##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For The Quarterly Period Ended March 31, 2009
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 001-32407
 AMERICAN REPROGRAPHICS COMPANY
  Delaware
    
    20-1700361(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 1981 N. Broadway, Suite 385
Walnut Creek, California 94596
(925) 949-5100
 (Address, including zip code, and telephone number, including area code, of
 Registrants principal executive offices)
 Yes þ No o
 Yes o No o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if smaller reporting company)
 Yes o No þ




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##### 



AMERICAN REPROGRAPHICS COMPANY
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 2009
  
 Table of Contents
 PART I  Financial InformationItem 1. Condensed Consolidated Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008
    
    
    4Condensed Consolidated Statements of Income for the three months ended March
31, 2009 and 2008
    
    
    5Condensed Consolidated Statement of Changes in Stockholders Equity for the
three months ended March 31, 2009
    
    
    6Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 2009 and 2008
    
    
    7Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28PART II  Other InformationItem 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 6. Exhibits
    
    
    30SIGNATURES
    
    
    31Index to Exhibits
    
    
    32Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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FORWARD-LOOKING STATEMENTS
    3




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PART I  FINANCIAL INFORMATION
 
 Item 1. Condensed Consolidated Financial Statements (unaudited)
 AMERICAN REPROGRAPHICS COMPANY
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands, except per share data)
 (Unaudited)
 March 31,
    
    
    December 31,2009
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    50,476
    
    
    $
    46,542Accounts receivable, net of allowances for accounts receivable of $5,259 and
$5,424 at March 31, 2009 and December 31, 2008, respectively
    
    
    78,477
    
    
    
    77,216Inventories, net
    
    
    10,417
    
    
    
    11,097Deferred income taxes
    
    
    5,832
    
    
    
    5,831Prepaid expenses and other current assets
    
    
    8,632
    
    
    
    11,976Total current assets
    
    
    153,834
    
    
    
    152,662Property and equipment, net
    
    
    87,126
    
    
    
    89,712Goodwill
    
    
    367,270
    
    
    
    366,513Other intangible assets, net
    
    
    83,099
    
    
    
    85,967Deferred financing costs, net
    
    
    3,250
    
    
    
    3,537Deferred income taxes
    
    
    23,601
    
    
    
    25,404Other assets
    
    
    2,197
    
    
    
    2,136Total assets
    
    $
    720,377
    
    
    $
    725,931Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    24,409
    
    
    $
    25,171Accrued payroll and payroll-related expenses
    
    
    12,360
    
    
    
    13,587Accrued expenses
    
    
    23,984
    
    
    
    24,913Current portion of long-term debt and capital leases
    
    
    67,733
    
    
    
    59,193Total current liabilities
    
    
    128,486
    
    
    
    122,864Long-term debt and capital leases
    
    
    282,897
    
    
    
    301,847Other long-term liabilities
    
    
    12,281
    
    
    
    13,318Total liabilities
    
    
    423,664
    
    
    
    438,029Commitments and contingencies (Note 10)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;
45,688,233 and 45,674,810 shares issued and 45,240,579 and
45,227,156 shares outstanding in 2009 and 2008, respectively
    
    
    46
    
    
    
    46Additional paid-in capital
    
    
    86,080
    
    
    
    85,207Deferred stock-based compensation
    
    
    (88
    )
    
    
    (195
    )Retained earnings
    
    
    223,393
    
    
    
    215,846Accumulated other comprehensive loss
    
    
    (11,118
    )
    
    
    (11,414
    )298,313
    
    
    
    289,490Less cost of common stock in treasury, 447,654 shares in 2009 and 2008
    
    
    7,709
    
    
    
    7,709Total American Reprographics Company stockholders equity
    
    
    290,604
    
    
    
    281,781Noncontrolling interest
    
    
    6,109
    
    
    
    6,121Total stockholders equity
    
    
    296,713
    
    
    
