AMF BOWLING INC, 424B4, 1997-11-04

AMF BOWLING INC
424B4, 1997-11-04
RACING, INCLUDING TRACK OPERATION

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<PAGE> 1
Pursuant to Rule 424(b)(4)
Registration No. 333-34099

13,500,000 SHARES

AMF BOWLING, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)

[AMF LOGO]
------------------------

Of the 13,500,000 shares of Common Stock offered, 10,800,000 shares are
being offered hereby in the United States and 2,700,000 shares are being offered
in a concurrent international offering outside the United States. The initial
public offering price and the aggregate underwriting discount per share will be
identical for both Offerings. See "Underwriting". All of the shares of Common
Stock offered are being sold by the Company. After consummation of the
Offerings, certain affiliates of Goldman, Sachs & Co. (collectively, "GSCP")
will beneficially own approximately 52.7% of the shares of Common Stock. As a
result of such ownership and the terms of a stockholders agreement, GSCP will
have the ability to control the election of a majority of the Board of
Directors.

Prior to this offering, there has been no public market for the Common
Stock of the Company. For factors considered in determining the initial public
offering price, see "Underwriting".

SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.

The Common Stock has been approved for listing, subject to notice of
issuance, on the New York Stock Exchange under the symbol "PIN".
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
---------------- ---------------- ----------------
<S> <C> <C> <C>
Per Share..................... $19.50 $1.22 $18.28
Total(3)...................... $263,250,000 $16,470,000 $246,780,000
</TABLE>

- ---------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

(2) Before deducting estimated expenses of $2,448,800 payable by the Company.

(3) The Company has granted the U.S. Underwriters an option for 30 days to
purchase up to an additional 1,620,000 shares at the initial public offering
price per share, less the underwriting discount, solely to cover
over-allotments. Additionally, the Company has granted the International
Underwriters a similar option with respect to an additional 405,000 shares
as part of the concurrent international offering. If such options are
exercised in full, the total initial public offering price, underwriting
discount and proceeds to Company will be $302,737,500, $18,940,500 and
$283,797,000, respectively. See "Underwriting".

------------------------

The shares offered hereby are offered severally by the U.S. Underwriters,
as specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
certificates for the shares will be ready for delivery in New York, New York, on
or about November 7, 1997, against payment therefor in immediately available
funds.

GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
COWEN & COMPANY
SCHRODER & CO. INC.
------------------------
The date of this Prospectus is November 3, 1997.
<PAGE> 2

AMF Bowling intends to furnish to its stockholders annual reports
containing audited financial statements and quarterly reports containing
unaudited interim financial information for the first three fiscal quarters of
each fiscal year.
------------------------

CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERINGS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".

AVAILABLE INFORMATION

AMF Bowling, Inc. ("AMF Bowling") has filed with the Securities and
Exchange Commission (the "Commission") a Registration Statement on Form S-1
(together with all amendments and exhibits, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the common stock, par value $.01 per share, of AMF Bowling (the "Common Stock")
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to AMF Bowling and the Common Stock, reference is
hereby made to the Registration Statement. The Registration Statement, including
all exhibits and schedules thereto, may be inspected without charge at the
public reference facilities maintained by the Commission at the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549 and the
Commission's regional offices at 7 World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of the Registration Statement may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates.

Statements contained in this Prospectus as to the contents of any contract
or other document are not necessarily complete, although the material terms
thereof are described in this Prospectus, and, in each instance, reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statement. Each such statement is qualified by such reference to
such exhibits.

AMF Bowling will be subject to the periodic reporting and other
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). AMF Bowling will fulfill its obligations with respect to
such requirements by filing reports, proxy statements and other information with
the Commission. Such materials may be inspected and copied at the offices of the
Commission and in the manner described above, as well as on the World Wide Web
site maintained by the Commission at http://www.sec.gov. Such materials will
also be available at the offices of The New York Stock Exchange, Inc. (the
"NYSE").

FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements, which are
statements other than historical information or statements of current condition.
Some forward-looking statements may be identified by use of terms such as
"believes", "anticipates", "intends" or "expects". The forward-looking
statements contained in this Prospectus are generally located in the material
set forth under "Prospectus Summary", "Risk Factors", "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business",
but may be found in other locations as well. These forward-looking statements
relate to the plans and objectives of the Company for future operations. In
light of the risks and uncertainties inherent in all future projections, the
inclusion of forward-looking statements in this Prospectus should not be
regarded as a representation by AMF Bowling or any other person that the
objectives or plans of the Company will be achieved. Many

3
<PAGE> 3

factors could cause the Company's actual results to differ materially from those
in the forward-looking statements, including, among other things: (i) the
Company's ability to execute successfully acquisition opportunities and to
integrate acquired operations into its business, (ii) the continued development
and growth of new bowling markets and the Company's ability to continue to
identify those markets and to generate sales of products in those markets before
market saturation, (iii) the risk of adverse political acts or developments in
the Company's existing or proposed markets for its products or in which it
operates its bowling centers, (iv) the Company's ability to retain experienced
senior management, (v) the ability of AMF Bowling and its subsidiaries to
generate sufficient cash flow in a timely manner to satisfy principal and
interest payments on their indebtedness and (vi) the popularity of bowling as an
activity in the United States and abroad. In addition, actual results may also
differ materially from forward-looking statements in this Prospectus as a result
of factors generally applicable to companies in similar businesses, including,
among other things: (i) a decline in general economic conditions, (ii) an
adverse judgment in pending or future litigation and (iii) increased competitive
pressure from current competitors and future market entrants. The foregoing
review of important factors should not be construed as exhaustive and should be
read in conjunction with other cautionary statements that are included in the
Registration Statement. AMF Bowling undertakes no obligation to release publicly
the results of any future revisions it may make to forward-looking statements to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

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<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and financial statements appearing elsewhere in this
Prospectus. As used in this Prospectus, "AMF Bowling" refers to AMF Bowling,
Inc., and the "Company" or "AMF" refers to AMF Bowling and its subsidiaries.
Unless otherwise indicated, all information in this Prospectus assumes that the
over-allotment options granted to the Underwriters are not exercised. Except as
otherwise indicated herein, all pro forma information has been prepared to give
effect to the Acquisition (as hereinafter defined) of AMF as if it had occurred
on January 1, 1996. EBITDA (which represents earnings before net interest
expense, income taxes, depreciation and amortization, and other income and
expenses) is not intended to represent and should not be considered more
meaningful than, or an alternative to, other measures of performance determined
in accordance with generally accepted accounting principles ("GAAP"). The
fragmented nature of the bowling centers business makes it difficult to compile
reliable industry-wide statistics. Accordingly, industry statistics provided in
this Prospectus should be regarded as approximations with a potentially
significant margin of error.

THE COMPANY

AMF is the largest bowling company in the world. The Company operates 447
bowling centers worldwide which generate over 60 million customer visits per
year. AMF is the U.S. market leader with 361 bowling centers, and is also the
largest operator internationally, with 86 bowling centers in nine countries. In
addition, AMF has been a leader in the bowling equipment industry for over 50
years, having revolutionized ten pin bowling with the introduction of the first
automatic pinspotter in 1946. AMF is one of only two bowling equipment
manufacturers that compete on a global basis. Management believes that AMF
bowling equipment accounts for approximately 41% of the world's installed base
of bowling equipment.

The worldwide bowling center and bowling equipment industry generates
approximately $9 billion in annual revenue and includes approximately 13,000
bowling centers in over 80 countries. The U.S. bowling center and bowling
equipment industry generates in excess of $4 billion of revenue annually and
includes approximately 5,900 centers. Over 100 million people participate
annually in bowling worldwide, according to the Federation Internationale des
Quilleurs (the "FIQ"), the official organization of the worldwide bowling
industry. The bowling center industry in both the U.S. and abroad is highly
fragmented. In the U.S., the next closest competitor to AMF's 361 centers has
approximately 111 centers. The next three largest operators collectively account
for approximately 55 of the total 5,900 centers.

An investor group led by GS Capital Partners II, L.P. (together with
affiliated investment funds, "GSCP"), an affiliate of Goldman, Sachs & Co.,
acquired AMF in May 1996 for a total purchase price of approximately $1.37
billion. The investor group appointed a new management team that has
aggressively pursued a three-part strategy:

- consolidate the U.S. bowling center industry,

- build a nationally recognized brand of superior bowling and
entertainment centers, and

- capitalize on the demand for bowling products and centers in certain
international markets.

Management is utilizing the well-recognized AMF name to build the only
national branded network of bowling and entertainment centers in the U.S.
through a series of initiatives. These include introducing innovative new
products, such as bumper bowling and Xtreme(TM) Bowling, upgrading the physical
appearance of centers, and improving the food and beverage offerings. Since May
1996, AMF's management team has grown the number of AMF's U.S. centers from 207
to 361, an increase of approximately 74%, principally through acquisitions.

AMF is also capitalizing on the strong international growth in the demand
for bowling products through direct sales of equipment and the building of new
bowling centers abroad. Strong demand

5
<PAGE> 5

for AMF's New Center Packages ("NCPs"), which include all of the equipment
necessary to outfit one new bowling lane, drove AMF's backlog from 1,426 NCP
units at December 31, 1996 to 2,085 NCP units at October 26, 1997, an increase
of approximately 46%. Over 90% of the Company's NCP backlog is to international
markets such as China, Japan and Germany. Further, AMF is acting to accelerate
the development of bowling in key potential markets. During 1997, AMF entered
into joint ventures to build and operate bowling centers equipped with AMF
bowling products in China and selected Southeast Asian countries, and in Brazil
and Argentina.

BUSINESS STRATEGY

AMF believes that its future growth will depend on the continued success of
its three-part strategy to consolidate the U.S. bowling center industry, build a
nationally recognized AMF brand of superior bowling and entertainment centers,
and capitalize on the demand for bowling products and centers in certain
international markets. The key elements of the strategy are:

CONSOLIDATE THE FRAGMENTED U.S. BOWLING CENTER INDUSTRY. In addition to
the 160 centers that AMF has acquired since May 1996, the Company's dedicated
acquisition team has identified approximately 2,000 potential center acquisition
candidates in the United States. The Company employs a regional clustering
strategy for its U.S. centers and focuses on acquiring centers that either fit
into existing geographic clusters or could be the base for forming new clusters.
Management believes that none of the Company's competitors in the U.S. bowling
industry is pursuing such an active acquisition strategy.

IMPROVE ACQUIRED CENTERS' PROFITABILITY. The Company believes that its
EBITDA margins are among the highest of operators of U.S. bowling center chains.
This belief is based on publicly available information and on the Company's
knowledge of the industry, due to the Company's experience in operating the
largest U.S. bowling center chain, in participating in various industry trade
associations and in evaluating many U.S. bowling centers and chains for possible
acquisition. Following an acquisition, management acts to increase profitability
by cutting costs and introducing programs to increase revenue. Specifically, the
Company improves marketing programs, reduces overhead, optimizes staffing,
implements improved financial controls, centralizes management and maintenance
of equipment, and centralizes purchasing. The Company often makes immediate
capital and other improvements to upgrade the centers it acquires which are
designed to generate increased revenue and to further AMF's goal of creating a
nationally recognized brand of superior bowling and entertainment centers.

BUILD A NATIONALLY RECOGNIZED BRAND OF SUPERIOR BOWLING AND ENTERTAINMENT
CENTERS. AMF believes it offers a superior bowling and entertainment experience
utilizing innovative products such as Xtreme(TM) Bowling, which uses
glow-in-the-dark pins and equipment, black lighting and music; bumper bowling
for children, in which bumpers prevent balls from rolling into the gutter;
computerized, automatic and color scoring; and time period discounts for certain
groups, such as seniors and children. The Company is also increasing concourse
space in certain of its centers for amusement games, billiards and other
activities. AMF is selectively introducing the "Family Fun Fest" bowling center,
which offers expanded state-of-the-art arcade and video games. The Company also
seeks to increase its profile through the sponsorship of Special Olympics
International and by hosting professional bowling tournaments.

BUILD NEW CENTERS. The Company has built new bowling centers in attractive
markets to enhance its Bowling Centers business and also to serve as a showcase
for the products manufactured by its Bowling Products business. These centers
utilize state-of-the-art equipment and present bowling as part of a family
entertainment experience and are an integral part of AMF's efforts to build a
nationally branded network of superior bowling and entertainment centers. For
instance, in August 1997, the Company opened a new 40-lane bowling center at
Chelsea Piers in New York, the first new bowling center in Manhattan in 30
years.

6
<PAGE> 6

IMPROVE FOOD AND BEVERAGE REVENUES. The Company estimates that it has over
60 million customer visits per year in its bowling centers. The Company is
expanding and improving the food and beverage product offerings at many of its
centers to take better advantage of its significant customer traffic. AMF also
capitalizes on purchasing economies of scale. The Company is one of the nation's
leading on-premise accounts for both Anheuser Busch Companies, Inc. and The
Coca-Cola Company.

CAPITALIZE ON GROWING GLOBAL DEMAND FOR BOWLING PRODUCTS. Management
believes that AMF's well-established global brand name, the quality of its
products, and its comprehensive service and strong direct sales force and
distribution network will enable it to take advantage of growing NCP demand
worldwide. The Company is focused on sales of NCPs (which comprised 48% of AMF's
Bowling Products sales in 1996) into selected countries with demonstrated strong
demand for bowling products. AMF's backlog of NCPs increased by approximately
46% from 1,426 units at December 31, 1996 to 2,085 units at October 26, 1997.
Customers outside the U.S. comprise over 90% of the current NCP backlog total,
with the largest portion going to markets such as China, Japan and Germany. In
addition, AMF will continue to acquire and to build international bowling
centers on a selective basis, either to enhance the growth of bowling in
countries which present attractive opportunities for the sale of bowling
products or to enhance AMF's competitive position in a particular country's
bowling center industry.

ACCELERATE THE DEVELOPMENT OF BOWLING IN SELECTED INTERNATIONAL
MARKETS. In addition to the international markets that currently have a high
demand for bowling products, management believes that selected international
markets which are in the early development stage have the potential for high
growth. Examples of such early stage markets are India which has over 25 million
people per lane of installed bowling equipment, Poland which has over 2 million
people per lane, Indonesia which has over 650,000 people per lane, and Brazil
which has 450,000 people per lane. By contrast, mature markets, such as the U.S.
and Korea, have populations per lane of 2,000 and 3,600, respectively. There can
be no assurance that these early stage markets will develop to the same extent
as the United States or Korea, as only a small number of markets have achieved
this level of development. AMF seeks to accelerate the industry's growth in
early stage markets by building showcase centers and conducting promotional
programs. As bowling becomes more popular, local developers and entrepreneurs
build new bowling centers, which are outfitted with equipment, and drive demand
for NCPs. To capitalize on this development cycle, AMF has entered into joint
ventures to build, own and operate up to 20 bowling centers in China and
Southeast Asia and 39 bowling centers in Brazil and Argentina. The Company is
also developing a center in India and pursuing opportunities in Russia and
Poland.

PROVIDE INNOVATIVE AND QUALITY PRODUCTS. AMF expects to continue to
maintain its leadership position in manufacturing by setting industry standards
for quality and innovation. Management believes that AMF has the fastest
pinspotters, the highest scoring lanes and the most durable pins. Since the
development of the first automatic pinspotter over 50 years ago, AMF has been an
innovator in the advancement of such products as automatic scoring, bumpers, and
Xtreme(TM) Bowling. AMF positions its products as high quality and
technologically advanced, allowing it generally to command premium prices.
Management believes that AMF uses its position as an integrated bowling center
operator and bowling products manufacturer to AMF's advantage in testing and
developing product innovations.

INCREASE MODERNIZATION AND CONSUMER PRODUCT SALES. Management expects AMF
to benefit as the worldwide base of bowling centers grows due to the increased
popularity of bowling. AMF's brand name, the large installed base of AMF bowling
equipment, AMF's established direct sales force and distribution network and its
quality products will position AMF to increase sales of Modernization and
Consumer Products. These products, which include modernization equipment,
supplies, spare parts and consumable products, comprised 52% of AMF's Bowling
Products sales in 1996. Furthermore, when AMF acquires or constructs a center
and installs state-of-the-art

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<PAGE> 7

equipment in that center, management believes that competing centers may
purchase Modernization and Consumer Products, often from AMF, to remain viable
competitors to the AMF center.

RECENT FINANCIAL PERFORMANCE

AMF's management has significantly improved financial results since the May
1996 acquisition. Revenue and EBITDA increased by 33.9% to $318.1 million and by
30.4% to $85.8 million, respectively, for the first six months of 1997 as
compared to the pro forma results for the first six months of 1996. Net loss for
the first six months of 1997 was $12.2 million as compared to a pro forma net
loss of $13.5 million for the first six months of 1996. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Consolidated Items -- Net Income (Loss)". Management believes that
AMF's Bowling Centers and Bowling Products businesses have been characterized by
high EBITDA margins and attractive returns on investment. Management believes
that the Company is well-positioned, due to its long established industry
leadership position, the AMF brand, the Company's large installed base and its
strategy, to develop and capitalize on the growth potential of bowling
worldwide.

BACKGROUND

AMF Bowling is a Delaware corporation which was incorporated in 1996 by
GSCP to effect the acquisition of AMF (the "Acquisition"). AMF Bowling was
initially incorporated under the name "AMF Holdings Inc." and was subsequently
renamed "AMF Bowling, Inc."

After the incorporation of AMF Bowling, GSCP sold certain equity interests
in AMF Bowling to investment funds affiliated with The Blackstone Group, Kelso &
Company, Bain Capital Inc. and Citicorp North America, Inc. and to certain
officers and directors of AMF Bowling.

AMF Group Holdings Inc. ("AMF Group Holdings"), a direct, wholly owned
subsidiary of AMF Bowling, acquired substantially all of the assets of AMF's
predecessor (the "Predecessor Company") on May 1, 1996 pursuant to the Stock
Purchase Agreement, dated February 16, 1996, between AMF Group Holdings and the
then-current stockholders of the Predecessor Company, as amended (the "Stock
Purchase Agreement"). The purchase price for the Acquisition was approximately
$1.37 billion.

AMF Bowling's principal executive offices are located at 8100 AMF Drive,
Richmond, Virginia, and the telephone number of AMF Bowling is (804) 730-4000.

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THE OFFERINGS

The offering hereby of 10,800,000 shares of Common Stock initially being
offered in the United States (the "U.S. Offering") and the offering of 2,700,000
shares of Common Stock initially being offered in a concurrent international
offering outside the United States (the "International Offering") are
collectively referred to as the "Offerings". The underwriters for the U.S.
Offering (the "U.S. Underwriters") and the underwriters for the International
Offering (the "International Underwriters") are collectively referred to as the
"Underwriters". The closing of each Offering is conditioned upon the closing of
the other Offering.

<TABLE>
<S> <C>
Common Stock offered by the Company: (1)
United States Offering................................. 10,800,000 shares
International Offering................................. 2,700,000 shares
Total.......................................... 13,500,000 shares
Common Stock to be outstanding after the Offerings....... 57,605,000 shares(1)(2)
NYSE symbol.............................................. "PIN"
Use of proceeds by the Company........................... To repay indebtedness. See
"Use of Proceeds".
</TABLE>

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(1) Assumes that the Underwriters' over-allotment options are not exercised. See
"Underwriting".

(2) Does not include outstanding Stock Options (as hereinafter defined) to
acquire 1,798,000 shares of Common Stock or outstanding Warrants (as
hereinafter defined) to acquire 870,000 shares of Common Stock.

RISK FACTORS

Prospective purchasers of the Common Stock should carefully consider the
factors set forth under "Risk Factors" starting on page 13 as well as the other
information set forth in this Prospectus. The risks of investing in the Common
Stock include the following factors: the Company's ability to implement growth
strategies, characteristics of the bowling industry, seasonality and market
development cycles, the Company's indebtedness, recent net losses, the holding
company structure, dependence on key personnel, control by GSCP, the Company's
international operations, anti-takeover effects of certain certificate of
incorporation and by-law provisions, absence of prior public market and possible
volatility of stock price, shares eligible for future sale, absence of dividends
and dilution.

RECENT DEVELOPMENTS

On October 24, 1997, the Company reported its results of operations for the
quarter and nine months ended September 30, 1997 compared to the results of
operations for the quarter ended September 30, 1996 and the pro forma results of
operations for the nine months ended September 30, 1996. Revenue increased 42.3%
to $187.5 million for the third quarter of 1997 as compared to $131.8 million
for the third quarter of 1996. EBITDA increased 27.0% to $40.9 million for the
third quarter of 1997 as compared to $32.2 million for the third quarter of
1996. Net loss was $10.3 million for the third quarter of 1997 as compared to a
net loss of $5.2 million for the third quarter of 1996.

Revenue increased 36.9% to $505.6 million for the first nine months of 1997
as compared to $369.3 million for the first nine months of 1996. EBITDA
increased 29.3% to $126.7 million for the first nine months of 1997 as compared
to $98.0 million for the first nine months of 1996. Net loss for the first nine
months of 1997 was $22.4 million as compared to a net loss of $18.7 million for
the first nine months of 1996.

Both revenue and EBITDA for the third quarter of 1997 reflect the inclusion
of results of 160 bowling centers acquired and one new bowling center built
since May 1996 through September 30,

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<PAGE> 9

1997, and increased levels of NCP shipments to several international regions.
Net loss for the third quarter of 1997 reflects incremental depreciation and
interest expense related to increased levels of assets and indebtedness under
the Credit Agreement as a result of bowling center acquisitions.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------- -----------------
1997 1996 1997 1996(1)
------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Operating revenues................................... $187.5 $131.8 $505.6 $369.3
Net loss............................................. (10.3) (5.2) (22.4) (18.7)
Selected Data:
EBITDA.......................................... $ 40.9 $ 32.2 $126.7 $ 98.0
</TABLE>

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(1) The information presented with respect to the nine months ended September
30, 1996 is presented on a pro forma basis.

On October 20, 1997, the Company acquired Michael Jordan Golf Company,
Inc., a company formed to build and operate golf practice ranges in select U.S.
locations. In addition, Michael Jordan agreed to become a spokesperson for and
endorser of AMF bowling centers and bowling products under a personal services
contract which grants the Company rights to use Mr. Jordan's image and name in
advertising and marketing campaigns.

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<PAGE> 10

SUMMARY FINANCIAL DATA

The summary financial data set forth below for the fiscal years indicated
were derived from the consolidated pro forma results of AMF Bowling for the year
ended December 31, 1996, and the Predecessor Company's audited combined
financial statements for the years ended December 31, 1995, 1994, 1993, and
unaudited combined financial statements for the year ended December 31, 1992.
The summary financial data include results for the six months ended June 30,
1997, compared to pro forma results for the six months ended June 30, 1996. The
pro forma results set forth below are presented as if the Acquisition had
occurred on January 1, 1996, and are based on the Predecessor Company's
statement of income for the period ending April 30, 1996, AMF Bowling's
statement of income from its inception through the relevant reporting date and
adjustments giving effect to the Acquisition under the purchase method of
accounting. See "Note 3. Pro Forma Results of Operations" in the Notes to
Consolidated Financial Statements and the Notes to Condensed Consolidated
Financial Statements of AMF Bowling. The data should be read in conjunction with
AMF Bowling's Consolidated Financial Statements and Condensed Consolidated
Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations", which appear elsewhere herein.

The summary financial data include operating results expressed in terms of
EBITDA, which represents earnings before net interest expense, income taxes,
depreciation and amortization, and other income and expenses. EBITDA information
is included because the Company understands that such information is a standard
measure commonly reported and widely used by certain investors and analysts.
EBITDA is not intended to represent and should not be considered more meaningful
than, or an alternative to, other measures of performance determined in
accordance with GAAP.

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
YEAR ENDED DECEMBER 31, --------------------------------
-------------------------------------------------------------
PRO FORMA PRO FORMA
AMF AMF AMF
PREDECESSOR COMPANY BOWLING, INC. BOWLING, INC. BOWLING, INC.
------------------------------------------- ------------- ------------- -------------
1992 1993 1994(a) 1995 1996(b) 1996(c) 1997
------ ------ ------- ------ ------------- ------------- -------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenue.......... $391.2 $427.6 $517.8 $564.9 $ 548.9 $ 237.5 $ 318.1
------ ------ ------ ------ ------ ------ ------
Cost of goods sold......... 132.1 153.2 196.0 184.1 173.6 66.5 86.1
Bowling center operating
expenses.................. 103.1 108.5 115.2 166.5 178.8 82.5 116.0
Selling, general and
administrative expenses... 43.2 41.9 57.1 50.8 51.0 22.7 30.2
Depreciation and
amortization.............. 25.5 21.4 24.8 39.1 73.5 34.9 43.4
------ ------ ------ ------ ------ ------ ------
Operating income........... 87.3 102.6 124.7 124.4 72.0 30.9 42.4
Interest expense, gross.... 7.9 5.0 7.4 15.7 106.2 52.2 57.5
Other income (expense),
net....................... 0.1 (0.1) (1.5) 0.2 3.8 3.4 (1.3)
------ ------ ------ ------ ------ ------ ------
Income (loss) before income
taxes..................... 79.5 97.5 115.8 108.9 (30.4) (17.9) (16.4)
Provision (benefit) for
income taxes.............. 15.4 15.1 16.5 12.1 (8.9) (4.4) (4.2)
------ ------ ------ ------ ------ ------ ------
Net income (loss).......... $ 64.1 $ 82.4 $ 99.3 $ 96.8 $ (21.5) $ (13.5) $ (12.2)
====== ====== ====== ====== ====== ====== ======
Net loss per share......... $ (0.55) $ (0.35) $ (0.29)
Supplementary pro forma net
loss per share(d)......... $ (0.12) $ (0.11) $ (0.07)
SELECTED DATA:
EBITDA..................... $112.8 $124.0 $149.5 $163.5 $ 145.5 $ 65.8 $ 85.8
EBITDA margin.............. 28.8% 29.0% 28.9 % 28.9% 26.5% 27.7% 27.0%
Revenue:(e)
Bowling Centers........... $204.5 $192.6 $225.4 $292.3 $ 307.3 $ 147.2 $ 201.1
Bowling Products.......... 195.4 243.6 301.7 286.5 252.1 96.8 124.7
</TABLE>

11
<PAGE> 11

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
YEAR ENDED DECEMBER 31, -------------------------------
----------------------------------------------------
PRO FORMA PRO FORMA
AMF AMF AMF
PREDECESSOR COMPANY BOWLING, INC. BOWLING, INC. BOWLING, INC.
----------------------------------- ------------- ------------- -------------
1992 1993 1994(a) 1995 1996(b) 1996(c) 1997
----- ----- ----- ----- ------------- ------------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
EBITDA:(f)
Bowling Centers................ $65.2 $54.5 $65.8 $86.8 $ 95.6 $48.3 $ 63.0
Bowling Products............... 48.7 71.1 84.6 79.3 62.6 22.9 31.3
New Center Packages sold......... 2,210 3,577 4,941 4,437 3,029 1,152 1,933
New Center Packages backlog, end
of period(g)................... N/A N/A 2,078 940 1,426 1,144 2,182
Number of centers, end of
period......................... 197 190 293 286 341 284 408
Number of lanes, end of period... 5,988 5,896 9,586 9,430 11,782 9,386 14,206
Capital Expenditures:
Routine modernization and
maintenance(h)............... $ 8.3 $ 9.0 $11.4 $13.1 $ 14.5 $ 6.9 $ 12.2
Expansion and acquisition
capital(i)................... 3.8 5.7 6.4 16.9 117.4 3.3 135.6
------ ------ ------ ------ ------ ------ ------
Total.......................... $12.1 $14.7 $17.8 $30.0 $ 131.9 $10.2 $ 147.8
====== ====== ====== ====== ====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
AS OF AS OF JUNE
DECEMBER 31, 1996 30, 1997
----------------------- -------------
AMF AMF
BOWLING, INC. BOWLING, INC.
----------------------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................ $ 7.8 $ (23.3)
Goodwill, net.......................................................... 771.1 766.7
Total assets........................................................... 1,594.0 1,715.6
Total debt............................................................. 1,091.3 1,221.3
Stockholders' equity................................................... 408.8 391.1
Total capitalization................................................... $ 1,500.1 $ 1,612.4
</TABLE>

- ---------------
(a) Includes results of Fair Lanes, Inc., a bowling center operator ("Fair
Lanes"), which operated 106 centers and was acquired on September 29, 1994.

(b) Represents results of operations from January 1, 1996 through December 31,
1996 on a pro forma basis. See "Note 3. Pro Forma Results of Operations" in
the Notes to Consolidated Financial Statements of AMF Bowling as of December
31, 1996.

(c) Represents results of operations from January 1, 1996 through June 30, 1996,
on a pro forma basis. See "Note 3. Pro Forma Results of Operations" in the
Notes to Condensed Consolidated Financial Statements of AMF Bowling as of
June 30, 1997.

(d) Supplementary pro forma net loss per share reflects (i) 13,500,000 shares of
Common Stock issued at $19.50 per share pursuant to the Offerings and (ii)
pro forma interest expense reductions due to an assumed $100 million
reduction in the amount of senior indebtedness and $128.6 million reduction
in the amount of subordinated indebtedness which would have been outstanding
if the Offerings had occurred on January 1, 1996.

(e) Before intersegment eliminations.

(f) Before intersegment eliminations and corporate general and administrative
expenses.

(g) Orders of New Center Packages included in the backlog are subject to
cancellation by customers in the normal course of business. Accordingly, the
Company has experienced, and expects to continue to experience, the
cancellation of a portion of such orders. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Backlog; Recent
NCP Sales". Data is not provided for 1992 and 1993 because the Company does
not maintain this data for such periods.

(h) Defined as capital expenditures for existing product lines and manufacturing
operations and capital expenditures for modernizing and refurbishing bowling
centers.

(i) Includes (i) the construction of centers and (ii) the acquisition of centers
since May 1, 1996. Excludes the acquisition of Fair Lanes and all other
acquisitions prior to May 1, 1996.

12
<PAGE> 12

RISK FACTORS

ABILITY TO IMPLEMENT GROWTH STRATEGIES

The Company's Bowling Centers business has grown, and the Company
anticipates that it will continue to grow, through acquisitions of centers and
improvements at existing centers. There can be no assurance that the Company
will continue to be successful in acquiring centers and improving operations of
acquired and existing centers.

Historically, the Company has financed acquisitions through issuances of
Common Stock, cash on hand and borrowings. The Company anticipates that it will
finance future acquisitions in the same manner. The Credit Agreement (as
hereinafter defined) and Note Indentures (as hereinafter defined) restrict the
Company's ability to incur indebtedness and make certain investments and as a
result may limit the number of centers acquired by the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity", "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Capital Resources", "Business -- Business
Strategy" and "Description of Certain Indebtedness". There can be no assurance
that the Company will generate cash or obtain debt or equity financing on
acceptable terms in amounts sufficient to fund its growth strategies.

The Company also seeks to grow through increased sales of NCPs and
Modernization and Consumer Products. Integral to such increased sales is the
Company's strategy of exploiting increased demand for bowling products in
developed as well as in emerging bowling markets. There can be no assurance that
such increased demand will materialize or that the Company will be able to
successfully exploit such demand. See "-- Seasonality and Market Development
Cycles" and "Business -- Business Strategy".

BOWLING INDUSTRY CHARACTERISTICS

BOWLING CENTERS

In the United States, the operation of bowling centers generally has been
characterized by slightly declining lineage (number of games bowled per lane per
day), offset by increasing average price per game. Total lineage, according to
an industry source, has declined despite an average annual increase in the total
number of people bowling since 1987. This trend is largely a result of a decline
in league participation, partially offset by an increase in recreational (i.e.,
non-league) play, resulting in more people bowling, but bowling less frequently.
Bowling center operators have offset the decrease in overall lineage by
increasing prices and creating additional sources of income. Contrary to the
overall lineage trend in the industry, AMF's U.S. lineage has remained
relatively stable over recent years due to its ability to retain existing league
bowlers and attract new recreational bowlers due to, management believes, the
generally higher quality of AMF's centers. Internationally, although trends vary
by country, certain of the markets in which AMF operates have experienced
increasing competition as they have matured, resulting in declining lineage. AMF
has offset these lineage declines through higher prices and additional focus on
food and beverage and other amusement revenue. There can be no assurance that
AMF will be able to continue to maintain lineage or increase prices in the U.S.
or internationally in the future. See "Business -- AMF Bowling Centers".

In addition, bowling, as both a competitive sport and a recreational
activity, faces competition from numerous alternative activities. The continued
success of AMF's bowling operations is subject to consumers' continued interest
in bowling, the availability and cost of other sport, recreational and
entertainment alternatives and the amount of leisure time, as well as various
other social and economic factors over which AMF has no control. There can be no
assurance that bowling will continue to exhibit its current level of popularity
or that AMF will continue to compete effectively in the industry. See
"Business -- Industry Overview".

13
<PAGE> 13

BOWLING PRODUCTS

The Bowling Products industry has been characterized by relatively stable
sales of Modernization and Consumer Products to the installed base of equipment
operators, and more varied results in sales of New Center Packages to newly
constructed bowling centers. While established bowling markets continue to
produce some NCP sales, the primary driver of NCP sales in recent years has been
the rapid growth experienced in new markets as bowling has become popular in
particular countries and the economics of constructing and operating a bowling
center have become attractive to local developers and entrepreneurs. Continued
growth in AMF's sale of NCPs depends, in part, on similar bowling growth
patterns developing in other emerging bowling markets, such as Eastern Europe,
India, Indonesia and South America, and on AMF's ability to successfully exploit
new demand. Sales of NCPs for 1996 declined substantially from 1995, reflecting
the maturing bowling markets in Taiwan and Korea. There can be no assurance that
future international expansion will occur or, if it does occur, that AMF will be
able to successfully compete in such emerging markets. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Backlog; Recent NCP Sales" and "Business -- AMF Bowling Products".

SEASONALITY AND MARKET DEVELOPMENT CYCLES

Financial performance of Bowling Centers is seasonal in nature, with cash
flows typically peaking in the winter months and reaching their lows in the
summer months. The geographic diversity of AMF's Bowling Centers operations
helps to reduce this seasonality as bowling centers in certain countries in
which AMF operates exhibit different seasonal sales patterns. However, as a
result of the growing number of U.S. centers attributable to the Company's
acquisition program, the seasonality of financial performance of AMF's Bowling
Centers business may be accentuated. See "Business -- Business Strategy".

NCP sales experience significant fluctuations due to changes in demand for
NCPs as certain markets experience high growth followed by market maturity, at
which times sales to that market decline, sometimes rapidly. Management believes
market cycles for individual countries have, in the past, spanned several years,
with periods of high demand for several markets (e.g., Japan, Korea, Taiwan)
which, in AMF's experience, last five years or more. These growth patterns do
not seem to be closely tied to general economic cycles. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Seasonality and Market Development Cycles".

SUBSTANTIAL LEVERAGE; INDEBTEDNESS

The Company is, and will continue to be, highly leveraged as a result of
the substantial indebtedness that it incurred in connection with the Acquisition
and intends to incur to finance acquisitions and expand its operations. As of
June 30, 1997, the Company had total indebtedness of $1,221.3 million and
stockholders' equity of $391.1 million, resulting in a ratio of debt to total
capitalization of approximately 75.7%. Although the Company believes it will be
able to meet its debt obligations, there is no assurance that there will be
adequate cash available to make interest payments under the Company's
indebtedness when they become due. The Company intends to incur additional
indebtedness in the future, subject to limitations imposed by the Note
Indentures and the Credit Agreement. Although AMF Bowling intends to repay
certain indebtedness with the proceeds of the Offerings, it also intends to
incur additional indebtedness to finance acquisitions and expand its operations,
and will therefore remain highly leveraged after giving effect to the Offerings.
See "Capitalization". The Credit Agreement requires the maintenance of certain
financial ratios and imposes certain operating and financial restrictions on the
Company which restrict, among other things, the Company's ability to declare
dividends, redeem stock, incur indebtedness, incur obligations under leases,
create liens, consummate mergers, sell assets, and make capital expenditures,
investments and acquisitions. See "Description of Certain Indebtedness".

14
<PAGE> 14

A principal component of the Company's strategy for future growth is the
acquisition of additional bowling centers, which the Company expects to finance
with the Acquisition Facility (as hereinafter defined) under the Credit
Agreement or, following adoption of the Proposed Amendments (as hereinafter
defined), with the Working Capital Facility (as hereinafter defined) thereunder.
As of October 31, 1997, $59.0 million remained available under the Acquisition
Facility. Actual borrowings must meet certain financial tests under the Credit
Agreement and the Note Indentures. The Company's leverage may adversely affect
its ability to meet these tests, and, as a result, to obtain such financing. See
"-- Ability to Implement Growth Strategies" and "Description of Certain
Indebtedness".

NET LOSSES

The Company recorded a net loss of $21.5 million, on a pro forma basis, in
1996 and a net loss of $12.2 million for the first six months of 1997. There can
be no assurance that the Company will not continue to generate net losses. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Recent Developments", "Selected Financial Data" and the
Consolidated Financial Statements and Condensed Consolidated Financial
Statements of AMF Bowling.

EXTRAORDINARY CHARGES

In accordance with GAAP, the Company will incur after-tax extraordinary
charges totalling $22.7 million in the fourth quarter of 1997 arising from the
Third Amended and Restated Credit Agreement (as hereinafter defined) and the
resulting write-off of costs previously incurred to obtain bank financing for
the Acquisition, the premium associated with the portion of the 12 1/4% Senior
Subordinated Discount Notes Due 2006 of Bowling Worldwide (as hereinafter
defined) expected to be redeemed with the proceeds of the Offerings and the
write-off of the portion of deferred financing costs attributable to the Senior
Subordinated Discount Notes expected to be so redeemed.

HOLDING COMPANY STRUCTURE

AMF Bowling conducts all of its business through subsidiaries and has no
operations of its own. AMF Bowling is dependent on the cash flow of its
subsidiaries and distributions thereof from its subsidiaries to AMF Bowling. The
subsidiaries are separate and distinct legal entities and have no obligation,
contingent or otherwise, to make funds available to AMF Bowling, whether in the
form of loans, dividends or otherwise. In addition, the Credit Agreement
effectively prohibits AMF Bowling Worldwide, Inc., the subsidiary through which
all of the Company's operations are held (which was formerly named AMF Group
Inc.) ("Bowling Worldwide"), from paying, and the Note Indentures restrict the
ability of Bowling Worldwide to pay, dividends. The Credit Agreement is secured
by all of the stock of Bowling Worldwide and certain of its present and future
domestic and international subsidiaries and by substantially all of Bowling
Worldwide's and certain of its present and future domestic subsidiaries' present
and future property and assets. In addition, AMF Bowling's subsidiaries may,
subject to limitations contained in the Credit Agreement and the Note
Indentures, become parties to financing arrangements which contain limitations
on the ability of such subsidiaries to pay dividends or to make loans or
advances to AMF Bowling. In the event of any insolvency, bankruptcy or similar
proceedings of a subsidiary, creditors of such subsidiary would generally be
entitled to priority over AMF Bowling with respect to assets of the affected
subsidiary. See "Description of Certain Indebtedness".

DEPENDENCE ON KEY PERSONNEL

The Company's business is managed by certain key executive officers. The
loss of the services of certain of these executives could have a material
adverse impact on AMF. There can be no assurance that the services of such
personnel will continue to be made available to the Company. The Company does
not maintain key-person insurance with respect to its executive officers.

15
<PAGE> 15

CONTROL BY GSCP

Upon completion of the Offerings, GSCP and The Goldman Sachs Group, L.P.
("The Goldman Sachs Group"), which has a 99% interest in Goldman, Sachs & Co.
("Goldman Sachs"), together will beneficially own 52.7% of the Common Stock.
Richard A. Friedman and Terence M. O'Toole, each of whom is a Managing Director
of Goldman Sachs, and Peter M. Sacerdote, who is a limited partner of The
Goldman Sachs Group, are directors of AMF Bowling, and Mr. Friedman is Chairman
of AMF Bowling. See "Principal Stockholders".

As a result of its ownership of a majority of the outstanding Common Stock
and the terms of the Stockholders Agreement (as hereinafter defined), GSCP has
the ability to control the election of a majority of the Board of Directors of
AMF Bowling (the "Board of Directors"), appoint new management and approve or
block any action requiring the approval of AMF Bowling's stockholders, including
adoption of amendments to AMF Bowling's Restated Certificate of Incorporation
(the "Certificate of Incorporation") and approval of mergers or sales of
substantially all of AMF Bowling's assets, in each case, subject to the
restrictions contained in the Stockholders Agreement. The Stockholders Agreement
also provides for three of the investment funds which are stockholders of AMF
Bowling each to nominate a director, subject to GSCP's consent, and for the
formation of the Executive Committee (as hereinafter defined), which consists of
two directors nominated by GSCP. See "Description of Capital Stock" and
"Principal Stockholders -- Stockholders Agreement".

INTERNATIONAL OPERATIONS

The Company's international operations are subject to the usual risks
inherent in operating abroad, including, but not limited to, risks with respect
to currency exchange rates, economic and political destabilization, other
disruption of markets, restrictive laws and actions by foreign governments (such
as restrictions on transfer of funds, import and export duties and quotas,
foreign customs and tariffs, value added taxes ("VATs") and unexpected changes
in regulatory environments), difficulty in obtaining distribution and support,
nationalization, the laws and policies of the United States affecting trade,
international investment and loans, and foreign tax laws. There can be no
assurance that these factors will not have a material adverse impact on the
Company's ability to increase or maintain its international sales or on its
results of operations. For the six months ended June 30, 1997, 26.1% of Bowling
Centers operations revenue was generated by the Company's international centers.
For the year ended December 31, 1996, 33.8% of AMF's Bowling Centers revenue was
generated by the Company's international centers. For the six months ended June
30, 1997, 59.2% of Bowling Products sales were international sales. For the year
ended December 31, 1996, approximately 62.7% of Bowling Products sales were
international sales. See "Selected Financial Data" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- International
Operations" and "-- Backlog; Recent NCP Sales".

ANTI-TAKEOVER EFFECTS OF CERTAIN CERTIFICATE OF INCORPORATION AND BY-LAWS
PROVISIONS

Certain provisions of the Certificate of Incorporation and the By-Laws of
AMF Bowling (the "By-Laws") may have the effect of delaying, deterring or
preventing a sale or change in control of the Company. Such provisions may also
render the removal of directors and management more difficult. Specifically, the
By-Laws provide for restrictions on who may call a special meeting of
stockholders. In addition, the Certificate of Incorporation authorizes the
issuance of preferred stock, par value $.01 per share ("Preferred Stock"), and
of rights or options entitling holders thereof to purchase from AMF Bowling
securities of AMF Bowling or any other corporation ("Purchase Rights"), in any
case without stockholder approval and upon such terms as the Board of Directors
may determine. The issuance of Preferred Stock or Purchase Rights may have the
effect of delaying, deterring or preventing a sale or change in control of the
Company. The rights of the holders of Common Stock will be subject to, and may
be adversely affected by, the rights of holders

16
<PAGE> 16

of Preferred Stock that may be issued in the future. See "-- Control by GSCP"
and "Description of Capital Stock".

ABSENCE OF PRIOR PUBLIC MARKET FOR THE COMMON STOCK; POSSIBLE VOLATILITY OF
STOCK PRICE

Prior to the Offerings, there has been no public market for the Common
Stock. Although the Common Stock has been approved for listing on the NYSE,
subject to official notice of issuance, there can be no assurance that an active
trading market for the Common Stock will develop or be sustained following the
Offerings or that the market price of the Common Stock will not decline below
the initial public offering price. The initial public offering price was
determined by negotiation between AMF Bowling and the representatives of the
Underwriters based upon several factors and may not be indicative of future
market prices. The price at which the Common Stock will trade will depend upon a
number of factors, some of which are beyond the Company's control. Such factors
include, but are not limited to, the Company's historical and anticipated
operating results, general market and economic conditions, quarterly
fluctuations in the Company's financial and operating results, announcements by
the Company or others and developments affecting the Company, the markets in
which it competes or the bowling industry generally. In addition, the stock
market has from time to time experienced extreme price and volume fluctuations.
These broad market fluctuations may have an adverse effect on the market price
of the Common Stock. See "Underwriting".

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of Common Stock by existing stockholders under Rule 144 ("Rule
144") of the Securities Act or otherwise could have an adverse effect on the
price of the Common Stock. The shares of Common Stock sold in the Offerings will
be eligible for immediate resale, except to the extent acquired by "affiliates"
of the Company, as such term is defined in Rule 144. Additionally, 44,105,000
shares of Common Stock will be eligible for sale in the public market pursuant
to Rule 144, or otherwise, generally 180 days after the effective date of the
Registration Statement of which this Prospectus is a part, upon expiration of
lock-up agreements with the Underwriters. Sales of such shares in the public
market, or the perception that such sales may occur, could adversely affect the
market price of the Common Stock or impair the Company's ability to raise
additional capital in the future through the sale of equity securities. Any
additional shares outstanding upon completion of the Offerings will be eligible
for sale pursuant to Rule 144 upon the expiration of the applicable holding
period. See "Principal Stockholders -- Registration Rights Agreement" and
"Shares Eligible for Future Sale".

ABSENCE OF DIVIDENDS

AMF Bowling has never paid cash dividends on the Common Stock and does not
anticipate paying such dividends in the foreseeable future. See "Dividend
Policy".

DILUTION

Investors purchasing shares of Common Stock in the Offerings will incur
substantial and immediate dilution in the amount of approximately $22.01 in net
tangible book value per share of the Common Stock from the initial public
offering price. See "Dilution".

17
<PAGE> 17

USE OF PROCEEDS

The net proceeds of the Offerings, estimated to be $244.4 million after
deducting the underwriting discount and expenses payable by the Company, will be
used to repay $100 million of senior bank indebtedness and, assuming receipt of
consent to the Proposed Amendments from the lenders under the Credit Agreement,
the remainder is expected to be used to redeem a portion of Bowling Worldwide's
12 1/4% Senior Subordinated Discount Notes Due 2006 at a price of 112.25% of the
accreted value. However, the Company may elect to apply some or all of the
remainder to redemption of a portion of Bowling Worldwide's 10 7/8% Senior
Subordinated Notes Due 2006 at a price of 110.875% of the principal amount
and/or additional repayment of senior bank indebtedness. The Senior Subordinated
Discount Notes do not accrue cash interest prior to March 15, 2001, while
interest on the Senior Subordinated Notes is currently payable in cash. As a
result of the Proposed Amendments, the senior bank indebtedness to be repaid
would remain available for reborrowing and would mature in 2002, and at
September 30, 1997 would have borne interest at a weighted average rate of
8.68%.

DIVIDEND POLICY

AMF Bowling has never paid cash dividends on the Common Stock and does not
anticipate paying such dividends in the foreseeable future. As a holding
company, the ability of AMF Bowling to pay dividends is dependent upon the
ability of its subsidiaries to pay cash dividends or to make other
distributions. See "Risk Factors -- Holding Company Structure". The Credit
Agreement effectively prohibits Bowling Worldwide from paying, and the Note
Indentures restrict the ability of Bowling Worldwide to pay, dividends, and,
accordingly, will limit the ability of AMF Bowling to pay cash dividends to its
stockholders. See "Description of Certain Indebtedness". Any determination to
pay cash dividends in the future will be at the discretion of the Board of
Directors and will depend upon the Company's results of operations, financial
condition, contractual restrictions and other factors deemed relevant at that
time by the Board of Directors. See "Risk Factors -- Absence of Dividends" and
"Risk Factors -- Holding Company Structure".

18
<PAGE> 18

CAPITALIZATION

The following table sets forth the consolidated capitalization of AMF
Bowling at June 30, 1997 and as adjusted as of such date to give effect to (i)
after-tax extraordinary charges totalling $22.7 million arising from the Third
Amended and Restated Credit Agreement and the resulting write-off of costs
previously incurred to obtain bank financing for the Acquisition, the premium
associated with the portion of the Senior Subordinated Discount Notes expected
to be redeemed with the proceeds of the Offerings and the write-off of the
portion of deferred financing costs attributable to the Senior Subordinated
Discount Notes expected to be so redeemed, (ii) the issuance and sale of Common
Stock in September 1997 pursuant to the "overcall" provisions of the
Stockholders Agreement and the Offerings (after deducting the underwriting
discount and estimated expenses of the Offerings) and the application of the net
proceeds therefrom and the issuance and sale of 100,000 shares of Common Stock
in October 1997 to Michael Jordan for $10 per share (the "Jordan Sale
Transaction") in connection with his agreeing to become a spokesperson for and
endorser of AMF bowling centers and bowling products and (iii) the Offerings and
the application of the net proceeds therefrom. See "Use of Proceeds". This table
should be read in conjunction with the Consolidated Financial Statements of AMF
Bowling as of December 31, 1996, and Notes thereto, the unaudited Condensed
Consolidated Financial Statements of AMF Bowling as of June 30, 1997, and Notes
thereto and the other financial information included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1997
-----------------------
PRO FORMA
AFTER
ACTUAL OFFERINGS
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term borrowings:
Current maturities, long-term debt.................................. $ 44.9 $ 44.9
Working capital facility............................................ 30.0 30.0
-------- --------
Total short-term borrowings................................. 74.9 74.9
Long-term debt:
Senior bank debt.................................................... 603.0 503.0
Senior subordinated notes........................................... 250.0 250.0
Senior subordinated discount notes.................................. 291.4 162.8
Mortgage and equipment notes........................................ 2.0 2.0
-------- --------
Total debt.................................................. 1,221.3 992.7
Stockholders' equity:
Preferred stock, par value $.01, no shares authorized, no shares
issued or outstanding prior to the Offerings, and 50,000,000
shares authorized, no shares issued and outstanding after the
Offerings........................................................ N/A --
Common stock, par value $.01, 60,000,000 shares authorized,
42,225,000 shares issued and outstanding prior to the Offerings,
and 200,000,000 shares authorized, 57,605,000 shares issued and
outstanding after the Offerings.................................. 0.4 0.6
Paid-in capital..................................................... 428.5 709.3
Retained deficit.................................................... (31.6) (54.4)
Equity adjustment from foreign currency translation................. (6.2) (6.2)
-------- --------
Total stockholders' equity.................................. 391.1 649.3
-------- --------
Total capitalization........................................ $ 1,612.4 $1,642.0
======== ========
</TABLE>

19
<PAGE> 19

DILUTION

The negative net tangible book value of the Company at June 30, 1997, as
adjusted for the issuance and sale of Common Stock in September 1997 pursuant to
the "overcall" provisions of the Stockholders Agreement (see "Principal
Stockholders -- Stockholders Agreement") and pursuant to the Jordan Sale
Transaction in October 1997, was approximately $(387.7) million, or $(8.79) per
share. Negative net tangible book value per share represents the amount of total
tangible assets less total liabilities, divided by the number of shares of
Common Stock then outstanding. Without taking into account any changes in net
tangible book value attributable to operations after June 30, 1997, after giving
effect to the sale of the Common Stock offered in the Offerings, the application
of the net proceeds therefrom as described under "Use of Proceeds" and the
after-tax extraordinary charges totalling $22.7 million described under
"Capitalization", the pro forma negative net tangible book value at June 30,
1997 would have been $(144.5) million, or $(2.51) per share of Common Stock.
This represents an immediate increase in pro forma net tangible book value of
$6.28 per share of Common Stock to existing stockholders and an immediate
dilution of $22.01 per share of Common Stock to purchasers of Common Stock in
the Offerings. The following table illustrates such per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share................................. $19.50
Negative net tangible book value per share before the Offerings....... $ (8.79)
Increase per share attributable to the Offerings...................... 6.28
------
Pro forma negative net tangible book value per share after the
Offerings............................................................. (2.51)
------
Net tangible book value dilution per share to new investors(1).......... $22.01
======
</TABLE>

- ---------------
(1) Dilution is determined by subtracting pro forma net tangible book value per
share after the Offerings from the initial public offering price per share
of Common Stock of $19.50.

The following table compares, on a pro forma basis as of June 30, 1997,
giving effect to the issuance and sale of Common Stock pursuant to the
"overcall" provisions of the Stockholders Agreement in September 1997 and
pursuant to the Jordan Sale Transaction in October 1997, and the number of
shares of Common Stock purchased and the total consideration paid by the
existing stockholders with the number of shares of Common Stock purchased and
the total consideration paid by the new investors in the Offerings:

<TABLE>
<CAPTION>
TOTAL CONSIDERATION
SHARES PURCHASED ------------------------- AVERAGE
---------------------- AMOUNT PRICE PER
NUMBER PERCENT (IN MILLIONS) PERCENT SHARE
---------- ------- ------------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders............... 44,105,000 76.6% $ 458.8 63.5% $ 10.40
New investors....................... 13,500,000 23.4 263.3 36.5 19.50
---------- ----- ------- -----
Total............................... 57,605,000 100.0% $ 722.1 100.0%
========== ===== ======= =====
</TABLE>

The foregoing tables do not assume the exercise of any of the Warrants or
Stock Options. After giving effect to the exercise of the Warrants and Stock
Options, there will be further dilution in the aggregate to new investors. See
"Certain Transactions" and "Note 1. Organization" and "Note 18. Related Parties"
in the Notes to Consolidated Financial Statements of AMF Bowling as of December
31, 1996.

20
<PAGE> 20

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following pro forma statement of income of AMF Bowling is presented for
the twelve months ended December 31, 1996, as if the Acquisition had occurred on
January 1, 1996. AMF Bowling's pro forma statement of income for the twelve
months ended December 31, 1996, is based on the Predecessor Company's statement
of income for the four-month period ending April 30, 1996, which appears
elsewhere herein, AMF Bowling's statement of income for the period ended
December 31, 1996, and adjustments giving effect to the Acquisition under the
purchase method of accounting.

The Pro Forma Statement of Income and the accompanying notes should be read
in conjunction with the Consolidated Financial Statements of AMF Bowling as of
December 31, 1996, and accompanying notes, which appear elsewhere in this
Prospectus.

The Pro Forma Statement of Income does not purport to be indicative of AMF
Bowling's results that actually would have been obtained had the Acquisition
been consummated as of January 1, 1996 and for the period presented, nor are
they indicative of AMF Bowling's results of operations or financial condition
for any future period or date.

PRO FORMA STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
PREDECESSOR PRO FORMA
HISTORICAL COMPANY AMF BOWLING, INC.
AMF BOWLING, INC. FOUR MONTHS TWELVE MONTHS
PERIOD ENDED ENDED PRO FORMA ENDED
12/31/96(a) 4/30/96 ADJUSTMENTS 12/31/96
----------------- ----------- ----------- -------------------
<S> <C> <C> <C> <C>
Operating revenue................. $ 384.8 $ 164.9 $ (0.8)(b) $ 548.9
------ ------ ------ ------
Operating expenses:
Cost of goods sold.............. 130.5 43.1 -- 173.6
Bowling center operating
expenses...................... 123.7 80.2 (25.1)(b)(c) 178.8
Selling, general and
administrative expenses....... 35.1 35.5 (19.6)(b)(c) 51.0
Depreciation and amortization... 49.4 15.1 9.0(d) 73.5
------ ------ ------ ------
Total operating expenses...... 338.7 173.9 (35.7) 476.9
------ ------ ------ ------
Operating income (loss)....... 46.1 (9.0) 34.9 72.0
Nonoperating expenses:
Interest expense................ 78.0 4.5 23.7(e) 106.2
Other expenses, net............. 1.9 0.7 -- 2.6
Interest income................. (5.8) (0.6) -- (6.4)
------ ------ ------ ------
Income (loss) before income
taxes........................... (28.0) (13.6) 11.2 (30.4)
Provision (benefit) for income
taxes........................... (8.5) (1.7) 1.3(f) (8.9)
------ ------ ------ ------
Net income (loss)............. $ (19.5) $ (11.9) $ 9.9 $ (21.5)
====== ====== ====== ======
</TABLE>

- ---------------
(a) For the period from the inception date of January 12, 1996 through December
31, 1996, which includes results of operations of the acquired business from
May 1, 1996 through December 31, 1996.

(b) To reflect the impact of AMF Bowling not acquiring in the Acquisition the
operations of one bowling center in Switzerland and one bowling center in
Spain.

(c) To eliminate a one-time charge of $44.0 million for special bonuses and
payments made by the owners of the Predecessor Company in April 1996.

(d) To reflect the increase in depreciation and amortization expense resulting
from the allocation of the purchase price to fixed assets and goodwill and a
change in the method of depreciation of fixed assets. The Predecessor
Company principally used the double declining balance method. The amount of
the pro forma adjustment for depreciation was determined using the
straight-line method over the estimated lives of the assets acquired.
Goodwill is being amortized over 40 years.

(e) To reflect the incremental interest expense associated with the issuance of
debt which partially funded the Acquisition.

(f) To give effect to the change in status of the U.S. and international
subsidiaries of AMF Bowling from S corporations to taxable corporations
under the U.S. federal tax laws upon consummation of the Acquisition.

21
<PAGE> 21

SELECTED FINANCIAL DATA

The selected financial data set forth below for the fiscal years indicated
were derived from AMF Bowling's audited consolidated financial statements for
the period ended December 31, 1996, and the Predecessor Company's audited
combined financial statements for the four months ended April 30, 1996, and the
years ended December 31, 1995, 1994, 1993, and its unaudited combined financial
statements for the year ended December 31, 1992. The selected financial data
include results for the six months ended June 30, 1997, compared to pro forma
results for the six months ended June 30, 1996. The consolidated pro forma
results set forth below are presented as if the Acquisition had occurred on
January 1, 1996, and are based on the Predecessor Company's statement of income
for the period ending April 30, 1996, AMF Bowling's statement of income from its
inception through the relevant reporting date and adjustments giving effect to
the Acquisition under the purchase method of accounting. See "Note 3. Pro Forma
Results of Operations" in the Notes to Consolidated Financial Statements and the
Notes to Condensed Consolidated Financial Statements of AMF Bowling. The data
should be read in conjunction with AMF Bowling's Consolidated Financial
Statements and Condensed Consolidated Financial Statements, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
appear elsewhere herein.

