-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JUFNWvzFk4UAXmkjnorMQNVhr3XBqWYm3U7FraverF6+nv3aM9Vk3NKA2q2YnoKP HQETI3I2PhsOvZTduaMKtg== 0000913827-95-000012.txt : 19950518 0000913827-95-000012.hdr.sgml : 19950518 ACCESSION NUMBER: 0000913827-95-000012 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950517 SROS: NONE 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-14665 FILM NUMBER: 95540472 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/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A (Mark One) X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 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 Avenue, 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 April 30, 1995 Common Stock, par value 1,651,521 shares $ .01 per share PART I Item 1. Financial Statements DAILY JOURNAL CORPORATION - CONSOLIDATED BALANCE SHEET (Unaudited) March 31 September 30 1995 1994 ASSETS Current assets: Cash and cash equivalents $ 56,000 $ 2,068,000 U.S. Treasury Bills, at cost plus discount earned 1,952,000 1,479,000 Accounts receivable, less allowance for doubtful accounts of $700,000 and $1,000,000 5,952,000 6,074,000 Inventories 30,000 94,000 Prepaid expenses and other assets 337,000 268,000 Deferred income taxes 1,083,000 1,254,000 Total current assets 9,410,000 11,237,000 Property, plant and equipment, at cost: Land, buildings and improvements 6,978,000 6,660,000 Furniture and office equipment 5,178,000 5,951,000 Machinery and equipment 1,534,000 1,330,000 13,690,000 13,941,000 Less accumulated depreciation (5,387,000) (5,398,000) 8,303,000 8,543,000 Deferred tax benefits 482,000 104,000 Intangible assets, at cost, less accumulated amortization of $138,000 and $97,000 1,248,000 48,000 $19,443,000 $19,932,000 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,646,000 $ 2,697,000 Accrued liabilities, including current portion of management termination fee payable of $50,000 2,739,000 3,251,000 Notes payable 536,000 532,000 Deferred subscription revenue 5,942,000 5,679,000 Total current liabilities 10,863,000 12,159,000 Management termination fee payable 2,000 20,000 Notes payable 993,000 1,264,000 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, 1,651,521 and 1,654,111 shares, respectively, outstanding 17,000 17,000 Other paid-in capital 2,099,000 2,102,000 Retained earnings 5,820,000 4,721,000 Less 30,429 treasury shares at cost (351,000) (351,000) Total shareholders' equity 7,585,000 6,489,000 $19,443,000 $19,932,000 See accompanying notes to consolidated financial statements. DAILY JOURNAL CORPORATION CONSOLIDATED STATEMENT OF INCOME (Unaudited) Three months ended March 31 1995 1994 Revenues: Advertising $ 4,974,000 $ 4,729,000 Circulation 2,694,000 2,475,000 Advertising service fees and other 868,000 1,085,000 8,536,000 8,289,000 Costs and expenses: Salaries and employee benefits 3,530,000 3,391,000 Newsprint and printing expenses 969,000 827,000 Commissions and other outside services 1,115,000 1,046,000 Postage and delivery expenses 652,000 594,000 Depreciation and amortization 507,000 509,000 Other, including interest expense 918,000 945,000 7,691,000 7,312,000 Income before taxes 845,000 977,000 Provision for income taxes 340,000 400,000 Net income $ 505,000 $ 577,000 Weighted average number of common shares outstanding 1,622,746 1,623,690 Net income per share $ .31 $ .36 See accompanying notes to consolidated financial statements. DAILY JOURNAL CORPORATION CONSOLIDATED STATEMENT OF INCOME (Unaudited) Six months ended March 31 1995 1994 Revenues: Advertising $ 9,651,000 $ 9,126,000 Circulation 5,257,000 4,937,000 Advertising service fees and other 1,754,000 2,203,000 16,662,000 16,266,000 Costs and expenses: Salaries and employee benefits 6,920,000 6,698,000 Newsprint and printing expenses 1,793,000 1,609,000 Commissions and other outside services 2,119,000 2,030,000 Postage and delivery expenses 1,171,000 1,165,000 Depreciation and amortization 947,000 873,000 Other, including interest expense 1,803,000 2,230,000 14,753,000 14,605,000 Income before taxes 1,909,000 1,661,000 Provision for income taxes 765,000 700,000 Net income $ 1,144,000 $ 961,000 Weighted average number of common shares outstanding 1,623,194 1,623,692 Net income per share $ .70 $ .59 See accompanying notes to consolidated financial statements. DAILY JOURNAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Six months ended March 31 1995 1994 Cash flows from operating activities: Net income $ 1,144,000 $ 961,000 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 947,000 873,000 Deferred income taxes (207,000) (3,000) Discount earned on U.S. Treasury Bills (10,000) - Gains on sales of capital assets (2,000) - Changes in assets and liabilities: (Increase) decrease in current assets Accounts receivable, net 122,000 383,000 Inventories 64,000 (18,000) Prepaid expenses and other assets (69,000) 174,000 Increase (decrease) in current liabilities Accounts payable (1,051,000) (920,000) Accrued liabilities (512,000) (10,000) Income taxes payable - (449,000) Deferred subscription revenue 263,000 110,000 Cash provided by operating activities 689,000 1,101,000 Cash flows from investing activities: Net investments in U. S. Treasury Bills (463,000) - Capital expenditures including acquisitions (1,905,000) (410,000) Cash used for investing activities (2,368,000) (410,000) Cash flows from financing activities: Principal payments under management termination fee payable and notes payable (285,000) (388,000) Purchase of common stock (48,000) - Cash used for financing activities (333,000) (388,000) Increase (decrease) in cash and cash equivalents (2,012,000) 303,000 Cash and cash equivalents: Beginning of year 2,068,000 2,551,000 End of period $ 56,000 $ 2,854,000 Interest paid during period $ 87,000 $ 103,000 Income taxes paid during period $ 972,000 $ 783,000 See accompanying notes to consolidated financial statements. DAILY JOURNAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - The Corporation and Operations: The Daily Journal Corporation is primarily a gatherer and distributor of information through its publications and specialized information services. California Newspaper Service Bureau, Inc., a wholly owned and consolidated subsidiary since it was acquired in 1990, is a newspaper representative specializing in public notice advertising. The Public Record Corporation, a wholly owned and consolidated subsidiary since it was acquired in January 1995, publishes The Code of Colorado Regulations and newspapers for the Colorado legal profession. 