The Aristotle (MM) (NASDAQ:ARTLP)
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The Aristotle Corporation (NASDAQ: ARTL; ARTLP) announced today the
following:
Results for Quarter and Calendar
Year ended December 31, 2007
For the calendar year ended December 31, 2007, net sales increased 4.2%
to $211.6 million from $203.0 million for the calendar year ended
December 31, 2006, and earnings before income taxes increased 14.0% to
$35.1 million from $30.8 million. For the quarter ended December 31,
2007, net sales increased 5.1% to $43.6 million from $41.5 million for
the quarter ended December 31, 2006, and earnings before income taxes
increased 43.0% to $5.6 million from $3.9 million. Earnings before
income taxes for the quarter and calendar year ended December 31, 2006
were unfavorably impacted by approximately $1.0 million of pension
expense principally incurred as a result of a partial settlement of
benefit obligations in 2006.
Net earnings applicable to common stockholders for the calendar year
ended December 31, 2007 were $14.9 million, or $.84 per diluted common
share, compared to $15.2 million, or $.87 per diluted common share
(including $5.5 million, or $.31 per diluted common share, related to
additional deferred tax benefits recorded through reductions of the
deferred tax asset valuation allowance from greater than expected
utilization of Federal net operating tax loss carryforwards (“NOLs”)),
for the calendar year ended December 31, 2006. Net earnings applicable
to common stockholders for the quarter ended December 31, 2007 were $3.1
million, or $.17 per diluted common share compared to $4.5 million, or
$.26 per diluted common share (including $4.7 million, or $.27 per
diluted common share, related to additional deferred tax benefits
recorded through reductions of the deferred tax asset valuation
allowance from greater than expected utilization of NOLs), for the
quarter ended December 31, 2006.
The reported net earnings are shown after deduction for Federal, state
and foreign income tax provisions. Approximately $6.3 million in
deferred income tax expense in the quarter ended December 31, 2006
relates to the non-cash charge for utilization of NOLs. For the calendar
years ended December 31, 2007 and 2006, respectively, $1.3 million and
$14.2 million of the reported deferred income tax expense relate to
current year NOL utilization. The NOL utilization for the reported
quarters and calendar year periods reduced 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. The effective tax rate for 2007 was 32.9% versus 22.8% for
2006.
Steven B. Lapin, Aristotle’s President and
Chief Operating Officer, stated, “I am pleased
to report earnings per share of $.17 and $.84, for the quarter and year
ended December 31, 2007, respectively. Given the positive impact in 2006
resulting from the Company’s NOLs, Aristotle’s
earnings performance significantly improved in 2007. Additionally,
Aristotle’s gross margins improved by 70 basis
points from 2006 to 2007, an important achievement driven by strategic
purchasing plans and revenue growth of the Company’s
higher-margin proprietary product lines. At the same time, management
limited increases in selling and administrative expenses to 2.7% and
3.4% for the 2007 fourth quarter and calendar year, respectively,
excluding the additional $1.0 million pension expense recognized in
2006. The Company does not anticipate the need for significant capital
expenditures going forward and has sufficient capacity to maintain
current operations and support a sustained level of future growth.”
Mr. Lapin added, “Revenues for recent
quarters in 2007 reflect moderate growth despite the heavy challenges
faced by state budgetary constraints. The Company remains optimistic for
2008 but will, of course, continue to monitor the impact of U.S.
economic conditions on its business to ensure that Aristotle maintains
appropriate levels of expenditures and maximizes value for all
stockholders.”
Dean Johnson, Aristotle’s Chief Financial
Officer, stated, “Portions of the Company’s
2007 cash flow from operations have been used to reduce the outstanding
balance on the $45.0 million credit facility to $3.0 million at December
31, 2007. Additional cash flows have permitted the Company to make
investments in marketable securities and other investments; at December
31, 2007, Aristotle had cash, marketable securities and liquid and other
investments of $31.4 million. The Company’s
available credit facility allows management to explore potential
acquisitions and strategic investments to advance its long term
profitability.”
