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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q*



| ̈ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended June 30, 2004



OR



| ̈ | 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 DELAWARE DELAWARE                                     |  | 39-1927923 39-1928505 52-2055893    
|(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) |  | (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 ̈No ̈



Indicate by check mark whether the registrant is an accelerated filer as defined in Rule
12b-2 of the Exchange Act of 1934:



Yes ̈No ̈



|* | This report is being filed pursuant to requirements contained in the indenture governing the registrants Senior Subordinated Notes and not as required under Section 13 or
15(d) of the Securities Exchange Act of 1934.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Alliance Laundry Holdings LLC

Form 10-Q

For The Period Ended June 30, 2004



Table of Contents



|           |  |                                                                                             |  |         
|---------- |  | ------------------------------------------------------------------------------------------- |  | --------
|           |  |                                                                                             |  | Page No.
|PART I     |  | Financial Information                                                                       |  |         
|           |  |                                                                                            
|Item 1.    |  | Financial Statements                                                                        |  |         
|           |  |                                                                                            
|           |  | Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003                       |  | 3       
|           |  |                                                                                            
|           |  | Consolidated Statements of Income for the periods ended June 30, 2004 and June 30, 2003     |  | 4       
|           |  |                                                                                            
|           |  | Consolidated Statements of Cash Flows for the periods ended June 30, 2004 and June 30, 2003 |  | 5       
|           |  |                                                                                            
|           |  | Notes to Unaudited Consolidated Financial Statements                                        |  | 6       
|           |  |                                                                                            
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations       |  | 14      
|           |  |                                                                                            
|Item 3.    |  | Quantitative and Qualitative Disclosure About Market Risk                                   |  | 21      
|           |  |                                                                                            
|Item 4.    |  | Controls and Procedures                                                                     |  | 21      
|           |  |                                                                                            
|PART II    |  | Other Information                                                                           |  |         
|           |  |                                                                                            
|Item 1.    |  | Legal Proceedings                                                                           |  | 22      
|           |  |                                                                                            
|Item 2.    |  | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities            |  | 22      
|           |  |                                                                                            
|Item 3.    |  | Defaults upon Senior Securities                                                             |  | 22      
|           |  |                                                                                            
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                         |  | 22      
|           |  |                                                                                            
|Item 5.    |  | Other Information                                                                           |  | 22      
|           |  |                                                                                            
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                            |  | 22      
|           | 
|Signatures |  | 23                                                                                         



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PART I FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS.
|------- | ---------------------



ALLIANCE LAUNDRY HOLDINGS LLC

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands)



|                                                        |  |              |          |   |                  |   |          |  
|------------------------------------------------------- |  | ------------ | -------- | - | ---------------- | - | -------- | -
|                                                        |  | June 30,2004 |          |   | December 31,2003 |  
|Assets                                                  |  |              |          |   |                  |   |          |  
|Current assets:                                         |  |              |          |   |                  |   |          |  
|Cash                                                    |  | $            | 10,550   |   |                  | $ | 7,937    |  
|Accounts receivable, net                                |  |              | 7,917    |   |                  |   | 9,157    |  
|Inventories, net                                        |  |              | 26,733   |   |                  |   | 26,215   |  
|Beneficial interests in securitized accounts receivable |  |              | 18,753   |   |                  |   | 16,789   |  
|Prepaid expenses and other                              |  |              | 1,498    |   |                  |   | 898      |  
|                                                        |  |              |          |   |                  |   |          |  
|Total current assets                                    |  |              | 65,451   |   |                  |   | 60,996   |  
|Notes receivable, net                                   |  |              | 6,334    |   |                  |   | 8,161    |  
|Property, plant and equipment, net                      |  |              | 31,575   |   |                  |   | 34,035   |  
|Goodwill, net                                           |  |              | 55,414   |   |                  |   | 55,414   |  
|Beneficial interests in securitized financial assets    |  |              | 20,148   |   |                  |   | 22,676   |  
|Debt issuance costs, net                                |  |              | 6,676    |   |                  |   | 7,636    |  
|Other assets                                            |  |              | 3,951    |   |                  |   | 1,721    |  
|                                                        |  |              |          |   |                  |   |          |  
|Total assets                                            |  | $            | 189,549  |   |                  | $ | 190,639  |  
|                                                        |  |              |          |   |                  |   |          |  
|Liabilities and Members Deficit                        |  |              |          |   |                  |   |          |  
|Current liabilities:                                    |  |              |          |   |                  |   |          |  
|Current portion of long-term debt                       |  | $            | 12,822   |   |                  | $ | 11,270   |  
|Revolving credit facility                               |  |              |         |   |                  |   |         |  
|Accounts payable                                        |  |              | 11,313   |   |                  |   | 11,279   |  
|Other current liabilities                               |  |              | 18,893   |   |                  |   | 20,428   |  
|                                                        |  |              |          |   |                  |   |          |  
|Total current liabilities                               |  |              | 43,028   |   |                  |   | 42,977   |  
|Long-term debt:                                         |  |              |          |   |                  |   |          |  
|Senior credit facility                                  |  |              | 132,428  |   |                  |   | 145,975  |  
|Senior subordinated notes                               |  |              | 110,000  |   |                  |   | 110,000  |  
|Junior subordinated note                                |  |              | 26,326   |   |                  |   | 24,171   |  
|Other long-term debt                                    |  |              | 657      |   |                  |   | 783      |  
|Other long-term liabilities                             |  |              | 6,922    |   |                  |   | 6,491    |  
|Mandatorily redeemable preferred interests              |  |              | 6,000    |   |                  |   |         |  
|                                                        |  |              |          |   |                  |   |          |  
|Total liabilities                                       |  |              | 325,361  |   |                  |   | 330,397  |  
|Commitments and contingencies (see Note 3)              |  |              |          |   |                  |   |          |  
|Mandatorily redeemable preferred interests              |  |              |         |   |                  |   | 6,000    |  
|Members deficit                                        |  |              | (135,812 | ) |                  |   | (145,758 | )
|                                                        |  |              |          |   |                  |   |          |  
|Total liabilities and members deficit                  |  | $            | 189,549  |   |                  | $ | 190,639  |  
|                                                        |  |              |          |   |                  |   |          |  



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



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ALLIANCE LAUNDRY HOLDINGS LLC

