##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF
1934
 For the quarterly period ended December 31, 2005
 or
 o
    
    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: 001-32359
 Coinmach Service Corp.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-0809839(State or other jurisdiction of
incorporation or organization)
    
    (I. R. S. Employer
Identification No.)303 Sunnyside Blvd., Suite 70, Plainview, New York
    
    11803(Address of principal executive offices)
    
    (zip code)
 Registrants telephone number, including area code: (516) 349-8555
 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 þ No o .
 Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ .
 Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):
 Large accelerated filer o Accelerated filer o Non-accelerated filer o
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act) Yes o No
o
 As of the close of business on February 13, 2006, Coinmach Service Corp. had outstanding (i)
27,418,757 shares of Class A common stock, par value $0.01 per share (the Class A Common Stock),
(ii) 13,485,811 Income Deposit Securities (the IDSs), (iii) and 24,980,445 shares of Class B
common stock, par value $0.01 per share (the Class B Common Stock).




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 INDEX
 Page No.Part I. Financial InformationItem 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets  December 31, 2005 (Unaudited) and
March 31, 2005
    
    
    3Condensed Consolidated Statements of Operations (Unaudited)  Three Months
and Nine Months Ended December 31, 2005 and 2004
    
    
    4Condensed Consolidated Statement of Stockholders Equity for the Nine Months
Ended December 31, 2005 (Unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited)  Nine Months
Ended December 31, 2005 and 2004
    
    
    6Notes to Condensed Consolidated Financial Statements
(Unaudited)
    
    
    7Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    
    
    32Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    53Item 4. CONTROLS AND PROCEDURES
    
    
    54Part II. Other InformationItem 1. Legal Proceedings
    
    
    55Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    56Item 3. Defaults Upon Senior Securities
    
    
    56Item 4. Submission of Matters to a Vote of Security Holders
    
    
    56Item 5. Other Information
    
    
    56Item 6. Exhibits
    
    
    56Signature Page
    
    
    58EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
 2




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 
 PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  December 31,
    
    
    March 31,2005
    
    
    20051(Unaudited)ASSETS:Current assets:Cash and cash equivalents
    
    $
    56,885
    
    
    $
    57,271Receivables, net
    
    
    6,124
    
    
    
    6,486Inventories
    
    
    12,354
    
    
    
    12,432Assets held for sale
    
    
    
    
    
    
    2,475Prepaid expenses
    
    
    4,543
    
    
    
    4,994Interest rate swap asset
    
    
    
    
    
    
    832Other current assets
    
    
    1,820
    
    
    
    2,625Total current assets
    
    
    81,726
    
    
    
    87,115Advance location payments
    
    
    67,840
    
    
    
    72,222Property, equipment and leasehold improvements, net of accumulated
depreciation and amortization of $385,142 and $329,130
    
    
    257,793
    
    
    
    264,264Contract rights, net of accumulated amortization of $111,142 and $100,975
    
    
    300,323
    
    
    
    309,698Goodwill
    
    
    206,196
    
    
    
    204,780Other assets
    
    
    19,762
    
    
    
    18,597Total assets
    
    $
    933,640
    
    
    $
    956,676LIABILITIES AND STOCKHOLDERS EQUITY:Current liabilities:Accounts payable and accrued expenses
    
    $
    32,815
    
    
    $
    33,983Accrued rental payments
    
    
    33,763
    
    
    
    30,029Accrued interest
    
    
    15,816
    
    
    
    9,512Interest rate swap liability
    
    
    635
    
    
    
    Current portion of long-term debt
    
    
    54,136
    
    
    
    17,704Total current liabilities
    
    
    137,165
    
    
    
    91,228Deferred income taxes
    
    
    61,124
    
    
    
    65,546Long-term debt, less current portion
    
    
    644,444
    
    
    
    690,687Total liabilities
    
    
    842,733
    
    
    
    847,461Stockholders equity:Class A Common Stock  $0.01 par value; 100,000,000 shares authorized;
18,911,532 shares issued and outstanding
    
    
    189
    
    
    
    189Class B Common Stock  $0.01 par value; 100,000,000 shares authorized;
24,980,445 shares issued and outstanding
    
    
    250
    
    
    
    250Capital in excess of par value
    
    
    319,211
    
    
    
    319,038Carryover basis adjustment
    
    
    (7,988
    )
    
    
    (7,988
    )Accumulated other comprehensive (loss) income, net of tax
    
    
    (376
    )
    
    
    492Accumulated deficit
    
    
    (220,379
    )
    
    
    (202,754
    )Deferred compensation
    
    
    
    
    
    
    (12
    )Total stockholders equity
    
    
    90,907
    
    
    
    109,215Total liabilities and stockholders equity
    
    $
    933,640
    
    
    $
    956,676
  
 1.
    
    The March 31, 2005 balance sheet has been derived from the audited consolidated financial
statements as of that date. 3




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (UNAUDITED)
  Three Months Ended
    
    
    Nine Months EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004REVENUES
    
    $
    138,744
    
    
    $
    135,627
    
    
    $
    404,894
    
    
    $
    402,076COSTS AND EXPENSES:Laundry operating expenses (exclusive of
depreciation and amortization and
amortization of advance location
payments)
    
    
    93,767
    
    
    
    92,270
    
    
    
    274,799
    
    
    
    274,902General and administrative (including
stock-based compensation expense of   $0, $19, $12 and $56, respectively)
    
    
    3,571
    
    
    
    2,502
    
    
    
    9,141
    
    
    
    7,229Depreciation and amortization
    
    
    19,027
    
    
    
    19,029
    
    
    
    56,887
    
    
    
    57,087Amortization of advance location payments
    
    
    5,015
    
    
    
    4,928
    
    
    
    14,188
    
    
    
    14,780Amortization of intangibles
    
    
    3,514
    
    
    
    3,580
    
    
    
    10,485
    
    
    
    10,840Other items, net
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    500124,894
    
    
    
    122,309
    
    
    
    365,810
    
    
    
    365,338OPERATING INCOME
    
    
    13,850
    
    
    
    13,318
    
    
    
    39,084
    
    
    
    36,738INTEREST EXPENSE
    
    
    15,570
    
    
    
    14,781
    
    
    
    46,216
    
    
    
    43,406INTEREST EXPENSE  preferred stock
    
    
    
    
    
    
    4,862
    
    
    
    
    
    
    
    18,230INTEREST EXPENSE  escrow interest
    
    
    
    
    
    
    941
    
    
    
    
    
    
    
    941TRANSACTION COSTS
    
    
    2,620
    
    
    
    17,135
    
    
    
    2,620
    
    
    
    17,135LOSS BEFORE INCOME TAXES
    
    
    (4,340
    )
    
    
    (24,401
    )
    
    
    (9,752
    )
    
    
    (42,974
    )PROVISION (BENEFIT) FOR INCOME TAXES:Current
    
    
    
    
    
    
    160
    
    
    
    
    
    
    
    195Deferred
    
    
    (1,674
    )
    
    
    (8,260
    )
    
    
    (3,823
    )
    
    
    (10,216
    )(1,674
    )
    
    
    (8,100
    )
    
    
    (3,823
    )
    
    
    (10,021
    )NET LOSS
    
    $
    (2,666
    )
    
    $
    (16,301
    )
    
    $
    (5,929
    )
    
    $
    (32,953
    )Basic and diluted distributed earnings:Class A Common Stock
    
    $
    0.21
    
    
    $
    
    
    
    $
    0.62
    
    
    $
    Class B Common Stock
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Basic and diluted net income (loss):Class A Common Stock
    
    $
    0.06
    
    
    $
    (0.52
    )
    
    $
    0.22
    
    
    $
    (1.22
    )Class B Common Stock
    
    $
    (0.15
    )
    
    $
    (0.52
    )
    
    $
    (0.40
    )
    
    $
    (1.22
    )Weighted average common stock outstanding:Class A Common Stock
    
    
    18,911,532
    
    
    
    6,111,111
    
    
    
    18,911,532
    
    
    
    2,037,037Class B Common Stock
    
    
    24,980,445
    
    
    
    24,980,445
    
    
    
    24,980,445
    
    
    
    24,980,445Cash dividends per Share:Class A Common Stock
    
    $
    0.21
    
    
    $
    
    
    
