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 September 27, 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
October 25, 1998
Class A Common Stock, 4,062,351
$.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
September 27, September 28,
1998 1997
_______________________
<S> <C> <C>
Operating Revenues
Bowling and other $3,837,591 $3,830,878
Food, beverage and merchandise sales 1,569,635 1,585,876
_________ _________
5,407,226 5,416,854
Operating Expenses
Compensation and benefits 2,767,519 2,779,558
Cost of bowling and other 1,451,511 1,530,332
Cost of food,beverage and mdse sales 508,458 511,775
Depreciation and amortization 580,511 550,614
General and administrative 211,894 191,584
_________ _________
5,519,893 5,563,863
Operating Loss (112,667) (147,009)
Interest and dividend income 164,618 135,098
_________ _________
Earnings (loss) before provision
for income taxes 51,951 (11,911)
Income tax provision (benefit) 13,470 (12,615)
_________ _________
Net Income $ 38,481 $ 704
Earnings per share $ .01 $ .00
Weighted average shares
outstanding 5,651,497 5,662,144
Dividends paid $565,650 $566,214
Per share, Class A $.10 $.10
Per share, Class B $.10 $.10
</TABLE>
The operating results for these thirteen (13) 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>
September 27, 1998 June 28, 1998
__________________ _____________
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 2,080,805 $ 1,944,462
Short-term investments 7,546,494 8,041,136
Inventories 836,449 697,571
Prepaid expenses and other 653,933 489,758
Income taxes refundable 15,532 -
Deferred income taxes 21,000 -
__________ __________
Total Current Assets 11,154,213 11,193,927
Property, Plant and Equipment
less accumulated depreciation of
$22,700,399 and $22,183,152 22,071,264 22,223,345
Other Assets
Marketable equity securities 6,666,224 6,360,356
Cash surrender value-life insurance 386,134 383,343
Other long-term assets 217,332 274,479
__________ __________
TOTAL ASSETS $40,495,167 $40,435,450
</TABLE>
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 27, 1998 June 28, 1998
__________________ _____________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable $ 1,013,416 $ 848,330
Accrued expenses 791,018 776,051
Other current liabilities 553,691 343,496
__________ __________
Total Current Liabilities 2,358,125 1,967,877
Noncurrent Deferred Income Taxes 3,292,230 3,176,000
TOTAL LIABILITIES 5,650,355 5,143,877
__________ __________
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 -
4,105,351 and 4,120,351 shares 410,535 412,035
Class B issued and outstanding -
1,536,146 153,614 153,614
Additional paid-in capital 4,884,654 4,893,504
Unrealized gain on securities
available-for-sale, net of tax 3,524,969 3,335,331
Retained earnings 25,871,040 26,497,089
__________ __________
TOTAL STOCKHOLDERS' EQUITY $34,844,812 $35,291,573
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $40,495,167 $40,435,450
<FN>
See notes to financial information.
</TABLE>
<PAGE>
<TABLE>
BOWL AMERICA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED SEPTEMBER 27, 1998 AND SEPTEMBER 28, 1997
<CAPTION>
September 27, September 28,
1998 1997
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings (loss) $ 38,481 $ 704
Adjustments to reconcile net
loss to net cash provided
by (used in) operating activities
Depreciation and amortization 580,511 550,614
Changes in assets and liabilities
Increase in inventories (138,878) (200,782)
Increase in prepaid and other (164,175) (80,071)
Decrease in other long-term assets 54,356 244,352
Increase (decrease) in accounts payable 165,086 (378,319)
Increase in accrued expenses 14,967 59,762
Increase in income taxes refundable (15,532) (79,615)
Increase in other current liabilities 210,195 172,913
_________ _________
Net cash provided by
operating activities $ 745,011 $ 289,558
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (428,430) (561,408)
Net decrease in short-term investments 494,642 867,096
_________ _________
Net cash provided by
investing activities 66,212 305,688
_________ _________
Cash flows from financing activities
Payment of cash dividends (565,650) (566,214)
Purchase of Class A common stock (109,230) -
_________ _________
Net cash used in financing activities (674,880) (566,214)
_________ _________
Net Increase in Cash and Equivalents 136,343 29,032
Cash and Equivalents, Beginning of Qtr 1,944,462 1,797,656
_________ _________
Cash and Equivalents, End of Quarter $2,080,805 $1,826,688
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $ 29,003 $ 67,000
<FN>
See notes to financial information.
</TABLE>
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Thirteen Weeks Ended
September 27, 1998
1. Consolidated Financial Statements
The consolidated balance sheets as of September 27, 1998, and
the consolidated statements of earnings and cash flows for the
three-month periods ended September 27, 1998 and September 28, 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 September 27,
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 28, 1998.
