Attached files
file | filename |
---|---|
EX-20 - EXHIBIT 20 - BOWL AMERICA INC | ex20.htm |
EXCEL - IDEA: XBRL DOCUMENT - BOWL AMERICA INC | Financial_Report.xls |
EX-32 - EXHIBIT 32 - BOWL AMERICA INC | ex32.htm |
EX-31 - EXHIBIT 31.1 - BOWL AMERICA INC | ex31-1.htm |
EX-31 - EXHIBIT 31.2 - BOWL AMERICA INC | ex31-2.htm |
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: SEPTEMBER 28, 2014
COMMISSION FILE NUMBER: 001-7829
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 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) 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, or a smaller reporting company. See the definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer __ |
Accelerated Filer __ |
Non-Accelerated Filer __ |
Smaller Reporting Company X |
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 |
|
November 10, 2014 |
Class A Common Stock, |
|
$.10 par value |
3,746,454 |
|
|
Class B Common Stock, |
|
$.10 par value |
1,414,517 |
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Thirteen Weeks Ended |
||||||||
September 28, |
September 29, |
|||||||
2014 |
2013 |
|||||||
Operating Revenues: |
||||||||
Bowling and other |
$ | 3,301,343 | $ | 3,395,226 | ||||
Food, beverage and merchandise sales |
1,328,001 | 1,355,048 | ||||||
Total Operating Revenue |
4,629,344 | 4,750,274 | ||||||
Operating Expenses: |
||||||||
Employee compensation and benefits |
2,753,227 | 2,813,723 | ||||||
Cost of bowling and other services |
1,528,706 | 1,558,187 | ||||||
Cost of food, beverage and merchandise sales |
435,190 | 436,801 | ||||||
Depreciation and amortization |
325,392 | 355,292 | ||||||
General and administrative |
217,353 | 206,277 | ||||||
Total Operating Expenses |
5,259,868 | 5,370,280 | ||||||
Operating Loss |
(630,524 |
) |
(620,006 |
) | ||||
Interest, dividend and other income |
146,307 | 138,769 | ||||||
Loss from continuing operations before provision for income tax benefit |
(484,217 |
) |
(481,237 |
) | ||||
Provision for income tax benefit |
(169,500 |
) |
(168,400 |
) | ||||
Net loss from continuing operations |
$ | (314,717 |
) |
$ | (312,837 |
) | ||
Loss from discontinued operations, net of tax |
$ | - | $ | (5,553 |
) | |||
Net loss |
$ | (314,717 |
) |
$ | (318,390 |
) | ||
Loss per share-basic & diluted |
||||||||
Continuing operations |
$ | (.06 |
) |
$ | (.06 |
) | ||
Discontinued operations |
$ | .00 | $ | (.00 |
) | |||
Net loss per share |
$ | (.06 |
) |
$ | (.06 |
) | ||
Weighted average shares outstanding |
5,160,971 | 5,160,971 | ||||||
Dividends paid |
$ | 877,365 | $ | 851,561 | ||||
Per share, dividends paid, Class A |
$ | .17 | $ | .165 | ||||
Per share, dividends paid, Class B |
$ | .17 | $ | .165 |
The operating results for the thirteen (13) week period ended September 28, 2014 are not necessarily indicative of results to be expected for the year. See notes to condensed consolidated financial statements.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (CONTINUED)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
Thirteen Weeks Ended |
||||||||
September 28, |
September 29, |
|||||||
2014 |
2013 |
|||||||
Net Loss |
$ | (314,717 |
) |
$ | (318,390 |
) | ||
Other comprehensive earnings-net of tax | ||||||||
Unrealized (loss) gain on available- for-sale securities net of tax benefit of $25,790 and $58,754 |
( 41,899 |
) |
(95,458 |
) | ||||
Comprehensive Loss |
$ | (356,616 |
) |
$ | (413,848 |
) |
The operating results for the thirteen (13) week period ended September 28, 2014 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 |
||||||||
September 28, |
June 29, |
|||||||
2014 |
2014 |
|||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 1,303,145 | $ | 842,114 | ||||
Short-term investments |
133,549 | 1,453,326 | ||||||
Inventories |
602,681 | 520,355 | ||||||
Prepaid expenses and other |
210,265 | 610,416 | ||||||
Income taxes refundable |
312,856 | 312,856 | ||||||
Current deferred income tax |
169,500 | - | ||||||
