MEDQUIST INC - FORM 10-Q

Attached files

file	filename
EX-10.5 - EX-10.5 - MEDQUIST INC	w78445exv10w5.htm
EX-32.1 - EX-32.1 - MEDQUIST INC	w78445exv32w1.htm
EX-31.1 - EX-31.1 - MEDQUIST INC	w78445exv31w1.htm
EX-10.4 - EX-10.4 - MEDQUIST INC	w78445exv10w4.htm
EX-31.2 - EX-31.2 - MEDQUIST INC	w78445exv31w2.htm
EX-32.2 - EX-32.2 - MEDQUIST INC	w78445exv32w2.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010.


o		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: 001-13326

MEDQUIST INC.

(Exact name of registrant as specified in its charter)


New Jersey		22-2531298
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1000 BISHOPS GATE BOULEVARD
SUITE 300
MOUNT LAUREL, NEW JERSEY		08054-4632
(Address of principal executive offices)		(Zip Code)

(856) 206-4000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or 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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of registrant’s shares of common stock, no par value, outstanding as of May 5, 2010 was 37,555,893.

MEDQUIST INC.
INDEX


		Page
PART I. FINANCIAL INFORMATION		1
Item 1. Financial Statements		1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 4. Controls and Procedures		20

PART II. OTHER INFORMATION		21

Item 1. Legal Proceedings		21
Item 1A. Risk Factors		23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		23
Item 3. Defaults Upon Senior Securities		23
Item 5. Other Information		23
Item 6. Exhibits		23
EX-10.4
EX-10.5
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MedQuist Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
Unaudited


	Three months ended
	March 31,
	2010			2009
Net revenues	$	73,981		$	78,944


Operating costs and expenses:
Cost of revenues		49,833			53,868
Selling, general and administrative		8,797			9,438
Research and development		2,281			2,416
Depreciation		1,910			2,552
Amortization of intangible assets		1,820			1,511
Cost of legal proceedings and settlements		1,043			1,924
Acquisition related charges		894			—
Restructuring charges		60			—


Total operating costs and expenses		66,638			71,709


Operating income		7,343			7,235

Equity in income of affiliated company		514			72
Interest income (expense), net		(146	)		46


Income before income taxes		7,711			7,353

Income tax provision		367			499


Net income	$	7,344		$	6,854


Net income per share:
Basic	$	0.20		$	0.18

Diluted	$	0.20		$	0.18


Weighted average shares outstanding:
Basic		37,556			37,556

Diluted		37,556			37,556

The accompanying notes are an integral part of these consolidated financial statements.

MedQuist Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands)
Unaudited


	March 31,			December 31,
	2010			2009
Assets
Current assets:
Cash and cash equivalents	$	21,726		$	25,216
Accounts receivable, net of allowance of $2,984 and $3,159, respectively		43,897			43,627
Income tax receivable		283			772
Other current assets		5,299			4,940

Total current assets		71,205			74,555

Property and equipment, net		10,758			11,772
Goodwill		40,723			40,813
Other intangible assets, net		36,032			36,307
Deferred income taxes		1,312			1,396
Other assets		17,769			9,818


Total assets	$	177,799		$	174,661


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	7,544		$	8,687
Accrued expenses		22,634			22,848
Accrued compensation		10,495			12,432
Deferred income taxes		4			4
Deferred revenue		10,112			10,854

Total current liabilities		50,789			54,825

Deferred income taxes		3,424			3,240
Other non-current liabilities		1,745			1,848


Commitments and contingencies (Note 8)

Shareholders’ equity:
Common stock — no par value; authorized 60,000 shares; 37,556 and 37,556 shares issued and outstanding, respectively		237,896			237,848
Accumulated deficit		(118,510	)		(125,854	)
Accumulated other comprehensive income		2,455			2,754


Total shareholders’ equity		121,841			114,748


Total liabilities and shareholders’ equity	$	177,799		$	174,661

The accompanying notes are an integral part of these consolidated financial statements.

MedQuist Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
Unaudited


	Three months ended
	March 31,
	2010			2009
Operating activities:
Net income	$	7,344		$	6,854
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		3,730			4,063
Equity in income of affiliated company		(514	)		(72	)
Deferred income tax provision		182			309
Stock option expense		48			48
Provision for (recovery of) doubtful accounts		779			(105	)
Loss on disposal of property and equipment		—			24

Changes in operating assets and liabilities:
Accounts receivable		(1,035	)		3,920
Income tax receivable		483			(20	)
Other current assets		(166	)		923
Other non-current assets		65			(18	)
Accounts payable		(819	)		392
Accrued expenses		(482	)		(1,739	)
Accrued compensation		(1,938	)		930
Deferred revenue		(766	)		(1,424	)
Other non-current liabilities		(84	)		63

Net cash provided by operating activities	$	6,827		$	14,148


Investing activities:
Purchase of property and equipment		(1,737	)		(1,393	)
Capitalized software		(925	)		(766	)
Deposit for Spheris Acquisition		(7,500	)		—

Net cash used in investing activities		(10,162	)		(2,159	)


Financing activities:
Debt issuance costs		(195	)		—

Net cash used in financing activities		(195	)		—


Effect of exchange rate changes		40			(53	)


Net increase (decrease) in cash and cash equivalents		(3,490	)		11,936


Cash and cash equivalents — beginning of period		25,216			39,918


Cash and cash equivalents — end of period	$	21,726		$	51,854


Supplemental cash flow information:

Cash paid (recovered) for income taxes	$	(695	)	$	(131	)

Accommodation payments paid with credits	$	—		$	61

The accompanying notes are an integral part of these consolidated financial statements.

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

1. Basis of Presentation

The consolidated financial statements and footnotes thereto are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted pursuant to such rules and regulations although we believe that the disclosures are adequate to make the information presented not misleading. The consolidated financial statements include our accounts and the accounts of all of our wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

These statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for the fair presentation of our results of operation, financial position and cash flows. Interim results are not necessarily indicative of results for a full year. The information in this Form 10-Q should be read in conjunction with our 2009 Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission (SEC) on March 12, 2010.

Recent Developments On April 22, 2010, we and our majority shareholder, CBay Inc. (together with us, the Purchasers), completed the acquisition (the Acquisition) of substantially all of the assets of Spheris, Inc. (Spheris) and certain of its affiliates (collectively with Spheris, the Sellers), pursuant to the terms of the Stock and Asset Purchase Agreement (the Agreement) entered into between the Purchasers and Sellers on April 15, 2010. See Note 11 for a description of the transaction.

Recent Accounting Pronouncements

In September 2009, the Financial Accounting Standards Board (FASB) ratified two consensuses affecting revenue recognition:

The first consensus, Revenue Recognition—Multiple-Element Arrangements, sets forth requirements that must be met for an entity to recognize revenue from the sale of a delivered item that is part of a multiple-element arrangement when other items have not yet been delivered. One of those current requirements is that there be objective and reliable evidence of the standalone selling price of the undelivered items, which must be supported by either vendor-specific objective evidence (VSOE) or third-party evidence (TPE).

This consensus eliminates the requirement that all undelivered elements have VSOE or TPE before an entity can recognize the portion of an overall arrangement fee that is attributable to items that already have been delivered. In the absence of VSOE or TPE of the standalone selling price for one or more delivered or undelivered elements in a multiple-element arrangement, entities will be required to estimate the selling prices of those elements. The overall arrangement fee will be allocated to each element (both delivered and undelivered items) based on their relative selling prices, regardless of whether those selling prices are evidenced by VSOE or TPE or are based on the entity’s estimated selling price. Application of the “residual method” of allocating an overall arrangement fee between delivered and undelivered elements will no longer be permitted.

The second consensus, Software-Revenue Recognition, addresses the accounting for transactions involving software to exclude from its scope tangible products that contain both software and non-software and not-software components that function together to deliver a products functionality.

The consensuses are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. We are evaluating the potential impact of these requirements on our financial statements.

2. Comprehensive income

Comprehensive income was as follows:


	Three months ended March 31,
	2010			2009
Net income	$	7,344		$	6,854
Foreign currency translation adjustment		(299	)		(265	)

Comprehensive income	$	7,045		$	6,589

3. Net Income per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares outstanding during each period. Diluted net income per share is computed by dividing net income by the weighted average shares outstanding, as adjusted for the dilutive effect of common stock equivalents, which consist only of stock options, using the treasury stock method.

