<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTER ENDED MARCH 31, 1995
0-132
(Commission file number)
THE REYNOLDS AND REYNOLDS COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
OHIO 31-0421120
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
115 SOUTH LUDLOW STREET, DAYTON, OHIO 45402
(Address of principal executive offices)
(513) 443-2000
(Registrant's telephone number)
NONE
(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
--- ---
As of May 10, 1995, the number of Class A common shares outstanding was
41,047,795 and the number of Class B common shares outstanding was 10,000,000.
<PAGE> 2
THE REYNOLDS AND REYNOLDS COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Consolidated Income
For the Three and Six Months Ended March 31, 1995 and 1994 3
Condensed Consolidated Balance Sheets
As of March 31, 1995 and September 30, 1994 4
Condensed Statements of Consolidated Cash Flows
For the Six Months Ended March 31, 1995 and 1994 5
Notes to Condensed Consolidated Financial Statements 6
Independent Accountants' Review Report 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
For the Three and Six Months Ended March 31, 1995 and 1994 9
PART II. OTHER INFORMATION
Item 4. Results of Votes of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE REYNOLDS AND REYNOLDS COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1995 AND 1994
(In thousands except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales and Revenues
Information systems
Products $158,196 $144,808 $300,557 $277,693
Services 64,942 55,836 126,180 110,783
-------- -------- -------- --------
Total information systems 223,138 200,644 426,737 388,476
Financial services 5,380 4,815 10,480 9,625
-------- -------- -------- --------
Total net sales and revenues 228,518 205,459 437,217 398,101
-------- -------- -------- --------
Costs and Expenses
Information systems
Cost of sales
Products 93,623 86,247 175,916 167,068
Services 26,768 25,198 52,233 48,216
-------- -------- -------- --------
Total cost of sales 120,391 111,445 228,149 215,284
Selling, general and administrative expenses 72,554 65,770 138,420 127,930
Financial services 2,131 1,495 4,166 2,957
-------- -------- -------- --------
Total costs and expenses 195,076 178,710 370,735 346,171
-------- -------- -------- --------
Operating Income 33,442 26,749 66,482 51,930
-------- -------- -------- --------
Other Charges (Income)
Interest expense 970 899 1,788 1,762
Interest income (289) (310) (722) (615)
Other (736) (222) (950) (352)
-------- -------- -------- --------
Total other charges (income) (55) 367 116 795
-------- -------- -------- --------
Income Before Income Taxes 33,497 26,382 66,366 51,135
Provision For Income Taxes 14,167 10,913 28,147 21,257
-------- -------- -------- --------
Net Income $19,330 $15,469 $38,219 $29,878
======== ======= ======= =======
Earnings Per Common Share $0.46 $0.35 $0.90 $0.68
======== ======= ======= =======
Average Number of Common Shares Outstanding 42,185 44,309 42,464 43,990
======== ======= ======= =======
Cash Dividends Declared Per Common Share $0.10 $0.085 $0.20 $0.16
======== ======= ======= =======
</TABLE>
See Independent Accountants' Review Report and Notes to Condensed Consolidated
Financial Statements.
3
<PAGE> 4
THE REYNOLDS AND REYNOLDS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1995 AND SEPTEMBER 30, 1994
(In thousands)
<TABLE>
<CAPTION>
3/31/95 9/30/94
------- -------
<S> <C> <C>
INFORMATION SYSTEMS ASSETS
Current Assets
Cash and equivalents $4,342 $20,230
Accounts receivable 106,123 101,872
Inventories 39,730 37,274
Other current assets 16,649 16,140
-------- --------
Total current assets 166,844 175,516
Property, Plant and Equipment, less accumulated depreciation of
$145,512 in 1995 and $143,367 in 1994 119,340 117,485
Goodwill 89,018 78,277
Other Intangible Assets 27,975 25,229
Other Assets 38,765 34,085
-------- --------
Total Information Systems Assets 441,942 430,592
-------- --------
FINANCIAL SERVICES ASSETS
Finance Receivables 235,373 202,620
Cash and Other Assets 2,142 1,487
-------- --------
Total Financial Services Assets 237,515 204,107
-------- --------
TOTAL ASSETS $679,457 $634,699
======== ========
INFORMATION SYSTEMS LIABILITIES
Current Liabilities 102,928 90,039
Long-Term Debt 41,809 41,014
Other Liabilities 51,696 52,417
-------- --------
Total Information Systems Liabilities 196,433 183,470
-------- --------
FINANCIAL SERVICES LIABILITIES
Notes Payable 117,862 104,363
Other Liabilities 60,459 53,827
-------- --------
Total Financial Services Liabilities 178,321 158,190
-------- --------
SHAREHOLDERS' EQUITY
Capital Stock 25,961 26,380
Additional Paid-In Capital 3,094 2,557
Other Adjustments (3,261) (2,566)
Retained Earnings 278,909 266,668
-------- --------
Total Shareholders' Equity 304,703 293,039
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $679,457 $634,699
======== ========
</TABLE>
See Independent Accountants' Review Report and Notes to Condensed Consolidated
Financial Statements.
