The Aristotle Corporation (NASDAQ: ARTL; ARTLP) announced today its
results of operations for the quarter ended March 31, 2007, and set
the date for its 2007 Annual Meeting of Stockholders. First Quarter
2007 Results For the quarter ended March 31, 2007, net sales
increased 4.5% to $48.2 million from $46.2 million for the quarter
ended March 31, 2006. Earnings before income taxes increased 13.7%
to $7.4 million for the quarter ended March 31, 2007 from $6.5
million for the quarter ended March 31, 2006, and net earnings
increased 14.1% to $4.5 million for the quarter ended March 31,
2007 from $4.0 million from the quarter ended March 31, 2006. Net
earnings applicable to common stockholders for the quarter ended
March 31, 2007 were $2.4 million, or $.13 per diluted common share,
compared to $1.8 million, or $.10 per diluted common share, for the
quarter ended March 31, 2006. The reported net earnings are shown
after deduction for Federal, state and foreign income tax expenses.
Approximately $1.3 million and $1.9 million of the income tax
provision for the quarters ended March 31, 2007 and 2006,
respectively, relate to the non-cash charge for utilization of
Federal net operating tax loss carryforwards (�NOL�s�). The
utilization of NOL�s for the reported quarters reduced Aristotle�s
current Federal tax liability, thereby conserving cash. In the
quarter ended March 31, 2007, the remaining balance of NOL�s
available as of December 31, 2006, approximately $3.6 million, was
utilized by Federal taxable income generated by the Company. Steven
B. Lapin, Aristotle�s President and Chief Operating Officer,
stated, �I am delighted to report the increase in quarterly
earnings per share, on a fully diluted basis, to $.13 per common
share compared to $.10 per common share in the same quarter of last
year. Although the first calendar quarter is historically one of
the lower revenue quarters of the year, the Company�s ability to
yield improved earnings in the 2007 first quarter is an indication
that management continues to effectively control the Company�s
operating expenses.� �Additionally, gross profit margins improved
in the 2007 first quarter to 39.3% of net sales, compared to 38.1%
in the 2006 first quarter. Each business unit applies
corporately-coordinated procurement practices that effectively
consolidate purchasing leverage to attain the best available
merchandise pricing from vendors. The Company continues to nurture
mutually-beneficial business relationships with vendors so as to
expand the value of its product offerings to all customers.� Dean
Johnson, Aristotle�s Chief Financial Officer, commented, �At
December 31, 2006, the Company had approximately $3.6 million of
NOL�s available that could be utilized to offset future Federal
income tax obligations. In the first quarter of 2007, the Company
generated taxable income in excess of the $3.6 million balance of
NOL�s. Utilization of this remaining balance of NOL�s provided the
Company a Federal tax benefit of approximately $1.3 million in the
first quarter of 2007. In future quarters, the Company will utilize
cash to pay its Federal income tax obligations.� In providing
EBITDA information, Aristotle offers a non-GAAP financial measure
to complement its condensed consolidated financial statements
presented in accordance with GAAP. This non-GAAP financial measure
is intended to supplement the reader�s overall understanding of
Aristotle�s current financial performance. However, this non-GAAP
financial measure is not intended to supercede or replace
Aristotle�s GAAP results. A reconciliation of the non-GAAP results
to the GAAP results is provided in the �Reconciliation of GAAP Net
Earnings to EBITDA� schedule below. EBITDA is defined as net
earnings before income taxes, interest expense, other income and
expense, and depreciation and amortization. 2007 Annual Meeting
Aristotle also announced today that it will hold its 2007 Annual