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

The following table reflects the weighted average shares outstanding used to compute basic and diluted net income per share:


	Three months ended March 31,
	2010		2009
Net income	$	7,344	$	6,854

Weighted average shares outstanding:
Basic		37,556		37,556
Effect of dilutive shares		—		—

Diluted		37,556		37,556

Net income per share:
Basic	$	0.20	$	0.18
Diluted	$	0.20	$	0.18

For the three months ended March 31, 2010 and 2009, 1,152 and 1,582 options, respectively, were excluded from the computation of diluted earnings per share as the options’ exercise price was greater than the average market price of the common stock during the respective period.

4. Accrued Expenses

Accrued expenses consisted of the following:


	March 31, 2010		December 31, 2009
Customer accommodations	$	11,477	$	11,635
Other (no item exceeds 5% of current liabilities)		11,157		11,213

Total accrued expenses	$	22,634	$	22,848

In November 2003, one of our employees raised allegations that we had engaged in improper billing practices. In response, our board of directors undertook an independent review of these allegations (Review). In response to our customers’ concern over the public disclosure of certain findings from the Review, we made the decision in the fourth quarter of 2005 to take action to try to avoid litigation and preserve and solidify our customer business relationships by offering a financial accommodation to certain of our customers.

In connection with our decision to offer financial accommodations to certain of our customers (Accommodation Customers), we analyzed our historical billing information and the available report-level data (Management’s Billing Assessment) to develop individualized accommodation offers to be made to Accommodation Customers (Accommodation Analysis). Based on the Accommodation Analysis, our board of directors authorized management to make cash or credit accommodation offers to Accommodation Customers in the aggregate amount of $75,818. By accepting our accommodation offer, the customer agreed, among other things, to release us from any and all claims and liability regarding the billing related issues. We are unable to predict how many customers, if any, may accept the outstanding accommodation offers on the terms proposed by us, nor are we able to predict the timing of the acceptance of any outstanding accommodation offers. Until any offers are accepted, we may withdraw or modify the terms of the accommodation program or any outstanding offers at any time. In addition, we are unable to predict how many future offers, if made, will be accepted on the terms proposed by us. We regularly evaluate whether to proceed with, modify or withdraw the accommodation program or any outstanding offers.

The following is a summary of the financial statement activity related to the customer accommodation.


	Three months ended			Year ended
	March 31, 2010			December 31, 2009
Beginning balance	$	11,635		$	12,055
Payments and other adjustments		(158	)		(317	)
Credits		—			(103	)

Ending balance	$	11,477		$	11,635

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

2009 Restructuring Plan

During the third and fourth quarters of 2009, as a result of management’s continued planned process improvement and technology development investments we committed to an exit and disposal plan which includes projected employee severance for planned reduction in headcount. Because of plan development in late 2009 and execution of the plan over multiple quarters in 2009 and 2010, not all personnel affected by the plan know of the plan or its impact. The plan includes costs of $2.5 million for employee severance and $0.4 million for vacating operating leases. The table below reflects the financial statement activity related to the 2009 restructuring plan:


	Three Months Ended			Year Ended
	March 31, 2010			December 31, 2009
Beginning balance	$	2,064		$	—
Charge		60			2,810
Cash paid		(495	)		(746	)

Ending balance	$	1,629		$	2,064

The charge for the three months ended March 31, 2010 reflected costs related to vacating facilities.

5. Cost of Legal Proceedings and Settlements

The following is a summary of the amounts recorded as Cost of legal proceedings and settlements, in the accompanying consolidated statements of operations:


	Three months ended March 31,
	2010		2009
Legal fees	$	1,043	$	1,894
Other professional fees		—		30

Total	$	1,043	$	1,924

Other professional fees represent document search and retrieval costs.

6. Income Taxes

Our consolidated income tax expense consists principally of an increase in deferred tax liabilities related to goodwill amortization deductions for income tax purposes during the applicable period as well as state and foreign income taxes. We recorded a valuation allowance to reduce our net deferred tax assets to an amount that is more likely than not to be realized in future years.

We expect that our consolidated income tax expense for the year ended December 31, 2010, similar to the year ended December 31, 2009, will consist principally of an increase in deferred tax liabilities related to goodwill amortization deductions for income tax purposes during the applicable year as well as state and foreign income taxes. We regularly assess the future realization of deferred taxes and whether the valuation allowance against the majority of domestic deferred tax assets is still warranted. To the extent sufficient positive evidence, including past results and future projections, exists to benefit all or part of these benefits, the valuation allowance will be released accordingly.

We classify penalties and interest related to uncertain tax positions as part of income tax expense. There were no material changes to our uncertain tax positions, including penalties and interest for the three months ended March 31, 2010.

7. Credit Agreement

In August 2009, we entered into a five-year $25 million revolving credit agreement (the Wells Fargo Credit Agreement) with Wells Fargo Foothill, LLC. Subject to certain terms and conditions, the Wells Fargo Credit Agreement provided committed revolving funding through August 2014 and included an option whereby we could increase our maximum credit to $40 million. The amount available for borrowings was based upon a percentage of eligible accounts receivable. At March 31, 2010, $21.0 million was available

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

under the Wells Fargo Credit Agreement. At March 31, 2010 and December 31, 2009, there were no borrowings outstanding under the Wells Fargo Credit Agreement.

The Wells Fargo Credit Agreement terminated April 22, 2010 when we acquired substantially all of the assets of Spheris, Inc. and entered into a credit agreement with General Electric Capital Corporation, CapitalSource Bank, and Fifth Third Bank, as described in Note 11. Pursuant to its terms, we paid a fee of $576 to terminate the Wells Fargo Credit Agreement.

8. Commitments and Contingencies

Customer Litigation

Kaiser Litigation

On June 6, 2008, plaintiffs Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, The Permanente Medical Group, Inc., Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc., and Kaiser Foundation Health Plan of Colorado (collectively, Kaiser) filed suit against MedQuist Inc. and MedQuist Transcriptions, Ltd. (collectively, MedQuist) in the Superior Court of the State of California in and for the County of Alameda. The action is entitled Foundation Health Plan Inc., et al v. MedQuist Inc. et al., Case No. CV-078-03425 PJH. The complaint asserts five causes of action, for common law fraud, breach of contract, violation of California Business and Professions Code section 17200, unjust enrichment, and a demand for an accounting. More specifically, Kaiser alleges that we fraudulently inflated the payable units of measure in medical transcription reports generated by us for Kaiser pursuant to the contracts between the parties. The damages alleged in the complaint include an estimated $7 million in compensatory damages, as well as punitive damages, attorneys’ fees and costs, and injunctive relief. We contend that we did not breach the contracts with Kaiser, or commit the fraud alleged, and we intend to defend the suit vigorously. The parties participated in private mediation on July 24, 2008, but the case was not settled. We removed the case to the United States District Court for the Northern District of California, and we filed motions to dismiss Kaiser’s complaint and to transfer venue of the case to the United Stated District Court for the District of New Jersey. Kaiser stipulated to transfer, and the case was transferred to the United States District Court for the District of New Jersey on or about August 26, 2008

The parties exchanged initial disclosures on October 6, 2008 and appeared before the court for an initial scheduling conference on October 14, 2008. Kaiser’s initial disclosures claim damages, including compensatory damages, punitive damages, and prejudgment interest, in excess of $12 million. Following the scheduling conference, the court ordered the parties to mediation. The parties participated in court-ordered mediation on February 27, 2009 but the case was not settled. The court heard argument on our motion to dismiss on March 19, 2009. On April 8, 2009, the court entered an order denying our motion to dismiss, except that our motion to dismiss plaintiffs’ claim under the fraudulent prong of the California Unfair Competition Law was granted. The court issued a scheduling order on April 17, 2009, setting a pretrial schedule. We filed our answer to plaintiff’s complaint on April 23, 2009.

