<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 DECEMBER 31, 1997
0-132
-----
(Commission file number)
THE REYNOLDS AND REYNOLDS COMPANY
---------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<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)
(937) 485-2000
--------------
(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
--- ---
On February 10, 1998, 78,789,842 Class A common shares and 20,000,000 Class B
common shares were outstanding.
<PAGE> 2
THE REYNOLDS AND REYNOLDS COMPANY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Consolidated Income
For the Three Months Ended December 31, 1997 and 1996 3
Condensed Consolidated Balance Sheets
As of December 31, 1997 and September 30, 1997 4
Condensed Statements of Consolidated Cash Flows
For the Three Months Ended December 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
For the Three Months Ended December 31, 1997 and 1996 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE REYNOLDS AND REYNOLDS COMPANY
STATEMENTS OF CONSOLIDATED INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(In thousands except per share data)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Net Sales and Revenues
Information systems
Products $ 259,361 $ 220,337
Services 102,282 86,846
------------ ------------
Total information systems 361,643 307,183
Financial services 8,097 7,124
------------ ------------
Total net sales and revenues 369,740 314,307
------------ ------------
Costs and Expenses
Information systems
Cost of sales
Products 162,041 129,852
Services 39,087 33,000
------------ ------------
Total cost of sales 201,128 162,852
Selling, general and administrative expenses 118,151 102,317
Financial services 4,628 3,385
------------ ------------
Total costs and expenses 323,907 268,554
------------ ------------
Operating Income 45,833 45,753
------------ ------------
Other Charges (Income)
Interest expense 3,251 1,649
Interest income (325) (413)
Other 697 (288)
------------ ------------
Total other charges 3,623 948
------------ ------------
Income Before Income Taxes 42,210 44,805
Provision for Income Taxes 18,462 19,305
------------ ------------
Net Income $ 23,748 $ 25,500
============ ============
Basic Earnings Per Common Share $ 0.30 $ 0.31
============ ============
Diluted Earnings Per Common Share $ 0.29 $ 0.30
============ ============
Average Number of Common Shares Outstanding 79,848 82,004
============ ============
Average Number of Common Shares and
Common Share Equivalents Outstanding 81,644 85,041
============ ============
Cash Dividends Declared Per Common Share $ 0.09 $ 0.08
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 4
THE REYNOLDS AND REYNOLDS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND SEPTEMBER 30, 1997
(In thousands)
<TABLE>
<CAPTION>
12/31/97 9/30/97
----------- -----------
<S> <C> <C>
INFORMATION SYSTEMS ASSETS
Current Assets
Cash and equivalents $ 9,489 $ 7,604
Accounts receivable 204,014 197,215
Inventories 75,717 75,645
Other current assets 44,721 47,463
----------- -----------
Total current assets 333,941 327,927
Property, Plant and Equipment, less accumulated depreciation of
$199,455 at 12/31/97 and $193,190 at 9/30/97 179,440 188,501
Goodwill 93,072 94,241
Other Intangible Assets 20,556 22,301
Other Assets 99,314 96,365
----------- -----------
Total Information Systems Assets 726,323 729,335
----------- -----------
FINANCIAL SERVICES ASSETS
Finance Receivables 374,503 372,073
Cash and Other Assets 750 1,102
----------- -----------
Total Financial Services Assets 375,253 373,175
----------- -----------
TOTAL ASSETS $ 1,101,576 $ 1,102,510
=========== ===========
INFORMATION SYSTEMS LIABILITIES
Current Liabilities $ 232,090 $ 208,579
Long-Term Debt 128,132 170,150
Other Liabilities 77,287 74,662
----------- -----------
Total Information Systems Liabilities 437,509 453,391
----------- -----------
FINANCIAL SERVICES LIABILITIES
Notes Payable 202,426 198,314
Other Liabilities 87,874 86,575
----------- -----------
Total Financial Services Liabilities 290,300 284,889
----------- -----------
SHAREHOLDERS' EQUITY
Capital Stock 56,154 53,894
Other Adjustments (5,957) (5,481)
Retained Earnings 323,570 315,817
----------- -----------
Total Shareholders' Equity 373,767 364,230
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,101,576 $ 1,102,510
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
THE REYNOLDS AND REYNOLDS COMPANY
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(In thousands)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
INFORMATION SYSTEMS
Cash Flows Provided By Operating Activities $ 34,075 $ 40,979
------------ ------------
Cash Flows Provided By (Used For) Investing Activities
Business combinations (1,393) (45,722)
Capital expenditures (7,619) (12,808)
Net proceeds from asset sales 5,459 4,930
Capitalization of software licensed to customers (254) (566)
