##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
    Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   Commission File Number:
    001-32407
    AMERICAN REPROGRAPHICS
    COMPANY
 (Exact name of Registrant as
    specified in its Charter)
  Delaware

20-1700361(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   1981 N. Broadway, Suite 385
 Walnut Creek, California 94596
 (925) 949-5100
 (Address, including zip code,
    and telephone number,
 including area code, of
    Registrants principal executive offices)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 NONE
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K




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##### 





AMERICAN
    REPROGRAPHICS COMPANY
  ANNUAL
    REPORT ON
    FORM 10-K
 for the
    fiscal year ended December 31, 2007
  Table of
    Contents
  PagePART I


3Item 1.


Business


3Item 1A.


Risk Factors


11Item 1B.


Unresolved Staff Comments


15Item 2.


Properties


15Item 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 Consolidated Financial Data


20Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operation


21Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


41Item 8.


Consolidated Financial Statements and
    Supplementary Data


42Item 9.


Changes in and Disagreements with Accountants On
    Accounting And Financial Disclosure


42Item 9A.


Controls and Procedures


42Item 9B.


Other Information


43PART III


44Item 10.


Directors and Executive Officers of the
    Registrant


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


44Item 14.


Principal Accounting Fees and Services


44PART IV


45Item 15.


Exhibits, Financial Statement Schedules


45EXHIBIT 10.58EXHIBIT 10.60EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




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AMERICAN
    REPROGRAPHICS COMPANY 2007 ANNUAL REPORT
  In this report, American Reprographics Company,
    ARC, the Company, we,
    us, and our refer to American
    Reprographics Company and its consolidated subsidiaries, unless
    the context otherwise dictates.
  FORWARD-LOOKING
    STATEMENTS
        
    the current residential construction industry downturn and any
    general downturn in the architectural, engineering and
    construction industry;
    competition in our industry and innovation by our competitors;
    our failure to anticipate and adapt to future changes in our
    industry;
    uncertainty regarding our product and service innovations;
    the inability to charge for our value-added services to offset
    potential declines in print volumes;
    adverse developments affecting the State of California,
    including general and local economic conditions, macroeconomic
    trends, and natural disasters;
    our inability to successfully identify and consummate potential
    acquisitions, manage our acquisitions or open new branches;
    our inability to successfully monitor and manage the business
    operations of our subsidiaries and uncertainty regarding the
    effectiveness of financial and management policies and
    procedures we established to improve accounting controls;
    adverse developments concerning our relationships with certain
    key vendors;
    our inability to adequately protect our intellectual property
    and litigation regarding intellectual property;
    acts of terrorism, violence, war, natural disaster or other
    circumstances that cause damage or disruption to us, our
    facilities, our technology centers, our vendors or our customers;
    the loss of key personnel or qualified technical staff;
    the potential writedown of goodwill or other intangible assets
    we have recorded in connection with our acquisitions;
    the availability of cash to operate and expand our business as
    planned and to service our debt;
    failure to maintain an effective system of internal controls
    necessary to accurately report our financial results and prevent
    fraud; and
    potential environmental liabilities.   1




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Form 10-K, Form 10-Q, Form 8-K,
    TRADEMARKS
    AND TRADE NAMES
  ® TM SM SM TM SM SM ® ® SM SM
 2




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##### Table of Contents



PART I  Item 1.
    Business  Our
    Company
  print-on-demand, on-site
          (925) 949-5100.
 3




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##### Table of Contents



Available
    Information
  1-800-SEC-0330 www.sec.gov.
  www.e-arc.com. www.e-arc.com Form 10-K, Form 10-Q, Form 8-K 925-945-5100
  Corporate
    Background and Reorganization
      Acquisitions
     4




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Industry
    Overview
      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 our PlanWell online planroom is well positioned to
    become the industry standard for managing and procuring
    reprographics services within the AEC industry. In addition, we
    have developed other proprietary software applications that
    complement PlanWell and have 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 among our service centers within each market.
    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 an improving business environment.
    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. 5




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##### Table of Contents




    Low Cost Operator.  We believe we are one of
    the lowest cost operators in the reprographics industry, which
    we have accomplished by minimizing branch level expenses and
    capitalizing on our significant scale for purchasing
    efficiencies.
    Experienced Management Team and Highly Trained
    Workforce.  Our senior management team has an
    average of over 20 years of industry experience and it is
    our preferred practice to maintain the senior management of the
    companies we acquire.  Our
    Services
  print-on-demand.
  Document Management.
  Document Distribution and Logistics. pick-up
  Print-on-demand. on-site
  On-site
    services. on-site
  print-on-demand
    
    PlanWell, our proprietary, internet-based planroom launched in
    June 2000, and our suite of other reprographics software
    products that enable the online purchase and fulfillment of
    document management services.
    Production services, including
    print-on-demand,
    document assembly, document finishing, mounting, laminating,
    binding, and kitting. 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.
    Document distribution and logistics, including the physical
    pick-up,
    delivery, and shipping of time-sensitive, critical documents.
    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. 6




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##### Table of Contents




    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.
    Abacus Print Cost Recovery (PCR), 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.  Customers
    Operations
  Geographic Presence. pick-up
  Hub and Satellite Configuration.
 7




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
    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.  We operate
    our business under a dual operating structure of centralized
    administrative functions and regional decision making. Acquired
    companies typically retain their local business identities,
    managers, sales force, and marketing efforts in order to
    maintain strong local relationships. Our local management
    maintains autonomy over the
    day-to-day
    operations of their business units, including profitability,
    customer billing, receivables collection, and service mix
    decisions.    Suppliers
    and Vendors
      Sales and
    Marketing
  Divisional Sales Force.
  Premier Accounts.
 8




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##### Table of Contents



print-on-demand
  PEiR Group.
  Competition
    Research
    and Development
    Proprietary
    Rights
     9




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Information
    Technology
      e-commerce
  Employees
    Executive
    Officers of the Registrant
    Name

Age


PositionKumarakulasingam Suriyakumar


54



Chief Executive Officer and PresidentJonathan R. Mather


57



Chief Financial Officer; SecretarySathiyamurthy Chandramohan


49



Chairman of the Board of DirectorsRahul K. Roy


48



Chief Technology Officer   Kumarakulasingam (Suri) Suriyakumar
  Sathiyamurthy (Mohan) Chandramohan
 10




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##### Table of Contents



U-Save
  Jonathan R. Mather
  Rahul K. Roy
  Item 1A.
    Risk
    Factors  and/or
  The
    residential architectural, engineering and construction
    industry, or AEC industry, is in the midst of a downturn, and a
    continuing decline in the residential AEC industry, or a
    downturn in the non-residential AEC industry, could adversely
    affect our future revenue and profitability.
     11




