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 ~~December 26~~April 2, ~~2004~~2006

¨	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~~7313 ~~AMF~~Bell ~~Drive~~ Creek Road

~~Richmond~~Mechanicsville, 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 ¨

AsIndicate ofby ~~December~~check ~~26,~~mark ~~2004,~~whether ~~there were issued and outstanding 1,000 shares of~~ the registrant’s ~~common~~is ~~stock,~~a ~~$0.01~~shell company ~~par~~(as ~~value,~~defined ~~all~~in ofRule ~~which were held of record by Kingpin Intermediate Corp., a wholly~~12b-~~owned~~2 ~~subsidiary~~ of ~~Kingpin~~the ~~Holdings,~~Exchange ~~LLC~~Act). Yes ¨ No x

As of April 2, 2006, 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	2425
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4041
Item 4.	Controls and Procedures	4142
	PART II
Item 1.	Legal Proceedings	4243
Item 6.	Exhibits	4344
Signatures		4445

AMF BOWLING WORLDWIDE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

PART I

ITEM 1. FINANCIAL STATEMENTS

	New Company
(In thousands, except share data)	April 2,2006			July 3,2005
(In thousands, except share and per share data)	December 26,2004			June 27,2004
Assets
Current assets:
Cash and cash equivalents	$	3159,~~284~~299		$	1245,~~734~~254
Accounts and notes receivable, net of allowance for doubtful accounts of $4,239 and $4,155, respectively		24,465			25,737
Accounts and notes receivable, net of allowance for doubtful accounts of $119 and $2,853, respectively		3,956			23,497
Inventories, net		315,~~854~~173			3025,~~745~~531
Prepaid expenses and other current assets		139,~~452~~691			1914,~~231~~293
Assets held for sale (Note 3)		51,125			—
Assets held for sale		—			5,294
Total current assets		~~152~~78,~~180~~119			88113,~~447~~869
Property and equipment, net		~~268~~232,~~537~~742			~~363~~248,~~956~~526
Other assets		44,132			49,704
Investment in equity affiliate		33,927			—
Total assets	$	464,849		$	502,107
Other assets		20,529			29,230
Total assets	$	365,317		$	391,625
Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	138,~~520~~477		$	2112,~~661~~506
Accrued expenses and other liabilities		7550,~~658~~988			7971,~~979~~121
Current portion of long-term debt		~~1,559~~967			21,~~294~~073
Liabilities held for sale (Note 3)		10,011			—
Liabilities held for sale		—			1,069
Total current liabilities		~~100~~60,~~748~~432			~~103~~85,~~934~~769
Long-term debt, less current portion		~~239~~202,~~967~~910			~~286~~203,~~503~~771
Liabilities, subject to resolution		~~213~~103			~~233~~143
Total liabilities		340,928			390,670
Other liabilities		4,742			4,742
Total liabilities		268,187			294,425
Stockholder’s equity:
Common stock ($0.01 par value, 1,000 shares authorized and outstanding)		—			—
Paid-in capital		133,716			133,716
Accumulated deficit		(529,~~945~~871	)		(1829,~~992~~690	)
Accumulated other comprehensive loss		(36,~~850~~715	)		(36,~~287~~826	)
Total stockholder’s equity		~~123~~97,~~921~~130			~~111~~97,~~437~~200
Total liabilities and stockholder’s equity	$	~~464~~365,~~849~~317		$	~~502~~391,~~107~~625

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)	2006 ThirdQuarter			2005 ThirdQuarter			2006 NineMonths			2005 NineMonths
(In thousands)	2005 SecondQuarter			2004 SecondQuarter			2005 FirstSix Months			2004 FirstSix Months
Operating revenue	$	147,766		$	166,428		$	397,527		$	426,919
Operating revenue	$	149,290		$	150,093		$	266,889		$	275,999
Operating expenses:
Cost of goods sold		3914,~~424~~013			3330,~~419~~720			6761,~~150~~232			6493,~~647~~069
Bowling center operating expenses		7988,~~857~~897			7486,~~469~~115			~~163~~249,~~794~~068			~~149~~242,~~294~~837
Selling, general and administrative expenses		159,~~712~~130			1215,~~000~~572			2636,~~464~~454			2248,~~958~~321
Asset impairment		—			—6,915			~~1,303~~606			—8,218
Depreciation and amortization		108,~~649~~889			129,~~247~~735			2129,~~929~~029			2531,~~081~~451
Total operating expenses		~~145~~120,~~642~~929			~~132~~149,~~135~~057			~~280~~376,~~640~~389			~~261~~423,~~980~~896
Operating income (loss)		3,648			17,958			(13,751	)		14,019
Operating income		26,837			17,371			21,138			3,023
Non-operating (income) expenses:
Interest expense		65,~~679~~718			86,~~859~~189			1316,~~181~~776			1819,~~046~~370
Interest income		(~~306~~487	)		(66478	)		(~~332~~1,074	)		(~~126~~810	)
Other income, net		(87	)		(3,102	)		(4,739	)		(3,309	)
Loss from equity affiliate		3,706			—			3,706			—
Total non-operating expenses		6,286			5,691			8,110			14,611
Other (income) expense, net		(41	)		1,760			(715	)		(2,979	)
Income (loss) from continuing operations before income taxes		(2,638	)		12,267			(21,861	)		(592	)
Total non-operating expenses		8,896			7,471			18,693			15,581
Provision for income taxes		1,276			1,731			1,648			1,672
Income (loss) from continuing operations before income taxes		17,941			9,900			2,445			(12,558	)
Income (loss) from continuing operations		(3,914	)		10,536			(23,509	)		(2,264	)
Provision for income taxes		2,847			3,997			2,183			5,645
Discontinued operations (Note 3):
Income (loss) from continuing operations		15,094			5,903			262			(18,203	)
Income (loss) from discontinued operations, net of tax		(346	)		1,958			6,309			2,086
Discontinued operations :
Gain on disposal, net of tax		30,247			—			30,247			—
Income from discontinued operations, net of tax		50			269			194			7,175
Income from discontinued operations		29,901			1,958			36,556			2,086
Gain (loss) on disposal, net of tax		682			(2,771	)		(637	)		27,476
Net income (loss)	$	25,987		$	12,494		$	13,047		$	(178	)
Income (loss) from discontinued operations		732			(2,502	)		(443	)		34,651
Net income (loss)	$	15,826		$	3,401		$	(181	)	$	16,448

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)	2006 NineMonths			Revised2005 NineMonths
(In thousands)	2005 FirstSix Months			2004 FirstSix Months
Operating activities:
Net income (loss)	$	~~13,047~~(181	)	$	~~(178~~16,448	)
Income from discontinued operations, net of tax		(36,556	)		(2,086	)
Less: Income (loss) from discontinued operations, net of tax		(443	)		34,651
Loss from continuing operations		(23,509	)		(2,264	)
Income (loss) from continuing operations		262			(18,203	)
Adjustments to reconcile net loss from continuing operations to net cash provided by continuing operations:
Adjustments to reconcile income (loss) from continuing operations to net cash provided by continuing operations:
Stock based compensation		—			210
Depreciation and amortization		29,029			31,451
Depreciation and amortization		21,929			25,081
(Gain) loss on the sale of property and equipment, net		(280	)		1,109
(Gain) loss on the sale of property and equipment, net		257			(1,051	)
Asset impairment		606			8,218
Gain from casualty loss		—			(1,413	)
Loss from equity affiliate		3,706			—
Asset impairment		1,303			—
Changes in assets and liabilities:
Accounts and notes receivable, net		(2,~~005~~556	)		~~329~~4,514
Inventories		(25,~~318~~217	)		~~1,226~~254
Other assets		23,~~173~~063			(42,~~772~~905	)
Accounts payable and accrued expenses		(12,~~619~~927	)		(24,~~775~~880	)
Income taxes payable		(~~264~~3,484	)		~~700~~1,854
Other long-term liabilities		~~1,168~~(670	)		~~(29~~2,047	)
Net cash provided by operating activities from continuing operations		127,~~125~~386			1529,~~242~~269
Investing activities:
Capital expenditures		(2138,~~513~~260	)		(2130,~~353~~089	)
Proceeds from:
Return of cash from equity affiliate		17,531			—
Sale of property and equipment		19,~~548~~546			32,~~427~~400
Sale of subsidiary		~~69,875~~—			—115,803
Net cash provided by (used in) investing activities from continuing operations		49(11,~~910~~183	)		~~(17~~88,~~926~~114	)
Financing activities:
Payments of long-term debt		(~~47,080~~753	)		(2856,~~380~~139	)
Payments under capital lease obligations		(~~211~~213	)		(~~146~~791	)
Net cash used in financing activities from continuing operations		(~~47,291~~966	)		(2856,~~526~~930	)
Effect of exchange rates on cash		(21,~~123~~015	)		(14,~~754~~430	)
Net cash provided by discontinued operations		16,929			5,982
Net cash (used in) provided by operating activities from discontinued operations (See Note 8)		(28	)		2,526
Net increase (decrease) in cash		18,550			(26,982	)
Net cash (used in) provided by investing activities from discontinued operations (See Note 8)		(149	)		15,036
Cash and cash equivalents at beginning of period		12,734			56,275
Net increase in cash and cash equivalents		14,045			73,585
Cash and cash equivalents at end of period	$	31,284		$	29,293
Cash and cash equivalents at beginning of period		45,254			12,734
Cash and cash equivalents at end of period	$	59,299		$	86,319

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 (“Worldwide”), and ~~its~~our subsidiaries (~~which~~Worldwide and our subsidiaries may be referred to as ~~Worldwide,~~ the Company, AMF, we, us, or our) ~~operate~~are engaged in the business of operating bowling centers and hold an interest in a business that manufactures and sells bowling equipment. Since October 8, 2005, the Company had two reportable business segments:

• the operation of bowling centers ~~in the United States and internationally~~ (“Centers”); and

•

“Holdings”, which consists of our investment in the Joint Venture (defined below) and a service company that provides services exclusively to the Joint Venture.

For periods prior to October 8, 2005, AMF engaged in two business segments:

•

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”).

AsCenters ofoperations ~~December 26, 2004, we operated 425 bowling centers worldwide including 368 bowling centers in the U.S.~~ and ~~57 international bowling centers,~~ ~~including~~operating 42assets inare ~~Australia.~~held ~~On September 30, 2004, we sold our 33 bowling centers~~ in ~~the~~subsidiaries ~~United Kingdom for gross cash proceeds~~ of ~~approximately $71,200~~Worldwide. On 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 the 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.

~~Products~~AMF is ~~one~~the largest operator of bowling centers in the world with 365 centers in ~~largest~~operation ~~manufacturers~~as of ~~bowling~~April 2, ~~center~~2006, ~~equipment~~and is comprised of 352 centers in the ~~world~~U.S. ~~Products~~and ~~revenue~~13 ~~consists~~bowling centers operating outside the U.S. Although we have operated our bowling centers under the “AMF” brand for a number of ~~two~~years, ~~major~~we ~~sales~~recently remodeled ~~categories:~~and upgraded four centers that we operate under the “300” brand. We are exploring opportunities to expand the number of “300” centers.

•On ~~New~~September 30, ~~Center~~2004, ~~Packages~~we ~~(“NCPs”),~~sold ~~which~~our is33 ~~all~~bowling ofcenters in the ~~equipment~~United ~~necessary~~Kingdom toand ~~outfit~~on ~~one~~February 8, ~~lane~~2005, atwe asold ~~new~~our or42 ~~existing~~bowling centers in Australia. We no longer have bowling center; ~~and~~operations in these countries. The results of Centers in these countries have been reported as discontinued operations for all periods in which they are presented.

•AMF ~~Modernization~~was ~~and~~also ~~Consumer~~one ~~Products,~~of ~~which~~the islargest manufacturers of bowling equipment ~~used~~in tothe ~~upgrade~~world. anWe ~~existing~~conducted ~~center,~~our ~~spare~~business ~~parts,~~of ~~pins~~manufacturing and selling bowling equipment through our Products subsidiaries until October 7, ~~supplies~~2005. ~~and~~Until ~~consumable~~such ~~products~~date, ~~used~~we reported inProducts ~~the~~as ~~operation~~a segment of aour ~~center~~business. On October 7, ~~and~~2005, ~~bowling~~we ~~balls~~entered ~~and~~into ~~ancillary~~a ~~products~~Joint Venture with Italian-based Qubica, S.p.A. (“Qubica”), in exchange for ~~resale~~a to50% ~~bowlers~~equity interest.

~~Products~~On ~~also~~December 4, ~~manufactures~~2005, ~~and~~we ~~sells~~sold ~~its~~our ~~Playmaster,~~billiards ~~Highland~~division ~~and~~for ~~Renaissance~~gross ~~brands~~cash proceeds of approximately $4.5 million subject to certain post-closing adjustments. Billiards manufactured and sold billiard tables and accessories. The results of operations for the billiards division have been reported as discontinued operations for all periods presented and are included within our former Products segment.

During the nine months of fiscal year 2006 (“2006 Nine Months”), Worldwide ~~serves~~served as the corporate headquarters of the Company. Its employees ~~provide~~provided ~~certain~~ management and administrative services for Centers and ~~Products.~~ ~~Worldwide’s~~certain ~~business~~administrative ~~operations~~services ~~and~~for ~~operating~~Products ~~assets~~until ~~are held in subsidiaries. AMF Bowling Centers~~October 7, ~~Inc.,~~2005 ~~a wholly-owned, indirect subsidiary of Worldwide, owns~~ and ~~operates~~for ~~our~~Holdings ~~bowling centers in the U~~thereafter.S. Our bowling centers located outside of the U.S. are operated through separate, indirect subsidiaries of Worldwide. Products is primarily operated through AMF Bowling Products, Inc., 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 including vested options and warrants, for aggregate proceeds (including option proceeds) of $258,700. The old common stock was canceled and the common stock of Merger Sub became the new common stock of Worldwide. 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~~Joint ~~Holdings~~Venture ~~is a Delaware limited liability company formed at the direction of Code Hennessy & Simmons LLC, a Chicago-based private equity firm.~~

On October 7, 2005, we completed transactions to form the joint venture with the shareholder of Qubica. In these transactions, AMF Holdings, Inc. (“AMF Holdings”), a subsidiary of Worldwide, contributed the equity of QubicaAMF Worldwide, LLC, formerly known as AMF Bowling Products, LLC (“AMF Products”), and substantially all of the other subsidiaries that conducted our Products business to QubicaAMF Worldwide, S.à.R.L. (the “Joint Venture”), in exchange for a 50% equity interest in the Joint Venture. The shareholder of Qubica also contributed the equity of Qubica and its subsidiaries to the Joint Venture in exchange for a 50% equity interest in the Joint Venture. The board of managers of the Joint Venture has six (6) members split equally between AMF Holdings and the shareholder of Qubica.

AMF Bowling Products UK Limited (“UK BPO”), a company organized under the laws of the United Kingdom, was a subsidiary of our Products business and was not contributed to the Joint Venture. UK BPO is now owned by AMF Holdings. UK BPO provides technical services exclusively to the Joint Venture under a services agreement. The Joint Venture provides administrative services, such as accounting and financial services, to UK BPO.

In creating the Joint Venture, Worldwide and certain of its non-Products subsidiaries entered into various agreements with the Joint Venture and its subsidiaries. These agreements include, but are not limited to, a supply agreement between Centers and the Joint Venture that requires the purchase of bowling products and supplies from the Joint Venture at prices similar to those charged in the past and at levels below the aggregate purchases in the past, a trademark license agreement between Worldwide and the Joint Venture, AMF Products and Qubica, that allows them to use the AMF mark and certain related marks, and various administrative services and similar agreements that provide for leasing space in certain facilities and support services from and to the Company and the Joint Venture. Management believes these agreements are on an arms-length basis and reflect commercial terms. In addition, the Joint Venture adopted an option plan that allows awards of options to purchase interests in the Joint Venture to managers of the Joint Venture. Upon exercise of any options, the ownership percentage of the Joint Venture will be equally reduced between the two shareholders.

Since the formation of the Joint Venture, AMF Products is no longer a guarantor of our obligations under our senior secured credit agreement (the “Credit Agreement”) and our Subordinated Notes due in 2010 (the “Subordinated Notes”) and liens against assets of AMF Products that secured its guarantee have been released. (See “Long-Term Debt Note”). In addition, the Joint Venture and certain of its subsidiaries, entered into a credit agreement for a $30.0 million revolving credit facility. Certain assets of the Joint Venture and certain of its subsidiaries secure the credit agreement. Worldwide and its remaining subsidiaries have no obligation under the Joint Venture’s credit agreement. Neither Worldwide nor AMF Holdings has any obligation to contribute capital or make loans to the Joint Venture.

Accounting for the Joint Venture

Our investment in the Joint Venture is accounted for using the equity method of accounting. We receive financial information from the Joint Venture on a delayed basis and therefore we record our share of the income or losses of our investment approximately one quarter in arrears. For the period October 8, 2005 to December 31, 2005, the Joint Venture reported total assets of $101.8 million, total revenues of $41.3 million, gross profit of $9.9 million, an operating loss of $2.9 million and a net loss of $5.4 million. In this quarter report, we recorded losses from our investment of $3.7 million including amortization of the investment and elimination of intercompany profit on purchases.

