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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 001-32407
 AMERICAN REPROGRAPHICS COMPANY
 (Exact name of Registrant as specified in its Charter)
 Delaware
    
    20-1700361(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 1981 N. Broadway, Suite 385
Walnut Creek, California 94596
(925) 949-5100
 (Address, including zip code, and telephone number, including area code, of Registrants principal executive offices)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, par value $0.001 per share
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
NONE
 o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



AMERICAN REPROGRAPHICS COMPANY
ANNUAL REPORT ON FORM 10-K
for the fiscal year ended December 31, 2010
Table of Contents
 PagePART I
    
    
    4Item 1. Business
    
    
    4Item 1A. Risk Factors
    
    
    11Item 1B. Unresolved Staff Comments
    
    
    16Item 2. Properties
    
    
    16Item 3. Legal Proceedings
    
    
    16Item 4. Removed and Reserved
    
    
    16PART II
    
    
    17Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    17Item 6. Selected Financial Data
    
    
    19Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    44Item 8. Financial Statements and Supplementary Data
    
    
    44Item 9. Changes in and Disagreements with Accountants On Accounting And Financial Disclosure
    
    
    45Item 9A. Controls and Procedures
    
    
    45Item 9B. Other Information
    
    
    47PART III
    
    
    47Item 10. Directors, Executive Officers and Corporate Governance
    
    
    47Item 11. Executive Compensation
    
    
    47Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    47Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    47Item 14. Principal Accountant Fees and Services
    
    
    47PART IV
    
    
    48Item 15. Exhibits and Financial Statement Schedules
    
    
    48SIGNATURES
    
    
    55Exhibit 4.1Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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AMERICAN REPROGRAPHICS COMPANY
2010 ANNUAL REPORT ON FORM 10-K
  FORWARD-LOOKING STATEMENTS
   TRADEMARKS AND TRADE NAMES
 ® ® ® SM
  3




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PART I
 
 Item 1.
    
    Business
 Our Company
          4




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Available Information
 www.sec.gov.
 www.e-arc.com www.e-arc.com
 Corporate Background and Reorganization
  Acquisitions
    Industry Overview
    5




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##### Table of Contents



Our Competitive Strengths
  
    
    Leading Market Position in a Specialized Market.We are the largest reprographics
company in the U.S., with operations in eight times as many cities and with eight times the
number of service facilities as our next largest competitor in this fragmented and highly
specialized market. We believe we are market share leaders in most of the major
metropolitan areas we serve, and we believe our market share has increased as many small
undercapitalized reprographers have closed as the economic downturn continues. Our size and
national footprint provide us with significant economies of scale, making us one of the
lowest cost operators in the reprographics industry. Furthermore, our leading position is
bolstered by a highly-diverse customer base in which no single customer accounted for more
than 2.7% of our net sales in 2010.
 
    
    Extensive National Footprint with Regional Expertise.We are the only reprographics
company with a network that consists of more than 225 production facilities in the U.S.,
significant operations in Canada, and a growing presence in the United Kingdom, India and
China. To enhance our global presence, we also have partnerships with independent
reprographers in more than 50 countries around the world. Our service centers are digitally
connected as a cohesive network, allowing us to provide our services locally, nationally,
and globally to more than 120,000 customers. Our footprint also enables us to serve the
local offices of our national and regional customers under a single contract through our
Global Services (formerly Premier Accounts) program.
 
    
    Leader in Technology and Innovation.To maintain our leadership position amid growing
adoption of technology by our customers we have invested approximately $100 million since
2000 in developing and maintaining our technology infrastructure and software applications.
Our technology investments have helped us automate workflow, drive production costs down,
increase efficiency and reduce errors for our customers and ourselves. We believe our
technology products are well-positioned to become standards for document management and
distribution in the AEC industry. With PlanWell, our cloud-based planroom application, we
managed more than 30 terabytes of customer data and uploaded approximately 400,000 original
documents to the system each month during 2010. We have developed and use other proprietary
technology that supports online order management, print cost recovery, bid management,
digital document distribution, and cloud printing and project collaboration. A dedicated
staff of 44 engineers and technical specialists, with expertise in reprographics,
internet-based applications, database management, and internet security, provide us with
technology development and support capabilities unrivaled in our industry.
 
    
    Flexible Operating Model and Strong Cash Flows.Our business model has several
characteristics that produce consistent cash flows under a variety of industry and economic
conditions including (i) high gross margins relative to other reprographers, (ii) variable
costs that comprise 55% of our total cost structure, as estimated in 2010 and (iii) the
ability to leverage our economies of scale to closely manage our inventory, receivables and
capital expenditures. We generate strong margins due to our lower cost structure and
high-margin value-added services.
 
    
    Experienced Management Team and Highly Trained Workforce.Members of our executive and
divisional senior
management teams have an average of more than 20 years of industry experience. To maintain
continuity of operations and local relationships, it is our preferred practice to maintain
the senior management of the companies we acquire. We regularly offer training on every
aspect of our business using a variety of online and in-person venues, conducting up to ten
webinars or training seminars a week. We also actively develop our managerial bench through
an elite leadership and mentoring program conducted by our senior executive staff, as well as
respected third-party business consultants.
  6




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Our Business Strategy
  
    
    Global Services (formerly Premier Accounts).We created Global Services in 2004 to
take advantage of growing globalization and business consolidation within the AEC market.
We plan to further enhance our market share and service portfolio on a national level by
continuing to offer the services of all of ARC operating locations to large regional and
national customers. We utilize our dedicated Global Services sales team to establish
ourselves at an enterprise level as the only national reprographics services and technology
provider with extensive geographic and service capabilities.
 
    
    Facilities Management/Managed Print Services. We intend to capitalize on the continued
trend of our customers to outsource their document management services. Since the late
1990s, we have placed reprographics equipment and sometimes staff in our customers offices
to eliminate the burden of equipment ownership, maintenance and the procurement of
supplies. Customers are billed as if the services were outsourced, making reimbursement the
primary means of cost recovery for FM services, and renewals for such contracts are
typically high. Commissioned studies on the use of facilities management service strongly
suggest that the FM customer is more likely to be retained over time, and use a greater
amount and number of related reprographics services than a conventional reprographics
customer. As of December 31, 2010, we had approximately 5,800 facilities management
contracts, which represented 20.4% of our revenue in 2010. Managed print services, or MPS,
is an extension of our FM business in which we address the equipment and cost recovery
requirements of an entire enterprise print network, including reprographics services. By
assuming the operation of substantially all of our customers print operations, we can
offer them a mix of on-site and off-site services to provide more cost-effective
operations, better asset management, and greater flexibility in production capacity. While
this initiative is attractive to clients of any size, it has proved to be effective in
attracting new business from our larger Global Services customers.
 
    
    Strategic Acquisitions.We have pursued acquisitions of reprographics companies to
expand and complement our existing geographic footprint, especially in markets where we
believe we could become a market leader. Since 1997, we have acquired more than 140
companies, realizing substantial operating and purchasing synergies by leveraging our
existing corporate infrastructure, best practices and economies of scale. While we have
largely refrained from purchases of U.S. reprographics companies during the recent economic
downturn, we believe we can continue to grow our business by acquiring small,
privately-held companies that serve local markets once the construction market begins to
recover. Outside of the U.S., we will continue to look for opportunities in high-growth
markets similar to our business venture with Unisplendour Corporation Limited in China, and
our new operations in India.
 
    
    Generate Incremental Revenue From Technology. Our ability to design, develop and license
best-in-class software applications, combined with our national distribution footprint,
creates the opportunity to establish standards for technology use in the reprographics
industry. By adding value to conventional services with technology and charging our
customers for advances in productivity and efficiency, we seek to generate incremental
revenue growth in the future. These value-added services include digital document
distribution, file format and document conversions, building information modeling,
scan-to-file, and digital document archiving, some of which are based on licensing and
subscription models that create recurring revenue. Digital services revenue compromised
8.9% of overall revenue in 2010.
 
    
    Riot Creative Imaging.Since the 1990s, we have provided an extensive array of large-
and small-format digital color printing services to our AEC and non-AEC customers through
our reprographics service centers. Over the past 12 months, we have consolidated a
significant portion of our existing color production capacity into ten centralized
production facilities under a new, dedicated color services brand called Riot Creative
Imaging. We support these centers with an existing color sales, support, and production
team that has been repurposed to address the special promotional, marketing and advertising
needs of retail companies and others in the non-AEC market. In less than a year, Riot has
attracted high-profile clients such as Adobe, Ducati motorcycles, metropolitan and regional
sports stadiums, national restaurant chains, clothing retailers and others. We intend to
create smaller support centers within our existing branch network throughout 2011 to
facilitate national production and distribution services.
  7




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Our Services
   
    
    Document management. Document management involves storing, tracking
and providing authorized access to documents we maintain on our
customers behalf. This is largely accomplished through digital
database management as documents enter our digital infrastructure and
are maintained on our production workstations, servers and networks.
    
    Document distribution and logistics. Document distribution and
logistics involves transferring digital documents throughout our local
and wide-area computer networks, and over the internet, as well as the
pickup, delivery and shipping of hardcopy documents to and from
locations around the world.
    
    Print-on-demand. Print-on-demand involves quick-turnaround digital
printing in black and white and color, and in a wide variety of sizes
and formats
    
    Facilities management. On-site services, frequently referred to as
FMs, is any combination of the above services supplied at a customers
location. On-site services involve placing equipment and sometimes
staff in our customers location to provide convenience printing and
other reprographics services. Our FM service offering is evolving to
include the management of entire print networks in our customers
offices, which we refer to as MPS.
    
    
    License our suite of reprographics technology products, including our
flagship online planroom, PlanWell, to independent reprographers.
    
    Operate Profit and Education in Reprographics (PEiR) Group, a trade
organization wholly-owned by us, through which we charge membership
fees and provide purchasing, technology, and educational benefits to
other reprographers. PEiR members are required to license PlanWell and
may purchase equipment and supplies at a lower cost than they could
obtain independently. We also distribute our educational programs to
PEiR members to help establish and promote best practices within the
reprographics industry.
 Customers
   Operations
 Geographic Presence.
 Hub and Satellite Configuration.
  8




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Management Systems and Controls.
  Suppliers and Vendors
   Sales and Marketing
 Divisional Sales Force.
 Global Services (formerly Premier Accounts).
 PEiR Group.
 Competition
   9




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Research and Development
  Proprietary Rights
    Information Technology
    Employees
  Executive Officers of the Registrant
  Name
    
    Age
    
    PositionKumarakulasingam Suriyakumar
    
    
    57
    
    
    Chairman, President and Chief Executive OfficerJonathan R. Mather
    
    
    60
    
    
    Chief Financial Officer and SecretaryRahul K. Roy
    
    
    51
    
    
    Chief Technology OfficerDilantha Wijesuriya
    
    
    49
    
    
    Chief Operating Officer
 Kumarakulasingam (Suri) Suriyakumar
  10




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Jonathan R. Mather
 Rahul K. Roy
 Dilantha Wijesuriya
 
 Item 1A.
    
    Risk Factors
  Adverse domestic and global economic conditions and disruption of financial markets could have a
material adverse impact on our business and results of operations.
   11




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The residential and non-residential architectural, engineering and construction (AEC) industry is
in the midst of a severe
downturn. A continuing decline in the residential and non-residential AEC industry, could adversely
affect our future revenue and profitability.
  Because a majority of our overall costs are fixed, changes in economic activity, positive or
negative, affect our results of operations.
  Impairment of goodwill may adversely impact future results of operations.
   Competition in our industry and innovation by our competitors may hinder our ability to execute our
business strategy and maintain our profitability.
    12




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The reprographics industry has undergone significant changes in recent years and will continue to
evolve. Our failure to anticipate and adapt to future changes in the reprographics industry could
harm our competitive position and future revenue and profitability.
   If we fail to continue to develop and introduce new services and technologies successfully, our
competitive positioning and our ability to grow our business could be harmed.
   If we are unable to charge for our value-added services to offset potential declines in print
volumes, our long term revenue could decline.
  We derive a significant percentage of net sales from within the State of California and our
business could be disproportionately harmed by an economic downturn or natural disaster affecting
California.
  Our growth strategy depends, in part, on our ability to successfully complete and manage our
acquisitions and branch openings. Failure to do so could impede our future growth and adversely
affect our competitive position.
   13




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If we are unable to successfully monitor and manage operations of our subsidiaries and segments,
our business and profitability could suffer.
  We depend on certain key vendors for reprographics equipment, maintenance services and supplies,
making us vulnerable to supply shortages and price fluctuations.
  Our failure to adequately protect the proprietary aspects of our technology, including PlanWell,
may cause us to lose market share.
  Damage or disruption to our facilities, our technology center, our vendors or a majority of our
customers could impair our ability to effectively provide our services and may have a significant
impact on our revenues, expenses and financial condition.
   14




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If we lose key personnel or qualified technical staff, our ability to manage the day-to-day aspects
of our business will be adversely affected.
  Downgrades in our credit rating may adversely affect our business, financial condition and results
of operations.
  Valuation allowances recorded against our deferred tax assets may adversely impact our future
results of operations.
  Results of tax examinations may adversely impact our future results of operations.
  Our debt instruments impose operating and financial restrictions on us and, in the event of a
default, would have a material adverse impact on our business and results of operations.
      15




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Item 1B.
    
    Unresolved Staff Comments
  
 Item 2.
    
    Properties
    
 Item 3.
    
    Legal Proceedings
   
 Item 4.
    
    (REMOVED AND RESERVED)
  16




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  2010
    
    
    2009High
    
    
    Low
    
    
    High
    
    
    LowFirst Quarter
    
    $
    9.15
    
    
    $
    6.43
    
    
    $
    7.11
    
    
    $
    2.55Second Quarter
    
    
    11.31
    
    
    
    8.33
    
    
    
    10.26
    
    
    
    3.26Third Quarter
    
    
    9.68
    
    
    
    6.53
    
    
    
    10.21
    
    
    
    7.20Fourth Quarter
    
    
    7.97
    
    
    
    6.00
    
    
    
    9.74
    
    
    
    5.43
 Performance Graph
  
  17




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12/05
    
    
    12/06
    
    
    12/07
    
    
    12/08
    
    
    12/09
    
    
    12/10American Reprographics Company
    
    
    100.00
    
    
    
    131.09
    
    
    
    64.86
    
    
    
    27.15
    
    
    
    27.59
    
    
    
    29.87Russell 2000
    
    
    100.00
    
    
    
    118.37
    
    
    
    116.51
    
    
    
    77.15
    
    
    
    98.11
    
    
    
    124.46Diversified Commercial & Professional Services
    
    
    100.00
    
    
    
    115.85
    
    
    
    109.74
    
    
    
    88.31
    
    
    
    100.55
    
    
    
    107.18
  Holders
  Dividends
  Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
   18




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Item 6.
    
