UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Quarter Ended December 30, 2001 Commission file Number 0-1830
BOWL AMERICA INCORPORATED
(Exact name of registrant as specified in its charter.)
MARYLAND 54-0646173
(State of Incorporation) (I.R.S. Employer Identification No.)
6446 Edsall Road, Alexandria, Virginia 22312
(Address of principal executive offices) (Zip Code)
(703)941-6300
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
Shares Outstanding at
January 27, 2002
Class A Common Stock, 3,660,882
$.10 par value
Class B Common Stock 1,487,236
$.10 par value
ITEM 1. FINANCIAL STATEMENTS
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended
December 30, December 31, December 30, December 31,
2001 2000 2001 2000
_______________________ __________________________
Operating Revenues
Bowling and other $5,547,213 $5,354,385 $10,024,029 $ 9,879,470
Food, beverage and
merchandise sales 2,319,919 2,220,976 4,277,144 4,090,058
_________ _________ __________ __________
7,867,132 7,575,361 14,301,173 13,969,528
Operating Expenses
Compensation and benefits 3,213,191 3,118,142 6,346,564 6,217,595
Cost of bowling and other 1,454,877 1,380,043 2,942,319 2,816,249
Cost of food, beverage and
merchandise sales 791,638 724,600 1,508,738 1,344,154
Depreciation and
amortization 436,758 487,994 889,192 981,839
General and administrative 276,581 233,675 448,611 444,318
_________ _________ __________ __________
6,173,045 5,944,454 12,135,424 11,804,155
Operating Income 1,694,087 1,630,907 2,165,749 2,165,373
Interest and dividend
income 138,124 173,675 271,100 574,014
_________ _________ __________ __________
Earnings before provision
for income taxes 1,832,211 1,804,582 2,436,849 2,739,387
Provision for income taxes 657,763 647,805 874,828 983,400
_________ _________ __________ __________
Net Earnings $1,174,448 $1,156,777 $ 1,562,021 $ 1,755,987
Earnings per share-basic &
diluted $.23 $.22* $.31 $.33*
Weighted average shares
outstanding 5,151,237 5,257,357* 5,118,729 5,304,078*
Dividends paid $595,176 $550,995 $1,187,838 $1,117,793
Per share, Class A $.115 $.105* $.23 $.21*
Per share, Class B $.115 $.105* $.23 $.21*
*Restated for 5% stock dividend paid July 26, 2001.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
Net Earnings $1,174,448 $1,156,777 $ 1,562,021 $1,755,987
Other comprehensive
earnings-net of tax
Unrealized (loss)gain on
available for sale
securities (407,419) (589,590) (207,706) (1,531,470)
_________ _________ _________ _________
Comprehensive earnings $ 767,029 $ 567,187 $ 1,354,315 $ 224,517
The operating results for these thirteen (13) and twenty-six (26) week
periods are not necessarily indicative of results to be expected for the year.
See notes to financial information.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 30, 2001 July 1, 2001
________________ _____________
ASSETS
Current Assets
Cash and cash equivalents $ 3,137,322 $ 1,338,420
Short-term investments 6,012,786 6,236,665
Inventories 677,459 720,505
Prepaid expenses and other 569,798 867,938
Income taxes refundable 170,949 449,093
__________ __________
Total Current Assets 10,568,314 9,612,621
Property, Plant and Equipment
less accumulated depreciation of
$26,935,396 and $26,598,008 21,171,431 21,078,785
Other Assets
Marketable equity securities 5,887,236 6,216,928
Cash surrender value-life insurance 414,203 411,411
Other long-term assets 193,881 278,121
__________ __________
TOTAL ASSETS $38,235,065 $37,597,866
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 30, 2001 July 1, 2001
_________________ _____________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 660,691 $ 1,071,563
Accrued expenses and payroll ded 796,022 934,274
Other current liabilities 1,602,559 400,889
__________ __________
Total Current Liabilities 3,059,272 2,406,726
Noncurrent Deferred Income Taxes 2,366,989 2,488,000
TOTAL LIABILITIES 5,426,261 4,894,726
__________ __________
Stockholders' Equity
Preferred stock,
par value $10 a share: Authorized
and unissued 2,000,000 shares
Common stock,
par value $.10 per share
Authorized 10,000,000 shares
Class A issued and outstanding -
3,660,882 and 3,491,976 shares 366,087 349,197
Class B issued and outstanding -
1,487,236 and 1,416,427 148,723 141,643
Additional paid-in capital 7,556,300 5,075,754
Unrealized gain on securities
available-for-sale, 3,219,765 3,427,471
Retained earnings 21,517,929 23,709,075
__________ __________
TOTAL STOCKHOLDERS' EQUITY $32,808,804 $32,703,140
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $38,235,065 $37,597,866
<FN>
See notes to financial information.