    $
    0.62
    
    
    $
    Class B Common Stock
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  4




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 
 Condensed Consolidated Statement of Stockholders Equity  For the Nine Months Ended December 31, 2005  (UNAUDITED)
  AccumulatedOtherClass A
    
    Class B
    
    
    
    
    
    Carryover
    
    Comprehensive
    
    
    
    
    
    
    
    
    
    TotalCommon
    
    Common
    
    Capital in
    
    Basis
    
    Income (Loss),
    
    Accumulated
    
    Deferred
    
    StockholdersStock
    
    Stock
    
    Excess of Par
    
    Adjustment
    
    net of tax
    
    Deficit
    
    Compensation
    
    EquityBalance, March 31,
2005
    
    $
    189
    
    
    $
    250
    
    
    $
    319,038
    
    
    $
    (7,988
    )
    
    $
    492
    
    
    $
    (202,754
    )
    
    $
    (12
    )
    
    $
    109,215Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,929
    )
    
    
    
    
    
    
    (5,929
    )Loss on derivative
instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (868
    )
    
    
    
    
    
    
    
    
    
    
    (868
    )Total comprehensive
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,797
    )Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,696
    )
    
    
    
    
    
    
    (11,696
    )Adjustment to IDS
Transaction costs
    
    
    
    
    
    
    
    
    
    
    173
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    173Stockbased
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    12Balance, December
31, 2005
    
    $
    189
    
    
    $
    250
    
    
    $
    319,211
    
    
    $
    (7,988
    )
    
    $
    (376
    )
    
    $
    (220,379
    )
    
    
    
    
    
    $
    90,907
  5




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (UNAUDITED)
  Nine Months EndedDecember 31, 2005
    
    
    December 31, 2004OPERATING ACTIVITIES:Net loss
    
    $
    (5,929
    )
    
    $
    (32,953
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    56,887
    
    
    
    57,087Amortization of advance location payments
    
    
    14,188
    
    
    
    14,780Amortization of intangibles
    
    
    10,485
    
    
    
    10,840Deferred income taxes
    
    
    (3,823
    )
    
    
    (10,216
    )Interest expense  preferred stock
    
    
    
    
    
    
    18,230Premium on redemption of 9% senior notes
    
    
    
    
    
    
    11,295Write-off of deferred financing costs
    
    
    1,700
    
    
    
    3,475Amortization of deferred issue costs
    
    
    1,603
    
    
    
    1,795Gain on sale of equipment
    
    
    (46
    )
    
    
    (472
    )Stock compensation
    
    
    12
    
    
    
    56Change in operating assets and liabilities, net of businesses acquired:Other assets
    
    
    (567
    )
    
    
    470Receivables, net
    
    
    391
    
    
    
    (911
    )Inventories and prepaid expenses
    
    
    529
    
    
    
    (573
    )Accounts payable and accrued expenses, net
    
    
    2,739
    
    
    
    3,104Accrued interest
    
    
    6,304
    
    
    
    7,108Net cash provided by operating activities
    
    
    84,473
    
    
    
    83,115INVESTING ACTIVITIES:Additions to property and equipment
    
    
    (43,431
    )
    
    
    (41,019
    )Advance location payments to location owners
    
    
    (9,806
    )
    
    
    (13,250
    )Acquisition of net assets related to acquisitions of businesses
    
    
    (3,436
    )
    
    
    (613
    )Proceeds from sale of investment
    
    
    
    
    
    
    277Proceeds from sale of property and equipment
    
    
    1,077
    
    
    
    653Net cash used in investing activities
    
    
    (55,596
    )
    
    
    (53,952
    )FINANCING ACTIVITIES:Proceeds from issuance of IDS
    
    
    
    
    
    
    257,983Proceeds from issuance of third party senior secured notes
    
    
    
    
    
    
    20,000Redemption of preferred stock
    
    
    
    
    
    
    (99,208
    )Cash dividends paid
    
    
    (11,696
    )
    
    
    Repayments under credit facility
    
    
    (240,507
    )
    
    
    (19,830
    )Proceeds from credit facility
    
    
    230,000
    
    
    
    Principal payments on capitalized lease obligations
    
    
    (3,652
    )
    
    
    (3,249
    )(Repayments to) borrowings from bank and other borrowings
    
    
    (183
    )
    
    
    159Credit facility issuance costs
    
    
    (3,225
    )
    
    
    Redemption of 9% Senior Notes
    
    
    
    
    
    
    (125,500
    )Payment on premium on 9% Senior Notes
    
    
    
    
    
    
    (11,295
    )IDS and third party senior secured notes issuance costs
    
    
    
    
    
    
    (23,597
    )Receivables from shareholders
    
    
    
    
    
    
    (1
    )Net cash used in financing activities
    
    
    (29,263
    )
    
    
    (4,538
    )Net (decrease) increase in cash and cash equivalents
    
    
    (386
    )
    
    
    24,625CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    57,271
    
    
    
    31,620CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    56,885
    
    
    $
    56,245SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Interest paid
    
    $
    38,309
    
    
    $
    35,608Income taxes paid
    
    $
    738
    
    
    $
    199NON-CASH FINANCING ACTIVITIES:Acquisition of fixed assets through capital leases
    
    $
    4,531
    
    
    $
    3,770Transfer of assets held for sale to fixed assets
    
    $
    1,936
    
    
    $
    
  6




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 1. Basis of Presentation
   The IDS Transactions
     7




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
   The Class A Common Stock Offering
   8




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
  Voting Rights of Common Stock
    Dividends
  9




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
     2. Inventories
  December 31,
    
    
    March 31,2005
    
    
    2005Laundry equipment
    
    $
    8,757
    
    
    $
    8,882Machine repair parts
    
    
    3,597
    
    
    
    3,550$
    12,354
    
    
    $
    12,432
 3. Assets Held for Sale
 Accounting for the Impairment or Disposal of
Long-Lived Assets
 10




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
  4. Goodwill and Contract Rights
 Goodwill and Other Intangible Assets
 December 31,
    
    March 31,2005
    
    2005Route
    
    $
    195,026
    
    
    $
    195,026Rental (AWA)
    
    
    8,253
    
    
    
    6,837Distribution (Super Laundry)
    
    
    2,917
    
    
    
    2,917$
    206,196
    
    
    $
    204,780
    11




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(continued)
  Years ending March 31,2006 (remainder of year)
    
    $
    3.42007
    
    
    13.32008
    
    
    13.02009
    
    
    12.62010
    
    
    12.32011
    
    
    12.0
 Accounting for the Impairment and Disposal of Long-Lived Assets
 5. Long-Term Debt
  December 31,
    
    
    March 31,2005
    
    
    2005IDS 11% Senior Secured Notes
    
    $
    116,117
    
    
    $
    116,117Third party 11% Senior Secured Notes
    
    
    20,000
    
    
    
    20,0009% Senior Notes due 2010
    
    
    324,500
    
    
    
    324,500Credit facility indebtedness
    
    
    230,000
    
    
    
    240,507Obligations under capital leases
    
    
    7,509
    
    
    
    6,630Other long-term debt with varying terms and maturities
    
    
    454
    
    
    
    637698,580
    
    
    
    708,391Less current portion
    
    
    54,136
    
    
    
    17,704$
    644,444
    
    
    $
    690,687
 11% Senior Secured Notes
  12




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
       13




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
   9% Senior Notes
     Amended and Restated Credit Facility
  14




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
       15




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
     Intercompany Loan
     16




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
 Interest Rate Swaps
   6. Guarantor Subsidiaries
  17




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
  Condensed Consolidating Balance Sheets
 December 31, 2005CoinmachCoinmach
    
    
    Corporation
    
    
    AdjustmentsCoinmach
    
    
    Laundry
    
    
    and
    
    
    andService Corp.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets, consisting of cash,
receivables, inventory, assets held
for sale, prepaid expenses and other
current assets
    
    $
    446
    
    
    $
    
    
    
    $
    81,331
    
    
    $
    (51
    )
    
    $
    81,726Advance location payments
    
    
    
    
    
    
    
    
    
    
    67,840
    
    
    
    
    
    
    
    67,840Property, equipment and leasehold
improvements, net
    
    
    
    
    
    
    
    
    
    
    257,793
    
    
    
    
    
    
    
