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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1994
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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 0-132
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THE REYNOLDS AND REYNOLDS COMPANY
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(Exact name of registrant as specified in its charter)
Ohio 31-0421120
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
115 South Ludlow Street, Dayton, Ohio 45402
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (513) 443-2000
-----------------------------
None
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(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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of February 7, 1994:
Class A Common shares, 41,003,897 net of 5,216,145 treasury shares;
Class B Common shares, 10,000,000.
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<TABLE>
THE REYNOLDS AND REYNOLDS COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
<CAPTION>
Page
Number
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Consolidated Income (Unaudited)
Three Months Ended December 31, 1994 and 1993 3
Condensed Consolidated Balance Sheets (Unaudited)
December 31, 1994 and September 30, 1994 4
Statements of Consolidated Cash Flows (Unaudited)
Three Months Ended December 31, 1994 and 1993 5
Notes to Consolidated Financial Statements (Unaudited) 6
Independent Accountants' Review Report 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Three Months Ended December 31, 1994 and 1993 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
</TABLE>
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<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE REYNOLDS AND REYNOLDS COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED DECEMBER 31, 1994 AND 1993
(In thousands except per share data)
<CAPTION>
1994 1993
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<S> <C> <C>
Net Sales and Revenues:
Information systems:
Products $142,362 $132,885
Services 61,237 54,947
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Total information systems 203,599 187,832
Financial services 5,100 4,810
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Total net sales and revenues 208,699 192,642
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Costs and Expenses:
Information systems:
Cost of sales:
Products 82,294 80,820
Services 25,464 23,019
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Total cost of sales 107,758 103,839
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Selling, general and administrative expenses 65,866 62,160
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Financial services 2,035 1,462
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Total costs and expenses 175,659 167,461
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Operating Income 33,040 25,181
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Other Charges (Income):
Interest expense 818 863
Interest income (433) (305)
Other (214) (130)
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Total other charges 171 428
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Income Before Income Taxes 32,869 24,753
Provision for Income Taxes 13,980 10,344
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Net Income $ 18,889 $ 14,409
======== ========
Earnings Per Common Share $.44 $.33
==== ====
Average Number of Common Shares Outstanding 42,736 43,679
====== ======
Cash Dividends Declared Per Common Share $.10 $.075
==== =====
<FN>
See Independent Accountants' Review Report and Notes to Consolidated Financial Statements.
</TABLE>
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<TABLE>
THE REYNOLDS AND REYNOLDS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
DECEMBER 31, 1994 AND SEPTEMBER 30, 1994
(In thousands)
<CAPTION>
12/31/94 9/30/94
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<S> <C> <C>
INFORMATION SYSTEMS ASSETS
Current Assets:
Cash and equivalents $ 7,264 $ 20,230
-------- --------
Accounts receivable (less allowance for doubtful accounts:
12/31/94----$2,660; 9/30/94----$2,683) 100,870 101,872
-------- --------
Inventories:
Finished products 31,674 31,027
Work in process 1,867 1,720
Raw materials and supplies 5,035 4,527
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Total inventories 38,576 37,274
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Deferred income taxes 8,758 8,832
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Prepaid expenses and other assets 7,629 7,308
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Total current assets 163,097 175,516
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Property, Plant and Equipment 262,163 260,852
Less Accumulated Depreciation 143,554 143,367
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Net Property, Plant and Equipment 118,609 117,485
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Intangible Assets - Net:
Goodwill 86,143 78,277
Software licensed to customers 14,004 14,413
Other 10,114 10,816
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Total intangible assets 110,261 103,506
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Other Assets 34,976 34,085
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Total Information Systems Assets 426,943 430,592
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FINANCIAL SERVICES ASSETS
Finance Receivables - Net 218,928 202,620
Cash and Other Assets 1,185 1,487
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Total Financial Services Assets 220,113 204,107
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TOTAL ASSETS $647,056 $634,699
======== ========
INFORMATION SYSTEMS LIABILITIES
Current Liabilities:
Current portion of long-term debt $ 293 $ 287
Notes payable 3,500
Accounts payable 31,297 33,193
Accrued liabilities 63,505 56,559
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Total current liabilities 98,595 90,039
Long-Term Debt 40,955 41,014
Retirement and Other Liabilities 51,137 52,417
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Total Information Systems Liabilities 190,687 183,470
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FINANCIAL SERVICES LIABILITIES
Notes Payable 109,712 104,363
Deferred Income Taxes 53,904 51,602
Other Liabilities 2,297 2,225
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Total Financial Services Liabilities 165,913 158,190
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SHAREHOLDERS' EQUITY
Capital Stock:
Preferred
Class A common 25,651 26,067
Class B common 313 313
Additional Paid-In Capital 2,974 2,557
Other Adjustments (3,314) (2,566)
Retained Earnings 264,832 266,668
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Total Shareholders' Equity 290,456 293,039
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $647,056 $634,699
======== ========
<FN>
See Independent Accountants' Review Report and Notes to Consolidated Financial Statements.
