UNITEDTable STATESof SECURITIES AND EXCHANGE COMMISSION Contents

~~WASHINGTON,~~UNITED ~~D.C.~~STATES ~~20549~~SECURITIES AND EXCHANGE COMMISSION

~~FORM~~WASHINGTON, ~~10-Q~~D.C. 20549

þFORM ~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934~~10-Q

~~For~~þ ~~the~~QUARTERLY ~~quarterly~~REPORT ~~period~~PURSUANT ~~ended~~TO ~~December 31,~~SECTION ~~2004~~ 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

orFor the quarterly period ended December 31, 2006

~~o TRANSITION REPORT PURSUANT TO SECTION 13~~ OR ~~15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~o ~~the~~TRANSITION ~~transition~~REPORT ~~period~~PURSUANT ~~from~~TO ~~_________to~~SECTION ~~_________~~ 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Commission~~For ~~File~~the ~~Number:~~transition ~~001-32359~~ period from to

~~Coinmach~~Commission ~~Service~~file ~~Corp.~~ number: 001-32359

~~(Exact~~Coinmach ~~name~~Service ~~of registrant as specified in its charter)~~Corp.

Delaware		20-0809839
(State or other jurisdiction of incorporation or organization)		(I. R. S. Employer Identification No.)

(Exact name of registrant as specified in its charter)

Delaware		20-0809839
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
303 Sunnyside Blvd., Suite 70, Plainview, New York		11803
(Address of principal executive offices)		(~~zip~~Zip ~~code~~Code)

(516) 349-8555 (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

~~Yes~~ Indicate by check mark whether the registrant is a large accelerated filer, an ~~o No~~accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and þlarge accelerated filer” in Rule 12b-2 of the Exchange Act.

~~Indicate~~Large ~~by check mark whether the registrant is an~~ accelerated filer ~~(as~~o Accelerated ~~defined~~filer ~~in Rule 12b~~þ Non-2accelerated ~~of the~~filer ~~Exchange Act). Yes~~ o ~~No þ.~~

As Indicate ofby ~~the~~check ~~close~~mark ofwhether ~~business~~the onregistrant ~~February 11,~~is ~~2005,~~a ~~Coinmach~~shell ~~Service~~company ~~Corp.~~(as ~~had~~defined ~~outstanding~~in ~~18,911,532 shares~~Rule 12b-2 of ~~Class A common stock, par value $0.01 per share (~~the ~~“Class A~~Exchange ~~Common Stock”~~Act) ~~and~~. ~~outstanding~~Yes ~~24,980,445~~o ~~shares~~No ~~of Class B common stock, par value $.01 per share (the “Class B~~þ ~~Common Stock”).~~

~~COINMACH~~ Indicate ~~SERVICE~~the ~~CORP.~~number ~~AND~~of ~~SUBSIDIARIES~~shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

INDEX


Class		Outstanding at January 31, 2007
Class A common stock, $0.01 par value per share		29,246,141 shares
Class B common stock, $0.01 par value per share		23,374,450 shares

	Page No.
PART I.
Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - December 31, 2004 (Unaudited) and March 31, 2004		3
Condensed Consolidated Statements of Operations (Unaudited) - Three months and Nine months Ended December 31, 2004 and 2003		4
Condensed Consolidated Statement of Stockholders’ Equity (Deficit) for the Nine months Ended December 31, 2004		5
Condensed Consolidated Statements of Cash Flows (Unaudited) - Nine months Ended December 31, 2004 and 2003		6
Notes to Condensed Consolidated Financial Statements (Unaudited)		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		30
Item 3. Quantitative and Qualitative Disclosures About Market Risk		50
Item 4. Controls and Procedures		51
PART II.
Other Information
Item 1. Legal Proceedings		52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		52
Item 3. Defaults Upon Senior Securities		54
Item 4. Submission of Matters to a Vote of Security Holders		54
Item 5. Other Information		54
Item 6. Exhibits		54
Signature Page		59

The registrant publicly trades Income Deposit Securities (“IDSs”) on the American Stock Exchange. Each IDS is comprised of one underlying share of Class A common stock and an underlying 11% senior secured note due 2024 in a principal amount of $6.14. As of January 31, 2007, there were 13,274,032 IDSs outstanding.

2COINMACH SERVICE CORP. AND SUBSIDIARIES

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~INDEX

PART I. FINANCIAL INFORMATION


	Page No.
PART I. FINANCIAL INFORMATION		3

ITEM 1. Financial Statements		3

Condensed Consolidated Balance Sheets – December 31, 2006 (Unaudited) and March 31, 2006		3

Condensed Consolidated Statements of Operations (Unaudited) – Three Months and Nine Months ended December 31, 2006 and 2005		4

Condensed Consolidated Statement of Stockholders’ Equity – Nine Months ended December 31, 2006 (Unaudited)		5

Condensed Consolidated Statements of Cash Flows (Unaudited) – Nine Months ended December 31, 2006 and 2005		6

Notes To Condensed Consolidated Financial Statements (Unaudited)		7

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS		30

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		47

ITEM 4. CONTROLS AND PROCEDURES		48

PART II. OTHER INFORMATION		49

ITEM 1. Legal Proceedings		49

ITEM 1A. Risk Factors		49

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds		49

ITEM 3. Defaults Upon Senior Securities		49

ITEM 4. Submission of Matters to a Vote of Security Holders		49

ITEM 5. Other Information		49

ITEM 6. Exhibits		49

Signature Page		51

Index to Exhibits		52
EX-10.1: RESTRICTED STOCK AWARD AGREEMENT
EX-10.2: RESTRICTED STOCK AWARD AGREEMENT
EX-10.3: RESTRICTED STOCK AWARD AGREEMENT
EX-10.4: RESTRICTED STOCK AWARD AGREEMENT
EX-10.5: RESTRICTED STOCK AWARD AGREEMENT
EX-10.6: RESTRICTED STOCK AWARD AGREEMENT
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION

~~ITEM 1. Financial Statements~~2

CONDENSEDTable CONSOLIDATED BALANCE SHEETS (in thousands of dollars, except share data) Contents

	December 31, 2004			March 31, 20041
	(Unaudited)
ASSETS:
Current assets:
Cash and cash equivalents	$	56,245		$	31,620
Receivables, net		7,118			6,207
Inventories		12,081			11,508
Assets held for sale		2,475			2,560
Prepaid expenses		5,216			5,097
Interest rate swap asset		40			—
Other current assets		1,959			1,974
Total current assets		85,134			58,966
Advance location payments		72,219			73,253
Property, equipment and leasehold improvements, net of accumulated depreciation and amortization of $310,127 and $253,736		270,935			283,688
Contract rights, net of accumulated amortization of $97,500 and $87,139		313,107			323,152
Goodwill		204,780			204,780
Other assets		20,372			15,669
Total assets	$	966,547		$	959,508
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT):
Current liabilities:
Accounts payable and accrued expenses	$	33,721		$	28,806
Accrued rental payments		30,087			31,855
Accrued interest		14,657			7,549
Interest rate swap liability		—			3,597
Current portion of long-term debt		5,920			9,149
Total current liabilities		84,385			80,956
Deferred income taxes		65,171			73,775
Long-term debt, less current portion		703,178			708,482
Redeemable preferred stock — $2.5 million par value; 82 shares authorized; 74.89 shares issued and outstanding (liquidation preference of $265,914 at March 31, 2004)		—			265,914
Total liabilities		852,734			1,129,127
Stockholders’ equity (deficit):
Class A Common Stock — $0.01 par value; 100,000,000 shares authorized; 18,911,532 shares issued and outstanding		189			—
Class B Common Stock — $0.01 par value; 100,000,000 shares authorized; 24,980,445 shares issued and outstanding		250			—
Common stock — $2.50 par value; 76,000 shares authorized; 66,825.83 shares issued and outstanding at March 31, 2004		—			167
Capital in excess of par value		319,049			5,022
Carryover basis adjustment		(7,988	)		(7,988	)
Accumulated other comprehensive income (loss), net of tax		24			(2,006	)
Accumulated deficit		(197,681	)		(164,728	)
Deferred compensation		(30	)		(86	)
Total stockholders’ equity (deficit)		113,813			(169,619	)
Total liabilities and stockholders’ equity (deficit)	$	966,547		$	959,508

COINMACH SERVICE CORP. AND SUBSIDIARIES

~~See~~PART ~~accompanying notes~~I. FINANCIAL INFORMATION

ITEM 1. ~~The~~Financial ~~March 31, 2004 balance sheet has been derived from the audited consolidated financial statements of Coinmach Laundry Corporation as of that date.~~Statements

3CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands of dollars, except share data)

COINMACH SERVICE CORP. AND SUBSIDIARIES


	December 31, 2006			March 31, 2006¹
	(Unaudited)
ASSETS:
Current assets:
Cash and cash equivalents	$	38,354		$	62,008
Receivables, net		6,610			5,635
Inventories		14,645			11,458
Prepaid expenses		6,041			4,375
Interest rate swap asset		933			2,615
Other current assets		1,701			1,796

Total current assets		68,284			87,887

Advance location payments		64,527			67,242
Property, equipment and leasehold improvements, net of accumulated depreciation and amortization of $457,695 and $403,024		245,396			252,398
Contract rights, net of accumulated amortization of $124,890 and $114,535		298,348			296,912
Goodwill		208,496			206,196
Other assets		9,741			11,531

Total assets	$	894,792		$	922,166


LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable and accrued expenses	$	37,536		$	32,656
Accrued rental payments		34,319			33,044
Accrued interest		7,026			3,563
Current portion of long-term debt		5,601			11,151

Total current liabilities		84,482			80,414

Deferred income taxes		49,795			49,984
Long-term debt, less current portion		652,635			653,102

Total liabilities		786,912			783,500

Stockholders’ equity:
Class A Common Stock — $0.01 par value; 100,000,000 shares authorized; 29,246,141 shares issued and outstanding at December 31, 2006 and 29,113,641 shares issued and outstanding at March 31, 2006		292			291
Class B Common Stock — $0.01 par value; 100,000,000 shares authorized; 23,374,450 shares issued and outstanding		234			234
Capital in excess of par value		389,801			389,616
Carryover basis adjustment		(7,988	)		(7,988	)
Accumulated other comprehensive income, net of tax		439			1,547
Accumulated deficit		(274,898	)		(245,034	)

Total stockholders’ equity		107,880			138,666

Total liabilities and stockholders’ equity	$	894,792		$	922,166

~~CONDENSED~~See ~~CONSOLIDATED~~accompanying ~~STATEMENTS OF OPERATIONS~~notes. ~~(UNAUDITED) (in thousands of dollars, except per share data)~~

	Three Months Ended						Nine Months Ended
	December 31,			December 31,			December 31,			December 31,
	2004			2003			2004			2003
REVENUES	$	135,627		$	135,740		$	402,076		$	398,208
COSTS AND EXPENSES:
Laundry operating expenses (exclusive of depreciation and amortization and amortization of advance location payments)		92,270			93,612			274,902			274,182
General and administrative (including stock-based compensation expense of $19, $51, $56 and $153, respectively)		2,502			2,362			7,229			6,950
Depreciation and amortization		19,029			18,207			57,087			54,245
Amortization of advance location payments		4,928			4,952			14,780			15,312
Amortization of intangibles		3,580			3,800			10,840			11,313
Other items, net		—			96			500			96
		122,309			123,029			365,338			362,098
OPERATING INCOME		13,318			12,711			36,738			36,110
INTEREST EXPENSE		14,781			14,424			43,406			43,132
INTEREST EXPENSE – preferred stock		4,862			6,292			18,230			18,324
INTEREST EXPENSE – escrow interest		941			—			941			—
TRANSACTION COSTS		17,135			—			17,135			—
LOSS BEFORE INCOME TAXES		(24,401	)		(8,005	)		(42,974	)		(25,346	)
PROVISION (BENEFIT) FOR INCOME TAXES:
Current		160			103			195			253
Deferred		(8,260	)		(748	)		(10,216	)		(2,323	)
		(8,100	)		(645	)		(10,021	)		(2,070	)
NET LOSS	$	(16,301	)	$	(7,360	)	$	(32,953	)	$	(23,276	)
BASIC AND DILUTED NET LOSS PER SHARE
Net loss per common share — Class A	$	(0.37	)	$	(0.17	)	$	(0.75	)	$	(0.53	)
Net loss per common share — Class B	$	(0.37	)	$	(0.17	)	$	(0.75	)	$	(0.53	)
Weighted average common shares — Class A		18,911,532			18,911,532			18,911,532			18,911,532
Weighted average common shares — Class B		24,980,445			24,980,445			24,980,445			24,980,445


1		The March 31, 2006 balance sheet has been derived from the audited consolidated financial statements as of that date.

~~See accompanying notes.~~3

4 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

~~Condensed~~CONDENSED ~~Consolidated~~CONSOLIDATED ~~Statement~~STATEMENTS ofOF ~~Stockholders’ Equity (Deficit)~~OPERATIONS (UNAUDITED) (in thousands of dollars, except share data)

																Accumulated
	Three Months Ended						Nine Months Ended
																Other									Total
	December 31,			December 31,			December 31,			December 31,
	Class A			Class B						Capital			Carryover			Comprehensive									Stockholders’
	2006			2005			2006			2005
	Common			Common			Common			in Excess			Basis			Income (Loss),			Accumulated			Deferred			(Deficit)
REVENUES	$	140,971		$	138,744		$	416,566		$	404,894
	Stock			Stock			Stock			of Par			Adjustment			net of tax			Deficit			Compensation			Equity
COSTS AND EXPENSES:
Balance at March 31, 2004	$	–		$	–		$	167		$	5,022		$	(7,988	)	$	(2,006	)	$	(164,728	)	$	(86	)	$	(169,619	)
Laundry operating expenses (exclusive of depreciation and amortization and amortization of advance location payments)		94,732			93,767			281,934			274,799
Issuance of common stock (net of issuance costs of $12,468)		189			–			–			129,180			–			–			–			–			129,369
General and administrative (including stock-based compensation expense of $118, $0, $194 and $12, respectively)		3,100			3,571			9,236			9,141
Exchange of preferred and common stock for Class B Common Sock		–			250			(167	)		184,847			–			–			–			–			184,930
Depreciation and amortization		18,874			19,027			55,887			56,887
Comprehensive loss:
Amortization of advance location payments		4,900			5,015			14,702			14,188
Net loss		–			–			–			–			–			–			(32,953	)		–			(32,953	)
Amortization of intangibles		3,560			3,514			10,680			10,485
Gain on derivative instruments		–			–			–			–			–			2,030			–			–			2,030
Other items, net		—			—			—			310
Total comprehensive loss																										(30,923	)
		125,166			124,894			372,439			365,810
Stock-based compensation		–			–			–			–			–			–			–			56			56
OPERATING INCOME		15,805			13,850			44,127			39,084
Balance at December 31, 2004	$	189		$	250		$	–		$	319,049		$	(7,988	)	$	24		$	(197,681	)	$	(30	)	$	113,813
INTEREST EXPENSE		13,999			15,570			41,359			46,216
TRANSACTION COSTS		—			2,620			845			2,620
INCOME (LOSS) BEFORE INCOME TAXES		1,806			(4,340	)		1,923			(9,752	)
PROVISION (BENEFIT) FOR INCOME TAXES:
Current		506			—			887			—
Deferred		440			(1,674	)		384			(3,823	)
		946			(1,674	)		1,271			(3,823	)
NET INCOME (LOSS)	$	860		$	(2,666	)	$	652		$	(5,929	)
Distributed earnings per share:
Class A Common Stock	$	0.21		$	0.21		$	0.62		$	0.62
Class B Common Stock	$	—		$	—		$	0.53		$	—
Basic and diluted net income (loss) per share:
Class A Common Stock	$	0.11		$	0.06		$	0.05		$	0.22
Class B Common Stock	$	(0.10	)	$	(0.15	)	$	(0.04	)	$	(0.40	)
Weighted average common stock outstanding:
Class A Common Stock		29,060,305			18,911,532			29,052,500			18,911,532
Class B Common Stock		23,374,450			24,980,445			23,374,450			24,980,445
Cash dividends per share:
Class A Common Stock	$	0.21		$	0.21		$	0.62		$	0.62
Class B Common Stock	$	—		$	—		$	0.53		$	—

See accompanying notes.

COINMACHTable SERVICEof CORP. AND SUBSIDIARIES Contents

~~CONDENSED~~COINMACH ~~CONSOLIDATED~~SERVICE ~~STATEMENTS~~CORP. OFAND ~~CASH FLOWS~~SUBSIDIARIES ~~(UNAUDITED) (In thousands of dollars)~~

	Nine Months Ended
	December 31, 2004			December 31, 2003
OPERATING ACTIVITIES:
Net loss	$	(32,953	)	$	(23,276	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		57,087			54,245
Amortization of advance location payments		14,780			15,312
Amortization of intangibles		10,840			11,313
Deferred income taxes		(10,216	)		(2,323	)
Preferred stock interest expense		18,230			18,324
Premium on redemption of 9% senior notes		11,295			—
Write-off of deferred financing costs		3,475			—
Amortization of deferred issue costs		1,795			1,810
Gain on sale of investment and equipment		(472	)		(1,836	)
Stock based compensation		56			153
Change in operating assets and liabilities, net of businesses acquired:
Other assets		470			(897	)
Receivables, net		(911	)		3,888
Inventories and prepaid expenses		(573	)		2,251
Accounts payable and accrued expenses, net		3,104			(7,376	)
Accrued interest		7,108			9,639
Net cash provided by operating activities		83,115			81,227
INVESTING ACTIVITIES:
Additions to property and equipment		(41,019	)		(50,505	)
Advance location payments to location owners		(13,250	)		(16,029	)
Acquisition of net assets related to acquisitions of businesses		(613	)		(3,423	)
Proceeds from sale of investment		277			1,022
Proceeds from sale of property and equipment		653			334
Net cash used in investing activities		(53,952	)		(68,601	)
FINANCING ACTIVITIES:
Proceeds from issuance of IDSs		257,983			—
Proceeds from issuance of third party senior secured notes		20,000			—
Redemption of preferred stock		(99,208	)		—
Proceeds from credit facility		—			8,200
Repayments under credit facility		(19,830	)		(8,200	)
Redemption of 9 % Senior Notes		(125,500	)		—
Payment of premium on 9 % Senior Notes		(11,295	)		—
IDS and third party senior secured notes issuance costs		(23,597	)		—
Principal payments on capitalized lease obligations		(3,249	)		(3,093	)
Borrowings from bank and other borrowings		159			548
Receivables from shareholders		(1	)		2
Net cash used in financing activities		(4,538	)		(2,543	)
Net increase in cash and cash equivalents		24,625			10,083
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		31,620			27,428
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	56,245		$	37,511
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	35,608		$	31,722
Income taxes paid	$	199		$	364
NON-CASH FINANCING ACTIVITIES:
Acquisition of fixed assets through capital leases	$	3,770		$	3,842

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
– NINE MONTHS ENDED DECEMBER 31, 2006
(UNAUDITED)
(in thousands of dollars)

See accompanying notes.


											Accumulated
											Other
	Class A		Class B		Capital in			Carryover			Comprehensive
	Common		Common		Excess of Par			Basis			Income, net of			Accumulated			Stockholders’
	Stock		Stock		Value			Adjustment			tax			Deficit			Equity
Balance, March 31, 2006	$	291	$	234	$	389,616		$	(7,988	)	$	1,547		$	(245,034	)	$	138,666
Issuance costs		—		—		(9	)		—			—			—			(9	)
Issuance of common stock		1		—		—			—			—			—			1
Comprehensive loss:
Net income		—		—		—			—			—			652			652
Loss on derivative instruments		—		—		—			—			(1,108	)		—			(1,108	)

Total comprehensive loss																		(456	)
Dividends		—		—		—			—			—			(30,516	)		(30,516	)
Stock-based compensation		—		—		194			—			—			—			194

Balance, December 31, 2006	$	292	$	234	$	389,801		$	(7,988	)	$	439		$	(274,898	)	$	107,880

6See accompanying notes.

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~5

NOTESTable TOof CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED) Contents

1.COINMACH ~~Basis~~SERVICE ofCORP. ~~Presentation~~AND SUBSIDIARIES

~~The~~CONDENSED ~~condensed~~CONSOLIDATED ~~consolidated~~STATEMENTS ~~financial~~OF ~~statements~~CASH ~~of Coinmach Service Corp., a Delaware~~FLOWS ~~corporation~~ (~~“CSC”~~UNAUDITED)~~, include the accounts of all of its subsidiaries. CSC was incorporated on~~ ~~December 23,~~(in ~~2003~~thousands ~~as a wholly-owned subsidiary~~ of ~~Coinmach Holdings, LLC (“Holdings”~~dollars)~~. Holdings, a~~ ~~Delaware limited liability company, was formed on November 15, 2002. Unless otherwise specified~~ ~~herein, references to the “Company”, “we”, “our” shall mean Coinmach Service Corp. and its subsidiaries.~~

CSC had no operating activity from the date of its incorporation through November 24, 2004. Holdings and its other subsidiaries agreed to fund CSC’s ongoing operations through the date of its initial public offering of Income Deposit Securities (“IDSs”). The Board of Directors of CSC authorized the filing of a registration statement on Form S-1 with the Securities and Exchange Commission for the offering of IDSs (each IDS consisting of one share of Class A Common Stock, par value $0.01 per share, and an 11% senior secured note due 2024 in a principal amount of $6.14) and a contemporaneous offering of 11% senior secured notes due 2024 (together with the 11% senior secured notes underlying IDSs, the “11% senior secured notes”) separate and apart from the IDSs. Immediately following the offering and certain corporate reorganization transactions, Coinmach Laundry Corporation (“Coinmach Laundry”), a wholly owned subsidiary of Holdings, became a direct wholly owned subsidiary of CSC.


	Nine Months Ended
	December 31, 2006			December 31, 2005
OPERATING ACTIVITIES:
Net income (loss)	$	652		$	(5,929	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		55,886			56,887
Amortization of advance location payments		14,702			14,188
Amortization of intangibles		10,681			10,485
Deferred income taxes		384			(3,823	)
Amortization of deferred issue costs		595			1,603
Write-off of deferred financing costs		414			1,700
Premium on redemption of 11% senior secured notes due 2024		417			—
Gain on sale of equipment		(365	)		(46	)
Stock-based compensation		194			12
Change in operating assets and liabilities, net of businesses acquired:
Other assets		263			(567	)
Receivables, net		(804	)		391
Inventories and prepaid expenses		(4,426	)		529
Accounts payable and accrued expenses, net		5,461			2,739
Accrued interest		3,463			6,304

Net cash provided by operating activities		87,517			84,473


INVESTING ACTIVITIES:
Additions to property, equipment and leasehold improvements		(42,398	)		(43,431	)
Advance location payments to location owners		(10,775	)		(9,806	)
Acquisition of net assets related to acquisitions of businesses, net of cash acquired		(17,837	)		(3,436	)
Proceeds from sale of property and equipment		1,168			1,077

Net cash used in investing activities		(69,842	)		(55,596	)


FINANCING ACTIVITIES:
Repayments under credit facility		(1,725	)		(240,507	)
Proceeds from credit facility		—			230,000
Redemption of 11% senior secured notes due 2024		(5,649	)		—
Payment of premium on 11% senior secured notes due 2024		(417	)		—
Principal payments on capitalized lease obligations		(2,872	)		(3,652	)
Repayments from bank and other borrowings		(141	)		(183	)
Debt issuance costs		(9	)		(3,225	)
Cash dividends paid		(30,516	)		(11,696	)

Net cash used in financing activities		(41,329	)		(29,263	)

Net decrease in cash and cash equivalents		(23,654	)		(386	)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		62,008			57,271

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	38,354		$	56,885


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	37,301		$	38,309

Income taxes paid	$	199		$	930

NON CASH FINANCING ACTIVITIES:
Acquisition of fixed assets through capital leases	$	4,370		$	4,531

Transfer of assets held for sale to fixed assets	$	—		$	1,936

~~The~~See offerings and related transactions and use of proceeds therefrom are referred to herein collectively as the “IDS Transactions”. The corporate reorganization transactions were recorded by CSC at carryover basis. Accordingly, the accompanying ~~financial statements include the accounts of Coinmach Laundry and its subsidiaries as if they had been wholly-owned by CSC as of the beginning of the earliest period reported~~notes. ~~All significant intercompany accounts and transactions have been~~ ~~eliminated.~~

~~Coinmach Laundry and its wholly owned subsidiaries are providers of outsourced laundry~~6 equipment services for multi-family housing properties in North America. The Company’s core business (which the Company refers to as the “route” business) involves leasing laundry rooms from building owners and property management companies, installing and servicing laundry equipment, collecting revenues generated from laundry machines and operating 162 retail laundromats located throughout Texas and Arizona. Through Appliance Warehouse of America, Inc. (“AWA”), a Delaware corporation jointly-owned by the Company and Coinmach Corporation (“Coinmach”), a wholly-owned subsidiary of Coinmach Laundry, the Company rents laundry machines and other household appliances to property owners, managers of multi-family housing properties, and to a lesser extent, individuals and corporate relocation entities. Super Laundry Equipment Corp. (“Super Laundry”), a wholly-owned subsidiary of Coinmach, constructs, designs and retrofits laundromats and distributes laundromat equipment. In addition, Super Laundry, through its wholly-owned subsidiary American Laundry Franchising Corp. (“ALFC”), builds and develops laundromat facilities for sale as franchise locations.

7 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

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

1. Basis of Presentation ~~(continued)~~

AtThe ~~December 31,~~condensed ~~2004,~~consolidated financial statements include the ~~Company~~accounts ~~owned~~of Coinmach Service Corp., a Delaware corporation (“CSC”), and ~~operated~~all ~~approximately~~of ~~875~~its subsidiaries,~~000~~ ~~laundry~~including ~~machines~~Coinmach inCorporation, ~~approximately~~a 80Delaware corporation (“Coinmach”). All significant intercompany profits,~~000~~ ~~locations~~transactions ~~throughout~~and balances ~~North~~have ~~America~~been eliminated in consolidation. CSC was incorporated on December 23, 2003 as a wholly-owned subsidiary of Coinmach Holdings, LLC, a Delaware limited liability company (“Holdings”). Unless otherwise specified herein, references to the “Company,” “we,” “us” and “our” shall mean CSC and its subsidiaries.

~~The~~CSC ~~accompanying~~and ~~unaudited~~its ~~condensed~~wholly-owned ~~consolidated~~subsidiaries ~~financial~~are ~~statements~~providers of ~~the~~outsourced ~~Company~~laundry ~~have~~equipment services ~~been~~for ~~prepared~~multi-family inhousing ~~conformity~~properties ~~with~~in UNorth America.S. ~~generally~~The ~~accepted~~Company’s ~~accounting~~core ~~principles~~business (which the Company refers to as the “~~GAAP~~route” business) ~~for~~involves ~~interim financial~~leasing ~~reporting~~laundry ~~and~~rooms ~~pursuant~~from tobuilding ~~the~~owners ~~rules~~ and property ~~regulations~~management ofcompanies, ~~the~~installing ~~Securities~~and servicing laundry equipment and ~~Exchange~~collecting revenues ~~Commission~~generated from laundry machines. ~~Accordingly~~Through Appliance Warehouse of America, ~~such~~Inc., ~~financial~~a ~~statements~~Delaware corporation dojointly-owned ~~not~~by ~~include~~CSC ~~all~~and ofCoinmach (“AWA”), the ~~information~~Company rents laundry machines and other ~~footnotes~~household ~~required~~appliances byto ~~GAAP~~property ~~for~~owners, ~~complete~~managers ~~financial~~of ~~statements.~~multi-family ~~GAAP~~housing ~~requires~~properties, ~~the~~and ~~Company’s management~~ to ~~make~~a lesser ~~estimates~~extent, individuals and ~~assumptions~~corporate ~~that~~relocation ~~affect~~entities. ~~the~~Super ~~amounts~~Laundry ~~reported~~Equipment inCorp., ~~the~~a Delaware ~~financial~~corporation and a direct wholly-owned subsidiary of Coinmach (“Super Laundry”), ~~statements.~~constructs, ~~Actual~~designs ~~results~~and ~~could~~retrofits ~~differ~~laundromats ~~from~~and ~~such~~distributes ~~estimates~~laundromat equipment.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial ~~results~~reporting ~~presented~~and ~~herein~~pursuant ~~are~~to ~~not~~the ~~necessarily~~rules ~~indicative~~and regulations of the ~~results~~Securities toand beExchange ~~expected~~Commission ~~for~~(“SEC”). Accordingly, such financial statements do not include all of the ~~entire~~information and ~~year~~footnotes required by GAAP for complete financial statements. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from such estimates.

InThe ~~the~~interim ~~opinion~~results ofpresented ~~management~~herein ofare ~~the~~not ~~Company,~~necessarily ~~these~~indicative ~~unaudited condensed consolidated financial statements contain all adjustments~~ of ~~a normal recurring nature necessary for a fair presentation of~~ the ~~financial~~results ~~statements~~to ~~for the interim periods presented. These unaudited condensed consolidated financial statements should~~ be ~~read in conjunction with the audited consolidated~~ ~~financial~~expected ~~statements~~for ~~included in~~ the ~~Company’s~~entire ~~registration statement (the “Registration Statement”) on Form S-1 (No~~year. ~~333-114421), including the Prospectus contained therein, dated~~ ~~November 19, 2004. Certain amounts in the financial statements have been reclassified for presentation purposes.~~

~~During~~In ~~November 2004~~the ~~and~~opinion ~~December 2004, CSC completed its initial public offering~~ of ~~18,911,532~~ ~~IDSs~~management ~~(578,199~~ of ~~which were issued in connection with~~ the ~~exercise of an over-allotment option on December 21~~Company, ~~2004~~these ~~granted~~unaudited tocondensed ~~the~~consolidated ~~underwriters in such offering) at an offering price of~~financial ~~$13.64~~statements ~~per~~contain ~~IDS~~all ~~(which~~adjustments ~~included 18,911,532 underlying shares~~ of ~~Class A~~a ~~Common~~normal ~~Stock~~recurring ~~and approximately~~nature ~~$116.1 million~~necessary ~~aggregate~~for ~~principal amount of underlying 11% senior secured notes) and~~ a ~~concurrent~~fair ~~offering~~ presentation of ~~$20 million~~the ofconsolidated ~~11%~~financial ~~senior~~statements ~~secured~~for ~~notes~~the ~~which~~interim ~~were~~periods ~~sold~~presented. ~~separate~~These ~~and apart~~unaudited ~~from~~condensed ~~the~~consolidated ~~IDSs.~~financial ~~Immediately~~statements ~~following~~should ~~the~~be ~~offerings~~read ~~and~~in ~~certain~~conjunction ~~related~~with ~~corporate~~the ~~reorganization~~audited ~~transactions,~~consolidated ~~Holdings~~financial ~~exchanged~~statements ~~its~~included ~~remaining~~in ~~Coinmach~~the ~~Laundry~~Company’s ~~capital~~Annual ~~stock~~Report ~~and~~on ~~all~~Form of10-K ~~its~~for ~~shares~~the offiscal ~~common~~year ~~stock~~ended ~~of AWA to CSC for 24,980,445 shares of Class~~March ~~B Common Stock. Pursuant to these transactions~~31, ~~Class B Common Stock of CSC became controlled by Holdings~~2006.

~~Based~~The ~~on U.S. generally accepted accounting principles, the proceeds of the~~ IDS ~~offering~~Transactions and ~~the~~ ~~offering of the separate 11% senior secured notes were allocated to the shares of~~ Class A ~~common~~ ~~stock and the underlying 11% senior secured notes based on their respective relative fair values. The price paid for the IDSs was equivalent to the fair value of $7.50 per Class A~~ Common Stock ~~and $6.14 in a principal amount of a 11% senior secured note due 2024 underlying the IDS, and~~Offering ~~the fair value of the separate notes was equivalent to their face value.~~

8 On November 24, 2004, CSC completed its initial public offerings (collectively, the “IPO”) of (i) 18,911,532 Income Deposit Securities (“IDSs”) (each IDS consisting of one

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~7

NOTESTable TOof CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED) (continued) Contents

1.COINMACH ~~Basis~~SERVICE ofCORP. ~~Presentation~~AND ~~(continued)~~SUBSIDIARIES

~~Pursuant to~~NOTES ~~CSC~~TO ~~certificate~~CONDENSED ofCONSOLIDATED ~~incorporation,~~FINANCIAL STATEMENTS (iUNAUDITED) on ~~all matters for which a vote of CSC stockholders is required, each holder of shares of Class A Common Stock is entitled to one vote per share and~~ (iicontinued) ~~only Class A common stockholders may vote, as a single class, to amend provisions of~~ ~~our certificate of incorporation in a manner that adversely affects voting and dividend rights~~ which are exclusive to the Class A Common Stock and does not adversely affect the voting, dividend or redemption rights of the Class B Common Stock, and any such amendment will require the affirmative vote of the holders of a majority of such class.

Inshare ~~addition, on all matters for which a vote~~ of ~~CSC stockholders is required, each holder of~~ Class BA common ~~Common~~stock, ~~Stock~~par isvalue ~~initially~~$0.01 ~~entitled to two votes~~ per share. ~~However, if at any time Holdings and~~ (the ~~permitted transferees collectively own less than 25% in the aggregate of our then outstanding shares of~~ “Class A Common Stock”) and ~~Class B~~an ~~Common~~11% ~~Stock~~senior ~~(subject~~secured tonote due ~~adjustment~~2024 in ~~the event~~a ofprincipal ~~any~~amount ~~split, reclassification, combination or similar adjustments in shares~~ of ~~CSC common stock~~$6.14), ~~at such time,~~ and at(ii) ~~all~~$20.0 million ~~times~~aggregate ~~thereafter,~~principal ~~all~~amount ~~holders~~ of ~~Class B Common Stock shall only~~11% besenior ~~entitled~~secured tonotes ~~one~~due ~~vote~~2024 ~~per~~separate ~~share~~and onapart ~~all~~from ~~matters~~the ~~for~~IDSs ~~which~~(such anotes, ~~vote~~together ofwith ~~CSC~~the ~~stockholders is required.~~11% ~~The~~senior ~~dividend~~secured ~~and~~notes ~~redemption~~underlying ~~rights~~IDSs, ofthe ~~Class B~~“11% ~~common~~Senior ~~stockholders~~Secured ~~and~~Notes”). ~~their~~In ~~exclusive~~connection ~~right~~with tothe ~~vote~~IPO, on(i) Holdings became the ~~amendment~~sole ofholder ~~certain provisions~~ of ~~our~~all ~~certificate~~outstanding shares of ~~incorporation would not be affected by such event. Only~~ the Company’s Class B ~~stockholders may vote~~common stock, aspar avalue ~~single~~$0.01 ~~class,~~per toshare ~~amend provisions of our certificate of incorporation relating to~~ (~~i) an increase or decrease in~~ the ~~number of authorized shares of~~ Class B Common Stock”), orand (ii) ~~changes~~Coinmach ~~that affect voting~~Laundry Corporation, ~~dividend~~a orDelaware ~~redemption~~corporation ~~rights which~~(“CLC” ~~are~~or ~~exclusive~~“Laundry toCorp.”), ~~the Class B Common Stock~~ and doAWA ~~not~~became ~~adversely affect the dividend or voting~~wholly-owned ~~rights~~subsidiaries of ~~the Class A Common Stock~~CSC. ~~Any~~The ~~such~~IPO ~~amendment~~and ~~will~~the ~~require~~use ~~the~~of ~~affirmative~~proceeds ~~vote~~therefrom ofand the ~~holders~~ oftransactions arelated thereto ~~majority~~are ofreferred ~~all~~to ~~the~~herein ~~outstanding~~collectively ~~shares~~as ofthe ~~Class B~~“IDS ~~Common Stock~~Transactions.”

~~Payment of~~On ~~dividends~~February 8, on2006, ~~all~~CSC ~~classes~~completed ofa ~~CSC~~public ~~common~~offering ~~stock~~of ~~will~~12,312,633 ~~not~~shares beof ~~cumulative.~~Class A ~~Therefore,~~Common ~~prior~~Stock at a price to ~~paying~~the ~~any~~public ~~dividend~~of on$9.00 ~~our~~per share (the “Class A ~~Common~~Offering”). ~~Stock~~Net orproceeds from the Class BA ~~Common~~Offering ~~Stock~~were approximately $102.7 million. As a result of the Class A Offering, ~~CSC~~the Company ~~will~~incurred ~~not~~approximately be$8.2 million in issuance costs, including underwriting discounts and ~~required~~commissions, towhich ~~first~~was ~~pay~~recorded ~~any~~as ~~previously~~a ~~declared~~reduction ~~but~~of ~~not~~the ~~paid~~proceeds ~~dividend~~from onits sale of the Class A Common Stock. orIn addition to the issuance costs, CSC incurred certain expenses that were classified as ~~any~~transaction ~~previously~~costs ~~declared~~on ~~but~~the ~~not~~Consolidated Statements of Operations for the fiscal year ended March 31, 2006, which included (i) a premium (including an early tender payment of approximately $0.5 million) paid ~~dividend~~with onproceeds of the Class BA ~~Common~~Offering ~~Stock~~to redeem the 11% Senior Secured Notes of approximately $4.8 million, (ii) the write-off of a proportionate amount of unamortized deferred financing costs of approximately $3.4 million and (iii) certain direct expenses related to the Tender Offer (defined below) of approximately $1.0 million which included approximately $0.5 million relating to special bonuses.

~~CSC~~The ~~intends~~net toproceeds ~~pay~~of ~~dividends~~the ~~on its~~ Class A ~~Common Stock on each March 1~~Offering, ~~June 1,~~upon ~~September~~their ~~1 and~~distribution ~~December 1~~ to ~~holders~~CSC, ofwere ~~record~~used ~~as of the preceding February~~(i) ~~25,~~to purchase ~~May 25,~~approximately ~~August~~$48.4 25million ~~and~~aggregate ~~November 25,~~principal ~~respectively,~~amount inoutstanding ~~each~~of ~~case~~11% ~~with~~Senior ~~respect~~Secured Notes pursuant to the ~~immediately~~Tender ~~preceding~~Offer ~~fiscal~~further ~~quarter,~~described ~~except~~in ~~for such~~Note ~~dividends payable on March 1~~4, ~~2005,~~and ~~which~~related ~~will~~fees beand ~~payable for the period from November 24~~expenses, ~~2004~~ (~~the closing of the offering~~ii) to ~~December 31~~repurchase 2,199,413 ~~2004.~~shares ~~CSC~~of ~~also intends to pay dividends on its~~ Class BA Common Stock onowned ~~each~~by ~~June~~an 1affiliate ~~to holders~~ of ~~record~~GTCR as– ofCLC, LLC (the ~~preceding~~controlling ~~May 25~~equity ~~with~~investor ~~respect~~in ~~to the~~Holdings) ~~immediately~~at ~~preceding~~a ~~fiscal~~repurchase ~~year,~~price ~~subject~~of to$8.505 ~~certain~~per ~~limitations~~share ~~and exceptions with respect~~or toapproximately ~~such~~$18.7 million ~~dividends,~~in ifthe ~~any~~aggregate, ~~payable~~(iii) to onrepurchase ~~March~~ 1,605,995 ~~2005~~shares ~~and~~of ~~June~~Class 1,B Common ~~2006.~~Stock ~~The~~that ~~payment~~had ofbeen ~~dividends~~distributed ~~by CSC~~to onequity ~~its~~investors ~~common~~of ~~stock~~Holdings is(including ~~subject~~CSC toofficers ~~the~~and certain ~~sole~~directors) ~~discretion~~at ofa ~~the~~repurchase ~~Board~~price of ~~Directors~~$8.505 ofper ~~CSC,~~share ~~various limitations~~or ~~imposed~~approximately by$13.7 million in the aggregate ~~debt agreements of CSC~~ and ~~Coinmach,~~(iv) for ~~and~~general ~~applicable~~corporate ~~law~~purposes.

9 Subject to the satisfaction of certain conditions, the indenture governing the 11% Senior Secured Notes permits us to merge Laundry Corp. and Coinmach into CSC. We refer to such potential mergers collectively as the “Merger Event.” If we were to consummate the Merger Event in the future, CSC would become an operating company as well as the direct borrower under the Senior Credit Facility (as defined below) and sole owner of the capital stock of Coinmach’s subsidiaries. We are not currently contemplating completion of the Merger Event.

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~8

NOTESTable TOof CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED) (continued) Contents

1.COINMACH ~~Basis~~SERVICE ofCORP. ~~Presentation~~AND ~~(continued)~~SUBSIDIARIES

~~Interest~~NOTES onTO ~~the~~CONDENSED ~~11%~~CONSOLIDATED ~~senior~~FINANCIAL ~~secured notes accrues at the rate of 11% per annum and is payable~~STATEMENTS ~~quarterly, in arrears, in cash on each March 1, June 1, September 1 and December 1, commencing on March 1, 2005~~ (~~which payment will constitute interest accrued from November 24, 2004 through December 31, 2004~~UNAUDITED), ~~to the holders of record at the close of business on the February 25, May 25,~~(continued) ~~August 25 and November 25, respectively, immediately preceding the applicable interest payment~~ ~~date.~~

~~Proceeds from the offerings and related transactions, after approximately $14.3 million in~~Dividends underwriting discounts and commissions, were approximately $263.7 million. The net proceeds were, in part, used to (i) redeem a portion of the 9% senior notes in an aggregate principal amount of $125.5 million (plus approximately $4.5 million of accrued interest and approximately $11.3 million of related redemption premium), which notes were redeemed on December 24, 2004, (ii) repay approximately $15.5 million of outstanding term loans under Coinmach’s senior secured credit facility and (iii) redeem approximately $91.8 million of Coinmach Laundry’s outstanding Class A preferred stock (representing all of its outstanding Class A preferred stock) and approximately $7.4 million of Coinmach Laundry’s outstanding Class B preferred stock (representing a portion of the then outstanding Class B preferred stock).

AsPursuant ato ~~result~~CSC’s ofcurrent ~~the~~dividend ~~IDS transactions~~policy, ~~the~~CSC ~~Company~~intends ~~incurred~~to ~~approximately~~pay ~~$23.6 million~~dividends ~~in issuance~~on ~~costs~~its ~~including~~Class A ~~underwriting~~Common Stock ~~discounts~~on ~~and~~each ~~commissions~~March 1, ofJune 1, ~~which~~September ~~approximately~~1 ~~$12.5 million~~and ~~was~~December ~~recorded~~1 asto aholders ~~reduction~~of record as of the ~~proceeds~~preceding February 25, ~~from~~May 25, ~~the~~August 25 ~~sale~~and ofNovember 25, ~~the~~respectively, ~~equity~~in ~~component~~each ofcase with respect to the ~~IDS~~immediately ~~equity~~preceding ~~and~~fiscal ~~approximately $11~~quarter.~~1 million~~ ~~related~~CSC tocurrently ~~the~~intends ~~11%~~to ~~senior~~pay ~~secured~~annual ~~notes~~dividends ~~was~~on ~~capitalized~~its Class B asCommon ~~deferred~~Stock ~~financing~~on ~~costs~~each toJune be1 ~~amortized~~to ~~using~~holders ~~the~~of ~~effective~~record ~~interest~~as ~~method~~of ~~through~~the ~~November 24,~~preceding ~~2024.~~May 25 Inwith ~~addition~~respect to the immediately ~~issuance~~preceding ~~costs~~fiscal year, ~~the~~subject ~~Company~~to ~~paid~~certain ~~approximately~~limitations ~~$11.3 million~~and ofexceptions awith respect to ~~redemption~~such ~~premium~~dividends, onif ~~the~~any. ~~portion~~The payment of 9%dividends ~~senior~~by ~~notes~~CSC ~~redeemed~~on ~~and~~its ~~approximately~~common ~~$2.4 million~~stock is subject to the sole ~~amend~~discretion of the ~~Senior~~board ~~Secured~~of ~~Credit~~directors ~~Facility.~~of ~~The~~CSC, ~~issuance~~various ~~costs~~limitations ~~were~~imposed ~~allocated~~by ~~between~~the ~~equity~~certificate ~~and~~of ~~debt~~incorporation ~~based~~of onCSC, the ~~ratio~~terms of ~~the~~outstanding ~~respective~~indebtedness ~~relative~~of ~~fair~~CSC ~~values~~and Coinmach, and applicable law. Payment of ~~the~~dividends ~~components~~on all classes of ~~the~~CSC ~~IDSs issued~~common stock will not be cumulative.

102. Inventories

~~COINMACH~~ Inventory ~~SERVICE~~costs ~~CORP~~for the route business and AWA are determined principally by using the average cost method and are stated at the lower of cost or net realizable value. ~~AND~~Inventory ~~SUBSIDIARIES~~costs for Super Laundry are valued at the lower of cost (first-in, first-out). Machine repair parts inventory is valued using a formula based on total purchases and the annual inventory turnover. Inventory consists of the following (in thousands):

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


	December 31, 2006		March 31, 2006
Laundry equipment	$	10,806	$	7,884
Machine repair parts		3,839		3,574

	$	14,645	$	11,458

23. ~~Inventories~~Goodwill and Contract Rights

~~Inventories~~The ~~are~~Company ~~valued~~accounts atfor goodwill in accordance with the ~~lower~~provisions of ~~cost~~Statement of Financial Accounting Standards (~~first-in,~~“SFAS”) ~~first-out~~No. 142 (“SFAS 142”) “Goodwill and Other Intangible Assets”. SFAS 142 requires an annual impairment test of goodwill. Goodwill is further tested between annual tests if an event occurs or ~~market~~circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Based on present operating and strategic plans, management believes that there have not been any indications of impairment of goodwill. The fair value of the reporting units for these tests is based upon a discounted cash flow model. The Company has determined that its reporting units with goodwill consist of the route business, AWA ~~following~~and Super Laundry. Goodwill attributed to the route business, AWA and Super Laundry is as follows (in thousands):

	December 31,		March 31,
	2004		2004
Laundry equipment	$	8,728	$	7,973
Machine repair parts		3,353		3,535
	$	12,081	$	11,508

3.Table Goodwillof and Contract Rights Contents

~~The~~COINMACH ~~Company~~SERVICE ~~accounts for goodwill in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No~~CORP. ~~142~~ ~~(“SFAS~~AND ~~142”) “Goodwill and Other Intangible Assets.” SFAS~~SUBSIDIARIES 142 required an initial impairment assessment upon adoption on April 1, 2002, as well as an annual assessment thereafter. Goodwill is further tested between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. SFAS 142 requires a two-step process in evaluating goodwill. In performing the annual goodwill assessment, the first step requires comparing the fair value of the reporting unit to its carrying value. To the extent that the carrying value of the reporting unit exceeds the fair value, the Company would need to perform the second step in the impairment test to measure the amount of goodwill write-off. The fair value of the reporting units for these tests is based upon a discounted cash flow model. In step two, the fair value of the reporting unit is allocated to the reporting units’ assets and liabilities (a hypothetical purchase price allocation as if the reporting unit had been acquired on that date). The implied fair value of goodwill is calculated by deducting the allocated fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as determined in step one. The remaining fair value, after assigning fair value to all of the reporting units’ assets and liabilities, represents the implied fair value of goodwill for the reporting unit. If the implied fair value is less than the carrying value of goodwill, an impairment loss equal to the difference would be recognized. The Company has determined that its reporting units with goodwill consist of the route business, AWA and Super Laundry. Goodwill attributed to the route business, AWA and Super Laundry at December 31, 2004 is as follows (in thousands):

Route	$	195,026
Rental		6,837
Distribution		2,917
	$	204,780

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


	December 31, 2006		March 31, 2006
Route	$	197,015	$	195,026
Rental		8,564		8,253
Distribution		2,917		2,917

	$	208,496	$	206,196

~~COINMACH~~ The ~~SERVICE~~Company ~~CORP~~performed its annual assessment of goodwill as of January 1, 2006 and determined that no impairment existed. ~~AND~~There ~~SUBSIDIARIES~~can be no assurances that future goodwill impairment tests will not result in a charge to income.

~~NOTES~~ Contract TOrights ~~CONDENSED~~represent ~~CONSOLIDATED~~the ~~FINANCIAL~~value ~~STATEMENTS(UNAUDITED)~~of ~~(continued)~~location contracts arising from the acquisition of laundry machines on location. These amounts, which arose primarily from purchase price allocations pursuant to acquisitions, are amortized using accelerated methods over periods ranging from 30 to 35 years. The Company does not record contract rights relating to new locations signed in the ordinary course of business.

3. Amortization ~~Goodwill~~expense for contract rights for the remainder of the fiscal year ending March 31, 2007 and ~~Contract~~each ~~Rights~~of the next five years is estimated to be as follows (~~continued~~in millions of dollars):

The Company performed its annual assessment of goodwill as of January 1, 2004 and determined that no impairment existed. The annual impairment test for the 2005 fiscal year will be completed by the Company’s fiscal year end. There can be no assurances that future goodwill impairment tests will not result in a charge to income.


Years ending March 31,
2007 (remainder of year)	$	3.6
2008		13.6
2009		13.3
2010		12.9
2011		12.6
2012		12.3

~~Contract~~The ~~rights~~Company ~~represent~~assesses the ~~value~~recoverability of ~~location~~contract ~~contracts~~rights ~~arising~~in ~~from~~accordance with the ~~acquisition~~provisions of SFAS No. 144 (“SFAS 144”) “Accounting for the Impairment and Disposal of Long-Lived Assets.” ~~laundry~~The ~~machines~~Company onhas ~~location.~~twenty-eight ~~These~~geographic ~~amounts,~~regions to which ~~arose~~contract ~~primarily~~rights ~~from~~have ~~purchase~~been ~~price~~allocated. ~~allocations~~The ~~pursuant~~Company tohas ~~acquisitions,~~contracts ~~are~~at ~~amortized~~every ~~using~~location/property, ~~accelerated~~and ~~methods~~analyzes ~~over~~revenue ~~periods~~and ~~ranging~~certain ~~from~~direct ~~30-35~~costs on ~~years.~~a ~~The~~contract-by-contract basis, however, the Company does not ~~record~~allocate common region costs and servicing costs to contracts, therefore regions represent the lowest level of identifiable cash flows in grouping contract rights. ~~relating~~The toassessment ~~new~~includes ~~locations~~evaluating ~~signed~~the financial results/cash flows and certain statistical performance measures for each region in which the Company operates. ~~ordinary~~Factors ~~course~~that generally impact cash flows include commission rates paid to property owners, occupancy rates at properties, sensitivity to price increases, loss of ~~business~~existing machine base, and the regions general economic conditions. If as a result of this evaluation there are indicators of impairment that result in losses to the machine base, or an event occurs that would indicate that the carrying amounts may not be recoverable, the Company reevaluates the carrying value of contract rights based on future undiscounted cash

~~Amortization expense for contract rights for each of the next five years is estimated to be as~~10 ~~follows (in millions of dollars):~~

Years ending March 31,
2005 (remainder of year)	$	3.5
2006		13.5
2007		13.2
2008		12.9
2009		12.6

~~The~~COINMACH ~~Company~~SERVICE ~~assesses the recoverability of contract rights in accordance with the provisions of SFAS No~~CORP. ~~144~~ ~~(“SFAS~~AND ~~144”) “Accounting for the Impairment and Disposal of Long-Lived~~SUBSIDIARIES Assets.” The Company has twenty-eight geographic regions to which contract rights have been allocated. Although the Company has contracts at every location/property, and we analyze revenue and certain direct costs on a contract-by-contract basis, the Company does not allocate common region costs and servicing costs to each contract. Accordingly, such regions represent the lowest level of identifiable cash flows in grouping contract rights. The assessment includes evaluating the financial results/cash flows and certain statistical performance measures for each region in which the Company operates. Factors that generally impact cash flows include commission rates paid to property owners, occupancy rates at properties, sensitivity to price increases, loss of existing machine base, and the regions general economic conditions. If as a result of this evaluation there are indicators of impairment that result in losses to the machine base, or an event occurs that would indicate that the carrying amounts may not be recoverable, the Company reevaluates the carrying value of contract rights based on future undiscounted cash flows attributed to that region and records an impairment loss based on discounted cash flows if the carrying amount of the contract rights are not recoverable from undiscounted cash flows. Based on present operations and strategic plans, management believes that there have not been any indicators of impairment of contract rights.

12NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

~~COINMACH~~flows ~~SERVICE~~attributed ~~CORP~~to that region and records an impairment loss based on discounted cash flows if the carrying amount of the contract rights are not recoverable from undiscounted cash flows. ~~AND~~Based ~~SUBSIDIARIES~~on present operations and strategic plans, management believes that there have not been any indicators of impairment of contract rights or long lived assets.

~~NOTES~~ On TOApril 3, ~~CONDENSED~~2006, ~~CONSOLIDATED~~the ~~FINANCIAL~~Company ~~STATEMENTS(UNAUDITED)~~completed the acquisition of substantially all of the assets of American Sales, Inc. (~~continued~~“ASI”) for a purchase of $15.0 million, subject to the outcome of certain purchase price adjustments. Based on a preliminary price allocation, the Company allocated approximately $1.8 million to goodwill, approximately $9.7 million to contract rights and approximately $3.5 million to working capital assets.

4. For ~~Long-Term~~the ~~Debt~~nine month period ended December 31, 2006, the Company completed other acquisitions of route businesses for purchase prices aggregating approximately $3.3 million, of which the Company allocated approximately $0.3 to goodwill, approximately $2.1 million to contract rights and approximately $0.9 million to working capital assets.

4. Long-~~term~~Term ~~debt consists of the following (in thousands):~~Debt

	December 31,		March 31,
	2004		2004
9% Senior Notes due 2010	$	324,500	$	450,000
Credit facility indebtedness		240,507		260,337
IDS 11% senior secured notes		116,117		—
Third party 11% senior secured notes		20,000		—
Obligations under capital leases		7,283		6,762
Other long-term debt with varying terms and maturities		691		532
		709,098		717,631
Less current portion		5,920		9,149
	$	703,178	$	708,482

Long-term debt consists of the following (in thousands):

On January 25, 2002, Coinmach issued $450 million of 9% senior notes due 2010 (the “9% senior notes”) and entered into a $355 million senior secured credit facility (as amended, the “Senior Secured Credit Facility”) comprised of: (i) $280 million in aggregate principal amount of term loans and (ii) a revolving credit facility with a maximum borrowing limit of $75 million. The revolving credit portion of the Senior Secured Credit Facility provides up to $10 million of letter of credit financings and short term borrowings under a swing line facility of up to $7.5 million. The Senior Secured Credit Facility is secured by a first priority security interest in all of the Company’s real and personal property and is guaranteed by each of Coinmach’s domestic subsidiaries. In addition, Coinmach Laundry and Coinmach pledged to the Collateral Agent under the Senior Secured Credit Facility their interests in all of the issued and outstanding shares of capital stock of their respective domestic subsidiaries.


	December 31,		March 31,
	2006		2006
Credit facility indebtedness	$	567,700	$	569,425
11% Senior Secured Notes		82,067		87,716
Obligations under capital leases		8,219		6,721
Other long-term debt with varying terms and maturities		250		391

		658,236		664,253
Less current portion		5,601		11,151

	$	652,635	$	653,102

~~Transaction costs related to the IDS Transactions on the Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2004 represent (1) the $~~11~~.3 million redemption premium on the portion of 9~~% senior notes redeemed, (2) the write-off of the deferred financing costs relating to the 9% senior notes redeemed and term loans repaid aggregating approximately $3.5 million and (3) expenses relating to the Senior Secured ~~Credit Facility~~Notes ~~amendment aggregating approximately $2.4 million.~~

AsThe a11% ~~condition~~Senior toSecured ~~the~~Notes ~~consummation~~were ofissued ~~the~~on ~~initial~~November 24, ~~public~~2004 ~~offering~~and December 21, ~~Coinmach~~2004 ~~entered~~as ~~into~~part anof ~~amendment~~the toIPO. ~~the~~The 11% Senior Secured ~~Credit~~Notes, ~~Facility~~which are scheduled to mature on ~~November~~December 151, ~~2004~~2024, ~~with~~are senior ~~the~~secured ~~requisite~~obligations ~~lenders~~of the Company and are redeemable, at the Company’s option, in whole or ~~agents~~in ~~thereunder~~part, at any time or from time to ~~permit~~time, ~~consummation~~upon not less than 30 nor more than 60 days’ notice (i) prior to December 1, 2009, upon payment of a make-whole premium and (ii) on or after December 1, 2009, at the ~~IDS~~redemption ~~Transactions~~prices set forth in the indenture governing the 11% Senior Secured Notes plus accrued and unpaid interest thereon.

13 Interest on the 11% Senior Secured Notes is payable quarterly, in arrears, in cash on each March 1, June 1, September 1 and December 1, to the holders of record at the close of business on the February 25, May 25, August 25 and November 25, respectively, immediately preceding the applicable interest payment date.

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~11

NOTESTable TOof CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED) (continued) Contents

4.COINMACH ~~Long-Term~~SERVICE ~~Debt~~CORP. ~~(continued)~~AND SUBSIDIARIES

AtNOTES ~~December 31,~~TO ~~2004,~~CONDENSED ~~the~~CONSOLIDATED ~~Company~~FINANCIAL ~~had outstanding debt consisting of (a) approximately $324.5~~STATEMENTS ~~million of 9% senior notes,~~ (bUNAUDITED) ~~approximately~~ ~~$240.5 million of term loans with interest rates ranging from 5.31% to 5.44%,~~ (ccontinued) ~~approximately $116.1 million of 11% senior secured notes~~ ~~underlying IDSs and (d) $20.0 million of 11% senior secured notes not underlying IDSs. The term~~ loans under the Senior Secured Credit Facility are scheduled to be fully repaid by July 25, 2009. The 11% senior secured notes are due on December 1, 2024. As of December 31, 2004, the Company had no amounts outstanding under the revolver portion of the Senior Secured Credit Facility, which is scheduled to expire on January 25, 2008. Letters of credit outstanding at December 31, 2004 were approximately $6.4 million.

~~The~~On ~~11% senior secured notes are senior secured obligations of the Company and are redeemable~~February 8, at ~~the Company’s option~~2006, inCSC ~~whole~~completed oran inoffer ~~part, at any time or from time~~ to ~~time,~~purchase ~~upon~~for ~~not~~cash ~~less~~(the ~~than 30~~“Tender ~~nor more than 60 days’ notice (i~~Offer”) ~~prior~~ approximately ~~to December~~$48.4 1,million ~~2009,~~aggregate ~~upon~~principal ~~payment~~amount of aits ~~make-whole premium~~outstanding ~~and (ii) on or after December 1, 2009, at the redemption prices set forth in the indenture governing the~~ 11% ~~senior~~Senior ~~secured~~Secured ~~notes plus accrued and unpaid interest thereon~~Notes. The ~~11%~~total ~~senior secured~~aggregate ~~notes~~amount ~~are~~paid ~~secured~~ by athe ~~first-priority~~Company ~~perfected~~for ~~lien,~~the ~~subject~~11% toSenior ~~certain~~Secured ~~permitted~~Notes ~~liens, on~~tendered ~~substantially~~in ~~all of~~ the Tender ~~Company’s~~Offer ~~existing~~was ~~and~~approximately ~~future assets~~$55.1 million, including ~~the~~a ~~common~~premium ~~stock~~ of ~~AWA,~~ ~~the~~approximately ~~capital~~$4.8 million ~~stock of Coinmach Laundry~~ and accrued ~~the intercompany note~~ and ~~related~~unpaid ~~guaranty.~~interest ~~The~~thereon ~~11% senior~~of ~~secured~~approximately ~~notes are guaranteed on a senior secured basis by Coinmach Laundry~~$1.8 million.

The ~~indenture~~Company ~~governing~~recorded ~~the~~a ~~11%~~charge ~~senior~~to ~~secured~~operations ~~notes contains a number~~ of ~~restrictive covenants~~approximately ~~and~~$9.3 million ~~agreements~~in ~~applicable to us and~~ the ~~Company’s~~fiscal quarter ~~restricted~~ended ~~subsidiaries~~March 31, ~~including covenants~~2006, ~~with~~consisting ~~respect~~of ~~to the following matters:~~ (i) ~~limitation~~a ~~on additional indebtedness; (ii)~~premium ~~limitation on certain payments~~ (inincluding ~~the~~an ~~form~~early oftender ~~the declaration or~~ payment of ~~certain dividends or~~ ~~distributions~~approximately on$0.5 million) ~~the~~paid ~~Company’s~~to ~~capital~~redeem ~~stock,~~such ~~the~~11% ~~purchase,~~Senior ~~redemption~~Secured orNotes ~~other acquisition~~ of ~~any of~~approximately ~~the Company’s capital stock~~$4.8 million, ~~the voluntary prepayment of subordinated indebtedness, and certain investments);~~ (~~iii~~ii) ~~limitation~~the onwrite-off ~~transactions~~of ~~with~~a ~~affiliates;~~proportionate ~~(iv) limitation~~amount ~~on liens; (v) limitation on sales~~ of ~~assets;~~unamortized ~~(vi) limitation~~deferred onfinancing ~~the~~costs ~~issuance~~ of ~~preferred stock by non-guarantor~~ ~~subsidiaries;~~approximately ~~(vii)~~$3.4 ~~limitation~~million ~~on conduct of business; (viii) limitation on dividends~~ and ~~other payment restrictions affecting subsidiaries;~~ (ixiii) ~~limitations~~certain ondirect ~~exercising~~expenses ~~Class B~~related ~~Common~~to ~~Stock redemption~~the ~~rights~~Tender ~~and~~Offer ~~consummating purchases~~ of approximately ~~Class~~$1.0 Bmillion ~~Common~~which ~~Stock~~included ~~upon~~approximately ~~exercise of sales rights by holders; and (x)~~$0.5 ~~limitation~~million onrelating ~~consolidations,~~to ~~mergers~~special ~~and sales of substantially all of the Company’s assets~~bonuses.

InOn ~~addition~~April 28, to2006, ~~certain~~the ~~customary~~Company ~~terms~~purchased ~~and~~approximately ~~provisions,~~$5.6 million ~~including~~aggregate ~~events~~principal amount of ~~default~~its ~~and customary~~outstanding ~~representations,~~11% ~~covenants~~Senior ~~and~~Secured ~~agreements,~~Notes ~~the~~in ~~Senior~~open ~~Secured~~market ~~Credit~~purchases. ~~Facility~~The ~~contains certain~~total ~~restrictive~~aggregate ~~covenants~~amount paid ~~including,~~by ~~but~~the ~~not~~Company ~~limited~~in order to, apurchase ~~maximum~~the ~~leverage~~11% ~~ratio,~~Senior aSecured ~~minimum consolidated~~Notes ~~earnings~~was ~~before~~approximately ~~interest~~$6.3 million, ~~taxes,~~including ~~depreciation~~accrued and ~~amortization~~unpaid ~~coverage~~interest ~~ratio~~thereon. ~~and limitations~~The onCompany ~~indebtedness,~~recorded ~~capital~~a ~~expenditures,~~charge ~~advances,~~to operations ~~investments~~of ~~and~~approximately ~~loans,~~$0.8 million ~~mergers~~in ~~and acquisitions~~the quarter ended June 30, ~~dividends~~2006, ~~stock~~which ~~issuances~~represents ~~and~~the premium ~~transactions~~paid ~~with~~to ~~affiliates.~~purchase ~~Also,~~such ~~the~~11% ~~indenture governing~~Senior ~~the~~Secured 9%Notes ~~senior~~of ~~notes~~approximately $0.4 million and the write-off ~~Senior~~of ~~Secured~~a ~~Credit~~proportionate ~~Facility~~amount ~~limit~~of inunamortized ~~certain~~deferred financing costs of approximately $0.4 million.

14 At December 31, 2006, there was approximately $82.1 million aggregate principal amount of 11% Senior Secured Notes outstanding.

~~COINMACH~~ At ~~SERVICE~~December 31, ~~CORP.~~2006, ~~AND~~the ~~SUBSIDIARIES~~Company was in compliance with the covenants under the indenture governing the 11% Senior Secured Notes and was not aware of any events of default pursuant to the terms of such indebtedness.

~~NOTES~~Senior TOCredit ~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED) (continued)~~Facility

~~respects~~ The Company’s senior credit facility (the ~~ability~~“Senior ofCredit ~~Coinmach~~Facility”) tois ~~pay~~comprised ~~dividends~~of a $570.0 million Atterm ~~December~~loan facility and a $75.0 ~~31,~~million ~~2004,~~revolving ~~the~~credit ~~Company~~facility ~~was~~(subject into outstanding ~~compliance~~letters ~~with~~of ~~the~~credit). ~~covenants~~The ~~under~~revolver ~~the~~portion ~~indenture~~of ~~governing~~ the ~~11%~~Senior ~~senior~~Credit ~~secured~~Facility ~~notes~~also ~~and~~provides ~~with~~a $15.0 ~~the~~million ~~covenants~~letter ~~under~~of ~~the~~credit ~~indenture~~facility ~~governing~~and ~~the~~short-term 9%borrowings ~~senior~~under ~~notes~~a ~~and~~swing ~~the~~line ~~Senior~~facility ~~Secured~~of ~~Credit~~up to ~~Facility~~$7.5 million.

OnThe ~~September 23,~~revolving ~~2002,~~loans ~~Coinmach~~accrue ~~entered into three separate~~ interest, ~~rate~~at ~~swap~~Coinmach’s ~~agreements totaling~~option, ~~$150 million~~at ~~in aggregate notional amount that effectively convert~~ a ~~portion of its floating-~~rate ~~term~~per ~~loans~~annum ~~pursuant~~equal to the base ~~Senior~~rate ~~Secured~~plus ~~Credit Facility to~~ a ~~fixed~~margin ~~rate~~of ~~basis~~2.00% ~~thus reducing~~or the ~~impact~~Eurodollar ~~of interest~~ rate ~~changes~~plus ~~on future interest expense~~3.00%, ~~The~~subject ~~three~~in ~~swap~~each ~~agreements consist~~case ~~of: (i) a $50 million notional amount interest rate swap transaction with a financial~~to ~~institution~~performance ~~effectively~~based ~~fixing~~adjustments. ~~the~~The ~~three-month~~term ~~LIBOR~~loans accrue interest, ~~rate (as determined therein)~~ at ~~2.91% and~~Coinmach’s ~~expiring on February 1~~option, ~~2006,~~at ~~(ii)~~ a ~~$50 million notional amount interest~~ rate ~~swap transaction~~per ~~with~~annum aequal ~~financial~~to ~~institution effectively fixing~~ the ~~three-month~~base ~~LIBOR interest~~ rate ~~(as~~plus ~~determined therein)~~a atmargin ~~2.91%~~of ~~and expiring on February~~ 1~~, 2006 and (iii) a $~~.50 ~~million~~% ~~notional~~or ~~amount interest rate swap transaction with a financial institution effectively fixing~~ the ~~three-month LIBOR~~Eurodollar ~~interest~~ rate ~~(as~~plus ~~determined therein) at~~ 2.9050% ~~and expiring on February 1~~, ~~2006.~~subject ~~These~~in ~~interest~~each ~~rate~~case ~~swaps used~~ to ~~hedge~~performance ~~the~~based ~~variability of forecasted cash flows attributable to interest rate risk were designated as cash flow hedges~~adjustments. The ~~Company~~term ~~recognized~~loans ~~accumulated~~are ~~other comprehensive~~scheduled ~~income in the stockholders’ equity section included in the condensed consolidated balance sheet at December 31, 2004 relating~~ to ~~the~~be ~~interest rate swaps that qualify as cash flow~~fully ~~hedges.~~

~~5. Guarantor Subsidiaries~~12

CoinmachTable Laundry has guaranteed the 11% senior secured notes referred to in Note 4. The Company has not included separate financial statements of Coinmach Laundry because Coinmach Laundry is wholly-owned by the Company, its guarantee is full and unconditional and no other subsidiary of CSC guarantees the 11% senior secured notes. Accordingly, CSC’s financial statements include, in a footnote, condensed consolidating financial information for CSC, Coinmach Laundry and CSC’s other indirect subsidiaries. In addition, Coinmach’s domestic subsidiaries have guaranteed Coinmach’s 9% senior notes and Senior Secured Credit Facility also referred to in Note 4. Contents

~~Condensed~~COINMACH ~~consolidating~~SERVICE ~~financial~~CORP. ~~information~~AND ~~for the Company and Coinmach Laundry is as~~SUBSIDIARIES ~~follows (in thousands):~~

15NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

~~COINMACH~~repaid ~~SERVICE~~by December 19, ~~CORP~~2012, and the revolving credit facility is scheduled to expire on December 19, 2010. At ~~AND~~December 31, ~~SUBSIDIARIES~~2006, the monthly variable Eurodollar rate was 5.375%.

~~NOTES~~ As a TOresult ~~CONDENSED~~of ~~CONSOLIDATED~~the ~~FINANCIAL~~debt ~~STATEMENTS(UNAUDITED)~~refinancing ~~(continued)~~in December 2005, Coinmach incurred approximately $3.1 million in issuance costs related to the Senior Credit Facility, which were capitalized as deferred financing costs to be amortized using the effective interest method through December 19, 2012.

~~Condensed~~ At ~~Consolidating~~December 31, ~~Balance~~2006, ~~Sheets~~the $567.7 million of term loan borrowings under the Senior Credit Facility had an interest rate of approximately 7.875% and the amount available under the revolving credit portion of the Senior Credit Facility was approximately $68.2 million. Letters of credit under the revolver portion of the Senior Credit Facility outstanding at December 31, 2006 were approximately $6.8 million.

	December 31, 2004
							Coinmach
	Coinmach			Coinmach			Corporation			Adjustments
	Service			Laundry			and			and
	Corp.			Corporation			Subsidiaries			Eliminations			Consolidated
Assets
Current assets, consisting of cash, receivables, inventory, assets held for sale, prepaid expenses and other current assets	$	1,895		$	—		$	84,144		$	(905	)	$	85,134
Advance location payments		—			—			72,219			—			72,219
Property, equipment and leasehold improvements, net		—			—			270,935			—			270,935
Intangible assets, net		—			—			517,887			—			517,887
Deferred income taxes		1,274			2,113			—			(3,387	)		—
Intercompany loans and advances		191,425			49,580			23,183			(264,188	)		—
Investment in subsidiaries		(32,243	)		101,154			(26,608	)		(42,303	)		—
Investment in preferred stock		—			—			18,004			(18,004	)		—
Other assets		92,746			206			9,296			(81,876	)		20,372
Total assets	$	255,097		$	153,053		$	969,060		$	(410,663	)	$	966,547
Liabilities and Stockholders’ Equity
(Deficit)
Current liabilities:
Accounts payable and accrued expenses	$	3,062		$	—		$	76,514		$	(1,111	)	$	78,465
Current portion of long-term debt		—			—			5,920			—			5,920
Total current liabilities		3,062			—			82,434			(1,111	)		84,385
Deferred income taxes		—			—			68,558			(3,387	)		65,171
Long-term debt, less current portion		136,117			—			590,244			(23,183	)		703,178
Loan Payable to Parent		—			—			81,670			(81,670	)		—
Due to parent/subsidiary		—			184,936			51,884			(236,820	)		—
Preferred stock and dividends payable- AWA		—			—			18,004			(18,004	)		—
Total stockholders’ equity (deficit)		115,918			(31,883	)		76,266			(46,488	)		113,813
Total liabilities and stockholders’ equity (deficit)	$	255,097		$	153,053		$	969,060		$	(410,663	)	$	966,547

At December 31, 2006, Coinmach was in compliance with the covenants under the Senior Credit Facility and was not aware of any events of default pursuant to the terms of such indebtedness.

