<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
[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.
(Exact name of registrant as specified in its charter)
DELAWARE 38-3214743
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
1305 Stephenson Highway
Troy, Michigan 48083
(Address of principal executive offices including zip code)
Telephone: (248) 597-5800
(Registrant's telephone number, including area code)
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.
<PAGE> 2
This Quarterly Report on Form 10-Q/A amends and restates, in its entirety, the
Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, which
was filed with the Securities and Exchange Commission on November 15, 1999. The
Quarterly Report on Form 10-Q/A has been restated to present the merger of
Lason, Inc. with M-R Group plc ("M-R"), which was completed June 30, 1999, using
the purchase method of accounting. The merger with M-R was accounted for using
the pooling of interests method of accounting in the original filing on Form
10-Q. All other information in this Quarterly Report on Form 10-Q/A is presented
as of the original filing date of November 15, 1999, unless otherwise indicated.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of
September 30, 1999 (Unaudited) 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. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 12
ITEM 3. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 17
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18
SIGNATURES 21
</TABLE>
<PAGE> 3
LASON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARES)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
---------------- -------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 10,454 $ 1,315
Accounts receivable (net) 142,693 86,073
Supplies 12,075 10,144
Deferred income taxes 1,420 --
Prepaid expenses and other 29,467 16,028
-------------- ----------
Total current assets 196,109 113,560
Property and equipment (net) 105,487 61,665
Deferred income taxes 398 --
Intangible assets (net) 512,363 252,400
Employee loans receivable 3,170 1,698
Other 6,707 2,362
-------------- ----------
Total assets $ 824,234 $ 431,685
============== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses $ 38,862 $ 13,466
Accounts payable 27,351 17,332
Notes payable 300 18,906
Customer deposits 4,743 6,015
Deferred income taxes 1,353 918
Current portion of term loan 7,500 --
Other 11,969 9,763
-------------- ----------
Total current liabilities 92,078 66,400
Revolving credit line borrowings 90,000 59,000
Term loan 142,500 --
Deferred income taxes 2,131 2,101
Convertible debentures 3,034 1,169
Other 31,820 18,077
-------------- ----------
Total liabilities 361,563 146,747
-------------- ----------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 100,000,000 and 20,000,000 shares
authorized, 18,872,419 and 15,378,375 shares issued and
outstanding, 759,093 and 686,865 shares held in escrow. 180 146
Preferred stock, $.01 par value; 5,000,000 shares authorized,
none issued and outstanding -- --
Additional paid-in capital 415,781 252,479
Retained earnings 46,323 32,313
Treasury stock (at cost) (5,541) --
Accumulated other comprehensive income 5,928 --
-------------- ----------
Total stockholders' equity 462,671 284,938
-------------- ----------
Total liabilities and stockholders' equity $ 824,234 $ 431,685
============== ==========
</TABLE>
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
2
<PAGE> 4
LASON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT FOR SHARES)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- ------------------------------
1999 1998 1999 1998
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues, net of postage $ 148,885 $ 77,934 $ 374,440 $ 187,136
Cost of revenues 91,659 50,902 236,565 121,227
------------ ----------- ------------ ------------
Gross profit 57,226 27,032 137,875 65,909
Selling, general and administrative expenses 34,478 15,616 84,837 38,152
Compensatory stock option expense 65 70 208 208
Amortization of intangibles 4,788 1,655 10,585 3,938
Merger-related charges -- -- 7,755 --
------------ ----------- ------------ ------------
Income from operations 17,895 9,691 34,490 23,611
Net interest expense 3,777 1,741 8,622 3,917
------------ ----------- ------------ ------------
Income before income taxes 14,118 7,950 25,868 19,694
Provision for income taxes 5,916 3,180 11,858 7,618
------------ ----------- ------------ ------------
Net income $ 8,202 $ 4,770 $ 14,010 $ 12,076
============ =========== ============ ============
Basic income per share $ 0.46 $ 0.37 $ 0.78 $ 1.00
============ =========== ============ ============
Diluted income per share $ 0.43 $ 0.35 $ 0.74 $ 0.95
============ =========== ============ ============
</TABLE>
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE> 5
LASON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1999 1998
--------- ----------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 8,999 $ (4,716)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisition of businesses, net of cash acquired (127,934) (117,937)
Additions to fixed assets and software development costs (29,135) (13,771)
Proceeds from sales of fixed assets 610 368
Other, net 271 --
--------- ----------