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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 the last
    eight years and will continue to evolve, and our failure to
    anticipate and adapt to future changes in our industry could
    harm our competitive position.
  On-site
    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.
   12




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If we
    are unable to charge for our value-added services to offset
    potential declines in print volumes, our long term revenue could
    decline.
    We
    derive a significant percentage of net sales from within the
    State of California and our business could be disproportionately
    harmed by an economic downturn or natural disaster affecting
    California.
    Our
    growth strategy depends in part on our ability to successfully
    complete and manage our acquisitions and branch openings.
    Failure to do so could impede our future growth and adversely
    affect our competitive position.
     13




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If we
    are unable to successfully monitor and manage the business
    operations of our subsidiaries, 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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##### Table of Contents



and/or back-up
    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    Item 2.
    Properties    Number ofNumber of





ReprographicsAdmin & IT


Square


Service


SquareRegion

Facilities


Footage


Centers


FootageSouthern California(1)


2



8,843



52



401,465Northern California(2)


4



21,761



36



257,075Pacific Northwest(3)


0



0



16



132,967Northeast


2



11,297



54



257,345Southern


1



6,023



99



288,856Midwest(4)


1



3,160



50



307,208Total


10



51,084



307



1,644,916     (1)
    
    Includes one service center in Mexico City, Mexico.(2)
    
    Includes two technology centers in Fremont, California, and one
    in Kolkata, India.(3)
    
    Includes four service centers in the Vancouver, British Columbia
    area, and one in Calgary, Alberta.(4)
    
    Includes three service centers in the Toronto metropolitan area. 15




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##### Table of Contents



Item 3.
    Legal
    Proceedings  Louis Frey Case.
    Environmental
    and Regulatory Considerations
    Item 4.
    Submission
    of Matters to a Vote of Security Holders   16




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    High


LowFiscal Year 2006First Quarter

$
35.80


$
25.00Second Quarter


38.98



30.06Third Quarter


38.51



28.45Fourth Quarter


36.27



29.16Fiscal Year 2007First Quarter

$
35.32


$
29.99Second Quarter


33.80



29.07Third Quarter


31.50



18.68Fourth Quarter


22.51



14.33  17




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##### Table of Contents



35-month
  COMPARISON
    OF 35 MONTH CUMULATIVE TOTAL RETURN*
 Among American Reprographics Company, The Russell 2000
    Index
 And The S&P 600 Diversified Commercial &
    Professional Services Index
  
  *
    $100 invested on 2/4/05 in stock or index-including reinvestment
    of dividends. Fiscal year ending December 31.  ©
  2/05


2/05


3/05


4/05


5/05


6/05


7/05


8/05


9/05


10/05


11/05


12/05American Reprographics Company



100




105




104




102




108




117




129




124




124




123




156




185Russell 2000



100




100




97




91




97




101




107




105




106




102




107




107S&P 600 Diversified Commercial & Professional
    Services



100




102




98




91




98




102




109




110




109




100




105




105   1/06


2/06


3/06


4/06


5/06


6/06


7/06


8/06


9/06


10/06


11/06


12/06American Reprographics Company



199




209




252




258




252




264




233




222




233




258




227




242Russell 2000



116




116




122




122




115




116




112




115




116




123




126




126S&P 600 Diversified Commercial & Professional
    Services



106




110




118




120




113




108




107




109




114




123




119




123   1/07


2/07


3/07


4/07


5/07


6/07


7/07


8/07


9/07


10/07


11/07


12/07American Reprographic Company



228




241




224




241




224




224




181




178




136




147




113




120Russell 2000



129




128




129




131




137




135




125




128




130




134




125




124S&P 600 Diversified Commercial & Professional
    Services



123




120




121




124




130




129




122




122




122




120




117




115  18




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The stock price performance included in this graph is not
    necessarily indicative of future stock price performance.
    Holders
    Dividends
    Sales of
    Unregistered Securities
    Issuer
    Purchases of Equity Securities
    Maximum Number (orTotal Number of


Approximate DollarShares Purchased as


Value) of SharesTotal Number of





Part of Publicly


that May Yet BeShares Purchased


Average Price Paid


Announced Plans or


Purchased under thePeriod

(1)


per Share


Programs


Plans or ProgramsMonth #1 (December 6, 2007 to December 31, 2007)


447,654


$
17.22



447,654


$
142,291,159     (1)
    
    All shares were acquired in open-market purchases, pursuant to a
    stock repurchase program announced in a press release issued by
    the Company on December 6, 2007. 19




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##### Table of Contents



Item 6.
    Selected
    Consolidated Financial Data    Fiscal Year Ended December 31,2003


2004


2005


2006


2007(Dollars in thousands)Statement of Operations Data:Reprographics services

$
315,995


$
333,305


$
369,123


$
438,375


$
513,630Facilities management


59,311



72,360



83,125



100,158



113,848Equipment and supplies sales


40,654



38,199



41,956



53,305



60,876Total net sales


415,960



443,864



494,204



591,838



688,354Cost of sales


252,028



263,787



289,580



337,509



401,317Gross profit


163,932



180,077



204,624



254,329



287,037Selling, general and administrative expenses


101,252



105,780



112,679



131,743



143,811Litigation reserve (gain)














11,262



(2,897
)Provision for sales tax dispute settlement






1,389











Amortization of intangibles


1,709



1,695



2,120



5,055



9,083Income from operations


60,971



71,213



89,825



106,269



137,040Other income


1,024



420



381



299



Interest expense, net


39,390



33,565



26,722



23,192



24,373Loss on early extinguishment of debt


14,921







9,344







1,327Income before income tax provision (benefit)


7,684



38,068



54,140



83,376



111,340Income tax provision (benefit)(1)


4,131



8,520



(6,336
)


31,982



42,203Net income


3,553



29,548



60,476



51,394



69,137Dividends and amortization of discount on preferred equity


(1,730
)














