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UNITED STATES
FORM 10-Q
[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 1999
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 000-21407
LASON, INC.
DELAWARE
1305 Stephenson Highway
Telephone: (248) 597-5800
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
As of November 10, 1999, 18,897,348 shares of Common Stock, $.01 par value were outstanding.
TABLE OF CONTENTS | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | ||||||||
SIGNATURES | ||||||||
EXHIBIT INDEX |
Page No. | ||||||
Part I. | Financial Information | |||||
Item 1. Financial Statements | ||||||
Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 1999 and December 31, 1998 | 2 | |||||
Condensed Consolidated Statements of Income (Unaudited), Three Months and Nine Months Ended September 30, 1999 and 1998 | 3 | |||||
Condensed Consolidated Statements of Cash Flows (Unaudited), Nine Months Ended September 30, 1999 and 1998 | 4 | |||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | 5 | |||||
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations | 12 | |||||
Item 3. Quantitive and Qualitative Disclosures about Market Risk | 16 | |||||
Part II. | Other Information | |||||
Item 2. Changes in Securities and Use of Proceeds | 17 | |||||
Item 6. Exhibits and Reports on Form 8-K | 17 | |||||
Signatures | 20 |
1
LASON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, | December 31, | ||||||||
1999 | 1998 | ||||||||
ASSETS | |||||||||
Cash and cash equivalents | $ | 10,454 | $ | 6,910 | |||||
Accounts receivable (net) | 143,147 | 105,530 | |||||||
Supplies | 12,107 | 12,649 | |||||||
Deferred income taxes | 1,777 | 1,932 | |||||||
Prepaid expenses and other | 34,973 | 23,845 | |||||||
Total current assets | 202,458 | 150,866 | |||||||
Property and equipment (net) | 108,032 | 84,714 | |||||||
Intangible assets (net) | 379,349 | 266,015 | |||||||
Employee loans receivable | 3,170 | 1,698 | |||||||
Deferred income taxes | 32,161 | | |||||||
Other | 6,707 | 3,496 | |||||||
Total assets | $ | 731,877 | $ | 506,789 | |||||
LIABILITIES AND STOCKHOLDERS EQUITY | |||||||||
Accrued expenses | $ | 41,115 | $ | 29,116 | |||||
Accounts payable | 27,351 | 26,884 | |||||||
Notes payable | 300 | 18,906 | |||||||
Customer deposits | 4,742 | 6,015 | |||||||
Deferred income taxes | 1,871 | 918 | |||||||
Current portion of term loan | 7,500 | | |||||||
Other | 11,566 | 12,602 | |||||||
Total current liabilities | 94,445 | 94,441 | |||||||
Revolving credit line borrowings | 90,000 | 59,000 | |||||||
Term loan | 142,500 | | |||||||
Deferred income taxes | 1,009 | 3,246 | |||||||
Convertible debentures | 3,034 | 1,169 | |||||||
Other | 18,292 | 22,235 | |||||||
Total liabilities | 349,280 | 180,091 | |||||||
STOCKHOLDERS EQUITY | |||||||||
Common stock, $.01 par value; 100,000,000 and 20,000,000 shares authorized, 18,872,419 and 18,332,140 shares issued and outstanding, 759,093 and 686,865 shares held in escrow | 180 | 176 | |||||||
Preferred stock, $.01 par value; 5,000,000 shares authorized, none issued and outstanding | | | |||||||
Additional paid-in capital | 339,924 | 291,621 | |||||||
Retained earnings | 39,888 | 32,495 | |||||||
Treasury stock (at cost) | (3,579 | ) | (3,579 | ) | |||||
Accumulated other comprehensive income | 6,184 | 5,985 | |||||||
Total stockholders equity | 382,597 | 326,698 | |||||||
Total liabilities and stockholders equity | $ | 731,877 | $ | 506,789 | |||||
The accompanying Notes are an integral part of the condensed consolidated financial statements.
2
LASON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
1999 | 1998 | 1999 | 1998 | ||||||||||||||
Revenue, net of postage | $ | 152,745 | $ | 96,943 | $ | 425,913 | $ | 248,565 | |||||||||
Cost of revenues | 94,456 | 62,983 | 264,645 | 155,297 | |||||||||||||
Gross profit | 58,289 | 33,960 | 161,268 | 93,268 | |||||||||||||
Selling, general and administrative expenses | 32,982 | 22,520 | 95,938 | 59,116 | |||||||||||||
Compensatory stock option expense (income) | 65 | (694 | ) | 1,584 | 125 | ||||||||||||
Amortization of intangibles | 3,747 | 1,826 | 9,838 | 4,402 | |||||||||||||
Merger-related charges | | | 31,088 | | |||||||||||||
Income from operations | 21,495 | 10,308 | 22,820 | 29,625 | |||||||||||||
Net interest expense | 3,832 | 1,764 | 8,845 | 3,889 | |||||||||||||
Income before income taxes | 17,663 | 8,544 | 13,975 | 25,736 | |||||||||||||
Provision for income taxes | 7,030 | 3,253 | 6,582 | 9,625 | |||||||||||||
Net income | $ | 10,633 | $ | 5,291 | $ | 7,393 | $ | 16,111 | |||||||||
Basic income per share | $ | 0.59 | $ | 0.34 | $ | 0.41 | $ | 1.08 | |||||||||
Diluted income per share | $ | 0.56 | $ | 0.32 | $ | 0.40 | $ | 1.03 | |||||||||
The accompanying Notes are an integral part of the condensed consolidated financial statements.
3
LASON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended | |||||||||
September 30, | |||||||||
1999 | 1998 | ||||||||
Cash Flows Provided By (Used In) Operating Activities | $ | 11,264 | $ | (1,302 | ) | ||||
Cash Flows From Investing Activities: | |||||||||
Payments for acquisition of businesses, net of cash acquired | (131,320 | ) | (118,448 | ) | |||||
Additions to fixed assets and software development costs | (32,694 | ) | (19,917 | ) | |||||
Proceeds from sales of fixed assets | 1,023 | 1,127 | |||||||
Other, net | (24 | ) | | ||||||
Net cash used in investing activities | (163,015 | ) | (137,238 | ) | |||||
Cash Flows From Financing Activities: | |||||||||
Borrowings on revolving line of credit | 335,218 | 418,400 | |||||||
Repayments on revolving line of credit | (304,218 | ) | (404,450 | ) | |||||
Borrowings on term loan | 150,000 | | |||||||
Repayments of notes payable | (18,606 | ) | (6,254 | ) | |||||
Repayment on capital lease liabilities and other debt | (3,837 | ) | (2,907 | ) | |||||
Payments to amend credit agreement | (2,260 | ) | (694 | ) | |||||
Proceeds from exercise of employee stock options | 1,607 | 493 | |||||||
Dividends paid by M-R Group plc | (1,201 | ) | (2,347 | ) | |||||
Net proceeds from issuance of shares of common stock | | 130,809 | |||||||
Payments by M-R Group plc to acquire shares for stock option plans | | (1,190 | ) | ||||||
Other, net | (1,504 | ) | (1,698 | ) | |||||
Net cash provided by financing activities | 155,199 | 130,162 | |||||||
Effect of foreign exchange rate changes on cash and cash equivalents | 96 | 36 | |||||||
Net increase (decrease) in cash and cash equivalents | 3,544 | (8,342 | ) | ||||||
Cash and cash equivalents at beginning of period | 6,910 | 11,643 | |||||||
Cash and cash equivalents at end of period | $ | 10,454 | $ | 3,301 | |||||
The accompanying Notes are an integral part of the condensed consolidated financial statements.
