The Aristotle Corporation Announces 2006 Second Quarter and First Six Months Results

The Aristotle Corporation (NASDAQ: ARTL; ARTLP)
announced today its results of operations for the second quarter and
six months ended June 30, 2006.
   For the three months ended June 30, 2006, net sales increased 6.6%
to $53.5 million from $50.2 million in the second quarter of 2005, and
earnings before income taxes increased 14.6% to $9.0 million from $7.8
million. For the six months ended June 30, 2006, net sales increased
8.4% to $99.6 million from $91.9 million for the six months ended June
30, 2005, and earnings before income taxes increased 18.5% to $15.4
million from $13.0 million.
   Net earnings applicable to common stockholders in the second
quarter of 2006 were $3.3 million, or $.19 per diluted common share,
versus $2.6 million, or $.15 per diluted common share, in the second
quarter of 2005. Net earnings applicable to common stockholders for
the six months of 2006 were $5.1 million, or $.29 per diluted common
share, compared to $3.7 million, or $.21 per diluted common share, for
the comparable six months of 2005.
   The reported net earnings are shown after deduction for Federal,
state and foreign income tax provisions. Approximately $2.6 million
and $2.2 million in deferred income tax expense in the 2006 and 2005
second quarters, respectively, relate to the non-cash charge for
utilization of Federal net operating tax loss carryforwards ("NOL's").
For the first six months of 2006 and 2005, respectively, $4.5 million
and $3.8 million of the reported deferred income tax expense relate to
current year NOL utilization. The NOL utilization for the reported
quarters and year-to-date periods substantially eliminated Aristotle's
current Federal income tax liability and allowed Aristotle to retain
for other business purposes the cash that would have been used for tax
payments. Except for Federal alternative minimum tax obligations
arising from limitations on the utilization of the NOL's, Aristotle
anticipates that the utilization of available NOL's will offset its
Federal taxable income through 2006. At June 30, 2006, the Condensed
Consolidated Balance Sheet contains a net deferred tax asset of $9.8
million, of which $5.4 million relates to the NOL's.
   Steven B. Lapin, Aristotle's President and Chief Operating
Officer, stated, "I am pleased to report second quarter operating
results which demonstrate the Company's continued ability to enhance
its earnings at rates greater than its revenue. With 6.6% organic
growth in revenue for the quarter ended June 30, 2006, Aristotle has
produced EBITDA growth of 11.0%, facilitated by the comprehensive
efforts at each of its business units to control operating costs;
selling and administrative expenses increased less than 2% from the
2005 to the 2006 second quarters."
   Mr. Lapin added, "Through the first six months of 2006, Aristotle
has generated $.29 per diluted common share, increasing nearly 40%
compared to $.21 per diluted common share earned in the same period of
2005. All of us at the Company are focused on carrying this earnings
momentum into the peak shipping season now upon us in the third
quarter."
   In commenting on Aristotle's financial condition at June 30, 2006,
Dean T. Johnson, Aristotle's Chief Financial Officer, stated, "As the
Company's earning performance improved over the past 12 months,
Aristotle's balance sheet has gained strength as well. While short
term cash investments increased $7.8 million in the past 12 months,
the outstanding balance on Aristotle's primary line of credit has
declined $6.0 million to $18.5 million at June 30, 2006. The credit
facility continues to offer the Company as much as $26.5 million of
additional capital for working capital and acquisitions." Mr. Johnson
added, "We are pleased to report that the Company has begun
construction of the new 60,000 square foot facility on its existing
land in Fort Atkinson, WI to house Nasco's plastics operations.
Completion of the building is expected by the end of 2006 at a cash
cost of approximately $3.7 million."
   Mr. Lapin also stated, "The Special Committee of Aristotle's Board
of Directors, together with its legal and financial advisors, is
proceeding to evaluate the proposal made by Geneve Corporation, the
Company's majority stockholder, to acquire the outstanding shares of
Common Stock and Series I Preferred Stock not already owned by Geneve
on terms previously reported. It is anticipated that further
information as to the status of that process will be available to
stockholders before month-end."
   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 the Company'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 earnings before income
taxes, interest expense, other income and expense, depreciation and
amortization.

