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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 30, 2003 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 27, 2003
Class A Common Stock, 3,665,906
$.10 par value
Class B Common Stock 1,468,462
$.10 par value
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 under the Exchange Act).
YES [ ] NO [X]
ITEM 1. FINANCIAL STATEMENTS
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Thirteen Weeks Ended Thirty-nine Weeks Ended
March 30, March 31, March 30, March 31,
2003 2002 2003 2002
_______________________ _________________________
Operating Revenues
Bowling and other $6,204,957 $6,343,476 $15,746,609 $16,367,505
Food, beverage and
merchandise sales 2,639,884 2,652,796 6,751,115 6,929,940
_________ _________ __________ __________
8,844,841 8,996,272 22,497,724 23,297,445
Operating Expenses
Compensation and benefits 3,437,520 3,445,331 9,813,584 9,791,895
Cost of bowling and other 1,535,587 1,530,203 4,485,005 4,472,522
Cost of food, beverage and
merchandise sales 812,340 847,715 2,186,994 2,356,453
Depreciation and
amortization 403,570 436,758 1,248,292 1,325,950
General and administrative 219,657 201,206 592,486 649,817
_________ _________ __________ __________
6,408,674 6,461,213 18,326,361 18,596,637
Operating Income 2,436,167 2,535,059 4,171,363 4,700,808
Interest and dividend
income 130,696 175,713 368,974 446,813
_________ _________ __________ __________
Earnings before provision
for income taxes 2,566,863 2,710,772 4,540,337 5,147,621
Provision for income taxes 926,600 973,172 1,639,000 1,848,000
_________ _________ __________ __________
Net Earnings $1,640,263 $1,737,600 $ 2,901,337 $ 3,299,621
Earnings per share-basic &
diluted $.31 $.33 $.56 $.64
Weighted average shares
outstanding 5,149,238 5,146,828 5,149,689 5,128,095
Dividends paid $617,957 $592,044 $1,853,956 $1,779,882
Per share, Class A $.12 $.115 $.36 $.345
Per share, Class B $.12 $.115 $.36 $.345
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
Net Earnings $1,640,263 $1,737,600 $ 2,901,337 $3,299,621
Other comprehensive
earnings-net of tax
Unrealized gain (loss) on
available for sale
securities (370,400) (537,358) (439,042) (745,064)
_________ _________ _________ _________
Comprehensive earnings $1,269,863 $1,200,242 $ 2,462,295 $2,554,557
The operating results for the thirteen (13) and thirty-nine (39) week
periods ended March 30, 2003 are not necessarily indicative of results
to be expected for the year.
See notes to condensed consolidated financial information.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 30, 2003 June 30, 2002
________________ _____________
ASSETS
Current Assets
Cash and cash equivalents $ 2,615,139 $ 1,633,817
Short-term investments 10,666,444 8,183,932
Inventories 483,117 541,027
Prepaid expenses and other 837,189 479,289
Income taxes refundable - 699,768
__________ __________
Total Current Assets 14,601,889 11,537,833
Property, Plant and Equipment
less accumulated depreciation of
$27,824,334 and $26,996,091 20,616,265 20,505,586
Other Assets
Marketable equity securities 3,293,693 3,990,248
Cash surrender value-life insurance 434,040 431,249
Other long-term assets 67,267 97,662
__________ __________
TOTAL ASSETS $39,013,154 $36,562,578
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 686,235 $ 701,671
Accrued expenses and payroll ded 780,920 749,245
Income taxes payable 158,438 -
Other current liabilities 2,472,624 369,027
__________ __________
Total Current Liabilities 4,098,217 1,819,943
Long-term Deferred Compensation 132,496 132,496
Noncurrent Deferred Income Taxes 1,670,594 1,928,000
__________ __________
TOTAL LIABILITIES 5,901,307 3,880,439
__________ __________
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 -
3,665,906 and 3,666,376 shares 366,591 366,638
Class B issued and outstanding -
1,468,462 and 1,483,620 146,846 148,362
Additional paid-in capital 7,431,429 7,603,646
Unrealized gain on securities
available-for-sale, 1,604,020 2,043,062
Retained earnings 23,562,961 22,520,431
__________ __________
TOTAL STOCKHOLDERS' EQUITY $33,111,847 $32,682,139
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $39,013,154 $36,562,578
See notes to condensed consolidated financial information.