Net cash used in investing activities (156,188) (131,340)
--------- ----------
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 --
Net proceeds from issuance of share of common stock -- 130,809
Repayments of notes payable (18,606) (6,254)
Repayment on capital lease liabilities and other debt (3,506) (1,428)
Payments to amend credit agreement (2,260) (694)
Proceeds from exercise of employee stock options 1,047 409
Other, net (1,508) (1,698)
--------- ----------
Net cash provided by financing activities 156,167 135,094
--------- ----------
Effect of foreign exchange rate changes on cash and cash equivalents 161 --
--------- ----------
Net increase (decrease) in cash and cash equivalents 9,139 (962)
Cash and cash equivalents at beginning of period 1,315 2,925
--------- ----------
Cash and cash equivalents at end of period $ 10,454 $ 1,963
========= ==========
</TABLE>
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 Company's 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.
In the unaudited condensed consolidated financial statements previously
presented and filed with the Securities and Exchange Commission on Form 10-Q on
November 15, 1999, the acquisition of MR Group plc ("M-R") was accounted for
using the pooling of interests method of accounting. In December 1999, Lason
took certain actions which require a change to the purchase method of accounting
for the acquisition of M-R. The accompanying unaudited condensed consolidated
financial statements, which are included in Form 10-Q/A, are restated to present
the acquisition of M-R using the purchase method of accounting. All other
information is as previously filed, unless otherwise indicated. See Note 2.
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 3,071,863 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 $152.4 million as
of June 30, 1999.
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 as part of the aforementioned 3,071,863 shares of Lason
common stock issued. The June 30, 1999 value of such shares of common stock
issued is recorded as treasury stock in the Company's condensed consolidated
financial statements.
5
<PAGE> 7
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 M-R 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.
In connection with the M-R merger, the Company recorded approximately
$7.8 million of merger-related expenses which were charged to operations during
the second quarter of 1999, related to discontinued leases, the consolidation of
facilities, severance and other related expenses for Lason facilities which were
closed or consolidated into M-R facilities. For the business 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. The remaining accrual for such costs at September 30,
1999 is $500,000, which is expected to be fully used by the end of the first
quarter of 2000.
During the nine months ended September 30, 1999, the Company completed
several additional acquisitions, 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 acquisitions completed during the first
nine months of 1999 (the "1999 Acquisitions"), excluding liabilities assumed,
was approximately $279.3 million, consisting of approximately $110.5 million in
cash, 3,377,206 shares of the Company's common stock valued at approximately
$166.9 million and debentures convertible into 32,532 shares of the Company's
common stock valued at approximately $1.9 million at the date of acquisition.
For the 1999 Acquisitions, 270,705 shares of the Company's 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 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 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.
Each of the 1999 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 acquisitions since the
date of their respective acquisition.
The purchase price for the 1999 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.
6
<PAGE> 8
In conjunction with 1999 Acquisitions, liabilities assumed and other
noncash consideration were as follows (in thousands):
<TABLE>
<S> <C>
Fair value of assets acquired $ 81,252
Goodwill 230,724
Cash and common stock held in escrow 14,730
Net cash paid in consideration for companies acquired (100,578)
Common stock issued in consideration for companies acquired (166,967)
Convertible debentures issued in consideration for companies
acquired (1,865)
Treasury shares assumed 5,541
----------
Liabilities assumed $ 62,837
==========
</TABLE>
The following table summarizes pro forma unaudited results of operations as
if each of the 1999 Acquisitions had occurred at the beginning of the periods
presented (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Nine Months Ended September 30,
------------------------------------
1999 1998
----------- ----------------
<S> <C> <C>
Revenues $ 459,329 $ 358,616
Income before income taxes 29,370 28,294
Net income 16,111 17,236
Basic income per share $ 0.89 $ 1.14
Diluted income per share $ 0.84 $ 1.07
</TABLE>
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
Company's 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 Company's subsidiaries, as well as pledges of
the capital stock of certain subsidiaries. Interest on amounts outstanding is
calculated based on interest rates determined at the time of borrowing.