</TABLE>
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<TABLE>
THE REYNOLDS AND REYNOLDS COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED DECEMBER 31, 1994 AND 1993
(In thousands)
<CAPTION>
1994 1993
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<S> <C> <C>
INFORMATION SYSTEMS
Cash Flows Provided by Operating Activities $19,615 $14,420
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Cash Flows Provided by (Used for) Investing Activities:
Acquisitions (11,543)
Capital expenditures (6,449) (4,421)
Net proceeds from sales of assets 871 259
Capitalization of software licensed to customers (395) (567)
Repayments from (advances to) financial services (1,166) 245
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Net cash used for investing activities (18,682) (4,484)
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Cash Flows Provided by (Used for) Financing Activities:
Additional borrowings 3,500
Principal payments on debt (53)
Capital stock issued 402 801
Capital stock repurchased (16,997) (2,246)
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Net cash used for financing activities (13,148) (1,445)
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Effect of Exchange Rate Changes on Cash (751) 145
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Increase (Decrease) in Cash and Equivalents (12,966) 8,636
Cash and Equivalents, Beginning of Period 20,230 9,437
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Cash and Equivalents, End of Period $ 7,264 $18,073
======= =======
FINANCIAL SERVICES
Cash Flows Provided by Operating Activities $ 3,047 $ 3,436
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Cash Flows Provided by (Used for) Investing Activities:
Finance receivables originated (24,764) (16,328)
Collections on finance receivables 14,862 12,663
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Net cash used for investing activities (9,902) (3,665)
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Cash Flows Provided by (Used for) Financing Activities:
Additional borrowings 12,350 7,900
Principal payments on debt (7,000) (5,813)
Advances from (repayments to) information systems 1,166 (245)
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Net cash provided by financing activities 6,516 1,842
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Increase (Decrease) in Cash and Equivalents (339) 1,613
Cash and Equivalents, Beginning of Period 1,200 996
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Cash and Equivalents, End of Period $ 861 $ 2,609
======= =======
<FN>
See Independent Accountants' Review Report and Notes to Consolidated Financial Statements.
</TABLE>
5
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THE REYNOLDS AND REYNOLDS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in thousands except per share data)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In the opinion of management, the accompanying consolidated financial
statements contain all significant adjustments (which consist only of normal
recurring adjustments) necessary to present fairly the financial position
(unaudited) of the company as of December 31, 1994 and September 30, 1994, the
results of operations (unaudited) for the three months ended December 31, 1994
and 1993 and cash flows (unaudited) for the three months ended December, 1994
and 1993.
(2) BUSINESS FORMS RESTRUCTURING
During the third quarter of fiscal year 1994, the company recorded a
restructuring charge of $12,400 for costs to be incurred in the disposal of
part of its stock tab product line and the consolidation of certain custom
business forms printing operations. The company discontinued the manufacture
of certain low-margin stock tab products and closed its Chambersburg,
Pennsylvania plant. To facilitate this process, the company sold a minority
interest in a subsidiary to Willamette Industries Inc. Willamette, based in
Oregon, is a forest products company and a leading supplier of stock tab
products. Willamette and the company jointly owned and operated this
subsidiary during the transition of manufacturing operations to ensure
continuous quality customer service. During the first quarter of fiscal year
1995, the company liquidated this subsidiary with no effect on net income.
