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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) August 2, 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)
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Item 5. Other Events
On August 2, 1999, the registrant announced certain financial results for the
six months ended June 30, 1999. A copy of the announcement is attached as
Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit Description
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99.1 Announcement regarding financial results for the six months ended
June 30, 1999
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 2, 1999 AMF BOWLING WORLDWIDE, INC.
By: /s/ Stephen E. Hare
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Stephen E. Hare
Executive Vice President and
Chief Financial Officer
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EXHIBIT 99.1
AMF Bowling Worldwide, Inc. (the "Company" or "AMF") today announced operating
results for the six months ended June 30, 1999. AMF reported a 4.2% revenue
increase to $363.7 million for the first six months of 1999 from $349.1 million
for the same period of 1998. EBITDA for the first six months of 1999 was $75.6
million, an increase of 6.0% compared with $71.4 million for the same period of
1998. The increase in revenue and EBITDA for the period reflects the
continuation of improvement in Bowling Centers, particularly in the U.S., as a
result of operational initiatives and the inclusion of new centers which were
acquired since the first half of 1998. (EBITDA is a measure of operating cash
flow which represents operating income before interest, taxes, depreciation,
amortization and non-operating expenses.)
For the second quarter ended June 30, 1999, AMF reported revenue of $161.1
million, a 0.4% decrease compared with $161.8 million for the same quarter of
1998. EBITDA for the second quarter was $19.2 million, a 4.9% increase compared
with $18.3 million for the same quarter of 1998.
Operating Results
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For the six months ended June 30, 1999, Bowling Centers reported revenue of
$301.9 million, an increase of 13.6% compared with revenue of $265.8 million for
the same period of 1998. U.S. and international constant center revenue
increased 1.1% and 0.2%, respectively, in the first half of 1999 compared with
the same period of 1998. EBITDA for the first half of 1999 was $83.5 million, an
increase of 11.2% compared with $75.1 million for the first half of 1998. EBITDA
margin for the first half of 1999 was 27.7% compared with 28.3% for the same
prior year period.
For the quarter ended June 30, 1999, Bowling Centers reported revenue of $129.3
million, an increase of 11.9% compared with $115.6 million for the same quarter
of 1998. In the U.S., constant center revenue in the second quarter of 1999
increased 4.5% compared with the second quarter of 1998 primarily due to
increases in open play, food and beverage sales, and ancillary revenue
associated with open play traffic. International constant center revenue
increased 1.7% compared with the second quarter of 1998. Total revenue was
favorably impacted by the inclusion of 18 centers acquired and one new center
constructed since July 1, 1998.
EBITDA for the second quarter of 1999 was $23.0 million, an increase of 25.7%
compared with $18.3 million for the second quarter of 1998. EBITDA margin for
the second quarter of 1999 was 17.8% compared with 15.8% for the second quarter
of 1998. The higher EBITDA margin in 1999 was attributable to the increases in
revenue which resulted in part from AMF's marketing and operating initiatives to
improve customer traffic and certain cost management initiatives which reduced
cost of sales and operating expenses as a percentage of revenue.
For the six months ended June 30, 1999, Bowling Products reported revenue of
$70.9 million, a decrease of 23.5% compared with revenue of $92.7 million for
the same period of 1998. EBITDA for the first half of 1999 was $(0.6) million
compared with $3.9 million for the same prior year period.
For the quarter ended June 30, 1999, Bowling Products reported revenue of $38.9
million, a decrease of 24.6% compared with revenue of $51.6 million for 1998.
EBITDA for the second quarter of 1999 was zero compared with $3.8 million for
the same prior year period.
NCP shipments for the first six months of 1999 totaled 422 units compared with
1,163 units for the same prior year period. Economic difficulties in certain
Asia Pacific markets and increased competition in general continues to
challenge Bowling Products' operations. The Bowling Products cost reduction
program, which began in 1998 and continues into 1999, resulted in a decrease of
$5.5 million in selling, general and administrative expenses in the first six
months of 1999 compared to the same prior year period. However, this
improvement was offset by a decline in gross profit resulting from lower sales
volumes and competitive pricing.
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In June, Bowling Products signed a 3-year joint distribution agreement with
Shanghai Zhonglu Industrial Corporation, a bowling equipment manufacturer in
China. Under the terms of the agreement, Zhonglu will become the exclusive
distributor of AMF products in China, and Bowling Products will be the exclusive
distributor of Zhonglu bowling products outside of China. These agreements
are intended to improve Bowling Products' competitive position both in China and
in other developing markets around the world.
Consolidated Operating Results
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For the six months ended June 30, 1999, net loss was $58.6 million compared with
a net loss of $32.8 million for the same prior year period. Equity in loss of
joint ventures totaled $5.7 million in the first half of 1999 compared to $1.6
million in the same prior year period. The increased loss in equity of joint
ventures was attributable to the Company's Brazilian joint venture results which
were adversely impacted by a currency devaluation.
