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 March 31, 1995
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 AND SUBSIDIARY
(Exact name of registrant as specified in its charter)
DELAWARE 06-1165854
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
129 Church Street, Suite 810
New Haven, Connecticut 06510
(Address of principal executive offices) (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 April 30, 1995, 1,087,534 shares of Common Stock were
outstanding.
<PAGE>
THE ARISTOTLE CORPORATION AND SUBSIDIARY
INDEX OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page
Part I - Financial Information
Item 1 - Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at
March 31, 1995 and June 30, 1994 3
Condensed Consolidated Statements of
Operations for the Three and Nine Months
Ended March 31, 1995 and 1994 4
Condensed Consolidated Statements of Changes
in Stockholders' Equity for the Nine Months
Ended March 31, 1995 5
Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended March 31,
1995 and 1994 6
Notes to Condensed Consolidated Financial
Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
Part II - Other Information
Item 1 - Legal Proceedings 14
Item 6 - Exhibits and Reports on Form 8-K 14
<PAGE>
<TABLE>
THE ARISTOTLE CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands, except for share data)
<CAPTION>
<S> <C> <C>
March 31, June 30,
1995 1994
ASSETS
Current assets:
Cash and cash equivalents $ 186 $ 12
Accounts receivable, net of reserves of $111 and $177, respectively 3,321 3,564
Inventories 12,142 10,071
Other current assets 938 1,288
Total current assets 16,587 14,935
Property and equipment, net 902 581
Other assets:
Marketable securities held in escrow at market value 4,682 4,638
Employee notes receivable 354 354
Goodwill, less amortization of $33 and $8, respectively 1,761 1,610
Patents and trademarks, net 90 98
Other noncurrent assets 363 146
7,250 6,846
TOTAL $24,739 $22,362
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt $ 212 $ 6,736
Accounts payable 1,980 1,904
Accrued expenses 819 1,090
Total current liabilities 3,011 9,730
Long-term debt, less current maturities 9,428 251
Reserve for tax refund claim 3,982 3,982
Total liabilities 16,421 13,963
Minority interest in subsidiary's preferred stock 2,454 2,454
Minority interest in subsidiary's common stock 179 137
Commitments and contingencies
Redeemable preferred stock, $.01 par value;
3,000,000 shares authorized; 122,691 Series A,
61,345 Series B, 61,345 Series C and 24,998 Series D
issued and outstanding 3 3
Stockholders' equity:
Common stock, $.01 par value; 3,000,000 shares
authorized; 1,105,801 shares issued and outstanding 11 11
Additional paid-in capital 159,843 159,816
Retained earnings (deficit) (153,952) (153,815)
Treasury stock at cost - 18,267 shares
and 21,610 shares, respectively ( 151) ( 143)
Net unrealized investment losses ( 69) ( 64)
Total stockholders' equity 5,682 5,805
TOTAL $24,739 $22,362
<PAGE>
<FN>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE ARISTOTLE CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(dollars in thousands, except for share data)
<CAPTION>
Three Months Nine Months
Ended March 31, Ended March 31,
<S> <C> <C> <C> <C>
1995 1994 1995 1994
Net sales $ 5,049 $ - $ 15,264$ -
Cost of goods sold 3,927 - 11,149 -
Gross profit 1,122 - 4,115 -
Operating expenses:
Selling 627 - 2,031 -
General and administrative 482 166 1,422 723
Product development 113 - 369 -
Operating income (loss)( 100)( 166) 293 ( 723)
Other income (expense):
Investment and interest income 81 74 244 249
Loss on sale of securities - - - ( 48)
Interest expense ( 194) - ( 483) -
Income (loss) before income taxes
and minority interest( 213)( 92) 54 ( 522)
Income tax expense (benefit) - ( 19) 22 ( 86)
Income (loss) before minority
interest ( 213)( 73) 32 ( 436)
Minority interest 52 - 169 -
NET LOSS $ ( 265)$( 73)$( 137) $( 436)
Net loss per share $ ( 0.24)$( 0.07)$( 0.12) $( 0.40)
