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First Financial Management Corp – ‘10-Q’ for 9/30/94

As of: Friday, 11/4/94 · For: 9/30/94 · Accession #: 950144-94-1912 · File #: 1-10442

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/04/94  First Financial Management Corp   10-Q        9/30/94    2:33K                                    Bowne of Atlanta Inc/FA

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        First Financial Management Corporation Form 10-Q      15     60K 
 2: EX-27.1     Financial Data Schedule                                2±    11K

10-Q — First Financial Management Corporation Form 10-Q
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Capital Resources and Liquidity Consolidated Financial Statements: Exhibits and Reports on Form 8-K Management's Discussion and Analysis of Financial Condition and Results of Operations
1	1st Page - Filing Submission
2	Item 1. Consolidated Financial Statements:
10	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
12	Capital Resources and Liquidity
14	Item 6. Exhibits and Reports on Form 8-K

10-Q 1st Page of 15 TOC ↑Top Previous Next ↓Bottom Just 1st
 
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         

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FIRST FINANCIAL MANAGEMENT CORPORATION  

INDEX   

                                                        [Enlarge/Download Table]

                                                                                                  PAGE 
PART I.  FINANCIAL INFORMATION                                                                   NUMBER
                                                                                                 ------
                                                                                                       
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   

2 

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PART I.   FINANCIAL INFORMATION 
FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED BALANCE SHEETS 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                      SEPTEMBER 30, 1994  DECEMBER 31, 1993 
                                                      ------------------  ----------------- 
ASSETS                                                         (Dollars in thousands)       
                                                                                            
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 
                                                              ==========         ========== 

See notes to consolidated financial statements.                       

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FIRST FINANCIAL MANAGEMENT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME 
(UNAUDITED) 

                                                                [Download Table]

                                    THREE MONTHS ENDED SEPTEMBER 30,     
                                    --------------------------------     
                                         1994                   1993     
                                    ---------              ---------     
                                 (In thousands, except per share amounts)
                                                                         
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     
                                     ========               ========     

See notes to consolidated financial statements.                         

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FIRST FINANCIAL MANAGEMENT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME 
(UNAUDITED) 

                                                                [Download Table]

                                  NINE MONTHS ENDED SEPTEMBER 30,     
                                  -------------------------------     
                                        1994                 1993     
                                  ----------           ----------     
                              (In thousands, except per share amounts)
                                                                      
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     
                                  ==========           ==========     

See notes to consolidated financial statements.                         

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FIRST FINANCIAL MANAGEMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                               NINE MONTHS ENDED SEPTEMBER 30, 
                                                               ------------------------------- 
                                                                    1994                  1993 
                                                                --------               ------- 
                                                                      (In thousands)           
                                                                                               
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 
                                                                ========             ========= 

See notes to consolidated financial statements.                         

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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.                                       

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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:

                                                                [Download Table]

                                                      1994             1993 
                                                      ----             ---- 
                                                         (In thousands)     

                                                                            
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

    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.                                                   

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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):          

                                                                [Download Table]

                                              1994            1993  
                                             ------          ------ 
                                                                    
Three months ended September 30               62,703          62,197
Nine months ended September 30                62,570          61,946

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.                            

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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                                    

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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

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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.         

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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.                                                            

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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.                       

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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
                                          --------------------------------------
                                                (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

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

	1/3/95	12
	12/31/94	7		10-K405, 11-K
	12/1/94	12
Filed on:	11/4/94	15		8-K, S-3
	11/1/94	9	10
	10/31/94	1
	10/26/94	12
	10/20/94	9	10
For Period End:	9/30/94	1	14
	9/19/94	9	10
	7/21/94	8	10
	7/1/94	12
	6/1/94	12
	3/22/94	7	11
	1/3/94	12
	12/31/93	2	7	10-K, 10-K/A
	12/1/93	12
	9/30/93	2
	1/1/93	8
	6/25/92	12
				List all Filings

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Filing Submission 0000950144-94-001912 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

First Financial Management Corp – ‘10-Q’ for 9/30/94

As of: Friday, 11/4/94 · For: 9/30/94 · Accession #: 950144-94-1912 · File #: 1-10442

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Quarterly Report — Form 10-QFiling Table of Contents

10-Q — First Financial Management Corporation Form 10-QDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly Report — Form 10-Q
Filing Table of Contents

10-Q — First Financial Management Corporation Form 10-Q
Document Table of Contents