##### 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
 For the Quarterly Period Ended March 31, 2007
 Commission
File Number 000-22217
 AMSURG CORP.
 (Exact Name of Registrant as Specified in its Charter)
 Tennessee(State or other jurisdiction of 
incorporation or organization)
    
    62-1493316(I.R.S. Employer
Identification No.)20 Burton Hills Boulevard 
Nashville, TN
    
    37215(Zip code)(Address of principal executive offices)
 (615) 665-1283  (Registrants Telephone Number, Including Area Code)
  þ o
  þ o o
  o þ




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Table of Contents to Form 10-Q for the Three Months Ended March 31, 2007
  
 Part IItem 1.
    
    Financial Statements
    
    1Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    10Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    16Item 4.
    
    Controls and Procedures
    
    17Part IIItem 1.
    
    Legal Proceedings
    
    17Item 1A.
    
    Risk Factors
    
    17Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    17Item 3.
    
    Defaults Upon Senior Securities
    
    17Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    17Item 5.
    
    Other Information
    
    17Item 6.
    
    Exhibits
    
    17Signature
    
    
    
    18Ex-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 & CFO
  i




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##### Table of Contents



Part I
 
 Item 1. Financial Statements
 AmSurg Corp.
Consolidated Balance Sheets
March 31, 2007 (unaudited) and December 31, 2006
(Dollars in thousands)
 March 31,
    
    December 31,2007
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    22,216
    
    
    $
    20,083Accounts receivable, net of allowance of $7,063 and $6,628, respectively
    
    
    55,579
    
    
    
    51,546Supplies inventory
    
    
    6,143
    
    
    
    6,183Deferred income taxes
    
    
    1,429
    
    
    
    915Prepaid and other current assets
    
    
    16,187
    
    
    
    15,276Total current assets
    
    
    101,554
    
    
    
    94,003Long-term receivables and other assets
    
    
    4,145
    
    
    
    4,091Property and equipment, net
    
    
    91,927
    
    
    
    89,175Intangible assets, net
    
    
    444,752
    
    
    
    402,763Total assets
    
    $
    642,378
    
    
    $
    590,032Liabilities and Shareholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    3,632
    
    
    $
    3,367Accounts payable
    
    
    9,400
    
    
    
    11,098Accrued salaries and benefits
    
    
    11,333
    
    
    
    11,534Other accrued liabilities
    
    
    1,877
    
    
    
    1,413Current income taxes payable
    
    
    3,587
    
    
    
    Total current liabilities
    
    
    29,829
    
    
    
    27,412Long-term debt
    
    
    148,910
    
    
    
    123,948Deferred income taxes
    
    
    36,922
    
    
    
    39,350Other long-term liabilities
    
    
    11,695
    
    
    
    3,873Minority interest
    
    
    56,534
    
    
    
    52,341Preferred 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, 30,269,457
and 29,933,932 shares outstanding, respectively
    
    
    148,938
    
    
    
    143,077Accumulated other comprehensive income, net of income taxes
    
    
    (594
    )
    
    
    (470
    )Retained earnings, net of ($634) cumulative adjustment to beginning
retained earnings on January 1, 2007 for change in accounting for
uncertainty in income taxes
    
    
    210,144
    
    
    
    200,501Total shareholders equity
    
    
    358,488
    
    
    
    343,108Total liabilities and shareholders equity
    
    $
    642,378
    
    
    $
    590,032
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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 31,2007
    
    
    2006Revenues
    
    $
    127,615
    
    
    $
    112,609Operating expenses:Salaries and benefits
    
    
    38,412
    
    
    
    34,516Supply cost
    
    
    14,626
    
    
    
    12,779Other operating expenses
    
    
    24,924
    
    
    
    21,468Depreciation and amortization
    
    
    4,706
    
    
    
    4,141Total operating expenses
    
    
    82,668
    
    
    
    72,904Operating income
    
    
    44,947
    
    
    
    39,705Minority interest
    
    
    25,409
    
    
    
    23,693Interest expense, net of interest income
    
    
    2,487
    
    
    
