UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
OR
[__] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to ______________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 39-1927923
DELAWARE 39-1928505
DELAWARE 52-2055893
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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 [ ]
Alliance Laundry Systems LLC
Form 10-Q
For The Period Ended March 31, 2002
Table of Contents
Page No.
--------
PART I Financial Information
Item 1. Financial Statements
Condensed Balance Sheets as of March 31, 2002 and December 31, 2001 3
Condensed Statements of Operations for the periods ended March 31, 2002 and March 31, 2001 4
Condensed Statements of Cash Flows for the periods ended March 31, 2002 and March 31, 2001 5
Notes to Unaudited Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9
PART II Other Information
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ALLIANCE LAUNDRY HOLDINGS LLC
CONDENSED BALANCE SHEETS
(in thousands)
March 31, December 31,
2002 2001
----------- -----------
Assets (Unaudited)
Current assets:
Cash ......................................................... $ 3,716 $ 5,659
Cash-restricted .............................................. 605 439
Accounts receivable, net ..................................... 13,185 10,440
Inventories, net ............................................. 28,280 29,862
Prepaid expenses and other ................................... 9,659 10,093
----------- ----------
Total current assets ..................................... 55,445 56,493
Notes receivable, net ........................................... 11,100 8,512
Property, plant and equipment, net .............................. 44,501 46,909
Goodwill, net ................................................... 55,414 55,414
Beneficial interests in securitized financial assets ............ 28,488 28,227
Debt issuance costs, net ........................................ 7,226 7,863
Other assets .................................................... 271 353
---------- ----------
Total assets ............................................. $ 202,445 $ 203,771
========== ==========
Liabilities and Members' Deficit
Current liabilities:
Current portion of long-term debt ............................ $ 1,200 $ 1,212
Revolving credit facility .................................... - -
Accounts payable ............................................. 9,279 12,194
Other current liabilities .................................... 20,320 20,539
---------- ----------
Total current liabilities ................................ 30,799 33,945
Long-term debt:
Senior credit facility ....................................... 191,032 194,018
Senior subordinated notes .................................... 110,000 110,000
Junior subordinated note ..................................... 17,780 17,069
Other long-term debt ......................................... 1,206 1,265
Other long-term liabilities ..................................... 1,706 1,682
---------- ----------
Total liabilities ........................................ 352,523 357,979
Mandatorily redeemable preferred equity ......................... 6,000 6,000
Members' deficit ................................................ (156,078) (160,208)
---------- ----------
Total liabilities and members' deficit ................... $ 202,445 $ 203,771
========== ==========
3
ALLIANCE LAUNDRY HOLDINGS LLC
CONDENSED STATEMENTS OF OPERATIONS
(in thousands)
Three Months Ended
-----------------------------
March 31, March 31,
2002 2001
----------- -----------
(Unaudited)
Net revenues:
Commercial laundry ........................................ $ 51,040 $ 53,175
Service parts ............................................. 8,808 9,491
----------- -----------
59,848 62,666
Cost of sales ............................................. 42,793 46,642
----------- -----------
Gross profit .............................................. 17,055 16,024
Selling, general and administrative expense ................. 6,986 7,471
----------- -----------
Operating income ...................................... 10,069 8,553
Interest expense ............................................ 6,359 9,673
Other income, net ........................................... 25 46
----------- -----------
Net income (loss) ..................................... $ 3,735 $ (1,074)
=========== ===========
4
ALLIANCE LAUNDRY HOLDINGS LLC
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
-----------------------------
March 31, March 31,
2002 2001
----------- -----------
(Unaudited)
Cash flows from operating activities:
Net income (loss) .............................................. $ 3,735 $ (1,074)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization ............................... 3,624 4,182
Non-cash interest ........................................... (227) 1,739
Gain on sale of property, plant and equipment ............... (25) (46)
Changes in assets and liabilities:
Accounts receivable ...................................... (2,745) (3,804)
Inventories .............................................. 1,582 341
Other assets ............................................. (2,053) (10,328)
Accounts payable ......................................... (2,915) 3,474
Other liabilities ........................................ 602 1,235
----------- -----------
Net cash provided by (used in) operating activities ......... 1,578 (4,281)
----------- -----------
Cash flows from investing activities:
Additions to property, plant and equipment ..................... (517) (1,342)
Proceeds on disposal of property, plant and equipment .......... 53 60
------------ -----------
Net cash used in investing activities ....................... (464) (1,282)
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt ........................... (3,057) (250)
Net increase in revolving line of credit borrowings ............ - 2,000
----------- -----------
Net cash provided by (used in) financing activities ......... (3,057) 1,750
----------- -----------
Decrease in cash ................................................. (1,943) (3,813)
Cash at beginning of quarter ..................................... 5,659 5,091
----------- -----------
Cash at end of quarter ........................................... $ 3,716 $ 1,278
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest ......................................... $ 3,774 $ 4,774
5
Notes to Unaudited Condensed Financial Statements
NOTE 1. BASIS OF PRESENTATION
The unaudited financial statements as of and for the quarter ended March
31, 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 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 quarter ended
March 31, 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 approximately $0.4 million of interest income related to its retained
interests in its securitization transactions during the first quarter of 2002.
The Company adopted Statement of Financial Accounting Standards No. 133
("SFAS 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 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 three months ended March 31, 2001, the Company
recognized a non-cash loss of $1.1 million and for the quarter ended March 31,
2002, the Company recognized a non-cash gain of $0.9 million related to these
interest rate swaps, which matured during the quarter. These amounts were
recorded in interest expense in the statement of operations.
6
Certain amounts in the prior year financial statements have been
reclassified to conform to the current year presentation.
This report on Form 10-Q for the periods ended March 31, 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):
March 31, December 31,
2002 2001
--------------- ---------------
(Unaudited)
Materials and purchased parts .......... $ 10,621 $ 11,830
Work in process ........................ 3,960 4,017
Finished goods ......................... 15,557 16,822
Less: inventory reserves ............... (1,858) (2,807)
--------------- ---------------
$ 28,280 $ 29,862
=============== ===============
NOTE 3. GOODWILL AND OTHER INTANGIBLE ASSETS
The Company adopted Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards ("SFAS") 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 three months ended
March 31, 2002 and 2001 adjusted for the non-amortization provisions of SFAS No.
142.
Quarter Ended
-----------------------------------
March 31, March 31,
2002 2001
--------------- ---------------
Reported net earnings (loss) ............. $ 3,735 $ (1,074)
Add: Goodwill amortization .............. - 504
-------------- ---------------
Adjusted net earnings (loss) ............. $ 3,735 $ (570)
============== ===============
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
7
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 April 24, 2002 the Argentine Peso was trading at .3160 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 three months ended March 31, 2002 and
2001 consist of the following (in thousands):
Three Months Ended
----------------------------------------
March 31, March 31,
2002 2001
-------------------- -------------------
Comprehensive income (loss):
Net income (loss) $ 3,735 $ (1,074)
Other comprehensive income (loss)
Net unrealized holding gain (loss) on residual interests 536 (2,616)
Unrealized gain (loss) on interest rate swap (141) 564
-------------------- -------------------
Comprehensive income (loss) $ 4,130 $ (3,126)
==================== ===================
8
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
------------------------------------
March 31, March 31,
2002 2001
------------------ -----------------
(Dollars in millions)
Net revenues:
Commercial laundry ....................... $ 51.0 $ 53.2
Service parts ............................ 8.8 9.5
------------------ -----------------
$ 59.8 $ 62.7
================== =================
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:
9
Quarter Ended
---------------------------------------
March 31, March 31,
2002 2001
------------------- -------------------
Net revenues ........................................ 100.0% 100.0%
Cost of sales ....................................... 71.5% 74.4%
Gross profit ........................................ 28.5% 25.6%
Selling, general and administrative expense ......... 11.7% 11.9%
Operating income .................................... 16.8% 13.7%
Net income (loss) ............................. 6.2% (1.7%)
Net revenues. Net revenues for the quarter ended March 31, 2002 decreased
$2.9 million, or 4.5%, to $59.8 million from $62.7 million for the quarter ended
March 31, 2001. This decrease was primarily attributable to lower commercial
laundry revenue of $2.2 million and lower service parts revenue of $0.7 million.
The decrease in commercial laundry revenue was due primarily to lower North
American equipment revenue of $1.3 million, lower international revenue of $0.2
million and lower earnings from the Company's off-balance sheet equipment
financing program of $0.7 million. The decrease in North American equipment
revenue was primarily due to lower revenue from laundromats resulting from a
general economic slowdown. The lower earnings from the financing program were
due to a lower level of loans originated and sold in the first quarter of 2002
as compared to 2001.
Gross profit. Gross profit for the quarter ended March 31, 2002 increased
$1.1 million, or 6.4%, to $17.1 million from $16.0 million for the quarter ended
March 31, 2001. This increase was primarily attributable to favorable
manufacturing efficiencies, a recent price increase, and a $0.5 million
favorable impact on 2002 resulting from a change in accounting principle whereby
goodwill is no longer amortized. (See Note 3). These favorable impacts were
partially offset by the lower earnings from the financing program. Gross profit
as a percentage of net revenues increased to 28.5% for the quarter ended March
31, 2002 from 25.6% for the quarter ended March 31, 2001. This 2.9% increase was
primarily attributable to the manufacturing efficiencies, price increase and
accounting principle change.
Selling, general and administrative expense. Selling, general and
administrative expenses for the quarter ended March 31, 2002 decreased $0.5
million, or 6.5%, to $7.0 million from $7.5 million for the quarter ended March
31, 2001. The decrease in selling, general and administrative expenses was
primarily due to lower independent development expenses of $0.2 million and
lower one-time expenses related to the relocation of Cincinnati, Ohio production
lines to Marianna, Florida of $0.3 million. Selling, general and administrative
expenses as a percentage of net revenues decreased to 11.7% for the quarter
ended March 31, 2002 from 11.9% for the quarter ended March 31, 2001.
Operating income. As a result of the foregoing, operating income for the
quarter ended March 31, 2002 increased $1.5 million, or 17.7%, to $10.1 million
from $8.6 million for the quarter ended March 31, 2001. Operating income as a
percentage of net revenues increased to 16.8% for the quarter ended March 31,
2002 from 13.7% for the quarter ended March 31, 2001.
Interest expense. Interest expense for the quarter ended March 31, 2002
decreased $3.3 million, or 34.3%, to $6.4 million from $9.7 million for the
quarter ended March 31, 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.
The first quarter of 2001
10
included an unfavorable non-cash adjustment of $1.1 million related to these
agreements. Interest expense was also lower in 2002 as a result of a reduction
in total debt outstanding of $17.8 million, or 5.3%.
Net income (loss). As a result of the foregoing, net income (loss) for the
quarter ended March 31, 2002 increased $4.8 million to net income of $3.7
million as compared to a net loss of $1.1 million for the quarter ended March
31, 2001. Net income (loss) as a percentage of net revenues increased to 6.2%
for the quarter ended March 31, 2002 from (1.7%) for the quarter ended March 31,
2001.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity are cash flows generated from
operations and borrowings under its $75.0 million revolving credit facility,
(the "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 $7.0 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 March 31, 2002, the Company has $321.2 million of combined
indebtedness outstanding, consisting of outstanding debt of $192.0 million under
the Term Loan Facility, $110.0 million of senior subordinated notes and $17.8
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 March 31, 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 $14.1 million at
March 31, 2002. As a result, at March 31, 2002 the Company had $60.9 million of
its $75.0 million Revolving Credit Facility available subject to certain
limitations under the Company's $275 million credit agreement dated May 5, 1998
(the "Senior Credit Facility"). After considering such limitations, which relate
primarily to the maximum ratio of consolidated debt to EBITDA (as defined by the
Senior Credit Facility), the Company could have borrowed $23.0 million at March
31, 2002 in additional indebtedness under the Revolving Credit Facility.
Additionally, at March 31, 2002 the Company could have sold additional trade
receivables of approximately $6.8 million to finance its operations. The maximum
ratio of consolidated debt to EBITDA under the Senior Credit Facility is
scheduled to be reduced from 6.0 at March 31, 2002 to 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 that may be required as a result of the scheduled reduction in the
ratio of consolidated debt to EBITDA discussed above.
11
The $192.0 million Term Loan Facility amortizes quarterly and is
repayable in the following aggregate annual amounts:
Year Amount Due
---- ----------
(Dollars in
millions)
2002 ............. $ 0.7
2003 ............. $ 19.9
2004 ............. $ 95.4
2005 ............. $ 76.0
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 the Senior Credit Facility). The Revolving Credit Facility
will terminate in 2003.
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 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
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.
Historical
Cash generated from operations for the three months ended March 31, 2002 of
$1.6 million was principally derived from changes in operations (net income
(loss) adjusted for depreciation, amortization, non-cash interest and gains on
sale of property, plant and equipment) which were partially offset by lower
sales of accounts receivable under the Asset Backed Facility, and an increase in
ineligible loans under the Asset Backed Facility. The working capital investment
in accounts receivable at March 31, 2002 of $13.2 million increased $2.8 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 March 31, 2002 of $11.1
million increased $2.6 million as compared to the balance of $8.5 million at
December 31, 2001, which was primarily attributable to
12
the increase in ineligible loans under the Asset Backed Facility. The investment
in inventory at March 31, 2002 of $28.3 million decreased $1.6 million as
compared to the balance of $29.9 million at December 31, 2001. Accounts payable
at March 31, 2002 of $9.3 million decreased $2.9 million as compared to the
balance of $12.2 million at December 31, 2001.
Net cash provided by operating activities for the three months ended March
31, 2002 of $1.6 million increased by $5.9 million as compared to the three
months ended March 31, 2001. This increase was primarily due to lower net cash
used in changes in assets and liabilities of $3.6 million, and an increase in
net cash provided by operations of $2.3 million for the three months ended March
31, 2002 as compared to the three months ended March 31, 2001. The net cash
impact from changes in assets and liabilities for the three months ended March
31, 2002 of $3.6 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 three months ended March 31,
2002 and March 31, 2001 were $0.5 million and $1.3 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.
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.
13
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).
14
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. None.
(b) Reports on Form 8-K. None.
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Alliance Laundry Systems LLC has duly caused this quarterly report to be signed
on its behalf by the undersigned, thereto duly authorized, in the city of Ripon,
state of Wisconsin, on the 1st day of May 2002.
Signature Title Date
--------- ----- ----
/s/ Thomas L'Esperance Chairman and CEO 5-1-02
- ------------------------------------------- -----------------------
Thomas L'Esperance
/s/ Bruce P. Rounds Vice President and Chief Financial Officer 5-1-02
- ------------------------------------------- -----------------------
Bruce P. Rounds
Pursuant to the requirements of the Securities Exchange Act of 1934,
Alliance Laundry Corp. has duly caused this quarterly report to be signed on its
behalf by the undersigned, thereto duly authorized, in the city of Ripon, state
of Wisconsin, on the 1st day of May 2002.
Signature Title Date
--------- ----- ----
/s/ Thomas L'Esperance Chairman and CEO 5-1-02
- ------------------------------------------- -----------------------
Thomas L'Esperance
/s/ Bruce P. Rounds Vice President and Chief Financial Officer 5-1-02
- ------------------------------------------- -----------------------
Bruce P. Rounds
Pursuant to the requirements of the Securities Exchange Act of 1934,
Alliance Laundry Holdings LLC has duly caused this quarterly report to be signed
on its behalf by the undersigned, thereto duly authorized, in the city of Ripon,
state of Wisconsin, on the 1st day of May 2002.
Signature Title Date
--------- ----- ----
/s/ Thomas L'Esperance Chairman and CEO 5-1-02
- ------------------------------------------- -----------------------
Thomas L'Esperance
/s/ Bruce P. Rounds Vice President and Chief Financial Officer 5-1-02
- ------------------------------------------- -----------------------
Bruce P. Rounds
16