FORM 10-Q

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P3BBuK2GyoRdMVlHyUHo63Vb4wVA9Xdb4InftvL7+qchZtiIB6LnmCgTa+C/SngT 6toRqH/otr6DNcoa4eUsJg== 0000950130-02-007540.txt : 20021106 0000950130-02-007540.hdr.sgml : 20021106 20021106163001 ACCESSION NUMBER: 0000950130-02-007540 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE LAUNDRY HOLDINGS LLC CENTRAL INDEX KEY: 0001063698 IRS NUMBER: 522055893 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-56857-02 FILM NUMBER: 02811382 BUSINESS ADDRESS: STREET 1: RAYTHEON COMMERCIAL LAUNDRY STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 BUSINESS PHONE: 9207481634 MAIL ADDRESS: STREET 1: RAYTHEON COMMERCIAL LAUNDRY STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE LAUNDRY CORP CENTRAL INDEX KEY: 0001063697 IRS NUMBER: 391928505 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-56857-01 FILM NUMBER: 02811383 BUSINESS ADDRESS: STREET 1: RAYTHEON COMMERCIAL LAUNDRY STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 BUSINESS PHONE: 9207481634 MAIL ADDRESS: STREET 1: RAYTHEON COMMERCIAL LAUNDRY STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE LAUNDRY SYSTEMS LLC CENTRAL INDEX KEY: 0001063699 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MACHINERY, EQUIPMENT & SUPPLIES [5080] IRS NUMBER: 391927923 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-56857 FILM NUMBER: 02811384 BUSINESS ADDRESS: STREET 1: ALLIANCE LAUNDRY SYSTEMS STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 BUSINESS PHONE: 9207481634 MAIL ADDRESS: STREET 1: ALLIANCE LAUNDRY SYSTEMS STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 10-Q 1 d10q.htm FORM 10-Q FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q EQUIVALENT*

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

[ ] 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		333-56857
		333-56857-01
		333-56857-02

ALLIANCE LAUNDRY SYSTEMS LLC

ALLIANCE LAUNDRY CORPORATION

ALLIANCE LAUNDRY HOLDINGS LLC

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE

(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)

39-1927923

39-1928505

52-2055893

(I.R.S. EMPLOYER IDENTIFICATION NO.)

P.O. BOX 990

RIPON, WISCONSIN 54971-0990

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(920) 748-3121

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

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 [ ]

This report is being filed pursuant to requirements contained in the indenture governing the registrant’s Senior Subordinated Notes.

Alliance Laundry Systems LLC

Form 10-Q Equivalent

For The Period Ended September 30, 2002

Table of Contents

		Page No.

PART I	Financial Information

Item 1.	Financial Statements

	Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001	3

	Consolidated Statements of Income (Loss) for the periods ended September 30, 2002 and September 30, 2001	4

	Consolidated Statements of Cash Flows for the periods ended September 30, 2002 and September 30, 2001	5

	Notes to Unaudited Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	17

Item 4.	Controls and Procedures	17

PART II	Other Information

Item 1.	Legal Proceedings	19

Item 2.	Changes in Securities	19

Item 3.	Defaults upon Senior Securities	19

Item 4.	Submission of Matters to a Vote of Security Holders	19

Item 5.	Other Information	19

Item 6.	Exhibits and Reports on Form 8-K	19

Signatures		20

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

ALLIANCE LAUNDRY HOLDINGS LLC

CONSOLIDATED BALANCE SHEETS

(in thousands)

	September 30, 2002			December 31, 2001
Assets		(unaudited)
Current assets:
Cash	$	10,714		$	5,659
Cash-restricted		504			439
Accounts receivable, net		15,101			10,440
Inventories, net		27,526			29,862
Prepaid expenses and other		11,020			10,093

Total current assets		64,865			56,493
Notes receivable, net		10,306			8,512
Property, plant and equipment, net		40,571			46,909
Goodwill, net		55,414			55,414
Beneficial interests in securitized financial assets		29,548			28,227
Debt issuance costs, net		10,124			7,863
Other assets		386			353

Total assets	$	211,214		$	203,771

Liabilities and Members’ Deficit
Current liabilities:
Current portion of long-term debt	$	10,104		$	1,212
Revolving credit facility		—			—
Accounts payable		11,598			12,194
Other current liabilities		21,941			20,539

Total current liabilities		43,643			33,945
Long-term debt:
Senior credit facility		178,131			194,018
Senior subordinated notes		110,000			110,000
Junior subordinated note		19,447			17,069
Other long-term debt		1,088			1,265
Other long-term liabilities		1,757			1,682

Total liabilities		354,066			357,979

Mandatorily redeemable preferred equity		6,000			6,000
Members’ deficit		(148,852	)		(160,208	)

Total liabilities and members’ deficit	$	211,214		$	203,771

ALLIANCE LAUNDRY HOLDINGS LLC

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands)

	Three Months Ended						Nine Months Ended
	September 30, 2002			September 30, 2001			September 30, 2002		September 30, 2001
	(unaudited)						(unaudited)
Net revenues:
Commercial laundry	$	52,091		$	51,792		$	162,154	$	164,501
Service parts		9,238			8,531			27,093		26,634

		61,329			60,323			189,247		191,135
Cost of sales		43,618			45,495			134,439		143,321

Gross profit		17,711			14,828			54,808		47,814
Selling, general and administrative expense		7,853			7,380			22,602		22,470
Nonrecurring costs		32			—			462		—

Total operating expense		7,885			7,380			23,064		22,470

Operating income		9,826			7,448			31,744		25,344
Interest expense		7,069			8,138			19,993		26,347
Loss from early extinguishment of debt		2,004			—			2,004		—
Other income (expense), net		(5	)		(3	)		28		77

Income (loss) before taxes		748			(693	)		9,775		(926	)
Provision for income taxes		7			—			43		22

Net income (loss) before cumulative effect of accounting change		741			(693	)		9,732		(948	)
Cumulative effect of change in accounting principle		—			—			—		2,043

Net income (loss)	$	741		$	(693	)	$	9,732	$	(2,991	)

ALLIANCE LAUNDRY HOLDINGS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Nine Months Ended
	September 30, 2002			September 30, 2001
	(unaudited)
Cash flows from operating activities:
Net income (loss) before cumulative effect of accounting change	$	9,732		$	(948	)
Adjustments to reconcile net income (loss) before cumulative effect of accounting change to cash provided by operating activities:
Depreciation and amortization		10,408			12,625
Non-cash interest		1,440			3,566
Non-cash loss from early extinguishment of debt		2,004			—
Gain on sale of property, plant and equipment		(28	)		(77	)
Changes in assets and liabilities:
Accounts receivable		(4,661	)		(6,478	)
Inventories		2,336			5,661
Other assets		(2,656	)		(14,320	)
Accounts payable		(596	)		5,819
Other liabilities		2,274			1,875

Net cash provided by operating activities		20,253			7,723

Cash flows from investing activities:
Additions to property, plant and equipment		(1,823	)		(4,675	)
Proceeds on disposal of property, plant and equipment		81			171

Net cash used in investing activities		(1,742	)		(4,504	)

Cash flows from financing activities:
Proceeds from long-term debt		193,000			812
Principal payments on long-term debt		(200,172	)		(799	)
Net decrease in revolving line of credit borrowings		—			(8,000	)
Debt financing costs		(6,284	)		—

Net cash used in financing activities		(13,456	)		(7,987	)

Increase (decrease) in cash		5,055			(4,768	)
Cash at beginning of quarter		5,659			5,091

Cash at end of quarter	$	10,714		$	323

Supplemental disclosure of cash flow information:
Cash paid for interest	$	14,911		$	18,563

Notes to Unaudited Consolidated Financial Statements

NOTE 1. BASIS OF PRESENTATION

The unaudited financial statements as of September 30, 2002 and for the periods ended September 30, 2002 present the consolidated financial position and results of operations of Alliance Laundry Holdings LLC (the “Company”), including its wholly-owned direct and indirect subsidiaries, Alliance Laundry Systems LLC and Alliance Laundry Corporation.

In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments necessary (consisting only of normal recurring adjustments) to present fairly the financial position and operating results of the Company for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year.

These financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such regulations, although the Company believes the disclosures provided are adequate to prevent the information presented from being misleading.