Kaiser served an initial set of discovery requests on May 7, 2009. On May 20, 2009, the court temporarily stayed discovery to address allegations of ethical misconduct by Kaiser’s trial counsel, Greenberg Traurig, LLP. On July 1, 2009, the court granted us leave to conduct limited written discovery regarding Greenberg Traurig’s alleged ethical misconduct and continued the temporary stay of all other discovery. On July 14, 2009, we moved for sanctions against Greenberg Traurig for breach of the New Jersey Rules of Professional Conduct, and we moved to stay the litigation pending resolution of the motion for sanctions. Discovery is presently stayed pending resolution of our motion to stay. No hearing date has been set for any of the pending motions. On February 24, 2010, the court granted our motion to stay pending resolution of the motion for sanctions and entered a scheduling order setting oral arguments on the pending motion for sanctions for March 16, 2010. On March 31, 2010, the court granted our motion to disqualify Greenberg Traurig as counsel for Kaiser. In its order, the court gave Kaiser until May 31, 2010 to obtain new counsel and set an in-person status conference for June 9, 2010.

Kahn Putative Class Action

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

Burlington County. In the action, plaintiff purports to bring the action on his own behalf and on behalf of all current holders of our common stock. The original complaint alleged that defendants breached their fiduciary duties of good faith, fair dealing, loyalty, and due care by purportedly agreeing to and initiating a process for our sale or a change of control transaction which will allegedly cause harm to plaintiff and members of the putative class. Plaintiff sought damages in an unspecified amount, plus costs and interest, a judgment declaring that defendants breached their fiduciary duties and that any proposed transactions regarding our sale or change of control are void, an injunction preventing our sale or any change of control transaction that is not entirely fair to the class, an order directing us to appoint three independent directors to our board of directors, and attorneys’ fees and expenses.

On June 12, 2008, plaintiff filed an amended class action complaint against us, eight of our current and former directors, and Philips in the Superior Court of New Jersey, Chancery Division. In the amended complaint, plaintiff alleged that our current and former directors breached their fiduciary duties of good faith, fair dealing, loyalty, and due care by not providing our public shareholders with the opportunity to decide whether they wanted to participate in a share purchase offer with non-party CBaySystems Holdings Ltd. (CBaySystems Holdings) that would have allowed the public shareholders to sell their shares of our common stock for an amount above market price. Plaintiff further alleged that CBaySystems Holdings made the share purchase offer to Philips and that Philips breached its fiduciary duties by accepting CBaySystems Holdings’ offer. Based on these allegations, plaintiff sought declaratory, injunctive, and monetary relief from all defendants. Plaintiff claimed that we were only named as a party to the litigation for purposes of injunctive relief.

On July 14, 2008, we moved to dismiss plaintiff’s amended class action complaint, arguing (1) that plaintiff’s amended class action complaint did not allege that we engaged in any wrongdoing which supported a breach of fiduciary duty claim and (2) that a breach of fiduciary duty claim is not legally cognizable against a corporation. Plaintiff filed an opposition to our motion to dismiss on July 21, 2008.

On November 21, 2008, the Court granted our motion and the motions filed by the other defendants and dismissed plaintiff’s amended class action complaint with prejudice. On December 31, 2008, plaintiff filed an appeal of the trial court’s dismissal order with the New Jersey Appellate Division. Thereafter, the parties briefed all the issues raised in plaintiff’s appeal. In our opposition brief, we opposed all the arguments plaintiff raised with respect to the dismissal of the claims against us.

On September 24, 2009, the Appellate Division held oral argument on the issues that are the subject of plaintiff’s appeal. We are now waiting for the Appellate Division to issue a decision.

Reseller Arbitration Demand

On October 1, 2007, we received from counsel to nine current and former resellers of our products (Claimants), a copy of an arbitration demand filed by the Claimants, initiating an arbitration proceeding styled Diskriter, Inc., Electronic Office Systems, Inc., Milner Voice & Data, Inc., Nelson Systems, Inc., NEO Voice and Communications, Inc., Office Business Systems, Inc., Roach-Reid Office Systems, Inc., Stiles Office Systems, Inc., and Travis Voice and Data, Inc. v. MedQuist Inc. and MedQuist Transcriptions, Ltd. (collectively MedQuist) (filed on September 27, 2007, AAA, 30-118-Y-00839-07). The arbitration demand purports to set forth claims for breach of contract; breach of covenant of good faith and fair dealing; promissory estoppel; misrepresentation; and tortious interference with contractual relations. The Claimants allege that we breached our written agreements with the Claimants by: (i) failing to provide reasonable training, technical support, and other services; (ii) using the Claimants’ confidential information to compete against the Claimants; (iii) directly competing with the Claimants’ territories; and (iv) failing to make new products available to the Claimants. In addition, the Claimants allege that we made false oral representations that we: (i) would provide new product, opportunities and support to the Claimants; (ii) were committed to continuing to use Claimants; (iii) did not intend to create our own sales force with respect to the Claimants’ territory; and (iv) would stay out of Claimants’ territories and would not attempt to take over the Claimants business and relationships with the Claimants’ customers and end-users. The Claimants assert that they are seeking damages in excess of $24.3 million. We also moved to dismiss MedQuist Inc. as a party to the arbitration since MedQuist Inc. is not a party to the Claimants’ agreements, and accordingly, has never agreed to arbitration. The AAA initially agreed to rule on these matters, but then decided to defer a ruling to the panel of arbitrators selected pursuant to the parties’ agreements (Panel). In response, we informed the Panel that a court, not the Panel, should rule on these issues. When it appeared that the Panel would rule on these issues, we initiated a lawsuit in the Superior Court of DeKalb County (the Court) and requested an injunction enjoining the Panel from deciding these issues. The Court denied the request, and indicated that a new motion could be filed if the Panel’s ruling was adverse to MedQuist Inc. or MedQuist Transcriptions, Ltd. On May 6, 2008, the Panel dismissed MedQuist Inc. as a party, but ruled against our opposition to a consolidated arbitration. We asked the Court to stay the arbitration in order to review that decision. The Court initially granted the stay, but later lifted the stay. The Court did not make any substantive rulings regarding consolidation, and in fact, left that

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

decision and others to the assigned judge, who was unable to hear those motions. Accordingly, until further order of the Court, the arbitration will proceed forward.

We filed an answer and counterclaim in the arbitration, which generally denied liability. In the lawsuit, the defendants filed a motion to dismiss alleging that our complaint failed to state an actionable claim for relief. On July 25, 2008, we filed our response which opposed the motion to dismiss in all respects. On September 10, 2008, the Court heard argument on defendants’ motion to dismiss. The Court did not issue a decision, but rather, took the matter under advisement.

During discovery in the arbitration, Claimants repeatedly modified the individual damage claims and asserted two alternative damage theories. Claimants did not specify what the two alternative damage theories were, but stated that they were seeking alternative damage amounts for each Claimant. The Panel issued a Revised Scheduling Order, which tentatively scheduled the arbitration to begin in February 2010.

On March 31, 2010, the parties entered into a Settlement Agreement and Release pursuant to which we paid the Claimants $500 on April 1, 2010 to resolve all claims. Under the Settlement Agreement and Release, (i) the parties exchanged mutual releases, (ii) the arbitration and related state court litigation were dismissed with prejudice and (iii) we did not admit to any liability or wrongdoing. We accrued the entire amount of this settlement as of December 31, 2009.

SEC Investigations of Former Officers

With respect to our historical billing practices, the SEC is pursuing civil litigation against our former chief financial officer, whose employment with us ended in July 2004. Pursuant to our bylaws, we have indemnification obligations for the legal fees for our former chief financial officer. In February 2010, one of our current employees, who was our former controller but who does not currently serve in a senior management or financial reporting oversight role, reached a settlement with the SEC in connection with the civil litigation that the SEC had brought against him in connection with our historical billing practices.

9. Related Party Transactions

From time to time, we enter into transactions in the normal course of business with related parties. Since August 6, 2008, CBaySystems Holdings and affiliated entities own approximately 69.5% ownership interest in MedQuist. The Audit Committee of our board of directors has been charged with the responsibility of approving or ratifying all related party transactions. In any situation where the Audit Committee sees fit to do so, any related party transaction, is presented to disinterested members of our board of directors for approval or ratification. All of the agreements with CBay Systems & Services, Inc. and CBay Inc. described below have been reviewed and approved by our Audit Committee.

