In the first quarter of 2007, we had a loss from discontinued operations of $108,000 attributable to our
RMPT and HIFU operations. Our RMPT business, was sold on September 28, 2007.
Depreciation and amortization expense decreased $188,000 in the first quarter of 2008 as compared to the
same period in 2007.
Minority interest in consolidated income for the three month period ended March 31, 2008 increased
$1,538,000 compared to the same period in 2007, as a result of an increase in income at our urology
partnerships.
Provision for income taxes in the first quarter of 2008 increased $385,000 compared to the same period
in 2007 due to the increase in our taxable net income during the same periods, as well as an increase in
the effective tax rate. For the next several years, we will only be an alternative minimum tax payer as
we will utilize our existing net operating loss carryforwards to offset any current taxes payable.
Liquidity and Capital Resources
Cash Flows
Our cash and cash equivalents were $21,707,000 and $25,198,000 at March 31, 2008 and December 31, 2007,
respectively. Our subsidiaries generally distribute all of their available cash quarterly, after
establishing reserves for estimated capital expenditures and working capital. For the three months
ended March 31, 2008 and 2007, our subsidiaries distributed cash of approximately $13,924,000 and
$11,810,000, respectively, to minority interest holders.
Cash provided by our operations, before minority interest, was $16,074,000 for the three months ended
March 31, 2008 and $11,382,000 for the three months ended March 31, 2007. For the three months ended
March 31, 2008 compared to the same period in 2007, fee and other revenue collected increased by
$3,007,000 due primarily to our increased revenues and a decrease in our overall accounts receivable
balances. Cash paid to employees, suppliers of goods and others for the three months ended March 31,
2008 decreased by $1,562,000 compared to the same period in 2007. This fluctuation is attributable to a
significant payoff of accrued expenses in 2007 as well as a decrease in our overall expenses in 2008 as
compared to the same period in 2007.
Cash used by our investing activities for the three months ended March 31, 2008, was $4,696,000. We
purchased equipment and leasehold improvements totaling $4,671,000 in 2008, $3.1 million of which were
for additional Revolix lasers. Cash used by our investing activities for the three months ended March
31, 2007, was $1,526,000 primarily due to $1,796,000 in equipment and leasehold improvements purchases.
Cash used in our financing activities for the three months ended March 31, 2008, was $14,869,000,
primarily due to distributions to minority interests of $13,924,000 and payments on notes payable of
$1,002,000 partially offset by borrowings on notes payable of $213,000. Cash used in our financing
activities for the three months ended March 31, 2007, was $12,785,000, primarily due to distributions to
minority interests of $11,810,000 and net payments on notes payable of $829,000.
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