<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 1999
--------------
MALIBU ENTERTAINMENT WORLDWIDE, INC.
717 North Harwood, Suite 1650
Dallas, Texas 75201
(214) 210-8701
--------------
Incorporated in Georgia SEC File No.: 0-22458 IRS Employer Id.
No.: 58-1949379
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The Company (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months and (2) has been subject to such filing requirements for the past 90
days.
At August 11, 1999, 52,508,625 shares of the Company's Common Stock
were outstanding.
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<PAGE> 2
MALIBU ENTERTAINMENT WORLDWIDE, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
1999 DECEMBER 31,
(UNAUDITED) 1998
-------------- --------------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents $ 93,035 $ 237,336
Restricted cash 1,769,193 1,388,396
Inventories 1,325,998 1,153,923
Current portion of notes receivable 33,727 17,000
Assets held for sale 1,073,000 1,615,217
Prepaid expenses 1,207,759 1,007,459
------------- -------------
Total current assets 5,502,712 5,419,331
------------- -------------
Property and equipment, less accumulated depreciation 107,311,429 108,843,304
------------- -------------
Other noncurrent
Investments in and advances to limited partnerships 332,977 335,836
Notes receivable -- 26,405
Other assets 158,854 154,965
Debt issuance costs, less accumulated amortization 1,100,788 1,655,784
Intangible assets, less accumulated amortization 973,908 995,365
------------- -------------
Total other noncurrent assets 2,566,527 3,168,355
------------- -------------
$ 115,380,668 $ 117,430,990
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of notes payable $ 22,107,104 $ 22,182,802
Current portion of notes payable to shareholder 8,000,000 8,000,000
Accounts payable 2,070,477 4,249,065
Accrued expenses 10,332,778 9,406,008
Accrued expenses related to assets held for sale 673,630 812,152
------------- -------------
Total current liabilities 43,183,989 44,650,027
Line of credit 7,500,000 7,500,000
Term loan revolver 9,809,080 10,000,000
Notes payable to shareholder 63,614,967 57,809,603
Notes payable 2,609,889 3,012,691
Accrued interest due to shareholder 8,419,659 5,394,524
Other accrued expenses 1,685,810 1,785,811
------------- -------------
Total liabilities 136,823,394 130,152,656
------------- -------------
Commitments and contingencies
Shareholders' equity
Preferred stock, 6,000,000 shares authorized with no par value
Series AA, 5,000 shares authorized; none outstanding
Series BB, 5,000 shares authorized; none outstanding
Series CC, 5,000 shares authorized; none outstanding
Series F, 2,700,000 shares authorized; none outstanding
Series G, 213,551 shares authorized; none outstanding
Common stock, 100,000,000 shares authorized with no par
value; 46,508,625 shares issued and outstanding 136,577,850 136,386,360
Outstanding warrants 1,974,600 1,974,600
Accumulated deficit (159,995,176) (151,082,626)
------------- -------------
Total shareholders' equity (21,442,726) (12,721,666)
------------- -------------
$ 115,380,668 $ 117,430,990
============= =============
</TABLE>
<PAGE> 3
MALIBU ENTERTAINMENT WORLDWIDE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Entertainment revenue $12,346,498 $14,012,925 $ 20,765,718 $ 23,143,292
----------- ----------- ------------ ------------
OPERATING EXPENSES
Entertainment expenses 9,362,953 11,580,120 17,206,669 21,195,427
General and administrative expenses 1,433,008 1,805,174 2,643,391 3,564,504
Other expenses 93,423 224,078 186,261 355,906
Depreciation and amortization 2,067,208 2,504,348 4,114,495 4,958,193
----------- ----------- ------------ ------------
Total operating expenses 12,956,592 16,113,720 24,150,816 30,074,030
----------- ----------- ------------ ------------
Operating loss (610,094) (2,100,795) (3,385,098) (6,930,738)
OTHER (EXPENSE) INCOME
Interest expense (2,915,119) (2,989,153) (5,612,410) (5,975,907)
Interest income 7,628 144,694 17,324 278,914
Other, net (72,047) (6,661) 67,634 39,390
----------- ----------- ------------ ------------
Net loss $(3,589,632) $(4,951,915) $ (8,912,550) $(12,588,341)
=========== =========== ============ ============
Basic and diluted loss per share of common stock $ (0.08) $ (0.10) $ (0.19) $ (0.26)
=========== =========== ============ ============
Weighted average number of shares of
common stock used in calculating
net loss per share 46,508,625 48,483,386 46,508,625 48,483,386
=========== =========== ============ ===========
</TABLE>
<PAGE> 4
MALIBU ENTERTAINMENT WORLDWIDE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
1999 1998
----------- -------------
<S> <C> <C>
Operating activities:
Net loss $(8,912,550) $(12,588,341)
