10-Q 1 0001.txt 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 December 31, 2000 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 January 28, 2001 Class A Common Stock, 3,573,426 $.10 par value Class B Common Stock 1,430,085 $.10 par value BOWL AMERICA INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS PART I - FINANCIAL INFORMATION Item 1 - Financial Statements
Thirteen Weeks Ended Twenty-six Weeks Ended December 31, December 26, December 31, December 26, 2000 1999 2000 1999 _______________________ __________________________ Operating Revenues Bowling and other $5,354,385 $5,302,801 $ 9,879,470 $ 9,562,058 Food, beverage and merchandise sales 2,220,976 2,071,108 4,090,058 3,778,890 _________ _________ __________ __________ 7,575,361 7,373,909 13,969,528 13,340,948 Operating Expenses Compensation and benefits 3,118,142 2,994,890 6,217,595 5,853,013 Cost of bowling and other 1,380,043 1,382,755 2,816,249 2,882,232 Cost of food and mdse sales 724,600 663,416 1,344,154 1,190,594 Depreciation and amortization 487,994 563,073 981,839 1,122,458 General and administrative 233,675 170,710 444,318 363,842 _________ _________ __________ __________ 5,944,454 5,774,844 11,804,155 11,412,139 Operating Income 1,630,907 1,599,065 2,165,373 1,928,809 Interest and dividend income 173,675 176,858 574,014 378,915 _________ _________ __________ __________ Earnings before provision for income taxes 1,804,582 1,775,923 2,739,387 2,307,724 Provision for income taxes 647,805 635,157 983,400 820,197 _________ _________ __________ __________ Net Earnings $1,156,777 $1,140,766 $ 1,755,987 $ 1,487,527 Earnings per share $.23 $.21* $.35 $.27* Weighted average shares outstanding 5,007,007 5,415,445* 5,051,503 5,449,780* Dividends paid $550,995 $543,645 $1,117,793 $1,095,408 Per share, Class A $.11 $.10* $.22 $.20* Per share, Class B $.11 $.10* $.22 $.20* *Restated for 5% stock dividend paid July 26, 2000. CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS Net Earnings $1,156,777 $1,140,766 $ 1,755,987 $ 1,487,527 Other comprehensive earnings-net of tax Unrealized (loss)gain on available for sale securities (589,590) 645,520 (1,531,470) 837,639 _________ _________ _________ _________ Comprehensive earnings $ 567,187 $1,786,286 $ 224,517 $ 2,325,166
The operating results for these thirteen (13) and twenty-six (26) week periods are not necessarily indicative of results to be expected for the year. See notes to financial information. BOWL AMERICA INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, 2000 July 2, 2000 ________________ _____________ ASSETS Current Assets Cash and cash equivalents $ 1,372,194 $ 1,523,242 Short-term investments 7,683,487 8,873,682 Inventories 679,390 657,628 Prepaid expenses and other 599,074 440,318 __________ __________ Total Current Assets 10,334,145 11,494,870 Property, Plant and Equipment less accumulated depreciation of $25,747,330 and $25,416,493 21,306,224 19,367,989 Other Assets Marketable equity securities 6,737,541 9,168,446 Cash surrender value-life insurance 390,976 388,184 Other long-term assets 247,096 291,810 __________ __________ TOTAL ASSETS $39,015,982 $40,711,299
BOWL AMERICA INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, 2000 July 2, 2000 _________________ _____________ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 656,335 $ 688,213 Accrued expenses and payroll ded 826,633 893,493 Income taxes payable 223,336 129,390 Deferred income taxes 23,000 23,000 Other current liabilities 1,600,449 430,808 __________ __________ Total Current Liabilities 3,329,753 2,164,904 Noncurrent Deferred Income Taxes 2,778,565 3,678,000 TOTAL LIABILITIES 6,108,318 5,842,904 __________ __________ 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 - 3,576,130 and 3,406,070 shares 357,611 340,607 Class B issued and outstanding - 1,430,085 and 1,488,826 143,008 148,883 Additional paid-in capital 4,051,648 3,959,169 Unrealized gain on securities available-for-sale, 3,714,951 5,246,421 Retained earnings 24,640,446 25,173,315 __________ __________ TOTAL STOCKHOLDERS' EQUITY $32,907,664 $34,868,395 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $39,015,982 $40,711,299 See notes to financial information.