    257,793Intangible assets, net
    
    
    
    
    
    
    
    
    
    
    506,519
    
    
    
    
    
    
    
    506,519Deferred income taxes
    
    
    
    
    
    
    6,955
    
    
    
    
    
    
    
    (6,955
    )
    
    
    Intercompany loans and advances
    
    
    (294
    )
    
    
    49,174
    
    
    
    
    
    
    
    (48,880
    )
    
    
    Investment in subsidiaries
    
    
    (43,120
    )
    
    
    81,843
    
    
    
    
    
    
    
    (38,723
    )
    
    
    Investment in preferred stock
    
    
    180,851
    
    
    
    
    
    
    
    
    
    
    
    (180,851
    )
    
    
    Other assets
    
    
    94,843
    
    
    
    149
    
    
    
    8,823
    
    
    
    (84,053
    )
    
    
    19,762Total assets
    
    $
    232,726
    
    
    $
    138,121
    
    
    $
    922,306
    
    
    $
    (359,513
    )
    
    $
    933,640Liabilities and Stockholders Equity
(Deficit)Current liabilities:Accounts payable and accrued expenses
    
    $
    4,570
    
    
    $
    
    
    
    $
    80,893
    
    
    $
    (2,434
    )
    
    $
    83,029Current portion of long-term debt
    
    
    
    
    
    
    
    
    
    
    54,136
    
    
    
    
    
    
    
    54,136Total current liabilities
    
    
    4,570
    
    
    
    
    
    
    
    135,029
    
    
    
    (2,434
    )
    
    
    137,165Deferred income taxes
    
    
    654
    
    
    
    
    
    
    
    67,425
    
    
    
    (6,955
    )
    
    
    61,124Long-term debt, less current portion
    
    
    136,117
    
    
    
    
    
    
    
    508,327
    
    
    
    
    
    
    
    644,444Loan Payable to Parent
    
    
    
    
    
    
    
    
    
    
    81,670
    
    
    
    (81,670
    )
    
    
    Due to parent/subsidiary
    
    
    
    
    
    
    
    
    
    
    48,880
    
    
    
    (48,880
    )
    
    
    Preferred stock and dividends payable
    
    
    
    
    
    
    180,851
    
    
    
    
    
    
    
    (180,851
    )
    
    
    Total stockholders equity (deficit)
    
    
    91,385
    
    
    
    (42,730
    )
    
    
    80,975
    
    
    
    (38,723
    )
    
    
    90,907Total liabilities and stockholders
equity (deficit)
    
    $
    232,726
    
    
    $
    138,121
    
    
    $
    922,306
    
    
    $
    (359,513
    )
    
    $
    933,640
 18




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
 Condensed Consolidating Balance Sheets (continued)
 March 31, 2005CoinmachCoinmach
    
    
    Corporation
    
    
    AdjustmentsCoinmach
    
    
    Laundry
    
    
    and
    
    
    andService Corp.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets, consisting of cash,
receivables, inventory, assets held
for sale, prepaid expenses and other
current assets
    
    $
    474
    
    
    $
    
    
    
    $
    86,678
    
    
    $
    (37
    )
    
    $
    87,115Advance location payments
    
    
    
    
    
    
    
    
    
    
    72,222
    
    
    
    
    
    
    
    72,222Property, equipment and leasehold
improvements, net
    
    
    
    
    
    
    
    
    
    
    264,264
    
    
    
    
    
    
    
    264,264Intangible assets, net
    
    
    
    
    
    
    
    
    
    
    514,478
    
    
    
    
    
    
    
    514,478Deferred income taxes
    
    
    1,087
    
    
    
    2,307
    
    
    
    
    
    
    
    (3,394
    )
    
    
    Intercompany loans and advances
    
    
    2,060
    
    
    
    49,475
    
    
    
    
    
    
    
    (51,535
    )
    
    
    Investment in subsidiaries
    
    
    (34,770
    )
    
    
    99,698
    
    
    
    
    
    
    
    (64,928
    )
    
    
    Investment in preferred stock
    
    
    186,034
    
    
    
    
    
    
    
    
    
    
    
    (186,034
    )
    
    
    Other assets
    
    
    94,866
    
    
    
    162
    
    
    
    7,619
    
    
    
    (84,050
    )
    
    
    18,597Total assets
    
    $
    249,751
    
    
    $
    151,642
    
    
    $
    945,261
    
    
    $
    (389,978
    )
    
    $
    956,676Liabilities and Stockholders Equity
(Deficit)Current liabilities:Accounts payable and accrued expenses
    
    $
    4,797
    
    
    $
    
    
    
    $
    71,145
    
    
    $
    (2,418
    )
    
    $
    73,524Current portion of long-term debt
    
    
    
    
    
    
    
    
    
    
    17,704
    
    
    
    
    
    
    
    17,704Total current liabilities
    
    
    4,797
    
    
    
    
    
    
    
    88,849
    
    
    
    (2,418
    )
    
    
    91,228Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    68,940
    
    
    
    (3,394
    )
    
    
    65,546Long-term debt, less current portion
    
    
    136,117
    
    
    
    
    
    
    
    554,570
    
    
    
    
    
    
    
    690,687Loan payable to Parent
    
    
    
    
    
    
    
    
    
    
    81,670
    
    
    
    (81,670
    )
    
    
    Due to parent/subsidiary
    
    
    
    
    
    
    
    
    
    
    51,534
    
    
    
    (51,534
    )
    
    
    Preferred stock and dividends payable
    
    
    
    
    
    
    186,034
    
    
    
    
    
    
    
    (186,034
    )
    
    
    Total stockholders equity (deficit)
    
    
    108,837
    
    
    
    (34,392
    )
    
    
    99,698
    
    
    
    (64,928
    )
    
    
    109,215Total liabilities and stockholders
equity (deficit)
    
    $
    249,751
    
    
    $
    151,642
    
    
    $
    945,261
    
    
    $
    (389,978
    )
    
    $
    956,676
 19




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
 Condensed Consolidating Statements of Operations
 Three Months Ended December 31, 2005CoinmachCoinmach
    
    
    CorporationCoinmach
    
    
    Laundry
    
    
    andService Corp.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    138,744
    
    
    $
    
    
    
    $
    138,744Costs and expenses
    
    
    859
    
    
    
    106
    
    
    
    123,929
    
    
    
    
    
    
    
    124,894Operating (loss) income
    
    
    (859
    )
    
    
    (106
    )
    
    
    14,815
    
    
    
    
    
    
    
    13,850Transaction costs
    
    
    206
    
    
    
    
    
    
    
    2,414
    
    
    
    
    
    
    
    2,620Interest expense, net
    
    
    1,641
    
    
    
    
    
    
    
    13,929
    
    
    
    
    
    
    
    15,570Interest expense  preferred stock
    
    
    (3,663
    )
    
    
    3,663
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) before taxes
    
    
    957
    
    
    
    (3,769
    )
    
    
    (1528
    )
    
    
    
    
    
    
    (4,340
    )Income tax provision (benefit)
    
    
    431
    
    
    
    (1,539
    )
    
    
    (566
    )
    
    
    
    
    
    
    (1,674
    )526
    
    
    
    (2,230
    )
    
    
    (962
    )
    
    
    
    
    
    
    (2,666
    )Equity in loss (income) of
subsidiaries
    
    
    3,191
    
    
    
    962
    
    
    
    
    
    
    
    (4,153
    )
    
    
    Net loss
    
    $
    (2,665
    )
    
    $
    (3,192
    )
    
    $
    (962
    )
    
    $
    4,153
    
    
    $
    (2,666
    )
 Three Months Ended December 31, 2004CoinmachCoinmach
    
    
    Coinmach
    
    
    CorporationService
    
    
    Laundry
    
    
    andCorp.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    135,627
    
    
    $
    
    
    
    $
    135,627Costs and expenses
    
    
    111
    
    
    
    126
    
    
    
    122,072
    
    
    
    
    
    
    
    122,309Operating (loss) income
    
    
    (111
    )
    
    
    (126
    )
    
    
    13,555
    
    
    
    
    
    
    
    13,318Transaction costs
    
    
    
    
    
    
    
    
    
    
    17,135
    
    
    
    
    
    
    
    17,135Interest expense, net
    
    
    644
    
    
    