Our investment was recorded initially at cost and subsequently adjusted for our equity share in net income (loss) and any cash contributions and distributions. The difference between the carrying amount of this investment on our balance sheet and the underlying equity in net assets of the Joint Venture of $12.2 million is amortized as an adjustment to net income (loss) of the Joint Venture over 5 years. AMF continues to purchase capital equipment and supplies from the Joint Venture, and eliminates its shares of the intercompany profit. The Joint Venture has a December 31^st year end for financial reporting purposes.

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

Merger

On February 27, 2004, we were acquired in a merger transaction (the “Merger”) by a subsidiary of Kingpin Holdings LLC (“Kingpin”), a Delaware limited liability company formed at the direction of Code Hennessy & Simmons LLC, a Chicago-based private equity firm (“CHS”) to effect the Merger. Kingpin Holdings is owned by a fund managed by CHS and other equity investors.

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~~2006 ~~had~~has 52 weeks, ~~and~~while fiscal year 2005 ~~has~~had 53 weeks, with the extra week being reported in the fourth quarter.

NOTE 2. BASIS OF PRESENTATION

~~Our~~As ~~interim~~permitted by the rules and regulations of the Securities and Exchange Commission, the accompanying unaudited consolidated financial statements contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements ~~presented~~prepared in ~~this~~accordance ~~report~~with ~~are~~accounting ~~unaudited~~principles generally accepted in the United States (“generally accepted accounting principles”). 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 inaccounting ~~the~~principles ~~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, which are necessary to present fairly the consolidated financial position and the consolidated results of operations and cash flows for all periods presented.

~~These~~Certain ~~financial~~amounts ~~statements should be read~~ in ~~conjunction~~ ~~with~~ the ~~consolidated~~ financial statements and ~~the~~supporting ~~notes~~footnotes ~~thereto~~for ~~included~~prior inperiods ~~our~~have ~~Annual~~been ~~Report~~reclassified onto ~~Form~~conform ~~10-K~~to ~~for~~ the current ~~fiscal~~ year’s ~~ended June 27, 2004~~classification.

~~Prior~~These tofinancial ~~February~~statements ~~27,~~should ~~2004,~~be weread ~~were~~in ~~referred~~conjunction towith as the ~~“Reorganized~~consolidated ~~Predecessor~~financial ~~Company”~~ statements and, ~~as we existed on and after February 27, 2004, we are referred to as~~ the ~~“New~~notes ~~Company.”~~thereto ~~Our~~included ~~financial~~in ~~results~~our ~~during~~Annual ~~the~~Report ~~three~~on ~~and~~Form ~~six~~10-K ~~months~~for ~~ended December 26, 2004 and~~ the ~~three~~fiscal ~~and~~year ~~six months~~ ended ~~December 28~~July 3, ~~2003 are not comparable due to the Merger~~2005.

Period		Referred to as
Results for the New Company from September 27, 2004 through December 26, 2004		“New Company 2005 Second Quarter”
Results from January 2, 2006 through April 2, 2006		“2006 Third Quarter”
Results for the New Company from June 28, 2004 through December 26, 2004		“New Company 2005 First Six Months”
Results from July 4, 2005 through April 2, 2006		“2006 Nine Months”
Results for the Reorganized Predecessor Company from September 29, 2003 through December 28, 2003		“Reorganized Predecessor Company 2004 Second Quarter”
Results from December 27, 2004 through March 27, 2005		“2005 Third Quarter”
Results for the Reorganized Predecessor Company from June 30, 2003 through December 28, 2003		“Reorganized Predecessor Company 2004 First Six Months”
Results from June 28, 2004 through March 27, 2005		“2005 Nine Months”

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

NOTE 3. DISCONTINUED OPERATIONS

InOn ~~the~~December 4, ~~New~~2005, ~~Company~~we ~~2005~~sold ~~Second~~our ~~Quarter~~billiards division for gross cash proceeds of approximately $4,500 subject to certain post-closing adjustments. On September 30, 2004, we sold our bowling center operations in the United Kingdom for gross proceeds of approximately $7169,~~200.~~900 ~~Additionally,~~and inon February 8, 2005, we sold our bowling center operations in Australia for approximately $4744,~~810~~700. ~~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 billiards division and the bowling centers in the United Kingdom and Australia are reported separately as discontinued operations for all periods in which they are presented. The 2006 Third Quarter Income from operations and gain on disposal are related to certain post-closing adjustments from the sale of Billiards. The Company recognized a tax benefit in 2006 Third Quarter on its discontinued operations as a result of finalizing the tax computation for the gain on the disposition of the bowling centers in Australia.

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

	NewCompany			ReorganizedPredecessorCompany			NewCompany			ReorganizedPredecessorCompany
	2006 ThirdQuarter			2005 ThirdQuarter			2006 NineMonths				2005 NineMonths
	2005 SecondQuarter			2004 SecondQuarter			2005 FirstSix Months			2004 FirstSix Months
Revenue	$	—		$	8,766		$	4,830			$	52,970
Revenue	$	12,562		$	24,096		$	37,796		$	46,204
Income (loss) from operations, pretax		50			(25	)		194				10,039
Income from operations, pretax		114			1,470			9,467			2,130
Provision (benefit) for income taxes		—			(294	)		—				2,864
Provision (benefit) for income taxes		460			(488	)		3,158			44
Income from operations, after tax		50			269			194				7,175
Income (loss) from operations, after tax		(346	)		1,958			6,309			2,086
Gain (loss) on disposal, pretax		262			1,399			(1,057	)			35,041
Gain on disposal, pretax		33,642			—			33,642			—
Provision (benefit) for income taxes		(420	)		4,170			(420	)			7,565
Provision for income taxes		3,395			—			3,395			—
Gain (loss) on disposal, after tax		682			(2,771	)		(637	)			27,476
Gain on disposal, after tax		30,247			—			30,247			—
Income (loss) from discontinued operations	$	732		$	(2,502	)	$	(443	)		$	34,651
Income from discontinued operations	$	29,901		$	1,958		$	36,556		$	2,086

The assets and liabilities of the ~~Australian~~billiards ~~bowling center~~ operations are classified as “held-for-sale” as of ~~December 26~~July 3, ~~2004~~2005 and were as follows:

	December 26,2004
	July 3, 2005
Accounts receivable, net of allowance	$	~~114~~1,638
Inventories, net		13,~~411~~596
Prepaid and other current assets		~~1,519~~60
Property and equipment, net		45,461
Assets held for sale	$	5,294
Other		2,620
Accounts payable	$	601
Assets held for sale	$	51,125
Accrued expenses and other liabilities		468
Accounts payable	$	510
Liabilities held for sale	$	1,069
Accrued expenses and other liabilities		9,501
Liabilities held for sale	$	10,011

7NOTE 4. EQUITY BASED COMPENSATION

On February 27, 2004, Kingpin granted 313,145 options to purchase common units of Kingpin, at an exercise price of $10.00 and 104,381 options to purchase common units at an exercise price of $20.00 per common unit, to Frederick R. Hipp, President and Chief Executive Officer of Worldwide. These options vest ratably over a four year period.

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

~~NOTE~~Effective 4September 27, 2004, Kingpin adopted the 2004 Unit Option Plan (the “Option Plan”) and granted 100,000 options to purchase common units at an exercise price of $10.00 ~~EQUITY~~per ~~BASED~~common ~~COMPENSATION~~unit, to twenty two (22) managers of Worldwide. One-third of the options vest on June 28 of each year beginning June 28, 2005. The options are subject to customary terms and conditions, including provisions for the extinguishment of options upon the termination of employment. Due to management turn over, as of April 2, 2006, there are 86,000 options, held by eighteen (18) managers, which remain outstanding. 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 or Worldwide.

~~Effective~~On ~~September 27~~October 17, ~~2004~~2005, Kingpin ~~Holdings~~granted ~~adopted the~~75,000 ~~2004~~options ~~Unit~~under ~~Option Plan (~~the “Option Plan”) ~~and granted 100,000 options~~ to purchase common units ~~of Kingpin Holdings,~~ at an exercise price of $10.089 per common unit, to ~~twenty~~eight ~~two~~ (228) ~~senior~~ managers of Worldwide. ~~One-third~~and ~~of the options vest on June 28 of each year beginning June 28~~15,388 ~~2005. The~~ options ~~are subject~~ to ~~customary~~purchase ~~terms and conditions. The number of~~ common units ~~with~~at ~~respect~~an ~~to which options may be granted under the Option Plan and which may be issued upon their~~ exercise ~~may~~price ~~not~~of ~~exceed~~$10.89 ~~1,094,595~~per common ~~units in the aggregate. Under the Option Plan~~unit, ~~grants may be made~~ to ~~any~~two ~~director,~~Board ~~executive~~members ~~or other key employee~~ of, ~~or any consultant or advisors to,~~ Kingpin ~~Holdings or Worldwide~~. WeOne-third ~~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,~~options ifvest ~~any, between the fair value of the unit option and the exercise price~~ on October 17 ~~the date~~ of ~~the~~each ~~grant.~~year Nobeginning ~~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~~October 17, as2006. ~~all~~The options ~~granted~~are ~~under~~subject ~~this~~to ~~plan~~customary ~~had~~terms anand ~~exercise price not less than the market value of the common unit on the date of the grant~~conditions.

On December 31, 2005, under the Option Plan, Kingpin granted 20,000 options to purchase common units at an exercise price of $10.89 per common unit to William A. McDonnell, Vice President and Chief Financial Officer of Worldwide. One-third of the options vest on December 5 of each year beginning December 5, 2006. The options are subject to customary terms and conditions.

On February 16, 2006, under the Option Plan, Kingpin granted a total of 5,000 options to purchase common units at an exercise price of $10.00 per common unit and a total of 7,500 options at an exercise price of $10.89, to one (1) manager. The options vest over three years and are subject to customary terms and conditions.

On March 1, 2006, under the Option Plan, Kingpin granted a total of 47,500 options to purchase common units at an exercise price of $10.89 per common unit to four (4) managers. The options vest over three years and are subject to customary terms and conditions.

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. If we had elected to recognize compensation expense based on the fair value of all stock awards at grant date as prescribed by SFAS No. 123 “Accounting for Stock-Based Compensation,” the net income (loss) would have been reflected as the pro forma amounts shown below:


	2006 Third Quarter		2005 Third Quarter		2006 Nine Months			2005 Nine Months
Net income (loss), as reported	$	15,826	$	3,401	$	(181	)	$	16,448

Stock-based employee compensation under APB 25		—		—		—			—
Pro forma stock-based employee compensation expense under SFAS No. 123		63		40		156			108

Net income (loss), pro forma	$	15,763	$	3,361	$	(337	)	$	16,340

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

The fair value of each unit option grant was estimated at the time of the grant using the Black-Scholes option-pricing model. Pro forma net income (loss) disclosures were computed by amortizing the estimated fair value of the grants over the respective vesting periods.

NOTE 5. COMPREHENSIVE INCOME

Comprehensive income (loss) was $2716,~~244~~127 for the ~~New~~2006 ~~Company~~Third ~~2005 Second~~ Quarter, $~~12,484~~(70) for the ~~New~~2006 ~~Company~~Nine ~~2005 First Six~~ Months, $174,~~116~~558 for the ~~Reorganized Predecessor~~2005 ~~Company~~Third ~~2004 Second~~ Quarter and $417,~~997~~042 for the 2005 ~~Reorganized~~Nine ~~Predecessor Company 2004 First Six~~ Months. Accumulated other comprehensive loss of $36,~~850~~715 at ~~December 26~~April 2, ~~2004~~2006 and $36,~~287~~826 at ~~June 27~~July 3, ~~2004~~2005 is included in stockholder’s equity and consists of the foreign currency translation adjustment and minimum pension liability.

NOTE 6. INVENTORIES, NET

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

	December 26,2004		June 27, 2004
	April 2, 2006		July 3, 2005
Products, at FIFO:
Products, at FIFO (a):
Raw materials	$	~~6,459~~—	$	63,~~157~~509
Work in process (a)		3,585		2,281
Work in process (b)		—		112
Finished goods and spare parts		~~15,592~~—		1416,~~362~~410
Centers, at average cost:
Merchandise and spare parts		65,~~218~~173		75,~~945~~500
Total inventories, net	$	31,854	$	30,745
Total inventories	$	5,173	$	25,531

(a) ~~Work~~See inFootnote ~~process~~1 ~~also~~regarding ~~includes~~the ~~certain~~Joint ~~inventory shipments in-transit to customers~~Venture.

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

NOTE 7. PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consisted of:


	April 2, 2006			July 3, 2005
Land	$	25,291		$	28,582
Buildings and improvements		116,430			111,493
Equipment, furniture and fixtures		165,533			155,934
Other		9,074			7,825

		316,328			303,834
Less accumulated depreciation		(83,586	)		(55,308	)

Property and equipment, net	$	232,742		$	248,526

Depreciation expense related to property and equipment was $8,843 in the 2006 Third Quarter, $28,732 in the 2006 Nine Months, $9,569 in the 2005 Third Quarter and $30,953 in the 2005 Nine Months.

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

NOTE 7. PROPERTY AND EQUIPMENT, 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
	2006 NineMonths		2005 NineMonths
	2005 FirstSix Months		2004 FirstSix Months
Cash paid during the period for:
Interest	$	1116,~~182~~408	$	1819,~~776~~948
Income taxes		12,~~956~~943		13,~~577~~093

Beginning 2006 Second Quarter, the Company separately disclosed the operating, and investing portion of the cash flows attributable to its discontinued operations, which in prior periods were reported on a combined basis as a single amount.

The assets and liabilities of Products contributed to the Joint Venture included total current assets of $55,200, total property and equipment, net of $22,035, total other assets of $3,128, and total liabilities of $40,651.

NOTE 9. LONG-TERM DEBT

As discussed in Note 1, we completed the Merger on ~~February~~ February 27, 2004 and substantially all of the ~~debt~~long ~~the~~term ~~Reorganized~~debt ~~Predecessor~~Worldwide ~~Company~~ had in place prior to the Merger was paid in full and replaced by the long term indebtness described below.

Long-Term Debt Summary

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

	December 26,2004			June 27,2004
	April 2, 2006			July 3, 2005
Term Loan	$	8777,~~921~~811		$	~~135~~78,~~000~~564
Revolver		—			—
Subordinated Notes, 10%, due 2010		~~150~~123,~~000~~910			~~150~~123,~~000~~910
Old Subordinated Notes, 13%, due 2008		5			5
Mortgage note and capitalized leases		32,~~600~~151			32,~~792~~365
Total debt		~~241~~203,~~526~~877			~~288~~204,~~797~~844
Current maturities		(~~1,559~~967	)		(21,~~294~~073	)
Total long-term debt	$	~~239~~202,~~967~~910		$	~~286~~203,~~503~~771

9Credit Agreements

In September 2004, we entered into a First Amendment to Credit Agreement (“First Amendment”). The First 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 First Amendment also permits us to redeem, purchase, prepay, retire, defease or otherwise acquire our Subordinated Notes 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 within a specified period of time.

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

In June 2005, we entered into a Second Amendment to Credit Agreement (“Second Amendment”). The Second Amendment, among other things, provided us with the ability to add a synthetic letter of credit facility that will allow the issuance of up to an additional $20,000 of letters of credit, and amended certain definitions and covenants to permit the formation of the Joint Venture. It also amended certain of the existing financial covenants, added a minimum liquidity test with respect to certain capital expenditures and a net senior leverage ratio test and amended certain definitions relating to the requirements to make mandatory excess cash flow prepayments to, among other things, exclude certain adjustments and expenses resulting from certain corporate transactions. The Second Amendment modified financial covenants to take into account the reduction of cash flow as a result of the divestiture of certain international center operations. At the end of the 2006 Nine Months, we owed $77,811 in term loans (the “Term Loan”) under the Credit Agreement which also has an aggregate revolving loan commitment of $40,000 (the “Revolver”).