    287,902Total liabilities and stockholders equity
    
    $
    720,377
    
    
    $
    725,931
   4




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AMERICAN REPROGRAPHICS COMPANY
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (Dollars in thousands, except per share data)
 (Unaudited)
 Three Months EndedMarch 31,2009
    
    
    2008Reprographics services
    
    $
    99,769
    
    
    $
    142,496Facilities management
    
    
    26,865
    
    
    
    29,551Equipment and supplies sales
    
    
    12,849
    
    
    
    15,396Total net sales
    
    
    139,483
    
    
    
    187,443Cost of sales
    
    
    87,504
    
    
    
    107,840Gross profit
    
    
    51,979
    
    
    
    79,603Selling, general and administrative expenses
    
    
    30,966
    
    
    
    39,521Amortization of intangible assets
    
    
    2,983
    
    
    
    3,188Income from operations
    
    
    18,030
    
    
    
    36,894Other income
    
    
    (59
    )
    
    
    (202
    )Interest expense, net
    
    
    5,796
    
    
    
    7,146Income before income tax provision
    
    
    12,293
    
    
    
    29,950Income tax provision
    
    
    4,758
    
    
    
    11,452Net income
    
    
    7,535
    
    
    
    18,498Plus loss attributable to the noncontrolling interest
    
    
    12
    
    
    
    Net income attributable to American Reprographics Company
    
    $
    7,547
    
    
    $
    18,498Earnings per share attributable to American Reprographics
Company shareholders:Basic
    
    $
    0.17
    
    
    $
    0.41Diluted
    
    $
    0.17
    
    
    $
    0.41Weighted average common shares outstanding:Basic
    
    
    45,089,794
    
    
    
    45,045,038Diluted
    
    
    45,100,225
    
    
    
    45,390,827
   5




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AMERICAN REPROGRAPHICS COMPANY
 
 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 (Dollars in thousands, except per share)
 (Unaudited)
 American Reprographics Company ShareholdersAccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Deferred
    
    
    Retained
    
    
    Comprehensive
    
    
    Common Stock in
    
    
    NoncontrollingShares
    
    
    Par Value
    
    
    Capital
    
    
    Compensation
    
    
    Earnings
    
    
    Loss
    
    
    Treasury
    
    
    Interest
    
    
    TotalBalance at December 31, 2008
    
    
    45,227,156
    
    
    $
    46
    
    
    $
    85,207
    
    
    $
    (195
    )
    
    $
    215,846
    
    
    $
    (11,414
    )
    
    $
    (7,709
    )
    
    $
    6,121
    
    
    $
    287,902Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    826
    
    
    
    107
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    933Issuance of common stock under
Employee Stock Purchase Plan
    
    
    13,423
    
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47Comprehensive Income:Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,547
    
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    7,535Foreign currency translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (139
    )
    
    
    
    
    
    
    
    
    
    
    (139
    )Fair value adjustment of
derivative, net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    435
    
    
    
    
    
    
    
    
    
    
    
    435Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,831Balance at March 31, 2009
    
    
    45,240,579
    
    
    $
    46
    
    
    $
    86,080
    
    
    $
    (88
    )
    
    $
    223,393
    
    
    $
    (11,118
    )
    
    $
    (7,709
    )
    
    $
    6,109
    
    
    $
    296,713
   6




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AMERICAN REPROGRAPHICS COMPANY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 (Unaudited)
 Three Months EndedMarch 31,2009
    
    
    2008Cash flows from operating activitiesNet income
    
    $
    7,535
    
    
    $
    18,498Adjustments to reconcile net income to net cash provided by operating activities:Allowance for accounts receivable
    
    
    1,249
    
    
    
    1,078Depreciation
    
    
    9,732
    
    
    
    8,929Amortization of intangible assets
    
    
    2,983
    
    
    
    3,188Amortization of deferred financing costs
    
    
    331
    
    
    
    260Stock-based compensation
    
    
    933
    
    
    
