UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to _____________
Commission file number 0-14669
The Aristotle Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
27 Elm Street, New Haven, Connecticut
(Address of principal executive offices)
06-1165854
(I.R.S. Employer
Identification No.)
06510
(Zip Code)
Registrant's telephone number, including area code:
(203) 867-4090
---------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
As of February 10, 2001, 1,887,179 shares of Common Stock, $.01 par value
per share, were outstanding.
THE ARISTOTLE CORPORATION
INDEX OF INFORMATION CONTAINED IN FORM 10-Q FOR THE
QUARTER ENDED DECEMBER 31, 2000
Page
----
Part I - Financial Information
Item 1 - Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at December 31, 2000
and June 30, 2000...............................................3
Condensed Consolidated Statements of Operations for the Three
and Six Months Ended December 31, 2000 and 1999.................4
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended December 31, 2000 and 1999.....................5
Notes to Condensed Consolidated Financial Statements................6
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................10
Item 3 - Quantitative and Qualitative Disclosure About Market Risk............12
Part II - Other Information
Item 1 - Legal Proceedings....................................................14
Item 4 - Submission of Matters to a Vote of Security Holders..................14
Item 6 - Exhibits and Reports on Form 8-K.....................................15
Signatures....................................................................16
Exhibit Index.................................................................17
2
THE ARISTOTLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except for share data)
December 31, June 30,
2000 2000
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents ................................................... $ 3,429 $ 4,951
Marketable securities ....................................................... 1,911 1,806
Accounts receivable, net .................................................... 525 465
Inventories ................................................................. 940 928
Other current assets ........................................................ 207 251
--------- ---------
Total current assets ................................................... 7,012 8,401
--------- ---------
Property and equipment, net ...................................................... 1,535 1,365
--------- ---------
Other assets:
Goodwill, net of amortization of $456 and $267 at December 2000 and June 2000 7,042 5,428
Other noncurrent assets ..................................................... 54 17
--------- ---------
7,096 5,445
--------- ---------
$ 15,643 $ 15,211
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt ........................................ $ 255 $ 253
Accounts payable ............................................................ 226 127
Accrued expenses ............................................................ 693 492
Deferred income ............................................................. 100 --
Accrued tax reserves ........................................................ 720 720
--------- ---------
Total current liabilities .............................................. 1,994 1,592
--------- ---------
Long term debt, net of current maturities ........................................ 1,245 1,672
--------- ---------
Stockholders' equity:
Common stock, $.01 par value, 3,000,000 shares authorized, 1,904,613
shares issued ............................................................ 19 19
Additional paid-in capital .................................................. 163,324 163,324
Retained earnings (deficit) ................................................. (150,686) (151,035)
Treasury stock, at cost, 17,434 shares and 17,834 shares at December 31 and
June 30, respectively .................................................... (91) (93)
Net unrealized investment losses ............................................ (162) (268)
--------- ---------
Total stockholders' equity ............................................. 12,404 11,947
--------- ---------
$ 15,643 $ 15,211
========= =========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
THE ARISTOTLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(dollars in thousands, except per share data)
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
2000 1999 2000 1999
---- ---- ---- ----
Net sales ................................................ $ 1,944 $ 1,687 $ 3,732 $ 3,333
Cost of goods sold ....................................... 959 979 1,918 1,954
------- ------- ------- -------
Gross profit ........................................ 985 708 1,814 1,379
------- ------- ------- -------
Selling expenses ......................................... 279 116 392 205
Product development ...................................... 147 13 161 27
General and administrative expenses ...................... 390 404 866 764
Goodwill amortization .................................... 121 57 189 114
------- ------- ------- -------
Operating income .................................... 48 118 206 269
------- ------- ------- -------
Other income (expense):
Investment and interest income ......................... 93 95 201 171
Interest expense ....................................... (33) (45) (71) (85)
------- ------- ------- -------
Income from continuing operations before income taxes 108 168 336 355
Provision for income taxes ............................... (5) -- (22) (30)
------- ------- ------- -------
Income from continuing operations ................... 103 168 314 325
Minority interest ........................................ 19 -- 35 --
------- ------- ------- -------
Net income .......................................... 122 168 349 325
Preferred dividends ...................................... -- 54 -- 109
------- ------- ------- -------
Net income applicable to common shareholders ........ $ 122 $ 114 $ 349 $ 216
======= ======= ======= =======
Basic earnings per common share .......................... $ .06 $ .09 $ .19 $ .18
======= ======= ======= =======
Diluted earnings per common share ........................ $ .06 $ .09 $ .18 $ .17
======= ======= ======= =======
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
