Amsterdam, May 22, 2000


PHILIPS TO AQUIRE 60% OF MEDQUIST INC. FOR $1.2 BILLION IN GROWTH AREA FOR
PHILIPS MEDICAL SYSTEMS

Royal Philips Electronics of the Netherlands (AEX: PHI, NYSE: PHG) and MedQuist
Inc. (NASDAQ: MEDQ) of the United States, announced today that they have entered
into an agreement whereby Philips will make a tender offer for approximately 60
percent of MedQuist's fully diluted common stock for a cash price of $51 per
share. The transaction is subject to Philips acquiring 60 percent of the fully
diluted shares of common stock of MedQuist, as well as the expiration of the
Hart-Scott-Rodino waiting period and other customary conditions. It is expected
that after completion of the transaction MedQuist's shares will continue to
trade on NASDAQ under the symbol "MEDQ".

MedQuist Inc. is a US-based provider of outsourced medical record transcription
services with sales of approximately $330 million in 1999. Philips' investment
is intended to lead to the transformation of MedQuist into a multinational,
technology-based medical document services provider over broadband networks.
MedQuist plans to aggressively roll out Philips' speech and other technologies,
enabling significant productivity improvements in the conversion of dictated
medical records into written text.

Philips Medical Systems (PMS) is a global leader in diagnostic imaging systems
and services, incorporating advanced x-ray, magnetic resonance, computed
tomography, ultrasound and imaging information systems to provide the data
necessary for the most effective patient care. MedQuist occupies a strong
adjacent position in the hospital's information chain. For example, Radiology
departments, where most of the imaging systems are used, are also some of the
heaviest users of medical dictation services. Philips will now be able to offer
its customers cost-saving software and services along with a full range of
imaging systems.

This acquisition moves us further into healthcare services, which is line with
our stated strategy, and provides us with a significant growth opportunity, as
well as leveraging our speech technology capability," said Cor Boonstra, CEO of
Philips. "MedQuist has a market leadership position and a strong management team
which enables it to become an effective early adopter of automated dictation.
That will translate into more complete solutions for our medical customers. We
have confidence in the current management team's ability to continue to drive
the company forward."

David A. Cohen, MedQuist Chairman and Chief Executive said, "We are delighted to
have Philips as our partner - the combination of our client base and their
world-class technology and experience is extremely powerful. During the coming
year we will utilize Philips technologies to begin the transition to our new
digital transcription platform via






regional data centers, providing us with additional growth opportunities,
generating revenue and cost synergies, and enabling us to enter important new
markets. With Philips as our technological partner and major shareholder, we are
confident in our ability to undertake this important step in the future of our
company."

Philips will also accelerate MedQuist's plans to expand into Europe, where
Philips Medical Systems and Philips Speech Processing have strong existing
hospital relationships. The two companies also plan to expand MedQuist's current
range of outsourced transcription services to include in-house speech
recognition software sales and Application Service Provider models.

As part of the transaction, MedQuist and Philips have also entered into a
license agreement for the joint development and implementation of speech
recognition technology. The more efficient use of MedQuist's transcription
workforce, via the use of Philips Speech Processing's technology, and the
recruitment of more widely available "editors", is anticipated to lead to even
faster growth (already 20% per year on average), due to the fact that growth has
been limited by the availability of qualified transcriptionists. Consequently,
Philips and MedQuist do not expect any workforce reductions as a result of the
speech technology rollout, which will take place between 2001 and 2005.

