-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EJh6jk1ekcABSaTqFV9AhHHW0n5wCHFo5Uj4P1le0fFDsgQmVuTVsiGjJgnF/aqh ER1qSKxTI0r3lPUZMr3mEg== 0000898430-98-002719.txt : 19980804 0000898430-98-002719.hdr.sgml : 19980804 ACCESSION NUMBER: 0000898430-98-002719 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980803 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAILY JOURNAL CORP CENTRAL INDEX KEY: 0000783412 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 954133299 STATE OF INCORPORATION: SC FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14665 FILM NUMBER: 98675816 BUSINESS ADDRESS: STREET 1: 915 E FIRST STREET CITY: LOS ANGELES STATE: CA ZIP: 90012 BUSINESS PHONE: 2132295436 MAIL ADDRESS: STREET 1: 915 E FIRST STREET CITY: LOS ANGELES STATE: CA ZIP: 90012 FORMER COMPANY: FORMER CONFORMED NAME: DAILY JOURNAL CO DATE OF NAME CHANGE: 19870427 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _____________________ Commission File Number 0-14665 DAILY JOURNAL CORPORATION ------------------------------------------ (Exact name of registrant as specified in its charter) South Carolina 95-4133299 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 355 South Grand Ave., 34th floor Los Angeles, California 90071-1560 - ----------------------- ---------- (Address of principal executive office) (Zip code) Registrant's telephone number, including area code: (213) 624-7715 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: X No: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Class Outstanding at July 31, 1998 - --------------------------------------- ---------------------------- Common Stock, par value $ .01 per share 1,618,870 shares 1 of 10 DAILY JOURNAL CORPORATION INDEX
Page Nos. PART I Financial Information Item 1. Financial statements Consolidated Balance Sheet - June 30, 1998 and September 30, 1997 3 Consolidated Statement of Income - Three months ended June 30, 1998 and 1997 4 Consolidated Statement of Income - Nine months ended June 30, 1998 and 1997 5 Consolidated Statement of Cash Flows - Nine months ended June 30, 1998 and 1997 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II Other Information Item 6. Exhibits and Reports on Form 8-K 10
2 of 10 PART I Item 1. Financial Statements DAILY JOURNAL CORPORATION - CONSOLIDATED BALANCE SHEET (Unaudited)
June 30 September 30 1998 1997 ----------- ------------- ASSETS Current assets: Cash and cash equivalents $ 282,000 $ 273,000 U.S. Treasury Bills, at cost plus discount earned 12,519,000 9,832,000 Accounts receivable, less allowance for doubtful accounts of $700,000 6,260,000 6,073,000 Inventories 57,000 58,000 Prepaid expenses and other assets 123,000 160,000 Deferred income taxes 908,000 1,036,000 ----------- ----------- Total current assets 20,149,000 17,432,000 ----------- ----------- Property, plant and equipment, at cost: Land, buildings and improvements 7,572,000 7,763,000 Furniture and office equipment 5,666,000 5,468,000 Machinery and equipment 1,355,000 1,342,000 ----------- ----------- 14,593,000 14,573,000 Less accumulated depreciation (6,975,000) (6,451,000) ----------- ----------- 7,618,000 8,122,000 Deferred income taxes 308,000 231,000 Intangible assets, at cost, less accumulated amortization of $673,000 and $491,000 - 182,000 ----------- ----------- $28,075,000 $25,967,000 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 2,531,000 $ 2,947,000 Accrued liabilities 2,949,000 3,046,000 Income taxes 403,000 274,000 Deferred subscription revenue 6,533,000 6,402,000 ----------- ----------- Total current liabilities 12,416,000 12,669,000 ----------- ----------- Shareholders' equity: Preferred stock, $.01 par value, 5,000,000 shares authorized and no shares issued - - Common stock, $.01 par value, 5,000,000 shares authorized; 1,618,870 shares and 1,621,870 shares, respectively, outstanding 16,000 16,000 Other paid-in capital 2,058,000 2,062,000 Retained earnings 13,936,000 11,571,000 Less 30,429 treasury shares at cost (351,000) (351,000) ----------- ----------- Total shareholders' equity 15,659,000 13,298,000 ----------- ----------- $28,075,000 $25,967,000 =========== ===========
See accompanying notes to consolidated financial statements. 3 of 10 DAILY JOURNAL CORPORATION CONSOLIDATED STATEMENT OF INCOME (Unaudited)
