8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K/A

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported)    APRIL 1, 2008

MAC-GRAY CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

DELAWARE

(State or Other Jurisdiction of Incorporation)

1-13495	04-3361982
(Commission File Number)	(IRS Employer Identification No.)

404 WYMAN STREET
WALTHAM, MASSACHUSETTS	02451
(Address of Principal Executive Offices)	(Zip Code)

(781) 487-7600

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (SEE General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

On April 7, 2008, Mac-Gray Corporation (the “Company” or “Mac-Gray”) filed a Form 8-K with the Securities and Exchange Commission describing the acquisition of Automatic Laundry Company, Ltd. on April 1, 2008.  This amendment on Form 8-K/A is being filed to file the financial statements of the acquired business and unaudited pro forma financial information as required by Item 9.01 of Form 8-K. All other items in the original Form 8-K are unchanged and incorporated herein by reference.

Item 9.01.     FINANCIAL STATEMENTS AND EXHIBITS

(a)FINANCIAL STATEMENTS OF BUSINESS ACQUIRED

Filed as Exhibit 99.3 of this report and incorporated herein by reference are the following audited financial statements of Automatic Laundry Company, Ltd.: (i) Independent Auditor’s Report, (ii) Balance Sheets as of December 31, 2007 and 2006, (iii) Statements of Operations for the years ended December 31, 2007 and 2006, (iv) Statements of Changes in Partners’ Capital for the years ended December 31 2007 and 2006, (v) Statements of Cash Flows for the years ended December 31, 2007 and 2006, and (vi) Notes to the Financial Statements.

Filed as Exhibit 99.4 of this report and incorporated herein by reference are the following unaudited financial statements of Automatic Laundry Company, Ltd.: (i) Balance Sheets as of March 31, 2008 and 2007, (ii) Statements of Operations for the three months ended March 31, 2008 and 2007 and (iii) Statements of Cash Flows for the three months ended March 31, 2008 and 2007.

(b)PRO FORMA FINANCIAL INFORMATION

Filed as Exhibit 99.5 of this report and incorporated herein by reference is the Company’s Unaudited Pro Forma Combined Income Statement for the twelve months ended December 31, 2007, and Notes to the Unaudited Pro Forma Combined Income Statement.

Filed as Exhibit 99.6 of this report and incorporated herein by reference are the Company’s Unaudited Pro Forma Combined Balance Sheet as of March 31, 2008, the Company’s Unaudited Pro Forma Combined Income Statement for the three months ended March 31, 2008, and Notes to the Unaudited Pro Forma Combined Financial Statements.

(c).EXHIBITS

EXHIBIT NO.	DESCRIPTION
23.1	Consent of Clifton Gunderson LLP
*99.1	Press release of Mac-Gray Corporation issued on April 1, 2008 (Incorporated by reference to Exhibit 99.1 to the current report on Form 8-K filed my Mac-Gray on April 7, 2008)
*99.2	Transcript of Conference Call held by Mac-Gray on April 1, 2008. (Incorporated by reference to Exhibit 99.2 to the current report on Form 8-K filed my Mac-Gray on April 7, 2008)

2

99.3	Independent Auditor’s Report, Balance Sheets of Automatic Laundry Company, Ltd as of December 31, 2007 and 2006, Statements of Operations for the years ended December 31, 2007 and 2006, Statements of Changes in Partners’ Capital for the years ended December 31, 2007 and 2006, Statements of Cash Flows for the years ended December 31, 2007 and 2006, and Notes to Financial Statements
99.4	Unaudited Balance Sheets of Automatic Laundry Company, Ltd as of March 31, 2008 and 2007, Unaudited Statements of Operations for the three months ended March 31, 2008 and 2007 and Unaudited Statements of Cash Flows for the three months ended March 31, 2008 and 2007.
99.5	Unaudited Pro Forma Combined Income Statement of Mac-Gray Corporation for the twelve months ended December 31, 2007, and Notes to the Unaudited Pro Forma Combined Financial Statement.
99.6	Unaudited Pro Forma Combined Balance Sheet of Mac-Gray Corporation as of March 31, 2008, Unaudited Pro Forma Combined Income Statement for the three months ended March 31, 2008, and Notes to the Unaudited Pro Forma Combined Financial Statements

* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

SIGNATURES

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

Date: June 16, 2008	MAC-GRAY CORPORATION
	By:	/S/ Michael J. Shea
		Michael J. Shea
		Executive Vice President and
		Chief Financial Officer

3

EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
23.1	Consent of Clifton Gunderson LLP
*99.1	Press release of Mac-Gray Corporation issued on April 1, 2008 (Incorporated by reference to Exhibit 99.1 to the current report on Form 8-K filed my Mac-Gray on April 7, 2008)
*99.2	Transcript of Conference Call held by Mac-Gray on April 1, 2008 (Incorporated by reference to Exhibit 99.2 to the current report on Form 8-K filed my Mac-Gray on April 7, 2008)
99.3	Independent Auditor’s Report, Balance Sheets of Automatic Laundry Company, Ltd as of December 31, 2007 and 2006, Statements of Operations for the years ended December 31, 2007 and 2006, Statements of Changes in Partners’ Capital for the years ended December 31, 2007 and 2006, Statements of Cash Flows for the years ended December 31, 2007 and 2006, and Notes to Financial Statements.
99.4	Unaudited Balance Sheets of Automatic Laundry Company, Ltd as of March 31, 2008 and 2007, Unaudited Statements of Operations for the three months ended March 31, 2008 and 2007 and Unaudited Statements of Cash Flows for the three months ended March 31, 2008 and 2007.
99.5	Unaudited Pro Forma Combined Income Statement of Mac-Gray Corporation for the twelve months ended December 31, 2007, and Notes to the Unaudited Pro Forma Combined Financial Statement
99.6	Unaudited Pro Forma Combined Balance Sheet of Mac-Gray Corporation as of March 31, 2008, Unaudited Pro Forma Combined Income Statement for the three months ended March 31, 2008, and Notes to the Unaudited Pro Forma Combined Financial Statements

* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

4

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference in the Registration Statements on Forms S-8 (No. 333-44117, No. 333-62936, No. 333-126583 and No. 333-151378) of Mac-Gray Corporation of our report dated May 5, 2008, relating to the financial statements of Automatic Laundry Company, Ltd as of and for the years ended December 31,2007 and 2006 which appear in this Current Report on Form 8-K/A of Mac-Gray Corporation dated April 1, 2008.