Net income

$
1,823


$
29,548


$
60,476


$
51,394


$
69,137   Fiscal Year Ended December 31,2003


2004


2005


2006


2007(In thousands, except per share amounts)Earnings per share:Basic

$
0.05


$
0.83


$
1.43


$
1.14


$
1.52Diluted

$
0.05


$
0.79


$
1.40


$
1.13


$
1.51Weighted average common shares outstanding:Basic


35,480



35,493



42,264



45,015



45,421Diluted


37,298



37,464



43,178



45,595



45,829   20




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##### Table of Contents



Fiscal Year Ended December 31,2003


2004


2005


2006


2007(Dollars in thousands)Other Financial Data:Depreciation and amortization

$
19,937


$
18,730


$
19,165


$
27,749


$
39,445Capital expenditures, net

$
4,992


$
5,898


$
5,237


$
7,391


$
8,303Interest expense, net

$
39,390


$
33,565


$
26,722


$
23,192


$
24,373   As of December 31,2003


2004


2005


2006


2007(Dollars in thousands)Balance Sheet Data:Cash and cash equivalents

$
17,315


$
13,826


$
22,643


$
11,642


$
24,802Total assets

$
374,716


$
377,334


$
442,362


$
547,581


$
722,611Long term obligations and mandatorily redeemable preferred and
    common stock(2)

$
360,008


$
338,371


$
253,371


$
252,097


$
321,013Total stockholders equity (deficit)

$
(60,015
)

$
(35,009
)

$
113,569


$
184,244


$
251,651Working capital

$
16,809


$
22,387


$
35,797


$
21,150


$
3,560     (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
    $25.8 million as of December 31, 2003 and
    $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.  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 21




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
    On-site
    services, frequently referred to as facilities management, or
    FMs, (any combination of the above services supplied at a
    customers location).            Evaluating our Performance.
  
    Creating consistent, profitable growth;
    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. print-on-demand
     22




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##### Table of Contents



print-on-demand per-square-foot
  On-site per-square-foot
        short-run
  Costs and Expenses.
  three-to-five
      Operating Cash.
 23




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##### Table of Contents



Other Common Financial Measures.
  
    Net income and earnings per share;
    EBIT;
    EBITDA;
    Material costs as a percentage of net sales; and
    Days Sales Outstanding/Days Sales Inventory/Days Accounts
    Payable.  location-by-location
      Acquisitions.
        Stand-Alone
    Acquisitions.
  Branch/Fold-in Acquisitions. (fold-in)
   24




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##### Table of Contents



Recent Developments.
  Economic Factors Affecting Financial
    Performance.
  Non-GAAP Measures
            
    They do not reflect our cash expenditures, or future
    requirements for capital expenditures and contractual
    commitments; 25




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##### Table of Contents




    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.    one-time one-time
    Fiscal Year Ended December 31,2005


2006


2007Cash flows provided by operating activities

$
56,648


$
98,354


$
101,386Changes in operating assets and liabilities


8,859



(10,138
)


13,856Non-cash (expenses) income, including depreciation and
    amortization


(5,031
)


(36,822
)


(46,105
)Income tax (benefit) provision


(6,336
)


31,982



42,203Interest expense, net


26,722



23,192



24,373Loss on early extinguishment of debt


9,344







1,327EBIT


90,206



106,568



137,040Depreciation and amortization


19,165



27,749



39,445EBITDA


109,371



134,317



176,485Interest expense


(26,722
)


(23,192
)


(24,373
)Loss on early extinguishment of debt


(9,344
)






(1,327
)Income tax benefit (provision)


6,336



(31,982
)


(42,203
)Depreciation and amortization


(19,165
)


(27,749
)


(39,445
)Net income

$
60,476


$
51,394


$
69,137  26




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##### Table of Contents



Fiscal Year Ended December 31,2005


2006


2007Net income

$
60,476


$
51,394


$
69,137Interest expense, net


26,722



23,192



24,373Loss on early extinguishment of debt


9,344







1,327Income tax (benefit) provision


(6,336
)


31,982



42,203EBIT


90,206



106,568



137,040Depreciation and amortization


19,165



27,749



39,445EBITDA

$
109,371


$
134,317


$
176,485     Fiscal Year Ended December 31,2005


2006


2007(1)Net income margin


12.2
%


8.7
%


10.0
%Interest expense, net


5.4



3.9



3.5Loss on early extinguishment of debt


1.9







0.2Income tax (benefit) provision


(1.3
)


5.4



6.1EBIT margin


18.2



18.0



19.9Depreciation and amortization


3.9



4.7



5.7EBITDA margin


22.1
%


22.7
%


25.6
%     (1)
    
    column does not foot due to rounding    Fiscal Year Ended December 31,2005


2006


2007Net income

$
60,476


$
51,394


$
69,137Litigation reserve/(settlement)






11,262



(2,897
)Interest expense due to litigation reserve/(settlement)






2,685



(418
)Income tax (benefit) provision due to litigation
    reserve/settlement






(5,579
)


1,260Income tax benefit due to reorganization


(27,701
)






Unaudited adjusted net income

$
32,775


$
59,762


$
67,082Earning Per Share (Actual):Basic

$
1.43


$
1.14


$
1.52Diluted

$
1.40


$
1.13


$
1.51Earning Per Share (Adjusted):Basic

$
0.78


$
1.33


$
1.48Diluted

$
0.76


$
1.31


$
1.46Weighted average common shares outstanding:Basic


42,264,001



45,014,786



45,421,498Diluted


43,178,001



45,594,950



45,829,010  27




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##### Table of Contents



Results
    of Operations
    As a Percentage of Net SalesFiscal Year Ended December 31,2005


2006(1)


2007(1)Net sales


100.0
%


100.0
%


100.0
%Cost of sales


58.6



57.0



58.3Gross profit


41.4



43.0



41.7Selling, general and administrative expenses


22.8



22.3



20.9Litigation reserve/(settlement)


0.0



1.9



(0.4
)Amortization of intangibles


0.4



0.9



1.3Income from operations


18.2



18.0



19.9Other income


0.1



0.0



0.0Interest expense, net


(5.4
)


(3.9
)


(3.5
)Loss on early extinguishment of debt


(1.9
)


0.0



(0.2
)Income before income tax provision


11.0



14.1



16.2Income tax benefit/(provision)


1.2



(5.4
)


(6.1
)Net income


12.2
%


8.7
%


10.0
%     (1)
    
    column does not foot due to rounding  Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Fiscal Year EndedDecember 31,


Increase (decrease)2006


2007


(In dollars)


(Percent)(In millions)Reprographics services

$
438.4


$
513.6


$
75.2



17.2
%Facilities management


100.1



113.8



13.7



13.7
%Equipment and supplies sales


53.3



60.9



7.6



14.3
%Total net sales

$
591.8


$
688.3


$
96.5



16.3
%Gross profit

$
254.3


$
287.0


$
32.7



12.9
%Selling, general and administrative expenses

$
131.7


$
143.8


$
12.1



9.2
%Litigation reserve/(settlement)

$
11.3


$
(2.9
)

$
(14.2
)


