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DAILY JOURNAL CORP

DAILY JOURNAL CORPDJCOEarnings & Financial Report

Nasdaq · publishing

Daily Journal Corporation is an American publishing company and technology company headquartered in Los Angeles, California. The company has offices in the California cities of Corona, Oakland, Riverside, Sacramento, San Diego, San Francisco, San Jose, and Santa Ana, as well as in Denver, Colorado; Logan, Utah; Phoenix, Arizona; and Melbourne, Australia. Since being led by Charles T. Munger, its newspapers have focused greatly on reporting about the U.S. legal system.

What changed in DAILY JOURNAL CORP's 10-K — 2023 vs 2024

Top changes in DAILY JOURNAL CORP's 2024 10-K

164 paragraphs added · 168 removed · 135 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

48 edited+9 added−7 removed33 unchanged
Journal Technologies has the following product solutions based on the Company’s core eSeries Framework™ technology: - 6 - eCourt®, eProsecutor™, eDefender™ and eSupervision™ (formerly eProbation)™ ― browser-based case processing systems that can be used by courts and other justice agencies for all case types because the screens, data elements, business rules, work queues, searches and alerts are highly configurable.
Journal Technologies has the following product solutions based on the Company’s core eSeries Framework™ technology: eCourt®, eProsecutor™, eDefender™ and eSupervision™ (formerly eProbation)™ ― browser-based case processing systems that can be used by courts and other justice agencies for all case types because the screens, data elements, business rules, work queues, searches and alerts are highly configurable.
These costs have generally been offset by increased license, maintenance and support fees, which often contain a periodic cost-of-living adjustment. Also, the Company's investment margin account has an interest rate that fluctuates based on the Federal Funds Rate plus 50 basis points with interest only payable monthly.
These costs have generally been offset by increased license, maintenance and support fees, which often contain a periodic cost-of-living adjustment. The Company’s investment margin account has an interest rate that fluctuates based on the Federal Funds Rate plus 50 basis points with interest only payable monthly.
The specialized information services offered by the Company have grown out of its newspaper operations or have evolved in response to requests of its newspaper subscribers. The Company has several court rules services, including multi-volume, loose-leaf sets for certain state and federal courts in California. The Northern California set consists of nine volumes. The Southern California set has eight volumes.
The specialized information services offered by the Company have grown out of its newspaper operations or have evolved in response to requests of its newspaper subscribers. The Company has several court rules services, including multi-volume, loose-leaf sets for state and federal courts in California. The Northern California set consists of nine volumes. The Southern California set has eight volumes.
The publications are based in the following cities: 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 The Daily Journals.
The publications are based in the following cities: 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 - 3 - The Daily Journals.
The Company updates these court rules on a monthly basis. In addition, the Company publishes single-volume rules for Los Angeles and San Diego counties. The single volumes are replaced when there are rule changes. The Judicial Profiles service contains information concerning nearly all active judges in California.
The Company updates these court rules on a monthly basis. In addition, the Company publishes single-volume rules for Los Angeles and San Diego counties. The single volumes are replaced when there are rule changes. - 5 - The Judicial Profiles service contains information concerning nearly all active judges in California.
Generally, The Daily Journals seek to be of special use to lawyers and judges. - 3 - The Daily Journals share much content. The Los Angeles Daily Journal is the largest newspaper published by the Company, both in terms of revenues and circulation.
Generally, The Daily Journals seek to be of special use to lawyers and judges. The Daily Journals share much content. The Los Angeles Daily Journal is the largest newspaper published by the Company, both in terms of revenues and circulation.
These organizations use the Journal Technologies family of products to help manage cases and information electronically, to interface with other critical justice partners and to extend electronic services to the public, including e-filing and a website to pay traffic citations and fees online. These products are licensed or subscribed to in approximately 30 states, and internationally.
These organizations use the Journal Technologies family of products to help manage cases and information electronically, to interface with other critical justice partners and to extend electronic services to the public, including e-filing and a website to pay traffic citations and fees online. These products are licensed or subscribed to in approximately 32 states, and internationally.