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands)



|                                            |  |                    |        |                  |   |              |  |              |         |  |   |        
|------------------------------------------- |  | ------------------ | ------ | ---------------- | - | ------------ |  | ------------ | ------- |  | - | -------
|                                            |  | Three Months Ended |        | Six Months Ended
|                                            |  | June 30, 2004      |        | June 30,2003     |   | June 30,2004 |  | June 30,2003
|Net revenues:                               |  |                    |        |                  |   |              |  |              |         |  |   |        
|Commercial laundry                          |  | $                  | 63,910 |                  | $ | 62,142       |  | $            | 120,218 |  | $ | 113,471
|Service parts                               |  |                    | 9,460  |                  |   | 8,859        |  |              | 19,432  |  |   | 18,639 
|                                            |  |                    |        |                  |   |              |  |              |         |  |   |        
|                                            |  |                    | 73,370 |                  |   | 71,001       |  |              | 139,650 |  |   | 132,110
|Cost of sales                               |  |                    | 52,239 |                  |   | 50,212       |  |              | 97,760  |  |   | 94,234 
|                                            |  |                    |        |                  |   |              |  |              |         |  |   |        
|Gross profit                                |  |                    | 21,131 |                  |   | 20,789       |  |              | 41,890  |  |   | 37,876 
|Selling, general and administrative expense |  |                    | 9,107  |                  |   | 8,182        |  |              | 17,726  |  |   | 16,399 
|Offering related expenses                   |  |                    | 540    |                  |   |             |  |              | 1,268   |  |   |       
|                                            |  |                    |        |                  |   |              |  |              |         |  |   |        
|Total operating expense                     |  |                    | 9,647  |                  |   | 8,182        |  |              | 18,994  |  |   | 16,399 
|                                            |  |                    |        |                  |   |              |  |              |         |  |   |        
|Operating income                            |  |                    | 11,484 |                  |   | 12,607       |  |              | 22,896  |  |   | 21,477 
|Interest expense                            |  |                    | 5,260  |                  |   | 7,720        |  |              | 12,370  |  |   | 15,405 
|Other expense, net                          |  |                    | 18     |                  |   | 797          |  |              | 52      |  |   | 797    
|                                            |  |                    |        |                  |   |              |  |              |         |  |   |        
|Income before taxes                         |  |                    | 6,206  |                  |   | 4,090        |  |              | 10,474  |  |   | 5,275  
|Provision for income taxes                  |  |                    | 5      |                  |   | 43           |  |              | 54      |  |   | 43     
|                                            |  |                    |        |                  |   |              |  |              |         |  |   |        
|Net income                                  |  | $                  | 6,201  |                  | $ | 4,047        |  | $            | 10,420  |  | $ | 5,232  
|                                            |  |                    |        |                  |   |              |  |              |         |  |   |        



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



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ALLIANCE LAUNDRY HOLDINGS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)



|                                                                                  |  |                  |         |   |              |   |         |  
|--------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ------------ | - | ------- | -
|                                                                                  |  | Six Months Ended |        
|                                                                                  |  | June 30,2004     |         |   | June 30,2003 |  
|Cash flows from operating activities:                                             |  |                  |         |   |              |   |         |  
|Net income                                                                        |  | $                | 10,420  |   |              | $ | 5,232   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                  |         |   |              |   |         |  
|Depreciation and amortization                                                     |  |                  | 5,118   |   |              |   | 5,557   |  
|Non-cash interest                                                                 |  |                  | 1,797   |   |              |   | 3,612   |  
|Non-cash incentive unit compensation                                              |  |                  | 670     |   |              |   |        |  
|(Gain) loss on sale of property, plant and equipment                              |  |                  | 52      |   |              |   | (9      | )
|Changes in assets and liabilities:                                                |  |                  |         |   |              |   |         |  
|Accounts receivable                                                               |  |                  | 1,240   |   |              |   | (4,248  | )
|Inventories                                                                       |  |                  | (518    | ) |              |   | (278    | )
|Other assets                                                                      |  |                  | (1,316  | ) |              |   | (2,697  | )
|Accounts payable                                                                  |  |                  | 34      |   |              |   | (2,405  | )
|Other liabilities                                                                 |  |                  | (746    | ) |              |   | 54      |  
|                                                                                  |  |                  |         |   |              |   |         |  
|Net cash provided by operating activities                                         |  |                  | 16,751  |   |              |   | 4,818   |  
|                                                                                  |  |                  |         |   |              |   |         |  
|Cash flows from investing activities:                                             |  |                  |         |   |              |   |         |  
|Additions to property, plant and equipment                                        |  |                  | (1,647  | ) |              |   | (2,351  | )
|Proceeds on disposal of property, plant and equipment                             |  |                  | 5       |   |              |   | 36      |  
|                                                                                  |  |                  |         |   |              |   |         |  
|Net cash used in investing activities                                             |  |                  | (1,642  | ) |              |   | (2,315  | )
|                                                                                  |  |                  |         |   |              |   |         |  
|Cash flows from financing activities:                                             |  |                  |         |   |              |   |         |  
|Repayment of management note                                                      |  |                  |        |   |              |   | 32      |  
|Principal payments on long-term debt                                              |  |                  | (12,121 | ) |              |   | (10,118 | )
|Cash paid for capitalized offering related costs                                  |  |                  | (375    | ) |              |   |        |  
|Net increase in revolving line of credit borrowings                               |  |                  |        |   |              |   | 5,000   |  
|                                                                                  |  |                  |         |   |              |   |         |  
|Net cash used in financing activities                                             |  |                  | (12,496 | ) |              |   | (5,086  | )
|                                                                                  |  |                  |         |   |              |   |         |  
|Increase (decrease) in cash                                                       |  |                  | 2,613   |   |              |   | (2,583  | )
|Cash at beginning of period                                                       |  |                  | 7,937   |   |              |   | 7,339   |  
|                                                                                  |  |                  |         |   |              |   |         |  
|Cash at end of period                                                             |  | $                | 10,550  |   |              | $ | 4,756   |  
|                                                                                  |  |                  |         |   |              |   |         |  
|Supplemental disclosure of cash flow information:                                 |  |                  |         |   |              |   |         |  
|Cash paid for interest                                                            |  | $                | 11,494  |   |              | $ | 10,932  |  



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



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Notes to Unaudited Consolidated Financial Statements



|NOTE 1. | BASIS OF PRESENTATION
|------- | ---------------------



Throughout this quarterly report, we refer to Alliance Laundry Holdings LLC, a Delaware limited liability company, as Alliance Holdings, and,
together with its consolidated operations, as Alliance, we, our, and us, unless otherwise indicated. Any reference to Alliance Laundry refers to our wholly-owned subsidiary, Alliance
Laundry Systems LLC, a Delaware limited liability company, and its consolidated operations, unless otherwise indicated.



The unaudited financial statements as of and for the quarter ended June 30, 2004 present the consolidated financial position and results of operations of
Alliance Laundry Holdings LLC, including our 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 our financial position and operating results 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 us
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 we believe the disclosures provided are adequate to prevent the information presented from being misleading.



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 period ended June 30, 2004 should be read in
conjunction with the audited financial statements presented in our Annual Report on Form 10-K (file no. 333-56857) filed with the Securities and Exchange Commission, which includes our audited financial statements as of and for the year ended
December 31, 2003.



During January 2003, the FASB issued FIN
No. 46, Consolidation of Variable Interest Entities, which clarifies the consolidation and disclosure requirements related to variable interests in a variable interest entity. A variable interest entity is an entity for which control is
achieved through means other than voting rights. In December 2003, the FASB issued a revision to FIN No. 46, which replaced FIN No. 46. The revised Interpretation (FIN 46-R) was adopted by us beginning on January 1, 2004 for interests in
entities created on or before December 31, 2003 and as of the date we first become involved with a potential variable interest entity created after December 31, 2003.



FIN 46-R provides exceptions from its scope for certain entities, including qualifying special-purpose securitization
entities subject to the reporting requirements of SFAS No. 140 and business entities, as defined, that do not possess certain characteristics.



