##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.For the fiscal year ended
    September 30, 2005o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.For the transition period
    from          to          .   Commission File
    No. 1-10147
  THE REYNOLDS AND REYNOLDS
    COMPANY
 (Exact name of registrant as
    specified in its charter)
  Ohio

31-04211(State of
    Incorporation)

(IRS Employer Identification
    No.)   One Reynolds Way
 Dayton, Ohio 45430
 (Address of principal executive
    offices)
  Registrants telephone number, including area code:
 (937) 485-2000
  Securities registered pursuant to Section 12(b) of the
    Act:
  Class A Common Shares (no
    par value)

New York Stock
    Exchange(Title of class)

(Exchange on which registered)   Securities registered pursuant to Section 12(g) of the
    Act:
 None
   o þ
  o þ
  o þ
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 þ o o
  Rule 12b-2 o þ
         DOCUMENTS
    INCORPORATED BY REFERENCE None




---



##### 



TABLE OF
    CONTENTS
  EXPLANATORY NOTE


1MEANINGFUL
    CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS


1PART IITEM 1.


BUSINESS


2ITEM 1A.


RISK FACTORS


6ITEM 1B.


UNRESOLVED STAFF
    COMMENTS


9ITEM 2


PROPERTIES


9ITEM 3.


LEGAL
    PROCEEDINGS


9ITEM 4.


SUBMISSION OF
    MATTERS TO A VOTE OF SECURITY HOLDERS


9PART IIITEM 5.


MARKET FOR
    REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
    MATTERS


10ITEM 6.


SELECTED FINANCIAL
    DATA


11ITEM 7.


MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS


12ITEM 7A.


QUALITATIVE AND
    QUANTITATIVE DISCLOSURES ABOUT MARKET RISK


38ITEM 8.


FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA


38ITEM 9.


CHANGES IN AND
    DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
    DISCLOSURE


38ITEM 9A.


CONTROLS AND
    PROCEDURES


38ITEM 9B.


OTHER
    INFORMATION


44PART IIIITEM 10.


DIRECTORS AND
    EXECUTIVE OFFICERS OF THE REGISTRANT


44ITEM 11.


EXECUTIVE
    COMPENSATION


47ITEM 12.


SECURITY OWNERSHIP
    OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


58ITEM 13.


CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS


61ITEM 14.


PRINCIPAL
    ACCOUNTANT FEES AND SERVICES


61PART IVITEM 15.


EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES


62EX-10(J) Employee Offer Letter/AgreementEX-10(K) Employee Offer Letter/AgreementEX-10(L) Employee Offer Letter/AgreementEX-12 Computation of Ratio of Earnings to Fixed ChargesEX-21 List of SubsidiariesEX-23 Consent of Independent Registered Public Accounting FirmEX-31.1 CertificationEX-31.2 CertificationEX-32.1 CertificationEX-32.2 Certification




---



##### Table of Contents



EXPLANATORY
    NOTE      Form 10-K Form 10-Q
 MEANINGFUL
    CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
    STATEMENTS  Form 10-K
  
    the identification by the Companys management and
    independent registered public accounting firm of an additional
    material weakness or the continuation of the existing material
    weakness in internal control over financial reporting;
    the Companys ability to make timely filings of its
    required periodic reports under the Securities Exchange Act of
    1934, as amended (the Securities Exchange Act),
    particularly as it relates to the application of the
    Companys new revenue recognition policy;
    the effect of any further delay of the Companys annual
    meeting of shareholders for 2006 or the filing of its required
    periodic reports;
    any impact on the listing of the Companys common stock on
    the New York Stock Exchange (the NYSE);
    the Companys ability to continue to secure necessary
    waivers from lenders for the delay in filing its required
    periodic reports; 1




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##### Table of Contents




    the Companys ability to maintain adequate cash balances
    for operations after payment and discharge of the public debt
    and to meet its liquidity covenant under its credit facility;
    the higher cost of borrowing on future debt and the
    Companys ability to access the debt markets due to the
    recent downgrades to the Companys credit ratings;
    the Companys estimates of addressable markets in the U.S.
    or internationally and the Companys ability to save costs
    in the future; and
    other factors described in this Annual Report on
    Form 10-K
    and prior filings of the Company with the SEC.   PART I

(Dollars in thousands)  ITEM 1.
    Description
    of Business  General
    Development of Business
    ®
  Financial
    Information about Segments
  Form 10-Q
 2




---



##### Table of Contents



Narrative
    Description of Business
  Software
    Solutions
    end-to-end
  ® ®
  ® ® ®
    Documents
   3




---



##### Table of Contents



Financial
    Services
    Business
    Strategy
    PATENTS,
    TRADEMARKS, AND RELATED RIGHTS
  Reynolds &
    Reynolds®
  PRODUCT
    DEVELOPMENT
    SALES
   4




---



##### Table of Contents



COMPETITION
    BACKLOG
    EMPLOYEES
    AVAILABLE
    INFORMATION
  Form 10-K, Form 10-Q, Form 8-K www.reyrey.com
 5




---



##### Table of Contents



1-888-4REYREY
    (473-9739)
    ITEM 1.A.
    Risk
    Factors    BUSINESS FOCUS ON THE AUTOMOBILE
    INDUSTRY.
  CONSOLIDATION OF AUTOMOBILE DEALERSHIPS.
  COMPETITION.
  CUSTOMER ATTRITION.
  MATERIAL WEAKNESS.
 6




---



##### Table of Contents



NEW PRODUCTS AND SERVICES. and/or
    RELIANCE ON SUPPLIERS.
    DEPENDENCE ON KEY PERSONNEL.
 7




---



##### Table of Contents



BUSINESS INTERRUPTIONS AND DEPENDENCE ON SINGLE RESOURCE FOR
    CERTAIN SERVICES.
  BUSINESS COMBINATIONS, STRATEGIC ALLIANCES, JOINT VENTURES
    AND DIVESTITURES.
  DISTRIBUTION CHANNELS.
  INTELLECTUAL PROPERTY.
  INTERNATIONAL OPERATIONS.
    ACCESS TO CAPITAL.
 8




---



##### Table of Contents



ITEM 1.B.
    Unresolved
    Staff Comments    ITEM 2.
    Properties    ITEM 3.
    Legal
    Proceedings        ITEM 4.
    Submission
    of Matters to a Vote of Security Holders   9




---



##### Table of Contents



PART II  ITEM 5.
    Market
    for the Registrants Common Equity and Related Stockholder
    Matters (In thousands except per share data and holders of
    record)
    First


Second


Third


Fourth2005

Quarter


Quarter


Quarter


QuarterCash dividends declared per shareClass A common

$
.11


$
.11


$
.11


$
.11Class B common

$
.0055


$
.0055


$
.0055


$
.0055Closing market prices of
    Class A common sharesHigh

$
26.51


$
28.28


$
27.59


$
29.00Low

$
23.20


$
25.36


$
26.20


$
26.74     Purchases
    of Equity Securities (in thousands except per share
    data)
    Total Numberof Shares


Maximum NumberTotal


Average


Purchased as


of Shares RemainingProgram




Number of


Price


Part of a Publicly


for Purchase asApproval




Shares


Paid (per


Announced


Part of a PubliclyDate

Period


Purchased


Share)


Program


Announced Program2/17/05


7/1/2005  7/31/2005



70



28.34



70



2,8642/17/05


8/1/2005  8/31/2005



555



28.41



555



2,3092/17/05


9/1/2005  9/30/2005



435



28.20



435



1,8741,060



28.32



1,060  10




---



##### Table of Contents



ITEM 6.
    Selected
    Financial Data  Five-Year
    Selected Financial Data
    (Dollars in thousands except per share data)
  For the Years Ended
    September 30

2005(1)(2)


2004


2003(3)


2002(3)(4)


2001Net Sales and Revenues

$
969,080


$
982,241


$
1,008,245


$
992,383


$
1,004,012Income from Continuing Operations

$
33,287


$
92,643


$
109,800


$
104,012


$
97,934Class A common(5)Basic earnings per common share

$
.53


$
1.40


$
1.61


$
1.47


$
1.34Diluted earnings per common share

$
.51


$
1.37


$
1.56


$
1.42


$
1.31Class B common(5)Basic and Diluted earnings per
    common share

$
.03


$
.07


$
.08


$
.07


$
.07Net Income

$
33,287


$
92,643


$
109,800


$
67,449


$
99,557Class A common(5)Basic earnings per common share

$
.53


$
1.40


$
1.61


$
.95


$
1.36Diluted earnings per common share

$
.51


$
1.37


$
1.56


$
.92


$
1.33Class B common(5)Basic and Diluted earnings per
    common share

$
.03


$
.07


$
.08


$
.05


$
.07Return on Equity


7.8
%


19.6
%


23.2
%


14.2
%


20.4
%Cash Dividends Per Common ShareClass A common

$
.44


$
.44


$
.44


$
.44


$
.44Class B common

$
.022


$
.022


$
.022


$
.022


$
.022Book Value Per Outstanding Common
    Share

$
6.13


$
7.25


$
7.05


$
6.82


$
6.69Current Ratio(6)


1.96



2.30



1.99



2.06



1.80Net Property, Plant and
    Equipment(6)

$
175,155


$
178,480


$
184,745


$
161,174


$
159,182Total Assets(6)

$
956,096


$
1,026,757


$
1,092,653


$
1,109,119


$
1,109,440Long-Term DebtAutomotive solutions

$
100,237


$
103,512


$
106,912


$
107,408


$
105,805Financial services


152,883



176,731



169,293



180,519



147,429Total Long-Term Debt

$
253,120


$
280,243


$
276,205


$
287,927


$
253,234Total Debt

$
292,381


$
295,643


$
305,680


$
330,721


$
315,378Net Debt to Capitalization


29.3
%


31.4
%


32.5
%


32.8
%


32.4
%Number of Employees


4,289



4,380



4,518



4,602



4,763     (1)
    
    On July 19, 2005, the Companys board of directors
    decided to stop marketing, selling and installing the Reynolds
    Generations Series Suite dealer management system for
    automobile dealers. As a result of this decision, the Company
    wrote-off capitalized software development costs of $66,558
    ($42,191 or $.65 per diluted Class A common share
    after income taxes) and recorded additional pre-tax expenses
    costs of $24,225 ($15,062 or $.23 per diluted Class A
    common share after income taxes) in the quarter ended
    September 30, 2005.(2)
    
    During the quarter ended September 30, 2005, the Company
    corrected prior period errors related to revenue recognition and
    reduced revenues by $11,761 and net income by $676 or
    $.01 per Class A common share. 11




---



##### Table of Contents



(3)
    
    Financial information for 2003 and 2002 was restated to reflect
    the retroactive adoption of Statement of Financial Accounting
    Standards (SFAS) No. 123, Accounting for Stock-Based
    Compensation. Financial information for 2001 was not
    restated per SFAS No. 148, Accounting for
    Stock-Based Compensation  Transition and
    Disclosure and Amendment of FASB Statement No. 123.(4)
    
    Effective October 1, 2001, the Company adopted the
    provisions of SFAS No. 142, Goodwill and Other
    Intangible Assets, and reduced income by $36,563 for the
    cumulative effect of the accounting change.(5)
    
    In 2005, the Company restated prior financial statements to
    report basic and diluted earnings per share for all classes of
    common stock. Previously the Company had not reported earnings
    per Class B common share. There was no change to earnings
    per Class A common share.(6)
    
    In 2005, the prior years balance sheets were restated to
    reclassify investments in auction rate securities as either
    short-term or long-term marketable securities instead of cash
    and equivalents. Prior years balance sheets were also
    restated to classify financial services assets and liabilities
    into current and long-term portions.  ITEM 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations (In thousands except employee and per share
    data, unless otherwise indicated)  OVERVIEW
  Introduction
  How
    the Company does business
  ®
      The
    Companys growth plans, strategy and market
    opportunities
   12




---



##### Table of Contents



end-to-end
  RESULTS
    OF OPERATIONS
    Correction
    of Prior Period Errors
  Form 10-K Form 10-Q
 13




---



##### Table of Contents



SOP 97-2. SOP 97-2
    Restatement
    of Prior Periods with Respect to Auction Rate Securities and
    Earnings per Share
     14




---



##### Table of Contents



Prior
    Revenue Recognition Policy
  SOP 97-2, No. 00-21,
  Units of
    Accounting
  EITF 00-21
  Allocation
    of Consideration
  EITF 00-21 EITF 00-21 SOP 97-2
  Prior
    Revenue Recognition under
    SOP 97-2
  SOP 97-2,
 15




---



##### Table of Contents



New
    Revenue Recognition Policy
  SOP 97-2, SOP 97-2 EITF 03-5, SOP 97-2 More-Than-Incidental
  Accounting
    Model
    SOP 97-2, EITF 00-21, EITF 01-8, EITF 03-5.
  Transactions
    Including a Lease Element
        Cash
    Sales Transactions
       16




---



##### Table of Contents



Transactions
    Including a Lease Element
  
    Determining Separate Units of Accounting for Transactions that
    Include a Lease Element:  §
    Separation of SFAS Elements from Non-SFAS Elements  EITF 00-21 EITF 01-8,
  §
    Separation of Financing Income from Hardware Lease Revenue    EITF 00-21. EITF 00-21. EITF 00-21 EITF 00-21.
  EITF 00-21
        -
    Hardware lease element-
    Combined one-time sales unit of accounting-
    Recurring maintenance services 17




---



##### Table of Contents



| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | Allocation Of Arrangement Consideration To Separate Units Of
    Accounting For Arrangements Subject To Leases



| |   |                                                    
| | - | ---------------------------------------------------
| | § | Allocation between SFAS 13 and Non-SFAS 13 Elements



EITF 00-21,




| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| | § | Allocation of Arrangement Consideration to Non-SFAS 13
    Units of Accounting



Software
    Element, Hardware Installation Services and Software Training
    Services












Recurring
    Maintenance Services
















| |   |                                                                            
| | - | ---------------------------------------------------------------------------
| |  | Revenue Recognition For Multiple Element Arrangements Subject To
    Leases



| |   |                             
| | - | ----------------------------
| | § | Hardware Revenue Recognition









18



---



##### Table of Contents



| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| | § | Revenue Recognition for the Combined Software Element, Hardware
    Installation Services and Software Training Services Unit of
    Accounting



EITF 00-21 EITF 00-21.