4
<PAGE> 5
THE REYNOLDS AND REYNOLDS COMPANY AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1995 AND 1994
(In thousands)
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
INFORMATION SYSTEMS
Cash Flows Provided By Operating Activities $39,296 $18,930
------- -------
Cash Flows Provided By (Used For) Investing Activities
Business combinations (17,406) (4,895)
Capital expenditures (12,649) (9,231)
Net proceeds from asset sales 2,510 794
Capitalization of software licensed to customers (1,078) (1,541)
Repayments from (advances to) financial services (7,038) 440
------- -------
Net cash flows used for investing activities (35,661) (14,433)
------- -------
Cash Flows Provided By (Used For) Financing Activities
Additional borrowings 3,754 2,675
Principal payments on debt (846) (641)
Cash dividends paid (4,183) (3,225)
Capital stock issued 582 1,317
Capital stock repurchased (18,127) (7,944)
------- -------
Net cash flows used for financing activities (18,820) (7,818)
------- -------
Effect of Exchange Rate Changes on Cash (703) (499)
------- -------
Decrease in Cash and Equivalents (15,888) (3,820)
Cash and Equivalents, Beginning of Period 20,230 9,437
------- -------
Cash and Equivalents, End of Period $4,342 $5,617
======= =======
FINANCIAL SERVICES
Cash Flows Provided By Operating Activities $6,567 $5,359
------- -------
Cash Flows Provided By (Used For) Investing Activities
Finance receivables originated (57,315) (32,963)
Collections on finance receivables 30,644 27,927
------- -------
Net cash flows used for investing activities (26,671) (5,036)
------- -------
Cash Flows Provided By (Used For) Financing Activities
Additional borrowings 28,300 11,900
Principal payments on debt (14,801) (12,050)
Advances from (repayments to) information systems 7,038 (440)
------- -------
Net cash flows provided by (used for) financing activities 20,537 (590)
------- -------
Increase (Decrease) in Cash and Equivalents 433 (267)
Cash and Equivalents, Beginning of Period 1,200 996
------- -------
Cash and Equivalents, End of Period $1,633 $729
======= =======
</TABLE>
See Independent Accountants' Review Report and Notes to Condensed Consolidated
Financial Statements.
5
<PAGE> 6
THE REYNOLDS AND REYNOLDS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The balance sheet as of September 30, 1994, is condensed financial information
taken from the audited balance sheet. The interim financial statements are
unaudited. In the opinion of management, the accompanying interim financial
statements contain all significant adjustments (which consist only of normal
recurring adjustments) necessary to present fairly the company's financial
position, results of operations and cash flows for the periods presented.
(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 computer paper product line and the consolidation of
certain custom business forms printing operations. The company discontinued
the manufacture of certain low-margin stock tab computer paper 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.
<TABLE>
<S> <C>
Write-off of goodwill $ 4,000
Plant closure 3,850
Severance and outplacement 2,990
Other 1,560
-------
Total $12,400
=======
</TABLE>
The severance and outplacement accruals represent benefits for 288 employees,
comprised principally of manufacturing employees and some sales and
administrative employees. Through March 31, 1995, 276 employees were
terminated and $2,829 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 $4,468 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.