Our primary variable interests are notes receivable that have not been sold and are comprised primarily of equipment loans to laundromat operators and
other end-users. Excluding notes awaiting sale, the carrying value of such loans was approximately $5.0 million at June 30, 2004. We did not enter into



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any new variable interests since December 31, 2003. If in the future we are required to consolidate a variable interest entity in which one or both of our
SFAS No. 140 qualifying special-purpose entities also holds a variable interest, the qualifying status of the special-purpose entity with such holdings would be eliminated. In that instance, we would be required to determine if we are the primary
beneficiary of the affected securitization entity under FIN 46-R and if so, to consolidate that entity, which would have a material effect on our consolidated financial position, results of operations and cash flows.



During May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity, which establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. The FASB has
also subsequently issued certain Staff Positions that effectively amended SFAS No. 150. The statement is effective for us beginning January 1, 2004. As a result of the adoption of SFAS No. 150, as amended, our mandatorily redeemable preferred
interests have been reclassified from mezzanine equity to the long- term liability section of our consolidated balance sheet (see Note 8).



During December 2003, the FASB revised SFAS No. 132, Employers Disclosures about Pensions and Other Postretirement Benefits, to require
additional disclosures about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. These disclosure requirements were effective for our plans in 2003,
except for estimated future benefit payments, which are effective in this quarter. This statement also requires interim-period disclosures of the components of net periodic benefit cost and, if significantly different from previously disclosed
amounts, the amount of contributions and projected contributions to fund pension and other postretirement benefit plans. These interim-period disclosures have been included within our financial statement notes beginning in the first quarter of 2004
(see Note 6).



On December 8, 2003, the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (the Act) was signed into law. The Act introduces a prescription drug benefit under Medicare (Medicare Part D) as well as a federal subsidy to sponsors of retiree health care benefit plans
that provide a benefit that is at least actuarially equivalent to Medicare Part D. Because our postretirement health care plan does not provide prescription drug benefits beyond age 65 (general eligibility for Medicare Part D), the Act will have no
effect on our accumulated postretirement benefit obligations or net periodic postretirement benefit cost.



The FASB is expected to re-expose a proposed statement that would amend and clarify SFAS No. 140 (and related implementation guidance). The proposed
statement will address permitted activities of qualifying special-purpose entities, including the degree of discretion allowable in determining the terms of beneficial interests issued after inception, and whether certain transfers can meet the
criteria for sale accounting under SFAS No. 140 if the transferor or any consolidated affiliate provides liquidity support for the transferees beneficial interests. As the proposed statement has not been issued, we are unable to determine the
effects of the related transition provisions, if any, on our existing securitization entities. However, in the event that transfers to our existing asset backed facility would no longer qualify as sales of financial assets in the future, we may
recognize additional costs for a replacement facility or it may have other material financial statement effects.



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|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):



|                              |  |              |        |   |                  |   |        |  
|----------------------------- |  | ------------ | ------ | - | ---------------- | - | ------ | -
|                              |  | June 30,2004 |        |   | December 31,2003 |  
|                              |  | (Unaudited)  |        |   |                  |  
|Materials and purchased parts |  | $            | 8,885  |   |                  | $ | 9,167  |  
|Work in process               |  |              | 3,580  |   |                  |   | 3,074  |  
|Finished goods                |  |              | 14,793 |   |                  |   | 15,394 |  
|Less: inventory reserves      |  |              | (525   | ) |                  |   | (1,420 | )
|                              |  |              |        |   |                  |   |        |  
|                              |  | $            | 26,733 |   |                  | $ | 26,215 |  
|                              |  |              |        |   |                  |   |        |  



|NOTE 3. | COMMITMENTS AND CONTINGENCIES
|------- | -----------------------------



Various claims and legal proceedings generally incidental to the normal course of business are pending or threatened against us. While we cannot predict
the outcome of these matters, in the opinion of management, any liability arising thereunder will not have a material adverse effect on our business, financial condition and results of operations after giving effect to provisions already recorded.



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 lost 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 his responsibilities under the Consulting Agreement and was therefore not entitled to the fees, and that ALSA was not liable for lost profits in either 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 (equivalent to $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. We believed, inasmuch as ALSA was a foreign subsidiary, ALSA was responsible for its own debts and obligations. In our opinion based on the
advice of counsel, under the terms of the award, any such payments would have been 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. On December 12, 2002, Mr. Lopez filed a lawsuit with the National Commercial Court Number 13 in Buenos Aires, Argentina against us for the amount ordered to be paid in the Lopez Arbitration, plus unspecified damages caused by the
award not having been timely paid.



Because of the risk this
lawsuit presented, we commenced settlement negotiations with Mr. Lopez in the second quarter of 2003. On July 17, 2003 a Settlement, Release, Discharge and Indemnification Agreement was entered into by Mr. Lopez and the Company. While denying any
liability whatsoever, we agreed to and paid Mr. Lopez US$736,440 on August 6, 2003 and agreed to deliver to Mr. Lopez in Brazil commercial laundry equipment, free of charge, up to a cost to us of US$60,000. In consideration of the aforementioned
payment and delivery of equipment, Mr. Lopez released and forever discharged, and waived any claims or rights of any nature whatsoever against the Company and a number of affiliated subsidiary companies. In addition, Mr. Lopez and his counsel signed
the dismissal of the lawsuit referred to above. A provision for this settlement was recorded in the second quarter of our 2003 consolidated financial statements.



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In April 2002 we were named as a defendant in a lawsuit filed by Imonex Services, Inc. for patent
infringement arising from a coin selector, the W2000, which was a vendor-supplied component used in certain of our products. The vendor, W. H. Münzprüfer Dietmar Trenner GmbH, has indemnified us and has agreed to pay and is
paying for our representation in this matter. Imonex accused us, and other Münzprüfer customers, of patent infringement resulting from the sales of the W2000 within the Münzprüfer customers products. Trial commenced January
6, 2003 in the United States District Court for the Eastern District of Texas. Following the trial, the court indicated it would enter an order rendering judgment for Imonex that the asserted patent claims were infringed, are not invalid, and were
not procured by inequitable conduct. The court indicated it will issue a permanent injunction and invited the parties to submit proposed injunction languages, and objections thereto. The court has withheld ruling upon the timelines of Imonex
bringing its damage claims. The court reduced the jurys damage verdict from $10,350,000 ($5,382,000 against us with the remainder against the other Münzprüfer customers) to $490,295 ($267,645 against us with the remainder against the
other Münzprüfer customers) and gave Imonex the option to accept the reduced damages or have a new trial on damages. On April 28, 2003, Imonex filed an election for a new trial on damages, and filed proposed language for the injunction.
The Münzprüfer customers filed their objections to the injunction language on May 5, 2003. On August 1, 2003, the court ruled it will not enhance any damages for willful infringement, but entered judgment for Imonex on the issues of
infringement, and validity of Imonexs patents. Imonex submitted expert reports at the new trial on damages which attempted to prove actual damages of approximately $16,267,644 (approximately $6,305,232 against us with the remainder against
other Münzprüfer customers). On August 12, 2003 a preliminary injunction was issued prohibiting W2000 coin selector usage.



