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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q*



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



For the quarterly period ended March 31, 2003



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



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ALLIANCE LAUNDRY SYSTEMS LLC

ALLIANCE LAUNDRY CORPORATION

ALLIANCE LAUNDRY
HOLDINGS LLC

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)



|DELAWARE DELAWARE DELAWARE (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) |  | 39-1927923 39-1928505 52-2055893 (I.R.S. EMPLOYER IDENTIFICATION NO.)
|----------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------



P.O.
BOX 990

RIPON, WISCONSIN 54971-0990

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)



(920) 748-3121

(REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA
CODE)



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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 ̈



* 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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Alliance
Laundry Systems LLC

Form 10-Q

For The Period Ended March 31, 2003



Table of Contents



|           |  |                                                                                                  |  | Page No.
|---------- |  | ------------------------------------------------------------------------------------------------ |  | --------
|PART I     |  | Financial Information                                                                            |  |         
|          
|Item 1.    |  | Financial Statements                                                                             |  |         
|          
|           |  | Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002                           |  | 3       
|          
|           |  | Consolidated Statements of Income (Loss) for the periods ended March 31, 2003 and March 31, 2002 |  | 4       
|          
|           |  | Consolidated Statements of Cash Flows for the periods ended March 31, 2003 and March 31, 2002    |  | 5       
|          
|           |  | Notes to Unaudited Consolidated Financial Statements                                             |  | 6       
|          
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations            |  | 9       
|          
|Item 3.    |  | Quantitative and Qualitative Disclosure About Market Risk                                        |  | 14      
|          
|Item 4.    |  | Controls and Procedures                                                                          |  | 14      
|          
|PART II    |  | Other Information                                                                                |  |         
|          
|Item 1.    |  | Legal Proceedings                                                                                |  | 16      
|          
|Item 2.    |  | Changes in Securities                                                                            |  | 16      
|          
|Item 3.    |  | Defaults upon Senior Securities                                                                  |  | 16      
|          
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                              |  | 16      
|          
|Item 5.    |  | Other Information                                                                                |  | 16      
|          
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                 |  | 16      
|          
|Signatures |  | 17                                                                                              





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PART I     FINANCIAL INFORMATION



ITEM 1.    FINANCIAL STATEMENTS.



ALLIANCE LAUNDRY HOLDINGS LLC

CONSOLIDATED BALANCE SHEETS

(in thousands)



|                                                        |  | March 31, 2003 |          |   | December 31, 2002 |  
|------------------------------------------------------- |  | -------------- | -------- | - | ----------------- | -
|                                                        |  | (unaudited)    |          |   |                   |  
|Assets                                                  |  |                |          |   |                   |  
|Current assets:                                         |  |                |          |   |                   |  
|Cash                                                    |  | $              | 2,675    |   |                   | $
|Cash-restricted                                         |  |                | 841      |   |                   |  
|Accounts receivable, net                                |  |                | 9,938    |   |                   |  
|Inventories, net                                        |  |                | 27,013   |   |                   |  
|Beneficial interests in securitized accounts receivable |  |                | 17,945   |   |                   |  
|Prepaid expenses and other                              |  |                | 3,259    |   |                   |  
|                                                        |  |                |          |   |                   |  
|Total current assets                                    |  |                | 61,671   |   |                   |  
|Notes receivable, net                                   |  |                | 9,107    |   |                   |  
|Property, plant and equipment, net                      |  |                | 38,011   |   |                   |  
|Goodwill, net                                           |  |                | 55,414   |   |                   |  
|Beneficial interests in securitized financial assets    |  |                | 22,806   |   |                   |  
|Debt issuance costs, net                                |  |                | 9,142    |   |                   |  
|Other assets                                            |  |                | 1,642    |   |                   |  
|                                                        |  |                |          |   |                   |  
|Total assets                                            |  | $              | 197,793  |   |                   | $
|                                                        |  |                |          |   |                   |  
|Liabilities and Members
Deficit                        |  |                |          |   |                   |  
|Current liabilities:                                    |  |                |          |   |                   |  
|Current portion of long-term debt                       |  | $              | 9,835    |   |                   | $
|Revolving credit facility                               |  |                | 2,000    |   |                   |  
|Accounts payable                                        |  |                | 10,047   |   |                   |  
|Other current liabilities                               |  |                | 22,736   |   |                   |  
|                                                        |  |                |          |   |                   |  
|Total current liabilities                               |  |                | 44,618   |   |                   |  
|Long-term debt:                                         |  |                |          |   |                   |  
|Senior credit facility                                  |  |                | 168,404  |   |                   |  
|Senior subordinated notes                               |  |                | 110,000  |   |                   |  
|Junior subordinated note                                |  |                | 21,158   |   |                   |  
|Other long-term debt                                    |  |                | 967      |   |                   |  
|Other long-term liabilities                             |  |                | 11,045   |   |                   |  
|                                                        |  |                |          |   |                   |  
|Total liabilities                                       |  |                | 356,192  |   |                   |  
|Mandatorily redeemable preferred equity                 |  |                | 6,000    |   |                   |  
|Members deficit                                        |  |                | (164,399 | ) |                   |  
|                                                        |  |                |          |   |                   |  
|Total liabilities and members deficit                  |  | $              | 197,793  |   |                   | $
|                                                        |  |                |          |   |                   |  



