##### 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, 2008
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 001-32407
 AMERICAN REPROGRAPHICS COMPANY
  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)
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



AMERICAN REPROGRAPHICS COMPANY
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 2008
Table of Contents
 PART I Financial InformationItem 1. Financial Statements (unaudited)Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007
    
    
    3Consolidated Statements of Income for the three months ended March 31, 2008 and 2007
    
    
    4Condensed Consolidated Statement of Changes in Stockholders Equity for the three months
ended March 31, 2008
    
    
    5Consolidated Statements of Cash Flows for the three months ended March 31, 2008 and 2007
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    25PART IIItem 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 6. Exhibits
    
    
    26SIGNATURES
    
    
    27Index to Exhibits
    
    
    28Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 AMERICAN REPROGRAPHICS COMPANY
 
 CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
(Unaudited)
 March 31,
    
    
    December 31,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    16,796
    
    
    $
    24,802Restricted cash
    
    
    
    
    
    
    937Accounts receivable, net of allowances of $5,869 and $5,092
at March 31, 2008 and December 31, 2007, respectively
    
    
    106,894
    
    
    
    97,934Inventories, net
    
    
    11,146
    
    
    
    11,233Deferred income taxes
    
    
    5,792
    
    
    
    5,791Prepaid expenses and other current assets
    
    
    10,346
    
    
    
    10,234Total current assets
    
    
    150,974
    
    
    
    150,931Property and equipment, net
    
    
    86,881
    
    
    
    84,634Goodwill
    
    
    386,657
    
    
    
    382,519Other intangible assets, net
    
    
    84,471
    
    
    
    86,349Deferred financing costs, net
    
    
    4,764
    
    
    
    5,170Deferred income taxes
    
    
    12,261
    
    
    
    10,710Other assets
    
    
    2,267
    
    
    
    2,298Total assets
    
    $
    728,275
    
    
    $
    722,611Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    33,955
    
    
    $
    35,659Accrued payroll and payroll-related expenses
    
    
    16,417
    
    
    
    19,293Accrued expenses
    
    
    23,431
    
    
    
    22,030Current portion of long-term debt and capital leases
    
    
    62,128
    
    
    
    69,254Total current liabilities
    
    
    135,931
    
    
    
    146,236Long-term debt and capital leases
    
    
    316,906
    
    
    
    321,013Other long-term liabilities
    
    
    10,024
    
    
    
    3,711Total liabilities
    
    
    462,861
    
    
    
    470,960Commitments and contingencies (Note 9)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;
45,562,724 and 45,561,773 shares issued and outstanding
    
    
    46
    
    
    
    46Additional paid-in capital
    
    
    81,962
    
    
    
    81,153Deferred stock-based compensation
    
    
    (556
    )
    
    
    (673
    )Retained earnings
    
    
    197,590
    
    
    
    179,092Accumulated other comprehensive income
    
    
    (5,919
    )
    
    
    (258
    )273,123
    
    
    
    259,360Less cost of common stock in treasury, 447,654 shares
    
    
    7,709
    
    
    
    7,709Total stockholders equity
    
    
    265,414
    
    
    
    251,651Total liabilities and stockholders equity
    
    $
    728,275
    
    
    $
    722,611
   3




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AMERICAN REPROGRAPHICS COMPANY
 
 CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007Reprographics services
    
    $
    142,496
    
    
    $
    119,779Facilities management
    
    
    29,551
    
    
    
    26,356Equipment and supplies sales
    
    
    15,396
    
    
    
    14,079Total net sales
    
    
    187,443
    
    
    
    160,214Cost of sales
    
    
    107,840
    
    
    
    92,435Gross profit
    
    
    79,603
    
    
    
    67,779Selling, general and administrative expenses
    
    
    39,521
    
    
    
    34,234Amortization of intangible assets
    
    
    3,188
    
    
    
    1,745Income from operations
    
    
    36,894
    
    
    
    31,800Other income
    
    
    (202
    )
    
