SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 3, 1998
AMF BOWLING WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-12131 13-3873272
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
8100 AMF Drive, Richmond, Virginia 23111
(Address of principal executive offices) (Zip Code)
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events
On August 3, 1998, the registrant announced certain financial results for the
quarter and six months ended June 30, 1998. A copy of the announcement is
attached as Exhibit 99.1.
Item 7. Financial Statements and Exhibits
Exhibit Description
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99.1 Announcement regarding financial results for the quarter and six
months ended June 30, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 3, 1998 AMF BOWLING WORLDWIDE, INC.
By: /s/ Stephen E. Hare
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Stephen E. Hare
Executive Vice President and
Chief Financial Officer
EXHIBIT 99.1
On August 3, 1998, AMF Bowling Worldwide, Inc. (the "Company") announced
operating results for the six months ended June 30, 1998. The Company reported
revenue of $349.8 million, a 10.0% increase compared with $318.1 million for the
same period of 1997. EBITDA for the first half of 1998 was $71.4 million, a
decrease of 16.8% compared with $85.8 million for the same prior year period.
For the second quarter ended June 30, 1998, the Company reported revenue of
$162.2 million, a 1.0% increase compared with $160.5 million for the same
quarter of 1997. EBITDA for the second quarter was $18.3 million, a 48.6%
decrease compared with $35.6 million for the same quarter of 1997. EBITDA is a
measure of operating cash flow which represents operating income before
interest, taxes, depreciation, amortization and non-operating expenses.
Operating Results
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For the six months ended June 30, 1998, Bowling Centers reported revenue of
$266.5 million, an increase of 32.5% compared with revenue of $201.1 million for
the same period of 1997. EBITDA for the first half of 1998 was $76.9 million, an
increase of 22.1% compared with $63.0 million for the first half of 1997. EBITDA
margin for the first half was 28.9% compared with 31.3% for the same prior year
period.
For the second quarter of 1998, Bowling Centers reported revenue of $116.0
million, an increase of 25.3% compared with revenue of $92.6 million for the
same quarter of 1997. EBITDA was $20.1 million, a 4.7% decrease compared with
$21.1 million for the same quarter of 1997. Operating results were favorably
impacted by the inclusion of 154 bowling centers acquired and one new center
constructed since July 1, 1997. EBITDA margins were 17.3% compared to 22.8% for
the same quarter of 1997.
For the six months ended June 30, 1998, Bowling Products reported revenue of
$92.7 million, a decrease of 25.7% compared with revenue of $124.7 million for
the same period of 1997. EBITDA for the first half was $3.9 million, a decrease
of 87.5% compared with $31.3 million for the same prior year period.
For the second quarter of 1998, Bowling Products reported revenue of $51.6
million, a decrease of 29.0% compared with revenue of $72.7 million for the same
quarter of 1997. EBITDA was $3.8 million, a decrease of 80.3% compared with
$19.3 million for the same quarter of 1997. EBITDA margin of 7.4% compared to
26.5% for the same quarter of 1997.
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During the second quarter of 1998, NCP shipments of 659 units compared to 1,172
units for the same quarter of 1997. During the first half of 1998, NCP shipments
of 1,163 units compared to 2,069 units for the same prior year period. As of
June 30, 1998, the NCP backlog was 1,615 units, a 6.4% decrease compared with
December 31, 1997.
On a consolidated basis, net loss was $32.2 million for the second quarter of
1998 compared with a net loss of $12.3 million in the same quarter of 1997. For
the six months ended June 30, 1998, net loss was $32.8 million compared with a
net loss of $12.2 million.
Acquisition Program
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During the first half of 1998, the Company acquired 66 bowling centers including
46 in the U.S., fifteen in the U.K., and five in Australia. As of June 30, 1998,
the Company operated 533 bowling centers worldwide including 413 in the U.S. and
120 international centers (including 14 joint venture centers).
During the second quarter of 1998, the Company acquired 33 bowling centers
including 17 in the U.S., 13 in the U.K., and 3 in Australia.
Recent Financing Developments
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On May 12, 1998, AMF Bowling, Inc. ("AMF"), the parent of the Company, issued
zero coupon convertible debentures in a private placement to institutional
buyers for net proceeds of approximately $273.1 million. The debentures have a
yield to maturity of 7%, and are convertible at any time prior to maturity in
2018 into shares of AMF common stock at a conversion rate of 8.6734 per $1,000
principal amount of maturity. Under certain conditions, AMF has the option to
call the debentures beginning May 12, 2003. AMF contributed the net proceeds of
the debentures to the Company, and the Company used $249.6 million of the net
proceeds to repay amounts outstanding under the Company's bank facility and
$23.5 million for acquisitions and general corporate purposes.