TOTAL CURRENT ASSETS |
2,731,996 | 3,739,067 | ||||||
LAND, BUILDINGS & EQUIPMENT, net of accumulated depreciation of $39,661,343 and $39,358,295 |
20,877,722 | 20,887,127 | ||||||
OTHER ASSETS: |
||||||||
Marketable investment securities |
8,936,100 | 8,979,499 | ||||||
Cash surrender value-life insurance |
677,922 | 677,922 | ||||||
Other |
80,165 | 80,165 | ||||||
TOTAL OTHER ASSETS |
9,694,187 | 9,737,586 | ||||||
TOTAL ASSETS |
$ | 33,303,905 | $ | 34,363,780 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable |
$ | 495,578 | $ | 681,509 | ||||
Accrued expenses |
882,566 | 1,091,098 | ||||||
Dividends payable |
877,365 | 877,365 | ||||||
Other current liabilities |
902,427 | 308,068 | ||||||
Current deferred income taxes |
24,705 | 24,705 | ||||||
TOTAL CURRENT LIABILITIES |
3,182,641 | 2,982,745 | ||||||
LONG-TERM DEFERRED COMPENSATION |
34,088 | 34,088 | ||||||
NONCURRENT DEFERRED INCOME TAXES |
2,342,426 | 2,368,216 | ||||||
TOTAL LIABILITIES |
5,559,155 | 5,385,049 | ||||||
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 | ||||||
Class B issued and outstanding 1,414,517 |
141,452 | 141,452 | ||||||
Additional paid-in capital |
7,849,814 | 7,849,814 | ||||||
Accumulated other comprehensive earnings- |
||||||||
Unrealized gain on available-for-sale securities, net of tax |
2,550,704 | 2,592,603 | ||||||
Retained earnings |
16,828,135 | 18,020,217 | ||||||
TOTAL STOCKHOLDERS' EQUITY |
27,744,750 | 28,978,731 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ | 33,303,905 | $ | 34,363,780 |
See notes to condensed consolidated financial statements.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Thirteen Weeks Ended |
||||||||
September 28, |
September 29, |
|||||||
2014 |
2013 |
|||||||
Cash Flows From Operating Activities |
||||||||
Net loss |
$ | (314,717 |
) |
$ | (318,390 |
) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
325,392 | 355,292 | ||||||
Changes in assets and liabilities |
||||||||
Increase in inventories |
(82,326 |
) |
(141,799 |
) | ||||
Decrease in prepaid & other |
400,151 | 214,098 | ||||||
Increase in income taxes refundable |
- | (6,000 |
) | |||||
Decrease in income taxes payable |
- | (151,227 |
) | |||||
Decrease in other long-term assets |
- | 3,800 | ||||||
Increase in deferred tax asset |
(169,500 |
) |
(171,500 |
) | ||||
Decrease increase in accounts payable |
(185,931 |
) |
(264,128 |
) | ||||
Decrease in accrued expenses |
(208,532 |
) |
(77,374 |
) | ||||
Increase in other current liabilities |
594,359 | 563,883 | ||||||
Net cash provided by operating activities |
358,896 | 6,655 | ||||||
Cash Flows From Investing Activities |
||||||||
Expenditures for land, building and equipment |
(315,987 |
) |
(44,422 |
) | ||||
Net sales & maturities (purchases) of short-term investments |
1,319,777 | (499,067 |
) | |||||
Purchases of marketable securities |
(24,290 |
) |
(270,898 |
) | ||||
Net cash provided by (used by) investing activities |
979,500 | (814,387 |
) | |||||
Cash Flows From Financing Activities |
||||||||
Payment of cash dividends |
(877,365 |
) |
(851,561 |
) | ||||
Net cash used in financing activities |
(877,365 |
) |
(851,561 |
) | ||||
Net Increase (decrease) in Cash and Equivalents |
461,031 | (1,659,293 |
) | |||||
Cash and Cash Equivalents, Beginning of period |
842,114 | 3,437,780 | ||||||
Cash and Cash Equivalents, End of period |
$ | 1,303,145 | $ | 1,778,487 | ||||
Supplemental Disclosures of Cash Flow Information |
||||||||
Cash Paid During the Period for: |
||||||||
Income taxes |
$ | - | $ | 157,227 |
See notes to condensed consolidated financial statements.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Thirteen Weeks Ended
September 28, 2014
(Unaudited)
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 29, 2014 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. 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 annual report on Form 10-K for the year ended June 29, 2014.