The selected financial data include operating results expressed in terms of
EBITDA, which represents earnings before net interest expense, income taxes,
depreciation and amortization, and other income and expenses. EBITDA information
is included because the Company understands that such information is a standard
measure commonly reported and widely used by certain investors and analysts.
EBITDA is not intended to represent and should not be considered more meaningful
than, or an alternative to, other measures of performance determined in
accordance with GAAP.

<TABLE>
<CAPTION>
FOUR MONTHS
SIX MONTHS ENDED ENDED
YEAR ENDED DECEMBER 31, JUNE 30, APRIL 30,
-------------------------------------------------------------- --------------------- -----------
PRO FORMA PRO FORMA
AMF AMF AMF AMF
BOWLING, BOWLING, BOWLING, BOWLING, PREDECESSOR
PREDECESSOR COMPANY INC. INC. INC. INC. COMPANY
---------------------------------------- --------- ------- ---------- ------- -----------
1992 1993 1994(a) 1995 1996(b) 1996(c) 1996(e) 1997 1996(d)
------- ------- ------- ------- --------- ------- ---------- ------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenue.......... $ 391.2 $ 427.6 $517.8 $ 564.9 $ 548.9 $384.8 $ 237.5 $318.1 $ 164.9
----- ----- ----- ----- ------ ----- ----- ----- -----
Cost of goods sold......... 132.1 153.2 196.0 184.1 173.6 130.5 66.5 86.1 43.1
Bowling center operating
expenses.................. 103.1 108.5 115.2 166.5 178.8 123.7 82.5 116.0 80.2
Selling, general and
administrative expenses... 43.2 41.9 57.1 50.8 51.0 35.1 22.7 30.2 35.5
Depreciation and
amortization.............. 25.5 21.4 24.8 39.1 73.5 49.4 34.9 43.4 15.1
----- ----- ----- ----- ------ ----- ----- ----- -----
Operating income (loss).... 87.3 102.6 124.7 124.4 72.0 46.1 30.9 42.4 (9.0)
Interest expense, gross.... 7.9 5.0 7.4 15.7 106.2 78.0 52.2 57.5 4.5
Other income (expense),
net....................... 0.1 (0.1) (1.5) 0.2 3.8 3.9 3.4 (1.3) (0.1)
----- ----- ----- ----- ------ ----- ----- ----- -----
Income (loss) before income
taxes..................... 79.5 97.5 115.8 108.9 (30.4) (28.0) (17.9) (16.4) (13.6)
Provision (benefit) for
income taxes.............. 15.4 15.1 16.5 12.1 (8.9) (8.5) (4.4) (4.2) (1.7)
----- ----- ----- ----- ------ ----- ----- ----- -----
Net income (loss).......... $ 64.1 $ 82.4 $ 99.3 $ 96.8 $ (21.5) $(19.5) $ (13.5) $(12.2) $ (11.9)
===== ===== ===== ===== ====== ===== ===== ===== =====
Net loss per share......... $ (0.55) $(0.49) $ (0.35) $(0.29)
Supplementary pro forma net
loss per share(f)......... $ (0.12) $(0.08) $ (0.11) $(0.07)
</TABLE>

22
<PAGE> 22

FOUR MONTHS
SIX MONTHS ENDED ENDED APRIL
YEAR ENDED DECEMBER 31, JUNE 30, 30,
------------------------------------------------------------ ------------------- -----------
PRO FORMA PRO FORMA
AMF AMF AMF AMF
BOWLING, BOWLING, BOWLING, BOWLING, PREDECESSOR
PREDECESSOR COMPANY INC. INC. INC. INC. COMPANY
------------------------------------- --------- ------- --------- ------- -----------
1992 1993 1994(a) 1995 1996(b) 1996(c) 1996(e) 1997 1996(d)
------ ------ ------- ------ --------- ------- --------- ------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED DATA:
EBITDA......................... $112.8 $124.0 $149.5 $163.5 $ 145.5 $95.5 $ 65.8 $ 85.8 $ 6.1
EBITDA margin.................. 28.8% 29.0% 28.9 % 28.9% 26.5% 24.8% 27.7% 27.0 % 3.7%
Revenue: (g)
Bowling Centers............... $204.5 $192.6 $225.4 $292.3 $ 307.3 $ 147.2 $201.1
Bowling Products.............. 195.4 243.6 301.7 286.5 252.1 96.8 124.7
EBITDA: (h)
Bowling Centers............... $ 65.2 $ 54.5 $ 65.8 $ 86.8 $ 95.6 $ 48.3 $ 63.0
Bowling Products.............. 48.7 71.1 84.6 79.3 62.6 22.9 31.3
New Center Packages sold....... 2,210 3,577 4,941 4,437 3,029 1,152 1,933
New Center Packages backlog,
end of period(i).............. N/A N/A 2,078 940 1,426 1,144 2,182
Number of centers, end of
period........................ 197 190 293 286 341 284 408
Number of lanes, end of
period........................ 5,988 5,896 9,586 9,430 11,782 9,386 14,206
Capital Expenditures:
Routine modernization and
maintenance(j).............. $ 8.3 $ 9.0 $ 11.4 $ 13.1 $ 14.5 $ 6.9 $ 12.2
Expansion and acquisition
capital(k).................. 3.8 5.7 6.4 16.9 117.4 3.3 135.6
----- ----- ----- ----- ------ ----- -----
Total......................... $ 12.1 $ 14.7 $ 17.8 $ 30.0 $ 131.9 $ 10.2 $147.8
===== ===== ===== ===== ====== ===== =====
</TABLE>

AS OF AS OF
DECEMBER 31, JUNE 30,
---------------------------------------------------- ------------
AMF AMF
BOWLING, BOWLING,
PREDECESSOR COMPANY INC. INC.
------------------------------------ ------------ ------------
1992 1993 1994(a) 1995 1996 1997
------ ------ ------ ------ ------------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital(l)................................... $ 15.6 $ 18.9 $ 16.9 $ 29.2 $ 7.8 $ (23.3)
Goodwill, net........................................ -- -- -- -- 771.1 766.7
Total assets......................................... 231.1 228.2 410.2 400.4 1,594.0 1,715.6
Total debt........................................... 98.0 75.7 186.1 167.4 1,091.3 1,221.3
Stockholders' equity................................. 75.8 88.6 132.4 161.5 408.8 391.1
Total capitalization................................. 173.8 164.3 318.5 328.9 1,500.1 1,612.4
</TABLE>

- ---------------
(a) Includes results of Fair Lanes, which operated 106 centers and was acquired
on September 29, 1994.
(b) Represents results of operations from January 1, 1996 through December 31,
1996 on a pro forma basis. See "Note 3. Pro Forma Results of Operations" in
the Notes to Consolidated Financial Statements of AMF Bowling as of December
31, 1996.
(c) For the period from the inception date of January 12, 1996 through December
31, 1996, which includes results of operations of the acquired business from
May 1, 1996 through December 31, 1996.
(d) Represents results of operations from January 1, 1996 through April 30,
1996.
(e) Represents results of operations from January 1, 1996 through June 30, 1996,
on a pro forma basis. See "Note 3. Pro Forma Results of Operations" in the
Notes to Condensed Consolidated Financial Statements of AMF Bowling as of
June 30, 1997.
(f) Supplementary pro forma net loss per share reflects (i) 13,500,000 shares of
Common Stock issued at $19.50 per share pursuant to the Offerings and (ii)
pro forma interest expense reductions due to an assumed $100 million
reduction in the amount of senior indebtedness and $128.6 million reduction
in the amount of subordinated indebtedness which would have been outstanding
if the Offerings had occurred on January 1, 1996.
(g) Before intersegment eliminations.
(h) Before intersegment eliminations and corporate, general and administrative
expenses.
(i) Orders of New Center Packages included in the backlog are subject to
cancellation by customers in the normal course of business. Accordingly, the
Company has experienced, and expects to continue to experience, the
cancellation of a portion of such orders. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Backlog; Recent
NCP Sales". Data is not provided for 1992 and 1993 because the Company does
not maintain this data for such periods.
(j) Defined as capital expenditures for existing product lines and manufacturing
operations and capital expenditures for modernizing and refurbishing bowling
centers.
(k) Includes (i) the construction of centers and (ii) the acquisition of centers
since May 1, 1996. Excludes the acquisition of Fair Lanes and all other
acquisitions prior to May 1, 1996.
(l) Predecessor Company amounts reflect elimination of affiliates receivables
and payables.

23
<PAGE> 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

BACKGROUND

This discussion should be read in conjunction with the information
contained under "Selected Financial Data" and in AMF Bowling's Consolidated
Financial Statements and Condensed Consolidated Financial Statements included
elsewhere herein.

Management believes that a comparison of the results of operations for the
six months ended June 30, 1997 and 1996, and the years ended December 31, 1996
and 1995, on a pro forma basis, is more meaningful than a comparison on an
historical basis. This is due primarily to significant changes in depreciation
and amortization that result from the application of the purchase method of
accounting for the Acquisition and from the increased interest expense due to
the debt incurred related to the Acquisition. Discussion of the results of
Predecessor Company operations for the years ended December 31, 1995 and 1994,
are on an historical basis. See "Note 3. Pro Forma Results of Operations" in the
Notes to Consolidated Financial Statements of AMF Bowling as of December 31,
1996 and the Notes to Condensed Consolidated Financial Statements as of June 30,
1997.

To facilitate a meaningful comparison, in addition to discussing the
consolidated results of the Company, certain portions of this Management's
Discussion and Analysis of Financial Condition and Results of Operations discuss
results of Bowling Centers and Bowling Products separately.

The results of Bowling Centers, Bowling Products and the consolidated group
of companies are set forth below. The two European centers that were not
acquired by the Company as part of the Acquisition, as discussed in "Note 1.
Organization" in the Notes to Consolidated Financial Statements of AMF Bowling
as of December 31, 1996, are included in the 1996 actual Predecessor Company
results and excluded from 1996 pro forma results. The two centers have no
material impact on the Company's financial statements or on the information
presented in this section.

For 1995, Bowling Centers adopted a calendar year end; accordingly, the
Bowling Centers results of operations for the year ended December 31, 1995
include the results of U.S. operations for the period from December 26, 1994
through December 31, 1995. Total revenue for the period from December 26, 1994
through December 31, 1994 was approximately $2.0 million.

The business segment results presented below are before intersegment
eliminations since the Company's management believes that this will provide a
more accurate comparison of performance by segment from year to year. The
intersegment eliminations are not material. Interest expense is presented on a
gross basis.

RECENT DEVELOPMENTS

24
<PAGE> 24

Both revenue and EBITDA for the third quarter of 1997 reflect the inclusion
of results of 160 bowling centers acquired and one new bowling center built
since May 1996 through September 30, 1997, and increased levels of NCP shipments
to several international regions. Net loss for the third quarter of 1997
reflects incremental depreciation and interest expense related to increased
levels of assets and indebtedness under the Credit Agreement as a result of
bowling center acquisitions.

- ---------------

(1) The information presented with respect to the nine months ended September
30, 1996 is presented on a pro forma basis.

PERFORMANCE BY BUSINESS SEGMENT

BOWLING CENTERS

Bowling Centers derives its revenue and profits from three principal
sources: (i) bowling, (ii) food and beverage and (iii) other sources, such as
shoe rental, amusement games, billiards and pro shops. In 1996, bowling, food
and beverage and other revenue represented 62%, 24% and 14% of total Bowling
Centers revenue, respectively.

25
<PAGE> 25

The results shown below reflect both U.S. and international Bowling Centers
operations.

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
YEAR ENDED DECEMBER 31, ---------------------------
---------------------------------
PRO FORMA PRO FORMA
PREDECESSOR AMF AMF AMF
COMPANY BOWLING, INC BOWLING, INC BOWLING, INC
------------------ ------------ ------------ ------------
1994 1995 1996(A) 1996(B) 1997
------ ------ ------------ ------------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BOWLING CENTERS (before
intersegment eliminations):
Operating revenue............... $225.4 $292.3 $ 307.3 $ 147.2 $ 201.1
Cost of goods sold.............. 22.3 26.3 27.5 12.6 18.3
Bowling center operating
expenses...................... 120.3 168.7 177.2 83.3 116.6
Selling, general and
administrative expenses....... 17.0 10.5 7.0 3.0 3.2
Depreciation and amortization... 21.8 36.6 56.2 26.1 34.3
------ ------ ------ ------ ------
Operating income................ $ 44.0 $ 50.2 $ 39.4 $ 22.2 $ 28.7
====== ====== ====== ====== ======
SELECTED DATA:
EBITDA.......................... $ 65.8 $ 86.8 $ 95.6 $ 48.3 $ 63.0
EBITDA margin................... 29.2% 29.7% 31.1% 32.8% 31.3%
Number of centers, end of
period........................ 293 286 341 284 408
Number of lanes, end of
period........................ 9,586 9,430 11,782 9,386 14,206
</TABLE>

- ---------------
(a) Represents pro forma results of operations from January 1, 1996 through
December 31, 1996. See "Note 3. Pro Forma Results of Operations" in the
Notes to Consolidated Financial Statements of AMF Bowling as of December 31,
1996. The pro forma 1996 amount of selling, general and administrative
expenses has been adjusted to reflect a reallocation to corporate of certain
general and administrative expenses previously allocated to the Bowling
Centers segment. The 1995 and 1994 amounts have not been restated to reflect
this change.

(b) Represents results of operations from January 1, 1996 through June 30, 1996,
on a pro forma basis. See "Note 3. Pro Forma Results of Operations" in the
Notes to Condensed Consolidated Financial Statements of AMF Bowling as of
June 30, 1997.

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30,
1996. Of the $53.9 million, or 36.6%, increase in operating revenue, $52.5
million was attributable to new centers, of which $48.8 million was from U.S.
centers, and $3.7 million was from international centers. An increase of $2.8
million, or 1.9%, in constant centers (centers in operation for at least one
full fiscal year) revenue was primarily a result of an increase in revenue in
the Northeast region of the U.S., a region in which the Company has a large
number of centers and which experienced severe weather conditions during the
first quarter of 1996. The increase in constant centers revenue in the first six
months of 1997 compared to the same period in 1996 was net of $1.0 million
additional revenue in 1996 due to leap year, and a $1.6 million decrease in
revenue from the Japanese centers in 1997 which was primarily caused by recent
poor economic conditions in Japan. The overall increase was also offset in part
by a $1.4 million decrease attributable to seven U.S. centers which were closed
since May 1996.

Cost of goods sold increased $5.7 million, or 45.2%, primarily as a result
of new centers, partially offset by savings associated with closed centers.

Of the increase of $33.3 million, or 40.0%, in operating expenses,
approximately $31.4 million was attributable to new centers, of which $29.4
million was attributable to U.S. centers and $2.0 million was attributable to
international centers. As a percentage of its revenue, Bowling Centers operating
expenses were 56.6% for the six months ended June 30, 1996, on a pro forma
basis, versus 58.0% for the six months ended June 30, 1997.

26
<PAGE> 26

The increase of $0.2 million, or 6.7%, in selling, general and
administrative expenses was attributable to new centers, partially offset by
savings associated with closed centers.

The increase of $14.7 million, or 30.4%, in EBITDA was attributable to new
centers. EBITDA margin decreased from 32.8% for the six months ended June 30,
1996, on a pro forma basis, to 31.3% for the six months ended June 30, 1997.
EBITDA margin for the six-month period ended June 30, 1997 was affected, as
expected, by the increasing proportion of U.S. centers purchased. U.S. centers
typically have lower margins in the second quarter compared with international
centers and compared with U.S. margins in the first and fourth quarters of the
year, primarily because revenue declines in the second quarter as fall leagues
finish the season. See" -- Seasonality and Market Development Cycles".

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31,
1995. Operating revenue increased $15.0 million, or 5.1%. Increases of $19.0
million attributable to the addition of 57 new centers purchased during the last
two quarters of 1996 and $0.5 million attributable to increases at constant
centers were offset by decreases of $2.2 million attributable to the two bowling
centers which were not acquired as part of the Acquisition and $2.3 million
attributable to the closure of seven of the 106 bowling centers originally
purchased by the Predecessor Company from Fair Lanes. The constant center
revenue increase was attributable to an increase in international revenue of
$2.4 million, offset by a decrease in U.S. constant centers revenue of $1.9
million. The decrease in U.S. constant centers revenue was largely a result of a
decrease in revenue due to the severe weather conditions in the Northeast, a
region in which the Company has a large number of centers, during the first
quarter of 1996. An increase in bowling prices in the U.S. during 1996 was
partially offset by a decrease in U.S. lineage. The increase in international
revenue was primarily a result of an increase in average price per game and
increased food and beverage revenue.

Cost of goods sold increased $1.2 million, or 4.6%, primarily as a result
of new centers.

Bowling Centers operating expenses increased by $8.5 million, or 5.0%. An
increase of $10.0 million attributable to new centers and a net increase of $2.2
million attributable to constant centers were offset by a decrease of $3.7
million primarily attributable to the two centers not acquired in the
Acquisition and the closure of seven Fair Lanes centers. The net increase in
constant centers operating expenses was a result of an increase of $4.1 million
in international centers due to increased rents and payroll expenses, and a
decrease of $1.9 million in U.S. centers resulting from the implementation of
cost reduction plans developed by management after assessing the impact of the
severe weather conditions during the first quarter of 1996. As a percentage of
total revenue, Bowling Centers operating expenses remained constant at 57.7%
during 1996 and 1995.

Of the $3.5 million decrease in selling, general and administrative
expenses, $3.6 million is due to a reallocation to corporate of certain selling,
general and administrative expenses previously allocated to the Bowling Centers
segment.

An increase of $8.8 million, or 10.1%, in EBITDA was attributable to new
centers. EBITDA margin in 1996 was 31.1% compared to 29.7% in 1995.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31,
1994. Operating revenue increased by $66.9 million, or 29.7%. U.S. centers
revenue (excluding centers purchased from Fair Lanes) increased $3.6 million, or
3.7%, over 1994 revenue of $96.2 million, primarily as a result of an increase
in average price per game and lineage, and an increase of $67.2 million was
attributable to the Fair Lanes centers. These increases were offset by a
decrease of $3.9 million in international revenue which resulted primarily from
a weakening of the Mexican peso.

The increase of $4.0 million, or 17.9%, in cost of goods sold was primarily
attributable to the acquisition of the Fair Lanes centers in September, 1994.

Bowling Centers total operating expenses increased by $48.4 million, or
40.2%, of which an increase of $44.0 million was attributable to Fair Lanes
centers operations, an increase of $2.3

27
<PAGE> 27

million was attributable to non-recurring costs which resulted from integrating
Fair Lanes centers into the Company's risk management program and the closure of
seven centers, and an increase of $2.1 million was primarily attributable to
non-recurring costs related to changes in management personnel implemented in
1995. As a percent of Bowling Centers operating revenue, operating expenses
increased from 53.4% in 1994, to 57.7% in 1995, primarily as a result of the
non-recurring costs described above.

The decrease of $6.5 million, or 38.2%, in Bowling Centers selling, general
and administrative expenses was primarily attributable to the Fair Lanes centers
integration into Bowling Centers operations.

EBITDA increased $21.0 million, or 31.9%. An increase of $22.6 million
attributable to the Fair Lanes centers was offset by a decrease of $1.6 million
which was primarily attributable to centers in Mexico impacted by the weakening
of the peso. EBITDA margin increased from 29.2% in 1994 to 29.7% in 1995
primarily because the Fair Lanes centers EBITDA margin improved from 12.6% for
the fourth quarter in 1994 to 27.8% for the full year in 1995.

BOWLING PRODUCTS

The results shown below reflect Bowling Products operations.

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
YEAR ENDED DECEMBER 31, -------------------------------
-----------------------------------
PRO FORMA PRO FORMA
PREDECESSOR AMF AMF AMF
COMPANY BOWLING, INC. BOWLING, INC. BOWLING, INC.
----------------- ------------- ------------- -------------
1994 1995 1996(A) 1996(B) 1997
------ ------ ------------- ------------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BOWLING PRODUCTS (before
intersegment eliminations):
Operating revenue............... $301.7 $286.5 $ 252.1 $96.8 $ 124.7
Cost of goods sold.............. 178.9 166.9 153.3 58.2 74.7
------ ------ ------ ------ ------
Gross profit.................... 122.8 119.6 98.8 38.6 50.0
Selling, general and
administrative expenses....... 38.2 40.3 36.2 15.7 18.7
Depreciation and amortization... 3.7 3.6 18.5 9.4 9.9
------ ------ ------ ------ ------
Operating income................ $ 80.9 $ 75.7 $ 44.1 $13.5 $ 21.4
====== ====== ====== ====== ======
SELECTED DATA:
Gross profit margin............. 40.7% 41.7% 39.2% 39.9% 40.1%
EBITDA.......................... $ 84.6 $ 79.3 $ 62.6 $22.9 $ 31.3
EBITDA margin................... 28.0% 27.7% 24.8% 23.7% 25.1%
New Center Packages sold........ 4,941 4,437 3,029 1,152 1,933
New Center Packages backlog
end of period(c).............. 2,078 940 1,426 1,144 2,182
</TABLE>

- ---------------
(a) Represents results of operations from January 1, 1996 through December 31,
1996 on a pro forma basis. See "Note 3. Pro Forma Results of Operations" in
the Notes to Consolidated Financial Statements of AMF Bowling as of December
31, 1996. The pro forma 1996 amount of selling, general and administrative
expenses has been adjusted to reflect a reallocation to corporate of certain
overhead expenses previously allocated to the Bowling Products segment. The
1995 and 1994 amounts have not been restated to reflect this change.

(c) Orders of NCPs included in the backlog are subject to cancellation by
customers in the normal course of business. Accordingly, the Company has
experienced, and expects to continue to experience, the cancellation of a
portion of such orders. See "-- Backlog; Recent NCP Sales". Data is not
provided for 1992 and 1993 because the Company does not maintain this data
for such periods.

Bowling Products' long-standing customer relationships, Bowling Centers'
and third-party centers' predictable demand for Modernization and Consumer
Products, a steadily increasing

28
<PAGE> 28

installed base of NCPs and Bowling Products' ability to supply a full product
line have historically made the Modernization and Consumer Products category a
stable and recurring base of revenue and EBITDA. Revenue growth from 1991 to
1994 for the NCP category resulted primarily from increased unit sales to Taiwan
and Korea, and since 1995 to China and to emerging bowling markets, where the
popularity of bowling and consequent demand for new bowling centers increased
dramatically. During 1995 and 1996, NCP revenue declined primarily because the
markets in Taiwan and Korea had matured. The decline was partially offset by
continued demand in China and in certain emerging bowling markets. During the
first six months of 1997, NCP revenue increased due to continued demand in China
and other international markets, such as Japan and Malaysia.

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30,
1996. Bowling Products total operating revenue increased $27.9 million, or
28.8%, primarily due to an increase of $25.3 million, or 67.5%, in NCP revenue,
and an increase of $2.0 million, or 3.4%, in Modernization and Consumer Products
revenue. The increase in NCP revenue was due to an overall increase in NCP sales
of 781 units which occurred primarily in China, Malaysia, the Americas and
Japan. See "Risk Factors -- Seasonality and Market Development Cycles" and
"-- Seasonality and Market Development Cycles".

Total gross profit from Bowling Products increased by $11.4 million, or
29.5%, primarily as a result of increased NCP sales. Gross profit margin was
39.9% and 40.1% for the six months ended June 30, 1996 and 1997, respectively.

Bowling Products selling, general and administrative expenses increased by
$3.0 million, or 19.1%, primarily as a result of a $2.4 million increase
attributable to payroll and facilities expenses related to staffing the
Company's international sales and service offices, and an increase of $1.5
million attributable to advertising and promotion expenses in the U.S.
locations. These increases were offset by a decrease of $0.9 million in payroll,
facilities and related expenses at the U.S. locations.

EBITDA increased from $22.9 million to $31.3 million, resulting in an
increase in EBITDA margin from 23.7% to 25.1%, primarily due to the increased
NCP revenue, offset in part by the increased expenses discussed above.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO DECEMBER 31, 1995. Operating
revenue decreased by $34.4 million, or 12.0%, primarily due to a decrease of
$35.3 million, or 22.7%, in NCP revenue offset by an increase of $0.9 million,
or 0.7%, in Modernization and Consumer Products revenue. The drop in NCP revenue
was due to an overall decrease in NCP sales by 1,408 units in 1996 compared to
1995, particularly for maturing markets including Korea and Taiwan, offset by an
increase in NCP revenue from sales to China. From 1995 to 1996, total NCP sales
to Korea decreased by 1,165 units and to Taiwan decreased by 1,323 units.
Additionally, there was a moderate increase in NCP units sold in the Americas
and southern Europe during 1996. The increase in sales to China occurred during
the last six months of 1996. See "Risk Factors -- Seasonality and Market
Development Cycles" and "-- Seasonality and Market Development Cycles". The
increase in Modernization and Consumer Products revenue was due in part to
increased sales of synthetic lanes and automatic scoring in the United States.

Gross profit decreased by $20.8 million, or 17.4%. Gross profit margin was
41.7% in 1995 and 39.2% in 1996. Of this 2.5% decrease, 0.8% was attributable to
an increase in certain inventory and warranty reserves in the Modernization and
Consumer Products categories of $2.1 million, and 1.7% was attributable to the
lower margins on decreased revenues, particularly in Japan, due to price cuts
implemented by the Company's management in response to stiffer competition in
the Modernization and Consumer Products category.

29
<PAGE> 29

Of the $4.1 million decrease in selling, general and administrative
expenses, $4.2 million was due to a reallocation to corporate of certain
overhead expenses previously allocated to the Bowling Products segment.

EBITDA decreased $16.7 million, or 21.1%, and EBITDA margin decreased from
27.7% in 1995, to 24.8% in 1996, primarily due to the decreased NCP revenue and
gross profit discussed above.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO DECEMBER 31, 1994. Operating
revenue decreased $15.2 million, or 5.0%, as a result of a decrease of $15.1
million, or 8.8%, in NCP revenue, and a less than 1.0% decrease of $0.1 million
in Modernization and Consumer Products revenue.

A significant portion of the decrease in NCP revenue was attributable to a
decrease in sales to Taiwan and Korea during November and December 1995, which
had significantly lower sales than the comparable period in 1994. Management
believes that the sales to Taiwan and Korea peaked during 1994. Additionally,
NCP sales in Japan were significantly affected by uncertain economic conditions
following the Kobe earthquake and the subway gas attacks, which resulted in
delayed investments in recreational activities.

Gross profit decreased by $3.2 million, or 2.6%, and the gross profit
margin of 40.7% in 1994 increased to 41.7% in 1995. Decreases of $3.8 million
caused by the decrease in NCPs sold and $1.7 million primarily attributable to
start up expenses incurred in pool cue, bumper, and automatic scoring systems
manufacturing were offset by a $2.3 million increase which resulted from
decreased warranty costs.

The increase of $2.1 million, or 5.5%, in selling, general and
administrative expenses was primarily attributable to non-recurring costs of
$2.9 million in 1995, offset by $0.8 million which was primarily due to net
reversals of reserves.

EBITDA decreased $5.3 million, or 6.3%, and EBITDA margin decreased from
28.0% in 1994 to 27.7% in 1995, primarily due to the decreased revenue and
increased selling, general and administrative expenses discussed above. The 1995
EBITDA was depressed by the non-recurring selling, general and administrative
costs of $2.9 million described above.

CONSOLIDATED ITEMS

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased by $8.5 million, or 24.4%, in the
six months ended June 30, 1997 compared with the same period in 1996, primarily
due to depreciation of property and equipment of centers acquired since May 1996
and incremental depreciation expense incurred as a result of capital
expenditures.

For the year ended December 31, 1996, depreciation and amortization
increased by $34.4 million, or 88.0%, over the same period in 1995, primarily as
a result of recording fixed assets at fair market value and goodwill in
accordance with the purchase accounting method applied to the Acquisition.

For the year ended December 31, 1995, depreciation and amortization
increased by $14.3 million, or 57.7%, over the same period in 1994, primarily
due to the inclusion of Fair Lanes centers for the entire 12 months of 1995, as
compared with three months during 1994.

INTEREST EXPENSE

Gross interest expense increased by $5.3 million, or 10.2%, in the six
months ended June 30, 1997 compared with the same period in 1996, primarily due
to interest paid on increased levels of bank debt as a result of the center
acquisitions described under "Business -- AMF Bowling Centers -- Recent
Acquisitions and Joint Ventures". See "-- Liquidity" and "-- Capital Re-

30
<PAGE> 30

sources". Cash interest paid by the Company for the six months ended June 30,
1997 totaled $39.8 million, while non-cash bond interest amortization totaled
$16.8 million.

For the year ended December 31, 1996, gross interest expense increased by
$90.5 million, or 576.4%, compared with the same period in 1995 due to interest
paid on debt incurred to finance the Acquisition and interest on the Acquisition
Facility. Cash interest paid by the Company for the year ended December 31, 1996
totaled $44.5 million, while non-cash bond interest amortization totaled $24.7
million.

Gross interest expense increased by $8.3 million, or 112.2%, for the year
ended December 31, 1995, compared with the same period in 1994 as a result of
additional debt incurred in connection with the acquisition of the Fair Lanes
centers on September 29, 1994. This debt was paid in full by the prior owners of
the Predecessor Company before the Acquisition.

NET INCOME (LOSS). Net loss decreased $1.3 million, or 9.6%, for the six
months ended June 30, 1997 compared with the same period in 1996, as a result of
the increases in EBITDA discussed above on a segment basis, offset by increases
in depreciation and amortization expense, interest expense and the current tax
provision for the Company.

The decline of $118.3 million, or 122.2%, in net income from $96.8 million
in 1995 to a net loss of $(21.5) million in 1996, on a pro forma basis, was
primarily attributable to a decrease in Bowling Products EBITDA resulting from
the decline in NCP revenue and higher depreciation and amortization and interest
expense resulting from the Acquisition after allowing for an $8.9 million tax
benefit.

Net income decreased $2.5 million, or 2.5%, for the year ended December 31,
1995, compared with the same period in 1994 as a result of higher depreciation
and amortization and interest expense incurred in 1995 as a result of the
full-year impact of the acquisition of the Fair Lanes centers which occurred in
the fourth quarter of 1994.

The Company will incur after-tax extraordinary charges totalling $22.7
million in the fourth quarter of 1997 arising from the Third Amended and
Restated Credit Agreement and the resulting write-off of costs previously
incurred to obtain bank financing for the Acquisition, the premium associated
with the portion of the Senior Subordinated Discount Notes expected to be
redeemed with the proceeds of the Offering and the write-off of the portion of
deferred financing costs attributable to the Senior Subordinated Discount Notes
expected to be so redeemed. See "Description of Certain Indebtedness -- Credit
Agreement".

INCOME TAXES. Prior to the Acquisition, certain of the companies within
the Predecessor Company elected S corporation status under the Internal Revenue
Code of 1986, as amended (the "Code"). Upon consummation of the Acquisition,
those companies became taxable corporations under the Code.

Pursuant to the Stock Purchase Agreement, the two principal companies
within the affiliated group elected under Section 338(h)(10) of the Code, to
treat the stock purchase as a deemed asset acquisition for the purposes of U.S.
income taxes. These elections permitted both of the affiliated companies to
revalue their assets to fair market value and to treat any amortizable goodwill
as tax deductible over fifteen years.

As of June 30, 1997, the Company had net operating losses of approximately
$38.0 million and foreign tax credits of $9.6 million which will carry over to
future years to offset U.S. taxes. The foreign tax credits will begin to expire
in the year 2001 and the net operating losses will begin to expire in the year
2010. The Company has not booked a valuation reserve as of June 30, 1997 because
the Company expects to utilize these net operating losses prior to expiration.

31
<PAGE> 31

LIQUIDITY

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

The following discussion compares AMF Bowling's results for the period
ended June 30, 1997 with the period ended June 30, 1996, on an historical basis.

The Company's primary source of liquidity is cash provided by operations
and credit facilities as described below. Working capital on December 31, 1996
was $7.8 million compared with a negative $23.3 million as of June 30, 1997, a
decrease of $31.1 million. Cash decreased $27.0 million primarily as a result of
payments on debt under the Credit Agreement and internal funding of certain
bowling center acquisitions, and the note payable under the Credit Agreement
increased $30.0 million as a result of borrowings under the Working Capital
Facility under the Credit Agreement which was used to fund increases in working
capital. Accounts receivable increased $14.5 million primarily as a result of
increased NCP revenue, and inventory increased $15.5 million in advance of
future shipments. These increases in working capital were partially offset by a
decrease of $4.1 million caused by changes in other current assets and
liabilities.

Net cash flows used in operating activities were $28.0 million for the six
months ended June 30, 1996 compared with net cash provided of $8.2 million for
the six months ended June 30, 1997, a difference of $36.2 million. Net cash
provided resulted from a decrease of $0.1 million in net loss, an increase of
$31.7 million in depreciation and amortization primarily as a result of
application of the purchase method of accounting for the Acquisition, an
increase of $8.0 million in amortization of the discount related to the bonds
used to partially fund the Acquisition, a net loss of $0.1 million on the sale
of property and equipment, a net change of $3.3 million in deferred taxes and
income taxes payable, and a change of $19.8 million in other assets and
liabilities. Net cash used resulted from an increase of $14.3 million in
accounts receivable primarily resulting from the increased levels of NCP sales
compared with the same period in 1996, and an increase of $12.5 million in
inventory primarily reflecting the increased backlog of NCP orders to be shipped
after June 30, 1997.

Net cash flows used in investing activities were $1,336.3 million for the
six months ended June 30, 1996 compared with net cash flows used of $147.5
million for the six months ended June 30, 1997. During the six months ended June
30, 1996, cash flows used for the Acquisition totaled $1,333.1 million, capital
spending was $3.3 million and other investing cash flows provided were $0.1
million. During the six months ended June 30, 1997, acquisitions of bowling
centers totaled $122.2 million, capital spending was $25.6 million, and other
cash flows provided by investing activities were $0.3 million. See "Note 9.
Acquisitions" in the Notes to Condensed Consolidated Financial Statements of AMF
Bowling as of June 30, 1997 and "-- Capital Expenditures".

Net cash provided by financing activities was $1,409.8 million for the six
months ended June 30, 1996 compared with net cash provided of $112.4 million for
the six months ended June 30, 1997. During the six months ended June 30, 1996,
cash flows were primarily provided by $1,029.9 million of proceeds of long-term
debt and $380.3 million from a capital contribution, both of which were used to
fund the Acquisition. During the six months ended June 30, 1997, cash flows were
primarily provided by drawing down $103.5 million and $30.0 million from
available borrowings under the Acquisition Facility and the Working Capital
Facility, respectively, to fund the acquisitions of centers and increases in
working capital. During 1997, funds were used primarily for the payment of long-
term debt totaling $20.3 million, and $0.5 million was used for the repurchase
of an officer's shares in connection with the termination of his employment with
the Company. See "Note 13. Employee Benefit Plans" in the Notes to Consolidated
Financial Statements of AMF Bowling as of December 31, 1996.

As a result of the aforementioned, cash increased by $45.1 million for the
six months ended June 30, 1996 compared to a decrease of $26.9 million for the
six months ended June 30, 1997.

32
<PAGE> 32

YEAR ENDED DECEMBER 31, 1996 COMPARED TO DECEMBER 31, 1995

The following discussion compares AMF Bowling's results for the period
ended December 31, 1996, with the Predecessor Company's results for the year
ended December 31, 1995, on an historical basis.

Net cash flows from operating activities decreased $51.0 million from
$124.8 million for the year ended December 31, 1995 to $73.8 million for the
period ended December 31, 1996. This decrease was primarily due to the decrease
in net income from $96.8 million for the year ended December 31, 1995 to a net
loss of $(19.5) million for the period ended December 31, 1996 and higher
depreciation, amortization and interest expenses as a result of the Acquisition.

Net cash flows used in investing activities were $28.3 million for the year
ended December 31, 1995 compared with net cash flows used of $1,467.1 million
for the period ended December 31, 1996. The change was due primarily to the
Acquisition. During the year ended December 31, 1995, capital spending was $30.0
million and other investing cash flows provided were $1.7 million. During the
period ended December 31, 1996, acquisitions of operating units, net of cash
acquired, including the Acquisition, totaled $1,450.9 million, capital spending
was $16.9 million, and other cash flows provided by investing activities were
$0.7 million.

Net cash used for financing activities was $94.7 million for the year ended
December 31, 1995 compared with net cash provided of $1,438.3 million for the
period ended December 31, 1996. This change primarily resulted from the issuance
of debt and capital contributions related to the Acquisition. During 1995, the
Predecessor Company made distributions to its owners of $71.9 million, net
payments on notes payable to its owners of $3.8 million, net payments on credit
note agreements and long-term debt of $21.3 million and a payment for redemption
of stock of $4.0 million. Additionally, cash of $8.3 million was received as
capital contributions by stockholders.

During the period ended December 31, 1996, the Company had borrowings, net
of deferred financing costs, of $1,059.3 million from debt incurred to finance
the Acquisition and from the Acquisition Facility, and made payments of $38.9
million on this debt. Additionally, a total of $420.8 million was received as
capital contributions by the institutional stockholders of AMF Bowling and
certain of its officers and directors. Of the total capital contributed, $380.8
million was for the initial capitalization of the Company and the Acquisition,
and $40.0 million was received as additional capital contributions in connection
with the acquisition of centers from Charan Industries, Inc. ("Charan"). See
"Business -- AMF Bowling Centers -- Recent Acquisitions and Joint Ventures".

As a result of the aforementioned, cash increased by $1.6 million for the
year ended December 31, 1995 compared with an increase of $43.6 million for the
period ended December 31, 1996.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO DECEMBER 31, 1994

Net cash flow from operating activities increased from $119.7 million for
the year ended December 31, 1994 to $124.8 million for the year ended December
31, 1995. This increase was primarily a result of the fact that although net
income decreased from $99.3 million to $96.8 million and assets and liabilities
changes occurred which reflected a net use of cash of $5.3 million and $10.9
million for the year ended December 31, 1994 and for the year ended December 31,
1995, respectively, depreciation and amortization increased by $14.3 million,
from $24.8 million for the year ended December 31, 1994 to $39.1 million for the
fiscal year ended December 31, 1995.

Net cash used for investing activities decreased from $32.6 million for the
year ended December 31, 1994 to $28.3 million for the year ended December 31,
1995. During 1994, cash of $17.3 million was used for the acquisition of
centers, primarily Fair Lanes centers. Capital spending was $17.8 million for
the year ended December 31, 1994 compared with $30.0 million for the year ended
December 31, 1995.

33
<PAGE> 33

Net cash used for financing activities increased from $89.6 million for the
year ended December 31, 1994 to $94.7 million for the year ended December 31,
1995. During 1994, the Predecessor Company made distributions to its owners of
$78.2 million, net payments on notes payable to its owners of $8.6 million and
net payments on credit note agreements and long-term debt of $4.8 million.
Additionally, cash of $2.1 million was received as capital contributions by its
owners. During 1995, the Predecessor Company made distributions to its owners of
$71.9 million, net payments on notes payable to its owners of $3.8 million, net
payments on credit note agreements and long-term debt of $21.3 million and a
payment for redemption of stock of $4.0 million. Additionally, cash of $8.3
million was received as capital contributions by its owners.

As a result of the aforementioned, cash increased by $0.2 million for the
year ended December 31, 1994 compared to an increase of $1.6 million for the
year ended December 31, 1995.

CAPITAL RESOURCES

As a result of the Acquisition, the Company's total indebtedness has
increased substantially. At June 30, 1997, the Company's debt structure
consisted of senior debt of $679.9 million, senior subordinated notes of $250.0
million and senior subordinated discount notes of $291.4 million. At June 30,
1997, the Company was also capitalized with equity of $391.1 million. The
Company also has the ability to borrow for general corporate purposes pursuant
to the $50.0 million Working Capital Facility and for acquisitions pursuant to
the $230.0 million Acquisition Facility, subject to certain conditions. At June
30, 1997, $112.0 million and $30.0 million was outstanding under the Acquisition
Facility and the Working Capital Facility, respectively. Between June 30, 1997
and October 31, 1997, additional borrowings under the Acquisition Facility
totaled $59.0 million and were used to fund the acquisitions of centers. See
"Business -- AMF Bowling Centers -- Recent Acquisitions and Joint Ventures". In
addition, the Company borrowed an additional $17.5 million under the Working
Capital Facility to fund increases in working capital. At October 31, 1997,
$171.0 million and $47.5 million was outstanding under the Acquisition Facility
and the Working Capital Facility, respectively.

In September 1997, certain current stockholders of AMF Bowling purchased an
aggregate of 1,780,000 shares of Common Stock for $20.00 per share pursuant to
the "overcall" provisions of the Stockholders Agreement. The aggregate $35.6
million capital contribution was used to fund acquisitions, including 15 centers
from Conbow Corporation ("Conbow"), and for other permitted purposes. See
"Business -- AMF Bowling Centers -- Recent Acquisitions and Joint Ventures" and
"Principal Stockholders -- Stockholders Agreement".

The Company funds its cash needs through cash flow from operations,
existing cash balances and the Working Capital Facility and Acquisition
Facility. A substantial portion of the Company's available cash will be applied
to service outstanding indebtedness. For the period beginning January 12, 1996
and ending December 31, 1996, the Company incurred cash interest expense of
$53.0 million, representing 55.5% of EBITDA of $95.5 million for the period. For
the six months ended June 30, 1997, the Company incurred cash interest expense
of $39.8 million, representing 46.4% of EBITDA of $85.8 million for the six
month period.

The Note Indentures and the Credit Agreement contain financial and
operating covenants and significant restrictions on the ability of the Company
to pay dividends, incur indebtedness, make investments and take certain other
corporate actions. See "Risk Factors -- Substantial Leverage; Indebtedness",
"Risk Factors -- Holding Company Structure", "Risk Factors -- Net Losses",
"Description of Certain Indebtedness" and "Note 9. Long-Term Debt" in the Notes
to Consolidated Financial Statements of AMF Bowling as of December 31, 1996.

The Company's ability to make scheduled payments of principal of, or to pay
interest on, or to refinance its indebtedness depends on its future performance,
which, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors beyond its control. Based
upon the current level of operations and anticipated growth, management believes

34
<PAGE> 34

that available cash flow, together with available borrowings under the Credit
Agreement and other sources of liquidity, will be adequate to meet the Company's
anticipated future requirements for working capital, capital expenditures,
scheduled payments of principal of, and interest on, its senior debt, and
interest on the Notes. There can be no assurance, however, that the Company's
business will generate sufficient cash flow from operations or that future
borrowings will be available in an amount sufficient to enable the Company to
service its indebtedness or that any refinancing would be available on
commercially reasonable terms or at all. See "Risk Factors -- Substantial
Leverage; Indebtedness" and "Risk Factors -- Net Losses".

The Company and the lenders under the Credit Agreement have agreed in
principle to the Proposed Amendments, pursuant to which the Credit Agreement
will be amended and restated as the Third Amended and Restated Credit Agreement,
the Acquisition Facility and a portion of the Term Facilities under the Credit
Agreement will be converted into a non-amortizing revolving Working Capital
Facility the aggregate size of which will be increased to $355.0 million, and a
portion of such revolving credit indebtedness will be repaid with proceeds of
the Offerings. Borrowings under the amended Working Capital Facility will
provide the Company the ability to finance acquisitions or new center
construction. At October 31, 1997, $161.5 million would have been available
under such Working Capital Facility, assuming the Proposed Amendments were
effective at such time and $100.0 million of the proceeds of the Offerings was
used to repay indebtedness under the Credit Agreement. See "Use of Proceeds" and
"Description of Certain Indebtedness".

CAPITAL EXPENDITURES

For the six months ended June 30, 1997, the Company's actual capital
expenditures were $25.6 million compared with $10.2 million for the six months
ended June 30, 1996, on a pro forma basis (capital expenditures of the acquired
business from January 1, 1996 through June 30, 1996). The increase was primarily
due to an ongoing modernization program in Bowling Centers, a new point-of-sale
information system in U.S. Bowling Centers, new Company-wide information
systems, and construction of a new 40 lane, state-of-the-art bowling and family
entertainment center at Chelsea Piers in New York City.

For the period ended December 31, 1996, the Company's capital expenditures
were $16.9 million. For the year ended December 31, 1997, the Company's capital
expenditures are expected to be approximately $50.0 million. For the year ended
December 31, 1995, the Company's capital expenditures were $30.0 million,
including $9.7 million for the construction of three new centers. In 1994, the
Company's capital expenditures were $17.8 million. The 1996 expenditures level
was lower than the 1995 level in part because in 1995 three new bowling centers
were constructed at a cost of approximately $9.7 million.

The Company conducts an ongoing modernization and maintenance program that
results in its centers having upgraded physical plants and generally attractive
appearances. Management believes that its historical spending level of 3.7% of
Bowling Centers revenue is fully adequate to cover all modernization and
maintenance capital expenditures. Management estimates that approximately 2.0%
of Bowling Centers revenue is required for maintenance capital expenditures
alone.

Bowling Products has relatively modest capital investment requirements, and
the Company has followed a relatively conservative approach to capital
investment. Maintenance and replacement investments have been made when clearly
needed, but as close to the end of the useful lives of assets as possible.
Investment in production machinery and equipment has received the highest
investment priority and has focused on projects with projected payback periods
of one to three years. Management is not planning significant changes in the
policy for non-strategic projects.

The Company has the opportunity to acquire and build additional bowling
centers, both in the U.S. and internationally. The Company is prepared to
acquire or build additional bowling centers as appropriate opportunities arise
and is engaged in ongoing evaluations of and discussions with third parties
regarding possible acquisitions. See "Business -- Business Strategy". Management
plans to acquire centers with funding provided under the Credit Agreement to the
extent available. Under

35
<PAGE> 35

the Acquisition Facility, as of October 31, 1997, the Company had the ability to
borrow up to an additional $59.0 million (or $161.5 million, assuming the
Proposed Amendments were effective at such time and $100.0 million of the
proceeds of the Offerings was used to repay indebtedness under the Credit
Agreement) for acquisitions or to refinance new center construction, subject to
certain conditions. Management's plans to expand the Bowling Centers operations
are subject to the continuation of favorable economic and financial conditions,
which are generally not within the Company's control. Currently, the Company has
entered into purchase agreements to acquire eighteen centers, including the Pin
Boys Centers (as hereinafter defined), from several unrelated sellers. The
aggregate purchase price for such centers is expected to be approximately $38.5
million and is expected to be funded with borrowings under the Acquisition
Facility (or, under the Proposed Amendments, the Working Capital Facility) and
cash generated from operations.

The Company has funded its capital expenditures from cash generated by
operations and, with respect to the construction and acquisition of new centers,
internally generated cash, the Acquisition Facility, and issuances of common
equity. See "Note 9. Acquisitions" in the Notes to Condensed Consolidated
Financial Statements of AMF Bowling as of June 30, 1997, "-- Liquidity" and
"-- Capital Resources".

SEASONALITY AND MARKET DEVELOPMENT CYCLES

The following table sets forth AMF's U.S. constant centers revenue for the
last four quarters:

<TABLE>
<CAPTION>
QUARTER ENDING
---------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1996 1996 1997 1997
------------- ------------ --------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>

Total Revenue............ $38.7 $ 50.5 $58.1 $ 41.1
% of Total............... 20.6% 26.8% 30.8% 21.8%
</TABLE>

On a consolidated basis, revenue and EBITDA of the Company's businesses are
neither highly seasonal nor highly cyclical. The geographic diversity of the
Company's bowling centers, which operate across different regions of the U.S.
and across nine other countries, along with the bowling industry's historic
relative insulation from recessions, has provided stability to the Company's
annual cash flows. Although financial performance of Bowling Centers operations
is seasonal in nature in many countries, with cash flows typically peaking in
the winter months and reaching their lows in the summer months, the geographic
diversity of the Company's bowling centers has helped reduce this seasonality as
bowling centers in certain countries in which AMF operates exhibit different
seasonal sales patterns. As a result of the growing number of U.S. centers
attributable to the Company's acquisition program, the seasonality described
above may be accentuated. In Australia, where AMF has its largest number of
international centers, the reversal of seasons relative to the U.S. helps
mitigate the seasonality in worldwide operations. AMF's cash flows are further
stabilized by the location of many centers in regions where the climates have
high average temperatures and high humidity. In the U.S., during the summer
months when league bowling is generally less active, bowling centers in the
southern U.S. continue to show strong performance. Similarly, in regions with
warm summer climates such as Hong Kong and Mexico, where bowling in
air-conditioned centers may be more attractive than outdoor activities, bowling
centers show strong performance. See "Business -- Business Strategy" and "Note
10. Business Segments" in the Notes to Condensed Consolidated Financial
Statements of AMF Bowling as of June 30, 1997.

Modernization and Consumer Products sales display significant seasonality.
The U.S. market, which is the largest market for Modernization and Consumer
Products, is driven by the beginning of leagues in the fall of each year.
Operators typically sign purchase orders, particularly for replacement
equipment, during the first four months of the year, after they receive winter
league revenue indications. Equipment is shipped and installed during the summer
months, when leagues are generally less active. Sales of modernization
equipment, such as automatic scoring and synthetic

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<PAGE> 36

lane overlays, are less predictable and fluctuate more than the replacement
equipment because of the four to ten year life cycles of these major products.

The NCP category of bowling products experiences significant fluctuations
due to changes in demand for NCPs as certain markets experience high growth
followed by market maturity, at which time sales to that market decline,
sometimes rapidly. Market cycles for individual countries have, in the past,
spanned several years, with periods of high demand for several markets (e.g.,
Korea and Taiwan) which, in the Company's experience, last five years or more.
These growth patterns do not seem to be closely tied to general economic cycles.

INTERNATIONAL OPERATIONS

For the six months ended June 30, 1997, 26.1% of Bowling Centers revenue
was generated by its international centers. For the year ended December 31,
1996, 33.8% of the Bowling Centers revenue was generated by international
centers. Historically, the Company has not engaged in any significant currency
hedging activities.

For the six months ended June 30, 1997, 59.2% of Bowling Products sales
were international sales. For the year ended December 31, 1996, approximately
62.7% of Bowling Products sales were made in international markets. To minimize
credit and international exchange risk, equipment is sold primarily using
letters of credit denominated in U.S. dollars. Letters of credit are usually
received before shipments leave U.S. ports. International sales offices sell
some products in local currency, but adjust pricing, to the extent that market
conditions permit, with changes in exchange rates. This policy enables the
Bowling Products operations generally to avoid any material adverse effect from
exchange rate fluctuations. Management believes that this policy should continue
to protect the Company from material adverse consequences of exchange rate
fluctuations, except in the event of severe international exchange rate
volatility. See "Risk Factors -- International Operations".

BACKLOG; RECENT NCP SALES

The total backlog of NCPs (which include all of the equipment necessary to
outfit one new bowling lane) as of October 26, 1997 was 2,085 units, which is an
approximately 46% increase over the December 31, 1996 backlog of 1,426 units.
The increased backlog was directly attributable to strong NCP orders generated
throughout the world as a result of an aggressive program to increase sales in
early stage and developed markets. The backlog as of October 26, 1997 reflects a
significant number of orders from customers in China, Malaysia, North and South
America, Japan and Europe. Orders of NCPs included in the backlog are subject to
cancellation by customers from time to time in the normal course of business.
Accordingly, the Company has experienced, and expects to continue to experience,
the cancellation of a portion of such orders.

NCP sales for the first six months of 1997 totaled $62.8 million, a 67.5%
increase over the same period in 1996. The significant increase was attributable
to the market development and sales programs implemented in mid-1996 which were
designed to maximize NCP sales activity in a variety of marketplaces of the
world. While China currently represents the largest market for the Company's NCP
sales and backlog, other markets such as South America, India, Poland, Russia
and the Middle East are being developed.

The total NCP backlog of approximately 1,426 units as of December 31, 1996
represented an increase of 486 units from the backlog of 940 units at December
31, 1995. This increase was

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<PAGE> 37

primarily composed of increases in the backlogs in China, the United States and
Malaysia, partially offset by decreases in the backlogs in Korea and Taiwan.

Reflecting the decline in orders in the fourth quarter of 1995,
manufacturing revenue from NCP sales declined very substantially during the
first six months of 1996 representing a decrease of over 59.0% compared with NCP
sales during the first six months of 1995. Overall NCP sales in the second half
of 1996 exceeded NCP sales for the first half of 1996, reflecting continued
progress in establishing a direct sales presence in China. The drop in NCP
revenue for the year ended December 31, 1996 was due to a decrease in NCP unit
sales, particularly in Korea and Taiwan. For the full year 1996, total NCP sales
to Korea decreased by 1,165 units and to Taiwan decreased by 1,323 units
compared with the full year 1995. The decrease in sales to Korea and Taiwan
during 1996 was offset in part by an increase in NCP sales to China of 825
units. Management believes that the initial expansion period in both Korea and
Taiwan peaked during 1994. Management believes that the decreased sales to Korea
were also partially attributable to the effect of the Company's decreased
presence in Korea while it was in the process of establishing a direct sales
office to replace its former distributor. As a result of the maturing state of
the markets in Korea and Taiwan, management does not expect NCP sales to these
markets to return to the levels realized in 1994.

IMPACT OF INFLATION

The Company has historically offset the impact of inflation through price
increases and expense reductions. Periods of high inflation could have an
adverse effect on the Company to the extent that increased borrowing costs for
floating rate debt may not be offset by increases in revenue.

ENVIRONMENTAL MATTERS

The Company's operations are subject to federal, state, local and foreign
environmental laws and regulations that impose limitations on the discharge of,
and establish standards for the handling, generation, emission, release,
discharge, treatment, storage and disposal of certain materials, substances and
wastes.

The Company currently and from time to time is subject to environmental
claims. It is the opinion of management that the various asserted claims in
which the Company currently is involved are not likely to have a material
adverse effect on its financial position or results of operations. However, no
assurance can be given as to the ultimate outcome with respect to such claims.

The Company cannot predict with any certainty whether existing conditions
or future events, such as changes in existing laws and regulations, may give
rise to additional environmental costs. Furthermore, actions by federal, state,
local and foreign governments concerning environmental matters could result in
laws or regulations that could increase the cost of producing the Company's
products, or providing its services, or otherwise adversely affect the demand
for its products or services. See "Business -- Environmental Matters".

RECENT ACCOUNTING PRONOUNCEMENTS

The Company does not expect that adoption of these standards will have a
material impact on the Company's financial position or results of operations.
The adoption of SFAS No. 130 will require reporting comprehensive income, which
includes the foreign currency translation adjustment, in an alternative format
prescribed by the standard.

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<PAGE> 38

BUSINESS

GENERAL

The worldwide bowling center and bowling equipment industry generates
approximately $9 billion in annual revenue and includes approximately 13,000
bowling centers in over 80 countries. The U.S. bowling center and bowling
equipment industry generates in excess of $4 billion of revenue annually and
includes approximately 5,900 centers. Over 100 million people participate
annually in bowling worldwide, according to the FIQ, the official organization
of the worldwide bowling industry. The bowling center industry in both the U.S.
and abroad is highly fragmented. In the U.S., the next closest competitor to
AMF's 361 centers has approximately 111 centers. The next three largest
operators collectively account for only approximately 55 of the total 5,900
centers.

An investor group led by GSCP, an affiliate of Goldman Sachs, acquired AMF
in May 1996 for a total purchase price of approximately $1.37 billion. The
investor group appointed a new management team that has aggressively pursued a
three-part strategy:

- consolidate the U.S. bowling center industry,

- build a nationally recognized brand of superior bowling and
entertainment centers, and

- capitalize on the demand for bowling products and centers in certain
international markets.

AMF is also capitalizing on the strong international growth in the demand
for Bowling Products through direct sales of equipment and the building of new
bowling centers abroad. Strong demand for AMF's New Center Packages of bowling
equipment drove AMF's backlog from 1,426 NCP units at December 31, 1996 to 2,085
NCP units at October 26, 1997, an increase of approximately 46%. Over 90% of the
Company's NCP backlog is to international markets such as China, Japan and
Germany. Further, AMF is acting to accelerate the development of bowling in key
potential markets. During 1997, AMF entered into joint ventures to build and
operate bowling centers equipped with AMF bowling products in China and selected
Southeast Asian countries, and in Brazil and Argentina.

INDUSTRY OVERVIEW

BOWLING CENTERS

Bowlers represent a broad cross-section of the population. Several key
reasons for bowling's popularity in the U.S. and abroad are that it is (i) an
indoor, all-weather sport with year-round appeal, (ii) a lifetime sport suitable
for all age groups, and (iii) low in cost relative to other forms of
entertainment, requiring minimal expenditure on equipment to participate.
Approximately 50% of U.S. bowling revenue is derived from league bowlers, who
register in leagues and commit to

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<PAGE> 39

participate on a scheduled basis generally once a week for a period of up to 40
weeks. Management believes that outside the U.S., league revenue generally
comprises a smaller percentage of bowling revenue.

The bowling center industry is highly fragmented, and consists of two
relatively large bowling center operators, AMF (which has 361 U.S. centers as of
October 31, 1997) and Brunswick Corporation ("Brunswick") (which has
approximately 111 U.S. centers), three medium-sized chains, which together
account for 55 bowling centers, and over 5,300 bowling centers owned by
single-center and small-chain operators, which typically own four or fewer
centers. The top five operators (including AMF) account for less than 9% of the
total number of U.S. bowling centers.

The international bowling center industry is also highly fragmented. There
are typically few chain operators in any one country and a large number of
single-center operators. AMF generally enjoys a relative size advantage (i.e., a
larger number of lanes per center), and is competitively well positioned in
markets such as the United Kingdom and Australia.

In the United States, the operation of bowling centers is a mature industry
characterized by slightly decreasing lineage (games per lane per day) offset by
increasing average price per game and creating additional sources of income.
Management believes that AMF's U.S. lineage has remained relatively stable in
recent years due to AMF's ability to better maintain existing league bowlers and
attract new recreational bowlers.