Weighted average shares outstanding1,114,2821,080,1871,110,661 1,081,988
<FN>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE ARISTOTLE CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
NINE-MONTH PERIOD ENDED MARCH 31, 1995
(Unaudited)
(dollars in thousands)
<CAPTION>
Net
AdditionalRetained Unrealized
CommonPaid-in EarningsTreasuryInvestment
Stock Capital (Deficit) Stock Losses Total
<S> <C> <C> <C> <C> <C> <C>
Balance - June 30, 1994$ 11$159,816$(153,815)$( 143)$( 64)$ 5,805
Net loss - - ( 137) - -( 137)
Purchase of treasury stock - - - ( 11) -( 11)
Issuance of treasury stock - 27 - 3 - 30
Net unrealized investment loss - - - - ( 5)( 5)
Balance - March 31, 1995$ 11$159,843$(153,952)$( 151)$( 69)$ 5,682
<FN>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
THE ARISTOTLE CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(dollars in thousands)
<CAPTION>
Nine Months
Ended March 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net loss $( 137) $( 436)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 209 -
Changes in assets and liabilities:
Loss on sale of investments held for sale - 48
Accounts receivable 242 -
Inventories ( 2,071) -
Other assets ( 99) 36
Accounts payable 77 -
Accrued expenses ( 270) 223
Net cash used in operating activities( 2,049) ( 129)
Cash flows from investing activities:
Professional fees capitalized for
acquisition activities - ( 487)
Proceeds from sale of investments
held for sale - 7,778
Purchase of investment securities - (3,841)
Purchase of property and equipment ( 490) -
Minority interest 42 -
Net cash provided by (used in) investing
activities ( 448) 3,450
Cash flows from financing activities:
Transfer from cash to cash held in escrow - (3,982)
Net payments under line of credit 255 -
Issuance of treasury stock 30 -
Principal payments under note payable ( 103) -
Proceeds from issuance of long term debt 2,500 -
Purchase of treasury stock ( 11) ( 143)
Net cash provided by (used in) financing
activities 2,671 (4,125)
INCREASE IN CASH AND CASH EQUIVALENTS 174 ( 804)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 12 5,832
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 186 $ 5,028
<FN>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
THE ARISTOTLE CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The Aristotle Corporation ("Aristotle") is a holding company for
its subsidiary, Aristotle Sub, Inc. ("ASI"). ASI is a holding
company for The Strouse, Adler Company ("Strouse"). Strouse
designs, manufactures and markets women's intimate apparel.
On April 11, 1994, Aristotle, through a newly created subsidiary,
ASI, acquired (the "Acquisition") 97.78% of the outstanding common
stock of Strouse. The Acquisition was accounted for as a purchase.
Certain reclassifications have been made to the 1994 financial
statements to make them comparable to the 1995 presentation.
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 nine months ended March 31, 1995 are not
necessarily indicative of results that may be expected for the year
ending June 30, 1995. 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, 1994.
The June 30, 1994 consolidated financial statements contained an
independent auditors report which had an emphasis of a matter and
a going concern paragraph related to outstanding litigation
asserted as a result of Aristotle's former subsidiary's banking
activities.
2. Earnings per Common Share
Weighted average shares outstanding are primary; treasury stock has
not been included. At March 31, 1995, the weighted average shares
include 33,424 shares of common stock equivalents.
<PAGE>
3. Debt Agreement
On November 9, 1994, Strouse and Fleet Bank entered into a new
three-year agreement which established a line-of-credit facility
and two term loan facilities. The line-of-credit facility provides
for maximum borrowings of $8.5 million in the first year, $11.0
million in the second year, and $13.0 million in the third year.
