Lenders’ PresentationLenders’ Presentation
June 28, 2006June 28, 2006
DisclaimerDisclaimer
The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on Management’s current expectations and beliefs, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions and other important factors, many of which are outside Management’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. You are cautioned not to put undue reliance on such forward-looking statements because actual results may vary materially from those expressed or implied. All forward-looking statements are based on information available to Management on this date and Alliance Laundry assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
AgendaAgenda
Transaction Overview
Alliance Financial Update
LSG / CLD Overview
Amendment Request
Public Lenders’ Q&A
Pro Forma Financial Projections
Private Lenders’ Q&A
Presenters
Bruce Rounds, CFOAlliance Laundry Systems LLC
Bruce Rounds, CFOAlliance Laundry Systems LLC
Tom L’Esperance, CEOAlliance Laundry Systems LLC
Diane Albanese, Vice PresidentLehman Brothers
Bruce Rounds, CFOAlliance Laundry Systems LLC
Transaction OverviewTransaction Overview
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Transaction OverviewTransaction Overview
Alliance Laundry Systems reached an agreement to purchase the Commercial Laundry Division (“CLD”) from Laundry Systems Group (“LSG”) on May 23, 2006
Acquisition strategically enhances geographic scope, expands product offering and provides control of soft-mount technology
Total transaction value of $85 million includes capital lease obligations assumed
Alliance expects to finance the acquisition with a combination of debt and equity in order to maintain existing leverage levels
$60 million add-on to the existing Term Loan Facility, along with a $5 million increase to the Revolving Credit Facility to maintain adequate liquidity
— Maturity and amortization schedules will remain the same as existing $23 million in equity from Teachers’ and management (1)(2)(3)
Sources and Uses
1. The remaining $1.4 million of the total purchase price reflects the capital lease assumed.2. Management includes both Alliance and CLD.3. Teachers’ equity will initially be funded through $20.0 mm bridge facility held at a new limited liability Holding Company,
parent to Alliance Laundry Holdings LLC; remaining equity will be provided by Alliance and CLD management.4. Alliance will fund the full €59.0 mm purchase price, which includes the assumption of $1.4 mm capital lease, at close.
Through post-closing purchase price adjustments, the value of the capital lease will be returned to Alliance approximately 60 days post-close.
($ in millions)
Sources Uses
Term Loan Add-On $60.0 Adjusted Purchase Price (4) $74.8
Teachers' Equity (3) 20.0 Transaction Costs 5.3
Equity (3) 3.2 Cash for Europe 3.1
Capital Lease Assumed 1.4 Capital Lease Assumed 1.4
Total Sources $84.6 Total Uses $84.6
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Pro Forma CapitalizationPro Forma Capitalization
Pro Forma Capitalization
The financing of the transaction has been structured to be leverage neutral
($ in millions)Alliance EBITDA ProForma EBITDA
Consolidated Capitalization 3/ 31/ 2006 Multiple Adj. 3/ 31/ 2006 Multiple
Revolver (1) $3.0 0.0x $0.0 $3.0 0.0x
Term Loan B 177.0 2.9x 60.0 237.0 3.3x
Senior Subordinated Notes 149.4 2.4x 0.0 149.4 2.1x
Other Long-Term Debt 1.0 0.0x 0.0 1.0 0.0x
Capital Lease 0.0 0.0x 1.4 1.4 0.0x
Total Debt $330.4 5.4x $61.4 $391.8 5.4x
less: Cash $0.3 0.0x $3.1 $3.4 0.0x
Net Debt $330.1 5.4x $58.3 $388.4 5.3x
Equity (market value) (2) 117.0 1.9x 23.2 140.2 1.9x
Total Enterprise Value $447.1 7.3x $81.5 $528.6 7.3x
LTM Adjusted EBITDA (3) $61.5 $72.7
1. Total availability under Revolver is increasing from $50 million to $55 million.2. Reflects market value of equity of Alliance at January 27, 2005 and CLD in conjunction with acquisition.3. Alliance LTM Adjusted EBITDA as of March 31, 2006; CLD LTM EBITDA as of December 31, 2005 and is subject to E&Y diligence
adjustments. See the Company’s filings with the Securities and Exchange Commission for a reconciliation of Adjusted EBITDA to Net Loss.