In addition to closing several distribution facilities and sales offices, the
company also closed its custom business forms plant in Chestertown, Maryland
and consolidated operations primarily into its Hagerstown, Maryland plant.
Significant components of the restructuring charge are included in the
following table.
Write-off of goodwill $ 4,000
Plant closure 3,850
Severance and outplacement 2,990
Other 1,560
-------
Total $12,400
=======
The severance and outplacement accruals represent benefits for 288 employees,
comprised principally of manufacturing employees and some sales and
administrative employees. Through December 31, 1994, 274 employees were
terminated and $2,587 of severance and outplacement benefits were paid.
(3) BUSINESS COMBINATIONS
On November 1, 1994, the company acquired substantially all assets and assumed
certain liabilities of privately owned PD Medical Systems of Portland, Oregon
for $7,472 of cash. PD Medical Systems, a provider of information management
systems to medical practices, has annual revenues of about $8,000.
On December 2, 1994, the company acquired most of the assets of Transkrit
Corporation's Pegboard and Flat Division for $4,071 of cash. Assets acquired
were Transkrit's wholesale pegboard customer list, certain printing equipment
and inventories for pegboard and related products. Transkrit's Pegboard and
Flat Division has annual sales of about $7,000.
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These business combinations were accounted for as purchases and were financed
with internally generated cash. The accounts of acquired businesses were
included in the company's financial statements since their respective
acquisition dates.
In January 1995, the company completed the acquisition of Service Systems
Enterprises Inc., a Chicago-based provider of highly targeted direct marketing
services to automobile dealerships. Service Systems Enterprises has annual
sales of about $8,000.
(4) CASH FLOW STATEMENTS
The following supplemental information has been presented to aid in the
analysis of the statements of consolidated cash flows for the three months
ended December 31, 1994 and 1993.
<TABLE>
<CAPTION>
1994 1993
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<S> <C> <C>
INFORMATION SYSTEMS
Cash flows provided by (used for) operating activities:
Net income $17,045 $12,402
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amoritization 8,154 7,608
Deferred income taxes (219) (1,367)
Deferred income taxes transferred to
financial services 1,120 960
Loss on sales of assets 38 271
Changes in operating assets and liabilities:
Accounts receivable (3,995) 146
Inventories (1,021) (2,052)
Prepaid expenses and other assets (193) (1,000)
Intangible and other assets (546) 150
Accounts payable (2,127) 1,323
Accrued liabilities 2,313 (4,197)
Other liabilities (954) 176
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Net cash provided by operating activities $19,615 $14,420
======= =======
Income taxes paid $8,418 $5,878
====== ======
Interest paid $16 $101
=== ====
FINANCIAL SERVICES
Cash flows provided by (used for) operating activities:
Net income $1,844 $2,007
Adjustments to reconcile net income to net cash
provided by operating activities:
Deferred income taxes 2,302 1,516
Deferred income taxes transferred from
information systems (1,120) (960)
Changes in receivables, other assets and other
liabilities 21 873
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Net cash provided by operating activities $3,047 $3,436
====== ======
Income taxes paid $13 $34
=== ===
Interest paid $1,560 $1,211
====== ======
</TABLE>
On November 14, 1994, the company's Board of Directors raised the quarterly
dividend to $.10 per Class A common share, which was paid on January 13, 1995.
Dividends declared but not paid as of December 31, 1994 and 1993, were not
included in the statements of consolidated cash flows. Cash dividends paid in
January 1995 and 1994 were $4,183 and $3,225 respectively.
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(5) STOCK SPLIT
On February 17, 1994, the company's board of directors approved a two-for-one
common stock split. As a result of the split, on March 15, 1994, common
shareholders received one additional share for each share held as of March 1,
1994. Par value remained $.625 per Class A common share and $.03125 per Class
B common share. Share and per share information presented in the accompanying
financial statements was restated to reflect the stock split.
(6) CONTINGENCIES
The U.S. Environmental Protection Agency (EPA) has designated the company as
one of a number of potentially responsible parties (PRP) under the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
at three environmental remediation sites. The EPA has contended that any
company linked to a CERCLA site is potentially liable for all response costs
under the legal doctrine of joint and several liability.
