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) November 1, 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 November 1, 1999, the registrant announced certain financial results for the
quarter and nine months ended September 30, 1999. A copy of the announcement is
attached as Exhibit 99.1.
Item 7. Financial Statements and Exhibits
Exhibit Description
- ------- -----------
99.1 Announcement regarding financial results for the quarter and
nine months ended September 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: November 1, 1999 AMF BOWLING WORLDWIDE, INC.
By: /s/ Stephen E. Hare
-----------------------------
Stephen E. Hare
Executive Vice President and
Chief Financial Officer
EXHIBIT 99.1
AMF Bowling Worldwide, Inc. (the "Company") today announced operating results
for the third quarter ended September 30, 1999. The Company reported
consolidated revenue of $182.8 million, a 6.2% increase compared with $172.1
million for the same quarter of 1998. Recurring consolidated EBITDA, before
restructuring and other special charges, decreased 10.0% to $19.0 million from
$21.1 million during the same period in 1998. (EBITDA is a measure of operating
cash flow which represents operating income before interest, taxes,
depreciation, amortization and non-operating expenses.)
For the nine months ended September 30, 1999, AMF reported consolidated revenue
of $546.5 million, a 4.9% increase compared with $521.2 million for the same
period of 1998. Recurring consolidated EBITDA for the first nine months of 1999
was $94.6 million, an increase of 2.3% compared with $92.5 million for the same
period of 1998.
Non-Recurring Restructuring and Other Special Charges
- -----------------------------------------------------
During the third quarter of 1999, the Company recorded restructuring charges of
approximately $7.5 million that were related primarily to a plan to reorganize
and downsize the Bowling Products business in response to market weakness in
Asia Pacific and increased competition which has negatively impacted NCP sales
and profitability. The restructuring plan was developed in conjunction with a
strategic business assessment performed by Bain & Co. and was designed to reduce
the overall volatility of Bowling Products. Actions taken included closing of
plants in the U.S. and Korea, three warehouses in China and one in Taiwan,
closing of four sales offices in China and one in Belgium, and downsizing sales
offices in four other countries. Approximately $1.7 million of the restructuring
charges were non-cash write-downs of assets.
In addition, the strategic assessment by Bain led to programs designed to
improve product line profitability and quality. This assessment was a catalyst
to the Company recording approximately $27.5 million of other special charges.
These charges are non-cash, relate primarily to receivables and inventory and
are included within operating expenses. The Company's bank credit agreement
allows it to exclude the restructuring and other special charges for covenant
purposes.
Bowling Centers Operating Results
- ---------------------------------
For the quarter ended September 30, 1999, Bowling Centers reported total revenue
of $125.9 million, an increase of 7.7% compared with $116.9 million for the same
quarter of 1998. In the U.S., constant center revenue in the third quarter of
1999 increased 7.5%, primarily due to an increase in open play. International
constant center revenue increased 5.7% compared with the third quarter of 1998.
Total revenue was favorably impacted by the inclusion of 7 centers acquired and
one new center constructed since October 1, 1998.
Recurring EBITDA for the third quarter of 1999 was $18.0 million, an increase of
3.4% compared with $17.4 million for the third quarter of 1998. Recurring EBITDA
margin was 14.3% compared with 14.9% for the third quarter of 1998.
For the nine months ended September 30, 1999, Bowling Centers reported revenue
of $427.8 million, an increase of 11.8% compared with revenue of $382.7 million
for the same period of 1998. U.S. and international constant center revenue
increased 2.9% and 1.9%, respectively, in the first nine months of 1999 compared
with the same period of 1998. Recurring EBITDA for the first nine months of 1999
was $101.5 million, an increase of 9.7% compared with $92.5 million for the
first nine months of 1998. Recurring EBITDA margin for the first nine months of
1999 was 23.7% compared with 24.2% for the same prior year period.
Bowling Products Operating Results
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For the quarter ended September 30, 1999, Bowling Products reported revenue of
$60.7 million, an increase of 1.2% compared with revenue of $60.0 million for
the same quarter of 1998. Recurring EBITDA for the third quarter of 1999 was
$5.1 million compared with $4.6 million for the same prior year period.
For the nine months ended September 30, 1999, Bowling Products reported revenue
of $131.6 million, a decrease of 13.8% compared with $152.7 million for the same
period of 1998. Recurring EBITDA for the first nine months of 1999 was $4.5
million compared with $8.5 million for the same prior year period.