BOWL AMERICA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE TWENTY-SIX WEEKS ENDED DECEMBER 30, 2001 AND DECEMBER 31, 2000
December 30, December 31,
2001 2000
Cash Flows From Operating Activities:
Net earnings $1,562,021 $1,755,987
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation and amortization 889,192 981,839
Changes in assets and liabilities
Decrease (increase) in inventories 43,046 (21,762)
Decrease (increase) in prepaid & other 298,140 (158,756)
Decrease in income taxes refundable 278,144 -
Decrease in other long-term assets 81,448 41,922
Decrease in accounts payable (410,872) (31,878)
Decrease in accrued expenses (138,252) (66,860)
Increase in income taxes payable - 93,946
Increase in other current liabilities 1,202,645 1,169,638
_________ _________
Net cash provided by operating activities $3,805,512 $3,764,076
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (981,838) (2,920,074)
Net sales and maturities of short-term
investments 223,879 1,190,195
_________ _________
Net cash used in investing activities (757,959) (1,729,879)
_________ _________
Cash flows from financing activities
Payment of cash dividends (1,187,838) (1,117,793)
Purchase of Class A & B Common Stock (60,813) (1,067,452)
_________ _________
Net cash used in financing activities (1,248,651) (2,185,245)
_________ _________
Net Increase (Decrease) in Cash
and Equivalents 1,798,902 (151,048)
Cash and Equivalents, Beginning of Period 1,338,420 1,523,242
_________ _________
Cash and Equivalents, End of Period $3,137,322 $1,372,194
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $ 596,710 $ 890,785
<FN>
See notes to financial information.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Twenty-six Weeks Ended
December 30, 2001
1. Consolidated Financial Statements
The accompanying unaudited consolidated financial statements of Bowl
America Incorporated and subsidiaries (the "Company"), have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. The consolidated balance sheet as of July 1, 2001 has been
derived from the Company's July 1, 2001 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 consolidated
financial statements reflect all adjustments and reclassifications (all of
which are of a normal, recurring nature) that are necessary for the fair
presentation for the periods presented. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's latest annual report to the Securities and Exchange Commission
on Form 10-K for the year ended July 1, 2001.
2. Marketable Equity Securities
Marketable equity securities are carried at fair value in accordance
with the provisions of SFAS No. 115.
The telecommunications stocks included in the portfolio as of
December 30, 2001 were:
16,835 shares of AT&T Wireless
3,946 shares of Alltel
27,572 shares of Bell South
8,028 shares of Lucent Technologies
9,969 shares of Qwest Communications
45,580 shares of SBC
32,000 shares of SprintFon
16,000 shares of SprintPCS
18,784 shares of Verizon
13,560 shares of Vodafone/AirTouch
BOWL AMERICA INCORPORATED
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
December 30, 2001
Liquidity and Capital Resources
Short-term investments, consisting mainly of U.S. Treasury Bills
and Notes, and cash totaled $9,150,000 at the end of the second
quarter of fiscal 2002 or $1,584,000 higher than at the beginning
of the quarter.
In the six-month period ended December 30, 2001, the Company expended
approximately $1 million primarily for the purchase of bowling equipment
to upgrade facilities and to replace some amusement games. The Company
is actively seeking property for additional locations. Cash and cash
flow are sufficient to finance all currently planned purchases and
construction. The Company has also maintained its fiscal year end 2001
position in marketable securities, primarily telecommunications stocks
as a further source of expansion capital.
