-- Annual Revenue: $701 million
-- Annual EPS Fully Diluted: $1.30*
-- Fourth Quarter Revenue: $154 million
-- Fourth Quarter EPS Fully Diluted: $0.14*
American Reprographics Company (
American Reprographics Company
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
December December
31, 31,
--------- ---------
2008 2007
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 46,542 $ 24,802
Restricted cash - 937
Accounts receivable, net 77,216 97,934
Inventories, net 11,097 11,233
Deferred income taxes 5,565 5,791
Prepaid expenses and other current assets 12,817 10,234
--------- ---------
Total current assets 153,237 150,931
Property and equipment, net 89,712 84,634
Goodwill 401,667 382,519
Other intangible assets, net 85,967 86,349
Deferred financing costs, net 3,537 5,170
Deferred income taxes 11,875 10,710
Other assets 2,136 2,298
--------- ---------
Total assets $ 748,131 $ 722,611
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 25,171 $ 35,659
Accrued payroll and payroll-related expenses 13,587 19,293
Accrued expenses 24,916 22,030
Current portion of long-term debt and capital leases 59,193 69,254
--------- ---------
Total current liabilities 122,867 146,236
Long-term debt and capital leases 301,847 321,013
Other long-term liabilities 13,318 3,711
Minority interest 6,121 -
--------- ---------
Total liabilities 444,153 470,960
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 25,000,000 shares
authorized; zero and zero shares issued and
outstanding -- --
Common stock, $0.001 par value, 150,000,000 shares
authorized; 45,674,810 and 45,561,773 shares
issued and outstanding 46 46
Additional paid-in capital 85,278 81,153
Deferred stock-based compensation (195) (673)
Retained earnings 238,068 179,092
Accumulated other comprehensive income (11,510) (258)
--------- ---------
311,687 259,360
Less cost of common stock in treasury, 447,654 shares
in 2008 and 2007 7,709 7,709
--------- ---------
Total stockholders' equity 303,978 251,651
--------- ---------
Total liabilities and stockholders' equity $ 748,131 $ 722,611
========= =========
American Reprographics Company
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Reprographics services $ 108,900 $ 128,940 $ 518,062 $ 513,630
Facilities management 29,246 29,267 120,983 113,848
Equipment and supplies
sales 15,872 15,939 61,942 60,876
---------- ---------- ---------- ----------
Total net sales 154,018 174,146 700,987 688,354
Cost of sales 97,452 102,368 415,715 401,317
---------- ---------- ---------- ----------
Gross profit 56,566 71,778 285,272 287,037
Selling, general and
administrative expenses 36,907 37,902 154,728 143,811
Litigation reserve (gain) - (2,897) - (2,897)
Amortization of intangible
assets 3,017 2,463 12,004 9,083
---------- ---------- ---------- ----------
Income from operations 16,642 34,310 118,540 137,040
Other income, net (218) - (517) -
Interest expense, net 6,004 5,699 25,890 24,373
Loss on early
extinguishment of debt - 1,327 - 1,327
---------- ---------- ---------- ----------
Income before minority
interest and income tax
provision 10,856 27,284 93,167 111,340
Minority interest 64 - 59 -
Income tax provision 4,257 10,547 34,132 42,203
---------- ---------- ---------- ----------
Net income $ 6,535 $ 16,737 $ 58,976 $ 69,137
========== ========== ========== ==========
Earnings per share:
Basic $ 0.14 $ 0.37 $ 1.31 $ 1.52
========== ========== ========== ==========
Diluted $ 0.14 $ 0.37 $ 1.30 $ 1.51
========== ========== ========== ==========
Weighted average common
shares outstanding:
Basic 45,078,554 45,397,441 45,060,482 45,421,498
Diluted 45,353,789 45,715,483 45,398,086 45,829,010
American Reprographics Company
Non-GAAP Measures
Reconciliation of Net Income to EBIT and EBITDA
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net income $ 6,535 $ 16,737 $ 58,976 $ 69,137
Interest expense, net 6,004 5,699 25,890 24,373
Loss on early extinguishment
of debt - 1,327 - 1,327
Income tax provision 4,257 10,547 34,132 42,203
--------- --------- --------- ---------
EBIT 16,796 34,310 118,998 137,040
Depreciation and amortization 12,939 10,557 50,121 39,445
--------- --------- --------- ---------