The first site relates to a privately owned and operated solid waste disposal
facility. The EPA has issued a record of decision mandating certain
remediation activities. The company has shared costs with other PRPs for the
remedial investigation and feasibility study of the site. The company believes
it is a minor participant, and has accrued its estimated share of response
costs as of December 31, 1994. The company believes that the reasonably
foreseeable resolution will not have a material adverse effect on the financial
statements.
The second site involves a municipal waste disposal facility owned and operated
by four municipalities. The company joined a PRP coalition and is sharing
remedial investigation and feasibility study costs with other PRPs. During the
quarter ended June 30, 1994, the PRP coalition received an engineering
evaluation/cost analysis of the presumed remedy for the site from its private
contractor. However, because the EPA has not yet selected a remedy, potential
remediation costs remain uncertain. Remediation costs for a typical CERCLA
site on the National Priorities List average about $30,000. The engineering
evaluation/cost analysis was consistent with this average. The company has
accrued its estimated share of response costs of $2,500 as of December 31,
1994. Management believes that the reasonably foreseeable resolution will not
have a material adverse effect on the financial statements.
In January, 1994, by means of a special notice letter, the EPA notified the
company that it was considered to be one of more than three hundred PRPs at a
former drum reconditioning facility. A remedial investigation and feasibility
study is complete. A record of decision has been issued, and a statement of
work for the remedial design and remedial action is in circulation. The
company was unable to substantiate any previous involvement with the facility
and believes that the reasonably foreseeable resolution of this matter will not
have a material adverse effect on the financial statements.
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INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors,
The Reynolds and Reynolds Company:
We have reviewed the accompanying condensed consolidated balance sheet of The
Reynolds and Reynolds Company and subsidiaries as of December 31, 1994, and the
related statements of consolidated income for the three months ended December
31, 1994 and 1993 and consolidated cash flows for the three months ended
December 31, 1994 and 1993. These financial statements are the responsibility
of the company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data, and of making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope than
an audit in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of The Reynolds and Reynolds Company
and subsidiaries as of September 30, 1994 and the related consolidated
statements of income, shareholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated November 14, 1994, we
expressed an unqualified opinion. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of September 30, 1994
is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Dayton, Ohio
February 7, 1995
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE REYNOLDS AND REYNOLDS COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1994 AND 1993
(Dollars in thousands except per share data)
SIGNIFICANT EVENTS
BUSINESS COMBINATIONS
During the first quarter of fiscal year 1995, the company acquired PD Medical
Systems and Transkrit Corporation's Pegboard and Flat Division. The effects
on first quarter sales and net income were not material. In January 1995, the
company completed the acquisition of Service Systems Enterprises Inc. See
Note 3 to the Consolidated Financial Statements for additional disclosures
about the company's business combinations.
STOCK SPLIT
On February 17, 1994, the board of directors approved a two-for-one common
stock split. This split was the second such split since November 1992 and
the sixth split since the company's initial public offering in 1961. See
Note 5 to the Consolidated Financial Statements for additional disclosures
regarding the stock split.
BUSINESS FORMS RESTRUCTURING
During the third quarter of fiscal year 1994, the company recorded a $12,400
restructuring charge for costs incurred in the disposal of part of its stock
tab product line and the consolidation of certain custom business forms
printing operations. As part of the restructuring, the company sold a
minority interest in a subsidiary to Willamette Industries Inc. During the
first quarter of fiscal year 1995, the company liquidated this subsidiary
with no effect on net income. Through December 31, 1994, 95% of the
positions accrued for in the restructuring have been eliminated. Operating
income for the general printing business improved $1,125 over last year's
first quarter. The general printing business remained on track to achieve the
anticipated $4,300 annual improvement in operating income. See Note 2 to the
Consolidated Financial Statements for additional disclosures related to the
restructuring.
RESULTS OF OPERATION
CONSOLIDATED
Consolidated net sales and revenues increased $16,057 or 8% to an all-time
quarterly record of $208,699 primarily because computer systems revenues
increased $13,129. The net effect of 1994 and 1995 divestitures and
acquisitions was to reduce revenues $2,206. Excluding 1994 and 1995 revenues
from divestitures and acquisitions, revenues increased 11% over last year.
