##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-Q
   (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the
    quarterly period ended September 30,
    2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to    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)
  þ o
  Regulation S-T o o
  non-accelerated 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ




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##### 





AMERICAN
    REPROGRAPHICS COMPANY
  Quarterly
    Report on
    Form 10-Q
 For the
    Quarter Ended September 30, 2010
   Table of
    Contents
   
 PART IFinancial InformationItem 1.


Condensed Consolidated Financial Statements
    (Unaudited)


4Condensed Consolidated Balance Sheets as of
    September 30, 2010 and December 31, 2009


4Condensed Consolidated Statements of Operations
    for the three and nine months ended September 30, 2010 and
    2009


5Condensed Consolidated Statements of Equity and
    Comprehensive Loss for the nine months ended September 30,
    2010 and 2009


6Condensed Consolidated Statements of Cash Flows
    for the nine months ended September 30, 2010 and 2009


7Notes to Condensed Consolidated Financial
    Statements


8Item 2.


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


23Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


41Item 4.


Controls and Procedures


41PART IIOther InformationItem 1.


Legal Proceedings


43Item 1A.


Risk Factors


43Item 6.


Exhibits


44SIGNATURES


45Index to Exhibits


46EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



FORWARD-LOOKING
    STATEMENTS
  Form 10-Q Form 10-Q, Item 1A-Risk
  Form 10-Q Form 10-K, Form 10-Q, Form 8-K,
 3




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##### Table of Contents



PART IFINANCIAL
    INFORMATION  Item 1.
    Condensed
    Consolidated Financial Statements (Unaudited)  AMERICAN
    REPROGRAPHICS COMPANY
  CONDENSED CONSOLIDATED BALANCE SHEETS
  September 30,


December 31,2010


2009(Dollars in thousands,except per share data)(Unaudited)AssetsCurrent assets:Cash and cash equivalents


$29,755



$29,377Accounts receivable, net of allowances for accounts receivable
    of $4,021and $4,685 at September 30, 2010 and December 31,
    2009, respectively


58,432



53,919Inventories, net


11,034



10,605Deferred income taxes


5,640



5,568Prepaid expenses and other current assets


13,082



7,011Total current assets


117,943



106,480Property and equipment, net


60,402



74,568Goodwill


294,759



332,518Other intangible assets, net


66,592



74,208Deferred financing costs, net


2,923



4,082Deferred income taxes


36,816



26,987Other assets


2,157



2,111Total assets


$581,592



$620,954Liabilities and EquityCurrent liabilities:Accounts payable


$24,180



$23,355Accrued payroll and payroll-related expenses


11,575



8,804Accrued expenses


24,353



24,540Current portion of long-term debt and capital leases


64,444



53,520Total current liabilities


124,552



110,219Long-term debt and capital leases


183,802



220,711Other long-term liabilities


9,067



8,000Total liabilities


317,421



338,930Commitments and contingencies (Note 9)Stockholders equity:American Reprographics Company stockholders equity:Preferred stock, $0.001 par value, 25,000,000 shares
    authorized; zero and zero shares issued and outstanding






Common stock, $0.001 par value, 150,000,000 shares
    authorized; 46,172,122 and 46,112,653 shares issued and
    45,724,468 and 45,664,999 shares outstanding in 2010 and
    2009, respectively


46



46Additional paid-in capital


94,550



89,982Retained earnings


178,213



200,961Accumulated other comprehensive loss


(7,078
)


(7,273
)265,731



283,716Less cost of common stock in treasury, 447,654 shares in
    2010 and 2009


7,709



7,709Total American Reprographics Company stockholders equity


258,022



276,007Noncontrolling interest


6,149



6,017Total equity


264,171



282,024Total liabilities and equity


$581,592



$620,954    4




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  CONDENSED CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2010


2009


2010


2009(Dollars in thousands, except per share data)(Unaudited)Reprographics services


$72,709



$81,989



$227,419



$274,663Facilities management


22,602



23,395



67,632



75,158Equipment and supplies sales


14,110



13,966



41,619



40,066Total net sales


109,421



119,350



336,670



389,887Cost of sales


74,403



78,219



225,346



247,622Gross profit


35,018



41,131



111,324



142,265Selling, general and administrative expenses


26,612



27,330



81,912



88,335Amortization of intangible assets


2,466



2,777



7,659



8,674Goodwill impairment


38,263



37,382



38,263



37,382Impairment of long-lived assets






781







781(Loss) income from operations


(32,323
)


(27,139
)


(16,510
)


7,093Other income


(52
)


(41
)


(129
)


(138
)Interest expense, net


5,614



6,428



17,256



18,060Loss before income tax (benefit) provision


(37,885
)


