-- Adjusted Annual EPS Fully Diluted: $0.38 -- Annual Cash from Operations: $97.4 million -- 2010 Annual Forecast EPS: $0.15 to $0.30 -- 2010 Annual Forecast Cash from Operations: $65 million to $80 millionAmerican Reprographics Company (
American Reprographics Company
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
December 31, December 31,
------------ ------------
2009 2008
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 29,377 $ 46,542
Accounts receivable, net 53,919 77,216
Inventories, net 10,605 11,097
Deferred income taxes 5,568 5,831
Prepaid expenses and other current assets 7,011 11,976
------------ ------------
Total current assets 106,480 152,662
Property and equipment, net 74,568 89,712
Goodwill 332,518 366,513
Other intangible assets, net 74,208 85,967
Deferred financing costs, net 4,082 3,537
Deferred income taxes 26,987 25,404
Other assets 2,111 2,136
------------ ------------
Total assets $ 620,954 $ 725,931
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 23,355 $ 25,171
Accrued payroll and payroll-related expenses 8,804 13,587
Accrued expenses 24,540 24,913
Current portion of long-term debt and capital
leases 53,520 59,193
------------ ------------
Total current liabilities 110,219 122,864
Long-term debt and capital leases 220,711 301,847
Other long-term liabilities 8,000 13,318
------------ ------------
Total liabilities 338,930 438,029
------------ ------------
Commitments and contingencies
Stockholders' equity:
American Reprographics Company 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; 46,112,653 and 45,674,810
shares issued and 45,664,999 and 45,227,156
shares outstanding in 2009 and 2008, respectively 46 46
Additional paid-in capital 89,982 85,207
Deferred stock-based compensation - (195)
Retained earnings 200,961 215,846
Accumulated other comprehensive loss (7,273) (11,414)
------------ ------------
283,716 289,490
Less cost of common stock in treasury, 447,654
shares in 2009 and 2008 7,709 7,709
------------ ------------
Total American Reprographics Company
stockholders' equity 276,007 281,781
Noncontrolling interest 6,017 6,121
------------ ------------
Total stockholders' equity 282,024 287,902
------------ ------------
Total liabilities and stockholders' equity $ 620,954 $ 725,931
============ ============
American Reprographics Company
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Reprographics services $ 75,828 $ 108,900 $ 350,491 $ 518,062
Facilities management 22,243 29,246 97,401 120,983
Equipment and supplies
sales 13,591 15,872 53,657 61,942
---------- ---------- ---------- ----------
Total net sales 111,662 154,018 501,549 700,987
Cost of sales 75,738 97,452 323,360 415,715
---------- ---------- ---------- ----------
Gross profit 35,924 56,566 178,189 285,272
Selling, general and
administrative expenses 26,685 36,908 115,020 154,728
Amortization of intangible
assets 2,693 3,016 11,367 12,004
Goodwill impairment - 35,154 37,382 35,154
Impairment of long-lived
assets - - 781 -
---------- ---------- ---------- ----------
Income (loss) from
operations 6,546 (18,512) 13,639 83,386
Other income, net (33) (217) (171) (517)
Interest expense, net 7,721 6,005 25,781 25,890
---------- ---------- ---------- ----------
Income before income tax
(benefit) provision (1,142) (24,300) (11,971) 58,013
Income tax (benefit)
provision (502) (8,677) 3,018 21,200
---------- ---------- ---------- ----------
Net (loss) income (640) (15,623) (14,989) 36,813
Loss (income) attributable
to noncontrolling interest 65 (64) 104 (59)
---------- ---------- ---------- ----------
Net (loss) income
attributable to American
Reprographics Company $ (575) $ (15,687) $ (14,885) $ 36,754
========== ========== ========== ==========
Earnings per share
attributable to American
Reprographics
Company shareholders:
Basic $ (0.01) $ (0.35) $ (0.33) $ 0.82
========== ========== ========== ==========
Diluted $ (0.01) $ (0.35) $ (0.33) $ 0.81
========== ========== ========== ==========
Weighted average common
shares outstanding:
Basic 45,393,929 45,078,554 45,185,350 45,060,482
Diluted 45,393,929 45,078,554 45,185,350 45,398,086
American Reprographics Company
Non-GAAP Measures
Reconciliation of cash flows provided by operating activities to
EBIT and EBITDA
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Cash flows provided by
operating activities $ 22,061 $ 32,003 $ 97,425 $ 127,266