Primary borrowings under the line-of-credit (the "Borrowing Base")
are limited to 80% of eligible accounts receivable plus the lesser
of (i) 50% of eligible raw materials, 50% of eligible finished
goods, and 20% of eligible work-in-process and (ii) the inventory
caps of $5 million in the first year, $6 million in the second
year, and $7 million in the third year. In addition to the
Borrowing Base, the Fleet Bank agreement permits advances to exceed
the formula amounts (the seasonal "Overadvance") by up to $500,000
in the first year, $1,000,000 in the second year, $1,500,000 in the
third year (so long as the total line-of-credit is not more than
the maximum borrowings allowed and the Overadvance reduces to zero
at each fiscal year end). The interest rate on the line-of-credit
is fixed at 8.3% for the first $3.5 million and varies at prime
plus .25 for the remaining balance. The bank term loan facilities
are a $2.5 million facility which has an interest rate fixed at
8.55% and a $.2 million facility which has an interest rate fixed
at 7.25%. The term loan facilities have a three year term and
require principal payments to reduce the amount outstanding based
on a 15 year amortization for the $2.5 million facility and a 5
year amortization for the $.2 million facility. The Fleet
agreement matures on October 31, 1997.
The new loan agreement with Fleet Bank also provides that (i) the
currently existing $500,000 subordinated loan from Aristotle to
Strouse may be repaid after June 30, 1995 if certain covenants are
achieved, and (ii) Strouse may pay dividends up to an aggregate of
$500,000 per year to Aristotle if certain covenants are achieved.
As of March 31,1995, the balances outstanding on the line-of-
credit and term loans were $6.9 million and $2.6 million,
respectively.
4. Common Stock
In connection with the Acquisition, there was a ten for one
reverse stock split which resulted in fractional shares. As of
March 31, 1995, Aristotle purchased 2,075 fractional shares for
approximately $11,000.
Aristotle issued treasury stock, at fair value, to the Directors'
in partial consideration for services provided.
<PAGE>
THE ARISTOTLE CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The discussion and analysis of financial condition and
results of operations for the three months and nine months ended
March 31, 1995 will discuss and analyze the results of operations
of both Aristotle, on a consolidated basis, and Strouse on a stand-
alone basis. It will also discuss and analyze the financial
condition of Aristotle on a consolidated basis.
Results of Operations of Aristotle
Three Months Ended March 31, 1995 and 1994
Aristotle's net sales for the three months ended March 31,
1995 were $5,049,000, versus no sales for the three months ended
March 31, 1994. The difference between the two periods reflects
the fact that Aristotle's operations for the three months included
the operations of Strouse.
Aristotle's gross profit for the three months ended March 31,
1995 was $1,122,000, or 22.2% of net sales. There was no gross
profit in the prior year three months ended March 31, 1994.
Selling, general and administrative expenses for the three
months ended March 31, 1995 were $1,109,000, compared to $166,000
for the corresponding three months ended March 31, 1994. Expenses
incurred by Aristotle at the parent level for the three months
ended March 31, 1995 were $199,000 and primarily included legal
fees, board of directors fees, corporate insurance costs, and
stockholder expenses. Expenses incurred by Strouse for the three
months ended March 31, 1995 were $910,000.
Product development costs for Aristotle for the three months
ended March 31, 1995 were $113,000 and were incurred by Strouse.
Investment and interest income for the three months ended
March 31, 1995 of $81,000 was primarily generated by two escrowed
investment accounts (the "Escrowed Accounts") with account balances
totaling $4,682,000. Investment income for the prior year three
months ended March 31, 1994 of $74,000 reflected account balances
totaling approximately $9,010,000 at March 31, 1994, but earnings
upon such account balances accrued at a lower rate of interest.
Aristotle's interest expense for the three months ended March
31, 1995 was $194,000, net of intercompany interest expense, and
reflects the debt of Strouse. There was no interest expense in
the prior year three months ended March 31, 1994.
Minority interest expense of $52,000 was principally due to
preferred dividends paid or accrued during the three months ended
March 31, 1995.
Nine Months Ended March 31, 1995 and 1994
<PAGE>
Aristotle's net sales for the nine months ended March 31, 1995
were $15,264,000, versus no sales for the nine months ended March
31, 1994. The difference between the two periods reflects the fact
that Aristotle's operations for the nine months included the
operations of Strouse.
