<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C.  20549

                                   FORM 10-Q

{X}  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
     SECURITIES AND EXCHANGE ACT OF 1934

FOR THE PERIOD ENDED SEPTEMBER 27, 1996
                                      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 1-11907

                          COINMACH LAUNDRY CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                  DELAWARE                              11-3258015
       (STATE OR OTHER JURISDICTION OF              (I. R. S. EMPLOYER
       INCORPORATION OR ORGANIZATION)               IDENTIFICATION NO.)

          55 LUMBER ROAD, ROSLYN, NEW YORK                 11576
       (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)          (ZIP CODE)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:     (516) 484-2300

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT
WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES   X    NO     .
     ----     ----

AS OF THE CLOSE OF BUSINESS ON NOVEMBER 8, 1996, COINMACH LAUNDRY CORPORATION
HAD OUTSTANDING 10,004,278 SHARES OF CLASS A COMMON STOCK, PAR VALUE $.01 PER
SHARE (THE "COMMON STOCK") AND 480,648 SHARES OF NON-VOTING CLASS B COMMON
STOCK, PAR VALUE $.01 PER SHARE (THE "NON-VOTING COMMON STOCK").
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES

                                     INDEX


      PART I.

        Financial Information                                           Page No.
        ---------------------                                           --------

        Item 1.     Financial Statements
 
                    Condensed Consolidated Balance Sheets --
                    September 27, 1996 (Unaudited) and March 29, 1996        3
                                                                        
                    Condensed Consolidated Statements of Operations --  
                    Three Months and Six Months Ended September 27,     
                    1996 (Unaudited) and September 29, 1995                  4
                                                                        
                    Condensed Consolidated Statements of Cash Flows --  
                    Six Months Ended September 27, 1996 (Unaudited)     
                    and September 29, 1995                                   5
                                                                        
                    Notes to Condensed Consolidated Financial           
                    Statements (Unaudited)                                 6-9
                                                                        
        Item 2.     Management's Discussion and Analysis of Financial   
                    Condition and Results of Operations                  10-13
                                                                        
                                                                        
      PART II.                                                          
                                                                        
          Other Information                                                 14
          -----------------                              

          Item 1.   Legal Proceedings

          Item 2.   Changes in Securities

          Item 3.   Defaults Upon Senior Securities

          Item 4.   Submission of Matters to a Vote of Security Holders.

          Item 5.   Other Information

          Item 6.   Exhibits and Reports on Form 8-K

          Signature Page                                                    15
          --------------                                 

                                      -2-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

       PART 1.  FINANCIAL INFORMATION
                ---------------------

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

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     -------------------------------------

                            (dollars in thousands)

<TABLE>
<CAPTION>
                                                                   September 27,   March 29,
                                                                        1996          1996
                                                                   --------------  ----------
                                                                    (Unaudited)    (Audited)
<S>                                                                <C>             <C>
       ASSETS:
 
          Cash and cash equivalents                                     $ 32,529    $ 19,858
          Receivables, net                                                 5,821       5,758
          Inventories                                                      5,492       4,443
          Prepaid expenses                                                 2,638       2,641
          Advance rental payments                                         22,528      20,320
          Property and equipment, less accumulated depreciation
            of $30,124 and $19,509                                        93,819      82,699
          Contract rights, less accumulated amortization
            of $13,329 and $8,925                                         63,217      59,745
          Goodwill, less accumulated amortization
            of $3,554 and $2,386                                          43,173      44,071
          Other assets, principally debt issuance costs                   11,059       9,613
                                                                        --------    --------
 
          Total assets                                                  $280,276    $249,148
                                                                        ========    ========
 
       LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT):
 
          Accounts payable                                              $  5,548    $  6,085
          Accrued commissions                                              7,982       7,380
          Accrued interest                                                 8,741       7,745
          Other accrued expenses                                           8,295       7,557
          Deferred income taxes                                           17,174      18,924
          11-3/4% Senior Notes                                           196,655     196,655
          12-3/4% Senior Notes                                             5,000       5,000
          Other long-term debt                                             2,254       1,110
 
          Shareholders' equity (deficit):
            Common stock and capital in excess
              of par value                                                51,273      17,903
            Notes receivable from management                                (439)       (492)
            Accumulated deficit                                          (22,207)    (18,719)
                                                                        --------    --------
          Total shareholders' equity (deficit)                            28,627      (1,308)
                                                                        --------    --------
 
          Total liabilities and shareholders' equity (deficit)          $280,276    $249,148
                                                                        ========    ========
</TABLE>

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

                                      -3-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                -----------------------------------------------

                                  (UNAUDITED)
                                  -----------

                             (dollars in thousands)
                             ----------------------

<TABLE>
<CAPTION>
                                                  Three Months Ended               Six Months Ended
                                            ------------------------------  ------------------------------
 
