Alliance Laundry Holdings LLC Reports 2006 Sales and Earnings



    RIPON, WIS., March 22 /CNW/ - Alliance Laundry Holdings LLC announced
today results for the year ended December 31, 2006.

    Net revenues for full year 2006 increased $48.8 million, or 15.4%, to
$366.1 million from $317.3 million for the full year 2005. Net loss for 2006
was $1.8 million as compared to a net loss of $29.1 million for 2005. Adjusted
EBITDA (see "About Non-GAAP Financial Measures" below) for 2006 was $63.2
million compared with Adjusted EBITDA of $60.4 million for 2005.

    On July 14, 2006 we completed the acquisition of substantially all of
Laundry System Group NV's Commercial Laundry Division ("CLD") operations which
manufacturers and markets commercial laundry products similar to Alliance
Laundry Systems LLC ("Alliance"). CLD's European headquarters is in Wevelgem,
Belgium, and it has manufacturing facilities in Belgium and sales offices in
Belgium, Norway and Spain ("European Operations"). CLD also had manufacturing
facilities and sales offices in the United States which have been consolidated
into Alliance's operations. The results of operations acquired in the CLD
acquisition have been included in our results since the date of the
acquisition.

    The overall net revenue increase for the year ended 2006 versus 2005 of
$48.8 million was attributable to $16.1 million of higher commercial laundry
revenues, $4.4 million of higher consumer laundry revenue, $5.2 million of
higher service parts revenue and European Operations revenues of $36.5
million, partially offset by $13.4 million of worldwide sales eliminations.

    In announcing the Company's results, CEO and President Thomas F.
L'Esperance said, "We are extremely pleased with the progress made in 2006. We
closed a very complicated acquisition in July. The Marianna transition to
Ripon for washer-extractor production was completed in the third quarter. The
consolidation of the acquired U.S. operations is substantially complete.
Additionally, the equipment and tooling for the acquired IPH washer-extractors
product line is currently being transferred to Ripon from an LSG facility. The
IPH transfer will complete all U.S. acquisition related projects. The Belgium
operation required no project work and is performing very well."

    L'Esperance concluded, "Based on progress to date, we anticipate that the
CLD acquisition and our consolidation efforts in the U.S. will position us for
improved profitability in 2007."

    About Non-GAAP Financial Measures

    In addition to disclosing financial results that are determined in
accordance with generally accepted accounting principles (GAAP), we also
disclose EBITDA and Adjusted EBITDA, which are non-GAAP measures. We have
presented EBITDA and Adjusted EBITDA because certain covenants in our Senior
Credit Facility are tied to ratios based on these measures. "EBITDA"
represents net income (loss) before interest expense, income tax (provision)
benefit and depreciation and amortization, and "Adjusted EBITDA" (as defined
under the Senior Credit Facility) is EBITDA as further adjusted to exclude,
among other things, certain non-recurring expenses and other non-recurring
non-cash charges. EBITDA and Adjusted EBITDA do not represent, and should not
be considered, an alternative to net income or cash flow from operations, as
determined by GAAP, and our calculations thereof may not be comparable to
similarly entitled measures reported by other companies. Our Senior Credit
Facility requires us to satisfy specified financial ratios and tests,
including a maximum of total debt to Adjusted EBITDA and a minimum Adjusted
EBITDA to cash interest expense. To the extent that we fail to maintain either
of these ratios within the limits set forth in the Senior Credit Facility, our
ability to access amounts available under our Revolving Credit Facility would
be limited, our liquidity would be adversely affected and our obligations
under the Senior Credit Facility could be accelerated. In addition, any such
acceleration would constitute an event of default under the indenture
governing the Senior Subordinated Notes (the "Notes Indenture"), and such an
event of default under the Notes Indenture could lead to an acceleration of
our obligations under the Senior Subordinated Notes. A reconciliation of
EBITDA and Adjusted EBITDA with the most directly comparable GAAP measure is
included below for the twelve months ended December 31, 2006 along with the
components of EBITDA and Adjusted EBITDA.

    About Alliance Laundry Holdings LLC

    Alliance Laundry Holdings LLC is the parent company of Alliance Laundry
Systems LLC (www.comlaundry.com), a leading North American manufacturer of
commercial laundry products and provider of services for laundromats,
multi-housing laundries and on-premise laundries. Alliance offers a full line
of washers and dryers for light commercial use as well as large frontloading
washers, heavy duty tumbler dryers and finishing equipment for heavy
commercial use. The Company's products are sold under the well known brand
names Speed Queen(R), UniMac(R), Huebsch(R), IPSO(R) and Cissell(R).