U.S. BOWLING CENTER INDUSTRY(a)

<TABLE>
<CAPTION>
NUMBER OF
OPERATOR LOCATIONS % OF TOTAL
- ---------------------------------------------------------------------- --------- ----------
<S> <C> <C>
AMF................................................................... 361 6.1%
Brunswick............................................................. 111 1.9
Bowl America.......................................................... 23 0.4
Active West........................................................... 17 0.3
Bowl New England...................................................... 15 0.2
----- -----
Subtotal............................................................ 527 8.9
----- -----
Single-center and small-chain operators............................... 5,373 91.1
----- -----
Total....................................................... 5,900 100.0%
===== =====
</TABLE>

- ---------------
(a) AMF estimate at October 31, 1997.

BOWLING PRODUCTS

The Bowling Products business consists of two categories: (i) New Center
Packages (all of the equipment necessary to outfit a new bowling center or
expand an existing bowling center); and (ii) Modernization and Consumer Products
(which includes modernization equipment which upgrades an existing center, spare
parts, supplies and consumable products). AMF and Brunswick are the only bowling
center equipment manufacturers that compete on a global basis. Management
believes that AMF's bowling equipment accounts for approximately 41% of the
world's installed base of bowling equipment. Other competitors are typically
smaller companies that tend to offer a narrower range of products and are often
regionally focused. See "-- AMF Bowling Products -- Competition".

New Center Package sales follow the trends in the growth of bowling. As
bowling is introduced and becomes popular in new markets, the economics of
constructing and operating bowling centers become attractive to local market
developers and entrepreneurs. Consequently, they build new bowling centers,
which need to be outfitted with equipment, driving demand for NCPs. For at least
the last 15 years, the vast majority of NCP sales have been to international
markets. This

40
<PAGE> 40

international trend has been fueled by the growth of bowling in several
countries, particularly China, Taiwan and Korea.

Sales of Modernization and Consumer Products to bowling center operators
who manage the growing installed base of bowling equipment provide a stable base
of recurring revenue. These products include both proprietary and standard spare
parts for existing equipment and other products including pins, shoes, supplies
and modernization equipment. Some of these products, such as bowling pins,
should be replaced on approximately an annual basis to maintain a center, while
certain less frequent investments in other equipment are necessary to modernize
a center and are often required to maintain a customer base.

In the U.S. and Korea, which are mature bowling markets, the population per
lane in 1996 was approximately 2,000 and 3,600, respectively. (These figures are
calculated by dividing total population by number of lanes: total population is
obtained from the Population Reference Bureau; lane numbers are estimates
received from AMF regional sales representatives.) In developing markets, the
population per lane is significantly higher, suggesting the opportunity for
additional growth, although there can be no assurance that these markets will
develop to the same extent as the U.S. or Korea, as only a small number of
markets have achieved this level of development. For example, India has over 25
million people per lane of installed bowling equipment, Poland has over 2
million people per lane, Indonesia has over 650,000 people per lane and Brazil
has over 450,000 people per lane.

BUSINESS STRATEGY

CONSOLIDATE THE FRAGMENTED U.S. BOWLING CENTER INDUSTRY

In addition to the 160 centers that AMF has acquired since May 1996, the
Company's dedicated acquisition team has identified approximately 2,000
potential center acquisition candidates in the United States. The Company
employs a regional clustering strategy for its U.S. centers and focuses on
acquiring centers that either fit into existing geographic clusters or could be
the base for forming new clusters. Management believes that none of the
Company's competitors in the U.S. bowling industry is pursuing such an active
acquisition strategy.

IMPROVE ACQUIRED CENTERS' PROFITABILITY

The Company believes that its EBITDA margins are among the highest of
operators of U.S. bowling center chains. This belief is based on publicly
available information and on the Company's knowledge of the industry, due to the
Company's experience in operating the largest U.S. bowling center chain, in
participating in various industry trade associations and in evaluating many U.S.
bowling centers and chains for possible acquisition. Following an acquisition,
management acts to increase profitability by cutting costs and introducing
programs to increase revenue. Specifically, the Company improves marketing
programs, reduces overhead, optimizes staffing, implements improved financial
controls, centralizes management and maintenance of equipment, and centralizes
purchasing. The Company often makes immediate capital and other improvements to
upgrade the centers it acquires which are designed to generate increased revenue
and to further AMF's goal of creating a nationally recognized brand of superior
bowling and entertainment centers.

BUILD A NATIONALLY RECOGNIZED BRAND OF SUPERIOR BOWLING AND ENTERTAINMENT
CENTERS

AMF believes it offers a superior bowling and entertainment experience
utilizing innovative products such as Xtreme(TM) Bowling, which uses
glow-in-the-dark pins and equipment, black lighting

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<PAGE> 41

and music; bumper bowling for children, in which bumpers prevent balls from
rolling into the gutter; computerized, automatic and color scoring; and time
period discounts for certain groups, such as seniors and children. The Company
is also increasing concourse space in certain of its centers for amusement
games, billiards and other activities. AMF is selectively introducing the
"Family Fun Fest" bowling center, which offers expanded state-of-the-art arcade
and video games. The Company also seeks to increase its profile through the
sponsorship of Special Olympics International and by hosting professional
bowling tournaments.

BUILD NEW CENTERS

The Company has built new bowling centers in attractive markets to enhance
its Bowling Centers business and also to serve as a showcase for the products
manufactured by its Bowling Products business. These centers utilize
state-of-the-art equipment and present bowling as part of a family entertainment
experience and are an integral part of AMF's efforts to build a nationally
branded network of superior bowling and entertainment centers. For instance, in
August 1997, the Company opened a new 40-lane bowling center at Chelsea Piers in
New York, the first new bowling center in Manhattan in 30 years.

IMPROVE FOOD AND BEVERAGE REVENUES

The Company estimates that it has over 60 million customer visits per year
in its bowling centers. The Company is expanding and improving the food and
beverage product offerings at many of its centers to take better advantage of
its significant customer traffic. AMF also capitalizes on purchasing economies
of scale. The Company is one of the nation's leading on-premise accounts for
both Anheuser Busch Companies, Inc. and The Coca-Cola Company.

CAPITALIZE ON GROWING GLOBAL DEMAND FOR BOWLING PRODUCTS

Management believes that AMF's well-established global brand name, the
quality of its products, and its comprehensive service and strong direct sales
force and distribution network will enable it to take advantage of growing NCP
demand worldwide. The Company is focused on sales of NCPs (which comprised 48%
of AMF's Bowling Products sales in 1996) into selected countries with
demonstrated strong demand for bowling products. AMF's backlog of NCPs increased
by approximately 46% from 1,426 units at December 31, 1996 to 2,085 units at
October 26, 1997. Customers outside the U.S. comprise over 90% of the current
NCP backlog total, with the largest portion going to markets such as China,
Japan and Germany. In addition, AMF will continue to acquire and to build
international bowling centers on a selective basis, either to enhance the growth
of bowling in countries which present attractive opportunities for the sale of
bowling products or to enhance AMF's competitive position in a particular
country's bowling center industry.

ACCELERATE THE DEVELOPMENT OF BOWLING IN SELECTED INTERNATIONAL MARKETS

In addition to the international markets that currently have a high demand
for bowling products, management believes that selected international markets
which are in the early development stage have the potential for high growth.
Examples of such early stage markets are India which has over 25 million people
per lane of installed bowling equipment, Poland which has over 2 million people
per lane, Indonesia which has over 650,000 people per lane, and Brazil which has
450,000 people per lane. By contrast, mature markets, such as the U.S. and
Korea, have populations per lane of 2,000 and 3,600, respectively. There can be
no assurance that early stage markets will develop to the same extent as the
United States or Korea, as only a small number of markets have achieved this
level of development. AMF seeks to accelerate the industry's growth in early
stage markets by building showcase centers and conducting promotional programs.
As bowling becomes more popular, local developers and entrepreneurs build new
bowling centers, which are outfitted with equipment, and drive demand for NCPs.
To capitalize on this development cycle, AMF has entered into joint ventures to
build, own and operate up to 20 bowling centers in China and Southeast Asia

42
<PAGE> 42

and 39 bowling centers in Brazil and Argentina. The Company is also developing a
center in India and pursuing opportunities in Russia and Poland.

PROVIDE INNOVATIVE AND QUALITY PRODUCTS

AMF expects to continue to maintain its leadership position in
manufacturing by setting industry standards for quality and innovation.
Management believes that AMF has the fastest pinspotters, the highest scoring
lanes and the most durable pins. Since the development of the first automatic
pinspotter over fifty years ago, AMF has been an innovator in the advancement of
such products as automatic scoring, bumpers, and Xtreme(TM) Bowling. AMF
positions its products as high quality and technologically advanced, allowing it
generally to command premium prices. Management believes that AMF uses its
position as an integrated bowling centers operator and bowling products
manufacturer to AMF's advantage in testing and developing product innovations.

INCREASE MODERNIZATION AND CONSUMER PRODUCT SALES

Management expects AMF to benefit as the worldwide base of bowling centers
grows due to the increased popularity of bowling. AMF's brand name, the large
installed base of AMF bowling equipment, AMF's established direct sales force
and distribution network and its quality products will position AMF to increase
sales of Modernization and Consumer Products. These products, which include
modernization equipment, supplies, spare parts and consumable products,
comprised 52% of AMF's Bowling Products sales in 1996. Furthermore, when AMF
acquires or constructs a center and installs state-of-the-art equipment in that
center, management believes that competing centers may purchase Modernization
and Consumer Products, often from AMF, to remain viable competitors to the AMF
center.

RECENT FINANCIAL PERFORMANCE

AMF's management has significantly improved financial results since the May
1996 acquisition. Revenue and EBITDA increased by 33.9% to $318.1 million and by
30.4% to $85.8 million, respectively, for the first six months of 1997 as
compared to the pro forma results for the first six months of 1996. Net loss for
the first six months of 1997 was $12.2 million compared to a pro forma net loss
of $13.5 million for the first six months of 1996. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Recent
Developments" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Consolidated Items -- Net Income (Loss)".
Management believes that AMF's Bowling Centers and Bowling Products businesses
have been characterized by high EBITDA margins and attractive returns on
investment. Management believes that the Company is well-positioned, due to its
long established industry leadership position, the AMF brand, the Company's
large installed base and its strategy, to develop and capitalize on the growth
potential of bowling worldwide.

AMF BOWLING CENTERS

In the United States, AMF is the largest operator of bowling centers, with
(as of October 31, 1997) 361 bowling centers in 36 states and Puerto Rico.
Outside the United States, AMF is also the largest operator of bowling centers,
with (as of October 31, 1997) 86 bowling centers in nine countries: Australia
(38), the United Kingdom (22), Mexico (9), Japan (4), China (including Hong
Kong) (6), France (3), Spain (2), Switzerland (1), and Canada (1). Of the U.S.
centers, 207 were acquired as part of the Acquisition (seven of which were
subsequently closed), 160 were acquired thereafter and one was constructed. Of
the international centers, 78 were acquired as part of the Acquisition, nine
were acquired thereafter, including seven in the United Kingdom and two in
Australia, and one in Japan was closed.

The Company's number of U.S. centers, regional clustering for U.S. centers
(54 clusters) and average size (an average of 38 lanes per U.S. center versus an
industry average of 21 lanes per U.S. center) provide both additional revenue
opportunities and economies of scale. These revenue opportunities include (i)
scheduling flexibility, which improves lane utilization, (ii) the ability to
support an expanded food and beverage operation and (iii) more concourse space
for food and

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<PAGE> 43

beverage offerings, amusement games, billiards and pro shops. Cost savings
resulting from the economies of scale include (a) the ability to distribute
operating and corporate overhead costs (including marketing and advertising
costs) over a larger revenue base and (b) attractive terms from certain of the
Company's suppliers.

Internationally, AMF's centers also are, on average, larger than those of
its competitors. As with its U.S. operations, the number of centers, geographic
clustering and size result in additional revenue opportunities and economies of
scale. The Company is particularly well positioned in the United Kingdom and
Australia.

The geographic diversity of AMF's Bowling Centers operations across
different regions of the U.S. and across nine other countries, along with the
bowling centers industry's historic relative insulation from recessions, has
provided stability to AMF's annual cash flows. See "Risk Factors -- Seasonality
and Market Development Cycles" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Seasonality and Market
Development Cycles".

The Company has an ongoing modernization program that results in its
bowling centers having more upgraded physical plants and attractive appearances
than those of other operators. Management believes that its historical spending
level of approximately 3.7% of Bowling Centers revenue is adequate to cover
routine capital expenditures. Management estimates that only 2% of Bowling
Centers revenue is required for nondiscretionary capital expenditures alone. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Capital Expenditures".

The Bowling Centers business derives its revenue and profits from three
principal sources: (i) bowling, (ii) food and beverage and (iii) other sources,
such as shoe rental, amusement games, billiards and pro shops. In 1996, bowling,
food and beverage and other revenue represented 62%, 24% and 14% of total
Bowling Centers revenue, respectively.

Bowling revenue, the largest portion of a bowling center's revenue and
profitability, is derived from league play, tournament play and recreational
play. Food and beverage sales occur primarily through snack bars that offer
snack foods, soft drinks and, at many centers, alcoholic beverages. AMF has
acquired several centers with large sports bars that provide a large portion of
such centers' revenue. Other revenue is derived from shoe rental and the
operation of amusement games, billiards and pro shops. The shoe rental business
is driven primarily by recreational bowlers who usually do not own a pair of
bowling shoes. Recreational bowlers and non-bowling customers are also the
primary users of amusement games and billiards tables.

RECENT ACQUISITIONS AND JOINT VENTURES

On October 10, 1996, AMF completed the acquisition of 50 bowling centers
and certain related assets and liabilities from Charan. The purchase price of
the Charan acquisition was approximately $106.5 million, subject to certain
adjustments. The Charan acquisition was funded with approximately $40 million
from the sale of equity by AMF Bowling to its existing institutional
stockholders and one of its directors, and with approximately $66.5 million
borrowed under the Acquisition Facility.

On April 24, 1997, AMF completed the acquisition of American Recreation
Centers, Inc. ("ARC"), which operated 43 bowling centers in six states. The
aggregate price of the ARC acquisition was approximately $70.0 million,
including repayment of certain debt and the purchase of related joint venture
interests, and was funded with borrowings under the Acquisition Facility.

Commencing October 31, 1997, AMF is leasing and operating a chain of eight
bowling centers (the "Pin Boys Centers") for a period ending January 6, 1998, at
which time AMF will purchase the personal property of the eight centers and real
estate relating to six of such centers for approximately $18.8 million. AMF will
continue to lease and operate the two centers with respect to which real
property is not acquired.

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<PAGE> 44

In addition, between May 1, 1996 and October 31, 1997, the Company acquired
44 centers in the United States, seven centers in the U.K. and two centers in
Australia from various single-center and small chain operators, and one chain of
15 bowling centers from Conbow. The aggregate purchase price for such
acquisitions was approximately $130.3 million, and was funded with borrowings
under the Acquisition Facility.

As a result of the foregoing acquisitions and after giving effect to the
construction of one center and the closing of eight centers since the
Acquisition, the Company operated 361 U.S. bowling centers and 86 international
bowling centers as of October 31, 1997.

As of October 31, 1997, after giving effect to such acquisitions, $59.0
million remained available under the Acquisition Facility, of which a portion is
expected to partially fund acquisitions that are scheduled to close by the end
of January 1998.

The Company has entered into purchase agreements to acquire eighteen U.S.
centers, including the Pin Boys Centers, from several unrelated sellers. The
aggregate purchase price for such centers is expected to be approximately $38.5
million and is expected to be funded with borrowings under the Acquisition
Facility (or, under the Proposed Amendments, the Working Capital Facility) and
internally generated cash. See "Management's Discussion and Analysis of
Financial Statements and Results of Operation -- Capital Resources".

In April 1997, the Company entered into a joint venture arrangement with
Hong Leong Corporation Limited, a Singapore based conglomerate ("Hong Leong").
Pursuant to the arrangement, the joint venture, to be owned 50% by the Company
and 50% by Hong Leong, is expected to build and operate up to 20 bowling centers
during the next three years. These bowling centers, the first of which is
expected to open during 1997 in Tianjin, China, will be located in China,
Indonesia, Malaysia, the Philippines, Thailand and Vietnam.

In August 1997, the Company entered into a joint venture arrangement with
Playcenter S.A., a Sao Paulo based amusement and entertainment company
("Playcenter"). Pursuant to the arrangement, the joint venture, owned 50% by the
Company and 50% by Playcenter, is expected to build or assume ownership of, and
operate, up to 39 bowling centers in Brazil and Argentina during the next four
years.

The Company expects its total investments in the joint ventures with Hong
Leong and Playcenter to be approximately $12 million and $14 million,
respectively, and expects each joint venture to finance the construction and
acquisition of bowling centers with financing that is non-recourse to the
Company.

On October 20, 1997, the Company acquired Michael Jordan Golf Company,
Inc., a company formed to build and operate golf practice ranges in select U.S.
locations. In connection with such acquisition, the Company agreed to build two
golf practice ranges by the end of 1999.

COMPETITION (BOWLING CENTERS)

Bowling, both as a competitive sport and a recreational activity, faces
competition from numerous alternative activities. The ongoing success of the
Company's Bowling Centers operations is subject to the level of interest in
bowling, the availability and relative cost of other sport, recreational and
entertainment alternatives, the amount of leisure time enjoyed by potential
players, as well as various other social and economic factors over which AMF has
no control. There can be no assurance that bowling will continue to be popular
or that the Company will continue to compete effectively in the industry. See
"Risk Factors -- Bowling Industry Characteristics", "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Performance by
Business Segment -- Bowling Centers" and "-- Business Strategy".

45
<PAGE> 45

The Company's centers also compete with other bowling centers. See
"-- Industry Overview". The Company competes primarily through the quality,
appearance and location of its facilities and through the range of amenities and
service level offered.

FACILITIES (BOWLING CENTERS)

As of October 31, 1997, AMF operated 361 centers in the United States and
86 centers in nine other countries. A regional list of these facilities is set
forth below:

U.S. CENTERS*

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF OWNED/
CLUSTERS CENTERS LEASED
--------- --------- -------
<S> <C> <C> <C>
REGION
Pacific........................................... 8 54 24/30
Great Lakes....................................... 7 51 39/12
Baltimore/Washington.............................. 3 24 15/9
Northeast......................................... 7 52 28/24
Southern.......................................... 10 58 42/16
Mid-Atlantic...................................... 7 48 25/23
Midwest........................................... 6 37 27/10
Texas............................................. 6 35 28/7
-- --- -------
Total........................................... 54 359 228/131
== === =======

</TABLE>

- ---------------
* AMF operates two centers for an unrelated party. The two managed centers are
neither owned nor leased by AMF and, therefore, are not included in the
foregoing table.

INTERNATIONAL CENTERS

<TABLE>
<CAPTION>
NUMBER OF OWNED/
LOCATIONS LEASED
--------- ------
<S> <C> <C>
COUNTRY
Australia....................................................... 38 23/15
United Kingdom.................................................. 22 3/19
Mexico.......................................................... 9 5/4
China (including Hong Kong)..................................... 6 0/6
Japan........................................................... 4 0/4
France.......................................................... 3 0/3
Spain........................................................... 2 0/2
Switzerland..................................................... 1 0/1
Canada.......................................................... 1 1/0
-- -----
Total......................................................... 86 32/54
== =====
</TABLE>

AMF's leases are subject to periodic renewal. Thirty-five of the U.S.
Bowling Centers have leases which expire during the next three years. Twenty-two
of such leases have renewal options. Nineteen of the international Bowling
Centers have leases which expire during the next three years. Twelve of such
leases have renewal options. AMF generally does not have difficulty renewing
leases.

EMPLOYEES (BOWLING CENTERS)

As of July 31, 1997, Bowling Centers operations had approximately 12,882
full- and part-time employees. The Company believes that its relations with its
Bowling Centers employees are satisfactory.

46
<PAGE> 46

NUMBER OF EMPLOYEES

<TABLE>
<CAPTION>
NUMBER OF
EMPLOYEES
----------
<S> <C>
COUNTRY
United States................................................ 10,624
------
International:
Australia................................................. 1,144
United Kingdom............................................ 550
Mexico.................................................... 220
China (including Hong Kong)............................... 122
Japan..................................................... 48
France.................................................... 77
Spain..................................................... 33
Switzerland............................................... 13
Canada.................................................... 51
------
Total International.................................. 2,258
------
Total Worldwide...................................... 12,882
======
</TABLE>

AMF BOWLING PRODUCTS

AMF is one of only two bowling center equipment manufacturers that compete
on a global basis. Management believes that AMF bowling equipment accounts for
approximately 41% of the world's installed base of bowling center equipment and
has supplied or is supplying equipment to an estimated 10,000 bowling centers in
over 50 countries. The Company manufactures and sells bowling center equipment,
including automatic pinspotters, automatic scoring equipment, bowling pins,
lanes, ball returns, and certain spare and modernization parts, and resale
products, such as bowling balls, bags, shoes and other bowlers' aids, sold
primarily through pro shops.

The bowling products business consists of two categories: (i) New Center
Packages (all of the equipment necessary to outfit a new bowling center or
expand an existing bowling center); and (ii) Modernization and Consumer Products
(which includes modernization equipment, spare parts, supplies and consumable
products).

AMF positions its products as high quality, technologically advanced
products, allowing AMF generally to command premium prices. AMF's long history
of bowling equipment innovation began over 50 years ago when AMF revolutionized
ten pin bowling with the introduction of the automatic pinspotter. Today, AMF
manufactures 8800 Gold (the fastest pinspotter for play conducted under
conditions specified by the American Bowling Congress) and 8290 pinspotters,
and, management believes, the highest-scoring lanes and the most durable pins.
The superior speed of AMF's pinspotter directly influences the amount of bowling
revenue a bowling center can generate, and the reliability and ease of repair is
an important marketing tool against sellers of refurbished equipment. AMF's HPL
synthetic lanes, introduced in 1988, are the performance leaders. In the annual
American Bowling Congress tournament, where AMF and Brunswick supply the
equipment in alternating years, every major scoring record has been set on AMF's
synthetic lanes. Internal tests demonstrate that AMF pins are more durable under
stress conditions and are less likely to break. In general, AMF's products are
developed through internal research and development efforts. AMF holds over 40
U.S. patents for its various proprietary products and technologies.

MODERNIZATION AND CONSUMER PRODUCTS

The potential customers for Modernization and Consumer Products include all
bowling centers in operation today, and the number of these potential customers
will continue to grow as the number

47
<PAGE> 47

of centers increases. In order for a bowling center to remain competitive and to
satisfy its customers, the center operator must make certain periodic
investments in the center's equipment. Some of these investments, such as
replacing pins, must be made on approximately an annual basis. These annual
investments represent relatively modest expenditures necessary to maintain the
center. Other equipment, such as automatic scoring systems, replacement lanes
and upgraded automated lane maintenance equipment, require less frequent but
more significant investments by center operators. Management believes that many
of these modernizations are necessary for a center to maintain its existing
customer base.

NEW CENTER PACKAGES

New Center Packages include the equipment necessary to outfit new or expand
existing bowling centers, such as lanes, pinspotters, automatic scoring, bowler
seating, ball returns, masking units and bumpers. AMF is focused on sales of
NCPs into selected countries with demonstrated strong demand for bowling
products, such as China, Japan and Germany. In addition, AMF believes that
markets, such as Argentina, Brazil, Indonesia, India, Poland and other selected
markets in Asia, Eastern Europe and South America, hold the potential for high
growth over the next several years, but are currently in the early stages of the
industry's development. As bowling is introduced in a market and becomes more
popular, local developers and entrepreneurs build new bowling centers, which are
outfitted with equipment, and drive demand for NCPs. To capitalize on this
development cycle, AMF has entered into the joint ventures with Hong Leong and
Playcenter described under "-- AMF Bowling Centers -- Recent Acquisitions and
Joint Ventures". See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Backlog; Recent NCP Sales".

BILLIARDS

In addition to bowling equipment and supplies, AMF manufactures and sells
PlayMaster billiards tables. PlayMaster sells an extensive line of home
billiards tables and a limited line of commercial billiards tables. For the six
months ended June 30, 1997, PlayMaster had revenue of $3.8 million.

COMPETITION (BOWLING PRODUCTS)

AMF is one of the largest manufacturers of bowling center equipment in the
world. Management estimates that AMF accounts for approximately 41% of the
worldwide installed base of bowling center equipment.

AMF and Brunswick are the two largest manufacturers of bowling center
equipment, and are the only full-line manufacturers of NCPs and Modernization
and Consumer Products that compete on a global basis. The Company also competes
with smaller, often regionally focused companies in certain product lines. For
example, DACOS, a Korean-based manufacturer, competes with the Company in the
Asia-Pacific region, primarily in China and Korea.

Because of bowling equipment's relatively long useful life, used equipment
can be refurbished and sold, often to builders of new centers. The Company
actively purchases and resells used equipment in new, high growth markets in
order to compete with refurbishers who often are U.S. based.

PROPERTIES (BOWLING PRODUCTS)

As of October 31, 1997, AMF owned or leased facilities at five locations in
the U.S., four of which are used for its Bowling Products business and one of
which is used for its billiards business. AMF also leased facilities at 28
international locations, which are used as offices or warehouses. These
facilities are listed below.

48
<PAGE> 48

U.S. FACILITIES

<TABLE>
<CAPTION>
APPROXIMATE OWNED/
LOCATION PRODUCTS SQUARE FOOTAGE LEASED
- ----------------------- -------------------------------------------- -------------- -------
<S> <C> <C> <C>
Richmond, VA........... World headquarters,
pinspotters, automatic scoring, synthetic
lanes, other capital equipment, 360,000 Owned
consumer products, used pinspotters 54,000 Leased
Lowville, NY........... Pins and wood lanes 121,000 Owned
50,000 Owned
Golden, CO............. Lane maintenance equipment (Century) 50,000 Leased
Bland, MO.............. Billiard tables (PlayMaster) 37,210 Owned
33,373 Leased
32,000 Owned
24,000 Owned
16,000 Owned
11,000 Leased
Miami, FL.............. Office 200 Leased
</TABLE>

INTERNATIONAL FACILITIES

<TABLE>
<CAPTION>
APPROXIMATE OWNED/
LOCATION FUNCTIONS SQUARE FOOTAGE LEASED
- ---------------------------------------------------- ---------- -------------- -------
<S> <C> <C> <C>
Emu Plains, Australia............................... Office 400 Leased
Warehouse 10,100 Leased
Brussels, Belgium................................... Office 1,000 Leased
Ontario, Canada..................................... Office 400 Leased
Beijing, China...................................... Office 390 Leased
Guangzhou, China.................................... Office 380 Leased
Warehouse 1,650 Leased
Hong Kong........................................... Office 2,500 Leased
Office 1,125 Leased
Shanghai, China..................................... Office 400 Leased
Levallois-Perret, France............................ Office 984 Leased
Warehouse 1,470 Leased
Mainz-Kastel, Germany............................... Office 656 Leased
Warehouse 1,650 Leased
Bangalore, India.................................... Office 1,050 Leased
New Delhi, India.................................... Office 2,000 Leased
Yokohama, Japan..................................... Office 4,626 Leased
Warehouse 8,880 Leased
Service
Center 1,634 Leased
Seoul, Korea........................................ Office 5,119 Leased
Warehouse 7,472 Leased
Mexico City, Mexico................................. Office 1,300 Leased
Warehouse 11,431 Leased
Warsaw, Poland...................................... Office 209 Leased
Granna, Sweden...................................... Office 4,515 Leased
Warehouse 12,705 Leased
Hemel Hempstead, United Kingdom..................... Office 11,500 Leased
Warehouse 11,770 Leased
</TABLE>

49
<PAGE> 49

EMPLOYEES (BOWLING PRODUCTS)

As of July 31, 1997, the Bowling Products business had approximately 995
full-time employees. The Company believes that its relations with its Bowling
Products employees are satisfactory. Employees are divided along functional
lines as shown in the table below.

EMPLOYEES

<TABLE>
<CAPTION>
SEGMENT NUMBER OF EMPLOYEES
--------------------------------------------------------- -------------------
<S> <C>
Manufacturing............................................ 653
---
Sales
Australia.............................................. 8
Americas............................................... 48
Europe................................................. 53
Asia-Pacific........................................... 192
Japan.................................................. 41
---
Total Sales......................................... 342
---
Total Worldwide................................ 995
===
</TABLE>

EMPLOYEES (CORPORATE)

As of July 31, 1997, the Company had approximately 142 full-time corporate
employees. The Company believes that its relations with its corporate employees
are satisfactory.

LEGAL PROCEEDINGS

The Company currently and from time to time is subject to claims and suits
arising in the ordinary course of its business, including employment
discrimination claims, workers' compensation claims, and personal injury claims
from customers of Bowling Centers. In certain such actions, plaintiffs request
punitive or other damages that may not be covered by insurance. In the opinion
of management, the various asserted claims and litigation in which the Company
currently is involved will not have a material adverse effect on its financial
position or results of operations. However, no assurance can be given as to the
ultimate outcome with respect to such claims and litigation.

On March 5, 1996, the defendant in an action entitled Northland Bowl and
Sports Center, Inc. and Recreation Association, II v. Golden Giant, Inc., d/b/a
Golden Giant Building Systems, Court of Common Pleas, Centre County,
Pennsylvania, asserted a third-party claim against AMF Bowling Products, Inc.
(formerly named AMF Bowling, Inc.), a wholly owned, indirect subsidiary of AMF
Bowling ("AMF Bowling Products"), and other parties. Defendant, Golden Giant,
Inc. ("Golden Giant"), a construction company, was originally named as the sole
defendant by a bowling center (not owned or operated by the Company) in
connection with the collapse of such center's roof in early 1994. Golden Giant
named AMF Bowling Products as an additional defendant, charging it with
negligence and breach of implied warranty for installing scoring monitors (four
years before the roof collapsed) on a portion of the building that allegedly
could not adequately support the additional weight of the equipment. The bowling
center plaintiff claims total damages in amounts exceeding $3.5 million, and
Golden Giant asserts that, if the plaintiff is entitled to any recovery, it
should be in whole or part against AMF Bowling Products. On March 25, 1997, an
order was entered dismissing AMF Bowling Products from the lawsuit, which
continues against the other defendants. The plaintiff has appealed the order
dismissing AMF Bowling Products, and in October 1997, the appellate court denied
the plaintiff permission to appeal.

50
<PAGE> 50

REGULATORY MATTERS

There are no unique federal or state regulations applicable to bowling
center operations or equipment manufacturing. State and local governments
require establishments to hold permits to sell alcoholic beverages, and,
although regulations vary from state to state, once permits are issued, they
generally remain in place indefinitely (except for routine renewals) without
burdensome reporting or supervision other than revenue tax reports. See "Risk
Factors -- International Operations".

ENVIRONMENTAL MATTERS

AMF's operations are subject to federal, state, local and foreign
environmental laws and regulations that impose limitations on the discharge of,
and establish standards for the handling, generation, emission, release,
discharge, treatment, storage and disposal of, certain materials, substances and
wastes. AMF believes that its operations are in material compliance with the
terms of all applicable environmental laws and regulations as currently
interpreted.

AMF has received notices of potential liability under CERCLA or analogous
state statutes at eight off-site disposal facilities. AMF believes that the
entity involved was a de minimis contributor of waste at each of these sites. In
addition, in connection with the Acquisition, AMF Reece Inc., which is owned by
certain of the prior owners of AMF, will be required to indemnify AMF for the
liability at three of these sites under an indemnity agreement which certain of
the prior owners of AMF were required by such agreement to procure. AMF does not
believe that CERCLA liabilities for these eight sites in the aggregate will have
a material adverse effect on AMF's business or financial condition taken as a
whole.

AMF cannot predict with any certainty whether existing conditions or future
events, such as changes in existing laws and regulations, may give rise to
additional environmental costs. Furthermore, actions by federal, state, local
and foreign governments concerning environmental matters could result in laws or
regulations that could increase the cost of producing AMF's products, or
providing its services, or otherwise adversely affect the demand for its
products or services. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Environmental Matters".

51
<PAGE> 51

MANAGEMENT

OFFICERS AND DIRECTORS

The following table sets forth information concerning the individuals who
are the executive officers and directors of AMF Bowling and certain other
officers of AMF:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- -------------------------------------------------
<S> <C> <C>
Richard A. Friedman................ 39 Director and Chairman
Douglas J. Stanard................. 50 Director; President and Chief Executive Officer
Stephen E. Hare.................... 44 Director; Executive Vice President; Chief
Financial Officer and Treasurer
Michael P. Bardaro................. 46 Vice President; Secretary and Corporate
Controller
Paul D. Barkley.................... 41 Vice President, U.S. Operations of AMF Bowling
Centers
Stephen C. Mackie.................. 48 Vice President, International Operations of AMF
Bowling Centers
Steven H. Buckley.................. 48 Vice President, Food and Beverage of AMF Bowling
Centers
Lawrence C. Kind................... 45 Vice President of AMF Bowling Products
J. Randolph V. Daniel, IV.......... 37 Vice President, New Center/Modernization Products
of AMF Bowling Products
J. Simon Shearer................... 41 Vice President, Worldwide Quality Management of
AMF Bowling Products
Merrell C. Wreden.................. 48 Vice President, Marketing
Charles G. Moss.................... 36 Director of Corporate Development
Daniel M. McCormack................ 52 Vice President and General Counsel
Terence M. O'Toole................. 39 Director
Peter M. Sacerdote................. 59 Director
Charles M. Diker................... 62 Director
Paul B. Edgerley................... 41 Director
Howard A. Lipson................... 33 Director
Thomas R. Wall IV.................. 39 Director
</TABLE>

DIRECTORS AND EXECUTIVE OFFICERS OF AMF BOWLING

RICHARD A. FRIEDMAN is a Managing Director of Goldman Sachs where he is the
head of the Principal Investment Area. He joined Goldman Sachs in 1981. Mr.
Friedman is on the Advisory Committees or Boards of Directors of Diamond Cable
Communications PLC, Marcus Cable Company, L.P., and Polo Ralph Lauren
Corporation. He received an A.B. from Brown University and an M.B.A. from The
University of Chicago.

DOUGLAS J. STANARD is the President and Chief Executive Officer of AMF
Bowling. He served as President of AMF Worldwide Bowling Centers from 1993 to
1995 and President of AMF U.S. Bowling Centers in 1992. He joined AMF in 1992
after having been President of Stewart Foods, Inc. from 1989 to 1992 and
President of Beatrice International Food (Europe) S.A. from 1984 to 1988. Mr.
Stanard received a B.S. from Northern Illinois University and a J.D. from The
College of William and Mary.

STEPHEN E. HARE is the Executive Vice President and Chief Financial Officer
of AMF Bowling and has been Executive Vice President and Chief Financial Officer
of Bowling Worldwide since he joined AMF in May 1996. Prior to joining AMF, Mr.
Hare was Senior Vice President and Chief Financial Officer of James River
Corporation of Virginia, beginning in 1992. Before joining James River
Corporation, he was Senior Vice President of Investment Banking at Kidder,
Peabody & Co. in New

52
<PAGE> 52

York. Mr. Hare holds a Certified Public Accountant license. He received a B.B.A.
from the University of Notre Dame and an M.B.A. from the Harvard Graduate School
of Business Administration.

MICHAEL P. BARDARO is a Vice President, Secretary and Corporate Controller
of AMF Bowling. He joined AMF in 1994 after having been Controller at General
Medical Manufacturing Co. in Richmond, Virginia between 1989 and 1994 and Vice
President/Controller at Virginia Linen Service, Inc. between 1986 and 1989. Mr.
Bardaro holds a Certified Public Accountant License in Virginia. He received a
B.S. in Accounting from the University of Cincinnati.

TERENCE M. O'TOOLE is a Managing Director of Goldman Sachs in the Principal
Investment Area. He joined Goldman Sachs in 1983. Mr. O'Toole serves on the
Boards of Directors of Concentric Network Corporation, Insilco Corporation,
21(st) Century Newspapers, Inc. and Western Wireless Corporation. He holds a
B.S. degree from Villanova University and an M.B.A. from the Stanford University
Graduate School of Business.

PETER M. SACERDOTE is a limited partner in The Goldman Sachs Group. He
joined Goldman Sachs in 1964 and served as a general partner from 1973 to 1990.
Mr. Sacerdote is Chairman of Goldman, Sachs & Co. Principal Investment
Committee. Mr. Sacerdote serves on the Boards of Directors of Franklin
Resources, Inc. and QUALCOMM Incorporated. Mr. Sacerdote has a B.E.E. from
Cornell University and an M.B.A. from the Harvard Graduate School of Business
Administration.

CHARLES M. DIKER has been a non-managing principal of Weiss, Peck & Greer,
an investment management firm, since 1975. He has been Chairman of the Board of
Cantel Industries since 1986. Mr. Diker serves as a director of BeautiControl
Cosmetics, International Specialty Products, Data Broadcasting and Chyron
Corporation. He received an A.B. from Harvard College and an M.B.A. from the
Harvard Graduate School of Business Administration.

PAUL B. EDGERLEY has been Managing Director of Bain Capital, Inc., an
investment firm, since 1993. From 1990 to 1993 he was a General Partner of Bain
Venture Capital, and from 1988 to 1990 he was a principal of Bain Capital
Partners. He serves on the Boards of Directors of Steel Dynamics, Inc. and GS
Industries, Inc. Mr. Edgerley received a B.S. from Kansas State University and
an M.B.A. with distinction from the Harvard Graduate School of Business
Administration.

HOWARD A. LIPSON is Senior Managing Director of The Blackstone Group, and
has been involved in the firm's principal activities since 1988. He serves on
the Boards of Directors of Allied Waste Industries, Inc., Rose Hills Company,
Prime Succession, Inc., Volume Services, Inc. and Ritvik Holdings, Inc. Mr.
Lipson received a B.S. in Economics from the Wharton School of The University of
Pennsylvania.

THOMAS R. WALL IV joined Kelso in 1983 and has served as a Managing
Director since 1990. Mr. Wall is a director of CCA Holdings Corp., CCT Holdings
Corp., Charter Communications Long Beach, Inc., Consolidated Vision Group, Inc.,
Cygnus Publishing, Inc., IXL Holdings, Inc., Mitchell Supreme Fuel Company,
Mosler Inc., Peebles, Inc., TransDigm Inc., 21(st) Century Newspapers, Inc.,
Hillside Broadcasting of North Carolina, Inc. and Tyler Refrigeration
Corporation.

OTHER OFFICERS OF AMF

PAUL D. BARKLEY has served as Vice President, U.S. Operations of AMF
Bowling Centers since February 1997. Mr. Barkley served as Vice President of
U.S. Operations, Western U.S. of AMF Bowling Centers in 1996 and as a region
manager in 1995. In 1993 and 1994, Mr. Barkley served as a Region Manager for
Fair Lanes. Mr. Barkley has a degree in accounting from Arizona State
University.

STEPHEN C. MACKIE has served as Vice President, International Operations of
AMF Bowling Centers since May 1996. Mr. Mackie has served AMF Bowling Centers in
various other capacities since 1980.

53
<PAGE> 53

STEVEN H. BUCKLEY has served as Vice President, Food and Beverage of AMF
Bowling Centers since February 1997. Prior to joining AMF, Mr. Buckley was a
Vice President at Chock Full O' Nuts Corp. Mr. Buckley received a B.B.A. in
finance from Hofstra University.

LAWRENCE C. KIND has served as Vice President, Bowling Products since
February 1997. Mr. Kind had served as Region Manager of AMF Bowling Centers from
1993 to February 1997. Mr. Kind received a B.A. in Business from Long Island
University.

J. RANDOLPH V. DANIEL, IV was named Vice President, New
Center/Modernization Products for AMF Bowling Products in February 1997. Mr.
Daniel served as General Manager, Capital Equipment Division from 1995 to
February 1997 and as Director of Operations, Capital Equipment Division from
1993 to 1994 for AMF Bowling Products. Mr. Daniel received a B.S. and an M.B.A.
from the University of Virginia.

J. SIMON SHEARER has served as Vice President Worldwide Quality at AMF
Bowling Products since February 1997. Mr. Shearer has served AMF in various
other capacities since 1981. Mr. Shearer attended the University of South
Australia.

MERRELL C. WREDEN has served as Vice President, Marketing since October
1996. Prior to joining AMF, Mr. Wreden was Group Manager Advertising, Promotion
at The Remington Arms Company, Inc. since 1993. Mr. Wreden has a B.A. from the
University of Virginia.

CHARLES G. MOSS has served as Director of Center Development since May
1996. Mr. Moss has served AMF in various other capacities since 1991. Mr. Moss
received a B.A. and an M.B.A. from the University of Virginia.

DANIEL M. MCCORMACK has been a Vice President and General Counsel of AMF
since May 1996. Prior to that time, Mr. McCormack was an attorney with CCA
Industries, Inc., where he had been employed since 1990. Mr. McCormack has a
B.A. and J.D. from University of Richmond.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has three standing committees: an Audit Committee, a
Compensation Committee and an Executive Committee.

The Audit Committee has general responsibility for supervising financial
controls, as well as responsibility for accounting and auditing activities of
the Company. The Audit Committee annually reviews the qualifications of the
Company's independent certified public accountants, makes recommendations to the
Board of Directors as to their selection and reviews the planning, fees and
results of their audit. The Audit Committee will consist solely of independent
directors.

The Compensation Committee is responsible for reviewing and approving the
amount and type of consideration to be paid to senior management and is
authorized to make grants and various other decisions under the AMF Bowling,
Inc. 1996 Stock Incentive Plan (the "Stock Incentive Plan") and to make
determinations as to a number of the terms of awards granted under the Stock
Incentive Plan. See "-- AMF Bowling, Inc. 1996 Stock Incentive Plan".

The Executive Committee may exercise all the powers and authority of the
Board of Directors (subject to any restrictions under Delaware law) except with
respect to those actions requiring a Special Vote (as hereinafter defined) and,
in the case of matters requiring a prior meeting of the Board of Directors, only
after such meeting has occurred. See "Principal Stockholders -- Stockholders
Agreement".

EXECUTIVE COMPENSATION

The following table shows for each of the three years ended December 31,
1994, 1995 and 1996, all annual compensation paid or accrued by AMF and the
Predecessor Company, as applicable, to AMF Bowling's Chief Executive Officer and
its three executive officers (collectively, the "Named Executive Officers").

54
<PAGE> 54

EXECUTIVE COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------
------------------- SECURITIES ALL OTHER
SALARY BONUS UNDERLYING STOCK LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS(#)(a) ($) ($)(b)
- -------------------------------- ---- ------- ------- ---------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Douglas J. Stanard.............. 1994 180,000 112,500 -- -- --
President/Chief Executive 1995 225,000 204,750 -- -- --
Officer 1996 308,333 229,167 130,000 -- 7,500
Richard A. Friedman(c).......... 1996 -- -- -- -- --
Chairman
Stephen E. Hare................. 1994 N/A N/A N/A N/A N/A
Executive Vice President/ 1995 N/A N/A N/A N/A N/A
Chief Financial Officer/ 1996 178,333(d) 266,667(e) 105,000 N/A --
Treasurer
Robert L. Morin(f).............. 1994 103,000 59,950 -- -- --
Executive Vice President/ 1995 180,286 60,125 -- -- --
Director of Worldwide 1996 228,341 83,325 110,000 860,100(g) 7,500
Market Development
Michael P. Bardaro.............. 1994 44,371(h) 4,500 -- -- --
Vice President/Secretary 1995 95,833 29,958 -- -- 2,327
and Corporate Controller 1996 120,958 40,076 25,000 -- 168,338(i)
</TABLE>

- ---------------

(a) Options to purchase shares of Common Stock.

(b) Unless otherwise indicated, all other compensation represents 401(k) plan
and profit-sharing contributions made by Bowling Worldwide.

(c) Mr. Friedman ceased to hold the positions of Chief Executive Officer and
President of AMF Bowling on July 31, 1997, at which time Mr. Stanard, who
had been and continues to be Chief Executive Officer of AMF's principal
subsidiaries, assumed the additional titles of President and Chief Executive
Officer of AMF Bowling.

(d) Mr. Hare's employment with Bowling Worldwide began on May 28, 1996.

(e) Mr. Hare received two bonuses with respect to 1996, one for $166,667 and one
for $100,000. Mr. Hare used the proceeds of the $166,667 bonus to pay a
portion of the purchase price for 150,000 shares of Common Stock. Further,
the Company loaned Mr. Hare $62,614 to be used to pay taxes associated with
such bonus. In exchange, Mr. Hare gave the Company a full recourse
promissory note secured by the 150,000 shares of Common Stock. See
"-- Employment Agreements".

(f) Mr. Morin's employment terminated, and he resigned all positions with AMF
and its affiliates as of February 28, 1997.

(g) Prior to the Acquisition, Mr. Morin held 10,000 shares of phantom stock in
the Capital Equipment Division ("CED") of the Predecessor Company under a
phantom stock plan (the "Phantom Stock Plan"). Under the Phantom Stock Plan,
the phantom stock was valued at five times the average earnings of CED for
the current and two preceding fiscal years. In connection with the
Acquisition, the shares of phantom stock issued under the Phantom Stock Plan
were exchanged for $86.01 per share and the Phantom Stock Plan was
terminated.

(h) Mr. Bardaro's employment with AMF began on July 5, 1994. On July 31, 1997,
Mr. Bardaro was elected Vice President, Secretary and Corporate Controller
of AMF Bowling.

(i) Includes a "special one-time bonus" in the amount of $161,388 paid by the
Predecessor Company in connection with the Acquisition.

55
<PAGE> 55

OPTION GRANTS

The following table provides information on grants of Stock Options in 1996
to the Named Executive Officers.

<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OF TOTAL
SECURITIES STOCK OPTIONS
UNDERLYING GRANTED TO EXERCISE
STOCK OPTIONS EMPLOYEES PRICE GRANT DATE
GRANTED IN FISCAL PER PRESENT
NAME (SHARES)(1)(2)(3) 1996 SHARE EXPIRATION DATE VALUE(4)
- ----------------------- ----------------- ------------- -------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Douglas J. Stanard..... 130,000 10.6% $ 10.00 May 1, 2006 $ 3.05
Stephen E. Hare........ 105,000 8.6% $ 10.00 May 28, 2006 $ 3.05
Robert L. Morin(5)..... 110,000 9.0% $ 10.00 May 1, 2006 $ 3.05
Michael P. Bardaro..... 25,000 2.0% $ 10.00 August 28, 2006 $ 3.08
</TABLE>

- ---------------
(1) Subsequent to January 1, 1997, Mr. Stanard, Mr. Hare and Mr. Bardaro were
granted Stock Options to purchase 25,000, 15,000, 10,000 shares of Common
Stock, respectively. These options are exercisable at $10 per share and for
a 10-year period expiring on June 11, 2007. All such Stock Options were
granted under the Stock Incentive Plan.

(2) All Stock Options listed in this table other than Mr. Stanard's Stock
Options to purchase 130,000 shares of Common Stock were granted under the
Stock Incentive Plan.

(3) Of the Stock Options granted to each Named Executive Officer listed in this
table and that will remain outstanding, 20% vest on each anniversary of
their grant until all have vested. The first anniversary of Mr. Stanard's
grant was May 1, 1997; the first anniversary of Mr. Hare's grant was May 28,
1997; and the first anniversary of Mr. Bardaro's grant was August 28, 1997.

(4) The present value of the grant at the date of grant is estimated using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for these grants: risk-free rate of return of 6.5%;
expected dividend yield of zero; expected time of exercise of ten years;
expected volatility of zero, due to the lack of a public trading market for
the securities underlying the options at the time of grant, based on the
minimum value method. No adjustments were made to reflect forfeiture risk or
non-transferability.

(5) In connection with the termination of his employment with AMF, Mr. Morin's
Stock Options were cancelled.

OPTION EXERCISES AND YEAR-END VALUES

The following table provides information for the Named Executive Officers
regarding the number and value of all their unexercised Stock Options at
December 31, 1996. No such officers exercised any Stock Options in fiscal year
1996.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED STOCK OPTIONS AT IN-THE-MONEY STOCK OPTIONS AT
DECEMBER 31, 1996 (SHARES) DECEMBER 31, 1996($)(1)
------------------------------- -----------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------------- ------------------------------- -----------------------------
<S> <C> <C>
Douglas J. Stanard................... 0 / 130,000 $ 0 / 0
Stephen E. Hare...................... 0 / 105,000 $ 0 / 0
Robert L. Morin...................... 0 / 110,000 $ 0 / 0
Michael P. Bardaro................... 0 / 25,000 $ 0 / 0
</TABLE>

- ---------------
(1) The fair market value of Stock Options as of December 31, 1996 was assumed
to be $10.00 per share, equal to the grant price, due to the lack of a
public trading market for the securities underlying the Stock Options.

EMPLOYMENT AGREEMENTS

Mr. Stanard and Mr. Hare each have an employment agreement (collectively,
the "Executive Employment Agreements") with AMF Bowling and Bowling Worldwide.
Mr. Stanard's Executive

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<PAGE> 56

Employment Agreement is for an employment period ending on May 1, 1999, and Mr.
Hare's is for an employment period ending on May 28, 1999. Each executive
receives compensation consisting of salary and an incentive bonus if certain
operational and financial targets are met. Mr. Stanard's annual base salary is
$400,000 and Mr. Hare's annual base salary is $300,000. Both Executive
Employment Agreements provide for the payment of an annual bonus if certain
operational and financial targets determined by the Board of Directors of
Bowling Worldwide (the "Targets") are attained, and that the executive will earn
a smaller annual bonus if less than 100% but more than 90% of the Targets are
attained. Notwithstanding this provision, Mr. Hare's Executive Employment
Agreement additionally states that his annual bonus would not be less than
$100,000 for the fiscal year ending December 31, 1996 and will not be less than
$50,000 for the fiscal year ending December 31, 1997.

Under their respective Executive Employment Agreements, Mr. Stanard holds
the position of Chief Operating Officer of Bowling Worldwide and Mr. Hare holds
the position of Chief Financial Officer of Bowling Worldwide. In addition, Mr.
Stanard was elected President and Chief Executive Officer of AMF Bowling on July
31, 1997 and is currently serving as President of AMF Bowling Centers Inc., AMF
Bowling Products and certain other related entities. Mr. Hare also serves as
Executive Vice President, Chief Financial Officer and Treasurer of AMF Bowling.

The Executive Employment Agreements provide for payment of accrued
compensation, continuation of certain benefits and payment of a portion of the
executive's bonus (if the applicable Targets are later met) following
termination of employment by Bowling Worldwide under certain circumstances. The
Executive Employment Agreements further provide for a severance payment equal to
the executive's annual base salary if termination by Bowling Worldwide is not
due to death or disability. The executive's employment will be deemed to have
been terminated by Bowling Worldwide if all or substantially all of the stock or
assets of Bowling Worldwide are sold or disposed of to an unaffiliated third
party and the executive is not thereafter employed by AMF Bowling or one of its
continuing affiliates; however, neither AMF Bowling nor Bowling Worldwide will
have any obligations with respect to accrued salary, continuation of benefits,
allocated portion of bonus and, if applicable, severance payments to either Mr.
Stanard or Mr. Hare upon termination of his employment if he is hired by the
purchaser of Bowling Worldwide's stock or assets, or if his employment is
continued by Bowling Worldwide.

Mr. Stanard purchased, pursuant to his Executive Employment Agreement,
150,000 shares of Common Stock (the "Purchased Stock") for $500,000 in cash plus
a non-recourse promissory note for $1,000,000, payable to AMF Bowling and
secured by the Purchased Stock which has been pledged pursuant to a stock pledge
agreement between Mr. Stanard and AMF Bowling. Mr. Hare purchased 150,000 shares
of Common Stock for $500,000 in cash plus a non-recourse promissory note for
$1,000,000, payable to AMF Bowling and secured by the Purchased Stock which has
been pledged pursuant to a stock pledge agreement between Mr. Hare and AMF
Bowling. Mr. Hare received a bonus of $166,667 in connection with his employment
with AMF. Mr. Hare used the proceeds of such bonus to pay a portion of the
purchase price for his Purchased Stock. Further, the Company loaned Mr. Hare
$62,614 to be used to pay taxes associated with such bonus. In exchange, Mr.
Hare gave the Company a full recourse promissory note secured by his Purchased
Stock. In addition, Mr. Stanard and Mr. Hare were granted Stock Options to
purchase 130,000 and 105,000 shares of Common Stock, respectively. Unless sooner
exercised or forfeited as provided, such Stock Options expire on May 1, 2006,
and May 28, 2006, respectively. To the extent not inconsistent with the
Executive Employment Agreements, such Stock Options are governed by the Stock
Incentive Plan. Twenty percent of Mr. Stanard's Stock Options vested on May 1,
1997 and another twenty percent will vest on each May 1 thereafter through the
year 2001; and twenty percent of Mr. Hare's Stock Options vested on May 28, 1997
and another twenty percent will vest on each May 28 thereafter through the year
2001.

The Executive Employment Agreements further provide that, prior to the
consummation of a public offering or offerings by AMF Bowling with gross
proceeds in the aggregate of at least $100

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<PAGE> 57

million (an "IPO"), AMF Bowling may, upon termination of the executive's
employment for any reason (including death), repurchase all of the shares of
Purchased Stock and any shares of Common Stock issued upon exercise of the Stock
Options (together, "Restricted Stock") held by him for fair market value as of a
specified date. The executive or his legal representative may, prior to such an
IPO, require AMF Bowling to repurchase all of his Restricted Stock at fair
market value (in the case of death or disability) or otherwise at the original
price paid for the shares, if Bowling Worldwide terminates his employment for
any reason. The consummation of the Offerings will constitute an IPO for
purposes of the Executive Employment Agreements and, accordingly, the foregoing
rights will terminate upon consummation of the Offerings. Immediately prior to
certain change in control transactions any unvested Stock Options will vest.

If any successor to AMF Bowling or Bowling Worldwide acquires all or
substantially all of the business and/or assets of AMF Bowling or Bowling
Worldwide, AMF Bowling may purchase all of the Restricted Stock held by the
executive for its fair market value, and any Stock Options then held by him for
the fair market value of the underlying Common Stock less the exercise price of
the Stock Options.

Prior to February 28, 1997, Mr. Morin was employed by AMF Bowling and a
subsidiary thereof pursuant to an employment agreement (the "Morin Employment
Agreement") on terms substantially similar to those of Mr. Stanard's Executive
Employment Agreement as described above. Mr. Morin's annual base salary was
$250,000. Pursuant to the Morin Employment Agreement, Mr. Morin purchased
150,000 shares of Common Stock ("Morin Purchased Stock") for $500,000 in cash
plus a non-recourse promissory note for $1,000,000 (the "Morin Note"), payable
to AMF Bowling and secured by the Morin Purchased Stock. In addition, Mr. Morin
was awarded Stock Options to purchase 110,000 shares of Common Stock.

As of February 28, 1997, Mr. Morin's employment terminated, and he resigned
all positions with AMF and its related entities. Pursuant to the terms of the
Morin Employment Agreement, Mr. Morin received a cash payment of $270,000,
representing severance pay equal to his annual base salary and an allocable
bonus in the amount of $20,000. Mr. Morin is also entitled to receive an amount
equal to the full balance of his 401(k) plan as of the close of business on
February 28, 1997. In addition, AMF Bowling repurchased the Morin Purchased
Stock for $500,000 in cash plus the cancellation of the Morin Note, including
interest thereon. The Stock Options granted to Mr. Morin were cancelled.

AMF BOWLING, INC. 1996 STOCK INCENTIVE PLAN

In connection with the Acquisition, AMF Bowling adopted the Stock Incentive
Plan under which AMF Bowling may grant incentive awards in the form of shares of
Common Stock ("Restricted Stock Awards"), options to purchase shares of Common
Stock ("Stock Options") and stock appreciation rights ("Stock Appreciation
Rights") to certain officers, employees, consultants and non-employee directors
("Participants") of AMF Bowling and its affiliates. The total number of shares
of Common Stock initially reserved and available for grant under the Stock
Incentive Plan is 1,767,151. As of October 31, 1997, Stock Options to purchase
1,668,000 shares of Common Stock were outstanding, at an exercise price of
$10.00 per share. The Compensation Committee is authorized to make grants and
various other decisions under the Stock Incentive Plan and to make
determinations as to a number of the terms of awards granted under the Stock
Incentive Plan. Unless otherwise determined by the Compensation Committee, any
Participant granted an award under the Stock Incentive Plan must become a party
to, and agree to be bound by, the Stockholders Agreement.

Stock Option awards under the Stock Incentive Plan may include incentive
Stock Options, non-qualified Stock Options, or both types of Stock Options, in
each case with or without Stock Appreciation Rights. Stock Options are
nontransferable (except under certain limited circumstances) and, unless
otherwise determined by the Compensation Committee, have a term of ten

58
<PAGE> 58

years. Upon a Participant's death or when the Participant's employment with AMF
Bowling or the applicable affiliate of AMF Bowling is terminated for any reason,
such Participant's previously unvested Stock Options are forfeited and the
Participant or his legal representative may, within three months (if termination
of employment is for any reason other than death) or one year (in the case of
the Participant's death), exercise any previously vested Stock Options.

Stock Appreciation Rights may be granted in conjunction with all or part of
any Stock Option award, and are exercisable, subject to certain limitations,
only in connection with the exercise of the related Stock Option. Upon the
termination or exercise of the related Stock Option, Stock Appreciation Rights
terminate and are no longer exercisable. Stock Appreciation Rights are
transferable only with the related Stock Options.

Unless otherwise provided in the related award agreement or, if applicable,
the Stockholders Agreement, immediately prior to certain change of control
transactions described in the Stock Incentive Plan, all outstanding Stock
Options and Stock Appreciation Rights will, subject to certain limitations,
become fully exercisable and vested and any restrictions and deferral
limitations applicable to any Restricted Stock Awards will lapse.

