Reynolds and Reynolds Reports Q3 Results
21 July 1998
Reynolds and Reynolds Reports Third Quarter Results
DAYTON, Ohio, July 21 -- The Reynolds and Reynolds Company
today reported revenues of $385 million for the third quarter
ended June 30, 1998, an increase of 14 percent over the prior year. Diluted
earnings per share were 32 cents, compared to 9 cents per share last year when
the company recorded 15 cents per share of special charges.
For the nine-month period, revenues of $1.14 billion were 13 percent above
last year. Nine-month earnings per share were 93 cents compared to 70 cents
per share last year. During the third quarter, the company recorded a
favorable settlement of several tax audits and an offsetting amount of charges
primarily to streamline product offerings. Excluding the tax settlements and
effect of the charges, third quarter earnings were 32 cents per share.
"Overall third quarter results were strong with double digit revenue and
earnings growth over the prior year," said David R. Holmes, chairman,
president and CEO. "The automotive computer systems and automotive forms
businesses were particularly strong and we continue to benefit from last
year's restructuring actions."
Computer Systems Segment
Third quarter and nine-month revenues increased 17 percent and 13 percent,
respectively over the prior year. Operating margins were 11 percent for the
quarter including the effect of charges to streamline products. Excluding
these charges, operating margins were 14 percent.
Automotive computer systems continued its strong performance with a
14 percent increase in third quarter revenues over the prior year. Results
benefited from strong new unit sales and higher recurring revenues. "Sales of
our core systems are strong, and we continue to expand our relationship with
the large auto retailing enterprises. Healthcare systems sales increased
significantly over the prior year following several large recent account
signings and the 1997 acquisition of Fiscal Information," said Holmes.
Business Forms Segment
Third quarter revenues were up 12 percent over the prior year primarily
because of the 1997 acquisition of Crain-Drummond, partially offset by a
decline in U.S. forms sales. Profitability during the quarter was negatively
impacted by weaker demand and pricing which affected the entire forms
industry. The company continued to make progress in integrating recent
acquisitions and lowering costs. However, the impact of the revenue decline
from the second fiscal quarter more than offset those gains. "During the
quarter, UnitedAuto Group selected Reynolds to be the exclusive provider of
business forms and forms management services to its network of 97 automobile
franchises," Holmes said.
Share Repurchase
During the quarter, the company repurchased 1.1 million shares for a total
1.8 million shares for the nine-month period ending June 30, 1998. Board
authorization exists for an additional 1.4 million shares.
Outlook
"Looking to the remainder of fiscal 1998, we expect to report record
revenues and profits with return on equity above 20 percent," said Holmes.
Reynolds and Reynolds, headquartered in Dayton, Ohio, is a leading
provider of integrated information management systems and related value-added
services to the automotive, healthcare and general business markets.
The company has reported revenues of $1.5 billion for the 12 months ended
June 30, 1998. For more information on Reynolds and Reynolds, visit the
company's World Wide Web site on http://www.reyrey.com, or call the Reynolds
and Reynolds Information Hotline at 888-4REYREY.
The Reynolds and Reynolds Company
Segment Report (Unaudited)
(In thousands except per share data)
For The Periods Third Quarter Nine Months
Ended June 30 1998 1997 Change 1998 1997 Change
Consolidated
Net Sales
and Revenue $384,785 $338,060 14% $1,140,270 $1,006,569 13%
Operating
Income $41,863 $20,742 102% $137,819 $113,143 22%
Net
Income $26,049 $7,278 258% $76,157 $59,045 29%
Basic Earnings
Per Share $0.33 $0.09 267% $0.96 $0.72 33%
Diluted
Earnings
Per Share $0.32 $0.09 256% $0.93 $0.70 33%
Average Shares
Outstanding 79,435 81,487 79,692 81,882
Average Shares
and Common
Share
Equivalents
Outstanding 81,442 83,734 81,614 84,656
Computer Systems
Net Sales and
Revenues $156,442 $133,375 17% $444,673 $394,836 13%
Gross Profit $74,387 $59,649 25% $217,879 $186,987 17%
Gross Margin 47.3% 44.7% 49.0% 47.4%
Operating
Income $16,643 ($746) $59,635 $37,097 61%
Operating
Margin 10.6% -0.6% 13.4% 9.4%
Business Forms
Net Sales and
Revenues $219,555 $196,898 12% $670,142 $589,297 14%
Gross Profit $90,822 $84,901 7% $276,831 $258,318 7%
Gross Margin 41.4% 43.1% 41.3% 43.8%
Operating
Income $20,538 $17,473 18% $65,767 $64,379 2%
Operating
Margin 9.4% 8.9% 9.8% 10.9%
Financial Services
Net Sales and
Revenue $8,788 $7,787 13% $25,455 $22,436 13%
Operating
Income $4,682 $4,015 17% $12,417 $11,667 6%
Operating
Margin 53.3% 51.6% 48.8% 52.0%