<PAGE> 1
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):
JUNE 3, 1998 (NOVEMBER 25, 1997)
LASON, INC.
---------------------------------
Exact name of Registration as Specified in its Charter
DELAWARE 0-21407 38-321473
- ------------------------ ----------- ----------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
1305 STEPHENSON HIGHWAY
TROY, MICHIGAN 48083
- ------------------------------- ----------
(Address of Principal Executive (Zip Code)
Offices)
(248) 597-5800
----------------------------
(Registrant's Telephone Number, Including Area Code)
<PAGE> 2
This current report on Form 8-K/A amends and restates, in its entirety, the
Current Report on Form 8-K (date of report November 25, 1997) which was filed
with the Securities and Exchange Commission on December 10, 1997.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Lason Systems, Inc. ("Systems"), a wholly-owned subsidiary of
Lason, Inc. (the "Company"), acquired substantially all of the
assets of VIP Imaging Inc. ("VIP") pursuant to an Asset
Purchase Agreement dated November 13, 1997 which was
consummated on November 25, 1997 (the "Asset Purchase
Agreement"), between and among the Company, Systems, VIP and
the shareholders of VIP (such acquisition is referred to
herein as the "VIP Acquisition").
The aggregate consideration paid by the Company as a result of
the VIP Acquisition was determined pursuant to arm's length
negotiations and consisted of 147,260 shares of common stock,
par value $.01 per share ("Common Stock") of the Company and
approximately $14,500,000 in cash. 50% of the Common Stock is
subject to a 12-month lock-up agreement and the remaining 50%
of the Common Stock is subject to a 24-month lock-up
agreement. The Company has agreed to register the Common Stock
subsequent to the 12-month lock-up period. Approximately
one-fourth of the shares of Common Stock are being held in
escrow to collateralize the shareholders' indemnification
obligations to Systems under the Asset Purchase Agreement.
$250,000 is also being held in escrow to facilitate an
adjustment, if any, to the purchase price based on the net
current working capital of VIP on the closing date. As
additional consideration for the acquisition of the Purchased
Assets, VIP may receive up to an aggregate of $1,000,000
payable 50% in cash and 50% in Lason Common Stock if pre-tax
net income before net interest expense for the two 12-month
periods following the closing date exceed certain targeted
levels.
The primary source of the cash portion of the purchase price
used in the VIP Acquisition was Systems' credit facility with
a bank group led by First Union National Bank.
The description of the foregoing VIP Acquisition is qualified
in its entirety by reference to the copy of the Asset Purchase
Agreement filed as an Exhibit to the Company's Form 8-K filed
on December 10, 1997.
The Company is not aware of any material relationship that
existed prior to the VIP Acquisition between the Company, its
officers and directors, on the one hand and VIP and its
shareholders on the other.
<PAGE> 3
The assets of VIP at the time of the VIP Acquisition include
cash, receivables, inventories, equipment and other personal
property. The Company intends to continue the utilization of
these assets in a manner consistent with that of their
historical usage, namely, providing commercial and financial
printing including the provision of print on demand services.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of VIP:
The report of Coopers and Lybrand L.L.P. dated January 23,
1998, the audited balance sheet of VIP as of December 31,
1996, and the related statements of income, stockholders'
equity and cash flows for the year then ended, and the notes
to financial statements, and the condensed balance sheet of
VIP as of September 30, 1997 (unaudited), and the condensed
statement of income for the nine months ended September 30,
1997 (unaudited).
(b) Pro Forma Financial Information:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as
of September 30, 1997.
Unaudited Pro Forma Condensed Consolidated Statement of
Income for the Nine Months Ended September 30, 1997.
Unaudited Pro Forma Condensed Consolidated Statement of
Income for the year ended December 31, 1996
Notes to Unaudited Pro Forma Condensed Consolidated Financial
Information
(c) Exhibits
2.10 Asset Purchase Agreement with respect to the VIP
Acquisition was filed as an exhibit to the Company's
Form 8-K with the Securities and Exchange Commission
on December 10, 1997 and is incorporated herein by
reference.
23.1 Consent of Coopers and Lybrand L.L.P.
<PAGE> 4
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: June 3, 1998 LASON, INC.
