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 29, 1998 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 26, 1998
Class A Common Stock, 4,120,351
$.10 par value
Class B Common Stock 1,536,146
$.10 par value
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
March 29, March 30, March 29, March 30,
1998 1997 1998 1997
_______________________ __________________________
<S> <C> <C> <C> <C>
Operating Revenues
Bowling and other $6,211,143 $6,062,748 $15,288,672 $14,863,432
Food and merchandise sales 2,411,610 2,439,554 6,097,810 6,155,120
_________ _________ __________ __________
8,622,753 8,502,302 21,386,482 21,018,552
Operating Expenses
Compensation and benefits 3,103,145 3,168,017 8,847,149 9,033,911
Cost of bowling and other 1,452,079 1,597,975 4,581,961 4,743,635
Cost of food and mdse sales 754,617 756,050 2,015,928 2,022,277
Depreciation and
amortization 592,304 509,241 1,724,724 1,512,862
General and administrative 214,141 188,064 635,457 554,075
_________ _________ __________ __________
6,116,286 6,219,347 17,805,219 17,866,760
Operating Income 2,506,467 2,282,955 3,581,263 3,151,792
Interest and dividend
income 197,160 197,137 482,198 443,350
_________ _________ __________ __________
Earnings before provision
for income taxes 2,703,627 2,480,092 4,063,461 3,595,142
Provision for income taxes 1,018,991 934,208 1,519,288 1,341,832
_________ _________ __________ __________
Net Earnings $1,684,636 $1,545,884 $ 2,544,173 $ 2,253,310
Earnings per share $.30 $.28 $.45 $.40
Weighted average shares
outstanding 5,657,457 5,681,536 5,660,582 5,682,049
Dividends paid $566,214 $541,534 $1,698,643 $1,619,415
Per share, Class A $.10 $.095 $.30 $.285
Per share, Class B $.10 $.095 $.30 $.285
</TABLE>
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.
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 29, 1998 June 29, 1997
_______________ _____________
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,385,513 $ 1,797,656
Short-term investments 10,466,026 6,375,039
Inventories 609,900 700,200
Prepaid expenses and other 801,333 459,652
Income taxes refundable - 32,982
__________ __________
Total Current Assets 13,262,772 9,365,529
Property, Plant and Equipment
less accumulated depreciation of
$21,607,107 and $20,052,750 22,656,262 23,454,699
Other Assets
Noncurrent marketable securities 6,351,553 4,363,058
Cash surrender value-life insurance 358,429 354,206
Other long-term assets 217,332 465,079
__________ __________
TOTAL ASSETS $42,846,348 $38,002,571
</TABLE>
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 29, 1998 June 29, 1997
_______________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable $ 723,600 $ 992,397
Accrued expenses and payroll ded 971,444 840,502
Income taxes payable 284,742 -
Other current liabilities 2,295,847 382,840
Current deferred income taxes 70,000 70,000
__________ __________
Total Current Liabilities 4,345,633 2,285,739
Noncurrent Deferred Income Taxes 3,090,628 2,335,000
TOTAL LIABILITIES 7,436,261 4,620,739
__________ __________
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 -
4,120,351 and 4,125,998 shares 412,035 412,600
Class B issued and outstanding -
1,536,146 153,614 153,614
Additional paid-in capital 4,893,503 4,896,835
Unrealized gain on securities
available-for-sale, net of tax 3,405,901 2,173,033
Retained earnings 26,545,034 25,745,750
__________ __________
TOTAL STOCKHOLDERS' EQUITY $35,410,087 $33,381,832
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $42,846,348 $38,002,571
<FN>
See notes to financial information.
</TABLE>
<PAGE>
<TABLE>
BOWL AMERICA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEKS ENDED MARCH 29, 1998 AND MARCH 30, 1997
<CAPTION>
March 29, March 30,
1998 1997
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $2,544,173 $ 2,253,310
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation and amortization 1,724,724 1,512,862
Gain on disposition of assets-net - 25,301
Changes in assets and liabilities
Decrease in inventories 90,300 16,614
Increase in prepaid and other (341,681) (196,602)
Decrease in other long-term assets 243,525 302,008
Decrease in accounts payable (268,797) (730,676)
Increase in accrued expenses
and payroll deductions 130,942 305,432
Increase in income taxes payable 284,742 547,346
Decrease in income taxes refundable 32,982 204,662
Increase in other current liabilities 1,913,007 1,926,612
_________ _________
Net cash provided by operating activities $6,353,917 $ 6,166,869
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (926,287) (2,504,270)
Net increase in short-term investments (4,090,987) (2,116,518)
_________ _________
Net cash used in investing activities (5,017,274) (4,620,788)
_________ _________
Cash flows from financing activities
Payment of cash dividends (1,698,643) (1,619,415)
Purchase of Class A Common Stock (50,143) (6,353)
_________ _________
Net cash used in financing activities (1,748,786) (1,625,768)
_________ _________
Net Decrease in Cash and
Cash Equivalents (412,143) (79,687)
Cash and Equivalents, Beginning of Year 1,797,656 2,120,862
_________ _________
Cash and Equivalents, End of Period $1,385,513 $ 2,041,175
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $1,201,564 $ 589,824
<FN>
See notes to financial information.
