UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2004

Commission File Number 000-22217

AMSURG CORP.

(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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [X]       No [  ]

     As of November 5, 2004 there were outstanding 29,255,844 shares of the registrant’s common stock, no par value.

Table of Contents to Form 10-Q for the Nine Months Ended September 30, 2004

i

Part I

Item 1. Financial Statements

AmSurg Corp.
Consolidated Balance Sheets
September 30, 2004 (unaudited) and December 31, 2003
(Dollars in thousands)

See accompanying notes to the unaudited consolidated financial statements.

1

Item 1. Financial Statements – (continued)

AmSurg Corp.
Consolidated Statements of Earnings (unaudited)
Three Months and Nine Months Ended September 30, 2004 and 2003
(In thousands, except earnings per share)

See accompanying notes to the unaudited consolidated financial statements.

2

Item 1. Financial Statements – (continued)

AmSurg Corp.
Consolidated Statements of Cash Flows (unaudited)
Nine Months Ended September 30, 2004 and 2003
(In thousands)

See accompanying notes to the unaudited consolidated financial statements.

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Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements

(1) Basis of Presentation

AmSurg Corp. (the “Company”), through its wholly owned subsidiaries, owns majority interests, primarily 51% and up to 65% in certain instances, in limited partnerships and limited liability companies (“LLCs”) which own and operate practice-based ambulatory surgery centers (“centers”). The Company also has majority ownership interests in other partnerships and LLCs formed to develop additional centers. The Company operates in one reportable business segment, the ownership and operation of ambulatory surgery centers. The consolidated financial statements include the accounts of the Company and its subsidiaries and the majority owned limited partnerships and LLCs in which the Company is the general partner or member. Consolidation of such partnerships and LLCs is necessary as the Company has 51% or more of the financial interest, is the general partner or majority member with all the duties, rights and responsibilities thereof, is responsible for the day-to-day management of the partnership or LLC and has control of the entities. The limited partner or minority member responsibilities are to supervise the delivery of medical services, with their rights being restricted to those that protect their financial interests, such as approval of the acquisition of significant assets or incurring debt which they, as physician limited partners or members, are required to guarantee on a pro rata basis based upon their respective ownership interests. Intercompany profits, transactions and balances have been eliminated. All subsidiaries and minority owners are herein referred to as partnerships and partners, respectively.

These financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and in accordance with Rule 10-01 of Regulation S-X. In the opinion of management, the unaudited interim financial statements contained in this report reflect all adjustments, consisting of only normal recurring accruals which are necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year.

The accompanying consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s 2003 Annual Report on Form 10-K.

(2) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The determination of contractual and bad debt allowances constitutes a significant estimate. Some of the factors considered by management in determining the amount of such allowances are the historical trends of the centers’ cash collections and contractual and bad debt write-offs, accounts receivable agings, established fee schedules, contracts with payors and procedure statistics. Accordingly, net accounts receivable at September 30, 2004 and December 31, 2003 reflect allowances for contractual adjustments of $33,629,000 and $32,447,000, respectively, and allowances for bad debt expense of $4,807,000 and $4,956,000, respectively.

(3) Revenue Recognition

Center revenues consist of billing for the use of the centers’ facilities (the “facility fee”) directly to the patient or third-party payor, and in limited instances, billing for anesthesia services. Such revenues are recognized when the related surgical procedures are performed. Revenues exclude any amounts billed for physicians’ surgical services, which are billed separately by the physicians to the patient or third-party payor.

Revenues from centers are recognized on the date of service, net of estimated contractual allowances from third-party payors including Medicare and Medicaid. During the nine months ended September 30, 2004 and 2003, approximately 38% and 41%, respectively, of the Company’s revenues were derived from the provision of services to patients covered under Medicare and Medicaid. Concentration of credit risk with respect to other payors is limited due to the large number of such payors.