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ALLIANCE
LAUNDRY HOLDINGS LLC

CONSOLIDATED STATEMENTS OF INCOME

(in thousands)



|                                            |  | Three Months Ended
|------------------------------------------- |  | ------------------
|                                            |  | March 31, 2003    
|                                            |  | (unaudited)       
|Net revenues:                               |  |                   
|Commercial laundry                          |  | $                 
|Service parts                               |  |                   
|                                            |  |                   
|                                            |  |                   
|Cost of sales                               |  |                   
|                                            |  |                   
|Gross profit                                |  |                   
|                                           
|Selling, general and administrative expense |  |                   
|                                            |  |                   
|Operating income                            |  |                   
|                                           
|Interest expense                            |  |                   
|Other income, net                           |  |                   
|                                            |  |                   
|Net income                                  |  | $                 
|                                            |  |                   



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ALLIANCE
LAUNDRY HOLDINGS LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                            |  | Three Months Ended |       
|------------------------------------------------------------------------------------------- |  | ------------------ | ------
|                                                                                            |  | March 31, 2003     |       
|                                                                                            |  | (unaudited)        |       
|Cash flows from operating activities:                                                       |  |                    |       
|Net income                                                                                  |  | $                  | 1,185 
|Adjustments to reconcile net income to net cash (used in) provided by operating
activities: |  |                    |       
|Depreciation and amortization                                                               |  |                    | 2,807 
|Non-cash interest                                                                           |  |                    | 1,593 
|(Gain) on sale of property, plant and equipment                                             |  |                    |      
|Changes in assets and liabilities:                                                          |  |                    |       
|Accounts receivable                                                                         |  |                    | (4,104
|Inventories                                                                                 |  |                    | (1,316
|Other assets                                                                                |  |                    | 2,024 
|Accounts payable                                                                            |  |                    | (3,750
|Other liabilities                                                                           |  |                    | 1,058 
|                                                                                            |  |                    |       
|Net cash (used in) provided by operating activities                                         |  |                    | (503  
|                                                                                            |  |                    |       
|Cash flows from investing activities:                                                       |  |                    |       
|Additions to property, plant and equipment                                                  |  |                    | (1,134
|Proceeds on disposal of property, plant and equipment                                       |  |                    |      
|                                                                                            |  |                    |       
|Net cash used in investing activities                                                       |  |                    | (1,134
|                                                                                            |  |                    |       
|Cash flows from financing activities:                                                       |  |                    |       
|Repayment of management note                                                                |  |                    | 32    
|Principal payments on long-term debt                                                        |  |                    | (5,059
|Net increase in revolving line of credit borrowings                                         |  |                    | 2,000 
|                                                                                            |  |                    |       
|Net cash used in financing activities                                                       |  |                    | (3,027
|                                                                                            |  |                    |       
|Decrease in cash                                                                            |  |                    | (4,664
|Cash at beginning of period                                                                 |  |                    | 7,339 
|                                                                                            |  |                    |       
|Cash at end of period                                                                       |  | $                  | 2,675 
|                                                                                            |  |                    |       
|Supplemental disclosure of cash flow information:                                           |  |                    |       
|Cash paid for interest                                                                      |  | $                  | 2,664 



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Notes to Unaudited Consolidated Financial Statements



NOTE 1. BASIS OF PRESENTATION



The unaudited financial statements as of and for the quarter ended March 31, 2003 present the consolidated financial position and results of operations of Alliance Laundry Holdings LLC (the
Company), including its wholly-owned direct and indirect subsidiaries, Alliance Laundry Systems LLC and Alliance Laundry Corporation.



