During the three months ended December 31, 2012, consolidated pretax income of Daily Journal Corporation (NASDAQ:DJCO) decreased by $1,322,000 (51%) to $1,264,000 from $2,586,000 in the comparable prior year period, primarily resulting from (i) a reduction in trustee sale notice and related service fee revenues of $567,000 and (ii) an increase in operating costs and expenses of $1,328,000, including $938,000 for the Company’s new subsidiary, New Dawn Technologies, Inc., partially offset by New Dawn’s additional revenues of $247,000 and an increase in dividends and interest income of $241,000. (In December 2012, the Company purchased all of the outstanding stock of New Dawn, which is based in Logan, Utah and provides products and services to courts and other justice agencies.) The Company’s traditional business segment pretax income decreased by $275,000 to $2,755,000 from $3,030,000 primarily because of the reduction in trustee sale notice and related service fee revenues of $567,000, partially offset by a reduction in operating costs and expenses of $9,000. Sustain’s and New Dawn’s business segment had a pretax loss of $1,491,000 compared to $444,000 in the prior year period primarily due to (i) the addition of New Dawn’s pretax loss of $691,000 and (ii) an increase in Sustain’s personnel costs during the three months ended December 31, 2012.
|Three months ended December 31|
|Net change in unrealized appreciation of investments (net of taxes)||7,197,000||3,919,000|
At December 31, 2012, the Company held marketable securities valued at $114,120,000, including unrealized gains of $64,427,000. It accrued a liability of $25,664,000 for income taxes due only upon the sales of the appreciated securities. The marketable securities consist of common stocks of three Fortune 200 companies, two foreign companies and certain bonds of a sixth, and most of the unrealized gains were in the common stocks.Consolidated net income was $834,000 and $1,706,000 for the three months ended December 31, 2012 and 2011, respectively. Net income per share decreased to $.60 from $1.24, primarily due to the loss attributable to New Dawn.
|Financial Information for the Company’s Reportable Segments|
|Traditionalbusiness||Sustain & New Dawn*||Total|
|Three months ended December 31, 2012|
|Pretax income (loss)||2,755,000||(1,491,000||)||1,264,000|
|Income tax (expense) benefit||(930,000||)||500,000||(430,000||)|
|Net income (loss)||1,825,000||(991,000||)||834,000|
|Three months ended December 31, 2011|
|Pretax income (loss)||3,030,000||(444,000||)||2,586,000|
|Income tax (expense) benefit||(1,030,000||)||150,000||(880,000||)|
|Net income (loss)||2,000,000||(294,000||)||1,706,000|
Daily Journal Corporation publishes newspapers and web sites covering California and Arizona, as well as the California Lawyer magazine, and produces several specialized information services. Sustain Technologies, Inc. and New Dawn Technologies, Inc. are wholly-owned subsidiaries and supply case management software systems and related products to courts and other justice agencies.Daily Journal Corporation’s Form 10-Q for the period ended December 31, 2012 is expected to be filed electronically with the Securities and Exchange Commission today. We invite your attention to the Form 10-K 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, 2012.