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Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements — (continued)

(4) Stock-Based Compensation

The Company accounts for its stock option plan in accordance with the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. No stock-based employee compensation cost is reflected in net earnings for the three and nine months ended September 30, 2004 and 2003. Pro forma earnings and earnings per share, as if the fair value of all stock-based awards on the date of grant are recognized over the vesting period by applying the Black-Scholes option pricing model, is presented below (dollars in thousands, except per share amounts):

5

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements — (continued)

(5) Acquisitions and Dispositions

In the nine months ended September 30, 2004, the Company, through a wholly owned subsidiary, acquired majority interests in four physician practice-based surgery centers. The aggregate amount paid for the acquisitions and other acquisition costs was $26,453,000.

Effective August 1, 2004 the Company sold its interest in a surgery center for $12,500,000 in the form of a secured note receivable. The note is secured by a pledge of a 51% ownership interest in the center, is guaranteed by the physician partners at the center and is due in installments through 2009. The Company recognized an after-tax gain on the sale of its discontinued interest in the surgery center of $4,332,000 in the three months ended September 30, 2004.

During the nine months ended September 30, 2004, in three separate transactions, including the disposition occurring in August 2004, the Company sold its interests in four surgery centers and recognized a combined after tax gain of $5,573,000. The centers’ results of operations have been classified as discontinued operations in the current year and prior periods have been restated to reflect comparable presentations. Results of operations of the combined discontinued surgery centers for the three and nine months ended September 30, 2004 and 2003 are as follows (in thousands):

At December 31, 2003, the discontinued surgery centers had combined working capital of $1,518,000, total assets of $9,820,000 and net assets of $9,056,000.

(6) Intangible Assets

Amortizable intangible assets at September 30, 2004 and December 31, 2003 consisted of the following (in thousands):

Estimated amortization of intangible assets for the remainder of 2004 and the following four years is $90,000, $360,000, $310,000, $159,000 and $27,000, respectively.

6

Item 1. Financial Statements – (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements — (continued)

The changes in the carrying amount of goodwill for the three and nine months ended September 30, 2004 and 2003 are as follows (in thousands):

(7) Long-term Debt

The Company’s revolving credit facility, as amended on March 10, 2004, permits the Company to borrow up to $125,000,000 to finance its acquisitions and development projects and stock repurchase programs at an interest rate equal to, at the Company’s option, the prime rate or LIBOR plus a spread of 1.25% to 2.25% or a combination thereof, provides for a fee of 0.375% to 0.50% of unused commitments, prohibits the payment of dividends and contains certain covenants relating to the ratio of debt to net worth, operating performance and minimum net worth. At September 30, 2004, the Company had $73,000,000 outstanding under its revolving credit facility and was in compliance in all material respects with all covenants.

(8) Shareholders’ Equity

In February 2004, the Company’s Board of Directors approved a 3-for-2 stock split to be effected in the form of a 50% stock dividend. The new shares were distributed on March 24, 2004 to shareholders of record at the close of business on March 8, 2004. All prior period shares outstanding, earnings per share and prices per share have been adjusted to reflect the stock split.

Effective May 21, 2004, the Company’s Second Amended and Restated Charter was amended to increase its authorized shares of capital stock from 44,800,000 to 75,000,000 and to increase its authorized shares of common stock, no par value, from 39,800,000 to 70,000,000.

In the three months ended September 30, 2004, the Company completed its stock repurchase programs, which were authorized in February 2003 and March 2004, by acquiring and retiring 1,290,214 shares of its common stock for $28,757,000, at an average price per share of $22.29.

(9) Commitments and Contingencies

The Company and its partnerships and LLCs are insured with respect to medical malpractice risk on a claims-made basis. The Company also maintains insurance for general liability, director and officer liability and property. Certain policies are subject to deductibles. In addition to the insurance coverage provided, the Company indemnifies its officers and directors for actions taken on behalf of the Company and its partnerships and LLCs. Management is not aware of any claims against it or its partnerships or LLCs which would have a material effect on the Company’s consolidated financial position or consolidated results of operations.

The Company’s wholly owned subsidiaries that are general partners in the limited partnerships are responsible for all debts incurred but unpaid by the respective partnerships. As manager of the operations of the partnerships, the Company’s subsidiaries have the ability to limit potential liabilities by curtailing operations or taking other operating actions.

In the event of a change in current law which would prohibit the physicians’ current form of ownership in the partnerships or LLCs, the Company is obligated to purchase the physicians’ interests in the partnerships or LLCs.

