Reynolds and Reynolds Reports Record Fiscal Year
4 November 1998
Reynolds and Reynolds Reports Record Fiscal Year
DAYTON, Ohio, Nov. 4 -- The Reynolds and Reynolds Company
today reported the following:
1997
In thousands except per share data 1998 Excluding As
Charges (b) Reported
Fourth Quarter
Net Sales and Revenues (a) $383,358 $366,256 $366,256
% Increase 5% -- --
Diluted Earnings Per Common Share $.34 $.26 $.00
% Increase 31% -- --
Twelve Months
Net Sales and Revenues (a) $1,485,963 $1,345,339 $1,345,339
% Increase 10% -- --
Diluted Earnings Per Common Share $1.27 $1.11 $.70
% Increase 14% -- --
a. Net sales and revenues exclude Healthcare Systems which is being
reported as a discontinued operation.
b. Diluted earnings per common share excludes restructuring and special
charges of 26 cents per share in the fourth quarter and 41 cents per
share for the 12 months.
"Fiscal year 1998 represents another year of record financial performance
for the company," said David R. Holmes, chairman, president and chief
executive officer. "The year was capped by a very strong performance by our
automotive business. And, the company delivered on its commitment to drive
out costs, expand its market presence and deliver strong earnings growth."
Discontinued operations. During the quarter, the company announced the
sale of its Healthcare Systems Division to InfoCure Corporation. The
transaction closed on October 23rd, with Reynolds receiving approximately
$50 million (about $40 million in cash and the remainder in subordinated
notes). The company expects to record a gain on the sale during the first
quarter of fiscal 1999.
Automotive Division. Automotive Division revenues were up 14 percent for
the quarter and 9 percent for the fiscal year. Sales were driven by strong
growth in automotive systems for the quarter and fiscal year. Operating
margins for the year were approximately 22 percent. "Reynolds has established
a clear market leadership position in providing solutions for automotive
retailers. During the year, we were successful in every segment of the
market, including the enterprise segment where we forged strong relationships
with AutoNation, UnitedAuto Group, Ford FEICo, Southeast Toyota, and Gulf
States Toyota," said Holmes.
Business Systems Division. Revenues in the Business Systems Division
declined during the quarter from the prior year, but increased 12 percent for
the fiscal year due to the acquisition of Crain-Drummond. Operating margins
for the quarter and the year were 6 percent. "The division expects margin
growth during fiscal 1999 as we complete the integration of recent
acquisitions and execute against a number of cost savings initiatives," Holmes
said. "The division's pipeline for new business continues to build,
highlighted by the signing of Kaiser Permanente to a five year, $200 million
contract, the largest in the company's history. We also added a number of
other key accounts during the year including American Red Cross, Disney's
Retail Division, Warner Brothers' Music Division, Transamerica, Scripps
Hospitals, R.R. Donnelly, Time Warner Cable, Charter One Bank and many more,"
Holmes reported.
Share Repurchase. During the quarter, the board of directors increased
the number of authorized shares available for repurchase by 4 million shares,
bringing the total authorized to 5.4 million shares. During fiscal 1998, the
company repurchased 1.8 million shares.
Outlook. "We expect continued strong earnings in the first fiscal
quarter. During the quarter, we will bring the Kaiser account on line which
will result in an investment of approximately one cent per share. We expect
the account to be profitable by fiscal year end 1999. In addition, the
company will adopt a new accounting pronouncement (AICPA's Statement of
Position 97-2 on Software Revenue Recognition) requiring us to recognize
systems revenues upon installation rather than on shipment -- our current
practice. This change will result in lower systems revenues and earnings,
primarily in the first quarter, which will be partially offset by the gain on
the sale of the Healthcare Systems Division. Nevertheless, we expect first
fiscal quarter results to show strong improvement over the prior year.
"Looking to fiscal 1999, we expect another record year with solid revenue
and earnings growth, strong cash flow and return on equity above 20 percent,"
Holmes said.
Reynolds and Reynolds, headquartered in Dayton, Ohio, is a leading
provider of integrated information management systems and related value-added
services to automotive and general business markets. The company reported
revenues of about $1.5 billion for the 12 months ended September 30, 1998.
For more information about 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)
For The Periods Ended September 30 Fourth Quarter
1998 1997 Change
Consolidated
Net Sales and Revenues $383,358 $366,256 5%
Gross Profit $170,872 $159,393 7%
Operating Income $54,523 $20,808 162%
Net Income $26,950 $174 15389%
Basic Earnings Per Common Share $0.34 $O.00 --
Diluted Earnings Per Common Share $0.34 $O.00 --
Average Shares Outstanding 78,733 80,215 --
Average Shares and Common
Share Equivalents Outstanding 79,751 82,139 --
Automotive
Net Sales and Revenues $201,003 $176,647 14%
Gross Profit $107,179 $94,745 13%
Gross Margin 53.3% 53.6% --
Operating Income $44,551 $20,968 112%
Operating Margin 22.2% 11.9% --
Business Systems
Net Sales and Revenues $173,483 $181,752 -5%
Gross Profit $63,693 $64,648 -1%
Gross Margin 36.7% 35.6% --
Operating Income $10,582 $6,243 70%
Operating Margin 6.1% 3.4% --
Financial Services
Net Sales and Revenues $9,042 $7,947 14%
Operating Income $4,129 $3,434 20%
Operating Margin 45.7% 43.2% --
Elimination of
Intersegment Sales ($170) ($90) --
Unallocated Corporate
Expenses ($4,739) ($9,837) --
The Reynolds and Reynolds Company
Segment Report (Unaudited)
(In thousands except per share data)
CONTINUED
For The Periods Ended September 30 Twelve Months
1998 1997 Change
Consolidated
Net Sales and Revenues $1,485,963 $1,345,339 10%
Gross Profit $651,946 $596,441 9%
Operating Income $203,355 $158,101 29%
Net Income $103,107 $59,219 74%
Basic Earnings Per Common Share $1.30 $O.73 --
Diluted Earnings Per Common Share $1.27 $O.70 --
Average Shares Outstanding 79,451 81,462 --
Average Shares and
Common Shares Equivalents
Outstanding 81,146 84,023 --
Automotive
Net Sales and Revenues $741,858 $681,145 9%
Gross Profit $400,521 $363,217 10%
Gross Margin 54.0% 53.3% --
Operating Income $160,858 $125,245 28%
Operating Margin 21.7% 18.4% --
Business Systems
Net Sales and Revenues $710,221 $634,172 12%
Gross Profit $251,425 $233,224 8%
Gross Margin 35.4% 36.8% --
Operating Income $42,198 $40,021 5%
Operating Margin 5.9% 6.3% --
Financial Services
Net Sales and Revenues $34,497 $30,383 14%
Operating Income $16,546 $15,101 10%
Operating Margin 48.0% 49.7% --
Elimination of
Intersegment Sales ($613) ($361) --
Unallocated Corporate
Expenses ($16,247) ($22,266) --
The above amounts include 1997 restructuring and special charges of $.26
per diluted share in the fourth quarter and $.41 per diluted share for the
twelve months.