10-Q 1 bwla_10q-093012.htm FORM 10-Q bwla_10q-093012.htm
FORM  10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2012

COMMISSION FILE NUMBER: 1-7829

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405) of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes X  No __

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer __          Accelerated Filer __          Non-Accelerated Filer __          Smaller Reporting Company X

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act)   Yes __    No X

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

 
Shares Outstanding at
November 6, 2012
Class A Common Stock,
 
$.10 par value
3,683,009
   
Class B Common Stock,
 
$.10 par value
1,468,462

 
 

 

PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

  BOWL AMERICA INCORPORATED AND SUBSIDIARIES
  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
  (Unaudited)
 
   
Thirteen Weeks Ended
 
   
September 30,
2012
   
October 2,
2011
 
Operating Revenues:
           
Bowling and other
 
$
3,674,480
   
$
3,898,063
 
Food, beverage and merchandise sales
   
1,512,764
     
1,597,538
 
Total Operating Revenue
   
5,187,244
     
5,495,601
 
                 
Operating Expenses:
               
Employee compensation and benefits
   
2,954,864
     
3,045,399
 
Cost of bowling and other services
   
1,625,701
     
1,831,851
 
Cost of food, beverage and merchandise sales
 
454,277
     
482,344
 
Depreciation and amortization
   
390,387
     
423,767
 
General and administrative
   
263,927
     
254,020
 
Total Operating Expenses
   
5,689,156
     
6,037,381
 
                 
Operating Loss
   
(501,912
)
   
(541,780
)
Interest and dividend income
   
131,219
     
118,437
 
                 
Loss before provision for income tax benefit
   
(370,693
)
   
(423,343
)
Provision for income tax benefit
   
(129,700
)
   
(148,170
)
                 
Net Loss
 
$
(240,993
)
 
$
(275,173
)
                 
Loss per share-basic & diluted
 
$
(.05
)
 
$
(.05
)
                 
Weighted average shares outstanding
   
5,151,471
     
5,151,471
 
                 
Dividends paid
 
$
824,235
   
$
824,235
 
                 
Per share, dividends paid, Class A
 
$
.16
   
$
.16
 
                 
Per share, dividends paid, Class B
 
$
.16
   
$
.16
 

The operating results for the thirteen (13) week period ended September 30, 2012 are not necessarily indicative of results to be expected for the year.  See notes to condensed consolidated financial statements.
 
 
2

 
 
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (CONTINUED)
(Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
 
   
Thirteen Weeks Ended
 
   
September 30,
2012
   
October 2,
2011
 
             
Net Loss
 
$
(240,993
)
 
$
 (275,173
)
Other comprehensive earnings- net of tax
               
Unrealized gain (loss) on available-for-sale securities net of tax (benefit) of $123,879 and ($150,495)
   
 201,265
 
   
 (244,505
)
     
 
       
 
                 
Comprehensive Loss
 
$
(39,728
)
 
$
   (519,678
)
                 

The operating results for the thirteen (13) week period ended September 30, 2012 are not necessarily indicative of results to be expected for the year.

See notes to condensed consolidated financial statements.
 
 
3

 
 
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
 
   
As of
 
   
September 30,
2012
   
July 1,
2012
 
ASSETS
 
CURRENT ASSETS:
           
Cash and cash equivalents
 
$
2,194,413
   
$
2,332,022
 
Short-term investments
   
3,457,488
     
3,863,721
 
Inventories
   
653,640
     
535,412
 
Prepaid expenses and other
   
466,792
     
613,891
 
Income taxes refundable
   
313,518
     
313,518
 
Current deferred income tax
   
64,148
     
-
 
TOTAL CURRENT ASSETS
   
7,149,999
     
7,658,564
 
LAND, BUILDINGS & EQUIPMENT, net of accumulated depreciation of 38,412,298 and 38,021,911
   
22,616,772
     
22,718,526
 
OTHER ASSETS:
               
Marketable investment securities
   
8,635,517
     
8,286,680
 
Cash surrender value-life insurance
   
619,624
     
619,624
 
Other
   
84,780
     
84,780
 
TOTAL OTHER ASSETS
   
9,339,921
     
8,991,084
 
TOTAL ASSETS
 
$
39,106,692
   
$
39,368,174
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES:
               