    
    
    
    
    14,137
    
    
    
    
    
    
    
    14,781Interest expense  preferred stock
    
    
    
    
    
    
    4,862
    
    
    
    
    
    
    
    
    
    
    
    4,862Interest expense  escrow interest
    
    
    
    
    
    
    
    
    
    
    941
    
    
    
    
    
    
    
    941Loss before taxes
    
    
    (755
    )
    
    
    (4,988
    )
    
    
    (18,658
    )
    
    
    
    
    
    
    (24,401
    )Income tax benefit
    
    
    (1,274
    )
    
    
    (185
    )
    
    
    (6,641
    )
    
    
    
    
    
    
    (8,100
    )519
    
    
    
    (4,803
    )
    
    
    (12,017
    )
    
    
    
    
    
    
    (16,301
    )Equity in loss of subsidiaries
    
    
    16,820
    
    
    
    12,017
    
    
    
    (391
    )
    
    
    (28,446
    )
    
    
    (16,301
    )
    
    
    (16,820
    )
    
    
    (11,626
    )
    
    
    28,446
    
    
    
    (16,301
    )Dividend income
    
    
    
    
    
    
    
    
    
    
    (411
    )
    
    
    411
    
    
    
    Net loss
    
    $
    (16,301
    )
    
    $
    (16,820
    )
    
    $
    (11,215
    )
    
    $
    28,035
    
    
    $
    (16,301
    )
 20




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
 Condensed Consolidating Statements of Operations
 Nine Months Ended December 31, 2005CoinmachCoinmach
    
    
    CorporationCoinmach
    
    
    Laundry
    
    
    andService Corp.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    404,894
    
    
    $
    
    
    
    $
    404,894Costs and expenses
    
    
    1,764
    
    
    
    324
    
    
    
    363,722
    
    
    
    
    
    
    
    365,810Operating (loss) income
    
    
    (1,764
    )
    
    
    (324
    )
    
    
    41,172
    
    
    
    
    
    
    
    39,084Transaction costs
    
    
    206
    
    
    
    
    
    
    
    2,414
    
    
    
    
    
    
    
    2,620Interest expense, net
    
    
    4,923
    
    
    
    
    
    
    
    41,293
    
    
    
    
    
    
    
    46,216Interest expense  preferred stock
    
    
    (11,053
    )
    
    
    11,053
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) before taxes
    
    
    4,160
    
    
    
    (11,377
    )
    
    
    (2,535
    )
    
    
    
    
    
    
    (9,752
    )Income tax provision (benefit)
    
    
    1,739
    
    
    
    (4,647
    )
    
    
    (915
    )
    
    
    
    
    
    
    (3,823
    )2,421
    
    
    
    (6,730
    )
    
    
    (1,620
    )
    
    
    
    
    
    
    (5,929
    )Equity in loss (income) of
subsidiaries
    
    
    8,350
    
    
    
    1,620
    
    
    
    
    
    
    
    (9,970
    )
    
    
    Net loss
    
    $
    (5,929
    )
    
    $
    (8,350
    )
    
    $
    (1,620
    )
    
    $
    9,970
    
    
    $
    (5,929
    )
 Nine Months Ended December 31, 2004CoinmachCoinmach
    
    
    Coinmach
    
    
    CorporationService
    
    
    Laundry
    
    
    andCorp.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    402,076
    
    
    $
    
    
    
    $
    402,076Costs and expenses
    
    
    111
    
    
    
    376
    
    
    
    364,851
    
    
    
    
    
    
    
    365,338Operating (loss) income
    
    
    (111
    )
    
    
    (376
    )
    
    
    37,225
    
    
    
    
    
    
    
    36,738Transaction costs
    
    
    
    
    
    
    
    
    
    
    17,135
    
    
    
    
    
    
    
    17,135Interest expense, net
    
    
    644
    
    
    
    
    
    
    
    42,762
    
    
    
    
    
    
    
    43,406Interest expense  preferred stock
    
    
    
    
    
    
    18,230
    
    
    
    
    
    
    
    
    
    
    
    18,230Interest expense  escrow interest
    
    
    
    
    
    
    
    
    
    
    941
    
    
    
    
    
    
    
    941Loss before taxes
    
    
    (755
    )
    
    
    (18,606
    )
    
    
    (23,613
    )
    
    
    
    
    
    
    (42,974
    )Income tax benefit
    
    
    (1,274
    )
    
    
    (175
    )
    
    
    (8,572
    )
    
    
    
    
    
    
    (10,021
    )519
    
    
    
    (18,431
    )
    
    
    (15,041
    )
    
    
    
    
    
    
    (32,953
    )Equity in loss of subsidiaries
    
    
    33,472
    
    
    
    15,041
    
    
    
    (851
    )
    
    
    (47,662
    )
    
    
    (32,953
    )
    
    
    (33,472
    )
    
    
    (14,190
    )
    
    
    47,662
    
    
    
    (32,953
    )Dividend income
    
    
    
    
    
    
    
    
    
    
    (1,227
    )
    
    
    1,227
    
    
    
    Net loss
    
    $
    (32,953
    )
    
    $
    (33,472
    )
    
    $
    (12,963
    )
    
    $
    46,435
    
    
    $
    (32,953
    )
 21




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
 Condensed Consolidating Statements of Cash Flows
 Nine Months Ended December 31, 2005CoinmachCoinmach
    
    
    Coinmach
    
    
    CorporationService
    
    
    Laundry
    
    
    andCorp.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating ActivitiesNet income (loss)
    
    $
    2,421
    
    
    $
    (6,730
    )
    
    $
    (1,620
    )
    
    $
    
    
    
    $
    (5,929
    )Noncash adjustments
    
    
    (11,147
    )
    
    
    11,053
    
    
    
    81,100
    
    
    
    
    
    
    
    81,006Change in operating
assets and
liabilities
    
    
    1,832
    
    
    
    (4,623
    )
    
    
    12,187
    
    
    
    
    
    
    
    9,396Net cash (used in)
provided by
operating activities
    
    
    (6,894
    )
    
    
    (300
    )
    
    
    91,667
    
    
    
    
    
    
    
    84,473Investing ActivitiesCapital expenditures
    
    
    
    
    
    
    
    
    
    
    (53,237
    )
    
    
    
    
    
    
    (53,237
    )Acquisition of assets
    
    
    
    
    
    
    
    
    
    
    (3,436
    )
    
    
    
    
    
    
    (3,436
    )Proceeds from sale
of property and
equipment
    
    
    
    
    
    
    
    
    
    
    1,077
    
    
    
    
    
    
    
    1,077Net cash used in
investing activities
    
    
    
    
    
    
    
    
    
    
    (55,596
    )
    
    
    
    
    
    
    (55,596
    )Financing ActivitiesRepayment of debt
    
    
    
    
    
    
    
    
    
    
    (240,507
    )
    
    
    
    
    
    
    (240,507
    )Other financing items
    
    
    6,894
    
    
    
    300
    
    
    
    204,050
    
    
    
    
    
    
    
    211,244Net cash provided by
(used in) financing
activities
    
    
    6,894
    
    
    
    300
    
    
    
    (36,457
    )
    
    
    
    
    
    
    (29,263
    )Net decrease in cash
and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (386
    )
    
    
    
    
    
    
    (386
    )Cash and cash
equivalents,
beginning of period
    
    
    431
    
    
    
    
    
    
    
    56,840
    
    
    
    
    
    
    
    57,271Cash and cash
equivalents, end of
period
    
    $
    431
    
    
    $
    
    
    
    $
    56,454
    
    
    $
    
    
    
    $
    56,885
 22




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
 Condensed Consolidating Statements of Cash Flows (continued)
 Nine Months Ended December 31, 2004CoinmachCoinmach
    
    
    Coinmach
    
    
    CorporationService
    
    
    Laundry
    
    
    andCorp.
    