SOP 97-2 SOP 97-2 SOP 97-2








Recognition
    of Financing Income related to Software Training Services
    (including the arrangement consideration related to the software
    element and hardware installation services)




Interest on Receivables and
    Payables












| |   |                               
| | - | ------------------------------
| | § | Recurring Maintenance Services



SOP 97-2.




SOP 97-2 SOP 97-2






19



---



##### Table of Contents



Cash
    Sales Transactions
    EITF 00-21. EITF 00-21 EITF 00-21
  EITF 00-21. EITF 00-21 EITF 00-21.
  EITF 00-21 EITF 00-21
  
    All revenues are allocated to the one-time sales combined unit
    of accounting (hardware, software, hardware installation
    services and software training services) and recurring
    maintenance services.
    The fair value of the recurring maintenance services is
    recognized separately from the combined one-time sales unit of
    accounting. The allocation of revenue to the combined one-time
    sales unit of accounting is determined based on the residual
    method.    Comparison
    of Prior Revenue Recognition Policy to the New Revenue
    Recognition Policy
    
    The Company now follows the general revenue recognition
    principles of SAB Topic 13.
    In a transaction containing a lease arrangement:  §
    The Company allocates arrangement consideration on a relative
    fair value basis to determine the allocation of revenue between
    leasing and non-leasing elements. Under the Companys prior
    revenue recognition policy it allocated revenue to the leased
    hardware in an amount equal to the cost of the related equipment.§
    The Company records hardware revenue upon commencement of the
    lease (which is after completion of software training services).
    Under the Companys prior revenue recognition policy the
    Company recorded its hardware revenue upon shipment of the
    hardware. 20




---



##### Table of Contents




    In a cash sale transaction, the Company combines the hardware
    element with the software, hardware installation services and
    software training services and recognizes the combined revenue
    as software training services are performed using the actual
    dispersion of training hours. Under the Companys prior
    revenue recognition policy the Company accounted for the
    hardware element as a separate unit of accounting and recognized
    revenue equal to the cost of hardware upon shipment of the
    hardware.
    For periods subsequent to September 2004, the Company allocates
    revenue from one-time elements to recurring maintenance services
    in instances when the recurring maintenance services stated
    sales price did not fall within managements pre-defined
    reasonable range used to determine fair value of recurring
    maintenance services. Under the Companys prior revenue
    recognition policy, the Company recorded all one-time revenue
    separate from recurring maintenance services revenues, and
    recorded all recurring maintenance services revenues at an
    amount equal to the invoice price of recurring maintenance
    services, even in situations where such price was below the
    range of prices used to determine fair value.  Effects
    of the Change in Revenue Recognition Policy
  SOP 97-2.
  SOP 97-2
    Impact
    on Previously Issued Financial Statements
   21




---



##### Table of Contents



Fourth
    Quarter 2005 Adjustments
  ®
    Form 8-K
  Other
    Adjustments
  2000-2002
  Segment
    Reporting
   22




---



##### Table of Contents



Accounting
    Change
    Reorganization
    Costs
      Business
    Combinations
           23




---



##### Table of Contents



Consolidated
    Summary
  2005 vs. 2004


2004 vs. 20032005


2004


2003


Change


ChangeNet sales and revenues

$
969,080


$
982,241


$
1,008,245


$
(13,161
)


(1
)%

$
(26,004
)


(3
)%Gross profit

$
464,258


$
543,754


$
559,400


$
(79,496
)


(15
)%

$
(15,646
)


(3
)%% of revenues


47.9
%


55.4
%


55.5
%SG&A expenses

$
418,902


$
399,776


$
383,762


$
19,126



5
%

$
16,014



4
%% of revenues


43.2
%


40.7
%


38.1
%Operating income

$
45,356


$
143,978


$
175,638


$
(98,622
)


(68
)%

$
(31,660
)


(18
)% of revenues


4.7
%


14.7
%


17.4
%Net income

$
33,287


$
92,643


$
109,800


$
(59,356
)


(64
)%

$
(17,157
)


(16
)%Earnings per Class A common
    shareBasic earnings per share

$
0.53


$
1.40


$
1.61


$
(0.87
)


(62
)%

$
(0.21
)


(13
)%Diluted earnings per share

$
0.51


$
1.37


$
1.56


$
(0.86
)


(63
)%

$
(0.19
)


(12
)%       7-year 180-days
 24




---



##### Table of Contents



order-to-cash
           25




---



##### Table of Contents



Income


Income


EffectiveBefore


Tax


IncomeIncome


Provision


TaxTaxes


(Benefit)


Rate2005Adjusted amounts

$
117,369


$
49,054



41.8
%Suite capitalized software
    impairment


(66,558
)


(24,367
)International goodwill impairment


(6,075
)


0Ohio Jobs Credit






(1,067
)Tax law changes






(1,400
)Federal income tax audit
    settlements






(1,788
)Reported amounts

$
44,736


$
20,432



45.7
%2004Adjusted amounts

$
146,542


$
58,161



39.7
%Ohio income tax legislation






(1,859
)Record non-income tax liability


(1,524
)


(596
)Record interest on non-income tax
    liability


(297
)


(115
)Reverse reserve previously
    included in income tax liability






(1,110
)CEO compensation deduction
    adjustment






(407
)Reported amounts

$
144,721


$
54,074



37.4
%2003Adjusted amounts

$
177,722


$
68,616



38.6
%Ohio income tax legislation






2,210State deferred income tax
    adjustment for federal bonus depreciation






(1,451
)Reported amounts

$
177,722


$
69,375



39.0
%  26




---



##### Table of Contents



Software
    Solutions
  2005 vs. 2004


2004 vs. 20032005


2004


2003


Change


ChangeNet sales and revenuesRecurring revenues

$
614,140


$
603,933


$
580,194


$
10,207



2
%

$
23,739



4
%One-time sales

$
166,717


$
180,240


$
217,280


$
(13,523
)


(8
)%

$
(37,040
)


(17
)%Total net sales and revenues

$
780,857


$
784,173


$
797,474


$
(3,316
)


0
%

$
(13,301
)


(2
)%Gross profitRecurring revenues

$
321,127


$
385,557


$
376,386


$
(64,430
)


(17
)%

$
9,171



2
%One-time sales

$
31,234


$
44,709


$
61,092


$
(13,475
)


(30
)%

$
(16,383
)


(27
)%Total gross profit

$
352,361


$
430,266


$
437,478


$
(77,905
)


(18
)%

$
(7,212
)


(2
)%Gross marginRecurring revenues


52.3
%


63.8
%


64.9
%One-time sales


18.7
%


24.8
%


28.1
%Total gross margin


45.1
%


54.9
%


54.9
%SG&A expenses

$
349,997


$
330,285


$
312,346


$
19,712



6
%

$
17,939



6
%% of revenues


44.8
%


42.2
%


39.2
%Operating income

$
2,364


$
99,981


$
125,132


$
(97,617
)


(98
)%

$
(25,151
)


(20
)%% of revenues


0.3
%


12.7
%


15.7
%     2005 vs. 2004


2004 vs. 20032005


2004


2003


Change


ChangeTotal R&D expenditures

$
96,000


$
93,000


$
88,270


$
3,000



3
%

$
4,730



5
%Less capitalized software
    development costs


0



0



(16,270
)


0







16,270



(100
)%Total R&D expenses (SG&A
    expenses)


96,000



93,000



72,000



3,000



3
%


21,000



29
%Software amortization expenses
    (cost of sales)


78,582



18,823



3,455



59,759



317
%


15,368



445
%Total expenses

$
174,582


$
111,823


$
75,455


$
62,759



56
%

$
36,368



48
%    27




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##### Table of Contents



®
      ®
     28




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##### Table of Contents



Documents
  2005 vs. 2004


2004 vs. 20032005


2004


2003


Change


ChangeNet sales and revenues

$
161,695


$
166,254


$
174,239


$
(4,559
)


(3
)%

$
(7,985
)


(5
)%Gross profit

$
92,404


$
88,938


$
94,233


$
3,466



4
%

$
(5,295
)


(6
)%% of revenues


57.1
%


53.5
%


54.1
%SG&A expenses

$
61,963


$
62,940


$
64,266


$
(977
)


(2
)%

$
(1,326
)


(2
)%% of revenues


38.3
%


37.9
%


36.9
%Operating income

$
30,441


$
25,998


$
29,967


$
4,443



17
%

$
(3,969
)


(13
)%% of revenues


18.8
%


15.6
%


17.2
%      29




---



##### Table of Contents



Financial
    Services
  2005 vs. 2004


2004 vs. 20032005


2004


2003


Change


ChangeNet sales and revenues

$
26,528


$
31,814


$
36,532


$
(5,286
)


(17
)%

$
(4,718
)


(13
)%Gross profit

$
19,493


$
24,550


$
27,689


$
(5,057
)


(21
)%

$
(3,139
)


(11
)%% of revenues


73.5
%


77.2
%


75.8
%SG&A expenses

$
6,942


$
6,551


$
7,150


$
391



6
%

$
(599
)


(8
)%% of revenues


26.2
%


20.6
%


19.6
%Operating income

$
12,551


$
17,999


$
20,539


$
(5,448
)


(30
)%

$
(2,540
)


(12
)%% of revenues


47.3
%


56.6
%


56.2
%         Supplemental
    Non-GAAP Consolidated Amounts
     30




---



##### Table of Contents



Consolidated
  2005 vs. 20042005


2004


ChangeAdjusted Amounts
    (Non-GAAP)Net sales and revenues

$
985,427


$
982,241


$
3,186



0
%Operating income

$
137,186


$
143,978


$
(6,792
)


(5
)%% of revenues


13.9
%


14.7
%Net income

$
91,216


$
92,643


$
(1,427
)


(2
)%Earnings per Class A common
    shareBasic earnings per share

$
1.44


$
1.40


$
0.04



3
%Diluted earnings per share

$
1.40


$
1.37


$
0.03



2
%     2005


Correction


Suite


2005As


of Prior


Software


AdjustedReported


Period


& Related


(Non(GAAP)


Errors


Costs


GAAP)Net sales and revenues

$
969,080


$
(11,761
)

$
(4,586
)

$
985,427Operating income (loss)

$
45,356


$
(1,047
)

$
(90,783
)

$
137,186% of revenues


4.7
%










13.9
%Net income

$
33,287


$
(676
)

$
(57,253
)

$
91,216Earnings per Class A common
    shareBasic earnings per share

$
0.53


$
(0.01
)

$
(0.90
)

$
1.44Diluted earnings per share

$
0.51


$
(0.01
)

$
(0.88
)

$
1.41   Software
    Solutions
  2005 vs. 20042005


2004


ChangeAdjusted Amounts
    (Non-GAAP)Net sales and revenuesRecurring revenues

$
614,280


$
603,933


$
10,347



2
%One-time sales

$
183,116


$
180,240


$
2,876



2
%Total net sales and revenues

$
797,396


$
784,173


$
13,223



2
%Operating income

$
94,953


$
99,981


$
(5,028
)


(5
)%% of revenues


11.9
%


12.7
%  31




---



##### Table of Contents



2005


Correction


Suite


2005As


of Prior


Software


AdjustedReported


Period


& Related


(Non(GAAP)


Errors


Costs


GAAP)Net sales and revenuesRecurring revenues

$
614,140






$
(140
)

$
614,280One-time sales

$
166,717


$
(11,953
)

$
(4,446
)

$
183,116Total net sales and revenues

$
780,857


$
(11,953
)

$
(4,586
)

$
797,396Operating income (loss)

$
2,364


$
(1,806
)

$
(90,783
)

$
94,953% of revenues


0.3
%










11.9
%   LIQUIDITY
    AND CAPITAL RESOURCES
  Cash
    Flows
        Capitalization
   32




---



##### Table of Contents



Form 10-K Form 10-Q Form 10-K,
       33




---



##### Table of Contents



Shareholders
    Equity
        APPLICATION
    OF CRITICAL ACCOUNTING POLICIES
    Revenue
    Recognition
    go-to-market
 34




---



##### Table of Contents



Automotive
    Solutions
  No. 00-21,
        00-3,
    Financial
    Services
    Software
    Licensed to Customers
   35




---



##### Table of Contents



Long-Lived
    Assets
    Income
    Taxes
    Postretirement
    Benefits
  Form 10-K
 36




---



##### Table of Contents



PRINCIPAL
    CONTRACTUAL OBLIGATIONS
  Payment Due by PeriodLess Than








More ThanTotal


1 Year


1-3 Years


3-5 Years


5 YearsLong-term debtAutomotive Solutions

$
100,000






$
100,000Financial Services


192,144


$
39,261



71,133


$
81,750Interest paymentsAutomotive Solutions


8,148



6,706



1,442Financial Services


18,724



6,775



9,965



1,984Operating leases


28,785



6,245



8,734



5,094


$
8,712Computer services agreement


76,820



19,205



38,410



19,205



0Total contractual obligations

$
424,621


$
78,192


$
229,684


$
108,033


$
8,712     MARKET
    RISKS
  Interest
    Rates
        Foreign
    Currency Exchange Rates
   37




---



##### Table of Contents



CONTINGENCIES
    ACCOUNTING
    STANDARDS
    OTHER
    MATTERS
    ITEM 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk    ITEM 8.
    Financial
    Statements and Supplementary Data    ITEM 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    ITEM 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15
   38




