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 ~~September~~December 26, 2004

¨	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)

(Former name, former address and former fiscal year, if changed since last report.)

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 ¨

As of ~~September~~December 26, 2004, there were issued and outstanding 1,000 shares of the registrant’s common stock, $0.01 par value, all of which were held of record by Kingpin Intermediate Corp., a wholly-owned subsidiary of Kingpin Holdings, LLC.

AMF BOWLING WORLDWIDE, INC.

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (unaudited)	2
	Condensed Consolidated Statements of Operations (unaudited)	3
	Condensed Consolidated Statements of Cash Flows (unaudited)	4
	Notes to Condensed Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2124
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3540
Item 4.	Controls and Procedures	3641
	PART II
Item 1.	Legal Proceedings	3742
Item 6.	Exhibits	3843
Signatures		3944

AMF BOWLING WORLDWIDE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

PART I

ITEM 1. FINANCIAL STATEMENTS

	New Company
(In thousands, except share and per share data)	~~September~~December 26, 2004			June 27, 2004
Assets
Current assets:
Cash	$	16,284		$	12,734
Cash and cash equivalents	$	31,284		$	12,734
Accounts and notes receivable, net of allowance for doubtful accounts of $3,829 and $4,155, respectively		24,676			25,737
Accounts and notes receivable, net of allowance for doubtful accounts of $4,239 and $4,155, respectively		24,465			25,737
Inventories, net		31,~~927~~854			30,745
Prepaid expenses and other current assets		13,~~999~~452			19,231
Assets held for sale (Note 3)		4551,~~320~~125			—
Total current assets		~~132~~152,~~206~~180			88,447
Property and equipment, net		~~314~~268,~~675~~537			363,956
Other assets		4744,~~591~~132			49,704
Total assets	$	~~494~~464,~~472~~849		$	502,107
Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	1413,~~175~~520		$	21,661
Accrued expenses and other liabilities		8075,~~841~~658			79,979
Current portion of long-term debt		21,~~311~~559			2,294
Liabilities held for sale (Note 3)		610,~~531~~011			—
Total current liabilities		~~103~~100,~~858~~748			103,934
Long-term debt, less current portion		~~293~~239,~~704~~967			286,503
Liabilities, subject to resolution		~~233~~213			233
Total liabilities		~~397~~340,~~795~~928			390,670
Stockholder’s equity:
Common stock ($0.01 par value, 1,000 shares authorized and outstanding)		—			—
Paid-in capital		133,716			133,716
Accumulated deficit		(315,~~932~~945	)		(18,992	)
Accumulated other comprehensive loss		(53,~~107~~850	)		(3,287	)
Total stockholder’s equity		96123,~~677~~921			111,437
Total liabilities and stockholder’s equity	$	~~494~~464,~~472~~849		$	502,107

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

AMF BOWLING WORLDWIDE, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	NewCompany			ReorganizedPredecessorCompany			New Company			ReorganizedPredecessorCompany
(In thousands)	2005 ~~FirstQuarter~~SecondQuarter			2004 ~~FirstQuarter~~SecondQuarter			2005 FirstSix Months			2004 FirstSix Months
Operating revenue	$	~~131~~149,~~382~~290		$	~~138~~150,~~680~~093		$	266,889		$	275,999
Operating expenses:
Cost of goods sold		2939,~~274~~424			3233,~~690~~419			67,150			64,647
Bowling center operating expenses (net of $9,222 gain in 2005, discussed in Note 10)		85,078			84,100
Bowling center operating expenses		79,857			74,469			163,794			149,294
Selling, general and administrative expenses		1015,~~750~~712			1012,~~959~~000			26,464			22,958
Asset impairment		~~1,303~~—			—			1,303			—
Depreciation and amortization		1210,~~865~~649			1412,~~385~~247			21,929			25,081
Total operating expenses		~~139~~145,~~270~~642			~~142~~132,~~134~~135			280,640			261,980
Operating loss		(7,888	)		(3,454	)
Operating income (loss)		3,648			17,958			(13,751	)		14,019
Non-operating (income) expenses:
Interest expense		6,~~502~~679			98,~~187~~859			13,181			18,046
Interest income		(~~119~~306	)		(9366	)		(332	)		(126	)
Other income, net		(~~4,497~~87	)		(~~858~~3,102	)		(4,739	)		(3,309	)
Total non-operating expenses		16,~~886~~286			85,~~236~~691			8,110			14,611
Loss from continuing operations before income taxes		(9,774	)		(11,690	)
Income (loss) from continuing operations before income taxes		(2,638	)		12,267			(21,861	)		(592	)
Provision for income taxes		31,~~407~~276			~~111~~1,731			1,648			1,672
Loss from continuing operations		(13,181	)		(11,801	)
Income (loss) from continuing operations		(3,914	)		10,536			(23,509	)		(2,264	)
Income (loss) from discontinued operations, net of tax (Note 3)		241			(871	)
Discontinued operations (Note 3):
Net loss	$	(12,940	)	$	(12,672	)
Income (loss) from discontinued operations, net of tax		(346	)		1,958			6,309			2,086
Gain on disposal, net of tax		30,247			—			30,247			—
Income from discontinued operations		29,901			1,958			36,556			2,086
Net income (loss)	$	25,987		$	12,494		$	13,047		$	(178	)

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

AMF BOWLING WORLDWIDE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	NewCompany			ReorganizedPredecessorCompany
(In thousands)	2005 ~~FirstQuarter~~FirstSix Months			2004 ~~FirstQuarter~~FirstSix Months
Operating activities:
Net loss	$	(12,940	)	$	(12,672	)
Net income (loss)	$	13,047		$	(178	)
(Income) loss from discontinued operations, net of tax		(241	)		871
Income from discontinued operations, net of tax		(36,556	)		(2,086	)
Loss from continuing operations		(1323,~~181~~509	)		(112,~~801~~264	)
Adjustments to reconcile net loss from continuing operations to net cash used in continuing operations:
Adjustments to reconcile net loss from continuing operations to net cash provided by continuing operations:
Stock based compensation		—			~~105~~210
Depreciation and amortization		1221,~~865~~929			1425,~~385~~081
Gain on the sale of property and equipment, net		(9,222	)		(746	)
(Gain) loss on the sale of property and equipment, net		257			(1,051	)
Gain from casualty loss		—			(1,413	)
Asset impairment		1,303			—
Changes in assets and liabilities:
Accounts and notes receivable, net		~~806~~2,005			~~(287~~329	)
Inventories		(2,~~013~~318	)		~~300~~1,226
Other assets		2,~~720~~173			(~~708~~4,772	)
Accounts payable and accrued expenses		~~134~~(1,619	)		(32,~~789~~775	)
Income taxes payable		~~1,704~~(264	)		~~451~~700
Other long-term liabilities		~~188~~1,168			(2729	)
Net cash used in operating activities from continuing operations		(4,696	)		(2,117	)
Net cash provided by operating activities from continuing operations		1,125			15,242
Investing activities:
Purchases of property and equipment		(11,705	)		(9,089	)
Capital expenditures		(21,513	)		(21,353	)
Proceeds from the sale of property and equipment		14,896			892
Proceeds from:
Net cash provided by (used in) investing activities from continuing operations		3,191			(8,197	)
Sale of property and equipment		1,548			3,427
Sale of subsidiary		69,875			—
Net cash provided by (used in) investing activities from continuing operations		49,910			(17,926	)
Financing activities:
Borrowing under revolving line of credit		8,000			5,000
Payments of long-term debt		(47,080	)		(28,380	)
Payments of long-term debt		(643	)		(25,358	)
Payments under capital lease obligations		(211	)		(146	)
Payments under capital lease obligations		(140	)		(56	)
Net cash used in financing activities from continuing operations		(47,291	)		(28,526	)
Net cash provided by (used in) financing activities from continuing operations		7,217			(20,414	)
Effect of exchange rates on cash		(2,123	)		(1,754	)
Effect of exchange rates on cash		(2,082	)		(2,223	)
Net cash provided by discontinued operations		16,929			5,982
Net cash used in discontinued operations		(80	)		(1,074	)
Net increase (decrease) in cash		18,550			(26,982	)
Net increase (decrease) in cash		3,550			(34,025	)
Cash and cash equivalents at beginning of period		12,734			56,275
Cash at beginning of period		12,734			56,275
Cash and cash equivalents at end of period	$	31,284		$	29,293
Cash at end of period	$	16,284		$	22,250

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

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except as otherwise noted)

(unaudited)

NOTE 1. BUSINESS DESCRIPTION

Organization

AMF Bowling Worldwide, Inc., a Delaware corporation, and its subsidiaries (which may be referred to as Worldwide, the Company, we, us or our), operate in two business segments:

• the operation of bowling centers in the United States ~~(“U.S. Centers”)~~ and internationally (“~~International~~ Centers” ~~and collectively with U.S. Centers, “Centers”~~); and

•

the manufacture and sale of bowling equipment, such as automatic pinspotters, automatic scoring equipment, bowling pins, lanes, ball returns, lane machines, bowling center supplies and the resale of other related products, including bowling bags and shoes (collectively, “Products”).

As of ~~September~~December 26, 2004, we operated ~~460~~425 bowling centers worldwide. Weincluding ~~operated~~ 368 bowling centers in the U.S. and 9257 international bowling centers, including 42 in ~~five foreign countries~~Australia. On September 30, 2004, we sold our ~~bowling center business that operated~~ 33 bowling centers in the United Kingdom for gross cash proceeds of approximately $71,200. ~~and~~On ~~exited~~February 8, 2005, we sold our 42 bowling centers in Australia for approximately $47,810 subject to certain post closing adjustments. We no longer have bowling center operations in ~~that~~the ~~country~~United Kingdom or Australia. The results of operations for the bowling centers in the United Kingdom and Australia have been reported as discontinued operations for all periods presented ~~and related assets and liabilities are classified as “held for sale” in the Condensed Consolidated Balance Sheet~~.

Products is one of the largest manufacturers of bowling center equipment in the world. Products revenue consists of two major sales categories:

•

New Center Packages (“NCPs”), which is all of the equipment necessary to outfit one lane at a new or existing bowling center; and

•

Modernization and Consumer Products, which is equipment used to upgrade an existing center, spare parts, pins, supplies and consumable products used in the operation of a center, and bowling balls and ancillary products for resale to bowlers.

Products also manufactures and sells its Playmaster, Highland and Renaissance brands of billiard tables.

Worldwide serves as the corporate headquarters of the Company. Its employees provide certain management and administrative services for Centers and Products. Worldwide’s business operations and operating assets are held in subsidiaries. ~~U.S. Centers is primarily operated through~~ AMF Bowling Centers, Inc. ~~(“AMF Centers”)~~, a wholly-owned, indirect subsidiary of Worldwide, owns and operates our bowling centers in the U.S. Our bowling centers located ~~International~~outside ~~Centers~~of isthe U.S. are operated through separate, indirect subsidiaries of Worldwide ~~that operate bowling centers in various countries~~. Products is primarily operated through AMF Bowling Products, Inc. ~~(“AMF Products”)~~, which is a wholly-owned, indirect subsidiary of Worldwide.

Merger

On November 26, 2003, Kingpin Holdings, LLC (“Kingpin Holdings”) and its wholly-owned subsidiary, Kingpin Merger Sub, Inc. (“Merger Sub”), entered into an Agreement and Plan of Merger with Worldwide (the “Merger Agreement”). Pursuant to the Merger Agreement, on February 27, 2004, Merger Sub was merged into Worldwide with Worldwide being the surviving corporation (the “Merger”). The Company, as it existed after the Merger, is sometimes referred to as the “New Company.” Each shareholder of Worldwide received $25.00 in cash for each share of the common stock of Worldwide that was outstanding prior to the Merger ~~(the “Old Common Stock”)~~ including vested options and warrants, for aggregate proceeds (including option proceeds) of $258,700. The ~~Old~~old ~~Common Stock~~common stock was canceled and the common stock of Merger Sub became the new common stock of Worldwide ~~(the “New Common Stock”)~~. As part of the Merger, Kingpin Intermediate Corp., a wholly-owned subsidiary of Kingpin Holdings, became the sole shareholder of Worldwide.

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

Kingpin Holdings is a Delaware limited liability company formed at the direction of Code Hennessy & Simmons LLC, a Chicago-based private equity firm ~~(“CHS”)~~.

Fiscal Year

We report on a retail calendar year, with each quarter comprised of one 5-week period and two 4-week periods. Fiscal year 2004 had 52 weeks and fiscal year 2005 has 53 weeks, with the extra week being reported in the fourth quarter.

NOTE 2. BASIS OF PRESENTATION

Our interim condensed consolidated financial statements presented in this report are unaudited. All significant intercompany balances and transactions have been eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States for financial information requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual amounts could differ from these estimates. Certain previously reported amounts have been reclassified to conform to the current year presentation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals ~~and purchase method accounting adjustments~~, which are necessary to present fairly the consolidated financial position and the consolidated results of operations and cash flows for all periods presented.

These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 27, 2004.

Prior to February 27, 2004, we were referred to as the “Reorganized Predecessor Company” and, as we existed on and after February 27, 2004, we are referred to as the “New Company.” Our financial results during the three and six months ended ~~September~~December 26, 2004 and the three and six months ended ~~September~~December 28, 2003 are not comparable due to the Merger ~~described above~~.

Period		Referred to as
Results for the New Company from June 28, 2004 through September 26, 2004		“New Company 2005 First Quarter”
Results for the New Company from September 27, 2004 through December 26, 2004		“New Company 2005 Second Quarter”
Results for the Reorganized Predecessor Company from June 30, 2003 through September 28, 2003		“Reorganized Predecessor Company 2004 First Quarter”
Results for the New Company from June 28, 2004 through December 26, 2004		“New Company 2005 First Six Months”
Results for the Reorganized Predecessor Company from September 29, 2003 through December 28, 2003		“Reorganized Predecessor Company 2004 Second Quarter”
Results for the Reorganized Predecessor Company from June 30, 2003 through December 28, 2003		“Reorganized Predecessor Company 2004 First Six Months”

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

NOTE 3. DISCONTINUED OPERATIONS

~~During~~In the New Company 2005 ~~First~~Second Quarter, we ~~committed~~sold ~~to a plan to sell~~ our bowling center operations in the United Kingdom ~~and~~for gross proceeds of approximately $71,200. Additionally, in February 2005, we sold ~~such~~our bowling center operations onin ~~September~~Australia 30for approximately $47,810. ~~2004~~The gain on the Australian sale is not recorded in the New Company 2005 Second Quarter. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144 “Accounting for the Impairment or Disposal of Long-lived Assets,” the bowling operations of the United Kingdom and Australia are reported separately as discontinued operations for all periods presented.

The financial results of the United Kingdom and Australian bowling ~~business~~center operations, included in discontinued operations, were as follows:

	NewCompany			ReorganizedPredecessorCompany			NewCompany		ReorganizedPredecessorCompany
	2005 FirstQuarter			2004 FirstQuarter
	2005 SecondQuarter			2004 SecondQuarter			2005 FirstSix Months		2004 FirstSix Months
Revenue	$	1112,~~451~~562		$	924,~~334~~096		$	37,796	$	46,204
Loss before income taxes		(96	)		(509	)
Income from operations, pretax		114			1,470			9,467		2,130
Provision (benefit) for income taxes		~~(337~~460	)		~~362~~(488	)		3,158		44
Income (loss) from discontinued operations	$	241		$	(871	)
Income (loss) from operations, after tax		(346	)		1,958			6,309		2,086
Gain on disposal, pretax		33,642			—			33,642		—
Provision for income taxes		3,395			—			3,395		—
Gain on disposal, after tax		30,247			—			30,247		—
Income from discontinued operations	$	29,901		$	1,958		$	36,556	$	2,086

The assets and liabilities of the ~~United~~Australian ~~Kingdom~~ bowling ~~business~~center asoperations ~~of September 26, 2004~~ are classified as “held -for -sale” as of December 26, 2004 and were as follows:

	September 26,2004
	December 26,2004
Accounts receivable, net of allowance	$	~~203~~114
Inventory		813
Inventories, net		1,411
Prepaid and other current assets		31,~~570~~519
Property and equipment, net		4045,~~576~~461
Other		~~158~~2,620
Assets held for sale	$	4551,~~320~~125
Accounts payable	$	~~3,718~~510
Accrued expenses		2,813
Accrued expenses and other liabilities		9,501
Liabilities held for sale	$	610,~~531~~011

NOTE 4. COMPREHENSIVE INCOME (LOSS)

Comprehensive loss was $14,760 for the New Company 2005 First Quarter and $12,119 for the Reorganized Predecessor Company 2004 First Quarter. Accumulated other comprehensive loss of $5,107 at September 26, 2004 and $3,287 at June 27, 2004 is included in stockholder’s equity and consists of the foreign currency translation adjustment.

