##### Table of Contents



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, 2008
 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
    
    (I.R.S. Employerincorporation or organization)
    
    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
 Yes o No þ
 o þ
 þ o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No 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, 2008
 Table of Contents
 PagePART I
    
    
    4Item 1. Business
    
    
    4Item 1A. Risk Factors
    
    
    11Item 1B. Unresolved Staff Comments
    
    
    15Item 2.
Properties
    
    
    16Item 3. Legal Proceedings
    
    
    16Item 4. Submission of Matters to a Vote of Security Holders
    
    
    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 Operation
    
    
    21Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 8. Financial Statements and Supplementary Data
    
    
    42Item 9. Changes in and Disagreements with Accountants On Accounting And
Financial Disclosure
    
    
    43Item 9A. Controls and Procedures
    
    
    43Item 9B. Other Information
    
    
    43PART III
    
    
    44Item 10. Directors, Executive Officers and Corporate Governance
    
    
    44Item 11. Executive Compensation
    
    
    44Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    44Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    44Item 14. Principal Accounting Fees and Services
    
    
    44PART IV
    
    
    45Item 15. Exhibits, Financial Statement Schedules
    
    
    45SIGNATURES
    
    
    51Exhibit 10.69Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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AMERICAN REPROGRAPHICS COMPANY
 2008 ANNUAL REPORT ON FORM 10-K
  FORWARD-LOOKING STATEMENTS
   TRADEMARKS AND TRADE NAMES
 ® ® ® SM
  3




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##### Table of Contents



PART I
 
 Item 1. Business
 Our Company
       Available Information
 www.sec.gov.
 www.e-arc.com. www.e-arc.com
  4




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Corporate Background and Reorganization
   Acquisitions
     Industry Overview
    5




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##### Table of Contents



Our Competitive Strengths
  
    
    Leading Market Position in Fragmented Industry. Our size and national footprint
provide us with significant purchasing power, economies of scale, the ability to invest
in industry-leading technologies, and the resources to service large, national
customers.
    
    Leader in Technology and Innovation. We believe several of our technology products
are well positioned to become industry standards for managing and procuring
reprographics services within the AEC industry, as well as managing reprographic shops
themselves. We have developed other proprietary software applications that complement
these applications which has enabled us to improve the efficiency of our services, add
services and increase our revenue.
    
    Extensive National Footprint with Regional Expertise. Our national network of
service centers maintains local customer relationships while benefiting from
centralized corporate functions and national scale. Our service facilities are
organized as hub and satellite structures within individual markets, allowing us to
balance production capacity and minimize capital expenditures through
technology-sharing and the consolidation of administrative and accounting functions
among our service centers within each market or region. In addition, we serve our
national and regional customers under a single contract through our Premier Accounts
business unit, while offering centralized access to project specific services, billing,
and tracking information.
    
    Flexible Operating Model. By promoting regional decision making for marketing,
pricing, and selling practices, we remain responsive to our customers while benefiting
from the cost structure advantages of our centralized administrative functions. Our
flexible operating model also allows us to capitalize on any business environment,
quickly scaling up or down as needed within a given marketplace.
    
    Consistent, Strong Cash Flow. Through management of our inventory and receivables
and our low capital expenditure requirements, we have consistently generated strong
cash flow from operations after capital expenditures regardless of industry and
economic conditions.
    
    Low Cost Operator. We believe we are one of the lowest cost operators in the
reprographics industry. We have achieved this status by minimizing branch level
expenses and capitalizing on our significant scale for purchasing efficiencies.
    
    Experienced Management Team and Highly Trained Workforce. Members of our executive
and divisional senior management team have an average of more than 20 years of industry
experience. It is also our preferred practice to maintain the senior management of the
companies we acquire.
 Our Services
  Document Management.
 Document Distribution and Logistics.
 Print-on-demand.
 On-site Services.
  6




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##### Table of Contents




    
    PlanWell Enterprise (PlanWell), our proprietary, internet-based planroom launched in
June 2000, and our suite of other reprographics software products that enable online
purchase and fulfillment of document management services.
    
    Production services, including print-on-demand, document assembly, document
finishing, mounting, laminating, binding, and kitting.
    
    Document distribution and logistics, including the physical pick-up, delivery, and
shipping of time-sensitive, critical documents. Documents can be digitally transferred
from one service facility to another to balance production capacity or take advantage
of a distribute and print operating system.
    
    Highly customized large and small format reprographics in color and black and white.
This includes digital reproduction of posters, tradeshow displays, plans, banners,
signage and maps.
    
    Facilities management, including recurring on-site document management services and
staffing at our customers locations.
    
    Sales of reprographics equipment and supplies and licensing of software to other
reprographics companies and end-users in the AEC industry.
    
    The design and development of other document management and reprographics software,
in addition to PlanWell, that supports ordering, tracking, job estimating, and other
customer-specific accounting information for a variety of projects and services. These
proprietary applications include:
 
    
    Electronic Work Order (EWO), which offers our customers access to
the services of all of our service centers through the internet.
    
    MetaPrint Abacus, which provides a suite of software modules for
reprographers and their customers to track documents produced from equipment
installed as a part of a facilities management program.
    
    BidCaster Invitation-to-Bid (ITB), a data management internet
application inside PlanWell Enterprise that issues customizable invitations to
bid from a customers desktop using email and a hosted fax server.
    
    MetaPrint Print Automation and Device Manager, a universal print
driver that facilitates the printing of documents with output devices
manufactured by multiple vendors, and allows the reprographer to print multiple
documents in various formats as a single print submission.
    
    OneView Document Access and Customer Administration System, an
internet-based application that leverages the security attributes of PlanWell to
provide a single point of access to all of a customers project documents inside
PlanWell planrooms, regardless of which of our local production facilities
stores the relevant documents.
    
    Sub-Hub, an internet-based application that notifies subscribers
of upcoming construction jobs in their markets and allows them to view plans
online and order paper copies from a reprographer.
  
    
    License our suite of reprographics technology products, including our flagship
online planroom, PlanWell, to independent reprographers.
    
    Operate PEiR (Profit and Education in Reprographics) 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.
  7




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Customers
   Operations
 Geographic Presence.
 Hub and Satellite Configuration.
 
    
    Central Hub Facilities. In each of our major markets, we operate one or more large
scale full service facilities that have high production capacity and sophisticated
equipment. These larger facilities offer specialized services such as laser digital imaging
on photographic material, large format color printing, and finishing services that may not
be economically viable for smaller facilities to provide. Our central hub facilities also
coordinate our facilities management programs.
    
    Satellite Facilities. To supplement the capabilities of our central hub facilities, we
operate satellite facilities that are typically located closer to our customers than the
central hubs. Our satellite facilities have quick turnaround capabilities, responsive,
localized service, and handle the majority of digital processes.
 Management Systems and Controls.
  Suppliers and Vendors
    8




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##### Table of Contents



Sales and Marketing
 Divisional Sales Force.
 Premier Accounts.
 PEiR Group.
 Competition
  Research and Development
  Proprietary Rights
      9




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Information Technology
    Employees
  Executive Officers of the Registrant
  Name
    
    Age
    
    PositionKumarakulasingam Suriyakumar
    
    
    55
    
    
    Chairman, President and Chief Executive
OfficerJonathan R. Mather
    
    
    58
    
    
    Chief Financial Officer and SecretaryRahul K. Roy
    
    
    49
    
    
    Chief Technology OfficerDilantha Wijesuriya
    
    
    46
    
    
    Senior Vice President-National Operations
 Kumarakulasingam (Suri) Suriyakumar
 Jonathan R. Mather
 Rahul K. Roy
  10




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##### Table of Contents



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.
  The residential and non-residential architectural, engineering and construction industry, or AEC
industry, is in the midst of a downturn. A continuing decline in the residential AEC industry,
and/or a downturn in the non-residential AEC industry, could adversely affect our future revenue
and profitability.
   Covenants in our credit and guaranty agreement could adversely affect our financial condition.
   11




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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.
   The reprographics industry has undergone vast 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.
    12




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If we fail to continue to develop and introduce new services 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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##### Table of Contents



If we are unable to successfully monitor and manage the business operations of our subsidiaries and
divisions, 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 centers, 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.
  
 Item 1B. Unresolved Staff Comments
   15




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##### Table of Contents



Item 2. Properties
  Number ofNumber of
    
    
    Approx.
    
    
    Reprographics
    
    
    Approx.Non-Prod.
    
    
    Square
    
    
    Service
    
    
    SquareRegion
    
    Facilities
    
    
    Footage
    
    
    Centers
    
    
    FootageSouthern California
    
    
    5
    
    
    
    17,700
    
    
    
    51
    
    
    
    392,000Northern California(1)
    
    
    3
    
    
    
    19,500
    
    
    
    35
    
    
    
    268,000Pacific Northwest(2)
    
    
    2
    
    
    
    2,000
    
    
    
    18
    
    
    
    117,000Northeast
    
    
    3
    
    
    
    11,300
    
    
    
    52
    
    
    
    250,000Southern
    
    
    3
    
    
    
    7,200
    
    
    
    96
    
    
    
    400,000Midwest(3)
    
    
    1
    
    
    
    1,800
    
    
    
    43
    
    
    
    344,000International (not including Canada)
    
    
    0
    
    
    
    0
    
    
    
    4
    
    
    
    18,500Total
    
    
    17
    
    
    
    59,500
    
    
    
    299
    
    
    
    1,789,500
 
 (1)
    
    Includes two technology centers in Fremont, California, and one in Kolkata, India.(2)
    
    Includes four service centers in the Vancouver, British Columbia area, and one in Calgary, Alberta.(3)
    
    Includes three service centers in the Toronto, Ontario area.  
 Item 3. Legal Proceedings
  Environmental and Regulatory Considerations
  
 Item 4. Submission of Matters to a Vote of Security Holders
   16




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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
 Market Information
  High
    
    
    LowFiscal Year 2007First Quarter
    
    $
    35.32
    
    
    $
    29.99Second Quarter
    
    
    33.80
    
    
    
    29.07Third Quarter
    
    
    31.50
    
    
    
    18.68Fourth Quarter
    
    
    22.51
    
    
    
    14.33Fiscal Year 2008First Quarter
    
    $
    17.06
    
    
    $
    13.49Second Quarter
    
    
    19.96
    
    
    
    14.65Third Quarter
    
    
    21.83
    
    
    
    14.93Fourth Quarter
    
    
    17.15
    
    
    
    5.36
 Performance Graph
  
  17




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##### Table of Contents



2/05
    
    
    2/05
    
    
    3/05
    
    
    4/05
    
    
    5/05
    
    
    6/05
    
    
    7/05
    
    
    8/05
    
    
    9/05
    
    
    10/05
    
    
    11/05American Reprographics Company
    
    
    100.00
    
    
    
    105.09
    
    
    
    104.36
    
    
    
    102.18
    
    
    
    108.36
    
    
    
    117.02
    
    
    
