<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):
September 2, 1999 (June 21, 1999)
---------------------------------
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.)
20 BURTON HILLS BOULEVARD
NASHVILLE, TENNESSEE 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 June 21, 1999:
(a) Financial Statements of Business Acquired:
Independent Auditors' Report.
Balance Sheets of Northside Gastroenterology Endoscopy Center as of
December 31, 1998 and June 15, 1999 (unaudited).
Statements of Earnings and Retained Earnings of Northside
Gastroenterology Endoscopy Center for the year ended December 31,
1998, the six months ended June 30, 1998 (unaudited) and the period
ended June 15, 1999 (unaudited).
Statements of Cash Flows of Northside Gastroenterology Endoscopy Center
for the year ended December 31, 1998, the six months ended June 30,
1998 (unaudited) and the period ended June 15, 1999 (unaudited).
Notes to Financial Statements of Northside Gastroenterology Endoscopy
Center.
(b) Pro Forma Financial Information:
Unaudited Pro Forma Combined Statements of Operations for the year ended
December 31, 1998 and the six months ended June 30, 1999.
Notes to Unaudited Pro Forma Combined Statements of Operations.
2
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Members
Northside Gastroenterology Endoscopy Center
Indianapolis, Indiana
We have audited the accompanying balance sheet of Northside Gastroenterology
Endoscopy Center as of December 31, 1998, and the related statement of earnings
and retained earnings and cash flows for the year 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 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
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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Northside Gastroenterology Endoscopy Center
as of December 31, 1998, 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
August 26, 1999
3
<PAGE> 4
NORTHSIDE GASTROENTEROLOGY ENDOSCOPY CENTER
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 15,
1998 1999
------------ --------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................... $ 53,617 $306,857
Accounts receivable, net of allowance of $77,961 and $94,955 (unaudited),
respectively .......................................................... 339,279 320,026
Supplies inventory ...................................................... 12,636 17,640
Prepaid and other current assets ........................................ 5,605 7,305
-------- --------
Total current assets ........................................... 411,137 651,828
Property and equipment, net (note 2) ......................................... 368,837 338,511
-------- --------
Total assets ................................................... $779,974 $990,339
======== ========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Current portion of long-term debt (note 3) .............................. $112,689 $114,425
Accounts payable ........................................................ 30,395 48,443
Accrued expenses ........................................................ 9,209 9,768
-------- --------
Total current liabilities ...................................... 152,293 172,636
Long-term debt (note 3) ...................................................... 417,895 402,582
Members' equity:
Contributed capital ..................................................... 500 500
Retained earnings ....................................................... 209,286 414,621
-------- --------
Total members' equity .......................................... 209,786 415,121
-------- --------
Commitments (note 4)
Total liabilities and members' equity .......................... $779,974 $990,339
======== ========
</TABLE>
See accompanying notes to the financial statements.
4
<PAGE> 5
NORTHSIDE GASTROENTEROLOGY ENDOSCOPY CENTER
STATEMENTS OF EARNINGS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, JUNE 15,
1998 1998 1999
----------- ---------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Revenues ................................................. $ 2,073,336 $ 856,263 $ 1,064,724
Operating expenses:
Salaries and benefits ............................... 575,813 237,055 264,754
Medical supply and drug costs ....................... 161,432 66,460 94,796
Other operating expenses ............................ 374,973 164,502 213,552
Depreciation ........................................ 145,527 68,680 62,979
----------- --------- -----------
Total operating expenses ........................ 1,257,745 536,697 636,081
----------- --------- -----------
Operating income ................................ 815,591 319,566 428,643
Interest expense, net of interest income of $4,260, $2,203
(unaudited) and $4,596 (unaudited), respectively .... 41,586 25,188 13,833
----------- --------- -----------
Net earnings .................................... 774,005 294,378 414,810
Beginning retained earnings .............................. 128,781 128,781 209,286
Distributions ............................................ (693,500) (156,750) (209,475)
----------- --------- -----------
Ending retained earnings ........................ $ 209,286 $ 266,409 $ 414,621
=========== ========= ===========
</TABLE>
See accompanying notes to the financial statements.