(33,526
)


(33,637
)


(10,829
)Income tax (benefit) provision


(12,668
)


(5,334
)


(10,862
)


3,520Net loss


(25,217
)


(28,192
)


(22,775
)


(14,349
)Loss attributable to the noncontrolling interest


73



28



27



39Net loss attributable to American Reprographics Company


$(25,144
)


$(28,164
)


$(22,748
)


$(14,310
)Earnings per share attributable to American ReprographicsCompany shareholders:Basic


$(0.56
)


$(0.62
)


$(0.50
)


$(0.32
)Diluted


$(0.56
)


$(0.62
)


$(0.50
)


$(0.32
)Weighted average common shares outstanding:Basic


45,224,369



45,138,446



45,190,660



45,115,059Diluted


45,224,369



45,138,446



45,190,660



45,115,059    5




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND
    COMPREHENSIVE LOSS
  American Reprographics Company ShareholdersAccumulatedAdditional








OtherCommon Stock


Paid-in


Deferred


Retained


Comprehensive


Common Stock


NoncontrollingShares


Par Value


Capital


Compensation


Earnings


Loss


in Treasury


Interest


Total(Dollars in thousands, except per share data)(Unaudited)Balance at December 31, 2008


45,227,156



$46



$85,207



$(195
)


$215,846



$(11,414
)


$(7,709
)


$6,121



$287,902Stock-based compensation


46,512







3,351



195



















3,546Issuance of common stock under Employee Stock Purchase Plan


27,275







167























167Stock options exercised


11,800







63























63Tax benefit from stock based compensation










18























18Comprehensive loss:Net loss


















(14,310
)










(39
)


(14,349
)Foreign currency translation adjustments






















732











732Gain on derivative, net of tax effect






















2,476











2,476Comprehensive loss


































(11,141
)Balance at September 30, 2009


45,312,743



$46



$88,806



$



$201,536



$(8,206
)


$(7,709
)


$6,082



$280,555   American Reprographics Company ShareholdersAccumulatedAdditional





OtherCommon Stock


Paid-in


Retained


Comprehensive


Common Stock


NoncontrollingShares


Par Value


Capital


Earnings


Loss


in Treasury


Interest


TotalBalance at December 31, 2009


45,664,999



$46



$89,982



$200,961



$(7,273
)


$(7,709
)


$6,017



$282,024Stock-based compensation


29,100







4,371



















4,371Issuance of common stock under Employee Stock Purchase Plan


7,119







51



















51Stock options exercised


23,250







125



















125Tax benefit from stock based compensation










21



















21Comprehensive loss:Net loss














(22,748
)










(27
)


(22,775
)Foreign currency translation adjustments


















314







159



473Loss on derivative, net of tax effect


















(119
)










(119
)Comprehensive loss:






























(22,421
)Balance at September 30, 2010


45,724,468



$46



$94,550



$178,213



$(7,078
)


$(7,709
)


$6,149



$264,171    6




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  CONDENSED CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Nine Months EndedSeptember 30,2010


2009(Dollars in thousands)(Unaudited)Cash flows from operating activitiesNet loss


$(22,775
)


$(14,349
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Allowance for accounts receivable


598



2,842Depreciation


25,862



28,977Amortization of intangible assets


7,659



8,674Amortization of deferred financing costs


1,159



972Goodwill impairment


38,263



37,382Impairment of long-lived assets






781Stock-based compensation


4,371



3,564Excess tax benefit related to stock-based compensation


(38
)


(18
)Deferred income taxes


(9,750
)


(2,258
)Other non-cash items, net


102



(54
)Changes in operating assets and liabilities, net of effect of
    business acquisitions:Accounts receivable


(5,033
)


11,237Inventory


(456
)


355Prepaid expenses and other assets


(5,516
)


3,675Accounts payable and accrued expenses


3,562



(6,416
)Net cash provided by operating activities


38,008



75,364Cash flows from investing activitiesCapital expenditures


(5,696
)


(5,852
)Payments for businesses acquired, net of cash acquired and
    including other cash payments associated with the acquisitions


(500
)


(2,023
)Other


754



716Net cash used in investing activities


(5,442
)


(7,159
)Cash flows from financing activitiesProceeds from stock option exercises


125



63Proceeds from issuance of common stock under Employee Stock
    Purchase Plan


37



116Excess tax benefit related to stock-based compensation


38



18Payments on long-term debt agreements and capital leases


(32,203
)


(55,838
)Net (repayments) borrowings under revolving credit facility


(450
)


Payment of loan fees






(44
)Net cash used in financing activities


(32,453
)


