What the heck does shrinking cost base mean. - This does not look good for an MT.

http://webcache.googleusercontent.com/search?q=cache:aRYbCNbTPgQJ:www.marketwatch.com/story/medquist-reports-second-quarter-2010-results-with-revenue-up-26-primarily-due-to-spheris-asset-acquisition-in-april-2010-2010-08-11+medquist+restructuring&cd=4&hl=en&ct=clnk&gl=us&client=firefox-a

The following results for both the three months and six months ended June 30, 2010 include the Spheris results from the acquisition date.

Prior to its acquisition, Spheris had been experiencing significant client defections, in large part, due to the adverse impact of its deteriorating financial condition. The revamped senior executive team has begun to integrate MedQuist methodologies and processes into the Spheris service delivery model to better address client needs and stabilize the risk of future client defections. However, the lag effect of client terminations may negatively impact our post-acquisition revenue through at least the fourth quarter 2010.

"Integration savings of approximately $7 million, resulting from the scale made available through the Spheris acquisition, are expected to be realized in the fourth quarter of 2010. The Company anticipates that its integration activities will be substantially completed during the first quarter of 2011."

Since CBay became our majority owner in August 2008, we have focused our efforts on stabilizing our existing client base and creating a value proposition for our clients through:

increasing use of technology applications in both our processes and those of our clients - including, tailoring our proprietary clinical documentation workflow management system for client specific solutions and increased integration of speech recognition technology

increasing use of offshore transcription and editing work

We expect that the impact of the above actions and the increased scale from the Spheris acquisition will continue to be reflected in lower operating costs and improved margins; as we continue to share the benefits of a SHRINKING COST BASE base and enhanced technologies with our clients through profitable, competitive pricing.

Use of non-GAAP Financial Information.

In addition, to the United States generally accepted accounting principles, or GAAP, results provided throughout this document, MedQuist has provided Adjusted EBITDA data that is a non-GAAP financial measurement. Adjusted EBITDA is Net income excluding taxes, interest, equity in income of an affiliated company, depreciation, amortization, cost of legal proceedings and settlements, acquisition and integration related charges, restructuring charges and certain non-recurring accrual reversals.