Aristotle's gross profit for the nine months ended March 31,
1995 was $4,115,000, or 27.0% of net sales. There was no gross
profit in the prior year nine months ended March 31, 1994.
Selling, general and administrative expenses for the nine
months ended March 31, 1995 were $3,453,000, compared to $723,000
for the corresponding nine months ended March 31, 1994. Expenses
incurred by Aristotle at the parent level for the nine months ended
March 31, 1995 were $479,000 and primarily included legal fees,
board of directors fees, corporate insurance costs, and stockholder
expenses. Expenses incurred by Strouse for the nine months ended
March 31, 1995 were $2,974,000.
Product development costs for Aristotle for the nine months
ended March 31, 1995 were $369,000 and were incurred by Strouse.
Investment and interest income for the nine months ended March
31, 1995 of $244,000 was primarily generated by two escrowed
investment accounts (the "Escrowed Accounts") with account balances
totaling $4,682,000. Investment income for the prior year nine
months ended March 31, 1994 of $249,000 reflected account balances
totaling approximately $9,010,000 at March 31, 1994, but earnings
upon such account balances accrued at a lower rate of interest.
Aristotle's interest expense for the nine months ended March
31, 1995 was $483,000, net of intercompany interest expense, and
reflects the debt of Strouse. There was no interest expense for
the nine months ended March 31, 1994.
The provision for income taxes for the nine months ended March
31, 1995 was $22,000 and mainly reflects state taxes.
Minority interest expense of $169,000 for the nine months
ended March 31, 1995 was principally due to preferred dividends
paid or accrued.
<PAGE>
<TABLE>
Results of Operations of Strouse
THE STROUSE, ADLER COMPANY
STATEMENT OF OPERATIONS (selected data)
(Unaudited)
(dollars in thousands)
<CAPTION>
Three Months Nine Months
Ended March 31, Ended March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 5,049 $ 3,927 $ 15,264$ 12,388
Cost of goods sold 3,927 2,700 11,149 8,709
Gross profit 1,122 1,227 4,115 3,679
% to net sales 22.2% 31.2% 27.0% 29.7%
Selling, general and administrative 910 880 2,974 2,722
Product development 113 94 369 285
Income from operations 99 253 772 672
% to net sales 2.0% 6.4% 5.1% 5.4%
Interest expense 209 127 536 331
Provision (benefit) for income taxes ( 42) 48 82 116
Net income (loss) $( 68)$ 78$ 154$ 225
</TABLE>
Three Months Ended March 31, 1995 and 1994
Strouse's net sales for the three months ended March 31, 1995
increased 28.6% to $5,049,000, compared to net sales of $3,927,000
for the corresponding period of the prior year. The increase was
generated by a $1,036,000, or a 26.4%, increase in unit sales and
a $86,000 impact from increased prices.
Gross profit for the three months ended March 31, 1995
decreased to $1,122,000 from $1,227,000 for the corresponding prior
year period, and the gross profit percentage decreased to 22.2%
from 31.2%. The decrease in gross profit was mainly a result of
increased subcontracting costs, higher production scrap, an
increased mix of private label sales, and extra costs incurred in
response to delayed deliveries from fabric suppliers, partially
offset by profit generated by sales growth.
Selling, general and administrative expenses for the three
months ended March 31, 1995 were $910,000, compared to $880,000 for
the corresponding period in 1994. The $30,000 increase was
principally a result of increases in staffing and advertising,
partially offset by reduced professional fees.
Product development costs for the three months ended March 31,
1995 were $113,000, compared to $94,000 for the corresponding prior
year period. The increase in costs mainly reflects continued
investment in the product development staff.
Interest expense for the three months ended March 31, 1995
increased to $209,000 from $127,000 in the corresponding prior year
period. The increase reflected higher borrowing rates and higher
borrowing needs to support working capital requirements for
business growth.
The benefit for income taxes for the three months ended March
31, 1995 was $42,000, compared to a provision of $48,000 in the
corresponding prior year period. This reduction in the provision
for income taxes reflects the change in income.