Consolidated operating income of $33,040 represented an increase of $7,859 or
31% over last year. Operating income increased 41% for computer systems and
31% for business forms while financial services declined $283. As a
percentage of sales, operating income was 16% compared to 13% last year.
The effective income tax rate was 42.5% compared to 41.8% last year. The
effective income tax rate increased over last year because of the increase
in non-deductible goodwill associated with 1994 acquisitions and the effects
of tax law changes.
Net income of $18,889 increased $4,480 or 31% and earnings per common share
of $.44 increased 33% in the first quarter. Earnings per share increased
faster than net income because of share repurchases which reduced
outstanding shares.
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Annualized return on average shareholders' equity was 24.1% compared to 20.2%
last year.
COMPUTER SYSTEMS (excluding financial services)
Computer systems revenues increased $13,129 or 15% as strong growth in
automotive computers exceeded sales lost from the 1994 sale of the French
subsidiary. Automotive computer systems sales increased because the number
of ERA computer systems sold increased over 20% and related recurring service
revenues grew substantially. Recurring service revenues continued to grow
because strong computer systems sales increased the number of software
applications supported. These recurring service revenues result from monthly
billings for technical support, software updates and hardware maintenance
that allow customers to maximize the value of their computer systems. The
automotive computer systems order backlog remained very strong at December 31,
1994 and should support continued strong sales in the second quarter.
Healthcare computer systems sales rose 61% with about half of the growth
resulting from the November 1994 PD Medical Systems acquisition. The
remainder of the healthcare sales increase was attributable to improved
systems sales as a result of the higher year-end order backlog. The December
31, 1994 order backlog for healthcare systems remained substantially higher
than last year.
Computer systems operating income grew $5,520 or 41% to $18,896 because of
the sales increase, gross margin improvement and strong cost control. Gross
profit was 47.4% of revenues compared to 46.4% last year. Gross profit
improved because of a continuation of the improved productivity experienced
in the second half of 1994 when a group of employees completed training and
increased the computer installation rate. Selling, general and
administrative (SG&A) expenses increased 6% on a sales increase of 15% and
declined to 28.6% of sales compared to 31.1% last year. Operating income
represented 19% of revenues, compared to 15% last year. Virtually all
operating income was generated by automotive computers as healthcare computer
systems operated at near breakeven because of expenses associated with the PD
Medical Systems acquisition and the formation of the consolidated healthcare
systems group.
BUSINESS FORMS
Business forms net sales increased $2,638 or 3% because of growth in
automotive forms sales. The net effect of acquisitions and divestitures was
slightly negative as the effect of acquisitions was offset by the 1994 stock
tab divestiture. Automotive forms sales grew 15% over last year because of
the 1994 Law Printing acquisition, higher sales volume and price increases.
The company raised prices to keep pace with rising paper costs. General
printing sales were relatively flat as sales increases from new business and
the 1994 Formcraft acquisition were offset by the 1994 stock tab divestiture.
Business forms operating income increased $2,622 or 31% compared to last
year. This strong improvement occurred on relatively modest sales growth
because of significant improvement in gross profit margins. Gross profit, as
a percentage of sales, was 46.8% compared to 43.3% last year. Most of this
improvement occurred as a result of the 1994 general printing restructuring
that increased productivity and reduced operating costs. Also contributing
to the improved gross profit percentage was growth of higher margin
automotive forms sales, which represented a greater percentage of the revenue
mix. Recently the company has experienced significant increases in the cost
of paper. Rising paper costs have also increased LIFO inventory expense
adjustments by $950 over last year. The company has been able to offset
these cost increases by passing costs through to customers and improving
productivity. SG&A expenses have increased 6% over last year and risen to
36.0% of sales compared to 34.9% last year. The SG&A expense increase, as a
percentage of sales, resulted primarily from a change in the sales mix from
the 1994 general printing restructuring. General printing's divested low
margin stock tab sales also had relatively low SG&A expenses. Operating
income represented 11% of sales, compared to 8% last year. Automotive forms
continued to be the largest profit contributor in this segment. General
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printing's percentage of total operating income increased over last year as
operating income increased $1,125.