(55,685
)Effect of foreign currency translation on cash balances


265



117Net change in cash and cash equivalents


378



12,637Cash and cash equivalents at beginning of period


29,377



46,542Cash and cash equivalents at end of period


$29,755



$59,179Supplemental disclosure of cash flow informationNoncash investing and financing activitiesNoncash transactions include the following:Capital lease obligations incurred


$6,802



$12,134Issuance of subordinated notes in connection with the
    acquisition of businesses


$



$246(Loss) gain on derivative, net of tax effect


$(119
)


$2,476    7




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS
 (Dollars in thousands, except per share data)
 (Unaudited)
  1.
    Description
    of Business and Basis of Presentation  business-to-business
  Basis of
    Presentation
      Form 10-K. Form 10-K, No. 2010-06, Fair Value Measurements and Disclosures, improving
    disclosures about Fair Value Measurements 2010-06),
  Risk and
    Uncertainties
   8




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
    2.
    Stock-Based
    Compensation            3.
    Employee
    Stock Purchase Plan     9




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
    4.
    Goodwill
    and Other Intangibles Resulting from Business
    Acquisitions  Goodwill
           10




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
          Gross


Accumulated


Net CarryingGoodwill


Impairment Loss


AmountJanuary 1, 2009


$401,667



$35,154



$366,513Additions


3,136







3,136Goodwill impairment






37,382



(37,382
)Translation adjustment


251







251December 31, 2009


405,054



72,536



332,518Additions


500







500Goodwill impairment






38,263



(38,263
)Translation adjustment


4







4September 30, 2010


$405,558



$110,799



$294,759     Long-lived
    Assets
  Accounting for
    the Impairment or Disposal of Long-lived
 11




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
  Assets
          September 30, 2010


December 31, 2009Gross





Net


Gross





NetCarrying


Accumulated


Carrying


Carrying


Accumulated


CarryingAmount


Amortization


Amount


Amount


Amortization


AmountAmortizable other intangible assets:Customer relationships


$96,279



$46,111



$50,168



$96,219



$39,243



$56,976Trade names and trademarks


20,294



3,902



16,392



20,294



3,139



17,155Non-compete agreements


100



68



32



303



226



77$116,673



$50,081



$66,592



$116,816



$42,608



$74,208  12




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
    2010


$2,4172011


9,1272012


8,2312013


7,3272014


6,518Thereafter


32,972$66,592   5.
    Long-Term
    Debt    September 30,


December 31,2010


2009Borrowings from foreign revolving credit facilities; 6.0%
    interest rate at September 30, 2010 and December 31,
    2009, respectively; principal payable through October 2010


$1,096



$1,523Borrowings from senior secured term loan credit facility;
    interest payable quarterly (weighted average 8.2% and 8.1%
    interest rate at September 30, 2010 and December 31,
    2009, respectively, inclusive of amended swap transaction);
    principal payable in varying quarterly installments; any unpaid
    principal and interest due December 6, 2012


199,375



205,625Various subordinated notes payable; weighted average 6.2%
    interest rate at September 30, 2010 and December 31,
    2009, respectively; principal and interest payable monthly
    through June 2012


11,160



21,755Various capital leases; weighted average 8.8% and 9.2% interest
    rate at September 30, 2010 and December 31, 2009,
    respectively; principal and interest payable monthly through May
    2015


36,615



45,328248,246



274,231Less current portion


(64,444
)


(53,520
)$183,802



$220,711   Amended
    Credit and Guaranty Agreement
   13




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
       
    The interest coverage ratio is 2.00:1.00 for the period ended
    December 31, 2009; 1.75:1.00 for the periods ending
    March 31, 2010 through September 30, 2010; 2.00:1.00
    for the periods ending December 31, 2010 through
    September 30, 2011; 2.50:1.00 for the period ending
    December 31, 2011; and 3.00:1.00 for all periods thereafter.
    The fixed charge coverage ratio is 1.00:1.00 for the period
    ended December 31, 2009 through maturity.
    The leverage ratio is 3.25:1.00 for the period ended
    December 31, 2009; 3.50:1.00 for the period ended
    March 31, 2010; 3.85:1.00 for the periods ending
    June 30, 2010 through September 30, 2010; 3.25:1.00
    for the period ending December 31, 2010; and 3.00:1.00 for
    all periods thereafter.
    The senior secured leverage ratio is 3.00:1.00 for the period
    ended December 31, 2009; 3.25:1.00 for the period ended
    March 31, 2010; 3.65:1.00 for the periods ending
    June 30, 2010 through September 30, 2010; 3.00:1.00
    for the periods ending December 31, 2010 through
    March 31, 2011; and 2.50:1.00 for all periods thereafter.         14