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 Company's election at
the time of borrowing. The credit agreement contains restrictions on
acquisitions, disposition of assets, and the incurrance of other liabilities and
contains certain financial ratio covenants.
The amended credit agreement includes 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 dollar 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.
7
<PAGE> 9
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):
<TABLE>
<S> <C>
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
----------
</TABLE>
Prior to the amendment, the credit agreement provided for revolving loans of up
to $200 million, which the Company supplemented with an agreement providing for
revolving credit loans of up to an additional $50 million. Borrowings under the
credit agreement were collateralized by substantially all of the Company's
assets before the recent amendment.
NOTE 4. COMPREHENSIVE INCOME
The assets and liabilities of 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 approximately $5.9 million at September 30, 1999, and zero at
December 31, 1998.
The components of other comprehensive income are as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income $ 8,202 $ 4,770 $ 14,010 $ 12,076
Net foreign currency translation gain 5,945 -- 5,928 --
--------- --------- --------- ---------
Comprehensive income $ 14,147 $ 4,770 $ 19,938 $ 12,076
========= ========= ========= =========
</TABLE>
8
<PAGE> 10
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).
<TABLE>
<CAPTION>
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
------ ------ ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
BASIC EPS $ 8,202 17,977 $ 0.46 $ 4,770 12,842 $ 0.37
EFFECT OF DILUTIVE SECURITIES
Contingently issuable
shares of common stock -- 732 -- -- 532 --
Potential shares of common
stock from debentures and
stock options outstanding -- 363 -- -- 379 --
-------- ------- ------- ------
DILUTED EPS $ 8,202 19,072 $ 0.43 $ 4,770 13,753 $ 0.35
======== ======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
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
------ ------ ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
BASIC EPS $ 14,010 18,004 $ 0.78 $ 12,076 12,038 $ 1.00
EFFECT OF DILUTIVE SECURITIES
Contingently issuable
shares of common stock -- 643 -- -- 389 --
Potential shares of common
stock from debentures and
stock options outstanding -- 376 -- -- 350 --
--------- ------ -------- ------
DILUTED EPS $ 14,010 19,023 $ 0.74 $ 12,076 12,777 $0.95
========= ====== ======== ======
</TABLE>
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.
9
<PAGE> 11
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 Company's reportable segments consist of groups
of business units that are organized geographically. Each of the Company's
geographic regions has a separate management team and infrastructure, and offers
different combinations of the Company's services. The Company evaluates the
performance of its operating segments based on income before income taxes and
net corporate interest expense. Intersegment sales and transfers are not
significant.
The following table presents summarized financial information for the
Company's 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. 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.
