Reynolds and Reynolds Reports First Quarter Results
20 January 1998
Reynolds and Reynolds Reports First Quarter Results
DAYTON, Ohio, Jan. 20 -- The Reynolds and Reynolds Company
today reported revenues of $370 million for the three months ended
December 31, 1997, an increase of 18 percent over the prior year. Earnings
for the quarter were 29 cents per share (diluted), compared to 30 cents per
share a year ago. Earnings improved from the fourth quarter's 26 cents per
share (excluding fourth quarter's restructuring and special charges).
"We made strong progress, on a sequential basis, driving higher earnings
during what historically has been our most challenging sales quarter," said
David R. Holmes, chairman, president and CEO.
Computer Systems. Computer systems revenues increased 11 percent compared
to the prior year. Automotive systems revenues increased primarily because of
recurring revenues as many automotive retailers remain tentative in making
buying decisions. Nevertheless, sales activity did improve during the first
quarter. Healthcare systems revenues grew 28 percent over the prior year,
primarily because of the acquisition of Fiscal Information.
"The acquisition of Fiscal Information gives us a market leadership
position in information systems to hospital-based physicians and strengthens
our existing product lineup," said Holmes.
Computer systems operating margins of 15 percent were higher than last
year's 14 percent and ahead of the fourth quarter's 9 percent (excluding
fourth quarter's restructuring and special charges). Operating margins
benefited from higher sales and various restructuring-related actions taken in
fiscal 1997.
"Later this month, Reynolds will participate in the National Automobile
Dealers Association convention in New Orleans," Holmes said. "At that show,
we'll leverage our strong position of having the industry's most extensive
suite of information management solutions, the highest customer satisfaction
ratings of any systems vendor, and third-party proof that automotive retailers
using Reynolds' ERA(R) system generate on average $200,000 more profit per
year than non-ERA users.
"In February, we will participate in the Healthcare Information Management
Systems Society convention in Orlando. We'll showcase our wide range of
solutions that create value for physician groups, management service
organizations and integrated healthcare delivery networks. Highlighting our
participation will be our formal unveiling of POWERRprovider(TM), the
industry's most advanced electronic medical records system."
Business Forms. Business forms segment revenues increased 23 percent over
the prior year primarily because of the acquisitions of Crain-Drummond and
Vanier Graphics. Total segment operating margins declined from the fourth
quarter (excluding fourth quarter's restructuring and special charges),
primarily due to lower automotive forms sales. Operating margins in our forms
and document management business were flat with the fourth quarter (excluding
fourth quarter's restructuring and special charges) as margin improvement was
offset by plant closing costs and integration expenses. "We expect these
costs to decline in the remainder of the year as we complete our restructuring
and integration actions," Holmes said.
"The company continues to win significant document management contracts
based on our ability to deliver measurable business results for our customers.
The American Red Cross (ARC) Biomedical Services, the nation's largest
provider of blood services and a key provider of the nation's tissue for
transplantation, was a notable addition to our client list during the
quarter," Holmes said. "Our product and services lineup, is supported by the
industry-unique Reynolds Advantage Network(TM), a fully integrated
client-server solution that includes our Internet-based interactive document
management services."
Share repurchase. During the quarter, the company repurchased
500,000 shares. Board authorization exists to purchase 2.7 million additional
shares.
Outlook. "Each of our businesses is well positioned with solutions that
deliver measurable business results for our customers. We remain enthusiastic
about our growth opportunities, and we expect double digit revenue and
earnings growth for fiscal 1998 with return on equity above 20 percent,"
Holmes said. "The restructuring and other cost-cutting actions the company
initiated late in fiscal 1997 benefited the first quarter modestly, and we
expect the impact of the restructuring to build throughout fiscal 1998."
Reynolds and Reynolds, headquartered in Dayton, Ohio, is a leading
provider of integrated information management systems and related value-added
services to automotive, healthcare and general business markets. The Company
reported revenues of $1.44 billion for the 12 months ended Dec. 31, 1997. For
more information on Reynolds and Reynolds, visit the company's World Wide Web
site at http://www.reyrey.com, or call The Reynolds and Reynolds Information
Hotline at 1-888-4REYREY.
The Reynolds and Reynolds Company Segment Report (Unaudited)
(In thousands except per share data)
First Quarter
For The Periods Ended December 31
1997 1996 Change
Consolidated
Net Sales and Revenues $369,740 $314,307 18%
Operating Income $45,833 $45,753 0%
Net Income $23,748 $25,500 -7%
Basic Earnings Per Share $0.30 $0.31 -3%
Diluted Earnings Per Share $0.29 $0.30 -3%
Average Shares Outstanding 79,848 82,004
Average Shares and Common Share
Equivalents Outstanding 81,644 85,041
Computer Systems
Net Sales and Revenues $140,012 $126,412 11%
Gross Profit $70,281 $61,438 14%
Gross Margin 50.2% 48.6%
Operating Income $21,300 $18,029 18%
Operating Margin 15.2% 14.3%
Business Forms
Net Sales and Revenues $221,631 $180,771 23%
Gross Profit $90,234 $82,893 9%
Gross Margin 40.7% 45.9%
Operating Income $21,064 $23,985 -12%
Operating Margin 9.5% 13.3%
Financial Services
Net Sales and Revenues $8,097 $7,124 14%
Operating Income $3,469 $3,739 -7%
Operating Margin 42.8% 52.5%
SOURCE Reynolds and Reynolds Company