ARC Document Solutions, Inc. Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) March 31, December 31, Current assets: 2015 2014 ------------ ------------ Cash and cash equivalents $ 17,561 $ 22,636 Accounts receivable, net of allowances for accounts receivable of $2,371 and $2,413 66,046 62,045 Inventories, net 17,354 16,251 Deferred income taxes 277 278 Prepaid expenses 5,247 4,767 Other current assets 3,913 6,080 ------------ ------------ Total current assets 110,398 112,057 Property and equipment, net of accumulated depreciation of $218,850 and $214,697 58,897 59,520 Goodwill 212,608 212,608 Other intangible assets, net 22,228 23,841 Deferred financing fees, net 2,296 2,440 Deferred income taxes 992 1,110 Other assets 2,686 2,492 ------------ ------------ Total assets $ 410,105 $ 414,068 ============ ============ Current liabilities: Accounts payable $ 23,701 $ 26,866 Accrued payroll and payroll-related expenses 11,788 13,765 Accrued expenses 21,253 22,793 Current portion of long-term debt and capital leases 28,303 27,969 ------------ ------------ Total current liabilities 85,045 91,393 Long-term debt and capital leases 171,890 175,916 Deferred income taxes 34,050 33,463 Other long-term liabilities 3,464 3,458 ------------ ------------ Total liabilities 294,449 304,230 ------------ ------------ Commitments and contingencies Stockholders' equity: ARC Document Solutions, Inc. stockholders' equity: Preferred stock, $0.001 par value, 25,000 shares authorized; 0 shares issued and outstanding -- -- Common stock, $0.001 par value, 150,000 shares authorized; 47,039 and 46,800 shares issued and 46,962 and 46,723 shares outstanding 47 47 Additional paid-in capital 112,573 110,650 Retained deficit (2,917) (7,353) Accumulated other comprehensive loss (678) (161) ------------ ------------ 109,025 103,183 Less cost of common stock in treasury, 77 and 77 shares 408 408 ------------ ------------ Total ARC Document Solutions, Inc. stockholders' equity 108,617 102,775 Noncontrolling interest 7,039 7,063 ------------ ------------ Total equity 115,656 109,838 ------------ ------------ Total liabilities and equity $ 410,105 $ 414,068 ============ ============ ARC Document Solutions, Inc. Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three Months Ended March 31, ------------------------ 2015 2014 ----------- ----------- Service sales $ 93,325 $ 88,931 Equipment and supplies sales 10,994 11,442 ----------- ----------- Total net sales 104,319 100,373 Cost of sales 68,298 66,439 ----------- ----------- Gross profit 36,021 33,934 Selling, general and administrative expenses 27,455 26,106 Amortization of intangible assets 1,489 1,498 Restructuring expense 74 483 ----------- ----------- Income from operations 7,003 5,847 Other income, net (26) (26) Interest expense, net 1,857 3,913 ----------- ----------- Income before income tax provision 5,172 1,960 Income tax provision 761 664 ----------- ----------- Net income 4,411 1,296 Loss attributable to noncontrolling interest 25 100 ----------- ----------- Net income attributable to ARC Document Solutions, Inc. shareholders $ 4,436 $ 1,396 =========== =========== Earnings per share attributable to ARC Document Solutions, Inc. shareholders: Basic $ 0.10 $ 0.03 =========== =========== Diluted $ 0.09 $ 0.03 =========== =========== Weighted average common shares outstanding: Basic 46,443 45,990 Diluted 47,654 46,782 ARC Document Solutions, Inc. Non-GAAP Measures Reconciliation of cash flows provided by operating activities to EBIT, EBITDA and Adjusted EBITDA (In thousands) (Unaudited) Three Months Ended March 31, ------------------------ 2015 2014 ----------- ----------- Cash flows provided by operating activities $ 5,288 $ 7,714 Changes in operating assets and liabilities, net of effect of business acquisitions 9,416 4,229 Non-cash expenses, including depreciation, amortization and restructuring (10,293) (10,647) Income tax provision 761 664 Interest expense, net 1,857 3,913 Loss attributable to the noncontrolling interest 25 100 ----------- ----------- EBIT 7,054 5,973 Depreciation and amortization 8,555 8,493 ----------- ----------- EBITDA 15,609 14,466 Trade secret litigation costs(1) 34 398 Restructuring expense 74 483 Stock-based compensation 1,083 781 ----------- ----------- Adjusted EBITDA $ 16,800 $ 16,128 =========== ===========