/s/ Clifton Gunderson LLP

Clifton Gunderson LLP

Denver, Colorado

June 16, 2008

EX-99.3

EXHIBIT 99.3

INDEPENDENT AUDITOR’S REPORT

The Partners

Automatic Laundry Company, Ltd.

Denver, Colorado

We have audited the accompanying balance sheets of Automatic Laundry Company, Ltd. as of December 31, 2007, and 2006 and the related statements of operations, changes in partners’ capital and cash flows for the years then ended.  These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Automatic Laundry Company, Ltd. as of December 31, 2007 and 2006 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 11 to the financial statements, on April 1, 2008 the Company’s partners entered into an agreement to sell their ownership interests in the Company.  This subsequent event is not reflected in the accompanying financial statements.

/s/ Clifton Gunderson LLP

Denver, Colorado

May 5, 2008

AUTOMATIC LAUNDRY COMPANY, LTD.

BALANCE SHEETS

December 31, 2007 and 2006

ASSETS

	2007		2006
CURRENT ASSETS
Cash and cash equivalents	$	5,438,618	$	4,680,104
Investment securities	6,378,265		5,870,454
Current portion of prepaid lease costs	2,841,491		2,982,051
Prepaid expenses and other current assets	247,554		246,698
Total current assets	14,905,928		13,779,307
PROPERTY AND EQUIPMENT, NET	10,811,520		11,056,325
OTHER ASSETS
Prepaid lease costs, less current portion included above	3,483,217		3,712,846
Covenants not to compete, less accumulated amortization of $1,022,188 in 2007 and $936,188 in 2006	186,806		272,806
Goodwill	8,371,159		8,371,159
Cash surrender value of life insurance	554,226		533,810
Deposits and other assets	477,720		321,248
Total other assets	13,073,128		13,211,869
TOTAL ASSETS	$	38,790,576	$	38,047,501

AUTOMATIC LAUNDRY COMPANY, LTD.

BALANCE SHEETS

December 31, 2007 and 2006

LIABILITIES AND PARTNERS’ CAPITAL

	2007		2006
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,563,664	$	1,972,051
Current maturities of notes payable	694,449		666,666
Current maturities of related party notes payable	6,085,000		55,357
Due to affiliated entity for administrative services	1,157,821		1,171,154
Location rentals payable	3,752,664		3,801,008
Total current liabilities	13,253,598		7,666,236
LONG-TERM LIABILITIES
Notes payable, less current maturities included above	—		694,449
Related party notes payable, less current maturities included above	—		6,085,000
Other long-term liabilities	448,884		297,239
Total long-term liabilities	448,884		7,076,688
Total liabilities	13,702,482		14,742,924
PARTNERS’ CAPITAL
General partner	411,707		393,872
Limited partner	24,676,387		22,910,705
Total partners’ capital	25,088,094		23,304,577
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	38,790,576	$	38,047,501

The accompanying notes are an integral part of the financial statement

AUTOMATIC LAUNDRY COMPANY, LTD.

STATEMENTS OF OPERATIONS

Years Ended December 31, 2007 and 2006

	2007			2006
REVENUE
Laundry route income	$	65,263,636		$	64,964,505
Equipment lease income	609,326			665,430
Total revenue	65,872,962			65,629,935
OPERATING EXPENSES
Location rentals	32,107,351			32,015,489
Depreciation and amortization	8,924,366			8,829,012
Salaries, wages, and employee benefits	11,093,788			10,623,402
Administrative service fees	4,999,240			4,950,739
Other location expenses	627,818			733,747
Parts and supplies	1,269,413			1,304,564
General and administrative	1,426,798			1,314,057
Rent and occupancy	854,518			753,016
Transportation	1,046,130			926,469
Other operating expenses	1,100,965			1,161,647
Marketing expenses	352,221			282,175
Executive services fee	200,000			134,000
Loss on disposal of property and equipment	285,145			15,736
Total operating expenses	64,287,753			63,044,053
Operating income	1,585,209			2,585,882
OTHER INCOME (EXPENSE)
Interest income	295,646			215,065
Interest expense	(617,901		)	(665,596		)
Other, net	520,563			409,275
Total other income (expense)	198,308			(41,256		)
NET INCOME	$	1,783,517		$	2,544,626

The accompanying notes are an integral part of the financial statements

AUTOMATIC LAUNDRY COMPANY, LTD.

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

Years Ended December 31, 2007 and 2006

					Total
			PaceCo		Partners’
	JCP Holding, LP		Investors, LP		Capital
BALANCES, DECEMBER 31, 2005	$	368,426	$	20,391,525	$	20,759,951
Net income	25,446		2,519,180		2,544,626
BALANCES, DECEMBER 31, 2006	393,872		22,910,705		23,304,577
Net income	17,835		1,765,682		1,783,517
BALANCES, DECEMBER 31, 2007	$	411,707	$	24,676,387	$	25,088,094

The accompanying notes are an integral part of the financial statements

AUTOMATIC LAUNDRY COMPANY, LTD.

STATEMENTS OF CASH FLOWS

Years Ended December 31, 2007 and 2006

	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,783,517		$	2,544,626
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	8,924,366			8,829,012
Loss on disposal of property and equipment	285,145			15,736
Increase in cash surrender value of life insurance	(20,416		)	(20,655		)
Net increase in benefit plan	—			92,818
Changes in operating assets and liabilities:
Prepaid lease costs	(3,175,854		)	(3,086,148		)
Prepaid expenses and other current assets	(856		)	(36,038		)
Deposits and other assets	(4,827		)	14,358
Accounts payable and accrued expenses	(408,387		)	438,759
Due to affiliated entity	(13,333		)	63,396
Location rentals payable	(48,344		)	163,458
Net cash provided by operating activities	7,321,011			9,019,322
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities	(12,725,519		)	(10,754,084		)
Proceeds from maturities of investment securities	12,217,708			8,811,567
Expenditures for property and equipment	(5,353,361		)	(5,941,403		)
Proceeds from sale of property and equipment	20,698			18,175
Net cash used by investing activities	(5,840,474		)	(7,865,745		)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes payable	(722,023		)	(736,322		)
Net cash used by financing activities	(722,023		)	(736,322		)
NET INCREASE IN CASH AND CASH EQUIVALENTS	758,514			417,255
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	4,680,104			4,262,849
CASH AND CASH EQUIVALENTS, END OF YEAR	5,438,618			4,680,104
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid	$	617,901		$	665,596

The accompanying notes are an integral part of the financial statements

AUTOMATIC LAUNDRY COMPANY, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Automatic Laundry Company, LTD. (the “Company”) is a limited partnership owned by JCP Holding, LP (1% General Partner) and PaceCo Investors, LP (99% Limited Partner).

