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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10442
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Date of Report (Date of earliest event reported) MARCH 28, 1995
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FIRST FINANCIAL MANAGEMENT CORPORATION
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(Exact name of registrant as specified in its charter)
GEORGIA 58-1107864
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 CORPORATE SQUARE, SUITE 700, ATLANTA, GEORGIA 30329
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (404) 321-0120
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NOT APPLICABLE
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(Former name, former address and formal fiscal year, if changed since last
report)
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Item 7. Financial Statements and Exhibits
(a) Financial Information of Business Acquired
Not applicable.
(b) Pro Forma Combined Financial Statements of First Financial Management
Corporation and Business Acquired (unaudited):
Pro Forma Combined Statement of Income for the year ended December 31,
1994. Notes to Pro Forma Combined Statement of Income.
(c) Exhibits
Not applicable.
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FIRST FINANCIAL MANAGEMENT CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
The following unaudited pro forma combined statement of income for the year
ended December 31, 1994 reflects the combined operations of First Financial
Management Corporation ("FFMC" or the "Company") and Western Union Financial
Services, Inc. ("Western Union"), which was acquired by FFMC during November
1994 and accounted for as a purchase. The pro forma combined statement of
income conforms to the current presentation format of FFMC's consolidated
financial statements.
The pro forma combined statement of income assumes that the Company's
acquisition of Western Union and related assets had occurred, all cash
purchase price consideration was paid, and related debt financing was concluded
on January 1, 1994.
The acquisition of Western Union by FFMC is more fully described in Note B to
FFMC's audited consolidated financial statements included in its Annual Report
on Form 10-K for the year ended December 31, 1994. The pro forma combined
statement of income is not necessarily indicative of what the combined
operations would have been if the Company had control of such combined
businesses during the period presented.
FFMC completed additional acquisitions during 1994, accounted for as purchases,
with an aggregate purchase price of $59.2 million, the effects of which are not
included in the accompanying pro forma combined statement of income as they are
not significant.
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FIRST FINANCIAL MANAGEMENT CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME (Unaudited)
YEAR ENDED DECEMBER 31, 1994
(In millions, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
FFMC Western Union Increase Pro Forma
(Historical) (Historical) (Decrease) Results
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<S> <C> <C> <C> <C>
REVENUES
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Service revenues $2,131.0 $448.9 ($11.9)(2) $2,568.0
Product sales 73.1 73.1
Other 3.4 3.4
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2,207.5 448.9 (11.9) 2,644.5
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EXPENSES
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Operating 1,767.5 366.8 (10.3)(2) 2,108.6
(15.4)(3)
General and administrative 26.2 26.2
Cost of products sold 46.6 46.6
Depreciation and amortizat 97.7 7.4 25.6 (4) 130.7
Interest, net (1.1) 44.8 (5) 43.7
Cost of Western Union
pension plan 2.3 16.0 (6) 18.3
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1,939.2 374.2 60.7 2,374.1
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Income before income taxes 268.3 74.7 (72.6) 270.4
Income taxes 108.1 26.7 (24.4)(7) 110.4
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Net income $ 160.2 $ 48.0 ($48.2) $ 160.0
======== ====== ====== ========
Earnings per common share $ 2.56 $ 2.49
======== ========
Average common shares
outstanding 62.9 6.2 (8) 69.1
</TABLE>
See notes to pro forma combined statement of income.
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FIRST FINANCIAL MANAGEMENT CORPORATION
NOTES TO PRO FORMA COMBINED STATEMENT OF INCOME (UNAUDITED)
(1) 1994 operations of Western Union relate to the period prior to the
acquisition by FFMC. Certain reclassifications have been made to conform
the statement of income presentation format for Western Union to the
format used by FFMC.
(2) Adjustments to reflect the elimination of messaging service business
revenue and related expense because such business was retained by Western
Union's former parent company, New Valley Corporation ("New Valley").
Income before tax related to the messaging service business was $1.6
million for the 1994 period prior to FFMC's acquisition of Western Union.
(3) Adjustments to eliminate royalty and other fees paid to New Valley which
did not continue after the acquisition.
(4) Adjustments to reflect the amortization of goodwill (the excess of cost
over the fair value of assets acquired) using a straight-line method over
40 years. Adjustments have also been made to reflect depreciation on
equipment and other capital assets transferred to Western Union from New
Valley.
(5) Adjustments to reflect additional interest expense (and the amortization
of estimated transaction costs of $5.4 million) related to $447.1 million
in senior convertible debentures, additional interest expense related
to $350.5 million in bank debt (also used to finance $4.4 million of the
transaction costs), and interest foregone on $100 million of FFMC cash
used. Interest expense is based on the senior convertible debentures at
5.0%, and bank debt under the Company's revolving credit facility at
6.8%, the rate available under such facility for a six-month term
at December 31, 1994. This year end rate for the revolving credit
facility is higher than the comparable average rate during 1994.
Interest foregone on FFMC cash used is based on investment rates earned
by the Company in 1994 (3.8%).
Interest rates under the revolving credit facility fluctuate. The impact
of a 1/8 percent increase in the interest rate on the $350.5 million in
borrowings under the revolving credit facility would be approximately
$438,000 in additional interest expense on an annualized basis.
(6) Adjustments to reflect the net periodic pension cost under the Western
Union Pension Plan assumed by FFMC. The 1994 amount is based on actuarial
assumptions similar to those used by New Valley prior to the acquisition
of Western Union by FFMC and as previously reported in New Valley's 1993
Annual Report on Form 10-K.
(7) Tax effect of pro forma adjustments. The tax computation includes the
deductibility of the majority of goodwill amortization. New Valley and
FFMC will make the necessary tax elections to allow the deductibility of
goodwill, except for that portion associated with the assumption of the
Western Union pension plan which is deductible for tax purposes when paid.
Additionally, a pro forma adjustment has been made to increase Western
Union's state income tax from its historical rate to a rate which
excludes the benefit it received from using New Valley's tax loss
carry-forwards in calculating its state income taxes.
(8) Shares assumed to have been issued to reflect the assumed conversion of
FFMC's $447.1 million in senior convertible debentures (based on the
conversion price of $69.00 per share) into FFMC common stock solely for
the purposes of computing earnings per common share. Interest expense
(including amortization of estimated transaction costs), net of tax
effect, from the senior convertible debentures (at a rate of 5.0%) was
added to net income in calculating earnings per common share.
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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
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(Registrant)
Date: March 28, 1995 By /s/ M. Tarlton Pittard
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M. Tarlton Pittard
Vice Chairman, Chief Financial
Officer and Treasurer
Date: March 28, 1995 By /s/ Richard Macchia
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Richard Macchia
Executive Vice President
and Principal Accounting Officer
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