10-Q 1 r10qdc04.txt FORM 10-Q FOR PERIOD ENDED 12/26/04 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 26, 2004 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 by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12 b-2) YES [ ] NO [X] 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 23, 2005 Class A Common Stock, 3,669,311 $.10 par value Class B Common Stock 1,468,462 $.10 par value PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BOWL AMERICA INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended December 26, December 28, December 26, December 28, 2004 2003 2004 2003 _______________________ __________________________ Operating Revenues Bowling and other $5,033,421 $5,163,791 $ 9,256,174 $ 9,489,060 Food, beverage and merchandise sales 2,078,175 2,143,726 3,755,506 3,963,632 _________ _________ __________ __________ 7,111,596 7,307,517 13,011,680 13,452,692 Operating Expenses Compensation and benefits 3,099,810 3,159,693 6,062,501 6,341,283 Cost of bowling and other 1,578,907 1,571,781 3,054,091 3,092,215 Cost of food, beverage and merchandise sales 663,684 706,323 1,187,248 1,340,358 Depreciation and amortization 402,485 391,647 803,118 786,577 General and administrative 176,718 166,074 379,989 347,218 _________ _________ __________ __________ 5,921,604 5,995,518 11,486,947 11,907,651 Net gain on sale of building - - - 2,168,117 Operating Income 1,189,992 1,311,999 1,524,733 3,713,158 Investment earnings 151,817 - 151,817 - Interest and dividend income 160,319 103,361 264,322 199,342 _________ _________ __________ __________ Earnings before provision for income taxes 1,502,128 1,415,360 1,940,872 3,912,500 Provision for income taxes 552,100 503,500 700,000 1,426,700 _________ _________ __________ __________ Net Earnings $ 950,028 $ 911,860 $ 1,240,872 $ 2,485,800 ========= ========= ========= ========= Earnings per share-basic & diluted $.18 $.17 $.24 $.48 Weighted average shares outstanding 5,137,773 5,138,574 5,137,773 5,138,574 Dividends paid $693,600 $642,322 $1,387,200 $1,284,645 Per share, Class A $.135 $.125 $.27 $.25 Per share, Class B $.135 $.125 $.27 $.25 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS Net Earnings $ 950,028 $ 911,860 $ 1,240,872 $2,485,800 Other comprehensive earnings-net of tax Unrealized gain (loss) on available for sale securities 186,736 199,282 458,657 (33,511) Less: reclassification adjustment for gain included in net income (88,687) - (88,687) - _________ _________ _________ _________ Comprehensive earnings $1,048,077 $1,111,142 $ 1,610,842 $2,452,289 ========= ========= ========= =========
The operating results for the thirteen (13) and twenty-six (26) week periods ended December 26, 2004 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 ----------------------------------- December 26, 2004 June 27, 2004 ________________ _____________ ASSETS Current Assets Cash and cash equivalents $ 1,604,784 $ 1,320,643 Short-term investments 12,258,232 11,681,729 Inventories 618,180 583,466 Prepaid expenses and other 303,804 595,460 __________ __________ Total Current Assets 14,785,000 14,181,298 Land, Buildings and Equipment Net of accumulated depreciation of $28,668,753 and $28,394,203 22,113,207 21,762,919 Other Assets Marketable equity securities 4,489,683 4,041,161 Cash surrender value-life insurance 469,817 467,603 Other long-term assets 77,580 126,600 __________ __________ TOTAL ASSETS $41,935,287 $40,579,581 ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 890,335 $ 805,812 Accrued expenses 423,818 891,289 Dividends payable 693,600 693,600 Other current liabilities 1,732,254 334,317 Income taxes payable 80,495 179,855 Current deferred income taxes 148,675 148,675 __________ __________ Total Current Liabilities 3,969,177 3,053,548 Long-term Deferred Compensation 74,278 74,278 Noncurrent Deferred Income Taxes 2,772,178 2,555,174 ---------- ---------- TOTAL LIABILITIES 6,815,633 5,683,000 __________ __________ COMMITMENTS AND CONTINGENCIES (Note 3) 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 - 3,669,311 shares 366,932 366,932 Class B issued and outstanding - 1,468,462 shares 146,846 146,846 Additional paid-in capital 7,479,072 7,479,072 Unrealized gain on securities available-for-sale, 2,318,319 1,948,918 Retained earnings 24,808,485 24,954,813 __________ __________ TOTAL STOCKHOLDERS' EQUITY $35,119,654 $34,896,581 __________ __________ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $41,935,287 $40,579,581 ========== ========== See notes to condensed consolidated financial statements.
