SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
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(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period Commission file number
ended March 31, 2002 0-19941
MedQuist Inc.
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(Exact name of registrant as specified in its charter)
New Jersey 22-2531298
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
Five Greentree Centre, Suite 311, Marlton, NJ 08053
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(Address of principal executive offices) (Zip Code)
(856) 810-8000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes _X_ No___
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 36,978,795 shares of
common stock, no par value, as of May 9, 2002.
MedQuist Inc.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE NO.
- ------- --------------------- --------
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets at March 31, 2002 (Unaudited) and 1
December 31, 2001
Consolidated Statements of Income for the Three Months Ended March 31, 2002 2
and 2001 (Unaudited)
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2002 3
and 2001 (Unaudited)
Notes to Condensed Consolidated Financial Statements (Unaudited) 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosure About Market Risk 11
Special Note Concerning Forward Looking Statements 11
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURE 13
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MEDQUIST INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2002 2001
--------- ------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $100,767 $ 86,334
Accounts receivable, net of allowance of $5,157 and
$5,148 79,587 78,429
Prepaid expenses and other current assets 8,101 7,892
-------- --------
Total current assets 188,455 172,655
Property and equipment - net 33,914 34,167
Deferred income taxes 20,089 20,197
Other assets 7,338 9,215
Intangible assets - net 171,130 167,803
-------- --------
$420,926 $404,037
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term debt $1,048 $1,067
Accounts payable 5,477 4,562
Accrued expenses 36,940 31,323
-------- --------
Total current liabilities 43,465 36,952
-------- --------
Long-term debt 82 1,088
-------- --------
Other liabilities 1,458 1,187
-------- --------
Shareholders' equity:
Common stock, no par value, 60,000 shares authorized,
36,951 and 36,889 issued and outstanding 226,646 225,503
Retained earnings 149,327 139,284
Deferred compensation (23) (31)
Accumulated other comprehensive income (loss) (29) 54
-------- --------
Total shareholders' equity 375,921 364,810
-------- --------
$420,926 $404,037
======== ========
See Accompanying Notes to Consolidated Financial Statements.
1
MEDQUIST INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended
March 31,
2002 2001
---- ----
Revenue $113,974 $95,099
-------- -------
Costs and expenses:
Cost of revenue, excluding depreciation 85,010 70,367
Selling, general and administrative 3,700 3,095
Depreciation 4,234 3,768
Amortization of intangible assets 1,701 1,952
Restructuring (credits) -- (600)
Other (income) -- (3,000)
-------- -------
Total costs and expenses 94,645 75,582
-------- -------
Operating income 19,329 19,517
Other income:
Equity in losses of investee (184) --
Interest income, net 313 1,405
-------- -------
Income before income taxes 19,458 20,922
Income taxes 7,492 8,055
-------- -------
Net income $ 11,966 $12,867
======== =======
Basic net income per common share $ 0.32 $ 0.35
======== =======
Diluted net income per common share $ 0.32 $ 0.34
======== =======
See Accompanying Notes to Consolidated Financial Statements.
2
MEDQUIST INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
Three Months Ended
March 31,
2002 2001
---- ----
Operating activities:
Net income $ 11,966 $ 12,867
Adjustments to reconcile net income to net cash provided by operating
activities, net of business acquisitions:
Depreciation and amortization 5,935 5,720
Equity in losses of investee 184 --
Pension contributions payable in Common Stock 280 225
Amortization of deferred compensation 8 24
Tax benefit for exercise of employee stock options 191 25
Changes in assets and liabilities, excluding effects of acquisitions
Accounts receivable, net (1,051) 2,143
Prepaid expenses and other current assets (208) 5,658
Other assets (121) (361)
Accounts payable 905 469
Accrued expenses 4,553 1,730
Other liabilities 271 346
-- --
Net cash provided by operating activities 22,913 28,846
-------- --------
Investing activities:
Purchases of property and equipment (3,861) (3,173)
Investment in A-Life Medical, Inc. (109) --
Acquisitions, net of cash acquired (4,089) (11,452)
-------- --------
Net cash used in investing activities (8,059) (14,625)
-------- --------
Financing activities:
Repayments of long-term debt (1,097) (18)
Proceeds from the exercise of common stock options 527 67
Proceeds from issuance of Common Stock 232 262
-------- --------
Net cash provided by (used in) financing activities (338) 311
-------- --------
Effect of exchange rate changes (83) --
-------- --------
Net increase in cash and cash equivalents 14,433 14,532
Cash and cash equivalents, beginning of period 86,334 97,365
-------- --------
Cash and cash equivalents, end of period $100,767 $111,897
======== ========
Supplemental disclosure of cash flow information:
Cash paid during period for:
Interest $ 133 $ 10
====== ======
Income taxes $1,077 $ 115
====== ======
See Accompanying Notes to Consolidated Financial Statements.
