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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q


(Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
[x] THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File Number: 033-78954

SCOTSMAN HOLDINGS, INC.
(Exact name of Registrant as specified in its Charter)


Delaware 52-1862719
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

8211 Town Center Drive 21236
Baltimore, Maryland (Zip Code)
(Address of principal executive offices)

(410) 931-6000 (Registrant's
telephone number, including area code)

None
(Former name, former address and former fiscal year - if changed since
last report)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes__ No X -

As of November 12, 2004, 6,194,799 shares of common stock ("Common Stock") of
the Registrant were outstanding.








SCOTSMAN HOLDINGS, INC.

INDEX

FORM 10-Q


Page



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

Consolidated Balance Sheets at September 30, 2004 1
and December 31, 2003

Consolidated Statements of Operations for the three 2
and nine months ended September 30, 2004 and 2003

Consolidated Statements of Cash Flows for the
nine months ended September 30, 2004 and 2003 3

Notes to Consolidated Financial Statements 4-8


Item 2. Management's Discussion and Analysis of 9-16
Financial Condition and Results of Operations


Item 3. Quantitative and Qualitative Disclosures
about Market Risk 17

Item 4. Controls and Procedures 17



PART II - OTHER INFORMATION


Item 5. Other Information 18


Item 6. Exhibits 18

SIGNATURES 19







SAFE HARBOR STATEMENT - CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements in this Form 10-Q for the quarter ended September 30,
2004 constitute "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These
forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may cause actual results to differ materially from future
results expressed or implied by these forward-looking statements. These factors
include, among others, the following: substantial leverage and our ability to
service debt; changing market trends in the mobile office industry; general
economic and business conditions including a prolonged or substantial recession;
our ability to finance fleet and branch expansion and to locate and finance
acquisitions; our ability to implement our business and growth strategy and
maintain and enhance our competitive strengths; our ability to obtain financing
for general corporate purposes; intense industry competition; availability of
key personnel; industry over-capacity; and changes in, or the failure to comply
with, government regulations. No assurance can be given as to future results and
neither we nor any other person assumes responsibility for the accuracy and
completeness of these forward-looking statements. Consequently, you should not
place undue reliance on these forward-looking statements, which speak only as of
the date hereof. We undertake no obligation to publicly release the result of
any revision to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.







PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
SCOTSMAN HOLDINGS, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(dollars in thousands)
September 30, December 31,
2004 2003
--------------------------------
Assets (Unaudited)


Cash $ 562 $ 387
Trade accounts receivable, net of allowance for doubtful
accounts of $1,212 in 2004 and $862 in 2003 80,378 55,841
Prepaid expenses and other current assets 44,353 33,741
Rental equipment, net of accumulated depreciation of
$246,360 in 2004 and $224,794 in 2003 869,002 828,078
Property and equipment, net of accumulated depreciation of
$51,533 in 2004 and $45,141 in 2003 79,338 80,750
Deferred financing costs, net 18,468 22,868
Goodwill, net 169,968 169,913
Other intangible assets, net of accumulated amortization of
$2,631 in 2004 and $2,127 in 2003 2,925 2,575
Other assets 17,887 10,958
--------- ---------
$1,282,881 $1,205,111
========= =========

Liabilities and stockholders' equity
Accounts payable $ 47,458 $ 29,505
Accrued expenses 21,655 17,923
Accrued interest 21,401 11,454
Rents billed in advance 21,821 18,295
Revolving credit facility 99,028 54,940
Long-term debt, net 906,377 907,238
Deferred income taxes 146,303 147,392
--------- ---------
Total liabilities 1,264,043 1,186,747
--------- ---------

Stockholders' equity
Common stock, $.01 par value. Authorized 10,000,000
shares; issued 9,507,407 shares in 2004 and 2003 95 95
Additional paid-in capital 240,534 240,005
Cumulative foreign currency translation adjustment 9,779 8,621
Retained earnings 64,368 65,581
------- --------

314,776 314,302
Less treasury stock, - 3,312,608 common shares in 2004
and 2003, at cost (295,938) (295,938)
------- -------

Net stockholders' equity 18,838 18,364
------ ------
$1,282,881 $1,205,111
========= =========
See accompanying notes to consolidated financial statements.



1







SCOTSMAN HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Operations
Three and nine months ended September 30, 2004 and 2003
(Unaudited)

Three months ended Nine months ended
September 30, September 30,
----------------------- ----------------------


2004 2003 2004 2003
---- ---- ---- ----
(In thousands except share and per share amounts)
Revenues
Leasing $ 57,110 $ 53,501 $164,775 $160,535
Sales:
New units 24,107 20,052 67,913 52,729
Rental equipment 9,737 5,037 20,747 14,690
Delivery and installation 36,407 27,903 85,653 68,205
Other 10,745 10,166 30,163 28,076
------- ------- ------- -------
Total revenues 138,106 116,659 369,251 324,235
------- ------- ------- -------

Costs of sales and services
Leasing:
Depreciation and amortization 12,136 11,736 35,904 36,726
Other direct leasing costs 13,979 12,521 37,994 33,424
Sales:
New units 20,915 16,912 57,791 44,108
Rental equipment 7,716 3,937 16,514 11,713
Delivery and installation 31,386 23,825 74,272 58,648
Other 2,632 2,326 7,469 5,900
------ ------ ------- -------
Total costs of sales and services 88,764 71,257 229,944 190,519
------ ------ ------- -------