The Stock Incentive Plan will terminate ten years after its effective date
of May 1, 1996; however, awards outstanding as of such date will not be affected
or impaired by such termination. The Board of Directors and the Compensation
Committee have authority to amend the Stock Incentive Plan and awards granted
thereunder, subject to the terms of the Stock Incentive Plan.

Through October 31, 1997, Stock Options to purchase 1,798,000 shares of
Common Stock were granted (of which Stock Options to purchase 1,668,000 shares
of Common Stock were granted under the Stock Incentive Plan) and remain
outstanding. The exercise price for all such Stock Options is $10.00 per share.

Pursuant to an Option Agreement (the "Diker Option Agreement"), dated May
1, 1996, Mr. Diker, a director of AMF Bowling, AMF Group Holdings and Bowling
Worldwide was granted, pursuant to the Stock Incentive Plan, non-qualified Stock
Options to purchase 100,000 shares of Common Stock at an exercise price of
$10.00 per share. One third of such Stock Options vested on May 1, 1996, one
third vested on May 1, 1997 and the remaining Stock Options vest on May 1, 1998.
The Diker Option Agreement provides that, prior to an IPO, AMF Bowling may, upon
termination of Mr. Diker's service as a director of AMF Bowling for any reason
(including death but excluding disability), repurchase all of the shares of
Restricted Stock held by him for fair market value as of a specified date. Mr.
Diker or his legal representative may, prior to an IPO, require AMF Bowling to
repurchase all of his Restricted Stock at fair market value (in the case of
death or disability) or otherwise at the original price paid for the shares if
AMF Bowling terminates his service as a director of AMF Bowling for any reason.
If any successor to AMF Bowling acquires all or substantially all of the
business and/or assets of AMF Bowling, AMF Bowling may purchase all of the Stock
Options then held by Mr. Diker for the fair market value of the underlying
Common Stock less the exercise price of the Stock Options. Mr. Diker is a party
to the Stockholders Agreement and any shares of Common Stock held by Mr. Diker
will be subject to the terms of the Stockholders Agreement in addition to the
terms of his Option Agreement.

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<PAGE> 59

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Common Stock, as of October 31, 1997 and as adjusted to reflect
the sale of the shares of Common Stock offered by AMF Bowling in the Offerings,
by (i) each stockholder who is known by AMF Bowling to own beneficially more
than 5% of the outstanding Common Stock prior to the Offerings, (ii) each
director of AMF Bowling, (iii) each Named Executive Officer of AMF Bowling and
(iv) all directors and executive officers of AMF Bowling as a group. Except as
set forth in the footnotes to the table, each stockholder listed below has
informed AMF that such stockholder has (a) sole voting and investment power with
respect to such stockholder's shares of Common Stock and (b) record and
beneficial ownership with respect to such stockholder's shares of Common Stock.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO THE SHARES BENEFICIALLY OWNED
OFFERINGS(1)(2) AFTER THE OFFERINGS(1)(2)(3)
NAME AND ADDRESS OF BENEFICIAL ------------------------- ------------------------------
OWNER NUMBER PERCENTAGE NUMBER PERCENTAGE
- ----------------------------------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
The Goldman Sachs Group(4)......... 30,836,593 68.6% 30,836,593 52.7%
Blackstone Group (as hereinafter
defined)(5)...................... 5,762,805 13.1% 5,762,805 10.0%
Kelso (as hereinafter
defined)(6)...................... 5,762,805 13.1% 5,762,805 10.0%
Richard A. Friedman(7)............. -- -- -- --
Terence M. O'Toole(8).............. -- -- -- --
Peter M. Sacerdote(9).............. -- -- -- --
Charles M. Diker................... 204,850(10) * 204,850(10) *
Paul B. Edgerley(11)............... -- -- -- --
Howard A. Lipson(12)............... -- -- -- --
Thomas R. Wall, IV(13)............. -- -- -- --
Douglas J. Stanard................. 176,000(14) * 176,000(14) *
Stephen E. Hare.................... 171,000(15) * 171,000(15) *
Michael P. Bardaro................. 5,000(16) * 5,000(16) *
All directors and executive
officers as a group (10
persons)......................... 556,850 1.3% 556,850 1.0%
</TABLE>

- ---------------
* Less than 1%.

(1) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of Common Stock
subject to options and warrants held by that person that are currently
exercisable or exercisable within 60 days of the date of this Prospectus
are deemed outstanding. Such shares, however, are not deemed outstanding
for the purposes of computing the percentage ownership of any other person.

(2) Based on 44,105,000 shares of Common Stock outstanding prior to the
Offerings, 57,605,000 shares of Common Stock outstanding after the
Offerings, and Warrants to purchase 870,000 shares of Common Stock
outstanding prior to and after the Offerings.

(3) Assumes no exercise of the Underwriters' over-allotment option.

(4) Of the total number of shares beneficially owned by The Goldman Sachs
Group, 870,000 shares are owned by The Goldman Sachs Group, 19,317,476 are
owned by GS Capital Partners II, L.P., 7,679,488 shares are owned by GS
Capital Partners II Offshore, L.P., 712,530 shares are owned by Goldman,
Sachs & Co. Verwaltungs GmbH, as nominee for GS Capital Partners II
(Germany) Civil Limited Partnership, 451,922 shares are owned by Stone
Street Fund 1995, L.P., 772,645 shares are owned by Stone Street Fund 1996,
L.P., 508,546 shares are owned by Bridge Street Fund 1995, L.P. and 523,986
shares are owned by Bridge Street Fund 1996, L.P. The 870,000 shares
beneficially owned by The Goldman Sachs Group represent Warrants to
purchase 870,000 shares of Common Stock, which were issued upon the closing
of the Acquisition. GS Capital Partners II, L.P., GS Capital Partners II
Offshore, L.P., GS Capital Partners II Germany, C.L.P., Stone Street Fund
1995, L.P., Stone Street Fund 1996, L.P., Bridge Street Fund 1995, L.P. and
Bridge Street Fund 1996, L.P., are investment partnerships. Affiliates of
The Goldman Sachs Group are the general, managing general or managing
partners of all of such partner-

60
<PAGE> 60

ships and have full voting and investment power with respect to the holdings of
such partnerships. The address of The Goldman Sachs Group is 85 Broad Street,
New York, New York 10004.

(5) Of the total number of shares beneficially owned by Blackstone Group,
4,141,761 shares are owned by Blackstone Capital Partners II Merchant
Banking Fund L.P., 1,210,342 shares are owned by Blackstone Offshore
Capital Partners II L.P. and 410,702 shares are owned by Blackstone Family
Investment Partnership II L.P. The address of Blackstone Group is 345 Park
Avenue, New York, New York 10154.

(6) Of the total number of shares beneficially owned by Kelso Investment
Associates V, L.P. ("KIA V") and Kelso Equity Partners V, L.P. ("KEP V,"
and together with KIA V, "Kelso"), 5,409,974 shares are owned by KIA V and
352,831 are owned by KEP V. The address of each such stockholder is c/o
Kelso & Company, 320 Park Avenue, 24th Floor, New York, New York 10022. Due
to their common control, KIA V and KEP V could be deemed to beneficially
own each other's shares, but each disclaims such beneficial ownership.
Frank T. Nickell, Thomas R. Wall, IV, George E. Matelich, Michael B.
Goldberg, David I. Wahrhaftig and Frank K. Bynum, Jr. may be deemed to
share beneficial ownership of shares beneficially owned of record by KIA V
and KEP V, by virtue of their status as general partners of the general
partner of KIA V and as general partners of KEP V. Messrs. Nickell, Wall,
Matelich, Goldberg, Wahrhaftig and Bynum share investment and voting power
with respect to securities owned by KIA V and KEP V, but disclaim
beneficial ownership of such securities.

(7) Mr. Friedman, who is a managing director of Goldman Sachs, disclaims
beneficial ownership of the shares owned by The Goldman Sachs Group and its
affiliates, except to the extent of his pecuniary interest therein.

(8) Mr. O'Toole, who is a managing director of Goldman Sachs, disclaims
beneficial ownership of the shares owned by The Goldman Sachs Group and its
affiliates, except to the extent of his pecuniary interest therein.

(9) Mr. Sacerdote, who is a limited partner of The Goldman Sachs Group,
disclaims beneficial ownership of the shares owned by The Goldman Sachs
Group and its affiliates, except to the extent of his pecuniary interest
therein.

(10) Includes 66,666 shares which may be acquired upon exercise of Stock Options
within 60 days.

(11) Mr. Edgerley, who is (i) a managing director of the general partner of the
general partner of Bain Capital Fund V, L.P. and Bain Capital Fund V-B,
L.P. and (ii) a general partner of BCIP Associates and BCIP Trust
Associates, L.P., disclaims beneficial ownership of the shares owned by
those entities (collectively, "Bain"). Bain Capital Fund V, L.P. owns
402,002 shares, Bain Capital Fund V-B, L.P. owns 1,055,469 shares, BCIP
Associates owns 193,031 shares and BCIP Trust Associates, L.P. owns 78,340
shares.

(12) Mr. Lipson, who is a member of the limited liability company which acts as
the general partner of Blackstone Capital Partners II Merchant Banking Fund
L.P., Blackstone Offshore Capital Partners II L.P. and Blackstone Family
Investment Partnership II L.P. (collectively, "Blackstone Group"),
disclaims beneficial ownership of the shares owned by Blackstone Group.

(13) Mr. Wall, who is (i) a general partner of Kelso Partners V, L.P., the
general partner of KIA V and (ii) a general partner of KEP V, disclaims
beneficial ownership of the shares owned by KIA V and KEP V.

(14) Includes 26,000 shares which may be acquired upon exercise of Stock Options
within 60 days.

(15) Includes 21,000 shares which may be acquired upon exercise of Stock Options
within 60 days.

(16) Includes 5,000 shares which may be acquired upon exercise of Stock Options
within 60 days.

STOCKHOLDERS AGREEMENT

On April 30, 1996, AMF Bowling, GSCP, Blackstone Group, Kelso, Bain (Bain,
together with Blackstone Group and Kelso, the "Governance Investors"), Citicorp
North America, Inc. ("Citicorp"), Mr. Diker (Mr. Diker, together with Blackstone
Group, Kelso, Bain and Citicorp, the "Investors"), Mr. Morin and Mr. Stanard
(together with Mr. Morin, the "Management Investors", and, with GSCP and the
Investors, the "Stockholders") entered into a stockholders agreement (the
"Stockholders Agreement"), which regulates the relationship among AMF Bowling
and the Stockholders. Subsequently, Mr. Hare and other members of management who
have received Stock Option awards under the Stock Incentive Plan have become
parties to the Stockholders Agreement as additional Management Investors and
Stockholders. The following discussion summarizes the

61
<PAGE> 61

terms of the Stockholders Agreement that AMF Bowling believes are material to
holders of Common Stock. This summary is qualified in its entirety by reference
to the full text of the Stockholders Agreement, which is filed as an exhibit to
the Registration Statement of which this Prospectus is a part.

The Stockholders Agreement confers on GSCP the right to increase or
decrease the Board of Directors from its initial size of nine members. GSCP has
the right to nominate five directors and to nominate a majority (not limited to
a simple majority) of the members of the Board of Directors, so long as GSCP and
its Permitted Transferees (as hereinafter defined) hold a majority of the
outstanding shares of Common Stock. Each Governance Investor has the right to
nominate, subject to GSCP consent, one member of the Board of Directors, so long
as the number of shares of Common Stock held by it and certain of its permitted
transferees under the Stockholders Agreement is equal to at least one-half of
the sum of (i) the number of shares initially purchased by it and its Permitted
Transferees plus (ii) the number of additional shares that the Governance
Investor was required to purchase pursuant to the "overcall" provisions of the
Stockholders Agreement described below (in each case, subject to appropriate
adjustments). If a Governance Investor is no longer entitled to nominate a
director, the director is required to resign or be subject to removal by the
Stockholders. Each of GSCP and each Governance Investor has the right to
recommend removal, with or without cause, of any director nominated by it, in
which case such director must resign immediately or be subject to removal by the
Stockholders. In the event of death, removal or resignation of a director
nominated by a Governance Investor, so long as the Governance Investor continues
to have the right to nominate a director for such position, the Governance
Investor has the right to nominate (subject to GSCP consent) a director to fill
the vacancy created. A quorum may be constituted by a majority of the number of
directors then in office, but not less than one-third of the whole Board of
Directors, including at least one GSCP director.

Pursuant to the "overcall" provisions of the Stockholders Agreement, each
of GSCP and the Investors (other than Mr. Diker) agreed, for a period of two
years from April 30, 1996, to purchase additional shares of Common Stock having
an aggregate purchase price of up to 20% of the amount initially invested by
such Investor (i.e., collectively up to a total of $75.6 million) upon the
request of the Board of Directors. Any such additional investments were required
to be made pro rata by the funding Investors. Funds raised through such
additional investments could be used only to finance acquisitions of businesses
or assets, capital expenditures, investments in partnerships or joint ventures
or other investments in the business of AMF Bowling and its subsidiaries, or any
similar transactions or expenditures. In October 1996, in connection with the
acquisition of the Charan centers, GSCP and the funding Investors purchased an
aggregate of 4,000,000 additional shares of Common Stock for $10.00 per share.
In September 1997, GSCP and the funding Investors of AMF Bowling purchased an
aggregate of 1,780,000 shares of Common Stock for $20.00 per share pursuant to
the overcall provisions of the Stockholders Agreement, and the aggregate
proceeds of $35.6 million were used in part to fund acquisitions, including that
of 15 centers from Conbow, and for other corporate purposes. The stockholders
party to the Stockholders Agreement have no further rights or obligations to
make capital contributions under the overcall provisions of the Stockholders
Agreement. See "Business -- AMF Bowling Centers -- Recent Acquisitions and Joint
Ventures" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity".

The Stockholders Agreement provides for the continual existence of an
Executive Committee, consisting of two directors designated by GSCP. The
Executive Committee may exercise all the powers and authority of the Board of
Directors (subject to any restrictions under Delaware law) except with respect
to those actions requiring a Special Vote and, in the case of matters which
under the Stockholders Agreement require a prior meeting of the Board of
Directors, only after such meeting has occurred. A "Special Vote" is required
for (i) the issuance of capital stock below fair market value, (ii) the grant or
issuance of options or warrants exercisable or exchangeable for more than
2,877,151 shares, (iii) entering into certain transactions with affiliates of
GSCP and

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<PAGE> 62

(iv) amendments to the Stockholders Agreement, the Certificate of Incorporation
or By-Laws which amendments would adversely affect the rights and obligations of
Blackstone or Kelso; provided, that any amendment affecting a Stockholder
differently from any other Stockholder requires such Stockholder's approval.
Matters requiring a Special Vote must be approved by a majority of the GSCP
directors who are partners or employees of Goldman Sachs and who are not
employees of AMF Bowling and its subsidiaries, and at least one investor
director nominated by Blackstone or Kelso (if there is one serving at such
time).

Pursuant to the Stockholders Agreement, each of the Stockholders has agreed
(i) to appear in person or by proxy at any stockholder meeting for the purpose
of obtaining a quorum, (ii) to vote its shares of Common Stock at any
stockholder meeting called for the purpose of voting on the election or removal
of directors in favor of the election or removal of directors, as applicable, in
accordance with the provisions described in the third preceding paragraph, (iii)
otherwise to vote its shares of Common Stock at stockholder meetings in a manner
consistent with the Stockholders Agreement, (iv) not to grant any proxy or enter
into any voting trust with respect to the Common Stock it holds or enter into
any stockholder agreement or arrangement inconsistent with the provisions of the
Stockholders Agreement and (v) not to act as a member of a group or in concert
with others in connection with the acquisition, disposition or voting of shares
of Common Stock in any manner inconsistent with the Stockholders Agreement.

Under the Stockholders Agreement, Goldman Sachs have the exclusive right to
perform all consulting, financing, investment banking and similar services for
AMF Bowling and its subsidiaries, for customary compensation and on terms
customary for similar engagements with unaffiliated third parties. Neither AMF
Bowling nor its subsidiaries are allowed to engage any person to perform such
services during the term of the Stockholders Agreement, except to the extent
Goldman Sachs consent thereto or decline, at its sole election, to perform such
services. Pursuant to the terms of the Stockholders Agreement, the provisions
relating to services performed by Goldman Sachs will terminate and be of no
further effect upon consummation of the Offerings.

The Stockholders Agreement provides that in the event a Stockholder
determines to sell its shares of Common Stock (subject to certain exceptions),
such Stockholder must give the other Stockholders notice thereof and such other
Stockholders must have the opportunity to sell a pro rata share of their Common
Stock in such a sale. Moreover, in the event Stockholders owning 51% or more of
the outstanding Common Stock propose to sell all of the Common Stock held by
such Stockholders pursuant to a stock sale, merger, business combination,
recapitalization, consolidation, reorganization, restructuring or similar
transaction, such Stockholders will have the right, under certain circumstances,
to require the other Stockholders to sell the equity securities of the Company
held by such other Stockholders in such sale on the same terms and conditions
and at the same price as the Stockholders proposing to sell.

The foregoing rights and obligations (other than those described in the
second preceding paragraph which will terminate upon consummation of the
Offerings) will terminate after consummation of the Offerings upon the first to
occur of: (i) GSCP, the Investors and their permitted transferees under the
Stockholders Agreement (the "Permitted Transferees") holding in the aggregate
less than 50% of the sum of (a) the number of shares of Common Stock
outstanding, on a fully diluted basis, immediately after giving effect to the
transactions contemplated by the subscription agreement (the "Subscription
Agreement") entered into on the same date and by the same parties as the
Stockholders Agreement, except for the Management Investors, and (b) the number
of additional shares of Common Stock, if any, issued pursuant to the "overcall"
provisions of the Stockholders Agreement and (ii) GSCP, the Investors and their
Permitted Transferees holding in the aggregate less than 40% of the fully
diluted shares of Common Stock then outstanding. Notwithstanding these
provisions, in the event of any merger, recapitalization, consolidation,
reorganization or other restructuring of AMF Bowling as a result of which the
Stockholders and their Permitted Transferees own less than a majority of the
outstanding voting power of the entity surviving such transaction, the
Stockholders Agreement will terminate.

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<PAGE> 63

REGISTRATION RIGHTS AGREEMENT

AMF Bowling and the Stockholders entered into a Registration Rights
Agreement on April 30, 1996 (the "Registration Rights Agreement"). Pursuant to
the Registration Rights Agreement, following consummation of the Offerings, (i)
each of Blackstone (as a group), Kelso (as a group) and Bain (as a group) may
make one demand (subject to certain exceptions) of AMF Bowling to register
shares of Common Stock held by such group and (ii) GSCP may make up to five
demands (subject to certain exceptions) of AMF Bowling to register shares of
Common Stock held by it, in each case, so long as (a) the aggregate offering
price for the shares to be sold is at least $50 million and (b) shares
representing at least 5% of the sum of (1) the number of shares of Common Stock
purchased by GSCP prior to execution of the Subscription Agreement, (2) the
number of shares of Common Stock issued pursuant to the Subscription Agreement
and (3) the number of shares (subject to adjustment) of Common Stock purchased
by the Stockholders pursuant to the "overcall" provisions of the Stockholders
Agreement are being registered. Upon a demand for registration by any of GSCP,
Blackstone, Kelso or Bain, each of the other Stockholders is to be given the
opportunity to participate on a pro rata basis in the registration demanded. The
Registration Rights Agreement also provides the Stockholders with piggyback
registration rights which allow each of them to include all or a portion of
their shares of Common Stock under a registration statement filed by AMF
Bowling, subject to certain exceptions and limitations. The foregoing summary is
qualified in its entirety by reference to the full text of the Registration
Rights Agreement, which is filed as an exhibit to the Registration Statement of
which this Prospectus is a part. The Stockholders have agreed not to exercise
their piggyback registration rights with respect to the Offerings.

CERTAIN TRANSACTIONS

Messrs. Friedman and O'Toole, each of whom is a Managing Director of
Goldman Sachs, and Mr. Sacerdote, who is a limited partner of The Goldman Sachs
Group, are directors of AMF Bowling, AMF Group Holdings and Bowling Worldwide.
Mr. Friedman is also Chairman of AMF Bowling. Goldman Sachs and its affiliates
together currently beneficially own and will, following consummation of the
Offerings, continue to own a majority of the outstanding Common Stock. See
"Principal Stockholders". Goldman Sachs and its affiliates were the initial
purchasers of the debt issued by Bowling Worldwide in connection with the
Acquisition and received an underwriting discount of approximately $19.0 million
in connection with the purchase and resale of certain senior subordinated notes
and senior subordinated discount notes, each issued in March 1996, which were
subsequently exchanged by the holders thereof for the Senior Subordinated Notes
(as hereinafter defined) and the Senior Subordinated Discount Notes (as
hereinafter defined). Goldman Sachs also served as financial advisor to the
owners of the Predecessor Company in connection with the Acquisition and
received a fee in the form of 10-year warrants (the "Warrants") to purchase
870,000 shares of the Common Stock, on a fully diluted basis, at a purchase
price of $.01 per share. The Warrants were valued for accounting purposes at
approximately $8.7 million.

In connection with the Credit Agreement and the amendments thereto, Goldman
Sachs Credit Partners, L.P., an affiliate of Goldman Sachs, acted as Syndication
Agent, Goldman Sachs Credit Partners, L.P. and Citicorp Securities, Inc. acted
as Arrangers, and Citibank, N.A. is acting as Administrative Agent. Total fees
payable to Goldman Sachs Credit Partners, L.P. aggregate approximately $10.0
million, and such entity is reimbursed for expenses in connection with such
services. Goldman Sachs Credit Partners, L.P. is also a lender under the Credit
Agreement. See "Description of Certain Indebtedness -- Credit Agreement".
Goldman Sachs also received a cash fee of $5.0 million from AMF in connection
with the Acquisition and was reimbursed for related expenses. Blackstone
Management Partners L.P., an affiliate of Blackstone Group, and Kelso & Company,
L.P., an affiliate of Kelso, each received an investment banking fee of $1.0
million, and Bain Capital, Inc., an affiliate of Bain, received a fee of
$300,000, each in connection with the Acquisition.

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<PAGE> 64

Bowling Worldwide and Goldman Sachs are parties to an engagement letter
pursuant to which Goldman Sachs are retained as Bowling Worldwide's financial
advisor to provide investment banking and financial advisory services, including
in connection with any acquisitions, dispositions or financings. Pursuant to the
engagement, Bowling Worldwide has agreed to reimburse Goldman Sachs for their
out-of-pocket expenses and indemnify Goldman Sachs in connection with their
services arising under the engagement.

AMF Bowling has also entered into two interest rate cap agreements with
Goldman Sachs Capital Markets, L.P. ("GSCM"), an affiliate of Goldman Sachs,
both of which were executed to hedge the Company's exposure to fluctuations in
the interest rates applicable to borrowings under the Credit Agreement. The
Company paid a fee of $3.6 million to GSCM in 1996 in connection with the
execution of the first of these transactions, which "caps" the interest rate on
$500 million principal amount of debt at 6.5% until April 1998 and at 7.5% from
May 1998 through October 1998. The Company paid a fee of $15,000 to GSCM in
respect of the second transaction executed on July 2, 1997, which caps the rate
applicable to $100 million in debt at 7.0% until March 31, 1998. See "Note 9.
Long-Term Debt" in the Consolidated Financial Statements of AMF Bowling as of
December 31, 1996 and "Note 6. Long-Term Debt" in the Condensed Consolidated
Financial Statements of AMF Bowling as of June 30, 1997.

The Company retained Michael Stanard Design, Inc. ("MSD"), a market
consultant, to provide marketing and related services in 1996 for an aggregate
of $114,000 and in 1997 for an aggregate of $446,000 to date. A majority owner
of MSD is H. Michael Stanard, who is Mr. Stanard's brother. A substantial
portion of such amounts were reimbursement of costs for materials, travel,
printing and other out-of-pocket expenses.

The Company has agreed to pay a fee of $300,000 to Goldman Sachs for their
representation of the Company in connection with the Company's lease of its new
bowling center at Chelsea Piers in New York.

AMF and the Stockholders have entered into the Stockholders Agreement and
the Registration Rights Agreement. See "Principal Stockholders -- Stockholders
Agreement" and "Principal Stockholders -- Registration Rights Agreement".

DESCRIPTION OF CAPITAL STOCK

The following description of the capital stock of the Company and certain
provisions of the Certificate of Incorporation and By-Laws is a summary and is
qualified in its entirety by the provisions of the Certificate of Incorporation
and By-Laws, copies of which have been filed as exhibits to the Registration
Statement of which this Prospectus is a part.

Upon completion of the Offerings, the authorized capital stock of the
Company will consist of (i) 200,000,000 shares of Common Stock, par value $.01
per share, of which 57,605,000 shares will be outstanding, and (ii) 50,000,000
shares of Preferred Stock, of which no shares will be outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on all matters
to be voted on by the stockholders of AMF Bowling and do not have cumulative
voting rights. Accordingly, holders of a majority of the outstanding shares of
Common Stock entitled to vote in any election of directors of AMF Bowling may
elect all of the directors of AMF Bowling standing for election. Following
completion of the Offerings, GSCP will own 52.7% of the outstanding Common
Stock. As a result of such ownership and the terms of the Stockholders
Agreement, GSCP has the ability to control the election of a majority of the
Board of Directors, appoint new management and approve or block any action
requiring the approval of AMF Bowling's stockholders, including adopting
amendments to the Certificate of Incorporation and approving mergers or sales of
substantially all of AMF Bowling's

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<PAGE> 65

assets, in each case, subject to the restrictions contained in the Stockholders
Agreement. The Stockholders Agreement also provides for three of the investment
funds which are stockholders of AMF Bowling each to nominate a director with
each such nominee being subject to GSCP's consent, and for the formation of the
Executive Committee.

Subject to preferences that may be applicable to any Preferred Stock
outstanding at the time, holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of AMF Bowling, holders of Common Stock
are entitled to share ratably in all assets remaining after payment of AMF
Bowling's liabilities and the liquidation preference, if any, of any outstanding
Preferred Stock. Holders of shares of Common Stock have no preemptive,
subscription, redemption or conversion rights. There are no redemption or
sinking fund provisions applicable to the Common Stock. All of the outstanding
shares of Common Stock are, and the shares offered by AMF Bowling in the
Offerings will be, when issued and paid for, fully paid and non-assessable. The
rights, preferences and privileges of holders of Common Stock are subject to,
and may be adversely affected by, the rights of the holders of shares of any
series of Preferred Stock which AMF Bowling may designate and issue in the
future.

At present, there is no established trading market for the Common Stock.
The Common Stock has been approved for listing on the NYSE under the symbol
"PIN" subject to official notice of issuance.

PREFERRED STOCK

The Board of Directors is authorized to issue from time to time 50,000,000
shares of Preferred Stock in one or more series, and to fix the rights,
designations, powers, preferences, qualifications, limitations and restrictions
thereof, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and the
number of shares constituting any series, all without stockholder approval. The
ability of the Board of Directors to issue Preferred Stock could have the effect
of making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring or making a proposal to acquire, AMF Bowling or a
majority of the outstanding stock of AMF Bowling. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights of
holders of Preferred Stock that may be issued in the future. See "Risk
Factors -- Anti-Takeover Effects of Certain Certificate of Incorporation and
By-Laws Provisions".

RIGHTS TO PURCHASE SECURITIES AND OTHER PROPERTY

The Certificate of Incorporation authorizes the Board of Directors to
create and issue rights or options entitling the holders thereof to purchase
from AMF Bowling shares of stock or other securities of AMF Bowling or any other
corporation. The times at which and terms upon which such rights or options are
issued may be determined by the Board of Directors and set forth in the
contracts or other instruments that evidence such rights. The authority of the
Board of Directors with respect to such rights or options includes, but is not
limited to, determination of (i) the initial purchase price per share or other
unit of the stock or other securities or property to be purchased upon exercise
of such rights or options, (ii) provisions relating to the times at which and
the circumstances under which such rights or options may be exercised or sold or
otherwise transferred, either together with or separately from any other stock
or other securities of AMF Bowling, (iii) provisions that adjust the number or
exercise price of such rights or options or amount or nature of the stock or
other securities or property receivable upon exercise of such rights or options
in the event of a combination, split or recapitalization of any stock of AMF
Bowling, a change in ownership of AMF Bowling's stock or other securities or a
reorganization, merger, consolidation, sale of assets or other occurrence
relating to AMF Bowling or any stock of AMF Bowling, and provisions restricting
the ability of AMF Bowling to enter into any such transaction absent an
assumption by the other party or parties thereto of the obligations of AMF
Bowling under such rights

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<PAGE> 66

or options, (iv) provisions that deny the holder of a specified percentage of
the outstanding stock or other securities of AMF Bowling the right to exercise
such rights or options and/or cause such rights held by such holder to become
void, (v) provisions that permit AMF Bowling to redeem or exchange such rights
or options and (vi) the appointment of the rights agent with respect to such
rights or options. This provision is intended to confirm the authority of the
Board of Directors to issue share purchase rights or other rights or options to
purchase stock or securities of AMF Bowling or any other corporation. The
affirmative vote of holders of at least 80% of the voting power of the then
outstanding shares of capital stock of AMF Bowling entitled to vote generally in
the election of directors, voting together as a single class, is required to
amend or repeal or adopt any provisions inconsistent with the provisions
described in this section under the caption "Rights to Purchase Securities and
Other Property." The ability of the Board of Directors to issue such securities
could have the effect of making it more difficult for a third party to acquire,
or of discouraging a third party from acquiring or making a proposal to acquire,
AMF Bowling or a majority of the outstanding stock of AMF Bowling.

LIMITATIONS ON DIRECTORS' LIABILITY

The Certificate of Incorporation and By-Laws limit the liability of
directors to the maximum extent permitted by Delaware law. Delaware law
currently permits corporations to provide in their certificates of incorporation
that directors of the corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors or officers, except
liability for (i) breach of the directors' and officers' duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, (iii)
the unlawful payment of a dividend or unlawful stock purchase or redemption and
(iv) any transaction from which directors or officers derive an improper
personal benefit. Delaware law does not permit a corporation to eliminate a
director's duty of care, and this provision of the certificate of incorporation
has no effect on the availability of equitable remedies, such as injunction or
rescission, based upon a director's breach of the duty of care.

These provisions will not limit liability under federal or state securities
laws. AMF Bowling believes that these provisions will assist AMF Bowling in
attracting and retaining qualified individuals to serve as directors.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

AMF Bowling has elected in the Certificate of Incorporation to not be
subject to the provisions of Section 203 of the Delaware General Corporation
Law, which restricts certain business combinations between a Delaware
corporation and an "interested stockholder" (generally, a holder of 15% or more
of a corporation's voting stock).

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar of the Common Stock is ChaseMellon
Shareholder Services, L.L.C.

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<PAGE> 67

DESCRIPTION OF CERTAIN INDEBTEDNESS

CREDIT AGREEMENT

Bowling Worldwide is party to a Credit Agreement amended and restated as of
June 30, 1997 (and as further amended, modified, renewed, refunded, replaced or
refinanced, in whole or in part, from time to time, the "Credit Agreement") with
Goldman Sachs, their affiliate Goldman Sachs Credit Partners, L.P., Citibank,
N.A. ("Citibank") and its affiliates Citicorp and Citicorp USA, Inc. and certain
other banks, financial institutions and institutional lenders (collectively, the
"Lenders") providing for (i) senior secured term loan facilities aggregating
$580.0 million (the "Term Facilities"), (ii) a senior secured multiple-draw term
facility of $230.0 million (the "Acquisition Facility") and (iii) a senior
secured revolving credit facility of up to $50.0 million (the "Working Capital
Facility", and together with the Term Facilities and the Acquisition Facility,
the "Senior Facilities"). In connection with such financing, Goldman Sachs
Credit Partners, L.P. acted as Syndication Agent, Goldman Sachs Credit Partners,
L.P. and Citicorp Securities, Inc. acted as Arrangers, and Citibank is acting as
Administrative Agent. The initial borrowings under the Credit Agreement were
used to partially fund the Acquisition. In connection with the Offerings,
Bowling Worldwide and the lenders under the Credit Agreement have approved in
principle an amendment to the Credit Agreement that will constitute the Third
Amended and Restated Credit Agreement (the "Proposed Amendments"). The Proposed
Amendments will, among other things, (i) convert the Acquisition Facility and a
portion of the Term Facilities under the Credit Agreement into a non-amortizing
Working Capital Facility which matures in 2002 and the aggregate size of which
will be increased to $355.0 million, (ii) extend the final maturity of the
Working Capital Facility and certain of the Term Facilities, (iii) reduce the
interest rates under the Credit Agreement, (iv) amend certain covenants
contained in the Credit Agreement to provide Bowling Worldwide and its
subsidiaries with additional operating flexibility and (v) permit a portion of
the proceeds of the Offerings to be applied to repayment of the Notes.

The following summary of the material provisions of the Credit Agreement is
qualified in its entirety by reference to the full text of the Credit Agreement.
A copy of the Credit Agreement giving effect to the Proposed Amendments has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part.

THE FACILITIES

The Term Facilities consist of the following three tranches: (i) a Term
Loan Facility of $250.0 million, (ii) an Amortization Extended Loan
("AXELs(SM)") Series A Facility of $190.0 million and (iii) an AXELs(SM) Series
B Facility of $140.0 million. The Term Loan Facility bears interest, at Bowling
Worldwide's option, at Citibank's customary base rate or at Citibank's
Eurodollar rate, in each case plus a margin which varies in accordance with a
performance pricing grid which is based on the Total Debt to EBITDA Ratio (as
defined in the Credit Agreement) for the Rolling Period (as hereinafter defined)
then most recently ended. As of June 30, 1997 pro forma for the Offerings, the
applicable margin for base rate loans was 1.25% and for Eurodollar rate loans
was 2.25%. The AXELs(SM) Series A Facility bears interest, at Bowling
Worldwide's option, at Citibank's customary base rate plus 1.875% or at
Citibank's Eurodollar rate plus 2.875%. The AXELs(SM) Series B Facility bears
interest, at Bowling Worldwide's option, at Citibank's customary base rate plus
2.125% or at Citibank's Eurodollar rate plus 3.125%. The Term Facilities provide
for quarterly amortization until final maturity. The Term Loan Facility has a
term of five years, the AXELs(SM) Series A Facility has a term of seven years
and the AXELs(SM) Series B Facility has a term of eight years. The Proposed
Amendments will (i) reduce the Term Loan Facility to $130.0 million and
substantially increase the Working Capital Facility, as discussed below, (ii)
extend the final maturity of the Working Capital Facility and the Term Loan
Facility to March 31, 2002 and (iii) reduce the applicable interest rates. Based
on the Total Debt to EBITDA Ratio as of June 30, 1997 pro forma for the
Offerings, the Proposed Amendments would result in base rate margins of .75%,
1.00% and 1.25%, and Eurodollar

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<PAGE> 68

rate margins of 1.75%, 2.00% and 2.25%, for the Term Loan Facility, the
AXELs(SM) Series A Facility and the AXELs(SM) Series B Facility, respectively.

Average amounts outstanding and average borrowing rates for the period
ended June 30, 1997, were as follows (dollars in millions):

<TABLE>
<CAPTION>
OUTSTANDING AVERAGE AVERAGE
JUNE 30, AMOUNTS BORROWING
DESCRIPTION MATURITY DATES 1997 OUTSTANDING RATES
- ----------------------------------- --------------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Term Loan Facility................. March 31, 2001 $210,000 $ 232,620 8.15%
AXELs(SM) Series A Facility........ March 31, 2003 $187,750 $ 189,007 8.54%
AXELs(SM) Series B Facility........ March 31, 2004 $138,125 $ 104,759 8.77%
</TABLE>

Under the terms currently in effect, Bowling Worldwide will be required to
make scheduled amortization payments on the Term Facilities as follows (dollars
in millions):

<TABLE>
<CAPTION>
TWELVE MONTHS TERM AXELS(SM) AXELS(SM)
ENDING LOAN SERIES A SERIES B
DECEMBER 31, FACILITY FACILITY FACILITY TOTAL
----------------------------------------- -------- -------- -------- ------
<S> <C> <C> <C> <C>
1997.................................. $ 38.1 $ 2.0 $ 2.3 $ 42.4
1998.................................. 43.1 2.0 2.2 47.3
1999.................................. 51.3 2.0 2.2 55.5
2000.................................. 67.5 2.0 2.3 71.8
2001.................................. 28.1 50.8 2.2 81.1
2002.................................. -- 92.5 2.3 94.8
2003.................................. -- 37.5 78.9 116.4
2004.................................. -- -- 46.8 46.8
------ ------ ------ ------
$228.1 $188.8 $139.2 $556.1
====== ====== ====== ======
</TABLE>

The Proposed Amendments will not affect the scheduled amortization payments
on the AXELs(SM) Series A Facility or the AXELs(SM) Series B Facility, but will
reduce the scheduled amortization payments on the Term Loan Facility to $7.5
million on December 31, 1997 and thereafter as follows (dollars in millions):

<TABLE>
<CAPTION>
TWELVE MONTHS
ENDING
DECEMBER 31,
----------------------------------------------------------------------------
<S> <C>
1998..................................................................... $ 23.1
1999..................................................................... 28.1
2000..................................................................... 30.0
2001..................................................................... 30.0
2002..................................................................... 11.3
------
$122.5
======
</TABLE>

In addition, under the terms currently in effect, Bowling Worldwide will be
required to make prepayments which permanently reduce the availability under the
Senior Facilities under certain circumstances, including upon certain asset
sales, issuances of debt and public issuance of equity securities of AMF
Bowling. Bowling Worldwide will also be required to make prepayments which
permanently reduce the availability under the Senior Facilities in an amount
equal to (i) 75% (to be reduced to 50% for years in which Bowling Worldwide's
Total Debt to EBITDA Ratio for the prior 12 months is less than 4.0 to 1.0) of
Bowling Worldwide's Excess Cash Flow (as defined in the Credit Agreement) or
(ii) during each of the first three years after the closing of the Senior
Facilities, if less than the amount described in clause (i), the amount by which
Bowling Worldwide's Excess Cash Flow for such year exceeds $10.0 million (during
the first two years after closing) or $20.0 million

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<PAGE> 69

(during the third year after closing). The Proposed Amendments will require for
such prepayment based on Excess Cash Flow to permanently reduce the availability
under the Senior Facilities only if the Total Debt to EBITDA Ratio is greater
than or equal to 5.50 to 1.0, and will reduce the percentage referred to in
clause (i) of the preceding sentence from 75% to 50%. The Proposed Amendments
will also provide that the first $100 million of the net cash proceeds of the
Offerings will be used to repay borrowings that, under such Proposed Amendments,
would constitute a portion of the expanded Working Capital Facility (and thus
would be available for reborrowing), and the remaining net cash proceeds
anticipated from the Offerings may be used, at Bowling Worldwide's option, to
redeem a portion of the Senior Subordinated Notes and/or the Senior Subordinated
Discount Notes and/or to repay borrowings under the Working Capital Facility.
See "Use of Proceeds".

The terms currently in effect also provide for a $50.0 million Working
Capital Facility for general corporate purposes and a $230.0 million Acquisition
Facility to finance acquisitions and to refinance new center construction.
Borrowings under these facilities are subject to Bowling Worldwide meeting
certain pro forma financial covenants and limitations imposed on the amount
borrowed, including that the amount borrowed under the Acquisition Facility may
not exceed 4.5 times the Deemed EBITDA (as defined in the Credit Agreement) of
the business to be acquired or the newly constructed center.

The existing Acquisition Facility has a term of five years and will begin
to amortize in December 1999, with final maturity at March 31, 2001. The
Acquisition Facility bears interest, at Bowling Worldwide's option, at
Citibank's customary base rate or at Citibank's Eurodollar rate, in each case,
plus a margin which varies in accordance with a performance pricing grid which
is based on the Total Debt to EBITDA Ratio for the Rolling Period then most
recently ended. As of June 30, 1997, the applicable margin for base rate loans
was 1.50% and for Eurodollar rate loans was 2.50%. As of October 31, 1997,
$171.0 million was outstanding under the Acquisition Facility.

The Proposed Amendments (i) will convert the entire Acquisition Facility
and a portion of the Term Loan Facility into an amended Working Capital Facility
having an aggregate amount of $355.0 million, of which $193.5 million is
expected to be outstanding after giving effect to the Offerings and the related
repayment of $100.0 million under the Working Capital Facility and (ii) will
eliminate the above described limitation on the amount that may be borrowed for
an acquisition or new construction (although the pro forma compliance with
covenants requirement will remain).

The Working Capital Facility, as currently in effect, matures in 2001, is
fully revolving until its final maturity and bears interest, at Bowling
Worldwide's option, at Citibank's customary base rate or at Citibank's
Eurodollar rate, in each case, plus a margin which varies in accordance with a
performance pricing grid which is based on the Total Debt to EBITDA Ratio for
the four fiscal quarter rolling period then most recently ended. As of June 30,
1997, the applicable margin for base rate loans was 1.50% and for Eurodollar
rate loans was 2.50%. As of October 31, 1997, $47.5 million was outstanding
under the Working Capital Facility. The Proposed Amendments will extend the
maturity of the Working Capital Facility to March 31, 2002 and increase the
amount of the Working Capital Facility to $355.0 million and will decrease the
interest rates thereunder. Based on the Total Debt to EBITDA Ratio as of June
30, 1997, the Proposed Amendments, without giving pro forma effect to the
Offerings, would result in a base rate margin of 0.875% and would result in a
Eurodollar rate margin of 1.875%.

The Senior Facilities are (and following the Proposed Amendments will
continue to be) guaranteed by AMF Group Holdings and by each of Bowling
Worldwide's present and future domestic Subsidiaries (as defined in the Credit
Agreement) and are secured by all of the stock of Bowling Worldwide and Bowling
Worldwide's present and future domestic Subsidiaries and Second-Tier
Subsidiaries (as defined in the Credit Agreement), by 66% of the stock of
Bowling Worldwide's present and future international subsidiaries and by
substantially all of Bowling Worldwide's and its present and future domestic
Subsidiaries' present and future property and assets.

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<PAGE> 70

In accordance with GAAP, the Company will incur after-tax extraordinary
charges totalling $22.7 million arising from the Third Amended and Restated
Credit Agreement and the resulting write-off of costs previously incurred to
obtain bank financing for the Acquisition, the premium associated with the
portion of the Senior Subordinated Discount Notes expected to be redeemed with
the proceeds of the Offerings and the write-off of the portion of deferred
financing costs attributable to the Senior Subordinated Discount Notes expected
to be so redeemed. Costs incurred with respect to the Third Amended and Restated
Credit Agreement will be amortized over seven years.

COVENANTS

The Credit Agreement contains certain financial covenants, as well as
additional affirmative and negative covenants, constraining Bowling Worldwide.
Under the terms currently in effect, Bowling Worldwide must maintain a minimum
EBITDA (as defined in the Credit Agreement) of not less than the sum of (i) an
amount ranging from $150 million for the "Rolling Period" (defined as a calendar
quarter together with the three consecutive immediately preceding calendar
quarters) ending June 30, 1997, to $200 million for the Rolling Period ending
March 31, 2004 and thereafter, and (ii) the EBITDA Adjustment Amount (as defined
in the Credit Agreement) for such Rolling Period, which is equal to 80% of the
aggregate amount of the EBITDA of each bowling center acquired or constructed by
Bowling Worldwide or any of its Subsidiaries after May 1, 1996 and acquired or
constructed at least 15 months prior to such time of determination.

Bowling Worldwide must also maintain a Cash Interest Coverage Ratio
(defined in the Credit Agreement as the ratio of (i) consolidated EBITDA of
Bowling Worldwide and its Subsidiaries during a Rolling Period, as modified with
respect to certain bowling centers acquired or constructed after May 1, 1996
("Modified Consolidated EBITDA") to (ii) cash interest payable on all Debt (as
defined in the Credit Agreement) of Bowling Worldwide and its Subsidiaries) at
an amount ranging from not less than 2.00 for the Rolling Period ending June 30,
1997, to not less than 2.50 for the Rolling Period ending September 30, 2004 and
thereafter. Bowling Worldwide is required to maintain a Fixed Charge Coverage
Ratio (defined in the Credit Agreement as the ratio of (i) Modified Consolidated
EBITDA less the sum of (a) cash taxes paid plus (b) Capital Expenditures (as
defined in the Credit Agreement) made by Bowling Worldwide and its Subsidiaries
during such Rolling Period to (ii) the sum of (a) cash interest payable on all
Debt plus (b) principal amounts of all Debt payable by Bowling Worldwide and its
Subsidiaries during such Rolling Period) at an amount ranging from not less than
1.05 for the Rolling Period ending June 30, 1997, to not less than 1.10 for the
Rolling Period ending March 31, 2004 and thereafter. A Senior Debt to EBITDA
Ratio (defined in the Credit Agreement as the ratio of Consolidated Debt, as
defined in the Credit Agreement (other than Subordinated Debt and Hedge
Agreements, as defined in the Credit Agreement), of Bowling Worldwide and its
Subsidiaries to Modified Consolidated EBITDA for that Rolling Period) must be
maintained at levels ranging from not more than 3.75 for the Rolling Period
ending June 30, 1997 to not more than 1.50 for the Rolling Period ending March
31, 2004 and thereafter. A Total Debt to EBITDA Ratio (defined in the Credit
Agreement as the ratio of consolidated total Debt (other than Hedge Agreements)
of Bowling Worldwide and its Subsidiaries to Modified Consolidated EBITDA) must
be maintained at levels ranging from not more than 6.50 for the Rolling Period
ending June 30, 1997 to not more than 4.00 for the Rolling Period ending March
31, 2004 and thereafter. In each case, the above-mentioned ratios are calculated
on a quarterly basis. The Proposed Amendments will change certain of the above
financial ratios and covenants to reflect the capital structure which will
result from the Offerings and the application of the proceeds therefrom.

Negative covenants under the Senior Facilities prohibit Bowling Worldwide
and its Subsidiaries from incurring any liens (except for those created under
the loan documents or otherwise permitted under the Credit Agreement, including
those securing Bowling Worldwide's obligations as borrower on other indebtedness
not to exceed $5 million at any time outstanding). Bowling Worldwide and its
Subsidiaries are also prohibited from incurring any debt, other than (in the
case of Bowling

71
<PAGE> 71

Worldwide) debt owed to its Subsidiaries or in respect of hedge agreements not
entered into for speculative purposes or (in the case of any Subsidiary) debt
owed to Bowling Worldwide or any of its wholly owned Subsidiaries, to the extent
permitted under the Credit Agreement or (in the case of either Bowling Worldwide
or its Subsidiaries) debt secured by permitted liens, capitalized leases not to
exceed $10 million at any time outstanding and any debt existing at the time of
the Acquisition, among other things. Bowling Worldwide and its Subsidiaries may
not incur any obligations under leases having a term of one year or more that
would cause their direct and contingent liabilities for any 12 months to exceed
the sum of (i) $25 million, (ii) the product of (x) $200,000 and (y) the number
of leased bowling centers acquired by Bowling Worldwide or any Subsidiaries
after May 1, 1996 and (iii) in each calendar year after 1996, an amount equal to
4% of the amount permitted by this provision in the immediately preceding
calendar year. Bowling Worldwide is also prohibited from entering into a merger
of which it is not the survivor or to sell, lease, or otherwise transfer its
assets other than in the ordinary course of business, except as otherwise
permitted by the Credit Agreement. Investments by Bowling Worldwide or its
Subsidiaries in any other person are also limited by formulas set forth in the
Credit Agreement. The negative covenants also relate to the payment of
dividends, prepayments of, and amendments of the terms of, other debt (including
the Notes), amendment of Related Documents (as defined in the Credit Agreement),
ownership changes, negative pledges, partnerships, speculative transactions,
capital expenditures and payment restrictions affecting subsidiaries. Bowling
Worldwide is also subject to certain financial and other reporting requirements.
The Proposed Amendments will not materially affect the foregoing covenants.

Under the Proposed Amendments, Bowling Worldwide is prohibited from making
a material change in the nature of its existing business, except that it may
have up to $50 million invested at any one time in golf driving ranges and other
golf-related activities.

So long as Bowling Worldwide is not in default of the covenants contained
in the Credit Agreement, it may (i) declare and pay dividends in common stock,
(ii) declare and pay cash dividends to the extent necessary to make payments
under certain noncompete agreements with stockholders of the Predecessor
Company, (iii) declare and pay cash dividends for general administrative
expenses not to exceed $0.25 million and (iv) declare and pay cash dividends not
to exceed $2.0 million for the repurchase of Common Stock. As of June 30, 1997,
Bowling Worldwide is in compliance with all of its covenants.

SENIOR SUBORDINATED NOTES

Bowling Worldwide has outstanding $250.0 million in principal amount of
10 7/8% Series B Senior Subordinated Notes due 2006 (the "Senior Subordinated
Notes") and $291.4 million principal amount of 12 1/4% Series B Senior
Subordinated Discount Notes due 2006 (the "Senior Subordinated Discount Notes",
and together with the Senior Subordinated Notes, the "Notes"). The following
description of the Notes and the Note Indentures is a summary and is qualified
in its entirety by the provisions of the Notes and the Note Indentures, copies
of which have been filed as exhibits to the Registration Statement of which this
Prospectus is a part.

The Senior Subordinated Notes will mature on March 15, 2006. Interest
thereon accrues from the date of issuance at an annual rate of 10 7/8% and is
payable in cash semiannually in arrears on March 15 and September 15 of each
year which commenced on September 15, 1996.

The Senior Subordinated Discount Notes will mature on March 15, 2006 at a
fully-accreted value of $452 million. The Senior Subordinated Discount Notes
will result in an effective yield of 12 1/4% per annum, computed on a semiannual
bond equivalent basis. No interest will be payable prior to March 15, 2001.
Commencing March 15, 2001, interest will accrue and be payable in cash
semiannually in arrears on March 15 and September 15 of each year beginning with
September 15, 2001.

72
<PAGE> 72

Bowling Worldwide's payment obligations under the Notes are jointly and
severally guaranteed on a senior subordinated basis by Bowling Worldwide's
direct and indirect domestic subsidiaries and by any other subsidiaries of
Bowling Worldwide that act as guarantors under the Credit Agreement
(collectively, the "Guarantors").

The guarantees of the Notes are subordinated to the guarantees of the
indebtedness under the Credit Agreement and certain other indebtedness
(collectively, the "Senior Debt"). The Notes are general, unsecured obligations
of Bowling Worldwide, are subordinated in right of payment to all Senior Debt of
Bowling Worldwide, and rank pari passu with all existing and future subordinated
debt of Bowling Worldwide. The claims of the holders of the Notes will be
effectively subordinated to all other indebtedness and other liabilities
(including trade payables and capital lease obligations) of Bowling Worldwide's
subsidiaries that are not Guarantors and through which Bowling Worldwide will
conduct a portion of its operations.

Prior to March 15, 1999, up to $100 million in aggregate principal amount
of Senior Subordinated Notes will be redeemable at the option of Bowling
Worldwide, on one or more occasions, from the net proceeds of public or private
sales of common stock of, or contributions to the common equity capital of,
Bowling Worldwide, at a price of 110.875% of the principal amount of the Senior
Subordinated Notes, together with accrued and unpaid interest, if any, to the
date of redemption; so long as at least $150 million in aggregate principal
amount of Senior Subordinated Notes remains outstanding after such redemption.
Similarly, prior to March 15, 1999, the Senior Subordinated Discount Notes will
be redeemable at the option of Bowling Worldwide, on one or more occasions, from
the net proceeds of public or private sales of common stock of, or contributions
to the common equity capital of, Bowling Worldwide, at a price of 112.25% of the
accreted value of the Senior Subordinated Discount Notes; so long as at least
$150 million in accreted value of Senior Subordinated Discount Notes remains
outstanding after such redemption. The Proposed Amendments will enable Bowling
Worldwide to use a portion of the proceeds of the Offerings to redeem Senior
Subordinated Notes and/or Senior Subordinated Discount Notes. See "Use of
Proceeds".

The indenture governing the Senior Subordinated Notes and the indenture
governing the Senior Subordinated Discount Notes (collectively, the "Note
Indentures") contain certain covenants that, among other things, limit the
ability of the Company and its Restricted Subsidiaries (as defined in the
applicable Note Indenture) to incur additional indebtedness and issue
Disqualified Stock (as defined in the applicable Note Indenture), pay dividends
or distributions or make investments or make certain other Restricted Payments
(as defined in the applicable Note Indenture), enter into certain transactions
with affiliates, dispose of certain assets, incur liens securing pari passu and
subordinated indebtedness of Bowling Worldwide and engage in mergers and
consolidations. As of June 30, 1997, Bowling Worldwide is in compliance with all
of its covenants under the Note Indentures.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings, assuming no exercise of the Underwriters'
over-allotment options, 57,605,000 shares of Common Stock will be outstanding
(59,630,000 shares if the Underwriters' over-allotment options are exercised in
full). Of these shares, the 13,500,000 shares of Common Stock sold in the
Offerings (15,525,000 shares if the Underwriters' over-allotment options are
exercised in full) will be available for resale in the public market without
restriction or further registration under the Securities Act, unless purchased
by an affiliate of AMF Bowling. The remaining 44,105,000 outstanding shares of
Common Stock are deemed to be "restricted securities" as that term is defined in
Rule 144, all of which are eligible for sale in the public market in compliance
with Rule 144. Certain existing stockholders of AMF Bowling (who in the
aggregate hold 44,005,000 shares of Common Stock) have agreed, subject to
certain exceptions, that they will not offer, sell or otherwise dispose of any
of the shares of Common Stock owned by them for a period of 180 days after the
date of this Prospectus without the prior written consent of the representatives

73
<PAGE> 73

of the Underwriters. Additionally, AMF Bowling has agreed that, during the
period of 180 days from the date of this Prospectus, subject to certain
exceptions, it will not issue, sell, offer or agree to sell, grant any options
for the sale of (other than employee stock options) or otherwise dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable for Common Stock, other than pursuant to the Offerings or
upon the exercise of outstanding stock options.

In general, under Rule 144, any person (or persons whose shares are
aggregated) who has beneficially owned shares for at least one year is entitled
to sell, within any three-month period, a number of restricted securities which
does not exceed the greater of 1% of the then-outstanding shares of Common Stock
(576,050 shares immediately after the Offerings) or the average weekly trading
volume of the Common Stock during the four calendar weeks preceding the date on
which notice of the sale is filed with the Commission. Sales under Rule 144 also
may be subject to certain manner of sale provisions, notice requirements and the
availability of current public information about AMF Bowling. Any person (or
persons whose shares are aggregated) who is not deemed to have been an affiliate
of AMF Bowling at any time during the three months preceding a sale, and who has
beneficially owned shares within the definition of "restricted securities" under
Rule 144 for at least two years, is entitled to sell such shares under Rule
144(k) promulgated under the Securities Act without regard to the volume
limitation, manner of sale provisions, public information requirements or notice
requirements.

Prior to the Offerings, there has been no public market for the Common
Stock. No prediction can be made as to the effect, if any, that market sales of
shares of Common Stock that are restricted securities or the availability of
such shares will have on the market price of the Common Stock prevailing from
time to time. Nevertheless, sales of substantial amounts of Common Stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Common Stock and could impair AMF Bowling's future ability to
raise capital through an offering of equity securities.

74
<PAGE> 74

VALIDITY OF SHARES

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Wachtell, Lipton, Rosen & Katz, New York, New York, and
for the Underwriters by Sullivan & Cromwell, New York, New York.

EXPERTS

The consolidated balance sheet of AMF Bowling and subsidiaries as of
December 31, 1996, and the related consolidated statements of income,
stockholders' equity, and cash flows for the period from inception (January 12,
1996) through December 31, 1996, included in this Prospectus, and the related
financial statement schedule included elsewhere in the Registration Statement of
which this Prospectus is a part, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein, in reliance upon the authority of said firm as
experts in giving said reports.

The combined financial statements of AMF Bowling Group as of April 30, 1996
and December 31, 1995 and for the period from January 1, 1996 through April 30,
1996 and for each of the two years in the period ended December 31, 1995,
included in this Prospectus, have been so included in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

The consolidated financial statements of Fair Lanes, Inc. as of September
29, 1994 and June 30, 1994 and for the three months ended September 29, 1994,
and year ended June 30, 1994 included in this Prospectus, have been so included
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

AMF Bowling has agreed to indemnify Price Waterhouse LLP for the payment of
all legal costs and expenses incurred in Price Waterhouse LLP's successful
defense of any legal action or proceeding that arises as a result of inclusion
of Price Waterhouse LLP's audit reports on the combined financial statements of
AMF Bowling Group and the consolidated financial statements of Fair Lanes, Inc.
(Debtor-in-Possession) and Subsidiaries in this Registration Statement.

The consolidated financial statements of Charan as of December 31, 1996 and
for the year then ended, included elsewhere in the Registration Statement of
which this Prospectus is a part, have been audited by Todres & Sheiffer,
independent auditors, as stated in their reports appearing herein and elsewhere
in the Registration Statement, and are included in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing.