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Item 1. Financial Statements — (continued)

AmSurg Corp.
Notes to the Unaudited Consolidated Financial Statements — (continued)

The purchase price to be paid in such event is determined by a predefined formula, as specified in the partnership or operating agreements.

(10) Subsequent Events

Subsequent to September 30, 2004 and through a wholly owned subsidiary, the Company acquired in three separate transactions majority ownership interests in three physician practice-based surgery centers for approximately $14,900,000.

(11) Recent Accounting Pronouncements

In December 2003, the Financial Accounting Standards Board issued Interpretation No. (“FIN”) 46 (revised 2003), “Consolidation of Variable Interest Entities.” This interpretation, which replaces FIN 46, addresses consolidation by business enterprises of variable interest entities (“VIEs”) when certain characteristics are present. This interpretation applies immediately to VIEs created after December 31, 2003, and to VIEs in which an enterprise obtains an interest after that date. Interests held in VIEs created on or before December 31, 2003 are not subject to the provisions of this interpretation until the end of the first reporting period after March 15, 2004 unless the VIE meets the definition of a special-purpose entity as defined by this statement. This interpretation must be applied for special purpose entities as of the first reporting period subsequent to December 15, 2003. As of December 31, 2003, the Company did not have any entities that were considered to be special purpose entities. The adoption of the remaining portion of the interpretation did not have a material effect on the Company’s consolidated financial position or consolidated results of operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report contains certain forward-looking statements (all statements other than with respect to historical fact) within the meaning of the federal securities laws, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve known and unknown risks and uncertainties including, without limitation, those described below, some of which are beyond our control. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate. Therefore there can be no assurance that the forward-looking statements included in this report will prove to be accurate. Actual results could differ materially and adversely from those contemplated by any forward-looking statement. In light of the significant risks and uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We undertake no obligation to publicly release any revisions to any forward-looking statements in this discussion to reflect events and circumstances occurring after the date hereof or to reflect unanticipated events.

Forward-looking statements, and our liquidity, financial condition and results of operations, may be affected by the following and the other risks and uncertainties discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2003 under the caption “Business – Risk Factors,” as well as other unknown risks and uncertainties:

•

our ability to enter into partnership or operating agreements for new practice-based ambulatory surgery centers;

•

our ability to identify suitable acquisition candidates and negotiate and close acquisition transactions, including centers under letter of intent;

•

our ability to obtain the necessary financing or capital on terms satisfactory to us in order to execute our expansion strategy;

•

our ability to generate and manage growth;

•

our ability to grow revenues at our existing centers;

•

our ability to contract with managed care payors on terms satisfactory to us for our existing centers and our centers that are currently under development;

•

our ability to obtain and retain appropriate licensing approvals for our existing centers and centers currently under development;

•

our ability to minimize start-up losses of our development centers;

•

the ability of our physician partners to recruit additional physicians to their practice;

•

our ability to maintain favorable relations with our physician partners;

•

changes in medical staff at our centers;

•

changes in the rate setting methodology, payment rates, payment policies and the list of covered surgical procedures for ambulatory surgery centers by the Centers for Medicare & Medicaid Services;

•

the risk of legislative or regulatory changes that would establish uniform rates for outpatient surgical services, regardless of setting;

•

risks associated with our status as a general partner of the limited partnerships;

•

our ability to maintain our technological capabilities in compliance with regulatory requirements;

•

risks associated with the valuation and tax deductibility of goodwill;

•

risks of legislative or regulatory changes that would prohibit physician ownership in ambulatory surgery centers; and

•

our ability to obtain the necessary financing to fund the purchase of our physician partners’ minority interests in the event of a regulatory change that would require such a purchase.

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (continued)

Overview

We develop, acquire and operate practice-based ambulatory surgery centers in partnership with physician practice groups. As of September 30, 2004, we owned a majority interest (51% or greater) in 119 surgery centers.

The following table presents the changes in the number of surgery centers in operation, under development and under letter of intent during the three and nine months ended September 30, 2004 and 2003. A center is deemed to be under development when a partnership or limited liability company has been formed with the physician group partner to develop the center.