AtNo ~~December~~borrowings ~~26,~~were ~~2004,~~outstanding weunder ~~owed~~the ~~$87,921~~Revolver inas ~~term~~of ~~loans~~the (end of the ~~“Term Loan”)~~2006 ~~under~~Nine aMonths ~~senior~~and ~~secured~~outstanding standby letters of credit ~~agreement~~issued (under the Revolver ~~“Credit~~totaled ~~Agreement”)~~$17,017, ~~which~~leaving ~~also~~$22,983 ~~has~~available anfor ~~aggregate~~additional ~~revolving~~borrowings ~~loan~~or ~~commitment~~letters of credit. Our aggregate letter of credit obligations outstanding under the Credit Agreement may not exceed $4025,000. ~~(the~~The ~~“Revolver”).~~principal Inamount ~~September~~of ~~2004,~~the weTerm ~~entered~~Loan ~~into~~must be repaid on a ~~First~~quarterly ~~Amendment~~basis toin the amounts and at the times specified in the Credit Agreement, ~~(the~~with ~~“Amendment”).~~a ~~The~~final ~~Amendment~~principal payment of $75,231 ~~among~~due ~~other~~on ~~things~~August 27, ~~requires~~2009. usCurrent toscheduled ~~prepay~~quarterly ~~loans~~principal payments are $199 and~~/or~~ ~~cash~~are ~~collateralize~~due oron ~~pay~~the ~~certain~~30th day ~~letter~~of the last month of ~~credit~~each ~~obligations~~calendar ~~under~~quarter. Repayment also is required in amounts specified in the Credit Agreement infor ancertain ~~amount~~events ~~equal~~including tocertain ~~20%~~asset ofsale ~~the~~proceeds ~~net~~and ~~cash~~equity and debt offering proceeds. The Credit Agreement requires the ~~from~~frequency ~~any~~of ~~sale,~~interest ~~transfer~~payments orto ~~other~~be ~~disposition~~not less than quarterly and an annual mandatory prepayment of the ~~assets~~Term orLoan ~~stock~~based ofon ~~certain~~a percentage of ~~our~~free ~~foreign~~cash ~~subsidiaries.~~flow, ~~The~~ranging ~~Amendment~~from ~~also~~25-75%, ~~permits~~as usspecified in the Credit Agreement. Since the transactions to ~~redeem,~~form ~~purchase,~~the Joint ~~prepay,~~Venture ~~retire~~have been completed, ~~defease~~AMF orProducts ~~otherwise~~is ~~acquire~~no longer a guarantor of our ~~10%~~obligations ~~Senior~~under the Credit Agreement and the Subordinated Notes ~~due~~and ~~2010 for~~liens ~~cash~~against ~~consideration~~assets inof anAMF ~~amount~~Products that ~~does~~secured ~~not~~its ~~exceed~~guarantee ~~80%~~have ofbeen ~~net~~released. ~~cash~~The ~~proceeds~~obligations under ~~from~~the ~~those~~Credit ~~sales~~Agreement are secured by substantially all of our U.S. assets orand a 65% pledge of the capital stock of ~~certain~~one of our first tier foreign subsidiaries. ~~within~~Certain aof ~~specified~~our ~~period~~U.S. subsidiaries have guaranteed, or are directly obligated on, the Credit Agreement. The Credit Agreement contains certain events of ~~time~~default including cross default provisions.

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

WeAs ~~have~~of ~~$150~~February 27,~~000~~ of2004, ~~10%~~in ~~Senior~~conjunction ~~Subordinated~~with ~~Notes~~the ~~due~~Merger, ~~2010~~we issued the $150,000 Subordinated Notes (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~~our ~~Intermediate~~parent ~~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). During fiscal year 2005, we repurchased and cancelled $26,090 of Subordinated Notes. At the end of 2006 Nine Months, we owed $123,910 of Subordinated Notes.

~~NOTE~~12 ~~10. LIABILITIES SUBJECT TO RESOLUTION~~

In 2001, Worldwide and certain of its U.S. subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 with the United States Bankruptcy Court for the Eastern District of Virginia, Richmond Division (the “Bankruptcy Court”). On February 1, 2002, the Bankruptcy Court confirmed the Second Amended Second Modified Joint Plan of Reorganization (the “Plan”) of the Debtors. The Plan became effective on March 8, 2002, which is the date on which the Debtors emerged from Chapter 11. Liabilities subject to resolution in the

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

~~Chapter~~Dividends 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.

Under our Credit Agreement and Indenture, subject to certain restrictions and conditions, we may distribute up to 35% of the Net Cash Proceeds (as defined in the Indenture and the Credit Agreement) from the sale of certain International Operations (as defined in the Indenture and the Credit Agreement). The payment of a dividend or distribution is prohibited under the Indenture if the announcement or paying of the dividend or distribution results in a change in outlook or downgrading of the Subordinated Notes by Moody’s or Standard & Poor’s. As a condition to paying a dividend or distribution, the Indenture also requires us to first make an offer to purchase to the holders of our Subordinated Notes with an aggregated principal amount equal to 35% of such net cash proceeds at a price equal to 102% of the aggregate principal amount being purchased.

NOTE 10. LIABILITIES SUBJECT TO RESOLUTION

In 2001, Worldwide and certain of its U.S. subsidiaries filed voluntary petitions for relief under Chapter 11 with the United States Bankruptcy Court for the Eastern District of Virginia, Richmond Division. Liabilities subject to resolution remaining from the Chapter 11 proceeding were $103 and $143 at April 2, 2006 and July 3, 2005, respectively. 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 or was operated, either in connection with the closing of a bowling center or in response to an attractive offer to buy ~~such~~the ~~real estate~~property. ~~In addition, we will, from time to time, sell excess real estate.~~

The following table shows our asset sales for the reported periods:

	2005 Second Quarter						2005 First Six Months
	2006 ThirdQuarter				2005 ThirdQuarter				2006 NineMonths			2005 NineMonths
	Proceeds			Gain/(loss), net			Proceeds			Gain/(loss), net
U.S. Centers – Asset Sales
U.S. Centers:
Proceeds	$	1,954			$	879			$	3,771		$	2,397
Excess property	$	3		$	3		$	1,518		$	531
Gain (loss), net		(3	)			(811	)			292			(280	)
International Centers – Asset Sales
Proceeds		—				—				1,998			—
Gain , net		—				—				171			—

Centers net gains ~~are included in bowling center operating expenses~~ and ~~Products~~losses ~~net~~from ~~gains~~asset sales are included in ~~selling,~~bowling ~~general~~center ~~and~~operating ~~administrative~~expenses ~~expense~~ on the Condensed Consolidated Statements of Operations.

~~Litigation~~Asset ~~and~~sales ~~Claims~~in 2006 Third Quarter reflect the sale of five (5) excess properties in the U.S.

WeOn ~~currently~~December 4, ~~and~~2005, ~~from~~we ~~time~~sold toour ~~time~~billiards ~~are~~division ~~subject~~for togross ~~claims~~cash ~~and~~proceeds ~~actions arising in the ordinary course~~ of ~~our~~approximately ~~business~~$4,500 ~~including~~subject ~~general~~to ~~liability,~~certain ~~workers’~~post-closing ~~compensation,~~adjustments. ~~employee~~Billiards ~~compensation~~manufactured and ~~environmental~~sold ~~claims.~~billiard Intables ~~some~~and ~~actions, plaintiffs request punitive or other damages that may not be covered by insurance~~accessories. InThe ~~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. Infor ~~addition,~~the webilliards ~~are~~division ahave ~~defendant~~been inreported ~~two~~as ~~actions~~discontinued ~~alleging~~operations ~~violations~~for ofall ~~federal~~periods ~~legislation involving unsolicited communications~~presented. These ~~actions~~ ~~were~~proceeds ~~brought~~are bynot ~~plaintiffs~~included above ~~who allegedly received unsolicited communications from us or from an agent on our behalf. The plaintiffs in these actions sought statutory damages~~ and ~~have requested geographically-limited class certifications. In one of these actions, which was brought in Georgia state court,~~ the ~~court~~resulting ~~has~~loss ~~approved a settlement of the class action. It~~ is ~~not~~included ~~possible at this time to predict the outcome of the remaining action. From time to time, we resolve claims alleging similar violations~~ in ~~order~~discontinued ~~to avoid litigation~~operations.

1113

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

~~European~~Litigation ~~Community~~and ~~Tariff~~Claims

~~The~~We ~~Commission~~currently ofand ~~the~~from ~~European~~time ~~Community increased tariffs last year on certain U.S. exports~~ to ~~the~~time ~~countries~~are ~~comprising~~subject ~~the European Community (the “EC”) in response~~ to ~~benefits~~claims ~~for~~and ~~U.S.~~actions ~~exporters under the U.S. Foreign Sales Corporation/Extraterritorial Income Exclusion tax regimes, which were declared in~~arising ~~violation~~in ~~of U.S. obligations by~~ the ~~World~~ordinary ~~Trade~~course ~~Organization (the “WTO”). A substantial portion~~ of our ~~bowling~~business, ~~products~~including ~~imported~~general ~~into~~liability, ~~the~~workers’ ECcompensation, ~~was~~employee ~~subject~~compensation ~~to the additional duty. The additional duty was 5% ad valorem in March 2004~~ and ~~increased~~ 1%environmental ~~each month thereafter up to a maximum of 14%~~claims. ~~The~~In ~~U.S.~~some ~~Congress~~actions, ~~recently~~plaintiffs ~~enacted~~request ~~legislation~~punitive ~~which~~or ~~was~~other ~~intended~~damages tothat ~~address~~may ~~the~~not ~~issues~~be ~~raised~~covered by ~~the EC~~insurance. ~~The~~In management’s ECopinion, ~~has agreed to repeal temporarily~~ the ~~additional~~claims ~~duty~~and ~~retroactive~~actions toin ~~January 1,~~which ~~2005~~we ~~until~~are ~~the~~involved ~~WTO~~are ~~determines~~not ~~that~~expected ~~the U.S. legislation adequately responded~~ to ~~global~~have ~~trade~~a ~~rules.~~material ~~There~~adverse ~~can~~impact beon noour ~~assurance~~financial ~~that~~position ~~the~~or ~~WTO~~results ~~will~~of ~~make a favorable determination~~operations.

In July 2005, the Australian state of Western Australian assessed Worldwide approximately $0.3 million for stamp taxes relating to the Merger. The assessment claims that the Merger was a purchase of a land-rich company, which Western Australian law generally provides is a company whose real estate constitutes greater than 60% of all its assets (other than excluded assets). We paid the assessment under protest and filed an objection. The objection is an internal review by the department of revenue of Western Australia. In March 2006, the Australian state of South Australia assessed our former subsidiary that operated our bowling centers in Australia (“BCO Australia”) $405 for stamp tax relating to the Merger. Under the stock purchase agreement (the “SPA”) by which we sold our interest in BCO Australia in February 2005, we were responsible for this assessment. We paid this assessment under protest and filed an objection. The objection is an internal review by the department of revenue of South Australia. If the assessments are not reversed, management will consider appeals. The Australian state of New South Wales has also made inquiries about the applicability of its land-rich laws to the Merger but has not made an assessment.

After signing the SPA, the Australian state of NSW passed a law that made a vendor of the stock of a land rich company liable for stamp tax. In March 2006, NSW assessed Worldwide for vendor’s stamp tax of $369, including interest as the vendor in the sale to BCO Australia under the SPA.

NOTE 12. BUSINESS SEGMENTS

WeFASB ~~operate~~Statement inNo. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision makers. Beginning October 8, 2005, the Company has two business segments: Centers (the operation of bowling centers) and Holdings (the manufacture and sale of bowling and related products through our investment in the Joint Venture). Holdings includes the results and balances from the Joint Venture. Such amounts are eliminated and not presented in our consolidated financial statements as they are accounted for using the equity method. In prior periods, the Company reported Products as a segment. All segment information for prior periods has not been recast to conform to the new segment structure. Information concerning these ~~segments~~ operations from continuing operations is presented below:

	New Company 2005 Second Quarter
	2006 Third Quarter
(In millions)	Revenue fromunaffiliatedcustomers			~~Intersegmentsales~~	Intersegmentsales			~~Operatingincome(loss)~~	Operatingincome(loss)			~~Totalassets~~	Totalassets			~~Depreciationandamortization~~	Depreciationandamortization			~~Capitalexpenditures~~	Capitalexpenditures
Centers:
U.S.	$	~~112~~142.52		$	—$	—		$	~~13.0~~$	28.8		$	~~252.1~~$	256.0		$	~~8.1~~$	8.6		$	~~8.5~~$	6.5
International		4.79			—	—			~~0.3~~	0.8			~~67.7~~	11.8			~~0.3~~	0.2			~~0.1~~	0.2
Subtotal		~~117~~147.21			—	—			~~13.3~~	29.6			~~319.8~~	267.8			~~8.4~~	8.8			~~8.6~~	6.7
Products:
Holdings		36.6				5.4				(3.0	)			151.9				2.1				0.3
U.S.		15.2			5.3				0.3				78.2				1.7				0.7
Equity method eliminations		(35.9	)			(5.4	)			2.9				(101.8	)			(2.1	)			(0.3	)
International		16.9			1.1				—				27.1				0.1				0.1
Subtotal		0.7				—				(0.1	)			50.1				—				—
Subtotal		32.1			6.4				0.3				105.3				1.8				0.8
Corporate		—				—				(2.8	)			36.7				0.2				1.0
Corporate		—			—				(10.0	)			32.2				0.5				0.4
Eliminations		—				—				0.1				10.7				(0.1	)			(0.1	)
Eliminations		—			(6.4	)			—				7.5				(0.1	)			—
Total	$	147.8			$	—			$	26.8			$	365.3			$	8.9			$	7.6
Total	$	149.3		$	—			$	3.6			$	464.8			$	10.6			$	9.8
	Reorganized Predecessor Company 2004 Second Quarter
(In millions)	Revenue fromunaffiliatedcustomers			Intersegmentsales				Operatingincome(loss)				Totalassets				Depreciationandamortization				Capitalexpenditures
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

1214

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

	New Company 2005 First Six Months
	2005 Third Quarter
(In millions)	Revenue fromunaffiliatedcustomers			~~Intersegmentsales~~	Intersegmentsales			~~Operatingincome(loss)~~	Operating income (loss)			~~Totalassets~~	Totalassets			~~Depreciationandamortization~~	Depreciationandamortization			~~Capitalexpenditures~~	Capitalexpenditures
Centers:
U.S.	$	~~198~~136.06		$	—$	—		$	~~2.5~~$	21.9		$	~~252.1~~$	248.5		$	~~16.9~~$	7.4		$	~~18.6~~$	9.6
International		95.62			—	—			~~(1.8~~	)0.4			~~67.7~~	15.1			~~0.6~~	0.3			~~0.2~~	0.3
Subtotal		~~207~~141.68			—	—			~~0.7~~	22.3			~~319.8~~	263.6			~~17.5~~	7.7			~~18.8~~	9.9
Products:
Products		24.6				6.6				0.3				99.7				1.7				0.3
U.S.		32.5			12.2				(0.9	)			78.2				3.4				1.4
Corporate		—				—				(3.7	)			81.5				0.5				0.5
International		26.8			2.1				2.1				27.1				0.2				0.1
Eliminations		—				(6.6	)			(1.5	)			6.1				(0.2	)			(1.8	)
Subtotal		59.3			14.3				1.2				105.3				3.6				1.5
Total	$	166.4			$	—			$	17.4			$	450.9			$	9.7			$	8.9
Corporate		—			—				(15.7	)			32.2				0.9				1.2
	2006 Nine Months
Eliminations		—			(14.3	)			—				7.5				(0.1	)			—
(In millions)	Revenue fromunaffiliatedcustomers				Intersegmentsales				Operatingincome(loss)				Totalassets				Depreciationandamortization				Capitalexpenditures
Total	$	266.9		$	—			$	(13.8	)		$	464.8			$	21.9			$	21.5
Centers:
	Reorganized Predecessor Company 2004 First Six Months
U.S.	$	349.9			$	—			$	29.8			$	256.0			$	26.3			$	36.2
(In millions)	Revenue fromunaffiliatedcustomers			Intersegmentsales				Operatingincome(loss)				Totalassets				Depreciationandamortization				Capitalexpenditures
International		14.1				—				2.3				11.8				0.7				0.6
Centers:
Subtotal		364.0				—				32.1				267.8				27.0				36.8
U.S.	$	206.2		$	—			$	24.5			$	483.1			$	21.0			$	19.0
Products		32.1				7.7				(1.7	)			—				1.6				1.1
International		11.1			—				0.9				106.9				0.7				0.7
Holdings		37.3				5.4				(2.9	)			151.9				2.1				0.3
Subtotal		217.3			—				25.4				590.0				21.7				19.7
Equity method eliminations		(35.9	)			(5.4	)			2.9				(101.8	)			(2.1	)			(0.3	)
Products:
Subtotal		1.4				—				—				50.1				—				—
U.S.		30.2			9.0				2.1				80.1				2.6				0.5
Corporate		—				—				(9.1	)			36.7				0.9				1.0
International		28.5			2.3				(1.4	)			31.4				0.2				0.1
Eliminations		—				(7.7	)			(0.2	)			10.8				(0.5	)			(0.6	)
Subtotal		58.7			11.3				0.7				111.5				2.8				0.6
Total	$	397.5			$	—			$	21.1			$	365.4			$	29.0			$	38.3
Corporate		—			—				(12.3	)			(7.0	)			0.9				1.1
	2005 Nine Months
Eliminations		—			(11.3	)			0.2				7.2				(0.3	)			—
(In millions)	Revenue fromunaffiliatedcustomers				Intersegmentsales				Operatingincome(loss)				Totalassets				Depreciationandamortization				Capitalexpenditures
Total	$	276.0		$	—			$	14.0			$	701.7			$	25.1			$	21.4
Centers:
U.S.	$	334.6			$	—			$	19.5			$	248.5			$	24.3			$	28.1
International		14.8				—				(1.4	)			15.1				0.9				0.5
Subtotal		349.4				—				18.1				263.6				25.2				28.6
Products		77.5				20.9				0.9				99.7				5.2				1.5
Corporate		—				—				(14.5	)			81.5				1.4				1.8
Eliminations		—				(20.9	)			(1.5	)			6.1				(0.3	)			(1.8	)
Total	$	426.9			$	—			$	3.0			$	450.9			$	31.5			$	30.1

1315

AMF BOWLING WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)

~~NOTE 13.~~ CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The Subordinated Notes are jointly and ~~severally~~ 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 ~~December 26~~April 2, ~~2004~~2006 and ~~June 27~~July 3, ~~2004~~2005, condensed consolidating statements of operations for the ~~New~~2006 ~~Company~~Third ~~2005 Second~~ Quarter, 2005 ~~Reorganized~~Third ~~Predecessor Company 2004 Second~~ Quarter, ~~New~~2006 ~~Company~~Nine ~~2005 First Six~~ Months and ~~Reorganized~~2005 ~~Predecessor~~Nine ~~Company 2004 First Six~~ Months and the condensed consolidating statements of cash flows for the ~~New~~ ~~Company~~2006 ~~2005~~Nine ~~First Six~~ Months and ~~the~~2005 ~~Reorganized~~Nine ~~Predecessor Company 2004 First Six~~ Months. The elimination entries presented are necessary to combine the entities. Information presented below for periods in which Products was included as a Guarantor Subsidiary has been recast to present Products as a Non-Guarantor Subsidiary.