    Selected Financial Data
  Fiscal Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollars in thousands)Statement of Operations Data:Reprographics services
    
    $
    294,555
    
    
    $
    350,491
    
    
    $
    518,062
    
    
    $
    513,630
    
    
    $
    438,375Facilities management
    
    
    89,994
    
    
    
    97,401
    
    
    
    120,983
    
    
    
    113,848
    
    
    
    100,158Equipment and supplies sales
    
    
    57,090
    
    
    
    53,657
    
    
    
    61,942
    
    
    
    60,876
    
    
    
    53,305Total net sales
    
    
    441,639
    
    
    
    501,549
    
    
    
    700,987
    
    
    
    688,354
    
    
    
    591,838Cost of sales
    
    
    299,307
    
    
    
    323,360
    
    
    
    415,715
    
    
    
    401,317
    
    
    
    337,509Gross profit
    
    
    142,332
    
    
    
    178,189
    
    
    
    285,272
    
    
    
    287,037
    
    
    
    254,329Selling, general and administrative expenses
    
    
    107,744
    
    
    
    115,020
    
    
    
    154,728
    
    
    
    143,811
    
    
    
    131,743Litigation (gain) reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,897
    )
    
    
    11,262Amortization of intangibles
    
    
    11,657
    
    
    
    11,367
    
    
    
    12,004
    
    
    
    9,083
    
    
    
    5,055Goodwill impairment
    
    
    38,263
    
    
    
    37,382
    
    
    
    35,154
    
    
    
    
    
    
    
    Impairment of long-lived assets
    
    
    
    
    
    
    781
    
    
    
    
    
    
    
    
    
    
    
    (Loss) income from operations
    
    
    (15,332
    )
    
    
    13,639
    
    
    
    83,386
    
    
    
    137,040
    
    
    
    106,269Other income, net
    
    
    (156
    )
    
    
    (171
    )
    
    
    (517
    )
    
    
    
    
    
    
    (299
    )Interest expense, net
    
    
    24,091
    
    
    
    25,781
    
    
    
    25,890
    
    
    
    24,373
    
    
    
    23,192Loss on early extinguishment of debt
    
    
    2,509
    
    
    
    
    
    
    
    
    
    
    
    1,327
    
    
    
    (Loss) income before income tax
(benefit) provision
    
    
    (41,776
    )
    
    
    (11,971
    )
    
    
    58,013
    
    
    
    111,340
    
    
    
    83,376Income tax (benefit) provision
    
    
    (14,186
    )
    
    
    3,018
    
    
    
    21,200
    
    
    
    42,203
    
    
    
    31,982Net (loss) income
    
    
    (27,590
    )
    
    
    (14,989
    )
    
    
    36,813
    
    
    
    69,137
    
    
    
    51,394Loss (income) attributable to
noncontrolling interest
    
    
    88
    
    
    
    104
    
    
    
    (59
    )
    
    
    
    
    
    
    Net (loss) income attributable to
American Reprographics Company
    
    $
    (27,502
    )
    
    $
    (14,885
    )
    
    $
    36,754
    
    
    $
    69,137
    
    
    $
    51,394
 Fiscal Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands, except per share amounts)(Loss) earnings per share attributable to ARC shareholders:Basic
    
    $
    (0.61
    )
    
    $
    (0.33
    )
    
    $
    0.82
    
    
    $
    1.52
    
    
    $
    1.14Diluted
    
    $
    (0.61
    )
    
    $
    (0.33
    )
    
    $
    0.81
    
    
    $
    1.51
    
    
    $
    1.13Weighted average common shares outstanding:Basic
    
    
    45,213
    
    
    
    45,123
    
    
    
    45,060
    
    
    
    45,421
    
    
    
    45,015Diluted
    
    
    45,213
    
    
    
    45,123
    
    
    
    45,398
    
    
    
    45,829
    
    
    
    45,595
  19




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Fiscal Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollars in thousands)Other Financial Data:Depreciation and amortization
    
    $
    45,649
    
    
    $
    49,543
    
    
    $
    50,121
    
    
    $
    39,445
    
    
    $
    27,749Capital expenditures
    
    $
    8,634
    
    
    $
    7,506
    
    
    $
    9,033
    
    
    $
    8,303
    
    
    $
    7,391Interest expense, net
    
    $
    24,091
    
    
    $
    25,781
    
    
    $
    25,890
    
    
    $
    24,373
    
    
    $
    23,192
 As of December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollars in thousands)Balance Sheet Data:Cash and cash equivalents
    
    $
    26,293
    
    
    $
    29,377
    
    
    $
    46,542
    
    
    $
    24,802
    
    
    $
    11,642Total assets
    
    $
    569,085
    
    
    $
    620,954
    
    
    $
    725,931
    
    
    $
    722,611
    
    
    $
    547,581Long term obligations
    
    $
    221,088
    
    
    $
    228,711
    
    
    $
    315,165
    
    
    $
    324,724
    
    
    $
    253,419Total ARC stockholders equity
    
    $
    256,506
    
    
    $
    276,007
    
    
    $
    281,781
    
    
    $
    251,651
    
    
    $
    184,244Working capital
    
    $
    22,387
    
    
    $
    (3,739
    )
    
    $
    29,798
    
    
    $
    4,695
    
    
    $
    21,150
 
 Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with the other sections of this Annual
Report on Form 10-K , including Part 1, Item 1  Business; Part I, Item 1A  Risk Factors;
Part II, Item 6  Selected Financial Data; and Part II, Item 8  Financial Statements and
Supplementary Data.
 Executive Summary
    
    
    Document management. Document management typically involves storing,
tracking and providing authorized access to documents we maintain on
our customers behalf. This activity is largely accomplished through
digital database management as documents enter our digital
infrastructure and are maintained on our production workstations,
servers and networks.
 
    
    Document distribution and logistics. Document distribution and
logistics involves transferring digital documents throughout our local
and wide-area computer networks, and over the internet, as well as
pickup, delivery and shipping of hardcopy documents to and from
locations around the world.
 
    
    Print-on-demand. Print-on-demand usually involves quick-turnaround
digital printing of documents in black and white and color, and in a
wide variety of sizes and formats
 
    
    On-site services, frequently referred to as facilities management
(FMs), which is any combination of the above services supplied at a
customers location. On-site services typically involve placing
equipment and sometimes staff in our customers locations to provide
convenience printing and other reprographic services. This category is
evolving to include the management of entire print networks in our
customers offices, which we refer to as managed print services or
MPS.
   20




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Business Combinations Business
Combinations
   Evaluating our Performance.
 
    
    Creating consistent, profitable-growth, or in the absence of growth due to market conditions beyond our control,
stable margins superior to commonly understood industry benchmarks;
    
    Maintaining our industry leadership position as measured by our geographical footprint, market share and revenue
generation capabilities;
    
    Continuing to develop and invest in our products, services, and technology to meet the changing needs of our
customers;
    
    Maintaining a low cost structure; and
    
    Maintaining a flexible capital structure that provides for both responsible debt service and pursuit of acquisitions
and other high-return investments.
 Primary Financial Measures.
  21




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Net Sales.
          Costs and Expenses.
   22




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##### Table of Contents



Other Common Financial Measures.
 
    
    Net income and earnings per share;
    
    Material and labor costs as a percentage of net sales;
    
    Days sales outstanding/days sales inventory/days payable outstanding; and
    
    Cash flows from operations.
    Acquisitions.
    1.
    
    Standalone Acquisitions. Post-acquisition, these businesses maintain
their management team and act as strategic platforms for the Company
to acquire market share in and around the specific geographical
location.2.
    
    Branch/Fold-in Acquisitions. These acquisitions are equivalent to
opening a new or greenfield branch. They support an outlying portion
of a larger market and rely on a larger centralized production
facility nearby for strategic management, load balancing, providing
specialized services, and for administrative and other back office
support. We maintain the staff and equipment of these businesses to a
minimum to serve a small market or a single large customer, or we may
physically integrate (fold-in) staff and equipment into a larger
nearby production facility.
  23




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##### Table of Contents



Economic Factors Affecting Financial Performance.
 Non-GAAP Financial Measures
      
    
    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.
  24




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##### Table of Contents



Fiscal Year EndedDecember 31,2010
    
    
    2009
    
    
    2008Cash flows provided by operating activities
    
    $
    53,924
    
    
    $
    97,425
    
    
    $
    127,266Changes in operating assets and liabilities
    
    
    955
    
    
    
    (19,919
    )
    
    
    (4,829
    )Non-cash (expenses) income, including
depreciation and amortization
    
    
    (82,469
    )
    
    
    (92,495
    )
    
    
    (85,624
    )Income tax (benefit) provision
    
    
    (14,186
    )
    
    
    3,018
    
    
    
    21,200Interest expense, net
    
    
    24,091
    
    
    
    25,781
    
    
    
    25,890Net loss (income) attributable to the noncontrolling interest
    
    
    88
    
    
    
    104
    
    
    
    (59
    )EBIT
    
    
    (17,597
    )
    
    
    13,914
    
    
    
    83,844Depreciation and amortization
    
    
    45,649
    
    
    
    49,543
    
    
    
    50,121EBITDA
    
    
    28,052
    
    
    
    63,457
    
    
    
    133,965Interest expense
    
    
    (24,091
    )
    
    
    (25,781
    )
    
    
    (25,890
    )Income tax benefit (provision)
    
    
    14,186
    
    
    
    (3,018
    )
    
    
    (21,200
    )Depreciation and amortization
    
    
    (45,649
    )
    
    
    (49,543
    )
    
    
    (50,121
    )Net (loss) income attributable to American Reprographics Company
    
    $
    (27,502
    )
    
    $
    (14,885
    )
    
    $
    36,754
  25




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##### Table of Contents



Fiscal Year EndedDecember 31,2010
    
    
    2009
    
    
    2008Net (loss) income attributable to
American Reprographics Company
    
    $
    (27,502
    )
    
    $
    (14,885
    )
    
    $
    36,754Interest expense, net
    
    
    24,091
    
    
    
    25,781
    
    
    
    25,890Income tax (benefit) provision
    
    
    (14,186
    )
    
    
    3,018
    
    
    
    21,200EBIT
    
    
    (17,597
    )
    
    
    13,914
    
    
    
    83,844Depreciation and amortization
    
    
    45,649
    
    
    
    49,543
    
    
    
    50,121EBITDA
    
    
    28,052
    
    
    
    63,457
    
    
    
    133,965Special items:Stock-based compensation
    
    
    5,922
    
    
    
    4,892
    
    
    
    4,289Loss on early extinguishment of debt
    
    
    2,509
    
    
    
    
    
    
    
    Goodwill impairment
    
    
    38,263
    
    
    
    37,382
    
    
    
    35,154Impairment of long-lived assets
    
    
    
    
    
    
    781
    
    
    
    Adjusted EBITDA
    
    $
    74,746
    
    
    $
    106,512
    
    
    $
    173,408
  Fiscal Year EndedDecember 31,2010 (1)
    
    
    2009 (1)
    
    
    2008 (1)Net (loss) income margin
    
    
    (6.2)
    %
    
    
    (3.0)
    %
    
    
    5.2
    %Interest expense, net
    
    
    5.5
    
    
    
    5.1
    
    
    
    3.7Income tax (benefit) provision
    
    
    (3.2
    )
    
    
    0.6
    
    
    
    3.0EBIT margin
    
    
    (4.0
    )
    
    
    2.8
    
    
    
    12.0Depreciation and amortization
    
    
    10.3
    
    
    
    9.9
    
    
    
    7.2EBITDA margin
    
    
    6.4
    
    
    
    12.7
    
    
    
    19.1Special items:Stock-based compensation
    
    
    1.3
    
    
    
    1.0
    
    
    
    0.6Loss on early extinguishment of debt
    
    
    0.6
    
    
    
    
    
    
    
    Goodwill impairment
    
    
    8.7
    
    
    
    7.5
    
    
    
    5.0Impairment of long-lived assets
    
    
    
    
    
    
    0.2
    
    
    
    Adjusted EBITDA margin
    
    
    16.9
    %
    
    
    21.2
    %
    
    
    24.7
    %
 (1)
    
    Column does not foot due to rounding  26




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##### Table of Contents



Fiscal Year EndedDecember 31,2010
    
    
    2009
    
    
    2008Net (loss) income attributable to American Reprographics
Company
    
    $
    (27,502
    )
    
    $
    (14,885
    )
    
    $
    36,754Goodwill impairment
    
    
    38,263
    
    
    
    37,382
    
    
    
    35,154Impairment of long-lived assets
    
    
    
    
    
    
    781
    
    
    
    Change in trade name impact to amortization
    
    
    1,579
    
    
    
    
    
    
    
    Loss on early extinguishment of debt
    
    
    2,509
    
    
    
    
    
    
    
    Amended 2007 Credit Agreement and Swap Transaction costs
    
    
    1,241
    
    
    
    2,632
    
    
    
    Income tax benefit, related to above items
    
    
    (14,758
    )
    
    
    (8,748
    )
    
    
    (12,932
    )Unaudited adjusted net income
attributable to ARC
    
    $
    1,332
    
    
    $
    17,162
    
    
    $
    58,976(Loss) Earnings Per Share (Actual):Basic
    
    $
    (0.61
    )
    
    $
    (0.33
    )
    
    $
    0.82Diluted
    
    $
    (0.61
    )
    
    $
    (0.33
    )
    
    $
    0.81Earnings Per Share (Adjusted):Basic
    
    $
    0.03
    
    
    $
    0.38
    
    
    $
    1.31Diluted
    
    $
    0.03
    
    
    $
    0.38
    
    
    $
    1.30Weighted average common shares (Actual)
outstanding:Basic
    
    
    45,212,724
    
    
    
    45,123,110
    
    
    
    45,060,482Diluted
    
    
    45,212,724
    
    
    
    45,123,110
    
    
    
    45,398,086Weighted average common shares (Adjusted)
outstanding:Basic
    
    
    45,212,724
    
    
    
    45,123,110
    
    
    
    45,060,482Diluted
    
    
    45,382,542
    
    
    
    45,266,310
    
    
    
    45,398,086
 Results of Operations
  As a Percentage of Net SalesFiscal Year Ended December 31,2010 (1)
    
    
    2009 (1)
    
    
    2008 (1)Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    67.8
    
    
    
    64.5
    
    
    
    59.3Gross profit
    
    
    32.2
    
    
    
    35.5
    
    
    
    40.7Selling, general and administrative expenses
    
    
    24.4
    
    
    
    22.9
    
    
    
    22.1Amortization of intangibles
    
    
    2.6
    
    
    
    2.3
    
    
    
    1.7Goodwill impairment
    
    
    8.7
    
    
    
    7.5
    
    
    
    5.0Impairment of long-lived assets
    
    
    0.0
    
    
    
    0.2
    
    
    
    0.0(Loss) income from operations
    
    
    (3.5
    )
    
    
    2.7
    
    
    
    11.9Other income, net
    
    
    (0.0
    )
    
    
    0.0
    
    
    
    (0.1
    )Interest expense, net
    
    
    5.5
    
    
    
    5.1
    
    
    
    3.7Loss on early extinguishment of debt
    
    
    0.6
    
    
    
    0.0
    
    
    
    0.0(Loss) income before income tax (benefit)
provision
    
    
    (9.5
    )
    
    
    (2.4
    )
    
    
    8.3Income tax (benefit) provision
    
    
    (3.2
    )
    
    
    0.6
    
    
    
    3.0Net (loss) income
    
    
    (6.2
    )
    
    
    (3.0
    )
    
    
    5.3Loss attributable to the noncontrolling interest
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0Net (loss) income attributable to ARC
    
    
    (6.2
    )%
    
    
    (3.0
    )%
    
    
    5.2
    %
 (1)
    
    column does not foot due to rounding  27




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Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
 Fiscal Year EndedDecember 31,
    
    
    Increase (decrease)2010 (1)
    
    
    2009 (1)
    
    
    (In dollars)
    
    
    (Percent)(In millions)Reprographics services
    
    $
    294.6
    
    
    $
    350.5
    
    
    $
    (55.9
    )
    
    
    (15.9
    )%Facilities management
    
    
    90.0
    
    
    
    97.4
    
    
    
    (7.4
    )
    
    
    (7.6
    )%Equipment and supplies sales
    
    
    57.1
    
    
    
    53.7
    
    
    
    3.4
    
    
    
    6.3
    %Total net sales
    
    $
    441.6
    
    
    $
    501.5
    
    
    $
    (59.9
    )
    
    
    (11.9
    )%Gross profit
    
    $
    142.3
    
    
    $
    178.2
    
    
    $
    (35.9
    )
    