</TABLE>
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Thirty-nine Weeks Ended
March 29, 1998
1. Consolidated Financial Statements
The consolidated balance sheets as of March 29, 1998, and
the consolidated statements of earnings and cash flows for the
three-month and nine-month periods ended March 29, 1998 and
March 30, 1997 have been prepared by the Company, without
audit.
This quarterly financial information is submitted in response
to the requirements of Form 10-Q and does not purport to be
financial statements prepared in accordance with generally accepted
accounting principles. They therefore do not include all
disclosures which might be associated with such statements.
In the opinion of management such information includes all
adjustments, consisting only of normal recurring accruals,
necessary to present fairly the financial position at March 29,
1998, and for all periods presented.
For a summary of significant accounting principles, which have
been continued without change refer to Note 1 to the financial
statements for the year ended June 29, 1997.
2. Earnings Per Share
The Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share" in February 1997. The effect of adopting
this standard has no impact on the earnings per share calculation
for the periods ended March 29, 1998 and March 30, 1997.
<PAGE>
BOWL AMERICA INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 29, 1998
Liquidity and Capital Resources
Short-term investments consisting mainly of U.S. Treasury Bills
and Notes, and cash totaled $11,852,000 at the end of the third
quarter of fiscal 1998 or $2,324,000 higher than at the beginning
of the quarter. The increase relates mainly to the seasonal
nature of bowling participation.
Current liabilities include $1,900,000 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.
Marketable securities, primarily telecommunications stocks, are
carried at their price on the last day of the quarter. For the
nine month period ending March 29, 1998, the market value increased
by approximately $2,000,000 with a net after tax gain of $1,200,000.
There were no transactions in these stocks.
Expenditures including $163,000 for new bowling lanes and $130,000 for
bumper assemblies are planned as the Company continues to modernize
existing locations. 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's
position in telecommunications stocks is an additional source of
expansion capital.
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 February 1, 1997, the 16-lane expansion from 32 to 48 lanes at
Bowl America Dranesville began operation. During the fourth quarter
of fiscal 1997, the Company closed two centers which, at the expiration
of their leases, were operating with negative cash flows.
Results of Operations
As noted above, the Company operated two fewer centers in the fiscal
1998 period than in the prior year period and one fewer in the first
quarter of fiscal 1997 than in fiscal 1996. All comparisons in this
report are significantly influenced by the change in the number of
operating locations.
<PAGE>
There was a $.30 per share profit for the thirteen-week period ending
March 29, 1998, versus $.28 per share profit for the thirteen weeks
ending March 30, 1997. For the current thirty-nine week period
earnings per share were $.45 compared to $.40 for the comparable period
a year ago.
Operating revenues increased 1% for the current three-month period
and 2% for the current nine-month period versus an increase of 3% and
a decrease of 2% respectively in the period year. Linage at comparable
centers was up. Bowling and other income increased partially because
the price per game in the three and nine month periods was up over the
prior year periods. In addition, amusement game income continues to
increase over the prior year as the Company now owns the majority of
the games.
Food and beverage sales were down in the current period overall,
but at comparable locations there was a 3% increase for both the
quarter and nine-month periods. Cost of food and beverage sales
at comparable centers was flat.
Operating expenses excluding depreciation and amortization decreased 3%
in the three-month period and 2% in the current nine-month period
versus a 3% decrease in the nine-month period last year. Employee
compensation and benefits were down 2% in both the current and prior
year nine-month periods.
Advertising costs decreased 43% from the prior year quarter mainly
due to our use of print media, newspapers and direct mail, as our
primary advertising campaign vehicle. Glow-in-the-dark bowling
and amusement game supplies have been largely responsible for an
increase in the supplies and services expense. Utility costs
decreased 11% in the current quarter resulting in a 7% decrease for
the nine-month period compared to a 4% decrease in the prior year period.
Increases in depreciation and amortization expense of 14% in the
current nine-month period relate to the purchases of amusement games
and glow-in-the-dark bowling equipment and the Dranesville expansion.
Rent expense decreased 18% in the current quarter as we operated two
fewer leased centers than in the prior year.
<PAGE>
S.E.C. FORM 10-Q
March 29, 1998
PART II - OTHER INFORMATION
No material unusual charges or credits to income or changes in
independent accountants occurred during the quarter which would
require the filing of a Form 8-K.
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
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 11, 1998 Leslie H. Goldberg
Date Leslie H. Goldberg
President
May 11, 1998 Cheryl A. Dragoo
Date Cheryl A. Dragoo
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<EXCHANGE-RATE> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-28-1998
<PERIOD-END> MAR-29-1998
<CASH> 1,386
<SECURITIES> 6,352
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 610
<CURRENT-ASSETS> 13,263
<PP&E> 44,263
<DEPRECIATION> 21,607
<TOTAL-ASSETS> 42,846
<CURRENT-LIABILITIES> 4,346
<BONDS> 0
0
0
<COMMON> 566
<OTHER-SE> 34,844
<TOTAL-LIABILITY-AND-EQUITY> 42,846
<SALES> 6,098
<TOTAL-REVENUES> 21,386
<CGS> 2,016
<TOTAL-COSTS> 17,805
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,063
<INCOME-TAX> 1,519
<INCOME-CONTINUING> 2,544
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,544
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
</TABLE>