(125.7
)%Amortization of intangibles

$
5.1


$
9.1


$
4.0



78.4
%Interest expense, net

$
23.2


$
24.4


$
1.2



5.2
%Income taxes provision

$
32.0


$
42.2


$
10.2



31.9
%Net Income

$
51.4


$
69.1


$
17.7



34.4
%EBITDA

$
134.3


$
176.5


$
42.2



31.4
%   Net
    Sales.
    Reprographics services.
 28




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##### Table of Contents



Facilities
    management. On-site, on-site on-site
  Equipment and supplies sales.
  Gross
    Profit.
     29




---



##### Table of Contents



on-site
  Selling, General and Administrative
    Expenses. Note 7-
    Amortization of Intangibles.
  Litigation Reserve.
  Interest Expense.
  Loss on the extinguishment of debt.
 30




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##### Table of Contents



Income Taxes.
  Net Income.
  EBITDA.
  Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
  Fiscal Year Ended December 31,


Increase (decrease)2005


2006


(In dollars)


(Percent)(In millions)Reprographics services

$
369.1


$
438.4


$
69.3



18.8
%Facilities management


83.1



100.1



17.0



20.5
%Equipment and supplies sales


42.0



53.3



11.3



26.9
%Total net sales

$
494.2


$
591.8


$
97.6



19.8
%Gross profit

$
204.6


$
254.3


$
49.7



24.3
%Selling, general and administrative expenses

$
112.7


$
131.7


$
19.0



16.9
%Litigation reserve





$
11.3


$
11.3



100.0
%Amortization of intangibles

$
2.1


$
5.1


$
3.0



142.9
%Interest expense, net

$
26.7


$
23.2


$
(3.5
)


(13.1
)%Income taxes provision (benefit)

$
(6.3
)

$
32.0


$
38.3



(607.9
)%Net Income

$
60.5


$
51.4


$
(9.1
)


(15.0
)%EBITDA

$
109.4


$
134.3


$
24.9



22.8
%   Net
    Sales.
    Reprographics services.
  Facilities management.
 31




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##### Table of Contents



on-site on-site
  Equipment and supplies sales.
  Gross
    Profit.
      Selling, General and Administrative
    Expenses.
  Amortization of Intangibles.
  Interest Expense.
  Income Taxes.
  Net Income.
 32




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##### Table of Contents



EBITDA.
  Quarterly
    Results of Operations
    Quarter EndedMar. 31,


June 30,


Sept. 30,


Dec. 31,


Mar. 31,


June 30,


Sept. 30,


Dec. 31,2006


2007Reprographics services

$
104,817


$
114,658


$
111,176


$
107,724


$
119,779


$
133,257


$
131,655


$
128,940Facilities management


22,932



24,691



25,814



26,721



26,356



28,984



29,241



29,267Equipment and supplies sales


13,053



12,178



15,548



12,526



14,079



15,542



15,316



15,939Total net sales

$
140,802


$
151,527


$
152,538


$
146,971


$
160,214


$
177,783


$
176,212


$
174,146Quarterly sales as a% of annual sales


23.8
%


25.6
%


25.8
%


24.8
%


23.3
%


25.8
%


25.6
%


25.3
%Gross profit

$
60,359


$
65,814


$
67,007


$
61,149


$
67,779


$
74,816


$
72,664


$
71,778Income from operations

$
28,088


$
20,573


$
30,917


$
26,691


$
31,800


$
37,866


$
33,066


$
34,310EBITDA

$
34,052


$
27,416


$
38,020


$
34,829


$
40,158


$
47,895


$
43,566


$
44,867Net Income

$
14,375


$
8,427


$
15,756


$
12,836


$
16,844


$
19,612


$
15,945


$
16,737     Quarter EndedMar. 31,


June 30,


Sept. 30,


Dec. 31,


Mar. 31,


June 30,


Sept. 30,


Dec. 31,2006


2007EBITDA

$
34,052


$
27,416


$
38,020


$
34,829


$
40,158


$
47,895


$
43,566


$
44,867Interest expense, net


(4,459
)


(7,001
)


(5,810
)


(5,922
)


(5,161
)


(6,642
)


(6,872
)


(5,699
)Loss on early extinguishment of debt






























(1,327
)Income tax provision


(9,583
)


(5,617
)


(8,993
)


(7,789
)


(9,795
)


(11,612
)


(10,249
)


(10,547
)Depreciation and amortization


(5,635
)


(6,371
)


(7,461
)


(8,282
)


(8,358
)


(10,029
)


(10,500
)


(10,557
)Net income

$
14,375


$
8,427


$
15,756


$
12,836


$
16,844


$
19,612


$
15,945


$
16,737   quarter-to-quarter
 33




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##### Table of Contents



Impact of
    Inflation
    Liquidity
    and Capital Resources
    Year Ended December 31,2005


2006


2007Net cash provided by operating activities

$
56,648


$
98,354


$
101,386Net cash used in investing activities

$
(27,547
)

$
(77,488
)

$
(132,688
)Net cash (used in) provided by financing activities

$
(20,284
)

$
(31,867
)

$
44,353   Operating
    Activities
  Note 7-
     34




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##### Table of Contents



Investing
    Activities
    Financing
    Activities
      December 31,2005


2006


2007Cash and cash equivalents

$
22,643


$
11,642


$
24,802Working capital

$
35,797


$
21,150


$
3,560Borrowings from senior secured credit facilities

$
230,423


$
215,651


$
297,000Other debt obligations


43,389



57,494



93,267Total debt obligations

$
273,812


$
273,145


$
390,267        35




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##### Table of Contents



Debt
    Obligations
  Senior Secured Credit Facilities.
           36




---



##### Table of Contents



As of December 31, 2006


As of December 31, 2007Available








AvailableBorrowing


Interest





Borrowing


InterestBalance


Capacity


Rate


Balance


Capacity


Rate(Dollars in thousands)Term facility

$
215,651


$
50,000



7.10
%

$
275,000


$
67,998



6.93
%Revolving facility






25,945



9.00
%


22,000



48,222



7.00
%$
215,651


$
75,945






$
297,000


$
116,220     Seller Notes.
  Off-Balance
    Sheet Arrangements
   37




---



##### Table of Contents



Contractual
    Obligations and Other Commitments
    Years Ending December 31,2008


2009


2010


2011


2012


Thereafter(Dollars in thousands)Debt obligations

$
48,283


$
31,103


$
64,725


$
73,639


$
117,332


$
Capital lease obligations


20,971



16,145



10,287



5,086



2,283



413Interest on long term debt


21,837



18,056



14,425



9,915



4,273



8Operating lease


31,887



24,892



18,499



11,950



8,055



18,672FIN 48 liability(1)






















