ARC Document Solutions Reports Results for Fourth Quarter and Full Year 2013

ARC Document Solutions Reports Results for Fourth Quarter and Full Year 2013 
WALNUT CREEK, CA -- (Marketwired) -- 02/25/14 --  ARC Document
Solutions, Inc. (NYSE: ARC), the nation's leading document solutions
provider for the architecture, engineering, and construction (AEC)
industry, today reported its financial results for the fourth quarter
and full year ended December 31, 2013. 
Business Highlights: 


 
--  Annual revenue grew year-over-year for first time in five years
--  Annual adjusted earnings per share was $0.09 vs. ($0.04) in 2012
--  Annual gross margin was 33.0% vs. 30.4% in 2012
--  Annual adjusted EBITDA margin of 16.8% vs. 14.9% in 2012
--  Full year cash flow from operations of $46.8 million vs. $37.6 million
    in 2012
--  2014 fully-diluted annual adjusted earnings per share outlook
    projected to be in the range $0.19 to $0.23; outlook for 2014 annual
    cash provided by operating activities projected to be in the range of
    $51-$56 million
    
    

 
                                                                            
Financial Highlights:                                                       
                                    Three Months Ended  Twelve Months Ended 
                                       December 31,         December 31,    
                                   -------------------  ------------------- 
(All dollar amounts in millions,                                            
 except EPS)                         2013       2012      2013       2012   
                                   --------   --------  --------   -------- 
Net Revenue                        $  101.3   $   96.9  $  407.2   $  406.1 
Gross Margin                           33.0%      29.6%     33.0%      30.4%
Net loss attributable to ARC       $  (16.0)  $   (5.9) $  (15.3)  $  (32.0)
Adjusted Net Income (loss)                                                  
 attributable to ARC               $    1.1   $   (0.8) $    4.1   $   (1.7)
Earnings (loss) per share          $  (0.35)  $  (0.13) $  (0.33)  $  (0.70)
Adjusted earnings (loss) per share $   0.02   $  (0.02) $   0.09   $  (0.04)
Cash provided by operating                                                  
 activities                        $    6.8   $    6.7  $   46.8   $   37.6 
Capital Expenditures               $   (3.3)  $   (6.2) $  (18.2)  $  (20.3)
Debt & Capital Leases (including                                            
 current)                                               $  219.7   $  222.5 

 
Management Commentary 
"Our performance in 2013 was gratifying and exceeded our initial
expectations, especially in our sales, cash generation, and margin
performance," said K. "Suri" Suriyakumar, Chairman, President and CEO
of ARC Document Solutions. "As we noted in January, the third and
fourth quarters produced year-over-year sales increases, and for the
first time in the company's public history, fourth quarter revenue
matched third quarter revenue. Fourth quarter gross margin also
improved sequentially over third quarter gross margin. These are all
indications of the fundamental changes in the business drivers of our
company. As a result of the effects of the restructuring we began in
2012, we also saw gross margin expand dramatically year-over-year,
and we delivered a strong uptick in our adjusted EBITDA. We've
achieved real momentum with organic margin improvement programs as
well, and I expect that we will continue to reap the benefit of our
efforts throughout the coming year." 
John Toth, ARC's CFO, said, "While our business has adapted to
embrace new customer workflows, new business lines, and new
technologies, one thing that hasn't changed is our ability to produce
cash. Not only did we exceed our forecast for cash flow from
operations, but we ended the year with a cash balance equal to 2012
despite the cash outlays associated with our restructuring, open
market bond repurchases, and our refinancing at the end of the year.
We are well positioned to deleverage the company and I think our
performance in 2013 provides an excellent springboard for more
success in 2014." 
2013 Fourth Quarter Supplemental Information: 
Net sales were $101 million, a 5% increase compared to the fourth
quarter of 2012.  
Days sales outstanding in Q4 2013 were 50 compared to 48 days in Q4
2012.  
AEC customers comprised approximately 76% of our total net sales,
while non-AEC customers made up 24% of our total net sales. 
Total number of Onsite Services contracts was approximately 7,700, a
gain of approximately 700 contracts over Q4 2012. 


