AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 2000
AMENDMENT NO. 1 TO
SCHEDULE TO
TENDER OFFER STATEMENT
UNDER SECTION 14(D)(1) OR 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
MEDQUIST INC.
(NAME OF SUBJECT COMPANY)
KONINKLIJKE PHILIPS ELECTRONICS N.V.
(NAME OF FILING PERSONS)
COMMON STOCK,
NO PAR VALUE
(TITLE OF CLASS OF SECURITIES)
584949101
(CUSIP NUMBER OF CLASS OF SECURITIES)
ERIC COUTINHO,
DIRECTOR AND DEPUTY SECRETARY
KONINKLIJKE PHILIPS ELECTRONICS N.V.
LEGAL DEPARTMENT
5600 JB EINDHOVEN
THE NETHERLANDS
31 20 597 7235
(NAME, ADDRESS, AND TELEPHONE NUMBERS OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF FILING PERSONS)
with a copy to:
STEPHEN M. KOTRAN, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004-2498
(212) 558-4000
--------------------------------------------------------------------------------
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|_| Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
|X| third-party tender offer subject to Rule 14d-1.
|_| issuer tender offer subject to Rule 13e-4.
|_| going-private transaction subject to Rule 13e-3.
|_| amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: |_|
This Amendment No. 1 amends and supplements the Tender Offer Statement
on Schedule TO, dated June 1, 2000, relating to the offer by Koninklijke Philips
Electronics N.V., a company incorporated under the laws of the Netherlands
("Royal Philips"), to purchase 22,250,327 shares of common stock, no par value
(the "Shares"), of MedQuist Inc., a New Jersey corporation ("MedQuist"), at a
price of $51 per Share, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated June 1, 2000 (the
"Offer to Purchase"), a copy of which was attached as Exhibit (a)(1) to Schedule
TO, and in the related Letter of Transmittal, a copy of which was attached
thereto as Exhibit (a)(2).
ITEM 2. SUBJECT COMPANY INFORMATION.
Section 8 -- "Certain Information Concerning MedQuist" of the Offer to
Purchase is amended in its entirety to read as follows:
8. CERTAIN INFORMATION CONCERNING MEDQUIST.
MedQuist has its principal executive offices at Five Greentree Centre,
Suite 311, Marlton, New Jersey 08053. The telephone number of MedQuist at such
location is (856) 596-8877. MedQuist, which was incorporated in 1984, is the
leading national provider of medical transcription services, a key component in
the provision of healthcare services. Transcription is the process by which
dictation is converted into an electronic medical report. The timely production
of accurate reports is necessary for patient care and for healthcare providers
to receive reimbursement.
Through MedQuist's approximately 8,000 transcriptionists, proprietary
software, sophisticated digital dictation equipment and ability to interface
with healthcare providers' computer systems, MedQuist provides customized
solutions to shorten customers' billing cycles and reduce their overhead and
other administrative costs. In addition to hospital medical records departments,
MedQuist's target markets include patient care departments, such as radiology,
emergency rooms, oncology, pathology, pediatrics and cardiology departments,
health maintenance organizations, physician practice groups and out-patient
clinics.
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MedQuist serves approximately 2,300 clients through 68 client service
centers nationwide. Due to the large number of trained transcriptionists and
MedQuist's ability to allocate work among them efficiently, MedQuist believes
that it is able to reduce the production turnaround times for transcribed
medical reports. An in-house staff or small transcription company cannot
generally achieve these efficiencies to the extent MedQuist can.
As a result of internal growth and acquisitions, MedQuist's revenues
have increased from $61.5 million in 1996 (before restatement for acquisitions
accounted for as pooling of interests) to $330 million in 1999.
Set forth below is certain summary consolidated financial information
for each of MedQuist's last three fiscal years for the period ended December 31,
1999 as contained in MedQuist's 1999 Annual Report to Shareholders, and
incorporated by reference in its Annual Report on Form 10-K, as well as
unaudited financial information for the period ended March 31, 2000 as contained
in MedQuist's Quarterly Report on Form 10-Q. More comprehensive financial
information is included in such reports (including management's discussion and
analysis of financial condition and results of operation) and other documents
filed by MedQuist with the SEC, and the following summary is qualified in its
entirety by reference to such reports and other documents and all of the
financial information and notes contained therein. Copies of such reports and
other documents may be examined at or obtained from the SEC and the Nasdaq Stock
Market in the manner set forth below.
