ARC DOCUMENT SOLUTIONS, INC., 10-Q filed on 11/6/2015
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2015
Oct. 30, 2015
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q3 
 
Entity Registrant Name
ARC Document Solutions, Inc. 
 
Entity Central Index Key
0001305168 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
46,992,165 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Current assets:
 
 
Cash and cash equivalents
$ 20,824 
$ 22,636 
Accounts receivable, net of allowances for accounts receivable of $2,237 and $2,413
64,600 
62,045 
Inventories, net
17,839 
16,251 
Deferred income taxes
3,798 
278 
Prepaid expenses
5,049 
4,767 
Other current assets
3,271 
6,080 
Total current assets
115,381 
112,057 
Property and equipment, net of accumulated depreciation of $216,023 and $214,697
58,459 
59,520 
Goodwill
212,608 
212,608 
Other intangible assets, net
19,339 
23,841 
Deferred financing fees, net
1,804 
2,440 
Deferred income taxes
71,989 
1,110 
Other assets
2,192 
2,492 
Total assets
481,772 
414,068 
Current liabilities:
 
 
Accounts payable
24,733 
26,866 
Accrued payroll and payroll-related expenses
13,820 
13,765 
Accrued expenses
18,713 
22,793 
Current portion of long-term debt and capital leases
17,268 
27,969 
Total current liabilities
74,534 
91,393 
Long-term debt and capital leases
163,151 
175,916 
Deferred income taxes
35,156 
33,463 
Other long-term liabilities
3,226 
3,458 
Total liabilities
276,067 
304,230 
Commitments and contingencies (Note 7)
   
   
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; 47,093 and 46,800 shares issued and 46,992 and 46,723 shares outstanding
47 
47 
Additional paid-in capital
114,304 
110,650 
Retained earnings (deficit)
86,626 
(7,353)
Accumulated other comprehensive loss
(1,693)
(161)
Total stockholders equity before adjustment of treasury stock
199,284 
103,183 
Less cost of common stock in treasury, 101 and 77 shares
612 
408 
Total ARC Document Solutions, Inc. stockholders’ equity
198,672 
102,775 
Noncontrolling interest
7,033 
7,063 
Total equity
205,705 
109,838 
Total liabilities and equity
$ 481,772 
$ 414,068 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]
 
 
Allowances for accounts receivable
$ 2,237 
$ 2,413 
Accumulated depreciation on property and equipment
$ 216,023 
$ 214,697 
Preferred stock, par value
$ 0.001 
$ 0.001 
Preferred stock, shares authorized
25,000 
25,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 0.001 
$ 0.001 
Common stock, shares authorized
150,000 
150,000 
Common stock, shares issued
47,093 
46,800 
Common stock, shares outstanding
46,992 
46,723 
Treasury stock, shares
101 
77 
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Income Statement [Abstract]
 
 
 
 
Service sales
$ 94,384 
$ 94,426 
$ 287,045 
$ 279,555 
Equipment and supplies sales
12,034 
12,381 
37,081 
36,607 
Total net sales
106,418 
106,807 
324,126 
316,162 
Cost of sales
70,475 
70,584 
211,303 
206,798 
Gross profit
35,943 
36,223 
112,823 
109,364 
Selling, general and administrative expenses
25,816 
26,331 
80,403 
80,720 
Amortization of intangible assets
1,375 
1,497 
4,306 
4,498 
Restructuring expense
11 
89 
765 
Income from operations
8,748 
8,384 
28,025 
23,381 
Other income, net
(25)
(22)
(81)
(71)
Loss on extinguishment of debt
96 
347 
193 
347 
Interest expense, net
1,679 
3,780 
5,475 
11,637 
Income before income tax (benefit) provision
6,998 
4,279 
22,438 
11,468 
Income tax (benefit) provision
(73,338)
659 
(71,766)
1,930 
Net income
80,336 
3,620 
94,204 
9,538 
(Income) loss attributable to the noncontrolling interest
(50)
41 
(225)
64 
Net income attributable to ARC Document Solutions, Inc. shareholders
$ 80,286 
$ 3,661 
$ 93,979 
$ 9,602 
Earnings per share attributable to ARC Document Solutions, Inc. shareholders:
 
 
 
 
Basic (dollars per share)
$ 1.72 
$ 0.08 
$ 2.02 
$ 0.21 
Diluted (dollars per share)
$ 1.69 
$ 0.08 
$ 1.98 
$ 0.20 
Weighted average common shares outstanding:
 
 
 
 
Basic (shares)
46,698 
46,338 
46,601 
46,195 
Diluted (shares)
47,557 
47,015 
47,541 
46,856 
Condensed Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 80,336 
$ 3,620 
$ 94,204 
$ 9,538 
Other comprehensive loss, net of tax
 
 
 
 
Foreign currency translation adjustments, net of tax
(1,434)
(428)
(1,524)
(463)
Fair value adjustment of derivatives, net of tax
(69)
(263)
Other comprehensive loss, net of tax
(1,503)
(428)
(1,787)
(463)
Comprehensive income
78,833 
3,192 
92,417 
9,075 
Comprehensive loss attributable to noncontrolling interest
(237)
(43)
(30)
(122)
Comprehensive income attributable to ARC Document Solutions, Inc. shareholders
$ 79,070 
$ 3,235 
$ 92,447 
$ 9,197 
Condensed Consolidated Statements of Equity (USD $)
In Thousands, unless otherwise specified
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings (Deficit) [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Common Stock in Treasury [Member]
Noncontrolling Interest [Member]
Beginning Balance at Dec. 31, 2013
$ 99,139 
$ 46 
$ 105,806 
$ (14,628)
$ 634 
$ (168)
$ 7,449 
Beginning Balance, shares at Dec. 31, 2013
 
46,365 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Stock-based compensation
2,618 
 
2,618 
 
 
 
 
Stock-based compensation, shares
 
174 
 
 
 
 
 
Issuance of common stock under Employee Stock Purchase Plan
65 
 
65 
 
 
 
 
Issuance of common stock under Employee Stock Purchase Plan, shares
 
11 
 
 
 
 
 
Stock options exercised
1,201 
 
1,201 
 
 
 
 
Stock options exercised, shares
 
216 
 
 
 
 
 
Treasury shares
(151)
 
 
 
 
(151)
 
Dividends paid to noncontrolling interest
(486)
 
 
 
 
 
(486)
Treasury Stock, Shares
 
24 
 
 
 
 
 
Comprehensive income:
 
 
 
 
 
 
 
Net income (loss)
9,538 
 
 
9,602 
 
 
(64)
Foreign currency translation adjustments, net of tax
(463)
 
 
 
(405)
 
(58)
Fair value adjustment of derivatives, net of tax
 
 
 
 
 
 
Comprehensive income
9,075 
 
 
 
 
 
 
Ending Balance at Sep. 30, 2014
111,461 
46 
109,690 
(5,026)
229 
(319)
6,841 
Ending Balance, shares at Sep. 30, 2014
 
46,790 
 
 
 
 
 
Beginning Balance at Dec. 31, 2014
109,838 
47 
110,650 
(7,353)
(161)
(408)
7,063 
Beginning Balance, shares at Dec. 31, 2014
46,800 
46,800 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Stock-based compensation
3,009 
 
3,009 
 
 
 
 
Stock-based compensation, shares
 
131 
 
 
 
 
 
Issuance of common stock under Employee Stock Purchase Plan
83 
 
83 
 
 
 
 
Issuance of common stock under Employee Stock Purchase Plan, shares
 
13 
 
 
 
 
 
Stock options exercised
562 
 
562 
 
 
 
 
Stock options exercised, shares
 
125 
 
 
 
 
 
Treasury shares
(204)
 
 
 
 
(204)
 
Treasury Stock, Shares
101 
24 
 
 
 
 
 
Comprehensive income:
 
 
 
 
 
 
 
Net income (loss)
94,204 
 
 
93,979 
 
 
225 
Foreign currency translation adjustments, net of tax
(1,524)
 
 
 
(1,269)
 
(255)
Fair value adjustment of derivatives, net of tax
(263)
 
 
 
(263)
 
 
Comprehensive income
92,417 
 
 
 
 
 
 
Ending Balance at Sep. 30, 2015
$ 205,705 
$ 47 
$ 114,304 
$ 86,626 
$ (1,693)
$ (612)
$ 7,033 
Ending Balance, shares at Sep. 30, 2015
47,093 
47,093 
 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Cash flows from operating activities
 
 
 
 
Net income
$ 80,336 
$ 3,620 
$ 94,204 
$ 9,538 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Allowance for accounts receivable
110 
197 
292 
444 
Depreciation
7,040 
7,039 
21,184 
21,063 
Amortization of intangible assets
1,375 
1,497 
4,306 
4,498 
Amortization of deferred financing costs
138 
190 
460 
587 
Amortization of discount on long-term debt
 