EBITDA $ 29,735 $ 44,867 $ 169,119 $ 176,485
========= ========= ========= =========
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Cash flows provided by
operating activities $ 31,931 $ 30,266 $ 127,194 $ 101,386
Changes in operating assets
and liabilities (12,070) (959) (4,165) 13,856
Non-cash (expenses) income,
including depreciation
and amortization (13,326) (12,570) (64,053) (46,105)
Income tax provision 4,257 10,547 34,132 42,203
Interest expense 6,004 5,699 25,890 24,373
Loss on early extinguishment
of debt - 1,327 - 1,327
--------- --------- --------- ---------
EBIT 16,796 34,310 118,998 137,040
Depreciation and amortization 12,939 10,557 50,121 39,445
--------- --------- --------- ---------
EBITDA $ 29,735 $ 44,867 $ 169,119 $ 176,485
========= ========= ========= =========
American Reprographics Company
Non-GAAP Measures
Reconciliation of Net Income to Adjusted Net Income
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -----------------------
2008 2007 2008 2007
----------- ---------- ----------- ----------
Net income $ 6,535 $ 16,737 $ 58,976 $ 69,137
Litigation reserve - (2,898) - (2,898)
Interest expense due to
litigation reserve - (1,029) - (417)
One time loss on early
extinguishment of debt - 1,327 - 1,327
Income tax impact - 988 - 755
----------- ---------- ----------- ----------
Unaudited adjusted net
income $ 6,535 $ 15,125 $ 58,976 $ 67,904
=========== ========== =========== ==========
Earning Per Share (Actual):
Basic $ 0.14 $ 0.37 $ 1.31 $ 1.52
=========== ========== =========== ==========
Diluted $ 0.14 $ 0.37 $ 1.30 $ 1.51
=========== ========== =========== ==========
Earning Per Share
(Adjusted):
Basic $ 0.14 $ 0.33 $ 1.31 $ 1.49
=========== ========== =========== ==========
Diluted $ 0.14 $ 0.33 $ 1.30 $ 1.48
=========== ========== =========== ==========
Weighted average common
shares outstanding:
Basic 45,078,554 45,397,441 45,060,482 45,421,498
Diluted 45,353,789 45,715,483 45,398,086 45,829,010
Non-GAAP Measures
EBIT and EBITDA and related ratios presented in this report are
supplemental measures of our performance that are not required by or
presented in accordance with GAAP. These measures are not measurements of
our financial performance under GAAP and should not be considered as
alternatives to net income, income from operations, or any other
performance measures derived in accordance with GAAP or as an alternative
to cash flow from operating, investing or financing activities as a measure
of our liquidity.
EBIT represents net income before interest and taxes. EBITDA represents net
income before interest, taxes, depreciation and amortization. Amortization
does not include $1.1 million and $0.9 million of stock based compensation
expense, for the three months ended December 31, 2008 and 2007,
respectively and $4.3 million and $3.5 million of stock based compensation
expense, for the twelve months ended December 31, 2008 and 2007,
respectively. EBIT margin is a non-GAAP measure calculated by dividing EBIT
by net sales. EBITDA margin is a non-GAAP measure calculated by dividing
EBITDA by net sales.
We present EBIT and EBITDA and related ratios because we consider them
important supplemental measures of our performance and liquidity. We
believe investors may also find these measures meaningful, given how our
management makes use of them. The following is a discussion of our use of
these measures.
We use EBIT and EBITDA to measure and compare the performance of our
operating segments. Our operating segments' financial performance includes
all of the operating activities except for debt and taxation which are
managed at the corporate level for U.S. operating segments. As a result,
EBIT is the best measure of divisional profitability and the most useful
metric by which to measure and compare the performance of our operating
segments. We also use EBIT to measure performance for determining operating
division-level compensation and use EBITDA to measure performance for
determining consolidated-level compensation. We also use EBIT and EBITDA to
evaluate potential acquisitions and to evaluate whether to incur capital
expenditures.
