Arc Document Solutions (ARC) 8-K American Reprographics Company Reports Second Quarter 2007 Results

Exhibit 99.1

AMERICAN REPROGRAPHICS COMPANY REPORTS
SECOND QUARTER 2007 RESULTS

~ Second Quarter Revenue $177.8 million; 17.3% increase from Q2 ’06 ~
~ Second Quarter EPS $0.43 ~
~ Company Reaffirms Full-Year Forecast: Revenue of $690-$710, EPS of $1.58-$1.62 ~

WALNUT CREEK, California (August 8, 2007) — American Reprographics Company (NYSE: ARP), the nation’s leading provider of reprographics services and technology today announced financial results for the three months ended June 30, 2007.

The Company reported net revenue for the second quarter of 2007 of $177.8 million, compared to $151.5 million in the second quarter of 2006, an increase of 17.3%. The Company’s gross margin for the second quarter was 42.1% compared to 43.4% in the same period in 2006. Net income for the second quarter of 2007 was $19.6 million, or $0.43 per diluted share. This compares to net income for the second quarter of 2006 of $8.4 million, or $0.18 per diluted share, which includes the one-time Louis Frey litigation charges of $13.3 million pre-tax.

Revenue for the first six months of 2007 was $338 million, compared to $292.3 million for the same period in 2006. Net income for the first six months of 2007 was $36.5 million, or $0.80 per diluted share, compared to net income of $22.8 million, or $0.50 per diluted share, which also includes the one-time Louis Frey litigation charges.

K. “Suri” Suriyakumar, Chief Executive Officer, stated, “Our second quarter results clearly demonstrate that the Company is on solid footing and our business is fundamentally strong. We also delivered excellent EPS performance thanks to a robust and growing commercial construction market, and continuing strength in the non-AEC segment of our business. This performance offset some revenue erosion attributable to the current downturn in the residential building market, which affects approximately 15% of our revenues. Other positives for the quarter include the early fulfillment of our annual acquisition plan, and continued strength in our acquisition pipeline. Overall, we remain very confident in our forecast for the year.”

Jonathan Mather, Chief Financial Officer, said, “The fundamentals of our business remained steady, with net revenue in the second quarter 2007 up more than 17% from the same period in 2006. Gross margin was in-line with expectations given the large and generally dilutive acquisitions we completed. The accelerated acquisition activity, however, did increase depreciation, amortization and interest, which amounted to $3.2 million in added pre-tax costs, or an after tax EPS of $0.04 compared to the prior quarter. This was partially offset by settlement of litigation, a portion of which was the reimbursement of costs relating to prior periods. We estimate that this benefited SG&A expenses by $2.2 million in this quarter, which computes to an after tax EPS of $0.03.”

The Company also announced that its Board of Directors authorized management to negotiate with the Company’s lenders to seek to remove share repurchase restrictions from its current debt agreement.

2007 Outlook

American Reprographics Company is reaffirming its prior forecast for 2007. Revenue is forecasted to be in the range of $690-$710 million. Earnings per share will be in the range of $1.58-$1.62

Teleconference and Webcast

American Reprographics Company will host a conference call and audio webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss financial results for the second quarter ended June 30, 2007. The conference call can be accessed by dialing 201-689-8471.

A replay of this call will be available approximately one hour after the call for seven days following the conclusion of the call. This replay can be accessed by dialing 201-612-7415. The account number to access the phone replay is 3055 and the Conference ID number is 247838.

A Web archive will be made available at:http://www.e-arc.com for approximately 90 days following end of the call.

About American Reprographics Company

American Reprographics Company is the leading reprographics company in the United States providing business-to-business document management services to the architectural, engineering and construction, or AEC, industries. The Company provides these services to companies in non-AEC industries, such as technology, financial services, retail, entertainment, and food and hospitality, which also require sophisticated document management services. American Reprographics Company provides its core services through its suite of reprographics technology products, a network of more than 260 locally-branded reprographics service centers across the U.S., and on-site at their customers’ locations. The Company’s service centers are arranged in a hub and satellite structure and are digitally connected as a cohesive network, allowing the provision of services both locally and nationally to more than 100,000 active customers.