 
                                                                            
Sales from Services and Product Lines as a Percentage of Net Sales          
                                                                            
                                  Three Months Ended    Twelve Months Ended 
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
Services and Product Line           2013       2012       2013       2012   
-------------------------------  ---------  ---------  ---------  --------- 
Onsite Services                       30.6%      28.4%      29.9%      26.8%
Traditional Reprographics             27.3%      29.3%      28.7%      31.2%
Color Services                        20.0%      19.9%      20.5%      19.5%
Equipment and Supplies Sales          14.0%      14.4%      12.7%      13.8%
Digital                                8.1%       8.1%       8.2%       8.8%

 
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 anticipates annual adjusted earnings per share
in 2014 to be in the range of $0.19 to $0.23 on a fully diluted
basis, and annual cash flow from operations to be in the range of $51
million to $56 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 2013 fourth quarter and full year. To
access the live audio call, dial 800-390-5202. International callers
may join the conference by dialing 719-325-2470. The conference ID
number is 7088960. A live webcast will also be made available on the
investor relations page of ARC Document Solution's website at
www.e-arc.com. 
A replay of the call will be available for five days after the call's
conclusion. To access the replay, dial 888-203-1112. International
callers may access the replay by dialing 719-457-0820. The conference
ID number is 7088960. The webcast will also be made available at
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 7,700 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)                                                                 
                                                                            
                                               -------------   -------------
                                                December 31,    December 31,
                                               -------------   -------------
Current assets:                                     2013            2012    
                                               -------------   -------------
  Cash and cash equivalents                    $      27,362   $      28,021
  Accounts receivable, net of allowances for                                
   accounts receivable of $2,517 and $2,634           56,328          51,855
  Inventories, net                                    14,047          14,251
  Deferred income taxes                                  356              --
  Prepaid expenses                                     4,324           3,277
  Other current assets                                 4,013           6,819
                                               -------------   -------------
      Total current assets                           106,430         104,223
Property and equipment, net of accumulated                                  
 depreciation of $206,636 and $197,830                56,181          56,471
Goodwill                                             212,608         212,608
Other intangible assets, net                          27,856          34,498
Deferred financing fees, net                           3,242           4,219
Deferred income taxes                                  1,186           1,246
Other assets                                           2,419           2,574
                                               -------------   -------------
      Total assets                             $     409,922   $     415,839
                                               =============   =============
Current liabilities:                                                        
  Accounts payable                             $      23,363   $      21,215
  Accrued payroll and payroll-related                                       
   expenses                                           11,497           6,774
  Accrued expenses                                    21,365          22,321
  Current portion of long-term debt and                                     
   capital leases                                     21,500          13,263
                                               -------------   -------------
      Total current liabilities                       77,725          63,573
Long-term debt and capital leases                    198,228         209,262
Deferred income taxes                                 31,667          28,936
Other long-term liabilities                            3,163           3,231
                                               -------------   -------------
      Total liabilities                              310,783         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; 46,365 and 46,274                                   
     shares issued and 46,320 and 46,262                                    
     shares outstanding                                   46              46
  Additional paid-in capital                         105,806         102,510
  Retained (deficit) earnings                        (14,628)            695
  Accumulated other comprehensive income                 634             689
                                               -------------   -------------
                                                      91,858         103,940
    Less cost of common stock in treasury, 45                               
     and 12 shares                                       168              44
                                               -------------   -------------
      Total ARC Documen
t Solutions, Inc.                                    
       stockholders' equity                           91,690         103,896
Noncontrolling interest                                7,449           6,941
                                               -------------   -------------
      Total equity                                    99,139         110,837
                                               -------------   -------------
      Total liabilities and equity             $     409,922   $     415,839
                                               =============   =============
                                                                            
                                                                            
                                                                            
ARC Document Solutions, Inc.                                                
Consolidated Statements of Operations                                       
(Dollars in thousands, except per share data)                               
(Unaudited)                                                                 
                                  Three Months Ended    Twelve Months Ended 
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
Service sales                    $  87,100  $  82,969  $ 355,358  $ 350,260 
Equipment and supplies sales        14,185     13,922     51,837     55,858 
                                 ---------  ---------  ---------  --------- 
  Total net sales                  101,285     96,891    407,195    406,118 
Cost of sales                       67,818     68,251    272,858    282,599 
                                 ---------  ---------  ---------  --------- 
  Gross profit                      33,467     28,640    134,337    123,519 
Selling, general and                                                        
 administrative expenses            24,117     21,727     96,800     93,073 
Amortization of intangible                                                  
 assets                              1,556      1,791      6,612     11,035 
Goodwill impairment                     --         --         --     16,707 
Restructuring expense                  779      3,320      2,544      3,320 
                                 ---------  ---------  ---------  --------- 
  Income (loss) from operations      7,015      1,802     28,381       (616)
Other income                           (20)       (21)      (106)      (100)
Loss on extinguishment of debt      16,077         --     16,339         -- 
Interest expense, net                5,725      6,490     23,737     28,165 
                                 ---------  ---------  ---------  --------- 
  Loss before income tax                                                    
   provision                       (14,767)    (4,667)   (11,589)   (28,681)
Income tax provision                 1,040        939      2,986      2,784 
                                 ---------  ---------  ---------  --------- 
  Net loss                         (15,807)    (5,606)   (14,575)   (31,465)
Income attributable to                                                      
 noncontrolling interest              (203)      (290)      (748)      (503)
                                 ---------  ---------  ---------  --------- 
  Net loss attributable to ARC                                              
   Document Solutions, Inc.                                                 
   shareholders                  $ (16,010) $  (5,896) $ (15,323) $ (31,968)
                                 =========  =========  =========  ========= 
Loss per share attributable to                                              
 ARC Document Solutions, Inc.                                               
 shareholders:                                                              
  Basic                          $   (0.35) $   (0.13) $   (0.33) $   (0.70)
                                 =========  =========  =========  ========= 
  Diluted                        $   (0.35) $   (0.13) $   (0.33) $   (0.70)
                                 =========  =========  =========  ========= 
Weighted average common shares                                              
 outstanding:                                                               
  Basic                             45,928     45,749     45,856     45,668 
  Diluted                           45,928     45,749     45,856     45,668 
                                                                            
                                                                            
                                                                            
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   Twelve Months Ended 
                                      December 31,          December 31,    
                                  -------------------   ------------------- 
                                    2013       2012       2013       2012   
                                  --------   --------   --------   -------- 
Cash flows provided by operating                                            
 activities (1)                   $  6,788   $  6,673   $ 46,798   $ 37,552 
  Changes in operating assets                                               
   and liabilities, net of                                                  
   effect of business                                                       
   acquisitions                      4,629      1,647     (2,388)      (463)
  Non-cash expenses, including                                              
   depreciation, amortization                                               
   and restructuring               (27,224)   (13,926)   (58,985)   (68,554)
  Income tax provision               1,040        939      2,986      2,784 
  Interest expense, net              5,725      6,490     23,737     28,165 
  Income attributable to                                                    
   noncontrolling interest            (203)      (290)      (748)      (503)
                                  --------   --------   --------   -------- 
EBIT                                (9,245)     1,533     11,400     (1,019)
  Depreciation and amortization      8,655      9,012     34,745     39,522 
                                  --------   --------   --------   -------- 
EBITDA                                (590)    10,545     46,145     38,503 
  Loss on extinguishment of debt    16,077         --     16,339         -- 
  Goodwill impairment                   --         --         --     16,707 
  Restructuring expense                779      3,320      2,544      3,320 
  Stock-based compensation           1,158        542      3,207      1,999 
                                  --------   --------   --------   -------- 
Adjusted EBITDA                   $ 17,424   $ 14,407   $ 68,235   $ 60,529 
                                  ========   ========   ========   ======== 

 
(1) For the three and twelve months ended months ended December 31,
2013 cash flows provided by operating activities includes $1.0
million and $4.3 million, respectively, in cash payments related to
restructuring. 


 
                                                                            
                                                                            
                           
                                                 
ARC Document Solutions, Inc.                                                
Non-GAAP Measures Reconciliation of net loss attributable to ARC to         
unaudited adjusted net income (loss) attributable to ARC (Dollars in        
thousands, except per share data) (Unaudited)                               
                                                                            
                                   Three Months Ended   Twelve Months Ended 
                                      December 31,          December 31,    
                                  -------------------   ------------------- 
                                    2013       2012       2013       2012   
                                  --------   --------   --------   -------- 
Net loss attributable to ARC                                                
 Document Solutions, Inc.         $(16,010)  $ (5,896)  $(15,323)  $(31,968)
  Loss on extinguishment of debt    16,077         --     16,339         -- 
  Goodwill impairment                   --         --         --     16,707 
  Restructuring expense                779      3,320      2,544      3,320 
  Change in trade name impact to                                            
   amortization                         --         --         --      3,158 
  Interest rate swap related                                                
   costs                                --        393         --      3,440 
  Income tax benefit related to                                             
   above items                      (6,877)    (1,397)    (7,667)    (7,676)
  Deferred tax valuation                                                    
   allowance and other discrete                                             
   tax items                         7,172      2,736      8,245     11,311 
                                  --------   --------   --------   -------- 
Unaudited adjusted net income                                               
 (loss) attributable to ARC                                                 
 Document Solutions, Inc.         $  1,141   $   (844)  $  4,138   $ (1,708)
                                  ========   ========   ========   ======== 
                                                                            
