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): May 28, 1998
MEDQUIST INC.
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(Exact name of issuer as specified in charter)
New Jersey 0-19941 22-253 1298
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(State or Other (Commission (I.R.S. Employer
Jurisdiction file Identification
of Incorporation or number) Number)
Organization)
Five Greentree Centre
Suite 311
Marlton, New Jersey 08053
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(Address of principal executive offices)
(609) 596-8877
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
(a) On May 28, 1998, Transcriptions, Ltd. ("TL"), a wholly-owned
subsidiary of the registrant, MedQuist Inc. ("MedQuist"),
acquired approximately 93.4% of the outstanding common stock of
Digital Dictation, Inc. ("DDI") pursuant to an Agreement and Plan
of Merger among MedQuist, TL, DDI, Proactive Partners, L.P.
("Proactive"), Lagunitas Partners, L.P. ("Lagunitas"), Gruber &
McBaine International ("G&B") and Richard D. Cameron ("Cameron")
(the "Merger Agreement"). Prior to the execution of the Merger
Agreement, Proactive, Lagunitas, G&B and Cameron (collectively,
the "Principal Shareholders") owned 5,908,673 shares of DDI
common stock, par value $.01 per share ("DDI Common Stock"), or
approximately 93.4% of the outstanding shares of DDI Common
Stock. Pursuant to the Merger Agreement, on May 28, 1998, the
Principal Shareholders exchanged each of their shares of DDI
Common Stock for 0.0720449 shares of MedQuist common stock, no
par value per share ("MedQuist Common Stock"), for a total of
425,688 shares of MedQuist Common Stock. Moreover, pursuant to
the Merger Agreement, DDI will merge with and into TL (the
"Merger") upon the effectiveness of a Registration Statement on
Form S-4 covering shares of MedQuist Common Stock to be issued in
the Merger, with TL being the surviving corporation of the
Merger. Upon consummation of the Merger, the holders of DDI
Common Stock, other than TL, will receive 0.0720449 (the
"Exchange Ratio") shares of MedQuist Common Stock in exchange for
each share of DDI Common Stock held by such stockholders. The
Exchange Ratio was agreed to by TL and DDI based upon the values
of their respective common stock and the anticipated cash flow
and net earnings of DDI. Outstanding options to purchase DDI
Common Stock will be exchanged on an equivalent basis for options
to purchase MedQuist Common Stock.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial information that is required to be filed pursuant to
instruction (a) of Item 7 shall be filed not later than 60 days
after the date of this Form 8-K.
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(b) Pro Forma financial information that is required to be filed
pursuant to instruction (b) of Item 7 shall be filed not later
than 60 days after the date this Form 8-K.
(c) Exhibits
(1) Press Release dated May 29, 1998 is attached hereto as
Exhibit A.
(2) Agreement and Plan of Merger dated May 28, 1998 by and among
MedQuist Inc., Transcriptions, Ltd., Digital Dictation,
Inc., Proactive Partners, L.P., Lagunitas Partners, L.P.,
Gruber & McBaine International, and Richard D. Cameron
incorporated by reference to the June 8, 1998 filing with
the SEC by Transcriptions, Ltd. and MedQuist Inc. of a
Schedule 13-D reporting their ownership interest in Digital
Dictation, Inc.
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: June 12, 1998 By: /s/ John M. Suender
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Name: John M. Suender
Title: Vice President and
General Counsel
<PAGE>
Exhibit A
News Release
NASDAQ: MEDQ
FOR IMMEDIATE RELEASE
MEDQUIST ACQUIRES FOURTEENTH AND FIFTEENTH MEDICAL TRANSCRIPTION
COMPANIES
MARLTON, NJ, May 29, 1998 - MedQuist Inc. ("Company") announced today
that it has acquired two medical transcription companies in separate
transactions. In the first transaction the Company has acquired approximately
95% of the outstanding shares of capital stock of Digital Dictation Inc.
("DDI"), and will acquire the remaining outstanding shares by merger. The
Company will issue approximately 455 thousand shares of common stock in
connection with both the exchange and merger. In addition, the Company will
exchange DDI options on an equivalent basis for the Company's options. The
transaction is expected to be accounted for under the pooling-of-interests
method. DDI (NASDAQ: DGDT) is a publicly-traded company.
David A. Cohen, Chairman, President and CEO of MedQuist said, "We are
extremely excited about this acquisition, which is our largest to date. DDI's
business, with 1998 projected revenues of approximately $12 million based on
first quarter 1998 run rate, will be immediately accretive to the Company's
operating earnings (excluding one-time charges related to the transaction) and
operates on an advanced telecommunications platform which we hope will further
reduce costs in various segments of our Company's core business. DDI's
technological strengths strongly complement our Company's operating experience
as the market leader in the medical transcription industry. We are pleased that
DDI has chosen to become a key member of our team as we develop more
technologically advanced delivery platforms for our service".
Richard Cameron, President and CEO of DDI said, "We feel that the
strength of this merger is in the combination of our technological strengths. As
the medical transcription industry becomes more driven by systems and
technology, the ability to deliver next-generation information management
capabilities to the health care industry will be the primary characteristic of
the market leader. We made the decision to join with MedQuist because we want to
be a part of that market leadership".
In the second transaction, the Company acquired Med-Line Transcription,
Inc., a privately-owned medical transcription company based in the Houston
marketplace. Med-Line had revenues of approximately $1.0 million for the twelve
months ending December 31, 1997. Terms of the transaction are confidential.
David Cohen said, "This acquisition strengthens our presence in the Houston
metropolitan marketplace".
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The Company has agreed to file registration statements to register
shares issued in connection with the above transactions.
Under pooling of interests accounting treatment, the Company will be
obligated to take non-recurring charges for expenses related to the above
transactions.
MedQuist is a leading national provider of electronic transcription and
healthcare information management solutions.
Other than historical information set forth herein, this press release
contains forward-looking statements 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 meet 1998 projected revenues, failure of
acquisition to be accretive to Company's earnings; inability to integrate
technology platforms into the Company's base business, inability to manage and
maintain growth; inability to penetrate new markets; inability to make and
successfully integrate acquisitions; decreased demand for existing products; and
lack of a market for new products.
The Company has consulted with its independent auditors and on that
basis expects that these transactions will be accounted for using the
pooling-of-interests method. However, there can be no assurance that the
transactions can be accounted for under the pooling-of-interests method.
Additional risks associated with the Company's business can be found in
its Annual Report on Form 10-K and other periodic filings with the SEC.
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Contact: John R. Emery, Chief Financial Officer, MedQuist Inc. (800) 355-6337,
Ext. 418