207 
 
656 
Stock-based compensation
735 
956 
2,739 
2,618 
Deferred income taxes
2,198 
2,100 
8,221 
6,272 
Deferred tax valuation allowance
(76,091)
(1,615)
(80,882)
(4,652)
Loss on extinguishment of debt
96 
347 
193 
347 
Other non-cash items, net
(73)
(401)
(357)
(337)
Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable
2,996 
(930)
(3,637)
(8,424)
Inventory
1,083 
(142)
(1,775)
(2,071)
Prepaid expenses and other assets
1,224 
(946)
2,941 
(309)
Accounts payable and accrued expenses
(202)
3,192 
(4,772)
6,819 
Net cash provided by operating activities
20,965 
15,311 
43,117 
37,049 
Cash flows from investing activities
 
 
 
 
Capital expenditures
(3,880)
(3,430)
(11,517)
(10,027)
Payments for businesses acquisitions
 
(142)
(342)
Other
266 
105 
656 
505 
Net cash used in investing activities
(3,614)
(3,325)
(11,003)
(9,864)
Cash flows from financing activities
 
 
 
 
Proceeds from stock option exercises
191 
562 
1,201 
Proceeds from issuance of common stock under Employee Stock Purchase Plan
25 
17 
83 
65 
Share repurchases, including shares surrendered for tax withholding
(204)
(151)
Contingent consideration on prior acquisitions
(360)
(360)
Early extinguishment of long-term debt
(3,625)
(5,000)
(10,875)
(12,500)
Payments on long-term debt agreements and capital leases
(7,262)
(5,497)
(20,042)
(16,437)
Net repayments under revolving credit facilities
(144)
(532)
(1,888)
(828)
Payment of deferred financing costs
(25)
(454)
Payment of hedge premium
(632)
Dividends paid to noncontrolling interest
(486)
(486)
Net cash used in financing activities
(11,365)
(11,307)
(33,381)
(29,590)
Effect of foreign currency translation on cash balances
(598)
(50)
(545)
(122)
Net change in cash and cash equivalents
5,388 
629 
(1,812)
(2,527)
Cash and cash equivalents at beginning of period
15,436 
24,206 
22,636 
27,362 
Cash and cash equivalents at end of period
20,824 
24,835 
20,824 
24,835 
Noncash investing and financing activities
 
 
 
 
Capital lease obligations incurred
2,625 
5,506 
9,667 
14,909 
Contingent liabilities in connection with acquisition of businesses
$ 0 
$ 186 
$ 0 
$ 1,110 
Description of Business and Basis of Presentation
Description of Business and Basis of Presentation
Description of Business and Basis of Presentation
ARC Document Solutions, Inc. (“ARC Document Solutions,” “ARC” or the “Company”) 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 (“AEC”) industry. ARC offers a variety of services including: Construction Document Information Management ("CDIM"), Managed Print Services ("MPS"), and Archive and Information Management ("AIM"). In addition, ARC also sells Equipment and Supplies. The Company conducts its operations through its wholly-owned operating subsidiary, ARC Document Solutions, LLC, a Texas limited liability company, and its affiliates.
Basis of Presentation
The accompanying interim Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in conformity with the requirements of the SEC. As permitted under those rules, certain footnotes or other financial information required by GAAP for complete financial statements have been condensed or omitted. In management’s opinion, the accompanying interim Condensed Consolidated Financial Statements presented reflect all adjustments of a normal and recurring nature that are necessary to fairly present the interim Condensed Consolidated Financial Statements. All material intercompany accounts and transactions have been eliminated in consolidation. The operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the interim Condensed Consolidated Financial Statements and accompanying notes. The Company evaluates its estimates and assumptions on an ongoing basis and relies on historical experience and various other factors that it believes to be reasonable under the circumstances to determine such estimates. Actual results could differ from those estimates, and such differences may be material to the interim Condensed Consolidated Financial Statements.
These interim Condensed Consolidated Financial Statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s 2014 Form 10-K.
Recent Accounting Pronouncements
In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-11, Simplifying the Measurement of Inventory. The new guidance requires that inventory be measured at the lower of cost or net realizable value and amends existing guidance which requires inventory be measured at the lower of cost or market. Replacing the concept of market with the single measurement of net realizable value is intended to create efficiencies for financial statement preparers. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the adoption of ASU 2015-11 on its condensed consolidated financial statements.
In April 2015, the FASB issued ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The new guidance amends Accounting Standards Codification ("ASC") 350-40, Intangibles - Goodwill and Other, Internal-Use Software, to provide guidance on determining whether a cloud computing arrangement contains a software license that should be accounted for as internal-use software. ASU 2015-05 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the adoption of ASU 2015-05 on its condensed consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of deferred financing fees in an entity's financial statements. Under the ASU, deferred financing fees are to be presented in the balance sheet as a direct deduction from the related debt liability rather than as an asset. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted. The Company expects to adopt ASU 2015-03 for the quarterly report on Form 10-Q for the three months ended March 31, 2016.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. ASU 2014-15 requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnotes disclosures in certain circumstances. It is effective for annual and interim periods beginning on or after December 15, 2016, with early adoption permitted. We do not believe the adoption of this guidance will have an impact on our condensed consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the existing revenue recognition requirements in “Revenue Recognition (Topic 605).” The new guidance requires entities to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is not permitted. The Company is currently in the process of evaluating the impact of the adoption of ASU 2014-09 on its condensed consolidated financial statements.
In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The new guidance raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. It was effective for annual periods beginning on or after December 15, 2014. The adoption of ASU 2014-08 had no impact to the Company's condensed consolidated financial statements.
Segment Reporting
The provisions of ASC 280, Disclosures about Segments of an Enterprise and Related Information, require public companies to report financial and descriptive information about their reportable operating segments. The Company identifies operating segments based on the various business activities that earn revenue and incur expense and whose operating results are reviewed by the Company's Chief Executive Officer, who is the Company's chief operating decision maker. Because its operating segments have similar products and services, classes of customers, production processes, distribution methods and economic characteristics, the Company operates as a single reportable segment.
In an effort to more closely align the Company's financial presentation to how it markets its services and products to its customers, during the first quarter of 2015, the Company re-categorized its offerings to better report distinct sales recognized from CDIM, MPS, AIM, and Equipment and Supplies Sales. MPS is a new categorization of sales, which combines the Company's previously reported Onsite Services sales with sales generated from the servicing of equipment, which was previously included in Traditional Reprographics. In addition, sales generated from the Company's AIM services were split out from the Company's previously reported Digital Services category and presented separately. The remaining sales generated from Traditional Reprographics, Color Services and Digital Services were combined into CDIM. Equipment and Supplies sales remained unchanged. Amounts for the prior year have been recast to conform to the current year presentation in the table below. The Company believes the updated presentation of its sales categories reflects the drivers of its consolidated sales and will provide greater insight into the opportunities and risk diversification provided by the Company's portfolio of service and product offerings.
Net sales of the Company’s principal services and products were as follows:
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2015
 
2014
 
2015
 
2014
Service Sales
 
 
 
 
 
 
 
CDIM
$
54,710

 
$
55,352

 
$
168,187

 
$
166,234

MPS
35,923

 
36,464

 
108,934

 
105,216

AIM
3,751

 
2,610

 
9,924

 
8,105

Total service sales
94,384

 
94,426

 
287,045

 
279,555

Equipment and supplies sales
12,034

 
12,381

 
37,081

 
36,607

Total net sales
$
106,418

 
$
106,807

 
$
324,126

 
$
316,162


Risk and Uncertainties
The Company generates the majority of its revenue from sales of services and products to customers in the AEC industry. As a result, the Company’s operating results and financial condition can be significantly affected by economic factors that influence the AEC industry, such as non-residential construction spending, GDP growth, interest rates, unemployment rates, and office vacancy rates. Reduced activity (relative to historic levels) in the AEC industry would diminish demand for some of ARC’s services and products, and would therefore negatively affect revenues and have a material adverse effect on its business, operating results and financial condition.
As part of the Company’s growth strategy, ARC intends to continue to offer and grow a variety of service offerings that are relatively new to the Company. The success of the Company’s efforts will be affected by its ability to acquire new customers for the Company’s new service offerings, as well as to sell the new service offerings to existing customers. The Company’s inability to successfully market and execute these relatively new service offerings could significantly affect its business and reduce its long term revenue, resulting in an adverse effect on its results of operations and financial condition.
Earnings Per Share
Earnings Per Share
Earnings per Share
The Company accounts for earnings per share in accordance with ASC 260, Earnings Per Share. Basic earnings per share is computed by dividing net income attributable to ARC by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is computed similarly to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if common shares subject to outstanding options and acquisition rights had been issued and if the additional common shares were dilutive. Common share equivalents are excluded from the computation if their effect is anti-dilutive. For the three and nine months ended September 30, 2015, stock options for 2.1 million and 1.5 million common shares, respectively, were excluded from the calculation of diluted net income attributable to ARC per common share because they were anti-dilutive. For both the three and nine months ended September 30, 2014, stock options of 1.7 million common shares, were excluded from the calculation of diluted net income attributable to ARC per common share because they were anti-dilutive. The Company's common share equivalents consist of stock options issued under the Company's stock plan.
Basic and diluted weighted average common shares outstanding were calculated as follows for the three and nine months ended September 30, 2015 and 2014:
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2015
 