3
MedQuist Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
March 31, 2002
(Unaudited - amounts in thousands, except per share amounts)
Note 1. Business and Basis of Presentation
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MedQuist Inc. is the leading national provider of medical transcription
services to the healthcare industry in the United States. We entered this
business in May 1994 through the acquisition of a medical transcription services
company. Since this date we have completed an additional 46 acquisitions and
have integrated the acquired business into our operations.
MedQuist Inc. is a majority owned subsidiary of Koninklijke Philips
Electronics N.V. (Philips).
The information set forth in these statements is unaudited. The
information reflects all adjustments that, in the opinion of management, are
necessary to present a fair statement of operations of MedQuist Inc. and its
consolidated subsidiaries for the periods indicated. Results of operations for
the interim periods ended March 31, 2002 are not necessarily indicative of the
results of operations for the full year. Certain information in footnote
disclosures normally included in financial statements have been condensed or
omitted in accordance with the rules and regulations of the Securities and
Exchange Commission.
Note 2. Acquisitions
- ---------------------
During 2001, we completed seven acquisitions accounted for using the
purchase method. Pro forma information is not presented as the acquisitions were
not material to the Company.
During the three months ended March 31, 2002, we completed two
acquisitions accounted for using the purchase method. Pro forma information is
not presented as the acquisitions were not material to the Company.
Note 3. Restructuring Charges
- ------------------------------
In December 2001, we approved a restructuring plan associated with the
roll out of our new transcription platform. The plan includes the closure of
several operating facilities in order to improve operating efficiencies. Costs
associated with the plan of approximately $1,468 were recognized in 2001 in
accordance with Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity." The components of the restructuring charge and associated activity is
as follows:
Non-Cancelable
Leases Severance Total
-------------- --------- ------
2001 Restructuring Charge $1,343 $125 $1,468
Payments against Restructuring accrual:
2002 (106) (24) (130)
------ ---- ------
Accrual at March 31, 2002 $1,237 $101 $1,338
====== ==== ======
4
In November 2001, we completed the purchase of a medical transcription
company. In connection with this acquisition, we established a restructure
reserve of $1,790. The components of the restructuring charge and associated
activity is as follows:
Non-Cancelable
Leases Severance Total
-------------- --------- ------
2001 Restructuring Charge $1,599 $191 $1,790
Payments against Restructuring accrual:
2001 (85) -- (85)
2002 (115) (156) (271)
------ ---- ------
Accrual balance at March 31, 2002 $1,399 $ 35 $1,434
====== ==== ======
In December 1998, the Company's board of directors approved
management's restructuring plan associated with the MRC merger. The components
of the restructuring charge and associated activity is as follows:
Non-Cancelable
Non-Cancelable Contracts and
Leases Severance Other Exit Costs Total
-------------- --------- ---------------- -----
1998 Restructuring Charge $3,835 $1,618 $1,086 $6,539
Payments against Restructuring accrual:
1998 -- (567) (410) (977)
1999 (437) (723) (17) (1,177)
2000 (556) (20) -- (576)
2001 (164) -- -- (164)
2002 (18) -- -- (18)
Revision to estimate recorded in 1999 (1,492) (182) (659) (2,333)
Revision to estimate recorded in 2000 (471) -- -- (471)
Revision to estimate recorded in 2001 (44) (126) -- (170)
------ ------ ------ ------
Accrual balance at March 31, 2002 $ 653 $ -- $ -- $ 653
====== ====== ====== ======
In 1997, MRC approved a separate management plan to close and/or merge
several redundant customer service centers in order to further reduce costs and
improve operating efficiencies. The plan was completed during 1998 and included
the cost of exiting certain facilities, primarily related to non-cancelable
leases, the disposition of fixed assets and employee severance costs. During
2001, we revised our accrual estimates and $430 of the restructure accruals were
reversed in connection with the revision. At December 31, 2001, the accrual had
been fully utilized.