Three months ended June 30 ------------- 1998 1997 ---------- ---------- Revenues: Advertising $5,529,000 $5,573,000 Circulation 2,907,000 2,915,000 Advertising service fees and other 1,096,000 917,000 ---------- ---------- 9,532,000 9,405,000 ---------- ---------- Costs and expenses: Salaries and employee benefits 3,893,000 3,589,000 Newsprint and printing expenses 854,000 907,000 Commissions and other outside services 1,101,000 1,128,000 Postage and delivery expenses 592,000 596,000 Depreciation and amortization 489,000 654,000 Other 949,000 1,078,000 ---------- ---------- 7,878,000 7,952,000 ---------- ---------- Income before taxes 1,654,000 1,453,000 Provision for income taxes 635,000 580,000 ---------- ---------- Net income $1,019,000 $ 873,000 ========== ========== Weighted average number of common shares outstanding 1,590,716 1,591,441 Net income per share $ .64 $ .55
See accompanying notes to consolidated financial statements. 4 of 10 DAILY JOURNAL CORPORATION CONSOLIDATED STATEMENT OF INCOME (Unaudited)
Nine months ended June 30 ------------- 1998 1997 ----------- ----------- Revenues: Advertising $15,902,000 $16,047,000 Circulation 8,567,000 8,590,000 Advertising service fees and other 2,779,000 2,398,000 ----------- ----------- 27,248,000 27,035,000 ----------- ----------- Costs and expenses: Salaries and employee benefits 11,579,000 10,826,000 Newsprint and printing expenses 2,551,000 2,482,000 Commissions and other outside services 3,142,000 3,253,000 Postage and delivery expenses 1,714,000 1,753,000 Depreciation and amortization 1,234,000 1,311,000 Other 2,908,000 3,676,000 ----------- ----------- 23,128,000 23,301,000 ----------- ----------- Income before taxes 4,120,000 3,734,000 Provision for income taxes 1,645,000 1,490,000 ----------- ----------- Net income $ 2,475,000 $ 2,244,000 =========== =========== Weighted average number of common shares outstanding 1,591,199 1,595,401 Net income per share $ 1.55 $ 1.41
See accompanying notes to consolidated financial statements. 5 of 10 DAILY JOURNAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
Nine months ended June 30 ------------- 1998 1997 ------------- ------------ Cash flows from operating activities: Net income $ 2,475,000 $ 2,244,000 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 1,234,000 1,311,000 Deferred income taxes 51,000 (236,000) Discount earned on U.S. Treasury Bills (179,000) (133,000) Gains on sales of capital assets (106,000) Changes in assets and liabilities: (Increase) decrease in current assets Accounts receivable, net (187,000) (496,000) Inventories 1,000 (5,000) Prepaid expenses and other assets 37,000 (34,000) Increase (decrease) in current liabilities Accounts payable (416,000) 387,000 Accrued liabilities (97,000) 346,000 Income taxes 129,000 339,000 Deferred subscription revenue 131,000 (312,000) ------------ ------------ Cash provided by operating activities 3,073,000 3,411,000 ------------ ------------ Cash flows from investing activities: Net investments in U.S. Treasury Bills (2,508,000) (3,181,000) Capital expenditures, net (442,000) (679,000) ------------ ------------ Cash used for investing activities (2,950,000) (3,860,000) ------------ ------------ Cash flows from financing activities: Purchase of common stock (114,000) (448,000) ------------ ------------ Cash used for financing activities (114,000) (448,000) ------------ ------------ Increase (decrease) in cash and cash equivalents 9,000 (897,000) Cash and cash equivalents: Beginning of period 273,000 1,093,000 ------------ ------------ End of period $ 282,000 $ 196,000 ============ ============ Income taxes paid during period $ 1,464,000 $ 1,297,000
See accompanying notes to consolidated financial statements. 6 of 10 DAILY JOURNAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - The Corporation and Operations: The Company publishes newspapers in California, Washington, Arizona, Colorado and Nevada and the California Lawyer magazine and produces several specialized information services. It also publishes The Code of Colorado Regulations and serves as a newspaper representative specializing in public notice advertising. Essentially all of the Company's operations are based in California, Arizona, Colorado and Washington. Note 2 - Basis of Presentation In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its financial position as of June 30, 1998 and September 30, 1997, the results of operations for the three- and nine-month periods ended June 30, 1998 and 1997 and its cash flows for the nine months ended June 30, 1998 and 1997. The results of operations for the nine months ended June 30, 1998 and 1997 are not necessarily indicative of the results to be expected for the full year. The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1997. 7 of 10 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Revenues were $27,248,000 and $27,035,000 for the nine months ended June 30, 1998 and 1997, respectively. This increase of less than 1% was primarily attributable to increases in classified and display advertising lineage and advertising and subscription rate increases partially offset by a decrease in public notice advertising revenues. During the nine months ended June 30, 1998, classified advertising revenues increased by $470,000, and display advertising revenues were up by $903,000. Public notice advertising revenues decreased by $1,518,000 primarily resulting from decreased foreclosure notices, and the Company anticipates this trend to continue. The Company's smaller newspapers, those other than the Los Angeles and San Francisco Daily Journals ("The Daily Journals"), accounted for about 91% of the total public notice advertising revenues. Public notice advertising revenues and related advertising and other service fees constituted about 28% of the Company's total revenues. Circulation revenues decreased an aggregate of $23,000. The Daily Journals accounted for about 64% of the Company's total circulation revenues, and their circulation levels decreased slightly. The Rule Book and Judicial Profile services generated about 23% of the total circulation revenues, with the other newspapers and services accounting for the balance. Costs and expenses decreased by $173,000 (1%) from $23,301,000 to $23,128,000. Personnel costs increased an aggregate of $753,000 (7%) primarily due to the normal annual salary adjustments. Newsprint and printing expenses increased by $69,000 primarily because of the increase in newsprint prices. Commissions and other outside services decreased by $111,000 primarily because of less agency foreclosure notice sales. The decrease in other expenses of $768,000 primarily resulted from reduced legal and bad debt expenses. Pretax income in the nine months ended June 30, 1998 increased by $386,000 (10%) to $4,120,000 from $3,734,000 in fiscal 1997. The Company's smaller newspapers and its newspaper representative, which specializes in public notice advertising, accounted for about 36% of the Company's pretax income. Net income was $2,475,000 compared to $2,244,000 in the comparable prior year period. Net income per share increased to $1.55 from $1.41. Liquidity and Capital Resources During the nine months ended June 30, 1998, the Company's cash and cash equivalent position increased by $9,000, and the investments in U.S. Treasury Bills increased by $2,687,000. In addition, cash and cash equivalents were used for the purchase of net capital assets of $442,000, including the development of a parking lot for employees in Los Angeles, and to purchase the Company's common stock for an aggregate amount of $114,000. The land and building in Phoenix were sold for $428,000. The gain on this sale of $106,000 about offset the write-off of the unamortized intangible assets acquired in the purchase of The Record Reporter which has moved to leased facilities. The cash provided by operating activities of $3,073,000 included a net increase in prepayments for subscriptions of $131,000. Proceeds from the sale of subscriptions from newspapers, court rule books and other publications are booked as deferred subscription revenue and are included in earned revenue only over the duration of the subscription. The cash flows from operating activities decreased by $338,000 during the nine months ended June 30 1998 primarily from the decrease in current liabilities. As of June 30, 1998, the Company had working capital of $14,266,000 before deducting the liability for deferred subscription revenues of $6,533,000 which will be earned within one year. The cash and short-term investments in U.S. Treasury Bills, aggregating about $12.8 million at June 30, 1998, and the current level of cash provided by 8 of 10 operating activities appear adequate to meet the obligations of the Company. In June 1998 the Company agreed to purchase land and building adjacent to our new parking lot in Los Angeles for $515,000. After some remodeling this will be used in lieu of the current leased production facilities with the excess space to be rented to a local printing company. 9 of 10 DAILY JOURNAL CORPORATION PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K: (A) Exhibits - none 27 Financial Data Schedule (B) Reports on Form 8-K - None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DAILY JOURNAL CORPORATION (Registrant) /s/ Gerald L. Salzman Gerald L. Salzman Chief Financial Officer DATE: August 3, 1998 10 of 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS SEP-30-1998 OCT-01-1997 JUN-30-1998 282,000 12,519,000 6,960,000 700,000 57,000 20,149,000 14,593,000 6,975,000 28,075,000 12,416,000 0 0 0 16,000 15,643,000 28,075,000 26,798,000 27,248,000 0 23,128,000 0 153,000 0 4,120,000 1,645,000 2,475,000 0 0 0 2,475,000 1.55 1.55
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