75
<PAGE> 75

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
AMF BOWLING, INC. AND SUBSIDIARIES -- AUDITED FINANCIAL STATEMENTS
Report of Independent Public Accountants.......................................... F-2
Consolidated Balance Sheet as of December 31, 1996................................ F-3
Consolidated Statement of Income for the Period Ended December 31, 1996........... F-4
Consolidated Statement of Cash Flows for the Period Ended December 31, 1996....... F-5
Consolidated Statement of Stockholders' Equity for the Period Ended December 31,
1996........................................................................... F-6
Notes to Consolidated Financial Statements........................................ F-7

AMF BOWLING, INC. AND SUBSIDIARIES -- INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheet as of June 30, 1997.......................... F-33
Condensed Consolidated Statements of Income for the Six Months
Ended June 30, 1997 and 1996................................................... F-34
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30,
1997 and 1996.................................................................. F-35
Notes to Condensed Consolidated Financial Statements.............................. F-36

AMF BOWLING GROUP (PREDECESSOR COMPANY)
Report of Independent Accountants................................................. F-47
Combined Balance Sheets as of April 30, 1996, and December 31, 1995............... F-48
Combined Statements of Operations for the Four Months Ended April 30, 1996, and
the Years Ended December 31, 1995 and 1994..................................... F-49
Combined Statements of Cash Flows for the Four Months Ended April 30, 1996, and
the Years Ended December 31, 1995 and 1994..................................... F-50
Combined Statement of Changes in Stockholders' Equity for the Four Months Ended
April 30, 1996, and the Years Ended December 31, 1995 and 1994................. F-51
Notes to Combined Financial Statements............................................ F-52

SELECTED QUARTERLY DATA (UNAUDITED)................................................. F-86

CONSOLIDATED FINANCIAL STATEMENTS OF FAIR LANES, INC. (DEBTOR-IN-POSSESSION) AND
SUBSIDIARIES
Report of Independent Accountants................................................. F-87
Consolidated Balance Sheets as of September 29, 1994 and June 30, 1994............ F-88
Consolidated Statements of Loss for the Three Months Ended September 29, 1994 and
the Year Ended June 30, 1994................................................... F-89
Consolidated Statements of Cash Flows for the Three Months Ended September 29,
1994 and the Year Ended June 30, 1994.......................................... F-90
Consolidated Statements of Stockholder's Equity for the Three Months Ended
September 29, 1994 and the Year Ended June 30, 1994............................ F-91
Notes to Consolidated Financial Statements........................................ F-92
BCA & AFFILIATES
Report of Independent Auditors.................................................... F-103
Balance Sheet as of August 31, 1996............................................... F-104
Statement of Income for the Year Ended August 31, 1996............................ F-105
Statement of Cash Flows for the Year Ended August 31, 1996........................ F-106
Notes to Financial Statements..................................................... F-107
</TABLE>

F-1
<PAGE> 76

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
AMF Bowling, Inc.:

We have audited the accompanying consolidated balance sheet of AMF Bowling,
Inc. (a Delaware corporation, formerly named AMF Holdings Inc.) and subsidiaries
as of December 31, 1996, and the related consolidated statements of income,
stockholders' equity, and cash flows for the period from inception (January 12,
1996) through December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AMF Bowling, Inc. and
subsidiaries as of December 31, 1996, and the results of their operations and
their cash flows for the period from inception (January 12, 1996) through
December 31, 1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Richmond, Virginia
February 28, 1997

F-2
<PAGE> 77

AMF BOWLING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................... $ 43,568
Accounts and notes receivable, net of allowance for doubtful accounts
of $4,492................................................................ 42,625
Inventories................................................................. 41,001
Deferred taxes and other.................................................... 11,178
----------
Total current assets................................................ 138,372
Property and equipment, net................................................... 630,796
Deferred financing costs, net................................................. 40,595
Goodwill, net................................................................. 771,146
Other assets.................................................................. 13,101
----------
Total assets........................................................ $1,594,010
==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................ $ 31,563
Accrued expenses............................................................ 54,357
Income taxes payable........................................................ 2,276
Long-term debt, current portion............................................. 42,376
----------
Total current liabilities........................................... 130,572
Long-term debt................................................................ 1,048,877
Other long-term liabilities................................................... 1,851
Deferred income taxes......................................................... 3,895
----------
Total liabilities........................................................... 1,185,195
----------
Commitments and contingencies
Stockholders' equity:
Common stock (par value $.01, 60,000,000 shares authorized, 42,375,000
shares issued and outstanding)........................................... 424
Paid-in capital............................................................. 429,026
Retained deficit............................................................ (19,484)
Equity adjustment from foreign currency translation......................... (1,151)
----------
Total stockholders' equity.......................................... 408,815
----------
Total liabilities and stockholders' equity.......................... $1,594,010
==========
</TABLE>

The accompanying notes are an integral part of this consolidated balance sheet.

F-3
<PAGE> 78

AMF BOWLING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIOD ENDED DECEMBER 31, 1996 (NOTE 2)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<S> <C>
Operating revenue................................................................ $384,809
--------
Operating expenses:
Cost of goods sold............................................................. 130,542
Bowling center operating expenses.............................................. 123,673
Selling, general, and administrative expenses.................................. 35,070
Depreciation and amortization.................................................. 49,386
--------
Total operating expenses............................................... 338,671
--------
Operating income....................................................... 46,138
Nonoperating expenses:
Interest expense............................................................... 77,990
Other expenses, net............................................................ 1,912
Interest income................................................................ (5,748)
--------
Total nonoperating expenses............................................ 74,154
--------
Loss before income taxes............................................... (28,016)
Benefit for income taxes............................................... (8,532)
--------
Net loss............................................................... $(19,484)
========
Net loss per share............................................................... $ (.49)
========
Weighted average shares outstanding.............................................. 39,713
========
</TABLE>

The accompanying notes are an integral part of this consolidated financial
statement.

F-4
<PAGE> 79

AMF BOWLING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED DECEMBER 31, 1996 (NOTE 2)
(IN THOUSANDS)

<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss.................................................................... $ (19,484)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization............................................ 49,386
Deferred taxes........................................................... (14,040)
Amortization of bond discount............................................ 24,731
Loss on the sale of property and equipment, net.......................... 408
Changes in assets and liabilities:
Accounts and notes receivable.......................................... (6,504)
Inventories............................................................ 1,862
Other assets........................................................... (4,010)
Accounts payable and accrued expenses.................................. 21,930
Income taxes payable................................................... 417
Other long-term liabilities............................................ 19,135
-----------
Net cash provided by operating activities................................ 73,831
Cash flows from investing activities:
Acquisitions of operating units, net of cash acquired....................... (1,450,928)
Purchases of property and equipment......................................... (16,941)
Proceeds from sales of property and equipment............................... 754
-----------
Net cash used in investing activities.................................... (1,467,115)
Cash flows from financing activities:
Proceeds from long-term debt, net of deferred financing costs............... 1,059,277
Payments on long-term debt.................................................. (38,875)
Capital contributions....................................................... 420,750
Payment of noncompete obligations........................................... (2,892)
-----------
Net cash provided by financing activities................................ 1,438,260
-----------
Effect of exchange rates on cash......................................... (1,408)
-----------
Net increase in cash..................................................... 43,568
Cash and cash equivalents at beginning of period......................... --
-----------
Cash and cash equivalents at end of period............................... $ 43,568
===========
</TABLE>

The accompanying notes are an integral part of this consolidated financial
statement.

F-5
<PAGE> 80

AMF BOWLING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED DECEMBER 31, 1996 (NOTE 2)
(IN THOUSANDS)

<TABLE>
<CAPTION>
EQUITY
ADJUSTMENT
FROM FOREIGN TOTAL
COMMON PAID-IN RETAINED CURRENCY STOCKHOLDERS'
STOCK CAPITAL DEFICIT TRANSLATION EQUITY
------ -------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance January 12, 1996.............. $ -- $ -- $ -- $ -- $ --
Initial capitalization.............. 384 389,066 -- -- 389,450
Capital contribution by
stockholders..................... 40 39,960 -- -- 40,000
Net loss............................ -- -- (19,484) -- (19,484)
Equity adjustment from foreign
currency translation............. -- -- -- (1,151) (1,151)
---- -------- -------- ------- --------
Balance December 31, 1996............. $424 $429,026 $(19,484) $ (1,151) $ 408,815
==== ======== ======== ======= ========
</TABLE>

The accompanying notes are an integral part of this consolidated financial
statement.

F-6
<PAGE> 81

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996

NOTE 1. ORGANIZATION

AMF Bowling, Inc. ("AMF Bowling") changed its name from AMF Holdings Inc.
in 1997. AMF Bowling and its subsidiaries (collectively, the "Company" or "AMF")
are principally engaged in two business segments: (i) the ownership or operation
of bowling centers, consisting of 263 U.S. bowling centers and 78 international
bowling centers ("Bowling Centers") as of December 31, 1996, and (ii) the
manufacture and distribution of bowling equipment such as automatic pinspotters,
automatic scoring equipment, bowling pins, lanes, ball returns, certain spare
parts, and the resale of allied products such as bowling balls, bags, shoes, and
certain other spare parts ("Bowling Products"). The principal markets for
bowling equipment are U.S. and international independent bowling center
operators.

AMF Bowling Worldwide, Inc., formerly named AMF Group Inc. ("Bowling
Worldwide"), is a wholly owned subsidiary of AMF Group Holdings Inc. ("AMF Group
Holdings"). AMF Group Holdings is a wholly owned subsidiary of AMF Bowling. AMF
Group Holdings and Bowling Worldwide are Delaware corporations organized by GS
Capital Partners II, L.P., and certain other investment funds (collectively,
"GSCP") affiliated with Goldman, Sachs & Co. ("Goldman Sachs") to effect the
Acquisition (described below). AMF Bowling and AMF Group Holdings are holding
companies only. The primary assets in each are comprised of investments in
subsidiaries.

Pursuant to a Stock Purchase Agreement dated February 16, 1996, between AMF
Group Holdings and the stockholders (the "Prior Owners") of AMF Bowling Group
(the "Predecessor Company"), on May 1, 1996 (the "Closing Date"), AMF Group
Holdings acquired the Predecessor Company through a stock purchase by AMF Group
Holdings' subsidiaries of all the outstanding stock of the separate domestic and
foreign corporations that constituted substantially all of the Predecessor
Company and through the purchase of certain of the assets of the Predecessor
Company's bowling center operations in Spain and Switzerland (the
"Acquisition"). AMF Group Holdings did not acquire the assets of two bowling
centers located in Madrid, Spain, and Geneva, Switzerland (both of which were
retained by the Prior Owners).

The purchase price for the Acquisition was approximately $1.37 billion,
less approximately $2.0 million representing debt of the Predecessor Company
which remained in place following the closing of the Acquisition. The
Acquisition was accounted for by the purchase method of accounting, pursuant to
which the purchase price was allocated among the acquired assets and liabilities
in accordance with estimates of fair market value on the date of Acquisition.
The purchase included the payment of $1.323 billion to the Prior Owners. The
Acquisition was funded with $380.8 million of contributed capital, and $1.015
billion of debt, including bank debt and senior subordinated notes and discount
notes. The purchase included $8.7 million which represents warrants to purchase
870,000 shares of AMF Bowling common stock, par value $.01 per share ("Common
Stock"), which were issued on the Closing Date to Goldman Sachs. See "Note 9.
Long-Term Debt". See also "Note 14. Supplemental Disclosures to the Consolidated
Statement of Cash Flows" which presents the components of the purchase price
allocation.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The results of operations for the period ended December 31, 1996, reflect
the results of the Company since the inception date of January 12, 1996, and the
subsidiaries acquired as of May 1, 1996, from the Predecessor Company. All
significant intercompany balances and transactions have

F-7
<PAGE> 82

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

been eliminated in the accompanying consolidated financial statements. All
dollar amounts are in thousands, except where otherwise indicated.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. The more significant estimates made by management include allowances for
obsolete inventory, uncollectible accounts receivable, realization of goodwill
and other deferred assets, litigation and claims, product warranty costs, and
self-insurance costs. Actual results could differ from those estimates.

Revenue Recognition

For sales to customers in the United States, revenue is generally
recognized at the time the products are shipped. For larger contract orders,
Bowling Products generally requires that customers submit a deposit as a
condition of accepting the order. Internationally, revenue is generally
recognized when products arrive at the customer's port of entry. For
nonaffiliate international sales, Bowling Products generally requires the
customer to obtain a letter of credit prior to shipment.

Warranty Costs

Bowling Products warrants all new products for certain periods up to one
year. Major products are warranted for one year. Bowling Products charges to
income an estimated amount for future warranty obligations, and offers customers
the option to purchase extended warranties on certain products. Warranty expense
aggregated $4,471 for the period ended December 31, 1996, and is included in
cost of sales in the accompanying consolidated statement of income.

Cash and Cash Equivalents

The Company classifies all highly liquid fixed-income investments purchased
with an original maturity of three months or less as cash equivalents.

Inventories

Bowling Products' inventory is valued at the lower of cost or market, cost
being determined using the first-in, first-out ("FIFO") method for U.S. and
international inventories. Bowling Centers' inventory is valued at the lower of
cost or market, with the cost being determined using the actual or average cost
method.

Long-Lived Assets

The carrying value of long-lived assets and certain identifiable
intangibles, including goodwill, is reviewed by the Company for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable, and an estimate of future undiscounted cash
flows is less than the carrying amount of the asset.

F-8
<PAGE> 83

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

Property and Equipment

Property and equipment are stated at cost. Expenditures for maintenance and
repairs which do not improve or extend the life of an asset are charged to
expense as incurred; major renewals or betterments are capitalized. Upon
retirement or sale of an asset, its cost and related accumulated depreciation
are removed from property, and any gain or loss is recognized.

As a result of the Acquisition, the carrying value of property and
equipment was adjusted to fair market value in accordance with the purchase
method of accounting. Property and equipment are depreciated over their
estimated useful lives using the straight-line method. Estimated useful lives of
property and equipment for financial reporting purposes are as follows:

<TABLE>
<S> <C>
Buildings and improvements.... 5 - 40 years
Leasehold improvements........ lesser of the estimated useful life or term of the lease
Bowling and related
equipment................... 5 - 10 years
Manufacturing equipment....... 2 - 7 years
Furniture and fixtures........ 3 - 8 years
</TABLE>

Goodwill

As a result of the Acquisition and in accordance with the purchase method
of accounting for the Acquisition, the Company recorded goodwill representing
the excess of the purchase price over the allocation among the acquired assets
and liabilities in accordance with estimates of fair market value on the Closing
Date. Goodwill is being amortized over 40 years. Amortization expense was
$13,070 for the period ended December 31, 1996.

Income Taxes

Upon consummation of the Acquisition, the U.S. and international
subsidiaries of AMF Bowling became taxable corporations under the Internal
Revenue Code ("IRC"). Income taxes are accounted for using the asset and
liability method under which deferred income taxes are recognized for the tax
consequences on future years of temporary differences between the financial
statement carrying amounts and the tax bases of assets and liabilities.

Research and Development Costs

Expenditures relating to the development of new products, including
significant improvements and refinements to existing products, are expensed as
incurred. The amount charged against income was approximately $1,312 for the
period ended December 31, 1996, and is included in cost of sales in the
accompanying consolidated statement of income.

Advertising Costs

Costs incurred for producing and communicating advertising are expensed
when incurred. The amount charged against income was approximately $9,299 for
the period ended December 31, 1996, with $5,932 included in bowling center
operating expenses for Bowling Centers, and $3,367 included in selling, general,
and administrative expenses for Bowling Products and Corporate in the
accompanying consolidated statement of income.

F-9
<PAGE> 84

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

Earnings Per Share

Net loss per share is calculated based on the actual weighted average
shares outstanding. Outstanding stock options and warrants are not considered as
their effect is antidilutive.

Foreign Currency Translation

All assets and liabilities of AMF Bowling's international operations are
translated from foreign currencies into U.S. dollars at year-end exchange rates.
Adjustments resulting from the translation of financial statements of
international operations into U.S. dollars are included in the equity adjustment
from foreign currency translation on the accompanying consolidated balance
sheet. Revenues and expenses of international operations are translated using
average exchange rates that existed during the year and reflect currency
exchange gains and losses resulting from transactions conducted in other than
local currencies. The net loss from transactions in foreign currencies of $488
is included in other expenses in the accompanying consolidated statement of
income.

Fair Value of Financial Instruments

The carrying value of financial instruments including cash and cash
equivalents and short-term debt approximated fair value at December 31, 1996,
because of the short maturity of these instruments. At December 31, 1996, the
fair value of interest rate cap agreements (to reduce the interest rate risk of
its floating rate debt) was approximately $577. The interest rate cap agreement
is valued using the estimated amount that the Company would receive to terminate
the cap agreement as of December 31, 1996, based on a quote from the
counterparty, taking into account current interest rates and the credit
worthiness of the counterparty. The Company has no intention of terminating the
cap agreement. The fair value of the Senior Debt, as defined in "Note 9. Long-
Term Debt," at December 31, 1996, was approximately $623,520 based on the market
value of debt with similar maturities and covenants. The fair value of the
Notes, as defined in "Note 9. Long-Term Debt", at December 31, 1996, was
approximately $560,315 based on the trading value at December 31, 1996.

Noncompete Agreements

AMF Bowling, through its subsidiaries, has noncompete agreements with
various individuals. The assets are recorded at cost or at the present value of
payments to be made under these agreements, discounted at annual rates ranging
from 8 percent to 10 percent. The assets are included in other assets on the
accompanying consolidated balance sheet and are amortized on a straight-line
basis over the terms of the agreements. Noncompete obligations at December 31,
1996, net of accumulated amortization, totaled approximately $2,498.

F-10
<PAGE> 85

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

Annual maturities on noncompete obligations as of December 31, 1996, are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
----------------------------------------------------
<S> <C>
1997................................................ $ 724
1998................................................ 666
1999................................................ 362
2000................................................ 164
2001................................................ 146
Thereafter.......................................... 436
-------
$ 2,498
======
</TABLE>

Self-Insurance Programs

The Company is self-insured up to certain levels for general and product
liability, workers' compensation, certain health care coverage, and property
damage. The cost of these self-insurance programs is accrued based upon
estimated settlements for known and anticipated claims. The Company has recorded
an estimated amount to cover known claims and claims incurred but not reported
as of December 31, 1996, which is included in accrued expenses in the
accompanying consolidated balance sheet.

NOTE 3. PRO FORMA RESULTS OF OPERATIONS

Pro forma statements of income are presented on the following pages for the
years ended December 31, 1996 and 1995, as if the Acquisition had occurred on
January 1, 1996 and 1995, respectively. AMF Bowling's pro forma statement of
income for the twelve months ended December 31, 1996, is based on the
Predecessor Company's statement of income for the four-month period ending April
30, 1996, reported elsewhere in this Prospectus, AMF Bowling's statement of
income for the period ended December 31, 1996, and adjustments giving effect to
the Acquisition under the purchase method of accounting as described in the
notes below. AMF Bowling's pro forma statement of income for the twelve months
ended December 31, 1995, is based on the Predecessor Company's results of
operations reported elsewhere in this Prospectus and adjustments giving effect
to the Acquisition under the purchase method of accounting as described in the
notes below. The pro forma results are for illustrative purposes only and do not
purport to be indicative of the actual results which occurred, nor are they
indicative of future results of operations.

F-11
<PAGE> 86

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

PRO FORMA RESULTS OF OPERATIONS (IN MILLIONS)
(UNAUDITED)

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
AMF PREDECESSOR AMF
BOWLING, COMPANY BOWLING, INC.
INC. FOUR MONTHS TWELVE MONTHS
PERIOD ENDED ENDED PRO FORMA ENDED
12/31/96(a) 4/30/96 ADJUSTMENTS 12/31/96
------------ ----------- ----------- -------------
<S> <C> <C> <C> <C>
Operating revenue:..................... $384.8 $ 164.9 $ (0.8)(b) $ 548.9
------ ------ ------ ------
Operating expenses:
Cost of goods sold................... 130.5 43.1 -- 173.6
Bowling center operating expenses.... 123.7 80.2 (25.1)(b)(c) 178.8
Selling, general and administrative
expenses.......................... 35.1 35.5 (19.6)(b)(c) 51.0
Depreciation and amortization........ 49.4 15.1 9.0(d) 73.5
------ ------ ------ ------
Total operating expenses..... 338.7 173.9 (35.7) 476.9
------ ------ ------ ------
Operating income (loss)...... 46.1 (9.0) 34.9 72.0
Nonoperating expenses:
Interest expense..................... 78.0 4.5 23.7(e) 106.2
Other expenses, net.................. 1.9 0.7 -- 2.6
Interest income...................... (5.8) (0.6) -- (6.4)
------ ------ ------ ------
Income (loss) before income taxes...... (28.0) (13.6) 11.2 (30.4)
Provision (benefit) for income taxes... (8.5) (1.7) 1.3(f) (8.9)
------ ------ ------ ------
Net income (loss)............ $(19.5) $ (11.9) $ 9.9 $ (21.5)
====== ====== ====== ======
Net loss per share..................... $ (0.55)
======
</TABLE>

(b) To reflect the impact of AMF Group Holdings not acquiring in the Acquisition
the operations of one bowling center in Switzerland and one bowling center
in Spain.

(c) To eliminate a one-time charge of $44.0 million for special bonuses and
payments made by the then-current stockholders of the Predecessor Company
(the "Prior Owners") in April 1996.

(e) To reflect the incremental interest expense associated with the issuance of
debt which partially funded the Acquisition.

F-12
<PAGE> 87

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

PRO FORMA RESULTS OF OPERATIONS (IN MILLIONS)
(UNAUDITED)

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
PREDECESSOR AMF
COMPANY BOWLING, INC.
TWELVE MONTHS TWELVE MONTHS
ENDED PRO FORMA ENDED
12/31/95 ADJUSTMENTS 12/31/95
------------- ----------- -------------
<S> <C> <C> <C>
Operating revenue:................................. $ 564.9 $ (2.3)(h) $ 562.6
------ ------- ------
Operating expenses:
Cost of goods sold............................... 184.1 (0.3)(h) 183.8
Bowling center operating expenses................ 166.5 (1.5)(h) 165.0
Selling, general, and administrative expenses.... 50.8 (0.3)(i) 50.5
Depreciation and amortization.................... 39.1 27.9(j) 67.0
------ ------- ------
Total operating expenses................. 440.5 25.8 466.3
------ ------- ------
Operating income (loss).................. 124.4 (28.1) 96.3
Nonoperating expenses:
Interest expense................................. 15.7 88.6(k) 104.3
Other expenses, net.............................. 1.0 -- 1.0
Interest income.................................. (2.2) -- (2.2)
Foreign currency transaction loss................ 1.0 -- 1.0
------ ------- ------
Income (loss) before income taxes.................. 108.9 (116.7) (7.8)
Provision (benefit) for income taxes............... 40.6(g) (30.6)(l) 10.0
------ ------- ------
Net income (loss)........................ $ 68.3 $ (86.1) $ (17.8)
====== ======= ======
Net loss per share................................. $ (0.47)
======
</TABLE>

- ---------------
(g) Reflects the pro forma income tax provision that would have been provided
had the Predecessor Company consisted of taxable C corporations, rather than
S corporations.

(h) To reflect the net reduction in revenue and expenses related to the
following:

i. Certain assets of the Predecessor Company not purchased by AMF Group
Holdings.

ii. Impact of AMF Group Holdings not acquiring one bowling center in
Switzerland and one bowling center in Spain.

iii. Concurrent with the Acquisition, amounts due from and payable to the
Prior Owners and other related parties were canceled.

(i) To reflect the termination of management fees charged by an affiliate of the
Prior Owners.

(j) To reflect the increase in depreciation and amortization expense resulting
from the allocation of the purchase price to fixed assets and goodwill and a
change in the method of depreciation of fixed assets. The Predecessor
Company principally used the double declining balance method. The amount of
the pro forma adjustment for depreciation was determined using the
straight-line method over the estimated lives of the assets acquired.
Goodwill is being amortized over 40 years.

(k) To reflect the incremental interest expense associated with the issuance of
debt which partially funded the Acquisition.

(l) To reflect the pro forma income tax benefit associated with the pro forma
adjustments.

F-13
<PAGE> 88

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

NOTE 4. INVENTORIES

Inventories at December 31, 1996, consist of the following:

<TABLE>
<S> <C>
Bowling Products, at FIFO:
Raw materials................................... $ 11,683
Work in progress................................ 2,335
Finished goods and spare parts.................. 23,195
Bowling Centers, at average cost:
Merchandise inventory........................... 3,788
-------
$ 41,001
=======
</TABLE>

NOTE 5. DEFERRED TAXES AND OTHER CURRENT ASSETS

The components of deferred taxes and other current assets at December 31,
1996, are summarized below:

<TABLE>
<S> <C>
Deferred income taxes............................. $ 4,847
Advances or deposits.............................. 2,018
Other............................................. 4,313
-------
$ 11,178
=======
</TABLE>

NOTE 6. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 1996, consists of the following:

<TABLE>
<S> <C>
Land............................................. $ 90,512
Buildings and improvements....................... 265,461
Equipment, furniture, and fixtures............... 304,067
Other............................................ 2,631
--------
662,671
Less: accumulated depreciation and
amortization................................... (31,875)
--------
$ 630,796
========
</TABLE>

Depreciation and amortization expense related to property and equipment was
$31,875 for the period ended December 31, 1996.

NOTE 7. OTHER LONG-TERM ASSETS

Other long-term assets at December 31, 1996, total $13,101 and are
primarily composed of long-term rent deposits, long-term portion of noncompete
obligations, and notes receivable.

F-14
<PAGE> 89

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

NOTE 8. ACCRUED EXPENSES

Accrued expenses at December 31, 1996, consist of the following:

<TABLE>
<S> <C>
Accrued compensation.............................. $ 9,141
Accrued interest.................................. 8,640
League bowling accounts........................... 7,676
Accrued installation costs........................ 4,451
Other............................................. 24,449
-------
$ 54,357
=======
</TABLE>

NOTE 9. LONG-TERM DEBT

Long-term debt at December 31, 1996, consists of the following:

<TABLE>
<S> <C>
Bank debt....................................... $ 564,625
Senior subordinated notes....................... 250,000
Senior subordinated discount notes.............. 274,663
Mortgage and equipment notes.................... 1,965
----------
Total debt............................ 1,091,253
Current maturities.............................. (42,376)
----------
Total long-term debt.................. $1,048,877
==========
</TABLE>

BANK DEBT

The bank debt (the "Senior Debt") was incurred pursuant to a credit
agreement (the "Bank Credit Agreement") dated as of May 1, 1996, and amended and
restated as of December 20, 1996, between Bowling Worldwide and its lenders. The
Bank Credit Agreement provides for (i) senior secured term loan facilities
aggregating $580.0 million (the "Term Facilities"), (ii) a senior secured
multiple-draw term facility of $150.0 million (the "Acquisition Facility"), and
(iii) a senior secured revolving credit facility of up to $50.0 million (the
"Working Capital Facility").

The Term Facilities consist of the following three tranches: (i) a Term
Loan Facility of $250.0 million, (ii) an Amortization Extended Loans
("AXELs(SM)") Series A facility of $190.0 million, and (iii) an AXELs(SM) Series
B Facility of $140.0 million. Maturity dates of the three tranches and scheduled
amortization payments are included in tables below. The Term Loan Facility bears
interest, at Bowling Worldwide's option, at Citibank's customary base rate plus
1.5% or at Citibank's Eurodollar rate plus 2.5%. At December 31, 1996, the
interest rate was 8.125%. The AXELs(SM) Series A Facility bears interest, at
Bowling Worldwide's option, at Citibank's customary base rate plus 1.875% or at
Citibank's Eurodollar rate plus 2.875%. At December 31, 1996, the interest rate
was 8.5%. The AXELs(SM) Series B Facility bears interest, at Bowling Worldwide's
option, at Citibank's customary base rate plus 2.125% or at Citibank's
Eurodollar rate plus 3.125%. At December 31, 1996, the interest rate was
10.375%. On January 10, 1997, the interest rate was adjusted to 8.69% when the
amounts under the Bank Credit Agreement were refinanced.

The Acquisition Facility has a term of five years. The Acquisition Facility
will begin to amortize in December 1999, with final maturity at March 31, 2001.
The Acquisition Facility bears interest, at Bowling Worldwide's option, at
Citibank's customary base rate plus 1.5% or at Citibank's Eurodollar rate plus
2.5%. At December 31, 1996, $65.0 million of the Acquisition Facility bore
interest at 9.75%,

F-15
<PAGE> 90

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

while $8.5 million bore interest at 8.125%. On January 10, 1997, $65.0 million
was refinanced as part of the AXELs(SM) Series B Facility and the interest rate
was adjusted to 8.69% as stated above.

The Working Capital Facility has a term of five years and will be fully
revolving until its final maturity. The Working Capital Facility will bear
interest, at Bowling Worldwide's option, at Citibank's customary base rate plus
1.5% or at Citibank's Eurodollar rate plus 2.5%.

Beginning May 1, 1997, the margins above Citibank's customary base rate and
Citibank's Eurodollar rate, at which the Term Loan Facility, the Working Capital
Facility, and the Acquisition Facility will bear interest, may be reduced
pursuant to a floating performance pricing grid which is based on the Total
Debt/EBITDA ratio for the four fiscal quarter rolling period then most recently
ended.

The Bank Credit Agreement contains certain covenants, including, but not
limited to, covenants related to cash interest coverage, fixed charge coverage,
payments on other debt, mergers and acquisitions, sales of assets, guarantees
and investments. The Bank Credit Agreement also contains certain provisions
which limit the amount of funds available for transfer from Bowling Worldwide to
AMF Group Holdings, and from AMF Group Holdings to AMF Bowling. Limits exist on,
among other things, the declaration or payment of dividends, distributions of
assets, and issuance or sale of capital stock.

So long as Bowling Worldwide is not in default of the covenants contained
in the Bank Credit Agreement, it may i) declare and pay dividends in common
stock; ii) declare and pay cash dividends to the extent necessary to make
payments of approximately $0.15 million due in May 1997 under certain noncompete
agreements with the Prior Owners; iii) declare and pay cash dividends for
general administrative expenses not to exceed $0.25 million; and iv) declare and
pay cash dividends not to exceed $2.0 million for the repurchase of Common
Stock. As of December 31, 1996, Bowling Worldwide is in compliance with all of
its covenants.

MORTGAGE AND EQUIPMENT NOTES

At December 31, 1996, mortgage and equipment notes related to one U.S.
bowling center bore interest at 9.175%.

NOTES

The senior subordinated notes will mature on March 15, 2006. Interest
accrues from the date of issuance at an annual rate of 10 7/8% and is payable in
cash semiannually in arrears on March 15 and September 15 of each year which
commenced on September 15, 1996.

The senior subordinated discount notes will mature on March 15, 2006 at a
fully-accreted value of $452,000. The senior subordinated discount notes will
result in an effective yield of 12 1/4% per annum, computed on a semiannual bond
equivalent basis. No interest will be payable prior to March 15, 2001.
Commencing March 15, 2001, interest will accrue and be payable in cash
semiannually in arrears on March 15 and September 15 of each year beginning with
September 15, 2001.

The Company's payment obligations under the senior subordinated notes and
the senior subordinated discount notes (together, the "Notes") are jointly and
severally guaranteed on a senior subordinated basis by AMF Group Holdings and
each of Bowling Worldwide's subsidiaries identified below in "Note 20.
Consolidating Financial Statements" (collectively, the "Guarantors").

F-16
<PAGE> 91

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

The guarantees of the Notes are subordinated to the guarantees of the
Senior Debt and the mortgage and equipment notes outstanding at December 31,
1996, referred to in the table above which have been issued by the Guarantors.
The Notes are general, unsecured obligations of Bowling Worldwide, are
subordinated in right of payment to all Senior Debt of Bowling Worldwide, and
rank pari passu with all existing and future subordinated debt of Bowling
Worldwide. The claims of the holders of the Notes will be effectively
subordinated to all other indebtedness and other liabilities (including trade
payables and capital lease obligations) of Bowling Worldwide's subsidiaries that
are not Guarantors and through which Bowling Worldwide will conduct a portion of
its operations. See "Note 20. Consolidating Financial Statements".

Prior to March 15, 1999, up to $100 million in aggregate principal amount
of senior subordinated notes will be redeemable at the option of Bowling
Worldwide, on one or more occasions, from the net proceeds of public or private
sales of common stock of, or contributions to the common equity capital of,
Bowling Worldwide, at a price of 110.875% of the principal amount of the senior
subordinated notes, together with accrued and unpaid interest, if any, to the
date of redemption; so long as at least $150 million in aggregate principal
amount of senior subordinated notes remains outstanding after such redemption.
Similarly, prior to March 15, 1999, the senior subordinated discount notes will
be redeemable at the option of Bowling Worldwide, on one or more occasions, from
the net proceeds of public or private sales of common stock of, or contributions
to the common equity capital of, Bowling Worldwide, at a price of 112.25% of the
accreted value of the senior subordinated discount notes; so long as at least
$150 million in accreted value of senior subordinated discount notes remains
outstanding after such redemption.

The indenture governing the senior subordinated notes and the indenture
governing the senior subordinated discount notes (the "Note Indentures") contain
certain covenants that, among other things, limit the ability of Bowling
Worldwide and its Restricted Subsidiaries, as defined therein, to incur
additional indebtedness and issue Disqualified Stock, as defined therein, pay
dividends or distributions or make investments or make certain other Restricted
Payments, as defined therein, enter into certain transactions with affiliates,
dispose of certain assets, incur liens securing pari passu and subordinated
indebtedness of Bowling Worldwide and engage in mergers and consolidations. As
of December 31, 1996, Bowling Worldwide is in compliance with all of its
covenants.

Annual maturities of long-term debt, including accretion of the senior
subordinated discount notes, as of December 31, 1996, are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------------------------------------------
<S> <C>
1997............................................ $ 42,376
1998............................................ 47,375
1999............................................ 55,500
2000............................................ 71,750
2001............................................ 81,125
Thereafter...................................... 970,464
----------
$ 1,268,590
==========
</TABLE>

F-17
<PAGE> 92

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

Interest Rate Cap Agreements

During 1996, Bowling Worldwide entered into an interest rate cap agreement
with Goldman Sachs Capital Markets, L.P. to reduce the interest rate risk of its
Senior Debt. The notional amount of this cap was $500 million at December 31,
1996. Under the terms of this agreement, Bowling Worldwide receives payment if
the three-month LIBOR rises above 5.75 percent through April, 1997, above 6.50
percent from May, 1997 through April, 1998 and above 7.5 percent from May, 1998
through October, 1998. No amounts were received under this agreement during
1996.

Bowling Worldwide is exposed to credit-related loss in the event of
non-performance by the counterparty. Bowling Worldwide believes its exposure to
potential loss due to counterparty non-performance is minimized primarily due to
the relatively strong credit rating of the counterparty.

Average amounts outstanding and average borrowing rates for the period
ended December 31, 1996, were as follows:

<TABLE>
<CAPTION>
OUTSTANDING
AT AVERAGE AVERAGE
DECEMBER 31, AMOUNTS BORROWING
DESCRIPTION MATURITY DATES 1996 OUTSTANDING RATES
- ----------------------------------------- ---------------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Term Loan................................ March 31, 2001 $228,125 $ 243,074 8.20%
AXEL A................................... March 31, 2003 188,750 $ 188,164 8.58
AXEL B................................... March 31, 2004 74,250 $ 74,218 8.84
Acquisition Facility..................... March 31, 2001 73,500 $ 25,426 8.41
Working Capital Facility................. March 31, 2001 -- $ 11,434 9.09
Mortgage and Equipment Notes............. October 1, 2013 1,965 $ 1,967 9.18
</TABLE>

Deferred Financing Costs

Costs incurred to obtain bank financing and issue bond financing for the
Acquisition, as discussed above, are amortized over the lives of the various
types of debt. Bank financing costs are amortized over eight years and bond
financing costs are amortized over ten years using the effective interest rate
method. An interest rate cap agreement included in deferred financing costs is
amortized over the term of the agreement beginning November 1, 1996, and ending
October 31, 1998. Amortization expense for financing costs was $3,252 for the
period ended December 31, 1996. Interest expense for the interest rate cap
agreement was $304 for the period ended December 31, 1996.

Other

The Company is highly leveraged as a result of this indebtedness incurred
in connection with the Acquisition and subsequent acquisitions. Although the
Company believes it will be able to meet its debt obligations, there is no
assurance that the Company will generate sufficient cash flow in a timely manner
to satisfy scheduled principal and interest payments.

NOTE 10. INCOME TAXES

Income (loss) before income taxes at December 31, 1996, consists of the
following:

<TABLE>
<S> <C>
U.S.............................................................. $ (28,427)
International.................................................... 411
--------
$ (28,016)
========
</TABLE>

F-18
<PAGE> 93

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

The income tax provision (benefit) at December 31, 1996, consists of the
following:

<TABLE>
<S> <C>
CURRENT INCOME TAX EXPENSE
U.S. Federal..................................................... $ --
State and local.................................................. --
International.................................................... 5,508
--------
Total current provision................................ 5,508
--------
DEFERRED TAX BENEFIT
U.S. Federal..................................................... (12,274)
State and local.................................................. (1,766)
International.................................................... --
--------
Total deferred benefit................................. (14,040)
--------
Total benefit.......................................... $ (8,532)
========
</TABLE>

Temporary differences and carryforwards which give rise to deferred tax
assets and liabilities at December 31, 1996, are as follows:

<TABLE>
<S> <C>
DEFERRED INCOME TAX ASSETS
Current assets
Reserve provisions not deductible for tax purposes.............. $ 4,847
-------
Noncurrent assets
Net operating losses............................................ 8,225
Foreign tax credits............................................. 5,452
Interest expense on high yield debt............................. 8,533
-------
Total noncurrent deferred tax assets.................... 22,210
-------
Total deferred tax assets......................................... 27,057
-------

DEFERRED INCOME TAX LIABILITIES
Noncurrent liabilities
Goodwill amortization............................................. 5,840
Depreciation on property and equipment............................ 20,265
-------
Total deferred tax liabilities.................................... 26,105
-------
Net deferred tax assets........................................... $ 952
=======
</TABLE>

In connection with the Acquisition, the Company has made a joint tax
election with the Prior Owners for certain entities under Section 338(h)(10) of
the Internal Revenue Code of 1986, as amended ("IRC"). The effect of this
election is the revaluation of the assets of the electing entities with any
residual purchase price allocated to goodwill. The nonelecting entities were
acquired by both stock and asset purchases.

The gross amount of net operating losses ("NOLs") the Company may utilize
on future tax returns is $22,986. The NOLs may be carried forward for fifteen
years until expiration. Foreign tax credits eligible for carry forward total
$5,452, and expire in five years. The Company had no valuation allowance related
to income tax assets as of December 31, 1996, and there was no change in the
valuation allowance during the year.

F-19
<PAGE> 94

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

The provision for income taxes differs from the amount computed by applying
the statutory rate of 35 percent for the period ended December 31, 1996, to
income before taxes. The principal reasons for this difference are as follows:

<TABLE>
<S> <C>
Tax at Federal statutory rate..................................... $ (9,806)
Increase resulting from:
Meals and entertainment......................................... 159
Goodwill related to acquisition of international bowling
centers...................................................... 1,093
Disallowance of certain high yield debt......................... 192
Other, net...................................................... (170)
-------
Total............................................................. $ (8,532)
=======
</TABLE>

NOTE 11. COMMITMENTS AND CONTINGENCIES

Bowling Centers and Bowling Products lease certain facilities and equipment
under operating leases which expire at various dates through 2026. Bowling
Centers has certain ground leases, associated with several centers, which expire
at various dates through 2058. These leases generally contain renewal options
and require payments of taxes, insurance, maintenance, and other expenses in
addition to the minimum annual rentals. Certain leases require contingent
payments based on usage of equipment above certain specified levels. Such
contingent rentals amounted to $912 for the period ended December 31, 1996.
Total rent expense under operating leases aggregated approximately $13,737 for
the period ended December 31, 1996.

Future minimum rental payments under the operating lease agreements as of
December 31, 1996, are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
-------------------------------------------------
<S> <C>
1997............................................. $ 19,712
1998............................................. 16,192
1999............................................. 14,055
2000............................................. 12,274
2001............................................. 17,039
Thereafter....................................... 58,624
-------
$ 137,896
=======
</TABLE>

Litigation and Claims

The Company is involved in certain lawsuits arising out of normal business
operations. The majority of these relate to accidents at the bowling centers.
Management believes that the ultimate resolution of such matters will not have a
material adverse effect on the Company's results of operations or financial
position. While the ultimate outcome of the litigation and claims against the
Company cannot presently be determined, management believes the Company has made
adequate provision for possible losses.

F-20
<PAGE> 95

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

NOTE 12. STOCKHOLDERS' EQUITY

Stockholders Agreement

On April 30, 1996, AMF Bowling and the stockholders of AMF Bowling (the
"Stockholders") entered into a stockholders agreement (the "Stockholders
Agreement") which regulates the relationship among AMF Bowling and the
Stockholders. The Stockholders Agreement primarily provides for, subject to
certain limitations and exceptions, (a) the establishment and nomination of the
Board of Directors and an Executive Committee; (b) certain of the Stockholders
to purchase additional shares of Common Stock, to finance acquisitions, capital
expenditures, investments in partnerships or joint ventures, or any similar
transactions or expenditures; (c) Goldman Sachs to have the exclusive right to
perform all consulting, financing, investment banking and similar services for
AMF Bowling and its subsidiaries, for customary compensation and on terms
customary for similar engagements with unaffiliated third parties; and (d)
guidance in the event a Stockholder determines to sell its shares of Common
Stock. The foregoing rights and obligations will terminate under certain
circumstances and notwithstanding those circumstances, in the event of any
merger, recapitalization, consolidation, reorganization or other restructuring
of AMF Bowling as a result of which the Stockholders own less than a majority of
the outstanding voting power of the entity surviving such transaction, the
Stockholders Agreement will terminate.

Registration Rights Agreement

On April 30, 1996, AMF Bowling and the Stockholders entered into a
Registration Rights Agreement (the "Registration Rights Agreement"). Pursuant to
the Registration Rights Agreement, subject to certain limitations and
exceptions, certain Stockholders may make demands of AMF Bowling to register
shares of Common Stock held by such Stockholders; provided, that AMF Bowling is
not required to so register unless, in the case of an initial public offering,
the aggregate offering price is at least $100 million, and, in the case of any
other offering, the aggregate offering price is at least $50 million. Upon a
demand for registration by certain Stockholders, each of the other Stockholders
is to be given the opportunity to participate on a pro rata basis in the
registration demanded. The Registration Rights Agreement also provides the
Stockholders with piggyback registration rights, which allow each of them to
include all or a portion of their shares of Common Stock under a registration
statement filed by AMF Bowling, subject to certain exceptions and limitations.

NOTE 13. EMPLOYEE BENEFIT PLANS

The Company has a defined contribution 401(k) plan to which U.S. employees
may make voluntary contributions based on their compensation. Under the
provisions of the plan, the Company can, at its option, match a discretionary
percentage of employee contributions and make an additional profit-sharing
contribution as determined by the Board of Directors. Employer contributions
vest 100 percent after a five-year period. The amount charged to expense under
this plan was $1,060 for the period ended December 31, 1996.

Certain of the Company's international operations have employee benefit
plans covering selected employees. These plans vary as to the funding, including
local government, employee, and employer funding. Each international operation
has provided for pension expense and made contributions to these plans in
accordance with the requirements of the plans and local country practices. The
amounts charged to expense under these plans aggregated $506 for the period
ended December 31, 1996.

F-21
<PAGE> 96

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

Bowling Worldwide has entered into employment agreements with three
executives, each for a term ending in May 1999. Each agreement calls for
compensation consisting of a salary and an incentive bonus of up to 50 percent
of the executive's annual salary if the Company meets certain operational and
financial targets. Each employment agreement also calls for a continuation of
certain benefits, under specified circumstances, following termination of
employment.

These three executives were also granted options to purchase a total of
345,000 shares of Common Stock. Unless sooner exercised or forfeited, as
provided, the options expire in May 2006. Twenty percent of the options vest on
each of the first five anniversaries of the Closing Date. The exercise price of
the options is $10.00 per share, which approximates the fair value of the Common
Stock at the date of the grants.

One executive, Robert L. Morin, resigned from all positions with the
Company as of February 28, 1997. As part of Mr. Morin's severance arrangement,
AMF Bowling repurchased all of the shares of Common Stock owned by Mr. Morin and
all options held by Mr. Morin were canceled.

In connection with the Acquisition, AMF Bowling adopted a stock incentive
plan (the "Stock Incentive Plan") under which AMF Bowling may grant incentive
awards in the form of shares of Common Stock, options to purchase shares of
Common Stock ("Stock Options") and stock appreciation rights to certain
officers, employees, consultants, and nonemployee directors ("Participants") of
AMF Bowling and its affiliates. The total number of shares of Common Stock
initially reserved and available for grant under the Stock Incentive Plan is
1,767,151. A committee of AMF Bowling's Board of Directors (the "Committee") is
authorized to make grants and various other decisions under the Stock Incentive
Plan and to make determinations as to a number of the terms of awards granted
under the Stock Incentive Plan. In August 1996, the Committee granted Stock
Options to Participants to purchase a total of 713,000 shares of Common Stock at
an exercise price of $10.00 per share. Twenty percent of the options vest on
each of the first five anniversaries of the grant date. Stock Options are
nontransferable (except under certain limited circumstances) and, unless
otherwise determined by the Committee, have a term of ten years.

The Committee granted an additional 91,000 in Stock Options to several
individuals who began employment with the Company between August 1996 and
December 31, 1996. The number of Stock Options outstanding to senior management,
other employees, and directors at December 31, 1996, after including forfeited
Stock Options, total 1,096,500. In addition to Stock Options outstanding under
the Stock Incentive Plan, 130,000 Stock Options granted to Douglas J. Stanard on
May 1, 1996 were outstanding at December 31, 1996. No Stock Options awarded were
exercisable during the period ended December 31, 1996.

The Stock Incentive Plan will terminate ten years after its effective date;
however, awards outstanding as of such date will not be affected or impaired by
such termination. AMF Bowling's Board of Directors and the Committee have
authority to amend the Stock Incentive Plan and awards granted thereunder,
subject to the terms of the Stock Incentive Plan.

In 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation", and elected to account for its stock options under APB Opinion
No. 25, under which no compensation cost has been recognized. Had compensation
cost for these stock options been determined consistent with SFAS No. 123, the
Company's net loss for 1996 would have been increased to $23,227.

The weighted-average fair value of options granted during 1996 is $3.05 per
option. The 1,226,500 options outstanding at December 31, 1996, have a
weighted-average exercise price of $10.00 and a weighted-average remaining
contractual life of 9.6 years.

F-22
<PAGE> 97

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1996: risk-free rate of return of 6.5%; expected
dividend yield of zero; expected time of exercise of ten years; expected
volatility of zero due to the lack of a public trading market for the securities
underlying the options based on the minimum value method.

NOTE 14. SUPPLEMENTAL DISCLOSURES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<S> <C> <C> <C> <C>
Cash paid for the period ended December 31, 1996:
Interest................................ $ 44,465
Income taxes............................ $ 7,990
</TABLE>

<TABLE>
<CAPTION>
CHARAN OTHER
ACQUISITION ACQUISITION ACQUISITIONS TOTAL
------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Business acquisitions, net of cash
acquired
Working capital, other than cash
acquired............................. $ (17,385) $ (5,028) $ -- $ (22,413)
Plant and equipment..................... (537,827) (97,857) (5,182) (640,866)
Purchase price in excess of the net
assets acquired...................... (784,217) -- -- (784,217)
Other assets............................ (18,330) -- -- (18,330)
Noncurrent liabilities.................. 6,198 -- -- 6,198
Warrants to purchase shares of Common
Stock................................ 8,700 -- -- 8,700
------------ ---------- ------------ ------------
Net cash used for business
acquisitions......................... $ (1,342,861) $ (102,885) $ (5,182) $ (1,450,928)
============ ========== ========== ============
Non-cash financing activities:
Warrants to purchase shares of Common
Stock................................ $ 8,700
Notes receivable from three executive
officers for the purchase of Common
Stock................................ $ 3,000
</TABLE>

NOTE 15. ACQUISITIONS

On October 10, 1996, AMF Bowling Centers, Inc. ("AMF Bowling Centers"), a
Virginia corporation and an indirect, wholly owned subsidiary of Bowling
Worldwide, completed the acquisition (the "Charan Acquisition") of 50 bowling
centers and certain related assets and liabilities from Charan Industries, Inc.
("Charan"), a Delaware corporation, pursuant to an Asset Purchase Agreement (the
"Asset Purchase Agreement"), dated as of September 10, 1996, by and between AMF
Bowling Centers and Charan.

The purchase price of the Charan Acquisition was approximately $106.5
million, subject to certain adjustments. The Charan Acquisition was funded with
approximately $40.0 million from the sale of equity by AMF Bowling to its
institutional stockholders and one of its directors, and with approximately
$66.5 million from available borrowings under Bowling Worldwide's existing
Acquisition Facility.

The following unaudited pro forma information has been prepared assuming
the Charan Acquisition had occurred as of January 1, 1996 and 1995, respectively
and are based on pro forma AMF Bowling results of operations presented in "Note
3. Pro Forma Results of Operations". The

F-23
<PAGE> 98

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

pro forma information is presented for information purposes only and is not
necessarily indicative of what would have occurred if the acquisition had
occurred as of those dates. In addition, the pro forma information is not
intended to be a projection of future results of operations.

PRO FORMA CONSOLIDATED DATA (UNAUDITED):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
-----------------
1996 1995
------ ------
(IN MILLIONS)
<S> <C> <C>
Operating revenue........................................ $595.5 $622.7
Operating income......................................... 80.0 105.2
Loss before income taxes................................. (26.9) (4.9)
Net loss................................................. (19.5) (16.1)
</TABLE>

Since the Acquisition and prior to December 31, 1996, AMF Bowling Centers
purchased an aggregate of 57 bowling centers and certain related assets and
liabilities from five unrelated sellers including Charan. The combined purchase
price was approximately $113.5 million, including certain adjustments and
transaction costs, and was funded with approximately $40.0 million from the sale
of equity by AMF Bowling to its institutional stockholders and one of its
directors, and with $73.5 million from available borrowing under Bowling
Worldwide's Acquisition Facility. The results of operations for purchases of
bowling centers and certain related assets and liabilities additional to the
Charan Acquisition were not material in relation to the Company's consolidated
results of operations.

Other Acquisitions

On January 17, 1997, the Company, through AMF Bowling Centers, entered into
an Agreement and Plan of Merger with American Recreation Centers, Inc. ("ARC")
pursuant to which a wholly owned subsidiary of AMF Bowling Centers will merge
with and into ARC (the "ARC Merger"). As a result of the ARC Merger, the
outstanding shares of ARC's common stock, no par value per share (the "ARC
Common Stock"), will be converted into the right to receive $8.50 per share, in
cash. The purchase price, after reflecting the assumption of ARC's outstanding
debt and the purchase of certain joint venture interests, represents a
transaction with a total value of approximately $70.0 million, which will be
funded from available borrowing under Bowling Worldwide's Acquisition Facility.
The ARC Merger is conditioned upon, among other things, approval by holders of a
majority of the outstanding shares of ARC Common Stock and upon receipt of
certain regulatory and governmental approvals. ARC operates 43 bowling centers
in six states.

Subsequent to December 31, 1996, the Company acquired an additional eight
bowling centers in the United States and six bowling centers in the United
Kingdom, all of which were previously owned by several unrelated single-center
and small-chain operators. The total purchase price was approximately $28.3
million, including certain adjustments and transaction costs, and was funded
with $16.5 million from available borrowing under Bowling Worldwide's
Acquisition Facility.

F-24
<PAGE> 99

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

NOTE 16. BUSINESS SEGMENTS

The Company operates in two major lines of business: operation of bowling
centers and manufacturing of bowling and related products. Information
concerning operations in these business segments for the period ended December
31, 1996, is presented below:

<TABLE>
<S> <C>
Revenue from unaffiliated customers
Bowling Centers
U.S........................................................ $ 132,300
International.............................................. 67,400
---------
199,700
Bowling Products
U.S........................................................ 69,100
International.............................................. 116,000
---------
185,100
---------
$ 384,800
=========
Intersegment sales
Bowling Products.............................................. $ 6,000
=========
Operating income (loss)
Bowling Centers
U.S........................................................ $ 8,300
International.............................................. 6,800
---------
15,100
Bowling Products
U.S........................................................ 23,200
International.............................................. 10,900
---------
34,100

Corporate..................................................... (3,200)
Eliminations.................................................. 100
---------
$ 46,100
=========
Identifiable assets
Bowling Centers
U.S........................................................ $ 612,800
International.............................................. 302,700
---------
915,500
Bowling Products
U.S........................................................ 606,700
International.............................................. 44,500
---------
651,200

Corporate..................................................... 27,200
Eliminations.................................................. 100
---------
$1,594,000
=========
Depreciation and amortization
Bowling Centers
U.S........................................................ $ 25,600
International.............................................. 12,100
---------
37,700
</TABLE>

F-25
<PAGE> 100

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

<TABLE>
<S> <C>
Bowling Products
U.S........................................................ 12,100
International.............................................. 500
---------
12,600

Eliminations.................................................. (900)
---------
$ 49,400
=========
Capital expenditures
Bowling Centers
U.S........................................................ $ 8,100
International.............................................. 5,000
---------
13,100
Bowling Products
U.S........................................................ 1,500
International.............................................. 1,700
---------
3,200

Corporate..................................................... 1,300
Eliminations.................................................. (700)
---------
$ 16,900
=========
Research and development expense
Bowling Products.............................................. $ 1,300
=========
</TABLE>

NOTE 17. GEOGRAPHIC SEGMENTS

Information about the Company's operations in different geographic areas
for the period ended December 31, 1996, and identifiable assets at December 31,
1996, are presented below:

<TABLE>
<S> <C>
Operating revenue
United States.................................................. $205,800
Hong Kong...................................................... 59,700
Japan.......................................................... 36,800
Australia...................................................... 33,500
United Kingdom................................................. 15,900
Sweden......................................................... 7,400
Mexico......................................................... 5,400
Korea.......................................................... 14,300
Spain.......................................................... 900
China.......................................................... 1,000
Canada......................................................... 200
Other European countries....................................... 9,900
Eliminations................................................... (6,000)
--------
$384,800
========
</TABLE>

Operating revenue for the U.S. Bowling Products operation has been reduced
by $63,400 for the period ended December 31, 1996, to reflect the elimination of
intracompany sales between the U.S. Bowling Products operation and the Bowling
Products international sales and service branches.

F-26
<PAGE> 101

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

<TABLE>
<S> <C>
Operating income (loss)
United States.................................................. $ 28,200
Hong Kong...................................................... 7,700
Japan.......................................................... 4,000
Australia...................................................... 4,900
United Kingdom................................................. 600
Sweden......................................................... 1,000
Mexico......................................................... 500
Korea.......................................................... 100
Spain.......................................................... (100)
Canada......................................................... (100)
China.......................................................... (100)
Other European countries....................................... (700)
Eliminations................................................... 100
--------
$ 46,100
========
</TABLE>

Operating income for the U.S. Bowling Products operation has been reduced
by $1,000 for the period ended December 31, 1996, to reflect the elimination of
intracompany gross profit between the U.S. Bowling Products operation and the
Bowling Products international sales and service branches.

<TABLE>
<S> <C>
Identifiable assets
United States................................................. $1,246,700
Hong Kong..................................................... 26,700
Japan......................................................... 40,200
Australia..................................................... 138,000
United Kingdom................................................ 72,300
Sweden........................................................ 3,000
Mexico........................................................ 15,200
Korea......................................................... 4,600
Spain......................................................... 7,300
Canada........................................................ 3,700
China......................................................... 6,000
Other European countries...................................... 30,200
Eliminations.................................................. 100
----------
$1,594,000
==========
</TABLE>

Identifiable assets for the international sales and service branches have
been reduced by $5,500 to reflect the elimination of intracompany gross profit
in inventory between the U.S. Bowling Products operations and the Bowling
Products international sales and service branches.

NOTE 18. RELATED PARTIES

Goldman Sachs and its affiliates have certain interests in the Company in
addition to being the initial purchasers of the registered debt securities of
the Company in connection with the Acquisition. Richard A. Friedman and Terence
M. O'Toole, each of whom is a managing Director of Goldman, Sachs, and Peter M.
Sacerdote, who is a limited partner of The Goldman Sachs

F-27
<PAGE> 102

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

Group, L.P., are directors of AMF Bowling, AMF Group Holdings and Bowling
Worldwide. Goldman Sachs and its affiliates together currently beneficially own
a majority of the outstanding voting equity of AMF Bowling; thus Goldman Sachs
will be deemed to be an "affiliate" of the Company. Goldman Sachs received an
underwriting discount of approximately $19.0 million in connection with the
purchase and resale of the notes. Goldman Sachs also served as financial advisor
to the owners of the Predecessor Company in connection with the Acquisition and
received a fee in the form of 10-year warrants to purchase 870,000 shares of
Common Stock. The warrants were valued for accounting purposes at approximately
$8.7 million. In addition, Goldman Sachs is entitled to the reimbursement of its
expenses and is indemnified in connection with its services.

In connection with the Bank Credit Agreement, Goldman Sachs Credit Partners
L.P. acted as Syndication Agent, Goldman Sachs Credit Partners L.P. and Citicorp
Securities, Inc. acted as Arrangers, and Citibank, N.A. is acting as
Administrative Agent. Goldman Sachs Credit Partners L.P. is also a lender under
the Bank Credit Agreement. Goldman Sachs received a fee of approximately $9.5
million and was reimbursed for expenses in connection with such services.
Goldman Sachs also received a cash fee of $5.0 million from the Company in
connection with the Acquisition and was reimbursed for related expenses.

Pursuant to the three employment agreements with executives of the Company
discussed in "Note 13. Employee Benefit Plans," AMF Bowling issued to each
executive 150,000 shares of Common Stock, at a purchase price of $10.00 per
share. One executive was granted an initial employment bonus of $166,667 which
he used to partially fund his purchase of shares of Common Stock. Each executive
has borrowed $1.0 million from AMF Bowling in order to fund the portion of his
purchase of Common Stock. These notes are due in May 2003 and accrue interest,
compounded annually, on the unpaid principal amount at 7 percent per annum.