Total

$
122,978


$
90,196


$
107,936


$
100,590


$
131,943


$
19,093     (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 6  Income
    Taxes to our consolidated financial statements included in
    this report for additional discussion).  Operating Leases.
  Contingent Transaction Consideration.
  Impact of
    Conversion from an LLC to a Corporation
    Stockholders
    Equity
   38




---



##### Table of Contents



Critical
    Accounting Policies
    Goodwill
    and Other Intangible Assets
  and/or
          Revenue
    Recognition
       39




---



##### Table of Contents



EITF 99-19
    Allowance
    for Doubtful Accounts
    Commitments
    and Contingencies
    Stock-Based
    Compensation
       40




---



##### Table of Contents



Recent
    Accounting Pronouncements
          Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk       41




---



##### Table of Contents



Item 8.
    Consolidated
    Financial Statements and Supplementary Data  page F-1
  Item 9.
    Changes
    in and Disagreements with Accountants On Accounting And
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rule 13a-15(e) 15d-15(e)
  Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f) Internal
    Control  Integrated Framework Form 10-K.
  Form 10-K.
  Changes
    in Internal Control Over Financial Reporting
   42




---



##### Table of Contents



Item 9B.
    Other
    Information   43




---



##### Table of Contents



PART III  Item 10.
    Directors
    and Executive Officers of the Registrant    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    Item 14.
    Principal
    Accounting Fees and Services   44




---



##### 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).10
.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). 45




---



##### Table of Contents



Number

Description10
.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).ˆ10
.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).ˆ10
.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).ˆ10
.7

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).ˆ10
.8

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).ˆ10
.9

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).ˆ10
.10

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).ˆ10
.11

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
.12

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
.13

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).10
.14

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
.15

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
.16

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
.17

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
.18

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). 46




---



##### Table of Contents



Number

Description10
.19

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
.20

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
.21

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
.22

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
.23

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
.24

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
.25

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).10
.26

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
.27

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).ˆ10
.28

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).ˆ10
.29

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).ˆ10
.30

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).ˆ10
.31

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).ˆ10
.32

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).ˆ10
.33

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).ˆ 47




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##### Table of Contents



Number

Description10
.34

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).ˆ10
.35

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).ˆ10
.36

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).ˆ10
.37

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).ˆ10
.38

Restricted Stock Award Grant Notice between American
    Reprographics Company and Mr. Kumarakulasingam Suriyakumar
    dated March 27, 2007 (incorporated by reference to
    Exhibit 99.2 to Registrants
    Form 8-K
    filed on March 30, 2007).ˆ10
.39

Employment Agreement, dated January 7, 2005, between
    American Reprographics Company and Mr. Mark W. Legg
    (incorporated by reference to Exhibit 10.32 to the
    Registrants Registration Statement on
    Form S-1
    A (Reg.
    No. 333-119788),
    as amended on January 13, 2005).ˆ10
.40

Employment Agreement, dated January 7, 2005, between
    American Reprographics Company and Mr. Rahul K. Roy
    (incorporated by reference to Exhibit 10.33 to the
    Registrants Registration Statement on
    Form S-1
    A (Reg.
    No. 333-119788),
    as amended on January 13, 2005).ˆ10
.41

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).ˆ10
.42

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).ˆ10
.43

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).ˆ10
.44

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
.45

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
.46

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
.47

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
.48

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
.49

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
.50

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
.51

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). 48




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##### Table of Contents



Number

Description10
.52

Indemnification Agreement made as of September 30, 2004
    between American Reprographics Company and Kumarakulasingam
    Suriyakumar (incorporated by reference to Exhibit 10.44 to
    the Registrants
    Form 10-K
    filed on March 31, 2005).10
.53

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
.54

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
.55

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
.56

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
.57

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
.58

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.*10
.59

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
.60

2007 Bonus Plan, dated February 20, 2007, between American
    Reprographics Company and Jonathan Mather.*ˆ21
.1

List of Subsidiaries.*23
.1

Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm.*31
.1

Certification by the Chief Executive Officer pursuant to
    Rules 13a-14(a)/15d-14(a)
    of the Securities Exchange Act of 1934.*31
.2

Certification by the Chief 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 herewithˆ
    
    Indicates management contract or compensatory plan or agreement 49




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##### Table of Contents



SIGNATURES
      By:
    /s/  KUMARAKULASINGAM
    SURIYAKUMAR         Signature

Title/s/  KUMARAKULASINGAM
    SURIYAKUMARKumarakulasingam
    Suriyakumar

President, Chief Executive Officer/s/  SATHIYAMURTHY
    CHANDRAMOHANSathiyamurthy
    Chandramohan

Chairman of the Board of Directors/s/  JONATHAN
    R. MATHERJonathan
    R. Mather

Chief Financial Officer and Secretary/s/  THOMAS
    J. FORMOLOThomas
    J. Formolo

Director/s/  ERIBERTO
    SCOCIMARAEriberto
    Scocimara

Director/s/  DEWITT
    KERRY MCCLUGGAGEDewitt
    Kerry McCluggage

Director/s/  MARK
    W. MEALYMark
    W. Mealy

Director/s/  MANUEL
    PEREZ DE LA MESAManuel
    Perez de la Mesa

Director  50




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##### 



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, 2006 and 2007


F-5Consolidated Statements of Income for the years
    ended December 31, 2005, 2006 and 2007


F-6Consolidated Statements of Stockholders
    Equity and Comprehensive Income for the years ended
    December 31, 2005, 2006 and 2007


F-7Consolidated Statements of Cash Flows for the
    years ended December 31, 2005, 2006 and 2007


F-8Notes to Consolidated Financial Statements


F-9Financial Statement Schedule:Schedule II  Valuation and
    Qualifying Accounts


F-34   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  Rule 13a-15(f). 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



F-4




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES



CONSOLIDATED
    BALANCE SHEETS  December 31,


December 31,2006


2007(Dollars in thousands, except per share data)ASSETSCurrent assets:Cash and cash equivalents

$
11,642


$
24,802Restricted cash


8,491



937Accounts receivable, net of allowances of $4,344 and $5,092 at
    December 31, 2006 and December 31, 2007, respectively