Gross profit 49,342 45,402 139,307 133,716
------ ------ ------- -------

Selling, general and administrative expenses 20,632 18,687 61,556 56,472
Other depreciation and amortization 3,855 3,478 10,949 10,437
Interest, including amortization of deferred
financing costs 23,305 23,821 68,750 64,727
------ ------ ------ ------
Total operating expenses 47,792 45,986 141,255 131,636
------ ------ ------- -------

Income (loss) before income taxes 1,550 (584) (1,948) 2,080
Income tax expense (benefit) 592 (232) (736) 835
--- ----- ----- ---
Net income (loss) $ 958 $ (352) $ (1,212) $ 1,245
=== ===== ====== =====

Earnings (loss) per common share $ 0.15 $ (0.06) $ (0.20) $ 0.20
==== ==== ==== ====
Earnings (loss) per common share,
assuming dilution $ 0.15 $ (0.06) $ (0.20) $ 0.19
==== ==== ==== ====

See accompanying notes to consolidated financial statements.



2





SCOTSMAN HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

Nine months ended September 30,
------------------------------


Cash flows from operating activities 2004 2003
---- ----
Net (loss) income $ (1,212) $ 1,245
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization 51,993 54,229
Bond discount amortization 268 268
Provision for bad debts 2,105 1,745
Deferred income tax (benefit) expense (951) 743
Non-cash stock option compensation expense 529 641
Gain on sale of rental equipment (4,233) (2,977)
Gain on sale of fixed assets (9) (838)
(Increase) decrease in trade accounts receivable (26,482) 8,962
Increase in accounts payable and accrued expenses 31,513 13,722
Other (13,972) (7,825)
------ ------
Net cash provided by operating activities 39,549 69,915
------ ------

Cash flows from investing activities
Rental equipment additions (49,143) (38,247)
Proceeds from sales of rental equipment 20,747 14,690
Purchases of property and equipment, net (5,241) (5,953)
Acquisition of businesses, net of cash acquired (3,908) (3,456)
Fleet acquisitions (43,572) --
------ ------
Net cash used in investing activities (81,117) (32,966)
------ ------

Cash flows from financing activities
Proceeds from debt 404,064 477,888
Repayment of debt (361,105) (507,521)
Increase in deferred financing costs (740) (7,449)
------ ------
Net cash provided by (used in) financing activities 42,219 (37,082)
------ ------

Net effect of change in exchange rates (476) 101
----- ---

Net increase (decrease) in cash 175 (32)

Cash at beginning of period 387 429
--- ---
Cash at end of period $ 562 $ 397
=== ===
Supplemental cash flow information:
Cash paid for income taxes $ 578 $ 432
=== ===
Cash paid for interest $ 54,071 $ 43,649
====== ======
See accompanying notes to consolidated financial statements.

3






SCOTSMAN HOLDINGS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
(Dollars in thousands, except share and per share amounts)

(1) ORGANIZATION AND BASIS OF PRESENTATION

Scotsman Holdings, Inc. ("Holdings" or when including Williams Scotsman
Inc., "the Company" ) was organized in November 1993 for the purpose of
acquiring Williams Scotsman, Inc. (Scotsman). Holdings conducts business
solely as a holding company, the only significant asset of which is the
capital stock of Scotsman. Therefore, any cash dividends to be paid on
Holdings' common stock, or cash interest to be paid on the debt of the
Company are dependent upon the cash flow of Scotsman.

The operations of the Company consist primarily of the leasing and sale of
mobile offices, modular buildings and storage products (equipment) and
their delivery and installation throughout the United States, Canada, and
certain parts of Mexico.

(2) FINANCIAL STATEMENTS

In the opinion of management, the unaudited financial statements contain
all adjustments (consisting only of normal, recurring adjustments)
necessary to present fairly the Company's financial position as of
September 30, 2004, the consolidated statements of operations for the three
and nine month periods ended September 30, 2004 and 2003, and the
consolidated statements of cash flows for the nine months ended September
30, 2004 and 2003. The results of operations for the periods ended
September 30, 2004 are not necessarily indicative of the operating results
expected for the full year.

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's latest Form 10-K. Certain prior year
amounts have been reclassified to conform to the current year presentation.











4




SCOTSMAN HOLDINGS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements (Continued)

(3) ACCOUNTING CHANGE

During the fourth quarter of 2003, the Company adopted the fair value
recognition provisions of SFAS 123, Accounting for Stock-Based
Compensation, retroactively effective January 1, 2003, using the modified
prospective method described in SFAS 148, Accounting for Stock-Based
Compensation--Transition and Disclosure . Under the fair value recognition
provisions of SFAS 123, stock-based compensation cost is measured at the
grant date based on the fair value of the award and is recognized as
expense over the vesting period. The impact of this change resulted in an
$82, a $0.01, and a $0.01 decrease in net loss, loss per share basic, and
loss per share, assuming dilution, respectively, for the three month period
ended September 30, 2003, as well as a $638, a $0.10, and a $0.10 increase
in net income, earnings per share basic, and earnings per share, assuming
dilution, respectively, for the nine month period ended September 30, 2003.


(4) PURCHASE OF CALIFORNIA CLASSROOM UNITS

On March 26, 2004, the Company acquired nearly 3,800 relocatable DSA
classroom units located in the state of California from Transport
International Pool, Inc. (d/b/a GE Modular Space) for approximately $43.5
million. The assets were acquired using available funds under the Company's
revolving credit facility.