The trial on damages commenced August 18, 2003 and yielded a jury verdict of $1,396,873 to Imonex ($614,662 against us with the remainder against the
other Münzprüfer customers). Final judgment on the August 18, 2003 jury verdict was rendered on February 9, 2004 against all the Münzprüfer customers. The final judgment included $614,662 against us, plus prejudgment interest,
yielding $771,728 against us. In addition, the judgment awarded court costs to Imonex, including attorneys fees. On February 23, 2004, Imonex submitted an application seeking from all the Münzprüfer customers a total of $669,107 in
attorneys fees and $133,214 in court costs. The preliminary injunction of August 12, 2003 was made permanent. The Münzprüfer customers have filed a post judgment motion seeking to have the judgment amended or set aside.



Imonex has filed a Notice of Appeal and the Court of Appeals for the
Federal Circuit set the date of docketing as March 16, 2004. Münzprüfer and the Münzprüfer customers have filed cross-appeals. Imonex has served a statement of issues that it will pursue on appeal. Imonex filed its appeal brief
on May 13, 2004. Münzprüfer and the Münzprüfer customers appeal brief was filed on June 25, 2004. Imonex has 40 days thereafter to file a reply brief. Münzprüfer and the Münzprüfer customers will then
have 14 days to file a reply brief. Once the reply briefs are filed, the Court of Appeals for the Federal Circuit will typically schedule a hearing.



Our position remains that any liability related to this lawsuit is properly borne by Münzprüfer. We believe that Münzprüfer has the
ability to fully satisfy its indemnification obligations up to the amount of the final judgment. We have also reached tentative agreement with Münzprüfer as to acceptable methods of satisfying the provisions of the indemnification
agreement, in the event the judgment is not appealed, or is not overturned upon appeal. In accordance with generally accepted accounting principles, as a judgment has been rendered by the court, in the fourth quarter of 2003 we recorded an
appropriate payable to Imonex related to our liability and a corresponding receivable balance from Münzprüfer within our consolidated financial statements.



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Environmental, Health and Safety Matters



We are subject to comprehensive and frequently changing federal, state and local environmental and occupational health and
safety laws and regulations, including laws and regulations governing emissions of air pollutants, discharges of waste and storm water and the disposal of hazardous wastes. We are also subject to liability for the investigation and remediation of
environmental contamination (including contamination caused by other parties) at the properties we own or operate and at other properties where the Company or our predecessors have arranged for the disposal of hazardous substances. As a result, we
are involved, from time to time, in administrative and judicial proceedings and inquires relating to environmental matters. There can be no assurance that we will not be involved in such proceedings in the future and that the aggregate amount of
future clean-up costs and other environmental liabilities will not have a material adverse effect on our business, financial condition and results of operations. We believe that our facilities and operations are in material compliance with all
environmental, health and safety laws.



|NOTE 4. | GUARANTEES
|------- | ----------



Pursuant to the terms of a $300.0 million asset backed facility, entered into in November of 2002 by a special-purpose bankruptcy remote subsidiary of ours (the Asset Backed Facility), we provide credit
enhancement to the note purchasers consisting of an irrevocable letter of credit, an unconditional lending commitment of the lenders under our senior credit facility, subject to certain limits. We are obligated under the reimbursement provisions of
the senior credit facility to reimburse the lenders for any drawings on the credit enhancement by the facility indenture trustee. If the credit enhancement is not replenished by us after a drawing, the trust will not be permitted to request new
borrowings under the Asset Backed Facility and the Asset Backed Facility will begin to amortize. The amount of the irrevocable letter of credit related to the Asset Backed Facility at June 30, 2004 was $25.4 million.



We offer warranties to our customers depending upon the specific product and
the product use. Standard product warranties vary from one to three years for most parts with certain components extending to five years. Certain customers have elected to buy products without warranty coverage. The standard warranty program
requires that we replace defective components within a specified time period from the date of installation. We record an estimate for future warranty related costs based on actual historical incident rates and cost per incident trends. Based on
analysis of these and other factors, the carrying amount of our warranty liability is adjusted as necessary. While our warranty costs have historically been within our calculated estimates, it is possible that future warranty costs could exceed
those estimates.



The changes in the carrying amount of our
total product warranty liability for the six months ended June 30, 2004 and 2003 were as follows:



|                                                                          |  |                  |        |   |              |   |        |  
|------------------------------------------------------------------------- |  | ---------------- | ------ | - | ------------ | - | ------ | -
|                                                                          |  | Six Months Ended |       
|                                                                          |  | June 30,2004     |        |   | June 30,2003 |  
|Balance at beginning of period                                            |  | $                | 4,759  |   |              | $ | 4,890  |  
|Accruals for current and pre-existing warranties issued during the period |  |                  | 928    |   |              |   | 1,097  |  
|Settlements made during the period                                        |  |                  | (1,228 | ) |              |   | (1,097 | )
|                                                                          |  |                  |        |   |              |   |        |  
|Balance at end of period                                                  |  | $                | 4,459  |   |              | $ | 4,890  |  
|                                                                          |  |                  |        |   |              |   |        |  



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|NOTE 5. | COMPREHENSIVE INCOME
|------- | --------------------



Comprehensive income for the three months ended June 30, 2004 and 2003 consist of the following (in thousands):



|                                                         |  |                    |        |   |               |   |      
|-------------------------------------------------------- |  | ------------------ | ------ | - | ------------- | - | -----
|                                                         |  | Three Months Ended
|                                                         |  | June 30, 2004      |        |   | June 30, 2003
|Comprehensive income:                                    |  |                    |        |   |               |   |      
|Net income                                               |  | $                  | 6,201  |   |               | $ | 4,047
|Other comprehensive income                               |  |                    |        |   |               |   |      
|Net unrealized holding gain (loss) on residual interests |  |                    | (1,995 | ) |               |   | 48   
|                                                         |  |                    |        |   |               |   |      
|Comprehensive income                                     |  | $                  | 4,206  |   |               | $ | 4,095
|                                                         |  |                    |        |   |               |   |      



Comprehensive income
for the six months ended June 30, 2004 and 2003 consist of the following (in thousands):



|                                                         |  |                  |        |   |               |   |      
|-------------------------------------------------------- |  | ---------------- | ------ | - | ------------- | - | -----
|                                                         |  | Six Months Ended
|                                                         |  | June 30, 2004    |        |   | June 30, 2003
|Comprehensive income:                                    |  |                  |        |   |               |   |      
|Net income                                               |  | $                | 10,420 |   |               | $ | 5,232
|Other comprehensive income                               |  |                  |        |   |               |   |      
|Net unrealized holding gain (loss) on residual interests |  |                  | (1,144 | ) |               |   | 1,172
|                                                         |  |                  |        |   |               |   |      
|Comprehensive income                                     |  | $                | 9,276  |   |               | $ | 6,404
|                                                         |  |                  |        |   |               |   |      



|NOTE 6. | EMPLOYEE BENEFIT PLANS
|------- | ----------------------



Substantially all of our employees are covered by a defined benefit pension plan. In addition, we provide certain health care benefits for retired
employees. The components of periodic benefit costs for these plans for the three months ended June 30, 2004 and 2003 are as follows:



|                                   |  |                  |      |   |                |   |      |      |  |      |    |  |   |   
|---------------------------------- |  | ---------------- | ---- | - | -------------- | - | ---- | ---- |  | ---- | -- |  | - | --
|                                   |  | Pension Benefits |      |   | Other Benefits
|                                   |  | 2004             |      |   | 2003           |   |      | 2004 |  | 2003
|Service cost                       |  | $                | 406  |   |                | $ | 361  |      |  | $    | 23 |  | $ | 15
|Interest cost                      |  |                  | 671  |   |                |   | 643  |      |  |      | 27 |  |   | 23
|Expected return on assets          |  |                  | (826 | ) |                |   | (705 | )    |  |      |   |  |   |  
|Amortization of net obligation     |  |                  |     |   |                |   |     |      |  |      | 12 |  |   | 12
|Amortization of prior service cost |  |                  | 17   |   |                |   | 17   |      |  |      |   |  |   |  
|Amortization of loss               |  |                  | 18   |   |                |   | 129  |      |  |      | 15 |  |   | 9 
|                                   |  |                  |      |   |                |   |      |      |  |      |    |  |   |   
|Net periodic benefit cost          |  | $                | 286  |   |                | $ | 445  |      |  | $    | 77 |  | $ | 59
|                                   |  |                  |      |   |                |   |      |      |  |      |    |  |   |   