2. Investments
The Company’s investments are categorized as available-for-sale. Short-term investments consist of certificates of deposits with maturities of generally three months to one year. Equity securities consist primarily of telecommunications stocks. Mutual funds consist of federal agency mortgage backed securities (Ginnie Mae). The fair value of the Company’s investments at September 28, 2014 and June 29, 2014 were as follows:
September 28, 2014 Description |
Fair Value |
Cost basis |
Unrealized Gain |
|||||||||
Short-term investments |
$ | 133,549 | $ | 133,549 | $ | - | ||||||
Equity securities |
$ | 5,319,759 | $ | 1,285,759 | $ | 4,034,000 | ||||||
Mutual funds |
$ | 3,616,341 | $ | 3,529,677 | $ | 86,664 |
June 29, 2014 Description |
Fair Value |
Cost basis |
Unrealized Gain |
|||||||||
Short-term investments |
$ | 1,453,326 | $ | 1,453,326 | $ | - | ||||||
Equity securities |
$ | 5,373,986 | $ | 1,285,759 | $ | 4,088,227 | ||||||
Mutual funds |
$ | 3,605,513 | $ | 3,505,388 | $ | 100,125 |
The fair values of the Company’s investments were determined as follows:
September 28, 2014
Description |
Quoted Price for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||
Certificates of deposits |
$ | - | $ | 133,549 | $ | - | ||||||
Equity securities |
5,319,759 | - | - | |||||||||
Mutual funds |
3,616,341 | - | - | |||||||||
Total |
$ | 8,936,100 | $ | 133,549 | $ | - |
June 29, 2014
Description |
Quoted Price for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||
Certificates of deposits |
$ | - | $ | 1,453,326 | $ | - | ||||||
Equity securities |
5,373,986 | - | - | |||||||||
Mutual funds |
3,605,513 | - | - | |||||||||
Total |
$ | 8,979,499 | $ | 1,453,326 | $ | - |
The stocks included in the portfolio as of September 28, 2014 were:
82,112 |
shares of AT&T |
4,398 |
shares of CenturyLink |
4,508 |
shares of Frontier Communications |
412 |
shares of DexMedia |
774 |
shares of Teradata |
774 |
shares of NCR |
40,000 |
shares of Sprint |
31,904 |
shares of Verizon |
6,471 |
shares of Vodafone |
4,079 |
shares of Windstream |
2,520 |
shares of Manulife |
|
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. Commitments and Contingencies
The Company’s purchase commitments at September 28, 2014, are for materials, supplies, services and equipment as part of the normal course of business.
4. 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 postretirement plan.
5. New Accounting Standards
There were no new accounting pronouncements during the quarter ended September 28, 2014, that would impact the Company.
6. Subsequent Events
The Company has evaluated subsequent events through the time of filing these financial statements with the Securities and Exchange Commission on November 12, 2014, and has determined that no material subsequent events have occurred.
7. Reclassifications
Certain previous year amounts have been reclassified to conform with current year presentation.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business, our sales and the industry in which we operate and our management’s beliefs and assumptions. These statements are not guarantees of future performance or development and involve risks, uncertainties and other factors that are in some cases beyond our control. The forward-looking statements included in this Quarterly Report on Form 10-Q are made as of the date hereof. We are under no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
LIQUIDITY AND CAPITAL RESOURCES
The Company views a strong financial position as a major benefit to shareholders and emphasizes payment of dividends as part of its financial plan. A portion of earnings has consistently been invested to create a reserve to protect the Company in downturns in business, to capitalize on opportunities for expansion and modernization 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 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.
With the exception of 13,120 shares of Verizon, the common stocks 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 one insurance company acquired at no cost when the company demutualized. The Company purchased a total of 10,000 shares of Verizon during previous periods at a cost of approximately $430,000 and 3,120 shares of Verizon were received as a special dividend from Vodafone. 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 $3,900,000 in dividends, the majority of which are tax favored in the form of exclusion from federal taxable income. These marketable securities are carried at their fair value on the last day of each reporting period. The value of the securities on September 28, 2014 was approximately $5.3 million. The value of securities held at June 29, 2014 was approximately $5.4 million. Short-term investments consisting mainly of Certificates of Deposits, cash and cash equivalents totaled $1,437,000 at September 28, 2014 compared to $2,295,000 at June 29, 2014.