THE ARISTOTLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(dollars in thousands)
Six Months Ended
December 31,
------------
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ...................................................................... $ 349 $ 325
Adjustments to reconcile net income to net cash provided by operating activities:
Goodwill amortization ......................................................... 189 114
Depreciation and amortization ................................................. 99 97
Minority interest ............................................................. (35) --
Changes in assets and liabilities:
Accounts receivable ....................................................... 295 (97)
Inventories ............................................................... (11) 44
Tax receivable ............................................................ -- 935
Other assets .............................................................. 89 (92)
Accounts payable .......................................................... (38) (49)
Accrued expenses .......................................................... (7) (111)
Deferred income ........................................................... (14) --
------- -------
Net cash provided by operating activities ............................. 916 1,166
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Redemption of marketable securities ............................................. -- 360
Purchase of Safe Passage, net of $20 of cash acquired ........................... (1,746) --
Investment in on-line university project ........................................ (28) --
Purchase of property and equipment .............................................. (121) (49)
------- -------
Net cash (used in) provided by investing activities ................... (1,895) 311
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of revolving loan ..................................................... (116) (5,000)
Proceeds from credit agreement .................................................. -- 2,000
Principal debt payments ......................................................... (412) (75)
Repayment of capital lease obligations .......................................... (15) (12)
Purchase of treasury stock ...................................................... -- (22)
Payment of dividends on preferred stock ......................................... -- (109)
------- -------
Net cash used in provided by financing activities .................... (543) (3,218)
------- -------
DECREASE IN CASH AND CASH EQUIVALENTS ............................................... (1,522) (1,741)
CASH AND CASH EQUIVALENTS, beginning of period ...................................... 4,951 5,849
------- -------
CASH AND CASH EQUIVALENTS, end of period ............................................ $ 3,429 $ 4,108
======= =======
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
THE ARISTOTLE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000
(Unaudited)
1. Nature of Operations
The Aristotle Corporation ("Aristotle") is a holding company which,
through its wholly-owned subsidiaries, Simulaids, Inc. ("Simulaids") and Safe
Passage International, Inc. ("Safe Passage"), currently conducts business in two
segments, the health and medical educational products market and the
computer-based training market. Simulaids' primary products include manikins and
simulation kits used for training in CPR, emergency rescue and patient care
fields. Simulaids' 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. Safe Passage
develops and sells computer based training products to government, industry and
educational clients.
On September 14, 2000, Aristotle acquired 80% of the outstanding shares of
common stock (the "Acquisition") of Safe Passage, a privately-held Rochester,
New York-based company, pursuant to a Stock Purchase Agreement dated as of
September 13, 2000 between Aristotle and the Safe Passage shareholders (the
"Sellers"). Accordingly, the Company's 2000 consolidated statement of operations
includes the results of operations of Safe Passage since the date of the
Acquisition. In consideration for such shares, the Company paid an aggregate
purchase price of $1.625 million in cash to the Sellers plus possible additional
future consideration of up to a maximum of $2.3 million based on the operating
performance of Safe Passage during calendar years 2000 and 2001. If and when
such additional consideration is earned, the Company will record the payment as
additional purchase price consideration. At December 31, 2000, no such
consideration was earned. In addition, the Company has incurred approximately
$318,000 of transaction and other related costs associated with the Acquisition.
The Acquisition has been accounted for using the purchase method of
accounting and, accordingly, the purchase price will be allocated to the assets
and liabilities acquired based on their fair market values at the date of the
Acquisition. The excess cost over the fair value of net assets acquired, which
amounted to approximately $1.8 million, is reflected as goodwill and will be
amortized over seven years.
Operating results for the three and six months ended December 31, 2000 and
1999, on a pro forma basis as though Safe Passage was acquired as of the first
day of each period are as follows (dollars in thousands except share data):
Three Months Ended December 31
2000 1999
---- ----
(unaudited) (unaudited)
Net sales ......................................... $1,944 $1,912
Net income (loss) applicable to common shareholders 122 (252)
Basic earnings per common share ................... .06 (.20)
Diluted earnings per common share ................. .06 (.20)
6
Six Months Ended December 31
2000 1999
---- ----
(unaudited) (unaudited)
Net sales ........................................ $4,419 $4,508
Net income applicable to common shareholders ... 536 184
Basic earnings per common share .................. .28 .15
Diluted earnings per common share ................ .28 .14
The pro forma financial information is presented for informational
purposes only and is not necessarily indicative of the operating results that
would have occurred had the Acquisition been consummated as of the above dates,
nor are they necessarily indicative of the future operating results. The pro
forma adjustments include amortization of intangibles, decreased interest income
and state income taxes on the income of Safe Passage.
