##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-Q
   (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31, 2007.ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to    Commission file number:
 MEDQUIST INC.
 (Exact name of registrant as
    specified in its charter)
   New Jersey

22-2531298(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1000 BISHOPS GATE BOULEVARD
    SUITE 300
    MOUNT LAUREL, NEW JERSEY(Address of principal
    executive offices)

08054-4632(Zip Code)    (856) 206-4000
 (Registrants telephone number, including area code)
   o þ
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ




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##### 



MEDQUIST
    INC.
  INDEX
  
  PagePART I.


FINANCIAL INFORMATION


1Item 1.


Financial Statements


1Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


19Item 4.


Controls and Procedures


26PART II.


OTHER INFORMATION


27Item 1.


Legal Proceedings


27Item 1A.


Risk Factors


31Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


31Item 3.


Defaults Upon Senior Securities


31Item 4.


Submission of Matters to a Vote of Security
    Holders


31Item 5.


Other Information


31Item 6.


Exhibits


32Certification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of Chief Executive Officer pursuant to Section 906Certification of Chief Financial Officer pursuant to Section 906




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##### Table of Contents



PART I.
    FINANCIAL INFORMATION
  Item 1.
    Financial
    Statements  MedQuist
    Inc. and Subsidiaries
  Consolidated Statements of Operations
 Unaudited
 (In thousands, except per share amounts)
  Three Months Ended March 31,2007


2006Net revenues

$
89,066


$
96,014Operating costs and expenses:Cost of revenues


68,345



74,335Selling, general and administrative


14,693



14,924Research and development


3,442



3,201Depreciation


2,539



2,891Amortization of intangible assets


1,346



1,575Cost of investigation and legal proceedings, net


1,741



7,537Restructuring charges


256



1,212Total operating costs and expenses


92,362



105,675Operating loss


(3,296
)


(9,661
)Equity in income of affiliated company


260



396Interest income, net


2,102



1,797Loss before income taxes


(934
)


(7,468
)Income tax provision


952



1,003Net loss

$
(1,886
)

$
(8,471
)Net loss per share:Basic

$
(0.05
)

$
(0.23
)Diluted

$
(0.05
)

$
(0.23
)Weighted average shares outstanding:Basic


37,484



37,484Diluted


37,484



37,484    1




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##### Table of Contents



MedQuist
    Inc. and Subsidiaries
  Consolidated Balance Sheets
 Unaudited
 (In thousands)
  March 31,


December 31,2007


2006AssetsCurrent assets:Cash and cash equivalents

$
173,409


$
175,412Accounts receivable, net of allowance of $4,495 and $4,494,
    respectively


53,024



54,778Insurance receivable


3,326



707Income tax receivable


1,863



1,772Deferred income taxes


297



298Other current assets


7,589



7,645Total current assets


239,508



240,612Property and equipment, net of accumulated depreciation of
    $39,981 and $37,838, respectively


20,414



20,969Goodwill


124,886



124,826Other intangible assets, net of accumulated amortization of
    $45,643 and $44,218, respectively


44,248



45,448Deferred income taxes


2,375



2,378Other assets


7,205



6,906Total assets

$
438,636


$
441,139Liabilities and Shareholders EquityCurrent liabilities:Accounts payable

$
11,537


$
10,779Accrued expenses


27,281



28,812Accrued compensation


15,968



15,558Customer accommodation and quantification


22,042



24,777Deferred revenue


14,689



15,202Total current liabilities


91,517



95,128Deferred income tax liability


18,744



18,034Other non-current liabilities


2,276



458Commitments and contingencies (Note 11)Shareholders equity:Common stock  no par value; authorized
    60,000 shares;37,484 and 37,484 shares issued and outstanding,
    respectively