BOWL AMERICA INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) FOR THE TWENTY-SIX WEEKS ENDED DECEMBER 26, 2004 AND DECEMBER 28, 2003
December 26, December 28, 2004 2003 Cash Flows From Operating Activities: Net earnings $1,240,872 $2,485,800 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization 803,118 786,577 Gain on sale of available-for-sale securities (151,817) - Changes in assets and liabilities Increase in inventories (34,714) (62,419) Decrease (increase) in prepaid expenses & other 291,656 (1,764,558) Decrease in income taxes refundable - 443,788 (Decrease) increase in income taxes payable (99,360) 161,069 Decrease in other long-term assets 46,806 51,271 Increase (decrease) in accounts payable 84,523 (58,596) Decrease in accrued expenses (467,471) (247,770) Increase in other current liabilities 1,397,937 1,434,095 _________ _________ Net cash provided by operating activities $3,111,550 $3,229,257 _________ _________ Cash flows from investing activities Expenditures for land,buildings & equip (1,153,406) (785,507) Net purchases of short-term investments (539,328) (368,145) Proceeds from sale of marketable securities 252,525 - _________ _________ Net cash used in investing activities (1,440,209) (1,153,652) _________ _________ Cash flows from financing activities Payment of cash dividends (1,387,200) (1,284,645) _________ _________ Net cash used in financing activities (1,387,200) (1,284,645) _________ _________ Net Increase in Cash and Equivalents 284,141 790,960 Cash and Equivalents, Beginning of Period 1,320,643 1,503,313 _________ _________ Cash and Equivalents, End of Period $1,604,784 $2,294,273 ========= ========= Supplemental Disclosures of Cash Flow Information Cash paid during the period for Income taxes $ 803,477 $ 821,900 See notes to condensed consolidated financial statements.
BOWL AMERICA INCORPORATED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Twenty-six Weeks Ended December 26, 2004 (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 27, 2004 has been derived from the Company's June 27, 2004 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 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 latest annual report to the Securities and Exchange Commission on Form 10-K for the year ended June 27, 2004. 2. Marketable Equity Securities Marketable equity securities are carried at fair value in accordance with the provisions of SFAS No. 115. At December 26, 2004, the fair value of these securities was $4,489,683, with an original cost of $757,074, resulting in an unrealized gain of $3,732,609. The telecommunications stocks included in the portfolio as of December 26, 2004 were: 2,209 shares of Agere 3,946 shares of Alltel 669 shares of Avaya 27,572 shares of Bell South 8,028 shares of Lucent Technologies 9,969 shares of Qwest Communications 45,580 shares of SBC 40,000 shares of SprintFon 18,784 shares of Verizon 13,560 shares of Vodafone/AirTouch 3. Commitments and Contingencies In late September 2004, the Company signed a contract for approximately $770,000 for site preparation relating to the building of a bowling center in Henrico County, Virginia to be paid out as work is completed. During the quarter ended December 26, 2004, approximately $48,000 had been paid for work completed. In February 2005, the Company signed a contract for the purchase of bowling equipment for the new location totaling approximately $374,712. Delivery is not expected prior to the end of fiscal 2005. 4. Reclassifications Certain previous period amounts have been reclassified to conform with current period presentation. 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 26, 2004 Liquidity and Capital Resources Short-term investments consisting mainly of U.S. Government securities and cash totaled $13,863,000 at the end of the second quarter of fiscal 2005, or $905,000 higher than at the beginning of the quarter and $861,000 higher than at the beginning of the fiscal year. The increased funds result primarily from operations and reflect the seasonal nature of the bowling business which is strongest from September through May. During the quarter ended December 26, 2004, the Company received $252,525 as merger compensation from Cingular Wireless for the mandatory exchange of 16,835 shares of AT&T Wireless stock held by the Company. No Cingular Wireless stock was received in the transaction. In the six-month period ended December 26, 2004, the Company expended $1,025,000 for purchases of equipment to modernize facilities, including the replacement of some amusement games and all remaining wooden bowling