    912Deferred income taxes
    
    
    1,412
    
    
    
    613Other non-cash items, net
    
    
    23
    
    
    
    (215
    )Changes in operating assets and liabilities, net of effect of business acquisitions:
    
    
    
    
    
    
    Accounts receivable
    
    
    (2,425
    )
    
    
    (9,478
    )Inventory
    
    
    686
    
    
    
    438Prepaid expenses and other assets
    
    
    3,575
    
    
    
    1,426Accounts payable and accrued expenses
    
    
    (3,758
    )
    
    
    (5,301
    )Net cash provided by operating activities
    
    
    22,276
    
    
    
    20,348Cash flows from investing activitiesCapital expenditures
    
    
    (1,979
    )
    
    
    (2,301
    )Payments for businesses acquired, net of cash acquired
and including other cash payments associated with
the acquisitions
    
    
    (588
    )
    
    
    (4,831
    )Restricted cash
    
    
    
    
    
    
    940Other
    
    
    163
    
    
    
    554Net cash used in investing activities
    
    
    (2,404
    )
    
    
    (5,638
    )Cash flows from financing activitiesProceeds from issuance of common stock under Employee Stock Purchase Plan
    
    
    
    
    
    
    13Payments on long-term debt agreements and capital leases
    
    
    (15,878
    )
    
    
    (12,115
    )Net (repayments) borrowings under revolving credit facility
    
    
    
    
    
    
    (10,000
    )Payment of loan fees
    
    
    (44
    )
    
    
    (632
    )Net cash used in financing activities
    
    
    (15,922
    )
    
    
    (22,734
    )Effect of foreign currency translation on cash balances
    
    
    (16
    )
    
    
    18Net change in cash and cash equivalents
    
    
    3,934
    
    
    
    (8,006
    )Cash and cash equivalents at beginning of period
    
    
    46,542
    
    
    
    24,802Cash and cash equivalents at end of period
    
    $
    50,476
    
    
    $
    16,796Supplemental disclosure of cash flow informationNoncash investing and financing activitiesNoncash transactions include the following:Capital lease obligations incurred
    
    $
    5,253
    
    
    $
    9,184Issuance of subordinated notes in connection with the
acquisition of businesses
    
    $
    246
    
    
    $
    1,660Accrued liabilities in connection with acquisition of businesses
    
    $
    333
    
    
    $
    Change in fair value of derivative, net of tax effect
    
    $
    435
    
    
    $
    (5,421
    )
   7




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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
  Basis of Presentation
   Business Combinations, Effective Date of FASB Statement No. 157 Noncontrolling Interests in
Consolidated Financial Statements  an Amendment of ARB No. 51 Disclosures about Derivative Instruments and Hedging Activities  an amendment of FASB
Statement No. 133
 Risk and Uncertainties
  Reclassifications
   8




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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
   4. Acquisitions
  5. Goodwill and Other Intangibles Resulting from Business Acquisitions
 Business Combinations,
  9




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AMERICAN REPROGRAPHICS COMPANY
Notes to Condensed Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
 Goodwill
and Other Intangible Assets,
  GoodwillBalance at December 31, 2008
    
    $
    366,513Additions
    
    
    797Translation adjustment
    
    
    (40
    )Balance at March 31, 2009
    
    $
    367,270
    March 31, 2009
    
    
    December 31, 2008Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountAmortizable other
intangible
assets:Customer relationships
    
    $
    96,678
    
    
    $
    31,832
    
    
    $
    64,846
    
    
    $
    96,574
    
    
    $
    29,233
    
    
    $
    67,341Trade names and
trademarks
    
    
    20,359
    
    
    
    2,380
    
    
    
    17,979
    
    
    
    20,359
    
    
    
    2,126
    
    
    
    18,233Non-Compete Agreements
    
    
    1,278
    
    
    
    1,004
    
    
    
    274
    
    
    