In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement modifies and expands the financial accounting and reporting for the impairment or disposal of long-lived assets other than goodwill, which is specifically addressed by SFAS No. 142. This statement supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and the accounting and reporting provisions for the disposal of a segment of a business of APB Opinion No. 30, “Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” SFAS No. 144 had no effect on the Company’s financial condition or results of operations for the nine months ended September 30, 2002.

Effective April 1, 2001, the Company also adopted the provisions of EITF Issue No. 99-20 “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets.” The Company recognized an approximate $2.0 million charge upon adoption in 2001 and recognized approximately $1.5 million and $0.7 million of interest income related to its retained interests in its securitization transactions during the first nine months of 2002 and 2001, respectively.

The Company adopted Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” on January 1, 2001. SFAS No. 133 as amended, requires the Company to recognize all derivatives as either assets or liabilities and measure those instruments at fair value, and recognize changes in the fair value of derivatives in net income or other comprehensive income, as appropriate. In accordance with the transition provisions of SFAS No. 133, the Company recorded a cumulative-effect-type gain adjustment of $0.7 million in other comprehensive income (loss) within members’ deficit to recognize at fair value its interest rate swap arrangements at January 1, 2001. For the nine months ended September 30, 2001, the Company recognized a gain of $0.5 million for the reclassification of the transition adjustment as discussed above.

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

This report on Form 10-Q Equivalent for the periods ended September 30, 2002 should be read in conjunction with the audited financial statements presented in the Company’s Annual Report on Form 10-K (file no. 333-56857) filed with the Securities and Exchange Commission, which includes the audited financial statements of the Company as of and for the year ended December 31, 2001.

NOTE 2. INVENTORIES

Inventories are stated at cost using the first-in, first-out method but not in excess of net realizable value, and consist of the following (in thousands):

	September 30, 2002			December 31, 2001
	(unaudited)
Materials and purchased parts	$	10,974		$	11,830
Work in process		3,397			4,017
Finished goods		15,478			16,822
Less: inventory reserves		(2,323	)		(2,807	)

	$	27,526		$	29,862

NOTE 3. GOODWILL AND OTHER INTANGIBLE ASSETS

The Company adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” in the first quarter of fiscal 2002. Application of the non-amortization provisions of SFAS No. 142 is expected to result in an increase in net income (loss) of approximately $2.0 million in fiscal 2002. The following sets forth a reconciliation of net income for the nine months ended September 30, 2002 and 2001 adjusted for the non-amortization provisions of SFAS No. 142.

	Nine Months Ended
	September 30, 2002		September 30, 2001
Reported net income (loss)	$	9,732	$	(2,991	)
Add: Goodwill amortization		—		1,532

Adjusted net income (loss)	$	9,732	$	(1,459	)

NOTE 4. COMMITMENTS AND CONTINGENCIES

In September 1999, Juan Carlos Lopez pursued an arbitration against Alliance Laundry Sociedad Anonima, (“ALSA”) a foreign subsidiary of Alliance Laundry Systems LLC, under UNCITRAL rules in Buenos Aires, Argentina, seeking in pertinent part, to be paid fees arising from a Consulting Agreement, and indemnification for loss of profits in Argentina and Brazil, plus damages for pain and suffering. An arbitration was conducted by an “ad-hoc” panel (the “Lopez Arbitration”), during which ALSA contended that Juan Carlos Lopez failed to fulfill responsibilities under the Consulting Agreement and was therefore not entitled to the fees, and that ALSA was not liable for loss of profits either in Argentina or Brazil, nor for an indemnification for pain and suffering. On April 3, 2001, the Lopez Arbitration was concluded. The arbitration panel awarded Argentine Pesos 1,408,900 ($1.4 million U.S. dollars at the time), plus nine percent interest from September 6, 1999, plus ten percent over this principal and interest amount as moral damages, plus certain fees and costs, while rejecting other claims of plaintiff. The Company does not believe this arbitration award will have a material effect on the Company’s operations, in as much as ALSA is a foreign subsidiary and is responsible for its own debts and obligations. The remaining investment on the Company’s financial statements is not material as this operation was discontinued in the fourth quarter of 1998, at which time the Company’s investment in ALSA was written down to the value of certain remaining assets. In management’s opinion based on the advice of counsel, under the terms of the award, any such payments would have to be forthcoming from the assets of ALSA. On December 20, 2001, ALSA’s bankruptcy was decreed, at the request of Mr. Lopez, on grounds of non-payment of the arbitration award.

Since January 2002, there have been significant changes in Argentina’s monetary legislation, and the value of the Argentine Peso. The rate of exchange of one Argentine Peso per one United States Dollar is no longer in force, and as of October 30, 2002 the Argentine Peso was trading at .2821 per United States Dollar. Accordingly, in the event that Mr. Lopez was ultimately successful in a U.S. court of securing payment of this award from the Company, the U.S. dollar value of the award (based upon the current rate of exchange) would be substantially reduced as compared to the amount discussed above.

Various claims and legal proceedings generally incidental to the normal course of business are pending or threatened against the Company. While the ultimate liability from these proceedings is difficult to determine, in the opinion of management, any additional liability will not have a material effect on the Company’s financial position, liquidity or results of operations.

NOTE 5. COMPREHENSIVE INCOME / (LOSS)

Comprehensive income/(loss) for the nine months ended September 30, 2002 and 2001 consist of the following (in thousands):

	Nine Months Ended
	September 30, 2002			September 30, 2001
Comprehensive income (loss):
Net income (loss)	$	9,732		$	(2,991	)
Other comprehensive income (loss)
Net unrealized holding gain (loss) on residual interests		1,765			(332	)
Unrealized gain (loss) on interest rate swap		(141	)		283

Comprehensive income (loss)	$	11,356		$	(3,040	)

NOTE 6. DEBT FINANCING

The Company entered into an amended and restated credit agreement dated as of August 2, 2002. As a result, the Company recorded a loss on early extinguishment of debt of $2.0 million, to write-off unamortized debt issuance costs related to its prior term loan and revolving credit facilities. In connection with the amended and restated credit agreement, the Company incurred approximately $6.3 million of debt issuance costs of which approximately $2.4 million was paid to certain related parties under a pre-existing agreement.

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

OPERATIONS

OVERVIEW

The Company believes it is the leading designer, manufacturer and marketer of stand-alone commercial laundry equipment in North America and a leader worldwide. Under the well-known brand names of Speed Queen, UniMac, Huebsch and Ajax, the Company produces a full line of commercial washing machines and dryers with load capacities from 16 to 250 pounds as well as presses and finishing equipment. The Company’s commercial products are sold to four distinct customer groups: (i) laundromats; (ii) multi-housing laundries, consisting primarily of common laundry facilities in apartment buildings, universities and military installations; (iii) on-premise laundries, consisting primarily of in-house laundry facilities of hotels, hospitals, nursing homes and prisons; and (iv) drycleaners.

This discussion and analysis should be read in conjunction with the Financial Statements and Notes thereto included in this report and in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in the Company’s Annual Report on Form 10-K (file no. 333-56857) filed with the Securities and Exchange Commission, which includes the audited financial position and operating results of the Company as of and for the year ended December 31, 2001.

RESULTS OF OPERATIONS

The following table sets forth the Company’s historical net revenues for the periods indicated:

	Quarter Ended
	September 30, 2002		September 30, 2001
	(Dollars in millions)
Net revenues:
Commercial laundry	$	52.1	$	51.8
Service parts		9.2		8.5

	$	61.3	$	60.3

The following table sets forth certain condensed historical financial data for the Company expressed as a percentage of net revenues for each of the periods indicated:

	Quarter Ended
	September 30, 2002		September 30, 2001
Net revenues	100.0	%	100.0	%
Cost of sales	71.1	%	75.4	%
Gross profit	28.9	%	24.6	%
Selling, general and administrative expense	12.8	%	12.3	%
Nonrecurring costs	0.1	%	—
Operating income	16.0	%	12.3	%
Net income (loss) before cumulative effect of accounting change	1.2	%	(1.1	%)

Net revenues. Net revenues for the quarter ended September 30, 2002 increased $1.0 million, or 1.7%, to $61.3 million from $60.3 million for the quarter ended September 30, 2001. This increase was primarily attributable to higher commercial laundry revenue of $0.3 million and higher service parts revenue of $0.7 million. The increase in commercial laundry revenue was due primarily to higher North American equipment revenue of $0.4 million and higher earnings from the Company’s off-balance sheet equipment financing program of $0.6 million, partially offset by lower international revenue of $0.7 million. Revenue from international customers was lower largely due to the discontinuance of sales to a foreign customer under a private label contract and higher sales to the Mexican government in 2001 under a one time contract. The increase in service parts revenue was primarily driven by low sales in the third quarter of 2001, as customers either purchased in advance of, or delayed purchases as a result of a third quarter price increase.

