SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 2003
THE ARISTOTLE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-14669 06-116854
(State or other (Commission File Number) (IRS Employer
jurisdiction of incorporation) Identification No.)
96 Cummings Point Road, Stamford, CT 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 358-8000
(Former name or former address, if changed since last report)
Page 1 of 2 Pages
Page 2 of 2 Pages
Item 12. Disclosure of Results of Operations and Financial Condition.
On August 1, 2003, The Aristotle Corporation issued a press release announcing financial results for the quarter ended June 30, 2003, a copy of which is attached as Exhibit 99.1.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
THE ARISTOTLE CORPORATION
(Registrant)
By: /s/ H. William Smith
Name: H. William Smith
Title: Vice President, General Counsel
and Secretary
Date: August 5, 2003
EXHIBITS
Exhibit 99.1 Press release issued August 1, 2003.
Exhibit 99.1
For Immediate Release News Release
Contacts:
Bill Smith or Dean Johnson
The Aristotle Corporation
Phone: (203) 358-8000 or (920) 563-2446
Fax: (203) 358-0179 or (920) 563-0234
wsmith@ihc-geneve.com
int@enasco.com
The Aristotle Corporation Announces
2003 Second Quarter Results
Stamford, CT, August 1, 2003 - The Aristotle Corporation (NASDAQ: ARTL; ARTLP) announced today its results of operations for the second quarter of 2003. For financial reporting purposes, the merger of Nasco International, Inc. into The Aristotle Corporation ("Aristotle") on June 17, 2002 was accounted for as a reverse merger. As a result, the historical financial information for the periods up to June 17, 2002 is that of Nasco, and for the periods after June 17, 2002 is that of Aristotle.
For the three months ended June 30, 2003, net revenue was $43.0 million versus $43.3 million in the second quarter of 2002, while gross profit margins improved to 37.8% from 35.4%. Earnings before income taxes and extraordinary gain increased to $5.5 million from $4.8 million, and earnings before extraordinary gain increased to $3.3 million, compared to $2.8 million in the same quarter last year. Net income applicable to common shareholders in the second quarter of 2003 was $1.2 million or $.07 per common share, which includes the accretion of $2.2 million of preferred dividends on the Series I and Series J preferred stocks issued on June 17, 2002, $1.4 million of expense related to the non-cash provision for Federal income taxes and $0.2 million related to the non-cash provision for stock option expense. For the 2002 second quarter, net income applicable to common shareholders was $22.8 million, or $1.49 per common share; in that quarter, $0.3 million in preferred dividends had accreted because preferred shares were issued on June 17, 2002, the tax provision included $0.3 million related to the non-cash provision for Federal income taxes, and less than $0.1 million related to the non-cash provision for stock option expense. In the 2002 period, an extraordinary gain of $20.2 million ($1.33 per share) was also recorded, which primarily resulted from the recognition through purchase accounting of $30.7 million of tax benefits, partially offset by the elimination of Aristotle's pre-merger goodwill and long-term assets of $8.3 million.
For the six months ended June 30, 2003, net revenue was $78.4 million versus $77.8 million in the first six months of 2002. Gross profit margins improved to 37.6% from 35.4% in the prior year. Earnings before income taxes and extraordinary gain increased to $8.7 million from $7.1 million, and earnings before extraordinary gain increased to $5.3 million, compared to $4.3 million in the same year-to-date period last year. Net income applicable to common shareholders in the first six months of 2003 was $1.0 million or $.06 per common share, which includes the accretion of $4.3 million of preferred dividends on the Series I and Series J preferred stocks issued on June 17, 2002, $2.4 million of expense related to the non-cash provision for Federal income taxes and $0.3 million related to the non-cash provision for stock option expense. For the 2002 first six-month period, net income applicable to common shareholders was $24.2 million, or $1.60 per common share; in that period, $0.3 million in preferred dividends had accreted because preferred shares were issued on June 17, 2002, the tax provision included $0.3 million related to the non-cash provision for Federal income taxes, and less than $0.1 million related to the non-cash provision for stock option expense. The 2002 period also included the $20.2 million ($1.34 per share) extraordinary gain referred to above.
"While second quarter revenues experienced the continuing influence of state budget deficits in its educational segment, and difficult national and international economic conditions in its commercial segment, your Company has improved its gross profit margin by 240 basis points through creative product development, comprehensive product selections and effective purchasing practices," noted Steven B. Lapin, Aristotle's President and Chief Operating Officer. "Positively impacted by diligent and appropriate operating cost controls, earnings before the extraordinary gain improved 18% compared to last year's second quarter. 2003's second quarter earnings were aided by the full-period impact of Simulaids versus last year and the successful fulfillment by our Spectrum group of a significant tender from Ontario, Canada, offset, however, by an extraordinary increase in employee health insurance costs funded by your Company, and expected seasonal losses at Haan Crafts which was acquired at the end of May 2003. Although the state, national and international economic environment has yet to stabilize, management's commitments to high quality products, responsive customer service and maximum operating efficiencies remain firm."
"Cash flow from operations improved $1.8 million in the first six months of 2003 compared to the same period last year," stated Dean T. Johnson, Aristotle's Chief Financial Officer. "The improvement in cash flow from operations is attributable primarily to the growth in earnings from operations and the utilization of Federal net operating tax loss carryforwards. Aristotle's June 30, 2003 balance sheet reflects Federal net operating tax loss carryforwards as a $25.2 million element of the $26.6 million deferred tax asset."
About Aristotle
The Aristotle Corporation, founded in 1986, and headquartered in Stamford, CT, is a leading manufacturer and global distributor of educational, health and agricultural products. A selection of over 80,000 items is offered, primarily through catalogs carrying the brand of Nasco (founded in 1941), as well as those bearing the brands of Simulaids, Triarco, Summit Learning, Hubbard Scientific, Scott Resources, Spectrum Educational Supplies, Haan Crafts and To-Sew. Products include educational materials and supplies for substantially all K-12 curricula, molded plastics, biological materials and items for the agricultural, senior care and food industries. Aristotle has approximately 800 employees at its operations in Fort Atkinson, WI, Modesto, CA, Fort Collins, CO, Plymouth, MI, Woodstock, NY, Chippewa Falls, WI, Otterbein, IN and Newmarket, Ontario, Canada.
There are approximately 17 million shares outstanding of Aristotle common stock (NASDAQ: ARTL) and 1 million shares outstanding of 11%, cumulative, convertible, voting, Series I preferred stock (NASDAQ: ARTLP); there are also approximately 11 million privately-held shares outstanding of 12%, cumulative, non-convertible, non-voting shares of Series J preferred stock. Aristotle has about 4,000 shareholders of record.
Further information about Aristotle can be obtained on its website
, at www.aristotlecorp.net.Safe Harbor under 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. 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 companies; (iv) the ability of Aristotle to retain and utilize its Federal net operating tax loss carryforward position; and (v) general economic conditions. 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.
___________________________________________________
Reference is also made to the risk factors set forth in Aristotle's final prospectus dated May 15, 2002 which was filed in connection with the merger with Nasco International, Inc.
