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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended October 2, 2005



or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to



Commission file number 001-12131



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AMF BOWLING WORLDWIDE, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 13-3873272                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



7313 Bell Creek Road

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.)



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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 is a shell company (as defined in Rule 12b-2 of the Act).    Yes ̈No  x



Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  x    No ̈



As of October 2, 2005, 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.



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##### Table of Contents

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 |  | 21  
|           |  |                                                                                      
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 35  
|           |  |                                                                                      
|Item 4.    |  | Controls and Procedures                                                               |  | 36  
|           | 
|PART II    |  |                                                                                      
|           |  |                                                                                      
|Item 1.    |  | Legal Proceedings                                                                     |  | 37  
|           |  |                                                                                      
|Item 5.    |  | Other Information                                                                     |  | 38  
|           |  |                                                                                      
|Item 6.    |  | Exhibits                                                                              |  | 39  
|           | 
|Signatures |  | 40                                                                                   



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##### Table of Contents

AMF BOWLING WORLDWIDE, INC.



CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)



PART I



ITEM 1. FINANCIAL STATEMENTS



|                                                                                                         |  |                |         |   |             |   |         |  
|-------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ----------- | - | ------- | -
|(In thousands, except share and per share data)                                                          |  | October 2,2005 |         |   | July 3,2005 |  
|Assets                                                                                                   |  |                |         |   |             |   |         |  
|Current assets:                                                                                          |  |                |         |   |             |   |         |  
|Cash and cash equivalents                                                                                |  | $              | 14,548  |   |             | $ | 45,254  |  
|Accounts and notes receivable, net of allowance for doubtful accounts of $2,663 and $2,853, respectively |  |                | 21,523  |   |             |   | 23,497  |  
|Inventories, net                                                                                         |  |                | 31,625  |   |             |   | 25,531  |  
|Prepaid expenses and other current assets                                                                |  |                | 12,624  |   |             |   | 14,293  |  
|Assets held for sale (Note 3)                                                                            |  |                | 5,727   |   |             |   | 5,294   |  
|                                                                                                         |  |                |         |   |             |   |         |  
|Total current assets                                                                                     |  |                | 86,047  |   |             |   | 113,869 |  
|                                                                                                         |  |               
|Property and equipment, net                                                                              |  |                | 255,622 |   |             |   | 248,526 |  
|Other assets                                                                                             |  |                | 28,274  |   |             |   | 29,230  |  
|                                                                                                         |  |                |         |   |             |   |         |  
|Total assets                                                                                             |  | $              | 369,943 |   |             | $ | 391,625 |  
|                                                                                                         |  |                |         |   |             |   |         |  
|Liabilities and Stockholders Equity                                                                     |  |                |         |   |             |   |         |  
|                                                                                                         |  |               
|Current liabilities:                                                                                     |  |                |         |   |             |   |         |  
|Accounts payable                                                                                         |  | $              | 17,150  |   |             | $ | 12,506  |  
|Accrued expenses and other liabilities                                                                   |  |                | 65,534  |   |             |   | 71,121  |  
|Current portion of long-term debt                                                                        |  |                | 1,078   |   |             |   | 1,073   |  
|Liabilities held for sale (Note 3)                                                                       |  |                | 1,008   |   |             |   | 1,069   |  
|                                                                                                         |  |                |         |   |             |   |         |  
|Total current liabilities                                                                                |  |                | 84,770  |   |             |   | 85,769  |  
|                                                                                                         |  |               
|Long-term debt, less current portion                                                                     |  |                | 203,497 |   |             |   | 203,771 |  
|Liabilities, subject to resolution                                                                       |  |                | 143     |   |             |   | 143     |  
|Other liabilities                                                                                        |  |                | 4,742   |   |             |   | 4,742   |  
|                                                                                                         |  |                |         |   |             |   |         |  
|Total liabilities                                                                                        |  |                | 293,152 |   |             |   | 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                                                                                      |  |                | (50,219 | ) |             |   | (29,690 | )
|Accumulated other comprehensive loss                                                                     |  |                | (6,706  | ) |             |   | (6,826  | )
|                                                                                                         |  |                |         |   |             |   |         |  
|Total stockholders equity                                                                               |  |                | 76,791  |   |             |   | 97,200  |  
|                                                                                                         |  |                |         |   |             |   |         |  
|Total liabilities and stockholders equity                                                               |  | $              | 369,943 |   |             | $ | 391,625 |  
|                                                                                                         |  |                |         |   |             |   |         |  



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



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AMF BOWLING WORLDWIDE, INC



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)



|                                                         |  |                   |         |   |                   |   |         |  
|-------------------------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | -
|(In thousands)                                           |  | 2006 FirstQuarter |         |   | 2005 FirstQuarter |  
|Operating revenue                                        |  | $                 | 122,743 |   |                   | $ | 115,133 |  
|                                                         |  |                  
|Operating expenses:                                      |  |                   |         |   |                   |   |         |  
|Cost of goods sold                                       |  |                   | 31,409  |   |                   |   | 25,910  |  
|Bowling center operating expenses                        |  |                   | 85,943  |   |                   |   | 83,158  |  
|Selling, general and administrative expenses             |  |                   | 10,407  |   |                   |   | 10,324  |  
|Asset impairment                                         |  |                   | 443     |   |                   |   | 1,303   |  
|Depreciation and amortization                            |  |                   | 10,352  |   |                   |   | 11,179  |  
|                                                         |  |                   |         |   |                   |   |         |  
|Total operating expenses                                 |  |                   | 138,554 |   |                   |   | 131,874 |  
|                                                         |  |                   |         |   |                   |   |         |  
|Operating loss                                           |  |                   | (15,811 | ) |                   |   | (16,741 | )
|                                                         |  |                  
|Non-operating (income) expenses:                         |  |                   |         |   |                   |   |         |  
|Interest expense                                         |  |                   | 5,501   |   |                   |   | 6,502   |  
|Interest income                                          |  |                   | (326    | ) |                   |   | (26     | )
|Other (income) expenses, net                             |  |                   | 196     |   |                   |   | (4,652  | )
|                                                         |  |                   |         |   |                   |   |         |  
|Total non-operating expenses                             |  |                   | 5,371   |   |                   |   | 1,824   |  
|                                                         |  |                   |         |   |                   |   |         |  
|Loss from continuing operations before income taxes      |  |                   | (21,182 | ) |                   |   | (18,565 | )
|Provision for (benefit from) income taxes                |  |                   | (590    | ) |                   |   | 372     |  
|                                                         |  |                   |         |   |                   |   |         |  
|Loss from continuing operations                          |  |                   | (20,592 | ) |                   |   | (18,937 | )
|                                                         |  |                  
|Income from discontinued operations, net of tax (Note 3) |  |                   | 63      |   |                   |   | 5,997   |  
|                                                         |  |                   |         |   |                   |   |         |  
|Net loss                                                 |  | $                 | (20,529 | ) |                   | $ | (12,940 | )
|                                                         |  |                   |         |   |                   |   |         |  



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



3



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AMF BOWLING WORLDWIDE, INC.



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                                        |  |                   |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | -
|(In thousands)                                                                                          |  | 2006 FirstQuarter |         |   | 2005 FirstQuarter |  
|Operating activities:                                                                                   |  |                   |         |   |                   |   |         |  
|Net loss                                                                                                |  | $                 | (20,529 | ) |                   | $ | (12,940 | )
|Less: Income from discontinued operations, net of tax                                                   |  |                   | 63      |   |                   |   | 5,997   |  
|                                                                                                        |  |                   |         |   |                   |   |         |  
|Loss from continuing operations                                                                         |  |                   | (20,592 | ) |                   |   | (18,937 | )
|Adjustments to reconcile net loss from continuing operations to net cash used in continuing operations: |  |                   |         |   |                   |   |         |  
|Depreciation and amortization                                                                           |  |                   | 10,352  |   |                   |   | 11,179  |  
|(Gain) loss on the sale of property and equipment, net                                                  |  |                   | (11     | ) |                   |   | 251     |  
|Asset impairment                                                                                        |  |                   | 443     |   |                   |   | 1,303   |  
|Changes in assets and liabilities:                                                                      |  |                   |         |   |                   |   |         |  
|Accounts and notes receivable, net                                                                      |  |                   | 1,907   |   |                   |   | 758     |  
|Inventories                                                                                             |  |                   | (6,229  | ) |                   |   | (1,529  | )
|Other assets                                                                                            |  |                   | 2,449   |   |                   |   | 1,340   |  
|Accounts payable and accrued expenses                                                                   |  |                   | 1,681   |   |                   |   | (1,203  | )
|Income taxes payable                                                                                    |  |                   | (2,556  | ) |                   |   | (370    | )
|Other long-term liabilities                                                                             |  |                   | (307    | ) |                   |   | 188     |  
|                                                                                                        |  |                   |         |   |                   |   |         |  
|Net cash used in operating activities from continuing operations                                        |  |                   | (12,863 | ) |                   |   | (7,020  | )
|                                                                                                        |  |                   |         |   |                   |   |         |  
|Investing activities:                                                                                   |  |                   |         |   |                   |   |         |  
|Purchases of property and equipment                                                                     |  |                   | (17,475 | ) |                   |   | (11,496 | )
|Proceeds from the sale of property and equipment                                                        |  |                   | 52      |   |                   |   | 1,515   |  
|                                                                                                        |  |                   |         |   |                   |   |         |  
|Net cash used in investing activities from continuing operations                                        |  |                   | (17,423 | ) |                   |   | (9,981  | )
|                                                                                                        |  |                   |         |   |                   |   |         |  
|Financing activities:                                                                                   |  |                   |         |   |                   |   |         |  
|Borrowing (payments) under revolving line of credit                                                     |  |                   |        |   |                   |   | 8,000   |  
|Payments of long-term debt                                                                              |  |                   | (199    | ) |                   |   | (643    | )
|Payments under capital lease obligations                                                                |  |                   | (70     | ) |                   |   | (140    | )
|                                                                                                        |  |                   |         |   |                   |   |         |  
|Net cash provided by (used in) financing activities from continuing operations                          |  |                   | (269    | ) |                   |   | 7,217   |  
|                                                                                                        |  |                   |         |   |                   |   |         |  
|Effect of exchange rates on cash                                                                        |  |                   | 276     |   |                   |   | (64     | )
|Net cash provided by (used in) discontinued operations                                                  |  |                   | (427    | ) |                   |   | 13,398  |  
|                                                                                                        |  |                   |         |   |                   |   |         |  
|Net increase (decrease) in cash                                                                         |  |                   | (30,706 | ) |                   |   | 3,550   |  
|Cash at beginning of period                                                                             |  |                   | 45,254  |   |                   |   | 12,734  |  
|                                                                                                        |  |                   |         |   |                   |   |         |  
|Cash at end of period                                                                                   |  | $                 | 14,548  |   |                   | $ | 16,284  |  
|                                                                                                        |  |                   |         |   |                   |   |         |  



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



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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 our subsidiaries (Worldwide and our subsidiaries may be referred to as
the Company, we, us, or our) engaged in two business segments during the first quarter of fiscal year 2006 (the 2006 First Quarter), the period covered by this report:



| |  |  | the operation of bowling centers (Centers); and
| | - |  | -------------------------------------------------



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



Centers is the largest operator of bowling centers in the world with 365 centers in operation as of October 2, 2005, comprised of 350 centers in the
U.S. and 15 bowling centers operating outside the U.S. On September 30, 2004, we sold our 33 bowling centers in the United Kingdom for approximately $69,900 and on February 8, 2005, we sold our 42 bowling centers in Australia for
approximately $44,700. We no longer have bowling center operations in the United Kingdom and Australia. The results of operations for the bowling centers in these countries have been reported as discontinued operations for all periods presented.