Gross profit. Gross profit for the quarter ended September 30, 2002 increased $2.9 million, or 19.4%, to $17.7 million from $14.8 million for the quarter ended September 30, 2001. This increase was primarily attributable to favorable manufacturing efficiencies, a recent price increase, the higher earnings from the Company’s off-balance sheet equipment financing program and $0.5 million of favorable impact in 2002 resulting from a change in accounting principle whereby goodwill is no longer amortized. (See Note 3). Gross profit as a percentage of net revenues increased to 28.9% for the quarter ended September 30, 2002 from 24.6% for the quarter ended September 30, 2001. This 4.3% increase was primarily attributable to the factors discussed above.

Selling, general and administrative expense. Selling, general and administrative expenses for the quarter ended September 30, 2002 increased $0.5 million, or 6.4%, to $7.9 million from $7.4 million for the quarter ended September 30, 2001. The increase in selling, general and administrative expenses was primarily due to higher pension and fringe benefit costs of $0.9 million and higher independent development expenses of $0.2 million which were partially offset by lower sales and marketing expenses of $0.3 million. Selling, general and administrative expenses as a percentage of net revenues increased to 12.8% for the quarter ended September 30, 2002 from 12.3% for the quarter ended September 30, 2001.

Nonrecurring costs. Nonrecurring costs for the quarter ended September 30, 2002 were $0.1 million. The 2002 costs were due to the write-off of costs incurred while pursuing an initial public offering through a Canadian Income Trust during the second quarter. Due to market conditions, management determined that such a public offering was not advantageous to the Company at that time. Nonrecurring costs as a percentage of net revenues were 0.1% for the quarter ended September 30, 2002.

Operating income. As a result of the foregoing, operating income for the quarter ended September 30, 2002 increased $2.4 million, or 31.9%, to $9.8 million from $7.4 million for the quarter ended September 30, 2001. Operating income as a percentage of net revenues increased to 16.0% for the quarter ended September 30, 2002 from 12.3% for the quarter ended September 30, 2001.

Interest expense. Interest expense for the quarter ended September 30, 2002 decreased $1.0 million, or 13.1%, to $7.1 million from $8.1 million for the quarter ended September 30, 2001. Interest expense was lower in 2002 as a result of lower interest rates and a reduction in total debt outstanding of $16.6 million, or 5.0% since June of 2001.

Loss from early extinguishment of debt. Loss from early extinguishment of debt for the quarter ended September 30, 2002 was $2.0 million. The Company entered into an amended and restated credit agreement dated as of August 2, 2002. As a result, the Company recorded a loss on early extinguishment of debt of $2.0 million, to write-off unamortized debt issuance costs related to its prior term loan and revolving credit facilities.

Net income (loss). As a result of the foregoing, net income (loss) for the quarter ended September 30, 2002 increased $1.4 million to net income of $0.7 million as compared to a net loss of $0.7 million for the quarter ended September 30, 2001. Net income (loss) as a percentage of net revenues increased to 1.2% for the quarter ended September 30, 2002 from (1.1%) for the quarter ended September 30, 2001.

The following table sets forth the Company’s historical net revenues for the periods indicated:

	Nine Months Ended
	September 30, 2002		September 30, 2001
	(Dollars in millions)
Net revenues:
Commercial laundry	$	162.1	$	164.5
Service parts		27.1		26.6

	$	189.2	$	191.1

The following table sets forth certain condensed historical financial data for the Company expressed as a percentage of net revenues for each of the periods indicated:

	Nine Months Ended
	September 30, 2002		September 30, 2001
Net revenues	100.0	%	100.0	%
Cost of sales	71.0	%	75.0	%
Gross profit	29.0	%	25.0	%
Selling, general and administrative expense	12.0	%	11.7	%
Nonrecurring costs	0.2	%	—
Operating income	16.8	%	13.3	%
Net income (loss) before cumulative effect of accounting change	5.1	%	(0.5	%)

Net revenues. Net revenues for the nine months ended September 30, 2002 decreased $1.9 million, or 1.0%, to $189.2 million from $191.1 million for the nine months ended September 30, 2001. This decrease was primarily attributable to lower commercial laundry revenue of $2.4 million and higher service parts revenue of $0.5 million. The decrease in commercial laundry revenue was due primarily to lower North American equipment revenue of $0.6 million and lower international revenue of $2.2 million, partially offset by higher earnings from the Company’s off-balance sheet equipment financing program of $0.4 million. The decrease in North American equipment revenues was primarily due to lower revenues from on-premise laundries partially offset by higher revenues from multi-housing laundries. Revenue from international customers was lower due to the discontinuance of sales to a foreign customer under a private label contract and higher sales to the Mexican government in 2001 under a one time contract.

Gross profit. Gross profit for the nine months ended September 30, 2002 increased $7.0 million, or 14.6%, to $54.8 million from $47.8 million for the nine months ended September 30, 2001. This increase was primarily attributable to favorable manufacturing efficiencies and $1.5 million of favorable impact in 2002 resulting from a change in accounting principle whereby goodwill is no longer amortized. (See Note 3). Gross profit as a percentage of net revenues increased to 29.0% for the nine months ended September 30, 2002 from 25.0% for the nine months ended September 30, 2001.

Selling, general and administrative expense. Selling, general and administrative expenses for the nine months ended September 30, 2002 increased $0.1 million, or 0.6%, to $22.6 million from $22.5 million for the nine months ended September 30, 2001. The increase in selling, general and administrative expenses was primarily due to higher pension expense of $1.1 million and higher independent development expenses of $0.4 million, partially offset by lower one-time expenses related primarily to the relocation of Cincinnati, Ohio production lines to Marianna, Florida of $0.9 million and a lower loss on sales of qualified accounts receivable of $0.5 million. Selling, general and administrative expenses as a percentage of net revenues increased to 12.0% for the nine months ended September 30, 2002 from 11.7% for the nine months ended September 30, 2001.

Nonrecurring costs. Nonrecurring costs for the nine months ended September 30, 2002 were $0.5 million. The 2002 costs were due to the write-off of costs incurred while pursuing an initial public offering through a Canadian Income Trust in the second quarter. Due to market conditions, management determined that such a public offering was not advantageous to the Company at that time. Nonrecurring costs as a percentage of net revenues increased to 0.2% for the nine months ended September 30, 2002.

Operating income. As a result of the foregoing, operating income for the nine months ended September 30, 2002 increased $6.4 million, or 25.3%, to $31.7 million from $25.3 million for the nine months ended September 30, 2001. Operating income as a percentage of net revenues increased to 16.8% for the nine months ended September 30, 2002 from 13.3% for the nine months ended September 30, 2001.

Interest expense. Interest expense for the nine months ended September 30, 2002 decreased $6.3 million, or 24.1%, to $20.0 million from $26.3 million for the nine months ended September 30, 2001. Interest expense in 2002 includes a favorable non-cash adjustment of $0.9 million to reflect changes in the fair values of interest rate swap agreements which expired during the first quarter of 2002. Interest expense in 2001 included an unfavorable non-cash adjustment of $1.6 million related to these agreements. Interest expense was also lower in 2002 as a result of lower interest rates and a reduction in total debt outstanding of $17.8 million, or 5.3% since December of 2000.

Loss from early extinguishment of debt. Loss from early extinguishment of debt for the nine months ended September 30, 2002 was $2.0 million. The Company entered into an amended and restated credit agreement dated as of August 2, 2002. As a result, the Company recorded a loss on early extinguishment of debt of $2.0 million, to write-off unamortized debt issuance costs related to its prior term loan and revolving credit facilities.

