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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF


THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 1999


OR

[   ]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(State or other jurisdiction of
	incorporation or organization)         |  | 38-3214743(I.R.S. Employer
	identification number)
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|1305 Stephenson Highway, Troy, Michigan(Address of principle executive offices) |  | 48083(Zip Code)                                   

Registrants telephone number, including area
code: (248) 597-5800

Securities registered pursuant to Section 12(b) of the
Act: None

Securities registered pursuant to Section 12(g) of the
Act:

Common Stock, par value $0.01 per share

(Title of class)

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 for 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 
[   ]

Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of the registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [   ]

The aggregate market value of the
registrants voting stock held by non-affiliates of the
registrant as of March 24, 2000, computed by reference to
the last sale price for such stock on that date as reported on
the Nasdaq National Market System, was $133,205,416.

As of March 24, 2000,
19,316,674 shares of Common Stock , par value $0.01 per share,
were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrants
Notice of 2000 Annual Meeting of Shareholders and Proxy
Statement (Part III).









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TABLE OF CONTENTS



|                                                                                          |  |  |  |  |  |  |  | 
|----------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|FORWARD-LOOKING STATEMENTS                                                               
|PART I                                                                                   
|RECENT DEVELOPMENTS                                                                      
|SEGMENTS                                                                                 
|PRODUCTS AND SERVICES                                                                    
|CONTINUING OPERATIONS                                                                    
|PART II                                                                                  
|PART III                                                                                 
|PART IV                                                                                  
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
|CONSOLIDATED BALANCE SHEETS                                                              
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME                           
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY                                          
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                    
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                               
|LASON, INC. CONDENSED FINANCIAL INFORMATION OF REGISTRANT BALANCE SHEETS (In thousands)  
|SIGNATURES                                                                               



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FORWARD-LOOKING STATEMENTS


Lason, Inc. (together with its subsidiaries, Lason or
 the Company) may from time to time provide
information including certain statements included in or
incorporated by reference in this Form 10-K which constitute
 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 forward-looking statements include 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) variations in quarterly results; (ii) the
assimilation of acquisitions; (iii) the management of the
Companys growth and expansion; (iv) dependence on
major customers, dependence on key personnel;
(v) development by competitors of new or superior products
or services, or entry into the market of new competitors;
(vi) fluctuations in paper prices; (vii) reliability of
 the Companys data; (viii) volatility of the
Companys stock price; (ix) managements ability
to successfully complete its restructuring initiatives;
(x) any financial and legal impact of the class action
litigation; (xi) changes in the business services
outsourcing industry; (xii) significance of intangible
assets; (xiii) changes related to compensatory stock
options; and (xiv) other risks identified from time to time
in the Companys reports and registration statements filed
with the Securities and Exchange Commission.






PART I


ITEM I.  BUSINESS

General

Lason Systems, Inc., a Michigan corporation and the predecessor
(the Predecessor) to Lason, was formed in 1985 as a
result of a management buyout of the direct mail division of
McKesson Corporations 3PM subsidiary. In January 1995,
 the founders and principal shareholders of the Predecessor
recapitalized it (the Recapitalization) by selling
substantially all of its assets to Lason Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Lason,
Inc., which was then named Lason Holdings, Inc. In August 1996,
Lason Holdings, Inc. changed its name to Lason, Inc. After the
acquisition, Lason Acquisition Corp. changed its name to Lason
Systems, Inc., and continued the business operations of the
Predecessor.

Lason provides integrated information outsourcing for image and
data capture, data management and output processing services. The
 investments the Company has made in imaging and communications
technology, personnel, equipment and systems over the past decade
 have given it the capabilities and expertise necessary to meet
the growing and increasingly complex information management
requirements of its customers. The Company primarily serves
customers in the commercial, healthcare, financial services and
professional services industries. The Companys core
competencies in input processing, data management and output
processing enable it to provide a broad range of services across
a wide range of media types and allow customers to fulfill their
information management outsourcing needs with a single vendor.
The Companys strategy has been to offer a wide range of
services across a broad geographic area to its customers and to
use technologically advanced solutions to expand its service
offerings.

Lason believes that companies will continue to increase their use
 of outsourced information management services, and the market
for its services will continue to grow due to a variety of
factors including: (i) continuing advancements in computer,
networking, facsimile, printing and other technologies which have
 greatly facilitated the production and distribution of
documents; (ii) government regulations that require lengthy
document retention periods and rapid accessibility for many types
 of records; (iii) increased customer expectations of low
cost access to records on short notice at different locations;
and (iv) an increasingly litigious society, necessitating
access to relevant documents and records for extended periods. To
 manage large volumes of documents efficiently, a customer would
be required to make significant investments in equipment,
processes and technology which may only be fully utilized
occasionally. Through outsourcing, companies can avoid these
investments, as well as the risks of obsolescence that arise from
 the rapid changes in information

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The information management industry is highly fragmented,
consisting of a large number of small companies providing limited
 service offerings. An important element of the Companys
growth strategy has been to selectively make acquisitions of
companies with complementary technologies or customer bases to
consolidate its position as a provider of comprehensive
information management services across a broad geographic area.
See Recent Developments  Restructuring.

The Companys goal is to become a global, single source
provider of information management services for customers in its
targeted industries. To achieve this goal, the Company will
continue to implement a focused business strategy based on the
following elements: (i) provide a broad range of services
that will allow both existing and new customers to secure all
their information management services from one source;
(ii) facilitate the cross-selling of additional services to
customers through its comprehensive marketing program and develop
 national brand recognition for the quality and scope of
Lasons services; (iii) continue to develop additional
high value-added applications within its core service offerings;
and (iv) continue to develop scalable applications utilizing
 an open architecture and modular approach that will enable the
Company to service the unique needs of various customers across a
 broad range of volume requirements.

Since June 1995, the Company has acquired a substantial
number of companies involved in records management, duplication,
conversion services, facilities management, item processing and
research, micrographics, litigation support document management
services, electronic sorting of mass mailings, proxy
solicitations, mail creation and distribution and database
management services.

The Companys acquisition strategy has been to selectively
make acquisitions of companies that (a) have proven
operating track records and strong customer franchises that could
 benefit from the Companys technology and broad product and
 service offerings; (b) have solid management teams that
will join and remain with the Company after the acquisition;
(c) have an existing presence in the Companys core
competencies to build economies of scale through volume
purchasing and facility utilization; (d) expand the
Companys customer base and thereby increase its
cross-selling opportunities and (e) broaden the
Companys geographic reach. See Recent
Developments  Restructuring.






RECENT DEVELOPMENTS


E-Commerce

Lasons e-business represents the services and products the
Company provides that are initially transacted via the internet
or web. These offerings can be delivered in either a land based
or electronic mode. The Companys e-commerce business will
be transacted via the Companys worldwide portal, called
Lason Exchange. By using Lason Exchange, the Companys
customers will be able to order services and products directly
via the web without having to interface with the Companys
employees. This will improve the delivery of services and
products to the Companys customers, while reducing the
Companys cost of sales and distribution. Products initially
 targeted for Lason Exchange include equipment and supplies for
document imaging, digital reprographics, digital print and the
Companys internal office supply requirements.

In December 1999, the Company announced that its Board of
Directors had authorized the engagement of investment bankers to
explore the spin-off, or other means, to capitalize on
Lasons existing e-commerce business. After a thorough
review of Lasons strategy in this area which included
consulting with its external technical and financial advisors,
Lason has reconfirmed that these e-commerce offerings are
important to its integrated approach of providing full service
solutions to customers. Accordingly, Lason has decided not to
spin-off these high potential areas as separate entities but will
 continue to build this business through internal growth and
through strategic partnering.

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Discontinued Operations

In December 1999, Lason announced its intention to
discontinue, by sale or exit from the market, its activities
providing traditional litigation support, software development
and other analog services. Those services are no longer
consistent with Lasons long-term growth strategy as they
are largely analog and are expected to have slow long-term
growth. The businesses to be discontinued consist of nine
litigation copy businesses, an offset print business, a digital
graphics business and the software development business that was
acquired as part of the M-R acquisition in 1999. The Company has
engaged brokers and has begun to actively market these
businesses. Combined, the discontinued businesses had revenues of
 approximately $33.0 million and a pre tax loss of
approximately $6.2 million for the year ended
December 31, 1999. The Company expects to realize a pre tax
loss of approximately $32.4 million, including a write-off
of goodwill totaling $34.1 million, as a result of disposing
 of and/or exiting these businesses. Management anticipates that
the sale or exit from these businesses will be completed during
2000.

Restructuring

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 M-R merger, the Company recorded a $7.8
million pre tax restructuring charge during the second quarter of
 1999 for costs associated with discontinued leases, the
consolidation of facilities, severance and other related expenses
 for Lason facilities which were to be closed or consolidated
with M-R facilities. For 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 423
employees have been separated from the Company as of
December 31, 1999.

In the fourth quarter of 1999, management completed a thorough
review of its operations and approved a restructuring plan to
make the Company more efficient and to lower overall costs. These
 decisions resulted in the Company recording a one-time pre tax
charge to operations of $14.9 million in the fourth quarter
of 1999. The charge consists of severance, facility closure and
exit costs related primarily to discontinued leases and equipment
 write-downs. The restructuring plan calls for the consolidation
of facilities and operations, the closure of facilities, and the
streamlining of the administrative support functions.

As part of the Companys restructuring, management has
shifted its focus from acquisitions and has accelerated the
integration of its businesses to enhance the Companys
future profitability.

M-R Acquisition

Effective with the completion of the transaction, the acquisition
 of M-R was presented for financial reporting purposes using the
pooling of interest method of accounting. In December 1999,
Lason took certain actions, including those discussed above under
 Discontinued Operations, which required a change to
the purchase method of accounting for the acquisition of M-R. The
 change to purchase accounting resulted in an increase to
goodwill of approximately $128.0 million, which will increase
annual goodwill amortization expense by approximately $4.4
million.

Class-Action Litigation

On December 21, 1999 and various dates thereafter, several
individuals filed complaints against the Company and certain
executive officers in various United States District Courts. The
complaints purport to be brought as class actions on behalf of
purchasers of shares of the Companys common stock during
periods ranging from August 14, 1998, through
December 17, 1999. The complaints generally allege that the
Company and certain of its officers made public statements
concerning the Companys revenues and earnings and inflated
the market price of the shares of the Companys common
stock. The complaints allege violations of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder,
and one complaint alleges violations of the Securities Act of
1933. The complaints seek unspecified damages allegedly incurred
as a result of the decline in the market price of shares of the
Companys common stock after the Company

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These actions are in a preliminary stage. However, the Company
believes, based on the advice of outside legal counsel, that it
and the named officers have substantial defenses to the
plaintiffs claims, and the Company intends to vigorously
defend these claims. While the final resolution of this
litigation cannot be presently determined, management does not
believe it will have a material adverse effect on the
Companys business or the future consolidated financial
statements, although such adverse effect could be possible.






SEGMENTS


The Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 131, Disclosures About Segments of an Enterprise and Related
Information,during the year ended December 31, 1998.
SFAS No. 131 requires the Company to report certain
information about its operating segments.

For years prior to 1998, the Company was managed as one operating
 segment and there were no material individual segments.
Beginning in 1998, the Companys reportable segments
generally consist of a group of business units that are organized
 geographically. Each of the Companys six United States
geographic regions has a separate management team and
infrastructure, and offer different combinations of the
Companys services.

The segment disclosures required by SFAS No. 131 are
presented in Note 12 of Notes to Consolidated Financial
Statements included in this Form 10-K.






PRODUCTS AND SERVICES


Although there is significant overlap, the Companys
information management service offerings can generally be divided
 into the areas of image and data capture, data management and
output processing. The Companys image and data capture
services include the scanning and conversion of documents from a
variety of input media to a digital format. The Company also
provides traditional microfilm and microfiche services as well as
 on-site facility management services. The Companys data
management services include electronic document storage and
retrieval, database management and internet-based services, as
well as list manipulation, sorting services and information
search solutions so that customers data can be customized
and updated for specific target market mailings. The
Companys output processing services include print on
demand, business communications and statement processing
services.






CONTINUING OPERATIONS


The Company provides a broad range of image and data capture
services that enable it to meet its customers information
management outsourcing needs, including electronic conversion
services, micrographic conversion services, high volume and
quick-turn reprographics, and on-site facilities management. The
Companys experience and capabilities enable it to provide a
 broad range of document conversion services with respect to a
wide variety of input and output formats, including digital,
film, CD-ROM, optical disk, magnetic disk, aperture card and
hardcopy, including engineering drawings.

Electronic Conversion Services.A company
implementing a document storage and retrieval (DSR)
program frequently faces the challenge of converting hundreds of
thousands to millions of paper and/or microfilm documents to
digital format. These paper and microfilm documents can be
converted to indexed digital images or, using OCR technology,
into electronically recognizable text. The Companys
investments in advanced document scanners and imaging software
combined with its experience in scanning and converting documents
 typically enables the Company to perform this document
conversion process more efficiently and in significantly less
time than a potential customer. The Companys technical
support staff is skilled at assisting customers in developing
customized indexing systems and selecting optimal file formats
and naming conventions.

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Micrographics Conversion Services.The Company
performs traditional micrographic conversions including the
conversion of paper documents into microfilm images, film
processing, computer-based indexing and formatting of microfilm
images. Micrographic services often are selected as a cost
competitive technology to paper-based systems in order to reduce
the physical size of stored records, for their long term
(typically over 100 years) archival capabilities and as an
intermediate step in certain imaging or reprographics
applications.

High Volume, Quick-Turn Reprographics.The Company,
through its imaging centers, provides high volume, quick-turn
reprographics services 24 hours a day, seven days a week. In
addition, the Company possesses the capability to handle
reprographic projects including conversion services.

On-Site Facilities Management.The Company can equip,
staff and manage most aspects of a customers information
management needs at a customers facility. In addition to
copying and printing, Company employees perform file room
maintenance, decentralized copier management, facility mail and
courier services, and address list maintenance. Typically, the
Company will operate its own satellite production center (called
a Lason Servicenter) on the customers premises. By working
in partnership with a customer at the customers facility,
the Company and the customer frequently identify additional ways
the Company can help meet the customers information
management needs both on-site and at the Companys imaging
centers. The Company established its first Lason Servicenter in
1992 and currently provides on-site services at over 100
facilities.

Data management services include electronic document storage and
retrieval, database management and web-based services.

Electronic Document Storage and Retrieval.The Company has
 developed a flexible electronic DSR system, called Visions, that
 enables Lasons customers to obtain the benefits of
electronic document storage and retrieval without developing and
purchasing their own DSR system. By using Visions,
customers can access large volumes of documents immediately that
would be impossible using conventional filing systems. DSR
systems also provide rapid distribution of archived information
to multiple destinations and remove the logistical burden and
cost of archiving paper documents. Lasons Visions
system enables it to store and index a customers digital
documents whether the document was converted to digital format
from paper format or was originally produced in digital format.
Because stored documents can be indexed by several criteria, a
customer can use simple but exacting computer search techniques
to rapidly access individual documents or groups of documents.

Database Management Services.The Companys
sophisticated database management systems support data
manipulation, item sorting and information search solutions so
that various customers lists can be customized and updated
for specific target markets and targeted mailings. These database
 capabilities save customers money while increasing response
rates. These services are typically offered in conjunction with
other services the Company provides.

Internet-Based Services.The Companys Corporate
ID system allows customers and their employees to utilize the
 internet to manage and control the procurement of corporate
identification materials. Corporate ID provides fully
automated ordering, approval, tracking, manufacturing,
fulfillment and reporting to all of a customers designated
employees to ensure that all corporate materials ordered conform
to organizational guidelines.

The Company offers a variety of output processing services to its
 customers, which enables them to cost-effectively produce and
distribute large volumes of customized documents on short notice.

Digital Communication Services.Lasons customers
benefit from outsourcing their high volume communications needs
to the Company through improved turn-around time, reduced
production constraints and the flexibility and benefits provided
by using the latest software and mail handling processes.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Priority Gram. The Companys Priority
	Gram is a nationally recognized product that large volume
	mailers have found to be an effective mode of communication in a
	variety of applications. Among these customers are firms involved
	 in debt collection. The Company works with leading software
	vendors to provide credit institutions with an effective system
	of debt collection communications.

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | PROXYGRAM. The Companys PROXYGRAM serves
	 the time sensitive proxy solicitation sector of the financial
	services market. PROXYGRAMs solicit, collect, report and validate
	 shareholders proxy votes while providing flexibility to
	shareholders and cost savings and greater shareholder
	participation to customers. Outgoing messages to shareholders
	contain instructions on how to vote shares by a toll-free
	telephone call using a confidential identification number to
	assure shareholder verification and validity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Fax, Electronic Distribution, Print and Mail.The
	Companys business communication services provide customers
	with rapid, reliable and cost-effective methods for making
	large-scale distributions of statements, reports and letters to
	customer and other target audiences by fax, electronic
	distribution, print and mail. The Company develops customized
	programs for its customers to support event driven response
	requirements, such as product recall and credit card solicitation
	 campaigns. For example, the Company currently provides
	declination letter and incomplete application letter processing
	with respect to credit card applications for a leading credit
	card company. Such letters can be generated on a daily basis as
	the status of the customers application file requires. By
	combining volumes of mail from all of its customers and
	presorting such mail to United States Postal Service
	specifications, the Company is able to generate significant
	postal discounts for its customers. Each customer enjoys the
	maximum postal discounts allowed for First Class Mail
	regardless of the volume of mail sent by that customer. The
	Company can incorporate these savings in quotes to customers on
	its services.

Print on Demand Solutions.The Document Express (print on
demand) system enables customers to cost effectively produce and
distribute large volumes of a document on 24-hour notice. The
customer supplies the Company with either an electronic copy or a
 hard copy of the document, which the Company converts to an
electronic copy, which is then stored on the Document Express
system. The customer can then use its own computer system to
place a print order, including production amount and distribution
 method and location, and the Company completes the print and
distribution process.

The Document Express system offers an alternative to
traditional printing methods for companies which produce
documents that are subject to frequent revisions or unpredictable
 demand. Since conventional offset printing requires large
production runs to produce high quality documents in a
cost-effective manner, a company which utilizes offset printing
to print such documents runs the risk that it will find itself
with a costly inventory of outdated and useless documents. In
addition, the flexibility of the Document Express system
provides customers with an ability to increase the quality of
their product offerings by enabling them to make document
enhancements (such as corrections or improvements to product
manuals) which would otherwise be prohibitively expensive. The
Company believes that the demand for print on demand services by
manufacturers, financial and insurance institutions will continue
 to increase as technological advances create shorter product
life cycles and increased product variation.

