The Aristotle Corp. (ARTL) filed Quarterly Report for the period ended 2009-06-30.
Aristotle Corporation is a holding company which through its wholly-owned subsidiary Simulaids Inc. manufactures health and medical education teaching aids. The company\'s primary products include manikins and simulation kits used for training in CPR emergency rescue and patient care fields. The products are sold throughout the United States and internationally via distributors and catalogs to end users such as fire and emergency medical departments and nursing and medical schools. The Aristotle Corp. has a market cap of $90.3 million; its shares were traded at around $5.03 with a P/E ratio of 7.8 and P/S ratio of 0.4. The Aristotle Corp. had an annual average earning growth of 11.3% over the past 5 years.
Highlight of Business Operations:
Selling and administrative expenses for the second quarter of 2009 increased 1.8% to $12.0 million from $11.8 million in the comparable period in 2008. As a percent of net sales, selling and administrative expenses amounted to 23.3% and 20.8% for the second quarters of 2009 and 2008, respectively. Selling and administrative expenses include advertising and catalog costs, warehouse and shipping activities, customer service and general administrative functions. Selling and administrative expenses for the second quarter of 2009 were primarily impacted by: (i) a decrease in salaries and wages of $.5 million, or 7.4%, as a result of changes in the number of employees due to sales declines; (ii) an increase in group health care costs of $.3 million; and (iii) an increase in catalog and advertising costs of 2.8% or $.1 million. Selling and administrative expenses for the second quarter of 2008 were reduced by an insurance recovery of $.7 million.
Interest expense for the second quarter of 2009 increased 52.6% to $435 thousand from $285 thousand for the second quarter of 2008. The increase in interest expense is principally due to the estimated interest due of $239 thousand related to the settlement of the IRS audit (see ”Income Tax Provision” below), offset by a decrease in the average effective interest rate on outstanding debt under the Company’s primary line of credit to 2.6% during the second quarter of 2009 compared to 3.8% during the second quarter of 2008. Interest expense of $.1 million in each of the second quarters of 2009 and 2008 relates to other long-term accruals established in the fourth quarter of 2006 in connection with the transfer of ownership of certain assets.
At June 30, 2009, the Company had working capital of $80.3 million, increasing from $76.2 million at December 31, 2008. At June 30, 2008, the Company had working capital of $85.7 million. Cash and cash equivalents increased $7.6 million in the six months ended June 30, 2009, ending the period at $22.9 million. The increase in the generation of cash and cash equivalents during the six months ended June 30, 2009 as compared to the same period in 2008 is primarily due to the following:
The Company generated cash of $.1 million from investing activities in the six months ended June 30, 2009, compared to a $5.3 million use of cash for the comparable period in 2009. In the six months ended June 30, 2009, the Company used $.6 million to fund the purchase of fixed assets, and generated $.7 million from the sale of marketable securities. In the six months ended June 30, 2008, the Company used $2.2 million to fund the purchase of fixed assets, including $1.2 million for renovations of an existing facility.
During the six months ended June 30, 2009 and 2008, the Company invested $0 and $.5 million, respectively, in marketable securities (see Note 6 of the Notes to Condensed Consolidated Financial Statements included in Item 1 of this Form 10-Q). Also during these comparable six month periods, the Company invested $0 and $3.0 million, respectively, in limited partnerships (see Note 7 of the Notes to Condensed Consolidated Financial Statements included in Item 1 of this Form 10-Q).
Financing activities used cash of $4.4 million and $1.3 million in the six months ended June 30, 2009 and 2008, respectively. In the six months ended June 30, 2009, the Company reduced long-term debt by $.1 million. In the six months ended June 30, 2008, net proceeds from borrowings under the Company’s primary credit facility of $2.8 million were needed for seasonal working capital requirements, including the payment of Preferred Stock cash dividends on March 31, 2008.
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