    
    (20.1
    )%Selling, general and administrative
expenses
    
    $
    107.7
    
    
    $
    115.0
    
    
    $
    (7.3
    )
    
    
    (6.3
    )%Amortization of intangible assets
    
    $
    11.7
    
    
    $
    11.4
    
    
    $
    0.3
    
    
    
    2.6
    %Goodwill impairment
    
    $
    38.3
    
    
    $
    37.4
    
    
    $
    0.9
    
    
    
    2.4
    %Impairment of long-lived assets
    
    $
    
    
    
    $
    0.8
    
    
    $
    (0.8
    )
    
    
    (100.0
    )%Interest expense, net
    
    $
    24.1
    
    
    $
    25.8
    
    
    $
    (1.7
    )
    
    
    (6.6
    )%Loss on early extinguishment of debt
    
    $
    2.5
    
    
    $
    
    
    
    $
    2.5
    
    
    
    100.0
    %Income taxes (benefit) provision
    
    $
    (14.2
    )
    
    $
    3.0
    
    
    $
    (17.2
    )
    
    
    (573.3
    )%Net (loss) income attributable to ARC
    
    $
    (27.5
    )
    
    $
    (14.9
    )
    
    $
    (12.6
    )
    
    
    84.6
    %EBITDA
    
    $
    28.1
    
    
    $
    63.5
    
    
    $
    (35.4
    )
    
    
    (55.7
    )%
 (1)
    
    column does not foot due to rounding Net Sales
  Reprographics services .
      28




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##### Table of Contents



Facilities management .
  Equipment and supplies sales.
 Gross Profit
    Selling, General and Administrative Expenses
   Amortization of Intangibles
    29




---



##### Table of Contents



Goodwill Impairment
         Impairment of Long-Lived Assets
    30




---



##### Table of Contents



Interest Expense, Net
  Loss on the extinguishment of debt
  Income Taxes
   Noncontrolling Interest
  Net Loss Attributable to ARC
  EBITDA
   31




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##### Table of Contents



Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Fiscal Year EndedDecember 31,
    
    
    Increase (decrease)2009 (1)
    
    
    2008
    
    
    (In dollars)
    
    
    (Percent)(In millions)Reprographics services
    
    $
    350.5
    
    
    $
    518.1
    
    
    $
    (167.6
    )
    
    
    (32.3
    )%Facilities management
    
    
    97.4
    
    
    
    121.0
    
    
    
    (23.6
    )
    
    
    (19.5
    )%Equipment and supplies sales
    
    
    53.7
    
    
    
    61.9
    
    
    
    (8.2
    )
    
    
    (13.2
    )%Total net sales
    
    $
    501.5
    
    
    $
    701.0
    
    
    $
    (199.5
    )
    
    
    (28.5
    )%Gross profit
    
    $
    178.2
    
    
    $
    285.3
    
    
    $
    (107.1
    )
    
    
    (37.5
    )%Selling, general and administrative expenses
    
    $
    115.0
    
    
    $
    154.7
    
    
    $
    (39.7
    )
    
    
    (25.7
    )%Amortization of intangible assets
    
    $
    11.4
    
    
    $
    12.0
    
    
    $
    (0.6
    )
    
    
    (5.0
    )%Goodwill impairment
    
    $
    37.4
    
    
    $
    35.2
    
    
    $
    2.2
    
    
    
    6.3
    %Impairment of long-lived assets
    
    $
    0.8
    
    
    $
    
    
    
    $
    0.8
    
    
    
    100.0
    %Interest expense, net
    
    $
    25.8
    
    
    $
    25.9
    
    
    $
    (0.1
    )
    
    
    (0.4
    )%Income taxes provision
    
    $
    3.0
    
    
    $
    21.2
    
    
    $
    (18.2
    )
    
    
    (85.8
    )%Net (loss) income attributable to ARC
    
    $
    (14.9
    )
    
    $
    36.8
    
    
    $
    (51.7
    )
    
    
    (140.5
    )%EBITDA
    
    $
    63.5
    
    
    $
    134.0
    
    
    $
    (70.5
    )
    
    
    (52.6
    )%
 (1)
    
    column does not foot due to rounding Net Sales
  Reprographics services .
   Facilities management .
 Equipment and supplies sales.
  32




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##### Table of Contents



Gross Profit
   Selling, General and Administrative Expenses
    Amortization of Intangibles
  Goodwill Impairment
    33




---



##### Table of Contents



Impairment of Long-Lived Assets
  Other Income
  Interest Expense, Net
  Income Taxes
   Noncontrolling Interest
  Net (Loss) Income Attributable to ARC
  EBITDA
   34




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##### Table of Contents



Quarterly Results of Operations
  Quarter EndedMar. 31,
    
    
    June 30,
    
    
    Sept. 30,
    
    
    Dec. 31,
    
    
    Mar. 31,
    
    
    June 30,
    
    
    Sept. 30,
    
    
    Dec. 31,2010
    
    
    2009Reprographics services
    
    $
    76,257
    
    
    $
    78,453
    
    
    $
    72,709
    
    
    $
    67,136
    
    
    $
    99,769
    
    
    $
    92,905
    
    
    $
    81,989
    
    
    $
    75,828Facilities management
    
    
    22,403
    
    
    
    22,627
    
    
    
    22,602
    
    
    
    22,362
    
    
    
    26,865
    
    
    
    24,898
    
    
    
    23,395
    
    
    
    22,243Equipment and supplies sales
    
    
    13,501
    
    
    
    14,008
    
    
    
    14,110
    
    
    
    15,471
    
    
    
    12,849
    
    
    
    13,251
    
    
    
    13,966
    
    
    
    13,591Total net sales
    
    $
    112,161
    
    
    $
    115,088
    
    
    $
    109,421
    
    
    $
    104,969
    
    
    $
    139,483
    
    
    $
    131,054
    
    
    $
    119,350
    
    
    $
    111,662Quarterly sales as a % of
annual sales
    
    
    25.4
    %
    
    
    26.1
    %
    
    
    24.8
    %
    
    
    23.7
    %
    
    
    27.8
    %
    
    
    26.1
    %
    
    
    23.8
    %
    
    
    22.3
    %Gross profit
    
    $
    36,851
    
    
    $
    39,455
    
    
    $
    35,018
    
    
    $
    31,008
    
    
    $
    51,979
    
    
    $
    49,155
    
    
    $
    41,131
    
    
    $
    35,924Income (loss) from operations
    
    $
    7,084
    
    
    $
    8,729
    
    
    $
    (32,323
    )
    
    $
    1,178
    
    
    $
    18,030
    
    
    $
    16,202
    
    
    $
    (27,139
    )
    
    $
    6,546EBITDA
    
    $
    18,791
    
    
    $
    19,817
    
    
    $
    (21,441
    )
    
    $
    10,885
    
    
    $
    30,816
    
    
    $
    28,990
    
    
    $
    (14,885
    )
    
    $
    18,536Net income
(loss)attributable to ARC
    
    $
    717
    
    
    $
    1,679
    
    
    $
    (25,144
    )
    
    $
    (4,754
    )
    
    $
    7,547
    
    
    $
    6,307
    
    
    $
    (28,164
    )
    
    $
    (575
    )
  Quarter EndedMar. 31,
    
    
    June 30,
    
    
    Sept. 30,
    
    
    Dec. 31,
    
    
    Mar. 31,
    
    
    June 30,
    
    
    Sept. 30,
    
    
    Dec. 31,2010
    
    
    2009EBITDA
    
    $
    18,791
    
    
    $
    19,817
    
    
    $
    (21,441
    )
    
    $
    10,885
    
    
    $
    30,816
    
    
    $
    28,990
    
    
    $
    (14,885
    )
    
    $
    18,536Interest expense, net
    
    
    (5,888
    )
    
    
    (5,754
    )
    
    
    (5,614
    )
    
    
    (6,835
    )
    
    
    (5,796
    )
    
    
    (5,836
    )
    
    
    (6,428
    )
    
    
    (7,721
    )Income tax (provision) benefit
    
    
    (530
    )
    
    
    (1,276
    )
    
    
    12,668
    
    
    
    3,324
    
    
    
    (4,758
    )
    
    
    (4,096
    )
    
    
    5,334
    
    
    
    502Depreciation and amortization
    
    
    (11,656
    )
    
    
    (11,108
    )
    
    
    (10,757
    )
    
    
    (12,128
    )
    
    
    (12,715
    )
    
    
    (12,751
    )
    
    
    (12,185
    )
    
    
    (11,892
    )Net income (loss)
attributable to ARC
    
    $
    717
    
    
    $
    1,679
    
    
    $
    (25,144
    )
    
    $
    (4,754
    )
    
    $
    7,547
    
    
    $
    6,307
    
    
    $
    (28,164
    )
    
    $
    (575
    )
  Impact of Inflation
   35




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##### Table of Contents



Liquidity and Capital Resources
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Net cash provided by operating
activities
    
    $
    53,924
    
    
    $
    97,425
    
    
    $
    127,266Net cash used in investing activities
    
    $
    (8,502
    )
    
    $
    (9,349
    )
    
    $
    (30,807
    )Net cash used in financing activities
    
    $
    (48,999
    )
    
    $
    (105,332
    )
    
    $
    (74,334
    )
 Operating Activities
    Investing Activities
   36




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##### Table of Contents



Financing Activities
  December 31,2010
    
    
    2009
    
    
    2008Cash and cash equivalents
    
    $
    26,293
    
    
    $
    29,377
    
    
    $
    46,542Working capital
    
    $
    22,387
    
    
    $
    (3,739
    )
    
    $
    29,798Borrowings from senior secured
credit facilities and Notes
    
    $
    195,692
    
    
    $
    205,625
    
    
    $
    261,250Other debt obligations
    
    
    43,932
    
    
    
    68,606
    
    
    
    99,790Total debt obligations
    
    $
    239,624
    
    
    $
    274,231
    
    
    $
    361,040
     Debt Obligations
 10.5% Senior Notes due 2016
    37




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##### Table of Contents



Optional Redemption
 Repurchase upon Change of Control
 Other Covenants
 Events of Default
 2010 Credit Agreement
     
    
    Maximum consolidated leverage ratio:
 
    
    4.35:1.00 for quarters ending December 31, 2010 through September 30, 2011
    
    4.25:1.00 for quarters ending December 31, 2011 through September 30, 2012
    
    4.15:1.00 for quarters ending December 31, 2012 through September 30, 2013
    
    4.00:1.00 for quarters ending December 31, 2013 through maturity;
  38




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##### Table of Contents




    
    Maximum consolidated senior secured debt leverage ratio not greater than 1.50:1.00, determined on the
last day of each fiscal quarter through maturity;
    
    Minimum consolidated interest coverage ratio:
 
    
    1.70:1.00 for quarters ending December 31, 2010 through September 30, 2011
    
    1.75:1.00 for quarters ending December 31, 2011 through maturity;
     2007 Credit Agreement
    Foreign Credit Agreement
   39




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##### Table of Contents



As of December 31, 2010
    
    
    As of December 31, 2009Available
    
    
    
    
    
    
    
    
    
    
    AvailableBorrowing
    
    
    Interest
    
    
    
    
    
    
    Borrowing
    
    
    InterestBalance
    
    
    Capacity
    
    
    Rate
    
    
    Balance
    
    
    Capacity
    
    
    Rate(Dollars in thousands)Notes (1)
    
    $
    200,000
    
    
    $
    
    
    
    
    10.50
    %
    
    $
    
    
    
    $
    
    
    
    
    Term facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    205,625
    
    
    
    
    
    
    
    8.10
    %Revolving facilities
    
    
    
    
    
    
    46,146
    
    
    
    
    
    
    
    1,523
    
    
    
    46,073
    
    
    
    6.00
    %$
    200,000
    
    
    $
    46,146
    
    
    
    
    
    
    $
    207,148
    
    
    $
    46,073
 (1)
    
    Notes balance shown gross of discount, of $4.3 million. Seller Notes.
 Off-Balance Sheet Arrangements
  Contractual Obligations and Other Commitments
  Less than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 year
    
    
    1 to 3 years
    
    
    3 to 5 years
    
    
    5 years(Dollars in thousands)Debt obligations and Notes (2)
    
    $
    208,635
    
    
    $
    7,940
    
    
    $
    695
    
    
    $
    
    
    
    $
    200,000Capital lease obligations
    
    
    35,297
    
    
    
    15,668
    
    
    
    16,717
    
    
    
    2,911
    
    
    
    1Amended Swap Transaction (3)
    
    
    9,729
    
    
    
    9,729
    
    
    
    
    
    
    
    
    
    
    
    Interest on long-term debt, Notes and capital leases
    
    
    131,228
    
    
    
    24,757
    
    
    
    44,218
    
    
    
    42,736
    
    
    
    19,517Operating lease
    
    
    74,734
    
    
    
    23,672
    
    
    
    30,424
    
    
    
    11,735
    
    
    
    8,903ASC 740 liability (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    459,623
    
    
    $
    81,766
    
    
    $
    92,054
    
    
    $
    57,382
    
    
    $
    228,421
 (1)
    
    ASC 740,formerly FIN 48, Accounting for Uncertainty in Income Taxes,
Liability.As a result of the adoption of ASC 740, we have a $1.5 million
contingent liability for uncertain tax positions. We are not updating the
disclosures in our long-term contractual obligations table presented above
because of the difficulty in making reasonably reliable estimates of the
timing of cash settlements with the respective taxing authorities (see Note 9
Income Taxes to our Consolidated Financial Statements included in this
report for additional discussion).(2)
    
    Notes balance of $200.0 million shown gross of discounts, of $4.3 million.(3)
    
    On January 3, 2011, the Company terminated the interest rate swap, as amended. Operating Leases.
 Contingent Transaction Consideration.
 Critical Accounting Policies
   40




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##### Table of Contents



Impairment of Long-Lived Assets
    Goodwill and Other Intangible Assets
       41




---



##### Table of Contents



42




---



##### Table of Contents



Revenue Recognition
 Revenue Recognition in Financial Statements
     Income Taxes
        Allowance for Doubtful Accounts
   43




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##### Table of Contents



Commitments and Contingencies
  Stock-Based Compensation
 Transition Election Related to Accounting for the Tax Effects of
Share-Based Payment Awards
  Recent Accounting Pronouncements
  
 Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
        
 Item 8.
    
    Financial Statements and Supplementary Data
   44




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##### Table of Contents



Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A.
    
    Controls and Procedures
 Disclosure Controls and Procedures
   Managements Report on Internal Control Over Financial Reporting
 Internal
Control  Integrated Framework
  Changes in Internal Control Over Financial Reporting
    45




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       
   46




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##### Table of Contents



Item 9B.
    
    Other Information
  
 PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
  Certain Executive Officer Certifications
  
 Item 11.
    
    Executive Compensation
   
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
  
 Item 14.
    
    Principal Accountant Fees and Services
   47




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##### Table of Contents



PART IV
 
 Item 15.
    