Net income (loss) before cumulative effect of accounting change. As a result of the foregoing, net income before cumulative effect of accounting change for the nine months ended September 30, 2002 increased $10.6 million to net income before cumulative effect of accounting change of $9.7 million as compared to a net loss before cumulative effect of accounting change of $0.9 million for the nine months ended September 30, 2001. Net income before cumulative effect of accounting change as a percentage of net revenues increased to 5.1% for the nine months ended September 30, 2002 from (0.5%) for the nine months ended September 30, 2001.

Cumulative effect of accounting change. Effective April 1, 2001, the Company adopted the provisions of Emerging Issues Task Force (EITF) Issue No. 99-20 “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets.” In accordance with the impairment provisions of EITF 99-20, upon adoption in 2001 the Company recognized a $2.0 million non-cash write-down of the Company’s retained interests in its securitization transactions.

Net income (loss). As a result of the foregoing, net income for the nine months ended September 30, 2002 increased $12.7 million to net income of $9.7 million as compared to a net loss of $3.0 million for the nine months ended September 30, 2001. Net income (loss) as a percentage of net revenues increased to 5.1% for the nine months ended September 30, 2002 from (1.6%) for the nine months ended September 30, 2001.

LIQUIDITY AND CAPITAL RESOURCES

On August 2, 2002 the Company amended and restated its May of 1998 credit agreement with a syndicate of financial institutions. The new amended and restated credit facility (the “Senior Credit Facility”) is comprised of a term loan facility aggregating $193.0 million (the “Term Loan Facility”) and a $45.0 million revolving credit facility (the “Revolving Credit Facility”). Among other modifications, the amended and restated agreement extends the Senior Credit Facility termination date from May 5, 2003 to August 6, 2007.

The new Senior Credit Facility continues to be subject to certain financial ratios and tests, similar to those included in the prior facilities. The new Senior Credit Facility allows a maximum ratio of consolidated debt to EBITDA (as defined by the Senior Credit Facility) at December 31, 2002 of 6.0 whereas under the prior credit facilities the maximum allowed under this ratio was 5.25 at December 31, 2002. Management believes that future cash flows from operations, together with available borrowings under the Revolving Credit Facility, will be adequate to meet the Company’s anticipated requirements for capital expenditures, working capital, interest payments, scheduled principal payments and other debt repayments while achieving all required covenant requirements under the new credit facilities.

The Term Loan Facility is also subject to mandatory prepayment with the proceeds of certain debt incurrences, asset sales and a portion of Excess Cash Flow (as defined in its amended and restated credit agreement dated as of August 2, 2002).

The Company’s principal sources of liquidity are cash flows generated from operations and borrowings under its $45.0 million Revolving Credit Facility. The Company’s principal uses of liquidity are to meet debt service requirements, finance the Company’s capital expenditures and provide working capital. The Company expects that capital expenditures in 2002 will not exceed $4.0 million. The Company expects the ongoing requirements for debt service, capital expenditures and working capital will be funded by internally generated cash flow and borrowings under the Revolving Credit Facility.

As of September 30, 2002, the Company has $318.8 million of combined indebtedness outstanding, consisting of outstanding debt of $188.0 million under the Term Loan Facility, $110.0 million of senior subordinated notes and $19.4 million of junior subordinated notes, $0.7 million of borrowings pursuant to a Wisconsin Community Development Block Grant Agreement and $0.7 million of borrowings pursuant to an equipment financing transaction with Alliant Energy – Wisconsin Power & Light Company. At September 30, 2002 there were no borrowings under the Company’s Revolving Credit Facility. Letters of credit issued on the Company’s behalf under the Revolving Credit Facility totaled $15.4 million at September 30, 2002. As a result, at September 30, 2002 the Company had $29.6 million of its $45.0 million Revolving Credit Facility available subject to certain limitations under the new Senior Credit Facility. After considering such limitations, which relate primarily to the maximum ratio of consolidated debt to EBITDA, the Company could have borrowed $43.4 million at September 30, 2002 in additional indebtedness under the Revolving Credit Facility. Additionally, at September 30, 2002 the Company could have sold additional trade receivables of approximately $4.7 million to finance its operations.

The new Term Loan Facility amortizes quarterly and is repayable in the following aggregate amounts:

Year	Amount Due
	(Dollars in millions)
2002	$	2.5
2003	$	9.9
2004	$	12.3
2005	$	14.8
2006	$	19.7
2007	$	128.8

The Company’s Asset Backed Facility provides $250.0 million of off-balance sheet financing for trade receivables and equipment loans. The finance programs have been and will continue to be structured in a manner that qualifies for off-balance sheet treatment in accordance with generally accepted accounting principles. It is expected that under the Asset Backed Facility, the Company will continue to act as originator and servicer of the equipment financing promissory notes and the trade receivables. The Company’s Asset Backed Facility is scheduled to expire on May 5, 2003. The Company currently expects to replace this facility within the fourth quarter of 2002.

The Company’s ability to make scheduled payments of principal of, or to pay the interest or liquidated damages, if any, on, or to refinance, its indebtedness, or to fund planned capital expenditures, will depend upon its future performance, which, in turn, is subject to general economic, financial, competitive and other factors that are beyond its control. Based upon the current level of operations and anticipated growth, management believes that future cash flow from operations, together with available borrowings under the new Revolving Credit Facility, will be adequate to meet the Company’s anticipated requirements for capital expenditures, working capital, interest payments and scheduled principal payments. There can be no assurance, however, that the Company’s business will continue to generate sufficient cash flow from operations in the future to service its debt and make necessary capital expenditures after satisfying certain liabilities arising in the ordinary course of business. If unable to do so, the Company may be required to refinance all or a portion of its existing debt, to sell assets or to obtain additional financing. There can be no assurance that any such refinancing would be available or that any such sales of assets or additional financing could be obtained.

On October 1, 2002, Alliance Laundry Systems Income Fund (the “Fund”) and the Company announced that the Fund filed a preliminary prospectus with securities regulators across Canada. The Fund has been created to acquire an indirect ownership interest in the Company and will make monthly distributions of its available cash to the holders of its units.

The Fund expects to use the net proceeds from its initial public offering to acquire an indirect ownership interest in the Company. The Company expects to use the proceeds from the sale of such ownership interest to reduce existing debt and acquire other securities and to ultimately provide it with the flexibility to fund future acquisitions and product development. Specifically, on November 4, 2002 the Company commenced an offer to purchase for cash and solicitation of consents relating to its outstanding 9 5/8% Senior Subordinated Notes. The offer to purchase is conditioned upon the completion of the units offering by the Fund and the Company’s receipt of sufficient funds from the sale of an indirect ownership interest to the Fund. In the event the Company repurchases a portion or all of its outstanding 9 5/8% Senior Subordinated Notes, the Company would be required to write-off a proportionate amount of related unamortized debt issuance costs. The total amount of unamortized debt issuance costs related to the 9 5/8% Senior Subordinated Notes was $3.9 million at September 30, 2002. The closing of the public offering is subject to regulatory approval. The units of the Fund have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Historical

Cash generated from operations for the nine months ended September 30, 2002 of $20.3 million was principally derived from operations (net income adjusted for depreciation, amortization, non-cash interest, non-cash loss from early extinguishment of debt and gains on sale of property, plant and equipment) which was partially offset by lower sales of accounts receivable under the Asset Backed

Facility. The working capital investment in accounts receivable at September 30, 2002 of $15.1 million increased $4.7 million as compared to the balance of $10.4 million at December 31, 2001, which was primarily attributable to selling less accounts receivable through Alliance Laundry Receivable Warehouse (“ALRW”), a special-purpose single member limited liability company. The investment in notes receivable at September 30, 2002 of $10.3 million increased $1.8 million as compared to the balance of $8.5 million at December 31, 2001, which was primarily attributable to the increase in ineligible loans under the Asset Backed Facility. The investment in inventory at September 30, 2002 of $27.5 million decreased $2.4 million as compared to the balance of $29.9 million at December 31, 2001. Accounts payable at September 30, 2002 of $11.6 million decreased $0.6 million as compared to the balance of $12.2 million at December 31, 2001.

Net cash provided by operating activities for the nine months ended September 30, 2002 of $20.3 million increased by $12.6 million as compared to the nine months ended September 30, 2001. This increase was primarily due to lower net cash used in changes in assets and liabilities of $4.2 million, and an increase in net cash provided by operations of $8.4 million for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001. The lower net cash impact from changes in assets and liabilities for the nine months ended September 30, 2002 of $4.2 million was largely due to decreased working capital changes in notes receivable and beneficial interests in securitized financial assets, which were partially offset by lower accounts payable.

