The Aristotle Corporation (NASDAQ: ARTL; ARTLP) announced today
its results of operations for the third quarter and nine months
ended September 30, 2009.
Net earnings applicable to common stockholders for the first
nine months of 2009 were $8.3 million, or $.46 per diluted common
share, compared to $12.0 million, or $.67 per diluted common share,
for the comparable nine months of 2008. Pursuant to a final
settlement with the Internal Revenue Service of an audit previously
reported by the Company, the nine months ended September 30, 2009
includes additional Federal income taxes of $.5 million and $1.0
million for the 2006 and 2007 tax years, respectively, plus
approximately $.1 million of interest, related to a partial
disallowance of the Company’s historical Federal net operating tax
losses that were utilized. Such amounts reduced net income for the
nine months ended September 30, 2009 by approximately $.09 per
diluted common share. For the third quarter ended September 30,
2009, net earnings applicable to common stockholders were $4.8
million, or $.27 per diluted common share, compared to $4.7
million, or $.26 per diluted common share, in the third quarter of
2008. An adjustment to the initial IRS settlement reduced the
Federal tax expense by $.3 million and the related interest expense
by $.1 million, or approximately $.02 per diluted common share, in
the three and nine months ended September 30, 2009. No additional
taxes were due for any years prior to 2006.
In the nine months ended September 30, 2009, net sales decreased
7.8% to $158.9 million from $172.2 million in the nine months ended
September 30, 2008. Earnings from operations decreased by 11.5% in
the first nine months of 2009 to $26.8 million, or 16.9% of net
sales. In the first nine months of 2008, earnings from operations
totaled $30.3 million (including a $.7 million insurance recovery),
or 17.6% of net sales. In the third quarter of 2009, net sales
decreased 5.9% to $61.1 million from $65.0 million in the third
quarter of 2008. Earnings from operations decreased by 2.6% in the
third quarter of 2009 to $11.4 million, or 18.6% of net sales. In
the same quarter of 2008, earnings from operations totaled $11.7
million, or 17.9% of net sales.
About Aristotle
The Aristotle Corporation, founded in 1986, and headquartered in
Stamford, CT, is a leading manufacturer and global distributor of
educational, health, medical technology and agricultural products.
A selection of over 80,000 items is offered, primarily through 50
separate catalogs carrying the brand of Nasco (founded in 1941), as
well as those bearing the brands of Life/Form®, Whirl-Pak®,
Simulaids, Triarco, Spectrum Educational Supplies, Hubbard
Scientific, Scott Resources, Haan Crafts, CPR Prompt®, Ginsberg
Scientific and Summit Learning. Products include educational
materials and supplies for substantially all K-12 curricula, molded
plastics, biological materials, medical simulators, health care
products and items for the agricultural, senior care and food
industries. Aristotle has approximately 850 full-time employees at
its operations in Fort Atkinson, WI, Modesto, CA, Fort Collins, CO,
Plymouth, MN, Saugerties, NY, Chippewa Falls, WI, Otterbein, IN and
Newmarket, Ontario, Canada.
There are 18.0 million shares outstanding of Aristotle common
stock (NASDAQ: ARTL) and 1.1 million shares outstanding of Series I
preferred stock (NASDAQ: ARTLP); there are also 11.0 million
privately-held shares outstanding of Series J preferred stock.
Aristotle has about 3,600 stockholders of record.
Further information about Aristotle can be obtained on its
website, at aristotlecorp.net.
Safe Harbor under the Private
Securities Litigation Reform Act of 1995
To the extent that any of the statements contained in this
release are forward-looking, such statements are based on current
expectations that involve a number of uncertainties and risks that
could cause actual results to differ materially from those
projected or suggested in such forward-looking statements.