The Company leases laundry room space as the lessee and operates coin-operated laundry equipment in apartments, condominiums, and townhome developments in Alabama, Arizona, Arkansas, Colorado, Florida, Louisiana, Mississippi, New Mexico, Tennessee, Texas, Washington,  and Wyoming.  During the years ended December 31, 2007 and 2006, revenue derived from Colorado locations was 34% of total revenue.

Use of Estimates in Preparing Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes laundry route revenue on an accrual basis and related expenses are recognized as incurred.  The Company recognizes equipment lease income on a straight-line basis over the terms of the lease agreements (see Note 8).

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.  Included in cash and cash equivalents is an estimate of cash not yet collected which is at laundry facilities at year-end.  The total estimated cash was $2,654,748 and $2,635,950 at December 31, 2007 and 2006, respectively.

Investment Securities

Investment securities at December 31, 2007 and 2006 consist of U.S. Treasury Bills.  These debt securities were classified as held-to-maturity at December 31, 2006 as the Company had the positive intent and ability to hold the securities to maturity.  Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity.  Such amortization and accretion is included in interest income.  In March 2008, the Company sold all of its investment securities and as a result, transferred all of its held-to-maturity securities at December 31, 2007 to investments categorized as available-for-sale.  Management determined that it no longer had the positive intent to hold its investment in securities classified as held-to-maturity due to the actual sale of the investments prior to maturity.  Available-for-sale securities are carried at fair value.  The amortized cost of debt securities in this category is also adjusted for amortization of premiums and accretion of discounts to maturity.  There was no

AUTOMATIC LAUNDRY COMPANY, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

material difference between the amortized cost and fair value of the securities transferred at December 31, 2007 or at the date of sale; therefore, no gain or loss was recognized.  The securities originally matured in one year or less.  Interest on investment securities is included in interest income.

Parts and Supplies

The Company expenses parts and supplies when purchased.

Property and Equipment

Property and equipment are stated at cost.  Depreciation on property and equipment is as follows:

		Estimated
		Useful Life
	Method	(in Years)
Laundry equipment	Accelerated	5
Transportation equipment	Accelerated	5
Furniture and office equipment	Accelerated	7
Buildings	Straight-line	20-39

Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the respective leases.  Construction in process represents software capitalized for internal use and not yet placed in service.  Total depreciation expense for the years ended December 31, 2007 and 2006 was $5,292,323 and $5,157,902, respectively.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Assets to be disposed of are reported at the lower of carrying amount or the fair value less costs to sell.  A review of such assets by the Company during 2007 resulted in a write-off of internally developed software not anticipated to be used with a net book value of $271,308.  The impairment loss is included in the loss on disposal of property and equipment for the year ended December 31, 2007.

Prepaid Lease Costs

Prepaid lease costs consist of lease initiation fees paid to lessors in connection with obtaining lease locations.  Prepayments are amortized monthly using the greater of straight-line amortization over the prepayment period or a predetermined percentage of gross receipts.  The projected amount of the succeeding year’s amortization for existing leases is included in current assets.  Amortization of prepaid leases for the years ended December 31, 2007 and 2006 was $3,546,043 and $3,581,341, respectively.

AUTOMATIC LAUNDRY COMPANY, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Covenants Not to Compete

Covenants not to compete are amortized on a straight-line basis over the terms of the agreements.  Amortization of covenants not to compete for the years ended December 31, 2007 and 2006 was $86,000 and $86,000, respectively.

Lease Acquisition Costs

Lease acquisition costs consisted of capitalized costs associated with leases of locations acquired in the purchase of assets of coin-operated laundry operators and were fully amortized at December 31, 2006.  Amortization of lease acquisition costs for the years ended December 31, 2007 and 2006 was $0 and $3,769, respectively.

Goodwill and Other Intangible Assets

Goodwill relates to the Company’s acquisition of certain assets and represents the excess of the cost of net assets acquired over the fair value of the net assets and is subsequently reported at the lesser of carrying value or fair value. Goodwill is not amortized, but rather is tested at least annually for impairment under Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and Other Intangible Assets”. At December 31, 2007 and 2006, the Company determined that there was no impairment. In addition, intangible assets (other than goodwill) that have finite useful lives will continue to be amortized over their useful lives.

Sales Taxes Collected and Remitted

The Company presents sales taxes collected from the laundry route customers and remitted to governmental authorities on a gross basis, including such amounts in revenues and operating expenses.  The amount of sales taxes collected and remitted that are included in revenues were approximately $137,000 and $136,000 for the years ended December 31, 2007 and 2006, respectively.

Income Taxes

The Company is a limited partnership, and accordingly, no provision for income taxes is included in the financial statements since all income, deductions, gains, losses, and credits are reportable on the tax returns of the partners of the Company.

New Accounting Standards

In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” an interpretation of FASB Statement No. 109 (“FIN 48”), to create a single model to address accounting for uncertainty in tax positions.  FIN 48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.  FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, disclosure and transition.  FIN 48 is effective for nonpublic entities for annual periods beginning after December 15, 2007.  The Company will adopt FIN 48 in its December 31, 2008 statements as required.  The

AUTOMATIC LAUNDRY COMPANY, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

cumulative effect of adopting FIN 48 will be recorded as an adjustment to partner’s capital on January 1, 2008.  The Company has not determined the effect, if any, the adoption of FIN 48 will have on the Company’s financial position and results of operations.

NOTE 2 - RELATED PARTY TRANSACTIONS

Related parties include the Company’s owners, JCP Holding, LP and PaceCo Investors, LP and their affiliated entities and/or owners.