10
<PAGE> 12
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Revenues:
Midwest $ 3,898 $ 872 $ 7,756 $ 2,377
Central 40,759 25,391 109,791 73,207
Northeast 21,557 14,593 57,331 34,025
Southeast 20,051 9,560 49,396 21,392
Southwest 17,525 11,474 51,604 24,876
West 25,496 14,219 70,287 29,129
International 23,180 177 35,757 451
Other (3,581) 1,648 (7,482) 1,679
----------- ---------- ----------- ----------
Total $ 148,885 $ 77,934 $ 374,440 $ 187,136
=========== ========== =========== ==========
Segment profit (loss):
Midwest $ 470 $ 242 $ 1,102 $ 589
Central 2,900 1,948 9,200 9,178
Northeast 4,697 2,467 9,177 6,000
Southeast 2,683 1,338 7,489 2,941
Southwest 1,802 2,097 8,391 5,065
West 3,835 2,933 11,078 6,360
International 3,742 (44) 5,413 (17)
Other (6,011) (3,031) (25,982) (10,422)
----------- ---------- ----------- ----------
Total $ 14,118 $ 7,950 $ 25,868 $ 19,694
=========== ========== =========== ==========
Details of "Other" segment profit (loss):
Net corporate interest $ (3,706) $ (1,650) $ (8,007) $ (3,753)
Corporate expenses not allocated to
operating segments (1,654) (792) (16,778) (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) -- -- --
----------- ---------- ----------- ----------
Total $ (6,011) $ (3,031) $ (25,982) $ (10,422)
=========== ========== =========== ==========
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
--------------- ------------------
<S> <C> <C>
Total assets:
Midwest $ 13,740 $ --
Central 153,065 86,933
Northeast 124,106 107,245
Southeast 103,706 37,405
Southwest 86,695 56,143
West 105,714 84,397
International 179,806 13,610
Other 57,402 45,952
------------ --------------
Total $ 824,234 $ 431,685
============ ==============
Details of "Other" total assets:
Net goodwill not allocated to operating segments $ 25,664 $ 29,900
Net other intangibles assets not allocated to
operating segments 9,523 5,931
Other corporate assets not allocated to
operating segments 22,215 10,121
------------ --------------
Total $ 57,402 $ 45,952
============ ==============
</TABLE>
ITEM 2. MANAGEMENT'S 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 Company's 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 Company's data, (vii) volatility of the Company's 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 Company's
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: M-R Group plc ("M-R"), Vetri Systems, Inc. and its affiliate
Vetri Software India, Ltd., Bonner & Moore Computing Company, a
12
<PAGE> 14
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 connection with the M-R merger, the Company recorded approximately $7.8
million of merger-related costs which were charged to operations during the
second quarter of 1999, related to leases, the consolidation of facilities,
severance and other related expenses for Lason facilities closed or consolidated
into M-R facilities.
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 sales
and profitability justifying the Company's investment therein or that the
Company will recognize the synergies expected from such acquisitions.
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH
THREE MONTHS ENDED SEPTEMBER 30, 1998.
Consolidated net revenues increased 91% to $148.9 million for the three
months ended September 30, 1999 from $77.9 million in the third quarter of 1998.
Approximately $60.7 million of the increase was due to acquisitions and
approximately $10.3 million was due to growth in the Company's existing
business. The majority of the internal growth came from an increase in image and
data capture revenues of approximately $10.7 million, largely the result of
successful cross-selling of the Company's core services and the Company's focus
on fast growing markets such as e-commerce.
Gross profit increased to $57.2 million for the third quarter of 1999 from
$27.0 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.
M-R's margins were higher due to higher revenues at divisions with relatively
fixed costs (divisions providing software and digitization services).
Selling, general and administrative expenses increased $18.9 million to
$34.5 million, or 23% of net revenues, for the three months ended September 30,
1999 from $15.6 million, or 20% of net revenue for the comparable 1998 quarter.
Approximately $14.0 million of the increase was due to selling, general and
administrative expenses of acquired companies. The remaining increase was
primarily due to higher compensation and other corporate overhead expenses
associated with managing a larger consolidated organization.
Amortization of intangibles increased to $4.8 million for the three months
ended September 30, 1999 from $1.7 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 $1.7 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
42% for the third quarter of 1999 from 40% in the comparable 1998 quarter
primarily due to an increase in goodwill amortization expense which is not
deductible for federal income tax purposes.
13
<PAGE> 15
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE
MONTHS ENDED SEPTEMBER 30, 1998.
Consolidated net revenues increased 100% to $374.4 million for the nine
months ended September 30, 1999 from $187.1 million for the comparable period of
1998. Approximately $154.7 million of the increase was due to acquisitions and
approximately $32.8 million was due to growth in the Company's existing
business. The internal growth was primarily the result of higher image and data
capture and data management revenue.