Pursuant to the Stock Subscription Agreement dated April 30, 1996, Charles
M. Diker, a director of AMF Bowling, AMF Group Holdings, and Bowling Worldwide,
purchased 125,000 shares of Common Stock, at a purchase price of $10.00 per
share. Pursuant to an Option Agreement (the "Diker Option Agreement") dated May
1, 1996, Mr. Diker was granted, pursuant to the Stock Incentive Plan,
non-qualified Stock Options to purchase 100,000 shares of Common Stock at an
exercise price of $10.00 per share. One third of such options vested on May 1,
1996, one third vest on May 1, 1997, and the remaining options vest on May 1,
1998. The Diker Option Agreement also provides, among other things, for
repurchase of all of the shares held by him for fair market value as of a
specified date upon certain conditions. Mr. Diker is a party to the Stockholders
Agreement and any shares of Common Stock held by Mr. Diker will be subject to
the terms of that agreement.

NOTE 19. RECENT ACCOUNTING PRONOUNCEMENTS

Effective for the fiscal year ended December 31, 1997, the Company is
required to adopt Statement of Financial Accounting Standards ("SFAS") No. 128
"Earnings Per Share" and No. 129 "Disclosure of Information About Capital
Structure." The Company does not expect that adoption of these standards will
have a material impact on the Company's financial position or results of
operations.

NOTE 20. CONSOLIDATING FINANCIAL STATEMENTS

The following consolidating information presents:

- Consolidating balance sheet as of December 31, 1996, and consolidating
statements of income and cash flows for the period ended December 31,
1996.

- Elimination entries necessary to combine the entities comprising AMF
Bowling.

F-28
<PAGE> 103

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

The Notes are jointly and severally guaranteed on a full and unconditional
basis by AMF Group Holdings and by the first and second-tier subsidiaries of
Bowling Worldwide, as follows (together with AMF Group Holdings, the
"Guarantors"):

AMF Bowling Centers Holdings Inc.
AMF Bowling Holdings Inc.
AMF Bowling, Inc.
AMF Bowling Centers, Inc.
Bush River Corporation
King Louie Lenexa, Inc.
AMF Beverage Company of Oregon, Inc.
AMF Beverage Company of W. VA., Inc.
AMF Worldwide Bowling Centers Holdings Inc.
AMF Bowling Centers (Aust) International Inc.
AMF Bowling Centers (Canada) International Inc.
AMF BCO-France One, Inc.
AMF BCO-France Two, Inc.
AMF Bowling Centers Spain Inc.
AMF Bowling Centers (Hong Kong) International Inc.
AMF Bowling International Inc.
AMF Bowling Mexico Holding, Inc.
Boliches AMF, Inc.
AMF BCO - UK One, Inc.
AMF BCO - UK Two, Inc.
AMF Bowling Centers China, Inc.
AMF BCO - China, Inc.
AMF Bowling Centers Switzerland Inc.

The following third-tier subsidiaries of Bowling Worldwide, all of which
are wholly owned subsidiaries of AMF Worldwide Bowling Centers Holdings Inc.,
have not provided guarantees (collectively, the "Non-Guarantors"):

AMF Bowling
Worthing North Properties Limited
AMF Bowling France SNC
AMF Bowling de Paris SNC
AMF Bowling de Lyon La Part Dieu SNC
Boliches y Compania
Operadora Mexicana de Boliches, S.A.
Promotora de Boliches, S.A. de C.V.
Immeubles Obispado, S.A.
Immeubles Minerva, S.A.
Boliches Mexicano, S.A.
AMF Bowling Centers (China) Company
AMF Garden Hotel Bowling Center Company

F-29
<PAGE> 104

AMF BOWLING, INC. AND SUBSIDIARIES

CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- --------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
- -------------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents................. $ 39,660 $ 3,908 $ -- $ 43,568
Accounts and notes receivable, net of
allowance for doubtful accounts........ 41,266 1,359 -- 42,625
Accounts receivable -- intercompany....... 3,365 1,259 (4,624) --
Inventories............................... 39,609 1,392 -- 41,001
Deferred taxes and other.................. 9,491 1,687 -- 11,178
----------- -------- -------- -----------
Total current assets.............. 133,391 9,605 (4,624) 138,372
Notes receivable -- intercompany............ 1,998 1,663 (3,661) --
Property and equipment, net................. 599,706 30,139 951 630,796
Investment in subsidiaries.................. 59,559 -- (59,559) --
Goodwill and other assets................... 823,762 1,080 -- 824,842
----------- -------- -------- -----------
Total assets...................... $ 1,618,416 $42,487 $(66,893) $ 1,594,010
=========== ======== ======== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable.......................... $ 30,198 $ 1,365 $ -- $ 31,563
Accounts payable -- intercompany.......... 773 3,851 (4,624) --
Accrued expenses.......................... 50,460 3,897 -- 54,357
Income taxes payable...................... 1,676 600 -- 2,276
Long-term debt, current portion........... 42,376 -- -- 42,376
----------- -------- -------- -----------
Total current liabilities......... 125,483 9,713 (4,624) 130,572
Long-term debt.............................. 1,048,877 -- -- 1,048,877
Notes payable -- intercompany............... 1,663 1,998 (3,661) --
Other long-term liabilities................. 1,851 -- -- 1,851
Deferred income taxes....................... 2,828 1,067 -- 3,895
----------- -------- -------- -----------
Total liabilities................. 1,180,702 12,778 (8,285) 1,185,195
----------- -------- -------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock.............................. 289 4,364 (4,229) 424
Paid-in capital........................... 454,506 24,098 (49,578) 429,026
Retained earnings (deficit)............... (11,184) 4,826 (13,126) (19,484)
Equity adjustment from foreign
currency translation................... (5,897) (3,579) 8,325 (1,151)
----------- -------- -------- -----------
Total stockholders' equity........ 437,714 29,709 (58,608) 408,815
----------- -------- -------- -----------
Total liabilities and
stockholders' equity............ $ 1,618,416 $42,487 $(66,893) $ 1,594,010
=========== ======== ======== ===========
</TABLE>

F-30
<PAGE> 105

AMF BOWLING, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF INCOME
FOR THE PERIOD ENDED DECEMBER 31, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
--------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Operating revenue............................. $364,095 $21,768 $ (1,054) $384,809
-------- ------- ------- --------
Operating expenses:
Cost of goods sold.......................... 127,623 3,566 (647) 130,542
Bowling center operating expenses........... 112,318 11,780 (425) 123,673
Selling, general, and administrative
expenses................................. 33,444 1,626 -- 35,070
Depreciation and amortization............... 46,198 3,260 (72) 49,386
-------- ------- ------- --------
Total operating expenses................. 319,583 20,232 (1,144) 338,671
-------- ------- ------- --------
Operating income......................... 44,512 1,536 90 46,138
Nonoperating expenses:
Interest expense............................ 77,968 22 -- 77,990
Other (income) expense, net................. (39) 1,029 922 1,912
Interest income............................. (5,480) (268) -- (5,748)
Equity in loss of subsidiaries.............. 499 -- (499) --
-------- ------- ------- --------
Total nonoperating expenses.............. 72,948 783 423 74,154
-------- ------- ------- --------
Income (loss) before income taxes........ (28,436) 753 (333) (28,016)
Provision (benefit) for income taxes..... (9,703) 1,171 -- (8,532)
-------- ------- ------- --------
Net loss................................. $(18,733) $ (418) $ (333) $(19,484)
======== ======= ======= ========
</TABLE>

F-31
<PAGE> 106

AMF BOWLING, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED DECEMBER 31, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss...................................... $ (18,733) $ (418) $ (333) $ (19,484)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization.............. 46,198 3,260 (72) 49,386
Deferred taxes............................. (14,040) -- -- (14,040)
Amortization of bond discount.............. 24,731 -- -- 24,731
Equity in loss of subsidiaries............. (499) -- 499 --
Dividends from non-guarantor companies..... 922 (922) -- --
Loss on the sale of property and equipment,
net...................................... 390 18 -- 408
Changes in assets and liabilities:
Accounts and notes receivable............ (6,663) 159 -- (6,504)
Receivables and payables -- affiliates... 399 (399) -- --
Inventories.............................. 1,830 32 -- 1,862
Other assets............................. (3,334) (582) (94) (4,010)
Accounts payable and accrued
expenses.............................. 21,631 299 -- 21,930
Income taxes payable..................... 662 (245) -- 417
Other long-term liabilities.............. 18,918 217 -- 19,135
---------- -------- ------ -----------
Net cash provided by operating
activities............................... 72,412 1,419 -- 73,831
Cash flows from investing activities:
Acquisitions of operating units, net of cash
acquired................................... (1,454,213) 3,285 -- (1,450,928)
Purchases of property and equipment........... (15,930) (1,011) -- (16,941)
Proceeds from sales of property and
equipment.................................. 584 170 -- 754
---------- -------- ------ -----------
Net cash provided by (used in) investing
activities............................... (1,469,559) 2,444 -- (1,467,115)
Cash flows from financing activities:
Proceeds from long-term debt, net of deferred
financing costs............................ 1,059,277 -- -- 1,059,277
Payments on long-term debt.................... (38,875) -- -- (38,875)
Capital contribution.......................... 420,750 -- -- 420,750
Payment of noncompete obligations............. (2,892) -- -- (2,892)
---------- -------- ------ -----------
Net cash provided by financing
activities............................... 1,438,260 -- -- 1,438,260
---------- -------- ------ -----------
Effect of exchange rates on cash........... (1,453) 45 -- (1,408)
---------- -------- ------ -----------
Net increase in cash....................... 39,660 3,908 -- 43,568
Cash and cash equivalents at beginning of
period................................... -- -- -- --
---------- -------- ------ -----------
Cash and cash equivalents at end of
period................................... $ 39,660 $ 3,908 $ -- $ 43,568
========== ======== ====== ===========
</TABLE>

F-32
<PAGE> 107

AMF BOWLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30,
1997
-----------
<S> <C>
(UNAUDITED)

<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................................... $ 16,640
Accounts and notes receivable, net of allowance for doubtful accounts of
$4,086.................................................................... 57,120
Inventories.................................................................. 56,488
Deferred taxes and other..................................................... 13,210
----------
Total current assets................................................. 143,458
Property and equipment, net.................................................... 743,675
Deferred financing costs, net.................................................. 40,151
Goodwill, net.................................................................. 766,661
Other assets................................................................... 21,647
----------
Total assets......................................................... $ 1,715,592
==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................. $ 32,757
Accrued expenses............................................................. 54,550
Income taxes payable......................................................... 4,553
Note payable................................................................. 30,000
Long-term debt, current portion.............................................. 44,876
----------
Total current liabilities............................................ 166,736
Long-term debt................................................................. 1,146,415
Other long-term liabilities.................................................... 6,383
Deferred income taxes.......................................................... 4,922
----------
Total liabilities.................................................... 1,324,456
----------
Commitments and contingencies
Stockholders' equity:
Common stock (par value $.01, 60,000,000 shares authorized, 42,225,000 shares
issued and outstanding)................................................... 422
Paid-in capital.............................................................. 428,528
Retained deficit............................................................. (31,648)
Equity adjustment from foreign currency translation.......................... (6,166)
----------
Total stockholders' equity........................................... 391,136
----------
Total liabilities and stockholders' equity........................... $ 1,715,592
==========
</TABLE>

The accompanying notes are an integral part of this consolidated balance sheet.

F-33
<PAGE> 108

AMF BOWLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
AMF BOWLING, INC.
---------------------
SIX MONTHS ENDED
JUNE 30,
---------------------
1997 1996(A)
-------- --------
<S> <C> <C>
Operating revenue.................................................. $318,068 $ 73,423
--------- ---------
Operating expenses:
Cost of goods sold............................................... 86,084 23,513
Bowling center operating expenses................................ 116,038 26,747
Selling, general, and administrative expenses.................... 30,172 7,518
Depreciation and amortization.................................... 43,424 11,650
--------- ---------
Total operating expenses...................................... 275,718 69,428
--------- ---------
Operating income (loss)....................................... 42,350 3,995
Nonoperating expenses (income):
Interest expense................................................. 57,454 23,873
Other expenses, net.............................................. 2,368 323
Interest income.................................................. (1,126) (3,782)
--------- ---------
Total nonoperating expenses................................... 58,696 20,414
--------- ---------
Loss before income taxes...................................... (16,346) (16,419)
Benefit for income taxes...................................... (4,182) (4,193)
--------- ---------
Net loss...................................................... $(12,164) $(12,226)
========= =========
Net loss per share................................................. $ (.29) $ (.32)
========= =========
Weighted average shares outstanding................................ 42,274 38,306
========= =========
</TABLE>

- ---------------

(a) For the period from the inception date of January 12, 1996 through June 30,
1996, which includes results of operations of the acquired business from May
1, 1996 through June 30, 1996.

The accompanying notes are an integral part of these consolidated financial
statements.

F-34
<PAGE> 109

AMF BOWLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
AMF BOWLING, INC.
SIX MONTHS ENDED JUNE
30,
------------------------
1997 1996(A)
--------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................................ $ (12,164) $ (12,226)
Adjustments to reconcile net income loss to net cash provided by
operating activities:
Depreciation and amortization................................ 43,424 11,650
Deferred income taxes........................................ (1,775) 5,871
Amortization of bond discount................................ 16,788 8,826
Loss (gain) on the sale of property and equipment, net....... 94 (31)
Changes in assets and liabilities:
Accounts and notes receivable, net......................... (17,942) (3,678)
Inventories................................................ (15,877) (3,396)
Other assets............................................... (21,417) (47,372)
Accounts payable and accrued expenses...................... 1,432 21,418
Income taxes payable....................................... 2,257 (8,590)
Other long-term liabilities................................ 13,345 (517)
--------- -----------
Net cash provided by (used in) operating activities.......... 8,165 (28,045)
--------- -----------
Cash flows from investing activities:
Acquisitions of operating units, net of cash acquired........... (122,165) (1,333,048)
Purchases of property and equipment............................. (25,639) (3,318)
Proceeds from the sale of property and equipment................ 268 86
--------- -----------
Net cash used in investing activities........................ (147,536) (1,336,280)
--------- -----------
Cash flows from financing activities:
Proceeds from long-term debt, net of deferred financing costs... 133,500 1,029,930
Payment on long-term debt....................................... (20,250) (233)
Payments on notes payable -- stockholders, net.................. -- --
Capital contribution............................................ -- 380,250
Repurchase of common stock...................................... (500) --
Distributions to stockholders................................... -- --
Noncompete obligations.......................................... (322) (190)
--------- -----------
Net cash provided by financing activities.................... 112,428 1,409,757
--------- -----------
Effect of exchange rates on cash............................. 15 (338)
--------- -----------
Net (decrease) increase in cash.............................. (26,928) 45,094
Cash and cash equivalents at beginning of period............. 43,568 --
--------- -----------
Cash and cash equivalents at end of period................... $ 16,640 $ 45,094
========= ===========
</TABLE>

- ---------------
(a) For the period from the inception date of January 12, 1996, through June 30,
1996, which includes the cash flows of the acquired business from May 1,
1996 through June 30, 1996.

The accompanying notes are an integral part of these consolidated financial
statements.

F-35
<PAGE> 110

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997

NOTE 1. ORGANIZATION

The accompanying unaudited condensed consolidated financial statements
reflect all adjustments (consisting of normal recurring accruals) which are, in
the opinion of management, necessary for a fair presentation of the results of
operations for the interim periods. The interim financial information and notes
thereto should be read in conjunction with the April 30, 1996, and December 31,
1995 audited combined financial statements of AMF Bowling Group (the
"Predecessor Company") and the December 31, 1996 audited consolidated financial
statements of AMF Bowling, Inc. and subsidiaries included elsewhere in this
Registration Statement. The results of operations for the six months ended June
30, 1997, are not necessarily indicative of results to be expected for the
entire year.

AMF Bowling, Inc. ("AMF Bowling") changed its name from AMF Holdings Inc.
in 1997. AMF Bowling and its subsidiaries (collectively, the "Company" or "AMF")
are principally engaged in two business segments: (i) the ownership or operation
of bowling centers, consisting of 321 U.S. centers and 87 international centers
("Bowling Centers") as of June 30, 1997, and (ii) the manufacture and
distribution of bowling equipment such as automatic pinspotters, automatic
scoring equipment, bowling pins, lanes, ball returns, certain spare parts, and
the resale of allied products such as bowling balls, bags, shoes, and certain
other spare parts ("Bowling Products"). The principal markets for bowling
equipment are U.S. and international bowling center operators.

AMF Bowling Worldwide, Inc., formerly named AMF Group Inc. ("Bowling
Worldwide"), is a wholly owned subsidiary of AMF Group Holdings Inc. ("AMF Group
Holdings"). AMF Group Holdings is a wholly owned subsidiary of AMF Bowling. AMF
Group Holdings and Bowling Worldwide are Delaware corporations organized by GS
Capital Partners II, L.P., and certain other investment funds (collectively,
"GSCP") affiliated with Goldman, Sachs & Co. ("Goldman Sachs") to effect the
Acquisition (described below). AMF Group Holdings and AMF Bowling are holding
companies only. The primary assets in each are comprised of investments in
direct and/or indirect subsidiaries.

Pursuant to a Stock Purchase Agreement dated February 16, 1996, between AMF
Group Holdings and the stockholders (the "Prior Owners") of the Predecessor
Company, on May 1, 1996 (the "Closing Date"), AMF Group Holdings acquired the
Predecessor Company through a stock purchase by AMF Group Holdings' subsidiaries
of all the outstanding stock of the separate domestic and foreign corporations
that constituted substantially all of the Predecessor Company and through the
purchase of certain of the assets of the Predecessor Company's bowling center
operations in Spain and Switzerland (the "Acquisition"). AMF Group Holdings did
not acquire the assets of two bowling centers located in Madrid, Spain and
Geneva, Switzerland (both of which were retained by the Prior Owners).

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated results of operations of AMF Bowling have been presented
for the six months ended June 30, 1997, and the period from the inception date
of January 12, 1996 through June 30,

F-36
<PAGE> 111

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1997

1996. All significant intercompany balances and transactions have been
eliminated in the accompanying consolidated financial statements. All dollar
amounts are in thousands, except where otherwise indicated.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. The estimates made by management include allowances for obsolete
inventory, uncollectible accounts receivable, realization of goodwill and other
deferred assets, litigation and claims, product warranty costs, and
self-insurance costs. Actual results could differ from those estimates.

Goodwill

As a result of the Acquisition and subsequent purchases of bowling centers
discussed in "Note 9. Acquisitions", and in accordance with the purchase method
of accounting for the Acquisition, the Company recorded goodwill representing
the excess of the purchase price over the allocation among the acquired assets
and liabilities in accordance with estimates of fair market value on the dates
of acquisition. Goodwill is being amortized over 40 years. Amortization expense
was $9,860 for the six months ended June 30, 1997. Accumulated amortization at
June 30, 1997 was $22,930.

Earnings Per Share

Net loss per share is calculated based on the actual weighted average
shares outstanding. Outstanding stock options and warrants are not considered as
their effect is antidilutive.

NOTE 3. PRO FORMA RESULTS OF OPERATIONS (UNAUDITED) (IN MILLIONS)

Pro forma statements of income are presented on the following pages for the
six months ended June 30, 1996, as if the Acquisition had occurred on January 1,
1996. AMF Bowling's pro forma statement of income for the six months ended June
30, 1996, is based on the Predecessor Company's statement of income for the four
months ended April 30, 1996, AMF Bowling's statement of income for the period
from the inception date of January 12, 1996 through June 30, 1996, and
adjustments giving effect to the Acquisition under the purchase method of
accounting as described in the notes below. The pro forma results are for
illustrative purposes only, do not purport to be indicative of the actual
results which occurred, and are not indicative of future results of operations.

F-37
<PAGE> 112

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1997

<TABLE>
<CAPTION>
PRO FORMA
-------------
PREDECESSOR AMF
COMPANY BOWLING, INC.
-------------- -------------
AMF
BOWLING, INC. FOUR MONTHS SIX MONTHS
---------------- ENDED ENDED
PERIOD ENDED -------------- PRO FORMA -------------
JUNE 30, 1996(a) APRIL 30, 1996 ADJUSTMENTS JUNE 30, 1996
---------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Operating revenue.................. $ 73.4 $164.9 $ (0.8)(b) $ 237.5
------ ------ ------ ------
Operating expenses:
Cost of goods sold............... 23.5 43.1 (0.1)(b) 66.5
Bowling center operating
expenses...................... 26.7 80.2 (24.4)(b)(c) 82.5
Selling, general, and
administrative expenses....... 7.5 35.5 (20.3)(b)(c) 22.7
Depreciation and amortization.... 11.7 15.1 8.1(d) 34.9
------ ------ ------ ------
Total operating
expenses............... 69.4 173.9 (36.7) 206.6
------ ------ ------ ------
Operating income
(loss)................. 4.0 (9.0) 35.9 30.9
Nonoperating expenses:
Interest expense................. 23.9 4.5 23.8(e) 52.2
Other expenses, net.............. 0.3 0.7 -- 1.0
Interest income.................. (3.8) (0.6) -- (4.4)
------ ------ ------ ------
Income (loss) before income taxes.. (16.4) (13.6) 12.1 (17.9)
Provision (benefit) for income
taxes............................ (4.2) (1.7) 1.5(f) (4.4)
------ ------ ------ ------
Net income (loss)........ $(12.2) $(11.9) $ 10.6 $ (13.5)
====== ====== ====== ======
Net loss per share................. $ (0.35)
======
</TABLE>

- ---------------
(a) For the period from the inception date of January 12, 1996 through June 30,
1996, which includes results of the acquired business from May 1, 1996
through June 30, 1996.

(b) To reflect the impact of AMF Group Holdings not acquiring the operations of
one bowling center in Switzerland and one bowling center in Spain.

(c) To eliminate a one-time charge of $44.0 million for special bonuses and
payments made by the Prior Owners in April 1996.

(d) To reflect the increase in depreciation and amortization expense from the
allocation of the purchase price to fixed assets and goodwill and a change
in the method of depreciation of fixed assets. The Predecessor Company
principally used the double declining balance method. The amount of the pro
forma adjustment for depreciation was determined using the straight-line
method over the estimated lives of the assets acquired. Goodwill is being
amortized over 40 years.

(e) To reflect the incremental interest expense associated with the issuance of
debt which partially funded the Acquisition.

(f) To give effect to the change in status of certain U.S. and international
subsidiaries of AMF Bowling from S corporations to taxable corporations
under the U.S. federal tax law upon consummation of the Acquisition.

F-38
<PAGE> 113

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997

NOTE 4. INVENTORIES

Inventories at June 30, 1997, consist of the following:
<TABLE>
<CAPTION>
JUNE 30,
1997
-----------
<S> <C>
(UNAUDITED)

<CAPTION>
<S> <C>
Bowling Products, at FIFO:
Raw materials................................. $13,603
Work in progress.............................. 2,493
Finished goods and spare parts................ 35,365
Bowling Centers, at average cost:
Merchandise inventory......................... 5,027
-------
$56,488
=======
</TABLE>

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment at June 30, 1997, consists of the following:
<TABLE>
<CAPTION>
JUNE 30,
1997
-----------
<S> <C>
(UNAUDITED)

<CAPTION>
<S> <C>
Land............................................ $ 103,004
Buildings and improvements...................... 306,848
Equipment, furniture, and fixtures.............. 386,580
Other........................................... 9,993
--------
806,425
Less: accumulated depreciation and
amortization.................................. (62,750)
--------
$ 743,675
========
</TABLE>

Depreciation and amortization expense related to property and equipment was
$30,875 and $7,445 for the six months ended June 30, 1997 and 1996,
respectively.

NOTE 6. LONG-TERM DEBT

Long-term debt at June 30, 1997, consists of the following:
<TABLE>
<CAPTION>
JUNE 30,
1997
-----------
<S> <C>
(UNAUDITED)

<CAPTION>
<S> <C>
Bank debt...................................... $ 677,875
Exchange senior subordinated notes............. 250,000
Exchange senior subordinated discount notes.... 291,446
Mortgage and equipment notes................... 1,970
----------
Total debt........................... 1,221,291
Current maturities............................. (74,876)
----------
Total long-term debt................. $ 1,146,415
==========
</TABLE>

F-39
<PAGE> 114

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1997

In May 1997, Bowling Worldwide amended the Bank Credit Agreement to
increase the flexibility and borrowing capacity of its ongoing acquisition
program. As a result, Bowling Worldwide increased the availability under the
Acquisition Facility to $230.0 million. As of July 31, 1997, $144.0 million was
outstanding under the Acquisition Facility.

In July 1997, Bowling Worldwide entered into an interest rate cap agreement
to reduce the interest rate risk of its Senior Debt. The notional amount of this
cap is $100.0 million. Under the terms of this agreement, Bowling Worldwide
receives payment if the three month LIBOR rises above 7.00 percent through March
31, 1998.

Deferred Financing Costs

Costs incurred to obtain bank financing and issue bond financing for the
Acquisition are amortized over the lives of the various types of debt. Bank
financing costs are amortized over eight years and bond financing costs are
amortized over ten years using the effective interest rate method. An interest
rate cap agreement included in deferred financing costs is amortized over the
term of the agreement beginning November 1, 1996, and ending October 31, 1998.
Amortization expense for financing costs was $2,530 for the six months ended
June 30, 1997. Interest expense for the interest rate cap agreement was $911 for
the six months ended June 30, 1997.

NOTE 7. COMMITMENTS AND CONTINGENCIES

Litigation and Claims

The Company is involved in certain lawsuits arising out of normal business
operations. The majority of these relate to accidents at bowling centers.
Management believes that the ultimate resolution of such matters will not have a
material adverse effect on the Company's results of operations or financial
position. While the ultimate outcome of the litigation and claims against the
Company cannot presently be determined, management believes the Company has made
adequate provision for possible losses.

NOTE 8. EMPLOYEE BENEFIT PLANS

The total number of options to purchase shares of Common Stock ("Stock
Options") currently reserved and available for grant under the Stock Incentive
Plan is 1,767,151. On June 11, 1997, the Executive Committee of AMF Bowling's
Board of Directors approved the grant of Stock Options to participants of the
Stock Incentive Plan to purchase a total of 366,000 shares of Common Stock at an
exercise price of $10.00 per share. The number of Stock Options outstanding to
senior management, other employees, and directors at June 30, 1997, after giving
effect to the grant and to forfeited Stock Options, total 1,418,000 at an
exercise price of $10.00 per share. In addition to Stock Options outstanding
under the Stock Incentive Plan, 130,000 Stock Options granted to Douglas J.
Stanard on May 1, 1996 were outstanding at June 30, 1997.

NOTE 9. ACQUISITIONS

On April 24, 1997, the Company completed the acquisition of American
Recreation Centers, Inc. ("ARC"), which operated 43 bowling centers in six
states. The aggregate purchase price of the ARC acquisition was approximately
$70 million, including repayment of certain debt and the purchase of related
joint venture interests, and was funded from available borrowing under the
Acquisition Facility. Between January 1, 1997 and June 30, 1997, the Company
acquired 64 centers in the United States, seven centers in the United Kingdom,
two centers in Australia, and certain

F-40
<PAGE> 115

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1997

related assets and liabilities from several unrelated sellers including ARC. The
aggregate purchase price was approximately $122.2 million, including certain
adjustments and transaction costs, and was funded with $103.5 million from
available borrowing under AMF Group's Acquisition Facility and the remainder
from internally generated cash.

In addition, between July 1, 1997, and September 23, 1997, the Company
acquired 30 centers in the United States from five unrelated sellers. The
aggregate purchase price was approximately $62.0 million, and was funded with
$59.0 million from available borrowing under the Acquisition Facility and $3.0
million from internally generated cash. As a result of the acquisitions, and
after giving effect to the construction of one center and the closing of six
centers in 1997, the Company operated 352 U.S. centers and 87 international
centers as of September 23, 1997.

The Company has entered into purchase agreements regarding the acquisition
of 15 additional U.S. centers from several unrelated sellers. The aggregate
purchase price is expected to be approximately $28.7 million, and will be funded
primarily with available borrowings under the Acquisition Facility and cash
generated from operations.

In April 1997, the Company entered into a joint venture arrangement with
Hong Leong Corporation Limited, a Singapore-based conglomerate. Pursuant to the
arrangement, the joint venture, to be owned 50% by the Company and 50% by Hong
Leong, is expected to build and operate up to 20 bowling centers during the next
three years. These bowling centers, the first of which is expected to open
during 1997 in Tianjin, China, will be located in China, Indonesia, Malaysia,
the Philippines, Thailand and Vietnam.

In June 1997, the Company signed an agreement to enter into a joint venture
arrangement with Playcenter S.A., a Sao Paulo-based amusement and entertainment
company ("Playcenter"). Pursuant to the arrangement, the joint venture, to be
owned 50% by the Company and 50% by Playcenter, is expected to build or assume
ownership of, and operate, up to 39 bowling centers, in Brazil and Argentina
during the next four years.

F-41
<PAGE> 116

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1997

NOTE 10. BUSINESS SEGMENTS

The Company operates in two major lines of business: operating bowling
centers and manufacturing bowling and related products. Information concerning
operations in these businesses for the six months ended June 30, 1997 and 1996,
respectively, is presented below (in millions):

<TABLE>
<CAPTION>
AMF BOWLING, INC.
-----------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1997
-----------------------------------------------------------------------------------------------------
BOWLING CENTERS BOWLING PRODUCTS
------------------------------- -------------------------------
U.S. INTERNATIONAL SUBTOTAL U.S. INTERNATIONAL SUBTOTAL CORPORATE ELIMINATIONS TOTAL
------ ------------- -------- ------ ------------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue from
unaffiliated
customers............ $148.7 $ 52.4 $ 201.1 $ 47.7 $69.3 $117.0 $ -- $ -- $ 318.1
Intersegment sales..... -- -- -- 5.3 2.4 7.7 -- -- 7.7
Operating income
(loss)............... 22.8 5.9 28.7 16.1 5.3 21.4 (8.4) 0.7 42.4
Identifiable assets.... 729.0 306.1 1,035.1 615.7 58.2 673.9 6 0.6 1,715.6
Depreciation and
amortization......... 25.1 9.2 34.3 9.3 0.6 9.9 -- (0.8) 43.4
Capital expenditures... 19.0 3.0 22.0 1.9 0.4 2.3 1.5 (0.2) 25.6
Research and
development expense.. -- -- -- 0.7 -- 0.7 -- -- 0.7
</TABLE>

<TABLE>
<CAPTION>
AMF BOWLING, INC.
------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1996
------------------------------------------------------------------------------------------------
BOWLING CENTERS BOWLING PRODUCTS
------------------------------ ------------------------------
U.S. INTERNATIONAL SUBTOTAL U.S. INTERNATIONAL SUBTOTAL CORPORATE ELIMINATIONS TOTAL
----- ------------- -------- ----- ------------- -------- ----------- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue from unaffiliated
customers................. $23.3 $16.2 $ 39.5 $15.7 $18.2 $ 33.9 $ -- $ -- $73.4
Intersegment sales.......... -- -- -- 0.6 1.3 1.9 -- -- 1.9
Operating income (loss)..... (3.6) 2.3 (1.3) 4.5 1.2 5.7 (0.2) (0.2) 4.0
Depreciation and
amortization.............. 6.2 2.6 8.8 3.0 0.1 3.1 -- (0.2) 11.7
Capital expenditures........ 1.5 1.7 3.2 0.2 0.2 0.4 -- (0.3) 3.3
Research and development
expense................... -- -- -- 1.1 -- 1.1 -- -- 1.1
</TABLE>

F-42
<PAGE> 117

AMF BOWLING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1997

NOTE 11. RECENT ACCOUNTING PRONOUNCEMENTS

Effective for the fiscal year ended December 31, 1997, the Company is
required to adopt Statement of Financial Accounting Standards ("SFAS") No. 128
"Earnings Per Share" and No. 129 "Disclosure of Information About Capital
Structure." Effective for the fiscal year ended December 31, 1998, the Company
is required to adopt SFAS No. 130 "Reporting Comprehensive Income" and SFAS No.
131 "Disclosures About Segments of an Enterprise and Related Information." The
Company does not expect that adoption of these standards will have a material
impact on the Company's financial position or results of operations. The
adoption of SFAS No. 130 by the Company will require reporting comprehensive
income, which includes the foreign currency translation adjustment, in an
alternative format prescribed by the standard.

NOTE 12. CONSOLIDATING FINANCIAL STATEMENTS

The following consolidating financial information presents:

- Consolidating balance sheet as of June 30, 1997, and consolidating
statements of income and cash flows for the six months ended June 30,
1997.

- Elimination entries necessary to combine the entities comprising AMF
Bowling.

The Notes are jointly and severally guaranteed on a full and unconditional
basis by AMF Group Holdings and by the first and second-tier subsidiaries of
Bowling Worldwide. Third-tier subsidiaries of Bowling Worldwide have not
provided guarantees.

F-43
<PAGE> 118

AMF BOWLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 1997
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
---------- --------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
- ---------------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents.................... $ 15,651 $ 989 $ -- $ 16,640
Accounts and notes receivable, net of
allowance for doubtful accounts............ 55,738 1,382 -- 57,120
Accounts receivable -- intercompany.......... 2,889 4,609 (7,498) --
Inventories.................................. 54,535 1,953 -- 56,488
Deferred taxes and other..................... 11,343 1,867 -- 13,210
---------- ------- -------- ----------
Total current assets.................. 140,156 10,800 (7,498) 143,458
Notes receivable -- intercompany............... 6,771 10,663 (17,434) --
Property and equipment, net.................... 702,932 39,712 1,031 743,675
Investment in subsidiaries..................... 26,099 -- (26,099) --
Goodwill and other assets...................... 821,781 6,678 -- 828,459
---------- ------- -------- ----------
Total assets.......................... $1,697,739 $67,853 $(50,000) $1,715,592
========== ======= ======== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable............................. $ 30,786 $ 1,971 $ -- $ 32,757
Accounts payable -- intercompany............. 74 7,424 (7,498) --
Accrued expenses............................. 49,769 4,781 -- 54,550
Income taxes payable......................... 3,218 1,335 -- 4,553
Note payable................................. 30,000 -- -- 30,000
Long-term debt, current portion.............. 44,876 -- -- 44,876
---------- ------- -------- ----------
Total current liabilities............. 158,723 15,511 (7,498) 166,736
Long-term debt................................. 1,137,415 9,000 -- 1,146,415
Notes payable -- intercompany.................. 1,327 16,107 (17,434) --
Other long-term liabilities.................... 6,383 -- -- 6,383
Deferred income taxes.......................... 3,881 1,041 -- 4,922
---------- ------- -------- ----------
Total liabilities..................... 1,307,729 41,659 (24,932) 1,324,456
---------- ------- -------- ----------
Commitments and contingencies
Stockholders' equity:
Common stock................................. -- 4,362 (3,940) 422
Paid-in capital.............................. 427,446 23,600 (22,518) 428,528
Retained earnings (deficit).................. (31,270) 3,769 (4,147) (31,648)
Equity adjustment from foreign currency
translation................................ (6,166) (5,537) 5,537 (6,166)
---------- ------- -------- ----------
Total stockholders' equity............ 390,010 26,194 (25,068) 391,136
---------- ------- -------- ----------
Total liabilities and stockholders'
equity.............................. $1,697,739 $67,853 $(50,000) $1,715,592
========== ======= ======== ==========
</TABLE>

F-44
<PAGE> 119

AMF BOWLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
--------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Operating revenue............................. $298,354 $20,625 $ (911) $318,068
-------- ------- ------- --------
Operating expenses:
Cost of goods sold.......................... 83,875 2,818 (609) 86,084
Bowling center operating expenses........... 105,290 10,938 (190) 116,038
Selling, general, and administrative
expenses................................. 28,714 1,458 -- 30,172
Depreciation and amortization............... 40,632 2,985 (193) 43,424
-------- ------- ------- --------
Total operating expenses............ 258,511 18,199 (992) 275,718
-------- ------- ------- --------
Operating income.................... 39,843 2,426 81 42,350
Nonoperating expenses (income):
Interest expense............................ 57,180 274 -- 57,454
Other (income) expense, net................. (86) 1,127 1,327 2,368
Interest income............................. (948) (178) -- (1,126)
Equity in earnings of subsidiaries.......... 246 -- (246) --
-------- ------- ------- --------
Total nonoperating expenses......... 56,392 1,223 1,081 58,696
-------- ------- ------- --------
Income (loss) before income taxes... (16,549) 1,203 (1,000) (16,346)
Provision (benefit) for income
taxes............................. (5,617) 1,435 -- (4,182)
-------- ------- ------- --------
Net loss............................ $(10,932) $ (232) $ (1,000) $(12,164)
======== ======= ======= ========
</TABLE>

F-45
<PAGE> 120

AMF BOWLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
--------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................... $(10,932) $ (232) $ (1,000) $ (12,164)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization............ 40,632 2,985 (193) 43,424
Deferred income taxes.................... (1,775) -- -- (1,775)
Amortization of bond discount............ 16,788 -- -- 16,788
Equity in earnings of subsidiaries....... (246) -- 246 --
Loss on the sale of property and
equipment, net......................... 94 -- -- 94
Changes in assets and liabilities:
Accounts and notes receivable.......... (17,750) (192) -- (17,942)
Receivables and
payables -- affiliates.............. (4,502) 4,502 -- --
Inventories............................ (15,383) (494) -- (15,877)
Other assets........................... (20,128) (797) (492) (21,417)
Accounts payable and accrued expenses.. (50) 1,482 -- 1,432
Income taxes payable................... 1,745 512 -- 2,257
Other long-term liabilities............ 13,345 -- -- 13,345
-------- ------- ------- ---------
Net cash provided by (used in) operating
activities............................. 1,838 7,766 (1,439) 8,165
Cash flows from investing activities:
Acquisitions of operating units, net of cash
acquired................................. (105,444) (16,721) -- (122,165)
Purchases of property and equipment......... (24,228) (1,523) 112 (25,639)
Proceeds from sale of property and
equipment................................ 268 -- -- 268
-------- ------- ------- ---------
Net cash provided by (used in) investing
activities............................. (129,404) (18,244) 112 (147,536)
Cash flows from financing activities:
Proceeds from long-term debt, net of
deferred financing costs................. 124,500 9,000 133,500
Payment on long-term debt................... (20,250) -- -- (20,250)
Repurchase of common stock.................. (500) -- -- (500)
Dividend to Parent.......................... 0 (1,327) 1,327 0
Noncompete obligations...................... (322) -- -- (322)
-------- ------- ------- ---------
Net cash provided by financing
activities............................. 103,428 7,673 1,327 112,428
-------- ------- ------- ---------
Effect of exchange rates on cash......... 112 (97) -- 15
-------- ------- ------- ---------
Net decrease in cash..................... (24,026) (2,902) -- (26,928)
Cash and cash equivalents at beginning of
period................................. 39,677 3,891 -- 43,568
-------- ------- ------- ---------
Cash and cash equivalents at end of
period................................. $ 15,651 $ 989 $ -- $ 16,640
======== ======= ======= =========
</TABLE>

F-46
<PAGE> 121

REPORT OF INDEPENDENT ACCOUNTANTS

To the Boards of Directors
and the Stockholders
AMF Bowling Group

In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, of cash flows and of changes in stockholders'
equity present fairly, in all material respects, the financial position of AMF
Bowling Group at April 30, 1996 and December 31, 1995, and the results of its
operations and its cash flows for the period ended April 30, 1996 and for each
of the two years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Norfolk, Virginia
June 28, 1996

F-47
<PAGE> 122

AMF BOWLING GROUP

COMBINED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................... $ 21,913 $ 9,732
Accounts and notes receivable, net of allowance for doubtful
accounts of $3,110 and $3,373, respectively.................. 33,887 39,026
Accounts and notes receivable -- affiliates..................... 166 3,979
Inventories..................................................... 43,296 39,821
Prepaid expenses and other...................................... 6,113 5,182
-------- --------
Total current assets.................................... 105,375 97,740
Notes receivable -- affiliates.................................... -- 22,941
Property and equipment, net....................................... 251,544 259,724
Other assets...................................................... 18,330 19,973
-------- --------
Total assets............................................ $ 375,249 $400,378
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................ $ 23,670 $ 23,641
Book overdrafts................................................. 5,724 2,362
Accrued expenses and deposits................................... 34,916 30,328
Accounts and notes payable -- affiliates........................ -- 1,989
Long-term debt, current portion................................. 10 1,084
Income taxes payable............................................ 1,757 7,129
-------- --------
Total current liabilities............................... 66,077 66,533
Long-term debt.................................................... 1,958 19,550
Notes payable -- affiliates....................................... -- 146,727
Other liabilities................................................. 2,811 5,856
Deferred income taxes............................................. 1,429 174
-------- --------
Total liabilities....................................... 72,275 238,840
-------- --------
Commitments and contingencies (Note 9)
Stockholders' equity:
Common stock.................................................... 454 1,538
Paid-in capital................................................. 251,770 63,781
Retained earnings............................................... 52,302 101,080
Equity adjustment from foreign currency translation............. (1,552) (3,400)
Notes receivable stock subscription............................. -- (1,461)
-------- --------
Total stockholders' equity.............................. 302,974 161,538
-------- --------
Total liabilities and stockholders' equity.............. $ 375,249 $400,378
======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-48
<PAGE> 123

AMF BOWLING GROUP

COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
----------- -------- --------
<S> <C> <C> <C>
Operating revenues:
Sales of products and services....................... $ 164,371 $563,998 $515,426
Revenue from operating lease activities.............. 573 926 2,360
-------- -------- --------
Total operating revenues..................... 164,944 564,924 517,786
-------- -------- --------
Operating expenses:
Cost of sales, excluding depreciation of $791,
$2,531, and $1,691, respectively.................. 43,118 184,129 196,043
Bowling center operations............................ 80,156 166,465 115,147
Selling, general and administrative.................. 35,557 50,778 57,142
Depreciation and amortization........................ 15,097 39,139 24,776
-------- -------- --------
Total operating expenses..................... 173,928 440,511 393,108
-------- -------- --------
Operating (loss) income...................... (8,984) 124,413 124,678
Nonoperating income (expenses):
Interest expense..................................... (4,504) (15,711) (7,394)
Other expenses, net.................................. (692) (1,043) (1,188)
Interest income...................................... 611 2,184 526
Foreign currency transaction loss.................... (29) (979) (867)
-------- -------- --------
(Loss) income before income taxes...................... (13,598) 108,864 115,755
Income tax benefit (expense)........................... 1,731 (12,098) (16,452)
-------- -------- --------
Net (loss) income............................ $ (11,867) $ 96,766 $ 99,303
======== ======== ========
</TABLE>

PRO FORMA FINANCIAL INFORMATION (UNAUDITED):

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
----------- -------- --------
<S> <C> <C> <C>
Net (loss) income before income taxes and pro forma
adjustments.......................................... $ (13,598) $108,864 $115,755
Pro forma C Corporation -- tax benefit (provision)..... 5,065 (40,616) (42,972)
-------- -------- --------
Pro forma net (loss) income............................ $ (8,533) $ 68,248 $ 72,783
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-49
<PAGE> 124

AMF BOWLING GROUP

COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
----------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income.................................... $ (11,867) $ 96,766 $ 99,303
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization..................... 15,097 39,139 24,776
Deferred income taxes............................. 414 (830) (19)
Loss on sale of property and equipment, net....... -- 567 911
Changes in assets and liabilities, net of effects
from companies acquired:
Accounts and notes receivable, net.............. 4,784 10,630 (9,014)
Receivables and payables -- affiliates.......... 1,535 6,147 4,725
Inventories..................................... (3,631) (5,996) (1,411)
Other assets and liabilities.................... (2,673) (101) (1,000)
Accounts payable and accrued expenses........... 8,713 (18,741) 3,838
Income taxes payable............................ (5,745) (2,830) (2,390)
-------- -------- --------
Net cash provided by operating activities....... 6,627 124,751 119,719
-------- -------- --------
Cash flows from investing activities:
Acquisitions of operating units, net of cash
acquired.......................................... -- -- (17,307)
Purchase of property and equipment................... (6,874) (29,965) (17,788)
Proceeds from sales of property and equipment........ -- 1,410 1,535
Other................................................ 2,989 229 941
-------- -------- --------
Net cash used for investing activities.......... (3,885) (28,326) (32,619)
-------- -------- --------
Cash flows from financing activities:
Payments on credit note agreements, net.............. -- (11,057) (3,689)
Distributions to stockholders........................ (36,721) (71,851) (78,170)
Payment of long-term debt............................ (3,812) (10,285) (1,104)
Payment for redemption of stock...................... -- (3,960) --
Proceeds (payments) on notes payable -- stockholders,
net............................................... 1,236 (3,793) (8,560)
Capital contributions by stockholders................ 24,805 8,329 2,109
Collection of notes receivable -- affiliates......... 19,408 -- --
Other................................................ 3,988 (2,056) (212)
-------- -------- --------
Net cash provided by (used for) financing
activities................................... 8,904 (94,673) (89,626)
Effect of exchange rates on cash................ 535 (194) 2,759
-------- -------- --------
Net increase in cash................................... 12,181 1,558 233
Cash at beginning of period............................ 9,732 8,174 7,941
-------- -------- --------
Cash at end of period.................................. $ 21,913 $ 9,732 $ 8,174
======== ======== ========
</TABLE>

See Note 11 for supplemental disclosures to the Combined Statements of Cash
Flows.

The accompanying notes are an integral part of these financial statements.

F-50
<PAGE> 125

AMF BOWLING GROUP

COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
EQUITY
ADJUSTMENT
FROM FOREIGN TOTAL
COMMON PAID-IN RETAINED CURRENCY STOCKHOLDERS'
STOCK CAPITAL EARNINGS TRANSLATION OTHER EQUITY
------- -------- -------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1993......... $ 1,536 $ 46,714 $ 45,573 $ (5,389) $ -- $ 88,434

Net income................ -- -- 99,303 -- -- 99,303
Distribution to
stockholders........... -- -- (78,170) -- -- (78,170)
Increase in equity
adjustment from foreign
currency translation... -- -- -- 2,087 -- 2,087
Capital contributions..... -- 2,109 -- -- -- 2,109
The Reece Corporation
merger................. -- 9,184 9,459 -- -- 18,643
Other..................... -- (32) -- -- -- (32)
------- -------- -------- ------- ------- --------
Balance,
December 31, 1994......... 1,536 57,975 76,165 (3,302) -- 132,374

Net income................ -- -- 96,766 -- -- 96,766
Distribution to
stockholders........... -- -- (71,851) -- -- (71,851)
Redemption of stock....... -- (3,960) -- -- -- (3,960)
Decrease in equity
adjustment from foreign
currency translation... -- -- -- (98) -- (98)
Sale of stock............. 2 1,479 -- -- (1,479) 2
Capital contributions..... -- 8,329 -- -- -- 8,329
Other..................... -- (42) -- -- 18 (24)
------- -------- -------- ------- ------- --------
Balance,
December 31, 1995......... 1,538 63,781 101,080 (3,400) (1,461) 161,538

Net loss.................. -- -- (11,867) -- -- (11,867)
Distribution to
stockholders........... -- -- (36,721) -- -- (36,721)
Increase in equity
adjustment from foreign
currency translation... -- -- -- 1,665 -- 1,665
Payment of notes
receivable
officer/stockholder.... -- -- -- -- 1,461 1,461
Capital contributions..... 102 187,989 -- -- -- 188,091
Other..................... (1,186) -- (190) 183 -- (1,193)
------- -------- -------- ------- ------- --------
Balance, April 30, 1996..... $ 454 $251,770 $ 52,302 $ (1,552) $ -- $ 302,974
======= ======== ======== ======= ======= ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-51
<PAGE> 126

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

NOTE 1 -- ORGANIZATION

AMF Bowling Group ("the Combined Companies") consisted of the following
entities:

S CORPORATIONS

- - AMF Bowling, Inc. ("AMF Bowling")
- - AMF Bowling Centers, Inc. ("AMF Bowling Centers")
- - AMF Beverage Company of Oregon, Inc.
- - King Louis Lenexa, Inc.
- - AMF Bowling Centers (Aust) International Inc.
- - AMF Bowling Centers (Canada) International Inc.
- - AMF BCO - France One, Inc.
- - AMF BCO - France Two, Inc.
- - AMF Bowling Centers (Hong Kong) International Inc.
- - AMF Bowling Centers International Inc. - Japan
- - AMF Bowling Mexico Holding, Inc.
- - Boliches AMF, Inc.
- - AMF Bowling Centers II Inc. - Switzerland
- - AMF BCO - U.K. One, Inc.
- - AMF BCO - U.K. Two, Inc.
- - AMF BCO - China, Inc.
- - AMF Bowling Centers China, Inc.

OTHER

- - AMF Catering Services Pty, Ltd.
- - Bush River Corporation

Pursuant to a Stock Purchase Agreement dated February 16, 1996 between AMF
Group Holdings, Inc. and the stockholders of AMF Bowling Group (the "Combined
Companies"), on May 1, 1996, AMF Group Holdings, Inc. (the "Company"), through
its subsidiaries, acquired the Combined Companies in a stock purchase of all the
outstanding stock of the separate domestic and foreign corporations that
constitute substantially all of the Combined Companies and through the purchase
of certain assets of the Combined Companies' bowling center operations in Spain
and Switzerland. Prior to the acquisition, the Combined Companies were
controlled by the Virginia Investment Trust.

The Combined Companies operated bowling centers in the United States and in
9 foreign countries and manufactured and distributed a full line of bowling and
leisure related products. The principal markets for bowling and leisure related
equipment are domestic and foreign independent bowling center operators. The
accompanying combined financial statements have been prepared for the purpose of
presenting the financial position and results of operations of the bowling
related operations of the various entities.

The Company did not acquire the assets of two bowling centers located in
Madrid, Spain and Geneva, Switzerland (both of which were retained by the
sellers) and, accordingly, the April 30, 1996 combined financial statements
exclude the assets of these centers. As a result of the acquisition, the
Company, at May 1, 1996, owns or operates 205 of the Combined Companies'
domestic bowling centers and 78 international bowling centers (205 domestic
bowling centers and 80 international bowling centers at December 31, 1995). The
purchase price for the acquisition was approximately $1,300,000, subject to
certain postclosing adjustments, less approximately $2,000

F-52
<PAGE> 127

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

representing debt of the Combined Companies which remained in place following
the closing of the acquisition (the "Closing").

The revaluation, in accordance with Accounting Principles Board Opinion No.
16, of the Combined Companies' assets and liabilities as a result of the Stock
Purchase Agreement has not been reflected in the accompanying combined financial
statements. In addition, no adjustments have been recorded to reflect any tax
liability resulting from the stock purchase and the related Section 338(h)(10)
election.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying combined financial statements have been prepared on the
accrual basis of accounting and conform in all material respects to accounting
principles generally accepted in the United States. The accompanying combined
financial statements are stated in U.S. dollars. All significant intercompany
and intracompany balances and transactions have been eliminated in the
accompanying combined financial statements.

Use of estimates

The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. The more significant estimates made by management include
allowances for obsolete inventory, uncollectible accounts receivable, product
warranty costs and litigation and claims. Actual results could differ from those
estimates.

Fiscal year

The entities included in the accompanying combined financial statements
operate on fiscal years ending on December 31, except for AMF Bowling Centers,
which operated on a 52-week period ended on the last Sunday in December during
1994, and the Fair Lanes operation which operated on a fiscal period ended on
December 29, 1994. For 1995, AMF Bowling Centers, including the acquired Fair
Lanes operation, adopted a calendar month-end; accordingly, the results of
operations for the period ended December 31, 1995 include AMF Bowling Centers'
operations for the period December 26, 1994 (December 30, 1994 with respect to
Fair Lanes operations) through December 31, 1995.

Revenue recognition

Revenue is generally recognized from the sale of products at the time the
products are shipped. For larger contract orders, the Combined Companies
generally require that customers submit a deposit as a condition of accepting
the order. For nonaffiliate international sales, the Combined Companies
generally require the customer to obtain a letter of credit prior to shipment.

Warranty costs

AMF Bowling offers warranties for its various products and provides, by a
current charge to income, an amount it estimates will be needed to cover future
warranty obligations for products

F-53
<PAGE> 128

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

sold. Warranty expense aggregated approximately $1,313 for the four months ended
April 30, 1996 and $2,748 and $4,963 for the years ended December 31, 1995 and
1994, respectively.

Cash and cash equivalents

For the purpose of the statement of cash flows, the Combined Companies
consider all highly liquid debt instruments purchased with an original maturity
of three months or less at the date of purchase to be cash equivalents.

Inventories

Manufacturing inventory is valued at the lower of cost or market, cost
being determined using the last-in, first-out ("LIFO") method for domestic
inventories and the first-in, first-out ("FIFO") method for foreign inventories.

Bowling center inventory is valued at the lower of cost or market with the
cost being determined using the actual or average cost method.

Property and equipment

Property and equipment are stated at cost. Expenditures for maintenance and
repairs which do not improve or extend the life of an asset are charged to
expense as incurred; major renewals or betterments are capitalized to the
property accounts. Upon retirement or sale of an asset, its cost and related
accumulated depreciation are removed from the property accounts, and any gain or
loss is recognized.

Property and equipment are depreciated over their estimated useful lives
using straight-line and accelerated methods. Estimated useful lives of property
and equipment for financial reporting purposes are as follows:

<TABLE>
<S> <C>
Buildings and improvements.................... 5 - 40 years
Bowling and related equipment................. 5 - 10 years
Manufacturing equipment....................... 2 - 7 years
Furniture and fixtures........................ 3 - 8 years
</TABLE>

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of," ("SFAS No.
121"). SFAS No. 121 is effective for fiscal year 1996 for the Company. This
Statement establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those assets.
The adoption of SFAS No. 121 did not have a material effect on the financial
position or results of operations of the Company.

Income taxes

Certain of the Combined Companies included in the accompanying combined
financial statements have elected S Corporation status under the Internal
Revenue Code (see Note 1). As an S Corporation, the companies may be liable for
U.S. federal income taxes under certain circumstances and liable for state
income taxes in certain jurisdictions; all other domestic income taxes are the
responsibility of the Combined Companies' stockholders.

F-54
<PAGE> 129

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

The foreign branches of the S Corporations and other foreign entities file
income tax returns and pay taxes in their respective countries. The stockholders
receive a tax credit, subject to certain limitations, in their U.S. federal
income tax returns for foreign taxes paid by the foreign branches of the U.S.
Corporation and certain other foreign entities.

The Combined Companies account for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," ("SFAS No. 109"). SFAS No. 109 mandates the liability method for
computing deferred income taxes. Because the Combined Companies have elected S
Corporation status, deferred income taxes are only provided with respect to
state and foreign income taxes.

Research and development costs

Expenditures relating to the development of new products, including
significant improvements and refinements to existing products, are expensed as
incurred. The amounts charged against income were approximately $875 for the
four months ended April 30, 1996 and $3,600 and $3,075 for the years ended
December 31, 1995 and 1994, respectively.

Advertising costs

Costs incurred for producing and communicating advertising are expensed
when incurred. The amounts charged against income were approximately $3,575 for
the four months ended April 30, 1996 and $12,250 and $10,400 for the years ended
December 31, 1995 and 1994, respectively.

Foreign currency

In accordance with Statement of Financial Accounting Standards No. 52,
"Foreign Currency Translation," all assets and liabilities of the Combined
Companies' foreign operations are translated from foreign currencies into U.S.
dollars at year-end exchange rates. Revenues and expenses of foreign operations
are translated using average exchange rates that existed during the year and
reflect currency exchange gains and losses resulting from transactions conducted
in nonlocal currencies. Adjustments resulting from the translation of financial
statements of foreign operations into U.S. dollars are included in the equity
adjustment from foreign currency translation on the accompanying combined
balance sheets. Gains and losses arising from transactions in foreign currencies
are included as a separate item in the accompanying combined statement of
operations.

Fair value of financial instruments

The carrying value of financial instruments including cash and cash
equivalents, accounts receivable, accounts payable and short-term debt
approximated fair value at April 30, 1996 and December 31, 1995 because of the
short maturity of these instruments. The carrying value of long-term receivables
and payables approximated fair value as of April 30, 1996 and December 31, 1995
based upon market rates for similar instruments.

Noncompete agreements

The Combined Companies have certain noncompete agreements with individuals.
The assets are recorded at cost or at the present value of payments to be made
under these agreements, discounted at annual rates ranging from 8%-10%. The
assets are included in other current and noncurrent assets and are amortized on
a straight-line basis over the terms of the agreements. Noncompete obligations
were $3,095 at April 30, 1996 and $3,300 at December 31, 1995.

F-55
<PAGE> 130

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

Common stock

The common stock account represents the aggregate number of shares
outstanding for all the Combined Companies multiplied by the respective par
value at each of the Combined Companies.

NOTE 3 -- RELATED PARTY TRANSACTIONS

The Combined Companies had related party transactions with several
companies which are affiliated through common ownership and with certain of its
officers, directors and stockholders. The majority of balances with affiliated
companies were liquidated on or prior to April 30, 1996. Interest income and
expense during the four months ended April 30, 1996 were not significant to the
operating results of the Combined Companies. A summary of the significant
balances and transactions with related parties follows.

Accounts and notes receivable -- affiliates, including accrued interest, at
April 30, 1996 and December 31, 1995 consisted of the following:

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31,
1996 1995
--------- -------------
<S> <C> <C>
Accounts receivable -- affiliates................... $ 166 $ 2,084
=== =======
Notes receivable -- AMF Reece....................... $ -- $ 12,910
Notes receivable -- stockholders.................... -- 11,130
Note receivable -- AMF Machinery Systems
("AMS")........................................... -- 796
--- -------
-- 24,836
Current maturities.................................. -- (1,895)
--- -------
$ -- $ 22,941
=== =======
</TABLE>

Notes receivable -- AMF Reece represented various notes, plus accrued and
unpaid interest income, between AMF Bowling and AMF Reece, an affiliated
company. The notes earned interest monthly based on the LIBOR rate plus .75%,
which was 6.48% at December 31, 1995. Interest income was $762 for the year
ended December 31, 1995.

