ARC Document Solutions Reports Results for Second Quarter 2013

ARC Document Solutions Reports Results for Second Quarter 2013 
WALNUT CREEK, CA -- (Marketwired) -- 08/06/13 --  ARC Document
Solutions, Inc. (NYSE: ARC), the nation's leading document solutions
company for the architecture, engineering, and construction (AEC)
industry, today reported its financial results for the second quarter
ended June 30, 2013. 
Business Highlights: 


 
--  Q2 adjusted earnings per share of $0.04 vs. $0.02 in Q2 2012
--  Gross margin for the second quarter was 34.0%, a year-over-year
    increase of 220 basis points
--  Cash from operations was $20.0 million for the six months ended June
    30, 2013, vs. $16.9 million for the same period last year
--  Repurchased $7.0 million of ARC bonds in July; results in full-year
    annual interest savings of more than $700,000
--  Revises 2013 fully-diluted annual adjusted earnings per share forecast
    to be in the range $0.06 to $0.09 and maintains projected 2013 annual
    cash from operating activities to be in the range of $38-$45 million
    
    

 
                                                                            
Financial Highlights:                                                       
                                                                            
                                   Three Months Ended      Six Months Ended 
                                         June 30               June 30      
                                ---------------------  -------------------- 
(All dollar figures in                                                      
 millions, except EPS)             2013        2012       2013       2012   
                                ----------  ---------  ---------  --------- 
Net Revenue                     $    104.6  $   106.2  $   204.7  $   209.8 
Gross Margin                          34.0%      31.8%      33.2%      31.3%
Net Income (Loss) attributable                                              
 to ARC                         $      0.7  $    (1.1) $     1.1  $    (6.0)
Adjusted Net Income (Loss)                                                  
 attributable to ARC            $      1.6  $     0.8  $     2.2  $     0.9 
EPS                             $     0.02  $   (0.02) $    0.02  $   (0.13)
Adjusted EPS                    $     0.04  $    0.02  $    0.05  $    0.02 
                                                                            
Cash from Operations            $      8.1  $     4.5  $    20.0  $    16.9 
Capital Expenditures            $      4.4  $     5.5  $    10.0  $     9.3 
                                                                            
Debt & Capital Leases                                                       
 (including current)                                   $   220.8  $   224.4 

 
Management Commentary:
 "The company continues to gain strength and
momentum as a technology-enabled document solutions provider," said
K. "Suri" Suriyakumar, Chairman, President and CEO of ARC Document
Solutions. "While nonresidential construction is still recovering,
the addressable market for ARC continues to grow with new offerings
fuelled by our investments in technology. This is clearly
demonstrated by our growth in managed print services, which is
powered by our proprietary Abacus software." 
"In addition, as the markets improve and our revenues stabilize, our
performance is clearly having the desired effect on our margins, and
strong cash generation has opened up opportunities to de-lever and
lower our annual interest costs," Mr. Suriyakumar said. "While we
will continue to drive margin expansion through the rest of the year,
we remain committed to developing new technology solutions, which
will allow us to solidify our position as a leader in the document
solutions space."  
"With just a one percent year-over-year decline in North American
daily sales during the quarter, and continuing strength in our MPS
and color sales, we've made significant progress in reversing the
revenue trends that have characterized our performance since the
early days of the recession," said John Toth, ARC Document Solution's
Chief Financial Officer. "Between our margin expansion and these
early steps in our deleveraging program, we are building a strong
foundation from which to build in the years ahead." 
2013 Second Quarter Supplemental Information:
 Net sales were $104.6
million, a 1.5% decrease compared to the second quarter of 2012.  
Daily sales for North America decreased 1.0% year-over year with 64
days in the period, compared to 64 days in 2Q 2012.  
There were 54 days sales outstanding in Q2 2013 compared to 51 days
in Q2 2012. 
AEC customers comprised approximately 75% of our total net sales,
while non-AEC customers made up 25% of our total net sales. 
Total number of Onsite Services contracts was approximately 7,300, a
gain of more than 175 contracts in Q2 2013. 