                                            September 27,   September 29,   September 27,   September 29,
                                                 1996            1995            1996            1995
                                            --------------  --------------  --------------  --------------
<S>                                         <C>             <C>             <C>             <C>
 
GROSS REVENUES                                    $46,506         $43,192         $94,446         $89,719
 
COSTS AND EXPENSES:
 
     Laundry operating expenses                    31,016          30,151          63,596          62,905
     General and administrative expenses            1,082           1,233           2,123           2,351
     Depreciation and amortization                 10,382           9,272          20,192          18,423
     Stock-based compensation charge                1,460               -           1,460               -
     Restructuring expenses                             -           2,200               -           2,200
                                                  -------         -------         -------         -------
                                                   43,940          42,856          87,371          85,879
                                                  -------         -------         -------         -------
 
OPERATING INCOME                                    2,566             336           7,075           3,840
 
INTEREST EXPENSE                                     6001           6,036          12,142          11,818
                                                  -------         -------         -------         -------
 
LOSS BEFORE INCOME TAXES                           (3,435)         (5,700)         (5,067)         (7,978)
                                                  -------         -------         -------         -------
 
PROVISION (BENEFIT) FOR INCOME TAXES:
     Currently payable                                100             309             105             420
     Deferred                                      (1,300)         (1,793)         (1,750)         (2,282)
                                                  -------         -------         -------         -------
                                                   (1,200)         (1,484)         (1,600)         (1,862)
                                                  -------         -------         -------         -------
                                                  $(2,235)        $(4,216)        $(3,467)        $(6,116)
                                                  =======         =======         =======         =======
 
NET LOSS PER
COMMON AND COMMON
EQUIVALENT SHARES                                   $(.23)          $(.68)          $(.43)          $(.99)
                                                  =======         =======         =======         =======
</TABLE>

  The accompanying notes are an integral part of these financial statements

                                      -4-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                -----------------------------------------------
                                  (UNAUDITED)
                                  -----------
                             (dollars in thousands)
<TABLE>
<CAPTION>
                                                                             Six  Months Ended
                                                                    ----------------------------------
                                                                      September 27,     September 29,
                                                                           1996              1995
                                                                    ------------------  --------------
<S>                                                                 <C>                 <C>
 
       CASH FLOWS FROM OPERATING ACTIVITIES:
         Net loss                                                            $ (3,467)       $ (6,116)
         Adjustment to reconcile net loss to net cash
          provided by operating activities:
            Depreciation and amortization                                      20,192          18,423
            Deferred income taxes                                              (1,750)         (2,000)
            Stock-based compensation charge                                     1,460               -
         Amortization of debt discount and debt issuance                          261             735
         Increase in other assets                                              (1,216)         (1,054)
         Increase in receivables, net                                             (63)           (197)
        (Increase) decrease in inventories and prepayments                     (1,177)            930
         Decrease in accounts payable                                            (537)          ( 610)
         Increase (decrease) in accrued interest                                  996             (25)
         Increase in accrued expenses                                             688           1,980
                                                                             --------        --------
 
           Net cash provided by operating activities                           15,387          12,066
                                                                             --------        --------
       CASH FLOWS FROM INVESTING ACTIVITIES:
         Additions to property and equipment                                  (12,555)         (9,545)
         Advance rental payment to location owners                             (4,872)         (3,569)
         Additions to net assets from acquired businesses                     (17,623)        (11,925)
                                                                             --------        --------
 
           Net cash used for investing activities                             (35,050)        (25,039)
                                                                             --------        --------
       CASH FLOWS FROM FINANCING ACTIVITIES:
       Debt Transactions:
         Net (repayment) borrowings of bank and other borrowings                 (136)          6,126
         Deferred debt issuance costs                                             (90)              -
         Principal payments on capitalized lease obligations                     (229)           (143)
       Equity transactions:
         Proceeds from issuance of common stock                                52,017               -
         Redemption of preferred stock                                        (19,207)              -
         Dividend paid-preferred stock                                            (21)              -
         Loans to shareholders                                                      -            (154)
         Sale of common stock                                                       -           6,681
                                                                             --------        --------
 
           Net cash provided by financing activities                           32,334          12,510
                                                                             --------        --------
 
           Net increase (decrease) in cash and cash equivalents                12,671            (463)
 
       CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                          19,858          10,774
                                                                             --------        --------
 
       CASH AND CASH EQUIVALENTS, END OF PERIOD                              $ 32,529        $ 10,311
                                                                             ========        ========
       SUPPLEMENTAL DISCLOSURE OF CASH FLOW
         INFORMATION:
         Interest paid                                                       $ 11,131          $8,478
                                                                             ========        ========
</TABLE>

