LOS ANGELES--(BUSINESS WIRE)-- 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 Companys 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 Companys Management Incentive Plan, professional service fees and rents.

Sustains 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.

		Comprehensive Income
				Nine months ended June 30
					2012			2011
		Net income		$	3,958,000		$	5,917,000
		Net change in unrealized appreciation of investments (net of taxes)			13,430,000			2,523,000
		Other than temporary impairment losses recognized in net income (net of taxes)			1,720,000			---
		Comprehensive income		$	19,108,000		$	8,440,000

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.

At June 30, 2012, the Company held marketable securities valued at $94,831,000, including unrealized gains of $49,710,000. It accrued a liability of $19,800,000 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 $3,958,000 and $5,917,000 for the nine months ended June 30, 2012 and 2011, respectively. Net income per share decreased to $2.87 from $4.29, primarily due to the recording of the after-tax impairment losses on investments of $1,720,000.

		Financial Information for the Companys Reportable Segments
				Traditional
				business				Sustain				Total
		Nine months ended June 30, 2012
		Revenues		$	21,824,000			$	2,293,000			$	24,117,000
		Income (loss) from operations			8,133,000				(1,455,000	)			6,678,000
		Other-than-temporary impairment losses on investments			2,855,000				---				2,855,000
		Pretax income (loss)			6,791,000				(1,448,000	)			5,343,000
		Income tax (expense) benefit			(2,135,000	)			750,000				(1,385,000	)
		Net income (loss)			4,656,000				(698,000	)			3,958,000
		Nine months ended June 30, 2011
		Revenues		$	24,050,000			$	2,318,000			$	26,368,000
		Income (loss) from operations			9,475,000				(1,102,000	)			8,373,000
		Pretax income (loss)			10,319,000				(1,102,000	)			9,217,000
		Income tax (expense) benefit			(3,705,000	)			405,000				(3,300,000	)
		Net income (loss)			6,614,000				(697,000	)			5,917,000

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., a wholly owned subsidiary, supplies case management software systems and related products to courts and other justice agencies.

Daily Journal Corporations Form 10-Q for the period ended June 30, 2012 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, managements 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.

Daily Journal Corporation
Tu To, 213-229-5436

Source: Daily Journal Corporation

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