 
                                                                  
         Sales from Services and Product Lines as a Percentage of 
          Net Sales                                               
                                               Three Months Ended 
                                                    June 30       
                                             ---------------------
         Services and Product Line              2013       2012   
         ----------------------------------- ---------- ----------
         Traditional Reprographics              29.2%      32.3%  
         Onsite Services                        29.2%      25.9%  
         Color Services                         20.9%      19.3%  
         Digital Services                       8.3%       9.0%   
         Equipment and Supplies Sales           12.4%      13.6%  

 
Sales Reporting Format
 In February 2013, ARC Document Solutions
announced that in its statement of operations the Company would begin
reporting net sales under "Service sales" and "Equipment and supplies
sales" to better identify and report its individual services and
product lines. The two new categories replace the three categories
previously used to report net sales of "Reprographics services,"
"Facilities management," and "Equipment and supplies sales." 
"Service sales" includes traditional reprographics services, onsite
services, color printing services, and digital services. "Equipment
and supplies sales" is self-explanatory. Net sales for the individual
services and product lines that comprise each category are reported
and reconciled in the Company's "Net Sales by Services and Product
Line" table included herein. For historical comparisons, please
consult the Company's 2012 annual report on Form 10-K. 
Outlook: 
 ARC Document Solutions revised its annual adjusted
earnings per share forecast for 2013 to be in the range of $0.06 to
$0.09 on a fully-diluted basis, and maintains its annual cash flow
from operations to be in the range of $38 million to $45 million. 
Teleconference and Webcast: 
 ARC Document Solutions will host a
conference call and audio webcast today at 2:00 P.M. Pacific Time
(5:00 P.M. Eastern Time) to discuss results for the Company's second
quarter of 2013. The conference call can be accessed by dialing (888)
265-9177. The conference ID number is 15526230.  
A live Webcast will also be made available on the investor relations
page of ARC's website at www.e-arc.com.
 A replay will be available
approximately one hour after the call for seven days following the
call's conclusion. To access the replay, dial (855) 859-2056. The
conference ID number to access the replay is 15526230. A Web archive
will be made available at http://www.e-arc.com for approximately 90
days following the call's conclusion. 
About ARC Document Solutions (NYSE: ARC) 
 ARC Document Solutions is
a leading document solutions company serving businesses of all types,
with an emphasis on the non-residential segment of the architecture,
engineering and construction industries. The Company helps more than
90,000 customers reduce costs and increase efficiency in the use of
their documents, improve document access and control, and offers a
wide variety of ways to print, produce, and store documents. ARC
provides its solutions onsite in more than 7,000 of its customers'
offices, offsite in service centers around the world, and digitally
in the form of proprietary software and web applications. For more
information please visit www.e-arc.com. 
Forward-Looking Statements 
 This press release contains
forward-looking statements that are based on current opinions,
estimates and assumptions of management regarding future events and
the future financial performance of the Company. Words such as
"expected," "consider" "intended," and similar expressions identify
forward-looking statements and all statements other than statements
of historical fact, including, but not limited to, any projections
regarding earnings, revenues and financial performance of the
Company, could be deemed forward-looking statements. We caution you
that such statements are only predictions and are subject to certain
risks and uncertainties that could cause actual results to differ
materially from those contained in the forward-looking statements. In
addition to matters affecting the construction, managed print
services, document management or reprographics industries, or the
economy generally, factors that could cause actual results to differ
from expectations stated in forward-looking statements include, among
others, the factors described in the caption entitled "Risk Factors"
in Item 1A in ARC Document Solution's Annual Report on Form 10-K for
the fiscal year ended December 31, 2012, Quarterly Reports on Form
10-Q, and other periodic filings and prospectuses. The Company
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events, or
otherwise, except as required by law. 


