Daily Journal Corporation Announces Financial Results for the Three Months ended December 31, 2020
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LOS ANGELES, Feb. 12, 2021 (GLOBE NEWSWIRE) -- During the three months ended December 31, 2020, Daily Journal Corporation (NASDAQ: DJCO) had consolidated revenues of $10,420,000 as compared with $11,677,000 in the prior year period. This decrease of $1,257,000 was primarily from (i) Journal Technologies’ decreased license and maintenance fees of $177,000, consulting fees of $445,000 and public service fees of $32,000, and (ii) reductions in the Traditional Business’ display advertising net revenues of $164,000, classified advertising net revenues of $65,000, trustee sale notice advertising net revenues of $102,000, legal notice advertising net revenues of $53,000, government notice advertising net revenues of $50,000 and circulation revenues of $109,000.
The Traditional Business’ pretax income increased by $275,000 to $527,000 from $252,000 in the prior fiscal year period. Journal Technologies’ business segment pretax loss decreased by $929,000 to $863,000 from $1,792,000 in the prior fiscal year period. During the three months ended December 30, 2020, there were increases in net unrealized gains on marketable securities of $61,681,000 to $81,212,000 from $19,531,000 in the prior fiscal year period. These investments generated approximately $638,000 in dividends income during the quarter. Dividends from the Company’s portfolio have declined and are expected to remain lower than in the past because the investments are largely concentrated in U.S. financial institutions, and some banks are reducing their dividends. During the three months ended December 31, 2020, consolidated pretax income was $81,450,000, as compared to $19,490,000 in the prior fiscal year period, in each case reflecting dividends received and the performance of the Company’s investments. There was consolidated net income of $59,270,000 ($42.93 per share) for the three months ended December 31, 2020, as compared with $14,210,000 ($10.29 per share) in the prior fiscal year period.
The Company believes that the Coronavirus pandemic (“COVID-19”) has had, and, with the continued surge of COVID-19 cases, will continue to have a significant impact on the Company’s business operations. This might include a substantial decrease in the value of the Company’s marketable securities portfolio or at least a fair degree of volatility. At December 31, 2020, the Company held marketable securities valued at $260,580,000, including net pretax unrealized gains of $218,805,000, and accrued a deferred tax liability of $58,230,000 for estimated income taxes due only upon the sales of the net appreciated securities.
For the three months ended December 31, 2020, the Company recorded a provision for income taxes of $22,180,000 on pretax income of $81,450,000. The income tax provision consisted of a tax provision of $63,000 on income from operations, a tax benefit of $84,000 for the dividends received deduction and other permanent book and tax differences, a tax provision of $22,360,000 on the unrealized gains on marketable securities and a tax benefit of $159,000 related to restating state deferred taxes to the current state rate. The overall effective tax rate for the three months ended December 31, 2020 was 27%, after including the taxes on the unrealized gains on marketable securities.
For the three months ended December 31, 2019, the Company recorded a provision for income taxes of $5,280,000 on pretax income of $19,490,000. This was the net result of applying the 19% effective tax rate that had been anticipated for fiscal 2020 to the pretax loss, before the unrealized gains on marketable securities, for the three months ended December 31, 2019. The 19% effective tax rate was less than the statutory rate primarily due to the dividends received deduction and state tax benefits. In addition, the Company recorded taxes on its unrealized gains on marketable securities of $19,531,000 during the three months ended December 31, 2019. The overall effective tax rate for the three months ended December 31, 2019 was 27%, after including the taxes on the unrealized gains on marketable securities.
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.
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