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

NOTE 54. ~~INVENTORIES,~~EQUITY ~~NET~~BASED COMPENSATION

~~Inventories~~Effective September 27, ~~net~~2004, atKingpin ~~September~~Holdings ~~26,~~adopted the 2004 Unit Option Plan (the “Option Plan”) and granted 100,000 options to purchase common units of Kingpin Holdings, at an exercise price of $10.0 per common unit, to twenty two (22) senior managers of Worldwide. One-third of the options vest on June 2728 of each year beginning June 28, ~~2004~~2005. ~~consisted~~The options are subject to customary terms and conditions. The number of: common units with respect to which options may be granted under the Option Plan and which may be issued upon their exercise may not exceed 1,094,595 common units in the aggregate. Under the Option Plan, grants may be made to any director, executive or other key employee of, or any consultant or advisors to, Kingpin Holdings or Worldwide. We currently use the intrinsic value method of accounting for stock based employee compensation in accordance with Accounting Principles Board (“APB”) Opinion No. 25 “Accounting for Stock Issued to Employees.” Under APB Opinion No. 25, compensation expense is based upon the difference, if any, between the fair value of the unit option and the exercise price on the date of the grant. No compensation expense for the unit options is reflected in the New Company 2005 Second Quarter or the New Company 2005 First Six Months net earnings, as all options granted under this plan had an exercise price not less than the market value of the common unit on the date of the grant.

	September 26, 2004		June 27, 2004
Products, at FIFO:
Raw materials	$	6,269	$	6,157
Work in process (a)		3,100		2,281
Finished goods and spare parts		15,383		14,362
Centers, at average cost:
Merchandise and spare parts		7,175		7,945
Total inventories	$	31,927	$	30,745

NOTE 5. COMPREHENSIVE INCOME

Comprehensive income was $27,244 for the New Company 2005 Second Quarter, $12,484 for the New Company 2005 First Six Months, $17,116 for the Reorganized Predecessor Company 2004 Second Quarter and $4,997 for the Reorganized Predecessor Company 2004 First Six Months. Accumulated other comprehensive loss of $3,850 at December 26, 2004 and $3,287 at June 27, 2004 is included in stockholder’s equity and consists of the foreign currency translation adjustment.

NOTE 6. INVENTORIES, NET

Inventories, net, at December 26, 2004 and June 27, 2004 consisted of:


	December 26, 2004		June 27, 2004
Products, at FIFO:
Raw materials	$	6,459	$	6,157
Work in process (a)		3,585		2,281
Finished goods and spare parts		15,592		14,362
Centers, at average cost:
Merchandise and spare parts		6,218		7,945

Total inventories, net	$	31,854	$	30,745

(a)	Work in process also includes certain inventory shipments in-transit to customers.

NOTE 6. PROPERTY AND EQUIPMENT, NET

Property and equipment, net at September 26, 2004 and June 27, 2004 consisted of:

	September 26, 2004			June 27, 2004
Land	$	36,711		$	44,248
Buildings and improvements		118,347			143,124
Equipment, furniture and fixtures		175,848			186,488
Other		14,379			10,664
		345,285			384,524
Less accumulated depreciation		(30,610	)		(20,568	)
Property and equipment, net	$	314,675		$	363,956

Depreciation expense related to property and equipment was $12,458 in the New Company 2005 First Quarter and $14,218 in the Reorganized Predecessor Company 2004 First Quarter.

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

NOTE 7. ~~SUPPLEMENTAL~~PROPERTY ~~CASH~~AND ~~FLOW~~EQUIPMENT, ~~INFORMATION~~NET

Property and equipment, net, at December 26, 2004 and June 27, 2004 consisted of:


	December 26, 2004			June 27, 2004
Land	$	29,771		$	44,248
Buildings and improvements		109,652			143,124
Equipment, furniture and fixtures		153,481			186,488
Other		11,490			10,664

		304,394			384,524
Less accumulated depreciation		(35,857	)		(20,568	)

Property and equipment, net	$	268,537		$	363,956

Depreciation expense related to property and equipment was $10,683 in the New Company 2005 First Quarter, $21,597 in the New Company 2005 First Six Months, $12,201 in the Reorganized Predecessor Company 2004 Second Quarter and $31,303 in the Reorganized Predecessor Company 2004 First Six Months.

NOTE 8. SUPPLEMENTAL CASH FLOW INFORMATION

The table below presents supplemental cash flow information for the reporting periods:

	NewCompany		ReorganizedPredecessorCompany
	2005 FirstQuarter		2004 FirstQuarter
	2005 FirstSix Months		2004 FirstSix Months
Cash paid during the period for:
Interest	$	911,~~245~~182	$	1518,~~524~~776
Income taxes		~~830~~1,956		~~707~~1,577

NOTE 89. LONG-TERM DEBT

As discussed in Note 1, we completed the Merger on February 27, 2004 and substantially all of the debt the Reorganized Predecessor Company had in place prior to the Merger was paid in full.

Long-Term Debt Summary

Our long-term debt at ~~September~~December 26, 2004 and June 27, 2004 consisted of:

	September 26, 2004			June 27,2004
	December 26,2004			June 27,2004
Term Loan	$	~~134~~87,~~358~~921		$	135,000
Revolver		~~8,000~~—			—
Subordinated Notes, 10%, due 2010		150,000			150,000
Old Subordinated Notes, 13%, due 2008		5			5
Mortgage note and capitalized leases		3,~~652~~600			3,792
Total debt		~~296~~241,~~015~~526			288,797
Current maturities		(21,~~311~~559	)		(2,294	)
Total long-term debt	$	~~293~~239,~~704~~967		$	286,503

Credit Agreement

We have $134,358 in term loans (the “Term Loan”) under a senior secured credit agreement (the “Credit Agreement”) which also has an aggregate revolving loan commitment of $40,000 (the “Revolver”). In September 2004, we entered into a First Amendment to Credit Agreement (the “Amendment”). The Amendment, among other things, requires us to prepay loans and/or cash collateralize or pay certain letter of credit obligations under the Credit Agreement in an amount equal to 20% of the net cash proceeds from any sale, transfer or other disposition of the assets or stock of certain of our subsidiaries that operate overseas. The Amendment also permits us to redeem, purchase, prepay, retire, defease or otherwise acquire our 10% Senior Subordinated Notes due 2010 for cash consideration in an amount that does not exceed 80% of net cash proceeds from those sales of assets or stock of certain of our subsidiaries that operate overseas within a specified period of time.

At September 26, 2004, $8,000 was outstanding under the Revolver. Outstanding standby letters of credit issued under the Revolver totaled $18,135 leaving $13,865 available for additional borrowings or letters of credit. Our aggregate letter of credit obligations outstanding under the Credit Agreement may not exceed $25,000. The principal amount of the Term Loan must be repaid on a quarterly basis in the amounts and at the times specified in the Credit Agreement, with a final principal payment of $127,608 due on August 27, 2009. Scheduled quarterly

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

~~principal payments of $296 are due on the 30th day of the last month of the calendar quarter. Repayment also is required in amounts specified in the~~ Credit Agreement for certain events including certain asset sale proceeds and equity and debt offering proceeds. The Credit Agreement requires the frequency of interest payments to be not less than quarterly and an annual mandatory prepayment of the Term Loan based on a percentage of free cash flow, ranging from 25-75%, as specified in the Credit Agreement. The obligations under the Credit Agreement are secured by substantially all of our U.S. assets and a 65% pledge of the capital stock of certain first tier foreign subsidiaries. Certain of our U.S. subsidiaries have guaranteed, or are directly obligated on, the Credit Agreement. The Credit Agreement contains certain events of default including cross default provisions.

At December 26, 2004, we owed $87,921 in term loans (the “Term Loan”) under a senior secured credit agreement (the “Credit Agreement”) which also has an aggregate revolving loan commitment of $40,000 (the “Revolver”). In September 2004, we entered into a First Amendment to Credit Agreement (the “Amendment”). The Amendment, among other things, requires us to prepay loans and/or cash collateralize or pay certain letter of credit obligations under the Credit Agreement in an amount equal to 20% of the net cash proceeds from any sale, transfer or other disposition of the assets or stock of certain of our foreign subsidiaries. The Amendment also permits us to redeem, purchase, prepay, retire, defease or otherwise acquire our 10% Senior Subordinated Notes due 2010 for cash consideration in an amount that does not exceed 80% of net cash proceeds from those sales of assets or stock of certain of our foreign subsidiaries within a specified period of time.

At December 26, 2004, there were no borrowings outstanding under the Revolver. Outstanding standby letters of credit issued under the Revolver totaled $18,114 leaving $21,886 available for additional borrowings or letters of credit. Our aggregate letter of credit obligations outstanding under the Credit Agreement may not exceed $25,000. The principal amount of the Term Loan must be repaid on a quarterly basis in the amounts and at the times specified in the Credit Agreement, with a final principal payment of $83,723 due on August 27, 2009. Scheduled quarterly principal payments of $221 are due on the last day of each calendar quarter. Repayment also is required in amounts specified in the Credit Agreement for certain events including certain asset sale proceeds and equity and debt offering proceeds. The Credit Agreement requires the frequency of interest payments to be not less than quarterly and an annual mandatory prepayment of the Term Loan based on a percentage of free cash flow, ranging from 25-75%, as specified in the Credit Agreement. The obligations under the Credit Agreement are secured by substantially all of our U.S. assets and a 65% pledge of the capital stock of certain first tier foreign subsidiaries. Certain of our U.S. subsidiaries have guaranteed, or are directly obligated on, the Credit Agreement. The Credit Agreement contains certain events of default including cross default provisions.

Subordinated Notes

We have $150,000 of 10% Senior Subordinated Notes due 2010 (the “Subordinated Notes”) with interest payable semi-annually. The Subordinated Notes were issued pursuant to an indenture dated February 27, 2004 (the “Indenture”). The Subordinated Notes are expressly subordinated to the payment of the Credit Agreement and any other senior indebtedness; contain affirmative and negative covenants that are customary to high yield instruments and generally no more restrictive than those contained in the Credit Agreement; contain certain events of default including cross default provisions; are unsecured; and have the benefit of guarantees of certain of the U.S. subsidiaries. Subject to certain exceptions, the Subordinated Notes may not be redeemed at our option before March 1, 2007. Thereafter, the Subordinated Notes are redeemable in the manner provided in the Indenture at redemption prices equal to 105.00% during the 12 month period beginning March 1, 2007, 102.50% during the 12 month period beginning March 1, 2008 and 100.00% beginning on March 1, 2009 and thereafter. Upon the occurrence of a change of control (as defined in the Indenture), we are required to offer to purchase the Subordinated Notes at 101.00% of their principal amount, plus accrued interest. Subject to certain restrictions and conditions, the Indenture permits the payment of a dividend or distribution to Kingpin Intermediate Corp. or the repurchase or redemption of shares of Worldwide or any parent of Worldwide of up to 35% of the Net Cash Proceeds (as defined in the Indenture) from the sale of International Operations (as defined in the Indenture).

NOTE 910. LIABILITIES SUBJECT TO RESOLUTION

~~Liabilities~~In ~~subject~~2001, toWorldwide ~~resolution~~and incertain of its U.S. subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 ~~proceeding~~with ~~were~~the ~~$233~~United atStates ~~September~~Bankruptcy ~~26,~~Court ~~2004~~for ~~and~~the ~~June~~Eastern 27District of Virginia, ~~2004.~~Richmond ~~These~~Division ~~balances~~(the ~~consist~~“Bankruptcy ~~primarily~~Court”). ofOn ~~real~~February 1, 2002, ~~and~~the ~~personal~~Bankruptcy ~~property~~Court ~~taxes~~confirmed ~~expected~~the toSecond beAmended ~~paid~~Second ~~upon~~Modified ~~settlement~~Joint Plan of Reorganization (the ~~claim~~“Plan”) orof ~~over~~the aDebtors. ~~six~~The ~~year~~Plan ~~period~~became effective on March 8, 2002, which is the date on which the Debtors emerged from Chapter 11. Liabilities subject to resolution in the

NOTE 10. COMMITMENTS AND CONTINGENCIES

Equipment Warranties

The following table provides a roll-forward from June 27, 2004 of our estimated exposure related to equipment warranties for the period ended September 26, 2004:

Balance, June 27, 2004	$	1,136
Provision		66
Payments		(60	)
Exchange rate effect		(1	)
Balance, September 26, 2004	$	1,141

The warranty reserve is evaluated on a regular basis to determine its adequacy. The reserve is based upon prior experience and management’s estimates.

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

Chapter 11 proceeding were $213 at December 26, 2004 and $233 at June 27, 2004. These balances consist primarily of real and personal property taxes expected to be paid upon settlement of the claim or over a six year period.

NOTE 11. COMMITMENTS AND CONTINGENCIES

Equipment Warranties

The following table provides a roll-forward from June 27, 2004 of our estimated exposure related to equipment warranties for the period ended December 26, 2004:


Balance, June 27, 2004	$	1,136
Provision		125
Payments		(104	)
Exchange rate effect		3

Balance, December 26, 2004	$	1,160

The warranty reserve is evaluated on a regular basis to determine its adequacy. The reserve is based upon prior experience and management’s estimates.

Asset Sales

From time to time, we will sell real estate on which a bowling center is operated, either in connection with the closing of a bowling center or in response to an attractive offer to buy such real estate. In addition, we will, from time to time, sell excess real estate.

The following table shows our asset sales for the ~~New~~reported ~~Company 2005 First Quarter~~periods:

	Proceeds		Gain/(loss), net
	2005 Second Quarter				2005 First Six Months
U.S. Centers:
	Proceeds		Gain/(loss), net		Proceeds		Gain/(loss), net
Excess property	$	1,515	$	528
U.S. Centers:
International Centers (a):
Excess property	$	3	$	3	$	1,518	$	531
Bowling centers (b)		13,381		9,473
Total asset sales	$	14,896	$	10,001

~~(a)~~Centers ~~See~~net ~~Note~~gains 13are included ~~for~~in ~~information~~bowling ~~regarding~~center ~~the~~operating ~~sale~~expenses ofand ~~our~~Products ~~bowling~~net ~~center~~gains ~~operations~~are included in selling, general and administrative expense on the ~~United~~Condensed ~~Kingdom~~Consolidated ~~and~~Statements ~~Australia~~of Operations.

(b) Includes three bowling centers in Australia which were sold in connection with sale-leaseback agreements for proceeds of $12,806 and gains of $9,928.

Net gains on sale of property and equipment are $9,222, and include the asset sales above. Centers net gains are included in bowling center operating expenses and Products net gains are included in selling, general and administrative expense on the Condensed Consolidated Statements of Operations.

Litigation and Claims

We currently and from time to time are subject to claims and actions arising in the ordinary course of our business, including general liability, workers’ compensation, employee compensation and environmental claims. In some actions, plaintiffs request punitive or other damages that may not be covered by insurance. In management’s opinion, the claims and actions in which we are involved are not expected to have a material adverse impact on our financial position or results of operations. In addition, we are a defendant in ~~certain~~two actions alleging violations of federal legislation involving unsolicited communications. These actions were brought by plaintiffs who allegedly received unsolicited communications from us or from an agent on our behalf. The plaintiffs in these actions ~~seek~~sought statutory damages and have requested geographically-limited class certifications. In one of these actions, which was brought in Georgia state court, the court ~~recently~~has approved a settlement of the class action. It is not possible at this time to predict the outcome of the remaining action. From time to time, we resolve claims alleging similar violations in order to avoid litigation.

