<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 31, 1998
--------------
AMSURG CORP.
(Exact Name of Registrant as Specified in its Charter)
TENNESSEE 000-22217 62-1493316
(State or other jurisdiction of (Commission (I.R.S. employer
incorporation or organization) File Number) identification no.)
ONE BURTON HILLS BOULEVARD
SUITE 350
NASHVILLE, TN 37215
(Address of principal executive offices) (Zip code)
(615) 665-1283
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
This Form 8-K/A-1 includes the following financial information required
to be filed pursuant to Item 7 (Financial Statements and Exhibits) of the
Current Report on Form 8-K dated March 31, 1998:
(a) Financial Statements of Business Acquired:
Independent Auditors' Report.
Balance Sheets of South Denver Endoscopy Center, Inc. as of December
31, 1997 and March 31, 1998 (unaudited).
Statements of Earnings and Retained Earnings of South Denver Endoscopy
Center, Inc. for the year ended December 31, 1997 and the
Three Months ended March 31, 1997 and 1998 (unaudited).
Statements of Cash Flows of South Denver Endoscopy Center, Inc. for the
year ended December 31, 1997 and the Three Months ended March
31, 1997 and 1998 (unaudited).
Notes to Financial Statements of South Denver Endoscopy Center, Inc.
(b) Pro Forma Financial Information:
Pro Forma Combined Statements of Operations for the year ended December
31, 1997 and the Three Months ended March 31, 1998.
Notes to Pro Forma Financial Statements.
2
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
South Denver Endoscopy Center, Inc.
We have audited the accompanying balance sheet of South Denver Endoscopy
Center, Inc. (the "Center") as of December 31, 1997, and the related statements
of earnings and retained earnings and cash flows for the year then ended. These
financial statements are the responsibility of the Center's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Center as of December 31, 1997, and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Nashville, Tennessee
April 24, 1998
3
<PAGE> 4
SOUTH DENVER ENDOSCOPY CENTER, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 24,105 $414,080
Accounts receivable, net of allowance for uncollectible
accounts of $62,587 and $79,693, respectively.......... 333,505 272,946
Supplies inventory........................................ 15,000 13,000
Prepaid expenses.......................................... 600 3,664
-------- --------
Total current assets.............................. 373,210 703,690
Organization cost, net of accumulated amortization of
$15,572 and $16,546, respectively......................... 3,895 2,921
Equipment, net of accumulated depreciation of $110,619 and
$128,202, respectively.................................... 258,654 242,581
-------- --------
Total............................................. $635,759 $949,192
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $182,624 $181,733
Accrued expenses.......................................... 9,099 14,708
-------- --------
Total current liabilities......................... 191,723 196,441
Shareholders' equity:
Retained earnings......................................... 444,036 752,751
-------- --------
Total............................................. $635,759 $949,192
======== ========
</TABLE>
See notes to financial statements.
4
<PAGE> 5
SOUTH DENVER ENDOSCOPY CENTER, INC.
STATEMENTS OF EARNINGS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, ---------------------
1997 1997 1998
------------ --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Revenue.................................................... $ 2,092,392 $ 485,068 $ 598,138
Expenses:
Salaries and benefits.................................... 372,872 80,866 141,171
Supplies and other operating expenses.................... 442,380 99,836 93,980
Rent expense (Note 2).................................... 71,185 16,117 17,795
Bad debt expense......................................... 61,181 14,384 17,920
Depreciation and amortization............................ 65,068 17,686 18,557
----------- --------- ---------
Total expenses................................... 1,012,686 228,889 289,423
----------- --------- ---------
Net earnings............................................... 1,079,706 256,179 308,715
Retained earnings, beginning of period..................... 390,867 390,867 444,036
Distributions to shareholders.............................. (1,026,537) (226,532) --
----------- --------- ---------
Retained earnings, end of period........................... $ 444,036 $ 420,514 $ 752,751
=========== ========= =========
</TABLE>
See notes to financial statements.
5
<PAGE> 6
SOUTH DENVER ENDOSCOPY CENTER, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, --------------------
1997 1997 1998
------------ --------- --------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings.............................................. $ 1,079,706 $ 256,179 $308,715
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation........................................... 61,175 16,712 17,583
Amortization of organization cost...................... 3,893 974 974
(Increase) decrease in accounts receivable............. (77,214) 7,389 60,559
Increase in supplies inventory......................... (5,500) (2,500) 2,000
Increase in prepaid assets............................. (241) (4,137) (3,064)
Increase (decrease) in accounts payable................ 1,382 (10,252) (891)
Increase in accrued expenses........................... 2,599 2,276 5,609
----------- --------- --------
Net cash provided by operating activities......... 1,065,800 266,641 391,485
Cash flows from financing activities:
Shareholders' distributions............................... (1,026,537) (226,532) --
----------- --------- --------
Cash flows from investing activities:
Purchase of equipment..................................... (19,254) -- (1,510)
----------- --------- --------
Net increase in cash........................................ 20,009 40,109 389,975
Cash at beginning of period................................. 4,096 4,096 24,105
----------- --------- --------
Cash at end of period....................................... $ 24,105 $ 44,205 $414,080
=========== ========= ========
</TABLE>
See notes to financial statements.