Accounts payable
 
$
722,589
   
$
722,380
 
Accrued expenses
   
939,310
     
1,004,221
 
Dividends payable
   
849,992
     
824,235
 
Other current liabilities
   
904,834
     
295,978
 
Current deferred income taxes
   
-
     
65,552
 
TOTAL CURRENT LIABILITIES
   
3,416,725
     
2,912,366
 
LONG-TERM DEFERRED COMPENSATION
   
44,217
     
44,217
 
NONCURRENT DEFERRED INCOME TAXES
   
2,850,316
     
2,726,437
 
TOTAL LIABILITIES
   
6,311,258
     
5,683,020
 
                 
COMMITMENTS AND CONTINGENCIES
               
                 
STOCKHOLDERS' EQUITY
               
Preferred stock, par value $10 a share: Authorized and unissued, 2,000,000 shares
    -       -  
Common stock, par value $.10 a share: Authorized, 10,000,000 shares                
Class A issued and outstanding 3,683,009
   
368,301
     
368,301
 
Class B issued and outstanding 1,468,462
   
146,846
     
146,846
 
Additional paid-in capital
   
7,727,264
     
7,727,264
 
Accumulated other comprehensive earnings- Unrealized gain on available-for-sale securities, net of tax
   
2,740,083
     
2,538,818
 
Retained earnings
   
21,812,940
     
22,903,925
 
TOTAL STOCKHOLDERS' EQUITY
   
32,795,434
     
33,685,154
 
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
39,106,692
   
$
39,368,174
 
 
See notes to condensed consolidated financial statements.
 
 
4

 
 
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS  OF CASH FLOWS
(Unaudited)
 
   
Thirteen Weeks Ended
 
   
September 30,
2012
   
October 2,
2011
 
Cash Flows From Operating Activities
           
Net loss
 
$
(240,993
)
 
$
(275,173
)
Adjustments to reconcile net loss to net cash provided by operating activities:
               
Depreciation and amortization
   
390,387
 
   
423,767
 
Changes in assets and liabilities
               
Increase in inventories
   
(118,228
)
   
(154,587
)
Decrease in prepaid & other
   
147,099
     
155,575
 
Increase in income taxes refundable
   
-
     
(2,000
)
Increase in deferred tax asset
   
(129,700
)
   
(148,170
)
Increase in accounts payable
   
209
     
24,732
 
Decrease in accrued expenses
   
(64,911
)
   
(291,144
)
Increase in other current liabilities
   
608,856
     
622,776
 
Net cash provided by operating activities
   
592,719
     
355,776
 
                 
Cash Flows From Investing Activities
               
Expenditures for land, building and equip
   
(288,633
)
   
(211,021
)
Net sales & maturities of short-term Investments
   
406,233
     
1,107,448
 
Purchases of marketable securities
   
(23,693
)
   
(28,782
)
Net cash provided by
               
Investing activities
   
93,907
 
   
867,645
 
                 
Cash Flows From Financing Activities
               
Payment of cash dividends
   
(824,235
)
   
(824,235
)
                 
Net cash used in financing activities
   
(824,235
)
   
(824,235
)
                 
Net (Decrease) increase in Cash and Equivalents
   
(137,609
)
   
399,186
 
                 
Cash and Equivalents, Beginning of period
   
2,332,022
     
2,361,846
 
                 
Cash and Equivalents, End of period
 
$
2,194,413
   
$
2,761,032
 
                 
                 
Supplemental Disclosures of Cash Flow Information
               
Cash Paid During the Period for:
               
Income taxes
 
$
-
   
$
2,000
 
 
See notes to condensed consolidated financial information.
 
 
5

 

BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Weeks Ended
September 30, 2012
(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 July 1, 2012 has been derived from the Company's 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 of the Company’s financial position and results of operations 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 annual report on Form 10-K for the year ended July 1, 2012.

2.  Investments

The Company’s investments are categorized as available-for-sale.  Short-term investments consist of certificates of deposits with maturities of generally three months to one year.  Equity securities consist primarily of telecommunications stocks.  Mutual funds consist of federal agency mortgage backed securities (Ginnie Mae).  The fair value of the Company’s investments at September 30, 2012 and July 1, 2012 were as follows:
 
September 30, 2012
Description
 
Fair Value
   
Cost basis
   
Unrealized Gain
 
Short-term investments
  $ 3,457,488     $ 3,457,488     $ -  
Equity securities
  $ 5,094,633     $ 888,998     $ 4,205,635  
Mutual funds
  $ 3,540,884     $ 3,319,893     $ 220,991  
 