    Exhibits and Financial Statement Schedules.
  Financial Statements
 Report of Independent Registered Public Accounting FirmDeloitte & Touche LLPPricewaterhouseCoopers LLPConsolidated Balance Sheets as of December 31, 2010 and 2009Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 2008Consolidated Statements of Equity and Comprehensive Loss for the years ended December 31, 2010, 2009 and 2008Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008Notes to Consolidated Financial Statements(2) Financial Statement SchedulesSchedule II  Valuation and Qualifying Accounts
  Exhibits
   48




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##### Table of Contents



Index to Exhibits
 Number
    
    Description3.1
    
    
    Amended and Restated Certificate of Incorporation, filed February 2, 2005
(incorporated by reference to Exhibit 3.1 to the Registrants Form 10-K filed on
March 31, 2005).3.2
    
    
    Second Amended and Restated Bylaws, (incorporated by reference to Exhibit 3.1 to the
Registrants Form 8-K filed on October 6, 2009).4.1
    
    
    Specimen Stock Certificate*4.2
    
    
    Indenture, dated December 1, 2010, among American Reprographics Company, certain
subsidiaries of American Reprographics Company as guarantors thereto, and Wells Fargo
Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 of
the Registrants Form 8-K filed on December 2, 2010).4.3
    
    
    Form of 10.5% Senior Note due 2016 (incorporated by reference to Exhibit 4.2 of the
Registrants Form 8-K filed on December 2, 2010).4.4
    
    
    Registration Rights Agreement, dated December 1, 2010, among American Reprographics
Company, certain subsidiaries of American Reprographics Company as guarantors
thereto, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of
the several initial purchasers (incorporated by reference to Exhibit 4.3 of the
Registrants Form 8-K filed on December 2, 2010).10.1
    
    
    Credit Agreement, dated as of December 1, 2010, by and among American Reprographics
Company, certain of its subsidiaries as guarantors, and Wells Fargo Bank, National
Association (incorporated by reference to Exhibit 10.1 of the Registrants Form 8-K
filed on December 2, 2010).10.2
    
    
    American Reprographics Company 2005 Stock Plan (incorporated by reference to Exhibit
10.7 to the Registrants Registration Statement on Form S-1 A (Reg. No. 333-119788),
as amended on January 13, 2005).10.3
    
    
    Amendment No. 1 to American Reprographics Company 2005 Stock Plan dated May 22, 2007
(incorporated by reference to Exhibit 10.63 to the Registrants Form 10-Q filed on
August 9, 2007).10.4
    
    
    Amendment No. 2 to American Reprographics Company 2005 Stock Plan dated May 2, 2008
(incorporated by reference to Exhibit 10.3 to the Registrants Form 10-Q filed August
8, 2008). 10.5
    
    
    Amendment No. 3 to American Reprographics Company 2005 Stock Plan (incorporated by
reference to Exhibit 10.1 to the Registrants Form 10-Q filed August 7, 2009). 10.6
    
    
    Forms of Stock Option Agreements under the 2005 Stock Plan (incorporated by reference
to Exhibit 10.8 to the Registrants Registration Statement on Form S-1 (Reg. No.
333-119788), as filed on October 15, 2004).10.7
    
    
    Forms of Restricted Stock Award Agreements under 2005 Stock Plan (incorporated by
reference to Exhibit 10.27 to the Registrants Registration Statement on Form S-1 A
(Reg. No. 333-119788), as amended on December 6, 2004).10.8
    
    
    Form of Restricted Stock Unit Award Agreement under 2005 Stock Plan (incorporated by
reference to Exhibit 10.28 to the Registrants Registration Statement on Form S-1 A
(Reg. No. 333-119788), as amended on December 6, 2004).10.9
    
    
    Form of Stock Appreciation Right Agreement under 2005 Stock Plan (incorporated by
reference to Exhibit 10.29 to the Registrants Registration Statement on Form S-1 A
(Reg. No. 333-119788), as amended on January 13, 2005).10.10
    
    
    Form of American Reprographics Company Stock Option Grant Notice  Non-employee
Directors (Discretionary Non-statutory Stock Options) (incorporated by reference to
Exhibit 10.1 to the Registrants Form 8-K filed on December 16, 2005).
  49




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##### Table of Contents



Number
    
    Description10.11
    
    
    Form of American Reprographics Company Non-employee Directors Nonstatutory Stock
Option Agreement (Discretionary Grants) (incorporated by reference to Exhibit 10.2 to
the Registrants Form 8-K filed on December 16, 2005).10.12
    
    
    Amended and Restated American Reprographics Company 2005 Employee Stock Purchase Plan
amended and restated as of July 30, 2009 (incorporated by reference to Exhibit 10.1
to the Registrants Form 10-Q filed on November 9, 2009).10.13
    
    
    Lease Agreement, for the premises commonly known as 934 and 940 Venice Boulevard, Los
Angeles, CA, dated November 19, 1997, by and between American Reprographics Company,
L.L.C. (formerly Ford Graphics Group, L.L.C.) and Sumo Holdings LA, LLC (incorporated
by reference to Exhibit 10.10 to the Registrants Registration Statement on Form S-1
(Reg. No. 333-119788), as filed on October 15, 2004).10.14
    
    
    Amendment to Lease for the premises commonly known as 934 and 940 Venice Boulevard,
Los Angeles, CA, effective as of August 2, 2005, by and between Sumo Holdings LA,
LLC, Landlord and American Reprographics Company, L.L.C. (formerly known as Ford
Graphics Group, L.L.C.) Tenant (incorporated by reference to Exhibit 10.2 to the
Registrants Form 10-Q filed on November 14, 2005).10.15
    
    
    Lease Agreement for the premises commonly known as 835 West Julian Street, San Jose,
CA, dated February 1, 2009, by and between American Reprographics Company, L.L.C. and
Sumo Holdings San Jose, LLC (incorporated by reference to Exhibit 10.11 to the
Registrants Registration Statement on Form S-1 (Reg. No. 333-119788), as filed on
October 15, 2004).10.16
    
    
    Amendment to Lease for the premises commonly known as 835 West Julian Street, San
Jose, CA, dated effective February 1, 2009, by and between Sumo Holdings San Jose,
LLC, Landlord, and American Reprographics Company, L.L.C. Tenant (incorporated by
reference to Exhibit 10.1 to the Registrants Form 10-Q filed on May 8, 2009).10.17
    
    
    Lease Agreement for the premises commonly known as 17721 Mitchell North, Irvine, CA,
dated April 1, 19999, by and between American Reprographics Company, L.L.C. and Sumo
Holdings Irvine, LLC (incorporated by reference to Exhibit 10.12 to the Registrants
Registration Statement on Form S-1 (Reg. No. 333-119788), as filed on October 15,
2004).10.18
    
    
    Amendment to Lease for the premises commonly known as 17721 Mitchell North, Irvine,
CA, effective as of August 2, 2005, by and between Sumo Holdings Irvine, LLC, Lessor
and American Reprographics Company, L.L.C., Lessee (incorporated by reference to
Exhibit 10.1 to the Registrants Form 10-Q filed on November 14, 2005).10.19
    
    
    Assignment of Lease and Consent for the premises commonly known as 17721 Mitchell
North, Irvine, CA, dated effective April 28, 2009, by and between OCB, LLC, American
Reprographics Company, L.L.C. and Sumo Holdings Irvine LLC (incorporated by reference
to Exhibit 10.2 to the Registrants Form 10-Q filed on May 8, 2009).10.20
    
    
    Second Amendment to Lease for the premises commonly known as 17721 Mitchell North,
Irvine, CA, dated effective April 28, 2009, by and between Sumo Holdings Irvine LLC,
Lessor, and OCB, LLC, Lessee, (incorporated by reference to Exhibit 10.3 to the
Registrants Form 10-Q filed on May 8, 2009).10.21
    
    
    Lease Agreement for the premises commonly known as 2210 Magnolia Street, Oakland, CA,
dated December 1, 1997, between American Reprographics Company, L.L.C. and Sumo
Holdings Sacramento, LLC (Oakland Property) (incorporated by reference to Exhibit
10.13 to the Registrants Registration Statement on Form S-1 (Reg. No. 333-119788),
as filed on October 15, 2004).10.22
    
    
    Lease Agreement for the premises commonly known as 1322 V Street, Sacramento, CA,
dated December 1, 1997, by and between American Reprographics Company, L.L.C.
(formerly Ford Graphics Group, L.L.C.) and Sumo Holdings Sacramento, LLC (Sacramento
Property) (incorporated by reference to Exhibit 10.14 to the Registrants
Registration Statement on Form S-1 (Reg. No. 333-119788), as filed on October 15,
2004).10.23
    
    
    Amendment to Lease for the premises commonly known as 1322 V Street, Sacramento, CA,
effective as of August 2, 2005, by and between Sumo Holdings Sacramento, LLC,
Landlord and American Reprographics Company, L.L.C. (formerly known as Ford Graphics
Group, L.L.C.) Tenant (incorporated by reference to Exhibit 10.4 to the Registrants
Form 10-Q filed on November 14, 2005).10.24
    
    
    Lease Agreement for the premises commonly known as 18810 Woodfield Road,
Gaithersburg, MC, dated December 7, 1995, by and between Leet-Melbrook, Inc. and Sumo
Holdings Maryland, LLC (as successor lessor) (incorporated by reference to Exhibit
10.15 to the Registrants Registration Statement on Form S-1 (Reg. No. 333-119788),
as filed on October 15, 2004).
  50




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##### Table of Contents



Number
    
    Description10.25
    
    
    Amendment to Lease for the premises commonly known as 18810 Woodfield Road,
Gaithersburg, MD, effective as of August 2, 2005, by and between Sumo Holdings
Maryland, LLC, Landlord and Leet-Melbrook, Inc., Tenant (incorporated by reference to
Exhibit 10.3 to the Registrants Form 10-Q filed on November 14, 2005).10.26
    
    
    Second Amendment to Lease for the premises commonly known as 18810 Woodfield Road,
Gaithersburg, MD, effective as of August 1, 2006 by and between Sumo Holdings
Maryland, LLC, Landlord and Leet-Melbrook Inc., Tenant (incorporated by reference to
Exhibit 10.24 to the Registrants Form 10-K filed on March 1, 2007).10.27
    
    
    Lease Agreement for the premises commonly known as 345 Clinton Street, Costa Mesa,
CA, dated September 23, 2003, by and between American Reprographics Company (dba
Consolidated Reprographics) and Sumo Holdings Costa Mesa, LLC (incorporated by
reference to Exhibit 10.16 to the Registrants Registration Statement on Form S-1
(Reg. No. 333-119788), as filed on October 15, 2004).10.28
    
    
    Lease Agreement for the premises commonly known as 616 Monterey Pass Road, Monterey
Park, CA, by and dated November 19, 1997, between Dieterich-Post Company and American
Reprographics Company, L.L.C. (as successor lessee) (incorporated by reference to
Exhibit 10.26 to the Registrants Form 10-K filed on March 1, 2007).10.29
    
    
    Indemnification Agreement, dated April 10, 2000, among American Reprographics
Company, L.L.C., American Reprographics Holdings, L.L.C., ARC Acquisition Co.,
L.L.C., Mr. Chandramohan, Mr. Suriyakumar, Micro Device, Inc., Dieterich-Post
Company, ZS Ford L.P., and ZS Ford L.L.C. (incorporated by reference to Exhibit 10.19
to the Registrants Registration Statement on Form S-1 (Reg. No. 333-119788), as
filed on October 15, 2004).10.30
    
    
    Restricted Stock Award Grant Notice between American Reprographics Company and Mr.
Sathiyamurthy Chandramohan dated March 27, 2007 (incorporated by reference to Exhibit
99.1 to the Registrants Form 8-K filed on March 30, 2007).10.31
    
    
    Employment Agreement, dated January 7, 2005, between American Reprographics Company
and Mr. Kumarakulasingam Suriyakumar (incorporated by reference to Exhibit 10.31 to
the Registrants Registration Statement on Form S-1 A (Reg. No. 333-119788), as
amended on January 13, 2005).10.32
    
    
    First Amendment to Employment Agreement between American Reprographics Company and
Mr. Kumarakulasingam Suriyakumar, effective November 18, 2005 (incorporated by
reference to Exhibit 10.38 to the Registrants Form 10-K filed on March 16, 2006).10.33
    
    
    Second Amendment to Employment Agreement between American Reprographics Company and
Mr. Kumarakulasingam Suriyakumar, effective March 17, 2006 (incorporated by reference
to Exhibit 99.2 to the Registrants Form 8-K filed on March 23, 2006).10.34
    
    
    Third Amendment to Employment Agreement between American Reprographics Company and
Mr. Kumarakulasingam Suriyakumar, dated July 27, 2007 (incorporated by reference to
Exhibit 99.1 to the Registrants Form 8-K filed on August 1, 2007).10.35
    
    
    Fourth Amendment to Executive Employment Agreement, dated March 11, 2009 by and
between American Reprographics Company and Mr. Kumarakulasingam Suriyakumar
(incorporated by reference to Exhibit 10.1 to the Registrants Form 8-K filed on
March 11, 2009).10.36
    
    
    Fifth Amendment to Executive Employment Agreement, dated March 18, 2010, by and
between American Reprographics Company and Kumarakulasingam Suriyakumar (incorporated
by reference to Exhibit 10.1 to the Registrants Form 8-K filed on March 22, 2010). 10.37
    
    
    Sixth Amendment to Executive Employment Agreement, dated August 2, 2010, by and
between American Reprographics Company and Kumarakulasingam Suriyakumar (incorporated
by reference to Exhibit 10.1 to the Registrants Form 8-K filed on August 3, 2010). 10.38
    
    
    Restricted Stock Award Grant Notice between American Reprographics Company and Mr.
Kumarakulasingam Suriyakumar dated March 27, 2007 (incorporated by reference to
Exhibit 99.2 to the Registrants Form 8-K filed on March 30, 2007).
  51




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##### Table of Contents



Number
    
    Description10.39
    
    
    Employment Agreement, dated January 7, 2005, between American Reprographics Company
and Mr. Mark W. Legg (incorporated by reference to Exhibit 10.32 to the Registrants
Registration Statement on Form S-1 A (Reg. No. 333-119788), as amended on January 13,
2005).10.40
    
    
    Employment Agreement, dated January 7, 2005, between American Reprographics Company
and Mr. Rahul K. Roy (incorporated by reference to Exhibit 10.33 to the Registrants
Registration Statement on Form S-1 A (Reg. No. 333-119788), as amended on January 13,
2005).10.41
    
    
    First Amendment to Executive Employment Agreement between American Reprographics
Company and Mr. Rahul K. Roy, effective April 17, 2008 (incorporated by reference to
Exhibit 10.2 to the Registrants Form 10-Q filed on August 8, 2008).10.42
    
    
    Second Amendment to Executive Employment Agreement between American Reprographics
Company and Mr. Rahul K. Roy, effective December 22, 2008 (incorporated by reference
to Exhibit 10.69 to the Registrants Form 10-K filed on February 27, 2009)10.43
    
    
    Third Amendment to Executive Employment Agreement, dated March 11, 2009, by and
between American Reprographics Company and Mr. Rahul K. Roy (incorporated by
reference to Exhibit 10.3 to the Registrants Form 8-K filed on March 11, 2009). 10.44
    
    
    Fourth Amendment to Executive Employment Agreement, dated March 16, 2010, by and
between American Reprographics Company and Mr. Rahul K. Roy (incorporated by
reference to Exhibit 10.3 to the Registrants Form 8-K filed on March 22, 2010). 10.45
    
    
    Fifth Amendment to Executive Employment Agreement, dated August 2, 2010, by and
between American Reprographics Company and Mr. Rahul K. Roy (incorporated by
reference to Exhibit 10.3 to the Registrants Form 8-K filed on August 3, 2010). 10.46
    
    
    Agreement to Grant Stock dated effective December 7, 2004, between American
Reprographics Company and Mr. Rahul K. Roy (incorporated by reference to Exhibit
10.36 to the Registrants Form 10-K filed on March 31, 2005).10.47
    
    
    First Amendment to Agreement to Grant Stock dated May 17, 2006 between American
Reprographics Company and Mr. Rahul K. Roy (incorporated by reference to Exhibit
10.48 to the Registrants Form 10-K filed on March 1, 2007).10.48
    
    
    Executive Employment Agreement between American Reprographics Company and Mr.
Jonathan R. Mather dated November 29, 2006 (incorporated by reference to Exhibit 99.2
to the Registrants Form 8-K filed on November 30, 2006).10.49
    