    1,278
    
    
    
    885
    
    
    
    393$
    118,315
    
    
    $
    35,216
    
    
    $
    83,099
    
    
    $
    118,211
    
    
    $
    32,244
    
    
    $
    85,967
  2009
    
    $
    8,3912010
    
    
    10,1482011
    
    
    9,1922012
    
    
    8,2882013
    
    
    7,383Thereafter
    
    
    39,697$
    83,099
  10




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AMERICAN REPROGRAPHICS COMPANY
Notes to Condensed Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
 6. Long-Term Debt
  March 31,
    
    
    December 31,2009
    
    
    2008Borrowings from senior secured First Priority  Term Loan Credit Facility;
interest payable quarterly (5.6% and 5.4% interest rate, inclusive of
interest rate swap, at March 31, 2009 and December 31, 2008,
respectively); principal payable in varying quarterly installments; any
unpaid principal and interest due December 6, 2012
    
    $
    256,094
    
    
    $
    261,250Various subordinated notes payable; weighted average 6.2%
interest rate at March 31, 2009 and December 31, 2008;
principal and interest payable monthly through June 2012
    
    
    31,730
    
    
    
    35,376Various capital leases; weighted average 9.0% and 9.1% interest rate
at March 31, 2009 and December 31, 2008, respectively;
principal and interest payable monthly through January 2015
    
    
    62,806
    
    
    
    64,414350,630
    
    
    
    361,040Less current portion
    
    
    (67,733
    )
    
    
    (59,193
    )$
    282,897
    
    
    $
    301,847
       11




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AMERICAN REPROGRAPHICS COMPANY
Notes to Condensed Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
      7. Derivatives and Hedging Transactions
  Accounting for Derivative Instruments and
Hedging Activities,
   Fair ValueBalance Sheet
    
    March 31,
    
    
    December 31,Classification
    
    2009
    
    
    2008Derivative designated as hedging instrument under SFAS 133Interest rate swap  current portion
    
    Accrued expenses
    
    $
    6,160
    
    
    $
    5,953Interest rate swap  long term portion
    
    Other long-term liabilities
    
    
    9,646
    
    
    
    10,531Total derivatives designated as hedging instruments
under SFAS 133
    
    
    
    $
    15,806
    
    
    $
    16,484
  12




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AMERICAN REPROGRAPHICS COMPANY
Notes to Condensed Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
  Amount of Gain or (Loss) Recognizedin AOCL on DerivativeThree Months EndedMarch 31,2009
    
    
    2008Derivative in SFAS 133 Cash Flow Hedging RelationshipInterest rate swap, net of
taxes of $243 and $3,272,
at March 31, 2009
and 2008, respectively
    
    $
    435
    
    
    $
    (5,421
    )
  Amount of Loss Reclassified fromAOCL into IncomeThree Months EndedMarch 31,2009
    
    
    2008Location
of Gain or (Loss) Reclassified from AOCL into IncomeInterest expense
    
    $
    (1,723
    )
    
    $
    
 8. Fair Value Measurements
 Fair Value Measurements,
     Level 2March 31,
    
    
    December 31,2009
    
    
    2008Recurring Fair Value MeasureInterest rate swap
    
    $
    15,806
    
    
    $
    16,484
   13




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AMERICAN REPROGRAPHICS COMPANY
Notes to Condensed Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
 9. Income Taxes
   10. Commitments and Contingencies
 Operating Leases.
 Contingent Transaction Consideration.
 FIN 48 Liability.
 Legal Proceedings.
 11. Comprehensive Income
  Three Months EndedMarch 31,2009
    
    
    2008Net income
    
    $
    7,535
    
    
    $
    18,498Foreign currency translation adjustments
    
    
    (139
    )
    
    
    (240
    )Increase (decrease) in fair value of financial derivative
instrument, net of tax effects
    
    
    435
    
    
    
    (5,421
    )Comprehensive income
    
    
    7,831
    
    
    