    
    Interest expense, net
    
    
    7,146
    
    
    
    5,161Income before income tax provision
    
    
    29,950
    
    
    
    26,639Income tax provision
    
    
    11,452
    
    
    
    9,795Net income
    
    $
    18,498
    
    
    $
    16,844Earnings per share:Basic
    
    $
    0.41
    
    
    $
    0.37Diluted
    
    $
    0.41
    
    
    $
    0.37Weighted average common shares outstanding:Basic
    
    
    45,045,038
    
    
    
    45,344,317Diluted
    
    
    45,390,827
    
    
    
    45,790,548
   4




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AMERICAN REPROGRAPHICS COMPANY
 
 CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS EQUITY
(Dollars in thousands, except per share)
(Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Common
    
    
    TotalCommon Stock
    
    
    Paid-In
    
    
    Deferred
    
    
    Retained
    
    
    Comprehensive
    
    
    Stock in
    
    
    StockholdersShares
    
    
    Par Value
    
    
    Capital
    
    
    Compensation
    
    
    Earnings
    
    
    Income
    
    
    Treasury
    
    
    EquityBalance at December 31, 2007
    
    
    45,561,773
    
    
    $
    46
    
    
    $
    81,153
    
    
    $
    (673
    )
    
    $
    179,092
    
    
    $
    (258
    )
    
    $
    (7,709
    )
    
    $
    251,651Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    796
    
    
    
    117
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    913Issuance of common stock under
Employee Stock Purchase Plan
    
    
    951
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,498
    
    
    
    
    
    
    
    
    
    
    
    18,498Foreign currency translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (240
    )
    
    
    
    
    
    
    (240
    )Fair value adjustment of
derivatives, net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,421
    )
    
    
    
    
    
    
    (5,421
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,837Balance at March 31, 2008
    
    
    45,562,724
    
    
    $
    46
    
    
    $
    81,962
    
    
    $
    (556
    )
    
    $
    197,590
    
    
    $
    (5,919
    )
    
    $
    (7,709
    )
    
    $
    265,414
   5




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##### Table of Contents



AMERICAN REPROGRAPHICS COMPANY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007Cash flows from operating activitiesNet income
    
    $
    18,498
    
    
    $
    16,844Adjustments to reconcile net income to net cash provided by operating activities:Depreciation
    
    
    8,929
    
    
    
    6,613Amortization of intangible assets
    
    
    3,188
    
    
    
    1,745Amortization of deferred financing costs
    
    
    260
    
    
    
    89Stock-based compensation
    
    
    912
    
    
    
    572Excess tax benefit related to stock options exercised
    
    
    
    
    
    
    (1,138
    )Deferred income taxes
    
    
    613
    
    
    
    1,329Other non-cash items, net
    
    
    863
    
    
    
    185Changes in operating assets and liabilities, net of effect of business acquisitions:Accounts receivable
    
    
    (9,478
    )
    
    
    (7,308
    )Inventory
    
    
    438
    
    
    
    (261
    )Prepaid expenses and other assets
    
    
    1,426
    
    
    
    217Accounts payable and accrued expenses
    
    
    (5,301
    )
    
    
    (7,481
    )Net cash provided by operating activities
    
    
    20,348
    
    
    
    11,406Cash flows from investing activitiesCapital expenditures
    
    
    (2,301
    )
    
    
    (2,128
    )Payments for businesses acquired, net of cash acquired
and including other cash payments associated with
the acquisitions
    
    
    (4,831
    )
    
    
    (22,044
    )Restricted cash
    
    
    940
    
    
    
    Other
    
    
    554
    
    
    
    98Net cash used in investing activities
    
    
    (5,638
    )
    
    
    (24,074
    )Cash flows from financing activitiesProceeds from stock option exercises
    
    
    
    
    
    
    592Proceeds from issuance of common stock under Employee Stock Purchase Plan
    
    
    13
    
    
    
