American Reprographics Company (NYSE: ARP) was already the nation’s largest and fastest growing provider of outsourced reprographics when the company came to CHS’ attention. In the three years prior to our investment, ARC had completed approximately 40 acquisitions and invested heavily in digital technologies to become the preferred national provider of business-to-business document management, document distribution and logistics and print-on-demand services.

Like other CHS investments, ARC offered an opportunity to consolidate a highly fragmented and growing industry. We anticipated that ARC's development of a national footprint with regional expertise would provide significant purchasing power, the ability to invest in industry leading technologies and the resources to service large, national customers. ARC was a recapitalization transaction wherein CHS acquired a 50% interest alongside a proven management team. CHS entered this arrangement carefully, negotiating detailed governance provisions with springing control for CHS in the event that ARC underperformed.

CHS’ role with ARC has been to coach management through its transformation from an entrepreneurially run business into a public company. Working with the management team, we have assembled a Board of Directors with extensive public company experience and have implemented formal budgeting, tracking and reporting systems across the company’s 177 reprographics service centers. We also have implemented other public company disciplines including an audit committee and an internal audit function. In addition, we have helped ARC negotiate and close nearly 40 additional acquisitions, including the acquisition of ARC's then largest competitor on two separate occasions, and have refinanced or amended ARC's credit facilities on multiple occasions to optimize ARC’s financing structure and facilitate its acquisition strategy.

We also have supported management’s investment in PlanWell™, a proprietary suite of internet-based technologies which create a seamless capability to document, store, manipulate, retrieve and print construction documentation. ARC’s goal is to promote PlanWell to become the industry standard for digital document management and online procurement of reprographics services.

In February 2005, these efforts resulted in a successful initial public offering of ARC’s common stock. Goldman Sachs and JPMorgan co-led the IPO. The IPO resulted in a realized return of 2.8x CHS’ invested capital including cash received at the offering and the value of retained shares at the IPO price. ARC was among the best performing initial public offerings of 2005. By year-end, ARC common stock appreciated 95% from its offering price.

With sales of $450 million and operations in 135 cities and 30 states, ARC is approximately 8x larger than its next largest competitor and the only reprographics company with a national footprint.

CHS remains active on the Board of Directors and continues to pursue a growth strategy at ARC.