The Aristotle Corporation Announces 2009 First Quarter Results

First Quarter 2009 Results

For the quarter ended March 31, 2009, net earnings applicable to common stockholders were $2.0 million, or $.11 per diluted common share, compared to $2.8 million, or $.16 per diluted common share, for the quarter ended March 31, 2008. Earnings from operations were $6.9 million for the current quarter versus $8.1 million for last year's quarter. The results of operations for the quarter ended March 31, 2009 were primarily impacted by a decline in net sales to $46.3 million from $50.4 million for the quarter ended March 31, 2008.

Steven B. Lapin, President and Chief Operating Officer, and Dean Johnson, Senior Vice President and Chief Financial Officer, stated, "Revenues for your Company's 2009 first quarter were negatively affected by the funding deterioration of state and local education budgets. Management anticipates that revenues will continue to be restricted so long as employment conditions remain unstable and until education-earmarked dollars from the 2009 stimulus package begin to flow meaningfully into state and local coffers. Your Company has been vigilant in controlling, where prudent, factors that influence earnings; for example, gross profit margin for the first quarter of 2009 increased 110 basis points to 40.6% compared to the first quarter of 2008 principally as a result of procurement action plans to control transportation costs. In addition, variable components of selling and administrative expenses, with particular focus on labor, were reduced in reaction to lower order volume. Management will continue to scrutinize operating costs in order to protect earnings potential during this period of economic disruption without negatively impacting the Company's long term financial goals."

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 50 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, 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 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 18.0 million shares outstanding of Aristotle common stock (NASDAQ: ARTL | Quote | Chart | News | PowerRating) 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 3,600 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, 2008. 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,
                                                      2009              2008
Net sales                                        $    46,301            50,432
Cost of sales                                         27,482            30,536
Gross profit                                          18,819            19,896
Selling and administrative expense                    11,939            11,826
Earnings from operations                              6,880             8,070
Other income (expense):
Interest expense                                      (194       )      (288       )
Other, net                                            (100       )      232
                                                      (294       )      (56        )
Earnings before income taxes                          6,586             8,014
Income taxes:
Current                                               2,493             2,328
Deferred                                              (54        )      687
                                                      2,439             3,015
Net earnings                                          4,147             4,999
Preferred dividends                                   2,156             2,156
Net earnings applicable to common stockholders   $    1,991             2,843
Earnings per common share:
Basic                                            $    .11               .16
Diluted                                          $    .11               .16
Weighted average common shares outstanding:
Basic                                                 17,962,875        17,961,040
Diluted                                               17,962,875        17,973,632

THE ARISTOTLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                    March 31,     December 31,   March 31,
Assets                                              2009          2008           2008
                                                    (unaudited)                  (unaudited)
Current assets:
Cash and cash equivalents                       $   14,807        15,290         4,514
Marketable securities                               4,160         4,437          3,305
Investments                                         2,840         2,876          19,277
Accounts receivable, net                            16,705        14,048         20,481
Inventories                                         45,076        44,653         44,156
Prepaid expenses and other                          6,619         8,542          7,318
Income tax receivable                               3,272         5,396          283
Deferred income taxes                               4,662         4,644          1,910
Total current assets                                98,141        99,886         101,244
Property, plant and equipment, net                  27,407        27,808         28,193
Goodwill                                            13,588        13,712         14,338
Deferred income taxes                               6,668         6,668          5,646
Investments                                         4,318         4,318          4,319
Other assets                                        964           884            518
Total assets                                    $   151,086       153,276        154,258
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt          $   292           294            302
Trade accounts payable                              7,675         9,576          8,632
Accrued expenses                                    12,206        11,641         6,100
Accrued dividends payable                           -             2,156          -
Total current liabilities                           20,173        23,667         15,034
Long-term debt, less current installments           10,293        10,364         16,083
Long-term pension obligations                       5,684         5,891          2,704
Other long-term accruals                            2,474         2,467          2,439
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           180            180
Additional paid-in capital                          7,690         7,690          7,674
Retained earnings                                   36,970        34,979         37,807
Accumulated other comprehensive income (loss)       (4,627  )     (4,211  )      88
Total stockholders' equity                          112,462       110,887        117,998
Total liabilities and stockholders' equity      $   151,086       153,276        154,258

SOURCE: The Aristotle Corporation

The Aristotle Corporation 
Bill Smith or Dean Johnson 
203-358-8000 or 920-563-2446 
Fax: 203-358-0179 or 920-563-0234 
wsmith@ihc-geneve.com 
int@enasco.com