    129.45
    
    
    
    123.56
    
    
    
    124.36
    
    
    
    122.55
    
    
    
    156.44Russell 2000
    
    
    100.00
    
    
    
    99.54
    
    
    
    96.69
    
    
    
    91.15
    
    
    
    97.12
    
    
    
    100.86
    
    
    
    107.25
    
    
    
    105.26
    
    
    
    105.59
    
    
    
    102.31
    
    
    
    107.28Diversified Commercial & Professional Services
    
    
    100.00
    
    
    
    102.58
    
    
    
    98.35
    
    
    
    91.36
    
    
    
    98.07
    
    
    
    103.73
    
    
    
    109.99
    
    
    
    112.20
    
    
    
    112.57
    
    
    
    103.34
    
    
    
    109.24
 12/05
    
    1/06
    
    
    2/06
    
    
    3/06
    
    
    4/06
    
    
    5/06
    
    
    6/06
    
    
    7/06
    
    
    8/06
    
    
    9/06
    
    
    10/06
    
    
    11/06
    
    
    12/06
    
    
    1/07
    
    
    2/07
    
    
    3/07184.80
    
    
    198.55
    
    
    
    208.73
    
    
    
    252.29
    
    
    
    257.96
    
    
    
    252.15
    
    
    
    263.64
    
    
    
    232.58
    
    
    
    221.96
    
    
    
    233.16
    
    
    
    258.18
    
    
    
    227.35
    
    
    
    242.25
    
    
    
    227.78
    
    
    
    240.80
    
    
    
    223.93106.79
    
    
    116.37
    
    
    
    116.05
    
    
    
    121.68
    
    
    
    121.66
    
    
    
    114.82
    
    
    
    115.56
    
    
    
    111.80
    
    
    
    115.11
    
    
    
    116.07
    
    
    
    122.75
    
    
    
    125.98
    
    
    
    126.41
    
    
    
    128.52
    
    
    
    127.50
    
    
    
    128.87107.66
    
    
    109.53
    
    
    
    112.34
    
    
    
    121.37
    
    
    
    122.89
    
    
    
    115.98
    
    
    
    110.84
    
    
    
    110.58
    
    
    
    112.18
    
    
    
    117.52
    
    
    
    126.66
    
    
    
    121.23
    
    
    
    124.73
    
    
    
    124.86
    
    
    
    121.46
    
    
    
    122.85
 4/07
    
    5/07
    
    
    6/07
    
    
    7/07
    
    
    8/07
    
    
    9/07
    
    
    10/07
    
    
    11/07
    
    
    12/07
    
    
    1/08
    
    
    2/08
    
    
    3/08
    
    
    4/08
    
    
    5/08
    
    
    6/08
    
    
    7/08241.45
    
    
    224.00
    
    
    
    223.93
    
    
    
    181.24
    
    
    
    177.67
    
    
    
    136.15
    
    
    
    147.49
    
    
    
    112.58
    
    
    
    119.85
    
    
    
    113.82
    
    
    
    117.67
    
    
    
    107.93
    
    
    
    115.42
    
    
    
    133.02
    
    
    
    121.09
    
    
    
    116.44131.18
    
    
    136.55
    
    
    
    134.56
    
    
    
    125.35
    
    
    
    128.19
    
    
    
    130.39
    
    
    
    134.14
    
    
    
    124.50
    
    
    
    124.43
    
    
    
    115.94
    
    
    
    111.64
    
    
    
    112.11
    
    
    
    116.80
    
    
    
    122.17
    
    
    
    112.77
    
    
    
    116.94126.48
    
    
    132.66
    
    
    
    132.06
    
    
    
    125.03
    
    
    
    125.43
    
    
    
    124.89
    
    
    
    123.89
    
    
    
    120.17
    
    
    
    118.14
    
    
    
    114.23
    
    
    
    113.21
    
    
    
    115.26
    
    
    
    108.78
    
    
    
    124.63
    
    
    
    106.64
    
    
    
    122.73
 8/08
    
    
    
    9/08
    
    
    
    10/08
    
    
    
    11/08
    
    
    
    12/08128.80
    
    
    
    125.45
    
    
    
    77.38
    
    
    
    56.95
    
    
    
    50.18121.16
    
    
    
    111.51
    
    
    
    88.31
    
    
    
    77.87
    
    
    
    82.39126.00
    
    
    
    114.88
    
    
    
    95.03
    
    
    
    88.83
    
    
    
    95.08
  Holders
  Dividends
  Sales of Unregistered Securities
   18




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Item 6. Selected Financial Data
  Fiscal Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(Dollars in thousands)Statement of Operations Data:Reprographics services
    
    $
    518,062
    
    
    $
    513,630
    
    
    $
    438,375
    
    
    $
    369,123
    
    
    $
    333,305Facilities management
    
    
    120,983
    
    
    
    113,848
    
    
    
    100,158
    
    
    
    83,125
    
    
    
    72,360Equipment and supplies sales
    
    
    61,942
    
    
    
    60,876
    
    
    
    53,305
    
    
    
    41,956
    
    
    
    38,199Total net sales
    
    
    700,987
    
    
    
    688,354
    
    
    
    591,838
    
    
    
    494,204
    
    
    
    443,864Cost of sales
    
    
    415,715
    
    
    
    401,317
    
    
    
    337,509
    
    
    
    289,580
    
    
    
    263,787Gross Profit
    
    
    285,272
    
    
    
    287,037
    
    
    
    254,329
    
    
    
    204,624
    
    
    
    180,077Selling, general and administrative
expenses
    
    
    154,728
    
    
    
    143,811
    
    
    
    131,743
    
    
    
    112,679
    
    
    
    105,780Litigation (gain) reserve
    
    
    
    
    
    
    (2,897
    )
    
    
    11,262
    
    
    
    
    
    
    
    Provision for sales tax dispute settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,389Amortization of intangibles
    
    
    12,004
    
    
    
    9,083
    
    
    
    5,055
    
    
    
    2,120
    
    
    
    1,695Goodwill impairment
    
    
    35,154
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income from operations
    
    
    83,386
    
    
    
    137,040
    
    
    
    106,269
    
    
    
    89,825
    
    
    
    71,213Other (income), net
    
    
    (517
    )
    
    
    
    
    
    
    (299
    )
    
    
    (381
    )
    
    
    (420
    )Interest expense, net
    
    
    25,890
    
    
    
    24,373
    
    
    
    23,192
    
    
    
    26,722
    
    
    
    33,565Loss on early extinguishment of debt
    
    
    
    
    
    
    1,327
    
    
    
    
    
    
    
    9,344
    
    
    
    Income before minority interest and income
tax provision
    
    
    58,013
    
    
    
    111,340
    
    
    
    83,376
    
    
    
    54,140
    
    
    
    38,068Minority interest
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income tax provision (benefit) (1)
    
    
    21,200
    
    
    
    42,203
    
    
    
    31,982
    
    
    
    (6,336
    )
    
    
    8,520Net income
    
    
    36,754
    
    
    
    69,137
    
    
    
    51,394
    
    
    
    60,476
    
    
    
    29,548
 Fiscal Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(In thousands, except per share amounts)Earnings per share:Basic
    
    $
    0.82
    
    
    $
    1.52
    
    
    $
    1.14
    
    
    $
    1.43
    
    
    $
    0.83Diluted
    
    $
    0.81
    
    
    $
    1.51
    
    
    $
    1.13
    
    
    $
    1.40
    
    
    $
    0.79Weighted average
common shares
outstanding:Basic
    
    
    45,060
    
    
    
    45,421
    
    
    
    45,015
    
    
    
    42,264
    
    
    
    35,493Diluted
    
    
    45,398
    
    
    
    45,829
    
    
    
    45,595
    
    
    
    43,178
    
    
    
    37,464
 Fiscal Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(Dollars in thousands)Other Financial Data:Depreciation and amortization
    
    $
    50,121
    
    
    $
    39,445
    
    
    $
    27,749
    
    
    $
    19,165
    
    
    $
    18,730Capital expenditures, net
    
    $
    9,033
    
    
    $
    8,303
    
    
    $
    7,391
    
    
    $
    5,237
    
    
    $
    5,898Interest expense, net
    
    $
    25,890
    
    
    $
    24,373
    
    
    $
    23,192
    
    
    $
    26,722
    
    
    $
    33,565
  19




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##### Table of Contents



As of December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(Dollars in thousands)Balance Sheet Data:Cash and cash equivalents
    
    $
    46,542
    
    
    $
    24,802
    
    
    $
    11,642
    
    
    $
    22,643
    
    
    $
    13,826Total assets
    
    $
    725,931
    
    
    $
    722,611
    
    
    $
    547,581
    
    
    $
    442,362
    
    
    $
    377,334Long term obligations and mandatorily
redeemable preferred and common
stock (2)
    
    $
    301,847
    
    
    $
    321,013
    
    
    $
    252,097
    
    
    $
    253,371
    
    
    $
    338,371Total stockholders equity (deficit)
    
    $
    281,781
    
    
    $
    251,651
    
    
    $
    184,244
    
    
    $
    113,569
    
    
    $
    (35,009
    )Working capital
    
    $
    29,798
    
    
    $
    4,695
    
    
    $
    21,150
    
    
    $
    35,797
    
    
    $
    22,387
 
 (1)
    
    The Company was reorganized from a California limited liability
company to a Delaware corporation immediately prior to the
consummation of its initial public offering on February 9, 2005. As a
result of that reorganization, a deferred tax benefit of $27.7 million
was booked concurrent with the consummation of the IPO.(2)
    
    In July 2003, we adopted SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity. In accordance with SFAS No. 150, the redeemable preferred
equity of Holdings has been reclassified in our financial statements
as a component of our total debt upon our adoption of this new
standard. The redeemable preferred equity amounted to $27.8 million as
of December 31, 2004. SFAS No. 150 does not permit the restatement of
financial statements for periods prior to the adoption of this
standard.  20




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with our consolidated financial
statements and the related notes and other financial information appearing elsewhere in this Annual
Report. This Annual Report contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those indicated in forward-looking
statements. See Forward-Looking Statements and Risk Factors.
 Executive Summary
    
    
    Document management;
    
    Document distribution & logistics;
    
    Print-on-demand; and
    
    On-site services, frequently referred to as facilities management or
FMs, which is any combination of the above services supplied at a
customers location.
        21




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##### Table of Contents



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 as measured by our geographical footprint,
market share and revenue generation;
    
    Continuing to develop and invest in our products, services, and technology to meet
the changing needs of our customers;
    
    Maintaining the lowest cost structure in the industry; 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.
 Net Sales.
         22




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##### Table of Contents



Costs and Expenses.
    Operating Cash.
 Other Common Financial Measures.
 
    
    Net income and earnings per share;
    
    Material costs as a percentage of net sales; and
    
    Days Sales Outstanding/Days Sales Inventory/Days Payable Outstanding.
    Acquisitions.
   23




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##### Table of Contents



1.
    
