MedQuist Reports First Quarter 20...(ue to improve our margins over time said...)

Selling general and administrative expenses declined $1.6M or 11% to $13.1M in the first quarter of 2008 compared to $14.7M in the first quarter of 2007. This decline reflects the benefits of the restructuring actions taken by the company during the second half of 2007.

Research and development expense increased $.7M or 20% to $4.1M in the first quarter of 2008 compared to $3.4M in the first quarter of 2007. The R&D increase reflects additional cost related to investments in our industry- leading DEP technology.

Cost of Investigation and Legal Proceedings, net, increased to $6.4M in the first quarter of 2008 compared to $1.7M in the first quarter of 2007. In addition to legal expenses, the first quarter of 2008 included a charge of $1.5M related to the proposed settlement of all claims related to the consolidated medical transcriptionists' putative class action while the first quarter of 2007 included the benefit of $3.5M of insurance recoveries which were exhausted by the first quarter of 2008. These two items generated the increased cost of investigation and legal proceedings in the first quarter of 2008.

In addition to the United States generally accepting accounting principles, or GAAP, results provided throughout this document, MedQuist has provided non-GAAP financial measurements. Management believes that the non- GAAP financial measures used to manage the business may provide users additional useful information. The tables attached to this press release include a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and a description of why the non- GAAP financial measures are useful to investors.

On or about April 21, 2008, MedQuist reached a tentative settlement of all claims related to the consolidated medical transcriptionists' putative class action lawsuit in exchange for payment by MedQuist of $1.5 million plus ce
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