Reynolds and Reynolds Reports Strong Second Quarter

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Apr 25, 2001, 01:00 ET from Reynolds & Reynolds Company

    DAYTON, Ohio, April 25 /PRNewswire/ --
 The Reynolds and Reynolds Company (NYSE:   REY) today reported revenues of
 $241.3 million for the quarter ended March 31, 2001, an increase of 9 percent
 over the prior year. Net income for the quarter of $23.8 million or 32 cents
 per share was in line with consensus estimates. During the quarter, the
 company recorded a 3-cent charge associated with a work stoppage on a software
 development contract, and a 2-cent gain related to discontinued operations.
 Without these two items, earnings per share from continuing operations were 33
 cents, 14 percent above the prior year.
     "We achieved a strong performance in an uncertain economic environment. We
 expect the weaker market conditions to continue, negatively impacting
 consulting revenues and new systems sales. We are keeping our cost structure
 in line with our revenues," President and CEO Lloyd "Buzz" Waterhouse said.
 "We continue to increase our market share lead with our ERA3 system -- the
 most widely used retail management system in North America. We are on schedule
 with the integration of our customer relationship management solutions with
 the ERA3 system. We continue to aggressively strengthen our broad suite of
 solutions as well."
 
     Highlights of the quarter include:
     *     Strong operating margins in Retail Management Solutions driven by
           high recurring service revenues.
     *     Improved operating margins in Documents driven by manufacturing
           consolidation and other cost improvements.
     *     Continued growth in Automark, the company's Web services arm, which
           was selected by Sonic Automotive Inc. and Asbury Group as their Web
           site developer for over 200 dealership locations.
     *     The launch of ReySource(TM), an Internet solution that provides a
           unique procurement option to automotive retailers to help manage
           their purchase of business forms, office supplies and other products
           and services in their dealership.
     *     The selection by BMW Canada Inc. as its exclusive provider of retail
           management systems and related products and services for all their
           dealers.
     *     Continued recognition for high achievement in customer support as
           evidenced by Reynolds' Technical Assistance Center (TAC) winning the
           Help Desk Institute's 2001Team Excellence Award -- the gold medal of
           the customer support profession.
 
     "While we don't expect to achieve double-digit sales growth goals in this
 business environment, we are encouraged by our performance through the first
 six months and we remain confident in our ability to meet consensus earnings
 estimates for the fiscal year," Waterhouse said.
 
     For the 2001 fiscal year the company currently expects:
     *     Earnings per share to be in line with the consensus estimate of
           $1.31, compared to $1.19 from continuing operations in fiscal year
           2000 (excluding restructuring charges).
     *     Return on equity to approach 20 percent.
     *     Capital expenditures and capitalized software to total approximately
           $70 million.
     *     Depreciation and amortization expense is expected to total
           approximately $50 million.
     *     R&D expenses to be approximately $75 million.
     *     Dividends to remain at the rate of 11 cents per common share
           per quarter.
 
     Reynolds and Reynolds, headquartered in Dayton, Ohio, is the leading
 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.
 To find out more about the company, its vision, products and services, visit
 http://www.reyrey.com.
 
     Certain statements in this news release constitute forward-looking
 statements within the meaning of the Private Securities Litigation Reform Act
 of 1995. The forward-looking statements are based on current expectations,
 estimates, forecasts and projections of future company or industry performance
 based on management's judgment, beliefs, current trends and market conditions.
 Forward-looking statements made or to be made by or on behalf of the company
 may be identified by the use of words such as "expects," "anticipates,"
 "intends," "plans," "believes," "seeks," "estimates" and similar expressions.
 Forward-looking statements are not guarantees of future performance and
 involve certain risks, uncertainties and assumptions that are difficult to
 predict. Actual outcomes and results may differ materially from what is
 expressed, forecasted or implied in the forward-looking statements. See also
 the discussion of factors that may affect future results contained in the
 company's Current Report on Form 8-K filed with the SEC on August 11, 2000,
 which we incorporate herein by reference. The company undertakes no obligation
 to update any forward-looking statements, whether as a result of new
 information, future events or otherwise.
 