---



##### Table of Contents



Form 10-K Form 10-Qs
    Form 10-K.
  Managements
    Report on Internal Control over Financial Reporting
      
    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of our assets;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with GAAP, and that our receipts and expenditures are
    being made only in accordance with authorizations of our
    management and members of our board of directors; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use, or disposition of
    our assets that could have a material effect on our financial
    statements.   39




---



##### Table of Contents



May 15,
    2006
  Remediation
    Activities
    
    Partnering with a nationally recognized benchmarking and
    consulting group to assist management in evaluating the
    accounting function to determine whether there is adequate
    staffing, appropriate skill sets and organizational alignment.
    Management expects to complete this study by September 30,
    2006, at which time organizational plans will be developed.
    Acquired additional accounting reference materials and working
    with outside consultants to structure a technical training
    curriculum for the accounting staff to ensure the staff is aware
    of and understands the Companys critical accounting
    policies as well as new accounting pronouncements and SEC
    developments. This curriculum will be developed by
    September 30, 2006.
    Implemented a new policy requiring the accounting staff to
    re-evaluate the Companys critical accounting policies at
    least once every three years even if there is no new guidance
    applicable to critical accounting policies. The Companys
    critical accounting policies include revenue recognition. This
    policy was implemented in April 2006. Management will formalize
    the review schedule by June 30, 2006. 40




---



##### Table of Contents





Changes
    in Internal Control over Financial Reporting










41



---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
     Internal
    Control  Integrated Framework
         42




---



##### Table of Contents



Internal Control  Integrated Framework Internal
    Control  Integrated Framework
        43




---



##### Table of Contents



ITEM 9B.  Other
    Information   PART III  ITEM 10.
    Directors
    and Executive Officers of the Registrant  DIRECTORS
    OF THE COMPANY
    Name

Age

PositionStephanie W. Bergeron
    (Terms Expires 2008)


52


President and Chief Executive
    Officer of Bluepoint Partners, LLCDr. David E. Fry
    (Term Expires 2008)


62


President and Chief Executive
    Officer, Northwood University (retiring August 30, 2006)Richard H. Grant, III
    (Term Expires 2008)


66


Private InvestorIra D. Hall
    Term Expires 2008


61


RetiredCleve L.
    Killingsworth, Jr. 
    (Nominee for Election  Term to Expire in 2009)


53


President and Chief Executive
    Officer of Blue Cross Blue Shield of MassachusettsEustace W. Mita
    (Term Expires 2007)


51


Chairman and Chief Executive
    Officer of Achristavest Properties, LLC and Chairman and Chief
    Executive Officer of Avista Properties Worldwide LLC.Philip A. Odeen
    (Term Expires 2007)


70


Chairman of the Board of The
    Reynolds and Reynolds Company and interim CEO for QinetiQ North
    American operations.Finbarr J. ONeill
    (Nominee for Election  Term to Expire in 2009)


54


President and Chief Executive
    Officer of The Reynolds and Reynolds CompanyRenato Zambonini
    (Nominee for Election  Term to Expire in 2009)


59


Chairman of the Board of Cognos
    Incorporated            44




---



##### Table of Contents



Audit
    Committee
  Regulation S-K. Form 10-K. www.reyrey.com
 45




---



##### Table of Contents



EXECUTIVE
    OFFICERS OF THE COMPANY
    Name

Age

PositionFinbarr J. ONeill


54


President and Chief Executive
    Officer and DirectorGregory T. Geswein


51


Senior Vice President and Chief
    Financial OfficerDouglas M. Ventura


46


Executive Vice President, Reynolds
    International and Corporate ServicesScot K. Eisenfelder


42


Senior Vice President, Solutions
    Management, Marketing and Strategic PlanningTerri L. Mulcahey


40


Senior Vice President of Sales and
    ServicesRobert S. Guttman


53


Vice President, General Counsel
    and Secretary                 Section 16(a)
    Beneficial Ownership Reporting Compliance
   46




---



##### Table of Contents



www.reyrey.com
  ITEM 11.
    Executive
    Compensation    SUMMARY
    COMPENSATION TABLE
  Long-Term CompensationAwardsAnnual Compensation





Number ofOther


Restricted


SecuritiesAnnual


Stock


Underlying


All OtherName and Principal
    Position

Year


Salary(1)


Bonus(2)


Compensation(3)


Award(s)(4)


Options(5)


Compensation(6)Philip A. Odeen(7)


2005


$
112,154


$
0


$
0


$
114,801



0


$
0Chairman of the Board


2004


$
80,308


$
0


$
0


$
0



50,000



02003























Finbarr J. ONeill


2005


$
519,231


$
620,000


$
8,213


$
925,400



300,000


$
5,892President and


2004























Chief Executive Officer


2003























Gregory T. Geswein


2005


$
36,923


$
160,000


$
930


$
356,375



150,000


$
0Senior Vice President


2004























and CFO


2003























Douglas M. Ventura


2005


$
296,635


$
251,424


$
9,722


$
178,875



0


$
6,349Executive Vice


2004


$
244,615


$
133,092


$
9,722


$
256,140



0


$
6,190President of Corporate


2003


$
234,923


$
145,457


$
0


$
0



65,000


$
5,796Services and Reynolds InternationalScot K. Eisenfelder


2005


$
150,000


$
148,719


$
6,246


$
134,150



50,000


$
1,500Senior Vice President,


2004























Marketing and


2003























Strategic PlanningTerri L. Mulcahey


2005


$
220,962


$
145,651


$
2,413


$
175,925



0


$
3,015Senior Vice


2004


$
150,865


$
75,520


$
175


$
77,108



15,000


$
2,882President of Sales


2003


$
159,247


$
62,591


$
0


$
0



13,000


$
2,600and ServiceDale L. Medford


2005


$
263,404


$
223,781


$
18,032


$
178,875



0


$
6,149Former Executive Vice


2004


$
344,038


$
159,365


$
16,260


$
346,380



0


$
17,989President, Chief


2003


$
346,577


$
211,860


$
0


$
0



90,000


$
17,167Financial Officer and Chief
    Administrative OfficerMichael J. Berry


2005


$
252,500


$
125,000


$
11,795


$
143,100



0


$
6,765Former Senior


2004


$
224,038


$
212,240


$
9,485


$
284,340



100,000


$
5,481Vice President,


2003























Solutions Management     (1)
    
    Effective November 2005, the Compensation Committee approved
    base salary increases for the following named executive
    officers: Mr. Ventura  4%;
    Ms. Mulcahey  3%; and
    Mr. Eisenfelder  4%. 47




---



##### Table of Contents



(2)
    
    Sign-on bonuses are included as follows: Mr. ONeill
    for $200,000, Mr. Eisenfelder for $80,000, and Mr. Geswein
    for $100,000. Retention bonuses are included as follows:
    Mr. Berry for $125,000, Mr. Medford for $125,000,
    Ms. Mulcahey for $40,000, and Mr. Ventura for $125,000.(3)
    
    Reflects the following perquisites: tax and will preparation,
    executive physicals, health club memberships, auto allowance and
    personal use of the Company aircraft. For years prior to 2005
    the Company computed the value of personal use of the Company
    aircraft for purposes of this table based on the rate for
    imputing income to the executive for tax purposes. For 2005 the
    value of the personal use of the aircraft is computed based on
    the incremental cost of such usage to the Company.(4)
    
    This column shows the fair market value of the stock at the time
    of grant. Restricted stock awards are made to executives
    annually. The restricted stock awards are of two types. The
    first type contains restrictions that are time-based and the
    value of the shares awarded under these restrictions is
    indicated in this column. The second type of restriction is
    performance-based and restrictions will lapse upon achieving
    specific revenue growth targets as described below. The value of
    these performance-based awards is not included in this column
    but will be shown in the LTIP column the year the restrictions
    lapse, if earned. Dividends on all restricted shares are paid on
    a quarterly basis to each executive. In November 2005, the
    Compensation Committee revised the restrictions on shares
    awarded to be 100% performance based and to have them vest over
    a three year period if certain revenue growth and total
    shareholder return targets are met.    Closing




RestrictedMarket


Vesting

StockExecutive Officer

Date of Grant


Price


Schedule

Award(s) #


Value $Philip A. Odeen


2/17/2005


$
27.55


vest on 2/15/2007


4,167


$
114,801Finbarr J. ONeill


1/18/2005


$
26.44


3 years on 1/18/2008


35,000


$
925,400Gregory T. Geswein


8/23/2005


$
28.51


3 years on 8/23/2008


12,500


$
356,375Douglas M. Ventura


12/1/2004


$
23.85


3 years on 12/1/2007


7,500


$
178,8753/1/2004


$
28.20


vest on 12/1/2006


4,000


$
112,8008/16/2004


$
23.89


vested on 7/18/2005


6,000
*

$
143,340Scot K. Eisenfelder


4/11/2005


$
26.83


3 years on 4/11/2008


5,000


$
134,150Terri L. Mulcahey


3/21/2005


$
28.03


3 years on 3/21/2008


5,000
*

$
140,15012/1/2004


$
23.85


3 years on 12/1/2007


1,500


$
35,7753/1/2004


$
28.20


vest on 12/1/2006


1,040


$
29,3288/16/2004


$
23.89


vested on 7/18/2005


2,000
*

$
47,780Dale L. Medford


12/1/2004


$
23.85


vested on 6/1/2005


7,500


$
178,8753/1/2004


$
28.20


vested on 6/1/2005


7,200


$
203,0408/16/2004


$
23.89


vested on 6/1/2005


6,000
*

$
143,340Michael J. Berry


12/1/2004


$
23.85


cancelled on 8/20/05


6,000


$
143,1003/1/2004


$
28.20


cancelled on 8/20/05


5,000


$
141,0008/16/2004


$
23.89


vested on 7/18/2005


6,000
*

$
143,340   *
    
    Mr. Ventura, Ms. Mulcahey, Mr. Medford and
    Mr. Berry were granted time-based shares for retention
    purposes.  The number and market value (based on the closing market price
    of the Companys common stock on September 30, 2005,
    $27.41), respectively, of unvested restricted stock holdings
    (including performance-based awards) held by
    Mr. ONeill, Mr. Geswein, Mr. Ventura,
    Mr. Eisenfelder and Ms. Mulcahey at September 30, 2005
    is: Mr. ONeill  70,000, $1,918,700;
    Mr. Geswein  25,000, $685,250;
    Mr. Ventura  23,000, $630,430;
    Mr. Eisenfelder  10,000, $274,100; and
    Ms. Mulcahey  15,080, $413,343. On
    December 1, 2005, restricted stock awarded to executive
    officers were: Mr. ONeill  70,000;
    Mr. Geswein  25,000;
    Mr. Ventura  15,000;
    Mr. Eisenfelder  17,500; and
    Ms. Mulcahey  15,000.  (5)
    
    Annual stock option grants were discontinued in 2003. However,
    options were granted at time of employment for
    Mr. ONeill on January 18, 2005;
    Mr. Eisenfelder on April 11, 2005 and Mr. Geswein
    on August 23, 2005. 48




---



##### Table of Contents



(6)
    
    Amounts disclosed in this column include Company matching
    contributions to the Defined Contribution Plan. Mr. Medford
    has a Deferred Compensation Agreement whereby income was
    deferred for four years in order to provide individual
    retirement benefits at age 65 of up to $100,000 per
    year for a fixed term of 15 years. The deferral was
    completed as of September 30, 1989. Benefits payable are
    reduced for early retirement, and upon retirement, lump sum
    distributions are available at the participants
    discretion. The amount included in the table, $12,105,
    represents the above market interest earned on the funds
    deferred and was calculated assuming a
    15-year
    payment stream at age 65. Imputed interest on Split Dollar
    life Insurance, which was shown in previous years, is not
    included because the Company ceased paying split-dollar premiums
    in October 2001 and these policies were terminated with respect
    to actively employed associates in December of 2003. Prior to
    its termination, each participant paid the term equivalent
    premium on the split dollar policy and the Company paid the
    remainder of the premium. At termination of the policy, all
    recoverable premium payments were reimbursed. All split-dollar
    contract obligations with active associates have been
    discharged, and substantially all premium payments recovered. In
    a few cases, the accumulated cash value of the policies was not
    sufficient to reimburse some or all of the premium payments. In
    those instances, the Company waived its right to reimbursement.
    Most of the split dollar contracts with former employees also
    have been terminated. A few split dollar policies remain for
    former employees. The Company anticipates full recovery of
    premiums paid by it with respect to those few remaining
    contracts.(7)
    
    Mr. Odeen was appointed Chairman and Acting Chief Executive
    Officer of the Company upon the resignation of Lloyd Waterhouse
    on July 7, 2004. Mr. Odeen resigned as Acting CEO upon the
    appointment of Finbarr ONeill on January 21, 2005 but
    remains as Chairman.  OPTIONS
    GRANTED IN LAST FISCAL YEAR
  Individual Grants(1)% of Total








Potential RealizableOptions








Value at AssumedGranted to








Annual Rates of StockNumber of


Employees in


Exercise or





Price Appreciation forOptions


Fiscal Year


Base Price


Expiration


Option Term(3)Name

Granted(2)


(%)


($/Share)(2)


Date


5% ($)


10% ($)Philip A. Odeen


0



















Finbarr J. ONeill


300,000



54.9



26.18



1/18/12



3,197,637



7,451,224Greg Geswein


150,000



27.5



28.48



8/23/12



1,739,133



4,052,919Douglas M. Ventura


0















Scot Eisenfelder


50,000



9.2



26.73



4/11/12



544,090



1,267,960Terri Mulcahey


0



















Dale L. Medford


0



















Michael J. Berry


0



















     (1)
    
    No Stock Appreciation Rights (SARs) were awarded in the 2005
    fiscal year and to date, no SARs were awarded in this current
    fiscal year.(2)
    
    No annual grants under the Companys stock option plan were
    made.(3)
    
    Assumed annual appreciation rates are set by the SEC and are not
    a forecast of future appreciation. 49




