During the three months ended December 31, 2011, consolidated pretax income of Daily Journal Corporation (NASDAQ:DJCO) decreased by $803,000 to $2,586,000 from $3,389,000 in the prior year period. Consolidated revenues declined by $1,375,000, and costs and expenses decreased by $448,000. Dividends and interest income increased by $115,000. The Company’s traditional business segment pretax profit decreased by $646,000 to $3,030,000 from $3,676,000 primarily because of a reduction in trustee sale notice and related service fee revenues. Total personnel costs decreased by $132,000 to $3,317,000 primarily due to a $170,000 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 $240,000 in the Incentive Plan accrual during the three months ended December 31, 2011 due to reduced consolidated pretax profits before this accrual versus a decrease of $70,000 in the prior year period. Other general and administrative expenses decreased by $216,000 primarily resulting from reduced professional service fees. Sustain’s business segment had a pretax loss of $444,000 compared to $287,000 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. Consolidated revenues were $7,920,000 and $9,295,000 for the three months ended December 31, 2011 and 2010, respectively. This decrease of $1,375,000 was primarily from decreases of $1,031,000 in trustee sale notice and related service fee revenues, $69,000 in government notice revenues, $31,000 in legal advertising notice and service fees, $20,000 in classified advertising revenues, $37,000 in display advertising revenues, $73,000 in circulation revenues and $99,000 in Sustain consulting 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 December 31, 2011, the Company held marketable securities valued at $76,213,000, including unrealized gains of $31,047,000. It accrued a liability of $12,368,000 for income taxes due only upon the sales of the appreciated securities. The marketable securities consist of common stocks of three Fortune 200 companies and two foreign companies and certain bonds of a sixth, and most of the unrealized gains were in the common stocks.Consolidated net income was $1,706,000 and $2,184,000 for the three months ended December 31, 2011 and 2010, respectively. Net income per share decreased to $1.24 from $1.58.
|Three months ended December 31, 2011|
|Pretax income (loss)||3,030,000||(444,000||)||2,586,000|
|Income tax benefit (expense)||(1,030,000||)||150,000||(880,000||)|
|Net income (loss)||2,000,000||(294,000||)||1,706,000|
|Three months ended December 31, 2010|
|Pretax income (loss)||3,676,000||(287,000||)||3,389,000|
|Income tax benefit (expense)||(1,320,000||)||115,000||(1,205,000||)|
|Net income (loss)||2,356,000||(172,000||)||2,184,000|
Daily Journal Corporation’s Form 10-Q for the period ended December 31, 2011 is expected to be filed electronically with the Securities and Exchange Commission today. We invite your attention to the Form 10-Q which contains our consolidated financial statements, management’s discussion and analysis of financial condition and results of operations and other information.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, including the Form 10-Q we expect to file today and our Annual Report on Form 10-K for the fiscal year ended September 30, 2011.