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Daily Journal Corporation Announces Financial Results for the Nine Months ended June 30, 2016

LOS ANGELES, Aug. 09, 2016 (GLOBE NEWSWIRE) -- During the nine months ended June 30, 2016, Daily Journal Corporation (NASDAQ:DJCO) had consolidated pretax loss of $606,000 compared to pretax income of $210,000 in the prior year period. Consolidated revenues were $32,595,000 and $33,209,000 for the nine months ended June 30, 2016 and 2015, respectively. This decrease of $614,000 was primarily from the continuing decline in the Company’s traditional publishing business segment’s trustee sale notice and related service fee revenues of $429,000 and a decline in commercial advertising revenues of $427,000 primarily due to the discontinuance of publishing the California Lawyer magazine. It also reflects a decline in the Company’s Journal Technologies segment’s public service fees of $1,089,000, partially offset by increased Journal Technologies’ license and maintenance fees of $681,000 and consulting fees of $387,000. Consolidated operating costs and expenses increased by $234,000 to $35,915,000 from $35,681,000 primarily resulting from additional expenses for Journal Technologies, partially offset by reduced expenses for the Traditional Business primarily due to the discontinuance of the California Lawyer magazine and decreases in legal, accounting and other professional fees.

Overall Financial Results (000)
(Unaudited)
For the nine months ended June 30
Reportable Segments
Traditional
Business
Journal
Technologies
Corporate
income and expenses

Total
2016 2015 2016 2015 2016 2015 2016 2015
Revenues
Advertising$7,382 $7,954 $--- $--- $--- $--- $7,382 $7,954
Circulation 4,431 4,429 --- --- --- --- 4,431 4,429
Advertising service fees and other 2,014 2,037 --- --- --- --- 2,014 2,037
Licensing and maintenance fees --- --- 11,433 10,752 --- --- 11,433 10,752
Consulting fees --- --- 3,788 3,401 --- --- 3,788 3,401
Other public service fees --- --- 3,547 4,636 --- --- 3,547 4,636
Total revenues 13,827 14,420 18,768 18,789 --- --- 32,595 33,209
Operating expenses
Salaries and employee benefits 7,450 7,745 13,087 11,995 --- --- 20,537 19,740
Amortization of intangible assets 106 --- 3,671 3,671 --- --- 3,777 3,671
Others 5,355 5,855 6,246 6,415 --- --- 11,601 12,270
Total operating expenses 12,911 13,600 23,004 22,081 --- --- 35,915 35,681
Income (loss) from operations 916 820 (4,236) (3,292) --- --- (3,320) (2,472)
Dividends and interest income --- --- --- --- 3,013 2,865 3,013 2,865
Other income (net) 37 --- --- --- 9 55 46 55
Interest expenses on note payable
collateralized by real estate
(62) --- --- --- --- --- (62) ---
Interest expenses on margin loans --- --- --- --- (208) (168) (208) (168)
Interest and penalty expenses
accrued for uncertain and
unrecognized tax benefits
--- --- (75) (70) --- --- (75) (70)
Pretax income (loss)$891 $820 $(4,311)$(3,362) $2,814 $2,752 $(606)$210

The Company’s Traditional Business segment’s pretax income increased by $71,000 to $891,000 from $820,000 primarily resulting from the decreases in legal, accounting and other professional service fees of $620,000, partially offset by decreased trustee sale notice and related service fee revenues of $429,000 and commercial advertising revenues of $427,000. Journal Technologies’ business segment pretax loss increased by $949,000 to $4,311,000 from $3,362,000 and included the amortization costs of intangible assets of $3,671,000 for both the nine-month periods ended June 30, 2016 and 2015. This increase in loss primarily resulted from the decreases in public service fees of $1,089,000 and the increases in personnel costs of $1,092,000 and additional travel expenses of $351,000 primarily for installation services, partially offset by increased licensing and maintenance fees of $681,000 and consulting fees of $387,000.

The Company’s Corporate income, net of expenses, increased by $62,000 to $2,814,000, primarily because of more dividend income from the Company’s marketable securities, partially offset by increased interest rate for the two acquisition loans and additional interest expenses for the Company’s real estate loan.

The Company recorded an income tax benefit of $525,000 on pretax loss of $606,000 for the nine months ended June 30, 2016. The income tax benefit was the result of applying the effective tax rate anticipated for fiscal 2016 to pretax loss for the nine-month period ended June 30, 2016. The effective tax rate was lower than the statutory rate primarily due to the dividends received deduction. On pretax income of $210,000 for the nine months ended June 30, 2015, the Company recorded an income tax benefit of $760,000 which was the net result of applying the effective tax rate anticipated for fiscal 2015 to pretax income for the nine months ended June 30, 2015.

At June 30, 2016, the Company held marketable securities valued at $161,250,000, including net unrealized gains of $102,868,000, and accrued a liability of $40,000,000 for income taxes due only upon the sales of the net appreciated securities.

Comprehensive (loss) income includes net (loss) income and net (decrease) increase in unrealized net gains on marketable securities, net of taxes, as summarized below:

Comprehensive (Loss) Income
Nine months ended June 30
2016 2015
Net (loss) income$(81,000)$970,000
Net (decrease) increase in unrealized appreciation of
marketable securities (net of taxes)
(5,353,000) 833,000
$(5,434,000)$1,803,000

Daily Journal Corporation publishes newspapers and web sites covering California and Arizona, and produces several specialized information services. Journal Technologies, Inc. is a wholly-owned subsidiary and supplies case management software systems and related products to courts and other justice agencies.

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain statements contained in this press release are “forward-looking” statements that involve risks and uncertainties that may cause actual future events or results to differ materially from those described in the forward-looking statements. Words such as “expects,” “intends,” “anticipates,” “should,” “believes,” “will,” “plans,” “estimates,” “may,” variations of such words and similar expressions are intended to identify such forward-looking statements. We disclaim any intention or obligation to revise any forward-looking statements whether as a result of new information, future developments, or otherwise. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in documents we file with the Securities and Exchange Commission.


Contact: Tu To (213) 229-5436

Source:Daily Journal