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. Except for a one time sale of approximately $666,000 in 1991, all earnings have been reinvested. The fund is carried at fair value on the last day of the reporting period. At September 28, 2014, the value was approximately $3,616,000.
The Company’s position in all the above investments is a source of capital for possible expansion. Potential volatility in the trading prices of the marketable securities held by the Company could impact the Company’s opportunities for expansion. The Board of Directors reviews the portfolio weekly and any use of this reserve at its quarterly meetings.
During the three-month period ended September 28, 2014, the Company expended approximately $316,000 for the purchase of building, entertainment and restaurant equipment. The Company has no current plans 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 first quarter decreases in the categories of Prepaid expenses and other and of Accounts payable were attributable primarily to the timing of the payments including compensation, insurance and taxes and for contributions to benefit plans.
Current liabilities generally increase during the first three quarters of the fiscal year as bowling leagues deposit prize fund monies with the Company throughout the league season. These funds are returned to the leagues at the end of the bowling season, generally in the fourth quarter. At September 28, 2014, league deposits of approximately $738,000 were included in the current liabilities category.
Cash flow provided by operating activities in the thirteen weeks ended September 28, 2014 was $359,000 which, along with cash on hand, was sufficient to meet day-to-day cash needs and pay dividends. Cash dividends of approximately $877,000, or $.17 per share, were paid to shareholders during the three-month period ended September 28, 2014. In September 2014, the Company declared a regular quarterly dividend of $.17 per share, payable November 12, 2014. 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 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 whims. 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. An unstable economy can lead many to participate in entertainment that is close to home and relatively inexpensive. Bowling has those advantages. However the longer the economy remains unstable, the less willing people are to spend on other than necessities. 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. Current economic conditions continue to create challenging times but our response will be helped by having the resources to be able to promote the sport.
RESULTS OF OPERATIONS
The following table sets forth the items in our consolidated summary of operations for the fiscal quarters ended September 28, 2014, and September 29, 2013, and the dollar and percentage changes therein.
Thirteen weeks ended |
||||||||||||||||
September 28, 2014 and September 29, 2013 |
||||||||||||||||
Dollars in thousands |
||||||||||||||||
2014 |
2013 |
Change |
% Change |
|||||||||||||
Operating Revenues: |
||||||||||||||||
Bowling and other |
$ | 3,301 | $ | 3,395 | $ | (94 |
) |
(2.8 |
) | |||||||
Food, beverage and merchandise sales |
1,328 | 1,355 | (27 |
) |
(2.0 |
) | ||||||||||
4,629 | 4,750 | (121 |
) |
(2.5 |
) | |||||||||||
Operating Expenses: |
||||||||||||||||
Employee Compensation and benefits |
2,753 | 2,814 | (61 |
) |
(2.2 |
) | ||||||||||
Cost of bowling and other services |
1,529 | 1,558 | (29 |
) |
(1.9 |
) | ||||||||||
Cost of food, beverage and merchandise sales |
435 | 437 | (2 |
) |
(.4 |
) | ||||||||||
Depreciation and amortization |
325 | 355 | (30 |
) |
(8.4 |
) | ||||||||||
General and administrative |
218 | 206 | 12 | 5.4 | ||||||||||||
5,260 | 5,370 | (110 |
) |
(2.0 |
) | |||||||||||
Operating loss from continuing operations |
(631 |
) |
(620 |
) |
(11 |
) |
(1.8 |
) | ||||||||
Interest, dividend and other income |
146 | 139 | 7 | 5.0 | ||||||||||||
Loss from continuing operations before tax benefit |
(485 |
) |
(481 |
) |
(4 |
) |
(.6 |
) | ||||||||
Income tax benefit |
(170 |
) |
(168 |
) |
(2 |
) |
(.7 |
) | ||||||||
Loss from continuing operations |
$ | (315 |
) |
$ | (313 |
) |
$ | (2 |
) |
(.6 |
) | |||||
Loss from discontinued operations, net of tax |
$ | 0 | $ | (5 |
) |
$ | 5 | 100.0 | ||||||||
Net loss |
$ | (315 |
) |
$ | (318 |
) |
$ | 3 | 1.2 |
For the thirteen week period ended September 28, 2014 there was a loss of $314,717 or $.06 per share. Including the loss from discontinued operations of $5,553 related to a Florida location sold in May 2013, for the thirteen-week period ended September 29, 2013, there was a net loss of $318,390, or $.06 loss per share. Eighteen locations were in operation in both the current year quarter and in the prior year comparable period. The bowling business is seasonal and the first quarter which includes summer months is typically the slowest. Management believes that the length and uncertainty of economic conditions are negatively influencing the public’s discretionary spending. The operating results for the fiscal 2015 period included in this report are not necessarily indicative of results to be expected for the year.