The acquisition included the purchase of units, equipment associated with
these classroom units as well as rights under all outstanding leases
related to these classroom units and certain other assets. The Company did
not acquire employees, physical facilities, sales force, or other business
related items. In addition, the customer base, which is primarily related
to public and private educational institutions in the State of California,
is similar to, and in many cases duplicative of, the Company's existing
customer base. As a result, the Company considers the purchase of these
assets an asset purchase rather than an acquisition of a business.


(5) MINORITY INVESTMENT IN WIRON CONSTRUCCIONES MODULARES, SA

On August 4, 2004, Scotsman, through its 100% owned subsidiary, Williams
Scotsman of Europe, S.L., acquired an 8.5% minority interest in Wiron
Construcciones Modulares, SA., (Wiron) headquartered in Parla, Spain and
secured a right of first refusal to acquire any or all of the shares of
Wiron in the future. Wiron is the second largest modular space provider in
Spain, with branches located in all major cities throughout the country.
Scotsman acquired its 8.5% minority interest for approximately $4.7
million, which includes acquisition related costs and is included in other
assets in the consolidated balance sheet. Scotsman accounts for this
minority investment using the cost method.


5



SCOTSMAN HOLDINGS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements (Continued)

(6) REVOLVING CREDIT FACILITY AND LONG-TERM DEBT

Debt consists of the following:
September 30, December 31,
2004 2003
---------------------------

Borrowings under revolving credit facility $ 99,028 $ 54,940
Term loan 206,837 208,428
Capital lease obligations 462 --
9.875% senior notes, net of
unamortized discount of
$922 in 2004 and $1,189 in 2003 549,078 548,810
10.0% senior secured notes 150,000 150,000
--------- -------
$1,005,405 $962,178
========= =======

The Company amended its bank credit facility, effective September 24, 2004.
The amendment increased the permitted maximum leverage ratio as defined in
the credit agreement to 6.75:1 at September 30, 2004 from 6.60:1 and the
ratio remains at 6.75:1 until June 30, 2005 at which time it decreases to
6.60:1. The leverage ratio decreases thereafter over time to 6.25:1 at
September 30, 2006. This change will provide the Company with additional
financial flexibility. In addition, the amendment (1) reduces the total
revolving commitments under the credit facility to $300.0 million from
$342.0 million and (2) reduces the annual limitation on capital
expenditures to $175.0 million in each of 2005 and 2006, from $235.0
million and $250.0 million, respectively.

(7) COMPREHENSIVE INCOME (LOSS)

Total comprehensive income (loss) was $4,682 and $(574) for the three
months ended September 30, 2004 and 2003, respectively, and $(54) and
$8,624 for the nine months ended September 30, 2004 and 2003, respectively,
which includes net income (loss) and the change in the foreign currency
translation adjustment. A summary of the components of comprehensive (loss)
income for the three and nine month periods ended September 30, 2004 and
2003 is presented below.

Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
----------------- -----------------
2004 2003 2004 2003
---- ---- ---- ----
Net income (loss) $ 958 $(352) $(1,212) $1,245
Foreign currency
translation adjustment 3,724 (222) 1,158 7,379
----- ----- ----- -----
Comprehensive income (loss) $4,682 $(574) $ (54) $8,624
===== === == =====



6





SCOTSMAN HOLDINGS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements (Continued)



(8) EARNINGS AND DIVIDENDS PER SHARE

Earnings per common share is computed by dividing net income by the weighted average number of common
shares outstanding during the periods.

The following table sets forth the components of the weighted-average shares outstanding for the basic and
diluted earnings per share computations:


Three months ended Nine months ended
September 30, September 30
------------ ------------
2004 2003 2004 2003
---- ---- ---- ----

Weighted-average shares-for computation
of basic earnings per share 6,194,799 6,194,799 6,194,799 6,194,799

Effect of employee stock options 331,329 -- -- 346,641
--------- --------- --------- ----------

Weighted-average shares-for computation
of diluted earnings per share 6,526,128 6,194,799 6,194,799 6,541,440
========= ========= ========= =========


Common stock equivalents of 347,400 and 331,329 were excluded from the weighted average shares-diluted total
for the quarter ended September 30, 2003 and the nine month period ended September 30, 2004, due to their
anti-dilutive nature, which resulted from the Company's net loss for such periods.



(9) HURRICANE IMPACT

As a result of the recent hurricanes experienced in the southeast region of the U.S., approximately 500 mobile
office and storage units, the majority of which were not on rent, with a book value of approximately $3.2 million
were destroyed. In addition, the Company incurred additional damages related to mobile office and storage
units as well as Company property and equipment. An evaluation of the damage caused by these storms is currently
underway; however, the Company's current estimate of the total costs related to these storms, including the
value of the destroyed units noted above, is approximately $4.5 million. The Company believes that proceeds
from casualty insurance will cover the costs of replacing or repairing these units, as well as other hurricane
related damages to the Company's assets. Amounts received in excess of damage costs incurred, if any, will be
recorded when readily determinable. The book value of the units destroyed by the hurricanes is included
in prepaid expenses and other current assets within the Company's consolidated balance sheet.




7




SCOTSMAN HOLDINGS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements (Continued)

(10) COMMITMENTS AND CONTINGENCIES

Currently, the Company is involved in various lawsuits and claims arising
out of the normal course of its business. The nature of the Company's
business is such that disputes occasionally arise with vendors including
suppliers and subcontractors and customers over warranties, contract
specifications and contract interpretations among other things. The Company
assesses these matters on a case-by-case basis as they arise. Reserves are
established, as required, based on the Company's assessment of its
exposure. The Company has insurance policies to cover general liability and
workers compensation related claims. In the opinion of management, the
ultimate amount of liability not covered by insurance, if any, under
pending litigation and claims will not have a material adverse effect on
the financial position or operating results of the Company.

