April 16, 2001:
AMF's CEO Says Bankruptcy Is Most Likely Option
04/16/2001 - AMF
RICHMOND, Va. - AMF (OTC Bulletin Board: AMBW) today provided an update on the ongoing discussions with creditor groups related to a restructuring and reduction of its debt, and reported operating results for the year ended December 31, 2000.
In August 2000, AMF Bowling Worldwide, Inc. ("AMF Worldwide") began discussions with its banks and holders of long-term debt about alternatives to significantly reduce its debt and interest expense, and stated that it intended to develop a new capital structure that would provide financial flexibility for growth.
"After exploring a variety of alternatives, I now believe that a Chapter 11 filing is the most likely and efficient means to complete the debt restructuring of AMF Worldwide," said Roland Smith, AMF's President and Chief Executive Officer. "However, we are continuing constructive discussions with the banks and bondholders, and I believe we are making progress. Therefore, I have not made a recommendation to the Board of Directors on a Chapter 11 filing, and the Board has not yet taken any action in this regard."
"Whatever form of restructuring is pursued, we are working diligently to ensure an orderly process with minimal impact on AMF Worldwide's operations," continued Smith. "As part of the preparation, we have started discussions with our banks for a secured debtor-in-possession (DIP) financing facility, so that the additional borrowing capacity, along with available cash from operations, would be sufficient to meet our operating needs during a Chapter 11 reorganization."
Mr. Smith said that he is moving forward with initiatives to improve operating performance: "In 2001, we are focused on growing revenue in the Bowling Centers business with expanded promotional activities and enhanced customer service supported by our new programs to recruit, train and reward center managers. In our Products business, we have a new management team in place -- led by John Suddarth, our new Chief Operating Officer, who joined us last month. This team is developing aggressive actions to enhance financial performance, including initiatives to grow revenue, reduce costs and enhance profit margins."
"AMF employees continue to welcome customers to our centers, as well as produce, sell and ship products," Smith continued. "We are continuing to conduct business as usual and move forward on operating improvements. In conjunction with a more flexible capital structure, our operating improvements will position AMF for future success."
For a further discussion of the restructuring, see the Form 10-K's filed by AMF Bowling Worldwide, Inc. and its parent, AMF Bowling, Inc., with the Securities and Exchange Commission on April 16, 2001.
2000 OPERATING RESULTS
For the year ended December 31, 2000, AMF Bowling, Inc. reported consolidated revenue of $715.0 million, compared with $732.7 million in 1999, a decrease of 2.4%. Net loss was $200.6 million, or $2.40 per share, compared with a net loss before extraordinary items of $226.1 million, or $3.23 per share, in 1999. The weighted average shares outstanding increased to 83.6 million in 2000 from 69.9 million in 1999.
Bowling Centers reported revenue of $580.4 million in 2000 compared with $585.7 million in 1999. The decline was attributed to a $9.3 million reduction of revenue from under-performing centers closed in 2000 and the negative impact of foreign currency exchange rates, especially in Australia.
Constant center revenue increased 2.2% in the U.S. due largely to an increase in open play. Bowling Centers' EBITDA for 2000 was $125.6 million, compared with $137.3 million in 1999. (EBITDA is a measure of operating cash flow that represents Earnings Before Interest, Taxes, Depreciation, and Amortization). The decline reflects lower revenue and $5.4 million of additional charges.
Bowling Products reported revenue of $151.3 million in 2000 compared with $169.3 million in 1999. The decline was attributed to weak demand for New Center Packages and lower sales of consumer products. Bowling Products' EBITDA for 2000 was $(18.6) million, compared with $(11.7) million in 1999. The decline reflects lower revenue and gross profit as well as $6.8 million of additional charges.
As the largest bowling company in the world, AMF owns and operates 520 bowling centers worldwide, with 402 centers in the U.S. and 118 centers in nine other countries. AMF is also a world leader in the manufacturing and marketing of bowling products. The company also manufactures and sells the PlayMaster, Highland and Renaissance brands of billiards tables. Information about AMF is available on the Internet at http://www.amf.com.
Statements in this earnings release about AMF's future plans are forward-looking statements. A number of important factors could cause actual results to differ materially from those anticipated and projected by forward-looking information. The factors include, but are not limited to, the ability of the Company to continue to operate as a going concern; the timing, execution and results of the Company's restructuring, the ability of management to implement its business strategies; the ability to maintain liquidity and carry out its capital expenditure plan; the ability to grow revenue in the bowling centers; foreign currency volatility, political acts, adverse judgements, and regulatory changes. Additional information on factors that could affect the Company's financial results are contained in the Company's SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2000, filed with the U.S. Securities and Exchange Commission.