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

                                      -5-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

       1.  DESCRIPTION OF BUSINESS

       Coinmach Laundry Corporation, a Delaware corporation ("Coinmach
       Laundry"), through its wholly-owned subsidiaries (collectively, the
       "Company"), is a leading supplier of coin-operated laundry equipment
       services for multi-family housing units.  The Company owns and operates
       approximately 247,000 coin-operated washers and dryers on routes in over
       26,000 locations in 28 states and the District of Columbia.  Such routes
       are located throughout the Northeast, Mid-Atlantic, Southeast, South-
       Central and Midwest regions of the United States.  The Company, through
       its wholly-owned subsidiary, Super Laundry Equipment Corp., is also a
       construction and laundromat equipment distribution company.

       2.  BASIS OF PRESENTATION

       The accompanying unaudited condensed consolidated financial statements of
       the Company have been prepared in conformity with generally accepted
       accounting principles ("GAAP") for interim financial reporting and
       pursuant to the rules and regulations of the Securities and Exchange
       Commission.  Accordingly, such financial statements do not include all of
       the information and footnotes required by GAAP for complete financial
       statements. GAAP requires the Company's management to make estimates and
       assumptions that affect the amounts reported therein.  Actual results
       could vary from such estimates.  In addition, certain reclassifications
       have been made to prior period financial statements to conform with the
       1996 presentations.  The interim results presented herein are not
       necessarily indicative of the results to be expected for the entire year.

       In the opinion of management of the Company, these unaudited condensed
       consolidated financial statements contain all adjustments of a normal
       recurring nature necessary for a fair presentation of the financial
       statements for the interim periods presented.

       These unaudited condensed consolidated financial statements should be
       read in conjunction with the audited combined and consolidated financial
       statements included in Coinmach Laundry's registration statement (the
       "Registration Statement") on Form S-1 (No. 333-03587), including the
       Prospectus contained therein, dated July 17, 1996.  See Note 6.a. "Equity
       Restructuring-Initial Public Offering".

       3.  ACCOUNTING PRONOUNCEMENTS

       Effective March 30, 1996, the Company adopted Statement of Financial
       Accounting Standards No. 121, "Accounting for the Impairment of Long-
       Lived Assets and for Long-Lived Assets to be Disposed Of" ("FAS 121"),
       which requires impairment losses to be recorded on long-lived assets used
       in operations when indicators of impairment are present and the
       undiscounted cash flows estimated to be generated by those assets are
       less than the assets' carrying amount.  FAS 121 also addresses the
       accounting for long-lived assets that are expected to be disposed of.
       The effect of adoption did not have a material impact on the Company's
       results of operations or financial condition for the three months and six
       months ended September 27, 1996.

       In October 1995, the Financial Accounting Standards Board issued
       Statement No.123, "Accounting for Stock-Based Compensation" ("FAS 123").
       FAS 123 establishes financial accounting and reporting standards for
       stock-based employee compensation plans.  FAS 123 is effective for
       transactions entered into in fiscal years beginning after December 15,
       1995.  The Company has accounted for stock-based compensation awards
       pursuant to the provisions of Accounting Principles Board Opinion No. 25,
       as permitted by FAS 123, but will provide the necessary disclosure
       information in the Company's annual report on Form 10-K for the fiscal
       year ended March 28, 1997.

                                      -6-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

       4.  LOSS PER COMMON AND COMMON EQUIVALENT SHARE

       Loss per common and common equivalent share is computed by dividing net
       loss applicable to common stock by the weighted average number of shares
       of common stock and common stock equivalents outstanding during each
       period.  Weighted average shares outstanding were 9,742,573 and
       7,980,134, respectively, for the three month and six month periods ended
       September 27, 1996 and 6,193,830 for each of the three month and six
       month periods ended September 29, 1995.

       All common share data presented in this report on Form 10-Q has been
       restated to reflect a reclassification of the Company's capital stock and
       an approximate 23-to-1 stock split, in each case, which were effected in
       connection with the Offering (as defined below).  See Note 6.b. - "Equity
       Restructuring -  Reclassification and Stock Split".

       5.    LONG-TERM DEBT

       Coinmach Corporation, a wholly-owned subsidiary of the Company, has long-
       term debt, consisting of (a) approximately $196.7 million of 11 3/4%
       Senior Notes due 2005, (b) $5.0 million of 12 3/4% Senior Notes due 2001
       (collectively, the "Senior Notes") and (c) an availability of up to $35.0
       million under a revolving credit facility which, among other items,
       imposes restrictions on the Company's ability to incur debt, make
       acquisitions and certain restricted payments, create liens, sell assets
       or enter into transactions with affiliates. The revolving credit facility
       contains covenants and agreements that are generally more restrictive
       than the indentures governing the Senior Notes. Also, the Senior Notes
       and the revolving credit facility presently limit Coinmach Corporation's
       ability to pay dividends. At September 27, 1996, there were no amounts
       outstanding under the Company's revolving credit facility.