 
                                                                            
                                                                            
ARC Document Solutions, Inc.                                                
Consolidated Balance Sheets                                                 
(Dollars in thousands, except per share data)                               
(Unaudited)                                                                 
                                                                            
                                                    June 30,    December 31,
                                                 ------------- -------------
                                                      2013          2012    
                                                 ------------- -------------
Assets                                                                      
Current assets:                                                             
Cash and cash equivalents                        $      32,377 $      28,021
Accounts receivable, net of allowances for                                  
 accounts receivable of $2,736                                              
and $2,634                                              63,111        51,855
Inventories, net                                        13,717        14,251
Deferred income taxes                                      386            --
Prepaid expenses                                         3,993         3,277
Other current assets                                     3,318         6,819
                                                 ------------- -------------
Total current assets                                   116,902       104,223
                                                                            
Property and equipment, net of accumulated                                  
 depreciation of $201,643 and $197,830                  56,552        56,471
Goodwill                                               212,608       212,608
Other intangible assets, net                            31,021        34,498
Deferred financing costs, net                            3,658         4,219
Deferred income taxes                                    1,350         1,246
Other assets                                             2,275         2,574
                                                 ------------- -------------
Total assets                                     $     424,366 $     415,839
                                                 ============= =============
                                                                            
Liabilities and Equity                                                      
Current liabilities:                                                        
Accounts payable                                 $      24,824 $      21,215
Accrued payroll and payroll-related expenses             9,834         6,774
Accrued expenses                                        21,958        22,321
Current portion of long-term debt and capital                               
 leases                                                 12,061        13,263
                                                 ------------- -------------
Total current liabilities                               68,677        63,573
                                                                            
Long-term debt and capital leases                      208,722       209,262
Deferred income taxes                                   30,319        28,936
Other long-term liabilities                              3,137         3,231
                                                 ------------- -------------
Total liabilities                                      310,855       305,002
                                                 ------------- -------------
                                                                            
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; 46,356 and 46,274 shares issued and                            
 46,316 and 46,262 shares outstanding                       46            46
Additional paid-in capital                             103,840       102,510
Retained earnings                                        1,832           695
Accumulated other comprehensive income                     411           689
                                                 ------------- -------------
                                                       106,129       103,940
Less cost of common stock in treasury, 40 and 12                            
 shares                                                    134            44
                                                 ------------- -------------
Total ARC Document Solutions, Inc. stockholders'                            
 equity                                                105,995       103,896
Noncontrolling interest                                  7,516         6,941
                                                 ------------- -------------
Total equity                                           113,511       110,837
                                                 ------------- -------------
Total liabilities and equity                     $     424,366 $     415,839
                                                 ============= =============
                                                                            
                                                                            
                                                                            
ARC Document Solutions, Inc.                                                
Consolidated Statements of Operations                                       
(Dollars in thousands, except per share data)                               
(Unaudited)                                                                 
                                                                            
                                  Three Months Ended     Six Months Ended   
                                       June 30,              June 30,       
                                 --------------------  -------------------- 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
                                                                            
Service sales                    $  91,628  $  91,783  $ 179,428  $ 181,455 
Equipment and supplies sales        12,994     14,445     25,230     28,346 
                                 ---------  ---------  ---------  --------- 
  Total net sales                  104,622    106,228    204,658    209,801 
Cost of sales                       69,011     72,475    136,668    144,170 
                                 ---------  ---------  ---------  --------- 
  Gross profit                      35,611     33,753     67,990     65,631 
Selling, general and                                                        
 administrative expenses            24,891     23,973     48,664     47,430 
Amortization of intangible                                                  
 assets                              1,699      2,805      3,446      7,398 
Restructuring expense                  636          -      1,108          - 
                                 ---------  ---------  ---------  --------- 
  Income from operations             8,385      6,975     14,772     10,803 
Other income, net                      (35)       (24)       (61)       (54)
Interest expense, net                6,076      7,255     12,117     14,693 
                                 ---------  ---------  ---------  --------- 
Income (loss) before income tax                                             
 provision                           2,344       (256)     2,716     (3,836)
Income tax provision                 1,467        619      1,156      1,929 
                                 ---------  ---------  ---------  --------- 
  Net income (loss)                    877       (875)     1,560     (5,765)
Income attributable to the                                                  
 noncontrolling interest              (155)      (178)      (423)      (195)
                                 ---------  ---------  ---------  --------- 
  Net income (loss) attributable                                            
   to ARC Document Solutions,                                               
   Inc. shareholders             $     722  $  (1,053) $   1,137  $  (5,960)
                                 =========  =========  =========  ========= 
Earnings (loss) per share                                                   
 attributable to ARC Document                                               
 Solutions, Inc. shareholders:                                              
  Basic                          $    0.02  $   (0.02) $    0.02  $   (0.13)
                                 =========  =========  =========  ========= 
  Diluted                        $    0.02  $   (0.02) $    0.02  $   (0.13)
                                 =========  =========  =========  ========= 
                                                                            
