<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): April 30, 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)
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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 April 30, 1998:
(a) Financial Statements of Business Acquired:
Independent Auditors' Report.
Combined Balance Sheets of Boswell Eye Center, LLC as of December 31,
1996 and 1997 and March 31, 1998 (unaudited).
Combined Statements of Earnings of Boswell Eye Center, LLC for the years
ended December 31, 1996 and 1997 and the Three Months ended March 31,
1997 and 1998 (unaudited).
Combined Statements of Cash Flows of Boswell Eye Center, LLC for the
years ended December 31, 1996 and 1997 and the Three Months ended
March 31, 1997 and 1998 (unaudited).
Notes to Combined Financial Statements of Boswell Eye Center, LLC.
(b) Pro Forma Financial Information:
Pro Forma Combined Balance Sheet as of March 31, 1998.
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 Combined Financial Statements.
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INDEPENDENT AUDITORS' REPORT
Board of Directors and Members
Boswell Eye Center, LLC
Sun City, Arizona
We have audited the accompanying combined balance sheets of Boswell Eye
Center, LLC as of December 31, 1996 and 1997, and the related combined
statements of earnings and retained earnings and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits 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
misstatements. 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 audits provide a reasonable basis for our opinion.
In our opinion, such combined financial statements present fairly, in all
material respects, the financial position of Boswell Eye Center, LLC as of
December 31, 1996 and 1997 and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Nashville, Tennessee
May 6, 1998
3
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BOSWELL EYE CENTER, LLC
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1996 1997 1998
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.................................................... $ 80,383 $ 97,747 $ 510,524
Accounts receivable, net of allowance for uncollectible
accounts of $45,393, $28,511 and $20,861,
respectively......................................... 361,866 592,838 519,214
Prepaid expenses........................................ 6,691 6,924 21,642
Supplies inventory...................................... 48,714 62,632 70,076
-------- ---------- ----------
Total current assets............................ 497,654 760,141 1,121,456
Furniture and equipment, net (Note 2)..................... 353,523 246,115 244,425
Other assets.............................................. 4,600 2,300 --
-------- ---------- ----------
Total........................................... $855,777 $1,008,556 $1,365,881
======== ========== ==========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable........................................ $153,204 $ 84,508 $ 159,130
Note payable -- current portion (Note 3)................ 106,150 36,980 36,980
-------- ---------- ----------
Total current liabilities....................... 259,354 121,488 196,110
Note payable (Note 3)..................................... 156,822 123,433 110,644
Commitments and contingencies (Note 4)
Members' equity:
Capital................................................. 9,000 9,000 9,000
Retained earnings....................................... 430,601 754,635 1,050,127
-------- ---------- ----------
Total members' equity........................... 439,601 763,635 1,059,127
-------- ---------- ----------
Total........................................... $855,877 $1,008,556 $1,365,881
======== ========== ==========
</TABLE>
See notes to financial statements.
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BOSWELL EYE CENTER, LLC
COMBINED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------------- -----------------------
1996 1997 1997 1998
----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues...................................... $ 4,460,677 $ 5,032,149 $1,296,892 $1,467,813
Expenses:
Supplies and other operating expenses....... 1,609,488 1,785,911 455,963 472,458
Salaries and benefits....................... 1,012,588 1,024,131 242,794 250,802
Rent expense................................ 232,267 229,899 57,830 57,119
Bad debt expense............................ 220,532 145,271 37,710 20,261
Depreciation................................ 105,650 107,408 27,313 24,882
Interest expense............................ 28,852 20,752 5,763 4,799
----------- ----------- ---------- ----------
Total expenses...................... 3,209,377 3,313,372 827,373 830,321
----------- ----------- ---------- ----------
Net earnings.................................. 1,251,300 1,718,777 469,519 637,492
Retained earnings, beginning of period........ 446,800 430,601 430,601 754,635
Distributions to Members...................... (1,267,499) (1,394,743) (319,494) (342,000)
----------- ----------- ---------- ----------
Retained earnings, end of period.............. $ 430,601 $ 754,635 $ 580,626 $1,050,127
=========== =========== ========== ==========
</TABLE>
See notes to financial statements.
