SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of the earliest event reported): July 29, 1997
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DISCOVERY ZONE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-21854 36-3877601
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(State or other jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification Number)
110 East Broward Boulevard 33301
Ft. Lauderdale, Florida ------------------------
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(Address of principal executive offices)
954-627-2400
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Registrant's telephone number, including area code
Page 1 of 4 -- Exhibit Index appears on Page 4
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Item 5. Other Events.
On July 29, 1997, the Third Amended Joint Plan of Reorganization
(the "Plan") of Discovery Zone, Inc. (the "Company") became effective. On July
29, 1997, the Company issued a press release announcing the Company's emergence
from bankruptcy. This press release stated, among other things, that all
securities of the Company that existed as of the bankruptcy petition date had
been extinguished or retired, as the case may be.
On July 31, 1997, in response to continued trading of the
common stock of the Company which was cancelled upon the effectiveness of the
Plan, the Company filed a subsequent press release. This press release
reiterated that all of the existing common stock of the Company was cancelled
and no longer had any value, and thus, no longer represented an economic or
beneficial interest in the Company.
Each of the July 29, 1997 press release and the July 31, 1997
press release is filed as an exhibit hereto and is incorporated by reference
herein.
Item 7. Financial Statements and Exhibits
The press release issued on July 29, 1997 and the press release
issued on July 31, 1997 are each incorporated by reference herein.
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3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
DISCOVERY ZONE, INC.
By: /s/ Robert G. Rooney
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Robert G. Rooney
Senior Vice President, Chief
Financial Officer and Secretary
Dated: August 4, 1997
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DISCOVERY ZONE, INC.
EXHIBIT INDEX
Number and
Description of Exhibit
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99.1 Press Release dated July 29, 1997
99.2 Press Release dated July 31, 1997
Exhibit 99.1
DISCOVERY ZONE EMERGES FROM CHAPTER 11 BANKRUPTCY
PROTECTION WITH $100 MILLION IN PRIVATE FINANCING
Management Team Focused on Upgrading Discovery Zone Experience
for Kids and Parents
July 29, 1997 -- Ft. Lauderdale, FL -- Discovery Zone ("DZ"), the
children's indoor entertainment company, emerged from Chapter 11 bankruptcy
protection today. With a new ownership group, led by the New York-based
investment firm Wellspring Associates L.L.C.; a new management team; and $100
million in private financing to implement its new business plan, Discovery Zone
is now poised to reclaim its position at the forefront of children's
entertainment.
As part of the reorganization plan, Wellspring Associates has
acquired majority control of Discovery Zone. A key component of Wellspring's
investment strategy involved recruiting a new senior management team led by
president and chief executive officer Scott Bernstein, a former senior executive
of Six Flags Theme Parks Inc. and Time Warner Inc. In addition, Robert Rooney
was appointed chief financial and administrative officer and Sharon Rothstein
was named senior vice president of marketing and entertainment. All senior
managers share a background in family entertainment, marketing and turnaround
expertise (see bios attached).
"Our goal is to reposition Discovery Zone from an indoor
playground facility to a fresh, exciting, entertainment venue for kids and
families. The new DZ will provide a wide variety of entertainment offerings and
attractions that will encourage kids and their parents to return again and again
for a different experience each time," said Scott Bernstein.
After having secured exit financing, the next and most important
step in the turnaround process is the revitalization of the FunCenter product,
according to Bernstein, who plans to broaden the entertainment offerings,
initiate strategic advertising and promotional alliances with
nationally-recognized properties and offer branded, high-quality food. With its
national network of FunCenters and strong brand name, Discovery Zone is uniquely
positioned to act as a platform for its promotional partners to market and
advertise their products.
In keeping with this strategy, Discovery Zone has already secured
long-term agreements with Pizza Hut and Pepsi to engage in joint promotions and
provide branded food service for Discovery Zone. DZ has also created promotional
alliances with Hasbro's Nerf, Toys R Us, the World Wrestling Federation and New
Line Cinema.
In addition to introducing unique, frequently changing
entertainment experiences
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and establishing a theme-based, seasonal promotional schedule, Discovery Zone
plans to upgrade the Fun Center experience by investing $20 million through the
end of 1997. Bernstein continues, "We are also developing additional weekday
programming targeted towards toddlers and their parents (slated to roll out in
September), to increase our Monday through Friday business."
Once the revitalization phase of the turnaround plan is complete,
Discovery Zone will set its sights on expansion. "Right now, our focus is on
re-launching the brand as a family attraction and delivering a high-quality,
high-value entertainment experience," Bernstein concludes.
Pursuant to the plan of reorganization, all securities of
Discovery Zone that existed as of the bankruptcy petition date have been
extinguished or retired, as the case may be. The securities offered in the
private financing have not been registered under the Securities Act of 1933, as
amended, and may not be offered or sold in the United States absent registration
or an applicable exemption from registration requirements.
