The Aristotle (MM) (NASDAQ:ARTLP)
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The Aristotle Corporation (NASDAQ: ARTL; ARTLP) announced today its
results of operations for the third quarter and nine months ended
September 30, 2008.
For the third quarter ended September 30, 2008, net earnings applicable
to common stockholders were $4.7 million, or $.26 per diluted common
share, versus $5.5 million, or $.31 per diluted common share, for the
third quarter of 2007. Net earnings applicable to common stockholders
for the first nine months of 2008 were $12.0 million, or $.67 per
diluted common share, compared to $11.8 million, or $.67 per diluted
common share, for the comparable nine months of 2007.
Third quarter net sales in 2008 increased 2.3% to $65.0 million from
$63.5 million in the third quarter of 2007. Earnings from operations,
equating to 18.0% of net sales, declined 5.6% to $11.7 million from
$12.4 million in the same quarter of 2007 (including an insurance
recovery of $.4 million), or 19.5% of net sales.
For the nine months ended September 30, 2008, net sales increased 2.5%
to $172.2 million from $168.0 million for the nine months ended
September 30, 2007. Earnings from operations increased 3.2% to $30.3
million (including a $.7 million insurance recovery) in the first nine
months of 2008, or 17.6% of net sales, compared to $29.4 million
(including the $.4 million insurance recovery) in the 2007 period, or
17.5% of net sales.
Steven B. Lapin, Aristotle’s President and
Chief Operating Officer, stated, “Aristotle’s
balance sheet is exceptionally strong, with stockholders’
equity having increased by 13.3% to $127.0 million at September 30, 2008
from $112.1 million at September 30, 2007, and current outstanding bank
debt of a modest $5.0 million on its $45.0 million revolving line of
credit. Although volatility in the equity markets did have a negative
impact on diluted earnings per common share in the three and nine month
periods ended September 30, 2008 of approximately $.02 and $.01,
respectively, the change in value of Aristotle’s
short-term investments is not material to your Company’s
available working capital or financial condition. While I am pleased to
report your Company’s sales growth and
significant profitability in the third quarter and first nine months of
2008, optimism must be tempered in view of unprecedented challenges now
facing local, state, federal and global economies.”
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 900
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 4,000
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; (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, 2007. 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,
2008
2007
2008
2007
Net sales
$
64,976
63,524
172,202
167,950
Cost of sales
40,123
39,017
105,116
102,909
Gross profit
24,853
24,507
67,086
65,041
Selling and administrative expense
13,178
12,133
36,795
35,677
Earnings from operations
11,675
12,374
30,291
29,364
Other (expense) income:
Interest expense
(260)
(393)
(833)
(1,082)
Other, net
(428)
453
162
1,216
(688)
60
(671)
134
Earnings before income taxes
10,987
12,434
29,620
29,498
Income tax expense (benefit):
Current
4,234
4,690
10,568
8,596
Deferred
(109)
84
564
2,623
4,125
4,774
11,132
11,219
Net earnings
6,862
7,660
18,488
18,279
Preferred dividends
2,155
2,154
6,467
6,470
Net earnings applicable to common stockholders
$
4,707
5,506
12,021
11,809
Earnings per common share:
Basic
$
.26
.31
.67
.67
Diluted
$
.26
.31
.67
.67
Weighted average common shares outstanding:
Basic
17,962,875
17,927,671
17,962,209
17,552,073
Diluted
17,968,921
17,946,013
17,971,305
17,569,502
THE ARISTOTLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Assets
September 30,
2008
December 31,
2007
September 30,
2007
(unaudited)
(unaudited)
Current assets:
Cash and cash equivalents
$
7,138
5,604
3,173
Marketable securities
2,480
3,335
2,886
Investments
21,991
18,150
15,761
Accounts receivable, net
26,175
15,631
27,975
Inventories, net
42,388
42,297
40,046
Prepaid expenses and other
4,000
9,611
5,084
Deferred income taxes
1,788
2,484
2,634
Total current assets
105,960
97,112
97,559
Property, plant and equipment, net
28,429
27,476
27,140
Goodwill
14,186
14,476
14,458
Deferred income taxes
5,646
5,646
8,188
Investments
4,318
4,279
4,000
Other assets
817
446
391
Total assets
$
159,356
149,435
151,736
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt
$
299
305
300
Trade accounts payable
9,331
10,500
8,593
Accrued expenses
7,537
6,765
6,814
Income Taxes
184
-
4,434
Accrued dividends payable
-
2,156
-
Total current liabilities
17,351
19,726
20,141
Long term debt, less current installments
10,434
8,655
14,237
Long term pension obligations
2,115
2,944
2,808
Other long term accruals
2,458
2,429
2,424
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
179
179
Additional paid-in capital
7,685
7,580
6,867
Retained earnings
46,985
34,964
31,866
Accumulated other comprehensive earnings (loss)
(101)
709
965
Total stockholders' equity
126,998
115,681
112,126
Total liabilities and stockholders' equity
$
159,356
149,435
151,736