    Stand-Alone Acquisitions.Post-acquisition, these businesses maintain their existing
local brand 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 are equivalent to our opening a new or green
field branch. They support an outlying portion of a larger market and rely on a larger
centralized production facility nearby for strategic management, load balancing, for
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.
  Economic Factors Affecting Financial Performance.
 Non-GAAP Measures
      24




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##### Table of Contents




    
    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.
    Fiscal Year Ended December 31,2008
    
    
    2007
    
    
    2006Cash flows provided by operating activities
    
    $
    127,266
    
    
    $
    101,386
    
    
    $
    98,354Changes in operating assets and liabilities
    
    
    (4,829
    )
    
    
    13,856
    
    
    
    (10,138
    )Non-cash (expenses) income, including
depreciation and amortization
    
    
    (85,683
    )
    
    
    (46,105
    )
    
    
    (36,822
    )Income tax provision
    
    
    21,200
    
    
    
    42,203
    
    
    
    31,982Interest expense, net
    
    
    25,890
    
    
    
    24,373
    
    
    
    23,192Loss on early extinguishment of debt
    
    
    
    
    
    
    1,327
    
    
    
    EBIT
    
    
    83,844
    
    
    
    137,040
    
    
    
    106,568Depreciation and amortization
    
    
    50,121
    
    
    
    39,445
    
    
    
    27,749EBITDA
    
    
    133,965
    
    
    
    176,485
    
    
    
    134,317Interest expense
    
    
    (25,890
    )
    
    
    (24,373
    )
    
    
    (23,192
    )Loss on early extinguishment of debt
    
    
    
    
    
    
    (1,327
    )
    
    
    Income tax provision
    
    
    (21,200
    )
    
    
    (42,203
    )
    
    
    (31,982
    )Depreciation and amortization
    
    
    (50,121
    )
    
    
    (39,445
    )
    
    
    (27,749
    )Net income
    
    $
    36,754
    
    
    $
    69,137
    
    
    $
    51,394
  25




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##### Table of Contents



Fiscal Year Ended December 31,2008
    
    
    2007
    
    
    2006Net income
    
    $
    36,754
    
    
    $
    69,137
    
    
    $
    51,394Interest expense, net
    
    
    25,890
    
    
    
    24,373
    
    
    
    23,192Loss on early extinguishment of debt
    
    
    
    
    
    
    1,327
    
    
    
    Income tax provision
    
    
    21,200
    
    
    
    42,203
    
    
    
    31,982EBIT
    
    
    83,844
    
    
    
    137,040
    
    
    
    106,568Depreciation and amortization
    
    
    50,121
    
    
    
    39,445
    
    
    
    27,749EBITDA
    
    
    133,965
    
    
    
    176,485
    
    
    
    134,317Special Item:Goodwill impairment
    
    
    35,154
    
    
    
    
    
    
    
    Adjusted EBITDA
    
    $
    169,119
    
    
    $
    176,485
    
    
    $
    134,317
  Fiscal Year Ended December 31,2008 (1)
    
    
    2007 (1)
    
    
    2006Net income margin
    
    
    5.2
    %
    
    
    10.0
    %
    
    
    8.7
    %Interest expense, net
    
    
    3.7
    %
    
    
    3.5
    %
    
    
    3.9
    %Loss on early extinguishment of debt
    
    
    0.0
    %
    
    
    0.2
    %
    
    
    0.0
    %Income tax provision
    
    
    3.0
    %
    
    
    6.1
    %
    
    
    5.4
    %EBIT margin
    
    
    12.0
    %
    
    
    19.9
    %
    
    
    18.0
    %Depreciation and amortization
    
    
    7.2
    %
    
    
    5.7
    %
    
    
    4.7
    %EBITDA margin
    
    
    19.1
    %
    
    
    25.6
    %
    
    
    22.7
    %Goodwill impairment
    
    
    5.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Adjusted EBITDA margin
    
    
    24.1
    %
    
    
    25.6
    %
    
    
    22.7
    %
 
 (1)
    
    column does not foot due to rounding  26




---



##### Table of Contents



Fiscal Year Ended December 31,2008
    
    
    2007
    
    
    2006Net income
    
    $
    36,754
    
    
    $
    69,137
    
    
    $
    51,394Litigation reserve
    
    
    
    
    
    
    (2,897
    )
    
    
    11,262Interest expense due to litigation reserve/settlement
    
    
    
    
    
    
    (418
    )
    
    
    2,685Goodwill impairment
    
    
    35,154
    
    
    
    
    
    
    
    Income tax (benefit) provision
    
    
    (12,932
    )
    
    
    1,260
    
    
    
    (5,579
    )Unaudited adjusted net income
    
    $
    58,976
    
    
    $
    67,082
    
    
    $
    59,762Earning Per Share (Actual):Basic
    
    $
    0.82
    
    
    $
    1.52
    
    
    $
    1.14Diluted
    
    $
    0.81
    
    
    $
    1.51
    
    
    $
    1.13Earning Per Share (Adjusted):Basic
    
    $
    1.31
    
    
    $
    1.48
    
    
    $
    1.33Diluted
    
    $
    1.30
    
    
    $
    1.46
    
    
    $
    1.31Weighted average common shares
outstanding:Basic
    
    
    45,060,482
    
    
    
    45,421,498
    
    
    
    45,014,786Diluted
    
    
    45,398,086
    
    
    
    45,829,010
    
    
    
    45,594,950
  27




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##### Table of Contents



Results of Operations
  As a Percentage of Net SalesFiscal Year Ended December 31,2008 (1)
    
    
    2007 (1)
    
    
    2006 (1)Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    59.3
    
    
    
    58.3
    
    
    
    57.0Gross profit
    
    
    40.7
    
    
    
    41.7
    
    
    
    43.0Selling, general and administrative expenses
    
    
    22.1
    
    
    
    20.9
    
    
    
    22.3Litigation Reserve
    
    
    0.0
    
    
    
    (0.4
    )
    
    
    1.9Amortization of intangibles
    
    
    1.7
    
    
    
    1.3
    
    
    
    0.9Goodwill impairment
    
    
    5.0
    
    
    
    0.0
    
    
    
    0.0Income from operations
    
    
    11.9
    
    
    
    19.9
    
    
    
    18.0Other income, net
    
    
    0.1
    
    
    
    0.0
    
    
    
    0.0Interest expense, net
    
    
    (3.7
    )
    
    
    (3.5
    )
    
    
    (3.9
    )Loss on early extinguishment of debt
    
    
    0.0
    
    
    
    (0.2
    )
    
    
    0.0Income before minority interest and income tax provision
    
    
    8.3
    
    
    
    16.2
    
    
    
    14.1Minority interest
    
    
    (0.0
    )
    
    
    0.0
    
    
    
    0.0Income tax provision
    
    
    (3.0
    )
    
    
    (6.1
    )
    
    
    (5.4
    )Net income
    
    
    5.2
    %
    
    
    10.0
    %
    
    
    8.7
    %
 
 (1)
    
    column does not foot due to rounding Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
 Fiscal Year EndedDecember 31,
    
    
    Increase (decrease)2008
    
    
    2007
    
    
    (In dollars)
    
    
    (Percent)(In millions)Reprographics services
    
    $
    518.1
    
    
    $
    513.6
    
    
    $
    4.5
    
    
    
    0.9
    %Facilities management
    
    
    121.0
    
    
    
    113.8
    
    
    
    7.2
    
    
    
    6.3
    %Equipment and supplies sales
    
    
    61.9
    
    
    
    60.9
    
    
    
    1.0
    
    
    
    1.6
    %Total net sales
    
    $
    701.0
    
    
    $
    688.3
    
    
    $
    12.7
    
    
    
    1.8
    %Gross profit
    
    $
    285.3
    
    
    $
    287.0
    
    
    $
    (1.7
    )
    
    
    (0.6
    )%Selling, general and administrative expenses
    
    $
    154.7
    
    
    $
    143.8
    
    
    $
    10.9
    
    
    
    7.6
    %Litigation reserve
    
    $
    
    
    
    $
    (2.9
    )
    
    $
    2.9
    
    
    
    (100.0
    )%Amortization of intangibles
    
    $
    12.0
    
    
    $
    9.1
    
    
    $
    2.9
    
    
    
    31.9
    %Goodwill impairment
    
    $
    35.2
    
    
    $
    
    
    
    $
    35.2
    
    
    
    100.0
    %Interest expense, net
    
    $
    25.9
    
    
    $
    24.4
    
    
    $
    1.5
    
    
    
    6.1
    %Income taxes provision
    
    $
    21.2
    
    
    $
    42.2
    
    
    $
    (21.0
    )
    
    
    (49.8
    )%Net Income
    
    $
    36.8
    
    
    $
    69.1
    
    
    $
    (32.3
    )
    
    
    (46.7
    )%EBITDA
    
    $
    134.0
    
    
    $
    176.5
    
    
    $
    (42.5
    )
    
    
    (24.1
    )%
 Net Sales
   28




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##### Table of Contents



Reprographics services.
   Facilities management.
 Equipment and supplies sales.
 Gross Profit
    29




---



##### Table of Contents



Selling, General and Administrative Expenses.
    Litigation Reserve.
 Amortization of Intangibles.
 Goodwill
Impairment.
 Other Income.
 Interest Expense.
 Loss on the extinguishment of debt.
  30




---



##### Table of Contents



Minority Interest.
 Income Taxes.
 Net Income.
 EBITDA.
 Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
 Fiscal Year EndedDecember 31,
    
    
    Increase (decrease)2007
    
    
    2006
    
    
    (In dollars)
    
    
    (Percent)(In millions)Reprographics services
    
    $
    513.6
    
    
    $
    438.4
    
    
    $
    75.2
    
    
    
    17.2
    %Facilities management
    
    
    113.8
    
    
    
    100.1
    
    
    
    13.7
    
    
    
    13.7
    %Equipment and supplies sales
    
    
    60.9
    
    
    
    53.3
    
    
    
    7.6
    
    
    
    14.3
    %Total net sales
    
    $
    688.3
    
    
    $
    591.8
    
    
    $
    96.5
    
    
    
    16.3
    %Gross profit
    
    $
    287.0
    
    
    $
    254.3
    
    
    $
    32.7
    
    
    
    12.9
    %Selling,
general and administrative expenses
    
    $
    143.8
    
    
    $
    131.7
    
    
    $
    12.1
    
    
    
    9.2
    %Litigation reserve/(settlement)
    
    $
    (2.9
    )
    
    $
    11.3
    
    
    $
    (14.2
    )
    
    
    (125.7
    )%Amortization of intangibles
    
    $
    9.1
    
    
    $
    5.1
    
    
    $
    4.0
    
    
    
    78.4
    %Interest expense, net
    
    $
    24.4
    
    
    $
    23.2
    
    
    $
    1.2
    
    
    
    5.2
    %Income taxes provision
    
    $
    42.2
    
    
    $
    32.0
    
    
    $
    10.2
    
    
    