July 1, 2012
Description
 
Fair Value
   
Cost basis
   
Unrealized Gain
 
Short-term investments
  $ 3,863,721     $ 3,863,721     $ -  
Equity securities
  $ 4,788,498     $ 888,998     $ 3,899,500  
Mutual funds
  $ 3,498,182     $ 3,296,201     $ 201,981  

 
6

 

The fair values of the Company’s investments were determined as follows:

September 30, 2012
 
 
Description
 
Quoted
Price for Identical Assets
(Level 1)
   
Significant Other Observable Inputs
(Level 2)
   
Significant Unobservable Inputs
(Level 3)
 
                   
Certificates of deposits
  $ -     $ 3,457,488     $ -  
Equity securities
    5,094,633       -       -  
Mutual funds
    3,540,884       -       -  
                         
Total
  $ 8,635,517     $ 3,547,488     $ -  
 
July 1, 2012
 
 
Description
 
Quoted
Price for Identical Assets
(Level 1)
   
Significant Other Observable Inputs
(Level 2)
   
Significant Unobservable Inputs
(Level 3)
 
                   
Certificates of deposits
  $ -     $ 3,863,721     $ -  
Equity securities
    4,788,498       -       -  
Mutual funds
    3,498,182       -       -  
                         
Total
  $ 8,286,680     $ 3,863,721     $ -  
 
The stocks included in the portfolio as of September 30, 2012 were:
 
82,112  
shares of AT&T
354   shares of Fairpoint Communications
939   shares of Supermedia
40,000   shares of Sprint
11,865   shares of Vodafone
2,520   shares of Manulife
774  
shares of Teradata
4,398  
shares of CenturyLink
4,508  
shares of Frontier Communications
475  
shares of LSI
23,784  
shares of Verizon
4,079  
shares of Windstream
774   shares of NCR
 
The fair value of certificates of deposits is estimated using net present value techniques and comparing the values derived from those techniques to certificates with similar values.

3.  Commitments and Contingencies

The Company’s purchase commitments at September 30, 2012, are for materials, supplies, services and equipment as part of the normal course of business.

4.  Employee benefit plans
 
The Company has two defined contribution plans with Company contributions determined by the Board of Directors.  The Company has no defined benefit plan or other postretirement plan.

 5. New Accounting Standards
 
There were no new accounting pronouncements during the quarter ended September 30, 2012, that would impact the Company.
 
 
7

 

6.  Subsequent Events
 
The Company has evaluated subsequent events through the time of filing these financial statements with the Securities and Exchange Commission on November 14, 2012, and has determined that no material subsequent events have occurred.

7.  Reclassifications
 
Certain previous year amounts have been reclassified to conform with current year presentation.

 
8

 
 
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition that are subject to risks and uncertainties.  All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements.   These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions.  These statements are not guarantees of future performance or development and involve risks, uncertainties and other factors that are in some cases beyond our control.  The forward-looking statements included in this Quarterly Report on Form 10-Q are made as the date hereof.  We are under no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

LIQUIDITY AND CAPITAL RESOURCES
 
The Company views a strong financial position as a major benefit to shareholders and emphasizes payment of dividends as
part of its financial plan.  A portion of earnings has consistently been invested to create a reserve to protect the Company in downturns in business, to capitalize on opportunities for expansion and modernization and to provide a secure source of income.  For these reasons, the Company prefers a conservative approach to investing rather than taking greater risk for possible rapid growth.  The Company balances market volatility by using both fixed income and equity investments in managing its reserve funds.  Any equity security is subject to price fluctuation, however, the stocks held by the Company have relatively low volatility.  The Company has long been invested in a Government National Mortgage Association (“Ginnie Mae”) fund and domestically domiciled stocks with the perceived potential of appreciation, primarily telecommunications stocks.  The Company considers that this diversity also provides a measure of safety of principal.

The Company purchased 5,000 shares of Verizon for $178,200 during the fiscal year ended July 1, 2012.  The remainder of common stocks in our portfolio have come from spin-offs, mergers and acquisitions of AT&T and United Telecommunications (now Sprint) purchased in 1979 and 1984 and one insurance company acquired at no cost when the company demutualized.  While not all stocks in the portfolio are domestic American companies any longer, since the original purchases at an approximate cost of $630,000, we have received approximately $962,000 from mergers and sales and over $3,200,000 in dividends, the majority of which are tax favored in the form of exclusion from federal taxable income.  These marketable securities are carried at their fair value on the last day of each reporting period.  The value of the securities on September 30, 2012 was approximately $5.1 million, an increase of approximately $300,000 from July 1, 2012.  Short-term investments consisting mainly of Certificates of Deposits, cash and cash equivalents totaled $5,652,000 at September 30, 2012 compared to $6,196,000 at July 1, 2012.

