<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR
--- 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 1-10442
FIRST FINANCIAL MANAGEMENT
CORPORATION
(Exact name of Registrant as specified in its charter)
GEORGIA 58-1107864
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 CORPORATE SQUARE, SUITE 700, ATLANTA, GEORGIA 30329
(Address of principal executive offices)
(404) 321-0120
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which registered
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COMMON STOCK, $.10 PAR VALUE NEW YORK STOCK EXCHANGE
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Securities registered pursuant to Section 12(g) of the Act: None
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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/.
The aggregate market value of the Common Stock of the Registrant held by
nonaffiliates as of January 31, 1994: $3,470,335,962
Number of shares of Common Stock outstanding as of January 31, 1994:
59,954,212 shares
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<CAPTION>
DOCUMENTS INCORPORATED BY REFERENCE PART
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<S> <C>
Proxy Statement for the Annual Meeting of Shareholders
to be held on April 27, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III
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PART I
ITEM 1. BUSINESS.
First Financial Management Corporation ("FFMC" or the "Company") provides
a variety of information services to a diverse customer base. FFMC was
incorporated as a Georgia corporation in 1971. Since becoming a public company
in 1983, the Company has significantly expanded its customer base and range of
services through internal growth and the completion of numerous acquisitions.
STRATEGIC TRANSACTIONS
FFMC periodically conducts a strategic reevaluation of its businesses,
reviewing overall trends and developments in relation to its business
investments and industry concentrations. These strategic reviews have resulted
in numerous business acquisitions since 1987 that have broadened the Company's
service offerings, and in dispositions in 1992 of business units no longer
involved in FFMC's strategic direction.
On May 31, 1989, FFMC acquired Georgia Federal Bank, FSB and its
subsidiaries ("Georgia Federal"), including its consumer finance subsidiary,
First Family Financial Services ("First Family"). This acquisition was
completed specifically to ensure that the Company's merchant credit card
processing business had access to the payment system through Georgia Federal's
sponsorship in the VISA and MasterCard networks.
During 1992, the Company implemented alternative measures to provide
the Company's merchant credit card processing business continued access to the
payment system, including a plan to form a credit card bank. These
arrangements provided FFMC the flexibility to sell Georgia Federal, and FFMC
entered into a definitive agreement to sell Georgia Federal on December 21,
1992. FFMC operated this business until the sale was consummated on June 12,
1993, although the agreement provided that all 1993 results accrued to the
purchaser. FFMC also sold First Family on November 10, 1992.
During the period of FFMC's ownership of Georgia Federal and First
Family, these combined businesses comprised a separate segment ("Financial
Services") for purposes of the Company's financial reporting. Georgia Federal
was the largest thrift institution in the State of Georgia with assets of over
$4 billion, and First Family was a regional consumer finance company with $600
million in assets and offices in eight southeastern states. These businesses
have been presented as discontinued operations in FFMC's consolidated financial
statements.
On December 31, 1992, FFMC entered into a definitive agreement to sell
Basis Information Technologies, Inc. ("Basis"), FFMC's original core business
unit that provided data processing services to financial institutions. FFMC
operated this business until the sale was consummated on February 10, 1993,
although the agreement provided that all 1993 results accrued to the purchaser.
During the fourth quarter of 1992, the Company discontinued software
development for a major Basis product line in connection with the settlement of
litigation with a vendor. As a part of its overall strategic reevaluation,
FFMC's management determined that additional investments in its financial
institutions processing business did not fit the Company's overall strategic
direction and decided to pursue the sale of Basis. Basis was included in
FFMC's Information Services segment for financial reporting purposes.
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CONTINUING OPERATIONS
The continuing operations of the Company consist of its businesses
previously presented as the Information Services segment together with the
corporate entity. FFMC's service and related product offerings currently
include merchant credit card authorization, processing and settlement; check
guarantee and verification; debt collection and accounts receivable management;
data imaging, micrographics and electronic data base management; health care
claims processing and integrated management services; and the development and
marketing of data communication and information processing systems, including
in-store marketing programs and systems for supermarkets.
FFMC operates in a single business segment, providing a vertically
integrated set of data processing, storage and management services for the
capture, manipulation, and distribution of information to a variety of
commercial and governmental customers. Similarities exist among these
businesses in the methods of providing services, in the customers served, and
in the marketing activities utilized to obtain new customers. In addition,
FFMC continues to pursue further integration of its services and products to
gain competitive advantages. The Company's continuing operations encompass the
areas of merchant services, health care services, and data imaging services.
Merchant Services
FFMC offers merchant services primarily through four of its operating
units: National Bancard Corporation ("NaBANCO") - credit card authorization,
processing and settlement services; TeleCheck Services, Inc. ("TeleCheck") -
check verification and guarantee services; Nationwide Credit, Inc.
("Nationwide") - debt collection and accounts receivable management services;
and MicroBilt Corporation ("MicroBilt") - the development and marketing of data
communication and information processing systems. Services are provided to
approximately 250,000 customers in all 50 states, the Caribbean and Canada
through 56 locations with 4,000 employees. The percentages of FFMC's revenues
from continuing operations contributed by merchant services were 70%, 60%, and
67%, respectively, during the years ended December 31, 1993, 1992 and 1991.
Merchant services' business is not seasonal, except that its revenues,
earnings and margins are favorably affected in the fourth quarter, primarily by
increased merchant credit card and check volume during the holiday season.
During 1993, FFMC continued its strategy of cross-selling the various
product and service offerings within its merchant services area. MicroBilt's
point-of-service processing systems were a factor in the decision of several
national retail companies to sign merchant processing agreements with NaBANCO.
NaBANCO is the largest full service provider of merchant credit card
authorization, processing, and settlement services in the United States,
providing these services for merchants with respect to transactions in which
payment is made through bank cards (primarily VISA and MasterCard) and certain
other credit cards. Fees for credit card authorization and settlement services
are generally based on the dollar volume of transactions processed. Its
processing centers are located in Sunrise, Florida and Melville, New York.
These operations support electronic cash registers and dial up point-of-sale
authorization and draft capture terminals. Approximately $54 billion in
merchant credit card transactions were handled in 1993, compared with $43
billion in 1992 and $34 billion in 1991.
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Over 95% of the credit card authorizations by NaBANCO are performed
electronically, compared with approximately 70% of all credit card transactions
industry-wide. Automated response units are utilized at both the New York and
Florida processing centers. This technology allows for the automated
recognition of communication via voice or touch tone telephones, thus reducing
the labor intensity of a large portion of NaBANCO's card authorization
services. Also, voice authorization services are provided via the Florida
center to merchants without electronic authorization capabilities and in the
event that electronic authorization capabilities are interrupted. Essentially
all of the electronic authorization volume can be handled through either of the
two processing centers, enabling transactions to be load-shared between centers
and ensuring availability of processing facilities. This capability provides
virtually complete availability for electronic authorization services with
electronic responses to customers usually within eight seconds.
Starting in June 1993, NaBANCO began providing most of its services
under an agreement as agent for and in conjunction with First Financial Bank
("FFB"), FFMC's credit card bank formed for the primary purpose of supporting
the Company's merchant services activities. FFB replaced Georgia Federal as
NaBANCO's primary sponsoring member bank in the VISA and MasterCard systems as
required by their rules. NaBANCO also provides services as agent for and in
conjunction with other sponsoring member banks and maintains ongoing
relationships with these and other banks to assist in marketing and delivering
NaBANCO's services to these banks' merchant customers.
During 1993, NaBANCO continued its focus on new account growth among
regional and local merchants through its commission-based sales staff that
operates in a network of sales offices throughout the United States. NaBANCO
also acquired merchant portfolios from the Bank of New York and Brown Foreman
Enterprises in 1993.
TeleCheck became a part of merchant services through the acquisition in
July 1992 of TeleCheck Services, Inc. ("TSI") and its principal franchisee,
Payment Services Company - U.S. ("PSC"), by FFMC. TSI was the owner and
franchisor of the TeleCheck system, and provided these services along with
eleven independent franchises (including PSC) operating in geographically-
defined territories. PSC started in 1976 as the owner of the Houston TeleCheck
franchise, and grew its volume and service offerings through internal growth
and the acquisition of additional TeleCheck franchises and other related
businesses. During 1993, FFMC continued the consolidation of these two
organizations that was initiated during 1992. This consolidation centralized
TeleCheck's operations in Houston and converted the former TSI Denver
organization into an operating facility.
The TeleCheck system provides check acceptance services through
TeleCheck or independent franchises to retail merchants throughout the United
States, Canada, Australia, and New Zealand using large consumer data bases and
proprietary risk management systems operated under the "TeleCheck" trademark.
The TeleCheck system was founded in 1964 to provide services to merchants who
desired to pass the risk of bad checks to a third party, and is now one of the
largest check acceptance services in the world. Over $24 billion in checks
were authorized in 1993, compared with approximately $15 billion in checks
authorized in 1992.
TeleCheck provides check guarantee services, buying the approved check
at face value from the merchant if it is subsequently dishonored, up to a
pre-established warranty maximum. TeleCheck's check verification service helps
merchants reduce bad check write-offs and control the costs of check acceptance
by providing access to payment data bases and activity monitoring systems.
These services allow merchants to maintain a liberal check acceptance program
to increase sales and profits. Fees charged to
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customers for check verification and guarantee services are generally based on
the dollar volume of transactions processed.
During 1993, FFMC acquired five entities that operated TeleCheck
franchises, four in the United States and one in the Commonwealth of Puerto
Rico. These acquisitions gave the Company a 97% share of the domestic
TeleCheck system volume by year-end. In addition, TeleCheck focused its 1993
marketing efforts toward the signing of new merchant customers through its
internal sales organization.
Nationwide provides debt collection and accounts receivable management
services nationally to a wide variety of customers including retailers, health
care providers, financial institutions and the federal government and its
agencies through seven collection offices located throughout the United States.
Fees charged to customers are generally based on the dollar amount of funds
collected. Nationwide's debt collection and accounts receivable management
services are performed with enhanced technological advancements, including
on-line skiptracing capabilities and paperless collection systems, whereby its
customers' transactions are managed through a collector's computer terminal
linked to a central mainframe computer. During 1993, Nationwide continued to
enhance the productivity of its collectors through system enhancements, and
also focused on the successful renewal of several significant collection
contracts with agencies of the federal government.
MicroBilt serves as FFMC's research and development arm, particularly
in the merchant services area, working to develop technological solutions to
enhance the Company's product offerings. MicroBilt develops, markets, and
supports data capture, communications and distribution systems to
multi-location customers including financial institutions, retailers, health
care providers, pharmaceutical providers and restaurants. These systems are low
cost, easy to use data communication systems suited to a wide range of
industries that require data transmissions to and from numerous remote
locations. MicroBilt specializes in point of sale data communication
applications through the sale of systems and network design. MicroBilt's
systems integrate proprietary software with a range of hardware platforms which
are distinguished by their application-specific design and common product
framework. MicroBilt targets application-specific systems to selected
industries. Its systems typically replace the use of mail, voice telephone and
less efficient computer systems to send and receive information. Revenues are
generated from both sales of systems and support services.
During 1993, MicroBilt continued its delivery of point-of-sale
equipment to merchant customers of NaBANCO, and began development of
check-reading terminals targeted for TeleCheck's merchant customers. Also in
1993, MicroBilt strengthened its point-of-sale offerings by assimilating the
acquisition of Techpoint, Inc., a provider of retail systems.
FFMC completed its merger with International Banking Technologies,
Inc. ("IBT") in August 1993, and began the consolidation of IBT under the
MicroBilt organization during the fourth quarter. IBT was formed in 1985 and
is a leader in developing in-store branch banking programs in supermarkets.
IBT provides a comprehensive array of services for its financial institution
customers, with the objective of developing a profitable retail financial
services outlet while achieving a value-added arrangement to the food retailer.
IBT derives its revenues from fees earned during the design and construction
phases, and also from the on-going management of the in-store program between
the financial institution and the supermarket.
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Health Care Services
FFMC's health care services are provided through its subsidiaries
FIRST HEALTH Services and FIRST HEALTH Strategies (collectively referred to as
"FIRST HEALTH"). Services are provided to approximately 1,500 customers
through 55 locations across the United States that employ 4,500 persons. Over
330 million health care claims totalling approximately $27 billion are
processed annually on systems operated or developed and supported by FIRST
HEALTH. The percentages of FFMC's revenues from continuing operations provided
by health care services were 17%, 15%, and 6%, respectively, for the years
ended December 31, 1993, 1992 and 1991.
FIRST HEALTH Services is one of the largest providers of transaction
processing and management services to governmental agencies and private and
public third party payors. These services include processing for Medicaid and
other state programs, pharmaceutical claims processing, drug utilization review
services, and management services for mental health, substance abuse, and
preventative care programs.
Services for Medicaid programs are provided through its centers or
management of its customers' facilities. Central to its claims processing
business is its Medicaid Management Information System ("MMIS") which has been
certified by the federal government as meeting the requirements of a full range
Medicaid fiscal agent system. The MMIS system is a very large and flexible
information management system, the use of which is not limited to the Medicaid
market.
FFMC completed the acquisition of ALTA Health Strategies, Inc., since
renamed FIRST HEALTH Strategies, on April 1, 1992. One of the nation's largest
processors of private sector health care claims, its services include claims
administration, utilization management, provider networks, insurance brokerage
and data analysis and reporting. Its services are designed to help control
employer health care costs and to monitor the quality of health care provided.
FIRST HEALTH Strategies markets its services principally to employers with
self-funded group health benefit plans and to employers with insured plans
which are seeking health care management alternatives. The acquisition of
FIRST HEALTH Strategies significantly broadened FFMC's health care management
services capabilities.
During 1993, FIRST HEALTH Strategies substantially completed the
development of its ACT3 electronic claims processing system. This system will
be implemented for existing customers beginning in 1994, and the Company will
also begin marketing the highly automated claims system to potential clients.
FIRST HEALTH expanded its service offerings with the 1993 acquisition
of VIPS, Inc., a leading supplier of Medicare claims processing systems to
health care insurers. Insurance carriers utilize the VIPS system to process
Part B Medicare health claims for senior citizens. HealthCare Cost
Consultants, Inc., a provider of hospital information processing systems
focused on revenue generation and cost containment, was also acquired in 1993.
Health care reform measures have been introduced in 1993 by the
executive and legislative branches of the federal government. These proposals,
if enacted, could significantly impact the delivery and payment for health care
services in the United States. It is uncertain what changes will actually be
implemented and how such changes may impact FIRST HEALTH. However, the Company
believes that its health care businesses, given their focus on the efficiency
of information processing, are favorably positioned to benefit from an emphasis
on reducing the level of administrative costs related to the delivery
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of health care products and services.
Data Imaging Services
FFMC's data imaging services are provided through First Image
Management Company ("First Image") through 74 locations across the United
States. First Image employs approximately 3,000 people in order to provide
12,000 customers with a variety of data management services. The majority of
First Image's revenues are derived from contracts one to three years in length.
Fees are based on the volume and complexity of the data imaging or management
services provided as well as other factors such as required turnaround time,
volume and duration of contract. The percentages of FFMC's revenues from
continuing operations provided by data imaging services were 13% in 1993, 16%
in 1992 and 19% in 1991.
First Image's data imaging services include a full spectrum of data
management services: the conversion of hard copy documents into machine
readable form and production of computer output microfilm ("COM"); the design,
installation and day-to-day management of immense data bases used by large
corporations and federal and state governments; the customization, printing and
mailing of reports and statements from large databases; and the publishing and
distribution of training manuals, product catalogs and other documents. These
services are offered by First Image under a "total solutions" approach with the
objective of improving the utility of a user's data base through ease of access
and efficient information output. In addition, First Image's services reduce
the need for its clients to devote substantial capital investments to create,
maintain, and access these large databases.
First Image's COM services involve transferring data from computer
tape to microforms, generally referred to as "microfiche." Duplicate
microfiche can be produced quickly and inexpensively. Cost savings to the
customer are obtained by the elimination of paper and reduced information
distribution costs with compact storage and efficient information retrieval.
In addition to the storage of data on microfiche, cartridge tape storage is
also offered with sophisticated indexing methods to aid in data retrieval.
This methodology improves efficiency for First Image's largest customers which
previously stored much of their data on large space reels that now can be
replaced with small cassette-type tapes.
First Image's Data Input division creates and manages large-scale
electronic data bases through the collection and conversion of paper source
documents. Services are tailored to meet the specific information needs of a
wide array of customers. Large volumes of source documents are transferred to
machine readable media such as magnetic tape or diskette through key entry and
high-speed Optical Character Recognition scanning techniques. The data bases
are created from the converted data. These data bases are transmitted to the
customer off-line, by dedicated transmission lines or satellite link, or
on-line, by a direct link between the customer's mainframe computer and First
Image's key entry terminals. Alternatively, the data bases may be stored for
future access and retrieval upon the customer's request.
First Image's report production services are a natural extension of
its database management services. The Print and Mail division designs, prints
and distributes large volumes of computer generated documents such as
promotional mailings, invoices and account statements for its clients each
month. The Corporate Publishing division maintains databases for training
manuals, product catalogs, directories and other detailed and lengthy
documents. Updates for these documents are transmitted electronically to First
Image from its customers. First Image then updates the database, prints the
required pages, and ships the hard copy output to predetermined client
locations.
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First Image continued to consolidate its operations during 1993,
positioning its branches geographically to enhance operational efficiencies
while providing services to its clients. In addition, First Image made several
small acquisitions during the year to increase the scope of its COM and report
production operations.
MARKETING
FFMC markets its services through a variety of channels including
direct solicitation and general advertising. The Company's employees are
utilized in the direct solicitation of new customers and the cross-selling of
additional services to existing customers. Marketing efforts are directed
toward the solicitation of large multi-location retailers, established regional
and local merchants, direct response (mail order) companies, restaurant chains
and hotels, financial institutions, governments (both federal and state) and
other commercial entities. In addition, the Company's acquisition strategy is
designed to enhance existing products and to expand markets and services
offered. The Company views this strategy as an efficient complement to direct
marketing efforts. General advertising of FFMC's products and services is
accomplished through industry and trade publications, direct mail,
telemarketing and contact at trade conventions and FFMC-sponsored seminars as
well as direct sales. Products and services complement each other and provide
cross-selling opportunities within the Company's customer base.
COMPETITION
The most significant competitive factors in the sale of the Company's
products and services are price, quality, technological advancement and
reliability of service. Other important factors include the ability to handle
large volumes of data in both data processing and data base management and a
commitment to provide technologically competitive software and application
packages. Competition is encountered from several different sources, which
vary depending on the particular product or service involved and the size of
the customer served. These sources include national service bureaus, in-house
solutions sold by software and hardware vendors, and local competitor
operations. In the merchant credit card services arena, the Company's
principal competitors are two other national credit card processors, but it
also encounters competition from banks and other companies which (in some
instances acting together) offer authorization and processing services. In
many cases, a customer using FFMC's competitors must buy services from several
different companies to obtain a similar integrated system. FFMC's check
verification and guarantee business is in competition principally with two
other national companies. The data processing markets within the health care
services and debt collection services industries continue to be fragmented,
with no one company or group of companies considered dominant. While First
Image is the largest provider in its imaging market, it competes in a market
composed primarily of local area providers.
REGULATION AND EXAMINATION
The 1992 business dispositions removed certain product and service
offerings that previously subjected FFMC to considerable regulation and
examination. These included the consumer and commercial banking and lending
services provided by Georgia Federal and First Family, and the data processing
services provided by Basis to financial institutions. However, remaining
services that the Company provides directly to governmental agencies and to
banks and other regulated financial institutions may be reviewed by various
federal and state regulatory agencies.
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First Financial Bank was formed effective May 7, 1993 under Georgia
law as a special purpose bank that will conduct only those activities permitted
for "credit card banks" under the Federal Bank Holding Company Act, as amended
(the "BHC Act"). Under the BHC Act, FFMC may own a credit card bank without
itself becoming subject to regulation as a bank holding company (or subject to
related restrictions on the types of activities FFMC and its other subsidiaries
may engage in) as long as the credit card bank: (a) engages only in credit
card operations, (b) accepts no deposits other than time deposits of $100,000
or more, (c) maintains only one office that accepts deposits, and (d) does not
engage in the business of making commercial loans. First Financial Bank
operates within these limitations.
First Financial Bank is subject to examination and regulation by the
Georgia Department of Banking and Finance and applicable federal regulatory
agencies, including the Federal Deposit Insurance Corporation ("FDIC"), which
in 1993 approved First Financial Bank's application for FDIC deposit insurance.
Certain activities of NaBANCO are subject to examination and regulation. In
addition, certain minimum capital ratios must be maintained by First Financial
Bank, and arrangements between First Financial Bank and its affiliates must be
on terms at least as favorable as those available from independent third
parties. In addition, First Financial Bank and NaBANCO continue to be subject
to the VISA and MasterCard rules, including a requirement that First Financial
Bank maintain adequate capital (currently $70 million) based on the merchant
credit card processing volume settled through First Financial Bank.
INDUSTRY TRENDS
The technological capabilities required for the rapid and efficient
creation, processing, handling, storage and retrieval of information are
becoming increasingly complex, thus requiring large capital expenditures and
resulting in an industry consolidation that is beneficial to FFMC. FFMC's
customers are handling an expanding variety and rapidly growing volumes of
transactions. This processing increasingly requires the use of sophisticated
software, hardware and communication technologies. Third-party credit card
processing and check verification services are being performed increasingly
through electronic means, which provide faster and more reliable confirmations
and quicker and more convenient transaction processing and settlement.
Sophisticated technological and communication capabilities are also essential
to permit the imaging, creation and effective management of large data bases.
Likewise, within the health care and pharmaceutical claims industry, there is
an increasing need for data to be available more rapidly in order to manage and
pay for health care services.
Significant capital commitments are becoming increasingly important in
order to develop, maintain and update the systems (including software, hardware
and communication equipment and methods) necessary to provide these
technologically advanced services at a competitive price. Economies of scale
are needed to justify these capital investments. In addition, as more on-line
and other electronic delivery systems are used, it is becoming easier to serve
a wider geographic area from centralized data processing centers. As a result
of these developments, many institutions are contracting with outside
specialists for these services, and many small information processing and
handling organizations are consolidating with large providers of these
services.
FFMC believes that it can benefit from these trends by leveraging the
collective capabilities developed through its varied, but related, services and
products which lend themselves to cross-selling and to synergistic
combinations. The Company also believes that its growing array of information
services and products enhances its ability to provide a total solutions
approach to many of its customers' needs.
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EMPLOYEES
At December 31, 1993, FFMC and its subsidiaries had approximately
11,500 employees. FFMC employees are not represented by a union. FFMC
believes that relations with its employees are excellent. Although the demand
for technical data processing personnel is high, the Company seeks to minimize
the turnover of these and other key personnel by providing competitive
compensation and benefits within its various geographic markets. FFMC
emphasizes thorough documentation of its software programs and procedures to
minimize any adverse effect of employee turnover.
PRODUCT DEVELOPMENT
FFMC's capitalized expenditures for software development, purchase and
modification totalled approximately $31 million in 1993, $27 million in 1992
and $16 million in 1991. The amounts prior to 1993 are exclusive of the
development costs incurred by Basis during these years which were written off
during 1992 in connection with the settlement of litigation with a vendor. In
addition, costs of software maintenance, research and conceptualization have
been expensed when incurred.
ITEM 2. PROPERTIES.
The Company's corporate headquarters at 3 Corporate Square, Atlanta,
Georgia is under lease through June 1995, with renewal options available upon
expiration. Approximately 95,000 square feet is leased, and FFMC has options
to lease additional space in the building as it becomes available. The
headquarters facilities are in good repair and in suitable condition for the
purposes for which they are used.
The Company leases over 200 operations facilities across the United
States and two locations in Canada. Many of these facilities also contain
sales and administrative offices. Included in these facilities are
approximately 100 data processing and service centers and four warehouse
storage areas. These facilities are under leases that have expiration dates
ranging from 1994 to 2003, with most containing renewal options. The Company
owns the FIRST HEALTH Strategies operations facility in Salt Lake City, Utah,
and a First Image facility in London, Kentucky. All of FFMC's properties are
in good repair and in suitable condition for the purposes for which they are
used.
ITEM 3. LEGAL PROCEEDINGS.
There were no material legal proceedings involving FFMC or its
property required to be disclosed herein.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of FFMC's shareholders during the
fourth quarter of 1993.
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EXECUTIVE OFFICERS
Set forth below is information about FFMC's executive officers:
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OFFICER OF
NAME AGE POSITIONS WITH FFMC FFMC SINCE
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<S> <C> <C> <C>
Patrick H. Thomas 51 Chairman of the Board, President 1972
and Chief Executive Officer
Richard D. Jackson 57 Senior Executive Vice President and 1989
Chief Operations Officer
Stephen D. Kane 50 Senior Executive Vice President, Chief 1988
Administrative Officer and Secretary
M. Tarlton Pittard 54 Senior Executive Vice President and Chief 1986
Financial Officer
O. G. Greene 52 Senior Executive Vice President, Deputy 1992
Chief Operations Officer
Raymond A. Emmons 43 Executive Vice President and Treasurer 1993
Randolph L. M. Hutto 45 Executive Vice President, General Counsel 1992
Richard Macchia 42 Executive Vice President, Finance and 1989
Principal Accounting Officer
</TABLE>
Messrs. Thomas, Kane and Pittard have been principally employed as
executive officers of FFMC for more than five years.
Mr. Jackson assumed his present position in January 1993. He was Vice
Chairman and Chief Executive Officer of Georgia Federal Bank, FSB ("Georgia
Federal"), since July 1986 and became Senior Executive Vice President of FFMC
in June 1989.
Mr. Greene joined FFMC in June 1992. Previously, he served since 1991
as President and Chief Executive Officer of National Data Corporation and, from
1987 to 1991, as President and Chief Operating Officer, Financial Systems
Division for Unisys Corporation.
Mr. Emmons assumed his present position with FFMC in June 1993. From
May 1989 until such time, he served as Executive Vice President and Chief
Financial Officer of Georgia Federal. Previously, Mr. Emmons was Senior Vice
President, Chief Financial Officer and Treasurer of BarclaysAmerican where he
was employed since 1979.
Mr. Hutto joined FFMC in January 1992 as Executive Vice President,
Secretary and General Counsel. Previously he had been a partner with the law
firm of Sutherland, Asbill and Brennan, FFMC's principal outside counsel, since
1985.
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Mr. Macchia assumed his present position with FFMC in September 1991.
From December 1989 until such time, he served as Senior Vice President and
Chief Financial Officer, Commercial Services, then a division of FFMC. From
1985 until he joined FFMC, Mr. Macchia was Executive Vice President, Chief
Financial Officer, Secretary and a Director of MicroBilt Corporation.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
FFMC's $.10 par value common stock is traded on the New York Stock
Exchange under the symbol "FFM." The high and low prices for the Company's
common stock for each quarter during the last two years were as follows:
<TABLE>
<CAPTION>
1993 1992
------- -------
Quarter Ended High Low High Low
- ------------- ------ ----- ------ -----
<S> <C> <C> <C> <C>
March 31 44 1/4 38 1/4 33 1/8 26 3/8
June 30 42 3/8 36 29 7/8 24 3/4
September 30 55 1/8 42 3/8 35 5/8 29 3/4
December 31 58 1/2 50 1/2 44 5/8 31 1/2
</TABLE>
The closing sale price for the Company's common stock on March 11,
1994 was $57 1/2 per share, with approximately 1,755 holders of record as of
that date.
In 1989 the Company established a policy of making semi-annual
dividend payments to shareholders and the Company's Board of Directors has
since declared semi-annual cash dividends of $.05 per share ($.033 per share
prior to the three-for-two stock split distributed in March 1992). The
Company's ability to pay dividends is limited by a covenant in FFMC's debt
facility. The dividend amount permitted under the covenant, however,
significantly exceeds the Company's current cash dividend payment levels. The
Company expects to pay future cash dividends semi-annually depending upon the
Company's pattern of growth, profitability, financial condition, and other
factors which the Board of Directors may deem appropriate.
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<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA.
FIRST FINANCIAL MANAGEMENT CORPORATION
The following data should be read in conjunction with the consolidated
financial statements and related notes thereto included elsewhere in this
Annual Report and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The Company's merger with
International Banking Technologies, Inc. ("IBT") in August 1993 has been
accounted for as a pooling of interests and, accordingly, the following
information (including share information) has been restated to include
both FFMC and IBT. During each of the periods presented below, FFMC has
made various acquisitions, accounted for as purchases, which affect the
comparability of information presented. For additional information
concerning the Company's acquisitions, see Note B to the consolidated
financial statements. In addition, in 1992 the Company disposed of one of
its two business segments and recorded a loss in another business unit
that was sold. These dispositions are outlined in Note C to the
consolidated financial statements.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
1993 1992 1991 1990 1989
-------------------------------------------------------------------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Income statement data:
Revenues $ 1,669,668 $ 1,425,256 $ 1,057,518 $ 816,268 $ 606,685
Expenses (1,453,911) (1,360,150)* (952,875) (737,114) (537,344)
----------- ----------- ----------- ---------- ----------
Income from continuing operations
before income taxes 215,757 65,106 104,643 79,154 69,341
Income taxes 88,112 46,294 41,912 31,477 29,976
----------- ----------- ----------- ---------- ----------
Income from continuing operations $ 127,645 $ 18,812 $ 62,731 $ 47,677 $ 39,365
=========== =========== =========== ========== ==========
Per share data:
Income per share - continuing operations
Primary $ 2.10 $ 0.32 * $ 1.32 $ 1.17 $ 1.06
Fully diluted 2.10 0.32 * 1.23 1.10 1.01
Cash dividends per share 0.10 0.10 0.07 0.07 0.07
Weighted average common
shares outstanding:
Primary 60,796 58,874 47,400 40,812 37,223
Fully diluted 60,845 59,058 53,035 48,110 44,916
Balance sheet data (at year end):
Total assets $ 1,626,143 $ 1,554,661 $ 1,296,994 $1,105,216 $1,027,219
Long-term debt, including
current portion 14,713 155,255 152,057 207,785 202,804
Convertible subordinated debentures 166,834 172,500
Total shareholders' equity 1,247,964 1,119,892 997,536 600,671 500,829
</TABLE>
* Includes loss in business unit sold of $79,567 ($1.10 after-tax loss per
share).
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<PAGE> 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
CONTINUING AND DISCONTINUED OPERATIONS
The continuing operations of First Financial Management Corporation
(the "Company" or "FFMC") consist of its information services businesses
together with the corporate entity. These businesses provide a vertically
integrated set of data processing, storage and management products for the
capture, manipulation and distribution of information. Similarities exist
among these businesses in the methods of providing services, in the customers
served, and in the marketing activities utilized to obtain new customers. In
addition, the Company continues to pursue further integration of its product
and service offerings to gain competitive advantages. Services include
merchant credit card authorization, processing and settlement; check guarantee
and verification; debt collection and accounts receivable management; data
imaging, micrographics and electronic data base management; health care claims
processing and integrated management services; and the development and
marketing of data communication and information processing systems, including
in-store marketing programs and systems for supermarkets.
Discontinued operations consist of the Company's previous financial
services businesses, comprised of Georgia Federal Bank, FSB ("Georgia
Federal"), formerly the largest thrift institution in Georgia, together with
First Family Financial Services ("First Family"), which previously was Georgia
Federal's regional consumer finance subsidiary.
FFMC consummated several significant business transactions in 1993
that resulted from the Company's strategic reevaluation of its businesses
completed during 1992. During the fourth quarter of 1992, the Company entered
into agreements to sell First Family and Georgia Federal. These sales were
consummated on November 10, 1992 and June 12, 1993, respectively. FFMC also
agreed to sell Basis Information Technologies, Inc. ("Basis") during 1992's
fourth quarter. Basis was the unit within the Company's information service
businesses that provided data processing services to financial institutions.
The sale of Basis was consummated on February 10, 1993.
The terms of both the Georgia Federal and Basis sale agreements
provided that the results of operations of these businesses after December 31,
1992 accrued to the respective purchasers. Accordingly, the Company's
financial results do not include results for these businesses for the year
ended December 31, 1993.
Prior to entering into the agreement for the sale of Basis, the
Company discontinued software development and wrote off related costs for a
major product line in connection with the settlement of litigation with a
vendor, the combination of which resulted in income of $13.8 million included
in other revenues. Concurrently, the Company decided to explore the sale of
Basis. In reviewing the potential market value of Basis, FFMC's management
determined that a write-down of the carrying value of Basis' net assets was
appropriate. Accordingly, the Company recognized a pretax loss of $79.6
million, an after-tax loss of $1.10 per share in 1992. Revenues attributable
to Basis were $113.8 million in 1992 and its contribution to income before
income taxes, aside from the items mentioned above, was approximately $4.5
million.
In August 1993, FFMC completed its merger with International Banking
Technologies, Inc.
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<PAGE> 15
("IBT"). This business combination has been accounted for as a pooling of
interests and, accordingly, the following discussions include IBT as a part of
FFMC's continuing operations for all periods presented.
RESULTS OF OPERATIONS
The following discussions pertain to the Company's continuing
operations.
1993 Compared with 1992
FFMC's revenues increased 17% to $1.7 billion in 1993 from $1.4
billion in the prior year. Excluding Basis' 1992 revenues, the revenue growth
rate for the year was 27%. Income from continuing operations increased to
$127.6 million in 1993 from $18.8 million in 1992. Excluding the Basis asset
write-down from the prior year's results, income from continuing operations
increased 53% in 1993 compared with the prior year. Income per share from
continuing operations increased to $2.10 per share in 1993, compared with $.32
in 1992. Per share earnings increased 48% over 1992 excluding the Basis
write-down.
The effect on the year-to-year revenue comparison of excluding Basis'
1992 revenues is largely offset by the incremental 1993 revenue contributions
from the 1992 acquisitions of ALTA Health Strategies, Inc., renamed as FIRST
HEALTH Strategies ("Strategies"), in April 1992 and TeleCheck Services, Inc.
and its principal franchisee, Payment Services Company - U.S. (collectively
referred to as "TeleCheck"), in July 1992. As a result, the 17% increase in
revenues in 1993 is all attributable to internal growth.
The internal growth in 1993 was due primarily to significant volume
growth within FFMC's existing businesses which more than offset continued
pricing pressures in several of FFMC's product areas. The Company's merchant
services areas experienced strong volume growth in its credit card services and
check verification and guarantee businesses. Record new customer volume was
added from marketing efforts, including national, regional and local merchants.
In addition, FFMC continued to cross-sell the multiple product offerings within
its merchant services area, which resulted in the signing of additional
national merchants to processing contracts. FFMC also experienced volume
growth in its health care services area, with increases in claims processing
for both public and private sectors. Health care businesses received contract
awards or began claims processing under previously awarded contracts during
1993. The Company's imaging business experienced volume growth in 1993, which
competitive pricing pressure partially offset to produce a small increase in
revenues for the year.
FFMC demonstrated the leveragibility of its businesses by translating
the revenue increases, despite the pricing pressures noted above, into higher
percentage rate increases in pretax income, thereby producing higher pretax
margins. The Company's pretax margin was 12.9% in 1993 compared with a 10.2%
pretax margin in 1992 (excluding the Basis write-down). Margins were also
favorably influenced by the Company's continued emphasis on expense controls
and the successful integration of acquisitions completed in 1992. Depreciation
and amortization expenses declined 8% in 1993 primarily due to the inclusion of
Basis in 1992. General and administrative expenses increased only 2% for the
year (and decreased as a percent of revenues) as the Company enjoyed the
benefit of the restructuring of its corporate infrastructure which occurred as
a result of the 1992 strategic evaluation of the Company.
The impact of the revenue increases and the expansion of margins in
1993 was enhanced by
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<PAGE> 16
lower net interest expense during 1993. FFMC experienced lower borrowing
levels in 1993, as a substantial portion of its debt obligations were repaid
during the second quarter from cash received from the sale of businesses.
Proceeds from these sales, along with increased cash generated from operations,
resulted in higher levels of cash investments during the second half of 1993
which favorably impacted the Company's net interest expense for the year.
FFMC adopted Statement of Financial Accounting Standards No. 109 ("FAS
109"), "Accounting for Income Taxes," effective January 1, 1993. The Company
elected the prospective method of adoption allowable under FAS 109 instead of
restating prior period results. The cumulative effect on the Company's results
of operations of adopting FAS 109 was not material, and no adjustment was
recorded. In addition, the Omnibus Budget Reconciliation Act of 1993 (the
"1993 Act") was signed into law during 1993 which contained several provisions
which affected the Company's 1993 income tax expense.
The Company's effective tax rate decreased 1.5% in 1993 to 40.8%. The
comparable prior year rate of 42.3% excludes the impact of the Basis
write-down. The decrease, which occurred despite the 1% increase in the
federal corporate tax rate, is attributable to lower levels of nondeductible
goodwill, lower effective state tax rates and other favorable impacts of the
1993 Act and the Company's tax strategies.
1992 Compared with 1991
FFMC's revenues increased 35% to $1.4 billion in 1992 from $1.1
billion in 1991, primarily from new business acquisitions and revenue growth
within existing businesses. Both income from continuing operations and related
per share amounts decreased in 1992 compared with 1991's results. However,
excluding the Basis asset write-down of $79.6 million, the Company's 1992
income from continuing operations increased 33% to $83.5 million from the $62.7
million reported in 1991. Fully diluted income per share from continuing
operations, excluding the Basis write-down, increased 15% to $1.42 from $1.23
in 1991.
Revenue growth from business acquisitions in 1992 resulted primarily
from the Company's acquisition of Strategies (April 1992) and TeleCheck (July
1992). Existing businesses expanded revenues in 1992 from volume increases as
a result of new customers and expanded business with existing customers. The
merchant credit card processing area benefited from an increase in retail
activity during the 1992 holiday season in the fourth quarter. Health care
services experienced increased claims processing volume and received several
new long-term contracts with government agencies and became fully operational
on several other processing contracts.
Higher personnel costs within the newly acquired Strategies and
TeleCheck businesses in 1992 caused operating expenses, as a percentage of
service revenues, to increase in 1992 over the prior year. In addition, 1992's
business acquisitions increased goodwill amortization from prior year levels.
Interest expense (net of interest income) declined in 1992 due to lower
interest rates and reduced borrowing levels due to the conversion of all of the
Company's convertible subordinated debentures into common stock in October
1991, and repayment of borrowings under FFMC's revolving credit facility from
the cash proceeds received from the First Family sale.
FFMC's continuing operations, excluding the Basis asset write-down,
generated 1992 earnings before taxes of $144.7 million, a pretax margin of
10.2%. This margin is consistent with the 9.9% pre-tax margin on earnings
before income taxes of $104.6 million in 1991. The Company's 1992 effective
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<PAGE> 17
tax rate of 71.1% was substantially above the federal statutory rate due to the
nondeductibility of the majority of the Basis asset write-down. Excluding the
effect of the write-down, FFMC's provision for income taxes from continuing
operations increased to 42.3% in 1992 from 40.1% in 1991. This increase was
due primarily to increased state income taxes, lower IBT Subchapter S income
taxed at the shareholder level, and lower tax credits.
ECONOMIC FLUCTUATIONS
The Company's business is somewhat insulated from economic
fluctuations due to recurring revenues from long-term service contracts, and
the fact that the Company's services often result in cost savings for its
customers. The slow growth, but steadily improving economic environment during
1993 benefited FFMC's results, as the Company experienced higher year-to-year
processing volumes, particularly in its merchant services area. The results of
FFMC's health care services area have not been significantly affected by recent
reform oriented developments in that industry.
The Company's business is not seasonal, except that its revenues,
earnings and margins are favorably affected in the fourth quarter, primarily by
increased merchant credit card and check volume during the holiday season.
Although FFMC cannot precisely determine the impact of inflation on
its operations, inflation affects the Company through increased costs of
employee compensation and other operating expenses. In addition, competition
for employees with data processing skills, programming expertise, and other
technical knowledge contributes to increased costs in some parts of the
country. To the extent permitted by the Company's service contracts, these
increases in costs are passed along to customers in the form of periodic price
increases. FFMC's revenues from merchant credit card processing and check
verification and guarantee services are generally a percentage of the dollar
volume of transactions processed. The Company's operating margins on these
services are therefore relatively insulated from the effects of inflation on
merchant prices for goods and services. As a result, the Company has not been
significantly affected by inflation.
CAPITAL RESOURCES AND LIQUIDITY
The following discussions pertain to the Company's continuing
operations, and the effects on cash flows of FFMC's business dispositions.
Cash generated from operating activities increased 42% in 1993 to $207
million, as compared with the $146 million generated in 1992 and $121 million
in 1991. This increase was due primarily to increased income from continuing
operations. FFMC reinvests cash in its businesses, principally for property
and equipment additions, software development and customer conversions.
Amounts reinvested totalled $80 million in 1993 compared with $78 million in
1992 and $67 million in 1991. The Company anticipates that the level of these
capital investments in its existing businesses for 1994 will be similar to 1993
amounts. Cash from operating activities exceeded non-acquisition investing
activities by $128 million in 1993, $68 million in 1992, and $53 million in
1991.
FFMC activated its credit card bank, First Financial Bank ("FFB"),
during the second quarter of 1993 with a required initial capitalization of $70
million. The capitalization of FFB is based upon requirements of bank card
associations given the size of FFMC's credit card processing operations. The
primary purpose of FFB is to support the Company's merchant services
activities, a function previously
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<PAGE> 18
provided by Georgia Federal Bank. Except for the support FFB provides for
FFMC's merchant services activities, FFB does not conduct any significant
banking activities, accept deposits from unaffiliated parties, or engage in
lending activities. FFB's capitalization and activities comply with applicable
regulatory requirements and restrictions.
The Company received $345 million in cash in 1993 through dividends
from its discontinued operation and from the sale of businesses, after
expenses, that were completed during 1993. The Company also had received $150
million in cash from Georgia Federal during 1992, comprised of a $100 million
dividend and a $50 million payment toward the settlement of income tax
liabilities from the sale of First Family which were paid by FFMC during 1993.
The Company utilized these proceeds to repay $154 million of long-term debt
obligations in 1993 and $146 million in 1992, including all outstanding
borrowings under FFMC's revolving credit facility. The Company's long-term
debt to equity ratio dropped to 1.2% at December 31, 1993 from 13.9% at
December 31, 1992.
Cash consideration paid for business acquisitions (net of cash
acquired), including amounts paid related to acquisitions completed in prior
years, utilized $92 million in 1993, $267 million in 1992 and $72 million in
1991. The Company funded the 1993 acquisitions from cash resulting from
operations and from cash balances generated from the sale of businesses. FFMC
utilized capital markets and borrowings under debt arrangements to supplement
excess cash generated from operations to fund its acquisition program in 1992.
FFMC has potential obligations under certain acquisition agreements to
pay future consideration to the former shareholders of specified acquired
businesses. Any such payments will be due only if the acquired entity's
results of operations exceed specified targeted levels which are generally set
substantially above the historical experience of the acquired entity. Thus,
any such payments will not negatively impact the Company's financial position.
The Company currently has available lines of credit of $460 million;
no borrowings were outstanding under these arrangements at December 31, 1993.
These arrangements consist primarily of a $450 million unsecured revolving
credit facility. This facility has a term ending in June 1995, with two
possible one year extensions, and allows FFMC flexibility to reduce borrowing
levels with excess cash funds which are not immediately utilized for business
investments. Remaining excess cash funds are invested in short-term
interest-bearing securities.
The Company continued its practice established in 1989 of paying
semi-annual $.05 per share cash dividends to shareholders, maintaining a
constant dividend rate per share despite a three-for-two stock split effective
March 31, 1992.
FFMC's cash and cash equivalents of $186 million at December 31, 1993,
except for cash and cash equivalents in its credit card bank (currently $80
million), are available for acquisitions and general corporate purposes. If
suitable opportunities arise for additional acquisitions the Company may use
cash, draw on its credit facilities, or use common stock or other securities as
payment of all or part of the consideration for such acquisitions, or FFMC may
seek additional funds in the equity or debt markets. The Company believes that
its current level of cash and future cash flows from operations are sufficient
to meet the needs of its existing businesses.
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<PAGE> 19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary data filed as a part of
this Form 10-K are listed in the Index to Consolidated Financial Information.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
FFMC has not filed or been required to file a Form 8-K reporting a
change of accountants or reporting a disagreement on any matter of accounting
principles or practices or financial statement disclosures.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning the nominees for Directors of FFMC is contained
under "Election of Directors" at page 4 in FFMC's Proxy Statement for the
April 27, 1994 Annual Meeting of Shareholders and is incorporated herein by
reference in response to the information required by this item.
Information concerning the Executive Officers of FFMC is contained in
a separate section captioned "Executive Officers" in Part I of this Report and
is incorporated herein by reference in response to the information required by
this item.
ITEM 11. EXECUTIVE COMPENSATION.
The information set forth under "Compensation Related Matters" at page
5 in FFMC's Proxy Statement for the April 27, 1994 Annual Meeting of
Shareholders is incorporated herein by reference in response to the information
required by this item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information set forth under "Voting Securities" and "Election of
Directors" (regarding ownership of FFMC stock) at pages 1 and 4, respectively,
in FFMC's Proxy Statement for the April 27, 1994 Annual Meeting of Shareholders
is incorporated herein by reference in response to the information required by
this item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information set forth under "Certain Transactions" at page 15 in
FFMC's Proxy Statement for the April 27, 1994 Annual Meeting of Shareholders is
incorporated herein by reference in response to the information required by
this item.
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<PAGE> 20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
<TABLE>
<S> <C>
(A)(1) FINANCIAL STATEMENTS
The financial statements filed as a part of this Form 10-K are listed in the Index to Consolidated Financial Information.
(A)(2) FINANCIAL STATEMENT SCHEDULES
The schedules required under Article 5 of Regulation S-X are listed in the attached Index to Consolidated Financial
Information. All other schedules are omitted because they are either not applicable or the information is presented in
the financial statements or notes thereto.
(A)(3) EXHIBITS
3.1 Restated Articles of Incorporation, as amended. (Filed on May 14, 1992 as an exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1992 and incorporated herein by reference.)
3.2 Articles of Correction to the Articles of Amendment to the Restated Articles of Incorporation of First Financial
Management Corporation through September 29, 1993 (filed on November 12, 1993 as an exhibit to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1993 and incorporated herein by reference).
3.3 Bylaws, as amended through July 28, 1993 (filed on November 12, 1993 as an exhibit to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1993 and incorporated herein by reference).
4.1 See Article V of the Registrant's Restated Articles of Incorporation, as amended, and Articles 1, 2 and 9 of the
Registrant's Bylaws, as amended, listed as Exhibits 3.1, 3.2 and 3.3, respectively.
4.2* FFMC Savings Plus Plan, as amended and restated, effective January 1, 1991 (filed on November 5, 1990 as an exhibit to
the Registrant's Registration Statement on Form S-8 (File No. 33-37532) and incorporated herein by reference).
4.3 Credit Agreement, dated as of June 25, 1992, among the Registrant, each of the banks named therein, and The Chase
Manhattan Bank (National Association) as agent for such banks. The Schedules and Exhibits to this Credit Agreement are
identified on a list of schedules and exhibits contained at the end of the Table of Contents to such Agreement, which
list is incorporated herein by reference. All schedules and exhibits were omitted for purposes of filing but will be
furnished supplementally to the Commission upon request (filed on August 14, 1992 as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 and incorporated herein by reference).
</TABLE>
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<PAGE> 21
<TABLE>
<S> <C>
4.4 Warrant Agreement, dated June 15, 1989, between the Registrant and Wachovia Bank and Trust Company, N.A. (filed on June
19, 1989 as an exhibit to Registrant's Registration Statement on Form S-3 (File No. 33-29267) and incorporated herein by
reference).
4.5 Amendment dated September 5, 1989, to the Warrant Agreement, dated June 15, 1989, by and between the Registrant and
Wachovia Bank and Trust Company, N.A. (filed on September 6, 1989 as an exhibit to Amendment No. 1 to Registrant's
Registration Statement on Form S-3 (File No. 33-29267) and incorporated herein by reference).
4.6 Commitment Letter dated December 21, 1993, from Wachovia Bank of Georgia, extending the maturity of a $10 million line of
credit to the Registrant along with the Letter Agreement in like amount dated June 23, 1993.
10.1 Agreement and Plan of Merger, dated July 6, 1992, by and among the Registrant, PSC Acquisition Corporation and Payment
Services Company - U.S. (filed on November 16, 1992 as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1992 and incorporated herein by reference). The schedules to the Agreement and Plan of
Merger were omitted, but were identified in a list included therein and will be furnished supplementally to the
Commission upon request.
10.2 Stock Purchase Agreement, dated as of December 31, 1992, between First Financial Management Corporation and FIserv, Inc.,
as amended by Amendment No. 1 to Stock Purchase Agreement dated as of February 10, 1993 (filed on February 25, 1993 as an
exhibit to the Registrant's Current Report on Form 8-K that reported this February 10, 1993 stock sale and incorporated
herein by reference).
10.3 Stock Purchase Agreement, dated as of December 20, 1992, among First Financial Management Corporation, First Union
Corporation and First Union Corporation of Georgia. The schedules to the Stock Purchase Agreement are identified on a
list of schedules included with the Agreement and have been omitted for purposes of this filing, but will be furnished
supplementally to the Commission upon request (filed on March 31, 1993 as an exhibit to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1992 and incorporated herein by reference).
10.4 Lease between the Northwestern Mutual Life Insurance Company, as lessor, and Endata, Inc., as lessee, dated December 23,
1985 for Endata, Inc.'s headquarters at 501 Great Circle Road, Nashville, Tennessee (filed on March 31, 1986 as an
exhibit to Endata, Inc.'s Annual Report on Form 10-K for 1985 (File No. 0-11357) and incorporated herein by reference).
10.5 Lease between Parkway, Ltd., as landlord, and National Bancard Corporation, as tenant, dated December 28, 1987, together
with Addendum to Lease Agreement, dated February 22, 1988, for the NaBANCO Building in Sunrise, Florida (filed on March
14, 1988 as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1987 and
incorporated herein by reference).
10.6 Sublease, dated January 7, 1983, between National Bancard Corporation (NaBANCO) as the tenant and assignee of The Chase
Manhattan Bank, N.A., and Broadhollow Realty Company, as the landlord and assignee of Allstate Insurance Company,
covering NaBANCO's center on
</TABLE>
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<TABLE>
<S> <C>
Bayliss Road in Melville (previously known as Huntington), New York, including as Exhibit D thereto the primary Lease,
dated September 3, 1975, pursuant to which the Sublease was made, and a related agreement modifying the primary Lease,
together with two amendments to the Sublease, dated December 22, 1986 and June 15, 1988, respectively (filed on March 27,
1990 as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1989 and incorporated
herein by reference).
10.7 Lease, together with related Rider, dated February 6, 1989, between Rowe Properties-Data Limited Partnership, as Lessor,
and The Computer Company as Lessee, covering First Health Services Corporation's facilities at Innsbrook Corporate Center
in Glen Allen, Virginia, together with a Guaranty, dated February 2, 1989, guaranteeing Lessor's obligations under the
Lease (filed on March 27, 1990 as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December
31, 1989 and incorporated herein by reference).
10.8 Lease, dated February 28, 1990, as amended by the First Amendment dated June 22, 1990, between Frank J. Hanna, Jr., as
Lessor, and Nationwide Credit, Inc. (Nationwide), as Lessee, covering Nationwide's headquarters facility at 2258
Northwest Parkway, Marietta, Georgia. (1)
10.9* The Registrant's 1982 Incentive Stock Plan, as amended through January 31, 1990. (1)
10.10* The Registrant's 1988 Incentive Stock Plan, as amended through January 30, 1991. (1)
10.11* First Financial Management Corporation Performance Units Incentive Plan, as amended through May 1, 1991 (filed on
November 14, 1991 as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30,
1991 and incorporated herein by reference).
10.12* Directors' Restricted Stock Award Plan, together with Form of Director's Restricted Stock Award Agreement (filed on March
31, 1987 as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1986 and
incorporated herein by reference).
10.13* 1990 Directors' Stock Option Plan. (Filed on August 14, 1990 as an exhibit to the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1990 and incorporated herein by reference.)
10.14* Endata, Inc. Amended Stock Option Plan (filed on October 17, 1986 as an exhibit to Post-Effective Amendment No. 1 to
Endata, Inc.'s Registration Statement on Form S-8 (File No. 2-97925) and incorporated herein by reference), together with
an Amendment to Endata Inc.'s Amended Stock Option Plan, dated October 30, 1987, and two forms of letters specifying the
manner in which each Endata, Inc. Stock Option was converted into an option to purchase the Registrant's stock and forms
of the Endata Incentive and Non-Qualified Stock Option Agreements (filed on March 14, 1988 as an exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,1987 and incorporated herein by reference).
</TABLE>
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<TABLE>
<S> <C>
10.15* FFMC 1990 Employee Stock Purchase Plan adopted December 15, 1989, as amended on October 24, 1990 (1), and amendment
thereto adopted on July 24, 1991, effective October 1, 1991 (filed on August 14, 1991 as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1991 and incorporated herein by reference).
10.16* Employment Agreement, dated January 31, 1989, between the Registrant and Patrick H. Thomas (filed on March 31, 1989 as an
exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1988 and incorporated herein by
reference).
10.17* Employment Agreement, dated January 31, 1989, between the Registrant and M. Tarlton Pittard (filed on March 31, 1989 as
an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1988 and incorporated herein by
reference).
10.18* Employment Agreement, dated February 15, 1991, Termination of prior Employment Agreement, Termination of Employee Death
Benefit Agreement, and First Amendment to Deferred Compensation Agreement, all between the Registrant (or Georgia Federal
Bank, FSB) and Richard D. Jackson. (1)
10.19* Form of Restricted Stock Award Agreement between the Registrant and each of the following officers covering awards
under the 1988 Incentive Stock Plan, on January 31 1990, to M. Tarlton Pittard and Richard D. Jackson. (1)
10.20* Non-Qualified Stock Option, dated February 5, 1988, granted by the Registrant to Patrick H. Thomas (filed on March 14,
1988 as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1987 and incorporated
herein by reference).
10.21* Form of Non-Qualified Stock Option Agreement as issued to the Registrant's Executive Officers under the 1988 Incentive
Stock Plan.
10.22* Form of Restricted Stock Award Agreement between the Registrant and each of the following officers covering awards under
the 1988 Incentive Stock Plan on May 1, 1991, to Richard D. Jackson, M. Tarlton Pittard and Stephen D. Kane (filed on
August 14, 1991 as an exhibit to the Registrant's Quarterly Report on Form 10-K for the quarter ended June 30, 1991 and
incorporated herein by reference).
10.23* Form of Restricted Stock Award Agreement between the Registrant and each of the following officers covering awards on
January 31, 1989 under the 1988 Incentive Stock Plan: Patrick H. Thomas, M. Tarlton Pittard and Stephen D. Kane (filed
on March 31, 1989 as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1988 and
incorporated herein by reference).
10.24 Resolution of the Compensation Committee of the Registrant's Board of Directors, dated June 24, 1993, accelerating to
December 31, 1993 the date on which restrictions lapsed on stock awards previously issued to Patrick H. Thomas, M.
Tarlton Pittard and Stephen D. Kane.
10.25* Employment Agreement, dated January 29, 1992, between the Registrant and Stephen D. Kane. (2)
</TABLE>
-23-
<PAGE> 24
<TABLE>
<S> <C>
10.26 Agreement, dated May 7, 1993, by and among National Bancard Corporation, CMSC Corporation and First Financial Bank (filed
on May 14, 1993 as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1993 and
incorporated herein by reference).
10.27 Agreement, Plan of Reorganization and Plan of Merger, dated as of July 28, 1993 by and among First Financial Management
Corporation, Tomahawk Acquisition Corporation, Pennant Acquisition Corporation, International Banking Technologies, Inc.,
Prime Consulting Group, Inc. and The Shareholders of International Banking Technologies, Inc. and Prime Consulting Group,
Inc. The Schedules to this Agreement, Plan of Reorganization and Plan of Merger are identified on a list of schedules
contained at the end of the Table of Contents to such Agreement, which list is incorporated herein by reference. All
schedules were omitted for purposes of filing but will be furnished supplementally to the Commission upon request (filed
on August 13, 1993 as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993
and incorporated herein by reference).
10.28* Employment Agreement, dated March 22, 1994, between the Registrant and Patrick H. Thomas.
10.29* Restricted Stock Award Agreement between the Registrant and Patrick H. Thomas covering an award under the 1988
Incentive Stock Plan on March 22, 1994.
10.30* Restricted Stock Award Agreement between the Registrant and Patrick H. Thomas covering an award under the 1988 Incentive
Stock Plan on March 22, 1994.
10.31* Non-Qualified Stock Option, dated March 22, 1994, granted by the Registrant to Patrick H. Thomas.
11.1 Statement regarding computation of net income per share.
22.1 List of Subsidiaries.
24.1 Consent of Independent Auditors.
28.1 Annual Report on Form 11-K for the FFMC Savings Plus Plan (to be filed by amendment).
</TABLE>
_____________________________
* Indicates management contract or compensatory plan or
arrangement.
(1) Filed on April 1, 1991 as an exhibit to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1990 and
incorporated herein by reference.
(2) Filed on March 23, 1992 as an exhibit to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1991 and
incorporated herein by reference.
(B) REPORTS ON FORM 8-K
The Company did not file any current report on Form 8-K during the
quarter ended December 31, 1993.
-24-
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on March
28, 1994.
FIRST FINANCIAL MANAGEMENT CORPORATION
By: /s/ Patrick H. Thomas
------------------------------------------
Patrick H. Thomas
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------- ----------------------------- --------------------
<S> <C> <C>
/s/ Patrick H. Thomas Chairman of the Board, March 28, 1994
- ---------------------------- President and Chief Executive Officer
Patrick H. Thomas
/s/ M. Tarlton Pittard Senior Executive Vice President, March 28, 1994
- ----------------------------- Chief Financial Officer and Director
M. Tarlton Pittard
/s/ Richard Macchia Executive Vice President March 28, 1994
- ---------------------------- and Principal Accounting Officer
Richard Macchia
/s/ George L. Cohen Director March 28. 1994
- ---------------------------
George L. Cohen
/s/ Robert E. Coleman Director March 28, 1994
- --------------------------
Robert E. Coleman
/s/ Jack R. Kelly, Jr. Director March 28, 1994
- -------------------------------
Jack R. Kelly, Jr.
/s/ Henry A. Leslie Director March 28, 1994
- -----------------------------
Henry A. Leslie
/s/ Charles B. Presley Director March 28, 1994
- -----------------------------
Charles B. Presley
Director
- -----------------------------
Jack A. Skarupa
/s/ Virgil R. Williams Director March 28, 1994
- -----------------------------
Virgil R. Williams
</TABLE>
-25-
<PAGE> 26
FIRST FINANCIAL MANAGEMENT CORPORATION
INDEX TO CONSOLIDATED FINANCIAL INFORMATION
FINANCIAL STATEMENTS:
<TABLE>
<CAPTION>
Page in this
10-K Report
------------
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Consolidated Balance Sheets at December 31, 1993
and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Consolidated Statements of Income for the Years
Ended December 31, 1993, 1992, and 1991 . . . . . . . . . . . . . . . . . . . . . . . . 29
Consolidated Statements of Shareholders'
Equity for the Years Ended
December 31, 1993, 1992, and 1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1993, 1992 and 1991 . . . . . . . . . . . . . . . . . . . . . 31
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 32
SUPPLEMENTARY INFORMATION - QUARTERLY FINANCIAL INFORMATION (UNAUDITED) . . . . . . . . . . . . . 43
SCHEDULES:
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Schedule II - Amounts Receivable from Related Parties . . . . . . . . . . . . . . . . . . . . . . 45
Schedule VIII - Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . 46
Schedule X - Supplementary Income Statement Information . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
All other schedules (as required under Article 5 of Regulation S-X) are omitted
because they are either not applicable or the information is presented in the
financial statements or notes thereto.
-26-
<PAGE> 27
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
First Financial Management Corporation
Atlanta, Georgia
We have audited the accompanying consolidated balance sheets of First
Financial Management Corporation and subsidiaries as of December 31, 1993 and
1992, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended December 31,
1993. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of First Financial Management
Corporation and subsidiaries as of December 31, 1993 and 1992, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1993 in conformity with generally accepted accounting
principles.
As discussed in Note A to the financial statements, the Company changed
its method of accounting for income taxes in 1993 to conform with Statement of
Financial Accounting Standards No. 109.
DELOITTE & TOUCHE
Atlanta, Georgia
January 28, 1994
-27-
<PAGE> 28
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------
1993 1992
----------- ---------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 186,263 $ 16,823
Accounts receivable, net of allowance for doubtful
accounts of $4,043 (1993) and $5,183 (1992) 323,130 220,421
Prepaid expenses and other current assets 87,797 52,840
Net assets of discontinued operations 254,338
---------- ----------
Total Current Assets 597,190 544,422
Property and equipment, net 134,804 143,430
Excess of cost over fair value of assets acquired,
less accumulated amortization of $52,001 (1993)
and $45,332 (1992) 647,746 621,017
Customer contracts, less accumulated amortization
of $31,806 (1993) and $29,899 (1992) 140,124 125,324
Other assets 106,279 120,468
---------- ----------
$1,626,143 $1,554,661
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 278,637 $ 171,505
Income taxes payable 10,563 62,475
Current portion of long-term debt 6,218 147,533
---------- ----------
Total Current Liabilities 295,418 381,513
Long-term debt, less current portion 8,495 7,722
Deferred income taxes payable 63,347 39,955
Other liabilities 10,919 5,579
---------- ----------
Total Liabilities 378,179 434,769
---------- ----------
Commitments
Shareholders' Equity:
Common stock, $.10 par value; authorized
150,000,000 shares, issued 59,881,709
shares (1993) and 59,503,310 shares (1992) 5,988 5,950
Paid-in capital 828,699 820,212
Retained earnings 413,928 294,381
Treasury stock at cost, 20,000 shares (651) (651)
---------- ----------
Total Shareholders' Equity 1,247,964 1,119,892
---------- ----------
$1,626,143 $1,554,661
========== ==========
</TABLE>
See notes to consolidated financial statements.
-28-
<PAGE> 29
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------
1993 1992 1991
------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C>
REVENUES
Service revenues $ 1,543,004 $ 1,316,668 $ 998,326
Product sales 116,798 92,011 57,274
Other 9,866 16,577 1,918
----------- ----------- ----------
1,669,668 1,425,256 1,057,518
----------- ----------- ----------
EXPENSES
Operating 1,283,839 1,107,094 826,254
General and administrative 23,870 23,449 20,720
Cost of products sold 70,570 58,033 34,596
Depreciation and amortization 75,926 82,567 58,716
Loss in business unit sold 79,567
Interest, net (294) 9,440 12,589
----------- ----------- ----------
1,453,911 1,360,150 952,875
----------- ----------- ----------
Income from continuing operations
before income taxes 215,757 65,106 104,643
Income taxes 88,112 46,294 41,912
----------- ----------- ----------
Income from continuing operations 127,645 18,812 62,731
Income from discontinued operations, net of taxes 36,900 30,737
Loss on sale of discontinued operations, net of taxes (6,818)
----------- ----------- ----------
Net income $ 127,645 $ 48,894 $ 93,468
=========== =========== ==========
INCOME PER SHARE - PRIMARY
Continuing operations $2.10 $0.32 $ 1.32
Discontinued operations 0.51 0.65
----------- ----------- ----------
Net income $ 2.10 $ 0.83 $ 1.97
=========== =========== ==========
INCOME PER SHARE - FULLY DILUTED
Continuing operations $ 2.10 $ 0.32 $ 1.23
Discontinued operations 0.51 0.60
----------- ----------- ----------
Net income $ 2.10 $ 0.83 $ 1.83
=========== =========== ==========
</TABLE>
See notes to consolidated financial statements.
-29-
<PAGE> 30
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Treasury Stock
----------------- Paid-in Retained -------------------
Shares Amount Capital Earnings Shares Cost Total
-------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1991
As previously reported by FFMC 41,640 $4,164 $430,988 $168,279 (207) ($2,760) $ 600,671
Pooling of interests with International
Banking Technologies, Inc. (IBT) 1,000 100 1,936 1,145 3,181
-------------------------------------------------------------------------------
Balance, January 1, 1991, as restated 42,640 4,264 432,924 169,424 (207) (2,760) 603,852
Stock offering 6,503 650 144,150 144,800
Subordinated debentures converted 7,298 730 161,493 162,223
Purchase of treasury shares (237) (4,406) (4,406)
Stock issued in acquisitions 183 18 300 483
Shares issued under stock compensation
plans, net of forfeitures 270 27 2,855 2,882
Shares issued for employee stock
purchase plan 42 4 488 492
Cash dividends ($.07 per share) (3,224) (3,224)
IBT shareholder distributions (3,034) (3,034)
Net income 93,468 93,468
-------------------------------------------------------------------------------
Balance, December 31, 1991 56,753 5,675 742,093 256,634 (426) (6,866) 997,536
Stock issued in acquisitions 2,058 206 59,420 426 6,866 66,492
Stock warrants exercised 389 39 10,329 10,368
Shares issued under stock compensation
plans, net of forfeitures 256 25 7,130 7,155
Shares issued for employee stock
purchase plan 47 5 1,240 1,245
Cash dividends ($.10 per share) (5,817) (5,817)
IBT investment in FFMC common stock (20) (651) (651)
IBT shareholder distributions (5,330) (5,330)
Net income 48,894 48,894
-------------------------------------------------------------------------------
Balance, December 31, 1992 59,503 5,950 820,212 294,381 (20) (651) 1,119,892
Stock issued in acquisitions 50 5 2,343 2,348
Stock warrants exercised 50 5 1,328 1,333
Shares issued under stock compensation
plans, net of forfeitures 227 23 2,902 2,925
Shares issued for employee stock
purchase plan 52 5 1,914 1,919
Cash dividends ($.10 per share) (5,932) (5,932)
IBT shareholder distributions (2,166) (2,166)
Net income 127,645 127,645
-------------------------------------------------------------------------------
Balance, December 31, 1993 59,882 $5,988 $828,699 $413,928 (20) ($651) $1,247,964
===============================================================================
</TABLE>
See notes to consolidated financial statements.
-30-
<PAGE> 31
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
1993 1992 1991
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Cash and cash equivalents at January 1 $ 16,823 $ 75,392 $ 26,780
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Income from continuing operations 127,645 18,812 62,731
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation and amortization 75,926 82,567 58,716
Interest expense allocated to discontinued operations (636) (3,878) (5,208)
Loss in business unit sold 79,567
Other non-cash items (3,008) 477 2,152
Increase (decrease) in cash, net of effects from
acquisitions and dispositions, resulting from changes in:
Accounts receivable (98,293) (48,072) 6,523
Prepaid expenses and other assets (1,580) (7,219) (13,364)
Accounts payable and accrued expenses 85,414 10,194 (15,586)
Income tax accounts 21,827 13,785 24,664
-------- -------- --------
Net cash provided by continuing operating activities 207,295 146,233 120,628
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under long-term debt arrangements 140,000 10,000
Principal payments on long-term debt (154,447) (146,078) (70,860)
Proceeds from issuance of common stock 1,333 10,368 144,800
Purchase of treasury shares (651) (4,406)
Payments of other liabilities (8,394) (13,442) (12,523)
-------- -------- --------
Net cash provided by (used in) financing activities (161,508) (9,803) 67,011
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions, net of cash received (70,184) (232,618) (54,102)
Payments related to businesses previously acquired (22,017) (34,862) (17,831)
Proceeds, net of expenses, from sale of business 86,817
Proceeds and dividends received from discontinued
operations, net of expenses and taxes paid 208,688 150,421
Additions to property and equipment, net (35,368) (32,289) (28,534)
Software development and customer conversions (44,283) (45,651) (38,560)
-------- -------- --------
Net cash provided by (used in) investing activities 123,653 (194,999) (139,027)
-------- -------- --------
Change in cash and cash equivalents 169,440 (58,569) 48,612
-------- -------- --------
Cash and cash equivalents at December 31 $186,263 $ 16,823 $ 75,392
======== ======== ========
CASH PAID DURING THE YEAR FOR
Income taxes $ 62,590 $ 33,220 $ 21,282
Interest 5,183 13,446 28,036
</TABLE>
See notes to consolidated financial statements.
-31-
<PAGE> 32
FIRST FINANCIAL MANAGEMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of First
Financial Management Corporation and its wholly-owned subsidiaries (the
"Company" or "FFMC"). All material intercompany profits, transactions, and
balances have been eliminated.
The Company's continuing operations operate in a single business
segment ("Information Services") providing a vertically integrated set of data
processing, storage and management products for the capture, manipulation and
distribution of information. Services include merchant credit card
authorization, processing and settlement; check guarantee and verification;
debt collection and accounts receivable management; data imaging, micrographics
and electronic data base management; health care claims processing and
integrated management services; and the development and marketing of data
communication and information processing systems, including in-store marketing
programs and systems for supermarkets.
In 1993, FFMC formed First Financial Bank ("FFB"), its credit card
bank, whose only significant business purpose is to support the Company's
merchant services activities. FFB does not conduct any other significant
banking activities, accept deposits from unaffiliated parties, or engage in
lending activities.
DISCONTINUED OPERATIONS
In 1993, FFMC completed the sale of its Financial Services businesses
(see Note C - Dispositions). For purposes of the consolidated financial
statements, net amounts for these businesses have been presented separately as
discontinued operations.
CASH EQUIVALENTS
Cash equivalents, which consist of investment grade debt instruments
with an original maturity of three months or less, are stated at cost which
approximates market value. FFMC utilizes primarily repurchase agreements of
government or mortgage-backed securities for its short-term cash investments.
Cash and cash equivalents at December 31, 1993 include approximately $80
million in FFB, of which $70 million relates to FFB's current capital
requirements.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated
depreciation or amortization which is provided on a straight-line basis over
the lesser of the useful life of the related assets or lease term.
-32-
<PAGE> 33
EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED
The excess of cost over fair value of assets acquired represents the
excess of the cost of acquired businesses over the value assigned to tangible
and identifiable intangible assets, and is amortized on a straight-line basis,
primarily over 40 years.
CUSTOMER CONTRACT COSTS
Customer contract costs represent the costs assigned to purchased
customer contracts, and are amortized on a straight-line basis over the
estimated average lives of the contracts (10-15 years).
OTHER ASSETS
The principal components of other assets include software development
costs and customer conversion costs, both of which are amortized on a
straight-line basis over four years.
INCOME TAXES
FFMC adopted Statement of Financial Accounting Standards No. 109 ("FAS
109"), "Accounting for Income Taxes," effective January 1, 1993. Under FAS
109, deferred income taxes are determined based on the difference between
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the years in which such differences are expected to
reverse. The Company elected the prospective method of adoption allowable
under FAS 109 instead of restating prior period results. No cumulative effect
on the Company's results of operations from adopting FAS 109 was recorded
because it was insignificant. Prior to January 1, 1993 deferred income taxes
were provided in accordance with Accounting Principles Board Opinion No. 11.
REVENUE RECOGNITION
Service revenues are recognized as services are performed and product
sales (data processing equipment and related software enhancements) are
recognized upon delivery. Interchange fees incurred in the settlement of
merchant credit card transactions are included in operating expenses.
INCOME PER SHARE
Income per share amounts on a primary basis are computed by dividing
income amounts by the weighted average number of common and common equivalent
shares (when dilutive) outstanding during the period. Common stock equivalents
consist of shares issuable under the Company's stock option plans and in
connection with outstanding warrants. Income per share amounts on a fully
diluted basis give effect to the conversion of outstanding convertible
subordinated debentures through the date of their actual conversion in 1991
(after elimination of related after-tax interest expense). Weighted average
shares for all periods reflect the shares issued in 1993 to effect FFMC's
merger with International Banking Technologies, Inc., which was accounted for
as a pooling of interests. Weighted average shares used in income per share
computations were as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1993 1992 1991
---- ---- ----
Weighted average shares outstanding:
-----------------------------------
<S> <C> <C> <C>
Primary 60,796 58,874 47,400
Fully diluted 60,845 59,058 53,035
</TABLE>
-33-
<PAGE> 34
B. BUSINESS COMBINATIONS AND ACQUISITIONS
FFMC completed the following business combinations and asset
acquisitions:
<TABLE>
<CAPTION>
Consideration
-----------------------------------------
FFMC Common Stock
-----------------
Dollar
Businesses and Assets Acquired Month Total Cash Value Shares
- ------------------------------ ----- -----------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C>
1993:
- ----
International Banking Technologies (IBT) August $ 46,000 $46,000 1,000
Credit card processing contracts 32,937 $ 32,937
TeleCheck franchise entities 20,136 15,436
Other 44,157 27,063
-------- -------- ------- -----
$143,230 $ 75,436 $46,000 1,000
======== ======== ======= =====
1992:
- ----
First Health Strategies (Strategies) April $112,534 $ 59,641 $52,893 1,998
TeleCheck Services (TeleCheck) July 156,123 142,795 13,328 470
Credit card processing contracts 10,367 10,367
Other 28,015 28,015
-------- -------- ------- -----
$307,039 $240,818 $66,221 2,468
======== ======== ======= =====
1991:
- ----
Kalvar Corporation October $ 23,425 $ 13,425
Credit card processing contracts 24,301 24,301
Other 18,411 17,661
-------- --------
$ 66,137 $ 55,387
======== ========
</TABLE>
All of the outstanding common stock was acquired for each of the
businesses noted in the table above. Other consideration, not separately
listed in the table, consists of promissory notes and accounts payable
totalling $21.8 million and $10.7 million for acquisitions in 1993 and 1991,
respectively.
The merger with IBT was accounted for as a pooling of interests and,
accordingly, the Company's financial statements include the accounts and
operations of IBT for all periods presented. Prior to the combination, IBT was
a Subchapter S Corporation and included no income taxes in its financial
statements since its income was taxed at the shareholder level. Also, IBT
owned shares of FFMC common stock for investment purposes prior to the merger
with FFMC which have been reclassified as treasury stock in the accompanying
balance sheets. Results of IBT included with FFMC's consolidated results are
as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------
1993 1992 1991
---------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Revenues $28,080 $20,546 $21,398
Income from continuing operations 4,489 3,051 4,429
</TABLE>
-34-
<PAGE> 35
All other business combinations and asset acquisitions have been
accounted for as purchases, and their results have been included in the results
of the Company's continuing operations from the effective dates of acquisition.
The following table summarizes the pro forma results of operations of the
Company as if the Company's acquisitions of Strategies and TeleCheck had
occurred on January 1, 1991. All other acquisitions have been excluded due to
their immaterial effect. This pro forma information is not necessarily
indicative of what the combined operations would have been if the Company had
control of such combined businesses for the periods presented.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------
1992 1991
------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C>
Revenues $1,530,251 $1,308,094
Income from continuing operations 17,044 56,647
Income per share from continuing operations:
Primary .29 1.12
Fully Diluted .29 1.06
</TABLE>
The acquired entities provide the following types of information services
and products: IBT, in-store marketing programs and systems for supermarkets;
Strategies, health care management services; TeleCheck, check guarantee and
verification services; Kalvar Corporation, micrographics and other data imaging
services. The Company also acquired four companies that previously held
TeleCheck franchises and purchased merchant credit card processing contracts
from six different companies during these periods. Other acquisitions include
twenty-one entities that expanded the Company's markets and service offerings
in data imaging and micrographics, retail information processing systems, and
information management systems and services to hospitals and Medicare programs.
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------
1993 1992 1991
---------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Details of businesses acquired:
Fair value of assets acquired $136,070 $407,274 $91,694
Liabilities recorded (38,840) (100,235) (25,557)
Less acquisitions notes and accounts payable (21,794) (10,750)
Less value of common stock issued (66,221)
Less cash acquired (5,252) (8,200) (1,285)
-------- -------- -------
Net cash paid for acquisitions $ 70,184 $232,618 $54,102
======== ======== =======
</TABLE>
The terms of certain of the Company's acquisition agreements provide
for additional consideration to be paid if the acquired entity's results of
operations exceed certain targeted levels. Targeted levels are generally set
substantially above the historical experience of the acquired entity at the
time of acquisition. Such additional consideration is paid in cash and with
shares of the Company's common stock, and is recorded if and when earned as
"excess of cost over fair value of assets acquired."
Acquisitions consummated in 1993 have a maximum of approximately $50
million in additional contingent consideration payable based upon the
achievement of targeted revenue or profit levels for various periods through
1999. Additionally, cash was paid and shares of FFMC common stock were
-35-
<PAGE> 36
distributed totalling $10.7 million in 1993, $6.5 million in 1992 and $4.0
million in 1991 related to businesses acquired prior to 1993 which have maximum
remaining contingent consideration totalling approximately $20 million, payable
through 1995.
C. DISPOSITIONS
During the fourth quarter of 1992, FFMC sold or signed agreements to sell the
following businesses:
<TABLE>
<CAPTION>
BUSINESS SOLD DATE SALE COMPLETED PROCEEDS TO FFMC
- ------------- ------------------- ----------------
(BEFORE SALE EXPENSES)
<S> <C> <C>
Georgia Federal Bank, FSB June 12, 1993 $269 million in cash
("Georgia Federal")
First Family Financial Services November 10, 1992 $248 million in cash to Georgia
("First Family," formerly a Federal which paid FFMC in 1992
subsidiary of Georgia Federal) a $100 million cash dividend and
$50.4 million in cash for the
settlement of income tax liabilities
related to the First Family sale
Basis Information Technologies, February 10, 1993 $96.5 million, 50% in cash and 50%
Inc. ("Basis") in common stock of the buyer
(subsequently sold June 1, 1993)
</TABLE>
Georgia Federal and First Family formerly comprised FFMC's Financial
Services business segment. Georgia Federal was the largest thrift institution
in Georgia, and First Family was a regional consumer finance company. For
purposes of the consolidated financial statements, net amounts for these
businesses have been presented as discontinued operations. The assets and
liabilities of these businesses are included in the December 31, 1992 balance
sheet as net assets of discontinued operations. Interest expense was allocated
to the Company's discontinued operations for each of the periods presented,
including the 1993 period prior to the completion of the Georgia Federal sale.
This allocation was based on the net assets of discontinued operations relative
to the sum of the consolidated net assets plus long term debt of continuing
operations, none of which was directly attributable to specific operations.
The agreement for the sale of Georgia Federal provided that the results of
operations of Georgia Federal after December 31, 1992 accrued to the buyer.
Revenues attributable to FFMC's discontinued operations were $184.5 million in
1992 and $173.9 million in 1991, and income from discontinued operations was
net of income taxes of $20.5 million in 1992 and $18.0 million in 1991.
Basis provided data processing services to financial institutions, and
prior to its sale was included in FFMC's continuing operations in the
accompanying consolidated financial statements. The agreement for the sale of
Basis provided that Basis' results of operations after December 31, 1992 would
accrue to the buyer. Prior to entering into the stock purchase agreement for
the sale of Basis, the Company discontinued software development and wrote off
related costs for a major product line in connection with the settlement of
litigation with a vendor, the combination of which resulted in income of $13.8
million
-36-
<PAGE> 37
included in other revenues in 1992. Concurrently, FFMC decided to explore the
sale of Basis. In reviewing the market value of Basis, the Company's
management determined that a write-down of the carrying value of Basis' net
assets was appropriate and recognized a fourth quarter 1992 pretax loss of
$79.6 million.
D. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
December 31,
------------------------
1993 1992
---- ----
(In thousands)
<S> <C> <C>
Equipment $183,294 $208,135
Furniture and fixtures 23,616 21,439
Leasehold improvements 15,805 16,294
Land and buildings 15,139 16,940
-------- --------
237,854 262,808
Less accumulated depreciation and amortization (103,050) (119,378)
--------- --------
$134,804 $143,430
======== ========
</TABLE>
Amounts charged to expense for the depreciation and amortization of
property and equipment were $30.6 million, $31.9 million and $25.3 million,
respectively, for the years ended December 31, 1993, 1992 and 1991.
E. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
December 31,
-----------------------
1993 1992
---- ----
(In thousands)
<S> <C> <C>
Accounts payable, including merchant settlements $174,627 $ 55,930
Accrued costs of businesses acquired 36,630 30,806
Compensation and benefit liabilities 30,834 25,914
Other accrued expenses 36,546 58,855
-------- --------
$278,637 $171,505
======== ========
</TABLE>
The accounts payable balance at December 31, 1993 includes $105.3
million in credit card settlements due to merchants from FFB. Related amounts
due to FFB from credit card associations totalling $101.5 million are included
in FFMC's accounts receivable balance at December 31, 1993.
F. LONG-TERM DEBT
<TABLE>
<CAPTION>
December 31,
----------------------
1993 1992
---- ----
(In thousands)
<S> <C> <C>
Revolving credit facility $ $140,000
Other obligations 14,713 15,255
------- --------
14,713 155,255
Less: current portion (6,218) (147,533)
------- --------
$ 8,495 $ 7,722
======= ========
</TABLE>
FFMC has an unsecured revolving credit facility totalling $450
million. The facility has a term through June 1995 (with two possible one
year extensions), with borrowings due at the end of the term.
-37-
<PAGE> 38
Borrowings at December 31, 1992 were classified as current due to the Company's
intention to repay these borrowings in 1993. Interest rates for borrowings
under the facility are established based on floating market rates in effect at
the time of borrowing. The facility contains covenants which require the
Company to meet certain financial tests and restrict certain activities in the
future, none of which are expected to significantly affect the Company's
operations. At December 31, 1993, the Company was in compliance with all of
these covenants. The Company also has a separate $10 million unsecured line of
credit available to cover short-term operating cash needs. Other obligations
consist of equipment notes payable and capitalized lease obligations. These
obligations have interest rates ranging from 2% to the prime commercial lending
rate, and are due at various dates through 2003.
Maturities of long-term debt at December 31, 1993 are due as follows:
$6.2 million in 1994; $1.5 million in 1995; $4.9 million in 1996; $.9 million
in 1997; $.6 million in 1998; and $.6 million in all periods thereafter.
G. LEASES AND CONTINGENCIES
The Company leases certain of its facilities and equipment under
operating lease agreements. Lease terms generally range from one to seven
years and substantially all agreements contain renewal options. Total rent
expense for operating leases was $37.6 million, $41.9 million and $32.5 million
for the years ended December 31, 1993, 1992 and 1991, respectively. Minimum
rental commitments at December 31, 1993 under operating leases having an
initial or remaining noncancelable term of one year or more are as follows:
<TABLE>
<CAPTION>
Due during year ending December 31,
- -----------------------------------
(In thousands)
<S> <C>
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $39,883
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,891
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,564
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,599
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,304
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,196
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $155,437
========
</TABLE>
Additionally, one of the Company's merchant services businesses leases
supermarket space which it concurrently leases to its bank customers. The
lease terms, renewal options, and rent escalation provisions of the Company's
lease to the bank generally mirror the corresponding provisions of the
Company's lease from the supermarket. Lease rentals received exceed lease
payments and the terms of the leases are generally for noncancelable initial
terms of five years. Total lease payments to supermarkets were $5.7 million,
$4.7 million, and $4.4 million for the years ended December 31, 1993, 1992 and
1991, respectively, and remaining obligations under supermarket leases as of
December 31, 1993 are as follows: $6.8 million in 1994; $6.6 million in 1995;
$5.7 million in 1996; $4.9 million in 1997; $3.5 million in 1998; and $2.9
million in all periods thereafter.
A state has attempted to prematurely terminate its Medicaid claims
processing contract with the Company. Management contends such action is
improper, intends to pursue its rights under the contract and expects the
ultimate outcome will not have a material negative impact on the Company's
financial statements.
-38-
<PAGE> 39
H. INCOME TAXES
The provision for income taxes for continuing operations includes:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------
1993 1992 1991
---------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Current tax expense:
Federal $59,444 $30,759 $21,151
State 8,237 7,904 4,687
------- ------- -------
67,681 38,663 25,838
------- ------- -------
Deferred tax expense:
Federal 18,044 6,732 14,172
State 2,387 899 1,902
------- ------- -------
20,431 7,631 16,074
------- ------- -------
$88,112 $46,294 $41,912
======= ======= =======
</TABLE>
The Company's effective tax rates for continuing operations differ from
statutory rates as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------
1993 1992 1991
---------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 35.0% 34.0% 34.0%
State income taxes, net of
federal income tax benefit 4.6 4.9 4.2
Non-deductible amortization of intangible assets 2.4 3.5 3.3
Non-deductible loss in business unit sold 28.8
IBT Subchapter S income (0.4) (0.7) (1.4)
Other (0.8) 0.6
---- ---- ----
Effective tax rate 40.8% 71.1% 40.1%
==== ==== ====
</TABLE>
In years prior to 1993, deferred income taxes arose from the
recognition of certain income and expenses for tax purposes in years different
from those in which they are recognized in the financial statements. The tax
effects of these timing differences, which are deducted from (added to) the
amount currently payable in determining the provision for taxes on income, are
as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1992 1991
--------------------------------
(In thousands)
<S> <C> <C>
Depreciation and amortization $ 6,179 $ 2,275
Software and conversion costs 2,474 11,966
Other asset sales 576 725
Restricted stock awards (1,214) 287
Other (384) 821
------- --------
$ 7,631 $ 16,074
======= ========
</TABLE>
-39-
<PAGE> 40
Deferred tax assets and liabilities at December 31, 1993 consist of
net noncurrent deferred tax liabilities of $63.3 million and net current
deferred tax assets (included in prepaid expenses and other current assets) of
$22.3 million. There is no valuation allowance. Principal components of
deferred tax items, as aggregated under FAS 109, are as follows:
<TABLE>
<CAPTION>
December 31, 1993
-----------------
(In thousands)
<S> <C>
Deferred tax liabilities:
Differences between book and tax bases of:
Capitalized software development $20,921
Property and equipment 16,771
Customer contracts 10,723
Capitalized customer conversions 8,050
Excess of cost over fair value of assets acquired 4,103
Other 3,055
Deferred tax assets:
Differences between book and tax bases of:
Accrued expenses (20,245)
Other (2,397)
-------
Net deferred tax liability $40,981
=======
</TABLE>
During 1993, the Internal Revenue Service completed its examinations
of the Company's 1986 and 1987 federal income tax returns, with no material
negative impact to the Company. In addition, the Internal Revenue Service is
currently conducting its examinations of FFMC's 1988 and 1989 federal income
tax returns, for which no report has been issued. While the results of the
1988 and 1989 examinations are not currently determinable, the management of
the Company believes the results will not have a material effect on the
Company's financial position or results of operations.
I. SHAREHOLDERS' EQUITY
On August 18, 1993, FFMC issued 1,000,000 unregistered shares of its
common stock related to the Company's merger with International Banking
Technologies, Inc.
On January 29, 1992, the Company's Board of Directors authorized a
stock split of each two $.10 par value shares into three $.10 par value shares
of the Company's common stock and increased the number of authorized shares
from 100 million to 150 million. The split was distributed on March 31, 1992
to holders of record on March 2, 1992. All share and per share data have been
restated to reflect this stock split.
In June 1989, the Company sold 6.3 million shares of its common stock
to an investment banking firm, resulting in net proceeds to the Company of
$120.1 million. These shares were issued with warrants to subscribe for up to
2.1 million additional common shares at $26.67 per share. A total of 1.6
million shares remained under warrant at December 31, 1993, with such warrants
exercisable during specified periods in 1994 and 1995.
During 1988, the Company issued $172.5 million of 7% convertible
subordinated debentures due 2013 convertible into shares of the Company's
common stock. On October 9, 1991, the Company
-40-
<PAGE> 41
completed the retirement of these debentures (following a call for redemption)
totally through conversion into common stock, resulting in the issuance of 7.3
million shares. Related conversion costs and unamortized issuance costs
totalling $4.6 million were charged to paid-in capital.
In July 1991, the Company completed an equity offering of 6.5 million
shares of its common stock, resulting in net proceeds to the Company of $144.8
million.
The Company's Articles of Incorporation authorizes 5,000,000 shares of
preferred stock, none of which are issued. Also, the Company's ability to pay
dividends on its common stock is limited by a covenant in its revolving credit
facility. The dividend amount permitted under the covenant, however,
significantly exceeds the Company's current cash dividend payment levels.
J. STOCK OPTIONS AND AWARDS
The Company has various plans that provide for the granting of stock
options and restricted shares to certain officers, employees and non-employee
members of the Company's Board of Directors. A total of 5.9 million shares of
FFMC common stock has been authorized for issuance under these plans. The
Company has reserved the appropriate number of shares of common stock to
accommodate these plans and other outstanding options.
Options to purchase shares of the Company's common stock are generally
granted at not less than the common stock's fair market value at the date of
grant, have ten-year terms, and become exercisable in five equal annual
increments beginning six months after the grant date. In connection with the
Company's acquisitions, outstanding options under certain stock option plans
were assumed. These options were converted to options to purchase shares of
FFMC common stock and are exercisable on specified conditions and at specified
times not later than ten years from the date of grant.
A summary of stock option transactions is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------
1993 1992 1991
---------------------------------------------------------
<S> <C> <C> <C>
Shares under option at January 1 1,692,241 1,629,803 1,783,272
Granted 155,714 275,668 228,000
Canceled (78,172) (61,959) (145,682)
Exercised (507,875) (151,271) (235,787)
--------- --------- ---------
Shares under option at December 31 1,261,908 1,692,241 1,629,803
========= ========= =========
Average price of options exercised $ 14.34 $ 11.00 $ 9.26
At December 31:
Price range of outstanding options
From $ 1.53 $ 1.53 $ 3.19
To $ 48.13 $ 31.88 $ 28.00
Options exercisable 889,869 1,124,520 801,660
</TABLE>
Common stock awards have restrictions that generally expire after two
to five years of continuous service from the grant date. The value of the
awards is determined using closing prices of the Company's
-41-
<PAGE> 42
common stock on the grant date, and is amortized to expense on a straight-line
basis over the restriction period. The unamortized portion of such awards is
reported as a reduction in paid-in capital.
A summary of stock award transactions is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1993 1992 1991
--------------------------------------------------------
<S> <C> <C> <C>
Restricted shares at January 1 590,483 569,997 586,969
Granted 9,837 128,239 89,040
Canceled (19,500) (23,208) (8,208)
Vested (410,884) (84,545) (97,804)
------- ------- -------
Restricted shares at December 31 169,936 590,483 569,997
======= ======= =======
Value of restricted shares granted (in thousands) $ 419 $ 4,035 $ 2,155
</TABLE>
K. EMPLOYEE BENEFIT PLANS
The Company maintains a defined contribution savings and profit sharing
plan covering substantially all employees. The savings component of the plan
provides a tax deferred amount for each participant consisting of an employee
elective contribution and a matching amount provided by the Company. The
profit sharing component consists of a Company contribution for each eligible
participant. The profit sharing contribution and the extent of the Company's
savings plan match are based on the Company's financial performance. The
aggregate amounts charged to expense in connection with this plan were $2.4
million in 1993, $2.0 million in 1992 and $1.3 million in 1991.
The Company has an employee stock purchase plan for which a total of
2,250,000 unissued shares have been reserved for purchase. Monies accumulated
through payroll deductions elected by eligible employees are used to effect
quarterly purchases of FFMC common stock at a 5% discount from the lower of the
market price at the beginning or end of the quarter.
The Company does not offer post-retirement health care or other
insurance benefits for retired employees.
-42-
<PAGE> 43
FIRST FINANCIAL MANAGEMENT CORPORATION
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
1993 By Quarter
------------------------------------------------
First Second Third Fourth
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 348,469 $ 393,397 $ 420,946 $ 506,856
Expenses (311,909) (345,807) (364,050) (432,145)
--------- --------- --------- ---------
Income from continuing operations
before income taxes 36,560 47,590 56,896 74,711
Income taxes 15,096 19,703 24,220 29,093
--------- --------- --------- ---------
Income from continuing operations $ 21,464 $ 27,887 $ 32,676 $ 45,618
========= ========= ========= =========
Income per share from
continuing operations $ 0.35 $ 0.46 $ 0.54 $ 0.75
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
1992 By Quarter
------------------------------------------------
First Second Third Fourth
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 276,351 $ 332,875 $ 373,422 $ 442,608
Loss in business unit sold (79,567)
Other expenses (252,464) (301,091) (336,286) (390,742)
--------- --------- --------- ---------
Income (loss) from continuing operations
before income taxes 23,887 31,784 37,136 (27,701)
Income taxes 9,852 13,191 15,147 8,104
--------- --------- --------- ---------
Income (loss) from continuing operations 14,035 18,593 21,989 (35,805)
Income from discontinued operations,
net of taxes 8,679 9,184 10,747 8,290
Loss on sale of discontinued
operations, net of taxes (6,818)
--------- --------- --------- ---------
Net income (loss) $ 22,714 $ 27,777 $ 32,736 $ (34,333)
========= ========= ========= =========
Income (loss) per share:
Continuing operations $ 0.25 $ 0.31 $ 0.37 $ (0.59)
Discontinued operations 0.15 0.16 0.18 0.02
--------- --------- --------- ---------
Net income (loss) $ 0.40 $ 0.47 $ 0.55 $ (0.57)
========= ========= ========= =========
</TABLE>
FFMC completed its merger with International Banking Technologies, Inc.
("IBT") during the third quarter of 1993. This merger has been accounted
for as a pooling of interests. Accordingly, the previously reported
results for all quarterly periods prior to the merger have been restated to
combine the results of FFMC and IBT. Per share amounts have been
recalculated after adding the shares of FFMC common stock issued to effect
the merger to weighted average share amounts.
-43-
<PAGE> 44
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and Shareholders of
First Financial Management Corporation
Atlanta, Georgia
We have audited the consolidated financial statements of First
Financial Management Corporation and subsidiaries (the "Company") as of
December 31, 1993 and 1992, and for each of the three years in the period ended
December 31, 1993, and have issued our report thereon dated January 28, 1994;
such report is included elsewhere in this Form 10-K. Our audits also included
the financial statement schedules of the Company, listed in Item 14. These
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE
Atlanta, Georgia
January 28, 1994
-44-
<PAGE> 45
FIRST FINANCIAL MANAGEMENT CORPORATION
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
Deductions
Balance at ------------------- Balance
Beginning Amounts Amounts at End of Period
Name of Debtor of Period Additions Collected Written Off Current Non-Current
- -------------- ---------- --------- ------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
- ----------------------------
David J. Cotcher (1) $50 $125 ---- ---- $175 ----
Virgil R. Williams (2) ---- 1,248 ---- ---- 1,248 ----
Equipment Technologies,
Inc., ("ETI") (3) ---- 1,425 ---- ---- 1,425 ----
Year Ended December 31, 1992:
- ----------------------------
David J. Cotcher (1) ---- 50 ---- ---- 50 ----
</TABLE>
There were no reportable items for the year ended December 31, 1991.
(1) David J. Cotcher is formerly the President of MicroBilt Corporation, a
subsidiary of FFMC. These notes bear interest at a floating rate tied
to the Federal short-term rate, as defined in the Internal Revenue Code
of 1986, as amended (currently 3.9%), and are payable on demand.
(2) Virgil R. Williams was elected as a Director of the Registrant in 1993,
and was previously a principal shareholder of International Banking
Technologies, Inc. ("IBT"). IBT had this note receivable from Mr.
Williams prior to its merger with FFMC; such merger was completed in
August 1993. This note bears interest at eight percent and is payable
on demand.
(3) ETI is a company 50% owned by Virgil R. Williams, a Director of the
Registrant. IBT had loaned funds to ETI under a working capital line
of credit prior to its merger with FFMC. Interest was payable at the
prime commercial lending rate plus one percentage point. The entire
balance of this loan, plus accrued interest, was repaid on February 28,
1994.
-45-
<PAGE> 46
FIRST FINANCIAL MANAGEMENT CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Additions, charged to:
----------------------
Balance at Costs Balance
Beginning and Other at End
Description of Period Expenses Accounts (1) Deductions (2) of Period
- ----------- --------- -------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C>
RELATED TO AMOUNTS
PRESENTED IN BALANCE
SHEET CAPTIONS:
Year Ended December 31, 1993
- ----------------------------
Allowance for doubtful accounts $ 5,183 $ 1,734 $ 498 $ (3,372) $ 4,043
======= ======= ======= ======== ========
Year Ended December 31, 1992
- ----------------------------
Allowance for doubtful accounts $ 1,018 $ 4,202 $ 2,007 $ (2,044) $ 5,183
======= ======= ======= ======== ========
Year Ended December 31, 1991
- ----------------------------
Allowance for doubtful accounts $ 991 $ 441 $ 426 $ (840) $ 1,018
======= ======= ======= ======== ========
</TABLE>
(1) Additional amounts added during the year are from acquired businesses,
representing balances at the date of acquisition.
(2) Amounts represent write-offs.
-46-
<PAGE> 47
FIRST FINANCIAL MANAGEMENT CORPORATION
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
Charged to Costs and Expenses
Year Ended December 31,
-----------------------------------------------------
1993 1992 1991
-----------------------------------------------------
<S> <C> <C> <C>
1. Maintenance and repairs $18,859 $21,305 $18,304
2. Depreciation and amortization of intangible
assets, preoperating costs and similar deferral:
Amortization of excess of cost over fair
value of assets acquired 17,273 15,093 10,258
Amortization of customer contracts 9,819 10,684 8,771
</TABLE>
Taxes (other than payroll and income taxes), royalties, and advertising costs
did not exceed one percent of total revenues in any year presented.
-47-
<PAGE> 48
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibits Numbered Page
-------- -------------
<S> <C> <C>
3.1 Restated Articles of Incorporation, as amended. (Filed on May 14, 1992
as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1992 and incorporated herein by reference.)
3.2 Articles of Correction to the Articles of Amendment to the Restated
Articles of Incorporation of First Financial Management Corporation
through September 29, 1993 (filed on November 12, 1993 as an exhibit to
the Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993 and incorporated herein by reference).
3.3 Bylaws, as amended through July 28, 1993 (filed on November 12, 1993 as
an exhibit to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993 and incorporated herein by reference).
4.1 See Article V of the Registrant's Restated Articles of Incorporation, as
amended, and Articles 1, 2 and 9 of the Registrant's Bylaws, as amended,
listed as Exhibits 3.1, 3.2 and 3.3, respectively.
4.2* FFMC Savings Plus Plan, as amended and restated, effective January 1,
1991 (filed on November 5, 1990 as an exhibit to the Registrant's
Registration Statement on Form S-8 (File No. 33-37532) and incorporated
herein by reference).
4.3 Credit Agreement, dated as of June 25, 1992, among the Registrant, each
of the banks named therein, and The Chase Manhattan Bank (National
Association) as agent for such banks. The Schedules and Exhibits to this
Credit Agreement are identified on a list of schedules and exhibits
contained at the end of the Table of Contents to such Agreement, which
list is incorporated herein by reference. All schedules and exhibits
were omitted for purposes of filing but will be furnished supplementally
to the Commission upon request (filed on August 14, 1992 as an exhibit to
the Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 1992 and incorporated herein by reference).
4.4 Warrant Agreement, dated June 15, 1989, between the Registrant and
Wachovia Bank and Trust Company, N.A. (filed on June 19, 1989 as an
exhibit to Registrant's Registration Statement on Form S-3 (File No.
33-29267) and incorporated herein by reference).
</TABLE>
-48-
<PAGE> 49
<TABLE>
<CAPTION>
Sequentially
Exhibits Numbered Page
-------- -------------
<S> <C> <C>
4.5 Amendment dated September 5, 1989, to the Warrant Agreement, dated June
15, 1989, by and between the Registrant and Wachovia Bank and Trust
Company, N.A. (filed on September 6, 1989 as an exhibit to Amendment No.
1 to Registrant's Registration Statement on Form S-3 (File No. 33-29267)
and incorporated herein by reference).
4.6 Commitment Letter dated December 21, 1993, from Wachovia Bank of Georgia, 54
extending the maturity of a $10 million line of credit to the Registrant
along with the Letter Agreement in like amount dated June 23, 1993.
10.1 Agreement and Plan of Merger, dated July 6, 1992, by and among the
Registrant, PSC Acquisition Corporation and Payment Services Company -
U.S. (filed on November 16, 1992 as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1992
and incorporated herein by reference). The schedules to the Agreement
and Plan of Merger were omitted, but were identified in a list included
therein and will be furnished supplementally to the Commission upon
request.
10.2 Stock Purchase Agreement, dated as of December 31, 1992, between First
Financial Management Corporation and FIserv, Inc., as amended by
Amendment No. 1 to Stock Purchase Agreement dated as of February 10, 1993
(filed on February 25, 1993 as an exhibit to the Registrant's Current
Report on Form 8-K that reported this February 10, 1993 stock sale and
incorporated herein by reference).
10.3 Stock Purchase Agreement, dated as of December 20, 1992, among First
Financial Management Corporation, First Union Corporation and First Union
Corporation of Georgia. The schedules to the Stock Purchase Agreement
are identified on a list of schedules included with the Agreement and
have been omitted for purposes of this filing, but will be furnished
supplementally to the Commission upon request (filed on March 31, 1993 as
an exhibit to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992 and incorporated herein by reference).
10.4 Lease between the Northwestern Mutual Life Insurance Company, as lessor,
and Endata, Inc., as lessee, dated December 23, 1985 for Endata, Inc.'s
headquarters at 501 Great Circle Road, Nashville, Tennessee (filed on
March 31, 1986 as an exhibit to Endata, Inc.'s Annual Report on Form 10-K
for 1985 (File No. 0-11357) and incorporated herein by reference).
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C>
10.5 Lease between Parkway, Ltd., as landlord, and National Bancard
Corporation, as tenant, dated December 28, 1987, together with Addendum
to Lease Agreement, dated February 22, 1988, for the NaBANCO Building in
Sunrise, Florida (filed on March 14, 1988 as an exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1987 and incorporated herein by reference).
10.6 Sublease, dated January 7, 1983, between National Bancard Corporation
(NaBANCO) as the tenant and assignee of The Chase Manhattan Bank, N.A.,
and Broadhollow Realty Company, as the landlord and assignee of Allstate
Insurance Company, covering NaBANCO's center on Bayliss Road in Melville
(previously known as Huntington), New York, including as Exhibit D
thereto the primary Lease, dated September 3, 1975, pursuant to which the
Sublease was made, and a related agreement modifying the primary Lease,
together with two amendments to the Sublease, dated December 22, 1986 and
June 15, 1988, respectively (filed on March 27, 1990 as an exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1989 and incorporated herein by reference).
10.7 Lease, together with related Rider, dated February 6, 1989, between Rowe
Properties-Data Limited Partnership, as Lessor, and The Computer Company
as Lessee, covering First Health Services Corporation's facilities at
Innsbrook Corporate Center in Glen Allen, Virginia, together with a
Guaranty, dated February 2, 1989, guaranteeing Lessor's obligations under
the Lease (filed on March 27, 1990 as an exhibit to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1989 and
incorporated herein by reference).
10.8 Lease, dated February 28, 1990, as amended by the First Amendment dated
June 22, 1990, between Frank J. Hanna, Jr., as Lessor, and Nationwide
Credit, Inc. (Nationwide), as Lessee, covering Nationwide's headquarters
facility at 2258 Northwest Parkway, Marietta, Georgia. (1)
10.9* The Registrant's 1982 Incentive Stock Plan, as amended through January
31, 1990. (1)
10.10* The Registrant's 1988 Incentive Stock Plan, as amended through January
30, 1991. (1)
10.11* First Financial Management Corporation Performance Units Incentive Plan,
as amended through May 1, 1991 (filed on November 14, 1991 as an exhibit
to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1991 and incorporated herein by reference).
</TABLE>
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<TABLE>
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<S> <C> <C>
10.12* Directors' Restricted Stock Award Plan, together with Form of Director's
Restricted Stock Award Agreement (filed on March 31, 1987 as an exhibit to
the Registrant's Annual Report on Form 10-K for the year ended December 31,
1986 and incorporated herein by reference).
10.13* 1990 Directors' Stock Option Plan. (Filed on August 14, 1990 as an exhibit
to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1990 and incorporated herein by reference.)
10.14* Endata, Inc. Amended Stock Option Plan (filed on October 17, 1986 as an
exhibit to Post-Effective Amendment No. 1 to Endata, Inc.'s Registration
Statement on Form S-8 (File No. 2-97925) and incorporated herein by
reference), together with an Amendment to Endata Inc.'s Amended Stock
Option Plan, dated October 30, 1987, and two forms of letters specifying
the manner in which each Endata, Inc. Stock Option was converted into an
option to purchase the Registrant's stock and forms of the Endata Incentive
and Non-Qualified Stock Option Agreements (filed on March 14, 1988 as an
exhibit to the Registrant's Annual Report on Form 10-K for the year ended
December 31,1987 and incorporated herein by reference).
10.15* FFMC 1990 Employee Stock Purchase Plan adopted December 15, 1989, as
amended on October 24, 1990 (1), and amendment thereto adopted on July 24,
1991, effective October 1, 1991 (filed on August 14, 1991 as an exhibit to
the Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 1991 and incorporated herein by reference).
10.16* Employment Agreement, dated January 31, 1989, between the Registrant and
Patrick H. Thomas (filed on March 31, 1989 as an exhibit to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1988 and incorporated herein by reference).
10.17* Employment Agreement, dated January 31, 1989, between the Registrant and M.
Tarlton Pittard (filed on March 31, 1989 as an exhibit to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1988 and
incorporated herein by reference).
10.18* Employment Agreement, dated February 15, 1991, Termination of prior Employment
Agreement, Termination of Employee Death Benefit Agreement, and First Amendment
to Deferred Compensation Agreement, all between the Registrant (or Georgia
Federal Bank, FSB) and Richard D. Jackson. (1)
</TABLE>
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<TABLE>
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10.19* Form of Restricted Stock Award Agreement between the Registrant and each of
the following officers covering awards under the 1988 Incentive Stock
Plan, on January 31 1990, to M. Tarlton Pittard and Richard D. Jackson.
(1)
10.20* Non-Qualified Stock Option, dated February 5, 1988, granted by the
Registrant to Patrick H. Thomas (filed on March 14, 1988 as an exhibit to
the Registrant's Annual Report on Form 10-K for the year ended December 31,
1987 and incorporated herein by reference).
10.21* Form of Non-Qualified Stock Option Agreement as issued to the Registrant's 58
Executive Officers under the 1988 Incentive Stock Plan.
10.22* Form of Restricted Stock Award Agreement between the Registrant and each of
the following officers covering awards under the 1988 Incentive Stock Plan
on May 1, 1991, to Richard D. Jackson, M. Tarlton Pittard and Stephen D.
Kane (filed on August 14, 1991 as an exhibit to the Registrant's Quarterly
Report on Form 10-K for the quarter ended June 30, 1991 and incorporated
herein by reference).
10.23* Form of Restricted Stock Award Agreement between the Registrant and each of
the following officers covering awards on January 31, 1989 under the 1988
Incentive Stock Plan: Patrick H. Thomas, M. Tarlton Pittard and Stephen D.
Kane (filed on March 31, 1989 as an exhibit to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1988 and incorporated
herein by reference).
10.24 Resolution of the Compensation Committee of the Registrant's Board of 60
Directors, dated June 24, 1993, accelerating to December 31, 1993 the date
on which restrictions lapsed on stock awards previously issued to Patrick
H. Thomas, M. Tarlton Pittard and Stephen D. Kane.
10.25* Employment Agreement, dated January 29, 1992, between the Registrant and
Stephen D. Kane. (2)
10.26 Agreement, dated May 7, 1993, by and among National Bancard Corporation,
CMSC Corporation and First Financial Bank (filed on May 14, 1993 as an
exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993 and incorporated herein by reference).
</TABLE>
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<TABLE>
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10.27 Agreement, Plan of Reorganization and Plan of Merger, dated as of July 28,
1993 by and among First Financial Management Corporation, Tomahawk
Acquisition Corporation, Pennant Acquisition Corporation, International
Banking Technologies, Inc., Prime Consulting Group, Inc. and The
Shareholders of International Banking Technologies, Inc. and Prime
Consulting Group, Inc. The Schedules to this Agreement, Plan of
Reorganization and Plan of Merger are identified on a list of schedules
contained at the end of the Table of Contents to such Agreement, which list
is incorporated herein by reference. All schedules were omitted for
purposes of filing but will be furnished supplementally to the Commission
upon request (filed on August 13, 1993 as an exhibit to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 and
incorporated herein by reference).
10.28* Employment Agreement, dated March 22, 1994, between the Registrant and
Patrick H. Thomas. 62
10.29* Restricted Stock Award Agreement between the Registrant and Patrick H.
Thomas covering an award under the 1988 Incentive Stock Plan on March 22,
1994. 73
10.30* Restricted Stock Award Agreement between the Registrant and Patrick H.
Thomas covering an award under the 1988 Incentive Stock Plan on March 22,
1994. 79
10.31* Non-Qualified Stock Option, dated March 22, 1994, granted by the Registrant
to Patrick H. Thomas. 85
11.1 Statement regarding computation of net income per share. 89
22.1 List of Subsidiaries. 91
24.1 Consent of Independent Auditors. 95
28.1 Annual Report on Form 11-K for the FFMC Savings Plus Plan (to be filed by
amendment).
</TABLE>
_____________________________
* Indicates management contract or compensatory
plan or arrangement.
(1) Filed on April 1, 1991 as an exhibit to
the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990
and incorporated herein by reference.
(2) Filed on March 23, 1992 as an exhibit to
the Registrant's Annual Report on Form
10-K for the year ended December 31, 1991
and incorporated herein by reference.
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EXHIBIT 4.6
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<PAGE> 2
Wachovia Bank of Georgia, N.A. EXHIBIT 4.6
191 Peachtree Street, N.E. PAGE 1 OF 3
Atlanta, Georgia 30303
December 21, 1993
Mr. Raymond A. Emmons
Executive Vice President
First Financial Management Corporation
3 Corporate Square Suite 700
Atlanta, GA 30329
RE: The line of credit (the "Line of Credit") evidenced by that
certain letter agreement between First Financial Mangement
Corporation (the "Borrower") and Wachovia Bank of Georgia,
N.A. (the "Bank") dated June 23, 1993 (the "Letter Agreement")
Dear Ray:
I am pleased to advise you that the Bank has agreed to extend the
maturity of the ten million dollar ($10,000,000) Line of Credit to
March 31, 1994. This extension shall become effective from the date of
the Borrower's signing the acknowledgment and acceptance below, and
during this period, the Line of Credit remains subject to all terms
and conditions contained in the Letter Agreement.
Sincerely,
/s/ Gay M. Buxton
------------------------
Gay M. Buxton
Assistant Vice President
Accepted and agreed to this 23rd day of December, 1993.
By: /s/ Raymond A. Emmons
---------------------
Raymond A. Emmons
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<PAGE> 3
Wachovia Bank of Georgia, N.A. EXHIBIT 4.6
Post Office Box 4148 PAGE 2 OF 3
Atlanta, Georgia 30302
June 23, 1993
Mr. M. Tarlton Pittard
Senior Executive Vice President,
Chief Financial Officer
First Financial Management Corporation
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
Dear Mr. Pittard:
Wachovia Bank of Georgia, N.A. (the "Bank") is pleased to make available to
your company a Ten Million Dollar ($10,000,000) line of credit ("the
Commitment"). The Commitment expires on September 30, 1993 and is subject to:
1) the occurrence of no event of default under that Credit Agreement dated June
25, 1992 by and between First Financial Management Corporation ("FFMC") and
Chase Manhattan Bank, N.A., as Agent and the banks signatory thereto, 2)
execution of loan documents acceptable to the Bank. FFMC and the Bank shall
each have the right to cancel the Commitment prior to the expiration date if
the banking relationship between the Bank and FFMC is no longer mutually
satisfactory and in the event the Commitment is terminated prior to its
expiration date, the party terminating the agreement shall furnish prompt
notice to the other of such termination.
This line of credit is also subject to a commitment fee equal to 0.25% per annum
of the average daily amount of the unused portion of the commitment, payable
monthly in arrears on the basis of a 360-day year. The rate of interest for
direct borrowings under the Commitment will be the Base Rate, subject to change
from time to time, or a rate mutually agreed upon at the time of any
borrowings. Interest shall be due and payable upon the maturity of each and
every borrowing.
The Base Rate means, for any day, the rate per annum that is equal to the
higher as of such day (i) The Prime Rate minus 0.75%, and (ii) 1/2 of 1% above
the Federal Funds Rate. For purposes of determining the Base Rate for any day,
changes in the Prime Rate will be effective on the date of such change. As
used herein, the "Prime Rate" refers to that interest rate so denominated and
set by the Bank from time to time as an interest rate basis for borrowings.
The Prime Rate is one of several interest rate bases used by the Bank. The
Bank lends at interest rates above and below the Prime Rate. The Federal Funds
Rate means, for any day, the rate per annum equal to the weighted average of
the rates on overnight Federal Reserve System on such
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EXHIBIT 4.6
PAGE 3 OF 3
day. The rate of interest shall be calculated on the basis of a 360-day year
for the actual numbers of days during each period.
The maximum maturity on any advances under this Commitment will be ten days.
At the discretion of the Bank, FFMC must repay the line for one day after any
borrowing of ten days.
This commitment will be gauranteed by FFMC's subsidiaries as outlined in the
Credit Agreement referenced above. Advances outstanding under the Commitment
will be evidenced by a Master Note. No condition or other term of this
commitment may be waived or modified except by a writing signed by both your
company and the Bank.
This commitment to lend will be null and void if not accepted and returned to
the Bank on or before July 9, 1993.
Sincerely,
/s/ Gay M. Buxton
- -----------------------
Gay M. Buxton
Assistant Vice President
GMB:bam
Accepted and agreed to this 19th day of July, 1993
FIRST FINANCIAL MANAGEMENT CORPORATION
By: /s/ M. Tarlton Pittard
-------------------------
Senior Executive Vice President(Title)
and Chief Financial Officer
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EXHIBIT 10.21
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<PAGE> 2
EXHIBIT 10.21
FIRST FINANCIAL MANAGEMENT CORPORATION
NON-QUALIFIED STOCK OPTION
First Financial Management Corporation (the "Corporation"),
a Georgia corporation, hereby grants to (__________________) (the "Holder"), a
Non-Qualified Stock Option to purchase from the Corporation (_______________)
(________) fully paid and non-assessable shares of the common stock, $.10 par
value, of the Corporation at a price of $___________ per share. This Option
has been granted pursuant to the 1988 Incentive Stock Plan (the "Plan") of the
Corporation adopted by its Board of Directors on February 5, 1988, and as
amended through January 30, 1991, and is subject to all of the terms,
conditions and provisions of that Plan. A copy of the Plan is attached hereto
and made a part of this Option as if fully set out herein.
During each of the five successive twelve-month periods,
beginning six months after the date of grant of this Option, this Option may be
exercised as to one-fifth of the total number of shares covered hereby. Such
right to purchase in each such twelve-month period up to one-fifth of the total
number of shares covered hereby shall be cumulative, so that any shares
eligible for purchase, but not so purchased, in any twelve-month period shall
be added to the number of shares which may be purchased in any following
twelve-month period. Beginning 54 months after the date of the grant, this
Option may be exercised as to all shares covered hereby. Payment for shares
purchased pursuant to this Option may be in cash or, subject to any rules or
restrictions which the Compensation Committee of the Corporation may adopt, by
delivery of shares of common stock of the Corporation at their fair market
value on the date of delivery.
Executed as of _____ day of __________ 1993.
FIRST FINANCIAL MANAGEMENT CORPORATION
By:
----------------------------------
Patrick H. Thomas
Chairman of the Board
President and Chief Executive Officer
THE HOLDER
By:
----------------------------------
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EXHIBIT 10.24
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EXHIBIT 10.24
WHEREAS, the Compensation Committee made Restricted Stock Awards on
January 31, 1989 (the "Awards") in accordance with the Corporation's 1988
Incentive Stock Option Plan (the "1988 Plan") to the following persons in the
following amounts:
Patrick H. Thomas 236,250 Shares
M. Tarlton Pittard 23,625 Shares
Stephen D. Kane 23,625 Shares
Norman E. Marwitz 15,750 Shares
Harlan F. Seymour 7,875 Shares
WHEREAS, under the terms of the Awards, the restrictions on such
shares are scheduled to lapse on January 31, 1994;
WHEREAS, Section 8(a) of the 1988 Plan allows the Compensation
Committee to accelerate the expiration of the applicable restriction period
with respect to all or part of any award under the 1988 Plan in the Committee's
discretion; and
WHEREAS, acceleration of the Awards into calendar 1993 would result in
a tax savings to both the recipients of the Awards and the Corporation;
NOW, THEREFORE BE IT RESOLVED, that the Compensation Committee hereby
accelerates the expiration of the applicable restriction period with respect to
the Awards from January 31, 1994 to December 31, 1993 as permitted under
Section 8(a) of the 1988 Plan.
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EXHIBIT 10.28
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<PAGE> 2
EMPLOYMENT AGREEMENT
This Agreement is made as of the 22nd day of March, 1994, between
FIRST FINANCIAL MANAGEMENT CORPORATION, a Georgia corporation ("FFMC"), and
PATRICK H. THOMAS (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is serving as Chairman of the Board, President
and Chief Executive Officer of FFMC pursuant to an Employment Agreement dated
January 31, 1989 (the "1989 Agreement"); and
WHEREAS, the parties desire to terminate the 1989 Agreement effective
as of December 31, 1994;
WHEREAS, the parties desire to enter into a revised employment
agreement with respect to the continued employment of the Executive by FFMC
which shall automatically become effective as of January 1, 1995;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
1. Termination of 1989 Agreement. The 1989 Agreement shall
terminate and be of no further force and effect as of midnight on December 31,
1994, and this Agreement shall serve as the required notice of termination by
each party to the other pursuant to Section 3(a) of the 1989 Agreement.
2. Employment. The Executive hereby agrees to serve as Chairman
of the Board, President and Chief Executive Officer of FFMC for the term of
this Agreement, subject to the terms set forth herein and the provisions of the
Bylaws of FFMC. During his employment hereunder, the Executive shall devote
his effort and attention, substantially on a full-time basis, to the
performance of the duties required of him as an executive of FFMC.
3. Compensation. As compensation for his services during the
term of this Agreement, the Executive shall receive the amounts and benefits
set forth in subsections (a), (b), (c), (d), (e), (f), (g) and (h) of this
Section 3:
(a) An annual salary effective January 1, 1995 of
$950,000.00 prorated for any partial year of employment, subject to
annual review for increases in the light of the size and performance
of FFMC at such time as FFMC conducts salary reviews for its officers
generally. The Executive's salary shall be payable semimonthly or in
accordance with FFMC's regular payroll practices in effect from time
to time for officers of his level in the corporation;
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(b) In lieu of cash bonuses, a Restricted Stock Award to
be made contemporaneously with the execution of this Agreement under
FFMC's 1988 Incentive Stock Plan (the "Plan") containing an
opportunity to obtain 472,500 shares of FFMC Common Stock (the
"Stock") free of restrictions on December 31, 1999. The Stock awarded
pursuant to the Restricted Stock Award will be subject to the terms of
the Plan and the Restricted Stock Agreement attached to this Agreement
as Exhibit A;
(c) Participation in the employee benefit plans
maintained by FFMC for the purpose of providing retirement, deferred
compensation, healthcare, life insurance, disability and similar
benefits to its employees;
(d) Continued participation in the incentive stock plans,
Performance Units Incentive Plan or other incentive plans for senior
executives of FFMC;
(e) Provision at FFMC's expense of a term life insurance
policy insuring the Executive during the term of this Agreement in an
amount of not less than $5,000,000 payable to the Executive's estate
or designated beneficiary;
(f) Reimbursement of the dues and costs of club
memberships and automobile expenses, and the right to personal use of
FFMC's airplane in accordance with FFMC's policies in effect from time
to time;
(g) A Restricted Stock Award to be made contemporaneously
with the execution of this Agreement pursuant to the Restricted Stock
Agreement attached as Exhibit B; and
(h) An Option to be granted pursuant to the Option
Agreement attached as Exhibit C.
4. Term.
(a) This Agreement and the Executive's employment
hereunder shall be effective as of January 1, 1995 and shall continue
for a five-year term ending on December 31, 1999. This Agreement and
the Executive's employment hereunder shall automatically continue for
successive one-year periods at the end of the initial five-year term,
unless either party gives notice to the other of its intent to
terminate this Agreement and the Executive's employment hereunder not
less than 180 days prior to the commencement of any such one-year
renewal period. In the event such notice to terminate is properly
given, this Agreement and the Executive's employment hereunder shall
terminate at the end of the initial term or the one-year renewal
period during which the notice is given.
(b) This Agreement and the Executive's employment
hereunder may be terminated by either party prior to the end of the
initial term hereof (or any renewal period) upon 30 days' prior
written notice to the other party, provided, that, in the event
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of such termination, FFMC shall be obligated to make the payments and
provide the benefits described in Section 5 below.
5. Termination Payments. Upon termination of the Executive's
employment prior to the end of the term of this Agreement (including any
renewal term), FFMC shall pay to the Executive, within three business days
after the end of the 30-day notice period provided in Section 4 above, a
payment in cash determined under subsection (a), (b) or (c) of this Section 5
and shall for the period or at the time specified provide the other benefits
described in subsections (d), (e) and (g) of this Section 5:
(a) The payment shall be 300% of the Executive's "Current
Total Annual Compensation" as defined in subsection (f) of this
Section 5, if: (i) the Executive's employment is terminated by FFMC,
whether with or without cause, within three (3) years after any
"Change in Control" of FFMC as defined in subsection (f) of this
Section 5, or at the request of or pursuant to an agreement with a
third party who has taken steps reasonably calculated to effect a
Change in Control, or otherwise in connection with or in anticipation
of a Change in Control; or (ii) the Executive elects to terminate
employment within three (3) years after any Change in Control of FFMC.
(b) The payment shall be 200% of the Executive's Current
Total Annual Compensation, if: (i) the Executive's employment is
terminated by FFMC, whether with or without cause, and such
termination is not described in (a) above; (ii) the Executive elects
to terminate his employment for "Good Reason", as defined in
subsection (f) of this Section 5, and such termination is not
described in (a) above; or (iii) the Executive's employment is
terminated by reason of his "Disability", as defined in subsection (f)
of this Section 5.
(c) The payment shall be 100% of the Executive's Current
Total Annual Compensation, if the Executive's employment is terminated
and such termination is not described in subsections (a) or (b) of
this Section 5.
(d) In addition to the amount payable to the Executive
under subsection (a), (b) or (c) of this Section 5, the health care
and life insurance benefits coverage provided to the Executive at his
date of termination shall be continued at the same level and in the
same manner as if his employment had not terminated (subject to the
customary changes in such coverages if the Executive reaches age 65 or
similar events), beginning on the date of such termination and ending
on the date sixty (60) months from the date of termination. Any
additional coverages the Executive had at termination, including
dependent coverage, will also be continued for such period on the same
terms. Any costs the Executive was paying for such coverages at the
time of termination shall continue to be paid by the Executive. If
the terms of any benefit plan referred to in this section do not
permit continued participation by the Executive, then FFMC will
arrange for other coverage providing substantially similar benefits.
In addition, the Executive may elect by notice to FFMC to continue the
term life insurance policy described in
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<PAGE> 5
Section 3(e) above at his expense and FFMC shall take all actions
necessary to transfer such policy to the Executive or his designee at
the time of his termination.
(e) FFMC agrees that there will be no change made in any
stock option or restricted stock award under FFMC's 1982 or 1988
Incentive Stock Plans or any award under FFMC's Performance Units
Incentive Plan during the term of the Executive's employment hereunder
which adversely affects the Executive's rights under such stock
option, restricted stock or other award without the prior written
consent of the Executive.
(f) For purposes of this Agreement, the following
definitions shall apply:
(i) The "Board" shall mean the Board of
Directors of FFMC.
(ii) "The Incumbent Board" shall mean the
members of the Board as of the date hereof and any person
becoming a member of the Board hereafter whose election, or
nomination for election by FFMC's shareholders, was approved
by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office
is in connection with an actual or threatened election contest
relating to the election of the directors of FFMC, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act).
(iii) "Change in Control" shall mean:
(A) The acquisition (other than from FFMC)
by any person, entity or "group", within the
meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act (excluding, for this purpose, any
employee benefit plan of FFMC or its
subsidiaries which acquires beneficial ownership
of voting securities of FFMC) of beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or
more of either the then outstanding shares of
Common Stock or the combined voting power of
FFMC's then outstanding voting securities
entitled to vote generally in the election of
directors; or
(B) The failure for any reason of
individuals who constitute the Incumbent Board
to continue to constitute at least a majority of
the Board; or
(C) Approval by the stockholders of FFMC
of a reorganization, merger, consolidation, in
each case, with respect to which the shares of
FFMC voting stock outstanding immediately prior
to such reorganization, merger or consolidation
do not constitute or become exchanged for or
converted into more than 50% of the combined
voting power entitled to vote generally in the
election of directors of
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the reorganized, merged or consolidated
company's then outstanding voting securities,
or a liquidation or dissolution of FFMC or of
the sale of all or substantially all of the
assets of FFMC.
(iv) "Good Reason" shall mean:
(A) The assignment to the Executive of any
duties inconsistent in any respect with the
Executive's position (including status, offices,
titles and reporting requirements), authority,
duties or responsibilities as contemplated by
Section 2 above, or any other action by FFMC
which results in a diminution in such position,
authority, duties or responsibilities, excluding
for this purpose any action taken with the
consent of the Executive and any isolated,
insubstantial and inadvertent action not taken
in bad faith and which is remedied by FFMC
promptly after receipt of notice thereof given
by the Executive;
(B) A reduction in the overall level of the
Executive's compensation or benefits;
(C) FFMC's requiring the Executive to be
based at any office or location other than
FFMC's executive offices in Atlanta, Georgia,
except for travel reasonably required in the
performance of the Executive's responsibilities;
(D) Any purported termination by the
Company of the Executive's employment otherwise
than as expressly permitted by this Agreement;
or
(E) Any failure by FFMC to comply with and
satisfy Section 9 below.
For purposes of this Agreement, any good faith
determination of "Good Reason" made by the
Executive shall be conclusive.
(v) "Current Total Annual Compensation" shall
be the total of the following amounts: (A) the greater of the
Executive's current annual salary for the calendar year in
which his employment terminates or such salary for the
calendar year prior to the year of such termination; (B) if
the year of termination is 1995, the Executive's additional
annual incentive compensation for 1994 as provided in the 1989
Agreement; (C) if the year of termination is 1996 or later,
the greater of i) $1,800,000 or ii) the fair market value (as
determined in accordance with paragraph 3(b) of the Restricted
Stock Agreement referred to in Section 3(b) above) of any
shares of Stock earned for the calendar year prior to the year
of termination pursuant to the terms of paragraph 3 of the
Restricted
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Stock Agreement referred to in Section 3(b) above; and
(D) any total amount that became payable to the Executive
under the FFMC Performance Units Incentive Plan during the
calendar year prior to the calendar year in which his
employment terminates, regardless of when such amounts are
actually to be paid.
(vi) "Disability" shall mean the total and
permanent inability of the Executive due to illness, accident
or other physical or mental incapacity to perform the usual
duties of his employment under this Agreement, as determined
by a physician selected by FFMC and acceptable to the
Executive or the Executive's legal representative (which
agreement as to acceptability shall not be unreasonably
withheld).
(vii) The "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
(g) In addition to the amounts payable under subsection
(a), (b) or (c) of this Section 5, FFMC shall pay the Executive a tax
equalization payment in accordance with this subsection. The tax
equalization payment shall be in an amount which when added to the
other amounts payable to the Executive under this Section 5 will place
the Executive in the same after-tax position as if the excise tax
penalty of Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor statute of similar import, did
not apply to any of the amounts payable under this Section 5 including
any amounts paid under this subsection (g). The amount of this tax
equalization payment shall be determined by FFMC's independent
accountants and shall be payable to the Executive at the same time as
the payment under subsection (a), (b) or (c) of this Section 5.
6. Noncompetition. The Executive agrees that if his employment
terminates during the term of this Agreement and such termination is not
covered by the provisions of Sections 5(a) or 5(b) above, he will not for one
year after such termination:
(a) directly or indirectly acquire or join with others in
acquiring more than 10% of the outstanding Common Stock of FFMC,
without the prior approval of the Board of Directors of FFMC;
(b) directly or indirectly engage in providing data
processing, storage and management products or services of the type
currently provided by FFMC or any of its subsidiaries as of the date
of this Agreement, including merchant credit card authorization,
processing and settlement, check guarantee and verification, in-store
marketing programs and systems for supermarkets, debt collection and
accounts receivable management, data imaging and micrographics,
database management, health care claims processing and integrated
management services, the development and marketing of data
communications and information processing systems and related services
and products (the "Services" and "Products") in the continental United
States, Alaska, Hawaii, the District of Columbia, the Caribbean or
Mexico (the "Territory"),
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the Executive acknowledging that he directs and is responsible for
FFMC's operations throughout the Territory and that FFMC must protect
itself on such basis;
(c) directly or indirectly on behalf of himself or any
other entity contact, divest, take away or solicit, for the purpose of
providing or permitting others to provide Services or Products in the
Territory, any person or entity which was a customer that the
Executive had material contact with during the term of this Agreement
and that received Services or Products from FFMC or any of its
subsidiaries during the term of this Agreement as shown on the books
and records of FFMC or any of its subsidiaries; or
(d) induce any employee of FFMC or any of its
subsidiaries to leave the employment of FFMC or any of its
subsidiaries.
Notwithstanding anything to the contrary above, this Section 6 shall not be
violated by the ownership by the Executive of less than 1% of the shares of
common stock of a publicly-held corporation or by any activities of the
Executive as an employee, agent or consultant in a capacity unrelated to
providing any Services or Products in the Territory.
7. Damages and Injunctive Relief. The Executive agrees that the
breach of any of his obligations under Section 6 above (a) may cause injury to
FFMC and that FFMC is entitled to seek and obtain compensation and damages, and
(b) may cause irreparable injury to FFMC and that, accordingly, FFMC may seek
and obtain injunctive relief against the breach or threatened breach of those
provisions, in addition to other remedies at law or in equity which may be
available; provided, however, that no such claims by FFMC shall permit FFMC to
offset, reduce, suspend or withhold any of the payments or benefits provided
under Section 5 above or to seek an injunction providing for such offset,
reduction, suspension or withholding.
8. Stock Sales. As an inducement to the Executive to execute
this Agreement, the Compensation Committee agrees that it is in the best
interests of the Executive and FFMC for the Executive to be able to make
limited sales of FFMC Common Stock in the market at appropriate times in
compliance with Rule 144 under the Securities Act of 1933, as amended, in order
to provide him with liquidity and an opportunity for investment
diversification, as provided in this section, while at the same time retaining
a substantial equity interest in FFMC. The Executive agrees that, until the
termination of this Agreement, he will not make any sales of Common Stock
without prior approval of the Compensation Committee, except for sales of up to
100,000 shares in 1994, and sales not in excess of 100,000 shares per year
during each year of the term of this Agreement made during the period of ten
business days beginning on the third business day following the release for
publication of FFMC's report of sales and earnings for a quarter or a year.
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9. Assignment; Successors.
(a) The rights and benefits of the Executive under this
Agreement, other than accrued and unpaid amounts due hereunder, are
personal to him and shall not be assignable, except with the prior
written consent of FFMC.
(b) Subject to the provisions of subsection (c) of this
Section 9, this Agreement shall not be assignable by FFMC, provided,
that with the consent of the Executive, FFMC may assign this Agreement
to another corporation wholly-owned by it, either directly or through
one or more other corporations, or to any corporate successor of FFMC
or any such corporation.
(c) Any business entity succeeding to substantially all
of the business of FFMC by purchase, merger, consolidation, sale of
assets or otherwise, shall be bound by and shall adopt and assume this
Agreement and FFMC shall obtain the assumption of this Agreement by
such successor.
10. Notices. Any notice or other communications under this
Agreement shall be in writing, signed by the party making the same, and shall
be delivered personally or sent by certified or registered mail, postage
prepaid, addressed as follows:
If to the Executive: Mr. Patrick H. Thomas
First Financial Management Corporation
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
If to FFMC: The Board of Directors
First Financial Management Corporation
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
Copy to:
Sutherland, Asbill & Brennan
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Mr. George L. Cohen
or to such other address or agent as may hereafter be designated by either
party hereto. All such notices shall be deemed given on the date personally
delivered or mailed.
11. Full Settlement and Legal Expenses. FFMC's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counter-claim,
recoupment, defense or other claim, right or action which
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FFMC may have against the Executive or others. In no event shall the Executive
be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement. FFMC agrees to pay, to the full extent permitted by law,
all legal fees and expenses which the Executive may reasonably incur as a
result of any contest (regardless of the outcome thereof) by FFMC or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to Section 5
of this Agreement), plus in each case interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code.
12. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Georgia.
13. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid, but
if any one or more of the provisions contained in this Agreement shall be
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provisions in every other respect and
of the remaining provisions of this Agreement shall not be in any way impaired.
14. Entire Agreement. This Agreement and the 1989 Agreement
contain the entire agreement of the parties hereto with respect to the subject
matter contained herein. There are no restrictions, promises, covenants, or
undertakings, other than those expressly set forth herein or therein or
contained in the FFMC employee benefit or incentive compensation plans,
Performance Units Incentive Plan and agreements (including restricted stock
agreements and stock options), between FFMC and the Executive. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to the matters set forth herein other than the 1989 Agreement. This
Agreement may not be amended or modified except by a writing executed by the
parties.
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<PAGE> 11
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
FIRST FINANCIAL MANAGEMENT CORPORATION
By:/s/ Robert E. Coleman
-----------------------------------
Robert E. Coleman, Chairman of the
Compensation Committee
EXECUTIVE
/s/ Patrick H. Thomas
--------------------------------------
Patrick H. Thomas
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<PAGE> 1
EXHIBIT 10.29
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<PAGE> 2
FIRST FINANCIAL MANAGEMENT CORPORATION
RESTRICTED STOCK AWARD AGREEMENT
This is an Agreement dated as of March 22, 1994, between First Financial
Management Corporation ("FFMC") and Patrick H. Thomas (the "Participant").
BACKGROUND:
The Participant is currently serving as Chairman of the Board, President and
Chief Executive Officer of FFMC. FFMC currently has in effect the First
Financial Management Corporation 1988 Incentive Stock Plan (the "Plan") which
provides for the grant of Restricted Stock Awards of shares of Common Stock,
$.10 par value, of FFMC (the "Common Stock") subject to certain restrictions as
an incentive for valued employees of FFMC and its subsidiaries. FFMC desires
to grant a Restricted Stock Award to the Participant as additional compensation
pursuant to his Employment Agreement dated as of March 22, 1994 (the
"Employment Agreement") and as an inducement to the continuation by the
Participant of his services to FFMC in the future.
AGREEMENT:
Pursuant to the Plan the parties hereto do hereby agree as follows:
1. FFMC hereby grants to the Participant a Restricted Stock Award of Four
Hundred Seventy-Two Thousand Five Hundred (472,500) shares of Common
Stock (the "Shares") subject to the terms of the Plan and this
Agreement.
2. The Shares are subject to the following restrictions:
a. No Shares may be sold, assigned, transferred,
exchanged, pledged, hypothecated, or otherwise
encumbered by the Participant, until such restrictions
have expired with respect to such Shares as provided
in paragraphs 3, 4 and 5.
b. If at any time the Participant's employment by FFMC
terminates prior to expiration of these restrictions
pursuant to paragraph 3 or 4 as to any Shares for any
reason which does not cause these restrictions to
expire as provided in paragraph 4, such Shares shall
immediately be forfeited to FFMC, and the Participant
shall have no further rights with respect thereto.
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<PAGE> 3
c. All dividends payable by FFMC on Shares subject to this award
shall be held by FFMC and paid to the Participant at such time
as the restrictions on such Shares expire.
3. Subject to the provisions of paragraph 5, the restrictions contained in
paragraph 2 shall expire on December 31, 1999 as to any shares earned
by the Participant for any of the years 1995 through 1999 determined as
follows:
a. Not more than 94,500 Shares shall be earned for any year.
b. The number of shares earned for any year shall be equal to
2.5% of FFMC's Pretax Income for such year divided by the Fair
Market Value of FFMC Common Stock. The Fair Market Value of
FFMC Common Stock shall be the average closing price for FFMC
Common Stock on the New York Stock Exchange for the last 10
business days of the calendar year.
c. A number of shares equal to the difference between 94,500 and
the number of shares which are earned for any year shall be
forfeited to FFMC as of the end of such year.
d. For purposes of this Agreement, Pretax Income shall be FFMC's
income before deduction or provision for income taxes for the
applicable calendar year computed by FFMC in accordance with
generally accepted accounting principles consistently applied
utilizing FFMC's methods of accounting in effect as of the
date of this Agreement, with the following qualifications or
adjustments:
(i) all gain or loss on the sale of business units or
subsidiaries by FFMC shall be excluded;
(ii) all restructuring charges incurred by FFMC shall
be excluded;
(iii) all costs incurred in connection with
pooling-of-interest combinations entered into by FFMC shall be
excluded;
(iv) all writedowns of goodwill or intangible assets
shall be excluded;
(v) all expenses incurred in connection with the
grant of restricted stock awards to the Participant or the
payment of any incentive bonus to the Participant shall be
excluded; and
(vi) pretax income (loss) from the operations of a
discontinued operation prior to the sale of such discontinued
operation shall be included.
Any disputes about the computation of Pretax Income will be resolved by
an independent accounting firm satisfactory to FFMC and the Participant.
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<PAGE> 4
4. Subject to the provisions of paragraph 5, the restrictions contained
in paragraph 2 with respect to any Shares that have not been previously
forfeited as provided herein shall expire on the earliest to occur of
any of the following:
a. Upon termination of the Participant's employment by FFMC by
reason of death or disability, or
b. The acquisition (other than from FFMC) by any person, entity
or "group," within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act (excluding, for this purpose, any employee
benefit plan of FFMC or its subsidiaries which acquires
beneficial ownership of voting securities of FFMC) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of either
the then outstanding shares of FFMC Common Stock or the
combined voting power of FFMC's then outstanding voting
securities entitled to vote generally in the election of
directors, or
c. The failure for any reason of individuals who constitute the
Incumbent Board to continue to constitute at least a majority
of the Board of Directors of FFMC, or
d. Approval by the stockholders of FFMC of a reorganization,
merger or consolidation, in each case, with respect to which
the shares of FFMC voting stock outstanding immediately prior
to such reorganization, merger or consolidation do not
constitute or become exchanged for or converted into more than
50% of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, or
a liquidation or dissolution of FFMC or of the sale of all or
substantially all of the assets of FFMC, or
e. Termination of Participant's employment under the Employment
Agreement as described in Section 5(b)(i) or (ii) of the
Employment Agreement; provided, however, that in the event of
such termination, the restrictions contained in paragraph 2
shall expire only with respect to the Shares which have been
earned, as determined pursuant to paragraph 3b, on or before
the date of such termination, or
f. Receipt by the Participant of written notice from the
Compensation Committee of the Board of Directors of FFMC (the
"Compensation Committee") that the restrictions have been
terminated.
For purposes of the Agreement, the "Incumbent Board" at any time shall
mean the persons who are then members of the Board of Directors of FFMC
and who (a) are members of the Board of Directors of FFMC as of the
date hereof, or (b) become members of the Board of Directors of FFMC
hereafter upon election, or nomination for election by FFMC's
shareholders, by a vote of at least a majority of the Incumbent Board
(other than an election or nomination of an individual whose initial
assumption of office
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<PAGE> 5
is in connection with an actual or threatened election contest relating
to the elections of the directors of FFMC, as such terms are used in
Rule 14(a)-11 of Regulation 14A promulgated under the Exchange Act).
5. Notwithstanding any other provision in this Agreement, the restrictions
contained in paragraph 2 with respect to any Shares shall not lapse
until such time as the Compensation Committee of FFMC has certified in
writing that all applicable requirements for expiration of the
restrictions with respect to such Shares, including the performance
criteria established pursuant to paragraph 3, have been satisfied. The
Compensation Committee shall not unreasonably withhold any such
certification.
6. For purposes of this Agreement, the Participant's employment by FFMC
shall be deemed to terminate at any time when he is no longer employed
by FFMC, a subsidiary of FFMC or any corporation or other entity which
owns 50% or more of the outstanding common stock of FFMC.
7. The Compensation Committee hereby consents to any Stock Surrender
Withholding Election (as defined in the Plan) hereafter made by the
Participant in accordance with the requirements of Section 9 of the
Plan, subject to the limitation contained in paragraph 8. At the
election of the Participant, "federal, state and local withholding tax
requirements" (as defined in Section 9 of the Plan) shall be deemed to
be any amount designated by the Participant which does not exceed his
estimated federal, state and local tax obligations associated with the
expiration of the restrictions on and the delivery of any Shares,
including FICA taxes to the extent applicable.
8. The Participant shall be entitled to satisfy estimated tax liabilities
in excess of actual federal, state and local withholding requirements
pursuant to a Stock Surrender Withholding Election only by the
surrender of Shares of FFMC Common Stock held by the Participant for at
least six months prior to delivery to FFMC.
9. The Participant agrees that a legend reflecting the restrictions
contained in this Agreement shall be placed on any certificate for
shares of FFMC stock subject to such restrictions.
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<PAGE> 6
10. All certificates issued for the Shares shall be held by the Secretary
of FFMC so long as the restrictions set forth in paragraph 2 have not
expired. Upon the expiration of such restrictions, the certificates
shall be delivered to the Participant. If this Agreement requires
forfeiture of the Shares to FFMC, the Secretary shall take appropriate
action to cancel the certificates and restore the Shares to authorized
but unissued shares of Common Stock.
11. Any shares of FFMC Common Stock or other securities of FFMC or any
other entity which are issued as a distribution on, or in exchange for,
the Shares or into which the Shares are converted as a result of a
recapitalization, stock dividend, distribution of securities, stock
split or combination of shares or a merger, consolidation of sale of
substantially all of the assets of FFMC shall be subject to the
restrictions set forth herein, which shall inure to the benefit of any
surviving or successor corporation which is the issuer of such
securities, unless such restrictions have expired in accordance with
the terms of this Agreement.
12. The Participant agrees not to file an election under Section 83(b) of
the Internal Revenue Code of 1986 with respect to the Shares.
13. This Agreement shall bind and inure to the benefit of the parties,
their heirs, personal representatives, successors in interest and
assigns.
Executed as of the day and year first above written.
FIRST FINANCIAL MANAGEMENT CORPORATION
By: /s/ Robert E. Coleman
-------------------------------------
Robert E. Coleman
Chairman of the Compensation Committee
PARTICIPANT
/s/ Patrick H. Thomas
---------------------
Patrick H. Thomas
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<PAGE> 1
EXHIBIT 10.30
79
<PAGE> 2
FIRST FINANCIAL MANAGEMENT CORPORATION
RESTRICTED STOCK AWARD AGREEMENT
This is an Agreement dated as of March 22, 1994, between First Financial
Management Corporation ("FFMC") and Patrick H. Thomas (the "Participant").
BACKGROUND:
The Participant is currently serving as Chairman of the Board, President and
Chief Executive Officer of FFMC. FFMC currently has in effect the First
Financial Management Corporation 1988 Incentive Stock Plan (the "Plan") which
provides for the grant of Restricted Stock Awards of shares of Common Stock,
$.10 par value, of FFMC (the "Common Stock") subject to certain restrictions as
an incentive for valued employees of FFMC and its subsidiaries. FFMC desires
to grant a Restricted Stock Award to the Participant as additional compensation
pursuant to his Employment Agreement dated as of March 22, 1994 (the
"Employment Agreement") and as an inducement to the continuation by the
Participant of his services to FFMC in the future.
AGREEMENT:
Pursuant to the Plan the parties hereto do hereby agree as follows:
1. FFMC hereby grants to the Participant a Restricted Stock Award of Five
Hundred Thousand (500,000) shares of Common Stock (the "Shares")
subject to the terms of the Plan and this Agreement.
2. The Shares are subject to the following restrictions:
a. No Shares may be sold, assigned, transferred, exchanged,
pledged, hypothecated, or otherwise encumbered by the
Participant until such restrictions have expired with respect
to such Shares as provided in paragraphs 3, 4 or 5.
b. If at any time the Participant's employment by FFMC terminates
prior to the expiration of these restrictions pursuant to
paragraph 3 or 4 as to any Shares for any reason that does not
cause these restrictions to expire as provided in paragraph 4,
such Shares shall immediately be forfeited to FFMC, and the
Participant shall have no further rights with respect thereto.
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<PAGE> 3
c. All dividends payable by FFMC on Shares subject to this award
shall be held by FFMC and paid to the Participant at such time
as the restrictions for such Shares expire.
3. Subject to the provisions of paragraph 5, the restrictions contained in
paragraph 2 shall expire as to the total shares subject to this award
on December 31, 1999 if:
a. FFMC's Pretax Income, as defined in paragraph 9, for 1994 is
greater than or equal to $250 million; and
b. The Participant is employed by FFMC on December 31, 1999.
If the condition specified in subparagraph b of this paragraph is not
satisfied, all the Shares shall be forfeited to FFMC as of December 31,
1994.
4. Subject to the provisions of paragraph 5, the restrictions contained in
paragraph 2 with respect to any shares that have not been previously
forfeited as provided herein shall expire on the earliest to occur of
any of the following:
a. Upon termination of the Participant's employment by FFMC by
reason of death or disability, or
b. The acquisition (other than from FFMC) by any person, entity
or "group," within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act (excluding, for this purpose, any employee
benefit plan of FFMC or its subsidiaries which acquires
beneficial ownership of voting securities of FFMC) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of either
the then outstanding shares of FFMC Common Stock or the
combined voting power of FFMC's then outstanding voting
securities entitled to vote generally in the election of
directors, or
c. The failure for any reason of individuals who constitute the
Incumbent Board to continue to constitute at least a majority
of the Board of Directors of FFMC, or
d. Approval by the stockholders of FFMC of a reorganization,
merger or consolidation, in each case, with respect to which
the shares of FFMC voting stock outstanding immediately prior
to such reorganization, merger or consolidation do not
constitute or become exchanged for or converted into more than
50% of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, or
a liquidation or dissolution of FFMC or of the sale of all or
substantially all of the assets of FFMC, or
e. Termination of Participant's employment under the Employment
Agreement as described in Section 5(b)(i) or (ii) of the
Employment Agreement; provided,
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<PAGE> 4
however, that in the event of such termination, the restrictions
contained in paragraph 2 shall expire only with respect to a number of
Shares determined as follows:
1. 100,000, if such termination occurs during 1996;
2. 200,000, if such termination occurs during 1997;
3. 300,000, if such termination occurs during 1998; and
4. 400,000, if such termination occurs during 1999, or
f. Receipt by the Participant of written notice from the
Compensation Committee of the Board of Directors of FFMC (the
"Compensation Committee") that the restrictions have been
terminated.
For purposes of the Agreement, the "Incumbent Board" at any time shall
mean the persons who are then members of the Board of Directors of FFMC
and who (a) are members of the Board of Directors of FFMC as of the
date hereof, or (b) become members of the Board of Directors of FFMC
hereafter upon election, or nomination for election by FFMC's
shareholders, by a vote of at least a majority of the Incumbent Board
(other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the elections of the directors of FFMC, as
such terms are used in Rule 14(a)-11 of Regulation 14A promulgated
under the Exchange Act).
5. Notwithstanding any other provision in this Agreement, the restrictions
contained in paragraph 2 shall not lapse until such time as the
Compensation Committee of FFMC has certified in writing that all
applicable requirements for expiration of the restrictions with respect
to such Shares, including the performance goal established pursuant to
paragraph 3, have been satisfied. The Compensation Committee shall
not unreasonably withhold any such certification.
6. For purposes of this Agreement, the Participant's employment by FFMC
shall be deemed to terminate at any time when he is no longer employed
by FFMC, a subsidiary of FFMC or any corporation or other entity which
owns 50% or more of the outstanding common stock of FFMC.
7. The Compensation Committee hereby consents to any Stock Surrender
Withholding Election (as defined in the Plan) hereafter made by the
Participant in accordance with the requirements of Section 9 of the
Plan, subject to the limitation contained in paragraph 8. At the
election of the Participant, "federal, state and local withholding tax
requirements" (as defined in Section 9 of the Plan) shall be deemed to
be any amount designated by the Participant which does not exceed his
estimated federal, state and local
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<PAGE> 5
tax obligations associated with the expiration of the restrictions on
and the delivery of any Shares, including FICA taxes to the extent
applicable.
8. The Participant shall be entitled to satisfy estimated tax liabilities
in excess of actual federal, state and local withholding requirements
through a Stock Surrender Withholding Election only by the surrender of
Shares of FFMC Common Stock held by the Participant for at least six
months prior to delivery to FFMC.
9. For purposes of this Agreement, Pretax Income shall be FFMC's pretax
income for the applicable calendar year computed by FFMC in accordance
with generally accepted accounting principles consistently applied
utilizing FFMC's methods of accounting in effect as of the date of this
Agreement, with the following qualifications or adjustments:
(i) all gain or loss on the sale of business units or
subsidiaries by FFMC shall be excluded;
(ii) all restructuring charges incurred by FFMC shall be
excluded;
(iii) all costs incurred in connection with
pooling-of-interest combinations entered into by FFMC shall be
excluded;
(iv) all writedowns of goodwill or intangible assets shall be
excluded;
(v) all expenses incurred in connection with the grant of
restricted stock awards to the Participant or the payment of any
incentive bonus to the Participant shall be excluded; and
(vi) pretax income (loss) from the operations of a
discontinued operation prior to the sale of such discontinued operation
shall be included.
Any disputes about the computation of Pretax Income will be resolved by
an independent accounting firm satisfactory to FFMC and the
Participant.
10. The Participant agrees that a legend reflecting the restrictions
contained in this Agreement shall be placed on any certificate for
shares of FFMC stock subject to such restrictions.
11. All certificates issued for the Shares shall be held by the Secretary
of FFMC so long as the restrictions set forth in paragraph 2 have not
expired. Upon the
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<PAGE> 6
expiration of such restrictions, the certificates shall be delivered to the
Participant. If this Agreement requires forfeiture of the Shares to FFMC, the
Secretary shall take appropriate action to cancel the certificates and restore
the Shares to authorized but unissued shares of Common Stock.
12. Any shares of FFMC Common Stock or other securities of FFMC or any
other entity which are issued as a distribution on, or in exchange for,
the Shares or into which the Shares are converted as a result of a
recapitalization, stock dividend, distribution of securities, stock
split or combination of shares or a merger, consolidation of sale of
substantially all of the assets of FFMC shall be subject to the
restrictions set forth herein, which shall inure to the benefit of any
surviving or successor corporation which is the issuer of such
securities, unless such restrictions have expired in accordance with
the terms of this Agreement.
13. The Participant agrees not to file an election under Section 83(b) of
the Internal Revenue Code of 1986 with respect to the Shares.
14. This Agreement shall bind and inure to the benefit of the parties,
their heirs, personal representatives, successors in interest and
assigns.
Executed as of the day and year first above written.
FIRST FINANCIAL MANAGEMENT CORPORATION
By: /s/ Robert E. Coleman
-------------------------------------
Robert E. Coleman
Chairman of the Compensation Committee
PARTICIPANT
/s/ Patrick H. Thomas
---------------------
Patrick H. Thomas
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<PAGE> 1
EXHIBIT 10.31
85
<PAGE> 2
FIRST FINANCIAL MANAGEMENT CORPORATION
NON-QUALIFIED STOCK OPTION
Pursuant to authorization on March 22, 1994 by the Compensation
Committee of the Board of Directors (the "Compensation Committee") of First
Financial Management Corporation, a Georgia corporation ("FFMC"), FFMC hereby
grants to Patrick H. Thomas (the "Holder"), a Non-Qualified Stock Option to
purchase from the Corporation Five Hundred Thousand (500,000) fully paid and
non assessable shares of the common stock, $.10 par value, of the Corporation
at a price of $57.25 per share. This Option has been granted pursuant to the
1988 Incentive Stock Plan (the "Plan") of the Corporation adopted by its Board
of Directors on February 5, 1988, and as amended through January 30, 1991, and
is subject to all of the terms, conditions and provisions of that Plan. A copy
of the Plan is attached hereto and made a part of this Option as if fully set
out herein.
1. At December 31 of each year beginning in 1995 and ending in
1999, this Option may be exercised as to one- fifth of the total number of
shares covered hereby. Such right to purchase in each year up to one-fifth of
the total number of shares covered hereby shall be cumulative, so that any
shares eligible for purchase, but not so purchased, in any year shall be added
to the number of shares which may be purchased in any following year.
Beginning on December 31, 1999, and continuing until March 21, 2004, this
Option may be exercised as to all shares covered hereby. This Option will
terminate at the close of business on March 21, 2004.
2. Notwithstanding the exercise provisions provided above and any
conflicting provision in section 6(g) of the Plan, and subject to the
provisions in paragraph 3 of this Option, this Option may be exercised at any
time prior to its termination as to the full 500,000 shares upon:
a. The acquisition (other than from FFMC) by any person, entity
or "group," within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act (excluding, for this purpose, any employee
benefit plan of FFMC or its subsidiaries which acquires
beneficial ownership of voting securities of FFMC) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of either
the then outstanding shares of FFMC Common Stock or the
combined voting power of FFMC's then outstanding voting
securities entitled to vote generally in the election of
directors, or
b. The failure for any reason of individuals who constitute the
Incumbent Board to continue to constitute at least a majority
of the Board, or
86
<PAGE> 3
c. Approval by the stockholders of FFMC of a reorganization,
merger or consolidation, in each case, with respect to which
the shares of FFMC voting stock outstanding immediately prior
to such reorganization, merger or consolidation do not
constitute or become exchanged for or converted into more than
50% of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, or
a liquidation or dissolution of FFMC or of the sale of all or
substantially all of the assets of FFMC, or
d. A tender offer or exchange offer being made for at least 25%
of the outstanding shares of FFMC Common Stock other than one
made by FFMC, provided that the person, corporation or other
entity making such offer purchases or otherwise acquired
shares of FFMC Common Stock pursuant to such offer.
3. If this Option is exercised within the first six months
following the date of grant, the shares of FFMC Common Stock received upon such
exercise may not be sold within the first six months from the date of grant.
4. For purposes of this Option Agreement, the "Incumbent Board"
at any time shall mean the persons who are then members of the Board and who
(a) are members of the Board as of the date hereof, or (b) become members of
the Board hereafter upon election, or nomination for election by FFMC's
shareholders, by a vote of at least a majority of the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the elections of the directors of FFMC, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act).
5. Payment for shares purchased pursuant to this Option may be in
cash or by delivery of shares of FFMC Common Stock at their fair market value
on the date of delivery. Only shares of FFMC Common Stock held by the Holder
for at least six months prior to delivery may be used as payment for shares
purchased pursuant to this Option.
6. The Compensation Committee hereby consents to any Stock
Surrender Withholding Election (as defined in the Plan) hereafter made by the
Holder in accordance with the requirements of Section 9 of the Plan, subject to
the limitation contained in paragraph 7 of this Option. At the election of the
Holder, "federal, state and local withholding tax requirements" (as used in
Section 9 of the Plan) shall be deemed to be any amount designated by the
Holder which does not exceed his estimated federal, state and local tax
obligations associated with the exercise of this Option, including FICA taxes
to the extent applicable.
7. The Holder shall be entitled to satisfy estimated tax
liabilities in excess of actual federal, state and local withholding
requirements through a Stock Surrender
87
<PAGE> 4
Withholding Election only by the surrender of shares of FFMC Common Stock held
by him for at least six months prior to delivery to FFMC.
Executed as of the 22nd day of March, 1994.
FIRST FINANCIAL MANAGEMENT CORPORATION
By: /s/ Robert E. Coleman
--------------------------------------
Robert E. Coleman
Chairman of the Compensation Committee
THE HOLDER
By: /s/ Patrick H. Thomas
---------------------
Patrick H. Thomas
88
<PAGE> 1
EXHIBIT 11.1
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<PAGE> 2
<TABLE>
<CAPTION>
EXHIBIT 11.1
FIRST FINANCIAL MANAGEMENT CORPORATION
STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE
Year Ended December 31,
------------------------------------------
1993 1992 1991
----------- ------------ -------------
AMOUNTS USED IN FULLY DILUTED (In thousands, except per share data)
INCOME PER SHARE COMPUTATIONS
<S> <C> <C> <C>
Continuing Operations:
Income from continuing operations $ 127,645 $ 18,812 $ 62,731
Add interest expense, net of tax,
applicable to convertible debentures 2,766
---------- --------- ---------
$ 127,645 $ 18,812 $ 65,497
========== ========= =========
Discontinued Operations:
Income from discontinued operations,
net of taxes $ 36,900 $ 30,737
Loss on sale of discontinued operations,
net of taxes (6,818)
Add interest expense, net of tax,
applicable to convertible debentures 1,158
---------- --------- ---------
$ 0 $ 30,082 $ 31,895
========== ========= =========
Consolidated:
Net income $ 127,645 $ 48,894 $ 93,468
Add interest expense, net of tax, applicable
to convertible debentures 3,924
---------- --------- ---------
$ 127,645 $ 48,894 $ 97,392
========== ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING-FULLY DILUTED BASIS
Weighted average number of common
shares outstanding 60,845 59,058 47,506
Shares issuable upon conversion of convertible
debentures-considered as issued for all
periods presented for purposes of fully diluted
income per share computations 5,529
---------- --------- ---------
60,845 59,058 53,035
========== ========= =========
INCOME PER SHARE-FULLY DILUTED
Continuing operations $ 2.10 $ 0.32 $ 1.23
Discontinued operations 0.51 0.60
---------- --------- ---------
Net income $ 2.10 $ 0.83 $ 1.83
========== ========= =========
</TABLE>
Primary earnings per share figures for the years ended December 31, 1993,
1992 and 1991 can be derived by using income amounts from the Consolidated
Statements of Income together with the primary weighted average shares
outstanding figures listed in Note A to the consolidated financial
statements.
FFMC completed its merger with International Banking Technologies, Inc.
("IBT") during the third quarter of 1993. This merger has been accounted
for as a pooling of interests. Accordingly, the previously reported
results for 1992 and 1991 have been restated to combine the results of FFMC
and IBT. Per share amounts have been recalculated after adding the shares
of FFMC common stock issued to effect the merger to weighted average share
amounts.
-90-
<PAGE> 1
EXHIBIT 22.1
-91-
<PAGE> 2
EXHIBIT 22.1
Page 1 of 3
FIRST FINANCIAL MANAGEMENT CORPORATION
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
State or Other
Jurisdiction of
Name of Subsidiary (1) Incorporation
- ---------------------- --------------
<S> <C>
Appalachian Computer Services, Inc. Kentucky
Data Preparation, Inc. Georgia
Mail Services, Inc. Tennessee
Third Party Computer Equipment Sales Corp. Kentucky
FFHC, Inc. Georgia
FFMC Canada Inc. Ontario
Gamma Micro-Systemes LTEE Quebec
Gamma Terminals Inc. Quebec
Gamma Technik Inc. Quebec
FFMC Mexico H.C., Inc. Georgia
FFMC Mexico, S.A. de C.V. Mexico
FIRST HEALTH Services Corporation Virginia
A.P.L. Services, Inc. New York
FIRST HEALTH Data Services, Inc. Virginia
First Mental Health, Inc. Tennessee
Psych Review Associates of Tennessee, Inc. Tennessee
Midwest Benefits Corporation Michigan
VIPS, INC. Maryland
FIRST HEALTH Strategies, Inc. Delaware
ALTA Reinsurance Company Arizona
FIRST HEALTH Realty, Inc. Utah
FIRST HEALTH Strategies (TPA), Inc. Delaware
FIRST HEALTH Strategies of Utah, Inc. Utah
FIRST HEALTH Insurance Agency, Inc. Massachusetts
FIRST HEALTH Review, Inc. Utah
FIRST HEALTH Strategies of New Mexico, Inc. New Mexico
FIRST HEALTH Strategies of Ohio, Inc. Ohio
FIRST HEALTH Strategies of Pennsylvania, Inc. Pennsylvania
FIRST HEALTH Strategies of Texas, Inc. Texas
U.S. Administrators, Inc. California
First Image Management Corporation Georgia
</TABLE>
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<PAGE> 3
EXHIBIT 22.1
Page 2 of 3
<TABLE>
<CAPTION>
State or Other
Jurisdiction of
Name of Subsidiary (1) Incorporation
- ---------------------- ---------------
<S> <C>
IMTECH Atlanta, Inc. Georgia
International Banking Technologies, Inc. Georgia
Kalvar Corporation Delaware
Laser Print America, Inc. Georgia
MicroBilt Corporation Georgia
COIN Banking Systems, Inc. Georgia
Genesis Electronics, Inc. Georgia
Hospital Cost Consultants, Inc. California
Master Hospital Systems, Inc. Texas
MicroBilt Leasing, Inc. Georgia
MicroBilt Software, Inc. Georgia
MicroBilt Products, Inc. Georgia
Retail Interact, Inc. California
TechPoint, Inc. Michigan
National Bancard Corporation Florida
First Financial Bank Georgia
NaBANCO Merchant Services Corporation Delaware
Nationwide Credit, Inc. Georgia
National Network Communications, Inc. Delaware
OnLine Financial Communications Systems, Inc. Georgia
Bianco Corporation Georgia
Prime Consulting Group, Inc. Georgia
TeleCheck International, Inc. Georgia
Shared Global Systems, Inc. Texas
TeleCheck Services, Inc. Delaware
TeleCheck Pittsburgh/West Virginia, Inc. Pennsylvania
TNZ, Inc. (2) Colorado
TeleCheck Recovery Services, Inc. Colorado
TeleCheck Services of Puerto Rico, Inc. Georgia
</TABLE>
-93-
<PAGE> 4
EXHIBIT 22.1
Page 3 of 3
(1) This list includes subsidiaries owned directly by FFMC and those owned
indirectly through another subsidiary; each indentation denotes a tier
of indirect ownership through wholly-owned subsidiaries. The
Registrant owns 100% of the voting securities of all the above listed
subsidiary companies, with two exceptions:
- One share of FFMC Mexico, S.A. de C.V. is held by Nationwide
Credit, Inc., a wholly-owned subsidiary of the Registrant, to
satisfy a Mexican requirement of at least two shareholders.
- 50% of Psych Review Associates of Tennessee, Inc. is owned by
Behavioral Health Management, Inc.
(2) This company holds a 10% equity interest in TeleCheck Payment Systems
Limited, a New Zealand corporation which is the TeleCheck franchisee
in Australia and New Zealand.
-94-
<PAGE> 1
EXHIBIT 24.1
-95-
<PAGE> 2
EXHIBIT 24.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in First Financial Management
Corporation's Registration Statement No. 33-29267 on Form S-3 filed June 19,
1989 and the following Registration Statements on Form S-8:
<TABLE>
<CAPTION>
Registration Statement
--------------------------------------
No. Filed
------------ --------------
<S> <C>
2-84870 June 30, 1983
2-96064 February 26, 1985
33-10711 December 10, 1986
33-17834 October 9, 1987
33-18541 November 17, 1987
33-21675 May 5, 1988
33-25340 (a) December 28, 1988
33-32555 December 18, 1989
33-31915 (a) January 17, 1990
33-37532 November 5, 1990
33-40891 June 3, 1991
33-46669 March 25, 1992
33-48619 June 17, 1992
</TABLE>
(a) Post-Effective Amendment No. 1
of our reports dated January 28, 1994 on the consolidated financial statements
and financial statement schedules appearing in the Annual Report on Form 10-K
of First Financial Management Corporation for the year ended December 31, 1993.
DELOITTE & TOUCHE
Atlanta, Georgia
March 28, 1994
-96-