Features include default listings and probate sale notices. The Daily Commerce carries both public notice and commercial advertising. It is published each business day. A subscription includes online access to the Los Angeles County foreclosure listing and public record database. The Daily Recorder. The Daily Recorder, based in Sacramento, began operations in 1911. It is published each business day.
Features include default listings and probate sale notices. The Daily Commerce carries both public notice and commercial advertising. It is published each business day. A subscription includes online access to the Los Angeles and Ventura county foreclosure listings and public record database. The Daily Recorder. The Daily Recorder, based in Sacramento, began operations in 1911.
The regular yearly subscription rate for each of The Daily Journals is $887 plus tax. Most of the information published in The Daily Journals is available to subscribers online at www.dailyjournal.com. Daily Commerce.
The regular yearly subscription rate for each of The Daily Journals is $895 plus tax. Most of the information published in The Daily Journals is available to subscribers online at www.dailyjournal.com. Daily Commerce.
Journal Technologies (Canada) Journal Technologies (Canada) Inc. was founded in August 2022 as a service company to provide management and advisory services related to corporate leadership, financial management, strategic planning, operational guidance, human resources, project management, software development, professional services, and various other services required by Daily Journal Corporation and Journal Technologies.
Journal Technologies (Canada) Journal Technologies (Canada) Inc. was founded in August 2022 as a service company to provide management and advisory services related to corporate leadership, financial management, strategic planning, operational guidance, human resources, project management, software development, professional services, and various other services required by Daily Journal Corporation and Journal Technologies. It is primarily based in Victoria, Canada.
The remainder of the Company’s other revenues in those years were attributable to the United States.
The remainder of the Company’s other revenues in those years was attributable to the United States.
As a technology-based company, Journal Technologies’ success depends on the continued improvement of its products, which is why the costs to update and upgrade them consistently constitute such a significant portion of the Company’s expenses. The Company’s revenues from Journal Technologies’ foreign customers were approximately $3,293,000 in fiscal 2023 and $4,638,000 in fiscal 2022.
As a technology-based company, Journal Technologies’ success depends on the continued improvement of its products, which is why the costs to update and upgrade them consistently constitute such a significant portion of the Company’s expenses. - 7 - The Company’s revenues from Journal Technologies’ foreign customers were approximately $6,153,000 in fiscal 2024 and $3,293,000 in fiscal 2023.
Public notice advertising revenues and related advertising and other service fees, including trustee sales legal advertising revenues, constituted about 14% of the Company's total operating revenues in fiscal 2023 and about 17% in fiscal 2022.
Public notice advertising revenues and related advertising and other service fees, including trustee sales legal advertising revenues, constituted about 14% of the Company's total operating revenues in both fiscal 2024 and 2023.
Item 1. Business Daily Journal Corporation (the “Company”) publishes newspapers and websites reporting California and Arizona news and produces several specialized information publications. It also serves as a newspaper representative specializing in public notice advertising. This is sometimes referred to as the Company’s “Traditional Business”. Journal Technologies, Inc.
Item 1. Business Daily Journal Corporation (“Daily Journal” or “the Company”) publishes newspapers and websites covering California and Arizona news and produces several specialized information publications. It also serves as a newspaper representative specializing in public notice advertising. This is sometimes referred to as the Company’s “Traditional Business”. Journal Technologies, Inc.
Essentially all of the Company’s U.S. operations are based in California, Arizona and Utah. The Company also has a presence in Australia where Journal Technologies is working on three software installation projects. In August 2022, the Company established a new wholly-owned subsidiary, Journal Technologies (Canada) Inc., in Victoria BC, Canada.
Essentially all of the Company’s U.S. operations are based in California, Arizona and Utah. The Company also has a presence in Australia where Journal Technologies is working on three software installation projects and in British Columbia, Canada, where the Company has operated a wholly-owned subsidiary, Journal Technologies (Canada) Inc. since August 2022.
During the past several years, the U.S. Postal Service has increased postal rates. During fiscal 2023, postage increased slightly by $32,000 (7%) to $472,000 from $440,000. Marketing The Company actively promotes its individual newspapers and its multiple newspaper network as well as its other publications. The specialization of each publication creates both target subscribers and target advertisers.