Forward-Looking Statements Disclaimer

This press release contains forward-looking statements that fall within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 regarding future events and the future financial performance of the Company. Words such as “forecast,” “will,” and similar expressions also identify forward-looking statements. We wish to caution you that such statements are only predictions and actual results may differ materially as a result of risks and uncertainties that pertain to our business. These risks and uncertainties include, among others:

• Future downturns in the architectural, engineering and construction industries could diminish demand for our products and services

• Competition in our industry and innovation by our competitors may hinder our ability to execute our business strategy and maintain our profitability

• Failure to anticipate and adapt to future changes in our industry could harm our competitive position

• Failure to manage our acquisitions, including our inability to integrate and merge the business operations of the acquired companies, and failure to retain key personnel and customers of acquired companies could have a negative effect on our future performance, results of operations and financial condition

• Dependence on certain key vendors for equipment, maintenance services and supplies, could make us vulnerable to supply shortages and price fluctuations

• Damage or disruption to our facilities, our technology centers, our vendors or a majority of our customers could impair our ability to effectively provide our services and may have a significant impact on our revenues, expenses and financial condition

• If we fail to continue to develop and introduce new services successfully, our competitive positioning and our ability to grow our business could be harmed.

The foregoing list of risks and uncertainties is illustrative but is by no means exhaustive. For more information on factors that may affect future performance, please review our SEC filings, specifically our annual report on Form 10-K for the year ended December 31, 2006, our final prospectus supplement dated March 8, 2007, and our quarterly report on Form 10-Q for the quarter ended March 31, 2007. These documents contain important risk factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. These forward-looking statements are based on information as of August 8, 2007, and except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements.

Contacts:

David Stickney	David Pasquale
VP of Corporate Communications	EVP of The Ruth Group
Phone: 925-949-5100	Phone: 646-536-7006
Email:dstickney@e-arc.com	Email:dpasquale@theruthgroup.com

American Reprographics Company
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)

	December 31,			June 30,
	2006			2007
Assets
Current assets:
Cash and cash equivalents	$	11,642		$	16,426
Restricted cash		8,491			8,697
Accounts receivable, net		85,277			102,491
Inventories, net		7,899			10,354
Deferred income taxes		10,963			10,967
Prepaid expenses and other current assets		6,796			9,946
Total current assets		131,068			158,881
Property and equipment, net		60,138			75,704
Goodwill		291,290			351,848
Other intangible assets, net		50,971			73,663
Deferred financing costs, net		895			1,108
Deferred income taxes		11,245			6,748
Other assets		1,974			2,100
Total assets	$	547,581		$	670,052
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	33,447		$	33,814
Accrued payroll and payroll-related expenses		15,666			19,471
Accrued expenses		25,810			25,789
Accrued litigation charge		13,947			14,154
Current portion of long-term debt and capital leases		21,048			40,332
Total current liabilities		109,918			133,560
Long-term debt and capital leases		252,097			308,798
Other long-term liabilities		1,322			2,477
Total liabilities		363,337			444,835
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value, 25,000,000 shares authorized; zero and zero shares issued and outstanding		—			—
Common stock, $.001 par value, 150,000,000 shares authorized; 44,346,099and 45,544,202 shares issued and outstanding		45			45
Additional paid-in capital		75,465			79,381
Deferred stock-based compensation		(1,224	)		(905	)
Retained earnings		109,955			146,412
Accumulated other comprehensive income		3			284
Total stockholders’ equity		184,244			225,217
Total liabilities and stockholders’ equity	$	547,581		$	670,052

American Reprographics Company
Consolidated Statements of Income
(Dollars in thousands, except per
share data)
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2007			2006			2007
Reprographics services	$	114,658		$	133,257		$	219,475		$	253,035
Facilities management		24,691			28,984			47,623			55,340
Equipment and supplies sales		12,178			15,542			25,231			29,621
Total net sales		151,527			177,783			292,329			337,996
Cost of sales		85,713			102,967			166,156			195,401
Gross profit		65,814			74,816			126,173			142,595
Selling, general and administrative expenses		33,112			34,499			64,598			68,733
Litigation Reserve		11,262			0			11,262			0
Amortization of intangible assets		867			2,451			1,652			4,196
Income from operations		20,573			37,866			48,661			69,666
Other income, net		472			0			801			0
Interest expense, net		(7,001	)		(6,642	)		(11,460	)		(11,802	)
Income before income tax provision		14,044			31,224			38,002			57,864
Income tax provision		5,617			11,612			15,200			21,407
Net income	$	8,427		$	19,612		$	22,802		$	36,457
Earnings per share:
Basic	$	0.19		$	0.43		$	0.51		$	0.80
Diluted	$	0.18		$	0.43		$	0.50		$	0.80
Weighted average common shares outstanding:
Basic		44,932,873			45,455,828			44,779,662			45,400,380
Diluted		45,510,158			45,880,187			45,312,592			45,832,024

