The Aristotle (MM) (NASDAQ:ARTLP)
Historical Stock Chart
From Jun 2019 to Jun 2024
The Aristotle Corporation (NASDAQ: ARTL; ARTLP)
announced today its results of operations for the quarter and calendar
year ended December 31, 2005.
Fourth Quarter and Calendar Year 2005 Results
For the three months ended December 31, 2005, net sales increased
5.9% to $38.2 million from $36.1 million in the fourth quarter of
2004, and earnings before income taxes increased 36.6% to $4.1 million
from $3.0 million. For the calendar year ended December 31, 2005, net
sales increased 7.8% to $188.8 million from $175.1 million for the
calendar year ended December 31, 2004, and earnings before income
taxes increased 17.6% to $27.2 million from $23.1 million.
Net earnings applicable to common stockholders in the fourth
quarter of 2005 were $1.5 million, or $.09 per diluted common share,
versus $1.0 million, or $.06 per diluted common share, in the fourth
quarter of 2004. Net earnings applicable to common stockholders for
calendar 2005 were $9.2 million, or $.53 per diluted common share,
compared to $8.9 million, or $.52 per diluted common share, for
calendar 2004.
In the quarter ended December 31, 2005, the valuation allowance
that was established to reflect the estimate of Aristotle's Federal
net operating tax loss carryforwards ("NOL's") that were expected to
expire unutilized at December 31, 2006 was reduced by $1.0 million to
$6.5 million. The change in the valuation allowance related to the
projected utilization of NOL's was due primarily to increased 2005
taxable income and current estimates of 2006 taxable income. This
adjustment resulted in an increase of $.06 to diluted earnings per
common share for the quarter and year ended December 31, 2005. In the
quarter ended December 31, 2004, this valuation allowance had been
reduced by $1.2 million to $7.5 million, resulting in an increase of
$.07 to diluted earnings per common share for that quarter. For
calendar 2004, the aggregate adjustment to this valuation allowance
was a reduction of $2.8 million, increasing calendar 2004 diluted
earnings per common share by $.16.
The reported net earnings are shown after deduction for Federal,
state and foreign income tax provisions. The utilization of the
Company's NOL's resulted in the reporting of approximately $1.0
million and $1.2 million in income tax provisions in the 2005 and 2004
fourth quarters, respectively, for the reduction in the previously
recorded deferred tax asset. For the calendar years 2005 and 2004,
respectively, $8.0 million and $7.4 million of the reported tax
provisions relate to current year NOL utilization. The NOL utilization
for the reported quarters and calendar years 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 December 31, 2005,
the Condensed Consolidated Balance Sheet contains a net deferred tax
asset of $14.0 million, of which $9.9 million relates to the NOL's.
Net earnings applicable to common stockholders in both the 2005
and 2004 periods include the accretion of $2.1 million and $8.6
million in the fourth quarters and calendar years, respectively,
relating to dividends on Aristotle's Series I and Series J preferred
stocks.
Steven B. Lapin, Aristotle's President and Chief Operating
Officer, stated, "I am pleased with your Company's 2005 fourth quarter
and annual results, which reflect management meeting the challenges of
continued sluggish spending in the education market and volatility in
domestic energy pricing. Among the positive consequences of those
efforts, consolidated gross margins have increased approximately 50
basis points from 2004 to 2005 and, as a percentage of net sales,
selling and administrative expenses have decreased approximately 50
basis points. The net effects have yielded an impressive 2005 EBITDA
margin to net sales of 15.8% for the 2005 calendar year compared to
14.9% for 2004. Sales growth benefited from Aristotle's successful
acquisitions in the 2004 third quarter, but also represents a
company-wide organic revenue increase of more than 5.6%."
Mr. Lapin added, "I am also pleased to report that, in order to
meet the current and anticipated demands for its health-care and
emergency response training aids, and to provide capabilities to
service potentially other commercial markets, your Company commenced
operations in Simulaids' new 80,000 square foot Saugerties, NY
production facility in January 2006."
In commenting on Aristotle's 2005 performance, Dean T. Johnson,
Aristotle's Chief Financial Officer, stated, "While your Company
reported calendar 2005 earnings of $.53 per diluted common share
versus $.52 for 2004, diluted earnings per share for 2005 increased by
$.11 per share (from $.36 to $.47) before the adjustments to the tax
valuation allowance related to the recoverability of the Company's
NOL's in 2005 and 2004. Similarly, your Company reported 2005 fourth
quarter earnings of $.09 per diluted common share compared to $.06 for
the 2004 fourth quarter. Prior to the adjustments to the tax valuation
allowance recorded in the respective quarters, the 2005 fourth quarter
diluted earnings per share increased by $.04 per share (from a loss of
$.01 to income of $.03)."