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
           Form 10-K.
  Foreign
    Credit Facilities
    Amended
    Swap Transaction
   15




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
     6.
    Derivatives
    and Hedging Transactions  Accounting for Derivative Instruments
    and Hedging Activities
      Fair ValueBalance Sheet

September 30,


December 31,Classification

2010


2009Derivative designated as hedging instrument under
    ASC 815Amended Swap Transactioncurrent portion

Accrued expenses


$6,678



$6,908Amended Swap Transactionlong term portion

Other long-term liabilities


4,624



4,010Total derivatives designated as hedging


$11,302



$10,918  16




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
    Amount of Gain or (Loss) Recognized in AOCL on DerivativeThree Months Ended


Nine Months EndedSeptember 30,


September 30,2010


2009


2010


2009Derivative in ASC 815 Cash Flow Hedging RelationshipAmended Swap Transaction


$92



$452



$(234
)


$4,196Tax effect


(37
)


(163
)


115



(1,720
)Amended Swap Transaction, net of tax effect


$55



$289



$(119
)


$2,476     Amount of Gain  or (Loss) Reclassified from AOCL into
    Income(Effective Portion)


(Ineffective Portion)Three Months Ended


Nine Months Ended


Three Months Ended


Nine Months EndedSeptember 30,


September 30,


September 30,


September 30,2010


2009


2010


2009


2010


2009


2010


2009Location of Gain or (Loss) Reclassified from AOCL into
    IncomeInterest expense


$(1,841
)


$(2,252
)


$(5,775
)


$(5,844
)


$ (44
)

$
(960
)


$(150
)

$
(960
)   7.
    Fair
    Value Measurements         17




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
     Significant Other Observable Inputs Level 2September 30,


December 31,2010


2009Recurring Fair Value MeasureAmended Swap Transaction


$11,302



$10,918         Significant Other Unobservable InputsLevel 3


Total LossesNonrecurring Fair Value MeasureGoodwill


$294,759



$38,263     Fair Values of Financial Instruments.
  Cash and cash equivalents:
  Short- and long-term debt:
 18




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
    Interest rate hedge agreements:
  8.
    Income
    Taxes        9.
    Commitments
    and Contingencies  Operating Leases.
  Contingent Transaction Consideration. and/or
  Uncertain Tax Position Liability.
  Legal Proceedings.
 19




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
    10.
    Comprehensive
    Loss      Three Months Ended


Nine Months EndedSeptember 30,


September 30,2010


2009


2010


2009Net loss


$(25,217
)


$(28,192
)


$(22,775
)


$(14,349
)Foreign currency translation adjustments


423



377



473



732Gain (loss) on derivative, net of tax effect


55



289



(119
)


2,476Comprehensive loss


(24,739
)


(27,526
)


(22,421
)


(11,141
)Comprehensive income (loss) attributable to the noncontrolling
    interest


86



(28
)


132



(39
)Comprehensive loss attributable to ARC


$(24,825
)


$(27,498
)


$(22,553
)


$(11,102
)     11.
    Earnings
    per Share  Earnings per
    Share
 20




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS(Continued)
 (Dollars in thousands, except per share data)
 (Unaudited)
     Three Months Ended


Nine Months EndedSeptember 30,


September 30,2010


2009


2010


2009Weighted average common shares outstanding during the
    periodbasic


45,224,369



45,138,446



45,190,660



45,115,059Effect of dilutive stock options














Weighted average common shares outstanding during the
    perioddiluted


45,224,369



45,138,446



45,190,660



45,115,059   12.
    Segment
    and Geographic Reporting  Disclosures about Segments of an Enterprise and Related
    Information
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2010


2009


2010


2009Foreign








Foreign








Foreign








ForeignU.S.


Countries


Total


U.S.


Countries


Total


U.S.


Countries


Total


U.S.


Countries


TotalRevenues from external customers

$
99,993


$
9,428


$
109,421


$
111,740


$
7,610


$
119,350


$
310,561


$
26,109


$
336,670


$
369,961


$
19,926


$
389,887   September 30, 2010


December 31, 2009Foreign








ForeignU.S.


Countries


Total


U.S.