MEDQUIST INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, 2000 YEAR ENDED DECEMBER 31,
-------------- --------------------------------
(UNAUDITED) 1999 1998 1997
---- ---- ----
INCOME STATEMENT DATA:
<S> <C> <C> <C> <C>
Revenues............................. $92,512 $330,008 $271,655 $216,158
Income before income taxes........... 23,720 67,644 11,657 14,026
Net income........................... 14,232 40,205 3,185 8,733
Net income per common share:
Basic............................ 0.40 1.14 0.10 0.28
Diluted.......................... 0.39 1.09 0.09 0.26
BALANCE SHEET DATA (AT PERIOD END):
Current assets....................... 138,308 143,760 75,084 63,795
Total assets......................... 298,486 302,183 187,311 173,773
Current liabilities.................. 41,874 44,406 33,232 27,187
Total shareholders' equity........... 255,444 256,536 151,186 131,373
</TABLE>
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Except as otherwise set forth herein, the information concerning
MedQuist contained in this Offer to Purchase has been taken from or based upon
publicly available documents and records on file with the SEC and other public
sources and is qualified in its entirety by reference thereto. Although Royal
Philips and the Dealer Manager have no knowledge that would indicate that any
statements contained herein based on such documents and records are untrue,
Royal Philips and the Dealer Manager cannot take responsibility for the accuracy
or completeness of the information contained in such documents and records, or
for any failure by MedQuist to disclose events which may have occurred or may
affect the significance or accuracy of any such information but which are
unknown to Royal Philips or the Dealer Manager.
OTHER FINANCIAL INFORMATION. During the course of the discussions and
information exchange between Royal Philips and MedQuist that led to the
execution of the Tender Offer Agreement, MedQuist provided Royal Philips and its
financial advisors with certain information and projections about MedQuist and
its historical and projected future financial performance which is not publicly
available. The information provided included the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
2000P 2001P 2002P 2003P 2004P
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues................................ $ 397.7 $ 477.3 $ 572.8 $ 686.8 $ 848.8
EBIT.................................... 85.9 105.5 127.8 154.7 187.1
Net Income.............................. 52.6 64.9 79.8 98.0 120.0
EPS..................................... $ 1.41 $ 1.70 $ 2.03 $ 2.43 $ 2.91
</TABLE>
The information set forth above is based on various assumptions,
including, among other things: (i) total revenue growth (including base business
and acquisitions) of approximately 20% annually; (ii) EBITDA margins of 27.3% in
2000 and 27.7% in 2001 and thereafter; and (iii) a tax rate of approximately
40%.
MEDQUIST HAS ADVISED ROYAL PHILIPS THAT IT DOES NOT AS A MATTER OF
COURSE DISCLOSE PROJECTIONS AS TO FUTURE REVENUES, EARNINGS OR OTHER INCOME
STATEMENT DATA AND THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC
DISCLOSURE. IN ADDITION, THE PROJECTIONS WERE NOT PREPARED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, OR WITH A VIEW TO COMPLIANCE WITH THE
PUBLISHED GUIDELINES OF THE SEC OR THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS REGARDING PROJECTIONS, WHICH WOULD REQUIRE A MORE COMPLETE
PRESENTATION OF THE DATA THAN IS SHOWN ABOVE. THE PROJECTIONS HAVE NOT BEEN
EXAMINED, REVIEWED OR COMPILED BY MEDQUIST'S INDEPENDENT AUDITORS, AND
ACCORDINGLY THEY HAVE NOT EXPRESSED AN OPINION OR ANY OTHER ASSURANCE ON IT. THE
FORECASTED INFORMATION IS INCLUDED HEREIN SOLELY BECAUSE SUCH INFORMATION WAS
FURNISHED TO ROYAL PHILIPS AND ITS FINANCIAL ADVISORS PRIOR TO THE OFFER.