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 earnings before income
taxes, interest expense, other income and expense, depreciation and
amortization.
Declaration of Semi-Annual Preferred Dividends
Aristotle also announced today that it has declared semi-annual
cash dividends of $.33 and $.36 per share, respectively, on its
outstanding shares of Series I Preferred Stock and Series J Preferred
Stock. The dividends are payable on March 31, 2006, to holders of
record on March 15, 2006. Dividends are payable on Aristotle's
preferred stock on March 31 and September 30, if and when declared by
Aristotle's Board of Directors.
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 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 17.2 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; and (vi) other
factors identified in Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations, "Forward-Looking
Statements," contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 2004. 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.
-0-
*T
THE ARISTOTLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(In thousands, except share and per share data)
-----------------------------------------------
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net sales $ 38,210 36,077 188,769 175,077
Cost of sales 23,374 22,745 117,219 109,556
----------- ----------- ----------- -----------
Gross profit 14,836 13,332 71,550 65,521
Selling and
administrative
expense 10,772 10,072 43,620 41,242
----------- ----------- ----------- -----------
Earnings from
operations 4,064 3,260 27,930 24,279
Other expense
(income):
Interest expense 347 276 1,369 1,170
Interest income (11) (1) (34) (3)
Other, net (334) 12 (593) (6)
----------- ----------- ----------- -----------
2 287 742 1,161
----------- ----------- ----------- -----------
Earnings before
income taxes 4,062 2,973 27,188 23,118
Income tax expense
(benefit):
Current 161 239 2,447 2,277
Deferred 219 (409) 6,884 3,277
----------- ----------- ----------- -----------
380 (170) 9,331 5,554
----------- ----------- ----------- -----------
Net earnings 3,682 3,143 17,857 17,564
Preferred dividends 2,159 2,159 8,635 8,638
----------- ----------- ----------- -----------
Net earnings
applicable to
common
stockholders $ 1,523 984 9,222 8,926
=========== =========== =========== ===========
Earnings per common
share:
Basic $ .09 .06 .54 .52
Diluted $ .09 .06 .53 .52
Weighted average
common shares
outstanding:
Basic 17,207,115 17,132,714 17,167,769 17,116,032
Diluted 17,437,124 17,375,292 17,393,966 17,317,594
RECONCILIATION OF GAAP NET EARNINGS TO EBITDA
(in thousands)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------- ---------------
2005 2004 2005 2004
------ ------ ------- -------
Net earnings $3,682 3,143 17,857 17,564
Add:
Income tax expense (benefit) 380 (170) 9,331 5,554
Interest expense 347 276 1,369 1,170
Other (income) expense (345) 11 (627) (9)
Depreciation and amortization 458 466 1,820 1,814
------ ------ ------- -------
EBITDA $4,522 3,726 29,750 26,093
====== ====== ======= =======
RECONCILIATION OF GAAP DILUTED EARNINGS PER SHARE
(unaudited)
Three Twelve
Months Months
Ended Ended
December 31, December 31,
----------- -----------
2005 2004 2005 2004
----- ----- ----- -----
Diluted earnings per share $ .09 .06 .53 .52
Deduct:
Adjustments to valuation allowance for
deferred tax assets related to the
recoverability of Federal net operating
tax loss carryforwards (.06) (.07) (.06) (.16)
----- ----- ----- -----
Adjusted diluted earnings per share $ .03 (.01) .47 .36
===== ===== ===== =====
THE ARISTOTLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
December December
Assets 31, 2005 31, 2004
-------- --------
Current assets:
Cash and cash equivalents 1,803 2,143
Investments $ 12,856 4,058
Accounts receivable, net 14,530 12,592
Inventories 35,579 33,356
Prepaid expenses and other 8,026 6,665
Refundable income taxes - 49
Deferred income taxes 11,279 9,825
-------- --------
Total current assets 84,073 68,688
Property, plant and equipment, net 22,361 17,405
Goodwill 13,799 13,707
Deferred income taxes 2,712 10,594
Other assets 408 511
-------- --------
Total assets $123,353 110,905
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt $ 606 114
Trade accounts payable 9,013 7,192
Accrued expenses 6,594 5,833
Income taxes 185 -
Accrued dividends payable 2,159 2,158
-------- --------
Total current liabilities 18,557 15,297
Long-term debt, less current installments 24,350 24,948
Stockholders' equity:
Preferred stock, Series I 6,601 6,580
Preferred stock, Series J 65,760 65,760
Common stock 172 171
Additional paid-in capital 3,119 2,310
Retained earnings (accumulated deficit) 4,891 (4,331)
Accumulated other comprehensive (loss) earnings (97) 170
-------- --------
Total stockholders' equity 80,446 70,660
-------- --------
Total liabilities and stockholders'
equity $123,353 110,905
======== ========
*T