Aristotle cautions investors that there can be no assurance that
actual results or business conditions will not differ materially
from those projected or suggested in such forward-looking
statements as a result of various factors, including, but not
limited to, the following: (i) the ability of Aristotle to obtain
financing and additional capital to fund its business strategy on
acceptable terms, if at all; (ii) the ability of Aristotle on a
timely basis to find, prudently negotiate and consummate additional
acquisitions; (iii) the ability of Aristotle to manage any to-be
acquired businesses; (iv) there is not an active trading market for
the Company’s securities and the stock prices thereof are highly
volatile, due in part to the relatively small percentage of the
Company’s securities which is not held by the Company’s majority
stockholder and members of the Company’s Board of Directors and
management; and (v) other factors identified in Item 1A, Risk
Factors, contained in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2008. As a result, Aristotle’s future
development efforts involve a high degree of risk. For further
information, please see Aristotle’s filings with the Securities and
Exchange Commission, including its Forms 10-K, 10-K/A, 10-Q and
8-K.
THE ARISTOTLE CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except share and per share
data)
(Unaudited)
Three Months Ended Nine Months Ended September
30, September 30, 2009 2008
2009 2008 Net sales $ 61,128 64,976
158,854 172,202 Cost of sales 37,089 40,123 95,440
105,116 Gross profit 24,039 24,853 63,414 67,086
Selling and administrative expense 12,669 13,178
36,607 36,795 Earnings from operations 11,370
11,675 26,807 30,291 Other (expense) income: Interest
expense (104 ) (260 ) (733 ) (833 ) Other, net 167 (428 )
448 162 63 (688 ) (285 ) (671 ) Earnings
before income taxes 11,433 10,987 26,522 29,620 Income tax
expense (benefit): Current 4,371 4,234 11,616 10,568 Deferred 95
(109 ) 156 564 4,466 4,125
11,772 11,132 Net earnings 6,967 6,862 14,750 18,488
Preferred dividends 2,155 2,155 6,467
6,467 Net earnings applicable to common stockholders $ 4,812
4,707 8,283 12,021 Earnings per
common share: Basic $ .27 .26 .46 .67 Diluted $ .27 .26 .46 .67
Weighted average common shares outstanding: Basic 17,962,875
17,962,875 17,962,875 17,962,209 Diluted 17,962,875 17,968,921
17,962,875 17,971,305
THE ARISTOTLE CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
Assets
September
30,2009
December 31,2008
September
30,2008
(unaudited) (unaudited) Current assets: Cash and cash
equivalents
$
29,690 15,290 7,138 Marketable securities 4,220 4,437 2,480
Investments 2,996 2,876 21,991 Accounts receivable, net 24,065
14,048 26,175 Inventories, net 39,716 44,653 42,388 Prepaid
expenses and other 4,478 8,542 4,000 Income tax receivable - 5,396
- Deferred income taxes 4,070 4,644 1,788
Total current assets 109,235 99,886 105,960 Property, plant
and equipment, net 27,530 27,808 28,429 Goodwill 14,162
13,712 14,186 Deferred income taxes 6,668 6,668 5,646 Investments
4,318 4,318 4,318 Other assets 1,127 884 817
Total assets $ 163,040 153,276 159,356
Liabilities and Stockholders' Equity Current
liabilities: Current installments of long-term debt $ 309 294 299
Trade accounts payable 7,820 9,576 9,331 Accrued expenses 12,907
11,641 7,537 Income taxes 2,057 - 184 Accrued dividends payable -
2,156 - Total current liabilities 23,093
23,667 17,351 Long term debt, less current installments
10,126 10,364 10,434 Long term pension obligations 5,587 5,891
2,115 Other long term accruals 2,489 2,467 2,458
Stockholders' equity: Preferred stock, Series I 6,489 6,489 6,489
Preferred stock, Series J 65,760 65,760 65,760 Common stock 180 180
180 Additional paid-in capital 7,690 7,690 7,685 Retained earnings
43,262 34,979 46,985 Accumulated other comprehensive loss (1,636 )
(4,211 ) (101 ) Total stockholders' equity 121,745 110,887
126,998 Total liabilities and stockholders' equity $
163,040 153,276 159,356