       6.  EQUITY RESTRUCTURING

       a.   Initial Public Offering

       On July 23, 1996, Coinmach Laundry completed its initial public offering
       (the "Offering") of 4,120,000 shares of its Common Stock at an initial
       public offering price of $14.00 per share.  Coinmach Laundry's
       Registration Statement for 4,000,000 shares of Common Stock was filed
       with the Securities and Exchange Commission on May 13, 1996 and
       subsequently declared effective on July 17, 1996.  On July 18, 1996,
       Coinmach Laundry filed an additional registration statement on Form S-1
       (No. 333-08331) with respect to the registration of an additional 120,000
       shares of Common Stock, which registration statement was effective upon
       filing. Proceeds from the Offering were approximately $53.6 million,
       after underwriting discounts and commissions.  After giving effect to the
       redemption of the Preferred Stock (as described below), net proceeds from
       the Offering were approximately $34.4 million, before expenses.

       In connection with the Offering, the underwriters were granted a 30-day
       option to purchase up to an aggregate of 618,000 additional shares of
       Common Stock to cover over-allotments (the "Over-Allotment Option"),
       which Over-Allotment Option was exercised on August 16, 1996, with
       respect to the purchase of an additional 63,642 shares of Common Stock.

                                      -7-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

       6.  EQUITY RESTRUCTURING (CONTINUED)

       b.  Reclassification and Stock Split

       In connection with the Offering, Coinmach Laundry approved a
       reclassification (the "Reclassification") of all of its capital stock
       pursuant to which all seven classes of the previously issued and
       outstanding capital stock of Coinmach Laundry prior to the Offering were
       converted into a class of preferred stock, a class of voting common stock
       and a class of non-voting common stock.  As part of the Reclassification,
       holders of Coinmach Laundry's Class A common stock, Class E common stock
       and Class F common stock immediately prior to the Offering (collectively,
       the "Preference Shares") received, in respect of such Preference Shares,
       shares of Common Stock and shares of Series A preferred stock, par value
       $.01 per share (the "Preferred Stock") representing an amount equal to
       the sum of: (a) preferred dividends on such Preference Shares in an
       amount equal to the accrued yield (at a rate of 8% per annum, compounded
       quarterly) on the original investment in such Preference Shares through
       July 23, 1996; and (b) an amount equal to the original investment in such
       Preference Shares.  Holders of Preference Shares who were members of the
       Company's management received an aggregate of 28,425 shares of Common
       Stock, and holders of the Preference Shares who were not members of the
       Company's management received an aggregate of 1,000 shares of Preferred
       Stock.

       In connection with the Reclassification, Coinmach Laundry also approved
       an approximate 23-to-1 stock split (the "Stock Split") payable to
       shareholders of record of Coinmach Laundry on July 12, 1996.

       c.  Redemption of Preferred Stock

       Immediately following the Offering, approximately $19.2 million of the
       proceeds of the Offering were used by the Company to retire all of the
       issued and outstanding shares of Preferred Stock.

       7.  RELATED PARTY TRANSACTIONS

       Prior to the Offering, Coinmach Laundry issued an additional 79,029
       shares of its Class B common stock to certain members of management,
       which shares were purchased through loans made by the Company aggregating
       approximately $56,000.  The difference between the estimated fair market
       value of such stock (which management estimates to be 85% of the initial
       offering price of the Common Stock in the Offering) and the amount paid
       for such stock was approximately $887,000 and has been accounted for by
       the Company as a stock-based compensation charge.  In addition,
       approximately $103,000 of receivables outstanding at June 28, 1996
       relating to loans to management in connection with the purchase of common
       stock of the Company were forgiven and has been accounted for by the
       Company as a stock-based compensation charge.

       On July 23, 1996, in connection with the Offering, Coinmach Laundry
       granted certain non-qualified options (the "Options") to purchase up to
       735,618 shares of Common Stock at 85% of the initial offering price of
       the Common Stock in the Offering to certain members of management and
       other individuals (collectively, the "Option Holders") pursuant to the
       terms and conditions of option agreements entered into among Coinmach
       Laundry and the Option Holders, dated July 23, 1996 (the "Option
       Agreements").  On September 17, 1996, for the purpose of preserving the
       percentage interest of issued and outstanding Common Stock on a fully
       diluted basis represented by the Options (which percentage interest was
       decreased as a result of the exercise of the Over-Allotment Option),
       Coinmach Laundry granted additional non-qualified stock options to
       purchase up to 3,819 shares of Common Stock to each of the Option Holders
       (the "Additional Options").  The Additional Options are subject to the
       terms and conditions of the Option Agreements as amended by that certain
       Omnibus

                                      -8-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ( continued)

       7.  RELATED PARTY TRANSACTIONS (CONTINUED)

       Amendment to Option Agreements, dated September 27, 1996.  The Options
       and Additional Options vest in five equal annual installments commencing
       as of July 23, 1996, the effective date of the Offering.  With respect to
       Options and Additional Options granted to employees of the Company, the
       Company will record the difference between the exercise price and the
       $14.00 initial offering price of Common Stock in the Offering as a stock-
       based compensation charge over the applicable four-year vesting period.