Actual:                                                                     
Loss per share attributable to                                              
 ARC Document Solutions, Inc.                                               
 shareholders:                                                              
  Basic                           $  (0.35)  $  (0.13)  $  (0.33)  $  (0.70)
                                  ========   ========   ========   ======== 
  Diluted                         $  (0.35)  $  (0.13)  $  (0.33)  $  (0.70)
                                  ========   ========   ========   ======== 
Weighted average common shares                                              
 outstanding:                                                               
  Basic                             45,927     45,749     45,856     45,668 
  Diluted                           45,927     45,749     45,856     45,668 
                                                                            
Adjusted:                                                                   
Earnings (loss) per share                                                   
 attributable to ARC Document                                               
 Solutions, Inc. shareholders:                                              
  Basic                           $   0.02   $  (0.02)  $   0.09   $  (0.04)
                                  ========   ========   ========   ======== 
  Diluted                         $   0.02   $  (0.02)  $   0.09   $  (0.04)
                                  ========   ========   ========   ======== 
Weighted average common shares                                              
 outstanding:                                                               
  Basic                             45,927     45,749     45,856     45,668 
  Diluted                           46,682     45,749     46,157     45,668 
                                                                            
                                                                            
                                                                            
                                                                            
ARC Document Solutions, Inc. Non-GAAP Measures Reconciliation of net loss   
 attributable to ARC to EBIT, EBITDA and Adjusted EBITDA (Dollars in        
 thousands) (Unaudited)                                                     
                                                                            
                                Three Months Ended     Twelve Months Ended  
                                   December 31,            December 31,     
                              ---------------------   --------------------- 
                                 2013        2012        2013        2012   
                              ---------   ---------   ---------   --------- 
Net loss attributable to ARC                                                
 Document Solutions, Inc.     $ (16,010)  $  (5,896)  $ (15,323)  $ (31,968)
  Interest expense, net           5,725       6,490      23,737      28,165 
  Income tax provision            1,040         939       2,986       2,784 
                              ---------   ---------   ---------   --------- 
EBIT                             (9,245)      1,533      11,400      (1,019)
  Depreciation and                                                          
   amortization                   8,655       9,012      34,745      39,522 
                              ---------   ---------   ---------   --------- 
EBITDA                             (590)     10,545      46,145      38,503 
  Loss on extinguishment of                                                 
   debt                          16,077          --      16,339          -- 
  Goodwill impairment                --          --          --      16,707 
  Restructuring expense             779       3,320       2,544       3,320 
  Stock-based compensation        1,158         542       3,207       1,999 
                              ---------   ---------   ---------   --------- 
Adjusted EBITDA               $  17,424   $  14,407   $  68,235   $  60,529 
                              =========   =========   =========   ========= 

 
                                                                            
                                                                            
                                                                            
ARC Document Solutions, Inc.                                                
Net Sales by Product Line (Dollars in thousands) (Unaudited)                
                                                                            
                                   Three Months Ended    Twelve Months Ended
                                      December 31,          December 31,    
                                  --------------------  --------------------
                                     2013       2012       2013       2012  
                                  ---------  ---------  ---------  ---------
Service Sales                                                               
Traditional reprographics         $  27,693  $  28,357  $ 116,673  $ 126,785
Color                                20,212     19,241     83,601     79,080
Digital                               8,187      7,816     33,534     35,578
                                  ---------  ---------  ---------  ---------
  Subtotal                           56,092     55,414    233,808    241,443
Onsite services(1)                   31,008     27,555    121,550    108,817
                 
                 ---------  ---------  ---------  ---------
  Total services sales               87,100     82,969    355,358    350,260
Equipment and supplies sales         14,185     13,922     51,837     55,858
                                  ---------  ---------  ---------  ---------
  Total net sales                 $ 101,285  $  96,891  $ 407,195  $ 406,118
                                  =========  =========  =========  =========