4
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Lason, Inc. (together with its subsidiaries, Lason or the Company) have been prepared in conformity with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, such interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements.
In the opinion of management, all necessary adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The operating results for the nine month period ended September 30, 1999 are not necessarily indicative of the results to be expected for the year ending December 31, 1999.
For further information, refer to the consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 1998 filed with the Securities and Exchange Commission on March 31, 1999.
Certain reclassifications have been made to the consolidated financial statements for 1998 to conform to the 1999 presentation.
Note 2. Mergers and Acquisitions
On June 30, 1999 the Company completed its merger with M-R Group plc (M-R), a leading document and data management company headquartered in the United Kingdom. In connection with the merger, the Company issued approximately 3.1 million new shares of its common stock, in exchange for all of the outstanding common stock of M-R, including 47,222 shares issued in connection with the settlement of certain M-R stock options (the Executive Options). Pursuant to the merger agreement, M-R shareholders received 5.376 new shares of Lason common stock for every 100 M-R shares held for a total value of approximately $154.4 million as of June 30, 1999.
The merger was accounted for as a pooling-of-interests. Accordingly, the Companys condensed consolidated financial statements were restated as if the companies had been combined for all periods presented. Certain reclassifications and adjustments were made to M-Rs financial statements to conform with Lasons presentation and with accounting principles generally accepted in the United States. Prior to the merger, there were no material transactions between Lason and M-R.
The value of the shares of Lason common stock issued was approximately $90.4 million greater than the estimated fair value of the net assets acquired. For United States federal income tax purposes, the merger with M-R was a taxable exchange. Accordingly, for federal income tax purposes the $90.4 million was allocated to goodwill and will be amortized over the fifteen year life required in federal tax guidelines. A deferred federal income tax asset was recorded, and was credited to paid-in capital, totaling approximately $33.6 million. This amount represents a temporary difference in deductible expenses that will result in future federal income tax benefits.
Prior to the merger, M-Rs fiscal year end was June 30. Subsequent to the merger, M-R adopted a calendar year-end. Accordingly, the Companys condensed consolidated financial statements have been recast to retroactively combine M-Rs financial statements with Lason as if M-R had a calendar year-end for all periods presented.
Under terms of the merger agreement, certain M-R stock options (the Staff Options) were exchanged for options to receive 39,540 shares of Lason common stock, calculated at the same exchange ratio discussed above. The Staff Options must be exercised, in accordance with the terms of the option plan, on or before December 29, 1999 or the options expire. A total of 8,064 such shares were issued in the three month period ended September 30, 1999.
5
In connection with the Executive Options, M-R previously established a trust that purchased shares of M-R common stock on the open market. Such shares were to be issued to employees upon exercise of their respective individual stock options. Such shares were converted into approximately 112,000 shares of Lason common stock at the aforementioned conversion ratio. M-Rs cost to acquire such shares of common stock is recorded as treasury stock in the Companys condensed consolidated financial statements.
The following information reconciles total revenues and net income (loss) for the separate companies with amounts presented in the accompanying condensed consolidated statements of income for the nine months ended September 30, 1998 and the six months ended June 30, 1999 (the operating period of Lason and M-R prior to the merger) (in thousands):
Six Months Ended | Nine Months Ended | |||||||||
June 30, | September 30, | |||||||||
1999 | 1998 | |||||||||
Revenues: | ||||||||||
Lason | $ | 225,840 | $ | 187,136 | ||||||
M-R | 47,328 | 61,429 | ||||||||
Total | $ | 273,168 | $ | 248,565 | ||||||
Net income (loss): | ||||||||||
Lason | $ | 3,902 | $ | 12,076 | ||||||
M-R | (7,142 | ) | 4,035 | |||||||
Total | $ | (3,240 | ) | $ | 16,111 | |||||
The Executive Options were granted under award plans considered to be variable under accounting principles generally accepted in the United States. Financial reporting standards in the United Kingdom do not require compensation expense to be recognized for the Executive Options. As a result, the consolidated financial information presented for M-R includes an approximate $1.4 million pre-tax (approximately $0.9 million after-tax) charge to income for the nine months ended September 30, 1999 to conform the M-R financial statements to financial statements prepared in accordance with accounting principles generally accepted in the United States. For the corresponding nine month period in 1998, such options provided a benefit of approximately $80,000 pre-tax (approximately $40,000 after tax). The effect on diluted income per share was a (decrease) increase of approximately ($0.05) and $0.01 in the nine months ended September 30, 1999 and 1998, respectively.
In connection with the M-R merger, the Company recorded $31.1 million pre-tax ($20.3 million after tax, or $1.08 per diluted share) of merger-related costs which were charged to operations during the first half of 1999. Included in the charges are approximately $7.9 million in transaction costs primarily consisting of investment banking, legal, regulatory, accounting and other fees; non-cash charges of approximately $9.8 million for an adjustment to goodwill related to a previous M-R acquisition, recording the accelerated vesting of the Executive Options, and other charges as a result of the merger and to conform M-Rs United Kingdom financial accounting standards with those used in the United States; and approximately $13.4 million related to discontinued leases, the consolidation of facilities, severance and other related expenses.
Details of the merger-related charges are as follows (in thousands):
Used | |||||||||||||||||
Original | Balance at | ||||||||||||||||
Accrual | Cash | Non-cash | September 30, 1999 | ||||||||||||||
Transaction costs | $ | 7,897 | $ | 2,666 | $ | | $ | 5,231 | |||||||||
Accounting charges | 9,820 | | 9,200 | 620 | |||||||||||||
Consolidation and restructure costs | 13,371 | 7,878 | 4,136 | 1,357 | |||||||||||||
Totals | $ | 31,088 | $ | 10,544 | $ | 13,336 | $ | 7,208 | |||||||||
6
For the businesses that have had facilities closed or consolidated with other facilities, the tangible assets to be disposed of have been written down to their estimated fair value, less cost of disposal. In addition, as a result of the consolidation of approximately 21 facilities, approximately 410 employees have been separated from the Company as of September 30, 1999. These amounts are included in consolidation and restructure costs in the table above.
It is expected that the balance of the merger-related accrual will be used by the end of the first quarter of 2000.
During the nine months ended September 30, 1999, the Company completed several additional acquisitions which were accounted for using the purchase method of accounting, the most significant of which were: Vetri Systems, Inc. and its affiliate Vetri Software India, Ltd., Bonner & Moore Computing Company, a division of Bonner & Moore Associates, Inc., the Texas division of Compex Legal Services, MSI Digital Imaging Solutions, Inc., Cover-All Computer Holdings Company and its affiliates, MSCI, Inc., Crest Information Technologies, Inc., Marketing Associates, Inc., and Addressing Services Company, Inc.
Aggregate consideration for all the purchase acquisitions completed during the first nine months of 1999 (the 1999 Purchase Acquisitions), excluding liabilities assumed, was approximately $126.9 million, consisting of approximately $110.5 million in cash, 305,343 shares of the Companys common stock valued at approximately $14.5 million and debentures convertible into 32,532 shares of the Companys common stock valued at approximately $1.9 million at the date of acquisition.
For the 1999 Purchase Acquisitions, 270,705 shares of the Companys common stock valued at approximately $13.0 million on the transaction date, and approximately $1.7 million in cash are being held in escrow to indemnify the Company if contingencies set forth in the respective purchase agreements occur within specified time frames ranging from 12 to 24 months from the date of acquisition. In addition, $4.2 million of the aggregate cash will be paid only if certain contingencies are met. Finally, certain of the purchase agreements provide for an increase to the purchase price if operating income of the acquired business exceeds targeted levels. The maximum amount of additional purchase price which may be recorded should such targets be achieved for the 1999 Purchase Acquisitions is approximately $115.0 million. Purchase price contingencies, if any, will be recorded as an adjustment to the purchase price when the related contingency is resolved.
With the exception of the merger with M-R discussed above, each of the 1999 Purchase Acquisitions was accounted for as a purchase. The results of operations for the three and nine month periods ended September 30, 1999 include the results of operations for each of the purchase acquisitions since the date of their respective acquisition.
The purchase price for the 1999 Purchase Acquisitions was allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of acquisition. The excess of the aggregate purchase price over the fair values of assets acquired and liabilities assumed has been allocated to goodwill and is being amortized on a straight-line method over 30 years. The allocation of the excess purchase price is based on preliminary estimates and assumptions, and is subject to revision upon final determination of the fair market value of the net assets acquired. Management does not expect the final allocations to differ materially from the preliminary estimates.
7
In conjunction with 1999 Purchase Acquisitions, liabilities assumed and other non-cash consideration was as follows (in thousands):
Fair value of assets acquired | $ | 33,693 | ||
Goodwill | 93,207 | |||
Cash and common stock held in escrow | 14,730 | |||
Net cash paid in consideration for companies acquired | (104,193 | ) | ||
Common stock issued in consideration for companies acquired | (14,525 | ) | ||
Convertible debentures issued in consideration for companies acquired | (1,865 | ) | ||
Liabilities assumed | $ | 21,047 | ||
The following table summarizes pro forma unaudited results of operations as if each of the 1999 Purchase Acquisitions had occurred at the beginning of the periods presented (in thousands, except per share amounts):
Nine Months Ended | ||||||||
September 30, | ||||||||
1999 | 1998 | |||||||
Revenues | $ | 466,633 | $ | 370,395 | ||||
Income before income taxes | 14,248 | 33,285 | ||||||
Net income | 7,557 | 20,641 | ||||||
Basic income per share | $ | 0.42 | $ | 1.38 | ||||
Diluted income per share | $ | 0.40 | $ | 1.29 |
In October 1999, the Company purchased all of the outstanding common stock of Atlantic Document Centers, Inc. for aggregate consideration of $6.0 million consisting of approximately $5.1 million in cash and 19,537 shares of the Companys common stock valued at approximately $0.9 million.
Note 3. Long-Term Debt
In August of 1999, the Company amended and restated its credit agreement with its lenders. Borrowings under the amended credit agreement are expected to be used to finance additional acquisitions of businesses, working capital, capital expenditures and other corporate purposes. Such borrowings are secured by guarantees of certain of the Companys subsidiaries, as well as pledges of the capital stock of certain subsidiaries. Interest on amounts outstanding is calculated based on interest rates determined periodically at the beginning of each borrowing period. Borrowings bear interest at rates ranging from a Eurodollar rate plus a maximum of 2.00% (6.87% as of September 30, 1999) or a base percentage rate plus a maximum of 0.50% (8.25% at September 30, 1999), at the Companys election at the time of borrowing. The credit agreement contains restrictions on acquisitions, disposition of assets, and the incurrence of other liabilities and contains certain financial ratio covenants.
The amended credit agreement has a revolving credit facility of $150 million, which the Company may increase to up to $250 million, subject to certain limitations. A portion of the revolving credit facility of up to $50 million is available to the Company for borrowings in Euro, British pound sterling, Canadian dollars and other freely traded currencies to be agreed upon with the lenders. Lason is not required to make principal payments until final maturity in 2004.
8
The amendment to the credit agreement also added a term loan facility of $150 million. Quarterly principal payments commence May 2000, with final maturity August 2004, as follows (in thousands):
2000 | $ | 11,250 | ||
2001 | 20,625 | |||
2002 | 35,625 | |||
2003 | 52,500 | |||
2004 | 30,000 | |||
Total | 150,000 | |||
Less current portion | (7,500 | ) | ||
Long term portion | $ | 142,500 | ||
Note 4. Comprehensive Income
The assets and liabilities of M-R, and of other foreign subsidiaries, are translated into United States dollars using period-end exchange rates while income statements are translated using average exchange rates during the periods. Differences arising from the translation of assets and liabilities in comparison with the translation of the previous periods are included as a separate component of Stockholders Equity. The net accumulated foreign currency translation adjustment is $6,184,000 and $5,985,000 at September 30, 1999 and December 31, 1998, respectively.