    1,699Earnings from continuing operations before income taxes
    
    
    17,051
    
    
    
    14,313Income tax expense
    
    
    6,774
    
    
    
    5,611Net earnings from continuing operations
    
    
    10,277
    
    
    
    8,702Discontinued operations:Earnings from operations of discontinued interests in surgery
centers, net of income tax expense
    
    
    
    
    
    
    23Net earnings
    
    $
    10,277
    
    
    $
    8,725Basic earnings per common share:Net earnings from continuing operations
    
    $
    0.34
    
    
    $
    0.29Net earnings
    
    $
    0.34
    
    
    $
    0.29Diluted earnings per common share:Net earnings from continuing operations
    
    $
    0.34
    
    
    $
    0.29Net earnings
    
    $
    0.34
    
    
    $
    0.29Weighted average number of shares and share equivalents outstanding:Basic
    
    
    30,046
    
    
    
    29,693Diluted
    
    
    30,505
    
    
    
    30,219
  2




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Item 1. Financial Statements -(continued)
 AmSurg Corp.
Consolidated Statements of Cash Flows (unaudited)
(In thousands
 Three Months EndedMarch 31,2007
    
    2006Cash flows from operating activities:Net earnings
    
    $
    10,277
    
    
    $
    8,725Adjustments to reconcile net earnings to net cash flows provided by
operating activities:Minority interest
    
    
    25,409
    
    
    
    23,693Distributions to minority partners
    
    
    (22,579
    )
    
    
    (20,449
    )Share-based compensation
    
    
    1,078
    
    
    
    2,574Depreciation and amortization
    
    
    4,706
    
    
    
    4,141Deferred income taxes
    
    
    1,731
    
    
    
    614Excess tax benefit from share-based compensation
    
    
    (880
    )
    
    
    (35
    )Increase (decrease) in cash and cash equivalents, net of
effects of acquisitions and dispositions, due to changes in:Accounts receivable, net
    
    
    (2,301
    )
    
    
    (948
    )Supplies inventory
    
    
    178
    
    
    
    (150
    )Prepaid and other current assets
    
    
    (1,070
    )
    
    
    33Accounts payable
    
    
    (2,530
    )
    
    
    (1,419
    )Accrued expenses and other liabilities
    
    
    5,224
    
    
    
    4,654Other, net
    
    
    (157
    )
    
    
    (92
    )Net cash flows provided by operating activities
    
    
    19,086
    
    
    
    21,341Cash flows from investing activities:Acquisition of interests in surgery centers
    
    
    (42,213
    )
    
    
    (20,801
    )Acquisition of property and equipment
    
    
    (4,149
    )
    
    
    (5,345
    )Decrease in long-term receivables
    
    
    431
    
    
    
    662Net cash flows used in investing activities
    
    
    (45,931
    )
    
    
    (25,484
    )Cash flows from financing activities:Proceeds from long-term borrowings
    
    
    43,701
    
    
    
    40,743Repayment on long-term borrowings
    
    
    (19,533
    )
    
    
    (36,660
    )Proceeds from issuance of common stock upon exercise of stock options
    
    
    3,903
    
    
    
    183Proceeds from capital contributions by minority partners
    
    
    32
    
    
    
    65Excess tax benefit from share-based compensation
    
    
    880
    
    
    
    35Financing cost incurred
    
    
    (5
    )
    
    
    Net cash flows provided by financing activities
    
    
    28,978
    
    
    
    4,366Net increase in cash and cash equivalents
    
    
    2,133
    
    
    
    223Cash and cash equivalents, beginning of period
    
    
    20,083
    
    
    
    20,496Cash and cash equivalents, end of period
    
    $
    22,216
    
    
    $
    20,719
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Item 1. Financial Statements -(continued)
 AmSurg Corp.  Notes to the Unaudited Consolidated Financial Statements
 (1) Basis of Presentation
       (2) Use of Estimates
  4