5
<PAGE> 6
NORTHSIDE GASTROENTEROLOGY ENDOSCOPY CENTER
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, JUNE 15,
1998 1998 1999
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings ........................................... $ 774,005 $ 294,378 $ 414,810
Adjustments to reconcile net earnings to net cash flows
provided by operating activities:
Depreciation and amortization ...................... 145,527 68,680 62,979
Increase (decrease) in cash, due to change in:
Accounts receivable, net ...................... (65,940) 34,076 19,253
Supplies inventory ............................ (2,839) (1,753) (5,004)
Other assets .................................. -- -- (1,700)
Accounts payable .............................. 5,364 2,882 18,048
Accrued expenses .............................. 3,304 (1,918) 559
--------- --------- ---------
Net cash flows provided by operating activities 859,421 396,345 508,945
Cash flows used by investing activities-
Acquisition of property and equipment .................. (62,290) (21,049) (32,653)
Cash flows from financing activities:
Proceeds from long-term borrowings ..................... 40,000 -- 32,286
Payments on long-term borrowings ....................... (104,160) (54,914) (45,863)
Distributions .......................................... (693,500) (156,750) (209,475)
--------- --------- ---------
Net cash flows used by financing activities ... (757,660) (211,664) (223,052)
--------- --------- ---------
Net increase in cash and cash equivalents ................... 39,471 163,632 253,240
Cash and cash equivalents, beginning of period .............. 14,146 14,146 53,617
--------- --------- ---------
Cash and cash equivalents, end of period .................... $ 53,617 $ 177,778 $ 306,857
========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest ...................................... $ 46,105 $ 27,650 $ 18,329
========= ========= =========
</TABLE>
See accompanying notes to the financial statements.
6
<PAGE> 7
NORTHSIDE GASTROENTEROLOGY ENDOSCOPY CENTER
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1998, SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) AND
PERIOD ENDED JUNE 15, 1999 (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION
Northside Gastroenterology Endoscopy Center (the "Center") is owned and
operated by a group of physicians who perform endoscopy procedures at the Center
through their related physician practice. The Center and the affiliated
physician practice operate out of the same facility. The Center was organized as
part of the associated physician practice until September 1998, at which time
the net assets and operations were contributed into Northside Gastroenterology
Endoscopy Center, LLC, an Indiana limited liability company. The accompanying
financial statements have been prepared on the accrual basis of accounting from
the separate records maintained by the Center, reflect the operations of the
Center only and do not include activities of the physician practice.
B. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are comprised principally of demand deposits
at banks and other highly liquid short-term investments with maturities less
than three months when purchased.
C. REVENUE RECOGNITION
Revenues consist of amounts billed for the use of the Center's
facilities billed directly 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 and Medicaid. 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 1998, approximately 26% of the Center's revenues were provided
to patients covered under Medicare and Medicaid. Amounts that are determined to
be uncollectible are charged against the allowance for uncollectible accounts.
D. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation for leasehold
improvements is recognized under the straight-line method over the remaining
term of the lease plus renewal options. Depreciation for equipment and furniture
and fixtures is recognized over useful lives of three to seven years.
E. EMPLOYEE BENEFIT PLANS
The Center sponsors a profit sharing plan to which the Center may
contribute a discretionary amount each year to be shared by eligible employees.
The Center also sponsors a defined contribution plan to which the Center makes
contributions on behalf of eligible employees based on a formula as defined by
the plan. During the year ended December 31, 1998, six months ended June 30,
1998 (unaudited) and period ended June 15, 1999 (unaudited), the Center incurred
costs of $58,020, $29,010 and 29,544, respectively, associated with these plans.
F. INCOME TAXES
No provision for income taxes has been reflected in the accompanying
financial statements as a portion of the Center's operations in 1998 are
included with the physician practice while the remainder of the Center's
operations in 1998 and all of 1999 are included in a limited liability company.
Accordingly, income taxes prior to the formation of the limited liability
company have been assumed by the physician practice while income taxes
subsequent to the formation of the limited liability company are the
responsibility of the individual members of such limited liability company.
