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 March 31, 2002 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
April 28, 2002
Class A Common Stock, 3,657,376
$.10 par value
Class B Common Stock 1,483,620
$.10 par value
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
PART I - FINANCIAL INFORMATION
Thirteen Weeks Ended Thirty-nine Weeks Ended
March 31, April 1, March 31, April 1,
2002 2001 2002 2001
_______________________ __________________________
Operating Revenues
Bowling and other $6,343,476 $6,465,529 $16,367,505 $16,344,999
Food and merchandise sales 2,652,796 2,647,759 6,929,940 6,737,817
_________ _________ __________ __________
8,996,272 9,113,288 23,297,445 23,082,816
Operating Expenses
Compensation and benefits 3,445,331 3,320,547 9,791,895 9,538,142
Cost of bowling and other 1,530,203 1,477,447 4,472,522 4,293,696
Cost of food and mdse sales 847,715 837,795 2,356,453 2,181,949
Depreciation and
amortization 436,758 487,994 1,325,950 1,469,833
General and administrative 201,206 464,525 649,817 908,843
_________ _________ __________ __________
6,461,213 6,588,308 18,596,637 18,392,463
Operating Income 2,535,059 2,524,980 4,700,808 4,690,353
Interest and dividend
income 175,713 186,524 446,813 760,538
_________ _________ __________ __________
Earnings before provision
for income taxes 2,710,772 2,711,504 5,147,621 5,450,891
Provision for income taxes 973,172 973,500 1,848,000 1,956,900
_________ _________ __________ __________
Net Earnings $1,737,600 $1,738,004 $ 3,299,621 $ 3,493,991
Earnings per share-
basic and diluted $.33 $.33* $.64 $.66*
Weighted average shares
outstanding 5,146,828 5,178,010* 5,128,095 5,262,055*
Dividends paid $592,044 $575,417 $1,779,882 $1,693,210
Per share, Class A $.115 $.11* $.345 $.32*
Per share, Class B $.115 $.11* $.345 $.32*
*Restated for 5% stock dividend paid July 26, 2001.
CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS
Net earnings $1,737,600 $1,738,004 $ 3,299,621 $ 3,493,991
Other comprehensive
earnings net of tax
Unrealized loss on
available-for-sale
securities (537,358) (199,634) (745,064) (1,731,104)
_________ _________ _________ _________
Comprehensive earnings $1,200,242 $1,538,370 $ 2,554,557 $ 1,762,887
The operating results for these thirteen (13) and thirty-nine (39) week
periods are not necessarily indicative of results to be expected for the year.
See notes to financial information.
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BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2002 July 1, 2001
_______________ _____________
ASSETS
Current Assets
Cash and cash equivalents $ 3,181,979 $ 1,338,420
Short-term investments 8,736,616 6,236,665
Inventories 532,937 720,505
Prepaid expenses and other 1,111,547 867,938
Income taxes refundable - 449,093
__________ __________
Total Current Assets 13,563,079 9,612,621
Property, Plant and Equipment
less accumulated depreciation of
$27,285,698 and $26,598,008 20,807,076 21,078,785
Other Assets
Marketable equity securities 5,034,288 6,216,928
Cash surrender value-life insurance 414,203 411,411
Other long-term assets 117,338 278,121
__________ __________
TOTAL ASSETS $39,935,984 $37,597,866
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 678,206 $ 1,071,563
Accrued expenses 1,135,465 934,274
Income taxes payable 214,970 -
Other current liabilities 2,520,793 400,889
__________ __________
Total Current Liabilities 4,549,434 2,406,726
Noncurrent Deferred Income Taxes 2,051,398 2,488,000
_________ _________
TOTAL LIABILITIES 6,600,832 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 -
3,657,376 and 3,491,976 shares 365,737 349,197
Class B issued and outstanding -
1,483,620 and 1,416,427 shares 148,361 141,643
Additional paid-in capital 7,545,902 5,075,754
Unrealized gain on available-for-
sale securities, net of tax 2,682,407 3,427,471
Retained earnings 22,592,745 23,709,075
__________ __________
TOTAL STOCKHOLDERS' EQUITY $33,335,152 $32,703,140
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $39,935,984 $37,597,866
<FN>
See notes to financial information.
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BOWL AMERICA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEKS ENDED MARCH 31, 2002 AND APRIL 1, 2001
March 31, April 1,
2002 2001
Cash Flows From Operating Activities:
Net earnings $3,299,621 $ 3,493,991
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation and amortization 1,325,950 1,469,833
Changes in assets and liabilities
Decrease in inventories 187,568 89,454
Increase in prepaid expenses & other (243,609) (259,624)
Decrease in other long-term assets 157,991 40,413
(Decrease) increase in accounts payable (393,357) 242,360
Increase in accrued expenses 201,191 145,562
Increase in income taxes payable 664,063 236,408
Increase in other current liabilities 2,120,878 2,118,490
_________ _________
Net cash provided by operating activities $7,320,296 $ 7,576,887
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (1,054,241) (3,182,895)
Net sales and maturities (purchases)
of short-term investments (2,499,951) 352,548
_________ _________
Net cash used in investing activities (3,554,192) (2,830,347)
_________ _________
Cash flows from financing activities
Payment of cash dividends (1,779,882) (1,693,210)
Purchase of Common Stock (142,663) (2,091,111)
_________ _________
Net cash used in financing activities (1,922,545) (3,784,321)
_________ _________
Net Increase in Cash and Cash
Equivalents 1,843,559 962,219
Cash and Equivalents, Beginning of Year 1,338,420 1,523,242
_________ _________
Cash and Equivalents, End of Period $3,181,979 $ 2,485,461
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $1,183,963 $ 1,721,823
<FN>
See notes to financial information.
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BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Thirty-nine Weeks Ended
March 31, 2002
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 March 31, 2002
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
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ITEM 2. BOWL AMERICA INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 31, 2002
Liquidity and Capital Resources
Short-term investments consisting mainly of U.S. Treasury Bills
and Notes, and cash totaled $11,918,000 at the end of the third
quarter of fiscal 2002 or $2,768,000 higher than at the beginning
of the quarter. The increased funds resulted primarily from operations,
which reflects the seasonal nature of the business.
During the nine-month period the Company expended approximatley $1,100,000
for the purchase of bowling equipment and amusement games as existing
locations are upgraded. The Company is actively seeking property for the
development of additional bowling centers. Cash and cash flow are sufficient
to finance all currently planned purchases and construction. The Company's
holdings of marketable equity securities consisting of telecommunications
stocks is another potential source of expansion capital.
These securities are carried at their fair value on the last day of the
quarter. For the three-month period ending March 31, 2002, the market value
decreased by $900,000 to approximately $5,000,000.
Current liabilities include $2 million in league deposits of prize fund
monies which are returned to the leagues at the end of the bowling season,
generally during the fourth quarter.
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.
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 have been restated
for the effect of the stock dividends.
On March 19, 2002 the Company declared a cash dividend of $.115 per share
on its Class A and Class B Common Stock, payable on May 15, 2002 to share-
holders of record as of April 24, 2002.
During the fourth quarter of fiscal 2002, the Company will close a center
at the end of its lease as the Company was unable to negotiate a new lease.
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 location
in the second quarter of fiscal 2001. The changes in the number of centers
in operation affected all income, expense and comparisons for the periods
presented in this report.
There were net earnings of $.33 per share for both the thirteen-week periods
ended March 31, 2002 and April 1, 2001. For the current thirty-nine week
period net earnings per share were $.64 compared to $.66 for the comparable
period a year ago.
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Operating revenues decreased 1% for the three-month period ended March 31,
2002 versus an increase of 5% in the comparable period a year ago. For the
current nine-month period operating revenues were up 1% versus a 5% increase
in the prior year nine-month period. Food, beverage and merchandise sales
were flat in the quarter ended March 31, 2002, and up 3% in the nine-month
period. Cost of sales was up 1% for the three-month period and 8% in the
nine-month period ended March 31, 2002.
Operating expenses excluding depreciation and amortization decreased 1%
in the current three-month period but were up 2% through the nine-month
period. In the prior year the three-month period was up 10% and the
nine-month period showed an increase of 7% in expenses. Employee compensation
and benefits were up 4% in the current quarter and 3% in the nine-month
period. Overtime pay and a still tight labor market during our busy season
were the main causes for the increases.
Advertising costs during the quarter ended March 31, 2002, decreased 35%
compared to the prior year quarter. Last year the Company acquired a second
"Rolling Bowling" trailer. These tractor-trailers, containing a working
bowling lane and pinsetter, are used at fairs, schools and other events to
promote bowling. The higher expense in advertising last year was primarily
due to the cost of preparing both trailers for the new season. Utility costs
for the current quarter were down 3% versus an increase of 6% in last year's
quarter. For the nine-month period ending March 31, 2002, utility costs were
flat compared to an increase of 2% for the comparable prior year period.
General and administrative expenses decreased significantly in the current
three-month and nine-month periods from the prior year periods. Last year
the Company was defending a lawsuit brought by a former employee, which
commenced during the first quarter of fiscal year 2001 and was decided in
the Company's favor in the fourth quarter of fiscal 2001.
Depreciation and amortization expense decreased 10% in the year-to-date
period versus a decrease of 11% in the comparable prior year period. Several
large capital assets have reached full depreciation. Rent expense for the
nine-months ended March 31, 2002 was down 5% due to the closing of a leased
center mentioned above. Rent expense in the prior year's comparable period
decreased 25% after the closing of a leased location and the purchase of a
formerly leased center. Insurance expense increased approximately 20%
through the nine-month period ended March 31, 2002 primarily due to an
increase in premiums as a result of the events of September 11.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
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BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q
March 31, 2002
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits None
(b) Reports on Form 8-K None
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
May 14, 2002 Leslie H. Goldberg
Date Leslie H. Goldberg
President
May 14, 2002 Cheryl A. Dragoo
Date Cheryl A. Dragoo
Controller
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