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



| |  |  | New Center Packages (NCPs), which is all of the equipment necessary to outfit one lane at a new or existing bowling center; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



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



We are marketing for sale our billiards division, which was formerly a part of the Products segment and manufactures and sells Playmaster, Highland and Renaissance brands of billiard tables. The results of operations
for the billiards division have been reported as discontinued operations for all periods presented.



During the 2006 First Quarter, Worldwide served as the corporate headquarters of the Company. Its employees provided management and administrative
services for Centers and certain administrative services for Products.



Worldwides business operations and 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.



QubicaAMF Worldwide, LLC, formerly known as AMF Bowling Products, LLC (AMF Products), operated our Products business during the 2006 First
Quarter. AMF Products was a wholly-owned indirect, subsidiary of Worldwide for the 2006 First Quarter. Since June 7, 2005, our billiards division operated in AMF Billiards & Games LLC, which is a wholly-owned subsidiary of Worldwide.



Joint Venture



On October 7, 2005, we completed the previously announced transactions
to form the joint venture with the shareholder of Italian-based Qubica, S.p.A. (Qubica). In these transactions, AMF Holdings, Inc. (AMF Holdings), a subsidiary of Worldwide, contributed the equity of AMF Products and
substantially all of the other



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AMF BOWLING WORLDWIDE, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)



subsidiaries that conduct our Products business to
QubicaAMF Worldwide, S.à.R.L. (the Joint Venture), a company organized under the laws of Luxembourg, 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. On September 16, 2005, in anticipation of creating the Joint Venture, the name of AMF Products was changed to QubicaAMF Worldwide,
LLC. Qubica also changed its name to QubicaAMF Europe S.p.A. Other subsidiaries of AMF Products and Qubica have changed their names to reflect the name QubicaAMF.



In creating the Joint Venture, Worldwide and certain of its non-Products subsidiaries entered into various agreements with
the Joint Venture or its subsidiaries. These agreements include, but are not limited to, a supply agreement between AMF 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 that allows the Joint Venture 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 (the JV Option Plan) and intends to award certain managers of the Joint Venture options to purchase interests in the Joint Venture. Upon exercise of any
options, the ownership percentage of AMF Holdings and Qubica will be equally reduced.



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 Note 9. Long-Term Debt.) In addition, the Joint Venture and certain of its subsidiaries, entered into a
credit agreement for a $30.0 million asset based loan. 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.



We will account for our investment in the Joint
Venture using the equity method and management will determine how the equity method will affect certain presentations in our future reports, such as our critical accounting policies, segment reporting, business strategies and properties.



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
2006 has 52 weeks, and fiscal year 2005 had 53 weeks, with the extra week being reported in the fourth quarter. As a result of the additional week in fiscal year 2005, the 2006 First Quarter ended about one week later than the first quarter in
fiscal year 2005.



NOTE 2. BASIS OF PRESENTATION



As 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 prepared in
accordance with accounting 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 generally accepted accounting principles 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.



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AMF BOWLING WORLDWIDE, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)



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 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.



|                                                      |  |                     
|----------------------------------------------------- |  | --------------------
|Period                                                |  | Referred to as      
|Results from July 4, 2005 through October 2, 2005     |  | 2006 First Quarter
|                                                      | 
|Results from June 28, 2004 through September 26, 2004 |  | 2005 First Quarter



NOTE 3. DISCONTINUED OPERATIONS



On September 30, 2004, we sold our bowling center
operations in the United Kingdom for gross proceeds of approximately $69,900 and on February 8, 2005, we sold our bowling center operations in Australia for approximately $44,700. Additionally, we are marketing for sale our billiards division.
In accordance with SFAS No. 144 Accounting for the Impairment or Disposal of Long-lived Assets, the operations of the billiards division and the bowling centers in the United Kingdom and Australia are reported separately as
discontinued operations for all periods presented.



The
financial results of our discontinued operations were as follows:



|                                               |  |                   |       |                   |   |       
|---------------------------------------------- |  | ----------------- | ----- | ----------------- | - | ------
|(In thousands)                                 |  | 2006 FirstQuarter |       | 2005 FirstQuarter
|Revenue                                        |  | $                 | 2,584 |                   | $ | 27,700
|                                               |  |                   |       |                   |   |       
|Income from discontinued operations, pretax    |  |                   | 63    |                   |   | 8,695 
|Provision for income taxes                     |  |                   |      |                   |   | 2,698 
|                                               |  |                   |       |                   |   |       
|Income from discontinued operations, after tax |  | $                 | 63    |                   | $ | 5,997 



The assets and
liabilities of the billiards operations are classified as held-for-sale and were as follows:



|                                       |  |                |      
|-------------------------------------- |  | -------------- | -----
|                                       |  | October 2,2005
|Accounts receivable, net of allowance  |  | $              | 1,941
|Inventories, net                       |  |                | 3,676
|Prepaid and other current assets       |  |                | 69   
|Property and equipment, net            |  |                | 41   
|                                       |  |                |      
|Assets held for sale                   |  | $              | 5,727
|                                       |  |                |      
|Accounts payable                       |  | $              | 553  
|Accrued expenses and other liabilities |  |                | 455  
|                                       |  |                |      
|Liabilities held for sale              |  | $              | 1,008
|                                       |  |                |      



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AMF BOWLING WORLDWIDE, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)



NOTE 4. EQUITY BASED COMPENSATION



On February 27, 2004, Kingpin Holdings, LLC
(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. Effective September 27, 2004, Kingpin adopted the 2004 Unit Option Plan (the Option Plan) granted 100,000 options to purchase common units at an
exercise price of $10.00 per common unit, to twenty two (22) senior 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. An
additional grant, similar to the Option Plan, is expected to be complete in the second quarter of the 2006 fiscal year. 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. 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: The resulting pro forma expense relates to the grant on February 27,
2004.



|                                                                       |  |                    |         |   |                    |   |         |  
|---------------------------------------------------------------------- |  | ------------------ | ------- | - | ------------------ | - | ------- | -
|                                                                       |  | 2006 First Quarter |         |   | 2005 First Quarter |  
|Net loss, as reported                                                  |  | $                  | (20,529 | ) |                    | $ | (12,940 | )
|Stock-based employee compensation under APB 25                         |  |                    |        |   |                    |   |        |  
|Pro forma stock-based employee compensation expense under SFAS No. 123 |  |                    | 36      |   |                    |   | 36      |  
|                                                                       |  |                    |         |   |                    |   |         |  
|Net loss, pro forma                                                    |  | $                  | (20,565 | ) |                    | $ | (12,976 | )
|                                                                       |  |                    |         |   |                    |   |         |  



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 loss disclosures were computed by amortizing the estimated fair value of the grants over the respective vesting periods.



NOTE 5. COMPREHENSIVE INCOME (LOSS)



Comprehensive loss was $20,409 for the 2006 First Quarter and $14,760 for
the 2005 First Quarter. Accumulated other comprehensive loss of $6,706 at October 2, 2005 and $6,826 at July 3, 2005 is included in stockholders equity and consists of the foreign currency translation adjustment and minimum pension
liability.



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##### Table of Contents

AMF BOWLING WORLDWIDE, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)



NOTE 6. INVENTORIES, NET



Inventories, net consisted of:



|                               |  |                |        |             |   |       
|------------------------------ |  | -------------- | ------ | ----------- | - | ------
|                               |  | October 2,2005 |        | July 3,2005
|Products, at FIFO:             |  |                |        |             |   |       
|Raw materials                  |  | $              | 4,065  |             | $ | 3,509 
|Work in process (a)            |  |                | 5,256  |             |   | 112   
|Finished goods and spare parts |  |                | 16,585 |             |   | 16,410
|Centers, at average cost:      |  |                |        |             |   |       
|Merchandise and spare parts    |  |                | 5,719  |             |   | 5,500 
|                               |  |                |        |             |   |       
|Total inventories              |  | $              | 31,625 |             | $ | 25,531
|                               |  |                |        |             |   |       

---

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



NOTE 7. PROPERTY AND EQUIPMENT, NET



Property and equipment, net consisted of:



|                                  |  |                |         |   |             |   |         |  
|--------------------------------- |  | -------------- | ------- | - | ----------- | - | ------- | -
|                                  |  | October 2,2005 |         |   | July 3,2005 |  
|Land                              |  | $              | 30,105  |   |             | $ | 28,582  |  
|Buildings and improvements        |  |                | 124,268 |   |             |   | 111,493 |  
|Equipment, furniture and fixtures |  |                | 164,018 |   |             |   | 155,934 |  
|Other                             |  |                | 12,369  |   |             |   | 7,825   |  
|                                  |  |                |         |   |             |   |         |  
|                                  |  |                | 330,760 |   |             |   | 303,834 |  
|Less accumulated depreciation     |  |                | (75,138 | ) |             |   | (55,308 | )
|                                  |  |                |         |   |             |   |         |  
|Property and equipment, net       |  | $              | 255,622 |   |             | $ | 248,526 |  
|                                  |  |                |         |   |             |   |         |  



Depreciation expense
related to property and equipment was $10,192 in the 2006 First Quarter and $11,015 in the 2005 First Quarter.



NOTE 8. SUPPLEMENTAL CASH FLOW INFORMATION



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



|                                 |  |                    |       |                   |   |      
|-------------------------------- |  | ------------------ | ----- | ----------------- | - | -----
|                                 |  | 2006 First Quarter |       | 2005 FirstQuarter
|Cash paid during the period for: |  |                    |       |                   |   |      
|Interest                         |  | $                  | 7,463 |                   | $ | 9,245
|Income taxes                     |  |                    | 1,810 |                   |   | 418  
|                                 |  |                    |       |                   |   |      



9



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##### Table of Contents

AMF BOWLING WORLDWIDE, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)



NOTE 9. LONG-TERM DEBT



Long-Term Debt Summary



Our long-term debt consisted of:



|                                      |  |                |         |   |             |   |         |  
|------------------------------------- |  | -------------- | ------- | - | ----------- | - | ------- | -
|                                      |  | October 2,2005 |         |   | July 3,2005 |  
|Term Loan                             |  | $              | 78,365  |   |             | $ | 78,564  |  
|Revolver                              |  |                |        |   |             |   |        |  
|Subordinated Notes, 10%, due 2010     |  |                | 123,910 |   |             |   | 123,910 |  
|Old Subordinated Notes, 13%, due 2008 |  |                | 5       |   |             |   | 5       |  
|Mortgage note and capitalized leases  |  |                | 2,295   |   |             |   | 2,365   |  
|                                      |  |                |         |   |             |   |         |  
|Total debt                            |  |                | 204,575 |   |             |   | 204,844 |  
|Current maturities                    |  |                | (1,078  | ) |             |   | (1,073  | )
|                                      |  |                |         |   |             |   |         |  
|Total long-term debt                  |  | $              | 203,497 |   |             | $ | 203,771 |  
|                                      |  |                |         |   |             |   |         |  



Credit Agreement



At the end of the 2006 First Quarter, we owed $78,365 in term loans in
conjunction with the Credit Agreement which also has an aggregate revolving loan commitment of $40,000 (the Revolver). In June 2005, we entered into a Second Amendment to Credit Agreement (the 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, 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 accounted for the loss of cash flow as a result of
the divestiture of certain international center operations.