Advances to financial services (5,701) (80)
------------ ------------
Net cash flows used for investing activities (9,508) (54,246)
------------ ------------
Cash Flows Provided By (Used For) Financing Activities
Additional borrowings 99,510
Principal payments on debt (13,629) (55,510)
Capital stock issued 581 828
Capital stock repurchased (9,158)
------------ ------------
Net cash flows provided by (used for) financing activities (22,206) 44,828
------------ ------------
Effect of Exchange Rate Changes on Cash (476) (105)
------------ ------------
Increase in Cash and Equivalents 1,885 31,456
Cash and Equivalents, Beginning of Period 7,604 11,130
------------ ------------
Cash and Equivalents, End of Period $ 9,489 $ 42,586
============ ============
FINANCIAL SERVICES
Cash Flows Provided By Operating Activities $ 4,026 $ 7,094
------------ ------------
Cash Flows Provided By (Used For) Investing Activities
Finance receivables originated (38,079) (42,784)
Collections on finance receivables 23,876 21,589
------------ ------------
Net cash flows used for investing activities (14,203) (21,195)
------------ ------------
Cash Flows Provided By (Used For) Financing Activities
Additional borrowings 18,700 24,440
Principal payments on debt (14,588) (11,712)
Advances from information systems 5,701 80
------------ ------------
Net cash flows provided by financing activities 9,813 12,808
------------ ------------
Decrease in Cash and Equivalents (364) (1,293)
Cash and Equivalents, Beginning of Period 921 1,293
------------ ------------
Cash and Equivalents, End of Period $ 557 $ 0
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 6
THE REYNOLDS AND REYNOLDS COMPANY
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, 1997, 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) INVENTORIES
<TABLE>
<CAPTION>
12/31/97 9/30/97
---------- ----------
<S> <C> <C>
Finished products $ 58,973 $ 59,683
Work in process 6,059 6,256
Raw materials and supplies 10,685 9,706
---------- ----------
Total inventories $ 75,717 $ 75,645
========== ==========
</TABLE>
(3) EARNINGS PER SHARE
In February 1997 the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) Statement No. 128, "Earnings
per Share." This statement, effective for interim and annual periods ending
after December 15, 1997, requires the company to present basic earnings per
share (EPS) and diluted EPS. Basic EPS is computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
EPS is computed by dividing net income by the weighted average number of common
shares and common share equivalents outstanding during the period. The company's
common share equivalents represent the effect of employee stock options. Prior
year earnings per share amounts have been restated to comply with this
pronouncement.
(4) RESTRUCTURING CHARGE
During the fourth quarter of fiscal year 1997 the company recorded a
restructuring charge. This charge included costs to close four manufacturing
plants and three distribution facilities. At December 31, 1997 the company had
closed three of the manufacturing plants and all three of the distribution
facilities. Involuntary termination benefits of $9,699 were recorded for nearly
400 employees. Through December 31, 1997 $3,153 of involuntary termination
benefits, representing severance payments and outplacement services were paid to
305 employees.
(5) BUSINESS COMBINATIONS
The company purchased Duplex Products Inc. and Vanier Graphics Corporation in
May 1996 and December 1996, respectively. In recording the assets and
liabilities of these business combinations the company accrued the costs to
close duplicate facilities of Duplex and Vanier. These liabilities included the
costs to close eleven manufacturing plants, seven distribution facilities and
two administrative buildings. At December 31, 1997, all manufacturing plants,
distribution facilities and administrative buildings had been closed. Key
elements of the costs accrued for exiting duplicate facilities were involuntary
termination benefits of $9,029, relocation costs of $1,308 and exit costs of
$1,500. Involuntary termination benefits represent severance payments and
outplacement services for 696 employees, principally manufacturing employees.
Exit costs consist primarily of lease costs for idle facilities. Through
December 31, 1997, $7,923 of involuntary termination benefits were paid to 652
employees and $966 of relocation costs and $687 of exit costs were paid.
Remaining involuntary termination benefits will begin upon completion of certain
computer programming which will allow functions to be transferred to Dayton. The
company recorded the assets of the duplicate facilities as current assets held
for sale. These assets of $21,250 were recorded at estimated fair market value
less disposal costs. At December 31, 1997, $17,395 of these assets had been
sold.