ACCORDINGLY, NEITHER ROYAL PHILIPS NOR ANY OF ITS DIRECTORS, OFFICERS,
AFFILIATES, FINANCIAL ADVISOR OR ANY OTHER REPRESENTATIVE OF ROYAL PHILIPS IS
MAKING ANY REPRESENTATION WITH RESPECT TO, OR ASSUMING ANY RESPONSIBILITY FOR,
THE ACCURACY OR RELIABILITY OF SUCH PROJECTIONS. IN ADDITION, BECAUSE THE
ESTIMATES AND
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ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE INHERENTLY SUBJECT TO SIGNIFICANT
ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, WHICH ARE DIFFICULT OR
IMPOSSIBLE TO PREDICT ACCURATELY AND ARE BEYOND THE CONTROL OF MEDQUIST AND
ROYAL PHILIPS, THERE CAN BE NO ASSURANCE THAT RESULTS SET FORTH IN THE ABOVE
PROJECTIONS WILL BE REALIZED AND IT IS EXPECTED THAT THERE WILL BE DIFFERENCES
BETWEEN ACTUAL AND PROJECTED RESULTS, AND ACTUAL RESULTS MAY BE MATERIALLY
HIGHER OR LOWER THAN THOSE SET FORTH ABOVE.
AVAILABLE INFORMATION. MedQuist is subject to the information and
reporting requirements of the Exchange Act and in accordance therewith is
obligated to file reports and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning MedQuist's directors and officers, their remuneration, stock
options granted to them, the principal holders of MedQuist's securities, any
material interests of such persons in transactions with MedQuist and other
matters is required to be disclosed in proxy statements distributed to
MedQuist's shareholders and filed with the SEC. Such reports, proxy statements
and other information should be available for inspection at the public reference
room at the SEC's offices at 450 Fifth Street, N.W., Washington, D.C. 20549 and
also should be available for inspection and copying at the regional offices of
the SEC located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60611. Copies may be obtained by mail, upon payment of the SEC's
customary charges, by writing to its principal office at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, and can be obtained electronically on
the SEC's Website at http://www.sec.gov.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Section 12 -- "Source and Amount of Funds" of the Offer to Purchase is
amended in its entirety to read as follows:
Royal Philips estimates that the total amount of funds required to
purchase 22,250,327 Shares pursuant to the Offer and to pay related fees and
expenses will be approximately $1.1 billion. Royal Philips presently intends to
finance the Offer with cash on hand and cash flow from existing businesses.
Royal Philips has not made any alternative financing arrangements or alternative
financing plans.
ITEM 4. TERMS OF THE TRANSACTION.
Section 13 -- "Certain Conditions to the Offer" of the Offer to
Purchase is amended in its entirety to read as follows:
13. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer and provided that
Royal Philips is not obligated to accept for payment any Shares until expiration
of all applicable waiting periods under the HSR Act, Royal Philips is not
required to accept for payment
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or pay for, or may delay the acceptance for payment of or payment for, any
tendered Shares, or may, in its sole discretion, terminate or amend the Offer as
to any Shares not then paid for if less than 22,250,327 Shares are properly and
validly tendered pursuant to the Offer and not withdrawn prior to the expiration
of the Offer, or, if on or after May 22, 2000, and at or before the time of the
Expiration Date, any of the following events occurs:
(a) MedQuist breaches or fails to perform in any material
respect any of its obligations, covenants or agreements under the
Tender Offer Agreement or any representation or warranty of MedQuist
set forth in the Tender Offer Agreement which is qualified by "Company
Material Adverse Effect" was inaccurate or incomplete as so qualified
when made or thereafter has become inaccurate or incomplete as so
qualified, or any representation or warranty of MedQuist set forth in
the Tender Offer Agreement which is not qualified by "Company Material
Adverse Effect" was inaccurate or incomplete in any material respect
when made or thereafter becomes inaccurate or incomplete in any
material respect;
(b) there is instituted or pending any action, litigation,
proceeding, investigation or other application (an "Action") before any
court or other governmental entity by any governmental entity or by any
other person, domestic or foreign (it being understood that, with
respect to any Action by any person other than a governmental entity,
this clause (b) will only apply to bona fide Actions that are
reasonably likely to be successful on the merits): (i) challenging the
acquisition by Royal Philips of Shares, seeking to restrain or prohibit
the consummation of the transactions contemplated by the Offer or
seeking to obtain any material damages in connection with the