Unless the context indicates otherwise, all references herein to the
"Company" for the three and six months ended December 31, 1999 include only
Aristotle, Simulaids and S-A Subsidiary, and all other references herein to the
"Company" include Aristotle, Simulaids, Safe Passage and S-A Subsidiary.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and six months ended December 31, 2000 are not necessarily indicative of
results that may be expected for the year ending June 30, 2001. For further
information, refer to the consolidated financial statements and notes included
in Aristotle's Annual Report on Form 10-K for the year ended June 30, 2000.
2. Earnings per Common Share
The Company calculates earnings per share in accordance with the
provisions of SFAS 128, "Earnings Per Share." In addition, for the three and six
months ended December 31, 2000, there were an additional 30,164 options
exercisable whose exercise price exceeded the average market price for the
periods and therefore are excluded in the computation of diluted earnings per
share. For the three and six months December 31, 2000 and 1999, basic and
diluted earnings per share are calculated as follows:
Three Months Ended December 31
(in thousands of dollars, except share and per share data)
2000 1999
---- ----
Basic Earnings per share:
Numerator
Income from continuing operations .................. $ 122 $ 168
Preferred dividends ................................ -- (54)
----- -----
Net income applicable to common shareholders .... $ 122 $ 114
===== =====
7
Denominator
Weighted average shares outstanding ............ 1,886,922 1,230,160
----------- -----------
Basic Earnings Per Share Per Common Shareholder
Net income ................................. $ .06 .09
=========== ===========
2000 1999
---- ----
Diluted Earnings per Share:
Numerator
Income from continuing operations .............. $ 122 $ 168
Preferred dividends ............................ -- (54)
----------- -----------
Net income applicable to common shareholders $ 122 $ 114
=========== ===========
Denominator
Weighted average shares outstanding ............ 1,920,789 1,296,215
=========== ===========
Diluted Earnings Per Share Per Common Shareholder
Net income ................................. $ .06 $ .09
=========== ===========
Six Months Ended December 31
(in thousands of dollars, except share and per share data)
Basic Earnings per share:
Numerator
Income from continuing operations .............. $ 349 $ 325
Preferred dividends ............................ -- (109)
----------- -----------
Net income applicable to common shareholders $ 349 $ 216
=========== ===========
Denominator
Weighted average shares outstanding ............ 1,886,851 1,231,639
=========== ===========
Basic Earnings Per Share Per Common Shareholder
Net income ................................. $ .19 .18
=========== ===========
Diluted Earnings per Share:
Numerator
Income from continuing operations ............... $ 349 $ 325
Preferred dividends ............................ -- (109
----------- -----------
Net income applicable to common shareholders $ 349 $ 216
=========== ===========
Denominator
Weighted average shares outstanding ............ 1,914,507 1,297,694
----------- -----------
Diluted Earnings Per Share Per Common Shareholder
Net income ................................. $ .18 $ .17
=========== ===========
3. Comprehensive Income
The Company has adopted SFAS No. 130, "Reporting Comprehensive Income"
which discloses changes in equity that result from transactions and economic
events from non-owner sources. Comprehensive income for the three and six months
ended December 31, 2000 and 1999 is as follows:
8
Three Months Ended
December 31,
------------
(Unaudited)
(In thousands of dollars)
2000 1999
---- ----
Net income .................................... $ 122 $ 168
Net unrealized investment gain (loss) ......... 78 (105)
----- -----
Comprehensive income ....................... $ 200 $ 63
===== =====
Six Months Ended
December 31,
------------
(Unaudited)
(In thousands of dollars)
2000 1999
---- ----
Net income .................................... $ 349 $ 325
Net unrealized investment gain (loss) ......... 106 (160)
----- -----
Comprehensive income .......................... $ 455 $ 165
===== =====
4. Segment Reporting
The Company has two reportable segments: the health and medical
educational products segment and the computer-based training segment. The health
and educational products segment produces manikins and simulation kits used for
training in CPR, emergency rescue and patient care fields. The computer-based
training segment develops and sells computer-based training products to
government, industry and educational clients.