In conjunction with the acquisition of certain assets in May 2000, the Company financed $3,000,000 of the purchase price of the assets with related party notes payable (see Note 4).  The Company also refinanced a bank note with a related party note payable in the amount of $3,085,000 during 2004 (see Note 4).  The Company also has a separate note payable to another related party.  The balance of this note was $55,357 at December 31, 2006 and was paid off in 2007 (see Note 4).

The Company has an administrative services contract with an affiliate of the Company’s owners whereby the affiliate provides the Company certain management, accounting, and administrative services in return for approximately 7.5% of the Company’s gross receipts.  The Company incurred expenses of $4,999,240 and $4,950,739 under this agreement during 2007 and 2006, respectively, of which $1,157,821 and $1,171,154 was unpaid at December 31, 2007 and 2006, respectively.  The Company also incurred an annual executive services fee to an affiliated entity of $200,000 and $134,000 in 2007 and 2006, respectively.  In addition, rent of $98,988 and $96,792 in 2007 and 2006 was paid for office and warehouse space located in Denver to a company that is substantially owned by trusts for the benefit of the children of certain related parties.  The leasing agreement was extended through 2012 in March 2007.  The Company also paid rent of $20,000 in 2007 for office and warehouse space located in Phoenix that is substantially owned by trusts for the benefit of the children of certain related parties (see Note 6).  The lease was terminated in March 2008 and the Company paid termination fees totaling $275,000 to the related trusts (see Note 6).  The Company made payments to an affiliate of the Company’s owners for workers’ compensation premiums of $226,970 and $206,545, and for health insurance premiums of $1,021,784 and $867,403 in 2007 and 2006, respectively. The Company sold new washing machines to an affiliate of the Company’s owners for $106,693 and $27,604 in 2007 and 2006, respectively.  The washing machines were sold at cost.  The Company also made payments to an affiliate of the Company’s owners for computer consulting and software development services in the amount of $144,933 and $133,805 in 2007 and 2006, respectively.

The Company also has an Excess Benefit Plan administered by an affiliate of the Company’s owners (see Note 9).

AUTOMATIC LAUNDRY COMPANY, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment as December 31, 2007 and 2006 consist of:

	2007			2006
Land	$	39,956		$	39,956
Buildings	343,749			343,749
Laundry equipment	50,804,369			51,171,509
Transportation equipment	3,382,648			3,292,011
Furniture and office equipment	1,543,994			1,803,508
Leasehold improvements	637,282			637,282
Development in process - computer software	—			263,753
Total	56,751,998			57,551,768
Less accumulated depreciation and amortization	(45,940,478		)	(46,495,443		)
Net property and equipment	$	10,811,520		$	11,056,325

During the years ended December 31, 2007 and 2006, the Company replaced a number of older laundry machines with new machines that are the same model that the Company typically purchases for its locations.  The Company did not record a loss on disposal of laundry equipment in 2007 and 2006 in conjunction with these disposals as the laundry machines were fully depreciated.

NOTE 4 - NOTES PAYABLE

Bank note payable as of December 31, 2007 and 2006 consist of the following:

	2007			2006
Unsecured note payable to bank, payable in monthly principal installments of $55,555 plus interest at 6.15%; originally due October 2007 and subsequently extended to February 2009; note paid in full in February 2008; guaranteed by certain related parties.	$	694,449		$	1,361,115
Total bank notes payable	694,449			1,361,115
Less current portion	(694,449		)	(666,666		)
Long-term portion	$	—		$	694,449

The bank note payable contained certain restrictions regarding administrative matters and financial ratios.  The Company was in compliance with the note payable covenants at December 31, 2007 and 2006.

AUTOMATIC LAUNDRY COMPANY, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

NOTE 4 - NOTES PAYABLE (CONTINUED)

Related party notes payable as of December 31, 2007 and 2006 consist of the following:

	2007			2006
Unsecured notes payable to various related individuals; interest only payments at 10% due monthly; final principal due June 30, 2008; notes subsequently extended to June 30, 2009; note paid in full in March 2008.	$	3,000,000		$	3,000,000
Unsecured note payable to a related party; interest payable quarterly at 8%; final principal due May 27, 2008; notes subsequently extended to May 27, 2009; note paid in full in March 2008.	3,085,000			3,085,000
Unsecured note payable to a related individual; payable in monthly installments of $6,477 including interest at 8.5%; note paid off at maturity on September 1, 2007.	—			55,357
Total related party notes payable	6,085,000			6,140,357
Less current portion	(6,085,000		)	(55,357		)
Long-term portion	$	—		$	6,085,000

Although the bank and related party notes payable had extended maturity dates in 2009, the note balances are included as a current liability at December 31, 2007 due to the notes being paid in full in 2008.

NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses as of December 31, 2007 and 2006 consist of the following:

	2007		2006
Accounts payable	$	746,054	$	1,200,977
Accrued property taxes	372,100		346,600
Accrued payroll	408,739		380,737
Accrued excise taxes	35,065		41,001
Other	1,706		2,736
Total	$	1,563,664	$	1,972,051

AUTOMATIC LAUNDRY COMPANY, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

NOTE 6 - OFFICE AND WAREHOUSE LEASES

The Company leases office and warehouse space in Alabama, Arizona, Colorado, Texas, Tennessee, and Washington under noncancelable operating leases that expire through 2013.

Future minimum lease payments, including defined facility costs, and a lease termination fee of $275,000 (see Note 2), under noncancelable operating leases are as follows:

Year ending December 31
2008	$	744,229
2009	333,717
2010	285,224
2011	271,590
2012	154,478
Thereafter	57,600
Total minimum lease payments	$	1,846,838

Total rent expense under operating leases for office and warehouse space was approximately $478,000 in 2007 and $453,000 in 2006.

NOTE 7 - LAUNDRY FACILITY RENTALS

The Company leases laundry facilities under various lease agreements in which the Company is required to make minimum guaranteed rent payments to the respective lessors.  The lease agreements contain renewal options and expire at various dates through 2020.  The minimum payment is generally $5 per month for those lease agreements that contain the guaranteed minimum payment.  In addition to the minimum guaranteed payment, the Company also pays a percentage of laundry route income as location rentals to the lessors under its laundry room leases.  The contingent payments are based on a prescribed percentage of route collections at the respective location.

Future minimum guaranteed rent payments required under these lease agreements are as follows:

2008	$	299,925
2009	257,315
2010	215,815
2011	180,470
2012	142,295
Thereafter	317,390
Total	$	1,413,210

Minimum lease payments in this schedule exclude the contingent rental payments and renewal options.