6
<PAGE> 7
SOUTH DENVER ENDOSCOPY CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The South Denver Endoscopy Center, Inc. ("SDEC") began operations in 1994
in Englewood, Colorado (a suburb of Denver). SDEC is owned by a group of
shareholders who perform endoscopy procedures through their related physician
practice.
Revenue Recognition. Revenue consists of the billing for the use of SDEC
facilities (the "usage fee") directly to the patient or third party payer. The
usage fee excludes amounts billed for physicians' services, which are billed
separately by the physicians to the patient or third party payer. Revenues are
reported at the estimated net realizable amounts from patients, third-party
payers and others, including Medicare. Such revenues are recognized as the
related services are performed. Contractual adjustments resulting from
agreements with various organizations to provide services for amounts which
differ from billed charges, are recorded as deductions from patient service
revenues. During 1997, approximately 22% of the Center's revenues were provided
to patients covered under Medicare. Amounts which are determined to be
uncollectible are charged against the allowance for uncollectible accounts.
Equipment. Equipment acquisitions are recorded at cost. Depreciation is
provided over the estimated useful life and is computed using the straight-line
method. The estimated useful life for the depreciation of equipment is 5-10
years.
Income Taxes. SDEC has elected Subchapter S status of the Internal Revenue
Code, and accordingly, income taxes are the responsibility of the individual
shareholders of SDEC. Therefore, no provision for income taxes has been
reflected by SDEC.
Management Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the estimates.
Unaudited Interim Information. The unaudited interim financial statements
include all adjustments, consisting only of normal recurring adjustments, which
management considers necessary for a fair presentation of the financial position
and results of operations. The results of operations for the three-month period
ended March 31, 1998 are not necessarily indicative of the results that may be
expected for a full year.
2. RELATED PARTY TRANSACTIONS
For the year ended December 31, 1997, the shareholders of SDEC owned 100%
of SDEC as well as 100% of the South Denver Gastroenterology Center (SDGC). SDGC
provides SDEC with billing, collection, accounts payable and other bookkeeping
services. A monthly overhead charge is paid by SDEC in the amount of $2,000.
Total expense incurred for these services of $24,000 has been included in the
statement of earnings and retained earnings for the year ended December 31,
1997.
In addition, the SDGC maintains a defined benefit pension plan as well as a
profit sharing plan which is open to all employees of SDEC. Employees may
participate after completing 2 years of service. SDGC is responsible for making
the contributions to the plans on behalf of the SDEC. Contributions in the
amounts of $5,933 and $10,563 were contributed to the pension plan and profit
sharing plan, respectively during 1997.
7
<PAGE> 8
SOUTH DENVER ENDOSCOPY CENTER, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. COMMITMENTS AND CONTINGENCIES
The SDEC leases facility space under a five year operating lease that
expires on January 31, 1999. Total rental expense for 1997 was approximately
$71,000. The following is a schedule by year of the future minimum lease
payments under the operating lease as of December 31, 1997.
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C>
1998........................................................ $68,000
1999........................................................ 5,720
</TABLE>
4. SUBSEQUENT EVENT
Effective March 31, 1998, AmSurg Holdings, Inc. ("Holdings"), a subsidiary
of AmSurg Corp. ("AmSurg") acquired from SDEC a fifty-one percent ownership
interest in the assets and assumed certain liabilities comprising the business
operations of the endoscopy center.
Pursuant to the terms of the Asset Purchase Agreement, dated as of March
18, 1998, by and among Holdings, AmSurg and SDEC, Holdings paid $3,116,290 in
cash and AmSurg issued 1,131 shares of its Class A Common Stock to SDEC.
Following the asset purchase, Holdings and SDEC contributed their respective
ownership in the assets of the center into a newly formed limited liability
company, The Englewood ASC, LLC, and received proportionate membership therein.
8
<PAGE> 9
AMSURG CORP.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
BASIS OF PRESENTATION
The unaudited pro forma combined statements of operations for the year
ended December 31, 1997 and the three months ended March 31, 1998 are presented
to show the effects of the acquisition of South Denver Endoscopy Center, Inc.
acquired on March 31, 1998, as if the acquisition had occurred on January 1,
1997. The pro forma information is based on the historical financial statements
of the Company and the acquired center, giving effect to the acquisition under
the purchase method of accounting, and the assumption and adjustments in the
accompanying notes to the pro forma consolidated financial information.