On January 26, 1995, the company purchased substantially all assets and assumed
certain liabilities of Service Systems Enterprises Inc. (SSEI) for $4,638 of
cash and $4,000 of notes. SSEI, a provider of highly targeted direct marketing
services to automobile dealerships, has annual sales of about $8,000.
These business combinations were accounted for as purchases and the accounts of
acquired businesses were included in the company's financial statements since
their respective acquisition dates. Goodwill resulting from these acquisitions
is being amortized over five to twenty years. The acquisitions were funded
through a combination of internally generated cash and short-term debt.
6
<PAGE> 7
(4) 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 March 31, 1995. 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 March 31, 1995.
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.
7
<PAGE> 8
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 March 31, 1995, and the
related statements of consolidated income for the three and six months ended
March 31, 1995 and 1994 and condensed consolidated cash flows for the six
months ended March 31, 1995 and 1994. 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
May 11, 1995
8
<PAGE> 9
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 AND SIX MONTHS ENDED MARCH 31, 1995 AND 1994
(Dollars in thousands except per share data)
SIGNIFICANT EVENTS
BUSINESS COMBINATIONS
During the first six months of fiscal year 1995, the company completed several
business combinations. See Note 3 to the Consolidated Financial Statements for
disclosures about these business combinations.
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 computer paper product line and the consolidation of certain custom
business forms printing operations. Through March 31, 1995, 96% of the
positions accrued for in the restructuring have been eliminated. Year-to-date,
operating income for forms management services and custom printing improved
$4,000 over last year, in part, because of cost savings from the restructuring.
It is now estimated that operating income will improve significantly more than
the $4,300 originally anticipated for the full year. See Note 2 to the
Consolidated Financial Statements for additional disclosures related to the
restructuring.
RESULTS OF OPERATIONS
CONSOLIDATED SUMMARY
Consolidated net sales and revenues increased $23,059 or 11% in the second
quarter as computer systems revenues grew 17% and business forms sales rose 6%.
Second quarter sales of $228,518 were a record for any quarterly period in the
company's history. For the six months ended March 31, 1995, consolidated net
sales and revenues increased $39,116 or 10% as computer systems revenues grew
16% and business forms sales rose 5%. The net effect of 1994 and 1995
divestitures and acquisitions was to reduce consolidated revenues $3,486 in the
second quarter and $5,692 through six months. Excluding the effect of
divestitures and acquisitions, consolidated revenues increased over last year
by 14% in the quarter and 12% year-to-date.
Consolidated operating income of $33,442 in the second quarter represented an
increase of $6,693 or 25% over last year as operating income rose 21% for
computer systems and 38% for business forms. Consolidated operating income was
15% of revenues in the second quarter compared to 13% last year. Year-to-date,
consolidated operating income increased $14,552 or 28% as both computer systems
and business forms grew over 30% while financial services declined slightly.
As a percentage of sales, year-to-date consolidated operating income was 15%
compared to 13% last year.
Other income increased over last year for both the second quarter and six
months primarily because of the January 1995 sale of a healthcare service
bureau operation which resulted in a $400 pre-tax gain.
The year-to-date effective income tax rate was 42.4% compared to 41.6% last
year. The effective income tax rate increased over last year because of the
increase in non-deductible goodwill associated with acquisitions and the
effects of tax law changes.
Net income of $19,330 increased $3,861 or 25% and earnings per common share of
$.46 increased 31% in the second quarter. Year-to-date net income grew $8,341
or 28% while earnings per share rose 32%. The earnings per share percentage
increase was greater than net income's because of share repurchases which
reduced outstanding shares. Annualized return on average shareholders' equity
was 24.4% compared to 20.7% last year.