       On September 17, 1996, Coinmach Laundry granted to Dr. Arthur B. Laffer
       and Mr. Stephen G. Cerri, each of whom was appointed by the Board of
       Directors of Coinmach Laundry on such date to serve, as independent
       directors, options entitling each such director to purchase up to 60,000
       shares of Common Stock (the "Independent Director Options").  The
       Independent Director Options vest in four equal annual installments,
       commencing on September 17, 1996, and entitle each such director to
       purchase shares of Common Stock at $14.00 per share, the initial public
       offering price of the Common Stock in the Offering.  The Independent
       Director Options are subject to the terms and conditions of option
       agreements entered into by Coinmach Laundry and such directors and expire
       on September 17, 2006.  The Company will record the difference between
       the exercise price of the Independent Director Options and the fair
       market value of the Common Stock on September 17, 1996 as a stock-based
       compensation charge over the applicable three-year vesting period.

       For the three months ended September 27, 1996, the Company has recorded a
       stock-based compensation charge of approximately $470,000 relating to the
       Options, the Additional Options and the Independent Director Options.

       8.  GRANT OF STOCK OPTIONS UNDER COINMACH LAUNDRY'S EMPLOYEE STOCK OPTION
           PLAN.

       On August 8, 1996, Coinmach Laundry granted non-qualified options to
       purchase up to 181,250 shares of Common Stock (the "Plan Options")
       pursuant to Coinmach Laundry's Second Amended and Restated 1996 Employee
       Stock Option Plan (the "Stock Option Plan") to certain members of
       management and other employees of the Company (collectively, the "Plan
       Option Holders").  The Plan Options are subject to the terms and
       conditions of the Stock Option Plan and to the terms and conditions of
       the individual option agreements entered into in accordance with the
       Stock Option Plan among Coinmach Laundry and each of the Plan Option
       Holders, dated as of August 8, 1996.  The Plan Options vest in five equal
       annual installments commencing on August 8, 1996, and entitle each Plan
       Option Holder to purchase shares of Common Stock at an exercise price
       equal to the per share fair market value of the Common Stock on the date
       of grant.  The Stock Option Plan provides for the issuance of options to
       purchase 1,109,147 shares of Common Stock, representing approximately 9%
       of Coinmach Laundry's issued and outstanding Common Stock and Non-Voting
       Common Stock.  The Stock Option Plan is administered by the Plan
       Administration Committee, a committee of the Board of Directors of the
       Company comprised solely of disinterested directors.

                                      -9-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------
                                        
       ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
       -------  ---------------------------------------------------------------
                RESULTS OF OPERATIONS
                ---------------------

       Except for the historical information contained herein, certain matters
       discussed in this document are forward-looking statements that involve
       certain risks and uncertainties, including the risks and uncertainties
       discussed below, as well as the other risks set forth in the Registration
       Statement.

       GENERAL
       -------

       The Company, through its operating subsidiaries, is principally engaged
       in supplying coin-operated laundry equipment services for multi-family
       housing units in 28 states and the District of Columbia located
       throughout the Northeast, Mid-Atlantic, Southeast, South-Central and
       Midwest regions of the United States.  The most significant revenue
       source is derived from its routes, which are comprised of approximately
       26,000 locations containing over 247,000 coin-operated washing machines
       and dryers.  The Company provides coin-operated laundry equipment
       services to locations by leasing designated laundry rooms in buildings on
       a long-term basis.

       The Company, through its operating subsidiary, also owns and operates
       Super Laundry Equipment Corp. ("Super Laundry").  Super Laundry's
       business consists of constructing complete turnkey laundromat retail
       stores, retrofitting existing laundromat retail stores, distributing
       exclusive and non-exclusive lines of commercial coin and non-coin
       machines and parts, and selling service contracts.

       RESULTS OF OPERATIONS
       ---------------------

       The following discussion should be read in conjunction with the attached
       unaudited condensed consolidated financial statements and notes thereto
       and with the Company's audited combined and consolidated financial
       statements and notes thereto for the six month transition period ended
       March 29, 1996, which are included in Coinmach Laundry's Registration
       Statement.