The company purchased Fiscal Information Inc. and Crain-Drummond Inc. in June
1997 and July 1997, respectively. In recording the assets and liabilities of
these business combinations the company accrued the costs to close duplicate
facilities of Fiscal and Crain-Drummond. These liabilities included the costs to
close three manufacturing plants, three distribution facilities and one computer
services center. At December 31, 1997, none of the manufacturing plants or
distribution
6
<PAGE> 7
facilities had been closed. The Fiscal computer services center has been closed.
Key elements of the costs accrued for exiting duplicate facilities were
involuntary termination benefits of $2,379, relocation costs of $218 and exit
costs of $654. Involuntary termination benefits represent severance payments and
outplacement services for 235 employees, principally manufacturing employees.
Exit costs consist primarily of lease costs. Through December 31, 1997, $778 of
involuntary termination benefits were paid to 70 employees and $92 of relocation
costs and $18 of exit costs were paid. The company recorded the assets of the
duplicate facilities as current assets held for sale. These assets of $6,949
were recorded at estimated fair market value less disposal costs. At December
31, 1997 none of these assets had been sold.
(6) SEGMENT REPORTING
In June 1997 the FASB issued SFAS Statement No. 131, "Disclosures about Segments
of an Enterprise and Related Information." This statement, effective for
financial statements for periods beginning after December 15, 1997, requires
that a public business enterprise report financial and descriptive information
about its reportable operating segments. Generally, financial information is
required to be reported on the basis that is used internally for evaluating
segment performance and deciding how to allocate resources to segments.
Upon adoption of this pronouncement, the company's reportable operating segments
will be the Automotive Division, the Business Systems Division and the
Healthcare Systems Division. The company will also continue to present financial
services as a reportable operating segment. The Automotive Division provides
integrated computer systems products and services and business forms to
automobile dealers. The Business Systems Division manufactures and distributes
printed business forms and systems and provides forms management services to
general business markets. The Healthcare Systems Division provides integrated
computer systems products and services to both office-based and hospital-based
physicians.
The company has elected early compliance with this pronouncement effective
September 30, 1998. In the year of adoption, comparative interim financial
information is not required to be presented. This information must be
accumulated during the year of adoption so that comparative financial
information can be presented the following year. The company has chosen to
provide this pro forma financial information as it is accumulated.
Selected pro forma financial information for the period ended December 31, 1997.
<TABLE>
<CAPTION>
Net Sales and Gross Operating
Revenues Profit Income (Loss)
-------------------------------------------
<S> <C> <C> <C>
Automotive Division $ 171,295 $ 94,193 $ 39,190
Business Systems Division 178,533 62,004 10,778
Healthcare Systems Division 11,922 4,318 (3,849)
Financial Services 8,097 3,469
Elimination of Intersegment Sales (107)
Unallocated Corporate Expenses (3,755)
-------------------------------------------
Totals $ 369,740 $ 160,515 $ 45,833
===========================================
</TABLE>
(7) CONTINGENCY
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 an
environmental remediation site. 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. This environmental remediation 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 fiscal year
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. During fiscal year 1996, an agreement was reached whereby the
state of Connecticut will contribute $8,000 towards remediation costs. The
company believes that the reasonably foreseeable resolution will not have a
material adverse effect on the financial statements.
7
<PAGE> 8
(8) CASH FLOW STATEMENTS
Reconciliation of net income to net cash provided by operating activities.
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
INFORMATION SYSTEMS
Net Income $ 21,680 $ 23,256
Depreciation and Amortization 13,932 12,187
Deferred Income Taxes 970 993
Deferred Income Taxes Transferred to Financial Services (184) 735
Losses (Gains) on Sales of Assets 67 (367)
Changes in Operating Assets and Liabilities
Accounts receivable 4,494 (11,540)
Inventories 16 2,403
Prepaid expenses and other current assets 481 194
Intangible and other assets 915 6,155
Accounts payable (715) (1,447)
Accrued liabilities (10,218) 7,199
Other liabilities 2,637 1,211
----------- -----------
Net Cash Provided by Operating Activities $ 34,075 $ 40,979
=========== ===========
FINANCIAL SERVICES
Net Income $ 2,068 $ 2,244
Deferred Income Taxes 1,763 1,557
Deferred Income Taxes Transferred from Information Systems 184 (735)
Changes in Receivables, Other Assets and Other Liabilities 11 4,028
----------- -----------
Net Cash Provided by Operating Activities $ 4,026 $ 7,094
=========== ===========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND
1996 (Dollars in thousands except per share data)
RESULTS OF OPERATIONS
CONSOLIDATED SUMMARY
<TABLE>
<CAPTION>
1997 1996 Change % Change
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $369,740 $314,307 $55,433 18%
Gross profit $160,515 $144,331 $16,184 11%
Operating income $45,833 $45,753 $80 0%
Net income $23,748 $25,500 ($1,752) -7%
Basic earnings per share $0.30 $0.31 ($0.01) -3%
Diluted earnings per share $0.29 $0.30 ($0.01) -3%
</TABLE>
8
<PAGE> 9
Consolidated revenues increased over last year primarily as a result of business
combinations completed in fiscal year 1997. About $53,000 of the sales growth
resulted from the 1997 acquisitions of Crain-Drummond, Vanier Graphics and
Fiscal Information. Excluding the effect of business combinations, revenues
increased 1% as strong growth in automotive recurring service revenues was
substantially offset by declines in sales of new computer systems and business
forms.