On April 3, 2009, we entered into a transcription services agreement (Transcription Services Agreement) with CBay Systems, pursuant to which we outsource certain medical transcription services to CBay Systems. The Transcription Services Agreement will expire on April 16, 2012 unless sooner terminated by either party. Under the Transcription Services Agreement, we pay CBay Systems a per line fee based on each transcribed line of text processed and the specific type of service provided. CBay Systems will perform its services using our DocQment Enterprise Platform and will be held to certain performance standards and quality guidelines set forth in the agreement. The specific services to be performed will be set forth in order forms delivered by us to CBay Systems from time to time during the term of the Transcription Services Agreement. For the three months ended March 31, 2010 and 2009, we incurred expenses of $3,634 and $0, respectively, which were recorded in Cost of revenues. The Transcription Services Agreement terminated by agreement of the parties on March 9, 2010 when we entered into the Sales & Services Agreement with CBay Systems referenced immediately below.

On March 9, 2010, we entered into the Sales & Services Agreement with CBay Systems, pursuant to which we outsource certain medical transcription services to CBay Systems. Under the Sales & Services Agreement, CBay Systems has discontinued its new customer marketing efforts for transcription services to hospitals in North America and has become the exclusive supplier to us of Asian based transcription production services, which are either performed directly by CBay Systems or through a network of third party suppliers managed by CBay Systems. Under the Sales & Services Agreement, we pay CBay Systems a per line fee based on each transcribed line of text processed and the specific type of service provided. The Sales & Services Agreement will expire on March 10, 2015, and thereafter shall automatically renew for two additional five year terms, unless either party provides the other with written notice of its election to terminate the agreement at the end of the initial term or at the end of a renewal term, provided such notice is provided to the other party, not earlier than 12 months nor less than six months prior to the end of the initial term or the

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

applicable renewal term. Either we or CBay may terminate the Sales & Services Agreement if the other party materially breaches any term of the agreement, or in the event CBay Systems and its affiliates (other than us or our subsidiaries) cease to control, directly or indirectly, the power to vote at least thirty percent (30%) of our issued and outstanding common equity. For the three months ended March 31, 2010 and 2009, we recorded cost of revenues of $1,272 and $0, respectively.

On March 31, 2009, we entered into a transcription services subcontracting agreement (Subcontracting Agreement) with CBay Systems, pursuant to which CBay Systems will subcontract certain medical transcription, editing and related services to us. Under the Subcontracting Agreement, we will provide the medical transcription, editing and related services to CBay Systems using labor located within the United States using our DocQment Enterprise Platform. The specific services to be performed will be set forth in order forms delivered by CBay Systems to us from time to time during the term of the Subcontracting Agreement. We will receive 98% of the net monthly fees collected by CBay Systems from its customers for the services provided by us. For the three months ended March 31, 2010 and 2009, we recorded revenue of $531 and $0 under the terms of the Subcontracting agreement.

On September 19, 2009, we entered into a services agreement (Management Services Agreement) with CBay Inc. (CBay), a wholly-owned subsidiary of CBay Systems, pursuant to which certain senior executives and directors of CBay render to us, upon the request of our Chief Executive Officer, certain advisory and consulting services in relation to the affairs of us and our subsidiaries. The Management Services Agreement will remain in effect until the earliest to occur of (i) December 31, 2009, if either party gives notice of termination of the Services Agreement to the other party no later than December 1, 2009, (ii) the end of any calendar quarter subsequent to December 31, 2009, if either party gives notice of termination of the Services Agreement to the other party no later than thirty (30) days prior to the end of such calendar quarter, (iii) such time as CBay or its affiliates (other than the us and our subsidiaries) control, directly or indirectly, the power to vote less than thirty percent (30%) of the issued and outstanding common equity of the MedQuist, and (iv) such earlier date as we and CBay may mutually agree upon in writing. The Management Services Agreement provides that, in consideration of the management services rendered by CBay to us since July 1, 2009 and to be rendered by CBay to us pursuant to the Management Services Agreement, we will pay CBay a quarterly services fee equal to $350, which shall be payable in arrears. For the three months ended March 31, 2010 and 2009, we incurred services expenses with CBay Inc. of $350 and $0, respectively, which has been recorded in Selling, general and administrative expense.

As of March 31, 2010 and December 31, 2009, Accounts payable and Accrued expenses included $363 and $1,362, respectively, for amounts due to CBay. As of March 31, 2010 and December 31, 2009, Accounts receivable included $396 and $710, respectively, for amounts due from CBay Systems.

10. Investment in A-Life Medical, Inc. (A-Life)

We have an investment in A-Life of $9,378 and $8,864 as of March 31, 2010 and December 31, 2009. Our investment is accounted for under the equity method as we owned approximately 32% of the outstanding ownership as of March 31, 2010 and December 31, 2009. During the quarter ended March 31, 2010, A-Life recorded a change in estimate related to its purchase accounting of an acquisition. Our share of the impact from the change in estimate was approximately $440 which is included in the Equity in income of affiliated company. Our investment in A-Life is included in Other Assets in the accompanying consolidated balance sheets.

11. Subsequent Events

On April 22, 2010, we and our majority shareholder, CBay Inc. (together with us, the Purchasers), completed the acquisition (the Acquisition) of substantially all of the assets of Spheris, Inc. (Spheris) and certain of its affiliates (collectively with Spheris, the Sellers), pursuant to the terms of the Stock and Asset Purchase Agreement (the Agreement) entered into between the Purchasers and Sellers on April 15, 2010. The purchase price for the assets was approximately $116.3 million, consisting of approximately $98.8 million of cash, and the issuance of a promissory note in the principal amount of $17.5 million (the Subordinated Promissory Note). Included in Other Assets in the accompanying consolidated balance sheets as of March 31, 2010, is a deposit of $7.5 million related to the Acquisition.

In connection with the Acquisition, MedQuist Inc., together with MedQuist Transcriptions, Ltd. (MedQuist Transcriptions), a wholly-owned subsidiary (collectively, the Loan Parties) entered into a Credit Agreement (the GE Credit Agreement) with General Electric Capital Corporation, CapitalSource Bank, and Fifth Third Bank. The GE Credit Agreement provides for up to $100 million in senior secured credit facilities, consisting of a $50 million term loan, and a revolving credit facility of up to $50 million. The credit facilities are secured by a first priority lien on substantially all of the property of the Loan Parties. The term loan is repayable in equal quarterly installments of $5 million starting on October 1, 2010, with the balance payable 2.5 years from the date of closing (or, if certain convertible senior notes of CBay are called or otherwise become due and payable prior to such date, such earlier date). The

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

interest rate is Prime plus 3.25% (currently an interest rate of 6.50%) and is payable monthly. We may also structure borrowings as Eurodollar loans with an interest rate based on LIBOR rates. We may prepay the loan with certain prepayment penalties. Mandatory prepayments are required when we generate excess cash flows as defined under the agreement. The Term Loan maturity date is the earlier of October 22, 2012 or the date on which certain CBay notes are called or otherwise become due and payable. Maximum borrowings under the Revolving Loan are the lower of a percentage of eligible accounts receivable or $50 million. The interest rate is Prime plus 3% (currently an interest rate of 6.25%) and is payable monthly with a scheduled termination date of April 22, 2014.

To complete closing of the transactions, the entire facility amount of $100 million was utilized. Amounts borrowed under the GE Credit Agreement bear interest at a rate selected by MedQuist Transcriptions equal to the Base Rate or the Eurodollar Rate (each as defined in the GE Credit Agreement) plus a margin, all as more fully set forth in the GE Credit Agreement.

Both the Term Loan and the Revolving Loan contain usual and customary financial covenants, including covenants relating to reporting and notification, payment of indebtedness, taxes and other obligations, and compliance with applicable laws. There are also financial covenants, which include a Minimum Consolidated Fixed Charge Coverage Ratio, and a Maximum Consolidated Senior Leverage Ratio and a Maximum Consolidated Total Leverage Ratio and Minimum Liquidity, as defined. The GE Credit Agreement also imposes certain customary limitations and requirements on us with respect to the incurrence of indebtedness and liens, investments, mergers, acquisitions and dispositions of assets. Amounts due under the GE Credit Agreement may be accelerated upon an Event of Default (as defined in the GE Credit Agreement), including failure to comply with obligations under the credit agreement, bankruptcy or insolvency, and termination of certain material agreements.