Countries


TotalLong-lived assets, net


$419,128



$7,705



$426,833



$478,489



$8,998



$487,487  21




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##### Table of Contents



AMERICAN
    REPROGRAPHICS COMPANY
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (CONCLUDED)
    (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
    (UNAUDITED)
  13.
    Recent
    Accounting Pronouncements  2010-06. This 820-10, Fair Value Measurements and Disclosures 2010-06 2010-06
  No. 2009-13, Multiple-Deliverable Revenue Arrangements a consensus of the
    FASB Emerging Issues Task Force 2009-13). Revenue Recognition, 2009-13 2009-13
 22




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion should be read in conjunction with
    our interim Condensed Consolidated Financial Statements and the
    related notes and other financial information appearing
    elsewhere in this report as well as Managements Discussion
    and Analysis of Financial Condition and Results of Operations
    included in our 2009 Annual Report on
    Form 10-K
    and our Quarterly Report on
    Form 10-Q
    for the first and second quarters of fiscal year 2010.
  Executive
    Summary
  business-to-business
      
    Document management. Document management typically involves
    storing, tracking and providing authorized access to documents
    we maintain on our customers behalf. This activity is largely
    accomplished through digital database management as documents
    enter our digital infrastructure and are maintained on our
    production workstations, servers and networks.
    Document distribution and logistics. Document distribution and
    logistics involves transferring digital documents throughout our
    local and wide-area computer networks, and over the internet, as
    well as pickup, delivery and shipping of hardcopy documents to
    and from locations around the world.
    Print-on-demand.
    Print-on-demand
    usually involves quick-turnaround digital printing of documents
    in black and white and color, and in a wide variety of sizes and
    formats
    On-site
    services, frequently referred to as facilities management
    (FMs), which is any combination of the above
    services supplied at a customers location.
    On-site
    services typically involve placing equipment and sometimes staff
    in our customers locations to provide convenience printing
    and other reprographic services. This category is evolving to
    include the management of entire print networks in our
    customers offices, which we refer to as managed
    print services or MPS.  on-site
   23




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##### Table of Contents



Evaluating our Performance.
  
    Creating consistent, profitable-growth, or in the absence of
    growth due to market conditions beyond our control, stable
    margins superior to commonly understood industry benchmarks;
    Maintaining our industry leadership position as measured by our
    geographical footprint, market share and revenue generation
    capabilities;
    Continuing to develop and invest in our products, services, and
    technology to meet the changing needs of our customers;
    Maintaining a low cost structure; and
    Maintaining a flexible capital structure that provides for both
    responsible debt service and pursuit of acquisitions and other
    high-return investments.  Primary Financial Measures.
    Form 10-K
  Other Common Financial Measures.
  
    Net income and earnings per share; 24




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##### Table of Contents




    Material and labor costs as a percentage of net sales; and
    Days sales outstanding/days sales inventory/days payable
    outstanding.      Form 10-Q
  Acquisitions.
        1.
    Standalone Acquisitions.  Post-acquisition,
    these businesses maintain their existing local brand and act as
    strategic platforms for the Company to acquire market share in
    and around the specific geographical location.2.
    Branch/Fold-in Acquisitions.  These
    acquisitions are equivalent to opening a new or
    greenfield branch. They support an outlying portion
    of a larger market and rely on a larger centralized production
    facility nearby for strategic management, load balancing,
    providing specialized 25




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##### Table of Contents



services, and for administrative and other back
    office support. We maintain the staff and equipment of
    these businesses to a minimum to serve a small market or a
    single large customer, or we may physically integrate (fold-in)
    staff and equipment into a larger nearby production facility.    Economic Factors Affecting Financial
    Performance.
  Non-GAAP Financial
    Measures.
         26




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##### Table of Contents




    They do not reflect our cash expenditures, or future
    requirements for capital expenditures and contractual
    commitments;
    They do not reflect changes in, or cash requirements for, our
    working capital needs;
    They do not reflect the significant interest expense, or the
    cash requirements necessary, to service interest or principal
    payments on our debt;
    Although depreciation and amortization are non-cash charges, the
    assets being depreciated and amortized will often have to be
    replaced in the future, and EBITDA does not reflect any cash
    requirements for such replacements; and
    Other companies, including companies in our industry, may
    calculate these measures differently than we do, limiting their
    usefulness as comparative measures.  Form 10-K.
   27




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##### Table of Contents



Three Months Ended September 30,


Nine Months Ended September 30,2010


2009


2010


2009(Dollars in thousands)Cash flows provided by operating activities


$10,262



$19,566



$38,008



$75,364Changes in operating assets and liabilities, net of effect of
    business acquisitions


6,166



704



7,443



(8,851
)Non-cash (expenses) income, including depreciation and
    amortization


(41,645
)


(48,462
)


(68,226
)


(80,862
)Income tax (benefit) provision


(12,668
)


(5,334
)


(10,862
)


3,520Interest expense, net


5,614



6,428



17,256



18,060Net loss attributable to the noncontrolling interest


73



28



27



39EBIT


(32,198
)


(27,070
)