By: /s/ William J. Rauwerdink
-------------------------------------
William J. Rauwerdink
Its: Executive Vice President
<PAGE> 5
EXHIBIT INDEX
2.10 Asset Purchase Agreement with respect to the VIP
Acquisition was filed as an exhibit to the Company's
Form 8-K with the Securities and Exchange Commission on
December 10 ,1997 and is incorporated herein by reference.
23.1 Consent of Coopers and Lybrand L.L.P.
<PAGE> 6
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion in this Registration Statement on Form 8-K/A
of our report dated January 23, 1998, on our audit of the financial statements
of VIP Imaging, Inc.
/s/ Coopers and Lybrand L.L.P.
- ---------------------------------------
Detroit, Michigan
June 3, 1998
<PAGE> 7
VIP IMAGING INC.
CONTENTS
PAGES
Report of Independent Accountants............................................1
Financial Statements:
Balance Sheet.......................................................2
Statement of Income.................................................3
Statement of Stockholders' Equity...................................4
Statement of Cash Flows.............................................5
Notes to Financial Statements.....................................6-8
<PAGE> 8
[COOPERS & LYBRAND LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
VIP Imaging Inc.:
We have audited the accompanying balance sheet of VIP Imaging Inc. as of
December 31, 1996 and the related statements of income, stockholders' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of VIP Imaging Inc. as of December
31, 1996 and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND LLP
Detroit, Michigan
January 23, 1998
1
<PAGE> 9
VIP IMAGING INC.
BALANCE SHEET
as of December 31, 1996
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 878,785
Accounts receivable, net of allowance for doubtful accounts of $84,000 5,075,378
Prepaid expenses and other assets 285,744
-----------
Total current assets 6,239,907
Property and equipment:
Machinery and equipment 2,462,664
Vehicles 309,049
Furniture and fixtures 344,000
Leasehold improvements 578,369
Accumulated depreciation (860,517)
-----------
Total property and equipment 2,833,565
-----------
Total assets $ 9,073,472
===========
LIABILITIES
Current liabilities:
Cash overdraft $ 1,109,287
Accounts payable 640,681
Accrued expenses 608,574
Current portion of long-term debt 267,661
-----------
Total current liabilities 2,626,203
Long-term debt, less current portion 1,165,037
-----------
Total liabilities 3,791,240
STOCKHOLDERS' EQUITY
Common stock, $100 par value; authorized 600 shares; 400 shares issued
and outstanding 40,000
Retained earnings 6,024,841
Stockholders' loans (782,609)
-----------
Total stockholders' equity 5,282,232
-----------
Total liabilities and stockholders' equity $ 9,073,472
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 10
VIP IMAGING INC.
STATEMENT OF INCOME
for the year ended December 31, 1996
<TABLE>
<S> <C>
Revenues, net of postage of $1,820,731 $15,963,780
Cost of revenues 9,901,239
-----------
Gross profit 6,062,541
Selling expenses 961,075
Administrative and general expenses 3,231,988
-----------
Income from operations 1,869,478
Interest expense 132,429
Other income 63,176
-----------
Net income $ 1,800,225
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 11
VIP IMAGING INC.
STATEMENT OF STOCKHOLDERS' EQUITY
for the year ended December 31, 1996
<TABLE>
<CAPTION>
COMMON STOCKHOLDERS' RETAINED
STOCK LOANS EARNINGS TOTAL
----- ------------- ---------- -----
<S> <C> <C> <C> <C>
Balances, January 1, 1996 $ 40,000 $ (209,233) $ 4,224,616 $ 4,055,383
Additions to stockholders' loans -- (573,376) -- (573,376)
Net income -- -- 1,800,225 1,800,225
----------- ----------- ----------- -----------
Balances, December 31, 1996 $ 40,000 $ (782,609) $ 6,024,841 $ 5,282,232
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 12
VIP IMAGING INC.
STATEMENT OF CASH FLOWS
for the year ended December 31, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 1,800,225
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 278,314
Changes in operating assets and liabilities:
Accounts receivable (1,505,275)
Prepaid expenses and other assets 135,309
Accounts payable 379,126
Accrued expenses 159,079
-----------
Net cash provided by operating activities 1,246,778
-----------
Cash flows used in investing activities, purchase of property and equipment (324,201)
-----------
Cash flows from financing activities:
Increase in cash overdraft 84,666
Principal payments on long-term debt (421,979)
Loans to stockholders (573,376)
Borrowings under long-term debt 200,000
-----------
Net cash used in financing activities (710,689)
-----------
Net increase in cash and cash equivalents 211,888
Cash and cash equivalents, January 1, 1996 666,897
-----------
Cash and cash equivalents, December 31, 1996 $ 878,785
===========
Cash paid during the period for interest $ 132,429
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 13
VIP IMAGING INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND OPERATIONS:
Val's Instant Printing, Inc. was incorporated in 1976 in the State of
California and its name was changed to VIP Imaging Inc. (the
"Company") in 1997. The Company provides computer-assisted
printing, reprographics, offset printing, print on demand and mailing
services for the high technology, financial services and other
industries. Three customers accounted for 23.1, 14.2 and 13.5 percent
of 1996 revenues, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. REVENUE RECOGNITION: Revenues are recorded when products are
shipped or services are provided. Revenues are presented in the
statement of income net of postage because the cost of such postage
is passed through to the customer.
b. CASH AND CASH EQUIVALENTS: The Company classifies as cash and cash
equivalents amounts on deposit with banks and cash invested
temporarily in various investments with maturities of three months
or less at the time of purchase.
c. SUPPLIES: Supplies used in the printing process, primarily paper
and ink, are expensed as purchased.
d. PROPERTY AND EQUIPMENT: Property and equipment, including
significant improvements, are recorded at cost. Expenditures for
normal repairs and maintenance are charged to operations as
incurred. Adjustments of the asset and related accumulated
depreciation accounts are made for retirements of property and
equipment with the resulting gain or loss included in operations.
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets, ranging from 3 to 19 years.
e. INCOME TAXES: The Company has elected to be taxed as an
S-corporation and accordingly, is not subject to federal income tax.
f. FAIR VALUE OF FINANCIAL INSTRUMENTS: Statement of Financial
Accounting Standards No. 107, "Disclosures About Fair Value of
Financial Instruments," requires disclosures about the fair value
of financial instruments whether or not such instruments are
recognized in the balance sheet. Due to the short-term nature of
the Company's financial instruments, other than debt, fair
values are not materially different from their carrying values.
Based on the borrowing rates currently available to the Company,
the carrying value of debt approximates fair value.
g. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
3. STOCKHOLDERS' LOANS:
Stockholders' loans represent amounts advanced to stockholders
primarily for personal income tax liabilities. Subsequent to the
acquisition of substantially all the assets of the Company by Lason,
Inc., as discussed in Note 8, the loans were forgiven.
6
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. LONG-TERM DEBT:
<TABLE>
<S> <C>
Long-term debt consists of the following at December 31, 1996:
Installment debt on property and equipment $ 259,682
Promissory note, 9 percent interest, due 2001 180,000
Promissory note, 10 percent interest, due 2000 993,016
Less current portion (267,661)
---------------
Long-term debt $ 1,165,037
===============
</TABLE>
The 10 percent note provides for monthly payments of $20,096, including
interest, through April 2000 and a final principal payment of $454,878 in May
2000. The note is collaterized by short- term certificates of deposit and money
market funds which represent the entire balance of cash and cash equivalents.
The 9 percent note provides for monthly payments of $3,333 plus accrued interest
through May 2001. The installment debt on property and equipment bears interest
at 12.5 percent and provides for monthly payments of principal and interest of
$9,109 through October 1999. The installment agreement is collaterized by the
related equipment which has a net book value of $306,512. The loan agreements
contain various covenants related to certain financial ratios.
Aggregate maturities of long-term debt are follows:
<TABLE>
<CAPTION>
Year Ended December 31:
<S> <C>
1997 $ 267,661
1998 293,979
1999 305,060
2000 545,982
2001 and thereafter 20,016
----------------
$ 1,432,698
================
</TABLE>
At December 31, 1996, the Company had a $500,000 revolving line of
credit agreement with a bank. The revolving line expired on February 28, 1997
and had a variable interest rate of the bank's prime interest rate, plus .75
percent . At December 31, 1996, the entire $500,000 was available.
5. OPERATING LEASES:
The Company has various operating lease agreements related primarily to
buildings. At December 31, 1996 future minimum rental payments required under
noncancelable operating leases with initial or remaining lease terms in excess
of one year are as follows:
<TABLE>
<CAPTION>
BUILDINGS
---------
<S> <C>
1997 $ 225,762
1998 167,908
1999 52,200
2000 52,200
2001 34,800
---------------
Total $ 532,870
===============
</TABLE>
Rent expense for the year ended December 31, 1996 was $173,949 for
buildings.
7
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS, CONCLUDED
6. EMPLOYEE BENEFIT PLANS:
The Company participates in a 401(k) profit-sharing plan ( the
"Plan"). All employees, 21 years of age or older, with 12 months of
service are eligible to participate in the Plan. Eligible participants
may contribute up to 15 percent of their pretax earnings to the
Plan. The Plan is contributory and the Company may match via a
discretionary contribution. The Company's contribution for the year
ended December 31, 1996 was $168,511.
7. STOCKHOLDER BUYOUT AGREEMENT AND SALARY CONTINUATION AGREEMENT:
The Company entered into a stockholder buyout agreement dated
September 30, 1996 with its two stockholders whereby the Company
agrees to repurchase the shares held by either stockholder in the
event of death. For purposes of the agreement, the value of all shares
is deemed to be $2 million, unless adjusted by agreement of the
stockholders. The Company holds term insurance policies in the amount
of $1 million for each of the stockholders to fund the potential
obligation. In addition, the agreement provides for the Company to
have the option to purchase a stockholder's shares, under certain
circumstances, at a price agreed to by the stockholders on an annual
basis.
The Company entered into a salary continuation agreement dated June
13, 1996 with its two stockholders whereby the Company agrees, in the
event of the disability of either shareholder, to provide compensation
for a period of three years for the difference between the monthly
disability benefit received and the monthly salary of the stockholder.
In conjunction with the asset purchase by Lason, Inc. ("Lason")
discussed in Note 8, the stockholders entered into employment
agreements with Lason under which neither of the above described
arrangements was continued.
8. SUBSEQUENT EVENT:
In November 1997, Lason acquired substantially all of the assets of
the Company for $14.5 million in cash and 147,260 shares of Lason's
common stock valued at approximately $4.0 million. With respect to the
cash portion of the purchase price, $250,000 is being held in escrow
and will be increased or decreased on a dollar-for-dollar basis to the
extent net working capital, as defined by the asset purchase
agreement, as of the closing date exceeds or falls below $4.756
million. With respect to the shares of common stock issued in
connection with the acquisition of the Company, 36,815 of such shares
are being held in escrow as collateral to indemnify Lason if
contingencies set forth in the purchase agreement occur. In addition,
the purchase price may be increased by up to $1.0 million if certain
earnings and sales targets are met in the first 13-month period and
subsequent 12-month period following the closing date of the
acquisition.
8
<PAGE> 16
VIP IMAGING INC.
CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(In thousands)
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current Assets $ 7,614
Property and equipment, net 2,274
------------
TOTAL ASSETS 9,888
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion, long term debt 67
Other current liabilities 1,313
------------
Total current liabilities 1,380
Long term debt, less current portion 1,044
------------
TOTAL LIABILITIES 2,424
------------
STOCKHOLDERS' EQUITY
Common stock 40
Retained earnings 7,681
Stockholders' loans (257)
------------
TOTAL STOCKHOLDERS' EQUITY 7,464
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,888
============
</TABLE>
<PAGE> 17
VIP IMAGING INC.