During the past several years, the U.S. Postal Service has increased postal rates. During fiscal 2024, postage increased by $72,000 (15%) to $541,000 from $472,000. - 8 - Marketing The Company actively promotes its individual newspapers and its multiple newspaper network as well as its other publications. The specialization of each publication creates both target subscribers and target advertisers.
Those revenues declined significantly in more recent years due to an improved economy and then to the COVID-related foreclosure moratoriums. Because those moratoriums were generally lifted during 2023, trustee sales legal advertising revenues represented about 4% of the Company’s total operating revenues in fiscal 2023 as compared to 2% in fiscal 2022.
Those revenues declined significantly in more recent years due to an improved economy and then to the COVID-related foreclosure moratoriums. Trustee sales legal advertising revenues represented about 2% of the Company’s total operating revenues in both fiscal 2024 and 2023 in which those moratoriums were generally lifted.
These changes have included contracting for hand delivery in urban areas of San Francisco, Santa Clara, Alameda, San Diego, Riverside, Orange and Los Angeles counties, delivering pre-sorted newspapers to the post office on pallets, which facilitates delivery and improves service, and bundling newspapers to reduce per-piece charges.
These changes have included contracting for hand delivery in urban areas of San Francisco, Santa Clara, Alameda, San Diego, Riverside, Orange and Los Angeles counties, delivering pre-sorted newspapers to post offices, and bundling newspapers to reduce per-piece charges.
Its operations constituted about 76% of the Company’s total operating revenues in fiscal 2023 and 71% in fiscal 2022.
Its operations constituted about 76% of the Company’s total operating revenues in both fiscal 2024 and 2023.
At September 30, 2023, the Los Angeles Daily Journal had approximately 3,591 paid subscribers and the San Francisco Daily Journal had approximately 2,062 paid subscribers as compared with total paid subscriptions for both of The Daily Journals of 5,640 at September 30, 2022.
At September 30, 2024, the Los Angeles Daily Journal had approximately 3,805 paid subscribers and the San Francisco Daily Journal had approximately 2,177 paid subscribers as compared with total paid subscriptions for both of The Daily Journals of 5,653 at September 30, 2023.
The gross revenues generated directly by The Daily Journals are attributable approximately 56% to subscriptions and 44% to the sale of advertising and other revenues. Revenues from The Daily Journals constituted approximately 11% of the Company's total operating revenues in fiscal 2023 and 13% in fiscal 2022.
The gross revenues generated directly by The Daily Journals are attributable approximately 54% to subscriptions and 46% to the sale of advertising and other revenues. Revenues from The Daily Journals constituted approximately 11% of the Company's total operating revenues in both fiscal 2024 and 2023.
A subscription includes online access to the Alameda County foreclosure listing and public record database. - 4 - San Jose Post-Record. The San Jose Post-Record (the “Post-Record”) has been published since 1910. In addition to general news of local interest, the Post-Record focuses on legal and real estate news. It is published every business day and carries public notice advertising.
In addition to general news of local interest, the Post-Record focuses on legal and real estate news. It is published every business day and carries public notice advertising. A subscription includes online access to the Santa Clara and San Francisco county foreclosure listing and public record database. Orange County Reporter.
In addition, there were subsequent borrowings of $45.5 million to purchase additional marketable securities bringing the margin loan balance up to $75 million as of September 30, 2023. The Company believes it has sufficient cash and marketable securities for the foreseeable future.
In addition, there were subsequent borrowings of $45.5 million to purchase additional marketable securities bringing the margin loan balance up to $75 million as of September 30, 2023.
Materials and Postage After personnel costs (included in “Salaries and employee benefits” and in “Outside services” in the accompanying consolidated statements of comprehensive income (loss)), postage and paper costs are typically the next two largest expenses for T he Traditional Business.
Materials and Postage After personnel costs (included in “Salaries and employee benefits” and in “Outside services” in the accompanying consolidated statements of comprehensive income), postage and paper costs are typically the next two largest expenses for the Traditional Business. Paper and postage accounted for approximately 5% of the Traditional Business’ operating costs in both fiscal 2024 and 2023.
