SEC Filings

AMSURG CORP filed this Form 10-12G/A on 11/03/1997
Entire Document
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primarily from additional centers in operation, the acquisition of the interest
in the urology physician practice and from an increase in corporate staff
primarily to support growth in the number of centers in operation and
anticipated future growth. Salaries and benefits expense and other operating
expenses in the aggregate as a percentage of revenues remained comparable at
approximately 66% for the nine month periods ended September 30, 1997 and 1996.
However, salaries and benefits expense as a percentage of revenues decreased
during the 1997 period while other operating expenses as a percentage of
revenues increased proportionately during the 1997 period compared to the 1996
period due to the inclusion of contracted physician services within other
operating expenses for the urology practice acquired in January 1997.
     Depreciation and amortization expense increased $1,415,000, or 68%, for the
nine month period ended September 30, 1997, over the comparable period in 1996,
primarily due to 12 additional surgery centers and one physician practice in
operation in the 1997 period compared to the 1996 period. Interest expense
increased $472,000, or 71%, in the nine month period ended September 30, 1997
over the comparable period in 1996 due to debt assumed or incurred in connection
with additional acquisitions of interests in surgery centers and a physician
practice plus the interest expense associated with newly opened start-up surgery
centers financed partially with bank debt.
     AmSurg anticipates further increases in operating expenses during the
remainder of 1997 primarily due to additional start-up centers placed in
operation in excess of the number of development centers historically opened by
AmSurg within a nine month period. Typically a start-up center will incur
start-up losses during its initial one to three months of operations and
experiences lower revenues and operating margins than an established center
until its case load grows to a more optimal operating level, which generally is
expected to occur within 12 months after a center opens.
     Included in net loss on sale of assets in the nine month period ended
September 30, 1997 is a loss of approximately $1,954,000 from the disposition in
September 1997 of AmSurg's investment in a partnership that owned two surgery
centers acquired in 1994. Various disagreements with the sole physician partner
over the operation of these centers have adversely impacted the operations of
these centers. After a series of discussions and attempts to resolve these
differences, AmSurg determined that the partners could not resolve their
disagreements and that as a result the carrying value of the assets associated
with this partnership would not likely be fully recovered. AmSurg projected the
undiscounted cash flows from these centers and determined these cash flows to be
less than the carrying value of the long-lived assets attributable to this
partnership. Accordingly, an impairment loss equal to the excess of the carrying
value of the long-lived assets over the present value of the estimated future
cash flows was recorded in March 1997 in accordance with Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed of." In September 1997, AmSurg sold its
interest in the partnership assets to its physician partner and recognized a
partial loss recovery. Management believes it has good relationships with its
other physician partners and that the loss attributable to the partnership
discussed above resulted from a unique set of circumstances. AmSurg does not
believe that the absence of the operations of these two centers will have a
significant impact on AmSurg's future ongoing results of operations.
     In addition, net loss on sale of assets includes a pretax gain of
approximately $460,000 from the sale in July 1997 of the building and equipment
comprising a surgery center which AmSurg leased to a gastrointestinal physician
practice located in Tennessee. AmSurg concurrently terminated its management
agreement for this surgery center in which AmSurg had no ownership interest but
had managed since 1994.
     Distribution cost in the nine month period ended September 30, 1997
represents costs incurred by AmSurg to date related to effecting the
     AmSurg's minority interest in earnings for the nine month period ended
September 30, 1997 increased by $2,692,000 from the comparable 1996 period
primarily as a result of minority partners' interest in earnings at surgery
centers recently added to operations and from increased profitability at
     AmSurg recognized income tax expense of $1,279,000 in the nine month period
ended September 30, 1997, compared to $665,000 in the comparable period in 1996.
Because the net loss on sale of assets may only be deducted for tax purposes
against future capital gains for up to five years, AmSurg has recognized no tax