    Safe Harbor for Forward-Looking Statements

    With the exception of the reported actual results, this press release
contains predictions, estimates and other forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Act of 1934, as amended. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements of our business to
differ materially from those expressed or implied by such forward-looking
statements. Although we believe that our plans, intentions and expectations
reflected in such forward-looking statements are based on reasonable
assumptions, we can give no assurance that such plans, intentions,
expectations, objectives or goals will be achieved. Important factors that
could cause actual results to differ materially from those included in
forward-looking statements include: impact of competition; continued sales to
key customers; possible fluctuations in the cost of raw materials and
components; possible fluctuations in currency exchange rates, which affect the
competitiveness of our products abroad; possible fluctuation in interest
rates, which affects our earnings and cash flows; the impact of substantial
leverage and debt service on us; possible loss of suppliers; risks related to
our asset backed facilities; dependence on key personnel; labor relations;
potential liability for environmental, health and safety matters; potential
future legal proceedings and litigation; and other risks listed from time to
time in the Company's reports, including, but not limited to the Company's
most recent Annual Report on Form 10-K for the year ended December 31, 2006.

    Financial information for Alliance Laundry Holdings LLC appears on the
next six pages for the years ended December 31, 2006 and 2005.

    


                        ALLIANCE LAUNDRY HOLDINGS LLC
                         CONSOLIDATED BALANCE SHEETS
                                (in thousands)

                                                December 31,  December 31,
                                                    2006          2005
                                                ------------  ------------

                       Assets
    Current assets:
       Cash and cash equivalents                    $11,221        $5,075
       Accounts receivable (net of allowance for
        doubtful accounts of $949 and $104 at
        December 31, 2006 and 2005,
        respectively)                                24,523         9,056
       Inventories, net                              49,746        29,050
       Beneficial interests in securitized
        accounts receivable                          28,641        22,327
       Deferred income tax asset, net                 3,656           433
       Prepaid expenses and other                     4,684         2,139
                                                ------------  ------------
          Total current assets                      122,471        68,080

    Notes receivable, net                             4,018         6,131
    Property, plant and equipment, net               73,789        66,869
    Goodwill                                        180,778       139,903
    Beneficial interests in securitized
     financial assets                                18,055        16,939
    Deferred income tax asset, net                    9,177         8,932
    Debt issuance costs, net                         10,318        11,172
    Intangible assets, net                          153,108       145,433
                                                ------------  ------------
          Total assets                             $571,714      $463,459
                                                ------------  ------------

         Liabilities and Member(s)' Equity
    Current liabilities:
       Current portion of long-term debt and
        capital lease obligations                      $526            $-
       Revolving credit facility                          -             -
       Accounts payable                              21,438         7,866
       Deferred income tax liability, net               216             -
       Other current liabilities                     37,087        26,500
                                                ------------  ------------
          Total current liabilities                  59,267        34,366

    Long-term debt and capital lease
     obligations:
       Senior credit facility                       224,000       177,000
       Senior subordinated notes                    149,430       149,336
       Other long-term debt and capital lease
        obligations                                   2,159             -

    Deferred income tax liability, net                6,939             -
    Other long-term liabilities                      11,935         8,924
                                                ------------  ------------
          Total liabilities                         453,730       369,626

    Commitments and contingencies
    Member(s)' equity                               117,984        93,833
                                                ------------  ------------
       Total liabilities and member(s)' equity     $571,714      $463,459
                                                ------------  ------------


    

    


                        ALLIANCE LAUNDRY HOLDINGS LLC
                   CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                                (in thousands)


                                   January 28,    January 1,
                       Year Ended  2005 through  2005 through  Year Ended
                      December 31, December 31,  January 27,  December 31,
                          2006         2005          2005         2004
                      ------------ ------------  ------------ ------------
                       Successor    Successor    Predecessor  Predecessor
    Net revenues:
       Equipment and
        service parts    $359,755     $287,705       $20,303     $274,887
       Equipment
        financing, net      6,313        8,940           380        6,100
                      ------------ ------------  ------------ ------------
    Net revenues          366,068      296,645        20,683      280,987
    Cost of sales         278,370      225,706        15,585      199,010
                      ------------ ------------  ------------ ------------
    Gross profit           87,698       70,939         5,098       81,977
                      ------------ ------------  ------------ ------------