       COMPARISON OF THE THREE MONTHS AND SIX MONTH PERIODS ENDED SEPTEMBER 27,
       1996 AND SEPTEMBER 29, 1995.

       Gross revenues increased by approximately 8% and 5%, respectively, for
       the three month and six month periods ended September 27, 1996, as
       compared to gross revenues for the prior year's corresponding periods.
       The improvement in gross revenues for the three month and six month
       periods consisted primarily of increased route revenues resulting
       substantially from the acquisition in April 1996 of the route business of
       Allied Laundry Equipment Company (the "Allied Acquisition") located in
       the Midwest region and by a slight increase in distribution revenues from
       Super Laundry.  During the six months ended September 29, 1995, the
       Company's machine base declined by approximately 2,500 machines,
       primarily due to capital constraints, but increased by approximately
       3,800 machines during the six months ended September 27, 1996 (excluding
       the machines added from the Allied Acquisition).  This favorable trend is
       primarily the result of a reorganization of the field management team and
       additional capital resources provided by Coinmach Corporation's issuance
       of its 11 3/4% Senior Notes due 2005.

       Laundry operating expenses increased by approximately 3% and 1%,
       respectively, for the three month and six month periods ended September
       27, 1996, as compared to the prior year's corresponding periods.  The
       increase was due primarily to an increase in laundry operating expenses
       related to the Allied Acquisition in the Midwest region as well as an
       increase in the cost of sales related to Super Laundry's increased sales
       volume.  Such increase in laundry operating expenses was substantially
       offset by a reduction in expenses primarily related to the implementation
       of cost savings programs in the Company's field operations and
       consolidation of certain operating regions.

                                      -10-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

       ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
       -------  ---------------------------------------------------------------
                RESULTS OF OPERATIONS (continued)
                ---------------------            

       RESULTS OF OPERATIONS (continued)
       ---------------------            

       General and administrative expenses decreased by approximately 12% and
       10%, respectively, for three month and six month periods ended September
       27, 1996, as compared to the prior year's corresponding periods, due
       primarily to the consolidation of the Company's corporate staff into its
       existing facility in Roslyn, New York on September 29, 1995.

       Depreciation and amortization increased by approximately 12% and 10%,
       respectively, for the three month and six month periods ended September
       27, 1996, as compared to the prior year's corresponding periods, due
       primarily to the acquisition of the Midwest region route business in
       April 1996, as well as an increase in capital expenditures resulting from
       the elimination of capital constraints subsequent to September 29, 1995.

       The Company incurred one-time restructuring costs of approximately $2.2
       million in the three months ended September 29, 1995, to cover severance
       payments to certain of its management, administrative and regional
       personnel, costs to relocate certain financial and administrative
       functions to Roslyn, New York, costs to integrate certain financial and
       operating systems, and costs related to the consolidation of certain of
       its regional offices.

       Prior to the Offering, Coinmach Laundry had issued an additional 79,029
       shares of its Class B common stock to certain members of management.  The
       difference between the estimated fair market value of such stock
       (estimated by management to be 85% of the initial offering price of the
       Common Stock in the Offering) and the amount paid for such stock was
       approximately $.9 million and has been recorded by the Company as a
       stock-based compensation charge.  In addition, approximately $103,000 of
       receivables relating to loans to management in connection with the
       purchase of common stock of Coinmach Laundry were forgiven and has been
       recorded by the Company as a stock-based compensation charge.

       The Company also granted to management and certain other individuals
       options to purchase certain shares of Common Stock at 85% of the initial
       offering price of the Common Stock in the Offering.  With respect to such
       options granted to its employees, the Company will record such 15%
       discount as a stock-based compensation charge over the applicable four
       year vesting period.  The Company also granted to two of its
       disinterested directors options to purchase certain shares of Common
       Stock.  The Company will record the difference between the exercise price
       of the such options and the fair market value of the Common Stock on the
       date of grant as a stock-based compensation charge over the applicable
       three-year vesting period.  During the three months ended September 27,
       1996, the Company recorded a stock-based compensation charge of
       approximately $.5 million relating to the foregoing options.

       As a result of the above, operating income margins improved to
       approximately 6% and 7%, respectively, for the three month and six month
       periods ended September 27, 1996, as compared to approximately 1% and 4%,
       respectively, for the three month and six month periods ended September
       29, 1995.

       Interest expense decreased by approximately 1% for the three month period
       ended September 27, 1996, but increased by approximately 3% for the six
       month period ended September 27, 1996, as compared to the prior year's
       corresponding periods.  The increase for the six month period was due
       primarily to the incurrence of debt resulting from the Company's
       refinancing in November 1995.  Offsetting this increase in interest
       expense was the decrease in the effective interest rate as the result of
       such refinancing, as well as interest income earned on excess cash
       balances generated from the net proceeds from the Offering.