    12,837Comprehensive loss attributable to the noncontrolling interest
    
    
    (12
    )
    
    
    Comprehensive income attributable to ARC
    
    $
    7,843
    
    
    $
    12,837
  12. Earnings per Share
 Earnings per Share,
  14




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AMERICAN REPROGRAPHICS COMPANY
Notes to Condensed Consolidated Financial Statements (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
  Three Months EndedMarch 31,2009
    
    
    2008Weighted average common shares outstanding
during the period  basic
    
    
    45,089,794
    
    
    
    45,045,038Effect of dilutive stock options
    
    
    10,431
    
    
    
    345,789Weighted average common shares outstanding
during the period  diluted
    
    
    45,100,225
    
    
    
    45,390,827
 13. Recent Accounting Pronouncements
  Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly
  Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from Contingencies, .
 Interim Disclosures about Fair Value of Financial Instruments Disclosures about Fair Value of Financial Instruments Interim
Financial Reporting,
 Determining
Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, .
  15




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AMERICAN REPROGRAPHICS COMPANY
Notes to Condensed Consolidated Financial Statements (Concluded)
(Dollars in thousands, except per share data)
(Unaudited)
 Determination of the Useful Life of Intangible
Asset,
    16




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Item 2. 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
report as well as Managements Discussion and Analysis of Financial Condition and Results of
Operations included in our 2008 Annual Report on Form 10-K .
 Executive Summary
    
    
    Document management;
    
    Document distribution and logistics;
    
    Print-on-demand; and
    
    On-site services, frequently referred to as facilities management, or
FMs, which is any combination of the above services supplied at a
customers location.
        17




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Evaluating our Performance.
 
    
    Creating consistent, profitable growth, or in the absence of growth
due to market conditions beyond our control, stable margins superior
to commonly understood industry benchmarks;
    
    Maintaining our industry leadership as measured by our geographical
footprint, market share and revenue generation;
    
    Continuing to develop and invest in our products, services, and
technology to meet the changing needs of our customers;
    
    Maintaining the lowest cost structure in the industry; and
    
    Maintaining a flexible capital structure that provides for both
responsible debt service and pursuit of acquisitions and other
high-return investments.
 Primary Financial Measures.
  Other Common Financial Measures.
 
    
    Net income and earnings per share;
    
    Material costs as a percentage of net sales; and
    
    Days Sales Outstanding/Days Sales Inventory/Days Payable Outstanding.
    Acquisitions.
    18




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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 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.
     
    
    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.
  19




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##### Table of Contents



Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Cash flows provided by operating activities
    
    $
    22,276
    
    
    $
    20,348Changes in operating assets and liabilities
    
    
    1,922
    
    
    
    12,915Non-cash (expenses) income, including
depreciation and amortization
    
    
    (16,663
    )
    
    
    (14,765
    )Income tax provision
    
    
    4,758
    
    
    
    11,452Interest expense, net
    
    
    5,796
    
    
    
    7,146Net loss attributable to the noncontrolling interest
    
    
    12
    
    
    
    EBIT
    
    
    18,101
    
    
    
    37,096Depreciation and amortization
    
    
    12,715
    
    
    
    12,117EBITDA
    
    
    30,816
    
    
    
    49,213Interest expense, net
    
    
    (5,796
    )
    
    
    (7,146
    )Income tax provision
    
    
    (4,758
    )
    
    
    (11,452
    )Depreciation and amortization
    
    
    (12,715
    )
    
    
    (12,117
    )Net income attributable to ARC
    
    $
    7,547
    
    
    $
    18,498
  Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Net income attributable to ARC
    
    $
    7,547
    
    
    $
    18,498Interest expense, net
    
    
    5,796
    
    
    
    7,146Income tax provision
    
    
    4,758
    
    
    
    11,452EBIT
    
    
    18,101
    
    
    
