Dr. Ernest Bates - Chairman and CEO Craig Tagawa - Chief Operating and Financial Officer, Assistant Controller Alexis Wallace - Assistant Controller Brad Roberts - Information Technology Manager Ernest R. Bates - Vice President, Sales and Business Development

Tony Kamin - Eastwood Partners Lenny Dunn - Freedom Investors

Good afternoon, everyone. And welcome to the 2013 Second Quarter Financial Results Conference Call for American Shared Hospital Services. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the call over to Dr. Ernest Bates, Chairman and Chief Executive Officer; Craig Tagawa, Chief Operating and Financial Officer, Assistant Controllers of American Shared Hospital Services; Alexis Wallace and Brad Roberts; and Ernest R. Bates, Vice President, Sales and Business Development. Mr. Tagawa, you may begin.

Thank you, Christine. And thank you all for joining us for AMS' second quarter financial results conference call and webcast. Please note that various remarks that we may make on this conference call about future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K for the year ended December 31, 2012, a quarterly reports on Form-Q for the quarter ended March 31, 2013, and the definitive proxy statement for the Annual Meeting of Shareholders held on June 11, 2013. The company assumes no obligation to update the information contained in this conference call. We are pleased by our performance for the second quarter especially in view as a significant challenge we faced. AMS reported 7% higher revenue and 26% higher operating income despite a substantial reduction in Medicare reimbursement for Gamma Knife services that went into effect on April 1, 2013 as mandated by the American Taxpayer Relief Act of 2012. The increase in revenue and operating income reflected higher patient volume at a number of our established sites, as well as the addition of two Gamma Knife Perfexion units to our portfolio since the end of last year’s second quarter. The increase in revenue also reflected a favorable mix of procedures by location Even more impressive, these gains were achieved despite realizing in the second quarter only a small fraction of the savings from the cost reduction program we announced in late April. As we announced earlier, we expect this program to reduce future cash outlays by approximately $1 million annually. We expect to realize the bulk of these savings once all steps are fully implemented during the third and fourth quarters. Last month, we received from potentially [extra dividends] from the Centers for Medicare and Medicaid Services posted the proposed rule for Medicare's hospital outpatient prospective payment system for calendar year 2014. Within this proposed rule, CMS proposes updates for the delivery codes used for stereotactic radiosurgery, SRS, including Gamma Knife services. Specifically, CMS proposes to reimburse hospitals for a complete course of treatment comprised of a single session of SRS at $8,576 in 2014. This payment level would apply to single session treatment for all forms of SRS including Cobalt-60 SRS, Gamma Knife, robotic linear accelerator SRS or non-robotic LINAC SRS. By comparison, effective April 1, 2013, the Gamma Knife was reimbursed by CMS at $3,300 and during the period January 1, 2013 to March 31, 2013 at $7,910. This CMS proposed reimbursement rate is subject to comments from interested parties, and could change. Final CMS reimbursement rates are anticipated to be issued in fall 2013. As the world's largest provider of Gamma Knife services, the proposed reimbursement rates for stereotactic radiosurgery for 2014, if adopted, could be expected to have a positive impact on AMS' Gamma Knife business. We’ll keep you informed if any significant development concerning these proposed reimbursement rate as soon as we have addition information. In the meantime, as evidenced by our solid second quarter results, we believe we have positioned AMS to deal effectively with reduced Medicare reimbursement for the balance of 2013. We continue to push ahead in our proton therapy business. As we have reported previously construction of MD Anderson Orlando's dedicated proton center is underway. AMS has received a firm financing commitment for the MEVION S250 Proton Therapy System it will supply for this $25 million facility. FDA approval of the MEVION S250 was received last year. Delivery of the MEVION synchrocyclotron is now scheduled for April 2014, and the facility is expected to begin treating patients in first half of 2015. The MD Anderson Cancer Center Orlando will be the model for additional proton centers, we are developing. Now, I’m going to turn the call over to Alexis Wallace to go over the results in detail. Alexis?

