SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
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) February 26, 1999
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)
<PAGE>
Item 5. Other Events
On February 26, 1999, the registrant announced certain financial results for
1998. A copy of the announcement is attached as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit Description
99.1 Announcement regarding financial results for 1998.
<PAGE>
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: February 26, 1999 AMF BOWLING WORLDWIDE, INC.
By: /s/ Stephen E. Hare
------------------------------
Stephen E. Hare
Acting President and Chief
Executive Officer/ Executive
Vice President and
Chief Financial Officer
EXHIBIT 99.1
On February 26, 1999, AMF Bowling Worldwide, Inc.(the "Company") announced
operating results for the year ended December 31, 1998. The Company reported a
3.4% revenue increase from $713.7 million in 1997 to $738.1 million for 1998.
EBITDA for 1998 was $136.4 million, a decrease of 26.4% compared with $185.4
million for the prior year. (EBITDA is a measure of operating cash flow which
represents operating income before interest, taxes, depreciation, amortization
and non-operating expenses.)
For the fourth quarter ended December 31, 1998, the Company reported revenue of
$215.8 million, a 3.7% increase compared with $208.1 million for the same
quarter of 1997. EBITDA for the fourth quarter was $43.9 million, a 25.2%
decrease compared with $58.7 million for the same quarter of 1997.
Operating Results
Bowling Centers revenue increased 26.1%, from $429.1 million in 1997 to $540.9
million in 1998. Acquisitions of bowling centers favorably impacted 1998 revenue
versus 1997. These favorable results were partially offset by a decline in
constant center revenue of 3.7% in the U.S. during 1998. On a worldwide basis,
constant center revenue was down 1.9% for the year on a constant currency basis.
EBITDA for 1998 was $142.1 million, an increase of 9.0% compared with $130.4
million for 1997. EBITDA margin for the year was 26.3% compared with 30.4% for
1997. The lower EBITDA margin in 1998 was caused primarily by the decline in
constant center revenue which increased certain expense ratios, higher
advertising and promotion expense, as well as the lag effect of achieving cost
reductions in newly acquired centers.
For the fourth quarter of 1998, Bowling Centers reported revenue of $157.1
million, an increase of 19.7% compared with revenue of $131.2 million for the
same quarter of 1997. EBITDA was $46.3 million, a 0.2% decrease compared with
$46.4 million for the same quarter of 1997. EBITDA margins were 29.5% compared
to 35.4% for the same quarter of 1997. Fourth quarter U.S. constant center
revenue declined 1.4%, continuing an improving trend over the last three
quarters. Fourth quarter constant center revenue worldwide increased by 1.7% on
a constant currency basis and represented the best performance quarter of the
year.
Bowling Products reported revenue of $212.5 million, a decrease of 29.0%
compared with revenue of $299.3 million for 1997. EBITDA for the year was $10.7
million, a decrease of 84.9% compared with $70.8 million for 1997.
For the fourth quarter of 1998, Bowling Products reported revenue of $59.8
million, a decrease of 25.6% compared with revenue of $80.4 million for the same
quarter of 1997. EBITDA was $2.2 million, a decrease of 86.0% compared with
$15.7 million for the same quarter of 1997. EBITDA margin of 3.7% compared to
19.5% for the same quarter of 1997.
NCP shipments for the fourth quarter of 1998 totaled 620 units compared with
1,252 units for the comparable prior year quarter. For the year, NCP shipments
totaled 2,466 units compared with 4,576 units for the same 1997 period. As of
December 31, 1998, the NCP backlog was 1,078 units, a 37.5% decrease compared
with December 31, 1997. 87% of the NCP shipment decline during 1998 was
attributed to Asia Pacific markets.
In February 1999, a court in China issued a judgment of $2.8 million against the
Company related to litigation with Harbin Hai Heng Entertainment Co., Ltd. The
Company intends to pursue all available appeals.
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Consolidated Operating Results
The Company has elected to record a valuation allowance for utilization of a
portion of its net operating loss and foreign tax credits which increased the
net loss by $33.2 million in the fourth quarter of 1998 and by $45.6 million for
the year. For the fourth quarter of 1998, net loss was $42.6 million compared
with a net loss of $33.2 million in the same quarter of 1997. For the year ended
December 31, 1998, net loss was $106.8 million compared with a net loss of $55.6
million.
Financing Update
At December 31, 1998, The Company had total debt of $1,047.1 million compared
to $1,060.6 million at December 31, 1997. Of the $355 million revolver facility,
$163 million was outstanding at year-end.
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Statements in this report about the Company's future plans are 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.
<PAGE>
AMF GROUP HOLDINGS INC. AND SUBSIDIARIES (1)
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(in millions, except share data)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue $215.8 $208.1 $738.1 $713.7
Operating expenses (2) 171.9 149.4 601.7 528.3
Depreciation and amortization 32.7 35.7 120.3 102.5
---- ---- ----- -----
Operating income 11.2 23.0 16.1 82.9
Interest expense 25.1 29.2 101.9 118.4
Other non-operating (income) expenses (0.8) 6.2 5.5 8.2
---- --- --- ---
Loss before income taxes (13.1) (12.4) (91.3) (43.7)
Provision (benefit) for income taxes 24.2 (4.0) 7.3 (12.9)
---- ---- --- -----
Net loss before joint (37.3) (8.4) (98.6) (30.8)
ventures/extraordinary items
Equity in loss of joint ventures (5.3) (1.4) (8.2) (1.4)
---- ---- ---- ----
Net loss before extraordinary items (42.6) (9.8) (106.8) (32.2)
Extraordinary items, net of tax -- (23.4) -- (23.4)
------ ----- ------- -----
Net loss $(42.6) $(33.2) $(106.8) $(55.6)
====== ====== ======= ======
Selected Data:
EBITDA (3) $43.9 $58.7 $136.4 $185.4
EBITDA margin 20.3% 28.2% 18.5% 26.0%
</TABLE>
(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.
<PAGE>
AMF GROUP HOLDINGS INC. AND SUBSIDIARIES (1)
SEGMENT INFORMATION (unaudited)
(in millions)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Period
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
1998 Revenue
Bowling Centers $150.5 $116.0 $117.3 $157.1 $540.9
Bowling Products 41.1 51.6 60.0 59.8 212.5
Intersegment Elimination (4.0) (5.4) (4.8) (1.1) (15.3)
---- ---- ---- ---- -----
TOTAL $187.6 $162.2 $172.5 $215.8 $738.1
1997 Revenue
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)
Bowling Centers $56.8 $20.1 $18.9 $46.3 $142.1
Bowling Products 0.1 3.8 4.6 2.2 10.7
Corporate (3.8) (5.4) (2.3) (4.3) (15.8)
Intersegment Elimination (0.0) (0.2) (0.1) (0.3) (0.6)
---- ---- ---- ---- ----
TOTAL $53.1 $18.3 $21.1 $43.9 $136.4
1997 EBITDA (3)
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
</TABLE>
See notes 1 and 3 to Consolidated Statements of Income.
