Reynolds and Reynolds Meets Analyst Estimates for Year; Sees Upside for Fiscal 2002

The Reynolds and Reynolds Company reported November 1st financial results for the fourth quarter and the fiscal year ending September 30, 2001. Revenues of $1.0 billion were 5 percent higher than a year ago. Earnings per share from continuing operations of $1.31 were 10 percent higher than last year excluding the fiscal year 2002 restructuring charge.

"This was a good year for our company. I'm very proud of our associates and our management team. In a difficult economy, we faced a number of challenges and still made our commitments," president and CEO Lloyd "Buzz" Waterhouse, said. "We sold our non-automotive document management business a year ago, which required a significant re-alignment of people, systems and facilities. We simplified a number of processes, strengthened our organization and reduced costs. We effectively reshaped our e-business portfolio. We also wrote down our investment in Kalamazoo Computer Group, the U.K.-based automotive systems company in which we hold an equity position, following a difficult year for their business."

"Despite these challenges, we achieved respectable revenue growth year over year, and strong earnings which enabled us to invest in our businesses and continue our share repurchase program. As a result of all of the hard work by our associates, we see some upside to analyst estimates for fiscal 2002," Waterhouse said.

Fourth quarter revenues of $251.7 million were slightly behind last year due primarily to a reduction in revenue from CarPoint and a general slowdown in the company's consulting business. Fourth quarter earnings per share of 36 cents from continuing operations were 13 percent ahead of last year excluding the fiscal year 2000 restructuring charge.

During the fiscal year Reynolds:

Increased market share in core systems, adding over 300 new customers.

Introduced the CRA(TM)3 system featuring ConsumerReach, an integrated, Internet-ready set of retail management capabilities for automotive retailers.

Significantly expanded its services offerings, introducing 22 new services, including a number of Distance Learning Solutions.

Earned awards for its support organization, capped by its third consecutive Software Technical Assistance Recognition award in the high-volume category from the Software Support Professionals Association.

Acquired DealerKid, a premier provider of electronic customer marketing and relationship management software and services for automotive retailers.

Acquired a 10 percent equity position in Networkcar and exclusive distribution rights for North American automotive retailers, adding advanced wireless-enabled capability to the company's growing suite of automotive customer relationship management (CRM) solutions.

Introduced ReySource, an Internet-based procurement solution for automotive retailers. The service exceeded $14 million in sales in its first nine months of operation.

Announced a strategic technology and marketing alliance with Credit Online, Inc., a subsidiary of the First American Corporation, to provide Internet connectivity for automotive retailers to funding sources. In September, First American acquired e-fin LLC, a provider of online financing services in which Reynolds holds a minority interest.

Became the Internet technology partner with major enterprises and retailer groups including Southeast Toyota Distributors, Sonic Automotive Inc., Western washington Toyota Dealers Association and Salt Lake City Toyota Dealers Association.

"Our recurring revenue model remains strong. We continue to manage costs effectively, and aggressively invest in our business," said Dale Medford, executive vice president and CFO.

"Our intent is to play an important role in leading the transformation of automotive retailing," Waterhouse said. "We plan to introduce exciting new solutions to the marketplace that will enable us to further expand our leadership position, strengthen our customer relationships, and create shareholder value."

The company repurchased 2.4 million shares in the fourth quarter and 6.5 million shares during the year at average prices of $23.89 and $21.70 per share, respectively. Approximately 4.7 million shares remain authorized for repurchase.

For the first quarter of fiscal 2002, the company expects earnings per share to meet or slightly exceed the analyst consensus estimate of 34 cents per share.

For the 2002 fiscal year the company currently expects:

Revenues to grow 5 percent in line with analyst consensus estimates.

Earnings per share to be higher than the current consensus estimate of $1.43, primarily due to a goodwill accounting pronouncement.

Return on equity of approximately 20 percent.

Operating margins to be approximately 19 percent.

Capital expenditures and capitalized software to total approximately $65 million.

Depreciation and amortization expense to total approximately $40 million.

Research and development expenses to be approximately $75 million.

To continue its share repurchase plan throughout the year.

Reynolds and Reynolds, headquartered in Dayton, Ohio, is a provider of integrated information management solutions to the automotive retailing marketplace. The company's services include a full range of retail and enterprise management systems, networking and support, e-business applications, Web services, learning and consulting services, customer relationship management solutions, document management and leasing services. Tp find out more about the company, visit www.reyrey.com.