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First Financial Management Corp – ‘10-Q’ for 3/31/94

As of: Friday, 5/13/94 · For: 3/31/94 · Accession #: 950144-94-1052 · File #: 1-10442

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

 5/13/94  First Financial Management Corp   10-Q        3/31/94    2:30K                                    Bowne of Atlanta Inc/FA

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Ffmc Form 10-Q                                        12     42K 
 2: EX-3.1      Ffmc Articles of Incorporation                         5     19K

10-Q — Ffmc Form 10-Q
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Consolidated Financial Statements: Exhibits and Reports on Form 8-K Management's Discussion and Analysis of Financial Condition and Results of Operations Submission of Matters to a Vote of Security Holders
1	1st Page - Filing Submission
2	Item 1. Consolidated Financial Statements:
8	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
10	Item 4. Submission of Matters to a Vote of Security Holders
"	Item 6. Exhibits and Reports on Form 8-K

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FORM 10-Q 

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549 

(Mark One)                                                                      

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES     
EXCHANGE ACT OF 1934                                          
For the quarterly period ended MARCH 31, 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  May 2, 1994 
----------------------------                 ---------------------------- 
Common Stock, $.10 par value                          61,266,515          

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FIRST FINANCIAL MANAGEMENT CORPORATION

INDEX 

                                                                [Download Table]

                                                               PAGE 
PART I.  FINANCIAL INFORMATION                                NUMBER
                                                              ------
                                                                    
Item 1   Consolidated Financial Statements:                         

         Consolidated Balance Sheets at March 31, 1994              
         and December 31, 1993                                   3  

         Consolidated Statements of Income for the                  
         three months ended March 31, 1994 and 1993              4  

         Consolidated Statements of Cash Flows for the              
         three months ended March 31, 1994 and 1993              5  

         Notes to Consolidated Financial Statements              6  

Item 2   Management's Discussion and Analysis of                    
         Financial Condition and Results of Operations           8  

PART II. OTHER INFORMATION                                          

Item 4   Submission of Matters to a Vote of Security Holders    10  

Item 6   Exhibits and Reports on Form 8-K                       10  

2 

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PART I.   FINANCIAL INFORMATION 

FIRST FINANCIAL MANAGEMENT CORPORATION

CONSOLIDATED BALANCE SHEETS 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                      MARCH 31, 1994    DECEMBER 31, 1993 
                                                      --------------    ----------------- 
ASSETS                                                      (Dollars in thousands)        
                                                                                          
Current Assets:                                                                           
  Cash and cash equivalents                               $  181,976           $  186,263 
  Accounts receivable, net of allowance for doubtful                                      
    accounts of $4,368 (1994) and $4,043 (1993)              348,314              323,130 
  Prepaid expenses and other current assets                   89,139               87,797 
                                                      --------------    ----------------- 
     Total Current Assets                                    619,429              597,190 
Property and equipment, net                                  133,269              134,804 
Excess of cost over fair value of assets acquired,                                        
   less accumulated amortization of $56,580 (1994)                                        
   and $52,001 (1993)                                        677,882              647,746 
Customer contracts, less accumulated amortization                                         
   of $34,773 (1994) and $31,806 (1993)                      137,364              140,124 
Other assets                                                 116,367              106,279 
                                                      --------------    ----------------- 
                                                          $1,684,311           $1,626,143 
                                                      ==============    ================= 