2014
 
2015
 
2014
Weighted average common shares outstanding during the period—basic
46,698

 
46,338

 
46,601

 
46,195

Effect of dilutive stock options
859

 
677

 
940

 
661

Weighted average common shares outstanding during the period—diluted
47,557

 
47,015

 
47,541

 
46,856

Restructuring Expenses
Restructuring Expenses
Restructuring Expenses
To ensure that the Company’s costs and resources were in line with demand for its current portfolio of services and products, management initiated a restructuring plan in the fourth quarter of 2012. Restructuring activities associated with the plan concluded in the fourth quarter of 2013. Through December 31, 2013, the restructuring plan included the closure or downsizing of 56 of the Company’s service centers, which represented more than 25% of its total number of service center locations. In addition, as part of the restructuring plan, the Company reduced headcount and middle management associated with its service center locations, streamlined the senior operational management team, and allocated more resources into growing sales categories such as MPS. The reduction in headcount totaled approximately 300 full-time employees, which represented approximately 10% of the Company’s then current total workforce. To date, the Company has incurred $6.7 million of expense related to its restructuring plan.
Restructuring expenses include employee termination costs, estimated lease termination and obligation costs, and other restructuring expenses. Restructuring expenses for the three and nine months ended September 30, 2015 primarily consisted of revised estimated lease termination and obligation costs resulting from facilities closed in 2013.
The following table summarizes restructuring expenses incurred in the three and nine months ended September 30, 2015 and 2014:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Employee termination costs
$

 
$

 
$

 
$

Estimated lease termination and obligation costs
4

 
7

 
89

 
540

Other restructuring expenses

 
4

 

 
225

Total restructuring expenses
$
4

 
$
11

 
$
89

 
$
765


The changes in the restructuring liability from December 31, 2014 through September 30, 2015 are summarized as follows:
 
 
Nine Months Ended September 30, 2015
Balance, December 31, 2014
$
113

Restructuring expenses
89

Payments
(154
)
Balance, September 30, 2015
$
48

Goodwill and Other Intangibles Resulting from Business Acquisitions
Goodwill and Other Intangibles Resulting from Business Acquisitions
Goodwill and Other Intangibles Resulting from Business Acquisitions
Goodwill
In connection with acquisitions, the Company applies the provisions of ASC 805, Business Combinations, using the acquisition method of accounting. The excess purchase price over the assessed fair value of net tangible assets and identifiable intangible assets acquired is recorded as goodwill.
In accordance with ASC 350, Intangibles—Goodwill and Other, the Company assesses goodwill for impairment annually as of September 30, and more frequently if events and circumstances indicate that goodwill might be impaired. At September 30, 2015, the Company performed its assessment and noted that one reporting unit failed step one of the impairment analysis; however, step two of the analysis is not yet final due to the complexity and significant amount of work required to calculate the implied fair value of goodwill. The preliminary analysis is subject to finalization, and will be completed in the quarter ended December 31, 2015. The preliminary results of step two of the Company's goodwill impairment analysis indicate that there is no goodwill impairment and represents the Company's best estimate; however, it is possible that material adjustments to the Company's preliminary estimates may be required as the calculations are finalized.
Goodwill impairment testing is performed at the reporting unit level. Goodwill is assigned to reporting units at the date the goodwill is initially recorded. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or internally generated, are available to support the value of the goodwill.
Goodwill impairment testing is a two-step process. Step one involves comparing the fair value of the reporting units to its carrying amount. If the carrying amount of a reporting unit is greater than zero and its fair value is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount is greater than the fair value, the second step must be completed to measure the amount of impairment, if any. Step two involves calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of goodwill determined in this step is compared to the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss is recognized equal to the difference.
The Company determines the fair value of its reporting units using an income approach. Under the income approach, the Company determined fair value based on estimated discounted future cash flows of each reporting unit. The cash flows are discounted by an estimated weighted-average cost of capital, which is intended to reflect the overall level of inherent risk of a reporting unit. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates and EBITDA margins, discount rates and future market conditions, among others. The Company considered market information in assessing the reasonableness of the fair value under the income approach outlined above.
Given the current economic environment, the changing document and printing needs of the Company’s customers, and the uncertainties regarding the related impact on the Company’s business, there can be no assurance that the estimates and assumptions made for purposes of the Company’s goodwill impairment testing in 2015 will prove to be accurate predictions of the future. If the Company’s assumptions, including forecasted EBITDA of certain reporting units, are not achieved, the Company may be required to record additional goodwill impairment charges in future periods, whether in connection with the Company’s next annual impairment testing in the third quarter of 2016, or on an interim basis, if any such change constitutes a triggering event (as defined under ASC 350, Intangibles—Goodwill and Other ) outside of the quarter when the Company regularly performs its annual goodwill impairment test. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.
There was no change to the carrying amount of goodwill from January 1, 2014 through September 30, 2015.
Long-lived Assets
The Company periodically assesses potential impairments of its long-lived assets in accordance with the provisions of ASC 360, Accounting for the Impairment or Disposal of Long-lived Assets. An impairment review is performed whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The Company groups its assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities. The Company has determined that the lowest level for which identifiable cash flows are available is the regional level, which is the operating segment level.
Factors considered by the Company include, but are not limited to, significant underperformance relative to historical or projected operating results; significant changes in the manner of use of the acquired assets or the strategy for the overall business; and significant negative industry or economic trends. When the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators of impairment, the Company estimates the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future undiscounted cash flows and eventual disposition is less than the carrying amount of the asset, the Company recognizes an impairment loss. An impairment loss is reflected as the amount by which the carrying amount of the asset exceeds the fair value of the asset, based on the fair value if available, or discounted cash flows, if fair value is not available. The Company had no long-lived asset impairments in the first nine months of 2015 or for the year ended December 31, 2014.
Other intangible assets that have finite lives are amortized over their useful lives. Customer relationships are amortized using the accelerated method, based on customer attrition rates, over their estimated useful lives of 13 (weighted average) years.
The following table sets forth the Company’s other intangible assets resulting from business acquisitions as of September 30, 2015 and December 31, 2014 which continue to be amortized:
 
 
September 30, 2015
 
December 31, 2014
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Amortizable other intangible assets
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
99,174

 
$
80,323

 
$
18,851

 
$
99,606

 
$
76,298

 
$
23,308

Trade names and trademarks
20,345

 
19,857

 
488

 
20,370

 
19,837

 
533

 
$
119,519

 
$
100,180

 
$
19,339

 
$
119,976

 
$
96,135

 
$
23,841


Based on current information, estimated future amortization expense of amortizable intangible assets for the remainder of the 2015 fiscal year, each of the subsequent four fiscal years and thereafter are as follows:
 
2015 (excluding the nine months ended September 30, 2015)
$
1,332

2016
4,808

2017
4,248

2018
3,839

2019
3,120

Thereafter
1,992

 
$
19,339

Income Taxes
Income Taxes
Income Taxes
On a quarterly basis, the Company estimates its effective tax rate for the full fiscal year and records a quarterly income tax provision based on the anticipated rate in conjunction with the recognition of any discrete items within the quarter.
The Company recorded an income tax benefit of $73.3 million and $71.8 million in relation to pretax income of $7.0 million and of $22.4 million for the three and nine months ended September 30, 2015, respectively, due to the reversal of the valuation allowance against certain of its deferred tax assets. The Company recorded an income tax provision of $0.7 million and $1.9 million in relation to pretax income of $4.3 million and $11.5 million for the three and nine months ended September 30, 2014, respectively.

In accordance with ASC 740-10, Income Taxes, the Company evaluates the need for deferred tax asset valuation allowances based on a more likely than not standard. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. The Company considers the following possible sources of taxable income when assessing the realization of deferred tax assets:

Future reversals of existing taxable temporary differences;
Future taxable income exclusive of reversing temporary differences and carryforwards;
Taxable income in prior carryback years; and
Tax-planning strategies.

The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available positive and negative evidence factors, including but not limited to:

Nature, frequency, and severity of recent losses;
Duration of statutory carryforward periods;
Historical experience with tax attributes expiring unused; and
Near- and medium-term financial outlook.

It is difficult to conclude a valuation allowance is not required when there is significant objective and verifiable negative evidence, such as cumulative losses in recent years. The Company utilizes a rolling three years of actual and current year anticipated results as the primary measure of cumulative losses in recent years. The evaluation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in the Company's financial statements or tax returns and future profitability. The Company's accounting for deferred tax consequences represents its best estimate of those future events. Changes in the Company's current estimates, due to unanticipated events or otherwise, could have a material effect on its financial condition and results of operations. At September 30, 2015 as a result of sustained profitability in the U.S. evidenced by three years of earnings and forecasted continuing profitability, the Company determined it was more likely than not future earnings will be sufficient to realize deferred tax assets in the U.S. Accordingly the Company reversed most of its U.S.valuation allowance resulting in non-cash income tax benefit of $76.1 million for the three months ended September 30, 2015. The Company continues to carry a $1.1 million valuation allowance against certain deferred tax assets as of September 30, 2015.