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BOSWELL EYE CENTER, LLC
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------------- ---------------------
1996 1997 1997 1998
----------- ----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings................................. $ 1,251,300 $ 1,718,777 $ 469,519 $ 637,492
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation.............................. 105,650 107,408 27,313 24,882
Decrease (increase) in accounts
receivable.............................. 35,102 (230,972) (68,990) 73,624
Increase in supplies inventory............ (5,488) (13,918) (13,918) (7,444)
(Increase) decrease in prepaid expenses... 303 (233) (15,022) (14,718)
Decrease in other assets.................. 2,342 2,300 2,300 2,300
(Decrease) increase in accounts payable... (13,844) (68,696) 123,372 74,622
----------- ----------- --------- ---------
Net cash provided by operating
activities......................... 1,375,365 1,514,666 524,574 790,758
Cash flows from investing activities:
Payments for equipment additions............. -- -- -- (23,192)
----------- ----------- --------- ---------
Cash flows from financing activities:
Principal payments on notes payable.......... (99,439) (102,559) (22,405) (12,789)
Members' distributions....................... (1,267,499) (1,394,743) (319,494) (342,000)
----------- ----------- --------- ---------
Net cash used in financing
activities......................... (1,366,938) (1,497,302) (341,899) (354,789)
----------- ----------- --------- ---------
Net increase in cash........................... 8,427 17,364 182,675 412,777
Cash at beginning of period.................... 71,956 80,383 80,383 97,747
----------- ----------- --------- ---------
Cash at end of period.......................... $ 80,383 $ 97,747 $ 263,058 $ 510,524
=========== =========== ========= =========
Supplemental disclosure of cash flow
information:
Cash paid during the year for interest......... $ 28,852 $ 20,752 $ 5,763 $ 4,799
=========== =========== ========= =========
</TABLE>
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BOSWELL EYE CENTER, LLC
NOTES TO COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Boswell Eye Center, LLC (the "Center") owns and operates an
ophthalmology surgery center in Sun City, Arizona. The Center is owned by a
group of physicians who perform ophthalmic procedures at the Center through
their related physician practices.
The accompanying financial statements have been prepared on the accrual
basis of accounting and include the accounts and transactions of the Boswell Eye
Center, LLC and the Boswell Eye Institute, Inc. which are under common control.
Significant intercompany balances and transactions have been eliminated.
Furniture and equipment. Furniture and equipment are stated at cost less
accumulated depreciation. Depreciation for furniture and equipment is recognized
on the straight line method over five to seven years, and for leasehold
improvements over the remaining term of the lease plus renewal options.
Revenue recognition. Revenues consist of the billing of the use of the
Center's 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 the years ended December 31, 1996 and 1997, approximately 52%
and 48%, respectively, of the Center's revenues were provided to patients
covered under Medicare. Amounts that are determined to be uncollectible are
charged against the allowance for uncollectible accounts.
Income taxes. The Center has elected SubChapter S status of the Internal
Revenue Code, and accordingly, income taxes are the responsibility of the
individual members of the Center. Therefore, no provision for income taxes has
been reflected in the accompanying financial statements.
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. FURNITURE AND EQUIPMENT
Furniture and equipment consists of:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- MARCH 31,
1996 1997 1998
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Medical equipment............................... $ 1,116,666 $ 1,116,666 $ 1,139,859
Leasehold improvements.......................... 486,290 486,290 486,290
Furniture and fixtures.......................... 247,498 247,498 247,498
Office equipment................................ 54,584 54,584 54,584
----------- ----------- -----------
1,905,038 1,905,038 1,928,231
Less accumulated depreciation................... (1,551,515) (1,658,923) (1,683,806)
----------- ----------- -----------
$ 353,523 $ 246,115 $ 244,425
=========== =========== ===========
</TABLE>
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BOSWELL EYE CENTER, LLC
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
3. NOTE PAYABLE
The note payable bears interest at 9% and is due in monthly installments
through June 2001.