Gross profit increased to $137.9 million for the nine months ended
September 30, 1999 from $65.9 million for the comparable 1998 period primarily
due to the increase in net revenues. Gross profit as a percentage of net
revenues was 37% and 35% for the nine months ended September 30, 1999 and 1998,
respectively.
Selling, general and administrative expenses increased $46.7 million to
$84.8 million, or 23% of net revenues for the first nine months of 1999, from
$38.1 million, or 20% of net revenues in the same period of 1998. Approximately
$31.1 million of the increase was due to selling, general and administrative
expenses of acquired companies. The remaining increase was primarily due to
increased compensation and other corporate overhead expenses associated with
managing a larger consolidated organization.
Amortization of intangibles increased to $10.6 million for the nine months
ended September 30, 1999 from $3.9 million for the comparable 1998 period
primarily due to an increase in goodwill related to business acquisitions
completed.
The decline in operating income as a percentage of revenue from 13% in the
first nine months of 1998 to 9% in the corresponding period of 1999 is the
result of the merger-related charges of $7.8 million discussed in the overview
of this Item 2, offset by increased operating income from acquisitions and
internal growth.
Net interest expense was $8.7 million for the first nine months of 1999
compared to $3.9 million in 1998. The increase is primarily due to higher
average borrowing balances resulting from borrowings used mainly to fund
business acquisitions.
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 $9.0 million for the
nine months ended September 30, 1999 compared to $4.7 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 noncash merger-related
expenses and other non-cash charges such as depreciation and amortization,
partially offset by higher accounts receivable and other current assets.
Cash flows used in investing activities totaled $156.2 million and
$131.3 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 $127.9 million and $117.9 million for the nine
months ended September 30, 1999 and 1998, respectively. Cash used to invest in
capital equipment and software development activities totaled $29.1 million for
the 1999 first nine months, compared to $13.8 million for the
14
<PAGE> 16
comparable period of 1998. During the first nine months of 1999 and 1998, the
Company invested approximately $5.7 and $3.4, respectively, for the development
and implementation of computer software primarily to support the Company's
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.
Cash flows provided by financing activities totaled $156.2 million in 1999
compared to $135.1 million for the comparable period of 1998 and largely
consisted of borrowings on the Company's 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.
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 loan portions 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 Company's subsidiaries, as well as pledges of the
capital stock of certain subsidiaries. Interest on amounts outstanding is
calculated based on interest rates determined at the time of borrowing.
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 Company's 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 Company's liquidity and capital resources have been significantly
affected by acquisitions of businesses and, given the Company's 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 Company's 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.
15
<PAGE> 17
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.
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 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 Company's business, financial condition or
results of operations. In addition, there can be no assurance that failure of
the Company's critical customers or suppliers to be year 2000 compliant will not
have a material adverse effect on the Company's 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 Company's business,
financial condition or results of operations.
INFLATION
Certain of the Company's 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
Company's business, financial condition or results of operations.
16
<PAGE> 18
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 Company's 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 Company's pre tax earnings and operating
cash flows by approximately $2.4 million on an annualized basis.
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
arm's 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
additional shares could be issued upon exercise of M-R options still
outstanding.
17
<PAGE> 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<S><C>
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)
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)
</TABLE>
18
<PAGE> 20
<TABLE>
<S> <C>
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 - Restated) +
27.2 Financial Data Schedule. (9 months ended 9/30/98 - Restated) +
- ----------------------------------------------
+ Filed herewith.
(1) Incorporated herein by reference to registrant's Form S-1 filed on October 7, 1996, Commission File No.
333-09799.
(2) Incorporated herein by reference to registrant's Form 8-K filed on August 4, 1997, Commission File No.
0-21407.
(3) Incorporated herein by reference to registrant's Form 8-K filed on December 10, 1997, Commission File No.
0-21407.
(4) Incorporated herein by reference to registrant's Form 8-K filed on March 17, 1998, Commission File No.
0-21407.