In May 2002, the Company brought action against a customer to recover
approximately $0.2 million of monies owed to the Company on a construction
project. In December 2002, this customer counterclaimed against the Company
and filed claims against various subcontractors and suppliers to the
project alleging breach of various warranties and negligence among other
things. The customer has asserted that it is seeking to recover its direct
losses related to this $2.6 million project as well as other damages. The
case is currently in discovery. During the third quarter of 2004, a
mediation process commenced and is currently underway. The Company believes
that it is reasonably possible that the customer will recover some proceeds
from the dispute; however, the amount of such proceeds cannot be determined
at this time. To the extent that the Company is ultimately liable to the
customer, the Company believes it has adequate insurance coverage to apply
to its portion of the claim. The Company, with its insurance carriers,
continues to vigorously defend itself in this matter.

In January 2003, the Company was awarded a contract to construct and
renovate classrooms in an elementary school located in New Jersey. The
Company contracted with various subcontractors for certain components of
the project. During the course of the construction, the modular units were
impacted by weather conditions, including torrential rains, from which the
units were not properly protected by the subcontractors performing the
work. As a result, damage to the units resulted. In order to ensure that
these damages would be repaired and completed in advance of the school
term, the Company promptly repaired the damage. To date the Company
estimates the total costs of the repairs to approximate $1.8 million. As of
September 30, 2004, the Company has incurred costs to repair these damages
totaling approximately $1.6 million. These costs are included in prepaid
expenses and other current assets in the Company's consolidated balance
sheet. The Company and its legal counsel have determined that the
subcontractors are responsible for the damages, and are currently seeking
full recovery for costs incurred from the parties involved. In addition,
the Company has builders risk insurance to cover some portion of the claim.
The Company is pursuing these claims vigorously and believes that it will
recover the amount of its repair costs.




8



Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

Forward Looking Statements

The following discussion and analysis should be read in conjunction with
the unaudited consolidated financial statements included elsewhere in this
report. The terms "company," "we," "our," and "us" refer to Scotsman Holdings,
Inc. and its subsidiary Williams Scotsman ("Scotsman"). "Holdings" refers to the
parent company. The following discussion and analysis contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those contained in our Annual Report on
Form 10-K for the year ended December 31, 2003 under the headings "Business",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and elsewhere in that report. See the Safe Harbor Statement at the
beginning of this report.

Critical Accounting Policies and Estimates

General. This discussion and analysis of our financial condition and
results of operations is based upon our unaudited consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent liabilities. On an on-going basis, we evaluate estimates, including
those related to depreciation of rental equipment, bad debts, contingencies and
litigation, intangible assets, stock-based compensation, foreign currency
translation, and income taxes. We base our estimates on historical experience
and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of the unaudited
consolidated financial statements. A critical accounting policy is one which is
both important to the portrayal of a company's financial condition and results,
and requires management's most difficult, subjective or complex judgments, often
as a result of the need to make estimates about the effect of matters that are
inherently uncertain.

Depreciation of rental equipment. We depreciate rental equipment over its
estimated useful life, after giving effect to an estimated salvage value. The
useful life of our rental equipment is determined based on our estimate of the
period over which the asset will generate revenue (generally 20 years), and the
residual value (typically 50% of original cost) is determined based on our
estimate of the expected value we could realize from the asset after this
period. The lives and residual values are subject to periodic evaluation and may
be affected by, among other factors, changes in building codes, legislation,
regulations, local permitting and internal factors which may include, but are
not limited to, changes in equipment specifications or maintenance policies. If
these estimates change in the future, we may be required to recognize increased
or decreased depreciation expense for these assets.

Allowance for doubtful accounts. We are required to estimate the
collectibility of our trade receivables. Accordingly, allowances for doubtful
accounts are maintained for estimated losses resulting from the inability of our
customers to make required payments. We evaluate a variety of factors in


9


assessing the ultimate realization of these receivables including the current
credit-worthiness of customers. The allowance for doubtful accounts is
determined based on historical collection results, days sales outstanding
trends, and an ongoing review of specific customers. 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, resulting in
decreased net income.

Contingencies. We are subject to proceedings, lawsuits, and other claims
related to environmental, product and other matters, and are required to assess
the likelihood of any adverse judgments or outcomes to these matters as well as
potential ranges of probable losses. A determination of the amount of reserves
required, if any, for these contingencies is made after analysis of each
individual matter. The required reserves may change in the future due to new
developments in each matter or changes in approach such as a change in
settlement strategy in dealing with these matters.

Goodwill and Other Intangible Asset Impairment. We have significant
intangible assets related to goodwill and other acquired intangibles. We
periodically evaluate our long lived assets and intangible assets for potential
impairment indicators. The determination of whether or not these assets are
impaired involves significant judgments regarding estimated future cash flows,
market conditions, operational performance, and/or legal factors. Goodwill, in
particular, is evaluated on an annual basis on October 1st. Based on our most
recent valuation of goodwill, we determined that goodwill was not impaired.
Future changes in strategy and/or market conditions could significantly impact
these judgments and require adjustments to recorded asset balances.

Foreign Currency Translation. We use the exchange rate effective at the
close of business on the balance sheet date to translate Scotsman's foreign
subsidiaries' balance sheets and an average rate for the reporting period to
translate the results of operations. The cumulative effect of changes in
exchange rates is recognized in a separate line in the equity section of the
consolidated balance sheet.