235,163



235,080Retained earnings


86,196



87,693Deferred compensation


332



332Accumulated other comprehensive income


4,408



4,414Total shareholders equity


326,099



327,519Total liabilities and shareholders equity

$
438,636


$
441,139    2




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##### Table of Contents



MedQuist
    Inc. and Subsidiaries
  Consolidated Statements of Cash Flows
 Unaudited
 (In thousands)
  Three Months EndedMarch 31,2007


2006Operating activities:Net loss

$
(1,886
)

$
(8,471
)Adjustments to reconcile net loss to cash provided by (used in)
    operating activities:Depreciation and amortization


3,885



4,466Equity in income of affiliated company


(260
)


(396
)Deferred income tax provision


710



1,671Stock option expense


83



597Provision for doubtful accounts


1,418



2,312Asset writeoff charges


51



171Changes in operating assets and liabilities:Accounts receivable


(347
)


5,391Income tax receivable


(91
)


(518
)Insurance receivable


(2,619
)


Other current assets


58



(463
)Other non-current assets


(39
)


1,072Accounts payable


805



(73
)Accrued expenses


(1,337
)


(6,401
)Accrued compensation


409



(822
)Customer accommodation and quantification


(2,046
)


(9,528
)Deferred revenue


(628
)


(105
)Other non-current liabilities


1,930



(1,054
)Net cash provided by (used in) operating activities

$
96


$
(12,151
)Investing activities:Purchase of property and equipment


(1,889
)


(2,360
)Capitalized software


(217
)


(21
)Net cash used in investing activities


(2,106
)


(2,381
)Effect of exchange rate changes


7



7Net decrease in cash and cash equivalents


(2,003
)


(14,525
)Cash and cash equivalents  beginning of period


175,412



178,271Cash and cash equivalents  end of period

$
173,409


$
163,746Supplemental cash flow information:Cash paid (recovered) for income taxes

$
93


$
(143
)Accommodation payments paid with credits

$
689


$
    3




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##### Table of Contents



MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
  1.
    Description
    of Business    2.
    Introductory
    Note  Form 8-K Form 10-K.
       4




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MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
  and/or and/or and/or
      3.
    Basis of
    Presentation    Accounting for Income Taxes in
    Interim Periods.
  Form 10-K
  4.
    Stock-Based
    Compensation  Share-Based
    Payment Accounting for Stock-Based Compensation
 5




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##### Table of Contents



MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
    Three Months Ended March 31,2007


2006Selling, general and administrative

$
24


$
167Research and development


9



85Cost of revenues


50



345Total

$
83


$
597           Options ExercisableAverageNumber of


Intrinsic


ExerciseRange of Exercise Prices

Shares


Value


Price$2.71 - $10.00


34


$
155


$
5.39$10.01 - $20.00


123






$
15.59$20.01 - $70.00


423






$
46.59580


$
155  6




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MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
    WeightedWeighted


AverageShares


Average


Remaining


AggregateSubject to


Exercise


Contractual


IntrinsicOptions


Price


Life in Years


ValueOutstanding, December 31, 2006


2,150


$
31.86Forefeited


(1
)

$
17.45Canceled


(39
)

$
35.04Outstanding, March 31, 2007


2,110


$
31.81



3.9


$
182Exercisable, March 31, 2007


2,045


$
32.25



3.8


$
182Options vested and expected to vest as of March 31, 2007


2,096


$
31.90



3.9


$
182       Options Outstanding


Options ExercisableWeightedAverage


Weighted





WeightedRemaining


Average





AverageNumber


Contractual Life


Exercise


Number


ExerciseRange of Exercise Prices

of Shares


(in years)


Price


of Shares


Price$2.71 - $10.00


46



2.1


$
6.00



46


$
6.00$10.01 - $20.00


542



4.7


$
16.70



481


$
16.60$20.01 - $30.00


836



4.2


$
26.72



832


$
26.71$30.01 - $40.00


192



2.8


$
32.42



192


$
32.42$40.01 - $70.00


494



3.0


$
59.15



494


$
59.152,110



3.9


$
31.81



2,045


$
32.25     Three Months Ended March 31,2007


2006Selling, general and administrative

$
1


$
44Research and development






19Total

$
1


$
63  7




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##### Table of Contents



MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
    5.
    Other
    Comprehensive Loss    Three Months Ended March 31,2007