16Intercompany Loan

~~COINMACH~~ Pursuant ~~SERVICE~~to ~~CORP~~the indenture governing the 11% Senior Secured Notes, CSC used a portion of the proceeds from each of the IPO and the Class A Offering to make an intercompany loan (the “Intercompany Loan”) to Coinmach, which is eliminated in consolidation. ~~AND~~The ~~SUBSIDIARIES~~Intercompany Loan is represented by an intercompany note from Coinmach for the benefit of CSC (the “Intercompany Note”). As of December 31, 2006, the principal amount of indebtedness represented by the Intercompany Note was $183.6 million. Interest under the Intercompany Loan accrues at an annual rate of 10.95% and is payable quarterly on March 1, June 1, September 1 and December 1 of each year and the Intercompany Loan is due and payable in full on December 1, 2024. The Intercompany Loan and the guaranty of the Intercompany Loan by certain subsidiaries of the Company were pledged by CSC to secure the repayment of the 11% Senior Secured Notes.

~~NOTES~~ At TODecember 31, ~~CONDENSED~~2006, ~~CONSOLIDATED~~Coinmach ~~FINANCIAL~~was ~~STATEMENTS(UNAUDITED)~~in ~~(continued)~~compliance with the covenants under the Intercompany Loan and was not aware of any events of default pursuant to the terms of such indebtedness.

5.Interest ~~Guarantor~~Rate ~~Subsidiaries (continued)~~Swaps

~~Condensed~~ On ~~Consolidating~~November 17, ~~Balance~~2005, ~~Sheets~~Coinmach entered into two separate interest rate swap agreements, effective February 1, 2006, totaling $230.0 million in aggregate notional amount that effectively convert a portion of its floating-rate term loans pursuant to the Senior Credit Facility to a fixed rate basis, thereby reducing the impact of interest rate changes on future interest expense. The two swap agreements consist of: (~~continued~~i) a $115.0 million notional amount interest rate swap transaction with a financial institution effectively fixing the three-month LIBOR interest rate (as determined therein) at 4.90% and expiring on November 1, 2010, and (ii) a $115.0 million notional amount interest rate swap transaction with a financial institution

	March 31, 2004
				Coinmach
	Coinmach			Corporation			Adjustments
	Laundry			and			and
	Corporation			Subsidiaries			Eliminations			Consolidated
Assets
Current assets, consisting of cash, receivables, inventory, assets held for sale, prepaid expenses and other current assets	$	—		$	58,966		$	—		$	58,966
Advance location payments		—			73,253			—			73,253
Property, equipment and leasehold improvements, net		—			283,688			—			283,688
Deferred income taxes		1,974			—			(1,974	)		—
Intangible assets, net		—			527,932			—			527,932
Intercompany loans and advances		50,036			21,822			(71,858	)		—
Investment in subsidiaries		43,757			(27,460	)		(16,297	)		—
Investment in preferred stock		—			16,777			(16,777	)		—
Other assets		528			15,670			(529	)		15,669
Total assets	$	96,295		$	970,648		$	(107,435	)	$	959,508
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable and accrued expenses	$	—		$	72,336		$	(529	)	$	71,807
Current portion of long-term debt		—			9,149			—			9,149
Total current liabilities		—			81,485			(529	)		80,956
Deferred income taxes		—			75,749			(1,974	)		73,775
Long-term debt, less current portion		—			730,304			(21,822	)		708,482
Preferred stock and dividends payable – Coinmach Laundry		265,914			—			—			265,914
Due to Parent		—			50,036			(50,036	)		—
Preferred stock and dividends payable – AWA		—			16,777			(16,777	)		—
Total stockholders’ (deficit) equity		(169,619	)		16,297			(16,297	)		(169,619	)
Total liabilities and stockholders’ (deficit) equity	$	96,295		$	970,648		$	(107,435	)	$	959,508

17 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

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

5.effectively ~~Guarantor~~fixing ~~Subsidiaries~~the three-month LIBOR interest rate (~~continued~~as determined therein) at 4.89% and expiring on November 1, 2010. These interest rate swaps used to hedge the variability of forecasted cash flows attributable to interest rate risk were designated as cash flow hedges. The Company recognized accumulated other comprehensive loss of approximately $1.1 million, net of tax, in the stockholders’ equity section for the nine months ended December 31, 2006, relating to the interest rate swaps that qualify as cash flow hedges.

~~Condensed~~5. ~~Consolidating~~Guarantor ~~Statements of Operations~~Subsidiaries

	Three Months Ended December 31, 2004
							Coinmach
	Coinmach			Coinmach			Corporation
	Service			Laundry			and
	Corp.			Corporation			Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	135,627		$	—		$	135,627
Costs and expenses		111			126			122,072			—			122,309
Operating (loss) income		(111	)		(126	)		13,555			—			13,318
Transaction costs		—			—			17,135			—			17,135
Interest expense, net		644			4,862			15,078			—			20,584
		(755	)		(4,988	)		(18,658	)		—			(24,401	)
Income taxes		(1,274	)		(185	)		(6,641	)		—			(8,100	)
		519			(4,803	)		(12,017	)		—			(16,301	)
Equity in loss (income) 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	)

CLC has guaranteed the 11% Senior Secured Notes referred to in Note 4 on a full and unconditional basis. The 11% Senior Secured Notes are not currently guaranteed by any other subsidiary. Other subsidiaries, including Coinmach, are required to guarantee the 11% Senior Secured Notes on a senior unsecured basis upon the occurrence of certain events. The condensed consolidating balance sheets, the condensed consolidating statements of operations and the condensed consolidating statements of cash flows include the condensed consolidating financial information for CSC, CLC and CSC’s other indirect subsidiaries.

	Three Months Ended December 31, 2003
				Coinmach
	Coinmach			Corporation
	Laundry			and
	Corporation			Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	135,740		$	—		$	135,740
Costs and expenses		193			122,836			—			123,029
Operating (loss) income		(193	)		12,904			—			12,711
Interest expense, net		6,292			14,424			—			20,716
		(6,485	)		(1,520	)		—			(8,005	)
Income taxes		(62	)		(583	)		—			(645	)
		(6,423	)		(937	)		—			(7,360	)
Equity in loss of subsidiaries		937			995			(1,932	)		—
		(7,360	)		(1,932	)		1,932			(7,360	)
Dividend income		—			(364	)		364			—
Net loss	$	(7,360	)	$	(1,568	)	$	1,568		$	(7,360	)

18 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

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

5. Condensed ~~Guarantor~~consolidating ~~Subsidiaries~~financial information for the Company and CLC is as follows (~~continued~~in thousands):

Condensed Consolidating ~~Statements~~Balance ~~of Operations (continued)~~Sheets

	Nine Months Ended December 31, 2004
	December 31, 2006
							Coinmach
	Coinmach			Coinmach			Corporation			Adjustments
	Service			Laundry			~~and~~And			and
	Corp.			Corporation			Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	402,076		$	—		$	402,076
Assets
Costs and expenses		111			376			364,851			—			365,338
Current assets, consisting of cash, receivables, inventories, prepaid expenses and other current assets	$	944		$	—		$	67,413		$	(73	)	$	68,284
Operating (loss) income		(111	)		(376	)		37,225			—			36,738
Advance location payments		—			—			64,527			—			64,527
Transaction costs		—			—			17,135			—			17,135
Property, equipment and leasehold improvements, net		—			—			245,396			—			245,396
Interest expense, net		644			18,230			43,703			—			62,577
Intangible assets, net		—			—			506,844			—			506,844
		(755	)		(18,606	)		(23,613	)		—			(42,974	)
Deferred income taxes		—			815			—			(815	)		—
Income taxes		(1,274	)		(175	)		(8,572	)		—			(10,021	)
Intercompany loans and advances		(9,295	)		—			—			9,295			—
		519			(18,431	)		(15,041	)		—			(32,953	)
Due from Parent		—			48,977			—			(48,977	)		—
Equity in loss of subsidiaries		33,472			15,041			(851	)		(47,662	)		—
Investment in subsidiaries		(166,235	)		(50,738	)		—			216,973			—
		(32,953	)		(33,472	)		(14,190	)		47,662			(32,953	)
Investment in preferred stock		164,826			—			—			(164,826	)		—
Dividend income		—			—			(1,227	)		1,227			—
Other assets		194,906			—			3,486			(188,651	)		9,741
Net loss income	$	(32,953	)	$	(33,472	)	$	(12,963	)	$	46,435		$	(32,953	)
Total assets	$	185,146		$	(946	)	$	887,666		$	(177,074	)	$	894,792
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable, accrued expenses and accrued rental payments	$	3,025		$	73		$	80,943		$	(5,160	)	$	78,881
Current portion of long-term debt		—			—			5,601			—			5,601
Total current liabilities		3,025			73			86,544			(5,160	)		84,482
Deferred income taxes		(7,436	)		—			58,046			(815	)		49,795
Long-term debt, less current portion		82,067			—			570,568			—			652,635
Loan payable to parent		—			—			183,564			(183,564	)		—
Due to parent/subsidiary		—			—			39,682			(39,682	)		—
Preferred stock and dividends payable		—			164,826			—			(164,826	)		—
Total stockholders’ equity (deficit)		107,490			(165,845	)		(50,738	)		216,973			107,880
Total liabilities and stockholders’ equity (deficit)	$	185,146		$	(946	)	$	887,666		$	(177,074	)	$	894,792

	Nine Months Ended December 31, 2003
				Coinmach
	Coinmach			Corporation
	Laundry			and
	Corporation			Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	398,208		$	—		$	398,208
Costs and expenses		704			361,394			—			362,098
Operating (loss) income		(704	)		36,814			—			36,110
Interest expense, net		18,324			43,132			—			61,456
		(19,028	)		(6,318	)		—			(25,346	)
Income taxes		(213	)		(1,857	)		—			(2,070	)
		(18,815	)		(4,461	)		—			(23,276	)
Equity in loss of subsidiaries		4,461			1,020			(5,481	)		—
		(23,276	)		(5,481	)		5,481			(23,276	)
Dividend income		—			(1,236	)		1,236			—
Net loss	$	(23,276	)	$	(4,245	)	$	4,245		$	(23,276	)

19 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

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

5.Condensed ~~Guarantor~~Consolidating ~~Subsidiaries~~Balance Sheets (continued)

Condensed Consolidating Statements of Cash Flows


	March 31, 2006
							Coinmach
				Coinmach			Corporation			Adjustments
	Coinmach			Laundry			and			and
	Service Corp.			Corporation			Subsidiaries			Eliminations			Consolidated
Assets
Current assets, consisting of cash, receivables, inventories, prepaid expenses and other current assets	$	940		$	—		$	87,002		$	(55	)	$	87,887
Advance location payments		—			—			67,242			—			67,242
Property, equipment and leasehold Improvements, net		—			—			252,398			—			252,398
Intangible assets, net		—			—			503,108			—			503,108
Deferred income taxes		9,471			689			—			(10,160	)		—
Intercompany loans and advances		(311	)		—			—			311			—
Due from Parent		—			49,253			—			(49,253	)		—
Investment in subsidiaries		(152,462	)		(23,762	)		—			176,224			—
Investment in preferred stock		178,216			—			—			(178,216	)		—
Other assets		194,334			—			4,602			(187,405	)		11,531

Total assets	$	230,188		$	26,180		$	914,352		$	(248,554	)	$	922,166


Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable, accrued expenses and accrued rental payments	$	4,196		$	36		$	68,927		$	(3,896	)	$	69,263
Current portion of long-term debt		5,649			—			5,502			—			11,151

Total current liabilities		9,845			36			74,429			(3,896	)		80,414
Deferred income taxes		—			—			60,144			(10,160	)		49,984
Long-term debt, less current portion		82,067			—			571,035			—			653,102
Loan payable to parent		—			—			183,564			(183,564	)		—
Due to parent/subsidiary		—			—			48,942			(48,942	)		—
Preferred stock and dividends payable		—			178,216			—			(178,216	)		—
Total stockholders’ equity (deficit)		138,276			(152,072	)		(23,762	)		176,224			138,666

Total liabilities and stockholders’ equity (deficit)	$	230,188		$	26,180		$	914,352		$	(248,554	)	$	922,166

	Nine Months Ended December 31, 2004
							Coinmach
	Coinmach			Coinmach			Corporation
	Service			Laundry			and
	Corp.			Corporation			Subsidiaries			Eliminations			Consolidated
Operating Activities
Net income (loss) income	$	519		$	(18,431	)	$	(12,963	)	$	(2,078	)	$	(32,953	)
Noncash adjustments		(1,221	)		18,147			89,944			—			106,870
Change in operating assets and liabilities		2,473			(8	)		6,733			—			9,198
Net cash (used in) provided by operating activities		1,771			(292	)		83,714			(2,078	)		83,115
Investing Activities
Investment in and advances to subsidiaries		—			—			(2,078	)		2,078			—
Capital expenditures		—			—			(54,269	)		—			(54,269	)
Acquisition of assets		—			—			(613	)		—			(613	)
Proceeds from sale of investment		—			—			277			—			277
Proceeds from sale of property and equipment		—			—			653			—			653
Net cash used in investing activities		—			—			(56,030	)		2,078			(53,952	)
Financing Activities
Repayment of debt		—			—			(145,330	)		—			(145,330	)
Other financing items		(753	)		292			59,583			81,670			140,792
Loan 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			—			24,625
Cash and cash equivalents, beginning of period		—			—			31,620			—			31,620
Cash and cash equivalents, end of period	$	1,018		$	—		$	55,227		$	—		$	56,245

20 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

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

5.Condensed ~~Guarantor~~Consolidating ~~Subsidiaries~~Statements ~~(continued)~~of Operations

Condensed Consolidating Statements of Cash Flows (continued)


	Three Months Ended December 31, 2006
							Coinmach
	Coinmach			Coinmach			Corporation
	Service			Laundry			and
	Corp.			Corporation			Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	140,971		$	—		$	140,971
Costs and expenses		529			104			124,533			—			125,166

Operating (loss) income		(529	)		(104	)		16,438			—			15,805
Interest (income) expense, net		(5,996	)		3,316			16,679			—			13,999

Income (loss) before taxes		5,467			(3,420	)		(241	)		—			1,806
Income tax provision (benefit)		879			(42	)		(109	)		—			946

		4,588			(3,378	)		(350	)		—			860

Equity in loss (income) of Subsidiaries		3,728			350			—			(4,078	)		—

Net income (loss)	$	860		$	(3,728	)	$	(350	)	$	4,078		$	860

	Nine Months Ended December 31, 2003
	Three Months Ended December 31, 2005
				~~Coinmach~~			Coinmach
	Coinmach			~~Corporation~~Coinmach			Corporation
	Laundry			and
	Service			Laundry			and
	Corporation			Subsidiaries			Eliminations			Consolidated
	Corp.			Corporation			Subsidiaries			Eliminations			Consolidated
Operating Activities
Revenues	$	—		$	—		$	138,744		$	—		$	138,744
Net loss	$	(18,815	)	$	(4,245	)	$	(216	)	$	(23,276	)
Costs and expenses		859			106			123,929			—			124,894
Noncash adjustments		17,491			79,507			—			96,998
Operating (loss) income		(859	)		(106	)		14,815			—			13,850
Change in operating assets and liabilities		927			6,578			—			7,505
Interest (income) expense – non cash preferred stock dividend		(3,663	)		3,663			—			—			—
Net cash (used in) provided by operating activities		(397	)		81,840			(216	)		81,227
Interest expense, net		1,641			—			13,929			—			15,570
Investing Activities
Transaction costs		206			—			2,414			—			2,620
Investment in and advances to subsidiaries		—			(216	)		216			—
Income (loss) before taxes		957			(3,769	)		(1,528	)		—			(4,340	)
Capital expenditures		—			(66,534	)		—			(66,534	)
Income tax provision (benefit)		431			(1,539	)		(566	)		—			(1,674	)
Acquisition of assets		—			(3,423	)		—			(3,423	)
		526			(2,230	)		(962	)		—			(2,666	)
Proceeds from sale of investment		—			1,022			—			1,022
Equity in loss (income) of subsidiaries		3,192			962			—			(4,154	)		—
Proceeds from sale of property and equipment		—			334			—			334
Net loss	$	(2,666	)	$	(3,192	)	$	(962	)	$	4,154		$	(2,666	)
Net cash used in investing activities		—			(68,817	)		216			(68,601	)
Financing Activities
Other financing items		397			(2,940	)		—			(2,543	)
Net cash provided by (used in) financing activities		397			(2,940	)		—			(2,543	)
Net increase in cash and cash equivalents		—			10,083			—			10,083
Cash and cash equivalents, beginning of period		—			27,428			—			27,428
Cash and cash equivalents, end of period	$	—		$	37,511		$	—		$	37,511

2117

COINMACHTable SERVICEof CORP. AND SUBSIDIARIES Contents

~~NOTES~~COINMACH TOSERVICE ~~CONDENSED~~CORP. ~~CONSOLIDATED~~AND ~~FINANCIAL STATEMENTS(UNAUDITED) (continued)~~SUBSIDIARIES

6.NOTES ~~Segment~~TO ~~Information~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

~~The~~Condensed ~~Company~~Consolidating ~~reports~~Statements segment information for the route segment, its only reportable operating segment, and provides information for its two other operating segments reported as “All other.” The route segment, which comprises the Company’s core business, involves leasing laundry rooms from building owners and property management companies typically on a long-term, renewal basis, installing and servicing the laundry equipment, collecting revenues generated from laundry machines, and operating retail laundromats. The other business operations reported in “All other” include the aggregation of ~~the rental, distribution and franchise businesses. The rental business~~Operations involves the leasing of laundry machines and other household appliances to property owners, managers of multi-family housing properties and to a lesser extent, individuals and corporate relocation entities through the Company’s jointly-owned subsidiary, AWA. The distribution business involves constructing complete turnkey retail laundromats, retrofitting existing retail laundromats, distributing exclusive lines of coin and non-coin machines and parts, selling service contracts and building and developing laundromat facilities for sale as franchise locations through the Company’s indirect subsidiary, Super Laundry. The Company evaluates performance and allocates resources based on EBITDA (earnings from continuing operations before interest, taxes and depreciation and amortization), cash flow and growth opportunity. The accounting policies of the segment are the same as those described in the audited consolidated financial statements included in the Company’s registration statement (the “Registration Statement”) on Form S-1 (No. 333-114421), including the Prospectus contained therein, dated November 19, 2004.


	Nine Months Ended December 31, 2006
							Coinmach
	Coinmach			Coinmach			Corporation
	Service			Laundry			and
	Corp.			Corporation			Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	416,566		$	—		$	416,566
Costs and expenses		1,698			312			370,429			—			372,439

Operating (loss) income		(1,698	)		(312	)		46,137			—			44,127
Interest (income) expense, net		(18,087	)		10,092			49,354			—			41,359
Transaction costs		845			—			—			—			845

Income (loss) before taxes		15,544			(10,404	)		(3,217	)		—			1,923
Income tax provision (benefit)		2,227			(127	)		(829	)		—			1,271

		13,317			(10,277	)		(2,388	)		—			652

Equity in loss (income) of subsidiaries		12,665			2,388			—			(15,053	)		—

Net income (loss)	$	652		$	(12,665	)	$	(2,388	)	$	15,053		$	652

COINMACH SERVICE CORP. AND SUBSIDIARIES


	Nine Months Ended December 31, 2005
							Coinmach
	Coinmach			Coinmach			Corporation
	Service			Laundry			and
	Corp.			Corporation			Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	404,894		$	—		$	404,894
Costs and expenses		1,764			324			363,722			—			365,810

Operating (loss) income		(1,764	)		(324	)		41,172			—			39,084
Interest (income) expense – non cash preferred stock dividend		(11,053	)		11,053			—			—			—
Interest expense, net		4,923			—			41,293			—			46,216
Transaction costs		206			—			2,414			—			2,620

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) income	$	(5,929	)	$	(8,350	)	$	(1,620	)	$	9,970		$	(5,929	)

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED) (continued)~~18

6.Table Segmentof Information (continued) Contents

~~The~~COINMACH ~~table~~SERVICE ~~below~~CORP. ~~presents~~AND ~~information about the Company’s segments (in thousands):~~SUBSIDIARIES

	Three months ended December 31,						Nine months ended December 31,
	2004			2003			2004			2003
Revenue:
Route	$	119,489		$	119,173		$	353,727		$	351,529
All other:
Rental		8,617			8,133			25,497			24,025
Distribution		7,521			8,434			22,852			22,654
Subtotal		16,138			16,567			48,349			46,679
Total revenue	$	135,627		$	135,740		$	402,076		$	398,208
EBITDA(1):
Route	$	39,459		$	39,249		$	116,188		$	115,900
All other:
Rental		3,742			2,961			10,388			9,213
Distribution		156			(82	)		598			(1,087	)
Subtotal		3,898			2,879			10,986			8,126
Other items, net		—			(96	)		(500	)		(96	)
Transaction costs(2)		(17,135	)		—			(17,135	)		—
Corporate expenses		(2,502	)		(2,362	)		(7,229	)		(6,950	)
Total EBITDA		23,720			39,670			102,310			116,980
Reconciling items:
Depreciation and amortization expense, amortization of advance location payments and amortization of intangibles:
Route		(24,608	)		(24,221	)		(73,986	)		(73,046	)
All other		(2,216	)		(2,108	)		(6,487	)		(6,078	)
Corporate		(713	)		(630	)		(2,234	)		(1,746	)
Total depreciation		(27,537	)		(26,959	)		(82,707	)		(80,870	)
Interest expense		(14,781	)		(14,424	)		(43,406	)		(43,132	)
Interest expense – Preferred Stock		(4,862	)		(6,292	)		(18,230	)		(18,324	)
Interest expense – escrow Interest		(941	)		—			(941	)		—
Consolidated loss before income taxes	$	(24,401	)	$	(8,005	)	$	(42,974	)	$	(25,346	)

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

(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 relating to (1) the $11.3 million redemption premium on the portion of 9% senior notes redeemed, and (2) the write-off of the deferred financing costs relating to the 9% senior notes redeemed and term loans repaid aggregating approximately $3.5 million.

Condensed Consolidating Statements of Cash Flows


	Nine Months Ended December 31, 2006
							Coinmach
				Coinmach			Corporation
	Coinmach			Laundry			And
	Service Corp.			Corporation			Subsidiaries			Eliminations		Consolidated
Operating Activities:
Net income (loss)	$	13,317		$	(10,277	)	$	(2,388	)	$	—	$	652
Noncash adjustments		(6,874	)		9,966			79,816			—		82,908
Change in operating assets and Liabilities		(2,392	)		35			6,314			—		3,957

Net cash provided by (used in) operating activities		4,051			(276	)		83,742			—		87,517


Investing Activities:
Capital expenditures and advance location payments		—			—			(53,173	)		—		(53,173	)
Acquisition of net assets		—			—			(17,837	)		—		(17,837	)
Proceeds from sale of property and equipment		—			—			1,168			—		1,168

Net cash used in investing activities		—			—			(69,842	)		—		(69,842	)


Financing Activities:
Repayment of debt		(5,649	)		—			(1,725	)		—		(7,374	)
Other financing items		1,627			276			(35,858	)		—		(33,955	)

Net cash (used in) provided by financing activities		(4,022	)		276			(37,583	)		—		(41,329	)

Net increase (decrease) in cash and cash equivalents		29			—			(23,683	)		—		(23,654	)
Cash and cash equivalents, beginning of period		880			—			61,128			—		62,008

Cash and cash equivalents, end of period	$	909		$	—		$	37,445		$	—	$	38,354

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~19

NOTESTable TOof CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED) (continued) Contents

6.COINMACH ~~Segment~~SERVICE ~~Information~~CORP. ~~(continued)~~AND SUBSIDIARIES

~~Non-GAAP~~NOTES ~~Financial~~TO ~~Measures~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

~~EBITDA~~Condensed ~~represents~~Consolidating ~~earnings~~Statements from continuing operations before deductions for interest, income taxes and depreciation and amortization. Management believes that EBITDA is useful as a means to evaluate the Company’s ability to service existing debt, to sustain potential future increases in debt and to satisfy capital requirements. EBITDA is also used by management as a measure of ~~evaluating~~ ~~the~~Cash ~~performance~~Flows of the Company’s three operating segments. Management further believes that EBITDA is useful to investors as a measure of comparative operating performance as it is less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of changes in pricing decisions, cost controls and other factors that affect operating performance. Management uses EBITDA to develop compensation plans, to measure sales force performance and to allocate capital assets. Additionally, because the Company has historically provided EBITDA to investors, management believes that presenting this non-GAAP financial measure provides consistency in financial reporting. Management’s use of EBITDA, however, is not intended to represent cash flows for the period, nor has it been presented as an alternative to either (acontinued) ~~operating income (as determined by GAAP) as an indicator of~~ operating performance or (b) cash flows from operating, investing and financing activities (as determined by GAAP) as a measure of liquidity. Given that EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, EBITDA may not be comparable to other similarly titled measures of other companies. The following table reconciles the Company’s net loss to EBITDA for each period presented (in millions):

	Three months ended December 31,						Nine months ended December 31,
	Nine Months Ended December 31, 2005
	2004			2003			2004			2003
							Coinmach
Net loss	$	(16.3	)	$	(7.4	)	$	(32.9	)	$	(23.3	)
	Coinmach			Coinmach			Corporation
Benefit for income taxes		(8.1	)		(0.6	)		(10.0	)		(2.0	)
	Service			Laundry			and
Interest expense		14.8			14.4			43.4			43.1
	Corporation			Corporation			Subsidiaries			Elimination			Consolidated
Interest expense – preferred stock		4.9			6.3			18.2			18.3
Operating Activities:
Interest expense – escrow interest		0.9			—			0.9			—
Net income (loss)	$	2,421		$	(6,730	)	$	(1,620	)	$	—		$	(5,929	)
Depreciation and amortization		27.5			27.0			82.7			80.9
Noncash adjustments		(11,147	)		11,053			81,100			—			81,006
EBITDA*	$	23.7		$	39.7		$	102.3		$	117.0
Change in operating assets and Liabilities		1,832			(4,623	)		12,187			—			9,396
Net cash (used in) provided by operating activities		(6,894	)		(300	)		91,667			—			84,473
Investing Activities:
Capital expenditures and advance location payments		—			—			(53,237	)		—			(53,237	)
Acquisition of net assets		—			—			(3,436	)		—			(3,436	)
Proceeds from sale of property and equipment		—			—			1,077			—			1,077
Net cash used in investing activities		—			—			(55,596	)		—			(55,596	)
Financing Activities:
Repayment of debt		—			—			(240,507	)		—			(240,507	)
Other financing items		6,894			300			204,050			—			211,244
Net 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			—			57,271
Cash and cash equivalents, end of period	$	431		$	—		$	56,454		$	—		$	56,885

*No amounts have been added back to EBITDA related to the transactions costs consisting of (1) approximately $11.3 million redemption premium on the portion of the 9% senior notes redeemed, and (2) the write-off of deferred financing costs relating to the 9% senior notes redeemed and term loans repaid aggregating approximately $3.5 million.20

24 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

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

76. ~~Loss~~Segment ~~per Common Share~~Information

~~Basic~~The ~~loss~~Company ~~per~~reports ~~share~~segment information for the ~~two~~route ~~classes~~segment, ofits ~~common~~only ~~stock~~reportable isoperating segment, ~~calculated~~and byprovides ~~dividing~~information ~~net~~for ~~loss~~its two other operating segments reported as “All other.” byThe route segment, which comprises the ~~weighted~~Company’s ~~average~~core ~~number~~business, ofinvolves ~~shares~~leasing oflaundry ~~Class A~~rooms ~~Common~~from building ~~Stock~~owners and ~~Class B~~property ~~Common~~management ~~Stock~~companies typically on a long-term, renewal basis, ~~outstanding~~installing and servicing the laundry equipment, collecting revenues generated from laundry machines, collection services to third party operators and operating retail laundromats. ~~Diluted~~The ~~loss~~other business ~~per~~operations ~~share~~reported isin ~~computed~~“All ~~using~~other” include the ~~weighted~~aggregation ~~average~~of ~~number~~the ofrental ~~shares~~and distribution. The rental business involves the leasing of laundry machines and other household appliances to ~~Class A~~property ~~Common~~owners, ~~Stock~~managers of multi-family housing properties and ~~Class B~~to ~~Common~~a ~~Stock~~lesser ~~plus~~extent, individuals and corporate relocation entities through the ~~potentially~~Company’s ~~dilutive~~jointly-owned ~~effect~~subsidiary, ofAWA. ~~common~~The distribution ~~stock~~business involves constructing complete turnkey retail laundromats, retrofitting ~~equivalents.~~existing ~~Diluted~~retail ~~loss~~laundromats, ~~per~~distributing ~~share~~exclusive ~~for~~lines of coin and non-coin machines and parts, and selling service contracts through the Company’s ~~two~~subsidiary, ~~classes~~Super ofLaundry. ~~common~~The ~~stock~~Company evaluates ~~will~~performance beand allocates resources based on EBITDA (earnings from continuing operations before interest, taxes and depreciation and amortization), cash flow and growth opportunity. The accounting policies of the segment are the same as ~~basic~~those ~~loss~~described ~~per~~in ~~share~~the ~~because~~audited consolidated financial statements included in the Company’s ~~does~~Annual ~~not~~Report ~~have~~on ~~any~~Form ~~potentially~~10-K ~~dilutive~~for ~~securities~~the fiscal year ended ~~outstanding~~March 31, 2006.

~~Net loss available to common stockholders is allocated to the Company’s two classes of common~~21 stock based on the weighted average number of shares outstanding since both classes have the same participation rights. Under the two class method, loss per share for each class of common stock is presented (dollars in thousands, except share and per share data):

	Three Months Ended						Nine Months Ended
	December 31, 2004			December 31, 2003			December 31, 2004			December 31, 2003
Net loss	$	(16,301	)	$	(7,360	)	$	(32,953	)	$	(23,276	)
Weighted average common stock outstanding
Class A Common Stock		18,911,532			18,911,532			18,911,532			18,911,532
Class B Common Stock		24,980,445			24,980,445			24,980,445			24,980,445
Total		43,891,977			43,891,977			43,891,977			43,891,977
Basic and diluted loss per share:
Class A Common Stock per share	$	(0.37	)	$	(0.17	)	$	(0.75	)	$	(0.53	)
Class B Common Stock per share	$	(0.37	)	$	(0.17	)	$	(0.75	)	$	(0.53	)

~~The~~COINMACH ~~net~~SERVICE ~~loss available to common stock holders will be reduced by dividends declared and/or paid in the future~~CORP. ~~The~~AND ~~basic and diluted loss per share would be calculated by dividing~~SUBSIDIARIES ~~the net loss, adjusted for dividends, by the weighted average number of shares outstanding.~~

25NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

~~COINMACH~~The ~~SERVICE~~table ~~CORP.~~below ~~AND~~presents ~~SUBSIDIARIES~~information about the Company’s segments (in thousands):

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


	Three months ended						Nine months ended
	December 31,						December 31,
	2006			2005			2006			2005
Revenue:
Route	$	125,424		$	122,102		$	369,332		$	358,618
All other:
Rental		9,582			9,255			28,850			26,751
Distribution		5,965			7,387			18,384			19,525

Subtotal		15,547			16,642			47,234			46,276

Total Revenue	$	140,971		$	138,744		$	416,566		$	404,894


EBITDA (1):
Route	$	41,243		$	40,734		$	120,350		$	118,227
All other:
Rental		4,425			4,031			12,838			11,243
Distribution		571			212			1,444			625

Subtotal		4,996			4,243			14,282			11,868

Other items, net		—			—			—			(310	)
Transaction costs (2)		—			(2,620	)		(845	)		(2,620	)
Corporate expenses		(3,100	)		(3,571	)		(9,236	)		(9,141	)

Total EBITDA		43,139			38,786			124,551			118,024

Reconciling items:
Depreciation and amortization expense, amortization of advance location payments and amortization of intangibles:
Route		(24,430	)		(24,586	)		(72,177	)		(72,685	)
All other		(1,925	)		(2,150	)		(6,108	)		(6,421	)
Corporate		(979	)		(820	)		(2,984	)		(2,454	)

Total depreciation		(27,334	)		(27,556	)		(81,269	)		(81,560	)

Interest expense		(13,999	)		(15,570	)		(41,359	)		(46,216	)

Consolidated income (loss) before income taxes	$	1,806		$	(4,340	)	$	1,923		$	(9,752	)

8. Income Taxes


(1)		See description of “Non-GAAP Financial Measures” immediately following this table for more information regarding EBITDA and a reconciliation of net income (loss) to EBITDA for the periods indicated above.

(2)		The computation of EBITDA for the nine months ended December 31, 2006 has not been adjusted to exclude transaction costs consisting of: (i) the premium paid to purchase certain 11% Senior Secured Notes of approximately $0.4 million and (ii) the write-off of a proportionate amount of unamortized deferred financing costs of approximately $0.4 million.

		The computation of EBITDA for the three and nine months ended December 31, 2005 has not been adjusted to exclude transaction costs consisting of: (i) the write-off of the unamortized deferred financing costs relating to the previous 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 previous senior secured credit facility and (iii) additional expenses aggregating approximately $0.2 million relating to the IPO.

~~The components of the Company’s deferred tax liabilities and assets are as follows (in~~22 ~~thousands):~~

	December 31, 2004		March 31, 2004
Deferred tax liabilities:
Accelerated tax depreciation and contract rights	$	109,445	$	111,103
Interest rate swap		16		—
Other		1,505		1,246
		110,966		112,349
Deferred tax assets:
Interest rate swap		—		1,591
Net operating loss carryforwards		42,744		34,272
Covenant not to compete		1,158		1,202
Other		1,893		1,509
		45,795		38,574
Net deferred tax liability	$	65,171	$	73,775

~~The~~COINMACH ~~net~~SERVICE ~~operating loss carryforwards of approximately $105 million expire between fiscal years 2005 through 2024~~CORP. ~~The~~AND ~~majority of the Company’s net operating loss carryforwards begin to~~SUBSIDIARIES ~~expire after four years. In addition, the net operating losses are subject to annual limitations imposed under the provisions of the Internal Revenue Code regarding changes in ownership.~~

~~The~~NOTES ~~benefit~~TO ~~for~~CONDENSED ~~income~~CONSOLIDATED ~~taxes~~FINANCIAL ~~consists of~~ STATEMENTS (inUNAUDITED) ~~thousands~~(continued):

	Three months ended December 31,						Nine months ended December 31,
	2004			2003			2004			2003
Federal	$	(6,440	)	$	(577	)	$	(7,965	)	$	(1,806	)
State		(1,660	)		(68	)		(2,056	)		(264	)
	$	(8,100	)	$	(645	)	$	(10,021	)	$	(2,070	)

Non-GAAP Financial Measures

26 EBITDA represents earnings from continuing operations before deductions for interest, income taxes and depreciation and amortization. Management believes that EBITDA is useful as a means to evaluate the Company’s ability to service existing debt, to sustain potential future increases in debt and to satisfy capital requirements. EBITDA is also used by management as a measure of evaluating the performance of the Company’s three operating segments. Management further believes that EBITDA is useful to investors as a measure of comparative operating performance as it is less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of changes in pricing decisions, cost controls and other factors that affect operating performance. Management uses EBITDA to develop compensation plans, to measure sales force performance and to allocate capital assets. Additionally, because the Company has historically provided EBITDA to investors, management believes that presenting this non-GAAP financial measure provides consistency in financial reporting. Management’s use of EBITDA, however, is not intended to represent cash flows for the period, nor has it been presented as an alternative to either (a) operating income (as determined by U.S. generally accepted accounting principles) as an indicator of operating performance or (b) cash flows from operating, investing and financing activities (as determined by U.S. generally accepted accounting principles) as a measure of liquidity. Given that EBITDA is not a measurement determined in accordance with U.S. generally accepted accounting principles and is thus susceptible to varying calculations, EBITDA may not be comparable to other similarly titled measures of other companies. The following table reconciles the Company’s net income (loss) to EBITDA for each period presented (in millions):

COINMACH SERVICE CORP. AND SUBSIDIARIES


	Three Months Ended December 31,					Nine Months Ended December 31,
	2006		2005			2006		2005
Net income (loss)	$	0.9	$	(2.7	)	$	0.7	$	(5.9	)
Provision (benefit) for income taxes		0.9		(1.7	)		1.3		(3.8	)
Interest expense		14.0		15.6			41.3		46.2
Depreciation and amortization		27.3		27.6			81.3		81.5

EBITDA *	$	43.1	$	38.8		$	124.6	$	118.0

~~NOTES~~* TOThe ~~CONDENSED~~computation ~~CONSOLIDATED~~of ~~FINANCIAL~~EBITDA ~~STATEMENTS~~for the nine months ended December 31, 2006 has not been adjusted to exclude transaction costs consisting of: (~~UNAUDITED~~i) the premium paid to purchase certain 11% Senior Secured Notes of approximately $0.4 million and (~~continued~~ii) the write-off of a proportionate amount of unamortized deferred financing costs of approximately $0.4 million. The computation of EBITDA for the three and nine months ended December 31, 2005 has not been adjusted to exclude transaction costs consisting of: (i) the write-off of the unamortized deferred financing costs relating to the previous 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 previous senior secured credit facility and (iii) additional expenses aggregating approximately $0.2 million relating to the IPO.