 
(1) 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. 
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. For more information, see our 2012 Annual Report on
Form 10-K. 
Specifically, we have presented adjusted net income (loss)
attributable to ARC and adjusted earnings (loss) per share
attributable to ARC for the three and twelve months ended December
31, 2013 and 2012 to reflect the exclusion of amortization impact
related specifically to the change in useful lives of trade names,
loss on extinguishment of debt, goodwill impairment, 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 twelve months
ended December 31, 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 twelve months ended
December 31, 2013 and 2012 to exclude stock-based compensation
expense, restructuring expense, goodwill impairment and loss on
extinguishment of debt. 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     Twelve Months Ended  
                                   December 31,            December 31,     
                              ---------------------   --------------------- 
                                 2013        2012        2013        2012   
                              ---------   ---------   ---------   --------- 
Cash flows from operating                                                   
 activities                                                                 
Net loss                      $ (15,807)  $  (5,606)  $ (14,575)  $ (31,465)
Adjustments to reconcile net                                                
 loss to net cash provided                                                  
 by operating activities:                                                   
  Allowance for accounts                                                    
   receivable                        85         (76)        636         456 
  Depreciation                    7,099       7,221      28,133      28,487 
  Amortization of intangible                                                
   assets                         1,556       1,791       6,612      11,035 
  Amortization of deferred                                                  
   financing costs                  267         276       1,098       1,088 
  Amortization of bond                                                      
   discount                         171         158         671         611 
  Goodwill impairment                --          --          --      16,707 
  S
tock-based compensation        1,158         542       3,207       1,999 
  Deferred income taxes          (5,827)     (2,132)     (4,909)     (6,433)
  Deferred tax valuation                                                    
   allowance                      6,717       2,984       7,277       9,750 
  Restructuring expense,                                                    
   non-cash portion                (119)      2,379         244       2,379 
  Amortization of                                                           
   derivative, net of tax                                                   
   effect                            --         246          --       2,154 
  Loss on early                                                             
   extinguishment of debt        16,077          --      16,339          -- 
  Other non-cash items, net          40         537        (323)        321 
  Changes in operating                                                      
   assets and liabilities,                                                  
   net of effect of business                                                
   acquisitions:                                                            
    Accounts receivable           2,225       5,864      (5,133)      2,533 
    Inventory                      (345)       (339)        376      (3,005)
    Prepaid expenses and                                                    
     other assets                   (22)      2,233       1,966       1,032 
    Accounts payable and                                                    
     accrued expenses            (6,487)     (9,405)      5,179         (97)
                              ---------   ---------   ---------   --------- 
Net cash provided by                                                        
 operating activities             6,788       6,673      46,798      37,552 
                              ---------   ---------   ---------   --------- 
Cash flows from investing                                                   
 activities                                                                 
Capital expenditures             (3,335)     (6,154)    (18,191)    (20,348)
Other                               119         190         741         323 
                              ---------   ---------   ---------   --------- 
Net cash used in investing                                                  
 activities                      (3,216)     (5,964)    (17,450)    (20,025)
                              ---------   ---------   ---------   --------- 
Cash flows from financing                                                   
 activities                                                                 
Proceeds from stock option                                                  
 exercises                           59          --          59          79 
Proceeds from issuance of                                                   
 common stock under Employee                                                
 Stock Purchase Plan                 17          --          30          28 
Share repurchases, including                                                
 shares surrendered for tax                                                 
 withholding                        (34)         --        (124)         -- 
Proceeds from borrowings on                                                 
 long-term debt agreements      196,000          --     196,402          -- 
Payments of debt                                                            
 extinguishment costs           (11,264)                (11,330)         -- 
Early extinguishment of                                                     
 long-term debt                (193,000)               (200,000)         -- 
Payments on long-term debt                                                  
 agreements and capital                                                     
 leases                          (2,984)     (3,560)    (12,379)    (15,601)
Net (repayments) borrowings                                                 
 under revolving credit                                                     
 facilities                         201         225        (237)      1,266 
Payment of deferred                                                         
 financing costs                 (2,220)         --      (2,220)       (839)
Dividends paid to                                                           
 noncontrolling interest             --                    (485)         -- 
                              ---------   ---------   ---------   --------- 
Net cash used in financing                                                  
 activities                     (13,225)     (3,335)    (30,284)    (15,067)
                              ---------   ---------   ---------   --------- 
Effect of foreign currency                                                  
 translation on cash                                                        
 balances                           (39)        113         277         124 
                              ---------   ---------   ---------   --------- 
Net change in cash and cash                                                 
 equivalents                     (9,692)     (2,513)       (659)      2,584 
Cash and cash equivalents at                                                
 beginning of period             37,054      30,534      28,021      25,437 
                              ---------   ---------   ---------   --------- 
Cash and cash equivalents at                                                
 end of period                $  27,362   $  28,021   $  27,362   $  28,021 
                              =========   =========   =========   ========= 
Supplemental disclosure of                                                  
 cash flow information:                                                     
Noncash financing                                                           
 activities:                                                                
  Capital lease obligations                                                 
   incurred                   $   3,662   $   1,536   $  10,399   $  10,047 
  Liabilities in connection                                                 
   with deferred financing                                                  
   costs                      $     433   $      --   $     433   $      -- 

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