US Oncology Reports First Quarter 20...(uarter of2008. Corporate Costs Cor...),Health

Corporate Costs

Corporate costs, which represent general and administrative expenses, excluding stock-based compensation, were $19.4 million in the first quarter of 2008, compared to $20.0 million in the first quarter of 2007. The decrease of $0.6 million is due primarily to lower personnel costs as well as the completion of our financial information system upgrade that took place during 2007.

Compared to the fourth quarter of 2007, corporate costs decreased $0.9 million which reflects personnel reductions and management of avoidable expenses.

Impairment and Restructuring Charges and Other Expense

During the past several years, we have become less dependent on our medical oncology segment as a source of earnings. Also, during the first quarter of 2008, earnings were negatively impacted by price increases from manufacturers of supportive care drugs. Further, safety concerns regarding the use of these drugs continue to impact the utilization of these drugs by our affiliated physicians. (See additional discussion in "Contingencies and Risks".) These factors, along with lower market valuations resulting from unstable credit markets, led us to conclude that a goodwill impairment charge related to our medical oncology services segment was required as of March 31, 2008. As of December 31, 2007, goodwill related to our medical oncology services segment amounted to approximately $409 million and we believe a substantial portion of this amount will result in a non-cash charge in the first quarter of 2008. We currently estimate the charge will range from $375 million to $409 million (a complete impairment of goodwill related to our medical oncology segment). We initially recognized this goodwill on our balance sheet as a result of the purchase price allocation performed in connection with the merger transaction in August 2004.

To quantify the impairment of goodwill related to our medical oncology services segment, we ar
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