Q2 and Half Year Results -12-


transferred but are accounted for as expenses in the periods in which the costs 
are incurred.  External costs incurred to acquire the business, incremental 
direct integration costs, primarily travel, have been included in the line item 
Acquisition and integration related charges on the statement of operations. 
 
10.  Debt 
 
Current portion of debt consisted of the following: 
+---------------------------------------+----------+------------+----------+-----------+ 
|                                       |          |       June |          |  December | 
|                                       |          |            |          |           | 
+---------------------------------------+----------+------------+----------+-----------+ 
|                                       |          |   30, 2010 |          |  31, 2009 | 
+---------------------------------------+----------+------------+----------+-----------+ 
| Short term credit facilities          |        $ |      6,594 |        $ |     4,769 | 
+---------------------------------------+----------+------------+----------+-----------+ 
| Current portion of long term          |          |     31,649 |          |       621 | 
| borrowings                            |          |            |          |           | 
+---------------------------------------+----------+------------+----------+-----------+ 
| Current portion of capital lease      |          |      3,284 |          |       817 | 
| obligations                           |          |            |          |           | 
+---------------------------------------+----------+------------+----------+-----------+ 
| Current portion of debt               |        $ |     41,527 |        $ |     6,207 | 
+---------------------------------------+----------+------------+----------+-----------+ 
 
Debt consisted of the following as of: 
+---------------------------------------+--+-----------+----------+-----------+ 
|                                       |  |      June |          |  December | 
|                                       |  |           |          |           | 
+---------------------------------------+--+-----------+----------+-----------+ 
|                                       |  |  30, 2010 |          |  31, 2009 | 
+---------------------------------------+--+-----------+----------+-----------+ 
| Capital lease obligations             |$ |     4,841 |        $ |     3,134 | 
+---------------------------------------+--+-----------+----------+-----------+ 
| Term loans from banks                 |  |     2,668 |          |     3,018 | 
+---------------------------------------+--+-----------+----------+-----------+ 
| 6% Convertible note                   |  |    96,419 |          |    96,419 | 
+---------------------------------------+--+-----------+----------+-----------+ 
| Term loan due from 2010 to 2012, with |  |    50,000 |          |         - | 
| interest at Prime plus 3.25%          |  |           |          |           | 
+---------------------------------------+--+-----------+----------+-----------+ 
| Revolving loan with interest at Prime |  |    40,000 |          |         - | 
| plus 3% with a scheduled              |  |           |          |           | 
| termination date of April 22, 2014.   |  |           |          |           | 
+---------------------------------------+--+-----------+----------+-----------+ 
| Subordinated promissory note, due in  |  |    13,570 |          |           | 
| 2015 with varying interest rates      |  |           |          |           | 
| and provisions for early repayment    |  |           |          |           | 
+---------------------------------------+--+-----------+----------+-----------+ 
| Short term credit facilities          |  |     6,594 |          |     4,769 | 
+---------------------------------------+--+-----------+----------+-----------+ 
| Total debt                            |  |   214,092 |          |   107,340 | 
+---------------------------------------+--+-----------+----------+-----------+ 
| Less: current portion                 |  |    41,527 |          |     6,207 | 
+---------------------------------------+--+-----------+----------+-----------+ 
| Long term debt, net of current        |$ |   172,565 |        $ |   101,133 | 
| portion                               |  |           |          |           | 
+---------------------------------------+--+-----------+----------+-----------+ 
 
 
Credit facilities 
 
Line of Credit - K Bank 
The Company has a revolving line of credit from K Bank. Subject to certain terms 
and conditions of the agreement with K Bank, the agreement provides a revolving 
line of credit of a maximum of $ 5,750.  The amount available for borrowing is 
based on eligible accounts receivable. The rate of interest on this note is 
Prime + 1% with a floor of 6%. The note is payable on demand and is renewed 
annually. Under the agreement, certain subsidiaries of the Company assigned all 
their accounts receivable to K Bank with full recourse. The agreement contains 
certain covenants, which require the Company to notify the Bank of the important 
developments, including raising additional equity, borrowings, acquisition etc. 
The agreement does not contain any financial covenants. For the six months ended 
June 30, 2010 and 2009 interest expense of $162 and $142, respectively was 
recorded in the accompanying consolidated statements of operations. The amount 
outstanding as of June 30, 2010 and December 31, 2009 was $3,393 and $3,343, 
respectively. The remaining available amount under the line of credit was $2,357 
and $2,407 as of June 30, 2010 and December 31, 2009, respectively. 
 