Of the surgery centers in operation as of September 30, 2004, 71 centers perform gastrointestinal endoscopy procedures, 38 centers perform ophthalmology surgery procedures, five centers perform orthopedic procedures and five centers perform procedures in more than one specialty. The other partner or member in each partnership or limited liability company is generally an entity owned by physicians who perform procedures at the center. We intend to expand primarily through the development and acquisition of additional practice-based ambulatory surgery centers in targeted surgical specialties and through future same-center growth. Our growth targets for 2004 include the acquisition or development of 12 to 15 additional surgery centers, net of the disposition of four centers.

While we generally own 51% of the entities that own the surgery centers, and up to 65% in certain instances, our consolidated statements of earnings include 100% of the results of operations of the entities, reduced by the minority partners’ share of the net earnings or loss of the surgery center entities.

Sources of Revenues

Substantially all of our revenues are derived from facility fees charged for surgical procedures performed in our surgery centers. These fees vary depending on the procedure, but usually include all charges for operating room usage, special equipment usage, supplies, recovery room usage, nursing staff and medications. Facility fees do not include the charges of the patient’s surgeon, anesthesiologist or other attending physicians, which are billed directly by the physicians. Our revenues are recorded net of estimated contractual allowances from third-party payors.

Practice-based ambulatory surgery centers, such as those in which we own a majority interest, depend upon third-party reimbursement programs, including governmental and private insurance programs, to pay for services rendered to patients. The amount of payment a surgery center receives for its services may be adversely affected by market and cost factors, as well as other factors over which we have no control, including Medicare and Medicaid regulations and the cost containment and utilization decisions of third-party payors. We derived approximately 38% and 41% of our revenues in the nine months ended September 30, 2004 and 2003, respectively, from governmental

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (continued)

healthcare programs, primarily Medicare. The Medicare program currently pays ambulatory surgery centers in accordance with predetermined fee schedules. On October 1, 2003, ambulatory surgery centers received a 2% price increase, from Medicare. However, Medicare decreased its reimbursement rates 2% effective April 1, 2004.

Critical Accounting Policies

A summary of significant accounting policies is disclosed in Note 1 to our consolidated financial statements included in our 2003 Annual Report on Form 10-K. Our critical accounting policies are further described under the caption “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2003 Annual Report on Form 10-K. There have been no changes in the nature of our critical accounting policies or the application of those policies since December 31, 2003.

Results of Operations

Our revenues are directly related to the number of procedures performed at our surgery centers. Our overall growth in procedure volume is impacted directly by the increase in the number of surgery centers in operation and the growth in procedure volume at existing centers. We increase our number of surgery centers through both acquisitions and developments. Procedure growth at any existing center may result from additional contracts entered into with third-party payors, increased market share of the associated medical practice of our physician partners, new physician partners and/or scheduling and operating efficiencies gained at the surgery center. A significant measurement of how much our revenues grow from year to year for existing centers is our same-center revenue percentage. We define our same-center group each year as those centers which contain full year-to-date operations in both comparable reporting periods. Our 2004 same center group, comprised of 102 centers, had revenue growth of 2% and 5% respectively, in the three and nine months ended September 30, 2004.

In the three months ended September 30, 2004, revenue for 25 of our centers was adversely impacted by four major hurricanes in the Florida region during the months of August and September. Hurricane preparations and evacuations resulted in business disruption as scheduled surgical procedures were postponed or canceled. While experiencing no significant property damage, normal operations of these centers continued to be disrupted following landfall of the hurricanes due to power outages and dislocated patients, doctors and surgery center employees. Insurance recoveries from the business disruption of these centers will be nominal, if any. We estimate that as a result of the hurricanes, revenues were reduced by $2.0 million in the three and nine months ended September 30, 2004 and our same center revenue growth was adversely affected by approximately 3% and 1%, respectively, in the three and nine months ended September 30, 2004. While historically our quarter to quarter and year to year same-center revenue percentages have varied from 2% to 14%, our same-center revenue growth through the nine months ended September 30, 2004 was 5%.

Expenses directly related to procedures include clinical and administrative salaries and benefits, supply cost and other variable expenses such as linen cost, repair and maintenance of equipment, billing fees and bad debt expense. The majority of our corporate salary and benefits cost is more directly associated with the number of centers we own and manage and tends to grow in proportion to the growth of our centers in operation. Our centers and corporate offices also incur costs that are more fixed in nature, such as lease expense, insurance premiums, legal and accounting fees, property taxes, utilities and depreciation and amortization.

Surgery center profits are shared by our minority partners in proportion to their individual ownership percentages and reflected in the aggregate as minority interest. Our interest expense results primarily from our borrowings used to fund acquisition and development activity, as well as interest incurred on capital leases.

We file a consolidated federal income tax return and numerous state income tax returns with varying tax rates. Our income tax expense reflects the blending of these rates.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (continued)

The following table shows certain statements of earnings items expressed as a percentage of revenues for the three and nine months ended September 30, 2004 and 2003:

Revenues increased $9.8 million and $35.6 million, or 14% and 17%, to $81.9 million and $246.0 million in the three and nine months ended September 30, 2004, respectively, from $72.1 million and $210.4 million in the comparable 2003 periods, primarily due to the following factors:

•

Twelve additional continuing surgery centers in operation at September 30, 2004, primarily resulting from acquisitions, with an average number of additional continuing centers in operation of 11 throughout the first nine months of 2004 over the comparable 2003 period; and

•

Same-center revenue growth of 2% and 5% in the three and nine months ended September 30, 2004, respectively, resulting primarily from procedure growth (102 centers included in the same-center group).

Revenues were adversely impacted by approximately $2.0 million in the three and nine months ended September 30, 2004 due to the hurricanes as previously discussed.

The additional surgery centers in operation and same-center procedure growth resulted in a 12% and 16% increase in procedure volume in the three and nine months ended September 30, 2004, respectively, over the 2003 comparable periods. In order to appropriately staff our surgery centers for these additional procedures, as well as provide appropriate corporate management for the additional centers in operation, salaries and benefits increased by

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (continued)

11% to $22.1 million and 16% to $66.1 million in the three and nine months ended September 30, 2004, respectively, from $20.0 million and $57.0 million in the comparable 2003 periods.

Supply cost was $9.1 million and $27.7 million in the three and nine months ended September 30, 2004, respectively, an increase of $1.1 million and $3.9 million, or 14% and 17%, respectively, over supply cost in the comparable 2003 periods. These increases resulted primarily from the additional procedure volume.

Other operating expenses increased $1.3 million, or 9%, to $15.9 million in the three months ended September 30, 2004 over the comparable 2003 period and $4.6 million, or 11%, to $48.6 million in the nine months ended September 30, 2004 over the comparable 2003 period, primarily as a result of the additional surgery centers in operation and additional corporate overhead. Other operating expenses as a percentage of revenues decreased 0.9% and 1.0%, in the three and nine months ended September 30, 2004, respectively, primarily due to less bad debt expense and certain cost reductions in medical malpractice insurance and repair and maintenance compared to the comparable 2003 periods. We expect other operating expenses as a percentage of revenues in future periods to return to a level more consistent with historical periods.

We recognized a non-cash loss on a long-term note receivable of $1.1 million in the nine months ended September 30, 2004 due to an establishment of a reserve for an estimate of the uncollectible portion of a long-term note receivable. The note receivable originated from the sale of a physician practice in 1998 in connection with our exit from that line of business.

Depreciation and amortization expense increased $0.6 million and $1.6 million, or 22% and 19%, in the three and nine months ended September 30, 2004, respectively, over the comparable 2003 periods, primarily due to additional equipment and leasehold improvements at the additional surgery centers in operation.

We anticipate further increases in operating expenses in 2004 primarily due to additional start-up centers and acquired centers expected to be placed in operation, as well as insurance costs and scheduled property rent increases at our existing centers. Typically, a start-up center will incur start-up losses while under development and during its initial months of operations and will experience 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 the 12 months after a center opens. At September 30, 2004, we had 12 centers under development and six centers that had been open for less than one year.

Minority interest in earnings in the three and nine months ended September 30, 2004 increased $1.6 million and $7.9 million, or 11% and 19%, respectively, over the comparable 2003 periods, primarily as a result of minority partners’ interest in earnings at surgery centers recently added to operations and from increased same-center profitability. As a percentage of revenues, minority interest decreased during the three months ended September 30, 2004 due primarily to the sharing by our minority partners in lower profit margins at centers impacted by the hurricanes.

Interest expense increased $0.1 million and $0.3 million, or 21% and 26%, in the three and nine months ended September 30, 2004, respectively, from the comparable 2003 periods, due to additional long-term debt outstanding during the 2004 periods resulting from acquisition activity and our stock repurchase program (see – “Liquidity and Capital Resources”).

We recognized income tax expense of $5.8 million and $16.3 million in the three and nine months ended September 30, 2004, respectively, compared to $4.7 million and $13.5 million in the comparable 2003 periods. Our effective tax rate in all periods was 40% of net earnings from continuing operations before income taxes and differed from the federal statutory income tax rate of 35% primarily due to the impact of state income taxes. Because we continue to deduct goodwill amortization for tax purposes, a larger portion of our overall income tax expense is considered deferred income taxes, which results in a continuing increase in our deferred tax liability, which would be due in part or in whole upon the disposition of a portion or all of our surgery centers.

In August 2004, we sold our interest in a surgery center for $12,500,000 in the form of a secured note receivable. We recognized an after-tax gain on the sale of our discontinued interest in the surgery center of $4,332,000 in the three months ended September 30, 2004. During the nine months ended September 30, 2004, in three separate transactions, including the disposition occurring in August 2004, we sold our interests in four surgery centers and recognized a combined after tax gain of $5,573,000. The centers’ results of operations have been classified as

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (continued)

discontinued operations and prior periods have been restated. The net earnings derived from the operations of these centers were $0.1 million and $1.0 million for the three and nine months ended September 30, 2004, respectively, and $0.6 million and $1.7 million for the three and nine months ended September 30, 2003, respectively.

Liquidity and Capital Resources

At September 30, 2004, we had working capital of $47.5 million compared to $46.0 million at December 31, 2003. Operating activities for the nine months ended September 30, 2004 generated $41.6 million in cash flow from operations compared to $34.4 million in the comparable 2003 period. The increase in operating cash flow activity resulted primarily from an additional $2.6 million in net earnings, after adjusting for non-cash reconciling items, which resulted from additional centers in operation and growth in same-center revenue. In addition, changes in certain net working capital items during the nine months ended September 30, 2004 provided an additional $4.6 million more in operating cash flow over the comparable 2003 period. Cash and cash equivalents at September 30, 2004 and December 31, 2003 were $16.0 million and $14.3 million, respectively.

During the nine months ended September 30, 2004, we had total capital expenditures of $42.6 million, which included:

•

$26.5 million for acquisitions of interests in three practice-based ambulatory surgery centers;

•

$9.2 million for new or replacement property at existing surgery centers; and

•

$6.9 million for new start-up surgery centers.

We used our cash flow from operations to fund nearly 100% of our acquisition cash obligations and development activity, and we received approximately $1.1 million from capital contributions by our minority partners to fund their proportionate share of development activity. At September 30, 2004, we and our limited partnerships and limited liability companies had unfunded construction and equipment purchase commitments for centers under development or under renovation of approximately $2.4 million, which we intend to fund through additional borrowings of long-term debt, operating cash flow and capital contributions by minority partners.

In the first quarter of 2004, we received approximately $4.7 million from the sale of our interests in three surgery centers. Effective August 1, 2004, we sold our interest in a surgery center for $12.5 million in the form of a secured note receivable. The note is secured by a pledge of a 51% ownership interest in the center, is guaranteed by the physician partners at the center and is due in installments through 2009.