UBS Warburg LLC acted as financial advisor to MedQuist and Goldman Sachs
International served as financial advisor to Royal Philips Electronics.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Ben Geerts, Philips Corporate Communications, tel: +31 20 5977215
email: ben.geerts@philips.com

John Emery, MedQuist, Chief Financial Officer, tel: +1 856-810-8000, x-4418
Email: jemery@MedQuist.com

MEDQUIST IS THE LEADING U.S. PROVIDER OF ELECTRONIC MEDICAL TRANSCRIPTION
SERVICES, THE PROCESS BY WHICH DICTATION IS CONVERTED INTO A MEDICAL REPORT.
THROUGH THE COMPANY'S NATIONWIDE NETWORK OF MORE THAN 8,000 TRAINED
TRANSCRIPTIONISTS, BROADBAND TELECOMMUNICATION SYSTEMS AND INTERFACE WITH HEALTH
CARE PROVIDERS' COMPUTER SYSTEMS, MEDQUIST SHORTENS ITS CUSTOMERS BILLING CYCLES
AND REDUCES OVERHEAD AND OTHER ADMINISTRATIVE COSTS. ADDITIONAL INFORMATION ON
MEDQUIST CAN BE OBTAINED BY ACCESSING ITS HOMEPAGE AT HTTP://WWW.MEDQUIST.COM

PHILIPS MEDICAL SYSTEMS IS A LEADING SUPPLIER OF DIAGNOSTIC IMAGING SYSTEMS AND
RELATED SERVICES WORLDWIDE, REPRESENTED IN MORE THAN 100 COUNTRIES AND EMPLOYING
11,800 PEOPLE. A WORLDWIDE NETWORK OF RESEARCH AND DEVELOPMENT AND SALES AND
SERVICE ORGANIZATIONS BACKS PHILIPS' PRODUCTS. PHILIPS MEDICAL SYSTEMS IS PART
OF ROYAL PHILIPS ELECTRONICS, ONE OF THE WORLD'S LARGEST ELECTRONICS COMPANIES.
ADDITIONAL INFORMATION ON PHILIPS MEDICAL SYSTEMS CAN BE OBTAINED BY ACCESSING
ITS HOMEPAGE AT HTTP://WWW.MEDICAL.PHILIPS.COM

PHILIPS SPEECH PROCESSING IS A PIONEER AND ONE OF THE GLOBAL MARKET LEADERS IN
SPEECH RECOGNITION, NATURAL DIALOGUE AND LANGUAGE UNDERSTANDING TECHNOLOGIES. A
DEVELOPER OF VOICE ENABLED TELEPHONY APPLICATIONS, PHILIPS HAS A LARGE INSTALLED
BASE OF SPEECH RECOGNITION AND NATURAL DIALOGUE SYSTEMS IN EUROPE AND IS A MAJOR
SPEECH TECHNOLOGY PROVIDER IN NORTH AMERICA. ITS NATURAL DIALOGUE PLATFORM
SPEECHMANIA AND SPEECHPEARL SPEECH RECOGNITION ENGINES ARE USED FOR BANKING,
TRAVEL, AUTO ATTENDANTS SPEECH PORTALS AND WHITE AND YELLOW PAGES AUTOMATION.

PHILIPS HAS MORE THAN 40 YEARS EXPERIENCE IN THE DEVELOPMENT AND MARKETING OF
SPEECH PRODUCTS AND DEVELOPED THE FIRST COMMERCIALLY AVAILABLE PC BASED NATURAL,
CONTINUOUS SPEECH RECOGNITION ENGINE FOR SPEECH TO TEXT APPLICATIONS IN 1993.
PHILIPS' LINE OF END USER SOFTWARE (FREESPEECH 98 AND FREESPEECH 2000 FOR SOHO
AND CONSUMER MARKETS, AND SPEECHPRO FOR THE






PROFESSIONAL DICTATION USERS) IS AVAILABLE IN 16 LANGUAGES AND ITS VOCON SPEECH
RECOGNIZER FOR EMBEDDED SYSTEMS HAS BEEN SUCCESSFULLY INTEGRATED IN CONSUMER
ELECTRONICS PRODUCTS AND DEVICES. PHILIPS HAS SET UP SPEECHSOLUTIONS DESIGN
CENTERS AROUND THE GLOBE, SUPPORTING R&D AND THE ESTABLISHMENT OF INDUSTRY
STANDARDS, AND IS A MEMBER IN VARIOUS STANDARDIZATION BODIES SUCH AS ECTF, SAPI,
HAVI, HOMEAPI, VXML, W3C AND VOICETIMES: WWW.SPEECH.PHILIPS.COM

