-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Esk+8AoDSLlU9roWS45ApXzgPP6/vEdxTSqnp5IIZcc7bumMZ+knaIrdAnxpWv1F 5ZhM9xpjvsJh3EhTrM26lg== 0000950116-03-001599.txt : 20030213 0000950116-03-001599.hdr.sgml : 20030213 20030213164057 ACCESSION NUMBER: 0000950116-03-001599 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030213 ITEM INFORMATION: Other events FILED AS OF DATE: 20030213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDQUIST INC CENTRAL INDEX KEY: 0000884497 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 222531298 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19941 FILM NUMBER: 03560278 BUSINESS ADDRESS: STREET 1: FIVE GREENTREE CENTRE STE 311 STREET 2: STATE HIGHWAY 73 N CITY: MARLTON STATE: NJ ZIP: 08053 BUSINESS PHONE: 8568108000 MAIL ADDRESS: STREET 1: 5 GREENTREE CENTRE SUITE 311 STREET 2: ATTN BRUCE VAN FOSSEN CITY: MARLTON STATE: NJ ZIP: 08053 8-K 1 eightk.txt 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): February 13, 2003 MedQuist Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) New Jersey 0-19941 22-2531298 - ---------------- ----------- ------------------ (State or other (Commission (I.R.S. Employer jurisdiction File Identification No.) of incorporation Number) or organization) Five Greentree Centre Suite 311 Marlton, NJ 08053 --------------------------------------------------- (address of principal executive offices) (Zip Code) Registrants's telephone number, including area code: (856) 810-8000 Item 5. Other Events. Pursuant to Regulation FD Rules 100-103: - ---------------------------------------- Attached as Exhibit 5.1 is the script for the Registrant's fourth quarter and full year 2002 investor conference call held on February 13, 2003 at 11:00 a.m. (ET). Attached as Exhibit 5.2 is the Registrant's earnings release for the fourth quarter and full year ended December 31, 2002. Pursuant to Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, attached as Exhibit 5.3 is a note concerning forward-looking statements and additional information regarding factors that could cause actual results to differ materially from those in such forward-looking statements. 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 hereunto duly authorized. MEDQUIST INC. Date: February 13, 2002 By: --------------------------------------------- Name: Brian J. Kearns Title: Executive Vice President, Treasurer and Chief Financial Officer EX-5 3 ex5-1.txt EXHIBIT 5.1 Exhibit 5.1 - ----------- MedQuist Inc. - 2002 Fourth Quarter and Full Year Conference Call: - ------------------------------------------------------------------ Good morning everyone. I would like to take this opportunity to thank you for participating in our conference call. My name is David Cohen and I am the Chairman, President and Chief Executive Officer of the Company. Also on the call today are Brian Kearns, our Chief Financial Officer, and John Suender, our Chief Legal Officer. I first would like to make a brief opening statement and then open the call to your questions and comments. By now everyone should have received a copy of our earnings release or have had the opportunity to review the information distributed by the wire services. While the economic environment remains difficult, we remain focused on the future and on all the things we can control. As you will see from our financial results, our fourth quarter performance was in line with management guidance provided during our third quarter earnings call. Our NTP roll out is on schedule. Although it will require a significant effort to meet our target of $80 million on the platform by the end of June, we believe that goal is still achievable. Our dedicated and talented team of professionals is working hard to deliver on that goal. We continue to believe that our company's transition to a document management company will allow us to demonstrate MedQuist's clear value to the marketplace. Transcription is our bread and butter, but our strategy is to lever that foundation into something even greater. Our ASP software will lead the way into not only healthcare institutions, but also any business that has correspondence. CodeRunner, our innovative coding software, will put us in the drivers seat to expand our coding initiative. Our efforts in integrating the Lanier Healthcare acquisition are progressing according to plan. We recently held a National Sales Conference in Atlanta that was well attended and upbeat. The Lanier sales force is one of the best in the healthcare services industry and we are managing this asset