Capital Expenditures

The Company’s capital expenditures for the nine months ended September 30, 2002 and September 30, 2001 were $1.8 million and $4.7 million, respectively. Capital spending in 2002 was principally oriented toward product enhancements and manufacturing process improvements, while spending in 2001 was principally oriented toward reducing manufacturing costs and transitioning press and finishing equipment production from a prior facility to the Company’s Marianna, Florida manufacturing facility.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations.” This statement addresses the financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The Company is currently reviewing this statement to determine its effect on the Company’s financial statements.

In May 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002.” This statement, among other things, rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt” and provides that debt extinguishments that do not meet the criteria for classification as extraordinary items should not be classified as extraordinary. The Company has adopted this statement.

In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, “Accounting for Exit or Disposal Activities.” This statement addresses the recognition, measurement, and reporting of costs associated with exit and disposal activities, including restructuring

activities that are currently accounted for pursuant to the guidance that the Emerging Issues Task Force (EITF) has set forth in EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The scope of the current statement also includes (1) costs related to terminating a contract that is not a capital lease and (2) termination benefits that employees who are involuntarily terminated receive under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. SFAS No. 146 will be effective for exit or disposal activities that are initiated after December 31, 2002.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is potentially exposed to market risk associated with changes in interest and foreign exchange rates. From time to time the Company may enter into derivative financial instruments to hedge its interest rate exposures and to hedge exchange rate fluctuations between United States dollars and foreign currencies. An instrument will be treated as a hedge if it is effective in offsetting the impact of volatility in the Company’s underlying exposures. The Company does not enter into derivatives for speculative purposes. There have been no material changes in the Company’s market risk exposures as compared to those discussed in the Company’s Annual Report on Form 10-K (file no. 333-56857), except as previously discussed, the Company’s interest rate swaps matured during the first quarter of 2002.

ITEM 4. CONTROLS AND PROCEDURES

(a) The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chairman and Chief Executive Officer along with the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer concluded that as of October 30, 2002 the Company’s disclosure controls and procedures (1) are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings and (2) are adequate to ensure that information required to be disclosed by the Company in the reports filed or submitted by the Company under the Exchange Act is recorded, processed and summarized and reported within the time periods specified in the SEC’s rules and forms.

(b) There have been no significant changes in the Company’s internal controls or in other factors which could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

FORWARD-LOOKING STATEMENTS

With the exception of the reported actual results, the information presented herein contains predictions, estimates or 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, including items specifically discussed in the “Note 3 – Commitments and Contingencies” section of this document. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to differ materially from those

expressed or implied by such forward-looking statements. Although the Company believes that its plans, intentions and expectations reflected in such forward-looking statements are based on reasonable assumptions, it 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 the Company’s products abroad; market acceptance of new and enhanced versions of the Company’s products; the impact of substantial leverage and debt service on the Company and other risks listed from time to time in the Company’s reports, including but not limited to the Company’s Annual Report on Form 10-K (file no. 333-56857).

PART II		OTHER INFORMATION

Item 1.		Legal Proceedings. None.

Item 2.		Changes in Securities. None.

Item 3.		Defaults upon Senior Securities. None.

Item 4.		Submission of Matters to a Vote of Security Holders. None.

Item 5.		Other Information. None.

Item 6.		Exhibits and Reports on Form 8-K.

(a) List of Exhibits.

10.1 Alliance Laundry Holdings LLC nonqualified deferred compensation plan, dated as of February 27, 2002

10.2 First amendment to the Alliance Laundry Holdings LLC nonqualified deferred compensation plan, dated as of June 21, 2002

10.3 Second amendment, Alliance Laundry Holdings LLC nonqualified deferred compensation plan, dated as of August 19, 2002

(b) Reports on Form 8-K.

On October 1, 2002 a Report on Form 8-K was filed containing a joint press release of Alliance Laundry Systems LLC and Alliance Laundry Income Fund regarding the filing of a preliminary prospectus with Canadian security regulators for an initial public offering of trust units, dated October 1, 2002.

On October 9, 2002 a Report on Form 8-K was filed containing a copy of the prospectus of Alliance Laundry Income Fund, dated September 30, 2002. The units of Alliance Laundry Income Trust have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

SIGNATURES

Alliance Laundry Systems LLC has duly caused this quarterly report equivalent to be signed on its behalf by the undersigned, thereto duly authorized, in the city of Ripon, state of Wisconsin, on the 6th day of November 2002.

Signature	Title	Date

/s/ THOMAS L’ESPERANCE Thomas L’Esperance	Chairman and CEO	11-6-02

/s/ BRUCE P. ROUNDS Bruce P. Rounds	Vice President, Chief Financial Officer	11-6-02

Alliance Laundry Corp. has duly caused this quarterly report equivalent to be signed on its behalf by the undersigned, thereto duly authorized, in the city of Ripon, state of Wisconsin, on the 6th day of November 2002.

Signature	Title	Date

/s/ THOMAS L’ESPERANCE Thomas L’Esperance	Chairman and CEO	11-6-02

/s/ BRUCE P. ROUNDS Bruce P. Rounds	Vice President, Chief Financial Officer	11-6-02

Alliance Laundry Holdings LLC has duly caused this quarterly report equivalent to be signed on its behalf by the undersigned, thereto duly authorized, in the city of Ripon, state of Wisconsin, on the 6th day of November 2002.

Signature	Title	Date

/s/ THOMAS L’ESPERANCE Thomas L’Esperance	Chairman and CEO	11-6-02

/s/ BRUCE P. ROUNDS Bruce P. Rounds	Vice President, Chief Financial Officer	11-6-02

CERTIFICATIONS

I, Thomas F. L’Esperance, Chairman and Chief Executive Officer of Alliance Laundry Systems LLC, Alliance Laundry Corporation and Alliance Laundry Holdings LLC, certify that:

I have reviewed this quarterly report on Form 10-Q Equivalent of November 6, 2002;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Signature	Title	Date

/s/ THOMAS L’ESPERANCE Thomas L’Esperance	Chairman and CEO	11-6-02

CERTIFICATIONS

I, Bruce P. Rounds, Vice President, Chief Financial Officer of Alliance Laundry Systems LLC, Alliance Laundry Corporation and Alliance Laundry Holdings LLC, certify that:

I have reviewed this quarterly report on Form 10-Q Equivalent of November 6, 2002;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Signature	Title	Date

/s/ BRUCE P. ROUNDS Bruce P. Rounds	Vice President, Chief Financial Officer	11-6-02

EX-10.1 3 dex101.htm NONQUALIFIELD DEFERRED COMPENSATION PLAN NONQUALIFIELD DEFERRED COMPENSATION PLAN

EXHIBIT 10.1

ALLIANCE LAUNDRY HOLDINGS LLC

NONQUALIFIED DEFERRED COMPENSATION PLAN

Alliance Laundry Holdings LLC hereby establishes, effective as of June 1, 2002, the Alliance Laundry Holdings LLC Nonqualified Deferred Compensation Plan on the terms and conditions hereinafter set forth. Such Plan provides certain eligible employees and members with the opportunity to defer portions of their base salary, bonus payments and other payments in accordance with the provisions of the Plan.

SECTION I

DEFINITIONS

For the purposes hereof, the following words and phrases shall have the meanings set forth below, unless their context clearly requires a different meaning:

1.1. “Account” means the bookkeeping account maintained by the Committee on behalf of each Participant pursuant to Section 2.4.

1.2. “Affiliate” means any corporation, limited liability company, joint venture, partnership, unincorporated association or other entity that is affiliated, directly or indirectly, with the Company and which is designated as such under the Plan by the Committee from time to time.

1.3. “Base Salary” means the annual base rate of cash compensation (which, in the case of a Participant who is an Eligible Member, shall mean his annual “guaranteed payments” within the meaning of Section 707(c) of the Internal Revenue Code of 1986, as amended) payable by the Company and/or by any Affiliate to a Participant.

1.4. “Beneficiary” or “Beneficiaries” means the person or persons, including one or more trusts, designated by a Participant in accordance with the Plan to receive payment of the remaining balance of the Participant’s Account in the event of the death of the Participant prior to the Participant’s receipt of the entire amount credited to his Account.

1.5. “Board of Managers” means the Board of Managers of the Company.

1.6. “Bonus” means cash incentive compensation payable to an Eligible Participant or Eligible Member pursuant to a bonus or other incentive compensation plan, whether such plan is now in effect or hereafter established by the Company, which the Committee may designate from time to time.

1.7. “Change in Control” shall have the meaning set forth in Article I of the Alliance Laundry Holdings LLC Amended and Restated Limited Liability Company Agreement dated as of May 5, 1998, as the same has been or in the future may be amended or restated, or any successor thereto.

1.8. “Committee” means the committee appointed by the Board of Managers to administer the Plan. Unless and until otherwise specified, the Committee under the Plan at any time shall consist of the persons who are then serving as the Company’s Chief Executive Officer, Chief Financial Officer, and Vice President – Human Resources.

1.9. “Company” means Alliance Laundry Holdings LLC and its successors, including, without limitation, the surviving corporation resulting from any merger or consolidation of Alliance Laundry Holdings LLC with any corporation, limited liability company, joint venture, partnership, unincorporated association or other entity.

1.10. “Election Agreement” means a Participant’s agreement, on a form provided by the Committee, to defer his Base Salary and/or Bonus.

1.11. “Eligible Employee” means an employee of the Company or an Affiliate (other than an Eligible Member) who is, as determined by the Committee, a member of a “select group of management or highly compensated employees,” within the meaning of Sections 201, 301 and 401 of ERISA, and who is selected by the Committee to participate in the Plan. Unless otherwise determined by the Committee, an Eligible Employee shall continue as such until termination of employment.

1.12. “Eligible Member” means any member of the Company or its Affiliates who also performs services to the Company or its Affiliates (other than in his or her capacity as a member of such), and who is, as determined by the Committee, a member of a “select group of management or highly compensated employees,” within the meaning of Sections 201, 301 and 401 of ERISA, and who is selected by the Committee to participate in the Plan. Unless otherwise determined by the Committee, an Eligible Member shall continue as such until termination of service.

1.13. “Employer Contributions” has the meaning given to such term in Section 2.13.

1.14. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.15. “Insolvent” means that the Company or an Affiliate, whichever is applicable, has become subject to a pending voluntary or involuntary proceeding as a debtor under the United States Bankruptcy Code or has become unable to pay its debts as they mature.

1.16. “Participant” means any Eligible Employee or Eligible Member who has at any time elected to defer the receipt of a Bonus and/or Base Salary in accordance with the Plan and who, in conjunction with his Beneficiary, has not received a complete distribution of the amount credited to his Account.

1.17. “Plan” means this deferred compensation plan, which shall be known as the Alliance Laundry Holdings LLC Nonqualified Deferred Compensation Plan.

1.18. “Termination of Service Date” of any Participant who is an Eligible Employee shall be the date such Participant ceases to be an employee of the Company and its Affiliates. The “Termination of Service Date” of any Participant who is an Eligible Member shall be the date such Participant ceases to provide services to the Company or its Affiliates.

1.19. “Year” means a calendar year.

SECTION II

DEFERRALS, CONTRIBUTIONS AND ACCOUNTS

2.1. Eligibility. Subject to Section 2.3, an Eligible Employee or Eligible Member may elect to defer receipt of all or a specified part of his Base Salary and/or Bonus for any Year in accordance with Section 2.2. An Eligible Employee’s, or Eligible Member’s, entitlement to defer shall cease with respect to the Year following the Year in which he ceases to be an Eligible Employee or Eligible Member, as applicable.

2.2. Election to Defer.

(i) Base Salary. Unless otherwise provided by the Committee, an Eligible Employee or Eligible Member who desires to defer all or part of his Base Salary pursuant to the Plan must complete and deliver an Election Agreement to the Committee before the first day of the Year for which such compensation would otherwise be paid.

(ii) Bonus. Unless otherwise provided by the Committee, an Eligible Employee or Eligible Member who desires to defer all or part of his Bonus pursuant to the Plan must complete and deliver an Election Agreement to the Committee on or before the first day of the Year for which such compensation would otherwise be earned.

(iii) First Plan Year. Unless otherwise provided by the Committee, an Eligible Employee or Eligible Member who desires to defer all or part of his Base Salary for services rendered on and after June 1, 2002 through December 31, 2002 (i.e., the first Plan Year) or all or part of his Bonus that is earned during 2002 must complete and deliver an Election Agreement to the Committee during the period beginning on May 1, 2002 and ending May 31, 2002.

(iv) New Hire. Notwithstanding the above, in the event that an individual first becomes an Eligible Employee or Eligible Member during the course of a Year, rather than as of the first day of a Year, the individual’s Election Agreement must be filed no later than thirty (30) days following the date he first becomes an Eligible Employee or Eligible Member, as applicable, and such Election Agreement shall be effective only with regard to Base Salary and Bonuses earned following the filing of the Election Agreement with the Committee.

(v) General. Unless otherwise provided by the Committee, an Election Agreement that is timely delivered to the Committee shall be effective (i) with respect to Base Salary, for the Year following the Year in which the Election Agreement is delivered to the Committee and (ii) with respect to Bonus, for the Year in which the Bonus is earned, unless such Election Agreement is revoked or modified with the consent

of the Committee or until terminated automatically upon either the termination of the Plan, the Company or any Affiliate which employs the Participant becoming Insolvent or the Participant’s Termination of Service Date.

2.3. Amount Deferred. A Participant shall designate on the Election Agreement the portion of his Base Salary and/or Bonus that is to be deferred in accordance with the following rules.

(i) Base Salary. A Participant may defer up to 100% of the Base Salary that the Participant would otherwise receive during the Year for services performed as an Eligible Employee or Eligible Member; provided, however, that the Participant shall not be permitted to defer less than 1% of such amount during any one Year, and any such attempted deferral shall not be effective; provided, further, that the portion of such Base Salary that is eligible for deferral will be reduced by applicable employment taxes if such reduction is required in order to provide the Company or its Affiliates with a source of funds, from such Base Salary, with which to pay such employment taxes. Once during the Year, a Participant may modify the deferral percentage of his Base Salary specified on his Election Agreement, provided that the new percentage of his Base Salary does not exceed 100% and applies only to Base Salary for those pay periods of his services rendered after the date of the modification through the last day of the Year.

(ii) Bonus. A Participant may defer up to 100% of the Bonus that the Participant earns during the Year. Notwithstanding the preceding sentence, the portion of a Participant’s Bonus that is eligible for deferral will be reduced by applicable employment taxes if such reduction is required in order to provide the Company or its Affiliates with a source of funds, from the Bonus, with which to pay such employment taxes. In any event, a Participant shall not be permitted to defer less than 1% of his Bonus during any one Year, and any such attempted deferral shall not be effective. To the extent permitted by the Committee, a Participant may specify in the Election Agreement that different percentages or dollar amounts shall apply to Bonuses payable under different bonus or incentive compensation plans. Once during the Year, with the consent of the Committee, and in any event on or prior to December 1 of such Year, a Participant may modify the deferral percentage of his Bonus specified on his Election Agreement, provided that the new percentage of his Bonus does not exceed 100%.

2.4. Accounts.

(i) Crediting of Deferrals. Base Salary and/or Bonus that a Participant elects to defer shall be treated as if it were set aside in one or more Accounts on the date the Base Salary and/or Bonus would otherwise have been paid to the Participant, in accordance with procedures established from time to time by the Committee.

(ii) Crediting of Gains, Losses and Earnings to Accounts. Each Participant’s Account will be credited with gains, losses and earnings based on investment directions made by the Participant in accordance with investment deferral crediting options and procedures established from time to time by the Committee. The Committee specifically retains the right in its sole discretion to change the investment deferral crediting options and procedures from time to time. By electing to defer any amount pursuant to the Plan, each Participant shall thereby acknowledge and agree that the Company or any Affiliate is not and shall not be required to make any investment in connection with the Plan, nor is it required to follow the Participant’s investment directions in any actual investment it may make or acquire in connection with the Plan or in determining the amount of any actual or contingent liability or obligation of the Company or an Affiliate thereunder or relating thereto. Any amounts credited to a Participant’s Account with respect to which a Participant does not provide investment direction shall be credited with gains, losses and earnings as if such amounts were invested in an investment option to be selected by the Committee in its sole discretion. The Company, Board of Managers and the Committee do not guarantee the Participants from loss or depreciation, and the members of the Board of Managers and the Committee do not personally guarantee the payment of any amount which may become due to any person hereunder.