    
    Corporation
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating ActivitiesNet income (loss)
    
    $
    519
    
    
    $
    (18,431
    )
    
    $
    (15,041
    )
    
    $
    
    
    
    $
    (32,953
    )Noncash adjustments
    
    
    (1,221
    )
    
    
    18,147
    
    
    
    89,944
    
    
    
    
    
    
    
    106,870Change in operating assets and
liabilities
    
    
    2,473
    
    
    
    (8
    )
    
    
    6,733
    
    
    
    
    
    
    
    9,198Net cash provided by (used in)
operating activities
    
    
    1,771
    
    
    
    (292
    )
    
    
    81,636
    
    
    
    
    
    
    
    83,115Investing ActivitiesCapital expenditures
    
    
    
    
    
    
    
    
    
    
    (54,269
    )
    
    
    
    
    
    
    (54,269
    )Acquisition of assets
    
    
    
    
    
    
    
    
    
    
    (613
    )
    
    
    
    
    
    
    (613
    )Proceeds from sale of investment
    
    
    
    
    
    
    
    
    
    
    277
    
    
    
    
    
    
    
    277Proceeds from sale of property
and equipment
    
    
    
    
    
    
    
    
    
    
    653
    
    
    
    
    
    
    
    653Net cash used in investing
activities
    
    
    
    
    
    
    
    
    
    
    (53,952
    )
    
    
    
    
    
    
    (53,952
    )Financing ActivitiesRepayment of debt
    
    
    
    
    
    
    
    
    
    
    (145,330
    )
    
    
    
    
    
    
    (145,330
    )Other financing items
    
    
    (753
    )
    
    
    292
    
    
    
    59,583
    
    
    
    81,670
    
    
    
    140,792Loan from parent
    
    
    
    
    
    
    
    
    
    
    81,670
    
    
    
    (81,670
    )
    
    
    Net cash (used in) provided by
financing activities
    
    
    (753
    )
    
    
    292
    
    
    
    (4,077
    )
    
    
    
    
    
    
    (4,538
    )Net increase in cash and cash
equivalents
    
    
    1,018
    
    
    
    
    
    
    
    23,607
    
    
    
    
    
    
    
    24,625Cash and cash equivalents,
beginning of period
    
    
    
    
    
    
    
    
    
    
    31,620
    
    
    
    
    
    
    
    31,620Cash and cash equivalents, end
of period
    
    $
    1,018
    
    
    $
    
    
    
    $
    55,227
    
    
    $
    
    
    
    $
    56,245
 23




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
 7. Segment Information
  24




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
  Three Months ended December 31,
    
    
    Nine Months ended December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenue:Route
    
    $
    122,102
    
    
    $
    119,489
    
    
    $
    358,618
    
    
    $
    353,727All other:Rental
    
    
    9,255
    
    
    
    8,617
    
    
    
    26,751
    
    
    
    25,497Distribution
    
    
    7,387
    
    
    
    7,521
    
    
    
    19,525
    
    
    
    22,852Subtotal
    
    
    16,642
    
    
    
    16,138
    
    
    
    46,276
    
    
    
    48,349Total revenue
    
    $
    138,744
    
    
    $
    135,627
    
    
    $
    404,894
    
    
    $
    402,076EBITDA (1):Route
    
    $
    40,734
    
    
    $
    39,459
    
    
    $
    118,227
    
    
    $
    116,188All other:Rental
    
    
    4,031
    
    
    
    3,742
    
    
    
    11,243
    
    
    
    10,388Distribution
    
    
    212
    
    
    
    156
    
    
    
    625
    
    
    
    598Subtotal
    
    
    4,243
    
    
    
    3,898
    
    
    
    11,868
    
    
    
    10,986Other items, net
    
    
    
    
    
    
    
    
    
    
    (310
    )
    
    
    (500
    )Transaction costs (2)
    
    
    (2,620
    )
    
    
    (17,135
    )
    
    
    (2,620
    )
    
    
    (17,135
    )Corporate expenses
    
    
    (3,571
    )
    
    
    (2,502
    )
    
    
    (9,141
    )
    
    
    (7,229
    )Total EBITDA
    
    
    38,786
    
    
    
    23,720
    
    
    
    118,024
    
    
    
    102,310Reconciling items:Depreciation and amortization
expense, amortization of advance
location payments and amortization
of intangibles:Route
    
    
    (24,586
    )
    
    
    (24,608
    )
    
    
    (72,685
    )
    
    
    (73,986
    )All other
    
    
    (2,150
    )
    
    
    (2,216
    )
    
    
    (6,421
    )
    
    
    (6,487
    )Corporate
    
    
    (820
    )
    
    
    (713
    )
    
    
    (2,454
    )
    
    
    (2,234
    )Total depreciation
    
    
    (27,556
    )
    
    
    (27,537
    )
    
    
    (81,560
    )
    
    
    (82,707
    )Interest expense
    
    
    (15,570
    )
    
    
    (14,781
    )
    
    
    (46,216
    )
    
    
    (43,406
    )Interest expense  preferred stock
    
    
    
    
    
    
    (4,862
    )
    
    
    
    
    
    
    (18,230
    )Interest expense  escrow interest
    
    
    
    
    
    
    (941
    )
    
    
    
    
    
    
    (941
    )Consolidated loss before income taxes
    
    $
    (4,340
    )
    
    $
    (24,401
    )
    
    $
    (9,752
    )
    
    $
    (42,974
    )
 
 (1)
    
    See description of Non-GAAP Financial Measures immediately following this table for more
information regarding EBITDA and a reconciliation of net loss to EBITDA for the periods
indicated above.(2)
    
    Amounts have not been added back to EBITDA for the three and nine months ended December 31,
2004 relating to (i) approximately $11.3 million redemption premium on the 9% Senior Notes
redeemed, (ii) the write-off of the unamortized deferred financing costs relating to the 9%
Senior Notes redeemed and term loans repaid aggregating approximately $3.5 million, (iii)
expenses aggregating approximately $1.5 million relating to an amendment to the Senior Secured
Credit Facility effected on November 15, 2004 to, among other things, permit the IDS
Transactions, and (iv) special bonuses related to the IDS Transactions aggregating
approximately $0.8 million. Amounts have not been added back to EBITDA for the three and nine
months ended December 31, 2005 relating to (i) the write-off of the unamortized deferred
financing costs relating to the Senior Secured Credit Facility term loans repaid aggregating
approximately $1.7 million, (ii) expenses aggregating approximately $0.7 million relating to
an amendment to the Senior Secured Credit Facility and (iii) additional expenses aggregating
approximately $0.2 million relating to the IDS Transactions. Non-GAAP Financial Measures
  25




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
  Three Months ended December 31,
    
    
    Nine Months ended December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss
    
    $
    (2.7
    )
    
    $
    (16.3
    )
    
    $
    (5.9
    )
    
    $
    (32.9
    )Benefit for income taxes
    
    
    (1.7
    )
    
    
    (8.1
    )
    
    
    (3.8
    )
    
    
    (10.0
    )Interest expense
    
    
    15.6
    
    
    
    14.8
    
    
    
    46.2
    
    
    
    43.4Interest expense  preferred
stock
    
    
    
    
    
    
    4.9
    
    
    
    
    
    
    
    18.2Interest expense  escrow
interest
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    0.9Depreciation and amortization
    
    
    27.6
    
    
    
    27.5
    
    
    
    81.5
    
    
    
    82.7EBITDA*
    
    $
    38.8
    
    
    $
    23.7
    
    
    $
    118.0
    
    
    $
    102.3
 
 *
    
    Amounts have not been added back to EBITDA for the three and nine months ended December 31,
2004 relating to (1) approximately $11.3 million redemption premium on the 9% Senior Notes
redeemed, (2) the write-off of the unamortized deferred financing costs relating to the 9%
Senior Notes redeemed and term loans repaid aggregating approximately $3.5 million, (3)
expenses aggregating approximately $1.5 million relating to an amendment to the Senior Secured
Credit Facility effected on November 15, 2004 to, among other things, permit the IDS
Transactions, and (4) special bonuses related to the IDS Transactions aggregating
approximately $0.8 million. Amounts have not been added back to EBITDA for the three and nine
months ended December 31, 2005 relating to (1) the write-off of the unamortized deferred
financing costs relating to the Senior Secured Credit Facility term loans repaid aggregating
approximately $1.7 million, (2) expenses aggregating approximately $0.7 million relating to an
amendment to the Senior Secured Credit Facility and (3) additional expenses aggregating
approximately $0.2 million relating to the IDS Transactions. 26




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
 8.
Income Taxes
  December 31, 2005
    
    
    March 31, 2005Deferred tax liabilities:Accelerated tax depreciation and contract rights
    