lanes. Approximately $147,000 was spent for items relating to the construction of our new bowling center in Henrico County, Virginia, $48,000 of which was partial payment on the purchase obligation for site preparation and improvements. The table below summarizes all purchase obligations as of February 8, 2005. It includes $722,000 for site preparation and improvements for the new location of which approximately one-third will be paid for by the seller from funds escrowed at the time of purchase of the ground. Also included in purchase obligations is $374,712 for a portion of the equipment for the center. Construction of the new 40-lane facility, estimated to cost $5 million, began in the second quarter and site work is continuing. The Company is actively seeking property for additional locations. Cash and cash flow are sufficient to finance all currently contemplated purchases and construction. The Company has also maintained its fiscal year end 2004 position in marketable equity securities, primarily telecommunications stocks, except as noted above, as a further source of expansion capital. These marketable securities are carried at their fair value on the last day of the quarter. At December 26, 2004, the market value was approximately $4,490,000 or $53,000 higher than at the beginning of the quarter. ============================================================================ Contractual Total Less than 1-3 years 3-5 Years More than obligations 1 Year 5 Years ____________________________________________________________________________ Operating lease obligations $1,791,187 $ 283,721 $567,442 $567,442 $342,535 Purchase obligations $1,096,712 $1,096,712 ____________________________________________________________________________ Total $2,887,899 $1,380,433 $567,442 $567,442 $342,535 ============================================================================= Current liabilities increase during the first three quarters of the fiscal year as 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 December 26, 2004, approximately $1,500,000 in league deposits were included in the current liabilities category. While no factors calling for 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 December 7, 2004, the Board of Directors declared a cash dividend of $.135 per share on its Class A and Class B stock to holders of record on January 10, 2005, payable February 9, 2005. RESULTS OF OPERATIONS Eighteen centers were in operation in both the current and prior year periods. In the fourth quarter of fiscal 2003, the Company ceased operations at its Silver Spring center and the sale of the center that was operating with a negative cash flow was consummated in August 2003. Net earnings were $.18 per share for the thirteen-week period ended December 26, 2004, versus net earnings of $.17 per share for the thirteen weeks ended December 28, 2003. For the current twenty-six week period net earnings per share were $.24 compared to $.48 for the comparable period a year ago. The gain on the sale of AT&T Wireless stock of $151,817 is included in the Investment earnings category in the current quarter and six-month figures. Prior year-to-date earnings included a net gain of $2,168,117 from the sale of Silver Spring, after taxes. Without either sale earnings per share for the six-month periods would have been $.22 and $.23, respectively. Operating revenues decreased 3% in both of the three-month periods ended December 26, 2004 and December 28, 2003. For the current six-month period operating revenues were down 3% versus a decrease of 2% in the comparable six-month period a year ago. Operating revenues from bowling and other declined approximately 2% in both the current and prior year quarters, while the six-months periods showed a decline of 2% and less than 1%, respectively. The current year decrease in linage was partially offset by an increase in corporate event activity and a higher average game rate. Food, beverage and merchandise sales were down 3% in the current year quarter and down 5% in the six-month period partially as a result of the closing, in September 2003, of the full-service restaurant at Bowl America Gaithersburg. Cost of food, beverage and merchandise sales declined due to the change at Gaithersburg and lower sales. Operating expenses excluding depreciation and amortization were down 1% and 4% in the current three-month period and six-month periods, respectively, versus no change in the periods last year. Employee compensation and benefits were down 4% in the current six-month period and were flat in the prior year comparable period. Maintenance