<PAGE>
Nine Months Ended March 31, 1995 and 1994
Strouse's net sales for the nine months ended March 31, 1995
increased 23.2% to $15,264,000, compared to net sales of
$12,388,000 for the corresponding period of the prior year. The
increase was generated by a $2,594,000, or a 20.9%, increase in
unit sales and a $282,000 impact from increased prices.
Gross profit for the nine months ended March 31, 1995
increased to $4,115,000 from $3,679,000 for the corresponding prior
year period, and the gross margin decreased to 27.0% from 29.7%.
The increase in gross profit was mainly a result of the sales
growth, while the decrease in the gross margin primarily resulted
from increased subcontracting costs, higher production scrap, an
increased mix of private label sales, and extra costs incurred in
response to delayed deliveries from fabric suppliers.
Selling, general and administrative expenses for the nine
months ended March 31, 1995 were $2,974,000, compared to $2,722,000
for the corresponding period in 1994. The $252,000 increase was
principally a result of increases in sales commissions of $117,000,
increased staffing of $134,000, customer chargebacks of $47,000,
and computer costs of $28,000, partially offset by reductions in
advertising costs of $53,000 and professional fees of $51,000.
Product development costs for the nine months ended March 31,
1995 were $369,000, compared to $285,000 for the corresponding
prior year period. The increase in costs primarily reflects
continued investment in the product development staff.
Interest expense for the nine months ended March 31, 1995
increased to $536,000 from $331,000 in the prior year period. The
increase reflected higher borrowing rates and higher borrowing
needs to support working capital requirements for business growth.
The provision for income taxes for the nine months ended March
31, 1995 was $82,000, compared to $116,000. This reduction in the
provision for income taxes reflects the reduction in income.
Strouse calculates its provision for income taxes on a stand-alone
basis; however, on a consolidated basis, Aristotle intends to use
its federal and state tax loss carryforwards to shelter the taxable
income of Strouse.
Liquidity and Capital Resources of Aristotle
The assets of Aristotle are currently dedicated to support
Strouse's business needs (primarily inventory of $12.1 million and
accounts receivable of $3.3 million) or are held in the Escrowed
Accounts ($4.7 million).
Cash required to fund the working capital needs of Strouse is
supplied principally through its financing arrangement with Fleet
Bank, trade credit, and internally generated funds. On November 9,
1994, Strouse entered into new credit facilities with Fleet Bank.
The new credit facilities are for terms of three years and provide
for two term loan facilities for $2.5 million and $.2 million, and
a formula based line of credit. The loan agreement with Fleet Bank
provides for maximum borrowings on the line of credit of $8.5
million during the first year of the facility, with maximum
borrowings increasing to $13.0 million in the
<PAGE>
third year of the facility. In total, the revolving line of credit
and term loan facilities increase Strouse's borrowing capacity from
$7.7 million, Strouse's maximum borrowing capacity under the prior
Fleet loan agreement, to $11.2 million in the first year of the
facilities, approximately $13.5 million in the second year of the
facilities, and approximately $15.3 million in the third year of
the facilities. The new loan agreement also provides that (i) the
currently existing $500,000 subordinated loan from Aristotle to
Strouse may be repaid after June 30, 1995 if certain covenants are
achieved, and (ii) Strouse may pay dividends up to an aggregate of
$500,000 per year if certain covenants are achieved. Strouse is in
compliance with all bank covenants as of March 31, 1995, but
current projections indicate it will not be in compliance with its
debt service ratio covenant as of year end. Management intends to
seek a waiver or amendment with respect to this covenant. There is
no assurance that management will be able to obtain such waiver or
amendment. See Note 3 of the Notes to Condensed Consolidated
Financial Statements.
As of March 31, 1995, the balances outstanding on the line-of-
credit and term loans were $6.9 million and $2.6 million,
respectively. As of March 31, 1995, additional borrowings
available on the line-of-credit were $.3 million.