~~8. Income Taxes (continued)~~23

TheTable effective income tax rate differs from the amount computed by applying the U.S. federal statutory rate to loss before taxes as a result of state taxes and permanent book/tax differences as follows (in thousands): Contents

	Three months ended December 31,						Nine months ended December 31,
	2004			2003			2004			2003
Expected tax benefit	$	(8,644	)	$	(2,802	)	$	(15,145	)	$	(8,871	)
NOL Valuation Allowance		—			433			—			433
State tax benefit, net of federal taxes		(1,078	)		(52	)		(1,336	)		(180	)
Non deductible interest -
Preferred Stock		1,702			2,202			6,381			6,413
Permanent book/tax differences		(80	)		(426	)		79			135
Tax benefit	$	(8,100	)	$	(645	)	$	(10,021	)	$	(2,070	)

COINMACH SERVICE CORP. AND SUBSIDIARIES

9.NOTES ~~Redeemable~~TO ~~Preferred~~CONDENSED ~~Stock~~CONSOLIDATED ~~and~~FINANCIAL ~~Stockholders’~~STATEMENTS (UNAUDITED) ~~Deficit~~(continued)

~~Pursuant to a merger transaction in July 2000, all of the issued and outstanding capital stock of Coinmach Laundry was cancelled, and Coinmach Laundry issued (i) 20~~7.77 ~~shares~~Income ~~of Class A~~Taxes preferred stock accruing cash dividends on a quarterly basis at an annual rate of 12.5% (which increased to 14% on November 15, 2002) on the sum of the liquidation value thereof plus accumulated and unpaid dividends thereon (the “Class A Preferred Stock”), (ii) 53.84 shares of Class B preferred stock accruing cash dividends on a quarterly basis at an annual rate of 8% on the sum of the liquidation value thereof plus accumulated and unpaid dividends thereon (the “Class B Preferred Stock” and, together with the Class A Preferred Stock, (the “Preferred Stock”) and (iii) 59,823.30 shares of common stock, par value $25 per share (the “Common Stock”). The Preferred Stock did not have voting rights, had a liquidation value of $2.5 million per share and was mandatorily redeemable on July 5, 2010.

27 The components of the Company’s deferred tax liabilities and assets are as follows (in thousands):

COINMACH SERVICE CORP. AND SUBSIDIARIES


	December 31, 2006			March 31, 2006
Deferred tax liabilities:
Accelerated tax depreciation and contract rights	$	89,911		$	97,084
Interest rate swap		381			1,063
Other		2,438			2,123

Total deferred tax liabilities		92,730			100,270

Deferred tax assets:
Net operating loss carryforwards		47,436			55,430
Covenant not to compete		1,342			1,267
Transaction costs		3,068			2,726
Other		1,819			1,593

Total deferred tax asset		53,665			61,016
Valuation allowance		(10,730	)		(10,730	)

Net deferred tax assets		42,935			50,286

Net deferred tax liability	$	49,795		$	49,984

~~NOTES~~ The TOnet ~~CONDENSED~~operating ~~CONSOLIDATED~~loss ~~FINANCIAL~~carryforwards ~~STATEMENTS(UNAUDITED)~~of ~~(continued)~~approximately $116 million expire between fiscal years 2008 through 2026. In addition, the net operating losses are subject to annual limitations imposed under the provisions of the Internal Revenue Code regarding changes in ownership. For the nine months ended December 31, 2006, the Company generated taxable income of approximately $19.6 million primarily due to the reversal of temporary differences related to depreciation. The Company utilized $19.6 million of its net operating loss carryforwards to offset the entire amount of its taxable income.

9. The ~~Redeemable~~provision ~~Preferred~~(benefit) for ~~Stock~~income ~~and~~taxes ~~Stockholders’~~consists ~~Deficit~~of (~~continued~~in thousands):

Under Coinmach Laundry’s equity participation plan (the “Equity Participation Plan”), in July 2000, loans were extended by Coinmach Laundry (the “EPP Loans”) to certain employees for the purchase of Common Stock at a fixed price per share equal to the fair market value of such Common Stock at the time of issuance as determined by the board of directors of Coinmach Laundry. Additionally, certain members of senior management of the Company also acquired Class B Preferred Stock at such time. Pursuant to the terms of the Equity Participation Plan, the Preferred Stock was fully vested at the time of purchase, and the Common Stock vests over a specified period, typically over four years.


	Three months ended December 31,					Nine months ended December 31,
	2006		2005			2006		2005
Federal	$	493	$	(1,256	)	$	449	$	(2,868	)
State		453		(418	)		822		(955	)

	$	946	$	(1,674	)	$	1,271	$	(3,823	)

The ~~EPP~~effective ~~Loans~~income ~~are~~tax ~~payable~~rate indiffers ~~installments~~from ~~over~~the ~~ten~~amount ~~years~~computed ~~and~~by ~~accrue~~applying ~~interest~~the atU.S. federal astatutory rate ofto ~~7% per~~loss ~~annum.~~before ~~There~~taxes ~~are~~as noa ~~shares~~result ~~reserved~~of ~~for~~state ~~future~~taxes ~~issuance.~~and ~~The~~permanent ~~Equity Participation Plan~~book/tax ~~contains~~differences ~~certain~~as ~~restrictions~~follows on(in ~~the transfer of such Common Stock and Class B Preferred Stock.~~thousands):

The installments on the EPP Loans have to date been forgiven by the Company on or prior to their respective due dates. As a result, such loans are considered non-recourse and therefore treated as an award of stock requiring the recognition of compensation expense. Such expense is measured at fair value as of the time the stock award vests and is subsequently remeasured for changes in fair value until such time as the measurement date is established (upon forgiveness or repayment of the entire loan). The Company has recorded compensation expense of approximately $56,000 and $133,000 for the nine months ended December 31, 2004 and 2003, respectively.


	Three months ended December 31,					Nine months ended December 31,
	2006		2005			2006		2005
Expected tax provision (benefit)	$	629	$	(1,429	)	$	670	$	(3,323	)
State tax provision (benefit), net of federal taxes		294		(272	)		535		(580	)
Permanent book/tax differences		23		27			66		80

Tax provision (benefit)	$	946	$	(1,674	)	$	1,271	$	(3,823	)

~~In March 2003, through a series of transactions, all of the outstanding capital stock of~~24 Coinmach Laundry was contributed to Holdings in exchange for substantially equivalent equity interests (in the form of common and preferred membership units) in Holdings. Accordingly, Coinmach Laundry became a wholly owned subsidiary of Holdings.

OnTable May 15, 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equities. This standard requires, among other things, that any of various financial instruments that are issued in the form of shares that are mandatorily redeemable on a fixed or determinable date be classified as liabilities, any dividends paid on the underlying shares be treated as interest expense, and issuance costs should be deferred and amortized using the interest method. SFAS No. 150 is effective for all financial instruments created or modified after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003 (July 1, 2003 for Coinmach Laundry). As required by SFAS No. 150, accrued and unpaid dividends prior to adoption of SFAS No. 150 were not reclassified to interest expense. Effective April 1, 2003, dividends on the Preferred Stock have been classified as interest expense. For the nine months ended December 31, 2004 and 2003, the Company has recorded approximately $18.2 million and $18.3 million, respectively, of Preferred Stock dividends as interest expense. The Preferred Stock was carried at the amount of cash that would be paid under their terms if the shares were repurchased or redeemed at the reporting date. Contents

28COINMACH SERVICE CORP. AND SUBSIDIARIES

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

~~NOTES~~8. TOIncome ~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~(~~UNAUDITED~~Loss) ~~(continued)~~per Common Share

9 Basic income (loss) per share for the two classes of common stock is calculated by dividing net loss by the weighted average number of shares of Class A Common Stock and Class B Common Stock outstanding. ~~Redeemable~~Diluted ~~Preferred~~loss per share is computed using the weighted average number of shares of Class A Common Stock and ~~Stockholders~~Class B Common Stock plus the potentially dilutive effect of common stock equivalents. Diluted loss per share for the Company’s ~~Deficit~~two ~~(continued)~~classes of common stock will be the same as basic loss per share because the Company does not have any potentially dilutive securities outstanding.

AUndistributed ~~portion~~net ofloss ~~the~~is ~~net~~allocated ~~proceeds~~to ~~from~~ the ~~offering~~Company’s ~~were~~two ~~used~~classes toof ~~redeem~~common ~~approximately~~stock ~~$91.8~~based on the ~~million~~weighted ofaverage ~~Coinmach~~number ~~Laundry’s~~of ~~Class A~~shares ~~Preferred~~outstanding ~~Stock~~since ~~(representing~~both ~~all~~classes ofhave ~~Coinmach~~the ~~Laundry~~same participation ~~outstanding~~rights. ~~Class A~~Loss ~~Preferred~~per ~~Stock)~~share ~~and~~for ~~approximately~~each ~~$7.4 million~~class of ~~Class B~~common ~~Preferred~~stock ~~Stock. All~~under ~~unredeemed~~the ~~preferred~~two ~~stock~~class ofmethod ~~Coinmach~~is ~~Laundry~~presented below ~~was~~(dollars ~~exchanged~~in ~~for~~thousands, ~~additional~~except ~~shares~~share ofand ~~Class B Common~~per ~~Stock.~~share data):

10. Subsequent Event


	Three months ended						Nine months ended
	December 31,						December 31,
	2006			2005			2006			2005
Net income (loss) attributable to common stockholders	$	860		$	(2,666	)	$	652		$	(5,929	)

Add: Dividends paid on common stock		(6,014	)		(3,899	)		(30,517	)		(11,696	)


Undistributed loss available to Class A and Class B common stock	$	(5,154	)	$	(6,565	)	$	(29,865	)	$	(17,625	)


Basic and diluted allocation of undistributed loss:
Class A Common Stock	$	(2,856	)	$	(2,829	)	$	(16,550	)	$	(7,594	)
Class B Common Stock		(2,298	)		(3,736	)		(13,315	)		(10,031	)

Total	$	(5,154	)	$	(6,565	)	$	(29,865	)	$	(17,625	)


Weighted average common stock outstanding:
Class A Common Stock		29,060,305			18,911,532			29,052,500			18,911,532
Class B Common Stock		23,374,450			24,980,445			23,374,450			24,980,445

Total		52,434,755			43,891,977			52,426,950			43,891,977


Distributed earnings per share:
Class A Common Stock	$	0.21		$	0.21		$	0.62		$	0.62
Class B Common Stock	$	–		$	–		$	0.53		$	–

Undistributed loss per share:
Class A Common Stock	$	(0.10	)	$	(0.15	)	$	(0.57	)	$	(0.40	)
Class B Common Stock	$	(0.10	)	$	(0.15	)	$	(0.57	)	$	(0.40	)

Basic and diluted income (loss) per share
Class A Common Stock	$	0.11		$	0.06		$	0.05		$	0.22
Class B Common Stock	$	(0.10	)	$	(0.15	)	$	(0.04	)	$	(0.40	)

On February 8, 2005, the Board of Directors of CSC approved a quarterly cash dividend of $0.08704 per share of Class A Common Stock (or approximately $1.6 million in the aggregate). The dividend will be paid on March 1, 2005 to holders of record as of the close of business on February 25~~, 2005. The dividend payment covers the period from November 24, 2004 (the closing date of CSC’s~~ ~~initial public offering of IDSs) through December 31, 2004.~~

TheTable Board of Directors of CSC has also declared a dividend of $0.04226 per share of Class B Common Stock (or approximately $1.1 million in the aggregate) payable on March 1, 2005 to holders of record as of the close of business on February 25, 2005. Subject to certain limitations imposed by CSC’s charter, holders of Class B Common Stock are not entitled to receive another payment of cash dividends on their Class B Common Stock until June 1, 2006. Contents

29COINMACH SERVICE CORP. AND SUBSIDIARIES

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

~~ITEM~~ On 2May 10, 2006, the board of directors of CSC declared a quarterly cash dividend of $0.20615 ~~MANAGEMENT’S~~per ~~DISCUSSION~~share ~~AND~~of ~~ANALYSIS~~Class A OFCommon ~~FINANCIAL~~Stock ~~CONDITION~~(or ~~AND~~approximately ~~RESULTS~~$6.0 million OFin ~~OPERATIONS~~aggregate) and a cash dividend of $0.53477 per share of Class B Common Stock for its fiscal quarter ended March 31, 2005 and the fiscal year ended March 31, 2006 (or $12.5 million in aggregate), which cash dividend was paid on June 1, 2006 to holders of record as of the close of business on May 25, 2006.

~~General~~ On August 1, 2006, the board of directors of CSC declared a quarterly cash dividend of $0.20615 per share of Class A Common Stock (or approximately $6.0 million in the aggregate), which cash dividend was paid on September 1, 2006 to holders of record as of the close of business on August 25, 2006.

~~Except~~On 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 audited consolidated financial statements included in CSC’s registration statement (the “Registration Statement”) on Form S-1 (No. 333-114421), including the Prospectus contained therein, dated November 193, ~~2004~~2006, ~~relating~~the toboard ~~our initial public offering~~ of ~~Income~~ ~~Deposit~~directors ~~Securities (“IDSs”) and concurrent offering~~ of ~~11%~~CSC ~~senior~~declared ~~secured~~a ~~notes~~quarterly ~~due~~cash ~~2024 sold~~dividend ~~separate and apart from the IDSs. Each IDS consists~~ of ~~one share of Class A common stock, par~~ ~~value~~ $0.0120615 per share ~~(the~~of “Class A Common Stock~~”),~~ ~~and~~(or anapproximately ~~11% senior secured note due 2024 in a principal amount of~~ $6.140 million ~~and~~in ~~a contemporaneous offering of 11% senior secured notes due 2024 separate and apart from~~ the ~~IDSs (together with the 11% senior secured notes underlying IDSs~~aggregate), ~~the~~which ~~“11%~~cash ~~senior~~dividend ~~secured~~was ~~notes”).~~paid ~~Should~~on ~~any of these risks or uncertainties materialize~~December 1, or2006 ~~should underlying~~to ~~assumptions~~holders ~~prove~~of ~~incorrect,~~record ~~our~~as ~~future~~of ~~performance~~the ~~and~~close ~~actual results~~ of ~~operations~~business ~~may~~on ~~differ~~November 27, ~~materially from those expected or intended~~2006. ~~See “Special~~ ~~Note Regarding Forward Looking Statements” below.~~

~~Our~~On ~~primary~~February 1, ~~financial~~2007, ~~objective~~the isboard toof ~~increase~~directors ~~our~~of ~~cash~~CSC ~~flow~~declared ~~from operations. Cash flow from operations represents~~ a ~~source~~quarterly ofcash ~~funds~~dividend ~~available to service indebtedness, pay dividends and for~~of ~~investment in both organic growth and growth through acquisitions~~$0.20615 Weper ~~have~~share ~~experienced~~of ~~net~~Class A ~~losses during~~Common ~~the~~Stock ~~past~~(or ~~three~~approximately ~~fiscal years~~$6.0 million ~~Such net losses were attributable~~ in ~~part~~the toaggregate), ~~significant~~which ~~non-~~cash ~~charges~~dividend ~~associated~~is ~~with~~payable ~~our~~on ~~acquisitions~~March 1, ~~and~~2007 ~~the~~to ~~related~~holders ~~amortization~~ of ~~contract~~record ~~rights (for~~as ~~all~~of ~~three fiscal years) and goodwill (for~~ the ~~2002~~close ~~fiscal year) accounted for under the purchase method~~ of ~~accounting.~~business ~~We incur significant depreciation and amortization expense relating~~on ~~to annual capital expenditures~~February 26, ~~which also reduces our net income~~2007. ~~The continued incurrence of~~ ~~significant depreciation and amortization expenses may cause us to continue to incur losses.~~

~~Overview~~9. 2004 Long-Term Incentive Plan

~~We are principally engaged in the business of supplying laundry equipment services to~~The ~~multi~~Company’s Long-~~family~~Term ~~housing~~Incentive ~~properties.~~Plan ~~Our most significant revenue source is our route business, which over~~ (the ~~last~~“2004 ~~three~~LTIP”) ~~fiscal~~provides ~~years has accounted~~ for ~~approximately~~the ~~88%~~grant of ~~our revenue. Through our~~ ~~route~~non-qualified ~~operations~~options, weincentive ~~provide~~stock ~~laundry~~options, ~~equipment~~stock ~~services~~appreciation torights, ~~locations~~full byvalue ~~leasing~~awards ~~laundry rooms from~~and ~~building~~cash ~~owners~~incentive ~~and property management companies, typically on a long-term, renewable basis~~awards. ~~In return~~The ~~for~~maximum ~~the~~number ~~exclusive right to provide these services, most~~ of ~~our~~securities ~~contracts~~available ~~provide~~ for ~~commission~~ ~~payments~~awards tounder the ~~location~~2004 ~~owners. Commission expense (also referred to as rent expense),~~LTIP ~~our single largest expense item,~~ is ~~included~~15% inof ~~laundry~~the ~~operating~~aggregate ~~expenses~~number ~~and~~of ~~represents~~outstanding ~~payments to~~shares ~~location~~of ~~owners.~~Class A ~~Commissions~~Common ~~may~~Stock ~~be fixed amounts or percentages of revenues~~ and ~~are~~Class B ~~generally~~Common ~~paid~~Stock ~~monthly.~~immediately Infollowing ~~addition~~consummation ~~to commission payments, many~~ of ~~our~~the ~~leases~~IDS ~~require~~Transactions, uswhich toequals ~~make~~6,583,796 ~~advance~~shares. ~~location~~As ~~payments~~of toDecember 31, ~~location owners~~2006, ~~which are capitalized and amortized over~~ the ~~life~~board of ~~the~~directors ~~applicable~~of ~~leases.~~CSC ~~Advance~~had ~~location~~authorized ~~payments~~ up to ~~location owners are paid~~2,996,729 asshares ~~required~~of Class A byCommon ~~the~~Stock ~~applicable~~for ~~lease,~~issuance atunder the ~~inception~~2004 ~~or renewal of a~~LTIP.

30 During the 2006 fiscal year, the Company awarded restricted shares of Class A Common Stock as follows: (i) with respect to executive officers, 51,111 shares in the aggregate (ii) with respect to our independent directors, 5,001 shares in the aggregate and (iii) with respect to a non-independent director, 11,111 shares. In addition, 21,666 restricted shares of Class A Common Stock were awarded to employees (such award together with the restricted stock awards approved by the board of directors of CSC, the “2006 Restricted Stock Awards”) other than executive officers.

~~COINMACH~~ The ~~SERVICE~~2006 ~~CORP.~~Restricted ~~AND~~Stock ~~SUBSIDIARIES~~Awards to the independent directors were fully vested on the date of grant, and those to the non-independent director, the executive officers and the employees vested 20% on the date of grant and the balance at 20% per year over a consecutive four-year period thereafter. In addition, the 2006 Restricted Stock Awards to the executive officers and the

~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)~~26

leaseTable for the right to operate applicable laundry rooms during the contract period, which generally ranges from 5 to 10 years. The amount of advance location payments varies depending on the size of the location and the term of the lease. The Company also provides collection services for other route based companies, including payphone operators. At December 31, 2004, we owned and operated through our route business approximately 673,000 washers and dryers in approximately 70,000 locations throughout North America, including 162 retail laundromats located in Texas and Arizona. Contents

~~The~~COINMACH ~~operation~~SERVICE ofCORP. ~~retail~~AND ~~laundromats involves leasing store locations in desirable geographic~~SUBSIDIARIES ~~areas, maintaining an appropriate mix of washers and dryers at each store location and servicing the washers and dryers at such locations.~~

WeNOTES ~~also~~TO ~~operate~~CONDENSED anCONSOLIDATED ~~equipment~~FINANCIAL ~~rental business through Appliance Warehouse of America, Inc.~~STATEMENTS (~~“AWA”~~UNAUDITED), ~~a Delaware corporation that is jointly-owned by us and Coinmach Holdings, LLC~~ (~~“Holdings”~~continued)~~, a Delaware limited liability company. AWA leases laundry equipment and other~~ ~~household appliances and electronic items to property owners, managers of multi-family housing~~ ~~properties, and to a lesser extent, individuals and corporate relocation entities. At December 31, 2004, approximately 202,000 washers and dryers were installed with our rental customers through AWA.~~

Wenon-independent ~~also~~director ~~operate~~vest anupon ~~equipment~~a ~~distribution~~change ~~business~~of ~~through~~control ~~Super~~of ~~Laundry~~CSC ~~Equipment~~or ~~Corp. (“Super~~upon ~~Laundry”),~~the ~~our~~death ~~indirect~~or ~~wholly-owned~~disability ~~subsidiary. Super Laundry’s business consists~~ of ~~constructing~~the ~~and~~award ~~designing~~recipient ~~complete~~and ~~turnkey~~contain ~~retail~~all ~~laundromats, retrofitting existing retail laundromats, distributing exclusive lines~~ of ~~commercial~~the ~~coin~~rights and ~~non-coin~~are ~~operated~~subject ~~machines~~to ~~and parts,~~all ~~and~~of ~~selling~~the ~~service~~restrictions ~~contracts.~~of Class A InCommon ~~addition,~~Stock ~~Super~~prior ~~Laundry,~~to ~~through~~becoming ~~its~~fully ~~wholly-owned subsidiary~~vested, ~~American~~including ~~Laundry~~voting ~~Franchising Corp. (“ALFC”), builds~~ and ~~develops~~dividend ~~laundromat facilities for sale as franchise locations~~rights. ~~For each franchise laundromat facility, ALFC enters into a~~The ~~purchase~~fair ~~agreement~~value ~~and~~of ~~a license agreement with~~ the ~~buyer~~restricted ~~whereby~~stock ~~the~~issued ~~buyer~~of ~~may use certain systems created by ALFC to operate such facility~~$9.01 ~~ALFC~~per ~~receives~~share ~~revenue~~will ~~primarily~~be ~~from~~recorded ~~the~~as ~~sale price of~~compensation ~~the~~expense ~~laundromat~~over ~~facility and, to a lesser extent, from an initial franchise fee and certain other fees based on~~ the ~~sales~~vesting ~~from such facility~~periods.

~~Laundry~~On ~~operating~~November 3, ~~expenses include~~2006, inthe ~~addition~~compensation tocommittee ~~commission~~of ~~payments, (i)~~ the ~~cost~~board of directors of CSC awarded ~~machine~~performance ~~maintenance~~contingent and ~~revenue~~time-based ~~collection~~vesting inrestricted ~~the~~shares ~~route~~of ~~and~~Class A ~~retail~~Common ~~laundromat~~Stock ~~business,~~with ~~including~~a ~~payroll,~~grant ~~parts,~~date ~~insurance~~of ~~and~~November 3, ~~other~~2006 ~~related~~as ~~expenses,~~follows: (iii) ~~costs~~an ~~and~~aggregate ~~expenses~~of ~~incurred in maintaining our retail laundromats~~100,000 ~~including~~shares ~~utilities~~to ~~and~~certain ~~related expenses~~executive officers, (~~iii~~ii) ~~the~~an ~~cost~~aggregate of ~~sales~~ ~~associated~~7,500 ~~with~~shares ~~the~~to ~~equipment~~our ~~distribution~~three ~~business~~independent directors and (iviii) ~~certain~~25,000 shares ~~expenses related~~ to ~~the operation~~one of our ~~rental~~non-independent ~~business~~directors (collectively, the “2007 Restricted Stock Awards”).

~~Accounting~~ The ~~Policies~~2007 ~~Involving~~Restricted ~~Significant~~Stock ~~Estimates~~Awards to our independent directors were fully vested on the date of grant. The 2007 Restricted Stock Awards to our executive officers consisted of time-based shares (the “Time Vesting Shares”) as well as performance-based shares (the “Performance Vesting Shares”). Pursuant to the award agreements for the executive officers, 25% of all of the shares awarded are Time Vesting Shares and 75% of all of the shares awarded are Performance Vesting Shares. The 2007 Restricted Stock Award to our non-independent director consisted solely of Time Vesting Shares.

~~Our~~The ~~financial~~Performance ~~statements~~Vesting ~~are~~Shares ~~based~~vest onupon the ~~selection~~attainment ~~and application~~ of ~~significant~~certain ~~accounting policies,~~earnings ~~which~~and ~~require~~cash ~~management~~flow growth toperformance ~~make~~criteria ~~significant~~established ~~estimates~~by ~~and~~the ~~assumptions. We~~compensation ~~believe~~committee ~~that~~during the ~~following~~performance ~~are~~period ending ~~some~~March 31, of2009. ~~the~~The ~~more~~Time ~~critical~~Vesting ~~judgment~~Shares ~~areas~~vest in ~~the~~three ~~application of~~equal ~~our~~annual ~~accounting~~installments ~~policies~~commencing on ~~that~~the ~~currently~~first ~~affect~~anniversary ~~our~~of ~~financial~~the ~~condition~~date ~~and results~~ of ~~operations~~grant.

31 The 2007 Restricted Stock Awards to each of the executive officers and the non-independent director fully vest upon a change of control of CSC or upon the death or disability of the award recipient. In addition, the executive officers, the non-independent director and the independent directors shall be entitled to vote the restricted shares underlying their awards during the restricted period, but will not be entitled to receive dividends prior to the vesting of such shares.

~~COINMACH~~ The ~~SERVICE~~fair ~~CORP~~value of the Time Vesting Shares issued of $10.00 ~~AND~~per ~~SUBSIDIARIES~~share will be recorded as compensation expense over the vesting periods. In addition, since the Performance Vesting Shares vest upon the attainment of certain performance criteria, the Company will record compensation expense only for those Performance Vesting Shares of which the attainment of applicable performance conditions is probable.

~~ITEM~~ Compensation 2expense relating to the 2006 Restricted Stock Awards and the 2007 Restricted Stock Awards of approximately $0.2 million ~~MANAGEMENT’S~~has ~~DISCUSSION~~been ~~AND~~recorded ~~ANALYSIS~~for OFthe ~~FINANCIAL~~nine ~~CONDITION~~months ~~AND~~ended ~~RESULTS~~December 31, 2006. OFWe ~~OPERATIONS~~have ~~(continued)~~estimated the forfeiture rate to be zero.

~~Revenue and cash and cash equivalents include an estimate of cash and coin not yet collected~~27 at the end of a reporting period, which remain at laundry room locations. We calculate the estimated amount of cash and coin not yet collected at the end of a reporting period, which remain at laundry room locations by multiplying the average daily collection amount applicable to the location with the number of days since coin and cash were last collected at that location. We analytically review the estimated amount of cash and coin not yet collected at the end of a reporting period by comparing such amount with collections subsequent to the reporting period.

WeTable are required to estimate the collectibility of our receivables. A considerable amount of judgment is required in assessing the ultimate realization of these receivables, including the current credit-worthiness of each customer. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Allowance for doubtful accounts at December 31, 2004 was approximately $3.8 million. Contents

WeCOINMACH ~~currently~~SERVICE ~~have significant deferred tax assets, which are subject to periodic recoverability assessments~~CORP. ~~Realization~~AND ~~of our deferred tax assets is principally dependent upon~~SUBSIDIARIES our achievement of projected future taxable income. Management’s judgments regarding future profitability may change due to future market conditions and other factors. These changes, if any, may require possible material adjustments to these deferred tax asset balances.

WeNOTES ~~have~~TO ~~significant~~CONDENSED ~~costs~~CONSOLIDATED inFINANCIAL ~~excess of net assets acquired~~ STATEMENTS (~~goodwill~~UNAUDITED), ~~contract rights and~~(continued) ~~long-lived assets. Goodwill is tested for impairment on an annual basis. Additionally, goodwill~~ is tested between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We have determined that our reporting units with goodwill consist of our route business, AWA and Super Laundry. Goodwill attributed to the route business, AWA and Super Laundry at December 31, 2004 and March 31, 2004 was approximately $195.0 million, $6.8 million and $2.9 million, respectively. In performing the annual goodwill assessment, we compare the fair value of the reporting unit to its net asset-carrying amount, including goodwill. If the fair value exceeds the carrying amount, then it is determined that goodwill is not impaired. Should the carrying amount exceed the fair value, we would then need to perform the second step in the impairment test to determine the amount of goodwill write-off. The fair value for these tests is based upon a discounted cash flow model. Factors that generally impact cash flows include commission rates paid to property owners, occupancy rates at properties, sensitivity to price increases, loss of existing machine base and the prevailing general economic and market conditions. We performed our annual assessment of goodwill as of January 1, 2004 and determined that no impairment existed.

~~Contract~~A ~~rights~~summary ~~represent~~of ~~amounts expended for location contracts arising from~~ the ~~acquisition of~~status ~~laundry machines on location. These amounts arose solely from purchase price allocations pursuant to acquisitions made by us over a number~~ of ~~years based on an analysis of future cash flows. We do not record contract rights relating to new locations signed in~~ the ~~ordinary~~ ~~course~~Company’s ofrestricted ~~business.~~shares Weas ~~estimate that 90%~~ of ~~our contracts are long-term whereby the average term is approximately 8~~December ~~years~~31, ~~with~~2006 ~~staggered maturities. Of the remaining locations not~~is ~~subject~~presented ~~to long-term agreements, we believe that we have retained a majority of such customers~~below:


			Weighted Average
	Shares		Fair Value at Date
	Outstanding		of Contract
Restricted shares unvested at April 1, 2006		67,113	$	9.01
Granted		132,500		10.00
Vested		20,083		9.38

Restricted shares unvested at December 31, 2006		179,530	$	9.70

~~COINMACH~~ As ~~SERVICE~~of ~~CORP~~December 31, 2006, there was less than $1.2 million ~~AND~~of ~~SUBSIDIARIES~~unrecognized compensation costs related to restricted share compensation arrangements pertaining to the 2006 Restricted Stock Awards and the Time Vesting Shares from the 2007 Restricted Stock Awards. That cost is expected to be recognized over a weighted average period of 3.25 years. In addition, as of December 31, 2006, there was less than $0.1 million of unrecognized compensation costs related to restricted share compensation arrangements pertaining only to those Performance Vesting Shares that the Company has determined will relate to the probable outcome for the attainment of certain performance conditions. Such costs are expected to be recognized over a weighted average period of 2.5 years. At December 31, 2006, there was also approximately $0.7 million of unrecognized compensation costs related to restricted share compensation arrangements pertaining only to those Performance Vesting Shares that the Company has determined are not probable for the attainment of certain performance conditions.

~~ITEM 2~~10. ~~MANAGEMENT’S~~New ~~DISCUSSION~~Accounting ~~AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)~~Pronouncements

~~through~~ In ~~long-standing~~July 2006, ~~relationships~~the ~~and~~Financial ~~continue~~Accounting toStandards ~~service~~Board ~~such~~(FASB) issued ~~customers.~~Financial ~~Although the contracts~~Interpretation ~~have a legal life~~(FIN) No. 48, ~~there~~Accounting ~~are~~for ~~other~~Uncertainty ~~factors~~in ~~such~~Income ~~as renewals~~Taxes, ~~customer~~an ~~relationships~~Interpretation ~~and extensions that contribute to a value greater than the initial contract term. Over 90%~~ of ~~our~~FASB ~~contracts~~Statement ~~renew~~No. ~~automatically~~109. ~~and~~FIN ~~we have a right of first refusal upon termination in over 60% of our contracts~~No. ~~The~~ 48 ~~automatic renewal clause typically~~ provides ~~that,~~guidance ifregarding the ~~property~~recognition, ~~owner~~measurement, ~~fails~~presentation ~~to take any~~and ~~action~~disclosure ~~prior~~in to the ~~end~~financial statements of ~~the~~tax ~~lease~~positions ~~term~~taken or ~~any~~expected ~~renewal~~to ~~term,~~be ~~the~~taken ~~lease~~on ~~will~~a ~~automatically renew~~tax onreturn, ~~substantially~~including ~~similar~~the ~~terms.~~decision Inwhether ~~addition,~~to ~~over~~file ~~80%~~or ofnot ~~our~~file ~~contracts~~in ~~allow~~a ~~for~~particular ~~unilateral price increases~~jurisdiction. ~~Historically,~~FIN weNo. 48 ~~have~~must ~~demonstrated~~be anapplied ~~ability~~ to ~~renew~~all ~~contracts,~~existing ~~retain~~tax ~~our~~positions ~~customers and build~~ upon ~~those~~initial ~~relationships~~adoption. ~~Since~~The ~~April 1997,~~cumulative weeffect ~~have~~of applying ~~posted~~FIN ~~net~~No. 48 ~~machine~~at ~~gains~~adoption, ~~exclusive of~~if ~~acquisitions~~any, ~~and~~is ~~our~~to ~~losses~~be ~~have~~reported ~~averaged~~as ~~approximately~~an 3%adjustment ~~annually.~~to ~~Therefore,~~opening ~~we believe~~retained ~~that~~earnings ~~the~~for ~~cash flows from these contracts continue to be generated beyond~~ the ~~initial~~year ~~legal~~of ~~contract term~~adoption. ~~and~~FIN ~~subsequent renewal periods~~No. 48 Asis aeffective ~~result,~~for wefiscal ~~believe~~years ~~that~~beginning ~~the useful lives of contract~~after ~~rights~~December 15, ~~are~~2006, ~~related~~which tois the ~~expected~~Company’s ~~cash~~2008 ~~flows~~fiscal ~~that~~year, ~~are~~although ~~associated~~early ~~with~~adoption ~~those~~is ~~rights and the~~permitted. ~~amortization~~The ~~periods~~Company ~~for~~is ~~contract~~currently ~~rights~~evaluating ~~should~~the ~~generally~~impact, ~~reflect~~if ~~those useful lives and~~any, ~~by extension,~~ the ~~cash flow streams associated with them. As a result, upon~~ adoption of ~~SFAS~~FIN ~~142,~~No. 48 ~~we reassessed~~will ~~the~~have ~~useful~~on ~~lives being used to amortize contract rights and determined that the contract~~our ~~rights~~operating ~~have~~income anor ~~estimated~~net ~~useful life of approximately 30 to 35 years~~earnings.