Effects of Threatened European Community Tariff Increases

The Commission of the European Community increased tariffs this year on certain U.S. exports to the countries comprising the European Community (the “EC”) in response to benefits for U.S. exporters under the U.S. Foreign Sales Corporation/Extraterritorial Income Exclusion tax regimes, which were declared in violation of U.S. obligations by the World Trade Organization (the “WTO”). A substantial portion of our bowling products imported into the EC is subject to the additional duty. The additional duty was 5% ad valorem in March 2004 and increases 1% each month thereafter up to a maximum of 14%. The U.S. Congress recently enacted legislation which was intended to address the issues raised by the EC. Until the EC or the WTO responds to this action, there can be no assurance that the additional duty will be removed or the sanctions will not have an adverse impact on our sales in the EC or margin.

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

~~NOTE~~European ~~11.~~Community ~~BUSINESS~~Tariff ~~SEGMENTS~~

WeThe ~~operate~~Commission of the European Community increased tariffs last year on certain U.S. exports to the countries comprising the European Community (the “EC”) in ~~two~~response ~~business~~to ~~segments:~~benefits ~~operation~~for U.S. exporters under the U.S. Foreign Sales Corporation/Extraterritorial Income Exclusion tax regimes, which were declared in violation of U.S. obligations by the World Trade Organization (the “WTO”). A substantial portion of our bowling ~~centers~~products imported into the EC was subject to the additional duty. The additional duty was 5% ad valorem in March 2004 and ~~manufacture~~increased ~~and~~1% ~~sale~~each month thereafter up to a maximum of ~~bowling~~14%. ~~and~~The ~~related~~U.S. ~~products~~Congress recently enacted legislation which was intended to address the issues raised by the EC. ~~Information~~The ~~concerning~~EC ~~these~~has ~~operations~~agreed ~~from~~to ~~continuing~~repeal ~~operations~~temporarily isthe ~~presented~~additional ~~below:~~duty retroactive to January 1, 2005 until the WTO determines that the U.S. legislation adequately responded to global trade rules. There can be no assurance that the WTO will make a favorable determination.

	New Company 2005 First Quarter
(In millions)	Revenue fromunaffiliatedcustomers		Intersegmentsales			Operatingincome(loss)			Totalassets		Depreciationandamortization			Capitalexpenditures
Centers:
U.S.	$	85.5	$	—		$	(10.5	)	$	252.0	$	8.8		$	10.1
International		18.7		—			7.4			116.9		1.9			0.1
Subtotal		104.2		—			(3.1	)		368.9		10.7			10.2
Products:
U.S.		17.2		6.9			(1.2	)		83.0		1.7			0.7
International		10.0		1.0			2.1			23.4		0.1			—
Subtotal		27.2		7.9			0.9			106.4		1.8			0.7
Corporate		—		—			(5.7	)		11.7		0.4			0.8
Eliminations		—		(7.9	)		—			7.5		—			—
Total	$	131.4	$	—		$	(7.9	)	$	494.5	$	12.9		$	11.7
	Reorganized Predecessor Company 2004 First Quarter
(In millions)	Revenue fromunaffiliatedcustomers		Intersegmentsales			Operatingincome(loss)			Totalassets		Depreciationandamortization			Capitalexpenditures
Centers:
U.S.	$	89.5	$	—		$	(1.2	)	$	468.0	$	10.5		$	7.7
International		18.1		—			1.8			91.5		1.9			0.6
Subtotal		107.6		—			0.6			559.5		12.4			8.3
Products:
U.S.		18.0		4.2			1.7			86.6		1.4			0.3
International		13.1		1.1			(0.5	)		30.2		0.1			—
Subtotal		31.1		5.3			1.2			116.8		1.5			0.3
Corporate		—		—			(5.4	)		13.2		0.7			0.5
Eliminations		—		(5.3	)		0.1			7.1		(0.2	)		—
Total	$	138.7	$	—		$	(3.5	)	$	696.6	$	14.4		$	9.1

NOTE 12. BUSINESS SEGMENTS

We operate in two business segments: operation of bowling centers and manufacture and sale of bowling and related products. Information concerning these segments from continuing operations is presented below:


	New Company 2005 Second Quarter
*(In millions)*	Revenue from unaffiliated customers		Intersegment sales			Operating income (loss)			Total assets			Depreciation and amortization			Capital expenditures
Centers:
U.S.	$	112.5	$	—		$	13.0		$	252.1		$	8.1		$	8.5
International		4.7		—			0.3			67.7			0.3			0.1

Subtotal		117.2		—			13.3			319.8			8.4			8.6

Products:
U.S.		15.2		5.3			0.3			78.2			1.7			0.7
International		16.9		1.1			—			27.1			0.1			0.1

Subtotal		32.1		6.4			0.3			105.3			1.8			0.8

Corporate		—		—			(10.0	)		32.2			0.5			0.4
Eliminations		—		(6.4	)		—			7.5			(0.1	)		—

Total	$	149.3	$	—		$	3.6		$	464.8		$	10.6		$	9.8


	Reorganized Predecessor Company 2004 Second Quarter
*(In millions)*	Revenue from unaffiliated customers		Intersegment sales			Operating income (loss)			Total assets			Depreciation and amortization			Capital expenditures
Centers:
U.S.	$	116.7	$	—		$	24.9		$	483.1		$	10.5		$	11.3
International		5.8		—			0.4			106.9			0.2			0.5

Subtotal		122.5		—			25.3			590.0			10.7			11.8

Products:
U.S.		12.2		4.8			0.4			80.1			1.2			0.2
International		15.4		1.2			(0.9	)		31.4			0.1			0.1

Subtotal		27.6		6.0			(0.5	)		111.5			1.3			0.3

Corporate		—		—			(6.9	)		(7.0	)		0.2			0.6
Eliminations		—		(6.0	)		0.1			7.2			—			—

Total	$	150.1	$	—		$	18.0		$	701.7		$	12.2		$	12.7

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

NOTE 12. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS


	New Company 2005 First Six Months
*(In millions)*	Revenue from unaffiliated customers		Intersegment sales			Operating income (loss)			Total assets			Depreciation and amortization			Capital expenditures
Centers:
U.S.	$	198.0	$	—		$	2.5		$	252.1		$	16.9		$	18.6
International		9.6		—			(1.8	)		67.7			0.6			0.2

Subtotal		207.6		—			0.7			319.8			17.5			18.8

Products:
U.S.		32.5		12.2			(0.9	)		78.2			3.4			1.4
International		26.8		2.1			2.1			27.1			0.2			0.1

Subtotal		59.3		14.3			1.2			105.3			3.6			1.5

Corporate		—		—			(15.7	)		32.2			0.9			1.2
Eliminations		—		(14.3	)		—			7.5			(0.1	)		—

Total	$	266.9	$	—		$	(13.8	)	$	464.8		$	21.9		$	21.5


	Reorganized Predecessor Company 2004 First Six Months
*(In millions)*	Revenue from unaffiliated customers		Intersegment sales			Operating income (loss)			Total assets			Depreciation and amortization			Capital expenditures
Centers:
U.S.	$	206.2	$	—		$	24.5		$	483.1		$	21.0		$	19.0
International		11.1		—			0.9			106.9			0.7			0.7

Subtotal		217.3		—			25.4			590.0			21.7			19.7

Products:
U.S.		30.2		9.0			2.1			80.1			2.6			0.5
International		28.5		2.3			(1.4	)		31.4			0.2			0.1

Subtotal		58.7		11.3			0.7			111.5			2.8			0.6

Corporate		—		—			(12.3	)		(7.0	)		0.9			1.1
Eliminations		—		(11.3	)		0.2			7.2			(0.3	)		—

Total	$	276.0	$	—		$	14.0		$	701.7		$	25.1		$	21.4

The Subordinated Notes are jointly and severally guaranteed on a full and unconditional basis by our direct and indirect, wholly-owned domestic subsidiaries (the “Guarantor Subsidiaries”). Our foreign and non wholly-owned subsidiaries (the “Non-Guarantor Subsidiaries”) do not provide guarantees. Based on this distinction, the following information presents the condensed consolidating balance sheets as of September 26, 2004 and June 27, 2004, condensed consolidating statements of operations for the New Company 2005 First Quarter and Reorganized Predecessor Company 2004 First Quarter and the condensed consolidating statements of cash flows for the New Company 2005 First Quarter and the Reorganized Predecessor Company 2004 First Quarter. The elimination entries presented are necessary to combine the entities.

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

~~Condensed~~NOTE ~~Consolidating Financial~~13. ~~Statements~~CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

~~AMF~~The ~~Bowling~~Subordinated ~~Worldwide~~Notes are jointly and severally guaranteed on a full and unconditional basis by our direct and indirect, ~~Inc~~wholly-owned domestic subsidiaries (the “Guarantor Subsidiaries”). Our foreign and non wholly-owned subsidiaries (the “Non-Guarantor Subsidiaries”) do not provide guarantees. Based on this distinction, the following information presents the condensed consolidating balance sheets as of December 26, 2004 and June 27, 2004, condensed consolidating statements of operations for the New Company 2005 Second Quarter, Reorganized Predecessor Company 2004 Second Quarter, New Company 2005 First Six Months and Reorganized Predecessor Company 2004 First Six Months and the condensed consolidating statements of cash flows for the New Company 2005 First Six Months and the Reorganized Predecessor Company 2004 First Six Months. The elimination entries presented are necessary to combine the entities.

Condensed Consolidating Balance Sheet

	September 26, 2004
	Worldwide			GuarantorSubsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Assets
Current assets:
Cash and cash equivalents	$	3,993		$	7,647		$	4,644		$	—		$	16,284
Accounts and notes receivable, net		—			20,726			3,950			—			24,676
Accounts and notes receivable - intercompany		20,753			148,429			8,361			(177,543	)		—
Inventories, net		—			29,395			5,927			(3,395	)		31,927
Prepaid expenses and other current assets		(7,383	)		19,766			1,616			—			13,999
Assets held for sale		—			—			45,320			—			45,320
Total current assets		17,363			225,963			69,818			(180,938	)		132,206
Notes receivable – intercompany		42,851			—			5,663			(48,514	)		—
Property and equipment, net		7,639			299,903			4,777			2,356			314,675
Investment in subsidiaries		465,612			—			5			(465,617	)		—
Other assets		28,994			97,051			(554	)		(77,900	)		47,591
Total assets	$	562,459		$	622,917		$	79,709		$	(770,613	)	$	494,472
Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	17		$	12,937		$	1,221		$	—		$	14,175
Accrued expenses and other liabilities		9,365			66,570			4,906			—			80,841
Current portion of long-term debt		1,688			544			79			—			2,311
Accounts and notes payable - intercompany		135,871			13,361			28,311			(177,543	)		—
Liabilities held for sale		—			—			6,531			—			6,531
Total current liabilities		146,941			93,412			41,048			(177,543	)		103,858
Long-term debt, less current portion		290,674			2,699			331			—			293,704
Liabilities, subject to resolution		—			233			—			—			233
Other long-term liabilities		21,569			56,164			167			(77,900	)		—
Notes payable-intercompany		5,559			—			42,955			(48,514	)		—
Total liabilities		464,743			152,508			84,501			(303,957	)		397,795
Stockholder’s equity:
Common stock		—			—			—			—			—
Paid-in capital		133,716			649,280			44,623			(693,903	)		133,716
Accumulated deficit		(30,893	)		(182,481	)		(39,078	)		220,520			(31,932	)
Accumulated other comprehensive income (loss)		(5,107	)		3,610			(10,337	)		6,727			(5,107	)
Total stockholder’s equity		97,716			470,409			(4,792	)		(466,656	)		96,677
Total liabilities and stockholder’s equity	$	562,459		$	622,917		$	79,709		$	(770,613	)	$	494,472

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

Condensed Consolidating Financial Statements

AMF Bowling Worldwide, Inc.

Condensed Consolidating Balance Sheet

	June 27, 2004
	December 26, 2004
	Worldwide			~~Guarantor Subsidiaries~~GuarantorSubsidiaries			Non-~~Guarantor Subsidiaries~~GuarantorSubsidiaries			Eliminations			Total
Assets
Current assets:
Cash and cash equivalents	$	324,~~379~~298		$	64,~~484~~967		$	2,~~871~~019		$	—		$	1231,~~734~~284
Accounts and notes receivable, net		—			2120,~~333~~414			4,~~404~~051			—			2524,~~737~~465
Accounts and notes receivable - intercompany		1626,~~288~~548			~~150~~165,~~135~~616			208,~~146~~879			(~~186~~201,~~569~~043	)		—
Inventories, net		—			2729,~~430~~657			65,~~039~~710			(23,~~724~~513	)		3031,~~745~~854
Prepaid expenses and other current assets		(76,~~137~~346	)		1917,~~444~~922			61,~~924~~876			—			1913,~~231~~452
Total current assets		12,530			224,826			40,384			(189,293	)		88,447
Assets held for sale		—			51,125			—			—			51,125
Notes receivable – intercompany		47,330			—			5,663			(52,993	)		—
Total current assets		44,500			289,701			22,535			(204,556	)		152,180
Property and equipment, net		7,256			315,007			41,627			66			363,956
Notes receivable – intercompany		1,896			—			3,000			(4,896	)		—
Investment in subsidiaries		477,829			—			5			(477,834	)		—
Property and equipment, net		7,595			253,571			4,891			2,480			268,537
Other assets		30,003			98,258			(392	)		(78,165	)		49,704
Investment in subsidiaries		446,334			—			5			(446,339	)		—
Total assets	$	574,948		$	638,091		$	87,287		$	(798,219	)	$	502,107
Other assets		28,250			93,416			(657	)		(76,877	)		44,132
Total assets	$	528,575		$	636,688		$	29,774		$	(730,188	)	$	464,849
Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	~~496~~120		$	1412,~~719~~381		$	61,~~446~~019		$	—		$	2113,~~661~~520
Accrued expenses and other liabilities		1317,~~533~~092			6053,~~189~~512			65,~~257~~054			—			7975,~~979~~658
Current portion of long-term debt		~~1,688~~884			~~530~~586			7689			—			21,~~294~~559
Accounts and notes payable - intercompany		~~130~~126,~~212~~568			1343,~~576~~402			4231,~~781~~073			(~~186~~201,~~569~~043	)		—
Total current liabilities		145,929			89,014			55,560			(186,569	)		103,934
Liabilities held for sale		—			10,011			—			—			10,011
Long-term debt, less current portion		283,317			2,837			349			—			286,503
Total current liabilities		144,664			119,892			37,235			(201,043	)		100,748
Liabilities, subject to resolution		—			233			—			—			233
Long-term debt, less current portion		237,041			2,584			342			—			239,967
Other long-term liabilities		21,569			56,422			174			(78,165	)		—
Liabilities, subject to resolution		—			213			—			—			213
Notes payable-intercompany		10,038			—			42,955			(52,993	)		—
Other long-term liabilities		21,569			55,141			167			(76,877	)		—
Total liabilities		460,853			148,506			99,038			(317,727	)		390,670
Notes payable-intercompany		347			4,549			—			(4,896	)		—
Total liabilities		403,621			182,379			37,744			(282,816	)		340,928
Stockholder’s equity:
Common stock		—			—			—			—			—
Paid-in capital		133,716			~~504~~677,~~566~~220			~~(10~~9,~~975~~432	)		(~~493~~686,~~591~~652	)		133,716
Accumulated (deficit) earnings		(16,334	)		(9,965	)		(886	)		8,193			(18,992	)
Accumulated deficit		(4,912	)		(228,467	)		(6,377	)		233,811			(5,945	)
Accumulated other comprehensive income (loss)		(3,~~287~~850	)		(5,~~016~~556	)		~~110~~(11,025	)		45,~~906~~469			(3,~~287~~850	)
Total stockholder’s equity		~~114~~124,~~095~~954			~~489~~454,~~585~~309			(117,~~751~~970	)		(~~480~~447,~~492~~372	)		~~111~~123,~~437~~921
Total liabilities and stockholder’s equity	$	~~574~~528,~~948~~575		$	~~638~~636,~~091~~688		$	8729,~~287~~774		$	(~~798~~730,~~219~~188	)	$	~~502~~464,~~107~~849

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

Condensed Consolidating Financial Statements

AMF Bowling Worldwide, Inc.