Alliance Financial UpdateAlliance Financial Update
Alliance Performance Summary Alliance Performance Summary
Net revenues for the year ended December 31, 2005 increased $36.3 million, or 12.9%, to $317.3 million from $281.0 million Revenue growth was primarily driven by price and volume increases
Gross profit for the year ended December 31, 2005 decreased $6.0 million, or 7.2%, to $76.0 million from $82.0 million Decrease in gross profit attributed to higher cost of sales from asset step-ups and higher-than expected steel prices
$25 million of debt reduction since Facility closing date Leverage of 5.4x well below the maximum 6.50x Total Debt / EBITDA covenant as of March 31, 2006 (steps down to 6.25x at
June 30, 2006)
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Income StatementIncome Statement($ in millions) Quarter Ended, Fiscal Year Ended Quarter Ended, LTM
3/ 31/ 2005 6/ 30/ 2005 9/ 30/ 2005 12/ 31/ 2005 12/ 31/ 2005 3/ 31/ 2006 3/ 31/ 2006
Total Revenue $69.9 $85.7 $78.4 $83.3 $317.3 $71.5 $318.9
Gross Profit 11.0 20.6 22.4 21.9 76.0 18.6 83.6
% Margin 15.7% 24.0% 28.6% 26.3% 24.0% 26.0% 26.2%
EBITDA (GAAP Reporting) ($23.9) $8.1 $16.3 $14.8 $15.3 $9.6 $48.9 % Margin NA 9.5% 20.9% 17.7% 4.8% 13.5% 15.3%
Adjusted EBI TDA $12.7 $16.6 $14.1 $17.1 $60.4 $13.8 $61.5 % Margin 18.1% 19.3% 17.9% 20.6% 19.0% 19.3% 19.3%
Capital Expenditures $0.7 $1.6 $0.9 $1.2 $4.4 $1.4 $5.1Total Debt $347.3 $344.3 $336.3 $326.3 $326.3 $330.4 $330.4
Financial Performance UpdateFinancial Performance Update
LSG / CLD OverviewLSG / CLD Overview
Commercial Laundry Division of LSGCommercial Laundry Division of LSG
Managed out of Belgium, CLD is one of LSG’s two operating divisions, with approximately 400 employees
CLD has been a significant strategic partner of Alliance since 2002
CLD focuses on two geographic regions: Europe (Ipso) & the U.S. (Cissell & Ipso)
Focused on the laundromat and on-premise laundry (“OPL”) segments
Offers a full range of commercial washer extractors, tumbler dryers and ironers
Strong position in washer extractor soft-mount technology
Strong market position in Europe
Products distributed worldwide through local distributors
Stand-alone 2005 revenue and EBITDA of approximately $98.1 million and $11.2 million(1), respectively
CLD is a leading manufacturer and marketer of commercial washing and drying machines and finishing equipment
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1. CLD financials subject to E&Y diligence adjustments.
CLD Unit OverviewCLD Unit Overview
Focuses on laundromat and OPL segments
(European Operations) (U.S. Operations)
Facilities: 2 in Belgium (Wevelgem and Deinze)
Employees: 240
Production: 14,000 units per year (primarily washer-extractors, as well as ironers and tumbler dryers)
Unaudited 2005 Financials(1): Net Revenue: €53.7 million Adj. EBITDA: €7.2 million
Primary Competitors: Electrolux, Girbau, Primus
Focuses on laundromat, dry-cleaning and OPL segments
Cissell facilities: Louisville, KY and Portland, TN
Ipso sales center: Fort Mill, SC
Employees: 153
Production: 1,000 units per year (primarily large stand-alone tumbler dryers)
Unaudited 2005 Financials(1): Net Revenue: $30.1 million Adj. EBITDA: $2.0 million
Primary Competitors: Alliance, Dexter, Milnor, Girbau
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1. CLD financials subject to E&Y diligence adjustments.
CLD Unit Sales By GeographyCLD Unit Sales By Geography
(European Operations) (U.S. Operations)
U.S.84%
EMEA12%
Far East4%
EMEA75%
U.S.18%
Far East7%
2005 Net Revenue: €53.7 million 2005 Net Revenue: $30.1 million
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1. EMEA refers to Europe, the Middle East and Africa.
The acquisition further diversifies Alliance’s geographical reach and customer base
(1)
(1)
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CLD Historical FinancialsCLD Historical Financials
1. Financial results unaudited and are subject to E&Y diligence adjustments.2. Converted at an exchange rate of €1.24 / $1.00.3. Converted at an exchange rate of €1.27 / $1.00.
