The Aristotle Corporation (NASDAQ: ARTL; ARTLP) announced today
its results of operations for the second quarter and six months
ended June 30, 2009.
In the second quarter of 2009, net sales decreased 9.5% to $51.4
million from $56.8 million in the second quarter of 2008. Earnings
from operations decreased by 18.9% in the second quarter of 2009 to
$8.6 million, or 16.6% of net sales. In the same quarter of 2008,
earnings from operations totaled $10.5 million (including a $.7
million insurance recovery), or 18.6% of net sales. In the six
months ended June 30, 2009, net sales decreased 8.9% to $97.7
million from $107.2 million in the six months ended June 30, 2008.
Earnings from operations decreased by 17.1% in the first six months
of 2009 to $15.4 million, or 15.8% of net sales. In the same six
months of 2008, earnings from operations totaled $18.6 million
(including the insurance recovery), or 17.4% of net sales.
For the second quarter ended June 30, 2009, net earnings
applicable to common stockholders were $1.5 million, or $.08 per
diluted common share, compared to $4.5 million, or $.25 per diluted
common share, in the second quarter of 2008. Net earnings
applicable to common stockholders for the first six months of 2009
were $3.5 million, or $.19 per diluted common share, compared to
$7.3 million, or $.41 per diluted common share, for the comparable
six months of 2008. Pursuant to a settlement with the Internal
Revenue Service of an audit previously reported by the Company, the
second quarter and six months ended June 30, 2009 includes
additional Federal income taxes of $.5 million and $1.3 million for
the 2006 and 2007 tax years, respectively, plus approximately $.2
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 quarter and six
months ended June 30, 2009 by approximately $.11 per diluted common
share. No additional taxes were due for any years prior to
2006.
Steven B. Lapin, Aristotle’s President and Chief Operating
Officer, stated, “The continuing budgetary uncertainty in many key
states has kept sales at disappointing levels, and significant
federal stimulus monies accessible by our K-12 accounts have not
yet been observed. As always, management diligently applies all
available skills to retain historical operating efficiencies on
behalf of its customers and stockholders.”
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 Six Months Ended June 30,
June 30, 2009 2008 2009
2008 Net sales $ 51,425 56,794 97,726 107,226 Cost of
sales 30,869 34,457 58,351 64,993
Gross profit 20,556 22,337 39,375
42,233 Selling and administrative expense 11,999
11,791 23,938 23,617 Earnings from operations
8,557 10,546 15,437 18,616 Other (expense) income:
Interest expense (435 ) (285 ) (629 ) (573 )
Other, net 381 358 281 590 (54 ) 73
(348 ) 17 Earnings before income taxes 8,503 10,619
15,089 18,633 Income tax expense (benefit): Current 4,752
4,006 7,245 6,334 Deferred 115 (14 ) 61 673
4,867 3,992 7,306 7,007 Net earnings
3,636 6,627 7,783 11,626 Preferred dividends 2,156
2,156 4,312 4,312 Net earnings applicable to
common stockholders $ 1,480 4,471 3,471 7,314
Earnings per common share: Basic $ .08 .25 .19 .41
Diluted $ .08 .25 .19 .41 Weighted average common shares
outstanding: Basic 17,962,875 17,962,706 17,962,875 17,961,873
Diluted 17,962,875 17,971,444 17,962,875 17,972,490
THE
ARISTOTLE CORPORATION AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands)
Assets June 30,
2009
December 31,
2008
June 30, 2008
(unaudited) (unaudited) Current assets: Cash
and cash equivalents
$
22,905 15,290 6,444 Marketable securities 4,040 4,437 3,195
Investments 2,927 2,876 21,656 Accounts receivable, net 17,766
14,048 20,902 Inventories, net 46,257 44,653 48,215 Prepaid
expenses and other 5,292 8,542 5,034 Income tax receivable 912
5,396 - Deferred income taxes 4,344 4,644 1,879
Total current assets 104,443 99,886
107,325 Property, plant and equipment, net 27,514 27,808
28,603 Goodwill 13,859 13,712 14,358 Deferred income taxes
6,668 6,668 5,646 Investments 4,318 4,318 4,318 Other assets 1,046
884 604 Total assets $ 157,848 153,276
160,854
Liabilities and Stockholders' Equity Current
liabilities: Current installments of long-term debt $ 300 294 303
Trade accounts payable 8,952 9,576 11,762 Accrued expenses 12,736
11,641 7,191 Income taxes - - 240 Accrued dividends payable 2,156
2,156 2,156 Total current liabilities 24,144 23,667
21,652 Long term debt, less current installments 10,211
10,364 11,506 Long term pension obligations 5,639 5,891 2,617 Other
long term accruals 2,482 2,467 2,449 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 7,683 Retained earnings 38,450 34,979 42,278
Accumulated other comprehensive earnings (loss) (3,197 ) (4,211 )
240 Total stockholders' equity 115,372 110,887
122,630 Total liabilities and stockholders' equity $ 157,848
153,276 160,854
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