Stock-based Compensation. Prior to 2003, we accounted for our issuance of
stock options and any modifications thereof using variable plan accounting and
the intrinsic value method under Accounting Principles Board Opinion No. 25 -
Accounting for Stock Issued to Employees (APB No. 25) and related
interpretations. Effective January 1, 2003, we adopted the fair value
recognition provisions of SFAS No. 123 - Accounting for Stock-Based
Compensation. We selected the modified prospective method of adoption described
in SFAS No. 148 - Accounting for Stock-Based Compensation - Transition and
Disclosure (SFAS No. 148). Under SFAS No. 148 stock compensation expense related
to the fair value of our outstanding options must be recognized using estimates
of the risk free interest rate, estimated option life, volatility, dividend
yield, and the exercise price. No significant changes have been made during the
nine months ended September 30, 2004 regarding these input variables that were
presented in our annual report for the year ended December 31, 2003.

Income Taxes. We are required to estimate income taxes in each of the
jurisdictions in which we operate. The process involves estimating actual
current tax expense along with assessing temporary differences resulting from
differing treatment of items for book and tax purposes. These timing differences
result in deferred tax assets and liabilities, which are included in our
consolidated balance sheet. We record a valuation allowance to reduce our
deferred tax assets to the amount that is more likely than not to be realized.
We have considered future taxable income and ongoing tax planning strategies in
assessing the need for the valuation allowance. If our estimates of future
taxable income were to change, we may be also required to increase the deferred
tax asset valuation allowance, thereby increasing our reported income tax
expense.

10




Overview

In the nine months ended September 30, 2004, revenues were $369.3 million,
a 13.9% increase above the same period of 2003, primarily driven by increased
new unit sales and related delivery and installation activity. Gross profit for
the nine months ended September 30, 2004 of $139.3 million represented only a
4.2% increase above the same period of 2003 primarily due to lower gross profit
margins resulting from competitive pricing pressures as well as increased
refurbishment and maintenance costs on leased units. Operating expenses for the
nine months ended September 30, 2004 increased $9.6 million, a 7.3% increase
over the same period of 2003. Net loss for the nine months ended September 30,
2004 was $1.2 million as compared to net income of $1.2 million for the same
period of 2003.

Purchase of California Classroom Units

On March 26, 2004, we acquired nearly 3,800 relocatable DSA classroom units
located in the state of California from Transport International Pool, Inc.
(d/b/a GE Modular Space) for approximately $43.5 million. The assets were
acquired using available funds under our revolving credit facility. The
acquisition included the purchase of units, equipment associated with these
classroom units as well as rights under all outstanding leases related to these
classroom units and certain other assets. We did not acquire employees, physical
facilities, sales force, or other business related items. In addition, the
customer base, which is primarily related to public and private educational
institutions in the State of California, is similar to, and in many cases
duplicative of, our existing customer base. As a result, we consider the
purchase of these assets an asset purchase rather than an acquisition of a
business.

We estimate the resulting transaction would result in annual increases to
revenues, income before income taxes, and operating cash flows of approximately
$10.2 million, $4.4 million and $4.5 million, respectively. The estimated income
before income taxes of $4.4 million includes estimated interest and depreciation
expenses of $2.0 million and $1.7 million, respectively. The average age of the
units acquired is approximately 6 years while the remaining depreciable lives
range from 2 to 19 years with an average remaining life of approximately 14
years. Operating leases assumed in the transaction have an average contractual
life of less than two years, however, we expect a significant number of these
units to either continue on a month-to-month basis or be re-leased.


Hurricane Impact

As a result of the recent hurricanes experienced in the southeast region of
the U.S., approximately 500 mobile office and storage units, the majority of
which were not on rent, with a book value of approximately $3.2 million were
destroyed. In addition, the Company incurred additional damages related to
mobile office and storage units as well as Company property and equipment. An
evaluation of the damage caused by these storms is currently underway; however,
the Company's current estimate of the total costs related to these storms,
including the value of the destroyed units noted above, is approximately $4.5
million. The Company believes that proceeds from casualty insurance will cover
the costs of replacing or repairing these units, as well as other hurricane
related damages to the Company's assets. Amounts received in excess of damage
costs incurred, if any, will be recorded when readily determinable. The book
value of the units destroyed by the hurricanes is included in prepaid expenses
and other current assets within the Company's consolidated balance sheet.


11



Results of Operations

Three Months Ended September 30, 2004 Compared with Three Months Ended
September 30, 2003.

Revenues in the three month period ended September 30, 2004 were $138.1
million; a $21.4 million or 18.4% increase from revenues of $116.7 million in
the same period of 2003. The increase resulted primarily from a $8.5 million or
30.5% increase in delivery and installation revenues, a $4.7 million or 93.3%
increase in sales of rental equipment, a $4.1 million or 20.2% increase in sales
of new units, a $3.6 million or 6.7% increase in leasing, and a $0.6 million or
5.7% increase in other revenue from the same period of 2003. The increases in
sales of new units and corresponding increase in delivery and installation are
largely due to continued growth in the education industry we serve, particularly
in the west and southeast regions of the country, as well as increased modular
construction sales activity in the northeast and north central regions of the
country. Increased used sales activity resulted in increased sales of rental
equipment for the three month period ended September 30, 2004 as compared to the
same period of 2003. The 6.7% increase in leasing revenue for the three months
ended September 30, 2004, as compared to the same period of 2003, resulted from
an increase of approximately 4,100 units on rent, which includes our purchase of
California classroom units in the first quarter of 2004, and an increase in the
average rental rate. Average fleet utilization of approximately 80% for the
three month period ended September 30, 2004 was up approximately 3% from the
same period of the prior year. Of this increase, 2.4% is attributed to the
Company's strategic initiative to dispose of selected rental units in our lease
fleet, as disclosed in Note 11 to the Consolidated Financial Statements included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2003. Our average monthly rental rate increased by $2 to $250 for the three
months ended September 30, 2004 as compared to the same period of 2003. Other
revenue increased 5.7% for the quarter ended September 30, 2004 as compared to
the same period of 2003 due primarily to increased sales of miscellaneous
products and services. During the third quarter of 2003, other revenue also
included $1.0 million of profit related to the sale of a branch facility.