The consolidated gross profit percentage was 44.4% of information systems
revenues in the first quarter, compared to 47.0% last year and 44.1% in the
fourth quarter of fiscal year 1997. Computer systems gross profit percentage
increased over last year because of the growth in automotive recurring service
revenues. Business forms gross profit percentage declined from last year,
reflecting the lower margin products acquired in the Crain-Drummond and Vanier
Graphics business combinations.
Consolidated operating income was 12.4% of revenues in the first quarter
compared to 14.6% last year and 10.9% in the fourth quarter of fiscal year 1997
(excluding restructuring and special charges). Computer systems operating
margins grew over last year and exceeded 15% for the first time in two years
because of the strong growth in automotive recurring service revenues. Business
forms operating margins declined from last year because of the addition of lower
margin business forms products from the business combinations and costs incurred
to integrate acquisitions and close manufacturing plants.
Annualized return on average shareholders' equity was 24.1%, compared to 24.8%
at December 31, 1996.
COMPUTER SYSTEMS (excluding financial services)
<TABLE>
<CAPTION>
1997 1996 Change % Change
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $140,012 $126,412 $13,600 11%
Gross profit $70,281 $61,438 $8,843 14%
% of revenues 50.2% 48.6%
Operating income $21,300 $18,029 $3,271 18%
% of revenues 15.2% 14.3%
</TABLE>
Computer systems revenues grew for the first quarter primarily because of higher
automotive recurring service revenues. Recurring service revenues continued to
grow, primarily because of the increased number of ERA software applications
supported. Healthcare Systems revenues increased primarily because of the 1997
acquisition of Fiscal Information.
Computer systems gross profit and operating income grew at a greater rate than
revenues because of the strong growth of recurring service revenues. SG&A
expenses increased from 34.3% to 35.0% of revenues in the quarter because of
investments in products and capabilities in both the automotive and healthcare
businesses. Healthcare systems continued to operate at a loss because of these
investments.
BUSINESS FORMS
<TABLE>
<CAPTION>
1997 1996 Change % Change
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $221,631 $180,771 $40,860 23%
Gross profit $90,234 $82,893 $7,341 9%
% of revenues 40.7% 45.9%
Operating income $21,064 $23,985 ($2,921) -12%
% of revenues 9.5% 13.3%
</TABLE>
Business forms revenues rose for the first quarter because of the 1997
Crain-Drummond and Vanier Graphics business combinations which contributed about
$49,000 of sales. Excluding the effect of acquisitions, business systems and
automotive forms sales declined from last year.
The decline in gross profit margins from last year resulted primarily from lower
gross profit margins of Crain-Drummond and Vanier Graphics. Gross profit was
also less than the 42.6% reported in the fourth quarter of fiscal year 1997
because of the sales decline from the fourth quarter. The company's cost of
paper was stable in the first quarter and is expected to remain relatively
stable during the second quarter of fiscal year 1998.
9
<PAGE> 10
Business forms operating income declined from last year and the fourth quarter
(excluding restructuring and special charges) of fiscal year 1997. This decrease
occurred, in part, because of costs associated with plant closings and
integration of recent business combinations. During the first quarter the
company closed three manufacturing plants and incurred relocation and training
expenses. These costs could not be accrued as part of the 1997 restructuring
charge under existing accounting pronouncements. The company also incurred
acquisition integration expenses in the first quarter. These plant closing and
integration expenses totaled about $2,000 in the first quarter. As these
activities are completed, related expenses should decline and contribute to
higher operating margins. SG&A expenses declined as a percentage of sales from
32.6% last year to 31.2% for the first quarter primarily because of the effects
of the business combinations which provided revenue growth and lower SG&A
expenses as a percentage of sales. The company further reduced SG&A expenses, as
a percentage of revenues, by eliminating duplicate administrative functions.