---



##### Table of Contents



AGGREGATED
    OPTION EXERCISES IN LAST FISCAL YEAR
    AND FISCAL YEAR-END OPTION VALUES
  Value of UnexercisedNumber of Unexercised


In-the-MoneyOptions at FY-End


Options at FY-EndShares





Exercisable/


Exercisable/Acquired on


Realized


Unexercisable


Unexercisable(1)Name

Exercise (#)


Value ($)


(#)


($)Philip A. Odeen


0



0



26,928/34,529



146,090/129,981Finbarr J. ONeill


0



0



0/300,000



0/369,000Greg Geswein


0



0



0/150,000



0/0Douglas M. Ventura


33,459



379,484



112,212/34,166



608,665/166,080Scot Eisenfelder


0



0



0/50,000



0/34,000Terri Mulcahey


0



0



12,228/16,833



37,327/33,215Dale L. Medford


0



0



307,616/0



1,692,988/0Michael J. Berry


33,334



103,475



0/0



0/0     (1)
    
    Based on the difference between the exercise price and closing
    price on September 30, 2005.  PENSION
    PLAN TABLE(1)
    Years of Service(2)Remuneration

10


15


20


25


30$  300,000

$
45,000


$
67,500


$
90,000


$
112,500


$
135,000400,000


60,000



90,000



120,000



150,000



180,000500,000


75,000



112,500



150,000



187,500



225,000600,000


90,000



135,000



180,000



225,000



270,000700,000


105,000



157,500



210,000



262,500



315,000800,000


120,000



180,000



240,000



300,000



360,000900,000


135,000



202,500



270,000



337,500



405,0001,000,000


150,000



225,000



300,000



375,000



450,0001,100,000


165,000



247,500



330,000



412,500



495,0001,200,000


180,000



270,000



360,000



450,000



540,0001,300,000


195,000



292,500



390,000



487,500



585,0001,400,000


210,000



315,000



420,000



525,000



630,0001,500,000


225,000



337,500



450,000



562,500



675,0001,600,000


240,000



360,000



480,000



600,000



720,0001,700,000


255,000



382,500



510,000



637,500



765,0001,800,000


270,000



405,000



540,000



675,000



810,0001,900,000


285,000



427,500



570,000



712,500



855,0002,000,000


300,000



450,000



600,000



750,000



900,0002,100,000


315,000



472,500



630,000



787,500



945,0002,200,000


330,000



495,000



660,000



825,000



990,000     (1)
    
    Any full or part time associate who is a member of an eligible
    group (as defined by the plan) who is a participant in the
    qualified pension plan and the non-qualified Supplemental
    Retirement Plan (Supplemental Plan), receives, upon
    retirement at age 65, a benefit payable in the form of a
    single-life annuity equal to (i) 0.85% of final average
    pay, and (ii) 0.25% of that part of final average pay which
    exceeds covered compensation, multiplied by the lesser of 30 or
    the participants number of years of participation as of
    the date of determination. The Supplemental Plan provides that
    part of the benefit which cannot be provided by the qualified
    pension plan by virtue of the limits imposed by
    Sections 401(a)(17) and 415 of the Internal Revenue Code of
    1986, as amended (the Code). Otherwise eligible
    employees born on or before January 1, 1966 who were
    actively employed and plan participants on 50




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##### Table of Contents



December 31, 2002, are entitled to benefits determined
    under an older formula, if that formula produces a greater
    benefit. The old formula provides a benefit payable as a
    single-life annuity beginning at age 65 equal to
    (i) and multiplied by (ii). For this purpose (i) is
    the excess (if any) of: (A) 1.5% of the participants
    final average pay, over (B) 1.67% of the participants
    projected Social Security retirement benefit, multiplied by the
    lesser of 30 or the years of participation
    he/she would
    have had if
    he/she had
    remained in our employment until age 65; and (ii) is
    (A) for participants with at least 30 years of
    qualifying service, one, and (B) for participants with less
    than 30 years of qualifying service, a fraction, not to
    exceed one, the numerator of which is the participants
    actual number of years of participation (including fractional
    years) as of the date of determination and the denominator of
    which is the total number of years of participation (also
    including fractional years) he would have had if he had remained
    in our employment until age 65. The preceding table is
    based on the old formula, which generally produces a higher
    benefit for those who qualify. The amounts are slightly
    overstated, as they are unreduced for the Social Security offset.    (2)
    
    Respective years of service for purposes of the qualified plan
    as of September 30, 2005, for the persons named in the
    Summary Compensation Table are:
    Mr. Odeen  0;
    Mr. ONeill  0;
    Mr. Medford  31;
    Mr. Ventura  8;
    Mr. Berry  2 ;
    Mr. Eisenfelder  0; Ms.
    Mulcahey  18 ;
    Mr. Geswein  0.    Employment
    and Change in Control Severance Agreements
         51




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##### Table of Contents




    A lump sum severance payment equal to two times the sum of the
    executives base salary and the three year average bonus
    actually paid prior to the change in control; (however, if a
    change in control had occurred prior to December 15, 2005
    Mr. Venturas severance payment would have been 2.99
    times the sum of his base salary and three year average bonus);
    Continued medical coverage for 24 months;
    Credit of additional two years service and two years
    compensation with an assumed increase or 5% per year
    towards benefits under the Supplemental Retirement Plan
    (described under Pension Plan Table above); and
    Up to $20,000 of outplacement services.         52




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##### Table of Contents



Comparative
    Stock Price Performance Graph
        Stock
    Performance Graph
  Fiscal
    Years 2000 Through 2005
  
  9-30-00


9-30-01


9-30-02


9-30-03


9-30-04


9-30-05Reynolds and



100




120




117




146




133




150S&P Midcap



100




81




77




98




115




141Composite Peer



100




92




82




90




97




104    53




---



##### Table of Contents



Report of
    the Compensation Committee of the Board of Directors on
    Executive Compensation
  Committee.
    Compensation
    Policy and Objectives.
      Base
    Salary.
  th
  Annual
    Incentives.
  General.
  The Annual Component.
 54




---



##### Table of Contents



Annual Personal Performance Bonus.
  Long-term
    Incentives
  General.
  Stock Options.
  Restricted Stock. th
 55




---



##### Table of Contents



th th
  Stock Ownership Guidelines.
  Chief
    Executive Officer Compensation.
    Tax
    Deductibility of Executive Compensation.
    Summary.
    
  
  Compensation
    Committee Interlocks and Insider Participation
   56




---



##### Table of Contents



Compensation
    of Directors
  his/her
  his/her
 57




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##### Table of Contents



ITEM 12.
    Security
    Ownership of Certain Beneficial Owners and
    Management    % of TotalClass A


% of


Class B


% of


Total Voting


VotingShares(1)


Class A


Shares(1)


Class B


Shares


SharesRichard H. Grant, III


224,161
(2)


*



13,500,000



100.0



13,724,161
(2)


17.9Director of The Reynolds and
    Reynolds Company and Private Investor
    One Reynolds Way
    Dayton, OH 45430Franklin Templeton Investments


3,702,953



5.9











3,702,953



4.8One Franklin Parkway
    San Mateo, CA
    94403-190Wellington Management


4,110,850



6.5











4,110,850



5.4Company, LLP
    75 State Street
    Boston, MA 02109ValueAct Capital Partners (VA
    Partners, LLC)


6,902,086



10.9











6,902,086



9.0435 Pacific Avenue
    4th Floor
    San Francisco, CA 94133Directors and Named Executive
    OfficersStephanie W. Bergeron


6,905
(3)


*











6,905
(3)


*Scot K. Eisenfelder


27,500
(4)


*











27,500
(4)


*Dr. David E. Fry


22,187
(5)


*











22,187
(5)


*Gregory T. Geswein


50,000
(6)


*











50,000
(6)


*Ira D. Hall


7,008
(7)


*











7,008
(7)


*Cleve L.
    Killingsworth, Jr.


20,123
(8)


*











20,123
(8)


*Eustace W. Mita


14,516
(9)


*











14,516
(9)


*Terri L. Mulcahey


56,364
(10)


*











56,364
(10)


*Philip A. Odeen


44,147
(11)


*











44,147
(11)


*Finbarr J. ONeill


240,000
(12)


*











240,000
(12)


*Douglas M. Ventura


196,861
(13)


*











196,861
(13)


*Renato Zambonini


2,843



*











2,843



*Dale L. Medford(14)


102,273



*











102,273



*Michael J. Berry(15)


4,098



*











4,098



*Shares beneficially owned by all of
    our executive officers and directors as a group (15 persons)
    were:


1,018,986



1.6



13,500,000



100.0



14,518,986



18.9     *
    
    Represents beneficial ownership of less than 1%.(1)
    
    Beneficial ownership is determined in accordance with the rules
    of the SEC. In computing the number of shares beneficially owned
    by a person and the percentage ownership of that person, shares
    of common stock subject to options or warrants held by that
    person that are currently exercisable or exercisable within
    60 days of March 30, 2006 are deemed outstanding. Such
    shares, however, are not deemed outstanding for the purposes of
    computing the percentage ownership of each other person. Unless
    otherwise indicated, voting and investment power relating to the
    above shares is exercised solely by the beneficial owner or
    shared by the owner and the owners spouse or children.(2)
    
    The total includes 15,103 Class A Shares as to which
    Mr. Grant holds options exercisable within 60 days.
    The total also includes 1,181 Class A Shares of Restricted
    Stock in which voting power of such shares were granted to a
    company nominee pursuant to a proxy. Mr. Grant has sole
    voting and investment power with 58




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##### Table of Contents



regard to 11,410 Class A Shares held in his own name.
    Mr. Grant may be deemed to beneficially own 109,018
    Class A Shares owned by a family limited partnership, of
    which Mr. Grant is a director and 50% shareholder of the
    corporation which serves as the general partner to the family
    limited partnership. As a director and shareholder of the
    corporate general partner, Mr. Grant has shared voting and
    dispositive power over the shares owned by the family limited
    partnership. With respect to the 109,018 Class A Shares
    owned by the family limited partnership, Mr. Grant
    disclaims beneficial ownership because Mr. Grant does not
    have a pecuniary interest with respect to these shares.
    Additionally, the total amount excludes 12,776 Class A
    Shares held by Mrs. Grant and 88,630 shares held in
    two trusts as to which Mr. Grant disclaims beneficial
    ownership. The total amount also does not include 675,000
    Class A Shares into which Mr. Grants 13,500,000
    Class B Shares are convertible at a
    20-to-1
    ratio.(3)
    
    The 6,905 shares include 2,044 Class A Shares as to
    which Ms. Bergeron holds options exercisable within
    60 days. The total also includes 1,181 Class A Shares
    of Restricted Stock in which voting power of such shares were
    granted to a company nominee pursuant to a proxy.(4)
    
    The 27,500 represents Class A Shares of Restricted Stock in
    which voting power of such shares were granted to a company
    nominee pursuant to a proxy.(5)
    
    The 22,187 shares include 15,103 Class A Shares as to
    which Dr. Fry holds options exercisable within
    60 days. The total also includes 1,181 Class A Shares
    of Restricted Stock in which voting power of such shares were
    granted to a company nominee pursuant to a proxy.(6)
    
    The 50,000 represents Class A Shares of Restricted Stock in
    which voting power of such shares were granted to a company
    nominee pursuant to a proxy.(7)
    
    The 7,008 shares include 2,044 Class A Shares as to
    which Mr. Hall holds options exercisable within
    60 days. The total also includes 1,181 Class A Shares
    of Restricted Stock in which voting power of such shares were
    granted to a company nominee pursuant to a proxy.(8)
    
    The 20,123 shares include 13,550 Class A Shares as to
    which Mr. Killingsworth, Jr. holds options exercisable
    within 60 days. The total also includes 1,181 Class A
    Shares of Restricted Stock in which voting power of such shares
    were granted to a company nominee pursuant to a proxy.(9)
    
    The 14,516 shares include 4,105 Class A Shares as to
    which Mr. Mita holds options exercisable within
    60 days. The total also includes 1,181 Class A Shares
    of Restricted Stock in which voting power of such shares were
    granted to a company nominee pursuant to a proxy.(10)
    
    The 56,364 shares include 24,061 Class A Shares as to
    which Ms. Mulcahey holds options exercisable within
    60 days. The total also includes 30,080 Class A Shares
    of Restricted Stock in which voting power of such shares were
    granted to a company nominee pursuant to a proxy.(11)
    
    The 44,147 shares include 28,124 Class A Shares as to
    which Mr. Odeen holds options exercisable within
    60 days. The total also includes 4,913 Class A Shares
    of Restricted Stock in which voting power of such shares were
    granted to a company nominee pursuant to a proxy.(12)
    
    The 240,000 shares include 100,000 Class A Shares as
    to which Mr. ONeill holds options exercisable within
    60 days. The total also includes 140,000 Class A
    Shares of Restricted Stock in which voting power of such shares
    were granted to a company nominee pursuant to a proxy. The total
    amount does not include 577,290 Class A Shares of
    Restricted Stock in which voting power of such shares were
    granted to Mr. ONeill by certain employees pursuant
    to a proxy as of March 31, 2006.(13)
    
    The 196,861 shares include 146,378 Class A Shares as
    to which Mr. Ventura holds options exercisable within
    60 days. The total also includes 38,000 Class A Shares
    of Restricted Stock in which voting power of such shares were
    granted to a company nominee pursuant to a proxy. The total
    amount does not include 584,487 Class A Shares of
    Restricted Stock in which voting power of such shares were
    granted to Mr. Ventura by certain employees pursuant to a
    proxy as of March 31, 2006.(14)
    
    Mr. Medford resigned all positions he held with the Company
    effective June 1, 2005. Information in the table is based
    solely upon the last Form 4 filed by Mr. Medford with the
    SEC on June 1, 2005.(15)
    