                         The Reynolds and Reynolds Company
                             Segment Report (Unaudited)
                        (In thousands except per share data)
 
 
                                 Second Quarter              Six Months
     For The Periods Ended
      March 31                  2001      2000 Change     2001      2000 Change
 
     Consolidated
     Net Sales and Revenues $241,321  $220,740    9%  $484,807  $441,823   10%
     Gross Profit           $129,652  $118,143   10%  $265,171  $238,269   11%
     Operating Income        $37,647   $40,719   -8%   $78,139   $85,124   -8%
         Operating Margin      15.6%     18.4%           16.1%     19.3%
     Income From Continuing
      Operations             $22,199   $23,548   -6%   $46,078   $48,607   -5%
     Discontinued
      Operations              $1,623    $9,420  -83%    $1,623   $15,661  -90%
     Net Income              $23,822   $32,968  -28%   $47,701   $64,268  -26%
     Earnings Per Common
      Share (Diluted)
         Income From
          Continuing
          Operations           $0.30     $0.29    3%     $0.61     $0.61    0%
         Discontinued
          Operations           $0.02     $0.12  -83%     $0.02     $0.20  -90%
         Net Income            $0.32     $0.41  -22%     $0.64     $0.81  -21%
     Average Shares
      Outstanding             74,740    80,246          74,933    79,515
 
     Retail Management
      Solutions
     Net Sales and Revenues $141,549  $136,550    4%  $282,205  $276,992    2%
     Gross Profit            $83,297   $77,167    8%  $168,932  $158,092    7%
         Gross Margin          58.8%     56.5%           59.9%     57.1%
     Operating Income        $25,497   $24,817    3%   $51,221   $53,752   -5%
         Operating Margin      18.0%     18.2%           18.2%     19.4%
 
     Transformation
      Solutions
     Net Sales and Revenues  $45,500   $26,237   73%   $95,192   $51,788   84%
     Gross Profit            $18,545   $10,850   71%   $41,680   $21,462   94%
         Gross Margin          40.8%     41.4%           43.8%     41.4%
     Operating Income
      (Loss)                 ($4,139)    ($674)        ($2,962)     $233
         Operating Margin      -9.1%     -2.6%           -3.1%      0.4%
 
     Documents
     Net Sales and Revenues  $43,801   $47,438   -8%   $86,721   $92,764   -7%
     Gross Profit            $27,810   $30,126   -8%   $54,559   $58,715   -7%
         Gross Margin          63.5%     63.5%           62.9%     63.3%
     Operating Income        $10,377   $10,707   -3%   $18,144   $20,355  -11%
         Operating Margin      23.7%     22.6%           20.9%     21.9%
 
     Financial Services
     Net Sales and Revenues  $10,471   $10,515    0%   $20,689   $20,279    2%
     Operating Income         $5,912    $5,869    1%   $11,736   $10,784    9%
         Operating Margin      56.5%     55.8%           56.7%     53.2%
 
 
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SOURCE Reynolds & Reynolds Company
    DAYTON, Ohio, April 25 /PRNewswire/ --
 The Reynolds and Reynolds Company (NYSE:   REY) today reported revenues of
 $241.3 million for the quarter ended March 31, 2001, an increase of 9 percent
 over the prior year. Net income for the quarter of $23.8 million or 32 cents
 per share was in line with consensus estimates. During the quarter, the
 company recorded a 3-cent charge associated with a work stoppage on a software
 development contract, and a 2-cent gain related to discontinued operations.
 Without these two items, earnings per share from continuing operations were 33
 cents, 14 percent above the prior year.
     "We achieved a strong performance in an uncertain economic environment. We
 expect the weaker market conditions to continue, negatively impacting
 consulting revenues and new systems sales. We are keeping our cost structure
 in line with our revenues," President and CEO Lloyd "Buzz" Waterhouse said.
 "We continue to increase our market share lead with our ERA3 system -- the
 most widely used retail management system in North America. We are on schedule
 with the integration of our customer relationship management solutions with
 the ERA3 system. We continue to aggressively strengthen our broad suite of
 solutions as well."
 
     Highlights of the quarter include:
     *     Strong operating margins in Retail Management Solutions driven by
           high recurring service revenues.
     *     Improved operating margins in Documents driven by manufacturing
           consolidation and other cost improvements.
     *     Continued growth in Automark, the company's Web services arm, which
           was selected by Sonic Automotive Inc. and Asbury Group as their Web
           site developer for over 200 dealership locations.
     *     The launch of ReySource(TM), an Internet solution that provides a
           unique procurement option to automotive retailers to help manage
           their purchase of business forms, office supplies and other products
           and services in their dealership.
     *     The selection by BMW Canada Inc. as its exclusive provider of retail
           management systems and related products and services for all their
           dealers.
     *     Continued recognition for high achievement in customer support as
           evidenced by Reynolds' Technical Assistance Center (TAC) winning the
           Help Desk Institute's 2001Team Excellence Award -- the gold medal of
           the customer support profession.
 
     "While we don't expect to achieve double-digit sales growth goals in this
 business environment, we are encouraged by our performance through the first
 six months and we remain confident in our ability to meet consensus earnings
 estimates for the fiscal year," Waterhouse said.
 