    
    First Amendment to Executive Employment Agreement between American Reprographics
Company and Mr. Jonathan R. Mather, effective April 17, 2008 (incorporated by
reference to Exhibit 10.1 to the Registrants Form 10-Q filed on August 8, 2008).10.50
    
    
    Second Amendment to Executive Employment Agreement, dated March 11, 2009, by and
between American Reprographics Company and Mr. Jonathan R. Mather (incorporated by
reference to Exhibit 10.2 to the Registrants Form 8-K filed on March 11, 2009). 10.51
    
    
    Third Amendment to Executive Employment Agreement, dated March 16, 2010, by and
between American Reprographics Company and Mr. Jonathan R. Mather (incorporated by
reference to Exhibit 10.2 to the Registrants Form 8-K filed on March 22, 2010). 10.52
    
    
    Fourth Amendment to Executive Employment Agreement, dated August 2, 2010, by and
between American Reprographics Company and Mr. Jonathan R. Mather (incorporated by
reference to Exhibit 10.2 to the Registrants Form 8-K filed on August 3, 2010). 10.53
    
    
    Restricted Stock Award Grant Notice between American Reprographics Company and Mr.
Jonathan R. Mather dated April 17, 2008 (incorporated by reference to Exhibit 99.3 to
the Registrants Form 8-K filed on April 22, 2008). 10.54
    
    
    2007 Bonus Plan, dated February 20, 2007, between American Reprographics Company and
Mr. Jonathan R. Mather (incorporated by reference to Exhibit 10.60 to the
Registrants Form 10-K filed on February 27, 2008).
  52




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##### Table of Contents



Number
    
    Description10.55
    
    
    Executive Employment Agreement between American Reprographics Company and Dilantha
Wijesuriya dated February 23, 2009 (incorporated by reference to Exhibit 10.2 to the
Registrants Form 8-K filed on February 25, 2009). 10.56
    
    
    First Amendment to Executive Employment Agreement, dated March 11, 2009, by and
between American Reprographics Company and Mr. Dilantha Wijesuriya (incorporated by
reference to Exhibit 10.4 to the Registrants Form 8-K filed on March 11, 2009). 10.57
    
    
    Second Amendment to Executive Employment Agreement, dated March 16, 2010, by and
between American Reprographics Company and Mr. Dilantha Wijesuriya (incorporated by
reference to Exhibit 10.4 to the Registrants Form 8-K filed on March 22, 2010). 10.58
    
    
    Third Amendment to Executive Employment Agreement, dated August 2, 2010, by and
between American Reprographics Company and Mr. Dilantha Wijesuriya (incorporated by
reference to Exhibit 10.4 to the Registrants Form 8-K filed on August 3, 2010). 10.59
    
    
    Restricted Stock Award Grant Notice between American Reprographics Company and
Dilantha Wijesuriya dated October 28, 2009 (incorporated by reference to Exhibit
10.79 to the Registrants Form 10-K filed on February 26, 2010). 10.60
    
    
    Indemnification Agreement dated February 23, 2009 between American Reprographics
Company and Dilantha Wijesuriya (incorporated by reference to Exhibit 10.1 to the
Registrants Form 8-K filed on February 25, 2009).10.61
    
    
    Indemnification Agreement made as of December 4, 2006 between American Reprographics
Company and Jonathan Mather (incorporated by reference to Exhibit 10.50 to the
Registrants Form 10-K filed on March 1, 2007).10.62
    
    
    Indemnification Agreement made as of September 30, 2004 between American
Reprographics Company and Thomas J. Formolo (incorporated by reference to Exhibit
10.39 to the Registrants Form 10-K filed on March 31, 2005).10.63
    
    
    Indemnification Agreement made as of September 30, 2004 between American
Reprographics Company and Manuel Perez de la Mesa (incorporated by reference to
Exhibit 10.41 to the Registrants Form 10-K filed on March 31, 2005).10.64
    
    
    Indemnification Agreement made as of March 3, 2005 between American Reprographics
Company and Mark W. Mealy (incorporated by reference to Exhibit 10.43 to the
Registrants Form 10-K filed on March 31, 2005).10.65
    
    
    Indemnification Agreement made as of September 30, 2004 between American
Reprographics Company and Kumarakulasingam Suriyakumar (incorporated by reference to
Exhibit 10.44 to the Registrants Form 10-K filed on March 31, 2005).10.66
    
    
    Indemnification Agreement made as of October 7, 2004 between American Reprographics
Company and Rahul K. Roy (incorporated by reference to Exhibit 10.45 to the
Registrants Form 10-K filed on March 31, 2005).10.67
    
    
    Indemnification Agreement made as of February 2, 2006 between American Reprographics
Company and Dewitt Kerry McCluggage (incorporated by reference to Exhibit 10.51 to
the Registrants Form 10-K filed on March 16, 2006).10.68
    
    
    Indemnification Agreement made as of May 22, 2006, between American Reprographics
Company and Eriberto R. Scocimara (incorporated by reference to Exhibit 10.61 to the
Registrants Form 10-K filed on March 1, 2007).10.69
    
    
    Indemnification Agreement made as of March 11, 2009, between American Reprographics
Company and James F. McNulty (incorporated by reference to Exhibit 10.1 to the
Registrants Form 8-K filed on June 25, 2009).16.1
    
    
    Letter from PricewaterhouseCoopers LLP addressed to the United States Securities and
Exchange Commission, dated March 31, 2009 (incorporated by reference to Exhibit 16 to
the Registrants Form 8-K filed on April 2, 2009).21.1
    
    
    List of Subsidiaries.*
  53




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##### Table of Contents



Number
    
    Description23.1
    
    
    Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.*23.2
    
    
    Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.*31.1
    
    
    Certification of Principal Executive Officer pursuant to Rules 13a-14(a)/15d-14(a) of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*31.2
    
    
    Certification of Principal Financial Officer pursuant to Rules 13a-14(a)/15d-14(a) of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 
 *
    
    Filed herewith
    
    Indicates management contract or compensatory plan or agreement  54




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##### Table of Contents



SIGNATURES
  AMERICAN REPROGRAPHICS COMPANYBy:
    
    /s/ KUMARAKULASINGAM SURIYAKUMARChairman, President and Chief Executive Officer
   Signature
    
    Title
    
    Date/s/ KUMARAKULASINGAM SURIYAKUMAR

Kumarakulasingam Suriyakumar
    
    Chairman, President and Chief
Executive Officer and Director
    
    March 9, 2011(Principal Executive Officer)/s/ JONATHAN R. MATHER
    
    Chief Financial Officer and Secretary
    
    March 9, 2011Jonathan R. Mather
    
    (Principal Financial Officer andPrincipal Accounting Officer)/s/ THOMAS J. FORMOLO

Thomas J. Formolo
    
    Director
    
    March 9, 2011/s/ ERIBERTO SCOCIMARA

Eriberto Scocimara
    
    Director
    
    March 9, 2011/s/ DEWITT KERRY MCCLUGGAGE

Dewitt Kerry McCluggage
    
    Director
    
    March 9, 2011/s/ JAMES F. MCNULTY

James F. McNulty
    
    Director
    
    March 9, 2011/s/ MARK W. MEALY

Mark W. Mealy
    
    Director
    
    March 9, 2011/s/ MANUEL PEREZ DE LA MESA

Manuel Perez de la Mesa
    
    Director
    
    March 9, 2011
  55




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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting FirmDeloitte & Touche LLP
    
    
    F-2PricewaterhouseCoopers LLP
    
    
    F-3Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    F-4Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 2008
    
    
    F-5Consolidated Statements of Equity and Comprehensive Loss for the years ended December 31,
2010, 2009 and 2008
    
    
    F-6Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8Financial Statement Schedule:Schedule II  Valuation and Qualifying Accounts
    
    
    F-36
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
   F-2




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       F-3




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##### Table of Contents



AMERICAN REPROGRAPHICS COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands, except per share data)
 December 31,
    
    
    December 31,2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    26,293
    
    
    $
    29,377Accounts receivable, net of allowances of $4,030 and $4,685
at December 31, 2010 and December 31, 2009, respectively
    
    
    52,619
    
    
    
    53,919Inventories, net
    
    
    10,689
    
    
    
    10,605Deferred income taxes
    
    
    7,157
    
    
    
    5,568Prepaid expenses and other current assets
    
    
    10,944
    
    
    
    7,011Total current assets
    
    
    107,702
    
    
    
    106,480Property and equipment, net
    
    
    59,036
    
    
    
    74,568Goodwill
    
    
    294,759
    
    
    
    332,518Other intangible assets, net
    
    
    62,643
    
    
    
    74,208Deferred financing fees, net
    
    
    4,995
    
    
    
    4,082Deferred income taxes
    
    
    37,835
    
    
    
    26,987Other assets
    
    
    2,115
    
    
    
    2,111Total assets
    
    $
    569,085
    
    
    $
    620,954Liabilities and EquityCurrent liabilities:Accounts payable
    
    $
    23,593
    
    
    $
    23,355Accrued payroll and payroll-related expenses
    
    
    7,980
    
    
    
    8,804Accrued expenses
    
    
    30,134
    
    
    
    24,540Current portion of long-term debt and capital leases
    
    
    23,608
    
    
    
    53,520Total current liabilities
    
    
    85,315
    
    
    
    110,219Long-term debt and capital leases
    
    
    216,016
    
    
    
    220,711Other long-term liabilities
    
    
    5,072
    
    
    
    8,000Total liabilities
    
    
    306,403
    
    
    
    338,930Commitments and contingencies (Note 10)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
    
    
    
    46Additional paid-in capital
    
    
    96,251
    
    
    
    89,982Retained earnings
    
    
    173,459
    
    
    
    200,961Accumulated other comprehensive loss
    
    
    (5,541
    )
    
    
    (7,273
    )264,215
    
    
    
    283,716Less cost of common stock in treasury, 447,654 shares in 2010 and 2009
    
    
    7,709
    
    
    
    7,709Total American Reprographics Company stockholders equity
    
    
    256,506
    
    
    
    276,007Noncontrolling interest
    
    
    6,176
    
    
    
    6,017Total equity
    
    
    262,682
    
    
    
    282,024Total liabilities and equity
    
    $
    569,085
    
    
    $
    620,954
   F-4




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##### Table of Contents



AMERICAN REPROGRAPHICS COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Dollars in thousands, except per share data)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Reprographics services
    
    $
    294,555
    
    
    $
    350,491
    
    
    $
    518,062Facilities management
    
    
    89,994
    
    
    
    97,401
    
    
    
    120,983Equipment and supplies sales
    
    
    57,090
    
    
    
    53,657
    
    
    
    61,942Total net sales
    
    
    441,639
    
    
    
    501,549
    
    
    
    700,987Cost of sales
    
    
    299,307
    
    
    
    323,360
    
    
    
    415,715Gross profit
    
    
    142,332
    
    
    
    178,189
    
    
    
    285,272Selling, general and administrative expenses
    
    
    107,744
    
    
    
    115,020
    
    
    
    154,728Amortization of intangible assets
    
    
    11,657
    
    
    
    11,367
    
    
    
    12,004Goodwill impairment
    
    
    38,263
    
    
    
    37,382
    
    
    
    35,154Impairment of long-lived assets
    
    
    
    
    
    
    781
    
    
    
    (Loss) income from operations
    
    
    (15,332
    )
    
    
    13,639
    
    
    
    83,386Other income, net
    
    
    (156
    )
    
    
    (171
    )
    
    
    (517
    )Interest expense, net
    
    
    24,091
    
    
    
    25,781
    
    
    
    25,890Loss on early extinguishment of debt
    
    
    2,509
    
    
    
    
    
    
    
    (Loss) income before income tax (benefit) provision
    
    
    (41,776
    )
    
    
    (11,971
    )
    
    
    58,013Income tax (benefit) provision
    
    
    (14,186
    )
    
    
    3,018
    
    
    
    21,200Net (loss) income
    
    
    (27,590
    )
    
    
    (14,989
    )
    
    
    36,813Loss (income) attributable to noncontrolling interest
    
    
    88
    
    
    
    104
    
    
    
    (59
    )Net (loss) income attributable to American
Reprographics
Company
    
    $
    (27,502
    )
    
    $
    (14,885
    )
    
    $
    36,754(Loss) earnings per share attributable to American
Reprographics Company shareholders:Basic
    
    $
    (0.61
    )
    
    $
    (0.33
    )
    
    $
    0.82Diluted
    
    $
    (0.61
    )
    
    $
    (0.33
    )
    
    $
    0.81Weighted average common shares outstanding:Basic
    
    
    45,212,724
    
    
    
    45,123,110
    
    
    
    45,060,482Diluted
    
    
    45,212,724
    
    
    
    45,123,110
    
    
    
    45,398,086
   F-5




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##### Table of Contents



AMERICAN REPROGRAPHICS COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE LOSS
 (Dollars in thousands, except per share data)
 American Reprographics Company ShareholdersAccumulatedCommon Stock
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    CommonPar
    
    
    Paid-In
    
    
    Deferred
    
    
    Retained
    
    
    Comprehensive
    
    
    Stock in
    
    
    Noncontrolling
    
    
    TotalShares
    
    
    Value
    
    
    Capital
    
    
    Compensation
    
    
    Earnings
    
    
    Loss
    
    
    Treasury
    
    
    Interest
    
    
    EquityBalance at December 31, 2007
    
    
    45,114,119
    
    
    $
    46
    
    
    $
    81,153
    
    
    $
    (673
    )
    
    $
    179,092
    
    
    $
    (258
    )
    
    $
    (7,709
    )
    
    $
    
    
    
    $
    251,651Stock-based compensation
    
    
    78,250
    
    
    
    
    
    
    
    3,812
    
    
    
    478
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,290Issuance of common stock under Employee Stock
Purchase Plan
    
    
    3,087
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35Stock options exercised
    
    
    31,700
    
    
    
    
    
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177Net tax benefit from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30Noncontrolling interest resulting from
business combinations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,062
    
    
    
    6,062Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,754
    
    
    
    
    
    
    
    
    
    
    
    59
    
    
    
    36,813Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,989
    )
    
    
    
    
    
    
    
    
    
    
    (1,989
    )Gain (loss) on derivative, net of
tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,167
    )
    
    
    
    
    
    
    
    
    
    
    (9,167
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,657Balance at December 31, 2008
    
    
    45,227,156
    
    
    $
    46
    
    
    $
    85,207
    
    
    $
    (195
    )
    
    $
    215,846
    
    
    $
    (11,414
    )
    
    $
    (7,709
    )
    
    $
    6,121
    
    
    $
    287,902Stock-based compensation
    
    
    396,012
    
    
    
    
    
    
    
    4,697
    
    
    
    195
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,892Issuance of common stock under Employee Stock
Purchase Plan
    
    
    30,031
    
    
    
    
    
    
    
    164
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164Stock options exercised
    
    
    11,800
    
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63Tax deficiency from stock-based compensation, net of
tax benefit
    
    
    
    
    
    
    
    
    
    
    (149
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (149
    )Comprehensive lossNet loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,885
    )
    
    
    
    
    
    
    
    
    
    
    (104
    )
    
    
    (14,989
    )Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    823
    
    
    
    
    
    
    
    
    
    
    
    823Gain (loss) on derivative, net of
tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,318
    
    
    
    
    
    
    
    
    
    
    
    3,318Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,848
    )Balance at December 31, 2009
    
    
    45,664,999
    
    
    $
    46
    
    
    $
    89,982
    
    
    $
    
    
    
    $
    200,961
    
    
    $
    (7,273
    )
    
    $
    (7,709
    )
    
    $
    6,017
    
    
    $
    282,024Stock-based compensation
    
    
    14,550
    
    
    
    
    
    
    
    5,922
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,922Issuance of common stock under Employee Stock
Purchase Plan
    
    
    9,010
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64Stock options exercised
    
    
    47,250
    
    
    
    
    
    
    