Based on the Company’s assessment, the remaining net deferred tax assets as of September 30, 2015 are considered more likely than not to be realized. The valuation allowance of $1.1 million may be increased or reduced as conditions change or if the Company is unable to implement certain available tax planning strategies. The realization of the Company’s net deferred tax assets ultimately depend on future taxable income, reversals of existing taxable temporary differences or through a loss carry back. The Company has income tax receivables of $20 thousand as of September 30, 2015 included in other current assets in its Condensed Consolidated Balance Sheet primarily related to income tax refunds for prior years.
Long-Term Debt
Long-Term Debt
Long-Term Debt
Long-term debt consists of the following:
 
 
 
September 30, 2015
 
December 31, 2014
Term A loan facility maturing 2019; 2.57% and 2.74% interest rate at September 30, 2015 and December 31, 2014
 
$
151,000

 
$
173,000

Various capital leases; weighted average interest rate of 5.9% and 6.8% at September 30, 2015 and December 31, 2014; principal and interest payable monthly through August 2020
 
29,266

 
28,789

Borrowings from foreign revolving credit facilities; 0.6% interest rate at December 31, 2014
 

 
1,897

Various other notes payable with a weighted average interest rate of 8.2% and 6.5% at September 30, 2015 and December 31, 2014; principal and interest payable monthly through November 2019
 
153

 
199

 
 
180,419

 
203,885

Less current portion
 
(17,268
)
 
(27,969
)
 
 
$
163,151

 
$
175,916


Term A Loan Facility
On November 20, 2014 the Company entered into a Credit Agreement (the “Term A Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent and the lenders party thereto.
The Term A Credit Agreement provides for the extension of term loans (“Term Loans”) in an aggregate principal amount of $175.0 million, the entirety of which was disbursed on the closing date in order to pay outstanding obligations under the Company’s then-existing Term Loan Credit Agreement dated as of December 20, 2013. The Term A Credit Agreement also provides for the extension of revolving loans in an aggregate principal amount not to exceed $30.0 million. The Company may request incremental commitments to the aggregate principal amount of Term Loans and Revolving Loans available under the Term A Credit Agreement by an amount not to exceed $75.0 million in the aggregate. Unless an incremental commitment to increase the Term Loan or provide a new term loan matures at a later date, the obligations under the Term A Credit Agreement mature on November 20, 2019. As of September 30, 2015, the Company's borrowing availability under the Term A Credit Agreement was $28.1 million, which was the maximum borrowing limit of $30.0 million under the Revolving Loan facility reduced by outstanding letters of credit of $1.9 million.
Loans borrowed under the Term A Credit Agreement bear interest, in the case of LIBOR rate loans, at a per annum rate equal to the applicable LIBOR rate, plus a margin ranging from 1.50% to 2.50% per annum, based on the Company’s Total Leverage Ratio (as defined in the Term A Credit Agreement). Loans borrowed under the Term A Credit Agreement that are not LIBOR rate loans bear interest at a per annum rate equal to (i) the greatest of (A) the Federal Funds Rate plus 0.50% per annum, (B) the one month LIBOR rate plus 1.00% per annum, and (C) the rate of interest announced, from time to time, by Wells Fargo Bank, National Association as its “prime rate,” plus (ii) a margin ranging from 0.50% to 1.50% per annum, based on the Company’s Total Leverage Ratio.
The Company will pay certain recurring fees with respect to the credit facility, including administration fees to the administrative agent.
Subject to certain exceptions, including in certain circumstances, reinvestment rights, the loans extended under the Term A Credit Agreement are subject to customary mandatory prepayment provisions with respect to: the net proceeds from certain asset sales; the net proceeds from certain issuances or incurrences of debt (other than debt permitted to be incurred under the terms of the Term A Credit Agreement); the net proceeds from certain issuances of equity securities; and net proceeds of certain insurance recoveries and condemnation events of the Company.
The Term A Credit Agreement contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting the ability (subject to various exceptions) of the Company and its subsidiaries to: incur additional indebtedness (including guarantee obligations); incur liens; sell certain property or assets; engage in mergers or other fundamental changes; consummate acquisitions; make investments; pay dividends, other distributions or repurchase equity interest of the Company or its subsidiaries; change the nature of their business; prepay or amend certain indebtedness; engage in certain transactions with affiliates; amend their organizational documents; or enter into certain restrictive agreements. In accordance with the Term A Credit Agreement, the Company is permitted to pay dividends related to its equity securities payable solely in shares of equity securities. In addition, the Term A Credit Agreement contains financial covenants which require the Company to maintain (i) at all times, a Total Leverage Ratio in an amount not to exceed 3.25 to 1.00 through the Company’s fiscal quarter ending September 30, 2016, and thereafter, in an amount not to exceed 3.00 to 1.00; and (ii) a Fixed Charge Coverage Ratio (as defined in the Term A Credit Agreement), as of the last day of each fiscal quarter, in an amount not less than 1.25 to 1.00.
The Term A Credit Agreement contains customary events of default, including with respect to: nonpayment of principal, interest, fees or other amounts; failure to perform or observe covenants; material inaccuracy of a representation or warranty when made; cross-default to other material indebtedness; bankruptcy, insolvency and dissolution events; inability to pay debts; monetary judgment defaults; actual or asserted invalidity or impairment of any definitive loan documentation, repudiation of guaranties or subordination terms; certain ERISA related events; or a change of control.
The obligations of the Company’s subsidiary that is the borrower under the Term A Credit Agreement are guaranteed by the Company and each other United States domestic subsidiary of the Company. The Term A Credit Agreement and any interest rate protection and other hedging arrangements provided by any lender party to the credit facility or any affiliate of such a lender are secured on a first priority basis by a perfected security interest in substantially all of the borrower’s, the Company’s and each guarantor’s assets (subject to certain exceptions).
As of September 30, 2015, the Company paid $24.0 million in aggregate principal on its $175.0 million Term Loan Credit Agreement, which was $10.9 million above the required principal payments. The $10.9 million early pay down of the term loan resulted in a loss on extinguishment of debt of $0.1 million and $0.2 million for the three and nine months ended September 30, 2015, respectively.
Foreign Credit Agreement
In the third quarter of 2014, in conjunction with its Chinese operations, UNIS Document Solutions Co. Ltd. (“UDS”), the Company’s Chinese business venture with Beijing-based Unisplendour, entered into a revolving credit facility with a term of 12 months. The credit agreement expired in September 2015.
Other Notes Payable
Includes notes payable collateralized by equipment previously purchased.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Operating Leases. The Company has entered into various non-cancelable operating leases primarily related to facilities, equipment and vehicles used in the ordinary course of business.
Legal Proceedings. On October 21, 2010, a former employee, individually and on behalf of a purported class consisting of all non-exempt employees who work or worked for American Reprographics Company, L.L.C. and American Reprographics Company in the State of California at any time from October 21, 2006 through the present, filed an action against the Company in the Superior Court of California for the County of Orange. The complaint alleges, among other things, that the Company violated the California Labor Code by failing to (i) provide meal and rest periods, or compensation in lieu thereof, (ii) timely pay wages due at termination, and (iii) that those practices also violate the California Business and Professions Code. The relief sought includes damages, restitution, penalties, interest, costs, and attorneys’ fees and such other relief as the court deems proper. On March 15, 2013, the Company participated in a private mediation session with claimants’ counsel which did not result in resolution of the claim. Subsequent to the mediation session, the mediator issued a proposal that was accepted by both parties. The Company has received preliminary court approval of the settlement, and awaits final court approval. The Company has a liability of $1.1 million as of September 30, 2015 related to the claim, which represents management's best estimate based on information available.

