The Aristotle Corporation Announces 2009 Second Quarter and Six Month Results

In the second quarter of 2009, net sales decreased 9.5% to $51.4 million from $56.8 million in the second quarter of 2008. Earnings from operations decreased by 18.9% in the second quarter of 2009 to $8.6 million, or 16.6% of net sales. In the same quarter of 2008, earnings from operations totaled $10.5 million (including a $.7 million insurance recovery), or 18.6% of net sales. In the six months ended June 30, 2009, net sales decreased 8.9% to $97.7 million from $107.2 million in the six months ended June 30, 2008. Earnings from operations decreased by 17.1% in the first six months of 2009 to $15.4 million, or 15.8% of net sales. In the same six months of 2008, earnings from operations totaled $18.6 million (including the insurance recovery), or 17.4% of net sales.

For the second quarter ended June 30, 2009, net earnings applicable to common stockholders were $1.5 million, or $.08 per diluted common share, compared to $4.5 million, or $.25 per diluted common share, in the second quarter of 2008. Net earnings applicable to common stockholders for the first six months of 2009 were $3.5 million, or $.19 per diluted common share, compared to $7.3 million, or $.41 per diluted common share, for the comparable six months of 2008. Pursuant to a settlement with the Internal Revenue Service of an audit previously reported by the Company, the second quarter and six months ended June 30, 2009 includes additional Federal income taxes of $.5 million and $1.3 million for the 2006 and 2007 tax years, respectively, plus approximately $.2 million of interest, related to a partial disallowance of the Company's historical Federal net operating tax losses that were utilized. Such amounts reduced net income for the quarter and six months ended June 30, 2009 by approximately $.11 per diluted common share. No additional taxes were due for any years prior to 2006.

Steven B. Lapin, Aristotle's President and Chief Operating Officer, stated, "The continuing budgetary uncertainty in many key states has kept sales at disappointing levels, and significant federal stimulus monies accessible by our K-12 accounts have not yet been observed. As always, management diligently applies all available skills to retain historical operating efficiencies on behalf of its customers and stockholders."

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; and (v) 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              Six Months Ended
                                                                  June 30,                        June 30,
                                                                  2009            2008            2009            2008
Net sales                                                       $ 51,425          56,794          97,726          107,226
Cost of sales                                                     30,869          34,457          58,351          64,993
                Gross profit                                      20,556          22,337          39,375          42,233
Selling and administrative expense                                11,999          11,791          23,938          23,617
                Earnings from operations                          8,557           10,546          15,437          18,616
Other (expense) income:
        Interest expense                                          (435       )    (285       )    (629       )    (573       )
        Other, net                                                381             358             281             590
                                                                  (54        )    73              (348       )    17
                Earnings before income taxes                      8,503           10,619          15,089          18,633
Income tax expense (benefit):
        Current                                                   4,752           4,006           7,245           6,334
        Deferred                                                  115             (14        )    61              673
                                                                  4,867           3,992           7,306           7,007
                Net earnings                                      3,636           6,627           7,783           11,626
Preferred dividends                                               2,156           2,156           4,312           4,312
                Net earnings applicable to common stockholders  $ 1,480           4,471           3,471           7,314
Earnings per common share:
        Basic                                                   $ .08             .25             .19             .41
        Diluted                                                 $ .08             .25             .19             .41
Weighted average common shares outstanding:
        Basic                                                     17,962,875      17,962,706      17,962,875      17,961,873
        Diluted                                                   17,962,875      17,971,444      17,962,875      17,972,490

THE ARISTOTLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
Assets                                                             June 30,     December 31,  June 30,
                                                                   2009         2008          2008
                                                                   (unaudited)                (unaudited)
Current assets:
       Cash and cash equivalents                                $  22,905       15,290        6,444
       Marketable securities                                       4,040        4,437         3,195
       Investments                                                 2,927        2,876         21,656
       Accounts receivable, net                                    17,766       14,048        20,902
       Inventories, net                                            46,257       44,653        48,215
       Prepaid expenses and other                                  5,292        8,542         5,034
       Income tax receivable                                       912          5,396         -
       Deferred income taxes                                       4,344        4,644         1,879
                    Total current assets                           104,443      99,886        107,325
Property, plant and equipment, net                                 27,514       27,808        28,603
Goodwill                                                           13,859       13,712        14,358
Deferred income taxes                                              6,668        6,668         5,646
Investments                                                        4,318        4,318         4,318
Other assets                                                       1,046        884           604
                    Total assets                                $  157,848      153,276       160,854
Liabilities and Stockholders' Equity
Current liabilities:
       Current installments of long-term debt                   $  300          294           303
       Trade accounts payable                                      8,952        9,576         11,762
       Accrued expenses                                            12,736       11,641        7,191
       Income taxes                                                -            -             240
       Accrued dividends payable                                   2,156        2,156         2,156
                    Total current liabilities                      24,144       23,667        21,652
Long term debt, less current installments                          10,211       10,364        11,506
Long term pension obligations                                      5,639        5,891         2,617
Other long term accruals                                           2,482        2,467         2,449
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         7,683
       Retained earnings                                           38,450       34,979        42,278
       Accumulated other comprehensive earnings (loss)             (3,197  )    (4,211  )     240
                    Total stockholders' equity                     115,372      110,887       122,630
                    Total liabilities and stockholders' equity  $  157,848      153,276       160,854

SOURCE: 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