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



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



This report on Form 10-Q for the period ended March 31, 2003
should be read in conjunction with the audited financial statements presented in the Companys Annual Report on Form 10-K (file no. 333-56857) filed with the Securities and Exchange Commission, which includes the audited financial statements of
the Company as of and for the year ended December 31, 2002.



In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations. This statement
addresses the financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The provisions of SFAS No. 143 are effective for fiscal years beginning after
June 15, 2002. The Company adopted SFAS 143 effective January 1, 2003. The adoption did not have any impact on the consolidated financial statements.



In November 2002, the FASB issued FASB Interpretation No. (FIN) 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that
guarantee. In addition, FIN 45 requires additional disclosures about the guarantees that an entity has issued, including a reconciliation of the changes in the entitys product warranty liabilities during the reporting period. The initial
recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements in FIN 45 are effective for financial statements of interim or annual
periods ending after December 15, 2002. The Company adopted the provisions of this statement effective January 1, 2003. The adoption of the recognition and measurement provisions did not have a material impact on the consolidated financial
statements.



During January 2003, the Financial
Accounting Standards Board issued Interpretation 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. The consolidation provisions of this



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Interpretation are effective immediately for interests created after January 31, 2003. For interests
created before February 1, 2003, the Company is required to adopt the consolidation provisions no later than July 1, 2003. The Company is still evaluating the consolidation provisions of this Interpretation with respect to its pre-existing
interests; however, qualifying special-purpose securitization entities are excluded from the consolidations requirements of this Interpretation.



NOTE 2. INVENTORIES



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



|                              |  | March 31, 2003 |        |   | December 31, 2002 |  
|----------------------------- |  | -------------- | ------ | - | ----------------- | -
|                              |  | (Unaudited)    |        |   |                   |  
|Materials and purchased parts |  | $              | 10,943 |   |                   | $
|Work in process               |  |                | 4,063  |   |                   |  
|Finished goods                |  |                | 13,820 |   |                   |  
|Less: inventory reserves      |  |                | (1,813 | ) |                   |  
|                              |  |                |        |   |                   |  
|                              |  | $              | 27,013 |   |                   | $
|                              |  |                |        |   |                   |  



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



Various claims and legal proceedings generally incidental to the normal course of business are pending or threatened against the Company.
While the Company cannot predict the outcome of these matters, in the opinion of management, any liability arising thereunder will not have a material adverse effect on the Companys 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 loss of profits in Argentina and Brazil, plus damages for pain and suffering. An arbitration was conducted by an ad-hoc panel (the Lopez
Arbitration), during which ALSA contended that Juan Carlos Lopez failed to fulfill responsibilities under the Consulting Agreement and was therefore not entitled to the fees, and that ALSA was not liable for loss of profits either in Argentina
or Brazil, nor for an indemnification for pain and suffering. On April 3, 2001, the Lopez Arbitration was concluded. The arbitration panel awarded Argentine Pesos 1,408,900 ($1.4 million U.S. dollars at the time), plus nine percent interest from
September 6, 1999, plus ten percent over this principal and interest amount as moral damages, plus certain fees and costs, while rejecting other claims of plaintiff. The Company does not believe this arbitration award will have a material effect on
the Companys operations, in as much as ALSA is a foreign subsidiary and is responsible for its own debts and obligations. The remaining investment on the Companys financial statements is not material as this operation was discontinued in
the fourth quarter of 1998, at which time the Companys investment in ALSA was written down to the value of certain remaining assets. In managements opinion based on the advice of counsel, under the terms of the award,



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any such payments would have to be forthcoming from the assets of ALSA. On December 20, 2001, ALSAs
bankruptcy was decreed, at the request of Mr. Lopez, on grounds of non-payment of the arbitration award. On December 12, 2002, Mr. Lopez filed a lawsuit with the National Commercial Court Number 13 in Buenos Aires, Argentina against the Company for
the amount ordered to be paid in the Lopez Arbitration, plus unspecified damages caused by the award not having been timely paid. The Company filed an answer to the lawsuit on March 7, 2003 requesting that it be dismissed.