CONDENSED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(In thousands)
(Unaudited)
<TABLE>
<S> <C>
Revenues, net of postage $ 15,113
Cost of revenues 9,317
----------
Gross profit 5,796
Selling, general and administrative expenses 3,369
----------
Income from operations 2,427
Interest expense 88
Other income 56
----------
Net income $ 2,395
==========
</TABLE>
<PAGE> 18
LASON, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1997
(In thousands)
<TABLE>
<CAPTION>
Pro Forma
As Adjusted
Pro Forma For VIP
Lason VIP Adjustments Acquisition
----- --- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets $ 52,306 $ 7,614 $ - $ 59,920
Property and equipment, net 16,830 2,274 - 19,104
Intangibles, net 73,397 - 10,430 (A) 83,827
Other assets 1,610 - - 1,610
---------- ---------- ------------ -------------
TOTAL ASSETS $ 144,143 $ 9,888 $ 10,430 $ 164,461
========== ========== ============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion, long term debt $ - $ 67 $ (67) (B) $ -
Other current liabilities 14,713 1,313 - 16,026
---------- ---------- ------------ -------------
Total current liabilities 14,713 1,380 (67) 16,026
Long term debt, less current portion - 1,044 13,456 (C) 14,500
Other liabilities 3,353 - - 3,353
---------- ---------- ------------ -------------
TOTAL LIABILITIES 18,066 2,424 13,389 33,879
---------- ---------- ------------ -------------
Common stock with a put option 1,060 - - 1,060
STOCKHOLDERS' EQUITY
Redeemable preferred stock - - - -
Common stock 114 40 (40) (D) 114
Additional paid in capital 113,759 - 3,000 (D) 116,759
Retained earnings 11,144 7,681 (6,176) (D) 12,649
Stockholders' loans - (257) 257 (D) -
---------- ----------- ------------- --------------
TOTAL STOCKHOLDERS' EQUITY 125,017 7,464 (2,959) 129,522
---------- ----------- ------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 144,143 $ 9,888 $ 10,430 $ 164,461
========== =========== ============= ==============
</TABLE>
<PAGE> 19
LASON, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(In thousands, except per share amount)
<TABLE>
<CAPTION>
Pro Forma
As Adjusted
Pro Forma For VIP
Lason VIP Adjustments Acquisition
----- --- ----------- -----------
<S> <C> <C> <C> <C>
Revenues, net of postage $84,266 $15,113 $ -- $99,379
Cost of revenues 57,475 9,317 -- 66,792
------- ------- ------- -------
Gross profit 26,791 5,796 -- 32,587
Selling, general and administrative expenses 14,134 3,369 (1,114)(E) 16,389
Compensatory option expense 165 -- -- 165
Amortization of intangibles 1,617 -- 261 (F) 1,878
------- ------- ------- -------
Income from operations 10,875 2,427 853 14,155
Interest expense, net 1,167 88 673 (G) 1,928
Other income -- 56 -- 56
------- ------- ------- -------
Income before income taxes and minority interest
in net income of subsidiaries 9,708 2,395 180 12,283
Provision for income taxes 3,465 -- 901 (H) 4,366
------- ------- ------- -------
Income before minority interest in net income of subsidiaries 6,243 2,395 (721) 7,917
Minority interest in net income of subsidiaries 107 -- -- 107
------- ------- ------- -------
Net income $ 6,136 $ 2,395 $ (721) $ 7,810
======= ======= ======= =======
Pro forma earnings per share $ 0.82
=======
Weighted average common and equivalent shares outstanding 9,521
=======
</TABLE>
<PAGE> 20
LASON, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(In thousands, except per share amount)
<TABLE>
<CAPTION>
Pro Forma
As Adjusted
Pro Forma For VIP
Lason VIP Adjustments Acquisition
----- --- ----------- -----------
<S> <C> <C> <C> <C>
Revenues, net of postage $69,937 $15,964 $ -- $85,901
Cost of revenues 47,587 9,901 -- 57,488
------- ------- ------- -------
Gross profit 22,350 6,063 -- 28,413
Selling, general and administrative expenses 12,628 4,193 (1,485)(E) 15,336
Compensatory option expense 936 -- -- 936
Amortization of intangibles 1,121 -- 348 (F) 1,469
------- ------- ------- -------
Income from operations 7,665 1,870 1,137 10,672
Interest expense, net 1,760 132 883 (G) 2,775
Other income -- 63 -- 63
Income before income taxes and minority interest
------- ------- ------- -------
in net income of subsidiaries 5,905 1,801 254 7,960
Provision for income taxes 2,103 -- 719 (H) 2,822
------- ------- ------- -------
Income before minority interest in net income of subsidiaries 3,802 1,801 (465) 5,138
Minority interest in net income of subsidiaries 71 -- -- 71
------- ------- ------- -------
Net income $ 3,731 $ 1,801 $ (465) $ 5,067
======= ======= ======= =======
Pro forma earnings per share $ 0.74
=======
Weighted average common and equivalent shares outstanding 6,874
=======
</TABLE>
<PAGE> 21
LASON, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
In November 1997, Lason Systems, Inc. ("Lason"), a wholly-owned
subsidiary of Lason, Inc. (together with its subsidiaries, the "Company"),
acquired substantially all of the assets of VIP Imaging Inc. ("VIP") for $14.5
million in cash and 147,260 shares of the Company's common stock valued at
approximately $4.0 million. With respect to the cash portion of the purchase
price, $250,000 is being held in escrow and will be increased or decreased on a
dollar-for-dollar basis to the extent net working capital, as defined by the
asset purchase agreement, as of the closing date exceeds or falls below $4.756
million. With respect to the shares of common stock issued in connection with
the VIP acquisition, 36,815 of such shares are being held in escrow as
collateral to indemnify the Company if contingencies set forth in the purchase
agreement occur. In addition, the purchase price may be increased up to $1.0
million if certain earnings and gross sales targets are met in the first
13-month period and subsequent 12-month period following the closing date of the
acquisition.