International

With the completion of the M-R acquisition, the Company has
substantially increased its international operations in 1999. The
 international segment had net revenues of approximately
$56.0 million and pre tax income of approximately
$8.2 million in 1999.

Customers

The Company currently has over 10,000 customers primarily in the
commercial, healthcare, financial services and professional
services industries. The Company services accounts of all sizes,
from small business and professional groups to Fortune 100
companies. The Companys largest customers include
Fleetboston Financial Corporation, Blue Cross/ Blue Shield, Bank
One Corporation, First Union Corporation, VERITAS Software,
Ameritrade, Inc., Federal Express Corporation, Ford Motor
Company, General Electric Company, General Motors Corporation,
Nationsbank, Sears Roebuck and Co., Shell Oil Company, Her
Majestys Land Registry and Trans Union. No single customer
accounted for more than 10% of the Companys total
consolidated net revenues in 1999.

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Competition

The Companys businesses are highly competitive. A
significant source of competition is the in-house document
handling capability of the Companys target customer base.
In addition, with respect to those services that are outsourced,
the Company has a variety of competitors, including large
national or multinational companies, which have greater financial
 resources than the Company, and small regional or local
companies. The Companys major competitors, in addition to
various regional competitors, include IKON Office Solutions,
Inc., Pitney Bowes Management Services, Inc. (a subsidiary of
Pitney Bowes, Inc.) and Xerox Business Services, with respect to
its image and data capture services; Dataplex Corp., F.Y.I.
Incorporated and IKON Office Solutions, Inc., with respect to its
 database management services; and First Financial Management
Corp. (First Image), Sun Guard Mailing Services and Output
Technology Solutions, with respect to its output processing
services. The Companys businesses compete on the basis of
price, service and innovation.

Proprietary Rights and Processes

The Company regards the systems, information and know-how
underlying its services as proprietary and relies primarily on a
combination of contract, trade secrets, confidentiality
agreements and contractual provisions to protect its rights. The
Companys business is not materially dependent on any
patents. Despite the Companys efforts to protect its
proprietary rights, unauthorized parties may attempt to obtain
and use information that the Company regards as proprietary, and
policing unauthorized use of the Companys proprietary
information is difficult. Litigation may be necessary for the
Company to protect its proprietary information and could result
in substantial cost to, and diversion by, the Company.

Environmental Matters

The Company is subject to federal, state and local laws,
regulations and ordinances that: (i) govern activities or
operations that may have adverse environmental effects, such as
discharges to air and water, as well as handling and disposal
practices for solid and hazardous wastes; or (ii) impose
liability for the costs of cleaning up, and certain damages
resulting from, sites of past spills, disposal or other release
of solid wastes and hazardous substances.

The Company is not aware of any environmental conditions that
would be likely to have a material adverse effect on the
business, financial condition or results of operations of the
Company. However, there can be no assurance that environmental
liabilities in the future will not have a material adverse effect
 on the business, financial condition or results of operations of
 the Company.

Employees

As of March 24, 2000, the Company had approximately
10,300 employees, including approximately 4,000 in foreign
countries. No domestic employees of the Company are represented
by a labor union, however, some foreign employees are represented
 by local labor unions in certain countries. The Company
considers its relationship with its employees to be good.

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Executive Officers of the Registrant

The following table sets forth certain information concerning the
 Companys executive officers as of March 24, 2000:

|                      |  |     |    |          |  |                                                                                    |  |  |      | 
|--------------------- |  | --- | -- | -------- |  | ---------------------------------------------------------------------------------- |  |  | ---- | 
|                      |  |     |    |          |  | Executive                                                                         
|Name                  |  | Age |    | Position |  | Officer Since                                                                     
|                      |  |     |    |          |  |                                                                                   
|Gary L. Monroe        |  |     | 45 |          |  | Chairman of the Board and Chief Executive Officer, Director                        |  |  | 1995 | 
|                     
|                     
|                     
|                     
|William J. Rauwerdink |  |     | 50 |          |  | Executive Vice President, Chief Financial Officer, Treasurer,
	Secretary, Director |  |  | 1996 | 
|                     
|                     
|                     
|                     
|John R. Messinger     |  |     | 42 |          |  | President and Chief Operating Officer                                              |  |  | 1998 | 
|                     
|                     
|                     
|                     
|Randy L. Baker        |  |     | 43 |          |  | Executive Vice President  Human Resources and Business
	 Integration              |  |  | 1999 | 

Gary L. Monroe has served as Chairman of the Board
of the Company since April 1998, President of the Company
from April 1997 to January 1999, as Chief Executive
Officer of the Company since February 1996 and as a Director
 of the Company since he joined the Company in
September 1995. From September 1995 to
February 1996, Mr. Monroe served as Executive Vice
President of the Company. From May 1992 to
September 1995, Mr. Monroe served as President of Kodak
 Imaging Services, Inc., a subsidiary of Eastman Kodak Co.
Mr. Monroe is employed pursuant to an employment agreement
for a two year period ending May 31, 2001.

William J. Rauwerdink has served as Executive Vice
President, Chief Financial Officer, Treasurer and Secretary of
the Company since he joined the Company in May 1996 and as a
 director of the Company since May 1999. Mr. Rauwerdink
 is employed at the discretion of the Board. From
February 1993 to April 1995, Mr. Rauwerdink served
 as Executive Vice President, Chief Financial Officer and
Treasurer of The MEDSTAT Group, Inc., a publicly traded company
in the healthcare information industry. Mr. Rauwerdink was a
 partner with the Detroit office of the international accounting
and consulting firm of Deloitte & Touche from 1983 to 1993.
Mr. Rauwerdink is a certified public accountant.
Mr. Rauwerdink is also a director of Mercy Health Services,
Inc., a non-profit multistate health care services organization.

On December 11, 1995, Mr. Rauwerdink consented to the
entry of an order enjoining him from violating certain antifraud
and tender offer provisions of the federal securities laws. The
order required him to give up profits and pay penalties and
interest totaling approximately $225,000. He neither admitted nor
 denied the allegations made in the proceeding.

The proceeding involved the rollover of certain funds from a
former employers profit sharing plan. The investment
directions made in connection with the rollover into
Mr. Rauwerdinks 401(k) account at his new employer
specified that the investment of such funds be made 50% in the
stock of his employer and 50% in other investments in his 401(k)
account and resulted in the purchase of shares of common stock of
 the new employer at the time when it was alleged that the
employer was engaged in merger negotiations. The shares purchased
 in the rollover transaction constituted approximately 8% of Mr.
Rauwerdinks total holdings in his new employers
common stock.

John R. Messinger has served as an officer of the
Company since he joined the Company in July 1997 and is the
Companys President and Chief Operating Officer.
Mr. Messinger is employed pursuant to an employment
agreement for a two year period ending January 31, 2001.
From November 1995 to July 1997, Mr. Messinger
served as President and Director of Image Conversion Services,
Inc. From 1983 to November 1995, Mr. Messinger served in
various positions with Anacomp, Inc., including Group President,
Regional Vice President and District Manager.

Randy L. Baker has served as Executive Vice
President  Human Resources and Business Integration,
since he joined the Company in July 1999. Mr. Baker is
employed at the discretion of the Board. From January 1998
to April 1999, he served as Senior Vice President, Human
Resources, for Republic Industries, a publicly traded company in
the automotive retail and automotive rental industry. Beginning
in January 1995

8



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##### Table of Contents





ITEM 2.  PROPERTY

The Company has operations in 29 U.S. states, the United
Kingdom, Canada, Mexico, India, Maritius and the Caribbean.
Except for two facilities that are owned by the Company, all the
facilities are leased and are used for operations and general
administrative functions. The Company also operates over
100 facility management sites located on customers
premises.

ITEM 3.  LEGAL PROCEEDINGS

On December 21, 1999 and various dates thereafter, several
individuals filed complaints against the Company and certain
executive officers in various United States District Courts. The
complaints purport to be brought as class actions on behalf of
purchasers of shares of the Companys common stock during
periods ranging from August 14, 1998, through
December 17, 1999. The complaints generally allege that the
Company and certain of its officers made public statements
containing material omissions or misrepresentations which created
 the misleading impression that the Companys revenues and
earnings were on target with market forecasts and consequently
artificially inflated the market price of the shares of the
Companys common stock. The complaints allege violations of
the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder, and one complaint alleges violations of
the Securities Act of 1933. The complaints seek unspecified
damages allegedly incurred as a result of the decline in the
market price of shares of the Companys common stock after
the Company announced on December 17, 1999 that it expected
lower fourth quarter earnings per share compared with concensus
analysts estimates.

These actions are in a preliminary stage. However, the Company
believes, based on the advice of outside legal counsel, that it
and the named officers have substantial defenses to the
plaintiffs claims, and the Company intends to vigorously
defend these claims. While the final resolution of this
litigation cannot be presently determined, management does not
believe it will have a material adverse effect on the
Companys business, or the future consolidated financial
statements, although such adverse effect could be possible.

Various other claims have been made against the Company in the
normal course of business. Management believes that none of those
 legal proceedings will have a material adverse effect on the
Companys business, financial condition or results of
operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

There were no matters submitted to a vote of the Companys
shareholders during the fourth quarter of 1999.

9



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##### Table of Contents








PART II




|        |                                                                       
|------- | ----------------------------------------------------------------------
|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
	STOCKHOLDER MATTERS

The Companys common stock is traded on the Nasdaq National
Market System under the symbol LSON. As of
March 24, 2000, there were approximately 2,660 holders of
the Companys common stock.

The quarterly trading range for shares of the Companys
common stock during 1999 and 1998 is presented below:

|               |  |      |    |      |  |      |    |       |  |   |    |     |  |   |    |    
|-------------- |  | ---- | -- | ---- |  | ---- | -- | ----- |  | - | -- | --- |  | - | -- | ---
|               |  |      |    |     
|               |  | 1999 |    | 1998
|               |  |      |    |     
|               |  | High |    | Low  |  | High |    | Low  
|               |  |      |    |      |  |      |    |      
|Quarter Ended: |  |      |    |      |  |      |    |       |  |   |    |     |  |   |    |    
|              
|              
|              
|              
|December 31    |  | $    | 44 | 3/4  |  | $    | 9  | 3/4   |  | $ | 64 | 5/8 |  | $ | 42 | 1/4
|              
|              
|              
|              
|September 30   |  |      | 50 | 1/2  |  |      | 40 | 1/2   |  |   | 58 | 1/2 |  |   | 39 |    
|              
|              
|              
|              
|June 30        |  |      | 57 |      |  |      | 31 | 31/64 |  |   | 54 | 1/2 |  |   | 35 | 1/2
|              
|              
|              
|              
|March 31       |  |      | 68 | 1/4  |  |      | 52 |       |  |   | 38 | 3/4 |  |   | 25 | 1/8

The Company intends to retain any earnings to finance operations
and expansion and, therefore, does not anticipate paying any cash
 dividends on its common stock in the foreseeable future. Cash
dividends, if any, would be determined by the Board of Directors
and would be based on the Companys earnings, capital
requirements, financial condition and other factors deemed
relevant by the Board of Directors. Except for certain
constructive dividends related to partial forgiveness of certain
shareholder loans in connection with its initial public offering,
 the Company has not paid any dividends on its capital stock.

In the fourth quarter of 1999, in connection with the acquisition
 of the shares of a company and as a partial payment of the
purchase price, the Company issued 19,537 shares of its common
stock valued at approximately $900,000. The shares were issued at
 $46.06 per share.

In the fourth quarter of 1999, the Company issued 93,032 shares
of its common stock to owners of companies Lason had previously
acquired as additional consideration for the achievement of
certain target levels of financial performance after the
respective acquisition. The shares were issued at per share
prices ranging from $31.68 to $45.30, for an aggregate value of
approximately $3,026,500.

The issuance of the securities described in the two prior
paragraphs was exempt from registration under the Securities Act
of 1933 by virtue of Section 4 (2) thereof as
transactions not involving a public offering.

10



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##### Table of Contents





|        |                        
|------- | -----------------------
|ITEM 6. | SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial
data of the Company and includes the financial results of M-R
since June 30, 1999, the date the acquisition was completed
using the purchase method of accounting. The selected
consolidated financial data presented below have been derived
from the Companys consolidated financial statements which
have been audited by PricewaterhouseCoopers, LLP as described in
their report thereon and should be read in conjunction with
Managements Discussion and Analysis of Financial Condition
and Results of Operations and the consolidated financial
statements and notes thereto included in this Form 10-K.

|                                                       |         |                         |         |       |   |      |         |      |  |      |         |      |  |   |        |      |  |   |        |      | 
|------------------------------------------------------ | ------- | ----------------------- | ------- | ----- | - | ---- | ------- | ---- |  | ---- | ------- | ---- |  | - | ------ | ---- |  | - | ------ | ---- | 
|                                                       |         |                        
|                                                       |         | Year Ended December 31,
|                                                       |         |                        
|                                                       |         | 1999                    |         | 1998  |   | 1997 |         | 1996 |  | 1995
|                                                       |         |                         |         |       |   |      |         |      |  |     
|Revenue, net of postage                                |         | $                       | 479,594 |       |   | $    | 258,782 |      |  | $    | 112,099 |      |  | $ | 69,937 |      |  | $ | 46,605 |     
|                                                      
|                                                      
|                                                      
|                                                      
|Net income (loss) from continuing operations           |         |                         | (10,842 | )     |   |      | 18,044  |      |  |      | 8,427   |      |  |   | 3,731  |      |  |   | 2,014  |     
|                                                      
|                                                      
|                                                      
|                                                      
|Earnings (loss) per share from continuing
	operations: |         |                         |         |       |   |      |         |      |  |      |         |      |  |   |        |      |  |   |        |     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Basic   |                         |         | (0.65 | ) |      |         | 1.42 |  |      |         | 0.87 |  |   |        | 0.59 |  |   |        | 0.35 | 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Diluted |                         |         | (0.65 | ) |      |         | 1.33 |  |      |         | 0.84 |  |   |        | 0.55 |  |   |        | 0.33 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Working capital                                        |         |                         | 60,861  |       |   |      | 39,925  |      |  |      | 29,839  |      |  |   | 16,653 |      |  |   | 5,141  |     
|                                                      
|                                                      
|                                                      
|                                                      
|Total assets                                           |         |                         | 836,432 |       |   |      | 431,685 |      |  |      | 177,899 |      |  |   | 78,546 |      |  |   | 37,309 |     
|                                                      
|                                                      
|                                                      
|                                                      
|Long term debt, less current portion                   |         |                         | 138,750 |       |   |      |        |      |  |      |        |      |  |   |       |      |  |   | 11,500 |     
|                                                      
|                                                      
|                                                      
|                                                      
|Revolving credit line borrowings                       |         |                         | 134,000 |       |   |      | 59,000  |      |  |      | 13,550  |      |  |   | 4,101  |      |  |   | 7,277  |     
|                                                      
|                                                      
|                                                      
|                                                      
|Total stockholders equity(1)                          |         |                         | 419,522 |       |   |      | 284,938 |      |  |      | 131,545 |      |  |   | 57,006 |      |  |   | 9,214  |     




|    |                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes the net proceeds from an initial public offering and
	redemption of shares of common stock during the fourth quarter of
	 1996 and the net proceeds from secondary offerings of shares of
	common stock in the third quarters of both 1998 and 1997. Also
	included are the shares of common stock issued in connection with
	 the acquisition of M-R.



|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
	CONDITION AND RESULTS OF OPERATIONS

Overview

Lason is a leading provider of information management services.
The Companys strategy is to process information in the
following ways: (1) To provide integrated solutions that
capture information across a variety of formats; (2) to
manage information through database development; (3) to
manage information through electronic storage and retrieval
services; and (4) to disseminate information through
hardcopy output, print on demand and electronic formats.

Lasons capability to capture, manage and output information
 includes both traditional and digital services that support
customer migration to new technologies including internal-based
applications.

E-Commerce

Lasons e-business represents the services and products the
Company provides that are initially transacted via the internet
or web. These offerings can be delivered in either a land based
or electronic mode. The Companys e-commerce business will
be transacted via the Companys worldwide portal, called
Lason Exchange. By using Lason Exchange, the Companys
customers will be able to order products and services directly
via the web without having to interface with the Companys
employees. This will improve the delivery of services and
products to the Companys customers, while reducing the
Companys cost of sales and distribution. Products initially
 targeted for Lason Exchange include equipment and supplies for
document imaging, digital reprographics, digital print and the
Companys internal office supply requirements.

In December 1999, the Company announced that its Board of
Directors had authorized the engagement of investment bankers to
explore the spin-off, or other means, to capitalize on
Lasons existing e-commerce

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Acquisitions

Since 1995, the Company has acquired a significant number of
businesses. The information management industry is highly
fragmented, consisting of a large number of small companies
providing limited service offerings. An important element of the
Companys growth strategy to date has been to selectively
make acquisitions of companies with complementary technologies or
 customer bases to consolidate its position as a provider of
comprehensive information management services across a broad
geographic area. However, as part of the Companys
restructuring, management has now shifted its focus away from
acquisitions and has accelerated the integration of its
businesses to enhance the Companys future profitability.
Accordingly, business acquisitions are not expected to be a
significant part of the Companys growth and operating
strategy going forward.

Results of Operations  Year Ended December 31,
 1999 Compared With Year Ended December 31, 1998

Consolidated net revenues increased 85% to $479.6 million
for the year ended December 31, 1999 from
$258.8 million in 1998. Approximately $209.5 million of the
increase was due to acquisitions and approximately
$11.3 million was due to growth in the Companys
existing business, excluding the results of discontinued
operations. Revenue growth from the Companys existing
business was negatively affected by a slow down in fourth quarter
 sales largely the result of delays in certain integrated systems
 sales due to customer Y2K concerns, several contracts not
reaching expected revenue estimates and the performance of
discontinued operations and other operations to be sold or
eliminated.

Gross profit increased to $153.3 million for the year ended
December 31, 1999 from $90.3 million in 1998 primarily due
to an increase in net revenues. Gross profit as a percentage of
net revenues was 32% in 1999 compared to 35% in 1998. The lower
gross profit percentage in 1999 is primarily the result of the
effects caused by lower sales at certain business units that have
 relatively fixed production costs.