It has been an adjudicated newspaper of general circulation since 1909. It carries commercial and public notice advertising. A subscription includes online access to the San Diego County foreclosure listing and public record database. Business Journal. The Business Journal, established in 1991, publishes news of general interest and provides coverage of the business and professional communities in Riverside County.
It carries commercial and public notice advertising. A subscription includes online access to the San Diego County foreclosure listings and public record database. Business Journal. The Business Journal, established in 1991, publishes news of general interest and provides coverage of the business and professional communities in Riverside County. It also carries public notice advertising and is published each business day.
The Reporter is published three days a week. A subscription includes online access to the Orange County foreclosure listing and public record database. The Daily Transcript. The Daily Transcript is based in San Diego and published each business day. It reports general news items and San Diego commercial real estate, business and construction news.
A subscription includes online access to the Orange County foreclosure listings and public record database. The Daily Transcript. The Daily Transcript is based in San Diego and published each business day. It reports general news items and San Diego commercial real estate, business and construction news. It has been an adjudicated newspaper of general circulation since 1909.
A subscription includes online access to the Santa Clara County foreclosure listing and public record database. Orange County Reporter. The Orange County Reporter (“Reporter”) has been an adjudicated newspaper of general circulation since 1922. In addition to general news of local interest, the Reporter publishes local and state legal, business and real estate news, and carries public notice advertising.
The Orange County Reporter (“Reporter”) has been an adjudicated newspaper of general circulation since 1922. In addition to general news of local interest, the Reporter publishes local and state legal, business and real estate news, and carries public notice advertising. The Reporter is published three days a week.
The bill now allows the notice to be published either once per week for two consecutive weeks in a newspaper or once in a newspaper and once on an internet website that customarily conducts or advertises online auctions or sales. Another bill (AB721) relative to school budget hearing notices, was also passed.
Now, the notice can be published either once per week for two consecutive weeks in a newspaper or once in a newspaper and once on an Internet website that customarily conducts or advertises online auctions or sales.
Commercial advertising consists of display and classified advertising and constituted about 4% of the Company’s total operating revenues in both fiscal 2023 and 2022. - 5 - Public notice advertising consists of many different types of legal notices required by law to be published in an adjudicated newspaper of general circulation, including notices of death, fictitious business names, trustee sale notices and notices of governmental hearings.
Public notice advertising consists of many different types of legal notices required by law to be published in an adjudicated newspaper of general circulation, including notices of death, fictitious business names, trustee sale notices and notices of governmental hearings.
Recently, the California legislature passed a bill (AB542) to be effective January 1, 2024 that will almost certainly result in a decline in legal advertising revenue by reducing the number of publication days in a newspaper for self-service storage facility lien sales. The existing requirement is to publish the notice once per week for two consecutive weeks.
The California legislature passed a bill (AB542) which became effective January 1, 2024 that reduced the number of required publication days in a newspaper for self-service storage facility lien sales. The existing requirement was to publish the notice once per week for two consecutive weeks.
It also carries public notice advertising and is published each business day. The subscription includes online access to the Riverside/San Bernardino County foreclosure listing and public record database. The Record Reporter (Arizona). The Record Reporter has been in existence since 1914.
The subscription includes online access to the Riverside and San Bernardino county foreclosure listings and public record database. The Record Reporter (Arizona). The Record Reporter has been in existence since 1914.
Almost all of Journal Technologies’ customers are government agencies, and most new software installation and licensing projects are subject to competitive bidding procedures. Accordingly, the ability of Journal Technologies to get new customers is highly unpredictable.
In addition, Journal Technologies also provides hosting services through AWS GovCloud for customers who choose to have it. Almost all of Journal Technologies’ customers are government agencies, and most new software installation and licensing projects are subject to competitive bidding procedures. Accordingly, the ability of Journal Technologies to secure new customers is highly unpredictable.
Effective January 1, 2027 these notices are to be moved to posting on the school district’s website in lieu of being published in a newspaper. For several years, trustee sales legal advertising revenues were driven by the large number of foreclosures in California and Arizona, for which public notice advertising is required by law.