2006Net loss

$
(1,886
)

$
(8,471
)Foreign currency translation adjustment


(6
)


115Comprehensive loss

$
(1,892
)

$
(8,356
)   6.
    Net Loss
    per Share      Three Months Ended March 31,2007


2006Net loss

$
(1,886
)

$
(8,471
)Weighted average shares outstanding:Basic


37,484



37,484Diluted


37,484



37,484Net loss per share:Basic

$
(0.05
)

$
(0.23
)Diluted

$
(0.05
)

$
(0.23
)     7.
    Customer
    Accommodation and Quantification   8




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##### Table of Contents



MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
          and/or
    Three Months Ended


Year EndedMarch 31,


December 31,2007


2006Beginning balance

$
24,777


$
46,878Customer accommodation






10,402Payments and other adjustments


(2,046
)


(31,523
)Credits


(689
)


(980
)Ending balance

$
22,042


$
24,777  9




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##### Table of Contents



MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
  8.  Cost
    of Investigation and Legal Proceedings, Net
    Three Months Ended March 31,2007


2006Legal fees

$
4,477


$
4,406Other professional fees


601



2,219Nightingale & Associates, LLC (Nightingale) services


197



849Insurance claims


(3,536
)


Other


2



63Total

$
1,741


$
7,537   9.
    Restructuring
    Plans    Three Months Ended March 31, 2007


Year Ended December 31, 2006Non-Cancelable











Non-CancelableTotal


Leases


Severance


Equipment


Total


Leases


Severance


EquipmentBeginning balance

$
712


$
648


$
64


$



$
2,050


$
1,693


$
357


$
Additional charge


256



176



55



25



3,442



1,653



1,447



342Usage


(481
)


(380
)


(76
)


(25
)


(4,780
)


(2,698
)


(1,740
)


(342
)Ending balance

$
487


$
444


$
43


$



$
712


$
648


$
64


$
       10.
    Income
    Taxes    Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement 109
 10




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MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
  Accounting for Income Taxes Recognition Measurement
        11.
    Commitments
    and Contingencies  Governmental
    Investigations
        and/or
 11




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MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
  Shareholder
    Securities Litigation
  William
    Steiner v. MedQuist, Inc., et al. No. 1:04-cv-05487-FLW Rule 10b-5,
  Rule 10b-5
  Customer
    Litigation
  No. CV-04-7520-TJH-VBKx,
 12




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##### Table of Contents



MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
           13




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MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
  Medical
    Transcriptionist Litigation
  Hoffmann
    Putative Class Action
  No. 1:04-CV-3452,
  Force
    Putative Class Action
  No. 05-cv-2608-WSD,
  Myers
    Putative Class Action
  No. 05-cv-4608
   14




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##### Table of Contents



MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
    Shareholder
    Derivative Litigation
      Reseller
    Arbitration Demand
   15




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MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
      Other
    Matters
          12.
    Related
    Party Transactions      Licensing
    Agreement
     16




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MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
        OEM
    Supply Agreement
        Equipment
    Sales
    Insurance
    Coverage through Philips
   17




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MedQuist
    Inc. and Subsidiaries
  Notes to Consolidated Financial Statements
 (In thousands, except per share amounts)
 Unaudited
  Purchasing
    Agreements
          Three Months Ended March 31,2007


