Exhibit 99.1
Alliance Laundry Holdings LLC Reports 2003 Sales and Earnings
RIPON, Wis.--(BUSINESS WIRE)--March 9, 2004--Alliance Laundry
Holdings LLC announced today results for the year ended December 31,
2003.
Net revenues for the full year 2003 increased $12.4 million, or
4.9%, to $267.6 million compared to $255.2 million for the full year
2002. Net income for 2003 increased $14.6 million to $15.9 million as
compared to $1.3 million for the same period in 2002. Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA)(a) for 2003
was $53.1 million compared with EBITDA of $40.5 million for 2002.
The overall net revenue increase for the year of $12.4 million was
primarily attributable to higher commercial laundry revenue of $11.0
million and service parts revenue of $1.4 million. Net income for 2003
included $0.8 million of costs associated with the settlement of a
lawsuit against a former subsidiary in Argentina. Net income for 2002
included $10.9 million of transaction costs incurred in establishing a
new asset backed facility for the sale of trade receivables and notes
receivable, $3.4 million of expense related to an abandoned Canadian
public offering, and a $2.0 million non-cash loss resulting from the
write-off of certain unamortized debt issuance costs. The Company
entered into an amended and restated credit agreement dated August 2,
2002, and as such wrote-off the unamortized debt issuance costs
related to its prior senior credit facility of $2.0 million.
In announcing the Company's results today, Chairman and CEO Thomas
F. L'Esperance said, "We are extremely pleased with our top line
revenue growth of 4.9% for the twelve months ended December 31, 2003.
Leading the way for the year was higher North American equipment
revenue of $7.1 million and higher international equipment revenue of
$4.7 million."
"During the twelve months of 2004 we have paid down $26.2 million
on long-term debt. We will continue to focus on debt pay down in 2004,
with an emphasis on working capital management and strong top line
performance to help offset the continued higher medical and material
costs," said L'Esperance.
Alliance Laundry Holdings LLC, headquartered in Ripon, Wisconsin,
is a leading manufacturer of commercial laundry products and provider
of services for laundromats, multi-housing laundries, on-premise
laundries and drycleaners worldwide. The Company 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 four well known brand names: Speed Queen, UniMac,
Huebsch and Ajax.
(a) 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 (Earnings Before Interest, Taxes, Depreciation
and Amortization), which is a non-GAAP measure. We believe that EBITDA
is useful as a means to evaluate our ability to service existing debt,
to sustain potential future increases in debt and to satisfy capital
requirements. EBITDA, adjusted for certain non-cash items and as
defined in our Senior Credit Facility, is also used to determine our
compliance with key financial covenants under our Senior Credit
Facility, which among other things, impacts the amount of indebtedness
we are permitted to incur. Our use of EBITDA, however, should not be
considered an alternative to measures of operating performance as
determined in accordance with GAAP, including net income as a measure
of our operating results and cash flows as a measure of our liquidity.
Other companies may define EBITDA differently. A reconciliation of
EBITDA to net income is provided under the heading Selected Financial
Data of this press release.
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, including, without limitation, statements that include the
words "continue" and "strong" or similar expressions and statements
relating to growth or performance objectives. 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 the
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 most
recent Annual Report on Form 10-K for the year ended December 31,
2003.
Financial information for Alliance Laundry Holdings LLC appears on
the next two pages, followed by management's discussion and analysis
of financial condition and results of operations for the years ended
December 31, 2003 and 2002.