Note 4. Business Combinations and Intangibles
- ----------------------------------------------
In June 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS No. 141 requires that all business combinations consummated after
June 30, 2001 be accounted for under the purchase method of accounting. SFAS No.
142 requires that goodwill and intangible assets with indefinite lives will no
longer be amortized, but are reviewed at least annually for impairment. The
amortization provisions of SFAS No. 142 apply to goodwill and intangible assets
acquired after June 30, 2001. With respect to goodwill and intangible assets
acquired prior to July 1, 2001, we adopted SFAS No. 142 effective January 1,
2002.
5
The carrying amount of acquired intangible assets as of March 31, 2002
are as follows:
Gross Carrying Accumulated Net Book
Life Amount Amortization Value
---- -------------- ------------ --------
Goodwill NA $129,285 $14,542 $114,743
Customer Lists 10-20 years 60,498 10,541 49,957
Noncompete Agreements 1.5-4 years 10,944 7,158 3,786
Other 3-5 years 7,704 5,060 2,644
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$208,431 $37,301 $171,130
======== ======= ========
Reported net income for the three months ended March 31, 2002 and March
31, 2001 exclusive of amortization expense related to goodwill is as follows:
Three Months Ended
March 31,
--------------------
2002 2001
---- ----
Net income, as reported $11,966 $12,867
Add back:
Goodwill amortization, net of tax -- 453
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Adjusted net income $11,966 $13,320
======= =======
Basic net income per common share:
Basic net income per share, as reported $ 0.32 $ 0.35
Impact of goodwill amortization -- 0.01
------- -------
Adjusted basic net income per share $ 0.32 $ 0.36
======= =======
Diluted net income per common share:
Diluted net income per share, as reported $ 0.32 $ 0.34
Impact of goodwill amortization -- 0.02
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Adjusted diluted net income per share $ 0.32 $ 0.36
======= =======
Pursuant to SFAS No. 142, we will test goodwill for impairment in the
second quarter of 2002 and we currently do not expect that the impairment test
will result in any impairment charge.
Note 5. Investment in A-Life Medical, Inc.
- -------------------------------------------
In January 2002, we increased our ownership in A-Life Medical, Inc.
(A-Life) to 28.1 percent of the outstanding voting shares of A-Life. As such,
effective January 2002 we began accounting for the investment under the equity
method of accounting. In accordance with Accounting Principles Board Opinions
(APB) No. 18, we adjusted the carrying amount of our investment in A-Life to
reflect our percentage ownership in the losses incurred by A-Life during the
period we maintained the cost basis investment. As such, in the first quarter of
2002 we reduced our investment by $1.9 million with a corresponding offset to
retained earnings. In addition, because A-Life had negative book value at the
time of our change to the equity basis of accounting, the entire remaining
adjusted investment was allocated to intangible assets, of which $1 million was
allocated to acquired software with the balance of $3.9 million allocated to
goodwill. The acquired software is being amortized over three years.
6
Note 6. Net Income Per Common Share
- ------------------------------------
Basic net income per share is calculated by dividing net income by the
weighted average number of shares of Common Stock outstanding for the period.
Diluted net income per share is calculated by dividing net income by the
weighted average number of shares of Common Stock outstanding for the period,
adjusted for the dilutive effective of Common Stock equivalents, which consist
of stock options, using the treasury stock method.