Indeed, another bill (AB721) relative to school budget hearing notices, which will take effect January 1, 2027, provides that these notices may be posted on the school district’s website in lieu of being published in a newspaper. - 6 - For several years following the Global Financial Crisis that began in 2007, trustee sales legal advertising revenues were driven by the large number of foreclosures in California and Arizona, for which public notice advertising is required by law.
Factors which may affect competition for advertisers are the cost for such advertising compared with other media, and the size and characteristics of the readership of the Company's publications. Internet sites devoted to personnel recruitment have become significant competitors of our newspapers and websites for classified advertising.
Factors which may affect competition for advertisers are the cost for such advertising compared with other media, and the size and characteristics of the readership of the Company's publications.
Working Capital The Company owns marketable securities with dividends and significant appreciation, providing the Company with working capital in addition to its cash flow from operations, subject, of course, to the normal risks associated with owning securities.
Management considers its employee relations to be good. - 10 - Working Capital The Company owns marketable securities that provides the Company with working capital in addition to its cash flow from operations, subject, of course, to the normal risks associated with owning securities.
The steady decline in recent years in the number of subscriptions to The Daily Journals and court rule publications is likely to continue and will certainly impact the Company’s future revenues. In attracting commercial advertisers, the Company competes with other newspapers and magazines, television, radio and other media, including electronic and online systems for employment-related classified advertising.
The Company believes the long-term trend will be in the direction of fewer subscriptions to the Company’s publications, and that trend will certainly negatively impact the Company’s future revenues. In attracting commercial advertisers, the Company competes with other newspapers and magazines, television, radio and other media, including electronic and online systems for employment-related classified advertising.
In addition to general news items, it includes legal news and columns of interest to the Sacramento legal and real estate communities. It includes the Daily Appellate Report and carries commercial and public notice advertising. A subscription includes online access to the Sacramento County foreclosure listing and public record database. The Inter-City Express.
It is published each business day. In addition to general news items, it includes legal news and columns of interest to the Sacramento legal and real estate communities. It includes the Daily Appellate Report and carries commercial and public notice advertising.
These filings are not available on our website, www.dailyjournal.com , which is generally dedicated to the content of our publications and services. We will, however, provide these filings in electronic or paper format free of charge upon request addressed to our Secretary at our principal executive offices.
We will, however, provide these filings in electronic or paper format free of charge upon request addressed to our Secretary at our principal executive offices. Our SEC filings are also available to the public over the Internet at the SEC’s website at www.sec.gov. - 11 -
The Company's Judicial Profile services have indirect competition because some of the same information is available through other sources, including the courts. The newspaper industry is experiencing significant secular decline, and the Company’s Traditional Business is no exception.
Subscriptions to the single and multi-volume court rules continued to decline during fiscal 2024. The Company's Judicial Profile services have indirect competition because some of the same information is available through other sources, including the courts. The newspaper industry continues to experience significant secular decline.
The Inter-City Express (the “Express”) has been published since 1909. It covers general news of local interest and focuses its coverage on news about the real estate and legal communities in the Oakland/San Francisco area. The Express carries public notice advertising and is published each business day.
A subscription includes online access to Sacramento, Placer and El Dorado county foreclosure listings and public record database. - 4 - The Inter-City Express. The Inter-City Express (the “Express”) has been published since 1909. It covers general news of local interest and focuses its coverage on news about the real estate and legal communities in the Oakland/San Francisco area.
The Company believes that The Daily Journals are the most important newspapers serving California lawyers on a daily basis. - 8 - The Company's court rules publications face competition from case management systems and the courts themselves. Subscriptions to the single and multi-volume court rules continued to decline during fiscal 2023.
Other newspapers do provide some of the same subject coverage, but the Company believes its coverage, particularly that of The Daily Journals, is more complete. The Company believes that The Daily Journals are the most important newspapers serving California lawyers on a daily basis. The Company's court rules publications face competition from case management systems and the courts themselves.
CNSB, the Company’s commission-earning selling agent, faces competition from a number of companies based in California, some of which specialize in placing certain types of notices.