The Company’s position in all the above investments is a source of expansion capital.  Potential volatility in the trading prices of the marketable securities held by the Company could impact the Company’s opportunities for expansion.  The Board of Directors reviews the portfolio weekly and any use of this reserve at its quarterly meetings.

In the three-month period ended September 30, 2012, the Company expended approximately $286,000 for the purchase of building, entertainment and restaurant equipment.  The Company has no current plans to obtain third party funding as cash and cash flows are sufficient to finance all contemplated purchases and to meet short-term purchase commitments and operating lease commitments.

The first quarter decreases in the categories of Prepaid expenses and other and of Accrued expenses is attributable primarily to the timing of the payments including compensation, insurance and taxes and for contributions to two benefit plans.

Current liabilities generally increase during the first three quarters of the fiscal year as bowling 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 September 30, 2012, league deposits of approximately $740,000 were included in the current liabilities category.

Cash flow provided by operating activities in the thirteen weeks ended September 30, 2012 was $593,000 which, along with cash on hand, was sufficient to meet day-to-day cash needs and pay dividends.  Cash dividends of approximately $824,000, or $.16 per share, were paid to shareholders during the three-month period ended September 30, 2012.  In September 2012, the Company declared an increase in the regular quarterly dividend to $.165 per share, payable November 14, 2012.  The economic climate is part of the consideration at the Directors’ quarterly reviews of future estimates of cash flows.  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 estimate of future opportunities at such time.
 
 
9

 
 
Overview

The Company is in the entertainment business which, by its nature, has ups and downs based on consumer tastes and whims.  Generally, promotional and open play bowling which depends on the public’s discretionary budget dollars and their choices, accounts for more than half of our business.  An unstable economy can lead many to participate in entertainment that is close to home and relatively inexpensive.  Bowling has those advantages.  However the longer the economy remains unstable, the less willing people are to spend on other than necessities.  Weather is also a factor, especially for casual bowlers.  While extreme heat or rainy weather prompt people to look for indoor activities, heavy snow storms can keep customers from reaching the centers. Postponed league games are made up later in the season, but lost open play income is never recovered.   The Company operates in the Washington DC area where its business would be vulnerable to sequestration or other downsizing of the federal government.  Current economic conditions continue to create challenging times but our response will be helped by having the resources to be able to promote the sport.

RESULTS OF OPERATIONS

For the thirteen-week period ended September 30, 2012 there was a net loss of $240,993, or $.05 loss per share.  For the prior year thirteen-week period ended October 2, 2011, there was a net loss of $275,173, or $.05 loss per share.  Nineteen locations were in operation in both periods.  The bowling business is seasonal and the first quarter which includes summer months is typically the slowest.  Management believes that the length and uncertainty of economic conditions are negatively influencing the public’s discretionary spending.  The operating results for the fiscal 2013 period included in this report are not necessarily indicative of results to be expected for the year.

The following table sets forth the items in our consolidated summary of operations for the fiscal quarter ended September 30, 2012, and October 2, 2011, and the dollar and percentage changes therein.
 
   
Thirteen weeks ended
September 30, 2012 and October 2, 2011
Dollars in thousands
 
 
 
2012
   
2011
   
Change
   
% Change
 
Operating Revenues:
                       
Bowling and other
 
$
 3,674
   
$
3,898
   
$
(224
)
   
(5.7
)
Food, beverage & merchandise sales
   
1,513
     
1,597
     
(84
)
   
(5.3
)
     
5,187
     
5,495
     
(308
)
   
(5.6
)
Operating Expenses:
                               
Compensation & benefits
   
2,955
     
3,045
     
(90
)
   
(3.0
)
Cost of bowling & other
   
1,626
     
1,832
     
(206
)
   
(11.2
)
Cost of food, beverage & merchandise  sales
   
454
     
482
     
   (28
)
   
(5.8
)
Depreciation & amortization
   
390
     
424
     
(34
)
   
(8.0
)
General & administrative
   
264
     
254
     
10
     
3.9
 
     
5,689
     
6,037
     
(348
)
   
(5.8
)
                                 
Operating Loss
   
(502
)
   
(542
)
   
 40
 
   
   7.4
 
                                 
Interest & dividend income
   
131
     
119
     
 12
 
   
 10.1
 
                                 
Loss before taxes
   
(371
)
   