COMPUTER SYSTEMS (excluding financial services)
Computer systems second quarter revenues of $104,135 increased $15,310 or 17%
and six months revenues of $204,545 grew $28,439 or 16% as strong growth in
automotive computers exceeded sales lost from the 1994 sale of the French
subsidiary. Automotive computer systems sales grew for both the quarter and
six months because the number of ERA computer systems sold increased more than
30% and related recurring service revenues also grew substantially. Recurring
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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. Also contributing to automotive systems sales growth
was the acquisition of Service Systems Enterprise Inc. (SSEI), which offers
highly targeted direct marketing services to automobile dealerships. SSEI is a
part of the company's Customer For Life program, a comprehensive information
based program that utilizes dealership customer databases and other regional
databases to conduct one-to-one marketing. This marketing effort targets
existing, former and prospective customers of the dealership for dealership
service work or vehicle sales. Healthcare computer systems sales rose over 40%
in the second quarter and over 60% year-to-date primarily because of the
November 1994 PD Medical Systems acquisition. Both automotive and healthcare
computer systems order backlogs remained strong at March 31, 1995.
Computer systems second quarter operating income of $15,375 grew $2,704 or 21%
while year-to-date operating income of $34,271 increased $8,224 or 32% because
of higher sales and gross margin improvement. Gross profit was 46.5% of
revenues compared to 44.8% last year in the second quarter. Year-to-date gross
profit increased to 47.0% of sales versus 45.6% 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. SG&A expenses were 31.7% of revenues
in the second quarter, compared to 30.5% last year. The higher SG&A percentage
reflects additional investment in the Customers For Life program, additional
sales and marketing resources for automotive systems and to a lesser degree,
healthcare systems. Year-to-date SG&A expenses were 30.2% of sales, compared
to 30.8% last year. Operating income represented 15% of revenues in the second
quarter and 17% through six months, compared to 14% and 15%, respectively, last
year.
BUSINESS FORMS
Business forms second quarter net sales of $119,003 increased $7,184 or 6% and
six months net sales of $222,192 rose $9,822 or 5% because of strong growth in
automotive forms sales and forms management services and custom printing
revenues which offset sales lost in the divestiture of certain low margin
computer paper products. Automotive forms sales grew 7% for the second quarter
and 10% for the six months because of higher sales volume and price increases.
The 1994 acquisition of Law Printing also contributed to the year-to-date sales
increase. Forms management services and custom printing revenues increased 14%
for both the quarter and six months also because of increased sales volume and
price increases. The company raised prices to keep pace with rising paper
costs, which have increased significantly.
Business forms second quarter operating income of $14,818 increased $4,060 or
38% while year-to-date operating income of $25,897 rose $6,682 or 35%. This
strong improvement occurred because of the sales growth and improvement in
gross profit margins and SG&A expenses. Gross profit in the second quarter was
45.6% of sales compared to 44.2% last year. Year-to-date gross profit was
46.1%, compared to 43.8% last year. This improvement occurred as a result of
higher margins on automotive forms sales, which also represented a greater
percentage of the revenue mix. Also contributing was the 1994 restructuring
which reduced low margin computer paper sales and improved the sales mix. SG&A
expenses were 33.1% of sales in the second quarter, compared to 34.6% last year
and 34.4% versus 34.8% for the six months. SG&A expenses were less than last
year, as a percentage of sales, primarily because of cost reductions from the
restructuring. Operating income represented 12% of sales for the quarter and
six months, compared to 10% and 9% last year. Automotive forms continued to be
the largest profit contributor in this segment. Forms management services and
custom printing operating income grew $4,000 and increased significantly as a
percentage of total operating income.
FINANCIAL SERVICES
Financial services revenues increased $565 or 12% in the second quarter and
$855 or 9% for six months because of interest earned on higher average finance
receivables. Finance receivables increased over 30% since last year because of
the strong ERA 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 from last year by $71 for the quarter and
$354 for the six months primarily because last year's income included a
positive income adjustment to 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
six months of fiscal year 1995 the company entered into two $10,000 interest
rate ceiling agreements to limit interest rate exposure on new variable rate
debt. The
10
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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 flows from operating activities of $39,296
resulted from record net income. The company invested its cash in working
capital, business combinations and capital expenditures. Working capital
increased primarily because of increased accounts receivable resulting from
record sales. During the first six months of fiscal year 1995, the company
completed several business combinations. See Note 3 to the Consolidated
Financial Statements for additional information regarding these acquisitions.
Capital expenditures of $12,649 occurred in the normal course of business. The
company also returned cash to shareholders by repurchasing $18,127 of capital
stock and paying $4,183 of dividends. See the shareholders' equity caption of
this analysis for a discussion of share repurchases and dividends.