The components of other comprehensive income are as follows (in thousands):
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
1999 | 1998 | 1999 | 1998 | |||||||||||||
Net income | $ | 10,633 | $ | 5,291 | $ | 7,393 | $ | 16,111 | ||||||||
Net foreign currency translation gain | 2,153 | 780 | 199 | 1,192 | ||||||||||||
Comprehensive income | $ | 12,786 | $ | 6,071 | $ | 7,592 | $ | 17,303 | ||||||||
9
Note 5. Earnings Per Share
The following table presents a reconciliation of the numerator (income applicable to common shareholders) and denominator (weighted average common shares outstanding) for the basic and diluted earnings per share calculations for the three and nine month periods ended September 30, 1999 and 1998 (in thousands, except per share amounts). Weighted average shares outstanding have been retroactively restated for all periods presented to adjust for the issuance of new shares of Lason common stock related to the merger with M-R. (See Note 2):
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
September 30, 1999 | September 30, 1998 | |||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||
Net | Average | Per | Net | Average | Per | |||||||||||||||||||
Income | Shares | Share | Income | Shares | Share | |||||||||||||||||||
Basic EPS | $ | 10,633 | 17,977 | $ | 0.59 | $ | 5,291 | 15,731 | $ | 0.34 | ||||||||||||||
Effect of Dilutive Securities | ||||||||||||||||||||||||
Contingently issuable shares of common stock | | 732 | | | 532 | | ||||||||||||||||||
Potential shares of common stock from debentures and stock options outstanding | | 363 | | | 395 | | ||||||||||||||||||
Diluted EPS | $ | 10,633 | 19,072 | $ | 0.56 | $ | 5,291 | 16,658 | $ | 0.32 | ||||||||||||||
Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, 1999 | September 30, 1998 | |||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||
Net | Average | Per | Net | Average | Per | |||||||||||||||||||
Income | Shares | Share | Income | Shares | Share | |||||||||||||||||||
Basic EPS | $ | 7,393 | 17,875 | $ | 0.41 | $ | 16,111 | 14,945 | $ | 1.08 | ||||||||||||||
Effect of Dilutive Securities | ||||||||||||||||||||||||
Contingently issuable shares of common stock | | 500 | | | 389 | |||||||||||||||||||
Potential shares of common stock from debentures and stock options outstanding | | 269 | | | 364 | | ||||||||||||||||||
Diluted EPS | $ | 7,393 | 18,644 | $ | 0.40 | $ | 16,111 | 15,698 | $ | 1.03 | ||||||||||||||
The weighted average common shares and common share equivalents outstanding used to compute the dilutive effect of common stock options outstanding was computed using the treasury stock method prescribed by Statement of Financial Accounting Standards (SFAS) No. 128.
Note 6. Segment and Related Information
SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information was issued in June 1997 and is effective for financial statements issued after December 15, 1998. The statement requires the Company to report certain information about its operating segments.
For years prior to 1998, the Company was managed as one operating segment. Beginning in 1998, the Companys reportable segments consist of groups of business units that are organized geographically. Each of the Companys geographic regions has a separate management team and infrastructure, and offers different combinations of the Companys services. The Company evaluates the performance of its operating segments based on income before income taxes and net corporate interest expense. Inter-segment sales and transfers are not significant.
10
The following table presents summarized financial information for the Companys reportable segments for the three and nine months ended September 30, 1999 and 1998 (in thousands). The Other balances include corporate related items, results of insignificant operations and, as it relates to segment profit (loss), income and expenses not allocated to reportable segments, which includes all merger-related changes not specifically allocated to the International segment for the nine months ended September 30, 1999. The international segment was previously included in Other but is now shown separately as certain quantitative thresholds under SFAS No. 131 have now been met. The international segment includes the United Kingdom, Canada and Mexico. Prior periods have been restated accordingly. Additionally, prior periods have been restated for the reallocation of certain business units among regions during 1999.
Three Months Ended | Nine Months Ended | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
1999 | 1998 | 1999 | 1998 | |||||||||||||||
Revenues: | ||||||||||||||||||
Midwest | $ | 3,898 | $ | 872 | $ | 7,756 | $ | 2,377 | ||||||||||
Central | 41,003 | 25,803 | 110,590 | 74,530 | ||||||||||||||
Northeast | 22,333 | 15,691 | 60,789 | 37,540 | ||||||||||||||
Southeast | 19,276 | 11,496 | 52,782 | 27,474 | ||||||||||||||
Southwest | 17,524 | 11,474 | 51,604 | 24,876 | ||||||||||||||
West | 25,497 | 14,633 | 71,415 | 30,238 | ||||||||||||||
International | 23,389 | 15,327 | 74,523 | 49,851 | ||||||||||||||
Other | (175 | ) | 1,647 | (3,546 | ) | 1,679 | ||||||||||||
Total | $ | 152,745 | $ | 96,943 | $ | 425,913 | $ | 248,565 | ||||||||||
Segment profit (loss): | ||||||||||||||||||
Midwest | $ | 469 | $ | 242 | $ | 1,102 | $ | 589 | ||||||||||
Central | 3,203 | 1,938 | 9,220 | 9,225 | ||||||||||||||
Northeast | 4,868 | 2,576 | 10,225 | 6,728 | ||||||||||||||
Southeast | 2,980 | 1,228 | 7,696 | 2,651 | ||||||||||||||
Southwest | 2,147 | 2,097 | 9,082 | 5,065 | ||||||||||||||
West | 3,845 | 2,956 | 11,279 | 6,466 | ||||||||||||||
International | 4,820 | 534 | (581 | ) | 5,434 | |||||||||||||
Other | (4,669 | ) | (3,027 | ) | (34,048 | ) | (10,422 | ) | ||||||||||
Total | $ | 17,663 | $ | 8,544 | $ | 13,975 | $ | 25,736 | ||||||||||
Details of Other segment profit (loss): | ||||||||||||||||||
Net corporate interest | $ | (3,706 | ) | $ | (1,650 | ) | $ | (8,015 | ) | $ | (3,753 | ) | ||||||
Corporate expenses not allocated to operating segments | (314 | ) | (788 | ) | (24,834 | ) | (5,076 | ) | ||||||||||
Amortization of intangibles not allocated to operating segments | (585 | ) | (519 | ) | (989 | ) | (1,385 | ) | ||||||||||
Compensatory stock option expense | (65 | ) | (70 | ) | (208 | ) | (208 | ) | ||||||||||
Other | 1 | | (2 | ) | | |||||||||||||
Total | $ | (4,669 | ) | $ | (3,027 | ) | $ | (34,048 | ) | $ | (10,422 | ) | ||||||
11
September 30, | December 31, | |||||||||
1999 | 1998 | |||||||||
Total assets: | ||||||||||
Midwest | $ | 13,740 | $ | | ||||||
Central | 153,062 | 94,162 | ||||||||
Northeast | 128,453 | 111,400 | ||||||||
Southeast | 70,552 | 45,303 | ||||||||
Southwest | 87,311 | 48,914 | ||||||||
West | 106,114 | 84,397 | ||||||||
International | 78,063 | 64,987 | ||||||||
Other | 94,582 | 57,626 | ||||||||
Total | $ | 731,877 | $ | 506,789 | ||||||
Details of Other total assets: | ||||||||||
Net goodwill not allocated to operating segments | $ | 27,150 | $ | 29,900 | ||||||
Net other intangibles assets not allocated to operating segments | 9,362 | 5,931 | ||||||||
Other corporate assets not allocated to operating segments | 58,070 | 21,795 | ||||||||
Total | $ | 94,582 | $ | 57,626 | ||||||
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those statements include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those indicated by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: (i) the assimilation of acquisitions, (ii) the management of the Companys growth and expansion, (iii) dependence on major customers, or on key personnel, (iv) development by competitors of new or superior products or services, or entry into the market of new competitors, (v) fluctuations in paper prices, (vi) integrity and reliability of the Companys data, (vii) volatility of the Companys stock price, (viii) changes in the business services outsourcing industry, (ix) significance of intangible assets, (x) changes related to compensatory stock options and (xi) other risks identified from time to time in the Companys reports and registration statements filed with the Securities and Exchange Commission.