    Selling, general
     and
     administrative
     expenses              52,303       38,632         3,829       39,879
    Securitization,
     impairment and
     other costs            7,150       10,009             -            -
    Transaction costs
     associated with
     sale of business           -            -        18,790            -
                      ------------ ------------  ------------ ------------
    Total operating
     expenses              59,453       48,641        22,619       39,879
                      ------------ ------------  ------------ ------------
       Operating
        income (loss)      28,245       22,298       (17,521)      42,098

    Interest expense       31,177       24,117           995       25,439
    Loss from early
     extinguishment of
     debt                       -            -         9,867            -
    Costs related to
     abandoned public
     offerings                  -            -             -        4,823
    Other (expense)
     income, net             (417)           -             -            -
                      ------------ ------------  ------------ ------------
       (Loss) income
        before taxes       (3,349)      (1,819)      (28,383)      11,836
    (Benefit)
     provision for
     income taxes          (1,532)      (1,158)            9           71
                      ------------ ------------  ------------ ------------
       Net (loss)
        income            $(1,817)       $(661)     $(28,392)     $11,765
                      ------------ ------------  ------------ ------------


    

    


                        ALLIANCE LAUNDRY HOLDINGS LLC
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)

                                    January 28,   January 1,
                        Year Ended  2005 through 2005 through  Year Ended
                       December 31, December 31, January 27,  December 31,
                           2006         2005         2005         2004
                       ------------ ------------ ------------ ------------
                        Successor    Successor   Predecessor  Predecessor
    Cash flows from
     operating
     activities:
      Net (loss) income    $(1,817)       $(661)    $(28,392)     $11,765
      Adjustments to
       reconcile net
       (loss) income to
       cash provided by
       operating
       activities:
        Depreciation
         and
         amortization       21,790       20,187          526        9,695
        Non-cash
         interest
         (income)
         expense               424         (933)         351        4,415
        Non-cash
         executive unit
         compensation        1,120        1,120        1,089        5,579
        Non-cash
         intangible
         impairment          2,431        1,767            -            -
        Non-cash debt
         financing
         write-off               -            -        5,751            -
        Non-cash
         inventory
         expense             3,193        6,246            -            -
        Deferred income
         taxes              (2,739)      (1,158)           -            -
        Loss on sale of
         property,
         plant and
         equipment             175           48            -           42
        Changes in
         assets and
         liabilities:
           Accounts
            receivable       9,975       (2,889)        (556)       3,546
           Inventories      (2,896)        (456)      (1,833)        (546)
           Other assets     (9,517)         246          101          344
           Accounts
            payable            204      (22,828)      19,076          339
           Other
            liabilities        563        5,939       (2,732)        (299)
                       ------------ ------------ ------------ ------------
        Net cash
         provided by
         (used in)
         operating
         activities         22,906        6,628       (6,619)      34,880
                       ------------ ------------ ------------ ------------

    Cash flows from
     investing
     activities:
      Additions to
       property, plant
       and equipment        (6,150)      (4,229)        (188)      (4,166)
      Acquisition of
       businesses, net
       of cash acquired    (82,308)           -            -            -
      Proceeds on
       disposition of
       assets                1,421            4            -           65
                       ------------ ------------ ------------ ------------
        Net cash used
         in investing
         activities        (87,037)      (4,225)        (188)      (4,101)
                       ------------ ------------ ------------ ------------

    Cash flows used in
     financing
     activities:
      Principal
       payments on
       long-term debt      (13,123)     (23,000)           1      (27,245)
      Net increase in
       revolving line
       of credit
       borrowings                -            -            -            -
      Proceeds from
       promissory notes      1,000            -            -            -
      Proceeds from
       senior term loan     60,000      200,000            -            -
      Proceeds from
       senior
       subordinate
       notes                     -      149,250            -            -
      Repayment of
       long-term debt            -     (275,920)           -            -
      Issuance of
       common stock         23,493      117,000            -            -
      Repurchase of
       common stock            (50)           -            -            -
      Distribution to
       old unitholders           -     (154,658)           -            -
      Debt financing
       costs                (1,335)     (13,230)           -            -
      Cash paid for
       capitalized
       offering related
       costs                     -       (1,364)           -            -
      Net proceeds -
       management note           -            -          (71)           -