aggressively to maximize our distribution channel effectiveness. We expect this effort should revitalize our recent sluggish organic revenue growth, hopefully into low double-digit growth. Again, this will be no small task, but the sales force appears to be ready and willing to move forward engaging our hospital clients with the full suite of MedQuist products and services. It's full speed ahead for the MedQuist sales effort. We have also made progress in our technology development efforts, specifically regarding automated voice recognition. While this technology is still not quite ready for prime time in all areas of healthcare, there are certainly very real opportunities that exist today. We believe that going forward, we are well positioned to appreciate productivity enhancements through the creative use of this cutting edge technology. We believe that the use of this technology in partnership with Philips will help us maintain and even enhance our strong position in the medical transcription business. On a final note, as many of you are already aware, I have formally announced my retirement as CEO of MedQuist, which will be effective this July, at the end of my three-year employment contract. During my 30-year career with this company, I have worked hard to successfully grow MedQuist from a small local business into the largest medical transcription enterprise in the world. Along the way, I have made many long lasting friendships, including those with many of you on the call today. I have spent the last few years assembling the best management team in our industry and I believe they are very well positioned to expand our leadership role in healthcare document management. At this time I would like to turn it over to Brian Kearns for a review of our financial results. Thank you David and good morning everyone. For the fourth quarter: MedQuist generated revenue of $128.8 million and EBITDA of $23.1 million or 17.9% of revenue. Operating income was $16.2 million and earnings per share were $0.27, flat compared to the same period last year. Excluding the gain on the adjustment of our restructuring reserves, earnings per share were $0.26. For full-year 2002: MedQuist generated revenue of $486 million and EBITDA of $97 million or 19.9% of revenue. Operating income was $71 million and earnings per share were $1.16. Excluding the gain on the adjustment of our restructuring reserves, earnings per share were $1.15. At December 31, 2002, MedQuist had $142 million in working capital including $103 million in cash. Accounts receivable were $86 million and DSO remained in the low 60's, at 61 days, which is a decrease of one day from the September quarter. The Company had essentially zero debt and shareholders equity was over $410 million. At this time I will turn the presentation over to John Suender, MedQuist's Chief Legal Officer. During the conference call management will make forward-looking statements within the meaning of the safe-harbor provisions of the U.S. federal securities laws, such as market estimates, growth and expansion plans and opportunities, potential revenue and cost synergies, revenue and earnings projections, expected growth rates, and the benefits of new technologies. 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. Additional information concerning factors that could cause actual results to differ materially from these forward-looking statements is set forth in our periodic reports filed with the SEC, including our Form 10-Q's and Form 10-K for the year ended December 31, 2001 and our form 8-K filed in relation to today's call. In addition, more detailed unaudited financial information can be found in the earnings release we issued this morning and in the Form 8-K filed in relation to today's call. At this time we would like to open up the call to your questions. Please announce your name before asking your question. Thank you. EX-5 4 ex5-2.txt EXHIBIT 5.2 Exhibit 5.2 ----------- News Release NASDAQ: MEDQ FOR IMMEDIATE RELEASE MEDQUIST REPORTS FINANCIAL RESULTS FOR FOURTH QUARTER AND FULL-YEAR 2002 MARLTON, NJ February 13, 2003 - MedQuist Inc. (NASDAQ:MEDQ) reported revenue of $128.8 million, EBITDA of $23.1 million and net income of $10.0 million or $0.27 per diluted share for the three months ended December 31, 2002. Net income for the three months ended December 31, 2002 included income of $576 thousand from the adjustment of restructure reserves established in 1998 and 2001. Excluding this adjustment, net income for the three months ended December 31, 2002 