Overview
During the nine months ended September 30, 1999, the Company completed several acquisitions which were accounted for as purchases, the most significant of which were: Vetri Systems, Inc. and its affiliate Vetri Software India, Ltd., Bonner & Moore Computing Company, a division of Bonner & Moore Associates, Inc., the Texas division of Compex Legal Services, MSI Digital Imaging Solutions, Inc., Cover-All Computer Holdings Company and its affiliates, MSCI, Inc., Crest Information Technologies, Inc., Marketing Associates, Inc. and Addressing Services Company, Inc.
In addition, the Company completed its merger with M-R Group plc (M-R) on June 30, 1999, in a taxable exchange accounted for as a pooling-of-interest. Accordingly, the following discussion relates to the operations of Lason and M-R combined, unless otherwise indicated.
Although management anticipates that the Company will continue to acquire complementary businesses in the future, there can be no assurance that the Company will be able to identify and acquire attractive acquisition candidates, profitably manage such acquired companies or successfully integrate such acquired companies into the Company without substantial costs, delays or other problems. In addition, there can be no assurance that any companies acquired in the future will be profitable at the time of acquisition or will achieve
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Results of Operations Three Months Ended September 30, 1999 Compared with Three Months Ended September 30, 1998.
Consolidated net revenues, including the results of M-R, increased 58% to $152.7 million for the three months ended September 30, 1999 from $96.9 million in the third quarter of 1998. Approximately $41.9 million of the increase was due to acquisitions and approximately $13.9 million was due to growth in the Companys existing business excluding M-R. The majority of the internal growth came from an increase in image and data capture and data management revenues of approximately $14.3 million, largely the result of successful cross-selling of the Companys core services and the Companys focus on fast growing markets such as e-commerce.
Gross profit increased to $58.3 million for the third quarter of 1999 from $34.0 million for the comparable 1998 quarter primarily due to the increase in net revenues. Gross profit as a percentage of net revenues was 38% for the three months ended September 30, 1999 versus 35% for the comparable period of 1998. The increase is primarily due to lower margins in the prior-year quarter for M-R. M-Rs margins are higher in the 1999 quarter primarily due to a decrease in lower margin direct-mail services at one division and higher revenues at two divisions with relatively fixed costs (divisions providing software and digitization services).
Selling, general and administrative expenses increased $10.5 million to $33 million, or 22% of net revenues, for the three months ended September 30, 1999 from $22.5 million, or 23% of net revenue for the comparable 1998 quarter. Approximately $8.3 million of the increase was due to selling, general and administrative expenses of acquired companies, excluding M-R. The remaining increase was primarily due to higher compensation and other corporate overhead expenses associated with managing a larger consolidated organization.
Certain M-R stock options which previously existed were variable in nature. Declining prices of M-R common stock during the quarter ended September 30, 1998 resulted in a credit to compensatory stock option expense of $764,000 in accordance with accounting principles generally accepted in the United States.
Amortization of intangibles increased to $3.7 million for the three months ended September 30, 1999 from $1.8 million for the third quarter of 1998 primarily due to an increase in goodwill related to the business acquisitions completed.
Net interest expense was $3.8 million for the 1999 third quarter compared to $1.8 million in 1998. The increase is primarily due to higher average borrowing balances resulting from borrowings used primarily to fund business acquisitions.
Provision for income taxes as a percentage of pre-tax income increased to 40% for the third quarter of 1999 from 38% in the comparable 1998 quarter primarily due to an increase in goodwill amortization expense that is not deductible for federal income tax purposes.
Results of Operations Nine Months Ended September 30, 1999 Compared with Nine Months Ended September 30, 1998.
Consolidated net revenues increased 71% to $425.9 million for the nine months ended September 30, 1999 from $248.6 million for the comparable period of 1998. Approximately $140.8 million of the increase was due to acquisitions and approximately $36.5 million was due to growth in the Companys existing business excluding M-R. The internal growth was primarily the result of higher image and data capture and data management revenue.
Gross profit increased to $161.3 million for the nine months ended September 30, 1999 from $93.3 million for the comparable 1998 period primarily due to the increase in net revenues. Gross profit as a percentage of net revenues was 38% for the nine months ended September 30, 1999 and 1998.
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Selling, general and administrative expenses increased $36.8 million to $95.9 million, or 23% of net revenues for the first nine months of 1999, from $59.1 million, or 24% of net revenues in the same period of 1998. Approximately $25.5 million of the increase was due to selling, general and administrative expenses of acquired companies excluding M-R. The remaining increase was primarily due to increased compensation and other corporate overhead expenses associated with managing a larger consolidated organization.
The increase in compensatory option expense is due to the credit recorded for certain M-R stock options in the third quarter of 1998, discussed in the preceding section, coupled with increasing price of M-R common stock in the first three months of 1999.
Amortization of intangibles increased to $9.8 million for the nine months ended September 30, 1999 from $4.4 million for the comparable 1998 period primarily due to an increase in goodwill related to business acquisitions completed.
In connection with the M-R merger, the Company recorded $31.1 million pre-tax ($20.3 million after tax) of merger-related costs which were charged to operations during the first half of 1999. Included in the charges are approximately $7.9 million in transaction costs including investment banking, legal, regulatory, accounting and other fees; non cash charges of approximately $9.8 million for an adjustment to goodwill resulting from a previous M-R acquisition, and recording compensatory option and other charges as a result of the merger and to conform M-Rs United Kingdom financial accounting standards with those used in the United States; and approximately $13.4 million related to discontinued leases, the consolidation of facilities, severance and other related expenses. The decline in operating income from $29.6 million in the first nine months of 1998 to $22.8 million in the corresponding period of 1999 is the result of such merger-related charges, partially offset by increased operating income from acquisitions and internal growth.