transactions contemplated by the Offer; (ii) seeking to prohibit, or
impose any material limitations on, Royal Philips' ownership or
operation of all or any portion of their or MedQuist's business or
assets (including the business or assets of their respective affiliates
and subsidiaries), or to compel Royal Philips to dispose of or hold
separate all or any portion of Royal Philips' or MedQuist's business or
assets (including the business or assets of their respective affiliates
and subsidiaries) as a result of the transactions contemplated by the
Offer; (iii) seeking to make the acceptance for payment, purchase of,
or payment for, some or all of the Shares illegal or render Royal
Philips unable to, or result in a delay (other than an immaterial
delay) in, or restrict (other than immaterially), the ability of Royal
Philips to accept for payment, purchase or pay for some or all of the
Shares; (iv) seeking to impose material limitations on the ability of
Royal Philips effectively to acquire or hold or to exercise full rights
of ownership of the Shares including, without limitation, the right to
vote the Shares purchased by them on an equal basis with all other
Shares on all matters properly presented to the shareholders; or (v)
that, in any event, in the reasonable judgment of Royal Philips, is
reasonably likely to have a Company Material Adverse Effect or have a
material adverse effect on the value
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of the Shares to Royal Philips or the benefits expected to be derived
by Royal Philips as a result of consummation of the transactions
contemplated by the Offer;
(c) any statute, rule, regulation, order or injunction is
enacted, promulgated, entered, enforced or deemed applicable to the
Offer, or any other action has been taken, proposed or threatened, by
any court or other governmental entity other than the application to
the Offer of waiting periods under the HSR Act, that could, directly or
indirectly, be reasonably expected to result in any of the effects of,
or have any of the consequences sought to be obtained or achieved in,
any Action referred to in clauses (i) through (v) of paragraph (b)
above;
(d) there has occurred a Company Material Adverse Effect or
any occurrence or event has occurred that is reasonably likely to
result in a Company Material Adverse Effect;
(e) the board of directors of MedQuist (or a special committee
thereof) has amended or modified in a manner adverse to Royal Philips
its approval or recommendation of the Offer, has withdrawn such
recommendation or has approved or recommended any other Acquisition
Proposal, or has resolved to do any of the foregoing;
(f) the Tender Offer Agreement is terminated by MedQuist or
Royal Philips in accordance with its terms, or Royal Philips reaches an
agreement or understanding in writing with MedQuist providing for
termination;
(g) any of the Employment Agreements are terminated or
repudiated by the executive a party thereto, except as may result from
the death or disability of such executive;
(h) MedQuist terminates or repudiates the License Agreement;
(i) any of the Shareholder Agreements are terminated or
repudiated by the shareholder a party thereto; or
(j) MedQuist terminates or repudiates the Governance
Agreement;
which, in the good faith reasonable judgment of Royal Philips, in any such case,
and regardless of the circumstances (including any action or inaction by Royal
Philips other than a material breach of the Tender Offer Agreement) giving rise
to any such conditions, makes it inadvisable to proceed with the Offer and/or
with such acceptance for payment of or payment for Shares. Notwithstanding the
foregoing, Royal Philips will not accept Shares for payment upon expiration of
the Offer while any condition to the Offer remains unsatisfied or unwaived.
The foregoing conditions are for the sole benefit of Royal Philips and
may be asserted by Royal Philips regardless of the circumstances (including any
action or
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inaction by Royal Philips other than a material breach of this Agreement) giving
rise to such condition or may be waived by Royal Philips, in its sole
discretion, by express and specific action to that effect, in whole or in part
at any time and from time to time.
ITEM 11. ADDITIONAL INFORMATION.
On June 14, 2000, the Federal Trade Commission granted Royal Philips
early termination of the waiting period imposed by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the regulations thereunder.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Date: KONINKLIJKE PHILIPS ELECTRONICS N.V.
By: /s/ A. Baan
---------------------------
Name: A. Baan
Title: Executive Vice President
Royal Philips Electronics
By: /s/ J. H. M. Hommen
---------------------------
Name: J. H. M. Hommen
Title: Executive Vice President
Royal Philips Electronics
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