European Operations (1)
U.S. Operations (1)
CLD (Total) (1)
(€ and $ in millions)
2004A 2005A
Sales € 44.8 € 53.7% Growth 19.8%
Adj. EBITDA € 5.5 € 7.2% Margin 12.3% 13.5%
2004A 2005A
Sales $29.4 $30.1% Growth 2.2%
Adj. EBITDA $2.3 $2.0% Margin 8.0% 6.7%
2004A (2) 2005A (3)
European Ops Sales $55.6 $68.1
U.S. Ops Sales 29.4 30.1
Total Sales $85.1 $98.1
% Growth 15.3%
European Ops Adj. EBITDA $6.9 $9.2
U.S. Ops Adj. EBITDA 2.3 2.0
Total Adj. EBI TDA $9.2 $11.2
% Margin 10.8% 11.4%
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Growth Growth OpportunitiesOpportunities
Synergies and Synergies and Cost SavingsCost Savings
Key Credit StrengthsKey Credit Strengths
Increased size and scale Diversification with increased sales contribution from
Europe Increased product differentiation to support Alliance’s
multi-brand strategies Ownership of soft-mount technology broadens product
lines and reduces risk Branding unique products across markets creates
opportunity
Increased economies of scale provide potential opportunities for cost savings, such as corporate overhead
Substantial US manufacturing consolidation opportunity Additional synergies expected from combined
procurement
Strong MarketStrong MarketPositionPosition
Access to two strong brands with significant market share Significant presence in Western Europe
Access to CLD’s European distribution network Existing management expected to continue operating
European business
Amendment RequestAmendment Request
Summary of Terms Summary of Terms
1. Reflects 3/31/06 pro forma balance.
Borrower: Alliance Laundry Systems LLC (the “Company”)
Lead Arranger: Lehman Brothers Inc.
Administrative Agent: Lehman Commercial Paper Inc.
Add-On Facilities: $5 million Revolving Credit Commitments (the "Revolver")$60 million Term Loan B (the "TLB")
Pro Forma Credit Facilities: Size Maturity Current PricingRevolver $55.0 million January 27, 2011 L + 250 bps
Term Loan 237.0 million(1)
January 27, 2012 L + 225 bps$292.0 million
Security: First priority lien on all currently owned and hereafter acquired tangible and intangible assets of the Companyand the Guarantors, including all stock, ownership units, membership interests and notes owned by the Company or the Guarantors and 65% of the equity interests in the Company's first tier foreign subsidiaraies, but excluding trade receivables and equipment notes subject to the Company's securitization facilities
Guarantees: Holding company parent and each direct and indirect domestic subsidiary of the Company currently ownedor hereafter acquired (other than subsidiaries in place or formed as part of the Company's off-balancesheet accounts receivable and equipment loan financing activity)
Add-on Use of Proceeds: Revolver: General corporate purposesTLB: To fund the acquisition and pay fees and expenses
Amortization: Revolver: NoneTLB: 0.25% per quarter with a bullet payment at maturity
Optional Prepayments: Prepayable any time at par
Mandatory Prepayments: (i) 100% of asset sales and recovery events (subject to reinvestment rights);(ii) 100% from debt proceeds with carveouts;(iii) 50% from equity proceeds with carveouts;(iv) Beginning with the 2007 fiscal year, 75% from excess cash flow,
steps down to 50% if below 4.5x total leverage and 0% below 4.0x total leverage
Financial Covenants: Same as existing, including:• Maximum total leverage ratio • Minimum interest coverage ratio
Covenant Amendments: Include CLD Acquision as a Permitted AcquisitionAnnual capital expenditure basket increased from $10 million to $13 millionForeign debt capacity increased from $2.5 million to $5.0 millionOther changes included in the First Amendment to the Credit Agreement
Consent Fee: 10 bps
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Proposed Transaction TimelineProposed Transaction Timeline
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Week of Alliance-CLD Transaction Events
June 26th Lender Presentation (June 28)
July 10th Commitments and consents due from lenders (July 11) Comments due from lenders on documentation Close and fund (July 14)
Holiday
June
S M T W T F S1 2 3
4 5 6 7 8 9 1011 12 13 14 15 16 1718 19 20 21 22 23 2425 26 27 28 29 30
July
S M T W T F S1
2 3 4 5 6 7 89 10 11 12 13 14 15
16 17 18 19 20 21 2223/30 24 25 26 27 28 29
Key Dates
Public Lenders’ Q&APublic Lenders’ Q&A