Credit Agreement - ICICI Bank 
 
The Company has a Credit Arrangement with ICICI Bank, Mumbai, India of $2,772, 
at interest rates ranging from LIBOR+ 2.5% and 15.5%, respectively, which is 
secured by current assets and fixed assets of CBay Systems (India) Private 
Limited ("CBay India") a 100% subsidiary of the Company. The amount outstanding 
as of June 30, 2010 and December 31, 2009 was $194 and $1,426, respectively. For 
the six months ended June 30, 2010 and 2009 interest expense of $74 and $77, 
respectively, was recorded in interest expense in the consolidated statements of 
operations. 
 
Credit Agreement - IndusInd Bank 
 
The Company has a Credit Arrangement with IndusInd Bank, Mumbai, India of 
$3,227, at interest rates ranging from LIBOR+ 3%, respectively, which is secured 
by current assets and fixed assets of CBay Systems (India) Private Limited 
("CBay India") a 100% subsidiary of the Company. The amount outstanding as of 
June 30, 2010 and December 31, 2009 was $3,003 and $0, respectively. For the six 
months ended June 30, 2010 and 2009 interest expense of $18 and $0, 
respectively, was recorded in interest expense in the consolidated statements of 
operations. 
 
6% Convertible Note 
 
The Company issued a 6% Convertible note ("Convertible Note") in connection with 
the acquisition of MedQuist which is due August 5, 2015.  Any portion of the 
note can be converted at the option of Philips (the "holder") into common stock 
of the Company, anytime after November 4, 2008. The conversion rate for this 
purpose shall be $1 of the principal amount equals 0.6048 shares of common stock 
of the Company. If this option is exercised by the holder, 58,314 shares of 
common stock will become issuable. The Company has the option to redeem this 
note or any portion thereof after August 6, 2011 at a premium of 8%, after 
August 6, 2012 at a premium of 3%, and, after August 6, 2013, at par. 
 
Further, after August 6, 2012, the holders representing at least 50% of the 
aggregate principal amount of the notes outstanding have a collective one time 
right to require the Company to repurchase for cash a portion of the notes which 
has not been previously purchased or redeemed by the Company. Also, if a change 
of control event occurs at any time prior to the maturity and if the note has 
not been purchased or redeemed by the Company, it shall be repurchased by the 
Company, at the option of the holder. The Company will evaluate the 
classification of the note at each reporting date considering the early 
redemption option available to the Company or the one time repurchase right 
available to the holder. 
 
In March and August 2009, the Company exercised its right to convert the 
interest on this convertible note from August 6, 2008 to August 5, 2009 into 
additional convertible notes aggregating to $ 5,484 with the same terms and 
conditions as the original note. 
 
For the six months ended June 30, 2010 and 2009, interest expense accrued on the 
note was $2,893 and $2,771, respectively. 
 
Term and equipment loans 
 
The Company has term loans payable to four banks which carry interest rates 
ranging from 6.5% to 16% per annum and are repayable monthly through August 
2013. One loan contains certain non-financial covenants and limits borrowings 
for one of the Company's subsidiaries and the Company is in compliance with 
these covenants. The Company has a working capital term loan which is a Rupee 
denominated loan from EXIM Bank. This loan is repayable in full in June 2011 and 
carries an interest rate of 12%. This loan is secured by certain assets of one 
of the Company's subsidiaries. 
 
The Company has various equipment and vehicle loans that carry interest rates 
ranging from 10% to 15% per annum and are repayable monthly through 2013. These 
loans are secured by the related equipment and vehicles. 
 
The Company recorded interest of $146 and $143 during the six months ended June 
30, 2010 and 2009, respectively, on these borrowings. 
 
Acquisition debt 
 
In connection with the Acquisition, MedQuist Transcriptions, Ltd. a subsidiary 
of MedQuist, ("MedQuist Transcriptions"), and certain other subsidiaries of 
MedQuist (collectively, the "Loan Parties") entered into a Credit Agreement (the 
"GE Credit Agreement") with General Electric Capital Corporation, CapitalSource 
Bank, and Fifth Third Bank. The GE Credit Agreement provides for up to $100.0
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