Since January 2002, there have been significant changes in
Argentinas monetary legislation and the value of the Argentine Peso. The rate of exchange of one Argentine Peso per one United States Dollar is no longer in force, and as of April 30, 2003 the Argentine Peso was trading at .3541 per United
States Dollar. Accordingly, in the event that Mr. Lopez was ultimately successful in a U.S. court of securing payment of this award from the Company, the U.S. dollar value of the award (based upon the current rate of exchange) would be substantially
reduced as compared to the amount discussed above.



In April, 2002 the Company was named as a defendant in a lawsuit filed by Imonex Services, Inc. (the Plaintiff) for patent infringement, arising from a vendor supplied coin selector, the W2000, used in certain
of the Companys products. The vendor, W. H. Münzprüfer Dietmar Trenner GmbH (Münzprüfer), has indemnified the Company and has agreed to pay and is paying for the Companys representation in this matter.
Plaintiff accused the Company, and other Münzprüfer customers (the Defendants), of patent infringement resulting from the sales of the W2000 within the Defendants products. Trial commenced January 6, 2003 in the United States
District Court for the Eastern District of Texas. Following the trial the Court entered an order on April 17, 2003 rendering judgment for Imonex that the asserted patent claims are 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 issues of willful infringement, and the timelines of
Imonex bringing its damage claims. The Court reduced the jurys damage verdict from $10,350,000 ($5,382,000 against the Company with the remainder against the other Defendants) against all Defendants, to $490,295 ($267,645 against the Company
with the remainder against the other Defendants) 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 Defendants filed their objections to the injunction language on May 5, 2003. The position of the Company remains that any liability related to this lawsuit is properly borne by Münzprüfer. However, the ability of
Münzprüfer to fully satisfy its indemnification obligations could require the Company to fund a portion of any ultimate settlement or award amount, and such amount could be material to the Companys financial position, results of
operations and cash flows. Based upon the current status of this matter, no liability has been recorded by the Company.



Environmental, Health and Safety Matters



The Company and its operations 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. The Company is also subject to
liability for the investigation and remediation of environmental contamination (including contamination caused by other parties) at the properties it owns or operates and at other properties where the Company or predecessors have arranged for the
disposal of hazardous substances. As a result, the Company is involved, from time to time, in administrative and judicial proceedings and inquires relating to environmental matters. There can be no assurance that the Company 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 the Companys



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business, financial condition and results of operations. The Company believes that its facilities and
operations are in material compliance with all environmental, health and safety laws.



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



NOTE 4. COMPREHENSIVE INCOME / (LOSS)



Comprehensive income/(loss) for the three months ended March
31, 2003 and 2002 consist of the following (in thousands):



|                                                  |  | Three Months Ended |      
|------------------------------------------------- |  | ------------------ | -----
|                                                  |  | March 31, 2003     |      
|Comprehensive income:                             |  |                    |      
|Net income                                        |  | $                  | 1,185
|Other comprehensive income (loss)                 |  |                    |      
|Net unrealized holding gain on residual interests |  |                    | 1,124
|Unrealized loss on interest rate swap             |  |                    |     
|                                                  |  |                    |      
|Comprehensive income                              |  | $                  | 2,309
|                                                  |  |                    |      



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



OVERVIEW



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



This discussion and analysis should be read in conjunction with the Financial Statements and Notes thereto
included in this report and in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations set forth in the Companys Annual Report on Form 10-K (file no. 333-56857) filed with the Securities and
Exchange Commission, which includes the audited financial position and operating results of the Company as of and for the year ended December 31, 2002.



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RESULTS OF OPERATIONS



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



|                   |  | Quarter Ended        
|------------------ |  | ---------------------
|                   |  | March 31, 2003       
|                   |  | (Dollars in millions)
|Net revenues:      |  |                      
|Commercial laundry |  | $                    
|Service parts      |  |                      
|                   |  |                      
|                   |  | $                    
|                   |  |                      



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



|                                            |  | Quarter Ended  |  
|------------------------------------------- |  | -------------- | -
|                                            |  | March 31, 2003 |  
|Net revenues                                |  | 100.0          | %
|Cost of sales                               |  | 72.1           | %
|Gross profit                                |  | 27.9           | %
|Selling, general and administrative expense |  | 13.4           | %
|Operating income                            |  | 14.5           | %
|Net income                                  |  | 1.9            | %



Net
revenues. Net revenues for the quarter ended March 31, 2003 increased $1.4 million, or 2.2%, to $61.2 million from $59.8 million for the quarter ended March 31, 2002. This increase was primarily attributable to higher commercial laundry revenue
of $0.4 million and higher service parts revenue of $1.0 million. The increase in commercial laundry revenue was due primarily to higher North American equipment revenue of $0.9 million and higher international revenue of $0.2 million, partially
offset by lower earnings from the Companys off-balance sheet equipment financing program of $0.7 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 on-premise laundries. The increase in service parts revenue was due to gaining back additional service part sales due to more competitive pricing practices.