Thanks Craig. For the second quarter ended June 30, 2013, medical services revenue increased 7% to $4,583,000 compared to medical services revenue for the second quarter of 2012 of $4,284,000. The net loss for the second quarter of 2013 was $122,000, or $0.03 per diluted share. In comparison, for the second quarter of 2012, net income was $15,000, or $0.00 per diluted share. This year's second quarter net loss included a pre-tax loss from foreign currency transactions of $393,000, due to the weakening of the Turkish Lira against the U.S. Dollar. This foreign currency transaction loss reduced pre-tax income by $223,000, net of losses attributable to non-controlling interests. Operating income for the second quarter of 2013 increased 26.2% to $284,000, compared to operating income for the second quarter of 2012 of $225,000. The number of procedures performed on Gamma Knife Perfexion systems supplied by AMS increased 35% for the second quarter and 25% for the first half of 2013 compared to the same periods of 2012. The number of procedures performed in AMS' Gamma Knife business, including Gamma Knife and Gamma Knife Perfexion procedures, increased 26% for the second quarter and 24% for the first six months of 2013 compared to the same periods of 2012. Medical services gross margin for the second quarter of 2013 was 41.3%, compared to medical services gross margin of 43.7% for the second quarter of 2012. Selling and administrative expenses for the second quarter of 2013 was $1,153,000 compared to $1,109,000 for the second quarter of 2012. For the six months ended June 30, 2013, medical services revenue increased 6.5% to $9,251,000, compared to medical services revenue of $8,687,000 for the first six months of 2012. The net loss for the first six months of 2013 was $97,000, or $0.02 per diluted share. For the first six months of 2012, net income was $24,000, or $0.01 per diluted share. The net loss for this year's first half included a pre-tax loss from foreign currency transactions of $534,000. The foreign currency transaction loss reduced pre-tax income by $303,000, net of losses attributable to non-controlling interests. Cash flow, as measured by earnings before interest, taxes, depreciation and amortization or EBITDA was $1,940,000 for the second quarter and $3,961,000 for the first six months of 2013, compared to $1,988,000 for the second quarter and $4,127,000 for the first six months of 2012. On the balance sheet, at June 30, 2013, cash, cash equivalents and certificates of deposit were $10,345,000 compared to $10,564,000 at December 31, 2012. Shareholders' equity at June 30, 2013 was $24,605,000, or $5.34 per outstanding share. This compares to shareholders' equity at December 31, 2012 of $24,830,000, or $5.39 per outstanding share. Craig?

Thank you, Alexis. And Christine, we are ready for the first question.

(Operator Instructions) Our first question comes from [Steve McDennis], who is our private shareholder. Please go ahead.

Hey, first of all just like to congratulate you that earnings are probably lot better than expected. So congratulations on that. My question is revenues actually increased. Lot of us were worried that revenues were going to drop. Is that increase due to more that you had more transactions or is it due more to the fact that not too many of the procedures were reimbursed by Medicare or was that combination of both?

I think it’s a combination of both. As we mentioned earlier we had two new systems that started up in the latter part of last year, which had an impact on -- positive impact on this year. As we mentioned, the payer mix was a little different than -- different than we expected. So we didn’t get as much of a decrease since anticipated from the reimbursement impact.

Okay. Great. And now that CMS has proposed a reimbursement rate of over $8,000. And I think it was somewhere between seven and eight last year. But congress sort of on their own decided to put that $3,300 figure on reimbursements. Do you think the new CMS proposal is going to stick or will congress keep it at $3,300? If you could provide some color around that, I’ll appreciate that.

Well, the only color I could provide is that to say whether that -- as we mentioned we can’t predict whether that numbers was stick. But what I can tell you is that the proposal of the CMS is inline with the legislation enacted by congress under the fiscal cliff legislation. In that, the Gamma Knife will be getting the same rate for single traction as well as in that precision that’s what was mandated by congress. So, we are in keeping what was legislated at the beginning of this year.

Okay. All right. So thank you very much.

Thank you.

Thank you. Our next question comes from Tony Kamin from Eastwood Partners. Please go ahead. Tony Kamin - Eastwood Partners: Hi, guys. How are you?

Hi, Tony. Dr. Ernest Bates: Hi, Tony. Tony Kamin - Eastwood Partners: Question, Dr. Bates, I had seen within the last weak or so, an article suggesting that benign brain tumors were increasingly been treated by Gamma Knife. Is that actually new news and could that be driving -- but is that at end or other procedures that are now begin done increasingly with Gamma Knife? Dr. Ernest Bates: I never read that report. So I don’t know, but we have been treating meningiomas which are benign tumors for many year. I don’t think the incidence of meningioma has gone up. Craig, are you aware of them?