was $9.7 million or $0.26 per diluted share. For the twelve months ended December 31, 2002 revenue was $486.2 million, EBITDA was $96.7 million and net income was $43.9 million or $1.16 per share on a diluted basis. Net income for the twelve months ended December 31, 2002 included income of $576 thousand for the adjustment of restructure reserves established in 1998 and 2001. Excluding this adjustment, net income for the twelve months ended December 31, 2002 was $43.5 million or $1.15 per diluted share. David A. Cohen, Chairman and Chief Executive Officer, stated, "MedQuist's fourth quarter financial results were in line with previous company guidance issued during our third quarter investor conference call. Over the last year MedQuist achieved several important milestones including the acquisition of a strategically important business and the formal launch of our new technology platform." "In July 2002, MedQuist completed the acquisition of Lanier Healthcare, which added a well-established suite of products and services plus one of the most professional sales teams in healthcare services. The Lanier acquisition also provides MedQuist with a high quality research and development effort, a well developed client service capability plus an experienced and professional management team." "More recently, MedQuist announced the formal launch of our new transcription platform, called DocQment Enterprise Platform, which is a web-based document workflow management solution that integrates dictation, routing, speech recognition, transcription and document delivery. We believe that DocQment EP will become the application of choice among health information management professionals throughout the nation. We continue to believe that MedQuist remains extremely well positioned to extend our leadership position in medical document management." MedQuist is a leading provider of electronic medical transcription, health information and document management services. MedQuist provides document workflow management, digital dictation, speech recognition, mobile dictation devices, Web-based transcription, electronic signature, medical coding products and outsourcing services. MedQuist is a member of the Philips Group of Companies. Other than historical information set forth herein, this press release may contain forward-looking statements such as our anticipated future earnings growth, which involve risks and uncertainties. The Company's actual results may differ materially from those anticipated or implied in any such forward-looking statements as a result of various risks, including, without limitation, inability to predict future economic or market conditions, rapidly changing technology; inability to manage and maintain growth; inability to penetrate new markets; inability to make and successfully integrate acquisitions and transition our business strategy; decreased demand for existing products; lack of a market for new products; and failure to successfully negotiate agreements to take advantage of the opportunities facing MedQuist to broaden its service offering. Additional risks associated with the Company's business can be found in its December 31, 2001 Annual Report on Form 10-K and its other periodic filings with the SEC. Contact: Brian J. Kearns, Chief Financial Officer, MedQuist Inc., 856-810-8000 ext. 4418 Tables Follow MedQuist Inc. Financial Highlights (Unaudited) In thousands, except per share data and percentages
Three Months Ended December 31, ------------------------------- 2002 2001 --------- ----------- Revenues $128,811 $109,536 Gross profit 32,035 28,545 Gross margin 24.9% 26.1% Selling, general & administrative 8,180 3,510 % of revenues 6.4% 3.2% Research and development 1,310 -- % of revenues 1.0% n/a Restructure charges (credits) (576) 1,468 % of revenues (0.4%) 1.3% EBITDA 23,121 23,567 % of revenues 17.9% 21.5% Depreciation expense 5,132 4,736 Amortization expense 1,741 2,558 Operating income 16,248 16,273 Net interest income (252) (427) Equity in loss of investee 221 178 Pretax income 16,279 16,522 Tax provision 6,267 6,429 Net income 10,012 10,093 Net income per diluted share $0.27 $0.27 Fully diluted shares outstanding 37,684 37,776
MedQuist Inc. Financial Highlights (Unaudited) In thousands, except per share data and percentages