2.5. Date of Distribution. The distribution or commencement of the distribution of a Participant’s Account will be made in January of the Year commencing immediately after the Year in which occurs the Participant’s Termination of Service Date.

2.6. Form of Distribution. A Participant may elect, on the first Election Agreement that he delivers to the Committee pursuant to which amounts are credited to his Account, to receive his Account in cash in a single lump sum or in annual installments over a period not in excess of five years. The lump sum payment or the first installment, as the case may be, shall be made as specified in Section 2.5. In the event that an Account is paid in installments, the amount of such Account remaining unpaid shall continue to be credited with gains, losses and earnings as provided in Section 2.4. The payment to a Participant or his Beneficiary of a single lump sum or the number of installments elected by the Participant pursuant to this Section shall discharge all obligations of the Company and the Affiliates to such Participant or Beneficiary under the Plan with respect to that Account. In the event that an Account is paid in installments, the amount of each installment shall be determined in accordance with procedures established from time to time by the Committee.

2.7. Modification of Date and/or Form of Distribution. Notwithstanding the payment terms designated by a Participant on the first Election Agreement that he delivers to the Committee under the Plan, a Participant may elect to change the form of payment of an Account to a form of payment otherwise permitted under Section 2.6; provided, however, that such election shall be made on a form provided by the Committee; provided, further, that any election made less than twelve months prior to the Participant’s Termination of Service Date shall not be valid, and in such case, the distribution of his Account shall be made in accordance with the latest valid election of the Participant.

2.8. Death of a Participant.

(i) General. In the event of the death of a Participant, the remaining amount of his Account shall be paid to his Beneficiary or Beneficiaries as described in Section 2.8(ii). Each Participant shall designate a Beneficiary or Beneficiaries on a beneficiary designation form provided by the Committee. A Participant’s Beneficiary designation may be changed at any time prior to his death by the execution and delivery of a new beneficiary designation. The Beneficiary designation on file with the Company that bears the latest date at the time of the Participant’s death shall govern. In the absence of a Beneficiary designation, the amount of the Participant’s Account shall be paid to the Participant’s estate in a lump sum amount within 90 days after the appointment of an executor or administrator or as otherwise determined by the Committee.

(ii) Form and Date of Distribution. Notwithstanding any other provision, upon the death of a Participant, the remaining balance in his Account shall be paid as follows. If the Participant dies after payment of his Account has commenced, the remaining balance of his Account will continue to be paid to his Beneficiary or Beneficiaries in accordance with the payment schedule that has already commenced. Unless otherwise provided by the Committee, if the Participant dies before payments from his Account have commenced, his Account will be paid to his Beneficiary or Beneficiaries in accordance with the form of payment elected by the Participant, commencing in January of the Year commencing after the Year in which occurs the Participant’s death.

2.9. Small Payments. Notwithstanding the foregoing, if a Participant elects to receive his Account in installment payments and his Account has a balance of less than $25,000 at the time that installment payments are scheduled to commence, the entire amount of the Participant’s Account may at the discretion of the Committee be paid in a single lump sum.

2.10. Acceleration. Notwithstanding any other provision of the Plan, each Participant shall be permitted, at any time, to make an election to receive, payable as soon as practicable after such election is received by the Committee, a distribution of part or all of his Account in a single lump sum, if (and only if) the amount in the Participant’s Account subject to such distribution is reduced by 10%, which 10% amount shall thereupon irrevocably be forfeited.

2.11. Termination of Participation. Notwithstanding any other provision of the Plan, no Participant who is an Eligible Employee or an Eligible Member shall be permitted to continue to participate in the Plan upon a determination by the Committee that such Participant is not a member of a select group of management or highly compensated employees of his employer, within the meaning of ERISA. Upon such a determination, the Committee may direct that the Participant receive an immediate lump sum payment equal to the amount credited to his Account.

2.12. Vesting of Accounts. Subject to Sections 2.10 and 2.14(iii) and the following sentence, each Participant shall at all times have a nonforfeitable interest in his Account balance. Notwithstanding the preceding sentence, the portion of each Participant’s Account, if any,

attributable to Employer Contributions shall be subject to such vesting schedule as may be determined by the Company or Affiliate from time to time in accordance with the provisions of Section 2.13.

2.13. Employer Contributions. The Company or any Affiliate may, in its discretion, provide contributions (“Employer Contributions”) under this Plan with respect to one or more Participants. Any such Employer Contributions shall be allocated to the Participant’s Account. The amount and vesting schedule of such Employer Contributions, if any, shall be determined by the Company or Affiliate in its sole discretion.

2.14. Change in Control. Notwithstanding any other provisions of the Plan, the following provisions shall apply upon the occurrence of a Change in Control.

(i) Trust. As soon as administratively practicable following the occurrence of a Change in Control, the Company shall transfer to a trust, the assets of which shall remain liable for the claims of the Company’s or its Affiliate’s general creditors in the event of the Insolvency of the Company or any such Affiliate, an amount (which amount may include a letter of credit, as specified in such trust) equal to the aggregate account balances, determined as of the date of the Change in Control, of all persons then participating in the Plan.

(ii) Unreduced Distribution. A Participant may make an election, on an Election Agreement that he delivers to the Committee at least one year prior to the occurrence of a Change in Control, to receive his entire Account in a single lump sum as soon as administratively practicable following the occurrence of a Change in Control. In the event that a Change in Control occurs prior to the distribution of a Participant’s entire Account, any such election made by a Participant shall override his other elections regarding the form and timing of the distribution of his Account.

(iii) Reduced Distribution. Notwithstanding any other provision of the Plan, each Participant shall be permitted, during the one-year period commencing upon the occurrence of a Change in Control, to make an election to receive, payable as soon as practicable after such election is received by the Committee, a distribution of part or all of his Account in a single lump sum, if (and only if) the amount in the Participant’s Account subject to such distribution is reduced by 5%, which 5% amount shall thereupon irrevocably be forfeited.

SECTION III

ADMINISTRATION

The Company, through the Committee, shall be responsible for the general administration of the Plan and for carrying out the provisions hereof. The Committee shall have all such powers as may be necessary to carry out the provisions of the Plan, including the power to (i) resolve all questions relating to eligibility for participation in the Plan and the amount in the Account of any Participant and all questions pertaining to claims for benefits and procedures for claim review, (ii) resolve all other questions arising under the Plan, including any factual questions and questions of construction, and (iii) take such further action as the Company shall deem advisable in the administration of the Plan. The actions taken and the decisions made by

the Committee hereunder shall be final and binding upon all interested parties. In accordance with the provisions of Section 503 of ERISA, the Committee shall provide a procedure for handling claims of Participants or their Beneficiaries under the Plan. Such procedure shall be in accordance with regulations issued by the Secretary of Labor and shall provide adequate written notice within a reasonable period of time with respect to the denial of any such claim as well as a reasonable opportunity for a full and fair review by the Committee of any such denial. Except as otherwise specifically provided, no action taken in accordance with the Plan shall be construed or relied upon as a precedent for similar action under similar circumstances. Unless the context clearly requires otherwise, the masculine pronoun wherever used herein shall be construed to include the feminine pronoun.

SECTION IV

AMENDMENT AND TERMINATION

4.1. Amendment. The Company reserves the right to amend the Plan at any time by action of the Board of Managers; provided, however, that no such action shall adversely affect any Participant or Beneficiary who has an Account, or result in any change in the timing or manner of payment of the amount of any Account (except as otherwise permitted under the Plan), without the consent of the Participant or Beneficiary.

4.2. Termination. The Company reserves the right to terminate the Plan at any time by action of the Board of Managers or the unanimous vote of the Committee. In the event that the Company terminates the Plan, each Participant shall receive a distribution of his Account, at the discretion of the Committee (by majority vote), either (a) in a single lump sum as soon as administratively practicable following termination of the Plan or (b) in the form of payment elected by the Participant commencing as soon as administratively practicable following termination of the Plan.