Now, I think if you -- the one thing that we are seeing it increasing is, I think, in the treatment of [cystic] tumors which is a benign tumor but not of significant amount. From the Gamma’s perspective, what we see that there is a potential to increase if there is more knowledge of theirs. The benefits of radiosurgery, single-fraction radiosurgery to metastatic brain tumors and recent literature will tell you that there is about a 180 to 300,000 patients that are diagnosed metastatic brain tumors annually and currently only small portion of those are radiosurgically treated, most of them are getting whole brain radiation. And some recent literatures says that there is a potential for neurocognitive disorders based on giving whole brain for certain patients. So where we see growth opportunity is through the continued increase in the treatment of metastatic brain tumors by Gamma Knife. Dr. Ernest Bates: I think it is also important to remember that we used to think that they are only about 180,000 of these tumors a year, the number maybe twice that. Tony Kamin - Eastwood Partners: Yeah. It’s -- I just think it is really encouraging to see this sort of growth and upside here and I don’t think many people had counted on from this side of the business. Well, turning to the proton side, obviously, I think everyone is waiting for bonds to treat? Can you comment, Dr. Bates, again, we’ve kind of cover this in past calls? But I’d like to get some current feeling on your perception of what the -- what the pipeline maybe and what your expectations for new potential proton contracts are once [Barnes] actually treat them and the system is perceived as now in commercial use? Dr. Ernest Bates: Well, I’m quite excited. There was recently a meeting of the American Association of Physicists in Medicine where the Chief Medical Physicist at [Barnes] did talk and he did tell them that [Barnes] expected to take possession of the machine in the next two weeks and start treating their first patient probably in October. So that’s very exciting, very exciting. I think it is clear that we are at the point that where MEVION will produce a machine that will be I think revolutionary, innovative and they have proven the concept that the single room machine makes much more economical sense than multi-room systems. So we are very excited. And yes, we see ourselves going after that market and that market for us will be the our 17 sites that we have in the United States, as well as the designated cancer treatment centers and there are 67 of these, and we are helping to gear up and start marketing and selling to those 60 odd sites that will be available to a single room MEVION system, so we are very excited. Tony Kamin - Eastwood Partners: Well great. Congratulations on coming to a very difficult period and I don’t think I have ever seen the company as well-positioned as it is now, so looking forward to the next half. Thank you. Dr. Ernest Bates: Thank you for your comments.

Thank you. Our next question -- (Operator Instructions) Our next question comes from Lenny Dunn from Freedom Investors. Please go ahead. Lenny Dunn - Freedom Investors: Good afternoon. Congratulations on the quarter which was surprisingly strong and I also commend you for putting continuing cost cutting even [U.S. actually will likely] we’ll have better reimbursements starting in 2014. It never hurts to increase margins. And I -- with respect to euro against the U.S. dollar, I’m a currency expert but the U.S. dollar does seem strong, is there a way to hedge that without spending too much money to do it?

Well, I think, Lenny you hit the nail in the head. But the question is how much is it cost us to hedge and it is very expensive. We did look into that and if you look at even the multinational companies, most do not hedge to a great extent their individual positions just because it is too expensive both in terms of the actual cost of doing it, the expense of doing it, as well as the amount cash reserve that you need to keep on the book. But we did look at it. What we looked at was some of the recent events in Turkey really precipitated to a great degree the spike or the weakening of the Turkish Lira versus dollar. We have looked at there’s some analysts have said then, although there’s a possibility of further weakening, we think it’s manageable from our standpoint in terms of the actual cost to the company. Dr. Ernest Bates: The Lira had been stable for 10 years and just recently lost its value. We do believe that we won’t see any significant change in one direction or the other in the next several months. This is what our experts tell us. Lenny Dunn - Freedom Investors: Okay. I guess, sort of nickel in earnings and we have a couple of cent loss of currency, but still it was a very good quarter. I mean that I was very pleasantly surprised when I read the numbers this morning. So I want to congratulate you on that and I think that if we get this environment can get the first patient treated in October, one way to realizing some value we hear that we have with MEVION stock and with the surprises we have on the machines that are out there.

Thank you. Yes, you’re right. Lenny Dunn - Freedom Investors: Now, if MEVION starts treating in October, originally I thought, well, maybe by the end of the year they can do the IPO, but I think more like first quarter event for next year then because it’s taking longer than we expected but this event generally seem to but we’ll get there?

Thank you. Lenny Dunn - Freedom Investors: Okay.

Thank you. Mr. Tagawa, there are no further questions, would you like to make your closing remarks?

I’ll let Dr. Bates to make some remarks first. Dr. Ernest Bates: I want to say that we’re very excited about what’s going on with the MEVION machine. We’re excited about protons. The indications for protons are growing. The reimbursement for protons has remained strong. We anticipate that there’ll be no grade reduction into next year in reimbursement. So we’re quite excited about protons and really we’ll be focusing heavily on developing the proton business in the next 12 months and increasing staff to meet the challenge of getting proton machines out there.

Well, I’d just like to thank everyone for joining us this afternoon and we look forward to speaking with you on our third quarter results conference call that will be in probably November.

This call will be available in digital replay 90 minutes following today's program. To access the system, dial 888-843-7419 and enter the passcode 35488058, followed by the pound sign to access the replay. The webcast of this call will be available at www.ashs.com and www.earnings.com. This concludes today's teleconference. Thank you for participating. You may now disconnect.