On February 1, 2013, ARC filed a civil complaint against a competitor and a former employee in the Superior Court of California for Orange County, which alleged, among other claims, the misappropriation of ARC trade secrets; namely, proprietary customer lists that were used to communicate with ARC customers in an attempt to unfairly acquire their business. In prior litigation with the competitor based on related facts, in 2007 the competitor entered into a settlement agreement and stipulated judgment, which included an injunction. ARC instituted this suit to stop the defendant from using similar unfair business practices against it in the Southern California market. The case proceeded to trial in May 2014, and a jury verdict was entered for the defendants. In the first quarter of 2015, the Company settled with the defendants and paid $1.0 million, which had been accrued as of December 31, 2014.
In addition to the matters described above, the Company is involved in various additional legal proceedings and other legal matters from time to time in the normal course of business. The Company does not believe that the outcome of any of these matters will have a material effect on its consolidated financial position, results of operations or cash flows.
Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation
At the Company's annual meeting of stockholders held on May 1, 2014, the Company's stockholders approved the Company's 2014 Stock Plan (the “2014 Stock Plan”) as previously adopted by the Company's board of directors. The 2014 Stock Plan replaces the American Reprographics Company 2005 Stock Plan (the "2005 Plan"). The 2014 Stock Plan provides for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses and other forms of awards granted or denominated in the Company's common stock or units of the Company's common stock, as well as cash bonus awards to employees, directors and consultants of the Company. The 2014 Stock Plan authorizes the Company to issue up to 3.5 million shares of common stock. As of September 30, 2015, 2.3 million shares remain available for issuance under the Stock Plan.
Stock options granted under the 2014 Stock Plan generally expire no later than ten years from the date of grant. Options generally vest and become fully exercisable over a period of three to four years from date of award, except that options granted to non-employee directors may vest over a shorter time period. The exercise price of options must be equal to at least 100% of the fair market value of the Company’s common stock on the date of grant. The Company allows for cashless exercises of vested outstanding options.
During the nine months ended September 30, 2015, the Company granted options to acquire a total of 526 thousand shares of the Company's common stock to certain key employees with an exercise price equal to the fair market value of the Company’s common stock on the date of grant. During the nine months ended September 30, 2015, the Company granted 116 thousand shares of restricted stock to certain key employees at a price per share equal to the closing price of the Company's common stock on the date the restricted stock was granted. The granted stock options and restricted stock vest annually over three to four years from the grant date. In addition, the Company granted 7 thousand shares of restricted stock to each of the Company's six non-employee members of its board of directors at a price per share equal to the closing price of the Company's common stock on the date the restricted stock was granted. The restricted stock vests on the one-year anniversary of the grant date.
The impact of stock-based compensation before income taxes on the interim Condensed Consolidated Statements of Operations was $0.7 million and $1.0 million for the three months ended September 30, 2015 and 2014, respectively.
The impact of stock-based compensation before income taxes on the interim Condensed Consolidated Statements of Operations was $2.7 million and $2.6 million for the nine months ended September 30, 2015 and 2014, respectively.
As of September 30, 2015, total unrecognized compensation cost related to unvested stock-based payments totaled $4.6 million and is expected to be recognized over a weighted-average period of 2.2 years.
Derivatives and Hedging Transactions
Derivatives and Hedging Transactions
Derivatives and Hedging Transactions

The Company uses derivative financial instruments to hedge its exposure to interest rate volatility related to its Term A Loan Facility. The Company does not use derivative financial instruments for speculative or trading purposes. Such derivatives are designated as cash flow hedges and accounted for under ASC 815, Derivatives and Hedging. Derivative instruments are recorded at fair value as either assets or liabilities in the interim condensed consolidated balance sheets. Changes in fair value of cash flow hedges that are designated as effective hedging instruments are deferred in equity as a component of accumulated other comprehensive loss ("AOCL"). Any ineffectiveness in such cash flow hedges is immediately recognized in earnings. Changes in the fair value of hedges that are not designated as effective hedging instruments are immediately recognized in earnings. Cash flows from the Company’s derivative instruments are classified in the condensed consolidated statements of cash flows in the same category as the items being hedged.

In January 2015, the Company entered into three interest rate cap contracts to hedge against its exposure to interest rate volatility: (1) $80.0 million notional interest rate cap effective in 2015, (2) $65.0 million notional forward interest rate cap effective in 2016, and (3) $50.0 million notional forward interest rate cap effective in 2017. Over the next twelve months, the Company expects to reclassify $158 thousand from AOCL to interest expense.

The following table summarizes the fair value and classification on the Condensed Consolidated Balance Sheets of the Company's derivatives as of September 30, 2015:
 
 
 
Fair Value
 
Balance Sheet Classification
 
September 30, 2015
Derivative designated as hedging instrument under ASC 815
 
 
 
Interest rate cap contracts - current portion
Other current assets
 
$
2

Interest rate cap contracts - long-term portion
Other assets
 
190

Total derivatives designated as hedging instruments
 
 
$
192



As of and for the year ended December 31, 2014 the Company was not party to any derivative or hedging transactions.

The following table summarizes the loss recognized in AOCL of derivatives, designated and qualifying as cash flow hedges for the three and nine months ended September 30, 2015:

 
 
Amount of Loss Recognized in AOCL on Derivative
 
 
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2015
Derivative in ASC 815 Cash Flow Hedging Relationship
 
 
 
 
Interest rate cap contracts, net of tax
 
$
(69
)
 
$
(263
)


The following table summarizes the effect of the interest rate cap on the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2015:

 
 
Amount of Gain or (Loss) Reclassified from AOCL into Income
 
 
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2015
 
 
Effective Portion
 
Ineffective Portion
 
Effective Portion
 
Ineffective Portion
Location of Loss Reclassified from AOCL into Income
 
 
 
 
 
 
 
 
Interest expense
 
$
9

 
$

 
$
10

 
$

Fair Value Measurements
Fair Value Measurements
Fair Value Measurements
In accordance with ASC 820, Fair Value Measurement, the Company has categorized its assets and liabilities that are measured at fair value into a three-level fair value hierarchy as set forth below. If the inputs used to measure fair value fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement. The three levels of the hierarchy are defined as follows:
Level 1-inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2-inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3-inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis in the condensed consolidated financial statements as of and for the nine months ended September 30, 2015 and as of and for the year ended December 31 2014:

 
 
 
September 30, 2015
 
December 31, 2014
 
 
 
Level 2
 
Level 3
 
Total Losses
 
Level 2
 
Level 3
 
Total Losses
Recurring Fair Value Measure
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate cap contracts
 
$
192

 
$

 
$

 
$

 
$

 
$

 
Contingent purchase price consideration for acquired businesses
 
$

 
$
1,117

 
$

 
$

 
$
1,768

 
$



The Company determines the fair value of its interest rate cap contracts based on observable interest rate yield curves and represent the expected discounted cash flows underlying the financial instruments.
The Company recognizes liabilities for future earnout obligations on business acquisitions, or contingent purchase price consideration for acquired businesses, at their fair value based on discounted projected payments on such obligations. The inputs to the valuation, which are level 3 inputs within the fair value hierarchy, are projected sales to be provided by the acquired businesses based on historical sales trends for which earnout amounts are contractually based. Based on the Company's assessment as of September 30, 2015, the estimated contractually required earnout amounts would be achieved. The following table presents the change in the Level 3 contingent purchase price consideration liability for the three and nine months ended September 30, 2015 and 2014:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2015
 
2014
 
2015
 
2014
Beginning balance
$
1,479

 
$
924

 
$
1,768

 
$

     Additions related to acquisitions

 
186

 

 
1,452

     Payments
(360
)
 

 
(502
)
 
(342
)
     Adjustments included in earnings
32

 

 
2

 

     Foreign currency translation adjustments
(34
)
 

 
(151
)
 

