-- Adjusted Annual EPS Fully Diluted: $0.03 -- Annual Cash from Operations: $53.9 million -- 2011 Annual Forecast EPS: $0.01 to $0.15 -- 2011 Annual Forecast Cash from Operations: $40 million to $60 millionAmerican Reprographics Company (
American Reprographics Company
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
December 31, December 31,
------------ ------------
2010 2009
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 26,293 $ 29,377
Accounts receivable, net 52,619 53,919
Inventories, net 10,689 10,605
Deferred income taxes 7,157 5,568
Prepaid expenses and other current assets 10,944 7,011
------------ ------------
Total current assets 107,702 106,480
Property and equipment, net 59,036 74,568
Goodwill 294,759 332,518
Other intangible assets, net 62,643 74,208
Deferred financing costs, net 4,995 4,082
Deferred income taxes 37,835 26,987
Other assets 2,115 2,111
------------ ------------
Total assets $ 569,085 $ 620,954
============ ============
Liabilities and Equity
Current liabilities:
Accounts payable $ 23,593 $ 23,355
Accrued payroll and payroll-related expenses 7,980 8,804
Accrued expenses 30,134 24,540
Current portion of long-term debt and capital
leases 23,608 53,520
------------ ------------
Total current liabilities 85,315 110,219
Long-term debt and capital leases 216,016 220,711
Other long-term liabilities 5,072 8,000
------------ ------------
Total liabilities 306,403 338,930
------------ ------------
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;
46,183,463 and 46,112,653 shares issued and
45,735,809 and 45,664,999 shares outstanding
in 2010 and 2009, respectively 46 46
Additional paid-in capital 96,251 89,982
Retained earnings 173,459 200,961
Accumulated other comprehensive loss (5,541) (7,273)
------------ ------------
264,215 283,716
Less cost of common stock in treasury, 447,654
shares in 2010 and 2009 7,709 7,709
------------ ------------
Total American Reprographics Company
stockholders' equity 256,506 276,007
Noncontrolling interest 6,176 6,017
------------ ------------
Total equity 262,682 282,024
------------ ------------
Total liabilities and equity $ 569,085 $ 620,954
============ ============
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,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
Reprographics services $ 67,136 $ 75,828 $ 294,555 $ 350,491
Facilities management 22,362 22,243 89,994 97,401
Equipment and supplies
sales 15,471 13,591 57,090 53,657
---------- ---------- ---------- ----------
Total net sales 104,969 111,662 441,639 501,549
Cost of sales 73,961 75,738 299,307 323,360
---------- ---------- ---------- ----------
Gross profit 31,008 35,924 142,332 178,189
Selling, general and
administrative expenses 25,832 26,685 107,744 115,020
Amortization of intangible
assets 3,998 2,693 11,657 11,367
Goodwill impairment - - 38,263 37,382
Impairment of long-lived
assets - - - 781
---------- ---------- ---------- ----------
Income (loss) from
operations 1,178 6,546 (15,332) 13,639
Other income, net (27) (33) (156) (171)
Interest expense, net 6,835 7,721 24,091 25,781
Loss on early
extinguishment of debt 2,509 - 2,509 -
---------- ---------- ---------- ----------
Income before income tax
(benefit) provision (8,139) (1,142) (41,776) (11,971)
Income tax (benefit)
provision (3,324) (502) (14,186) 3,018
---------- ---------- ---------- ----------
Net loss (4,815) (640) (27,590) (14,989)
Loss attributable to
noncontrolling interest 61 65 88 104
---------- ---------- ---------- ----------
Net loss attributable to
American Reprographics
Company $ (4,754) $ (575) $ (27,502) $ (14,885)
========== ========== ========== ==========
(Loss) earnings per share
attributable to American
Reprographics Company
shareholders:
Basic $ (0.10) $ (0.01) $ (0.61) $ (0.33)
========== ========== ========== ==========
Diluted $ (0.10) $ (0.01) $ (0.61) $ (0.33)
========== ========== ========== ==========
Weighted average common
shares outstanding:
Basic 45,278,195 45,147,000 45,212,724 45,123,110
Diluted 45,278,195 45,147,000 45,212,724 45,123,110
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,
------------------ -------------------
2010 2009 2010 2009
-------- -------- -------- ---------