Weighted average common shares                                              
 outstanding:                                                               
  Basic                             45,901     45,667     45,832     45,604 
  Diluted                           46,058     45,667     45,884     45,604 
                                                                            
                                                                            
                                                                            
ARC Document Solutions, Inc.                                                
Non-GAAP Measures                                                           
Reconciliation of cash flows provided by operating activities to EBIT,      
 EBITDA and Adjusted EBITDA                                                 
(Dollars in thousands)                                                      
(Unaudited)                                                                 
                                                                            
                                  Three Months Ended     Six Months Ended   
                                       June 30,              June 30,       
                                 --------------------  -------------------- 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
                                                                            
                                                                            
Cash flows provided by operating                                            
 activities (1)                  $   8,110  $   4,455  $  19,991  $  16,850 
  Changes in operating assets                                               
   and liabilities, net of                                                  
   business acquisitions             4,314      6,928      2,558      
4,783 
  Non-cash expenses, including                                              
   depreciation amortization and                                            
   restructuring                   (11,547)   (12,258)   (20,989)   (27,398)
  Income tax provision               1,467        619      1,156      1,929 
  Interest expense                   6,076      7,255     12,117     14,693 
  Net income attributable to the                                            
   noncontrolling interest            (155)      (178)      (423)      (195)
                                 ---------  ---------  ---------  --------- 
EBIT                                 8,265      6,821     14,410     10,662 
  Depreciation and amortization      8,719      9,866     17,421     21,521 
                                 ---------  ---------  ---------  --------- 
EBITDA                              16,984     16,687     31,831     32,183 
  Restructuring expense                636          -      1,108          - 
  Stock-based compensation             729        459      1,321        903 
                                 ---------  ---------  ---------  --------- 
Adjusted EBITDA                  $  18,349  $  17,146  $  34,260  $  33,086 
                                 =========  =========  =========  ========= 

 
(1) For the three and six months ended June 30, 2013 cash flows
provided by operating activities includes $1.0 million and $2.6
million, respectively, in cash payments related to restructuring.  


 
                                                                            
                                                                            
                                                                            
ARC Document Solutions, Inc.                                                
Non-GAAP Measures                                                           
Reconciliation of net income (loss) attributable to ARC to unaudited        
 adjusted net income attributable to ARC                                    
(Dollars in thousands, except per share data)                               
(Unaudited)                                                                 
                                                                            
                                  Three Months Ended     Six Months Ended   
                                       June 30,              June 30,       
                                 --------------------  -------------------- 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
                                                                            
                                                                            
Net income (loss) attributable                                              
 to ARC                          $     722  $  (1,053) $   1,137  $  (5,960)
  Change in trade name impact to                                            
   amortization                          -        790          -      3,158 
  Restructuring expense                636          -      1,108          - 
  Interest rate swap related                                                
   costs                                 -      1,015          -      2,271 
  Income tax benefit, related to                                            
   above items                        (252)      (694)      (431)    (2,049)
  Deferred tax valuation                                                    
   allowance and other discrete                                             
   tax items                           542        788        388      3,433 
                                 ---------  ---------  ---------  --------- 
Unaudited adjusted net income                                               
 attributable to ARC             $   1,648  $     846  $   2,202  $     853 
                                 =========  =========  =========  ========= 
                                                                            
Actual:                                                                     
Earnings (loss) per share attributable to ARC                               
 Document Solutions, Inc. shareholders:                                     
  Basic                          $    0.02  $   (0.02) $    0.02  $   (0.13)
                                 =========  =========  =========  ========= 
  Diluted                        $    0.02  $   (0.02) $    0.02  $   (0.13)
                                 =========  =========  =========  ========= 
                                                                            
Weighted average common shares                                              
 outstanding:                                                               
  Basic                             45,901     45,667     45,832     45,604 
  Diluted                           46,058     45,667     45,884     45,604 
                                                                            
Adjusted:                                                                   
Earnings per share attributable to ARC Document                             
 Solutions, Inc. shareholders:                                              
  Basic                          $    0.04  $    0.02  $    0.05  $    0.02 
                                 =========  =========  =========  ========= 
  Diluted                        $    0.04  $    0.02  $    0.05  $    0.02 
                                 =========  =========  =========  ========= 
                                                                            
Weighted average common shares                                              
 outstanding:                                                               
  Basic                             45,901     45,667     45,832     45,604 
  Diluted                           46,058     45,726     45,884     45,618 
                                                                            
                                                                            
                                                                            
ARC Document Solutions, Inc.                                                
Non-GAAP Measures                                                           
Reconciliation of net income (loss) attributable to ARC Document Solutions  
 to EBIT, EBITDA and Adjusted EBITDA                                        
(Dollars in thousands)                                                      
(Unaudited)                                                                 
                                                                            
                                  Three Months Ended     Six Months Ended   
                                       June 30,              June 30,       
                                 --------------------  -------------------- 
                                    2013       2012       2013       2012   
                                 ---------- ---------  ---------- --------- 
                                                                            
Net income (loss) attributable                                              
 to ARC Document Solutions       $      722 $  (1,053) $    1,137 $  (5,960)
Interest expense, net                 6,076     7,255      12,117    14,693 
  Income tax provision                1,467       619       1,156     1,929 
                                 ---------- ---------  ---------- --------- 
EBIT                                  8,265     6,821      14,410    10,662 
  Depreciation and amortization       8,719     9,866      17,421    21,521 
                                 ---------- ---------  ---------- --------- 
EBITDA                               16,984    16,687      31,831    32,183 
  Restructuring expense                 636         -       1,108         - 
  Stock-based compensation              729       459       1,321       903 
                                 ---------- ---------  ---------- --------- 
Adjusted EBITDA                  $   18,349 $  17,146  $   34,260 $  33,086 
                                 ========== =========  ========== ========= 
                                                                            
                                                                            
                                                                            
ARC Document Solutions, Inc.                                                
Net Sales by Product Line                                                   
(Dollars in thousands)                                                      
(Unaudited)                                                                 
                                                                            
                          
          Three Months Ended    Six Months Ended  
                                         June 30,             June 30,      
                                  --------------------- --------------------
                                     2013       2012       2013       2012  
                                  ---------- ---------- ---------- ---------
                                                                            
                                                                            
Service sales                                                               
  Traditional reprographics       $   30,516 $   34,284 $   60,074 $  67,607
  Color                               21,846     20,501     42,751    40,504
  Digital                              8,690      9,508     17,051    19,198
                                  ---------- ---------- ---------- ---------
    Subtotal (1)                      61,052     64,293    119,876   127,309
  Onsite services (2)                 30,576     27,490     59,552    54,146
                                  ---------- ---------- ---------- ---------
    Total service sales               91,628     91,783    179,428   181,455
                                                                            
Equipment and supplies sales          12,994     14,445     25,230    28,346
                                  ---------- ---------- ---------- ---------
Total net sales                   $  104,622 $  106,228 $  204,658 $ 209,801
                                  ========== ========== ========== =========

 
(1) For comparison purposes this subtotal agrees with reprographics
services historically reported prior to the 2012 Annual Report on
Form 10-K.  
(2) Represents work done at our customer sites which Includes
Facilities Management ("FM") and Managed Print Services ("MPS"). 
Non-GAAP Financial Measures. 
 EBIT, EBITDA and related ratios
presented in this report are supplemental measures of our performance
that are not required by or presented in accordance with accounting
principles generally accepted in the United States of America
("GAAP"). These measures are not measurements of our financial
performance under GAAP and should not be considered as alternatives
to net income, income from operations, or any other performance
measures derived in accordance with GAAP or as an alternative to cash
flows from operating, investing or financing activities as a measure
of our liquidity. 
EBIT represents net income before interest and taxes. EBITDA
represents net income before interest, taxes, depreciation and
amortization. EBIT margin is a non-GAAP measure calculated by
dividing EBIT by net sales. EBITDA margin is a non-GAAP measure
calculated by dividing EBITDA by net sales. 
We present EBIT, EBITDA and related ratios because we consider them
important supplemental measures of our performance and liquidity. We
believe investors may also find these measures meaningful, given how
our management makes use of them. The following is a discussion of
our use of these measures. 
We use EBIT and EBITDA to measure and compare the performance of our
operating segments. Our operating segments' financial performance
includes all of the operating activities except debt and taxation
which are managed at the corporate level for U.S. operating segments.
As a result, we believe EBIT is the best measure of operating segment
profitability and the most useful metric by which to measure and
compare the performance of our operating segments. We also use EBIT
to measure performance for determining operating segment-level
compensation and we use EBITDA to measure performance for determining
consolidated-level compensation. In addition, we use EBIT and EBITDA
to evaluate potential acquisitions and potential capital
expenditures. 
EBIT, EBITDA and related ratios have limitations as analytical tools,
and should not be considered in isolation, or as a substitute for
analysis of our results as reported under GAAP. Some of these
limitations are as follows: 


 
--  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.

  
Because of these limitations, EBIT, EBITDA, and related ratios should
not be considered as measures of discretionary cash available to us
to invest in business growth or to reduce our indebtedness. We
compensate for these limitations by relying primarily on our GAAP
results and using EBIT, EBITDA and related ratios only as
supplements. For more information, see our interim Condensed
Consolidated Financial Statements and related notes on our 2013
second quarter report on Form 10-Q. Additionally, please refer to our
2012 Annual Report on Form 10-K. 
Our presentation of adjusted net income and adjusted EBITDA over
certain periods is an attempt to provide meaningful comparisons to
our historical performance for our existing and future investors. The
unprecedented changes in our end markets over the past several years
have required us to take measures that are unique in our history and
specific to individual circumstances. Comparisons inclusive of these
actions make normal financial and other performance patterns
difficult to discern under a strict GAAP presentation. Each non-GAAP
presentation, however, is explained in detail in the reconciliation
tables above. 
Specifically, we have presented adjusted net income attributable to
ARC and adjusted earnings per share attributable to ARC shareholders
for the three and six months ended June 30, 2013 and 2012 to reflect
the exclusion of amortization impact related specifically to the
change in useful lives of trade names, restructuring expense,
interest rate swap related costs, and changes in the valuation
allowances related to certain deferred tax assets and other discrete
tax items. This presentation facilitates a meaningful comparison of
our operating results for the three and six months ended June 30,
2013 and 2012. We believe these charges were the result of the
current macroeconomic environment, our capital restructuring, or
other items which are not indicative of our actual operating
performance. 
We presented adjusted EBITDA in three and six months ended June 30,
2013 and 2012 to exclude stock-based compensation expense and
restructuring expense. The adjustment of EBITDA for non-cash
adjustments is consistent with the definition of adjusted EBITDA in
our credit agreement; therefore, we believe this information is
useful to investors in assessing our financial performance. 


 
ARC Document Solutions                                                      
Consolidated Statements of Cash Flows                                       
(Dollars in thousands)                                                      
(Unaudited)                                                                 
                                                                            
                                  Three Months Ended     Six Months Ended   
                                       June 30,              June 30,       
                                 --------------------  -------------------- 
                                    2013       2012       2013       2012   
      
                           ---------  ---------  ---------  --------- 
Cash flows from operating                                                   
 activities                                                                 
Net income (loss)                $     877  $    (875) $   1,560  $  (5,765)
  Adjustments to reconcile net                                              
   income (loss) to net cash                                                
   provided by operating                                                    
   activities:                                                              
  Allowance for accounts                                                    
   receivable                          301        164        446        404 
  Depreciation                       7,020      7,061     13,975     14,123 
  Amortization of intangible                                                
   assets                            1,699      2,805      3,446      7,398 
  Amortization of deferred                                                  
   financing costs                     278        281        561        536 
  Amortization of bond discount        167        150        332        297 
  Stock-based compensation             729        459      1,321        903 
  Deferred income taxes              1,145       (179)       736       (504)
  Deferred tax valuation                                                    
   allowance                           154        944        174      2,912 
  Restructuring expense, non-                                               
   cash portion                        235          -        293          - 
  Amortization of derivative,                                               
   net of tax effect                     -        636          -      1,422 
  Other noncash items, net            (181)       (63)      (295)       (93)
  Changes in operating assets                                               
   and liabilities, net of                                                  
   effect of business                                                       
   acquisitions:                                                            
    Accounts receivable             (2,666)      (493)   (11,849)    (6,127)
    Inventory                          234     (1,064)       280     (1,585)
    Prepaid expenses and other                                              
     assets                           (619)      (140)     3,090       (406)
    Accounts payable and accrued                                            
     expenses                       (1,263)    (5,231)     5,921      3,335 
                                 ---------  ---------  ---------  --------- 
Net cash provided by operating                                              
 activities                          8,110      4,455     19,991     16,850 
                                 ---------  ---------  ---------  --------- 
Cash flows from investing                                                   
 activities                                                                 
                                                                            
  Capital expenditures              (4,430)    (5,457)   (10,042)    (9,262)
  Other                                182       (375)       539       (184)
                                 ---------  ---------  ---------  --------- 
Net cash used in investing                                                  
 activities                         (4,248)    (5,832)    (9,503)    (9,446)
                                 ---------  ---------  ---------  --------- 
Cash flows from financing                                                   
 activities                                                                 
                                                                            
  Proceeds from stock option                                                
   exercises                             -         79          -         79 
  Proceeds from issuance of                                                 
   common stock under Employee                                              
   Stock Purchase Plan                   9          7          9         28 
  Share repurchases, including                                              
   shares surrendered for tax                                               
   withholding                         (90)         -        (90)         - 
  Proceeds from borrowings on                                               
   long-term debt agreements           402          -        402          - 
  Payments on long-term debt                                                
   agreements and capital leases    (3,075)    (4,078)    (6,407)    (8,466)
  Net borrowings (repayments)                                               
   under revolving credit                                                   
   facilities                          929       (935)      (210)      (383)
  Payment of deferred financing                                             
   costs                                 -       (127)         -       (839)
                                 ---------  ---------  ---------  --------- 
Net cash used in financing                                                  
 activities                         (1,825)    (5,054)    (6,296)    (9,581)
                                 ---------  ---------  ---------  --------- 
Effect of foreign currency                                                  
 translation on cash balances          121        (65)       164         58 
                                 ---------  ---------  ---------  --------- 
Net change in cash and cash                                                 
 equivalents                         2,158     (6,496)     4,356     (2,119)
Cash and cash equivalents at                                                
 beginning of period                30,219     29,814     28,021  
   25,437 
                                 ---------  ---------  ---------  --------- 
Cash and cash equivalents at end                                            
 of period                       $  32,377  $  23,318  $  32,377  $  23,318 
                                 =========  =========  =========  ========= 
                                                                            
Supplemental disclosure of cash                                             
 flow information                                                           
Noncash investing and financing                                             
 activities                                                                 
Noncash transactions include the                                            
 following:                                                                 
  Capital lease obligations                                                 
   incurred                      $   2,992  $   2,884  $   4,246  $   6,730 

  
Contact Information:
David Stickney
VP Corporate Communications
925-949-5114