AUTOMATIC LAUNDRY COMPANY, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

NOTE 7 - LAUNDRY FACILITY RENTALS (CONTINUED)

Location rental expense consists of the following components:

	2007		2006
Minimum lease payments	$	297,875	$	298,150
Contingent rentals	31,809,476		31,717,339
Total	$	32,107,351	$	32,015,489

Included in minimum lease payments above are $28,560 and $27,280 of actual minimum payments made when the minimum was not reached through the percentage of collections.

NOTE 8 - EQUIPMENT LEASE INCOME

The Company may rent laundry equipment under operating leases to certain apartment complexes primarily at its Washington locations, in lieu of receiving the net route income from the facilities (see Note 7).  The terms of these leases are generally month-to-month arrangements, with some leases with terms of several years.  The Company retains title to the equipment, pays all insurance and taxes, and is obligated to maintain a working machine during the term of the agreements.  Total income from equipment leases was $609,326 and $665,430 for the years ended December 31, 2007 and 2006, respectively.

NOTE 9 - EMPLOYEE BENEFIT PLANS

The Company maintains a contributory deferred savings and profit sharing plan established pursuant to Section 401(k) of the Internal Revenue Code covering substantially all employees.  Company contributions to the plan are made at the discretion of the Company and were approximately $179,000 and $165,000 for the years ended December 31, 2007 and 2006, respectively.

The Company also participates in a non-qualified benefit plan for the benefit of certain senior executives.  The plan is administered by a related entity (see Note 2).  The Company’s contributions to the plan were $27,158 and $25,563 for the years ended December 31, 2007 and 2006, respectively.  The plan’s assets and a corresponding liability for the same amount are included in deposits and other assets and other long-term liabilities of $448,884 and $297,239 at December 31, 2007 and 2006, respectively.  The Company’s participation in the plan was terminated in March 2008.

AUTOMATIC LAUNDRY COMPANY, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 2007 and 2006

NOTE 10 - SIGNIFICANT CONCENTRATIONS

Generally accepted accounting principles require disclosure of information about current vulnerabilities due to certain concentrations.  These matters include the following:

Concentration of Risks

The Company maintains its cash and cash equivalents in various commercial banks.  Balances on deposit are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to specified limits.  The Company had balances in excess of FDIC limits at December 31, 2007 and 2006, which were uninsured.  The Company believes it is not exposed to any significant risk on cash and cash equivalents.

NOTE 11 - SUBSEQUENT EVENTS

On April 1, 2008, the general partner and the limited partner sold 100% of their interests in the Company to Mac-Gray Corporation.  The purchase price consisted of $106,500,000 in cash and an unsecured note for $10,000,000.  The note carries an interest rate of 9% per annum and matures on April 1, 2010.  Under the terms of the agreement, the seller will receive all of the uncollected cash and has assumed responsibility for all liabilities of the Company as of March 31, 2008.

In conjunction with the sale, distributions of $2,200,000 were also paid to the Company’s owners on March 31, 2008.

This information is an integral part of the accompanying financial statements.

EX-99.4

Exhibit 99.4

AUTOMATIC LAUNDRY COMPANY, LTD.

BALANCE SHEETS

March 31, 2008 and 2007

Unaudited

ASSETS

	2008		2007
CURRENT ASSETS
Cash and cash equivalents	$	3,331,782	$	4,352,468
Investment securities	—		6,346,210
Current portion of prepaid lease costs	3,394,584		3,734,573
Prepaid expenses and other current assets	938,603		261,965
Total current assets	7,664,969		14,695,216
PROPERTY AND EQUIPMENT, NET	9,550,436		11,191,774
OTHER ASSETS
Prepaid lease costs, less current portion included above	2,499,769		2,887,670
Covenants not to compete, less accumulated amortization of $1,043,688 in 2008 and $957,688 in 2007	165,307		251,306
Goodwill	8,371,159		8,371,159
Cash surrender value of life insurance	—		540,391
Deposits and other assets	30,468		349,730
Total other assets	11,066,703		12,400,256
TOTAL ASSETS	$	28,282,108	$	38,287,246

AUTOMATIC LAUNDRY COMPANY, LTD.

BALANCE SHEETS

March 31, 2008 and 2007

Unaudited

LIABILITIES AND PARTNERS’ CAPITAL

	2008		2007
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	891,122	$	1,777,439
Current maturities of notes payable	—		703,863
Due to affiliated entity	110,435		1,157,821
Location rentals payable	3,927,476		3,924,222
Total current liabilities	4,929,033		7,563,345
LONG-TERM LIABILITIES
Notes payable, less current maturities included above	—		527,782
Related party notes payable, less current maturities included above	—		6,085,000
Other long-term liabilities	—		324,397
Total long-term liabilities	—		6,937,179
Total liabilities	4,929,033		14,500,524
PARTNERS’ CAPITAL
General partner	394,357		398,693
Limited partner	22,958,718		23,388,029
Total partners’ capital	23,353,075		23,786,722
TOTAL LIABILITIES AND PARTNERS’ CAPITAL	$	28,282,108	$	38,287,246

The accompanying notes are an integral part of the unaudited financial statements

AUTOMATIC LAUNDRY COMPANY, LTD.

STATEMENTS OF OPERATIONS

Three Months Ended March 31, 2008 and 2007

Unaudited

	2008			2007
REVENUE
Laundry route income	$	16,701,787		$	16,713,637
Equipment lease income	153,620			151,666
Total revenue	16,855,407			16,865,303
OPERATING EXPENSES
Location rentals	8,314,582			8,269,324
Depreciation and amortization	2,212,817			2,329,265
Salaries, wages, and employee benefits	2,798,229			2,751,388
Administrative service fees	68,300			1,273,385
Other location expenses	184,048			149,463
Parts and supplies	372,980			379,978
General and administrative	360,427			378,201
Rent and occupancy	507,792			203,924
Transportation	281,532			252,364
Other operating expenses	269,275			254,071
Marketing expenses	57,213			90,239
Executive services fee	50,000			33,500
Loss on disposal of property and equipment	278,063			—
Total operating expenses	15,755,258			16,365,102
Operating income	1,100,149			500,201
OTHER INCOME (EXPENSE)
Interest income	80,841			67,886
Interest expense	(140,985		)	(157,077		)
Other, net	210,892			71,135
Total other income (expense)	150,748			(18,056		)
NET INCOME	$	1,250,897		$	482,145

The accompanying notes are an integral part of the unaudited financial statements

AUTOMATIC LAUNDRY COMPANY, LTD.