At June 30, 1998, the Company had total debt of $1,014.3 million compared to
$1,060.6 million at December 31, 1997 and was able to borrow, under its bank
facility, up to an additional $227.0 million to finance acquisitions or for
general corporate purposes, subject to certain conditions.
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Certain statements in this report about the Company's future plans may be
considered forward-looking statements. A number of important factors could cause
actual results to differ materially from those anticipated and projected by
forward-looking information. The factors include, but are not limited to,
changes in acquisition opportunities, the development and growth of new bowling
markets, the sales of products in those markets, the generation of timely and
sufficient cash flow to pay principal and interest on indebtedness, an adverse
legal judgment, an increase in competition, a change in economic conditions
including recent adverse developments in Asia Pacific markets, foreign currency
volatility, and political acts or regulatory changes. Additional information on
factors that could affect the Company's financial results are contained in the
Company's SEC filings, including its Annual Report on Form 10-K for the year
ended December 31, 1997, filed with the U.S. Securities and Exchange Commission.
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<TABLE>
AMF GROUP HOLDINGS INC. AND SUBSIDIARIES (1)
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(in millions)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ----------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C>
Operating revenue $162.2 $160.5 $349.8 $318.1
Operating expenses (2) 143.9 124.9 278.4 232.3
Depreciation and amortization 30.0 22.9 56.8 43.4
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Operating income (loss) (11.7) 12.7 14.6 42.4
Interest expense 25.0 29.8 51.0 57.5
Other non-operating expenses 1.3 0.5 1.5 1.3
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Loss before income taxes (38.0) (17.6) (37.9) (16.4)
Benefit for income taxes (7.1) (5.3) (6.7) (4.2)
------ ------ ------ ------
Net loss before joint ventures (30.9) (12.3) (31.2) (12.2)
Equity in loss of joint ventures, net of tax (1.3) - (1.6) -
------ ------ ------ ------
Net loss $(32.2) $(12.3) $(32.8) $(12.2)
====== ====== ====== ======
Selected Data:
EBITDA (3) $18.3 $35.6 $71.4 $85.8
EBITDA margin 11.3% 22.2% 20.4% 27.0%
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(1) AMF Group Holdings Inc. is a holding company, and its primary assets are
investments in subsidiaries including AMF Bowling Worldwide, Inc. which is
principally engaged in two business segments: (i) operation of bowling
centers and (ii) manufacturing and marketing of bowling products.
(2) Operating expenses represent costs of goods sold, bowling center operating
expenses and selling, general, and administrative expenses.
(3) Represents a measure of operating cash flow defined as operating income
before interest, taxes, depreciation, amortization, and non-operating
expenses.
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AMF GROUP HOLDINGS INC. AND SUBSIDIARIES (1)
SEGMENT INFORMATION (unaudited)
(in millions)
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Period
------- ------- ------- ------- ------
1998 Revenue
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Bowling Centers $150.5 $116.0 $266.5
Bowling Products 41.1 51.6 92.7
Intersegment Elimination (4.0) (5.4) (9.4)
------- ------- ------- ------- ------
TOTAL $187.6 $162.2 $349.8
1997 Revenue
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Bowling Centers $108.5 $92.6 $96.8 $131.2 $429.1
Bowling Products 52.0 72.7 94.2 80.4 299.3
Intersegment Elimination (2.9) (4.8) (3.5) (3.5) (14.7)
------- ------- ------- ------- ------
TOTAL $157.6 $160.5 $187.5 $208.1 $713.7
1998 EBITDA (3)
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Bowling Centers $56.8 $20.1 $76.9
Bowling Products 0.1 3.8 3.9
Corporate (3.8) (5.4) (9.2)
Intersegment Elimination (0.0) (0.2) (0.2)
------- ------- ------- ------- ------
TOTAL $53.1 $18.3 $71.4
1997 EBITDA (3)
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Bowling Centers $41.9 $21.1 $21.0 $46.4 $130.4
Bowling Products 12.0 19.3 23.8 15.7 70.8
Corporate (3.6) (4.7) (3.7) (3.4) (15.4)
Intersegment Elimination (0.1) (0.1) (0.2) (0.0) (0.4)
------- ------- ------- ------- ------
TOTAL $50.2 $35.6 $40.9 $58.7 $185.4
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See notes 1 and 3 to Consolidated Statements of Income.
</TABLE>