    Mr. Berry resigned all positions held with the Company
    effective August 20, 2005. Information in the table is
    based solely upon the last Form 4 filed by Mr. Berry
    with the SEC on August 22, 2005. 59




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##### Table of Contents



Equity
    Compensation Plan Information
    (In thousands except per share data)
    Number of SecuritiesNumber of Securities

Weighted-Average

Remaining Available forto be Issued Upon

Exercise Price of

Future Issuance Under EquityExercise of Outstanding

Outstanding

Compensation PlansOptions, Warrants

Options, Warrants

(Excluding SecuritiesPlan Category

and Rights (a)

and Rights (b)

Reflected in Column
    (a))Equity compensation plans approved
    by shareholders


4,164


$
23.29



2,994
(1)Equity compensation plans not
    approved by shareholders


2,571


$
21.03Total


6,735


$
22.43



2,994     (1)
    
    The total number of Class A Common Shares
    (Shares) authorized for issuance under the
    Companys 2004 Executive Stock Incentive Plan and the 2004
    REYShare Plus Plan (which were approved by the Companys
    shareholders) is 3,300 and 1,100 Shares, respectively. See
    Note 9 to the Consolidated Financial Statements for
    additional information regarding the Companys equity
    compensation plans.    2001 Shares Plan
       60




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##### Table of Contents



1996 Shares Plan
    ITEM 13.
    Certain
    Relationships and Related Transactions    ITEM 14.
    Principal
    Accountant Fees and Service    2004**


2005Audit Fees

$
476,810


$
1,652,720Audit-Related Fees

$
172,345


$
355,709Tax Fees

$
488,363


$
105,325Tax Fees  Other

$
986,750


$
22,315All Other Fees

$



$
Total

$
2,124,268


$
2,136,069     *
    
    Audit-Related Fees are expected to increase for fiscal year
    ended September 30, 2006 as a result of the additional
    services provided by Deloitte & Touche LLP in
    connection with the comment and review process conducted by the
    Staff of the Division of Corporation Finance of the SEC from
    March 2005 through March 2006 with regard to the Companys
    periodic reports.**
    
    The addition of the Tax Fees  Other
    category was not included in our 2004 proxy statement. At the
    request of Institutional Shareholders Services (ISS), the
    Company broke off a portion of its Tax Fees into the
    Tax Fees  Other category. A more
    detailed description of this additional category is set forth
    below.  Audit
    Fees
  Form 10-Q
  Audit-Related
    Fees
   61




---



##### Table of Contents



Tax
    Fees
    Tax
    Fees  Other
    All Other
    Fees
    Forms 10-Q
  Audit
    Committee Pre-approval Process for Audit and Permissible
    Non-audit Services
   PART IV
    (Dollars in thousands)  ITEM 15.
    Exhibits
    and Financial Statement Schedules  Financial Statements
           62




---



##### Table of Contents



Financial statement schedules for each of
    the three years in the period ended September 30, 2004 are
    attached hereto:
      Exhibits required by Item 601 of
    Regulation S-K.
  Exhibit No.

Item(3)(a)

Amended Articles of Incorporation,
    Restatement effective February 9, 1995; incorporated by
    reference to Exhibit A of the Companys definitive
    proxy statement dated January 5, 1995 filed with the SEC.(3)(b)

Amendment to Amended and Restated
    Articles of Incorporation, effective April 25, 1997;
    incorporated by reference to Exhibit 2 of the
    Companys Form 8A/A dated October 20, 1998 filed
    with the SEC.(3)(c)

Amendment to Amended and Restated
    Articles of Incorporation, effective April 18, 2001;
    incorporated by reference to Exhibit (3) (c) to
    Form 10-K
    for the fiscal year ended September 30, 2001.(3)(d)

Amended and Restated Consolidated
    Code of Regulations; incorporated by reference to Exhibit A
    to the Companys definitive proxy statement dated
    January 8, 2001 filed with the SEC.(4)(a)

Copies of the agreements relating
    to long-term debt, which are not required as exhibits to this
    Form 10-K,
    will be provided to the SEC upon request.(4)(b)

Amended and Restated Rights
    Agreement between The Reynolds and Reynolds Company and Wells
    Fargo Bank, N.A. as successor Rights Agent dated as of
    December 1, 2001; incorporated by reference to
    Exhibit (4) (b) to
    Form 10-K
    for the fiscal year ended September 30, 2001.(4)(c)

Appointment of Wells Fargo Bank,
    N.A. dated October 26, 2004 as successor Rights Agent to
    the Amended and Restated Rights Agreement dated December 1,
    2001; incorporated by reference to Exhibit (4) (c) to
    Form 10-K
    for the fiscal year ended September 30, 2004.(9)

Not applicable.(10)(a)*

Amended and Restated Employment
    Agreement with Lloyd G. Waterhouse, as of September 2,
    2003; incorporated by reference to Exhibit (10)(a) to
    Form 10-K
    for the fiscal year ended September 30, 2003.(10)(b)*

Agreement with Lloyd G.
    Waterhouse, Former Chief Executive Officer, Chairman and
    President, dated July 29, 2004; incorporated by reference
    to Exhibit 10.1 to the Companys
    Form 10-Q
    dated August 13, 2004 filed with the SEC.(10)(c)*

Employment Agreement with Dale L.
    Medford dated as of May 7, 2001; incorporated by reference
    to Exhibit (10)(d) to
    Form 10-K
    for the fiscal year ended September 30, 2001.(10)(d)

Separation Agreement with Dale L.
    Medford dated as of May 31, 2005; incorporated by reference
    to Exhibit 10.3 to the Companys
    Form 10-Q
    dated August 9, 2005 filed with the SEC.(10)(e)

Consultant Agreement with Dale L.
    Medford dated as of May 31, 2005; incorporated by reference
    to Exhibit 10.4 to the Companys
    Form 10-Q
    dated August 9, 2005 filed with the SEC.(10)(f)*

Employment Agreement with Douglas
    M. Ventura dated as of December 1, 2001; incorporated by
    reference to Exhibit (10)(f) to
    Form 10-K
    for the fiscal year ended September 30, 2001.(10)(g)

Employment Agreement with Finbarr
    J. ONeill dated as of December 31, 2004; incorporated
    by reference to Exhibit 10.1 to the Companys
    Form 10-Q
    dated February 9, 2005 filed with the SEC.(10)(h)

Employee Offer Letter/Agreement
    with Terri L. Mulcahey dated as of March 10, 2005;
    incorporated by reference to Exhibit 10.1 to the
    Companys
    Form 10-Q
    dated August 9, 2005 filed with the SEC.(10)(i)

Employee Offer Letter/Agreement
    with Scot K. Eisenfelder dated as of March 14, 2005;
    incorporated by reference to Exhibit 10.2 to the
    Companys
    Form 10-Q
    dated August 9, 2005 filed with the SEC.(10)(j)

Employee Offer Letter/Agreement
    with Gregory T. Geswein dated as of July 28, 2005.(10)(k)

Employee Offer Letter/Agreement
    with Robert S. Guttman dated as of July 18, 2005. 63




---



##### Table of Contents



Exhibit No.

Item(10)(l)

Employee Offer Letter/Agreement
    with Yen-Ping Shan dated as of October 27, 2005.(10)(m)*

Form of Retention Agreement,
    effective August 16, 2004, between the Company and each of
    Messrs. Medford, Ventura, Berry and eleven other officers;
    incorporated by reference to Exhibit (10)(g) to
    Form 10-K
    for the fiscal year ended September 30, 2004.(10)(n)*

Form of Change in Control
    Agreement, effective October 1, 2004, between the Company
    and each of Messrs. Medford, Ventura, Gapinski, Berry,
    ONeill, Geswein, Mulcahey, Eisenfelder, Shan and certain
    other officers; incorporated by reference to Exhibit 10.1
    to the Companys
    Form 8-K
    dated October 6, 2004 filed with the SEC.(10)(o)*

General form of Indemnification
    Agreement between the Company and each of its directors dated as
    of August, 6, 2002; incorporated by reference to
    Exhibit (10)(j) to
    form 10-K
    for the fiscal year ended September 30, 2002.(10)(p)*

Restated Stock Option
    Plan  1995, effective November 13, 2001;
    incorporated by reference to Exhibit (10)(k) to
    Form 10-K
    for the fiscal year ended September 30, 2001.(10)(q)*

1996 Shares Plan,
    adopted August 6, 1996; incorporated by reference to
    Exhibit 4(e) to
    Form S-8
    filed on August 13, 1999.(10)(r)*

Amended and Restated 2004
    Executive Stock Incentive Plan effective November 8, 2004;
    incorporated by reference to Exhibit (10)(m) to
    Form 10-K
    for the fiscal year ended September 30, 2004.(10)(s)

Forms of Stock Incentive
    Agreements to be issued by the Company to executive officers and
    other participants under the Amended and Restated 2004 Executive
    Stock Incentive Plan effective November 8, 2004 and its
    predecessor effective February 12, 2004; incorporated by
    reference to Exhibit (10)(n) to
    Form 10-K
    for the fiscal year ended September 30, 2004.(10)(t)

Forms of Stock Incentive
    Agreements to be issued by the Company to executive officers and
    other participants under the Amended and Restated 2004 Executive
    Stock Incentive Plan effective December 1, 2005;
    incorporated by reference to
    Exhibits 10.1-10.6
    of
    Form 8-K
    filed December 6, 2005 with the SEC.(10)(u)*

2001 Shares Plan,
    adopted August 7, 2001; incorporated by reference to
    Exhibit 4(g) to
    Form S-8
    filed on October 1, 2001.(10)(v)*

Description of The Reynolds and
    Reynolds Company Annual Incentive Compensation Plan adopted as
    of October 1, 1986; incorporated by reference to
    Exhibit (10)(t) to
    Form 10-K
    for the fiscal year ended September 30, 1987.(10)(w)*

Description of The Reynolds and
    Reynolds Company Amended and Restated Annual Incentive
    Compensation Plan effective October 1, 1995; incorporated
    by reference to Exhibit (10)(ff) to
    Form 10-K
    for the fiscal year ended September 30, 1995.(10)(x)*

The Reynolds and Reynolds Company
    Retirement Plan Revised and Restated effective October 1,
    1997; incorporated by reference to Exhibit (10)(bb) to
    Form 10-K
    for the fiscal year ended September 30, 2003.(10)(y)*

The Reynolds and Reynolds Company
    Supplemental Retirement Plan Restatement dated October 1,
    2002; incorporated by reference to Exhibit (10)(s) to
    Form 10-K
    for the fiscal year ended September 30, 2004.(10)(z)*

General Form of Deferred
    Compensation Agreement between the Company and each of the
    following officers: R. H. Grant, III, and Dale L.
    Medford;incorporated by reference to Exhibit (10)(p) to
    Form 10-K
    for the fiscal year ended September 30, 1983.(10)(aa)*

Resolution of the Board of
    Directors and General Form of Amendment dated December 1,
    1989 to the Deferred Compensation Agreements between the Company
    and Dale L. Medford; incorporated by reference to
    Exhibit (10)(fff) to
    Form 10-K
    for the fiscal year ended September 30, 1989.(10)(bb)*

Resolution of the Board of
    Directors and General Form of Amendment dated December 1,
    1989 to the Non-Qualified Compensation and Disability Benefit
    between the Company and each of the following officers: Michael
    J. Gapinski and Dale L. Medford; incorporated by reference to
    Exhibit (10)(hhh) to
    Form 10-K
    for the fiscal year ended September 30, 1989. 64




---



##### Table of Contents



Exhibit No.

Item(10)(cc)*

Amendment No. 3 to
    Loan Funding Agreement dated May 19, 2004 among Reyna
    Funding, L.L.C., Jupiter Securitization Corporation and Bank
    One, N.A.; incorporated by reference to Exhibit 10.2 to the
    Companys
    Form 10-Q
    dated August 13, 2004 filed with the SEC.(10)(dd)*

Credit Agreement dated
    April 4, 2004 among the Company, Reyna Capital Corporation,
    Credit Lyonnais New York Branch and JPMorgan Chase Bank;
    incorporated by reference to Exhibit 10.3 to the
    Companys
    Form 10-Q
    dated August 13, 2004 filed with the SEC.(10)(ee)

Agreement dated March 11,
    1963, between the Company and Richard H. Grant, Jr.,
    restricting transfer of Class B Common Stock of the
    Company; incorporated by reference to Exhibit 9 to
    Registration Statement
    No. 2-40237
    on
    Form S-7.(10)(ff)

Amendment dated February 14,
    1984 to Richard H. Grant, Jr.s Agreement restricting
    transfer of Class B Common Stock of the Company dated
    March 11, 1963; incorporated by reference to
    Exhibit (10)(u) to
    Form 10-K
    for the fiscal year ended September 30, 1984(11)

Not applicable(12)

Computation of Ratio of Earnings
    to Fixed Charges.(13)

Not applicable(18)

Not applicable(21)

List of subsidiaries(22)

Not applicable(23)

Consent of Independent Registered
    Public Accounting Firm(24)

Not Applicable(31.1)

Certification of Chief Executive
    Officer.(31.2)

Certification of Chief Financial
    Officer.(32.1)

Certification Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.(32.2)

Certification Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     *
    
    Contracts or compensatory plans or arrangements required to be
    filed as an exhibit to this form pursuant to Item 15(a)(3)
    of this report.    Consolidated Financial Statements
  Form 10-K
 65




---



##### Table of Contents



SIGNATURES
  Pursuant to the requirements of Section 13 or 15(d) 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.
     By:
    /s/  Gregory T. Geswein        Pursuant to the requirements of the Securities Exchange Act
    of 1934, this Report has been signed below by the following
    persons on behalf of the registrant and in the capacities and on
    the dates indicated.
   By:
    /s/  Finbarr J. ONeill         By:
    /s/  Gregory T. Geswein           By:
    /s/  Philip A. Odeen     By:
    /s/  Stephanie W. Bergeron     S-1