No
borrowings were outstanding under the Revolver as of the end of the 2006 First Quarter and outstanding standby letters of credit issued under the Revolver totaled $17,326, leaving $22,674 available for additional borrowings or letters of credit. Our
aggregate letter of credit obligations outstanding under the Credit Agreement may not exceed $20,000. 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 $75,381 due on August 27, 2009. Current scheduled quarterly principal payments are $199 and are due on the 30th day of the last month of the calendar quarter. Repayment also is required in amounts specified in the
Credit Agreement for certain events including certain asset sale proceeds and equity and debt offering proceeds. The Credit Agreement requires the frequency of interest payments to be not less than quarterly and an annual mandatory prepayment of the
Term Loan based on a percentage of free cash flow, ranging from 25-75%, as specified in the Credit Agreement. Since the transactions to form the Joint Venture have been completed, AMF Products is no longer a guarantor of our obligations under our
Credit Agreement and our Subordinated Notes and liens against assets of AMF Products that secured its guarantee have been released. 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 one of our 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



As of February 27, 2004, in conjunction with the merger of Kingpin and
Worldwide (the Merger), we issued the $150,000 Subordinated Notes with interest payable semi-annually. The Subordinated Notes were issued



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##### Table of Contents

AMF BOWLING WORLDWIDE, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)



pursuant to an indenture dated February 27,
2004 (the Indenture). The Subordinated Notes are expressly subordinated to the payment of the Credit Agreement and any other senior indebtedness; contain affirmative and negative covenants that are customary to high yield instruments and
generally no more restrictive than those contained in the Credit Agreement; contain certain events of default including cross default provisions; are unsecured; and have the benefit of guarantees of certain of the U.S. subsidiaries. Subject to
certain exceptions, the Subordinated Notes may not be redeemed at our option before March 1, 2007. Thereafter, the Subordinated Notes are redeemable in the manner provided in the Indenture at redemption prices equal to 105.00% during the 12
month period beginning March 1, 2007, 102.50% during the 12 month period beginning March 1, 2008 and 100.00% beginning on March 1, 2009 and thereafter. Upon the occurrence of a change of control (as defined in the Indenture), we are
required to offer to purchase the Subordinated Notes at 101.00% of their principal amount, plus accrued interest. Subject to certain restrictions and conditions, the Indenture permits the payment of a dividend or distribution to Kingpin Intermediate
Corp. or the repurchase or redemption of shares of Worldwide or any parent of Worldwide of up to 35% of the Net Cash Proceeds (as defined in the Indenture) from the sale of International Operations (as defined in the Indenture). During fiscal year
2005, we repurchased and cancelled $26,100 of Subordinated Notes.



Dividends



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 to purchase 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



Liabilities subject to resolution in the
Chapter 11 proceeding were $143 at October 2, 2005 and July 3, 2005. 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 July 3, 2005 of our estimated exposure related to equipment warranties
for the 2006 First Quarter:



|                         |  |   |     |  
|------------------------ |  | - | --- | -
|Balance, July 3, 2005    |  | $ | 986 |  
|Provision                |  |   | 10  |  
|Payments                 |  |   | (58 | )
|Exchange rate effect     |  |   | (1  | )
|                         |  |   |     |  
|Balance, October 2, 2005 |  | $ | 937 |  
|                         |  |   |     |  



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



11



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##### Table of Contents

AMF BOWLING WORLDWIDE, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)



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.



On September 30, 2004, we sold 33 bowling centers in the United Kingdom for approximately $69,900. During calendar year 2004, we closed five bowling
centers in Australia and sold the real estate. On February 8, 2005, we sold our 42 remaining operating bowling centers in Australia for approximately $44,700. We no longer have bowling center operations in the United Kingdom or Australia.



Litigation and Claims



We currently and from time to time are subject to claims and actions arising
in the ordinary course of our business, including general liability, workers compensation, employee compensation and environmental claims. In some actions, plaintiffs request punitive or other damages that may not be covered by insurance. In
managements opinion, the claims and actions in which we are involved are not expected to have a material adverse impact on our financial position or results of operations.



In addition, we concluded the settlements in two class 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. Those class settlements have been made final and the cases have been dismissed.



In July 2005, the Western Australian Commissioner of State
Revenue, (the Commission) assessed Worldwide approximately $314 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 a defined set of assets. We paid the assessment under protest and filed an objection. The objection is an internal review by the Commission. If the assessment is not reversed, management
intends to appeal the assessment. The Australian states of South Australia and New South Wales have also made inquiries about the applicability of their land-rich laws but have not made assessments.



European Community Tariff



The Commission of the European Community (the Commission)
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%. In response, U.S. Congress enacted legislation that was intended to address the issues raised by the EC. The Commission agreed to repeal temporarily the additional
duty retroactive to January 1, 2005 pending a WTO determination that the U.S. legislation adequately responded to global trade rules. On August 12, 2005, a WTO dispute panel ruled that the U.S. did not comply with the earlier WTO decision
against tax benefits for U.S. export firms. If this recent ruling is adopted, the Commission may re-impose the retaliatory tariffs.



12



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AMF BOWLING WORLDWIDE, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(in thousands, except as otherwise noted)

(unaudited)



NOTE 12. BUSINESS SEGMENTS



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



|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|------------- |  | --------------------------------- | ----- | ----------------- | - | ---- | --------------------- |  | - | ----------- | - |  | --------------------------- | ----- | ------------------- |  | - | ---- |  | - | ---- | -
|              |  | 2006 First Quarter                |      
|(In millions) |  | Revenue fromunaffiliatedcustomers |       | Intersegmentsales |   |      | Operatingincome(loss) |  |   | Totalassets |   |  | Depreciationandamortization |       | Capitalexpenditures | 
|Centers:      |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|U.S.          |  | $                                 | 91.0  |                   | $ |     |                       |  | $ | (9.9        | ) |  | $                           | 254.2 |                     |  | $ | 8.4  |  | $ | 17.1 |  
|International |  |                                   | 4.7   |                   |   |     |                       |  |   | 0.5         |   |  |                             | 13.9  |                     |  |   | 0.2  |  |   | 0.1  |  
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|Subtotal      |  |                                   | 95.7  |                   |   |     |                       |  |   | (9.4        | ) |  |                             | 268.1 |                     |  |   | 8.6  |  |   | 17.2 |  
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|Products:     |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|U.S.          |  |                                   | 13.7  |                   |   | 7.1  |                       |  |   | (1.4        | ) |  |                             | 73.7  |                     |  |   | 1.3  |  |   | 1.0  |  
|International |  |                                   | 13.3  |                   |   | 0.2  |                       |  |   | (0.9        | ) |  |                             | 27.1  |                     |  |   | 0.1  |  |   |     |  
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|Subtotal      |  |                                   | 27.0  |                   |   | 7.3  |                       |  |   | (2.3        | ) |  |                             | 100.8 |                     |  |   | 1.4  |  |   | 1.0  |  
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|Corporate     |  |                                   |      |                   |   |     |                       |  |   | (3.6        | ) |  |                             | (4.5  | )                   |  |   | 0.4  |  |   | (0.2 | )
|Eliminations  |  |                                   |      |                   |   | (7.3 | )                     |  |   | (0.5        | ) |  |                             | 5.5   |                     |  |   |     |  |   | (0.5 | )
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|Total         |  | $                                 | 122.7 |                   | $ |     |                       |  | $ | (15.8       | ) |  | $                           | 369.9 |                     |  | $ | 10.4 |  | $ | 17.5 |  
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|              | 
|              |  | 2005 First Quarter                |      
|(In millions) |  | Revenue fromunaffiliatedcustomers |       | Intersegmentsales |   |      | Operatingincome(loss) |  |   | Totalassets |   |  | Depreciationandamortization |       | Capitalexpenditures | 
|Centers:      |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|U.S.          |  | $                                 | 85.5  |                   | $ |     |                       |  | $ | (10.5       | ) |  | $                           | 252.0 |                     |  | $ | 8.8  |  | $ | 10.1 |  
|International |  |                                   | 4.9   |                   |   |     |                       |  |   | (1.3        | ) |  |                             | 116.9 |                     |  |   | 0.3  |  |   |     |  
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|Subtotal      |  |                                   | 90.4  |                   |   |     |                       |  |   | (11.8       | ) |  |                             | 368.9 |                     |  |   | 9.1  |  |   | 10.1 |  
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|Products:     |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|U.S.          |  |                                   | 14.7  |                   |   | 6.9  |                       |  |   | (1.3        | ) |  |                             | 83.0  |                     |  |   | 1.6  |  |   | 0.6  |  
|International |  |                                   | 10.0  |                   |   | 1.0  |                       |  |   | 2.1         |   |  |                             | 23.4  |                     |  |   | 0.1  |  |   |     |  
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|Subtotal      |  |                                   | 24.7  |                   |   | 7.9  |                       |  |   | 0.8         |   |  |                             | 106.4 |                     |  |   | 1.7  |  |   | 0.6  |  
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|Corporate     |  |                                   |      |                   |   |     |                       |  |   | (5.7        | ) |  |                             | 11.7  |                     |  |   | 0.4  |  |   | 0.8  |  
|Eliminations  |  |                                   |      |                   |   | (7.9 | )                     |  |   |            |   |  |                             | 7.5   |                     |  |   |     |  |   |     |  
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  
|Total         |  | $                                 | 115.1 |                   | $ |     |                       |  | $ | (16.7       | ) |  | $                           | 494.5 |                     |  | $ | 11.2 |  | $ | 11.5 |  
|              |  |                                   |       |                   |   |      |                       |  |   |             |   |  |                             |       |                     |  |   |      |  |   |      |  



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##### Table of Contents

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 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 October 2, 2005 and July 3, 2005, condensed consolidating statements of
operations and cash flows for the 2006 First Quarter and for the 2005 First Quarter. The elimination entries presented are necessary to combine the entities.