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The components of periodic benefit costs for the six months ended June 30, 2004 and 2003 are as follows:



|                                   |  |                  |        |   |                |   |        |      |  |      |     |  |   |    
|---------------------------------- |  | ---------------- | ------ | - | -------------- | - | ------ | ---- |  | ---- | --- |  | - | ---
|                                   |  | Pension Benefits |        |   | Other Benefits
|                                   |  | 2004             |        |   | 2003           |   |        | 2004 |  | 2003
|Service cost                       |  | $                | 812    |   |                | $ | 722    |      |  | $    | 46  |  | $ | 31 
|Interest cost                      |  |                  | 1,342  |   |                |   | 1,285  |      |  |      | 54  |  |   | 45 
|Expected return on assets          |  |                  | (1,653 | ) |                |   | (1,411 | )    |  |      |    |  |   |   
|Amortization of net obligation     |  |                  |       |   |                |   |       |      |  |      | 23  |  |   | 23 
|Amortization of prior service cost |  |                  | 35     |   |                |   | 35     |      |  |      |    |  |   |   
|Amortization of loss               |  |                  | 36     |   |                |   | 258    |      |  |      | 29  |  |   | 18 
|                                   |  |                  |        |   |                |   |        |      |  |      |     |  |   |    
|Net periodic benefit cost          |  | $                | 572    |   |                | $ | 889    |      |  | $    | 152 |  | $ | 117
|                                   |  |                  |        |   |                |   |        |      |  |      |     |  |   |    



Employer Contributions



We previously disclosed in our financial statements for
the year ended December 31, 2003 that we did not expect to contribute anything to our pension plan for 2004. As of June 30, 2004, $0.7 million of voluntary contributions have been made. We do not presently anticipate contributing additional funds to
our pension plan in 2004. We currently anticipate making an additional voluntary contribution of approximately $0.7 million in 2005.



In April 2004, the Pension Funding Equity Act of 2004 (the Act) was signed into law allowing many corporations to reduce their required
pension contributions during 2004 and 2005. The Act had no material impact on our 2004 required minimum contribution of zero.



Postretirement Health Care Plan



Our postretirement health care plan provides for prescription drug benefits. On December 8, 2003, the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Act) was signed into law. The Act introduces a prescription drug benefit under Medicare (Medicare Part D) as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit
that is at least actuarially equivalent to Medicare Part D. Because our postretirement health care plan does not provide prescription drug benefits beyond age 65 (general eligibility for Medicare Part D), the Act will have no effect on our
accumulated postretirement benefit obligations or net periodic postretirement benefit cost.



|NOTE 7. | RELATED PARTY TRANSACTIONS
|------- | --------------------------



2003 Executive Unit Agreements



On July 23, 2003, we amended and restated our Limited Liability Company Agreement to issue Class M Units and to issue incremental Class B Units, which in turn have been issued to certain members



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of management (each an Executive). These units were issued in return for the Executives present service to us and as an incentive for the
Executive to continue to provide future services to us. These units are subject to certain terms and conditions which include vesting provisions and repurchase provisions if the Executive is no longer employed by us.



The Class M and incremental Class B Units were purchased by the Executives at
a nominal value based upon the subordinated nature of such interests. Based upon a valuation of these and all other previously issued incentive units, in the second quarter of 2004 we recognized $0.7 million of compensation expense and a
corresponding credit to additional paid in capital. At any such time that these units would be considered to have a higher value, we would record an appropriate level of compensation expense.



|NOTE 8. | MANDATORILY REDEEMABLE PREFERRED INTERESTS
|------- | ------------------------------------------



Our mandatorily redeemable preferred interests (the preferred interests) have a liquidation value of $6.0 million. These preferred interests
do not accrete, accrue or pay dividends and are redeemable at the earlier of (i) a change of control (as defined in the Alliance Laundry Holdings Amended and Restated Limited Liability Company Agreement), (ii) any initial public offering or (iii)
November 5, 2009. The holders of the preferred interests are entitled to receive distributions from us in an amount equal to their unreturned capital (as defined in the Alliance Laundry Holdings Amended and Restated Limited Liability Company
Agreement) prior to distributions in respect of any other membership interests of the Company.



We adopted SFAS No. 150 as of January 1, 2004, which required us to reclassify the preferred interests from mezzanine equity to the long-term liability section of our consolidated balance sheet. SFAS No. 150 requires
us to measure the preferred interests at fair value at the time of adoption and at each reporting date. The preferred interests have been carried at the $6.0 million redemption amount since inception, which approximates the fair value of the
preferred interests.



|NOTE 9. | OFFERING OF INCOME DEPOSIT SECURITIES
|------- | -------------------------------------



On April 13, 2004 we announced that Alliance Laundry Holdings Inc. (Alliance Laundry Holdings), a company formed to be the holding company for
the operations of Alliance Laundry Systems LLC and its subsidiaries filed a registration statement with the Securities and Exchange Commission relating to the proposed initial public offering of Income Deposit Securities (IDSs)
representing shares of Alliance Laundry Holdings Class A common stock and senior subordinated notes. The registration statement also related to an offering of a separate issue of senior subordinated notes of the same series as the senior
subordinated notes represented by the IDSs. As a result of this offering, as of June 30, 2004 we have incurred and recorded $1.3 million of offering related expense in the consolidated statement of income. In addition we have capitalized $2.0
million of debt and offering related costs in other assets within the consolidated balance sheet.



In connection with these offerings, we expect to commence a tender offer and consent solicitation for all of our outstanding $110 million aggregate
principal amount of 9 5/8% senior subordinated notes due 2008.



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------



OVERVIEW



We believe we are 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, 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.



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 our Annual Report on Form 10-K (file no. 333-56857) filed with the Securities and Exchange Commission, which includes our audited financial
position and operating results as of and for the year ended December 31, 2003.