---



##### Table of Contents



By:
    /s/  Dr. David E. Fry     By:
    /s/  Richard H. Grant, III     By:
    /s/  Ira D. Hall     By:
    /s/  Cleve L. Killingsworth, Jr.       By:
    /s/  Eustace W. Mita     By:
    /s/  Renato Zambonini   S-2




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
            Internal
    Control  Integrated Framework
          F-1




---



##### Table of Contents



Statements
    of Consolidated Income
 (In thousands except per share data)
  2004


2003As Restated


As RestatedFor the Years Ended
    September 30

2005


See Note 2


See Note 2Net Sales and RevenuesProduct

$
633,709


$
659,809


$
673,547Services


308,843



290,618



298,166Financial services


26,528



31,814



36,532Total net sales and revenues


969,080



982,241



1,008,245Cost of salesProduct


287,842



227,268



234,104Services


209,945



203,955



205,898Financial services


7,035



7,264



8,843Total cost of sales


504,822



438,487



448,845Gross profit


464,258



543,754



559,400Selling, general and
    administrative expenses


418,902



399,776



383,762Operating Income


45,356



143,978



175,638Other Charges (Income)Interest expense


6,224



4,935



3,842Interest income


(3,724
)


(2,005
)


(2,705
)Other  net


(1,880
)


(3,673
)


(3,221
)Total other charges ( income)


620



(743
)


(2,084
)Income Before Income Taxes


44,736



144,721



177,722Income Taxes


20,432



54,074



69,375Equity in (income) of affiliated
    companies, net of income taxes


(8,983
)


(1,996
)


(1,453
)Net Income

$
33,287


$
92,643


$
109,800Earnings per Common ShareClass A commonBasic Earnings Per Class A
    Common ShareNet income

$
0.53


$
1.40


$
1.61Average number of common shares
    outstanding


62,711



65,320



67,610Diluted Earnings Per Class A
    Common ShareNet income

$
0.51


$
1.37


$
1.56Average number of common shares
    and equivalents outstanding


64,879



67,815



70,583Class B CommonBasic and Diluted Earnings Per
    Common ShareNet income

$
0.03


$
0.07


$
0.08Average number of common shares
    outstanding


13,918



14,399



15,929    F-2




---



##### Table of Contents



Consolidated Balance Sheets
    (In thousands)
  2004







2004As Restated







As RestatedSeptember 30

2005


See Note 2




2005


See Note 2ASSETS









LIABILITIESCurrent Assets









Current LiabilitiesCash and equivalents

$
133,403


$
80,673


Current portion of
    long-term debt

$
39,261


$
15,400Marketable Securities






37,020


Accounts payableTrade accounts receivable (less
    allowance for doubtful accounts: 2005  $5,071;
    2004  $6,404)


97,026



102,293


Trade


35,419



35,197Other accounts receivables


2,521



3,637


Other


6,005



6,960Net Finance Receivables


129,032



133,627


Accrued liabilitiesInventories









Compensation
    and related items


40,038



28,315Finished products


11,452



12,420


Income
    taxes


8,242



17,230Work in process


317



314


Other


46,188



29,321Raw materials and supplies


154



109


Deferred revenues


40,571



27,871Total inventories


11,923



12,843


Deferred income taxes






11,391Deferred income taxes


9,522






Total current
    liabilities


215,724



171,685Prepaid expenses and other assets


39,859



25,126


Long-Term
    Debt  Automotive Solutions


100,237



103,512Total current assets


423,286



395,219


Long-Term
    Debt  Financial Services


152,883



176,731Property, Plant and Equipment









Total Long-Term Debt


253,120



280,243Land and improvements


9,468



9,527


Deferred Income Taxes






23,029Buildings and improvements


97,903



89,397


Other LiabilitiesComputer equipment


122,006



125,597


Pensions


51,324



32,232Machinery and equipment


42,637



41,714


Postretirement medical


42,365



43,614Furniture and other


41,592



40,583


Other


9,077



6,137Construction in progress


523



7,994


Total other liabilities


102,766



81,983Total property, plant and equipment


314,129



314,812


Total Liabilities


571,610



556,940Less accumulated depreciation


138,974



136,332


Shareholders EquityNet property, plant and equipment


175,155



178,480


Capital StockIntangible Assets









PreferredGoodwill


43,996



48,366


Class A
    common  shares issued and outstanding: 62,012 in
    2005, 64,126 in 2004


390,019



345,914Software licensed to customers


4,966



83,757


Class B
    common  convertible to Class A common;
    shares issued and outstanding: 13,500 in 2005, 14,000 in 2004


422



438Acquired intangible assets


32,671



35,315


Accumulated Other Comprehensive
    Losses


(27,537
)


(13,739
)Other


6,677



7,490


Retained Earnings


21,582



137,204Total intangible assets


88,310



174,928


Total Shareholders Equity


384,486



469,817Net Finance Receivables


201,342



218,022Deferred Income Taxes


20,419Other Assets


47,584



60,108Total Assets

$
956,096


$
1,026,757


Total Liabilities and
    Shareholders Equity

$
956,096


$
1,026,757    F-3




---



##### Table of Contents



Statements
    of Consolidated Shareholders Equity and Comprehensive
    Income
 (In thousands except per share data)
  For the Years Ended
    September 30

2005


2004


2003Capital StockClass A commonBalance, beginning of year

$
345,914


$
299,310


$
246,052Capital stock issued


64,961



53,589



49,692Converted from Class B common


16



31



31Capital stock repurchased


(30,744
)


(22,363
)


(14,971
)Capital stock retired


(222
)


(664
)


(291
)Stock-based compensation


9,526



11,584



14,833Tax benefits from stock-based
    compensation


568



4,427



3,964Balance, end of year


390,019



345,914



299,310Class B commonBalance, beginning of year


438



469



500Converted to Class A common


(16
)


(31
)


(31
)Balance, end of year


422



438



469Accumulated Other Comprehensive
    Income (Losses)Balance, beginning of year


(13,739
)


(32,446
)


(14,234
)Foreign currency translation


2,666



1,599



3,757Minimum pension liability, net


(17,035
)


15,751



(23,002
)Net unrealized income on
    derivative contracts


571



1,357



1,033Balance, end of year


(27,537
)


(13,739
)


(32,446
)Retained EarningsBalance, beginning of year


137,204



207,578



240,702Net income


33,287



92,643



109,800Cash dividendsClass A common
    (2005  $.44 per share;2004  $.44 per
    share; 2003  $.44 per share)


(27,721
)


(28,647
)


(29,672
)Class B common
    (2005  $.022 per share;2004  $.022 per
    share; 2003  $.022 per share)


(305
)


(314
)


(352
)Capital stock repurchased


(120,883
)


(134,056
)


(112,900
)Balance, end of year


21,582



137,204



207,578Total Shareholders Equity

$
384,486


$
469,817


$
474,911Comprehensive Income (Losses)Net income

$
33,287


$
92,643


$
109,800Foreign currency translation


2,666



1,599



3,757Minimum pension liability, net of
    income tax provision (benefit) of $(10,298) in 2005 and $10,580
    in 2004 and ($15,072) in 2003


(17,035
)


15,751



(23,002
)Net unrealized income on
    derivative contracts, net of income tax provisions of $398 in
    2005, $915 in 2004 and $581 in 2003


571



1,357



1,033Total comprehensive income

$
19,489


$
111,350


$
91,588    F-4




---



##### Table of Contents



Statements
    of Consolidated Cash Flows
 (In thousands)
  2004


2003As Restated


As RestatedFor the Years Ended
    September 30

2005


See Note 2


See Note 2Cash Flows Provided by (Used for)
    Operating Activities:Net Income

$
33,287


$
92,643


$
109,800Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation and amortization


116,062



48,421



36,292Provision for doubtful accounts


7,717



11,225



9,184Stock-based compensation expense


9,645



11,639



14,833Deferred income taxes


(54,641
)


(16,283
)


24,618Net (gains) losses from sales of
    assets


(527
)


(2,636
)


289Changes in operating assets and
    liabilities:Accounts receivable


2,317



27,952



(28,283
)Finance receivables originated


(90,587
)


(106,594
)


(137,974
)Collections of finance receivables


119,552



156,471



137,354Inventories


920



(411
)


933Prepaid expenses and other assets


(10,543
)


(11,992
)


4,881Accounts payable


(3,039
)


(6,344
)


313Accrued and other liabilities


31,741



(9,999
)


(24,829
)Net cash provided by operating
    activities


161,904



194,092



147,411Cash Flows Provided by (Used for)
    Investing Activities:Business combinations


(1,800
)


(12,145
)


(11,714
)Capital expenditures


(29,028
)


(33,791
)


(57,818
)Net proceeds from sales of assets


8,209



16,053



9,570Capitalization of software
    licensed to customers










(16,270
)Marketable securities purchased


(35,000
)


(27,100
)


(107,700
)Marketable securities sold


72,020



19,180



134,500Finance receivables originated


(23,754
)


(23,692
)


(6,844
)Collections of finance receivables


12,413



13,393



15,568Net cash provided by (used for)
    investing activities


3,060



(48,102
)


(40,708
)Cash Flows Provided by (Used for)
    Financing Activities:Additional borrowings


27,000



12,550



0Principal payments on debt


(26,986
)


(24,462
)


(24,545
)Cash dividends paid


(28,026
)


(28,961
)


(30,024
)Capital stock issued


64,739



52,925



49,401Capital stock repurchased


(151,627
)


(156,419
)


(127,871
)Net cash used for financing
    activities


(114,900
)


(144,367
)


(133,039
)Effect of Exchange Rate Changes on
    Cash


2,666



1,599



3,757Increase (Decrease) in Cash and
    Equivalents


52,730



3,222



(22,579
)Cash and
    Equivalents  Beginning of Year


80,673



77,451



100,030Cash and
    Equivalents  End of Year

$
133,403


$
80,673


$
77,451Non-Cash Capital Expenditures
    Included in Accounts Payable

$
2,306    F-5




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars and shares in thousands, except for per share
    data)
  1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Consolidation
    Use of
    Estimates
    Cash
    and Equivalents
    Fair
    Value of Financial Instruments
    Concentrations
    of Credit Risk
    Allowance
    for Doubtful Accounts
    Inventories
  last-in, first-in,
 F-6




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Property,
    Plant and Equipment
    YearsLand improvements


10Buildings and improvements


3  33Computer equipment


3  5Machinery and equipment


3  20Furniture and other


3  15     Software
    Licensed to Customers
    Long-Lived
    Assets
   F-7




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Equity
    Investments
      Revenue
    Recognition
  Automotive
    Solutions
  00-21,
        00-3,
 F-8




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Financial
    Services
    Deferred
    Costs
  set-up
  Lease
    Obligations
    Commitments
    Research
    and Development Costs
    Income
    Taxes
    Earnings
    Per Common Share
   F-9




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2005


2004


2003Allocation of Basic Net
    IncomeNet income

$
33,287


$
92,643


$
109,800Less: dividends paidClass A


27,721



28,647



29,672Class B


305



314



352Undistributed earnings

$
5,261


$
63,682


$
79,776Allocation of undistributed
    earnings to Class A shares:

$
5,203


$
62,988


$
78,847Allocation of undistributed
    earnings to Class B shares:

$
58


$
694


$
929   Class A


Class B


Class A


Class B


Class A


Class BDistributed earnings

$
27,721


$
305


$
28,647


$
314


$
29,672


$
352Undistributed earnings


5,203



58



62,988



694



78,847



929Totals

$
32,924


$
363


$
91,635


$
1,008


$
108,519


$
1,281Allocation of Diluted Net
    IncomeNumerator used for basic EPS

$
32,924


$
363


$
91,635


$
1,008


$
108,519


$
1,281Add back: earnings allocated to
    Class B shareholders


363







1,008







1,281Numerator used for diluted EPS

$
33,287


$
363


$
92,643


$
1,008


$
109,800


$
1,281Average Number of Common Shares
    and Equivalents OutstandingDenominator used for basic EPS


62,711



13,918



65,320



14,399



67,610



15,929Effect of employee stock options
    and restricted stock awards


1,472







1,775







2,177Shares issuable upon conversion of
    Class B shares


696







720







796Denominator used for diluted EPS


64,879



13,918



67,815



14,399



70,583



15,929     Stock-Based
    Employee Compensation
   F-10




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Reclassifications
    2.
    CORRECTION
    OF PRIOR PERIOD ERRORS  No. 00-21,
  Restatements
      Revisions
     F-11




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      As








As RestatedReported


Revisions


Restatements


and RevisedConsolidated Balance Sheet as
    of September 30, 2004AssetsCash and equivalents

$
117,693






$
(37,020
)

$
80,673Marketable securities


0







37,020



37,020Finance
    receivables  current


0


$
133,627







133,627Deferred income
    taxes  current


14,650



(14,650
)






0Prepaid expenses and other assets


25,039



87







25,126Computer equipment


125,230



367







125,597Furniture and other


40,541



42







40,583Less accumulated depreciation


(135,956
)


(376
)






(136,332
)Finance
    receivables  long-term


351,649



(133,627
)






218,022Deferred income
    taxes  long-term


0



0







0Other assets


79,688



(19,580
)






60,108LiabilitiesCurrent portion of long-term
    debt  Financial Services


0



15,400







15,400Accounts payable


41,313



844







42,157Accrued liabilities


70,161



4,705







74,866Deferred income
    taxes  current


0



11,391







11,391Long-term
    debt  Financial Services


192,131



(15,400
)






176,731Deferred income
    taxes  long-term


68,530



(45,501
)






23,029Other liabilities


11,686



(5,549
)






6,137   F-12




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  As








As RestatedReported


Revisions


Restatements


and RevisedStatement of Consolidated Cash
    FlowsFor the Year Ended
    September 30, 2004Cash flows provided by (used for)
    operating activities:Depreciation and amortization

