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Filed pursuant to Rule 424(b)(3)
File No. 333-4877
AMF GROUP INC.
Supplement No. 13 to Prospectus dated August 12, 1996, as supplemented by
Supplement No. 1 dated September 9, 1996
Supplement No. 2 dated September 9, 1996
Supplement No. 3 dated September 10, 1996
Supplement No. 4 dated September 11, 1996
Supplement No. 5 dated September 27, 1996
Supplement No. 6 dated October 10, 1996
Supplement No. 7 dated October 24, 1996
Supplement No. 8 dated November 14, 1996
Supplement No. 9 dated December 20, 1996
Supplement No. 10 dated January 16, 1997
Supplement No. 11 dated January 20, 1997 and
Supplement No. 12 dated January 22, 1997
The date of this Supplement No. 13 is March 6, 1997.
On March 5, 1997, AMF Group Inc. issued the attached earnings release.
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EARNINGS RELEASE
8100 AMF Drive Contact Stephen E. Hare
Richmond, VA 23111 Chief Financial Officer
(804) 730-4401
FOR IMMEDIATE RELEASE
MARCH 5, 1997
AMF BOWLING WORLDWIDE REPORTS AN INCREASE OF 25% IN OPERATING CASH FLOW FOR THE
FOURTH QUARTER
Richmond, VA, March 5, 1997 - AMF Bowling Worldwide today reported revenue of
$179.6 million and operating cash flow (earnings before interest, income taxes,
depreciation and amortization or "EBITDA") of $47.5 million for the fourth
quarter ended December 31, 1996. During the quarter, the Company recorded $3.4
million of non-cash charges to strengthen reserves. Excluding these special
charges, operating cash flow was $50.9 million for the fourth quarter and
represented an increase of 25% over last year. These results compare to
revenue of $137.3 million and operating cash flow of $40.8 million for the
fourth quarter of 1995.
For the year ended December 31, 1996, the Company reported on a pro forma basis
to reflect a full year of operations, revenue of $548.9 million and operating
cash flow of $145.5 million. These results compare to revenue of $564.9
million and operating cash flow of $163.6 million for 1995. The shortfall in
revenue and operating cash flow compared to 1995 was primarily during the first
half of 1996 as a result of lower sales of New Center Products ("NCP") into the
maturing markets of Korea and Taiwan. The second half of 1996 generated higher
revenue and operating cash flow than 1995 primarily as a result of the
acquisition of 57 bowling centers and the improvement in NCP sales into
emerging markets including China.
OPERATING RESULTS BY BUSINESS
- Bowling Centers reports 25% increase in quarterly operating cash
flow boosted by acquisitions of bowling centers.
- Bowling Products reports 38% increase in quarterly operating cash
flow driven by increased NCP sales to China.
AMF's Bowling Centers generated a revenue increase of 25.3% to $94.7 million
and an operating cash flow increase of 23.1% to $30.9 million for the quarter
ended December 31, 1996 versus 1995. EBITDA margin (EBITDA as a percent of
revenue) decreased from 33.2% in 1995 to 32.6% in 1996. During the quarter,
the Company recorded a non-cash charge of $0.6 million to strengthen reserves.
Excluding this special charge, operating cash flow was $31.5 million,
representing an increase of 25% over last year and an EBITDA margin of 33.3%.
For the year ended December 31, 1996, Bowling Centers generated, on a pro forma
basis, a net revenue increase of 5.1% to $307.3 million and an increase in
operating cash flow of 4.7% to $90.9 million. EBITDA margin was substantially
unchanged for 1996 and 1995.
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Page 2 - AMF Bowling Worldwide Reports an Increase of 25% in Operating Cash
Flow for the Fourth Quarter
Revenue and operating cash flow for the fourth quarter and for the year ended
December 31, 1996 were favorably impacted by the inclusion of results for the
57 bowling centers acquired during the year. Operating results for 1996 were
adversely affected by the closing of seven Fair Lanes centers during 1995, the
elimination in 1996 of two bowling centers in Spain and Switzerland included in
1995 which were not acquired by the Company, and severe winter weather in the
U.S. during 1996 which combined to reduce the number of games bowled versus
last year.
AMF's Bowling Products generated a revenue increase of 35.4% to $86.5 million
and an increase in operating cash flow of 21.1% to $19.5 million for the
quarter ended December 31, 1996 versus 1995. EBITDA margin decreased from
25.2% in 1995 to 22.5% in 1996. The Company recorded non-cash charges of $2.8
million during the fourth quarter to strengthen reserves. Excluding these
special charges, operating cash flow was $22.3 million, representing an
increase of 38% over last year and an EBITDA margin of 25.8%. This continued
improvement in operating performance for Bowling Products during the fourth
quarter of 1996 was caused by strong levels of NCP shipments especially to
China.
For the year ended December 31, 1996, Bowling Products generated, on a pro
forma basis, revenue of $252.1 million and operating cash flow of $58.4
million. This compares to revenue of $286.5 million and operating cash flow of
$79.3 million for the year ended December 31, 1995. EBITDA margin for the year
declined from 27.7% in 1995 to 23.2% in 1996 primarily because of lower NCP
sales. For the first half of the year, revenue and operating cash flow lagged
1995 as a result of the maturing state of the NCP markets in Korea and Taiwan.
The second half of 1996 improved versus 1995 with increased NCP sales into
emerging markets such as China more than offsetting declines in Korea and
Taiwan.