                       ------------ ------------ ------------ ------------
        Net cash
         provided by
         (used in)
         financing
         activities         69,985       (1,922)         (70)     (27,245)
                       ------------ ------------ ------------ ------------

                       ------------ ------------ ------------ ------------
    Effect of exchange
     rate changes on
     cash and cash
     equivalents               292            -            -            -
                       ------------ ------------ ------------ ------------

    Increase (decrease)
     in cash                 6,146          481       (6,877)       3,534
    Cash at beginning
     of period               5,075        4,594       11,471        7,937
                       ------------ ------------ ------------ ------------
    Cash at end of
     period                $11,221       $5,075       $4,594      $11,471
                       ------------ ------------ ------------ ------------

    Supplemental
     disclosure of cash
     flow information:
      Cash paid for
       interest            $28,642      $19,699       $1,133      $21,876
      Cash paid for
       income taxes           $687          $55           $9          $71


    

    Reconciliation of Net Loss to EBITDA and Adjusted EBITDA, and
reconciliation of Adjusted EBITDA to Net Cash Provided by (Used in) Operating
Activities for the Twelve Months Ended December 31, 2006 (Dollars in
Thousands):

    


                          Year     January 28,    January 1,      Year
                         Ended     2005 through  2005 through    Ended
                      December 31, December 31,  January 27,  December 31,
                          2006         2005          2005         2005
                      ------------ ------------  ------------ ------------
                       Successor    Successor    Predecessor    Combined

    Net loss              $(1,817)       $(661)     $(28,392)    $(29,053)
    (Benefit)
     provision for
     income taxes          (1,532)      (1,158)            9       (1,149)
    Interest expense       31,177       24,117           995       25,112
    Depreciation and
     amortization (a)      21,790       20,187           526       20,713
    Non-cash interest
     income included
     in amortization
     above                 (2,189)      (2,058)            -       (2,058)
                      ------------ ------------  ------------ ------------
    EBITDA                 47,429       40,427       (26,862)      13,565
    Finance program
     adjustments (b)         (306)      (1,879)           31       (1,848)
    Other non-
     recurring charges
     (c)                    8,868        9,734        28,657       38,391
    Other non-cash
     charges (d)            6,744        9,133         1,089       10,222
    Other expense (e)         480            -             -            -
    Management fees
     paid to
     affiliates of
     Bain                       -            -            83           83
                      ------------ ------------  ------------ ------------
    Adjusted EBITDA        63,215       57,415         2,998       60,413

    Interest expense      (31,177)     (24,117)         (995)     (25,112)
    Non-cash interest
     income included
     in amortization
     above                  2,189        2,058             -        2,058
    Other non-cash
     interest                 424         (933)          351         (582)
    Finance program
     adjustments (b)          306        1,879           (31)       1,848
    Other non-
     recurring charges
     (c)                   (8,868)      (9,734)      (28,657)     (38,391)
    Non-cash debt
     financing write-
     off                        -            -         5,751        5,751
    Deferred taxes         (1,207)           -            (9)          (9)
    Loss on sale of
     property, plant
     and equipment            175           48             -           48
    Other expense (e)        (480)           -           (83)         (83)
    Changes in assets
     and liabilities       (1,671)     (19,988)       14,056       (5,932)
                      ------------ ------------  ------------ ------------
    Net cash provided
     by (used in)
     operating
     activities           $22,906       $6,628       $(6,619)          $9
                      ------------ ------------  ------------ ------------


    

    (a) Depreciation and amortization amounts include amortization of
deferred financing costs included in interest expense.

    (b) We currently operate an off-balance sheet commercial equipment
finance program in which newly originated equipment loans are sold to a
qualified special-purpose bankruptcy remote entity. In accordance with GAAP,
we are required to record gains/losses on the sale of these equipment based
promissory notes. In calculating Adjusted EBITDA, management determines the
cash impact of net interest income on these notes. The finance program
adjustments are the difference between GAAP basis revenues (as prescribed by
SFAS No. 125/140) and cash basis revenues.