Wellspring Associates L.L.C. is a private equity investment firm
focused on acquiring and revitalizing companies that typically have experienced
operational or financial difficulties. In addition to Discovery Zone, Wellspring
has investments in Lionel L.L.C., the world's leading manufacturer of model and
toy trains, and SLM International, Inc., a leading manufacturer of ice and
roller hockey products, primarily marketed under the CCM brand name.
Discovery Zone is the leading owner and operator of children's
entertainment centers in North America with 208 locations across the United
States, Canada and Puerto Rico. Discovery Zone features soft-play areas,
exciting activities and a variety of participatory games and attractions where
children two through eleven years old can play at their own skill level.
Discovery Zone...where kidz wanna be.
# # #
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SCOTT W. BERNSTEIN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Scott W. Bernstein became president and chief executive officer of Discovery
Zone in December, 1996. He was brought in by Wellspring Associates L.L.C. in
June of 1996 to assist with the formulation of Discovery Zone's reorganization
plan and to develop a new business plan for the company.
Mr. Bernstein's mission is to lead a company turnaround by revitalizing the
brand in the minds of consumers and repositioning the national network of
Discovery Zone FunCenters from indoor playground facilities to exciting,
entertainment venues for kids and families.
Mr. Bernstein has extensive experience in the family entertainment business,
having served in senior executive positions at Time Warner (currently the
largest entertainment company in the world) and Six Flags Theme Parks Inc. (the
number two theme park company in the United States and the nation's largest
regional theme park company).
Former positions include: president of Six Flags' Northeast operations, where
Mr. Bernstein led a turnaround of the New Jersey entertainment complex to become
the most visited regional theme park in North America; senior vice president and
chief administrative and legal officer of the Six Flags theme park chain; and
senior vice president of Time Warner Enterprises, a strategic and business
development unit of Time Warner.
Mr. Bernstein graduated Cornell University with a Bachelor of Science degree. He
also has a J.D. degree from Fordham University.
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ROBERT G. ROONEY
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL & ADMINISTRATIVE OFFICER
Mr. Rooney, senior vice president, chief financial and administrative officer,
joined Discovery Zone in December, 1996.
Mr. Rooney has 11 years experience as a senior financial executive, having most
recently served as senior vice president and chief financial officer of Victory
Capital L.L.C., a venture capital group (formerly known as Forschner
Enterprises, Inc.) and as managing director and chief financial officer of The
Signature Group, a merchant banking group specializing in troubled real estate.
Mr. Rooney also served as senior vice president, chief financial officer and
treasurer of Imagine Films Entertainment, Inc., a publicly-held film and
television production company, from 1986 through December, 1989. Prior to that,
Mr. Rooney had nine years of audit experience at Ernst & Young.
He graduated from St. John's University with a Bachelor of Science Degree in
Accounting.
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SHARON ROTHSTEIN
SENIOR VICE PRESIDENT
MARKETING & ENTERTAINMENT
Sharon Rothstein joined Discovery Zone as senior vice president and marketing
and entertainment in March, 1997.
Ms. Rothstein will lead Discovery Zone's marketing functions, as well as the
development of various entertainment products. Her mission is to reposition the
Discovery Zone brand from an indoor playground facility to a children's
entertainment venue.
Ms. Rothstein has over 13 years experience in consumer packaged goods marketing,
with a focus on new product introductions and brand revitalization. She joined
Nabisco Biscuit Company in 1987 as product manager. During her tenure, Ms.
Rothstein was responsible for successfully directing such brands as Ritz, Chips
Ahoy! and Oreos. She also spearheaded the launch of SnackWell's, for which she
was named one of Advertising Age's Top 100 Marketers and was honored by Food and
Beverage Marketing Magazine with a Best New Product award.
In 1996, Ms. Rothstein was promoted to vice president, new business. Leading a
newly-formed group, she was instrumental in developing the company's long-range
new business plan, identifying key consumer trends and several new snack
platforms outside Nabisco's current business.
She began her career with The Procter & Gamble Company in Toronto, Canada. Ms.
Rothstein graduated from the University of British Columbia, Vancouver, Canada
with an Honors Bachelor of Commerce Degree. She received her MBA from The
Anderson School, University of California at Los Angeles.
# # #
Exhibit 99.2
DISCOVERY ZONE ANSWERS QUESTIONS SURROUNDING
TRADING OF OLD COMMON (ZONEQ) STOCK
On July 18, 1997, the Third Amended Joint Plan of Reorganization
(the "Plan") of Discovery Zone (R), Inc. (the "Company") was confirmed by the
United States Bankruptcy Court for the District of Delaware and on July 29,
1997, the Plan became effective. Pursuant to the Plan, all of the existing
Common Stock of the Company was cancelled and no longer has any value.
Accordingly, the old Common Stock (ZONEQ) no longer represents an economic or
beneficial interest in the Company.
Discovery Zone is the leading owner and operator of children's
entertainment centers in North America with 208 locations across the United
States, Canada and Puerto Rico. Discovery Zone features soft-play areas,
exciting activities and a variety of participatory games and attractions where
children two through eleven years old can play at their own skill level.
Discovery Zone. . .where kidz wanna be.
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