The table below sets forth the reconciliation of the numerators and
denominators of the basic and diluted net income per share computations:
Three Months Ended March 31,
-------------------------------------------------------------------------------
2002 2001
----------------------------------- -----------------------------------
Net Per Share Net Per Share
Income Shares Amount Income Shares Amount
------ ------ --------- ------ ------ ----------
Basic $11,966 36,932 $0.32 $12,867 36,803 $0.35
Effect of dilutive securities -- 1,026 -- 717
------- ------ ------- ------
Diluted $11,966 37,958 $0.32 $12,867 37,520 $0.34
======= ====== ===== ======= ====== =====
Options to purchase 3,206 and 2,683 shares of Common Stock were
outstanding at March 31, 2002 and March 31, 2001, respectively, but were not
included in the computation of diluted net income, per share, because the
exercise prices of the options were greater than the average market prices of
the Common Stock during the periods.
Note 7. Related Party Transactions
- -----------------------------------
MedQuist paid Philips $538 during the three months ended March 31,
2001, related to a licensing agreement entered into to provide for the
integration and use of certain Philips speech recognition technology into our
business. This agreement was amended in January 2002, which required a $150 up
front payment in addition to a fee based on a per payroll line basis. To date,
the $150 has been paid and there have been no fees incurred on a payroll line
basis. The agreement expires on May 22, 2005.
In addition to the revision to the license agreement, MedQuist entered
into a consulting agreement with Philips. This agreement calls for Philips to
aid MedQuist with the integration of its speech and transcription technologies.
Under this agreement, MedQuist has incurred fees of $35 for the three months
ended March 31, 2002.
In the fourth quarter of 2000, the Company began participating in a
deposit facility established by Philips which allowed investments up to $150
million to earn interest at LIBOR less 0.125 percent, for periods up to 365
days. The Company withdrew all funds invested in this related-party deposit
facility in the second quarter of 2001 and, at December 31, 2001, the Company
had no such investment. The facility terminated in February 2002. Interest
income earned on cash deposited with Philips was $403 for the year ended
December 31, 2001, of which $87 was earned in the three months ended March 31,
2001.
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
- -------
We are the leading national provider of medical transcription services.
Substantially all of our revenue to date has been derived from providing medical
transcription services, which we recognize when we render services and deliver
reports. These services are based primarily on contracted rates. We also derive
revenue from services other than traditional transcription services, such as
coding revenue, interfacing fees, equipment rentals, equipment sales, referral
fees and commissions from strategic partners. Revenues from other sources are
recognized when earned.
Cost of revenue consists of all direct costs associated with providing
services, including payroll, telecommunications, technology development, repairs
and maintenance, rent and other direct costs. However, cost of revenue does not
include depreciation. Most of our cost of revenue is variable in nature, but
includes certain fixed components. Selling, general and administrative expenses
include costs associated with our senior executive management, marketing,
accounting, legal and other administrative functions. Selling, general and
administrative expenses are mostly fixed in nature, but include certain variable
components.
Results of Operations
- ---------------------
The following table sets forth for the periods indicated certain financial data
in the Company's Unaudited Consolidated Statements of Income as a percentage of
net revenue:
Three Months Ended
March 31,
2002 2001
---- ----
Revenue 100.0% 100.0%
Costs and expenses:
Cost of revenue, excluding depreciation 74.6 74.0
Selling, general and administrative 3.2 3.3
Depreciation 3.7 4.0
Amortization of intangible assets 1.5 2.0
Restructuring charges -- (0.6)
Lawsuit settlement -- (3.2)
----- -----
Operating income 17.0 20.5
Equity in losses of investee (0.2) --
Interest income, net 0.3 1.5
----- -----
Income before income taxes 17.1 22.0
Income taxes 6.6 8.5
----- -----
Net income 10.5% 13.5%
===== =====
8
Three Months Ended March 31, 2002
- ---------------------------------
Revenue. Revenue increased 19.8% from $95.1 million for the three months ended
March 31, 2001 to $114.0 million for the comparable 2002 period. The increase
resulted from additional sales to existing customers, sales to new customers and
additional revenue from acquisitions.
