##### Table of Contents



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
 March 31, 2008
  AMSURG CORP.
 (Exact Name of Registrant as Specified in its Charter)
 Tennessee
    
    62-1493316(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)20 Burton Hills BoulevardNashville, TN
    
    37215(Address of principal executive offices)
    
    (Zip code)
 (615) 665-1283  (Registrants Telephone Number, Including Area Code)
  x o
  Large accelerated filer
    
    x
    
    Accelerated filer
    
    oNon-accelerated filer
    
    o
    
    Smaller reporting company
    
    o
  o x




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##### 



Table of Contents to Form 10-Q for the Three Months Ended March 31, 2008
  
 Part IItem 1.   Financial Statements
    
    
    1Item 2.   Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3.   Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4.   Controls and Procedures
    
    
    18Item 4T. Controls and Procedures
    
    
    18Part IIItem 1.    Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3.    Defaults Upon Senior Securities
    
    
    19Item 4.    Submission of Matters to a Vote of Security Holders
    
    
    19Item 5.    Other Information
    
    
    19Item 6.    Exhibits
    
    
    19Signature
    
    
    20EX-11 EARNINGS PER SHAREEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEO




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##### Table of Contents



Part I
 
 Item 1. Financial Statements
 AmSurg Corp.
Consolidated Balance Sheets
March 31, 2008 (unaudited) and December 31, 2007
(Dollars in thousands)
 March 31,
    
    
    December 31,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    24,116
    
    
    $
    29,953Accounts receivable, net of allowance of $9,364 and $8,310, respectively
    
    
    63,925
    
    
    
    61,284Supplies inventory
    
    
    7,305
    
    
    
    6,882Deferred income taxes
    
    
    1,545
    
    
    
    1,354Prepaid and other current assets
    
    
    18,242
    
    
    
    18,509Current assets held for sale
    
    
    141
    
    
    
    Total current assets
    
    
    115,274
    
    
    
    117,982Long-term receivables and other assets
    
    
    977
    
    
    
    1,653Property and equipment, net
    
    
    104,625
    
    
    
    104,874Intangible assets, net
    
    
    563,281
    
    
    
    557,125Long-term assets held for sale
    
    
    1,118
    
    
    
    Total assets
    
    $
    785,275
    
    
    $
    781,634Liabilities and Shareholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    5,139
    
    
    $
    5,781Accounts payable
    
    
    10,865
    
    
    
    12,703Accrued salaries and benefits
    
    
    12,213
    
    
    
    12,415Other accrued liabilities
    
    
    2,420
    
    
    
    2,291Income taxes payable
    
    
    4,878
    
    
    
    1,000Current liabilities held for sale
    
    
    226
    
    
    
    Total current liabilities
    
    
    35,741
    
    
    
    34,190Long-term debt
    
    
    200,219
    
    
    
    216,822Deferred income taxes
    
    
    44,080
    
    
    
    41,990Other long-term liabilities
    
    
    15,868
    
    
    
    15,401Commitments and contingenciesMinority interest
    
    
    64,934
    
    
    
    62,006Preferred stock, no par value, 5,000,000 shares authorized, no shares issued or outstanding
    
    
    
    
    
    
    Shareholders equity:Common stock, no par value 70,000,000 shares authorized, 31,417,086 and 31,202,629
shares outstanding, respectively
    
    
    178,165
    
    
    
    172,536Deferred compensation
    
    
    (7,069
    )
    
    
    (3,916
    )Retained earnings, net of ($634) cumulative adjustment to beginning retained
earnings on January 1, 2007 for change in accounting for uncertainty in income
taxes
    
    
    255,748
    
    
    
    244,042Accumulated other comprehensive loss, net of income taxes
    
    
    (2,411
    )
    
    
    (1,437
    )Total shareholders equity
    
    
    424,433
    
    
    
    411,225Total liabilities and shareholders equity
    
    $
    785,275
    
    
    $
    781,634
  
 1




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##### Table of Contents



Item 1. Financial Statements  (continued)
 AmSurg Corp.
Consolidated Statements of Earnings (unaudited)
(In thousands, except earnings per share
 Three Months EndedMarch 31,2008
    