    37,096Depreciation and amortization
    
    
    12,715
    
    
    
    12,117EBITDA
    
    $
    30,816
    
    
    $
    49,213
  20




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##### Table of Contents



Three Months Ended March 31,2009
    
    
    2008Net income margin
    
    
    5.4
    %
    
    
    9.9
    %Interest expense, net
    
    
    4.2
    
    
    
    3.8Income tax provision
    
    
    3.4
    
    
    
    6.1EBIT margin
    
    
    13.0
    
    
    
    19.8Depreciation and amortization
    
    
    9.1
    
    
    
    6.5EBITDA margin
    
    
    22.1
    %
    
    
    26.3
    %
 Results of Operations for the Three Months Ended March 31, 2009 and 2008
  As Percentage of Net SalesThree Months Ended March 31,2009
    
    
    2008Net Sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    62.7
    
    
    
    57.5Gross profit
    
    
    37.3
    
    
    
    42.5Selling, general and administrative expenses
    
    
    22.2
    
    
    
    21.1Amortization of intangibles
    
    
    2.1
    
    
    
    1.7Income from operations
    
    
    13.0
    
    
    
    19.7Other income
    
    
    
    
    
    
    (0.1
    )Interest expense, net
    
    
    4.2
    
    
    
    3.8Income before income tax provision
    
    
    8.8
    
    
    
    16.0Income tax provision
    
    
    3.4
    
    
    
    6.1Net income
    
    
    5.4
    
    
    
    9.9Net loss attributable to the controlling
interest
    
    
    
    
    
    
    Net income attributable to ARC
    
    
    5.4
    %
    
    
    9.9
    %
  21




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##### Table of Contents



Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
 Three Months EndedMarch 31,
    
    
    Increase (decrease)2009
    
    
    2008 (1)
    
    
    (In dollars)
    
    
    (Percent)(In millions)Reprographics services
    
    $
    99.8
    
    
    $
    142.5
    
    
    $
    (42.7
    )
    
    
    -30.0
    %Facilities management
    
    
    26.9
    
    
    
    29.6
    
    
    
    (2.7
    )
    
    
    -9.1Equipment and supplies sales
    
    
    12.8
    
    
    
    15.4
    
    
    
    (2.6
    )
    
    
    -16.9Total net sales
    
    $
    139.5
    
    
    $
    187.4
    
    
    $
    (47.9
    )
    
    
    -25.6
    %Gross profit
    
    $
    52.0
    
    
    $
    79.6
    
    
    $
    (27.6
    )
    
    
    -34.7
    %Selling, general and
administrative expenses
    
    
    31.0
    
    
    
    39.5
    
    
    
    (8.5
    )
    
    
    -21.5Amortization of intangibles
    
    
    3.0
    
    
    
    3.2
    
    
    
    (0.2
    )
    
    
    -6.3Interest expense, net
    
    
    5.8
    
    
    
    7.1
    
    
    
    (1.3
    )
    
    
    -18.3Income taxes
    
    
    4.8
    
    
    
    11.5
    
    
    
    (6.7
    )
    
    
    -58.3Net income attributable to ARC
    
    
    7.5
    
    
    
    18.5
    
    
    
    (11.0
    )
    
    
    -59.5EBITDA
    
    
    30.8
    
    
    
    49.2
    
    
    
    (18.4
    )
    
    
    -37.4
 (1)
    
    column does not foot due to rounding Net Sales.
   Reprographics services.
   Facilities management
  22




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##### Table of Contents



Equipment and supplies sales.
 Gross Profit.
   Selling, General and Administrative Expenses.
    Amortization of Intangibles.
  Other Income.
  Interest Expense, Net.
   23




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##### Table of Contents



Income Taxes.
  Noncontrolling Interest.
  Net Income Attributable to ARC.
  EBITDA.
  Impact of Inflation
  Liquidity and Capital Resources
  Three Months EndedMarch 31,2009
    