                                      -11-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

       ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
       -------  ---------------------------------------------------------------
                RESULTS OF OPERATIONS (continued)
                ---------------------            

       RESULTS OF OPERATIONS (continued)
       ---------------------            

       EBITDA (earnings before deductions for interest, income taxes,
       depreciation and amortization) was approximately $28.7 million (before
       deduction for the stock-based compensation charges) for the six months
       ended September 27, 1996, compared to approximately $24.5 million (before
       deduction for restructuring costs) for the corresponding period in 1995,
       representing an improvement of approximately 17%.  EBITDA margins
       improved to approximately 30% for the six months ended September 27,
       1996, compared to approximately 27% for the corresponding period in 1995.
       EBITDA is used by management and certain investors as an indicator of a
       company's historical ability to service debt.  Management believes that
       an increase in EBITDA is an indication of a company's improved ability to
       service existing debt, potential future increases in debt or capital
       requirements.  However, EBITDA is not intended to represent cash flows
       for the period, nor has it been presented as an alternative to either (a)
       operating income (as determined by GAAP) as an indicator of operating
       performance or (b) cash flows from operating, investing and financing
       activities (as determined by GAAP) as a measure of liquidity.  Given that
       EBITDA is not a measurement determined in accordance with GAAP and is
       thus susceptible to varying calculations, EBITDA as presented may not be
       comparable to other similarly titled measures of other companies.

       The Company's effective income tax rate differs from the amount computed
       by applying the U.S. federal statutory rate to loss before income taxes
       as a result of state taxes and permanent book/tax differences (largely
       goodwill amortization).

       LIQUIDITY AND CAPITAL RESOURCES
       -------------------------------

       The Company continues to have substantial indebtedness and debt service
       requirements.  At September 27, 1996, the Company had outstanding long-
       term debt of approximately $203.9 million and shareholders' equity of
       approximately $28.6 million.

       The Company's level of indebtedness will have several important effects
       on its future operations, including the following: (a) a significant
       portion of the Company's cash flow from operations will be required to
       pay interest on its indebtedness and will not be available for other
       purposes; (b) financial covenants contained in certain of the agreements
       governing the Company's indebtedness will require the Company to meet
       certain financial tests and limit its ability to borrow additional funds
       or to dispose of assets; (c)the Company's ability to obtain additional
       financing in the future for working capital, capital expenditures,
       acquisitions, and general corporate purposes may be impaired; and (d) the
       Company's ability to adapt to changes in the coin-operated laundry
       equipment services industry and to economic conditions in general could
       be limited.  At September 27, 1996, there was no amount outstanding under
       the Company's revolving credit facility.

       The expenses of the Company include significant amounts of depreciation
       and amortization (approximately $20.2 million for the six months ended
       September 27, 1996) which have the effect of reducing net income but not
       operating cash flow.  In accordance with GAAP, a significant amount of
       the purchase price of businesses acquired by the Company is allocated to
       "contract rights", which costs are amortized over periods of up to 15
       years.  Although such accounting treatment has a favorable effect on
       operating cash flow by reducing taxes, it also reduces net income.  The
       Company expects to continue such practice with future acquisitions, so as
       to maximize cash flows through the recognition of related smaller net
       income caused by the increased amortization.  Such a practice will be
       employed until the purchase price has been fully amortized.

                                      -12-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

       ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
       -------  ---------------------------------------------------------------
                RESULTS OF OPERATIONS (continued)
                ---------------------            

       LIQUIDITY AND CAPITAL RESOURCES (continued)
       -------------------------------            

       The Company anticipates that it will continue to utilize cash flows from
       operations to finance its capital expenditures and working capital needs,
       including interest payments on its outstanding indebtedness.  Capital
       expenditures for the six months ended September 27, 1996 were
       approximately $35.1 million.  Of such amount, the Company spent
       approximately $17.6 million on the acquisition of related businesses,
       including the Allied Acquisition and approximately $4.3 million related
       to the net increase in the machine base.  The balance was used to
       maintain the existing machine base and for general corporate purposes.
       The effect of incremental increases in revenues and EBITDA generated from
       capital expended on acquisitions and the net increase in the machine base
       may not be reflected in the financial results until subsequent reporting
       periods, depending on the timing of the capital expended.