NCP shipments for the third quarter were 489 units, which is more than the total
shipped of 422 for the first half of 1999. For the first nine months of 1999,
NCP shipments totaled 911 units compared with 1,846 units for the same prior
year period. Economic difficulties in certain Asia Pacific markets and increased
competition in general continue to impact results. The Bowling Products cost
reduction program, which began in 1998 and continues into 1999, resulted in a
decrease of $7.8 million in selling, general and administrative expenses in the
first nine months of 1999 compared with the same prior year period. However,
these savings were offset by a decline in gross profit resulting from lower
sales volume and competitive pricing.
Consolidated Operating Results
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For the third quarter of 1999, net loss was $103.7 million compared with a net
loss of $31.4 million in the third quarter of 1998. The Company recorded a
valuation allowance for net operating loss and foreign tax credits which
increased net loss by $21.4 million in the third quarter of 1999.
For the nine months ended September 30, 1999, net loss was $162.3 million
compared with a net loss of $64.2 million for the same prior year period.
Recapitalization Plan and Financing Update
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As part of its previously announced recapitalization plan, on July 28, 1999, AMF
Bowling, Inc. (the "Parent") completed a rights offering to existing
stockholders and a tender offer for a portion of its outstanding zero coupon
convertible debentures due 2018 at a discount to carrying value. In the rights
offering, the Parent raised $120 million in equity capital and used
approximately $72 million of the proceeds to fund the purchase of the debentures
resulting in an extraordinary gain of $64.5 million. As a result, the Parent now
has approximately 83,597,550 shares of common stock outstanding. Proceeds of $30
million from the rights offering were contributed as equity by the Parent to the
Company which repaid amounts due under its revolving credit facility.
At September 30, 1999, the Company had total debt of $1,063.5 million, of which
$179.0 million was outstanding under the revolving credit facility, compared to
$1,047.1 million, of which $163.0 million was outstanding under the revolving
credit facility, at December 31, 1998.
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# # # # #
Statements in this earnings release 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, 1998, filed with the U.S. Securities and Exchange Commission.
<PAGE>
<TABLE>
AMF GROUP HOLDINGS INC. AND SUBSIDIARIES (1)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in millions)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- ------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue $182.8 $172.1 $546.5 $521.2
Operating expenses (2) 191.3 151.0 479.4 428.7
Restructuring charges 7.5 -- 7.5 --
Depreciation and amortization 37.6 30.8 103.4 87.6
-------- ------- -------- -------
Operating income (loss) (53.6) (9.7) (43.8) 4.9
Interest expense 27.3 26.0 81.4 76.8
Other non-operating expenses (income) (0.4) 4.6 5.0 6.3
-------- ------- -------- -------
Loss before income taxes (80.5) (40.3) (130.2) (78.2)
Provision (benefit) for income taxes 23.1 (10.2) 26.3 (16.9)
-------- ------- -------- -------
Net loss before joint ventures (103.6) (30.1) (156.5) (61.3)
Equity in loss of joint ventures, net of tax (0.1) (1.3) (5.8) (2.9)
-------- ------- -------- -------
Net loss $ (103.7) $ (31.4) $ (162.3) $ (64.2)
======== ======= ======== =======
Selected Data:
Recurring EBITDA (3) $19.0 (4) $21.1 $94.6 (4) $92.5
Recurring EBITDA margin 10.4% 12.3% 17.3% 17.7%
</TABLE>
(1) AMF Bowling, 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, selling, general and administrative expenses and, in 1999, other
special charges.
(3) EBITDA represents a measure of operating cash flow defined as operating
income before interest, taxes, depreciation, amortization, and
non-operating expenses.
(4) Recurring EBITDA represents EBITDA before non-recurring restructuring and
other special charges of approximately $7.5 million and $27.5 million,
respectively.
<PAGE>
<TABLE>
AMF GROUP HOLDINGS INC. AND SUBSIDIARIES (1)
SEGMENT INFORMATION (unaudited)
(in millions)
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Period
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
1999 Revenue
- ------------
Bowling Centers $172.6 $129.3 $125.9 $427.8
Bowling Products 32.0 38.9 60.7 131.6
Intersegment Elimination (2.0) (7.1) (3.8) (12.9)
------ ------ ------ ------ ------
TOTAL $202.6 $161.1 $182.8 $546.5
1998 Revenue
- ------------
Bowling Centers $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 Recurring EBITDA (3)
- ---------------------
Bowling Centers $60.5 $23.0 $18.0 $101.5
Bowling Products (0.6) (0.0) 5.1 4.5
Corporate (3.5) (3.7) (4.0) (11.2)
Intersegment Elimination (0.0) (0.1) (0.1) (0.2)
------ ------ ------ ------ ------
TOTAL $56.4 $19.2 $19.0 (4) $94.6
1998 EBITDA (3)
- -----------
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, 3 and 4 to Condensed Consolidated Statements of Operations.