2006PSRS licensing

$
514


$
511PSRS consulting






3OEM agreement


166



313Dictation equipment


171



245Insurance


721



223PENAC






10Other






42Total

$
1,572


$
1,347      18




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  CAUTIONARY
    STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
    
    each of the factors discussed in this Item 1A, Risk Factors
    in our Annual Report on
    Form 10-K
    for the year ended December 31, 2006 as well as risks
    discussed elsewhere in this report;
    each of the matters discussed in Part II, Item 1, Legal
    Proceedings;
    difficulties relating to our significant management turnover;
    our ability to recruit and retain qualified medical MTs and
    other employees;
    the impact of our new services and products on the demand for
    our existing services and products;
    our current dependence on medical transcription for
    substantially all of our business;
    our ability to expand our customer base;
    changes in law, including, without limitation, the impact Health
    Insurance Portability and Accountability Act of 1996 (HIPAA)
    will have on our business;
    infringement on the proprietary rights of others;
    our ability to diversify into other businesses;
    the results of our review of strategic alternatives;
    our ability to effectively integrate newly-acquired operations;
    competitive pricing pressures in the medical transcription
    industry and our response to those pressures; and
    general conditions in the economy and capital markets.  Form 10-K
    Form 10-K
 19




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##### Table of Contents



Executive
    Overview
        tm
    Form 10-K
      
    A shortage of qualified domestic MTs has increased the demand
    for outsourced medical transcription services by
    U.S.-based
    healthcare providers. This demand for qualified MTs, as well as
    budgetary pressures experienced by healthcare providers, has
    also caused many more
    U.S.-based
    healthcare providers to evaluate and consider the use of
    offshore medical transcription labor.
    Several low cost providers have emerged and aggressively moved
    into our market offering medical transcription services
    (performed both domestically and offshore) at prices
    significantly below our 20




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##### Table of Contents



traditional price point. While we believe the market for
    outsourced medical transcription continues to expand, the
    growing acceptance by customers of the use of offshore labor has
    further increased the competitive environment in the medical
    transcription industry.  
    There have been technological advances by us and our competitors
    which have reduced the length of time required to transcribe
    medical reports, in turn reducing the overall cost of medical
    transcription services.
    Other companies in the healthcare IT space have developed
    alternative solutions for the creation of electronic clinical
    documentation that, if successfully implemented, will reduce the
    overall demand for medical transcription services.      
    reduction in overhead and other administrative costs;
    improvement in the quality and speed of delivery of transcribed
    medical reports;
    access to leading technologies, such as speech recognition
    technology, without any development and investment risk;
    expertise in implementing and managing a medical transcription
    system tailored to the providers specific requirements;
    access to skilled MTs; and
    support for compliance with governmental and industry mandated
    privacy and security requirements and electronic health record
    initiatives.      
    revenues;
    operating income;
    net income per share;
    net cash provided by operating activities; and
    days sales outstanding.    Critical
    Accounting Policies, Judgments and Estimates
   21




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##### Table of Contents



Form 10-K Form 10-K
  Basis
    of Presentation
  Sources
    of Revenues
    Cost of
    Revenues
    Selling,
    General and Administrative (SG&A)
    Research
    and Development (R&D)
    Depreciation
    and amortization
    Cost of
    investigation and legal proceedings, net
   22




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##### Table of Contents



Consolidated
    Results of Operations
    Comparison
    of Three Months Ended March 31, 2007 and 2006
  Three Months Ended March 31,2007


2006% of Net





% of NetAmount


Revenues


Amount


Revenues


$ Change


% Change($ in thousands)Net revenues

$
89,066



100.0
%

$
96,014



100.0
%

$
(6,948
)


(7.2
)%Operating costs and expenses:Cost of revenues


68,345



76.7
%


74,335



77.4
%


(5,990
)


(8.1
)%Selling, general and administrative


14,693



16.5
%


14,924



15.5
%


(231
)


(1.5
)%Research and development


3,442



3.9
%


3,201



3.3
%


241



7.5
%Depreciation


2,539



2.9
%


2,891



3.0
%


(352
)


(12.2
)%Amortization of intangible assets


1,346



1.5
%


1,575



1.6
%


(229
)


(14.5
)%Cost of investigation and legal proceedings, net


1,741



2.0
%


7,537



7.8
%


(5,796
)


