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, 2017 and 2016 to reflect the exclusion of loss on extinguishment and modification of debt, goodwill impairment, restructuring expense, 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, 2017 and 2016. We believe these charges were the result of our capital restructuring, or other items which are not indicative of our actual operating performance.
We have presented adjusted EBITDA for the three and nine months ended September 30, 2017 and 2016 to exclude loss on extinguishment and modification of debt, goodwill impairment, 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, Inc.
(Unaudited) |
Three Months Ended |
Nine Months Ended |
||||||||||
|
September 30, |
September 30, |
|||||||||||
|
2017 |
2016 |
2017 |
2016 |
|||||||||
|
Cash flows from operating activities |
||||||||||||
|
Net (loss) income |
$ |
(14,767) |
$ |
2,902 |
$ |
(9,299) |
$ |
(50,278) |
||||
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
||||||||||||
|
Allowance for accounts receivable |
306 |
324 |
867 |
644 |
||||||||
|
Depreciation |
7,377 |
6,697 |
21,787 |
20,032 |
||||||||
|
Amortization of intangible assets |
1,053 |
1,160 |
3,250 |
3,705 |
||||||||
|
Amortization of deferred financing costs |
69 |
111 |
246 |
344 |
||||||||
|
Goodwill impairment |
17,637 |
— |
17,637 |
73,920 |
||||||||
|
Stock-based compensation |
699 |
650 |
2,251 |
2,073 |
||||||||
|
Deferred income taxes |
(2,380) |
2,299 |
1,045 |
(6,018) |
||||||||
|
Deferred tax valuation allowance |
454 |
(1) |
488 |
(16) |
||||||||
|
Loss on extinguishment and modification of debt |
124 |
66 |
230 |
156 |
||||||||
|
Other non-cash items, net |
(205) |
(87) |
(340) |
(540) |
||||||||
|
Changes in operating assets and liabilities: |
||||||||||||
|
Accounts receivable |
554 |
(897) |
406 |
(2,285) |
||||||||
|
Inventory |
(142) |
(429) |
(650) |
(3,196) |
||||||||
|
Prepaid expenses and other assets |
1,029 |
1,179 |
(1,129) |
513 |
||||||||
|
Accounts payable and accrued expenses |
(482) |
(1,811) |
(33) |
(5,008) |
||||||||
|
Net cash provided by operating activities |
11,326 |
12,163 |
36,756 |
34,046 |
||||||||
|
Cash flows from investing activities |
||||||||||||
|
Capital expenditures |
(2,335) |
(2,430) |
(7,246) |
(7,580) |
||||||||
|
Other |
72 |
135 |
466 |
842 |
||||||||
|
Net cash used in investing activities |
(2,263) |
(2,295) |
(6,780) |
(6,738) |
||||||||
|
Cash flows from financing activities |
||||||||||||
|
Proceeds from stock option exercises |
2 |
46 |
73 |
76 |
||||||||
|
Proceeds from issuance of common stock under Employee Stock Purchase Plan |
37 |
26 |
103 |
96 |
||||||||
|
Share repurchases |
— |
(200) |
— |
(5,297) |
||||||||
|
Contingent consideration on prior acquisitions |
(63) |
(86) |
(214) |
(453) |
||||||||
|
Early extinguishment of long-term debt |
— |
(7,000) |
(14,150) |
(16,000) |
||||||||
|
Payments on long-term debt agreements and capital leases |
(52,146) |
(3,310) |
(60,060) |
(9,651) |
||||||||
|
Borrowings under revolving credit facilities |
52,350 |
— |
54,850 |
— |
||||||||
|
Payments under revolving credit facilities |
(9,375) |
— |
(9,675) |
— |
||||||||
|
Payment of deferred financing costs |
(270) |
(76) |
(270) |
(106) |
||||||||
|
Net cash used in financing activities |
(9,465) |
(10,600) |
(29,343) |
(31,335) |
||||||||
|
Effect of foreign currency translation on cash balances |
161 |
(80) |
491 |
(296) |
||||||||
|
Net change in cash and cash equivalents |
(241) |
(812) |
1,124 |
(4,323) |
||||||||
|
Cash and cash equivalents at beginning of period |
26,604 |
20,452 |
25,239 |
23,963 |
||||||||
|
Cash and cash equivalents at end of period |
$ |
26,363 |
$ |
19,640 |
$ |
26,363 |
$ |
19,640 |
||||
|
Supplemental disclosure of cash flow information |
||||||||||||
|
Noncash investing and financing activities |
||||||||||||
|
Capital lease obligations incurred |
$ |
6,404 |
$ |
3,738 |
$ |
20,714 |
$ |
12,345 |
||||
|
Contingent liabilities in connection with acquisition of businesses |
$ |
— |
$ |
— |
$ |
27 |
$ |
85 |
||||