    
    2007Revenues
    
    $
    147,421
    
    
    $
    125,190Operating expenses:Salaries and benefits
    
    
    43,008
    
    
    
    37,677Supply cost
    
    
    17,024
    
    
    
    14,075Other operating expenses
    
    
    30,687
    
    
    
    24,479Depreciation and amortization
    
    
    5,292
    
    
    
    4,617Total operating expenses
    
    
    96,011
    
    
    
    80,848Operating income
    
    
    51,410
    
    
    
    44,342Minority interest
    
    
    29,099
    
    
    
    25,137Interest expense, net of interest income
    
    
    2,823
    
    
    
    2,479Earnings from continuing operations before income taxes
    
    
    19,488
    
    
    
    16,726Income tax expense
    
    
    7,810
    
    
    
    6,647Net earnings from continuing operations
    
    
    11,678
    
    
    
    10,079Discontinued operations:Earnings from operations of discontinued interests in surgery centers, net of income
tax expense
    
    
    28
    
    
    
    198Net earnings
    
    $
    11,706
    
    
    $
    10,277Basic earnings per common share:Net earnings from continuing operations
    
    $
    0.37
    
    
    $
    0.34Net earnings
    
    $
    0.37
    
    
    $
    0.34Diluted earnings per common share:Net earnings from continuing operations
    
    $
    0.37
    
    
    $
    0.33Net earnings
    
    $
    0.37
    
    
    $
    0.34Weighted average number of shares and share equivalents outstanding:Basic
    
    
    31,298
    
    
    
    30,046Diluted
    
    
    31,790
    
    
    
    30,505
  
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##### Table of Contents



Item 1. Financial Statements  (continued)
 AmSurg Corp.
Consolidated Statements of Comprehensive Income (unaudited)
(In thousands
 Three Months EndedMarch 31,2008
    
    
    2007Net earnings
    
    $
    11,706
    
    
    $
    10,277Other comprehensive loss:Loss on interest rate swap, net of income tax benefit
    
    
    (974
    )
    
    
    (124
    )Comprehensive income, net of tax
    
    $
    10,732
    
    
    $
    10,153
  
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##### Table of Contents



Item 1. Financial Statements  (continued)
 AmSurg Corp.
Consolidated Statements of Cash Flows (unaudited)
(In thousands
 Three Months EndedMarch 31,2008
    
    
    2007Cash flows from operating activities:Net earnings
    
    $
    11,706
    
    
    $
    10,277Adjustments to reconcile net earnings to net cash flows provided by
operating activities:Minority interest
    
    
    29,099
    
    
    
    25,137Distributions to minority partners
    
    
    (26,939
    )
    
    
    (22,579
    )Depreciation and amortization
    
    
    5,292
    
    
    
    4,617Share-based compensation
    
    
    1,066
    
    
    
    1,078Excess tax benefit from share-based compensation
    
    
    (271
    )
    
    
    (880
    )Deferred income taxes
    
    
    2,514
    
    
    
    1,731Increase (decrease) in cash and cash equivalents, net of effects of
acquisitions and dispositions, due to changes in:Accounts receivable, net
    
    
    (2,359
    )
    
    
    (2,301
    )Supplies inventory
    
    
    (132
    )
    
    
    178Prepaid and other current assets
    
    
    263
    
    
    
    (1,070
    )Accounts payable
    
    
    (1,793
    )
    
    
    (2,530
    )Accrued expenses and other liabilities
    
    
    2,982
    
    
    
    5,224Other, net
    
    
    67
    
    
    
    204Net cash flows provided by operating activities
    
    
    21,495
    
    
    
    19,086Cash flows from investing activities:Acquisition of interests in surgery centers
    
    
    (7,897
    )
    
    
    (42,213
    )Acquisition of property and equipment
    
    
    (4,535
    )
    
    
    (4,149
    )Net repayment of long-term receivables
    
    
    625
    
    
    
    431Net cash flows used in investing activities
    
    
    (11,807
    )
    