Notes receivable -- stockholders represented notes of $9,394 plus accrued
and unpaid interest income, between the Combined Companies and its stockholders.
Interest on the notes was at the LIBOR plus .75% rate, which was 6.48% at
December 31, 1995. Interest income for the years ended December 31, 1995 and
1994 was $602 and $70, respectively.

F-56
<PAGE> 131

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

Accounts and notes payable -- affiliates at April 30, 1996 and December 31,
1995 consisted of the following:

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31,
1996 1995
--------- -------------
<S> <C> <C>
Accounts payable -- stockholders.................... $-- $ 322
Accounts payable -- AMS............................. -- 1,619
Accounts payable -- CCA Industries.................. -- 48
--- -------
$-- $ 1,989
=== =======
Notes payable -- stockholders....................... $-- $ 117,022
Note payable -- Fair Lanes, Inc..................... -- 24,096
Notes payable -- AMS................................ -- 5,609
Capital lease obligations -- Commonwealth
Leasing Corporation ("CLC")....................... -- --
--- -------
-- 146,727
Current maturities.................................. -- --
--- -------
Long-term portion................................... $-- $ 146,727
=== =======
</TABLE>

Notes payable -- stockholders included $88,323, plus accrued and unpaid
interest, at December 31, 1995 of 9.5% of Fair Lanes, Inc. ("Fair Lanes") notes
which were acquired by certain stockholders in conjunction with the acquisition
of Fair Lanes. A portion of the notes were acquired by the stockholders as a
result of the plan of reorganization (Note 14). The note balance included
interest from the period July 15, 1994 through January 15, 1995 which was paid
through the issuance of additional notes. The notes were assumed by AMF Bowling
Centers in connection with the acquisition of the assets of Fair Lanes on July
2, 1995. The notes, originally payable in 2001, were paid prior to April 30,
1996, pursuant to the purchase of the Combined Companies. Interest expense for
the years ended December 31, 1995 and 1994 was approximately $8,053 and $1,900,
respectively.

Notes payable -- stockholders included $16,773, plus accrued and unpaid
interest, on a $60,000 revolving line of credit between AMF Bowling Centers and
its stockholders which originally matured on December 31, 1998. The notes were
repaid on or prior to April 30, 1996, pursuant to the purchase of the Combined
Companies. Interest on the notes was at the lesser of the prime rate or the
LIBOR rate plus 0.50% (6.23% at December 31, 1995). The note was repaid on or
prior to April 30, 1996, pursuant to the purchase of the Combined Companies.
Interest expense on these notes was $562 and $1,922 for the years ended December
31, 1995 and 1994, respectively.

Also, included in notes payable -- stockholders was a $1,943 note, plus
accrued and unpaid interest, which represented the balance outstanding on a
$16,000 revolving line of credit between AMF Bowling and its stockholders.
Interest on the note was at the prime rate (8.50% at December 31, 1995). The
note was repaid on or prior to April 30, 1996, pursuant to the purchase of the
Combined Companies. Interest expense on this note was $179 for the year ended
December 31, 1995.

The average amount outstanding under the various lines of credit was $7,865
during fiscal 1995 and $34,733 during fiscal 1994. The maximum amount
outstanding under these agreements was $21,246 during fiscal 1995 and $43,403
during fiscal 1994. The average interest rate on the outstanding debt was 7.5%
during fiscal 1995 and 5.56% during fiscal 1994.

F-57
<PAGE> 132

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

Note payable -- Fair Lanes related to the acquisition of Fair Lanes net
assets by AMF Bowling Centers from the AMF stockholders. Interest on the note
was at prime (8.50% at December 31, 1995). The note, originally payable on
December 31, 1998, was repaid on or prior to April 30, 1996, pursuant to the
purchase of the Combined Companies. Interest expense for the year ended December
31, 1995 was $1,187.

The notes payable of $5,609 to AMS consisted of various notes plus accrued
and unpaid interest (at 8.5%-11%) and were payable on demand. The notes were
repaid on or prior to April 30, 1996, pursuant to the purchase of the Combined
Companies. Interest expense on these notes was $417 and $380 for the years ended
December 31, 1995 and 1994, respectively.

Other related party transactions

The Combined Companies were charged $512 for the four months ended April
30, 1996 and $1,622 and $1,198 for the years ended December 31, 1995 and 1994,
respectively, in management fees for certain consulting and administrative
services performed by affiliated companies.

In May 1995, the Combined Companies began purchasing health insurance from
CCA Industries, an affiliated company, on a fully insured basis. Total premiums
for the four months ended April 30, 1996 were $411 and for the period from May
1995 to December 31, 1995 aggregated $889.

During the year ended December 31, 1995, Fair Lanes acquired equipment
which was leased from Commonwealth Leasing Corporation ("CLC"), an affiliated
company, for $1,367. The difference between the capitalized lease obligation and
the purchase price was treated as an adjustment of the notes payable -- Fair
Lanes.

The Combined Companies purchased used bowling equipment from CLC for $1,429
and $984 during the years ended 1995 and 1994, respectively.

The Combined Companies charged service fees and sales commissions of $53
and $126 for the years ended December 31, 1995 and 1994, respectively, to
Commonwealth Leasing Corporation, an affiliated company. These charges have been
treated as reductions in selling, general and administrative expenses.

The Combined Companies lease equipment from CCA Financial, an affiliated
company. Rent expense was $203 for the four months ended April 30, 1996 and $444
and $550 for the years ended December 31, 1995 and 1994, respectively.

NOTE 4 -- INVENTORIES

Inventories at April 30, 1996 and December 31, 1995 consist of the
following:

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
Raw materials....................................... $ 10,325 $ 10,590
Work-in-progress.................................... 2,084 1,522
Finished goods and spare parts...................... 28,661 24,920
Merchandise inventory............................... 3,033 4,045
------- -------
44,103 41,077
Inventory valuation reserves........................ (807) (1,256)
------- -------
$ 43,296 $ 39,821
======= =======
</TABLE>

F-58
<PAGE> 133

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

Inventories were determined using the following methods at April 30, 1996
and December 31, 1995:

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
LIFO (Domestic manufacturing)....................... $ 27,128 $ 24,389
FIFO (Foreign manufacturing)........................ 13,135 11,387
Other (Merchandise inventory)....................... 3,033 4,045
------- -------
$ 43,296 $ 39,821
======= =======
</TABLE>

If LIFO inventories had been valued at current costs, they would have been
greater by $2,527 at April 30, 1996 and $2,496 at December 31, 1995.

NOTE 5 -- PROPERTY AND EQUIPMENT

Property and equipment at April 30, 1996 and December 31, 1995 consist of
the following:

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
Land............................................ $ 25,891 $ 25,692
Buildings and improvements...................... 143,147 138,448
Equipment, furniture and fixtures............... 256,308 251,936
Construction in progress........................ 110 1,925
--------- ---------
425,456 418,001
Less: accumulated depreciation and
amortization.................................. (173,912) (158,277)
--------- ---------
$ 251,544 $ 259,724
========= =========
</TABLE>

Depreciation expense was $14,523 for the four months ended April 30, 1996
and $37,889 and $23,184 for the years ended December 31, 1995 and 1994,
respectively.

NOTE 6 -- ACCRUED EXPENSES AND DEPOSITS

Accrued expenses and deposits at April 30, 1996 and December 31, 1995
consist of the following:

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
Accrued compensation................................ $ 9,714 $ 7,152
League bowling accounts............................. 3,776 6,368
Other............................................... 21,426 16,808
--------- ---------
$ 34,916 $ 30,328
========= =========
</TABLE>

F-59
<PAGE> 134

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

NOTE 7 -- LONG-TERM DEBT

Long-term debt at April 30, 1996 and December 31, 1995 consisted of the
following:

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
Notes payable to bank -- guaranteed.................. $ -- $ 3,764
Mortgage and equipment notes......................... 1,968 14,469
Industrial development bond.......................... -- 1,354
Other................................................ -- 1,047
------- -------
1,968 20,634
Current maturities................................... (10) (1,084)
------- -------
Long-term portion.................................... $ 1,958 $ 19,550
======= =======
</TABLE>

Notes payable to bank -- guaranteed represented a credit agreement entered
into between AMF Bowling Centers and a bank under which up to $32,750 could be
borrowed. An additional $25,000 could be borrowed from one or more additional
financial institutions. Interest was payable at a rate equal to the lesser of
the prime rate or the LIBOR rate plus .50% (6.23% at December 31, 1995). The
notes were secured by certain tangible personal property of AMF Bowling Centers
and were guaranteed by certain stockholders. The agreement also required AMF
Bowling Centers to meet certain financial covenants, including maximum debt to
equity ratios, minimum tangible net worth requirements and minimum earnings to
charge ratios. At December 31, 1995, AMF Bowling Centers was in violation of
certain requirements which were subsequently waived by the bank through March
31, 1997. The notes payable were repaid on or prior to April 30, 1996, pursuant
to the purchase of the Combined Companies.

The mortgage and equipment notes were secured by first deeds of trust on
various bowling centers. The notes generally required monthly payments and
matured at various times through October 2008. Interest rates on these notes
were generally fixed and ranged from 3% to 12%. The notes were repaid on or
prior to April 30, 1996, except for one.

The Industrial Development Bond was secured by a first deed of trust on one
of the bowling centers. Interest on the bond was at a fluctuating rate based on
the prime rate of the lending bank (6.947% at December 31, 1995). Monthly
principal and interest payments were originally due through August 2001. The
bond was repaid on or prior to April 30, 1996, pursuant to the purchase of the
Combined Companies.

AMF Bowling had an agreement with a bank under which up to $15,000 could be
borrowed. This arrangement expired on April 30, 1996. There were no borrowings
at December 31, 1995 under the agreement. Interest was payable monthly at the
lower of the bank's prime rate or the adjusted LIBOR plus 0.50% (6.23% at
December 31, 1995). This agreement required certain financial covenants to be
met, including maximum debt to equity ratios, minimum tangible net worth
requirements and minimum earnings to charge ratios.

AMF Bowling had a $3,500 revolving credit line with a bank which was due to
expire on June 30, 1996. No balance was outstanding at December 31, 1995.
Interest on outstanding borrowings was payable quarterly at the lower of the
bank's prime interest rate or the adjusted LIBOR rate plus 0.50% (6.23% at
December 31, 1995). Under this line were two standby letters of credit with
amounts outstanding at December 31, 1995 of $1,138, expiring on December 1,
1996, and of $12 expiring on August 19, 1996.

F-60
<PAGE> 135

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

The average amount outstanding under the various lines of credit was
$21,807 during fiscal 1995 and $4,801 during fiscal 1994. The maximum amount
outstanding under these credit arrangements was $39,454 during fiscal 1995 and
$27,334 during fiscal 1994. The average interest rate on these credit
arrangements was 6.43% during fiscal 1995 and 6.06% during fiscal 1994.

AMF Bowling had available a foreign exchange line of $5,000 and a letter of
credit line of $1,000. No balances were outstanding at December 31, 1995. One
standby letter of credit with an amount at December 31, 1995 of $535, which
expired on January 18, 1996, and four import letters of credit totaling $142
were outstanding under these lines.

NOTE 8 -- INCOME TAXES

Income (loss) before income taxes consists of the following:

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
----------- -------- --------
<S> <C> <C> <C>
United States.......................... $ (7,757) $ 77,931 $ 75,807
Foreign................................ (5,841) 30,933 39,948
-------- -------- --------
$ (13,598) $108,864 $115,755
======== ======== ========
</TABLE>

The income tax benefit (provision) consists of the following:

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
----------- -------- --------
<S> <C> <C> <C>
CURRENT TAX BENEFIT (PROVISION)
U.S. federal........................... $ -- $ -- $ --
State and local........................ 205 (1,065) (481)
Foreign................................ 1,940 (11,961) (15,450)
-------- -------- --------
Total current.......................... 2,145 (13,026) (15,931)
-------- -------- --------
DEFERRED TAX BENEFIT (PROVISION)
U.S. federal........................... -- -- --
State and local........................ -- 32 --
Foreign................................ (414) 896 (521)
-------- -------- --------
Total deferred......................... (414) 928 (521)
-------- -------- --------
Total benefit (provision).............. $ 1,731 $(12,098) $(16,452)
======== ======== ========
</TABLE>

F-61
<PAGE> 136

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

Temporary differences and carryforwards which give rise to deferred tax
assets and liabilities are as follows:

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
DEFERRED TAX ASSETS
Current assets...................................... $ 815 $ 1,198
Noncurrent assets................................... 799 799
------- -------
Total deferred tax assets........................... 1,614 1,997
------- -------
DEFERRED TAX LIABILITIES
Noncurrent liabilities.............................. (1,429) (1,998)
------- -------
Total deferred tax liabilities...................... (1,429) (1,998)
------- -------
Net deferred tax assets (liabilities)............... $ 185 $ (1)
======= =======
</TABLE>

The primary determination of the deferred tax assets are book accruals not
deductible for tax purposes, such as the allowance for bad debts, inventory
reserves and various other accruals. Deferred tax liabilities are a result of
accelerated depreciation methods used for tax purposes.

The benefit (provision) for income taxes differs from the amount computed
by applying the statutory rate of 35% for the four months ended April 30, 1996
and the years ended December 31, 1995 and 1994 to income (loss) before income
taxes. The principal reasons for this difference are as follows:

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
----------- -------- --------
<S> <C> <C> <C>
Tax benefit (provision) at
federal statutory rate................ $ 4,759 $(38,102) $(40,514)
(Increase) decrease in rates resulting
from:
S Corporation election for U.S.
federal tax purposes............... (4,759) 38,102 40,514
State and local taxes................. 205 (1,033) (481)
Foreign income taxes.................. 1,526 (11,065) (15,971)
-------- -------- --------
Total................................. $ 1,731 $(12,098) $(16,452)
======== ======== ========
</TABLE>

Pro forma provision for income taxes (unaudited)

As a result of the Stock Purchase Agreement, the Combined Companies will no
longer be treated as an S Corporation for income tax purposes in the United
States and in certain state jurisdictions.

Accordingly, the combined statements of operations include a pro forma
adjustment for income taxes which would have been recorded if the Combined
Companies had not been an S Corporation, based on tax laws in effect during
these periods. The pro forma adjustment was computed separately for each entity
and then combined, except for purposes of computing the utilization of foreign
tax credits related to the worldwide bowling center operations, the domestic and
worldwide bowling center operations were considered in the aggregate.

F-62
<PAGE> 137

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

Pro forma income tax benefit (provision) is as follows:

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
----------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CURRENT
U.S. federal......................... $ 3,222 $(26,404) $(24,368)
State and local...................... 329 (3,491) (3,730)
Foreign.............................. 1,940 (11,961) (15,450)
------ -------- --------
Total current........................ 5,491 (41,856) (43,548)
------ -------- --------
DEFERRED
U.S. federal......................... (85) 317 979
State and local...................... 73 27 118
Foreign.............................. (414) 896 (521)
------ -------- --------
Total deferred....................... (426) 1,240 576
------ -------- --------
Total provision (benefit)............ $ 5,065 $(40,616) $(42,972)
====== ======== ========
</TABLE>

Temporary differences and carryforwards which give rise to pro forma
deferred tax assets and liabilities at April 30, 1996 and December 31, 1995 are
as follows:

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
DEFERRED TAX ASSETS
Current assets.................................. $ 3,851 $ 6,178
Noncurrent assets............................... 192 7,124
------- -------
Total deferred tax assets....................... 4,043 13,302
------- -------
DEFERRED TAX LIABILITIES
Noncurrent liabilities.......................... (6,170) (2,707)
------- -------
Total deferred tax liabilities.................. (6,170) (2,707)
------- -------
Net deferred tax liabilities.................... $(2,127) $ 10,595
======= =======
</TABLE>

Pro forma deferred income taxes relate primarily to timing differences
between financial and income tax reporting for depreciation and certain accruals
which are not currently deductible for income tax purposes.

F-63
<PAGE> 138

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

A reconciliation of the Combined Companies' pro forma United States income
tax benefit (provision) computed by applying the statutory United States federal
income tax rate of 35% to the Combined Companies' income (loss) before income
taxes is presented in the following table:

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
----------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Tax benefit (provision) at federal
statutory rate..................... $ 4,759 $(38,102) $(40,514)
(Increase) decrease in rates
resulting from:
State and local taxes, net......... 402 (2,272) (2,304)
Foreign income taxes............... 1,526 (11,065) (15,971)
Foreign tax credits................ (1,526) 11,065 15,971
Other business credits............. -- -- 79
Nondeductible items................ (91) (171) (134)
Environmental tax.................. -- (102) (103)
Other.............................. (5) 31 4
------- -------- --------
$ 5,065 $(40,616) $(42,972)
======= ======== ========
</TABLE>

NOTE 9 -- COMMITMENTS AND CONTINGENCIES

Leases

The Combined Companies lease certain facilities and equipment under
operating leases which expire at various dates through 2011. These leases
generally contain renewal options and require the Combined Companies to pay
taxes, insurance, maintenance and other expenses in addition to the minimum
annual rentals. Certain leases require contingent payments based on usage of
equipment above certain specified levels. Such contingent rentals amounted to
$293 for the four months ended April 30, 1996 and $1,517 and $1,275 for the
years ended December 31, 1995 and 1994, respectively.

Future minimum rental payments under the operating lease agreements are as
follows:

<TABLE>
<CAPTION>
PERIOD ENDING
DECEMBER 31,
-----------------------------------------------
<S> <C>
1996 (eight months)............................ $ 15,200
1997........................................... 14,900
1998........................................... 12,800
1999........................................... 10,900
2000........................................... 8,900
Thereafter..................................... 49,600
--------
$112,300
========
</TABLE>

Total rent expense under operating leases aggregated approximately $7,487
for the four months ended April 30, 1996 and $19,250 and $15,650 for the years
ended December 31, 1995 and 1994, respectively.

F-64
<PAGE> 139

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

Litigation and claims

AMF Bowling's Pins and Lanes division was the defendant in an
administrative proceeding related to a labor dispute. This claim was resolved in
favor of the division during 1995 and the related reserve of approximately
$1,100 was reversed.

AMF Bowling terminated its Korean distributorship agreement. The Korean
distributor filed suit against the company in Korea seeking an injunction
against AMF Bowling's Seoul Korea branch to prevent AMF Bowling from selling
bowling and bowling related products in Korea. The Korean Court dismissed the
suit on jurisdiction grounds subsequent to year-end. Such a decision is subject
to an appeal.

On January 10, 1996, the Korean distributor filed a second suit in the
Supreme Court of the State of New York against AMF Bowling and AMF Bowling
Centers. The suit alleges a number of complaints related to the conduct and
termination of the Korean distributorship agreement and alleges that the
defendants caused the Korean distributor's insolvency. The Korean distributor is
seeking compensatory damages of at least $41,759 and punitive damages of at
least $100,000 or ten times the amount of compensatory damages awarded,
whichever is greater, under each of seven causes of action set forth in the
suit.

Management believes that the Korean distributorship agreement was properly
terminated. Management intends to vigorously defend against this claim and
believes the resolution of such claim will not have a significant effect on the
Combined Companies' combined financial position or results of operations. Under
terms of the sale agreement (Note 1), the current AMF shareholders have agreed
to indemnify the buyers for any loss related to this litigation.

On March 5, 1996, the defendant in an action entitled Northland Bowl and
Sports Center, Inc. and Recreation Associates, II v. Golden Giant, Inc., d/b/a
Golden Giant Building System, Court of Common Pleas, Centre County, Pa. (Index
No. 96-75), asserted a third-party claim against AMF Bowling and other parties.
Defendant, Golden Giant, a construction company, was previously named as
defendant by a bowling center (not owned or operated by the Combined Companies)
in connection with the collapse of the center's roof in early 1994. Golden Giant
has now named AMF Bowling, charging it with negligence and breach of implied
warranty for installing scoring monitors (four years before the roof collapsed)
on a portion of the building that allegedly could not adequately support the
additional weight of the equipment. The bowling center plaintiff claims total
damages in amounts exceeding $3,500, and Golden Giant asserts that, if plaintiff
is entitled to any recovery, it should be in whole or part against AMF Bowling.

AMF Bowling is involved in two patent infringement suits. The plaintiff in
the first case, a competitor of AMF Bowling's Century division, obtained a
summary judgment on the issue of liability in December 1994. The court recently
issued an order which will permit AMF to appeal. The plaintiff claims damages in
the range of $3,000 to $9,000. A trial on damages will not occur unless and
until the liability issue is resolved against AMF Bowling. Management intends to
vigorously contest the claim and believes the resolution of such claim will not
have a significant effect on the Combined Companies' combined financial position
or results of operations.

The second patent infringement suit relates to AMF Bowling's Pins and Lanes
division. Management has settled this claim for $250 during the four months
ended April 30, 1996.

AMF Bowling Centers and AMF Bowling are defendants in a wrongful death suit
related to an employee. The employee's estate is seeking compensatory damages up
to $3,000 plus $3,000 in punitive damages. However, the plaintiff's counsel has
verbally offered to settle the case for $350.

F-65
<PAGE> 140

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

Management expects to vigorously contest the claim and believes the resolution
of such claim will not have a significant effect on the Combined Companies'
combined financial position or results of operations.

In addition, the Combined Companies are involved in certain other lawsuits
and claims arising out of normal business operations. The majority of these
relate to accidents at the Combined Companies' bowling centers. Management
believes that the ultimate resolution of such matters will not materially affect
the Combined Companies' results of operations or financial position.

While the ultimate outcome of the litigation and claims against the
Combined Companies cannot presently be determined, management believes the
Combined Companies have made adequate provision for possible losses. At April
30, 1996 and December 31, 1995, the Combined Companies had recorded reserves
aggregating approximately $2,900 and $2,800, respectively, for litigation and
claims.

NOTE 10 -- EMPLOYEE BENEFIT PLANS AND BONUS

The Combined Companies have a defined contribution 401(k) plan to which
domestic employees may make voluntary contributions based on their compensation.
Under the provisions of the plan, the Combined Companies can, at their option,
match a discretionary percentage of employee contributions and make an
additional contribution as determined by their Board of Directors. Contributions
vest 100% after a five-year period. The amounts charged to expense under this
plan were approximately $410 for the four months ended April 30, 1996 and $1,122
and $901 for the years ended December 31, 1995 and 1994, respectively.

One of the Combined Companies has a Stock Performance Plan (the "Plan") for
certain key employees. Under the terms of the Plan, eligible employees earn
Stock Performance Units as a result of the Company meeting certain operating
performance conditions, as defined by the Plan, relating to (1) sales, (2) cash
flow and (3) operating results. Benefits under the Plan vest over a five-year
period and will be paid in installments over a ten-year period without interest
(or less if specified by the Company's Board of Directors) upon the termination
of an eligible employee. The Plan can be terminated or amended at any time by
the Company's Board of Directors. The amount charged to expense under this plan
was approximately $1,479 for the four months ended April 30, 1996 and $622 and
$311 for the years ended December 31, 1995 and 1994, respectively. The agreement
contains a provision which would accelerate the payout of the benefits from ten
years to five years upon a change-of-control event and would require that
interest be paid on the unpaid balance. On April 30, 1996, the Combined
Companies made payments of $3,085 related to these plans and the plans were
terminated.

Certain of the Combined Companies' foreign operations have employee benefit
plans covering selected employees. These plans vary as to the funding, including
local government, employee and employer funding. Each company has provided
pension expense and made contributions to these plans in accordance with the
requirements of the plans and local country practices. The amounts charged to
expense under these plans aggregated $291 for the four months ended April 30,
1996 and $806 and $701 for the years ended December 31, 1995 and 1994.

On April 30, 1996, the Combined Companies paid bonuses and special payments
to employees, former employees and former directors of $43,760 in recognition of
their services.

F-66
<PAGE> 141

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

NOTE 11 -- SUPPLEMENTAL DISCLOSURES TO THE COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, -------------------
1996 1995 1994
----------- ------- -------
<S> <C> <C> <C>
Cash paid during the year for:
Interest....................................... $ 12,862 $ 5,909 $ 4,306
Income taxes................................... $ 5,359 $16,922 $17,593
Noncash capital contribution by the stockholders:
Debt forgiveness............................... $ 163,184 $ -- $ --
</TABLE>

NOTE 12 -- BUSINESS SEGMENTS

The Combined Companies operate in two major lines of business: operation of
bowling centers and manufacturing of bowling and related products. Information
concerning operations in these business segments for the four months ended April
30, 1996 and the years ended December 31, 1995 and 1994 and identifiable assets
at April 30, 1996 and December 31, 1995 are presented below:

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
----------- -------- --------
<S> <C> <C> <C>
Revenues from unaffiliated customers
Bowling centers
Domestic.................................. $ 75,000 $192,400 $121,600
International............................. 33,500 99,900 103,800
Manufacturing................................ 56,400 272,600 292,400
-------- -------- --------
$ 164,900 $564,900 $517,800
======== ======== ========
Intersegment sales
Bowling centers
Domestic.................................. $ -- $ -- $ --
International............................. -- -- --
Manufacturing................................ 4,600 13,900 9,300
-------- -------- --------
$ 4,600 $ 13,900 $ 9,300
======== ======== ========
Operating (loss) income
Bowling centers
Domestic.................................. $ 3,600 $ 26,500 $ 17,600
International............................. (2,500) 23,700 26,400
Manufacturing................................ (9,600) 75,700 80,900
Eliminations................................. (500) (1,500) (200)
-------- -------- --------
$ (9,000) $124,400 $124,700
======== ======== ========
</TABLE>

F-67
<PAGE> 142

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Identifiable assets
Bowling centers
Domestic.................................. $ 218,300 $224,500
International............................. 65,400 64,600
Manufacturing................................ 101,500 119,800
Eliminations................................. (10,000) (8,500)
-------- --------
$ 375,200 $400,400
======== ========
Depreciation and amortization expense
Bowling centers
Domestic.................................. $ 11,800 $ 29,100 $ 14,700
International............................. 2,500 7,500 7,100
Manufacturing................................ 1,200 3,600 3,700
Eliminations................................. (400) (1,000) (700)
-------- -------- --------
$ 15,100 $ 39,200 $ 24,800
======== ======== ========
Capital expenditures
Bowling centers
Domestic.................................. $ 5,100 $ 17,800 $ 10,400
International............................. 2,300 10,200 4,300
Manufacturing................................ 400 4,500 4,100
Eliminations................................. (900) (2,500) (1,000)
-------- -------- --------
$ 6,900 $ 30,000 $ 17,800
======== ======== ========
</TABLE>

F-68
<PAGE> 143

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

NOTE 13 -- GEOGRAPHIC SEGMENTS

Information about the Combined Companies' operations in different
geographic areas for the four months ended April 30, 1996 and the years ended
December 31, 1995 and 1994 and identifiable assets at April 30, 1996 and
December 31, 1995 are presented below:

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
----------- -------- --------
<S> <C> <C> <C>
Net operating revenue:
United States................................ $ 103,800 $371,400 $296,300
Japan........................................ 13,700 50,300 58,200
Hong Kong.................................... 14,000 40,800 55,100
Korea........................................ 5,800 6,000 --
Australia.................................... 14,700 47,100 43,900
United Kingdom............................... 7,300 26,100 27,600
Mexico....................................... 2,100 7,800 15,300
Sweden....................................... 1,200 10,000 9,700
Canada....................................... 300 600 700
Spain........................................ 1,000 2,700 2,600
Other European countries..................... 5,200 16,000 17,700
China........................................ 400 -- --
Eliminations................................. (4,600) (13,900) (9,300)
--------- --------- ---------
$ 164,900 $564,900 $517,800
========= ========= =========
</TABLE>

Net operating revenues for the United States manufacturing operation has
been reduced by approximately $21,500 for the four months ended April 30, 1996
and $61,000 and $69,200 for the years ended December 31, 1995 and 1994,
respectively, to reflect the elimination of intercompany sales between the
domestic manufacturing operation and the manufacturing foreign sales and service
branches.

F-69
<PAGE> 144

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
FOUR MONTHS YEARS ENDED
ENDED DECEMBER 31,
APRIL 30, ---------------------
1996 1995 1994
----------- -------- --------
<S> <C> <C> <C>
Operating (loss) income
United States................................ $ (2,900) $ 92,200 $ 83,300
Japan........................................ (1,400) 8,800 13,300
Hong Kong.................................... 800 6,200 5,200
Korea........................................ (300) (1,200) --
Australia.................................... (1,300) 13,300 12,000
United Kingdom............................... (1,100) 2,400 3,700
Mexico....................................... (200) 1,500 4,300
Sweden....................................... (500) 1,500 1,700
Canada....................................... -- -- --
Spain........................................ (100) (100) 300
Other European countries..................... (1,300) 1,300 1,100
China........................................ (200) -- --
Eliminations................................. (500) (1,500) (200)
--------- --------- ---------
$ (9,000) $124,400 $124,700
========= ========= =========
</TABLE>

Operating (loss) income for the United States manufacturing operation has
been reduced by approximately $1,300 for the four months ended April 30, 1996
and $900 and $1,600 for the years ended December 31, 1995 and 1994,
respectively, to reflect the elimination of intercompany gross profit between
the domestic manufacturing operation and the manufacturing foreign sales and
service branches.

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
Identifiable assets
United States........................................... $ 290,400 $311,300
Japan................................................... 17,200 22,100
Hong Kong............................................... 7,700 8,500
Korea................................................... 4,500 2,900
Australia............................................... 34,800 31,600
United Kingdom.......................................... 12,200 11,800
Mexico.................................................. 5,100 4,500
Sweden.................................................. 2,200 2,600
Canada.................................................. 900 1,200
Spain................................................... 200 2,000
Other European countries................................ 7,700 8,400
China................................................... 2,300 2,000
Eliminations............................................ (10,000) (8,500)
--------- ---------
$ 375,200 $400,400
========= =========
</TABLE>

Identifiable assets for the foreign sales and service branches have been
reduced by approximately $5,700 at April 30, 1996 and $4,400 at December 31,
1995 to reflect the elimination of

F-70
<PAGE> 145

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

intercompany gross profit in inventory between the domestic manufacturing
operations and the manufacturing foreign sales and service branches.

NOTE 14 -- BUSINESS COMBINATIONS

Effective December 31, 1994, The Reece Corporation, a related company, was
merged into AMF Bowling. The merger was accounted for at historical cost as a
capital contribution. The Reece Corporation activities for 1995 and 1994 were
not material to the combined financial statements.

Effective August 31, 1994, AMF Bowling acquired certain assets and
liabilities of Legendary Billiards, Inc. ("Legendary") for $215. Legendary is a
manufacturer of billiard cues. The acquisition was accounted for under the
purchase method, and the results of operations are included in the financial
statements from the date of acquisition.

Pro forma results of operations for the Legendary acquisition have not been
presented because the effects of this acquisition were not material.

Fair Lanes, Inc. ("Fair Lanes") operated 106 bowling centers in the United
States and Puerto Rico. On June 22, 1994, Fair Lanes and its parent Fair Lanes
Entertainment, Inc. ("FLE"), each filed voluntary petitions for relief under
Chapter 11 of Title 11 of the United States Code ("Chapter 11"). Fair Lanes'
operating subsidiaries did not file for Chapter 11 protection. At the time of
filing, liabilities subject to compromise consisted of Fair Lanes' $138,000
senior secured notes, which were publicly traded, and FLE's debt in the form of
$48,000 variable rate and zero coupon notes (these notes were also publicly
traded). The Bankruptcy Court approved the plan of reorganization effective
September 29, 1994 whereby the holders of FLE's $48,000 of notes received
approximately 6% of Fair Lanes' equity and the holders of Fair Lanes' $138,000
of notes received approximately 94% of Fair Lanes' equity and $90,350 of new
9.5% notes. The former Fair Lanes' equityholders' interests were eliminated as a
result of the reorganization. Through September 29, 1994, AMF's shareholders had
purchased old Fair Lanes' and FLE's notes which resulted in the AMF shareholders
obtaining approximately 56% of the voting shares of Fair Lanes. One other
shareholder held approximately 35% of the new stock and the remaining 9% was
held by other shareholders. The AMF shareholders were able to acquire the shares
held by the 35% shareholder on January 7, 1996 and an additional 2% of the
shares from other shareholders in open market purchases. On February 7, 1996,
the AMF shareholders affected a cash merger and bought out the remaining
shareholders.

The Fair Lanes' acquisition was accounted for as a purchase. As a result of
the relatively short acquisition period and the fact that the minority
shareholders' interest was not affected for losses during the acquisition
period, the combined financial statements include the results of operations for
periods subsequent to September 29, 1994.

The assets acquired and liabilities assumed were recorded at their
estimated fair value as follows:

<TABLE>
<S> <C>
Current assets.................................. $ 3,059
Property and equipment.......................... 141,785
Other assets.................................... 12,643
Current liabilities............................. (22,672)
Long-term liabilities........................... (116,174)
----------
Purchase price.................................. $ 18,641
==========
</TABLE>

F-71
<PAGE> 146

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

The following summary presents unaudited pro forma combined results of
operations as if the acquisition of Fair Lanes occurred at the beginning of
1994, and includes adjustments related to depreciation of fixed assets and
interest expense on debt assuming the initial purchase price allocation occurred
as of January 1, 1994. In addition, expenses related to the Chapter 11
reorganization have been eliminated. The pro forma results are for illustrative
purposes only, and do not purport to be indicative of the actual results which
would have occurred had the transaction been consummated as of January 1, 1994,
nor are they indicative of future results of operations. The pro forma results
do not reflect changes in the business which have occurred subsequent to the
date of acquisition.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1994
------------
<S> <C>
Operating revenue............................ $590,459
Operating income............................. 113,411
Income before income taxes................... 94,949
</TABLE>

F-72
<PAGE> 147

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

NOTE 15 -- STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
APRIL 30, 1996
------------------------------------------------------------------------------------------------
EQUITY
ADJUSTMENT
FROM FOREIGN TOTAL
ISSUED AND COMMON PAID IN RETAINED CURRENCY STOCKHOLDERS'
AUTHORIZED OUTSTANDING STOCK CAPITAL EARNINGS TRANSLATION OTHER EQUITY
---------- ------------ ------ -------- -------- ------------ ----- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AMF Bowling, Inc. ...... 10,000 950.6689 $ 1 $ 51,778 $15,639 $ 593 $-- $ 68,011
AMF Bowling Centers,
Inc. ................. 15,000 9,485.1000 9 183,780 8,825 -- -- 192,614
AMF Beverage Company of
Oregon, Inc........... 10,000 94.8510 -- -- -- -- -- --
King Louie Lenexa,
Inc. ................. 30,000 94.8510 -- -- -- -- -- --
AMF Catering Services
Pty Ltd. ............. 100,000 100,000.0000 82 -- -- -- -- 82
AMF Bowling Centers
(Aust) International,
Inc. ................. 10,000 948.5100 1 492 24,327 1,645 -- 26,465
AMF Bowling Centers
(Canada)
International,
Inc. ................. 10,000 948.5100 1 2,109 (1,238) 85 -- 957
AMF BCO - France One,
Inc. ................. 10,000 1,000.0000 1 220 533 (93) -- 661
AMF BCO - France Two,
Inc. ................. 10,000 1,000,0000 1 595 1,440 (250) -- 1,786
AMF Bowling Centers
(Hong Kong)
International,
Inc. ................. 10,000 948.5100 1 532 2,175 -- -- 2,708
AMF Bowling Centers
International, Inc. -
Japan................. 10,000 9,485.1000 10 1,210 4,446 505 -- 6,171
AMF Bowling Mexico
Holding, Inc. ........ 1,000 75.6972 322 1,856 2,563 (3,056) -- 1,685
Boliches AMF, Inc. ..... 10,000 100.0000 1 493 682 (814) -- 362
AMF Bowling Centers II
Inc. - Switzerland.... -- -- 205 171 -- 376
AMF BCO - U.K.
One, Inc. ............ 10,000 100.0000 1 1,597 (350) (86) -- 1,162
AMF BCO - U.K.
Two, Inc. ............ 10,000 100.0000 1 4,357 (956) (235) -- 3,167
AMF BCO - China,
Inc. ................. 10,000 1,000.0000 1 577 (159) (4) -- 415
AMF Bowling Centers
China, Inc. .......... 10,000 1,000.0000 1 2,174 (600) (13) -- 1,562
Bush River Corporation.. 100,000 18,895.1919 20 -- -- -- -- 20
Eliminations............ -- -- -- -- (5,230) -- -- (5,230)
---- -------- ------- -------- --- --------
Totals............................................. $454 $251,770 $52,302 $ (1,552) $-- $302,974
==== ======== ======= ======== === ========
</TABLE>

F-73
<PAGE> 148

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------------------------------------------------------------------------------
NOTES
RECEIVABLE TOTAL
ISSUED AND COMMON PAID IN RETAINED DEFERRED STOCK STOCKHOLDERS'
AUTHORIZED OUTSTANDING STOCK CAPITAL EARNINGS TRANSLATION SUBSCRIPTION EQUITY
---------- ----------- ------ ------- -------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AMF Bowling, Inc. ... 10,000 950.6689 $ 1 $28,213 $ 54,463 $ 593 $ -- $ 83,270
AMF Bowling Centers,
Inc. .............. 15,000 9,485.1000 9 29,122 13,436 -- (726) 41,841
AMF Beverage Company
of Oregon, Inc. ... 10,000 94.8510 -- -- 382 -- -- 382
King Louie Lenexa,
Inc. .............. 30,000 94.8510 -- -- 859 -- -- 859
AMF Bowling Centers
(Aust)
International,
Inc. .............. 10,000 948.5100 1 492 25,251 (74) (503) 25,167
AMF Bowling Centers
(Canada)
International,
Inc. .............. 10,000 948.5100 1 2,109 (1,286) 85 -- 909
AMF BCO - France One,
Inc. .............. 10,000 1,000.0000 1 31 681 (44) -- 669
AMF BCO - France Two,
Inc. .............. 10,000 1,000,0000 1 83 1,842 (119) -- 1,807
AMF Bowling Centers
(Hong Kong)
International,
Inc. .............. 10,000 948.5100 1 57 2,420 -- (62) 2,416
AMF Bowling Centers
International,
Inc. - Japan....... 10,000 9,485.1000 10 156 4,285 611 (170) 4,892
AMF Bowling Mexico
Holding, Inc. ..... 1,000 75.6972 1,507 226 2,753 (3,258) -- 1,228
Boliches AMF,
Inc. .............. 10,000 100.0000 1 60 814 (815) -- 60
AMF Bowling Centers
II Inc. -
Switzerland........ 1,000 100.0000 1 -- 617 61 -- 679
AMF BCO - U.K. One,
Inc. .............. 10,000 100.0000 1 129 (186) (113) -- (169)
AMF BCO - U.K. Two,
Inc. .............. 10,000 100.0000 1 352 (509) (310) -- (466)
AMF BCO - China,
Inc. .............. 10,000 1,000.0000 1 577 (97) (4) -- 477
AMF Bowling Centers
China, Inc. ....... 10,000 1,000.0000 1 2,174 (367) (13) -- 1,795
Bush River
Corporation........ 100,000 18,895.1919 -- -- 230 -- -- 230
Eliminations......... -- -- -- -- (4,508) -- -- (4,508)
------ ------- -------- ------- -------- --------
Totals......................................... $1,538 $63,781 $101,080 $(3,400) $ (1,461) $161,538
====== ======= ======== ======= ======== ========
</TABLE>

F-74
<PAGE> 149

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

NOTE 16 -- CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On February 16, 1996, the stockholders of the Combined Companies executed a
Stock Purchase Agreement, subject to certain closing conditions, to sell the
stock and certain assets of the individual companies to AMF Group Holdings,
Inc., through its subsidiaries. On May 1, 1996, the sale transaction was
completed.

In conjunction with the acquisition of the Combined Companies, AMF Bowling
Worldwide, Inc., a subsidiary of AMF Group Holdings, Inc. formerly named AMF
Group Inc., issued Senior Subordinated Notes and Senior Subordinated Discount
Notes on March 21, 1996. On May 1, 1996, AMF Bowling Worldwide, Inc., executed a
bank credit agreement and certain additional subsidiaries of AMF Bowling
Worldwide, Inc., became guarantors of the Senior Subordinated Notes and the
Senior Subordinated Discount Notes. These financing arrangements provide for
guarantees by the following companies which became indirect subsidiaries of AMF
Bowling Worldwide, Inc., which is the borrower and issuer of the notes
evidencing such indebtedness. Guarantor companies include the following:

- AMF Bowling Centers, Inc.

- Bush River Corporation

- King Louie Lenexa, Inc.

- AMF Beverage Company of Oregon, Inc.

- AMF Bowling, Inc.

- AMF Bowling Centers (Aust) International Inc.

- AMF Bowling Centers (Canada) International Inc.

- AMF BCO - France One, Inc.

- AMF BCO - France Two, Inc.

- AMF Bowling Centers (Hong Kong) International Inc.

- AMF Bowling Centers International Inc. (Japan)

- AMF Bowling Mexico Holding, Inc.

- Boliches AMF, Inc.

- AMF BCO - U.K. One, Inc.

- AMF BCO - U.K. Two, Inc.

- AMF BCO - China, Inc.

- AMF Bowling Centers China, Inc.

Included with the guarantor companies at April 30, 1996 are AMF Bowling
Centers Switzerland Inc. and AMF Bowling Centers Spain Inc., newly formed
subsidiaries of AMF Bowling Worldwide, Inc., which, respectively, purchased
assets of one bowling center and two bowling centers from AMF Bowling Centers
II, Inc. (Switzerland) and AMF Bowling S.A., former subsidiary of AMF Bowling
Mexico Holding, Inc.

F-75
<PAGE> 150

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

Included with the guarantor companies at December 31, 1995 and 1994 is AMF
Bowling Centers II, Inc. (Switzerland) which sold assets of one bowling center,
as discussed above, to a newly formed subsidiary of AMF Bowling Worldwide, Inc.,
which became a guarantor.

Non-guarantor companies at April 30, 1996 include the following foreign
subsidiaries of certain guarantor companies:

- AMF Bowling (Unlimited)

- Worthington North Properties Limited

- AMF Bowling France SNC

- AMF Bowling de Paris SNC

- AMF Bowling de Lyon La Part Dieu SNC

- Boliches y Compania

- Operadora Mexicana de Boliches, S.A.

- Promotora de Boliches, S.A. de C.V.

- Immeubles Obispado, S.A.

- Immeubles Minerva, S.A.

- Boliches Mexicano, S.A.

- AMF Bowling Centers (China) Company

- AMF Garden Hotel Bowling Center Company

Included in the non-guarantor companies at December 31, 1995 and 1994 is
AMF Bowling S.A. which sold assets of two bowling centers in Spain to a newly
formed subsidiary of AMF Bowling Worldwide, Inc., which became a guarantor
company.

The following condensed combining information presents:

- Condensed combining balance sheets as of April 30, 1996 and December 31,
1995 and the related condensed combining statements of operations and of
cash flows for the four months ended April 30, 1996 and the years ended
December 31, 1995 and 1994.

- Elimination entries necessary to combine the entities comprising the
Combined Companies.

F-76
<PAGE> 151

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

CONDENSED COMBINING BALANCE SHEETS
FOUR MONTHS ENDED APRIL 30, 1996

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................... $ 18,628 $ 3,285 $ -- $ 21,913
Accounts and notes receivable, net of allowance
for doubtful accounts....................... 32,316 1,571 -- 33,887
Accounts and notes receivable -- affiliates.... 2,463 380 (2,677) 166
Inventories.................................... 41,831 1,465 -- 43,296
Prepaid expenses and other..................... 4,856 1,257 -- 6,113
-------- ------- ------- --------
Total current assets................... 100,094 7,958 (2,677) 105,375
Property and equipment, net...................... 241,968 10,518 (942) 251,544
Investment in subsidiaries....................... 10,643 -- (10,643) --
Other assets..................................... 17,399 931 -- 18,330
-------- ------- ------- --------
Total assets........................... $370,104 $19,407 $(14,262) $375,249
======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................... $ 21,760 $ 1,910 $ -- $ 23,670
Book overdrafts................................ 5,724 -- -- 5,724
Accrued expenses and deposits.................. 32,185 2,731 -- 34,916
Accounts and notes payable -- affiliates....... 14 2,663 (2,677) --
Long-term debt, current portion................ 10 -- -- 10
Income taxes payable........................... 1,078 679 -- 1,757
-------- ------- ------- --------
Total current liabilities.............. 60,771 7,983 (2,677) 66,077
Long-term debt................................... 1,958 -- -- 1,958
Other liabilities................................ 2,811 -- -- 2,811
Deferred income taxes............................ 648 781 -- 1,429
-------- ------- ------- --------
Total liabilities...................... 66,188 8,764 (2,677) 72,275
-------- ------- ------- --------
Commitments and contingencies
Stockholders' equity:
Common stock................................... 454 3,940 (3,940) 454
Paid-in capital................................ 251,770 5,003 (5,003) 251,770
Retained earnings.............................. 53,244 6,247 (7,189) 52,302
Equity adjustment from foreign currency
translation................................. (1,552) (4,547) 4,547 (1,552)
-------- ------- ------- --------
Total stockholders' equity............. 303,916 10,643 (11,585) 302,974
-------- ------- ------- --------
Total liabilities and stockholders'
equity............................... $370,104 $19,407 $(14,262) $375,249
======== ======= ======= ========
</TABLE>

F-77
<PAGE> 152

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

CONDENSED COMBINING BALANCE SHEETS
YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 8,843 $ 889 $ -- $ 9,732
Accounts and notes receivable, net of
allowance for doubtful accounts........... 37,499 1,527 -- 39,026
Accounts and notes
receivable -- affiliates.................. 4,477 7,465 (7,963) 3,979
Inventories.................................. 38,042 1,779 -- 39,821
Prepaid expenses and other................... 3,944 1,238 -- 5,182
-------- ------- -------- --------
Total current assets................. 92,805 12,898 (7,963) 97,740
Notes receivable -- affiliates................. 22,941 -- -- 22,941
Property and equipment, net.................... 250,637 10,582 (1,495) 259,724
Other assets................................... 29,869 822 (10,718) 19,973
-------- ------- -------- --------
Total assets......................... $396,252 $24,302 $(20,176) $400,378
======== ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................. $ 22,313 $ 1,403 $ (75) $ 23,641
Book overdrafts.............................. 2,362 -- -- 2,362
Accrued expenses and deposits................ 28,203 2,125 -- 30,328
Accounts and notes payable -- affiliates..... 1,821 7,033 (6,865) 1,989
Long-term debt, current portion.............. 1,084 -- -- 1,084
Income taxes payable......................... 5,930 1,199 -- 7,129
-------- ------- -------- --------
Total current liabilities............ 61,713 11,760 (6,940) 66,533
Long-term debt................................. 19,550 -- -- 19,550
Notes payable -- affiliates.................... 146,639 1,076 (988) 146,727
Other liabilities.............................. 5,282 748 -- 6,030
-------- ------- -------- --------
Total liabilities.................... 233,184 13,584 (7,928) 238,840
-------- ------- -------- --------
Commitments and contingencies (Note 9)
Stockholders' equity:
Common stock................................. 1,538 3,941 (3,941) 1,538
Paid-in capital.............................. 63,781 4,153 (4,153) 63,781
Retained earnings............................ 102,610 7,300 (8,830) 101,080
Equity adjustment from foreign currency
translation............................... (3,400) (4,676) 4,676 (3,400)
Notes receivable stock subscription.......... (1,461) -- -- (1,461)
-------- ------- -------- --------
Total stockholders' equity........... 163,068 10,718 (12,248) 161,538
-------- ------- -------- --------
Total liabilities and stockholders'
equity............................. $396,252 $24,302 $(20,176) $400,378
======== ======= ======== ========
</TABLE>

F-78
<PAGE> 153

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

CONDENSED COMBINING STATEMENTS OF OPERATIONS
FOUR MONTHS ENDED APRIL 30, 1996

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Operating revenue:
Sales of products and services............... $154,500 $10,731 $ (860) $164,371
Revenue from operating lease activities...... 323 250 -- 573
-------- ------- ----- --------
Total operating revenues............. 154,823 10,981 (860) 164,944
-------- ------- ----- --------
Operating expenses:
Cost of goods sold, excluding depreciation of
$791...................................... 42,242 1,445 (569) 43,118
Bowling center operations.................... 71,289 8,985 (118) 80,156
Selling, general and administrative.......... 34,875 682 -- 35,557
Depreciation and amortization................ 14,380 802 (85) 15,097
-------- ------- ----- --------
Total operating expenses............. 162,786 11,914 (772) 173,928
-------- ------- ----- --------
Operating loss....................... (7,963) (933) (88) (8,984)
Nonoperating income (expenses):
Interest expense............................. (4,501) (3) -- (4,504)
Other expenses, net.......................... (634) (58) -- (692)
Interest income.............................. 574 37 -- 611
Equity in earnings of subsidiaries........... (707) -- 707 --
Foreign currency transaction gain (loss)..... (179) 150 -- (29)
-------- ------- ----- --------
Loss before income taxes....................... (13,410) (807) 619 (13,598)
Income tax benefit............................. 1,631 100 -- 1,731
-------- ------- ----- --------
Net loss............................. $(11,779) $ (707) $ 619 $(11,867)
======== ======= ===== ========
</TABLE>

F-79
<PAGE> 154

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

CONDENSED COMBINING STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
---------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
Operating revenues:
Sales of products and services............ $ 532,349 $ 34,197 $ (2,548) $563,998
Revenue from operating lease activities... 926 -- -- 926
-------- ------- ------- --------
Total operating revenues.......... 533,275 34,197 (2,548) 564,924
-------- ------- ------- --------
Operating expenses:
Cost of sales, excluding depreciation of
$2,531................................. 180,980 4,730 (1,581) 184,129
Bowling center operations................. 149,535 16,930 -- 166,465
Selling, general and administrative....... 47,218 4,046 (486) 50,778
Depreciation and amortization............. 36,723 2,650 (234) 39,139
-------- ------- ------- --------
Total operating expenses.......... 414,456 28,356 (2,301) 440,511
-------- ------- ------- --------
Operating income.................. 118,819 5,841 (247) 124,413
Nonoperating income (expenses):
Interest expense.......................... (15,569) (142) -- (15,711)
Other expenses, net....................... (600) (443) -- (1,043)
Interest income........................... 1,837 347 -- 2,184
Equity in earnings of subsidiaries........ 3,444 -- (3,444) --
Foreign currency transaction loss......... (465) (514) -- (979)
-------- ------- ------- --------
Income before income taxes.................. 107,466 5,089 (3,691) 108,864
Income tax expense.......................... 10,453 1,645 -- 12,098
-------- ------- ------- --------
Net income........................ $ 97,013 $ 3,444 $ (3,691) $ 96,766
======== ======= ======= ========
</TABLE>

F-80
<PAGE> 155

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

CONDENSED COMBINING STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
---------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
Operating revenues:
Sales of products and services............ $ 478,056 $ 40,930 $ (3,560) $515,426
Revenue from operating lease activities... 969 1,391 -- 2,360
-------- ------- ------- --------
Total operating revenues.......... 479,025 42,321 (3,560) 517,786
-------- ------- ------- --------
Operating expenses:
Cost of sales, excluding depreciation of
$1,691................................. 191,250 6,694 (1,901) 196,043
Bowling center operations................. 97,898 18,718 (1,469) 115,147
Selling, general and administrative....... 52,392 4,750 -- 57,142
Depreciation and amortization............. 21,606 3,343 (173) 24,776
-------- ------- ------- --------
Total operating expenses.......... 363,146 33,505 (3,543) 393,108
-------- ------- ------- --------
Operating income.................. 115,879 8,816 (17) 124,678
Nonoperating income (expenses):
Interest expense.......................... (7,164) (230) -- (7,394)
Other expenses, net....................... (1,188) -- -- (1,188)
Interest income........................... 231 295 -- 526
Equity in earnings of subsidiaries........ 5,179 -- (5,179) --
Foreign currency transaction loss......... (654) (213) -- (867)
-------- ------- ------- --------
Income before income taxes.................. 112,283 8,668 (5,196) 115,755
Income tax expense.......................... 12,963 3,489 -- 16,452
-------- ------- ------- --------
Net income........................ $ 99,320 $ 5,179 $ (5,196) $ 99,303
======== ======= ======= ========
</TABLE>

F-81
<PAGE> 156

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

CONDENSED COMBINING STATEMENTS OF CASH FLOWS
FOUR MONTHS ENDED APRIL 30, 1996

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................... $(11,072) $ (707) $ (88) $(11,867)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization............ 14,380 802 (85) 15,097
Deferred income taxes.................... 435 (21) -- 414
Equity in earnings of subsidiaries....... (707) -- 707 --
Changes in assets and liabilities:
Accounts and notes receivable, net..... 4,821 (37) -- 4,784
Receivables and
payables -- affiliates.............. 593 942 -- 1,535
Inventories............................ (3,655) 24 -- (3,631)
Other assets and liabilities........... (3,476) (34) 837 (2,673)
Accounts payable and accrued
expenses............................ 7,634 1,079 -- 8,713
Income taxes payable................... (5,442) (303) -- (5,745)
-------- ------- ------- --------
Net cash provided by operating
activities.......................... 3,511 1,745 1,371 6,627
-------- ------- ------- --------
Cash flows from investing activities:
Purchase of property and equipment.......... (6,046) (1,001) 173 (6,874)
Other....................................... 2,989 -- -- 2,989
-------- ------- ------- --------
Net cash used for investing
activities.......................... (3,057) (1,001) 173 (3,885)
-------- ------- ------- --------
Cash flows from financing activities:
Distributions to stockholders............... (36,721) (622) 622 (36,721)
Payment of long-term debt................... (3,812) -- -- (3,812)
Proceeds from notes payable -- stockholders,
net...................................... 1,236 -- -- 1,236
Capital contributions by stockholders....... 24,805 2,252 (2,252) 24,805
Collection of notes
receivable -- affiliates................. 19,408 -- -- 19,408
Other....................................... 3,902 -- 86 3,988
-------- ------- ------- --------
Net cash provided by financing
activities.......................... 8,818 1,630 (1,544) 8,904
Effect of exchange rates on cash and
cash equivalents.................... 330 205 -- 535
-------- ------- ------- --------
Net increase in cash and cash equivalents..... 9,602 2,579 -- 12,181
Cash and cash equivalents at beginning of
period...................................... 9,026 706 -- 9,732
-------- ------- ------- --------
Cash and cash equivalents at end of period.... $ 18,628 $ 3,285 $ -- $ 21,913
======== ======= ======= ========
</TABLE>

F-82
<PAGE> 157

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

CONDENSED COMBINING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income.................................. $ 97,013 $ 3,444 $ (3,691) $ 96,766
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in earnings of subsidiaries....... (3,444) -- 3,444 --
Dividends from non-guarantor companies... 3,133 -- (3,133) --
Depreciation and amortization............ 36,661 2,682 (204) 39,139
Deferred income taxes.................. 215 (1,045) -- (830)
Loss on sale of property and equipment,
net................................. 567 -- -- 567
Changes in assets and liabilities, net
of effects from companies acquired:
Accounts and notes receivable,
net............................... 11,864 (1,234) -- 10,630
Receivables and
payables -- affiliates............ 7,262 (1,115) -- 6,147
Inventories......................... (5,596) (400) -- (5,996)
Other assets and liabilities........ (2,484) (369) 2,752 (101)
Accounts payable and accrued
expenses.......................... (19,187) 446 -- (18,741)
Income taxes payable................ (2,039) (791) -- (2,830)
-------- ------- ------- --------
Net cash provided by operating
activities........................ 123,965 1,618 (832) 124,751
-------- ------- ------- --------
Cash flows from investing activities:
Purchase of property and equipment.......... (26,411) (4,005) 451 (29,965)
Proceeds from sales of property and
equipment................................ 494 916 -- 1,410
Other....................................... 229 -- -- 229
-------- ------- ------- --------
Net cash used for investing
activities........................ (25,688) (3,089) 451 (28,326)
-------- ------- ------- --------
Cash flows from financing activities:
Dividends to guarantor companies............ -- (3,133) 3,133 --
Payments on credit note agreements, net..... (11,057) -- -- (11,057)
Distributions to stockholders............... (71,851) -- -- (71,851)
Payment of long-term debt................... (10,605) 320 -- (10,285)
Payment for redemption of stock --.......... (3,960) -- -- (3,960)
stockholders, net........................ (4,882) 1,089 -- (3,793)
Capital contributions by stockholders....... 8,329 -- -- 8,329
Capital contributions from guarantor........ -- 2,752 (2,752) --
Other....................................... (2,056) -- -- (2,056)
-------- ------- ------- --------
Net cash (used for) provided by
financing activities.............. (96,082) 1,028 381 (94,673)
Effect of exchange rates on cash.... (5) (189) -- (194)
-------- ------- ------- --------
Net increase (decrease) in cash and cash
equivalents................................. 2,190 (632) -- 1,558
Cash at beginning of year..................... 6,653 1,521 -- 8,174
-------- ------- ------- --------
Cash at end of year........................... $ 8,843 $ 889 $ -- $ 9,732
======== ======= ======= ========
</TABLE>

F-83
<PAGE> 158

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

CONDENSED COMBINING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994

<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
-------- --------- ------------ --------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income.................................... $ 99,320 $ 5,179 $ (5,196) $ 99,303
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in earnings of subsidiaries............ (5,179) -- 5,179 --
Dividends from non-guarantor companies........ 5,084 -- (5,084) --
Depreciation and amortization................. 21,606 3,343 (173) 24,776
Deferred income taxes...................... (104) 85 -- (19)
Loss on sale of property and equipment,
net...................................... 911 -- -- 911
Changes in assets and liabilities, net of
effects from companies acquired:
Accounts and notes receivable, net....... (9,325) 311 -- (9,014)
Receivables and payables -- affiliates... 3,692 1,033 -- 4,725
Inventories.............................. (1,369) (42) -- (1,411)
Other assets............................. (864) (136) -- (1,000)
Accounts payable and accrued expenses.... 3,929 (91) -- 3,838
Income taxes payable..................... (3,207) 817 -- (2,390)
-------- ------- ------- --------
Net cash provided by operating
activities............................ 114,494 10,499 (5,274) 119,719
-------- ------- ------- --------
Cash flows from investing activities:
Acquisitions of operating units, net of cash
acquired................................... (17,307) -- -- (17,307)
Purchase of property and equipment............ (16,692) (1,286) 190 (17,788)
Proceeds from sales of property and
equipment.................................. 1,494 41 -- 1,535
Other......................................... 941 -- -- 941
-------- ------- ------- --------
Net cash used for investing
activities.......................... (31,564) (1,245) 190 (32,619)
-------- ------- ------- --------
Cash flows from financing activities:
Dividends to guarantor companies.............. -- (5,084) 5,084 --
Payments on credit note agreements, net....... (3,689) -- -- (3,689)
Distributions to stockholders................. (78,170) -- -- (78,170)
Payment of long-term debt..................... (740) (364) -- (1,104)
Proceeds (payments) on notes payable --
stockholders, net.......................... (4,989) (3,571) -- (8,560)
Capital contributions by stockholders......... 2,109 -- -- 2,109
Other......................................... (212) -- -- (212)
-------- ------- ------- --------
Net cash used for financing
activities.......................... (85,691) (9,019) 5,084 (89,626)
Effect of exchange rates on cash...... 2,488 271 -- 2,759
-------- ------- ------- --------
Net increase (decrease) in cash and cash
equivalents................................... (273) 506 -- 233
Cash at beginning of year....................... 6,926 1,015 -- 7,941
-------- ------- ------- --------
Cash at end of year............................. $ 6,653 $ 1,521 -- $ 8,174
======== ======= ======= ========
</TABLE>

F-84
<PAGE> 159

AMF BOWLING GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

NOTE 17 -- SUBSEQUENT EVENT (UNAUDITED)

On October 10, 1996, AMF Bowling Centers, Inc., completed the acquisition
of 50 bowling centers and certain related assets and liabilities from Charan
Industries, Inc. pursuant to an Asset Purchase Agreement, dated as of September
10, 1996.