Gross profit for the three month period ended September 30, 2004 was $49.3
million, a $3.9 million or 8.7% increase from the same period of 2003. This
increase was primarily driven by the increased revenues described above. Gross
profit margin percentage from delivery and installation and sales of new units
decreased by 0.8%, and 2.5%, respectively, primarily due to competitive pricing
pressures. Leasing gross profit margin percentage for the three months ended
September 30, 2004 decreased by 0.4% due primarily to increased refurbishment
and maintenance costs, partially offset by the increase in leasing revenue
described above. Gross profit margin from sales of rental equipment and other
revenue increased by $0.9 million and $0.3 million, respectively, as compared to
the same period of 2003 primarily due to an increase in sales of rental
equipment and other revenue as discussed above.

Selling, general and administrative expenses for the three month period
ended September 30, 2004 increased by approximately $1.9 million or 10.4% to
$20.6 million from $18.7 million in the same period of 2003. This increase is
primarily associated with increased employee related costs, business insurance,
professional fees and marketing related costs.

Interest expense for the three month period ended September 30, 2004
decreased by $0.5 million or 2.2% to $23.3 million from $23.8 million in the
same period of 2003 due to a prior year write-off of deferred financing costs in
the amount of $2.5 million and a $20.9 million or 6.3% decrease in the average
credit facility debt over the same period of 2003, partially offset by the
incremental interest expense incurred on the $150.0 million of 10.0% senior
secured notes. The net proceeds of the notes were used to pay off portions of
the term loan and revolving credit facility debt in August 2003.


12


Income before income taxes for the three months ended September 30, 2004
was approximately $1.6 million, an increase of approximately $2.1 million from a
loss of $0.6 million for the same period 2003. The effective tax rates for the
three month periods ended September 30, 2004 and 2003 were approximately 38% and
40%, respectively.


Nine Months Ended September 30, 2004 Compared with Nine Months Ended
September 30, 2003.

Revenues for the nine months ended September 30, 2004 were $369.3 million;
a $45.0 million or 13.9% increase from revenues of $324.2 million in the same
period of 2003. The increase resulted primarily from a $17.4 million or 25.6%
increase in delivery and installation revenues, a $15.2 million or 28.8%
increase in sales of new units, a $6.1 million or 41.2% increase in sales of
rental equipment, a $4.2 million or 2.6% increase in leasing revenue, and a $2.1
million or 7.4% increase in other revenue from the same period of 2003. The
increases in sales of new units and corresponding increase in delivery and
installation revenues are largely due to continued growth in the education
industry we serve, particularly in the southeast and west regions of the
country. Increased used sales activity, particularly in the west and north
central regions of the country, resulted in increased sales of rental equipment
for the nine months ended September 30, 2004 as compared to the same period of
2003. The 2.6% increase in leasing revenue for the nine month period ended
September 30, 2004 resulted from an increase of approximately 2,600 units on
rent, which includes our purchase of California classroom units in the first
quarter 2004, partially offset by a decrease of $2 in our average rental rate.
Average fleet utilization of approximately 80% for the nine month period ended
September 30, 2004 was up approximately 4% from the same period of the prior
year. Of this increase, 2.4% is attributed to the strategic initiative
previously discussed. Other revenue increased 7.4% for the nine month period
ended September 30, 2004 from the same period of 2003 due primarily to increased
sales of miscellaneous products and services. During the nine month period ended
September 30, 2003, other revenue also included $1.0 million of profit related
to the sale of a branch facility.

Gross profit for the nine month period ended September 30, 2004 was $139.3
million, a $5.6 million or 4.2% increase from the same period of 2003. This
increase was primarily driven by the increased sales of new units, and delivery
and installation revenues described above. Gross profit margin percentage from
the sales of new units, and delivery and installation decreased by 1.4% and
0.7%, respectively, due to competitive pricing pressures. Gross profit margin
from the sales of rental equipment and other revenue increased by $1.3 million
and $0.5 million, respectively, primarily due to an increase in sales of rental
equipment and other revenue as compared to the same period of 2003. Leasing
gross profit and the leasing gross profit margin percentage for the nine months
ended September 30, 2004 decreased by $0.5 million and 1.1%, respectively, as
compared to the corresponding prior year period. These decreases resulted
primarily from increased refurbishment and maintenance costs, partially offset
by the increase in leasing revenue for the nine month period ended September 30,
2004 as compared to the same period of 2003.

Selling, general and administrative expenses for the nine month period
ended September 30, 2004 increased by $5.1 million or 9.0% to $61.6 million from
$56.5 million in the same period of 2003. This increase is primarily associated
with increased employee and facility related costs, business insurance,
professional fees and marketing related costs.