   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(R), Whirl-Pak(R),
Simulaids, Triarco, Spectrum Educational Supplies, Hubbard Scientific,
Scott Resources, Haan Crafts, To-Sew, CPR Prompt(R), 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 800 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 and utilize its
Federal net operating tax loss carryforward position; (vi) there can
be no assurance that the transaction proposed by Geneve Corporation
will be approved or completed; and (vii) 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, 2005. 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-Q and
8-K.
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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,
                      ------------------------ -----------------------
                          2006        2005        2006        2005
                      ------------ ----------- ----------- -----------

Net sales             $    53,481      50,185      99,645      91,933
Cost of sales              33,086      30,938      61,651      56,623
                      ------------ ----------- ----------- -----------
    Gross profit           20,395      19,247      37,994      35,310

Selling and
 administrative expense    11,359      11,155      22,441      21,788
                       ----------- ----------- ----------- -----------
    Earnings from
     operations             9,036       8,092      15,553      13,522

Other (expense) income:
  Interest expense           (501)       (362)       (948)       (653)
  Interest income               1          12           2          12
  Other, net                  424          73         828         143
                      ------------ ----------- ----------- -----------
                              (76)       (277)       (118)       (498)
                      ------------ ----------- ----------- -----------
    Earnings before
     income taxes           8,960       7,815      15,435      13,024

Income tax expense:
  Current                   1,033         757       1,755       1,222
  Deferred                  2,427       2,263       4,219       3,819
                      ------------ ----------- ----------- -----------
                            3,460       3,020       5,974       5,041
                      ------------ ----------- ----------- -----------
 Net earnings               5,500       4,795       9,461       7,983

Preferred dividends         2,159       2,158       4,318       4,316
                      ------------ ----------- ----------- -----------
    Net earnings
     applicable to
     common
     stockholders     $     3,341       2,637       5,143       3,667
                      ============ =========== =========== ===========

Earnings per common
 share:
  Basic               $       .19         .15         .30         .21
  Diluted             $       .19         .15         .29         .21

Weighted average common 
 shares outstanding:
  Basic                17,266,513  17,154,032  17,257,955  17,149,538
  Diluted              17,516,190  17,394,146  17,503,199  17,399,309


             RECONCILIATION OF GAAP NET EARNINGS TO EBITDA
                            (in thousands)
                              (unaudited)

                                 Three Months Ended  Six Months Ended
                                      June 30,           June 30,
                                -------------------  -----------------
                                    2006     2005       2006    2005
                                ----------- -------  --------- -------

Net earnings                    $    5,500   4,795      9,461   7,983
Add:
 Income tax expense                  3,460   3,020      5,974   5,041
 Interest expense                      501     362        948     653
 Other (income) expense               (425)    (85)      (830)   (155)
 Depreciation and amortization         460     461        895     890
                                ----------- -------  --------- -------
EBITDA                          $    9,496   8,553     16,448  14,412
                                =========== =======  ========= =======


              THE ARISTOTLE CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                 June 30,    December 31,    June 30,
                                  2006         2005          2005
                               ------------  ------------  -----------
                                (unaudited)                (unaudited)
     Assets
Current assets:
 Cash and cash equivalents           3,671         1,803        2,169
 Investments                   $    13,669        12,856        5,919
 Accounts receivable, net           20,898        14,530       19,857
 Inventories, net                   42,108        35,579       39,281
 Prepaid expenses and other          4,896         8,026        4,231
 Deferred income taxes               7,088        11,279        9,825
                               ------------  ------------  -----------
  Total current assets              92,330        84,073       81,282

Property, plant and equipment,
 net                                23,215        22,361       18,343

Goodwill                            14,033        13,799       13,634
Deferred income taxes                2,712         2,712        6,793
Other assets                           351           408          439
                               ------------  ------------  -----------
  Total assets                 $   132,641       123,353      120,491
                               ============  ============  ===========

Liabilities and Stockholders' Equity

Current liabilities:
 Current installments of long-
  term debt                    $       599           606          115
 Trade accounts payable             12,362         9,013       11,015
 Accrued expenses                    7,004         6,779        5,860
 Accrued dividends payable           2,159         2,159        2,158
                               ------------  ------------  -----------
  Total current liabilities         22,124        18,557       19,148

Long-term debt, less current
 installments                       24,322        24,350       26,855

Stockholders' equity:
 Preferred stock, Series I           6,601         6,601        6,580
 Preferred stock, Series J          65,760        65,760       65,760
 Common stock                          173           172          172
 Additional paid-in capital          3,299         3,119        2,655
 Retained earnings (accumulated
  deficit)                          10,034         4,891         (664)
 Accumulated other comprehensive 
  earnings (loss)                      328           (97)         (15)
                               ------------  ------------  -----------
  Total stockholders' equity        86,195        80,446       74,488
                               ------------  ------------  -----------
  Total liabilities and
   stockholders' equity        $   132,641       123,353      120,491
                               ============  ============  ===========
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