Adjustments to reconcile net loss to
net cash used by operating activities
Depreciation and amortization 4,114,495 4,958,193
Interest expense associated with amortization of loan costs 691,215 657,451
Non-cash compensation expense 191,490
Gain on sale of property and equipment (71,764) (36,868)
Changes in assets and liabilities
(Increase) decrease in inventories (172,075) 42,993
Increase in prepaid expenses and other assets (204,189) (1,048,965)
Increase in debt issuance costs
and intangible assets (136,219) (8,174)
Decrease in accounts payable (2,178,588) (1,017,947)
Increase in accrued expenses 826,769 867,510
Increase in accrued interest due shareholder 3,025,135 2,053,111
Decrease in accrued expenses related to assets
held for sale (138,522) (1,497,981)
----------- ------------
Cash used by operating activities (2,964,803) (7,619,018)
----------- ------------
Investing activities:
Purchases of property and equipment (2,847,630) (5,009,596)
Proceeds from sale of property and equipment 900,448 1,494,020
Principal receipts under notes receivable 9,678 7,365
Increase in investments in and advances to
limited partnerships 2,859 (62,890)
Increase in restricted cash (380,797) (178,085)
----------- ------------
Cash used in investing activities (2,315,442) (3,749,186)
----------- ------------
Financing activities:
Proceeds from borrowings 5,805,364 8,061,698
Payments of borrowings (669,420) (497,720)
Issuance of common stock -- 395,000
Increase in interest receivable on notes receivable from employees -- (207,260)
----------- ------------
Cash provided by financing activities 5,135,944 7,751,718
----------- ------------
Decrease in cash and cash equivalents (144,301) (3,616,486)
Cash and cash equivalents, beginning of period 237,336 5,270,843
----------- ------------
Cash and cash equivalents, end of period $ 93,035 $ 1,654,357
=========== ============
Cash Paid for Interest $ 1,060,665 $ 1,654,357
=========== ============
</TABLE>
<PAGE> 5
MALIBU ENTERTAINMENT WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, the
accompanying consolidated financial statements include all adjustments
necessary to present fairly, in all material respects, the consolidated
financial position and results of operations of the Company and its
subsidiaries as of the dates and for the periods presented. The Company's
business is seasonal in nature. Operating results for the six-month period
ended June 30, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's report on Form 10-K
for the year ended December 31, 1998.
2. SUBSEQUENT EVENT - THE RECAPITALIZATION
On July 20, the Company completed its previously announced
recapitalization and the land sale and leaseback transaction (together, the
"Recapitalization") relating to its Willowbrook, Texas and Puente Hills,
California entertainment parks(the "Sale and Leaseback").
The principal components of the Recapitalization were as follows:
o Repayment of $11.4 million to one of the Company's principal
lenders. $9.1 of the $11.4 million came from the
proceeds of the Sale and Leaseback with the balance being
provided by an entity related to the Company's largest
shareholder.
o This lender, the holder of $21.4 million of secured debt of a
subsidiary of the Company and $21 million of other indebtedness
advanced through the Company's largest shareholder as an
accommodation to the Company, exchanged $33 million of debt
(including $2 million of accrued interest) for non-convertible
preferred stock of the Company. The lender also received 6
million of the Company's common shares and, if the Company has
not redeemed the non-convertible preferred stock by December 31,
2000, the lender will be entitled to an additional 2 million of
the Company's common shares plus 4 million of common shares from
the Company's largest shareholder.
<PAGE> 6
o A $500,000 per month principal amortization payment under the
Company's debt to it's next largest lender that would have been
payable had the recapitalization not been completed has been
eliminated.
o $50 million of debt (including $8 million of accrued interest)
to the Company's largest shareholder was converted into
preferred stock of the Company that is convertible into Company
common stock at any time at $2.50 per common share. In addition,
$12 million of debt (including $400,000 of accrued interest) to
an entity related to the Company's largest shareholder was
converted into preferred stock of the Company which is
convertible into Company common stock at any time after
September 30, 2000 at a per common share price of the lower of
$2.50 or 120% of market at the time of conversion. This
convertible preferred stock has the right to vote with the
Company common stock on a "as converted" basis.