(76.9
)%Restructuring charges


256



0.3
%


1,212



1.3
%


(956
)


(78.9
)%Total operating costs and expenses


92,362



103.7
%


105,675



110.1
%


(13,313
)


(12.6
)%Operating loss


(3,296
)


(3.7
)%


(9,661
)


(10.1
)%


6,365



(65.9
)%Equity in income of affiliated company


260



0.3
%


396



0.4
%


(136
)


(34.3
)%Interest income, net


2,102



2.4
%


1,797



1.9
%


305



17.0
%Loss before income taxes


(934
)


(1.0
)%


(7,468
)


(7.8
)%


6,534



(87.5
)%Income tax provision


952



1.1
%


1,003



1.0
%


(51
)


(5.1
)%Net loss

$
(1,886
)


(2.1
)%

$
(8,471
)


(8.8
)%

$
6,585



(77.7
)%   Net
    revenues
    
    excluding a charge of $1.0 million in 2006 related to the
    customer accommodation program, which did not occur in 2007,
    service revenues of $7.0 million resulting primarily from
    lower medical transcription volume and lower pricing to both new
    and existing customers. We believe the reduction in volume was
    the result primarily of customer losses to other outsourced
    medical transcription providers due to, among other things,
    price competition and our requirement that our medical
    transcription customers migrate from disparate and older
    technology platforms to our DEP; and
    reduced sales and implementations of our technology products of
    $0.9 million resulting primarily from the impact of certain
    technology products reaching the end of their life cycle.   23




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##### Table of Contents



Cost
    of revenues
    
    decreased telecommunications costs of $1.7 million
    associated with both the decrease in our service revenues and
    the transition of customers from our non-DEP medical
    transcription platforms, which required MTs to access dictation
    using traditional phone lines, to our DEP, which allows MTs to
    access dictation through the internet;
    reduced medical transcription payroll costs of $1.1 million
    related directly to the decrease in our service revenues as well
    as our increased use of speech recognition technology, which
    reduces the payroll costs associated with the production of
    revenues;
    reduced technology product costs of $0.5 million related
    directly to the reduction in our technology product
    revenues; and
    reduced other costs of $2.7 million resulting from
    headcount and facility reductions associated with our 2005
    restructuring plan based on a centralized national service
    delivery model to streamline our organizational and operational
    structure to better service our customers (2005 Restructuring
    Plan).    Selling,
    general and administrative
    Research &
    development
    Depreciation
    Amortization
   24




---



##### Table of Contents



Cost
    of investigation and legal proceedings, net
    Restructuring
    charges
    Interest
    income, net
    Income
    tax provision
    Liquidity
    and Capital Resources
   25




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##### Table of Contents




    the SEC, DOJ and DOL investigations and proceedings; and
    the defense and resolution of the civil litigation matters.  Off-Balance
    Sheet Arrangements
    Item 4.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15(e) Form 10-K Form 10-K
  Changes
    in Internal Control Over Financial Reporting
    
    Evaluated service delivery requirements associated with various
    equipment sales transactions including delivery, implementation,
    training and project management;
    Established a process to track the status of all project
    implementations by individuals specifically assigned to various
    technical and management project aspects; and established a
    formal accounting methodology and implemented formal, monthly
    review procedures performed by corporate accounting personnel
    prior to the recording of any post-contract support (PCS),
    hardware, software and implementation service revenues; and 26




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##### Table of Contents




    Centralized accounting related to PCS, implementation services
    and deferred revenue to our corporate headquarters.    PART II.
    OTHER INFORMATION
  Item 1.
    Legal
    Proceedings  Governmental
    Investigations
        and/or
  Shareholder
    Securities Litigation
  William
    Steiner v. MedQuist, Inc., et al. No. 1:04-cv-05487-FLW Rule 10b-5,
  Rule 10b-5
 27