STATEMENTS OF CASH FLOWS

Three Months Ended March 31, 2008 and 2007

Unaudited

	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,250,897		$	482,145
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,212,817			2,329,265
Loss on disposal of property and equipment	278,063			—
Increase in cash surrender value of life insurance	(4,944		)	(6,581		)
Changes in operating assets and liabilities:
Prepaid lease costs	(414,629		)	(849,846		)
Prepaid expenses and other current assets	(691,049		)	(15,267		)
Deposits and other assets	447,252			(28,482		)
Accounts payable and accrued expenses	(672,542		)	(194,612		)
Due to affiliated entity	(1,047,386		)	(13,333		)
Location rentals payable	174,812			123,214
Other long term liabilities	(448,884		)	27,158
Net cash provided by operating activities	1,084,407			1,853,661
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities	(3,456,560		)	(2,928,492		)
Proceeds from maturities of investment securities	9,834,825			2,452,736
Expenditures for property and equipment	(1,354,599		)	(1,520,714		)
Proceeds from sale of property and equipment	864,777			—
Net cash provided (used) by investing activities	5,888,443			(1,996,470		)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes payable	(6,779,449		)	(184,827		)
Distributions to partners	(2,300,237		)	—
Net cash used by financing activities	(9,079,686		)	(184,827		)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(2,106,836		)	(327,636		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	5,438,618			4,680,104
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	3,331,782		$	4,352,468
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid	$	140,985		$	157,077

NON-CASH TRANSACTIONS

During 2008, the Company transferred the cash surrender value of life insurance in the amount of $559,170 to PaceCo Investors, LP.

During 2008, the Company transferred the net book value of certain property in the amount of $126,509 to PaceCo Investors, LP.

The accompanying notes are an integral part of the unaudited financial statements

AUTOMATIC LAUNDRY COMPANY, LTD.

NOTES TO FINANCIAL STATEMENTS

March 31, 2008 and 2007

Note 1.  Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting. The unaudited interim financial statements do not include all information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America. In the opinion of the management of Automatic Laundry Company Ltd. the accompanying unaudited financial statements contain all adjustments (consisting of normal, recurring adjustments), which are necessary to present fairly Automatic Laundry Company Ltd.’s financial position, the results of its operations, and its cash flows. The results for interim periods are not necessarily indicative of the results to be expected for the full year.

Note 2.  Fair Value Measurements

Effective January 1, 2008, the Automatic Laundry Company Ltd. adopted SFAS No. 157, “Fair Value Measurements” (“FAS 157”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  Adoption of SFAS 157 did not have a material effect on the Automatic Laundry Company Ltd.’s financial position and results from operations.

Note 3 - New Accounting Standards

In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," an interpretation of FASB Statement No. 109 ("FIN 48"), to create a single model to address accounting for uncertainty in tax positions. FIN 48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, disclosure and transition. FIN 48 is effective for nonpublic entities for annual periods beginning after December 15, 2007. Automatic Laundry Company Ltd. did adopt FIN 48 as of January 1, 2008, as required. The cumulative effect of adopting FIN 48 did not have a material effect on the Automatic Laundry Company Ltd.’s financial position and results from operations.

NOTE 4 – Subsequent Events

On April 1, 2008, the general partner and the limited partner sold 100% of their interests in Automatic Laundry Company, Ltd. to Mac-Gray Corporation. The purchase price consisted of $106,500,000 in cash and an unsecured note for $10,000,000. The note carries an interest rate of 9% per annum and matures on April 1, 2010. Under the terms of the agreement, the seller will receive all of the uncollected cash and has assumed responsibility for all liabilities of Automatic Laundry Company, Ltd. as of March 31, 2008.  In conjunction with the sale, distributions of $2,200,000 were also paid to Automatic Laundry Company, Ltd. owners on March 31, 2008. During the quarter ended March 31, 2008, Automatic Laundry Company, Ltd. also liquidated all of its investment securities and paid off all of its notes payable.

EX-99.5

EXHIBIT 99.5

PRO FORMA FINANCIAL STATEMENTS

The following Unaudited Pro Forma Combined Income Statement gives effect to the acquisition by the Company of Automatic Laundry Company Ltd. (“ALC”).  This pro forma presentation has been prepared utilizing historical financial statements and notes thereto, certain of which are included herein as well as pro forma adjustments as described in the Notes to the Unaudited Combined Pro Forma Financial Statement.

The Unaudited Pro Forma Combined Income Statement for the year ended December 31, 2007 includes the operating results of the Company and ALC assuming the acquisition occurred on January 1, 2007.

The Unaudited Pro Forma Combined Income Statement is presented for illustrative purposes only and does not purport to represent what the Company’s results of operations would have been had the acquisition of ALC occurred on the dates indicated or the results which may be obtained in the future. Such pro forma financial statement is qualified in its entirety by reference to, and it should be read in conjunction with, the historical audited consolidated financial statements of the Company and the historical audited financial statements of ALC. ALC’s audited financial statements are attached herewith as part of this report and are incorporated herein by reference.

Although the Company believes it can achieve cost savings by combining certain operational, administrative, sales and marketing functions of ALC with those of the Company, none of these potential benefits which may be derived from the combination with the acquired ALC business have been included in the Unaudited Pro Forma Combined Income Statement.

The acquisition has been accounted for using the purchase method of accounting. The Unaudited Pro Forma Combined Income Statement reflects the preliminary allocation of the purchase price of Approximately $12 million of goodwill, approximately $22.4 million of equipment and approximately $82 million of intangibles assets representing contract rights related to laundry facilities management contracts. The Company expects that the tangible assets will be depreciated over an average of five years and the contract rights will be amortized over twenty years on the straight-line basis. The Company will determine the final purchase price allocation following completion of final appraisals of ALC’s assets.

