EX-99.1 2 a5207969ex99_1.htm EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Press release
Exhibit 99.1
 
 

 
logo
 
News Release
 
Contact:
 
Bruce P. Rounds, CFO
 
920-748-1634
 
ALLIANCE LAUNDRY HOLDINGS LLC REPORTS 2nd QUARTER 2006 EARNINGS

Ripon, Wis. - August 10, 2006 — Alliance Laundry Holdings LLC announced today results for the three and six months ended June 30, 2006.

Net revenues for the quarter ended June 30, 2006 increased $1.2 million, or 1.5%, to $86.9 million from $85.7 million for the quarter ended June 30, 2005. Our net loss for the quarter ended June 30, 2006 was $0.8 million as compared to a net loss of $2.7 million for the quarter ended June 30, 2005. Adjusted EBITDA (see “About Non-GAAP Financial Measures” below) for the quarter ended June 30, 2006 decreased $0.9 million to $15.7 million from $16.6 million for the quarter ended June 30, 2005.

The overall net revenue increase of $1.2 million was attributable to higher consumer laundry revenue of $1.5 million and higher service parts revenue of $0.6 million, which were partially offset by lower commercial laundry revenues of $0.9 million. Our net loss for the quarter ended June 30, 2006 included $1.1 million of costs related to the transfer of production lines from our Marianna, Florida plant to our Ripon, Wisconsin plant and another $2.1 million of costs related to the closure of our Marianna plant, with no similar costs in the second quarter of 2005.

Net revenues for the six months ended June 30, 2006 increased $2.8 million, or 1.8%, to $158.4 million from $155.6 million for the six months ended June 30, 2005. Our net loss for the six months ended June 30, 2006 was $2.3 million as compared to a net loss of $34.1 million for the six months ended June 30, 2005. Adjusted EBITDA (see “About Non-GAAP Financial Measures” below) for the six months ended June 30, 2006 increased $0.3 million to $29.5 million from $29.2 million for the six months ended June 30, 2005.

In announcing the Company’s results, CEO and President Thomas F. L’Esperance said, “We are pleased to report yet another solid quarter, and believe our operating performance reflects our efforts to continue manufacturing consolidations and match commodity cost increases with price increases. The physical move of the Marianna operations to our Ripon facilities was substantially completed by the end of July. We expect to begin seeing efficiencies from the consolidation during the fourth quarter of 2006.”

“On July 14, 2006, we announced the completion of the acquisition of substantially all of Laundry Systems Group NV’s Commercial Laundry Division (“CLD”) and look forward to the opportunities this transaction presents as we work together with the CLD team to execute our Company’s growth and customer one objectives,” said L’Esperance.

About Non-GAAP Financial Measures

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles (GAAP), we also disclose EBITDA and Adjusted EBITDA, which are non-GAAP measures. We have presented EBITDA and Adjusted EBITDA because certain covenants in the indenture governing our 2005 Senior Subordinated Notes are tied to ratios based on these measures. “EBITDA” represents net income before interest expense, income tax (provision) benefit and depreciation and amortization, and “Adjusted EBITDA” is EBITDA as further adjusted to exclude, among other things, certain non-recurring expenses and other non-recurring non-cash charges. EBITDA and Adjusted EBITDA do not represent, and should not be considered, an alternative to net income or cash flow from operations, as determined by GAAP, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. Based on our industry and debt financing experience, we believe that EBITDA and Adjusted EBITDA are customarily used to provide useful information regarding a company’s ability to service and/or incur indebtedness. In addition, EBITDA and Adjusted EBITDA are defined in the indenture governing our 2005 Senior Subordinated Notes in a manner which is identical to the definition of EBITDA and Adjusted EBITDA in our New Senior Credit Facility under which we are required to satisfy specified financial ratios and tests, including a maximum of total debt to Adjusted EBITDA and a minimum interest coverage ratio. A reconciliation of EBITDA and Adjusted EBITDA with the most directly comparable GAAP measure is included below for the three and six months ended June 30, 2006 along with the components of EBITDA and Adjusted EBITDA.
 
