-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IJv05AkSubKzL14qHHf5T5WdPm1n9PoZx3dUBXa1uA/KZyFN/tzWvFVgCI9BTBlz ygU8fBvqvMSiAelh8YKBNA== 0000950144-99-010880.txt : 19990903 0000950144-99-010880.hdr.sgml : 19990903 ACCESSION NUMBER: 0000950144-99-010880 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990621 ITEM INFORMATION: FILED AS OF DATE: 19990902 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMSURG CORP CENTRAL INDEX KEY: 0000895930 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 621493316 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-22217 FILM NUMBER: 99705494 BUSINESS ADDRESS: STREET 1: ONE BURTON HILLS BLVD. STREET 2: STE 350 CITY: NASHVILLE STATE: TN ZIP: 37215 BUSINESS PHONE: 6156651283 MAIL ADDRESS: STREET 1: ONE BURTON HILLS BLVD. STREET 2: SUITE 350 CITY: NASHVILLE STATE: TN ZIP: 37215 8-K/A 1 AMSURG CORP 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) 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 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 4 NORTHSIDE GASTROENTEROLOGY ENDOSCOPY CENTER BALANCE SHEETS
DECEMBER 31, JUNE 15, 1998 1999 ------------ -------- (UNAUDITED) 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 ======== ========
See accompanying notes to the financial statements. 4 5 NORTHSIDE GASTROENTEROLOGY ENDOSCOPY CENTER STATEMENTS OF EARNINGS AND RETAINED EARNINGS
SIX MONTHS YEAR ENDED ENDED PERIOD ENDED DECEMBER 31, JUNE 30, JUNE 15, 1998 1998 1999 ----------- ---------- ------------ (UNAUDITED) (UNAUDITED) 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 =========== ========= ===========
See accompanying notes to the financial statements. 5 6 NORTHSIDE GASTROENTEROLOGY ENDOSCOPY CENTER STATEMENTS OF CASH FLOWS
SIX MONTHS YEAR ENDED ENDED PERIOD ENDED DECEMBER 31, JUNE 30, JUNE 15, 1998 1998 1999 ------------ ----------- ----------- (UNAUDITED) (UNAUDITED) 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 ========= ========= =========
See accompanying notes to the financial statements. 6 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 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:
DECEMBER 31, JUNE 15, 1998 1999 ------------ --------- (UNAUDITED) 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 ========= =========
(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: YEAR ENDED DECEMBER 31, ------------ 1999 .......................................... $ 79,798 2000 .......................................... 79,798 2001 .......................................... 79,798 2002 .......................................... 6,650 --------- Total ................................. $ 246,044 =========
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 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 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)
NORTHSIDE GASTROENTEROLOGY PRO FORMA ENDOSCOPY PRO FORMA COMBINED HISTORICAL CENTER ADJUSTMENTS TOTALS ---------- ---------------- ----------- --------- 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
10 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)
NORTHSIDE GASTROENTEROLOGY PRO FORMA ENDOSCOPY PRO FORMA COMBINED HISTORICAL CENTER ADJUSTMENTS TOTALS ---------- ---------------- ----------- --------- 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
11 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 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 -----END PRIVACY-ENHANCED MESSAGE-----