WeIn ~~have~~September 2006, ~~twenty-eight~~the ~~geographic~~FASB ~~regions~~issued toSFAS ~~which~~No. 157, ~~contract~~Fair ~~rights~~Value ~~have~~Measurements. ~~been~~SFAS ~~allocated, which~~No. 157 ~~regions~~defines ~~represent~~fair ~~the~~value, ~~lowest~~establishes ~~level~~a offramework ~~identifiable~~for ~~cash~~measuring ~~flows~~fair value in ~~grouping~~generally ~~contract~~accepted accounting ~~rights~~principles and expands disclosures about fair value measurements. ~~Each~~This Statement ~~region~~applies ~~consists~~under ofother ~~approximately~~accounting ~~1,000~~pronouncements tothat ~~8,000~~require ~~contracts~~or ~~for~~permit ~~the~~fair ~~various~~value ~~locations/properties~~measurements, ~~that~~the ~~comprise~~FASB having previously concluded in those accounting pronouncements that ~~region~~fair value is the relevant measurement attribute. WeAccordingly, dothis Statement does not ~~analyze~~require ~~impairment~~any ofnew ~~contract~~fair ~~rights~~value measurements. onSFAS aNo. 157 ~~contract-by-contract~~is effective for fiscal years beginning after November 15, 2007. We ~~basis~~plan to adopt SFAS No. 157 ~~Although~~beginning wein ~~have~~the ~~contracts~~first atquarter ~~every~~of ~~location/property~~fiscal ~~and~~2009. ~~analyze~~We ~~revenue~~have ~~and~~not ~~certain~~determined ~~direct~~the ~~costs~~impact, onif aany, ~~contract-by-contract~~the ~~basis,~~adoption weof doSFAS ~~not~~No. 157 ~~allocate~~will ~~common~~have ~~region~~on ~~costs~~our ~~and~~operating ~~servicing costs~~income toor ~~each~~net ~~contract~~earnings.

~~We assess the recoverability of location contract rights and long-lived assets on a~~28 region-by-region basis. We evaluate the financial performance/cash flows for each region. This evaluation includes analytically comparing the financial results/cash flows and certain statistical performance measures for each region to prior period/year actuals and budgeted amounts. Factors that generally impact cash flows include commission rates paid to property owners, occupancy rates at properties, sensitivity to price increases and the regions general economic conditions. In addition, each year we lose a certain amount of our existing machine base, which essentially equates to loss of contract rights. Such loss has historically averaged approximately 3% annually. The accelerated amortization of contract rights is designed to capture and expense this shrinking machine base. An increase in the historical loss rate would also be a strong indicator of possible impairment of location contract rights and long-lived assets. If based on our initial evaluation there are indicators of impairment that result in losses to the machine base, or an event occurs that would indicate that the carrying amounts may not be recoverable, we reevaluate the carrying value of contract rights and long-lived assets based on future undiscounted cash flows attributed to that region and record an impairment loss based on discounted cash flows if the carrying amount of the contract rights are not recoverable from

33 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

~~ITEM~~NOTES 2.TO ~~MANAGEMENT’S~~CONDENSED ~~DISCUSSION~~CONSOLIDATED ~~AND ANALYSIS OF~~ FINANCIAL ~~CONDITION~~STATEMENTS (UNAUDITED) ~~AND RESULTS OF OPERATIONS~~ (continued)

~~undiscounted~~ In ~~cash~~September 2006, ~~flows~~the SEC issued Staff Accounting Bulletin (SAB) No. 108, ~~Based~~Considering onthe Effects ~~present~~of ~~operations~~Prior ~~and~~Year ~~strategic~~Misstatements ~~plans,~~when weQuantifying ~~believe~~Misstatements ~~that~~in ~~there~~Current Year Financial ~~have~~Statements. ~~not~~SAB ~~been~~No. 108 ~~any~~provides ~~indicators~~interpretative guidance on how the effects of ~~impairment~~the carryover or reversal of ~~location~~prior ~~contract~~year ~~rights~~misstatements orshould ~~long-lived~~be ~~assets~~considered in quantifying a current year misstatement. The SEC staff believes that registrants should quantify errors using both a balance sheet and an income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. This pronouncement is effective for fiscal years ending after November 15, 2006. We are currently evaluating the provisions of SAB No. 108.

~~Accounting Treatment for IDSs~~29

ATable portion of the aggregate IDSs outstanding represents notes recorded as long-term debt. We have concluded that it is appropriate to annually deduct interest expense on the notes from taxable income for U.S. federal and state and local income tax purposes. There can be no assurances that the IRS will not seek to challenge the treatment of these notes as debt or the amount of interest expense deducted, although to date we have not been notified that the notes should be treated as equity rather than debt for U.S. federal and state and local income tax purposes. If the notes would be required to be treated as equity for income tax purposes, the cumulative interest expense totaling approximately $1.5 million, as of December 31, 2004, would not be deductible from taxable income, and we would be required to recognize additional tax expense and establish a related income tax liability. The additional tax due to federal, state and local authorities would be based on our taxable income or loss for each of the respective years that we take the interest expense deduction. We do not currently intend to record a liability for a potential disallowance of this interest expense deduction. Contents

~~Based~~COINMACH onSERVICE UCORP.S. ~~generally~~AND ~~accepted accounting principles, the proceeds of the IDS offering and~~SUBSIDIARIES the offering of the separate 11% senior secured notes were allocated to the shares of Class A Common Stock and the underlying 11% senior secured notes based on their respective relative fair values. The price paid for the IDSs was equivalent to the fair value of $7.50 per Class A Common Stock and $6.14 in a principal amount of a 11% senior secured note due 2024 underlying the IDS and the fair value of the separate notes was equivalent to their face value.

InITEM ~~addition, we have concluded that there are no embedded derivative features in the IDSs or within the Class B common stock, par value $0~~2.01 ~~per~~MANAGEMENT’S ~~share,~~DISCUSSION ofAND ~~CSC~~ANALYSIS ~~(the~~OF ~~“Class B~~FINANCIAL ~~Common~~CONDITIONS ~~Stock”) which~~AND ~~requires~~RESULTS ~~separate~~OF ~~accounting. The make-whole redemption provision allows us to redeem all or~~OPERATIONS a portion of the notes prior to the date that is 60 months after November 24, 2004, the closing date of the initial public offering, at a redemption price that could result in a premium, therefore resulting in an embedded derivative requiring bifurcation. However, the terms of the embedded derivative permit us to redeem the notes at an amount that will always exceed the fair value of the notes. As a result, this option will always be out of the money, and, therefore, the value ascribed to the embedded derivative would be minimal. Accordingly, we initially recorded it at a value of zero. The optional redemption provision at scheduled prices allows us to redeem all or part of the notes at scheduled premium prices. Although the notes are redeemable at a premium, further analysis under SFAS 133 has led us to conclude that the option is clearly and closely related to the economic characteristics of the notes and should not be bifurcated. The tax redemption provision allows us to redeem all of the notes at par if the interest on the notes is not tax deductible. As a result of the redemption price being at par and the notes initially recorded without a substantial premium or discount, we have concluded that this option is clearly and closely related to the economic characteristics of the notes and should not be bifurcated. The change of control put option allows the note holders to put the notes to us at a price equal to 101% of par. Although the notes are callable at a premium,

34General

~~COINMACH~~ Except ~~SERVICE~~for ~~CORP~~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, 2006 under the caption “Business – Risk Factors.” ~~AND~~Should ~~SUBSIDIARIES~~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.

~~ITEM~~ Our 2primary financial objective is to increase our cash flow from operations. ~~MANAGEMENT’S~~Cash ~~DISCUSSION~~flow ~~AND~~from operations ~~ANALYSIS~~represents OFa ~~FINANCIAL~~source ~~CONDITION~~of ~~AND~~funds ~~RESULTS~~available OFto ~~OPERATIONS~~service (indebtedness, pay dividends and for investment in both organic growth and growth through acquisitions. We have experienced net losses during the past three fiscal years. Such net losses were attributable in part to significant non-cash charges associated with our acquisitions and the related amortization of contract rights accounted for under the purchase method of accounting. We incur significant depreciation and amortization expense relating to annual capital expenditures, which also reduces our net income. The continued) incurrence of significant depreciation and amortization expenses may cause us to continue to incur losses.

~~further analysis under SFAS 133 has led us to conclude that the option is clearly and~~Overview closely related to the economic characteristics of the notes and should not be bifurcated, principally because such premium does not cause the investor to double the initial contractual rate of return.

~~The~~We ~~entire~~are ~~proceeds~~principally ofengaged in the ~~offerings~~business ~~were~~of ~~allocated~~supplying laundry equipment services to multi-family ~~the~~housing ~~Class A~~properties. ~~Common~~Our ~~Stock~~most ~~and~~significant ~~the~~revenue ~~notes~~source is our route business, which ~~and~~over the ~~allocation~~last three fiscal years has accounted for approximately 89% of ~~the~~our ~~IDS~~revenue. ~~proceeds~~Through our route operations, we provide laundry equipment services to ~~the~~locations ~~Class A~~by ~~Common~~leasing ~~Stock~~laundry rooms from building owners and ~~the~~property ~~notes~~management ~~did~~companies, ~~not~~typically ~~result~~on in a ~~substantial~~long-term, ~~premium~~renewable ~~or discount~~basis. ~~Upon~~In return ~~subsequent~~for ~~issuances~~the ofexclusive ~~notes~~right orto ~~IDSs~~provide these services, wemost ~~will~~of ~~evaluate whether~~our ~~there~~contracts isprovide afor commission ~~substantial~~payments ~~discount~~to orthe ~~premium~~location owners. WeCommission ~~expect~~expense ~~that~~(also ifreferred ~~there~~to isas arent ~~substantial~~expense), ~~discount~~our orsingle ~~premium~~largest ~~upon~~expense aitem, ~~subsequent~~is ~~issuance~~included ofin ~~notes,~~laundry ~~certain~~operating ~~redemption~~expenses ~~features~~and ofrepresents ~~the notes~~payments to location owners. Commissions may be ~~considered~~fixed ~~not~~amounts ~~clearly~~or ~~and~~percentages ~~closely~~of ~~related,~~revenues and weare ~~would~~generally paid ~~separately~~monthly. ~~account~~In ~~for~~addition ~~these features~~to ascommission ~~embedded~~payments, ~~derivates.~~many Ifof ~~the~~our ~~embedded~~leases ~~derivates~~require ~~are~~us ~~required~~ to bemake ~~bifurcated,~~advance location wepayments ~~will (a) value~~to ~~the~~location ~~derivative~~owners, ~~(b) record~~which ~~such~~are ~~value~~capitalized asand aamortized ~~reduction~~over the life of the applicable ~~notes~~leases. ~~(discount) with~~Advance ~~a corresponding~~location ~~derivative~~payments ~~liability~~to location owners are paid, ~~(c) accrete~~as required by the applicable ~~discount~~lease, onat the ~~notes~~inception upor torenewal ~~their~~of ~~par~~a ~~value~~lease for the right to operate applicable ~~using~~laundry rooms during the ~~effective~~contract ~~interest~~period, ~~method~~which ~~with~~generally aranges ~~corresponding~~from ~~charge~~5 to ~~interest~~10 years. ~~expense,~~The ~~and~~amount ~~(d)~~of ~~revalue~~advance ~~the~~location ~~derivative~~payments ~~liability~~varies ~~quarterly~~depending ~~with~~on the ~~difference~~size ~~(increase~~of orthe ~~decrease)~~location ~~recorded~~and ~~to interest~~the ~~expense~~term of the lease.

~~The~~We ~~Class A~~also ~~Common~~operate ~~Stock~~an ~~portion~~equipment ofrental ~~each~~business ~~IDS~~through ~~and~~Appliance ~~the~~Warehouse ~~Class B~~of ~~Common~~America, ~~Stock are included in~~Inc. ~~stockholders’ equity~~(“AWA”), ~~net~~a ofDelaware ~~related~~corporation ~~transaction~~that ~~costs,~~is ~~and~~jointly-owned ~~dividends~~by ~~paid~~us onand ~~the~~Coinmach. ~~Class A~~AWA ~~Common~~leases laundry ~~Stock~~equipment and ~~the~~other ~~Class B~~household ~~Common~~appliances ~~Stock~~and ~~will~~electronic beitems ~~recorded as a decrease~~ to ~~stockholders’~~property ~~equity~~owners, ~~when declared.~~managers ~~The notes portion~~ of ~~each IDS are presented as long~~ multi-~~term~~family ~~obligations~~housing properties, and ~~the~~to ~~related transaction~~a ~~costs~~lesser ~~were~~extent, ~~capitalized~~individuals ~~as deferred financing fees~~ and ~~amortized~~corporate ~~to interest expense~~relocation ~~over the term of the notes~~entities. ~~Interest on the notes is charged to interest expense as it is accrued.~~

~~Results of Operations~~30

TheTable followingof discussion should be read in conjunction with the attached unaudited condensed consolidated financial statements and notes thereto and with the audited consolidated financial statements and notes thereto included in our audited consolidated financial statements included in CSC’s registration statement (the “Registration Statement”) on Form S-1 (No. 333-114421), including the Prospectus contained therein, dated November 19, 2004. Contents

35COINMACH SERVICE CORP. AND SUBSIDIARIES

~~COINMACH~~ITEM ~~SERVICE CORP~~2. MANAGEMENT’S DISCUSSION AND ~~SUBSIDIARIES~~ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)

~~ITEM~~ We 2also operate an equipment distribution business through Super Laundry Equipment Corp. (“Super ~~MANAGEMENT~~Laundry”), our indirect wholly-owned subsidiary. Super Laundry’Ss ~~DISCUSSION~~business ~~AND~~consists ~~ANALYSIS~~of constructing OFand ~~FINANCIAL~~designing ~~CONDITION~~complete ~~AND~~turnkey ~~RESULTS~~retail OFlaundromats, ~~OPERATIONS~~retrofitting ~~(continued)~~existing retail laundromats, distributing exclusive lines of commercial coin and non-coin operated machines and parts, and selling service contracts.

~~Comparison~~Laundry operating expenses include, in addition to commission payments, (i) the cost of machine maintenance and revenue collection in the ~~three-~~route and ~~nine-month~~retail ~~periods~~laundromat ~~ended~~business, ~~December 31~~including payroll, ~~2004~~parts, insurance and ~~December~~other related expenses, (ii) 31costs and expenses incurred in maintaining our retail laundromats, including utilities and related expenses, (iii) the cost of ~~2003~~sales associated with the equipment distribution business and (iv) certain expenses related to the operation of our rental business.

~~The~~Critical ~~following~~Accounting ~~table~~Policies: ~~sets forth our revenues for the periods indicated (in millions of~~ ~~dollars):~~

	Three months ended December 31,							Nine months ended December 31
	2004		2003		Change			2004		2003		Change
Route	$	119.5	$	119.2	$	0.3		$	353.7	$	351.5	$	2.2
Rental		8.6		8.1		0.5			25.5		24.0		1.5
Distribution		7.5		8.4		(0.9	)		22.9		22.7		0.2
	$	135.6	$	135.7	$	(0.1	)	$	402.1	$	398.2	$	3.9

Our financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. We believe that the following is one of the more critical judgment area in the application of our accounting policies that currently affect our financial condition and results of operations.

~~Revenue~~We ~~decreased~~have developed software to be utilized internally by ~~approximately~~our $0customer service representatives.~~1 million~~ Expenditures orrelated ~~less~~to ~~than~~such 1%qualifying ~~for~~computer software costs incurred during the ~~three-month~~application ~~period~~development ~~ended December 31~~stage, ~~2004,~~have asbeen ~~compared~~capitalized toby us since the ~~prior~~activities ~~year’s~~performed ~~corresponding~~during ~~period.~~this ~~Revenue~~stage ~~increased~~will bycreate ~~approximately~~probable ~~$3.9~~future economic benefits as required per Statement of Position (SOP) ~~million~~98-1, Accounting for Computer Software Developed For or Obtained For Internal-Use (“SOP 98-1%”). In order for ~~the~~computer ~~nine~~software costs to be considered internal-~~month~~use ~~period~~software ~~ended~~and ~~December 31~~subject to SOP 98-1, ~~2004~~the costs must have the following characteristics: (i) the software must be internally developed, acquired, asor modified solely to meet our internal needs and (ii) no plan exists or is being ~~compared~~developed to market the ~~prior~~software ~~year’s~~externally ~~corresponding~~during ~~period~~the development or modification of the software. Once we determine that such expenditures are available for actual application, these expenditures will be expensed as incurred, similar to maintenance.

~~Route revenue for the three months ended December~~ 31~~, 2004 increased by approximately $0.3~~ million over the prior year’s corresponding period. Route revenue for the nine months ended December 31, 2004 increased by approximately $2.2 million over the prior year’s corresponding period. We believe that the increase was due to the net result of an increase in third party service income and price increases, offset by decreased revenue primarily in the Southwest and Midwest operations caused by higher vacancy rates in these regions.

RentalTable revenue for the three months ended December 31, 2004 increased by approximately $0.5 million or 6% over the prior year’s corresponding period. Rental revenue for the nine months ended December 31, 2004 increased by approximately $1.5 million or 6% over the prior year’s corresponding period. This increase was primarily the result of internal growth of the machine base in existing areas of operations. Contents

~~Distribution~~COINMACH ~~revenue~~SERVICE ~~for the three months ended December 31, 2004 decreased by approximately $0~~CORP.~~9 million~~ orAND ~~11% from the prior year’s corresponding period. Distribution revenue for the nine~~SUBSIDIARIES months ended December 31, 2004 increased by approximately $0.2 million or less than 1% from the prior year’s corresponding period. Sales from the distribution business unit are sensitive to general market conditions and economic conditions. The decrease in the three-month period was primarily due to decreased revenue resulting from the closing of operations in California. The increase in the nine-month period was primarily due to increased sales from the Northeast and Midwest operations offset by decreased revenue resulting from the closing of operations in California. Distribution revenue from our California operations was approximately $0.4 million and $1.1 million for the three-month periods ended December 31, 2004 and December 31, 2003, respectively. Distribution revenue from our California operations was approximately $1.4 million and $2.9 million for the nine-month periods ended December 31, 2004 and December 31, 2003, respectively.

36ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)

~~COINMACH~~Results ~~SERVICE~~of ~~CORP. AND SUBSIDIARIES~~Operations

~~ITEM~~ The 2.following ~~MANAGEMENT’S~~discussion ~~DISCUSSION~~should ~~AND~~be ~~ANALYSIS~~read OFin ~~FINANCIAL~~conjunction ~~CONDITION~~with ~~AND~~the ~~RESULTS~~attached OFunaudited ~~OPERATIONS~~condensed consolidated ~~(continued)~~financial statements and notes thereto.

~~Laundry~~Comparison ~~operating expenses, exclusive~~ of ~~depreciation and amortization, decreased by approximately $1.3 million or 1% for~~ the three-~~month~~ ~~period ended December 31, 2004, as compared to the prior year’s corresponding period. Laundry operating expenses, exclusive of depreciation~~ and ~~amortization,~~ ~~increased by approximately $0.7 million or less than 1% for the~~ nine ~~months ended December 31, 2004, as compared to the prior year’s corresponding period. As a percentage of revenues, laundry operating expenses were 68% for the three~~- ~~and nine-~~month periods ended December 31, ~~2004,~~2006 ~~as compared to 69% for the three-~~ and ~~nine-month periods ended~~ December 31, ~~2003~~2005.

The ~~decrease~~following intable ~~laundry~~sets ~~operating~~forth ~~expenses~~our revenues for the ~~three-month~~periods ~~period~~indicated ~~was due primarily to~~ (~~i) a reduction~~ in ~~operating~~millions ~~expenses as a result~~ of ~~the closing of California operations in the~~ ~~distribution business of approximately $0.9 million, (ii~~dollars) ~~a decrease in insurance costs related to~~: general business insurance coverage of approximately $0.4 million and, (iii) a reduction in commission expense of approximately $0.4 million. These decreases in laundry operating expenses were offset by an increase in fuel cost of approximately $0.3 million primarily due to increased fuel prices.

The increase in laundry operating expenses for the nine-month period was due primarily to (i) increased cost of sales of approximately $1.4 million due to increased sales in the Northeast and Midwest operations in the distribution business, (ii) an increase in salary expense of approximately $1.2 million in the route business associated with collection services and, (iii) an increase in fuel cost of approximately $0.8 million primarily due to increased fuel prices. These increases in laundry operating expenses were offset by a reduction in operating expenses as a result of the closing of California operations in the distribution business of approximately $2.7 million.


	Three months ended December 31,							Nine months ended December 31,
	2006		2005		Change			2006		2005		Change
Route	$	125.4	$	122.1	$	3.3		$	369.3	$	358.6	$	10.7
Rental		9.6		9.2		0.4			28.9		26.8		2.1
Distribution		6.0		7.4		(1.4	)		18.4		19.5		(1.1	)

	$	141.0	$	138.7	$	2.3		$	416.6	$	404.9	$	11.7

~~General~~Revenue ~~and administrative expenses~~ increased by approximately $02.13 million, or 2%, for the three-month period ended December 31, ~~2004~~2006, as compared to the prior year’s corresponding period. ~~General~~ ~~and~~Revenue ~~administrative expenses~~ increased by approximately $011.37 million, or 3%, for the nine-month period ended December 31, ~~2004~~2006, as compared to the prior year’s corresponding period. ~~The~~ increases in general and administrative expenses were primarily due to stock based compensation expense and other public company incremental administrative fees and expenses including but not limited to incremental director and officer liability insurance, additional directors’ fees, investor and public relations expenses, and other miscellaneous costs and expenses relating to compliance with applicable securities laws. As a percentage of revenues, general and administrative expenses were approximately 1.8% for the three- and nine-month periods ended December 31, 2004, as compared to approximately 1.7% for the three and nine-month periods ended December 31, 2003.

~~Depreciation~~Route ~~and~~revenue ~~amortization~~for ~~expense~~the three months ended December 31, 2006 increased by approximately $03.8 3 million, or 53%, ~~for~~over the ~~three-month~~ prior year’s corresponding period. Route revenue for the nine months ended December 31, ~~2004~~2006 ~~and~~ increased by approximately $210.87 million, or 53%, ~~for~~ over the ~~nine-month~~prior year’s corresponding period. ~~ended~~The ~~December 31,~~increase ~~2004,~~was asprimarily ~~compared~~due to ~~the~~an ~~prior~~improvement ~~year~~in same store sales driven by the Company’s ~~corresponding~~pricing strategies and the general recovery in occupancy rates throughout our ~~periods~~operating regions, as well as additional revenue generated from the ASI acquisition. ~~The~~On ~~increase~~April 3, 2006, inwe ~~depreciation~~completed ~~and~~the ~~amortization~~acquisition ~~expense~~of ~~was~~substantially ~~primarily~~all ~~due~~of tothe ~~depreciation~~assets of ASI for a purchase price ~~expense~~of ~~relating~~$15.0 million, subject to ~~capital~~the ~~expenditures~~outcome ~~required~~of bycertain ~~historical~~purchase ~~increases~~price adjustments. ASI was a leading laundry service provider to colleges and universities in ~~our~~the ~~installed~~mid-west, ~~base~~with 40 years of experience ~~machines~~and more than 45 partner schools.

37 Rental revenue for the three months ended December 31, 2006 increased by approximately $0.4 million, or 4%, over the prior year’s corresponding period. Rental revenue for the nine months ended December 31, 2006 increased by approximately $2.1 million, or 8%, over the prior year’s corresponding period. This increase was primarily the result of our continuing internal growth of the machine base in existing areas of operations during the current and prior years, as well as the result of a “tuck-in” acquisition during the prior year.

~~COINMACH~~ Distribution ~~SERVICE~~revenue ~~CORP~~for the three months ended December 31, 2006 decreased by approximately $1.4 million, ~~AND~~or ~~SUBSIDIARIES~~19%, over the prior year’s corresponding period as compared to

~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)~~32

AmortizationTable of advance location payments decreased slightly for the three-month period ended December 31, 2004 and decreased by approximately $0.5 million or 3% for the nine-month period ended December 31, 2004, as compared to the prior year’s corresponding periods. The decrease was primarily due to advance location payments incurred in the prior years becoming fully amortized. Contents

~~Amortization~~COINMACH ofSERVICE ~~intangibles decreased by approximately $0~~CORP.~~2 million~~ orAND ~~6% for the three-month~~SUBSIDIARIES period ended December 31, 2004 and decreased by approximately $0.5 million or 4% for the nine-month period ended December 31, 2004, as compared to the prior year’s corresponding periods. The decrease was primarily the result of intangibles related to acquisitions becoming fully amortized.

~~Other~~ITEM ~~items~~2. ~~for~~MANAGEMENT’S ~~the~~DISCUSSION ~~nine-month~~AND ~~period~~ANALYSIS ~~ended~~OF ~~December 31,~~FINANCIAL ~~2004~~CONDITIONS ~~relates~~AND toRESULTS ~~additional~~OF ~~expenses associated~~OPERATIONS ~~with the closing of California operations in the distribution business.~~(continued)

~~Operating income margins were approximately 9.6% for~~ the ~~three-month period ended December 31, 2004, as compared to approximately 9.4% for the~~ prior year’s corresponding period. ~~Operating income~~Distribution ~~margins~~revenue ~~were approximately 9.1%~~ for the nine~~-month~~ ~~period~~months ended December 31, ~~2004,~~2006 asdecreased ~~compared~~by to approximately 9$1.1 million, or 6%, ~~for~~from the prior year’s corresponding period. The ~~slight~~decrease ~~increase in operating income margin~~ was primarily due to adecreased ~~reduction~~equipment insales. ~~operating~~Sales ~~expenses~~from asthe adistribution ~~result~~business ofunit ~~the~~are ~~closing~~sensitive ofto ~~California~~general ~~operations~~market inand ~~the~~economic ~~distribution business~~conditions.

~~Transaction~~Laundry ~~costs~~operating ~~for~~expenses, ~~the~~exclusive ~~three~~of depreciation and ~~nine months ended December 31~~amortization, ~~2004~~increased ~~represent (i)~~by approximately $111.30 million, ~~redemption~~or ~~premium~~1%, onfor the ~~portion~~three-month ofperiod 9%ended ~~senior~~December 31, ~~notes redeemed~~2006, ~~(2) the~~as compared ~~write-off~~to of the ~~deferred~~prior ~~financing~~year’s ~~costs~~corresponding ~~relating~~period. toLaundry ~~the~~operating 9%expenses, ~~senior~~exclusive ~~notes~~of ~~redeemed~~depreciation and ~~term loans~~ ~~repaid~~amortization, ~~aggregating~~increased by approximately $37.51 million, ~~and~~or (3)%, for the nine-month period ended December ~~expenses~~31, ~~relating~~2006, as compared to the ~~amendment~~prior year’s corresponding period. As a percentage of revenues, laundry operating expenses were approximately 67% for the three-month period ended ~~Senior~~December 31, ~~Secured~~2006 ~~Credit~~as ~~Facility~~compared ~~aggregating~~to approximately ~~$2.4~~68% for the prior year’s corresponding period and 68% for both nine-month periods ended December ~~million~~31, 2006 and December 31, 2005.

~~Interest~~The ~~expense~~increase ~~increased~~in bylaundry ~~approximately~~operating ~~$0.4 million~~expenses ~~or 2%~~ for the three-month period ~~ended~~ ~~December 31,~~was ~~2004~~due asprimarily ~~compared~~ to ~~the~~(i) an ~~prior~~increase ~~year’s~~in ~~corresponding~~commissions ~~period.~~paid ~~Interest~~of ~~expense increased by~~ approximately $01.38 million orrelated ~~less~~to ~~than~~increased 1%route ~~for~~revenue, (ii) various ~~the~~laundry ~~nine-month~~operating ~~period~~expenses ~~ended~~incurred ~~December 31, 2004,~~ as ~~compared~~a toresult of the ~~prior~~ASI ~~year’s~~acquisition ~~corresponding~~in ~~period.~~the ~~Following~~route business ~~consummation~~ of ~~our initial~~approximately ~~public offering in November~~$0.8 ~~2004~~million, a(iii) an ~~portion~~increase ofin ~~the~~franchise ~~net~~and ~~proceeds~~property ~~thereof~~taxes ~~was~~due primarily ~~used~~ to ~~redeem~~ timing of approximately $~~125~~0.54 million, of(iv) partially 9%offset ~~senior~~by ~~notes~~decreased ~~and~~cost of goods sold of approximately $151.57 million ofdue ~~outstanding~~to ~~term~~decreased ~~loans~~equipment ~~under the~~sales ~~Senior~~in ~~Secured~~the ~~Credit~~distribution ~~Facility. As~~ business, (v) a ~~consequence~~decrease ofin ~~the~~energy ~~initial~~costs ~~public~~for ~~offering~~vehicle ~~and~~fuel ~~related offering~~as ofwell ~~11%~~as ~~senior~~utilities ~~secured~~in ~~notes,~~our ~~CSC~~laundromats ~~issued~~ of approximately $~~116~~0.16 million ofand ~~11%~~(vi) other ~~senior~~miscellaneous ~~secured notes~~operating ~~underlying~~costs ~~IDSs~~ and ~~$20.0 million~~expenses ofthat ~~additional~~are ~~11%~~not material, ~~senior~~individually ~~secured~~or ~~notes~~in ~~not~~the ~~underlying IDSs~~aggregate.

The ~~benefit~~increase ~~for~~in ~~income~~laundry ~~taxes~~operating expenses for the nine-month period ~~ended~~was ~~December 31,~~due ~~2004~~primarily ~~was~~to (i) an increase in commissions paid of approximately $105.03 million asrelated ~~compared~~ to aincreased ~~benefit~~route ~~for~~revenue, (ii) various ~~income~~laundry ~~taxes~~operating expenses incurred as a result of ~~approximately~~the ~~$2.1 million for~~ASI acquisition in the ~~prior~~route business ~~year’s~~of ~~corresponding~~approximately ~~period~~$1.6 million, ~~The~~(iii) an ~~change~~increase ~~for~~in ~~the~~franchise ~~nine-month~~and ~~period~~property istaxes ~~primarily~~ due primarily to antiming ~~increased~~of ~~loss~~approximately ~~before~~$0.5 million, ~~income~~(iv) an ~~taxes~~increase ~~with~~in acosts ~~tax~~related ~~effect~~to medical insurance coverage of approximately $60.7 million, (v) partially offset by a ~~tax~~decrease in cost of ~~benefit~~goods sold of approximately $61.08 million ~~arising~~due ~~from~~to ~~transaction~~decreased ~~costs~~equipment ~~related~~sales toin the ~~initial public~~distribution ~~offering,~~business aand ~~state~~(vi) other ~~tax~~miscellaneous ~~benefit~~operating ~~net~~costs ofand ~~Federal~~expenses ~~taxes~~that ofare ~~approximately~~not ~~$1.2 million~~material, individually ~~and~~or ain the aggregate.

38 General and administrative expenses decreased by approximately $0.5 million for the three-month period ended December 31, 2006, as compared to the prior year’s corresponding period. General and administrative expenses increased by less than $0.1 million for the nine-month period ended December 31, 2006, as compared to the prior year’s corresponding period. The decrease in general and administrative expenses was primarily due to the timing of employee benefit costs, professional fees, audit and legal fees associated with being a public company, as well as costs related to continued procedures in order to comply with the Sarbanes-Oxley Act of 2002. As a percentage of revenues, general and administrative expenses were

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~33

ITEMTable 2.of MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)Contents

~~valuation~~COINMACH ~~allowance~~SERVICE ~~of approximately $0~~CORP.~~4 million~~ ~~offset~~AND ~~by non-deductible interest on~~SUBSIDIARIES preferred stock of approximately $6.4 million. The effective tax rate for the nine-month period ended December 31, 2004 was 23% as compared to 8% for the prior year’s corresponding period. The effective tax rate for the nine-month period ended December 31, 2004 reflects changes in the amount of net operating loss carryforwards that the Company expects to utilize.

~~Net~~ITEM ~~loss was approximately $33~~2.~~3 million~~ ~~for~~MANAGEMENT’S ~~the~~DISCUSSION ~~nine-month~~AND ~~period~~ANALYSIS ~~ended~~OF ~~December 31,~~FINANCIAL ~~2004,~~CONDITIONS ~~as compared~~AND toRESULTS ~~net~~OF ~~loss~~OPERATIONS ~~of approximately $23.3 million for the prior year’s corresponding period.~~(continued)

~~The~~approximately ~~following~~2% ~~table sets forth an analysis of EBITDA (as defined below)~~ for ~~each of~~ the ~~Company’s~~ ~~route,~~three-month ~~rental~~ and ~~distribution segments for~~ the nine-month periods ~~indicated~~ended ~~(in~~December 31, ~~millions~~2006 ofand December 31, 2005. ~~dollars):~~

	Three months ended December 31,									Nine months ended December 31,
	2004			2003			Change			2004			2003			Change
Route	$	39.5		$	39.3		$	0.2		$	116.2		$	115.9		$	0.3
Rental		3.7			3.0			0.7			10.4			9.2			1.2
Distribution		0.2			(0.1	)		0.3			0.6			(1.1	)		1.7
Other items, net		—			(0.1	)		0.1			(0.5	)		(0.1	)		(0.4	)
Corporate expenses		(2.5	)		(2.4	)		(0.1	)		(7.2	)		(6.9	)		(0.3	)
Transaction costs(1)		(17.2	)		—			(17.2	)		(17.2	)		—			(17.2	)
Total EBITDA	$	23.7		$	39.7		$	(16.0	)	$	102.3		$	117.0		$	(14.7	)

In conjunction with our 2006 Restricted Stock Awards, we adopted SFAS 123(R) as of January 1, 2006. SFAS 123(R) requires us to recognize compensation expense for all share-based payments made to employees based on their fair value of share-based payment at the date of grant. For share-based payments relating to the Time Vesting Shares granted subsequent to January 1, 2006, compensation expense, based on their fair value on the date of grant, will be recognized in the Consolidated Statements of Operations from the date of grant. For share-based payments relating to the Performance Vesting Shares granted subsequent to January 1, 2006, compensation expense will be recorded to the Consolidated Statements of Operations only for those shares of which the attainment of the applicable performance conditions is probable, based on their fair value on the date of grant. For the nine-month period ended December 31, 2006, we recognized approximately $0.2 million to compensation expense which is included in general and administrative expense in the Consolidated Statements of Operations for share-based payments to employees, which is discussed further in Note 9 to our consolidated financial statements.

( Depreciation and amortization expense decreased by approximately $0.2 million, or less than 1)%, Nofor ~~amounts~~the ~~have~~three-month ~~been~~period ~~added~~ended ~~back~~December 31, to2006, ~~EBITDA~~as ~~relating~~compared to ~~certain~~the ~~transaction~~prior ~~costs~~year’s corresponding ~~consisting~~period. ofDepreciation ~~(1)~~and ~~the~~amortization expense decreased by approximately $111.3 0 million, ~~redemption~~or ~~premium~~2%, onfor the ~~portion~~nine-month ofperiod 9%ended ~~senior~~December 31, ~~notes~~2006, ~~redeemed;~~as ~~and~~compared ~~(2)~~to the ~~write-off~~prior ofyear’s corresponding ~~the~~period. ~~deferred~~The ~~financing~~decrease ~~costs~~in ~~relating~~depreciation and amortization expense was primarily due to ~~the~~a reduction 9%in ~~senior~~depreciation ~~notes~~expense ~~redeemed~~relating ~~and~~to ~~term~~reduced ~~loans~~capital ~~repaid~~expenditures ~~aggregating~~made ~~approximately~~in ~~$3.5~~prior ~~million~~years.