Selling, general and administrative expenses increased
$64.6 million to $115.8 million in 1999 from
$51.2 million in 1998. Approximately $42.3 million was
due to selling, general and administrative expenses of acquired
companies. The remaining increase was due to personnel, systems
and other corporate overhead expenses associated with managing a
larger consolidated organization. Selling, general and
administrative expenses as a percentage of net revenues were 24%
in 1999 versus 20% in 1998.

Amortization of intangibles increased $9.9 million to $15.5
million for the year ended December 31, 1999 from
$5.6 million in 1998. The increase is due to acquisitions
completed in 1999, of which amortization related to the M-R
merger accounted for approximately $2.2 million during the
second half of 1999. In addition, approximately $1.2 million
 of the amortization increase was due to recording the aggregate
additional purchase price resulting from acquired businesses
achieving their targeted operating income or other measure during
 the year.

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 M-R merger, the Company recorded a $7.8
million pre tax restructuring charge during the second quarter of
 1999 for costs associated with discontinued leases, the
consolidation of facilities, severance and other related expenses
 for Lason facilities which were to be closed or consolidated
with M-R facilities. For 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 423
employees have been separated from the Company as of
December 31, 1999.

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##### Table of Contents



In the fourth quarter of 1999, management completed a thorough
review of its operations and approved a restructuring plan to
make the Company more efficient and to lower overall costs. These
 decisions resulted in the Company recording a one-time pre tax
charge to operations of $14.9 million in the fourth quarter
of 1999. The charge consisted of severance costs
($1.7 million), facility closure and exit costs related
primarily to discontinued leases ($11.6 million) and equipment
write-downs ($1.6 million). The restructuring plan calls for the
consolidation of facilities and operations, the closure of
facilities, and the streamlining of the administrative support
functions.

In December 1999, Lason announced its intention to
discontinue, by sale or exit from the market, its activities
providing traditional litigation support, software development
and other analog services. Those services are no longer
consistent with Lasons long-term growth strategy as they
are largely analog and are expected to have slow long-term
growth. The businesses to be discontinued consist of nine
litigation copy businesses, an offset print business, a digital
graphics business and the software development business that was
acquired as part of the M-R acquisition in 1999. The results of
operations of these businesses have been classified as
discontinued operations in the Companys consolidated
financial statements. Combined, these businesses had net revenue
of approximately $33.0 million for the year ended
December 31, 1999 compared to approximately
$21.0 million in 1998. The discontinued operations reported
a net loss of approximately $4.3 million in 1999 and net
income of $191,000 in 1998. The significant decrease in net
income for these businesses in 1999 primarily relates to
operating losses sustained by the offset print business and the
operating loss of the software development business acquired as
part of the M-R transaction. The net assets of the discontinued
businesses primarily consist of accounts receivable and goodwill,
 and have been segregated as net assets of discontinued
operations, net of allowance for estimated loss on disposal, in
the Companys consolidated balance sheet as of
December 31, 1999. The Company has engaged brokers and is
actively marketing these businesses. Management estimates that
the Company will incur a net loss of approximately
$21.1 million, including an estimated tax benefit of $11.3
million, on the disposal of these businesses. The estimated loss
on disposal includes the write down of goodwill totaling
approximately $34.1 million. Management anticipates that the
 sale or exit from these businesses will be completed during
2000.

Net interest expense was $11.1 million in 1999 versus
$3.4 million in 1998. The increase primarily is due to
higher average debt balances outstanding resulting from
significant business acquisitions partially offset by the effects
 of lower average borrowing rates during 1999.

The majority of the Companys goodwill amortization expense
is not deductible for federal income tax purposes. As a result,
the Company has recorded an income tax benefit of
$1.0 million on a loss of $11.9 million from continuing
 operations in 1999.

Results of Operations  Year Ended December 31,
 1998 Compared With Year Ended December 31, 1997

Consolidated net revenues increased 131% to $258.8 million
for the year ended December 31, 1998 from
$112.1 million in 1997. Approximately $128.2 million of the
increase was due to acquisitions and approximately
$18.5 million was due to growth in the Companys
existing businesses excluding the results of discontinued
operations. The majority of the internal growth came from the
image and data capture and data management business, and was
partially offset by the effects of certain discontinued services.

Gross profit increased to $90.3 million for the year ended
December 31, 1998 from $36.2 million in 1997 primarily
due to an increase in net revenues. Gross profit as a percentage
of net revenues was 35% for the year ended December 31, 1998
compared to 32% in 1997.

Selling, general and administrative expenses increased
$31.6 million to $51.2 million for the year ended
December 31, 1998 from $19.6 million in 1997.
Approximately $22.8 million of the increase was selling,
general and administrative expenses of acquired companies. The
remaining increase was primarily due to personnel, systems and
other corporate overhead expenses associated with managing a
larger consolidated organization. Selling, general and
administrative expenses as a percentage of net revenues were 20%
in 1998 versus 18% in 1997.

13



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##### Table of Contents



Amortization of intangibles increased to $5.6 million for
the year ended December 31, 1998 from $2.3 million in
1997 primarily due to an increase in goodwill related to business
 acquisitions completed in 1998.

Net interest expense was $3.4 million for the year ended
December 31, 1998 compared to $869,000 in 1997. The increase
 is primarily due to higher average borrowing balances resulting
from borrowings used to fund business acquisitions in 1998.

Revenue from discontinued operations was $21.0 million in
1998 compared to $8.2 million in 1997. Approximately
$6.0 million of the increase was due to businesses acquired
in 1998. The remaining increase was due to higher net revenue
from the discontinued offset business, not acquired until the
fourth quarter of 1997. Net income of discontinued operations was
 $191,000 in 1998 compared to $643,000 in 1997.

Liquidity and Capital Resources

The Company has funded its operations and acquisitions through a
combination of cash from operations, bank borrowings and the
issuance of shares of common stock.

Cash provided by operating activities was $12.7 million for
the year ended December 31, 1999 compared to
$8.9 million and $3.4 million in 1998 and 1997,
respectively. The year over year increase is largely due to
higher net income before non-cash charges and faster accounts
receivable turnover, partially offset by a decrease in accounts
payable and other short-term liabilities.

Cash used in investing activities totaled $203.2 million,
$176.4 million and $68.3 million for the years ended
December 31, 1999, 1998 and 1997, respectively, and was
primarily used to fund the acquisition of businesses and to
invest in capital assets. Cash used for acquisitions totaled
$163.4 million in 1999 compared to $149.7 million in
1998 and $57.3 million in 1997. Cash used to invest in
capital equipment and software development activities totaled
$41.6 million in 1999 compared to $26.3 million and
$11.8 million in 1998 and 1997, respectively. During 1999,
1998 and 1997, the Company invested approximately
$7.0 million, $4.6 million and $1.4 million,
respectively, in the development and implementation of computer
software primarily to support the Companys global
information processing needs. The increase in 1999 is largely
attributed to costs associated with the Companys Y2K
compliance program, development of a virtual private network and
installation and implementation of new company-wide accounting
and human resources information management systems during the
year.

Cash provided by financing activities was $198.7 million in
1999 compared to $165.8 million in 1998 and
$67.7 million in 1997. In 1999, cash was provided primarily
by borrowings from the Companys revolving credit line and
term loan which were used to fund business acquisitions and for
general working capital purposes. Also during 1999 the Company
repaid $18.6 million of short-term promissory notes relating
 to certain business acquisitions the Company completed in the
fourth quarter of 1998.

Credit Agreement Borrowings

During 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. The Company supplemented this credit agreement in
December 1999 with a $25 million expansion to the revolving
credit facility which expires March 30, 2000. 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 the additional
purchase price for certain acquisitions, working capital, capital
 expenditures and other corporate purposes. Borrowings under the
credit agreement are collateralized 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

14



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##### Table of Contents





On March 30, 2000, the Company amended its Credit agreement with
its lenders. The amendment increased the revolving credit
facility from $150 million to $175 million, which may
be further increased up to $185 million. As of
March 22, 2000, $317.4 million was borrowed under the
credit agreement.

Future Capital Needs

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 agreement, will be sufficient to meet debt
 services requirements 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.

In addition to its operational needs, the Company has cash
requirements related to additional purchase price payments (the
Payments) to be made, contingent upon certain targets
 being achieved, in connection with prior acquisitions. The
maximum amount of the Payments, if any, that could be paid over a
 period of twenty seven months from December 31, 1999 totals
 approximately $217.7 million. It is anticipated that the
actual amount of the Payments will be less than the maximum
amount. The ability of the Company to make the Payments is
dependent on the availability of financing, and there can be no
assurance that future financing will be available or that the
terms of any future financing will be favorable to the Company.
See Note 5 of the Notes to Consolidated Financial Statements

Year 2000

Lason has not experienced any significant Year 2000 related
disruptions to its operations. The costs of the Companys
Year 2000 program were expensed as incurred except for
capitalizable replacement hardware and computer software. Year
2000 program costs incurred in 2000 are not expected to be
material.

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 has generally 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.



|         |                                                           
|-------- | ----------------------------------------------------------
|ITEM 7A. | QUANTITATIVE 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
December 31, 1999 of approximately $284.0 million, 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 $2.8 million on an
 annualized basis.

Due to Lasons operations outside of the United States, the
Company experiences foreign currency exchange gains and losses.
Fluctuations between the United States dollar and other
currencies may adversely affect Lasons results of
operations. While the Company may engage in foreign currency
hedging transactions in the future which may moderate the overall
 effect of such currency rate fluctuations, the Company will be
affected by such fluctuations, and there is no assurance that the
 Company will be successful in any hedging

15



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##### Table of Contents





ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

The financial statements and supplemental financial information
included in this report are set forth on the Index to Financial
Statements and Financial Statement Schedules included in this
report.



|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
	AND FINANCIAL DISCLOSURE

None

16



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##### Table of Contents








PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

A.  DIRECTORS

Reported under the caption Information about Nominees and
Incumbent Directors and Section 16(a) Beneficial
 Ownership Reporting Compliance in the Companys 2000
Proxy Statement, herein incorporated by reference.

B.  EXECUTIVE OFFICERS

Reported in Part 1 pursuant to General Instruction G to
Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

Reported under the caption Executive Compensation in
the Companys 2000 Proxy Statement, herein incorporated by
reference.



|         |                                                               
|-------- | --------------------------------------------------------------
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Reported under the caption Questions and Answers and
Security Ownership of Management in the
Companys 2000 Proxy Statement, herein incorporated by
reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Reported under the caption Certain Transactions With
Management in the Companys 2000 Proxy Statement,
herein incorporated by reference.

17



---



##### Table of Contents








PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K

A.  (1)  Consolidated Financial Statements

The consolidated financial statements applicable to the Company
and its consolidated affiliates filed with this report are set
forth on the Index to Consolidated Financial Statements and
Consolidated Financial Statement Schedules of this report.

(2) Consolidated Financial Statement
Schedules

The consolidated financial statement schedule and report of
independent accountants have been filed as part of this Annual
Report on Form 10-K as indicated in the Index to
Consolidated Financial Statements and Consolidated Financial
Statement Schedules of this report.

(3) Exhibits

The following exhibits are filed as part of this report as
required by Item 601 of Regulation S-K. The exhibits
marked with an asterisk are management contracts and compensatory
 plans are arrangements required to be filed as exhibits to this
report.

|            |        |             |  |                                                                                                                                                                                                                  
|----------- | ------ | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |        | 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 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)
|            | 4.4    |             |  | Second Amendment to Third Amended and Restated Credit
	Agreement                                                                                                                                                
|            | 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)                                                                                                                                        

18



---



##### Table of Contents



|            |        |             |  |                                                                                                                      
|----------- | ------ | ----------- |  | ---------------------------------------------------------------------------------------------------------------------
|Exhibit No. |        | Description
|            |        |            
|            | 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)                                                  
|            | 21.1   |             |  | Subsidiaries of the Company                                                                                         
|            | 23.1   |             |  | Consent of PricewaterhouseCoopers LLP                                                                               
|            | 23.2   |             |  | Consent of Deloitte & Touche LLP                                                                                    
|            | 24.1   |             |  | Powers of attorney                                                                                                  
|            | 27.1   |             |  | Financial Data Schedule                                                                                             
|            | 27.2   |             |  | Financial Data Schedule. (12/31/98  Restated)                                                                      
|            | 27.3   |             |  | Financial Data Schedule (12/31/97  Restated)                                                                       
|            | 99.    |             |  | Auditors Report of Deloitte & Touche LLP                                                                           








| |     |                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------
| | (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.                          
|   
|(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.

19



---



##### Table of Contents



B.  Reports on Form 8-K

On January 5, 2000, the Company filed a Form 8-K,
disclosing in Item 5 the nature of certain complaints filed
against the Company. Such complaints are discussed further in
Item 3 of this Form 10-K.

On January 19, 2000, the Company filed a Form 8-K,
disclosing in Item 5 that the Company had taken certain
actions which required a change to the purchase method of
accounting for the acquisition of M-R Group plc.

20



---



##### Table of Contents



LASON, INC.






INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND


CONSOLIDATED FINANCIAL STATEMENT SCHEDULES


|                                                                                                                             |  |  |             | 
|---------------------------------------------------------------------------------------------------------------------------- |  |  | ----------- | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Financial Statements:                                                                                                        |  |  |             | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Consolidated Balance Sheets as of December 31, 1999 and 1998                                                                 |  |  | F-1         | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Consolidated Statements of Operations and Comprehensive Income
	for each of the years ended December 31, 1999, 1998 and 1997 |  |  | F-2         | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Consolidated Statements of Stockholders Equity for each of
	the years ended December 31, 1999, 1998 and 1997                |  |  | F-3         | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Consolidated Statements of Cash Flows for each of the years ended
	 December 31, 1999, 1998 and 1997                         |  |  | F-4         | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Notes to consolidated financial statements                                                                                   |  |  | F-5 to F-21 | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Other Financial Information:                                                                                                 |  |  |             | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Report of independent accountants                                                                                            |  |  | F-22        | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|Financial Statement Schedule:                                                                                                |  |  |             | 
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|                                                                                                                            
|I. Condensed financial information of registrant                                                                             |  |  | S-1 to S-3  | 

All other schedules are omitted as not applicable or the
information is included in the consolidated financial statements
or notes thereto.



---



##### Table of Contents



LASON, INC.






CONSOLIDATED BALANCE SHEETS


(In thousands, except for shares)


|                                                                                                                                                                                 |                                |              |         |         |   |   |         |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | ------------ | ------- | ------- | - | - | ------- | ------- | -
|                                                                                                                                                                                 |                                |             
|                                                                                                                                                                                 |                                | December 31,
|                                                                                                                                                                                 |                                |             
|                                                                                                                                                                                 |                                | 1999         |         | 1998   
|                                                                                                                                                                                 |                                |              |         |        
|ASSETS                                                                                                                                                                           |                                |              |         |         |   |   |         |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Cash and cash equivalents                                                                                                                                                        |                                | $            | 9,753   |         |   | $ | 1,315   |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Accounts receivable (net of allowance for doubtful accounts of
	$13,675 and $6,194)                                                                                              |                                |              | 117,760 |         |   |   | 86,073  |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Supplies                                                                                                                                                                         |                                |              | 13,181  |         |   |   | 10,144  |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Deferred income taxes                                                                                                                                                            |                                |              | 5,861   |         |   |   |        |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Net assets of discontinued operations                                                                                                                                            |                                |              | 18,682  |         |   |   |        |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Prepaid expense and other                                                                                                                                                        |                                |              | 27,541  |         |   |   | 16,028  |        
|                                                                                                                                                                                 |                                |              |         |         |   |   |         |        
|                                                                                                                                                                                 | Total current assets           |              |         | 192,778 |   |   |         | 113,560 |  
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Computer equipment and software                                                                                                                                                  |                                |              | 28,515  |         |   |   | 14,890  |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Production and office equipment                                                                                                                                                  |                                |              | 74,108  |         |   |   | 48,855  |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Leasehold improvements                                                                                                                                                           |                                |              | 13,155  |         |   |   | 6,333   |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Other                                                                                                                                                                            |                                |              | 12,013  |         |   |   | 1,352   |        
|                                                                                                                                                                                 |                                |              |         |         |   |   |         |        
|                                                                                                                                                                                 |                                |              | 127,791 |         |   |   | 71,430  |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                 | Less: accumulated depreciation |              |         | (21,689 | ) |   |         | (9,765  | )
|                                                                                                                                                                                 |                                |              |         |         |   |   |         |        
|                                                                                                                                                                                 | Net property and equipment     |              |         | 106,102 |   |   |         | 61,665  |  
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Deferred income taxes                                                                                                                                                            |                                |              | 207     |         |   |   |        |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Goodwill (net of accumulated amortization of $23,277 and $9,235)                                                                                                                 |                                |              | 509,255 |         |   |   | 241,710 |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Other intangibles (net of accumulated amortization of $3,630 and
	$1,005)                                                                                                        |                                |              | 19,891  |         |   |   | 10,690  |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Employee loans receivable                                                                                                                                                        |                                |              | 3,168   |         |   |   | 1,698   |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Other                                                                                                                                                                            |                                |              | 5,031   |         |   |   | 2,362   |        
|                                                                                                                                                                                 |                                |              |         |         |   |   |         |        
|                                                                                                                                                                                 | Total assets                   |              | $       | 836,432 |   |   | $       | 431,685 |  
|                                                                                                                                                                                 |                                |              |         |         |   |   |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                             |                                |              |         |         |   |   |         |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Accrued expenses                                                                                                                                                                 |                                | $            | 47,575  |         |   | $ | 13,466  |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Accounts payable                                                                                                                                                                 |                                |              | 27,816  |         |   |   | 17,332  |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Notes payable                                                                                                                                                                    |                                |              | 294     |         |   |   | 18,906  |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Acquisition-related obligations                                                                                                                                                  |                                |              | 16,580  |         |   |   | 7,235   |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Accrued restructuring expenses                                                                                                                                                   |                                |              | 13,310  |         |   |   |        |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Customer deposits                                                                                                                                                                |                                |              | 6,079   |         |   |   | 6,015   |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Deferred income taxes                                                                                                                                                            |                                |              |        |         |   |   | 918     |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Current portion of term loan                                                                                                                                                     |                                |              | 11,250  |         |   |   |        |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Other                                                                                                                                                                            |                                |              | 9,013   |         |   |   | 9,763   |        
|                                                                                                                                                                                 |                                |              |         |         |   |   |         |        
|                                                                                                                                                                                 | Total current liabilities      |              |         | 131,917 |   |   |         | 73,635  |  
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Revolving credit line borrowings                                                                                                                                                 |                                |              | 134,000 |         |   |   | 59,000  |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Term loan                                                                                                                                                                        |                                |              | 138,750 |         |   |   |        |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Deferred income taxes                                                                                                                                                            |                                |              | 1,299   |         |   |   | 2,101   |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Convertible debentures                                                                                                                                                           |                                |              | 3,034   |         |   |   | 1,169   |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Other                                                                                                                                                                            |                                |              | 7,910   |         |   |   | 10,842  |        
|                                                                                                                                                                                 |                                |              |         |         |   |   |         |        
|Total liabilities                                                                                                                                                                |                                |              | 416,910 |         |   |   | 146,747 |        
|                                                                                                                                                                                 |                                |              |         |         |   |   |         |        
|Stockholders Equity                                                                                                                                                             |                                |              |         |         |   |   |         |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Common Stock, $.01 par value; 100,000,000 and 20,000,000 shares
	authorized, 18,986,910 and 15,378,375 shares issued and
	outstanding, 698,712 and 686,865 shares held in escrow |                                |              | 182     |         |   |   | 146     |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Preferred stock, $.01 par value, 5,000,000 shares authorized,
	none issued and outstanding                                                                                       |                                |              |        |         |   |   |        |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Additional paid-in capital                                                                                                                                                       |                                |              | 421,544 |         |   |   | 252,479 |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Accumulated other comprehensive income                                                                                                                                           |                                |              | 7,314   |         |   |   |        |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Treasury stock                                                                                                                                                                   |                                |              | (5,541  | )       |   |   |        |        
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|Retained earnings (deficit)                                                                                                                                                      |                                |              | (3,977  | )       |   |   | 32,313  |        
|                                                                                                                                                                                 |                                |              |         |         |   |   |         |        
|                                                                                                                                                                                 | Total stockholders equity     |              |         | 419,522 |   |   |         | 284,938 |  
|                                                                                                                                                                                 |                                |              |         |         |   |   |         |        
|Total liabilities and stockholders equity                                                                                                                                       |                                | $            | 836,432 |         |   | $ | 431,685 |        
|                                                                                                                                                                                 |                                |              |         |         |   |   |         |        

The accompanying Notes are an integral part of the consolidated
financial statements.