and repair costs were down 24% in the six-month period ended December 26, 2004 partially due to the elimination of lane refinishing costs for wooden lanes. The comparable period in the prior year reflected an increase of 13%. Building and heating repairs and snow removal costs were primarily responsible for the prior year increase. Advertising costs during the current twenty-six week period increased 25% compared to a 17% increase in the prior year comparable period. Utility costs for the quarter were up 1% and were up 3% for the six-month period ended December 26, 2004 versus a decrease of 2% for the comparable periods last year. Bowling supplies and services costs were down 8% for the six-month period compared to a 6% decrease in the prior year six-month period. Rent expense was up 2% in the current year- to-date period versus flat in the prior year six-month period. Insurance expense, excluding health and life, decreased 7% through the six-month period ended December 26, 2004, as the insurance market softened, compared to a 2% increase in the six-month period a year ago. Depreciation and amortization expense increased 2% in the current year-to-date period and decreased 7% in the comparable prior year period. Last year's comparative decrease was due to the operation of one fewer center in 2004 than in 2003. CRITICAL ACCOUNTING POLICIES We have identified accounting for marketable investment securities under SFAS 115 ("Accounting for Certain Investments in Debt and Equity Securities") as a critical accounting policy due to the significance of the amounts included in our balance sheet under the captions of Short-term investments and Marketable equity 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 income, 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk. Our short-term investments and certain cash equivalents are subject to interest rate risk. We manage this risk by maintaining an investment portfolio of available-for-sale instruments with high credit quality and relatively short average maturities. The fair value of marketable debt securities held was $12,258,000 and $9,838,000 at December 26, 2004 and December 28, 2003, respectively. The fair value of certain fixed rate debt securities will change depending on movements in interest rates. Declines in interest rates will affect our interest income. Based on our portfolio of debt securities at December 26, 2004, a 10% decline in the average yield would have no material impact on annual interest income. 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 December 26, 2004. 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 December 26, 2004, 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 December 26, 2004 PART II - OTHER INFORMATION Item 4 - Submission of Matters to a Vote of Security Holders At the annual meeting held December 7, 2004, the Class A shareholders approved the appointment of Director Warren T. Braham for a one year period to expire at the 2005 Annual Meeting. The votes were cast as follows: For 3,241,914 Withheld 4,367 At the annual meeting held December 7, 2004, the Class A shareholders approved the appointment of Director Allan L. Sher for a one year period to expire at the 2005 Annual Meeting. The votes were cast as follows: For 3,243,967 Withheld 2,314 At the annual meeting held December 7, 2004, the Class B shareholders approved the appointment of Merle Fabian, Leslie H. Goldberg, Stanley H. Katzman, A. Joseph Levy, Ruth Macklin and Irvin Clark, as listed in the proxy statement for the December 7, 2004 meeting, for a one year period to expire at the 2005 Annual Meeting. The votes were cast as follows: For 14,142,700 Withheld 0 Item 6 - Exhibits (a) Exhibits 31.1 Certification of Chief Executive Officer 31.2 Certification of Chief Financial Officer 32 Written Statement of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350 10 Extension of Employment Agreement with Leslie H. Goldberg 20 Press release issued February 8, 2005 (furnished herewith) 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: February 8, 2005 By: Leslie H. Goldberg Leslie H. Goldberg, President Date: February 8, 2005 By: Cheryl A. Dragoo Cheryl A. Dragoo, Controller EXHIBIT 31.1 Exhibit 31.1 to Form 10-Q Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) Or 15d-14(a) under the Securities Exchange Act of 1934 I, Leslie H. Goldberg, certify that: 1. I have reviewed this Quarterly report on Form 10-Q of Bowl America Incorporated; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting: and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 8, 2005 Leslie