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 March 31, 1995 and September 30, 1994, the results of operations for the three- and six-month periods ended March 31, 1995 and 1994 and its cash flows for the six months ended March 31, 1995 and 1994. The results of operations for the six months ended March 31, 1995 and 1994 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. It is suggested that these financial statements 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, 1994. Note 3 - Acquisitions During the quarter ended March 31, 1995, the Company acquired for about $463,000 in cash The Public Record Corporation which primarily publishes The Code of Colorado Regulations and The Brief Times Reporter, a court opinion service for the Colorado legal profession. In connection with this acquisition the Company assumed the liability for the unexpired subscriptions and entered into an employment agreement with a former owner. In addition, the Company acquired for about $928,000 in cash a small newspaper and land and building in Phoenix, Arizona. These transactions were accounted for as purchases. Proforma results of operations have not been presented, as the effects of these transactions are not material to the Company's operating results. DAILY JOURNAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Revenues were $16,662,000 and $16,266,000 for the six months ended March 31, 1995 and 1994, respectively. This increase of 2% is primarily attributable to subscription and advertising rate increases and additional display and classified advertising lineage partially offset by a decrease in public notice advertising lineage. Recent acquisitions accounted for $157,000 of this increase, while a $223,000 decrease in other revenues resulted from the discontinuance of certain services for trustee sale customers. During the first six months of fiscal 1995, display and classified advertising revenues were up by $284,000 and $315,000, respectively, and public notice advertising revenues decreased by $74,000 primarily due to a decline in foreclosure notices. The Company's smaller newspapers, excluding the Los Angeles and San Francisco Daily Journals ("The Daily Journals"), account for about 74% of the total public notice advertising revenues. Public notice advertising revenues and related advertising and other service fees constituted about 33% of the Company's total revenues. Circulation revenues increased $320,000 primarily because of rate increases and $131,000 from publications of the recently acquired The Public Record Corporation. The Daily Journals account for about 60% of the Company's total circulation revenues, and their circulation levels increased slightly. The Rule Book and Judicial Profile services generate about 27% of the total circulation revenues, with the other newspapers and services accounting for the balance. Costs and expenses increased by 1% to $14,753,000 from $14,605,000. Personnel costs increased by $222,000 of which $59,000 resulted from recent acquisitions. Normal annual salary adjustments accounted for the majority of this increase in personnel costs. Newsprint and printing expenses increased by $184,000 primarily because of the higher cost of newsprint. Depreciation and amortization expenses increased by $74,000 primarily due to more equipment with shorter periods for depreciation, the write-off of primarily computer assets and the amortization of recently acquired intangible assets. The decrease in other expenses of $427,000 includes lower legal and advertising expenses, office supplies and interest. Pretax income during the six month period of fiscal 1995 increased $248,000 (15%) to $1,909,000 from $1,661,000 in the comparable period in fiscal 1994. The Company's smaller newspapers and its newspaper representative, which specializes in public notice advertising, accounted for about 60% of the Company's pretax income. Net income was $1,144,000 compared to a net income of $961,000 for the six months ended March 31, 1994. Net income per share increased to $.70 from $.59. Liquidity and Capital Resources During the six months ended March 31, 1995, the Company's cash and cash equivalent position decreased by $2,012,000 while the investments in U. S. Treasury Bills increased by $473,000. In addition, cash and cash equivalents were used to reduce notes and management fees payable by $285,000, for the net purchase of capital assets, including acquisitions, of $1,905,000 and to purchase common stock for an aggregate amount of $48,000. The cash provided by operating activities of $689,000 included a net increase in prepayments for subscriptions of $263,000. 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 subscriptions. As of March 31, 1994, the Company had working capital of $4,489,000 before deducting the liability for deferred subscription revenues of $5,942,000 which will be earned within one year. The cash and short-term investments in U.S. Treasury Bills, aggregating about $2 million at March 31, 1995, and the current level of cash provided by operating activities appear adequate to meet the obligations of the Company. In recent months, in general, newsprint prices have been rising, and in 1995 postal costs increased due to new postal rates. These developments are likely to increase total expenses. During the quarter ended March 31, 1995, the Company acquired for about $463,000 in cash The Public Record Corporation which primarily publishes The Code of Colorado Regulations and The Brief Times Reporter, a court opinion service for the Colorado legal profession. In connection with this acquisition the Company assumed the liability for the unexpired subscriptions and entered into an employment agreement with a former owner. In addition, the Company acquired for about $928,000 in cash a small newspaper and land and building in Phoenix, Arizona. These transactions were accounted for as purchases. The Company completed in 1990 a new Los Angeles office and printing facility. This has been financed by a term loan which has a balance payable of $1,529,000 at March 31, 1995. It bears interest at the prime rate plus one percentage point and is repayable in equal monthly installments of $45,000 through January 1998. The term loan is secured by all assets of the Company except real estate. The assets pledged include net accounts receivable of approximately $6 million. The term loan limits dividends and the amount the Company can pay to repurchase stock, but the loan may be repaid at any time without penalty. 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: May 16, 1995 -----END PRIVACY-ENHANCED MESSAGE-----