F-1



---



##### Table of Contents



LASON, INC.






CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


(In thousands, except for per share amounts)


|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |        | 
|-------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------- | ------- | ------- | - | ---- | ------- | ------ |  | - | ------- | ------ | 
|                                                                                                               |                                                              |                        
|                                                                                                               |                                                              | Year Ended December 31,
|                                                                                                               |                                                              |                        
|                                                                                                               |                                                              | 1999                    |         | 1998    |   | 1997
|                                                                                                               |                                                              |                         |         |         |   |     
|Revenue (net of postage of $70,368, $59,820 and $42,444 for the
	years ended December 31, 1999, 1998 and 1997) |                                                              | $                       | 479,594 |         |   | $    | 258,782 |        |  | $ | 112,099 |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Cost of revenues                                                                                               |                                                              |                         | 326,275 |         |   |      | 168,465 |        |  |   | 75,937  |       
|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|                                                                                                               | Gross profit                                                 |                         |         | 153,319 |   |      |         | 90,317 |  |   |         | 36,162 | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Selling, general and administrative expenses                                                                   |                                                              |                         | 115,810 |         |   |      | 51,224  |        |  |   | 19,619  |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Compensatory stock option expense                                                                              |                                                              |                         | 218     |         |   |      | 279     |        |  |   | 221     |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Amortization of intangibles                                                                                    |                                                              |                         | 15,470  |         |   |      | 5,599   |        |  |   | 2,327   |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Restructuring expenses                                                                                         |                                                              |                         | 22,621  |         |   |      |        |        |  |   |        |       
|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|                                                                                                               | Income (loss) from operations                                |                         |         | (800    | ) |      |         | 33,215 |  |   |         | 13,995 | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Net interest expense                                                                                           |                                                              |                         | 11,072  |         |   |      | 3,391   |        |  |   | 869     |       
|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|                                                                                                               | Income (loss) from continuing operations before income taxes |                         |         | (11,872 | ) |      |         | 29,824 |  |   |         | 13,126 | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Provision (benefit) for income taxes                                                                           |                                                              |                         | (1,030  | )       |   |      | 11,780  |        |  |   | 4,699   |       
|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|                                                                                                               | Net income (loss) from continuing operations                 |                         |         | (10,842 | ) |      |         | 18,044 |  |   |         | 8,427  | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Income (loss) from discontinued operations, net of tax                                                         |                                                              |                         | (4,334  | )       |   |      | 191     |        |  |   | 643     |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Estimated loss on disposal of discontinued operations, net of tax                                              |                                                              |                         | (21,114 | )       |   |      |        |        |  |   |        |       
|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|                                                                                                               | Net income (loss)                                            |                         | $       | (36,290 | ) |      | $       | 18,235 |  |   | $       | 9,070  | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Other comprehensive income:                                                                                    |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Foreign currency translation adjustments                     |                         |         | 7,314   |   |      |         |       |  |   |         |       | 
|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|Comprehensive income (loss)                                                                                    |                                                              | $                       | (28,976 | )       |   | $    | 18,235  |        |  | $ | 9,070   |       
|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|Basic earnings per share:                                                                                      |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Net income (loss) from continuing operations                 |                         | $       | (0.65   | ) |      | $       | 1.42   |  |   | $       | 0.87   | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Net income (loss) from discontinued operations               |                         |         | (0.26   | ) |      |         | 0.02   |  |   |         | 0.06   | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Estimated net loss on disposal of discontinued operations    |                         |         | (1.28   | ) |      |         |       |  |   |         |       | 
|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|                                                                                                               | Net income (loss)                                            |                         | $       | (2.19   | ) |      | $       | 1.44   |  |   | $       | 0.93   | 
|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|Diluted earnings per share:                                                                                    |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Net income (loss) from continuing operations                 |                         | $       | (0.65   | ) |      | $       | 1.33   |  |   | $       | 0.84   | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Net income (loss) from discontinued operations               |                         |         | (0.26   | ) |      |         | 0.02   |  |   |         | 0.06   | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Estimated net loss on disposal of discontinued operations    |                         |         | (1.28   | ) |      |         |       |  |   |         |       | 
|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |       
|                                                                                                               | Net income (loss)                                            |                         | $       | (2.19   | ) |      | $       | 1.35   |  |   | $       | 0.90   | 
|                                                                                                               |                                                              |                         |         |         |   |      |         |        |  |   |         |       

The accompanying Notes are an integral part of the consolidated
financial statements.

F-2



---



##### Table of Contents



LASON, INC.






CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


For the Years Ended December 31, 1999, 1998 and 1997


(In thousands, except for shares)


|                                                    |  |              |            |            |  |          |     |               |  |          |         |           |  |       |        |   |  |   |       |  |  |   |         |   |  |   |         |  
|--------------------------------------------------- |  | ------------ | ---------- | ---------- |  | -------- | --- | ------------- |  | -------- | ------- | --------- |  | ----- | ------ | - |  | - | ----- |  |  | - | ------- | - |  | - | ------- | -
|                                                    |  |              |            |            |  |          |     | Accumulated   |  |          |         |          
|                                                    |  | Common Stock |            | Additional |  |          |     | Other         |  | Retained |         |          
|                                                    |  |              |            | Paid-in    |  | Treasury |     | Comprehensive |  | Earnings |         |          
|                                                    |  | Shares       |            | Amount     |  | Capital  |     | Stock         |  | Income   |         | (Deficit) |  | Total
|                                                    |  |              |            |            |  |          |     |               |  |          |         |           |  |      
|Balances at December 31, 1996                       |  |              | 8,610,246  |            |  | $        | 86  |               |  | $        | 51,912  |           |  | $     |       |   |  | $ |      |  |  | $ | 5,008   |   |  | $ | 57,006  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Net income                                          |  |              |           |            |  |          |    |               |  |          |        |           |  |       |       |   |  |   |      |  |  |   | 9,070   |   |  |   | 9,070   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Issuance of shares of common stock                  |  |              | 2,457,620  |            |  |          | 25  |               |  |          | 58,044  |           |  |       |       |   |  |   |      |  |  |   |        |   |  |   | 58,069  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Compensatory stock option expense                   |  |              |           |            |  |          |    |               |  |          | 221     |           |  |       |       |   |  |   |      |  |  |   |        |   |  |   | 221     |  
|                                                   
|                                                   
|                                                   
|                                                   
|Issuance of shares of common stock for acquisitions |  |              | 338,250    |            |  |          | 2   |               |  |          | 6,046   |           |  |       |       |   |  |   |      |  |  |   |        |   |  |   | 6,048   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Employee stock options exercised                    |  |              | 231,524    |            |  |          | 2   |               |  |          | 1,129   |           |  |       |       |   |  |   |      |  |  |   |        |   |  |   | 1,131   |  
|                                                    |  |              |            |            |  |          |     |               |  |          |         |           |  |       |        |   |  |   |       |  |  |   |         |   |  |   |         |  
|Balances at December 31, 1997                       |  |              | 11,637,640 |            |  |          | 115 |               |  |          | 117,352 |           |  |       |       |   |  |   |      |  |  |   | 14,078  |   |  |   | 131,545 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Net income                                          |  |              |           |            |  |          |    |               |  |          |        |           |  |       |       |   |  |   |      |  |  |   | 18,235  |   |  |   | 18,235  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Issuance of shares of common stock                  |  |              | 2,925,000  |            |  |          | 29  |               |  |          | 129,829 |           |  |       |       |   |  |   |      |  |  |   |        |   |  |   | 129,858 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Compensatory stock option expense                   |  |              |           |            |  |          |    |               |  |          | 279     |           |  |       |       |   |  |   |      |  |  |   |        |   |  |   | 279     |  
|                                                   
|                                                   
|                                                   
|                                                   
|Issuance of shares of common stock for acquisitions |  |              | 696,453    |            |  |          | 1   |               |  |          | 2,815   |           |  |       |       |   |  |   |      |  |  |   |        |   |  |   | 2,816   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Employee stock options exercised                    |  |              | 119,282    |            |  |          | 1   |               |  |          | 2,204   |           |  |       |       |   |  |   |      |  |  |   |        |   |  |   | 2,205   |  
|                                                    |  |              |            |            |  |          |     |               |  |          |         |           |  |       |        |   |  |   |       |  |  |   |         |   |  |   |         |  
|Balances at December 31, 1998                       |  |              | 15,378,375 |            |  |          | 146 |               |  |          | 252,479 |           |  |       |       |   |  |   |      |  |  |   | 32,313  |   |  |   | 284,938 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Net loss                                            |  |              |           |            |  |          |    |               |  |          |        |           |  |       |       |   |  |   |      |  |  |   | (36,290 | ) |  |   | (36,290 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Issuance of shares of common stock for acquisitions |  |              | 3,544,416  |            |  |          | 35  |               |  |          | 167,423 |           |  |       | (5,541 | ) |  |   |      |  |  |   |        |   |  |   | 161,917 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Employee stock options exercised                    |  |              | 64,119     |            |  |          | 1   |               |  |          | 1,424   |           |  |       |       |   |  |   |      |  |  |   |        |   |  |   | 1,425   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Compensatory stock option expense                   |  |              |           |            |  |          |    |               |  |          | 218     |           |  |       |       |   |  |   |      |  |  |   |        |   |  |   | 218     |  
|                                                   
|                                                   
|                                                   
|                                                   
|Foreign currency translation adjustments            |  |              |           |            |  |          |    |               |  |          |        |           |  |       |       |   |  |   | 7,314 |  |  |   |        |   |  |   | 7,314   |  
|                                                    |  |              |            |            |  |          |     |               |  |          |         |           |  |       |        |   |  |   |       |  |  |   |         |   |  |   |         |  
|Balances at December 31, 1999                       |  |              | 18,986,910 |            |  | $        | 182 |               |  | $        | 421,544 |           |  | $     | (5,541 | ) |  | $ | 7,314 |  |  | $ | (3,977  | ) |  | $ | 419,522 |  
|                                                    |  |              |            |            |  |          |     |               |  |          |         |           |  |       |        |   |  |   |       |  |  |   |         |   |  |   |         |  

The accompanying Notes are an integral part of the consolidated
financial statements.

F-3



---



##### Table of Contents



LASON, INC






CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                                                                          |                                                                   |                         |          |          |        |      |          |          |        |   |          |         |       | 
|----------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ----------------------- | -------- | -------- | ------ | ---- | -------- | -------- | ------ | - | -------- | ------- | ----- | 
|                                                                                          |                                                                   |                        
|                                                                                          |                                                                   | Year Ended December 31,
|                                                                                          |                                                                   |                        
|                                                                                          |                                                                   | 1999                    |          | 1998     |        | 1997
|                                                                                          |                                                                   |                         |          |          |        |     
|Cash flows from operating activities:                                                     |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Net income (loss)                                                                         |                                                                   | $                       | (36,290  | )        |        | $    | 18,235   |          |        | $ | 9,070    |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Adjustments to reconcile net income (loss) to net cash provided
	by operating activities: |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Estimated loss on disposal of discontinued operations, net of tax |                         |          | 21,114   |        |      |          |         |        |   |          |        |      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Restructuring expenses                                            |                         |          | 14,793   |        |      |          |         |        |   |          |        |      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Depreciation and amortization                                     |                         |          | 33,390   |        |      |          | 12,415   |        |   |          | 4,941   |      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Compensatory stock option expense                                 |                         |          | 218      |        |      |          | 279      |        |   |          | 221     |      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Loss (gain) on disposal of fixed assets                           |                         |          | 1,519    |        |      |          | 152      |        |   |          | (256    | )    
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Deferred income taxes                                             |                         |          | (7,684   | )      |      |          | 1,233    |        |   |          | 1,761   |      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Changes in operating assets and liabilities net of effects from
	acquisitions:            |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Accounts receivable                                               |                         |          | (3,961   | )      |      |          | (21,181  | )      |   |          | (7,120  | )    
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Supplies                                                          |                         |          | (1,460   | )      |      |          | (776     | )      |   |          | (1,119  | )    
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Prepaid expenses and other                                        |                         |          | 652      |        |      |          | (2,905   | )      |   |          | (3,571  | )    
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Accounts payable                                                  |                         |          | (3,243   | )      |      |          | 920      |        |   |          | (1,073  | )    
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Customer deposits                                                 |                         |          | (180     | )      |      |          | 649      |        |   |          | (896    | )    
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Accrued expenses and other liabilities                            |                         |          | (6,205   | )      |      |          | (100     | )      |   |          | 1,478   |      
|                                                                                          |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|Cash flows provided by operating activities                                               |                                                                   |                         | 12,663   |          |        |      | 8,921    |          |        |   | 3,436    |        
|                                                                                          |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|Cash flows from investing activities:                                                     |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Payments for acquistion of businesses, net of cash acquired                               |                                                                   |                         | (163,424 | )        |        |      | (149,711 | )        |        |   | (57,274  | )      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Additions to fixed assets and software development costs                                  |                                                                   |                         | (41,601  | )        |        |      | (26,325  | )        |        |   | (11,799  | )      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Proceeds from sales of fixed assets                                                       |                                                                   |                         | 1,450    |          |        |      | 173      |          |        |   | 820      |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Other, net                                                                                |                                                                   |                         | 400      |          |        |      | (509     | )        |        |   |         |        
|                                                                                          |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|                                                                                          | Net cash used in investing activities                             |                         |          | (203,175 | )      |      |          | (176,372 | )      |   |          | (68,253 | )    
|                                                                                          |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|Cash flows from financing activities:                                                     |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Borrowings on revolving line of credit                                                    |                                                                   |                         | 411,668  |          |        |      | 483,951  |          |        |   | 137,793  |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Repayments on revolving line of credit                                                    |                                                                   |                         | (336,668 | )        |        |      | (438,500 | )        |        |   | (128,344 | )      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Borrowings on term loan                                                                   |                                                                   |                         | 150,000  |          |        |      |         |          |        |   |         |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Net proceeds from issuance of shares of common stock                                      |                                                                   |                         |         |          |        |      | 129,858  |          |        |   | 58,069   |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Repayments of notes payable                                                               |                                                                   |                         | (18,636  | )        |        |      | (6,478   | )        |        |   |         |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Proceeds from exercise of employee stock options                                          |                                                                   |                         | 1,101    |          |        |      | 572      |          |        |   | 145      |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Principal payments on lease liabilities and other debt                                    |                                                                   |                         | (5,028   | )        |        |      | (2,366   | )        |        |   |         |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Financing costs                                                                           |                                                                   |                         | (2,323   | )        |        |      | (1,121   | )        |        |   |         |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Other, net                                                                                |                                                                   |                         | (1,454   | )        |        |      | (75      | )        |        |   |         |        
|                                                                                          |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|                                                                                          | Net cash provided by financing activities                         |                         |          | 198,660  |        |      |          | 165,841  |        |   |          | 67,663  |      
|                                                                                          |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|Effect of exchange rate changes on cash and cash equivalents                              |                                                                   |                         | 290      |          |        |      |         |          |        |   |         |        
|                                                                                          |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|Net increase (decrease) in cash and cash equivalents                                      |                                                                   |                         | 8,438    |          |        |      | (1,610   | )        |        |   | 2,846    |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Cash and cash equivalents at beginning of year                                            |                                                                   |                         | 1,315    |          |        |      | 2,925    |          |        |   | 79       |        
|                                                                                          |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|Cash and cash equivalents at end of year                                                  |                                                                   | $                       | 9,753    |          |        | $    | 1,315    |          |        | $ | 2,925    |        
|                                                                                          |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|Supplemental disclosure of cash flow information cash paid during
	 the year for:         |                                                                   |                         |          |          |        |      |          |          |        |   |          |        
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                                                                   | Interest                |          | $        | 11,666 |      |          | $        | 5,117  |   |          | $       | 1,139 | 
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                                                                   | Income taxes            |          |          | 8,176  |      |          |          | 10,190 |   |          |         | 3,693 | 

The accompanying Notes are an integral part of the consolidated
financial statements.

F-4



---



##### Table of Contents



LASON, INC.






