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ARIS News ARI Reports Second Quarter Results

MILWAUKEE--(BUSINESS WIRE)--ARI (OTCBB:ARIS), a leading provider of technology-enabled business solutions that help equipment dealers, distributors and manufacturers build sales and profits, today reported financial results for the second quarter ended January 31, 2007.

Second Quarter Fiscal 2007 Highlights

• Revenues increased 5% to $3.7 million in the second quarter of fiscal 2007 from $3.5 million for the second quarter of fiscal 2006.
• Operating income was $261,000 for the second quarter of fiscal 2007, compared to operating income of $549,000 for the same period in the prior year.
• Net income was $248,000 or $0.04 per diluted share for the second quarter of fiscal 2007, compared to net income of $524,000 or $0.08 per diluted share for the same period in the prior year.

First Half Fiscal 2007 Highlights

• Revenues increased 3% to $7.2 million for the first half of fiscal 2007, from $7.0 million for the first half of fiscal 2006.
• Operating income was $490,000 for the first half of fiscal 2007, compared to $1.1 million for the same period in the prior year.
• Net income was $473,000 or $0.07 per diluted share for the first half of fiscal 2007, compared to net income of $1.0 million or $0.15 per diluted share for the same period in fiscal 2006.

Operations Review

“Second quarter revenues increased in our two primary areas of focus. Revenues in our core catalog business were up 5% for the quarter. Our Dealer Marketing Services (DMS) business continues to grow rapidly and once again more than doubled in the quarter over last year’s second quarter,” said Brian E. Dearing, chairman and chief executive officer of ARI.

Dearing said the company’s European operations benefited from revenues generated by a major contract with Harley-Davidson Europe signed in the fourth quarter of FY2006 and a large sale to a major OEM customer in Korea in the Agricultural Equipment Industry. “The unusually large increase in European revenues in the second quarter should not be interpreted as an indicator that our challenges in this market are behind us. The European operation is still not performing up to expectations and we continue to work hard on improving the performance of this unit.”

Dearing said the lower operating income in the second quarter of fiscal 2007 reflected accelerated hiring of sales and marketing personnel to drive future growth and a change in product mix for the quarter. “We are adding new sales staff to further leverage the potential of our DMS products and the new OC-Net products we recently acquired.”

Dearing concluded that the company paid down its debt by another $350,000 and cash flow from operations remained positive in the second quarter.

“One of the most significant events of the second quarter was our acquisition of OC-Net, Inc. of Cypress, California. This acquisition is an important next step in expanding our website development and hosting business in the Power Sports market. OC-Net has a strong market position and offers what we believe is one of the best products in the industry. The OC-Net acquisition was reflected in our balance sheet and cash flow in the second quarter, but we do not expect to see any significant impact on revenue until the third quarter,” said Dearing.

“The integration of OC-Net is proceeding very well. ARI and OC-Net have similar businesses and similar business models. The synergy between the companies is very positive – OC-Net’s excellent products are now in the hands of our skilled sales team, making it a win-win situation for everyone,” said Dearing.

Outlook

“We expect overall revenues to grow at a somewhat faster pace during the second half of the fiscal year. We continue to achieve organic growth in our core catalog business. In addition, our DMS business more than doubled in the first half of the year over the first half of last year and with the addition of OC-Net, we expect to continue – and even accelerate – that pace in the balance of this fiscal year,” said Dearing.

About ARI

ARI is a leading provider of electronic parts catalogs and other technology enabled services to increase sales and profits for dealers, distributors and manufacturers in the manufactured equipment markets. ARI currently provides approximately 100 parts catalogs (many of which contain multiple lines of equipment) for approximately 75 equipment manufacturers in the U.S. and Europe. Approximately 77,000 catalog subscriptions are provided through ARI to more than 26,000 dealers and distributors in approximately 89 countries in about a dozen segments of the worldwide equipment market including outdoor power, power sports, ag equipment, recreation vehicle, floor maintenance, auto and truck parts aftermarket, marine and construction. The Company builds and supports a full suite of multi-media electronic catalog publishing and viewing software for the Web or CD and provides expert catalog publishing and consulting services. ARI also provides dealer marketing services, including technology-enabled direct mail, email and a award-winning dealer website service that makes it quick and easy for an equipment dealer to have a professional and attractive website. In addition, ARI e-Catalog systems support a variety of electronic pathways for parts orders, warranty claims and other transactions between manufacturers and their networks of sales and service points. ARI currently operates four offices in the United States and one in Europe and has sales and service agents in England and France providing marketing and support of its products and services.

Second Quarter Earnings Conference Call

ARI’s Second Quarter Conference Call is scheduled for Thursday, March 8, 2007 at 3:30 p.m. Central Time/4:30 p.m. Eastern Time. If you would like to participate, please pre-register at https://www.myrcplus.com/rsvp-index.asp?BWebID=&CID=1010124. At that time you will be provided with the numbers to use to join the conference call. A replay of ARI’s conference call, as well as notes and financial information presented in the call, will also be available on ARI’s website, www.arinet.com, after 6:00 p.m. Central Time on Friday, March 9, 2007. Click on the “Investor Relations” tab to access the information.

Statements in this news release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. The forward-looking statements can generally be identified by words such as "believes," "anticipates," "expects" or words of similar meaning. Forward-looking statements also include statements relating to the Company's future performance, such as future prospects, revenues, profits and cash flows. The forward-looking statements are subject to risks and uncertainties, which may cause actual results to be materially different from any future performance suggested in the forward-looking statements. Such risks and uncertainties include those factors described under "Forward Looking Statements Disclosure" in Exhibit 99.1 of the Company’s annual report on Form 10-KSB for fiscal year ended July 31, 2006 filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements. For more information, please refer to the Company’s filings with the Securities and Exchange Commission.