LIABILITIES AND SHAREHOLDERS' EQUITY                                                      
Current Liabilities:                                                                      
  Accounts payable and accrued expenses                   $  293,711           $  278,637 
  Income taxes payable                                        23,779               10,563 
  Current portion of long-term debt                            4,425                6,218 
                                                      --------------    ----------------- 
     Total Current Liabilities                               321,915              295,418 
Long-term debt, less current portion                          11,651                8,495 
Deferred income taxes payable                                 63,882               63,347 
Other liabilities                                             10,064               10,919 
                                                      --------------    ----------------- 
       Total Liabilities                                     407,512              378,179 
                                                      --------------    ----------------- 
Commitments                                                                               
Shareholders' Equity:                                                                     
  Common stock, $.10 par value; authorized                                                
    150,000,000 shares, issued 60,935,314                                                 
    shares (1994) and 59,881,709 shares (1993)                 6,094                5,988 
  Paid-in capital                                            829,907              828,699 
  Retained earnings                                          441,449              413,928 
  Treasury stock at cost, 20,000 shares                         (651)                (651)
                                                      --------------    ----------------- 
       Total Shareholders' Equity                          1,276,799            1,247,964 
                                                      --------------    ----------------- 
                                                          $1,684,311           $1,626,143 
                                                      ==============    ================= 

See notes to consolidated financial statements.                       

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FIRST FINANCIAL MANAGEMENT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME 
(UNAUDITED) 

                                                                [Download Table]

                                            THREE MONTHS ENDED MARCH 31,      
                                      ----------------------------------------
                                                  1994                    1993
                                      ----------------          --------------
                                      (In thousands, except per share amounts)
                                                                              
REVENUES:                                                                     
Service revenues                              $413,678                $322,929
Product sales                                   18,818                  24,019
Other                                              359                   1,521
                                      ----------------          --------------
                                               432,855                 348,469
                                      ----------------          --------------
EXPENSES:                                                                     
Operating                                      348,405                 271,940
General and administrative                       4,803                   4,718
Cost of products sold                           11,447                  15,330
Depreciation and amortization                   21,937                  18,586
Interest, net                                   (1,186)                  1,335
                                      ----------------          --------------
                                               385,406                 311,909
                                      ----------------          --------------

Income before income taxes                      47,449                  36,560
Income taxes                                    19,928                  15,096
                                      ----------------          --------------
   Net Income                                 $ 27,521                $ 21,464
                                      ================          ==============

Earnings per common share                     $   0.45                $   0.35
                                      ================          ==============

See notes to consolidated financial statements.                         

4 

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FIRST FINANCIAL MANAGEMENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                THREE MONTHS ENDED MARCH 31, 
                                                                ---------------------------- 
                                                                        1994            1993 
                                                                ------------    ------------ 
                                                                        (In thousands)       
                                                                                             
Cash and cash equivalents at January 1                              $186,263        $ 16,823 
                                                                ------------    ------------ 

Cash flows from operating activities:                                                        
 Net income                                                           27,521          21,464 
 Adjustments to reconcile to net cash provided by                                            
  operating activities:                                                                      
    Depreciation and amortization                                     21,937          18,586 
    Interest expense allocated to discontinued operations                               (413)
    Other non-cash items                                                 309             664 
    Increase (decrease) in cash, net of effects from                                         
     acquisitions and dispositions, resulting from changes in:                               
      Accounts receivable                                            (21,375)         32,204 
      Prepaid expenses and other assets                               (2,351)         (4,402)
      Accounts payable and accrued expenses                           28,582         (14,402)
      Income tax accounts                                             17,935          12,114 
                                                                ------------    ------------ 
     Net cash provided by operating activities                        72,558          65,815 
                                                                ------------    ------------ 

Cash flows from financing activities:                                                        
 Principal payments on long-term debt                                   (831)        (58,948)
 Payments of other liabilities                                        (2,998)         (3,425)
                                                                ------------    ------------ 
     Net cash used in financing activities                            (3,829)        (62,373)
                                                                ------------    ------------ 

Cash flows from investing activities:                                                        
 Acquisitions, net of cash received                                  (24,731)         (1,492)
 Payments related to businesses previously acquired                  (26,381)         (5,974)
 Proceeds, net of expenses, from sale of business                                     41,249 
 Proceeds and dividends received from discontinued                                           
   operations, net of expenses and taxes paid                         (2,496)        (31,858)
 Additions to property and equipment, net                             (7,417)         (6,993)
 Software development and customer conversions                       (11,991)         (8,076)
                                                                ------------    ------------ 
     Net cash used in investing activities                           (73,016)        (13,144)
                                                                ------------    ------------ 