ROYAL PHILIPS ELECTRONICS OF THE NETHERLANDS IS ONE OF THE WORLD'S BIGGEST
ELECTRONICS COMPANIES AND EUROPE'S LARGEST, WITH SALES OF $33.5 BILLION (EUR
31.5 BILLION) IN 1999. ITS 226,900 EMPLOYEES IN MORE THAN 60 COUNTRIES ARE
ACTIVE IN THE AREAS OF LIGHTING, CONSUMER ELECTRONICS, DOMESTIC APPLIANCES,
COMPONENTS, SEMICONDUCTORS, MEDICAL SYSTEMS, AND IT SERVICES (ORIGIN). PHILIPS
IS QUOTED ON THE NYSE (SYMBOL: PHG), LONDON, FRANKFURT, AMSTERDAM (SYMBOL: PHI)
AND OTHER STOCK EXCHANGES. NEWS FROM PHILIPS IS LOCATED AT WWW.NEWS.PHILIPS.COM

Philips and MedQuist have also entered into a Governance Agreement, under which
Philips will nominate a majority of directors to MedQuist's board. Mr. Cohen
will remain MedQuist's Chairman of the Board and Chief Executive Officer, and
John A. Donohoe will continue as President and Chief Operating Officer and a
member of the Board. The Board will also consist of three independent directors
currently on MedQuist's Board and who will serve as a supervisory committee to
review transactions between Philips and MedQuist. This agreement also includes
restrictions on Philips's ability to purchase and sell MedQuist shares.

Philips has entered into agreements with a number of the senior management of
MedQuist who have together agreed to sell in the aggregate approximately 3 per
cent of the outstanding fully diluted shares, representing 37 per cent of those
individuals' combined holdings, and generally to hold the balance of their
holdings for at least two years. The tender offer, which will be made to all
MedQuist shareholders, will be for that number of shares which when added to the
shares to be directly purchased by Philips equals a total of 60 percent of
MedQuist's fully diluted common stock. The tender offer and direct purchases are
subject to MedQuist shareholders tendering at least that number of shares.

Shareholders of MedQuist Inc. should read the tender offer statement when it is
available because it contains important information. The tender offer statement,
the solicitation/recommendation statement on Form 14D-9 and other filed
documents will be available for free at the Securities and Exchange Commission's
website at www.sec.gov and from MedQuist Inc. This release is neither an offer
to purchase nor a solicitation of an offer to sell securities of MedQuist Inc.
The tender offer will be made solely by an offer to purchase and related letter
of transmittal to be disseminated upon the commencement of the tender offer.

This press releases may contain `forward-looking' statements. These statements
include forward-looking language such as "will likely result," "may," "are
expected to," "is anticipated," "estimated," "projected," "intends to" or other
similar words. Actual results may differ from such statements as they may have
been influenced by factors beyond Philips's or MedQuist's ability to control, as
more fully discussed in MedQuist's Annual Report on Form 10-K. This press
release contains certain statements that are neither reported financial results
nor other historical information. These statements are forward-looking
statements within the meaning of the safe-harbor provisions of the U.S. federal
securities laws. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed in the forward looking statements. Many of these risks and
uncertainties relate to factors that are beyond Philips's or MedQuist's ability
to control or estimate precisely, including,






without limitation, future market and economic conditions; the behavior of other
market participants; MedQuist's ability to implement and to achieve market
acceptance of new technology platforms; MedQuist's ability to successfully
integrate acquired businesses and achieve anticipated synergies; MedQuist's
ability to recruit and retain qualified transcriptionists and other employees;
the impact of new services or products on the demand for MedQuist's services;
and MedQuist's ability to expand its customer base. These and other risk factors
are detailed in Philips's and MedQuist's publicly filed reports. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Neither Philips nor MedQuist
undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
these materials.