(16,354
)


7,270Depreciation and amortization


10,757



12,185



33,521



37,651Stock-based compensation


1,453



1,403



4,371



3,564EBITDA


(19,988
)


(13,482
)


21,538



48,485Interest expense, net


(5,614
)


(6,428
)


(17,256
)


(18,060
)Income tax benefit (provision)


12,668



5,334



10,862



(3,520
)Depreciation and amortization


(10,757
)


(12,185
)


(33,521
)


(37,651
)Stock-based compensation


(1,453
)


(1,403
)


(4,371
)


(3,564
)Net loss attributable to ARC


$(25,144
)


$(28,164
)


$(22,748
)


$(14,310
)     Three Months Ended September 30,


Nine Months Ended September 30,2010


2009


2010


2009(Dollars in thousands)Net loss attributable to ARC


$(25,144
)


$(28,164
)


$(22,748
)


$(14,310
)Interest expense, net


5,614



6,428



17,256



18,060Income tax (benefit) provision


(12,668
)


(5,334
)


(10,862
)


3,520EBIT


(32,198
)


(27,070
)


(16,354
)


7,270Depreciation and amortization


10,757



12,185



33,521



37,651Stock-based compensation


1,453



1,403



4,371



3,564EBITDA


$(19,988
)


$(13,482
)


$21,538



$48,485Special items:Goodwill impairment


38,263



37,382



38,263



37,382Impairment of long-lived assets






781







781Adjusted EBITDA


$18,275



$24,681



$59,801



$86,648  28




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##### Table of Contents



Three Months Ended September 30,


Nine Months Ended September 30,2010 (1)


2009


2010


2009 (1)Net loss margin attributable to ARC


(23.0
)%


(23.6
)%


(6.8
)%


(3.7
)%Interest expense, net


5.1



5.4



5.1



4.6Income tax provision


(11.6
)


(4.5
)


(3.2
)


0.9EBIT margin


(29.4
)


(22.7
)


(4.9
)


1.9Depreciation and amortization


9.8



10.2



10.0



9.7Stock-based compensation


1.3



1.2



1.3



0.9EBITDA margin


(18.3
)%


(11.3
)%


6.4
%


12.4
%Special items:Goodwill impairment


35.0



31.3



11.4



9.6Impairment of long-lived assets






0.7







0.2Adjusted EBITDA margin


16.7
%


20.7
%


17.8
%


22.2
%    (1)
    
    column does not foot due to rounding    Three Months Ended September 30,


Nine Months Ended September 30,2010


2009


2010


2009Net loss attributable to ARC


$(25,144
)


$(28,164
)


$(22,748
)


$(14,310
)Goodwill impairment


38,263



37,382



38,263



37,382Impairment of long-lived assets






781







781Ineffective portion of Swap Transaction


44



960



150



960Income tax benefit, related to above items


(12,838
)


(8,041
)


(12,880
)


(8,041
)Unaudited adjusted net income attributable to ARC


$325



$2,918



$2,785



$16,772Earnings per share attributable to ARC shareholders (actual):Basic


$(0.56
)


$(0.62
)


$(0.50
)


$(0.32
)Diluted


$(0.56
)


$(0.62
)


$(0.50
)


$(0.32
)Weighted average common shares outstanding:Basic


45,224,369



45,138,446



45,190,660



45,115,059Diluted


45,224,369



45,138,446



45,190,660



45,115,059Earnings per share attributable to ARC shareholders (adjusted)Basic


$0.01



$0.06



$0.06



$0.37Diluted


$0.01



$0.06



$0.06



$0.37Weighted average common shares outstanding (adjusted):Basic


45,224,369



45,138,446



45,190,660



45,115,059Diluted


45,439,385



45,352,608



45,432,553



45,229,386  29




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##### Table of Contents



Results
    of Operations for the Three and Nine Months Ended
    September 30, 2010 and 2009
    As Percentage of Net Sales


As Percentage of Net SalesThree Months Ended September 30,


Nine Months Ended September 30,2010 (1)


2009


2010


2009Net Sales


100.0
%


100.0
%


100.0
%


100.0
%Cost of sales


68.0



65.5



66.9



63.5Gross profit


32.0



34.5



33.1



36.5Selling, general and administrative expenses


24.3



22.9



24.3



22.7Amortization of intangibles


2.3



2.3



2.3



2.2Goodwill impairment


35.0



31.3



11.4



9.6Impairment of long-lived assets






0.7







0.2(Loss) income from operations


(29.5
)


(22.7
)


(4.9
)


1.8Other income














Interest expense, net


5.1



5.4



5.1



4.6Loss before income tax (benefit) provision


(34.6
)