Condensed Consolidating ~~Statements~~Balance ofSheet ~~Operations~~

	New Company 2005 First Quarter
	June 27, 2004
	Worldwide			~~Guarantor Subsidiaries~~GuarantorSubsidiaries			Non-~~Guarantor Subsidiaries~~GuarantorSubsidiaries			Eliminations			Total
Operating revenue	$	—		$	125,517		$	9,590		$	(3,725	)	$	131,382
Assets
Operating expenses:
Current assets:
Cost of goods sold		—			27,516			5,273			(3,515	)		29,274
Cash and cash equivalents	$	3,379		$	6,484		$	2,871		$	—		$	12,734
Bowling center operating expenses		—			80,533			4,755			(210	)		85,078
Accounts and notes receivable, net		—			21,333			4,404			—			25,737
Selling, general and administrative expenses		5,318			4,809			623			—			10,750
Accounts and notes receivable - intercompany		16,288			150,135			20,146			(186,569	)		—
Asset impairment		—			1,303			—			—			1,303
Inventories, net		—			27,430			6,039			(2,724	)		30,745
Depreciation and amortization		430			12,307			137			(9	)		12,865
Prepaid expenses and other current assets		(7,137	)		19,444			6,924			—			19,231
Total operating expenses		5,748			126,468			10,788			(3,734	)		139,270
Total current assets		12,530			224,826			40,384			(189,293	)		88,447
Operating income (loss)		(5,748	)		(951	)		(1,198	)		9			(7,888	)
Notes receivable – intercompany		47,330			—			5,663			(52,993	)		—
Non-operating (income) expenses:
Property and equipment, net		7,256			315,007			41,627			66			363,956
Interest expense		6,429			73			—			—			6,502
Investment in subsidiaries		477,829			—			5			(477,834	)		—
Interest income		—			(111	)		(8	)		—			(119	)
Other assets		30,003			98,258			(392	)		(78,165	)		49,704
Other expense (income)		(7,481	)		6,315			(3,331	)		—			(4,497	)
Total assets	$	574,948		$	638,091		$	87,287		$	(798,219	)	$	502,107
Total non-operating expenses		(1,052	)		6,277			(3,339	)		—			1,886
Liabilities and Stockholder’s Equity
Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries		(4,696	)		(7,228	)		2,141			9			(9,774	)
Current liabilities:
Provision for income taxes		122			2,240			1,045			—			3,407
Accounts payable	$	496		$	14,719		$	6,446		$	—		$	21,661
Income (loss) from continuing operations		(4,818	)		(9,468	)		1,096			9			(13,181	)
Accrued expenses and other liabilities		13,533			60,189			6,257			—			79,979
Income from discontinued operations, net of tax		—			—			241			—			241
Current portion of long-term debt		1,688			530			76			—			2,294
Equity in income (loss) of subsidiaries		(8,122	)		—			—			8,122			—
Accounts and notes payable - intercompany		130,212			13,576			42,781			(186,569	)		—
Net income (loss)	$	(12,940	)	$	(9,468	)	$	1,337		$	8,131		$	(12,940	)
Total current liabilities		145,929			89,014			55,560			(186,569	)		103,934
Long-term debt, less current portion		283,317			2,837			349			—			286,503
Liabilities, subject to resolution		—			233			—			—			233
Other long-term liabilities		21,569			56,422			174			(78,165	)		—
Notes payable-intercompany		10,038			—			42,955			(52,993	)		—
Total liabilities		460,853			148,506			99,038			(317,727	)		390,670
Stockholder’s equity:
Common stock		—			—			—			—			—
Paid-in capital		133,716			504,566			(10,975	)		(493,591	)		133,716
Accumulated (deficit) earnings		(16,334	)		(9,965	)		(886	)		8,193			(18,992	)
Accumulated other comprehensive income (loss)		(3,287	)		(5,016	)		110			4,906			(3,287	)
Total stockholder’s equity		114,095			489,585			(11,751	)		(480,492	)		111,437
Total liabilities and stockholder’s equity	$	574,948		$	638,091		$	87,287		$	(798,219	)	$	502,107

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

Condensed Consolidating Financial Statements

AMF Bowling Worldwide, Inc.

Condensed Consolidating Statements of Operations

	Reorganized Predecessor Company 2004 First Quarter
	New Company 2005 Second Quarter
	Worldwide			~~Guarantor Subsidiaries~~GuarantorSubsidiaries			Non-~~Guarantor Subsidiaries~~GuarantorSubsidiaries			Eliminations			Total
Operating revenue	$	—		$	~~132~~140,~~265~~792		$	911,~~389~~716		$	(23,~~974~~218	)	$	~~138~~149,~~680~~290
Operating expenses:
Cost of goods sold		—			3136,~~040~~364			46,~~458~~527			(23,~~808~~467	)		3239,~~690~~424
Bowling center operating expenses		—			8075,~~624~~796			34,~~642~~141			(~~166~~80	)		8479,~~100~~857
Selling, general and administrative expenses		49,~~729~~532			54,~~314~~803			~~916~~1,377			—			1015,~~959~~712
Depreciation and amortization		~~666~~499			139,~~513~~897			~~206~~258			—(5	)		1410,~~385~~649
Total operating expenses		510,~~395~~031			~~130~~126,~~491~~860			912,~~222~~303			(23,~~974~~552	)		~~142~~145,~~134~~642
Operating income (loss)		(510,~~395~~031	)		113,~~774~~932			~~167~~(587	)		—334			(3,~~454~~648	)
Non-operating (income) expenses:
Interest expense		96,~~125~~641			6238			—			—			96,~~187~~679
Interest income		(8265	)		(8126	)		(415	)		—			(93306	)
Other expense (income)		(7,436	)		5,984			594			—			(858	)
Other (income) expense		(6,241	)		6,771			(617	)		—			(87	)
Total non-operating expenses		1,681			5,965			590			—			8,236
Total non-operating (income) expenses		135			6,783			(632	)		—			6,286
Loss from continuing operations before income taxes and equity in income (loss) of subsidiaries		(7,076	)		(4,191	)		(423	)		—			(11,690	)
Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries		(10,166	)		7,149			45			334			(2,638	)
Provision (benefit) for income taxes		—219			~~(75~~669	)		~~186~~388			—			~~111~~1,276
Loss from continuing operations		(7,076	)		(4,116	)		(609	)		—			(11,801	)
Income (loss) from continuing operations		(10,385	)		6,480			(343	)		334			(3,914	)
Loss from discontinued operations, net of tax		—			—			(871	)		—			(871	)
Discontinued operations:
Equity in income (loss) of subsidiaries		(5,596	)		—			—			5,596			—
Income (loss) from discontinued operations, net of tax		—			442			(788	)		—			(346	)
Net loss	$	(12,672	)	$	(4,116	)	$	(1,480	)	$	5,596		$	(12,672	)
Gain on disposal, net of tax		30,247			—			—			—			30,247
Income (loss) from discontinued operations		30,247			442			(788	)		—			29,901
Equity in income (loss) of subsidiaries		6,125			—			—			(6,125	)		—
Net income (loss)	$	25,987		$	6,922		$	(1,131	)	$	(5,791	)	$	25,987

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

Condensed Consolidating Financial Statements

AMF Bowling Worldwide, Inc.

Condensed Consolidating ~~Statement~~Statements of ~~Cash~~Operations ~~Flows~~

	New Company 2005 First Quarter
	Reorganized Predecessor Company 2004 Second Quarter
	Worldwide			~~Guarantor Subsidiaries~~GuarantorSubsidiaries			Non-~~Guarantor Subsidiaries~~GuarantorSubsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities from continuing operations	$	(5,961	)	$	(2,755	)	$	1,938		$	2,082		$	(4,696	)
Operating revenue	$	—		$	142,702		$	10,274		$	(2,883	)	$	150,093
Cash flows from investing activities:
Operating expenses:
Purchases of property and equipment		(782	)		(10,838	)		(85	)		—			(11,705	)
Cost of goods sold		—			31,022			5,081			(2,684	)		33,419
Proceeds from the sale of property and equipment		—			14,896			—			—			14,896
Bowling center operating expenses		—			70,240			4,414			(185	)		74,469
Net cash provided by (used in) investing activities		(782	)		4,058			(85	)		—			3,191
Selling, general and administrative expenses		6,706			4,506			788			—			12,000
Cash flows from financing activities:
Depreciation and amortization		229			11,778			240			—			12,247
Borrowings under revolving line of credit		8,000			—			—			—			8,000
Total operating expenses		6,935			117,546			10,523			(2,869	)		132,135
Repayments under long-term debt		(643	)		—			—			—			(643	)
Operating income (loss)		(6,935	)		25,156			(249	)		(14	)		17,958
Repayment under capital lease obligations		—			(140	)		—			—			(140	)
Non-operating (income) expenses:
Net cash provided by (used in) financing activities		7,357			(140	)		—			—			7,217
Interest expense		8,793			66			—			—			8,859
Effect of exchange rates on cash		—			—			—			(2,082	)		(2,082	)
Interest income		97			(59	)		(104	)		—			(66	)
Net cash used in discontinued operations		—			—			(80	)		—			(80	)
Other (income) expense		(8,852	)		5,776			27			(53	)		(3,102	)
Net increase in cash		614			1,163			1,773			—			3,550
Total non-operating (income) expenses		38			5,783			(77	)		(53	)		5,691
Cash at beginning of period		3,379			6,484			2,871			—			12,734
Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries		(6,973	)		19,373			(172	)		39			12,267
Cash at end of period	$	3,993		$	7,647		$	4,644		$	—		$	16,284
Provision for income taxes		—			1,204			527			—			1,731
Income (loss) from continuing operations		(6,973	)		18,169			(699	)		39			10,536
Income (loss) from discontinued operations, net of tax		—			(656	)		2,614			—			1,958
Equity in income (loss) of subsidiaries		19,467			—			—			(19,467	)		—
Net income (loss)	$	12,494		$	17,513		$	1,915		$	(19,428	)	$	12,494

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

Condensed Consolidating Financial Statements

AMF Bowling Worldwide, Inc.

Condensed Consolidating ~~Statement~~Statements of ~~Cash~~Operations ~~Flows~~

	Reorganized Predecessor Company 2004 First Quarter
	New Company 2005 First Six Months
	Worldwide			~~Guarantor Subsidiaries~~GuarantorSubsidiaries			Non-~~Guarantor Subsidiaries~~GuarantorSubsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities from continuing operations	$	(14,393	)	$	7,571		$	2,482		$	2,223		$	(2,117	)
Operating revenue	$	—		$	252,526		$	21,306		$	(6,943	)	$	266,889
Cash flows from investing activities:
Operating expenses:
Purchases of property and equipment		(491	)		(8,415	)		(183	)		—			(9,089	)
Cost of goods sold		—			62,332			11,800			(6,982	)		67,150
Proceeds from the sale of property and equipment		—			892			—			—			892
Bowling center operating expenses		—			155,188			8,896			(290	)		163,794
Net cash used in investing activities		(491	)		(7,523	)		(183	)		—			(8,197	)
Selling, general and administrative expenses		14,850			9,614			2,000			—			26,464
Cash flows from financing activities:
Asset impairment		—			1,303			—			—			1,303
Borrowing under revolving line of credit		5,000			—			—			—			5,000
Depreciation and amortization		929			20,619			395			(14	)		21,929
Payments on long-term debt		(25,358	)		—			—			—			(25,358	)
Total operating expenses		15,779			249,056			23,091			(7,286	)		280,640
Repayment under capital lease obligations		—			(56	)		—			—			(56	)
Operating income (loss)		(15,779	)		3,470			(1,785	)		343			(13,751	)
Net cash used in financing activities		(20,358	)		(56	)		—			—			(20,414	)
Non-operating (income) expenses:
Effect of exchange rates on cash		—			—			—			(2,223	)		(2,223	)
Interest expense		13,070			111			—			—			13,181
Net cash used by discontinued operations		—			—			(1,074	)		—			(1,074	)
Interest income		(265	)		(44	)		(23	)		—			(332	)
Net increase (decrease) in cash		(35,242	)		(8	)		1,225			—			(34,025	)
Other (income) expense		(13,722	)		12,931			(3,948	)		—			(4,739	)
Cash at beginning of period		48,123			5,440			2,712			—			56,275
Total non-operating (income) expenses		(917	)		12,998			(3,971	)		—			8,110
Cash at end of period	$	12,881		$	5,432		$	3,937		$	—		$	22,250
Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries		(14,862	)		(9,528	)		2,186			343			(21,861	)
Provision (benefit) for income taxes		341			(126	)		1,433			—			1,648
Income (loss) from continuing operations		(15,203	)		(9,402	)		753			343			(23,509	)
Discontinued operations:
Income (loss) from discontinued operations, net of tax		—			6,856			(547	)		—			6,309
Gain on disposal, net of tax		30,247			—			—			—			30,247
Income (loss) from discontinued operations		30,247			6,856			(547	)		—			36,556
Equity in income (loss) of subsidiaries		(1,997	)		—			—			1,997			—
Net income (loss)	$	13,047		$	(2,546	)	$	206		$	2,340		$	13,047

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

~~NOTE~~Condensed ~~13.~~Consolidating Financial ~~SUBSEQUENT~~Statements ~~EVENTS~~

OnAMF ~~September~~Bowling 30Worldwide, ~~2004, we sold our bowling center business that operated 33 bowling centers in the United Kingdom for gross cash proceeds of approximately $71,200~~Inc.

OnCondensed ~~October~~Consolidating ~~19,~~Statements 2004, we signed a definitive agreement to sell our 45 operating bowling centers in Australia for approximately $49,300, subject to certain adjustments to be made at closing. The sale will also include the real estate associated with one closed bowling center. The transaction is expected to close by the end of ~~November~~Operations ~~2004, subject to certain closing conditions. Following consummation of the sale, we will have exited all bowling center operations in Australia.~~


	Reorganized Predecessor Company 2004 First Six Months
	Worldwide			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Operating revenue	$	—		$	262,193		$	19,663		$	(5,857	)	$	275,999

Operating expenses:
Cost of goods sold		—			60,600			9,539			(5,492	)		64,647
Bowling center operating expenses		—			141,589			8,056			(351	)		149,294
Selling, general and administrative expenses		11,435			9,819			1,704			—			22,958
Depreciation and amortization		895			23,740			446			—			25,081

Total operating expenses		12,330			235,748			19,745			(5,843	)		261,980

Operating income (loss)		(12,330	)		26,445			(82	)		(14	)		14,019

Non-operating (income) expenses:
Interest expense		17,918			128			—			—			18,046
Interest income		89			(107	)		(108	)		—			(126	)
Other (income) expense		(16,288	)		12,411			621			(53	)		(3,309	)

Total non-operating (income) expenses		1,719			12,432			513			(53	)		14,611

Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries		(14,049	)		14,013			(595	)		39			(592	)

Provision for income taxes		—			959			713			—			1,672

Income (loss) from continuing operations		(14,049	)		13,054			(1,308	)		39			(2,264	)

Income from discontinued operations, net of tax		—			343			1,743			—			2,086

Equity in income (loss) of subsidiaries		13,871			—			—			(13,871	)		—

Net income (loss)	$	(178	)	$	13,397		$	435		$	(13,832	)	$	(178	)

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

Condensed Consolidating Financial Statements

AMF Bowling Worldwide, Inc.

