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