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Item 1. Financial Statements -(continued)
 AmSurg Corp.  Notes to the Unaudited Consolidated Financial Statements -(continued)
  (3) Revenue Recognition
  .
 (4) Share-Based Compensation
  WeightedAverageWeighted
    
    RemainingNumber
    
    Average
    
    Contractualof
    
    Exercise
    
    TermShares
    
    Price
    
    (in years)Outstanding at December 31, 2006
    
    
    4,589,532
    
    
    $
    20.46
    
    
    
    7.1Options granted
    
    
    360,293
    
    
    
    22.81Options exercised with total intrinsic value of $2,373,000
    
    
    (260,575
    )
    
    
    14.98Options terminated
    
    
    (33,008
    )
    
    
    23.74Outstanding at March 31, 2007 with total intrinsic value
of $17,927,000
    
    
    4,656,242
    
    
    $
    20.93
    
    
    
    7.2Exercisable at March 31, 2007 with total intrinsic value
of $14,996,000
    
    
    2,923,294
    
    
    $
    19.59
    
    
    
    6.3
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Item 1. Financial Statements -(continued)
 AmSurg Corp.  Notes to the Unaudited Consolidated Financial Statements -(continued)
  Share-Based Payment (Revised 2004).
  Three Months EndedMarch 31,2007
    
    2006Applied assumptions:Weighted average fair value of options at the date of grant
    
    $
    8.61
    
    
    $
    7.62Dividends
    
    
    
    
    
    
    Expected term/life of options in years
    
    
    4.8
    
    
    
    4.0Forfeiture rate
    
    
    0.1
    %
    
    
    11.0
    %Average risk-free interest rate
    
    
    4.8
    %
    
    
    4.6
    %Volatility rate
    
    
    34.4
    %
    
    
    37.8
    %
  (5) Acquisitions and Dispositions
   6




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Item 1. Financial Statements -(continued)
 AmSurg Corp.  Notes to the Unaudited Consolidated Financial Statements -(continued)
  ThreeMonthsEndedMarch 31,2006Revenues
    
    $
    1,025Earnings before income
taxes
    
    
    37Net earnings
    
    
    23
 (6) Intangible Assets
  March 31, 2007
    
    December 31, 2006Gross
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    Accumulated
    
    
    
    
    
    Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Net
    
    Amount
    
    Amortization
    
    NetDeferred financing cost
    
    $
    2,508
    
    
    $
    1,558
    
    
    $
    950
    
    
    $
    2,503
    
    
    $
    1,503
    
    
    $
    1,000Agreements not to compete
    
    
    1,000
    
    
    
    1,000
    
    
    
    
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    Total amortizable
intangible assets
    
    $
    3,508
    
    
    $
    2,558
    
    
    $
    950
    
    
    $
    3,503
    
    
    $
    2,503
    
    
    $
    1,000
   Three Months EndedMarch 31,2007
    
    
    2006Balance, beginning of period
    
    $
    397,147
    
    
    $
    347,424Goodwill acquired during
period
    
    
    41,609
    
    
    
    23,957Balance, end of period
    
    $
    438,756
    
    
    $
    371,381
  7




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Item 1. Financial Statements -(continued)
 AmSurg Corp.  Notes to the Unaudited Consolidated Financial Statements -(continued)
 (7) Long-term Debt
  Accounting for Derivative
Investments and Hedging Activities,
 (8) Income Taxes
 Accounting for Uncertainty in Income Taxes  an interpretation of SFAS No. 109, Accounting for Income Taxes.
  (9) Commitments and Contingencies
  8




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Item 1. Financial Statements -(continued)
 AmSurg Corp.  Notes to the Unaudited Consolidated Financial Statements -(continued)
    (10) Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities.
 (11) Subsequent Event
  9




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
   
    
    changes in the reimbursement system for outpatient surgical procedures under the
Medicare program;
    
    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 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;
    
    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 31,2007
    
    2006Centers in operation, beginning of period
    
    
    156
    
    
    
    149New center acquisitions placed in operation
    
    
    7
    
    
    
    3New development centers placed in operation
    
    
    
    
    
    
    1Centers in operation, end of period
    
    
    163
    
    
    