Large metropolitan general interest newspapers normally do not carry a significant amount of legal advertising, although recently they too have solicited certain types of public notice advertising. CNSB, the Company’s commission-earning selling agent, faces competition from a number of companies based in California, some of which specialize in placing certain types of notices.
In addition, there has been a steady consolidation of companies serving the legal marketplace, resulting in an ever-smaller group of companies placing display advertising. Consequently, retaining advertising revenues remains a challenge. To reduce costs, the Company has contracted with an outside advertising agency to conduct sales of its display advertising.
Internet sites devoted to personnel recruitment have become significant competitors of our newspapers and websites for classified advertising. - 9 - In addition, there has been a steady consolidation of companies serving the legal marketplace, resulting in an ever-smaller group of companies placing display advertising. Consequently, retaining advertising revenues remains a challenge.
Paper and postage accounted for approximately 5% of the Traditional Business' operating costs in fiscal 2023 and 4% in fiscal 2022. An adequate supply of newsprint and other paper is important to the Company's operations. The Company currently does not have a contract with any paper supplier.
An adequate supply of newsprint and other paper is important to the Company's operations. The Company currently does not have a contract with any paper supplier. The Company has always been able to obtain sufficient newsprint for its operations, although past shortages of newsprint have sometimes resulted in higher prices.
The Company is not a party to any collective bargaining agreements. Certain benefits, including medical insurance, are provided to all full-time employees. Management considers its employee relations to be good.
Employees The Company had approximately 400 full-time employees and contractors and about 11 part-time employees as of September 30, 2024, including about 280 employees and contractors at Journal Technologies and 22 employees at Journal Technologies (Canada). The Company is not a party to any collective bargaining agreements. Certain benefits, including medical insurance, are provided to all full-time employees.
During the past several years, the Company has instituted changes in an attempt to mitigate higher postage costs.
During fiscal 2024, the price of newsprint decreased about 14% and usage decreased about 2%. We use the U.S. Postal Service for distribution of roughly 48% of our print newspaper subscriptions. During the past several years, the Company has instituted changes in an attempt to mitigate higher postage costs.
Remaining competitive requires periodic investment in technology to ensure modern patterns are followed; Journal Technologies is currently embarking on developing next-generation technology and addressing certain technical debt that exists within current generation offerings. - 9 - Employees The Company had approximately 350 full-time employees and contractors and about 10 part-time employees as of September 30, 2023, including about 243 employees and contractors at Journal Technologies and 12 employees and contractors at Journal Technologies (Canada).
Remaining competitive requires periodic investment in technology to ensure modern patterns are followed; Journal Technologies has begun developing next-generation development patterns and practices to address technical debts that exist within current generation offerings.
The Company competes with at least one serious competitor for public notice advertising revenue in each of its markets. Large metropolitan general interest newspapers normally do not carry a significant amount of legal advertising, although recently they too have solicited certain types of public notice advertising.
To reduce costs, the Company has contracted with an outside advertising agency to conduct sales of its display advertising. The Company competes with at least one serious competitor for public notice advertising revenue in each of its markets.
Removed
The Company has always been able to obtain sufficient newsprint for its operations, although past shortages of newsprint have sometimes resulted in higher prices. During fiscal 2023, the price of newsprint did not increase significantly. - 7 - We use the U.S. Postal Service for distribution of roughly 36% of our newspapers.
Added
The Express carries public notice advertising and is published each business day. A subscription includes online access to the Alameda, Contra Costa, Stanislaus, and San Francisco county foreclosure listing and public record database. San Jose Post-Record. The San Jose Post-Record (the “Post-Record”) has been published since 1910.
Removed
Other newspapers do provide some of the same subject coverage as does the Company, but the Company believes its coverage, particularly that of The Daily Journals, is more complete.
Added
Commercial advertising consists of display and classified advertising and constituted about 4% of the Company’s total operating revenues in both fiscal 2024 and 2023.