Condensed Consolidating Statement of Cash Flows


	New Company 2005 First Six Months
	Worldwide			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities from continuing operations	$	(669	)	$	(380	)	$	51		$	2,123		$	1,125

Cash flows from investing activities:
Capital expenditures		(1,207	)		(20,050	)		(256	)		—			(21,513	)
Proceeds from the sale of:
Property and equipment		—			1,548			—			—			1,548
Sale of subsidiary		69,875			—			—			—			69,875

Net cash provided by (used in) investing activities		68,668			(18,502	)		(256	)		—			49,910

Cash flows from financing activities:
Repayments under long-term debt		(47,080	)		—			—			—			(47,080	)
Repayment under capital lease obligations		—			(211	)		—			—			(211	)

Net cash used in financing activities		(47,080	)		(211	)		—			—			(47,291	)

Effect of exchange rates on cash		—			—			—			(2,123	)		(2,123	)
Net cash provided by (used in) discontinued operations		—			17,576			(647	)		—			16,929

Net increase (decrease) in cash		20,919			(1,517	)		(852	)		—			18,550

Cash at beginning of period		3,379			6,484			2,871			—			12,734

Cash at end of period	$	24,298		$	4,967		$	2,019		$	—		$	31,284

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

Condensed Consolidating Financial Statements

AMF Bowling Worldwide, Inc.

Condensed Consolidating Statement of Cash Flows


	Reorganized Predecessor Company 2004 First Six Months
	Worldwide			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities from continuing operations	$	(4,613	)	$	15,452		$	2,649		$	1,754		$	15,242

Cash flows from investing activities:
Capital expenditures		(1,097	)		(19,583	)		(673	)		—			(21,353	)
Proceeds from the sale of property and equipment		—			3,394			33			—			3,427

Net cash used in investing activities		(1,097	)		(16,189	)		(640	)		—			(17,926	)

Cash flows from financing activities:
Payments on long-term debt		(28,380	)		—			—			—			(28,380	)
Repayment under capital lease obligations		—			(146	)		—			—			(146	)

Net cash used in financing activities		(28,380	)		(146	)		—			—			(28,526	)

Effect of exchange rates on cash		—			—			—			(1,754	)		(1,754	)
Net cash provided by discontinued operations		—			3,535			2,447			—			5,982

Net increase (decrease) in cash		(34,090	)		2,652			4,456			—			(26,982	)

Cash at beginning of period		48,123			5,440			2,712			—			56,275

Cash at end of period	$	14,033		$	8,092		$	7,168		$	—		$	29,293

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

NOTE 14. SUBSEQUENT EVENTS

On February 8, 2005, we sold our 42 bowling centers in Australia for approximately $47,810 and exited bowling center operations in that country. The purchase price is subject to certain post-closing adjustments.

On February 8, 2005, we prepaid the principal balance of $482 that was due on a capital lease for bowling equipment, which we lease to a customer in Portugal.

On February 8, 2005, our Board of Directors approved a dividend of approximately $46,830 to Kingpin Intermediate Corp., which is our sole shareholder. This dividend will eventually be distributed to the equity holders of Kingpin Holdings. Under our Credit Agreement and Indenture, subject to certain restrictions and conditions, we may distribute up to 35% of the net cash proceeds from the sale of certain international operations. As a condition to making such distribution, the Indenture requires us to first make an offer to the holders of our Subordinated Notes to purchase Subordinated Notes with an aggregated principal amount equal to 35% of such net cash proceeds (as defined in the Indenture) at a price equal to 102% of the aggregate principal amount being purchased. We expect to make an offer to purchase approximately $46,830 of Subordinated Notes at 102% on or about February 11, 2005. The offer will expire twenty business days after it is made.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

AMF Bowling Worldwide, Inc., a Delaware Corporation, and its subsidiaries (which may be referred to as Worldwide, the Company, we, us or our) operate in two business segments: bowling center operations (“Centers”) and bowling products operations (“Products”). At ~~September~~December 26, 2004, Centers, the largest segment, represented 7980.35% of consolidated revenue. In reviewing Centers, management focuses on revenue, operating expenses and capital expenditures. In reviewing Products, management focuses on working capital as well as revenue, operating expenses and gross profit margin.

To facilitate a meaningful comparison, certain portions of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) discuss the results of Centers and Products separately.

The MD&A discussion should be read in conjunction with the unaudited interim condensed consolidated financial statements and the notes to the condensed consolidated financial statements. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. Certain totals may be affected by rounding. Unless the context otherwise indicates, dollar amounts in this MD&A are in millions.

Our Centers segment ~~includes~~had ~~the~~425 ~~operation~~bowling ofcenters ~~the~~on ~~U.S.~~December ~~and international facilities~~26, ~~which~~2004 ~~together~~(368 ~~operated~~in ~~460~~the ~~centers~~U.S. asand of57 ~~September 26, 2004~~internationally). On September 30, 2004, we sold 33 bowling centers in the United Kingdom for ~~gross~~ ~~cash proceeds of~~ approximately $71.2 million and exited bowling center operations in that country. ~~The results of operations for the centers in the United Kingdom are reported as discontinued operations for all periods presented.~~

On February 8, 2005, we sold our 42 bowling centers in Australia for approximately $47.8 million and exited bowling center operations in that country. The purchase price is subject to certain post-closing adjustments. The results of operations of the bowling centers in the United Kingdom and Australia are reported as discontinued operations for all periods presented.

Our Products segment includes the manufacture of bowling equipment such as automatic pinspotters, automatic scoring equipment, bowling pins, lanes, ball returns, lane machines, bowling center supplies and the resale of other related products, including bowling bags and shoes.

Merger

On November 26, 2003, Kingpin Holdings, LLC (“Kingpin Holdings”) and its wholly-owned subsidiary, Kingpin Merger Sub, Inc. (“Merger Sub”), entered into an Agreement and Plan of Merger with Worldwide (the “Merger Agreement”). Pursuant to the Merger Agreement, on February 27, 2004, Merger Sub was merged into Worldwide with Worldwide being the surviving corporation (the “Merger”). The Company, as it existed after the Merger, is sometimes referred to as the “New Company.” Each shareholder of Worldwide received $25.00 in cash for each share of the common stock of Worldwide that was outstanding prior to the Merger ~~(the “Old Common Stock”)~~ including vested options and warrants, for aggregate proceeds (including option proceeds) of $258.7 million. The ~~Old~~old ~~Common~~common ~~Stock~~stock was canceled and the common stock of Merger Sub became the new common stock of Worldwide ~~(the “New Common Stock”)~~. As part of the Merger, Kingpin Intermediate Corp., a wholly-owned subsidiary of Kingpin Holdings, became the sole shareholder of Worldwide.

Kingpin Holdings is a Delaware limited liability company formed at the direction of Code Hennessy & Simmons LLC, a Chicago-based private equity firm ~~(“CHS”)~~.

Consolidated Results

The results of operations of the consolidated group of companies, Centers and Products are discussed below. The business segment results are presented before intersegment eliminations since we believe this provides a more accurate comparison of performance by segment. The intersegment eliminations are included in the consolidated results and are not material.

2124

Prior to February 27, 2004, we were referred to as the “Reorganized Predecessor Company” and, as we existed on and after February 27, 2004, are referred to as the “New Company.” As a result of the Merger, our financial results during the three and six months ended ~~September~~December 26, 2004 and the three and six months ended ~~September~~December 28, 2003 are not comparable due to the Merger described above.

Period		Referred to as
Results for the New Company from June 28, 2004 through September 26, 2004		“New Company 2005 First Quarter”
Results for the New Company from September 27, 2004 through December 26, 2004		“New Company 2005 Second Quarter”
Results for the Reorganized Predecessor Company from June 30, 2003 through September 28, 2003		“Reorganized Predecessor Company 2004 First Quarter”
Results for the New Company from June 28, 2004 through December 26, 2004		“New Company 2005 First Six Months”
Results for the Reorganized Predecessor Company from September 29, 2003 through December 28, 2003		“Reorganized Predecessor Company 2004 Second Quarter”
Results for the Reorganized Predecessor Company from June 30, 2003 through December 28, 2003		“Reorganized Predecessor Company 2004 First Six Months”

Consolidated Results

	NewCompany			ReorganizedPredecessorCompany			NewCompany			ReorganizedPredecessorCompany
(In millions)	2005 ~~FirstQuarter~~SecondQuarter			2004 ~~FirstQuarter~~SecondQuarter			2005 FirstSix Months			2004 FirstSix Months
Operating revenue	$	~~131~~149.43		$	~~138~~150.71		$	266.9		$	276.0
Cost of goods sold		29.3			32.7
Operating expenses:
Bowling center operating expenses		85.1			84.1
Cost of goods sold		39.4			33.4			67.2			64.6
Selling, general and administrative expenses		10.7			11.0
Bowling center operating expenses		79.9			74.5			163.8			149.3
Asset impairment		1.3			—
Selling, general and administrative expenses		15.7			12.0			26.5			23.0
Depreciation and amortization		12.9			14.4
Asset impairment		—			—			1.3			—
Operating loss		(7.9	)		(3.5	)
Depreciation and amortization		10.6			12.2			21.9			25.1
Interest expense, net		6.4			9.1
Operating income (loss)		3.6			18.0			(13.8	)		14.0
Other income, net		(4.5	)		(0.9	)
Interest expense, net		6.4			8.8			12.8			17.9
Loss from continuing operations before income taxes		(9.8	)		(11.7	)
Other income, net		(0.1	)		(3.1	)		(4.7	)		(3.3	)
Provision for income taxes		3.4			0.1
Income (loss) from continuing operations before income taxes		(2.6	)		12.3			(21.9	)		(0.6	)
Loss from continuing operations		(13.2	)		(11.8	)
Provision for income taxes		1.3			1.7			1.6			1.7
Income (loss) from discontinued operations, net of tax		0.3			(0.9	)
Income (loss) from continuing operations		(3.9	)		10.5			(23.5	)		(2.3	)
Net loss	$	(12.9	)	$	(12.7	)
Discontinued operations:
Income (loss) from discontinued operations, net of tax		(0.3	)		2.0			6.3			2.1
Gain on disposal, net of tax		30.2			—			30.2			—
Income from discontinued operations		29.9			2.0			36.6			2.1
Net income (loss)	$	26.0		$	12.5		$	13.0		$	(0.2	)

2005 First Quarter compared with 2004 First Quarter

Revenue

Consolidated operating revenue ~~was~~for ~~$131.4 million in~~ the New Company 2005 ~~First~~ Second Quarter was $149.3 million, a decrease of $70.38 million, or 50.35%, compared with the Reorganized Predecessor Company 2004 ~~First~~Second Quarter. This decrease was partially attributable to a $2.6 million decrease in U.S. constant center revenue due primarily to a ~~decrease~~ decrease in league and open lineage (number of games bowled per lane per day). In addition, closed centers represent a $13.90 million negative variance compared with the prior year period. ~~Products revenue decreased $1.3 million, or 3.6%.~~ These decreases were partially offset by an increase in Products ~~international constant center~~ revenue ~~as a result~~ of ~~favorable~~$4.9 ~~foreign~~million, ~~exchange~~or ~~rates~~14.6%.

22Consolidated operating revenue for the New Company 2005 First Six Months was $266.9 million, a decrease of $9.1 million, or 3.3%, compared with the Reorganized Predecessor Company 2004 First Six Months. This decrease was attributable to a $5.2 million decrease in U.S. constant center revenue due primarily to a decrease in league lineage. Additionally, closed centers represent a $4.7 million negative variance compared with the prior year period. These losses were partially offset by an increase in Products revenue of $3.6 million, or 5.1%.

Depreciation and Amortization

Depreciation and amortization decreased $1.56 million, or 10 13.41%, in the New Company 2005 ~~First~~Second Quarter ~~compared~~and ~~with~~$3.2 million, or 12.7%, in the ~~Reorganized~~ ~~Predecessor~~New Company ~~2004~~2005 First ~~Quarter.~~Six ~~This~~Months ~~decrease~~when ~~was~~compared ~~primarily~~with ~~attributable~~the toprior ayear $1periods.8 ~~million~~These ~~decrease~~decreases were primarily attributable to decreases in depreciation as a result of the sale-leaseback agreements that were entered into in conjunction with the Merger (the “Sale-Leaseback Agreements”). ~~Additionally, Centers depreciation decreased as a result~~ of machinery and equipment acquired in 1996 becoming fully depreciated. These decreases were partially offset by an increase in depreciation primarily attributable to adjustments made as a result of the application of purchase method accounting related to the Merger of $21.08 million and $0.3 ~~million for U~~.S.6 ~~Centers and Products, respectively.~~

million for the New Company 2005 Second Quarter and New Company 2005 First Six Months, respectively. Additionally, Centers depreciation decreased as a result of machinery and equipment acquired in 1996 and 1997 becoming fully depreciated. These decreases were partially offset by an increase in depreciation primarily attributable to adjustments made as a result of the application of purchase method accounting related to the Merger of $2.7 million and $5.5 million for the New Company 2005 Second Quarter and New Company 2005 First Six Months, respectively.

Asset Impairment

In the New Company 2005 First ~~Quarter~~Six Months, we recorded $1.3 million related to asset impairment charges representing the difference between the fair market value and carrying value of impaired assets in the U.S.

Interest Expense, net

Interest expense, net decreased $2.74 million, or 29 27.73%, in the New Company 2005 ~~First~~Second Quarter ~~compared~~and ~~with~~$5.1 ~~the~~million, ~~Reorganized~~or ~~Predecessor~~28.5%, in the New Company ~~2004~~2005 First ~~Quarter,~~Six Months compared with prior year periods. These decreases are primarily the result of lower principal amounts and interest rates under our senior secured credit agreement (the “Credit Agreement”).

Provision for Income Taxes

Total income tax expense increased to $35.41 million in the New Company 2005 ~~First~~Second Quarter from $0.1.2 million in the Reorganized Predecessor Company 2004 ~~First~~Second Quarter, ~~primarily~~including ~~due~~tax expense on discontinued operations. The increase to income tax expense for the quarter ~~estimated~~is primarily attributable to the gain on the sale of ~~certain~~our ~~Australian~~ bowling center ~~properties~~operations in the United Kingdom.

~~Net~~Total ~~Loss~~income tax expense increased to $8.2 million in the New Company 2005 First Six Months from $1.7 million in the Reorganized Predecessor Company 2004 First Six Months. The tax provision recorded for the New Company 2005 First Six Months includes federal, state, and foreign taxes, including tax expense on discontinued operations. The increase is primarily due to the gain on the sale of our bowling center operations in the United Kingdom and the taxation of individual subsidiaries by separate foreign jurisdictions. Various foreign subsidiaries and branches recorded a combined tax expense of $5.2 million as compared to an expense of $0.8 million for the Reorganized Predecessor Company 2004 First Six Months based on various foreign tax rates. This increase is due in part to property sales in Australia and a lease buyout for a bowling center in France. AMF Bowling Centers, Inc, a wholly-owned indirect subsidiary of Worldwide, recorded a state tax benefit of $0.4 million for the six months ended December 26, 2004 compared with an expense of $0.9 million for the Reorganized Predecessor Company 2004 First Six Months.

Net ~~loss~~Income ~~for~~(Loss) the New Company 2005 First Quarter totaled $12.9 million compared with a net loss of $12.7 million in the Reorganized Predecessor Company 2004 First Quarter. This change was primarily attributable to the decreases in revenue discussed above as well as charges incurred in the New Company 2005 First Quarter of $0.5 million related to certain senior management severance obligations which are recorded in selling, general and administrative expenses and bowling center operating expenses and $0.3 million related to costs incurred in conjunction with the Merger. These items are partially offset by the decrease in depreciation and amortization as discussed above as well as a decrease in cost of sales and operating expenses. In the New Company 2005 First Quarter, we recognized $0.5 million in gains related to the disposal of two Products branches and a 4.2 million gain related to an arbitration settlement regarding one of our leases in France. Additionally, the loss contributed from our discontinued operations decreased by $1.1 million.