Giving effect to the Recapitalization, the Company's total indebtedness
was reduced by $106.4 million (including accrued interest) to $20.6 million and
the Company's shareholder's equity was increased from negative $21.0 million to
positive $71.6 million.
3. NOTES PAYABLE TO SHAREHOLDER
During the six months ended June 30, 1999, the Company increased its
outstanding borrowings from the Company's largest shareholder and a related
entity, by $5.8 million (plus accrued interest of $3.0 million).
As a result of the Recapitalization described in Note 1, all borrowings
from the Company's largest shareholder, MEI Holdings and the related entities
have been eliminated.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Recent Developments; Pro Forma Financial Information
On July 20, the Company completed the Recapitalization. The basic terms
of the Recapitalization are described in Note 1 of Notes to the Company's
consolidated financial statements appearing in Item 1 of this Report.
Giving effect to the Recapitalization, as of July 31, 1999, the
Company's total indebtedness was reduced by $106.4 million (including accrued
interest) to $20.6 million and the Company's shareholder's equity increased from
negative $21.4 million to positive $71.6 million.
The selected unaudited pro forma balance sheet information below gives
effect to the Recapitalization as if it had occurred on June 30, 1999 and the
selected unaudited pro forma income statement information gives effect to the
Recapitalization as if it had occurred on January 1, 1999. The pro forma
financial information does not purport to represent what the financial position
or results of operations of the Company would actually have been had the
Recapitalization in fact occurred as of those dates, or to project the financial
position of the Company for any future period or date.
<PAGE> 8
SELECTED UNAUDITED BALANCE SHEET INFORMATION
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
------------- -------------
<S> <C> <C>
ASSETS
Current assets $ 5,502,712 $ 5,502,712
Fixed assets 107,311,429 98,438,487
Other assets 2,566,527 2,232,978
------------- -------------
Total assets $ 115,380,668 $ 106,174,177
============= =============
LIABILITIES & EQUITY
Current debt $ 30,107,104 $ 716,729
Accounts payable 2,070,477 2,070,477
Accrued expenses 11,006,408 9,650,400
------------- -------------
43,183,989 12,437,606
LONG-TERM LIABILITIES
Line of credit 7,500,000 7,500,000
Term loan revolver 9,809,080 9,809,080
Notes payable to shareholder 63,614,967 --
Notes payable 2,609,889 2,609,889
Accrued interest due shareholder 8,419,659 --
Deferred gain on sale/leaseback -- 567,653
Other accrued expenses 1,685,810 1,685,810
------------- -------------
Total Liabilities 136,823,394 34,610,038
SHAREHOLDER'S EQUITY
PREFERRED EQUITY
Series AA -- 11,325,658
Series BB -- 26,526,084
Series CC -- 49,808,717
Common stock 136,577,850 142,577,850
Outstanding warrants 1,974,600 1,974,600
Accumulated deficit (159,995,176) (160,648,770)
------------- -------------
Total shareholder's equity (21,442,726) 71,564,139
------------- -------------
Total liabilities and shareholders equity $ 115,380,668 $ 106,174,177
============= =============
</TABLE>
SELECTED UNAUDITED INCOME STATEMENT INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
------------ -------------
<S> <C> <C>
OPERATING REVENUES
Entertainment revenue $ 20,765,718 $ 20,765,718
------------ -------------
OPERATING EXPENSES
Entertainment expenses 17,206,669 17,751,481
General and administrative expenses 2,643,391 2,643,391
Other expenses 186,261 186,261
Depreciation and amortization 4,114,495 4,114,495
------------ -------------
Total operating expenses 24,150,816 24,695,628
------------ -------------
Operating Loss (3,385,098) (3,929,910)
OTHER (EXPENSE) INCOME
Interest expense (5,612,410) (1,779,944)
Interest income 17,324 17,324
Other, net 67,634 67,634
------------ ------------
Net loss $ (8,912,550) $ (5,624,896)
============ ============
Preferred dividend requirement -- 3,287,309
------------ ------------
Net loss to common shareholders -- $ (8,912,205)
============ ============
</TABLE>
Seasonality
The business of the Company is seasonal. Approximately two-thirds of
the Company's revenues have historically been generated during the six-month
period of April through September. As a result, the Company's operating income
can be expected to be substantially lower in the first and last quarters of the
year than the second and third quarters. Furthermore, since many of the
attractions at the parks involve outdoor activities, prolonged periods of
inclement weather result in a substantial reduction of revenues during such
periods. Accordingly, the Company believes that the results of operations for
the six months ended June 30, 1999 are not necessarily indicative of the
Company's future results of operations.