Change in cash and cash equivalents                                   (4,287)         (9,702)
                                                                ------------    ------------ 
Cash and cash equivalents at March 31                               $181,976        $  7,121 
                                                                ============    ============ 

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
       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 period are not necessarily indicative of results to be
expected for the year.                                        

2.       Cash and cash equivalents at March 31, 1994 include approximately      
     $88.5 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.  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 and certain
        other circumstances.  The number of shares earned for any year will be
   equal to 2 1/2% of the pretax income of FFMC, divided by the then
       current market price of FFMC Common Stock.  If the full 94,500 shares
       is 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 and continued employment through
1999.                                                         

   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.  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.

6 

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FIRST FINANCIAL MANAGEMENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(UNAUDITED) 

4.       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.  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 61,622,000
    shares and 60,588,000 shares, respectively, for the quarters ended
March 31, 1994 and 1993.                                      

7 

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ITEM 2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF                         
FINANCIAL CONDITION AND RESULTS OF OPERATIONS       

Results of Operations                                                           

FFMC reported net income of $27.5 million for the first quarter of 1994, an     
increase of 28% from the $21.5 million in the first three months of 1993.       
Revenues were $432.9 million, or 24% higher than the $348.5 in revenues from    
the first quarter of 1993.  Earnings per share increased 29% to $.45 per share  
in 1994's first quarter from the $.35 per share reported in the year earlier    
period.                                                                         

Record new business signed in the latter half of 1993, assimilation of          
acquisitions completed in 1993, and a strong consumer driven economy            
contributed to the Company's revenue growth.  Internal revenue growth           
approximating 16% was the principal component of the 24% increase in 1994 first 
quarter revenues over the same quarter in 1993.  This strong internal growth    
continues as 15,000 new customers were added during the first quarter of 1994,  
the majority of which occurred in FFMC's merchant services area.                

Expenses grew at a percentage increase slightly less than the revenue           
increase. Despite continued emphasis on expense control, operating expenses     
increased 28% as revenue increases occurred at a faster rate in business areas  
which enjoy improving margins, but which have margins lower than the overall    
company enjoys.  Continued emphasis on expense control is evident in the        
general and administrative category which increased only 2% in the first        
quarter of 1994 compared with the same period in 1993.  As a result of proceeds 
from sales of businesses in 1993 and strong cash flow, the Company moved from a 
net interest expense position in the first quarter of 1993 of $1.3 million to   
net interest income of $1.2 million in 1994.                                    

The combination of these revenue and expense changes produced a pretax margin   
of 11.0% in the first quarter of 1994, up from the 10.5% reported for the first 
quarter of 1993.                                                                

The Company's effective tax rate for the quarter ended March 31, 1994 was 42%,  
up slightly from the 41.3% effective tax rate during 1993's first quarter.  The 
increase in the effective tax rate is due primarily to the pooling-of-interests 
accounting treatment of a 1993 merger with a Subchapter S Corporation, which    
had previously recorded taxes at the shareholder level.                         

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.                         

8 

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

Capital Resources and Liquidity                                                 

Cash generated from operating activities for the first three months of 1994     
totalled $72.6 million, compared with $65.8 million generated in 1993's first   
quarter.  This increase was due primarily to increased earnings in 1994's first 
quarter over the first three months of 1993.                                    

Amounts reinvested in existing businesses, principally for property and         
equipment additions, software development and customer conversions, totalled    
$19.4 million in 1994 compared with $15.1 million during 1993's first quarter.  
The increase is due primarily to higher first quarter 1994 spending on software 
development activities in FFMC's health claims processing business.  The        
Company anticipates that the level of these capital expenditures in its         
existing businesses for the full year 1994 will be similar to the total for the 
year ended December 31, 1993.                                                   

Cash from operating activities exceeded reinvestments in existing businesses by 
$53.2 million in 1994's first quarter, slightly above the $50.7 million excess  
for the first three months of 1993.  Remaining excess cash generated in 1994's  
first quarter was utilized to fund $51.1 million in payments related to current 
and prior year acquisitions.                                                    

FFMC currently has available lines of credit of $460 million; no borrowings     
were outstanding under these arrangements at March 31, 1994.                    

On January 3, 1994, FFMC paid a cash dividend of $.05 per share to shareholders 
of record as of December 1, 1993 that was declared by the Company's Board of    
Directors on October 27, 1993.  On April 27, 1994, the Company's Board of       
Directors declared a cash dividend of $.05 per share, payable on July 1, 1994   
to FFMC's shareholders of record as of June 1, 1994.                            

FFMC's cash and cash equivalents of $182.0 million at March 31, 1994, except    
for cash and cash equivalents in its credit card bank (currently $88.5          
million), are available for acquisitions and general corporate purposes.  If    
suitable opportunities arise for additional acquisitions, the Company may use   
cash, draw on its available 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.                    

9 

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PART II.  OTHER INFORMATION 

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    

  On April 27, 1994, at the annual shareholders' meeting for which
  proxies were solicited pursuant to Regulation 14A, the Company's
        shareholders voted to elect all eight of the Company's nominees to the
        Company's Board of Directors.  The following table shows the number of
    votes cast for each nominee and the number of votes withheld as to
        each nominee.  There were no abstentions or broker non-votes as to any
   nominee, and there were no nominees other than those named in the
Company's proxy statement.                                    

NAME OF NOMINEE           AFFIRMATIVE VOTES               VOTES WITHHELD  
Patrick H. Thomas            47,156,411                       230,258       
George L. Cohen              47,158,197                       229,472       
Robert E. Coleman            47,215,840                       170,829       
Jack R. Kelly, Jr.           47,216,912                       169,757       
Henry A. Leslie              47,151,294                       235,375       
M. Tarlton Pittard           47,157,297                       229,372       
Charles B. Presley           47,210,794                       175,875       
Virgil R. Williams           47,156,736                       229,933       

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                       

(a)      Exhibits                                                               

       3.1  Restated Articles of Incorporation of First Financial Management
Corporation.                                        

(b)      Reports on Form 8-K                                                    

    The Company did not file any current report on Form 8-K during the
quarter ended March 31, 1994.                                 

10

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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:  May 13, 1994                    By    /s/ M. Tarlton Pittard             
  ---------------------                -----------------------------------
                            M. Tarlton Pittard
                                         Senior Executive Vice President
                                     and Chief Financial Officer

Date:  May 13, 1994                    By    /s/ Richard Macchia                
  ---------------------                -----------------------------------
                         Richard Macchia
                                  Executive Vice President
                                          and Principal Accounting Officer

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INDEX OF EXHIBITS 

                                                              Sequentially
Exhibits                                                         Numbered Page  
--------                                                         -------------  

3.1              Restated Articles of Incorporation of                          
         First Financial Management Corporation.              13

12

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Dates Referenced Herein and Documents Incorporated by Reference

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

	12/31/94	6		10-K405, 11-K
	7/1/94	9
	6/1/94	9
Filed on:	5/13/94	11
	5/2/94	1
	4/27/94	9	10	DEF 14A
For Period End:	3/31/94	1	10
	3/22/94	6
	1/3/94	9
	12/31/93	3	9	10-K, 10-K/A
	12/1/93	9
	10/27/93	9
	3/31/93	2	7
				List all Filings

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Filing Submission 0000950144-94-001052 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

First Financial Management Corp – ‘10-Q’ for 3/31/94

As of: Friday, 5/13/94 · For: 3/31/94 · Accession #: 950144-94-1052 · File #: 1-10442

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