ARTLP The Aristotle (MM)

The Aristotle Corporation (NASDAQ: ARTL; ARTLP) announced today its results of operations for the second quarter and six months ended June 30, 2008. For the second quarter ended June 30, 2008, net earnings applicable to common stockholders were $4.5 million, or $.25 per diluted common share, versus $3.9 million, or $.23 per diluted common share, in the second quarter of 2007. Net earnings applicable to common stockholders for the first six months of 2008 were $7.3 million, or $.41 per diluted common share, compared to $6.3 million, or $.36 per diluted common share, for the comparable six months of 2007. Second quarter net sales in 2008 increased 1.1% to $56.8 million from $56.2 million in the second quarter of 2007. Earnings from operations improved by 9.2% in the second quarter of 2008 to $10.5 million (including a $.7 million insurance recovery), equating to 18.6% of net sales. In the same quarter of 2007, earnings from operations totaled $9.7 million, or 17.2% of net sales. For the six months ended June 30, 2008, net sales increased 2.7% to $107.2 million from $104.4 million for the six months ended June 30, 2007. Earnings from operations increased 9.6% to $18.6 million (including the insurance recovery) in the first six months of 2008, or 17.4% of net sales. In comparison, earnings from operations for the first six months of 2007 were $17.0 million, or 16.3% of net sales. Steven B. Lapin, Aristotle�s President and Chief Operating Officer, stated, �Your Company is pleased to report net sales increases for the 2008 second quarter and year-to-date versus the comparable 2007 periods despite this year�s general economic slowdown throughout the U.S., and that, as a result of management�s diligent attention to cost controls, the growth in operating income has continued to exceed the growth in net sales.� Dean T. Johnson, Aristotle�s Chief Financial Officer, added, �Gross margins for the three and six month periods ended June 30, 2008 were 39.3% and 39.4%, respectively, compared to 38.4% and 38.8% in the same periods of 2007. The improvement in 2008 is primarily due to management�s purchasing strategies implemented in the fourth quarter of 2007 and first quarter of 2008 which have been designed to maximize returns on inventory investments and to limit effects of petroleum-related cost increases.� 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 Six Months Ended June 30, June 30, 2008 � 2007 2008 � 2007 � Net sales $ 56,794 56,202 107,226 104,426 Cost of sales 34,457 34,631 64,993 63,892 Gross profit 22,337 21,571 42,233 40,534 � Selling and administrative expense 11,791 11,917 23,617 23,544 Earnings from operations 10,546 9,654 18,616 16,990 � Other (expense) income: Interest expense (285) (363) (573) (689) Other, net 358 412 590 763 73 49 17 74 Earnings before income taxes 10,619 9,703 18,633 17,064 � Income tax expense (benefit): Current 4,006 2,383 6,334 3,906 Deferred (14) 1,220 673 2,539 3,992 3,603 7,007 6,445 Net earnings 6,627 6,100 11,626 10,619 � Preferred dividends 2,156 2,157 4,312 4,316 Net earnings applicable to common stockholders $ 4,471 3,943 7,314 6,303 � Earnings per common share: Basic $ .25 .23 .41 .36 Diluted $ .25 .23 .41 .36 � Weighted average common shares outstanding: Basic 17,962,706 17,454,704 17,961,873 17,361,153 Diluted 17,971,444 17,487,936 17,972,490 17,392,101 THE ARISTOTLE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) � � � Assets June 30, 2008 December 31, 2007 June 30, 2007 (unaudited) (unaudited) Current assets: Cash and cash equivalents $ 6,444 5,604 7,423 Marketable securities � 3,195 3,335 1,910 Investments 21,656 18,150 15,423 Accounts receivable, net 20,902 15,631 21,934 Inventories, net 48,215 42,297 45,618 Prepaid expenses and other 5,034 9,611 5,080 Deferred income taxes 1,879 2,484 2,680 Total current assets 107,325 97,112 100,068 � Property, plant and equipment, net 28,603 27,476 26,839 � Goodwill 14,358 14,476 14,185 Deferred income taxes 5,646 5,646 8,188 Investments 4,318 4,279 - Other assets 604 446 332 Total assets $ 160,854 149,435 149,612 � Liabilities and Stockholders' Equity Current liabilities: Current installments of long-term debt $ 303 305 294 Trade accounts payable 11,762 10,500 12,040 Accrued expenses 7,191 6,765 6,743 Income Taxes 240 - 922 Accrued dividends payable 2,156 2,156 2,157 Total current liabilities 21,652 19,726 22,156 � Long term debt, less current installments 11,506 8,655 15,317 Long term pension obligations 2,617 2,944 4,303 Other long term accruals 2,449 2,429 2,410 � Stockholders' equity: Preferred stock, Series I 6,489 6,489 6,549 Preferred stock, Series J 65,760 65,760 65,760 Common stock 180 179 179 Additional paid-in capital 7,683 7,580 6,606 Retained earnings 42,278 34,964 26,360 Accumulated other comprehensive earnings (loss) 240 709 (28) Total stockholders' equity 122,630 115,681 105,426 Total liabilities and stockholders' equity $ 160,854 149,435 149,612