ARI Reports Fourth Quarter and Fiscal 2006 Results.

Outlines corporate initiatives for fiscal 2007

MILWAUKEE -- ARI (OTCBB:ARIS), a leading provider of technology-enabled business solutions that help equipment dealers build sales and profits, today reported increased revenues and net income for the fiscal year ended July 31, 2006.

Full Year Fiscal 2006 Highlights

* Revenues were $14.0 million for fiscal 2006, compared to revenues of $13.7 million in fiscal 2005.

* Operating income was $2.07 million for fiscal 2006, compared to operating income of $2.15 million in the prior fiscal year.

* Net income was $3.2 million or $0.49 per diluted share for fiscal 2006, compared to net income of $2.8 million or $0.42 per diluted share in fiscal 2005.

Fourth Quarter Fiscal 2006 Highlights

* Revenues were $3.4 million for the fourth quarter of fiscal 2006, compared to revenues of $3.6 million for the same period in the prior year.

* Operating income was $540,000 for the fourth quarter of fiscal 2006, compared to operating income of $524,000 for the fourth quarter of fiscal 2005.

* Net income was $725,000 or $0.11 per diluted share for the fourth quarter of fiscal 2006, compared to net income of $1.4 million or $0.20 per diluted share for the comparable prior period.

Operations Review

Brian E. Dearing, chairman and chief executive officer of ARI, said the fourth quarter results were affected by a number of one-time events - some positive, some negative. These included revenue reversals, recognition of deferred tax assets based on updated forecasts of the Company's U.S. operations, recognition of a gain related to a vendor contract settlement, and reversal of accrued long-term bonuses related to the departure of an executive. "Excluding these events, our results for the fourth quarter were basically flat," said Dearing.

"While we are disappointed that we did not generate more top-line growth in fiscal 2006, we made excellent progress in expanding our Dealer Marketing Services (DMS) business, which doubled during the year. In addition, we maintained strong cash flow and significantly reduced our debt, to the point that as of the end of the fiscal year, we had one-and-a-half times again as much cash as debt," said Dearing.

"Our Dealer Marketing Services business continued to build momentum. We are very pleased with the market response and the increasing pace of new sales of these products. We believe this continuing growth reflects the need our DMS offerings meets in the marketplace for manufactured equipment dealers who want to actively promote their business to their customers," Dearing continued.

"Our strong cash flow enabled us to end the year with approximately the same cash balance we had at the beginning, while investing in new products and services, creating a dealer-direct channel in Europe, paying down debt and settling some disputed contracts. We repaid $1.2 million, or $0.19 per share, in principal on our loans during the fiscal year, with our final payments still scheduled for December 2007," said Dearing.

Dearing noted that the income tax benefit recognized in fiscal 2006 reflected the Company's continual evaluation of its deferred tax assets, offset by a deferred tax valuation allowance. The Company performs regular quarterly assessments of the likelihood of the realizability of the deferred tax assets based on the expected levels and sustainability of profits over a three-year period, which is the time frame for which the Company believes reasonable forecasting can be conducted.

Initiatives for Fiscal 2007

"Our four-part strategy to maintain and enhance our core electronic catalog business, expand our Dealer Marketing Services business, improve our European operations, and pursue synergistic acquisitions remains the same for fiscal 2007. Our focus for the coming year, however, will be improved execution on each of these initiatives," said Dearing.

"To help us accomplish this goal, we recently brought in Roy W. Olivier as vice president of global sales and marketing. Roy has a very strong background in our market as well as a track record of strategic and tactical execution in growing businesses. His first priority is to strengthen and expand our relationships with original equipment manufacturers and distributors to drive increased revenues and build stronger ties with our dealer customers, both in North America and internationally," said Dearing.

"Improving our European operation is a major emphasis for the year. While the performance of our office in the Netherlands has not met our expectations, a bright spot is our relationship with Harley-Davidson Motor Company. A new agreement signed in July includes the deployment of our PartSmart([R]) electronic parts catalog for use by over 300 Harley and Buell dealers in Europe, the Middle East and Africa. We expect that we will begin to see the benefits of this new agreement in the first quarter of fiscal 2007," said Dearing.

"Finally, we are still working hard to identify and complete one or more strategic acquisitions to add revenue, products, and customers to the ARI portfolio," Dearing added.

Outlook for Fiscal 2007

"Our overall objective is to build a solid business that can sustain double-digit organic revenue growth over the long term. For fiscal 2007, we expect to work toward that goal by ramping up our revenue growth rate during the year, with strong growth coming from our new Dealer Marketing Services business. We expect operating income to be approximately flat or perhaps to improve slightly as we continue to invest in the Dealer Marketing Services business and improving the European operation," Dearing said. "In addition, we expect to continue to de-lever the business by paying off an additional $1.6M (approximately $0.26 per share) of debt according to its terms during the fiscal year."

About ARI

ARI is a leading provider of electronic parts catalogs and related technology and services to increase sales and profits for dealers in the manufactured equipment markets. ARI currently provides approximately 96 parts catalogs (many of which contain multiple lines of equipment) for approximately 71 equipment manufacturers in the U.S. and Europe. Approximately 81,000 catalog subscriptions are provided through ARI to approximately 29,000 dealers and distributors in approximately 89 countries in 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 an 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 three 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.

Fourth Quarter Earnings Conference Call

ARI's Fourth Quarter Conference Call is scheduled for Thursday, October 12, 2006 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=1578254. 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, October 13, 2006. Click on the "Investor Relations" tab to access the information.

Statements in this news release, including the outlook for fiscal 2007, 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, 2005 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.

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