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Daily Journal Corporation Announces Financial Results for Fiscal Year Ended September 30, 2015

LOS ANGELES, Dec. 14, 2015 (GLOBE NEWSWIRE) -- During the fiscal year ended September 30, 2015, Daily Journal Corporation (NASDAQ:DJCO) had consolidated pretax loss of $310,000 as compared to pretax income of $141,000 in the prior year.  This was a decrease in profit of $451,000 that resulted primarily from decreases in trustee sale notice and related service fee revenues of $881,000, partially offset by increases in net non-operating income of $430,000.

 
Overall Financial Results (000) 
For the twelve months ended September 30 
 
 Reportable Segments    
 Traditional
Business
 Journal
Technologies
 Corporate
income and expenses
 
Total
  2015  2014   2015  2014   2015  2014   2015  2014 
Revenues           
Advertising$10,502 $11,435  --- ---  $--- $---  $10,502 $11,435 
Circulation 5,915  6,038   ---  ---   ---  ---   5,915  6,038 
Advertising service fees and other 2,703  2,800   ---  ---   ---  ---   2,703  2,800 
Licensing and maintenance fees ---  ---   13,984  12,987   ---  ---   13,984  12,987 
Consulting fees ---  ---   4,704  4,002   ---  ---   4,704  4,002 
Other public service fees ---  ---   6,170  6,161   ---  ---   6,170  6,161 
Total revenues 19,120  20,273   24,858  23,150   ---  ---   43,978  43,423 
Expenses                        
Salaries and employee benefits 9,750  9,526   16,260  15,736   ---  ---   26,010  25,262 
Amortization of intangible assets 12  ---   4,895  4,866   ---  ---   4,907  4,866 
Others 8,276  7,628   8,297  7,857   ---  ---   16,573  15,485 
Total operating expenses 18,038  17,154   29,452  28,459   ---  ---   47,490  45,613 
Income (loss) from operations 1,082  3,119   (4,594) (5,309)  ---  ---   (3,512) (2,190)
            
Other income (net), primarily dividends and interest income ---  ---   ---  ---   3,674  2,868   3,674  2,868 
Other-than-temporary impairment Losses on investments ---  ---   ---  ---   (376) ---   (376) --- 
Interest and penalty expenses accrued for uncertain and unrecognized tax benefits ---  ---   (96) (537)  ---  ---   (96) (537)
Pretax income (loss)$1,082 $3,119  $(4,690)$(5,846) $3,298 $2,868  $(310)$141 
                            

Consolidated revenues were $43,978,000 and $43,423,000 for fiscal 2015 and 2014, respectively. This increase of $555,000 was primarily from additional Journal Technologies licensing and maintenance and consulting revenues of $1,699,000, partially offset by a reduction in the Traditional Business’s trustee sale notice and related service fee revenues of $881,000, commercial advertising revenues of $237,000 and circulation revenues of $123,000. 

The Company’s Traditional Business segment’s pretax income decreased by $2,037,000 to $1,082,000 from $3,119,000, primarily resulting from decreases in trustee sale notice and related service fee revenues of $881,000, commercial advertising revenues of $237,000 and circulation revenues of $123,000, and increased expenses of $884,000 primarily for increased personnel costs and legal, accounting and tax fees.  The Company’s Journal Technologies business segment pretax loss decreased by $1,156,000 to $4,690,000 from $5,846,000 primarily resulting from increased licensing and maintenance fees and consulting fees of $1,699,000, partially offset by increased personnel costs of $524,000.  The Company’s non-operating income, net of expenses, increased by $430,000 to $3,298,000 primarily because of additional dividends and interest income from the Company’s marketable securities.  There were pretax other-than-temporary impairment losses on investments of $376,000 in fiscal 2015 and none in fiscal 2014.

The Company recorded an income tax benefit of $1,120,000 on a pretax loss of $310,000 in fiscal 2015.  The effective tax rate was lower than the statutory rate primarily due to the dividends received deduction, the domestic production activity deduction and a discrete benefit of approximately $400,000 related to the California Enterprise Zone hiring credits which resulted from the Company’s filing amended California tax returns for fiscal 2010 through fiscal 2013.  A benefit of this tax credit was recognized in the fiscal 2014 amended tax return.   On pretax income of $141,000 for fiscal 2014, the Company recorded a tax benefit of $490,000.   The Company’s effective tax rate was 361% and -348% for fiscal 2015 and 2014, respectively. 

At September 30, 2015, the Company held marketable securities valued at $166,041,000, including net unrealized gains of $111,498,000.   It accrued a liability of $43,278,000 for income taxes due only upon the sales of the net appreciated securities. 

Comprehensive (loss) income includes net income and unrealized net (losses) gains on investments, net of taxes, as summarized below: 

 
Comprehensive (Loss) Income
  
 Fiscal Year Ended September 30
    
  2015  2014  2013 
    
Net income$810,000 $631,000 $3,779,000 
Net (decrease) increase in unrealized appreciation of investments (net of taxes) (8,811,000) 22,393,000  21,292,000 
Reclassification adjustment of other-than-temporary impairment losses  recognized in net income (net of taxes) 230,000  ---  1,051,000 
 $(7,771,000)$23,024,000 $26,122,000 
          

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, including the Annual Report on Form 10-K we expect to file today for the fiscal year ended September 30, 2015.

Contact: Tu To (213) 229-5436

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