Results of Operations
For the three months ended June 30, 1999, the Company had a net loss
of $3.6 million ($0.8 per share), compared to a net loss of $5.0 million ($0.10
per share) for the comparable period last year. For the six months ended June
30, 1999, the Company had a net loss of $8.9 million ($0.19 per share) as
compared to a net loss of $12.6 million ($0.26 per share) in the comparable
period in the prior year. Giving pro forma effect to the
Recapitalization, the Company had a net loss of $5.6 million for the six months
ended June 30, 1999.
Entertainment revenue decreased by $1.7 million (or 12%) and $2.4
million (or 10%) respectively, for the three and six months ended June 30, 1999
from $14.0 million and $23.1 million for the three and six months ended June 30,
1998 to $12.3 million and $ 20.8 million for the three and six months ended June
30, 1999. The decrease in revenue is primarily due to the decrease in
entertainment revenue from the FECs that were closed in 1998 ($0.7 million and
$1.1 million for the three and six months, respectively) and decreased
advertising in 1999.
Entertainment expenses decreased by $2.2 million (or 19%) and $4.0
million (or 19%) respectively, for the three and six months ended June 30, 1999
from $11.6 million and $21.2 million for the three and six months ended June
30, 1998 to $9.4 million and $17.2 million for the three and six months ended
June 30, 1999. This was due to better aligning payroll with revenue and staff
reductions ($1.1 million and $2.0 million for the three and six months,
respectively), reductions in other operating costs ($0.5 million and $0.8
million for the three and six months, respectively) and decreases in expenses
from the FECs that were closed in 1998 ($0.6 million and $1.2 million for the
three and six months, respectively).
<PAGE> 9
General and administrative expenses decreased $0.4 million (or 21%)
and $0.9 million (or 26%) for the three and six months ended June 30, 1999,
primarily a result of a reduction in professional expenses ($0.2 million and
$0.7 million for the three and six months, respectively).
Depreciation and amortization for the quarter ended June 30, 1999
decreased by $0.4 million and $0.8 million, respectively for the three and six
months ended June 30, 1999 due principally to acceleration of games
depreciation in 1998.
Interest expense decreased by $74,000 and $363,000 for the three and
six months ended June 30, 1999, respectively, as compared to the comparable
periods in the prior year due to general interest rate declines from 1998 to
1999. After giving pro forma effect to the recapitalization, interest expense
decreased by $3.4 million for the six months ended June 30, 1999.
Liquidity and Capital Resources
At June 30, 1999, the Company had $5.5 million of current assets
(including $1.8 million of restricted cash) and $43.2 million of current
liabilities (including $30.1 million of current debt), or negative working
capital of $37.7 million (compared to negative working capital of $39.2 million
at December 31, 1998, which amount included $1.4 million of restricted cash).
After giving effect to the Recapitalization as of the July 31, 1999, the
Company had $5.6 million of current assets and $11.7 million of current
liabilities.
The Company's internally generated cash has been insufficient to fund
its working capital, debt service and capital expenditure requirements for the
past several years and the Company has, therefore, funded its operations and
capital expenditures principally through external financing. Following the
Recapitalization, the Company's largest shareholder has the right, but not the
obligation, to purchase up to $2.5 million worth of additional shares of
preferred stock of the Company such funds to be used to fund the Company's
seasonal working capital requirements. In addition, an entity related to the
Company's largest shareholder has agreed to purchase, upon request by the
Company, up to $2.4 million worth of additional shares of preferred stock of the
Company and that entity has the right, but not the obligation, to purchase up to
4.5 million additional shares of preferred stock of the Company for. As of
August 13, 1999, the entity related to the Company's largest shareholder had
purchased, upon the Company's request, an additional $450,000 worth of preferred
shares and currently has an obligation, at the Company's request, to purchase up
to $1.95 million worth of preferred shares. The Company's largest shareholder
has informed the Company that, except as described above, it is not willing to
invest additional capital in the Company. With the completion of the
Recapitalization, the Company believes that its ongoing business plan designed
to reduce costs and otherwise improve results, together with at least $4.9
million from the above-described investments in preferred stock, would provide
the Company sufficient capital resources to fund continuing operations through
the next winter season. There can, however, be no assurance that the Company
will be successful in achieving these results or that the $4.9 million
discretionary portion of the capital investment will be made. If these results
are not achieved or such investment is not made, the Company may require
additional equity or capital resources. In addition, the Company may be required
to obtain additional equity or capital resources to fund capital expenditures
that may be necessary or desirable. There can be no assurance that such equity
or capital resources will be available or the terms thereof.