MAC-GRAY CORPORATION UNAUDITED PRO FORMA COMBINED INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2007

(In thousands, except share data)

				Automatic Laundry						Pro Forma Combined
	Mac-Gray Corp.			Company, Ltd						Income Statement
	Year Ended			Year Ended						Year Ended
	December 31,			December 31,			Pro Forma			December 31,
	2007			2007			Adjustments			2007
Revenue:
Facilities management revenue	$	242,803		$	65,873					$	308,676
Product sales	53,099			—						53,099
Total revenue	295,902			65,873			—			361,775
Cost of revenue:
Cost of facilities management revenue	162,839			45,252						208,091
Depreciation and amortization	37,410			8,925			80		(1)	46,415
Cost of product sales	40,347			—						40,347
Total cost of revenue	240,596			54,177			80			294,853
Gross margin	55,306			11,696			(80		)	66,922
Operating expenses:
General, administration, sales and marketing	34,439			9,826						44,265
Depreciation and amortization	1,611			—						1,611
(Gain) loss on sale of assets, net	(254		)	285						31
Total operating expenses	35,796			10,111			—			45,907
Income (loss) from operations	19,510			1,585			(80		)	21,015
Interest expense, net	13,745			322			8,866		(2)	22,933
Loss related to derivative instruments	1,737			—						1,737
Loss on early extinguishment of debt							200		(2)	200
Other (Income)	—			(521		)				(521		)
Income (loss) before provision for (benefit from) income taxes	4,028			1,784			(9,146		)	(3,334		)
							689		(3)
Provision for (benefit from) income taxes	1,509			—			(3,532		)(3)	(1,334		)
Net income (loss)	$	2,519		$	1,784		$	(6,303	)	$	(2,000	)
Net income per common share – basic	$	0.19								$	(.15	)
Net income per common share - diluted	$	0.18								$	(.15	)
Weighted average common shares outstanding - basic	13,209									13,209
Weighted average common shares outstanding - diluted	13,680									13,209

FOOTNOTES TO PRO FORMA FINANCIAL STATEMENT

(in thousands)

(1)	Represents the net of the elimination of ALC’s depreciation and  amortization expense of $8,924 and one year of straight-line depreciation and amortization expense of $9,004 associated with the estimated fair  market value of approximately $22,400 assigned to the acquired equipment and $82,000 of contract rights. The assigned values are pending finalization of the business appraisal process.
(2)	The acquisition was financed with approximately $107,100 variable rate debt provided by the Company’s bank group on April 1, 2008 and a $10,000 note bearing an annual interest rate of 9% issued to the seller. The pro forma interest expense on the incremental debt of $117,100 would have been $9,188, using an interest rate of 7.74% on the bank debt, which is the interest rate on the variable rate debt at April 1, 2008 and 9% on the seller note. If variable interest rates fluctuate by 1/8 of 1%, the impact would be to increase or decrease interest expense on the variable rate debt by $134.  The adjustment also eliminated interest expense of $322 recorded by the seller and recorded a $200 expense for the early extinguishment of debt related to the Company renegotiating its credit facility.
(3)	The net impact of the above adjustments is to decrease pro forma taxable income by $9,146. The tax benefit of $3,532 resulting from this loss has been calculated using a tax rate of 38.6%, the statutory rate for the Company for the year ended December 31, 2007. The tax benefit is offset by $689 resulting from applying the Company’s statutory tax rate to ALC’s income before taxes.

EX-99.6

EXHIBIT 99.6

PRO FORMA FINANCIAL STATEMENTS

The following Unaudited Pro Forma Combined Balance Sheet and the Unaudited Pro Forma Combined Income Statement give effect to the acquisition by the Company of Automatic Laundry Company Ltd. (“ALC”).  This pro forma presentation has been prepared utilizing historical financial statements and notes thereto, certain of which are included herein as well as pro forma adjustments as described in the Notes to Unaudited Combined Pro Forma Financial Statements.

The Unaudited Pro Forma Combined Balance Sheet has been prepared assuming the acquisition occurred on March 31, 2008. The Unaudited Pro Forma Combined Income Statement for the three months ended March 31, 2008 includes the operating results of the Company and ALC assuming the acquisition occurred on January 1, 2008.

The Unaudited Pro Forma Combined Balance Sheet and the Unaudited Pro Forma Combined Income Statement are presented for illustrative purposes only and do not purport to represent what the Company’s results of operations or financial position would have been had the acquisition of ALC occurred on the dates indicated or the results of operations or financial position which may be obtained in the future. Such pro forma financial statements are qualified in their entirety by reference to, and they should be read in conjunction with, the historical audited consolidated financial statements of the Company and the historical audited financial statements of ALC. The pro forma financial statements should also be read in conjunction with the accompanying notes thereto.  ALC’s audited financial statements are attached herewith as part of this report and are incorporated herein by reference.

Although the Company believes it can achieve cost savings by combining certain operational, administrative, sales and marketing functions of ALC with those of the Company, none of these potential benefits which may be derived from the combination with the acquired ALC business have been included in the Unaudited Pro Forma Combined Income Statement.

The acquisition has been accounted for using the purchase method of accounting. The pro forma financial statements include the preliminary allocation of the purchase price of approximately $12 million of goodwill, approximately $22.4 million of equipment and approximately $82 million of intangibles assets representing contract rights related to laundry facilities management contracts. The Company expects that the tangible assets will be depreciated over an average of five years and the contract rights will be amortized over twenty years on the straight-line basis. The Company will determine the final purchase price allocation following completion of final appraisals on ALC’s assets.

MAC-GRAY CORPORATION UNAUDITED PRO FORMA COMBINED BALANCE SHEET

(In thousands, except share data)