    (c) Other non-recurring charges are described as follows:

    --  Other non-recurring charges in 2006 consist of $4.7 million of costs
associated with the closure of the Marianna, Florida production facility which
are included in the securitization, impairment and other costs line of our
Consolidated Statements of Income (Loss), $3.0 million of costs related to the
transfer of the Marianna, Florida product lines to Ripon, Wisconsin which are
included in the selling, general and administrative expenses line of our
Consolidated Statements of Income (Loss) and a periodic accrual of $1.2
million under the one time retention bonus agreement with certain management
employees. Under the retention bonus agreements, the executives are entitled
to receive special retention bonus awards upon the second anniversary of the
closing date of the Alliance Acquisition, subject generally to their continued
employment with Alliance Laundry through such date.

    --  Other non-recurring charges for the period from January 1, 2005
through January 27, 2005 relate to seller transaction costs of $18.8 million
incurred as part of the business sale and a loss on the early extinguishment
of debt of $9.9 million. The seller transaction costs are primarily comprised
of transaction underwriting fees of $4.5 million, legal and professional fees
of $1.3 million, Bain and BRS advisory fees of $6.8 million and a management
sale bonus of $6.2 million. The loss on early extinguishment of debt includes
the write-off of $5.8 million of unamortized deferred financing costs
associated with pre-Acquisition debt, which was paid off as of the Acquisition
date and $4.1 million of tender and call premium costs associated with
redeeming the 1998 Senior Subordinated Notes.

    --  Other non-recurring charges for the period from January 28, 2005
through December 31, 2005 relate to $8.1 million of costs associated with
establishing a new asset backed facility for the sale of equipment notes and
trade receivables, a periodic accrual of $1.1 million under a one time
retention bonus agreement and $0.5 million of expenses relate to the closure
and transition of the Marianna, Florida facility. The retention bonus
agreements were entered into with certain Company executives concurrent with
the Acquisition and entitle the executive to receive special retention bonus
awards upon the second anniversary of the closing date of the Acquisition,
subject generally to their continued employment with Alliance Laundry through
such date. The aggregate amount of retention bonuses payable upon the two year
anniversary of the sale date under these agreements is approximately $2.3
million.

    (d) Other non-cash charges are described as follows:

    --  Other non-cash charges are comprised of $3.2 million of costs
associated with the inventory step-up to fair market value recorded at the CLD
Acquisition date, which are included in the cost of sales line of our
Consolidated Statements of Income (Loss), a $1.4 million non-cash impairment
charge related to the Ajax trademark, which is included in the securitization,
impairment and other costs line of our Consolidated Statements of Income
(Loss), a $1.0 million non-cash impairment charge related to the LSG customer
agreement, which is included in the securitization, impairment and other costs
line of our Consolidated Statements of Income (Loss) and $1.1 million of
non-cash incentive compensation expense related to management incentive stock
options, which is included in the selling, general and administrative expenses
line of our Consolidated Statements of Income (Loss). The Ajax impairment
charges consist of a $1.4 million charge in the quarter ending March 31, 2006,
based on an asset impairment test conducted pursuant to SFAS No. 142,
"Goodwill and Other Intangible Assets" resulting from the Company's decision
to discontinue sales of Ajax products and sell this product line to a third
party. The LSG customer agreement impairment charges consist of a $1.0 million
charge in the quarter ending December 31, 2006, based on an asset impairment
test conducted pursuant to SFAS No. 142, "Goodwill and Other Intangible
Assets" resulting from the Company's CLD Acquisition and the decision to
replace the 2002 supply agreement with LSG with a new supply agreement at
substantially lower volumes.

    --  Non-cash charges for the period from January 1, 2005 through January
27, 2005 relate to non-cash incentive compensation expense resulting from the
acceleration of vesting for incentive units at the date of the Acquisition.
These incentive units were issued to our executives in 1998 and 2003.

    --  Non-cash charges for the period from January 28, 2005 through
December 31, 2005 relate to $6.2 million associated with the inventory step-up
to fair market value recorded at the Acquisition date, $1.7 million for an
impairment charge related to the Ajax trademark and $1.1 million of non-cash
incentive compensation expense resulting from an increase in value and
additional vesting of stock options granted to certain of the Company's
executive officers in 2005.

    (e) Other expense is described as follows:

    --  Other expense consists of $0.5 million of mark to market losses for
two foreign exchange hedge agreements entered to control the foreign exchange
risk associated with the initial acquisition price of CLD, which is included
in the other expense line of our Consolidated Statements of Income (Loss).




For further information:

For further information: Alliance Laundry Holdings LLC Bruce P. Rounds,
CFO, 920-748-1634

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ALLIANCE LAUNDRY HOLDINGS LLC

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