Daily Journal Corp 10-K for FY2020

Daily Journal Corp (DJCO)

10-K 2020-12-17 For: 2020-09-30

Added on April 05, 2026

About this 10-K

Daily Journal Corp filed this 10-K on December 17, 2020, covering the fiscal year ended September 30, 2020 (FY2020).

Headline figures

Fiscal year ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $49.94M; up 2.6% from $48.66M a year earlier
Net income: $4.04M; compared with a net loss of $25.22M a year earlier

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	DJCO	The Nasdaq Stock Market

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
Emerging growth company ☐

	Newspaper publications	Base of publication
	Los Angeles Daily Journal	Los Angeles, California
	San Francisco Daily Journal	San Francisco, California
	Daily Commerce	Los Angeles, California
	The Daily Recorder	Sacramento, California
	The Inter-City Express	Oakland, California
	San Jose Post-Record	San Jose, California
	Orange County Reporter	Santa Ana, California
	The Daily Transcript	San Diego, California
	Business Journal	Riverside, California
	The Record Reporter	Phoenix, Arizona

	High		Low
Fiscal 2020
Quarter ended December 31, 2019	$	293.18	$	249.76
Quarter ended March 31, 2020		298.00		187.53
Quarter ended June 30, 2020		300.30		250.75
Quarter ended September 30, 2020		317.01		234.59

Fiscal 2019
Quarter ended December 31, 2018	$	257.70	$	212.20
Quarter ended March 31, 2019		240.00		192.83
Quarter ended June 30, 2019		238.00		213.68
Quarter ended September 30, 2019		262.50		197.00

	Reportable Segments
	Traditional Business						Journal Technologies					Corporate						Total
	2020			2019			2020		2019			2020			2019			2020			2019
Revenues
Advertising	$	7,104		$	9,132		$	—	$	—		$	—		$	—		$	7,104		$	9,132
Circulation		5,090			5,249			—		—			—			—			5,090			5,249
Advertising service fees and other		2,501			2,712			—		—			—			—			2,501			2,712
Licensing and maintenance fees		—			—			21,647		20,179			—			—			21,647			20,179
Consulting fees		—			—			7,718		5,539			—			—			7,718			5,539
Other public service fees		—			—			5,882		5,844			—			—			5,882			5,844
Total operating revenues		14,695			17,093			35,247		31,562			—			—			49,942			48,655
Operating expenses
Salaries and employee benefits		11,290			10,637			26,512		24,377			—			—			37,802			35,014
Goodwill impairment		—			—			—		13,400			—			—			—			13,400
Others		5,135			6,344			8,288		12,121			—			—			13,423			18,465
Total operating expenses		16,425			16,981			34,800		49,898			—			—			51,225			66,879
Income (loss) from operations		(1,730	)		112			447		(18,336	)		—			—			(1,283	)		(18,224	)

Dividends and interest income		—			—			—		—			4,965			5,380			4,965			5,380
Other income		—			—			—		—			3			38			3			38
Net unrealized losses on investments		—			—			—		—			(3,099	)		(17,715	)		(3,099	)		(17,715	)
Interest expenses on note payable collateralized by real estate and other		(84	)		(93	)		—		—			(35	)		—			(119	)		(93	)
Interest expense on margin loans		—			—			—		—			(434	)		(862	)		(434	)		(862	)
Gains on sales of marketable securities, net		—			—			—		—			4,193			—			4,193			—
Pretax income (loss)	$	(1,814	)	$	19		$	447	$	(18,336	)	$	5,593		$	(13,159	)	$	4,226		$	(31,476	)

	September 30			September 30
	2020			2019
ASSETS
Current assets
Cash and cash equivalents	$	26,922,000		$	8,615,000
Restricted cash		2,041,000			2,015,000
Marketable securities at fair value -- common stocks of $179,368,000 at September 30, 2020 and $194,581,000 at September 30, 2019		179,368,000			194,581,000
Accounts receivable, less allowance for doubtful accounts of $250,000 at September 30, 2020 and $200,000 at September 30, 2019		6,727,000			7,036,000
Inventories		36,000			40,000
Prepaid expenses and other current assets		613,000			508,000
Income tax receivable		601,000			153,000
Total current assets		216,308,000			212,948,000

Property, plant and equipment, at cost
Land, buildings and improvements		16,572,000			16,499,000
Furniture, office equipment and computer software		1,782,000			2,119,000
Machinery and equipment		1,524,000			1,750,000
		19,878,000			20,368,000
Less accumulated depreciation		(9,422,000	)		(9,572,000	)
		10,456,000			10,796,000
Operating lease right-of-use assets		140,000			—
Deferred income taxes - Federal		11,137,000			12,596,000
Deferred income taxes - State		534,000			1,036,000
	$	238,575,000		$	237,376,000