The Company's principal uses of cash during the six months ended June
30, 1999 were to fund operations ($3.0 million) and capital investment ($2.8
million). The Company's capital investment included deferred maintenance on 20
parks. This investment was intended to protect existing revenue streams and, to
a lesser degree, enhance revenues at some parks on a go-forward basis. During
the six months ended June 30, 1999, the Company financed its operations
primarily through a combination of debt financing provided by the Company's
largest shareholder and a related entity ($5.8 million) and the sale in January
1999, of a property previously being held for sale for $0.7 million.
Of the Company's $113.6 million of total debt, at June 30, 1999, $30.1
million was due to mature in 1999 (the "Current Debt"). The Current Debt at June
30, 1999 primarily included $21.4 million of secured debt from a third-party
lender and an $8.0 million loan from that lender through the Company's largest
shareholder. The $8.0 million of Current Debt and an additional $13.0 million of
indebtedness (together, the "Pass-Through Debt") was advanced to the Company's
largest shareholder and reloaned to the Company as an accommodation to the
Company and the third-party lender so that the largest shareholder's equity
interests in the Company effectively supported that portion of the third-party
financing. In the recapitalization, $106 million of the Company's total debt
(including accrued interest) was converted into preferred stock. At July 31,
1999, $0.7 million of the Company's $20.6 million in total debt was due in 1999.
<PAGE> 10
Amex Listing Requirements
The Company's common shares are listed for trading on the American Stock
Exchange ("AMEX"). Based on its historical results of operations, the Company
does not currently meet the published guidelines of the AMEX for continued
listing. However, as discussed above, the Company's recently completed
Recapitalization is intended to improve the Company's financial position and
results of operations. Accordingly, the Company has requested that AMEX continue
to list the Company's common shares for trading.
If the AMEX were to delist the Company's common shares, it is possible that
the shares would continue to trade in the over-the-counter market or that price
quotations would be reported by other sources. The public market for the
Company's common shares and the availability of such quotations would, however,
depend on the number of holders of Company common shares at that time and the
interest in maintaining a market for the common stock on the part of securities
firms. Accordingly, there can be no assurance that there would be a market for
the shares or that any securities firm would maintain a market in or quote
prices for the shares. If AMEX were to delist the Company's common shares, the
market for the shares could be adversely affected.
The Company's common shares are currently "margin securities," as that term
is defined under the rules of the Board of Governors of the Federal Reserve
System. Because they are margin securities, among other things, brokers are
allowed to extend credit on the collateral of the shares. If the shares were to
be delisted by the AMEX and were not otherwise publicly traded or quoted, it is
possible that the shares would no longer constitute margin securities and,
therefore, could no longer be used as collateral for loans made by brokers.
Impact of Year 2000 Issues
The Company will be required to modify or replace portions of its computer
software and certain hardware so that those systems will properly utilize dates
beyond December 31, 1999. The Company believes that, with modifications or
replacements of existing software and certain hardware, the year 2000 issue can
be mitigated. However, if such modifications and replacements are not made, or
are not completed timely, the year 2000 issue could have a material adverse
impact in the operations of the Company.
The Company relies on a significant number of computer programs and computer
technologies (collectively, "IT") and non-IT systems for its key operations,
including point of sales systems, race car timing and safety systems and
finance and various administrative functions. The Company engaged a year 2000
consultant to evaluate the current systems and prepare a plan for addressing
compliance, which was completed during 1998.
The consultant requested confirmation from all vendors of their products'
status relative to year 2000 compliance. The consultant reviewed the Company's
systems and provided a report to the Company identifying information, compliance
requirements and criticality of each system. Based on the report, the total cost
of the year 2000 project is estimated at $300,000. Second quarter expenditures
were lower than expected due to scheduling issues with key vendors. Estimated
expenditures for the first six months were
<PAGE> 11
approximately $15,000 with $285,000 remaining to be spent in 1999. All major
software and hardware upgrades to systems are still planned for completion
before the end of the third quarter, as all major scheduling issues have been
resolved.