-more-
 
 

About Alliance Laundry Holdings LLC

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

Safe Harbor for Forward-Looking Statements

With the exception of the reported actual results, this press release contains predictions, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of our business to differ materially from those expressed or implied by such forward-looking statements. Although we believe that our plans, intentions and expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that such plans, intentions, expectations, objectives or goals will be achieved. Important factors that could cause actual results to differ materially from those included in forward-looking statements include: impact of competition; continued sales to key customers; possible fluctuations in the cost of raw materials and components; possible fluctuations in currency exchange rates, which affect the competitiveness of our products abroad; possible fluctuation in interest rates, which affects our earnings and cash flows; the impact of substantial leverage and debt service on us; possible loss of suppliers; risks related to our asset backed facilities; dependence on key personnel; labor relations; potential liability for environmental, health and safety matters; potential future legal proceedings and litigation; and other risks listed from time to time in the Company’s reports, including, but not limited to the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2005.
 
Financial information for Alliance Laundry Holdings LLC appears on the next seven pages for the three and six months ended June 30, 2006.
 
-more-
 
 
 
ALLIANCE LAUNDRY HOLDINGS LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
                
       
June 30,
 
 December 31,
  
       
2006
  
 2005
  
       
Successor
  
 Successor
  
Assets
  
 
           
Current assets: 
             
Cash
        
$
2,145
  
$
5,075
  
Accounts receivable, net
          
11,364
   
9,056
 
Inventories, net
          
42,235
   
29,050
 
Beneficial interests in securitized accounts receivable
          
21,550
   
22,327
 
Deferred income tax assets
          
1,444
   
433
 
Prepaid expenses and other
          
5,131
   
2,139
 
 Total current assets
          
83,869
   
68,080
 
                     
Notes receivable, net
          
4,046
   
6,131
 
Property, plant and equipment, net
          
61,148
   
66,869
 
Goodwill
          
139,903
   
139,903
 
Beneficial interests in securitized financial assets
          
17,168
   
16,939
 
Deferred income tax assets
          
8,432
   
8,932
 
Debt issuance costs, net
          
10,250
   
11,172
 
Intangible assets, net
          
140,588
   
145,433
 
Other assets
          
-
   
-
 
 Total assets
        
$
465,404
  
$
463,459
  
                     
Liabilities and Member(s) Equity
                    
Current liabilities:
                    
Current portion of long-term debt
        
$
53
  
$
-
  
Revolving credit facility
          
2,000
   
-
 
Accounts payable
          
10,263
   
7,866
 
Other current liabilities
          
25,848
   
26,500
 
 Total current liabilities
          
38,164
   
34,366
 
                     
Long-term debt:
                    
Senior credit facility
          
175,000
   
177,000
 
Senior subordinated notes
          
149,383
   
149,336
 
Other long-term debt
          
947
   
-
 
                     
Other long-term liabilities
          
9,690
   
8,924
 
 Total liabilities
          
373,184
   
369,626
 
                     
Commitments and contingencies
                    
Member(s) equity
          
92,220
   
93,833
 
Total liabilities and member(s) equity
        
$
465,404
  
$
463,459
  
 
-more-
 
 
 
ALLIANCE LAUNDRY HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)
                        
           
Six Months
  
January 28,
  
 January 1,
  
   
Three Months Ended
  
Ended
  
2005 through
  
 2005 through
  
   
June 30,
 
June 30,
  
June 30,
 
June 30,
 
 January 27,
  
   
2006
  
2005
  
2006
  
2005
  
 2005
  
   
Successor
  
Successor
  
Successor
  
Successor
  
 Predecessor
  
Net revenues
  
$
86,931
  
$
85,665
  
$
158,410
  
$
134,908
  
$
20,683
  
Cost of sales
    
66,829
   
65,081
   
119,745
   
108,418
   
15,585
 
Gross profit
    
20,102
   
20,584
   
38,665
   
26,490
   
5,098
 
                                 
Selling, general and administrative expense
    
11,989
   
10,116
   
24,486
   
16,858
   
3,829
 
Securitization, impairment and other costs
    
2,096
   
8,015
   
3,924
   
8,015
   
-
 
Transaction costs associated with sale of business
    
-
   
-
   
-
   
-
   
18,790
 
Total operating expenses
    
14,085
   
18,131
   
28,410
   
24,873
   
22,619
 
 Operating income (loss)
    
6,017
   
2,453
   
10,255
   
1,617
   
(17,521
)
                                 
Interest expense
    
6,785
   
7,537
   
13,242
   
11,301
   
995
 
Loss from early extinguishment of debt
    
-
   
-
   
-
   
-
   
9,867
 
Other expense, net
    
360
   
-
   
360
   
-
   
-
 
 Loss before taxes
    
(1,128
)
  
(5,084
)
  
(3,347
)
  
(9,684
)
  
(28,383
)
(Benefit) provision for income taxes
    
(307
)
  
(2,352
)
  