ACQUISITION PROGRAM
- AMF acquires 57 bowling centers during 1996.
- Pending acquisition of ARC will increase operations to
approximately 400 bowling centers around the world.
Since May 1996, the Company has launched an acquisition program for bowling
centers in the U.S. and selected international markets. On October 10, 1996,
the Company completed the acquisition of the Bowling Corporation of America
chain consisting of 50 bowling centers from Charan Industries, Inc. For the
year, the Company completed the acquisition of 57 bowling centers in the U.S.
The combined purchase price for these acquisitions was approximately $113
million and was funded with a $40 million equity contribution from its
institutional stockholders, and $73 million of borrowings from the Acquisition
Facility under its Bank Credit Agreement. As a result of these acquisitions,
AMF owned or operated 263 U.S. bowling centers and 78 international bowling
centers at the end of 1996.
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Page 3 - AMF Bowling Worldwide Reports an Increase of 25% in Operating Cash
Flow for the Fourth Quarter
On January 17, 1997, the Company entered into an Agreement and Plan of Merger
with American Recreation Centers, Inc. ("ARC") pursuant to which the Company
will acquire ARC. The Company has agreed to pay $8.50 per share in cash to ARC
stockholders. Including ARC's outstanding debt and the purchase of certain
joint venture interest, the transaction represents a total value of
approximately $70 million. The merger is subject to ARC stockholder approval,
among other things, but is currently anticipated to close during the spring of
1997.
ARC operates 43 bowling centers in six states with revenue of $46.1 million and
operating cash flow of $7.3 million for the fiscal year ended May 29, 1996.
Upon completion of the merger and other pending acquisitions, AMF will own or
operate approximately 400 bowling centers around the world.
FINANCING UPDATE
In January 1997, the Company completed an amendment to its $715 million Bank
Credit Agreement to increase the flexibility and borrowing capacity of its
ongoing acquisition program. In conjunction with the amendment, the Company
issued $65 million of long term debt and used the proceeds to reduce the
outstanding borrowings under its Acquisition Facility. As a result, the
Company increased the availability for borrowings under its Acquisition
Facility to $150 million.
FOURTH QUARTER REVIEW AND OUTLOOK
Stephen E. Hare, Chief Financial Officer, said "Improved fourth quarter revenue
and operating cash flow demonstrated both the success of our ongoing bowling
center acquisition program as well as the rebound of Bowling Products in
establishing strong market positions in attractive markets such as China. The
combination of the upcoming acquisition of ARC, along with an improved backlog
for Bowling Products to begin the year, favorably positions the Company for
growth in 1997."
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AMF Bowling Worldwide, headquartered in Richmond, Virginia, is the largest
owner and operator of bowling centers in the world. AMF is also one of the
world's leading manufacturers and marketers of bowling products.
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FINANCIAL SUMMARY
AMF BOWLING WORLDWIDE(1)
FOR THE QUARTER AND YEAR ENDED
DECEMBER 31, 1996 AND 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
Fourth Quarter Year
-------------- ----
PRO FORMA
1996(2) 1995(3) 1996(4) 1995
------- ------- ------- ----
<S> <C> <C> <C> <C>
REVENUE $179.6 $137.3 $548.9 $564.9
EBITDA(5) 47.5 40.8 145.5 163.6
</TABLE>
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(1) AMF Group Inc.
(2) EBITDA includes special noncash charges of $3.4 million to strengthen
reserves; $0.6 million for Bowling Centers and $2.8 million for Bowling
Products.
(3) Excludes unusual nonrecurring favorable adjustments recorded in the
fourth quarter of 1995 of $2.0 million of revenue and $3.7 million of
EBITDA related to a change in fiscal year and reversal of certain
reserves primarily related to the Fair Lanes acquisition.
(4) Pro forma operating results have been presented to provide a more
meaningful comparison with the prior year. The pro forma results include
operations for the Predecessor Company ("AMF Bowling Group") through
April 30, 1998 and for the Company ("AMF Bowling Worldwide") since May 1,
1996 (the closing date of the Acquisition). Pro forma adjustments
eliminate (i) two bowling centers retained by the Sellers; and (ii) a
one-time charge for special bonus payments of $44 million which was
substantially funded by the Sellers prior to the Acquisition.
(5) Represents a measure of operating cash flow defined as net income before
net interest expense, income taxes, depreciation and amortization, and
other income and expenses, net.
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SEGMENT INFORMATION
AMF BOWLING WORLDWIDE(1)
FOR THE QUARTER AND YEAR ENDED
DECEMBER 31, 1996 AND 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
Fourth Quarter Year
-------------- ----
PRO
FORMA
1996(2) 1995(3) 1996(4) 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
- -------
Bowling Centers $94.7 $75.6 $307.3 $292.3
Bowling Products 86.5 63.9 252.1 286.5
Intersegment Elimination (1.6) (2.2) (10.5) (13.9)
----- ---- ----- ------
TOTAL $179.6 $137.3 $548.9 $564.9
EBITDA(5)
Bowling Centers $30.9 $25.1 $90.9 $86.8
Bowling Products 19.5 16.1 58.4 79.3
Corporate (2.7) 0.0 (2.7) 0.0
Intersegment Elimination (0.2) (0.4) (1.1) (2.5)
----- ---- ---- ----
TOTAL $47.5 $40.8 $145.5 $163.6
</TABLE>
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See notes (1-5) to Financial Summary