85,277



97,934Inventories, net


7,899



11,233Deferred income taxes


10,963



5,791Prepaid expenses and other current assets


6,796



10,234Total current assets


131,068



150,931Property and equipment, net


60,138



84,634Goodwill


291,290



382,519Other intangible assets, net


50,971



86,349Deferred financing costs, net


895



5,170Deferred income taxes


11,245



10,710Other assets


1,974



2,298Total assets

$
547,581


$
722,611LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
33,447


$
35,659Accrued payroll and payroll-related expenses


15,666



19,293Accrued expenses


25,810



23,165Accrued litigation charge


13,947



Current portion of long-term debt and capital leases


21,048



69,254Total current liabilities


109,918



147,371Long-term debt and capital leases


252,097



321,013Other long-term liabilities


1,322



2,576Total liabilities


363,337



470,960Commitments and contingenciesStockholders 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; 45,346,099 and 45,561,773 shares issued and
    outstanding


45



46Additional paid-in capital


75,465



81,153Deferred stock-based compensation


(1,224
)


(673
)Retained earnings


109,955



179,092Accumulated other comprehensive income


3



(258
)184,244



259,360Less cost of common stock in treasury, 447,654 shares in
    2007






7,709Total stockholders equity


184,244



251,651Total liabilities and stockholders equity

$
547,581


$
722,611    F-5




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF INCOME  Year Ended December 31,2005


2006


2007(Dollars in thousands, except per share data)Reprographics services

$
369,123


$
438,375


$
513,630Facilities management


83,125



100,158



113,848Equipment and supplies sales


41,956



53,305



60,876Total net sales


494,204



591,838



688,354Cost of sales


289,580



337,509



401,317Gross profit


204,624



254,329



287,037Selling, general and administrative expenses


112,679



131,743



143,811Litigation reserve (gain)






11,262



(2,897
)Amortization of intangible assets


2,120



5,055



9,083Income from operations


89,825



106,269



137,040Other income (expense), net


381



299



Interest expense, net


26,722



23,192



24,373Loss on early extinguishment of debt


9,344







1,327Income before income tax (benefit) provision


54,140



83,376



111,340Income tax (benefit) provision


(6,336
)


31,982



42,203Net income


60,476



51,394



69,137Net income attributable to common shares:Basic

$
1.43


$
1.14


$
1.52Diluted

$
1.40


$
1.13


$
1.51Weighted average common shares outstanding:Basic


42,264,001



45,014,786



45,421,498Diluted


43,178,001



45,594,950



45,829,010    F-6




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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


Income


Treasury


Equity(Dollars in thousands)Balance at December 31, 2004

$
(32,688
)





$



$



$
(2,527
)

$



$
206


$



$
(35,009
)Amortization of deferred stock-based compensation for the period
    from January 1 to February 9, 2005


















61















61Comprehensive income for the period January 1 to
    February 9, 2005:Net Income


1,914































1,914Fair value adjustment of derivatives


























195







195Comprehensive income


































2,109Distributions to members


(8,244
)






























(8,244
)Reorganization from LLC to C Corporation


39,018



35,510,011



35



(39,053
)


















Issuance of common stock in initial public offering, net of
    underwriting discounts






7,666,667



8



92,682



















92,690Issuance of common stock in exchange for warrants exercised upon
    initial public offering






754,476



1























1Direct costs of initial public offering














(3,916
)


















(3,916
)Amortization of deferred stock-based compensation for the period
    from February 10 to December 31, 2005


















563















563Issuance of common stock under Employee Stock Purchase Plan






362,061







4,000



















4,000Stock options exercised






305,600







1,536



















1,536Tax benefit from exercise of stock options














1,576



















1,576Comprehensive income for the period from February 10, to
    December 31, 2005:Net income






















58,561











58,561Fair value adjustment of derivatives, net of tax effects


























(359
)






(359
)Comprehensive income


































58,202Balance 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 income Net income






















51,394











51,394Foreign Currency Translation


























62







62Fair value adjustment of derivatives, net of tax effects


























(101
)






(101
)Comprehensive income


































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 income Net income






















69,137











69,137Foreign Currency Translation


























676







676Fair value adjustment of derivatives, net of tax effects


























(937
)






(937
)Comprehensive income


































68,876Purchase of 447,654 treasury shares






























(7,709
)


(7,709
)Balance at December 31, 2007

$




45,561,773


$
46


$
81,153


$
(673
)

$
179,092


$
(258
)

$
(7,709
)

$
251,651    F-7




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,2005


2006


2007(Dollars in thousands,except per share data)Cash flows from operating activitiesNet income

$
60,476


$
51,394


$
69,137Adjustments to reconcile net income to net cash provided by
    operating activities:Accretion of yield on redeemable preferred member units


449







Depreciation


17,045



22,694



30,362Amortization of intangible assets


2,120



5,055



9,083Amortization of deferred financing costs


1,660



364



515Stock-based compensation


624



2,115



3,469Litigation charge (gain)






13,947



(3,315
)Excess tax benefit related to stock options exercised






(4,051
)


(1,563
)Deferred income taxes


(24,815
)


(3,934
)


5,318Write-off of deferred financing costs and interest rate collar


7,089



208



1,327Other non-cash items, net


859



324



909Changes in operating assets and liabilities, net of effect of
    business acquisitions:Accounts receivable


(3,964
)


(5,769
)


(446
)Inventory


754



949



694Prepaid expenses and other assets


433



(5
)


44Litigation settlement payment










(10,500
)Accounts payable and accrued expenses


(6,082
)


14,963



(3,648
)Net cash provided by operating activities


56,648



98,354



101,386Cash flows from investing activitiesCapital expenditures


(5,237
)


(7,391
)


(8,303
)Payments for businesses acquired, net of cash acquired and
    including other cash payments associated with the acquisitions


(22,380
)


(62,225
)


(132,739
)Restricted cash






(8,360
)


7,911Other


70



488



443Net cash used in investing activities


(27,547
)


(77,488
)


(132,688
)Cash flows from financing activitiesProceeds from initial public offering, net of underwriting
    discounts


92,690







Proceeds from stock option exercises


1,536



2,103



1,108Proceeds from issuance of common stock under Employee Stock
    Purchase Plan


4,000



290



100Treasury stock repurchase










(7,709
)Direct costs of initial public offering


(1,487
)






Excess tax benefit related to stock options exercised






4,051



1,563Redemption of preferred member units


(28,263
)






Proceeds from borrowings under long-term debt agreements


157,500



30,000



325,000Payments on long-term debt agreements and capital leases


(241,712
)


(62,767
)


(292,685
)Net borrowings (repayments) under revolving credit facility


5,000



(5,000
)


22,000Payment of loan fees


(1,304
)


(544
)


(5,024
)Member distributions and redemptions


(8,244
)






Net cash (used in) provided by financing activities


(20,284
)


(31,867
)