Meeting of Stockholders on August 8, 2007. Stockholders of record
on June 29, 2007 will be entitled to vote at the meeting. Any
stockholder wishing to submit a proposal to be considered for
inclusion in Aristotle�s proxy statement and proxy for the Annual
Meeting must deliver the proposal by May 25, 2007, addressed to
Aristotle�s Secretary at 96 Cummings Point Road, Stamford,
Connecticut 06902. 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 more than 45 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, To-Sew, 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 approximately 17.3 million shares
outstanding of Aristotle common stock (NASDAQ: ARTL) and
approximately 1.1 million shares outstanding of 11%, cumulative,
convertible, voting, Series I preferred stock (NASDAQ: ARTLP);
there are also approximately 11.0 million privately-held shares
outstanding of 12%, cumulative, non-convertible, non-voting shares
of Series J preferred stock. Aristotle has about 4,000 stockholders
of record. Further information about Aristotle can be obtained on
its website, at www.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; (v) the ability of
Aristotle to retain its Federal net operating tax loss carryforward
position and other deferred tax positions; and (vi) 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, 2006. 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 March 31, 2007� 2006� � Net sales $ 48,224� 46,164�
Cost of sales 29,261� 28,565� Gross profit 18,963� 17,599� �
Selling and administrative expense 11,627� 11,082� Earnings from
operations 7,336� 6,517� � Other income (expense): Interest expense
(326) (447) Other, net 351� 405� 25� (42) Earnings before income
taxes 7,361� 6,475� � Income taxes: Current 1,523� 722� Deferred
1,319� 1,792� 2,842� 2,514� Net earnings 4,519� 3,961� � Preferred
dividends 2,159� 2,159� Net earnings applicable to common
stockholders $ 2,360� 1,802� � Earnings per common share: Basic $
.14� .10� Diluted $ .13� .10� � Weighted average common shares
outstanding: Basic 17,266,573� 17,249,302� Diluted 17,536,665�
17,494,518� RECONCILIATION OF GAAP NET EARNINGS TO EBITDA (in
thousands) (unaudited) � Three Months Ended March 31, 2007� 2006� �
Net earnings $ 4,519� 3,961� Add: Income taxes 2,842� 2,514�
Interest expense 326� 447� Other, net (351) (405) Depreciation and
amortization 441� 435� EBITDA $ 7,777� 6,952� THE ARISTOTLE
CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) � Assets March 31, 2007 December 31, 2006 March 31,
2006 (unaudited) (unaudited) Current assets: Cash and cash
equivalents $ 2,013� 5,814� 1,999� Investments 14,958� 14,586�
13,258� Accounts receivable, net 19,557� 15,458� 19,381�
Inventories 39,609� 37,487� 38,222� Prepaid expenses and other
6,581� 8,123� 7,013� Deferred income taxes 2,774� 4,051� 9,501�
Total current assets 85,492� 85,519� 89,374� � Property, plant and
equipment, net 26,357� 25,426� 23,045� � Goodwill 13,890� 13,860�
13,872� Deferred income taxes 8,188� 8,188� 2,712� Other assets
311� 328� 373� Total assets $ 134,238� 133,321� 129,376� �
Liabilities and Stockholders' Equity Current liabilities: Current
installments of long-term debt $ 288� 287� 589� Trade accounts
payable 8,495� 9,440� 9,704� Accrued expenses 6,434� 8,207� 4,630�
Accrued dividends payable -� 2,159� -� Total current liabilities
15,217� 20,093� 14,923� � Long-term debt, less current installments
14,913� 11,985� 31,268� Long-term pension obligations 4,653� 4,469�
858� Other long-term accruals 2,397� 2,383� -� � Stockholders'
equity: Preferred stock, Series I 6,601� 6,601� 6,601� Preferred
stock, Series J 65,760� 65,760� 65,760� Common stock 173� 172� 173�
Additional paid-in capital 3,294� 3,106� 3,219� Retained earnings
22,417� 20,057� 6,693� Accumulated other comprehensive loss (1,187)
(1,305) (119) Total stockholders' equity 97,058� 94,391� 82,327�
Total liabilities and stockholders' equity $ 134,238� 133,321�
129,376�
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