H Goldberg Chief Executive Officer Exhibit 31.2 Exhibit 31.2 to Form 10-Q Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) Or 5d-14(a) under the Securities Exchange Act of 1934 I, Cheryl A. Dragoo, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of Bowl America Incorporated; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting: and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 8, 2005 Cheryl A. Dragoo Chief Financial Officer Exhibit 32 Exhibit 32 to Form 10-Q Written Statement of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350 Solely for the purposes of complying with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chief Executive Officer and Chief Financial Officer of Bowl America Incorporated (the "Company"), hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the period ended December 26, 2004, (the "Report") fully complies with the requirements of Section 13(a) of the Securities Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Leslie H. Goldberg Chief Executive Officer Cheryl A. Dragoo Chief Financial Officer Date: February 8, 2005 EXHIBIT 10 Exhibit 10 to Form 10-Q Extension of Employment Agreement with Leslie H. Goldberg December 7, 2004 Leslie H. Goldberg Bowl America Incorporated PO Box 1288 Springfield, VA 22151 Dear Les, This letter is to confirm our agreement extending your employment contract as President of the Company, at the terms in the contract dated June 28, 1999, to the end of the corporation's fiscal year 2005, year end date July 3, 2005. If this meets with your approval, please sign in the place indicated. Sincerely yours, Bowl America Incorporated BY: Warren Braham AGREED TO: Leslie H. Goldberg EXHIBIT 20 Exhibit 20 to FORM 10-Q Press Release issued February 8, 2005 SECOND QUARTER EARNINGS UP AT BOWL AMERICA Today Bowl America Incorporated announced that its fiscal 2005 second quarter earnings were $.18 per share compared to $.17 in the comparable prior year period. The current quarter included a gain on the sale of AT&T Wireless stock of approximately $152,000, without which earnings per share would have been $.16. For the current six months earnings per share were $.24. In fiscal 2004 the Company's gain on the sale of a building was $2,168,117. Excluding the gains from the sale of assets, the earnings for the current and prior six-month periods were $.22 and $.23 respectively. Linage declined on a year-to-date basis in part because the quarter, which ended December 26, 2004, was atypically warm, a condition that usually depresses open-play business. Higher gasoline prices are also thought to impact discretionary recreation spending. Bowl America operates 18 bowling centers and site work for a new 40-lane location in Richmond is continuing. Bowl America Class A Common Stock trades on the American Stock Exchange with the symbol BWLA. The Company's Form 10-Q is available at www.bowlamerica.com. BOWL AMERICA INCORPORATED Results of Operations (Unaudited)
Thirteen Weeks Ended 12/26/2004 12/28/2003 Operating Revenues Bowling and other $ 5,033,421 $ 5,163,791 Food, beverage and merchandise sales 2,078,175 2,143,726 __________ __________ 7,111,596 7,307,517 Operating expenses excluding depreciation and amortization 5,519,119 5,603,871 Depreciation and amortization 402,485 391,647 Net gain on sale of building - - Investment earnings 151,817 - Interest and dividend income 160,319 103,361 Earnings before taxes 1,502,128 1,415,360 Net Earnings $ 950,028 $ 911,860 Weighted average shares outstanding 5,137,773 5,138,574 EARNINGS PER SHARE .18 .17
Twenty-six Weeks Ended 12/26/2004 12/28/2003 Operating Revenues Bowling and other $ 9,256,174 $ 9,489,060 Food, beverage and merchandise sales 3,755,506 3,963,632 __________ __________ 13,011,680 13,452,692 Operating expenses excluding depreciation and amortization 10,683,829 11,121,074 Depreciation and amortization 803,118 786,577 Net gain on sale of building - 2,168,117 Investment earnings 151,817 - Interest and dividend income 264,322 199,342 Earnings before taxes 1,940,872 3,912,500 Net Earnings $ 1,240,872 $ 2,485,800 Weighted average shares outstanding 5,137,773 5,138,574 EARNINGS PER SHARE .24 .48
SUMMARY OF FINANCIAL POSITION (Unaudited) Dollars in Thousands 12/26/2004 12/28/2003 ASSETS Total current assets including cash and short-term investments of $13,863 and $12,132 $14,785 $15,232 Property and investments 27,150 24,741 ______ ______ TOTAL ASSETS $41,935 $39,973 LIABILITIES AND STOCKHOLDERS'EQUITY Total current liabilities $ 3,969 $ 4,051 Other liabilities 2,846 1,853 Stockholders' equity 35,120 34,069 ______ ______ $41,935 $39,973