    242
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    242Net tax benefit from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41Comprehensive lossNet loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,502
    )
    
    
    
    
    
    
    
    
    
    
    (88
    )
    
    
    (27,590
    )Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    607
    
    
    
    
    
    
    
    247
    
    
    
    854Gain (loss) on derivative, net of tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,125
    
    
    
    
    
    
    
    
    
    
    
    1,125Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,611
    )Balance at December 31, 2010
    
    
    45,735,809
    
    
    $
    46
    
    
    $
    96,251
    
    
    $
    
    
    
    $
    173,459
    
    
    $
    (5,541
    )
    
    $
    (7,709
    )
    
    $
    6,176
    
    
    $
    262,682
   F-6




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##### Table of Contents



AMERICAN REPROGRAPHICS COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands, except per share data)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Cash flows from operating activitiesNet (loss) income
    
    $
    (27,590
    )
    
    $
    (14,989
    )
    
    $
    36,813Adjustments to reconcile net (loss) income to net cash provided by operating activities:Allowance for accounts receivable
    
    
    966
    
    
    
    3,044
    
    
    
    4,966Depreciation
    
    
    33,992
    
    
    
    38,176
    
    
    
    38,117Amortization of intangible assets
    
    
    11,657
    
    
    
    11,367
    
    
    
    12,004Amortization of deferred financing fees
    
    
    1,491
    
    
    
    1,357
    
    
    
    1,267Amortization of bond discount
    
    
    44
    
    
    
    
    
    
    
    Goodwill impairment
    
    
    38,263
    
    
    
    37,382
    
    
    
    35,154Impairment of long-lived assets
    
    
    
    
    
    
    781
    
    
    
    Stock-based compensation
    
    
    5,922
    
    
    
    4,892
    
    
    
    4,289Excess tax benefit related to stock-based compensation
    
    
    (58
    )
    
    
    (18
    )
    
    
    (30
    )Deferred income taxes
    
    
    (12,657
    )
    
    
    (4,477
    )
    
    
    (10,172
    )Loss on early extinguishment of debt
    
    
    2,509
    
    
    
    
    
    
    
    Write-off of deferred financing fees
    
    
    
    
    
    
    190
    
    
    
    313Other noncash items, net
    
    
    340
    
    
    
    (199
    )
    
    
    (284
    )Changes in operating assets and liabilities, net of effect of business acquisitions:Accounts receivable
    
    
    469
    
    
    
    21,099
    
    
    
    21,556Inventory
    
    
    8
    
    
    
    1,344
    
    
    
    3,134Prepaid expenses and other assets
    
    
    (4,098
    )
    
    
    6,302
    
    
    
    (1,101
    )Accounts payable and accrued expenses
    
    
    2,666
    
    
    
    (8,826
    )
    
    
    (18,760
    )Net cash provided by operating activities
    
    
    53,924
    
    
    
    97,425
    
    
    
    127,266Cash flows from investing activitiesCapital expenditures
    
    
    (8,634
    )
    
    
    (7,506
    )
    
    
    (9,033
    )Payments for businesses acquired, net of cash acquired
and including other cash payments associated with
the acquisitions
    
    
    (870
    )
    
    
    (3,527
    )
    
    
    (23,916
    )Restricted cash
    
    
    
    
    
    
    
    
    
    
    937Other
    
    
    1,002
    
    
    
    1,684
    
    
    
    1,205Net cash used in investing activities
    
    
    (8,502
    )
    
    
    (9,349
    )
    
    
    (30,807
    )Cash flows from financing activitiesProceeds from stock option exercises
    
    
    242
    
    
    
    63
    
    
    
    177Proceeds from issuance of common stock under Employee Stock Purchase Plan
    
    
    51
    
    
    
    164
    
    
    
    35Excess tax benefit related to stock-based compensation
    
    
    58
    
    
    
    18
    
    
    
    30Proceeds from bond issuance
    
    
    195,648
    
    
    
    
    
    
    
    Payments on long-term debt agreements and capital leases
    
    
    (238,989
    )
    
    
    (105,008
    )
    
    
    (51,850
    )Net (repayments) borrowings under revolving credit facility
    
    
    (1,536
    )
    
    
    1,523
    
    
    
    (22,000
    )Payment of deferred financing fees
    
    
    (4,473
    )
    
    
    (2,092
    )
    
    
    (726
    )Net cash used in financing activities
    
    
    (48,999
    )
    
    
    (105,332
    )
    
    
    (74,334
    )Effect of foreign currency translation on cash balances
    
    
    493
    
    
    
    91
    
    
    
    (385
    )Net change in cash and cash equivalents
    
    
    (3,084
    )
    
    
    (17,165
    )
    
    
    21,740Cash and cash equivalents at beginning of period
    
    
    29,377
    
    
    
    46,542
    
    
    
    24,802Cash and cash equivalents at end of period
    
    $
    26,293
    
    
    $
    29,377
    
    
    $
    46,542Supplemental disclosure of cash flow informationCash paid for:Interest
    
    $
    20,627
    
    
    $
    24,733
    
    
    $
    26,111Income taxes
    
    $
    1,395
    
    
    $
    2,507
    
    
    $
    33,939Noncash investing and financing activities:Capital lease obligations incurred
    
    $
    10,305
    
    
    $
    16,181
    
    
    $
    34,561Issuance of subordinated notes in connection with the
acquisition of businesses
    
    $
    231
    
    
    $
    466
    
    
    $
    10,414Accrued liabilities in connection with the acquisition of businesses
    
    $
    
    
    
    $
    
    
    
    $
    100Accrued liabilities in connection with deferred financing fees
    
    $
    440
    
    
    $
    
    
    
    $
    Net gain (loss) on derivative, net of tax effect
    
    $
    1,125
    
    
    $
    3,318
    
    
    $
    (9,167
    )Contribution from noncontrolling interest
    
    $
    
    
    
    $
    
    
    
    $
    6,062
   F-7




---



##### Table of Contents



AMERICAN REPROGRAPHICS COMPANY AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands, except per share data)
 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
  Basis of Presentation
    Risk and Uncertainties
  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Cash Equivalents
   Concentrations of Credit Risk and Significant Vendors
     F-8




---



##### Table of Contents



Allowance for Doubtful Accounts
  Inventories
  Income Taxes
        F-9




---



##### Table of Contents



Property and Equipment
  Buildings
    
    10-20 yearsLeasehold improvements
    
    10-20 years or lease term, if shorterMachinery and equipment
    
    3-7 yearsFurniture and fixtures
    
    3-7 years
  Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use
 Impairment of Long-Lived Assets
    Goodwill and Other Intangible Assets
    F-10




---



##### Table of Contents



Business
Combinations
       AccumulatedGross
    
    
    Impairment
    
    
    Net CarryingGoodwill
    
    
    Loss
    
    
    AmountJanuary 1, 2009
    
    $
    401,667
    
    
    $
    35,154
    
    
    $
    366,513Additions
    
    
    3,136
    
    
    
    
    
    
    
    3,136Goodwill impairment
    
    
    
    
    
    
    37,382
    
    
    
    (37,382
    )Translation adjustment
    
    
    251
    
    
    
    
    
    
    
    251December 31, 2009
    
    
    405,054
    
    
    
    72,536
    
    
    
    332,518Additions
    
    
    500
    
    
    
    
    
    
    
    500Goodwill impairment
    
    
    
    
    
    
    38,263
    
    
    
    (38,263
    )Translation adjustment
    
    
    4
    
    
    
    
    
    
    
    4December 31, 2010
    
    $
    405,558
    
    
    $
    110,799
    
    
    $
    294,759
  F-11




---



##### Table of Contents



December 31, 2010
    
    
    December 31, 2009Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountAmortizable other
intangible assets:Customer relationships
    
    $
    96,359
    
    
    $
    48,301
    
    
    $
    48,058
    
    
    $
    96,219
    
    
    $
    39,243
    
    
    $
    56,976Trade names and trademarks
    
    
    20,294
    
    
    
    5,736
    
    
    
    14,558
    
    
    
    20,294
    
    
    
    3,139
    
    
    
    17,155Non-Competition Agreements
    
    
    100
    
    
    
    73
    
    
    
    27
    
    
    
    303
    
    
    
    226
    
    
    
    77$
    116,753
    
    
    $
    54,110
    
    
    $
    62,643
    
    
    $
    116,816
    
    
    $
    42,608
    
    
    $
    74,208
  2011
    
    $
    18,6072012
    
    
    10,7422013
    
    
    6,3532014
    
    
    5,5432015
    
    
    5,030Thereafter
    
    
    16,368$
    62,643
 Deferred Financing Fees
    F-12




---



##### Table of Contents



Derivative Financial Instruments
  Fair Values of Financial Instruments
  Cash and cash equivalents:
 Short- and long-term debt:
 Interest rate hedge agreements:
 Insurance Liability
   Commitments and Contingencies
  Revenue Recognition
 Revenue Recognition in Financial Statements
    F-13




---



##### Table of Contents



Comprehensive Loss
   Segment and Geographic Reporting
 Disclosures about Segments of an Enterprise and
Related Information
  2010
    
    
    2009
    
    
    2008Foreign
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    
    
    
    
    
    
    
    
    ForeignU.S.
    
    
    Countries
    
    
    Total
    
    
    U.S.
    
    
    Countries
    
    
    Total
    
    
    U.S.
    
    
    Countries
    
    
    TotalRevenues from external
customers
    
    $
    404,513
    
    
    $
    37,126
    
    
    $
    441,639
    
    
    $
    473,414
    
    
    $
    28,135
    
    
    $
    501,549
    
    
    $
    676,742
    
    
    $
    24,245
    
    
    $
    700,987Long-lived assets, net
    
    $
    414,693
    
    
    $
    8,855
    
    
    $
    423,548
    
    
    $
    478,489
    
    
    $
    8,998
    
    
    $
    487,487
    
    
    $
    538,056
    
    
    $
    9,809
    
    
    $
    547,865
 Advertising and Shipping and Handling Costs
  Stock-Based Compensation
 Transition Election Related to Accounting for the Tax
Effects of Share-Based Payment Awards
   F-14




---



##### Table of Contents



Year EndedDecember 31,2009
    
    
    2008Weighted average assumptions used:Risk free interest rate
    
    
    0.95
    %
    
    
    2.79
    %Expected volatility
    
    
    43.1
    %
    
    
    32.70
    %Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    Research and Development Expenses
  Sales Taxes
  Earnings Per Share
 Earnings per Share
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Weighted average common shares
outstanding during the period
 basic
    
    
    45,212,724
    
    
    
    45,123,110
    
    
    
    45,060,482Effect of dilutive stock options
    
    
    
    
    
    
    
    
    
    
    337,604Weighted average common
shares outstanding during the
period  diluted
    
    
    45,212,724
    
    
    
    45,123,110
    
    
    
    45,398,086
   F-15




---



##### Table of Contents



Recent Accounting Pronouncements
 Fair Value Measurements and Disclosures
 Multiple-Deliverable Revenue Arrangements a
consensus of the FASB Emerging Issues Task Force Revenue Recognition,
  3. ACQUISITIONS
         F-16




---



##### Table of Contents



Year ended December 31,2008Net sales
    
    $
    725,202Net income
    
    $
    37,482Earnings per share  basic
    
    $
    0.83Earnings per share  diluted
    
    $
    0.83
     4. PROPERTY AND EQUIPMENT
  December 31,2010
    
    
    2009Machinery and equipment
    
    $
    245,617
    
    
    $
    233,292Buildings and leasehold improvements
    
    
    20,563
    
    
    
    20,768Furniture and fixtures
    
    
    4,731
    
    
    
    4,850270.911
    
    
    
    258,910Less accumulated depreciation
    
    
    (211,875
    )
    
    
    (184,342
    )$
    59,036
    
    
    $
    74,568
    F-17




---



##### Table of Contents



5. LONG-TERM DEBT
  December 31,
    
    
    December 31,2010
    
    
    2009Borrowings from foreign Revolving Credit Facilities; 6.0% interest
rate at
December 31, 2009
    
    $
    
    
    
    $
    1,52310.5% Senior Notes due 2016, net of discount of $4,308 at
December 31, 2010
    
    
    195,692
    
    
    
    Borrowings from senior secured First Priority  Term Loan Credit
Facility;
interest payable quarterly (weighted average 8.1% interest rate at
December 31, 2009, inclusive of interest rate Swap Transaction);
principal payable in varying quarterly installments
    
    
    
    
    
    
    205,625Various subordinated notes payable; weighted average 6.2%
interest rate at December 31, 2010 and December 31, 2009;
principal and interest payable monthly through June 2012
    
    
    8,635
    
    
    
    21,755Various capital leases; weighted average 8.8% and 9.2% interest rate
at December 31, 2010 and December 31, 2009, respectively;
principal and interest payable monthly through February 2016
    
    
    35,297
    
    
    
    45,328239,624
    
    
    
    274,231Less current portion
    
    
    (23,608
    )
    
    
    (53,520
    )$
    216,016
    
    
    $
    220,711
 10.5% Senior Notes due 2016
    Optional Redemption
 Repurchase upon Change of Control
 Other Covenants
 Events of Default
  F-18




---



##### Table of Contents



2010 Credit Agreement
     
    
    Maximum consolidated leverage ratio as follows:
 
    
    4.35:1.00 for quarters ending December 31, 2010 through September 30, 2011
    
    4.25:1.00 for quarters ending December 31, 2011 through September 30, 2012
    
    4.15:1.00 for quarters ending December 31, 2012 through September 30, 2013
    
    4.00:1.00 for quarters ending December 31, 2013 through maturity;
 
    
    Maximum consolidated senior secured debt leverage ratio not greater than 1.50:1.00, determined on the last
day of each fiscal quarter through maturity;
    
    Minimum consolidated interest coverage ratio as follows:
 
    
    1.70:1.00 for quarters ending December 31, 2010 through September 30, 2011
    
    1.75:1.00 for quarters ending December 31, 2011 through maturity;
     F-19




---



##### Table of Contents



2007 Credit Agreement
     Foreign Credit Agreement
   Long-Term Debt
    
    
    Capital Lease ObligationsYear ending December 31:2011
    
    $
    7,940
    
    
    $
    15,6682012
    
    
    695
    
    
    
    10,8332013
    
    
    
    
    
    
    5,8842014
    
    
    
    
    
    
    2,3982015
    
    
    
    
    
    
    513Thereafter
    
    
    200,000
    
    
    
    1$
    208,635
    
    
    $
    35,297
  Interest Rate Swap Transaction
   F-20




---



##### Table of Contents



6. CONDENSED FINANCIAL STATEMENTS
   F-21




---



##### Table of Contents



Consolidating Condensed Balance Sheet
December 31, 2010
 ARC Delaware
    
    
    Guarantor
    
    
    Non-Guarantor(Issuer)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    12,587
    
    
    $
    13,706
    
    
    $
    
    
    
    $
    26,293Accounts receivable, net
    
    
    
    
    
    
    48,283
    
    
    
    4,336
    
    
    
    
    
    
    
    52,619Intercompany operations
    
    
    295
    
    
    
    2,717
    
    
    
    (3,012
    )
    
    
    
    
    
    
    Inventories, net
    
    
    
    
    
    
    8,090
    
    
    
    2,599
    
    
    
    
    
    
    
    10,689Deferred income taxes
    
    
    
    
    
    
    7,157
    
    
    
    
    
    
    
    
    
    
    
    7,157Prepaid expenses and other current assets
    
    
    72
    
    
    
    8,741
    
    
    
    2,131
    
    
    
    
    
    
    
    10,944Total current assets
    
    
    367
    
    
    
    87,575
    
    
    
    19,760
    
    
    
    
    
    
    
    107,702Property and equipment, net
    
    
    
    
    
    
    52,376
    
    
    
