ARC Document Solutions Reports Results for Third Quarter 2016

Because of these limitations, 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 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.

Specifically, we have presented adjusted net income attributable to ARC and adjusted earnings per share attributable to ARC shareholders for the three and nine months ended September 30, 2016 and 2015 to reflect the exclusion of loss on extinguishment of debt, goodwill impairment, restructuring expense, trade secret litigation 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 nine months ended September 30, 2016 and 2015. We believe these charges were the result of the then current macroeconomic environment, our capital restructuring, or other items which are not indicative of our actual operating performance.

We have presented adjusted EBITDA in the three and nine months ended September 30, 2016 and 2015 to exclude loss on extinguishment of debt, goodwill impairment, trade secret litigation costs, restructuring expense and stock-based compensation expense. The adjustment of EBITDA for these items 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 (In thousands) (Unaudited)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Cash flows from operating activities
Net income (loss)	$	2,902	$	80,336	$	(50,278)	$	94,204
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Allowance for accounts receivable	324		110		644		292
Depreciation	6,697		7,040		20,032		21,184
Amortization of intangible assets	1,160		1,375		3,705		4,306
Amortization of deferred financing costs	111		138		344		460
Goodwill impairment	—		—		73,920		—
Stock-based compensation	650		735		2,073		2,739
Deferred income taxes	2,299		2,198		(6,018)		8,221
Deferred tax valuation allowance	(1)		(76,091)		(16)		(80,882)
Loss on early extinguishment of debt	66		96		156		193
Other non-cash items, net	(87)		(73)		(540)		(357)
Changes in operating assets and liabilities:
Accounts receivable	(897)		2,996		(2,285)		(3,637)
Inventory	(429)		1,083		(3,196)		(1,775)
Prepaid expenses and other assets	1,179		1,224		513		2,941
Accounts payable and accrued expenses	(1,811)		(202)		(5,008)		(4,772)
Net cash provided by operating activities	12,163		20,965		34,046		43,117
Cash flows from investing activities
Capital expenditures	(2,430)		(3,880)		(7,580)		(11,517)
Other	135		266		842		514
Net cash used in investing activities	(2,295)		(3,614)		(6,738)		(11,003)
Cash flows from financing activities
Proceeds from stock option exercises	46		1		76		562
Proceeds from issuance of common stock under Employee Stock Purchase Plan	26		25		96		83
Share repurchases	(200)		—		(5,297)		(204)
Contingent consideration on prior acquisitions	(86)		(360)		(453)		(360)
Early extinguishment of long-term debt	(7,000)		(3,625)		(16,000)		(10,875)
Payments on long-term debt agreements and capital leases	(3,310)		(7,262)		(9,651)		(20,042)
Net repayments under revolving credit facilities	—		(144)		—		(1,888)
Payment of deferred financing costs	(76)		—		(106)		(25)
Payment of hedge premium	—		—		—		(632)
Net cash used in financing activities	(10,600)		(11,365)		(31,335)		(33,381)
Effect of foreign currency translation on cash balances	(80)		(598)		(296)		(545)
Net change in cash and cash equivalents	(812)		5,388		(4,323)		(1,812)
Cash and cash equivalents at beginning of period	20,452		15,436		23,963		22,636
Cash and cash equivalents at end of period	$	19,640	$	20,824	$	19,640	$	20,824
Supplemental disclosure of cash flow information
Noncash investing and financing activities
Capital lease obligations incurred	$	3,738	$	2,625	$	12,345	$	9,667
Contingent liabilities in connection with acquisition of businesses	$	—	$	—	$	85	$	—

« Previous Page 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 Next Page »