(1,012
)
  
(4,021
)
  
9
 
 Net loss
  
$
(821
)
$
(2,732
)
$
(2,335
)
$
(5,663
)
$
(28,392
)
                                 
 
-more-
 
 
 
ALLIANCE LAUNDRY HOLDINGS LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
                    
       
Six Months
  
January 28,
  
 January 1,
  
       
Ended
  
2005 through
  
 2005 through
  
       
June 30,
 
June 30,
 
 January 27,
  
       
2006
  
2005
  
 2005
  
       
Successor
  
Successor
  
 Predecessor
  
Cash flows from operating activities:
                 
Net loss
       
$
(2,335
)
$
(5,663
)
$
(28,392
)
Adjustments to reconcile net loss to net cash
                          
used in operating activities: 
                          
 Depreciation and amortization
          
11,245
   
10,365
   
526
 
 Non-cash interest (income) expense
          
(808
)
  
36
   
351
 
 Non-cash executive unit compensation
          
1,809
   
-
   
1,089
 
 Non-cash trademark impairment
          
1,400
   
-
   
-
 
 Non-cash debt financing write-off
          
-
   
-
   
5,751
 
 Non-cash inventory expense
          
-
   
6,246
   
-
 
 Deferred income tax assets
          
(1,011
)
  
(4,060
)
  
-
 
 Loss on sale of property, plant and equipment
          
131
   
3
   
-
 
 Changes in assets and liabilities:
                          
 Accounts receivable
          
(1,741
)
  
(10,284
)
  
(556
)
 Inventories
          
(13,185
)
  
(824
)
  
(1,833
)
 Other assets
          
1,365
   
6,220
   
101
 
 Accounts payable
          
2,397
   
(21,267
)
  
19,076
 
 Other liabilities
          
(163
)
  
3,407
   
(2,732
)
 Net cash used in operating activities
          
(896
)
  
(15,821
)
  
(6,619
)
                           
Cash flows from investing activities:
                          
Additions to property, plant and equipment
          
(2,492
)
  
(2,072
)
  
(188
)
Cash paid for business development
          
(1,738
)
  
-
   
-
 
Proceeds on disposition of assets
          
1,226
   
1
   
-
 
 Net cash used in investing activities
          
(3,004
)
  
(2,071
)
  
(188
)
                           
Cash flows from financing activities:
                          
Principal payments on long-term debt
          
(2,000
)
  
(5,000
)
  
1
 
Net increase in revolving line of credit borrowings
          
2,000
   
-
   
-
 
Proceeds from promissory notes
          
1,000
   
-
   
-
 
Proceeds from senior term loan
          
-
   
200,000
   
-
 
Proceeds from senior subordinated notes
          
-
   
149,250
   
-
 
Repayment of long-term debt
          
-
   
(275,920
)
  
-
 
(Repurchase) issuance of common stock
          
(30
)
  
117,000
   
-
 
Distribution to old unitholders
          
-
   
(154,658
)
  
-
 
Debt financing costs
          
-
   
(13,230
)
  
-
 
Cash paid for capitalized offering related costs
          
-
   
(1,364
)
  
-
 
Net proceeds - management note
          
-
   
-
   
(71
)
                           
 Net cash provided by (used in) financing activities
          
970
   
16,078
   
(70
)
                           
Decrease in cash
          
(2,930
)
  
(1,814
)
  
(6,877
)
Cash at beginning of period
          
5,075
   
4,594
   
11,471
 
Cash at end of period
        
$
2,145
  
$
2,780
  
$
4,594
  
                           
 
-more-
 
 
 
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA, and reconciliation of Adjusted EBITDA to Net Cash Provided by (Used in) Operating Activities for the Three and Six Months Ended June 30, 2006 (Dollars in Thousands):
 
   
Three Months
  
Three Months
  
   
Ended
  
Ended
  
   
June 30,
 
June 30,
  
   
2006
  
2005
  
   
Successor
  
Successor
  
           
Net loss
  
$
(821
)
$
(2,732
)
Benefit for income taxes
    
(307
)
  
(2,352
)
Interest expense
    
6,785
   
7,537
 
Depreciation and amortization (a)
    
5,378
   
6,240
 
Non-cash interest income included
             
in amortization above
    
(444
)
  
(579
)
EBITDA
    
10,591
   
8,114
 
Finance program adjustments (b)
    
750
   
(496
)
Other non-recurring charges (c)
    
3,505
   
8,305
 
Other non-cash charges (d)
    