BOWL AMERICA INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THIRTY-NINE WEEKS ENDED MARCH 30, 2003 AND MARCH 31, 2002
March 30, March 31,
2003 2002
Cash Flows From Operating Activities:
Net earnings $2,901,337 $3,299,621
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation and amortization 1,248,292 1,325,950
Changes in assets and liabilities
Decrease in inventories 57,910 187,568
Increase in prepaid expenses & other (358,550) (243,609)
Decrease in income taxes refundable 699,768 -
Decrease in other long-term assets 30,395 157,991
Decrease in accounts payable (15,436) (393,357)
Increase in accrued expenses 31,675 201,191
Increase in income taxes payable 158,438 664,063
Increase in other current liabilities 2,103,597 2,120,878
_________ _________
Net cash provided by operating activities $6,857,426 $7,320,296
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (1,358,971) (1,054,241)
Net purchases of short-term investments (2,482,512) (2,499,951)
_________ _________
Net cash used in investing activities (3,841,483) (3,554,192)
_________ _________
Cash flows from financing activities
Payment of cash dividends (1,853,956) (1,779,882)
Purchase of Class A Common Stock (180,665) (142,663)
_________ _________
Net cash used in financing activities (2,034,621) (1,922,545)
_________ _________
Net Increase in Cash and Equivalents 981,322 1,843,559
Cash and Equivalents, Beginning of Period 1,633,817 1,338,420
_________ _________
Cash and Equivalents, End of Period $2,615,139 $3,181,979
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $ 780,794 $1,183,963
See notes to condensed consolidated financial information.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the Thirty-nine Weeks Ended
March 30, 2003
1. Basis for Presentation
The accompanying unaudited condensed 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 condensed consolidated balance sheet as of June 30, 2002
has been derived from the Company's June 30, 2002 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 for the periods presented. It is suggested that these
condensed 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 June 30, 2002.
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 30, 2003 were:
16,835 shares of AT&T Wireless
2,209 shares of Agere
3,946 shares of Alltel
669 shares of Avaya
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
3. Commitments and Contingencies
In November 2002, the Company signed an agreement with Brunswick Corporation
for approximately $189,000 for the purchase of bowling equipment for one center.
These assets were received and installed in the quarter ended March 30, 2003.
The Company entered into an agreement to sell the building and ground lease
housing the Silver Spring location for $2,300,000. Closing on the sale is
expected in the current fiscal year, however, it can occur on any date
prior to August 30, 2003, that is selected by the Company. The gain on the
sale will approach $2,000,000.
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
March 30, 2003
Liquidity and Capital Resources
Short-term investments consisting mainly of U.S. Treasury Bills and Notes,
and cash totaled $13,282,000 at the end of the third quarter of fiscal 2003,
or $1,982,000 higher than at the beginning of the quarter. The increased
funds resulted primarily from operations and reflect the seasonal nature of
the business.
During the nine-month period ended March 30, 2003, the Company expended
approximately $1,359,000 for the purchase of bowling and restaurant equipment
and some amusement games as existing locations were upgraded. The Company is
actively seeking property for the development of additional bowling centers.
Cash and cash flow are sufficient to finance all contemplated purchases and
construction. The Company's holdings of marketable equity securities,
primarily consisting of telecommunications stocks, are another potential
source of expansion capital.
These marketable securities are carried at their fair value on the last day
of the quarter. For the three-month period ended March 30, 2003, the market
value decreased by $587,000 to approximately $3,294,000.
Current liabilities include approximately $2,133,000 in league deposits of
prize fund monies that 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.
On March 18, 2003, the Board of Directors declared a cash dividend of
$.12 per share on its Class A and Class B Common Stock, payable May 14, 2003,
to holders of record as of April 23, 2003.
The Company has entered into an agreement to sell the building and ground
lease for its only money-losing bowling center, for $2.3 million. The center
closed to the public in May 2003, and while settlement is expected in this
fiscal year, it can be extended by the Company to any date prior to August 30,
2003. The gain resulting from this sale will approach $2,000,000.
Results of Operations
In fiscal year 2002, two centers were closed at the expiration of their
leases. One center, operating at break-even, was closed at the end of the
first quarter of fiscal 2002, and a profitable center was closed in May 2002
after the Company was unable to negotiate a new 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.
Net earnings were $.31 per share for the thirteen-week period ended
March 30, 2003, versus net earnings of $.33 per share for the thirteen-
weeks ended March 31, 2002. For the current thirty-nine week period
net earnings per share were $.56 compared to $.64 for the comparable period
a year ago.