RESULTS OF OPERATIONS



The following table sets forth our historical net revenues for the periods indicated:



|                   |  |                       |      |              |   |     
|------------------ |  | --------------------- | ---- | ------------ | - | ----
|                   |  | Quarter Ended        
|                   |  | June 30,2004          |      | June 30,2003
|                   |  | (Dollars in millions)
|Net revenues:      |  |                       |      |              |   |     
|Commercial laundry |  | $                     | 63.9 |              | $ | 62.1
|Service parts      |  |                       | 9.5  |              |   | 8.9 
|                   |  |                       |      |              |   |     
|                   |  | $                     | 73.4 |              | $ | 71.0
|                   |  |                       |      |              |   |     



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



|                                            |  |               |   |  |              |  
|------------------------------------------- |  | ------------- | - |  | ------------ | -
|                                            |  | Quarter Ended |  
|                                            |  | June 30,2004  |   |  | June 30,2003 |  
|Net revenues                                |  | 100.0         | % |  | 100.0        | %
|Cost of sales                               |  | 71.2          | % |  | 70.7         | %
|Gross profit                                |  | 28.8          | % |  | 29.3         | %
|Selling, general and administrative expense |  | 12.4          | % |  | 11.5         | %
|Offering related expenses                   |  | 0.7           | % |  |             |  
|Operating income                            |  | 15.7          | % |  | 17.8         | %
|Net income                                  |  | 8.5           | % |  | 5.7          | %



Net revenues.
Net revenues for the quarter ended June 30, 2004 increased $2.4 million, or 3.3%, to $73.4 million from $71.0 million for the quarter ended June 30, 2003. This increase was primarily attributable to higher commercial laundry revenue of $1.8 million
and service parts revenue of $0.6 million. The increase in commercial laundry revenue was due primarily to higher North American equipment revenue of $0.3 million and higher international revenue of $2.1 million, which were partially offset by lower
earnings from our equipment financing program of $0.6 million. Revenue for North America was higher to coin-operated laundry customers and on-premise laundry and lower to multi-housing laundry customers. Revenue for international was higher to
customers in Asia, Europe, the Middle East and Africa.



Gross profit. Gross profit for the quarter ended June 30, 2004 increased $0.3 million, or 1.6%, to $21.1 million from $20.8 million for the quarter ended June 30, 2003. This increase was primarily attributable to margins associated
with the higher sales volume, lower depreciation expense and a recent price increase, which were partially offset by the lower earnings from our equipment financing program and nickel and chrome surcharges of $1.2 million related to stainless steel
purchases. Gross profit as a percentage of net revenues decreased to 28.8% for the quarter ended June 30, 2004 from 29.3% for the quarter ended June 30, 2003 primarily as a result of the lower earnings from our equipment financing program.



Selling, general and administrative expense. Selling,
general and administrative expenses for the quarter ended June 30, 2004 increased $0.9 million, or 11.3%, to $9.1 million from $8.2 million for the quarter ended June 30, 2003. The increase in selling, general and administrative expenses was
primarily due to non-cash incentive compensation of $0.7 million in 2004, higher sales and marketing expenses of $0.5 million and higher independent development costs of $0.2 million, which were partially offset by lower pension costs of $0.5
million. Selling, general and administrative expenses as a percentage of net revenues increased to 12.4% for the quarter ended June 30, 2004 from 11.5% for the quarter ended June 30, 2003.



Offering related expense. Offering related expense for the quarter
ended June 30, 2004 was $0.5 million, with no similar expense in 2003. Offering related expense as a percentage of net revenues was 0.7% for the quarter ended June 30, 2004.



Operating income. As a result of the foregoing, operating income for the quarter ended June 30, 2004 decreased $1.1
million, or 8.9%, to $11.5 million from $12.6 million for the quarter ended June 30, 2003. Operating income as a percentage of net revenues decreased to 15.7% for the quarter ended June 30, 2004 from 17.8% for the quarter ended June 30, 2003.



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Interest expense. Interest expense for the quarter ended June 30, 2004 decreased $2.4 million, or
31.9%, to $5.3 million from $7.7 million for the quarter ended June 30, 2003. Interest expense in 2004 includes a favorable non-cash adjustment of $1.5 million to reflect changes in the fair values of an interest rate swap agreement. Interest
expense in 2003 includes an unfavorable non-cash adjustment of $0.7 million to reflect changes in the fair values of a similar interest rate swap agreement. Cash interest expense was lower as a result of reductions in total debt outstanding, but was
partially offset by higher interest expense related to the Junior Subordinated Notes.



Net income. As a result of the foregoing, net income for the quarter ended June 30, 2004 increased $2.2 million to net income of $6.2 million as compared to net income of $4.0 million for the quarter ended June
30, 2003. Net income as a percentage of net revenues increased to 8.5% for the quarter ended June 30, 2004 from 5.7% for the quarter ended June 30, 2003.



The following table sets forth our historical net revenues for the periods indicated:



|                   |  |                       |       |              |   |      
|------------------ |  | --------------------- | ----- | ------------ | - | -----
|                   |  | Six Months Ended     
|                   |  | June 30,2004          |       | June 30,2003
|                   |  | (Dollars in millions)
|Net revenues:      |  |                       |       |              |   |      
|Commercial laundry |  | $                     | 120.2 |              | $ | 113.5
|Service parts      |  |                       | 19.4  |              |   | 18.6 
|                   |  |                       |       |              |   |      
|                   |  | $                     | 139.6 |              | $ | 132.1
|                   |  |                       |       |              |   |      



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



|                                            |  |                  |   |  |              |  
|------------------------------------------- |  | ---------------- | - |  | ------------ | -
|                                            |  | Six Months Ended |  
|                                            |  | June 30,2004     |   |  | June 30,2003 |  
|Net revenues                                |  | 100.0            | % |  | 100.0        | %
|Cost of sales                               |  | 70.0             | % |  | 71.3         | %
|Gross profit                                |  | 30.0             | % |  | 28.7         | %
|Selling, general and administrative expense |  | 12.7             | % |  | 12.4         | %
|Offering related expenses                   |  | 0.9              | % |  |             |  
|Operating income                            |  | 16.4             | % |  | 16.3         | %
|Net income                                  |  | 7.5              | % |  | 4.0          | %



Net revenues.
Net revenues for the six months ended June 30, 2004 increased $7.5 million, or 5.7%, to $139.6 million from $132.1 million for the six months ended June 30, 2003. This increase was primarily attributable to higher commercial laundry revenue of $6.7
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 $1.6 million, higher international revenue of $4.8 million, and higher earnings from
our equipment financing program of $0.4 million. The increase in North American equipment revenues was primarily due to higher revenues from on-premise laundry and coin-operated



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laundry customers, which were partially offset by lower revenues from multi-housing laundry customers. Revenue for international was higher to customers in
Asia, the Middle East, Africa and Europe.



Gross profit.
Gross profit for the six months ended June 30, 2004 increased $4.0 million, or 10.6%, to $41.9 million from $37.9 million for the six months ended June 30, 2003. This increase was primarily attributable to the margins associated with the higher
sales volume, a price increase, the higher earnings from our equipment financing program and lower depreciation expense, which were partially offset by nickel and chrome surcharges of $1.9 million related to stainless steel purchases. Gross profit
as a percentage of net revenues increased to 30.0% for the six months ended June 30, 2004 from 28.7% for the six months ended June 30, 2003.



Selling, general and administrative expense. Selling, general and administrative expenses for the six months ended June 30, 2004 increased $1.3
million, or 8.1%, to $17.7 million from $16.4 million for the six months ended June 30, 2003. The increase in selling, general and administrative expenses was primarily due to non-cash incentive unit compensation of $0.7 million in 2004, higher
sales and marketing expenses of $0.9 million and higher independent development costs of $0.3 million, which were partially offset by lower pension expense of $0.5 million. Selling, general and administrative expenses as a percentage of net revenues
increased to 12.7% for the six months ended June 30, 2004 from 12.4% for the six months ended June 30, 2003.



