HearUSA Inc (EAR, Financial) filed Quarterly Report for the period ended 2010-03-27.
Hearusa Inc has a market cap of $51.6 million; its shares were traded at around $1.15 with a P/E ratio of 115 and P/S ratio of 0.6. EAR is in the portfolios of Jim Simons of Renaissance Technologies LLC.
The $384,000 decrease in center operating expenses in the first quarter of 2010 as compared with the first quarter of 2009 is primarily attributable to reductions of approximately $477,000 in gross marketing costs, $216,000 in staffing costs and $154,000 in other center operating expenses. Incentive compensation also decreased by approximately $126,000 as a result of the decline in revenues. These decreases were partially offset by an increase of approximately $498,000 of costs related to our AARP program for payment of royalties, advertising and other costs. Total AARP costs in the first quarter of 2010 were approximately $588,000.
The Company has net operating loss carryforwards of approximately $47.4 million for U.S. income tax purposes. The Company has temporary differences between the financial statement and tax reporting arising primarily from differences in the amortization of intangible assets and goodwill and depreciation of fixed assets. The deferred tax assets for US income tax purposes have been offset by a valuation allowance because it was determined that these assets were not likely to be realized. During the first quarter of 2010, the Company recorded a deferred tax expense of approximately $220,000 compared to approximately $210,000 in the first quarter of 2009 related to the estimated deduction of tax deductible goodwill from its US operations. The deferred income tax expense was recorded because it cannot be offset by temporary differences as it relates to infinite-lived assets and the timing of reversing the liability is unknown. Deferred income tax expense will continue to be recorded until the tax deductible goodwill is fully amortized.
During the first quarter of 2010 and 2009, the Company s 50% owned joint venture, HEARx West, LLC generated net income of approximately $163,000 and $230,000, respectively. The Company records 50% of the venture s net income as net income attributable to noncontrolling interest in the income of a joint venture in the Company s consolidated statements of operations. The net income attributable to noncontrolling interest for the first quarter of 2010 and 2009 was approximately $74,000 and $115,000, respectively.
Cash, cash equivalents and short term marketable securities totaled approximately $7.1 million as of March 27, 2010. Approximately $2.5 million of the current maturities of long-term debt to Siemens may be repaid through rebate credits. During the quarter ended March 27, 2010, the Company has utilized approximately $1.6 million in cash to pay the Siemens trade payables under accelerated terms to take advantage of trade discounts. The Siemens trade payables can convert to normal terms at the Company s option.
Net cash used by operating activities in the first quarter of 2010 was approximately $3.1 million compared to cash provided by operating activities of approximately $2.4 million in the first quarter of 2009. The $3.1 million used in 2010 includes the impact of payment of the Siemens trade payables on 30 day terms which began in late 2009. The 30 day reduction in terms allowed the Company to earn early payment discounts but decreased cash flow by approximately $1.6 million. The Company can return to 60 day terms at anytime.
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Hearusa Inc has a market cap of $51.6 million; its shares were traded at around $1.15 with a P/E ratio of 115 and P/S ratio of 0.6. EAR is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
The $71,000 reduction in volume rebates earned was due to a decrease in the rebates per unit from $65 to $50 and a decline in Siemens units purchased. The rebates per unit were decreased in exchange for better overall pricing. The $260,000 decrease in interest forgiven is due to a decrease in Siemens indebtedness resulting from the repayment of approximately $8.1 million from the proceeds of the sale of the Canadian operations in 2009. Cost of products sold as a percent of total net revenues before the impact of the Siemens rebate credits was 34.1% in the first quarter of 2010 compared to 34.3% in the first quarter of 2009.The $384,000 decrease in center operating expenses in the first quarter of 2010 as compared with the first quarter of 2009 is primarily attributable to reductions of approximately $477,000 in gross marketing costs, $216,000 in staffing costs and $154,000 in other center operating expenses. Incentive compensation also decreased by approximately $126,000 as a result of the decline in revenues. These decreases were partially offset by an increase of approximately $498,000 of costs related to our AARP program for payment of royalties, advertising and other costs. Total AARP costs in the first quarter of 2010 were approximately $588,000.
The Company has net operating loss carryforwards of approximately $47.4 million for U.S. income tax purposes. The Company has temporary differences between the financial statement and tax reporting arising primarily from differences in the amortization of intangible assets and goodwill and depreciation of fixed assets. The deferred tax assets for US income tax purposes have been offset by a valuation allowance because it was determined that these assets were not likely to be realized. During the first quarter of 2010, the Company recorded a deferred tax expense of approximately $220,000 compared to approximately $210,000 in the first quarter of 2009 related to the estimated deduction of tax deductible goodwill from its US operations. The deferred income tax expense was recorded because it cannot be offset by temporary differences as it relates to infinite-lived assets and the timing of reversing the liability is unknown. Deferred income tax expense will continue to be recorded until the tax deductible goodwill is fully amortized.
During the first quarter of 2010 and 2009, the Company s 50% owned joint venture, HEARx West, LLC generated net income of approximately $163,000 and $230,000, respectively. The Company records 50% of the venture s net income as net income attributable to noncontrolling interest in the income of a joint venture in the Company s consolidated statements of operations. The net income attributable to noncontrolling interest for the first quarter of 2010 and 2009 was approximately $74,000 and $115,000, respectively.
Cash, cash equivalents and short term marketable securities totaled approximately $7.1 million as of March 27, 2010. Approximately $2.5 million of the current maturities of long-term debt to Siemens may be repaid through rebate credits. During the quarter ended March 27, 2010, the Company has utilized approximately $1.6 million in cash to pay the Siemens trade payables under accelerated terms to take advantage of trade discounts. The Siemens trade payables can convert to normal terms at the Company s option.
Net cash used by operating activities in the first quarter of 2010 was approximately $3.1 million compared to cash provided by operating activities of approximately $2.4 million in the first quarter of 2009. The $3.1 million used in 2010 includes the impact of payment of the Siemens trade payables on 30 day terms which began in late 2009. The 30 day reduction in terms allowed the Company to earn early payment discounts but decreased cash flow by approximately $1.6 million. The Company can return to 60 day terms at anytime.
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