(28.1
)


(10.0
)


(2.8
)Income tax (benefit) provision


(11.6
)


(4.5
)


(3.2
)


0.9Net loss


(23.0
)


(23.6
)


(6.8
)


(3.7
)Loss attributable to the noncontrolling interest


0.1











Net loss attributable to ARC


(23.0
)%


(23.6
)%


(6.8
)%


(3.7
)%    (1)
    
    column does not foot due to rounding  Three and
    Nine Months Ended September 30, 2010 Compared to Three and
    Nine Months Ended September 30, 2009
  Three Months Ended September 30,


Increase (Decrease)


Nine Months Ended September 30,


Increase (Decrease)2010


2009


(In dollars)


(Percent)


2010 (1)


2009


(In dollars)


(Percent)(In millions)











(In millions)Reprographics services


$72.7



$82.0



$(9.3
)


(11.3
)%


$227.4



$274.7



$(47.3
)


(17.2
)%Facilities management


22.6



23.4



(0.8
)


(3.4
)%


67.6



75.2



(7.6
)


(10.1
)%Equipment and supplies sales


14.1



14.0



0.1



0.7
%


41.6



40.1



1.5



3.7
%Total net sales


$109.4



$119.4



$(10.0
)


(8.3
)%


336.7



$390.0



(53.3
)


(13.6
)%Gross profit


$35.0



$41.1



$(6.1
)


(14.8
)%


$111.3



$142.3



$(31.0
)


(21.8
)%Selling, general and administrative expenses


26.6



27.3



(0.7
)


(2.6
)%


81.9



88.3



(6.4
)


(7.2
)%Amortization of intangibles


2.5



2.8



(0.3
)


(10.7
)%


7.7



8.7



(1.0
)


(11.5
)%Goodwill impairment


38.3



37.4



0.9



2.4
%


38.3



37.4



0.9



2.4
%Impairment of long-lived assets






0.8



(0.8
)


(100.0
)%






0.8



(0.8
)


(100.0
)%Interest expense, net


5.6



6.4



(0.8
)


(12.5
)%


17.3



18.1



(0.8
)


(4.4
)%Income tax (benefit) provision


(12.7
)


(5.3
)


(7.4
)


139.6
%


(10.9
)


3.5



(14.4
)


(411.4
)%Net loss attributable to ARC


(25.1
)


(28.2
)


3.1



(11.0
)%


(22.7
)


(14.3
)


(8.4
)


58.7
%EBITDA


(20.0
)


(13.5
)


(6.5
)


48.1
%


21.5



48.5



(27.0
)


(55.7
)%    (1)
    
    column does not foot due to rounding 30




---



##### Table of Contents



Net
    Sales
      Reprographics services.
  black-and-white black-and-white black-and-white
        Facilities management. on-site
 31




---



##### Table of Contents



on-site on-site
  Equipment and supplies sales. on-site
  Gross
    Profit
  year-over-year
  year-over-year
    Selling,
    General and Administrative Expenses
     32




---



##### Table of Contents



Amortization
    of Intangibles
    Goodwill
    Impairment
         33




---



##### Table of Contents



Impairment
    of Long-Lived Assets
      Interest
    Expense, Net
   34




---



##### Table of Contents



Income
    Taxes
      Noncontrolling
    Interest
    Net Loss
    Attributable to ARC
    EBITDA
    Impact of
    Inflation
    Liquidity
    and Capital Resources
   35




---



##### Table of Contents



Nine Months EndedSeptember 30,2010


2009(Dollars in thousands)Net cash provided by operating activities


$38,008



$75,364Net cash used in investing activities


$(5,442
)


$(7,159
)Net cash used in financing activities


$(32,453
)


$(55,685
)   Operating
    Activities
    Investing
    Activities
    Financing
    Activities
      36




---



##### Table of Contents



September 30,


December 31,2010


2009(Dollars in thousands)Cash and cash equivalents


$29,755



$29,377Working capital


$(6,609
)


