-- 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 45,829,010Non-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