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##### Table of Contents

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



|                                              |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|--------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | -------- | ------------------------- |  | - | ------------ | - |  | ----- | -------- | - |  | - | ------- | -
|                                              |  | October 2, 2005 |        
|                                              |  | Worldwide       |         |   | GuarantorSubsidiaries |   |          | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |         
|Assets                                        |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Current assets:                               |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Cash and cash equivalents                     |  | $               | 7,109   |   |                       | $ | 5,091    |                           |  | $ | 2,348        |   |  | $     |         |   |  | $ | 14,548  |  
|Accounts and notes receivable, net            |  |                 |        |   |                       |   | 18,050   |                           |  |   | 3,473        |   |  |       |         |   |  |   | 21,523  |  
|Accounts and notes receivable -intercompany   |  |                 | 25,230  |   |                       |   | 115,941  |                           |  |   |             |   |  |       | (141,171 | ) |  |   |        |  
|Inventories, net                              |  |                 |        |   |                       |   | 29,530   |                           |  |   | 5,745        |   |  |       | (3,650   | ) |  |   | 31,625  |  
|Prepaid expenses and other current assets     |  |                 | (7,898  | ) |                       |   | 18,842   |                           |  |   | 1,680        |   |  |       |         |   |  |   | 12,624  |  
|Assets held for sale                          |  |                 |        |   |                       |   | 5,727    |                           |  |   |             |   |  |       |         |   |  |   | 5,727   |  
|                                              |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total current assets                          |  |                 | 24,441  |   |                       |   | 193,181  |                           |  |   | 13,246       |   |  |       | (144,821 | ) |  |   | 86,047  |  
|                                              |  |                 |         |   |                      
|Property and equipment, net                   |  |                 | 3,780   |   |                       |   | 244,454  |                           |  |   | 5,007        |   |  |       | 2,381    |   |  |   | 255,622 |  
|Investment in subsidiaries                    |  |                 | 380,844 |   |                       |   |         |                           |  |   |             |   |  |       | (380,844 | ) |  |   |        |  
|Other assets                                  |  |                 | 14,059  |   |                       |   | 91,747   |                           |  |   | (1,227       | ) |  |       | (76,305  | ) |  |   | 28,274  |  
|                                              |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total assets                                  |  | $               | 423,124 |   |                       | $ | 529,382  |                           |  | $ | 17,026       |   |  | $     | (599,589 | ) |  | $ | 369,943 |  
|                                              |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Liabilities and Stockholders Equity          |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Current liabilities:                          |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Accounts payable                              |  | $               | 135     |   |                       | $ | 15,942   |                           |  | $ | 1,073        |   |  | $     |         |   |  | $ | 17,150  |  
|Accrued expenses and other liabilities        |  |                 | 5,253   |   |                       |   | 55,808   |                           |  |   | 4,473        |   |  |       |         |   |  |   | 65,534  |  
|Current portion of long-term debt             |  |                 | 796     |   |                       |   | 282      |                           |  |   |             |   |  |       |         |   |  |   | 1,078   |  
|Accounts and notes payable -intercompany      |  |                 | 115,827 |   |                       |   | 2,871    |                           |  |   | 22,473       |   |  |       | (141,171 | ) |  |   |        |  
|Liabilities held for sale                     |  |                 |        |   |                       |   | 1,008    |                           |  |   |             |   |  |       |         |   |  |   | 1,008   |  
|                                              |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total current liabilities                     |  |                 | 122,011 |   |                       |   | 75,911   |                           |  |   | 28,019       |   |  |       | (141,171 | ) |  |   | 84,770  |  
|                                              |  |                 |         |   |                      
|Long-term debt, less current portion          |  |                 | 201,484 |   |                       |   | 2,013    |                           |  |   |             |   |  |       |         |   |  |   | 203,497 |  
|Liabilities, subject to resolution            |  |                 |        |   |                       |   | 143      |                           |  |   |             |   |  |       |         |   |  |   | 143     |  
|Other long-term liabilities                   |  |                 | 21,569  |   |                       |   | 54,569   |                           |  |   | 4,909        |   |  |       | (76,305  | ) |  |   | 4,742   |  
|                                              |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total liabilities                             |  |                 | 345,064 |   |                       |   | 132,636  |                           |  |   | 32,928       |   |  |       | (217,476 | ) |  |   | 293,152 |  
|                                              |  |                 |         |   |                      
|Stockholders equity:                         |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Common stock                                  |  |                 |        |   |                       |   |         |                           |  |   |             |   |  |       |         |   |  |   |        |  
|Paid-in capital                               |  |                 | 133,716 |   |                       |   | 611,596  |                           |  |   | 12,265       |   |  |       | (623,861 | ) |  |   | 133,716 |  
|Accumulated deficit                           |  |                 | (48,950 | ) |                       |   | (221,678 | )                         |  |   | (13,046      | ) |  |       | 233,455  |   |  |   | (50,219 | )
|Accumulated other comprehensive income (loss) |  |                 | (6,706  | ) |                       |   | 6,828    |                           |  |   | (15,121      | ) |  |       | 8,293    |   |  |   | (6,706  | )
|                                              |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total stockholders equity                    |  |                 | 78,060  |   |                       |   | 396,746  |                           |  |   | (15,902      | ) |  |       | (382,113 | ) |  |   | 76,791  |  
|                                              |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total liabilities and stockholders equity    |  | $               | 423,124 |   |                       | $ | 529,382  |                           |  | $ | 17,026       |   |  | $     | (599,589 | ) |  | $ | 369,943 |  
|                                              |  |                 |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  



15



---

##### Table of Contents

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



|                                              |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|--------------------------------------------- |  | ------------ | ------- | - | --------------------- | - | -------- | ------------------------- |  | - | ------------ | - |  | ----- | -------- | - |  | - | ------- | -
|                                              |  | July 3, 2005 |        
|                                              |  | Worldwide    |         |   | GuarantorSubsidiaries |   |          | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |         
|Assets                                        |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Current assets:                               |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Cash and cash equivalents                     |  | $            | 39,537  |   |                       | $ | 4,045    |                           |  | $ | 1,672        |   |  | $     |         |   |  | $ | 45,254  |  
|Accounts and notes receivable, net            |  |              |        |   |                       |   | 19,906   |                           |  |   | 3,591        |   |  |       |         |   |  |   | 23,497  |  
|Accounts and notes receivable -intercompany   |  |              | 21,901  |   |                       |   | 139,208  |                           |  |   | 3,313        |   |  |       | (164,422 | ) |  |   |        |  
|Inventories, net                              |  |              |        |   |                       |   | 22,546   |                           |  |   | 5,916        |   |  |       | (2,931   | ) |  |   | 25,531  |  
|Prepaid expenses and other current assets     |  |              | (7,452  | ) |                       |   | 19,807   |                           |  |   | 1,938        |   |  |       |         |   |  |   | 14,293  |  
|Assets held for sale                          |  |              |        |   |                       |   | 5,294    |                           |  |   |             |   |  |       |         |   |  |   | 5,294   |  
|                                              |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total current assets                          |  |              | 53,986  |   |                       |   | 210,806  |                           |  |   | 16,430       |   |  |       | (167,353 | ) |  |   | 113,869 |  
|                                              |  |              |         |   |                      
|Property and equipment, net                   |  |              | 7,748   |   |                       |   | 233,292  |                           |  |   | 5,114        |   |  |       | 2,372    |   |  |   | 248,526 |  
|Investment in subsidiaries                    |  |              | 396,724 |   |                       |   |         |                           |  |   |             |   |  |       | (396,724 | ) |  |   |        |  
|Other assets                                  |  |              | 15,092  |   |                       |   | 91,648   |                           |  |   | (1,211       | ) |  |       | (76,299  | ) |  |   | 29,230  |  
|                                              |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total assets                                  |  | $            | 473,550 |   |                       | $ | 535,746  |                           |  | $ | 20,333       |   |  | $     | (638,004 | ) |  | $ | 391,625 |  
|                                              |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Liabilities and Stockholders Equity          |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Current liabilities:                          |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Accounts payable                              |  | $            | 46      |   |                       | $ | 11,759   |                           |  | $ | 701          |   |  | $     |         |   |  | $ | 12,506  |  
|Accrued expenses and other liabilities        |  |              | 12,468  |   |                       |   | 53,005   |                           |  |   | 5,648        |   |  |       |         |   |  |   | 71,121  |  
|Current portion of long-term debt             |  |              | 796     |   |                       |   | 277      |                           |  |   |             |   |  |       |         |   |  |   | 1,073   |  
|Accounts and notes payable -intercompany      |  |              | 139,229 |   |                       |   | 1,498    |                           |  |   | 23,695       |   |  |       | (164,422 | ) |  |   |        |  
|Liabilities held for sale                     |  |              |        |   |                       |   | 1,069    |                           |  |   |             |   |  |       |         |   |  |   | 1,069   |  
|                                              |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total current liabilities                     |  |              | 152,539 |   |                       |   | 67,608   |                           |  |   | 30,044       |   |  |       | (164,422 | ) |  |   | 85,769  |  
|                                              |  |              |         |   |                      
|Long-term debt, less current portion          |  |              | 201,683 |   |                       |   | 2,088    |                           |  |   |             |   |  |       |         |   |  |   | 203,771 |  
|Liabilities, subject to resolution            |  |              |        |   |                       |   | 143      |                           |  |   |             |   |  |       |         |   |  |   | 143     |  
|Other long-term liabilities                   |  |              | 21,569  |   |                       |   | 54,563   |                           |  |   | 4,909        |   |  |       | (76,299  | ) |  |   | 4,742   |  
|                                              |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total liabilities                             |  |              | 375,791 |   |                       |   | 124,402  |                           |  |   | 34,953       |   |  |       | (240,721 | ) |  |   | 294,425 |  
|                                              |  |              |         |   |                      
|Stockholders equity:                         |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Common stock                                  |  |              |        |   |                       |   |         |                           |  |   |             |   |  |       |         |   |  |   |        |  
|Paid-in capital                               |  |              | 133,716 |   |                       |   | 614,700  |                           |  |   | 9,161        |   |  |       | (623,861 | ) |  |   | 133,716 |  
|Accumulated (deficit) earnings                |  |              | (29,131 | ) |                       |   | (210,517 | )                         |  |   | (8,207       | ) |  |       | 218,165  |   |  |   | (29,690 | )
|Accumulated other comprehensive income (loss) |  |              | (6,826  | ) |                       |   | 7,161    |                           |  |   | (15,574      | ) |  |       | 8,413    |   |  |   | (6,826  | )
|                                              |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total stockholders equity                    |  |              | 97,759  |   |                       |   | 411,344  |                           |  |   | (14,620      | ) |  |       | (397,283 | ) |  |   | 97,200  |  
|                                              |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  
|Total liabilities and stockholders equity    |  | $            | 473,550 |   |                       | $ | 535,746  |                           |  | $ | 20,333       |   |  | $     | (638,004 | ) |  | $ | 391,625 |  
|                                              |  |              |         |   |                       |   |          |                           |  |   |              |   |  |       |          |   |  |   |         |  



