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 28, 1999 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 25, 1999
Class A Common Stock, 3,757,171
$.10 par value
Class B Common Stock 1,508,716
$.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 28, March 29, March 28, March 29,
1999 1998 1999 1998
_______________________ __________________________
<S> <C> <C> <C> <C>
Operating Revenues
Bowling and other $6,277,771 $6,211,143 $15,260,629 $15,288,672
Food and merchandise sales 2,430,919 2,411,610 6,027,827 6,097,810
_________ _________ __________ __________
8,708,690 8,622,753 21,288,456 21,386,482
Operating Expenses
Compensation and benefits 3,110,736 3,103,145 8,849,954 8,847,149
Cost of bowling and other 1,485,810 1,452,079 4,286,411 4,581,961
Cost of food and mdse sales 746,054 754,617 1,906,486 2,015,928
Depreciation and
amortization 567,237 592,304 1,711,142 1,724,724
General and administrative 212,715 214,141 664,194 635,457
_________ _________ __________ __________
6,122,552 6,116,286 17,418,187 17,805,219
Operating Income 2,586,138 2,506,467 3,870,269 3,581,263
Interest and dividend
income 178,597 197,160 506,911 482,198
_________ _________ __________ __________
Earnings before provision
for income taxes 2,764,735 2,703,627 4,377,180 4,063,461
Provision for income taxes 986,699 1,018,991 1,550,567 1,519,288
_________ _________ __________ __________
Net Earnings $1,778,036 $1,684,636 $ 2,826,613 $ 2,544,173
Earnings per share $.32 $.30 $.51 $.45
Weighted average shares
outstanding 5,375,287 5,657,457 5,517,778 5,660,582
Dividends paid $571,211 $566,214 $1,696,710 $1,698,643
Per share, Class A $.105 $.10 $.305 $.30
Per share, Class B $.105 $.10 $.305 $.30
</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 28, 1999 June 28, 1998
_______________ _____________
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 2,071,426 $ 1,944,462
Short-term investments 9,127,125 8,041,136
Inventories 548,791 697,571
Prepaid expenses and other 837,775 489,758
Deferred income taxes 21,000 21,000
__________ __________
Total Current Assets 12,606,117 11,193,927
Property, Plant and Equipment
less accumulated depreciation of
$23,663,584 and $22,183,152 21,266,318 22,223,345
Other Assets
Marketable equity securities 8,509,085 6,360,356
Cash surrender value-life insurance 386,961 383,343
Other long-term assets 246,733 274,479
__________ __________
TOTAL ASSETS $43,015,214 $40,435,450
</TABLE>
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 28, 1999 June 28, 1998
_______________ _____________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable $ 602,781 $ 848,330
Accrued expenses and payroll ded 996,813 776,051
Income taxes payable 187,923 -
Other current liabilities 2,253,008 343,496
__________ __________
Total Current Liabilities 4,040,525 1,967,877
Noncurrent Deferred Income Taxes 3,949,542 3,176,000
TOTAL LIABILITIES 7,990,067 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 -
3,757,171 and 4,120,351 shares 375,717 412,035
Class B issued and outstanding -
1,508,716 and 1,536,146 shares 150,871 153,614
Additional paid-in capital 4,273,034 4,893,504
Unrealized gain on available-for-
sale securities, net of tax 4,710,518 3,335,331
Retained earnings 25,515,007 26,497,089
__________ __________
TOTAL STOCKHOLDERS' EQUITY $35,025,147 $35,291,573
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $43,015,214 $40,435,450
<FN>
See notes to financial information.
</TABLE>
<PAGE>
<TABLE>
BOWL AMERICA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEKS ENDED MARCH 28, 1999 AND MARCH 29, 1998
<CAPTION>
March 28, March 29,
1999 1998
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $2,826,613 $ 2,544,173
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation and amortization 1,711,142 1,724,724
Changes in assets and liabilities
Decrease in inventories 148,780 90,300
Increase in prepaid and other (348,017) (341,681)
Decrease in other long-term assets 24,128 243,525
Decrease in accounts payable (245,549) (268,797)
Increase in accrued expenses
and payroll deductions 220,762 130,942
Increase in income taxes payable 187,923 284,742
Decrease in income taxes refundable - 32,982
Increase in other current liabilities 1,909,512 1,913,007
_________ _________
Net cash provided by operating activities $6,435,294 $ 6,353,917
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (754,115) (926,287)
Net increase in short-term investments (1,085,989) (4,090,987)
_________ _________
Net cash used in investing activities (1,840,104) (5,017,274)
_________ _________
Cash flows from financing activities
Payment of cash dividends (1,696,710) (1,698,643)
Purchase of Common Stock (2,771,516) (50,143)
_________ _________
Net cash used in financing activities (4,468,226) (1,748,786)
_________ _________
Net Increase (decrease) in Cash and
Cash Equivalents 126,964 (412,143)
Cash and Equivalents, Beginning of Year 1,944,462 1,797,656
_________ _________
Cash and Equivalents, End of Period $2,071,426 $ 1,385,513
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $1,365,935 $ 1,201,564
<FN>
See notes to financial information.
</TABLE>
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Thirty-nine Weeks Ended
March 28, 1999
1. Consolidated Financial Statements
The consolidated balance sheet as of March 28, 1999, and
the consolidated statements of earnings and cash flows for the
three-month and nine-month periods ended March 28, 1999 and
March 29, 1998 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 28,
1999, and for all periods presented.