    11Excess tax benefit related to stock options exercised
    
    
    
    
    
    
    1,138Payments on long-term debt agreements and capital leases
    
    
    (12,115
    )
    
    
    (6,052
    )Net (repayments) borrowings under revolving credit facility
    
    
    (10,000
    )
    
    
    18,000Payment of loan fees
    
    
    (632
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (22,734
    )
    
    
    13,689Effect of foreign currency translation on cash balances
    
    
    18
    
    
    
    Net change in cash and cash equivalents
    
    
    (8,006
    )
    
    
    1,021Cash and cash equivalents at beginning of period
    
    
    24,802
    
    
    
    11,642Cash and cash equivalents at end of period
    
    $
    16,796
    
    
    $
    12,663Supplemental disclosure of cash flow informationNoncash investing and financing activitiesCapital lease obligations incurred
    
    $
    9,184
    
    
    $
    7,056Issuance of subordinated notes in connection with the
acquisition of businesses
    
    $
    1,660
    
    
    $
    Change in fair value of derivatives, net of tax effects
    
    $
    (5,421
    )
    
    $
    (41
    )
   6




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AMERICAN REPROGRAPHICS COMPANY
 
 Notes to Consolidated Financial Statements
(Unaudited)
 1. Description of Business and Basis of Presentation
  Basis of Presentation
    Reclassifications
  2. Stock-Based Compensation
     7




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3. Employee Stock Purchase Plan
   4. Acquisitions
   Three MonthsEndedMarch 31,2007(unaudited)Net sales
    
    $
    190,317Net income
    
    
    17,256Earnings per share  basic
    
    $
    0.38Earnings per share  diluted
    
    $
    0.38
 5. Goodwill and Other Intangibles Resulting from Business Acquisitions
 Business Combinations
  Goodwill(unaudited)(Dollars in thousands)Balance at December 31, 2007
    
    $
    382,519Additions
    
    
    3,993Translation adjustment
    
    
    145Balance at March 31, 2008
    
    $
    386,657
   8




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March 31, 2008
    
    
    December 31, 2007Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    Amount(Dollars in thousands)
    
    
    (Dollars in thousands)Amortizable other intangible assets:Customer relationships
    
    $
    88,342
    
    
    $
    21,590
    
    
    $
    66,752
    
    
    $
    87,045
    
    
    $
    19,098
    
    
    $
    67,947Trade names and trademarks
    
    
    18,359
    
    
    
    1,399
    
    
    
    16,960
    
    
    
    18,359
    
    
    
    848
    
    
    
    17,511Non-Compete Agreements
    
    
    1,278
    
    
    
    519
    
    
    
    759
    
    
    
    1,278
    
    
    
    387
    
    
    
    891$
    107,979
    
    
    $
    23,508
    
    
    $
    84,471
    
    
    $
    106,682
    
    
    $
    20,333
    
    
    $
    86,349
  2008
    
    $
    8,2602009
    
    
    10,0762010
    
    
    8,9492011
    
    
    8,1052012
    
    
    7,293Thereafter
    
    
    41,788$
    84,471
 6. Long-Term Debt
  March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)(Dollars in thousands)Borrowings from senior secured First Priority  Revolving Credit
Facility; variable interest payable quarterly (weighted average 4.9% and
7.2% interest rate at March 31, 2008 and December 31, 2007, respectively);
any unpaid principal and interest due December 6, 2012
    
    $
    12,000
    
    
    $
    22,000Borrowings from senior secured First Priority  Term Loan Credit Facility;
interest payable quarterly (weighted average 5.9% and 6.9%
interest rate at March 31, 2008 and December 31, 2007, respectively);
principal payable in varying quarterly installments;
any unpaid principal and interest due December 6, 2012
    
    
    271,563
    
    
    
    275,000Various subordinated notes payable; weighted average 6.3% interest rate
at March 31, 2008 and December 31, 2007; principal
and interest payable monthly through June 2012
    