    153Centers under development, end of period
    
    
    5
    
    
    
    4Development centers awaiting regulatory approval, end of period
    
    
    
    
    
    
    3Average number of continuing centers in operation, during
period
    
    
    163
    
    
    
    150Centers under letter of intent, end of period
    
    
    3
    
    
    
    2
   Sources of Revenues
    11




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations -(continued)
   
    
    CMSs estimate that the revised ASC rates would be 62% of the corresponding rates of the
hospital outpatient prospective payment system;
    
    a scheduled phase in of the revised rates over two years, beginning January 1, 2008;
    
    an annual increase in the ASC rates beginning in 2010 based on the consumer price index; and
    
    an expansion of the list of procedures that can be performed in an ASC.
   Critical Accounting Policies
  Results of Operations
    12




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations -(continued)
    Three Months EndedMarch 31,2007
    
    2006Revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Salaries and benefits
    
    
    30.1
    
    
    
    30.7Supply cost
    
    
    11.5
    
    
    
    11.3Other operating expenses
    
    
    19.5
    
    
    
    19.0Depreciation and amortization
    
    
    3.7
    
    
    
    3.7Total operating expenses
    
    
    64.8
    
    
    
    64.7Operating income
    
    
    35.2
    
    
    
    35.3Minority interest
    
    
    19.9
    
    
    
    21.0Interest expense, net of interest income
    
    
    1.9
    
    
    
    1.6Earnings from continuing operations before income taxes
    
    
    13.4
    
    
    
    12.7Income tax expense
    
    
    5.3
    
    
    
    5.0Net earnings from continuing operations
    
    
    8.1
    
    
    
    7.7Discontinued operations:Earnings from operations of discontinued interests in
surgery centers, net of income tax expense
    
    
    
    
    
    
    Net earnings
    
    
    8.1
    %
    
    
    7.7
    %
  
    
    nine centers acquired or opened in the remainder of 2006, which contributed $7.6 million
of additional revenues due to having a full period of operations in the three months ended
March 31, 2007;
    
    seven centers acquired in the three months ended March 31, 2007, which generated $5.4
million in revenues; and
    
    $2.0 million of revenue growth by our 2007 same-center group, reflecting a 3% increase,
primarily as a result of procedure growth.
   13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations -(continued)
    
    
    nine centers acquired or opened during the remainder of 2006, which resulted in an
increase of $1.2 million in other operating expenses due to having a full period of
operations in the three months ended March 31, 2007;
    
    an increase of $1.0 million in other operating expenses from our 2007 same-center group
in the three months ended March 31, 2007, resulting primarily from additional procedure
volume and general inflationary cost increases; and
    
    seven centers acquired during the three months ended March 31, 2007, which resulted in
an increase of $900,000 in other operating expenses.
     Accounting for
Uncertainty in Income Taxes  an interpretation of SFAS No. 109,
 14




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations -(continued)
   Liquidity and Capital Resources
    
    
    $42.2 million for acquisitions of interests in practice-based ASCs;
    
    $3.4 million for new or replacement property at existing surgery centers, including
$160,000 in new capital leases; and
    
    $1.0 million for surgery centers under development.
    15




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations -(continued)
    Recent Accounting Pronouncements
 Accounting for
Income Taxes.
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities.
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  16




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Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 Part II
 
 Item 1.
    
    Legal Proceedings.Not applicable.
 
 Item 1A.
    
    Risk Factors.Not applicable.
 
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.Not applicable.
 
 Item 3.
    
    Defaults Upon Senior Securities.Not applicable.
 
 Item 4.
    
    Submission of Matters to a Vote of Security Holders.Not applicable.
 
 Item 5.
    
    Other Information.Not applicable.
 
 Item 6.
    
    Exhibits.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
 17




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Signature
  AMSURG CORP.Date: May 4, 2007
    By:
    /s/ Claire M. GulmiClaire M. GulmiExecutive Vice President and
Chief Financial Officer of the Company
(Principal Financial and Duly Authorized Officer) 18