    $
    105,375
    
    
    $
    108,058Interest rate swap
    
    
    
    
    
    
    340Other
    
    
    2,058
    
    
    
    1,798107,433
    
    
    
    110,196Deferred tax assets:Net operating loss carryforwards
    
    
    42,591
    
    
    
    41,464Covenant not to compete
    
    
    978
    
    
    
    1,073Interest rate swap
    
    
    259
    
    
    
    Other
    
    
    2,481
    
    
    
    2,11346,309
    
    
    
    44,650Net deferred tax liability
    
    $
    61,124
    
    
    $
    65,546
   Three Months ended
    
    
    Nine Months endedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Federal
    
    $
    (1,256
    )
    
    $
    (6,440
    )
    
    $
    (2,868
    )
    
    $
    (7,965
    )State
    
    
    (418
    )
    
    
    (1,660
    )
    
    
    (955
    )
    
    
    (2,056
    )$
    (1,674
    )
    
    $
    (8,100
    )
    
    $
    (3,823
    )
    
    $
    (10,021
    )
  Three Months ended
    
    
    Nine Months endedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Expected tax benefit
    
    $
    (1,429
    )
    
    $
    (8,644
    )
    
    $
    (3,323
    )
    
    $
    (15,145
    )State tax benefit, net of federal taxes
    
    
    (272
    )
    
    
    (1,078
    )
    
    
    (580
    )
    
    
    (1,336
    )Non deductible interest -
Preferred Stock
    
    
    
    
    
    
    1,702
    
    
    
    
    
    
    
    6,381Permanent book/tax differences
    
    
    27
    
    
    
    (80
    )
    
    
    80
    
    
    
    79Tax benefit
    
    $
    (1,674
    )
    
    $
    (8,100
    )
    
    $
    (3,823
    )
    
    $
    (10,021
    )
 27




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
 9. Loss per Common Share
   Three Months ended
    
    
    Nine Months endedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss attributable to common stockholders
    
    $
    (2,666
    )
    
    $
    (16,301
    )
    
    $
    (5,929
    )
    
    $
    (32,953
    )Add: Dividends paid on Class A common stock
    
    
    (3,899
    )
    
    
    
    
    
    
    (11,696
    )
    
    
    Undistributed loss available to Class A and Class
B common stock
    
    $
    (6,565
    )
    
    $
    (16,301
    )
    
    $
    (17,625
    )
    
    $
    (32,953
    )Basic and diluted allocation of undistributed loss:Class A Common Stock
    
    $
    (2,829
    )
    
    $
    (3,204
    )
    
    $
    (7,594
    )
    
    $
    (2,485
    )Class B Common Stock
    
    
    (3,736
    )
    
    
    (13,097
    )
    
    
    (10,031
    )
    
    
    (30,468
    )Total
    
    $
    (6,565
    )
    
    $
    (16,301
    )
    
    $
    (17,625
    )
    
    $
    (32,953
    )Weighted average common stock outstanding:Class A Common Stock
    
    
    18,911,532
    
    
    
    6,111,111
    
    
    
    18,911,532
    
    
    
    2,037,037Class B Common Stock
    
    
    24,980,445
    
    
    
    24,980,445
    
    
    
    24,980,445
    
    
    
    24,980,445Total
    
    
    43,891,977
    
    
    
    31,091,556
    
    
    
    43,891,977
    
    
    
    27,017,482Distributed earnings per share:Class A Common Stock
    
    $
    0.21
    
    
    $
    
    
    
    $
    0.62
    
    
    $
    Class B Common Stock
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Undistributed loss per share:Class A Common Stock
    
    $
    (0.15
    )
    
    $
    (0.52
    )
    
    $
    (0.40
    )
    
    $
    (1.22
    )Class B Common Stock
    
    $
    (0.15
    )
    
    $
    (0.52
    )
    
    $
    (0.40
    )
    
    $
    (1.22
    )Basic and diluted income (loss) per share:Class A Common Stock
    
    $
    0.06
    
    
    $
    (0.52
    )
    
    $
    0.22
    
    
    $
    (1.22
    )Class B Common Stock
    
    $
    (0.15
    )
    
    $
    (0.52
    )
    
    $
    (0.40
    )
    
    $
    (1.22
    )
 28




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
 Pro-Forma Presentation
  Three Months ended
    
    
    Nine Months endedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Net loss attributable to common stockholders
    
    $
    (2,666
    )
    
    $
    (16,301
    )
    
    $
    (5,929
    )
    
    $
    (32,953
    )Add: Dividends paid on Class A common stock
    
    
    (3,899
    )
    
    
    
    
    
    
    (11,696
    )
    
    
    Undistributed loss available to Class A and Class
B common stock
    
    $
    (6,565
    )
    
    $
    (16,301
    )
    
    $
    (17,625
    )
    
    $
    (32,953
    )Basic and diluted allocation of undistributed loss:Class A Common Stock
    
    $
    (2,829
    )
    
    $
    (7,024
    )
    
    $
    (7,594
    )
    
    $
    (14,198
    )Class B Common Stock
    
    
    (3,736
    )
    
    
    (9,277
    )
    
    
    (10,031
    )
    
    
    (18,755
    )Total
    
    $
    (6,565
    )
    
    $
    (16,301
    )
    
    $
    (17,625
    )
    
    $
    (32,953
    )Weighted average common stock outstanding:Class A Common Stock
    
    
    18,911,532
    
    
    
    18,911,532
    
    
    
    18,911,532
    
    
    
    18,911,532Class B Common Stock
    
    
    24,980,445
    
    
    
    24,980,445
    
    
    
    24,980,445
    
    
    
    24,980,445Total
    
    
    43,891,977
    
    
    
    43,891,977
    
    
    
    43,891,977
    
    
    
    43,891,977Distributed earnings per share:Class A Common Stock
    
    $
    0.21
    
    
    $
    
    
    
    $
    0.62
    
    
    $
    Class B Common Stock
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Undistributed loss per share:Class A Common Stock
    
    $
    (0.15
    )
    
    $
    (0.37
    )
    
    $
    (0.40
    )
    
    $
    (0.75
    )Class B Common Stock
    
    $
    (0.15
    )
    
    $
    (0.37
    )
    
    $
    (0.40
    )
    
    $
    (0.75
    )Basic and diluted income (loss) per share:Class A Common Stock
    
    $
    0.06
    
    
    $
    (0.37
    )
    
    $
    0.22
    
    
    $
    (0.75
    )Class B Common Stock
    
    $
    (0.15
    )
    
    $
    (0.37
    )
    
    $
    (0.40
    )
    
    $
    (0.75
    )
   10. Redeemable Preferred Stock and Stockholders Deficit
  29




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
  Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equities
       30




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
  11. 2004 Long-Term Incentive Plan
      31




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 General
 Except for the historical information contained herein, certain matters discussed in this
document are forward-looking statements based on the beliefs of our management and are subject to
certain risks and uncertainties, including the risks and uncertainties discussed below, as well as
other risks set forth in the Companys Annual Report on Form 10-K for the fiscal year ended March
31, 2005 under the caption Business  Risk Factors. Should any of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, our future performance and actual
results of operations may differ materially from those expected or intended. See Special Note
Concerning Forward Looking Statements below.
  Overview
    32




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
  Critical Accounting Policies: Use of Estimates
      33




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
    34




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
 Accounting Treatment for IDSs
     35




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
      Comparison of the three- and nine-month periods ended December 31, 2005 and December 31, 2004.
  Three Months ended December 31,
    
    
    Nine Months ended December 31,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeRoute
    
    $
    122.1
    
    
    $
    119.5
    
    
    $
    2.6
    
    
    $
    358.6
    
    
    $
    353.7
    
    
    $
    4.9Rental
    
    
    9.2
    
    
    
    8.6
    
    
    
    0.6
    
    
    
    26.8
    
    
    
    25.5
    
    
    
    1.3Distribution
    
    
    7.4
    
    
    
    7.5
    
    
    
    (0.1
    )
    
    
    19.5
    
    
    
    22.9
    
    
    
    (3.4
    )$
    138.7
    
    
    $
    135.6
    
    
    $
    3.1
    
    
    $
    404.9
    
    
    $
    402.1
    
    
    $
    2.8
  36




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
        37




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
         38




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
       39




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
 Three Months ended December 31,
    