    
    36,750
    
    
    
    38,082Various capital leases; weighted average 8.6% and 8.8% interest rate
at March 31, 2008 and December 31, 2007, respectively;
principal and interest payable monthly through March 2014
    
    
    58,721
    
    
    
    55,185379,034
    
    
    
    390,267Less current portion
    
    
    (62,128
    )
    
    
    (69,254
    )$
    316,906
    
    
    $
    321,013
  9




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7. Fair Value Measurements
 Fair Value Measurements
      10




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##### Table of Contents



At Fair Value as of March 31, 2008Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Liabilities
    
    
    Observable Inputs
    
    
    Unobservable InputsRecurring Fair Value Measures
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Total(Dollars in thousands)Interest rate swap
    
    $
    0
    
    
    $
    10,300
    
    
    $
    0
    
    
    $
    10,300
   8. Income Taxes
   9. Commitments and Contingencies
 Operating Leases.
 Contingent Transaction Consideration.
 Chinese Joint Venture Agreement.
 FIN 48 Liability.
   11




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10. Comprehensive Income
  Three Months EndedMarch 31,2008
    
    
    2007(Unaudited)(Dollars in thousands)Net income
    
    $
    18,498
    
    
    $
    16,844Foreign currency translation adjustments
    
    
    (240
    )
    
    
    (129
    )Decrease in fair value of financial derivative instruments, net of tax effects
    
    
    (5,421
    )
    
    
    (41
    )Comprehensive income
    
    $
    12,837
    
    
    $
    16,674
  11. Earnings per Share
 Earnings per Share
  Three Months EndedMarch 31,2008
    
    
    2007(Unaudited)Weighted average common shares outstanding during the period  basic
    
    
    45,045,038
    
    
    
    45,344,317Effect of dilutive stock options
    
    
    345,789
    
    
    
    446,231Weighted average common shares outstanding during the period  diluted
    
    
    45,390,827
    
    
    
    45,790,548
 12. Recent Accounting Pronouncements
 Fair Value Measurements.
 Effective Date of FASB
Statement No. 157
  12




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The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an Amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133 Accounting for Derivative
Instruments and Hedging Activities
  13




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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 included in our 2007 Annual Report on Form 10-K .
 In addition to historical information, this report on Form 10-Q contains certain forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.
These statements relate to future events or future financial performance, and include statements
regarding the Companys business strategy, timing of, and plans for, the introduction of new
products and enhancements, future sales, market growth and direction, competition, market share,
revenue growth, operating margins and profitability. All forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause our actual results, levels of
activity, performance or achievements to be materially different from any future results, levels of
activity, performance or achievements, expressed or implied, by these forward looking statements.
In some cases, you can identify forward-looking statements by terminology such as may, will,
should, expects, intends, plans, anticipates, believes, estimates, predicts,
potential, continue, or the negative of these terms or other comparable terminology. These
statements are only predictions and are based upon information available to the Company as of the
date of this report. We undertake no on-going obligation, other than that imposed by law, to update
these forward-looking statements.
 Actual results could differ materially from our current expectations. Factors that could cause
actual results to differ materially from current expectations, include among others, the following:
(i) general economic conditions, such as changes in construction spending, GDP growth, interest
rates, employment rates, office vacancy rates, and government expenditures; (ii) a downturn in the
architectural, engineering and construction industry; (iii) competition in our industry and
innovation by our competitors; (iv) our failure to anticipate and adapt to future changes in our
industry; (v) failure to continue to develop and introduce new products and services successfully;
(vi) our inability to charge for value-added services we provide our customers to offset potential
declines in print volume; (vii) adverse developments affecting the State of California, including
general and local economic conditions, macroeconomic trends, and natural disasters; (viii) our
inability to successfully complete and manage our acquisitions or open new branches; (ix) 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; (x) adverse developments concerning our relationships
with certain key vendors; and (xi) the loss of key personnel and qualified technical staff.
 Although we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
These forward-looking statements are subject to numerous risks and uncertainties, including, but
not limited to, the risks and uncertainties described in the Risk Factors section of our 2007
Annual Report on Form 10-K . You are urged to carefully consider these factors. All forward-looking
statements attributable to us are expressly qualified in their entirety by the foregoing cautionary
statements.
 Executive Summary
   
    
    Document management;
    
    Document distribution & logistics;
    
    Print-on-demand; and
    
    On-site services, frequently referred to as facilities management, or
FMs, (any combination of the above services supplied at a customers
location).
   14




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.
  Evaluating our Performance.
 
    
    Creating consistent, profitable revenue 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 the 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 Accounts Payable.
    15




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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 are equivalent to our 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 Measures
      16




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
    
    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.
  Three Months Ended March 31,2008
    
    
    2007(Dollars in thousands)Cash flows provided by operating activities
    
    $
    20,348
    
    
    $
    11,406Changes in operating assets and liabilities
    
    
    12,915
    
    
    
    14,833Non-cash (expenses) income, including
depreciation and amortization
    
    
    (14,765
    )
    
    
    (9,395
    )Income tax provision
    
    
    11,452
    
    
    
    9,795Interest expense
    
    
    7,146
    
    
    
    5,161EBIT
    
    $
    37,096
    
    
    $
    31,800Depreciation and amortization
    
    
    12,117
    
    
    
    8,358EBITDA
    
    $
    49,213
    
    
    $
    40,158Interest expense
    
    
    (7,146
    )
    
    
    (5,161
    )Income tax provision
    
    
    (11,452
    )
    
    
    (9,795
    )Depreciation and amortization
    
    
    (12,117
    )
    
    
    (8,358
    )Net income
    
    $
    18,498
    
    
    $
    16,844
  17




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##### Table of Contents



Three Months Ended March 31,2008
    
    
    2007(Dollars in thousands)Net income
    
    $
    18,498
    
    
    $
    16,844Interest expense, net
    
    
    7,146
    
    
    
    5,161Income tax provision
    
    
    11,452
    
    
    
    9,795EBIT
    
    $
    37,096
    
    
    $
    31,800Depreciation and amortization
    
    
    12,117
    
    
    
    8,358EBITDA
    
    $
    49,213
    
    
    $
    40,158
  Three Months Ended March 31,2008
    
    
    2007Net income margin
    
    
    9.9
    %
    
    
    10.5
    %Interest expense, net
    
    
    3.8
    %
    
    
    3.2
    %Income tax provision
    
    
    6.1
    %
    
    
    6.1
    %EBIT margin
    
    
    19.8
    %
    
    
    19.8
    %Depreciation and amortization
    
    
    6.5
    %
    
    
    5.2
    %EBITDA margin
    
    
    26.3
    %
    
    
    25.0
    %
 Results of Operations for the Three Months Ended March 31, 2008 and 2007
  As Percentage of Net SalesThree Months Ended March 31,2008
    
    
    2007Net Sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    57.5
    
    
    
    57.7Gross profit
    
    
    42.5
    
    
    
    42.3Selling, general and administrative expenses
    
    
    21.1
    
    
    
    21.4Amortization of intangibles
    
    
    1.7
    
    
    
    1.1Income from operations
    
    
    19.7
    
    
    
    19.8Other income
    
    
    (0.1
    )
    
    
    Interest expense, net
    
    
    3.8
    
    
    
    3.2Income before income tax provision
    
    
    16.0
    
    
    
    16.6Income tax provision
    
    
    6.1
    
    
    
    6.1Net income
    
    
    9.9
    %
    
    
    10.5
    %
  18




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##### Table of Contents



Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
 Three Months EndedMarch 31,
    
    
    Increase (decrease)2008
    
    
    2007
    
    
    (In dollars)
    
    
    (Percent)(In millions)Reprographics services
    
    $
    142.5
    
    
    $
    119.8
    
    
    $
    22.7
    
    
    
    18.9
    %Facilities management
    
    
    29.6
    
    
    
    26.3
    
    
    
    3.3
    
    
    
    12.5
    %Equipment and supplies sales
    
    
    15.4
    
    
    
    14.1
    
    
    
    1.3
    
    
    
    9.2
    %Total net sales
    
    
    187.4
    
    
    
    160.2
    
    
    
    27.2
    
    
    
    17.0
    %Gross profit
    
    
    79.6
    
    
    
    67.8
    
    
    
    11.8
    
    
    
    17.4
    %Selling, general and
administrative expenses
    
    
    39.5
    
    
    
    34.2
    
    
    
    5.3
    
    
    
    15.5
    %Amortization of intangibles
    
    
    3.2
    
    
    
    1.7
    
    
    
    1.5
    
    
    
    88.2
    %Interest expense, net
    
    
    7.1
    
    
    
    5.2
    
    
    
    1.9
    
    
    
    36.5
    %Income taxes
    
    
    11.5
    
    
    
    9.8
    
    
    
    1.7
    
    
    
    17.3
    %Net Income
    
    
    18.5
    
    
    
    16.8
    
    
    
    1.7
    
    
    
    10.1
    %EBITDA
    
    
    49.2
    
    
    
    40.2
    
    
    
    9.0
    
    
    
    22.4
    %
 Net Sales.
   Reprographics services.
  Facilities management
 Equipment and supplies sales.
  19




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##### Table of Contents



Gross Profit.
   Selling, General and Administrative Expenses.
    Amortization of Intangibles.
  Other Income.
  Interest Expense, Net.
   20




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##### Table of Contents



Income Taxes.
  Net Income.
  EBITDA.
  Impact of Inflation
  Liquidity and Capital Resources
  Three Months Ended March 31,2008
    
    
    2007(Unaudited)(Dollars in thousands)Net cash provided by operating activities
    
    $
    20,348
    
    
    $
    11,406Net cash used in investing activities
    
    $
    (5,638
    )
    
    $
    (24,074
    )Net cash (used in) provided by financing activities
    
    $
    (22,734
    )
    
    $
    13,689
 Operating Activities
   21




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##### Table of Contents



Investing Activities
  Financing Activities
   March 31, 2008
    
    
    December 31, 2007(Unaudited)(Dollars in thousands)Cash and cash equivalents
    
    $
    16,796
    
    
    $
    24,802Working capital
    
    
    15,043
    
    
    
    4,695Borrowings from senior secured credit facilities
    
    
    283,563
    
    
    
    297,000Other debt obligations
    
    
    95,471
    
    
    
    93,267Total debt obligations
    
    $
    379,034
    
    
    $
    390,267
   .
 Debt Obligations
 Senior Secured Credit Facilities.
   22




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##### Table of Contents



Seller Notes.
 Off-Balance Sheet Arrangements
  Contractual Obligations and Other Commitments
 Operating Leases.
 Contingent Transaction Consideration.
 Chinese Joint Venture Agreement.
 FIN 48 Liability.
  23




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##### Table of Contents



Critical Accounting Policies
   Recent Accounting Pronouncements
 Fair Value Measurements.
 Effective Date of FASB
Statement No. 157
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an Amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133 Accounting for Derivative
Instruments and Hedging Activities
  24




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosure About Market Risk
     
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
   Changes in Internal Controls over Financial Reporting
   25




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##### Table of Contents



PART II
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 6. Exhibits
  Number
    
    Description31.1
    
    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 by the Chief Executive Officer and 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  26




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##### Table of Contents



SIGNATURE PAGE
  AMERICAN REPROGRAPHICS COMPANYBy:
    /s/ Kumarakulasingam SuriyakumarPresident and Chief Executive OfficerBy:
    /s/ Jonathan R. MatherChief Financial Officer and Secretary  27




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    Description31.1
    
    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 by the Chief Executive Officer and 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  28