Reynolds and Reynolds Reports 4th Quarter and Fiscal Year Results
8 November 2000
Reynolds and Reynolds Reports 4th Quarter and Fiscal Year Results; 'New' Reynolds Positioned for Growth
DAYTON, Ohio, Nov. 8 The Reynolds and Reynolds Company
today reported strong financial results for the fourth quarter and
the fiscal year.
Fourth quarter revenues of $247 million were 8 percent ahead of last year.
Fiscal year revenues of $924 million were up 10 percent. Net income was
$27 million for the quarter and $117 million for the year and earnings per
share for the quarter were 35 cents and $1.47 for the fiscal year. These
results include restructuring charges of 8 cents per share and a gain on the
sale of the Information Solutions Group of 14 cents per share.
Excluding the restructuring charges, earnings per share from continuing
operations were 32 cents for the quarter and $1.19 for the year, up 10 percent
and 9 percent, respectively. Return on equity for the fiscal year was
24 percent.
"We reinvented the company with a singular focus on automotive retailing,"
said David R. Holmes, chairman and CEO. "This transformation positions us
firmly as the market leader in providing services and solutions to automotive
retailers and car companies. Reynolds offers the industry's only fully
integrated suite of applications and services with the financial resources to
fund long-term growth."
During the fiscal year Reynolds:
-- Completed the sale of the Information Solutions Group, a document
services business, for approximately $360 million in cash. The proceeds are
being used to fund an aggressive share buyback plan and to build next
generation solutions that will solidify the company's market leadership
position.
-- Acquired the HAC Group, the industry's leading web services, learning
and consulting company. The acquisition of HAC broadened our services
portfolio and enhanced our ability to provide integrated, end-to end
solutions.
-- Announced relationships with a number of car companies including Toyota
Motor Sales USA Inc., Saturn Corporation, Acura Division of American Honda
Motor Company, General Motors Corporation, and Mercedes-Benz USA.
-- Formed ChoiceParts, LLC, an online parts network, with other industry
partners.
-- Introduced AutoNotice.com, an Internet-based customer relationship
management system.
-- Was selected by Sonic Automotive to provide e-business networking
services to more than 150 franchises across the United States.
-- Was selected for the Information Week 500, receiving gold citations for
E-Business Strategy, silver citations for Technology Strategy and Business
Practices and a bronze citation for Customer Knowledge.
-- Received the Software Support Professionals Association Star award for
superior customer service for the second consecutive year.
"Earlier this week, we announced the immediate availability of ERA3, a
totally new capability that provides seamless access to the Internet using PCs
or text-based terminals," Holmes said. "This exciting offering enables all of
our customers to have two-way, text-based communications through the Internet.
The system is hugely popular to our retailing customers who already use about
250,000 text-based terminals in their computing environment. Additionally,
we're offering value-added applications packages with ERA3 that will enable
automotive retailers to expand their payroll and service capabilities, support
thin clients and wireless devices, and create a platform for ASP computing
needs. We're well positioned to grow our leadership position in the
automotive market."
Share repurchase. The company repurchased 4.5 million shares in the
fourth quarter and 5.5 million shares during the year at average prices of
$18.08 and $18.41 per share, respectively. Approximately 6.0 million shares
remain authorized for repurchase. "We believe that Reynolds stock represents
an exceptional value, especially at current market prices," Holmes said.
Looking Ahead. For the first quarter of fiscal 2001, the company expects:
-- Revenues to be in line with the consensus estimate of $243 million
-- Earnings per share to meet or slightly exceed the analyst consensus
estimate of 29 cents per share.
For the 2001 fiscal year the company currently expects:
-- Revenues to be in line with the consensus estimate of $1 billion
-- Earnings per share to be in line with the consensus estimate of $1.32
-- Return on equity to exceed 20 percent
-- Capital expenditures and capitalized software to total approximately
$70 million
-- Depreciation and amortization expense is expected to total
approximately $50 million
-- R&D expenses to be approximately $75 million
-- To continue its share buyback plan throughout the year. Approximately
6 million shares were authorized for repurchase at the end of September 2000
-- Dividends to remain at the rate of 11 cents per common share
The Reynolds and Reynolds Company
Segment Report (Unaudited)
(In thousands except per share data)
Fourth Quarter
For The Periods Ended
September 30 2000 1999 Change
Consolidated
Net Sales and Revenues $246,812 $227,961 8%
Gross Profit $134,749 $118,954 13%
Operating Income $31,017 $40,898 -24%
Operating Margin 12.6% 17.9% --
Income From Continuing Operations $18,809 $23,491 -20%
Discontinued Operations(2) ($2,627) $8,678 -130%
Gain on sale of Discontinued
Operations(3)(4) $10,853 $0 $10,853
Net Income $27,035 $32,169 -16%
Earnings Per Common Share (Diluted)
Income From Continuing Operations $0.24 $0.29 -17%
Discontinued Operations(2) ($0.03) $0.11 -127%
Gain on sale of Discontinued
Operations(3)(4) $0.14 $0.00 --
Net Income $0.35 $0.40 -13%
Average Shares Outstanding 78,233 80,492 79,499
Automotive Solutions
Net Sales and Revenues $236,631 $218,331 8%
Gross Profit $134,749 $118,954 13%
Gross Margin 56.9% 54.5% 56.4%
Operating Income $26,403 $35,958 -27%
Operating Margin 11.2% 16.5% 15.2%
Financial Services
Net Sales and Revenues $10,181 $9,630 6%
Operating Income $4,614 $4,940 -7%
Operating Margin 45.3% 51.3% --
Twelve Months
For The Periods Ended
September 30 2000 1999(1) Change
Consolidated
Net Sales and Revenues $924,381 $837,421 10%
Gross Profit $498,737 $433,369 15%
Operating Income $155,209 $153,922 1%
Operating Margin 16.8% 18.4% --
Income From Continuing Operations $88,440 $87,891 1%
Discontinued Operations(2) $17,303 $29,045 -40%
Gain on sale of
Discontinued Operations(3)(4) $10,853 $5,785 --
Net Income $116,596 $122,721 -5%
Earnings Per Common Share (Diluted)
Income From Continuing Operations $1.11 $1.09 2%
Discontinued Operations (2) $0.22 $0.36 -39%
Gain on sale of Discontinued
Operations(3)(4) $0.14 $0.07 100%
Net Income $1.47 $1.53 -4%
Average Shares Outstanding 79,499 80,340 --
Automotive Solutions
Net Sales and Revenues $884,175 $798,747 11%
Gross Profit $498,737 $433,369 15%
Gross Margin 56.4% 54.3% --
Operating Income $134,214 $133,358 1%
Operating Margin 15.2% 16.7% --
Financial Services
Net Sales and Revenues $40,206 $38,674 4%
Operating Income $20,995 $20,564 2%
Operating Margin 52.2% 53.2% --
(1) Reflects the company's adoption of AICPA Statement of
Position 97-2, Software Revenue Recognition which reduced Automotive
Solutions' revenues $17,936, gross profit $11,205, operating income
$10,624 ($.08 per share) for the six months ended March 31, 1999.
The company completed the transition period for the adoption of SOP
97-2 as of March 31, 1999, and there was no impact on the fourth
quarter of 1999's operating results.
(2) Represents the after-tax operating results of the company's
Information Solutions segment.
(3) 2000 represents the after-tax gain of $.14 per share on the sale of
the company's Information Solutions segment.
(4) 1999 represents the after-tax gain of $.07 per share on the sale of
the company's Healthcare Systems segment.