Interest expense for the nine month period ended September 30, 2004
increased by $4.0 million or 6.2% to $68.8 million from $64.7 million in the
same period of 2003 due primarily to the incremental interest expense incurred
on the $150.0 million of 10.0% senior secured notes. The net proceeds of the


13


notes were used to pay off portions of the term loan and revolving credit
facility debt in August 2003. This incremental interest expense was partially
offset by a $99.7 million or 25.4% decrease in the average credit facility debt
over the same period of 2003. Also included in the 2003 interest expense was a
write-off of deferred financing costs in the amount of $2.5 million.

Loss before income taxes for the nine months ended September 30, 2004 was
$1.9 million, a decrease of $4.0 million from $2.1 million in income before
taxes for the same period 2003. The effective tax rates for the nine month
periods ended September 30, 2004 and 2003 were approximately 38% and 40%,
respectively.

Contractual Obligations and Commercial Commitments

During the nine months ended September 30, 2004, there was no material
change in our contractual obligations and commercial commitments outside of the
ordinary course of business.

Liquidity and Capital Resources

During the nine months ended September 30, 2004, and 2003, cash flow from
operating activities were $39.5 million and $69.9 million, respectively. These
funds were largely generated by the rental of units from our lease fleet, the
associated delivery and installation services from rental and sales activities
and other products. The $30.4 million decrease in cash flow from operating
activities for the nine month period ended September 30, 2004 was substantially
the result of increased receivables related to increased classroom sales,
particularly in the west and southeast regions of the country, and modular
construction activity at September 30, 2004 as compared to the decrease in
receivables experienced during the same periods of 2003. Other factors that
impacted the decrease in net cash provided by operating activities from 2003
included increases in selling, general, and administrative expenses (SG&A), and
increases in paid interest resulting from the incremental interest discussed
above, partially offset by increased payables, other accrued expenses, and rents
billed in advance. The increase in accounts payable and other accrued expenses
resulted primarily from the timing of related payments while the increase in
rents billed in advance is primarily the result of increased leasing activity.
See Results of Operations above for further discussion of SG&A and interest
expense fluctuations.

Cash used in investing activities was $81.1 million and $33.0 million for
the nine months ended September 30, 2004 and 2003, respectively. In June 2003,
acquisition purchases consisted of a $3.3 million purchase of a Canadian company
while in March 2004, we acquired nearly 3,800 relocatable classrooms located in
the state of California for approximately $43.5 million. In August 2004, we made
an investment in a mobile office company, headquartered in Spain, for
approximately $4.7 million. See Note 4 to the Consolidated Financial Statements
for further discussion of the California fleet purchase and Note 5 for further
discussion of the minority investment. In addition to acquisitions, our primary
capital expenditures are for the discretionary purchase of new units for the
lease fleet. We seek to maintain our lease fleet in good condition at all times
and generally increase the size of our lease fleet only in those local or
regional markets experiencing economic growth and established unit demand.

Net cash provided by financing activities of $42.2 million for the nine
month period ended September 30, 2004 consisted of additional net borrowings
under our revolving credit facility, which were used to supplement cash flow
from operating activities in the funding of capital expenditures for the nine
months ended September 30, 2004, as well as the $43.5 million California fleet
purchase as described above. Net cash used in financing activities of $37.1
million for the nine month period ended September 30, 2003 consisted primarily
of net repayments of debt under our revolving credit facility.

14



The credit agreement contains restrictions on the amount of dividends that
Scotsman can pay to Holdings and requires compliance with certain financial
covenants including capital expenditures and ratios. We amended our bank credit
facility, effective September 24, 2004 to increase our permitted maximum
leverage ratio of 6.60:1 to 6.75:1 at September 30, 2004. The ratio remains at
6.75:1 until June 30, 2005 at which time it decreases to 6.60:1. The leverage
ratio decreases thereafter over time to 6.25:1 at September 30, 2006. In
addition, the amendment (1) reduces the total revolving commitments under the
credit facility to $300.0 million from $342.0 million and (2) reduces the annual
limitation on capital expenditures to $175.0 million in each of 2005 and 2006,
from $235.0 million and $250.0 million, respectively. This amendment provides us
with additional financial flexibility and supplements our funding from
operations in meeting both short-term and long-term goals.

In addition to the leverage ratio, our credit agreement contains covenants
for a consolidated interest coverage ratio of 1.70:1 and a minimum average
annual utilization rate for our fleet of 74% at September 30, 2004 increasing to
75% after December 31, 2004. The failure to maintain these required ratios would
result in us not being able to borrow under the credit agreement and, if not
cured within the grace periods, would result in a default under the credit
agreement. We are currently in compliance with all financial covenants.

Our total credit facility (including the term loan and revolver commitment)
was $506.8 million at September 30, 2004. Borrowing base (collateral)
availability calculated in accordance with the credit agreement under this
facility was $190.3 million at September 30, 2004. Consolidated Leverage Ratio
covenant restrictions further limited our borrowing availability at September
30, 2004 to $40.3 million. In order to meet our future cash requirements, we
intend to use internally generated funds and to borrow under our credit
facility. We believe we will have sufficient liquidity under our revolving line
of credit and from cash generated from operations to fund our operations for at
least the next 12 months. Our credit facility expires December 2006 and our
9.875% and 10.0% senior notes mature in 2007 and 2008, respectively. It is
expected that we will refinance outstanding obligations under these instruments
prior to their maturities. Until such time, we expect that funds from operations
will be sufficient to satisfy debt service requirements related to these
obligations.