Ending balance
$
1,117

 
$
1,110

 
$
1,117

 
$
1,110


Fair Values of Financial Instruments. The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments for disclosure purposes:
Cash equivalents: Cash equivalents are time deposits with maturity of three months or less when purchased, which are highly liquid and readily convertible to cash. Cash equivalents reported in the Company’s Condensed Consolidated Balance Sheets were $7.2 million and $9.2 million as of September 30, 2015 and December 31, 2014, respectively, and are carried at cost and approximate fair value due to the relatively short period to maturity of these instruments.
Short and long-term debt: The carrying amount of the Company’s capital leases reported in the Condensed Consolidated Balance Sheets approximates fair value based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements. The carrying amount reported in the Company’s Condensed Consolidated Balance Sheet as of September 30, 2015 for borrowings under its Term Loan Credit Agreement is $151.0 million. The Company has determined, utilizing observable market quotes, that the fair value of borrowings under its Term Loan Credit Agreement is $151.0 million as of September 30, 2015.
Description of Business and Basis of Presentation (Policies)
Goodwill
In connection with acquisitions, the Company applies the provisions of ASC 805, Business Combinations, using the acquisition method of accounting. The excess purchase price over the assessed fair value of net tangible assets and identifiable intangible assets acquired is recorded as goodwill.
In accordance with ASC 350, Intangibles—Goodwill and Other, the Company assesses goodwill for impairment annually as of September 30, and more frequently if events and circumstances indicate that goodwill might be impaired. At September 30, 2015, the Company performed its assessment and noted that one reporting unit failed step one of the impairment analysis; however, step two of the analysis is not yet final due to the complexity and significant amount of work required to calculate the implied fair value of goodwill. The preliminary analysis is subject to finalization, and will be completed in the quarter ended December 31, 2015. The preliminary results of step two of the Company's goodwill impairment analysis indicate that there is no goodwill impairment and represents the Company's best estimate; however, it is possible that material adjustments to the Company's preliminary estimates may be required as the calculations are finalized.
Goodwill impairment testing is performed at the reporting unit level. Goodwill is assigned to reporting units at the date the goodwill is initially recorded. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or internally generated, are available to support the value of the goodwill.
Goodwill impairment testing is a two-step process. Step one involves comparing the fair value of the reporting units to its carrying amount. If the carrying amount of a reporting unit is greater than zero and its fair value is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount is greater than the fair value, the second step must be completed to measure the amount of impairment, if any. Step two involves calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of goodwill determined in this step is compared to the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss is recognized equal to the difference.
The Company determines the fair value of its reporting units using an income approach. Under the income approach, the Company determined fair value based on estimated discounted future cash flows of each reporting unit. The cash flows are discounted by an estimated weighted-average cost of capital, which is intended to reflect the overall level of inherent risk of a reporting unit. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates and EBITDA margins, discount rates and future market conditions, among others. The Company considered market information in assessing the reasonableness of the fair value under the income approach outlined above.
Given the current economic environment, the changing document and printing needs of the Company’s customers, and the uncertainties regarding the related impact on the Company’s business, there can be no assurance that the estimates and assumptions made for purposes of the Company’s goodwill impairment testing in 2015 will prove to be accurate predictions of the future. If the Company’s assumptions, including forecasted EBITDA of certain reporting units, are not achieved, the Company may be required to record additional goodwill impairment charges in future periods, whether in connection with the Company’s next annual impairment testing in the third quarter of 2016, or on an interim basis, if any such change constitutes a triggering event (as defined under ASC 350, Intangibles—Goodwill and Other ) outside of the quarter when the Company regularly performs its annual goodwill impairment test. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.
Goodwill
In connection with acquisitions, the Company applies the provisions of ASC 805, Business Combinations, using the acquisition method of accounting. The excess purchase price over the assessed fair value of net tangible assets and identifiable intangible assets acquired is recorded as goodwill.
In accordance with ASC 350, Intangibles—Goodwill and Other, the Company assesses goodwill for impairment annually as of September 30, and more frequently if events and circumstances indicate that goodwill might be impaired. At September 30, 2015, the Company performed its assessment and noted that one reporting unit failed step one of the impairment analysis; however, step two of the analysis is not yet final due to the complexity and significant amount of work required to calculate the implied fair value of goodwill. The preliminary analysis is subject to finalization, and will be completed in the quarter ended December 31, 2015. The preliminary results of step two of the Company's goodwill impairment analysis indicate that there is no goodwill impairment and represents the Company's best estimate; however, it is possible that material adjustments to the Company's preliminary estimates may be required as the calculations are finalized.
Goodwill impairment testing is performed at the reporting unit level. Goodwill is assigned to reporting units at the date the goodwill is initially recorded. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or internally generated, are available to support the value of the goodwill.
Goodwill impairment testing is a two-step process. Step one involves comparing the fair value of the reporting units to its carrying amount. If the carrying amount of a reporting unit is greater than zero and its fair value is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount is greater than the fair value, the second step must be completed to measure the amount of impairment, if any. Step two involves calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit as determined in step one. The implied fair value of goodwill determined in this step is compared to the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss is recognized equal to the difference.
The Company determines the fair value of its reporting units using an income approach. Under the income approach, the Company determined fair value based on estimated discounted future cash flows of each reporting unit. The cash flows are discounted by an estimated weighted-average cost of capital, which is intended to reflect the overall level of inherent risk of a reporting unit. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates and EBITDA margins, discount rates and future market conditions, among others. The Company considered market information in assessing the reasonableness of the fair value under the income approach outlined above.
Given the current economic environment, the changing document and printing needs of the Company’s customers, and the uncertainties regarding the related impact on the Company’s business, there can be no assurance that the estimates and assumptions made for purposes of the Company’s goodwill impairment testing in 2015 will prove to be accurate predictions of the future. If the Company’s assumptions, including forecasted EBITDA of certain reporting units, are not achieved, the Company may be required to record additional goodwill impairment charges in future periods, whether in connection with the Company’s next annual impairment testing in the third quarter of 2016, or on an interim basis, if any such change constitutes a triggering event (as defined under ASC 350, Intangibles—Goodwill and Other ) outside of the quarter when the Company regularly performs its annual goodwill impairment test. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.
Earnings per Share
The Company accounts for earnings per share in accordance with ASC 260, Earnings Per Share. Basic earnings per share is computed by dividing net income attributable to ARC by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is computed similarly to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if common shares subject to outstanding options and acquisition rights had been issued and if the additional common shares were dilutive. Common share equivalents are excluded from the computation if their effect is anti-dilutive. For the three and nine months ended September 30, 2015, stock options for 2.1 million and 1.5 million common shares, respectively, were excluded from the calculation of diluted net income attributable to ARC per common share because they were anti-dilutive. For both the three and nine months ended September 30, 2014, stock options of 1.7 million common shares, were excluded from the calculation of diluted net income attributable to ARC per common share because they were anti-dilutive.
Basis of Presentation
The accompanying interim Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in conformity with the requirements of the SEC. As permitted under those rules, certain footnotes or other financial information required by GAAP for complete financial statements have been condensed or omitted. In management’s opinion, the accompanying interim Condensed Consolidated Financial Statements presented reflect all adjustments of a normal and recurring nature that are necessary to fairly present the interim Condensed Consolidated Financial Statements. All material intercompany accounts and transactions have been eliminated in consolidation. The operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the interim Condensed Consolidated Financial Statements and accompanying notes. The Company evaluates its estimates and assumptions on an ongoing basis and relies on historical experience and various other factors that it believes to be reasonable under the circumstances to determine such estimates. Actual results could differ from those estimates, and such differences may be material to the interim Condensed Consolidated Financial Statements.
These interim Condensed Consolidated Financial Statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s 2014 Form 10-K.
Recent Accounting Pronouncements
In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-11, Simplifying the Measurement of Inventory. The new guidance requires that inventory be measured at the lower of cost or net realizable value and amends existing guidance which requires inventory be measured at the lower of cost or market. Replacing the concept of market with the single measurement of net realizable value is intended to create efficiencies for financial statement preparers. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the adoption of ASU 2015-11 on its condensed consolidated financial statements.
In April 2015, the FASB issued ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The new guidance amends Accounting Standards Codification ("ASC") 350-40, Intangibles - Goodwill and Other, Internal-Use Software, to provide guidance on determining whether a cloud computing arrangement contains a software license that should be accounted for as internal-use software. ASU 2015-05 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the adoption of ASU 2015-05 on its condensed consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of deferred financing fees in an entity's financial statements. Under the ASU, deferred financing fees are to be presented in the balance sheet as a direct deduction from the related debt liability rather than as an asset. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Early adoption is permitted. The Company expects to adopt ASU 2015-03 for the quarterly report on Form 10-Q for the three months ended March 31, 2016.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. ASU 2014-15 requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnotes disclosures in certain circumstances. It is effective for annual and interim periods beginning on or after December 15, 2016, with early adoption permitted. We do not believe the adoption of this guidance will have an impact on our condensed consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the existing revenue recognition requirements in “Revenue Recognition (Topic 605).” The new guidance requires entities to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is not permitted. The Company is currently in the process of evaluating the impact of the adoption of ASU 2014-09 on its condensed consolidated financial statements.
In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The new guidance raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. It was effective for annual periods beginning on or after December 15, 2014. The adoption of ASU 2014-08 had no impact to the Company's condensed consolidated financial statements.
Segment Reporting
The provisions of ASC 280, Disclosures about Segments of an Enterprise and Related Information, require public companies to report financial and descriptive information about their reportable operating segments. The Company identifies operating segments based on the various business activities that earn revenue and incur expense and whose operating results are reviewed by the Company's Chief Executive Officer, who is the Company's chief operating decision maker. Because its operating segments have similar products and services, classes of customers, production processes, distribution methods and economic characteristics, the Company operates as a single reportable segment.
In an effort to more closely align the Company's financial presentation to how it markets its services and products to its customers, during the first quarter of 2015, the Company re-categorized its offerings to better report distinct sales recognized from CDIM, MPS, AIM, and Equipment and Supplies Sales. MPS is a new categorization of sales, which combines the Company's previously reported Onsite Services sales with sales generated from the servicing of equipment, which was previously included in Traditional Reprographics. In addition, sales generated from the Company's AIM services were split out from the Company's previously reported Digital Services category and presented separately. The remaining sales generated from Traditional Reprographics, Color Services and Digital Services were combined into CDIM. Equipment and Supplies sales remained unchanged. Amounts for the prior year have been recast to conform to the current year presentation in the table below. The Company believes the updated presentation of its sales categories reflects the drivers of its consolidated sales and will provide greater insight into the opportunities and risk diversification provided by the Company's portfolio of service and product offerings.
Risk and Uncertainties
The Company generates the majority of its revenue from sales of services and products to customers in the AEC industry. As a result, the Company’s operating results and financial condition can be significantly affected by economic factors that influence the AEC industry, such as non-residential construction spending, GDP growth, interest rates, unemployment rates, and office vacancy rates. Reduced activity (relative to historic levels) in the AEC industry would diminish demand for some of ARC’s services and products, and would therefore negatively affect revenues and have a material adverse effect on its business, operating results and financial condition.
As part of the Company’s growth strategy, ARC intends to continue to offer and grow a variety of service offerings that are relatively new to the Company. The success of the Company’s efforts will be affected by its ability to acquire new customers for the Company’s new service offerings, as well as to sell the new service offerings to existing customers. The Company’s inability to successfully market and execute these relatively new service offerings could significantly affect its business and reduce its long term revenue, resulting in an adverse effect on its results of operations and financial condition.
Long-lived Assets
The Company periodically assesses potential impairments of its long-lived assets in accordance with the provisions of ASC 360, Accounting for the Impairment or Disposal of Long-lived Assets. An impairment review is performed whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The Company groups its assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities. The Company has determined that the lowest level for which identifiable cash flows are available is the regional level, which is the operating segment level.
Factors considered by the Company include, but are not limited to, significant underperformance relative to historical or projected operating results; significant changes in the manner of use of the acquired assets or the strategy for the overall business; and significant negative industry or economic trends. When the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators of impairment, the Company estimates the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future undiscounted cash flows and eventual disposition is less than the carrying amount of the asset, the Company recognizes an impairment loss. An impairment loss is reflected as the amount by which the carrying amount of the asset exceeds the fair value of the asset, based on the fair value if available, or discounted cash flows, if fair value is not available.
Description of Business and Basis of Presentation (Tables)
Net Sales of Principal Services and Products
Net sales of the Company’s principal services and products were as follows:
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2015
 
2014
 
2015
 
2014
Service Sales
 
 
 
 
 
 
 
CDIM
$
54,710

 
$
55,352

 
$
168,187

 
$
166,234

MPS
35,923

 
36,464

 
108,934

 
105,216

AIM
3,751

 
2,610

 
9,924

 
8,105

Total service sales
94,384

 
94,426

 
287,045

 
279,555

Equipment and supplies sales
12,034

 
12,381

 
37,081

 
36,607

Total net sales
$
106,418

 
$
106,807

 
$
324,126

 
$
316,162


Earnings Per Share (Tables)
Basic and Diluted Earnings Per Share
Basic and diluted weighted average common shares outstanding were calculated as follows for the three and nine months ended September 30, 2015 and 2014:
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2015
 
2014
 
2015
 
2014
Weighted average common shares outstanding during the period—basic
46,698

 
46,338

 
46,601

 
46,195

Effect of dilutive stock options
859

 
677

 
940

 
661

Weighted average common shares outstanding during the period—diluted
47,557

 
47,015

 
47,541

 
46,856

Restructuring Expenses (Tables)
The following table summarizes restructuring expenses incurred in the three and nine months ended September 30, 2015 and 2014:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Employee termination costs
$

 
$

 
$

 
$

Estimated lease termination and obligation costs
4

 
7

 
89

 
540

Other restructuring expenses

 
4

 

 
225

Total restructuring expenses
$
4

 
$
11

 
$
89

 
$
765

The changes in the restructuring liability from December 31, 2014 through September 30, 2015 are summarized as follows:
 
 
Nine Months Ended September 30, 2015
Balance, December 31, 2014
$
113

Restructuring expenses
89

Payments
(154
)
Balance, September 30, 2015
$
48

Goodwill and Other Intangibles Resulting from Business Acquisitions (Tables)
The following table sets forth the Company’s other intangible assets resulting from business acquisitions as of September 30, 2015 and December 31, 2014 which continue to be amortized:
 
 
September 30, 2015
 
December 31, 2014
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Amortizable other intangible assets
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
99,174

 
$
80,323

 
$
18,851

 
$
99,606

 
$
76,298

 
$
23,308

Trade names and trademarks
20,345

 
19,857

 
488

 
20,370

 
19,837

 
533

 
$
119,519

 
$
100,180

 
$
19,339

 
$
119,976

 
$
96,135

 
$
23,841

Based on current information, estimated future amortization expense of amortizable intangible assets for the remainder of the 2015 fiscal year, each of the subsequent four fiscal years and thereafter are as follows:
 
2015 (excluding the nine months ended September 30, 2015)
$
1,332

2016
4,808

2017
4,248

2018
3,839

2019
3,120

Thereafter
1,992

 
$
19,339

Long-Term Debt (Tables)
Long-Term Debt
Long-term debt consists of the following:
 
 
 
September 30, 2015
 
December 31, 2014
Term A loan facility maturing 2019; 2.57% and 2.74% interest rate at September 30, 2015 and December 31, 2014
 
$
151,000

 
$
173,000

Various capital leases; weighted average interest rate of 5.9% and 6.8% at September 30, 2015 and December 31, 2014; principal and interest payable monthly through August 2020
 
29,266

 
28,789

Borrowings from foreign revolving credit facilities; 0.6% interest rate at December 31, 2014
 

 
1,897

Various other notes payable with a weighted average interest rate of 8.2% and 6.5% at September 30, 2015 and December 31, 2014; principal and interest payable monthly through November 2019
 
153

 
199

 
 
180,419

 
203,885

Less current portion
 
(17,268
)
 
(27,969
)
 
 
$
163,151

 
$
175,916

Derivatives and Hedging Transactions (Tables)
The following table summarizes the fair value and classification on the Condensed Consolidated Balance Sheets of the Company's derivatives as of September 30, 2015:
 
 
 
Fair Value
 
Balance Sheet Classification
 
September 30, 2015
Derivative designated as hedging instrument under ASC 815
 
 
 
Interest rate cap contracts - current portion
Other current assets
 
$
2

Interest rate cap contracts - long-term portion
Other assets
 
190

Total derivatives designated as hedging instruments
 
 
$
192

The following table summarizes the loss recognized in AOCL of derivatives, designated and qualifying as cash flow hedges for the three and nine months ended September 30, 2015:

 
 
Amount of Loss Recognized in AOCL on Derivative
 
 
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2015
Derivative in ASC 815 Cash Flow Hedging Relationship
 
 
 
 
Interest rate cap contracts, net of tax
 
$
(69
)
 
$
(263
)
The following table summarizes the effect of the interest rate cap on the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2015:

 
 
Amount of Gain or (Loss) Reclassified from AOCL into Income
 
 
Three Months Ended September 30, 2015
 
Nine Months Ended September 30, 2015
 
 
Effective Portion
 
Ineffective Portion
 
Effective Portion
 
Ineffective Portion
Location of Loss Reclassified from AOCL into Income
 
 
 
 
 
 
 
 
Interest expense
 
$
9

 
$

 
$
10

 
$

Fair Value Measurements Tables (Tables)
The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis in the condensed consolidated financial statements as of and for the nine months ended September 30, 2015 and as of and for the year ended December 31 2014:

 
 
 
September 30, 2015
 
December 31, 2014
 
 
 
Level 2
 
Level 3
 
Total Losses
 
Level 2
 
Level 3
 
Total Losses
Recurring Fair Value Measure
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate cap contracts
 
$
192

 
$

 
$

 
$

 
$

 
$

 
Contingent purchase price consideration for acquired businesses
 
$

 
$
1,117

 
$

 
$

 
$
1,768

 
$

The following table presents the change in the Level 3 contingent purchase price consideration liability for the three and nine months ended September 30, 2015 and 2014:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2015
 
2014
 
2015
 
2014
Beginning balance
$
1,479

 
$
924

 
$
1,768

 
$

     Additions related to acquisitions

 
186

 

 
1,452

     Payments
(360
)
 

 
(502
)
 
(342
)
     Adjustments included in earnings
32

 

 
2

 

     Foreign currency translation adjustments
(34
)
 

 
(151
)
 

Ending balance
$
1,117

 
$
1,110

 
$
1,117

 
$
1,110


Description of Business and Basis of Presentation - Net Sales of Principal Services and Products (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Service Sales
 
 
 
 
Service sales
$ 94,384 
$ 94,426 
$ 287,045 
$ 279,555 
Equipment and supplies sales
12,034 
12,381 
37,081 
36,607 
Total net sales
106,418 
106,807 
324,126 
316,162 
CDIM [Member]
 
 
 
 
Service Sales
 
 
 
 
Service sales
54,710 
55,352 
168,187 
166,234 
MPS [Member]
 
 
 
 
Service Sales
 
 
 
 
Service sales
35,923 
36,464 
108,934 
105,216 
AIM [Member]
 
 
 
 
Service Sales
 
 
 
 
Service sales
$ 3,751 
$ 2,610 
$ 9,924 
$ 8,105 
Earnings Per Share - Additional Information (Detail)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Earnings Per Share [Abstract]
 
 
 
 
Common stock options excluded for anti-dilutive
2.1 
1.7 
1.5 
1.7 
Earnings Per Share - Basic and Diluted Earnings Per Share (Detail)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Earnings Per Share [Abstract]
 
 
 