Financial services operating cash flows 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
13.8% at March 31, 1995, 13.3% at December 31, 1994 and 12.4% at September 30,
1994. During the second quarter, the company retired $1,000 of short-term debt
and issued $4,000 of new short-term debt in the SSEI acquisition. Remaining
credit available under existing revolving credit agreements was $18,250 at
March 31, 1995. 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
ongoing operations, which include anticipated capital expenditures of about
$28,500.
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 May 11, 1995, no preferred shares were outstanding and there were no
agreements or commitments with respect to the sale or issuance of these shares.
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. On May 1, 1995, the company's
board of directors declared a regular quarterly dividend of $.10 per Class A
common share, payable June 13, 1995 to shareholders of record May 19, 1995. 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 six months of fiscal year 1995, the company repurchased
776,000 Class A common shares for $18,127, an average price of $23.36 per
share. The company could repurchase an additional 1,149,800 Class A common
shares under existing board resolutions as of March 31, 1995. Subsequent to
March, 31, 1995, the company repurchased 238,500 additional Class A common
shares for $6,402 with settlement dates through May 12, 1995.
ENVIRONMENTAL MATTERS
See Note 4 to the Consolidated Financial Statements for a discussion of the
company's environmental contingencies.
11
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PART II - OTHER INFORMATION
ITEM 4. RESULTS OF VOTES OF SECURITY HOLDERS
At the Annual Meeting of Shareholders on February 9, 1995, the
shareholders of the company voted on and approved the following
issues.
Issue 1 Election of Directors to three-year terms expiring in 1998
<TABLE>
<CAPTION>
Shares
Shares For Withheld
---------- --------
<S> <C> <C>
Joseph N. Bausman 45,116,424 702,686
Richard H. Grant, Jr. 45,649,772 169,338
William H. Seall 45,114,542 704,568
</TABLE>
The following individuals' terms of office as directors
continued after the meeting; Dr. David E. Fry, Richard H.
Grant, III, David R. Holmes, Dale L. Medford, Robert C. Nevin,
Gayle B. Price, Jr., Kenneth W. Thiele and Martin D. Walker.
Issue 2 Increase the Number of Authorized Class A Common Shares
<TABLE>
<S> <C>
Shares For 41,350,306
Shares Against 4,304,928
Shares Abstain 163,876
</TABLE>
Issue 3 Adopt the Stock Option Plan - 1995
<TABLE>
<S> <C>
Shares For 29,264,293
Shares Against 13,510,348
Shares Abstain 406,619
Brokers Not Voted 2,637,850
</TABLE>
Issue 4 Appointment of Deloitte & Touche LLP as Independent
Auditors
<TABLE>
<S> <C>
Shares For 45,098,891
Shares Against 610,881
Shares Abstain 104,338
Brokers Not Voted 5,000
</TABLE>
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
March 31, 1995.
12
<PAGE> 13
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
<TABLE>
<S> <C>
Date May 11, 1995 /s/ David R. Holmes
------------ -------------------------------------
David R. Holmes
Chairman of the Board, President and
Chief Executive Officer
Date May 11, 1995 /s/ Dale L. Medford
------------ -------------------------------------
Dale L. Medford
Vice President, Corporate Finance and
Chief Financial Officer
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 4,342
<SECURITIES> 0
<RECEIVABLES> 108,649
<ALLOWANCES> 2,526
<INVENTORY> 39,730
<CURRENT-ASSETS> 166,844
<PP&E> 264,852
<DEPRECIATION> 145,512
<TOTAL-ASSETS> 679,457
<CURRENT-LIABILITIES> 102,928
<BONDS> 129,621
<COMMON> 25,961
0
0
<OTHER-SE> 278,742
<TOTAL-LIABILITY-AND-EQUITY> 679,457
<SALES> 300,557
<TOTAL-REVENUES> 437,217
<CGS> 175,916
<TOTAL-COSTS> 228,149
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,062
<INCOME-PRETAX> 66,366
<INCOME-TAX> 28,147
<INCOME-CONTINUING> 38,219
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,219
<EPS-PRIMARY> $.90
<EPS-DILUTED> $.90
</TABLE>