44,353Effect of foreign currency translation on cash balances










109Net change in cash and cash equivalents


8,817



(11,001
)


13,160Cash and cash equivalents at beginning of period


13,826



22,643



11,642Cash and cash equivalents at end of period

$
22,643


$
11,642


$
24,802Supplemental disclosure of cash flow informationCash paid for:Interest

$
28,508


$
19,581


$
27,728Income taxes

$
21,323


$
22,571


$
41,840Noncash investing and financing activities:Capital lease obligations incurred

$
19,403


$
22,477


$
35,263Issuance of subordinated notes in connection with the
    acquisition of businesses

$
10,293


$
13,086


$
23,758Accrued liabilities in connection with the acquisition of
    businesses

$



$
4,300


$
570Accrued liabilities in connection with deferred financing fees

$



$



$
663Stock issued for acquisition

$



$
8,500


$
Change in fair value of derivatives

$
(164
)

$
(101
)

$
(937
)Issuance of common stock in connection with settlement of
    accrued bonuses

$



$
2,160


$
    F-8




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS

(Dollars
    in thousands, except dollars per share)  1.
    DESCRIPTION
    OF BUSINESS AND BASIS OF PRESENTATION    Reorganization
    and Initial Public Offering
        Basis
    of Presentation
    Reclassifications
   F-9




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Cash
    Equivalents
      Restricted
    Cash
    Concentrations
    of Credit Risk and Significant Vendors
          Inventories
  first-in,
 F-10




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  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     98-1 (SOP 98-1),
  SOP 98-1,
  Impairment
    of Long-Lived Assets
   F-11




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill
    and Other Intangible Assets
  and/or
        GoodwillBalance at December 31, 2006

$
291,290Additions


90,790Translation adjustment


439Balance at December 31, 2007

$
382,519      F-12




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31, 2006


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

$
55,685


$
10,799


$
44,886


$
87,045


$
19,098


$
67,947Trade names and trademarks


5,886



566



5,320



18,359



848



17,511Non-Compete Agreements


1,025



260



765



1,278



387



891$
62,596


$
11,625


$
50,971


$
106,682


$
20,333


$
86,349     2008

$
11,2612009


9,9002010


8,7872011


7,9582012


7,160Thereafter


41,283$
86,349   Deferred
    Financing Costs
      Derivative
    Financial Instruments
     F-13




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Fair
    Values of Financial Instruments
    Cash and cash equivalents:
  Restricted Cash:
  Short- and long-term debt:
  Interest rate hedge agreements:
  Self-Insurance
    Liability
   F-14




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Revenue
    Recognition
      non-Premier
      EITF 99-19
   F-15




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Comprehensive
    Income
    Year EndedDecember 31,2006


2007Net income

$
51,394


$
69,137Foreign currency translation adjustments


62



676Decrease in fair value of financial derivative instruments, net
    of tax effects


(101
)


(937
)Comprehensive income

$
51,355


$
68,876     Segment
    and Geographic Reporting
        Year Ended December 31,2005


2006


2007Reprographics services

$
367,517


$
436,140


$
511,144Facilities management


83,125



100,158



113,848Equipment and supplies sales


41,956



53,305



60,876Software licenses and membership fees


1,606



2,235



2,486Total

$
494,204


$
591,838


$
688,354   Advertising
    and Shipping and Handling Costs
   F-16




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Income
    Taxes
        Stock-Based
    Compensation
    FAS 123(R-3)
   F-17




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year EndedDecember 31,2005Net income attributed to common sharesAs reported

$
60,476Equity-based employee compensation cost included in as reported
    net income


624Equity-based employee compensation cost that would have been
    included in the determination of net income attributed to common
    shares if the fair value method had been applied


(953
)Adjusted

$
60,147Basic earnings per common share:As reported

$
1.43Equity-based employee compensation cost, net of related tax
    effects, included in as reported net income attributed to common
    shares


0.01Equity-based employee compensation cost, net of related tax
    effects, that would have been included in the determination of
    net income attributed to common shares if the fair value method
    had been applied


(0.02
)Adjusted

$
1.42Diluted earnings per common share:As reported

$
1.40Equity-based employee compensation cost, net of related tax
    effects, included in as reported net income attributed to common
    shares


0.01Equity-based employee compensation cost, net of related tax
    effects, that would have been included in the determination of
    net income attributed to common shares if the fair value method
    had been applied


(0.02
)Adjusted

$
1.39      F-18




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Year EndedDecember 31,2006


2007Weighted average assumptions used:Risk free interest rate


4.77
%


4.51
%Expected volatility


25.99
%


25.28
%Expected dividend yield


0.00
%


0.00
%       Research
    and Development Expenses
    Use of
    Estimates
    Earnings
    Per Share
   F-19




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2005


2006


2007Weighted average common shares outstanding during the
    period  basic


42,264,001



45,014,786



45,421,498Effect of dilutive stock options


833,579



580,164



407,512Effect of dilutive warrants


80,421







Weighted average common shares outstanding during the
    period  diluted


43,178,001



45,594,950



45,829,010   Recent
    Accounting Pronouncements
         F-20




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  3.
    ACQUISITIONS        15-year
    December 31,2006


2007Purchase price

$
87,680


$
146,301Cash and cash equivalents


841



1,195Accounts receivable


9,466



13,198Property and equipment


7,638



11,908Inventories


2,173



4,112Other assets


1,459



910Total assets


21,577



31,323Accounts payable and other liabilities


9,766



8,984Debt and capital leases


1,552



3,145Net assets acquired


10,259



19,194Excess purchase price over net tangible assets acquired

$
77,421


$
127,107Intangible assets:Customer relationships

$
29,603


$
31,361Trade names


3,005



12,472Non-compete agreements


1,025



656Goodwill


43,788



82,618$
77,421


$
127,107  F-21




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended December 31,2005


2006


2007Net sales

$
604,797


$
756,693


$
759,060Net income

$
76,118


$
57,340


$
71,914Earnings per share  basic

$
1.80


$
1.27


$
1.58Earnings per share  diluted

$
1.76


$
1.26


$
1.57           4.
    PROPERTY
    AND EQUIPMENT    December 31,2006


2007Machinery and equipment

$
148,825


$
191,675Buildings and leasehold improvements


21,168



22,902Furniture and fixtures


5,676



6,023175,669



220,600Less accumulated depreciation and amortization


(115,531
)


(135,966
)$
60,138


$
84,634    F-22




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  5.
    LONG-TERM
    DEBT    December 31,


December 31,2006


2007(Dollars in thousands)Borrowings from Revolving Credit Facility; variable interest
    payable quarterly (weighted average 7.2% interest rate at
    December 31, 2007); any unpaid principal and interest due
    December 6, 2012