The unaudited pro forma financial information does not purport to represent
what the Company's financial position or results of operations would actually
have been had the transactions in fact occurred on the dates indicated above,
nor to project the Company's financial position or results of operations for any
future date or period. In the opinion of the Company's management, all
adjustments necessary for a fair presentation have been made. This unaudited pro
forma financial information should be read in conjunction with the accompanying
notes and the consolidated financial statements included in the Company's 1997
Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998.
9
<PAGE> 10
AMSURG CORP.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(ALL AMOUNTS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SOUTH DENVER PRO FORMA
ENDOSCOPY PRO FORMA COMBINED
HISTORICAL CENTER, INC. ADJUSTMENTS TOTALS
---------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Revenue........................... $57,414 $2,092 $ -- $59,506
Operating expenses:
Salaries and benefits........... 17,363 373 66(1) 17,802
Other operating expenses........ 20,352 574 8(2) 20,934
Depreciation and amortization... 4,944 65 97(3) 5,106
Net loss on sale of assets...... 1,425 -- -- 1,425
------- ------ ------- -------
Total operating
expenses................ 44,084 1,012 171 45,267
------- ------ ------- -------
Operating income.......... 13,330 1,080 (171) 14,239
Minority interest................. 9,084 -- 540(4) 9,624
Other (income) and expense:
Interest expense, net of
interest income............... 1,554 -- 217(5) 1,771
Distribution cost .............. 842 -- -- 842
------- ------ ------- -------
Earnings before income
taxes................... 1,850 1,080 (928) 2,002
Income tax expense................ 1,774 -- 61(6) 1,835
------- ------ ------- -------
Net earnings.............. 76 1,080 (989) 167
Accretion of preferred stock
discount........................ 286 -- -- 286
------- ------ ------- -------
Net earnings (loss)
attributable to common
shareholders............ $ (210) $1,080 $ (989) $ (119)
======= ====== ======= =======
Earnings (loss) per common share:
Basic........................... $ (0.02) $ (0.01)
Diluted......................... $ (0.02) $ (0.01)
Weighted average number of shares
and share equivalents
outstanding:
Basic........................... 9,453 1(7) 9,454
Diluted......................... 9,453 1(7) 9,454
</TABLE>
10
<PAGE> 11
AMSURG CORP.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SOUTH DENVER PRO FORMA
ENDOSCOPY PRO FORMA COMBINED
HISTORICAL CENTER, INC. ADJUSTMENTS TOTALS
---------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Revenue.................................. $17,829 $ 598 $ -- $18,427
Operating expenses:
Salaries and benefits.................. 5,367 141 17(1) 5,525
Other operating expenses............... 6,384 130 -- 6,514
Depreciation and amortization.......... 1,568 18 22(3) 1,608
Net loss on sale of assets............. 43 -- -- 43
------- ------ ------- -------
Total operating expenses......... 13,362 289 39 13,690
------- ------ ------- -------
Operating income................. 4,467 309 (39) 4,737
Minority interest........................ 2,807 -- 155(4) 2,962
Other (income) and expense:
Interest expense, net of interest
income............................... 493 -- 54(5) 547
------- ------ ------- -------
Earnings before income taxes..... 1,167 309 (248) 1,228
Income tax expense....................... 467 -- 24(6) 491
------- ------ ------- -------
Net earnings..................... $ 700 $ 309 $ (272) $ 737
======= ====== ======= =======
Earnings per common share:
Basic.................................. $ 0.07 $ 0.08
Diluted................................ $ 0.07 $ 0.07
Weighted average number of shares and
share equivalents outstanding:
Basic.................................. 9,673 1(7) 9,674
Diluted................................ 10,347 1(7) 10,348
</TABLE>
11
<PAGE> 12
AMSURG CORP.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
On March 31, 1998, the Company acquired a majority interest in the assets
and certain liabilities comprising the business operations of South Denver
Endoscopy Center, Inc. The accompanying pro forma consolidated statements of
operations reflects the pro forma results of operations of the Company, as if
the surgery center had been acquired on January 1, 1997.
PRO FORMA ADJUSTMENTS
The adjustments reflected in the pro forma consolidated statement of
operations are as follows:
1. To reflect additional corporate general and administrative salary
costs as a result of the increase in the number of centers managed.
2. To reflect additional miscellaneous general and administrative cost
as a result of increase in number of centers managed.
3. To reflect amortization of additional excess of cost over net
assets of purchased operations assets and differences in depreciation of
purchased equipment.
4. To reflect minority owners' interest in earnings of acquired
operations.
5. To reflect interest on acquisition-related borrowings.
6. To record estimated additional federal and state income taxes at a
combined rate of 40%, as a result of the incremental increase in earnings
before income taxes.
7. To reflect weighted average shares for stock issued in
acquisition.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
AMSURG CORP.
Date: June 11, 1998 By: /s/ Claire M. Gulmi
-----------------------------------------
CLAIRE M. GULMI
Senior Vice President and Chief Financial Officer
(Principal Financial and Duly Authorized Officer)
13