1416

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

	December 26, 2004
	April 2, 2006
	Worldwide			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Total
Assets
Current assets:
Cash and cash equivalents	$	2450,~~298~~837		$	47,~~967~~179		$	21,~~019~~283		$	—		$	3159,~~284~~299
Accounts and notes receivable, net		—55			203,~~414~~692			~~4,051~~209			—			243,~~465~~956
Accounts and notes receivable - intercompany		2615,~~548~~323			~~165~~137,~~616~~560			8(3,~~879~~502	)		(~~201~~149,~~043~~381	)		—
Inventories, net		—			294,~~657~~826			~~5,710~~347			~~(3,513~~—	)		315,~~854~~173
Prepaid expenses and other current assets		(67,~~346~~777	)		1716,~~922~~620			~~1,876~~540			—308			139,~~452~~691
Assets held for sale		—			51,125			—			—			51,125
Total current assets		58,438			169,877			(1,123	)		(149,073	)		78,119
Total current assets		44,500			289,701			22,535			(204,556	)		152,180
Property and equipment, net		10,415			215,947			6,555			(175	)		232,742
Notes receivable – intercompany		1,896			—			3,000			(4,896	)		—
Investment in subsidiaries		391,092			(5,358	)		—			(385,734	)		—
Property and equipment, net		7,595			253,571			4,891			2,480			268,537
Investment in equity affiliate		—			34,326			—			(399	)		33,927
Investment in subsidiaries		446,334			—			5			(446,339	)		—
Other assets		10,639			87,510			(1,028	)		(76,592	)		20,529
Other assets		28,250			93,416			(657	)		(76,877	)		44,132
Total assets	$	470,584		$	502,302		$	4,404		$	(611,973	)	$	365,317
Total assets	$	528,575		$	636,688		$	29,774		$	(730,188	)	$	464,849
Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	~~120~~62		$	127,~~381~~559		$	~~1,019~~856		$	—		$	138,~~520~~477
Accrued expenses and other liabilities		172,~~092~~399			5347,~~512~~066			51,~~054~~514			—9			7550,~~658~~988
Current portion of long-term debt		~~884~~794			~~586~~173			89—			—			~~1,559~~967
Accounts and notes payable - intercompany		~~126~~147,~~568~~073			~~43,402~~333			311,~~073~~987			(~~201~~149,~~043~~393	)		—
Liabilities held for sale		—			10,011			—			—			10,011
Total current liabilities		150,328			55,131			4,357			(149,384	)		60,432
Total current liabilities		144,664			119,892			37,235			(201,043	)		100,748
Long-term debt, less current portion		200,932			1,978			—			—			202,910
Long-term debt, less current portion		237,041			2,584			342			—			239,967
Liabilities, subject to resolution		—			103			—			—			103
Liabilities, subject to resolution		—			213			—			—			213
Other long-term liabilities		21,569			54,572			4,885			(76,284	)		4,742
Other long-term liabilities		21,569			55,141			167			(76,877	)		—
Total liabilities		372,829			111,784			9,242			(225,668	)		268,187
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~~668			~~677~~406,~~220~~677			96,~~432~~941			(~~686~~413,~~652~~570	)		133,716
Accumulated deficit		(4,912	)		(228,467	)		(6,377	)		233,811			(5,945	)
Accumulated earnings (deficit)		(29,198	)		(13,046	)		(8,208	)		20,581			(29,871	)
Accumulated other comprehensive income (loss)		(36,~~850~~715	)		5(3,~~556~~113	)		(113,~~025~~571	)		56,~~469~~684			(36,~~850~~715	)
Total stockholder’s equity		~~124~~97,~~954~~755			~~454~~390,~~309~~518			(74,~~970~~838	)		(~~447~~386,~~372~~305	)		~~123~~97,~~921~~130
Total liabilities and stockholder’s equity	$	~~528~~470,~~575~~584		$	~~636~~502,~~688~~302		$	294,~~774~~404		$	(~~730~~611,~~188~~973	)	$	~~464~~365,~~849~~317

1517

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
	July 3, 2005
	Worldwide			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Total
Assets
Current assets:
Cash and cash equivalents	$	339,~~379~~537		$	62,~~484~~868		$	2,~~871~~849		$	—		$	1245,~~734~~254
Accounts and notes receivable, net		—			~~21,333~~(615	)		424,~~404~~112			—			2523,~~737~~497
Accounts and notes receivable - intercompany		1621,~~288~~901			~~150~~119,~~135~~720			2022,~~146~~801			(~~186~~164,~~569~~422	)		—
Inventories, net		—			271,~~430~~325			627,~~039~~137			(2,~~724~~931	)		3025,~~745~~531
Prepaid expenses and other current assets		(7,~~137~~452	)		1913,~~444~~296			68,~~924~~449			—			1914,~~231~~293
Total current assets		12,530			224,826			40,384			(189,293	)		88,447
Assets held for sale		—			5,294			—			—			5,294
Notes receivable – intercompany		47,330			—			5,663			(52,993	)		—
Total current assets		53,986			141,888			85,348			(167,353	)		113,869
Property and equipment, net		7,~~256~~748			~~315~~207,~~007~~463			4130,~~627~~943			662,372			~~363~~248,~~956~~526
Investment in subsidiaries		~~477~~396,~~829~~724			—			5—			(~~477~~396,~~834~~724	)		—
Other assets		3015,~~003~~092			9856,~~258~~812			~~(392~~33,625	)		(7876,~~165~~299	)		4929,~~704~~230
Total assets	$	~~574~~473,~~948~~550		$	~~638~~406,~~091~~163		$	87149,~~287~~916		$	(~~798~~638,~~219~~004	)	$	~~502~~391,~~107~~625
Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	~~496~~46		$	145,~~719~~650		$	6,~~446~~810		$	—		$	2112,~~661~~506
Accrued expenses and other liabilities		1312,~~533~~468			6041,~~189~~810			616,~~257~~843			—			7971,~~979~~121
Current portion of long-term debt		~~1,688~~796			~~530~~277			76—			—			21,~~294~~073
Accounts and notes payable - intercompany		~~130~~139,~~212~~229			131,~~576~~498			4223,~~781~~695			(~~186~~164,~~569~~422	)		—
Total current liabilities		145,929			89,014			55,560			(186,569	)		103,934
Liabilities held for sale		—			1,069			—			—			1,069
Long-term debt, less current portion		283,317			2,837			349			—			286,503
Total current liabilities		152,539			50,304			47,348			(164,422	)		85,769
Liabilities, subject to resolution		—			233			—			—			233
Long-term debt, less current portion		201,683			2,088			—			—			203,771
Other long-term liabilities		21,569			56,422			174			(78,165	)		—
Liabilities, subject to resolution		—			143			—			—			143
Notes payable-intercompany		10,038			—			42,955			(52,993	)		—
Other long-term liabilities		21,569			35,378			24,094			(76,299	)		4,742
Total liabilities		~~460~~375,~~853~~791			~~148~~87,~~506~~913			9971,~~038~~442			(~~317~~240,~~727~~721	)		~~390~~294,~~670~~425
Stockholder’s equity:
Common stock		—			—			—			—			—
Paid-in capital		133,716			~~504~~318,~~566~~173			~~(10~~305,~~975~~688	)		(~~493~~623,~~591~~861	)		133,716
Accumulated (deficit) earnings		(1629,~~334~~131	)		(98,~~965~~165	)		(~~886~~210,559	)		8218,~~193~~165			(1829,~~992~~690	)
Accumulated other comprehensive income (loss)		(36,~~287~~826	)		(58,~~016~~242	)		~~110~~(16,655	)		48,~~906~~413			(36,~~287~~826	)
Total stockholder’s equity		~~114~~97,~~095~~759			~~489~~318,~~585~~250			~~(11~~78,~~751~~474	)		(~~480~~397,~~492~~283	)		~~111~~97,~~437~~200
Total liabilities and stockholder’s equity	$	~~574~~473,~~948~~550		$	~~638~~406,~~091~~163		$	87149,~~287~~916		$	(~~798~~638,~~219~~004	)	$	~~502~~391,~~107~~625

1618

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

	New Company 2005 Second Quarter
	2006 Third Quarter
	Worldwide			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Total
Operating revenue	$	—		$	~~140~~143,~~792~~435		$	114,~~716~~331		$	~~(3,218~~—	)	$	~~149~~147,~~290~~766
Operating expenses:
Cost of goods sold		—			3613,~~364~~338			~~6,527~~675			~~(3,467~~—	)		3914,~~424~~013
Bowling center operating expenses		—			7586,~~796~~357			42,~~141~~540			~~(80~~—	)		7988,~~857~~897
Selling, general and administrative expenses		92,~~532~~569			46,~~803~~126			~~1,377~~435			—			159,~~712~~130
Depreciation and amortization		~~499~~252			98,~~897~~564			~~258~~215			(5142	)		108,~~649~~889
Total operating expenses		102,~~031~~821			~~126~~114,~~860~~385			123,~~303~~865			(~~3,552~~142	)		~~145~~120,~~642~~929
Operating income (loss)		(102,~~031~~821	)		1329,~~932~~050			~~(587~~466	)		~~334~~142			326,~~648~~837
Non-operating (income) expenses:
Interest expense		65,~~641~~673			3813			—35			—(3	)		65,~~679~~718
Interest income		(~~265~~355	)		(26101	)		(1534	)		—3			(~~306~~487	)
Other (income) expense		(6,241	)		6,771			(617	)		—			(87	)
Loss from equity affiliate		—			3,307			—			399			3,706
Total non-operating (income) expenses		135			6,783			(632	)		—			6,286
Other (income) expense		(7,860	)		7,632			198			(11	)		(41	)
Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries		(10,166	)		7,149			45			334			(2,638	)
Total non-operating (income) expenses		(2,542	)		10,851			199			388			8,896
Provision (benefit) for income taxes		219			669			388			—			1,276
Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries		(279	)		18,199			267			(246	)		17,941
Income (loss) from continuing operations		(10,385	)		6,480			(343	)		334			(3,914	)
Provision (benefit) for income taxes		2			2,196			649			—			2,847
Income (loss) from continuing operations		(281	)		16,003			(382	)		(246	)		15,094
Discontinued operations:
Income (loss) from discontinued operations, net of tax		—			442			(788	)		—			(346	)
Income from discontinued operations, net of tax		—			50			—			—			50
Gain on disposal, net of tax		~~30,247~~			—682			—			—			~~30,247~~682
Income (loss) from discontinued operations		30,247			442			(788	)		—			29,901
Income from discontinued operations		—			732			—			—			732
Equity in income (loss) of subsidiaries		616,~~125~~107			—			—			(616,~~125~~107	)		—
Net income (loss)	$	2515,~~987~~826		$	616,~~922~~735		$	(~~1,131~~382	)	$	(516,~~791~~353	)	$	2515,~~987~~826

1719

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 Second Quarter
	2005 Third Quarter
	Worldwide			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Total
Operating revenue	$	—		$	~~142~~111,~~702~~429		$	1057,~~274~~480		$	(2,~~883~~481	)	$	~~150~~166,~~093~~428
Operating expenses:
Cost of goods sold		—			31(7,~~022~~704	)		540,~~081~~491			(2,~~684~~067	)		3330,~~419~~720
Bowling center operating expenses		—			7083,~~240~~052			43,~~414~~167			(~~185~~104	)		7486,~~469~~115
Selling, general and administrative expenses		65,~~706~~475			~~4,506~~9			~~788~~10,088			—			1215,~~000~~572
Depreciation and amortization		229			11,778			240			—			12,247
Asset impairment		—			6,915			—			—			6,915
Total operating expenses		6,935			117,546			10,523			(2,869	)		132,135
Depreciation and amortization		518			6,884			2,338			(5	)		9,735
Operating income (loss)		(6,935	)		25,156			(249	)		(14	)		17,958
Total operating expenses		5,993			89,156			56,084			(2,176	)		149,057
Operating income (loss)		(5,993	)		22,273			1,396			(305	)		17,371
Non-operating (income) expenses:
Interest expense		86,~~793~~228			6654			—989			—(1,082	)		86,~~859~~189
Interest income		97(1,350	)		(5957	)		(~~104~~153	)		—1,082			(66478	)
Other (income) expense		(8,852	)		5,776			27			(53	)		(3,102	)
Other expense (income), net		(8,344	)		6,845			3,259			—			1,760
Total non-operating (income) expenses		38(3,466	)		56,~~783~~842			~~(77~~4,095	)		~~(53~~—	)		57,~~691~~471
Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries		(62,~~973~~527	)		1915,~~373~~431			(~~172~~2,699	)		39(305	)		129,~~267~~900
Provision for income taxes		—			1,204			527			—			1,731
Provision (benefit) for income taxes		5,746			(428	)		(1,321	)		—			3,997
Income (loss) from continuing operations		(6,973	)		18,169			(699	)		39			10,536
Income (loss) from continuing operations before equity in income (loss) of subsidiaries		(8,273	)		15,859			(1,378	)		(305	)		5,903
Income (loss) from discontinued operations, net of tax		—			(656	)		2,614			—			1,958
Discontinued operations:
Equity in income (loss) of subsidiaries		19,467			—			—			(19,467	)		—
Income (loss) from discontinued operations, net of tax		—			817			(548	)		—			269
Net income (loss)	$	12,494		$	17,513		$	1,915		$	(19,428	)	$	12,494
Loss on disposal, net of tax		(2,771	)		—			—			—			(2,771	)
Income (loss) from discontinued operations		(2,771	)		817			(548	)		—			(2,502	)
Equity in income (loss) of subsidiaries		14,445			—			—			(14,445	)		—
Net income (loss)	$	3,401		$	16,676		$	(1,926	)	$	(14,750	)	$	3,401

1820

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

	New Company 2005 First Six Months
	2006 Nine Months
	Worldwide			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Total
Operating revenue	$	—		$	~~252~~353,~~526~~060		$	2152,~~306~~189		$	(67,~~943~~722	)	$	~~266~~397,~~889~~527
Operating expenses:
Cost of goods sold		—			6233,~~332~~221			1133,~~800~~602			(65,~~982~~591	)		6761,~~150~~232
Bowling center operating expenses		—			~~155~~242,~~188~~527			8,~~896~~072			(~~290~~1,531	)		~~163~~249,~~794~~068
Selling, general and administrative expenses		147,~~850~~787			919,~~614~~846			28,~~000~~821			—			2636,~~464~~454
Asset impairment		—			~~1,303~~259			—347			—			~~1,303~~606
Depreciation and amortization		~~929~~944			2026,~~619~~361			~~395~~2,150			(14426	)		2129,~~929~~029
Total operating expenses		158,~~779~~731			~~249~~322,~~056~~214			2352,~~091~~992			(7,~~286~~548	)		~~280~~376,~~640~~389
Operating income (loss)		(158,~~779~~731	)		330,~~470~~846			(~~1,785~~803	)		~~343~~(174	)		~~(13~~21,~~751~~138	)
Non-operating (income) expenses:
Interest expense		1316,~~070~~633			111			—273			—(241	)		1316,~~181~~776
Interest income		(~~265~~999	)		(44249	)		(2367	)		—241			(~~332~~1,074	)
Other (income) expense		(13,722	)		12,931			(3,948	)		—			(4,739	)
Loss from equity affiliate		—			3,307			—			399			3,706
Total non-operating (income) expenses		(917	)		12,998			(3,971	)		—			8,110
Other (income) expense		(18,762	)		18,135			(77	)		(11	)		(715	)
Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries		(14,862	)		(9,528	)		2,186			343			(21,861	)
Total non-operating (income) expenses		(3,128	)		21,304			129			388			18,693
Provision (benefit) for income taxes		341			(126	)		1,433			—			1,648
Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries		(5,603	)		9,542			(932	)		(562	)		2,445
Income (loss) from continuing operations		(15,203	)		(9,402	)		753			343			(23,509	)
Provision for income taxes		73			1,321			789			—			2,183
Income (loss) from continuing operations		(5,676	)		8,221			(1,721	)		(562	)		262
Discontinued operations:
Income (loss) from discontinued operations, net of tax		—			6,856			(547	)		—			6,309
Income from discontinued operations, net of tax		—			194			—			—			194
Gain on disposal, net of tax		30,247			—			—			—			30,247
Loss on disposal, net of tax		—			(637	)		—			—			(637	)
Income (loss) from discontinued operations		30,247			6,856			(547	)		—			36,556
Loss from discontinued operations, Net of tax		—			(443	)		—			—			(443	)
Equity in income (loss) of subsidiaries		(15,~~997~~495	)		—			—			1(5,~~997~~495	)		—
Net income (loss)	$	~~13,047~~(181	)	$	(27,~~546~~778	)	$	~~206~~(1,721	)	$	2(6,~~340~~057	)	$	~~13,047~~(181	)

1921

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 Six Months
	2005 Nine Months
	Worldwide			GuarantorSubsidiaries			Non- GuarantorSubsidiaries			Eliminations			Total
Operating revenue	$	—		$	~~262~~309,~~193~~226		$	19127,~~663~~117		$	(59,~~857~~424	)	$	~~275~~426,~~999~~919
Operating expenses:
Cost of goods sold		—			6010,~~600~~390			991,~~539~~727			(59,~~492~~048	)		6493,~~647~~069
Bowling center operating expenses		—			~~141~~232,~~589~~788			810,~~056~~443			(~~351~~394	)		~~149~~242,~~294~~837
Selling, general and administrative expenses		1120,~~435~~325			9,~~819~~905			118,~~704~~091			—			2248,~~958~~321
Depreciation and amortization		895			23,740			446			—			25,081
Asset impairment		—			8,218			—			—			8,218
Total operating expenses		12,330			235,748			19,745			(5,843	)		261,980
Depreciation and amortization		1,447			24,122			5,901			(19	)		31,451
Operating income (loss)		(12,330	)		26,445			(82	)		(14	)		14,019
Total operating expenses		21,772			285,423			126,162			(9,461	)		423,896
Operating income (loss)		(21,772	)		23,803			955			37			3,023
Non-operating (income) expenses:
Interest expense		1719,~~918~~298			~~128~~165			—989			—(1,082	)		1819,~~046~~370
Interest income		89(1,615	)		(~~107~~75	)		(~~108~~202	)		—1,082			(~~126~~810	)
Other (income) expense		(16,288	)		12,411			621			(53	)		(3,309	)
Other (income) expense, net		(22,066	)		18,834			253			—			(2,979	)
Total non-operating (income) expenses		1(4,~~719~~383	)		1218,~~432~~924			~~513~~1,040			~~(53~~—	)		1415,~~611~~581
Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries		(1417,~~049~~389	)		144,~~013~~879			(~~595~~85	)		3937			(~~592~~12,558	)
Provision for income taxes		—			959			713			—			1,672
Provision (benefit) for income taxes		6,087			(672	)		230			—			5,645
Income (loss) from continuing operations		(14,049	)		13,054			(1,308	)		39			(2,264	)
Income (loss) from continuing operations and equity in income (loss) of subsidiaries		(23,476	)		5,551			(315	)		37			(18,203	)
Income from discontinued operations, net of tax		—			343			1,743			—			2,086
Discontinued operations:
Equity in income (loss) of subsidiaries		13,871			—			—			(13,871	)		—
Income (loss) from discontinued operations, net of tax		—			7,722			(547	)		—			7,175
Net income (loss)	$	(178	)	$	13,397		$	435		$	(13,832	)	$	(178	)
Gain on disposal, net of tax		27,476			—			—			—			27,476
Income (loss) from discontinued operations		27,476			7,722			(547	)		—			34,651
Equity in income (loss) of subsidiaries		12,448			—			—			(12,448	)		—
Net income (loss)	$	16,448		$	13,273		$	(862	)	$	(12,411	)	$	16,448

2022

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
	2006 Nine Months
	Worldwide			GuarantorSubsidiaries			Non- GuarantorSubsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities from continuing operations	$	(~~669~~4,502	)	$	~~(380~~30,166	)	$	511,307		$	~~2,123~~415		$	127,~~125~~386
Cash flows from investing activities:
Capital expenditures		(~~1,207~~976	)		(2036,~~050~~167	)		(~~256~~1,717	)		—600			(2138,~~513~~260	)
Return of cash from equity affiliate		17,531			—			—			—			17,531
Proceeds from the sale of:
Property and equipment		—			19,~~548~~525			—21			—			19,~~548~~546
Sale of subsidiary		69,875			—			—			—			69,875
Net cash provided by (used in) investing activities from continuing operations		16,555			(26,642	)		(1,696	)		600			(11,183	)
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	)
Payments of long-term debt		(753	)		—			—			—			(753	)
Repayment under capital lease obligations		—			(211	)		—			—			(211	)
Payment under capital lease obligations		—			(213	)		—			—			(213	)
Net cash used in financing activities		(47,080	)		(211	)		—			—			(47,291	)
Net cash used in financing activities from continuing operations		(753	)		(213	)		—			—			(966	)
Effect of exchange rates on cash		—			—			—			(21,~~123~~015	)		(21,~~123~~015	)
Net cash provided by (used in) discontinued operations		—			17,576			(647	)		—			16,929
Net cash used in operating activities from discontinued operations		—			(28	)		—			—			(28	)
Net increase (decrease) in cash		20,919			(1,517	)		(852	)		—			18,550
Net cash used in investing activities from discontinued operations		—			(149	)		—			—			(149	)
Cash at beginning of period		3,379			6,484			2,871			—			12,734
Net increase (decrease) in cash		11,300			3,134			(389	)		—			14,045
Cash at end of period	$	24,298		$	4,967		$	2,019		$	—		$	31,284
Cash at beginning of period		39,537			4,045			1,672			—			45,254
Cash at end of period	$	50,837		$	7,179		$	1,283		$	—		$	59,299

2123

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
	2005 Nine Months (revised)
	Worldwide			GuarantorSubsidiaries			Non- GuarantorSubsidiaries			Eliminations			Total
Net cash provided by (used in) operating activities from continuing operations	$	(4,613	)	$	15,452		$	2,649		$	1,754		$	15,242
Net cash provided by operating activities from continuing operations	$	14,341		$	12,040		$	223		$	2,665		$	29,269
Cash flows from investing activities:
Capital expenditures		(1,~~097~~755	)		(1928,~~583~~133	)		(~~673~~1,966	)		—1,765			(2130,~~353~~089	)
Proceeds from the sale of property and equipment		—			3,394			33			—			3,427
Proceeds from:
Net cash used in investing activities		(1,097	)		(16,189	)		(640	)		—			(17,926	)
Sale of property and equipment		—			2,400			—			—			2,400
Sale of subsidiaries		115,803			—			—			—			115,803
Net cash provided by (used in) investing activities from continuing operations		114,048			(25,733	)		(1,966	)		1,765			88,114
Cash flows from financing activities:
Payments on long-term debt		(28,380	)		—			—			—			(28,380	)
Payments of long-term debt		(56,139	)		—			—			—			(56,139	)
Repayment under capital lease obligations		—			(146	)		—			—			(146	)
Payments under capital lease obligations		—			(195	)		(596	)		—			(791	)
Net cash used in financing activities		(28,380	)		(146	)		—			—			(28,526	)
Net cash used in financing activities from continuing operations		(56,139	)		(195	)		(596	)		—			(56,930	)
Effect of exchange rates on cash		—			—			—			(14,~~754~~430	)		(14,~~754~~430	)
Net cash provided by discontinued operations		—			3,535			2,447			—			5,982
Net cash provided by (used in) operating activities from discontinued operations		—			2,969			(443	)		—			2,526
Net increase (decrease) in cash		(34,090	)		2,652			4,456			—			(26,982	)
Net cash provided by (used in) investing activities from discontinued operations		—			15,260			(224	)		—			15,036
Cash at beginning of period		48,123			5,440			2,712			—			56,275
Net increase (decrease) in cash		72,250			4,341			(3,006	)		—			73,585
Cash at end of period	$	14,033		$	8,092		$	7,168		$	—		$	29,293
Cash at beginning of period		3,379			4,905			4,450			—			12,734
Cash at end of period	$	75,629		$	9,246		$	1,444		$	—		$	86,319

2224

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

Contents:

This MD&A includes the following:

•

Introduction

•

Joint Venture

•

Fiscal Year

•

Consolidated Results

•

2006 Third Quarter compared with 2005 Third Quarter

•

2006 Nine Months compared with 2005 Nine Months

•

Financial Condition

•

Liquidity

•

Capital Resources

•

Asset Sales

•

Capital Expenditures

•

Seasonality

•

International Operations

•

Impact of Inflation

•

Critical Accounting Policies

•

Disclosures Regarding Forward-Looking Statements

Introduction

AMF Bowling Worldwide, Inc., a Delaware ~~Corporation~~corporation (“Worldwide”), and ~~its~~our subsidiaries (~~which~~Worldwide ~~may~~and our subsidiaries may be referred to as ~~Worldwide,~~ the Company, AMF, we, us, or our) ~~operate~~are engaged in ~~two~~ the business ~~segments:~~of operating bowling ~~center~~centers ~~operations (“Centers”)~~ and ~~bowling~~hold ~~products~~an ~~operations~~interest ~~(“Products”).~~in Ata ~~December~~business ~~26,~~that ~~2004,~~manufactures ~~Centers,~~and ~~the~~sells ~~largest~~bowling ~~segment, represented 80~~equipment.5% ofSince ~~consolidated revenue. In reviewing Centers~~October 8, ~~management~~ ~~focuses on revenue~~2005, ~~operating~~the ~~expenses~~Company ~~and~~had ~~capital~~two ~~expenditures.~~reportable business Insegments: ~~reviewing Products, management focuses on working capital as well as revenue, operating expenses and gross profit margin.~~

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

~~The~~• ~~MD&A~~“Holdings”, ~~discussion~~which ~~should~~consists beof ~~read~~our investment in ~~conjunction with~~ the ~~unaudited~~Joint ~~interim~~Venture ~~condensed~~(defined ~~consolidated~~below) ~~financial statements~~ and ~~the~~a ~~notes~~service tocompany ~~the~~that ~~condensed~~provides ~~consolidated~~services ~~financial~~exclusively ~~statements. The results of operations for any interim period are not necessarily indicative of the results~~ to ~~be expected for~~ the ~~full~~Joint ~~year~~Venture. ~~Certain totals may be affected by rounding. Unless the context otherwise indicates, dollar amounts in this MD&A are in millions.~~

~~Our~~For ~~Centers~~periods ~~segment~~prior ~~had~~to ~~425 bowling centers on December 26~~October 8, ~~2004 (368 in the U.S. and 57 internationally). On September 30~~2005, ~~2004,~~AMF weengaged ~~sold 33 bowling centers~~ in ~~the~~two ~~United~~business ~~Kingdom~~segments: ~~for approximately $71.2 million and exited bowling center operations in that country.~~

On• ~~February 8,~~Centers; ~~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 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”).

~~Merger~~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, Holdings and Products separately.

OnThe ~~November~~MD&A ~~26,~~discussion ~~2003,~~should ~~Kingpin~~be ~~Holdings,~~read ~~LLC~~in ~~(“Kingpin~~conjunction ~~Holdings”)~~with ~~and~~the ~~its~~unaudited ~~wholly-owned~~interim ~~subsidiary,~~condensed ~~Kingpin~~consolidated ~~Merger~~financial ~~Sub,~~statements ~~Inc. (“Merger Sub”), entered into an Agreement~~ and ~~Plan of Merger with Worldwide (~~the ~~“Merger Agreement”). Pursuant~~ notes to the ~~Merger~~unaudited ~~Agreement,~~condensed onconsolidated ~~February~~financial ~~27, 2004, Merger Sub was merged into Worldwide with Worldwide being the surviving corporation (the “Merger”)~~statements. The ~~Company,~~results asof itoperations ~~existed~~for ~~after~~any ~~the Merger,~~interim isperiod ~~sometimes~~are ~~referred~~not tonecessarily asindicative ~~the “New Company.” Each shareholder~~ of ~~Worldwide received $25.00 in cash for each share of~~ the ~~common~~results ~~stock of Worldwide that was outstanding prior~~ to ~~the~~be ~~Merger~~expected ~~including vested options and warrants,~~ for ~~aggregate~~the ~~proceeds~~full ~~(including option proceeds) of $258~~year.7 ~~million.~~Certain ~~The~~totals ~~old~~may ~~common~~be ~~stock~~affected ~~was~~by ~~canceled and the common stock of Merger Sub became the new common stock of Worldwide~~rounding. AsUnless ~~part of~~ the context ~~Merger,~~otherwise ~~Kingpin Intermediate Corp.~~indicates, adollar ~~wholly-owned subsidiary~~amounts ofin ~~Kingpin~~this ~~Holdings,~~MD&A ~~became~~are ~~the~~in ~~sole shareholder of Worldwide~~millions.

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

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.

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 December 26, 2004 and the three and six months ended December 28, 2003 are not comparable due to the Merger described above.

Period		Referred to as
Results for the New Company from September 27, 2004 through December 26, 2004		“New Company 2005 Second 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”

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.

~~Consolidated~~AMF ~~Results~~is the largest operator of bowling centers in the world with 365 centers in operation as of April 2, 2006, and is comprised of 352 centers in the U.S. and 13 bowling centers operating outside the U.S. Although we have operated our bowling centers under the “AMF” brand for a number of years, we recently remodeled and upgraded four centers that we operate under the “300” brand. We are exploring opportunities to expand the number of “300” centers.

	NewCompany			ReorganizedPredecessorCompany			NewCompany			ReorganizedPredecessorCompany
(In millions)	2005 SecondQuarter			2004 SecondQuarter			2005 FirstSix Months			2004 FirstSix Months
Operating revenue	$	149.3		$	150.1		$	266.9		$	276.0
Operating expenses:
Cost of goods sold		39.4			33.4			67.2			64.6
Bowling center operating expenses		79.9			74.5			163.8			149.3
Selling, general and administrative expenses		15.7			12.0			26.5			23.0
Asset impairment		—			—			1.3			—
Depreciation and amortization		10.6			12.2			21.9			25.1
Operating income (loss)		3.6			18.0			(13.8	)		14.0
Interest expense, net		6.4			8.8			12.8			17.9
Other income, net		(0.1	)		(3.1	)		(4.7	)		(3.3	)
Income (loss) from continuing operations before income taxes		(2.6	)		12.3			(21.9	)		(0.6	)
Provision for income taxes		1.3			1.7			1.6			1.7
Income (loss) from continuing operations		(3.9	)		10.5			(23.5	)		(2.3	)
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	)

On September 30, 2004, we sold our 33 bowling centers in the United Kingdom and on February 8, 2005, we sold our 42 bowling centers in Australia. We no longer have bowling center operations in these countries. The results of Centers in these countries have been reported as discontinued operations for all periods in which they are presented.

~~Revenue~~AMF was also one of the largest manufacturers of bowling equipment in the world. We conducted our business of manufacturing and selling bowling equipment through our Products subsidiaries until October 7, 2005. Until such date, we reported Products as a segment of our business. On October 7, 2005, we entered into a Joint Venture, with Italian-based Qubica, S.p.A. (“Qubica”), in exchange for a 50% equity interest.

~~Consolidated~~On ~~operating~~December 4, ~~revenue~~2005, ~~for~~we ~~the~~sold ~~New~~our ~~Company~~billiards ~~2005~~division ~~Second~~for ~~Quarter~~gross ~~was $149.3~~cash ~~million,~~proceeds ~~a decrease~~ of approximately $04.85 million, orsubject ~~0.5%, compared with the Reorganized Predecessor Company 2004 Second Quarter. This decrease was partially attributable~~ to acertain ~~$2.6~~post-closing ~~million decrease in U~~adjustments.S. ~~constant~~Billiards ~~center~~manufactured ~~revenue~~and ~~due~~sold ~~primarily~~billiard totables aand ~~decrease~~accessories. inThe ~~league~~results ~~and open lineage (number~~ of ~~games~~operations ~~bowled~~for ~~per~~the ~~lane~~billiards ~~per~~division ~~day).~~have Inbeen ~~addition,~~reported ~~closed~~as ~~centers~~discontinued ~~represent~~operations afor ~~$3.0~~all ~~million~~periods ~~negative~~presented ~~variance~~and ~~compared~~are ~~with~~included ~~the~~within ~~prior~~our ~~year~~former ~~period. These decreases were partially offset by an increase in~~ Products ~~revenue of $4~~segment.9 ~~million, or 14.6%.~~

~~Consolidated operating~~During ~~revenue for~~ the ~~New~~2006 ~~Company~~Nine ~~2005 First Six~~ Months ~~was $266.9 million~~, aWorldwide ~~decrease~~served ofas ~~$9.1~~the ~~million,~~corporate orheadquarters ~~3.3%,~~of ~~compared with~~ the ~~Reorganized Predecessor~~ Company ~~2004 First Six Months~~. ~~This~~Its ~~decrease~~employees ~~was~~provided ~~attributable~~management toand aadministrative ~~$5.2 million decrease~~services infor ~~U.S.~~Centers ~~constant~~and ~~center~~certain ~~revenue~~administrative ~~due~~services ~~primarily~~for toProducts auntil ~~decrease in league lineage. Additionally~~October 7, ~~closed~~2005 ~~centers~~and ~~represent~~for aHoldings $4thereafter.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~~Worldwide’s business operations and ~~Amortization~~operating assets are held in subsidiaries. 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 outside of the U.S. are operated through separate, indirect subsidiaries of Worldwide.

~~Depreciation~~Joint ~~and~~Venture amortization decreased $1.6 million, or 13.1%, in the New Company 2005 Second Quarter and $3.2 million, or 12.7%, in the New Company 2005 First Six Months when compared with the prior year periods. These 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”) of $1.8 million and $3.6

~~million~~In ~~for~~creating the ~~New~~Joint ~~Company~~Venture, ~~2005~~Worldwide ~~Second~~and ~~Quarter~~certain ~~and~~of ~~New~~its ~~Company~~non-Products ~~2005~~subsidiaries ~~First~~entered ~~Six~~into various ~~Months,~~agreements ~~respectively~~with the Joint Venture and its subsidiaries. ~~Additionally~~These agreements include, ~~Centers~~but ~~depreciation~~are ~~decreased~~not aslimited to, a ~~result of~~supply ~~machinery~~agreement between Centers and ~~equipment~~the ~~acquired~~Joint inVenture ~~1996~~that ~~and~~requires ~~1997~~the ~~becoming~~purchase ~~fully~~of ~~depreciated.~~bowling ~~These~~products ~~decreases~~and ~~were~~supplies ~~partially~~from ~~offset~~the byJoint Venture anat ~~increase~~prices similar to those charged in ~~depreciation~~the ~~primarily~~past ~~attributable~~and toat ~~adjustments~~levels ~~made~~below asthe aggregate purchases in the past, a ~~result~~trademark oflicense agreement between Worldwide and the ~~application~~Joint ofVenture, ~~purchase~~AMF ~~method~~Products and Qubica allows them to use the AMF mark and ~~accounting~~certain related marks, and various administrative services and similar agreements that provide for leasing space in certain facilities and support services from and to the ~~Merger~~Company ofand $2the Joint Venture.7 ~~million~~Management believes these agreements are on an arms-length basis and $5reflect commercial terms.5 ~~million~~In ~~for~~addition, the ~~New~~Joint ~~Company~~Venture ~~2005~~adopted ~~Second~~an ~~Quarter~~option ~~and~~plan ~~New~~that ~~Company~~allows ~~2005~~awards ~~First~~of ~~Six~~options ~~Months~~to purchase interests in the Joint Venture to mangers of the Joint Venture. Upon exercise of any options, ~~respectively~~the ownership percentage of the Joint Venture will be equally reduced between the two shareholders.

~~Asset~~Since ~~Impairment~~the formation of the Joint Venture, AMF Products is no longer a guarantor of our obligations under our senior secured credit agreement (the “Credit Agreement”) and our Subordinated Notes due in 2010 (the “Subordinated Notes”) and liens against assets of AMF Products that secured its guarantee have been released. (See “Long-Term Debt Note”). In addition, the Joint Venture and certain of its subsidiaries, entered into a credit agreement for a $30.0 million revolving credit facility. Certain assets of the Joint Venture and certain of its subsidiaries secure the credit agreement. Worldwide and its remaining subsidiaries have no obligation under the Joint Venture’s credit agreement (“JV Credit Agreement”). Neither Worldwide nor AMF Holdings has any obligation to contribute capital or make loans to the Joint Venture.

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

~~Interest~~Our ~~Expense~~investment in the Joint Venture is accounted for using the equity method of accounting. We receive financial information from the Joint Venture on a delayed basis and will therefore record our share of the income or losses of our investment approximately one quarter in arrears. For the period October 8, 2005 to December 31, 2005, the Joint Venture reported total assets of $101.8 million, total revenues of $41.3 million, gross profit of $9.9 million, an operating loss of $2.9 million and a net loss of $5.4 million. In this quarter report, we recorded losses from our investment of $3.7 million including amortization of the investment and elimination of intercompany profit on purchases.

~~Interest~~Our ~~expense,~~investment ~~net~~was ~~decreased~~recorded ~~$2.4~~initially ~~million,~~at orcost and subsequently adjusted for our equity ~~27.3%,~~share in net income (loss) and any cash contributions and distributions. The difference between the ~~New~~carrying ~~Company~~amount ~~2005~~of ~~Second~~this ~~Quarter~~investment on our balance sheet and the underlying equity in net assets of the Joint Venture of $512.12 million, oris ~~28.5%,~~amortized inas an ~~the~~adjustment ~~New~~to ~~Company~~net ~~2005~~income ~~First~~(loss) ~~Six~~of ~~Months~~the ~~compared~~Joint ~~with~~Venture ~~prior~~over ~~year~~5 ~~periods~~years. ~~These~~AMF ~~decreases~~continues ~~are~~to ~~primarily~~purchase equipment and supplies from the ~~result~~Joint Venture, and eliminates its share of ~~lower~~the ~~principal~~intercompany ~~amounts~~profit. ~~and~~The ~~interest~~Joint ~~rates~~Venture ~~under~~has ~~our senior~~a ~~secured~~December 31st ~~credit~~year ~~agreement~~end ~~(the~~for ~~“Credit~~financial ~~Agreement”)~~reporting purposes.

~~Provision~~Merger ~~for Income Taxes~~

~~Total~~On ~~income~~February 27, ~~tax expense~~2004, ~~increased~~we towere ~~$5.1~~acquired ~~million~~ in ~~the~~a ~~New~~merger ~~Company~~transaction ~~2005~~(the ~~Second~~“Merger”) by ~~Quarter~~a ~~from~~subsidiary ~~$1.2~~of ~~million~~Kingpin inHoldings ~~the~~LLC ~~Reorganized~~(“Kingpin”), ~~Predecessor~~a ~~Company~~Delaware ~~2004~~limited ~~Second~~liability ~~Quarter,~~company ~~including~~formed ~~tax~~at ~~expense~~the ondirection ~~discontinued~~of ~~operations.~~Code ~~The~~Hennessy & ~~increase~~Simmons toLLC, ~~income~~a ~~tax~~Chicago-based ~~expense~~private ~~for~~equity ~~the quarter~~firm is(“CHS”) ~~primarily attributable~~ to effect the ~~gain~~Merger. onKingpin Holdings ~~the~~is ~~sale~~owned ofby ~~our~~a ~~bowling~~fund ~~center~~managed ~~operations~~by inCHS ~~the~~and ~~United~~other ~~Kingdom~~equity investors.

~~Total~~Fiscal ~~income~~Year 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~~We ~~Income~~report ~~(Loss)~~on a retail calendar year, with each quarter comprised of one 5-week period and two 4-week periods. Fiscal year 2006 has 52 weeks, and fiscal year 2005 had 53 weeks, with the extra week being reported in the fourth quarter.

Net 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~~Consolidated ~~Income~~Results

~~Comprehensive~~The ~~income~~results ~~for~~of ~~the~~operations ~~New~~of ~~Company 2005 Second Quarter and~~ the ~~New~~consolidated ~~Company~~group ~~2005~~of ~~First~~companies ~~Six Months totaled $27.2 million~~ and ~~$12.5~~Centers ~~million, respectively,~~are ~~compared~~discussed ~~with $17~~below.1 ~~million~~The ~~and~~business ~~$5.0~~segments ~~million~~results ~~for~~are ~~the~~presented ~~Reorganized~~before ~~Predecessor~~intersegment ~~Company~~eliminations ~~2004~~since ~~Second~~we ~~Quarter~~believe ~~and~~this ~~the~~provides ~~Reorganized~~a ~~Predecessor~~more accurate ~~Company~~comparison ~~2004~~of ~~First~~performance ~~Six~~by ~~Months~~segment. ~~These~~The ~~increases~~intersegment eliminations are ~~primarily~~included ~~attributable~~in to the ~~gain~~consolidated ~~recognized on~~results ~~the~~and ~~sale~~are ofnot ~~our bowling centers in the United Kingdom~~material.

~~Centers~~ 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 July 3, 2005.

Centers results reflect the operations of our bowling centers located in the U.S. and 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.


Period		Referred to as
Results from January 2, 2006 through April 2, 2006		“2006 Third Quarter”

Results from July 4, 2005 through April 2, 2006		“2006 Nine Months”

Results from December 27, 2004 through March 27, 2005		“2005 Third Quarter”

Results from June 28, 2004 through March 27, 2005		“2005 Nine Months”

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

Consolidated Results

(a) Before intersegment eliminations.


*(In millions)*	2006 Third Quarter		2005 Third Quarter			2006 Nine Months			2005 Nine Months
Operating revenue	$	147.8	$	166.4		$	397.5		$	426.9

Operating expenses:
Cost of goods sold		14.0		30.7			61.2			93.1
Bowling center operating expenses		88.9		86.1			249.1			242.9
Selling, general and administrative expenses		9.2		15.6			36.5			48.3
Asset impairment		—		6.9			0.6			8.2
Depreciation and amortization		8.9		9.7			29.0			31.4

Operating income		26.8		17.4			21.1			3.0

Interest expense, net		5.2		5.7			15.7			18.6
Loss from equity affiliate		3.7		—			3.7			—
Other income, net		—		1.8			(0.7	)		(3.0	)

Income (loss) from continuing operations before income taxes		17.9		9.9			2.4			(12.6	)
Provision for income taxes		2.8		4.0			2.2			5.6

Income (loss) from continuing operations		15.1		5.9			0.2			(18.2	)

Discontinued operations:
Income from discontinued operations, net of tax		0.0		0.3			0.2			7.2
Gain on disposal, net of tax		0.7		(2.8	)		(0.6	)		27.5

Income from discontinued operations		0.7		(2.5	)		(0.4	)		34.7

Net income (loss)	$	15.8	$	3.4		$	(0.2	)	$	16.5

To facilitate a meaningful comparison, the constant center results discussed below reflect the results of 383 centers (368 located in the U.S. and 15 international 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 are presented below:

	NewCompany		ReorganizedPredecessorCompany
	2005 FirstSix Months		2004 FirstSix Months
Revenue:
Bowling	58.2	%	58.5	%
Food and beverage	27.4	%	27.3	%
Ancillary sources	14.5	%	14.2	%

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 operations. League lineage (number of games bowled per lane per day) has 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 revenue that could be expected from the decline in lineage has been generally offset with price increases.

OnRevenue 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.

OnConsolidated ~~February~~operating revenue was $147.8 million in the 2006 Third Quarter, ~~2005~~a decrease of $18.6 million, weor ~~sold~~11.2%, ~~our~~compared 42with ~~operating~~the ~~bowling~~2005 ~~centers~~Third inQuarter. ~~Australia~~A ~~for~~decrease ~~approximately~~of $4723.84 million, ~~subject~~is primarily related to ~~certain~~Products ~~post-closing~~no ~~adjustments~~longer being fully consolidated during the 2006 Second Quarter and ~~exited~~the ~~bowling~~entire ~~center~~2006 ~~operations~~Third Quarter offset by an increase of $6.0 million increase in ~~that~~Centers ~~country~~revenue.

~~2005~~Consolidated ~~Second Quarter~~revenue was $397.5 million in the 2006 Nine Months, a decrease of $29.4 million, or 6.9%, compared with ~~2004~~the 2005 Nine Months. A decrease of $45.8 million is primarily related to Products no longer being fully consolidated during most of the Second Quarter and all of the 2006 Third Quarter, offset by a $1.7 million increase in Products first quarter revenues. Additionally, Centers revenue increased $15.4 million during the 2006 Nine Months compared to 2005 Nine Months.

~~Centers operating~~Cost 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 aGoods ~~decrease~~Sold ~~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~~Selling, ~~2003.~~General ~~These~~and ~~decreases~~Administrative ~~were~~Expenses ~~partially offset by an increase in new center revenue of $0.1 million.~~

~~Bowling~~Cost ~~center~~of ~~operating expenses~~goods ~~increased~~sold ~~$9.5~~and ~~million~~selling, orgeneral ~~12.7%.~~and ~~This~~administrative ~~increase was primarily due to increases in U.S. constant center operating~~ expenses ofdecreased $916.97 million, orand ~~14.8%, of which~~ $78.36 million, ~~is attributable to an increase~~ in ~~rent as a result of~~ the ~~Sale-Leaseback~~ ~~Agreements.~~2006 ~~Excluding~~Third ~~the~~Quarter ~~impact~~and ~~of the increase in rent expense, U~~$31.~~S. constant center operating expenses increased approximately 3.~~9% ~~primarily the result of increased payroll~~ million and ~~insurance expenses. Additionally, U.S. centers recorded a charge of~~ $020.97 million ~~related~~in ~~to actions alleging violations of federal legislation involving unsolicited communications. In~~ the ~~Reorganized~~2006 ~~Predecessor~~Nine ~~Company 2004 Second Quarter~~Months, ~~Centers~~respectively. ~~recognized~~The ~~$1.4~~decreases ~~million~~were primarily related to ~~casualty gains.~~Products ~~Offsetting~~no ~~these~~longer ~~increases~~being ~~was~~fully aconsolidated ~~decrease~~during inmost ~~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~~2006 ~~Company 2005~~ Second Quarter and ~~61.0%~~all ~~for~~of ~~the Reorganized~~2006 ~~Predecessor~~Third ~~Company 2004 Second~~ Quarter.

~~Depreciation~~Asset ~~and~~Impairment 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~~We ~~income~~recorded ~~was~~no ~~$13.3~~charges related to ~~million~~asset inimpairments for the ~~New~~2006 ~~Company~~Third ~~2005~~Quarter ~~Second~~and ~~Quarter~~$0.6 ~~versus~~million ~~operating~~for ~~income~~the of2006 ~~$25~~Nine Months.3 ~~million~~These incharges represent the ~~Reorganized~~difference ~~Predecessor~~between ~~Company~~the ~~2004~~fair ~~Second~~market ~~Quarter~~value and carrying value of impaired assets in the U.S primarily ~~due~~related to Products and the impact ~~decrease~~of inthe ~~revenue~~Joint ~~and~~Venture ~~increased~~transactions. ~~operating~~We ~~expenses~~recorded ~~partially~~$6.9 ~~offset~~million byfor the ~~decreases~~ in2005 ~~depreciation~~Third Quarter and ~~amortization~~$8.2 asmillion ~~discussed~~for ~~above~~the 2005 Nine Months, respectively, related to asset impairment charges related to underperforming bowling centers.

~~2005 First~~Depreciation ~~Six~~and ~~Months~~Amortization ~~compared with 2004 First Six Months~~

~~Centers~~Depreciation ~~operating~~and amortization ~~revenue for the New Company 2005 First Six Months~~ decreased $90.78 million, or 48.52%, asin ~~compared with~~ the ~~Reorganized~~2006 ~~Predecessor~~Third ~~Company~~Quarter ~~2004~~and ~~First Six Months. U.S. constant center revenue decreased~~ $5.2.4 million, or 27.6%~~, primarily~~ in the ~~result~~2006 ofNine aMonths ~~decrease~~when incompared ~~league~~to ~~lineage~~prior periods. ~~Also~~A ~~contributing to this~~ decrease ~~is a decline in revenue~~ of $41.7 million ~~attributable~~is toprimarily ~~the~~related ~~closure~~to ofProducts 12no ~~bowling~~longer ~~centers~~being ~~since~~fully ~~June~~consolidated during ~~29,~~the ~~2003.~~2006 ~~These~~Third ~~decreases~~Quarter ~~were partially~~ offset by an increase ~~in new center revenue~~ of $01.31 million for Centers.

~~Bowling~~Interest ~~center operating expenses increased $18.5 million~~Expense, ornet 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.

Interest expense, net decreased $0.5 million, or 8.8%, in the 2006 Third Quarter and $2.9 million, or 15.6% for the 2006 Nine Months compared with the prior period, primarily the result of lower principal amounts outstanding under both our Credit Agreement and Subordinated Notes, offset slightly by increasing interest rates.

Provision for Income Taxes

Total income tax expense decreased to $2.4 million in the 2006 Third Quarter from $7.9 million in the 2005 Third Quarter, including tax expense on discontinued operations. Total tax expense for 2006 Third Quarter included $2.8 million of expense for continuing operations and a $0.4 million benefit for discontinued operations. Total tax expense for 2005 Third Quarter included $4.0 million of expense for continuing operations and $3.9 million of expense for discontinued operations. Income tax expense for 2005 Third Quarter was primarily attributable to the gain on the sale of our bowling center operations in Australia.

~~Depreciation~~Total ~~and~~income ~~amortization~~tax expense decreased to $41.8 million in the 2006 Nine Months from $16.1 million, orin 19the 2005 Nine Months.~~0%,~~ ~~primarily~~The ~~attributable~~tax toexpense arecorded for 2006 Nine Months included $32.62 million ~~decrease~~ asof aexpense ~~result~~for continuing operations and $0.4 million of ~~the~~benefit ~~Sale-Leaseback~~for ~~Agreements~~discontinued operations. ~~Additionally,~~The Utax expense recorded for 2005 Nine Months included $5.S6 million of expense for continuing operations and $10.5 ~~centers~~million ~~depreciation~~for ~~decreased~~discontinued asoperations. aThe ~~result~~tax expense for the 2005 Nine Months was primarily due to the gain on the sale of ~~machinery~~our ~~and~~bowling ~~equipment~~center ~~acquired~~operations in ~~1996~~the United Kingdom and ~~1997~~Australia ~~becoming~~and ~~fully~~the ~~depreciated~~taxation of individual subsidiaries by separate foreign jurisdictions. ~~These~~Various ~~decreases~~foreign ~~were~~subsidiaries ~~partially~~and ~~offset~~branches byrecorded ~~an increase~~a incombined ~~depreciation~~tax expense of $41.52 million ~~primarily~~for ~~attributable~~2006 Nine Months as compared to ~~adjustments~~an ~~made~~expense asof a$7.9 ~~result~~million for the 2005 Nine Months based on various foreign tax rates. This decrease is due in part to the sale of the ~~application~~Australia and United Kingdom operations during the 2005 Nine Months. AMF Bowling Centers, Inc, a wholly-owned indirect subsidiary of ~~purchase~~Worldwide, ~~method~~recorded ~~accounting~~state ~~related~~tax toexpense of $1.0 million and $0.6 million for the ~~Merger~~2006 Nine Months and 2005 Nine Months, respectively.

~~Operating~~In ~~income was $0.7 million in~~ the ~~New~~2006 ~~Company~~Third ~~2005~~Quarter, ~~First Six Months versus operating income of~~ $251.49 million ~~in the~~of ~~Reorganized~~contingency ~~Predecessor~~reserve ~~Company~~was ~~2004~~released ~~First~~related ~~Six Months primarily due~~ to ~~the~~income ~~decrease~~taxes payable in ~~revenue~~a asforeign ~~well~~jurisdiction. asThe ~~the~~contingency ~~increase~~existed inat ~~operating expenses partially offset by~~ the ~~decrease~~date inof ~~depreciation and amortization as discussed above~~Merger. ~~Additionally~~Consequently, ~~Centers recorded~~intangibles ~~charges~~were ~~related~~reduced toby ~~asset impairment resulting from center closures of~~ $1.39 million in ~~the~~2006 ~~New~~Third ~~Company~~Quarter ~~2005~~and ~~First~~no ~~Six~~tax ~~Months.~~benefit was recorded.

Net Income (Loss)

Net income for the 2006 Third Quarter totaled $15.9 million compared with $3.4 million in the 2005 Third Quarter. This change was primarily attributable to the changes discussed above as well as the recognition of a charge of $0.5 million related to Australian stamp taxes. Additionally, in the 2005 Third Quarter, we recorded a loss of $2.8 on the sale of the Australian centers reported in discontinued operations, a charge of $0.1 million related to actions alleging violations of federal legislation involving unsolicited communications, $0.8 million in gains related to the disposal of two Products branches, and expenses related to strategic initiatives of $1.4 million.

Net loss for the 2006 Nine Months totaled $0.2 million compared with a net income of $16.5 million in the 2005 Nine Months. This change was primarily attributable to the changes discussed above as well as the recognition of a loss on the sale of Billiards of $1.3 million during the 2006 Second Quarter compared with a gain on the sale of the centers in the United Kingdom and Australia of $27.4 million as reported in discontinued operations. Additionally, expenses related to strategic initiatives totaled $1.4 million during the 2006 Nine Months compared to $6.7 million in the 2005 Nine Months. In 2005 Nine Months, we recognized $1.1 million in gains related to the disposal of two Products branches, a $4.2 million gain related to a negotiated termination of one of our bowling center leases in France, and a charge of $1.1 million related to actions alleging violations of federal legislation involving unsolicited communications.

Comprehensive Income

Comprehensive income for the 2006 Third Quarter totaled $13.1 million compared with $4.6 million in the 2005 Third Quarter. The increase was primarily attributable to the increase in income from continuing operations of $9.5 million for the 2006 Third Quarter of prior year.

~~Products~~ Centers

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

(a) Before intersegment eliminations.


*(In millions)*	2006 Third Quarter		2005 Third Quarter		2006 Nine Months		2005 Nine Months
Operating revenue	$	147.1	$	141.8	$	364.0	$	349.4

Operating expenses:
Cost of goods sold		13.7		13.3		34.3		32.9
Bowling center operating expenses		88.9		85.3		250.6		246.7
Selling, general, and administrative expenses		6.1		6.3		19.8		18.3
Asset impairment		—		6.9		0.3		8.2
Depreciation and amortization		8.8		7.7		26.9		25.2

Operating income	$	29.6	$	22.3	$	32.1	$	18.1

~~2005~~To ~~Second~~facilitate ~~Quarter~~a ~~compared~~meaningful ~~with~~comparison, ~~2004~~constant ~~Second~~center ~~Quarter~~results are discussed below. Constant centers reflect the results of 362 centers, 349 located in the U.S. and 13 international centers that have been in operation one full fiscal year as of July 3, 2005.

~~Products~~The ~~operating~~three ~~revenue~~principal ~~increased~~sources ~~$4.9~~of ~~million, or 14.6%, primarily attributable to an increase in~~ revenue inand the ~~U.S.,~~percentage ~~Europe and Mexico~~ of ~~$3.6 million,~~each ~~$2.1~~to ~~million~~total ~~and $0.6 million, respectively. These increases were partially offset by a decrease in~~ revenue inare ~~Japan~~presented ofbelow: ~~$1.8 million.~~

Gross profit increased $2.1 million, or 33.9%. The gross profit margin was 21.6% in the New Company 2005 Second Quarter compared with 18.5% in the Reorganized Predecessor Company 2004 Second Quarter. The increased margin percentage was primarily attributable to the increase in revenue and increases in intercompany pricing.


	2006 Nine Months		2005 Nine Months
Revenue:
Bowling	57.5	%	58.4	%
Food and beverage	28.1	%	27.4	%
Ancillary sources	14.4	%	14.2	%

~~Products~~2006 ~~selling,~~Third ~~general~~Quarter ~~and administrative expenses increased $0.9 million, or 17.0%,~~ compared with ~~the~~2005 ~~prior~~Third ~~year quarter.~~Quarter ~~The increase in expenses is primarily attributable to an increase in bad debt and legal expenses.~~

~~Depreciation~~Centers ~~and~~operating ~~amortization~~revenue for the 2006 Third Quarter increased $0.5.3 million, or 383.7%, as compared with the 2005 Third Quarter. U.S. constant center revenue increased $8.7 million, or 6.5%, primarily ~~due~~the toresult ~~adjustments~~of ~~made~~an increase in open play traffic. Open play revenue reflected growth as a result of ~~the~~increased ~~application~~traffic ofwhich ~~purchase~~also ~~method~~yielded growth in food and beverage revenue. Partially offsetting this ~~accounting~~increase ~~related~~is a decline in revenue of $3.0 million attributable to the ~~Merger~~closure of 21 bowling centers since June 27, 2004 in the U.S.

~~Operating~~Centers ~~income~~operating ~~was~~expenses increased $0.3 .6 million, inor ~~the~~4.2%. ~~New~~This ~~Company~~increase ~~2005~~was ~~Second~~primarily ~~Quarter~~due ~~compared~~to ~~with~~increases ain ~~loss~~U.S. constant center operating expenses of $07.50 million, inor 9.0%, primarily the ~~Reorganized~~result ~~Predecessor~~of ~~Company~~a ~~2004~~11.7% ~~Second~~increase ~~Quarter~~in payroll expenses. ~~The~~Also contributing to this increase was an increase in ~~operating~~utilities, ~~income~~and issupplies ~~primarily~~expenses. ~~due~~The to2006 ~~the~~Third ~~increase~~Quarter also includes $0.1 million in ~~revenue~~casualty ~~partially~~losses ~~offset~~incurred byas ~~the increase~~a result of hurricanes. Partially offsetting these increases was a decrease in expenses ~~selling,~~of ~~general~~$3.0 ~~and~~million ~~administrative~~due to closed bowling centers. As a percentage of revenue, Centers operating expenses aswere ~~well~~60.4% asfor ~~depreciation~~the 2006 Third Quarter and ~~amortization~~60.2% asfor ~~discussed~~the ~~above~~2005 Third Quarter.

~~2005~~Depreciation ~~First~~and ~~Six~~amortization increased $1.1 million, or 13.8%, attributable to increased capital spending during 2006 Nine Months compared ~~with~~to ~~2004~~prior periods ~~First~~and ~~Six~~assets transferred from Worldwide to Centers during 2006 Nine 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~~Operating ~~selling,~~income ~~general~~was ~~and administrative expenses increased~~ $029.26 million, orin ~~1.7%,~~the ~~compared~~2006 ~~with~~Third ~~the prior~~Quarter ~~year~~versus ~~quarter.~~operating ~~The~~income ~~increase~~of $22.3 million in the ~~expenses~~2005 isThird Quarter primarily ~~attributable~~due to anthe increase in ~~advertising~~revenue ~~and~~offset ~~payroll~~by ~~expenses~~the asincreases ~~well~~in operating expenses as ~~bad~~discussed ~~debt~~above. ~~and~~Additionally, ~~legal~~Centers ~~expenses.~~recorded ~~These~~charges ~~increases~~related ~~are~~to ~~partially~~asset ~~offset~~impairment byresulting ~~the~~from ~~recognition~~center closures of $06.79 million in ~~gains on the~~ ~~disposal~~the of2005 ~~two~~Third ~~Products branches~~Quarter.

~~Depreciation~~2006 ~~and amortization~~Nine ~~increased~~Months ~~$0.8~~compared ~~million,~~with or2005 ~~28.6%,~~Nine ~~primarily~~Months ~~due to adjustments made as a result of the application of purchase method accounting related to the Merger.~~

~~Operating~~Centers ~~income~~operating ~~was~~revenue for the 2006 Nine Months increased $114.27 million, inor ~~the~~4.2%, ~~New~~as ~~Company~~compared ~~2005~~to ~~First~~the ~~Six~~2005 Nine Months,. anU.S. ~~increase~~constant ofcenter revenue increased $024.58 million, or 717.47%, ~~when compared~~primarily ~~with~~ the ~~Reorganized~~result ~~Predecessor~~of ~~Company~~an ~~2004~~increase ~~First~~in ~~Six~~open ~~Months~~play traffic. Open play revenue reflected growth as a result of increased traffic and a centralized marketing effort surrounding coupons and pricing discounts. The increased ~~increase~~traffic and new menus have resulted in ~~operating~~increases ~~income~~in isfood ~~primarily~~and ~~due~~beverage torevenue. ~~the~~Partially offsetting this increase is a decline in revenue ~~partially~~of ~~offset~~$8.6 bymillion attributable to the ~~increases~~closure inof ~~selling,~~21 ~~general~~U.S. ~~and~~bowling ~~administrative~~centers ~~expenses~~since ~~and~~June 27, ~~depreciation~~2004. ~~and~~Additionally, ~~amortization~~international asconstant ~~discussed~~center ~~above~~revenue decreased $0.4 million or 7.6%.

Centers operating expenses increased $3.9 million, or 1.6%. This increase was primarily due to increases in U.S. constant center operating expenses of $15.3 million, or 6.9%, primarily the result of a 8.0% increase in payroll expenses. Also contributing to this increase was an increase in utilities, insurance and supplies expenses. The 2006 Nine Months also includes $0.6 million in casualty losses incurred as a result of hurricanes. Partially offsetting these increases was a decrease in expenses of $8.0 million due to closed bowling centers. As a percentage of revenue, Centers operating expenses were 68.5% for the 2006 Nine Months and 70.6% for the 2005 Nine Months.

Depreciation and amortization increased $1.7 million, or 6.8%, primarily attributable to increased capital spending during 2006 Nine Months.

Operating income was $32.1 million in the 2006 Nine Months versus operating income of $25.3 million in the 2005 Nine Months primarily due to the increase in revenue partially offset by the increases in operating expenses as discussed above. Additionally, Centers recorded charges related to asset impairment resulting from center closures of $0.3 million in the 2006 Nine Months compared to $8.2 million in the 2005 Nine Months.

Holdings

Beginning October 8, 2005, Holdings consists of our investment in the Joint Venture and UK BPO, a service company that provides services exclusively to the Joint Venture. The operations of UK BPO are not material and are fully consolidated. Our investment in the Joint Venture is accounted for using the equity method of accounting. We receive financial information from the Joint Venture on a delayed basis and therefore record our share of the income or losses of our investment approximately one quarter in arrears. For the period October 8, 2005 to December 31, 2005, the Joint Venture reported total assets of $101.8 million, total revenues of $41.3 million, gross profit of $9.9 million, an operating loss of $2.9 million and a net loss of $5.4 million. In this quarter report, we recorded losses from our investment of $3.7 million including amortization of the investment and elimination of intercompany profit on purchases. There is no comparable prior period for Holdings.

Our investment was recorded initially at cost, and subsequently adjusted for our equity share in net income (loss) and any cash contributions and distributions. The difference between the carrying amount of this investment on our balance sheet and the underlying equity in net assets of the Joint Venture of $12.2 million is amortized as an adjustment and included in net income (loss) of the Joint Venture over 5 years. AMF continues to purchase from the Joint Venture, and eliminates its share of the intercompany profit.

~~Liquidity~~Products ~~- Capital Resources – Asset Sales – Capital Expenditures~~

There are no results of Products for the 2006 Third Quarter as a result of the formation of the Joint Venture. Presented below are the results from 2005 Third Quarter which has no comparable data.


(in Millions)	2005 Third Quarter
Products (a):
Operating revenue	$	31.2
Cost of goods sold		23.1

Gross profit		8.1

Selling, general and administrative expenses		6.1
Depreciation and amortization		1.7

Operating income (loss)	$	0.3

Selected data:
Gross profit margin		26.0	%

(a)	Before intersegment eliminations.

Financial Condition

General

WeAs ~~have~~of April 2, 2006, we had $8777.9 8 million in ~~term~~principal ~~loans~~outstanding ~~(the “Term Loan”)~~ under our Credit Agreement. ~~which~~No ~~also~~borrowings ~~has~~were anoutstanding ~~aggregate revolving~~under ~~loan~~the ~~commitment~~Revolver as of the end of the 2006 Nine Months and outstanding standby letters of credit issued under the Revolver totaled $4017.0 million, ~~(the~~leaving $23.0 ~~“Revolver”)~~million available for additional borrowings or letters of credit.

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.

Both the Credit Agreement and our indenture dated February 27, 2004 relating to our Subordinated Notes (the “Indenture”) contain certain restrictive covenants, including covenants requiring the achievement of certain financial covenants and maximum levels of capital expenditures. We are in compliance with the covenants as of April 2, 2006.

Liquidity

As of ~~December 26~~April 2, ~~2004~~2006, working capital was $5117.47 million compared with a working capital ~~deficit~~ of $1528.51 million at ~~June 27~~July 3, ~~2004~~2005. Excluding assets and liabilities held for sale, working capital was $1023.39 million at ~~December 26~~July 3, ~~2004~~2005. This change was primarily attributable to athe ~~decrease~~removal ~~in accounts payable and accrued~~of ~~liabilities~~Products offrom ~~$8.1~~our ~~million~~consolidated ~~and $4~~results.3 ~~million, respectively, as well as an increase in cash of $18.6 million. Partially offsetting these increases was a decrease in prepaid expenses and other current assets of $5.8 million.~~

In June 2005, we entered into the Second Amendment to the Credit Agreement, that among other things, provided us with the ability to add a synthetic letter of credit facility that will allow the issuance of up to $20.0 million of letters of credit, amended certain definitions and covenants to permit certain business combinations and amended certain of the existing financial covenants. The Second Amendment also permitted the investment in the Joint Venture.

Under our Credit Agreement and Indenture, subject to certain restrictions and conditions, we may distribute up to 35% of the Net Cash Proceeds (as defined in the Indenture and the Credit Agreement) from the sale of certain International Operations (as defined in the Indenture and the Credit Agreement). The payment of a dividend is prohibited if the announcement or paying of the dividend results in a change in outlook or downgrading of the Subordinated Notes by Moody’s or Standard & Poor’s. As a condition to paying a dividend, the Indenture also requires us to first make an offer to purchase to the holders of our Subordinated Notes with an aggregated principal amount equal to 35.0% of such net cash proceeds at a price equal to 102.0% of the aggregate principal amount being purchased.

Operating Cash Flow

	New Company			Reorganized Predecessor Company
	2006 NineMonths			2005 NineMonths
	2005 FirstSix Months			2004 FirstSix Months
Cash flows from operating activities:
Before changes in assets and liabilities	$	3632.59		$	2257.64
Working capital		10(5.32	)		(94.56	)
Other changes		(90.17	)		4.2.0
Discontinued operations		(36.6	)		(2.1	)
Discontinued operations (income) loss		0.4			(34.7	)
Total	$	127.14		$	1529.23

Net cash provided by operating activities was $127.14 million in the ~~New~~2006 ~~Company~~Nine ~~2005 First Six~~ Months compared with net cash provided by operating activities of $1529.23 million in the ~~Reorganized~~2005 ~~Predecessor~~Nine ~~Company 2004 First Six~~ Months, a decrease of $142.10 million. The decrease inis ~~net~~the ~~cash~~result ~~provided~~of byProducts ~~operating activities~~building isits ~~primarily~~inventory during the ~~result~~2006 First Quarter in anticipation of anits ~~increase~~traditional inselling season. However, after October 7, 2006, Products is no longer consolidated and therefore the ~~loss~~sales ~~from~~of ~~continuing~~those ~~operations~~inventories ~~partially~~did ~~offset~~not bycontribute ~~improved~~to working capital ~~utilization~~during the 2006 Third Quarter.

Investing

	New Company			Reorganized Predecessor Company
	2006 NineMonths			2005 NineMonths
	2005 First Six Months			2004 First Six Months
Cash flows from investing activities:
Purchases of property and equipment	$	(2138.53	)	$	(2130.41	)
Proceeds from the sale of property and equipment		1.5			3.4
Return of cash from equity affiliate		17.5			—
Proceeds from sale of subsidiary		69.9			—
Proceeds from the sale of property and equipment		9.6			2.4
Total	$	49.9		$	(18.0	)
Proceeds from sale of subsidiary		—			115.8
Total	$	(11.2	)	$	88.1

33Net cash used by investing activities was $11.2 million in the 2006 Nine Months compared with net cash provided by investing activities of $88.1 million in the 2005 Nine Months. In the 2006 Nine Months, we received $17.5 million return of cash from our equity affiliate. Capital spending has increased $8.2 million over the prior period. In the 2005 Nine Months, we received proceeds of approximately $115.8 million related to the sale of our bowling centers in the United Kingdom and Australia and $2.4 million related to the sale of property and equipment.

Net cash provided by investing activities was $49.9 million in the New Company 2005 First Six Months compared with net cash used in investing activities of $17.9 million in the Reorganized Predecessor Company 2004 First Six Months. In the New Company 2005 First Six Months, we received proceeds of approximately $69.9 million related to the sale of our bowling centers in the United Kingdom and $1.5 million related to the sale of property and equipment.

Financing

	New Company			Reorganized Predecessor Company
	2006 NineMonths			2005 NineMonths
	2005 First Six Months			2004 First Six Months
Cash flows from financing activities:
Borrowings (repayments) of debt, net	$	(47.1	)	$	(28.4	)
Repayments of debt, net	$	(0.8	)	$	(56.1	)
Payments under capital lease obligations		(0.2	)		(0.18	)
Total	$	(471.30	)	$	(2856.59	)

Net cash used in financing activities was $471.30 million in the ~~New~~2006 ~~Company~~Nine ~~2005 First Six~~ Months compared with $2856.5 9 million in the ~~Reorganized~~2005 ~~Predecessor~~Nine ~~Company 2004 First Six~~ Months. In the ~~New~~2006 ~~Company~~Nine ~~2005 First Six~~ Months, we made payments of approximately $470.18 million on the Term Loan compared to $56.1 million in the prior period.

Capital Resources

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

	December 26, 2004		June 27, 2004
	April 2, 2006		July 3, 2005
Term Loan	$	8777.98	$	~~135~~78.06
Subordinated Notes, 10%, due 2010		~~150~~123.09		~~150~~123.09
Revolver		—		—
Mortgage note and capitalized leases		32.62		32.83
Total debt	$	~~241~~203.59	$	~~288~~204.8

In September 2004, we entered into a First Amendment to Credit Agreement ~~(the “Amendment”)~~. The First 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 20.0% of the net cash proceeds from any sale, transfer or other disposition of the assets or stock of certain of our foreign subsidiaries. The First 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 80.0% of net cash proceeds from those sales of assets or stock of certain of our foreign subsidiaries within a specified period of time. During fiscal year 2005, we repurchased and cancelled $26.1 million of our Subordinated Notes.

AtIn ~~December~~June 262005, ~~2004~~we entered into the Second Amendment. The Second Amendment, ~~there~~among ~~were~~other nothings, ~~outstanding~~provided ~~borrowings~~us ~~under~~with the ~~Revolver.~~ ~~Outstanding~~ability ~~standby~~to ~~letters~~add ofa synthetic letter of credit ~~issued~~facility ~~under~~that would allow the ~~Revolver~~issuance ~~totaled~~of up to $1820.10 million ~~leaving~~of ~~$21.9~~letters ~~million~~of ~~available~~credit, ~~for~~amended ~~additional~~certain ~~borrowings~~definitions orand ~~letters~~covenants to permit the formation of ~~credit.~~the ~~The~~Joint ~~Revolver~~Venture, ~~continues~~amended tocertain beof ~~available~~the ~~for~~existing ~~our~~financial ~~working~~covenants, added a minimum liquidity test with respect to certain capital expenditures and a net senior leverage ratio test and amended certain definitions relating to the requirement to make mandatory excess cash flow prepayments to, among other things, exclude certain ~~general~~adjustments and expenses resulting from certain corporate ~~needs,~~transactions. ~~subject~~The Second Amendment modified financial covenants to ~~customary~~take ~~borrowing~~into ~~conditions.~~account the reduction of cash flow as a result of the divestiture of certain international center operations.

InAs ~~October~~of ~~2004,~~the weend ~~made~~of athe ~~required~~2006 ~~repayment~~Third ~~under~~Quarter, ~~our~~we ~~Credit~~had ~~Agreement of~~ approximately $1623.10 million ~~due~~available tofor ~~the~~borrowing ~~sale~~under ~~of our bowling center operations in~~ the ~~United Kingdom~~Revolver, ~~property~~with ~~sales~~no inamounts outstanding ~~Australia~~ and aapproximately ~~lease~~$17.0 ~~termination~~million inof ~~France. Additionally,~~issued inbut ~~December~~undrawn ~~2004,~~standby weletters ~~made~~of acredit. ~~voluntary~~The ~~repayment~~Revolver ~~under~~continues ~~our~~to ~~Credit~~be ~~Agreement~~available offor ~~approximately~~our ~~$30.0~~working ~~million.~~capital ~~These~~and ~~repayments~~general ~~were~~corporate ~~applied~~needs, subject to ~~the~~customary ~~Term~~borrowing ~~Loan~~conditions. ~~Under~~In addition, the Second ~~Credit~~Amendment ~~Agreement~~provides ~~these~~us ~~non-scheduled~~with ~~repayments~~the ~~are~~ability ~~applied~~to ~~ratably~~add ~~to the~~a ~~remaining~~synthetic ~~scheduled~~letter ~~principal~~of ~~payments~~credit.

34Both the Credit Agreement and the Indenture contain certain restrictive covenants, including requiring the Company to achieve certain financial covenants and limiting capital expenditures. We are in compliance with the covenants as of April 2, 2006. There can be no assurance that we will continue to be in compliance with these covenants.

Both the Credit Agreement and the Indenture contain certain restrictive covenants, including the achievement of certain financial covenants and maximum levels of capital expenditures. We are in compliance with the covenants as of December 26, 2004. There can be no assurance that we will continue to be in compliance with 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 reported periods:

The following table shows our asset sales for the reported periods:


	2006 Third Quarter		2005 Third Quarter			2006 Nine Months		2005 Nine Months
U.S. Centers – Asset Sales
Proceeds	$	1.9	$	0.9		$	3.8	$	2.4
Gain (loss), net		—		(0.8	)		0.3		(0.3	)

International Centers – Asset Sales
Proceeds		—		—			2.0		—
Gain (loss), net		—		—			0.2		—

	2005 First Six Months
	Proceeds		Gain/(loss), net
U.S. Centers:
Excess property	$	1.5	$	0.5

Centers net losses from asset sales are included in bowling center operating expenses on the Condensed Consolidated Statements of Operations.

OnAsset ~~September~~sales ~~30,~~in ~~2004, we~~2006 ~~sold~~Third 33Quarter ~~bowling~~reflect ~~centers in~~ the ~~United~~sale ~~Kingdom for gross cash proceeds~~ of ~~approximately~~five ~~$71.2~~(5) excess ~~million~~properties ~~and exited bowling center operations~~ in the ~~that country~~U.S.

On ~~February 8~~December 4, 2005, we sold our 42billiards ~~operating~~division ~~bowling~~for ~~centers~~gross incash ~~Australia~~proceeds ~~for~~of approximately $474.85 million, subject to certain post-closing adjustments . Billiards manufactured and ~~exited~~sold ~~bowling~~billiard ~~center~~tables and accessories. The results of operations for the billiards division have been reported as discontinued operations for all periods presented. These proceeds are not included above and the resulting loss is included in ~~that~~discontinued ~~country~~operations.

Capital Expenditures

	NewCompany			ReorganizedPredecessorCompany
	2006 NineMonths				2005 NineMonths
	2005 FirstSix Months			2004 FirstSix Months
Centers	$	36.8			$	28.6
Centers	$	18.8		$	19.7
Products		1.1				1.5
Products		1.5			0.6
Corporate		1.0				1.8
Corporate		1.2			1.1
Eliminations		(0.6	)			(1.8	)
Total	$	2138.53		$	~~21.4~~$	30.1

Capital expenditures increased $08.12 million in the ~~New~~2006 ~~Company~~Nine ~~2005~~Months ~~First~~compared ~~Six~~to the 2005 Nine Months ~~compared~~primarily ~~with~~due to increased Centers expenditures related to capital improvements to enhance the ~~Reorganized~~appearance ~~Predecessor~~of ~~Company~~our ~~2004~~high ~~First~~performance ~~Six~~bowling ~~Months~~centers, ~~primarily~~our ~~due~~Long toIsland, ~~increased~~NY ~~Products~~market, ~~expenditures~~and our new 300 concept bowling centers. Capital expenditures are primarily funded from cash generated from operations.

~~Seasonality~~36 ~~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~~Seasonality ~~Operations~~and Market Development Cycles

Our ~~international~~centers ~~operations~~business ~~are~~is ~~subject to the usual risks inherent in operating internationally~~seasonal, ~~including,~~primarily ~~but~~due ~~not limited~~ to, ~~currency~~the ~~exchange rate~~bowling ~~fluctuations,~~league ~~economic~~season ~~and~~that ~~political~~begins ~~instability,~~in ~~other~~late ~~disruption~~summer ~~of markets, restrictive laws, tariffs~~ and ~~other~~ends ~~actions~~in bymid ~~foreign~~spring. ~~governments~~Cash ~~(such~~flow asfrom ~~restrictions on transfer of funds, import and export duties and quotas, foreign customs,~~operations ~~tariffs~~typically ~~and~~peaks ~~value added taxes and unexpected changes~~ in ~~regulatory environments), difficulty in obtaining distribution and support for products,~~ the ~~risk~~winter ~~of nationalization, the laws~~ and ~~policies of the U.S. affecting trade, international investment and loans, and foreign tax law changes. As~~ is ~~the~~lower ~~case~~in ~~of other U.S.-based manufacturers with export sales, local currency devaluation increases~~ the ~~cost of Products bowling equipment~~summer. ~~In addition, local currency devaluation negatively impacts the translation of operating results from our international operations.~~

~~Foreign~~Our ~~currency~~international ~~exchange~~operations ~~rates~~are ~~also~~subject ~~impact~~to the ~~translation~~usual ofrisks inherent in operating ~~results~~internationally, ~~from~~including, ~~international~~but ~~bowling~~not ~~centers~~limited ~~and~~to, ~~Products.~~currency ~~International~~exchange ~~bowling~~rate ~~centers~~fluctuations, ~~represented~~economic ~~3.6%~~ and ~~4.0%~~political ofinstability, ~~consolidated~~other ~~revenue~~disruption ~~for~~of ~~the~~markets, ~~New~~restrictive ~~Company~~laws, ~~2005~~actions ~~First Six~~by ~~Months~~foreign governments, and ~~the~~foreign ~~Reorganized~~tax ~~Predecessor~~law ~~Company~~changes. ~~2004~~In addition, ~~First~~local ~~Six~~currency ~~Months,~~devaluation ~~respectively.~~negatively ~~For~~impacts the ~~New~~translation ~~Company~~of ~~2005~~operating ~~First~~results ~~Six~~from ~~Months,~~our international bowling centers ~~represented $1~~.8 ~~million~~Since ofwe ~~the~~have ~~$13.8~~sold ~~million~~our ~~consolidated~~bowling ~~operating~~center ~~loss~~operations ~~and~~in ~~$0.9 million~~the ofUnited ~~the~~Kingdom ~~$14.0~~and ~~million~~Australia, ~~consolidated~~excluding ~~operating~~our ~~income~~investment in the ~~Reorganized~~Joint ~~Predecessor~~Venture, ~~Company~~our ~~2004~~international ~~First~~operations ~~Six Months. There~~ will be less ~~foreign~~subject ~~currency exchange rate impact~~ to ~~our Centers business as a result of~~ the ~~sale~~risks ofinherent ~~our~~in ~~Australian~~operating ~~and United Kingdom bowling center operations~~internationally.

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~~2006 ~~New~~Nine ~~Company 2005 Second Quarter, New Company 2005 First Six~~ Months, ~~Reorganized Predecessor Company 2004 Second Quarter~~ or ~~Reorganized~~the ~~Predecessor~~2005 ~~Company~~Nine ~~2004 First Six~~ Months.

Critical Accounting Policies

In preparing the consolidated financial statements, ~~GAAP~~Generally ~~requires~~Accepted Accounting Principles require 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. The development and selection of the critical accounting policies, and the related disclosures below have been reviewed with the Audit Committee of the board of directors of Kingpin.

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 New 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 including our Investment in the Joint Venture 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 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.

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 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.

Equity Method Investment

Our investment in the Joint Venture is accounted for using the equity method of accounting because the investment gives us the ability to exercise significant influence, but not control, over the Joint venture. Significant influence is generally deemed to exist where there is an ownership interest in an investee of between 20% and 50%. Other factors such as the degree of ultimate control, representation on the Joint Venture’s board of managers or similar oversight body are considered in determining whether the equity method of accounting is appropriate. We record our share in the income or losses of our investment approximately one quarter in arrears for the Joint Venture, which has a calendar year end for financial reporting purposes. Any difference between the carrying amount of our investment on our balance sheet and our portion of the underlying equity in the Joint Venture’s net assets will be amortized. All significant intercompany transactions will be eliminated.

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 Joint Venture or its success;

•

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;

•

the success of our investment in the Joint Venture;

•

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;

• 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~~the ineffect ~~foreign~~of ~~currency~~our ~~exchange~~prior ~~rates~~Chapter 11 filing;

• 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.

3940

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~~we consider the use of interest rate cap agreements and ~~foreign currency forward~~ exchange contracts. At ~~December 26~~April 2, ~~2004~~2006, no interest rate cap agreements ~~were~~or ~~outstanding and one foreign currency forward~~ exchange ~~contract~~contracts ~~was~~were outstanding. Management periodically reviews its exposure to changes in interest rates and may enter into an interest rate cap agreement as it deems appropriate. Foreign currency exchange rates also impact the translation of operating results from the international bowling centers.

AsManagement ~~with~~believes ~~other~~that ~~U.S.-based~~the ~~exporters,~~foregoing ~~local~~risks ~~currency devaluations~~are ~~increase~~lessened ~~the~~with ~~cost~~respect ofto our ~~bowling~~on-going ~~equipment~~Centers business in ~~that~~the ~~market.~~future Asbut athey ~~result,~~will acontinue ~~strengthening~~to ~~U.S.~~be applicable ~~dollar~~to ~~exchange rate may adversely impact sales volume and profit margins. Foreign currency exchange rates also impact~~ the ~~translation~~operations of ~~operating~~ ~~results from~~ the ~~international~~Joint ~~bowling centers~~Venture.

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.

AtThe ~~December~~following ~~26,~~table ~~2004,~~provides weinformation ~~had~~about ~~one forward exchange contract outstanding serving as a hedge of the purchase price of~~ our ~~Australian~~fixed ~~bowling~~and ~~center~~variable-rate ~~operations~~debt ~~in the notional amount of approximately $33.3 million. The fair value of the foreign currency derivative contract outstanding~~ at ~~December~~April 2, 262006, ~~2004~~weighted ~~was~~average ~~$1.3~~interest ~~million resulting~~rates inand arespective ~~loss~~maturity ~~of the same amount~~dates.

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


Maturity Date	Fixed Rate Debt		Weighted Average Interest Rate		Variable Rate Debt		Weighted Average Interest Rate
March 1, 2010	$	123.9	10.00	%		—	—
August 27, 2009		—	—		$	77.8	7.48	%

Maturity Date	FixedRate Debt		WeightedAverageInterest Rate		VariableRate Debt		WeightedAverageInterest Rate
December 1, 2010	$	150.0	10.00	%		—	—
August 27, 2009		—	—		$	87.9	5.09	%

The fair value of the Term Loan and the Subordinated Notes at April 2, 2006 was approximately $77.8 million and $127.0 million, respectively.

~~The~~41 ~~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~~principal 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~~principal 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.

4142

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 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 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.

In July 2005, the Australian state of Western Australian assessed Worldwide approximately $0.3 million for stamp taxes relating to the Merger. The assessment claims that the Merger was a purchase of a land-rich company, which Western Australian law generally provides is a company whose real estate constitutes greater than 60% of all its assets (other than excluded assets). We paid the assessment under protest and filed an objection. The objection is an internal review by the department of revenue of Western Australia. In March 2006, the Australian state of South Australia assessed our former subsidiary that operated our bowling centers in Australia (“BCO Australia”) $0.4 million for stamp tax relating to the Merger. Under the stock purchase agreement (the “SPA”) by which we sold our interest in BCO Australia in February 2005, we were responsible for this assessment. We paid this assessment under protest and filed an objection. The objection is an internal review by the department of revenue of South Australia. If the assessments are not reversed, management will consider appeals. The Australian state of New South Wales (“NSW”) has also made inquiries about the applicability of its land-rich laws to the Merger but has not made an assessment.

After signing the SPA, the Australian state of NSW passed a law that made a vendor of the stock of a land rich company liable for stamp tax. In March 2006, NSW assessed Worldwide for vendor’s stamp tax of $0.4 million, including interest as the vendor in the sale to BCO Australia under the SPA.

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, isare 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.

~~European~~43 ~~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 AND REPORTS ON FORM 8-K

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).

(a) Exhibits


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.

43(b) Reports on Form 8-K

We did not file Form 8-K during the Third quarter of 2006.

SIGNATURES

Pursuant to the requirements of the Securities 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		February 9, 2005
Christopher F. Caesar
Senior Vice President, Chief Financial Officer and Treasurer
(Duly authorized officer of the registrant and principal financial officer)

AMF Bowling Worldwide, Inc.

(registrant)

Date: May 16, 2006

/s/ William A. McDonnell

William A. McDonnell

Vice President and Chief Financial Officer

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