~~EBITDA~~Amortization ~~represents~~of ~~earnings~~advance ~~from~~location ~~continuing~~payments ~~operations~~decreased ~~before~~by ~~deductions~~approximately ~~for interest~~$0.1 million, ~~income~~ ~~taxes~~or ~~and depreciation and amortization. Management believes that EBITDA is useful as a means to evaluate our ability to service existing debt~~2%, ~~to sustain potential future increases in~~for ~~debt and to satisfy capital requirements. EBITDA is also used by management as a measure of evaluating~~ the ~~performance of our~~ three-month ~~operating~~period ~~segments.~~ended ~~Management~~December 31, ~~further~~2006, ~~believes that EBITDA is useful to investors~~ as acompared ~~measure of comparative operating performance as it is less susceptible~~ to ~~variances~~the inprior ~~actual~~year’s ~~performance resulting from depreciation, amortization and other~~corresponding ~~non-cash~~period. ~~charges~~Amortization ~~and more reflective~~ of ~~changes~~advance inlocation ~~pricing~~payments ~~decisions,~~increased ~~cost~~by ~~controls~~approximately ~~and other factors that affect operating performance~~$0.5 million, ~~Management~~or ~~uses EBITDA to develop compensation plans~~4%, tofor ~~measure~~the ~~sales~~nine-month ~~force~~period ~~performance~~ended ~~and~~December 31, ~~to allocate capital assets. Additionally~~2006, ~~because~~as wecompared ~~have historically provided EBITDA~~ to ~~investors,~~the weprior ~~believe~~year’s ~~that presenting this non-GAAP financial~~corresponding ~~measure~~period. ~~provides~~The ~~consistency~~increase in ~~its~~amortization ~~financial~~expense ~~reporting.~~for ~~Management’s~~the ~~use~~nine-month ofperiod ~~EBITDA, however,~~ is ~~not~~ ~~intended~~primarily due to ~~represent~~the timing ~~cash~~of ~~flows~~leases ~~for~~signed ~~the~~or ~~period~~renewed, ~~nor~~as ~~has~~such itrelated ~~been~~advance ~~presented~~location aspayments anare ~~alternative~~capitalized toand ~~either~~amortized ~~(a) operating~~over ~~income~~the ~~(as~~life ~~determined by GAAP) as an indicator~~ of ~~operating~~the ~~performance~~applicable orleases. ~~(b) cash flows from operating, investing and~~

39 Amortization of intangibles increased by less than $0.1 million, or 1%, for the three-month period ended December 31, 2006, as compared to the prior year’s corresponding period. Amortization of intangibles increased by approximately $0.2 million, or 2%, for the nine-month period ended December 31, 2006, as compared to the prior year’s corresponding period. The increase was primarily due to additional amortization expense relating to the acquisitions.

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~34

ITEMTable 2.of MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)Contents

~~financing~~COINMACH ~~activities~~SERVICE ~~(as determined by GAAP) as a measure of liquidity~~CORP. ~~Given~~AND ~~that EBITDA is~~SUBSIDIARIES not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, EBITDA may not be comparable to other similarly titled measures of other companies. See Note 6 to the Condensed Consolidated Financial Statements (Unaudited) for a reconciliation of net loss to EBITDA for the periods indicated in the table immediately above.

~~EBITDA~~ITEM ~~was approximately $23~~2.~~7 million~~ for the three months ended December 31, 2004, as compared to approximately $39.7 million for the three months ended December 31, 2003. EBITDA margin was approximately 17.5% for the three months ended December 31, 2004, as compared to 29.3% for the prior yearMANAGEMENT’sS ~~corresponding~~DISCUSSION ~~period.~~AND ~~EBITDA~~ANALYSIS ~~was~~OF ~~approximately~~FINANCIAL ~~$102.3 million~~CONDITIONS ~~for~~AND ~~the~~RESULTS ~~nine months~~OF ~~ended~~OPERATIONS ~~December 31, 2004, as compared to approximately $117.0 million for the prior year’s~~(continued) ~~corresponding period. EBITDA margin was approximately 25.4% for the nine months ended December 31, 2004, as compared to 29.4% for the prior year’s corresponding period.~~

~~Liquidity~~ Operating ~~and~~income ~~Capital~~margins ~~Resources~~were approximately 11.2% for the three-month period ended December 31, 2006, as compared to approximately 10.0% for the prior year’s corresponding period. Operating income margins were approximately 10.6% for the nine-month period ended December 31, 2006, as compared to approximately 9.7% for the prior year’s corresponding period. The increase in operating income margin was primarily due to an increase in revenue offset partially by an increase in laundry operating expenses.

~~CSC~~Transaction iscosts afor ~~holding company with no material assets other than~~ the ~~capital~~nine-month ~~stock~~period ofended ~~its subsidiaries~~December 31, ~~the~~2006 ~~intercompany note~~ of ~~Coinmach~~approximately ~~and~~$0.8 million ~~the~~consisted ~~guarantee~~ of ~~such~~costs ~~intercompany~~related ~~note~~to ~~by certain~~the ~~subsidiaries~~redemption of ~~Coinmach.~~a ~~Our~~portion ~~operating~~of ~~income~~the is11% ~~generated~~Senior bySecured ~~our~~Notes in ~~subsidiaries~~April 2006. ~~Under~~Transaction ~~a dividend~~costs ~~policy adopted by our board~~ of ~~directors,~~approximately ~~cash~~$2.6 million ~~generated~~for byboth usthe inthree-month ~~excess of operating~~and ~~needs,~~nine-month ~~interest~~periods ~~and~~ended ~~principal payments on indebtedness~~December 31, ~~and~~2005 ~~capital~~were ~~expenditures~~primarily ~~sufficient~~due to ~~maintain~~ ~~our properties and other assets would, subject to~~ (1) the ~~discretion~~write-off of ~~our board of~~the ~~directors,~~unamortized ~~generally~~deferred befinancing ~~distributed~~costs asrelating ~~regular quarterly cash dividends~~ to the ~~holders~~repayment of ~~Class A Common~~term ~~Stock~~loans ~~and~~under asthe ~~regular~~Company’s then ~~annual~~existing ~~cash~~senior ~~dividends~~credit tofacility, ~~the~~aggregating ~~holders~~approximately ~~of Class~~$1.7 ~~B Common Stock~~million, ~~in each~~(2) expenses ~~case~~aggregating ~~subject~~approximately ~~to compliance with the terms of our indebtedness and our organizational documents~~$0. ~~Dividend~~7 million ~~payments~~relating ~~are~~to ~~not~~an ~~mandatory~~amendment ~~or guaranteed~~ and ~~holders~~restatement of ~~our~~the ~~common stock do not have any~~Company’s ~~legal~~then ~~right~~existing tosenior ~~receive,~~credit orfacility ~~require~~and us(3) additional tocosts ~~pay, dividends. Furthermore, our board~~ of ~~directors~~approximately ~~may, in~~$0.2 million ~~its sole discretion, amend or repeal our dividend policy at any time, including decreasing the~~related ~~level~~to ~~of dividends or discontinuing entirely~~ the ~~payment of dividends~~IPO.

~~Our~~Interest ~~liquidity~~expense ~~requirements~~decreased ~~will~~by ~~primarily~~approximately ~~consist~~$1.6 million, ofor ~~interest~~10%, ~~payments~~for onthe ~~our~~three-month ~~11%~~period ended ~~senior~~December 31, 2006 as compared to the prior year’s corresponding period. Interest expense ~~secured~~decreased ~~notes~~by ~~and~~approximately ~~dividend~~$4.9 million, ~~payments~~or 11%, iffor ~~any~~the nine-month period ended December 31, on2006 as ~~our~~compared ~~common~~to ~~stock~~the prior year’s corresponding period. ~~Our~~The ~~ability~~decrease toin ~~make~~interest ~~such~~expense was due ~~payments~~primarily ~~will~~to ~~depend~~the onredemption of the ~~earnings~~9% ~~and~~Senior ~~cash~~Notes ~~flows~~in ofFebruary 2006, which were financed with additional borrowings under our ~~subsidiaries~~credit facility at a lower rate and the ~~ability~~redemption of ~~our~~a portion of ~~subsidiaries~~the to11% ~~distribute~~Senior ~~amounts~~Secured toNotes ~~us,~~in ~~including~~February 2006. This decrease was partially offset by ~~way~~additional interest ofexpense ~~payments~~due to an increase in variable interest rates on ~~the~~such ~~intercompany~~credit ~~note~~facility.

WeThe ~~and~~provision ~~our~~for ~~subsidiaries~~income ~~have~~taxes ~~substantial~~for ~~indebtedness~~the ~~and~~three-month ~~debt~~period ~~service~~ended ~~requirements. At~~ December 31, ~~2004,~~2006 onwas a$0.9 million ~~consolidated~~as ~~basis,~~compared weto ~~had~~a ~~outstanding~~benefit ~~total~~for ~~debt~~income taxes of approximately $~~709.~~1 .7 million, ~~which~~for ~~included~~the ~~(i)~~ prior year’s corresponding period. The change of approximately $~~324~~2.56 million ~~aggregate~~is ~~principal~~primarily ~~amount~~due ofto ~~Coinmach’s~~an 9%increase ~~senior~~in ~~notes,~~operating ~~(ii) approximately~~income ~~$240.5 million~~and ofa ~~borrowings~~change ~~under~~in the ~~Senior~~state ~~Secured~~of ~~Credit~~Texas franchise tax statutes, as ~~Facility~~discussed ~~and~~below. ~~(iii)~~The provision for income taxes for the nine-month period ended December 31, 2006 was approximately $~~136.~~1.3 million ~~aggregate~~as ~~principal~~compared ~~amount~~to ofa ~~our~~benefit ~~11%~~for ~~senior~~income taxes of approximately $3.8 ~~secured~~million ~~notes~~for the prior year’s corresponding period. ~~Letters~~The change of ~~credit~~approximately ~~under~~$5.1 million for the ~~Senior~~nine-month ~~Secured~~period ~~Credit~~is ~~Facility~~primarily ~~outstanding~~due atto ~~December 31,~~an ~~2004~~increase ~~were~~in ~~approximately~~operating $6income and state taxes.~~4 million.~~ The ~~11%~~effective ~~senior~~tax ~~secured~~rate ~~notes~~for ~~are~~the ~~scheduled~~nine-month toperiod ~~mature~~ended on December 131, ~~2024~~2006 ~~and~~was ~~the 9~~approximately 66% ~~senior~~as ~~notes~~compared ~~are~~to ~~scheduled~~39% tofor ~~mature~~the onprior ~~February 1,~~year’s ~~2010~~corresponding period. The ~~term~~increased effective tax rate ~~loans~~is ~~under~~primarily due to changes in the ~~Senior~~state ~~Secured~~of ~~Credit~~Texas ~~Facility~~franchise ~~are~~tax ~~scheduled~~statute pursuant to bethe Texas Franchise Tax Reform Bill (HB 3) which is effective for fiscal years ending in 2007.

40 Net income was approximately $0.7 million for the nine-month period ended December 31, 2006, as compared to net loss of approximately $5.9 million for the prior year’s

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~35

ITEMTable 2.of MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)Contents

~~fully~~COINMACH ~~repaid~~SERVICE ~~by July 25, 2009~~CORP. AsAND ~~of December 31, 2004, there were no amounts outstanding~~SUBSIDIARIES ~~under the revolver portion of the Senior Secured Credit Facility, which is scheduled to expire on January 25, 2008.~~

~~Our~~ITEM ~~stockholders~~2. MANAGEMENT’S ~~equity~~DISCUSSION ~~was~~AND ~~approximately~~ANALYSIS ~~$113.8 million~~OF asFINANCIAL ofCONDITIONS ~~December 31,~~AND ~~2004.~~RESULTS OF OPERATIONS (continued)

corresponding period. The ~~primary~~change ~~liquidity~~is ~~needs~~primarily ofdue ~~our~~to ~~operating~~increased ~~subsidiaries,~~revenue onand a ~~consolidated~~decrease ~~basis,~~in ~~are~~interest ~~to fund capital expenditures~~expense, ~~service indebtedness and support working capital requirements. We have~~partially ~~met~~offset ~~these~~by ~~requirements~~increased ~~for~~laundry ~~the past three fiscal years. Our principal sources of liquidity are cash flows from~~ operating ~~activities~~expenses and ~~selected~~income ~~borrowings available under the Senior Secured Credit Facility~~taxes. ~~As of December 31, 2004, we had cash and cash equivalents of approximately $56.2~~ ~~million and available borrowings under the Senior Secured Credit Facility of approximately $68.6 million.~~

AsThe wefollowing ~~have~~table ~~focused~~sets onforth ~~increasing~~EBITDA ~~our~~for ~~cash~~each ~~flow from operating activities, we have made significant capital investments, primarily consisting~~ of ~~capital~~our ~~expenditures related to acquisitions~~route, ~~renewals~~rental and ~~growth.~~distribution ~~We anticipate that we will continue to utilize cash flows from~~segments ~~operations~~for tothe ~~finance~~periods ~~our~~indicated ~~capital~~(in ~~expenditures~~millions ~~and~~of ~~working capital needs, including interest and~~dollars): ~~principal payments on our outstanding indebtedness, and to pay dividends on our common stock.~~

Financing Activities


	Three months ended December 31,								Nine months ended December 31,
	2006			2005			Change		2006			2005			Change
Route	$	41.2		$	40.7		$	0.5	$	120.3		$	118.2		$	2.1
Rental		4.4			4.0			0.4		12.8			11.2			1.6
Distribution		0.6			0.2			0.4		1.5			0.6			0.9
Other items, net		—			—			—		—			(0.3	)		0.3
Corporate expenses		(3.1	)		(3.5	)		0.4		(9.2	)		(9.1	)		(0.1	)
Transaction costs(1)		—			(2.6	)		2.6		(0.9	)		(2.6	)		1.7

Total EBITDA	$	43.1		$	38.8		$	4.3	$	124.5		$	118.0		$	6.5

We(1) ~~have~~The ~~from~~computation ~~time~~of EBITDA for the nine-months ended December 31, 2006 has not been adjusted to ~~time~~exclude ~~used~~transaction ~~external~~costs ~~financings~~consisting of: (i) the premium paid to ~~meet~~purchase ~~cash~~certain ~~needs~~11% ~~for~~Senior ~~operating~~Secured ~~expenses,~~ Notes of approximately $0.4 million and (ii) the ~~payment~~write-off of ~~interest,~~a ~~retirement~~proportionate amount of ~~debt~~unamortized ~~and~~deferred ~~acquisitions~~financing ~~and~~costs ~~capital~~of ~~expenditures~~approximately $0.4 Wemillion. ~~may~~The ~~use external~~computation ~~financings~~of inEBITDA for the ~~future~~three toand ~~refinance~~nine ormonths ~~fund~~ended ~~the~~December ~~retirement~~31, of2005 ~~our~~has ~~and~~not ~~our~~been ~~subsidiaries’ existing~~adjusted ~~indebtedness.~~to ~~The~~exclude ~~timing~~transaction ~~and~~costs ~~amount~~consisting of: ~~external~~(i) ~~financings~~the ~~depend~~write-off ~~primarily~~of ~~upon~~the ~~economic and~~unamortized ~~financial~~deferred ~~market~~financing ~~conditions,~~costs ~~our~~relating ~~consolidated~~to ~~cash~~the ~~needs~~previous ~~and~~senior ~~our~~secured ~~future~~credit ~~capital~~facility ~~structure objectives,~~term asloans ~~well~~repaid asaggregating ~~contractual~~approximately ~~limitations~~$1.7 onmillion, ~~additional~~(ii) ~~financings~~expenses aggregating approximately $0.7 ~~Additionally,~~million relating to an amendment to the ~~availability~~ ~~and~~previous ~~cost~~senior ofsecured ~~external~~credit ~~financings~~facility ~~will~~and ~~depend~~(iii) ~~upon~~additional ~~the~~expenses ~~financial~~aggregating ~~condition~~approximately of$0.2 ~~the entities~~million ~~seeking~~relating ~~those~~to ~~funds~~the IPO.

~~The~~EBITDA ~~Initial~~represents ~~Public~~earnings ~~Offering~~from continuing operations before deductions for interest, income taxes and depreciation and amortization. Management believes that EBITDA is useful as a means to evaluate our ability to service existing debt, to sustain potential future increases in debt and to satisfy capital requirements. EBITDA is also used by management as a measure of evaluating the performance of our three operating segments. Management further believes that EBITDA is useful to investors as a measure of comparative operating performance as it is less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of changes in pricing decisions, cost controls and other factors that affect operating performance. Management uses EBITDA to develop compensation plans, to measure sales force performance and to allocate capital assets. Additionally, because we have historically provided EBITDA to investors, we believe that presenting this non-GAAP financial measure provides consistency in financial reporting. Our use of EBITDA, however, is not intended to represent cash flows for the period, nor has it been presented as an alternative to either (a) operating income (as determined by GAAP) as an indicator of operating performance or (b) cash flows from operating, investing and financing activities (as determined by GAAP) as a measure of liquidity. Given that EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, EBITDA may not be comparable to other similarly titled measures of other companies. See Note 6 to the Condensed Consolidated Financial Statements for a reconciliation of net income (loss) to EBITDA for the periods indicated in the table immediately above.

~~On November 24, 2004, we completed our initial public offering of 18,333,333 IDSs at a public~~36 offering-price of $13.64 per IDS and $20 million aggregate principal amount of 11% senior secured notes. On December 21, 2004, the underwriters of the initial public offering purchased an additional 578,199 IDSs pursuant to an overallotment exercise.

ProceedsTable from these transactions, after approximately $14.3 million in underwriting discounts and commissions, were approximately $263.7 million. The net proceeds were used to (i) redeem a portion of the 9% senior notes in an aggregate principal amount of $125.5 million (plus approximately $4.5 million of accrued interest and approximately $11.3 million of related redemption premium), (ii) repay approximately $15.5 million of outstanding term loans under the Senior Secured Credit Facility, (iii) redeem approximately $91.8 million of Coinmach Contents

41COINMACH SERVICE CORP. AND SUBSIDIARIES

~~COINMACH~~ITEM ~~SERVICE CORP~~2. MANAGEMENT’S DISCUSSION AND ~~SUBSIDIARIES~~ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)

~~ITEM~~ EBITDA 2was approximately $43.1 million ~~MANAGEMENT~~for the three months ended December 31, 2006, as compared to approximately $38.8 million for the three months ended December 31, 2005. EBITDA margin was approximately 30.6% for the three months ended December 31, 2006, as compared to 28.0% for the prior year’Ss ~~DISCUSSION~~corresponding ~~AND~~period. ~~ANALYSIS~~EBITDA OFwas ~~FINANCIAL~~approximately ~~CONDITION~~$124.5 million ~~AND~~for ~~RESULTS~~the OFnine months ~~OPERATIONS~~ended ~~(continued)~~December 31, 2006, as compared to approximately $118.0 million for the nine months ended December 31, 2005. EBITDA margin was approximately 29.9% for the nine months ended December 31, 2006, as compared to 29.2% for the prior year’s corresponding period. The increase in EBITDA and EBITDA margin for the nine-month period is primarily attributable to an increase in revenue primarily in the route business and a decrease in interest expense.

~~Laundry’s~~Liquidity ~~outstanding Class A preferred stock~~ and ~~approximately~~Capital ~~$7.4 million of Coinmach~~Resources ~~Laundry’s outstanding Class B preferred stock, and (iv) pay related fees and expenses.~~

We are a holding company with no material assets other than the capital stock of our subsidiaries, the Intercompany Note and the guaranty of such Intercompany Note by certain subsidiaries of Coinmach. Our operating income is generated by our subsidiaries. The Intercompany Note and related guarantees are described below under “— Financing Activities — The Intercompany Loan.” Our liquidity requirements, on a consolidated basis, primarily consist of (i) interest payments on the 11% Senior Secured Notes, (ii) interest and regularly scheduled amortization payments with respect to borrowings under the Senior Credit Facility, (iii) dividend payments, if any, on our common stock and (iv) capital expenditures and other working capital requirements.

AtWe ~~December 31,~~have ~~2004,~~met ~~there~~these ~~was~~requirements ~~approximately~~for ~~$136.1 million~~the ~~aggregate~~past ~~principal~~three ~~amount~~fiscal ~~of 11% senior secured notes outstanding~~years. ~~The~~Our ~~11%~~ability ~~senior secured notes, which are scheduled~~ to ~~mature~~make onsuch ~~December 1,~~payments ~~2024,~~and ~~are~~expenditures ~~our~~will ~~senior~~depend ~~secured~~on ~~obligations~~the earnings and ~~are~~cash ~~redeemable,~~flows atof our ~~option,~~subsidiaries inand ~~whole or~~the inability ~~part,~~of atour ~~any~~subsidiaries ~~time~~to ordistribute ~~from~~amounts ~~time~~ to ~~time~~us, ~~upon~~including ~~not~~by ~~less~~way ~~than~~of 30payments ~~nor~~on ~~more than 60 days’ notice (i)~~the ~~prior~~Intercompany toNote. ~~December 1,~~Our ~~2009,~~principal ~~upon~~sources ~~payment~~ of aliquidity ~~make-whole~~are ~~premium~~cash ~~and~~flows ~~(ii) on~~from oroperating ~~after~~activities ~~December 1,~~and ~~2009,~~borrowings atavailable ~~the~~under ~~redemption prices set forth in~~ the ~~indenture~~revolver ~~governing~~portion ~~the~~of ~~11%~~Senior ~~senior~~Credit ~~secured notes plus accrued and unpaid interest thereon~~Facility. ~~The~~As ~~11%~~of ~~senior secured notes are secured by a~~December 31, ~~first-priority perfected lien~~2006, ~~subject~~we tohad ~~certain~~cash ~~permitted~~and ~~liens,~~cash onequivalents ~~substantially all~~ of ~~our existing~~approximately $38.4 million and ~~future~~available ~~assets,~~borrowings under ~~including~~ the ~~common~~revolver ~~stock~~portion of ~~AWA,~~ the ~~capital~~Senior ~~stock~~Credit Facility of ~~Coinmach~~approximately $68.2 million. Letters ~~Laundry~~of ~~and~~credit under the ~~intercompany~~revolver ~~note~~portion ~~and~~of ~~related~~the ~~guaranty.~~Senior ~~The~~Credit ~~11%~~Facility ~~senior~~outstanding ~~secured~~at ~~notes~~December 31, ~~are~~2006 ~~guaranteed~~were onapproximately ~~a senior secured basis by Coinmach Laundry~~$6.8 million.

~~The~~Our ~~indenture~~stockholders’ ~~governing~~equity ~~the~~was ~~11%~~approximately ~~senior secured notes contains a number of restrictive covenants and agreements applicable to us and our restricted subsidiaries, including covenants with respect to the following matters: (i)~~$107.9 ~~limitation~~million onas ~~additional indebtedness; (ii) limitation on certain payments (in the form~~ of the declaration or payment of certain dividends or distributions on our capital stock, the purchase, redemption or other acquisition of any of our capital stock, the voluntary prepayment of subordinated indebtedness, and certain investments); (iii) limitation on transactions with affiliates; (iv) limitation on liens; (v) limitation on sales of assets; (vi) limitation on the issuance of preferred stock by non-guarantor subsidiaries; (vii) limitation on conduct of business; (viii) limitation on dividends and other payment restrictions affecting subsidiaries; (ix) limitations on exercising Class B Common Stock redemption rights and consummating purchases of Class B Common Stock upon exercise of sales rights by holders; and (x) limitation on consolidations, mergers and sales of substantially all of our assets. At December 31, ~~2004, we were in compliance with the covenants under the indenture governing the 11% senior secured notes~~2006.

~~Senior~~As ~~Secured~~we ~~Credit~~have ~~Facility~~focused on increasing our cash flow from operating activities, we have made significant capital investments, primarily consisting of capital expenditures related to acquisitions, renewals, growth and software. We anticipate that we will continue to utilize cash flows from operations to finance our capital expenditures and working capital needs, including interest and principal payments on our outstanding indebtedness, and to pay dividends on our common stock.

~~On January 25, 2002, Coinmach entered into the Senior Credit Secured Facility, which was~~37 comprised of: (i) $280 million in aggregate principal amount of term loans and (ii) a revolving credit facility with a maximum borrowing limit of $75 million. The Senior Secured Credit Facility also provides for up to $10 million of letter of credit financings and short-term borrowings under a swing line facility of up to $7.5 million. The Senior Secured Credit Facility is secured by a first priority security interest in all of Coinmach’s real and personal property and is guaranteed by each of Coinmach’s domestic subsidiaries. On November 15, 2004, Coinmach entered into an amendment to the Senior Secured Credit Facility in order to permit the IDS Transactions.

42 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL ~~CONDITION~~CONDITIONS AND RESULTS OF OPERATIONS (continued)

~~Coinmach~~Dividend ~~used a portion of the proceeds from our initial public offering to repay~~Policy approximately $15.5 million of outstanding term loans. As of December 31, 2004 the aggregate principal amount outstanding under the term loans was approximately $240.5 million. The term loans are scheduled to be fully repaid by July 25, 2009. As of December 31, 2004, there were no amounts outstanding under the revolver portion of the Senior Secured Credit Facility, which is scheduled to expire on January 25, 2008. Letters of credit outstanding under the Senior Secured Credit Facility at December 31, 2004 were approximately $6.4 million.

OnOur ~~September 23,~~dividend ~~2002,~~policy ~~Coinmach~~reflects ~~entered~~a ~~into~~basic ~~three~~judgment ~~separate interest rate swap agreements totaling $150 million in aggregate notional amount~~ that ~~effectively~~our ~~convert~~stockholders awould ~~portion~~be ofbetter ~~the~~served if ~~floating-rate~~we ~~term~~distributed ~~loans~~our ~~pursuant~~available tocash ~~the Senior Secured Credit Facility~~ to athem ~~fixed~~instead ~~rate basis, thereby reducing the impact~~ of ~~interest~~retaining ~~rate~~it ~~changes~~in onour ~~future interest expense~~business. ~~The~~Pursuant ~~three swap~~to ~~agreements~~this ~~consist~~policy, ~~of:~~we ~~(i) a~~expect ~~$50 million~~that ~~notional~~cash ~~amount~~generated ~~interest~~by ~~rate~~us ~~swap~~in ~~transaction~~excess ~~with~~of ~~a financial~~operating ~~institution~~needs, ~~effectively fixing the three-month LIBOR~~ interest ~~rate (as determined therein) at 2.91%~~ and ~~expiring on February 1, 2006, (ii) a $50 million notional amount interest~~ ~~rate~~principal ~~swap~~payments ~~transaction with a financial institution effectively fixing the three-month LIBOR interest rate (as determined therein) at 2.91% and expiring~~ on ~~February 1~~indebtedness, ~~2006~~ and ~~(iii) a~~capital ~~$50 million~~expenditures ~~notional~~sufficient ~~amount~~to ~~interest~~maintain ~~rate~~our ~~swap transaction with a financial institution effectively~~properties ~~fixing the three-month LIBOR interest rate (as determined therein) at 2.90%~~ and expiring on February 1, 2006. These interest rate swaps used to hedge the variability of forecasted cash flows attributable to interest rate risk were designated as cash flow hedges. We recognized accumulated other ~~comprehensive~~assets ~~income~~would ingenerally ~~the~~be ~~stockholders’~~available ~~equity~~for ~~section~~distribution ~~included in the condensed consolidated balance sheet at December 31, 2004 of approximately $0.1 million, net of tax, relating to the interest rate swaps that qualify~~ as regular cash ~~flow hedges~~dividends.

AtHowever, ~~December 31~~there can be no assurance that we will continue to pay dividends at the levels set forth in our dividend policy, ~~2004~~or at all. Dividend payments are not mandatory or guaranteed and holders of our common stock do not have any legal right to receive, ~~Coinmach~~or ~~was~~require us to declare, dividends. Our board of directors may, in ~~compliance~~its ~~with~~sole discretion, amend or repeal our dividend policy at any time and decrease or eliminate dividend payments. If we had insufficient cash to pay dividends in the ~~covenants~~amounts set forth in our dividend policy, we would need either to reduce or eliminate dividends or, to the extent permitted under the ~~Senior~~indenture ~~Secured~~governing the 11% Senior Secured Notes and the Senior Credit Facility, fund a portion of our dividends with borrowings or from other sources.

9%As ~~Senior~~a ~~Notes~~result of our dividend policy, we may not retain a sufficient amount of cash to finance growth opportunities or unanticipated capital expenditure needs or to fund our operations in the event of a significant business downturn. We may have to forego growth opportunities or capital expenditures that would otherwise be necessary or desirable if we do not find alternative sources of financing. If we do not have sufficient cash for these purposes, our financial condition and our business will suffer.

On ~~January~~May 2510, ~~2002~~2006, ~~Coinmach~~the ~~issued~~board ~~$450 million~~ of ~~its~~directors 9%of ~~senior~~CSC ~~notes.~~declared ~~The~~a 9%quarterly ~~senior notes,~~cash ~~which~~dividend ~~mature on February 1, 2010, are unsecured senior obligations~~ of ~~Coinmach and are~~$0.20615 ~~redeemable,~~per atshare ~~Coinmach’s~~of ~~option,~~Class A inCommon ~~whole~~Stock (or inapproximately ~~part,~~$6.0 million atin ~~any~~aggregate) ~~time~~and ora ~~from~~cash ~~time~~dividend of to$0.53477 ~~time,~~per onshare ~~or after~~of ~~February~~Class 1,B ~~2006,~~Common ~~upon~~Stock ~~not~~for ~~less~~its ~~than~~fiscal 30quarter ~~nor~~ended ~~more than 60~~March ~~days’ notice~~31, at2005 ~~the~~and ~~redemption~~the ~~prices~~fiscal ~~set~~year ~~forth~~ended inMarch 31, ~~the~~2006 ~~indenture~~(or ~~governing~~$12.5 million ~~the~~in 9%aggregate), ~~senior~~which ~~notes~~cash ~~plus~~dividend ~~accrued~~was ~~and~~paid ~~unpaid interest~~on ~~thereon~~June 1, if2006 ~~any,~~ to ~~the~~holders ~~date~~ of ~~redemption.~~record ~~The~~as 9%of ~~senior~~the ~~notes~~close ~~are~~of ~~guaranteed~~business on aMay 25, ~~senior unsecured basis by Coinmach’s domestic restricted subsidiaries~~2006.

On ~~December~~August 241, ~~2004~~2006, ~~Coinmach~~the ~~used~~board aof ~~portion~~directors of ~~the~~CSC ~~proceeds~~declared ~~from~~a ~~our~~quarterly ~~initial~~cash ~~public~~dividend ~~offering~~of to$0.20615 ~~redeem~~per 9%share ~~senior notes in an aggregate principal amount~~ of ~~$125.5~~Class ~~million~~A Common Stock (~~plus~~or approximately $46.50 million ofin ~~accrued~~the ~~interest~~aggregate), ~~and~~which cash ~~approximately~~dividend ~~$11.3 million~~was ofpaid ~~related~~on ~~redemption premium). At December~~September 311, ~~2004,~~2006 ~~there~~to ~~was~~holders ~~approximately~~of ~~$324.5 million~~record ~~aggregate~~as ~~principal~~of ~~amount~~the close of 9%business on ~~senior~~August 25, ~~notes outstanding~~2006.

43 On November 3, 2006, the board of directors of CSC declared a quarterly cash dividend of $0.20615 per share of Class A Common Stock (or approximately $6.0 million in the aggregate), which cash dividend was paid on December 1, 2006 to holders of record as of the close of business on November 27, 2006.

~~COINMACH~~ On ~~SERVICE~~February 1, ~~CORP~~2007, the board of directors of CSC declared a quarterly cash dividend of $0.20615 ~~AND~~per ~~SUBSIDIARIES~~share of Class A Common Stock (or approximately $6.0 million in the aggregate),

~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)~~38

TheTable indenture governing the 9% senior notes contains a number of restrictive covenants and agreements applicable to Coinmach and its restricted subsidiaries, including covenants with respect to the following matters: (i) limitation on additional indebtedness; (ii) limitation on certain payments (in the form of the declaration or payment of certain dividends or distributions on the capital stock of Coinmach, the purchase, redemption or other acquisition of any capital stock of Coinmach, the voluntary prepayment of subordinated indebtedness, and certain investments); (iii) limitation on transactions with affiliates; (iv) limitation on liens; (v) limitation on sales of assets; (iv) limitation on the issuance of preferred stock by non-guarantor subsidiaries; (vii) limitation on conduct of business; (viii) limitation on dividends and other payment restrictions affecting subsidiaries; and (ix) limitation on consolidations, mergers and sales of substantially all of the assets of Coinmach. At December 31, 2004, Coinmach was in compliance with the covenants under the indenture governing the 9% notes. Contents

~~Operating~~COINMACH ~~and~~SERVICE ~~Investing~~CORP. ~~Activities~~AND SUBSIDIARIES

WeITEM ~~use cash from operating activities to maintain and expand our business~~2. AsMANAGEMENT’S weDISCUSSION ~~have~~AND ~~focused on~~ANALYSIS ~~increasing~~OF ~~our~~FINANCIAL ~~cash~~CONDITIONS ~~flow~~AND ~~from~~RESULTS ~~operating~~OF ~~activities,~~OPERATIONS ~~we have made significant capital~~(continued) investments, primarily consisting of capital expenditures related to acquisitions, renewals and growth. We anticipate that we will continue to utilize cash flows from operations to finance our capital expenditures and working capital needs.

~~Capital~~which ~~expenditures~~cash ~~for~~dividend ~~the~~is ~~three-month~~payable ~~period~~on ~~ended December~~March ~~31, 2004 were approximately $17.3 million (excluding payments of approximately $~~1~~.0 million relating to capital lease obligations). Capital expenditures for the nine-month period ended December 31~~, ~~2004~~2007 ~~were approximately $54.3 million (excluding approximately $3.2 million relating~~ to ~~capital~~holders ~~lease payments~~of ~~and~~record ~~excluding~~as ~~approximately $0.6 million relating to acquisition capital expenditures). The primary components~~ of ~~our capital expenditures are (i) machine expenditures, (ii) advance location payments, and (iii) laundry room improvements. Additionally, capital expenditures for~~ the ~~nine-month~~ ~~period~~close ended December 31, 2004 included approximately $1.8 million attributable to technology upgrades. The full impact on revenues and cash flow generated from capital expended on the net increase in the installed base of ~~machines~~business ~~is not expected to be reflected in our financial results until subsequent reporting periods, depending~~ on ~~certain factors, including the timing of~~ ~~the capital expended. While we estimate that we will generate sufficient cash flows from operations to finance anticipated capital expenditures~~February 26, ~~there can be no assurances that we will be able to do so~~2007.

~~The~~Financing ~~following table sets forth our capital expenditures (excluding payments for capital lease~~Activities ~~obligations and business acquisitions) for the periods indicated (in millions of dollars):~~

	Three months ended December 31,							Nine months ended December 31,
	2004		2003		Change			2004		2003		Change
Route	$	16.1	$	15.5	$	0.6		$	48.6	$	57.6	$	(9.0	)
Rental		0.7		1.6		(0.9	)		3.6		6.6		(3.0	)
Distribution		0.1		0.1		—			0.3		0.5		(0.2	)
Corporate		0.4		0.5		(0.1	)		1.8		1.8		—
	$	17.3	$	17.7	$	(0.4	)	$	54.3	$	66.5	$	(12.2	)

We have from time to time used external financings to meet cash needs for operating expenses, the payment of interest, retirement of debt and acquisitions and capital expenditures. We may use external financings in the future to refinance or fund the retirement of our and our subsidiaries’ existing indebtedness. The timing and amount of external financings depend primarily upon economic and financial market conditions, our consolidated cash needs and our future capital structure objectives, as well as contractual limitations on additional financings. Additionally, the availability and cost of external financings will depend upon the financial condition of the entities seeking those funds.

4411% Senior Secured Notes

~~COINMACH~~ As ~~SERVICE~~of ~~CORP~~December 31, 2006, there were approximately $82.1 million ~~AND~~aggregate ~~SUBSIDIARIES~~principal amount of 11% Senior Secured Notes outstanding.