    
    2008(Dollars in thousands)Net cash provided by operating activities
    
    $
    22,276
    
    
    $
    20,348Net cash used in investing activities
    
    $
    (2,404
    )
    
    $
    (5,638
    )Net cash used in financing activities
    
    $
    (15,922
    )
    
    $
    (22,734
    )
 Operating Activities
   24




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##### Table of Contents



Investing Activities
  Financing Activities
   March 31, 2009
    
    
    December 31, 2008(Dollars in thousands)Cash and cash equivalents
    
    $
    50,476
    
    
    $
    46,542Working capital
    
    
    25,348
    
    
    
    29,798Borrowings from senior secured
credit facilities
    
    $
    256,094
    
    
    $
    261,250Other debt obligations
    
    
    94,536
    
    
    
    99,790Total debt obligations
    
    $
    350,630
    
    
    $
    361,040
      25




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##### Table of Contents



Debt Obligations
 Senior Secured Credit Facilities.
      26




---



##### Table of Contents



Capital Leases.
 Seller Notes.
 Off-Balance Sheet Arrangements
  Contractual Obligations and Other Commitments
 Operating Leases.
 Contingent Transaction Consideration. Business Combinations
 FIN 48 Liability.
 Legal Proceedings.
 Critical Accounting Policies
  Effective Date of FASB Statement No. 157 Noncontrolling Interests in Consolidated Financial Statements  an Amendment of ARB No. 51 Disclosures about Derivative Instruments and Hedging Activities  an amendment of
FASB Statement No. 133
  27




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##### Table of Contents



Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosure About Market Risk
      
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
   28




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
   29




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##### Table of Contents



Item 6. Exhibits
 EXHIBIT INDEX
 Number
    
    
    Description10.1
    
    
    Amendment to Lease for premises commonly known
as 835 West Julian Street, San Jose, CA, by and
between Sumo Holdings San Jose, LLC and American
Reprographics Company, L.L.C.*10.2
    
    
    Assignment of Lease and Consent for the premises
commonly known as 17721 Mitchell North, Irvine,
CA, by and between OCB LLC, American
Reprographics Company, L.L.C. and Sumo Holdings
Irvine, LLC.*10.3
    
    
    Second Amendment to Lease for the premises
commonly known as 17721 Mitchell North, Irvine,
CA, by and between Sumo Holdings Irvine, LLC and
OCB LLC*31.1
    
    
    Certification of Principal Executive Officer
pursuant to Rules 13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *31.2
    
    
    Certification of Principal Financial Officer
pursuant to Rules 13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *32.1
    
    
    Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. *32.2
    
    
    Certification of Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. *
 *
    
    Filed herewith  30




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##### Table of Contents



SIGNATURES
   AMERICAN REPROGRAPHICS COMPANYBy:
    /s/ Kumarakulasingam SuriyakumarChairman, President and Chief Executive OfficerBy:
    /s/ Jonathan R. MatherChief Financial Officer and Secretary  31




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    
    Description10.1
    
    
    Amendment to Lease for premises commonly known
as 835 West Julian Street, San Jose, CA, by and
between Sumo Holdings San Jose, LLC and American
Reprographics Company, L.L.C.*10.2
    
    
    Assignment of Lease and Consent for the premises
commonly known as 17721 Mitchell North, Irvine,
CA, by and between OCB LLC, American
Reprographics Company, L.L.C. and Sumo Holdings
Irvine, LLC.*10.3
    
    
    Second Amendment to Lease for the premises
commonly known as 17721 Mitchell North, Irvine,
CA, by and between Sumo Holdings Irvine, LLC and
OCB LLC*31.1
    
    
    Certification of Principal Executive Officer
pursuant to Rules 13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. *31.2
    
    
    Certification of Principal Financial Officer
pursuant to Rules 13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. *32.1
    
    
    Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. *32.2
    
    
    Certification of Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. *
 *
    
    Filed herewith  32