---



##### Table of Contents



Customer
    Litigation
  No. CV-04-7520-TJH-VBKx,
       28




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##### Table of Contents



Medical
    Transcriptionist Litigation
  Hoffmann
    Putative Class Action
  No. 1:04-CV-3452,
  Force
    Putative Class Action
  No. 05-cv-2608-WSD,
  Myers
    Putative Class Action
  No. 05-cv-4608
 29




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##### Table of Contents



Shareholder
    Derivative Litigation
      Reseller
    Arbitration Demand
   30




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##### Table of Contents



Item 1A.
    Risk
    Factors  Form 10-K
  If the electronic health records (EHR) companies produce
    solutions acceptable to large hospital systems for the creation
    of electronic clinical documentation that are not based on the
    conversion of voice to text, the overall demand for medical
    transcription services could be reduced.
    Form 10-K Form 10-K and/or
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds    Item 3.
    Defaults
    Upon Senior Securities    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 5.
    Other
    Information   31




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Item 6.
    Exhibits  Exhibits.
  No.

Description10
.1*(1)

Amendment to Engagement Letter, dated as of January 8,
    2007, between MedQuist Inc. and Nightingale &
    Associates, LLC10
.2(2)

Amendment No. 6 to Licensing Agreement, dated as of
    February 13, 2007, between MedQuist Inc. and Philips Speech
    Recognition Systems GmbH f/k/a Philips Speech Processing GmbH10
.3*(3)

Amendment to Employment Agreement, dated as of February 16,
    2007, between MedQuist Inc. and Frank Lavelle10
.4(4)

Memorandum of Understanding dated March 23, 2007 by and
    among (i) MedQuist, Inc., Brian J. Kearns, David A. Cohen,
    John A. Donohoe, Ethan Cohen, John W. Quaintance, and Ronald F.
    Scarpone, and (ii) Greater Pennsylvania Carpenters Pension
    Fund10
.5(5)

Stipulation of Settlement dated March 23, 2007 by and among
    (i) MedQuist, Inc., Brian J. Kearns,
    David A. Cohen, John A. Donohoe, Ethan Cohen, John W.
    Quaintance, and Ronald F. Scarpone, and (ii) Greater
    Pennsylvania Carpenters Pension Fund31
.1

Certification of Chief Executive Officer required by
    Rule 13a-14(a)
    or
    Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200231
.2

Certification of Chief Financial Officer required by
    Rule 13a-14(a)
    or
    Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200232
.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 200232
.2

Certification of Chief Financial Officer pursuant to
    18 U.S.C. 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002     *
    
    Management contract or compensatory plan or arrangement.  (1)
    
    Incorporated herein by reference to Exhibit 10.24.3 to our
    Annual Report on
    Form 10-K
    for the year ended December 31, 2005 filed with the SEC on
    July 5, 2007.(2)
    
    Incorporated herein by reference to Exhibit 10.26.6 to our
    Annual Report on
    Form 10-K
    for the year ended December 31, 2005 filed with the SEC on
    July 5, 2007.(3)
    
    Incorporated herein by reference to Exhibit 10.16.1 to our
    Annual Report on
    Form 10-K
    for the year ended December 31, 2005 filed with the SEC on
    July 5, 2007.(4)
    
    Incorporated herein by reference to Exhibit 10.37.1 to our
    Annual Report on
    Form 10-K
    for the year ended December 31, 2005 filed with the SEC on
    July 5, 2007.(5)
    
    Incorporated by reference to Exhibit 10.1 to our Current
    Report on
    Form 8-K/A
    filed with the SEC on August 24, 2007. 32




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##### Table of Contents



SIGNATURES
      /s/  Howard
    S. Hoffmann          /s/  Kathleen
    E. Donovan       33




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##### Table of Contents



Exhibit Index
  No.

Description31
.1

Certification of Chief Executive Officer required by Rule
    13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
    1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200231
.2

Certification of Chief Financial Officer required by Rule
    13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
    1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200232
.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 200232
.2

Certification of Chief Financial Officer pursuant to
    18 U.S.C. 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002  34