The Subordinated Promissory Note was entered into with Spheris, Inc. The loan matures in five years from the date of the closing with provisions for prepayment at discounted amounts, ranging from 77.5% of the principal if paid within six months, 87.5% from six to nine months, 97.5% from nine to twelve months, 102.0% by year two, 101.0% by year three and 100.0% thereafter.

The note bears interest at 8.0% for the first six months, 9.0% from six to nine months, and 12.5% thereafter of which 2.5% may be paid by increasing the principal amount. Payments of interest are made semi-annually on each six month anniversary of the Spheris transaction.

When we entered into the GE Credit Agreement, we terminated our five-year $25 million revolving credit agreement with Wells Fargo Foothill, LLC dated August 31, 2009. Pursuant to its terms, we paid Wells Fargo a fee of $576 to terminate the Wells Fargo agreement.

On May 4, 2010, the audit committee of our board of directors approved the payment of a $1.5 million success-based fee to S A C Private Capital Group, LLC (SAC) in connection with the work of SAC to help us with the Acquisition.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

This report contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, the industry in which we operate and other matters, as well as management’s beliefs and assumptions and other statements regarding matters that are not historical facts. These statements include, in particular, statements about our plans, strategies and prospects. For example, when we use words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could,” “will,” “opportunity,” “potential” or “may,” variations of such words or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (Securities Act) and Section 21E of the Securities Exchange Act of 1934 (Exchange Act). Our forward-looking statements are subject to risks and uncertainties. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include:

•		each of the factors discussed in Item 1A, Risk Factors, of this report as well as risks discussed elsewhere in this report;

•		each of the matters discussed in Part II, Item 1, Legal Proceedings;

•		our ability to recruit and retain qualified medical transcriptionists (MTs) and other employees;

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

•		changes in law, including, without limitation, the impact HIPAA will have on our business;

•		the impact of our new services and products on the demand for our existing services and products;

•		our increased dependence on speech recognition technology, which we license, but do not own;

•		our current dependence on medical transcription for a significant portion of our technology-enabled clinical documentation services;

•		our ability to expand our customer base;

•		infringement on the proprietary rights of others;

•		our ability to diversify into other businesses;

•		our increased dependence on CBay Systems & Services, Inc. as the exclusive provider of medical transcription performed in Asia, the current location of all our medical transcription and medical editing work performed outside of North America;

•		our ability to effectively integrate the newly-acquired business and operations of Spheris;

•		the effectiveness of Spheris’ internal controls, which we are in the process of evaluating;

•		competitive pricing and service feature pressures in the clinical documentation industry and our response to those pressures;

•		our ability to operate the business given our restrictions under the GE Credit Agreement;

•		difficulties relating to our significant management turnover; and

•		general conditions in the economy and capital markets.

These and other risks and uncertainties that could affect our actual results are discussed in this report and in our other filings with the SEC.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance, or achievements. We do not assume responsibility for the accuracy and completeness of the forward-looking statements other than as required by applicable law. We do not undertake any duty to update any of the forward-looking statements after the date of this report to conform them to actual results, except as required by the federal securities laws.

You should read this section in combination with the section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2009, included in our Annual Report on Form 10-K for the year ended December 31, 2009.

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

Executive Overview

We are a leading provider of technology-enabled clinical documentation services. We offer health systems, hospitals, and group medical practices integrated solutions for voice capture, speech recognition, medical transcription, document management and clinical documentation improvement using natural language processing, as well as coding services. Our solutions are designed to facilitate electronic access to clinical information by healthcare providers and to improve overall revenue cycle performance and adoption of the Electronic Health Record (EHR). We perform our services utilizing the DocQment^tm Enterprise Platform (DEP), our proprietary clinical documentation workflow management system. We believe our services and enterprise technology solutions — including mobile voice capture devices, speech recognition technologies, Web-based workflow platforms, and global network of medical transcriptionists (MTs) and medical editors (MEs) — enable to improve patient care, increase physician satisfaction and lower operational costs while facilitating their migration toward increased adoption and utilization of the EHR.

Significant developments in the clinical documentation industry include:

	•		A shortage of qualified domestic medical transcriptionists (MTs) and medical editors (MEs) has increased the demand for offshore medical transcription services by healthcare providers. This demand for qualified MTs and MEs, combined with budgetary pressures experienced by healthcare providers nationwide, has also caused many more healthcare providers to evaluate and consider the use of offshore medical transcription services.

	•		Several low cost providers have emerged and aggressively moved into our market offering medical transcription services (performed both domestically and offshore) at prices significantly below our traditional price point. While we believe the market for outsourced medical transcription continues to expand, the growing acceptance of utilizing offshore labor by healthcare providers has further increased the competitive environment in the medical transcription industry.

	•		Technological advances including speech recognition products reduce the length of time required to transcribe medical reports, in turn reducing the overall cost of medical transcription services.

	•		Growing market penetration of EHR and certain other technologies have eliminated or shortened the length of certain work types produced through transcription.

Although we remain the leading provider of medical transcription services in the U.S., we experience competition from many other providers at the local, regional and national level. The medical transcription industry remains highly fragmented, with hundreds of small companies in the U.S. performing medical transcription services.

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

We believe the outsourced portion of the medical transcription services market will increase due in part to the majority of healthcare providers seeking the following:

	•		Reductions in overhead and other administrative costs;

	•		Improvements in the quality and delivery speed of transcribed medical reports;

	•		Access to leading technologies, such as speech recognition technology, without development and investment risk;

	•		Implementation and management of a medical transcription system tailored to the providers’ specific requirements;

	•		Access to skilled MTs and MEs;

	•		Solutions for compliance with governmental and industry mandated privacy and security requirements; and

	•		Product offerings that interface with EHR initiatives.

We evaluate our operating results based upon the following factors:

	•		Revenues;

	•		Operating income;

	•		Net income per share;

	•		Adjusted earnings before interest, taxes, depreciation and amortization;

	•		Net cash provided by operating activities; and

	•		Days sales outstanding.

Our goal is to execute our strategy to yield growth in net revenues, operating income, cash flow and net income per share.

Network and information systems, the Internet and other technologies are critical to our business activities. Substantially all of our transcription services are dependent upon the use of network and information systems, including the use of our DocQment™ Enterprise Platform (DEP) and our license to use speech recognition secured from a third party. If information systems including the Internet or our DEP are disrupted, we could face a significant disruption of services provided to our customers. We have periodically experienced short term outages with our DEP, which have not significantly disrupted our business and we have an active disaster recovery program in place for our information systems and our DEP.

Critical Accounting Policies, Judgments and Estimates

Management’s Discussion and Analysis (MD&A) is based in part upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (GAAP). We believe there are several accounting policies that are critical to understanding our historical and future performance, as these policies affect the reported amounts of revenues and other significant areas that involve management’s judgments and estimates. These critical accounting policies and estimates have been discussed with our audit committee.

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, expenses and related disclosure of contingent liabilities. On an ongoing basis, we evaluate these estimates and judgments. We base these estimates on historical experience and on various other assumptions that are believed to be reasonable at such time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other independent sources. Actual results may ultimately differ from these estimates. While there are a number of accounting policies, methods and estimates affecting our consolidated financial statements as addressed in Note 1 to our consolidated financial statements, areas that are particularly significant and critical include:

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

Valuation of Long-Lived and Other Intangible Assets and Goodwill: In connection with acquisitions, we allocate portions of the purchase price to tangible and intangible assets, consisting primarily of acquired technologies, and customer relationships, based on independent appraisals received after each acquisition, with the remainder allocated to goodwill. We assess the realizability of goodwill and intangible assets with indefinite useful lives at least annually, or sooner if events or changes in circumstances indicate that the carrying amount may not be recoverable. We have determined that the reporting unit level is our sole operating segment.

We review our long-lived assets, including amortizable intangibles, for impairment when events indicate that their carrying amount may not be recoverable. When we determine that one or more impairment indicators are present for an asset, we compare the carrying amount of the asset to net future undiscounted cash flows that the asset is expected to generate. If the carrying amount of the asset is greater than the net future undiscounted cash flows that the asset is expected to generate, we then compare the fair value to the book value of the asset. If the fair value is less than the book value, we recognize an impairment loss. The impairment loss is the excess of the carrying amount of the asset over its fair value.

Some of the events that we consider as impairment indicators for our long-lived assets, including goodwill, are:

	•		our net book value compared to our fair value;

	•		significant adverse economic and industry trends;

	•		significant decrease in the market value of the asset;

	•		the extent that we use an asset or changes in the manner that we use it;

	•		significant changes to the asset since we acquired it; and

	•		other changes in circumstances that potentially indicate all or a portion of the company will be sold.

Deferred income taxes. Deferred tax assets represent future tax benefits that we expect to be able to apply against future taxable income or that will result in future net operating losses that we can carry forward to use against future taxable earnings. Our ability to utilize the deferred tax assets is dependent upon our ability to generate future taxable income. To the extent that we believe it is more likely than not that all or a portion of the deferred tax asset will not be utilized, we record a valuation allowance against that asset. In making that determination we consider all positive and negative evidence and give stronger consideration to evidence that is objective in nature.

Commitments and contingencies. We routinely evaluate claims and other potential litigation to determine if a liability should be recorded in the event it is probable that we will incur a loss and can estimate the amount of such loss.

Revenue recognition. We recognize medical transcription services revenues when there is persuasive evidence that an arrangement exists, the price is fixed or determinable, services have been rendered and collectability is reasonably assured. These services are recorded using contracted rates and are net of estimates for customer credits. Historically, our estimates have been adequate. If actual results are higher or lower than our estimates, we would have to adjust our estimates and financial statements in future periods.

We recognize the remainder of our revenues from the sale and implementation of voice-capture and document management products including software and implementation, training and maintenance services related to these products. The application of the accounting guidelines requires judgment regarding the timing of the recognition of these revenues including: (i) whether a software arrangement includes multiple elements, and if so, whether vendor-specific objective evidence of fair value exists for those elements; (ii) whether customizations or modifications of the software are significant; and (iii) whether collection of the software fee is probable.

Additionally, for certain contracts we recognize revenues using the percentage-of-completion method. Percentage-of-completion accounting involves estimates of the total costs to be incurred over the duration of the project.

Accounts receivable and allowance for doubtful accounts. Accounts receivable are recorded at the invoiced amount and do not bear interest. The carrying value of accounts receivable approximates fair value. The allowance for doubtful accounts is our best estimate of potential losses resulting from the inability of our customers to make required payments due. This allowance is used to state trade receivables at estimated net realizable value.

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

We estimate uncollectible amounts based upon our historical write-off experience, current customer receivable balances, aging of customer receivable balances, the customer’s financial condition and current economic conditions. Historically, our estimates have been adequate to provide for our accounts receivable exposure.

Additionally, we enter into medical transcription service contracts that may contain provisions for performance penalties in the event we do not meet certain required service levels, primarily related to turnaround time on transcribed reports. We reduce revenues for any such performance penalties and service level credits incurred and have included an estimate of such penalties and credits in our allowance for uncollectible accounts.

We recognize product revenues for sales to end-user customers and resellers upon passage of title if all other revenue recognition criteria have been met. End-user customers generally do not have a right of return. We provide certain of our resellers and distributors with limited rights of return of our products. We reduce revenues for rights to return our product based upon our historical experience and have included an estimate of such credits in our allowance for uncollectible accounts.

Customer Accommodation Program. In response to customers’ concerns regarding historical billing matters, we established a plan to offer financial accommodations to certain of our customers during 2005 and 2006 and recorded the related liability. In 2008 we reached an agreement on customer litigation resolving all claims by the named parties. Since then we have not made additional offers.

We are unable to predict how many customers, if any, may accept the outstanding accommodation offers on the terms proposed by us, nor are we able to predict the timing of the acceptance (or rejection) of any outstanding accommodation offers. Until any offers are accepted, we may withdraw or modify the terms of the accommodation program or any outstanding offers at any time. In addition, we are unable to predict how many future offers, if made, will be accepted on the terms proposed by us. We regularly evaluate whether to proceed with, modify or withdraw the accommodation program or any outstanding offers.

Basis of Presentation

Sources of Revenues

We derive revenues primarily from providing medical transcription services to health systems, hospitals and large group medical practices. Our customers are generally charged a rate times the volume of work that we transcribe or edit. In the clinical documentation workflow, we provide, in addition to medical transcription technology and services, maintenance services, digital dictation, speech recognition and electronic signature services.

Cost of Revenues

Cost of revenues includes compensation of our U.S.-based employee MTs and our subcontractor MTs, other production costs (primarily related to operational and production management, quality assurance, quality control and customer and field service personnel), and telecommunication and facility costs. Cost of revenues also includes the direct cost of technology products sold to customers. MT costs are directly related to medical transcription revenues and are based on lines transcribed or edited multiplied by a specific rate.

Selling, General and Administrative (SG&A)

Our SG&A expenses include marketing and sales costs, accounting costs, information technology costs, professional fees, corporate facility costs, corporate payroll and benefits expenses.

Research and Development (R&D)

Our R&D expenses consist primarily of personnel and related costs, including salaries and employee benefits for software engineers and consulting fees paid to independent consultants who provide software engineering services to us. To date, our R&D efforts have been devoted to new products and services offerings and increases in features and functionality of our existing products and services.

Depreciation and Amortization

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets which range from two to seven years for furniture, equipment and software, and the lesser of the lease term or estimated useful life for leasehold improvements. Intangible assets are being amortized using the straight-line method over their estimated useful lives which range from three to 20 years.

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

Legal Matters

Cost of legal proceedings and settlements includes settlement of claims, ongoing litigation, and associated legal and other professional fees incurred.

Consolidated Results of Operations

The following tables set forth our consolidated results of operations for the periods indicated below:

Comparison of Three Months Ended March 31, 2010 and 2009


	Three Months Ended March 31,
	2010						2009
				% of Net					% of Net
($ in thousands)	Amount			Revenues			Amount		Revenues			$ Change			% Change
Net revenues	$	73,981			100.0	%	$	78,944		100.0	%	$	(4,963	)		(6.3	%)


Operating costs and expenses:
Cost of revenues		49,833			67.4	%		53,868		68.2	%		(4,035	)		(7.5	%)
Selling, general and administrative		8,797			11.9	%		9,438		12.0	%		(641	)		(6.8	%)
Research and development		2,281			3.1	%		2,416		3.1	%		(135	)		(5.6	%)
Depreciation		1,910			2.6	%		2,552		3.2	%		(642	)		(25.2	%)
Amortization of intangible assets		1,820			2.5	%		1,511		1.9	%		309			20.5	%
Cost of legal proceedings and settlements		1,043			1.4	%		1,924		2.4	%		(881	)		(45.8	%)
Acquisition related charges		894			1.2	%		—		—			894			n.a.
Restructuring charges		60			0.1	%		—		—			60			n.a.


Total operating costs and expenses		66,638			90.1	%		71,709		90.8	%		(5,071	)		(7.1	%)


Operating income		7,343			9.9	%		7,235		9.2	%		108			1.5	%

Equity in income of affiliated company		514			0.7	%		72		0.1	%		442			613.9	%
Interest income (expense), net		(146	)		(0.2	%)		46		0.1	%		(192	)		(417.4	%)


Income before income taxes		7,711			10.4	%		7,353		9.3	%		358			4.9	%

Income tax provision		367			0.5	%		499		0.6	%		(132	)		(26.5	%)


Net income	$	7,344			9.9	%	$	6,854		8.7	%	$	490			7.1	%

Net revenues

Net revenues decreased $5.0 million, or 6.3%, to $74.0 million for the three months ended March 31, 2010 compared with $78.9 million for the three months ended March 31, 2009. Transcription volumes increased during the first quarter relative to the prior period, while average prices for transcription declined and the migration from legacy products reduced the need for maintenance services.

Cost of revenues

Cost of revenues decreased $4.0 million, or 7.5% to $49.8 million for the three months ended March 31, 2010 compared with $53.9 million for the three months ended March 31, 2009. This decrease was attributable primarily to:

	•		reduced transcription costs of $1.9 million related to our increased use of speech recognition technology, which reduces the payroll costs associated with the production of revenues and an increase in the use of outsourced medical transcription volumes to our international labor partners;

	•		reduced costs of $2.8 million resulting from headcount reductions taken in 2009 to better align our overhead costs with our lower revenue levels; offset by

	•		an increase of $0.7 million due to a one-time benefit in the 2009 period for the release of a prior period reserve.