~~ITEM~~ The 2.indenture ~~MANAGEMENT’S~~governing ~~DISCUSSION~~the ~~AND~~11% ~~ANALYSIS~~Senior OFSecured ~~FINANCIAL~~Notes ~~CONDITION~~contains ~~AND~~a ~~RESULTS~~number OFof ~~OPERATIONS~~restrictive covenants and agreements applicable to us and our restricted subsidiaries, including covenants with respect to the following matters: (~~continued~~i) limitation on additional indebtedness; (ii) limitation on certain payments (in the form of the declaration or payment of certain dividends or distributions on our capital stock, the purchase, redemption or other acquisition of any of our capital stock, the voluntary prepayment of subordinated indebtedness, and certain investments); (iii) limitation on transactions with affiliates; (iv) limitation on liens; (v) limitation on sales of assets; (vi) limitation on the issuance of preferred stock by non-guarantor subsidiaries; (vii) limitation on conduct of business; (viii) limitation on dividends and other payment restrictions affecting subsidiaries; (ix) limitations on exercising Class B Common Stock redemption rights and consummating purchases of Class B Common Stock upon exercise of sales rights by holders; and (x) limitation on consolidations, mergers and sales of substantially all of our assets.

~~Management~~At ofDecember 31, ~~our working capital~~2006, ~~including~~we ~~timing~~were ofin ~~collections~~compliance ~~and~~with ~~payments~~the ~~and levels~~covenants ofunder ~~inventory,~~the ~~affect~~indenture ~~operating~~governing the ~~results~~11% ~~indirectly.~~Senior ~~However,~~Secured ~~our~~Notes ~~working capital requirements are,~~ and ~~are~~were ~~expected~~not toaware ~~continue~~of toany ~~be,~~events ~~minimal since a significant portion~~ of ~~our operating~~default ~~expenses~~pursuant ~~are~~to ~~commission~~the ~~payments~~terms ~~based on a percentage~~ of ~~collections, and are not paid~~ ~~until~~such ~~after cash is collected from the installed machines~~indebtedness.

~~The~~Senior ~~Intercompany~~Credit ~~Note~~Facility

~~Pursuant~~At toDecember 31, ~~the IDS Transactions~~2006, ~~we made an intercompany loan of~~ approximately $81567.7 million to ~~Coinmach,~~aggregate ~~which~~principal ~~loan~~amount isof ~~evidenced~~term byloan borrowings anunder ~~intercompany~~the ~~note.~~Senior ~~Interest~~Credit ~~under~~Facility ~~the~~were ~~intercompany~~outstanding ~~note accrues~~and athad an ~~annual~~interest rate of approximately 107.95875% and is payable quarterly on March 1, June 1, September 1 and December 1 of each year and is due and payable in full on December 1, 2024. The intercompany note is a senior unsecured obligation of Coinmach, ranks equally in right of payment with all existing and future senior indebtedness of Coinmach and ranks senior in right of payment to all existing and future subordinated indebtedness of Coinmach. Certain of Coinmach’s domestic restricted subsidiaries guarantee the ~~intercompany~~amount ~~note~~available onunder ~~a senior unsecured basis. The intercompany note contains covenants (other than a covenant providing for~~ the ~~delivery~~revolving ofcredit ~~reports~~portion ~~to holders) that are substantially the same as those provided in the terms~~ of the ~~9% senior notes (as such covenants~~Senior ~~may~~Credit beFacility ~~modified~~was inapproximately ~~the~~$68.2 million. ~~future~~Letters ~~pursuant to the terms~~ of ~~the~~credit ~~indenture~~under ~~governing~~ the 9%revolver ~~senior~~portion ~~notes) provided, however, that on the redemption or repayment in full~~ of ~~the 9% senior notes, the~~ ~~covenants contained in~~ the ~~intercompany~~Senior ~~note~~Credit ~~will~~Facility ~~become~~outstanding ~~substantially~~at ~~the same as those provided in the terms of such other indebtedness that refinances or replaces the 9% senior notes or~~December 31, in2006 ~~the absence thereof, the terms of the 11% senior secured notes. The intercompany note and the intercompany note guaranty~~ were ~~pledged~~approximately ~~by us to secure the repayment of the 11% senior secured notes~~$6.8 million.

~~If an event of default under the intercompany note occurs and is continuing, we will have the~~39 right to declare all obligations under the intercompany note immediately due and payable; provided that if Coinmach shall become the subject of an insolvency, bankruptcy or cross-acceleration event of default, all of the obligations under the intercompany note and the guarantees in respect thereof shall become immediately and automatically due and payable without any action or notice. Any waiver of a default or an event of default under the indenture governing the 11% senior secured notes that causes a default or an event of default under the intercompany note shall also be a waiver of such default or event of default under the intercompany note without further action or notice.

SummaryTable of Contractual Obligations Contents

~~The~~COINMACH ~~following~~SERVICE ~~table~~CORP. ~~sets~~AND ~~forth information with regard to disclosures about our contractual~~SUBSIDIARIES ~~obligations and commitments:~~

45ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)

~~COINMACH~~ The ~~SERVICE~~Senior ~~CORP~~Credit Facility requires Coinmach to make certain mandatory repayments, including from (a) 100% of net proceeds from asset sales by Coinmach and its subsidiaries, (b) 100% of the net proceeds from the issuance of debt (with an exception for proceeds from intercompany loans made by Coinmach to us), (c) 50% of annual excess cash flow of Coinmach and its subsidiaries, and (d) 100% of the net proceeds from insurance recovery and condemnation events of Coinmach and its subsidiaries, in each case subject to reinvestment rights, as applicable, and other exceptions generally consistent with the Old Senior Secured Credit Facility. ~~AND~~For ~~SUBSIDIARIES~~the fiscal year ended March 31, 2006, there is no required amount that was payable relating to the annual excess cash flows of Coinmach.

~~ITEM~~ The 2.Senior ~~MANAGEMENT~~Credit Facility contains a number of restrictive covenants and agreements applicable to Coinmach which, if the Merger Event were completed, would apply directly to us as borrower under such credit facility, including covenants with respect to limitations on (i) indebtedness; (ii) certain payments (in the form of the declaration or payment of certain dividends or distributions on Coinmach’Ss ~~DISCUSSION~~capital ~~AND~~stock ~~ANALYSIS~~or OFits ~~FINANCIAL~~subsidiaries ~~CONDITION~~or ~~AND~~the ~~RESULTS~~purchase, OFredemption ~~OPERATIONS~~or other acquisition of any of its or its subsidiaries’ capital stock); (~~continued~~iii) voluntary prepayments of previously existing indebtedness; (iv) Investments (as defined in the Senior Credit Facility); (v) transactions with affiliates; (vi) liens; (vii) sales or purchases of assets; (viii) conduct of business; (ix) dividends and other payment restrictions affecting subsidiaries; (x) consolidations and mergers; (xi) capital expenditures; (xii) issuances of certain of Coinmach’s equity securities; and (xiii) creation of subsidiaries. The Senior Credit Facility also requires that Coinmach satisfy certain financial ratios, including a maximum leverage ratio and a minimum consolidated interest coverage ratio.

			Payments Due in Fiscal Year
	Total		2005		2006		2007		2008		2009		After
Long-Term Debt Obligations	$	701.8	$	0.1	$	2.7	$	2.6	$	12.4	$	12.4	$	671.6
Capital Lease Obligations		7.3		0.9		3.0		2.1		1.1		0.2		—
Operating Lease Obligations		27.9		2.3		7.8		6.1		4.1		3.0		4.6
	$	737.0	$	3.3	$	13.5	$	10.8	$	17.6	$	15.6	$	676.2

At December 31, 2006, Coinmach was in compliance with the covenants under the Senior Credit Facility and was not aware of any events of default pursuant to the terms of such indebtedness.

~~Future~~The ~~Capital~~Intercompany ~~Needs and Resources~~Loan

~~Our~~In ~~near-term~~connection ~~cash~~with ~~requirements~~the ~~are~~IDS ~~primarily~~Transactions ~~related to payment of interest on existing consolidated indebtedness, capital expenditures, working capital~~ and ~~dividend payments on our common stock. Substantially all of our consolidated long-term debt is scheduled to mature on or after July 25, 2009,~~ the date on which the remaining balances under the Senior Secured Credit Facility’s term loans become due. However, our consolidated level of indebtedness will have several important effects on our future operations including, but not limited to, the following: (i)Class aA ~~significant portion of our cash flow from operations will be required to pay interest on our indebtedness and the indebtedness of our subsidiaries~~Offering, ~~(ii) the~~CSC ~~financial~~made ~~covenants contained in certain of~~ the ~~agreements governing such~~Intercompany ~~indebtedness~~Loan ~~will require us and/or our subsidiaries~~ to ~~meet certain financial tests and may limit our respective abilities to borrow additional funds~~Coinmach, ~~(iii) our~~which ~~ability~~is toeliminated ~~obtain additional financing~~ in ~~the~~consolidation. ~~future~~The ~~for~~Intercompany ~~working~~Loan ~~capital,~~is ~~capital~~represented ~~expenditures, acquisitions or general~~by ~~corporate purposes may be impaired and (iv) our ability to adapt to changes in~~ the ~~laundry equipment~~Intercompany ~~services industry could be limited~~Note.

~~The~~As ~~most~~of ~~significant factors affecting our near-term cash flow requirements are our ability to generate cash from operations~~December 31, ~~which is dependent on our ability to attract new and retain existing customers~~2006, ~~and~~approximately ~~our ability to satisfy our debt service and capital expenditure requirements~~$183. ~~Considering~~6 million ~~our~~aggregate ~~anticipated~~principal ~~level~~amount of ~~capital expenditures, our~~ ~~scheduled interest payments on our consolidated~~ indebtedness, ~~existing~~was ~~contractual~~outstanding ~~obligations,~~under ~~our~~the ~~anticipated~~Intercompany ~~dividend~~Note. ~~payments~~The onIntercompany ~~our~~Loan ~~capital~~contains ~~stock and~~covenants ~~subject~~that toare substantially the ~~factors~~same ~~described~~as ~~below,~~those weprovided ~~estimate~~in ~~that over~~ the ~~next~~terms ~~twelve~~of ~~months~~the ~~cash~~Senior ~~flow~~Credit ~~from~~Facility. The ~~operations,~~Intercompany ~~along~~Loan ~~with available cash~~ and ~~cash~~the ~~equivalents~~guaranty ~~and~~of ~~borrowings under~~ the ~~Senior~~Intercompany ~~Secured Credit~~Loan ~~Facility,~~by ~~will~~certain besubsidiaries ~~sufficient~~of tothe ~~fund operating needs, to service outstanding~~Company ~~consolidated~~were ~~indebtedness,~~pledged ~~and~~by CSC to ~~pay~~secure ~~dividends~~the ~~anticipated~~repayment toof bethe ~~declared~~11% bySenior ~~our~~Secured ~~board of directors~~Notes.

~~Other~~At ~~factors~~December 31, ~~including but not limited to any significant acquisition transactions~~2006, ~~the pursuit~~Coinmach ofwas ~~any significant new business opportunities, potential material increases~~ in ~~the cost of~~ compliance with ~~regulatory~~the ~~mandates~~covenants ~~(including~~under ~~state~~the ~~laws~~Intercompany Loan ~~imposing heightened energy~~ and ~~water efficiency~~was ~~standards~~not onaware ~~clothes washers), tax treatment~~ of our debt, unforeseen reductions in occupancy levels, changes in our competitive environment, or unexpected costs associated with lease renewals, may affect our ability to fund our liquidity needs in the future. In addition, subject to certain limitations contained in the indenture governing the 11% senior secured notes, at any ~~time~~ ~~after~~events ~~the six month anniversary~~ of ~~our~~default ~~initial~~pursuant ~~public~~to ~~offering, we may redeem all or part of~~ the ~~then~~terms ~~outstanding Class B Common Stock on a pro rata basis. Any exercise by us~~ of such ~~redemption~~ ~~rights will further reduce cash available to fund our liquidity needs~~indebtedness.

~~California, Connecticut, and Maryland have adopted state laws imposing heightened energy and~~40 ~~water efficiency standards on commercial clothes washers, and other states are~~

46 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL ~~CONDITION~~CONDITIONS AND RESULTS OF OPERATIONS (continued)

~~considering~~Operating ~~similar laws. While such laws are not scheduled to go in effect until 2007 or 2008, implementing machines compliant with such laws could result in increased capital costs (including material~~ and ~~equipment~~Investing ~~costs), labor and installation costs, and in some cases,~~Activities ~~operation and maintenance costs. Other states in which we operate may adopt similar laws, which would increase our costs associated with compliance.~~

We ~~continuously~~use ~~monitor~~cash ~~our~~from ~~debt~~operating ~~position~~activities ~~and~~to ~~coordinate~~maintain ~~our capital expenditure program with expected cash flows~~ and ~~projected~~expand ~~interest~~our ~~and dividend payments~~business. ~~However,~~As ~~our~~we ~~actual~~have ~~cash~~focused ~~requirements~~on ~~may~~increasing ~~exceed~~ our ~~current expectations. In the event~~ cash flow isfrom ~~lower~~operating ~~than anticipated~~activities, we ~~expect~~have tomade ~~either:~~significant ~~(i) reduce~~ capital ~~expenditures, (ii) supplement cash flow from~~ ~~operations with borrowings under the Senior Secured Credit Facility~~investments, orprimarily ~~(iii) evaluate~~consisting ~~other cost-effective funding alternatives. We expect that substantially all~~ of ~~the~~capital ~~cash~~expenditures ~~generated~~related byto ~~our business in excess of operating needs~~acquisitions, ~~debt~~renewals ~~service obligations~~ and ~~reserves will be distributed to~~ ~~the holders of our common stock. As a result, we may not retain a sufficient amount of cash to finance~~ growth ~~opportunities or unanticipated capital expenditure needs or to fund our operations in the event of a significant business downturn~~. InWe ~~addition,~~anticipate ~~we may have to forego growth opportunities or capital expenditures~~ that ~~would otherwise be necessary or desirable if~~ we dowill ~~not find~~continue ~~alternative~~to ~~sources~~utilize ~~of financing. If sources of liquidity are not available or if we cannot generate sufficient~~ cash ~~flow~~flows from operations, ~~we might also be required~~ to ~~reduce~~finance ~~or eliminate~~our ~~dividends to the extent previously paid or obtain additional sources of funds through~~ capital ~~market~~ ~~transactions,~~expenditures ~~reducing~~and orworking ~~delaying~~ capital ~~expenditures, refinancing or restructuring our indebtedness, asset sales or financing from third parties, or a combination thereof~~needs. ~~Additional~~ ~~sources of funds may not be available or allowed under the terms of our outstanding indebtedness or that of our subsidiaries or, if available, may not have commercially reasonable terms.~~

~~Certain~~Capital ~~Accounting Treatment~~Expenditures

~~Our~~Capital ~~depreciation~~expenditures ~~and~~(net ~~amortization~~of ~~expense,~~proceeds ~~amortization~~from the sale of ~~advance~~equipment) ~~location~~for ~~payments~~the ~~and amortization~~three ofmonths ~~intangibles~~ending December 31, ~~which~~2006 ~~aggregated~~were approximately $8216.75 million. Capital expenditures (net of proceeds from the sale of equipment) for the nine months ~~ended~~ ending December 31, ~~2004~~2006 ~~and~~were approximately $2752.50 million. The ~~for~~primary ~~the~~components ~~three~~of ~~months~~our ~~ended~~capital ~~December~~expenditures are (i) 31machine expenditures, ~~2004~~(ii) advance ~~reduces~~location ~~our~~payments, ~~net~~and ~~income~~(iii) laundry room improvements. Additionally, ~~but~~capital ~~not~~expenditures ~~our~~for ~~cash~~the nine ~~flow~~months ~~from~~ending ~~operations.~~December 31, In2006 ~~accordance~~include ~~with~~approximately ~~GAAP,~~$3.4 million aattributable to technology ~~significant~~upgrades. ~~amount~~The offull ~~the~~impact ~~purchase~~on ~~price~~revenues ~~representing~~and ~~the~~cash ~~value~~flow ofgenerated ~~location~~from ~~contracts~~capital ~~arising~~expended ~~from~~on the net ~~businesses~~increase ~~acquired~~in bythe usinstalled base of machines is ~~allocated~~not expected to ~~“contract~~be ~~rights.”~~reflected ~~Management~~in ~~evaluates~~our ~~the~~financial results ~~realizability~~until ofsubsequent ~~contract~~reporting ~~rights~~periods, ~~balances~~depending ~~(if~~on ~~there~~certain ~~are~~factors, ~~indicators~~including the timing of ~~impairment)~~the capital ~~based~~expended. ~~upon~~While ~~our forecasted~~we ~~undiscounted~~estimate ~~cash~~that ~~flows~~we ~~and~~will ~~operating~~generate ~~income.~~sufficient ~~Based~~cash ~~upon~~flows ~~present~~from operations ~~and~~to ~~strategic~~finance ~~plans~~anticipated capital expenditures, wethere ~~believe~~can ~~that~~be no ~~impairment~~assurances ofthat ~~contract~~we ~~rights~~will ~~has~~be ~~occurred~~able to do so.

~~Inflation~~ The ~~and~~following ~~Seasonality~~table sets forth our capital expenditures (excluding payments for capital business acquisitions) for the periods indicated (in millions of dollars):

In general, our laundry operating expenses and general and administrative expenses are affected by inflation and the effects of inflation may be experienced by us in future periods. We believe that such effects will not be material. Our business generally is not seasonal.


	Three months ended December 31,							Nine months ended December 31,
	2006		2005		Change			2006		2005		Change
Route	$	14.9	$	13.1	$	1.8		$	46.5	$	43.4	$	3.1
Rental		0.5		0.8		(0.3	)		2.2		4.4		(2.2	)
Distribution		—		0.1		(0.1	)		—		0.2		(0.2	)
Corporate		1.1		1.6		(0.5	)		3.3		4.2		(0.9	)

	$	16.5	$	15.6	$	0.9		$	52.0	$	52.2	$	(0.2	)

47 Management of our working capital, including timing of collections and payments and levels of inventory, affects operating results indirectly. However, our working capital requirements are, and are expected to continue to be, minimal since a significant portion of our operating expenses are commission payments based on a percentage of collections, and are not paid until after cash is collected from the installed machines.

~~COINMACH~~Summary ~~SERVICE~~of ~~CORP.~~Contractual ~~AND SUBSIDIARIES~~Obligations

~~ITEM~~ The 2.following ~~MANAGEMENT’S~~table ~~DISCUSSION~~sets ~~AND~~forth ~~ANALYSIS~~information OFwith ~~FINANCIAL~~regard ~~CONDITION~~to ~~AND~~disclosures ~~RESULTS~~about OFour ~~OPERATIONS~~contractual obligations ~~(continued)~~and commitments as of December 31, 2006:

~~Special Note Concerning Forward Looking Statements~~41

ThisTable report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward looking statements, including, without limitation, the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” to be covered by the safe harbor provisions for forward-looking statements in these provisions. These forward-looking statements include, without limitation, statements about our future financial position, adequacy of available cash resources, common stock dividend policy and anticipated payments, business strategy, competition, budgets, projected costs and plans and objectives of management for future operations. These forward-looking statements are usually accompanied by words such as “may,” “will,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “believe,” “continue” and similar expressions. The forward looking information is based on various factors and was derived using numerous assumptions. Contents

~~Forward-looking~~COINMACH ~~statements~~SERVICE necessarily involve risks and uncertainties, and our actual results could differ materially from those anticipated in the forward-looking statements due to a number of factors, including those set forth below and in this reportCORP. ~~Although~~AND ~~we believe that the~~SUBSIDIARIES expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. We caution readers not to place undue reliance on such statements and undertake no obligation to update publicly and forward-looking statements for any reason, even if new information becomes available or other events occur in the future. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements contained in this report.

~~Certain~~ITEM ~~factors,~~2. ~~including~~MANAGEMENT’S ~~but~~DISCUSSION ~~not~~AND ~~limited~~ANALYSIS toOF ~~those~~FINANCIAL ~~listed~~CONDITIONS ~~below,~~AND ~~may~~RESULTS ~~cause~~OF ~~actual~~OPERATIONS ~~results to~~(continued) ~~differ materially from current expectations, estimates, projections, forecasts and from past results:~~

• the restrictive debt covenants and other requirements related to our outstanding debt and that of our subsidiaries 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;


	Payments Due in Fiscal Year
	Total		2007		2008		2009		2010		2011		After
Long-Term Debt Obligations	$	650.0	$	0.6	$	2.4	$	3.2	$	5.7	$	5.7	$	632.4
Interest on Long-Term Debt (1)		420.3		18.0		53.6		53.4		53.1		52.6		189.6
Capital Lease Obligations (2)		9.5		1.1		3.6		2.6		1.3		0.8		0.1
Operating Lease Obligations		31.6		2.2		7.4		6.2		5.3		3.5		7.0

	$	1,111.4	$	21.9	$	67.0	$	65.4	$	65.4	$	62.6	$	829.1


(1)		As of December 31, 2006, $567.7 million of our long-term debt outstanding under the Senior 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 approximately 7.875% based on the Eurodollar rate in effect at December 31, 2006. In addition, approximately $82.1 million of our long-term debt outstanding was subject to a fixed interest rate of 11.0%. In connection with the Senior Credit Facility, Coinmach is 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 Senior Credit Facility to a fixed interest rate of approximately 7.40%, thereby reducing the impact of interest rate changes on future interest expense.

(2)		Includes both principal and interest.

~~COINMACH~~Future ~~SERVICE~~Capital ~~CORP.~~Needs ~~AND~~and ~~SUBSIDIARIES~~Resources

~~ITEM~~ Our 2near-term cash requirements are primarily related to payment of interest on our existing consolidated indebtedness, capital expenditures, working capital and, if and when declared by our board of directors, dividend payments on our common stock. ~~MANAGEMENT~~Substantially all of our consolidated long-term debt is scheduled to mature on or after December 19, 2012, the date on which the remaining balances under the Senior Credit Facility’Ss ~~DISCUSSION~~term ~~AND~~loans ~~ANALYSIS~~become OFdue. ~~FINANCIAL~~However, ~~CONDITION~~our consolidated ~~AND~~level ~~RESULTS~~of OFindebtedness ~~OPERATIONS~~will have several important effects on our future operations including, but not limited to, the following: (~~continued~~i) a significant portion of our cash flow from operations will be required to pay interest on our indebtedness and the indebtedness of our subsidiaries, (ii) the financial covenants contained in certain of the agreements governing such indebtedness will require us and/or our subsidiaries to meet certain financial tests and may limit our respective abilities to borrow additional funds, (iii) our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired and (iv) our ability to adapt to changes in the laundry equipment services industry could be limited.

• We ~~our~~continuously ~~ability~~evaluate toour ~~maintain~~capital ~~borrowing~~structure ~~flexibility~~objectives and tothe ~~meet~~most ~~our~~efficient ~~projected~~uses ~~and~~of ~~future cash needs~~our capital, including ~~capital~~investment ~~expenditure~~in ~~requirements with respect to maintaining~~ our ~~machine~~lines ~~base, given our substantial level~~ of ~~indebtedness~~business, ~~history~~potential ofacquisitions, ~~net losses~~ and ~~reduced~~purchasing, refinancing, ~~liquidity~~exchanging ~~should~~or weretiring ~~elect~~certain toof ~~declare cash dividends on~~ our ~~common~~and ~~stock; • risks associated with expansion of~~ our ~~business~~subsidiaries’ ~~through~~outstanding ~~“tuck-ins”~~debt securities and other ~~acquisitions~~instruments ~~and~~in ~~integration~~privately ofnegotiated ~~acquired~~or ~~operations~~open ~~into~~market ~~our~~transactions ~~existing~~or ~~business;~~by ~~• as a holding company~~other means, ~~our~~to ~~dependence~~the onextent ~~cash~~permitted ~~flow~~by ~~from~~ our ~~operating~~existing ~~subsidiaries~~covenant torestrictions. ~~make~~To ~~payments~~pursue ~~under~~such ~~our~~transactions we ~~11%~~may ~~senior~~use ~~secured~~external ~~notes;~~financings, •cash ~~the~~flow ~~risk~~from ofoperations, ~~adverse~~or ~~tax~~any ~~consequences~~combination ~~should~~thereof, ~~our~~which ~~11%~~in turn ~~senior~~will ~~secured~~depend ~~notes~~on ~~that underlie~~ our ~~income~~consolidated ~~deposit~~cash ~~securities~~needs, ~~not~~liquidity, beleverage ~~respected~~and asprevailing ~~debt~~economic ~~for~~and financial Umarket conditions.S. ~~federal~~However, ~~income~~should ~~tax~~we ~~purposes;~~determine •to ~~risks~~pursue ~~associated~~any ~~with~~one ~~changes~~or inmore ~~accounting~~of ~~standards promulgated by the Financial Accounting Standards Board~~such transactions, ~~the~~there ~~SEC~~can orbe ~~the~~no ~~American~~assurance ~~Institute~~that ofany ~~Certified~~such ~~Public~~transaction ~~Accountants;~~would ~~and~~not •adversely ~~other~~affect ~~factors~~our liquidity ~~discussed~~or ~~elsewhere~~our inability ~~this~~to ~~report~~satisfy ~~and in~~ our ~~public~~capital ~~filings~~requirements ~~with~~in the ~~SEC~~near term.

~~Several important factors, in addition to the specific factors discussed in connection with~~42 each forward-looking statement individually, could affect our future results or expectations and could cause those results and expectations to differ materially from those expressed in the forward-looking statements contained in this report. These additional factors include, among other things, future economic, industry, social, competitive and regulatory conditions, demographic trends, financial market conditions, future business decisions and actions of our competitors, suppliers, customers and stockholders and legislative, judicial and other governmental authorities, all of which are difficult or impossible to predict accurately and many of which are beyond our control. These factors, in some cases, have affected, and in the future, together with other factors, could affect, our ability to implement our business strategy and may cause our future performance and actual results of operations to vary significantly from those contemplated by the statements expressed in this report.

49 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

ITEM 32. ~~QUANTITATIVE~~MANAGEMENT’S DISCUSSION AND ~~QUALITATIVE~~ANALYSIS ~~DISCLOSURES~~OF ~~ABOUT~~FINANCIAL ~~MARKET~~CONDITIONS ~~RISK~~AND RESULTS OF OPERATIONS (continued)

~~Our~~The ~~principal~~most ~~exposure~~significant tofactors ~~market~~affecting ~~risk~~our ~~relates~~near-term cash flow requirements are our ability to generate ~~changes~~cash infrom ~~interest~~operations, ~~rates~~which is dependent on our ~~long-term borrowings.~~ability ~~Our~~to ~~operating~~attract ~~results~~new and ~~cash~~retain ~~flow~~existing customers, ~~would~~and beour ~~adversely~~ability ~~affected~~to bysatisfy anour ~~increase~~debt ~~in interest~~service ~~rates~~and capital expenditure requirements. Considering Asour anticipated level of ~~December 31~~capital expenditures, ~~2004~~our scheduled interest payments on our consolidated indebtedness, existing contractual obligations, our anticipated dividend payments on our capital stock and subject to the factors described below, we ~~had~~estimate ~~approximately~~that ~~$90.5 million~~over ~~outstanding~~the ~~relating~~next twelve months cash flow from operations, along with available cash and cash equivalents and borrowings under the Senior Credit Facility, will be sufficient to fund our ~~variable~~operating ~~rate~~needs, ~~debt~~to ~~portfolio.~~service our outstanding consolidated indebtedness, and to pay dividends anticipated to be declared by our board of directors.

~~Our~~Other ~~future earnings~~factors, ~~cash~~including ~~flow~~but ~~and~~not ~~fair~~limited ~~values relevant~~ to ~~financial~~any ~~instruments~~significant ~~are~~acquisition ~~dependent~~transactions, the ~~upon~~pursuit ~~prevalent~~of ~~market~~any ~~rates.~~significant ~~Market~~new ~~risk~~business isopportunities, potential material increases in the ~~risk~~cost of compliance ~~loss~~with ~~from~~regulatory ~~adverse~~mandates ~~changes~~(including instate ~~market~~laws ~~prices and~~imposing ~~interest~~heightened ~~rates.~~energy Ifand ~~market~~water efficiency ~~rates~~standards ofon ~~interest~~clothes onwashers), ~~our~~tax ~~variable~~treatment ~~interest~~of ~~rate~~our debt, ~~increased~~unforeseen byreductions in ~~2.0%~~occupancy (levels, changes in our competitive environment, or ~~200~~unexpected ~~basis~~costs ~~points)~~associated with lease renewals, may affect our ~~annual~~ability ~~interest~~to ~~expense~~fund onour ~~such~~liquidity ~~variable~~needs ~~interest~~in ~~rate~~the ~~debt~~future. ~~would~~In addition, subject ~~increase~~to bycertain ~~approximately~~limitations ~~$1.8 million,~~contained ~~assuming~~in the ~~total~~indenture ~~amount~~governing ofthe ~~variable~~11% ~~interest~~Senior ~~rate~~Secured ~~debt~~Notes, we may redeem all or part of the then outstanding ~~was~~Class B ~~$90~~Common Stock on a pro rata basis.~~5 million,~~ ~~the~~Any ~~balance~~exercise by asus of ~~December 31,~~such ~~2004~~redemption rights will further reduce cash available to fund our liquidity needs.

We ~~enter~~intend ~~into~~to ~~interest~~annually ~~rate~~deduct ~~swap~~interest ~~agreements~~expense ~~from~~on ~~time~~the to11% ~~time~~Senior toSecured ~~mitigate~~Notes ~~our~~from ~~exposure to~~taxable ~~adverse~~income ~~interest~~for ~~rate fluctuations~~U.S. Onfederal ~~September 23,~~and ~~2002,~~state ~~Coinmach~~and ~~entered~~local ~~into~~income ~~three~~tax ~~separate interest~~purposes. ~~rate~~However, ~~swap~~if ~~agreements~~the ~~totaling~~IRS ~~$150 million~~were successfully into ~~aggregate~~challenge ~~notional~~our ~~amount~~position that ~~effectively convert~~the a11% ~~portion~~Senior ofSecured ~~its~~Notes ~~floating-rate~~are ~~term~~debt ~~loans~~for ~~pursuant~~U.S. ~~to the Senior Secured Credit Facility to~~federal aincome ~~fixed~~tax ~~rate basis~~purposes, ~~thereby reducing~~ the ~~impact~~cumulative of interest ~~rate changes on future interest~~ expense. ~~The~~associated ~~three~~with ~~swap~~the ~~agreements~~11% ~~consist~~Senior ~~of:~~Secured ~~(i) a~~Notes would ~~$50 million~~not ~~notional~~be ~~amount~~deductible ~~interest~~from ~~rate swap~~taxable ~~transaction~~income, ~~with~~and awe ~~financial~~would ~~institution~~be ~~effectively~~required ~~fixing~~to ~~the~~recognize ~~three-month~~additional ~~LIBOR interest~~tax ~~rate~~expense ~~(as determined therein) at 2.91%~~ and ~~expiring~~establish ~~on February 1, 2006, (ii)~~ a ~~$50 million~~related ~~notional amount~~income ~~interest~~tax ~~rate~~liability. ~~swap~~To ~~transaction~~the ~~with~~extent athat ~~financial~~any ~~institution~~portion ~~effectively~~of ~~fixing~~ the ~~three-month LIBOR~~ interest ~~rate~~expense ~~(as~~is determined ~~therein)~~not atto ~~2.91%~~be ~~and expiring on February 1~~deductible, ~~2006 and~~we ~~(iii) a~~would ~~$50 million~~be ~~notional~~required ~~amount~~to ~~interest~~recognize ~~rate~~additional tax ~~swap~~expense ~~transaction~~and ~~with~~establish a ~~financial~~related ~~institution effectively~~income ~~fixing~~tax ~~the~~liability. ~~three-month~~The ~~LIBOR~~additional ~~interest~~tax ~~rate~~due ~~(as~~to ~~determined~~federal, ~~therein)~~state and atlocal ~~2.90%~~authorities ~~and expiring~~would onbe ~~February 1,~~based ~~2006.~~on ~~These~~our ~~interest~~taxable ~~rate~~income ~~swaps~~or ~~used~~loss tofor ~~hedge~~each of the ~~variability~~respective ofyears ~~forecasted~~that ~~cash~~we ~~flows~~take ~~attributable~~the to interest ~~rate~~expense ~~risk~~deduction ~~were~~and ~~designated~~would asreduce our after-tax cash flow ~~hedges~~.

~~Our~~Any ~~fixed~~disallowance ~~debt~~of ~~instruments~~our ~~are~~ability ~~not~~to ~~generally~~deduct ~~affected~~interest byexpense acould ~~change~~adversely inaffect ~~the~~our ~~market~~ability to ~~rates~~make of interest, payments on the 11% Senior Secured Notes and ~~therefore,~~dividend ~~such~~payments ~~instruments~~on ~~generally~~the doshares ~~not~~of Class A ~~have~~Common anStock ~~impact~~as well as dividend payments on ~~future~~the ~~earnings~~Class B Common Stock. Based on our ~~However,~~anticipated aslevel ~~fixed~~of ~~rate~~cash ~~debt~~requirements, ~~matures~~including capital expenditures, ~~future~~scheduled ~~earnings~~interest and dividend payments, and existing contractual obligations, we estimate that over the next twelve months cash ~~flows~~flow ~~may~~from beoperations, ~~impacted~~along bywith ~~changes~~the inavailable cash and cash equivalents and borrowing ~~interest~~capacity ~~rates~~under ~~related~~the toSenior ~~debt~~Credit ~~acquired~~Facility, will be sufficient to fund ~~repayments~~our ~~under~~operating ~~maturing~~needs ~~facilities~~and to service our indebtedness even if the interest expense deduction is not allowed.

~~We do not use derivative financial instruments for trading purposes and are not exposed to~~43 ~~foreign currency exchange risk.~~

50 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

ITEM 42. ~~CONTROLS~~MANAGEMENT’S DISCUSSION AND ~~PROCEDURES~~ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (continued)

~~Our management,~~Pursuant ~~with~~to ~~the~~recently ~~participation~~enacted offederal ~~our~~law, ~~Chief~~commercial ~~Executive~~clothes ~~Officer~~washers ~~and Chief~~manufactured ~~Financial Officer~~after January 1, ~~has~~2007 ~~evaluated~~are ~~the~~subject ~~effectiveness~~to ofcertain ~~our~~federal ~~disclosure~~energy ~~controls~~ and ~~procedures~~ ~~(as~~water ~~defined~~efficiency instandards. ~~Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934)~~Implementing asmachines ofcompliant ~~the~~with ~~end~~such oflaw ~~the~~could ~~period~~result ~~covered~~in byincreased ~~this~~capital ~~report.~~costs ~~Based~~(including ~~upon~~material ~~that~~and equipment ~~evaluation~~costs), ~~the~~labor ~~Chief Executive Officer~~ and ~~the~~installation ~~Chief~~costs, ~~Financial~~and ~~Officer~~in ~~have~~some ~~concluded that~~cases, asoperation ofand ~~the~~maintenance ~~end of the period~~costs. ~~covered~~Our bycapital ~~this report~~expenditures, ~~our~~as ~~disclosure~~well ~~controls~~as ~~and~~those ~~procedures~~of ~~were~~other ~~effective~~industry ~~in enabling us to record~~participants, ~~process,~~may ~~summarize, and report information~~significantly ~~required~~increase ~~to be included~~ in ~~our~~order ~~periodic~~to ~~Securities~~comply ~~and~~with ~~Exchange~~such ~~Commission filings within the required time period~~standards.