The Company's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business requires different technology and marketing strategies. Each of the
businesses was acquired as a unit, and the management at the time of the
acquisition was retained. The results of each segment for the three and six
months ended December 31, 2000 are as follows (in thousands of dollars):
9
Three Months Ended
Health Products Computer Training Corporate Total
--------------- ----------------- --------- -----
Net sales $1,758 $ 186 $ -- $1,944
Costs and expenses 1,384 411 101 1,896
Operating income (loss) 374 (225) (101) 48
Net income (loss) 196 (198) 124 122
Six Months Ended
Health Products Computer Training Corporate Total
--------------- ----------------- --------- -----
Net sales $3,532 $ 200 $ -- $3,732
Costs and expenses 2,785 514 227 3,526
Operating income (loss) 747 (314) (227) 206
Net income (loss) 391 (272) 230 349
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
This discussion and analysis of financial condition and results of
operations will review the results of operations of the Company, on a
consolidated basis, for the three and six months ended December 31, 2000, as
compared to the three and six months ended December 31, 1999. This discussion
and analysis of financial condition and results of operations have been derived
from, and should be read in conjunction with, the unaudited Consolidated
Financial Statements and Notes to Consolidated Financial Statements contained
elsewhere in this report.
Results of Operations of the Company
Three Months Ended December 31, 2000 As Compared to the Three Months Ended
December 31, 1999.
Net sales for the three months ended December 31, 2000 were $1,944, or
15.2% higher than the $1,687 recorded for the three months ended December 31,
1999. The increase primarily reflects the inclusion of a full
10
quarter's impact of Safe Passage of $185, which was acquired in September of
2000, and a 4.3% increase for Simulaids.
Gross profit for the three months ended December 31, 2000 was $985, or
39.1% higher than the $708 recorded for the three months ended December 31, 1999
and the gross margin percentage increased to 50.7% from 42.0%. The increase in
gross profit percentage mainly reflects high margins on the Safe Passage
business, which was acquired in September of 2000, and improved performance of
Simulaids.
Selling expense for the three months ended December 31, 2000 was $279, or
140.5% higher than the $116 recorded for the three months ended December 31,
1999. The increase mainly reflects the inclusion of a full quarter's impact of
Safe Passage, which was acquired in September of 2000.
Product development for the three months ended December 31, 2000 was $147
versus $13 for the three months ended December 31, 1999. The increase mainly
reflects the inclusion of a full quarter's impact of Safe Passage, which was
acquired in September of 2000.
The Company's general and administrative expenses for the three months
ended December 31, 2000 was $390, or 3.5% lower than the $404 recorded for the
three months ended December 31, 1999.
Goodwill amortization for the current fiscal quarter increased by 112.3%
to $121 from goodwill amortization for the prior fiscal year of $57. The
increase in goodwill reflects amortization incurred for the Safe Passage
business.
Investment and interest income was $93 and $95 for the three months ended
December 31, 2000 and 1999, respectively. The decrease in 2000 was mainly due to
lower investments, reflecting the utilization of investments in the purchase of
Safe Passage.
Interest expense for the three months ended December 31, 2000 was $33
versus $45 in the prior year period. The decrease reflected lower debt levels
due to principal payments made during the prior twelve months.
The income tax provision for the three months ended December 31, 2000 was
$5. The tax provision primarily represents state taxes due to the utilization of
federal net operating loss carryforwards to offset federal taxable income.
There were no preferred dividends for the three months ended December 31,
2000 compared to $54 for the three months ended December 31, 1999. The decrease
was due to the conversion of Aristotle Preferred Stock into shares of Common
Stock from February 2000 through May 2000.
Six Months Ended December 31, 2000 As Compared to the Six Months Ended
December 31, 1999.
Net sales for the six months ended December 31, 2000 increased 12.0% to
$3,732 compared to net sales of $3,333 for the prior year. The increase
primarily reflected higher volume of manikin sales to existing domestic and
international distributors and Safe Passage net sales of $200 since the date of
Acquisition.
Gross profit for the six months ended December 31, 2000 increased 31.5% to
$1,814 from $1,379 for the prior year and the gross margin percentage increased
to 48.6% from 41.4%. The increase in gross profit percentage mainly reflected
improved performance of Simulaids and high margins on the Safe Passage software
business.
11
Selling expense for the six months ended December 31, 2000 was $392, or
91.2% higher than the $205 recorded for the six months ended December 31, 1999.
The increase mainly reflects the inclusion of a full quarter's impact of Safe
Passage, which was acquired in September of 2000.