    
    (45,931
    )Cash flows from financing activities:Proceeds from long-term borrowings
    
    
    10,956
    
    
    
    43,701Repayment on long-term borrowings
    
    
    (28,206
    )
    
    
    (19,533
    )Net proceeds from issuance of common stock
    
    
    1,139
    
    
    
    3,903Proceeds from capital contributions by minority partners
    
    
    321
    
    
    
    32Excess tax benefit from share-based compensation
    
    
    271
    
    
    
    880Financing cost incurred
    
    
    (6
    )
    
    
    (5
    )Net cash flows (used in) provided by financing activities
    
    
    (15,525
    )
    
    
    28,978Net (decrease) increase in cash and cash equivalents
    
    
    (5,837
    )
    
    
    2,133Cash and cash equivalents, beginning of period
    
    
    29,953
    
    
    
    20,083Cash and cash equivalents, end of period
    
    $
    24,116
    
    
    $
    22,216
  
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##### Table of Contents



Item 1. Financial Statements  (continued)
 AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements
 (1) Basis of Presentation
       (2) Use of Estimates
   
 5




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##### Table of Contents



Item 1. Financial Statements  (continued)
 AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements  (continued)
 (3) Revenue Recognition
   (4) Stock Incentive Plans
     WeightedNumber
    
    
    Averageof
    
    
    ExerciseShares
    
    
    PriceNon-vested shares at December 31, 2007
    
    
    193,999
    
    
    $
    23.13Shares granted
    
    
    144,001
    
    
    
    24.75Shares vested
    
    
    
    
    
    
    Shares forfeited
    
    
    (2,230
    )
    
    
    23.36Non-vested shares at March 31, 2008
    
    
    335,770
    
    
    $
    23.82
  
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##### Table of Contents



Item 1. Financial Statements  (continued)
 AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements  (continued)
  WeightedAverageWeighted
    
    
    RemainingNumber
    
    
    Average
    
    
    Contractualof
    
    
    Exercise
    
    
    TermShares
    
    
    Price
    
    
    (in years)Outstanding at December 31, 2007
    
    
    3,674,474
    
    
    $
    21.72
    
    
    
    6.7Options granted
    
    
    204,781
    
    
    
    24.75Options exercised with aggregate intrinsic value of $725,000
    
    
    (72,686
    )
    
    
    15.67Options terminated
    
    
    (32,170
    )
    
    
    23.61Outstanding at March 31, 2008 with aggregate intrinsic value
of $8,861,000
    
    
    3,774,399
    
    
    $
    21.98
    
    
    
    6.7Vested or expected to vest at March 31, 2008 with aggregate intrinsic value
of $8,747,000
    
    
    3,661,167
    
    
    $
    21.92
    
    
    
    6.6Exercisable at March 31, 2008 with aggregate intrinsic value
of $7,654,000
    
    
    2,577,480
    
    
    $
    21.37
    
    
    
    5.9
   Three Months EndedMarch 31,2008
    
    
    2007Applied assumptions:Expected term/life of options in years
    
    
    5.1
    
    
    
    4.8Forfeiture rate
    
    
    
    
    
    
    0.1
    %Average risk-free interest rate
    
    
    2.7
    %
    
    
    4.8
    %Volatility rate
    
    
    31.9
    %
    
    
    34.4
    %Dividends
    
    
    
    
    
    
    
  (5) Acquisitions and Dispositions
   
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##### Table of Contents



Item 1. Financial Statements  (continued)
 AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements  (continued)
  Three Months EndedMarch 31,2008
    
    
    2007Revenues
    
    $
    411
    
    
    $
    2,424Earnings before income taxes
    
    
    47
    
    
    
    326Net earnings
    
    
    28
    
    
    
    198
 (6) Intangible Assets
  March 31, 2008
    
    
    December 31, 2007Gross
    
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    
    
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    
    Amortization
    
    
    NetDeferred financing cost
    
    $
    2,709
    
    
    
    ($1,806
    )
    
    $
    903
    
    
    $
    2,703
    
    
    
    ($1,738
    )
    