Cash flows provided by operating
activities $ 15,916 $ 22,061 $ 53,924 $ 97,425
Changes in operating assets and
liabilities (6,488) (11,068) 955 (19,919)
Non-cash (expenses) income,
including depreciation and
amortization (14,243) (11,633) (82,469) (92,495)
Income tax (benefit) provision (3,324) (502) (14,186) 3,018
Interest expense 6,835 7,721 24,091 25,781
Loss on early extinguishment of
debt 2,509 - 2,509 -
Net loss attributable to
noncontrolling interest 61 65 88 104
-------- -------- -------- ---------
EBIT 1,266 6,644 (15,088) 13,914
Depreciation and amortization 12,128 11,892 45,649 49,543
-------- -------- -------- ---------
EBITDA $ 13,394 $ 18,536 $ 30,561 $ 63,457
======== ======== ======== =========
American Reprographics Company
Non-GAAP Measures
Reconciliation of net loss attributable to ARC to unaudited adjusted net
(loss) income attributable to ARC
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
Net loss attributable
to ARC $ (4,754) $ (575) $ (27,502) $ (14,885)
Goodwill impairment - - 38,263 37,382
Impairment of long-lived
assets - - - 781
Change in trade name
impact to amortization 1,579 - 1,579 -
Loss on early
extinguishment of debt 2,509 - 2,509 -
Amended Credit Agreement
and Swap related costs 1,091 1,672 1,241 2,632
Income tax benefit,
related to above items (1,885) (669) (14,758) (8,748)
Unaudited adjusted net
(loss) income ---------- ---------- ---------- ----------
attributable to ARC $ (1,460) $ 428 $ 1,332 $ 17,162
========== ========== ========== ==========
(Loss) earnings per share
attributable to ARC
shareholders (actual):
Basic $ (0.10) $ (0.01) $ (0.61) $ (0.33)
========== ========== ========== ==========
Diluted $ (0.10) $ (0.01) $ (0.61) $ (0.33)
========== ========== ========== ==========
Weighted average common
shares outstanding:
Basic 45,278,195 45,147,000 45,212,724 45,123,110
Diluted 45,278,195 45,147,000 45,212,724 45,123,110
(Loss) earnings per share
attributable to ARC
shareholders (adjusted):
Basic $ (0.03) $ 0.01 $ 0.03 $ 0.38
========== ========== ========== ==========
Diluted $ (0.03) $ 0.01 $ 0.03 $ 0.38
========== ========== ========== ==========
Weighted average common
shares outstanding:
Basic 45,278,195 45,147,000 45,212,724 45,123,110
Diluted 45,278,195 45,277,354 45,382,542 45,266,310
American Reprographics Company
Non-GAAP Measures
Reconciliation of net loss attributable to ARC to EBIT, EBITDA and adjusted
EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Net loss attributable to ARC $ (4,754) $ (575) $ (27,502) $ (14,885)
Loss on early extinguishment
of debt 2,509 - 2,509 -
Interest expense, net 6,835 7,721 24,091 25,781
Income tax (benefit) provision (3,324) (502) (14,186) 3,018
--------- --------- --------- ---------
EBIT 1,266 6,644 (15,088) 13,914
Depreciation and amortization 12,128 11,892 45,649 49,543
--------- --------- --------- ---------
EBITDA 13,394 18,536 30,561 63,457
Stock-based compensation 1,551 1,328 5,922 4,892
Goodwill impairment - - 38,263 37,382
Impairment of long-lived
assets - - - 781
--------- --------- --------- ---------
Adjusted EBITDA $ 14,945 $ 19,864 $ 74,746 $ 106,512
========= ========= ========= =========
Non-GAAP Financial 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 $5.9 million and $4.9 million of stock-based compensation
expense recorded in selling, general and administrative expenses, for the
years ended December 31, 2010 and 2009, 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 we 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, EBITDA
and related ratios only as supplements.
Our presentation of adjusted net income and adjusted EBITDA over certain
periods is an attempt to provide meaningful comparisons to our historical
performance for our existing and future investors. The unprecedented
changes in our end markets over the past several years have required us to
take measures that are unique in our history and specific to individual
circumstances. Comparisons inclusive of these actions make normal financial
and other performance patterns difficult to discern under a strict GAAP
presentation. Each non-GAAP presentation, however, is explained in detail,
as required in the reconciliation tables above.
Specifically, we have presented adjusted net income attributable to ARC and
adjusted earnings per share attributable to ARC shareholders for the years
ended December 31, 2010 and 2009 to reflect the exclusion of the goodwill
impairment charge, long-lived assets impairment charge, amortization impact
related to the change in trade name, loss on early extinguishment of debt
and interest rate swap related costs, and 2009 amendments to our credit
agreement and swap transaction. We believe these charges were the result of
valuations dependent on the stock market and the result of our capital
restructuring, which have little bearing on our actual operating
performance.
We presented adjusted EBITDA in 2010 and 2009 to exclude stock-based
compensation expense and the non-cash impairment charges. This presentation
is consistent with the definition of EBITDA in our previous and current
credit agreements. We believe these excluded charges are a result of the
current economic environment, and not indicative of our continuing
operations.
American Reprographics Company
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2010 2009 2010 2009
--------- --------- --------- ---------
Cash flows from operating
activities
Net loss $ (4,815) $ (640) $ (27,590) $ (14,989)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Allowance for accounts
receivable 368 202 966 3,044
Depreciation 8,130 9,199 33,992 38,176
Amortization of intangible
assets 3,998 2,693 11,657 11,367
Amortization of deferred
financing costs 332 385 1,491 1,357
Amortization of bond
discount 44 - 44 -
Goodwill impairment - - 38,263 37,382
Impairment of long-lived
assets - - - 781
Stock-based compensation 1,551 1,328 5,922 4,892
Excess tax benefit related
to stock-based compensation (20) - (58) (18)
Deferred income taxes (2,907) (2,219) (12,657) (4,477)
Loss on early extinguishment
of debt 2,509 - 2,509 -
Write-off of deferred
financing costs - 190 - 190
Other noncash items, net 238 (145) 340 (199)
Changes in operating assets
and liabilities, net of
effect of business
acquisitions:
Accounts receivable 5,502 9,862 469 21,099
Inventory 464 989 8 1,344
Prepaid expenses and
other assets 1,418 2,627 (4,098) 6,302
Accounts payable and
accrued expenses (896) (2,410) 2,666 (8,826)
--------- --------- --------- ---------
Net cash provided by operating
activities 15,916 22,061 53,924 97,425
--------- --------- --------- ---------
Cash flows from investing
activities
Capital expenditures (2,938) (1,654) (8,634) (7,506)
Payments for businesses
acquired, net of cash
acquired and including
other cash payments
associated with the
acquisitions (370) (1,504) (870) (3,527)
Other 248 968 1,002 1,684
--------- --------- --------- ---------
Net cash used in investing
activities (3,060) (2,190) (8,502) (9,349)
--------- --------- --------- ---------
Cash flows from financing
activities
Proceeds from stock option
exercises 117 - 242 63
Proceeds from issuance of
common stock under Employee
Stock Purchase Plan 14 48 51 164
Excess tax benefit related to
stock-based compensation 20 - 58 18
Proceeds from bond issuance 195,648 - 195,648 -
Payments on long-term debt
agreements and capital
leases (206,786) (49,170) (238,989) (105,008)
Net repayments under revolving
credit facility (1,086) 1,523 (1,536) 1,523
Payment of loan fees (4,473) (2,048) (4,473) (2,092)
--------- --------- --------- ---------
Net cash used in financing
activities (16,546) (49,647) (48,999) (105,332)
--------- --------- --------- ---------
Effect of foreign currency
translation on cash balances 228 (26) 493 91
--------- --------- --------- ---------
Net change in cash and cash
equivalents (3,462) (29,802) (3,084) (17,165)
Cash and cash equivalents at
beginning of period 29,755 59,179 29,377 46,542
--------- --------- --------- ---------
Cash and cash equivalents at
end of period $ 26,293 $ 29,377 $ 26,293 $ 29,377
========= ========= ========= =========
Supplemental disclosure of
cash flow information
Noncash investing and financing
activities
Noncash transactions include
the following:
Capital lease obligations
incurred 3,503 $ 4,047 $ 10,305 $ 16,181
Issuance of subordinated notes
in connection with the
acquisition of businesses 231 $ 220 $ 231 $ 466
Accrued liabilities in
connection with deferred
financing fees 440 $ - $ 440 $ -
Net gain on derivative, net of
tax effect 1,244 $ 842 $ 1,125 $ 3,318
Contact Information: Contacts: David Stickney VP of Corporate Communications Phone: 925-949-5100 Email: Joseph Villalta The Ruth Group Phone: 646-536-7003 Email: