LOS ANGELES, Feb. 11 12, 2022 (GLOBE NEWSWIRE) — In the three months ended Dec. 31, 2021, Daily Journal Corporation (NASDAQ: DJCO) reported consolidated revenue of $11,528,000, compared to $10,420,000 a year earlier. This increase of $1,108,000 is primarily due to the increase in (i) Journal Technologies’ consulting fees of $1,517,000 and utility costs of $99,000, and (ii) net advertising revenue from the traditional business of $102,000, partially offset by decreases in (i) Journal Technologies’ license and maintenance fees of $553,000 and (ii) traditional business circulation revenue of $93,000.
Earnings before taxes for the traditional business decreased by $42,000 to $506,000 from $548,000 in the prior year period. The Journal Technologies segment’s pre-tax loss decreased to $413,000 to $450,000 from $863,000 in the prior year period. In December 2021, the Company sold a portion of its marketable securities for approximately $50,020,000, realizing gains on the sales of these marketable securities of $46,694,000, and simultaneously borrowed an additional $37,014,000 from its account. margin loan to purchase additional marketable securities with a total cost of approximately $87,125,000. The Company’s investments generated approximately $875,000 in dividend income for the quarter ended December 31, 2021, compared to $638,000 during the prior year period. For the three months ended December 31, 2021, consolidated pre-tax income was $11,438,000 compared to $81,450,000 for the prior year period. Consolidated net earnings were $6,878,000 ($4.98 per share) for the three months ended December 31, 2021, compared to $59,270,000 ($42.93 per share) for the prior year period.
The Company believes that the coronavirus pandemic has had, and together with the cases of the Delta and Omicron variants, will continue to have, a significant impact on the Company’s business operations. Governments may again take action in response to the pandemic, such as renewed closure or reduction of operations of courts and other government agencies that are clients of the Company. It could also include a certain degree of volatility in the value of the marketable securities of the Company. As of December 31, 2021, the Company held marketable securities worth $395,284,000, including net unrealized pre-tax gains of $208,005,000, and recognized a deferred tax liability of $56,175,000 for estimated income taxes due only on sales of net appreciated securities.
For the three months ended December 31, 2021, the Company recorded an income tax provision of $4,560,000 on pre-tax income of $11,438,000. The tax provision consisted of a tax provision of $230,000 on operating income, a tax benefit of $91,000 for the deduction of dividends received and other permanent accounting and tax differences, a tax benefit of $9,747,000 on unrealized losses on marketable securities, a tax provision of $12,612,000 on realized gains on marketable securities and a tax provision of $1,556,000 for the effect of a change in the allocation of the State on the deferred tax liability at the beginning of the year. Accordingly, the overall effective tax rate for the three months ended December 31, 2021 was 40%, after taking into account taxes on realized capital gains and unrealized capital losses on securities of placement.
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Daily Journal Corporation publishes newspapers and websites covering California and Arizona, and produces several specialty news services. Journal Technologies, Inc. is a wholly owned subsidiary and provides case management software systems and related products to courts and other legal agencies.
This press release contains “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 in this press release are “forward-looking” statements that involve risks and uncertainties that could 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 these 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 these forward-looking statements are reasonable, we cannot guarantee that these expectations will prove to be correct. Additional information regarding factors that could cause actual results to differ materially from those contained 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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