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  ORGANIZATION

Lason, Inc. (together with its subsidiaries, Lason or
 the Company), a Delaware corporation, was
incorporated on January 5, 1995. The Companys initial
equity was comprised of $10 million of Class B common
stock and approximately $1 million of Class A-1 common
stock. The Company contributed the capital to Lason Acquisition
Corporation, a non-operating wholly-owned subsidiary. On
January 17, 1995, the cash, in addition to $21 million
of bank borrowings, was used to acquire the assets and assume
certain liabilities of Lason Systems, Inc.
(Predecessor) and provide working capital. Subsequent
 to the acquisition, Lason Acquisition Corporation changed its
name to Lason Systems, Inc. and continued the business operations
 of the Predecessor. In October 1996, the Company completed
an initial public offering of 3,450,000 shares of common stock
for net proceeds of $53.0 million, after deducting
underwriting discounts and other offering expenses. The net
proceeds were primarily used to repay amounts then outstanding
under the Companys credit agreement and to redeem shares of
 common stock held by the Companys largest shareholder.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

The Company provides integrated information outsourcing for image
 and data capture, data management and output processing
services. These services include high-volume optical and digital
printing, facility management operations at customer sites,
converting inputs into digital formats, database management, and
direct mailing, among others. The Company primarily serves
customers in the commercial, healthcare, financial services and
professional services industries. No single customer accounts for
 more than 10% of the total consolidated net revenues in 1999.

Basis of Presentation

The accompanying consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant
intercompany transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and
expenses during the periods presented. Actual results could
differ from those estimates. Certain amounts in the prior year
consolidated financial statements have been reclassified to
conform with the current year presentation.

Revenue Recognition

Revenues are recorded when the services are provided. Revenues
are presented in the consolidated statements of income net of
postage where the cost of such postage is passed through to the
customer.

Cash Equivalents

The Company classifies as cash and cash equivalents amounts on
deposit with banks and cash invested temporarily in various
instruments with maturities of three months or less at the time
of purchase.

Supplies

Supplies are valued at cost, which approximates market, with cost
 determined using the first-in, first-out method.

F-5



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

Property and Equipment

Property and equipment, including significant improvements, are
recorded at cost. Expenditures for normal repairs and maintenance
 are charged to operations as incurred. Adjustments of the asset
and related accumulated depreciation accounts are made for
retirements of property and equipment with the resulting gain or
loss included in operations.

Assets placed in service prior to January 1, 1996, are
depreciated using an accelerated method over the estimated useful
 lives of the assets which range from 5 to 7 years. Assets
placed in service after December 31, 1995, are depreciated
using a straight-line method over the estimated lives of the
related assets which range from 5 to 15 years.

Intangible Assets

Goodwill is amortized using a straight-line method over
30 years. Deferred financing costs are amortized using the
interest method over the term of the associated credit agreement.

The Company capitalizes direct internal and external costs
associated with the development of technological systems,
primarily computer software, to meet the needs of its customers.
Such costs, which are included in other intangible assets, are
amortized using a straight-line method over the lesser of five
years or the economic life of the related services. In addition,
the Company capitalizes certain direct internal and external
costs associated with upgrading and enhancing its information
systems to support its global information processing needs.
Capitalization of such costs begins when the preliminary planning
 stage for each project is completed and management has formally
authorized its funding, and ends when the project is
substantially complete. These costs are amortized using a
straight-line method over five years. Research and development
costs and other computer software and hardware maintenance and
training costs are charged to expense as incurred.

Annually, the Company evaluates the carrying value of intangible
assets to determine if there has been an impairment in value. The
 methodology used for this evaluation includes a review of annual
 operating performance, along with a review of anticipated
results for future years. The Company determined that there had
been no impairment in the net carrying amount of intangible
assets as of December 31, 1999.

Fair Value of Financial Instruments

Statements of Financial Accounting Standards (SFAS)
No. 107, Disclosures About Fair Value of Financial
Instruments, requires disclosures about the fair value of
financial instruments whether or not such instruments are
recognized in the balance sheet. Due to the short-term nature of
the Companys financial instruments, other than debt, fair
values are not materially different from their carrying values.
Based on the borrowing rates available to the Company for similar
 variable-rate debt, the carrying value of debt approximated fair
 value as of December 31, 1999 and 1998.

Earnings Per Share

Basic earnings per share are computed by dividing net income
available to common shareholders from continuing operations by
the weighted average common shares outstanding.

F-6



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

The following table presents a reconciliation of the denominator
(weighted average common shares outstanding) for the basic and
diluted earnings per share calculations for the years ended
December 31, 1999, 1998 and 1997 (in thousands):

|                                                                                |  |                         |        |      |  |      |        |  |  |  |        | 
|------------------------------------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                                                                |  |                        
|                                                                                |  | Year Ended December 31,
|                                                                                |  |                        
|                                                                                |  | 1999                    |        | 1998 |  | 1997
|                                                                                |  |                         |        |      |  |     
|Weighted average shares outstanding  Basic                                     |  |                         | 16,561 |      |  |      | 12,704 |  |  |  | 9,704  | 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Effect of Dilutive SecuritiesContingently issuable shares of common stock       |  |                         |       |      |  |      | 447    |  |  |  | 24     | 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Potential shares of common stock from debentures and stock
	options outstanding |  |                         |       |      |  |      | 390    |  |  |  | 307    | 
|                                                                                |  |                         |        |      |  |      |        |  |  |  |        | 
|Weighted average shares outstanding  Diluted                                   |  |                         | 16,561 |      |  |      | 13,541 |  |  |  | 10,035 | 
|                                                                                |  |                         |        |      |  |      |        |  |  |  |        | 

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 SFAS No. 128. During the year ended
December 31, 1999, the effects of contingently issuable
shares of common stock and potential shares of common stock from
debentures and stock options outstanding are not included in the
denominator for diluted earnings per share, as such effects would
 be antidilutive.

Foreign Currency Translation

The assets and liabilities of foreign operations are translated
into United States dollars using period-end exchange rates, while
 statements of operations are translated using average exchange
rates during the periods. Differences arising from the
translation of assets and liabilities in comparison with the
translation of previous periods are included as a separate
component of stockholders equity.

NOTE 3.  DISCONTINUED OPERATIONS

In December 1999, Lason announced its intention to
discontinue, by sale or exit from the market, its activities
providing traditional litigation support, software development
and other analog services. Those services are no longer
consistent with Lasons long-term growth strategy as they
are largely analog and are expected to have slow long-term
growth. The businesses to be discontinued consist of nine
litigation copy businesses, an offset print business, a digital
graphics business and the software development business that was
acquired as part of the M-R acquisition in 1999. The results of
operations of these businesses have been classified as
discontinued operations in the accompanying consolidated
financial statements.

F-7



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

Following is summary financial information for the Companys
 discontinued operations (in thousands):

|                                                                                             |                                                                 |                         |         |        |   |      |        |       |  |   |       |       | 
|-------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ----------------------- | ------- | ------ | - | ---- | ------ | ----- |  | - | ----- | ----- | 
|                                                                                             |                                                                 |                        
|                                                                                             |                                                                 | Year Ended December 31,
|                                                                                             |                                                                 |                        
|                                                                                             |                                                                 | 1999                    |         | 1998   |   | 1997
|                                                                                             |                                                                 |                         |         |        |   |     
|Revenues, net                                                                                |                                                                 | $                       | 33,034  |        |   | $    | 20,974 |       |  | $ | 8,238 |      
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Cost of revenues                                                                             |                                                                 |                         | 23,945  |        |   |      | 12,684 |       |  |   | 4,909 |      
|                                                                                             |                                                                 |                         |         |        |   |      |        |       |  |   |       |      
|                                                                                             | Gross profit                                                    |                         |         | 9,089  |   |      |        | 8,290 |  |   |       | 3,329 | 
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Selling, general & administrative expenses                                                   |                                                                 |                         | 11,438  |        |   |      | 6,008  |       |  |   | 1,745 |      
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Amortization of intangibles                                                                  |                                                                 |                         | 1,071   |        |   |      | 431    |       |  |   | 150   |      
|                                                                                             |                                                                 |                         |         |        |   |      |        |       |  |   |       |      
|                                                                                             | Income (loss) from operations                                   |                         |         | (3,420 | ) |      |        | 1,851 |  |   |       | 1,434 | 
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Net interest expense                                                                         |                                                                 |                         | 2,818   |        |   |      | 1,538  |       |  |   | 380   |      
|                                                                                             |                                                                 |                         |         |        |   |      |        |       |  |   |       |      
|                                                                                             | Income (loss) from discontinued operations before income
	taxes |                         |         | (6,238 | ) |      |        | 313   |  |   |       | 1,054 | 
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Provision (benefit) for income taxes                                                         |                                                                 |                         | (1,904  | )      |   |      | 122    |       |  |   | 411   |      
|                                                                                             |                                                                 |                         |         |        |   |      |        |       |  |   |       |      
|                                                                                             | Net income (loss) from discontinued operations                  |                         |         | (4,334 | ) |      |        | 191   |  |   |       | 643   | 
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Estimated loss on disposal of discontinued operations, net of
	income tax benefit of $11,347 |                                                                 |                         | (21,114 | )      |   |      |       |       |  |   |      |      
|                                                                                             |                                                                 |                         |         |        |   |      |        |       |  |   |       |      
|Net income (loss) from discontinued operations                                               |                                                                 | $                       | (25,448 | )      |   | $    | 191    |       |  | $ | 643   |      
|                                                                                             |                                                                 |                         |         |        |   |      |        |       |  |   |       |      

Net loss from discontinued operations includes interest costs
totaling $2.8 million, $1.5 million and $380,000 for
the years ended December 31, 1999, 1998 and 1997,
respectively, which was allocated based on the ratio of net
assets to be discontinued to total consolidated net assets. The
net assets of the discontinued businesses primarily consist of
accounts receivable and goodwill, and have been segregated as net
 assets of discontinued operations, net of allowance for
estimated loss on disposal, in the accompanying consolidated
balance sheet as of December 31, 1999.

The Company has engaged brokers and is actively marketing these
businesses. Management estimates that the Company will incur a
net loss of approximately $21.1 million, including an
estimated tax benefit of $11.3 million, on the disposal of these
businesses. The estimated loss on disposal includes a write down
of goodwill totaling $34.1 million.

NOTE 4.  RESTRUCTURING

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 M-R merger, the Company recorded a
$7.8 million pre tax restructuring charge during the second
quarter of 1999 for costs associated with discontinued leases,
the consolidation of facilities, severance and other related
expenses for Lason facilities which were to be closed or
consolidated with M-R facilities. For 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 423 employees have been separated from the Company
as of December 31, 1999.

In the fourth quarter of 1999, management completed a thorough
review of its operations and approved a restructuring plan to
make the Company more efficient and to lower overall costs. These
 decisions resulted in the Company recording a one-time pre tax
charge to operations of $14.9 million in the fourth quarter
of 1999. The charge consists of severance, facility closure and
exit costs related primarily to discontinued leases and equipment
 write downs. The restructuring plan calls for the consolidation
of facilities and operations, the closure of facilities, and the
streamlining of the administrative support functions.

F-8



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

A summary of the accrued restructuring expense for the year ended
 December 31, 1999 follows (in thousands):

|                                          |         |               |        |          |        |                   |        |        |        |   |        |        |        | 
|----------------------------------------- | ------- | ------------- | ------ | -------- | ------ | ----------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                          |         | Restructuring |        | 1999     |        | Accrual at       
|                                          |         | Expense       |        | Activity |        | December 31, 1999
|                                          |         |               |        |          |        |                  
|Severance                                 |         | $             | 5,389  |          |        | $                 | (3,766 | )      |        | $ | 1,623  |       
|                                         
|                                         
|                                         
|                                         
|Facility closure                          |         |               | 13,260 |          |        |                   | (1,609 | )      |        |   | 11,651 |       
|                                         
|                                         
|                                         
|                                         
|Other                                     |         |               | 686    |          |        |                   | (650   | )      |        |   | 36     |       
|                                          |         |               |        |          |        |                   |        |        |        |   |        |       
|                                          | Accrual |               |        | 19,335   |        |                   |        | (6,025 | )      |   |        | 13,310 |       
|                                         
|                                         
|                                         
|                                         
|Equipment writedown to estimated recovery |         |               | 3,286  |          |        |                   | (1,853 | )      |        |   | 1,433  |       
|                                          |         |               |        |          |        |                   |        |        |        |   |        |       
|                                          |         | Totals        |        | $        | 22,621 |                   |        | $      | (7,878 | ) |        | $      | 14,743 | 
|                                          |         |               |        |          |        |                   |        |        |        |   |        |       

NOTE 5.  ACQUISITIONS

In connection with the M-R merger, the Company issued 3,071,863
new shares of its common stock valued at approximately
$152.4 million 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.

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, and 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 the 112,000 shares
of common stock issued is recorded as treasury stock in the
Companys consolidated financial statements.

Effective with the completion of the transaction, the acquisition
 of M-R was presented for financial reporting purposes using the
pooling of interests method of accounting. However, in
December 1999, Lason took certain actions which require the
acquisition to be presented in the accompanying consolidated
financial statements using the purchase method of accounting.

From June 1995 through December 31, 1999, the Company,
through certain of its subsidiaries, completed the acquisition of
 either substantially all of the assets or all the stock
ownership interest in a substantial number of companies in
addition to M-R. Significant acquisitions completed in 1999
included the following:

In January 1999, the Company acquired 100% of the common
stock of Vetri Systems, Inc. and its affiliate Vetri Software
India, Ltd. for $21.3 million in cash and 66,698 shares of
the Companys common stock valued at approximately
$3.7 million on the date of the transaction. The shares of
the common stock are being held in escrow as collateral to
indemnify the Company if contingencies set forth in the purchase
agreement occur within 24 months from the date of
acquisition. Additionally, $750,000 of the aggregate cash will be
 paid only if certain contingencies are met.

In April 1999, the Company purchased 100% of the common
stock of MSCI, Inc. for $10.8 million in cash, of which
$1.0 million will be paid only if certain contingencies are
met. Also in April 1999, the Company purchased 100% of the
stock of Crest Information Technologies, Inc. for
$8.8 million in cash and 68,922 shares of the Companys
 common stock valued at approximately $3.0 million. A total of
34,284 shares of common stock valued at $1.5 million are
being held in escrow as collateral to indemnify the Company if
contingencies set forth in the purchase agreement occur within
24 months from the date of acquisition.

F-9



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

In May 1999, the Company acquired 100% of the common stock
of Marketing Associates, Inc. for $10.4 million in cash and
29,109 shares of the Companys common stock valued at
approximately $1.1 million on the date of the transaction.
The shares of the common stock are being held in escrow as
collateral to indemnify the Company if contingencies set forth in
 the purchase agreement occur within 24 months from the date
 of acquisition.

In August 1999, the Company acquired 100% of the common
stock of Addressing Services, Inc. for $16.6 million in cash
 and 62,004 shares of the Companys common stock valued at
approximately $2.9 million on the date of the transaction.
The shares of the common stock are being held in escrow as
collateral to indemnify the Company if contingencies set forth in
 the purchase agreement occur within 24 months from the date
 of acquisition.

In October 1999, the Company acquired 100% of the common
stock of ACE Reprographics, Inc. for $10.3 million in cash,
of which approximately $1.0 million will be paid only if certain
contingencies are met.

During 1999, the Company acquired either all of the outstanding
common stock or substantially all of the assets of several
additional entities, the most significant of which were: MSI
Digital Imaging Solutions, Inc., Bonner & Moore
Computing Company, a division of Bonner & Moore
Associates, Inc., the Texas division of Compex Legal Services,
Cover-All Computer Holdings Company and its affiliates, and
Atlantic Document Centers, Inc.

Aggregate purchase price for all acquisitions completed in 1999,
excluding liabilities assumed, was approximately
$299.7 million, consisting of approximately
$129.9 million in cash, 3,396,743 shares of the
Companys common stock valued at approximately
$167.9 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.

Approximately $1.7 million in cash and 290,242 shares of the
 Companys common stock valued at approximately
$13.9 million were placed 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 the respective acquisitions. In addition,
$5.9 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 over the next twenty-seven months should such
targets be achieved for all acquisitions is approximately
$217.7 million of which approximately $124.8 million
relates to acquisitions completed in 1999. 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 shares issued for the M-R acquisition,
shares of common stock issued or to be issued in connection with
the acquisitions are generally subject to lock-up agreements
ranging from 12 to 24 months. The lock-up agreements
restrict the owners ability to sell the shares of common
stock.

Each of the acquisitions was accounted for as a purchase. The
results of operations for the year ended December 31, 1999
include the results of operations for each of the acquired
companies since the date of their respective acquisition.

The non-contingent portion of the purchase price was allocated to
 the assets acquired and liabilities assumed based on the related
 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.

F-10



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

In conjunction with acquisitions completed in 1999 and 1998,
liabilities assumed and other noncash consideration was as
follows (in thousands):

|                                                                         |  |      |          |      |  |   |          |  
|------------------------------------------------------------------------ |  | ---- | -------- | ---- |  | - | -------- | -
|                                                                         |  | 1999 |          | 1998
|                                                                         |  |      |          |     
|Fair value of assets acquired                                            |  | $    | 85,501   |      |  | $ | 65,670   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Goodwill                                                                 |  |      | 247,207  |      |  |   | 140,399  |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Cash and common stock held in escrow                                     |  |      | 15,630   |      |  |   | 25,499   |  
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Cash paid in consideration for companies acquired, net of cash
	acquired |  |      | (117,982 | )    |  |   | (139,383 | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Common stock issued in consideration for companies acquired              |  |      | (167,867 | )    |  |   | (25,672  | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Promissory notes issued in consideration for companies acquired          |  |      |         |      |  |   | (18,643  | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Convertible debentures issued in consideration for companies
	acquired   |  |      | (1,865   | )    |  |   | (1,169   | )
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Treasury shares assumed                                                  |  |      | 5,541    |      |  |   |         |  
|                                                                         |  |      |          |      |  |   |          |  
|Liabilities assumed                                                      |  | $    | 66,165   |      |  | $ | 46,701   |  
|                                                                         |  |      |          |      |  |   |          |  

The following table summarizes pro forma unaudited results of
operations as if each of the acquisitions completed during 1999
had occurred at the beginning of each year presented (in
thousands, except per share amounts):

|                                                             |  |                         |         |      |  |   |         | 
|------------------------------------------------------------ |  | ----------------------- | ------- | ---- |  | - | ------- | 
|                                                             |  |                        
|                                                             |  | Year Ended December 31,
|                                                             |  |                        
|                                                             |  | 1999                    |         | 1998
|                                                             |  |                         |         |     
|                                                             |  |                        
|                                                             |  | (unaudited)            
|                                                            
|                                                            
|                                                            
|                                                            
|Revenues from continuing operations                          |  | $                       | 579,084 |      |  | $ | 499,870 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Income (loss) from continuing operations before income taxes |  |                         | (5,886  | )    |  |   | 39,614  | 
|                                                            
|                                                            
|                                                            
|                                                            
|Net income (loss) from continuing operations                 |  |                         | (7,251  | )    |  |   | 23,918  | 
|                                                            
|                                                            
|                                                            
|                                                            
|Basic earnings (loss) per share from continuing operations   |  | $                       | (0.40   | )    |  | $ | 1.51    | 
|                                                            
|                                                            
|                                                            
|                                                            
|Diluted earnings (loss) per share from continuing operations |  |                         | (0.40   | )    |  |   | 1.41    | 

NOTE 6.  LONG-TERM DEBT

During 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 the additional
purchase price for certain acquisitions, working capital, capital
 expenditures and other corporate purposes. Such borrowings are
collateralized 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% (8.48% as of December 31, 1999) or a
 base percentage rate plus a maximum of 0.50% (9.0% at
December 31, 1999), at the Companys 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. At
December 31, 1999 the Company was in violation of certain of
 its financial ratio covenants. On December 31, 1999, the
lenders waived these covenant violations.

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.

F-11



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

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 |  |   | (11,250 | )
|                     |  |   |         |  
|Long term portion    |  | $ | 138,750 |  
|                     |  |   |         |  

In December of 1999, the Company entered into a supplemental
credit agreement (the Bridge Loan) providing for
unsecured revolving credit loans up to $25 million. The
Bridge Loan expires March 30, 2000 and may be used to
finance acquisitions, working capital, and for other corporate
purposes. Interest terms are the same as for the amended credit
agreement. No balance was outstanding under the Bridge Loan at
December 31, 1999.

On March 30, 2000, the Company amended its credit agreement
with its lenders. The amendment increased the revolving credit
facility from $150 million to $175 million which may be
 further increased to $185 million.

NOTE 7.  STOCKHOLDERS EQUITY

In August 1998, the Company sold 2,925,000 shares of its
common stock for net proceeds of approximately
$129.9 million, after deducting underwriting discounts and
other offering expenses. In August 1997, the Company sold
2,457,620 shares of its common stock for net proceeds of
approximately $58.0 million, after deducting underwriting
discounts and other offering expenses. The net proceeds from each
 of these offerings were used to repay debt then outstanding
under the Companys credit agreement, which was primarily
incurred to fund business acquisitions, and for general corporate
 purposes.

NOTE 8.  INCOME TAXES

The domestic and foreign components of income (loss) from
continuing operations before income taxes is as follows (in
thousands):

|                                                             |  |                         |         |      |  |      |        |  |  |   |        | 
|------------------------------------------------------------ |  | ----------------------- | ------- | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                                             |  |                        
|                                                             |  | Year Ended December 31,
|                                                             |  |                        
|                                                             |  | 1999                    |         | 1998 |  | 1997
|                                                             |  |                         |         |      |  |     
|Domestic                                                     |  | $                       | (18,328 | )    |  | $    | 28,996 |  |  | $ | 13,126 | 
|                                                            
|                                                            
|                                                            
|                                                            
|Foreign                                                      |  |                         | 6,456   |      |  |      | 828    |  |  |   |       | 
|                                                             |  |                         |         |      |  |      |        |  |  |   |        | 
|Income (loss) from continuing operations before income taxes |  | $                       | (11,872 | )    |  | $    | 29,824 |  |  | $ | 13,126 | 
|                                                             |  |                         |         |      |  |      |        |  |  |   |        | 

F-12



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

The components of the consolidated income tax provision
(benefit) related to continuing operations are as follows
(in thousands):

|                                     |         |                         |        |        |   |      |        |       |  |   |       |       | 
|------------------------------------ | ------- | ----------------------- | ------ | ------ | - | ---- | ------ | ----- |  | - | ----- | ----- | 
|                                     |         |                        
|                                     |         | Year Ended December 31,
|                                     |         |                        
|                                     |         | 1999                    |        | 1998   |   | 1997
|                                     |         |                         |        |        |   |     
|Current provision                    |         |                         |        |        |   |      |        |       |  |   |       |      
|                                    
|                                    
|                                    
|                                    
|                                     | Federal |                         | $      | 3,448  |   |      | $      | 9,582 |  |   | $     | 2,641 | 
|                                    
|                                    
|                                    
|                                    
|                                     | State   |                         |        | 359    |   |      |        | 617   |  |   |       | 297   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Foreign |                         |        | 2,847  |   |      |        | 348   |  |   |       |      | 
|                                     |         |                         |        |        |   |      |        |       |  |   |       |      
|Total current provision              |         |                         | 6,654  |        |   |      | 10,547 |       |  |   | 2,938 |      
|                                     |         |                         |        |        |   |      |        |       |  |   |       |      
|Deferred provision (benefit)         |         |                         |        |        |   |      |        |       |  |   |       |      
|                                    
|                                    
|                                    
|                                    
|                                     | Federal |                         |        | (7,353 | ) |      |        | 1,112 |  |   |       | 1,684 | 
|                                    
|                                    
|                                    
|                                    
|                                     | State   |                         |        | (721   | ) |      |        | 121   |  |   |       | 77    | 
|                                    
|                                    
|                                    
|                                    
|                                     | Foreign |                         |        | 390    |   |      |        |      |  |   |       |      | 
|                                     |         |                         |        |        |   |      |        |       |  |   |       |      
|Total deferred provision (benefit)   |         |                         | (7,684 | )      |   |      | 1,233  |       |  |   | 1,761 |      
|                                     |         |                         |        |        |   |      |        |       |  |   |       |      
|Total income tax provision (benefit) |         | $                       | (1,030 | )      |   | $    | 11,780 |       |  | $ | 4,699 |      
|                                     |         |                         |        |        |   |      |        |       |  |   |       |      

The following tables provide a reconciliation of the
Companys resulting income tax provision (benefit) to the
statutory federal income tax (in thousands):

|                                     |  |                         |        |      |  |      |        |   |  |   |       |  
|------------------------------------ |  | ----------------------- | ------ | ---- |  | ---- | ------ | - |  | - | ----- | -
|                                     |  |                        
|                                     |  | Year Ended December 31,
|                                     |  |                        
|                                     |  | 1999                    |        | 1998 |  | 1997
|                                     |  |                         |        |      |  |     
|Federal statutory tax                |  | $                       | (4,155 | )    |  | $    | 10,438 |   |  | $ | 4,594 |  
|                                    
|                                    
|                                    
|                                    
|State & local income tax             |  |                         | (235   | )    |  |      | 472    |   |  |   | 228   |  
|                                    
|                                    
|                                    
|                                    
|Foreign tax                          |  |                         | 972    |      |  |      | 58     |   |  |   |      |  
|                                    
|                                    
|                                    
|                                    
|Goodwill                             |  |                         | 2,113  |      |  |      | 830    |   |  |   | 211   |  
|                                    
|                                    
|                                    
|                                    
|Meals & entertainment                |  |                         | 250    |      |  |      | 106    |   |  |   | 48    |  
|                                    
|                                    
|                                    
|                                    
|Other                                |  |                         | 25     |      |  |      | (124   | ) |  |   | (382  | )
|                                     |  |                         |        |      |  |      |        |   |  |   |       |  
|Total income tax provision (benefit) |  | $                       | (1,030 | )    |  | $    | 11,780 |   |  | $ | 4,699 |  
|                                     |  |                         |        |      |  |      |        |   |  |   |       |  

F-13



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

Deferred income taxes represent the net tax effects of temporary
differences between the carrying value amounts of assets and
liabilities for financial reporting purposes and the amounts used
 for income tax return purposes. Significant components of the
Companys deferred federal income tax assets and liabilities
 are as follows (in thousands):

|                                     |                                  |              |        |       |  |   |       |       | 
|------------------------------------ | -------------------------------- | ------------ | ------ | ----- |  | - | ----- | ----- | 
|                                     |                                  |             
|                                     |                                  | December 31,
|                                     |                                  |             
|                                     |                                  | 1999         |        | 1998 
|                                     |                                  |              |        |      
|Deferred tax assets related to:      |                                  |              |        |       |  |   |       |      
|                                    
|                                    
|                                    
|                                    
|                                     | Goodwill                         |              | $      | 1,344 |  |   | $     | 315   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Allowance for doubtful accounts  |              |        | 2,000 |  |   |       | 2,654 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Restructuring accrual            |              |        | 5,339 |  |   |       |      | 
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred revenue                 |              |        | 2,296 |  |   |       |      | 
|                                    
|                                    
|                                    
|                                    
|                                     | Net operating loss carryforwards |              |        | 1,134 |  |   |       |      | 
|                                    
|                                    
|                                    
|                                    
|                                     | Foreign tax credit carryforwards |              |        | 720   |  |   |       |      | 
|                                    
|                                    
|                                    
|                                    
|                                     | Accrued expenses                 |              |        | 828   |  |   |       | 461   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Other                            |              |        | 835   |  |   |       | 8     | 
|                                     |                                  |              |        |       |  |   |       |      
|Total deferred tax assets            |                                  | $            | 14,496 |       |  | $ | 3,438 |      
|                                     |                                  |              |        |       |  |   |       |      
|Deferred tax liabilities related to: |                                  |              |        |       |  |   |       |      
|                                    
|                                    
|                                    
|                                    
|                                     | Prepaid expenses                 |              | $      | 2,308 |  |   | $     | 3,360 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Supplies                         |              |        |      |  |   |       | 835   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Depreciation and amortization    |              |        | 6,697 |  |   |       | 1,471 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Intangible assets                |              |        | 553   |  |   |       | 554   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Other                            |              |        | 169   |  |   |       | 237   | 
|                                     |                                  |              |        |       |  |   |       |      
|Total deferred tax liabilities       |                                  | $            | 9,727  |       |  | $ | 6,457 |      
|                                     |                                  |              |        |       |  |   |       |      

The Company has unremitted earnings from the United Kingdom and
Canada. Accordingly, potential withholding tax of approximately
$409,000 on these undistributed earnings has not been recorded as
 of December 31, 1999. The Company has domestic net
operating loss and foreign tax credit carryforwards of
approximately $2.8 million and approximately $720,000,
respectively, which will expire in 2019 and 2004, respectively.
The United Kingdom net operating loss is approximately $395,000
which will carryforward indefinitely.

NOTE 9.  STOCK OPTION PLANS

SFAS No. 123, Accounting for Stock Based Compensation
, requires disclosure regarding employee stock options and
encourages companies to recognize compensation expense for
stock-based awards based on the fair value of such awards on the
date of grant. Alternatively, companies may continue to account
for such transactions under Accounting Principles Board
(APB) No. 25, Accounting for Stock Issued to
Employees, provided that disclosures are made regarding the
net income and earnings per share impact as if the value
recognition and measurement criteria of SFAS No. 123 had
been adopted. The Company has elected to continue to account for
employee stock options under APB No. 25.

The Companys 1998 Equity Participation Plan (the 1998
 Plan) was adopted by the Board of Directors and approved
by the Companys shareholders in May 1998. A committee
composed of non-employee members of the Board of Directors
administers the 1998 Plan. Officers, consultants and employees
and non-employee directors are eligible to participate in the
1998 Plan. Under the 1998 Plan, as amended, the Company may grant
 up to 1,400,000 shares of common stock.

The Companys 1995 stock option plan (the 1995
Plan) was adopted by the Board of Directors and approved by
 the Companys shareholders in January 1995. A committee
composed of non-employee members

F-14



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

of the Board of Directors determines which key employees will
participate in the 1995 Plan. Under the 1995 Plan, the Company
may grant up to 1,000,000 shares of common stock.

Options generally vest over a period which ranges from three to
five years from the date of grant. Each options maximum
term is generally 10 years from the grant date for options
granted under the 1998 Plan and 7 years from the grant date
for options granted under the 1995 Plan.

Had compensation expense for the Companys stock option
plans been determined based on the fair value at the grant dates
for awards, consistent with the provisions of SFAS No. 123,
the Companys income (loss) from continuing operations
and the related earnings per share would have been reduced to the
 pro forma amounts as follows (in thousands, except per share
amounts):

|                                             |             |                         |   |         |   |      |   |        |  |  |   |       | 
|-------------------------------------------- | ----------- | ----------------------- | - | ------- | - | ---- | - | ------ |  |  | - | ----- | 
|                                             |             |                        
|                                             |             | Year Ended December 31,
|                                             |             |                        
|                                             |             | 1999                    |   | 1998    |   | 1997
|                                             |             |                         |   |         |   |     
|Net income (loss) from continuing operations |             |                         |   |         |   |      |   |        |  |  |   |      
|                                            
|                                            
|                                            
|                                            
|                                             | As reported |                         | $ | (10,842 | ) |      | $ | 18,044 |  |  | $ | 8,427 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Pro forma   |                         |   | (15,335 | ) |      |   | 14,648 |  |  |   | 7,516 | 
|Basic earnings (loss) per share              |             |                         |   |         |   |      |   |        |  |  |   |      
|                                            
|                                            
|                                            
|                                            
|                                             | As reported |                         | $ | (0.65   | ) |      | $ | 1.42   |  |  | $ | 0.87  | 
|                                            
|                                            
|                                            
|                                            
|                                             | Pro forma   |                         |   | (0.93   | ) |      |   | 1.15   |  |  |   | 0.77  | 
|Diluted earnings (loss) per share            |             |                         |   |         |   |      |   |        |  |  |   |      
|                                            
|                                            
|                                            
|                                            
|                                             | As reported |                         | $ | (0.65   | ) |      | $ | 1.33   |  |  | $ | 0.84  | 
|                                            
|                                            
|                                            
|                                            
|                                             | Pro forma   |                         |   | (0.93   | ) |      |   | 1.08   |  |  |   | 0.75  | 

For purposes of computing the pro forma amounts above, the fair
value of each option granted was estimated using the
Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1999, 1998 and
1997, respectively: dividend yield of 0.0 percent for all
three years; expected volatility of 73 percent,
54 percent and 59 percent, respectively; risk-free
interest rates of 5.19 percent, 5.55 percent and
6.12 percent, respectively; and expected lives of
3.60 years, 3.75 years and 4.17 years,
respectively.

A summary of the status of the Companys stock option plans
is as follows for each of the years ended December 31:

|                                               |  |        |           |                  |  |        |       |                  |  |        |           |                  |  |   |       |  |  |   |          |   |  |   |       | 
|---------------------------------------------- |  | ------ | --------- | ---------------- |  | ------ | ----- | ---------------- |  | ------ | --------- | ---------------- |  | - | ----- |  |  | - | -------- | - |  | - | ----- | 
|                                               |  |        |           |                  |  |       
|                                               |  | 1999   |           | 1998             |  | 1997  
|                                               |  |        |           |                  |  |       
|                                               |  |        |           | Weighted-Average |  |        |       | Weighted-Average |  |        |           | Weighted-Average
|                                               |  | Shares |           | Exercise Price   |  | Shares |       | Exercise Price   |  | Shares |           | Exercise Price  
|                                               |  |        |           |                  |  |        |       |                  |  |        |           |                 
|Outstanding at beginning of year               |  |        | 1,325,686 |                  |  | $      | 29.00 |                  |  |        | 663,318   |                  |  | $ | 11.14 |  |  |   | 755,243  |   |  | $ | 5.33  | 
|                                              
|                                              
|                                              
|                                              
|Granted Price = fair value                     |  |        | 276,075   |                  |  |        | 38.67 |                  |  |        | 802,450   |                  |  |   | 40.08 |  |  |   | 167,996  |   |  |   | 23.66 | 
|                                              
|                                              
|                                              
|                                              
|Exercised                                      |  |        | (55,383   | )                |  |        | 15.86 |                  |  |        | (119,282  | )                |  |   | 4.79  |  |  |   | (231,524 | ) |  |   | 0.66  | 
|                                              
|                                              
|                                              
|                                              
|Cancelled                                      |  |        | (80,251   | )                |  |        | 34.43 |                  |  |        | (20,800   | )                |  |   | 21.90 |  |  |   | (28,397  | ) |  |   | 16.90 | 
|                                               |  |        |           |                  |  |        |       |                  |  |        |           |                  |  |   |       |  |  |   |          |   |  |   |       | 
|Outstanding at end of year                     |  |        | 1,466,127 |                  |  |        | 31.07 |                  |  |        | 1,325,686 |                  |  |   | 29.00 |  |  |   | 663,318  |   |  |   | 11.14 | 
|                                               |  |        |           |                  |  |        |       |                  |  |        |           |                  |  |   |       |  |  |   |          |   |  |   |       | 
|Options exercisable at end of year             |  |        | 493,523   |                  |  |        |       |                  |  |        | 258,947   |                  |  |   |       |  |  |   | 262,413  |   |  |   |       | 
|                                              
|                                              
|                                              
|                                              
|Weighted-average fair value of options granted |  |        | $22.23    |                  |  |        |       |                  |  | $      | 18.02     |                  |  |   |       |  |  | $ | 12.00    |   |  |   |       | 

F-15



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

The following table summarizes information about stock options
outstanding as of December 31, 1999:

|               |                |             |  |                  |           |                  |  |             |      |                  |  |   |       |  |  |  |         |  |  |   |       | 
|-------------- | -------------- | ----------- |  | ---------------- | --------- | ---------------- |  | ----------- | ---- | ---------------- |  | - | ----- |  |  |  | ------- |  |  | - | ----- | 
|               |                | Number      |  | Weighted-Average |           |                  |  | Number      |      |                 
|Ranges of      |                | Outstanding |  | Remaining        |           | Weighted-Average |  | Exercisable |      | Weighted-Average
|Exercise Price |                | At 12/31/99 |  | Contractual Life |           | Exercise Price   |  | At 12/31/99 |      | Exercise Price  
|               |                |             |  |                  |           |                  |  |             |      |                 
|$              | 0.40 - $19.50  |             |  |                  | 373,415   |                  |  |             | 3.40 |                  |  | $ | 8.67  |  |  |  | 287,590 |  |  | $ | 6.36  | 
|               | 19.51 -  40.00 |             |  |                  | 295,112   |                  |  |             | 5.77 |                  |  |   | 30.90 |  |  |  | 39,054  |  |  |   | 27.91 | 
|               | 40.01 -  40.50 |             |  |                  | 646,025   |                  |  |             | 6.22 |                  |  |   | 40.50 |  |  |  | 158,788 |  |  |   | 40.50 | 
|               | 40.51 -  58.19 |             |  |                  | 151,575   |                  |  |             | 7.20 |                  |  |   | 46.42 |  |  |  | 8,091   |  |  |   | 49.28 | 
|               |                |             |  |                  |           |                  |  |             |      |                  |  |   |       |  |  |  |         |  |  |   |       | 
|               |                |             |  |                  | 1,466,127 |                  |  |             | 5.51 |                  |  |   | 31.07 |  |  |  | 493,523 |  |  |   | 19.76 | 
|               |                |             |  |                  |           |                  |  |             |      |                  |  |   |       |  |  |  |         |  |  |   |       | 

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 an
exchange ratio of 5.376 shares of Lason common stock for each 100
 M-R options held. The Staff Options must be exercised on or
before June 29, 2000 or the options expire. A total of 8,736
 of such shares were issued from the date of acquisition through
December 31, 1999.