In the event that the Company does not complete any phases of its year 2000
plan, the Company would have to manually track sales until the problem is
resolved. In addition, disruptions in the economy generally resulting from year
2000 issues could also materially adversely affect the Company. The amount of
lost revenue cannot be reasonably estimated at this time. The ability of third
parties with which the Company transacts business to adequately address their
year 2000 issues is outside the Company's control. There can be no assurance
that the failure of the Company or such third parties to adequately address
their respective year 2000 issues will not have a material adverse effect on
the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A substantial portion of the Company's long-term debt as of June 30, 1999
bore interest at variable rates and the Company is exposed to market risk from
changes in interest rates primarily through its borrowing activities, which are
described in the "Notes Payable" section to the Financial Statements included in
the Company's 1998 Form 10-K which is incorporated herein by reference. At June
30, 1999, the Company did not hold any derivatives related to interest rate
exposure for any of its debt facilities and it does not use financial
instruments for trading or other speculative purposes. Based on the terms and
outstanding amounts of the Company's borrowings at June 30, 1999, the Company
has determined that there is no material interest rate risk exposures to the
Company's financial position, results of operations or cash flows as of such
date.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Due to the nature of the attractions at the Company's entertainment
parks, the Company has been, and will likely continue to be, subject to a
significant number of personal injury lawsuits, certain of which may involve
claims for substantial damages. The Company also is from time to time a party
to other claims and legal proceedings, and is subject to environmental, zoning
and other legal requirements. As of the date of this Report, the Company does
not believe that any such matter is reasonably likely to have a material
adverse effect on the Company's financial position or results of operations.
However, there necessarily can be no assurance in this regard or that the
Company will not be subject to material claims or legal proceedings or
requirements in the future.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On July 20, 1999, in connection with the Recapitalization, the Company
issued 6 million shares of common stock to one of its principal lenders. The
Company also issued non-convertible preferred stock to this lender in exchange
for $33 million of debt.
In the Recapitalization, the Company issued convertible preferred stock
to the Company's largest shareholder and a related entity in exchange for an
aggregate of $62 million of debt held by those entities on the terms described
above.
<PAGE> 12
ITEM 5. OTHER INFORMATION
Forward-Looking Statements
This Report (including the documents incorporated by reference herein)
contains certain forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995) and information relating to
the Company that is based on the beliefs of the Company's management, as well as
assumptions made by and information currently available to the management of the
Company. When used herein, words such as "anticipate," "believe," "estimate,"
"expect," "intend" and similar expressions, as they relate to the Company or the
Company's management, identify forward-looking statements. Such statements
reflect the current views of the Company's management with respect to future
events and are subject to certain risks, uncertainties and assumptions relating
to the operations and results of operations of the Company and the success of
the Company's business and plan, competitive factors and pricing pressures;
general economic conditions; the failure of market demand for the types of
entertainment opportunities the Company provides or plans to provide in the
future and for family entertainment in general to be commensurate with
management's expectations or past experience; impact of present and future laws;
ongoing need for capital improvements; changes in operating expenses; adverse
changes in governmental rules or policies; changes in demographics, economics
and other factors. Should one or more of these assumptions prove incorrect,
actual results or outcomes may vary materially from those described herein as
anticipated, believed, estimated, expected or intended. Accordingly,
shareholders are cautioned not to place undue reliance on such forward-looking
statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No. Description
27 Financial Data Schedule (for SEC purposes only)
(b) No reports of Form 8-K were filed during the period covered by this
report.
<PAGE> 13
SIGNATURES
In accordance with the requirements of the Exchange Act, the Company
caused this report to be signed on behalf by the undersigned, thereunto duly
authorized.
MALIBU ENTERTAINMENT WORLDWIDE, INC.
By: /s/ R. SCOTT WHEELER
-----------------------------
R. Scott Wheeler
Chief Financial Officer
August 16, 1999
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 93,035
<SECURITIES> 0
<RECEIVABLES> 33,727
<ALLOWANCES> 0
<INVENTORY> 1,325,998
<CURRENT-ASSETS> 5,502,712
<PP&E> 107,311,429<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 115,380,668
<CURRENT-LIABILITIES> 43,183,989
<BONDS> 91,953,595
0
0
<COMMON> 136,577,850
<OTHER-SE> (158,207,576)
<TOTAL-LIABILITY-AND-EQUITY> 115,380,668
<SALES> 20,765,718
<TOTAL-REVENUES> 20,765,718
<CGS> 0
<TOTAL-COSTS> 24,150,816
<OTHER-EXPENSES> (84,958)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,612,410
<INCOME-PRETAX> (8,912,550)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,912,550)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,912,550)
<EPS-BASIC> (.19)
<EPS-DILUTED> (.19)
<FN>
<F1>PP&E IS NET OF ACCUMULATED DEPRECIATION
</FN>
</TABLE>