~~There were~~We nocontinuously ~~changes~~monitor inour debt position and coordinate our ~~internal~~capital ~~controls~~expenditure ~~over~~program ~~financial~~with expected ~~reporting~~cash ~~(as~~flows ~~such~~and projected interest and dividend payments. However, our actual cash ~~term~~requirements may exceed our current expectations. In the event cash flow is ~~defined~~lower inthan anticipated, ~~Rule 13a-15~~we expect to either: (fi) reduce ~~and~~capital ~~15d-15~~expenditures, (fii) supplement cash flow from operations with borrowings under the ~~Securities~~Senior ~~Exchange~~Credit ~~Act~~Facility, ofor ~~1934~~(iii) evaluate ~~during~~other cost-effective funding alternatives. We expect that substantially all of the ~~period~~cash ~~covered~~generated by ~~this~~our ~~report~~business ~~that~~in excess ~~have~~of ~~materially~~operating ~~affected~~needs, debt service obligations and reserves will be distributed to the holders of our common stock. As a result, we may not retain a sufficient amount of cash to finance growth opportunities or unanticipated capital expenditure needs or to fund our operations in the event of a significant business downturn. In addition, we may have to forego growth opportunities or capital expenditures that would otherwise be necessary or desirable if we do not find alternative sources of financing. If sources of liquidity are ~~reasonably~~not ~~likely~~available or if we cannot generate sufficient cash flow from operations, we might also be required to reduce or eliminate dividends to ~~materially~~the ~~affect~~extent previously paid or obtain additional sources of funds through capital market transactions, reducing or delaying capital expenditures, refinancing or restructuring our indebtedness, ~~internal~~asset ~~controls~~sales ~~over~~or ~~financial~~financing ~~reporting~~from third parties, or a combination thereof. Additional sources of funds may not be available or allowed under the terms of our outstanding indebtedness or that of our subsidiaries or, if available, may not have commercially reasonable terms.

51Inflation and Seasonality

~~COINMACH~~ In ~~SERVICE~~general, ~~CORP.~~our ~~AND~~laundry ~~SUBSIDIARIES~~operating expenses and general and administrative expenses are affected by inflation and the effects of inflation may be experienced by us in future periods. We believe that such effects will not be material. Our business generally is not seasonal.

~~PART~~Special ~~II.~~Note ~~OTHER~~Concerning ~~INFORMATION~~Forward Looking Statements

~~ITEM~~ This 1report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. ~~Legal~~We ~~Proceedings~~intend such forward looking statements, including, without limitation, the statements under “Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations,” to be covered by the safe harbor provisions for forward-looking statements in these provisions. These forward-looking statements include, without limitation, statements about our future financial position, adequacy of available cash resources, common stock dividend policy and anticipated payments, business strategy, competition, budgets, projected costs and plans and objectives of management for future operations. These forward-

We44 are party to various legal proceedings arising in the ordinary course of business. Although the ultimate disposition of such proceedings is not presently determinable, management does not believe that adverse determinations in any or all such proceedings would have a material adverse effect upon our financial condition, results of operations or cash flows.

ITEMTable 2. Unregistered Sales of Equity Securities and Use of ProceedsContents

OnCOINMACH ~~November 24,~~SERVICE ~~2004, CSC issued 17,767,204 shares of its Class B common stock, par value $0~~CORP.01 ~~per~~AND ~~share (the “Class B Common Stock”), to Coinmach Holdings, LLC, a Delaware limited~~SUBSIDIARIES liability company (“Holdings”) in exchange for all of the shares of capital stock of Coinmach Laundry then held by Holdings. Such Class B Common Stock issuance and exchange was completed pursuant to a purchase agreement entered into by and between CSC and Holdings, dated November 19, 2004 (the “Purchase Agreement”).

OnITEM ~~November 24,~~2. ~~2004~~MANAGEMENT’S ~~and~~DISCUSSION onAND ~~December 21,~~ANALYSIS ~~2004,~~OF ~~Coinmach~~FINANCIAL ~~Laundry~~CONDITIONS ~~redeemed~~AND ~~for~~RESULTS ~~cash~~OF aOPERATIONS ~~portion of~~(continued) ~~certain Coinmach Laundry capital stock held by certain members of the Company’s management and certain equity investors of Holdings.~~

~~Pursuant~~looking tostatements ~~the~~are ~~Purchase~~usually ~~Agreement,~~accompanied ~~on January 3, 2005, all of the outstanding Coinmach Laundry capital stock that had not been previously redeemed~~ by ~~Coinmach~~words ~~Laundry~~such ~~and~~as ~~held~~“may,” by“will,” ~~certain members~~“expect,” of“intend,” ~~the Company’s management and certain equity investors of Holdings~~“project,” ~~was contributed to~~“estimate,” ~~Holdings~~“anticipate,” in“believe,” ~~exchange~~“continue” ~~for~~and ~~certain~~similar ~~equity interests in Holdings~~expressions. ~~Holdings~~The inforward ~~turn~~looking ~~transferred~~information ~~such~~is ~~Coinmach~~based ~~Laundry capital stock to CSC in exchange for 7,213,241 additional shares of Class B Common Stock of Coinmach Laundry issued in reliance~~ on ~~the~~various ~~exemption~~factors ~~from~~and ~~the~~was ~~registration~~derived ~~requirements~~using ~~of the~~numerous ~~Securities Act of 1933 (the “Act”), as amended, set forth in Section 4(2) of the Act~~assumptions.

OnForward-looking ~~November 24,~~statements ~~2004~~necessarily involve risks and uncertainties, weand ~~completed~~our ~~initial~~actual ~~public~~results could ~~offerings~~differ ofmaterially ~~18,333,333~~from ~~IDSs~~those ~~(each~~anticipated ~~IDS consisting~~in ofthe ~~one~~forward-looking ~~share~~statements due to a number of factors, ~~our~~including ~~Class A~~those ~~Common~~set ~~Stock~~forth below and $6in this report.14 ~~principal~~Although ~~amount~~we ofbelieve ~~11%~~that ~~senior~~the ~~secured~~expectations ~~notes)~~reflected ~~and~~in ~~$20~~such forward-looking statements are reasonable,~~000,000~~ ~~11%~~we ~~senior~~can ~~secured~~give ~~notes~~no ~~sold~~assurance that ~~separate~~such ~~and~~expectations ~~apart~~will ~~from~~prove ~~the~~to ~~IDSs~~have been correct. We caution readers not to place undue Onreliance ~~December 21,~~on ~~2004,~~such instatements ~~connection~~and ~~with~~undertake ~~the~~no ~~partial~~obligation ~~exercise~~to ofupdate ~~the~~publicly ~~underwriters’~~and ~~over~~forward-~~allotment~~looking ~~option,~~statements wefor ~~sold~~any anreason, ~~additional~~even ~~578,199~~if ~~IDSs.~~new ~~The~~information ~~offerings~~becomes ~~were~~available ~~effected~~or ~~through~~other aevents ~~registration~~occur in the ~~statement~~future. onAll ~~form~~subsequent ~~S-1~~written ~~(File~~and ~~No. 333~~oral forward-~~114421)~~looking ~~(the~~statements ~~“Registration~~attributable ~~Statement”)~~to ~~that~~us, ~~was~~or ~~declared~~persons ~~effective~~acting byon ~~the~~our ~~Securities~~behalf, ~~and~~are ~~Exchange~~expressly ~~Commission~~qualified onin ~~November 19,~~their ~~2004~~entirety by the cautionary statements contained in this report.

ACertain ~~total of 18~~factors,~~911,532~~ ofincluding ~~our~~but ~~IDSs~~not ~~were~~limited ~~registered~~to ~~and~~those ~~sold~~listed atbelow, anmay ~~initial~~cause ~~public~~actual ~~offering~~results ~~price~~to ofdiffer ~~$13.64~~materially ~~per~~from ~~IDS,~~current ~~for an aggregate public offering price of $257~~expectations,~~953,296.~~ ~~In addition~~estimates, ~~we registered $20~~projections,~~000,000~~ ~~11%~~forecasts ~~senior secured notes sold separate~~ and ~~apart~~ from ~~the IDSs that were~~past ~~issued in a concurrent offering at 100.0% of their principal amount. Merrill Lynch, Pierce, Fenner~~results: & Smith Incorporated acted as lead representative of the underwriting syndicate for the IDSs and separate 11% senior secured notes offerings. Total expenses incurred in connection with the offerings were $23,596,735 (which includes approximately $700,000 in estimated expenses).

52 • 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 cash dividends on our common stock pursuant to our dividend policy; • risks associated with expansion of our business through “tuck-ins” and other acquisitions and integration of acquired operations into our existing business;

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~45

	(in millions)
Gross Proceeds	$	277,953,296
Underwriters’ discount		14,277,198
Other costs of issuance		9,319,537	(1)
Total expenses	$	23,596,735
Net proceeds to us	$	254,356,561

~~(1)~~COINMACH ~~Includes~~SERVICE aCORP. ~~transaction~~AND ~~bonus payment of $500,000 to a director.~~SUBSIDIARIES

~~The~~ITEM ~~net proceeds of our initial public offerings after deducting the total expenses above were approximately $254~~2.~~4 million.~~ ~~These~~MANAGEMENT’S ~~proceeds,~~DISCUSSION ~~together~~AND ~~with~~ANALYSIS ~~approximately~~OF ~~$1.6 million of~~FINANCIAL ~~cash~~CONDITIONS onAND ~~hand,~~RESULTS ~~were~~OF ~~used~~OPERATIONS ~~as indicated below.~~(continued)

	Intended			Actual
	Expenditures(1)			Expenditures
	(in millions)			(in millions)
Redeem Coinmach Laundry Class A Preferred Stock	$	90.0	(2)	$	91.8	(3)
Redeem Coinmach Laundry Class B Preferred Stock		—	(4)		7.4	(3)(5)
Redeem Coinmach Corporation 9% Senior Notes due 2010		125.5	(6)		125.5
Redemption premium		11.3			11.3
Accrued interest		2.8	(7)		4.5	(8)
Repay Tranche A term loans under Senior Secured Credit Facility		15.5	(6)		15.5

	•		as a holding company, our dependence on cash flow from our operating subsidiaries to make payments under the 11% Senior Secured Notes, and contractual and legal restrictions on the ability of our subsidiaries to make dividends and distributions to us;

	•		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.

(1)		As set forth in the Registration Statement.
(2)		The Registration Statement reflected the redemption values of the Coinmach Laundry preferred stock as of September 30, 2004.
(3)		At the time of the redemption of the Coinmach Laundry Class A preferred stock on November 24, 2004 and Class B preferred stock on December 21, 2004, the officers, directors and certain holders of 5% or more of the membership units of Coinmach Holdings, LLC, our controlling stockholder, owned substantially all of the Coinmach Laundry preferred stock to be redeemed, and therefore received substantially all of the proceeds used for the redemption. The payments in connection with the redemption of the preferred stock aggregate $99,137,805 paid to:

Several important factors, in addition to the specific factors discussed in connection with each forward-looking statement individually, could affect our future results or expectations and could cause those results and expectations to differ materially from those expressed in the forward-looking statements contained in this report. These additional factors include, among other things, future economic, industry, social, competitive and regulatory conditions, demographic trends, financial market conditions, future business decisions and actions of our competitors, suppliers, customers and stockholders and legislative, judicial and other governmental authorities, all of which are difficult or impossible to predict accurately and many of which are beyond our control. These factors, in some cases, have affected, and in the future, together with other factors, could affect, our ability to implement our business strategy and may cause our future performance and actual results of operations to vary significantly from those contemplated by the statements expressed in this report.

Stephen R Kerrigan (a)	$	691,538
Mitchell Blatt		504,089
Robert M. Doyle		340,612
Michael E. Stanky		119,454
Ramon Norniella		3,237
James N. Chapman		5,847
GTCR-CLC, LLC		4,737,373
Filbert Investment Pte Ltd		61,823,758
TCW		30,911,897

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COINMACH SERVICE CORP. AND SUBSIDIARIES

~~(a)~~ITEM ~~Preferred shares were beneficially owned by MCS Capital, Inc~~3., aQUANTITATIVE ~~corporation~~AND ~~controlled~~QUALITATIVE byDISCLOSURES ~~Mr.~~ABOUT ~~Kerrigan.~~MARKET RISK

(4)		The table in the “Use of Proceeds” section of the Registration Statement did not give effect to any exercise of the overallotment option.
(5)		The redemption of the Coinmach Laundry Class B preferred stock was affected with proceeds from the exercise of the underwriters’ overallotment option.
(6)		The Registration Statement reflected our indebtedness as of September 30, 2004.
(7)		The Registration Statement reflected accrued interest from August 1, 2004 through October 31, 2004 on the portion of the 9% senior notes to be redeemed.
(8)		Reflects accrued interest from August 1, 2004 through December 24, 2004 on the portion of the 9% senior notes actually redeemed.

Our principal exposure to market risk relates to changes in interest rates on our long term borrowings. Our operating results and cash flow would be adversely affected by an increase in interest rates. As of December 31, 2006, we had approximately $337.7 million outstanding relating to our variable rate debt portfolio.

ITEM 3.		Defaults Upon Senior Securities
		Not applicable.
ITEM 4.		Submission of Matters to a Vote of Security Holders
		None.
ITEM 5.		Other Information
		None.
ITEM 6.		Exhibits

Our future earnings, cash flow and fair values relevant to financial instruments are dependent upon prevalent market rates. Market risk is the risk of loss from adverse changes in market prices and interest rates. If market rates of interest on our variable interest rate debt increased by 2.0% (or 200 basis points), our annual interest expense on such variable interest rate debt would increase by approximately $6.8 million, assuming the total amount of variable interest rate debt outstanding was $337.7 million, the balance as of December 31, 2006.

Exhibit
Number		Description
3.1		Amended and Restated Certificate of Incorporation of Coinmach Service Corp. (referred to as CSC)
3.2		Amended and Restated Bylaws of CSC
4.1		Indenture by and between CSC, the subsidiary guarantors named therein and the Bank of New York, as Trustee
4.2		Security Agreement between CSC and Coinmach Laundry Corporation (referred to as Laundry Corp.) in favor of the Bank of New York, as Collateral Agent
4.3		Pledge Agreement between CSC and Laundry Corp. in favor of the Bank of New York, as Collateral Agent
4.4		Intercompany Note of Coinmach Corporation (referred to as Coinmach Corp.), issued to CSC
4.5		Intercompany Note Guaranty
4.6		Guarantee relating to the Senior Secured notes due 2024 of CSC
4.7		CSC Senior Secured Note

On November 17, 2005, Coinmach entered into 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 Senior Credit Facility to a fixed rate basis, thereby reducing the impact of interest rate changes on future interest expense. The two swap agreements consist of: (i) a $115.0 million notional amount interest rate swap transaction with a financial institution effectively fixing the three-month LIBOR interest rate (as determined therein) at 4.90% and expiring on November 1, 2010, and (ii) a $115.0 million notional amount interest rate swap transaction with a financial institution effectively fixing the three-month LIBOR interest rate (as determined therein) at 4.89% and expiring on November 1, 2010. These interest rate swaps used to hedge the variability of forecasted cash flows attributable to interest rate risk were designated as cash flow hedges.

54 Our fixed debt instruments are not generally affected by a change in the market rates of interest, and therefore, such instruments generally do not have an impact on future earnings. However, as fixed rate debt matures, future earnings and cash flows may be impacted by changes in interest rates related to debt acquired to fund repayments under maturing facilities.

~~COINMACH~~ We ~~SERVICE~~do ~~CORP.~~not ~~AND~~use ~~SUBSIDIARIES~~derivative financial instruments for trading purposes and are not exposed to material foreign currency translation.

4.8		IDS Certificate
4.9		Indenture, dated as of January 25, 2002, by and among Coinmach Corp., the subsidiary guarantors named therein and U.S. Bank, N.A., as trustee (incorporated by reference from exhibit number 4.9 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
4.10		Registration Rights Agreement dated as of January 25, 2002, by and among Coinmach Corp., the subsidiary guarantors named therein and the Initial Purchasers named therein (incorporated by reference from exhibit number 4.10 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
4.11		Form of 9% senior note of Coinmach Corp. (included as an exhibit to Exhibit 4.9 hereto) (incorporated by reference from exhibit number 4.11 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.1		Credit Agreement dated January 25, 2002, among Coinmach Corp., Laundry Corp., the Subsidiary Guarantors name therein, the lending institutions named therein, Deutsche Bank Trust Company Americas (formerly known as Bankers Trust and referred to as DB Trust), Deutsche Banc Alex. Brown Inc., J.P. Morgan Securities Inc., First Union Securities, Inc. and Credit Lyonnais New York Branch (incorporated by reference from exhibit number 10.1 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.2		Limited Waiver and Amendment No. 1 and Agreement to Credit Agreement among Coinmach Corp., Laundry Corp., the subsidiary guarantors named therein and the lenders named therein
10.3		Amended and Restated Securityholders Agreement among CSC, Coinmach Holdings LLC (referred to as Holdings) and its unitholders
10.4		Intercreditor Agreement by and among Laundry Corp., the collateral agent under the Credit Agreement and the collateral agent named therein
10.5		Purchase Agreement by and between Holdings and CSC
10.6		Indemnity Agreements by and between CSC and each director and executive officer
10.7		Senior Management Agreement, dated March 6, 2003, by and among Coinmach Corp., Holdings and Mitchell Blatt (incorporated by reference from exhibit number 10.8 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.8		Employment Agreement, dated as of July 1, 1995, by and between Solon (as predecessor-in-interest to Coinmach Corp.), Michael E. Stanky and GTCR (incorporated by reference from exhibit number 10.10 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.9		Promissory Note, dated February 11, 1997, of Stephen R. Kerrigan in favor of Coinmach Corp. (incorporated by reference from exhibit number 10.11 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.10		Holdings Pledge Agreement, dated January 25, 2002, made by Coinmach Corp. and each of the Guarantors party thereto to DB Trust (incorporated by reference from exhibit number 10.12 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.11		Credit Party Pledge Agreement, dated January 25, 2002, made by Coinmach Corp. and each of the Guarantors party thereto to DB Trust (incorporated by reference from

55 Table of Contents

COINMACH SERVICE CORP. AND SUBSIDIARIES

		exhibit number 10.13 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.12		Security Agreement, dated January 25, 2002, among Coinmach Corp., each of the Guarantors party thereto and DB Trust (incorporated by reference from exhibit number 10.14 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.13		Collateral Assignment of Leases, dated January 25, 2002, by Coinmach Corp. in favor of DB Trust (incorporated by reference from exhibit number 10.15 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.14		Collateral Assignment of Location Leases, dated January 25, 2002, by Coinmach Corp., in favor of DB Trust (incorporated by reference from exhibit number 10.16 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.15		Purchase Agreement, dated as of January 17, 2002, by and among Coinmach Corp., as Issuer, the Guarantors named therein, and the Initial Purchasers named therein (incorporated by reference from exhibit number 10.17 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.16		Registration Rights Agreement, dated as of March 6, 2003, by and among Holdings, GTCR-CLC, LLC, MCS, Stephen R. Kerrigan, Mitchell Blatt, Robert M. Doyle, Michael E. Stanky, James N. Chapman, and the investors named therein (incorporated by reference from exhibit number 10.18 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.17		Management Contribution Agreement, dated as of March 5, 2003, by and among Holdings, MCS, Stephen R. Kerrigan and Laundry Corp. (incorporated by reference from exhibit number 10.19 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.18		Management Contribution Agreement, dated as of March 5, 2003, by and between Holdings and Mitchell Blatt (incorporated by reference from exhibit number 10.20 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.19		Management Contribution Agreement, dated as of March 5, 2003, by and between Holdings and Robert M. Doyle (incorporated by reference from exhibit number 10.21 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.20		Management Contribution Agreement, dated as of March 5, 2003,by and between Holdings and Michael E. Stanky (incorporated by reference from exhibit number 10.22 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.21		Management Contribution Agreement, dated as of March 5, 2003, by and between Holdings and James N. Chapman (incorporated by reference from exhibit number 10.23 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.22		Amended and Restated Promissory Note, by and between MCS, as borrower and Laundry Corp., dated March 6, 2003 (incorporated by reference from exhibit number 10.24 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)

ITEM 4. CONTROLS AND PROCEDURES

56Evaluation of Disclosure Controls and Procedures

~~COINMACH~~ Under ~~SERVICE~~the ~~CORP.~~supervision ~~AND~~and ~~SUBSIDIARIES~~with the participation of our management, we evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2006. Based on that evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2006.

10.23		Amended and Restated Promissory Note, by and between Mitchell Blatt, as borrower, and Laundry Corp., dated March 6, 2003 (incorporated by reference from exhibit number 10.25 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.24		Amended and Restated Promissory Note, by and between Robert M. Doyle, as borrower, and Laundry Corp., dated March 6, 2003 (incorporated by reference from exhibit number 10.26 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.25		Amended and Restated Promissory Note, by and between Michael E. Stanky, as borrower and Laundry Corp., dated March 6, 2003 (incorporated by reference from exhibit number 10.27 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.26		Replacement Promissory Note, by and between Mitchell Blatt, as borrower, and Coinmach Corp. dated March 15, 2002 and amendment dated March 6, 2003 (incorporated by reference from exhibit number 10.28 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.27		Senior Management Employment Agreement, by and between Coinmach Corp. and Ramon Norniella, dated as of December 17, 2000 (incorporated by reference from exhibit number 10.29 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.28		Promissory Note, by and between MCS, as borrower and Laundry Corp., dated as of July 26, 1995 (incorporated by reference from exhibit number 10.30 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.29		Promissory Note, by and between Mitchell Blatt, as borrower and Laundry Corp., dated as of July 26, 1995 (incorporated by reference from exhibit number 10.31 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.30		Promissory Note, by and between MCS, as borrower and Laundry Corp., dated as of May 10, 1996 (incorporated by reference from exhibit number 10.32 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.31		Promissory Note, by and between Mitchell Blatt, as borrower and Laundry Corp., dated as of May 10, 1996 (incorporated by reference from exhibit number 10.33 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.32		Amended and Restated Promissory Note, by and between Ramon Norniella, as borrower and Laundry Corp., dated March 6, 2003 (incorporated by reference from exhibit number 10.34 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.33		Limited Liability Company Agreement of Holdings dated March 6, 2003 (incorporated by reference from exhibit number 10.35 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.34		Amendment No. 1 to the Limited Liability Company Agreement of Holdings (incorporated by reference from exhibit number 10.36 to Amendment No. 7 to CSC’s Form S-1 filed on November 18, 2004, file number 333-114421)
10.35		CSC 2004 Long Term Incentive Plan

Changes in Internal Control over Financial Reporting

57 Additionally, our management, including our chief executive officer and our chief financial officer, also conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during the quarter ended December 31, 2006 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, our chief executive officer and our chief financial officer concluded that there has been no change during the quarter ended December 31, 2006 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~48

10.36		CSC 2004 Unit Incentive Sub-Plan (incorporated by reference from exhibit number 10.38 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.37		Promissory Note, by and between Robert M. Doyle, as borrower, and Laundry Corp., dated July 26, 1995 (incorporated by reference from exhibit number 10.39 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.38		Promissory Note, by and between Robert M. Doyle, as borrower, and Laundry Corp., dated May 10, 1996 (incorporated by reference from exhibit number 10.40 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.39		Promissory Note, by and between Michael E. Stanky, as borrower, and Laundry Corp. dated July 26, 1995 (incorporated by reference from exhibit number 10.41 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.40		Amendment No. 1 to Holding Pledge Agreement made by Laundry Corp. to DB Trust
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 200
31.2		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
32.1		Certificate of Chief Executive Officer pursuant to 18 United States Code, Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
32.2		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

58COINMACH SERVICE CORP. AND SUBSIDIARIES

~~COINMACH~~PART ~~SERVICE CORP~~II. ~~AND~~OTHER ~~SUBSIDIARIES~~INFORMATION

~~SIGNATURES~~ITEM 1. Legal Proceedings

~~Pursuant~~ We are party to various legal proceedings arising in the ~~requirements~~ordinary course of business. Although the ~~Securities~~ultimate ~~Exchange~~disposition ~~Act~~ of ~~1934,~~such asproceedings ~~amended,~~is ~~the~~not ~~registrant~~presently ~~has~~determinable, management ~~duly~~does ~~caused~~not ~~this~~believe ~~report~~that toadverse bedeterminations ~~signed~~in onany ~~its~~or ~~behalf~~all bysuch ~~the~~proceedings ~~undersigned~~would ~~thereunto~~have ~~duly~~a ~~authorized~~material adverse effect upon our financial condition, results of operations or cash flows.

	COINMACH SERVICE CORP.
Date: February 15, 2005	/s/ Robert M. Doyle
	Robert M. Doyle
	Senior Vice President and Chief Financial Officer (On behalf of registrant and as Principal Financial Officer)

ITEM 1A. Risk Factors

~~COINMACH~~ There ~~SERVICE~~has ~~CORP.~~been ~~AND~~no ~~SUBSIDIARIES~~material change to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2006.

~~INDEX~~ITEM TO2. ~~EXHIBITS~~Unregistered Sales of Equity Securities and Use of Proceeds

Exhibit
Number		Description
3.1		Amended and Restated Certificate of Incorporation of Coinmach Service Corp. (referred to as CSC)
3.2		Amended and Restated Bylaws of CSC
4.1		Indenture by and between CSC, the subsidiary guarantors named therein and the Bank of New York, as Trustee
4.2		Security Agreement between CSC and Coinmach Laundry Corporation (referred to as Laundry Corp.) in favor of the Bank of New York, as Collateral Agent
4.3		Pledge Agreement between CSC and Laundry Corp. in favor of the Bank of New York, as Collateral Agent
4.4		Promissory Note of Coinmach Corporation (referred to as Coinmach Corp.) issued to CSC
4.5		Intercompany Note Guaranty
4.6		Guarantee relating to the Senior Secured notes due 2024 of CSC
4.7		CSC Senior Secured Note
4.8		IDS Certificate
4.9		Indenture, dated as of January 25, 2002, by and among Coinmach Corp., the subsidiary guarantors named therein and U.S. Bank, N.A., as trustee (incorporated by reference from exhibit number 4.9 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
4.10		Registration Rights Agreement dated as of January 25, 2002, by and among Coinmach Corp., the subsidiary guarantors named therein and the Initial Purchasers named therein (incorporated by reference from exhibit number 4.10 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
4.11		Form of 9% senior note of Coinmach Corp. (included as an exhibit to Exhibit 4.9 hereto) (incorporated by reference from exhibit number 4.11 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.1		Credit Agreement dated January 25, 2002, among Coinmach Corp., Laundry Corp., the Subsidiary Guarantors name therein, the lending institutions named therein, Deutsche Bank Trust Company Americas (formerly known as Bankers Trust and referred to as DB Trust), Deutsche Banc Alex. Brown Inc., J.P. Morgan Securities Inc., First Union Securities, Inc. and Credit Lyonnais New York Branch (incorporated by reference from exhibit number 10.1 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.2		Limited Waiver and Amendment No. 1 and Agreement to Credit Agreement among Coinmach Corp., Laundry Corp., the subsidiary guarantors named therein and the lenders named therein
10.3		Amended and Restated Securityholders Agreement among CSC, Coinmach Holdings LLC (referred to as Holdings) and its unitholders
10.4		Intercreditor Agreement by and among Laundry Corp., the collateral agent under the Credit Agreement and the collateral agent named therein
10.5		Purchase Agreement by and between Holdings and CSC

Not applicable.

~~COINMACH~~ITEM ~~SERVICE CORP~~3. ~~AND~~Defaults ~~SUBSIDIARIES~~Upon Senior Securities

10.6		Indemnity Agreements by and between CSC and each director and executive officer
10.7		Senior Management Agreement, dated March 6, 2003, by and among Coinmach Corp., Holdings and Mitchell Blatt (incorporated by reference from exhibit number 10.8 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.8		Employment Agreement, dated as of July 1, 1995, by and between Solon (as predecessor-in-interest to Coinmach Corp.), Michael E. Stanky and GTCR (incorporated by reference from exhibit number 10.10 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.9		Promissory Note, dated February 11, 1997, of Stephen R. Kerrigan in favor of Coinmach Corp. (incorporated by reference from exhibit number 10.11 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.10		Holdings Pledge Agreement, dated January 25, 2002, made by Coinmach Corp. and each of the Guarantors party thereto to DB Trust (incorporated by reference from exhibit number 10.12 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.11		Credit Party Pledge Agreement, dated January 25, 2002, made by Coinmach Corp. and each of the Guarantors party thereto to DB Trust (incorporated by reference from exhibit number 10.13 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.12		Security Agreement, dated January 25, 2002, among Coinmach Corp., each of the Guarantors party thereto and DB Trust (incorporated by reference from exhibit number 10.14 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.13		Collateral Assignment of Leases, dated January 25, 2002, by Coinmach Corp. in favor of DB Trust (incorporated by reference from exhibit number 10.15 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.14		Collateral Assignment of Location Leases, dated January 25, 2002, by Coinmach Corp., in favor of DB Trust (incorporated by reference from exhibit number 10.16 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.15		Purchase Agreement, dated as of January 17, 2002, by and among Coinmach Corp., as Issuer, the Guarantors named therein, and the Initial Purchasers named therein (incorporated by reference from exhibit number 10.17 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.16		Registration Rights Agreement, dated as of March 6, 2003, by and among Holdings, GTCR-CLC, LLC, MCS, Stephen R. Kerrigan, Mitchell Blatt, Robert M. Doyle, Michael E. Stanky, James N. Chapman, and the investors named therein (incorporated by reference from exhibit number 10.18 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.17		Management Contribution Agreement, dated as of March 5, 2003, by and among Holdings, MCS, Stephen R. Kerrigan and Laundry Corp. (incorporated by reference from exhibit number 10.19 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.18		Management Contribution Agreement, dated as of March 5, 2003, by and between Holdings and Mitchell Blatt (incorporated by reference from exhibit number 10.20 to

Not applicable.

61ITEM 4. Submission of Matters to a Vote of Security Holders

~~COINMACH SERVICE CORP. AND SUBSIDIARIES~~ None

		Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.19		Management Contribution Agreement, dated as of March 5, 2003, by and between Holdings and Robert M. Doyle (incorporated by reference from exhibit number 10.21 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.20		Management Contribution Agreement, dated as of March 5, 2003,by and between Holdings and Michael E. Stanky (incorporated by reference from exhibit number 10.22 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.21		Management Contribution Agreement, dated as of March 5, 2003, by and between Holdings and James N. Chapman (incorporated by reference from exhibit number 10.23 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.22		Amended and Restated Promissory Note, by and between MCS, as borrower and Laundry Corp., dated March 6, 2003 (incorporated by reference from exhibit number 10.24 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.23		Amended and Restated Promissory Note, by and between Mitchell Blatt, as borrower, and Laundry Corp., dated March 6, 2003 (incorporated by reference from exhibit number 10.25 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.24		Amended and Restated Promissory Note, by and between Robert M. Doyle, as borrower, and Laundry Corp., dated March 6, 2003 (incorporated by reference from exhibit number 10.26 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.25		Amended and Restated Promissory Note, by and between Michael E. Stanky, as borrower and Laundry Corp., dated March 6, 2003 (incorporated by reference from exhibit number 10.27 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.26		Replacement Promissory Note, by and between Mitchell Blatt, as borrower, and Coinmach Corp. dated March 15, 2002 and amendment dated March 6, 2003 (incorporated by reference from exhibit number 10.28 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.27		Senior Management Employment Agreement, by and between Coinmach Corp. and Ramon Norniella, dated as of December 17, 2000 (incorporated by reference from exhibit number 10.29 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.28		Promissory Note, by and between MCS, as borrower and Laundry Corp., dated as of July 26, 1995 (incorporated by reference from exhibit number 10.30 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.29		Promissory Note, by and between Mitchell Blatt, as borrower and Laundry Corp., dated as of July 26, 1995 (incorporated by reference from exhibit number 10.31 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)

ITEM 5. Other Information

62 None.

~~COINMACH~~ITEM ~~SERVICE CORP~~6. ~~AND SUBSIDIARIES~~Exhibits

10.30		Promissory Note, by and between MCS, as borrower and Laundry Corp., dated as of May 10, 1996 (incorporated by reference from exhibit number 10.32 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
Exhibit
10.31		Promissory Note, by and between Mitchell Blatt, as borrower and Laundry Corp., dated as of May 10, 1996 (incorporated by reference from exhibit number 10.33 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
Number		Description
10.32		Amended and Restated Promissory Note, by and between Ramon Norniella, as borrower and Laundry Corp., dated March 6, 2003 (incorporated by reference from exhibit number 10.34 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.1*		Restricted Stock Award Agreement, dated November 3, 2006, by and between Stephen R. Kerrigan and CSC
10.33		Limited Liability Company Agreement of Holdings dated March 6, 2003 (incorporated by reference from exhibit number 10.35 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.2*		Restricted Stock Award Agreement, dated November 3, 2006, by and between Robert M. Doyle and CSC
10.34		Amendment No. 1 to the Limited Liability Company Agreement of Holdings (incorporated by reference from exhibit number 10.36 to Amendment No. 7 to CSC’s Form S-1 filed on November 18, 2004, file number 333-114421)
10.3*		Restricted Stock Award Agreement, dated November 3, 2006, by and between Mitchell Blatt and CSC
10.35		CSC 2004 Long Term Incentive Plan
10.4*		Restricted Stock Award Agreement, dated November 3, 2006, by and between Michael E. Stanky and CSC
10.36		CSC 2004 Unit Incentive Sub-Plan (incorporated by reference from exhibit number 10.38 to Amendment No. 6 to CSC’s Form S-1 filed on November 17, 2004, file number 333-114421)
10.5*		Restricted Stock Award Agreement, dated November 3, 2006, by and between Ramon Norniella and CSC
10.37		Promissory Note, by and between Robert M. Doyle, as borrower, and Laundry Corp., dated July 26, 1995 (incorporated by reference from exhibit number 10.39 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.38		Promissory Note, by and between Robert M. Doyle, as borrower, and Laundry Corp., dated May 10, 1996 (incorporated by reference from exhibit number 10.40 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.39		Promissory Note, by and between Michael E. Stanky, as borrower, and Laundry Corp. dated July 26, 1995 (incorporated by reference from exhibit number 10.41 to Amendment No. 5 to CSC’s Form S-1 filed on November 3, 2004, file number 333-114421)
10.40		Amendment No. 1 to Holding Pledge Agreement made by Laundry Corp. to DB Trust
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 200
31.2		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
32.1		Certificate of Chief Executive Officer pursuant to 18 United States Code, Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
32.2		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

6349

COINMACH SERVICE CORP. AND SUBSIDIARIES


Exhibit
Number		Description
10.6*		Restricted Stock Award Agreement, dated November 3, 2006, by and between James N. Chapman and CSC

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 2002

31.2*		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

32.1†		Certificate of Chief Executive Officer pursuant to 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2†		Certificate of Chief Financial Officer pursuant to 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

COINMACH SERVICE CORP. AND SUBSIDIARIES

SIGNATURES

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


	COINMACH SERVICE CORP.
Date: February 5, 2007	/s/ Robert M. Doyle
	Robert M. Doyle
	Chief Financial Officer (on behalf of registrant and as Principal Financial Officer)

COINMACH SERVICE CORP. AND SUBSIDIARIES

INDEX TO EXHIBITS


Exhibit
Number		Description
10.1*		Restricted Stock Award Agreement, dated November 3, 2006, by and between Stephen R. Kerrigan and CSC

10.2*		Restricted Stock Award Agreement, dated November 3, 2006, by and between Robert M. Doyle and CSC

10.3*		Restricted Stock Award Agreement, dated November 3, 2006, by and between Mitchell Blatt and CSC

10.4*		Restricted Stock Award Agreement, dated November 3, 2006, by and between Michael E. Stanky and CSC

10.5*		Restricted Stock Award Agreement, dated November 3, 2006, by and between Ramon Norniella and CSC

10.6*		Restricted Stock Award Agreement, dated November 3, 2006, by and between James N. Chapman and CSC

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 2002

31.2*		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

32.1†		Certificate of Chief Executive Officer pursuant to 18 United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2†		Certificate of Chief Financial Officer pursuant to 18 United States Code, Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


*		Filed herewith

†		Furnished herewith

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