Mr. Lapin further reported, “I am delighted
to note that important promotions were recently made at the senior
management level. W. Phil Niemeyer, who has been with the Nasco group
for more than the past 35 years, has been designated an Executive Vice
President of Aristotle and appointed as a new member of the Company’s
Board of Directors; Phil will also remain as President of the Nasco
division. And, Dean T. Johnson, who has been a Nasco employee for the
past 14 years, has been named a Senior Vice President of Aristotle,
while retaining his positions of Chief Financial Officer of the Company
and the Nasco division.”
Long-Term Credit Facility
Aristotle has entered into an amendment to its existing long-term credit
agreement with the Company’s primary lender,
JP Morgan Chase Bank. The amendment principally provides for an
extension of the agreement (due to expire on October 15, 2008) to
January 31, 2013, with favorable pricing, reporting and covenant terms.
Semi-Annual Preferred Dividends
Aristotle 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, 2008 to holders of record on March 20, 2008. Dividends are payable
on Aristotle’s Preferred Stock on March 31
and September 30, if and when declared by the Company’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®,
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 approximately 17.9 million shares outstanding of Aristotle
common stock (NASDAQ: ARTL) and approximately 1.1 million shares
outstanding of Series I preferred stock (NASDAQ: ARTLP); there are also
approximately 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
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 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
Year Ended
December 31,
December 31,
2007
2006
2007
2006
Net sales
$
43,600
41,490
211,550
202,978
Cost of sales
26,681
25,739
129,590
125,906
Gross profit
16,919
15,751
81,960
77,072
Selling and administrative expense
11,252
11,951
46,929
46,392
Earnings from operations
5,667
3,800
35,031
30,680
Other (expense) income:
Interest expense
(321
)
(287
)
(1,403
)
(1,648
)
Other, net
287
426
1,503
1,781
(34
)
139
100
133
Earnings before income taxes
5,633
3,939
35,131
30,813
Income tax expense (benefit):
Current
(1,155
)
1,450
7,441
4,420
Deferred
1,534
(4,158
)
4,157
2,592
379
(2,708
)
11,598
7,012
Net earnings
5,254
6,647
23,533
23,801
Preferred dividends
2,156
2,159
8,626
8,635
Net earnings applicable to common stockholders
$
3,098
4,488
14,907
15,166
Earnings per common share:
Basic
$
.17
.26
.84
.88
Diluted
$
.17
.26
.84
.87
Weighted average common shares outstanding:
Basic
17,945,991
17,268,758
17,651,361
17,263,675
Diluted
17,966,233
17,518,302
17,669,161
17,508,631
THE ARISTOTLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets
December 31,2007
December 31,2006
Current assets:
Cash and cash equivalents
$
5,604
5,814
Marketable securities
3,335
-
Investments
18,150
14,586
Accounts receivable, net
15,631
15,458
Inventories, net
42,297
37,487
Prepaid expenses and other
9,071
8,123
Income taxes receivable
540
-
Deferred income taxes
2,484
4,051
Total current assets
97,112
85,519
Property, plant and equipment, net
27,476
25,426
Goodwill
14,476
13,860
Deferred income taxes
5,646
8,188
Investments
4,279
-
Other assets
446
328
Total assets
$
149,435
133,321
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt
$
305
287
Trade accounts payable
10,500
9,440
Accrued expenses
6,765
6,729
Income taxes payable
-
1,478
Accrued dividends payable
2,156
2,159
Total current liabilities
19,726
20,093
Long-term debt, less current installments
8,655
11,985
Long-term pension obligations
2,944
4,469
Other long-term accruals
2,429
2,383
Total liabilities
33,754
38,930
Stockholders' equity:
Preferred stock, Series I
6,489
6,601
Preferred stock, Series J
65,760
65,760
Common stock
179
172
Additional paid-in capital
7,580
3,106
Retained earnings
34,964
20,057
Accumulated other comprehensive income (loss)
709
(1,305
)
Total stockholders' equity
115,681
94,391
Total liabilities and stockholders' equity
$
149,435
133,321