XNAS:AMSG Amsurg Corporation Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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• FORM 10-Q • SECOND AMENDED AND RESTATED CHARTER OF AMSURG CORP, AS AMENDED • 302 CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER • 302 CERTIFICATION OF EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER • SECTION 1350 CERTIFICATION • XBRL INSTANCE DOCUMENT • XBRL TAXONOMY EXTENSION SCHEMA • XBRL TAXONOMY EXTENSION CALCULATION LINKBASE • XBRL TAXONOMY EXTENSION DEFINITION LINKBASE • XBRL TAXONOMY EXTENSION LABEL LINKBASE • XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2012

AMSURG CORP.

(Exact Name of Registrant as Specified in its Charter)

Tennessee	000-22217	62-1493316
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer 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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [X] Accelerated filer [ ]

Non-accelerated filer [ ] Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

As of August 1, 2012 there were outstanding 31,577,659 shares of the registrant’s Common Stock, no par value.

Table of Contents to Form 10-Q for the Six Months Ended June 30, 2012

Part I
	Item 1.	Financial Statements	1
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
	Item 4.	Controls and Procedures	24

Part II
	Item 1.	Legal Proceedings	25
	Item 1A.	Risk Factors	25
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
	Item 3.	Defaults Upon Senior Securities	25
	Item 4.	Mine Safety Disclosures	25
	Item 5.	Other Information	25
	Item 6.	Exhibits	26

	Signature		27

Part I

Item 1. Financial Statements

AmSurg Corp.

Consolidated Balance Sheets

June 30, 2012 (unaudited) and December 31, 2011

(Dollars in thousands)

				June 30,		December 31,
				2012		2011

Assets

Current assets:
	Cash and cash equivalents			$	37,649	$	40,718
	Accounts receivable, net of allowance of $23,009 and $18,844, respectively				90,446		93,454
	Supplies inventory				14,741		15,039
	Deferred income taxes				2,478		2,129
	Prepaid and other current assets				21,813		21,875

			Total current assets		167,127		173,215

Property and equipment, net					143,830		144,558
Investments in unconsolidated affiliates and long-term notes receivable					11,851		10,522
Goodwill					1,240,422		1,229,298
Intangible assets, net					16,248		15,425

			Total assets	$	1,579,478	$	1,573,018

Liabilities and Equity

Current liabilities:
	Current portion of long-term debt			$	10,018	$	10,800
	Accounts payable				17,442		19,746
	Current income taxes payable				-		1,796
	Accrued salaries and benefits				22,576		22,224
	Other accrued liabilities				9,664		9,088

			Total current liabilities		59,700		63,654

Long-term debt					409,726		447,963
Deferred income taxes					125,853		114,167
Other long-term liabilities					28,480		28,131
Commitments and contingencies
Noncontrolling interests – redeemable					171,412		170,636
Preferred stock, no par value, 5,000,000 shares authorized, no shares issued or outstanding					-		-

Equity:
	Common stock, no par value, 70,000,000 shares authorized, 31,624,480 and 31,283,772
		shares outstanding, respectively			174,690		173,187
	Retained earnings				473,370		443,058

			Total AmSurg Corp. equity		648,060		616,245
			Noncontrolling interests – non-redeemable		136,247		132,222

			Total equity		784,307		748,467

			Total liabilities and equity	$	1,579,478	$	1,573,018

See accompanying notes to the unaudited consolidated financial statements.

Item 1. Financial Statements – (continued)

AmSurg Corp.

Consolidated Statements of Earnings (unaudited)

Three Months and Six Months Ended June 30, 2012 and 2011

(In thousands, except earnings per share)

					Three Months Ended				Six Months Ended
					June 30,				June 30,
					2012		2011		2012		2011

Revenues					$	231,581	$	187,522	$	461,792	$	365,248

Operating expenses:
	Salaries and benefits					70,957		57,127		143,410		112,380
	Supply cost					33,169		23,938		65,386		46,418
	Other operating expenses					48,681		40,393		96,090		78,153
	Depreciation and amortization					7,463		6,133		14,838		12,046

				Total operating expenses		160,270		127,591		319,724		248,997

Equity in earnings of unconsolidated affiliates						316		-		711		-

				Operating income		71,627		59,931		142,779		116,251

Interest expense						4,159		3,631		8,428		7,573

	Earnings from continuing operations before income taxes					67,468		56,300		134,351		108,678

Income tax expense						11,263		8,899		22,204		17,166

	Net earnings from continuing operations					56,205		47,401		112,147		91,512

Discontinued operations:
	Earnings (loss) from operations of discontinued interests in surgery centers,
		net of income tax				-		60		(110)		758
	Loss on disposal of discontinued interests in surgery centers,
		net of income tax				(660)		(1,084)		(1,553)		(1,265)

			Net loss from discontinued operations			(660)		(1,024)		(1,663)		(507)

	Net earnings					55,545		46,377		110,484		91,005

Less net earnings attributable to noncontrolling interests:
	Net earnings from continuing operations					40,009		34,718		80,232		67,224
	Net earnings (loss) from discontinued operations					-		29		(60)		458

			Total net earnings attributable to noncontrolling interests			40,009		34,747		80,172		67,682

			Net earnings attributable to AmSurg Corp. common shareholders		$	15,536	$	11,630	$	30,312	$	23,323

Amounts attributable to AmSurg Corp. common shareholders:
	Earnings from continuing operations, net of income tax				$	16,196	$	12,683	$	31,915	$	24,288
	Discontinued operations, net of income tax					(660)		(1,053)		(1,603)		(965)

				Net earnings attributable to AmSurg Corp. common shareholders	$	15,536	$	11,630	$	30,312	$	23,323