    31.9
    %Net Income
    
    $
    69.1
    
    
    $
    51.4
    
    
    $
    17.7
    
    
    
    34.4
    %EBITDA
    
    $
    176.5
    
    
    $
    134.3
    
    
    $
    42.2
    
    
    
    31.4
    %
 Net Sales
  Reprographics services.
   31




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##### Table of Contents



Facilities management.
 Equipment and supplies sales.
 Gross Profit
    Selling, General and Administrative Expenses.
  Amortization of Intangibles.
  32




---



##### Table of Contents



Litigation Reserve.
 Interest Expense.
 Loss on the extinguishment of debt.
 Income Taxes.
 Net Income.
 EBITDA.
 Quarterly Results of Operations
  Quarter EndedMar. 31,
    
    
    June 30,
    
    
    Sept. 30,
    
    
    Dec. 31,
    
    
    Mar. 31,
    
    
    June 30,
    
    
    Sept. 30,
    
    
    Dec. 31,2008
    
    
    2007Reprographics
services
    
    
    142,496
    
    
    
    139,211
    
    
    
    127,455
    
    
    
    108,900
    
    
    
    119,779
    
    
    
    133,257
    
    
    
    131,655
    
    
    
    128,940Facilities
management
    
    
    29,551
    
    
    
    31,209
    
    
    
    30,977
    
    
    
    29,246
    
    
    
    26,356
    
    
    
    28,984
    
    
    
    29,241
    
    
    
    29,267Equipment and
supplies sales
    
    
    15,396
    
    
    
    14,521
    
    
    
    16,153
    
    
    
    15,872
    
    
    
    14,079
    
    
    
    15,542
    
    
    
    15,316
    
    
    
    15,939Total net sales
    
    $
    187,443
    
    
    $
    184,941
    
    
    $
    174,585
    
    
    $
    154,018
    
    
    $
    160,214
    
    
    $
    177,783
    
    
    $
    176,212
    
    
    $
    174,146Quarterly sales as a
% of annual sales
    
    
    26.7
    %
    
    
    26.4
    %
    
    
    24.9
    %
    
    
    22.0
    %
    
    
    23.3
    %
    
    
    25.8
    %
    
    
    25.6
    %
    
    
    25.3
    %Gross profit
    
    $
    79,603
    
    
    $
    79,088
    
    
    $
    70,015
    
    
    $
    56,566
    
    
    $
    67,779
    
    
    $
    74,816
    
    
    $
    72,664
    
    
    $
    71,778Income (loss) from
operations
    
    $
    36,894
    
    
    $
    36,776
    
    
    $
    28,228
    
    
    $
    (18,512
    )
    
    $
    31,800
    
    
    $
    37,866
    
    
    $
    33,066
    
    
    $
    34,310EBITDA
    
    $
    49,213
    
    
    $
    49,035
    
    
    $
    41,136
    
    
    $
    (5,419
    )
    
    $
    40,158
    
    
    $
    47,895
    
    
    $
    43,566
    
    
    $
    44,867Net Income
    
    $
    18,498
    
    
    $
    18,876
    
    
    $
    15,067
    
    
    $
    (15,687
    )
    
    $
    16,844
    
    
    $
    19,612
    
    
    $
    15,945
    
    
    $
    16,737
  33




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##### Table of Contents



Quarter EndedMar. 31,
    
    
    June 30,
    
    
    Sept. 30,
    
    
    Dec. 31,
    
    
    Mar. 31,
    
    
    June 30,
    
    
    Sept. 30,
    
    
    Dec. 31,2008
    
    
    2007EBITDA
    
    $
    49,213
    
    
    $
    49,035
    
    
    $
    41,136
    
    
    $
    (5,419
    )
    
    $
    40,158
    
    
    $
    47,895
    
    
    $
    43,566
    
    
    $
    44,867Interest expense, net
    
    
    (7,146
    )
    
    
    (6,559
    )
    
    
    (6,180
    )
    
    
    (6,004
    )
    
    
    (5,161
    )
    
    
    (6,642
    )
    
    
    (6,872
    )
    
    
    (5,699
    )Loss on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,327
    )Income tax benefit (provision)
    
    
    (11,452
    )
    
    
    (11,384
    )
    
    
    (7,041
    )
    
    
    8,675
    
    
    
    (9,795
    )
    
    
    (11,612
    )
    
    
    (10,249
    )
    
    
    (10,547
    )Depreciation and amortization
    
    
    (12,117
    )
    
    
    (12,216
    )
    
    
    (12,848
    )
    
    
    (12,939
    )
    
    
    (8,358
    )
    
    
    (10,029
    )
    
    
    (10,500
    )
    
    
    (10,557
    )Net income
    
    $
    18,498
    
    
    $
    18,876
    
    
    $
    15,067
    
    
    $
    (15,687
    )
    
    $
    16,844
    
    
    $
    19,612
    
    
    $
    15,945
    
    
    $
    16,737
  Impact of Inflation
  Liquidity and Capital Resources
  Year Ended December 31,2008
    
    
    2007
    
    
    2006Net cash provided by operating activities
    
    $
    127,266
    
    
    $
    101,386
    
    
    $
    98,354Net cash used in investing activities
    
    $
    (30,807
    )
    
    $
    (132,688
    )
    
    $
    (77,488
    )Net cash (used in) provided by financing activities
    
    $
    (74,334
    )
    
    $
    44,353
    
    
    $
    (31,867
    )
 Operating Activities
   34




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##### Table of Contents



Investing Activities
  Financing Activities
   December 31,2008
    
    
    2007
    
    
    2006Cash and cash equivalents
    
    $
    46,542
    
    
    $
    24,802
    
    
    $
    11,642Working capital
    
    $
    29,798
    
    
    $
    4,695
    
    
    $
    21,150Borrowings from senior secured credit facilities
    
    $
    261,250
    
    
    $
    297,000
    
    
    $
    215,651Other debt obligations
    
    
    99,790
    
    
    
    93,267
    
    
    
    57,494Total debt obligations
    
    $
    361,040
    
    
    $
    390,267
    
    
    $
    273,145
  35




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36




---



##### Table of Contents



Debt Obligations
 Senior Secured Credit Facilities.
       As of December 31, 2008
    
    
    As of December 31, 2007Available
    
    
    
    
    
    
    
    
    
    
    AvailableBorrowing
    
    
    Interest
    
    
    
    
    
    
    Borrowing
    
    
    InterestBalance
    
    
    Capacity
    
    
    Rate
    
    
    Balance
    
    
    Capacity
    
    
    Rate(Dollars in thousands)Term facility
    
    $
    261,250
    
    
    $
    
    
    
    
    5.39
    %
    
    $
    275,000
    
    
    $
    67,998
    
    
    
    6.93
    %Revolving facility
    
    
    
    
    
    
    70,996
    
    
    
    
    
    
    
    22,000
    
    
    
    48,222
    
    
    
    7.00
    %$
    261,250
    
    
    $
    70,996
    
    
    
    
    
    
    $
    297,000
    
    
    $
    116,220
   37




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##### Table of Contents



Seller Notes.
 Off-Balance Sheet Arrangements
  Contractual Obligations and Other Commitments
  Years Ending December 31,2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter(Dollars in thousands)Debt obligations
    
    $
    34,504
    
    
    $
    68,050
    
    
    $
    76,501
    
    
    $
    117,571
    
    
    $
    
    
    
    $
    Capital lease obligations
    
    
    24,689
    
    
    
    19,609
    
    
    
    11,580
    
    
    
    5,973
    
    
    
    2,374
    
    
    
    189Interest on long-term debt
    
    
    21,182
    
    
    
    16,631
    
    
    
    11,033
    
    
    
    4,772
    
    
    
    208
    
    
    
    24Operating leases
    
    
    31,273
    
    
    
    23,888
    
    
    
    17,176
    
    
    
    10,944
    
    
    
    6,881
    
    
    
    14,285FIN 48 liability (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    111,648
    
    
    $
    128,178
    
    
    $
    116,290
    
    
    $
    139,260
    
    
    $
    9,463
    
    
    $
    14,498
 
 (1)
    
    FIN 48 Liability.As a result of the adoption of FIN 48 we have a
$1.1 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 7  Income Taxes to our
consolidated financial statements included in this report for
additional discussion). Operating Leases.
 Contingent Transaction Consideration.
 Critical Accounting Policies
  Impairment of Long-Lived Assets
   38




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Goodwill and Other Intangible Assets
        39




---



##### Table of Contents



Revenue Recognition
    Allowance for Doubtful Accounts
  Commitments and Contingencies
  Stock-Based Compensation
    40




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##### Table of Contents



Recent Accounting Pronouncements
 Fair Value Measurements.
 Application of FASB
Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair
Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 Accounting for
Leases
 Effective Date of FASB
Statement No. 157
 Determining the Fair Value
of a Financial Asset When the Market for That Asset Is Not Active
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an Amendment of ARB No. 51
  41




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##### Table of Contents



Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities
 Determination of the Useful
Life of Intangible Asset Goodwill and Other Intangible Assets
 The Hierarchy of Generally Accepted Accounting
Principles The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles.
 Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities. Earnings per Share.
 
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk
      
 Item 8. Financial Statements and Supplementary Data
   42




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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
  
 Item 9B. Other Information
   43




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  
 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 Accounting Fees and Services
   44




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##### Table of Contents



PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
  Financial Statements
         Financial Statement Schedule
     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
    
    
    Amended and Restated Bylaws, adopted by Board January 28,
2005 (incorporated by reference to Exhibit 3.2 to the
Registrants Form 10-K filed on March 31, 2005).4.1
    
    
    Specimen Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Registrants Registration Statement on
Form S-1 A (Reg. No. 333-119788), as amended on January 13,
2005).10.1
    
    
    Second Amended and Restated Credit and Guaranty Agreement
dated as of December 21, 2005 by and among American
Reprographics Company; American Reprographics Company,
L.L.C., American Reprographics Holdings, L.L.C., certain
subsidiaries of American Reprographics Company, L.L.C., or
guarantors, and the lenders named therein (incorporated by
reference to Exhibit 10.1 of the Form 8-K filed on
December 21, 2005).
  45




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##### Table of Contents



Number
    
    Description10.2
    
    
    First Amendment to Second Amended and Restated Credit and
Guaranty Agreement dated effective as of July 17, 2006, by
and among American Reprographics Company L.L.C., a California
limited liability company, American Reprographics Company, a
Delaware corporation, certain financial institutions listed
in the signature pages thereto, Goldman Sachs Credit Partners
L.P., as Sole Lead Arranger and Joint Bookrunner, JPMorgan
Securities, Inc., as Joint Bookrunner, General Electric
Capital Corporation, as Administrative Agent and as
Collateral Agent and the Credit Support Parties listed on the
signature pages thereto (incorporated by reference to
Exhibit 10.1 of the Form 10-Q filed on August 14, 2006).10.3
    