    $
    965Customer and non-compete
agreements
    
    
    3,180
    
    
    
    (1,268
    )
    
    
    1,912
    
    
    
    3,180
    
    
    
    (1,218
    )
    
    
    1,962Total amortizable
intangible assets
    
    $
    5,889
    
    
    
    ($3,074
    )
    
    $
    2,815
    
    
    $
    5,883
    
    
    
    ($2,956
    )
    
    $
    2,927
   Three Months EndedMarch 31,2008
    
    
    2007Balance, beginning of period
    
    $
    546,915
    
    
    $
    397,147Goodwill acquired during period
    
    
    7,094
    
    
    
    41,609Goodwill disposed or held for sale during period
    
    
    (876
    )
    
    
    Balance, end of period
    
    $
    553,133
    
    
    $
    438,756
  (7) Long-term Debt
  
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##### Table of Contents



Item 1. Financial Statements  (continued)
 AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements  (continued)
 Accounting for Derivative Investments and Hedging Activities,
 (8) Fair Value Measurements
 Fair
Value Measurements.
  Fair Value Measurements atReporting Date Using:Quoted Pricesin Active
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantMarch 31,
    
    
    Identical
    
    
    Observable
    
    
    Unobservable2008
    
    
    Assets
    
    
    Inputs
    
    
    InputsAssets:Supplemental retirement savings plan investments
    
    $
    4,194
    
    
    $
    
    
    
    $
    4,194
    
    
    $
    Liabilities:Supplemental retirement savings plan obligations
    
    $
    3,874
    
    
    $
    
    
    
    $
    3,874
    
    
    $
    Interest rate swap agreement
    
    
    3,966
    
    
    
    
    
    
    
    3,966
    
    
    
    Total liabilities
    
    $
    7,840
    
    
    $
    
    
    
    $
    7,840
    
    
    $
    
  (9) Income Taxes
 Accounting for Uncertainty in
Income Taxes  an interpretation of SFAS No. 109, Accounting for
Income Taxes.
 
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##### Table of Contents



Item 1. Financial Statements  (continued)
 AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements  (continued)
   (10) Commitments and Contingencies
    (11) Recent Accounting Pronouncements
 The Fair Value Option for Financial Assets and
Financial Liabilities.
 Noncontrolling Interests in Consolidated Financial
Statements, an amendment of Accounting Research Bulletin No. 51.
 Business Combinations, Business Combinations.
 
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##### Table of Contents



Item 1. Financial Statements  (continued)
 AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements  (continued)
  Disclosures about Derivative Instruments and Hedging
Activities
 (12) Subsequent Events
  
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
   
    
    the risk that payments from third-party payors, including government healthcare
programs, may decrease or not increase as our costs increase;
    
    our ability to maintain favorable relations with our physician partners;
    
    our ability to acquire and develop additional surgery centers on favorable terms;
    
    our ability to grow revenues by increasing procedure volume while maintaining our
operating margins and profitability at our existing centers;
    
    our ability to manage the growth in our business;
    
    our ability to obtain sufficient capital resources to complete acquisitions and develop
new surgery centers;
    
    our ability to compete for physician partners, managed care contracts, patients and
strategic relationships;
    
    risks associated with weather and other factors that may affect our surgery centers
located in Florida;
    
    risks associated with judicial, regulatory and legislative developments in New Jersey;
    
    our failure to comply with applicable laws and regulations;
    
    the risk of changes in legislation, regulations or regulatory interpretations that may
negatively affect us;
    
    the risk of becoming subject to federal and state investigation;
    
    the risk of regulatory changes that may obligate us to buy out interests of physicians
who are minority owners of our surgery centers;
    
    risks associated with our status as a general partner of limited partnerships;
    
    our legal responsibility to minority owners of our surgery centers, which may conflict
with our interests and prevent us from acting solely in our best interests;
    
    risks associated with the write-off of the impaired portion of intangible assets; and
    
    risks associated with the tax deductibility of goodwill.
 