4. COMMITMENTS AND CONTINGENCIES
The center operates under a facilities lease expiring April 1999. The
following is a schedule of future minimum lease payments under the facilities
lease, which is classified as an operating lease:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C>
1998........................................................ $228,478
1999........................................................ 66,639
--------
$295,117
========
</TABLE>
5. SUBSEQUENT EVENT
Effective May 1, 1998, AmSurg Holdings, Inc. ("Holdings"), a subsidiary of
AmSurg Corp. ("AmSurg") acquired from the Center a sixty percent ownership
interest in the assets comprising the business operations of the Center.
Pursuant to the terms of the Asset Purchase Agreement, dated as of April 30,
1998, by and among Holdings, AmSurg, and the Center, Holdings paid $5,400,000 in
cash as consideration for the sixty percent ownership interest in the Center.
Following the asset purchase, Holdings and the Center contributed their
respective ownership in the assets of the Center into a newly formed limited
liability company, The Sun City Ophthalmology ASC, LLC, and received
proportionate membership therein.
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AMSURG CORP.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
BASIS OF PRESENTATION
The unaudited pro forma balance sheet of AmSurg Corp. as of March 31, 1998,
is presented to show the effects of the acquisition of the majority interest in
the assets and certain liabilities comprising the business operations of Boswell
Eye Center, LLC on April 30, 1998, as if it had occurred on March 31, 1998. The
unaudited pro forma combined statements of operations are presented to show the
effects of the acquisition as if it 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 assumptions and adjustments in the accompanying
notes to the pro forma consolidated financial information. The allocation of the
purchase price is preliminary, but management does not believe it will change
materially.
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 transaction 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 of AmSurg Corp. and the related
notes 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.
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<PAGE> 10
AMSURG CORP.
PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1998
(ALL AMOUNTS EXPRESSED IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
EFFECT OF PRO
BOSWELL ACQUISITION FORMA
EYE AND RELATED COMBINED
HISTORICAL CENTER, LLC FINANCING TOTALS
---------- -------------- ------------ --------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents......................... $ 3,772 $ 511 $(1,911)(1) $ 2,372
Accounts receivable, net.......................... 10,345 519 -- 10,864
Other current assets.............................. 2,321 92 (22)(2) 2,391
------- ------ ------- -------
Total current assets...................... 16,438 1,122 (1,933) 15,627
Long-term receivables and deposits.................. 881 -- -- 881
Property and equipment, net......................... 20,655 244 -- 20,899
Intangible assets, net.............................. 44,784 -- 4,900(3) 49,684
------- ------ ------- -------
Total assets.............................. $82,758 $1,366 $ 2,967 $87,091
======= ====== ======= =======
Current liabilities:
Current portion of long-term debt................. $ 1,447 $ 37 $ (37)(4) $ 1,447
Other current liabilities......................... 3,829 159 (159)(4) 3,829
------- ------ ------- -------
Total current liabilities................. 5,276 196 (196) 5,276
Long-term debt...................................... 30,060 111 3,889(5) 34,060
Deferred income taxes............................... 1,185 -- -- 1,185
Minority interest................................... 10,216 -- 333(6) 10,549
Preferred stock..................................... 3,208 -- -- 3,208
Shareholders' equity................................ 32,813 1,059 (1,059)(7) 32,813
------- ------ ------- -------
Total liabilities and shareholders'
equity.................................. $82,758 $1,366 $ 2,967 $87,091
======= ====== ======= =======
</TABLE>
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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>
PRO FORMA
BOSWELL EYE PRO FORMA COMBINED
HISTORICAL CENTER, LLC ADJUSTMENTS TOTALS
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue........................... $57,414 $5,032 $ -- $62,446
Operating expenses:
Salaries and benefits........... 17,363 1,024 66(8) 18,453
Other operating expenses........ 20,352 2,161 8(9) 22,521
Depreciation and amortization... 4,944 107 110(10) 5,161