    
    Second Amendment to Second Amended and Restated Credit and
Guaranty Agreement dated as of April 27, 2007 by and among
American Reprographics Company; American Reprographics
Company, L.L.C.; American Reprographics Holdings, L.L.C.;
certain subsidiaries of American Reprographics Company,
L.L.C., or guarantors, the lenders named therein, Goldman
Sachs Credit Partners L.P., as sole lead arranger, sole
bookrunner and sole syndication agent, and General Electric
Capital Corporation, as administrative agent (incorporated by
reference to Exhibit 10.1 to the Form 8-K filed on May 2,
2007).10.4
    
    
    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).10.5
    
    
    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).10.6
    
    
    Amendment No. 1 to American Reprographics Company 2005 Stock
Plan dated May 22, 2007 (incorporated by reference to
Exhibit 10.63 to the Form 10-Q filed on August 9, 2007).10.7
    
    
    Amendment No. 2 to American Reprographics Company 2005 Stock
Plan dated May 2, 2008 (incorporated by reference to Exhibit
10.3 to the Form 10-Q filed August 8, 2008). 10.8
    
    
    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 Form 8-K filed on December 16, 2005).10.9
    
    
    Form of American Reprographics Company Non-employee
Directors  Stock Option Agreement (Discretionary Grants)
(incorporated by reference to Exhibit 10.2 to the Form 8-K
filed on December 16, 2005).10.10
    
    
    American Reprographics Company 2005 Employee Stock Purchase
Plan (incorporated by reference to Exhibit 10.9 to the
Registrants Registration Statement on Form S-1 (Reg.
No. 333-119788), as filed on October 15, 2004).10.11
    
    
    Amendment to American Reprographics Company 2005 Employee
Stock Purchase Plan dated September 29, 2006 (incorporated by
reference to Exhibit 10.13 to the Form 10-K filed on March 1,
2007).10.12
    
    
    Amendment No. 2 to American Reprographics Company 2005
Employee Stock Purchase Plan dated May 2, 2008 (incorporated
by reference to Exhibit 10.3 to the Form 10-Q filed on
August 8, 2008).10.13
    
    
    Lease Agreement, dated November 19, 1997, 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 Form 10-Q filed on
November 14, 2005).10.15
    
    
    Lease Agreement 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).
  46




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##### Table of Contents



Number
    
    Description10.16
    
    
    Lease Agreement 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).10.17
    
    
    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 Form 10-Q filed on
November 14, 2005).10.18
    
    
    Lease Agreement, 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).10.19
    
    
    Lease Agreement 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).10.20
    
    
    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 Form 10-Q filed on
November 14, 2005).10.21
    
    
    Lease Agreement, dated December 7, 1995, 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).10.22
    
    
    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 Form 10-Q filed on
November 14, 2005).10.23
    
    
    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 Form 10-K filed on March 1,
2007).10.24
    
    
    Lease Agreement, dated September 23, 2003, 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).10.25
    
    
    Lease agreement dated November 19, 1997, between
Dieterich-Post Company and Ford Graphics Group, L.L.C.
(incorporated by reference to Exhibit 10.26 to the Form 10-K
filed on March 1, 2007).10.26
    
    
    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).10.27
    
    
    Investor Registration Rights Agreement, dated April 10, 2000,
among American Reprographics Holdings, L.L.C., ARC
Acquisition Co., L.L.C., Mr. Chandramohan, Mr. Suriyakumar,
GS Mezzanine Partners II, L.P. and GS Mezzanine Partners II
Offshore, L.P. (incorporated by reference to Exhibit 10.20 to
the Registrants Registration Statement on Form S-1 (Reg.
No. 333-119788), as filed on October 15, 2004).
  47




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Number
    
    Description10.28
    
    
    First Amendment to Investor Registration Rights Agreement,
among American Reprographics Holdings, L.L.C., American
Reprographics Company, ARC Acquisition Co., L.L.C., CHS
Associates IV, Ms. Paige Walsh, Mr. Chandramohan,
Mr. Suriyakumar, GS Mezzanine Partners II, L.P., GS Mezzanine
Partners II Offshore, L.P., Stone Street Fund 2000, L.P. and
Bridge Street Special Opportunities Fund, 2000, L.P.
(incorporated by reference to Exhibit 10.21 to the
Registrants Registration Statement on Form S-1 A (Reg.
No. 333-119788), as amended on January 13, 2005).10.29
    
    
    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).10.30
    
    
    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).10.31
    
    
    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).10.32
    
    
    Employment Agreement, dated January 7, 2005, between American
Reprographics Company and Mr. Sathiyamurthy Chandramohan
(incorporated by reference to Exhibit 10.30 to the
Registrants Registration Statement on Form S-1 A (Reg.
No. 333-119788), as amended on January 13, 2005).10.33
    
    
    First Amendment to Employment Agreement between American
Reprographics Company and Mr. Sathiyamurthy Chandramohan,
effective November 18, 2005 (incorporated by reference to
Exhibit 10.36 to the Registrants Form 10-K filed on
March 16, 2006).10.34
    
    
    Second Amendment to Employment Agreement between American
Reprographics Company and Mr. Sathiyamurthy Chandramohan,
effective March 17, 2006 (incorporated by reference to
Exhibit 99.1 to the Registrants Form 8-K filed on March 23,
2006).10.35
    
    
    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 Registrants Form 8-K filed on March 30,
2007).10.36
    
    
    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).10.37
    
    
    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).10.38
    
    
    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).10.39
    
    
    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).10.40
    
    
    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 Registrants Form 8-K filed on March 30,
2007).10.41
    
    
    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).10.42
    
    
    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).
  48




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Number
    
    Description10.43
    
    
    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 Form 10-Q filed on August 8, 2008).10.44
    
    
    Agreement to Grant Stock dated effective December 7, 2004,
between American Reprographics Company and Rahul K. Roy
(incorporated by reference to Exhibit 10.36 to the
Registrants Form 10-K filed on March 31, 2005).10.45
    
    
    First Amendment to Agreement to Grant Stock dated May 17,
2006 between American Reprographics Company and Rahul K. Roy
(incorporated by reference to Exhibit 10.48 to the
Registrants Form 10-K filed on March 1, 2007).10.46
    
    
    Executive Employment Agreement between American Reprographics
Company and Jonathan Mather dated November 29, 2006
(incorporated by reference to Exhibit 99.2 to the Form 8-K
filed on November 30, 2006).10.47
    
    
    First Amendment to Executive Employment Agreement between
American Reprographics Company and Mr. Jonathan Mather,
effective April 17, 2008 (incorporated by reference to
Exhibit 10.1 to the Registrants Form 10-Q filed on August 8,
2008).10.48
    
    
    Restricted Stock Award Grant Notice between American
Reprographics Company and 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). 10.49
    
    
    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). 10.50
    
    
    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).10.51
    
    
    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).10.52
    
    
    Indemnification Agreement made as of September 30, 2004
between American Reprographics Company and Sathiyamurthy
Chandramohan (incorporated by reference to Exhibit 10.37 to
the Registrants Form 10-K filed on March 31, 2005).10.53
    
    
    Indemnification Agreement made as of September 30, 2004
between American Reprographics Company and Andrew W. Code
(incorporated by reference to Exhibit 10.38 to the
Registrants Form 10-K filed on March 31, 2005).10.54
    
    
    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).10.55
    
    
    Indemnification Agreement made as of October 7, 2004 between American Reprographics
Company and Mark W. Legg (incorporated by reference to Exhibit 10.40 to the
Registrants Form 10-K filed on March 31, 2005).10.56
    
    
    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).10.57
    
    
    Indemnification Agreement made as of January 11, 2005 between American Reprographics
Company and Edward D. Horowitz (incorporated by reference to Exhibit 10.42 to the
Registrants Form 10-K filed on March 31, 2005).10.58
    
    
    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).10.59
    
    
    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).
  49




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Number
    
    Description10.60
    
    
    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).10.61
    
    
    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).10.62
    
    
    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
Form 10-K filed on March 1, 2007).10.63
    
    
    Consulting Agreement dated February 28, 2007 between American Reprographics Company,
L.L.C. and Legg Consulting L.L.C. (incorporated by reference to Exhibit 10.62 to the
Form 10-K filed on March 1, 2007).10.64
    
    
    Consulting Agreement between Sathiyamurthy Chandramohan and American Reprographics
Company, dated July 24, 2008 (incorporated by reference to Exhibit 10.4 to the
Form 10-Q filed on August 8, 2008). 10.65
    
    
    Credit and Guaranty Agreement dated as of December 6, 2007 by and among American
Reprographics Company, American Reprographics Company, L.L.C., certain subsidiaries
of American Reprographics Company, L.L.C., as guarantor, JPMorgan Chase Bank, N.A.,
as administrative agent and collateral agents, J.P. Morgan Securities, Inc. and
Wachovia Capital Markets, LLC, as joint bookrunners and joint lead arrangers, and
Wachovia Bank, National
Association, as syndication agent (incorporated by reference to Exhibit 10.1 to
Registrants Form 8-K filed on December 7, 2007).10.66
    
    
    Security Agreement dated as of December 6, 2007 by and among American Reprographics
Company, American Reprographics Company, L.L.C., the other Grantors party thereto and
JPMorgan Chase Bank, N.A. as collateral agent (incorporated by reference to
Exhibit 10.58 to the Form 10-K filed on February 27, 2008).10.67
    
    
    ISDA Master Agreement dated as of December 19, 2007 by and among American
Reprographics Company, American Reprographics Company, L.L.C., and Wells Fargo Bank
N.A. (incorporated by reference to Exhibit 10.1 to Registrants Form 8-K filed on
December 26, 2007).10.68
    
    
    2007 Bonus Plan, dated February 20, 2007, between American Reprographics Company and
Jonathan Mather (incorporated by reference to Exhibit 10.60 to the Form 10-K filed on
February 27, 2008).10.69
    
    
    Second Amendment to Executive Employment Agreement between American Reprographics
Company and Mr. Rahul K. Roy, effective December 22, 2008. *21.1
    
    
    List of Subsidiaries.*23.1
    
    
    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  50




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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 (Principal
Executive Officer)
    
    February 27, 2009/s/ JONATHAN R. MATHER

Jonathan R. Mather
    
    Chief Financial
Officer and
Secretary
(Principal
Financial Officer
and Principal
Accounting Officer)
    
    February 27, 2009/s/ THOMAS J. FORMOLO

Thomas J. Formolo
    
    Director
    
    February 27, 2009/s/ ERIBERTO SCOCIMARA

Eriberto Scocimara
    
    Director
    
    February 27, 2009/s/ DEWITT KERRY MCCLUGGAGE

Dewitt Kerry McCluggage
    
    Director
    
    February 27, 2009/s/ MARK W. MEALY

Mark W. Mealy
    
    Director
    
    February 27, 2009/s/ MANUEL PEREZ DE LA MESA

Manuel Perez de la Mesa
    
    Director
    
    February 27, 2009
  51




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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Managements Report on Internal Controls Over Financial Reporting
    