Offering related expense. Offering related expense for the six months ended June 30, 2004 was $1.3 million, with no similar expense in 2003.
Offering related expense as a percentage of net revenues was 0.9% for the six months ended June 30, 2004.



Operating income.As a result of the foregoing, operating income for the six months ended June 30, 2004 increased $1.4 million, or 6.6%, to $22.9
million from $21.5 million for the six months ended June 30, 2003. Operating income as a percentage of net revenues increased to 16.4% for the six months ended June 30, 2004 from 16.3% for the six months ended June 30, 2003.



Interest expense. Interest expense for the six months ended June 30,
2004 decreased $3.0 million, or 19.7%, to $12.4 million from $15.4 million for the six months ended June 30, 2003. Interest expense in 2004 includes a favorable non-cash adjustment of $1.1 million to reflect changes in the fair values of an interest
rate swap agreement. Interest expense in 2003 includes an unfavorable non-cash adjustment of $1.5 million to reflect changes in the fair values of a similar interest rate swap agreement. Cash interest expense was lower as a result of reductions in
total debt outstanding, but was partially offset by higher interest expense related to the Junior Subordinated Notes.



Net income. As a result of the foregoing, net income for the six months ended June 30, 2004 increased $5.2 million to net income of $10.4 million
as compared to net income of $5.2 million for the six months ended June 30, 2003. Net income as a percentage of net revenues increased to 7.5% for the six months ended June 30, 2004 from 4.0% for the six months ended June 30, 2003.



LIQUIDITY AND CAPITAL RESOURCES



On April 13, 2004 we announced that Alliance Laundry Holdings Inc.
(Alliance Laundry Holdings), a company formed to be the holding company for the operations of Alliance Laundry Systems LLC and its subsidiaries, filed a registration statement with the Securities and Exchange Commission relating to the
proposed initial public offering of Income Deposit Securities (IDSs) representing shares of



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Alliance Laundry Holdings Class A common stock and senior subordinated notes. The registration statement also related to an offering of a separate
issue of senior subordinated notes of the same series as the senior subordinated notes represented by the IDSs. As a result of this offering, as of June 30, 2004 we have incurred and recorded $1.3 million of offering related expense in the
consolidated statement of income, and have capitalized $2.0 million of debt and offering related costs in the consolidated balance sheet.



In connection with these offerings, we expect to commence a tender offer and consent solicitation for all of our outstanding $110 million aggregate
principal amount of 9 5/8% senior subordinated notes due 2008.



We expect to use the proceeds from the offering to repay the outstanding indebtedness under our existing senior credit facility. We will also enter into a new credit facility that will be comprised of a senior secured revolving credit
facility (the New Revolver) and a senior secured term loan facility (the New Term Loan). We expect to use borrowings under the New Revolver for general corporate purposes, including working capital, capital expenditures,
payment of dividends and letters of credit.



The New Revolver
will require that we meet certain financial tests and will contain customary covenants and restrictions.



We believe, based on currently available information, that future cash flows from operations, together with available borrowings under the New Revolver,
will be adequate to meet our anticipated requirements for capital expenditures, working capital, interest payments, dividend payments and debt repayments while achieving all required covenant requirements under the New Revolver and New Term Loan.



Our ability to make payments of principal or to refinance our
indebtedness, or to pay the interest or liquidated damages, if any thereon, or to fund planned capital expenditures, will depend upon our future performance, which, in turn, is subject to general economic, financial, competitive and other factors
that are beyond our control. There can be no assurance that our business will continue to generate sufficient cash flow from operations in the future to service our debt and make necessary capital expenditures after satisfying certain liabilities
arising in the ordinary course of business. If unable to do so, we may be required to refinance all or a portion of our 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.



As of June 30, 2004, we have $282.2 million of combined indebtedness outstanding, consisting of outstanding debt of $145.0 million under our term loan facility, $110.0 million of senior subordinated notes and $26.3
million of junior subordinated notes, $0.5 million of borrowings pursuant to a Wisconsin Community Development Block Grant Agreement and $0.4 million of borrowings pursuant to an equipment financing transaction with Alliant Energy  Wisconsin
Power & Light Company. At June 30, 2004 there were no borrowings under our revolving credit facility. Letters of credit issued on our behalf under the revolving credit facility totaled $26.9 million at June 30, 2004. As a result, at June 30,
2004 we had $18.1 million of our $45.0 million revolving credit facility available subject to certain limitations under our senior credit facility. After considering such limitations, which relate primarily to the maximum ratio of consolidated debt
to EBITDA, we could have borrowed $18.1 million at June 30, 2004 in additional indebtedness under the revolving credit facility.



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The term loan facility amortizes quarterly and is repayable in the following aggregate amounts:



|     |  |                      |      
|---- |  | -------------------- | -----
|Year |  | Amount Due          
|     |  | (Dollars inmillions)
|     |  |                      |      
|2004 |  | $                    | 6.3  
|2005 |  | $                    | 12.6 
|2006 |  | $                    | 16.7 
|2007 |  | $                    | 109.4



Our Asset Backed
Facility provides for a total of $300.0 million in 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, we will continue to act as originator and servicer of the equipment financing promissory notes and the trade receivables.



Historical



Cash generated from operations for the six months ended June 30, 2004 of $16.8 million was principally derived from
operations (net income adjusted for depreciation, amortization, non-cash interest and non-cash incentive unit compensation) which was partially offset by changes in working capital. The working capital investment for beneficial interests in
securitized accounts receivable at June 30, 2004 of $18.8 million increased $2.0 million as compared to the balance of $16.8 million at December 31, 2003, which was primarily attributable to an increase in retained interests on trade receivables
sold under the new Asset Backed Facility. Other assets at June 30, 2004 of $3.9 million increased $2.2 million as compared to the balance of $1.7 million at December 31, 2003, which was primarily attributable to $2.0 million of capitalized IDS
costs. The investment in accounts receivable at June 30, 2004 of $7.9 million decreased $1.3 million as compared to the balance of $9.2 million at December 31, 2003. The investment in notes receivable at June 30, 2004 of $6.3 million decreased $1.9
million as compared to the balance of $8.2 million at December 31, 2003.



Net cash provided by operating activities for the six months ended June 30, 2004 of $16.8 million increased by $11.9 million as compared to the six months ended June 30, 2003. This increase was primarily due to higher
cash provided by operations of $3.7 million and lower net cash used in changes in assets and liabilities of $8.3 million for the six months ended June 30, 2004 as compared to the six months ended June 30, 2003. The lower net cash impact from changes
in assets and liabilities for the six months ended June 30, 2004 of $8.3 million was largely due to a $1.3 million decrease in accounts receivable held by us for the six months ended June 30, 2004 as compared to an increase of $4.2 million for the
same period in 2003. Additionally, accounts payable decreased $2.4 million for the six months ended June 30, 2003, with no measurable change for the same period in 2004.