These securities are carried at their fair value on the last day of the
quarter. For the three-month period ended December 30, 2001, the
market value decreased by $600,000 to approximately $5,900,000.
While no factors requiring a change in the dividend rate are apparent,
the Board of Directors decides the amount and timing of any dividend
at its quarterly meeting based on its appraisal of the state of the
business and its estimate of future opportunities.
On December 4, 2001, the Board of Directors declared a cash dividend of
$.115 per share on its Class A and Class B stock to holders of record on
January 10, 2002, payable February 13, 2002.
The Company paid a 5% stock dividend on both July 26, 2001 and July 26, 2000.
All applicable share and per share data in prior periods has been restated
for the effect of the stock dividends.
Results of Operations
During the first quarter of fiscal 2002, a center operating at break-even
was closed at the end of its lease. The Company also closed a leased center
in the second quarter of fiscal 2001. The changes in the number of operating
centers affected all income, expense and comparisons for the periods presented
in this report.
There were net earnings of $.23 per share for the thirteen-week period ended
December 30, 2001, versus net earnings of $.22 per share for the thirteen-
week period ended December 31, 2000. For the current twenty-six week period
earnings per share were $.31 compared to $.33 for the comparable period
a year ago.
Operating income increased 2% for the current six-month period versus an
increase of 5% in the comparable period a year ago. Increased open play
linage and a higher average game rate contributed to the improvment in
bowling revenue. Some ancillary revenues were also up over the prior year.
Food, beverage and merchandise sales were up in the six-month period ended
December 30, 2001. Cost of sales increased due to the higher sales.
Operating expenses excluding depreciation and amortization increased 4%
in the current six-month period versus a 5% increase in the comparable
period last year. Employee compensation and benefits were up 2% for the
twenty-six week period versus an increase of 6% in last year's period when
the tight labor market forced the use of overtime.
Maintenance and repair costs were up 10% in the six-month period ended
December 30, 2001 versus 5% in the period a year ago. Advertising expense
increased 22% in the current twenty-six week period partially in support
of glow-in-the-dark bowling. Last year advertising costs were down 19%.
Supplies and services expenses were down 8% in this year's six-month
period versus a 1% increase in the prior year period. Utility costs were
flat in both the current and prior periods.
Depreciation and amortization expense decreased 9% in the current year
period and 13% in the comparable period last year. Several large capital
assets have reached full depreciation. Rent expense was down 6% in the
current year's six-month period due to the closing, mentioned above,
of a leased location. In last year's six-month period rent expense dropped
14%, the combination of closing a leased location and purchasing a formerly
leased center.
While lower interest rates in the current six-month period have caused a
decline in interest and dividend income, the primary cause for the decrease
is that last year's interest and dividend income figure included $219,000
received from the merger of AT&T and Media One.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q
December 30, 2001
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
At the annual meeting on December 4, 2001 the Class A shareholders
approved the appointment of Director Warren T. Braham for a one year period
to expire at the 2002 Annual Meeting. The votes were cast as follows:
For 3,348,976
Against 0
Withheld 6,553
At the annual meeting on December 4, 2001, the Class A shareholders
approved the appointment of Director Allan L. Sher for a one year period
to expire at the 2002 Annual Meeting. The votes were cast as follows:
For 3,349,044
Against 0
Withheld 6,485
At the annual meeting on December 4, 2001, the Class B shareholders
approved the appointment of all Class B Directors as listed in the
proxy statement for the December 4, 2001 meeting, for a one year period
to expire at the 2002 Annual Meeting. The votes were cast as follows:
For 14,836,200
Against 0
Withheld 0
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits None
(b) Reports on Form 8-K
A Form 8-K was filed during the quarter relating to an employment
contract between the Company and its President, Leslie H. Goldberg.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BOWL AMERICA INCORPORATED
Registrant
February 13, 2002 Leslie H. Goldberg
Date Leslie H. Goldberg
President
February 13, 2002 Cheryl A. Dragoo
Date Cheryl A. Dragoo
Controller