SEC Filings

10-Q
AMSURG CORP filed this Form 10-Q on 08/14/1997
Entire Document
 
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LIQUIDITY AND CAPITAL RESOURCES

       Operating activities for the six month period ended June 30, 1997
generated $6.8 million in cash flow. Investing activities during the six month
period ended June 30, 1997 used $12.1 million, including $7.0 million used to
acquire interests in three additional surgery centers and an interest in the
urology physician practice, and $5.2 million to acquire property and equipment
for new start-up surgery centers and for new or replacement property at existing
centers. Financing activities during the six month period ended June 30, 1997
provided $5.2 million in cash flow, primarily as a result of (i) net additions
to long-term debt of $7.6 million, (ii) minority partner capital contributions
to the Company's partnerships and limited liability companies of $1.3 million,
and (iii) $383,171 in cash proceeds from the issuance of common stock; these
financing proceeds were partially offset by $4.1 million in distributions to
surgery center minority partners. At June 30, 1997, the Company had $4.3 million
in outstanding term loan borrowings under its amended and restated bank credit
agreement which is repayable through June 2000. The Company also had outstanding
borrowings of $10.8 million under a related revolving credit facility which
provides up to $15.0 million in available credit through April 1999 for
acquisitions and development projects. Borrowings under the bank credit
agreement and related credit facility bear interest at a rate equal to the prime
rate or 1.75% above LIBOR or a combination thereof at the Company's option, plus
a .35% fee for unused commitments. At June 30, 1997, the Company's partnerships
and limited liability companies had unfunded construction and equipment purchase
commitments for centers under development of approximately $3.2 million of which
the Company anticipates approximately $2.2 million will be borrowed under the
Company's credit facility (and guaranteed on a pro rata basis by the
physicians), and that the remaining amount will be provided by the Company and
the physician partners in proportion to their respective ownership interests.
The Company intends to fund its portion out of cash flow from operations.

       On November 20, 1996, the Company issued shares of its Series A Preferred
Stock and Series B Preferred Stock to certain unaffiliated institutional
investors for cash proceeds of approximately $5.0 million, after payment of
offering expenses. The purpose of the offering was to fund the acquisition and
development of surgery centers and to provide other working capital as needed
prior to being in position to access capital markets as an independent public
company following the Distribution. The Series A Preferred Stock has a
liquidation value of $3.0 million and will accrue dividends of 8% per annum on
such liquidation value, commencing November 21, 1998. This stock is subject to
redemption at the Company's option at any time, and is subject to redemption at
the option of the holders on November 20, 2002 and upon the occurrence of
certain events, including a public offering yielding at least $20.0 million in
net proceeds to the Company and/or its stockholders (or $25.0 million in net
proceeds if the Distribution does not occur) (a "Qualified IPO"). The Series A
Preferred Stock may also be converted into shares of Common Stock at the option
of the holders for a limited period of time following the Distribution or upon a
Qualified IPO at the then current market price of the Common Stock. Upon a
Qualified IPO or other triggering event, the Series B Preferred Stock will be
automatically converted into a number of shares of Common Stock that
approximates 6% of the equity of the Company determined as of November 20, 1996,
with that percentage being ratably increased to 8% of the equity of the Company
if a triggering event has not occurred by November 20, 2000. If a Qualified IPO
or other triggering event does not occur by November 20, 2002, the holders of
the Series B Preferred Stock will have the right to sell such stock to the
Company at a formula price.

       Historically the Company has depended on AHC for the majority of its
equity financing. A principal purpose of the Distribution is to permit the
Company to have access to public debt and equity capital markets as an
independent public company. Management believes that the Company will have
access to such capital on more favorable terms as an independent public company
than it could have as a majority-owned subsidiary of AHC, particularly in public
equity markets. While the Company anticipates that its operating activities will
continue to provide positive cash flow and increased revenues, the Company will
require additional financing in order to fund its development and acquisition
plans and to achieve its long-term strategic growth plans. This additional
financing could take the form of a private or public offering of debt or equity
securities or additional bank financing. No assurances can be given that the
necessary financing will be obtainable on terms satisfactory to the Company. The
failure to raise the funds necessary to finance its future cash requirements
could adversely affect the Company's ability to pursue its strategy and could
adversely affect its results of operations for future periods.






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