    
    Nine Months ended December 31,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeRoute
    
    $
    40.7
    
    
    $
    39.5
    
    
    $
    1.2
    
    
    $
    118.2
    
    
    $
    116.2
    
    
    $
    2.0Rental
    
    
    4.0
    
    
    
    3.7
    
    
    
    0.3
    
    
    
    11.2
    
    
    
    10.4
    
    
    
    0.8Distribution
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.6
    
    
    
    0.6
    
    
    
    Other items, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.3
    )
    
    
    (0.5
    )
    
    
    0.2Corporate expenses
    
    
    (3.5
    )
    
    
    (2.5
    )
    
    
    (1.0
    )
    
    
    (9.1
    )
    
    
    (7.3
    )
    
    
    (1.8
    )Transaction costs (1)
    
    
    (2.6
    )
    
    
    (17.1
    )
    
    
    14.5
    
    
    
    (2.6
    )
    
    
    (17.1
    )
    
    
    14.5Total EBITDA
    
    $
    38.8
    
    
    $
    23.7
    
    
    $
    15.1
    
    
    $
    118.0
    
    
    $
    102.3
    
    
    $
    15.7
 
 (1)
    
    Amounts have not been added back to EBITDA for the three and nine months ended December
31, 2004 relating to (i) approximately $11.3 million redemption premium on the 9% Senior Notes
redeemed, (ii) the write-off of the unamortized deferred financing costs relating to the 9%
Senior Notes redeemed and term loans repaid aggregating approximately $3.5 million,
(iii) expenses aggregating approximately $1.5 million relating to an amendment to the Senior
Secured Credit Facility effected on November 15, 2004 to, among other things, permit the IDS
Transactions, and (iv) special bonuses related to the IDS Transactions aggregating
approximately $0.8 million. Amounts have not been added back to EBITDA for the three and nine
months ended December 31, 2005 relating to (i) the write-off of the unamortized deferred
financing costs relating to the Senior Secured Credit Facility term loans repaid aggregating
approximately $1.7 million, (ii) expenses aggregating approximately $0.7 million relating to
an amendment to the Senior Secured Credit Facility and (iii) additional expenses aggregating
approximately $0.2 million relating to the IDS Transactions.   40




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
 Liquidity and Capital Resources
     Dividend Policy
    41




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
   Financing Activities
  The Initial Public Offering
   11% Senior Secured Notes
   42




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
     Amended and Restated Credit Facility
   43




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
       44




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
     9% Senior Notes
   45




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
   The Intercompany Loan
      Operating and Investing Activities
  46




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
 Capital Expenditures
   Three Months ended December 31,
    
    
    Nine Months ended December 31,2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeRoute
    
    $
    13.1
    
    
    $
    16.1
    
    
    $
    (3.0
    )
    
    $
    43.4
    
    
    $
    48.6
    
    
    $
    (5.2
    )Rental
    
    
    0.8
    
    
    
    0.4
    
    
    
    0.4
    
    
    
    4.4
    
    
    
    2.9
    
    
    
    1.5Distribution
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    (0.1
    )Corporate
    
    
    1.6
    
    
    
    0.1
    
    
    
    1.5
    
    
    
    4.2
    
    
    
    1.5
    
    
    
    2.7$
    15.6
    
    
    $
    16.7
    
    
    $
    1.1
    
    
    $
    52.2
    
    
    $
    53.3
    
    
    $
    (1.1
    )
  The Tender Offer
  47




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
 Summary of Contractual Obligations
  Payments Due in Fiscal YearTotal
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    AfterLong-Term Debt Obligations (1)
    
    $
    706.6
    
    
    $
    49.1
    
    
    $
    2.5
    
    
    $
    2.3
    
    
    $
    5.7
    
    
    $
    5.8
    
    
    $
    641.2Interest on Long-Term Debt (2)
    
    
    458.1
    
    
    
    11.1
    
    
    
    49.9
    
    
    
    49.8
    
    
    
    49.6
    
    
    
    49.3
    
    
    
    248.4Capital Lease Obligations (3)
    
    
    8.7
    
    
    
    1.2
    
    
    
    3.5
    
    
    
    2.4
    
    
    
    1.4
    
    
    
    0.2
    
    
    
    Operating Lease Obligations
    
    
    25.9
    
    
    
    2.2
    
    
    
    7.3
    
    
    
    5.3
    
    
    
    4.2
    
    
    
    3.5
    
    
    
    3.4$
    1,199.3
    
    
    $
    63.6
    
    
    $
    63.2
    
    
    $
    59.8
    
    
    $
    60.9
    
    
    $
    58.8
    
    
    $
    893.0
 
 (1)
    
    On December 19, 2005, Coinmach entered into the Amended and Restated Credit Facility,
which is comprised of a $570.0 million term loan facility of which Coinmach borrowed an
additional $340.0 million on February 1, 2006, to retire all of its $324.5 million aggregate
principle amount of 9% Senior Notes (plus approximately $14.6 million of related redemption
premium) and to repay related fees and expenses. Coinmach used $230.0 million of borrowings
to refinance approximately $229.3 million of term debt under the Senior Secured Credit
Facility. The $324.5 million aggregate principal amount outstanding of the 9% Senior Notes
has been replaced by the additional $340.0 million borrowed under the Amended and Restated
Credit Facility in the table above.(2)
    
    As of December 31, 2005, $230.0 million of our long-term debt outstanding under our Amended
and Restated Credit Facility term loans was subject to variable rates of interest. In
addition, the $340.0 million borrowed on February 1, 2006 under our Amended and Restated
Credit Facility term loans was subject to variable rates of interest. Interest expense on
these variable rate borrowings for future years was calculated using a weighted average
interest rate of 6.875% based on the Eurodollar rate in effect at December 31, 2005. In
addition, at December 31, 2005, approximately $136.1 million of our long-term debt outstanding
was subject to a fixed interest rate of 11.0%. In addition, in connection with the Amended
and Restated Credit Facility, Coinmach is a party to three separate interest rate swap
agreements totaling $150.0 million which expired on February 1, 2006. Such agreements
effectively convert $150.0 million principal amount of floating rate term loans under the
Amended and Restated Credit Facility to a fixed interest rate of 5.66% and expired February 1,
2006. As of February 1, 2006, Coinmach became a party to two separate interest rate swap
agreements totaling $230.0 million in aggregate notional amount that effectively convert a
portion of its floating-rate term loans pursuant to the Amended and Restated Credit Facility
to a fixed interest rate of 7.40%, thereby reducing the impact of interest rate changes on
future interest expense. These two new swap agreements replaced the existing three swap
agreements that expired on February 1, 2006.(3)
    
    Includes both principal and interest. Future Capital Needs and Resources
  48




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
      49




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
   Inflation and Seasonality
  Special Note Concerning Forward Looking Statements
   50




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
   
    
    the restrictive debt covenants and other requirements related to our substantial
leverage that could restrict our operating flexibility;
    
    our ability to continue to renew our lease contracts with property owners and
management companies;
    
    extended periods of reduced occupancy which could result in reduced revenues and cash
flow from operations in certain areas;
    
    our ability to compete effectively in a highly competitive and capital intensive
industry which is fragmented nationally, with many small, private and family-owned
businesses operating throughout all major metropolitan areas;
    
    compliance obligations and liabilities under regulatory, judicial and environmental
laws and regulations, including, but not limited to, governmental action imposing
heightened energy and water efficiency standards or other requirements with respect to
commercial clothes washers;
    
    our ability to maintain borrowing flexibility and to meet our projected and future
cash needs, including capital expenditure requirements with respect to maintaining our
machine base, given our substantial level of indebtedness, history of net losses and
reduced liquidity resulting from any distributions Coinmach may make to us should we elect
to pay cash dividends on our common stock;
    
    assuming the underwriters overallotment option in connection with the Class A
Offering is exercised, our ability to repurchase shares of Class B Common Stock in
compliance with the indenture governing the 11% Senior Secured Notes;
    
    risks associated with expansion of our business through tuck-ins and other
acquisitions and integration of acquired operations into our existing business;
    
    as a holding company, our dependence on cash flow from our operating subsidiaries to
make payments under the 11% Senior Secured Notes;
    
    the risk of adverse tax consequences should the 11% Senior Secured Notes not be
respected as debt for U.S. federal income tax purposes;
    
    risks associated with changes in accounting standards promulgated by the Financial
Accounting Standards Board, the SEC or the American Institute of Certified Public
Accountants; and
    
    other factors discussed elsewhere in this report and in our other public filings with
the SEC.
 51