Earnings per share-basic:
	Net earnings from continuing operations attributable to
		AmSurg Corp. common shareholders			$	0.53	$	0.42	$	1.04	$	0.80
	Net loss from discontinued operations attributable to
		AmSurg Corp. common shareholders				(0.02)		(0.03)		(0.05)		(0.03)

			Net earnings attributable to AmSurg Corp. common shareholders		$	0.51	$	0.38	$	0.99	$	0.77

Earnings per share-diluted:
	Net earnings from continuing operations attributable to
		AmSurg Corp. common shareholders			$	0.51	$	0.40	$	1.01	$	0.78
	Net loss from discontinued operations attributable to
		AmSurg Corp. common shareholders				(0.02)		(0.03)		(0.05)		(0.03)

			Net earnings attributable to AmSurg Corp. common shareholders		$	0.49	$	0.37	$	0.96	$	0.75

Weighted average number of shares and share equivalents outstanding:
	Basic					30,743		30,415		30,681		30,418
	Diluted					31,577		31,335		31,489		31,180

See accompanying notes to the unaudited consolidated financial statements.

Item 1. Financial Statements – (continued)

AmSurg Corp.

Consolidated Statements of Comprehensive Income (unaudited)

Three Months and Six Months Ended June 30, 2012 and 2011

(In thousands)

				Three Months Ended				Six Months Ended
				June 30,				June 30,
				2012		2011		2012		2011

Net earnings				$	55,545	$	46,377	$	110,484	$	91,005

Other comprehensive income, net of income tax:
	Unrealized gain on interest rate swap, net of income tax				-		138		-		515

		Comprehensive income, net of income tax			55,545		46,515		110,484		91,520

	Less comprehensive income attributable to noncontrolling interests				40,009		34,747		80,172		67,682

		Comprehensive income attributable to AmSurg Corp.
			common shareholders	$	15,536	$	11,768	$	30,312	$	23,838

See accompanying notes to the unaudited consolidated financial statements.

Item 1. Financial Statements – (continued)

AmSurg Corp.

Consolidated Statements of Changes in Equity (unaudited)

Six Months Ended June 30, 2012 and 2011

(In thousands)

			AmSurg Corp. Shareholders
														Non-
										Non-				Controlling
								Accumulated		Controlling				Interests –
								Other		Interests –		Total		Redeemable
			Common Stock			Retained		Comprehensive		Non-		Equity		(Temporary		Net
			Shares	Amount		Earnings		Loss		Redeemable		(Permanent)		Equity)		Earnings

Balance at December 31, 2011			31,284	$	173,187	$	443,058	$	-	$	132,222	$	748,467	$	170,636
	Issuance of restricted common stock		281		-		-		-		-		-		-
	Stock options exercised		325		6,672		-		-		-		6,672		-
	Stock repurchased		(266)		(7,219)		-		-		-		(7,219)		-
	Share-based compensation		-		3,412		-		-		-		3,412		-
	Tax benefit related to
		exercise of stock options	-		594		-		-		-		594		-
	Net earnings		-		-		30,312		-		13,017		43,329		67,155	$	110,484
	Distributions to noncontrolling
		interests, net of capital contributions	-		-		-		-		(13,709)		(13,709)		(69,022)
	Sale of noncontrolling interest		-		(1,587)		-		-		2,494		907		-
	Acquisitions and other
		transactions impacting
		noncontrolling interests	-		-		-		-		2,223		2,223		2,467
	Disposals and other
		transactions impacting
		noncontrolling interests	-		(369)		-		-		-		(369)		176

Balance at June 30, 2012			31,624	$	174,690	$	473,370	$	-	$	136,247	$	784,307	$	171,412


Balance at January 1, 2011			31,040	$	171,522	$	393,061	$	(515)	$	12,799	$	576,867	$	147,740
	Issuance of restricted common stock		277		-		-		-		-		-		-
	Cancellation of restricted common stock		(23)		(525)		-		-		-		(525)		-
	Stock options exercised		236		4,628		-		-		-		4,628		-
	Stock repurchased		(248)		(6,185)		-		-		-		(6,185)		-
	Share-based compensation		-		3,171		-		-		-		3,171		-
	Tax benefit related to
		exercise of stock options	-		143		-		-		-		143		-
	Net earnings		-		-		23,323		-		3,202		26,525		64,480	$	91,005
	Distributions to noncontrolling
		interests, net of capital contributions	-		-		-		-		(2,740)		(2,740)		(64,580)
	Purchase of noncontrolling interest				15								15
	Sale of noncontrolling interest		-		(1,427)		-		-		-		(1,427)		1,318
	Acquisitions and other
		transactions impacting
		noncontrolling interests	-		-		-		-		10,536		10,536		16,730
	Gain on interest rate swap,
		net of income tax
		expense of $332	-		-		-		515		-		515		-

Balance at June 30, 2011			31,282	$	171,342	$	416,384	$	-	$	23,797	$	611,523	$	165,688

See accompanying notes to the unaudited consolidated financial statements.

Item 1. Financial Statements – (continued)

AmSurg Corp.

Consolidated Statements of Cash Flows (unaudited)

Six Months Ended June 30, 2012 and 2011

(In thousands)

					Six Months Ended
					June 30,
					2012		2011

Cash flows from operating activities:
	Net earnings				$	110,484	$	91,005
	Adjustments to reconcile net earnings to net cash flows provided by
		operating activities:
			Depreciation and amortization			14,838		12,046
			Net loss (gain) on sale of long-lived assets			599		(363)
			Share-based compensation			3,412		3,171
			Excess tax benefit from share-based compensation			(529)		(463)
			Deferred income taxes			13,388		11,460
			Equity in earnings of unconsolidated affiliates, net			(711)		-
			Increase (decrease) in cash and cash equivalents, net of effects of acquisitions and
				dispositions, due to changes in: