<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1994
-----------------------------------
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) (Zip Code)
Registrant's telephone number, including area code (404) 321-0120
---------------------
NOT APPLICABLE
- - -----------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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 the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Number of Shares Outstanding
Title of each class as of October 31, 1994
- - ---------------------------- ----------------------------
Common Stock, $.10 par value 62,506,651
<PAGE> 2
FIRST FINANCIAL MANAGEMENT CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION NUMBER
------
<S> <C> <C>
Item 1 Consolidated Financial Statements:
Consolidated Balance Sheets at September 30, 1994
and December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income for the
three and nine months ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the
nine months ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994 DECEMBER 31, 1993
------------------ -----------------
ASSETS (Dollars in thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 181,593 $ 189,975
Accounts receivable, net of allowance for doubtful
accounts of $5,122 (1994) and $5,022 (1993) 401,463 334,400
Prepaid expenses and other current assets 103,612 88,162
---------- ----------
Total Current Assets 686,668 612,537
Property and equipment, net 141,380 139,118
Excess of cost over fair value of assets acquired,
less accumulated amortization of $66,268 (1994)
and $52,001 (1993) 674,095 647,746
Customer contracts, less accumulated amortization
of $41,164 (1994) and $31,806 (1993) 153,643 140,124
Other assets 137,539 106,436
---------- ----------
$1,793,325 $1,645,961
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 318,153 $ 290,335
Income taxes payable 16,717 10,625
Current portion of long-term debt 10,334 6,577
---------- ----------
Total Current Liabilities 345,204 307,537
Long-term debt, less current portion 7,487 10,678
Deferred income taxes payable 58,021 63,347
Other liabilities 12,868 10,919
---------- ----------
Total Liabilities 423,580 392,481
---------- ----------
Shareholders' Equity:
Common stock, $.10 par value; authorized
150,000,000 shares, issued 62,510,411
shares (1994) and 60,976,996 shares (1993) 6,251 6,098
Paid-in capital 851,552 835,880
Retained earnings 512,593 412,153
Treasury stock at cost, 20,000 shares (651) (651)
---------- ----------
Total Shareholders' Equity 1,369,745 1,253,480
---------- ----------
$1,793,325 $1,645,961
========== ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1994 1993
--------- ---------
(In thousands, except per share amounts)
<S> <C> <C>
REVENUES:
Service revenues $518,335 $408,028
Product sales 16,943 32,330
Other 1,191 2,935
-------- --------
536,469 443,293
-------- --------
EXPENSES:
Operating 429,527 342,854
General and administrative 7,329 5,160
Cost of products sold 10,589 20,445
Depreciation and amortization 23,234 17,934
Interest, net (1,939) (1,232)
-------- --------
468,740 385,161
-------- --------
Income before income taxes 67,729 58,132
Income taxes 27,160 24,292
-------- --------
Net income $ 40,569 $ 33,840
======== ========
Earnings per common share $ 0.65 $ 0.54
======== ========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1994 1993
---------- ----------
(In thousands, except per share amounts)
<S> <C> <C>
REVENUES:
Service revenues $1,446,506 $1,142,458
Product sales 53,695 82,166
Other 2,765 6,111
---------- ----------
1,502,966 1,230,735
---------- ----------
EXPENSES:
Operating 1,208,143 962,997
General and administrative 20,515 15,773
Cost of products sold 33,482 49,954
Depreciation and amortization 69,194 56,337
Interest, net (4,616) 988
---------- ----------
1,326,718 1,086,049
---------- ----------
Income before income taxes 176,248 144,686
Income taxes 71,990 59,230
---------- ----------
Net income $ 104,258 $ 85,456
========== ==========
Earnings per common share $ 1.67 $ 1.38
========== ==========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1994 1993
-------- -------
(In thousands)
<S> <C> <C>
Cash and cash equivalents at January 1 $189,975 $ 18,223
-------- ---------
Cash flows from operating activities:
Net income 104,258 85,456
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation and amortization 69,194 56,337
Interest expense allocated to discontinued operations (636)
Other non-cash items 5,931 858
Increase (decrease) in cash, net of effects from
acquisitions and dispositions, resulting from changes in:
Accounts receivable (61,031) (107,564)
Prepaid expenses and other assets (15,308) (5,668)
Accounts payable and accrued expenses 43,200 140,337
Income tax accounts 11,305 8,492
-------- ---------
Net cash provided by operating activities 157,549 177,612
-------- ---------
Cash flows from financing activities:
Proceeds from exercise of stock warrants 8,069 1,333
Principal payments on long-term debt (5,912) (149,258)
Payments of other liabilities (6,765) (10,547)
-------- ---------
Net cash used in financing activities (4,608) (158,472)
-------- ---------
Cash flows from investing activities:
Acquisitions, net of cash received (56,967) (22,511)
Payments related to businesses previously acquired (40,256) (16,375)
Proceeds, net of expenses, from sale of business 87,309
Proceeds and dividends received from discontinued
operations, net of expenses and taxes paid (4,044) 210,034
Additions to property and equipment, net (25,362) (22,729)
Software development and customer conversions (34,694) (28,273)
-------- ---------
Net cash provided by (used in) investing activities (161,323) 207,455
-------- ---------
Change in cash and cash equivalents (8,382) 226,595
-------- ---------
Cash and cash equivalents at September 30 $181,593 $ 244,818
======== =========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
FIRST FINANCIAL MANAGEMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. 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 operates
in a single business segment, 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
and cost containment services; and the development and marketing of
data communication and information processing systems, including
in-store marketing programs and systems for supermarkets.
The financial information presented should be read in conjunction with
the Company's annual consolidated financial statements and notes
included in its Annual Report on Form 10-K for the year ended December
31, 1993. The foregoing unaudited consolidated financial statements
reflect all adjustments (all of which are of a normal recurring
nature) which are, in the opinion of management, necessary for a fair
presentation of the results of the interim periods. The results for
the interim periods are not necessarily indicative of results to be
expected for the year.
2. Cash and cash equivalents at September 30, 1994 include approximately
$81.8 million in First Financial Bank ("FFB"), of which $70 million
relates to FFB's current capital requirements.
3. On March 22, 1994, the Company entered into an employment agreement
with Patrick H. Thomas, FFMC's Chairman of the Board, President and
Chief Executive Officer, which begins coterminous with the termination
of his current employment agreement on December 31, 1994 and extends
through 1999. Two awards totalling 972,500 restricted shares of FFMC
common stock were granted to Mr. Thomas in connection with the new
employment agreement. The first of these awards, for up to 472,500
shares, is in lieu of any cash bonus. For each calendar year during
the term of the agreement up to 94,500 shares will be earned,
contingent upon Mr. Thomas' continued employment through 1999, subject
to acceleration in the event of death, disability, a "change in
control" of FFMC or certain other circumstances. The number of shares
earned for any year will be equal to 2 1/2% of the pre-tax income of
FFMC, divided by the then current market price of FFMC Common Stock.
If all of the 94,500 shares are not earned in any year or years, the
difference between the number of shares earned and 94,500 will be
forfeited. The vesting of the second of these awards, for 500,000
shares, is contingent upon FFMC's attainment of a performance goal for
1994 and continued employment through 1999, except in the event of
disability, death or involuntary termination.
The value of these awards is adjusted using closing prices of the
Company's common stock on balance sheet dates through the date of
measurement for the FFMC performance goal or the date on which the
number of shares earned in each year is determined, as appropriate.
The Company has assumed that the performance goal will be attained and
that the maximum number of shares will be earned in each calendar year
during the term of the contract. The value of these awards is being
amortized to expense on a straight-line basis from the grant date over
the restriction period.
7
<PAGE> 8
FIRST FINANCIAL MANAGEMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(UNAUDITED)
4. Publicly held stock warrants were exercised during the second quarter
of 1994, resulting in the issuance of 303,000 new shares of FFMC
common stock and cash proceeds to the Company of $8.1 million. After
such exercises, 1.3 million shares remained subject to publicly held
warrants at September 30, 1994, with these remaining warrants
exercisable at $26.67 per share during the second quarter of 1995.
5. On July 21, 1994, the Company issued 1,095,000 unregistered shares of
FFMC common stock and assumed stock options for an additional 163,000
shares as consideration for all the outstanding shares and stock
options of GENEX Services, Inc. ("GENEX"), a company that provides
workers' compensation programs to self-insured employers, insurance
companies, third party administrators, and government agencies
throughout the United States, Puerto Rico and Canada. This
combination has been accounted for as a pooling of interests.
Accordingly, the 1994 and 1993 consolidated financial statements have
been restated to include GENEX with FFMC's results for all periods
presented in this report.
Results of GENEX included with the Company's results are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
(In thousands)
<S> <C> <C>
Three months ended September 30
Revenues $22,890 $22,347
Net Income 2,206 1,164
Nine months ended September 30
Revenues $67,836 $67,923
Net Income 4,259 3,429
</TABLE>
Prior to the combination, GENEX was a Subchapter S Corporation and
included no income taxes in its financial statements since its income
was taxed at the shareholder level. Supplemental pro forma income tax
disclosures have been omitted due to the immateriality of amounts
involved.
The Company also paid $47.0 million in cash (net of cash received) and
issued $7.0 million in notes payable in connection with other
acquisitions in 1994. These other acquisitions include a credit
claims and collection company, two merchant credit card processing
portfolios, and data imaging assets, all of which expanded the
Company's markets and service offerings. These other acquisitions
were accounted for as purchases, and their results have been included
in the Company's results from the effective dates of acquisition. The
pro forma results of operations of these other acquisitions (as if the
acquisitions had occurred on January 1, 1993) are immaterial relative
to the overall results of operations of the Company.
In September 1994, the Company deposited $10.0 million in cash in
connection with the Western Union proceedings (see Note 7); this cash
deposit has been included with other assets and with cash outlays made
for acquisitions in the accompanying consolidated financial
statements.
8
<PAGE> 9
FIRST FINANCIAL MANAGEMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(UNAUDITED)
6. Earnings per share amounts are computed by dividing income amounts by
the weighted average number of common and common equivalent shares
(when dilutive) outstanding during the period. All weighted average
per share amounts have been restated to reflect the shares issued and
stock options assumed by the Company to effect its merger with GENEX.
Common stock equivalents consist of shares issuable under the
Company's stock option plans and in connection with outstanding
warrants. Weighted average shares used in earnings per share
computations were as follows (amounts in thousands):
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Three months ended September 30 62,703 62,197
Nine months ended September 30 62,570 61,946
</TABLE>
7. On September 19, 1994, FFMC was declared the winning bidder to acquire
Western Union Financial Services, Inc. ("Western Union") from the
bankruptcy proceedings of Western Union's parent company, New Valley
Corporation ("New Valley"). On November 1, 1994, the United States
Bankruptcy Court for the District of New Jersey approved the sale of
Western Union to FFMC pursuant to a Purchase Agreement, dated October
20, 1994, between New Valley and FFMC.
The Purchase Agreement provides that FFMC will acquire all of the
stock of Western Union and certain other assets from New Valley for a
cash purchase price of $893 million plus the assumption by FFMC of the
Western Union pension plan, as to which benefit accruals have been
permanently suspended. The acquisition provides the Company complete
ownership of the Western Union name and trademark, and includes
Western Union's money transfer and payment services business with an
established network of over 24,000 agents in over 75 countries. In
1993, Western Union completed over 40 million money transfers
involving the movement of over $7.8 billion. New Valley will retain
ownership of the Western Union messaging business, and FFMC will
obtain from New Valley an option to acquire and will grant to New
Valley an option to sell to FFMC this business in 1996 for $20
million in cash.
The Company expects to close the acquisition of Western Union during
November 1994 upon payment of $643 million in cash at closing with a
deferred payment of $250 million in January, 1995. The business
combination will be accounted for as a purchase, and the results of
Western Union will be included with the Company's results from the
effective date of the acquisition.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Strategic Transactions
On July 21, 1994, FFMC issued 1,095,000 unregistered shares of its common stock
and assumed stock options for an additional 163,000 shares as consideration for
all of the outstanding shares and stock options of GENEX Services, Inc.
("GENEX"), a company that provides workers' compensation programs to
self-insured employers, insurance companies, third party administrators, and
government agencies throughout the United States, Puerto Rico, and Canada.
This combination has been accounted for as a pooling of interests, and,
accordingly, the following discussions concerning the Company's results of
operations and capital resources and liquidity include GENEX as a part of
FFMC's business operations for all periods presented in this report.
On September 19, 1994, FFMC was declared the winning bidder to acquire Western
Union Financial Services, Inc. ("Western Union") from the bankruptcy
proceedings of Western Union's parent company, New Valley Corporation ("New
Valley"). On November 1, 1994, the United States Bankruptcy Court for the
District of New Jersey approved the sale of Western Union to FFMC pursuant to a
Purchase Agreement, dated October 20, 1994, between New Valley and FFMC.
The Purchase Agreement provides that FFMC will acquire all of the stock of
Western Union and certain other assets from New Valley for a cash purchase
price of $893 million plus the assumption by FFMC of the Western Union pension
plan, as to which benefit accruals have been permanently suspended. The
acquisition provides the Company complete ownership of the Western Union name
and trademark, and includes Western Union's money transfer and payment services
business with an established network of over 24,000 agents in over 75
countries. In 1993, Western Union completed over 40 million money transfers
involving the movement of over $7.8 billion. New Valley will retain ownership
of the Western Union messaging business, and FFMC will obtain from New Valley
an option to acquire and will grant to New Valley an option to sell to FFMC
this business in 1996 for $20 million in cash.
The Company expects to close the acquisition of Western Union during November
1994 upon payment of $643 million in cash at closing with a deferred payment of
$250 million in January 1995. The business combination will be accounted for
as a purchase, and the results of Western Union will be included with the
Company's results from the effective date of the acquisition.
The impact of the debt to be incurred to finance the Western Union acquisition
is described under "Capital Resources and Liquidity." The acquisition is not
expected to have any significant impact on the Company's liquidity. Western
Union's operations have been experiencing strong revenue and profit growth and
are not expected to require significant capital expenditures. As a result,
these operations are expected to provide substantial cash flow, contributing to
the Company's ability to service the debt incurred to finance this acquisition.
Results of Operations
FFMC reported net income of $40.6 million for the third quarter ended
September 30, 1994, an increase of 20% from the $33.8 million in 1993's third
quarter. Revenues for the quarter were $536.5 million, or 21% over the $443.3
million in revenues for third quarter of 1993. Earnings per share increased
20% to $.65 per share in the third quarter of 1994 from $.54 per share in the
prior year's third quarter.
For the nine months ended September 30, 1994, the Company reported net income
of $104.3 million, a 22% increase over the $85.5 million for the comparable
1993 period. Revenues were $1,503.0 million
10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
compared with $1,230.7 million in 1993's first nine months, an increase of 22%.
Earnings per share for the nine months ended September 30, 1994 increased 21%to
$1.67 per share from the $1.38 per share reported for the first nine months of
1993. Record new business (contracted in the latter half of 1993 and during
1994) together with the assimilation of acquisitions contributed to the
Company's revenue growth. Internal growth was 15% and 16%, respectively, for
the third quarter and first nine months of 1994, and was the principal
component of the overall revenue increases compared with similar 1993 periods.
Over 40,000 new customers have been added during the first nine months of 1994
(including 14,000 added during the third quarter), with the majority occurring
in FFMC's merchant services area.
The Company's emphasis on the growth of service revenues is reflected in the
27% increase during 1994's third quarter and first nine months compared with
the same periods in 1993. This rate of increase compares with a 25% increase
in operating expenses in these 1994 periods compared with the 1993 periods, as
FFMC continues to place important emphasis on expense controls. The favorable
impact occurred despite the fact that the strongest growth in service revenues
occurred in FFMC's merchant credit card processing, an area that has a margin
lower than the Company's overall margin.
Product sales declined during the third quarter and first nine months of 1994
compared with similar 1993 periods, largely as a result of the Company's
decisions to eliminate certain ancillary product sales in its imaging
businesses and decrease the significance of one-time product sales in its
merchant businesses. Changes in the composition of product sales resulted in a
gross profit percentage on product sales of 37.6% during the first nine months
of 1994 compared with 39.2% for the first nine months of 1993.
General and administrative expenses increased in the third quarter and first
nine months of 1994 compared with the same periods in 1993, due primarily to
the amortization of stock compensation costs in 1994's second and third
quarters from an executive employment agreement (covering 1995 through 1999)
entered into on March 22, 1994. Depreciation and amortization expense
increased in the 1994 periods compared with 1993's third quarter and first nine
months due primarily to the impact of acquisitions completed in the second half
of 1993 and 1994's first six months. The Company moved to a net interest
income position during the first nine months of 1994 from a net interest
expense position in 1993's first nine months as a result of the Company's
repayment of all outstanding bank borrowings near the end of 1993's second
quarter using cash generated from the sales of businesses during the first six
months of 1993 and strong cash flow from operations. These changes produced
increases in total expenses of 22% for both the third quarter and first nine
months of 1994 compared with prior year periods.
The combination of these revenue and expense changes resulted in pre-tax
margins of 11.7% for 1994's first nine months compared with a pre-tax margin of
11.8% for the first nine months of 1993. The third quarter 1994 pre-tax margin
of 12.6% was down from the 13.1% pre-tax margin in 1993's third quarter.
The Company's effective tax rate for the first nine months of 1994 was 40.8%,
comparable to the 40.9% for 1993's first nine months. The third quarter 1994
effective tax rate was 40.1%, down from 1993's third quarter rate of 41.8% due
to the favorable impact recorded during the quarter of tax savings initiatives.
FFMC'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.
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Capital Resources and Liquidity
The Company generated strong cash flows from operating activities totalling
$157.5 million and $177.6 million, respectively, for the first nine months of
1994 and 1993. FFMC had higher earnings, depreciation and amortization and
other non-cash charges in 1994's first nine months than in the comparable
period in 1993. These increases were more than offset by unfavorable
comparisons in the working capital categories of accounts receivable and
accounts payable and accrued expenses. This negative comparison is principally
due to a one-time positive effect of the commencement of merchant settlement
payments by First Financial Bank in 1993.
Amounts reinvested in existing businesses, principally for property and
equipment additions, software development and customer conversions, totalled
$60.1 million in 1994's first nine months compared with $51.0 million during
the first nine months of 1993. The majority of this increase is due to higher
1994 spending on system development activities in FFMC's health care services
business. Due to unusually high reinvestment outlays made during the fourth
quarter of 1993, the Company anticipates that full year 1994 outlays for these
capital expenditures in its existing businesses will be similar to the total
outlays made in 1993.
Cash from operating activities exceeded reinvestments in existing businesses by
$97.5 million in 1994's first nine months, as compared with the $126.6 million
excess for the first nine months of 1993. This excess cash generated during
the first nine months in 1994 was utilized to fund $97.2 million in payments
related to current and prior year acquisitions, including a $10.0 million cash
deposit related to the pending Western Union acquisition.
Publicly held stock warrants were exercised during the second quarter of 1994,
resulting in the issuance of 303,000 new shares of FFMC common stock at $26.67
per share, generating cash proceeds to the Company of $8.1 million. The final
exercise period for the remaining warrants is during the second quarter of 1995
and, if all warrants are exercised, FFMC would issue an additional 1.3 million
shares of FFMC common stock for cash proceeds to the Company of $35 million.
FFMC paid cash dividends of $.05 per share on each of January 3, 1994 and July
1, 1994, to shareholders of record as of December 1, 1993 and June 1, 1994,
respectively. On October 26, 1994, FFMC's Board of Directors declared a cash
dividend of $.05 per share, payable on January 3, 1995 to shareholders of
record on December 1, 1994.
FFMC's cash and cash equivalents of $181.6 million at September 30, 1994,
except for cash and cash equivalents in its credit card bank ($81.8 million at
September 30, 1994), are available for acquisitions and general corporate
purposes.
The Company is in the process of amending its unsecured revolving credit
facility, increasing it from $450 million to $1.0 billion and providing a new
three year term. Other terms and conditions of the amended facility will be
substantially the same as the previous credit facility entered into on June 25,
1992. The Company intends to use this facility as the initial financing for
the pending acquisition of Western Union. If suitable conditions arise, FFMC
intends to use longer term debt instruments or other securities as the ultimate
source of financing for the Western Union acquisition. The Company is
contemporaneously filing a shelf registration covering such securities.
12
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
If suitable opportunities arise for additional acquisitions, the Company may
use cash, draw on its available credit facility, or use common stock or other
securities as payment of all or part of the consideration for such
acquisitions. Alternatively, FFMC may seek additional funds in the equity or
debt markets to finance such acquisitions or to repay outstanding borrowings
under its credit facility. 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.
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
--------
27.1 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
-------------------
The Company did not file any current report on Form 8-K during the
quarter ended September 30, 1994.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST FINANCIAL MANAGEMENT CORPORATION
--------------------------------------
(Registrant)
Date: November 4, 1994 By /s/ M. Tarlton Pittard
------------------------- --------------------------------------
M. Tarlton Pittard
Senior Executive Vice President, Chief
Financial Officer and Treasurer
Date: November 4, 1994 By /s/ Richard Macchia
------------------------- --------------------------------------
Richard Macchia
Executive Vice President
and Principal Accounting Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.1
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST FINANCIAL MANAGEMENT CORPORATION FOR THE NINE
MONTHS ENDED SEPTEMBER 31, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 181,593
<SECURITIES> 0
<RECEIVABLES> 406,585
<ALLOWANCES> 5,122
<INVENTORY> 0
<CURRENT-ASSETS> 686,668
<PP&E> 141,380 <F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,793,325
<CURRENT-LIABILITIES> 345,204
<BONDS> 7,487
<COMMON> 6,251
0
0
<OTHER-SE> 1,363,494
<TOTAL-LIABILITY-AND-EQUITY> 1,793,325
<SALES> 53,695
<TOTAL-REVENUES> 1,502,966
<CGS> 33,482
<TOTAL-COSTS> 1,208,143
<OTHER-EXPENSES> 69,194
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,616) <F2>
<INCOME-PRETAX> 176,248
<INCOME-TAX> 71,990
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,258
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.67
<FN>
<F1>PP&E amount shown above is net of accumulated depreciation per FFMC's interim balance sheet. Both gross PP&E and
accumulated depreciation amounts will be reported in FFMC's year-end financials.
<F2>Amount represents net interest income, after deducting interest expense, consistent with FFMC's income statement presentation.
</FN>
</TABLE>