EBIT, EBITDA and related ratios have limitations as analytical tools, and
you should not consider them in isolation, or as a substitute for analysis
of our results as reported under GAAP. Some of these limitations are as
follows:
-- They do not reflect our cash expenditures, or future requirements for
capital expenditures and contractual commitments;
-- They do not reflect changes in, or cash requirements for, our working
capital needs;
-- They do not reflect the significant interest expense, or the cash
requirements necessary, to service interest or principal payments on our
debt;
-- Although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be replaced in
the future, and EBITDA does not reflect any cash requirements for such
replacements; and
-- Other companies, including companies in our industry, may calculate
these measures differently than we do, limiting their usefulness as
comparative measures.
Because of these limitations, EBIT, EBITDA, and related ratios should not
be considered as measures of discretionary cash available to us to invest
in business growth or to reduce our indebtedness. We compensate for these
limitations by relying primarily on our GAAP results and using EBIT and
EBITDA only as supplements. For more information, see our consolidated
financial statements and related notes elsewhere in this report.
We have presented adjusted net income and adjusted earnings per share for
the three and twelve months ended December 31, 2007 to reflect the
exclusion of the one-time litigation charge and corresponding gain on
settlement related to the Louis Frey bankruptcy litigation and the loss on
the early extinguishment of debt. This presentation facilitates a
meaningful comparison of our operating results for the three and twelve
months ended December 31, 2008 and 2007.
American Reprographics Company
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Twelve Months
Ended
December 31,
------------------
2008 2007
-------- --------
Cash flows from operating activities
Net income $ 58,976 $ 69,137
Adjustments to reconcile net income to net cash
provided by operating activities:
Allowance for accounts receivable 4,966 1,315
Depreciation 38,117 30,362
Amortization of intangible assets 12,004 9,083
Amortization of deferred financing costs 1,267 515
Minority interest 59 -
Stock-based compensation 4,289 3,469
Excess tax benefit related to stock options
exercised (102) (1,563)
Deferred income taxes 3,424 5,318
Write-off of deferred financing costs 313 1,327
Litigation charge (gain) - (3,315)
Other noncash items, net (284) (406)
Changes in operating assets and liabilities, net of
effect of business acquisitions:
Accounts receivable 21,556 (446)
Inventory 3,134 694
Prepaid expenses and other assets (1,838) 44
Litigation settlement payment - (10,500)
Accounts payable and accrued expenses (18,687) (3,648)
-------- --------
Net cash provided by operating activities 127,194 101,386
-------- --------
Cash flows from investing activities
Capital expenditures (9,033) (8,303)
Payments for businesses acquired, net of cash acquired
and including other cash payments associated with
the acquisitions (23,916) (132,739)
Restricted cash 937 7,911
Other 1,205 443
-------- --------
Net cash used in investing activities (30,807) (132,688)
-------- --------
Cash flows from financing activities
Proceeds from stock option exercises 177 1,108
Proceeds from issuance of common stock under Employee
Stock Purchase Plan 35 100
Treasury stock repurchase - (7,709)
Excess tax benefit related to stock options exercised 102 1,563
Proceeds from borrowings under debt agreements - 325,000
Payments on long-term debt agreements and capital
leases (51,850) (292,685)
Net (repayments) borrowings under revolving credit
facility (22,000) 22,000
Payment of loan fees (726) (5,024)
-------- --------
Net cash (used in) provided by financing activities (74,262) 44,353
-------- --------
Effect of foreign currency translation on cash balances (385) 109
-------- --------
Net change in cash and cash equivalents 21,740 13,160
Cash and cash equivalents at beginning of period 24,802 11,642
-------- --------
Cash and cash equivalents at end of period $ 46,542 $ 24,802
======== ========
Supplemental disclosure of cash flow information
Noncash investing and financing activities
Noncash transactions include the following:
Capital lease obligations incurred $ 34,561 $ 35,263
Issuance of subordinated notes in connection with the
acquisition of businesses $ 10,411 $ 23,758
Accrued liabilities in connection with acquisition of
businesses $ 100 $ 570
Accrued liabilities in connection with deferred
financing fees $ - $ 663
Change in fair value of derivative, net of tax effects $ (9,262) $ (937)
Contribution from minority owner $ 6,062 $ -
Contact Information: Contacts: David Stickney VP of Corporate Communications Phone: 925-949-5100 Email: Joseph Villalta The Ruth Group Phone: 646-536-7003 Email:jvillalta@theruthgroup.com