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

As a percentage of net revenues, cost of revenues decreased to 67.4% for the three months ended March 31, 2010 from 68.2% for the same period in 2009 for the reasons stated above. We expect to continue to increase our use of outsourced medical transcription volumes to our international labor partners.

Selling, general and administrative

SG&A expenses decreased $0.6 million, or 6.8% to $8.8 million for the three months ended March 31, 2010 compared with $9.4 million for the three months ended March 31, 2009. This decrease was attributable to a decrease of $0.5 million of consulting fees, a decrease of $0.2 million in legal fees, a reduction in audit fees of $0.2 million, a decrease of $0.1 million for building rent, and a decrease in all other SG&A expense of $0.1 million, offset by an increase in bad debt expense of $0.5 million. SG&A expense in the three month period ended March 31, 2010 as a percentage of net revenues was 11.9% compared with 12.0% for the same period in 2009.

Research & development

R&D expenses decreased $0.1 million, or 5.6%, to $2.3 million for the three months ended March 31, 2010 compared with $2.4 million for the three months ended March 31, 2009. This decrease was related to a decrease of $0.1 million for maintenance contracts with third party vendors. R&D expenses as a percentage of net revenues were 3.1% for the three months ended March 31, 2010 and March 31, 2009.

Depreciation

Depreciation expense decreased $0.6 million, or 25.2% to $1.9 million for the three months ended March 31, 2010 compared with $2.6 million for the three months ended March 31, 2009. This decrease was primarily the result of reduced capital spending in 2009. Depreciation expense as a percentage of net revenues was 2.6% for the three months ended March 30, 2010 compared with 3.2% for the same period in 2009.

Amortization

Amortization expense increased $0.3 million, or 20.5%, to $1.8 million for the three months ended March 31, 2010 compared with $1.5 million for the three months ended March 31, 2009. This increase was primarily the result of amortization expense associated with software development projects which were completed in 2009. Amortization expense as a percentage of net revenues was 2.5% for the three months ended March 31, 2010 compared with 1.9% for the same period in 2009.

Cost of legal proceedings and settlements

Costs of legal proceedings and settlements decreased $0.9 million, or 45.8%, to $1.0 million for the three months ended March 31, 2010 compared with $1.9 million for the three months ended March 31, 2009. In 2009, we incurred $0.9 million in legal fees regarding a patent claim.

Equity in income of affiliated company

Equity in income of affiliated company increased $0.4 million to $0.5 million for the three months ended March 31, 2010 compared with $0.1 million for the three months ended March 31, 2009. A-Life recorded a change in estimate related to its purchase accounting of an acquisition. Our share of the impact from the change in estimate was approximately $0.4 million.

Income tax provision

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

Liquidity and Capital Resources

As of March 31, 2010, we had working capital of $20.4 million compared with $19.7 million as of December 31, 2009. Our principal sources of liquidity include cash generated from operations, available cash on hand and our former credit facility with Wells Fargo. Cash and cash equivalents declined $3.5 million to $21.7 million as of March 31, 2010, from $25.2 million as of December 31, 2009. This decrease included cash provided by operating activities of $6.8 million offset by cash used to purchase property and equipment of $1.7 million, cash used for software development activities and other investments of $8.4 million, and cash used of $0.2 million for fees and expenses related to obtainment of our new GE Credit Agreement. See Note 11 to our consolidated financial statements.

We believe our existing cash, cash equivalents, and cash to be generated from operations, if any, will be sufficient to finance our operations for the foreseeable future. However, if we fail to generate adequate cash flows from operations in the future, due to an unexpected decline in our net revenues, or due to increased cash expenditures in excess of the net revenues generated, then our cash balances may not be sufficient to fund our continuing operations without obtaining additional debt or equity. There are no assurances that sufficient funding from external sources will be available to us on acceptable terms, if at all. For instance, we may have increased cash expenditures relating to the defense and resolution of the civil litigation matters.

Subsequent Events

On April 22, 2010, we and our majority shareholder, CBay Inc., completed the acquisition of substantially all of the assets of Spheris, Inc. and certain of its affiliates, pursuant to the terms of the Stock and Asset Purchase Agreement entered into between the Purchasers and Sellers on April 15, 2010. The purchase price for the assets was approximately $116.3 million, consisting of approximately $98.8 million of cash, and the issuance of a promissory note in the principal amount of $17.5 million (the Subordinated Promissory Note). Included in Other Assets as of March 31, 2010, is a deposit of $7.5 million related to the Acquisition.

In connection with the Acquisition, MedQuist Inc., together with MedQuist Transcriptions, Ltd., a wholly-owned subsidiary entered into a Credit Agreement with General Electric Capital Corporation, CapitalSource Bank, and Fifth Third Bank. The GE Credit Agreement provides for up to $100 million in senior secured credit facilities, consisting of a $50 million term loan, and a revolving credit facility of up to $50 million. The credit facilities are secured by a first priority lien on substantially all of the property of the Loan Parties. The term loan is repayable in equal quarterly installments of $5 million starting on October 1, 2010, with the balance payable 2.5 years from the date of closing (or, if certain convertible senior notes of CBay are called or otherwise become due and payable prior to such date, such earlier date). The interest rate is Prime plus 3.25% (currently an interest rate of 6.50%) and is payable monthly. We may also structure borrowings as Eurodollar loans with an interest rate based on LIBOR rates. We may prepay the loan with certain prepayment penalties. Mandatory prepayments are required when we generate excess cash flows as defined under the agreement. The Term Loan maturity date is the earlier of October 22, 2012 or the date on which certain CBay notes are called or otherwise become due and payable. Maximum borrowings under the Revolving Loan are the lower of a percentage of eligible accounts receivable of $50 million. The interest rate is Prime plus 3% (currently an interest rate of 6.25%) and is payable monthly with a scheduled termination date of April 22, 2014.

MedQuist Inc. & Subsidiaries
Notes to Consolidated Financial Statements
(In thousands, except for per share amounts)
Unaudited

Off-Balance Sheet Arrangements

We are not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material current or future impact on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management team, under the supervision and with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of the last day of the fiscal period covered by this report, March 31, 2010. The term disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and our principal financial officer concluded that, as of March 31, 2010, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2010 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Customer Litigation

Kaiser Litigation

Kaiser served an initial set of discovery requests on May 7, 2009. On May 20, 2009, the court temporarily stayed discovery to address allegations of ethical misconduct by Kaiser’s trial counsel, Greenberg Traurig, LLP. On July 1, 2009, the court granted us leave to conduct limited written discovery regarding Greenberg Traurig’s alleged ethical misconduct and continued the temporary stay of all other discovery. On July 14, 2009, we moved for sanctions against Greenberg Traurig for breach of the New Jersey Rules of Professional Conduct, and we moved to stay the litigation pending resolution of the motion for sanctions. Discovery is presently stayed pending resolution of our motion to stay. No hearing date has been set for any of the pending motions. On February 24, 2010, the court granted our motion to stay pending resolution of the motion for sanctions and entered a scheduling order setting oral arguments on the pending motion for sanctions for March 16, 2010. On March 31, 2010 the court granted our motion to disqualify Greenberg Traurig as counsel for Kaiser. In its order, the court gave Kaiser until May 31, 2010 to obtain new counsel and set an in-person status conference for June 9, 2010.

