UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 28, 2004
or
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 001-12131
AMF BOWLING WORLDWIDE, INC.
(Exact name of Registrant as specified in its charter)
| Delaware | 13-3873272 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
8100 AMF Drive
Richmond, Virginia 23111
(Address of principal executive offices, including zip code)
(804) 730-4000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the Registrant (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 (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ¨
AMF BOWLING WORLDWIDE, INC.
| Page | ||||
| PART I | ||||
| Item 1. |
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| 2 | ||||
| 3 | ||||
| 4 | ||||
| Notes to Condensed Consolidated Financial Statements (unaudited) |
5 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 | ||
| Item 3. |
39 | |||
| Item 4. |
40 | |||
| PART II | ||||
| Item 1. |
41 | |||
| Item 6. |
43 | |||
| 44 | ||||
1
AMF BOWLING WORLDWIDE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
| New Company |
Predecessor Company |
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| March 28, 2004 |
June 29, 2003 |
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| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 22,982 | $ | 56,275 | ||||
| Accounts and notes receivable, net of allowance for doubtful accounts of $4,088 and $7,329, respectively |
21,105 | 23,217 | ||||||
| Inventories, net |
32,326 | 34,001 | ||||||
| Advances and deposits |
22,902 | 19,019 | ||||||
| Total current assets |
99,315 | 132,512 | ||||||
| Property and equipment, net |
371,002 | 568,609 | ||||||
| Leasehold interests, net and other |
50,005 | 30,269 | ||||||
| Total assets |
$ | 520,322 | $ | 731,390 | ||||
| Liabilities and Stockholder’s Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 18,064 | $ | 17,642 | ||||
| Accrued expenses and other |
82,607 | 84,372 | ||||||
| Current portion of long-term debt |
1,605 | 40,901 | ||||||
| Total current liabilities |
102,276 | 142,915 | ||||||
| Long-term debt, less current portion |
287,335 | 375,587 | ||||||
| Liabilities subject to resolution |
953 | 1,323 | ||||||
| Total liabilities |
390,564 | 519,825 | ||||||
| Stockholder’s equity: |
||||||||
| Common Stock ($.01 par value) (a) |
— | 100 | ||||||
| Paid-in capital |
133,716 | 212,361 | ||||||
| Accumulated deficit |
(1,626 | ) | (12,209 | ) | ||||
| Accumulated other comprehensive income (loss) |
(2,332 | ) | 11,313 | |||||
| Total stockholder’s equity |
129,758 | 211,565 | ||||||
| Total liabilities and stockholder’s equity |
$ | 520,322 | $ | 731,390 | ||||
| (a) | As of February 27, 2004, in connection with the merger of Kingpin Merger Sub, Inc. and Worldwide, each former shareholder of Worldwide received $25.00 in cash for each share of the former common stock and all shares of Worldwide were cancelled. The capital stock of Kingpin Merger Sub, Inc. became the capital stock of Worldwide as part of the merger and Kingpin Intermediate Corp. became the sole shareholder of Worldwide. |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
AMF BOWLING WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)
| 2004 Third Quarter |
Predecessor |
Nine Months ended March 28, 2004 |
Predecessor |
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| New Company |
Predecessor Company |
New Company |
Predecessor Company |
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| 2004 One Month |
2004 Two Months |
2003 Third Quarter |
2004 One Month |
2004 Eight Months |
Nine Months ended March 30, 2003 |
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| Operating revenue |
$ | 63,636 | $ | 137,108 | $ | 187,861 | $ | 63,636 | $ | 459,311 | $ | 515,060 | ||||||||||||
| Operating expenses: |
||||||||||||||||||||||||
| Cost of goods sold |
20,433 | 23,235 | 29,759 | 20,433 | 93,171 | 101,423 | ||||||||||||||||||
| Bowling center operating expenses |
33,318 | 83,700 | 95,230 | 33,318 | 265,485 | 278,698 | ||||||||||||||||||
| Selling, general and administrative expenses |
3,221 | 25,007 | 9,756 | 3,221 | 47,965 | 29,529 | ||||||||||||||||||
| Depreciation and amortization |
4,873 | 10,143 | 20,735 | 4,873 | 41,176 | 62,971 | ||||||||||||||||||
| Total operating expenses |
61,845 | 142,085 | 155,480 | 61,845 | 447,797 | 472,621 | ||||||||||||||||||
| Operating income (loss) |
1,791 | (4,977 | ) | 32,381 | 1,791 | 11,514 | 42,439 | |||||||||||||||||
| Nonoperating expenses (income): |
||||||||||||||||||||||||
| Interest expense |
1,910 | 41,432 | 9,763 | 1,910 | 59,544 | 30,428 | ||||||||||||||||||
| Interest income |
(46 | ) | (149 | ) | (209 | ) | (46 | ) | (518 | ) | (449 | ) | ||||||||||||
| Other expense (income), net |
827 | (361 | ) | (844 | ) | 827 | (3,151 | ) | (287 | ) | ||||||||||||||
| Total nonoperating expenses, net |
2,691 | 40,922 | 8,710 | 2,691 | 55,875 | 29,692 | ||||||||||||||||||
| Income (loss) before provision for income taxes |
(900 | ) | (45,899 | ) | 23,671 | (900 | ) | (44,361 | ) | 12,747 | ||||||||||||||
| Provision for income taxes |
726 | 1,681 | 2,559 | 726 | 3,397 | 5,200 | ||||||||||||||||||
| Net income (loss) |
$ | (1,626 | ) | $ | (47,580 | ) | $ | 21,112 | $ | (1,626 | ) | $ | (47,758 | ) | $ | 7,547 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
AMF BOWLING WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| Nine Months ended March 28, 2004 |
Predecessor |
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| New Company |
Predecessor Company |
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| 2004 One Month |
2004 Eight Months |
Nine Months ended March 30, 2003 |
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| Cash flows from operating activities: |
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| Net income (loss) |
$ | (1,626 | ) | $ | (47,758 | ) | $ | 7,547 | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||||||
| Stock based compensation |
— | 892 | 456 | |||||||||
| Depreciation and amortization |
4,873 | 41,176 | 62,971 | |||||||||
| Write-off old deferred financing costs |
— | 8,832 | — | |||||||||
| Non-cash purchase method accounting adjustments |
7,090 | — | — | |||||||||
| (Gain) loss on the sale of property and equipment, net |
(350 | ) | (1,193 | ) | 1,354 | |||||||
| (Gain) loss on casualty loss |
— | (1,413 | ) | — | ||||||||
| Changes in assets and liabilities: |
||||||||||||
| Accounts and notes receivables, net |
(1,632 | ) | 4,746 | 8,931 | ||||||||
| Inventories |
1,865 | 2,362 | 4,035 | |||||||||
| Other assets |
(1,075 | ) | (2,097 | ) | (2,376 | ) | ||||||
| Accounts payable and accrued expenses |
(4,753 | ) | (542 | ) | (7,867 | ) | ||||||
| Income taxes payable |
979 | 1,150 | (2,197 | ) | ||||||||
| Other long-term liabilities |
135 | 135 | (305 | ) | ||||||||
| Net cash provided by operating activities |
5,506 | 6,290 | 72,549 | |||||||||
| Cash flows from investing activities: |
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| Purchases of property and equipment |
(2,573 | ) | (33,354 | ) | (26,032 | ) | ||||||
| Proceeds from the sale of property and equipment |
471 | 4,698 | 857 | |||||||||
| Proceeds from Sale-Leaseback Agreements |
— | 254,000 | — | |||||||||
| Other |
— | — | 137 | |||||||||