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
  52




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
       53




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 
 ITEM 4. CONTROLS AND PROCEDURES
   54




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 
 PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  ITEM 1A. Risk Factors
   Recently enacted federal legislation concerning energy and water efficiency standards on
commercial clothes washers could require a significant increase in our capital expenditures
and consequently reduce our profit margins.
    The separate public trading markets for IDSs and shares of Class A Common Stock, and the
ability to separate and create IDSs, may diminish the value of your investment in IDSs or
separately held shares of Class A Common Stock, as the case may be.
  55




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COINMACH SERVICE CORP. AND SUBSIDIARIES
    
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 ITEM 3. Defaults Upon Senior Securities
  
 ITEM 4. Submission of Matters to a Vote of Security Holders
  
 ITEM 5. Other Information
  
 ITEM 6. Exhibits
 ExhibitNumber
    
    Description10.1
    
    Amended and Restated Credit Agreement dated December 19, 2005, by and among Laundry Corp.,
Coinmach Corp., the Subsidiary Guarantors party thereto, the banks and other lending
institutions party thereto, DB Trust, J.P. Morgan Securities Inc., Deutsche Bank Securities
Inc., JPMorgan Chase Bank, N.A., First Union Securities Inc. and Credit Lyonnais New York
Branch (incorporated by reference from exhibit number 10.45 to Amendment No. 3 to CSCs Form
S-1 filed on January 27, 2006, file number 333-129764)10.2
    
    Amendment Agreement dated December 19, 2005, by and among Laundry Corp., Coinmach Corp., the
Subsidiary Guarantors party thereto, the banks and other lending institutions party thereto,
Deutsche Bank Securities Inc., J.P. Morgan Securities Inc.,
 56




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##### Table of Contents



COINMACH SERVICE CORP. AND SUBSIDIARIES
 ExhibitNumber
    
    DescriptionJPMorgan Chase Bank, N.A., and DB Trust (incorporated by reference from exhibit
number 10.46 to Amendment No. 3 to CSCs Form S-1 filed on January 27, 2006, file
number 333-129764)10.3
    
    Amendment No. 1 to Intercreditor Agreement, dated December 19, 2005, by and between Laundry
Corp., Coinmach Corp., the Subsidiary Guarantors party thereto, DB Trust and The Bank of New
York (incorporated by reference from exhibit number 10.47 to Amendment No. 3 to CSCs Form S-1
filed on January 27, 2006, file number 333-129764)10.4
    
    Amendment No 1. to Collateral Assignment of Leases, dated December 19, 2005, by Coinmach
Corp. in favor of DB Trust (incorporated by reference from exhibit number 10.48 to Amendment
No. 3 to CSCs Form S-1 filed on January 27, 2006, file number 333-129764)10.5
    
    Amendment No. 1 to Collateral Assignment of Location leases, dated December 19, 2005, by
Coinmach Corp. in favor of DB Trust (incorporated by reference from exhibit number 10.49 to
Amendment No. 3 to CSCs Form S-1 filed on January 27, 2006, file number 333-129764)10.6
    
    Amendment No. 1 to Credit Party Pledge Agreement, dated December 19, 2005, made by Coinmach
Corp. and each of the Subsidiary Guarantors party thereto, to DB Trust (incorporated by
reference from exhibit number 10.50 to Amendment No. 3 to CSCs Form S-1 filed on January 27,
2006, file number 333-129764)10.7
    
    Amendment No 2. to Holdings Pledge Agreement, dated December 19, 2005, made by Laundry Corp.
to DB Trust (incorporated by reference from exhibit number 10.51 to Amendment No. 3 to CSCs
Form S-1 filed on January 27, 2006, file number 333-129764)31.1
    
    Certificate of Chief Executive Officer pursuant to Exchange Act Rules 13a-14 and 15d-14, as
enacted by Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certificate of Chief Financial Officer pursuant to Exchange Act Rules 13a-14 and 15d-14, as
enacted by Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certificate of Chief Executive Officer pursuant to 18 United States Code, Section 1350, as
enacted by Section 302 of the Sarbanes-Oxley Act of 200232.2
    
    Certificate of Chief Financial Officer pursuant to 18 United States Code, Section 1350, as
enacted by Section 302 of the Sarbanes-Oxley Act of 2002
 57




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 
 SIGNATURES
  COINMACH SERVICE CORP.Date: February 14, 2006
    /s/ Robert M. DoyleRobert M. DoyleChief Financial Officer


(On behalf of registrant and as
Principal Financial Officer) 58




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 
 INDEX TO EXHIBITS
 ExhibitNumber
    
    Description10.1
    
    Amended and Restated Credit Agreement dated December 19, 2005, by and among Laundry Corp.,
Coinmach Corp., the Subsidiary Guarantors party thereto, the banks and other lending
institutions party thereto, DB Trust, J.P. Morgan Securities Inc., Deutsche Bank Securities
Inc., JPMorgan Chase Bank, N.A., First Union Securities Inc. and Credit Lyonnais New York
Branch (incorporated by reference from exhibit number 10.45 to Amendment No. 3 to CSCs Form
S-1 filed on January 27, 2006, file number 333-129764)10.2
    
    Amendment Agreement dated December 19, 2005, by and among Laundry Corp., Coinmach Corp., the
Subsidiary Guarantors party thereto, the banks and other lending institutions party thereto,
Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., JPMorgan Chase Bank, N.A., and DB
Trust (incorporated by reference from exhibit number 10.46 to Amendment No. 3 to CSCs Form
S-1 filed on January 27, 2006, file number 333-129764)10.3
    
    Amendment No. 1 to Intercreditor Agreement, dated December 19, 2005, by and between Laundry
Corp., Coinmach Corp., the Subsidiary Guarantors party thereto, DB Trust and The Bank of New
York (incorporated by reference from exhibit number 10.47 to Amendment No. 3 to CSCs Form S-1
filed on January 27, 2006, file number 333-129764)10.4
    
    Amendment No 1. to Collateral Assignment of Leases, dated December 19, 2005, by Coinmach
Corp. in favor of DB Trust (incorporated by reference from exhibit number 10.48 to Amendment
No. 3 to CSCs Form S-1 filed on January 27, 2006, file number 333-129764)10.5
    
    Amendment No. 1 to Collateral Assignment of Location leases, dated December 19, 2005, by
Coinmach Corp. in favor of DB Trust (incorporated by reference from exhibit number 10.49 to
Amendment No. 3 to CSCs Form S-1 filed on January 27, 2006, file number 333-129764)10.6
    
    Amendment No. 1 to Credit Party Pledge Agreement, dated December 19, 2005, made by Coinmach
Corp. and each of the Subsidiary Guarantors party thereto, to DB Trust (incorporated by
reference from exhibit number 10.50 to Amendment No. 3 to CSCs Form S-1 filed on January 27,
2006, file number 333-129764)10.7
    
    Amendment No 2. to Holdings Pledge Agreement, dated December 19, 2005, made by Laundry Corp.
to DB Trust (incorporated by reference from exhibit number 10.51 to Amendment No. 3 to CSCs
Form S-1 filed on January 27, 2006, file number 333-129764)31.1
    
    Certificate of Chief Executive Officer pursuant to Exchange Act Rules 13a-14 and 15d-14, as
enacted by Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certificate of Chief Financial Officer pursuant to Exchange Act Rules 13a-14 and 15d-14, as
enacted by Section 302 of the Sarbanes-Oxley Act of 2002
 59




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COINMACH SERVICE CORP. AND SUBSIDIARIES
 ExhibitNumber
    
    Description32.1
    
    Certificate of Chief Executive Officer pursuant to 18 United States Code, Section 1350, as
enacted by Section 302 of the Sarbanes-Oxley Act of 200232.2
    
    Certificate of Chief Financial Officer pursuant to 18 United States Code, Section 1350, as
enacted by Section 302 of the Sarbanes-Oxley Act of 2002
 60