524
   
640
 
Other expense (e)
    
360
   
-
 
Adjusted EBITDA
    
15,730
   
16,563
 
               
Interest expense
    
(6,785
)
  
(7,537
)
Non-cash interest income included
             
in amortization above
    
444
   
579
 
Other non-cash interest
    
(333
)
  
880
 
Finance program adjustments (b)
    
(750
)
  
496
 
Other non-recurring charges (c)
    
(3,505
)
  
(8,305
)
Loss on sale of property, plant and equipment
    
111
   
2
 
Other expense
    
(351
)
  
(42
)
Changes in assets and liabilities
    
1,953
   
330
 
Net cash provided by operating activities
  
$
6,514
  
$
2,966
  
               

(a)
Depreciation and amortization amounts include amortization of deferred financing costs included in interest expense.
   
(b)
We currently operate an off-balance sheet commercial equipment finance program in which newly originated equipment loans are sold to qualified special-purpose bankruptcy remote entities. In accordance with GAAP, we are required to record gains/losses on the sale of these equipment based promissory notes. In calculating Adjusted EBITDA, management determines the cash impact of net interest income on these notes. The finance program adjustments are the difference between GAAP basis revenues (as prescribed by SFAS No. 125/140) and cash basis revenues.
 
(c)
Other non-recurring charges are described as follows:
 
-more-
 
 
 
 
•
Other non-recurring charges for the quarter ended June 30, 2006 relate to $2.1 million of costs associated with the closure of the Marianna, Florida production facility which are included in the Securitization, impairment and other costs line of our consolidated statements of operations, $1.1 million of costs related to the transfer of the Marianna, Florida product lines to Ripon, Wisconsin which are included in the selling, general and administrative expense line of our consolidated statements of operations and a periodic accrual of $0.3 million under a one time retention bonus agreement entered into with certain management employees concurrent with the Acquisition, which is included in the selling, general and administrative expense line of our consolidated statements of operations. Under the retention bonus agreements, the executives are entitled to receive special retention bonus awards upon the second anniversary of the closing date of the Acquisition, subject generally to their continued employment with Alliance Laundry through such date.

 
•
Other non-recurring charges for the quarter ended June 30, 2005 relate to $8.0 million of transaction costs incurred in establishing a new asset backed facility for the sale of equipment notes and trade receivables, which is included in the Securitization, impairment and other costs line of our consolidated statements of operations, and a periodic accrual of $0.3 million under the one time retention bonus agreement entered into with certain management employees.
 
(d)
Other non-cash charges are described as follows:

 
•
Other non-cash charges for the quarter ended June 30, 2006 are comprised of $0.5 million of non-cash incentive compensation expense related to management incentive stock options, which is included in the selling, general and administrative expense line of our consolidated statements of operations.

 
•
Non-cash charges for the quarter ended June 30, 2005 relate to $0.6 million of cost associated with the inventory step-up to fair market value recorded at the Acquisition date, which are included in the cost of sales line of our consolidated statements of operations.
 
(e)
Other expense is described as follows:

 
•
Other expense for the quarter ended June 30, 2006 consists of $0.4 million of mark to market loss for two foreign exchange hedge agreements entered to control the foreign exchange risk associated with the initial acquisition price of CLD, which is included in the other expense line of our consolidated statements of operations.
 
-more-
 
 
 
   
Six Months
 
January 28,
 
 January 1,
 
Six Months
 
 
 
Ended
  
2005 through
  
 2005 through
  
Ended
  
   
June 30,
 
June 30,
 
 January 27,
 
June 30,
  
   
2006
 
2005
 
 2005
 
2005
  
   
Successor
 
Successor
 
 Predecessor
 
Combined
  
                    
Net loss
  
$
(2,335
)
$
(5,663
)
$
(28,392
)
$
(34,055
)
(Benefit) provision for income taxes
    
(1,012
)
  
(4,021
)
  
9
   
(4,012
)
Interest expense
    
13,242
   
11,301
   
995
   
12,296
 
Depreciation and amortization (a)
    
11,245
   
10,365
   
526
   
10,891
 
Non-cash interest income included
                         
in amortization above
   
(922
)
  
(911
)
  
-
   
(911
)
EBITDA
    
20,218
   
11,071
   
(26,862
)
  
(15,791
)
Finance program adjustments (b)
    
844
   
420
   
31
   
451
 
Other non-recurring charges (c)
    
4,872
   
8,498
   
28,657
   
37,155
 
Other non-cash charges (d)
    
3,209
   
6,246
   
1,089
   
7,335
 
Other expense (e)
    
360
   
-
   
-
   
-
 
Management fees paid to affiliates of Bain
    
-
   
-
   
83
   
83
 
Adjusted EBITDA
    
29,503
   
26,235
   
2,998
   
29,233
 
                           
Interest expense
    
(13,242
)
  
(11,301
)
  
(995
)
  
(12,296
)
Non-cash interest income included
                         
in amortization above
    
922
   
911
   
-
   
911
 
Other non-cash interest
    
(808
)
  
36
   
351
   
387
 
Finance program adjustments (b)
    
(844
)
  
(420
)
  
(31
)
  
(451
)
Other non-recurring charges (c)
    
(4,872
)
  
(8,498
)
  
(28,657
)
  
(37,155
)
Non-cash debt financing write-off
    
-
   
-
   
5,751
   
5,751
 
Loss on sale of property, plant and equipment
    
131
   
3
   
-
   
3
 
Other expense
    
(359
)
  
(39
)
  
(92
)
  
(131
)
Changes in assets and liabilities
    
(11,327
)
  
(22,748
)
  
14,056
   
(8,692
)
Net cash used in operating activities
  
$
(896
)
$
(15,821
)
$
(6,619
)
$
(22,440
)
                           
 
(a)
Depreciation and amortization amounts include amortization of deferred financing costs included in interest expense.
   
(b)
We currently operate an off-balance sheet commercial equipment finance program in which newly originated equipment loans are sold to qualified special-purpose bankruptcy remote entities. In accordance with GAAP, we are required to record gains/losses on the sale of these equipment based promissory notes. In calculating Adjusted EBITDA, management determines the cash impact of net interest income on these notes. The finance program adjustments are the difference between GAAP basis revenues (as prescribed by SFAS No. 125/140) and cash basis revenues.
 
(c)
Other non-recurring charges are described as follows:
 
  
•
Other non-recurring charges for the period from January 1, 2005 through January 27, 2005 relate to seller transaction costs of $18.8 million incurred as part of the Acquisition which are included in the transaction costs associated with the sale of business line of our consolidated statements of operations, and a loss on the early extinguishment of debt of $9.9 million which is included in the loss from early extinguishment of debt line of our consolidated statements of operations.
 
-more-
 
 
 
 
•
Other non-recurring charges for the period from January 28, 2005 through June 30, 2005 relate to $8.0 million of transaction costs incurred in establishing a new asset backed facility for the sale of equipment notes and trade receivables, which is included in the Securitization, impairment and other costs line of our consolidated statements of operations, and a periodic accrual of $0.5 million under the one time retention bonus agreement entered into with certain management employees, which is included in the selling, general and administrative expense line of our consolidated statements of operations.
  
 
•
Other non-recurring charges for the six months ended June 30, 2006 consist of $1.8 million of costs related to the transfer of the Marianna, Florida product lines to Ripon, Wisconsin which are included in the selling, general and administrative expense line of our consolidated statements of operations, $2.5 million of costs associated with the closure of the Marianna, Florida production facility which are included in the Securitization, impairment and other costs line of our consolidated statements of operations and a periodic accrual of $0.6 million under the one time retention bonus agreement with certain management employees referred to above.

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

 
•
Non-cash charges for the period from January 1, 2005 through January 27, 2005 of $1.1 million relate to non-cash incentive compensation expense resulting from the acceleration of vesting for incentive units at the date of the Acquisition, which are included in the selling, general and administrative expense line of our consolidated statements of operations.

 
•
Non-cash charges for the period from January 28, 2005 through June 30, 2005 relate to $6.2 million of cost associated with the inventory step-up to fair market value recorded at the Acquisition date, which are included in the cost of sales line of our consolidated statements of operations.

 
•
Non-cash charges for the six month period ended June 30, 2006 are comprised of $1.8 million of non-cash incentive compensation expense related to management incentive stock options which is included in the selling, general and administrative expense line of our consolidated statements of operations and a $1.4 million non-cash impairment charge related to the Ajax trademark, driven by the Company’s decision to discontinue sales of AJAX® products. The Ajax impairment is included in the Securitization, impairment and other costs line of our consolidated statements of operations.

(e)
Other expense is described as follows:

 
•
Other expense for the six months ended June 30, 2006 consists of $0.4 million of mark to market loss for two foreign exchange hedge agreements entered to control the foreign exchange risk associated with the initial acquisition price of CLD, which is included in the other expense line of our consolidated statements of operations.

-end-