FINANCIAL SERVICES
<TABLE>
<CAPTION>
1997 1996 Change % Change
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $8,097 $7,124 $973 14%
Operating income $3,469 $3,739 ($270) -7%
% of revenues 42.8% 52.5%
</TABLE>
Average finance receivables increased 17% over last year because of the
continued high level of new computer systems sales. Financial services revenues
grew because of interest earned on the higher receivables balances. Average
interest rates declined slightly as interest rates on new receivables were less
than those for maturing receivables.
Financial services interest rate spread remained strong, exceeding 3% in the
first quarter. This interest rate spread declined slightly from last year
because of slightly higher borrowing rates in addition to the previously
mentioned change in the receivables portfolio. Operating income declined
primarily because of bad debt expenses recorded to maintain an adequate reserve
for the growing receivables portfolio.
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. The company believes
that over time it has reduced interest expense by using interest rate management
agreements and variable rate debt instead of directly obtaining fixed rate debt.
During the first three months of fiscal year 1998 the company did not enter into
any new interest rate management agreements.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Information systems continued to provide strong cash flow from operating
activities during the first quarter. Operating cash flow was $34,075 and
resulted primarily from net income, adjusted for noncash charges. This strong
cash flow funded the company's investments for normal operations including
capital expenditures and capitalized software of $7,873. Capital expenditures in
the ordinary course of business are anticipated to be about $45,000 to $50,000
in fiscal year 1998.
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
32.2% at December 31, 1997 and 34.5% at September 30, 1997. Remaining credit
available under existing revolving credit agreements was $69,800 at December 31,
1997. In addition to committed credit agreements, the company also has a variety
of other short-term credit lines available. The company anticipates that cash
flow from operations and cash available from existing credit agreements will be
sufficient to fund fiscal year 1998 normal operations.
10
<PAGE> 11
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 10, 1998, 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. In November 1997, the company's board of
directors raised the quarterly dividend 13% to $.09 per Class A common share.
The company has increased cash dividends per share twelve times since 1989 and
paid dividends each year since the company's initial public offering in 1961.
The company has conducted an active share repurchase program during recent years
to provide increased returns to shareholders. During the first three months of
fiscal year 1998, the company repurchased 500,000 Class A common shares for
$9,158 ($18.32 per share). As of December 31, 1997 the company could repurchase
an additional 2,669,800 Class A common shares under existing board of directors'
authorizations.
YEAR 2000 COMPLIANCE
The company has assessed potential year 2000 effects on its internal computer
systems and systems provided to customers. Detailed plans have been prepared to
address year 2000 issues with completion of software development scheduled for
December 1998. As of December 31, 1997 the costs to make all systems year 2000
compliant were not projected to have a material adverse effect on the company's
financial position, results of operations and cash flows.
ENVIRONMENTAL MATTER
See Note 7 to the Consolidated Financial Statements for a discussion of an
environmental contingency.
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, 1997.
11
<PAGE> 12
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 February 11, 1998 /s/ David R. Holmes
------------------- -------------------
David R. Holmes
Chairman of the Board, President and
Chief Executive Officer
Date February 11, 1998 /s/ Dale L. Medford
------------------- -------------------
Dale L. Medford
Vice President, Corporate Finance and
Chief Financial Officer
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 9,489
<SECURITIES> 0
<RECEIVABLES> 211,222
<ALLOWANCES> 7,208
<INVENTORY> 75,717
<CURRENT-ASSETS> 333,941
<PP&E> 378,895
<DEPRECIATION> 199,455
<TOTAL-ASSETS> 1,101,576
<CURRENT-LIABILITIES> 232,090
<BONDS> 276,331
0
0
<COMMON> 56,154
<OTHER-SE> 317,613
<TOTAL-LIABILITY-AND-EQUITY> 1,101,576
<SALES> 259,361
<TOTAL-REVENUES> 369,740
<CGS> 162,041
<TOTAL-COSTS> 201,128
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,478
<INCOME-PRETAX> 42,210
<INCOME-TAX> 18,462
<INCOME-CONTINUING> 23,748
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,748
<EPS-PRIMARY> .30
<EPS-DILUTED> .29
</TABLE>