    
    F-2Report of Independent Registered Public Accounting Firm
    
    
    F-3Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    F-4Consolidated Statements of Income for the years ended December 31, 2008, 2007 and 2006
    
    
    F-5Consolidated Statements of Stockholders Equity and Comprehensive Income for the years
ended December 31, 2008, 2007 and 2006
    
    
    F-6Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8Financial Statement Schedule:Schedule II
 Valuation and Qualifying Accounts
    
    
    F-29
  F-1




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##### Table of Contents



STATEMENT OF MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS
   MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 Internal Control  Integrated Framework Internal Control  Integrated Framework
   F-2




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal Control  Integrated Framework
       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 31,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    46,542
    
    
    $
    24,802Restricted cash
    
    
    
    
    
    
    937Accounts receivable, net of allowances for accounts receivable
of $5,424
and $5,092 at December 31, 2008 and December 31, 2007,
respectively
    
    
    77,216
    
    
    
    97,934Inventories, net
    
    
    11,097
    
    
    
    11,233Deferred income taxes
    
    
    5,831
    
    
    
    5,791Prepaid expenses and other current assets
    
    
    11,976
    
    
    
    10,234Total current assets
    
    
    152,662
    
    
    
    150,931Property and equipment, net
    
    
    89,712
    
    
    
    84,634Goodwill
    
    
    366,513
    
    
    
    382,519Other intangible assets, net
    
    
    85,967
    
    
    
    86,349Deferred financing costs, net
    
    
    3,537
    
    
    
    5,170Deferred income taxes
    
    
    25,404
    
    
    
    10,710Other assets
    
    
    2,136
    
    
    
    2,298Total assets
    
    $
    725,931
    
    
    $
    722,611Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    25,171
    
    
    $
    35,659Accrued payroll and payroll-related expenses
    
    
    13,587
    
    
    
    19,293Accrued expenses
    
    
    24,913
    
    
    
    22,030Current portion of long-term debt and capital leases
    
    
    59,193
    
    
    
    69,254Total current liabilities
    
    
    122,864
    
    
    
    146,236Long-term debt and capital leases
    
    
    301,847
    
    
    
    321,013Other long-term liabilities
    
    
    13,318
    
    
    
    3,711Minority interest (Note 3)
    
    
    6,121
    
    
    
    Total liabilities
    
    
    444,150
    
    
    
    470,960Commitments and contingencies (Note 8)Stockholders equity:Preferred stock, $0.001 par value, 25,000,000 shares authorized;
zero and zero shares issued and outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value, 150,000,000 shares authorized;
45,674,810 and 45,561,773 shares issued and 45,227,156 and
45,114,119 shares outstanding in 2008 and 2007, respectively
    
    
    46
    
    
    
    46Additional paid-in capital
    
    
    85,207
    
    
    
    81,153Deferred stock-based compensation
    
    
    (195
    )
    
    
    (673
    )Retained earnings
    
    
    215,846
    
    
    
    179,092Accumulated
other comprehensive (loss) income
    
    
    (11,414
    )
    
    
    (258
    )289,490
    
    
    
    259,360Less cost of common stock in treasury, 447,654 shares in 2008
and 2007
    
    
    7,709
    
    
    
    7,709Total stockholders equity
    
    
    281,781
    
    
    
    251,651Total liabilities and stockholders equity
    
    $
    725,931
    
    
    $
    722,611
   F-4




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##### Table of Contents



AMERICAN REPROGRAPHICS COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 (Dollars in thousands, except per share data)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Reprographics services
    
    $
    518,062
    
    
    $
    513,630
    
    
    $
    438,375Facilities management
    
    
    120,983
    
    
    
    113,848
    
    
    
    100,158Equipment and supplies sales
    
    
    61,942
    
    
    
    60,876
    
    
    
    53,305Total net sales
    
    
    700,987
    
    
    
    688,354
    
    
    
    591,838Cost of sales
    
    
    415,715
    
    
    
    401,317
    
    
    
    337,509Gross profit
    
    
    285,272
    
    
    
    287,037
    
    
    
    254,329Selling, general and administrative expenses
    
    
    154,728
    
    
    
    143,811
    
    
    
    131,743Litigation (gain) reserve
    
    
    
    
    
    
    (2,897
    )
    
    
    11,262Amortization of intangible assets
    
    
    12,004
    
    
    
    9,083
    
    
    
    5,055Goodwill impairment
    
    
    35,154
    
    
    
    
    
    
    
    Income from operations
    
    
    83,386
    
    
    
    137,040
    
    
    
    106,269Other income, net
    
    
    (517
    )
    
    
    
    
    
    
    (299
    )Interest expense, net
    
    
    25,890
    
    
    
    24,373
    
    
    
    23,192Loss on early extinguishment of debt
    
    
    
    
    
    
    1,327
    
    
    
    Income before minority interest and income
tax provision
    
    
    58,013
    
    
    
    111,340
    
    
    
    83,376Minority interest
    
    
    59
    
    
    
    
    
    
    
    Income tax provision
    
    
    21,200
    
    
    
    42,203
    
    
    
    31,982Net income
    
    
    36,754
    
    
    
    69,137
    
    
    
    51,394Net income attributable to common shares:Basic
    
    $
    0.82
    
    
    $
    1.52
    
    
    $
    1.14Diluted
    
    $
    0.81
    
    
    $
    1.51
    
    
    $
    1.13Weighted average common shares outstanding:Basic
    
    
    45,060,482
    
    
    
    45,421,498
    
    
    
    45,014,786Diluted
    
    
    45,398,086
    
    
    
    45,829,010
    
    
    
    45,594,950
   F-5




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##### Table of Contents



AMERICAN REPROGRAPHICS COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
 (Dollars in thousands, except per share data)
 AccumulatedCommon Stock
    
    
    Additional
    
    
    
    
    
    
    
    
    Other
    
    
    Common
    
    
    TotalMembers
    
    
    
    
    
    
    Par
    
    
    Paid-In
    
    
    Deferred
    
    
    Retained
    
    
    Comprehensive
    
    
    Stock in
    
    
    StockholdersDeficit
    
    
    Shares
    
    
    Value
    
    
    Capital
    
    
    Compensation
    
    
    Earnings
    
    

(Loss)
Income
    
    
    Treasury
    
    
    Equity(Dollars in thousands)Balance at December 31, 2005
    
    
    
    
    
    
    44,598,815
    
    
    
    44
    
    
    
    56,825
    
    
    
    (1,903
    )
    
    
    58,561
    
    
    
    42
    
    
    
    
    
    
    
    113,569Stock-based compensation
    
    
    
    
    
    
    28,253
    
    
    
    
    
    
    
    1,536
    
    
    
    679
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,215Issuance of common stock under Employee Stock
Purchase Plan
    
    
    
    
    
    
    9,032
    
    
    
    
    
    
    
    290
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    290Issuance of common stock in connection with
accrued bonuses
    
    
    
    
    
    
    80,652
    
    
    
    
    
    
    
    2,160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,160Issuance of common stock in connection with
acquisitions
    
    
    
    
    
    
    246,277
    
    
    
    
    
    
    
    8,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,500Stock options exercised
    
    
    
    
    
    
    383,070
    
    
    
    1
    
    
    
    2,103
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,104Net Tax benefit from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,051
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,051Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,394
    
    
    
    
    
    
    
    
    
    
    
    51,394Foreign Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    62Fair value adjustment of
derivatives, net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (101
    )
    
    
    
    
    
    
    (101
    )51,355Balance at December 31, 2006
    
    
    
    
    
    
    45,346,099
    
    
    
    45
    
    
    
    75,465
    
    
    
    (1,224
    )
    
    
    109,955
    
    
    
    3
    
    
    
    
    
    
    
    184,244Stock-based compensation
    
    
    
    
    
    
    41,524
    
    
    
    
    
    
    
    2,917
    
    
    
    551
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,468Issuance of common stock under Employee Stock
Purchase Plan
    
    
    
    
    
    
    4,600
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Stock options exercised
    
    
    
    
    
    
    169,550
    
    
    
    1
    
    
    
    1,108
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,109Net Tax benefit from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,563
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,563Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,137
    
    
    
    
    
    
    
    
    
    
    
    69,137Foreign Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    676
    
    
    
    
    
    
    
    676Fair value adjustment of
derivatives, net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (937
    )
    
    
    
    
    
    
    (937
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,876Purchase of treasury shares
    
    
    
    
    
    
    (447,654
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,709
    )
    
    
    (7,709
    )Balance 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 exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,754
    
    
    
    
    
    
    
    
    
    
    
    36,754Foreign Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,989
    )
    
    
    
    
    
    
    (1,989
    )Fair value adjustment of
derivatives, net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,167
    )
    
    
    
    
    
    
    (9,167
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,598Balance at December 31, 2008
    
    $
    
    
    
    
    45,227,156
    
    
    $
    46
    
    
    $
    85,207
    
    
    $
    (195
    )
    
    $
    215,846
    
    
    $
    (11,414
    )
    
    $
    (7,709
    )
    
    $
    281,781
   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 31,2008
    
    
    2007
    
    
    2006Cash flows from operating activitiesNet income
    
    $
    36,754
    
    
    $
    69,137
    
    
    $
    51,394Adjustments to reconcile net income to net cash provided by operating activities:Allowance for accounts receivable
    
    
    4,966
    
    
    
    1,315
    
    
    
    599Depreciation
    
    
    38,117
    
    
    
    30,362
    
    
    
    22,694Amortization of intangible assets
    
    
    12,004
    
    
    
    9,083
    
    
    
    5,055Amortization of deferred financing costs
    
    
    1,267
    
    
    
    515
    
    
    
    364Goodwill impairment
    
    
    35,154
    
    
    
    
    
    
    
    Minority interest
    
    
    59
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    4,289
    
    
    
    3,469
    
    
    
    2,215Excess tax benefit related to stock options exercised
    
    
    (30
    )
    
    
    (1,563
    )
    
    
    (4,051
    )Deferred income taxes
    
    
    (10,172
    )
    
    
    5,318
    
    
    
    (3,934
    )Write-off of deferred financing costs
    
    
    313
    
    
    
    1,327
    
    
    
    208Litigation charge (gain)
    
    
    
    
    
    
    (3,315
    )
    
    
    13,947Other noncash items, net
    
    
    (284
    )
    
    
    (406
    )
    
    
    (275
    )Changes in operating assets and liabilities, net of effect of business acquisitions:Accounts receivable
    
    
    21,556
    
    
    
    (446
    )
    
    
    (5,769
    )Inventory
    
    
    3,134
    
    
    
    694
    
    
    
    949Prepaid expenses and other assets
    
    
    (1,101
    )
    
    
    44
    
    
    
    (5
    )Litigation settlement payment
    
    
    
    
    
    
    (10,500
    )
    
    
    Accounts payable and accrued expenses
    
    
    (18,760
    )
    
    
    (3,648
    )
    
    
    14,963Net cash provided by operating activities
    
    
    127,266
    
    
    
    101,386
    
    
    
    98,354Cash flows from investing activitiesCapital expenditures
    
    
    (9,033
    )
    
    
    (8,303
    )
    
    
    (7,391
    )Payments for businesses acquired, net of cash acquired
and including other cash payments associated with
the acquisitions
    
    
    (23,916
    )
    
    
    (132,739
    )
    
    
    (62,225
    )Restricted cash
    
    
    937
    
    
    
    7,911
    
    
    
    (8,360
    )Other
    
    
    1,205
    
    
    
    443
    
    
    
    488Net cash used in investing activities
    
    
    (30,807
    )
    
    
    (132,688
    )
    
    
    (77,488
    )Cash flows from financing activitiesProceeds from stock option exercises
    
    
    177
    
    
    
    1,108
    
    
    
    2,103Proceeds from issuance of common stock under Employee Stock Purchase Plan
    
    
    35
    
    
    
    100
    
    
    
    290Treasury stock repurchase
    
    
    
    
    
    
    (7,709
    )
    
    
    Excess tax benefit related to stock options exercised
    
    
    30
    
    
    
    1,563
    
    
    
    4,051Proceeds from borrowings under long-term debt agreements
    
    
    
    
    
    
    325,000
    
    
    
    30,000Payments on long-term debt agreements and capital leases
    
    
    (51,850
    )
    
    
    (292,685
    )
    
    
    (62,767
    )Net borrowings (repayments) under revolving credit facility
    
    
    (22,000
    )
    
    
    22,000
    
    
    
    (5,000
    )Payment of loan fees
    
    
    (726
    )
    
    
    (5,024
    )
    
    
    (544
    )Net cash (used in) provided by financing activities
    
    
    (74,334
    )
    
    
    44,353
    
    
    
    (31,867
    )Effect of foreign currency translation on cash balances
    
    
    (385
    )
    
    
    109
    
    
    
    Net change in cash and cash equivalents
    
    
    21,740
    
    
    
    13,160
    
    
    
    (11,001
    )Cash and cash equivalents at beginning of period
    
    
    24,802
    
    
    
    11,642
    
    
    
    22,643Cash and cash equivalents at end of period
    
    $
    46,542
    
    
    $
    24,802
    
    
    $
    11,642Supplemental disclosure of cash flow informationCash paid for:Interest
    
    $
    26,111
    
    
    $
    27,728
    
    
    $
    19,581Income taxes
    
    $
    33,939
    
    
    $
    41,840
    
    
    $
    22,571Noncash investing and financing activities:Capital lease obligations incurred
    
    $
    34,561
    
    
    $
    35,263
    
    
    $
    22,477Issuance of subordinated notes in connection with the
acquisition of businesses
    
    $
    10,414
    
    
    $
    23,758
    
    
    $
    13,086Accrued liabilities in connection with the acquisition of businesses
    
    $
    100
    
    
    $
    570
    
    
    $
    4,300Accrued liabilities in connection with deferred financing fees
    
    $
    
    
    
    $
    663
    
    
    $
    Stock issued for acquisition
    
    $
    
    
    
    $
    
    
    
    $
    8,500Change in fair value of derivative, net of tax effects
    
    $
    (9,167
    )
    
    $
    (937
    )
    
    $
    (101
    )Issuance of common stock in connection with settlement of accrued bonuses
    
    $
    
    
    
    $
    
    
    
    $
    2,160Contribution from minority owner
    
    $
    6,062
    
    
    $
    
    
    
    $
    
   F-7




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##### 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
  Reclassifications
and Revision
  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Cash Equivalents
    F-8




---



##### Table of Contents



Restricted Cash
  Concentrations of Credit Risk and Significant Vendors
      Inventories
  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
   F-9




---



##### Table of Contents



98-1 (SOP 98-1),
  Impairment of Long-Lived Assets
   Goodwill and Other Intangible Assets
     F-10




---



##### Table of Contents



2008
    
    
    2007Beginning balance at January 1
    
    $
    382,519
    
    
    $
    291,290Additions
    
    
    20,004
    
    
    
    90,790Goodwill impairment
    
    
    (35,154
    )
    
    
    Translation adjustment
    
    
    (856
    )
    
    
    439Ending balance at December 31
    
    $
    366,513
    
    
    $
    382,519
    December 31, 2008
    
    
    December 31, 2007Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    Amount(Dollars in thousands)
    
    
    (Dollars in thousands)Amortizable other intangible assets:Customer relationships
    
    $
    96,574
    
    
    $
    29,233
    
    
    $
    67,341
    
    
    $
    87,045
    
    
    $
    19,098
    
    
    $
    67,947Trade names and trademarks
    
    
    20,359
    
    
    
    2,126
    
    
    
    18,233
    
    
    
    18,359
    
    
    
    848
    
    
    
    17,511Non-Compete Agreements
    
    
    1,278
    
    
    
    885
    
    
    
    393
    
    
    
    1,278
    
    
    
    387
    
    
    
    891$
    118,211
    
    
    $
    32,244
    
    
    $
    85,967
    
    
    $
    106,682
    
    
    $
    20,333
    
    
    $
    86,349
  F-11




---



##### Table of Contents



2009
    
    $
    11,3612010
    
    
    10,1322011
    
    
    9,1782012
    
    
    8,2752013
    
    
    7,370Thereafter
    
    
    39,651$
    85,967
 Deferred Financing Costs
   Derivative Financial Instruments
       F-12




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##### Table of Contents



Fair Values of Financial Instruments
  Cash and cash equivalents:
 Restricted Cash:
 Short- and long-term debt:
 Interest rate hedge agreements:
 Self-Insurance Liability
  Revenue Recognition
        F-13




---



##### Table of Contents



Comprehensive Income
  Year EndedDecember 31,2008
    
    
    2007Net income
    
    $
    36,754
    
    
    $
    69,137Foreign currency translation adjustments
    
    
    (1,989
    )
    
    
    676Decrease in fair value of financial derivative
instruments, net of tax effects
    
    
    (9,167
    )
    
    
    (937
    )Comprehensive income
    
    $
    25,598
    
    
    $
    68,876
  Segment and Geographic Reporting
   Advertising and Shipping and Handling Costs
  Income Taxes
   F-14




---



##### Table of Contents



Stock-Based Compensation
    Year EndedDecember 31,2008
    
    
    2007Weighted average assumptions used:Risk free interest rate
    
    
    2.79
    %
    
    
    4.51
    %Expected volatility
    
    
    32.70
    %
    
    
    25.28
    %Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
     F-15




---



##### Table of Contents



Research and Development Expenses
  Use of Estimates
  Sales Taxes
  Earnings Per Share
   Year Ended December 31,2008
    
    
    2007
    
    
    2006Weighted average common shares
outstanding during the period 
basic
    
    
    45,060,482
    
    
    
    45,421,498
    
    
    
    45,014,786Effect of dilutive stock options
    
    
    337,604
    
    
    
    407,512
    
    
    
    580,164Weighted average common shares
outstanding during the period 
diluted
    
    
    45,398,086
    
    
    
    45,829,010
    
    
    
    45,594,950
 Recent Accounting Pronouncements
 Fair Value Measurements.
 Application of FASB
Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair
Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 Accounting for
Leases
  F-16




---



##### Table of Contents



Effective Date of FASB
Statement No. 157
 Determining the Fair Value
of a Financial Asset When the Market for That Asset Is Not Active
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an Amendment of ARB No. 51
 Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and
Hedging Activities
 Determination of the Useful
Life of Intangible Asset Goodwill and Other Intangible Assets
 The Hierarchy of Generally Accepted Accounting
Principles The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles.
  F-17




---



##### Table of Contents



Determining Whether Instruments Granted in
Share-Based
Payment Transactions Are Participating Securities. Earnings per Share.
 3. ACQUISITIONS
      Business Combinations
   F-18




---



##### Table of Contents



December 31,2008
    
    
    2007Purchase price
    
    $
    31,929
    
    
    $
    146,301Cash and cash equivalents
    
    
    431
    
    
    
    1,195Accounts receivable
    
    
    6,186
    
    
    
    13,198Property and equipment
    
    
    2,749
    
    
    
    11,908Inventories
    
    
    2,889
    
    
    
    4,112Other assets
    
    
    601
    
    
    
    910Total assets
    
    
    12,856
    
    
    
    31,323Accounts payable and other liabilities
    
    
    3,757
    
    
    
    8,984Capital Leases
    
    
    580
    
    
    
    3,145Minority Interest
    
    
    6,062
    
    
    
    Net assets acquired
    
    
    2,457
    
    
    
    19,194Excess purchase price over net tangible assets
acquired
    
    $
    29,472
    
    
    $
    127,107Intangible assets:Customer relationships
    
    $
    10,208
    
    
    $
    31,361Trade names
    
    
    2,016
    
    
    
    12,472Non-compete agreements
    
    
    
    
    
    
    656Goodwill
    
    
    17,248
    
    
    
    82,618$
    29,472
    
    
    $
    127,107
   Year ended December 31,2008
    
    
    2007
    
    
    2006(Dollars in thousands, except per share data)Net sales
    
    $
    725,202
    
    
    $
    804,979
    
    
    $
    756,693Net income
    
    $
    37,482
    
    
    $
    71,993
    
    
    $
    57,340Earnings per share  basic
    
    $
    0.83
    
    
    $
    1.59
    
    
    $
    1.27Earnings per share  diluted
    
    $
    0.83
    
    
    $
    1.57
    
    
    $
    1.26
    F-19




---



##### Table of Contents



4. PROPERTY AND EQUIPMENT
  December 31,2008
    
    
    2007Machinery and equipment
    
    $
    225,020
    
    
    $
    191,675Buildings and leasehold improvements
    
    
    23,504
    
    
    
    22,902Furniture and fixtures
    
    
    5,839
    
    
    
    6,023254,363
    
    
    
    220,600Less accumulated depreciation
    
    
    (164,651
    )
    
    
    (135,966
    )$
    89,712
    
    
    $
    84,634
  5. LONG-TERM DEBT
  December 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Borrowings from senior secured First Priority  Revolving Credit Facility;
variable interest payable quarterly (weighted average 7.2% interest rate
December 31, 2007); any unpaid principal and interest due December 6,
2012
    
    $
    
    
    
    $
    22,000Borrowings from senior secured First Priority  Term Loan Credit Facility;
interest payable quarterly (5.4% and 6.9% interest rate at December 31,
2008
and December 31, 2007, respectively); principal payable in varying
quarterly
installments; any unpaid principal and interest due December 6, 2012
    
    
    261,250
    
    
    
    275,000Various subordinated notes payable; weighted average 6.2% and 6.3% interest
rate at December 31, 2008 and December 31, 2007, respectively; principal
and interest payable monthly through June 2012
    
