Daily Journal Corporation Announces Financial Results for Fiscal Year ended September 30, 2021

During fiscal 2021, Daily Journal Corporation (NASDAQ:DJCO) had consolidated revenues of $49,389,000 as compared with $49,942,000 in the prior year. This decrease of $553,000 was primarily from decreases in (i) Journal Technologies’ license and maintenance fees of $603,000 and consulting fees of $1,399,000, and (ii) the Traditional Business’ trustee sale notice advertising net revenues of $264,000, display advertising net revenues of $92,000 and circulation revenues of $514,000, partially offset by increases in (i) Journal Technologies’ public service fees of $1,249,000 and (ii) the Traditional Business’ classified advertising net revenues of $13,000, legal notice advertising net revenues of $663,000 and government notice advertising net revenues of $158,000.

The Traditional Business’ pretax income increased by $955,000 to $443,000 from a pretax loss of $512,000 in the prior fiscal year. Journal Technologies’ business segment pretax income increased by $2,480,000 to $1,709,000 from a pretax loss of $771,000 in the prior fiscal year. During fiscal 2021, the Company sold some of its marketable securities for $45,033,000, realizing gains on the sales of those marketable securities of $41,749,000, and simultaneously reinvested the proceeds in marketable securities of a different company. During fiscal 2020, there were sales of $16,307,000 in marketable securities with realized gains of $4,193,000 from these sales. In addition, there were increases in net unrealized gains on marketable securities of $109,598,000 to $106,499,000 from unrealized losses of $3,099,000 in the prior fiscal year. These investments generated approximately $2,908,000 in dividends income for the fiscal 2021, as compared with $4,965,000 in the prior fiscal year. 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 have reduced their dividends. During fiscal 2021, consolidated pretax income was $153,050,000, as compared to $4,226,000 in the prior fiscal year. There was consolidated net income of $112,900,000 ($81.77 per share) for fiscal 2021, as compared with $4,041,000 ($2.93 per share) in the prior fiscal year.

The Company believes that the Coronavirus pandemic has had, and, with the Delta and Omicron variant cases, will continue to have, a significant impact on the Company’s business operations. It is possible that governments may again take extreme actions in response to the pandemic and the Delta and Omicron variants, such as the renewed closure, or scaling back of operations, of courts and other governmental agencies that are the customers of the Company. This might also include a fair degree of volatility in the value of the Company’s marketable securities. At September 30, 2021, the Company held marketable securities valued at $347,573,000, including net pretax unrealized gains of $244,093,000, and accrued a deferred tax liability of $64,115,000 for estimated income taxes due only upon the sales of the net appreciated securities.

For fiscal 2021, the Company recorded a provision for income taxes of $40,150,000 on pretax income of $153,050,000. The effective rate of 26% was higher than the statutory rate of 21% primarily due to the recording of (i) state taxes, which were offset by the dividends received deduction, resulting in a tax provision of $1,260,000 on pretax income before the unrealized and realized gains on marketable securities, (ii) a tax provision of $27,938,000 on the unrealized gains on marketable securities and (iii) a tax provision of $10,952,000 on the realized gains on marketable securities. The Company was able to utilize all of its federal and certain state net operating losses carryforwards in fiscal 2021.

For risk factors associated with the Company’s businesses, please see “Item 1A – Risk Factors” of the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2021.

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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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