    6,660
    
    
    
    
    
    
    
    59,036Goodwill
    
    
    
    
    
    
    294,759
    
    
    
    
    
    
    
    
    
    
    
    294,759Investment in subsidiaries
    
    
    257,838
    
    
    
    16,065
    
    
    
    
    
    
    
    (273,903
    )
    
    
    Other intangible assets, net
    
    
    
    
    
    
    60,585
    
    
    
    2,058
    
    
    
    
    
    
    
    62,643Deferred financing fees, net
    
    
    4,995
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,995Deferred income taxes
    
    
    708
    
    
    
    34,453
    
    
    
    2,674
    
    
    
    
    
    
    
    37,835Other assets
    
    
    
    
    
    
    1,978
    
    
    
    137
    
    
    
    
    
    
    
    2,115Total assets
    
    $
    263,908
    
    
    $
    547,791
    
    
    $
    31,289
    
    
    $
    (273,903
    )
    
    $
    569,085Liabilities and EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    21,137
    
    
    $
    2,456
    
    
    $
    
    
    
    $
    23,593Accrued payroll and payroll-related expenses
    
    
    
    
    
    
    7,643
    
    
    
    337
    
    
    
    
    
    
    
    7,980Accrued expenses
    
    
    2,210
    
    
    
    25,563
    
    
    
    2,361
    
    
    
    
    
    
    
    30,134Intercompany loans
    
    
    (190,500
    )
    
    
    190,241
    
    
    
    259
    
    
    
    
    
    
    
    Current portion of long-term debt and
capital leases
    
    
    
    
    
    
    22,787
    
    
    
    821
    
    
    
    
    
    
    
    23,608Total current liabilities
    
    
    (188,290
    )
    
    
    267,371
    
    
    
    6,234
    
    
    
    
    
    
    
    85,315Long-term debt and capital leases
    
    
    195,692
    
    
    
    19,201
    
    
    
    1,123
    
    
    
    
    
    
    
    216,016Other long-term liabilities
    
    
    
    
    
    
    3,381
    
    
    
    1,691
    
    
    
    
    
    
    
    5,072Total liabilities
    
    
    7,402
    
    
    
    289,953
    
    
    
    9,048
    
    
    
    
    
    
    
    306,403Commitments and contingenciesTotal equity
    
    
    256,506
    
    
    
    257,838
    
    
    
    22,241
    
    
    
    (273,903
    )
    
    
    262,682Total liabilities and equity
    
    $
    263,908
    
    
    $
    547,791
    
    
    $
    31,289
    
    
    $
    (273,903
    )
    
    $
    569,085
  F-22




---



##### Table of Contents



Consolidating Condensed Balance Sheet
December 31, 2009
 ARC Delaware
    
    
    Guarantor
    
    
    Non-Guarantor(Issuer)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    15,319
    
    
    $
    14,058
    
    
    $
    
    
    
    $
    29,377Accounts receivable, net
    
    
    
    
    
    
    50,300
    
    
    
    3,619
    
    
    
    
    
    
    
    53,919Intercompany operations
    
    
    
    
    
    
    1,671
    
    
    
    (1,671
    )
    
    
    
    
    
    
    Inventories, net
    
    
    
    
    
    
    6,864
    
    
    
    3,741
    
    
    
    
    
    
    
    10,605Deferred income taxes
    
    
    
    
    
    
    5,568
    
    
    
    
    
    
    
    
    
    
    
    5,568Prepaid expenses and other current assets
    
    
    
    
    
    
    6,114
    
    
    
    897
    
    
    
    
    
    
    
    7,011Total current assets
    
    
    
    
    
    
    85,836
    
    
    
    20,644
    
    
    
    
    
    
    
    106,480Property and equipment, net
    
    
    
    
    
    
    69,477
    
    
    
    5,091
    
    
    
    
    
    
    
    74,568Goodwill
    
    
    
    
    
    
    330,956
    
    
    
    1,562
    
    
    
    
    
    
    
    332,518Investment in subsidiaries
    
    
    276,007
    
    
    
    17,623
    
    
    
    
    
    
    
    (293,630
    )
    
    
    Other intangible assets, net
    
    
    
    
    
    
    71,953
    
    
    
    2,255
    
    
    
    
    
    
    
    74,208Deferred financing fees, net
    
    
    
    
    
    
    4,082
    
    
    
    
    
    
    
    
    
    
    
    4,082Deferred income taxes
    
    
    
    
    
    
    25,051
    
    
    
    1,936
    
    
    
    
    
    
    
    26,987Other assets
    
    
    
    
    
    
    2,021
    
    
    
    90
    
    
    
    
    
    
    
    2,111Total assets
    
    $
    276,007
    
    
    $
    606,999
    
    
    $
    31,578
    
    
    $
    (293,630
    )
    
    $
    620,954Liabilities and EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    21,810
    
    
    $
    1,545
    
    
    $
    
    
    
    $
    23,355Accrued payroll and payroll-related expenses
    
    
    
    
    
    
    8,458
    
    
    
    346
    
    
    
    
    
    
    
    8,804Accrued expenses
    
    
    
    
    
    
    22,765
    
    
    
    1,775
    
    
    
    
    
    
    
    24,540Intercompany loans
    
    
    
    
    
    
    285
    
    
    
    (285
    )
    
    
    
    
    
    
    Current portion of long-term debt and
capital leases
    
    
    
    
    
    
    50,902
    
    
    
    2,618
    
    
    
    
    
    
    
    53,520Total current liabilities
    
    
    
    
    
    
    104,220
    
    
    
    5,999
    
    
    
    
    
    
    
    110,219Long-term debt and capital leases
    
    
    
    
    
    
    219,519
    
    
    
    1,192
    
    
    
    
    
    
    
    220,711Other long-term liabilities
    
    
    
    
    
    
    7,253
    
    
    
    747
    
    
    
    
    
    
    
    8,000Total liabilities
    
    
    
    
    
    
    330,992
    
    
    
    7,938
    
    
    
    
    
    
    
    338,930Commitments and contingenciesTotal equity
    
    
    276,007
    
    
    
    276,007
    
    
    
    23,640
    
    
    
    (293,630
    )
    
    
    282,024Total liabilities and equity
    
    $
    276,007
    
    
    $
    606,999
    
    
    $
    31,578
    
    
    $
    (293,630
    )
    
    $
    620,954
  F-23




---



##### Table of Contents



Consolidating Condensed Statement of Operations
December 31, 2010
 ARCDelaware
    
    
    Guarantor
    
    
    Non-Guarantor(Issuer)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    
    
    
    $
    404,513
    
    
    $
    37,126
    
    
    
    
    
    
    $
    441,639Cost of sales
    
    
    
    
    
    
    269,304
    
    
    
    30,003
    
    
    
    
    
    
    
    299,307Gross profit
    
    
    
    
    
    
    135,209
    
    
    
    7,123
    
    
    
    
    
    
    
    142,332Selling, general and administrative expenses
    
    
    
    
    
    
    100,294
    
    
    
    7,450
    
    
    
    
    
    
    
    107,744Amortization of intangible assets
    
    
    
    
    
    
    11,368
    
    
    
    289
    
    
    
    
    
    
    
    11,657Goodwill impairment
    
    
    
    
    
    
    36,697
    
    
    
    1,566
    
    
    
    
    
    
    
    38,263Loss from operations
    
    
    
    
    
    
    (13,150
    )
    
    
    (2,182
    )
    
    
    
    
    
    
    (15,332
    )Other (income) expense, net
    
    
    
    
    
    
    (805
    )
    
    
    649
    
    
    
    
    
    
    
    (156
    )Interest expense (income), net
    
    
    1,895
    
    
    
    22,215
    
    
    
    (19
    )
    
    
    
    
    
    
    24,091Loss on early extinguishment of debt
    
    
    
    
    
    
    2,509
    
    
    
    
    
    
    
    
    
    
    
    2,509Loss before equity in earnings of
subsidiaries and income tax benefit
    
    
    (1,895
    )
    
    
    (37,069
    )
    
    
    (2,812
    )
    
    
    
    
    
    
    (41,776
    )Equity in earnings of subsidiaries
    
    
    26,315
    
    
    
    1,849
    
    
    
    
    
    
    
    (28,164
    )
    
    
    Income tax benefit
    
    
    (708
    )
    
    
    (12,603
    )
    
    
    (875
    )
    
    
    
    
    
    
    (14,186
    )Net (loss) income
    
    
    (27,502
    )
    
    
    (26,315
    )
    
    
    (1,937
    )
    
    
    28,164
    
    
    
    (27,590
    )Loss attributable to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    88
    
    
    
    
    
    
    
    88Net (loss) income attributable to AmericanReprographics Company
    
    $
    (27,502
    )
    
    $
    (26,315
    )
    
    $
    (1,849
    )
    
    $
    28,164
    
    
    $
    (27,502
    )
 Consolidating Condensed Statement of Operations
December 31, 2009
 ARCDelaware
    
    
    Guarantor
    
    
    Non-Guarantor(Issuer)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    
    
    
    $
    473,414
    
    
    $
    28,135
    
    
    
    
    
    
    $
    501,549Cost of sales
    
    
    
    
    
    
    300,957
    
    
    
    22,403
    
    
    
    
    
    
    
    323,360Gross profit
    
    
    
    
    
    
    172,457
    
    
    
    5,732
    
    
    
    
    
    
    
    178,189Selling, general and administrative expenses
    
    
    
    
    
    
    108,049
    
    
    
    6,971
    
    
    
    
    
    
    
    115,020Amortization of intangible assets
    
    
    
    
    
    
    11,077
    
    
    
    290
    
    
    
    
    
    
    
    11,367Goodwill impairment
    
    
    
    
    
    
    35,148
    
    
    
    2,234
    
    
    
    
    
    
    
    37,382Impairment of long-lived assets
    
    
    
    
    
    
    781
    
    
    
    
    
    
    
    
    
    
    
    781Income (loss) from operations
    
    
    
    
    
    
    17,402
    
    
    
    (3,763
    )
    
    
    
    
    
    
    13,639Other (income) expense, net
    
    
    
    
    
    
    (619
    )
    
    
    448
    
    
    
    
    
    
    
    (171
    )Interest expense, net
    
    
    
    
    
    
    25,755
    
    
    
    26
    
    
    
    
    
    
    
    25,781Loss before equity in earnings of
subsidiaries and income tax provision
(benefit)
    
    
    
    
    
    
    (7,734
    )
    
    
    (4,237
    )
    
    
    
    
    
    
    (11,971
    )Equity in earnings of subsidiaries
    
    
    14,885
    
    
    
    3,098
    
    
    
    
    
    
    
    (17,983
    )
    
    
    Income tax provision (benefit)
    
    
    
    
    
    
    4,053
    
    
    
    (1,035
    )
    
    
    
    
    
    
    3,018Net (loss) income
    
    
    (14,885
    )
    
    
    (14,885
    )
    
    
    (3,202
    )
    
    
    17,983
    
    
    
    (14,989
    )Loss attributable to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    104
    
    
    
    
    
    
    
    104Net (loss) income attributable to AmericanReprographics Company
    
    $
    (14,885
    )
    
    $
    (14,885
    )
    
    $
    (3,098
    )
    
    $
    17,983
    
    
    $
    (14,885
    )
  F-24




---



##### Table of Contents



Consolidating Condensed Statement of Operations
December 31, 2008
 ARCDelaware
    
    
    Guarantor
    
    
    Non-Guarantor(Issuer)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    
    
    
    $
    676,742
    
    
    $
    24,245
    
    
    
    
    
    
    $
    700,987Cost of sales
    
    
    
    
    
    
    398,959
    
    
    
    16,756
    
    
    
    
    
    
    
    415,715Gross profit
    
    
    
    
    
    
    277,783
    
    
    
    7,489
    
    
    
    
    
    
    
    285,272Selling, general and administrative expenses
    
    
    
    
    
    
    148,437
    
    
    
    6,291
    
    
    
    
    
    
    
    154,728Amortization of intangible assets
    
    
    
    
    
    
    11,698
    
    
    
    306
    
    
    
    
    
    
    
    12,004Goodwill impairment
    
    
    
    
    
    
    34,062
    
    
    
    1,092
    
    
    
    
    
    
    
    35,154Income (loss) from operations
    
    
    
    
    
    
    83,586
    
    
    
    (200
    )
    
    
    
    
    
    
    83,386Other (income) expense, net
    
    
    
    
    
    
    (1,219
    )
    
    
    702
    
    
    
    
    
    
    
    (517
    )Interest expense, net
    
    
    
    
    
    
    25,577
    
    
    
    313
    
    
    
    
    
    
    
    25,890Income (loss) before equity in earnings of
subsidiaries and income tax provision
(benefit)
    
    
    
    
    
    
    59,228
    
    
    
    (1,215
    )
    
    
    
    
    
    
    58,013Equity in earnings of subsidiaries
    
    
    (36,754
    )
    
    
    1,071
    
    
    
    
    
    
    
    35,683
    
    
    
    Income tax provision (benefit)
    
    
    
    
    
    
    21,403
    
    
    
    (203
    )
    
    
    
    
    
    
    21,200Net income (loss)
    
    
    36,754
    
    
    
    36,754
    
    
    
    (1,012
    )
    
    
    (35,683
    )
    
    
    36,813Income attributable to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Net income (loss) attributable to AmericanReprographics Company
    
    $
    36,754
    
    
    $
    36,754
    
    
    $
    (1,071
    )
    
    $
    (35,683
    )
    
    $
    36,754
  F-25




---



##### Table of Contents



Consolidating Condensed Statement of Cash Flows
December 31, 2010
 ARCDelaware
    
    
    Guarantor
    
    
    Non-Guarantor(Issuer)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalCash flows from operating activitiesNet cash (used in) provided by operating activities
    
    $
    (970
    )
    
    $
    49,404
    
    
    $
    5,490
    
    
    $
    
    
    
    $
    53,924Cash flows from investing activitiesCapital expenditures
    
    
    
    
    
    
    (6,233
    )
    
    
    (2,401
    )
    
    
    
    
    
    
    (8,634
    )Payments for businesses acquired, net of cash acquired
and including other cash payments associated with
the acquisitions
    
    
    
    
    
    
    (500
    )
    
    
    (370
    )
    
    
    
    
    
    
    (870
    )Other
    
    
    
    
    
    
    1,045
    
    
    
    (43
    )
    
    
    
    
    
    
    1,002Net cash used in investing activities
    
    
    
    
    
    
    (5,688
    )
    
    
    (2,814
    )
    
    
    
    
    
    
    (8,502
    )Cash flows from financing activitiesProceeds from stock option exercises
    
    
    
    
    
    
    242
    
    
    
    
    
    
    
    
    
    
    
    242Proceeds from issuance of common stock under Employee Stock Purchase Plan
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    51Excess tax benefit related to stock-based compensation
    
    
    
    
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    58Proceeds from bond issuance
    
    
    195,648
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    195,648Payments on long-term debt agreements and capital leases
    
    
    
    
    
    
    (237,801
    )
    
    
    (1,188
    )
    
    
    
    
    
    
    (238,989
    )Net repayments under revolving credit facility
    
    
    
    
    
    
    
    
    
    
    (1,536
    )
    
    
    
    
    
    
    (1,536
    )Payment of deferred financing fees
    
    
    (4,473
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,473
    )Advances to/from subsidiaries
    
    
    (190,205
    )
    
    
    191,002
    
    
    
    (797
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    970
    
    
    
    (46,448
    )
    
    
    (3,521
    )
    
    
    
    
    
    
    (48,999
    )Effect of foreign currency translation on cash balances
    
    
    
    
    
    
    
    
    
    
    493
    
    
    
    
    
    
    
    493Net change in cash and cash equivalents
    
    
    
    
    
    
    (2,732
    )
    