16



---

##### Table of Contents

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



|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|-------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ------ | - |  | - | ------- | -
|                                                                                                         |  | 2006 First Quarter |        
|                                                                                                         |  | Worldwide          |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |       
|Operating revenue                                                                                        |  | $                  |        |   |                       | $ | 115,766 |                           |  | $ | 9,859        |   |  | $     | (2,882 | ) |  | $ | 122,743 |  
|                                                                                                         |  |                    |         |   |                      
|Operating expenses:                                                                                      |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Cost of goods sold                                                                                       |  |                    |        |   |                       |   | 28,868  |                           |  |   | 5,002        |   |  |       | (2,461 | ) |  |   | 31,409  |  
|Bowling center operating expenses                                                                        |  |                    |        |   |                       |   | 82,617  |                           |  |   | 3,402        |   |  |       | (76    | ) |  |   | 85,943  |  
|Selling, general and administrative expenses                                                             |  |                    | 3,208   |   |                       |   | 5,849   |                           |  |   | 1,350        |   |  |       |       |   |  |   | 10,407  |  
|Asset impairment                                                                                         |  |                    |        |   |                       |   | 443     |                           |  |   |             |   |  |       |       |   |  |   | 443     |  
|Depreciation and amortization                                                                            |  |                    | 421     |   |                       |   | 9,694   |                           |  |   | 246          |   |  |       | (9     | ) |  |   | 10,352  |  
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Total operating expenses                                                                                 |  |                    | 3,629   |   |                       |   | 127,471 |                           |  |   | 10,000       |   |  |       | (2,546 | ) |  |   | 138,554 |  
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Operating income (loss)                                                                                  |  |                    | (3,629  | ) |                       |   | (11,705 | )                         |  |   | (141         | ) |  |       | (336   | ) |  |   | (15,811 | )
|                                                                                                         |  |                    |         |   |                      
|Non-operating (income) expenses:                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Interest expense                                                                                         |  |                    | 5,451   |   |                       |   | 277     |                           |  |   | 5            |   |  |       | (232   | ) |  |   | 5,501   |  
|Interest income                                                                                          |  |                    | (454    | ) |                       |   | (144    | )                         |  |   | 40           |   |  |       | 232    |   |  |   | (326    | )
|Other expense (income)                                                                                   |  |                    | (4,820  | ) |                       |   | 2,720   |                           |  |   | 2,296        |   |  |       |       |   |  |   | 196     |  
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Total non-operating expenses, net                                                                        |  |                    | 177     |   |                       |   | 2,853   |                           |  |   | 2,341        |   |  |       |       |   |  |   | 5,371   |  
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries |  |                    | (3,806  | ) |                       |   | (14,558 | )                         |  |   | (2,482       | ) |  |       | (336   | ) |  |   | (21,182 | )
|                                                                                                         |  |                    |         |   |                      
|Provision for income taxes                                                                               |  |                    | 13      |   |                       |   | (817    | )                         |  |   | 214          |   |  |       |       |   |  |   | (590    | )
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Income (loss) from continuing operations before equity in income (loss) of subsidiaries                  |  |                    | (3,819  | ) |                       |   | (13,741 | )                         |  |   | (2,696       | ) |  |       | (336   | ) |  |   | (20,592 | )
|                                                                                                         |  |                    |         |   |                      
|Income from discontinued operations, net of tax                                                          |  |                    |        |   |                       |   | 63      |                           |  |   |             |   |  |       |       |   |  |   | 63      |  
|                                                                                                         |  |                    |         |   |                      
|Equity in income (loss) of subsidiaries                                                                  |  |                    | (16,710 | ) |                       |   |        |                           |  |   |             |   |  |       | 16,710 |   |  |   |        |  
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Net income (loss)                                                                                        |  | $                  | (20,529 | ) |                       | $ | (13,678 | )                         |  | $ | (2,696       | ) |  | $     | 16,374 |   |  | $ | (20,529 | )
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  



17



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##### Table of Contents

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



|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|-------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ------ | - |  | - | ------- | -
|                                                                                                         |  | 2005 First Quarter |        
|                                                                                                         |  | Worldwide          |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |       
|Operating revenue                                                                                        |  | $                  |        |   |                       | $ | 109,268 |                           |  | $ | 9,590        |   |  | $     | (3,725 | ) |  | $ | 115,133 |  
|                                                                                                         |  |                    |         |   |                      
|Operating expenses:                                                                                      |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Cost of goods sold                                                                                       |  |                    |        |   |                       |   | 24,152  |                           |  |   | 5,273        |   |  |       | (3,515 | ) |  |   | 25,910  |  
|Bowling center operating expenses                                                                        |  |                    |        |   |                       |   | 78,613  |                           |  |   | 4,755        |   |  |       | (210   | ) |  |   | 83,158  |  
|Selling, general and administrative expenses                                                             |  |                    | 5,318   |   |                       |   | 4,383   |                           |  |   | 623          |   |  |       |       |   |  |   | 10,324  |  
|Restructuring, refinancing and other                                                                     |  |                    |        |   |                       |   | 1,303   |                           |  |   |             |   |  |       |       |   |  |   | 1,303   |  
|Depreciation and amortization                                                                            |  |                    | 430     |   |                       |   | 10,621  |                           |  |   | 137          |   |  |       | (9     | ) |  |   | 11,179  |  
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Total operating expenses                                                                                 |  |                    | 5,748   |   |                       |   | 119,072 |                           |  |   | 10,788       |   |  |       | (3,734 | ) |  |   | 131,874 |  
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Operating income (loss)                                                                                  |  |                    | (5,748  | ) |                       |   | (9,804  | )                         |  |   | (1,198       | ) |  |       | 9      |   |  |   | (16,741 | )
|                                                                                                         |  |                    |         |   |                      
|Non-operating (income) expenses:                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Interest expense                                                                                         |  |                    | 6,429   |   |                       |   | 73      |                           |  |   | 34           |   |  |       | (34    | ) |  |   | 6,502   |  
|Interest income                                                                                          |  |                    | (34     | ) |                       |   | (18     | )                         |  |   | (8           | ) |  |       | 34     |   |  |   | (26     | )
|Other expense (income)                                                                                   |  |                    | (7,481  | ) |                       |   | 6,160   |                           |  |   | (3,331       | ) |  |       |       |   |  |   | (4,652  | )
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Total non-operating expenses, net                                                                        |  |                    | (1,086  | ) |                       |   | 6,215   |                           |  |   | (3,305       | ) |  |       |       |   |  |   | 1,824   |  
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Income (loss) from continuing operations before income taxes and equity in income (loss) of subsidiaries |  |                    | (4,662  | ) |                       |   | (16,019 | )                         |  |   | 2,107        |   |  |       | 9      |   |  |   | (18,565 | )
|                                                                                                         |  |                    |         |   |                      
|Provision (benefit) for income taxes                                                                     |  |                    | 122     |   |                       |   | (795    | )                         |  |   | 1,045        |   |  |       |       |   |  |   | 372     |  
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Income (loss) from continuing operations before equity income (loss) of subsidiaries                     |  |                    | (4,784  | ) |                       |   | (15,224 | )                         |  |   | 1,062        |   |  |       | 9      |   |  |   | (18,937 | )
|                                                                                                         |  |                    |         |   |                      
|Income from discontinued operations, net of tax                                                          |  |                    |        |   |                       |   | 5,756   |                           |  |   | 241          |   |  |       |       |   |  |   | 5,997   |  
|                                                                                                         |  |                    |         |   |                      
|Equity in income (loss) of subsidiaries                                                                  |  |                    | (8,156  | ) |                       |   |        |                           |  |   |             |   |  |       | 8,156  |   |  |   |        |  
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  
|Net income (loss)                                                                                        |  | $                  | (12,940 | ) |                       | $ | (9,468  | )                         |  | $ | 1,303        |   |  | $     | 8,165  |   |  | $ | (12,940 | )
|                                                                                                         |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |        |   |  |   |         |  



18



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##### Table of Contents

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



|                                                                               |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |      |   |  |   |         |  
|------------------------------------------------------------------------------ |  | ------------------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | ---- | - |  | - | ------- | -
|                                                                               |  | 2006 First Quarter |        
|                                                                               |  | Worldwide          |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |     
|Net cash provided by (used in) operating activities from continuing operations |  | $                  | (32,470 | ) |                       | $ | 19,594  |                           |  | $ | 835          |   |  | $     | (822 | ) |  | $ | (12,863 | )
|                                                                               |  |                    |         |   |                      
|Cash flows from investing activities:                                          |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |      |   |  |   |         |  
|Purchases of property and equipment                                            |  |                    | 241     |   |                       |   | (18,103 | )                         |  |   | (159         | ) |  |       | 546  |   |  |   | (17,475 | )
|Proceeds from the sale of property and equipment                               |  |                    |        |   |                       |   | 52      |                           |  |   |             |   |  |       |     |   |  |   | 52      |  
|                                                                               |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |      |   |  |   |         |  
|Net cash provided by (used in) investing activities                            |  |                    | 241     |   |                       |   | (18,051 | )                         |  |   | (159         | ) |  |       | 546  |   |  |   | (17,423 | )
|                                                                               |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |      |   |  |   |         |  
|Cash flows from financing activities:                                          |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |      |   |  |   |         |  
|Borrowings under revolving line of credit                                      |  |                    |        |   |                       |   |        |                           |  |   |             |   |  |       |     |   |  |   |        |  
|Repayments under long-term debt                                                |  |                    | (199    | ) |                       |   |        |                           |  |   |             |   |  |       |     |   |  |   | (199    | )
|Repayment under capital lease obligations                                      |  |                    |        |   |                       |   | (70     | )                         |  |   |             |   |  |       |     |   |  |   | (70     | )
|                                                                               |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |      |   |  |   |         |  
|Net cash provided by (used in) financing activities from continuing operations |  |                    | (199    | ) |                       |   | (70     | )                         |  |   |             |   |  |       |     |   |  |   | (269    | )
|                                                                               |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |      |   |  |   |         |  
|Effect of exchange rates on cash                                               |  |                    |        |   |                       |   |        |                           |  |   |             |   |  |       | 276  |   |  |   | 276     |  
|Net cash provided by (used in) discontinued operations                         |  |                    |        |   |                       |   | (427    | )                         |  |   |             |   |  |       |     |   |  |   | (427    | )
|                                                                               |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |      |   |  |   |         |  
|Net increase (decrease) in cash                                                |  |                    | (32,428 | ) |                       |   | 1,046   |                           |  |   | 676          |   |  |       |     |   |  |   | (30,706 | )
|                                                                               |  |                    |         |   |                      
|Cash at beginning of period                                                    |  |                    | 39,537  |   |                       |   | 4,045   |                           |  |   | 1,672        |   |  |       |     |   |  |   | 45,254  |  
|                                                                               |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |      |   |  |   |         |  
|Cash at end of period                                                          |  | $                  | 7,109   |   |                       | $ | 5,091   |                           |  | $ | 2,348        |   |  | $     |     |   |  | $ | 14,548  |  
|                                                                               |  |                    |         |   |                       |   |         |                           |  |   |              |   |  |       |      |   |  |   |         |  



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##### Table of Contents

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



|                                                                               |  |                    |        |   |                       |   |         |                           |  |   |              |   |  |       |     |   |  |   |         |  
|------------------------------------------------------------------------------ |  | ------------------ | ------ | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ----- | --- | - |  | - | ------- | -
|                                                                               |  | 2005 First Quarter |       
|                                                                               |  | Worldwide          |        |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Total |    
|Net cash provided by (used in) operating activities from continuing operations |  | $                  | (5,961 | ) |                       | $ | 10,470  |                           |  | $ | (11,593      | ) |  | $     | 64  |   |  | $ | (7,020  | )
|                                                                               |  |                    |        |   |                      
|Cash flows from investing activities:                                          |  |                    |        |   |                       |   |         |                           |  |   |              |   |  |       |     |   |  |   |         |  
|Purchases of property and equipment                                            |  |                    | (782   | ) |                       |   | (10,629 | )                         |  |   | (85          | ) |  |       |    |   |  |   | (11,496 | )
|Proceeds from the sale of property and equipment                               |  |                    |       |   |                       |   | 1,515   |                           |  |   |             |   |  |       |    |   |  |   | 1,515   |  
|                                                                               |  |                    |        |   |                       |   |         |                           |  |   |              |   |  |       |     |   |  |   |         |  
|Net cash provided by (used in) investing activities from continuing operations |  |                    | (782   | ) |                       |   | (9,114  | )                         |  |   | (85          | ) |  |       |    |   |  |   | (9,981  | )
|                                                                               |  |                    |        |   |                       |   |         |                           |  |   |              |   |  |       |     |   |  |   |         |  
|Cash flows from financing activities:                                          |  |                    |        |   |                       |   |         |                           |  |   |              |   |  |       |     |   |  |   |         |  
|Borrowings under revolving line of credit                                      |  |                    | 8,000  |   |                       |   |        |                           |  |   |             |   |  |       |    |   |  |   | 8,000   |  
|Repayments under long-term debt                                                |  |                    | (643   | ) |                       |   |        |                           |  |   |             |   |  |       |    |   |  |   | (643    | )
|Repayment under capital lease obligations                                      |  |                    |       |   |                       |   | (140    | )                         |  |   |             |   |  |       |    |   |  |   | (140    | )
|                                                                               |  |                    |        |   |                       |   |         |                           |  |   |              |   |  |       |     |   |  |   |         |  
|Net cash provided by (used in) financing activities from continuing operations |  |                    | 7,357  |   |                       |   | (140    | )                         |  |   |             |   |  |       |    |   |  |   | 7,217   |  
|                                                                               |  |                    |        |   |                       |   |         |                           |  |   |              |   |  |       |     |   |  |   |         |  
|Effect of exchange rates on cash                                               |  |                    |       |   |                       |   |        |                           |  |   |             |   |  |       | (64 | ) |  |   | (64     | )
|Net cash provided by (used in) discontinued operations                         |  |                    |       |   |                       |   | (53     | )                         |  |   | 13,451       |   |  |       |    |   |  |   | 13,398  |  
|                                                                               |  |                    |        |   |                       |   |         |                           |  |   |              |   |  |       |     |   |  |   |         |  
|Net increase in cash                                                           |  |                    | 614    |   |                       |   | 1,163   |                           |  |   | 1,773        |   |  |       |    |   |  |   | 3,550   |  
|                                                                               |  |                    |        |   |                      
|Cash at beginning of period                                                    |  |                    | 3,379  |   |                       |   | 6,484   |                           |  |   | 2,871        |   |  |       |    |   |  |   | 12,734  |  
|                                                                               |  |                    |        |   |                       |   |         |                           |  |   |              |   |  |       |     |   |  |   |         |  
|Cash at end of period                                                          |  | $                  | 3,993  |   |                       | $ | 7,647   |                           |  | $ | 4,644        |   |  | $     |    |   |  | $ | 16,284  |  
|                                                                               |  |                    |        |   |                       |   |         |                           |  |   |              |   |  |       |     |   |  |   |         |  



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##### Table of Contents

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 First Quarter compared with 2005 First Quarter
| | - |  | ---------------------------------------------------



| |  |  | Performance by Business Segment
| | - |  | -------------------------------



Centers



| |  |  | 2006 First Quarter compared with 2005 First Quarter
| | - |  | ---------------------------------------------------



Products



| |  |  | 2006 First Quarter compared with 2005 First Quarter
| | - |  | ---------------------------------------------------



| |  |  | 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 (Worldwide), and our subsidiaries (Worldwide and our subsidiaries may be referred to as
the Company, we, us, or our) are engaged in two business segments: the operation of bowling centers (Centers); and the manufacture and sale of bowling equipment, such as automatic pinspotters, automatic scoring equipment, bowling pins,
lanes, ball returns, lane machines, bowling center supplies and the resale of other related products, including bowling bags and shoes (collectively, Products).



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



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



Centers is the largest operator of bowling centers in the world with 365 centers in operation as of October 2, 2005, comprised of 350 centers in the U.S. and 15 bowling centers operating outside the U.S. On September 30, 2004, we
sold our 33 bowling centers in the United Kingdom for approximately $69.9 million and on February 8, 2005, we sold our 42 bowling centers in Australia for approximately $44.7 million. We no longer have bowling center operations in the United
Kingdom and Australia. The results of operations for the bowling centers in these countries have been reported as discontinued operations for all periods presented.



Products is one of the largest manufacturers of bowling center equipment in the world. Products revenue consists of two
major sales categories: New Center Packages (NCPs), which is all of the equipment necessary to outfit one lane at a new or existing bowling center; and Modernization and Consumer Products, which is equipment used to upgrade an existing
center, spare parts, pins, supplies and consumable products used in the operation of a center, and bowling balls and ancillary products for resale to bowlers.



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##### Table of Contents

We are marketing for sale our billiards division, which was formerly a part of the Products segment and
manufactures and sells Playmaster, Highland and Renaissance brands of billiard tables. The results of operations for the billiards division have been reported as discontinued operations for all periods presented.



During the first quarter of fiscal year 2006 (the 2006 First
Quarter), Worldwide served as the corporate headquarters of the Company. Its employees provided management and administrative services for Centers and certain administrative services for Products.



Worldwides business operations and 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.



QubicaAMF Worldwide, LLC,
formerly known as AMF Bowling Products, LLC (AMF Products), operated our Products business during the 2006 First Quarter. AMF Products was a wholly-owned indirect, subsidiary of Worldwide for the 2006 First Quarter. Since June 7,
2005, our billiards division operated in AMF Billiards & Games LLC, which is a wholly-owned subsidiary of Worldwide.



Joint Venture



On October 7, 2005, we completed the previously announced transactions to form the joint venture with the shareholder of Italian-based Qubica, S.p.A.
(Qubica). In these transactions, AMF Holdings, Inc. (AMF Holdings), a subsidiary of Worldwide, contributed the equity of AMF Products and substantially all of the other subsidiaries that conduct our Products business to
QubicaAMF Worldwide, S.à.R.L. (the Joint Venture), a company organized under the laws of Luxembourg, 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. On September 16, 2005, in anticipation of creating the Joint Venture, the name of AMF Products was changed to QubicaAMF Worldwide,
LLC. Qubica also changed its name to QubicaAMF Europe S.p.A. Other subsidiaries of AMF Products and Qubica have changed their names to reflect the name QubicaAMF.



In creating the Joint Venture, Worldwide and certain of its non-Products subsidiaries entered into various agreements with
the Joint Venture or its subsidiaries. These agreements include, but are not limited to, a supply agreement between AMF 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 that allows the Joint Venture 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 (the JV Option Plan) and intends to award certain managers of the Joint Venture options to purchase interests in the Joint Venture. Upon exercise of any
options, the ownership percentage of AMF Holdings and Qubica will be equally reduced.



Subject to options being exercised under the Option Plan, AMF Holdings and the shareholder of Qubica own 50% of the equity of the Joint Venture. Each has the right to select three (3) members of the board of
managers of the Joint Venture. John Walker, who was the President of our Products business, is now the chief executive officer of the Joint Venture. Christopher Caesar, formerly our chief financial officer, now serves as its chief financial officer.
The headquarters of the Joint Venture is located at the present offices of Products, 8100 AMF Drive, Mechanicsville, Virginia with the headquarters of its automatic scoring division being located in Bologna, Italy at the offices of Qubica.



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##### Table of Contents

The Joint Venture is a holding company. Its operations are conducted and its assets held in its operating
subsidiaries. AMF Products and Qubica are the principal operating subsidiaries and AMF Products continues to own the assets and employ the same employees as it did prior to the formation of the Joint Venture.



Upon creation of the Joint Venture, the Company retained ownership of its
subsidiary that conducts the Products business in the United Kingdom. However, the services of that subsidiary are made available to the Joint Venture under a services agreement. In addition, the billiards division was not contributed to the Joint
Venture.



Since the formation the Joint Venture, AMF Products
is no longer a guarantor of our obligations under our senior secured credit agreement (the Credit Agreement) and our $150.0 million 10% Subordinated Notes due in 2010 (the Subordinated Notes) and liens against assets of AMF
Products that secured its guarantee have been released. In addition, the Joint Venture and certain of its subsidiaries, have entered into a credit agreement for a $30.0 million asset based loan. 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.



We will account for our investment in the Joint Venture using the equity method and management will determine how the equity method will affect certain
presentations in our future reports, such as our critical accounting policies, segment reporting, business strategies and properties.



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 2006 has 52 weeks and fiscal
year 2005 had 53 weeks, with the extra week being reported in the fourth quarter. As a result of the additional week in fiscal year 2005, the 2006 First Quarter ended about one week later than the first quarter in fiscal year 2005.



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.



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.



|                                                      |  |                     
|----------------------------------------------------- |  | --------------------
|Period                                                |  | Referred to as      
|Results from July 4, 2005 through October 2, 2005     |  | 2006 First Quarter
|                                                      | 
|Results from June 28, 2004 through September 26, 2004 |  | 2005 First Quarter



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##### Table of Contents

Consolidated Results



|                                                    |  |                   |       |   |                   |   |       |  
|--------------------------------------------------- |  | ----------------- | ----- | - | ----------------- | - | ----- | -
|(In millions)                                       |  | 2006 FirstQuarter |       |   | 2005 FirstQuarter |  
|Operating revenue                                   |  | $                 | 122.7 |   |                   | $ | 115.1 |  
|                                                    |  |                  
|Cost of goods sold                                  |  |                   | 31.4  |   |                   |   | 25.9  |  
|Bowling center operating expenses                   |  |                   | 85.9  |   |                   |   | 83.1  |  
|Selling, general and administrative expenses        |  |                   | 10.4  |   |                   |   | 10.3  |  
|Asset impairment                                    |  |                   | 0.4   |   |                   |   | 1.3   |  
|Depreciation and amortization                       |  |                   | 10.4  |   |                   |   | 11.2  |  
|                                                    |  |                   |       |   |                   |   |       |  
|Operating loss                                      |  |                   | (15.8 | ) |                   |   | (16.7 | )
|                                                    |  |                  
|Interest expense, net                               |  |                   | 5.2   |   |                   |   | 6.5   |  
|Other (income) expense, net                         |  |                   | 0.2   |   |                   |   | (4.7  | )
|                                                    |  |                   |       |   |                   |   |       |  
|Loss from continuing operations before income taxes |  |                   | (21.2 | ) |                   |   | (18.5 | )
|Provision for (benefit from) income taxes           |  |                   | (0.6  | ) |                   |   | 0.4   |  
|                                                    |  |                   |       |   |                   |   |       |  
|Loss from continuing operations                     |  |                   | (20.6 | ) |                   |   | (18.9 | )
|                                                    |  |                  
|Income from discontinued operations, net of tax     |  |                   | 0.1   |   |                   |   | 6.0   |  
|                                                    |  |                   |       |   |                   |   |       |  
|Net loss                                            |  | $                 | (20.5 | ) |                   | $ | (12.9 | )
|                                                    |  |                   |       |   |                   |   |       |  



2006 First Quarter compared with
2005 First Quarter



Revenue



Consolidated operating revenue was $122.7 million in the 2006 First Quarter,
an increase of $7.6 million, or 6.6%, compared with the 2005 First Quarter. This increase was partially attributable to an $8.0 million increase in U.S. constant center revenue due primarily to an increase in open lineage. In addition, Products
revenue increased $1.7 million, or 5.2%, when compared with the prior year period. These increases were partially offset by a $3.0 million decrease in revenue as a result of closed centers.



Depreciation and Amortization



Depreciation and amortization decreased $0.8 million, or 7.1%, in the 2006
First Quarter compared with the 2005 First Quarter.



Asset Impairment



In the 2006 First Quarter we recorded $0.4 million
related to asset impairment charges representing the difference between the fair market value and carrying value of impaired assets in the U.S primarily related to Products and the impact of the Joint Venture transactions. In the 2005 First Quarter,
we recorded $1.3 million related to asset impairment charges related to under performing bowling centers.



Interest Expense, net



Interest expense, net decreased $1.3 million, or 20.0%, in the 2006 First Quarter compared with the 2005 First Quarter, primarily the result of lower principal amounts outstanding under both our Credit Agreement and Subordinated Notes.



24



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##### Table of Contents

Provision for Income Taxes



We had a $0.6 million benefit from income taxes in the 2006 First Quarter compared with income tax expense of $0.4 million
in the 2005 First Quarter.



Net Loss



Net loss for the 2006 First Quarter totaled $20.5 million compared with a
net loss of $12.9 million in the 2005 First Quarter. This change was primarily attributable to the changes discussed above as well as the decrease in net income from discontinued operations of $5.9 million. In the 2006 First Quarter, we incurred
$1.9 million of expenses related to strategic initiatives compared to $0.5 million in the 2005 First Quarter. In the 2006 First Quarter we also incurred $0.1 million of expenses that were previously recorded at our United Kingdom bowling center
operation and $0.1 million related to actions alleging violations of federal legislation involving unsolicited communications. Additionally, in the 2005 First Quarter, we recognized $0.5 million in gains related to the disposal of two Products
branches and a $4.2 million gain related to an arbitration settlement regarding one of our leases in France.



Comprehensive Loss



Comprehensive loss for the 2006 First Quarter totaled $20.4 million compared with $14.8 million in the 2005 First Quarter. The increase in the loss was primarily attributable to the reduction in income from discontinued operations of $5.9
million as well as the addition of the minimum pension liability of $4.7 million in quarter four of fiscal year 2005.



Centers



While Centers results reflect worldwide bowling centers operations, 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.



|                                  |  |                   |      |   |                   |   |       |  
|--------------------------------- |  | ----------------- | ---- | - | ----------------- | - | ----- | -
|                                  |  | 2006 FirstQuarter |      |   | 2005 FirstQuarter |  
|Operating revenue (a)             |  | $                 | 95.7 |   |                   | $ | 90.4  |  
|Cost of goods sold                |  |                   | 9.0  |   |                   |   | 8.3   |  
|Bowling center operating expenses |  |                   | 87.4 |   |                   |   | 83.5  |  
|Asset impairment                  |  |                   | 0.1  |   |                   |   | 1.3   |  
|Depreciation and amortization     |  |                   | 8.6  |   |                   |   | 9.1   |  
|                                  |  |                   |      |   |                   |   |       |  
|Operating loss                    |  | $                 | (9.4 | ) |                   | $ | (11.8 | )
|                                  |  |                   |      |   |                   |   |       |  

---

|(a) | Before intersegment eliminations.
|--- | ---------------------------------



To facilitate a meaningful comparison, the constant center results reflect 365 centers (350 U.S. Centers and 15 international centers). Constant centers
include all centers that have been in operation one full fiscal year as of July 3, 2005.



25



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##### Table of Contents

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



|                  |  |                   |   |  |                   |  
|----------------- |  | ----------------- | - |  | ----------------- | -
|                  |  | 2006 FirstQuarter |   |  | 2005 FirstQuarter |  
|Revenue:          |  |                   |   |  |                   |  
|Bowling           |  | 56.4              | % |  | 56.6              | %
|Food and beverage |  | 26.5              | % |  | 26.6              | %
|Ancillary sources |  | 17.1              | % |  | 16.8              | %



2006 First Quarter compared with
2005 First Quarter



Centers operating revenue for the
2006 First Quarter increased $5.3 million, or 5.9%, as compared to the 2005 First Quarter. U.S. constant center revenue increased $8.0 million, or 9.7%, primarily the result of an increase in open lineage. Open play revenue reflected growth as a
result of increased traffic and better controls surrounding pricing discounts. Partially offsetting this increase is a decline in revenue of $3.0 million attributable to the closure of 21 bowling centers since June 27, 2004. Additionally,
international constant center revenue increased $0.3 million, or 7.0%.



Centers operating expenses increased $3.9 million, or 4.7%. This increase was primarily due to increases in U.S. constant center operating expenses of $4.7 million, or 6.6%, primarily the result of a 5.5% increase in payroll expenses. Also
contributing to this increase was an increase in utilities, insurance and maintenance expenses. The 2006 First Quarter also includes $0.1 million in casualty losses incurred as a result of Hurricane Katrina. In addition, Centers includes expenses
totaling $2.3 million that were previously recorded at Worldwide. Partially offsetting these increases was a decrease in expenses of $3.9 million due to closed bowling centers. As a percentage of revenue, Centers operating expenses were 91.3% for
the 2006 First Quarter and 92.4% for the 2005 First Quarter.



Depreciation and amortization decreased $0.5 million, or 5.5%, primarily attributable to the closure of 21 centers since June 27, 2004.



Operating loss was $9.4 million in the 2006 First Quarter versus operating loss of $11.8 million in the 2005 First Quarter 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 $0.1 million in the 2006 First Quarter compared with $1.3
million in the 2005 First Quarter.



26



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##### Table of Contents

Products



|                                             |  |                   |      |   |                   |   |      |  
|-------------------------------------------- |  | ----------------- | ---- | - | ----------------- | - | ---- | -
|                                             |  | 2006 FirstQuarter |      |   | 2005 FirstQuarter |  
|Products (a):                                |  |                   |      |   |                   |   |      |  
|Operating revenue                            |  | $                 | 34.3 |   |                   | $ | 32.6 |  
|Cost of goods sold                           |  |                   | 27.7 |   |                   |   | 25.1 |  
|                                             |  |                   |      |   |                   |   |      |  
|Gross profit                                 |  |                   | 6.6  |   |                   |   | 7.5  |  
|                                             |  |                  
|Selling, general and administrative expenses |  |                   | 7.2  |   |                   |   | 5.0  |  
|Asset impairment                             |  |                   | 0.3  |   |                   |   |     |  
|Depreciation and amortization                |  |                   | 1.4  |   |                   |   | 1.7  |  
|                                             |  |                   |      |   |                   |   |      |  
|Operating income (loss)                      |  | $                 | (2.3 | ) |                   | $ | 0.8  |  
|                                             |  |                   |      |   |                   |   |      |  
|Selected data:                               |  |                   |      |   |                   |   |      |  
|Gross profit margin                          |  |                   | 19.2 | % |                   |   | 23.0 | %
|                                             |  |                   |      |   |                   |   |      |  

---

|(a) | Before intersegment eliminations.
|--- | ---------------------------------



2006 First Quarter compared with 2005 First Quarter



Products operating revenue increased $1.7 million, or 5.2%, primarily attributable to increased revenue in Europe and Japan of $2.0 million and $0.5
million, respectively. These increases were partially offset by a decrease in revenue in the U.S. of $0.6 million.



Gross profit decreased $0.9 million, or 12.0%. The gross profit margin was 19.2% in the 2006 First Quarter compared with 23.0% in the 2005 First Quarter.
In June 2005, Products began selling scoring products sourced from Qubica. The margin on these sales during the 2006 First Quarter was substantially lower than those on AMF scoring products in the past.



Products selling, general and administrative expenses increased $2.2 million,
or 44.0%, compared with the prior year quarter. The increase in expenses is primarily attributable to the recognition of $0.7 million in gains on the disposal of two Products branches. In the 2006 First Quarter, Products incurred $0.1 million of
expenses that were previously recorded at our United Kingdom bowling center operation. In the 2006 First Quarter, Products also incurred $0.6 million in expenses related to the Joint Venture transaction.



Depreciation and amortization decreased $0.3 million, or 17.6%.



Operating loss was $2.3 million in the 2006 First Quarter, compared with
operating income of $0.8 million in the 2005 First Quarter. The decrease in operating income is primarily due to the decrease in gross profit as well as the increase in selling, general and administrative expenses as discussed above. Additionally,
Products recorded charges of $0.3 million related to asset impairment in the 2006 First Quarter.



Financial Condition



General



As of October 2, 2005, we had $78.4 million in
principal outstanding under our Credit Agreement. No borrowings were outstanding under the Revolver as of the end of the 2006 First Quarter and outstanding standby letters of credit issued under the Revolver totaled $17,326, leaving $22,674
available for additional borrowings or letters of credit.



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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 October 2, 2005.



Liquidity



As of October 2, 2005, working capital was $1.2 million compared with working capital of $28.1 million at July 3,
2005. Excluding assets and liabilities held for sale, working capital was a deficit of $3.4 million at October 2, 2005. This change was primarily attributable to a decrease in cash of $30.7 million as a result of normal seasonal operating
trends and higher levels of capital expenditures.



In June
2005, we entered into the Second Amendment to the Credit Agreement (the Second Amendment), 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% of such net cash proceeds at a price equal to 102% of the aggregate principal amount being
purchased.



Operating Cash Flow



|                                         |  |                   |       |   |                   |   |       |  
|---------------------------------------- |  | ----------------- | ----- | - | ----------------- | - | ----- | -
|                                         |  | 2006 FirstQuarter |       |   | 2005 FirstQuarter |  
|Cash flows from operating activities:    |  |                   |       |   |                   |   |       |  
|Before changes in assets and liabilities |  | $                 | (9.7  | ) |                   | $ | (0.2  | )
|Working capital                          |  |                   | (3.4  | ) |                   |   | (15.5 | )
|Other changes                            |  |                   | 0.3   |   |                   |   | 2.7   |  
|Discontinued operations                  |  |                   | (0.1  | ) |                   |   | 6.0   |  
|                                         |  |                   |       |   |                   |   |       |  
|Total                                    |  | $                 | (12.9 | ) |                   | $ | (7.0  | )
|                                         |  |                   |       |   |                   |   |       |  



Net cash used in
operating activities was $12.9 million in the 2006 First Quarter compared with $7.0 million in the 2005 First Quarter, an increase of $5.9 million. The increase in net cash used in operating activities is primarily the result of an increase in cash
used by working capital.