										Pro forma
				Automatic Laundry						Combined
	Mac-Gray Corp.			Company, Ltd						Balance Sheet
	At March 31,			At March 31,			Pro forma			At March 31,
	2008			2008			Adjustment			2008
Assets
Current assets:
Cash and cash equivalents	$	16,036		$	3,332		$	(3,332	)(2)	$	16,036
Trade receivables, net of allowance for doubtful accounts	9,124			—						9,124
Inventory of finished goods, net	8,925			—			1,500		(1)	10,425
Deferred income taxes	943			—						943
Prepaid facilities management rent and other current assets	14,494			4,333			(4,333		)(2)	14,494
Total current assets	49,522			7,665			(6,165		)	51,022
							(9,550		)(2)
Property, plant and equipment, net	127,225			9,550			22,382		(1)	149,607
							(8,371		)(2)
Goodwill	42,229			8,371			12,000		(1)	54,229
	2						(165		)(2)
Intangible assets, net	150,999			165			82,130		(1)	233,129
Prepaid facilities management rent and other assets	14,988			2,530			(2,357		)(2)	15,161
Total assets	$	384,963		$	28,282		$	89,904		$	503,148
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of notes payable and capital leases	$	1,285		$	—		$	4,000	(1)	$	5,285
Trade accounts payable and accrued expenses	18,480			891			(848		)(2)	18,523
Accrued facilities management rent	18,133			3,927			(3,927		)(2)	18,133
Due to affiliated entity	—			110			(110		)(2)	0
Deferred revenues and deposits	430			—			—			430
Total current liabilities	38,328			4,929			(885		)	42,371
Long-term debt	210,000			—			113,100		(1)	323,100
Long-term capital lease obligations	1,890			—			1,042		(1)	2,932
Deferred income taxes	31,173			—			—			31,173
Other liabilities	4,384						—		(2)	4,384
Commitments and contingencies
Stockholders’ equity:
General partner capital				394			(394		)(2)	0
Limited partner capital				22,959			(22,959		)(2)	(0		)
Preferred stock of Mac-Gray Corporation ($.01 par value, 5 million shares authorized, no shares outstanding)	—									0
Common stock of Mac-Gray Corporation ($.01 par value, 30 million shares authorized, 13,443,754 issued and 13,329,306outstanding at March 31, 2008	134						—			134
Additional paid in capital	73,030						—			73,030
Accumulated other comprehensive income	—						—			0
Retained earnings	27,212						—			27,212
	100,376			23,353			(23,353		)	100,376
Less common stock in treasury, at cost (114,448 shares at March 31, 2008)	(1,188		)	(1,188		)
Total stockholders’ equity	99,188			23,353			(23,353		)	99,188
Total liabilities and stockholders’ equity	$	384,963		$	28,282		$	89,904		$	503,148

MAC-GRAY CORPORATION UNAUDITED PRO FORMA COMBINED INCOME STATEMENT

FOR THE THREE MONTHS ENDED MARCH 31, 2008

(In thousands, except share data)

				Automatic Laundry						Pro Forma Combined
	Mac-Gray Corp.			Company, Ltd						Income Statement
	Three Months Ended			Three Months Ended			Pro Forma			Three Months Ended
	March 31, 2008			March 31, 2008			Adjustments			March 31, 2008
Revenue:
Facilities management revenue	$	67,053		$	16,855					$	83,908
Product sales	10,589			—						10,589
Total revenue	77,642			16,855			—			94,497
Cost of revenue:
Cost of facilities management revenue	44,226			11,986						56,212
Depreciation and amortization	9,791			2,213			38		(3)	12,042
Cost of product sales	8,114			—						8,114
Total cost of revenue	62,131			14,199			38			76,368
Gross margin	15,511			2,656			(38		)	18,129
Operating expenses:
General, administration, sales and marketing	9,203			1,278						10,481
Depreciation and amortization	401			—						401
(Gain) loss on sale of assets, net	(56		)	278						222
Total operating expenses	9,548			1,556			—			11,104
Income (loss) from operations	5,963			1,100			(38		)	7,025
Interest expense, net	3,798			60			2,237		(4)	6,095
Loss related to derivative instruments	1,202			—						1,202
Loss on early extinguishment of debt							200		(4)	200
Other (income)	—			(211		)				(211		)
Income before provision for income taxes	963			1,251			(2,475		)	(261)
							483		(5)
Provision for (benefit from) income taxes	201			—			(956		)(5)	(272		)
Net income	$	762		$	1,251		$	(1,519	)	$	11
Net income per common share – basic	$	0.06								$	0.00
Net income per common share - diluted	$	0.06								$	0.00
Weighted average common shares outstanding - basic	13,300									13,300
Weighted average common shares outstanding - diluted	13,670									13,670

FOOTNOTES TO PRO FORMA FINANCIAL STATEMENTS

(in thousands)

(1)Reflects the incremental debt of approximately $117,100 incurred to fund the acquisition and approximately $2,000 of related expenses.  Also included is the estimated fair market value, including related lease obligations, of the inventory and equipment acquired and intangible assets of approximately $94,000 consisting of $82,000 of contract rights and $12,000 of goodwill representing the excess of the purchase price over the fair value of the net tangible assets acquired. The values assigned to the tangible and intangible assets are preliminary estimates pending finalization of valuations by an independent third party appraisal firm. The Company anticipates that the tangible assets will be depreciated over 5 years and the contract rights will be amortized over 20 years using the straight line method.

(2)Reflects the elimination of cash ($3,332), miscellaneous other assets ($6,690), net book value of property and equipment ($9,550) and goodwill and intangible assets ($8,536) on the books of the ALC at March 31,2008, which totaled approximately $28,100 and the elimination of accounts payable and other liabilities on the books of ALC that totaled approximately $4,883. Also eliminates the partners’ capital of $23,400 related to ALC.

(3)Represents the net of the elimination of ALC’s depreciation and amortization expense of $2,213 and three months of straight-line depreciation and amortization expense of $2,251 associated with the estimated fair market value of approximately $22,400 assigned to the acquired equipment and $82,000 of contract rights. The assigned values are pending finalization of the business appraisal process.

(4)The acquisition was financed with approximately $107,100 of variable rate debt provided by the Company’s bank group on April 1, 2008 and a $10,000 note bearing an annual interest rate of 9% issued to the seller. The pro forma interest expense on the incremental debt of $117,100 would have been $2,297, using an interest rate of 7.74% on the bank debt, which is the interest rate on the variable rate debt at April 1, 2008 and 9% on the seller note. If variable interest rates fluctuate by 1/8 of 1%, the impact would be to increase or decrease interest expense on the variable rate debt by $33. The adjustment also eliminated interest expense of $60 recorded by ALC and recorded a $200 expense for the early extinguishment of debt related to the Company renegotiating its bank debt.

(5)The net impact of the above adjustments is to decrease pro forma taxable income by $2,475. The tax benefit of $956 resulting from this loss has been calculated using a tax rate of 38.6%, the statutory rate for the Company for the year ended December 31, 2007. The tax benefit is offset by $483 resulting from applying the Company’s statutory tax rate to ALC’s income before taxes.