    
    (352
    )
    
    
    
    
    
    
    (3,084
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    15,319
    
    
    
    14,058
    
    
    
    
    
    
    
    29,377Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    12,587
    
    
    $
    13,706
    
    
    $
    
    
    
    $
    26,293
  F-26




---



##### Table of Contents



Consolidating Condensed Statement of Cash Flows
December 31, 2009
 ARCDelaware
    
    
    Guarantor
    
    
    Non-Guarantor(Issuer)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalCash flows from operating activitiesNet cash provided by operating activities
    
    $
    
    
    
    $
    94,051
    
    
    $
    3,374
    
    
    $
    
    
    
    $
    97,425Cash flows from investing activitiesCapital expenditures
    
    
    
    
    
    
    (5,890
    )
    
    
    (1,616
    )
    
    
    
    
    
    
    (7,506
    )Payments for businesses acquired, net of cash acquired
and including other cash payments associated with
the acquisitions
    
    
    
    
    
    
    (3,051
    )
    
    
    (476
    )
    
    
    
    
    
    
    (3,527
    )Other
    
    
    
    
    
    
    1,690
    
    
    
    (6
    )
    
    
    
    
    
    
    1,684Net cash used in investing activities
    
    
    
    
    
    
    (7,251
    )
    
    
    (2,098
    )
    
    
    
    
    
    
    (9,349
    )Cash flows from financing activitiesProceeds from stock option exercises
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    63Proceeds from issuance of common stock under Employee Stock Purchase Plan
    
    
    
    
    
    
    164
    
    
    
    
    
    
    
    
    
    
    
    164Excess tax benefit related to stock-based compensation
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    18Payments on long-term debt agreements and capital leases
    
    
    
    
    
    
    (103,793
    )
    
    
    (1,215
    )
    
    
    
    
    
    
    (105,008
    )Net borrowings under revolving credit facility
    
    
    
    
    
    
    
    
    
    
    1,523
    
    
    
    
    
    
    
    1,523Payment of deferred financing fees
    
    
    
    
    
    
    (2,092
    )
    
    
    
    
    
    
    
    
    
    
    (2,092
    )Advances to/from subsidiaries
    
    
    
    
    
    
    1,752
    
    
    
    (1,752
    )
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    
    
    
    
    (103,888
    )
    
    
    (1,444
    )
    
    
    
    
    
    
    (105,332
    )Effect of foreign currency translation on cash balances
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    
    
    
    
    91Net change in cash and cash equivalents
    
    
    
    
    
    
    (17,088
    )
    
    
    (77
    )
    
    
    
    
    
    
    (17,165
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    32,407
    
    
    
    14,135
    
    
    
    
    
    
    
    46,542Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    15,319
    
    
    $
    14,058
    
    
    $
    
    
    
    $
    29,377
  F-27




---



##### Table of Contents



Consolidating Condensed Statement of Cash Flows
December 31, 2008
 ARCDelaware
    
    
    Guarantor
    
    
    Non-Guarantor(Issuer)
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalCash flows from operating activitiesNet cash provided by operating activities
    
    $
    
    
    
    $
    110,232
    
    
    $
    17,034
    
    
    $
    
    
    
    $
    127,266Cash flows from investing activitiesCapital expenditures
    
    
    
    
    
    
    (8,183
    )
    
    
    (850
    )
    
    
    
    
    
    
    (9,033
    )Payments for businesses acquired, net of cash acquired
and including other cash payments associated with
the acquisitions
    
    
    
    
    
    
    (21,573
    )
    
    
    (2,343
    )
    
    
    
    
    
    
    (23,916
    )Restricted cash
    
    
    
    
    
    
    937
    
    
    
    
    
    
    
    
    
    
    
    937Other
    
    
    
    
    
    
    1,197
    
    
    
    8
    
    
    
    
    
    
    
    1,205Net cash used in investing activities
    
    
    
    
    
    
    (27,622
    )
    
    
    (3,185
    )
    
    
    
    
    
    
    (30,807
    )Cash flows from financing activitiesProceeds from stock option exercises
    
    
    
    
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    177Proceeds from issuance of common stock under Employee Stock Purchase Plan
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    35Excess tax benefit related to stock-based compensation
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    30Payments on long-term debt agreements and capital leases
    
    
    
    
    
    
    (50,336
    )
    
    
    (1,514
    )
    
    
    
    
    
    
    (51,850
    )Net repayments under revolving credit facility
    
    
    
    
    
    
    (22,000
    )
    
    
    
    
    
    
    
    
    
    
    (22,000
    )Payment of deferred financing fees
    
    
    
    
    
    
    (726
    )
    
    
    
    
    
    
    
    
    
    
    (726
    )Advances to/from subsidiaries
    
    
    
    
    
    
    (1,424
    )
    
    
    1,424
    
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    
    
    
    
    (74,244
    )
    
    
    (90
    )
    
    
    
    
    
    
    (74,334
    )Effect of foreign currency translation on cash balances
    
    
    
    
    
    
    
    
    
    
    (385
    )
    
    
    
    
    
    
    (385
    )Net change in cash and cash equivalents
    
    
    
    
    
    
    8,366
    
    
    
    13,374
    
    
    
    
    
    
    
    21,740Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    24,041
    
    
    
    761
    
    
    
    
    
    
    
    24,802Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    32,407
    
    
    $
    14,135
    
    
    $
    
    
    
    $
    46,542
  F-28




---



##### Table of Contents



7. DERIVATIVES AND HEDGING TRANSACTIONS
    Fair ValueBalance Sheet
    
    Year Ended December 31,Classification
    
    2010
    
    
    2009Derivative designated as hedging instrument
under ASC 815Amended Swap Transaction  current portion
    
    Accrued expenses
    
    $
    9,729
    
    
    $
    6,908Amended Swap Transaction  long term portion
    
    Other long-term liabilities
    
    
    
    
    
    
    4,010Total derivatives designated as hedging
    
    
    
    $
    9,729
    
    
    $
    10,918
  Amount of Gain or (Loss) Recognized in AOCL on DerivativeYear Ended December 31,2010
    
    
    2009Derivative in ASC 815 Cash Flow Hedging
RelationshipAmended Swap Transaction
    
    $
    1,763
    
    
    $
    5,590Tax effect
    
    
    (638
    )
    
    
    (2,272
    )Amended Swap
Transaction, net of tax
effect
    
    $
    1,125
    
    
    $
    3,318
  Amount of Gain or (Loss)
    
    
    Amount of Gain or (Loss)Reclassified from AOCL into Income
    
    
    Recognized in Income(effective portion)
    
    
    (ineffective portion)Year Ended December 31,
    
    
    Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008Location of Gain or (Loss) Reclassified
from AOCL into IncomeInterest expense
    
    $
    (7,724
    )
    
    $
    (8,247
    )
    
    $
    (2,080
    )
    
    $
    (574
    )
    
    $
    (24
    )
    
    $
    
  F-29




---



##### Table of Contents



8. FAIR VALUE MEASUREMENTS
      Significant Other Observable InputsLevel 2December 31,2010
    
    
    2009Recurring Fair Value MeasureAmended Swap Transaction
    
    $
    9,729
    
    
    $
    10,918
    Significant Other Unobservable InputsDecember 31,2010
    
    
    2009Level 3
    
    
    Total Losses
    
    
    Level 3
    
    
    Total LossesNonrecurring Fair Value MeasureGoodwill
    
    $
    294,759
    
    
    $
    38,263
    
    
    $
    332,518
    
    
    $
    37,382
   F-30




---



##### Table of Contents



9. INCOME TAXES
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Current:Federal
    
    $
    (1,400
    )
    
    $
    5,767
    
    
    $
    25,644State
    
    
    157
    
    
    
    1,442
    
    
    
    5,052Foreign
    
    
    (286
    )
    
    
    286
    
    
    
    676(1,529
    )
    
    
    7,495
    
    
    
    31,372Deferred:Federal
    
    
    (10,429
    )
    
    
    (2,854
    )
    
    
    (6,510
    )State
    
    
    (1,640
    )
    
    
    (302
    )
    
    
    (2,783
    )Foreign
    
    
    (588
    )
    
    
    (1,321
    )
    
    
    (879
    )(12,657
    )
    
    
    (4,477
    )
    
    
    (10,172
    )Income tax (benefit) / provision
    
    $
    (14,186
    )
    
    $
    3,018
    
    
    $
    21,200
  December 31,2010
    
    
    2009Current portion of deferred tax assets (liabilities):Financial statement accruals not currently deductible
    
    $
    3,461
    
    
    $
    5,187Interest Rate Swap
    
    
    3,635
    
    
    
    State taxes
    
    
    61
    
    
    
    268Tax credit carryforward
    
    
    
    
    
    
    113Net current deferred tax assets
    
    
    7,157
    
    
    
    5,568Non-current portion of deferred tax assets and (liabilities):Excess of income tax basis over net book value of intangible assets
    
    
    15,488
    
    
    
    18,420Excess of income tax basis over net book value of property, plant and equipment
    
    
    10,341
    
    
    
    10,800Stock-based compensation
    
    
    6,054
    
    
    
    4,225Tax credit carryforward
    
    
    905
    
    
    
    761Foreign tax net operating loss carryforward
    
    
    1,614
    
    
    
    1,392Federal tax net operating loss carryforward
    
    
    10,851
    
    
    
    State tax net operating loss carryforward
    
    
    843
    
    
    
    Deferred revenue
    
    
    355Accumulated other comprehensive loss
    
    
    
    
    
    
    4,074Excess of net book value over income tax basis of intangible assets
    
    
    (8,616
    )
    
    
    (12,685
    )Net non-current deferred tax assets
    
    
    37,835
    
    
    
    26,987Net deferred tax assets
    
    $
    44,992
    
    
    $
    32,555
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Statutory federal income tax rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %State taxes, net of federal benefit
    
    
    3
    
    
    
    (5
    )
    
    
    5Foreign taxes
    
    
    (1
    )
    
    
    4
    
    
    
    Goodwill impairment
    
    
    (3
    )
    
    
    (56
    )
    
    
    1Non-deductible expenses and other
    
    
    (1
    )
    
    
    (6
    )
    
    
    2Domestic Production Activities Deduction tax benefit
    
    
    0
    
    
    
    3
    
    
    
    (3
    )Discrete item
    
    
    1
    
    
    
    
    
    
    
    (3
    )Effective income tax rate
    
    
    34
    %
    
    
    (25
    )%
    
    
    37
    %
   F-31




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##### Table of Contents



2010
    
    
    2009
    
    
    2008Beginning balance at January 1,
    
    $
    1,557
    
    
    $
    1,133
    
    
    $
    1,100Additions based on tax positions related to the current year
    
    
    387
    
    
    
    424
    
    
    
    379Reductions for tax positions due to effective settlement
with taxing authorities
    
    
    
    
    
    
    
    
    
    
    (346
    )Reductions for tax positions due to expiration of
statute of limitations
    
    
    (395
    )
    
    
    
    
    
    
    Ending balance at December 31,
    
    $
    1,549
    
    
    $
    1,557
    
    
    $
    1,133
   Accounting
for Uncertainty in Income Taxes,
 10. COMMITMENTS AND CONTINGENCIES
  Third Party
    
    
    Related Party
    
    
    TotalYear ending December 31:2011
    
    $
    22,387
    
    
    $
    1,285
    
    
    $
    23,6722012
    
    
    17,014
    
    
    
    1,123
    
    
    
    18,1372013
    
    
    11,394
    
    
    
    893
    
    
    
    12,2872014
    
    
    7,081
    
    
    
    154
    
    
    
    7,2352015
    
    
    4,500
    
    
    
    
    
    
    
    4,500Thereafter
    
    
    8,903
    
    
    
    
    
    
    
    8,903$
    71,279
    
    
    $
    3,455
    
    
    $
    74,734
    F-32




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##### Table of Contents



11. RELATED PARTY TRANSACTIONS
  12. RETIREMENT PLANS
  13. EMPLOYEE STOCK PURCHASE PLAN AND STOCK OPTION PLAN
 Employee Stock Purchase Plan
    2005 Stock Plan
    F-33




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##### Table of Contents



Stock Option Exchange Program.
     Year Ended December 31, 2010WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Contractual
    
    
    IntrinsicExercise
    
    
    Life
    
    
    ValueShares
    
    
    Price
    
    
    (In years)
    
    
    (In thousands)Outstanding at December 31, 2008
    
    
    2,281,146
    
    
    $
    19.49Granted
    
    
    1,541,576
    
    
    $
    8.12Exercised
    
    
    (11,800
    )
    
    $
    5.34Forfeited
    
    
    (1,559,250
    )
    
    $
    24.50Outstanding at December 31, 2009
    
    
    2,251,672
    
    
    $
    7.76Granted
    
    
    
    
    
    $
    Exercised
    
    
    (47,250
    )
    
    $
    5.14Forfeited/Cancelled
    
    
    (47,500
    )
    
    $
    8.20Outstanding at December 31, 2010
    
    
    2,156,922
    
    
    $
    7.81
    
    
    
    6.41
    
    
    $
    1,437Vested or expected to vest at December 31, 2010
    
    
    2,156,922
    
    
    $
    7.81
    
    
    
    6.41
    
    
    $
    1,437Exercisable at December 31, 2010
    
    
    1,403,288
    
    
    $
    7.66
    
    
    
    5.35
    
    
    $
    1,373
   F-34




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##### Table of Contents



WeightedAverage Grant DateNon-vested Options
    
    Shares
    
    
    Fair Market ValueNon-vested at December 31, 2009
    
    
    1,529,576
    
    
    $
    3.34Granted
    
    
    
    
    
    $
    Vested
    
    
    (728,442
    )
    
    $
    3.35Forfeited/Cancelled
    
    
    (47,500
    )
    
    $
    3.37Non-vested at December 31, 2010
    
    
    753,634
    
    
    $
    3.33
  Range of Exercise
    
    Options Outstanding atPrice
    
    December 31, 2010$4.88  $5.85
    
    
    596,000$6.11  $8.20
    
    
    1,511,375$23.85  $35.42
    
    
    49,547$4.88  $35.42
    
    
    2,156,922
 Restricted Stock
        14. SUBSEQUENT EVENT
   F-35




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##### Table of Contents



Schedule II
 AMERICAN REPROGRAPHICS COMPANY AND SUBSIDIARIES
 VALUATION AND QUALIFYING ACCOUNTS
 Balance at
    
    
    Charges to
    
    
    Charged to
    
    
    
    
    
    
    Balance atBeginning
    
    
    Cost and
    
    
    Other
    
    
    Deductions
    
    
    End ofof Period
    
    
    Expenses
    
    
    Accounts (1)
    
    
    (2)
    
    
    PeriodYear ended December 31, 2010Allowance for accounts receivable
    
    $
    4,685
    
    
    $
    966
    
    
    $
    
    
    
    $
    (1,621
    )
    
    $
    4,030Year ended December 31, 2009Allowance for accounts receivable
    
    $
    5,424
    
    
    $
    3,044
    
    
    $
    
    
    
    $
    (3,783
    )
    
    $
    4,685Year ended December 31, 2008Allowance for accounts receivable
    
    $
    5,092
    
    
    $
    4,966
    
    
    $
    362
    
    
    $
    (4,996
    )
    
    $
    5,424
 
 (1)
    
    Acquisition of businesses and sales returns and discounts.(2)
    
    Deductions represent uncollectible accounts written-off net of
recoveries and inventory adjustments.  F-36




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    Description4.1
    
    
    Specimen Stock Certificate*21.1
    
    
    List of Subsidiaries.*23.1
    
    
    Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.*23.2
    
    
    Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.*31.1
    
    
    Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. *31.2
    
    
    Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002. *32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *32.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
 *
    
    Filed herewith
    
    Indicates management contract or compensatory plan or agreement  F-37