American Reprographics Company
Non-GAAP Measures
Reconciliation of Net Income to EBIT and EBITDA
(Dollars in thousands)
(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2006		2007		2006		2007
	(Dollars in thousands)
Net income	$	8,427	$	19,612	$	22,802	$	36,457
Interest expense, net		7,001		6,642		11,460		11,802
Income tax provision		5,617		11,612		15,200		21,407
EBIT	$	21,045	$	37,866		49,462		69,666
Depreciation and amortization		6,371		10,029		12,006		18,387
EBITDA	$	27,416	$	47,895	$	61,468	$	88,053

See Note 1 for additional information regarding non-GAAP measures.

Note 1. Non -GAAP Measures

EBIT and EBITDA and related ratios presented in this report are supplemental measures of our performance that are not required by or presented in accordance with 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 flow 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.

We present EBIT and EBITDA 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 to measure and compare the performance of our operating segments. Our operating segments’ financial performance includes all of the operating activities except for debt and taxation which are managed at the corporate level. As a result, EBIT is the best measure of divisional 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 division-level compensation and use EBITDA to measure performance for determining consolidated-level compensation. We also use EBITDA as a metric to manage cash flow from our operating segments to the corporate level and to determine the financial health of each operating segment. As noted above, since debt and taxation are managed at the corporate level the cash flow from each operating segment should be equal to the corresponding EBITDA of each operating segment, assuming no other changes to an operating segment’s balance sheet. As a result, we reconcile EBITDA to cash flow monthly as one of our key internal controls. We also use EBIT and EBITDA to evaluate potential acquisitions and to evaluate whether to incur capital expenditures.

EBIT, and EBITDA have limitations as analytical tools, and you should not consider them 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 and EBITDA 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 and EBITDA only as supplements.

American Reprographics Company
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)

	Six Months Ended
	June 30,
	2006			2007
Cash flows from operating activities
Net income	$	22,802		$	36,457
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		10,354			14,191
Amortization of intangible assets		1,652			4,196
Amortization of deferred financing costs		151			215
Stock-based compensation		1,025			1,569
Excess tax benefit related to stock options exercised		(3,353	)		(1,534	)
Deferred income taxes		(3,315	)		1,840
Write-off of deferred financing costs		57			—
Litigation Charge		13,539			407
Other non-cash items, net		663			146
Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable		(12,675	)		(9,775	)
Inventory		(25	)		(362	)
Prepaid expenses and other assets		570			(2,583	)
Income Taxes Payable		3,756			(5,464	)
Accounts payable and accrued expenses		7,199			6,062
Net cash provided by operating activities		42,400			45,365
Cash flows from investing activities
Capital expenditures		(3,808	)		(5,232	)
Payments for businesses acquired, net of cash acquired and including other cash payments associated with the acquisitions		(16,106	)		(86,546	)
Other		(202	)		283
Net cash used in investing activities		(20,116	)		(91,495	)
Cash flows from financing activities
Proceeds from stock option exercises		1,665			1,080
Proceeds from issuance of common stock under Employee Stock Purchase Plan		238			52
Excess tax benefit related to stock options exercised		3,353			1,534
Proceeds from borrowings under debt agreements		5,000			70,000
Payments on debt agreements and capital leases		(31,943	)		(21,323	)
Payment of loan fees		(141	)		(429	)
Net cash (used in) provided by financing activities		(21,828	)		50,914
Net change in cash and cash equivalents		456			4,784
Cash and cash equivalents at beginning of period		22,643			11,642
Cash and cash equivalents at end of period	$	23,099		$	16,426
Supplemental disclosure of cash flow information
Noncash investing and financing activities
Noncash transactions include the following:
Capital lease obligations incurred	$	12,222		$	19,589
Issuance of subordinated notes in connection with the acquisition of businesses	$	8,815		$	4,550
Change in fair value of derivatives	$	281		$	66