SECTION V

MISCELLANEOUS

5.1. Non-alienation of Deferred Compensation. Except as permitted by the Plan, no right or interest under the Plan of any Participant or Beneficiary shall, without the written consent of the Company, be (i) assignable or transferable in any manner, (ii) subject to alienation, anticipation, sale, pledge, encumbrance, attachment, garnishment or other legal process or (iii) in any manner liable for or subject to the debts or liabilities of the Participant or Beneficiary.

5.2. Participation by Employees or Members of Affiliates. An Eligible Employee or Eligible Member who is employed by or performs services for an Affiliate and who elects to participate in the Plan shall participate on the same basis as an Eligible Employee or Eligible Member of the Company as allowed by law.

5.3. Interest of Participant.

(i) The obligation of the Company and the Affiliates under the Plan to make payment of amounts reflected in an Account merely constitutes the unsecured

promise of the Company and the Affiliates to make payments from their general assets and no Participant or Beneficiary shall have any interest in, or a lien or prior claim upon, any property of the Company or any Affiliate. Nothing in the Plan shall be construed as guaranteeing future employment to Eligible Employees. It is the intention of the Company and the Affiliates that the Plan be unfunded for tax purposes and for purposes of Title I of ERISA. The Company may create a trust to hold funds to be used in payment of its and the Affiliates’ obligations under the Plan, and may fund such trust; provided, however, that any funds contained therein shall remain liable for the claims of the Company’s and any Affiliate’s general creditors.

(ii) In the event that, in the discretion of the Committee, the Company and/or its Affiliates purchases an insurance policy or policies insuring the life of any Participant (or any other property) to allow the Company and/or its Affiliates to recover the cost of providing the benefits, in whole or in part, hereunder, neither the Participants nor their Beneficiaries or other distributees shall have nor acquire any rights whatsoever therein or in the proceeds therefrom. The Company and/or its Affiliates shall be the sole owner and beneficiary of any such policy or policies and, as such, shall possess and may exercise all incidents of ownership therein. The Company may require a Participant’s participation in the underwriting or other steps necessary to acquire such policy or policies and, if required, shall not be a suggestion of any beneficial interest in such policy or policies to such Participant or any other person.

5.4. Claims of Other Persons. The provisions of the Plan shall in no event be construed as giving any other person, firm or corporation any legal or equitable right as against the Company or any Affiliate or the officers, employees or directors of the Company or any Affiliate, except any such rights as are specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan.

5.5. Severability. The invalidity and unenforceability of any particular provision of the Plan shall not affect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted.

5.6. Governing Law. Except to the extent preempted by federal law, the provisions of the Plan shall be governed and construed in accordance with the laws of the State of Wisconsin.

5.7. Relationship to Other Plans. The Plan is intended to serve the purposes of and to be consistent with any bonus or incentive compensation plan approved by the Committee for purposes of the Plan.

5.8. Successors. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business and/or assets of the Company expressly to assume this Plan. This Plan shall be binding upon and inure to the benefit of the Company and any successor of or to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Company whether by sale, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the

“Company” for the purposes of this Plan), and the heirs, beneficiaries, executors and administrators of each Participant. In the event that any successor to the Company shall fail to assume this Plan, the Plan shall immediately terminate and each Participant shall immediately receive distribution of his Account in a single lump sum.

5.9. Withholding of Taxes. The Company and its Affiliates may withhold or cause to be withheld from any amounts deferred or payable under the Plan all federal, state, local and other taxes as shall be legally required.

5.10. Electronic or Other Media. Notwithstanding any other provision of the Plan to the contrary, including any provision that requires the use of a written instrument, the Committee may establish procedures for the use of electronic or other media in communications and transactions between the Plan or the Committee and Participants and Beneficiaries. Electronic or other media may include, but are not limited to, e-mail, the Internet, intranet systems and automated telephonic response systems.

5.11. Indemnification. In addition to whatever rights of indemnification the Committee may be entitled under the organizational authority or regulations of the Company, under any provision of law, or under any other agreement, the Company shall satisfy any liability actually and reasonably incurred by any member or members of the Committee, including expenses, attorneys’ fees, judgments, fines, and amounts paid in settlement (other than amounts paid in settlement not approved by the Company), in connection with any threatened, pending or completed action, suit, or proceeding which is related to the exercising or failure to exercise by such person or persons of any of the powers, authority, responsibilities, or discretion as provided under the Plan, or reasonably believed by such person or persons to be provided hereunder, and any action taken by such person or persons in connection therewith, unless the same is judicially determined to be the result of such person or persons’ gross negligence or willful misconduct.

5.12. Duty to Furnish Information. The Company, Board of Managers and the Committee shall furnish to any of the others any documents, reports, returns, statements, or other information that the other reasonably deems necessary to perform its duties hereunder or otherwise imposed by law.

EXECUTED at Ripon, Wisconsin on this 27th day of February, 2002.

ALLIANCE LAUNDRY HOLDINGS LLC

By:		/s/ Bruce P Rounds
Title:		Vice President—CFO

EX-10.2 4 dex102.htm FIRST AMENDMENT TO THE ALH LLC NON COMP PLAN FIRST AMENDMENT TO THE ALH LLC NON COMP PLAN

EXHIBIT 10.2

FIRST AMENDMENT

TO THE

ALLIANCE LAUNDRY HOLDINGS LLC NONQUALIFIED DEFERRED

COMPENSATION PLAN

WHEREAS, Alliance Laundry Holdings LLC (the “Company”) adopted the Alliance Laundry Holdings LLC Nonqualified Deferred Compensation Plan (the “Plan”) on February 27, 2002; and

WHEREAS, the Company desires to amend the Plan;

NOW, THEREFORE, the Company amends the Plan, effective as of the date set forth herein:

The introduction paragraph of the Plan, prior to Section I, shall be replaced in its entirety with the following:

“Alliance Laundry Holdings LLC hereby establishes, effective as of October 1, 2002, the Alliance Laundry Holdings LLC Nonqualified Deferred Compensation Plan on the terms and conditions hereinafter set forth. Such Plan provides certain eligible employees and members with the opportunity to defer portions of their base salary, bonus payments and other payments in accordance with the provisions of the Plan.”

Section 2.2 (iii) of the Plan, shall be replaced in its entirety with the following:

“First Plan Year. Unless otherwise provided by the Committee, an Eligible Employee or Eligible Member who desires to defer all or part of his Base Salary for services rendered on and after October 1, 2002 through December 31, 2002 (i.e., the first Plan Year) or all or part of his Bonus that is earned during 2002 must complete and deliver an Election Agreement to the Committee during the period beginning on September 1, 2002 and ending September 30, 2002.”

IN WITNESS WHEREOF, the Company has executed this instrument this 21^st day of June, 2002.

ALLIANCE LAUNDRY HOLDINGS LLC

By:		/s/ Bruce P Rounds
Title:		Vice President—CFO

EX-10.3 5 dex103.htm 2ND AMENDMENT ALH LLC DEF COMP PLAN 2ND AMENDMENT ALH LLC DEF COMP PLAN

EXHIBIT 10.3

SECOND AMENDMENT

ALLIANCE LAUNDRY HOLDINGS LLC

NONQUALIFIED DEFERRED COMPENSATION PLAN

WHEREAS, Alliance Laundry Holdings LLC (the “Company”) adopted the Alliance Laundry Holdings LLC Nonqualified Deferred Compensation Plan (the “Plan”) on February 27, 2002; and

WHEREAS, the Company amended the Plan on June 21, 2002;

WHEREAS, the Company desires to further amend the Plan;

NOW, THEREFORE, the Plan is further amended effective as of the date set forth herein as follows:

The Plan shall be effective as of September 1, 2002.

Section 2.2(iii) of the Plan is hereby amended in its entirety as follows:

“(iii) First Plan Year. Unless otherwise provided by the Committee, an Eligible Employee or Eligible Member who desires to defer all or part of his Base Salary or Bonus for services rendered during the first Year of the Plan must complete and deliver an Election Agreement to the Committee no later than 15 days after the effective date of the Plan. Such Election Agreement shall be effective only with regard to Base Salary and Bonuses earned following the filing of the Election Agreement with the Committee.”

IN WITNESS WHEREOF, the Company has executed this instrument this 19th day of August, 2002.

ALLIANCE LAUNDRY HOLDINGS LLC

By:		/s/ Bruce P Rounds
Title:		V.P., CFO & Treasurer

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