    
    35,376
    
    
    
    38,082Various capital leases; weighted average 9.1% and 8.8% interest rate
at December 31, 2008 and December 31, 2007, respectively;
principal and interest payable monthly through April 2014
    
    
    64,414
    
    
    
    55,185361,040
    
    
    
    390,267Less current portion
    
    
    (59,193
    )
    
    
    (69,254
    )$
    301,847
    
    
    $
    321,013
    F-20




---



##### Table of Contents



Long-Term Debt
    
    
    Capital Lease ObligationsYear ending December 31:2009
    
    $
    34,504
    
    
    $
    24,6892010
    
    
    68,050
    
    
    
    19,6092011
    
    
    76,501
    
    
    
    11,5802012
    
    
    117,571
    
    
    
    5,9732013
    
    
    
    
    
    
    2,374Thereafter
    
    
    
    
    
    
    189$
    296,626
    
    
    $
    64,414
  F-21




---



##### Table of Contents



6. FAIR VALUE MEASUREMENTS
 Fair Value Measurements Accounting for Leases
       At Fair Value as of December 31, 2008Quoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Liabilities
    
    
    Observable Inputs
    
    
    InputsRecurring Fair Value Measures
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Total(Dollars in thousands)Interest rate swap
    
    $
    
    
    
    $
    16,484
    
    
    $
    
    
    
    $
    16,484
    F-22




---



##### Table of Contents



7. INCOME TAXES
  Year Ended December 31,2008
    
    
    2007
    
    
    2006Current:Federal
    
    $
    25,644
    
    
    $
    30,362
    
    
    $
    29,318State
    
    
    5,052
    
    
    
    6,156
    
    
    
    6,598Foreign
    
    
    676
    
    
    
    367
    
    
    
    31,372
    
    
    
    36,885
    
    
    
    35,916Deferred:Federal
    
    
    (6,510
    )
    
    
    3,910
    
    
    
    (3,059
    )State
    
    
    (2,783
    )
    
    
    1,376
    
    
    
    (875
    )Foreign
    
    
    (879
    )
    
    
    32
    
    
    
    (10,172
    )
    
    
    5,318
    
    
    
    (3,934
    )Income tax provision
    
    
    21,200
    
    
    
    42,203
    
    
    
    31,982
  December 31,2008
    
    
    2007Current portion of deferred tax assets (liabilities):Financial statement accruals not currently deductible
    
    $
    4,306
    
    
    $
    4,472State taxes
    
    
    1,265
    
    
    
    1,319Tax credit carryforward
    
    
    260
    
    
    
    Net current deferred tax assets
    
    
    5,831
    
    
    
    5,791Non-current portion of deferred tax assets and (liabilities):Excess of income tax basis over net book value of intangible assets
    
    
    21,403
    
    
    
    24,227Excess of income tax basis over net book value of property, plant
and equipment
    
    
    9,855
    
    
    
    7,141Stock-based compensation
    
    
    2,781
    
    
    
    1,697Tax credit carryforward
    
    
    823
    
    
    
    Foreign tax
net operating loss carryforward
    
    
    133
    
    
    
    Accumulated other comprehensive income
    
    
    6,227
    
    
    
    Excess of net book value over income tax basis of intangible assets
    
    
    (15,818
    )
    
    
    (22,355
    )Net non-current deferred tax assets
    
    
    25,404
    
    
    
    10,710Net deferred tax assets
    
    $
    31,235
    
    
    $
    16,501
  Year Ended December 31,2008
    
    
    2007
    
    
    2006Statutory federal income tax rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %State taxes
    
    
    5
    
    
    
    5
    
    
    
    4Non-deductible expenses and other
    
    
    3
    
    
    
    1
    
    
    
    Domestic Production Activities Deduction tax benefit
    
    
    (3
    )
    
    
    (2
    )
    
    
    Discrete item
    
    
    (3
    )
    
    
    (1
    )
    
    
    (1
    )Effective income tax rate
    
    
    37
    %
    
    
    38
    %
    
    
    38
    %
   F-23




---



##### Table of Contents



2008
    
    
    2007Beginning balance at January 1
    
    $
    1,100
    
    
    $
    897Additions based on tax positions related to the current year
    
    
    379
    
    
    
    379Reductions for tax positions due to effective settlement with taxing authorities
    
    
    (346
    )
    
    
    Reduction for tax positions due to expiration of statute of limitations
    
    
    
    
    
    
    (176
    )Ending balance at December 31
    
    $
    1,133
    
    
    $
    1,100
   8. COMMITMENTS AND CONTINGENCIES
  Third Party
    
    
    Related Party
    
    
    TotalYear ending December 31:2009
    
    $
    29,764
    
    
    $
    1,509
    
    
    $
    31,2732010
    
    
    22,510
    
    
    
    1,378
    
    
    
    23,8882011
    
    
    16,063
    
    
    
    1,113
    
    
    
    17,1762012
    
    
    9,993
    
    
    
    951
    
    
    
    10,9442013
    
    
    6,160
    
    
    
    721
    
    
    
    6,881Thereafter
    
    
    14,285
    
    
    
    
    
    
    
    14,285$
    98,775
    
    
    $
    5,672
    
    
    $
    104,447
     F-24




---



##### Table of Contents



9. RELATED PARTY TRANSACTIONS
  10. RETIREMENT PLANS
  11. EMPLOYEE STOCK PURCHASE PLAN AND STOCK OPTION PLAN
 Employee Stock Purchase Plan
    F-25




---



##### Table of Contents



The Stock Plan
         F-26




---



##### Table of Contents



Year Ended December 31, 2008WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Contractual
    
    
    IntrinsicExercise
    
    
    Life
    
    
    ValueShares
    
    
    Price
    
    
    (In years)
    
    
    (In thousands)Outstanding at December 31, 2006
    
    
    1,683,600
    
    
    $
    14.69Granted
    
    
    608,000
    
    
    $
    32.22Exercised
    
    
    (169,550
    )
    
    $
    6.54Forfeited
    
    
    (64,254
    )
    
    $
    23.56Outstanding at December 31, 2007
    
    
    2,057,796
    
    
    $
    20.26Granted
    
    
    350,000
    
    
    $
    15.56Exercised
    
    
    (31,700
    )
    
    $
    5.57Forfeited
    
    
    (94,950
    )
    
    $
    26.23Outstanding at December 31, 2008
    
    
    2,281,146
    
    
    $
    19.49
    
    
    
    6.5
    
    
    $
    1,204Exercisable at December 31, 2008
    
    
    1,152,460
    
    
    $
    13.97
    
    
    
    4.9
    
    
    $
    1,168
   WeightedAverage Grant DateNon-vested Options
    
    Shares
    
    
    Fair Market ValueNon-vested at December 31, 2007
    
    
    1,145,399
    
    
    $
    11.17Granted
    
    
    350,000
    
    
    $
    6.01Vested
    
    
    (288,903
    )
    
    $
    11.09Forfeited
    
    
    (77,810
    )
    
    $
    9.90Non-vested at December 31, 2008
    
    
    1,128,686
    
    
    $
    9.68
   Range of Exercise Price
    
    Options Outstanding at December 31, 2008$  4.75  $  6.85
    
    
    774,349$15.56  $25.95
    
    
    780,562$30.79  $35.42
    
    
    726,235$  4.75  $35.42
    
    
    2,281,146
  F-27




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##### Table of Contents



Restricted Stock
    12. QUARTERLY FINANCIAL DATA (Unaudited)
  Quarter EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2007
    
    
    2007
    
    
    2007
    
    
    2007Net sales
    
    $
    160,214
    
    
    $
    177,783
    
    
    $
    176,212
    
    
    $
    174,146Gross profit
    
    $
    67,779
    
    
    $
    74,816
    
    
    $
    72,664
    
    
    $
    71,778Net income
    
    $
    16,844
    
    
    $
    19,612
    
    
    $
    15,945
    
    
    $
    16,737Net income per share:Basic
    
    $
    0.37
    
    
    $
    0.43
    
    
    $
    0.35
    
    
    $
    0.37Diluted
    
    $
    0.37
    
    
    $
    0.43
    
    
    $
    0.35
    
    
    $
    0.37
 Quarter EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2008
    
    
    2008
    
    
    2008
    
    
    2008Net sales
    
    $
    187,443
    
    
    $
    184,941
    
    
    $
    174,585
    
    
    $
    154,018Gross profit
    
    $
    79,603
    
    
    $
    79,088
    
    
    $
    70,015
    
    
    $
    56,566Net income
    
    $
    18,498
    
    
    $
    18,876
    
    
    $
    15,067
    
    
    $
    (15,687
    )Net income per share:Basic
    
    $
    0.41
    
    
    $
    0.42
    
    
    $
    0.33
    
    
    $
    (0.35
    )Diluted
    
    $
    0.41
    
    
    $
    0.42
    
    
    $
    0.33
    
    
    $
    (0.35
    )
  F-28




---



##### 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, 2006Allowance for accounts receivable
    
    $
    3,172
    
    
    $
    599
    
    
    $
    1,442
    
    
    $
    (869
    )
    
    $
    4,344Allowance for inventory obsolescence
    
    
    430
    
    
    
    68
    
    
    
    115
    
    
    
    (86
    )
    
    
    527$
    3,602
    
    
    $
    667
    
    
    $
    1,557
    
    
    $
    (955
    )
    
    $
    4,871Year ended December 31, 2007Allowance for accounts receivable
    
    $
    4,344
    
    
    $
    1,315
    
    
    $
    708
    
    
    $
    (1,275
    )
    
    $
    5,092Allowance for inventory obsolescence
    
    
    527
    
    
    
    104
    
    
    
    282
    
    
    
    (156
    )
    
    
    757$
    4,871
    
    
    $
    1,419
    
    
    $
    990
    
    
    $
    (1,431
    )
    
    $
    5,849Year ended December 31, 2008Allowance for accounts receivable
    
    $
    5,092
    
    
    $
    4,966
    
    
    $
    362
    
    
    $
    (4,996
    )
    
    $
    5,424Allowance for inventory obsolescence
    
    
    757
    
    
    
    47
    
    
    
    99
    
    
    
    (348
    )
    
    
    555$
    5,849
    
    
    $
    5,013
    
    
    $
    461
    
    
    $
    (5,344
    )
    
    $
    5,979
 
 (1)
    
    Acquisition of businesses and sales returns and discounts.(2)
    
    Deductions represent uncollectible accounts written-off net of recoveries and inventory
adjustments.  F-29




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    Description10.69
    
    
    Second Amendment to Executive Employment Agreement between American Reprographics
Company and Mr. Rahul K. Roy, effective December 22, 2008. *21.1
    
    
    List of Subsidiaries.*23.1
    
    
    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.*31.2
    
    
    Certification of Principal Financial Officer pursuant to Rules 13a-14(a)/15d-14(a) of
the Securities Exchange Act of 1934.*32.1
    
    
    Certification 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