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
---------------------
2003 2002
---------- ----------
Assets
Current assets:
Cash $7,937 $7,339
Cash-restricted - 99
Accounts receivable (net of allowance for
doubtful accounts of $257 and $207 at
December 31, 2003 and 2002, respectively) 9,157 5,834
Inventories, net 26,215 25,697
Beneficial interests in securitized accounts
receivable 16,789 19,864
Prepaid expenses and other 898 639
---------- ----------
Total current assets 60,996 59,472
Notes receivable, net 8,161 11,166
Property, plant and equipment, net 34,035 39,096
Goodwill (net of accumulated amortization of
$11,766 at December 31, 2003 and 2002) 55,414 55,414
Beneficial interests in securitized financial
assets 22,676 21,483
Debt issuance costs, net 7,636 9,654
Other assets 1,721 1,010
---------- ----------
Total assets $190,639 $197,295
========== ==========
Liabilities and Members' Deficit
Current liabilities:
Current portion of long-term debt $11,270 $9,971
Revolving credit facility - -
Accounts payable 11,279 13,797
Other current liabilities 20,428 21,638
---------- ----------
Total current liabilities 42,977 45,406
Long-term debt:
Senior credit facility 145,975 173,266
Senior subordinated notes 110,000 110,000
Junior subordinated note 24,171 20,312
Other long-term debt 783 1,028
Other long-term liabilities 6,491 8,023
---------- ----------
Total liabilities 330,397 358,035
Commitments and contingencies
Mandatorily redeemable preferred equity 6,000 6,000
Members' deficit (145,758) (166,740)
---------- ----------
Total liabilities and members' deficit $190,639 $197,295
========== ==========
ALLIANCE LAUNDRY HOLDINGS LLC
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
Years Ended December 31,
-----------------------------
2003 2002 2001
--------- --------- ---------
Net revenues:
Commercial laundry $230,663 $219,653 $219,273
Service parts 36,944 35,524 34,743
--------- --------- ---------
267,607 255,177 254,016
Cost of sales 188,979 179,047 188,982
--------- --------- ---------
Gross profit 78,628 76,130 65,034
--------- --------- ---------
Selling, general and administrative
expense 33,566 30,098 28,665
Securitization and other costs - 10,920 -
--------- --------- ---------
Total operating expenses 33,566 41,018 28,665
--------- --------- ---------
Operating income 45,062 35,112 36,369
Interest expense 28,258 28,341 33,538
Loss from early extinguishment of debt - 2,004 -
Abandoned Canadian public offering
costs - 3,409 -
Other income (expense), net (830) 33 (67)
--------- --------- ---------
Income before taxes 15,974 1,391 2,764
Provision for income taxes 55 56 34
Net income before cumulative
effect of accounting change 15,919 1,335 2,730
Cumulative effect of change in
accounting principle - - 2,043
--------- --------- ---------
Net income $15,919 $1,335 $687
========= ========= =========
ALLIANCE LAUNDRY HOLDINGS LLC
SELECTED FINANCIAL DATA
(in thousands)
Years Ended December 31,
---------------------------
2003 2002 2001
-------- -------- --------
Cash flow data:
Net cash provided by operating activities $30,393 $22,775 $21,338
Net cash used in investing activities (3,590) (2,563) (4,964)
Net cash provided by (used in) financing
activities (26,205) (18,532) (15,806)
Other data:
EBITDA(1) $53,101 $40,518 $50,608
Capital expenditures 3,600 2,652 5,152
Reconciliation: EBITDA
Net income (loss)(2) $15,919 $1,335 $687
Cumulative effect of change in accounting
principle - - 2,043
Provision for income taxes 55 56 34
-------- -------- --------
Income (loss) before income taxes 15,974 1,391 2,764
Adjustments:
Interest expense 28,258 28,341 33,538
Depreciation and amortization(3) 10,886 13,293 17,026
Non-cash interest expense included in
amortization above (2,017) (2,507) (2,720)
-------- -------- --------
EBITDA(1) $53,101 $40,518 $50,608
======== ======== ========
(1) "EBITDA", as presented, represents income before taxes plus
depreciation, amortization and interest expense.
(2) Subsequent to the consummation of the Recapitalization, we are not
a tax paying entity.
(3) Amortization expense for 2001 includes goodwill amortization of $2.0
million. In accordance with Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," we discontinued
amortization of the goodwill balance as of December 31, 2001.
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Years Ended December 31, 2003 and 2002
OVERVIEW
We believe we are the leading designer, manufacturer and marketer
of stand-alone commercial laundry equipment in North America and that
we are similarly a leader worldwide. Under the well-known brand names
of Speed Queen(R), UniMac(R), Huebsch(R), and Ajax(R), we produce a
full line of commercial washing machines and dryers with load
capacities from 16 to 250 pounds as well as presses and finishing
equipment. Our 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.
The financial statements as of and for the years ended December
31, 2003 and 2002 represent the consolidated financial position and
results of operations of Alliance Laundry Holdings LLC, including its
wholly-owned direct and indirect subsidiaries, Alliance Laundry
Systems, LLC and Alliance Laundry Corporation.
This report should be read in conjunction with the audited
financial statements presented in our Annual Report on Form 10-K (file
no. 333-56857-02) filed with the Securities and Exchange Commission,
effective March 8, 2004, which includes our audited financial
statements as of and for the years ended December 31, 2003 and 2002.
RESULTS OF OPERATIONS
The following table provides our historical net revenues for the
periods indicated:
Years Ended December 31,
--------------------------------
2003 2002 2001
----------- ---------- ---------
(dollars in millions)
Commercial laundry $230.7 $219.7 $219.3
Service parts 36.9 35.5 34.7
----------- ---------- ---------
$267.6 $255.2 $254.0
=========== ========== =========
The following table provides certain condensed historical
financial data expressed as a percentage of net revenues for each of
the periods indicated:
Years Ended
December 31,
--------------------
2003 2002 2001
------ ------ ------
Net revenues 100.0% 100.0% 100.0%
Cost of sales 70.6% 70.2% 74.4%
Gross profit 29.4% 29.8% 25.6%
Selling, general and administrative expense 12.6% 11.7% 11.3%
Securitization and other costs 0.0% 4.3% 0.0%
Operating income 16.8% 13.8% 14.3%
Net income before cumulative
effect of accounting change 5.9% 0.5% 1.1%
Year Ended December 31, 2003 Compared to Year Ended December 31,
2002
Net Revenues. Net revenues for the year ended December 31, 2003
increased $12.4 million, or 4.9%, to $267.6 million from $255.2
million for the year ended December 31, 2002. This increase was
primarily attributable to higher commercial laundry revenue of $11.0
million and higher service parts revenue of $1.4 million. The increase
in commercial laundry revenue was due primarily to higher North
American equipment revenue of $7.1 million, and international revenue
of $4.7 million, which was partly offset by lower earnings from our
off-balance sheet equipment financing program of $0.8 million. The
increase in North American equipment revenue was primarily due to
higher revenue from laundromats, and multi-housing laundries partially
offset by lower revenue from drycleaners and on-premise laundries.
Revenue from international customers was higher in Europe and Asia.
Gross Profit. Gross profit for the year ended December 31, 2003
increased $2.5 million, or 3.3%, to $78.6 million from $76.1 million
for the year ended December 31, 2002. This increase was primarily
attributable to margins associated with the higher sales volume, a
price increase and lower depreciation expense, which were partially
offset by unfavorable exchange rates related to foreign purchases,
unfavorable product mix related to sales to drycleaning customers and
lower earnings from our off-balance sheet equipment financing program.
Gross profit as a percentage of net revenues decreased to 29.4% for
the year ended December 31, 2003 from 29.8% for the year ended
December 31, 2002.
Selling, General and Administrative Expense. Selling, general and
administrative expenses for the year ended December 31, 2003 increased
$3.5 million, or 11.5%, to $33.6 million from $30.1 million for the
year ended December 31, 2002. The increase in selling, general and
administrative expenses was primarily due to higher pension expense of
$1.5 million, and higher sales and marketing expenses of $1.2 million.
Selling, general and administrative expenses as a percentage of net
revenues increased to 12.6% for the year ended December 31, 2003 from
11.7% for the year ended December 31, 2002.
Securitization and Other Costs. Securitization and other costs for
the year ended December 31, 2002 were $10.9 million. The 2002 costs
were due to transaction fees associated with a new asset backed
facility. Securitization and other costs as a percentage of net
revenues were 4.3% for the year ended December 31, 2002.
Operating Income. As a result of the aforementioned, operating
income for the year ended December 31, 2003 increased $10.0 million,
or 28.3%, to $45.1 million from $35.1 million for the year ended
December 31, 2002. Operating income as a percentage of net revenues
increased to 16.8% for the year ended December 31, 2003 from 13.8% for
the year ended December 31, 2002.
Interest Expense. Interest expense for the year ended December 31,
2003 of $28.3 million was unchanged as compared to interest expense
for the year ended December 31, 2002. Lower cash interest expense
resulting from a reduction in total debt outstanding was offset by
higher cash interest expense related to the Junior Subordinated Note.
Interest expense in 2003 includes an unfavorable non-cash adjustment
of $1.4 million to reflect changes in the fair values of an interest
rate swap agreement. Interest expense in 2002 includes an unfavorable
non-cash adjustment of $1.8 million to reflect changes in the fair
values of a similar interest rate swap agreement.
Other Income (Expense), Net. Other expense for the year ended
December 31, 2003 was $0.8 million as compared to other income of less
than $0.1 million for the year ended December 31, 2002. The 2003 other
expense is comprised of costs associated with the settlement of a
lawsuit against a former subsidiary in Argentina and losses on the
sale of fixed assets. The 2002 other income is comprised entirely of
gains on the sale of fixed assets.
Net Income. As a result of the aforementioned, net income for the
year ended December 31, 2003 increased $14.6 million to $15.9 million
as compared to $1.3 million for the year ended December 31, 2002. Net
income as a percentage of net revenues increased to 5.9% for the year
ended December 31, 2003 from 0.5% for the year ended December 31,
2002.