Twelve Months Ended December 31, -------------------------------- 2002 2001 --------- ---------- Revenues $486,166 $405,308 Gross profit 121,070 106,206 Gross margin 24.9% 26.2% Selling, general & administrative 22,253 13,117 % of revenues 4.6% 3.2% Research and development 2,736 -- % of revenues 0.6% n/a Restructure charges (credits) (576) 868 % of revenues (0.1%) 0.2% Other income -- (3,000) % of revenues n/a (0.7%) EBITDA 96,657 95,221 % of revenues 19.9% 23.5% Depreciation expense 18,829 17,001 Amortization expense 6,827 9,398 Operating income 71,001 68,822 Net interest income (1,202) (3,754) Equity in loss of investee 895 994 Pretax income 71,308 71,582 Tax provision 27,453 27,940 Net income 43,855 43,642 Earnings per diluted share $1.16 $1.16 Fully diluted shares outstanding 37,875 37,718
MedQuist Inc. Reconciliation to net income before special items Unaudited In thousands, except per share data and percentages
Three Months Twelve Months Ended December 31, Ended December 31, -------------------- -------------------- 2002 2001 2002 2001 ------- ------- -------- -------- Pre-tax income $16,279 $16,522 $71,308 $71,582 Adjustment for amortization of goodwill (1) -- 874 -- 3,369 Adjustment for special items (2) (3) (576) 1,468 (576) (2,132) ------- ------- ------- ------- Adjusted pre-tax income 15,703 18,864 70,732 72,819 Tax provision 6,045 7,331 27,231 28,416 ------- ------- ------- ------- Adjusted net income $9,658 $11,533 $43,501 $44,403 Adjusted net income per diluted share $0.26 $0.31 $1.15 $1.18
Notes: - ------ (1) In accordance with FASB No. 142, goodwill is no longer amortized, beginning January 1, 2002. For the three months ended December 31, 2001, the pretax income includes $874 of such goodwill amortization with an after tax effect of $538. For the twelve months ended December 31, 2001, the pretax income includes $3,369 of such goodwill amortization with an after tax effect of $2,072. (2) Adjustment for special items for the three and twelve months ended December 31, 2002 relates to income of $576 from an adjustment of the restructure reserves established in 1998 and 2001. (3) Adjustment for special items for the three months ended December 31, 2001 includes a charge of $1,468 related to a restructure reserve. The twelve months ended December 31, 2001 includes the following items; $3,000 of income related to favorable settlement of a lawsuit and $600 of income related to the adjustment of the restructuring reserves established in 1997 and 1998, and $1,468 related to establishing a restructure reserve. MedQuist Inc. Financial Highlights In thousands
December 31, December 31, 2002 2001 ------------ ------------ (Unaudited) (Audited) Assets: Current assets: Cash and cash equivalents $ 103,392 $ 86,334 Accounts receivable (net) 86,465 78,429 Other current assets 14,474 7,892 --------- --------- Total current assets 204,331 172,655 Property and equipment (net) 37,804 34,167 Goodwill 136,127 110,584 Other intangible assets (net) 73,798 57,219 Other assets 22,811 27,489 --------- --------- Total assets $ 474,871 $ 402,114 ========= ========= Liabilities and Shareholder's Equity: Current liabilities: Current portion of long term debt $ 31 $ 1,067 Accounts payable 9,908 4,562 Deferred revenue 18,789 333 Accrued expenses 33,701 30,990 --------- --------- Total current liabilities 62,429 36,952 Long term debt 54 1,088 Other long term liabilities 1,427 1,187 Shareholder's equity 410,961 362,887 --------- --------- Total liabilities and Shareholder's $ 474,871 $ 402,114 ========= =========
EX-5 5 ex5-3.txt EXHIBIT 5.3 Exhibit 5.3 - ----------- Risk Factors Concerning Forward Looking Statements - -------------------------------------------------- During our investor conference call held on the date of this filing we referred to, and during future oral disclosures or written statements we may refer to, certain risk factors concerning forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. 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. 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 ability to develop and sell new products and services; (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 Health Insurance Portability and Accountability Act of 1996 (HIPAA); (11) infringement on the proprietary rights of others; (12) our failure to comply with confidentiality requirements, including, without limitation, those imposed under HIPAA; (13) changes in economic conditions; and (14) inherent uncertainties in general relating to predicting future financial results and events. When considering these forward-looking statements, you should keep in mind these risk factors and other cautionary statements, 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 8-K or made elsewhere. -----END PRIVACY-ENHANCED MESSAGE-----