 (423
)
   
  52
 
   
 12.3
 
Income tax benefit
   
(130
)
   
(148
)
   
(18
)
   
(12.1
)
                                 
Net Loss
 
$
(241
)
 
$
(275
)
 
$
 34
 
   
 12.4
 
 
 
10

 

Operating Revenues

Total operating revenues decreased $308,000 to $5,187,000 in the thirteen-week period ended September 30, 2012, compared to a decrease of $155,000 to $5,495,000 in the three-month period ended October 2, 2011.  Bowling and other revenue decreased $224,000 in the current year fiscal quarter compared to a decrease of $109,000 in the comparable prior year quarter.  Food, beverage and merchandise sales were down $84,000 or 5% in the current year quarter due to lower traffic, compared to a decrease of $46,000 or 3% in the prior year comparable quarter.  Cost of sales declined $28,000 or 6% in the current year three-month period due to lower sales.

Operating Expenses

Operating expenses were down $348,000 or 6% in the three-month period ended September 30, 2012 compared to a decrease of $78,000 or 1% in the prior year quarter ended October 2, 2011.  Employee compensation and benefits were down $90,000 or 3% and $46,000 or 2% in each of the fiscal first quarters of 2013 and 2012, respectively.  The Company continued to make scheduling adjustments in response to lower traffic.  In addition, group health insurance costs decreased as a result of lower premiums, fewer participants and the end of costs incurred in establishing health savings accounts.  Included in this category of expense are contributions to our two benefit plans, both of which are defined contribution plans. There is no additional obligation beyond the current year contribution.

Cost of bowling and other services decreased $206,000 or 11% in the quarter ended September 30, 2012 versus a decrease of  $37,000 or 2% in the comparable quarter ended October 2, 2011.  Maintenance and repair costs were down $40,000 or 17% in the current year quarter versus a decrease of $10,000 or 4% in the comparable quarter of fiscal 2012 as fewer high cost repairs were needed in the current year period   Advertising costs decreased $97,000 or 42% in the quarter ended September 30, 2012 as the Company reduced summer months ad campaigns.  For the three month period ended September 30, 2012, utility costs were down $27,000 or 6%.  In the prior year quarter costs were down less than 1%.  Supplies and services expenses were down $15,000 or 7% in the current year thirteen-week period and were flat in the prior year comparable period.  

Depreciation and amortization expense was down 8% in the three-month period ended September 30, 2012, and down  3% in the prior year comparable three-month period as some large assets reached full depreciation.

As stated above, the first quarter of the fiscal year is seasonally the slowest and the quarter ended September 30, 2012 resulted in an operating loss of $502,000.  The comparable quarter last year produced an operating loss of $542,000.

Interest and Dividend Income

Interest and dividend income increased $12,000 or 10% versus a decrease of $26,000 or 18% in the fiscal 2013 and 2012 year-to-date periods, respectively.  Interest income in the current year period declined due to lower balances and interest rates, however dividend income was up in part due to the increase holdings in Verizon, mentioned above.

CRITICAL ACCOUNTING POLICIES

Management has identified accounting for marketable investment securities as a critical accounting policy due to the significance of the amounts included in the Company’s balance sheet under the captions of Short-term investments and Marketable 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 earnings, 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.

Management has identified accounting for the impairment of long-lived assets as a critical accounting policy due to the significance of the amounts included in the Company’s balance sheet under the caption of Land, Buildings and Equipment.  The Company reviews long-lived assets whenever events or changes indicate that the carrying amount of an asset may not be recoverable.  In making such evaluations, the Company compares the expected future cash flows to the carrying amount of the assets.  An impairment loss equal to the difference between the assets’ fair value and carrying value is recognized when the estimated future cash flows are less than the carrying amount.
 
 
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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 September 30, 2012. 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 September 30, 2012, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
 
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BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q

PART II - OTHER INFORMATION

Item 6.  Exhibits.
 
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Press release issued November 14, 2012 (furnished herewith)
   
31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act filed herewith
   
31.2
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act filed herewith
   
32
Written Statement of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350 filed herewith
   
101
Interactive data files for the thirteen weeks ended September 30, 2012 in eXtensible Business Reporting Language
 
 
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: November 14, 2012
By:  /s/ Leslie H Goldberg
 
Leslie H. Goldberg, President
   
   
   
Date: November 14, 2012
By:  /s/ Cheryl A. Dragoo
 
Cheryl A. Dragoo, Controller


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