Changes in operating assets
and liabilities (11,068) (12,734) (19,919) (4,829)
Non-cash (expenses) income,
including depreciation and
amortization (11,633) (34,892) (92,495) (85,624)
Income tax (benefit) provision (502) (8,677) 3,018 21,200
Interest expense 7,721 6,005 25,781 25,890
Net loss attributable to the
noncontrolling interest 65 (64) 104 (59)
--------- --------- --------- ---------
EBIT 6,644 (18,359) 13,914 83,844
Depreciation and amortization 11,892 12,940 49,543 50,121
--------- --------- --------- ---------
EBITDA $ 18,536 $ (5,419) $ 63,457 $ 133,965
========= ========= ========= =========
American Reprographics Company
Non-GAAP Measures
Reconciliation of net (loss) income attributable to ARC to unaudited
adjusted net income attributable to ARC
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
(Dollars in thousands, except share and per
share data)
Net (loss) income
attributable to ARC $ (575) $ (15,687) $ (14,885) $ 36,754
Goodwill impairment - 35,154 37,382 35,154
Impairment of long-lived
assets - - 781 -
Amended Credit Agreement
and Swap
Transaction costs 1,672 - 2,632 -
Income tax benefit,
related to above items (669) (12,932) (8,748) (12,932)
Unaudited adjusted net
income attributable
to ARC ---------- ---------- ---------- ----------
$ 428 $ 6,535 $ 17,162 $ 58,976
========== ========== ========== ==========
Earnings per share
attributable to ARC
shareholders (actual):
Basic $ (0.01) $ (0.35) $ (0.33) $ 0.82
========== ========== ========== ==========
Diluted $ (0.01) $ (0.35) $ (0.33) $ 0.81
========== ========== ========== ==========
Earnings per share
attributable to ARC
shareholders (adjusted):
Basic $ 0.01 $ 0.14 $ 0.38 $ 1.31
========== ========== ========== ==========
Diluted $ 0.01 $ 0.14 $ 0.38 $ 1.30
========== ========== ========== ==========
Weighted average common
shares outstanding (adjusted):
Basic 45,393,929 45,078,554 45,185,350 45,060,482
Diluted 45,524,283 45,353,789 45,328,550 45,398,086
American Reprographics Company
Non-GAAP Measures
Reconciliation of net (loss) income attributable to ARC to EBIT, EBITDA and
adjusted EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ----------
Net (loss) income attributable
to ARC $ (575) $ (15,687) $ (14,885) $ 36,754
Interest expense, net 7,721 6,005 25,781 25,890
Income tax (benefit) provision (502) (8,677) 3,018 21,200
--------- --------- --------- ----------
EBIT 6,644 (18,359) 13,914 83,844
Depreciation and amortization 11,892 12,940 49,543 50,121
--------- --------- --------- ----------
EBITDA 18,536 (5,419) 63,457 133,965
Special items:
Goodwill impairment - 35,154 37,382 35,154
Impairment of long-lived
assets - - 781 -
--------- --------- --------- ----------
Adjusted EBITDA $ 18,536 $ 29,735 $ 101,620 $ 169,119
========= ========= ========= ==========
Non-GAAP Measures
EBIT, EBITDA and related ratios presented in this report are supplemental
measures of our performance that are not required by or presented in
accordance with accounting principles generally accepted in the United
States of America ("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 flows 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 $4.9 million, $4.3 million and $3.5 million of stock based
compensation expense recorded in selling, general and administrative
expenses, for the years ended December 31, 2009, 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, 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
segment-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 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, EBITDA
and related ratios only as supplements.
We have presented adjusted net income attributable to ARC and adjusted
earnings per share attributable to ARC shareholders for the years ended
December 31, 2009 and 2008 to reflect the exclusion of the goodwill
impairment charge, long-lived assets impairment charge and costs related to
the 2009 amendments to the Credit Agreement and Swap Transaction. This
presentation facilitates a meaningful comparison of our operating results
for the years ended December 31, 2009 and 2008. We presented adjusted
EBITDA in 2009 and 2008 to exclude the non-cash impairment charges of $38.2
million and $35.2 million, respectively, as we believe this was a result of
the current macroeconomic environment and not indicative of our operations.