Net interest expense was $8.8 million for the first nine months of 1999 compared to $3.9 million in the comparable 1998 period. The increase is primarily due to higher average borrowing balances resulting from borrowings used mainly to fund business acquisitions.
Provision for income taxes as a percentage of pre-tax income increased to 47% for the first nine months of 1999, from 37% in the comparable period of 1998, primarily due to an increase in goodwill amortization that is not deductible for federal income tax purposes, and certain non-deductible merger-related charges recorded in the first half of 1999.
Liquidity and Capital Resources
The Company has funded its operations and acquisitions through a combination of cash flow from operations, bank borrowings and the issuance of shares of common stock.
Cash flows provided by operating activities totaled $11.3 million for the nine months ended September 30, 1999 compared to $1.3 million usage for the comparable period of 1998. The increase in operating cash flows in 1999 is primarily due to an increase in net income before non-cash merger-related charges and other non-cash charges such as depreciation and amortization, partially offset by higher accounts receivables and other current assets.
Cash flows used in investing activities totaled $163.0 million and $137.2 million for the nine months ended September 30, 1999 and 1998, respectively, and was primarily used to fund the acquisition of businesses and invest in capital equipment and software development activities. Cash used for acquisitions was approximately $131.3 million and $118.4 million for the nine months ended September 30, 1999 and 1998, respectively. Cash used to invest in capital equipment and software development activities totaled $32.7 million for the 1999 first nine months, compared to $19.9 million for the comparable period of 1998. During the first nine months of 1999 and 1998, the Company invested approximately $6.0 and $3.5, respectively, for the development and implementation of computer software primarily to support the Companys domestic and international operations and information processing needs. These projects and related costs will continue as the Company pursues its acquisition strategy and its focus on high technology services such as e-commerce.
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Cash flows provided by financing activities totaled $155.2 million in the first nine months of 1999 compared to $130.2 million for the comparable period of 1998 and largely consisted of borrowings on the Companys revolving line of credit and term loan primarily used to fund the payments for acquired businesses and for working capital requirements. In the 1998 period, the Company sold 2,925,000 shares of its common stock for net proceeds of approximately $130.8 million, after deducting underwriting discounts and other offering expenses. Additionally, during the first quarter of 1999 and 1998 the Company repaid promissory notes in the amount of $18.6 million and $6.2 million, respectively, relating to business acquisitions in the fourth quarter of 1998 and 1997, respectively.
During the first six months of 1998, a trust established by M-R purchased shares of M-R common stock in the open market. Such shares were to be issued to M-R employees upon exercise of their respective stock options. See Notes to Condensed Consolidated Financial Statements Note 2.
Credit Agreement Borrowings
During the quarter ended September 30, 1999, the Company amended and restated its credit agreement with its lenders. The amended credit agreement has a revolving credit facility of $150 million, which the Company may increase up to $250 million, subject to certain limitations. A portion of the revolving credit facility of up to $50 million is available to the Company for borrowings in Euro, British pound sterling, Canadian dollars and other freely traded currencies to be agreed upon with the lenders. The amendment to the credit agreement also added a term loan facility of $150 million. The Company is required to begin quarterly principal and interest payments on the term loan commencing May 31, 2000, with final maturity on both the term loan and revolving credit facility in 2004. Borrowings under the credit agreement will be used to finance additional acquisitions of businesses, working capital, capital expenditures and other corporate purposes. Borrowings under the credit agreement are secured by guarantees of certain of the Companys subsidiaries, as well as pledges of the capital stock of certain subsidiaries. Interest on amounts outstanding is calculated based on interest rates determined periodically at the beginning of each borrowing period. Borrowings bear interest at rates ranging from a Eurodollar rate plus a maximum of 2.00% (7.68% at November 10, 1999) or a base rate plus a maximum of 0.50% (8.25% at November 10, 1999), at the Companys election at the time of borrowing. The credit agreement contains restrictions on acquisitions, dispositions of assets and the incurrence of other liabilities and contains certain financial ratio covenants. As of November 10, 1999, $267.4 million was borrowed under the credit agreement.
Future Capital Needs
The Companys liquidity and capital resources have been significantly affected by acquisitions of businesses and, given the Companys acquisition strategy, may be significantly affected for the foreseeable future. To date, the Company has financed its acquisitions with borrowings under its credit agreement, with shares of its common stock and with cash from operations.
The Companys ability to obtain cash adequate to fund its needs depends generally on the results of its operations and the availability of financing. Management believes that cash flow from operations, in conjunction with borrowings from its existing and any future credit agreements and possible issuance of shares of its common stock, will be sufficient to meet debt service requirements, make possible future acquisitions and fund capital expenditures in the future. However, there can be no assurance in this regard or that the terms available for any future financing, if required, would be favorable to the Company.
Year 2000
The Company uses a significant number of computer software programs and operating systems in its internal operations. To the extent that these software applications contain a source code that is unable to interpret appropriately the upcoming calendar year 2000, some level of modification or even possible replacement of such source code or program applications will be necessary. In addition, the Company may experience significant adverse business interruptions if significant customers and/or suppliers are not prepared for the year 2000.
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The Company has a standing committee consisting of key management personnel to address the year 2000 issue. The Company has surveyed its customers and suppliers identifying those that are most critical to the operations of the Company. Meetings were scheduled between such entities and Company personnel to gain a clear understanding of their year 2000 readiness and any potential impact on the Company. Appropriate contingencies were developed based upon these meetings.
The Company is currently modifying its computer software programs and operating systems to make each significant system and program Year 2000 Compliant. Substantially all critical business systems are year 2000 compliant, and most individual business-unit systems (including those of M-R) are currently compliant. All final audits and certifications will be completed by the end of November 1999. The 10 largest site audits were performed by an independent agency. As of September 30, 1999, the Company has incurred approximately $3.8 million in connection with its year 2000 compliance program and anticipates that it will incur an additional estimated $0.5 million to complete the program.
The Company does not anticipate a material year 2000 business interruption due to the nature of its operating systems, and the customers and suppliers with which it transacts business. However, there can be no assurance that the Company will not incur unanticipated costs or systems interruptions, which could have a material adverse effect on the Companys business, financial condition or results of operations. In addition, there can be no assurance that failure of the Companys critical customers or suppliers to be year 2000 compliant will not have a material adverse effect on the Companys business, financial condition or results of operations. In addition, there can be no assurance that businesses acquired in the future will not incur unanticipated costs or systems interruption, which could have an adverse effect on the Companys business, financial condition or results of operations.