Cost of Revenue excluding depreciation. Cost of revenue increased 20.8% from
$70.4 million for the three months ended March 31, 2001 to $85.0 million for the
comparable 2002 period. As a percentage of revenue, cost of revenue increased
from 74.0% for the three months ended March 31, 2001 to 74.6% for the comparable
2002 period. The increase primarily resulted from increased transcription
expense as a percentage of revenue largely associated with the acquisition of
L&H transcription services in November 2001, and costs associated with ongoing
development of our new transcription platform.
Selling, general and administrative. Selling, general and administrative
expenses increased 19.5% from $3.1 million for the three months ended March 31,
2001 to $3.7 million for the comparable 2002 period. As a percentage of
revenues, selling, general and administrative expenses decreased from 3.3% for
the three months ended March 31, 2001 to 3.2% for the comparable 2002 period.
Depreciation. Depreciation expense increased 12.4% from $3.8 million for the
three months ended March 31, 2001 to $4.2 million for the comparable 2002
period. As a percentage of revenues, depreciation decreased from 4.0% for the
three months ended March 31, 2001 to 3.7% for the comparable period in 2002. The
increase in expense was due to increased capital purchases to support the
increased revenue base. As a percentage of revenue, depreciation decreased as a
result of our ability to reduce certain voice capture component expenditures
through our purchase of DVI early in 2001.
Amortization of intangible assets. Amortization of intangible assets decreased
from $2.0 million for the three months ended March 31, 2001 to $1.7 million for
the comparable 2002 period. The decrease is attributable to the elimination of
goodwill in accordance with SFAS 142 reflecting $736,000 reduction of
amortization partially offset by $485,000 of amortization of other intangibles
associated with the Company's acquisitions in 2001 and 2002, which were
accounted for using the purchase method.
Equity in losses of investee. As a result of our increased ownership in A-Life
to 28.1% of the outstanding voting shares of A-Life, we are required by APB No.
18 to reflect the investment under the equity method of accounting. As a result,
for the three months ended March 31, 2002, we recognized a loss in this
investment of $184,000. This loss was the result of amortization of $83,000
related to $1 million of the investment being allocated to acquired software and
$101,000 related to our 28.1% share of A-Life's operating loss.
Interest income, net. We had net interest income of $1.4 million for the three
months ended March 31, 2001 and net interest income of $313,000 for the
comparable 2002 period. The decrease is due to decreased rates of return on
liquid investments, partially offset by a greater amount of cash available for
investment.
Income taxes. Income taxes decreased from $8.1 million or 38.5% of income before
income taxes to $7.5 million or 38.5% of income before income taxes. The
decrease in income taxes resulted primarily from decreased pre-tax earnings
resulting from certain one-time earnings in the three months ended March 31,
2001.
9
Liquidity and Capital Resources
- -------------------------------
At March 31, 2002, we had working capital of $145.0 million, including
$100.8 million of cash and cash equivalents. During the three months ended March
31, 2002, our operating activities provided cash of $22.9 million and during the
three months ended March 31, 2001 our operating activities provided cash of
$28.8 million. The decrease is primarily due to reduced net income, resulting
from certain one time income during the three months ended March 31, 2001 and
increases in accounts receivable and other prepaid expenses and other current
assets.
During the three months ended March 31, 2002, we used cash in investing
activities of $8.1 million, consisting of $3.9 million of capital expenditures
and $4.1 million for acquisitions accounted for under the purchase method and
$109,000 additional investment in A-Life. During the three months ended March
31, 2001, we used cash for investing activities of $14.6 million, consisting of
$3.2 million of capital expenditures and $11.5 million for acquisitions
accounted for under the purchase method.
During the three months ended March 31, 2002, net cash used in
financing activities was $338,000. During the three months ended March 31, 2002,
cash provided by financing activities was $311,000.
We believe that our cash and cash equivalents generated from operations
and our borrowing capacity will be sufficient to meet our current working
capital and capital expenditure requirements.