Kahn Putative Class Action

On January 22, 2008, Alan R. Kahn, one of our shareholders, filed a shareholder putative class action lawsuit against us, Koninklijke Philips Electronics N.V. (Philips), our former majority shareholder, and four of our former non-independent directors, Clement Revetti, Jr., Stephen H. Rusckowski, Gregory M. Sebasky and Scott Weisenhoff. The action, entitled Alan R. Kahn v. Stephen H. Rusckowski, et al., Docket No. BUR-C-000007-08, was venued in the Superior Court of New Jersey, Chancery Division, Burlington County. In the action, plaintiff purports to bring the action on his own behalf and on behalf of all current holders of our common stock. The original complaint alleged that defendants breached their fiduciary duties of good faith, fair dealing, loyalty, and due care by purportedly agreeing to and initiating a process for our sale or a change of control transaction which will allegedly cause harm to plaintiff and members of the putative class. Plaintiff sought damages in an unspecified amount, plus costs and interest, a judgment declaring that defendants breached their fiduciary duties and that any proposed transactions regarding our sale or change of control are void, an injunction preventing our sale or any change of control transaction that is not entirely fair to the class, an order directing us to appoint three independent directors to our board of directors, and attorneys’ fees and expenses.

shareholders with the opportunity to decide whether they wanted to participate in a share purchase offer with non-party CBaySystems Holdings Ltd. (CBaySystems Holdings) that would have allowed the public shareholders to sell their shares of our common stock for an amount above market price. Plaintiff further alleged that CBaySystems Holdings made the share purchase offer to Philips and that Philips breached its fiduciary duties by accepting CBaySystems Holdings’ offer. Based on these allegations, plaintiff sought declaratory, injunctive, and monetary relief from all defendants. Plaintiff claimed that we were only named as a party to the litigation for purposes of injunctive relief.

On September 24, 2009, the Appellate Division held oral argument on the issues that are the subject of plaintiff’s appeal. We are now waiting for the Appellate Division to issue a decision.

Reseller Arbitration Demand

arbitration and related state court litigation were dismissed with prejudice and (iii) we did not admit to any liability or wrongdoing. We accrued the entire amount of this settlement as of December 31, 2009.

SEC Investigations of Former Officers

With respect to our historical billing practices, the Securities and Exchange Commission (SEC) is pursuing civil litigation against our former chief financial officer, whose employment with us ended in July 2004. Pursuant to our bylaws, we have indemnification obligations for the legal fees for our former chief financial officer. In February 2010, one of our current employees, who was our former controller but who does not currently serve in a senior management or financial reporting oversight role, reached a settlement with the SEC in connection with the civil litigation that the SEC had brought against him in connection with our historical billing practices.

Item 1A. Risk Factors

Excluding the updates discussed below, there have been no other material changes to the risk factors discussed in Part I, “Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2009 (“Form 10-K”). You should carefully consider the risks described in our Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.

We have reviewed the risk factors previously disclosed in our Form 10-K and have the following revisions:

The risk fact in our Form 10-K for the year ended December 31, 2009 which is entitled – “We may pursue future transactions, including the proposed acquisition of certain assets of Spheris Inc., which could require us to incur debt and assume contingent liabilities and expenses, and we may not be able to effectively integrate new operations.” — is hereby amended and restated as follows:

We may pursue future transactions, which could require us to incur debt and assume contingent liabilities and expenses, and we may not be able to effectively integrate new operations.

A significant portion of our historical growth has occurred through transactions, and we may pursue transactions in the future. Transactions involve risks that the combined businesses will not perform in accordance with expectations and that business judgments concerning the value, strengths and weaknesses of the combined businesses will prove incorrect. We cannot guarantee that if we decide to pursue other future transactions, we will be able to identify attractive opportunities or successfully integrate such other future businesses or assets with our existing business. In addition, we cannot guarantee the ability to retain customers of such other future businesses or assets we acquire. Future transactions may involve high costs and may result in the incurrence of debt, contingent liabilities, interest expense, amortization expense or periodic impairment charges related to goodwill and other intangible assets as well as significant charges relating to integration costs.

We cannot guarantee that we will be able to successfully integrate any future transaction with our existing business or that any combined businesses will be profitable. The successful integration of new businesses depends on our ability to manage these new businesses effectively. The successful integration of future transactions may also require substantial attention from our senior management and the management of the combined businesses, which could decrease the time that they have to service and attract customers. In addition, because we may actively pursue a number of opportunities simultaneously, we may encounter unforeseen expenses, complications and delays, including difficulties in employing sufficient staff and maintaining operational and management oversight. Our inability to complete the integration of any future transaction with our existing business in a timely and orderly manner could reduce our net revenues and negatively impact our results of operations.

We have also added the following additional risk factors to the Form 10-K:

We may not be able to effectively integrate the operation of Spheris Inc. and the internal controls of Spheris Inc. may not be effective.

We cannot guarantee that we will be able to identify attractive opportunities or successfully integrate Spheris with our existing business. In addition, we cannot guarantee the ability to retain customers of Spheris. The successful integration with Spheris depends on our ability to manage the operations and business of Spheris effectively and will require substantial attention from our senior management, which could decrease the time that they have to service and attract customers. Our inability to complete the integration of Spheris with our existing business in a timely and orderly manner could reduce our net revenues and negatively impact our results of operations. In addition, the internal controls of Spheris, which we are in the process of evaluating, may not be effective.

Our ability to operate the business given our restrictions under the GE Credit Agreement.

Our significant indebtedness could adversely affect our ability to raise additional capital to fund our business, harm our ability to react to changes in the economy or our business and prevent us from fulfilling our obligations under our indebtedness, including under our GE Credit Agreement and the Subordinated Promissory Note. The GE Credit Agreement contains usual and customary financial covenants, including covenants relating to reporting and notification, payment of indebtedness, taxes and other obligations, and compliance with applicable laws. There are also financial covenants, which include a Minimum Consolidated Fixed Charge Coverage Ratio, and a Maximum Consolidated Senior Leverage Ratio and a Maximum Consolidated Total Leverage Ratio and Minimum Liquidity, as defined in the GE Credit Agreement. Amounts due under the GE Credit Agreement may be accelerated upon an Event of Default (as defined in the GE Credit Agreement), including failure to comply with obligations under the credit agreement, bankruptcy or insolvency, and termination of certain material agreements;

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 5. Other Information

None.

Item 6. Exhibits

(a) Exhibits


No.		Description
10.1⁽¹⁾		Stock and Asset Purchase Agreement, dated February 2, 2010, between Spheris Holding II, Inc., Spheris Inc., Spheris Operations LLC, Vianeta Communications, Spheris Leasing LLC, Spheris Canada Inc., CBay Inc. and MedQuist Inc.

10.2⁽²⁾		Stock and Asset Purchase Agreement, dated April 15, 2010, between Spheris Holding II, Inc., Spheris Inc., Spheris Operations LLC, Vianeta Communications, Spheris Leasing LLC, Spheris Canada Inc., CBay Inc. and MedQuist Inc.

10.3⁽³⁾		Credit Agreement dated as April 22, 2010 among MedQuist Transcriptions, Ltd. as Borrower, MedQuist Inc. as Holdings, the Lenders and L/C Issuers party thereto, and General Electric Capital Corporation as Administrative Agent and Collateral Agent, CapitalSource Bank as Syndication Agent, and Fifth Third Bank as Documentation Agent.

10.4		MedQuist Transcriptions, Ltd. Subordinated Promissory Note dated April 22, 2010

10.5(#)		Sales & Services Agreement dated March 9, 2010 by and between MedQuist, Inc. and CBay Systems & Services, Inc.


No.		Description
31.1		Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


#		Portions of this Exhibit are omitted and filed separately with the Secretary of the SEC pursuant to a request for confidential treatment that has been filed with the SEC.

(1)		Incorporated by reference to our Current Report on Form 8-K filed with the SEC on February 4, 2010.

(2)		Incorporated by reference to our Current Report on Form 8-K filed with the SEC on April 21, 2010.

(3)		Incorporated by reference to our Current Report on Form 8-K filed with the SEC on April 28, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	MEDQUIST INC.
Date: May 10, 2010	/s/ Peter Masanotti
	Peter Masanotti
	President and Chief Executive Officer (Principal Executive Officer)


Date: May 10, 2010	/s/ Dominick Golio
	Dominick Golio
	Chief Financial Officer (Principal Financial Officer)

Exhibit Index


No.		Description
10.4		MedQuist Transcriptions, Ltd. Subordinated Promissory Note dated April 22, 2010Sales & Services Agreement dated March 9, 2010 by and between MedQuist, Inc. and CBay Systems & Services, Inc.

10.5(#)		Sales & Services Agreement dated March 9, 2010 by and between MedQuist, Inc. and CBay Systems & Services, Inc.

31.1		Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


#		Portions of this Exhibit are omitted and filed separately with the Secretary of the SEC pursuant to a request for confidential treatment that has been filed with the SEC.

Attached files

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

MEDQUIST INC Reports

Also read