The exclusion of the goodwill impairment charges and long-lived assets
impairment charge, and costs related to the 2009 amendments to the Credit
Agreement and Swap Transaction to arrive at adjusted EBITDA is consistent
with the definition of adjusted EBITDA in the amendment to the Credit
Agreement, therefore we believe this information is useful to investors in
assessing our ability to meet our debt covenants.
American Reprographics Company
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Cash flows from operating
activities
Net (loss) income $ (640) $ (15,623) $ (14,989) $ 36,813
Adjustments to reconcile net
(loss) income to net cash
provided by operating
activities:
Allowance for accounts
receivable 202 1,802 3,044 4,966
Depreciation 9,199 9,924 38,176 38,117
Amortization of intangible
assets 2,693 3,016 11,367 12,004
Amortization of deferred
financing costs 385 331 1,357 1,267
Goodwill impairment - 35,154 37,382 35,154
Impairment of long-lived
assets - - 781 -
Stock-based compensation 1,328 1,146 4,892 4,289
Excess tax benefit related
to stock-based compensation - 72 (18) (30)
Deferred income taxes (2,219) (16,670) (4,477) (10,172)
Write-off of deferred
financing costs 190 - 190 313
Other noncash items, net (145) 117 (199) (284)
Changes in operating assets
and liabilities, net of
effect of business
acquisitions:
Accounts receivable 9,862 19,656 21,099 21,556
Inventory 989 1,883 1,344 3,134
Prepaid expenses and other
assets 2,627 3,694 6,302 (1,101)
Accounts payable and
accrued expenses (2,410) (12,499) (8,826) (18,760)
--------- --------- --------- ---------
Net cash provided by operating
activities 22,061 32,003 97,425 127,266
--------- --------- --------- ---------
Cash flows from investing
activities
Capital expenditures (1,654) (2,674) (7,506) (9,033)
Payments for businesses
acquired, net of cash acquired
and including other cash
payments associated with
the acquisitions (1,504) (5,700) (3,527) (23,916)
Restricted cash - 1,959 - 937
Other 968 259 1,684 1,205
--------- --------- --------- ---------
Net cash used in investing
activities (2,190) (6,156) (9,349) (30,807)
--------- --------- --------- ---------
Cash flows from financing
activities
Proceeds from stock option
exercises - - 63 177
Proceeds from issuance of
common stock under Employee
Stock Purchase Plan 48 8 164 35
Excess tax benefit related to
stock-based compensation - (72) 18 30
Payments on long-term debt
agreements and capital leases (49,170) (13,343) (105,008) (51,850)
Net repayments under revolving
credit facility 1,523 - 1,523 (22,000)
Payment of loan fees (2,048) - (2,092) (726)
--------- --------- --------- ---------
Net cash used in financing
activities (49,647) (13,407) (105,332) (74,334)
--------- --------- --------- ---------
Effect of foreign currency
translation on cash balances (26) (527) 91 (385)
--------- --------- --------- ---------
Net change in cash and cash
equivalents (29,802) 11,913 (17,165) 21,740
Cash and cash equivalents at
beginning of period 59,179 34,629 46,542 24,802
--------- --------- --------- ---------
Cash and cash equivalents at
end of period $ 29,377 $ 46,542 $ 29,377 $ 46,542
========= ========= ========= =========
Supplemental disclosure of
cash flow information
Noncash investing and financing
activities
Noncash transactions include
the following:
Capital lease obligations
incurred $ 4,047 $ 7,950 $ 16,181 $ 34,561
Issuance of subordinated notes
in connection with the
acquisition of businesses $ 220 $ 2,761 $ 466 $ 10,414
Accrued liabilities in
connection with acquisition
of businesses $ - $ 100 $ - $ 100
Net gain (loss) on derivative,
net of tax effect $ 842 $ (8,387) $ 3,318 $ (9,167)
Contribution from
noncontrolling interest $ - $ - $ - $ 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: