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WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 13, 1997 (JULY 29,
1997)
LASON, INC.
DELAWARE 0-21407 38-3214743
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
1305 STEPHENSON HIGHWAY
TROY, MICHIGAN 48083
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(Address of Principal (Zip Code)
Executive Offices)
(810) 597-5800
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(Registrant's Telephone Number, Including Area Code)
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This current report on Form 8-K/A amends and restates, in its entirety, the
Current Report or Form 8-K (date of report July 29, 1997) which was filed with
the Securities and Exchange Commission on August 4, 1997.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Lason Systems, Inc. ("Systems"), a wholly-owned subsidiary of Lason,
Inc. (the "Company"), acquired all of the outstanding shares of
Common Stock of Image Conversion Systems, Inc. ("ICS") pursuant to an
Agreement of Purchase and Sale of Stock dated July 17, 1997 which was
consummated on July 29, 1997 (the "Stock Purchase Agreement"),
between and among the Company, Systems, ICS and approximately 35
shareholders of ICS (such acquisition is referred to herein as the
"ICS Acquisition").
The aggregate consideration paid by the Company as a result of the
ICS Acquisition was determined pursuant to arm's length negotiations
and consisted of 47,441 shares of Common Stock, par value $.01 per
share ("Common Stock") of the Company and $18,837,696 in cash. The
shares of Common Stock are being held in escrow to collateralize the
shareholders' indemnification obligations to Systems under the Stock
Purchase Agreement during the twelve month period from the date of
acquisition. The escrow agreement also provides that the shares of
certain of the shareholders are subject to forfeiture if ICS does not
achieve certain levels of operating income during the remaining
quarters and year ending December 31, 1997 and for the quarters and
year ending Decmeber 31, 1998. Further, if the operating income of
ICS for such periods exceeds a targeted level, the purchase
price may be increased by approximately $3.0 million payable to
certain selling shareholders, two-thirds in cash and one-third in
shares of the Company's Common Stock. The Common Stock issued in the
ICS Acquisition is subject to a 24-month lock-up agreement.
The primary source of the cash portion of the purchase price used in
the ICS Acquisition was Systems' credit facility with a bank group
led by First Union National Bank.
The description of the foregoing ICS Acquisition is qualified in its
entirety by reference to the copy of the Agreement of Purchase and
Sale of Stock filed as an Exhibit to the Company's Form 8-K filed on
August 4, 1997.
The Company is not aware of any material relationship that existed
prior to the ICS Acquisition between the Company, its officers and
directors, on the one hand and ICS and its shareholders, on the
other.
The assets of ICS include cash, receivables, inventories, equipment
and other personal property. The Company intends to continue the
utilization of these assets in a manner
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consistent with that of their historical usage, namely, providing
document conversion to electronic and other media in eight states.
<TABLE>
<S><C>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of ICS: Page
----
The audited balance sheet of ICS as of October 31, 1996, and the
related statements of operations, shareholders' equity and cash
flows for the year then ended and the report of Arthur Andersen
L.L.P. thereon, and the balance sheet of ICS as of April 30, 1997
(unaudited), the statement of operations for the six months ended
April 30, 1997 and 1996 (unaudited), the statement of changes in
shareholders' equity as of April 30, 1997 (unaudited), the
statement of cash flows for the six months ended April 30, 1997
and 1996 (unaudited), and the Notes to the Financial Statements
are incorporated by reference from the Registration Statement on
Form S-1, as amended, filed with the Securities and Exchange
Commission on August 4, 1997 (Reg. No. 333-32747).
(b) Pro Forma Financial Information:
Pro Forma Condensed Consolidated Balance Sheets as of 4
June 30, 1997 (unaudited)
Pro Forma Condensed Consolidated Statements of Income for the 5
Six Months Ended June 30, 1997 (unaudited)
Pro Forma Condensed Consolidated Statements of Income for the 6
year ended December 31, 1996 (unaudited)
Notes to Pro Forma Condensed Consolidated Financial 7-8
Information (unaudited)
(c) Exhibits
2.9 Agreement of Purchase and Sale of Stock with respect to the
ICS Acquisition was filed as exhibit to the Company's Form
8-K filed with the Securities and Exchange Commission on
August 4, 1997 and is incorporated herein by reference.
23.1 Consent of Arthur Andersen L.L.P.
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LASON, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1997
(Amounts in thousands)
<TABLE>
<CAPTION>
Pro Forma
As Adjusted
Pro Forma For ICS
Lason ICS Adjustments Acquisition
------- ----- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets $ 36,470 $ 4,752 $ -- $ 41,222
Property and equipment, net 11,286 3,821 -- 15,107
Intangibles, net 56,975 7,001 6,867 (A) 70,843
Other assets 1,996 179 -- 2,175
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TOTAL ASSETS $ 106,727 $ 15,753 $ 6,867 $ 129,347
========= ========= =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion, long term debt $ -- $ 4,529 $ (4,529)(B) $ --
Other current liabilities 11,445 2,558 -- 14,003
--------- --------- ----------- ----------
TOTAL CURRENT LIABILITIES 11,445 7,087 (4,529) 14,003
Long term debt, less current portion 27,400 6,191 12,709 (B) 46,300
Minority interests 355 -- -- 355
Other liabilities 2,915 -- -- 2,915
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TOTAL LIABILITIES AND MINORITY INTERESTS 42,115 13,278 8,180 63,573
--------- --------- ----------- ----------
Common stock with a put option 1,060 -- -- 1,060
STOCKHOLDERS' EQUITY
Redeemable preferred stock -- 2,118 (2,118)(C) --
Common stock 89 1 (1)(C) 89
Additional paid in capital 54,577 1,468 (306)(C) 55,739
Stock warrants -- 543 (543)(C) --
Retained earnings 8,886 (1,655) 1,655 (C) 8,886
--------- --------- ----------- ----------
TOTAL STOCKHOLDERS' EQUITY 63,552 2,475 (1,313) 64,714
--------- --------- ----------- ----------
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 106,727 $ 15,753 $ 6,867 $ 129,347
========= ========= =========== ==========
</TABLE>
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LASON, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
As Adjusted
Pro Forma For ICS
Lason ICS Adjustments Acquisition
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<S> <C> <C> <C> <C>
Revenues, net of postage $53,658 $ 8,532 $ -- $62,190
Cost of revenues 37,147 5,625 -- 42,772
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Gross profit 16,511 2,907 -- 19,418
Selling, general and administrative expenses 8,395 3,702 -- 12,097
Compensatory option expense 109 -- -- 109
Amortization of intangibles 1,041 -- 231 (D) 1,272
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Income (loss) from operations 6,966 (795) (231) 5,940
Interest expense, net 740 543 107 (E) 1,390
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Income (loss) before income taxes and minority interest
in net income of subsidiaries 6,226 (1,338) (339) 4,549
Provision for income taxes 2,250 -- (531) (F) 1,719
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Income (loss) before minority interest in net
income of subsidiaries 3,976 (1,338) 193 2,831
Minority interest in net income of subsidiaries 98 -- -- 98
Net income (loss) $ 3,878 $(1,338) $ 193 $ 2,733
======= ====== ====== =======
Pro forma earnings per share $ 0.30 (G)
=======
</TABLE>
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LASON, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
As Adjusted
Pro Forma For ICS
Lason ICS Adjustments Acquisition
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<S> <C> <C> <C> <C>
Revenues, net of postage $69,937 $20,049 $ -- $ 89,986
Cost of revenues 47,587 12,577 -- 60,164
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Gross profit 22,350 7,472 -- 29,822
Selling, general and administrative expenses 12,628 6,572 -- 19,200
Compensatory option expense 936 -- -- 936
Amortization of intangibles 1,121 -- 462 (D) 1,583
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Income from operations 7,665 900 (462) 8,103
Interest expense, net 1,760 1,217 95 (E) 3,072
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Income (loss) before income taxes and minority interest
in net income of subsidiaries 5,905 (317) (557) 5,031
Provision for income taxes 2,103 -- (219)(F) 1,884
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Income (loss) before minority interest in net
income of subsidiaries 3,802 (317) (338) 3,147
Minority interest in net income of subsidiaries 71 -- -- 71
Net income (loss) $ 3,731 $ (317) $ (338) $ 3,076
======= ======= ======= ========
Pro forma earnings per share $ 0.45 (G)
========
</TABLE>
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LASON, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
In July 1997, Lason Systems, Inc. ("Lason"), a wholly-owned subsidiary of
Lason, Inc. (together with its subsidiaries, the "Company"), acquired 100% of
the outstanding common stock of Image Conversion Systems, Inc. ("ICS") for
approximately $18.9 million in cash and 47,441 shares of the Company's common
stock valued at approximately $1.1 million. Of the total cash payment,
approximately $10.5 million was used to repay the outstanding debt of ICS and
approximately $8.4 million was paid to the selling shareholders.
The shares of common stock issued in connection with the acquisition of
ICS (i) are being held in escrow as collateral to indemnify the Company if
contingencies set forth in the purchase agreement occur within twelve months
from the date of the acquisition, and (ii) are subject to forfeiture if ICS
does not achieve targeted operating income in 1997 and in 1998. Further, if
the operating income of ICS for such periods exceeds a targeted level, the
purchase price may be increased by approximately $3.0 million payable to
certain selling shareholders, two-thirds in cash and one-third in shares of the
Company's common stock. All shares of common stock, are generally subject to a
twenty four month lock-up agreement which restricts the owner's ability to sell
such shares. The Company has agreed to register the shares of common stock for
sale subsequent to the lock-up period. Purchase price contingencies, if any,
will be recorded as adjustments to the purchase price when the contingencies
are resolved.
BALANCE SHEET
The excess of the purchase price and liabilities assumed over the fair
value of the net assets acquired has been allocated to the tangible and
intangible assets based on Lason's estimate of the fair market value of the net
assets acquired. The allocation of the excess purchase price paid for ICS is
as follows:
<TABLE>
<CAPTION>
<S> <C>
($ in millions)
Fair value of net assets acquired, after repayment of assumed debt $ 6.2
Allocation of purchase price in excess of acquired assets:
Goodwill 13.8
-----
$20.0
Plus liabilities assumed 2.6
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Total purchase price $22.6
=====
</TABLE>
The unaudited pro forma condensed consolidated balance sheet as of June 30,
1997 includes the following pro forma adjustments:
(A) A pro forma adjustment has been made to record goodwill related to the ICS
acquisition.
(B) To record revolving credit borrowings used to fund the acquisition of ICS
and the repayment of ICS debt outstanding, including accrued interest
thereon, upon consummation of the acquisition.
(C) Presents the issuance of 47,441 shares of common stock, valued at
approximately $1.1 million, related to the acquisition of ICS and eliminates
historical equity balances of ICS.
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LASON, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
(concluded)
STATEMENTS OF INCOME
The accompanying unaudited pro forma condensed consolidated statements of
income for the six months ended June 30, 1997 and for the year ended December
31, 1996 present the results of operations as though the ICS acquisition had
been consummated on January 1, 1996. ICS's fiscal year end was October 31.
Accordingly, the results of operations for ICS are included for the twelve
months ended October 31, 1996 and for the six months ended April 30, 1997.
The accompanying unaudited pro forma condensed consolidated statements of
income for the six months ended June 30, 1997 and for the year ended December
31, 1996 have been prepared by combining the historical results of operations
for the Company and, where applicable, ICS for such respective periods and
include the following adjustments:
(D) Pro forma adjustments for the six months ended June 30, 1997 and
for the year ended December 31, 1996 have been made to increase amortization by
$231,000 and $462,000, respectively, related to purchase price allocated to
goodwill as if the acquisition of ICS had occurred as of January 1, 1996.
Goodwill is amortized using a straight-line method over 30 years.
(E) Pro forma adjustments for the six months ended June 30, 1997 and for the
year ended December 31, 1996 have been made to increase interest expense by
$107,000 and $95,000, respectively, related to revolving credit borrowings used
to fund the acquisition of ICS, including the repayment of ICS debt then
outstanding.
(F) A tax benefit at a 34% federal statutory rate has been calculated for ICS
assuming the benefit was used in the Company's consolidated tax return for the
periods presented. Additionally, pro forma tax deductible adjustments have
been tax effected at a 34% federal statutory rate.
(G) Pro forma earnings per share is computed by dividing pro forma net income
by the weighted average common share and common share equivalents outstanding.
The pro forma common shares and common share equivalents outstanding for the
six months ended June 30, 1997 and the year ended December 31, 1996 were
9,146,386 and 6,811,690, respectively.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 13, 1997 LASON, INC.
By: /s/ William J. Rauwerdink
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William J. Rauwerdink
Its: Executive Vice President
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EXHIBIT INDEX
EXHIBIT DESCRIPTION:
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2.9 Agreement of Purchase and Sale of Stock with respect to the ICS
Acquisition was filed as an exhibit to the Company's Form 8-K
filed with the Securities and Exchange Commission on
August 4, 1997 and is incorporated herein by reference.
23.1 Consent of Arthur Andersen L.L.P.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form 8-K/A of our report dated July 28, 1997
included in the Registration Statement on Form S-1, File No. 333-32747. It
should be noted that we have not audited any financial statements of the
Company subsequent to October 31, 1996 or performed any audit procedures
subsequent to the date of our report.
/s/ ARTHUR ANDERSEN L.L.P.
Chicago, Illinois
October 10, 1997