2. Reporting Comprehensive Income
Effective June 29, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"), that establishes rules for the reporting and
display of comprehensive income and its components. Adoption of
SFAS 130 requires unrealized gains and losses on the Company's
available-for-sale securities adjustments to be included in
other comprehensive income. The components of comprehensive
income are as follows:
September 27, September 28,
1998 1997
Net Income $ 38,481 $ 704
Other comprehensive income:
Unrealized gain on available-
for-sale equity securities,
net of tax 189,638 111,488
_________ _________
Comprehensive income $ 228,119 $ 112,192
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
September 27, 1998
Liquidity and Capital Resources
Short-term investments consisting mainly of U.S. Treasury Bills
and Notes, and cash totaled $9,627,000 at the end of the first
quarter of fiscal 1999 or $358,000 lower than at the beginning
of the quarter. The decrease relates primarily to the seasonal
nature of bowling participation.
Marketable securities, primarily telecommunications stocks, are
carried at their price on the last day of the quarter. For the
three-month period ending September 27, 1998, the market value
increased by approximately $306,000 with a net after tax gain
of $190,000. There were no transactions in these stocks.
During the quarter the Company expended approximately $370,000
for bowling lanes, bumper assemblies and amusement game machines
purchases. The Company is actively seeking property for additional
locations. While previous offers have not yet been accepted, the
Company continues to pursue contracts on two sites. Cash and cash
flows are sufficient to finance all currently planned purchases and
construction. The Company has maintained its fiscal year end 1998
position in telecommunications stocks as a further source of
expansion capital.
The Company expended $109,000 for the purchase of 15,000 shares of
previously outstanding Class A common stock. Subsequent to the
end of the quarter, an additional 73,000 shares of Bowl America
stock were purchased at a cost of $530,000.
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.
Results of Operations
After several years of changes in the number of operating locations,
the current year comparisons reflect the same number of centers in
operation. All of the prior year's percentage changes were influenced
by the change in the number of centers in operation.
There was a $.01 per share profit for the quarter ending September 27,
1998, versus less than $.01 per share in the first quarter of last year.
Operating revenues declined slightly in the current period versus a 1%
increase in the prior year period. Increases in shoe rental revenue
and amusement game income offset the decline in bowling income.
Food and beverage sales were flat andmerchandise sale and costs were down
slightly due to lower traffic.
<PAGE>
Operating expenses excluding depreciation and amortization decreased 1%
in the current quarter versus a 3% decrease in in the comparable quarter
last year. In the current period supplies and services expense decreased
14%. Last year's costs included large purchases of glow-in-the-dark and
amusement game supplies. Advertising costs decreased 11% from the prior
year period and decreased 9% in the first quarter a year ago. Equipment
expense increased in the current year by 21% primarily due to the higher
costs associated with bowling pins and rental shoes. Employee compensation
and benefits expenses were down 1% this year and 2% in the prior year.
Depreciation and amortization expense increased 5% in the current year
quarter versus an increase of 10% in the comparable period last year.
The increases in both years are partially due to amusement game machine
and glow-in-the-dark equipment purchases. Rent expense increased 5% in
the current period due to higher sales at some leased locations. Last
year rent expense decreased 9%, the decrease mainly a result of the change
in the number of leased locations.
YEAR 2000
Bowl America considers Year 2000 issues to be a priority. The Company
has assessed the computer and related systems and found most to be year
2000 ready. Final identification of requirements and steps to be
implemented is expected to be complete in the second quarter of fiscal year
1999. All updates and replacements are expected to be completed by
fiscal year end 1999. The cost of remediation does not appear to be material.
The Company has received written verification from vendors and suppliers
with whom it has material relationships that they are addressing the Year
2000 issue and expect to be 2000 ready by mid 1999.
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q
September 27, 1998
PART II - OTHER INFORMATION
An 8K was filed in July 1998, which referred to changes
in an employment contract.
<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
November 10, 1998 Leslie H. Goldberg
Date Leslie H. Goldberg
President
November 10, 1998 Cheryl A. Dragoo
Date Cheryl A. Dragoo
Controller
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<CURRENCY> U.S. DOLLARS
<EXCHANGE-RATE> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-27-1999
<PERIOD-END> SEP-27-1998
<CASH> 2,081
<SECURITIES> 6,666
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 836
<CURRENT-ASSETS> 11,154
<PP&E> 44,772
<DEPRECIATION> 22,700
<TOTAL-ASSETS> 40,495
<CURRENT-LIABILITIES> 2,358
<BONDS> 0
0
0
<COMMON> 564
<OTHER-SE> 34,281
<TOTAL-LIABILITY-AND-EQUITY> 40,495
<SALES> 1,570
<TOTAL-REVENUES> 5,407
<CGS> 508
<TOTAL-COSTS> 5,520
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 52
<INCOME-TAX> 13
<INCOME-CONTINUING> 38
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<EPS-PRIMARY> .01
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