$(3,739
)Borrowings from senior secured credit facilities


$199,375



$205,625Other debt obligations


48,871



68,606Total debt obligations


$248,246



$274,231         and/or
 37




---



##### Table of Contents



and/or and/or
    Debt
    Obligations
  Senior Secured Credit Facilities.
   38




---



##### Table of Contents




    The interest coverage ratio is 2.00:1.00 for the period ended
    December 31, 2009, 1.75:1.00 for the periods ending
    March 31, 2010 through September 30, 2010, 2.00:1.00
    for the periods ending December 31, 2010 through
    September 30, 2011, 2.50:1.00 for the period ending
    December 31, 2011 and 3.00:1.00 for all periods thereafter.
    The fixed charge coverage ratio is 1.00:1.00 for the period
    ended December 31, 2009 through maturity.
    The leverage ratio is 3.25:1.00 for the period ended
    December 31, 2009, 3.50:1.00 for the period ended
    March 31, 2010, 3.85:1.00 for the periods ending
    June 30, 2010 through September 30, 2010, 3.25:1.00
    for the period ending December 31, 2010 and 3.00:1.00 for
    all periods thereafter.
    The senior secured leverage ratio is 3.00:1.00 for the period
    ended December 31, 2009, 3.25:1.00 for the period ended
    March 31, 2010, 3.65:1.00 for the periods ending
    June 30, 2010 through September 30, 2010, 3.00:1.00
    for the periods ending December 31, 2010 through
    March 31, 2011 and 2.50:1.00 for all periods thereafter.              Capital Leases.
 39




---



##### Table of Contents



Seller Notes.
  Off-Balance
    Sheet Arrangements
    Contractual
    Obligations and Other Commitments
  Operating Leases.
  Contingent Transaction Consideration. and/or
  Uncertain Tax Position Liability.
  Legal Proceedings.
  Critical
    Accounting Policies
     40




---



##### Table of Contents



Form 10-K, No. 2010-06, Fair Value Measurements and Disclosures, improving
    disclosures about Fair Value Measurements 2010-06),
  Recent
    Accounting Pronouncements
    Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk            Item 4.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
    Rule 13a-15(e) 15d-15(e)
 41




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting
   42




---



##### Table of Contents



PART IIOTHER
    INFORMATION  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Form 10-K Form 10-K
 43




---



##### Table of Contents



Item 6.
    Exhibits  ExhibitNumber

Description10
.1

Sixth Amendment to Executive Employment Agreement, dated August
    2, 2010, by and between American Reprographics Company and
    Kumarakulasingam Suriyakumar (incorporated by reference to
    Exhibit 10.1 to the Current Report on Form 8-K filed on August
    3, 2010).10
.2

Fourth Amendment to Executive Employment Agreement, dated August
    2, 2010, by and between American Reprographics Company and
    Jonathan R. Mather (incorporated by reference to Exhibit 10.2 to
    the Current Report on Form 8-K filed on August 3, 2010).10
.3

Fifth Amendment to Executive Employment Agreement, dated August
    2, 2010, by and between American Reprographics Company and Rahul
    K. Roy (incorporated by reference to Exhibit 10.3 to the Current
    Report on Form 8-K filed on August 3, 2010).10
.4

Third Amendment to Executive Employment Agreement, dated August
    2, 2010, by and between American Reprographics Company and
    Dilantha Wijesuriya (incorporated by reference to Exhibit 10.4
    to the Current Report on Form 8-K filed on August 3, 2010).31
.1

Certification of Principal Executive Officer pursuant to Rule
    13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act
    of 1934, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.*31
.2

Certification of Principal Financial Officer pursuant to Rule
    13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act
    of 1934, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.*32
.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.*32
.2

Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.*    *
    
    Filed herewith 44




---



##### Table of Contents



SIGNATURES        By:
    /s/  Kumarakulasingam
    Suriyakumar     By:
    /s/  Jonathan
    R. Mather    45




---



##### Table of Contents



EXHIBIT INDEX  ExhibitNumber

Description10.1

Sixth Amendment to Executive Employment Agreement, dated August
    2, 2010, by and between American Reprographics Company and
    Kumarakulasingam Suriyakumar (incorporated by reference to
    Exhibit 10.1 to the Current Report on Form 8-K filed on August
    3, 2010).10.2

Fourth Amendment to Executive Employment Agreement, dated August
    2, 2010, by and between American Reprographics Company and
    Jonathan R. Mather (incorporated by reference to Exhibit 10.2 to
    the Current Report on Form 8-K filed on August 3, 2010).10.3

Fifth Amendment to Executive Employment Agreement, dated August
    2, 2010, by and between American Reprographics Company and Rahul
    K. Roy (incorporated by reference to Exhibit 10.3 to the Current
    Report on Form 8-K filed on August 3, 2010).10.4

Third Amendment to Executive Employment Agreement, dated August
    2, 2010, by and between American Reprographics Company and
    Dilantha Wijesuriya (incorporated by reference to Exhibit 10.4
    to the Current Report on Form 8-K filed on August 3, 2010).31.1

Certification of Principal Executive Officer pursuant to Rule
    13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act
    of 1934, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.*31.2

Certification of Principal Financial Officer pursuant to Rule
    13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of
    1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.*32.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.*32.2

Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.*    *
    
    Filed herewith 46