G. 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 these estimates.
H. 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 period ended June 15, 1999 are
not necessarily indicative of the results that may be expected for a full year.
7
<PAGE> 8
NORTHSIDE GASTROENTEROLOGY ENDOSCOPY CENTER
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(2) PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1998 and June 15, 1999 are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 15,
1998 1999
------------ ---------
(UNAUDITED)
<S> <C> <C>
Leasehold improvements ............. $ 340,681 $ 340,681
Equipment .......................... 452,723 484,790
Furniture and fixtures ............. 9,807 10,393
--------- ---------
Total cost ................ 803,211 835,864
Depreciation ....................... (434,374) (497,353)
--------- ---------
Property and equipment, net $ 368,837 $ 338,511
========= =========
</TABLE>
(3) LONG-TERM DEBT
Long-term debt at December 31, 1998 and June 15, 1999 (unaudited) is
comprised of notes with banks of $530,584 and $517,007, respectively, at rates
ranging from 6.99% to 8.81% and are due in various monthly installments through
2003. The notes are secured by the assets of the Center. The Center also had an
unused $25,000 line of credit at December 31, 1998.
Principal payments required on long-term debt in the five years
subsequent to December 31, 1998 are $112,689, $121,911, $131,898, $108,135 and
$55,951.
(4) LEASES
The Center operates under facilities leases that expire January 2002.
Future minimum lease payments at December 31, 1998 are as follows:
<TABLE>
YEAR ENDED
DECEMBER 31,
------------
<S> <C>
1999 .......................................... $ 79,798
2000 .......................................... 79,798
2001 .......................................... 79,798
2002 .......................................... 6,650
---------
Total ................................. $ 246,044
=========
</TABLE>
The Center incurred rent expense for the year ended December 31, 1998,
the six months ended June 30, 1998 (unaudited) and the period ended June 15,
1999 (unaudited) of $67,277, $32,592 and $25,312, respectively.
(5) SUBSEQUENT EVENT
Effective June 15, 1999, AmSurg Holdings, Inc. ("Holdings"),
a subsidiary of AmSurg Corp. ("AmSurg") acquired a 51% membership interest in
Northside Gastroenterology Endoscopy Center, LLC.
Pursuant to the terms of the Membership Purchase Agreement dated June
15, 1999, by and among Holdings, AmSurg and Northside Gastroenterology Endoscopy
Center, LLC, Holdings paid an initial purchase price of $2,151,675 in cash and
AmSurg issued to the Northside Gastroenterology Endoscopy Center, LLC 40,515
shares of its Class A Common Stock. The purchase price is subject to adjustment
as set forth in the Membership Purchase Agreement.
8
<PAGE> 9
AMSURG CORP.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION BASIS OF PRESENTATION
The unaudited pro forma combined statements of operations of AmSurg
Corp. for the year ended December 31, 1998 and six months ended June 30, 1999,
are presented to show the effects of the acquisition of the majority interest in
Northside Gastroenterology Endoscopy Center, LLC on June 21, 1999 and effective
June 15, 1999, as if it had occurred on January 1, 1998. 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 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 1998 Annual Report on Form 10-K and Quarterly Report on Form
10-Q for the quarter ended June 30, 1999.