Year Ended December 31, 2002 Compared to Year Ended December 31,
2001
Net Revenues. Net revenues for the year ended December 31, 2002
increased $1.2 million, or 0.5%, to $255.2 million from $254.0 million
for the year ended December 31, 2001. This increase was primarily
attributable to higher commercial laundry revenue of $0.4 million and
higher service parts revenue of $0.8 million. The increase in
commercial laundry revenue was due primarily to higher North American
equipment revenue of $3.0 million, and higher earnings from our
off-balance sheet equipment financing program of $0.6 million, which
was partly offset by lower international revenue of $3.2 million. The
increase in North American equipment revenue was primarily due to
price increases of approximately $3.5 million and higher revenue from
multi-housing laundries, and laundromats, partially offset by lower
revenue from on-premise 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 year ended December 31, 2002
increased $11.1 million, or 17.1%, to $76.1 million from $65.0 million
for the year ended December 31, 2001. This increase was primarily
attributable to the price increase and favorable manufacturing
efficiencies, $1.5 million of lower depreciation expense, and $2.0
million of favorable impact in 2001 resulting from a change in
accounting principle whereby goodwill is no longer amortized. Gross
profit as a percentage of net revenues increased to 29.8% for the year
ended December 31, 2002 from 25.6% for the year ended December 31,
2001.
Selling, General and Administrative Expense. Selling, general and
administrative expenses for the year ended December 31, 2002 increased
$1.4 million, or 5.0%, to $30.1 million from $28.7 million for the
year ended December 31, 2001. The increase in selling, general and
administrative expenses was primarily due to higher pension expense of
$1.4 million, higher independent development expenses of $0.9 million,
higher compensation expenses of $0.9 million, and higher sales and
marketing expenses of $0.3 million, partially offset by lower 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 $0.8 million. Selling, general and
administrative expenses as a percentage of net revenues increased to
11.7% for the year ended December 31, 2002 from 11.3% for the year
ended December 31, 2001.
Securitization and Other Costs. Securitization and other costs for
the year ended December 31, 2002 were $10.9 million. The 2002 costs
were due to transaction fees associated with a new asset backed
facility. Securitization and other costs as a percentage of net
revenues were 4.3% for the year ended December 31, 2002.
Operating Income. As a result of the aforementioned, operating
income for the year ended December 31, 2002 decreased $1.3 million, or
3.5%, to $35.1 million from $36.4 million for the year ended December
31, 2001. Operating income as a percentage of net revenues decreased
to 13.8% for the year ended December 31, 2002 from 14.3% for the year
ended December 31, 2001.
Interest Expense. Interest expense for the year ended December 31,
2002 decreased $5.2 million, or 15.5%, to $28.3 million from $33.5
million for the year ended December 31, 2001. Interest expense in 2002
includes an unfavorable non-cash adjustment of $1.8 million related to
interest rate swap agreements entered into in 2002. Interest expense
in 2001 included an unfavorable non-cash adjustment of $0.9 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 $22.0 million, or 6.5% since December of 2000.
Loss from Early Extinguishment of Debt. Loss from early
extinguishment of debt for the year ended December 31, 2002 was $2.0
million. We entered into an amended and restated credit agreement
dated as of August 2, 2002. As a result, we recorded a loss on early
extinguishment of debt of $2.0 million at that time, to write-off
unamortized debt issuance costs related to our prior term loan and
revolving credit facilities.
Abandoned Canadian Public Offering. Abandoned Canadian public
offering expense for the year ended December 31, 2002 was $3.4 million
of costs incurred while pursuing an initial public offering through a
Canadian Income Trust. Due to market conditions, we determined that
such a public offering was not advantageous to Alliance at that time.
Other Income (Expense), Net. Other income for the year ended
December 31, 2002 was less than $0.1 million as compared to other
expense of $0.1 million for the year ended December 31, 2001. The 2002
other income is comprised entirely of gains on the sale of fixed
assets. The 2001 other expense is comprised entirely of losses on the
sale of fixed assets.
Net Income Before Cumulative Effect of Accounting Change. As a
result of the foregoing, net income before cumulative effect of
accounting change for the year ended December 31, 2002 decreased $1.4
million to a net income before cumulative effect of accounting change
of $1.3 million as compared to $2.7 million for the year ended
December 31, 2001. Net income before cumulative effect of accounting
change as a percentage of net revenues decreased to 0.5% for the year
ended December 31, 2002 from 1.1% for the year ended December 31,
2001.
Cumulative Effect of Accounting Change. Effective April 1, 2001,
we 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
we recognized a $2.0 million non-cash write-down of our retained
interests in our securitization transactions.
Net Income. As a result of the aforementioned, net income for the
year ended December 31, 2002 increased $0.6 million to $1.3 million as
compared to $0.7 million for the year ended December 31, 2001. Net
income as a percentage of net revenues increased to 0.5% for the year
ended December 31, 2002 from 0.3% for the year ended December 31,
2001.
CONTACT: Alliance Laundry Holdings LLC
Bruce P. Rounds, CFO, 920-748-1634