NOTE 10.  EMPLOYEE BENEFIT PLAN

The Company has a 401 (k) profit-sharing plan and trust (the
 Plan). Each employee who is 21 years of age or
older who has worked for the Company for twelve months and
performed 1,000 hours of service or, has an adjusted service date
 with the equivalent or greater term of service, is eligible to
participate in the Plan. Eligible participants may contribute not
 less than 2 percent and up to 15 percent of their pre
tax compensation to the Plan. The Plan is contributory and the
Company, at its discretion, can match up to 33 percent of
eligible participant contributions not to exceed 9 percent
of the participants earnings. The Companys match
contribution for the years ended December 31, 1999, 1998 and
 1997 totaled approximately $1.5 million, $459,000 and
$337,000, respectively.

NOTE 11.  LEASE COMMITMENTS

The Company has various operating lease agreements related
primarily to equipment and buildings. As of December 31,
1999, future minimum rental payments required under noncancelable
 operating leases with initial or remaining lease terms in excess
 of one year are as follows (in thousands):

|      |  |   |        | 
|----- |  | - | ------ | 
|     
|     
|     
|     
|2000  |  | $ | 19,452 | 
|     
|     
|     
|     
|2001  |  |   | 16,782 | 
|     
|     
|     
|     
|2002  |  |   | 13,572 | 
|     
|     
|     
|     
|2003  |  |   | 10,152 | 
|     
|     
|     
|     
|2004  |  |   | 8,055  | 
|      |  |   |        | 
|Total |  | $ | 68,013 | 
|      |  |   |        | 

In addition, the Company has a number of equipment leases that
are on a month-to-month basis.

Total rent expense for the years ended December 31, 1999,
1998 and 1997 was approximately $18.4 million,
$12.4 million and $9.2 million, respectively.

F-16



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

The Company also has a number of assets recorded under capital
leases and these consist of (in thousands):

|                                          |       |   |        |       | 
|----------------------------------------- | ----- | - | ------ | ----- | 
|                                         
|                                         
|                                         
|                                         
|Production/ Office equipment and vehicles |       | $ | 14,405 |      
|                                         
|                                         
|                                         
|                                         
|Less: Accumulated depreciation            |       |   | (5,419 | )    
|                                          |       |   |        |      
|                                          | Total |   | $      | 8,986 | 
|                                          |       |   |        |      

The minimum capital lease payments for the five years subsequent
to 1999 and in aggregate are (in thousands):

|                                                                |  |   |        |  
|--------------------------------------------------------------- |  | - | ------ | -
|                                                               
|                                                               
|                                                               
|                                                               
|2000                                                            |  | $ | 4,695  |  
|                                                               
|                                                               
|                                                               
|                                                               
|2001                                                            |  |   | 3,173  |  
|                                                               
|                                                               
|                                                               
|                                                               
|2002                                                            |  |   | 2,221  |  
|                                                               
|                                                               
|                                                               
|                                                               
|2003                                                            |  |   | 1,260  |  
|                                                               
|                                                               
|                                                               
|                                                               
|2004 and thereafter                                             |  |   | 246    |  
|                                                                |  |   |        |  
|Net minimum lease payments                                      |  |   | 11,595 |  
|                                                               
|                                                               
|                                                               
|                                                               
|Less: Amounts representing interest                             |  |   | (1,784 | )
|                                                                |  |   |        |  
|Present value of net minimum lease payments under capital lease |  | $ | 9,811  |  
|                                                                |  |   |        |  

The amounts disclosed above include leases related to
discontinued operations because the lease obligations for those
businesses had not been terminated as of December 31, 1999.

NOTE 12.  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.
Additionally, a group of units in the United States providing
certain data management services are managed as a separate
segment with a separate management team, regardless of geographic
 location.

The accounting policies of the reportable segments are the same
as those described in Note 2. The Company evaluates the
performance of its operating segments based on income from
continuing operations before income taxes, interest income and
interest expense. Intersegment sales and transfers are not
significant.

F-17



---



##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

The following table presents summarized financial information for
 the Companys reportable segments (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. Total other assets for 1999 also includes
the investment in discontinued operations. The international
segment includes the United Kingdom and Canada. The International
 and Data Management segments are shown separately due to
quantitative thresholds under SFAS No. 131 being met in
1999; prior periods have been restated accordingly. Additionally,
 prior periods have been restated for the reallocation of certain
 business units among regions during 1999.

|                |  |         |         |               |  |        |         |             |  |                  |         |  |  |   |        |   |  |   |        | 
|--------------- |  | ------- | ------- | ------------- |  | ------ | ------- | ----------- |  | ---------------- | ------- |  |  | - | ------ | - |  | - | ------ | 
|                |  |         |         | Segment       |  | Total  |         | Capital     |  | Depreciation and
|                |  | Revenue |         | Profit (loss) |  | Assets |         | Expeditures |  | Amortization    
|                |  |         |         |               |  |        |         |             |  |                 
|1999            |  |         |         |               |  |        |         |             |  |                  |         |  |  |   |        |   |  |   |        | 
|               
|               
|               
|               
|Midwest         |  | $       | 11,894  |               |  | $      | 1,609   |             |  | $                | 13,698  |  |  | $ | 404    |   |  | $ | 717    | 
|               
|               
|               
|               
|Central         |  |         | 111,084 |               |  |        | (748    | )           |  |                  | 107,277 |  |  |   | 9,791  |   |  |   | 7,047  | 
|               
|               
|               
|               
|Northeast       |  |         | 75,296  |               |  |        | 2,567   |             |  |                  | 122,845 |  |  |   | 8,101  |   |  |   | 3,977  | 
|               
|               
|               
|               
|Southeast       |  |         | 63,586  |               |  |        | 6,971   |             |  |                  | 100,789 |  |  |   | 2,244  |   |  |   | 3,474  | 
|               
|               
|               
|               
|Southwest       |  |         | 51,225  |               |  |        | 4,754   |             |  |                  | 67,716  |  |  |   | 4,604  |   |  |   | 3,791  | 
|               
|               
|               
|               
|West            |  |         | 69,927  |               |  |        | 11,056  |             |  |                  | 109,584 |  |  |   | 3,389  |   |  |   | 4,139  | 
|               
|               
|               
|               
|Data Management |  |         | 53,102  |               |  |        | 2,355   |             |  |                  | 62,108  |  |  |   | 5,472  |   |  |   | 3,373  | 
|               
|               
|               
|               
|International   |  |         | 56,017  |               |  |        | 8,194   |             |  |                  | 174,892 |  |  |   | 3,441  |   |  |   | 4,286  | 
|               
|               
|               
|               
|Other           |  |         | (12,537 | )             |  |        | (48,630 | )           |  |                  | 77,523  |  |  |   | (2,719 | ) |  |   | 2,586  | 
|                |  |         |         |               |  |        |         |             |  |                  |         |  |  |   |        |   |  |   |        | 
|Total           |  | $       | 479,594 |               |  | $      | (11,872 | )           |  | $                | 836,432 |  |  | $ | 34,727 |   |  | $ | 33,390 | 
|                |  |         |         |               |  |        |         |             |  |                  |         |  |  |   |        |   |  |   |        | 
|               
|1998            |  |         |         |               |  |        |         |             |  |                  |         |  |  |   |        |   |  |   |        | 
|               
|               
|               
|               
|Midwest         |  | $       | 3,033   |               |  | $      | 700     |             |  | $                |        |  |  | $ |       |   |  | $ | 59     | 
|               
|               
|               
|               
|Central         |  |         | 95,440  |               |  |        | 10,878  |             |  |                  | 86,933  |  |  |   | 14,079 |   |  |   | 4,049  | 
|               
|               
|               
|               
|Northeast       |  |         | 50,950  |               |  |        | 9,261   |             |  |                  | 107,245 |  |  |   | 1,296  |   |  |   | 1,577  | 
|               
|               
|               
|               
|Southeast       |  |         | 25,262  |               |  |        | 3,505   |             |  |                  | 37,405  |  |  |   | 993    |   |  |   | 1,350  | 
|               
|               
|               
|               
|Southwest       |  |         | 36,454  |               |  |        | 7,754   |             |  |                  | 56,143  |  |  |   | 1,579  |   |  |   | 1,036  | 
|               
|               
|               
|               
|West            |  |         | 37,996  |               |  |        | 9,159   |             |  |                  | 68,984  |  |  |   | 3,550  |   |  |   | 1,983  | 
|               
|               
|               
|               
|Data Management |  |         | 5,387   |               |  |        | 1,944   |             |  |                  | 16,349  |  |  |   | 86     |   |  |   | 97     | 
|               
|               
|               
|               
|International   |  |         | 2,897   |               |  |        | 828     |             |  |                  | 12,674  |  |  |   |       |   |  |   | 111    | 
|               
|               
|               
|               
|Other           |  |         | 1,363   |               |  |        | (14,205 | )           |  |                  | 45,952  |  |  |   |       |   |  |   | 2,153  | 
|                |  |         |         |               |  |        |         |             |  |                  |         |  |  |   |        |   |  |   |        | 
|Total           |  | $       | 258,782 |               |  | $      | 29,824  |             |  | $                | 431,685 |  |  | $ | 21,583 |   |  | $ | 12,415 | 
|                |  |         |         |               |  |        |         |             |  |                  |         |  |  |   |        |   |  |   |        | 
|1997            |  |         |         |               |  |        |         |             |  |                  |         |  |  |   |        |   |  |   |        | 
|               
|               
|               
|               
|Midwest         |  | $       | 1,365   |               |  | $      | 442     |             |  | $                |        |  |  | $ |       |   |  | $ | 14     | 
|               
|               
|               
|               
|Central         |  |         | 84,643  |               |  |        | 19,193  |             |  |                  | 64,432  |  |  |   | 10,178 |   |  |   | 2,349  | 
|               
|               
|               
|               
|Northeast       |  |         | 13,429  |               |  |        | 1,750   |             |  |                  | 38,474  |  |  |   | 65     |   |  |   | 436    | 
|               
|               
|               
|               
|Southeast       |  |         | 10,575  |               |  |        | 1,043   |             |  |                  | 20,806  |  |  |   | 324    |   |  |   | 712    | 
|               
|               
|               
|               
|Southwest       |  |         |        |               |  |        |        |             |  |                  |        |  |  |   |       |   |  |   |       | 
|               
|               
|               
|               
|West            |  |         | 2,572   |               |  |        | 823     |             |  |                  | 21,088  |  |  |   |       |   |  |   | 108    | 
|               
|               
|               
|               
|Data Management |  |         |        |               |  |        |        |             |  |                  |        |  |  |   |       |   |  |   |       | 
|               
|               
|               
|               
|International   |  |         |        |               |  |        |        |             |  |                  |        |  |  |   |       |   |  |   |       | 
|               
|               
|               
|               
|Other           |  |         | (485    | )             |  |        | (10,125 | )           |  |                  | 33,099  |  |  |   | (168   | ) |  |   | 1,322  | 
|                |  |         |         |               |  |        |         |             |  |                  |         |  |  |   |        |   |  |   |        | 
|Total           |  | $       | 112,099 |               |  | $      | 13,126  |             |  | $                | 177,899 |  |  | $ | 10,399 |   |  | $ | 4,941  | 
|                |  |         |         |               |  |        |         |             |  |                  |         |  |  |   |        |   |  |   |        | 

F-18



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

The following table presents the details of Other
segment profit (loss) (in thousands):

|                                                                 |       |                         |         |         |   |      |        |         |   |   |        |         |  
|---------------------------------------------------------------- | ----- | ----------------------- | ------- | ------- | - | ---- | ------ | ------- | - | - | ------ | ------- | -
|                                                                 |       |                        
|                                                                 |       | Year Ended December 31,
|                                                                 |       |                        
|                                                                 |       | 1999                    |         | 1998    |   | 1997
|                                                                 |       |                         |         |         |   |     
|Net interest expense                                             |       | $                       | (10,268 | )       |   | $    | (3,076 | )       |   | $ | (830   | )      
|                                                                
|                                                                
|                                                                
|                                                                
|Corporate expenses not allocated to operating segments and other |       |                         | (36,259 | )       |   |      | (9,711 | )       |   |   | (8,008 | )      
|                                                                
|                                                                
|                                                                
|                                                                
|Amortization of intangibles not allocated to operating segments  |       |                         | (1,885  | )       |   |      | (1,139 | )       |   |   | (1,066 | )      
|                                                                
|                                                                
|                                                                
|                                                                
|Compensatory stock option expense                                |       |                         | (218    | )       |   |      | (279   | )       |   |   | (221   | )      
|                                                                 |       |                         |         |         |   |      |        |         |   |   |        |        
|                                                                 | TOTAL |                         | $       | (48,630 | ) |      | $      | (14,205 | ) |   | $      | (10,125 | )
|                                                                 |       |                         |         |         |   |      |        |         |   |   |        |        

The following table presents the details of Other
total assets (in thousands):

|                                                                |       |              |        |        |  |      |        |        |  |   |        |        | 
|--------------------------------------------------------------- | ----- | ------------ | ------ | ------ |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                                                                |       |             
|                                                                |       | December 31,
|                                                                |       |             
|                                                                |       | 1999         |        | 1998   |  | 1997
|                                                                |       |              |        |        |  |     
|Net goodwill not allocated to operating segments                |       | $            | 26,888 |        |  | $    | 29,900 |        |  | $ | 17,351 |       
|                                                               
|                                                               
|                                                               
|                                                               
|Net other intangible assets not allocated to operating segments |       |              | 9,426  |        |  |      | 5,931  |        |  |   | 4,578  |       
|                                                               
|                                                               
|                                                               
|                                                               
|Net investment in discontinued operations                       |       |              | 18,682 |        |  |      |       |        |  |   |       |       
|                                                               
|                                                               
|                                                               
|                                                               
|Other corporate assets not allocated to operating segments      |       |              | 22,527 |        |  |      | 10,121 |        |  |   | 11,170 |       
|                                                                |       |              |        |        |  |      |        |        |  |   |        |       
|                                                                | TOTAL |              | $      | 77,523 |  |      | $      | 45,952 |  |   | $      | 33,099 | 
|                                                                |       |              |        |        |  |      |        |        |  |   |        |       

As of December 31, 1999, the Company had fixed assets
totaling $26.1 million in all foreign countries combined.
Amounts were not material prior to 1999.

NOTE 13.  RELATED PARTY TRANSACTIONS

Certain members of management are indebted to the Company
pursuant to the terms of ten-year collateralized promissory notes
 dated June 5, 1998, which provide for extensions of credit
up to a maximum aggregate principal amount of $6.6 million. The
terms of the notes provide that funds may be advanced to these
employees on the date of execution of the notes and on each of
the three anniversary dates thereafter and/or on other defined
dates.

Generally, the notes are collateralized by each employees
unexercised stock options granted on May 29, 1998, and any
of the Companys common stock acquired upon exercise of such
 options. Advances under a note will be forgiven in the event of
a change in control of the Company. Interest accrues under each
note at the applicable federal rate. As of December 31,
1999, $3.2 million was due to the Company pursuant to these
notes.

The Company purchases printing services from a company owned by
the wife of a director of the Company. For the years ended
December 31, 1999, 1998 and 1997, the Company paid
approximately $3.6 million, $2.7 million and
$1.7 million, respectively, for such printing services. In
December 1997, the Company sold certain assets to this
company and recognized a gain on the sale of approximately
$183,000.

The Company leases property and a building from a general
partnership in which one of the Companys directors is the
managing partner and 33.33 percent owner. Another director
of the Company owns 33.33 percent of such partnership and is
 one of its partners. The Company paid $163,800, $163,800 and
$150,150 in rent to that partnership for the years ended
December 31, 1999, 1998 and 1997, respectively.

The Company leases certain equipment from a company in which a
director is a 50 percent owner and its president. For the
years ended December 31, 1999, 1998 and 1997, the Company
paid $106,900, $120,300 and $116,500, respectively, in rent for
such operating leases.

F-19



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Continued

The Company believes that all the above transactions were on
terms that were reasonable and competitive. Additional
transactions of the nature described may take place in the
ordinary course of business in the future.

NOTE 14.  COMMITMENTS AND CONTINGENCIES

On December 21, 1999 and various dates thereafter, several
individuals filed complaints against the Company and certain
executive officers in various United States District Courts. The
complaints purport to be brought as class actions on behalf of
purchasers of shares of the Companys common stock during
periods ranging from August 14, 1998 through
December 17, 1999. The complaints generally allege that the
Company and certain of its officers made public statements
containing material omissions or misrepresentations which created
 the misleading impression that the Companys revenues and
earnings were on target with market forecasts and consequently
artificially inflated the market price of the shares of the
Companys common stock. The complaints allege violations of
the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder, and one complaint alleges violations of
the Securities Act of 1933. The complaints seek unspecified
damages allegedly incurred as a result of the decline in the
market price of shares of the Companys common stock after
the Company announced on December 17, 1999 that it expected
lower fourth quarter earnings per share compared with concensus
analysts estimates.

These actions are in a preliminary stage. However, the Company
believes, based on the advice of external legal counsel, that it
and the named officers have substantial defenses to the
plaintiffs claims, and the Company intends to vigorously
defend these claims. While the final resolution of this
litigation cannot be presently determined, management does not
believe it will have a material adverse effect on the
Companys business, or on future consolidated financial
results, although such adverse effect could be possible.

Various other claims have been made against the Company in the
normal course of business. Management believes that none of those
 legal proceedings will have a material adverse effect on the
Companys business, financial condition or results of
operations.