For the second quarter of 1999, net loss was $46.5 million compared with a net
loss of $32.2 million in the second quarter of 1998.
Recapitalization Plan and Financing Update
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As part of a previously announced recapitalization plan, AMF Bowling, Inc. (the
"Parent"), the Parent of the Company, completed on July 28, 1999 a rights
offering to existing stockholders and a tender offer for a portion of its
outstanding zero coupon convertible debentures due 2018 (the "Debentures") at a
discount. In the rights offering, the Parent raised $120.0 million in equity
capital and issued 24,000,000 shares of common stock at the subscription price
of $5.00 per share. As a result, the Parent now has approximately 83,597,550
shares of common stock outstanding.
In the tender offer, $514,286,000 in aggregate principal amount at maturity of
the debentures have been accepted for payment by the Parent at a price of $140
per $1,000 principal amount at maturity. Approximately $72 million of the
proceeds of the rights offering funded the purchase of the debentures. Proceeds
from the rights offering of $30 million were contributed as equity by the Parent
to the Company which repaid amounts due under its revolving credit facility. The
Parent will use the remainder of the proceeds to pay expenses of the rights
offering and the tender offer and for general corporate purposes.
As part of the recapitalization plan, the lenders have amended the Company's
credit agreement to enable the Company to resume its bowling center acquisition
program on a selective basis and provide greater financial flexibility under the
covenants contained in the credit agreement.
At June 30, 1999, AMF had total debt of $1,057.8 million compared to $1,047.1
million at December 31, 1998. Of the $355 million revolver facility, $176.0
million was outstanding at June 30, 1999. On a pro forma basis reflecting the
recapitalization plan, total debt as of June 30, 1999 would be reduced to
$1,027.8 million.
Current Outlook
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Management believes that consolidated EBITDA for the second half of 1999 will be
less than the first half assuming historical seasonality of U.S. bowling centers
and assuming that Bowling Products does not benefit from a significant
improvement in market conditions.
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# # # # #
Statements in this report about AMF'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, 1998, filed with the U.S. Securities and Exchange Commission.
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AMF GROUP HOLDINGS INC. AND SUBSIDIARIES (1)
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in millions, except share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- -------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue $161.1 $161.8 $363.7 $349.1
Operating expenses (2) 141.9 143.5 288.1 277.7
Depreciation and amortization 32.7 30.0 65.8 56.8
-------- -------- -------- --------
Operating income (loss) (13.5) (11.7) 9.8 14.6
Interest expense 28.2 24.8 54.1 50.8
Other non-operating expenses 2.9 1.5 5.4 1.7
-------- -------- -------- --------
Loss before income taxes (44.6) (38.0) (49.7) (37.9)
Benefit for income taxes 1.7 (7.1) 3.2 (6.7)
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Net loss before joint ventures (46.3) (30.9) (52.9) (31.2)
Equity in loss of joint ventures, net of tax (0.2) (1.3) (5.7) (1.6)
-------- -------- -------- --------
Net loss $(46.5) $(32.2) $(58.6) $(32.8)
======== ======== ======== ========
Selected Data:
EBITDA (3) $ 19.2 $ 18.3 $ 75.6 $ 71.4
EBITDA margin 11.9% 11.3% 20.8% 20.5%
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</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.
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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>
1999 Revenue
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Bowling Centers $172.6 $129.3 $301.9
Bowling Products 32.0 38.9 70.9
Intersegment Elimination (2.0) (7.1) (9.1)
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TOTAL $202.6 $161.1 $363.7
1998 Revenue
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Bowling Centers (2) $150.2 $115.6 $116.9 $156.5 $539.2
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 $187.3 $161.8 $172.1 $215.2 $736.4
1999 EBITDA (3)
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Bowling Centers $ 60.5 $ 23.0 $ 83.5
Bowling Products (0.6) (0.0) (0.6)
Corporate (3.5) (3.7) (7.2)
Intersegment Elimination (0.0) (0.1) (0.1)
-------- -------- -------- -------- --------
TOTAL $ 56.4 $ 19.2 $ 75.6
1998 EBITDA (3)
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Bowling Centers $ 56.8 $ 18.3 $ 17.4 $ 45.4 $137.9
Bowling Products 0.1 3.8 4.6 2.2 10.7
Corporate (3.8) (3.6) (0.8) (3.4) (11.6)
Intersegment Elimination (0.0) (0.2) (0.1) (0.3) (0.6)
-------- -------- -------- -------- --------
TOTAL $ 53.1 $ 18.3 $ 21.1 $ 43.9 $136.4
</TABLE>
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See notes 1, 2 and 3 to Condensed Consolidated Statements of Operations.
