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During the nine months ended June 30, 2012, consolidated pretax income of Daily Journal Corporation (NASDAQ:DJCO) decreased by $3,874,000 to $5,343,000 from $9,217,000 in the prior year period, primarily resulting from (i) a reduction in trustee sale notice and related service fee revenues of $1,982,000, partially offset by a reduction in its operating costs and expenses of $556,000 and an increase in dividends and interest income of $581,000, and (ii) the recording of an impairment loss of $2,855,000 ($1,720,000 net of taxes) related to the marketable securities of one issuer held by the Company as an investment. This impairment does not necessarily indicate the loss in value of these securities is permanent. U.S. GAAP requires that the Company recognize other-than-temporary impairment losses in earnings rather than in accumulated comprehensive income when the security prices remain below cost for a period of time that may be deemed excessive even in instances where the Company possesses the ability and intent to hold the security.
The Company’s traditional business segment income from operations decreased by $1,342,000 to $8,133,000 from $9,475,000 primarily because of the reduction in trustee sale notice and related service fee revenues partially offset by the reduction in its operating costs and expenses, including a reduction in expenses related to the Company’s Management Incentive Plan, professional service fees and rents.
Sustain’s business segment had a pretax loss of $1,448,000 compared to $1,102,000 in the prior year period primarily due to a decrease in consulting and support revenues from governmental agencies, reflecting in part continuing governmental budget constraints and an increase in personnel costs. Comprehensive income includes net income and net unrealized gains on investments, net of taxes.
Nine months ended June 30
Net change in unrealized appreciation of investments (net of taxes)
Other than temporary impairment losses recognized in net income (net of taxes)
Consolidated revenues were $24,117,000 and $26,368,000 for the nine months ended June 30, 2012 and 2011, respectively. This decrease of $2,251,000 was primarily from decreases of $1,982,000 in trustee sale notice and related service fee revenues and $150,000 in circulation 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.