FINANCIAL SERVICES
Financial services revenues increased $290 in the first quarter as interest
income increased 11%. Interest income grew because finance receivables
increased 24% over last year as a result of strong computer systems sales.
Interest income did not increase as rapidly as finance receivables because
interest rates on new receivables were lower on average than interest rates
on maturing receivables. Financial services operating income declined $283
from last year primarily because last year's income included a $250 positive
adjustment from the allowance for losses.
The company has entered into various interest rate management agreements to
limit interest rate exposure on financial services variable rate debt. It
is important to manage this interest rate exposure because the proceeds from
these borrowings were invested in fixed rate finance receivables. During the
first quarter of fiscal year 1995 the company entered into a $10,000 interest
rate ceiling agreement to limit interest rate exposure on new variable rate
debt. The company believes it has reduced interest expense by using interest
rate management agreements and variable rate debt instead of directly
obtaining fixed rate debt.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Information systems strong cash flow from operating activities of $19,615
resulted from record quarterly net income. The company invested this cash
in working capital, acquisitions and capital expenditures. Working capital
increased primarily because of increased accounts receivable and inventories
resulting from record sales. During the first quarter of fiscal year 1995,
the company acquired PD Medical Systems for $7,472 and Transkrit
Corporation's Pegboard and Flat Division for $4,071. See Note 3 to the
Consolidated Financial Statements for additional information regarding these
acquisitions. Capital expenditures of $6,449 occurred in the normal course
of business. The company also returned cash to shareholders by repurchasing
$16,997 of capital stock. See the shareholders' equity caption of this
analysis for a discussion of share repurchases and dividends.
Financial services operating cash flow and collections on finance receivables
were invested in new finance receivables for the company's computer systems
and used to make scheduled debt repayments.
CAPITALIZATION
The company's ratio of total debt (total information systems debt) to
capitalization (total information systems debt plus shareholders' equity)
was 13.3% at December 31, 1994 and 12.4% at September 30, 1994. In December
1994, information systems borrowed $3,500 using existing revolving credit
agreements. The company expects to repay this short-term borrowing during
its second fiscal quarter. Remaining credit available under existing
revolving credit agreements was $40,000 at December 31, 1994. In addition
to committed credit agreements, the company also has a variety of other
short-term credit lines available. It is expected that cash balances and
internally generated cash will be sufficient to fund 1995 normal operations,
which include anticipated capital expenditures of about $30,000.
SHAREHOLDERS' EQUITY
The company lists its Class A common shares on the New York Stock Exchange.
There is no principal market for the Class B common shares. The company also
has an authorized class of 60 million preferred shares with no par value. As
of February 7, 1995, none of these preferred shares were outstanding and
there were no agreements or commitments with respect to the sale or issuance
of these shares.
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Dividends are typically declared each November, February, May and August and
paid in January, April, June and September, respectively. Dividends per
Class A common share must be twenty times the dividends per Class B common
share and all dividend payments must be simultaneous. In November 1994, the
board of directors increased the quarterly dividend to $.10 per Class A
common share, an increase of 18%. This increase followed increases of 13% in
February 1994 and 15% in November 1993. The company has increased cash
dividends per share eight times since 1989 and paid dividends each year since
the company's initial public offering in 1961.
During the first quarter of fiscal year 1995, the company repurchased
727,600 Class A common shares for $16,997, an average price of $23.36 per
share. The company could repurchase an additional 1,198,200 Class A common
shares under existing board resolutions as of December 31, 1994.
ENVIRONMENTAL MATTERS
See Note 6 to the Consolidated Financial Statements for a discussion of the
company's environmental contingencies.
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
December 31, 1994.
14
<PAGE> 15
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.
THE REYNOLDS AND REYNOLDS COMPANY
Date February 7, 1995 /S/David R. Holmes
------------------- ------------------------------------------
David R. Holmes, Chairman, President
and Chief Executive Officer
Date February 7, 1995 /S/Dale L. Medford
------------------- ------------------------------------------
Dale L. Medford, Vice President,
Corporate Finance and Chief Financial
Officer
15
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