Gross profit. Gross profit for the quarter ended March
31, 2003 and March 31, 2002 was $17.1 million. Favorable manufacturing efficiencies and a recent price increase were offset by the lower earnings from the Companys off-balance sheet equipment financing program. Gross profit as a percentage of
net revenues decreased to 27.9% for the quarter ended March 31, 2003 from 28.5% for the quarter ended March 31, 2002. This 0.6% decrease was primarily attributable to the factors discussed above.



Selling, general and administrative expense. Selling,
general and administrative expenses for the quarter ended March 31, 2003 increased $1.2 million, or 17.6%, to $8.2 million from $7.0 million for the



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quarter ended March 31, 2002. The increase in selling, general and administrative expenses was primarily
due to higher pension and fringe benefit costs of $0.5 million, higher sales and marketing expenses of $0.3 million and higher independent development expenses of $0.2 million. Selling, general and administrative expenses as a percentage of net
revenues increased to 13.4% for the quarter ended March 31, 2003 from 11.7% for the quarter ended March 31, 2002.



Operating income. As a result of the foregoing, operating income for the quarter ended March 31, 2003 decreased $1.2 million, or
11.9%, to $8.9 million from $10.1 million for the quarter ended March 31, 2002. Operating income as a percentage of net revenues decreased to 14.5% for the quarter ended March 31, 2003 from 16.8% for the quarter ended March 31, 2002.



Interest expense. Interest expense for the quarter
ended March 31, 2003 increased $1.3 million, or 20.9%, to $7.7 million from $6.4 million for the quarter ended March 31, 2002. Interest expense in 2003 includes an unfavorable non-cash adjustment of $0.7 million related to a new interest rate swap
agreement entered into in the fourth quarter of 2002. Interest expense in 2003 was also higher due to higher interest rates associated with the new swap agreement and higher letter of credit rates within the Companys new Senior Credit
Facility.



Net income. As a result of the
foregoing, net income for the quarter ended March 31, 2003 decreased $2.5 million to net income of $1.2 million as compared to net income of $3.7 million for the quarter ended March 31, 2002. Net income as a percentage of net revenues decreased to
1.9% for the quarter ended March 31, 2003 from 6.2% for the quarter ended March 31, 2002.



LIQUIDITY AND CAPITAL RESOURCES



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



The new Senior Credit Facility continues to be subject to
certain financial ratios and tests, similar to those included in the prior facilities. The maximum rates of consolidated debt to EBITDA under the new Senior Credit Facility is scheduled to be reduced from 6.0 at March 31, 2003 to 5.5 at December 31,
2003. Management believes that future cash flows from operations, together with available borrowings under the Revolving Credit Facility, will be adequate to meet the Companys anticipated requirements for capital expenditures, working capital,
interest payments, scheduled principal payments and other debt repayments while achieving all required covenant requirements under the new credit facilities.



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



The Companys principal sources of liquidity are cash flows generated from operations and borrowings under its $45.0 million
Revolving Credit Facility. The Companys principal uses of liquidity are to meet debt service requirements, finance the Companys capital expenditures and provide working capital. The Company expects that capital expenditures in 2003 will
not exceed $5.0 million. The



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Company expects the ongoing requirements for debt service, capital expenditures and working capital will
be funded by internally generated cash flow and borrowings under the Revolving Credit Facility.



As of March 31, 2003, the Company has $312.4 million of combined indebtedness outstanding, consisting of outstanding debt of $178.0 million under the Term Loan Facility, $110.0 million of senior
subordinated notes and $21.2 million of junior subordinated notes, $2.0 million under the Revolving Credit Facility, $0.6 million of borrowings pursuant to a Wisconsin Community Development Block Grant Agreement and $0.6 million of borrowings
pursuant to an equipment financing transaction with Alliant Energy  Wisconsin Power & Light Company. Letters of credit issued on the Companys behalf under the Revolving Credit Facility totaled $22.0 million at March 31, 2003. As a
result, at March 31, 2003 the Company had $21.0 million of its $45.0 million Revolving Credit Facility available subject to certain limitations under the new Senior Credit Facility. After considering such limitations, which relate primarily to the
maximum ratio of consolidated debt to EBITDA, the Company could have borrowed $21.0 million at March 31, 2003 in additional indebtedness under the Revolving Credit Facility.