(5) Incorporated herein by reference to registrant's Form 8-K filed on March 20, 1998, Commission File No.
0-21407.
(6) Incorporated herein by reference to registrant's Form S-1 filed on July 30, 1998, Commission File No.
333-60143.
</TABLE>
19
<PAGE> 21
<TABLE>
<S> <C>
(7) Incorporated herein by reference to registrant's Form 10-Q filed on May 15, 1998, Commission File No.
0-21407.
(8) Incorporated herein by reference to registrant's 1998 proxy statement, Appendix A, filed on April 28, 1998,
Commission File No. 0-21407.
(9) Incorporated herein by reference to Registrant's Form 10-Q filed on May 17, 1999, Commission
File No.0-21407.
(10) Incorporated herein by reference to Registrant's Form 10-Q filed on August 16, 1999, Commission File No.
0-21407.
</TABLE>
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 pro forma financial information relating to
the merger with M-R Group plc.
20
<PAGE> 22
SIGNATURES
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
----------------------------------------------------
(Registrant)
/s/ William J. Rauwerdink
----------------------------------------------------
Executive Vice President and Chief Financial Officer
March 30, 2000
21
<PAGE> 23
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
- ----------- -----------
EX-27.1 FDS 9/30/99 - Restated
EX-27.2 FDS 9/30/98 - Restated
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999, HAS
BEEN RESTATED TO REFLECT THE MERGER WITH M-R GROUP PLC UNDER THE PURCHASE METHOD
OF ACCOUNTING. SUCH MERGER WAS ORIGINALLY ACCOUNTED FOR AS A POOLING OF
INTERESTS IN THE FINANCIAL DATA SCHEDULE FILED WITH FORM 10-Q ON NOVEMBER 15,
1999.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 10,454
<SECURITIES> 0
<RECEIVABLES> 142,693
<ALLOWANCES> 0
<INVENTORY> 12,075
<CURRENT-ASSETS> 196,109
<PP&E> 125,037
<DEPRECIATION> 19,550
<TOTAL-ASSETS> 824,234
<CURRENT-LIABILITIES> 92,078
<BONDS> 0
0
0
<COMMON> 180
<OTHER-SE> 462,491
<TOTAL-LIABILITY-AND-EQUITY> 824,234
<SALES> 374,440
<TOTAL-REVENUES> 374,440
<CGS> 236,565
<TOTAL-COSTS> 236,565
<OTHER-EXPENSES> 103,385
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,622
<INCOME-PRETAX> 25,868
<INCOME-TAX> 11,858
<INCOME-CONTINUING> 14,010
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,010
<EPS-BASIC> 0.78
<EPS-DILUTED> 0.74
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998, HAS
BEEN RESTATED TO REFLECT THE MERGER WITH M-R GROUP PLC UNDER THE PURCHASE METHOD
OF ACCOUNTING. SUCH MERGER WAS ORIGINALLY ACCOUNTED FOR AS A POOLING OF
INTERESTS IN THE FINANCIAL DATA SCHEDULE FILED WITH FORM 10-Q ON NOVEMBER 15,
1999.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,963
<SECURITIES> 0
<RECEIVABLES> 81,466
<ALLOWANCES> 0
<INVENTORY> 8,381
<CURRENT-ASSETS> 108,955
<PP&E> 55,401
<DEPRECIATION> 7,645
<TOTAL-ASSETS> 358,948
<CURRENT-LIABILITIES> 40,190
<BONDS> 0
0
0
<COMMON> 146
<OTHER-SE> 277,689
<TOTAL-LIABILITY-AND-EQUITY> 358,948
<SALES> 187,136
<TOTAL-REVENUES> 187,136
<CGS> 121,227
<TOTAL-COSTS> 121,227
<OTHER-EXPENSES> 42,298
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,917
<INCOME-PRETAX> 19,694
<INCOME-TAX> 7,618
<INCOME-CONTINUING> 12,076
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,076
<EPS-BASIC> 1.00
<EPS-DILUTED> 0.95
</TABLE>