9
<PAGE> 10
AMSURG CORP.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(All amounts expressed in thousands, except per share data)
<TABLE>
<CAPTION>
NORTHSIDE
GASTROENTEROLOGY PRO FORMA
ENDOSCOPY PRO FORMA COMBINED
HISTORICAL CENTER ADJUSTMENTS TOTALS
---------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues .................................... $80,322 $2,073 $ -- $82,395
Operating expenses:
Salaries and benefits .................. 22,947 576 66 (1) 23,589
Other operating expenses ............... 28,393 535 -- 28,928
Depreciation and amortization .......... 6,568 146 88 (2) 6,802
Net loss on sale of assets ............. 5,462 -- -- 5,462
------- ------ -------- -------
Total operating expenses ........... 63,370 1,257 154 64,781
------- ------ -------- -------
Operating income ................... 16,952 816 (154) 17,614
Minority interest ........................... 13,645 -- 390 (3) 14,035
Other expenses:
Interest expense, net of interest income 1,499 42 112 (4) 1,653
------- ------ -------- -------
Earnings before income taxes ....... 1,808 774 (656) 1,926
Income tax expense .......................... 1,047 -- 45 (5) 1,092
------- ------ -------- -------
Net earnings ....................... $ 761 $ 774 $ (701) $ 834
======= ====== ======== =======
Earnings per common share:
Basic .................................. $ 0.06 $ 0.07
Diluted ................................ $ 0.06 $ 0.06
Weighted average number of shares and share
equivalents outstanding:
Basic .................................. 12,247 41 (6) 12,288
Diluted ................................ 12,834 41 (6) 12,875
</TABLE>
10
<PAGE> 11
AMSURG CORP.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(All amounts expressed in thousands, except per share data)
<TABLE>
<CAPTION>
NORTHSIDE
GASTROENTEROLOGY PRO FORMA
ENDOSCOPY PRO FORMA COMBINED
HISTORICAL CENTER ADJUSTMENTS TOTALS
---------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues ..................................... $ 48,071 $1,065 $ -- $ 49,136
Operating expenses:
Salaries and benefits ................... 13,330 265 30 (1) 13,625
Other operating expenses ................ 16,411 308 -- 16,719
Depreciation and amortization ........... 3,414 63 44 (2) 3,521
Net gain on sale of assets .............. (33) -- -- (33)
-------- ------ -------- --------
Total operating expenses ............ 33,122 636 74 33,832
-------- ------ -------- --------
Operating income .................... 14,949 429 (74) 15,304
Minority interest ............................ 9,151 -- 207 (3) 9,358
Other expenses:
Interest expense, net of interest income 435 14 54 (4) 503
-------- ------ -------- --------
Earnings before income taxes and
cumulative effect of an accounting
change ............................ 5,363 415 (335) 5,443
Income tax expense ........................... 2,065 -- 32 (5) 2,097
-------- ------ -------- --------
Net earnings before cumulative effect
of an accounting change ........... 3,298 415 (367) 3,346
Cumulative effect of the change in the method
in which pre-opening costs are recorded . (126) -- -- (126)
-------- ------ -------- --------
Net earnings ........................ $ 3,172 $ 415 $ (367) $ 3,220
======== ====== ======== ========
Basic earnings per common share:
Net earnings before cumulative effect of
an accounting change .................. $ 0.23 $ 0.23
Net earnings ............................ $ 0.22 $ 0.22
Diluted earnings per common share:
Net earnings before cumulative effect of
an accounting change .................. $ 0.22 $ 0.23
Net earnings ............................ $ 0.22 $ 0.22
Weighted average number of shares and share
equivalents outstanding:
Basic ................................... 14,341 37 (6) 14,378
Diluted ................................. 14,710 37 (6) 14,747
</TABLE>
11
<PAGE> 12
AMSURG CORP.
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
On June 21, 1999 and effective June 15, 1999, the Company acquired a
majority interest in Northside Gastroenterology Endoscopy Center, LLC. The
accompanying pro forma combined statements of operations reflect the pro forma
results of operations of the Company as if the surgery center had been acquired
on January 1, 1998.
PRO FORMA ADJUSTMENTS
1. To reflect additional corporate general and administrative salary
costs as a result of an increase in the number of centers managed.
2. To reflect amortization of additional excess of cost over net assets
of purchased operations based on a 25-year amortization period.
3. To reflect minority owner's interest in earnings of acquired
operations.
4. To reflect interest expense on acquisition-related borrowings, net of
a reduction in interest income on cash and cash equivalents used in
the acquisition and interest expense of the acquired entity on
indebtedness not assumed.
5. To record estimated additional federal and state income taxes at a
combined statutory rate of 40% in 1998 and 38.5% in 1999, as a result
of the incremental increase in earnings before income taxes.
6. To reflect weighted average shares outstanding 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: September 2, 1999 By: /s/ Claire M. Gulmi
-------------------------------------------------
CLAIRE M. GULMI
Senior Vice President and Chief Financial Officer
(Principal Financial and Duly Authorized Officer)
13