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



|Year |  | Amount Due           
|---- |  | ---------------------
|     |  | (Dollars in millions)
|2003 |  | $                    
|2004 |  | $                    
|2005 |  | $                    
|2006 |  | $                    
|2007 |  | $                    



The
Companys 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, the Company will continue to act as originator and servicer of the equipment financing promissory notes and
the trade receivables.



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



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Historical



Cash used in operations for the three
months ended March 31, 2003 of $0.5 million was principally derived from operations (net income adjusted for depreciation, amortization, and non-cash interest) which was partially offset by changes in working capital. The working capital investment
in accounts receivable at March 31, 2003 of $9.9 million increased $4.1 million as compared to the balance of $5.8 million at December 31, 2002, which was primarily attributable to timing related to the sale of accounts receivable through the new
Asset Backed Facility at March 31, 2002. The investment in beneficial interests in securitized accounts receivable at March 31, 2003 of $17.9 million decreased $2.0 million as compared to the balance of $19.9 million at December 31, 2002. The
investment in notes receivable at March 31, 2003 of $9.1 million decreased $2.1 million as compared to the balance of $11.2 million at December 31, 2002, which was primarily attributable to a decrease in unsold notes carried on the Companys
books. The investment in inventory at March 31, 2003 of $27.0 million increased $1.3 million as compared to the balance of $25.7 million at December 31, 2002. Accounts payable at March 31, 2003 of $10.0 million decreased $3.8 million as compared to
the balance of $13.8 million at December 31, 2002.



Net cash used in operating activities for the three months ended March 31, 2003 of $0.5 million decreased by $2.1 million as compared to the three months ended March 31, 2002. This decrease was primarily due to higher net cash used
in changes in assets and liabilities of $0.6 million, and a decrease in net cash provided by operations of $1.5 million for the three months ended March 31, 2003 as compared to the three months ended March 31, 2002. The net cash impact from changes
in assets and liabilities for the three months ended March 31, 2003 of $0.6 million was largely due to higher accounts receivables partially offset by lower notes receivable and beneficial interests in securitized financial assets.



Capital Expenditures



The Companys capital expenditures for the three months
ended March 31, 2003 and March 31, 2002 were $1.1 million and $0.5 million, respectively. Capital spending in 2003 and 2002 was principally oriented toward product enhancements and manufacturing process improvements.



RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS



In June 2001, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations. This statement addresses the financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The provisions of SFAS No. 143 are effective for fiscal years beginning after June 15, 2002. The company adopted SFAS 143 effective
January 1, 2003. The adoption did not have any impact on the consolidated financial statements.



In November 2002, the FASB issued FASB Interpretation No. (FIN) 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. In addition, FIN 45 requires additional disclosures about
the guarantees that an entity has issued, including a reconciliation of the changes in the entitys product warranty liabilities during the reporting period. The initial recognition and measurement provisions of FIN 45 are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements in FIN 45 are effective for financial statements of interim or annual periods ending



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after December 15, 2002. The
Company adopted the provisions of this statement effective January 1, 2003. The adoption of the recognition and measurement provisions did not have a material impact on the consolidated financial statements.



During January 2003, the Financial Accounting Standards Board
issued Interpretation 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. The consolidation provisions of this Interpretation are effective immediately for interests created after January 31, 2003. For interests created before February 1, 2003, the
Company is required to adopt the consolidation provisions no later than July 1, 2003. The Company is still evaluating the consolidation provisions of this Interpretation with respect to its pre-existing interests; however, qualifying special-purpose
securitization entities are excluded from the consolidations requirements of this Interpretation.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



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



ITEM 4. CONTROLS AND PROCEDURES



(a) The Company carried out an evaluation within the 90 day period prior to this report, under the supervision and with the participation of the Companys management, including the Companys Chairman and Chief Executive
Officer along with the Companys Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 under the Securities Exchange Act of 1934,
as amended (the Exchange Act). Based upon that evaluation, the Companys Chief Executive Officer along with the Companys Chief Financial Officer concluded that the Companys disclosure controls and procedures (1) are
effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Companys periodic SEC filings and (2) are adequate to ensure that information required
to be disclosed by the Company in the reports filed or submitted by the Company under the Exchange Act is recorded, processed and summarized and reported within the time periods specified in the SECs rules and forms.