New Accounting Pronouncement
- ----------------------------
In August 2001, the Financial Accounting Standards Board issued SFAS
No. 143, "Accounting for Asset Retirement Obligations" (effective for fiscal
years beginning after June 15, 2002). SFAS No. 143 addresses accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and retirement of assets. We currently do not expect that the adoption of
SFAS No. 143 will have a significant impact on our consolidated financial
position and results of operations.
In August 2001, the Financial Accounting Standards Board issued SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which
establishes a single accounting model, based on the framework established in
SFAS No. 121, "Accounting for the Impairment or Disposal of Long-Lived Assets",
and resolves significant implementation issues related to SFAS No. 121. SFAS No.
144 superceded SFAS No. 121 and Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of a Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions". We are required to adopt SFAS No. 144 for the fiscal
year ending December 31, 2002. We do not believe that the adoption of SFAS No.
144 will have a material impact on our consolidated financial condition or
results of operations.
10
Item 3. Quantitative and Qualitative Disclosure About Market Risk
We generally do not use derivative financial instruments in our
investment portfolio. We make investments in instruments that meet credit
quality standards, as specified in our investment policy guidelines; the policy
also limits the amount of credit exposure to any one issue, and type of
instrument. We do not expect any material loss with respect to our investment
portfolio.
The following table provides information about our investment portfolio
at March 31, 2002. For investment securities, the table presents principal
amounts and related weighted average interest rates (dollars in thousands).
Cash and cash equivalents $100,767
Average interest rate 1.5%
Special Note Concerning Forward Looking Statements
- --------------------------------------------------
Some of the information in this Form 10-Q contains forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act. We also have referred you to this note in
other written or oral disclosures we have made. These statements include
forward-looking language such as "will likely result," "may," "are expected to,"
"is anticipated," "estimated," "projected," "intends to," "consensus earnings
estimates," or other similar words. Our actual results are likely to differ, and
could differ materially, from the results expressed in, or implied by, these
forward-looking statements. There are many factors that could cause these
forward-looking statements to be incorrect, including but not limited to the
following risks: risks associated with (1) our ability to recruit and retain
qualified transcriptionists; (2) inability to complete and assimilate
acquisitions of businesses; (3) dependence on our senior management team; (4)
the impact of new services or products on the demand for our services; (5) our
dependence on medical transcription for substantially all of our business; (6)
our ability to expand our customer base; (7) our ability to maintain our current
growth rate in revenue and earnings; (8) the volatility of our stock price; (9)
our ability to compete with others; (10) changes in law, including without
limitation, the impact of the Health Information Portability and Accountability
Act ("HIPAA"); (11) infringement on the proprietary rights of others; (12) our
failure to comply with confidentiality requirements; and (13) risks inherent in
diversifying into other businesses, such as from the acquisitions of DVI
(digital dictation equipment), Speech Machines (ASP transcription platform and
business) and entering into the medical record coding reimbursement business.
When considering these forward-looking statements, you should keep in mind these
risk factors and other cautionary statements in this report, and should
recognize that those forward-looking statements speak only as of the date made.
MedQuist does not undertake any obligation to update any forward-looking
statement included in this Form 10-Q or elsewhere. Other risk factors and
cautionary statements are set forth in our other filings with the SEC, and you
are encouraged to read those.
11
Part II Other Information
- -------------------------
Item 1. - Legal Proceedings - None
Item 2. - Changes in Securities and Use of Proceeds - None
Item 3. - Defaults upon Senior Securities - None
Item 4. - Submission of Matters to a Vote of Security Holders - None
Item 5. - Other Information
Item 6. - Exhibits and Reports on Form 8-K
a) Exhibits: - None
b) The Company filed the following Reports on Form 8-K during the
quarter for which this report is filed.
File Date Item Reported
--------- --------------
February 6, 2002 Regulation FD Disclosure in connection
with earnings release and conference
call
April 25, 2002 Regulation FD Disclosure in connection
with earnings release and conference
call
12
SIGNATURE
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.
Registrant
Date: May 14, 2002 By: /s/Brian J. Kearns
----------------------------------
Brian J. Kearns
Chief Financial Officer
13