If the former stockholders of Strouse do not convert certain
preferred stock of ASI which was issued in connection with the
Acquisition, and if the maximum additional payments to the former
stockholders of Strouse were earned and paid, then Aristotle would
have to pay up to $4.5 million during the next four fiscal years to
such stockholders as part of the Acquisition. Any default in the
payments due to the former stockholders of Strouse could result in
Aristotle returning 59% of the outstanding capital stock of Strouse
to the former stockholders of Strouse. While the new credit
facilities improve the cash flow of Aristotle, Aristotle's ability
to satisfy potential commitments related to the Acquisition during
the next four fiscal years is uncertain and dependent upon several
factors. These factors include Strouse's future growth in
profitability, the outcome and costs of certain legal proceedings
to which Aristotle is a party, and Aristotle's ability to raise new
equity capital.
In addition, (i) $700,000 of the Escrowed Accounts, and (ii)
amounts payable to Aristotle pursuant to certain notes from the
former Strouse stockholders, may be available to fund part of
Aristotle's capital needs. Although there can be no assurance that
the former Strouse stockholders will be able to pay the amounts due
under the notes, if any of the former Strouse stockholders fail to
make such payments, Aristotle's obligation to pay a portion of the
$4.5 million to such stockholders will be decreased
proportionately.
As of May 8, 1995, the balance outstanding on the line-of-
credit was $7.1 million.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
FDIC Tax Claim. Aristotle has previously reported in its Form
10-K for the fiscal year ended June 30, 1994 that it had received
correspondence from the Federal Deposit Insurance Corporation (the
"FDIC") indicating that the FDIC would make a claim that tax
refunds received by Aristotle should belong to the FDIC, as
receiver for Aristotle's former subsidiary, First Constitution
Bank. Aristotle also reported that it had established a reserve of
$4.0 million for this potential claim and that any settlement could
be funded from a special account (the "Account") that had been
established and funded with $4.0 million in accordance with an
agreement with the Office of Thrift Supervision. On April 19,
1995, the FDIC filed a complaint related to this matter captioned
Federal Deposit Insurance Corporation vs. The Aristotle Corporation
in the United States District Court for the District of Connecticut
(Civil No. 395CV00684TFGD). In its complaint, the FDIC seeks
ownership of all amounts in the Account, any further tax refunds to
be received from the Internal Revenue Service, and the return by
Aristotle of any amounts withdrawn from the Account.
Aristotle has previously reported an additional legal matter
entitled Joseph M. Caldrello vs. Federal Deposit Insurance
Corporation in its Form 10-Q for the quarterly period ended
September 30, 1994.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
<PAGE>
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, thereunto duly authorized.
THE ARISTOTLE CORPORATION
/s/ John J. Crawford
John J. Crawford
Chief Executive Officer
Date: May 12, 1995
/s/ Paul M. McDonald
Paul M. McDonald
Chief Financial Officer
Date: May 12, 1995
<PAGE>
EXHIBIT INDEX
Page
Exhibit 27.1 Financial Data Schedule 17
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the condensed consolidated balance sheets and condensed
consolidated statements of operations and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 186,000
<SECURITIES> 4,682,000
<RECEIVABLES> 3,285,000
<ALLOWANCES> (55,000)
<INVENTORY> 12,142,000
<CURRENT-ASSETS> 16,587,000
<PP&E> 1,071,000
<DEPRECIATION> (169,000)
<TOTAL-ASSETS> 24,739,000
<CURRENT-LIABILITIES> 3,011,000
<BONDS> 0
<COMMON> 11,000
2,454,000
0
<OTHER-SE> 5,808,000
<TOTAL-LIABILITY-AND-EQUITY> 24,739,000
<SALES> 15,264,000
<TOTAL-REVENUES> 15,508,000
<CGS> 11,149,000
<TOTAL-COSTS> 3,822,000
<OTHER-EXPENSES> 169,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 483,000
<INCOME-PRETAX> 54,000
<INCOME-TAX> 22,000
<INCOME-CONTINUING> (137,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (137,000)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> 0
</TABLE>