Product development for the six months ended December 31, 2000 was $161
versus $27 for the six months ended December 31, 1999. The increase mainly
reflects the inclusion of a full quarter's impact of Safe Passage, which was
acquired in September of 2000.
The Company's general and administrative expenses for the six months ended
December 31, 2000 was $866, or 13.4% higher than the $764 recorded for the six
months ended December 31, 1999. The increase mainly reflects the inclusion of a
full quarter's impact of Safe Passage, which was acquired in September of 2000.
Goodwill amortization for the six months ended December 31, 2000 increased
by 65.8% to $189 from goodwill amortization for the prior year period of $114.
The increase in goodwill reflects amortization incurred for the Safe Passage
business.
Investment and interest income was $201 and $171 for the six months ended
December 31, 2000 and 1999, respectively. The increase in 2000 mainly reflects
earnings on higher average investment balances generated from the income of
Simulaids partially offset by utilization of investment balances in the purchase
of Safe Passage.
Interest expense for the six months ended December 31, 2000 was $71 versus
$85 in the prior year period. The decrease reflected lower debt levels due to
principal payments made during the prior twelve months.
The income tax provision for the six months ended December 31, 2000 was
$22 compared to $30 for the six months ended December 31, 1999. The tax
provisions primarily represent state taxes due to the utilization of federal net
operating loss carryforwards to offset federal taxable income.
There were no preferred dividends for the six months ended December 31,
2000 compared to $109 for the six months ended December 31, 1999. The decrease
was due to the conversion of Aristotle Preferred Stock into shares of Common
Stock from February 2000 through May 2000.
Liquidity and Capital Resources
Aristotle ended the December 31, 2000 quarter with $3,429 in cash and cash
equivalents versus cash and cash equivalents of $4,951 at June 30, 2000. Cash
consumed during the six months ended December 31, 2000 was principally used for
the Safe Passage acquisition of $1,746 and to reduce debt by $543, partially
offset by cash provided by operating activities of $916. The overall decrease in
cash and cash equivalents of $1,522 is detailed below.
The Company generated cash of $916 from operations during the six months
ended December 31, 2000 and $1,166 of cash during the six months ended December
31, 1999. During the six months ended December 31, 2000, the generation of cash
from operations was principally the result of net income of $349, depreciation
and amortization of $288 and the reduction of accounts receivable of $295.
During the six month period ended December 31, 1999, the generation of cash from
operations was principally the result of the receipt of a tax refund of $935,
net income of $325 and depreciation and amortization of $211.
The Company used cash of $1,895 in investing activities during the six
months ended December 31, 2000, and generated cash of $311 from investing
activities during the six months ended December 31, 1999. During the six months
ended December 31, 2000, the utilization of cash was principally due to the
acquisition
12
of Safe Passage of $1,746, capital expenditures of $121 and initial expenditures
for the development of an on-line university with Quinnipiac University. During
the six month period ended December 31, 1999, the generation of cash was
principally due to the redemption of marketable securities of $360 partially
offset by capital expenditures of $49.
The Company utilized cash of $543 in financing activities during the six
months ended December 31, 2000 and used cash of $3,218 in financing activities
during the six months ended December 31, 1999. Funds utilized in the six months
ended December 31, 2000 reflected the reduction of debt by $543. Funds utilized
in the six month period ended December 31, 1999 primarily reflected the
reduction of debt by $3,087.
Capital resources in the future are expected to be used for the
development of the Simulaids and Safe Passage businesses and to acquire
additional companies. Aristotle anticipates that there will be sufficient
financial resources to meet Aristotle's projected working capital and other cash
requirements for the next twelve months.
Item 3. Quantitative & Qualitative Disclosures About Market Risk
As described below, credit risk and interest rate risk are the primary
sources of market risk to the Company in its marketable securities and
short-term borrowings.
Qualitative
Interest Rate Risk: Changes in interest rates can potentially impact the
Company's profitability and its ability to realize assets and satisfy
liabilities. Interest rate risk is resident primarily in the Company's
marketable securities and short-term borrowings, which have fixed coupon or
interest rates.
Credit Risk: The Company's marketable securities are invested in
investment grade corporate bonds and closed-end bond funds, both domestic and
international, which have various maturities.