BALANCE SHEET
The excess of the purchase price and liabilities assumed over the book
value of the net assets acquired has been allocated to the tangible and
intangible assets based on Lason's estimate of the fair market value of the net
assets acquired. The allocation of the excess purchase price paid for the VIP
assets is as follows:
<TABLE>
<CAPTION>
($ in thousands)
<S> <C>
Book value of net assets acquired $7,871
Allocation of purchase price in excess of acquired assets:
Goodwill 10,430
------
18,301
Plus liabilities assumed 801
-------
Total purchase price $19,102
=======
</TABLE>
PRO FORMA ADJUSTMENTS
(A) A pro forma adjustment has been made to reflect goodwill related to the VIP
acquisition.
(B) A pro forma adjustment has been made to eliminate debt of VIP not assumed by
Lason.
(C) A pro forma adjustment has been made to include the revolving credit
agreement borrowings used to fund the VIP acquisition and to eliminate the VIP
debt, which Lason did not assume.
(D) A pro forma adjustment has been made to eliminate the equity accounts of VIP
and to reflect the shares of the Company's common stock issued as partial
consideration for the VIP acquisition.
STATEMENTS OF INCOME
The accompanying unaudited pro forma condensed consolidated statements
of income for the year ended December 31, 1996 and the nine months ended
September 30, 1997, present the results of operations as though the acquisition
of VIP had occurred on January 1, 1996.
<PAGE> 22
The accompanying unaudited pro forma condensed consolidated statements
of income for the year ended December 31, 1996 and the nine months ended
September 30, 1997, have been prepared by combining the historical results of
operations for the Company and, where applicable, VIP for such periods and
include the following pro forma adjustments:
(E) Pro forma adjustments have been made to reduce selling, general and
administrative expenses to eliminate specific expenses that would not have been
incurred had the acquisition of VIP occurred on January 1, 1996. Such cost
savings relate to the reduction of certain management salaries based on signed
employment agreements.
(F) A pro forma adjustment has been made to increase amortization expense
related to the purchase price allocated to goodwill as if the acquisition of VIP
had occurred on January 1, 1996. Goodwill is amortized using a straight-line
method over 30 years.
(G) A pro forma adjustment has been made to increase interest expense related to
revolving credit agreement borrowings which were used to fund the acquisition of
VIP, net of the decrease in interest expense related to VIP debt not assumed by
Lason.
(H) A pro forma adjustment for income tax expense has been calculated at 35% of
the pre tax effect of the pro forma adjustments related to the acquisition of
VIP.
<PAGE> 23
EXHIBIT INDEX
2.10 Asset Purchase Agreement with respect to the VIP
Acquisition was filed as an exhibit to the Company's Form 8-K
with the Securities and Exchange Commission on December 10,
1997 and is incorporated herein by reference.
23.1 Consent of Coopers and Lybrand LLP
<PAGE> 1
EXHIBIT 23.1
As independent public accountants, we hereby consent to the inclusion in this
Form 8-K/A of our report dated January 23, 1998.
/s/ Coopers and Lybrand LLP
- --------------------------------
Detroit, Michigan
June 3, 1998