Operating revenues decreased 2% for the three-month period ended March 30,
2003, during which snow storms resulted in closings at all of the Company's
northern centers, versus a 1% decrease in the comparable period a year ago.
For the current nine-month period operating revenues were down 3% versus a 1%
increase in the prior year nine-month period. During the current quarter
promotional pricing succeeded in increasing games bowled by 2%, and in
comparable centers, by 6%, at the cost of a reduced average game rate. Food,
beverage and merchandise sales were flat in the current year quarter and down
3% in the nine-month period. Cost of sales was down 4% in the current quarter
and 7% in the year-to-date period.
Operating expenses excluding depreciation and amortization were down slightly
in the current three-month period and decreased 1% in the nine-month period
ended March 2003. The prior year three-month comparable period showed a
decrease of 1%, but the nine-month period expenses were up 2%. Employee
compensation and benefits were flat in both the current quarter and nine-
month period but were up 4% and 3%, respectively, last year.
Maintenance and repair costs were up 5% in the three-month period ended
March 30, 2003 due mainly to the cost of snow removal in our principal
operating area. Advertising costs during the current nine-month period
were up 6%. Utility costs were flat in the current quarter down 6% for the
nine-month period. Last year costs were down 3% in the quarter and flat
in the nine-month period. Bowling supplies and services costs were down
4% for the nine-month period.
Depreciation and amortization expense decreased 6% in the current nine-
month period and 10% in the prior year comparable period. Fewer centers are
in operation and several large capital assets have reached full depreciation.
Rent expense was down 16% in the current and prior year nine-month periods
due to the closing of leased centers mentioned above. The Company's
business insurance renews in February. The substantial premium increase
following 9/11/01 was reflected in the periods February through December 2002.
For the current nine-month insurance expense increase 30% and approximately
11% in three-month period ended March 30, 2003.
CRITICAL ACCOUNTING POLICIES
Critical accounting policies have the potential to have an impact on the
Company's financial statements, either because of the significance of the
financial statement item to which they relate, or because they require
judgment and estimation due to the uncertainty involved in measuring at a
specific point in time, events that are continuous in nature. Due to the
nature of its business, the Company has no accounting policies that it
considers critical to the understanding of the Company's financial reporting.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
The Company'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 a date within
90 days prior to the filing of this report. There were no significant changes
in internal controls or in other factors that significantly affect internal
controls subsequent to the date of their most recent evaluation.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q
March 30, 2003
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Written statement of Chief Executive Officer
99.2 Written statement of Chief Financial Officer
(b) Reports on Form 8-K None
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 President
May 14, 2003 Cheryl A. Dragoo
Date Controller
CERTIFICATIONS
I, Leslie H. Goldberg, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Bowl America
Incorporated;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchanges Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsid-
iaries is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectivness of the registrant's disclosure controls and
procedures as of a date with 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifyig officer and I have indicated in this
quarterly report whether there were significant changes in the internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 14, 2003 Leslie H. Goldberg
Chief Executive Officer
CERTIFICATIONS
I, Cheryl A. Dragoo, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Bowl America
Incorporated;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchanges Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsid-
iaries is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectivness of the registrant's disclosure controls and
procedures as of a date with 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifyig officer and I have indicated in this
quarterly report whether there were significant changes in the internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 14, 2003 Cheryl A. Dragoo
Chief Financial Officer
Exhibit 99.1
Written Statement of the Chief Executive Officer
Pursuant to 18 U.S.C. 1350
Solely for the purposes of complying with 18 U.S.C. 1350, I, the
undersigned President of Bowl America Incorporated (the "Company"), hereby
certify, based on my knowledge, that the Quarterly Report on Form 10-Q of
the Company for the quarter ended March 30, 2003 (the "Report") fully
complies with the requirements of Section 13(a) of the Securities Act of 1934
and that information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Leslie H. Goldberg
May 14, 2003
EXHIBIT 99.2
Written Statement of the Chief Financial Officer
Pursuant to 18 U.S.C. 1350
Solely for the purposes of complying with 18 U.S.C. 1350, I, the
undersigned Assistant Treasurer and Controller of Bowl America Incorporated
(the "Company"), hereby certify, based on my knowledge, that the Quarterly
Report on Form 10-Q of the Company for the quarter ended March 30, 2003,
(the "Report") fully complies with the requirements of Section 13(a) of the
Securities Act of 1934 and that information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.
Cheryl A. Dragoo
May 14, 2003