Net loss on sale of assets...... 1,425 -- -- 1,425
------- ------ ------- -------
Total operating
expenses................ 44,084 3,292 184 47,560
------- ------ ------- -------
Operating income.......... 13,330 1,740 (184) 14,886
Minority interest................. 9,084 -- 730(6) 9,814
Other (income) and expense:
Interest expense, net of
interest income............... 1,554 21 342(11) 1,917
Distribution cost............... 842 -- -- 842
------- ------ ------- -------
Earnings before income
taxes................... 1,850 1,719 (1,256) 2,313
Income tax expense................ 1,774 -- 185(12) 1,959
------- ------ ------- -------
Net earnings.............. 76 1,719 (1,441) 354
Accretion of preferred stock
discount........................ 286 -- -- 286
------- ------ ------- -------
Net earnings (loss)
attributable to common
shareholders............ $ (210) $1,719 $(1,441) $ 68
======= ====== ======= =======
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 9,453
Diluted......................... 9,453 336(13) 9,789
</TABLE>
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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>
PRO FORMA
BOSWELL EYE PRO FORMA COMBINED
HISTORICAL CENTER, LLC ADJUSTMENTS TOTALS
---------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue.................................. $17,829 $1,468 $ -- $19,297
Operating expenses:
Salaries and benefits.................. 5,367 251 17(8) 5,635
Other operating expenses............... 6,384 550 -- 6,934
Depreciation and amortization.......... 1,568 25 30(10) 1,623
Net loss on sale of assets............. 43 -- -- 43
------- ------ ------- -------
Total operating expenses......... 13,362 826 47 14,235
------- ------ ------- -------
Operating income................. 4,467 642 (47) 5,062
Minority interest........................ 2,807 -- 265(5) 3,072
Other (income) and expense:
Interest expense, net of interest
income............................... 493 5 86(11) 584
------- ------ ------- -------
Earnings before income taxes..... 1,167 637 (398) 1,406
Income tax expense....................... 467 -- 96(12) 563
------- ------ ------- -------
Net earnings..................... $ 700 $ 637 $ (494) $ 843
======= ====== ======= =======
Earnings per common share:
Basic.................................. $ 0.07 $ 0.09
Diluted................................ $ 0.07 $ 0.08
Weighted average number of shares and
share equivalents outstanding:
Basic.................................. 9,673 9,673
Diluted................................ 10,347 10,347
</TABLE>
12
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AMSURG CORP.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION (UNAUDITED)
On April 30, 1998, the Company acquired a majority interest in the assets
and certain liabilities comprising the business operations of Boswell Eye
Center, LLC. The accompanying pro forma consolidated balance sheet includes the
purchased assets and assumed liabilities and effects of financing, as if the
surgery center had been acquired on March 31, 1998. The accompanying pro forma
consolidated statements of operations reflect 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 cash used to fund the acquisition, net of cash not
acquired.
2. To reflect other current assets not acquired.
3. To reflect additional excess of cost over net assets acquired
resulting from the acquisition.
4. To reflect obligations of acquired entity not assumed.
5. To reflect additional long-term debt used to finance the
acquisition, net of long-term debt not assumed.
6. To reflect minority owners' interest in earnings of acquired
operations.
7. To eliminate equity of acquired entity.
8. To reflect additional corporate general and administrative salary
costs as a result of an increase in the number of centers managed.
9. To reflect additional miscellaneous general and administrative cost
as a result of increase in number of centers managed.
10. To reflect amortization of additional excess of cost over net
assets of purchased operations assets and differences in depreciation of
purchased equipment.
11. To reflect interest on acquisition-related borrowings.
12. 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.
13. To reflect the effect of potential common shares due to existing
securities options which are dilutive upon consideration of the adjusted
pro forma net earnings.
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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: July 13, 1998 By: /s/ Claire M. Gulmi
--------------------
CLAIRE M. GULMI
Senior Vice President and Chief
Financial Officer (Principal
Financial and Duly Authorized
Officer)
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