Inflation
Certain of the Companys expenses, such as wages and benefits, occupancy costs, and equipment repair and replacement, are subject to normal inflation. Supplies, such as paper and related products, can be subject to significant price fluctuations. Although the Company to date has been able to substantially offset any such cost increases through increased operating efficiencies, there can be no assurance that the Company will be able to offset any future cost increases through similar efficiencies or increased charges for its products and services.
Litigation
The Company is, from time to time, a party to legal proceedings arising in the normal course of its business. Management believes that none of the legal proceedings currently outstanding will have a material adverse effect on the Companys business, financial condition or results of operations.
Item 3. Quantitive and Qualitative Disclosures about Market Risk
Lason has exposure to interest rate risk on its obligations outstanding under the existing credit agreement, which bear interest at a variable rate. Based on the Companys outstanding balance under the credit agreement on September 30, 1999, a one-percent increase or decrease in interest rates would decrease or increase, respectively, the Companys pre-tax earnings and operating cash flows by approximately $2.4 million on an annualized basis.
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PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
During the third quarter of 1999, the Company issued shares of its common stock without registration under the Securities Act of 1933 (the Act). The issuance of Securities described in the first two paragraphs below were exempt from registration under the Act by virtue of Section 4(2) thereof as transactions not involving a public offering. The issuance of the securities described in the third paragraph were exempt from registration under the Act by virtue of Section 3(a)(10) thereof.
In the third quarter of 1999, in connection with the acquisition of the shares or assets of various companies as partial payment of the purchase price, the Company issued 68,969 shares of its common stock valued at $3,193,825. The shares were issued at prices ranging from $46.21 to $47.34.
In the third quarter of 1999, the Company issued 40,129 shares of its common stock to shareholders of companies it had previously acquired as additional consideration for the achievement of certain target levels of financial performance after the acquisitions. The shares were issued at prices ranging from $41.31 to $41.50, for a total value of $1,658,000.
On June 30, 1999, the Company acquired all of the outstanding shares of stock of M-R Group plc, a United Kingdom publicly-held company (M-R), effected by means of a Scheme of Arrangement (Scheme of Arrangement) negotiated at arms length under Section 425 of the Companies Act of 1985, under the laws of the United Kingdom. Under the Scheme of Arrangement, M-R shareholders received 3,024,641 shares of Lason common stock on June 30, 1999. Additionally, 47,222 shares were issued during the third quarter of 1999 in connection with the settlement of certain M-R stock options. Under another existing M-R stock option plan, an additional 8,064 shares were issued in the third quarter of 1999 and a maximum of 31,476 additional shares could be issued upon exercise of M-R options still outstanding.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
2.9 | Agreement of Purchase and Sale of Stock dated July 17, 1997 between Lason and Image Conversion Systems, Inc.(2) | |
2.10 | Asset Purchase Agreement dated November 25, 1997 between Lason and VIP Imaging, Inc.(3) | |
2.11 | Stock Purchase Agreement dated February 12, 1998 with respect to the acquisition of Racom Corporation and its affiliates by Lason.(4) | |
2.12 | Asset Purchase Agreement dated March 5, 1998 between Lason and API Systems, Inc.(5) | |
2.13 | Agreement for the Purchase and Sale of Stock dated July 24, 1998 between Lason and Consolidated Reprographics.(6) | |
2.15 | Transaction Agreement between Lason and M-R Group plc dated March 25, 1999.(9) | |
2.16 | Amendment Agreement between Lason and M-R Group plc dated April 30, 1999.(9) | |
2.17 | Amendment Agreement between Lason and M-R Group plc dated May 13, 1999.(9) | |
3.1 | Form of Amended and Restated Certificate of Incorporation of the Company.(1) | |
3.2 | Form of Revised Amended and Restated Bylaws.(7) | |
4.1 | Form of Certificate representing Common Stock of the Company.(1) | |
4.3 | Third Amended and Restated Credit Agreement dated as of August 16, 1999 among the Company, the Lenders named therein, Bank One, Michigan as administrative agent, and Comerica Bank, as syndication agent.(10) | |
10.5 | Registration Agreement dated January 17, 1995 by and among the Company and the 1995 Stockholders.(1) | |
10.9 | Offer of employment dated April 30, 1996 from Lason Systems, Inc. to Mr. Rauwerdink.(1) | |
10.10 | Offer of employment dated June 12, 1996 from Lason Systems, Inc. to Mr. Jablonski.(1) |
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10.11 | 1995 Stock Option Plan of the Company.(1) | |
10.17 | 1996 Lason Management Bonus Plan.(1) | |
10.18 | Lason Systems, Inc. 401(k) Profit Sharing Plan & Trust.(1) | |
10.19 | Amendments to Lason Systems, Inc. 401(k) Profit Sharing Plan & Trust.(1) | |
10.20 | Lease Agreement dated as of September 3, 1985 by and between Lason Systems, Inc. and Mart Associates, as amended.(1) | |
10.24 | Employment Agreement of Gary L. Monroe dated June 1, 1999.(10) | |
10.25 | Amended and Restated Secured Promissory Note, dated as of June 5, 1999 Gary L. Monroe.(10) | |
10.26 | Amended and Restated Pledge and Security Agreement dated June 5, 1999 Gary L. Monroe.(10) | |
10.27 | Amended and Restated Secured Promissory Note, dated as of June 5, 1999 William J. Rauwerdink.(10) | |
10.28 | Amended and Restated Pledge and Security Agreement dated June 5, 1999 William J. Rauwerdink.(10) | |
10.29 | Amended and Restated Secured Promissory Note, dated as of June 5, 1999 John R. Messinger.(10) | |
10.30 | Amended and Restated Pledge and Security Agreement dated June 5, 1999 John R. Messinger.(10) | |
10.42 | 1998 Equity Participation Plan of Lason, Inc.(8) | |
10.43 | Employment Agreement of John R. Messinger dated April 27, 1999.(9) | |
27.1 | Financial Data Schedule.(9 months ended 9/30/99)+ | |
27.2 | Financial Data Schedule. (9 months ended 9/30/98 Restated)+ | |
27.3 | Financial Data Schedule. (12 months ended 12/31/98 Restated)+ |
(1) | Incorporated herein by reference to registrants Form S-1 filed on October 7, 1996, Commission File No. 333-09799. |
(2) | Incorporated herein by reference to registrants Form 8-K filed on August 4, 1997, Commission File No. 0-21407. |
(3) | Incorporated herein by reference to registrants Form 8-K filed on December 10, 1997, Commission File No. 0-21407. |
(4) | Incorporated herein by reference to registrants Form 8-K filed on March 17, 1998, Commission File No. 0-21407. |
(5) | Incorporated herein by reference to registrants Form 8-K filed on March 20, 1998, Commission File No. 0-21407. |
(6) | Incorporated herein by reference to registrants Form S-1 filed on July 30, 1998, Commission File No. 333-60143. |
(7) | Incorporated herein by reference to registrants Form 10-Q filed on May 15, 1998, Commission File No. 0-21407. |
(8) | Incorporated herein by reference to registrants 1998 proxy statement, Appendix A, filed on April 28, 1998, Commission File No. 0-21407. |
(9) | Incorporated herein by reference to Registrants Form 10-Q filed on May 17, 1999, Commission File No. 0-21407. |
(10) | Incorporated herein by reference to Registrants Form 10-Q filed on August 16, 1999, Commission File No. 0-21407. |
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b. Reports on Form 8-K
The Company filed a report on Form 8-K on July 15, 1999 which was amended on September 13, 1999 and September 16, 1999, disclosing in Item 2 the merger with M-R Group plc on June 30, 1999, disclosing in Item 5 combined unaudited results of operations of the Company and M-R Group plc for the quarters stated, and including in Item 7 audited historical and unaudited proforma financial information relating to the merger with M-R Group plc.