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



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FORWARD-LOOKING STATEMENTS



With
the exception of the reported actual results, the information presented herein contains predictions, estimates or other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended, including items specifically discussed in the Note 3  Commitments and Contingencies section of this document. Such forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause actual results, performance or achievements of the Company to differ materially from those expressed or implied by such forward-looking statements. Although the Company believes that its plans, intentions and
expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that such plans, intentions, expectations, objectives or goals will be achieved. Important factors that could cause actual
results to differ materially from those included in forward-looking statements include: impact of competition; continued sales to key customers; possible fluctuations in the cost of raw materials and components; possible fluctuations in currency
exchange rates, which affect the competitiveness of the Companys products abroad; market acceptance of new and enhanced versions of the Companys products; the impact of substantial leverage and debt service on the Company and other risks
listed from time to time in the Companys reports, including but not limited to the Companys Annual Report on Form 10-K (file no. 333-56857).



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##### Table of Contents

|       
|-------
|PART II
|       
|Item 1.
|       
|Item 2.
|       
|Item 3.
|       
|Item 4.
|       
|Item 5.
|       
|Item 6.



(a)    List of Exhibits. None.



(b)    Reports on Form 8-K. None.



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##### Table of Contents

SIGNATURES



Alliance
Laundry Systems LLC has duly caused this quarterly report to be signed on its behalf by the undersigned, thereto duly authorized, in the city of Ripon, state of Wisconsin, on the 7th day of May 2003.



|Signature                                   |  | Title                                   |  | Date  
|------------------------------------------- |  | --------------------------------------- |  | ------
|                                           
|/s/    THOMAS
LESPERANCEThomas
LEsperance |  | Chairman and CEO                        |  | 5-7-03
|                                           
|/s/    BRUCE P. ROUNDSBruce P. Rounds       |  | Vice President, Chief Financial Officer |  | 5-7-03



Alliance
Laundry Corp. has duly caused this quarterly report to be signed on its behalf by the undersigned, thereto duly authorized, in the city of Ripon, state of Wisconsin, on the 7th day of May 2003.



|Signature                                   |  | Title                                   |  | Date  
|------------------------------------------- |  | --------------------------------------- |  | ------
|                                           
|/s/    THOMAS
LESPERANCEThomas
LEsperance |  | Chairman and CEO                        |  | 5-7-03
|                                           
|/s/    BRUCE P. ROUNDSBruce P. Rounds       |  | Vice President, Chief Financial Officer |  | 5-7-03



Alliance
Laundry Holdings LLC has duly caused this quarterly report to be signed on its behalf by the undersigned, thereto duly authorized, in the city of Ripon, state of Wisconsin, on the 7th day of May 2003.



|Signature                                   |  | Title                                   |  | Date  
|------------------------------------------- |  | --------------------------------------- |  | ------
|                                           
|/s/    THOMAS
LESPERANCEThomas
LEsperance |  | Chairman and CEO                        |  | 5-7-03
|                                           
|/s/    BRUCE P. ROUNDSBruce P. Rounds       |  | Vice President, Chief Financial Officer |  | 5-7-03



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##### Table of Contents

CERTIFICATIONS



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



|1. |  | I have reviewed this quarterly report on Form 10-Q of May 7, 2003;
|-- |  | ------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | b) |  | Evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent function):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Signature                                   |  | Title            |  | Date  
|------------------------------------------- |  | ---------------- |  | ------
|                                           
|/s/    THOMAS
LESPERANCEThomas
LEsperance |  | Chairman and CEO |  | 5-7-03



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##### Table of Contents

CERTIFICATIONS



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



|1. |  | I have reviewed this quarterly report on Form 10-Q of May 7, 2003;
|-- |  | ------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | b) |  | Evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent function):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Signature                             |  | Title                                   |  | Date  
|------------------------------------- |  | --------------------------------------- |  | ------
|                                     
|/s/    BRUCE P. ROUNDSBruce P. Rounds |  | Vice President, Chief Financial Officer |  | 5-7-03



19