The interim financial statements should be read in conjunction with
the financial statements and notes contained in the Company's Annual
Report or Form 10-K for the year ended June 28, 1998. Operating
results for the interim periods are not necessarily indicative of
results for the entire year.
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:
March 28, March 29,
1999 1998
Net Income $2,826,613 $2,544,173
Other comprehensive income:
Unrealized gain on available- for
sale equity securities, net of tax 1,375,187 1,232,868
_________ _________
Comprehensive income $4,201,800 $3,777,041
========= =========
<PAGE>
BOWL AMERICA INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
March 28, 1999
Liquidity and Capital Resources
Short-term investments consisting mainly of U.S. Treasury Bills
and Notes, and cash totaled $11,199,000 at the end of the third
quarter of fiscal 1999 or $1,685,000 higher than at the beginning
of the quarter. The Company has purchased, for a cost of $2,778,00,
390,610 shares of its previously outstanding common stock in the
fiscal year, expending $1,190,000 during the third quarter for
174,200 shares of Class A common stock. These purchases have
reduced the usual seasonal increase in cash.
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.
The Company has signed a contract with contingencies for approval
of permits on one of two sites mentioned in the previous quarterly
filing and is continuing to pursue a contract on an additional site.
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 telecommun-
ications stocks is an additional source of expansion capital.
These securities are carried at their fair value on the last day of
the quarter. For the nine month period ending March 28, 1999, the
market value increased by approximately $2,150,000 resulting in an
unrealized gain of $1,375,000. There were no transactions in these
stocks.
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.
During the fourth quarter of fiscal 1999, the Company will close a
center operating with negative cash flow.
Results of Operations
After several years of changes in the number of operating locations,
the current year comparisons reflect the same twenty-three centers in
operation. All of the prior year's percentage changes were influenced
by the change in the number of centers of operation.
<PAGE>
There was a $.32 per share profit for the thirteen-week period ending
March 28, 1999, versus $.30 per share profit for the thirteen weeks
ending March 29, 1998. For the current thirty-nine week period
earnings per share were $.51 compared to $.45 for the comparable period
a year ago.
Operating revenues increased 1% for the current three-month period
but were flat for the current nine-month period versus an increase of 1%
and an increase of 2% respectively in the period year. Ice and snow
caused closings at some locations at the beginning of the quarter
resulting in lost revenues and additional costs for removal. However
tournament activity has helped to offset some of the loss. Bowling and
other income increased primarily due to a higher average price per game
and higher shoe rental revenue.
Food and beverage sales were up 2% in the current quarter, but were flat
through the nine-month period. Cost of food and beverage sales
followed the same pattern.
Operating expenses excluding depreciation and amortization increased
less than 1% in the three-month period versus a decrease of 3% in the
prior year period. The nine-month periods for both years showed a 2%
decrease. Employee compensation and benefits were flat in the current
period and down 2% in the prior year nine-month period.
Advertising costs increased 21% from the prior year quarter mainly
due to our newspaper advertising campaign. Supplies and services
expense decreased 8% for the nine months. Glow-in-the-dark bowling
and amusement game supplies were responsible for the increase last year.
Equipment expense was up 15% in the year-to-date period due to increased
pin and rental shoe costs. Utility costs increased 1% in the current
quarter with a 2% decrease for the nine-month period compared to an 11%
and 4% decrease in the respective prior year periods.
Depreciation and amortization expense decreased 1% in the year-to-date
period versus an increase of 14% in the prior year nine-month period.
The increase last year related to the purchases of amusement games and
glow-in-the-dark bowling equipment and the Dranesville expansion.
Rent expense for the quarter was flat.
YEAR 2000
Bowl America considers Year 2000 issues to be a priority. The Company
has assessed its computer and related systems and has identified those
which require time and expenditures to become year 2000 ready. Bowl
America does not rely heavily on date sensitive hardware or software
for its internal operations. The operating system of the corporate
computer system is currenty compliant as is most of the software
used by the Company. Upgrades to some of the automatic scoring systems
in use in the bowling centers will be required. Updates and replacements
are expected to be completed during the summer after winter leagues have
completed their schedules. The cost of remediation does not appear to
be material.
The Company continues to receive 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. Currently 20%
of our material vendors respond that they are now compliant, about half
expect to be by July 1999 and the remainder later in the year.
<PAGE>
S.E.C. FORM 10-Q
March 28, 1999
PART II - OTHER INFORMATION
An 8K was filed in March 1999, with respect to the authorization of the
Company's president to purchase at his discretion from time to time up
to 600,000 shares of the Company's common stock on its behalf.
<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 10, 1999 Leslie H. Goldberg
Date Leslie H. Goldberg
President
May 10, 1999 Cheryl A. Dragoo
Date Cheryl A. Dragoo
Controller
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<CURRENCY> U.S. DOLLARS
<EXCHANGE-RATE> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-27-1999
<PERIOD-END> MAR-28-1999
<CASH> 2,071
<SECURITIES> 8,509
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 549
<CURRENT-ASSETS> 12,606
<PP&E> 44,930
<DEPRECIATION> 23,664
<TOTAL-ASSETS> 43,015
<CURRENT-LIABILITIES> 4,040
<BONDS> 0
0
0
<COMMON> 527
<OTHER-SE> 34,499
<TOTAL-LIABILITY-AND-EQUITY> 43,015
<SALES> 6,028
<TOTAL-REVENUES> 21,288
<CGS> 1,906
<TOTAL-COSTS> 17,418
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<INCOME-PRETAX> 4,377
<INCOME-TAX> 1,551
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<EPS-PRIMARY> .51
<EPS-DILUTED> .51
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