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Investing



|                                                 |  |                   |       |   |                   |   |       |  
|------------------------------------------------ |  | ----------------- | ----- | - | ----------------- | - | ----- | -
|                                                 |  | 2006 FirstQuarter |       |   | 2005 FirstQuarter |  
|Cash flows from investing activities:            |  |                   |       |   |                   |   |       |  
|Purchases of property and equipment              |  | $                 | (17.5 | ) |                   | $ | (11.5 | )
|Proceeds from the sale of property and equipment |  |                   | 0.1   |   |                   |   | 1.5   |  
|                                                 |  |                   |       |   |                   |   |       |  
|Total                                            |  | $                 | (17.4 | ) |                   | $ | (10.0 | )
|                                                 |  |                   |       |   |                   |   |       |  



Net cash used in
investing activities was $17.4 million in the 2006 First Quarter compared with net cash used in investing activities of $10.0 million in the 2005 First Quarter. This change was a result of capital expenditures primarily related to Centers
performance improvement initiatives. In the 2005 First Quarter, we received proceeds of $1.5 million related to excess property in the U.S.



Financing



|                                         |  |                   |      |   |                   |   |      |  
|---------------------------------------- |  | ----------------- | ---- | - | ----------------- | - | ---- | -
|                                         |  | 2006 FirstQuarter |      |   | 2005 FirstQuarter |  
|Cash flows from financing activities:    |  |                   |      |   |                   |   |      |  
|Borrowings (repayments) of debt, net     |  | $                 | (0.2 | ) |                   | $ | 7.3  |  
|Payments under capital lease obligations |  |                   | (0.1 | ) |                   |   | (0.1 | )
|                                         |  |                   |      |   |                   |   |      |  
|Total                                    |  | $                 | (0.3 | ) |                   | $ | 7.2  |  
|                                         |  |                   |      |   |                   |   |      |  



Net cash used in
financing activities was $0.3 million in the 2006 First Quarter compared with net cash provided by financing activities of $7.2 million in the 2005 First Quarter. In the 2006 First Quarter, we made scheduled payments of approximately $0.2 million on
the Term Loan. In the 2005 First Quarter, we borrowed $8.0 million on our revolving line of credit and made payments of approximately $0.6 million on the Term Loan.



Capital Resources



The following table shows our debt balances:



|                                     |  |                |       |             |   |      
|------------------------------------ |  | -------------- | ----- | ----------- | - | -----
|                                     |  | October 2,2005 |       | July 3,2005
|Term Loan                            |  | $              | 78.4  |             | $ | 78.6 
|Subordinated Notes, 10%, due 2010    |  |                | 123.9 |             |   | 123.9
|Revolver                             |  |                |      |             |   |     
|Mortgage note and capitalized leases |  |                | 2.3   |             |   | 2.3  
|                                     |  |                |       |             |   |      
|Total debt                           |  | $              | 204.6 |             | $ | 204.8
|                                     |  |                |       |             |   |      



In September 2004, we
entered into a First Amendment to Credit Agreement (the Amendment). The Amendment, among other things, requires us to prepay loans and/or cash collateralize or pay certain letter of credit obligations under the Credit Agreement in an
amount equal to 20% of the net cash proceeds from any sale, transfer or other disposition of the assets or stock of certain of our foreign subsidiaries. The 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. During fiscal year 2005, we repurchased and
cancelled $26.1 million of our Subordinated Notes.



In June
2005, we entered into the Second Amendment. The Second Amendment, among other things, provided us with the ability to add a synthetic letter of credit facility that would allow the issuance of up to $20.0 million of letters of credit, amended
certain definitions and covenants to permit the formation of the Joint Venture, amended



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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 requirement to make mandatory excess cash flow prepayments to, among other things, exclude certain adjustments and expenses resulting from certain corporate
transactions. The Second Amendment accounted for the loss of cash flow as a result of the divestiture of certain international center operations.



As of the end of the 2006 First Quarter, we had approximately $17.3 million available for borrowing under the Revolver, with no amounts outstanding and
approximately $22.7 million of issued but undrawn standby letters of credit. The Revolver continues to be available for our working capital and general corporate needs, subject to customary borrowing conditions. In addition, the Second Amendment
provides us with the ability to add a synthetic letter of credit.



Both 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
October 2, 2005. There can be no assurance that we will continue to be in compliance with these 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.



On
September 30, 2004, we sold 33 bowling centers in the United Kingdom for approximately $69.9 million. On February 8, 2005, we sold our 42 operating bowling centers in Australia for approximately $44.7 million. We no longer have bowling
center operations in the United Kingdom or Australia.



Capital Expenditures



|             |  |                   |      |   |                   |   |     
|------------ |  | ----------------- | ---- | - | ----------------- | - | ----
|             |  | 2006 FirstQuarter |      |   | 2005 FirstQuarter
|Centers      |  | $                 | 17.2 |   |                   | $ | 10.1
|Products     |  |                   | 1.0  |   |                   |   | 0.6 
|Corporate    |  |                   | (0.2 | ) |                   |   | 0.8 
|Eliminations |  |                   | (0.5 | ) |                   |   |    
|             |  |                   |      |   |                   |   |     
|Total        |  | $                 | 17.5 |   |                   | $ | 11.5
|             |  |                   |      |   |                   |   |     



Capital expenditures
increased $6.0 million in the 2006 First Quarter compared to the 2005 First Quarter primarily due to increased Centers expenditures related to capital improvements to enhance the appearance of our high performance bowling centers as well as our Long
Island, NY market of bowling centers. Capital expenditures are primarily funded from cash generated from operations.



During the 2006 First Quarter, Corporate transferred assets to Centers in excess of its purchases. The offset to this transfer is included in the Centers
total.



Seasonality and Market Development Cycles



Our 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 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.



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International Operations



Our international operations are subject to the usual risks inherent in operating internationally, including, but not limited to, currency exchange
rate fluctuations, economic and political instability, other disruption of markets, restrictive laws, actions by foreign governments, difficulty in obtaining distribution and support for products, and foreign tax law changes. In addition, local
currency devaluation negatively impacts the translation of operating results from our international bowling centers. Since we have sold our bowling center operations in the United Kingdom and Australia, excluding our investment in the Joint Venture,
our international operations will be less subject to the risks inherent in operating internationally.



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 First Quarter or the 2005 First Quarter.



Critical Accounting Policies



In preparing the consolidated financial statements, GAAP requires management to select and apply accounting policies that involve estimates and judgment.
The following accounting policies may require a higher degree of judgment or involve amounts that could have a material impact on the consolidated financial statements. The critical accounting policies disclosed below have been reviewed with the
Audit Committee of our parent company. The development and selection of the critical accounting policies, and the related disclosure below have been reviewed with the Audit Committee of the board of directors of Kingpin Holdings, LLC. Management
will review its selection of critical accounting policies in light of the formation of the Joint Venture.



Allowance for Doubtful Accounts



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



Impairment of Long-Lived Assets



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



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Inventory Obsolescence



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



Equipment Warranties



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



Self Insurance, Litigation and Claims



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



Deferred Tax Assets



Management periodically reviews our gross deferred tax assets to determine if it is more likely than not that such assets
will be realized. Such periodic reviews include, among other things, the nature and amount of the tax income and expense items, the expected timing when certain assets will be used or liabilities will be required to be reported, available tax
planning strategies, and the reliability of profitability projections of businesses expected to provide future earnings. If after conducting such a review, management determines that the realization of the tax asset does not meet the more
likely than not criteria of SFAS 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.



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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;
| | - |  | --------------------------------------------------------------------------



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| |  |  | 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 in foreign currency exchange rates;
| | - |  | ------------------------------------------------



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



| |  |  | the effect of our prior bankruptcy;
| | - |  | -----------------------------------



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



| |  |  | adverse judgments in existing, pending or future litigation; and
| | - |  | ----------------------------------------------------------------



| |  |  | changes in interest rates.
| | - |  | --------------------------



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



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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 we consider the use of interest rate cap agreements and exchange contracts. At October 2, 2005, no interest rate cap agreements or exchange
contracts 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.



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



Management believes that the foregoing risks are lessened with respect to our
on-going Centers business in the future but they will continue to be applicable to the operations of the Joint 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.



The following table provides information about our fixed and variable-rate debt at October 2, 2005, weighted average interest rates and respective
maturity dates.



|                |  |                |       |                              |       |   |                   |   |                              |  |      |  
|--------------- |  | -------------- | ----- | ---------------------------- | ----- | - | ----------------- | - | ---------------------------- |  | ---- | -
|Maturity Date   |  | FixedRate Debt |       | WeightedAverageInterest Rate |       |   | VariableRate Debt |   | WeightedAverageInterest Rate | 
|March 1, 2010   |  | $              | 123.9 |                              | 10.00 | % |                   |   |                             |  |     |  
|August 27, 2009 |  |                |      |                              |      |   |                   | $ | 78.4                         |  | 6.59 | %



The fair value of the
Term Loan and the Subordinated Notes at October 2, 2005 was approximately $78.4 million and $123.3 million, respectively.



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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 principal executive and financial officer, of the effectiveness of our
disclosure controls and procedures. Based on that evaluation, our management, including the principal executive and 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.



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##### Table of Contents

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 concluded the settlement in two
class 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. Those class settlements
have been made final and the cases have been dismissed.



In
July 2005, the Western Australian Commissioner of State Revenue, (the Commission) 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 Commission. If the assessment is not reversed, management intends to appeal the assessment. The Australian states of South Australia and New South Wales have also made inquiries about the applicability of their land-rich laws
but have not made assessments.



European Community Tariff



The Commission of the European Community (the Commission)
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%. In response, U.S. Congress enacted legislation that was intended to address the issues raised by the EC. The Commission agreed to repeal temporarily the additional
duty retroactive to January 1, 2005 pending a WTO determination that the U.S. legislation adequately responded to global trade rules. On August 12, 2005, a WTO dispute panel ruled that the U.S. did not comply with the earlier WTO decision
against tax benefits for U.S. export firms. If this recent ruling is adopted, the Commission may re-impose the retaliatory tariffs.



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, are 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.



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ITEM 5. OTHER INFORMATION



Effective February 27, 2004, Frederick R. Hipp, the President and Chief Executive Officer of Worldwide, entered into an Executive Securities Agreement with Kingpin Holdings, LLC, the parent of Worldwide (Kingpin). Under the
agreement, Mr. Hipp, among other things, was granted 313,145 options to purchase Kingpin common units at an exercise price of $10 per unit and 104,381 options to purchase Kingpin common units at $20 per unit. One-fourth of the options vest on
each of the first four anniversary dates of the effective date of the agreement. Any unvested options will become vested immediately prior to any sale of Kingpin or Worldwide.



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EXHIBITS



| | (a) | Exhibits
| | --- | --------



|     |  |                                                                                                                                                                                                                                  
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Executive Securities Agreement dated as of February 27, 2004 between Kingpin Holdings, LLC and Frederick R. Hipp.                                                                                                                
|     | 
|31.1 |  | Certification by the Companys Chief Executive and 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 and 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).                                  



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SIGNATURES



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



AMF Bowling Worldwide, Inc.

(registrant)



|                                            |  |                  
|------------------------------------------- |  | -----------------
|/s/ Frederick R. Hipp                       |  | November 16, 2005
|Frederick R. Hipp                           |  |                  
|President and Chief Executive Officer       |  |                  
|(principal executive and financial officer) |  |                  



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