The purchase was approximately $106,500, including certain adjustments and
transaction costs. It was funded with approximately $40,000 from the sale of
equity by AMF Group Holdings Inc., a wholly-owned subsidiary of AMF Holdings
Inc., to its institutional stockholders and one of its directors and with
$66,500 from available borrowing under the Company's Acquisition Facility.

The April 30, 1996 combined financial statements do not reflect any
adjustments or cost associated with the acquisition.

F-85
<PAGE> 160

AMF BOWLING, INC.
SELECTED QUARTERLY DATA (UNAUDITED)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
AMF BOWLING, INC.
--------------------
1997 QUARTERS ENDED MARCH 31 JUNE 30
- ---------------------------- --------- --------
<S> <C> <C>
Operating revenue........... $ 157.6 $160.5
Gross profit................ 119.5 112.4
Operating income............ 29.7 12.7
Income (loss) before income
taxes..................... 1.2 (17.6)
Net income.................. 0.1 (12.3)
Net income (loss) per
share..................... -- (0.29)
</TABLE>

<TABLE>
<CAPTION>
AMF BOWLING, INC.
PREDECESSOR COMPANY ---------------------------------------------------------
---------------------- PRO FORMA
ONE MONTH TWO MONTHS QUARTER
1996 QUARTERS ENDED MARCH 31 APRIL 30 JUNE 30 JUNE 30 SEPTEMBER 30 DECEMBER 31
- ---------------------------- -------- --------- ---------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Operating revenue........... $123.3 $ 41.6 $ 73.4 $ 114.8 $131.8 $ 179.6
Gross profit................ 92.6 29.2 49.9 78.9 86.8 117.6
Operating income (loss)..... 27.9 (36.9) 4.0 5.3 14.3 27.8
Income (loss) before income
taxes..................... 24.3 (37.9) (15.8) (18.1) (12.2) 0.7
Net income (loss)........... 21.6 (33.4) (11.9) (13.6) (5.3) (2.1)
Net income (loss) per
share..................... (0.31) (0.36) (0.14) (0.05)
</TABLE>

<TABLE>
<CAPTION>
PREDECESSOR COMPANY
-----------------------------------------------------
1995 QUARTERS ENDED MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
- ---------------------------- -------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Operating revenue........... $156.9 $ 138.3 $130.4 $ 139.3
Gross profit................ 109.4 90.6 84.6 96.2
Operating income............ 41.7 26.8 22.1 33.8
Income before income
taxes..................... 37.5 23.5 17.8 30.2
Net income.................. 34.2 19.7 14.9 27.9
</TABLE>

F-86
<PAGE> 161

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
AMF Bowling Centers, Inc.:

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of loss, of cash flows and of stockholder's
equity present fairly, in all material respects, the financial position of Fair
Lanes, Inc. (Debtor-in-Possession) and its subsidiaries at September 29, 1994
and June 30, 1994, and the results of their operations and their cash flows for
the three months ended September 29, 1994 and the year ended June 30, 1994, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of Fair Lanes' management. Our responsibility
is to express an opinion on these statements based on our audits. We conducted
our audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

For the period June 22, 1994 through September 29, 1994, Fair Lanes, Inc.
operated as a debtor-in-possession pursuant to Chapter 11 of the United States
Bankruptcy Code. On September 20, 1994, the creditors approved and the
Bankruptcy Court confirmed a plan or reorganization, with an effective date of
September 29, 1994, whereby Fair Lanes' Senior Secured Noteholders gained
ownership and voting control of the majority of Fair Lanes' common stock. As a
result of the change of control, Fair Lanes, Inc. will adjust the carrying
values of its assets and liabilities to their estimated fair values as of
September 30, 1994, taking into consideration the effects of the plan of
reorganization. The accompanying consolidated financial statements do not
reflect these adjustments and, accordingly, the carrying value of Fair Lanes,
Inc.'s assets and liabilities will change from those reported in the
accompanying consolidated balance sheet as of September 29, 1994, as disclosed
in Note 3.

As discussed in Note 12, Fair Lanes, Inc. adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," effective June 25, 1993.

PRICE WATERHOUSE LLP

Norfolk, Virginia
January 23, 1996

F-87
<PAGE> 162

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
SEPTEMBER 29, JUNE 30,
1994 1994
------------- --------
(SEE NOTE 3)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................... $ 3,419 $ 4,005
Receivables, net of allowance................................... 153 166
Inventories..................................................... 2,192 2,001
Prepaid expenses and other assets............................... 1,880 2,324
-------- --------
Total current assets......................................... 7,644 8,496
Property and equipment, net....................................... 178,002 179,860
Value of acquired leases, net..................................... 13,521 13,821
Other assets...................................................... 3,548 3,758
-------- --------
$ 202,715 $205,935
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Borrowings on line-of-credit.................................... $ 3,500 $ --
Current maturities of long-term debt and obligations under
capital leases............................................... 2,109 2,332
Accounts payable................................................ 8,223 6,242
Accrued expenses and other liabilities.......................... 9,334 7,026
-------- --------
Total current liabilities.................................... 23,166 15,600
-------- --------
Long-term liabilities:
Long-term debt, less current maturities......................... 12,924 13,135
Obligations under capital leases, less current maturities....... 7,189 7,414
Deferred income taxes........................................... -- 4,276
Other........................................................... 5,175 3,542
-------- --------
Total long-term liabilities.................................. 25,288 28,367
-------- --------
Liabilities subject to compromise under reorganization
proceedings..................................................... 151,975 151,975
-------- --------
Total liabilities............................................ 200,429 195,942
-------- --------
Commitments and contingencies
Stockholder's equity:
Common stock -- $.01 par value per share, 1,000 shares, issued
and outstanding.............................................. -- --
Additional paid-in capital...................................... 45,023 45,023
Accumulated deficit............................................. (45,739) (37,999)
Advances from Entertainment..................................... 3,002 2,969
-------- --------
Total stockholder's equity................................... 2,286 9,993
-------- --------
$ 202,715 $205,935
======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-88
<PAGE> 163

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF LOSS
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30,
1994 1994
------------- ----------
<S> <C> <C>
Operating revenue................................................. $ 19,376 $101,759
Operating expenses:
Cost of merchandise sold........................................ 2,032 10,321
Selling, general and administrative expenses.................... 25,425 94,049
----- ------
27,457 104,370
----- ------
Operating loss.......................................... (8,081) (2,611)
Interest expense.................................................. (2,654) (20,157)
Other income (expense), net....................................... 7 (2,918)
----- ------
Loss before reorganization costs, income tax benefit (provision)
and cumulative effect of accounting change................... (10,728) (25,686)
Reorganization costs.............................................. (1,288) (5,377)
----- ------
Loss before income tax benefit and cumulative effect of
accounting change............................................ (12,016) (31,063)
Income tax benefit................................................ 4,276 11,804
----- ------
Loss before cumulative effect of accounting change.............. (7,740) (19,259)
Cumulative effect of accounting change............................ -- 3,902
----- ------
Net loss................................................ $ (7,740) $(15,357)
===== ======
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-89
<PAGE> 164

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30,
1994 1994
------------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................................ $(7,740) $(15,357)
Adjustments to reconcile net loss to net cash used for operating
activities:
Depreciation and amortization................................ 3,583 15,026
Amortization of deferred charges............................. 32 754
Loss on disposal of assets................................... -- 2,632
Loss on equity investments................................... -- 1,132
Noncash reorganization costs................................. -- 3,618
Deferred income taxes........................................ (4,276) (11,914)
Cumulative effect of change in method of accounting for
income taxes................................................ -- (3,902)
Changes in assets and liabilities:
Decrease (increase) in receivables......................... 13 (68)
Increase in inventories.................................... (191) (387)
(Increase) decrease in prepaid expenses and other assets... 444 (902)
Increase (decrease) in accounts payable and accrued
expenses.................................................. 4,289 (5,695)
Accrued interest with respect to liabilities subject to
compromise................................................ 1,757 13,975
Other...................................................... (123) (86)
------- --------
Net cash used for operating activities.................. (2,212) (1,174)
------- --------
Cash flows from investing activities:
Purchases of property and equipment............................. (2,404) (5,453)
Proceeds from sales of property and equipment................... -- 6,534
Other........................................................... 1,156 435
------- --------
Net cash provided by (used for) investing activities.... (1,248) 1,516
------- --------
Cash flows from financing activities:
Proceeds from short-term borrowings............................. 3,500 6,000
Principal payments of indebtedness and obligations under capital
leases....................................................... (659) (8,757)
Dividends paid to Bowling....................................... -- (1,565)
Advances from Entertainment..................................... 33 5,380
Other........................................................... -- (101)
------- --------
Net cash provided by financing activities............... 2,874 957
------- --------
Net increase (decrease) in cash and cash equivalents.............. (586) 1,299
Cash and cash equivalents at beginning of year.................... 4,005 2,706
------- --------
Cash and cash equivalents at end of year.......................... $ 3,419 $ 4,005
======= ========
Cash paid during the period for:
Interest........................................................ $ 889 $ 11,602
======= ========
Income taxes.................................................... $ -- $ 110
======= ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-90
<PAGE> 165

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
ADDITIONAL ADVANCES TOTAL
PAID-IN ACCUMULATED (TO) FROM STOCKHOLDER'S
CAPITAL DEFICIT ENTERTAINMENT EQUITY
---------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Balance at June 24, 1993..................... $ 45,023 $ (21,077) $(2,411) $ 21,535
Net loss for the year ended June 30,
1994.................................... -- (15,357) -- (15,357)
Dividends.................................. -- (1,565) -- (1,565)
Advances from Entertainment, net........... -- -- 5,380 5,380
------- -------- ------- --------
Balance at June 30, 1994..................... 45,023 (37,999) 2,969 9,993
Net loss for the three months ended
September 29, 1994...................... -- (7,740) -- (7,740)
Advances from Entertainment................ -- -- 33 33
------- -------- ------- --------
Balance at September 29, 1994................ $ 45,023 $ (45,739) $ 3,002 $ 2,286
======= ======== ======= ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-91
<PAGE> 166

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS)

NOTE 1 -- BUSINESS

At September 29, 1994 and June 30, 1994, Fair Lanes, Inc.
(Debtor-in-Possession) and subsidiaries (Fair Lanes) operated 106 bowling
centers, containing 3,876 lanes, located in sixteen states and Puerto Rico.

Prior to Fair Lanes' emergence from bankruptcy, Fair Lanes was a
wholly-owned subsidiary of Fair Lanes Bowling, Inc. (Bowling), which was a
wholly-owned subsidiary of Fair Lanes Entertainment, Inc. (Debtor-in-Possession)
(Entertainment). Fair Lanes' assets represented substantially all of the
operating assets of Bowling and Entertainment. Effective with the emergence from
bankruptcy proceedings, Entertainment, Bowling and Fair Lanes, Inc. were merged
into one entity and a change in control occurred (see Notes 2 and 3).

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements have been prepared on the accrual
basis of accounting utilizing guidance provided by American Institute of
Certified Public Accountants' Statement of Position 90-7, "Financial Statements
by Entities in Reorganization Under the Bankruptcy Code" (SOP 90-7). On
September 29, 1994, in accordance with Fair Lanes' Plan of Reorganization (the
"Plan") dated July 15, 1994, control of the majority of Fair Lanes' common stock
transferred to the holders of Fair Lanes' Senior Secured Notes. The revaluation
of Fair Lanes' assets and liabilities as a result of this reorganization and
change in control has not been reflected in the accompanying consolidated
balance sheet as of September 29, 1994 (see Note 3).

The consolidated financial statements include the accounts of Fair Lanes
and all of its wholly-owned subsidiaries. All intercompany transactions have
been eliminated in consolidation.

Fair Lanes reports on a 52-53 week year ending on the last Thursday of
June. Fiscal year 1994 consisted of 53 weeks. The three-month period ended
September 29, 1994 consisted of 13 weeks.

USE OF ESTIMATES

CASH AND CASH EQUIVALENTS

Cash in excess of daily requirements is invested in marketable securities
consisting of commercial paper and bank repurchase agreements with maturities of
three months or less. Such investments are deemed to be cash equivalents for
purposes of the consolidated balance sheets and consolidated statements of cash
flows.

INVENTORIES

Inventories (principally food, beverage and pro shop merchandise) are
valued at the lower of cost or market with cost being determined by the first-in
first-out method.

F-92
<PAGE> 167

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation, including amortization of property under capital
leases, is provided by the straight-line method over the estimated useful lives
of the assets as follows:

<TABLE>
<CAPTION>
ASSETS CLASS USEFUL LIVES
------------------------------------------------- ------------------------
<S> <C>
Buildings........................................ 30-40 years
Machinery and equipment.......................... 4-20 years
Leasehold improvements and property under capital
leases......................................... Shorter of the estimated
useful lives or terms of
leases
</TABLE>

Additions and major improvements are capitalized and included in the
property accounts; the cost of routine maintenance and repairs is charged to
expense as incurred. Upon sale or other disposal of depreciable assets, the
related cost and accumulated depreciation and amortization are removed from the
accounts and any gain or loss is reflected in income.

VALUE OF ACQUIRED LEASES

Value of acquired leases result from purchase accounting adjustments
assigning values to favorable bowling center capital and operating lease
obligations and are being amortized over the remaining lives of the leases.
These leases have an average remaining life of approximately 10 years as of
September 29, 1994.

DEFERRED FINANCING COSTS

Costs incurred to obtain financing are deferred and amortized over the
lives of the related debt using the interest method. During the year ended June
30, 1994, Fair Lanes wrote off the unamortized deferred financing costs
associated with the Senior Secured Notes (see Note 9).

DEFERRED INCOME TAXES

At June 25, 1993, Fair Lanes adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No.
109), which required, among other things, a change from the deferred method to
the asset and liability method of accounting for deferred income taxes. Under
the asset and liability method, deferred income taxes are generally recognized
for temporary differences between the financial reporting basis and income tax
basis of assets and liabilities based on enacted tax rates expected to be in
effect when such amounts are realized or settled. The effects of changes in tax
laws or rates on deferred tax assets and liabilities are recognized in the
period that includes the enactment date.

Under the deferred method applied in prior periods, deferred income taxes
were recognized for income and expense items that were reported in different
periods for financial reporting and income tax purposes based on the tax rates
applicable in the period of the calculations and were not adjusted for
subsequent changes in tax laws or rates.

F-93
<PAGE> 168

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)

NOTE 3 -- REORGANIZATION PLAN AND LIQUIDITY

During the year ended June 30, 1994, Fair Lanes' cash resources were
insufficient to meet its debt service obligations with respect to the $138,000
of 11 7/8% Senior Secured Notes due August 15, 1997 (Senior Secured Notes).
Accordingly, management and the Board of Directors of Fair Lanes determined that
it was in the best interest of Fair Lanes to suspend interest payments on its
Senior Secured Notes commencing with the February 15, 1994 interest payment and
to pursue a negotiated restructuring of Fair Lanes' capital structure.

Management of Fair Lanes and committees representing certain Senior Secured
Noteholders of Fair Lanes and certain security holders of Entertainment agreed
in principle to support the Plan. On June 22, 1994 (Petition Date), Fair Lanes
and Entertainment filed a combined voluntary petition for relief under Chapter
11 of the federal bankruptcy laws in the United States Bankruptcy Court for the
District of Maryland, Baltimore Division (the Bankruptcy Court). Accordingly,
for the period June 22, 1994 through September 29, 1994, Fair Lanes was
operating as a Debtor-in-Possession under the jurisdiction of the Bankruptcy
Court. As a Debtor-in-Possession, Fair Lanes could not engage in transactions
outside the ordinary course of business without approval of the Bankruptcy
Court, after notice and hearing.

Liabilities subject to compromise in the accompanying consolidated balance
sheets represent Fair Lanes' liabilities as of the Petition Date subject to
adjustment in the reorganization process and consist of the Senior Secured Notes
of $138,000 and accrued interest thereon from August 16, 1993 to June 22, 1994
of $13,975. Fair Lanes defaulted on the February 15, 1994 interest payment and
stopped accruing interest on the Senior Secured Notes as of the Petition Date.
Under the contractual terms of the agreement, accrued interest on the Senior
Secured Notes at June 30, 1994 was $14,339. The Senior Secured Notes were issued
at a discount which was being amortized on the interest method over the term of
the loan. The unamortized discount at June 22, 1994 was approximately $444 and
was written off (see Note 9).

The Plan was approved by the creditors and confirmed by the Bankruptcy
Court on September 20, 1994 and was effective September 29, 1994. The confirmed
plan provided for the following:

CLAIMS OF THE FAIR LANES' SENIOR SECURED AND ENTERTAINMENT'S VARIABLE RATE AND
ZERO COUPON NOTEHOLDERS

The $138,000 of Senior Secured Notes were exchanged for a new issue of
$90,350 Senior Secured Notes (New Senior Secured Notes) and 94% of new Fair
Lanes' common stock. The New Senior Secured Notes bear interest at 9.5%.

Entertainment had $36,844 of variable rate notes and $7,375 of zero coupon
notes (accreted value) outstanding as of the Petition Date. Under the Plan, such
amounts were settled with the issuance of the remaining 6% of the new Fair
Lanes' common stock and warrants to purchase additional shares of the new Fair
Lanes' common stock. These warrants were not exercised and were subsequently
canceled.

OTHER GENERAL CLAIMS

Other obligations of Fair Lanes were to be settled in full. Substantially
all remaining liabilities were obligations of Fair Lanes' subsidiaries and
include trade debt, mortgage debt and capital lease obligations. Such
obligations were unaffected by the bankruptcy and the Plan.

F-94
<PAGE> 169

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)

COMMON STOCK

The common stockholders of Fair Lanes and Entertainment received no shares
in the new Fair Lanes stock. As part of the transaction, Entertainment and
Bowling were merged into Fair Lanes.

NEW SENIOR SECURED NOTES

The New Senior Secured Notes may be redeemed at any time on or after July
15, 1997 and prior to maturity (July 15, 2001) at the option of Fair Lanes,
either in whole or in part, at redemption prices defined in the Indenture,
together with interest accrued to the date of redemption. However, at any time
prior to July 15, 1997, Fair Lanes may redeem up to $30,000 of the initial
principal amount of the New Senior Secured Notes from the net proceeds of one or
more underwritten public offerings of equity securities of Fair Lanes, at a
redemption price equal to 108.5% of the principal amount thereof plus accrued
and unpaid interest to the redemption date, provided that at least $60,000 of
the principal amount of New Senior Secured Notes remain outstanding immediately
after the occurrence of any such redemption and that any such redemption occurs
within 60 days following the closing of any such public offering. In addition,
Fair Lanes may be required to offer to repurchase the New Senior Secured Notes
upon the occurrence of a "change of control" event as described in the
Indenture.

The New Senior Secured Notes are secured by a pledge of all of the
outstanding shares of capital stock of each of Fair Lanes' operating
subsidiaries and require semiannual interest payments in January and July of
each year. Interest began accruing on the New Senior Secured Notes from July 15,
1994 (date of Plan's filing) and is included from this date to September 29,
1994 in the accompanying consolidated statement of loss.

OTHER PLAN COMPONENTS

Upon the emergence of Fair Lanes from bankruptcy proceedings, an unrelated
third party acquired majority ownership of Fair Lanes' common stock through its
prior ownership of the 11 7/8% bonds. Shortly thereafter, this third party
obtained 100% ownership of Fair Lanes' stock in a transaction accounted for by
the purchase method as of September 30, 1994. The following table summarizes the
adjustments required to record the reorganization and change in control:

<TABLE>
<CAPTION>
DEBT FAIR VALUE
ACTUAL DISCHARGE ADJUSTMENTS PRO FORMA
-------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Current assets..................... $ 7,644 $ -- $ (2,715) $ 4,929
Property, plant and equipment,
net.............................. 178,002 -- (36,217) 141,785
Value of acquired leases, net...... 13,521 -- (2,180) 11,341
Other assets....................... 3,548 -- (2,246) 1,302
-------- -------- -------- --------
$202,715 $ -- $ (43,358) $ 159,357
======== ======== ======== ========
Current liabilities................ $ 23,166 $ -- $ 1,376 $ 24,542
Long-term debt..................... 172,088 (61,625) -- 110,463
Other long-term liabilities........ 5,175 -- 536 5,711
Stockholder's equity............... 2,286 61,625 (45,270) 18,641
-------- -------- -------- --------
$202,715 $ -- $ (43,358) $ 159,357
======== ======== ======== ========
</TABLE>

F-95
<PAGE> 170

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)

NOTE 4 -- PROPERTY AND EQUIPMENT

Property and equipment consist of the following at September 29, 1994 and
June 30, 1994.

<TABLE>
<CAPTION>
SEPTEMBER 29, JUNE 30,
1994 1994
------------- ---------
<S> <C> <C>
Land and improvements..................................... $ 53,630 $ 53,626
Buildings................................................. 98,130 97,645
Machinery and equipment................................... 62,461 61,210
Leasehold improvements.................................... 9,036 8,772
Leased property under capital leases 13,610 13,610
------------- --------
236,867 234,863
Less -- accumulated depreciation and amortization......... 58,865 55,003
------------- --------
$ 178,002 $ 179,860
============= ========
</TABLE>

Depreciation expense, including property under capital leases, was $3,209
and $13,865 for the three months ended September 29, 1994 and the year ended
June 30, 1994, respectively.

NOTE 5 -- ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consist of the following at
September 29, 1994 and June 30, 1994:

<TABLE>
<CAPTION>
SEPTEMBER 29, JUNE 30,
1994 1994
------------- --------
<S> <C> <C>
Insurance................................................... $ 1,547 $ 1,547
Payroll..................................................... 1,949 2,330
Property taxes.............................................. 2,040 1,489
Reorganization costs........................................ 2,280 1,293
Other....................................................... 1,518 367
------------- --------
$ 9,334 $ 7,026
============= ========
</TABLE>

NOTE 6 -- SHORT-TERM BORROWINGS

In July 1993, Fair Lanes obtained a $6,000 seasonal loan from a principal
vendor which was repaid in December 1993.

In August 1994, Fair Lanes entered into a $4,000 line of credit agreement
with a bank. Borrowings under the line bear interest at the bank's prime rate
plus 1% and are secured by certain equipment of Fair Lanes' subsidiaries.
Interest is payable monthly. Subsequent to September 29, 1994, this line of
credit was repaid in full.

F-96
<PAGE> 171

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)

NOTE 7 -- OTHER INDEBTEDNESS

Other long-term debt secured by mortgages on real property and equipment,
exclusive of capital lease obligations, consists of the following at September
29, 1994 and June 30, 1994:

<TABLE>
<CAPTION>
SEPTEMBER 29, JUNE 30,
1994 1994
------------- --------
<S> <C> <C>
9% to 9 3/4% to 1997-2002.................................. $ 3,839 $ 3,939
10% to 10 1/2% to 1998-2007................................ 1,482 1,501
11% to 11 3/4% to 1998-2000................................ 7,741 7,774
Other...................................................... 735 794
------- -------
13,797 14,008
Less current maturities.................................... 873 873
------- -------
$12,924 $ 13,135
======= =======
</TABLE>

Annual maturities of other long-term debt for each of the five fiscal years
subsequent to September 29, 1994 are as follows:

<TABLE>
<S> <C>
Nine months ending June 1995...................................... $ 667
Year ending June 1996............................................. 958
Year ending June 1997............................................. 1,043
Year ending June 1998............................................. 2,236
Year ending June 1999............................................. 4,990
Thereafter........................................................ 3,903
-------
$ 13,797
=======
</TABLE>

At September 29, 1994, the carrying value of property and equipment
securing mortgages on real property and equipment was approximately $31,800.

The estimated fair values of other long-term debt approximate the carrying
values.

NOTE 8 -- ADVANCES FROM ENTERTAINMENT

During fiscal 1994, Fair Lanes obtained approximately $5,380 in cash
advances from Entertainment which was used primarily for operating needs. The
payables reported in the consolidated balance sheets of $3,002 and $2,969 at
September 29, 1994 and June 30, 1994, respectively, are net of prior year
amounts advanced to Entertainment for costs paid by Fair Lanes on behalf of
Entertainment. The Plan, described in Note 3, did not provide for repayment of
the net advances from Entertainment, and Fair Lanes has reflected the net
advances as an addition to equity.

F-97
<PAGE> 172

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)

NOTE 9 -- REORGANIZATION COSTS

Reorganization costs for the three months ended September 29, 1994 and the
year ended June 30, 1994 consist of the following:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30,
1994 1994
------------- ----------
<S> <C> <C>
Professional fees................................. $ 1,288 $1,759
Write-off unamortized discount and deferred
financing costs associated with pre-petition
debt............................................ -- 3,618
------ ------
$ 1,288 $5,377
====== ======
</TABLE>

NOTE 10 -- COMMITMENTS

Fair Lanes occupies various premises subject to long-term leases. In
addition to minimum annual rentals, certain leases provide for additional rents
based on a percentage of sales in excess of specified amounts. The majority of
the leases require Fair Lanes to pay all real estate taxes and to maintain
adequate insurance coverage in addition to other terms that vary with the
individual leases.

In addition, Fair Lanes leases automatic scoring and computerized control
center equipment installed in certain bowling centers under capital lease
agreements, which expire on various dates during 1996 to 1999.

Future minimum lease payments under capital leases, noncancellable
operating leases and operating subleases are as follows at September 29, 1994:

<TABLE>
<CAPTION>
OPERATING
CAPITAL ---------------------
LEASES LEASES SUBLEASES
------- ------- ---------
<S> <C> <C> <C>
FISCAL YEAR
Nine months ending June 1995......................... $ 2,059 $ 2,227 $ 65
Year ending June 1996................................ 2,655 2,584 83
Year ending June 1997................................ 2,316 2,292 83
Year ending June 1998................................ 2,175 1,648 83
Year ending June 1999................................ 1,275 1,292 52
Thereafter........................................... 104 5,650 551
------- ------- ----
Total minimum lease payments......................... 10,584 $15,693 $ 917
======= ====
Less amount representing interest.................... (2,159)
-------
Obligations under capital leases................... $ 8,425
=======
</TABLE>

F-98
<PAGE> 173

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)

Accumulated depreciation and amortization includes accumulated amortization
of $7,241 and $6,809 on property leased under capital leases at September 29,
1994 and June 30, 1994, respectively.

Rent expense consists of the following:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30,
1994 1994
------------- ----------
<S> <C> <C>
Minimum rentals............................................. $ 732 $2,834
Contingent rentals.......................................... 254 2,002
Less sublease rentals....................................... (19) (74)
---- ------
$ 967 $4,762
==== ======
</TABLE>

NOTE 11 -- PENSION AND PROFIT SHARING PLANS

Fair Lanes had a defined benefit pension plan covering substantially all
employees. The benefits were based on years of service and the employees'
highest compensation during five consecutive years in the last 10 years of
employment. Fair Lanes' funding policy was to contribute annually the amount
that could be deducted for federal income tax purposes, assuming a 30-year
amortization of the unfunded accrued liability. Subsequent to the reorganization
of Fair Lanes, the defined benefit plan was frozen.

The following table sets forth the plan's funded status and the prepaid
pension cost included in the consolidated balance sheets at September 29, 1994
and June 30, 1994 based upon calculations made by consulting actuaries. Fair
Lanes obtains actuarial studies on an annual basis and an updated study for the
three months ended September 29, 1994 was not warranted.

<TABLE>
<S> <C>
Actuarial present value of obligations:
Accumulated benefit obligation including vested benefits of $7,339...... $ 7,537
----
Projected benefit obligation for services rendered to date................ $(8,597)
Plan assets at fair value, primarily listed stocks, corporate bonds and
U.S. government obligations............................................. 7,752
----
Plan assets (less than) in excess of projected benefit obligation......... (845)
Unrecognized prior service costs.......................................... (764)
Unrecognized net gain from past experience different from that assumed and
effect of changes in assumptions........................................ 1,757
----
Prepaid pension costs included in other assets $ 148
====
</TABLE>

F-99
<PAGE> 174

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)

Net periodic pension cost, as determined by consulting actuaries, included
the following for the year ended June 30, 1994. Pension expense for the three
months ended September 29, 1994 was estimated to be $94.

<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
1994
----------
<S> <C>
Service costs -- benefits earned during the period....................... $ 357
Interest cost on projected benefit obligation............................ 545
Actual return on plan assets............................................. 145
Net amortization and deferral............................................ (731)
----
$ 316
====
</TABLE>

The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation was 6.46% and 4.5% in 1994. The expected long-term
rate of return on assets was 8%.

Fair Lanes has a profit sharing plan which covers substantially all
employees with at least one year of service. Generally, contributions are made
at the discretion of the Board of Directors. No contributions were made by Fair
Lanes for the three months ended September 29, 1994 or the year ended June 30,
1994.

NOTE 12 -- INCOME TAXES

Fair Lanes files consolidated federal income tax returns with Entertainment
and prior to fiscal 1994 recorded its provision for federal income taxes for
financial reporting purposes in accordance with a tax allocation agreement with
Entertainment and Bowling. Such agreement provides that Fair Lanes will record
as expense its share of the federal income taxes payable by the consolidated
group in an amount that is based upon the ratio of the taxable income of Fair
Lanes and its subsidiaries to the taxable income of the consolidated group.

At June 25, 1993, Fair Lanes adopted the provisions of SFAS No. 109,
"Accounting for Income Taxes," which required Fair Lanes to record its income
tax provisions on a stand alone basis using the asset and liability method to
account for deferred income taxes. The cumulative effect of this change in
accounting method as of the date of adoption was to increase stockholder's
equity by $3,902. The change in accounting method required Fair Lanes to restate
the carrying values of assets acquired in prior business combinations by
increasing such values by approximately $18,000. The increase in carrying values
increased the loss before income tax benefit for the year ended June 30, 1994 by
$1,522 due to additional depreciation expense and a reduction of the gain on
sales of bowling centers. In addition, the change in accounting allowed Fair
Lanes to recognize a deferred income tax benefit of $11,914 related to the net
operating loss for the year ended June 30, 1994. Prior years' financial
statements were not restated to apply the provisions of SFAS No. 109.

F-100
<PAGE> 175

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)

The tax effect of temporary differences between the financial reporting basis
and income tax basis of assets and liabilities that are included in the net
deferred tax liability relate to the following:

<TABLE>
<CAPTION>
SEPTEMBER 29, JUNE 30,
1994 1994
------------- --------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward......................... $ 16,300 $ 13,400
Accrued interest and deferred financing costs........... 7,458 6,883
Obligations under long-term consulting and noncompete
agreements........................................... 1,100 1,053
Other................................................... 3,741 3,460
------ ------
Gross deferred tax assets....................... 28,599 24,796
Gross deferred tax asset valuation allowance............ (290) --
------ ------
Gross deferred tax assets, net.................. 28,309 24,796
------ ------
Deferred tax liabilities:
Property and equipment and leasehold interest, primarily
due to differences in basis from business
combinations and depreciation and amortization....... (27,898) (28,358)
Other................................................... (411) (714)
------ ------
Gross deferred tax liabilities....................... (28,309) (29,072)
------ ------
Net deferred tax liability........................... $ -- $ (4,276)
====== ======
</TABLE>

The income tax benefit for the three months ended September 29, 1994 and
the year ended June 30, 1994 differed from the amounts computed by applying the
U.S. federal income tax rate of 34% to loss before income taxes as a result of
the following:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30,
1994 1994
------------- ----------
<S> <C> <C>
Expected tax benefit...................................... $ 4,085 $ 10,561
(Increase) reduction income tax benefit resulting from:
State and local tax benefit, net of federal taxes....... 481 1,243
Change in deferred tax asset valuation allowance........ (290) --
------ -------
$ 4,276 $ 11,804
====== =======
</TABLE>

F-101
<PAGE> 176

FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)

The income tax benefit (provision) consists of the following:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30,
1994 1994
------------- ----------
<S> <C> <C>
Federal
Current................................................. $ -- $ --
Deferred................................................ 3,826 9,940
------ -------
3,826 9,940
------ -------
State
Current................................................. -- (110)
Deferred................................................ 450 1,974
------ -------
450 1,864
------ -------
$ 4,276 $ 11,804
====== =======
</TABLE>

The provisions for current state income taxes result from certain of Fair
Lanes' subsidiaries having taxable income in certain states. At June 30, 1994,
the consolidated group had a net operating loss carryforward available to reduce
future federal taxable income for income tax reporting purposes of approximately
$65,400, of which approximately $35,200 relates to Fair Lanes. Such amounts
expire in various amounts during the years 2002 to 2009. The Plan discussed in
Note 3 could have a significant effect on the amount and availability of net
operating loss carryforwards available to offset taxable income after the date
of the reorganization.

NOTE 13 -- OBLIGATIONS OF ENTERTAINMENT

In fiscal 1994, Fair Lanes distributed dividends to Bowling of $1,565.
Bowling distributed such amounts to Entertainment to enable it to pay interest
due on the variable rate notes.

NOTE 14 -- LITIGATION

Fair Lanes is subject to various lawsuits in the ordinary course of its
business, including employment-related matters. In the opinion of management,
none of the pending actions will have a material impact on Fair Lanes' financial
position or results of operations.

NOTE 15 -- BOWLING CENTER DISPOSITIONS

In the fourth quarter of fiscal 1993, Fair Lanes elected not to exercise
lease renewal options on two bowling centers. In the first quarter of fiscal
1994, Fair Lanes entered into a swap transaction in which it exchanged four
bowling centers in North Carolina for two bowling centers in each of Florida and
Texas. The swap transaction was accounted for at book value and, accordingly, no
gain or loss was recognized. Fair Lanes also sold four additional bowling
centers during the first quarter of fiscal 1994. The sale resulted in a loss of
$640 which is included in other income (expense), net in fiscal 1994.

F-102
<PAGE> 177

REPORT OF INDEPENDENT AUDITORS

Board of Directors
BCA & Affiliates

We have audited the accompanying balance sheet of BCA & Affiliates as of
August 31, 1996, and the related statement of income and cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of BCA & Affiliates as of
August 31, 1996, and the results of their operations and their cash flows for
the year then ended in conformity with generally accepted accounting principles.

Todres & Sheiffer

Westbury, New York
December 4, 1996

F-103
<PAGE> 178

BCA & AFFILIATES

BALANCE SHEET
AUGUST 31, 1996

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................... $ 598,000
Accounts receivable......................................................... 203,000
Inventories................................................................. 642,000
Prepaid expenses............................................................ 509,000
-----------
Total current assets................................................ 1,952,000
Property, plant and equipment -- net (Notes 1 and 2).......................... 42,892,000
Other assets (Note 8)......................................................... 613,000
-----------
$45,457,000
===========

LIABILITIES AND EXCESS OF ASSETS OVER LIABILITIES
Liabilities:
Current liabilities:
Accounts payable and accrued expenses.................................... $ 2,156,000
Current portion of long-term debt (Note 3)............................... 17,901,000
Bank line of credit (Note 4)............................................. 4,677,000
Capital lease obligation (Note 5)........................................ 811,000
-----------
Total current liabilities........................................... 25,545,000
Long-term liabilities:
Long-term debt (Note 3)..................................................... --
-----------
Total liabilities................................................... 25,545,000
Contingencies (Note 6)...................................................... --
Excess of assets over liabilities........................................... 19,912,000
-----------
$45,457,000
===========
</TABLE>

See notes to financial statements

F-104
<PAGE> 179

BCA & AFFILIATES

STATEMENT OF INCOME
YEAR ENDED AUGUST 31, 1996

<TABLE>
<S> <C>
Revenues:
Bowling..................................................................... $63,818,000
Other....................................................................... 178,000
-----------
Total revenues...................................................... 63,996,000
Cost of sales............................................................... 7,219,000
-----------
Gross profit........................................................ 56,777,000
-----------
Operating expenses:
Payroll and related costs................................................... 17,522,000
Parts and supplies.......................................................... 4,270,000
Repairs and maintenance..................................................... 1,301,000
Occupancy costs............................................................. 7,239,000
Promotional and marketing................................................... 4,531,000
Insurance and other costs................................................... 3,215,000
General and administrative -- home office................................... 6,146,000
Interest.................................................................... 2,003,000
-----------
Total operating expenses............................................ 46,227,000
-----------
Income before depreciation expense............................................ 10,550,000
Depreciation expense.......................................................... 7,093,000
-----------
Net income.......................................................... $ 3,457,000
===========
</TABLE>

See notes to financial statements

F-105
<PAGE> 180

BCA & AFFILIATES

STATEMENT OF CASH FLOWS
YEAR ENDED AUGUST 31, 1996

<TABLE>
<S> <C>
Cash Flows from Operating Activities:
Net income.................................................................. $ 3,457,000
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization............................................ 7,093,000
(Increase) decrease in:
Accounts receivable.................................................... 75,000
Inventories............................................................ (19,000)
Prepaid expenses....................................................... (51,000)
Other.................................................................. 55,000
Increase (decrease) in:
Accounts payable and accrued expenses.................................. (554,000)
-----------
Net cash from operating activities.......................................... 10,056,000
-----------
Cash Flows for Investing Activities:
Additions to property, plant and equipment, net............................. (4,997,000)
-----------
Net cash used for investing activities........................................ (4,997,000)
-----------
Cash flows for financing activities:
Principal payments on long-term debt........................................ (1,661,000)
Transfers to home office.................................................... (3,075,000)
-----------
Net cash used for financing activities...................................... (4,736,000)
-----------
Net increase in cash and cash equivalents..................................... 323,000
Cash and cash equivalents at beginning of year................................ 275,000
-----------
Cash and cash equivalents at end of year...................................... $ 598,000
===========
Supplemental Schedule of Cash Flow Information:
Cash paid during the year for:
Interest................................................................. $ 2,003,000
===========
Income taxes............................................................. $ 183,000
===========
</TABLE>

See notes to financial statements

F-106
<PAGE> 181

BCA & AFFILIATES

NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996

DESCRIPTION OF THE BUSINESS

ORGANIZATION

The financial statements of BCA and Affiliates (the "Company") consists of
the operations of 50 bowling centers, one golf course, and certain related
recreational activities. BCA is a division of Charan Industries, Inc. The
affiliates of BCA include two partnerships which are owned primarily by the
principal shareholders of Charan Industries, Inc.

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

The Company considers cash in the operating bank accounts, overnight
investments, and money market accounts to be cash and cash equivalents.

INVENTORIES

Inventories consists of food, liquor, and various bowling equipment at the
lower of cost (first-in, first-out method) or market.

PROPERTY, PLANT AND EQUIPMENT

Depreciation for financial reporting is computed using the straight-line
method over the estimated useful life of the asset beginning in the year of
acquisition. Accelerated methods are used for income tax reporting. When assets
are disposed of, the related costs and accumulated depreciation are removed from
the accounts and any gain or loss is reflected in income for the period. The
installment sales method for reporting gains is used where applicable.

LEASES

Leases which meet certain criteria are classified as capital leases, and
assets and liabilities are recorded at amounts equal to the lesser of the
present value of the minimum lease payments or the fair value of the leased
properties at the beginning of the lease term. Such assets are amortized evenly
over the related lease terms or their economic lives. Interest expense relating
to the lease liabilities is recorded to effect constant rates of interest over
the terms of the leases. Leases which do not meet such criteria are classified
as operating leases and the related rentals are charged to expense as incurred.

INCOME TAXES

On September 1, 1988 the Charan Industries, Inc. elected to be taxed under
the provisions of Subchapter "S" of the Internal Revenue Code. Under those
provisions, Charan Industries, Inc. is not subject to federal corporate income
taxes, other than on certain types of transactions. The stockholders are liable
for individual federal and state income taxes on their proportionate shares of
Charan's income. Accordingly, there is no provision for income taxes for BCA &
Affiliates.

ALLOCATION OF GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses of Charan Industries, Inc. (consisting
primarily of home office payroll costs, rent, professional fees, and general
insurance) are allocated to the company on the basis of revenues, which
approximate 90% of the total amount, unless the expenses are specifically
related to either bowling or non-bowling activities. Interest expense for the
term loan is

F-107
<PAGE> 182

BCA & AFFILIATES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

allocated to the Company on the basis of the proportional values of the
collateralized assets between non-bowling and bowling assets. All other interest
expense is specific to the bowling operation.

EXCESS OF ASSETS OVER LIABILITIES

The excess of assets over liabilities represents the net asset value of BCA
and Affiliates. Charan Industries, Inc. and two partnerships primarily owned by
the shareholders of Charan Industries, Inc., own the equity interests in BCA and
affiliates.

NOTE 2 -- PROPERTY, PLANT AND EQUIPMENT

The estimated useful lives of the various classes of fixed assets are as
follows:

<TABLE>
<S> <C>
Buildings and building improvements............................. 31.5 years
Bowling lanes and equipment..................................... 7 years
Pinspotter equipment............................................ 7 years
Restaurant and bar equipment.................................... 7 years
Furniture, fixtures and other equipment......................... 3-7 years
Leasehold improvements.......................................... 31.5 years
</TABLE>

Property, plant and equipment consists of the following:

<TABLE>
<S> <C>
Land........................................................ $ 5,072,000
Buildings................................................... 33,533,000
Bowling lanes/pinspotters................................... 23,574,000
Other equipment............................................. 43,187,000
------------
105,366,000
Less: Accumulated depreciation.............................. (62,474,000)
------------
$ 42,892,000
============
</TABLE>

Leased property under capital leases included in property, plant and
equipment is as follows:

<TABLE>
<S> <C>
Land and buildings -- bowling properties......................... $815,000
Less: accumulated amortization................................... 268,000
--------
$547,000
========
</TABLE>

NOTE 3 -- LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<S> <C>
Bowling properties:
various 7% - 10% debt instruments requiring monthly payments
of interest and principal maturing at various dates
through 2007............................................. $ 4,324,000
(A) Term loans:
Two term loans with independent banks. Bank prime rate
requiring quarterly payments through May, 2000........... 13,577,000
-----------
17,901,000
Less: Current portion of long-term debt....................... 17,901,000
-----------
Total............................................... $ 0
===========
</TABLE>

F-108
<PAGE> 183

BCA & AFFILIATES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The total long-term principal balance of $17,901,000 is classified as a
current liability since all debt attributable to bowling was repaid in October
1996. See Note 9 in connection with the sale of the Company.

(A) On May 27, 1993 Charan Industries, Inc. borrowed $35,500,000, the
proceeds of which were used for the refinancing of existing debt in the amount
of $28,675,000, with the balance used for working capital. The borrowing
consisted of two separate term loan agreements executed simultaneously with two
independent banking institutions. The principal amount of each term loan was
$23,000,000 and $12,500,000. The term notes require twenty-eight quarterly
principal payments the first of which was paid on August 31, 1993 with
succeeding quarterly installments due on the last day of each succeeding
November, February, and May thereafter until May 31, 2000 when the principal
amount of $14,200,000 shall be due and payable together with any remaining
interest. Interest is payable monthly at each bank's prime rate. The term notes
are secured by first mortgages upon certain assets. The loan agreements contain
covenants, that the Company maintain certain minimum requirements of net worth,
debt to equity ratio and certain other earnings and cash flow ratios. At August
31, 1996 the balance of $29,349,000 was allocated to BCA & Affiliates on the
basis of the collateralized assets pledged resulting in a balance outstanding to
the Company totaling $13,577,000.

NOTE 4 -- BANK LINE OF CREDIT

On May 27, 1993, Charan Industries, Inc. entered into a three-year
revolving credit agreement which enables the Company to borrow up to $5,000,000
through October 1996. Interest is payable monthly at the bank prime rate. The
note is secured by first mortgages on certain assets. The loan agreement
contains covenants requiring the Company to satisfy certain minimum requirements
of net worth, debt to equity, earnings and cash flow rates.

This facility was utilized to the extent of $4,677,000 for the year ended
August 31, 1996.

NOTE 5 -- LEASES

The Company is committed under a number of long-term leases expiring at
various dates through the year 2058. Certain operating leases contain provisions
for a percentage of gross sales to be paid as rent, should sales exceed an
agreed amount, otherwise base rents are to be paid. The agreements generally
require the payment of utilities, real estate taxes, insurance and repairs. The
following is a schedule of future minimum lease payments for all noncancellable
leases together with the present value of the net minimum lease payments for
capital leases.

<TABLE>
<CAPTION>
CAPITAL OPERATING
FISCAL YEAR LEASES LEASES
------------------------------------------------- ---------- ----------
<S> <C> <C>
1997............................................. $ 98,000 $1,220,000
1998............................................. 98,000 1,193,000
1999............................................. 98,000 1,138,000
2000............................................. 98,000 984,000
2001............................................. 98,000 444,000
2002 and thereafter.............................. 3,990,000 4,949,000
---------- ----------
Total minimum lease payments..................... 4,480,000 $9,928,000
==========
Less imputed interest............................ 3,669,000
----------
Present value of minimum lease payments.......... $ 811,000
==========
</TABLE>

F-109
<PAGE> 184

BCA & AFFILIATES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Total rent expense for the years ended August 31, 1996 amounted to
$1,785,000.

NOTE 6 -- CONTINGENCIES

The Company is involved in litigation on a number of matters and is subject
to certain claims which arise in the normal course of business, none of which,
in the opinion of management, is expected to have a materially adverse effect on
the Company's financial position.

NOTE 7 -- 401(K) RETIREMENT/PROFIT SHARING PLAN

In January 1991, Charan Industries, Inc. established a 401(K) Retirement
Profit Sharing Plan. The Board of Directors established a matching contribution
equal to a maximum of 50% of the first 2% of the employee contribution. The
profit sharing plan contribution is subject to annual determination and is not
mandatory.

NOTE 8 -- OTHER ASSETS

Other assets are as follows:

<TABLE>
<S> <C>
Non-compete agreements (net)..................................... $485,000
Mortgage acquisition costs (net)................................. 53,000
Other............................................................ 75,000
--------
$613,000
========
</TABLE>

Non-compete agreements and mortgage acquisition costs are shown net of
amortization.

NOTE 9 -- SUBSEQUENT EVENTS

All of the assets of the Company were sold to AMF Bowling Centers Inc. on
October 9, 1996, under the provisions of an asset purchase agreement dated
September 10, 1996. A portion of the proceeds of the sale were used by the
Company to satisfy its outstanding debt.

F-110
<PAGE> 185

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, AMF
Bowling has agreed to sell to each of the U.S. Underwriters named below, and
each of such U.S. Underwriters, for whom Goldman Sachs, Morgan Stanley & Co.
Incorporated, Cowen & Company and Schroder & Co. Inc. are acting as
representatives, has severally agreed to purchase from AMF Bowling the
respective number of shares of Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON
UNDERWRITER STOCK
---------------------------------------------------------------- ----------
<S> <C>
Goldman, Sachs & Co. ........................................... 1,728,000
Morgan Stanley & Co. Incorporated............................... 1,728,000
Cowen & Company................................................. 1,728,000
Schroder & Co. Inc.............................................. 1,728,000
CIBC Oppenheimer Corp. ......................................... 243,000
A.G. Edwards & Sons, Inc. ...................................... 243,000
EVEREN Securities, Inc. ........................................ 243,000
PaineWebber Incorporated........................................ 243,000
Salomon Brothers Inc............................................ 243,000
Smith Barney Inc. .............................................. 243,000
Wasserstein Perella Securities, Inc. ........................... 243,000
Wheat First Butcher Singer...................................... 243,000
Advest, Inc..................................................... 129,600
Dain Bosworth Incorporated...................................... 129,600
Davenport & Company LLC......................................... 129,600
Gruntal & Co., L.L.C. .......................................... 129,600
Interstate/Johnson Lane Corporation............................. 129,600
Jefferies & Company, Inc. ...................................... 129,600
Edward D. Jones & Co., L.P. .................................... 129,600
Ladenburg, Thalmann & Co. Inc. ................................. 129,600
McDonald & Company Securities, Inc. ............................ 129,600
Principal Financial Securities, Inc. ........................... 129,600
Raymond James & Associates, Inc. ............................... 129,600
Roney & Co., LLC................................................ 129,600
Scott & Stringfellow, Inc. ..................................... 129,600
Stephens Inc. .................................................. 129,600
Tucker Anthony Incorporated..................................... 129,600
----------
Total................................................. 10,800,000
==========
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.

The U.S. Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and in part to certain securities dealers at such
price less a concession of $.72 per share. The U.S. Underwriters may allow, and
such dealers may reallow, a concession not in excess of $.10 per share to
certain brokers and dealers. After the shares of Common Stock are released for
sale to the public, the offering price and other selling terms may from time to
time be varied by the representatives.

AMF Bowling has entered into an underwriting agreement (the "International
Underwriting Agreement") with the underwriters of the International Offering
(the "International Underwriters")

U-1
<PAGE> 186

providing for the concurrent offer and sale of 2,700,000 shares of Common Stock
in an international offering outside the United States. The offering price and
aggregate underwriting discounts and commissions per share for the two Offerings
are identical. The closing of the offering made hereby is a condition to the
closing of the International Offering, and vice versa. The representatives of
the International Underwriters are Goldman Sachs International, Morgan Stanley &
Co. International Limited, Cowen International L.P. and J. Henry Schroder & Co.
Limited.

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two Offerings, each of the
U.S. Underwriters named herein has agreed that, as a part of the distribution of
the shares offered hereby and subject to certain exceptions, it will offer, sell
or deliver the shares of Common Stock, directly or indirectly, only in the
United States of America (including the States and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction
(the "United States") and to U.S. persons, which term shall mean, for purposes
of this paragraph: (a) any individual who is a resident of the United States or
(b) any corporation, partnership or other entity organized in or under the laws
of the United States or any political subdivision thereof and whose office most
directly involved with the purchase is located in the United States. Each of the
International Underwriters has agreed pursuant to the Agreement Between that, as
a part of the distribution of the shares offered as a part of the International
Offering, and subject to certain exceptions, it will (i) not, directly or
indirectly, offer, sell or deliver shares of Common Stock (a) in the United
States or to any U.S. persons or (b) to any person who it believes intends to
reoffer, resell or deliver the shares in the United States or to any U.S.
persons, and (ii) cause any dealer to whom it may sell such shares at any
concession to agree to observe a similar restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price, less an amount not greater than the selling
concession.

AMF Bowling has granted the U.S. Underwriters an option exercisable for 30
days after the date of this Prospectus to purchase up to an aggregate of
1,620,000 additional shares of Common Stock solely to cover over-allotments, if
any. If the U.S. Underwriters exercise their over-allotment option, the U.S.
Underwriters have severally agreed, subject to certain conditions, to purchase
approximately the same percentage thereof that the number of shares to be
purchased by each of them, as shown in the foregoing table, bears to the
10,800,000 shares of Common Stock offered hereby. AMF Bowling has granted the
International Underwriters a similar option to purchase up to an aggregate of
405,000 additional shares of Common Stock.

AMF Bowling and certain of its existing stockholders (who in the aggregate
hold 44,005,000 shares of the Common Stock) have agreed that, during the period
beginning from the date of this Prospectus and continuing to and including the
date 180 days after the date of the Prospectus, they will not offer, sell,
contract to sell or otherwise dispose of any shares of Common Stock or any
securities of AMF Bowling (other than pursuant to employee stock option plans
existing, or on the conversion or exchange of convertible or exchangeable
securities outstanding, on the date of this Prospectus) which are substantially
similar to the shares of the Common Stock or which are convertible into or
exchangeable for shares of Common Stock or any securities which are
substantially similar to the shares of the Common Stock without the prior
written consent of the representatives, except for the shares of Common Stock
offered in connection with the concurrent U.S. and International Offerings.

Prior to this offering, there has been no public market for the shares. The
initial public offering price was negotiated among AMF Bowling and the
representatives of the U.S. Underwriters and the International Underwriters.
Among the factors considered in determining the initial public offering price of
the Common Stock, in addition to prevailing market conditions, were AMF
Bowling's historical performance, estimates of the business potential and
earnings prospects of AMF Bowling,

U-2
<PAGE> 187

an assessment of AMF Bowling's management and the consideration of the above
factors in relation to market valuation of companies in related businesses.

The Common Stock has been approved for listing on the NYSE under the symbol
"PIN" subject to official notice of issuance.

AMF Bowling has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act.

This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Common Stock, including shares initially sold in the
International Offering, to persons located in the United States.

In connection with the Offerings, the U.S. Underwriters may purchase and
sell the Common Stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the Offerings. Stabilizing
transactions consist of certain bids or purchases for the purpose of preventing
or retarding a decline in the market price of the Common Stock; and syndicate
short positions involve the sale by the U.S. Underwriters of a greater number of
shares of Common Stock than they are required to purchase from AMF Bowling in
the Offerings. The U.S. Underwriters also may impose a penalty bid, whereby
selling concessions allowed to syndicate members or other broker-dealers in
respect of the securities sold in the Offerings for their account may be
reclaimed by the syndicate if such shares of Common Stock are repurchased by the
syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Common Stock,
which may be higher than the price that might otherwise prevail in the open
market; and these activities, if commenced, may be discontinued at any time.
These transactions may be effected on the New York Stock Exchange, in the
over-the-counter market or otherwise.

Under Rule 2720 of the National Association of Securities Dealers, Inc.
(the "NASD"), AMF Bowling may be deemed an affiliate of Goldman Sachs. The
Offerings are being conducted in accordance with Rule 2720, which provides that,
among other things, when an NASD member participates in the underwriting of an
affiliate's equity securities, the initial public offering price can be no
higher than that recommended by a "qualified independent underwriter" meeting
certain standards. In accordance with this requirement, Morgan Stanley & Co.
Incorporated has served in such role and has recommended a price in compliance
with the requirements of Rule 2720. In connection with the Offerings, Morgan
Stanley & Co. Incorporated, in its role as qualified independent underwriter,
has performed due diligence investigations and reviewed and participated in the
preparation of this Prospectus and the Registration Statement of which this
Prospectus forms a part. In addition, the U.S. Underwriters may not confirm
sales to any discretionary account without the prior written approval of the
customer.

Richard A. Friedman and Terence M. O'Toole, each of whom is a Managing
Director of Goldman Sachs, and Peter M. Sacerdote, who is a limited partner of
The Goldman Sachs Group, L.P., are directors of AMF Bowling, and Mr. Friedman is
Chairman of AMF Bowling. See "Management" and "Certain Transactions".

At the request of the Company, the Underwriters have reserved for sale, at
the initial offering price, up to 85,000 shares offered hereby for directors,
officers and employees of the Company and certain other persons designated by
the Company. The number of shares of Common Stock available for sale to the
general public will be reduced to the extent such persons purchase such reserved
shares. Any reserved shares which are not so purchased will be offered by the
Underwriters to the general public on the same basis as the other shares offered
hereby.

U-3
<PAGE> 188

===============================================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 3
Forward-Looking Statements............. 3
Prospectus Summary..................... 5
Risk Factors........................... 13
Use of Proceeds........................ 18
Dividend Policy........................ 18
Capitalization......................... 19
Dilution............................... 20
Pro Forma Consolidated Financial
Statements........................... 21
Selected Financial Data................ 22
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 24
Business............................... 39
Management............................. 52
Principal Stockholders................. 60
Certain Transactions................... 64
Description of Capital Stock........... 65
Description of Certain Indebtedness.... 68
Shares Eligible for Future Sale........ 73
Validity of Shares..................... 75
Experts................................ 75
Index to Financial Statements.......... F-1
Underwriting........................... U-1
</TABLE>

THROUGH AND INCLUDING NOVEMBER 28, 1997 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
===============================================================================

===============================================================================

13,500,000 SHARES

AMF BOWLING, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)

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[AMF LOGO]

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GOLDMAN, SACHS & CO.

MORGAN STANLEY DEAN WITTER

COWEN & COMPANY

SCHRODER & CO. INC.

REPRESENTATIVES OF THE UNDERWRITERS

===============================================================================
<PAGE> 189
Description of Artwork for Purposes of the AMF Prospectus
---------------------------------------------------------

(Front Fold-Out Cover)

Artwork depicts (i) map of AMF bowling center locations (ii) the AMF logo and
(iii) people bowling.

(Back Cover Page)

Artwork depicts AMF logo and various AMF bowling products.