 
Weighted average common shares outstanding during the period—basic
46,698 
46,338 
46,601 
46,195 
Effect of dilutive stock options
859 
677 
940 
661 
Weighted average common shares outstanding during the period—diluted
47,557 
47,015 
47,541 
46,856 
Restructuring Expenses - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
15 Months Ended
Dec. 31, 2013
Head_Count
Location
Sep. 30, 2015
Restructuring and Related Activities [Abstract]
 
 
Company's service centers closed
56 
 
Percentage of service locations closed
25.00% 
 
Headcount reduction of full-time employees
300 
 
Percentage of headcount reduction in full-time employees
10.00% 
 
Restructuring expense incurred to date
 
$ 6.7 
Restructuring Expenses - Summary of Restructuring Expenses (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring expenses
$ 4 
$ 11 
$ 89 
$ 765 
Employee Termination Costs [Member]
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring expenses
Estimated Lease Termination and Obligation Costs [Member]
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring expenses
89 
540 
Other Restructuring Expenses [Member]
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring expenses
$ 0 
$ 4 
$ 0 
$ 225 
Restructuring Expenses - Summary of Restructuring Liability (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Restructuring Reserve [Roll Forward]
 
 
 
 
Balance, December 31, 2014
 
 
$ 113 
 
Restructuring expenses
11 
89 
765 
Payments
 
 
(154)
 
Balance, September 30, 2015
$ 48 
 
$ 48 
 
Goodwill and Other Intangibles Resulting from Business Acquisitions - Additional Information (Detail)
9 Months Ended
Sep. 30, 2015
Finite-Lived Intangible Assets [Line Items]
 
Estimated period for amortization
13 years 
Goodwill and Other Intangibles Resulting from Business Acquisitions - Other Intangible Assets Resulting from Business Acquisitions (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
$ 119,519 
$ 119,976 
Accumulated Amortization
100,180 
96,135 
Net Carrying Amount
19,339 
23,841 
Customer Relationships [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
99,174 
99,606 
Accumulated Amortization
80,323 
76,298 
Net Carrying Amount
18,851 
23,308 
Trade Names and Trademarks [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
20,345 
20,370 
Accumulated Amortization
19,857 
19,837 
Net Carrying Amount
$ 488 
$ 533 
Goodwill and Other Intangibles Resulting from Business Acquisitions - Estimated Future Amortization Expense of Amortizable Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
2015 (excluding the nine months ended September 30, 2015)
$ 1,332 
 
2016
4,808 
 
2017
4,248 
 
2018
3,839 
 
2019
3,120 
 
Thereafter
1,992 
 
Net Carrying Amount
$ 19,339 
$ 23,841 
Income Taxes - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Income Tax Disclosure [Abstract]
 
 
 
 
Income tax (benefit) provision
$ (73,338,000)
$ 659,000 
$ (71,766,000)
$ 1,930,000 
Pretax gain amount
6,998,000 
4,279,000 
22,438,000 
11,468,000 
Deferred tax valuation allowance
(76,091,000)
(1,615,000)
(80,882,000)
(4,652,000)
Valuation allowance
1,100,000 
 
1,100,000 
 
Income tax receivables
$ 0 
 
$ 0 
 
Long-Term Debt - Long-Term Debt (Detail) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Debt Instrument [Line Items]
 
 
Long-term Debt and Capital Lease Obligations, Including Current Maturities
$ 180,419 
$ 203,885 
Current portion of long-term debt and capital leases
(17,268)
(27,969)
Long-term debt and capital leases
163,151 
175,916 
Capital Lease Obligations [Member]
 
 
Debt Instrument [Line Items]
 
 
Capital Lease Obligations
29,266 
28,789 
Long-term Debt, Weighted Average Interest Rate
5.90% 
6.80% 
Foreign Line of Credit [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
1,897 
Line of Credit Facility, Interest Rate at Period End
   
0.60% 
Notes Payable, Other Payables [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
153 
199 
Long-term Debt, Weighted Average Interest Rate
8.20% 
6.50% 
Term A Loan Facility [Member] |
Line of Credit [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term Debt
$ 151,000 
$ 173,000 
Debt Instrument, Interest Rate, Effective Percentage
2.57% 
2.74% 
Long-Term Debt Narrative (Details) (USD $)
3 Months Ended 9 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Line of Credit [Member]
Term A Loan Facility [Member]
Nov. 20, 2014
Line of Credit [Member]
Term A Loan Facility [Member]
Dec. 31, 2014
Revolving Credit Facility [Member]
Line of Credit [Member]
Term A Loan Facility [Member]
Nov. 20, 2014
Revolving Credit Facility [Member]
Line of Credit [Member]
Term A Loan Facility [Member]
Nov. 20, 2014
Revolving Credit Facility [Member]
Line of Credit [Member]
Term A Loan Facility Agreement [Member]
Nov. 20, 2014
Revolving Credit Facility [Member]
Line of Credit [Member]
Term A Loan Facility Agreement [Member]
Nov. 20, 2014
Revolving Credit Facility [Member]
Line of Credit [Member]
Term A Loan Facility Agreement [Member]
London Interbank Offered Rate (LIBOR) [Member]
Nov. 20, 2014
Revolving Credit Facility [Member]
Line of Credit [Member]
Term A Loan Facility Agreement [Member]
Federal Funds Effective Swap Rate [Member]
Sep. 30, 2015
Revolving Credit Facility [Member]
Letter of Credit [Member]
Term A Loan Facility [Member]
Nov. 20, 2014
Minimum [Member]
Revolving Credit Facility [Member]
Line of Credit [Member]
Term A Loan Facility Agreement [Member]
London Interbank Offered Rate (LIBOR) [Member]
Nov. 20, 2014
Minimum [Member]
Revolving Credit Facility [Member]
Line of Credit [Member]
Term A Loan Facility Agreement [Member]
Prime Rate [Member]
Nov. 20, 2014
Maximum [Member]
Revolving Credit Facility [Member]
Line of Credit [Member]
Term A Loan Facility Agreement [Member]
London Interbank Offered Rate (LIBOR) [Member]
Nov. 20, 2014
Maximum [Member]
Revolving Credit Facility [Member]
Line of Credit [Member]
Term A Loan Facility Agreement [Member]
Prime Rate [Member]
Nov. 20, 2014
Fiscal Quarter, Through September 30, 2016 [Member]
Revolving Credit Facility [Member]
Line of Credit [Member]
Term A Loan Facility Agreement [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
$ (96,000)
$ (347,000)
$ (193,000)
$ (347,000)
$ 0 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of Credit Facility, Maximum Borrowing Capacity
 
 
 
 
 
175,000,000 
30,000,000 
30,000,000 
 
 
 
 
1,900,000 
 
 
 
 
 
Line of Credit Facility, Agreement Terms, Amount That Can be Requested as Incremental Commitments
 
 
 
 
 
 
 
 
 
75,000,000 
 
 
 
 
 
 
 
 
Long-term Line of Credit
 
 
 
 
 
 
 
28,100,000 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Basis Spread on Variable Rate
 
 
 
 
 
 
 
 
 
 
1.00% 
0.50% 
 
1.50% 
0.50% 
2.50% 
1.50% 
 
Debt Instrument, Covenant Terms, Fixed Charged Coverage Ratio
 
 
 
 
 
 
 
 
1.25 
 
 
 
 
 
 
 
 
 
Repayments of Lines of Credit
 
 
 
 
24,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Term
 
12 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Covenant Term, Total Leverage Ratio
 
 
 
 
 
 
 
 
3.00 
 
 
 
 
 
 
 
 
3.25 
Early extinguishment of long-term debt
$ (3,625,000)
$ (5,000,000)
$ (10,875,000)
$ (12,500,000)
$ (10,875,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitments and Contingencies - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
 
Loss on accrued liability
$ 1.1 
Payments for Legal Settlements
$ 1.0 
Stock-Based Compensation - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Authorization to issue number of common stock
3,500,000.0 
 
3,500,000.0 
 
Shares available for issuance
2,300,000 
 
2,300,000 
 
Stock option expiration period
 
 
10 years 
 
Exercise price of options, percentage of fair market value of Company's common stock
 
 
100.00% 
 
Stock options granted to acquire common stock
 
 
526,000 
 
Impact of stock-based compensation before income taxes
$ 735,000 
$ 956,000 
$ 2,700,000 
$ 2,600,000 
Total unrecognized compensation cost related to unvested stock-based payments
$ 4,600,000 
 
$ 4,600,000 
 
Expected weighted-average period to recognize compensation cost
 
 
2 years 2 months 24 days 
 
Minimum [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Vesting period
 
 
3 years 
 
Maximum [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Vesting period
 
 
4 years 
 
Board of Directors [Member] |
Restricted Stock [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Vesting period
 
 
1 year 
 
Share-based compensation, grants in period
 
 
7,000 
 
Share-based Compensation Arrangement by Share-based Payment Award, Plan Modification, Number of Employees Affected
 
 
 
Chief Executive Officer [Member] |
Restricted Stock [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation, grants in period
 
 
116,000 
 
Derivatives and Hedging Transactions Textuals (Detail) (USD $)