LOS ANGELES, May 09, 2017 (GLOBE NEWSWIRE) -- During the six months ended March 31, 2017, Daily Journal Corporation (NASDAQ:DJCO) had consolidated revenues of $20,269,000 as compared with $22,257,000 in the prior year period. This decrease of $1,988,000 (9%) was primarily from decreases in Journal Technologies’ public service fees of $914,000 mostly due to a reduction in the number of traffic tickets processed online and consulting fees of $882,000, partially offset by increased license and maintenance fees of $94,000. It also reflects a reduction in The Traditional Business’s trustee sale notice and related service fee revenues of $309,000. Consolidated operating expenses increased by $2,593,000 (11%) to $26,388,000 from $23,795,000 primarily resulting from additional personnel costs for Journal Technologies.
The Company had an accrued liability of approximately $2,655,000 for uncertain and unrecognized tax benefits relating to an acquisition in fiscal 2013. The Internal Revenue Service has concluded its examination of the Company’s fiscal 2014 income tax return and proposed no changes to the tax position that gave rise to this liability. Consequently, this liability was reversed along with the related accrued interest and penalty expenses of $743,000. In addition, a deferred tax liability, in the amount of $352,000, relating to temporary differences that would only exist if the uncertain tax position was never recognized, was reversed.
During the six months ended March 31, 2017, consolidated pretax loss was $3,042,000 after recording the interest and penalty expense reversal of $743,000 for uncertain and unrecognized tax benefits as compared with pretax income of $17,000 in the prior year period. There was net income of $1,508,000 ($1.09 per share) for the six months ended March 31, 2017, primarily because of the reversal of the tax liability for uncertain and unrecognized tax benefits, as compared with net income of $257,000 ($0.19 per share) in the prior year period.
The Company’s Traditional Business segment’s pretax income decreased by $389,000 to a pretax loss of $254,000 from pretax income of $135,000. Trustee sale notice and related service fee revenues decreased by $309,000, partially offset by increases in other public notice advertisings. Journal Technologies’ business segment pretax loss increased by $3,415,000 (197%) to $5,152,000 from $1,737,000 after recording the interest and penalty expense reversal of $743,000 for uncertain and unrecognized tax benefits in March 2017 and including the amortization costs of intangible assets of $2,447,000 for both the six-month periods ended March 31, 2017 and 2016. This increase in loss primarily resulted from (i) the decreases in public service fees of $914,000 and consulting fees of $882,000, partially offset by increased licensing and maintenance fees of $94,000, and (ii) the increases in personnel costs of $1,875,000 primarily for installation services.
The Company’s Corporate income, net of expenses, increased by $745,000 (46%) to $2,364,000, primarily because of more dividend income from the Company’s marketable securities, partially offset by increased interest costs for the two acquisition loans in fiscal 2013 and additional interest expense for the Company’s real estate loan in November 2015 for the purchase of an office building in Utah for Journal Technologies.
For the six months ended March 31, 2017, the Company recorded an income tax benefit of $4,550,000 on pretax loss of $3,042,000. The income tax benefit was also the result of applying the effective tax rate anticipated for fiscal 2017 to pretax loss for the six-month period ended March 31, 2017. The effective tax rate (before the discrete item) was greater than the statutory rate primarily due to the dividends received deduction which increases the loss for tax purposes. On pretax income of $17,000 for the six months ended March 31, 2016, the Company recorded an income tax benefit of $240,000 which was the net result of applying the effective tax rate anticipated for fiscal 2016 to pretax income for the six months ended March 31, 2016. The Company’s effective tax rate was 150% and -1,412% for the six months ended March 31, 2017 and 2016, respectively.
At March 31, 2017, the Company held marketable securities valued at $203,778,000, including net unrealized gains of $140,386,000, and accrued a liability of $54,723,000 for income taxes due only upon the sales of the net appreciated securities.
Comprehensive income (loss) includes net income and unrealized net gains (losses) on investments, net of taxes, as summarized below:
|Comprehensive Income (Loss)|
|Six months ended March 31|
|Net increase (decrease) in unrealized appreciation of|
|marketable securities (net of taxes)||19,657,000||(4,131,000||)|
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