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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________________
SCHEDULE 14D-9
(Amendment Number One)
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
_______________________
MEDQUIST INC.
(Name of Subject Company)
MEDQUIST INC.
(Name of Person(s) Filing Statement)
Common Stock, No Par Value
(Title of Class of Securities)
584949101
(CUSIP Number of Class of Securities)
_______________________
John M. Suender, Esq.
Senior Vice President, General Counsel and Secretary
MedQuist Inc.
Five Greentree Centre, Suite 311
Marlton, New Jersey 08053
(856) 596-8877
(Name, address and telephone number of person
authorized to receive notice and communications on
behalf of the person(s) filing statement)
Copy to:
James D. Epstein, Esq.
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, Pennsylvania 19103-2799
(215) 981-4000
[x] Check the box if the following relates solely to preliminary
communications made before the commencement of a tender offer
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MedQuist Inc. - Conference Call for Philips Transaction:
- -------------------------------------------------------
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 and Chief Executive Officer of MedQuist. With me on the call today are
John Donohoe, MedQuist's President and Chief Operating Officer, John Emery,
MedQuist's Chief Financial Officer, and John Suender, MedQuist's in-house
counsel.
By now everyone should have received a copy of our press release or have
had the opportunity to review the information distributed by the wire services.
I am very pleased to announce that MedQuist and Royal Philips Electronics
of the Netherlands have entered into an agreement whereby Philips will make a
tender offer for approximately 60 per cent of MedQuist's fully diluted common
stock at a cash price of $51 per share. The transaction is subject to Philips
acquiring 60 per cent 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 the completion of the
transaction MedQuist's shares will continue to trade on NASDAQ under the symbol
"MEDQ".
The management team of MedQuist is delighted to have Philips as our
technology partner and major shareholder, as the combination of our U.S.-based
client base and their world-class technology and resources is extremely
powerful. Philips holds world-leading positions in several areas synergistic to
MedQuist's business, including imaging information systems through its Philips
Medical Systems business, speech recognition through its Philips Speech
Processing business and network technologies through its Origin consulting
business. MedQuist plans to utilize support from each of these businesses, as
well as from Philips global infrastructure base, to capitalize on several large
opportunities.
First, we plan to work with Philips to begin the transition to a new
transcription platform, which will be based on moving digital voice files over
the Internet to a limited number of regional data centers. We intend to roll out
this platform from Q1-2001 through Q3-2002. The platform will enable us to
substantially lower our telecommunications cost - we currently spend
approximately $35 million annually on telecommunications. The platform will also
enable us to streamline our field office infrastructure - a substantial portion
of overhead in our 80 field offices and satellites is dedicated to managing
voice and data files for our customers and transcriptionists.
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Also, this platform will enable us to more effectively interface to our A-
Life automated coding product, which we intend to offer to emergency department
customers on a national basis. In addition, our ability to aggregate clinical
data on a national basis for our data mining effort will be greatly enhanced.
Also, our ASP model targeting the ambulatory market will be based on this new
platform.
Second, we plan to utilize Philips speech processing technology to increase
productivity of our current transcriptionists and to enlarge our workforce to
include unskilled typists familiar with medical terminology who will function as
medical editors. Philip's speech processing product has already demonstrated
productivity gains at nearly 100 sites in the European market. MedQuist will
target these same gains in its own business.
We believe that the combination of a digital voice platform and a workforce
whose productivity is augmented by speech recognition creates a very powerful
technology model for our business. It is our opinion that this technology model
positions us to grow substantially in the coming years.
This transaction provides us with a real opportunity to use state-of-the-
art and best-of-breed technology to expand our business and become a leader in
the provision of a much wider area of technological services to the healthcare
sector. The transaction structure allows MedQuist shareholders to realize a
significant premium over the recent trading price for the majority of their
holdings, while sharing in the additional long-term growth to be generated once
our transaction is complete.
MedQuist has built a great business based on an extremely strong growth
model. The fundamental opportunities facing the company at this point are 1)
utilizing digital and internet technology to reduce costs and accelerate revenue
growth, 2) utilizing speech recognition technology to increase capacity and
further accelerate revenue growth and 3) broadening MedQuist's business from its
U.S. base to other geographic and business markets. Philips world-class
technology and resources make it possible for MedQuist to accelerate its efforts
in all three of these areas.
After our general counsel reads the required legal disclaimer, we will open
the call up to any questions you may have. Thank you.
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This presentation contains certain statements by or relating to MedQuist and the
transaction with Philips 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,
and include statements of market estimates, growth and expansion plans and
opportunities, potential revenue and cost synergies, and the benefits of new
technologies. 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 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
lower telecom costs; MedQuist's ability to achieve anticipated productivity
gains; MedQuist's ability to implement and achieve market acceptance of new
technology platforms, including speech processing technology; 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 or the demand for MedQuist's
services; and MedQuist's ability to expand its customer base. These and other
risk factors are detailed in MedQuist's reports, including its Form 10-K for the
year ended December 31, 1999 filed with the SEC. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date of this press release. MedQuist does not undertake any obligation to
publicly release any revisions to these forward-looking statements to reflect
events or circumstances after the date of these materials.
The tender offer described in this announcement for outstanding shares of common
stock of MedQuist has not yet commenced, and this announcement is neither an
offer to purchase nor a solicitation of an offer to sell securities or any
recommendation with respect to the tender offer. The tender offer will be made
only through the Offer to Purchase and related Letter of Transmittal. We urge
MedQuist shareholders to read the following documents, when they become
available, regarding the tender offer because they contain important
information: (i) Philips' Tender Offer Statement on Schedule TO, including the
Offer to Purchase, Letter of Transmittal and Notice of Guaranteed Delivery; and
(ii) MedQuist's Solicitation/Recommendation Statement on Schedule 14D-9. These
documents will be filed with the Securities and Exchange Commission when the
tender offer commences. When these and other documents are filed with the SEC,
they may be obtained free of charge at the SEC's website at www.sec.gov.