F-20



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##### Table of Contents



LASON, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Concluded

NOTE 15.  SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

The following is a summary of unaudited quarterly results of
operations for each quarter of 1999 and 1998 (in thousands,
except for per share amounts). As discussed in Note 2, the
acquisition of M-R is accounted for under the purchase method of
accounting for all periods presented. As shown below, amounts
have been restated from those quarterly results previously
reported to present the decision in December 1999 to
discontinue certain operations. See Note 3.

|                                                                      |                                              |                                              |         |               |      |     |         |       |       |     |         |      |      |     |         |       |       |   |        |      |      |   |        |      |      |   |        |      |      |   |        |      |      | 
|--------------------------------------------------------------------- | -------------------------------------------- | -------------------------------------------- | ------- | ------------- | ---- | --- | ------- | ----- | ----- | --- | ------- | ---- | ---- | --- | ------- | ----- | ----- | - | ------ | ---- | ---- | - | ------ | ---- | ---- | - | ------ | ---- | ---- | - | ------ | ---- | ---- | 
|                                                                      |                                              |                                              |         |              
|                                                                      |                                              | 1999 Quarters                                |         | 1998 Quarters
|                                                                      |                                              |                                              |         |              
|                                                                      |                                              | 1st                                          |         | 2nd           |      | 3rd |         | 4th   |       | 1st |         | 2nd  |      | 3rd |         | 4th  
|                                                                      |                                              |                                              |         |               |      |     |         |       |       |     |         |      |      |     |         |      
|Net revenue, as previously reported                                   |                                              | $                                            | 106,162 |               |      | $   | 119,393 |       |       | $   | 148,885 |      |      | $   | 138,188 |       |       | $ | 46,566 |      |      | $ | 62,636 |      |      | $ | 77,934 |      |      | $ | 92,620 |     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Less net revenues of discontinued operations                          |                                              |                                              | 7,704   |               |      |     | 8,785   |       |       |     | 8,384   |      |      |     | 8,161   |       |       |   | 4,376  |      |      |   | 5,013  |      |      |   | 5,929  |      |      |   | 5,656  |     
|                                                                      |                                              |                                              |         |               |      |     |         |       |       |     |         |      |      |     |         |       |       |   |        |      |      |   |        |      |      |   |        |      |      |   |        |     
|Net revenue, as reported herein                                       |                                              | $                                            | 98,458  |               |      | $   | 110,608 |       |       | $   | 140,501 |      |      | $   | 130,027 |       |       | $ | 42,190 |      |      | $ | 57,623 |      |      | $ | 72,005 |      |      | $ | 86,964 |     
|                                                                      |                                              |                                              |         |               |      |     |         |       |       |     |         |      |      |     |         |       |       |   |        |      |      |   |        |      |      |   |        |      |      |   |        |     
|Gross profit, as previously reported                                  |                                              | $                                            | 37,884  |               |      | $   | 42,765  |       |       | $   | 57,226  |      |      | $   | 24,533  |       |       | $ | 16,755 |      |      | $ | 22,122 |      |      | $ | 27,032 |      |      | $ | 32,698 |     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Less gross profit of discontinued operations                          |                                              |                                              | 3,126   |               |      |     | 3,040   |       |       |     | 2,146   |      |      |     | 777     |       |       |   | 1,691  |      |      |   | 1,904  |      |      |   | 2,378  |      |      |   | 2,317  |     
|                                                                      |                                              |                                              |         |               |      |     |         |       |       |     |         |      |      |     |         |       |       |   |        |      |      |   |        |      |      |   |        |      |      |   |        |     
|Gross profit, as reported herein                                      |                                              | $                                            | 34,758  |               |      | $   | 39,725  |       |       | $   | 55,080  |      |      | $   | 23,756  |       |       | $ | 15,064 |      |      | $ | 20,218 |      |      | $ | 24,654 |      |      | $ | 30,381 |     
|                                                                      |                                              |                                              |         |               |      |     |         |       |       |     |         |      |      |     |         |       |       |   |        |      |      |   |        |      |      |   |        |      |      |   |        |     
|Net income (loss) from  continuing operations as previously
	reported |                                              | $                                            | 6,788   |               |      | $   | (980    | )     |       | $   | 8,202   |      |      | $   | (29,186 | )     |       | $ | 3,466  |      |      | $ | 3,840  |      |      | $ | 4,770  |      |      | $ | 6,159  |     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Net (income) loss from discontinued operations                        |                                              |                                              | (304    | )             |      |     | 171     |       |       |     | 1,257   |      |      |     | 3,210   |       |       |   | 160    |      |      |   | (115   | )    |      |   | (102   | )    |      |   | (134   | )   
|                                                                      |                                              |                                              |         |               |      |     |         |       |       |     |         |      |      |     |         |       |       |   |        |      |      |   |        |      |      |   |        |      |      |   |        |     
|Net income (loss) from continuing operations as reported herein       |                                              | $                                            | 6,484   |               |      | $   | (809    | )     |       | $   | 9,459   |      |      | $   | (25,976 | )     |       | $ | 3,626  |      |      | $ | 3,725  |      |      | $ | 4,668  |      |      | $ | 6,025  |     
|                                                                      |                                              |                                              |         |               |      |     |         |       |       |     |         |      |      |     |         |       |       |   |        |      |      |   |        |      |      |   |        |      |      |   |        |     
|Net income (loss)                                                     |                                              | $                                            | 6,788   |               |      | $   | (980    | )     |       | $   | 8,202   |      |      | $   | (50,300 | )     |       | $ | 3,466  |      |      | $ | 3,840  |      |      | $ | 4,770  |      |      | $ | 6,159  |     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Basic earnings per share:                                             |                                              |                                              |         |               |      |     |         |       |       |     |         |      |      |     |         |       |       |   |        |      |      |   |        |      |      |   |        |      |      |   |        |     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net income (loss) from continuing operations |                                              | $       | 0.44          |      |     | $       | (0.05 | )     |     | $       | 0.53 |      |     | $       | (1.43 | )     |   | $      | 0.31 |      |   | $      | 0.32 |      |   | $      | 0.36 |      |   | $      | 0.41 |     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                              | Net income (loss)                            |         |               | 0.46 |     |         |       | (0.07 | )   |         |      | 0.46 |     |         |       | (2.78 | ) |        |      | 0.30 |   |        |      | 0.33 |   |        |      | 0.37 |   |        |      | 0.42 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Diluted earnings per share:                                           |                                              |                                              |         |               |      |     |         |       |       |     |         |      |      |     |         |       |       |   |        |      |      |   |        |      |      |   |        |      |      |   |        |     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                              | Net income (loss) from continuing operations |         | $             | 0.41 |     |         | $     | (0.05 | )   |         | $    | 0.50 |     |         | $     | (1.43 | ) |        | $    | 0.30 |   |        | $    | 0.30 |   |        | $    | 0.34 |   |        | $    | 0.38 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                              | Net income (loss)                            |         |               | 0.43 |     |         |       | (0.07 | )   |         |      | 0.43 |     |         |       | (2.78 | ) |        |      | 0.29 |   |        |      | 0.31 |   |        |      | 0.35 |   |        |      | 0.39 | 

The net loss in the fourth quarter of 1999 is primarily
attributable to the estimated loss on disposal of discontinued
operations (pretax $32.4 million  see Note 3) and
 the restructuring expense ($14.9 million  see
Note 4) both of which were recorded in the fourth quarter.

F-21



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##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Lason, Inc.

In our opinion, based on our audits and the report of other
auditors, the consolidated financial statements listed in the
accompanying index in Item 14(A) of this Form 10-K
present fairly, in all material respects, the financial position
of Lason, Inc. and its subsidiaries at December 31, 1999 and
 1998, and the results of their operations and their cash flows
for each of the three years in the period ended December 31,
 1999 in conformity with accounting principles generally accepted
 in the United States. In addition, in our opinion, based on our
audits and the report of other auditors, the financial statement
schedule listed in the accompanying index in Item 14(A) of
this Form 10-K presents fairly, in all material respects,
the information set forth therein when read in conjunction with
the related consolidated financial statements. These financial
statements and financial statement schedule are the
responsibility of the Companys management; our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We did not audit the financial statements of M-R Group plc., a
wholly-owned subsidiary, acquired by the Company on June 30,
 1999, as of December 31, and June 30, 1999, and for
the six months ended December 31, 1999, which statements
reflect total assets of $182.9 million as of
December 31, 1999, and total revenues of $40.2 million,
 for the six month period ended December 31, 1999. Those
statements were audited by other auditors whose report thereon
has been furnished to us, and our opinion expressed herein,
insofar as it relates to the amounts included for M-R Group plc.,
 is based solely on the report of the other auditors. We
conducted our audits of the consolidated financial statements in
accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
 principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We
believe that our audits and the report of other auditors provide
a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Detroit, Michigan



F-22



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##### Table of Contents



SCHEDULE I






LASON, INC.


CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEETS


(In thousands)


|                                       |                                            |                    |         |         |  |   |         |         | 
|-------------------------------------- | ------------------------------------------ | ------------------ | ------- | ------- |  | - | ------- | ------- | 
|                                       |                                            |                   
|                                       |                                            | As of December 31,
|                                       |                                            |                   
|                                       |                                            | 1999               |         | 1998   
|                                       |                                            |                    |         |        
|Assets                                 |                                            |                    |         |         |  |   |         |        
|                                      
|                                      
|                                      
|                                      
|Investment in subsidiaries             |                                            | $                  | 417,070 |         |  | $ | 282,701 |        
|                                      
|                                      
|                                      
|                                      
|Deferred tax asset                     |                                            |                    | 350     |         |  |   | 459     |        
|                                      
|                                      
|                                      
|                                      
|Other                                  |                                            |                    | 1,956   |         |  |   | 1,632   |        
|                                       |                                            |                    |         |         |  |   |         |        
|                                       | Total assets                               |                    | $       | 419,376 |  |   | $       | 284,792 | 
|                                       |                                            |                    |         |         |  |   |         |        
|Liabilities                            |                                            |                    |         |         |  |   |         |        
|                                      
|                                      
|                                      
|                                      
|Total liabilities                      |                                            |                    |        |         |  |   |        |        
|                                      
|                                      
|                                      
|                                      
|Stockholders Equity                   |                                            |                    |         |         |  |   |         |        
|                                      
|                                      
|                                      
|                                      
|Common stock                           |                                            | $                  | 182     |         |  | $ | 146     |        
|                                      
|                                      
|                                      
|                                      
|Additional paid in capital             |                                            |                    | 421,544 |         |  |   | 252,479 |        
|                                      
|                                      
|                                      
|                                      
|Accumulated other comprehensive income |                                            |                    | 7,314   |         |  |   |        |        
|                                      
|                                      
|                                      
|                                      
|Treasury stock                         |                                            |                    | (5,541  | )       |  |   |        |        
|                                      
|                                      
|                                      
|                                      
|Retained earnings                      |                                            |                    | (4,123  | )       |  |   | 32,167  |        
|                                       |                                            |                    |         |         |  |   |         |        
|                                       | Total stockholders equity                 |                    |         | 419,376 |  |   |         | 284,792 | 
|                                       |                                            |                    |         |         |  |   |         |        
|                                       | Total liabilities and stockholders equity |                    | $       | 419,376 |  |   | $       | 284,792 | 
|                                       |                                            |                    |         |         |  |   |         |        

S-1



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##### Table of Contents



SCHEDULE I

LASON, INC.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF OPERATIONS


(In thousands)


|                                     |            |                         |         |         |   |      |        |        |  |   |       |       | 
|------------------------------------ | ---------- | ----------------------- | ------- | ------- | - | ---- | ------ | ------ |  | - | ----- | ----- | 
|                                     |            |                        
|                                     |            | Year Ended December 31,
|                                     |            |                        
|                                     |            | 1999                    |         | 1998    |   | 1997
|                                     |            |                         |         |         |   |     
|Revenue                              |            | $                       |        |         |   | $    |       |        |  | $ |      |      
|                                    
|                                    
|                                    
|                                    
|Operating Expenses                   |            |                         |         |         |   |      |        |        |  |   |       |      
|                                    
|                                    
|                                    
|                                    
|Compensatory stock option expense    |            |                         | 218     |         |   |      | 279    |        |  |   | 221   |      
|                                     |            |                         |         |         |   |      |        |        |  |   |       |      
|Operating loss                       |            |                         | (218    | )       |   |      | (279   | )      |  |   | (221  | )    
|                                    
|                                    
|                                    
|                                    
|Equity in net income of subsidiaries |            |                         | (36,181 | )       |   |      | 18,416 |        |  |   | 9,219 |      
|                                     |            |                         |         |         |   |      |        |        |  |   |       |      
|Income before taxes                  |            |                         | (36,399 | )       |   |      | 18,137 |        |  |   | 8,998 |      
|                                    
|                                    
|                                    
|                                    
|Income tax benefit                   |            |                         | 109     |         |   |      | (98    | )      |  |   | (72   | )    
|                                     |            |                         |         |         |   |      |        |        |  |   |       |      
|                                     | Net Income |                         | $       | (36,290 | ) |      | $      | 18,235 |  |   | $     | 9,070 | 
|                                     |            |                         |         |         |   |      |        |        |  |   |       |      

S-2



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##### Table of Contents



SCHEDULE I

LASON, INC.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF CASH FLOWS


(In thousands)


|                                                 |  |                         |        |      |  |      |          |   |  |   |         |  
|------------------------------------------------ |  | ----------------------- | ------ | ---- |  | ---- | -------- | - |  | - | ------- | -
|                                                 |  |                        
|                                                 |  | Year Ended December 31,
|                                                 |  |                        
|                                                 |  | 1999                    |        | 1998 |  | 1997
|                                                 |  |                         |        |      |  |     
|Net Cash Used in Operating Activities            |  | $                       |       |      |  | $    |         |   |  | $ |        |  
|                                                
|                                                
|                                                
|                                                
|Cash Flows from Investment Activities            |  |                         |        |      |  |      |          |   |  |   |         |  
|                                                
|                                                
|                                                
|                                                
|Investment in subsidiaries                       |  |                         | (1,425 | )    |  |      | (130,430 | ) |  |   | (65,248 | )
|                                                 |  |                         |        |      |  |      |          |   |  |   |         |  
|Net cash used in investing activities            |  |                         | (1,425 | )    |  |      | (130,430 | ) |  |   | (65,248 | )
|                                                
|                                                
|                                                
|                                                
|Cash Flows from Financing Activities             |  |                         |        |      |  |      |          |   |  |   |         |  
|                                                
|                                                
|                                                
|                                                
|Issuance of shares of common stock               |  |                         |       |      |  |      | 129,858  |   |  |   | 65,103  |  
|                                                
|                                                
|                                                
|                                                
|Proceeds from exercise of employee stock options |  |                         | 1,425  |      |  |      | 572      |   |  |   | 145     |  
|                                                 |  |                         |        |      |  |      |          |   |  |   |         |  
|Net cash provided by financing activities        |  |                         | 1,425  |      |  |      | 130,430  |   |  |   | 65,248  |  
|                                                
|                                                
|                                                
|                                                
|Change in cash                                   |  |                         |       |      |  |      |         |   |  |   |        |  
|                                                
|                                                
|                                                
|                                                
|Cash at beginning of year                        |  |                         |       |      |  |      |         |   |  |   |        |  
|                                                
|                                                
|                                                
|                                                
|Cash at end of year                              |  | $                       |       |      |  | $    |         |   |  | $ |        |  
|                                                 |  |                         |        |      |  |      |          |   |  |   |         |  

S-3



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##### Table of Contents








SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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.



| |     |                          
| | --- | -------------------------
| | By: | /s/ WILLIAM J. RAUWERDINK

| |                             
| | ----------------------------
| |                             
| | William J. Rauwerdink       
| | Executive Vice President and
| | Chief Financial Officer     

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and the dates
indicated:

|                                                                       |  |                                                                                                                                        |  |                
|---------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------
|Signature                                                              |  | Title                                                                                                                                  |  | Date           
|                                                                       |  |                                                                                                                                        |  |                
|/s/ GARY L. MONROEGary L. Monroe                                       |  | Chief Executive Officer, Chairman of the Board, (Principal
	Executive Officer) and Director                                            |  | March 30,  2000
|/s/ WILLIAM J. RAUWERDINKWilliam J. Rauwerdink                         |  | Executive Vice President, Chief Financial Officer, Treasurer and
	Secretary (Principal Financial and Accounting Officer) and
	Director |  | March 30,  2000
|/s/ JOHN R. MESSINGERJohn R. Messinger                                 |  | President and Chief Operating Officer                                                                                                  |  | March 30,  2000
|/s/ FARIBORZ GHADARFariborz Ghadar                                     |  | Director                                                                                                                               |  | March 30,  2000
|/s/ ALLEN J. NESBITTAllen J. Nesbitt                                   |  | Director                                                                                                                               |  | March 30,  2000
|/s/ JOSEPH P. NOLANJoseph P. Nolan                                     |  | Director                                                                                                                               |  | March 30,  2000
|/s/ MICHAEL T. WILLISMichael T. Willis                                 |  | Director                                                                                                                               |  | March 30,  2000
|/s/ ROBERT A. YANOVERRobert A. Yanover                                 |  | Director                                                                                                                               |  | March 30,  2000
|*By: /s/ WILLIAM J. RAUWERDINKWilliam J. Rauwerdink,
	Attorney-in-Fact |  |                                                                                                                                        |  |                



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##### Table of Contents



EXHIBIT INDEX

The following exhibits are filed as part of this report as
required by Item 601 of Regulation S-K. The exhibits
marked with an asterisk are management contracts and compensatory
 plans required to be filed as exhibits to this report.

|            |        |             |  |                                                                                                                                                                                                                  
|----------- | ------ | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |        | 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 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)
|            | 4.4    |             |  | Second Amendment to Third Amended and Restated Credit
	Agreement                                                                                                                                                
|            | 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)                                                                                            
|            | 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)                                                                                                                 

E-1



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##### Table of Contents



|            |        |             |  |                                                                                                
|----------- | ------ | ----------- |  | -----------------------------------------------------------------------------------------------
|Exhibit No. |        | Description
|            |        |            
|            | 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)                            
|            | 21.1   |             |  | Subsidiaries of the Company                                                                   
|            | 23.1   |             |  | Consent of PricewaterhouseCoopers LLP                                                         
|            | 23.2   |             |  | Consent of Deloitte & Touche LLP                                                              
|            | 24.1   |             |  | Powers of attorney                                                                            
|            | 27.1   |             |  | Financial Data Schedule                                                                       
|            | 27.2   |             |  | Financial Data Schedule. (12/31/98  Restated)                                                
|            | 27.3   |             |  | Financial Data Schedule (12/31/97  Restated)                                                 
|            | 99.    |             |  | Auditors Report of Deloitte & Touche LLP                                                     








| |     |                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------
| | (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.                          
|   
|(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.

E-2