During the nine months ended June 30, 2011, consolidated pretax income of Daily Journal Corporation (NASDAQ:DJCO) increased by $87,000 to $9,217,000 from $9,130,000 in the prior year period. Consolidated revenues declined by $2,069,000, and costs and expenses decreased by $1,940,000. Dividends and interest income increased by $215,000. The Company’s traditional business segment pretax profit increased by $459,000 to $10,319,000 from $9,860,000. Total personnel costs decreased by $1,813,000 (15%) to $10,419,000 primarily due to savings from departmental reorganizations and a $1,230,000 reduction in expenses related to the Company’s Management Incentive Plan (“Incentive Plan”), partially offset by annual salary adjustments. The reduction in Incentive Plan expenses consisted of a decrease of $290,000 in the Incentive Plan accrual during the nine months ended June 30, 2011 due to reduced consolidated pretax profits before this accrual versus an increase of $940,000 in the prior comparable period. Sustain’s business segment had a pretax loss of $1,102,000 compared to $730,000 in the prior year period primarily because of a decrease in consulting revenues from governmental agencies.
Consolidated revenues were $26,368,000 and $28,437,000 for the nine months ended June 30, 2011 and 2010, respectively. This decrease of $2,069,000 was primarily from decreases of $1,083,000 in public notice advertising revenues, $162,000 in classified advertising revenues, $177,000 in Sustain consulting revenues and $263,000 in circulation revenues, partially offset by an increase of $61,000 in display advertising revenues. Although public notice advertising revenues were down compared to the prior year period, the Company still continued to benefit from the large number of foreclosures in California and Arizona for which public notice advertising is required by law.
At June 30, 2011, the Company held marketable securities valued at $66,338,000, including unrealized gains of $34,755,000. It accrued a liability of $13,845,000 for income taxes due only upon the sales of the appreciated securities. The marketable securities consist of common stocks of two Fortune 200 companies and two foreign companies and certain bonds of a fifth, and almost all of the unrealized gains were in the common stocks.