$
48,393


$
28






$
48,421Provision for doubtful accounts


0



11,225







11,225Deferred income taxes


(15,365
)


(918
)






(16,283
)Accounts receivable


57,111



(29,159
)






27,952Finance receivables originated


0



(106,594
)






(106,594
)Collections of finance receivables


0



156,471







156,471Prepaid expenses and other assets


(12,190
)


198







(11,992
)Accounts payable


(6,541
)


197







(6,344
)Accrued and other liabilities


(9,118
)


(881
)






(9,999
)Changes in receivables, other
    assets and other liabilities


2,101



(2,101
)






0Cash flows provided by (used for)
    investing activities:Capital expenditures


(33,783
)


(8
)






(33,791
)Net proceeds on sales of assets


16,052



1







16,053Marketable securities purchased


0






$
(27,100
)


(27,100
)Marketable securities sold


0







19,180



19,180Finance receivables originated


(131,275
)


107,583







(23,692
)Collections of finance receivables


149,435



(136,042
)






13,393Cash and
    equivalents  beginning of period


106,551







(29,100
)


77,451Cash and
    equivalents  end of period


117,693







(37,020
)


80,673   F-13




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  As








As RestatedReported


Revisions


Restatements


and RevisedStatements of Consolidated Cash
    FlowsFor the Year Ended
    September 30, 2003Cash flows provided by (used for)
    operating activities:Depreciation and amortization

$
36,237


$
55






$
36,292Provision for doubtful accounts


0



9,184







9,184Deferred income taxes


25,197



(579
)






24,618Accounts receivable


(20,485
)


(7,798
)






(28,283
)Finance receivables originated


0



(137,974
)






(137,974
)Collections of finance receivables


0



137,354







137,354Prepaid expenses and other assets


4,599



282







4,881Accounts payable


475



(162
)






313Accrued and other liabilities


(26,132
)


1,303







(24,829
)Changes in receivables, other
    assets and other liabilities


4,936



(4,936
)






0Cash flows provided by (used for)
    investing activities:Capital expenditures


(57,810
)


(8
)






(57,818
)Marketable securities purchased


0






$
(107,700
)


(107,700
)Marketable securities sold


0







134,500



134,500Finance receivables originated


(145,043
)


138,199







(6,844
)Collections of finance receivables


150,488



(134,920
)






15,568Cash and
    equivalents  beginning of period


155,930







(55,900
)


100,030Cash and
    equivalents  end of period


106,551







(29,100
)


77,451   3.
    REYNOLDS
    GENERATIONS
    SERIES©
    SUITE    4.
    REORGANIZATION
    COSTS   F-14




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        SoftwareSolutions


Documents


TotalCost of SalesEmployee termination benefits

$
29


$
817


$
846Other direct expenses






786



786Total cost of sales


29



1,603



1,632SG&A ExpensesEmployee termination benefits


2,878



1,070



3,948Lease obligations


623



9



632Other direct expenses


312



530



842Total SG&A expenses


3,813



1,609



5,422Total Reorganization Expenses


3,842



3,212



7,054Payments


(3,387
)


(3,088
)


(6,475
)Balance as of September 30,
    2004


455



124



579Payments


(382
)


(124
)


(506
)Balance as of September 30,
    2005

$
73


$
0


$
73     5.
    BUSINESS
    COMBINATIONS     F-15




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Components
    of Purchase Prices
  2005


2004


2003Cash (net of cash and equivalents
    acquired)





$
11,645


$
11,714Contingent cash payments

$
1,800



500Totals

$
1,800


$
12,145


$
11,714   6.
    GOODWILL
    AND ACQUIRED INTANGIBLE ASSETS  Goodwill
  SoftwareSolutions


Documents


TotalsBalance as of September 30,
    2003

$
38,851


$
2,877


$
41,728Business combinations


9,273







9,273Divestiture


(50
)






(50
)Adjustment


(2,585
)






(2,585
)Balance as of September 30,
    2004


45,489



2,877



48,366Business Combinations


1,800







1,800Divestiture


(46
)






(46
)Impairment


(6,075
)






(6,075
)Translation


(49
)






(49
)Balance as of September 30,
    2005

$
41,119


$
2,877


$
43,996      F-16




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Acquired
    Intangible Assets
  WeightedGross


Accumulated


AverageAmount


Amortization


Life (Years)As of September 30,
    2005Contractual customer relationship

$
33,100


$
8,965



20Trademarks


6,251



1,715



19Other


5,747



1,747



11Total

$
45,098


$
12,427



19As of September 30,
    2004Contractual customer relationship

$
33,100


$
7,310



20Trademarks


6,263



1,364



19Other


7,006



2,380



10Total

$
46,369


$
11,054



18     7.
    INCOME
    TAXES  Income
    (Loss) Before Income Taxes
  2005


2004


2003Domestic

$
53,876


$
145,025


$
171,723Foreign


(9,140
)


(304
)


5,999Total

$
44,736


$
144,721


$
177,722   Provision
    for Income Taxes
  2005


2004


2003CurrentFederal

$
63,220


$
58,114


$
33,874State and local


5,494



10,722



8,994Foreign


6,565



2,086



3,103Deferred


(54,847
)


(16,848
)


23,404Provision for income taxes

$
20,432


$
54,074


$
69,375Income taxes paid (net of refunds)

$
78,500


$
63,700


$
54,000  F-17




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Reconciliation
    of Income Tax Rates
  2005


2004


2003Amount


Percent


Amount


Percent


Amount


PercentStatutory federal income taxes

$
15,658



35.0
%

$
50,652



35.0
%

$
62,203



35.0
%State and local taxes less federal
    income tax effect


656



1.5



3,289



2.3



7,271



4.1Rate
    differential  foreign subsidiaries


2,591



5.8



1,351



0.9



328



0.2Goodwill impairment


2,142



4.8Deferred income tax valuation
    allowance


1,616



3.6



(42
)






(7
)Audit settlement


(1,162
)


(2.6
)Other


(1,069
)


(2.4
)


(1,176
)


(0.8
)


(420
)


(0.2
)Provision for income taxes

$
20,432



45.7
%

$
54,074



37.4
%

$
69,375



39.0
%   Deferred
    Income Tax Assets (Liabilities)
  September 30

2005


2004Pensions

$
19,974


$
10,170Postretirement medical


16,861



18,298Stock-based compensation


13,534



17,127Receivables allowances


8,154



7,425Suite future support and
    mitigation costs


6,212NOL carryforward


4,944



2,843Non deductible state provision


3,410



4,096Severance


2,141



603Depreciation and amortization


514



(28,707
)Other assets


2,069



2,953Prepaid expenses


(875
)


(582
)Deferred income tax valuation
    allowance


(2,169
)


(522
)Deferred revenue


(2,413
)


406Financial Services


(42,415
)


(68,530
)Totals


29,941



(34,420
)Current


9,522



(11,391
)Noncurrent

$
20,419


$
(23,029
)   8.
    FINANCIAL
    SERVICES   F-18




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Income
    Summary
  2005


2004


2003Revenues

$
26,528


$
31,814


$
36,532Cost of
    sales  interest expense


7,035



7,264



8,843Gross profit


19,493



24,550



27,689Selling, general and
    administrative expenses


6,942



6,551



7,150Operating income

$
12,551


$
17,999


$
20,539   Net
    Finance Receivables
  September 30




2005


2004Product financing receivables





$
354,005


$
372,648Unguaranteed residual values






21,514



29,687Allowance for doubtful accounts






(6,340
)


(6,701
)Unearned interest income






(41,613
)


(47,064
)Other






2,808



3,079Totals





$
330,374


$
351,649Current






129,032



133,627Noncurrent





$
201,342


$
218,022     Allowance
    for Doubtful Accounts
  2005


2004Balance, beginning of year

$
6,701


$
6,705ProvisionsFinancial services


3,651



3,064Automotive solutions


270



540Net losses


(4,282
)


(3,608
)Balance, end of year

$
6,340


$
6,701   9.
    FINANCING
    ARRANGEMENTS  Automotive
    Solutions
    F-19




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NotionalAmountsNotes


SwapsSeptember 30, 2005Fixed rate notes, $100,000 face
    value, maturing in 2007

$
100,237


$
100,000Weighted average interest rate


7.0
%Weighted average pay rate






5.0
%Weighted average receive rate






7.0
%Totals


100,237



100,000Current portionLong-term portion

$
100,237


$
100,000September 30, 2004Fixed rate notes, $100,000 face
    value, maturing in 2007

$
103,512


$
100,000Weighted average interest rate


7.0
%Weighted average pay rate






3.6
%Weighted average receive rate






7.0
%Totals


103,512



100,000Current portionLong-term portion

$
103,512


$
100,000       Form 10-K Form 10-Q Form 10-K,
  Financial
    Services
   F-20




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        NotionalAmountsNotes


SwapsSeptember 30, 2005Variable rate instruments,
    maturing through 2009

$
177,000


$
127,000Weighted average interest rate


3.9
%Weighted average pay rate






3.5
%Weighted average receive rate






3.7
%Fixed rate notes, maturing through
    2007


15,144Weighted average interest rate


3.9
%Totals


192,144


$
127,000Current portion


39,261Long-term portion

$
152,883September 30, 2004Variable rate instruments,
    maturing through 2009

$
165,125


$
103,125Weighted average interest rate


2.0
%Weighted average pay rate






3.1
%Weighted average receive rate






1.7
%Fixed rate notes, maturing through
    2007


27,006Weighted average interest rate


4.2
%Totals


192,131


$
103,125Current portion


15,400Long-term portion

$
176,731  F-21




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Revolving
    Credit Agreement
     F-22




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   10.
    CAPITAL
    STOCK  September 30

2005


2004


2003PreferredNo par valueAuthorized shares


60,000



60,000



60,000Class A commonNo par valueAuthorized shares


240,000



240,000



240,000Issued and outstanding sharesBalance, beginning of year


64,126



66,658



68,595Issued


3,630



3,234



2,761Restricted stock canceled and
    returned


(190
)


(73
)Converted from Class B common


25



50



50Repurchased


(5,571
)


(5,720
)


(4,737
)Retired


(8
)


(23
)


(11
)Balance, end of year


62,012



64,126



66,658Class B commonNo par valueAuthorized shares


40,000



40,000



40,000Issued and outstanding sharesBalance, beginning of year


14,000



15,000



16,000Converted to Class A common


(500
)


(1,000
)


(1,000
)Balance, end of year


13,500



14,000



15,000        F-23




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   11.
    EMPLOYEE
    STOCK PLANS  and/or
    Stock
    Option Plans
  Weighted AverageShares Under Option


Option Prices per
    Share2005


2004


2003


2005


2004


2003OutstandingBeginning of year


9,358



12,147



13,075


$
21.70


$
20.94


$
20.02Granted


553



527



2,480


$
26.99


$
27.10


$
22.60Exercised


(3,087
)


(2,783
)


(2,751
)

$
21.04


$
19.26


$
18.06Canceled


(394
)


(533
)


(657
)

$
24.77


$
22.26


$
21.11End of year


6,430



9,358



12,147


$
22.28


$
21.70


$
20.94Exercisable at September 30


5,222



5,905



6,287


$
21.57


$
20.79


$
19.85   Outstanding,  September 30,
    2005


Exercisable, September 30,
    2005Weighted


Weighted





WeightedAverage


Average





AverageOption

Number of


Remaining


Option


Number of


OptionPrice Range

Options


Life in Years


Price


Options


Price$17.00 - $19.50


1,622



4.0


$
18.22



1,622


$
18.22$19.60 - $22.53


1,968



4.3


$
21.75



1,809


$
21.69$22.56 - $26.18


1,619



4.4


$
23.29



986


$
22.62$26.25 - $30.27


1,221



3.2


$
27.17



805


$
26.75Totals


6,430



4.0


$
22.28



5,222


$
21.57   Option
    Valuation Assumptions
  2005


2004


2003Expected life in years


3.6



3.0



3.0Dividend yield


1.7
%


1.8
%


1.9
%Risk free interest rate


3.7
%


2.0
%


2.1
%Volatility


24
%


24
%


31
%Weighted average fair value

$
5.37


$
4.22


$
4.52  F-24




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Restricted
    Stock Awards
  Weighted AverageShares or Units


Fair Value2005


2004


2005


2004Outstanding  Service
    Achievement AwardsBeginning of year


298






$
27.22Restricted StockGranted


362



314


$
24.46


$
27.30Canceled


(85
)


(33
)

$
25.68


$
28.04Returned


(27
)


(1
)

$
24.59


$
28.04Released


(59
)


(1
)

$
24.59


$
28.04Restricted Stock UnitsGranted


21



20


$
24.51


$
27.41Canceled


(9
)


(1
)

$
26.06


$
28.04Balance, end of year


501



298


$
25.85


$
27.22Outstanding  Performance
    AwardsBeginning of year


94






$
28.09Restricted StockGranted


174



128


$
25.01


$
28.07Canceled


(78
)


(39
)

$
25.84


$
28.04Restricted Stock UnitsGranted


7



5


$
26.15


$
28.04Canceled


(4
)





$
28.04Balance, end of year


193



94


$
26.16


$
28.09       12.
    POSTRETIREMENT
    BENEFITS  Pension
    Expense
      F-25




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2005


2004


2003Net Periodic CostService cost

$
11,610


$
11,280


$
8,546Plan administration










880Interest cost


18,308



16,857



17,038Expected return on plan assets


(15,337
)


(12,730
)


(12,471
)Amortization of prior service cost


764



786



598Amortization of net actuarial loss


3,583



3,930



1,293Amortization of transition
    obligation






259



139Net periodic benefit cost


18,928



20,382



16,023Settlement


933Special termination benefits


1,460



130



120Defined Contribution Plan


5,934



5,642



5,249Miscellaneous including
    Multi-employer Plan


4



7



13Total

$
27,259


$
26,161


$
21,405Actuarial AssumptionsDiscount rate


6.25
%


6.0
%


6.5% - 7.25
%Rate of compensation increase


4.0% - 4.5
%


3.25% - 4.5
%


3.75% -4.5
%Expected return on plan assets


8.25
%


8.25
%


9.0
%Actuarial cost method






projected unit creditMeasurement period






July 1-June 30    F-26




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Funded
    Status of Defined Benefit Pension Plans
  Funded Pension


Unfunded PensionBenefits


Benefits


Total2005


2004


2005


2004


2005


2004Change in benefit obligationBenefit obligation, beginning of
    year

$
238,579


$
221,825


$
49,064


$
53,966


$
287,643


$
275,791Service cost


10,569



10,099



1,041



1,181



11,610



11,280Interest cost


15,316



13,675



2,992



3,182



18,308



16,857Actuarial loss (gain)


29,801



115



4,953



(4,978
)


34,754



(4,863
)Benefits paid


(8,150
)


(8,094
)


(8,284
)


(4,287
)


(16,434
)


(12,381
)Foreign currency translation


1,219



959











1,219



959Special termination benefits










1,460







1,460Settlement










(933
)






(933
)Benefit obligation, end of year

$
287,334


$
238,579


$
50,293


$
49,064


$
337,627


$
287,643Change in Plan AssetsFair value of plan assets,
    beginning of year

$
184,519


$
133,997










$
184,519


$
133,997Actual return on plan assets


15,574



22,699











15,574



22,699Employer contribution


20,701



36,684











20,701



36,684Benefits paid


(8,150
)


(8,094
)










(8,150
)


(8,094
)Plan administration






(1,279
)














(1,279
)Foreign currency translation


801



512











801



512Fair value of plan assets, end of
    year

$
213,445


$
184,519










$
213,445


$
184,519Net amount recognizedFair value of plan assets

$
213,445


$
184,519










$
213,445


$
184,519Benefit obligation


(287,334
)


(238,579
)

$
(50,293
)

$
(49,064
)


(337,627
)


(287,643
)Funded status


(73,889
)


(54,060
)


(50,293
)


(49,064
)


(124,182
)


(103,124
)Contributions or benefit payments
    made after measurement date


12,797



14,636



1,020



5,153



13,817



19,789Unrecognized net loss


89,926



63,234



8,687



5,819



98,613



69,053Unrecognized prior service cost


5,373



5,849



1,359



1,641



6,732



7,490Miscellaneous includingMulti-employer plan liability










(386
)


(31
)


(386
)


(31
)Minimum Pension Liability


(48,054
)


(24,461
)


(7,741
)


(4,655
)


(55,795
)


(29,116
)Net asset (liability) recognized

$
(13,847
)

$
5,198


$
(47,354
)

$
(41,137
)

$
(61,201
)

$
(35,939
)Minimum Pension LiabilityIntangible Asset

$
5,318


$
5,849


$
1,359


$
1,641


$
6,677


$
7,490Deferred Income Tax Benefit


16,396



7,310



2,449



1,170



18,845



8,480Accumulated Other Comprehensive
    Income


26,340



11,302



3,933



1,844



30,273



13,146Total

$
48,054


$
24,461


$
7,741


$
4,655


$
55,795


$
29,116   2005


2004Actuarial AssumptionsDiscount rate


5.35%



6.25%Rate of compensation increase


3.0%



4.0%  F-27




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Target


Asset Allocation atAllocation


Measurement DateAsset Allocation

2006


2005


2004Equity securities


80
%


80
%


78
%Debt securities


20
%


19
%


20
%Cash


0
%


1
%


2
%Total


100
%


100
%


100
%     Funded


Unfunded


Total2005


2004


2005


2004


2005


2004Plans with Projected Benefit
    Obligation Greater than the Fair Value of Plan AssetsProjected benefit obligation

$
287,334


$
238,579


$
50,293


$
49,064


$
337,627


$
287,643Accumulated benefit obligation

$
241,064


$
193,956


$
47,903


$
46,143


$
288,967


$
240,099Fair value of plan assets

$
213,445


$
184,519










$
213,445


$
184,519Plans with Accumulated Benefit
    Obligation Greater than the Fair Value of Plan AssetsProjected benefit obligation

$
269,074


$
238,579


$
50,293


$
49,064


$
319,367


$
287,643Accumulated benefit obligation

$
229,346


$
193,956


$
47,903


$
46,143


$
277,249


$
240,099Fair value of plan assets

$
201,278


$
184,519










$
201,278


$
184,519   Expected
    Cash Flows
  Funded Pension


Unfunded PensionBenefits


BenefitsEmployer Contributions2006 (expected) to plan trusts

$
1,5002006 (expected) to plan
    participants





$
10,000Expected Benefit Payments2006

$
8,300


$
10,0002007

$
8,500


$
5,0002008

$
8,900


$
5,0002009

$
9,300


$
5,0002010

$
9,800


$
5,0002011  2015

$
67,400


$
25,000  F-28




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Postretirement
    Medical and Life Insurance Expense
    2005


2004


2003Net Periodic CostService cost

$
447


$
664


$
481Interest cost


3,459



3,708



4,291Amortization of prior service
    benefit


(1,413
)


(742
)


(742
)Amortization of net actuarial loss


992



1,120



1,088Net periodic benefit cost

$
3,485


$
4,750


$
5,118Actuarial AssumptionsDiscount rate


6.25
%


6.0
%


7.25
%Healthcare cost trend rate through
    2006


10.0
%


10.0
%


6.0
%Healthcare cost trend rate
    thereafter


5.0
%


5.0
%


5.0
%   Postretirement
    Medical and Life Insurance Obligation
  2005


2004Change in benefit obligationBenefit obligation, beginning of
    year

$
64,025


$
63,762Service cost


447



664Interest cost


3,459



3,708Plan participants
    contributions


1,052



741Plan amendments


(10,730
)Actuarial loss (gain)


4,959



(1,190
)Benefits paid


(5,799
)


(3,680
)Foreign currency translation


22



20Benefit obligation, end of year

$
57,435


$
64,025Net amount recognizedFunded status

$
(57,435
)

$
(64,025
)Unrecognized net loss


27,043



22,175Unrecognized prior service benefit


(14,982
)


(5,664
)Net liability recognized

$
(45,374
)

$
(47,514
)   F-29




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2005


2004Actuarial AssumptionsDiscount rate


5.35%



6.25%Healthcare cost trend rate2005


10.0%



9.0%2006


9.0%



8.0%2007


8.0%



7.0%2008


7.0%



6.0%2009


6.0%



5.0%Thereafter


5.0%



5.0%       1-Percentage


1-PercentagePoint Increase


Point DecreaseEffect on postretirement benefit
    obligation

$
2,366


$
(2,262
)Effect on total service cost and
    interest cost


137



(120
)   Plans
    with Accumulated Benefit Obligation Greater than Plan
    Assets
    Expected
    Cash Flows
  Employer Contributions2006 (expected) to plan
    participants

$
5,800Expected Benefit Payments2006

$
5,8002007

$
6,4002008

$
7,0002009

$
7,6002010

$
8,1002011  2015

$
42,120   13.
    SEGMENT
    REPORTING   F-30




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Reporting
    Segments
  2005


2004


2003Net sales and revenuesSoftware solutionsProductsSoftware

$
411,445


$
436,798


$
425,633Hardware


60,569



56,757



73,675ServicesComputer services


201,512



199,060



209,399Transaction-based services


66,186



61,774



68,699Hosting services


38,485



27,914



17,676Rentals


2,660



1,870



2,392Total


780,857



784,173



797,474Documents


161,695



166,254



174,239Financial services


26,528



31,814



36,532Total net sales and revenues

$
969,080


$
982,241


$
1,008,245   F-31




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2005


2004


2003Operating incomeSoftware solutions

$
2,364


$
99,981


$
125,132Documents


30,441



25,998



29,967Financial services


12,551



17,999



20,539Total operating income

$
45,356


$
143,978


$
175,638AssetsAutomotive solutions

$
666,099


$
673,944


$
697,159Financial services


289,997



352,813



395,494Total assets

$
956,096


$
1,026,757


$
1,092,653Investments in equity method
    investees

$
5,624


$
7,325


$
5,376Capital expenditures


29,028



33,791



57,818Depreciation and amortization


116,062



48,421



36,292   Geographic
    Areas
    2005


2004


2003United StatesNet sales and revenues

$
891,659


$
911,992


$
943,769Long-lived assets

$
276,147


$
371,720


$
411,038CanadaNet sales and revenues

$
61,813


$
58,868


$
59,828Long-lived assets

$
3,428


$
4,118


$
4,763Other InternationalNet sales and revenues

$
22,906


$
18,517


$
13,051Long-lived assets

$
6,061


$
13,077


$
94Elimination of intersegment sales

$
(7,298
)

$
(7,136
)

$
(8,403
)TotalsNet sales and revenues

$
969,080


$
982,241


$
1,008,245Long-lived assets

$
285,636


$
388,915


$
415,895   14.
    CONTINGENCIES     F-32




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        15.
    ACCOUNTING
    STANDARDS     F-33




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   16.
    QUARTERLY
    FINANCIAL DATA (UNAUDITED)  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(1)(2)2005Net sales and revenues

$
239,322


$
250,615


$
246,525


$
232,618Gross profit

$
129,581


$
139,437


$
135,833


$
59,407Net income (loss)

$
21,354


$
22,570


$
23,796


$
(34,433
)Class A commonBasic earnings (loss) per common
    share

$
.33


$
.35


$
.38


$
(.55
)Diluted earnings (loss) per common
    share

$
.33


$
.34


$
.37


$
(.55
)Class B commonBasic and Diluted earnings (loss)
    per common share(3)

$
.02


$
.02


$
.02


$
(.03
)Cash dividends declared per shareClass A common

$
.11


$
.11


$
.11


$
.11Class B common

$
.0055


$
.0055


$
.0055


$
.0055Closing market prices of
    Class A common sharesHigh

$
26.51


$
28.28


$
27.59


$
29.00Low

$
23.20


$
25.36


$
26.20


$
26.742004Net sales and revenues

$
248,403


$
249,492


$
242,830


$
241,516Gross profit

$
138,587


$
140,957


$
134,350


$
129,860Net income

$
23,822


$
26,357


$
22,019


$
20,445Class A commonBasic earnings per common share

$
.35


$
.40


$
.34


$
.31Diluted earnings per common share

$
.34


$
.38


$
.33


$
.31Class B commonBasic and Diluted earnings per
    common share(3)

$
.02


$
.02


$
.02


$
.02Cash dividends declared per shareClass A common

$
.11


$
.11


$
.11


$
.11Class B common

$
.0055


$
.0055


$
.0055


$
.0055Closing market prices of
    Class A common sharesHigh

$
29.35


$
29.71


$
30.58


$
25.10Low

$
26.42


$
26.51


$
22.70


$
21.21     (1)
    On July 19, 2005, the Companys board of directors
    decided to stop marketing, selling and installing the Reynolds
    Generations Series Suite dealer management system for
    automobile dealers. As a result of this decision, the Company
    wrote-off capitalized software development costs of $66,558 and
    also recorded additional pre-tax expenses of $24,225 in the
    quarter ending September 30, 2005. See Note 3 to the
    Consolidated Financial Statements for additional disclosures
    regarding these adjustments.(2)
    As discussed in Note 2 to the Consolidated Financial
    Statements, the Company corrected errors that existed in prior
    periods during the quarter ended September 30, 2005. The
    correction of prior period errors reduced fourth quarter
    revenues by $12,382 and net income by $1,485 or $.02 per
    Class A common share. The Company determined that these
    prior period errors and the correction of such errors in the
    quarter ended September 30, 2005, are not material to the
    Companys consolidated financial statements for any period
    presented. See Note 2 to the Consolidated Financial
    Statements for additional disclosures regarding the correction
    of prior period errors.(3)
    In 2005, the Company restated prior financial statements to
    report basic and diluted earnings per share for all classes of
    common stock. Previously the Company had not reported earnings
    per Class B common share. There was no change to earnings
    per Class A common share. F-34




---



##### Table of Contents



Valuation
    Accounts
    For the Years Ended September 30, 2005, 2004, and
    2003
 (Dollars in thousands)
  Column A

Column B


Column C


Column D


Column EAdditions


DeductionsChargedBalance at


to Costs





Write-offs


BalanceBeginning


and


Other


Net of


at EndDescription

of Year


Expenses


(a)


Recoveries


of YearValuation
    Accounts  Deducted From Assets to Which They
    ApplyReserves for accounts receivable:Year ended September 30, 2005

$
6,404


$
3,506


$
(5
)

$
4,834


$
5,071Year ended September 30, 2004

$
5,253


$
7,485


$
9


$
6,343


$
6,404Year ended September 30, 2003

$
4,902


$
4,399


$
213


$
4,261


$
5,253Reserves for credit memos:Year ended September 30, 2005

$
11,109


$
25,702


$
(218
)

$
21,899


$
14,694Year ended September 30, 2004

$
11,691


$
25,514


$
71


$
26,167


$
11,109Year ended September 30, 2003

$
10,321


$
31,153


$
173


$
29,956


$
11,691Reserves for finance receivables:Year ended September 30, 2005

$
6,701


$
3,651


$
288


$
4,300


$
6,340Year ended September 30, 2004

$
6,705


$
3,064


$
557


$
3,625


$
6,701Year ended September 30, 2003

$
6,184


$
3,765


$
566


$
3,810


$
6,705Reserves for inventories
    Year ended September 30, 2005

$
633


$
1,082


$
7


$
898


$
824Year ended September 30, 2004

$
1,665


$
1,164


$
7


$
2,203


$
633Year ended September 30, 2003

$
1,320


$
1,222


$
19


$
896


$
1,665     (a)
    
    Includes adjustments from translation of foreign currency to
    United States dollars, the effects of acquisitions of businesses
    and transfers between reserves. F-35