The information included in Operating Revenues and Operating Expenses below relates to the eighteen centers that were in operation for both the fiscal quarter ended September 28, 2014 and the prior year quarter ended September 29, 2013.
Operating Revenues
Total operating revenues decreased 2.5% or $121,000 to $4,629,000 in the thirteen-week period ended September 28, 2014, compared to a decrease of 7% or $360,000 to $4,750,000 in the three-month period ended September 29, 2013. Bowling and other revenue decreased $94,000 or 3% in the current year fiscal quarter compared to a decrease of $222,000 or 7% in the comparable prior year quarter. Food, beverage and merchandise sales were down $27,000 or 2% in the current year quarter due to lower traffic, compared to a decrease of $137,000 or 10% in the prior year comparable quarter. Cost of sales declined $2,000 in the current year three-month period due to lower sales.
Operating Expenses
Operating expenses were down $110,000 or 2% to $5,260,000 in the three-month period ended September 28, 2014 compared to a decrease of $213,000 or 4% to $5,370,000 in the prior year quarter ended September 29, 2013. Employee compensation and benefits were down $60,000 or 2% and $89,000 or 3% in the fiscal first quarters of 2015 and 2014, respectively. The Company continued to make scheduling adjustments in response to lower traffic. In addition, state unemployment tax rates decreased in the current year. Included in this category of expense are contributions to our two benefit plans, both of which are defined contribution plans. There is no additional obligation beyond the current year contribution.
Cost of bowling and other services decreased $29,000 or 2% in the quarter ended September 28, 2014 versus a decrease of $22,000 or 1% in the comparable quarter ended September 29, 2013. Maintenance and repair costs were up $2,000 or 1% in the current year quarter versus an increase of $26,000 or 12% in the comparable quarter of fiscal 2014. Both the current year and prior year periods included roof repairs, and the current year period included plumbing repairs at two locations. The prior year expense included storm drain work. Advertising costs decreased $7,000 or 7% in the quarter ended September 28, 2014. Utility costs were down $23,000 or 6% in the three month period ended September 28, 2014 in part due to lower electric rates in our Maryland locations. For the three month period ended September 29, 2013 costs were up slightly. Supplies and services expenses were up $9,000 or 5% in the current year thirteen-week period and were down $26,000 or 14% in the prior year comparable period, partially due to timing of bulk purchases.
Depreciation and amortization expense was down 8% in the three-month period ended September 29, 2013, and down 9% in the prior year comparable three-month period as assets reached full depreciation.
As stated above, the first quarter of the fiscal year is seasonally the slowest and the quarter ended September 28, 2014 resulted in an operating loss from continuing operations of $315,000 compared to an operating loss from continuing operations of $313,000 in the prior year period.
Interest, Dividend and Other Income
Interest, dividend and other income increased $8,000, or 5% in each of the fiscal 2015 and 2014 quarters, respectively.
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’s balance sheet under the captions of Short-term investments and Marketable securities. The Company exercises judgment in determining the classification of its investment securities as available-for-sale and in determining their fair value. The Company records these investments at their fair value with the unrealized gain or loss recorded in accumulated other comprehensive earnings, a component of stockholders’ equity, net of deferred taxes. Additionally, from time to time the Company must assess whether write-downs are necessary for other than temporary declines in value.
Management has identified accounting for the impairment of long-lived assets as a critical accounting policy due to the significance of the amounts included in the Company’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’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 September 28, 2014. 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 September 28, 2014, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q
PART II - OTHER INFORMATION
Item 6. Exhibits.
20 |
Press release issued November 12, 2014 (furnished herewith) |
|
|
31.1 |
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act filed herewith |
|
|
31.2 |
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act filed herewith |
|
|
32 |
Written Statement of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350 filed herewith |
101 |
Interactive data files for the thirteen weeks ended September 28, 2014 in eXtensible Business Reporting Language |
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: November 12, 2014 |
By: /s/ Leslie H Goldberg |
|
Leslie H. Goldberg, President |
|
|
|
|
|
|
Date: November 12, 2014 |
By: /s/ Cheryl A. Dragoo |
|
Cheryl A. Dragoo, Controller |
13