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	3,926,000		$	4,520,000
Accrued liabilities		5,005,000			5,173,000
Note payable collateralized by real estate		133,000			126,000
Deferred subscriptions		2,899,000			3,195,000
Deferred installation contracts		140,000			1,932,000
Deferred maintenance agreements and others		15,887,000			15,722,000
Total current liabilities		27,990,000			30,668,000

Long term liabilities
Investment margin account borrowings		29,493,000			29,493,000
Note payable collateralized by real estate		1,576,000			1,709,000
Deferred maintenance agreements		450,000			335,000
Accrued liabilities		1,455,000			230,000
Deferred income taxes		35,870,000			37,241,000
Total long term liabilities		68,844,000			69,008,000

Commitments and contingencies (Notes 4 and 5)		—			—

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; 1,805,053 shares issued, including 424,307 treasury shares,at September 30, 2020 and September 30, 2019		14,000			14,000
Additional paid-in capital		1,755,000			1,755,000
Retained earnings		139,972,000			135,931,000
Total shareholders' equity		141,741,000			137,700,000
	$	238,575,000		$	237,376,000

																Accumulated
											Additional					Other			Total
	Common Stock				Treasury Stock						Paid-in		Retained			Comprehensive			Shareholders'
	Share		Amount		Share			Amount			Capital		Earnings			Income			Equity

Balance at September 30, 2018		1,805,053	$	18,000		(424,307	)	$	(4,000	)	$	1,755,000	$	45,361,000		$	115,786,000		$	162,916,000
Net loss		—		—		—			—			—		(25,216,000	)		—			(25,216,000	)
Adoption of new accounting pronouncement		—		—		—			—			—		115,786,000			(115,786,000	)		—
Balance at September 30, 2019		1,805,053		18,000		(424,307	)		(4,000	)		1,755,000		135,931,000			—			137,700,000
Net income		—		—		—			—			—		4,041,000			—			4,041,000
Balance at September 30, 2020		1,805,053	$	18,000		(424,307	)	$	(4,000	)	$	1,755,000	$	139,972,000		$	—		$	141,741,000

	2020			2019
Cash flows from operating activities
Net income (loss)	$	4,041,000		$	(25,216,000	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization		524,000			589,000
Goodwill impairment		—			13,400,000
Gains on sales of marketable securities, net		(4,193,000	)		—
Deferred income taxes		590,000			(6,392,000	)
Unrealized losses on investments		3,099,000			17,715,000
Changes in assets and liabilities
(Increase) decrease in current assets
Accounts receivable, net		309,000			(2,233,000	)
Inventories		4,000			6,000
Prepaid expenses and other assets		(105,000	)		4,000
Income tax receivable		(448,000	)		117,000
Increase (decrease) in liabilities
Accounts payable		(594,000	)		1,700,000
Accrued liabilities		917,000			831,000
Deferred subscription		(296,000	)		21,000
Deferred installation contracts		(1,792,000	)		1,695,000
Deferred maintenance agreements and others		280,000			(622,000	)
Net cash provided by operating activities		2,336,000			1,615,000

Cash flows from investing activities
Sales of marketable securities		16,307,000			—
Purchases of property, plant and equipment, net		(184,000	)		(165,000	)
Net cash provided by (used in) investing activities		16,123,000			(165,000	)

Cash flows from financing activities
Proceeds from margin loan borrowing		1,000,000			—
Payment to margin loan borrowing		(1,000,000	)		—
Payment of loan principal		(126,000	)		(121,000	)
Net cash used in financing activities		(126,000	)		(121,000	)

Increase in cash and restricted cash and cash equivalents		18,333,000			1,329,000

Cash and restricted cash and cash equivalents
Beginning of year		10,630,000			9,301,000
End of year	$	28,963,000		$	10,630,000

Interest paid during year	$	529,000		$	963,000
Income taxes refunded during year	$	(47,000	)	$	(121,000	)

	September 30, 2020						September 30, 2019
	Aggregate fair value		Amortized/ Adjusted cost basis		Pretax unrealized gains		Aggregate fair value		Amortized/ Adjusted cost basis		Pretax unrealized gains
Marketable securities
Common stocks	$	179,368,000	$	41,775,000	$	137,593,000	$	194,581,000	$	53,889,000	$	140,692,000

Description	Balance at Beginning of Year		Additions Charged to Costs and Expenses		Accounts Charged off less Recoveries			Balance at End of Year
Fiscal 2020
Allowance for doubtful accounts	$	200,000	$	116,000	$	(66,000	)	$	250,000
Fiscal 2019
Allowance for doubtful accounts	$	200,000	$	8,000	$	(8,000	)	$	200,000

	2020			2019
Current:
Federal	$	(420,000	)	$	132,000
State		15,000			—
		(405,000	)		132,000
Deferred:
Federal		808,000			(4,685,000	)
State		(218,000	)		(1,707,000	)
		590,000			(6,392,000	)
	$	185,000		$	(6,260,000	)

	2020			2019

Statutory federal income tax rate		21.0	%		21.0	%
State franchise taxes (net of federal tax benefit)		5.6			4.5
Effect of state rate change on beginning balance of deferred tax liabilities		(9.4	)		(0.2	)
Business meals/gifts/other permanent differences		0.6			(0.1	)
Goodwill impairment		—			(6.5	)
Dividends received deduction		(11.1	)		1.5
Revenue recognized for book but not tax		0.4			—
Prior year true-up		—			0.2
Foreign tax credits		(0.4	)		0.1
CARES Act benefits		(4.4	)		—
Others		2.1			(0.6	)
Effective tax rate		4.4	%		19.9	%

	2020			2019
Deferred tax assets attributable to:
Accrued liabilities, including supplemental compensation and vacation pay accrual	$	415,000		$	178,000
Impairment losses on investments		1,016,000			2,201,000
Bad debt reserves not yet deductible		55,000			41,000
Depreciation and amortization		3,482,000			3,999,000
Deferred revenues		913,000			885,000
Goodwill		590,000			677,000
Net operating losses		4,768,000			5,195,000
Credits and other		432,000			456,000
Total deferred tax assets		11,671,000			13,632,000

Deferred tax liabilities attributable to:
Unrealized gains on investments		(35,870,000	)		(37,241,000	)
Net deferred income taxes	$	(24,199,000	)	$	(23,609,000	)

Fiscal Year ended	Federal NOL		California NOL		Other State NOL
	(in millions)
September 30, 2036	$	.8	$	—	$	—
September 30, 2037		6.6		—		.3
September 30, 2038		11.1		5.4		2.0
September 30, 2039		—		.7		.3
No expiration		1.6		—		—

	Payments due by Fiscal Year
	2021		2022		2023		2024		2025		2026 and after		Total
Real estate loan	$	131,000	$	148,000	$	153,000	$	158,000	$	164,000	$	955,000	$	1,709,000
Obligations under operating leases		129,000		11,000		—		—		—		—		140,000
Long-term accrued liabilities and other*		10,000		434,000		191,000		215,000		160,000		445,000		1,455,000
	$	270,000	$	593,000	$	344,000	$	373,000	$	324,000	$	1,400,000	$	3,304,000

101.INS	Inline XBRL Instance
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation
101.DEF	Inline XBRL Taxonomy Extension Definition
101.LAB	Inline XBRL Taxonomy Extension Labels
101.PRE	Inline XBRL Taxonomy Extension Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

(~)	Filed as an Exhibit to the Company’s 2019 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on December 12, 2019.
(‡)	Management Compensatory Plan.

	DAILY JOURNAL CORPORATION


	By:	/s/ Gerald L. Salzman
		Gerald L. Salzman
		President

Signature	Title	Date

/s/ Charles T. Munger	Chairman of the Board	December 17, 2020
Charles T. Munger

/s/ Gerald L. Salzman	President, Chief Executive Officer, Chief Financial Officer, Treasurer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)	December 17, 2020
Gerald L. Salzman

	Director
Peter Kaufman

	Director
Gary Wilcox

/s/ Mary Conlin	Director	December 17, 2020
Mary Conlin

(1)	Consolidated Financial Statements:
	Report of Independent Registered Public Accounting Firm
	Consolidated Balance Sheets at September 30, 2020 and 2019
	Consolidated Statements of Comprehensive Income (Loss) for the years ended September 30, 2020 and 2019
	Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2020 and 2019
	Consolidated Statements of Cash Flows for the years ended September 30, 2020 and 2019
	Notes to Consolidated Financial Statements

(2)	Exhibits
3.1	Articles of Incorporation of Daily Journal Corporation, as amended.
3.2	Amended and Restated Bylaws of Daily Journal Corporation
4.1	Description of Common Stock of Daily Journal Corporation (~)
10.1	Form of Non-Negotiable Certificate Representing an Employee Participant Interest in the Daily Journal Corporation (“DJC”) Plan for Supplemental Compensation to an Employee as long as that Employee Remains Employed by DJC or one of its Subsidiaries, Based on Pre-tax Earnings of DJC and its Subsidiaries on a Consolidated Basis. (~) (‡)
14	Daily Journal Corporation Code of Ethics.
21	Daily Journal Corporation’s List of Subsidiaries.
31	Certification by Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification by Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