Capital Expenditures



Our capital expenditures for the six months ended June 30, 2004 and June 30, 2003 were $1.6 million and $2.4 million, respectively. Capital spending in
both 2004 and 2003 were principally oriented toward replacement of old or obsolete machinery and manufacturing process improvements.



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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS



During January 2003, the FASB issued FIN No. 46, Consolidation of
Variable Interest Entities, which clarifies the consolidation and disclosure requirements related to variable interests in a variable interest entity. A variable interest entity is an entity for which control is achieved through means other
than voting rights. In December 2003, the FASB issued a revision to FIN No. 46, which replaced FIN No. 46. The revised Interpretation (FIN 46-R) was adopted by us beginning on January 1, 2004 for interests in entities created on or
before December 31, 2003 and as of the date we first become involved with a potential variable interest entity created after December 31, 2003.



FIN 46-R provides exceptions from its scope for certain entities, including qualifying special-purpose securitization entities subject to the reporting
requirements of SFAS No. 140 and business entities, as defined, that do not possess certain characteristics.



Our primary variable interests are notes receivable that have not been sold and are comprised primarily of equipment loans to laundromat operators and
other end-users. Excluding notes awaiting sale, the carrying value of such loans was approximately $5.0 million at June 30, 2004. We did not enter into any new variable interests since December 31, 2003. If in the future we are required to
consolidate a variable interest entity in which one or both of our SFAS No. 140 qualifying special-purpose entities also holds a variable interest, the qualifying status of the special-purpose entity with such holdings would be eliminated. In that
instance, we would be required to determine if we are the primary beneficiary of the affected securitization entity under FIN 46-R and if so, to consolidate that entity, which would have a material effect on our consolidated financial position,
results of operations and cash flows.



During May 2003, the
FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, which establishes standards for the classification and measurement of certain financial instruments with
characteristics of both liabilities and equity. The FASB has also subsequently issued certain Staff Positions that effectively amended SFAS No. 150. The statement is effective for us beginning January 1, 2004. As a result of the adoption of SFAS No.
150, as amended, our mandatorily redeemable preferred interests have been reclassified from mezzanine equity to the long- term liability section of our consolidated balance sheet (see Note 8).



During December 2003, the FASB revised SFAS No. 132, Employers
Disclosures about Pensions and Other Postretirement Benefits, to require additional disclosures about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement
plans. These disclosure requirements were effective for our plans in 2003, except for estimated future benefit payments, which are effective in this quarter. This statement also requires interim-period disclosures of the components of net periodic
benefit cost and, if significantly different from previously disclosed amounts, the amount of contributions and projected contributions to fund pension and other postretirement benefit plans. These interim-period disclosures have been included
within our financial statement notes beginning in the first quarter of 2004 (see Note 6).



On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) was signed into law. The Act introduces a prescription drug benefit under Medicare (Medicare Part D)
as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. Because our postretirement health care plan does not provide prescription drug benefits
beyond age 65 (general eligibility for Medicare Part D), the Act will have no effect on our accumulated postretirement benefit obligations or net periodic postretirement benefit cost.



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The FASB is expected to re-expose a proposed statement that would amend and clarify SFAS No. 140 (and
related implementation guidance). The proposed statement will address permitted activities of qualifying special-purpose entities, including the degree of discretion allowable in determining the terms of beneficial interests issued after inception,
and whether certain transfers can meet the criteria for sale accounting under SFAS No. 140 if the transferor or any consolidated affiliate provides liquidity support for the transferees beneficial interests. As the proposed statement has not
been issued, we are unable to determine the effects of the related transition provisions, if any, on our existing securitization entities. However, in the event that transfers to our existing asset backed facility would no longer qualify as sales of
financial assets in the future, we may recognize additional costs for a replacement facility or it may have other material financial statement effects.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------



We are potentially exposed to market risk associated with changes in interest and foreign exchange rates. From time to time we may enter into derivative
financial instruments to hedge our 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 our underlying exposures. We do not enter into derivatives for speculative purposes. There have been no material changes in our market risk exposures as compared to those discussed in our Annual Report on Form 10-K (file no.
333-56857).



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------



(a) We carried out an evaluation within the 90 day period prior to this report, under the supervision and with the participation of our management,
including our Chairman and Chief Executive Officer along with our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, as of the end of the period covered by
this quarterly report on Form 10-Q, our Chief Executive Officer along with our Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as
amended (1) are effective in timely alerting them to material information relating to the Company (including our consolidated subsidiaries) required to be included in our periodic SEC filings and (2) are adequate to ensure that information required
to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act of 1934, as amended, 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 our internal controls or in
other factors, including any corrective actions with regard to significant deficiencies and material weaknesses, that have materially affected, or are reasonably likely to materially affect, internal controls subsequent to the date we carried out
our 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



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may cause actual results, performance or achievements 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; market acceptance of new and enhanced versions of our products; the impact of substantial leverage and debt service on us and other risks
listed from time to time in our reports, including but not limited to our Annual Report on Form 10-K (file no. 333-56857). We do not undertake any obligation to update any such forward looking statements unless required by law.



PART II OTHER INFORMATION



|Item 1. | Legal Proceedings. See Note 3 to Item 1 in Part I.
|------- | --------------------------------------------------



|Item 2. | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity 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.
| | --- | -----------------



|        |  |                                         
|------- |  | ----------------------------------------
|Exhibit |  | Description                             
|        | 
|31.1    |  | Certification of Chief Executive Officer
|        | 
|31.2    |  | Certification of Chief Financial Officer



| | (b) | Reports on Form 8-K. On May 7, 2004 we issued a press release announcing our earnings for the first quarter ending March 31, 2004.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES



Alliance Laundry Systems
LLC has duly caused this quarterly report to be signed on its behalf by the undersigned, thereto duly authorized.



|                                         |  |                                         |  |       
|---------------------------------------- |  | --------------------------------------- |  | ------
|Signature                                |  | Title                                   |  | Date  
|                                         |  |                                        
|/s/ Thomas LEsperanceThomas LEsperance |  | Chairman and CEO                        |  | 8-4-04
|                                         |  |                                        
|/s/ Bruce P. RoundsBruce P. Rounds       |  | Vice President, Chief Financial Officer |  | 8-4-04



Alliance Laundry
Corporation has duly caused this quarterly report to be signed on its behalf by the undersigned, thereto duly authorized.



|                                         |  |                                         |  |       
|---------------------------------------- |  | --------------------------------------- |  | ------
|Signature                                |  | Title                                   |  | Date  
|                                         |  |                                        
|/s/ Thomas LEsperanceThomas LEsperance |  | Chairman and CEO                        |  | 8-4-04
|                                         |  |                                        
|/s/ Bruce P. RoundsBruce P. Rounds       |  | Vice President, Chief Financial Officer |  | 8-4-04



Alliance Laundry
Holdings LLC has duly caused this quarterly report to be signed on its behalf by the undersigned, thereto duly authorized.



|                                         |  |                                         |  |       
|---------------------------------------- |  | --------------------------------------- |  | ------
|Signature                                |  | Title                                   |  | Date  
|                                         |  |                                        
|/s/ Thomas LEsperanceThomas LEsperance |  | Chairman and CEO                        |  | 8-4-04
|                                         |  |                                        
|/s/ Bruce P. RoundsBruce P. Rounds       |  | Vice President, Chief Financial Officer |  | 8-4-04



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