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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 thereunto duly authorized.
LASON, Inc | |
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(Registrant) | |
/s/ WILLIAM J. RAUWERDINK | |
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Executive Vice President and | |
Chief Financial Officer |
November 15, 1999
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Exhibit | ||||
Number | Description | |||
2.9 | Agreement of Purchase and Sale of Stock dated July 17, 1997 between Lason and Image Conversion Systems, Inc.(2) | |||
2.10 | Asset Purchase Agreement dated November 25, 1997 between Lason and VIP Imaging, Inc.(3) | |||
2.11 | Stock Purchase Agreement dated February 12, 1998 with respect to the acquisition of Racon Corporation and its affiliates by Lason.(4) | |||
2.12 | Asset Purchase Agreement dated March 5, 1998 between Lason and API Systems, Inc.(5) | |||
2.13 | Agreement for the Purchase and Sale of Stock dated July 24, 1998 between Lason and Consolidated Reprographics.(6) | |||
2.15 | Transaction Agreement between Lason and M-R Group plc dated March 25, 1999.(9) | |||
2.16 | Amendment Agreement between Lason and M-R Group plc dated April 30, 1999.(9) | |||
2.17 | Amendment Agreement between Lason and M-R Group plc dated May 13, 1999.(9) | |||
3.1 | Form of Amended and Restated Certificate of Incorporation of the Company.(1) | |||
3.2 | Form of Revised Amended and Restated Bylaws.(7) | |||
4.1 | Form of Certificate representing Common Stock of the Company.(1) | |||
4.3 | Third Amended and Restated Credit Agreement dated as of August 16, 1999 among the Company, the Lenders named therein, Bank One, Michigan as administrative agent, and Comerica Bank, as syndication agent.(10) | |||
10.5 | Registration Agreement dated January 17, 1995 by and among the Company and the 1995 Stockholders.(1) | |||
10.9 | Offer of employment dated April 30, 1996 from Lason Systems, Inc. to Mr. Rauwerdink.(1) | |||
10.10 | Offer of employment dated June 12, 1996 from Lason Systems, Inc. to Mr. Jablonski.(1) | |||
10.11 | 1995 Stock Option Plan of the Company.(1) | |||
10.17 | 1996 Lason Management Bonus Plan.(1) | |||
10.18 | Lason Systems, Inc. 401(k) Profit Sharing Plan & Trust.(1) | |||
10.19 | Amendments to Lason Systems, Inc. 401(k) Profit Sharing Plan & Trust.(1) | |||
10.20 | Lease Agreement dated as of September 3, 1985 by and between Lason Systems, Inc. and Mart Associates, as amended.(1) |
Exhibit | ||||
Number | Description | |||
10.24 | Employment Agreement of Gary L. Monroe dated June 1, 1999.(10) | |||
10.25 | Amended and Restated Secured Promissory Note, dated as of June 5, 1999 Gary L. Monroe.(10) | |||
10.26 | Amended and Restated Pledge and Security Agreement dated June 5, 1999 Gary L. Monroe.(10) | |||
10.27 | Amended and Restated Secured Promissory Note, dated as of June 5, 1999 William J. Rauwerdink.(10) | |||
10.28 | Amended and Restated Pledge and Security Agreement dated June 5, 1999 William J. Rauwerdink.(10) | |||
10.29 | Amended and Restated Secured Promissory Note, dated as of June 5, 1999 John R. Messinger.(10) | |||
10.30 | Amended and Restated Pledge and Security Agreement dated June 5, 1999 John R. Messinger.(10) | |||
10.42 | 1998 Equity Participation Plan of Lason, Inc.(8) | |||
10.43 | Employment Agreement of John R. Messinger dated April 27, 1999.(9) | |||
27.1 | Financial Data Schedule.(9 months ended 9/30/99)+ | |||
27.2 | Financial Data Schedule. (9 months ended 9/30/98 Restated)+ | |||
27.3 | Financial Data Schedule. (12 months ended 12/31/98 Restated)+ |
(1) | Incorporated herein by reference to registrants Form S-1 filed on October 7, 1996, Commission File No. 333-09799. |
(2) | Incorporated herein by reference to registrants Form 8-K filed on August 4, 1997, Commission File No. 0-21407. |
(3) | Incorporated herein by reference to registrants Form 8-K filed on December 10, 1997, Commission File No. 0-21407. |
(4) | Incorporated herein by reference to registrants Form 8-K filed on March 17, 1998, Commission File No. 0-21407. |
(5) | Incorporated herein by reference to registrants Form 8-K filed on March 20, 1998, Commission File No. 0-21407. |
(6) | Incorporated herein by reference to registrants Form S-1 filed on July 30, 1998, Commission File No. 333-60143. |
(7) | Incorporated herein by reference to registrants Form 10-Q filed on May 15, 1998, Commission File No. 0-21407. |
(8) | Incorporated herein by reference to registrants 1998 proxy statement, Appendix A, filed on April 28, 1998, Commission File No. 0-21407. |
(9) | Incorporated herein by reference to Registrants Form 10-Q filed on May 17, 1999, Commission File No. 0-21407. |
(10) | Incorporated herein by reference to Registrants Form 10-Q filed on August 16, 1999, Commission File No. 0-21407. |
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