During the nine months ended September 30, 2004, we had net borrowings on long-term debt of $21.1 million. At September 30, 2004, we had $73.0 million outstanding under our revolving credit facility, which permits us to borrow up to $125.0 million to finance our acquisitions and development projects and stock repurchase program at a rate equal to, at our option, the prime rate or LIBOR plus a spread of 1.25% to 2.25%, depending upon borrowing levels. The loan agreement also provides for a fee of 0.375% to 0.50% of unused commitments. The loan agreement prohibits the payment of dividends and contains covenants relating to the ratio of debt to net worth, operating performance and minimum net worth. We were in compliance in all material respects with all covenants at September 30, 2004. Borrowings under the credit facility are due in March 2008 and are secured primarily by a pledge of the stock of our subsidiaries that serve as the general partners of our limited partnerships and our membership interests in the limited liability companies. We incurred approximately $0.1 million in deferred financing fees during the nine months ended September 30, 2004, primarily associated with amending our credit facility.

During the nine months ended September 30, 2004, we received approximately $4.1 million from the exercise of options and issuance of common stock under our employee stock option plans. The tax benefit received from the exercise of those options was approximately $1.6 million.

In the three months ended September 30, 2004, we completed our authorized stock repurchase programs, which were authorized in February 2003 and March 2004, by acquiring and retiring 1,290,214 shares of our common stock for $28.8 million, at an average price per share of $22.29.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (continued)

In February 2004, our Board of Directors approved a 3-for-2 stock split to be effected in the form of a 50% stock dividend. The new shares were distributed on March 24, 2004 to shareholders of record at the close of business on March 8, 2004.

Effective May 21, 2004, our Second Amended and Restated Charter was amended to increase our authorized shares of capital stock from 44,800,000 to 75,000,000 and to increase our authorized shares of common stock, no par value, from 39,800,000 to 70,000,000.

Recent Accounting Pronouncements

In December 2003, the Financial Accounting Standards Board issued Interpretation No., or FIN, 46 (revised 2003), “Consolidation of Variable Interest Entities.” This interpretation, which replaces FIN 46, addresses consolidation by business enterprises of variable interest entities when certain characteristics are present. This interpretation applies immediately to variable interest entities created after December 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. Interests held in variable interest entities created on or before December 31, 2003 are not subject to the provisions of this interpretation until the end of the first reporting period after March 15, 2004 unless the variable interest entities meet the definition of a special-purpose entity as defined by this statement. This interpretation must be applied for special purpose entities as of the first reporting period subsequent to December 15, 2003. As of December 31, 2003, we did not have any entities that were considered to be special purpose entities. The adoption of the remaining portion of this interpretation did not have a material effect on our consolidated financial position or consolidated results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to market risk from exposure to changes in interest rates based on our financing, investing and cash management activities. We utilize a balanced mix of maturities along with both fixed-rate and variable-rate debt to manage our exposures to changes in interest rates. Our debt instruments are primarily indexed to the prime rate or LIBOR. Although there can be no assurances that interest rates will not change significantly, we do not expect changes in interest rates to have a material effect on our income or cash flows in 2004.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our chief executive officer and chief financial officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or Exchange Act) as of September 30, 2004. Based on that evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures effectively and timely provide them with material information relating to our company and its consolidated subsidiaries required to be disclosed in the reports we file under the Exchange Act.

Changes in Internal Control Over Financial Reporting

During the period covered by this report, there has been no change in our internal control over financial reporting that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

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Part II

Item 1. Legal Proceedings.

     Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(1)

On February 18, 2003 and March 31, 2004, we announced that our board of directors had authorized stock repurchase programs, each program allowing for the purchase of up to $25,000,000 of our outstanding common stock over an 18 month period. We purchased $21,243,000 of our outstanding common stock in 2003 under the program announced in February 2003. Prior to its expiration in August 2004, we purchased the remaining $3,757,000 of our outstanding common stock pursuant to the 2003 program. We purchased $25,000,000 of outstanding common stock pursuant to the 2004 program in August 2004 and September 2004. Both repurchase programs are now complete.

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.

	11		Earnings Per Share
	31.1		Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a)
	31.2		Certification of Senior Vice President, Chief Financial Officer and Secretary pursuant to Rule 13a-14(a)
	32.1		Section 1350 Certification

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AMSURG CORP.
Date: November 8, 2004	By:	/s/ Claire M. Gulmi
		Claire M. Gulmi
		Senior Vice President, Chief Financial Officer and Secretary (Principal Financial and Duly Authorized Officer)

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