~~Comprehensive~~Net ~~Loss~~income (loss) for the New Company 2005 Second Quarter and New Company 2005 First Six Months totaled $26.0 million and $13.0 million, respectively, compared with $12.5 million and $(0.2) million, respectively in the Reorganized Predecessor Company 2004 Second Quarter and the Reorganized Predecessor Company 2004 First Six Months. These increases were primarily attributable to the changes discussed above as well as the recognition of the gain on the disposal of the discontinued operations of our United Kingdom bowling centers of $30.2 million in the New Company 2005 Second Quarter. In the New Company 2005 First Six Months we also recognized a $4.2 million gain related to a negotiated termination of one of our bowling center leases in France. Additionally, the income contributed from our discontinued operations increased by $4.2 million in the New Company 2005 First Six Months. These increases were partially offset by increases in operating expenses primarily attributable to an increase in rent as a result of the Sale-Leaseback Agreements. Additionally, in the New Company 2005 First Six Months, we incurred expenses of $5.6 million related to strategic initiatives, $0.6 million related to certain senior management severance obligations, $1.3 million in connection with losses related to a forward exchange contract and $0.9 million related to actions alleging violations of federal legislation involving unsolicited communications.

~~Comprehensive~~27 loss for the New Company 2005 First Quarter totaled $14.8 million compared with $12.1 million in the Reorganized Predecessor Company 2004 First Quarter. The decrease in the loss was primarily attributable to the decrease in revenue as discussed above as well as an increase in the foreign currency translation adjustment.

Comprehensive Income

Comprehensive income for the New Company 2005 Second Quarter and the New Company 2005 First Six Months totaled $27.2 million and $12.5 million, respectively, compared with $17.1 million and $5.0 million for the Reorganized Predecessor Company 2004 Second Quarter and the Reorganized Predecessor Company 2004 First Six Months. These increases are primarily attributable to the gain recognized on the sale of our bowling centers in the United Kingdom.

Centers

Centers results reflect the operations inof our ~~U.S.~~ bowling centers (“located in the U.S. ~~Centers”)~~ and ~~our international bowling centers (“International Centers”)~~internationally. The results of operations for the centers in the United Kingdom and Australia have been reported as discontinued operations for all periods presented and are not included in the tables or discussion below.

	NewCompany			ReorganizedPredecessorCompany	~~ReorganizedPredecessorCompany~~		NewCompany		ReorganizedPredecessorCompany
	2005 FirstQuarter				2004 FirstQuarter
(In millions)	2005 SecondQuarter			2004 SecondQuarter			2005 FirstSix Months		2004 FirstSix Months
Operating revenue (a)	$	~~104~~117.2		$	$122.5	~~107.6~~	$	207.6	$	217.3
Cost of goods sold		9.9				10.1
Operating expenses:
Bowling center operating expenses		85.4				84.5
Cost of goods sold		11.3			11.7			19.6		20.3
Asset impairment		1.3				—
Bowling center operating expenses		84.2			74.7			168.5		150.0
Depreciation and amortization		10.7				12.4
Asset impairment		—			—			1.3		—
Operating income (loss)		(3.1	)			0.6
Depreciation and amortization		8.4			10.8			17.5		21.6
Operating income	$	13.3		$	25.3		$	0.7	$	25.4

(a)	Before intersegment eliminations.

To facilitate a meaningful comparison, the constant center results discussed below reflect the results of ~~426~~383 centers (~~367~~368 located in the U.S. ~~Centers~~ and 5915 ~~International~~international ~~Centers~~centers) that have been in operation one full fiscal year as of June 27, 2004.

The three principal sources of revenue and the percentage of each to total revenue isare presented below:

	NewCompany		ReorganizedPredecessorCompany
	2005 FirstQuarter		2004 FirstQuarter
	2005 FirstSix Months		2004 FirstSix Months
Revenue:
Bowling	5758.12	%	5758.95	%
Food and beverage	2627.34	%	2627.13	%
Ancillary sources	1614.65	%	1614.02	%

Bowling revenue, the largest component of a center’s revenue, is derived from league play and recreational play, each representing approximately 50% of annual bowling revenue in U.S. ~~Centers~~centers operations. League lineage (number of games bowled per lane per day) has ~~been~~ been declining for a number of years. Recreational play includes managed, or scheduled play (such as birthday or corporate parties), and open, or unscheduled play. The decline in U.S. ~~Centers~~centers revenue that could be expected from the decline in lineage has been generally offset with price increases.

~~International Centers,~~28 which currently operates in four different countries, has an average bowling lineage mix of approximately 61% recreational lineage and 39% league lineage. Lineage has been declining for a number of years. Australia has experienced the most significant decline in lineage, particularly in league play. With the exception of Australia, the impact on revenue from the decline in International Centers lineage has also been generally offset with price increases. Price increases have generally paralleled local country inflation rates.

On September 30, 2004, we sold our bowling center business that operated 33 bowling centers in the United Kingdom for gross cash proceeds of approximately $71.2 million and exited bowling center operations in that country.

24On February 8, 2005, we sold our 42 operating bowling centers in Australia for approximately $47.8 million, subject to certain post-closing adjustments and exited bowling center operations in that country.

2005 Second Quarter compared with 2004 Second Quarter

Centers operating revenue for the New Company 2005 Second Quarter decreased $5.3 million, or 4.3%, as compared with the Reorganized Predecessor Company 2004 Second Quarter. U.S. constant center revenue decreased $2.6 million, or 2.3%, primarily the result of a decrease in league and open lineage. Also contributing to this decrease is a decline in revenue of $3.0 million attributable to the closure of 12 bowling centers since June 29, 2003. These decreases were partially offset by an increase in new center revenue of $0.1 million.

Bowling center operating expenses increased $9.5 million, or 12.7%. This increase was primarily due to increases in U.S. constant center operating expenses of $9.9 million, or 14.8%, of which $7.3 million is attributable to an increase in rent as a result of the Sale-Leaseback Agreements. Excluding the impact of the increase in rent expense, U.S. constant center operating expenses increased approximately 3.9% primarily the result of increased payroll and insurance expenses. Additionally, U.S. centers recorded a charge of $0.9 million related to actions alleging violations of federal legislation involving unsolicited communications. In the Reorganized Predecessor Company 2004 Second Quarter, Centers recognized $1.4 million related to casualty gains. Offsetting these increases was a decrease in operating expenses of $2.2 million due to closed bowling centers. As a percentage of revenue, Centers operating expenses were 71.8% for the New Company 2005 Second Quarter and 61.0% for the Reorganized Predecessor Company 2004 Second Quarter.

Depreciation and amortization decreased $2.4 million, or 22.2%, primarily attributable to a $1.8 million decrease as a result of the Sale-Leaseback Agreements. Additionally, U.S. centers depreciation decreased as a result of machinery and equipment acquired in 1996 and 1997 becoming fully depreciated. These decreases were partially offset by an increase in depreciation of $2.3 million primarily attributable to adjustments made as a result of the application of purchase method accounting related to the Merger.

Operating income was $13.3 million in the New Company 2005 Second Quarter versus operating income of $25.3 million in the Reorganized Predecessor Company 2004 Second Quarter primarily due to the decrease in revenue and increased operating expenses partially offset by the decreases in depreciation and amortization as discussed above.

2005 First Six Months compared with 2004 First Six Months

Centers operating revenue for the New Company 2005 First Six Months decreased $9.7 million, or 4.5%, as compared with the Reorganized Predecessor Company 2004 First Six Months. U.S. constant center revenue decreased $5.2 million, or 2.6%, primarily the result of a decrease in league lineage. Also contributing to this decrease is a decline in revenue of $4.7 million attributable to the closure of 12 bowling centers since June 29, 2003. These decreases were partially offset by an increase in new center revenue of $0.3 million.

Bowling center operating expenses increased $18.5 million, or 12.3%. This increase was primarily due to increases in U.S. constant center operating expenses of $18.1 million, or 13.8%, of which $14.6 million is attributable to an increase in rent as a result of the Sale-Leaseback Agreements. Excluding the impact of the increase in rent expense, U.S. constant center operating expenses increased approximately 2.6% primarily attributable to increases in payroll, insurance and tax expenses. Additionally, U.S. centers recorded a charge of $0.9 million related to actions alleging violations of federal legislation involving unsolicited communications. In the Reorganized Predecessor Company 2004 Second Quarter, Centers recognized $1.4 million related to casualty gains. Offsetting these increases was a decrease in operating expenses of $3.2 million due to closed bowling centers. In the New Company 2005 First Six Months, international centers incurred charges of $0.8 million related to losses on disposals of fixed assets while U.S. centers recognized $0.5 million related to gains on disposals of assets. As a percentage of revenue, Centers operating expenses were 81.2% for the New Company 2005 First Six Months and 69.0% for the Reorganized Predecessor Company 2004 First Six Months.

OnDepreciation ~~October~~and ~~19,~~amortization ~~2004,~~decreased we$4.1 ~~entered~~million, ~~into~~or a19.0%, ~~definitive~~primarily ~~agreement~~attributable to ~~sell~~a ~~our~~$3.6 45million decrease ~~operating~~as ~~bowling~~a ~~centers~~result ~~in Australia~~of ~~for~~the ~~approximately~~Sale-Leaseback ~~$49~~Agreements.3 ~~million~~Additionally, ~~subject~~U.S. tocenters ~~certain~~depreciation ~~adjustments~~decreased toas bea ~~made~~result atof ~~closing.~~machinery ~~The~~and ~~sale~~equipment ~~will~~acquired ~~also~~in ~~include~~1996 ~~the~~and ~~real~~1997 ~~estate~~becoming ~~associated~~fully ~~with one closed bowling center~~depreciated. ~~The~~These ~~transaction~~decreases iswere ~~expected~~partially tooffset ~~close~~ by ~~the~~an increase ~~end~~in depreciation of ~~November~~$4.5 ~~2004, subject~~million toprimarily ~~certain~~attributable ~~closing~~to ~~conditions.~~adjustments ~~Following~~made ~~the~~as ~~consummation~~a result of the ~~sale,~~application weof ~~will~~purchase ~~have~~method ~~exited~~accounting ~~our~~related ~~bowling~~to ~~center~~the ~~operations in Australia~~Merger.

Operating income was $0.7 million in the New Company 2005 First ~~Quarter~~Six ~~compared~~Months ~~with~~versus operating income of $25.4 million in the Reorganized Predecessor Company 2004 First ~~Quarter~~Six Months primarily due to the decrease in revenue as well as the increase in operating expenses partially offset by the decrease in depreciation and amortization as discussed above. Additionally, Centers recorded charges related to asset impairment resulting from center closures of $1.3 million in the New Company 2005 First Six Months.

~~Centers~~30 operating revenue for the New Company 2005 First Quarter decreased $3.4 million, or 3.2%, as compared to the Reorganized Predecessor Company 2004 First Quarter. U.S. constant center revenue decreased $2.6 million, or 2.9%, primarily the result of a decrease in league lineage. Revenue was negatively impacted in the New Company 2005 First Quarter by hurricanes and tropical storms in Florida and in the southern and mid-Atlantic regions of the U.S. and a delay in the start of the league season due to the timing of Labor Day in September 2004 versus September 2003. Also contributing to this decrease is a decline in revenue of $1.9 million attributable to the closure of 16 bowling centers since June 29, 2003. These decreases were partially offset by an increase in international constant center revenue of $1.0 million, or 5.8%, primarily attributable to a favorable foreign exchange rate variance of $1.0 million. Additionally, new center revenue increased $0.1 million.

Bowling center operating expenses increased $0.9 million, or 1.1%. This increase was primarily due to increases in U.S. constant center operating expenses of $8.2 million, or 12.3%, of which $7.3 million is attributable to an increase in rent as a result of the Sale-Leaseback Agreements. Excluding the impact of the increase in rent expense, U.S. constant center operating expenses increased approximately 1.0%. International center operating expenses increased $2.2 million, or 17.3%, partially attributable to an unfavorable foreign exchange rate variance of $0.6 million. Additionally, U.S. Centers incurred charges of $0.2 million related to certain senior management severance obligations. This increase was partially offset by an $8.7 million gain recognized in International Centers related to gains on disposals of fixed assets while U.S. Centers recognized $0.5 million related to gains on disposals of assets. Additionally, operating expenses decreased $1.1 million due to closed bowling centers. As a percentage of revenue, Centers operating expenses were 82.1% for the New Company 2005 First Quarter and 78.5% for the Reorganized Predecessor Company 2004 First Quarter.

Depreciation and amortization decreased $1.7 million, or 13.7%, primarily attributable to a $1.8 million decrease as a result of the Sale-Leaseback Agreements. Additionally, U.S. Centers depreciation decreased as a result of machinery and equipment acquired in 1996 becoming fully depreciated. These decreases were partially offset by an increase in depreciation of $2.0 million primarily attributable to adjustments made as a result of the application of purchase method accounting related to the Merger.

Operating loss was $3.1 million in the New Company 2005 First Quarter versus operating income of $0.6 million in the Reorganized Predecessor Company 2004 First Quarter primarily due to the decrease in revenue partially offset by the decreases in operating expenses and depreciation and amortization as discussed above. Additionally, Centers recorded charges related to asset impairment resulting from center closures of $1.3 million in the New Company 2005 First Quarter.

Products

	NewCompany2005 FirstQuarter			ReorganizedPredecessorCompany2004 FirstQuarter
	NewCompany			Reorganized Predecessor Company			New Company			Reorganized Predecessor Company
Products (a):
(In millions)	2005 SecondQuarter			2004 SecondQuarter			2005 FirstSix Months			2004 First Six Months
Operating revenue	$	35.1		$	36.4
Products (a):
Cost of goods sold		27.0			27.5
Operating revenue	$	38.5		$	33.6		$	73.6		$	70.0
Gross profit		8.1			8.9
Cost of goods sold		30.2			27.4			57.1			54.9
Selling, general and administrative expenses		5.4			6.2
Gross profit		8.3			6.2			16.5			15.1
Depreciation and amortization		1.8			1.5
Selling, general and administrative expenses		6.2			5.3			11.7			11.5
Operating income	$	0.9		$	1.2
Depreciation and amortization		1.8			1.3			3.6			2.8
Selected data:
Operating income (loss)	$	0.3		$	(0.5	)	$	1.2		$	0.7
Gross profit margin		23.1	%		24.5	%
Selected data:
Gross profit margin		21.6	%		18.5	%		22.4	%		21.6	%

(a)	Before intersegment eliminations.

2005 ~~First~~Second Quarter compared with 2004 ~~First~~Second Quarter

Products operating revenue ~~decreased~~increased $14.39 million, or 314.6%, primarily attributable to ~~decreased~~an increase in revenue in the U.S., Europe and ~~Japan~~Mexico of $23.6 million, $2.1 million and $10.2 6 million, respectively. These ~~decreases~~increases were partially offset by ana ~~increase~~decrease in revenue in ~~the~~Japan ~~U.S.~~ of $1.8 million.

Gross profit ~~decreased~~increased $02.81 million, or 933.09%. The gross profit margin was 2321.16% in the New Company 2005 ~~First~~Second Quarter compared with 2418.5% in the Reorganized Predecessor Company 2004 ~~First~~Second Quarter. The ~~decreased~~increased margin percentage was primarily attributable to the ~~decrease~~increase in revenue asand ~~well~~increases asin ~~increased~~intercompany ~~material expenses~~pricing.

Products selling, general and administrative expenses ~~decreased~~increased $0.89 million, or 1217.90%, compared with the prior year quarter. The ~~decrease~~increase in expenses is primarily attributable to ~~the~~an ~~recognition~~increase ~~of $0.7 million~~ in ~~gains~~bad ondebt ~~the disposal of two Products branches. This decrease was partially offset by increases in advertising~~ and ~~promotion~~legal ~~as well as payroll expense~~expenses.

Depreciation and amortization increased $0.35 million, or 2038.05%, primarily due to adjustments made as a result of the application of purchase method accounting related to the Merger.

Operating income was $0.9 3 million in the New Company 2005 ~~First~~Second Quarter, compared with a ~~decrease~~loss of $0.35 million, orin ~~25.0%, when compared with~~ the Reorganized Predecessor Company 2004 ~~First~~Second Quarter. The ~~decrease~~increase in operating income is primarily due to the ~~decrease~~increase in revenue inpartially offset by the increase ~~international~~in ~~markets~~selling, ~~partially~~general ~~offset~~and byadministrative ~~the~~expenses ~~gains~~as onwell ~~disposal~~as depreciation and amortization as discussed above.

262005 First Six Months compared with 2004 First Six Months

Products operating revenue increased $3.6 million, or 5.1%, primarily attributable to increased revenue in the U.S. and Mexico of $5.4 million and $1.2 million, respectively. These increases were partially offset by a decrease in revenue in Japan of $3.0 million.

Gross profit increased $1.4 million, or 9.3%. The gross profit margin was 22.4% in the New Company 2005 First Six Months compared with 21.6% in the Reorganized Predecessor Company 2004 First Six Months. The increased margin percentage was primarily attributable to the increase in revenue and increases in intercompany pricing.

Products selling, general and administrative expenses increased $0.2 million, or 1.7%, compared with the prior year quarter. The increase in expenses is primarily attributable to an increase in advertising and payroll expenses as well as bad debt and legal expenses. These increases are partially offset by the recognition of $0.7 million in gains on the disposal of two Products branches.

Depreciation and amortization increased $0.8 million, or 28.6%, primarily due to adjustments made as a result of the application of purchase method accounting related to the Merger.

Operating income was $1.2 million in the New Company 2005 First Six Months, an increase of $0.5 million, or 71.4%, when compared with the Reorganized Predecessor Company 2004 First Six Months. The increase in operating income is primarily due to the increase in revenue partially offset by the increases in selling, general and administrative expenses and depreciation and amortization as discussed above.

Liquidity - Capital Resources – Asset Sales – Capital Expenditures

General

We have $~~134~~87.49 million in term loans (the “Term Loan”) under our Credit Agreement which also has an aggregate revolving loan commitment of $40.0 million (the “Revolver”).

We generally rely on cash flow from operations and borrowings under the Revolver to fund our liquidity and capital expenditure needs. Our ability to repay our indebtedness will depend on future performance, which is subject to general economic, financial, competitive, legislative, regulatory and other factors. Management believes that available cash flow from operations and borrowings available or capacity under the Revolver will be sufficient to fund its liquidity and capital expenditure needs.

Liquidity

As of ~~September~~December 26, 2004, working capital was $2851.34 million compared with a working capital deficit of $15.5 million at June 27, 2004. Excluding assets and liabilities held for sale, working capital was ~~a deficit of~~ $10.43 million at ~~September~~December 26, 2004. This change was primarily attributable to a decrease in accounts payable and accrued liabilities of $78.51 million and $4.3 million, respectively, as well as an increase in cash ~~and inventory~~ of $318.6 million ~~and $1~~.2 ~~million, respectively.~~ Partially offsetting these increases was a decrease in prepaid expenses and other current assets of $5.28 million~~, a decrease in accounts receivable of $1~~.1 ~~million and a $0.9 million increase in accrued liabilities.~~

Operating Cash Flow

	NewCompany			ReorganizedPredecessorCompany
	New Company			Reorganized Predecessor Company
	2005 FirstQuarter			2004 FirstQuarter
	2005 FirstSix Months			2004 FirstSix Months
Cash flows from operating activities:
Before changes in assets and liabilities	$	(836.05	)	$	122.16
Working capital		2810.3			(149.25	)
Other changes		(249.71	)		104.12
Discontinued operations		(036.36	)		0(2.91	)
Total	$	(41.71	)	$	(215.12	)

Net cash ~~used~~provided inby operating activities was $41.71 million in the New Company 2005 First ~~Quarter~~Six Months compared with $215.12 million in the Reorganized Predecessor Company 2004 First ~~Quarter~~Six Months, ana ~~increase~~decrease of $214.61 million. The ~~increase~~decrease in net cash ~~used~~provided inby operating activities is primarily the result of an ~~$8.5~~increase ~~million~~in ~~gain on~~ the ~~sale~~loss offrom ~~property~~continuing ~~and~~operations ~~equipment~~partially asoffset ~~well as an increase in cash used~~ by improved working capital utilization.

Investing

	NewCompany			ReorganizedPredecessorCompany
	New Company			Reorganized Predecessor Company
	2005 FirstQuarter			2004 FirstQuarter
	2005 First Six Months			2004 First Six Months
Cash flows from investing activities:
Purchases of property and equipment	$	(1121.75	)	$	(921.14	)
Proceeds from the sale of property and equipment		141.95			03.94
Total	$	3.2		$	(8.2	)
Proceeds from sale of subsidiary		69.9			—
Total	$	49.9		$	(18.0	)

2733

Net cash provided by investing activities was $349.29 million in the New Company 2005 First ~~Quarter~~Six ~~compared~~Months compared with net cash used in investing activities of $817.29 million in the Reorganized Predecessor Company 2004 First ~~Quarter~~Six Months. In the New Company 2005 First ~~Quarter~~Six Months, we received proceeds of approximately $1369.49 million related to the sale of our ~~property~~bowling ~~and~~centers ~~equipment~~ in ~~Australia.~~ ~~Additionally,~~the weUnited ~~received~~Kingdom and $1.5 million ~~in proceeds~~ related to ~~excess property in~~ the ~~U.S.~~sale ~~This~~of ~~increase~~property inand ~~cash flow was partially offset by an increase in capital expenditures primarily related to Centers capital improvements~~equipment.

Financing

	NewCompany			ReorganizedPredecessorCompany
	New Company			Reorganized Predecessor Company
	2005 FirstQuarter			2004 FirstQuarter
	2005 First Six Months			2004 First Six Months
Cash flows from financing activities:
Borrowings (repayments) of debt, net	$	7(47.31	)	$	(2028.34	)
Payments under capital lease obligations		(0.12	)		(0.1	)
Total	$	7(47.23	)	$	(2028.45	)

Net cash ~~provided~~used byin financing activities was $747.23 million in the New Company 2005 First ~~Quarter~~Six Months compared with ~~net cash used in financing activities of~~ $2028.45 million in the Reorganized Predecessor Company 2004 First ~~Quarter~~Six Months. In the New Company 2005 First ~~Quarter~~Six Months, we ~~borrowed~~ ~~$8.0 million on our revolving line of credit and~~ made payments of approximately $047.61 million on the Term Loan.

Capital Resources

The following table shows our debt balances at ~~September~~December 26, 2004 and June 27, 2004:

	September 26,2004		June 27,2004
	December 26, 2004		June 27, 2004
Term Loan	$	~~134~~87.49	$	135.0
Subordinated Notes, 10%, due 2010		150.0		150.0
Revolver		~~8.0~~—		—
Mortgage note and capitalized leases		3.6		3.8
Total debt	$	~~296~~241.05	$	288.8

In September 2004, we entered into a First Amendment to Credit Agreement (the “Amendment”). The Amendment, among other things, requires us to prepay loans and/or cash collateralize or pay certain letter of credit obligations under the Credit Agreement in an amount equal to 20% of the net cash proceeds from any sale, transfer or other disposition of the assets or stock of certain of our ~~subsidiaries~~foreign ~~that operate overseas~~subsidiaries. The Amendment also permits us to redeem, purchase, prepay, retire, defease or otherwise acquire our 10% Senior Subordinated Notes due 2010 for cash consideration that does not exceed 80% of net cash proceeds from those sales of assets or stock of certain of our foreign subsidiaries ~~that operate overseas~~ within a specified period of time.

At ~~September~~December 26, 2004, ~~$8.0~~there ~~million~~were ~~was~~no outstanding borrowings under the Revolver. Outstanding standby letters of credit issued under the Revolver totaled $18.1 million leaving $1321.9 million available for additional borrowings or letters of credit. The Revolver continues to be available for our working capital ~~and~~ and general corporate needs, subject to customary borrowing conditions. ~~We made a $0.3 million repayment, required due to certain asset sale proceeds during the New Company 2005 First Quarter.~~

~~Both~~In ~~the~~October 2004, we made a required repayment under our Credit Agreement ~~and~~of approximately $16.1 million due to the ~~Indenture~~sale ~~contain~~of ~~certain~~our ~~restrictive covenants,~~bowling ~~including~~center operations in the ~~achievement~~United ofKingdom, ~~certain~~property ~~financial~~sales ~~covenants~~in Australia and ~~maximum~~a ~~levels~~lease termination in France. Additionally, in December 2004, we made a voluntary repayment under our Credit Agreement of ~~capital~~approximately ~~expenditures~~$30.0 Wemillion. ~~are~~These inrepayments ~~compliance~~were ~~with~~applied to the ~~covenants~~Term asLoan. ofUnder ~~September~~the ~~26,~~Credit ~~2004~~Agreement these non-scheduled repayments are applied ratably to the remaining scheduled principal payments.

2834

OnBoth ~~October 8, 2004, we repaid~~ the ~~$8.0~~Credit ~~million~~Agreement ~~outstanding~~and on the ~~Revolver.~~Indenture ~~Additionally,~~contain oncertain ~~October~~restrictive 14covenants, ~~2004,~~ weincluding ~~made a required repayment under our Credit Agreement of approximately $16.1 million due to~~ the achievement ~~sale~~ of ~~our~~certain ~~bowling~~financial ~~center~~covenants ~~operations in the United Kingdom, property sales in Australia~~ and amaximum ~~lease~~levels ~~termination~~of incapital ~~France~~expenditures. ~~These~~We ~~repayments~~ are ~~not~~ ~~reflected~~ in ~~the~~compliance ~~Condensed~~with ~~Consolidated~~the ~~Balance~~covenants ~~Sheet~~as atof ~~September~~December 26, 2004. ~~Non-scheduled~~There ~~prepayments~~can ~~under~~be ~~the~~no ~~Credit~~assurance ~~Agreement~~that ~~are~~we ~~applied~~will ~~ratably~~continue to ~~the~~be ~~remaining~~in ~~scheduled~~compliance ~~principal~~with ~~payments.~~the covenants.

Asset Sales

From time to time, we will sell real estate on which a bowling center is or was operated, either in connection with the closing of a bowling center or in response to an attractive offer to buy the property.

The following table shows our asset sales for the ~~New~~reported ~~Company 2005 First Quarter~~periods:

	NetProceeds		Gain/(loss), net
	2005 First Six Months
	Proceeds		Gain/(loss), net
U.S. Centers:
Excess property	$	1.5	$	0.5
International Centers:
Bowling centers		13.4		9.5
Total asset sales	$	14.9	$	10.0

On September 30, 2004, we sold 33 bowling centers in the United Kingdom for gross cash proceeds of approximately $71.2 million and exited bowling center operations in that country.

On ~~October~~February 198, ~~2004~~2005, we ~~signed~~sold ~~a definitive agreement to sell~~ our 4542 operating bowling centers in Australia for approximately $4947.38 million, subject to ~~certain~~ ~~adjustment to be made at closing. The sale will also include the real estate associated with one closed bowling center. The transaction is expected to close by the end of November 2004, subject to~~ certain post-closing ~~conditions. Following~~adjustments ~~consummation~~and ~~of the sale, we will have~~ exited ~~all~~ bowling center operations in ~~Australia~~that country.

Capital Expenditures

	NewCompany		ReorganizedPredecessorCompany
	2005 FirstQuarter		2004 FirstQuarter
	2005 FirstSix Months		2004 FirstSix Months
Centers	$	1018.28	$	819.37
Products		01.75		0.36
Corporate		01.82		01.51
Total	$	1121.75	$	921.14

Capital expenditures increased $20.61 million in the New Company 2005 First ~~Quarter~~Six Months compared towith the Reorganized Predecessor Company 2004 First ~~Quarter~~Six Months primarily due to increased ~~Centers~~Products expenditures. Capital expenditures are primarily funded from cash generated ~~from~~ from operations.

Seasonality and Market Development Cycles

Centers business is seasonal, primarily due to the bowling league season that begins in late summer and ends in mid spring. Cash flow from operations typically peaks in the winter and is lower in the summer.

Products sales are also seasonal, most notably in Modernization and Consumer Products sales in the U.S. While U.S. bowling center operators purchase spare parts, supplies and consumer products throughout the year, they often place larger orders during the late spring and early summer in preparation for the start of league play in the late summer. Summer is also generally the peak period for installation of modernization equipment in the U.S. Operators in the U.S. typically sign purchase orders for modernization equipment during the spring, which is then shipped and installed during the summer when U.S. bowling centers generally have fewer bowlers. Management does not expect the sale of our bowling center operations in Australia and the United Kingdom to materially impact the historical seasonality of our business.

~~International~~35 ~~Operations~~

Our international operations are subject to the usual risks inherent in operating internationally, including, but not limited to, currency exchange rate fluctuations, economic and political instability, other disruption of markets, restrictive laws, tariffs and other actions by foreign governments (such as restrictions on transfer of funds, import and export duties and quotas, foreign customs, tariffs and value added taxes and unexpected changes in regulatory environments), difficulty in obtaining distribution and support for products, the risk of nationalization, the laws and policies of the U.S. affecting trade, international investment and loans, and foreign tax law changes. As is the case of other U.S.-based manufacturers with export sales, local currency devaluation increases the cost of Products bowling equipment. In addition, local currency devaluation negatively impacts the translation of operating results from International Centers.

Foreign currency exchange rates also impact the translation of operating results from International Centers and Products. International Centers represented 14.2% and 13.0% of consolidated revenue for the New Company 2005 First Quarter and the Reorganized Predecessor Company 2004 First Quarter, respectively. For the New Company 2005 First Quarter International Centers represented $7.4 million in operating income of the $7.9 million consolidated operating loss and in the 2004 First Quarter International Centers represented $1.8 million in operating income of the $3.5 million consolidated operating loss.

Products international operations represented 8.4% and 10.2% of consolidated revenue for the New Company 2005 First Quarter and the Reorganized Predecessor Company 2004 First Quarter, respectively. For the New Company 2005 First Quarter Products international operations represented $2.1 million in operating income of the $7.9 million consolidated operating loss and in the Reorganized Predecessor Company 2004 First Quarter Products international operations represented $0.5 million in operating loss of the $3.5 million consolidated operating loss.

International Operations

Foreign currency exchange rates also impact the translation of operating results from international bowling centers and Products. International bowling centers represented 3.6% and 4.0% of consolidated revenue for the New Company 2005 First Six Months and the Reorganized Predecessor Company 2004 First Six Months, respectively. For the New Company 2005 First Six Months, international bowling centers represented $1.8 million of the $13.8 million consolidated operating loss and $0.9 million of the $14.0 million consolidated operating income in the Reorganized Predecessor Company 2004 First Six Months. There will be less foreign currency exchange rate impact to our Centers business as a result of the sale of our Australian and United Kingdom bowling center operations.

Products international operations represented 10.8% and 11.1% of consolidated revenue for the New Company 2005 First Six Months and the Reorganized Predecessor Company 2004 First Six Months, respectively. For the New Company 2005 First Six Months Products international operations represented $2.1 million in operating income of the $13.8 million consolidated operating loss and in the Reorganized Predecessor Company 2004 First Six Months Products international operations represented $1.4 million in operating loss of the $14.0 million consolidated operating income.

Impact of Inflation

We historically offset the impact of inflation through price increases. Periods of high inflation could have a material adverse impact on us to the extent that increased borrowing costs for floating rate debt may not be offset by increases in cash flow. There was no significant impact on our operations as a result of inflation during the New Company 2005 Second Quarter, New Company 2005 First Six Months, Reorganized Predecessor Company 2004 Second Quarter or ~~the~~ Reorganized Predecessor Company 2004 First ~~Quarter~~Six Months.