Quantitative
The Company's marketable securities and long-term borrowings as of
December 31, 2000 are as follows:
Maturity less Maturity greater
than one year than one year
------------- -------------
Marketable securities
Cost value $ -- $2,073
Weighted average return -- 7.0%
Fair market value $ -- $1,911
Long-term borrowings
Amount $ 255 $1,245
Weighted average interest rate 8.6% 8.6%
Fair market value $ 255 $1,245
13
Certain Factors That May Affect Future Results of Operations
The Company believes that this report may contain forward-looking
statements within the meaning of the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
include statements regarding the Company's liquidity and are based on
management's current expectations and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. The Company 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 the Company to obtain financing and additional
capital to fund its business strategy on acceptable terms, if at all; (ii) the
ability of the Company on a timely basis to find, prudently negotiate and
consummate one or more additional acquisitions; (iii) the ability of the Company
to retain and take advantage of its net operating tax loss carryforward
position; (iv) the Company's ability to manage Simulaids, Safe Passage and any
other to be acquired companies; and (v) general economic conditions. As a
result, the Company's future development efforts and operations involve a high
degree of risk. For further information, refer to the more specific risks and
uncertainties discussed throughout this report.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings.
The Registrant is not a party to any material legal proceedings. See the
following sections of the Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 2000: "Management's Discussion and Analysis of Financial
Conditions and Result of Operations - Income Taxes" and Note 8 - "Income Taxes"
to the Consolidated Financial Statements with regard to Registrant's claims for
tax refunds with the Internal Revenue Service.
Item 4 - Submission of Matters to a Vote of Security Holder.
(a) The information set forth in this Item 4 related to matters
submitted to a vote at the Annual Meeting of Stockholders of The
Aristotle Corporation on November 9, 2000.
(b) The meeting involved the election of the following directors: Robert
Fiscus, Betsy Henley Cohn and John C. Warfel. The directors whose
terms of office as directors continued after the meeting were: John
J. Crawford, John Lahey, Steven B. Lapin, Daniel J. Miglio, Edward
Netter and Sharon M. Oster.
(c) A proposal to elect Robert Fiscus, Betsy Henley Cohn and John C.
Warfel as directors to serve for three-year terms ending in 2003 and
until their successors are duly elected and qualified was approved
with the following vote:
14
Nominee For Against/Withheld
------- --- ----------------
Robert Fiscus 1,138,595 8,073
Betsy Henley Cohn 1,138,159 8,509
John C. Warfel 1,138,439 8,229
(d) Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
See Exhibit Index.
(b) Reports on Form 8-K:
A Form 8-K was filed on September 27, 2000 (Item 2. Acquisition or
Disposition of Assets and Item 7. Financial Statements and Exhibits)
and a Form 8-K/A was filed on November 22, 2000 (Item 7. Financial
Statements and Exhibits) on the purchase by the Registrant of 80% of
the issued and outstanding capital stock of Safe Passage.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE ARISTOTLE CORPORATION
/s/ John J. Crawford
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John J. Crawford
Its President, Chief Executive Officer and
Chairman of the Board
Date: February 14, 2001
/s/ Paul McDonald
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Paul McDonald
Its Chief Financial Officer and Secretary
(Principal Financial and Chief Accounting Officer)
Date: February 14, 2001
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EXHIBIT INDEX
Exhibit
Number Description
------ -----------
Exhibit 2.1--Capital Contribution Agreement dated as of November 19, 1993
by and among The Aristotle Corporation, Aristotle Sub, Inc., The Strouse,
Adler Company and the Stockholders of Strouse. Incorporated herein by
reference to Exhibit 2.1 of The Aristotle Corporation Current Report on
Form 8-K dated April 14, 1994, as amended (the "1994 Current Report").
Exhibit 2.2--Agreement and Plan of Reorganization, dated as of September
13, 2000 (closed on September 14, 2000), by and among the Registrant,
Aristotle Acquisition Sub, Inc., Safe Passage International, Inc., James
S. Viscardi, Michael R. Rooksby, Howard C. Rooksby and Andrew M. Figiel,
incorporated herein by reference to Exhibit 2.1 of the Registrant's
Current Report on Form 8-K dated September 27, 2000.
Exhibit 2.3--Agreement and Plan of Merger, dated as of September 13, 2000
(closed on September 14, 2000), by and between Aristotle Acquisition Sub,
Inc. and Safe Passage International, Inc., incorporated herein by
reference to Exhibit 2.2 of the Registrant's Current Report on Form 8-K
dated September 27, 2000.
Exhibit 3.1--Restated Certificate of Incorporation of The Aristotle
Corporation. Incorporated herein by reference to Exhibit 3.1 of The
Aristotle Corporation Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1997.
Exhibit 3.2--Amended and Restated Bylaws. Incorporated herein by reference
to Exhibit 3.2 of The Aristotle Corporation Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1997.
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