       The Company's working capital requirements are, and are expected to
       continue to be, minimal since a significant portion of the Company's
       operating expenses are not paid until after cash is collected from the
       installed machines.  In connection with certain of the financing
       agreements governing the Company's indebtedness, Coinmach Corporation is
       required to make semi-annual cash interest payments on the Senior Notes
       and will be required to make monthly interest payments under the
       revolving credit facility.  Management believes that the Company's future
       operating activities will generate sufficient cash flow to repay
       borrowings under the Senior Notes and the revolving credit facility or to
       permit any necessary refinancings thereof.  An inability of the Company,
       however, to comply with covenants or other conditions contained in the
       indentures governing the Senior Notes or in the revolving credit facility
       could result in an acceleration of the amounts due thereunder.  If the
       Company is unable to meet its debt service obligations, it could be
       required to take certain actions such as reducing or delaying capital
       expenditures, selling assets, refinancing or restructuring its
       indebtedness, selling additional equity capital or other actions.  There
       is no assurance that any of such actions could be effected on
       commercially reasonable terms, if at all, or on terms permitted under the
       Company's revolving credit facility or the indentures governing the
       Senior Notes.

       In July 1996, Coinmach Laundry used approximately $5.0 million of the net
       proceeds from the Offering to repay amounts borrowed under the Company's
       revolving credit facility.  The balance of such net proceeds are
       currently invested in short-term, investment grade, interest-bearing
       securities, certificates of deposit or direct or guaranteed obligations
       of the United States.  The Company has not yet determined the specific
       uses for the balance of the net proceeds of the Offering.  As part of its
       business strategy, the Company will continue to evaluate opportunities to
       acquire local, regional and multi-regional route businesses.  There can
       be no assurance that the Company will find attractive acquisition
       candidates or effectively manage the integration of acquired businesses
       into its existing business.

       INFLATION AND SEASONALITY
       -------------------------

       In general, the Company's laundry operating expenses and general and
       administrative expenses are affected by inflation, and the effects of
       inflation may be experienced by the Company in future periods.
       Management believes that such effects have not been nor will be material
       to the Company.  The Company's business generally is not seasonal.

                                      -13-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

       PART II.  OTHER INFORMATION
                 -----------------

       ITEM 1.   LEGAL PROCEEDINGS

                 From time to time, the Company has been, and expects to
                 continue to be, subject to legal proceedings and claims in the
                 ordinary course of its business. Although the amount of any
                 liability that could arise with respect to these actions can
                 not be accurately predicted, management believes that any such
                 liability, individually or in the aggregate, will not have a
                 material adverse effect on the financial condition and results
                 of operations of the Company.

       ITEM 2.   CHANGES IN SECURITIES

                 None

       ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

                 Not applicable

       ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                None

       ITEM 5.  OTHER INFORMATION

                On September 17, 1996, the Board of Directors of the Company
                (the "Board"): (i) appointed Dr. Arthur B. Laffer and Mr.
                Stephen G. Cerri to serve as directors on the Board and to serve
                on the Company's Audit and Compensation Committees; (ii)
                approved the grant of the Independent Director Options; (iii)
                approved an amendment to the Stock Option Plan to increase the
                aggregate number of shares of Common Stock subject to the Stock
                Option Plan from 1,103,419 to 1,109,147; and (iv) approved the
                grant of the Additional Options. See Note 7 to the Notes to
                Condensed Consolidated Financial Statements included in this
                Report.

       ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

                (a)   3.1  Third Amended and Restated By-laws

                     10.1  Second Amended and Restated 1996 Employee Stock
                           Option Plan of Coinmach Laundry

                     10.2  Form of Option Agreement Relating to the Second
                           Amended and Restated 1996 Employee Stock Option Plan

                     10.3  Omnibus Amendment to Option Agreements, dated as of
                           September 17, 1996, by and among Coinmach Laundry,
                           MCS Capital, Inc., Ronald S. Brody, James N. Chapman,
                           Robert M. Doyle, Michael E. Stanky, David E. Siegel,
                           R. Daniel Osborne, John E. Denson, James McDonnell,
                           Russell Harrison, Charles Prato and Michael E. Marrus

                     10.4  Option Agreement, dated as of September 17, 1996, by
                           and between Coinmach Laundry and Arthur B. Laffer

                     10.5  Option Agreement, dated as of September 17, 1996, by
                           and between Coinmach Laundry and Stephen G. Cerri

                     27.1  Financial Data Schedule

                (b)  No reports on Form 8-K were filed by the Company during the
                     three months ended September 27 , 1996.

                                      -14-
<PAGE>
 
                 COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
                 ---------------------------------------------

          SIGNATURES
          ----------

       Pursuant to the requirements of the Securities Exchange Act of 1934, as
       amended, the registrant has duly caused this report to be signed on its
       behalf by the undersigned thereunto duly authorized.


                                         COINMACH LAUNDRY CORPORATION


       Date: November 8, 1996            /s/   Robert M. Doyle
                                         --------------------------------------
                                         Robert M. Doyle
                                         Senior Vice President and
                                         Chief Financial Officer
                                         (On behalf of registrant and as
                                         Principal Financial Officer)

                                      -15-