Critical Accounting Policies

In preparing the consolidated financial statements, GAAP requires management to select and apply accounting policies that involve estimates and judgment. The following accounting policies may require a higher degree of judgment or involve amounts that could have a material impact on the consolidated financial statements. The critical accounting policies disclosed below have been reviewed with the Audit Committee of our parent company.

Allowance for Doubtful Accounts

Products maintains an allowance for doubtful accounts for estimated losses resulting from the failure of customers to make payment. Management determines the allowance based upon an evaluation of individual accounts, aging of the portfolio, issues raised by customers that may suggest non payment, historical experience and/or the current economic environment. A substantial portion of the allowance relates to the sale of ~~NCP~~New ~~packages~~Center Packages to international customers. If the financial condition of individual customers or countries in which Products operates or the general worldwide economy were to vary materially from the assumptions made by management, the allowance may require adjustment in the future. Products evaluates the adequacy of the allowance on a regular basis, modifying, as necessary, its assumptions, updating its record of historical experience and adjusting reserves as appropriate.

Impairment of Long-Lived Assets

We assess the impairment of long-lived assets when events or changes in circumstances indicate that the carrying value of the assets or the asset group may not be recoverable. Factors that are considered in deciding when to perform an impairment review include significant under-performance of a center or product line in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets. As a result, we have closed certain individual center locations with some regularity. Recoverability of assets that will continue to be used in operations is measured by comparing the carrying amount of the asset to the related total future net cash flows. If an asset’s carrying value is not recoverable through those cash flows, the asset is considered to be impaired. The impairment is measured by the difference between the asset’s carrying amount and its fair value, based on the best information available, including market prices or a discounted cash flow analysis.

Inventory Obsolescence

As we monitor working capital (defined as current assets minus current liabilities), net inventory represents approximately 37% of our current assets (excluding discontinued operations). Products evaluates the levels, composition and salability of its inventory on a regular basis. The evaluations include assumptions regarding potential sales of such inventory, estimated time periods over which such sales might take place and assessment of the potential usability of such inventory in future production. Products modifies, as necessary, its assumptions, updates its record of historical experience and adjusts its reserves as appropriate.

Equipment Warranties

Warranty expense is an indicator of product quality and handling. Products sells capital equipment where warranty and after sale service are very important to the customer. Products generally warrants all new products for one year and maintains an estimated reserve for future warranty obligations. The reserve is determined based on prior warranty experience. If future warranty experience were to vary materially, management would review the reserve and make any appropriate adjustment. Products evaluates the adequacy of the reserve on a regular basis, modifying as necessary, its assumptions, updating its record of historical experience and adjusting its reserves as appropriate.

Self Insurance, Litigation and Claims

We self-insure certain risks up to established limits, including general and product liability exposures, workers compensation, health care coverage, and property damage. Other risks, such as litigation and claims relating to contractual disputes and employment issues, may not be covered by insurance. The reserves related to such self-insurance programs and to such other risks are determined based on estimates of future settlements and costs of known and anticipated claims as well as on forces impacting the current economic environment. In the case of matters in litigation or involving threatened litigation, legal advice on our potential liability and the potential for the award of damages is considered in making any estimate. We maintain systems to track and monitor these risks. If actual results were to vary materially from the assumptions, management would review the reserve and make any appropriate adjustment. We evaluate the adequacy of these reserves on a regular basis, modifying, as necessary, our assumptions, updating our records of historical experience and adjusting reserves as appropriate.

Deferred Tax Assets

Management periodically reviews our gross deferred tax assets to determine if it is more likely than not that such assets will be realized. Such periodic reviews include, among other things, the nature and amount of the tax income and expense items, the expected timing when certain assets will be used or liabilities will be required to be reported, available tax planning strategies, and the reliability of profitability projections of businesses expected to provide future earnings. If after conducting such a review, management determines that the realization of the tax asset does not meet the “more likely than not” criteria of ~~SFAS~~Statement of Financial Accounting Standards No.109, “Accounting for Income Taxes,” an offsetting valuation allowance is recorded, thereby reducing net earnings and the deferred tax asset in that period. Due to our historical and expected future earnings from operations, management concluded that we “more likely than not” will not realize the benefit of a majority of our deferred tax assets. If expectations for future performance, the timing of deductibility of expenses, or tax statutes change in the future, we could decide to adjust the valuation allowance, which may increase or decrease income tax expense.

3237

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report contain forward-looking statements, which are statements other than historical information or statements of current condition. Statements set forth in this report or statements incorporated by reference from documents filed with the Securities and Exchange Commission are or may be forward-looking statements, including possible or assumed future results of our operations, including but not limited to:

•

any statements concerning:

•

the results of operations of our businesses;

•

the results of our initiatives to improve our bowling centers operations and our business of manufacturing and selling bowling equipment;

•

the amounts of capital expenditures needed to maintain or improve our bowling centers;

•

our ability to comply with the financial covenants in our financing facilities and generate cash flow to service our indebtedness;

•

the continued availability of sufficient borrowing capacity or other financing to supplement cash flow and fund operations; and

•

the outcome of existing or future litigation;

•

any statements preceded by, followed by or including the words “believes,” “expects,” “predicts,” “anticipates,” “intends,” “estimates,” “should,” “may” or similar expressions; and

•

other statements contained or incorporated in this report that are not historical facts.

These forward-looking statements relate to our plans and objectives or future operations. In light of the risks and uncertainties inherent in all future projections and our financial position, the inclusion of forward-looking statements in this report should not be regarded as a representation by us that the objectives, projections or plans will be achieved. Many factors could cause our actual results to differ materially from those in any forward-looking statements, including, but not limited to:

•

the popularity of bowling;

•

our ability to renew real estate leases;

•

risks related to our foreign operations;

•

our ability to retain and attract key employees;

•

our ability to successfully implement our business initiatives;

•

our ability to generate the cash flow required to service our indebtedness and real estate leases;

•

the continued decline in lineage and our difficulty in increasing lineage;

•

the seasonality and effect of unusual weather on bowling center operations;

•38 ~~the continued price pressure from the growth of lower cost, lower quality bowling products and readily available, low cost used equipment;~~

•

the continued price pressure from the growth of lower cost, lower quality bowling products and readily available, low cost used equipment;

•

the potential adverse impact from changes in governmental regulations;

•

the impact of environmental laws and regulations relating to hazardous materials used in or resulting from our operations;

•

the impact of anti-smoking legislation on bowling center operations;

•

the interests of controlling shareholders may conflict with the interests of holders of indebtedness;

•

competition from other leisure activities with our bowling center business;

•

fluctuations in foreign currency exchange rates;

•

the impact of potential retaliatory duties imposed on our products business by other countries;

•

the effect of our prior bankruptcy;

•

the lack of improvement or a decline in general economic conditions;

•

adverse judgments in existing, pending or future litigation; and

•

changes in interest rates.

The foregoing review should not be construed as exhaustive and should be read in conjunction with other cautionary statements included elsewhere in this report. We undertake no obligation to release publicly the results of any future revisions it may make to forward-looking statements to reflect events or circumstances after this date or to reflect the occurrence of unanticipated events.

3439

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in foreign currency exchange rates and interest rates that could impact our results of operations and financial condition. We manage our exposure to these risks through normal operating and financing activities and through the use of interest rate cap agreements and foreign currency forward exchange contracts. At ~~September~~December 26, 2004, no interest rate cap agreements were outstanding. ~~There~~and ~~are~~one noforeign ~~other derivative~~currency ~~instruments~~forward exchange contract was outstanding. Management periodically reviews its exposure to changes in interest rates and may enter into an interest rate cap agreement as it deems appropriate.

As with other U.S.-based exporters, local currency devaluations increase the cost of our bowling equipment in that market. As a result, a strengthening U.S. dollar exchange rate may adversely impact sales volume and profit margins. Foreign currency exchange rates also impact the translation of operating results from the international bowling centers.

From time to time we use interest rate cap agreements to mitigate the effect of changes in interest rates on variable rate borrowings under the Credit Agreement. While we are exposed to credit risk in the event of non-performance by the counterparties to the interest rate swap agreements, in all cases such counterparties are highly-rated financial institutions and we do not anticipate non-performance. We do not hold or issue derivative financial instruments for trading purposes.

~~The~~At ~~following~~December ~~table~~26, ~~provides~~2004, ~~information~~we ~~about~~had one forward exchange contract outstanding serving as a hedge of the purchase price of our ~~fixed~~Australian ~~and~~bowling ~~variable-rate~~center ~~debt~~operations in the notional amount of approximately $33.3 million. The fair value of the foreign currency derivative contract outstanding at ~~September~~December 26, 2004, ~~weighted~~was ~~average~~$1.3 ~~interest~~million resulting ~~rates~~in ~~and~~a ~~respective maturity~~loss ~~dates~~of the same amount.

Maturity Date	FixedRate Debt		Weighted AverageInterest Rate		VariableRate Debt		WeightedAverageInterest Rate
September 1, 2010	$	150.0	10.00	%		—	—
August 27, 2009		—	—		$	134.4	4.45	%

The following table provides information about our fixed and variable-rate debt at December 26, 2004, weighted average interest rates and respective maturity dates.

The fair value of the Term Loan and the Subordinated Notes at September 26, 2004 was approximately $134.4 million and $158.2 million, respectively.


Maturity Date	Fixed Rate Debt		Weighted Average Interest Rate		Variable Rate Debt		Weighted Average Interest Rate
December 1, 2010	$	150.0	10.00	%		—	—
August 27, 2009		—	—		$	87.9	5.09	%

35The fair value of the Term Loan and the Subordinated Notes at December 26, 2004 was approximately $87.9 million and $159.8 million, respectively.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we performed an evaluation under the supervision and with the participation of our management including the chief executive officer and the chief financial officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our management, including the chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective. There have been no changes in internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3641

PART II

ITEM 1. LEGAL PROCEEDINGS

We currently and from time to time are subject to claims and actions arising in the ordinary course of our business, including general liability, workers’ compensation, employee compensation and environmental claims. In some actions, plaintiffs request punitive or other damages that may not be covered by insurance. In management’s opinion, the claims and actions in which we are involved are not expected to have a material adverse impact on our financial position or results of operations. In addition, we are a defendant in ~~certain~~two actions alleging violations of federal legislation involving unsolicited communications. These actions were brought by plaintiffs who allegedly received unsolicited communications from us or from an agent on our behalf. The plaintiffs in these actions seek statutory damages and have requested geographically-limited class certifications. In one of these actions, which was brought in Georgia state court, the court ~~recently~~has approved a settlement of the class action. It is not possible at this time to predict the outcome of the remaining action. From time to time, we resolve claims alleging similar violations in order to avoid litigation.

Effects of Threatened European Community Tariff Increases

Regulatory Matters

State and local governments require bowling centers 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). There are no unique regulations applicable to bowling center operations or bowling equipment manufacturing. Currently, and from time to time, we are subject to claims relating to the violations of such regulations.

Our operations are also 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.

Currently and from time to time, we are subject to environmental and other regulatory claims. In management’s opinion, the various claims in respect of which we are currently involved, is not likely to have a material adverse impact on our financial position or results of operations.

We cannot predict with any certainty whether existing conditions or future events, such as changes in existing laws and regulations, may give rise to additional costs. Furthermore, actions by federal, state, local and foreign governments could result in laws or regulations that could increase the cost of producing our products, or providing our services, or otherwise adversely affect the demand for our products or services.

37European Community Tariff

The Commission of the European Community increased tariffs last year on certain U.S. exports to the countries comprising the European Community (the “EC”) in response to benefits for U.S. exporters under the U.S. Foreign Sales Corporation/Extraterritorial Income Exclusion tax regimes, which were declared in violation of U.S. obligations by the World Trade Organization (the “WTO”). A substantial portion of our bowling products imported into the EC was subject to the additional duty. The additional duty was 5% ad valorem in March 2004 and increased 1% each month thereafter up to a maximum of 14%. The U.S. Congress recently enacted legislation which was intended to address the issues raised by the EC. The EC has agreed to repeal temporarily the additional duty retroactive to January 1, 2005 until the WTO determines that the U.S. legislation adequately responded to global trade rules. There can be no assurance that the WTO will make a favorable determination.

ITEM

6. EXHIBITS

(a) Exhibits


3.1		Amended and Restated Certificate of Incorporation of AMF Bowling Worldwide, Inc. (incorporated herein by reference to the Company’s Current Report on Form 8-K dated March 8, 2002 (File No. 001-12131)).

3.2		Amended and Restated By-Laws of AMF Bowling Worldwide, Inc. (incorporated herein by reference to the Company’s Current Report on Form 8-K dated March 8, 2002 (File No. 001-12131)).

4.1		Supplemental Indenture, dated September 28, 2004, by and among AMF Bowling Worldwide, Inc., certain subsidiaries of AMF Bowling Worldwide, Inc., as Guarantors, and Wilmington Trust Company, as Trustee, with respect to the 10% Senior Subordinated Notes due 2010 (incorporated herein by reference to the Company’s Amendment No. 1 to Registration Statement on Form S-4, filed with the Securities and Exchange Commission on October 6, 2004 (File No. 333-117668-12)).

4.2		Joinder to Registration Rights Agreement, dated September 28, 2004, by and among AMF Bowling Worldwide, Inc., certain subsidiaries of AMF Bowling Worldwide, Inc., as Guarantors, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse First Boston, acting through its Cayman Islands Branch (incorporated herein by reference to the Company’s Amendment No. 1 to Registration Statement on Form S-4, filed with the Securities and Exchange Commission on October 6, 2004 (File No. 333-117688-12)).

10.1		First Amendment to Credit Agreement dated as of September 20, 2004 among Kingpin Intermediate Corp., the Company, the Lenders signatory thereto and Credit Suisse First Boston, Cayman Islands Branch, as Administrative Agent, amending that certain Credit Agreement dated as of February 27, 2004 (incorporated herein by reference to the Company’s Amendment No. 1 to Registration Statement on Form S-4, filed with the Securities and Exchange Commission on October 6, 2004 (File No. 333-117668-12)).

10.2		Employment Letter, dated as of October 27, 2004, between AMF Bowling Worldwide, Inc. and Anthony J. Ponsiglione II (incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 26, 2004 (File No. 001-12131)).*

10.3		Kingpin Holdings, LLC 2004 Unit Option Plan dated as of September 27, 2004 (filed herewith).*

12.1		Statement re: Computation of Ratios (filed herewith).

31.1		Certification by the Company’s Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2		Certification by the Company’s Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1		Certification by the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.2		Certification by the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

~~3.1~~* ~~Amended~~Management ~~and~~contract ~~Restated~~or ~~Certificate~~compensatory ofplan ~~Incorporation~~or ~~of AMF Bowling Worldwide, Inc~~arrangement. ~~(incorporated herein by reference to the Company’s Current Report on Form 8-K dated March 8, 2002 (File No. 001-12131)).~~

~~3.2~~43 ~~Amended and Restated By-Laws of AMF Bowling Worldwide, Inc. (incorporated herein by reference to the Company’s Current Report on Form 8-K dated March 8, 2002 (File No. 001-12131)).~~

10.1 Employment Letter, dated as of October 27, 2004, between AMF Bowling Worldwide, Inc. and Anthony J. Ponsiglione II (filed herewith).*

12.1 Statement re: Computation of Ratios (filed herewith).

31.1 Certification by the Company’s Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2 Certification by the Company’s Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1 Certification by the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.2 Certification by the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

* Management contract or compensatory plan or arrangement

SIGNATURES

Pursuant to ~~the~~ the requirements of the Securities ~~and~~ Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMF Bowling Worldwide, Inc.
(registrant)
/s/ Christopher F. Caesar		~~November~~February 89, ~~2004~~2005
Christopher F. Caesar
Senior Vice President, Chief Financial Officer and Treasurer
(Duly authorized officer of the registrant and principal financial officer)

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