For the period ended September 30, 2004, our actual Consolidated Leverage
Ratio was 6.49:1 as compared to the maximum covenant requirement of 6.75:1 and
our actual Consolidated Interest Coverage Ratio was 1.79:1 as compared to the
minimum covenant requirement of 1.70:1. The Consolidated Interest Coverage Ratio
was calculated by dividing Consolidated EBITDA (as defined in our credit
agreement) of $151.1 million for the twelve month period ended September 30,
2004 by cash interest expense of $84.4 million as defined in the credit
agreement. The Consolidated Leverage Ratio was calculated by dividing the
September 30, 2004 consolidated debt balance of $1.0 billion by Consolidated
EBITDA for the twelve month period ended September 30, 2004. For Consolidated
Leverage Ratio calculation purposes, Consolidated EBITDA for the twelve months
ended September 30, 2004 was $154.9 million which, in accordance with the credit
agreement, includes $3.8 million relating to acquisitions made during the
calculation period.

Consolidated EBITDA as defined in our credit agreement represents the
trailing 12 months consolidated net income plus consolidated interest, tax,
depreciation and amortization expenses, and excludes gains and losses on sales
of fixed assets and any other non-cash items. It is used in determining our
compliance with the financial ratios required by our agreement. Consolidated
EBITDA should not be considered in isolation or as a substitute to cash flow

15



from operating activities, net income or other measures of performance prepared
in accordance with generally accepted accounting principles or as a measure of a
company's profitability or liquidity.

Although not required by our credit agreement, if our cash flow from
operating activities for the twelve months ended September 30, 2004, the most
directly comparable GAAP measure to Consolidated EBITDA, were used in these
calculations instead of Consolidated EBITDA, our leverage ratio and interest
coverage ratio would have been 23.3:1 and .51:1, respectively.

The table below reconciles Consolidated EBITDA, calculated pursuant to the
credit agreement, to cash flow from operating activities for the twelve months
ended September 30, 2004, the most directly comparable GAAP measure (in
thousands).

Twelve Months Ended
September 30, 2004
-------------------
Consolidated EBITDA $ 154,916
Increase in net receivables (25,917)
Increase in accounts payable and accrued expenses 24,928
Interest paid (85,030)
Increase in other assets (10,296)
Decrease in other liabilities (5,349)
Gain on sale of equipment (5,628)
Pro forma EBITDA impact of acquisitions (3,774)
------
Cash flow from operating activities $ 43,850
======










16




Item 3.Quantitative and Qualitative Disclosures about Market Risk

For quantitative and qualitative disclosures about market risk, see Item
7A, "Quantitative and Qualitative Disclosures About Market Risk," of our Annual
Report on Form 10-K for the year ended December 31, 2003. Our exposures to
market risk have not changed materially since December 31, 2003.


Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

Our Chief Executive Officer and Acting Chief Financial Officer has
concluded, based on his evaluation, as of the end of the period
covered by this report, that our disclosure controls and procedures
(as defined in the Securities Exchange Act of 1934 Rules 13a - 15(e)
and 15d - 15(e)) are (1) effective to ensure that material information
required to be disclosed by us in reports filed or submitted by us
under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and (2) designed to ensure that material
information required to be disclosed by us in such reports is
accumulated, organized and communicated to our management, including
our Chief Executive Officer and Acting Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.


(b) Changes in Internal Control Over Financial Reporting.

There has been no change in the Company's internal control over
financial reporting (as defined in the Securities Exchange Act of 1934
Rules 13a-15(f) and 15d-15(f)) that occurred during the Company's most
recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over
financial reporting.


It should be noted that any system of controls, however well designed and
operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system will be met. In addition, the design of any control
system is based in part upon certain assumptions about the likelihood of future
events. Because of these and other inherent limitations of control systems,
there is only reasonable assurance that our controls will succeed in achieving
their stated goals under all potential future conditions.



17




PART II - OTHER INFORMATION

Item 5. Other Information

The Company is not required to file reports with the Securities and
Exchange Commission pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, but is filing this
Quarterly Report on Form 10-Q on a voluntary basis. Accordingly, it is
not an "issuer" as defined in Section 2(a)(7) of the Sarbanes-Oxley
Act of 2002.


Item 6. Exhibits



(2.1) Fourth Amendment dated as of September 24, 2004, among Scotsman
Holdings, Inc., the Company, the lenders from time to time party
to the credit agreement and Deutsche Bank Trust Company
Americas, as Administrative Agent (Incorporated by reference to
Exhibit 10.2 on Williams Scotsman's Form 10-Q dated November 12,
2004).


(31.1) Certification pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 for Gerard E. Holthaus, Chief Executive Officer and
Acting Chief Financial Officer of the Company.












18



SIGNATURES



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

SCOTSMAN HOLDINGS, INC.



By: /s/ Gerard E. Holthaus
---------------------
Gerard E. Holthaus
Chief Executive Officer and
Acting Chief Financial Officer


Dated: November 12, 2004














19






Exhibit (31.1)



CERTIFICATION

I, Gerard E. Holthaus, Chief Executive Officer and Acting Chief Financial
Officer, certify, that:

(1) I have reviewed this report on Form 10-Q of Scotsman
Holdings Inc.;

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

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

(4) I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures or
caused such disclosure controls and procedures to be
designed under my supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others
within those entities, particularly during the period in
which this report is being prepared;

b) Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this
report my conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting;


20




(5) I have disclosed, based on my most recent evaluation of
internal control over financial reporting, to the registrant's
auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
the registrant's ability to record, process, summarize and
report financial information; and

b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal control over financial reporting.



/s/ Gerard E. Holthaus
----------------------
Gerard E. Holthaus
Chief Executive Officer and
Acting Chief Financial Officer

November 12, 2004








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