BOWL AMERICA INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE TWENTY-SIX WEEKS ENDED DECEMBER 31, 2000 AND DECEMBER 26, 1999
December 31, December 26, 2000 1999 Cash Flows From Operating Activities: Net earnings $1,755,987 $1,487,527 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization 981,839 1,122,458 Changes in assets and liabilities Increase in inventories (21,762) (83,204) (Increase) decrease in prepaid & other (158,756) 20,938 Decrease in other long-term assets 41,922 281,804 (Decrease) increase in accounts payable (31,878) 35,694 Decrease in accrued expenses and payroll deductions (66,860) (346,755) Increase in income taxes payable 93,946 505,070 Increase in other current liabilities 1,169,638 1,173,810 _________ _________ Net cash provided by operating activities $3,764,076 $4,197,342 _________ _________ Cash flows from investing activities Expenditures for property,plant,equip (2,920,074) (321,757) Net decrease (increase) in short-term investments 1,190,195 (1,303,123) _________ _________ Net cash used in investing activities (1,729,879) (1,624,880) _________ _________ Cash flows from financing activities Payment of cash dividends (1,117,793) (1,095,408) Purchase of Class A & B Common Stock (1,067,452) (761,948) _________ _________ Net cash used in financing activities (2,185,245) (1,857,356) _________ _________ Net (Decrease) Increase in Cash and Equivalents (151,048) 715,106 Cash and Equivalents, Beginning of Year 1,523,242 1,557,225 _________ _________ Cash and Equivalents, End of Period $1,372,194 $2,272,331 Supplemental Disclosures of Cash Flow Information Cash paid during the period for Income taxes $ 890,785 $ 315,127 See notes to financial information.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS For the Twenty-six Weeks Ended December 31, 2000 1. Consolidated Financial Statements The accompanying unaudited 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 consolidated balance sheet as of July 2, 2000 has been derived from the Company's July 2, 2000 audited financial statements. Certain information and note disclosures normally included in the annual financial statements, prepared in accordance with generally accepted accounting principles, 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 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 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 July 2, 2000. 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 December 31, 2000 were: 3,946 shares of Alltel 14,316 shares of American Telephone & Telegraph 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 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 December 31, 2000 Liquidity and Capital Resources Short-term investments, consisting mainly of U.S. Treasury Bills and Notes, and cash totaled $9,100,000 at the end of the second quarter of fiscal 2001 or $1,773,000 higher than at the beginning of the quarter. There were no large expenditures for assets or stock during the quarter. However, since July 2000, the Company has expended $1,067,000 for the purchase of 133,224 shares of its previously outstanding common stock, and $2,250,000 for the purchase of the land and building at Bowl America Glen Burnie. The Company is actively seeking property for development of bowling centers while continuing to modernize existing locations. Cash and cash flow are sufficient to finance all currently planned purchases and construction. The Company's marketable securities, primarily in telecommunications stocks are another source of expansion capital. These securities are carried at their fair value on the last day of the quarter. For the three-month period ending December 31, 2000, the market value decreased by $936,000 to approximately $6,700,000. 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. The Company paid a 5% stock dividend on July 26, 2000. All applicable share and per share data in prior periods has been restated for the effect of the stock dividend. During the quarter the Company closed a center operating at break-even at the end of its lease. Results of Operations There was a $.23 per share profit for the thirteen-week period ending December 31, 2000, versus a $.21 per share profit for the thirteen weeks ended December 26, 1999. For the current twenty-six week period earnings per share were $.35 compared to $.27 for the comparable period a year ago. All revenue and expense comparisons were impacted by the operaton of one fewer center in the current year quarter. Operating revenues increased 5% for the current six-month period versus an increase of 6% in the comparable period a year ago. Open play and special event bowling improved and the average game rate was up over the prior year period minimizing the effect of decreased league bowling. Increases in ancillary revenues are the result of the higher casual bowler traffic. For the six-month period food, beverage and merchandise sales were up 8% versus a 5% increase in the prior year six-month period. Cost of sales increased due to the higher sales. Operating expenses excluding depreciation and amortization increased 5% in the current six-month period versus a 1% increase in the comparable period last year. Employee compensation and benefits were up 6% this period versus a 2% increase in the prior year period. The need for overtime pay decreased somewhat in the quarter, however the still tight labor market continues to apply pressure to this area of expense. Advertising expense decreased 19% from a year ago when there was a 15% increase partially due to support of glow-in-the-dark bowling. Equipment expense decreased 11% in the current year versus a 5% increase last year. Utility costs were flat in both the current and prior six-month periods. Depreciation and amortization expense decreased 13% in the current year period and 2% in the comparable period last year. Several large capital assets have reached full depreciation. Rent expense was down 14% in the current period due to the closing of a center mentioned above and the purchase of a formerly leased location. Last year rent expense declined by 12% after a leased location was closed. BOWL AMERICA INCORPORATED AND SUBSIDIARIES S.E.C. FORM 10-Q December 31, 2000 PART II - OTHER INFORMATION Item 4 - Submission of Matters to a Vote of Security Holders At the annual meeting on December 5, 2000, the Class A shareholders approved the appointment of Director Warren T. Braham for a one year period to expire at the 2001 Annual Meeting. The votes were cast as follows: For 2,889,914 Against 1,670 Withheld 84,166 At the annual meeting on December 5, 2000, the Class A shareholders approved the appointment of Director Allan L. Sher for a one year period to expire at the 2001 Annual Meeting. The votes were cast as follows: For 2,891,528 Against 56 Withheld 84,166 At the annual meeting on December 5, 2000, the Class B shareholders approved the appointment of all Class B Directors as listed in the proxy statement for the December 5, 2000 meeting, for a one year period to expire at the 2001 Annual Meeting. The votes were cast as follows: For 13,613,700 Against 0 Withheld 0 Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K No Form 8-K was filed during the quarter ended December 31, 2000. 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 February 14, 2001 Leslie H. Goldberg Date Leslie H. Goldberg President February 14, 2001 Cheryl A. Dragoo Date Cheryl A. Dragoo Controller