$



$
22,000Borrowings from Term Loan Credit Facility; variable interest
    payable quarterly (weighted average 7.1% and 6.9% interest rate
    at December 31, 2006 and December 31, 2007); principal
    payable in varying quarterly installments; any unpaid principal
    and interest due December 6, 2012


215,651



275,000Various subordinated notes payable; interest ranging from 5% to
    7.1%; principal and interest payable monthly through June 2012


20,103



38,082Various capital leases; weighted average interest rate 9.47% and
    8.81% at December 31, 2006 and 2007, respectively;
    principal and interest payable monthly through June 2013


37,391



55,185273,145



390,267Less current portion


(21,048
)


(69,254
)$
252,097


$
321,013         
    An increase in the aggregate purchase price limitation for
    business acquisitions commencing with fiscal year ending
    December 31, 2006;
    An increase in the threshold for capital expenditures during any
    trailing twelve-month period; and
    Permit the company to issue certain shares of its common stock
    in connection with certain proposed acquisitions.   F-23




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
               F-24




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Long-Term Debt


Capital Lease ObligationsYear ending December 31:2008

$
48,283


$
20,9712009


31,103



16,1452010


64,725



10,2872011


73,639



5,0862012


117,332



2,283Thereafter






413$
335,082


$
55,185   6.
    INCOME
    TAXES     F-25




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2005


2006


2007Current:Federal

$
14,401


$
29,318


$
30,362State


4,078



6,598



6,156Foreign










36718,479



35,916



36,885Deferred:Federal


(21,713
)


(3,059
)


3,910State


(3,102
)


(875
)


1,376Foreign










32(24,815
)


(3,934
)


5,318Income tax (benefit) provision


(6,336
)


31,982



42,203Deferred income tax benefit as a result of the Reorganization


27,701







Income tax provision excluding effects of Reorganization

$
21,365


$
31,982


$
42,203     December 31,2006


2007Current portion of deferred tax assets (liabilities):Financial statement accruals not currently deductible

$
9,518


$
4,472State taxes


1,445



1,319Net current deferred tax assets


10,963



5,791Non-current portion of deferred tax assets and (liabilities):Excess of income tax basis over net book value of intangible
    assets


27,223



24,227Excess of income tax basis over net book value of property,
    plant and equipment


4,747



7,141Stock-based compensation


836



1,697Excess of net book value over income tax basis of intangible
    assets


(21,561
)


(22,355
)Net non-current deferred tax assets


11,245



10,710Net deferred tax assets

$
22,208


$
16,501  F-26




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2005


2006


2007Statutory federal income tax rate


35
%


35
%


35
%State taxes


5



4



5Non-deductible expenses and other


(1
)






1Domestic Production Activities Deduction tax benefit










(2
)Non-recurring income tax benefit due to reorganization


(51
)






Discrete item






(1
)


(1
)Effective income tax rate


(12
)%


38
%


38
%     non-U.S. income
    Balance at January 1, 2007

$
897Additions based on tax positions related to the current year


379Additions for tax positions of prior years


Reductions for tax positions of prior years


(176
)Balance at December 31, 2007

$
1,100       7.
    COMMITMENTS
    AND CONTINGENCIES   F-27




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Third


RelatedParty


Party


TotalYear ending December 31:2008

$
30,301


$
1,586


$
31,8872009


23,380



1,512



24,8922010


17,121



1,378



18,4992011


10,837



1,113



11,9502012


7,118



937



8,055Thereafter


17,965



707



18,672$
106,722


$
7,233


$
113,955              F-28




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    8.
    RELATED
    PARTY TRANSACTIONS      9.
    RETIREMENT
    PLANS    10.
    EMPLOYEE
    STOCK PURCHASE PLAN AND STOCK OPTION PLAN  Employee
    Stock Purchase Plan
      The
    Stock Plan
   F-29




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      1 12
         F-30




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31, 2007Weighted


WeightedAverage


Average


AggregateExercise


Contractual


IntrinsicShares


Price


Life


Value(In years)


(In thousands)Outstanding at December 31, 2005


1,422,585


$
5.90Granted


682,485


$
27.99Exercised


(383,070
)

$
5.49Forfeited


(38,400
)

$
17.55Outstanding 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


$
20.26



7.1


$
9,006Exercisable at December 31, 2007


912,396


$
9.89



5.1


$
8,166       Weighted AverageGrant DateNon-vested Options

Shares


Fair Market ValueNon-vested at December 31, 2006


839,236


$
9.87Granted


608,000


$
11.85Vested


(249,083
)

$
8.69Forfeited


(52,754
)

$
8.19Non-vested at December 31, 2007


1,145,399


$
11.17       Options Outstanding atRange of Exercise Price

December 31, 2007$ 4.75  $ 6.85


809,749$23.85  $25.95


480,062$30.79  $35.42


767,985$ 4.75  $35.42


2,057,796  F-31




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restricted
    Stock
    1 12
  11.
    MEMBERS
    EQUITY AND REDEEMABLE PREFERRED UNITS  Mandatorily
    Redeemable Preferred Membership Units
      Distributions
    to Members
   F-32




---



##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  12.
    QUARTERLY
    FINANCIAL DATA (Unaudited)    Quarter EndedMarch 31,


June 30,


September 30,


December 31,2006


2006


2006


2006Net sales

$
140,802


$
151,527


$
152,538


$
146,971Gross profit

$
60,359


$
65,814


$
67,007


$
61,149Net income

$
14,375


$
8,427


$
15,756


$
12,836Net income per share:Basic

$
0.32


$
0.19


$
0.35


$
0.28Diluted

$
0.32


$
0.18


$
0.35


$
0.28   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  F-33




---



##### 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





End ofof Period


Expenses


Accounts(1)


Deductions(2)


Period(Dollars in thousands)Year ended December 31, 2005Allowance for trade receivables

$
3,053


$
1,241


$
333


$
(1,455
)

$
3,172Allowance for inventory obsolescence


321



109











430$
3,374


$
1,350


$
333


$
(1,455
)

$
3,602Year ended December 31, 2006Allowance for trade receivables

$
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 trade receivables

$
4,344


$
1,315


$
708


$
(1,275
)

$
5,092Allowance for inventory obsolescence


527



104



282



(156
)


757$
4,871


$
1,419


$
990


$
(1,431
)

$
5,849     (1)
    
    Acquisition of businesses and sales returns and discounts.(2)
    
    Deductions represent uncollectible accounts written-off net of
    recoveries and inventory adjustments. F-34