For Use By	(File This Form in	This Space For Use By
The Secretary of State	Duplicate Originals)	The Secretary of State
File No. ...................
Fee Paid $..................	(Sect. 33-7-30 of 1976 Code)
R.N. .......................
Date........................	(INSTRUCTIONS ON PAGE 4)

Class of Shares	Authorized No. of each class		Par Value
Preferred		5,000,000	$	.01
Common		5,000,000	$	.01

Charles T. Munger		355 South Grand Avenue, 34th Floor
Name		Los Angeles, CA 90071-1560
		Address

J.P. Guerin		355 South Grand Avenue, 34th Floor
Name		Los Angeles, CA 90071-1560
		Address

Gerald S. Salzman		355 South Grand Avenue, 34th Floor
Name		Los Angeles, CA 90071-1560
		Address


Name		Address


Name		Address

Name	Street & Box No.	City	County	State
Ruth E. Fisher,	355 S. Grand Avenue, 36th Fl.,	Los Angeles,	Los Angeles,	California

	/s/ Ruth E. Fisher
	(Signature of Incorporator)


Date January 16, 1987	Ruth E. Fisher
	(Type or Print Name)


	(Signature of Incorporator)


	(Type or Print Name)


	(Signature of Incorporator)


	(Type or Print Name)

Date January 16, 1987	/s/ Eric B. Amstutz
	(Signature)

	Eric B. Amstutz
	(Type or Print Name)

	Address P.O. Box 10207

	Greenville, SC 29603

Fee for filing Articles	$	5.00
In addition to the above $ 10 for each $1,000.00 of the aggregate value of shares which the Corporation is autho-rized to issue, but in no case less than		40.00
nor more than		1,000.00

	2.	The Registered Office of the Corporation is 2019 Park Street
		(Street and no.)
		in the City of Columbia , County of Richland and

		the State of South Carolina and the name of the Registered Agent at such address is

		The Prentice-Hall Corporation System

Total Number of
Shares Entitled	Number of Shares Voted
to vote	For	Against
10	10	0

	Number of Shares	Number of Shares Voted
Class	Entitled to Vote	For	Against

	4.	a. Prior to the organizational meeting the Corporation and with the consent of the subscribers, the follow-ing Amendment was adopted by the Incorporator(s) on......................................................

		(Text of Amendment)

		b. The number of withdrawals of subscribers, if such be the case is .......

		c. The number of Incorporators are ......... and the number voting for the Amendment was ............ and the number voting against the Amendment was...................................................................

Date March 13, 1987		DJC Corporation
		(Name of Corporation)


		/s/ Gerald L. Salzman
		(Name and Title)

Note: Any person signing this form		Gerald L. Salzman, President
shall either opposite or beneath		(Name and Title)
his signature clearly and legibly
state his name and the capacity in		/s/ Ira A. Marshal, Jr., Secretary
whether he signs. Must be signed		(Name and Title)
in accordance with Section 33-1-40
of the 1976 code as amended.
		(Name and Title)

STATE OF California
ss:


COUNTY OF Los Angeles

Fee for filing application	$	5.00
In addition to the above, $.40 for each $1,000,00 of the total increase in the ag-gregate value of authorized shares, but in no case less than		40.00
nor more than		1,000.00

Dated: April 13, 1997	DAILY JOURNAL CORPORATION


	By:	/s/ Gerald L. Salzman
		Gerald L. Salzman,
		President

		Ira A. Marshall, Jr.
		Ira A. Marshall, Jr.,
		Secretary


	DAILY JOURNAL COMPANY


	By:	/s/ Gerald L. Salzman
		Gerald L. Salzman,
		President

		/s/ Ira A. Marshall, Jr.
		Ira A. Marshall, Jr.,
		Secretary

	(1)	authorize distributions;

	(2)	approve or propose to shareholders action that is required to be approved by shareholders;

	(3)	fill vacancies on the board of directors or on any of its committees;

	(4)	amend the Articles of Incorporation;

	(5)	adopt, amend, or repeal Bylaws;

	(6)	approve a plan of merger not requiring shareholder approval;

	(7)	authorize or approve reacquisition of shares, except according to a formula or method prescribed by the board of directors; or

	(8)	authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except that the board of directors may authorize a committee (or a senior executive officer of the corporation) to do so within limits specifically prescribed by the board of directors.