     For the 2001 fiscal year the company currently expects:
     *     Earnings per share to be in line with the consensus estimate of
           $1.31, compared to $1.19 from continuing operations in fiscal year
           2000 (excluding restructuring charges).
     *     Return on equity to approach 20 percent.
     *     Capital expenditures and capitalized software to total approximately
           $70 million.
     *     Depreciation and amortization expense is expected to total
           approximately $50 million.
     *     R&D expenses to be approximately $75 million.
     *     Dividends to remain at the rate of 11 cents per common share
           per quarter.
 
     Reynolds and Reynolds, headquartered in Dayton, Ohio, is the leading
 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.
 To find out more about the company, its vision, products and services, visit
 http://www.reyrey.com.
 
     Certain statements in this news release constitute forward-looking
 statements within the meaning of the Private Securities Litigation Reform Act
 of 1995. The forward-looking statements are based on current expectations,
 estimates, forecasts and projections of future company or industry performance
 based on management's judgment, beliefs, current trends and market conditions.
 Forward-looking statements made or to be made by or on behalf of the company
 may be identified by the use of words such as "expects," "anticipates,"
 "intends," "plans," "believes," "seeks," "estimates" and similar expressions.
 Forward-looking statements are not guarantees of future performance and
 involve certain risks, uncertainties and assumptions that are difficult to
 predict. Actual outcomes and results may differ materially from what is
 expressed, forecasted or implied in the forward-looking statements. See also
 the discussion of factors that may affect future results contained in the
 company's Current Report on Form 8-K filed with the SEC on August 11, 2000,
 which we incorporate herein by reference. The company undertakes no obligation
 to update any forward-looking statements, whether as a result of new
 information, future events or otherwise.
 
                         The Reynolds and Reynolds Company
                             Segment Report (Unaudited)
                        (In thousands except per share data)
 
 
                                 Second Quarter              Six Months
     For The Periods Ended
      March 31                  2001      2000 Change     2001      2000 Change
 
     Consolidated
     Net Sales and Revenues $241,321  $220,740    9%  $484,807  $441,823   10%
     Gross Profit           $129,652  $118,143   10%  $265,171  $238,269   11%
     Operating Income        $37,647   $40,719   -8%   $78,139   $85,124   -8%
         Operating Margin      15.6%     18.4%           16.1%     19.3%
     Income From Continuing
      Operations             $22,199   $23,548   -6%   $46,078   $48,607   -5%
     Discontinued
      Operations              $1,623    $9,420  -83%    $1,623   $15,661  -90%
     Net Income              $23,822   $32,968  -28%   $47,701   $64,268  -26%
     Earnings Per Common
      Share (Diluted)
         Income From
          Continuing
          Operations           $0.30     $0.29    3%     $0.61     $0.61    0%
         Discontinued
          Operations           $0.02     $0.12  -83%     $0.02     $0.20  -90%
         Net Income            $0.32     $0.41  -22%     $0.64     $0.81  -21%
     Average Shares
      Outstanding             74,740    80,246          74,933    79,515
 
     Retail Management
      Solutions
     Net Sales and Revenues $141,549  $136,550    4%  $282,205  $276,992    2%
     Gross Profit            $83,297   $77,167    8%  $168,932  $158,092    7%
         Gross Margin          58.8%     56.5%           59.9%     57.1%
     Operating Income        $25,497   $24,817    3%   $51,221   $53,752   -5%
         Operating Margin      18.0%     18.2%           18.2%     19.4%
 
     Transformation
      Solutions
     Net Sales and Revenues  $45,500   $26,237   73%   $95,192   $51,788   84%
     Gross Profit            $18,545   $10,850   71%   $41,680   $21,462   94%
         Gross Margin          40.8%     41.4%           43.8%     41.4%
     Operating Income
      (Loss)                 ($4,139)    ($674)        ($2,962)     $233
         Operating Margin      -9.1%     -2.6%           -3.1%      0.4%
 
     Documents
     Net Sales and Revenues  $43,801   $47,438   -8%   $86,721   $92,764   -7%
     Gross Profit            $27,810   $30,126   -8%   $54,559   $58,715   -7%
         Gross Margin          63.5%     63.5%           62.9%     63.3%
     Operating Income        $10,377   $10,707   -3%   $18,144   $20,355  -11%
         Operating Margin      23.7%     22.6%           20.9%     21.9%
 
     Financial Services
     Net Sales and Revenues  $10,471   $10,515    0%   $20,689   $20,279    2%
     Operating Income         $5,912    $5,869    1%   $11,736   $10,784    9%
         Operating Margin      56.5%     55.8%           56.7%     53.2%
 
 
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 SOURCE  Reynolds & Reynolds Company