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations  (continued)
 Overview
  Three Months EndedMarch 31,2008
    
    
    2007Centers in operation, beginning of period
    
    
    176
    
    
    
    156New center acquisitions placed in operation
    
    
    2
    
    
    
    7New development centers placed in operation
    
    
    
    
    
    
    Centers held for sale
    
    
    (1
    )
    
    
    Centers in operation, end of period
    
    
    177
    
    
    
    163Centers under development, end of period
    
    
    2
    
    
    
    5Development centers awaiting regulatory approval, end of period.
    
    
    1
    
    
    
    Average number of continuing centers in operation, during period
    
    
    177
    
    
    
    163Centers under letter of intent, end of period
    
    
    3
    
    
    
    3
   Sources of Revenues
    
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations  (continued)
  
    
    ASCs are paid based upon a percentage of the payments to hospital outpatient departments
pursuant to the hospital outpatient prospective payment system;
    
    a scheduled phase in of the revised rates over four years, beginning January 1, 2008;
and
    
    an annual increase in the ASC rates beginning in 2010 based on increases in the consumer
price index.
  Critical Accounting Policies
  Results of Operations
      
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations  (continued)
  Three Months EndedMarch 31,2008
    
    
    2007Revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Salaries and benefits
    
    
    29.2
    
    
    
    30.1Supply cost
    
    
    11.5
    
    
    
    11.2Other operating expenses
    
    
    20.8
    
    
    
    19.6Depreciation and amortization
    
    
    3.6
    
    
    
    3.7Total operating expenses
    
    
    65.1
    
    
    
    64.6Operating income
    
    
    34.9
    
    
    
    35.4Minority interest
    
    
    19.8
    
    
    
    20.0Interest expense, net of interest income
    
    
    1.9
    
    
    
    2.0Earnings from continuing operations before income taxes
    
    
    13.2
    
    
    
    13.4Income tax expense
    
    
    5.3
    
    
    
    5.3Net earnings from continuing operations
    
    
    7.9
    
    
    
    8.1Discontinued operations:Earnings from operations of discontinued interests in surgery centers, net of income
tax expense
    
    
    
    
    
    
    0.1Net earnings
    
    
    7.9
    %
    
    
    8.2
    %
  
    
    centers acquired or opened in 2007, which contributed $17.6 million of additional
revenues due to having a full period of operations in 2008;
    
    $3.5 million of revenue growth recognized by our 2008 same-center group, reflecting a 3%
increase, primarily as a result of procedure growth; and
    
    centers acquired and opened in 2008, which generated $1.3 million in revenues.
    
    
    centers acquired or opened during 2007, which resulted in an increase of $3.2 million in
other operating expenses;
    
    an increase of $2.1 million in other operating expenses at our 2008 same-center group
resulting primarily from additional procedure volume, general inflationary cost increases
as well as higher bad debt expense at a select number of centers; and
    
    centers acquired and opened during 2008, which resulted in an increase of $300,000 in
other operating expenses.
 
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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations  (continued)
     Accounting for
Uncertainty in Income Taxes  an interpretation of SFAS No. 109,
  Liquidity and Capital Resources
    
    
    $7.9 million for acquisitions of interests in ASCs;
    
    $3.9 million for new or replacement property at existing surgery centers; and
    
    $600,000 for surgery centers under development.
 
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations  (continued)
     Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities.
 Noncontrolling Interests in Consolidated Financial
Statements, an amendment of Accounting Research Bulletin No. 51.
 Business Combinations, Business Combinations.
 
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations  (continued)
  Disclosures about Derivative Instruments and Hedging
Activities
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 Item 4T. Controls and Procedures
  
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Part II
 
 Item 1 Legal Proceedings
  
 Item 1A Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  11
    
    Earnings Per Share31.1
    
    Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a)31.2
    
    Certification of Executive Vice President and Chief Financial Officer pursuant to
Rule 13a-14(a)32.1
    
    Section 1350 Certification
 
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Signature
  AMSURG CORP.Date: May 5, 2008
    By:
    /s/ Claire M. GulmiClaire M. GulmiExecutive Vice President and
Chief Financial Officer of the Company
(Principal Financial and Duly Authorized Officer) 
 20