THE ARISTOTLE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended |
Six Months Ended |
|||||||||||||
June 30, |
June 30, |
|||||||||||||
2003 |
2002 |
2003 |
2002 |
|||||||||||
Net sales |
$ |
42,961 |
43,322 |
78,402 |
77,851 |
|||||||||
Cost of sales |
26,734 |
27,987 |
48,937 |
50,264 |
||||||||||
Gross profit |
16,227 |
15,335 |
29,465 |
27,587 |
||||||||||
Selling and administrative expense |
10,332 |
10,053 |
20,118 |
19,518 |
||||||||||
Earnings from operations |
5,895 |
5,282 |
9,347 |
8,069 |
||||||||||
Other expense (income): |
||||||||||||||
Interest expense |
371 |
508 |
679 |
966 |
||||||||||
Other, net |
(6) |
8 |
(55) |
(17) |
||||||||||
365 |
516 |
624 |
949 |
|||||||||||
Earnings before income taxes and |
||||||||||||||
extraordinary gain |
5,530 |
4,766 |
8,723 |
7,120 |
||||||||||
Income taxes: |
||||||||||||||
Current |
770 |
1,610 |
979 |
2,512 |
||||||||||
Deferred |
1,414 |
330 |
2,446 |
330 |
||||||||||
2,184 |
1,940 |
3,425 |
2,842 |
|||||||||||
Earnings before extraordinary gain |
3,346 |
2,826 |
5,298 |
4,278 |
||||||||||
Extraordinary gain |
- |
20,237 |
- |
20,237 |
||||||||||
Net earnings |
3,346 |
23,063 |
5,298 |
24,515 |
||||||||||
Preferred dividends |
2,150 |
306 |
4,300 |
306 |
||||||||||
Net earnings applicable to common shareholders |
$ |
1,196 |
22,757 |
998 |
24,209 |
|||||||||
Basic earnings per common share: |
||||||||||||||
Earnings before extraordinary gain, applicable to |
||||||||||||||
common shareholders |
$ |
0.07 |
0.16 |
0.06 |
0.26 |
|||||||||
Extraordinary gain |
- |
1.33 |
- |
1.34 |
||||||||||
Net earnings applicable to common shareholders |
$ |
0.07 |
1.49 |
0.06 |
1.60 |
|||||||||
Diluted earnings per common share: |
||||||||||||||
Earnings before extraordinary gain, applicable to |
||||||||||||||
common shareholders |
$ |
0.07 |
0.16 |
0.06 |
0.26 |
|||||||||
Extraordinary gain |
- |
1.31 |
- |
1.31 |
||||||||||
Net earnings applicable to common shareholders |
$ |
0.07 |
1.47 |
0.06 |
1.57 |
|||||||||
Weighted average common shares outstanding: |
||||||||||||||
Basic |
17,031,687 |
15,290,241 |
17,031,687 |
15,145,922 |
||||||||||
Diluted |
17,120,547 |
15,518,106 |
17,144,852 |
15,373,787 |
THE ARISTOTLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
Assets |
June 30, 2003 |
December 31, 2002 |
|||||
(unaudited) |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
8,850 |
11,299 |
||||
Accounts receivable, net |
19,152 |
12,452 |
|||||
Inventories |
34,705 |
27,941 |
|||||
Prepaid expenses and other |
6,102 |
7,766 |
|||||
Deferred income taxes |
7,251 |
7,251 |
|||||
Total current assets |
76,060 |
66,709 |
|||||
Property, plant and equipment, net |
17,126 |
9,153 |
|||||
Goodwill |
10,908 |
7,008 |
|||||
Deferred income taxes |
19,315 |
21,761 |
|||||
Other assets |
333 |
430 |
|||||
Total assets |
$ |
123,742 |
105,061 |
||||
Liabilities and Stockholders' Equity |
|||||||
Current liabilities: |
|||||||
Current installments of long-term debt |
$ |
10,560 |
9,108 |
||||
Trade accounts payable |
12,216 |
5,522 |
|||||
Accrued expenses |
3,798 |
3,979 |
|||||
Accrued dividends payable |
2,150 |
2,150 |
|||||
Income taxes |
690 |
1,005 |
|||||
Total current liabilities |
29,414 |
21,764 |
|||||
Long-term debt, less current installments |
37,463 |
27,579 |
|||||
Stockholders' equity: |
|||||||
Preferred stock, Series I, convertible, voting, 11% cumulative, $6.00 stated value; $.01 par value; 2,400,000 shares authorized, 1,046,716 shares issued and outstanding |
6,280 |
6,280 |
|||||
Preferred stock, Series J, non-voting, 12% cumulative, $6.00 stated value; $.01 par value; 11,200,000 shares authorized, 10,984,971 shares issued and outstanding |
65,760 |
65,760 |
|||||
Common stock, $.01 par value; 20,000,000 shares authorized, 17,031,687 shares issued and outstanding |
170 |
170 |
|||||
Additional paid-in capital |
512 |
251 |
|||||
Accumulated deficit |
(15,626) |
(16,624) |
|||||
Accumulated other comprehensive loss |
(231) |
(119) |
|||||
Total stockholders' equity |
56,865 |
55,718 |
|||||
Total liabilities and stockholders' equity |
$ |
123,742 |
105,061 |