Q2 and Half Year Results -8-
19 8월 2010 - 3:00PM
UK Regulatory
+------------------+----------+---------+----------+---------+-+----------+----------+---------+
| Weighted average | | | | | | | | |
| shares | | | | | | | | |
| outstanding: | | | | | | | | |
+------------------+----------+---------+----------+---------+-+----------+----------+---------+
| Basic | | 157,851 | | 154,991 | | 157,705 | | 154,991 |
+------------------+----------+---------+----------+---------+-+----------+----------+---------+
| Effect of | | - | | - | | - | | - |
| dilutive stock | | | | | | | | |
+------------------+----------+---------+----------+---------+-+----------+----------+---------+
| Diluted | | 157,851 | | 154,991 | | 157,705 | | 154,991 |
+------------------+----------+---------+----------+---------+-+----------+----------+---------+
| Net loss per | | | | | | | | |
| share | | | | | | | | |
| attributable to | | | | | | | | |
| CBaySystems | | | | | | | | |
| Holdings Limited | | | | | | | | |
+------------------+----------+---------+----------+---------+-+----------+----------+---------+
| Basic | $ | (0.01) | $ | (0.00) | $| (0.01) | $ | (0.03) |
+------------------+----------+---------+----------+---------+-+----------+----------+---------+
| Diluted | $ | (0.01) | $ | (0.00) | $| (0.01) | $ | (0.03) |
+------------------+----------+---------+----------+---------+-+----------+----------+---------+
The computation of diluted net income (loss) per share does not assume
conversion, exercise or issuance of shares that would have an anti-dilutive
effect. Potentially dilutive shares having an anti-dilutive effect and
therefore excluded from the calculation of diluted net income (loss) per share,
totaled 63,994, 62,460, 60,580 and 60,580 shares, for the three months and six
months ended June 30, 2010 and 2009, respectively. The net income (loss) for the
purpose of the basic loss per share is adjusted for the amounts payable to the
Company's majority shareholder amounting to $688 and $1,375, respectively, for
the three months and six months ended June 30, 2010 and 2009, under the
management services agreement, see Note 7.
4. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
+------------------------------------+--+----------+--+-----------+
| | | | | |
+------------------------------------+--+----------+--+-----------+
| | | June 30, | | December |
| | | 2010 | | 31, 2009 |
+------------------------------------+--+----------+--+-----------+
| Customer accommodations |$ | 11,477 |$ | 11,635 |
+------------------------------------+--+----------+--+-----------+
| Other (no item exceeds 5% of | | 28,718 | | 18,168 |
| current liabilities) | | | | |
+------------------------------------+--+----------+--+-----------+
| Total accrued expenses and other |$ | 40,195 |$ | 29,803 |
| current liabilities | | | | |
+------------------------------------+--+----------+--+-----------+
In November 2003, one of the employees of MedQuist raised allegations that it
had engaged in improper billing practices. In response, the board of directors
of MedQuist undertook an independent review of these allegations (Review). In
response to MedQuist's customers concern over its public disclosure of the
certain findings from the Review, it made the decision in the fourth quarter of
2005 to take action and try to avoid litigation and preserve and solidify its
customer business relationships by offering a financial accommodation to certain
of its customers.
In connection with MedQuist's decision to offer financial accommodations to
certain of its customers (Accommodation customers), MedQuist analyzed its
historical billing information and the available report level data to develop
individualized accommodation offers to be made to Accommodation Customers
(Accommodation Analysis). Based on the Accommodation Analysis, MedQuist's board
of directors authorized management to make cash or credit accommodation offers
to Accommodation Customers in the aggregate amount of $75,818. By accepting
MedQuist's accommodation offer, the customer agreed, among other things, to
release MedQuist from any and all claims and liability regarding the billing
related issues. MedQuist is unable to predict how many customers, if any, may
accept the outstanding accommodation offers on the terms proposed by it, nor is
it able to predict the timing of the acceptance (or rejection) of any
outstanding accommodation offers. Until any offers are accepted, MedQuist may
withdraw or modify the terms of the accommodation program or any outstanding
offers at any time. In addition, MedQuist is unable to predict how many future
offers, if made, will be accepted on the terms proposed by it. MedQuist
regularly evaluates whether to proceed with, modify or withdraw the
accommodation program or any outstanding offers.
The following is a summary of the financial statement activity related to the
customer accommodation.
+------------------------------------+--+------------+----------+----------+
| | | Six months | | Year |
| | | ended | | ended |
+------------------------------------+--+------------+----------+----------+
| | | June 30, | | December |
| | | 2010 | | 31, 2009 |
+------------------------------------+--+------------+----------+----------+
| Beginning balance |$ | 11,635 | $ | 12,055 |
+------------------------------------+--+------------+----------+----------+
| Payments and other adjustments | | (158) | | (317) |
+------------------------------------+--+------------+----------+----------+
| Credits | | - | | (103) |
+------------------------------------+--+------------+----------+----------+
| Ending balance |$ | 11,477 | $ | 11,635 |
+------------------------------------+--+------------+----------+----------+
As of June 30, 2010, $1.1 million of the balance is related to the Kaiser
Litigation (see Note 7).
2010 Restructuring Plan
During the second quarter of 2010, management's ongoing cost reduction
initiatives, including process improvement, combined with the acquisition of
Spheris resulted in a restructuring plan involving staff reductions and other
actions designed to maximize operating efficiencies. The affected employees are
entitled to receive severance benefits under existing established severance
policies. The employees were primarily in the operations and administrative
functions. This initial action under the plan was approved during second quarter
of 2010.
The table below reflects the financial statement activity related to the 2010
restructuring plan:
+--------------------------------------------------+----------+------------+
| | | Six months |
| | | ended |
+--------------------------------------------------+----------+------------+
| | | June 30, |
| | | 2010 |
+--------------------------------------------------+----------+------------+
| Beginning balance | $ | - |
+--------------------------------------------------+----------+------------+
| Charge | | 846 |
+--------------------------------------------------+----------+------------+
| Cash paid | | (194) |
+--------------------------------------------------+----------+------------+
| Ending balance | $ | 652 |
+--------------------------------------------------+----------+------------+
The Company expects that restructuring activities may continue in 2010 as
management identifies opportunities for synergies resulting from the acquisition
of Spheris including the elimination of redundant functions.
2009 Restructuring Plan
During the third and fourth quarters of 2009, as a result of management's
continued planned process improvement and technology development investments
MedQuist committed to an exit and disposal plan which includes projected
employee severance for planned reduction in headcount. Because of plan
development in late 2009 and execution of the plan over multiple quarters in
2009 and 2010, not all personnel affected by the plan know of the plan or its
impact. The plan includes costs of $2.5 million for employee severance and $0.4
million for vacating operating leases. The table below reflects the financial
statement activity related to the 2009 restructuring plan:
+--------------------------------+----------+-------------+----------+--------------+
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