Removed
As part of the competitive bidding process, many customers will express a preference for, or even require, larger vendors or specific domain specialization. Many customers desire externally-hosted Software-as-a-Service (SaaS) solutions to facilitate electronic filing, interface with other justice partners and the public, publish certain information from case management systems, and simplify provision of these services.
Added
We were able to successfully adjust our advertising rates upward in anticipation of the change in law, meaning that we suffered only a small decline in revenue of approximately $14,000 in 2024 due to the new law. The effort to reduce the number of required publication notices, however, is likely to continue.
Removed
Certain Journal Technologies’ product lines now provide versions of these services, but there are many uncertainties in the process of courts and other agencies migrating to a SaaS pattern. The Company competes on a variety of factors, including price, technological capabilities, and services to accommodate the individual requirements of each customer.
Added
As part of the competitive bidding process, many customers will express a preference for, or even require, larger vendors or specific domain specialization. As artificial intelligence (AI) becomes increasingly integrated into both our personal and professional lives, many of our competitors are rapidly incorporating AI capabilities into their offerings to maintain a technological advantage.
Removed
The interest rate as of September 30, 2023 was 6%, and the outstanding balance was $75 million.
Added
We have already introduced AI features in some of our products, and to continue delivering value to our customers and outpacing the competition, we must further invest in these cutting-edge technologies.
Removed
Because the Federal Reserve has increased interest rates to help combat inflation and may continue to do so, the Company’s interest expense on the margin account has increased and could increase more in the future. - 10 - Access to Our Information The Company files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”).
Added
In March 2024, the Company sold a portion of its marketable securities for approximately $40.6 million and used these proceeds and excess cash from operations to pay down the margin loan balance to $27.5 million at September 30, 2024. The Company believes it has sufficient cash and marketable securities for the foreseeable future.
Removed
Our SEC filings are also available to the public over the Internet at the SEC’s website at www.sec.gov.
Added
The interest rate as of September 30, 2024 was 5.5% after the first cut of 50 basis points to the central bank's key interest rate by Federal Reserve since 2020. The Federal Reserve may continue to reduce the rate in the near future.
Added
The Company’s interest expense on the margin account has decreased primarily due to the reduction to the investment margin account borrowings during fiscal 2024 and may continue to decrease more in the future because of the decreased interest rate.
Added
Access to Our Information The Company files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). These filings are not available on our website, www.dailyjournal.com , which is generally dedicated to the content of our publications and services.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

39 edited+10 added−13 removed21 unchanged
The costs to update and upgrade Journal Technologies’ products are expensed as incurred and will impact earnings at least through the foreseeable future. To build out next-generation technology there is up-front investment required, which is now underway. Likewise, investment is required to improve existing technology to simplify the process of configuring, managing and updating systems.
The costs to update and upgrade Journal Technologies’ products are expensed as incurred and will impact earnings at least through the foreseeable future. To build out next-generation technology there is up-front investment required, which is now underway and will increase. Likewise, investment is required to improve existing technology to simplify the process of configuring, managing and updating systems.
Effective January 1, 2027 these notices are to be moved to posting on the school district’s website in lieu of being published in a newspaper. - 12 - In addition, if the adjudication, which is what gives publishers the legal ability to publish public notice advertising, of one or more of the Company’s newspapers were challenged and revoked, those newspapers would no longer be eligible to publish public notice advertising, and it could materially affect the revenues of the Traditional Business.
Effective January 1, 2027, these notices are to be moved to posting on the school district’s website in lieu of being published in a newspaper. - 13 - In addition, if the adjudication, which is what gives publishers the legal ability to publish public notice advertising, of one or more of the Company’s newspapers were challenged and revoked, those newspapers would no longer be eligible to publish public notice advertising, and it could materially affect the revenues of the Traditional Business.
As the amount of this advertising has decreased due to the reduction in the number of foreclosures discussed above, the competition to publish the remaining public notices has intensified and may result in a further decline in the Traditional Business’ public notice advertising revenues.
As the amount of this advertising has decreased due to the reduction in the number of foreclosures and other things discussed above, the competition to publish the remaining public notices has intensified and may result in a further decline in the Traditional Business’ public notice advertising revenues.
Accordingly, a significant decline in the market value of one or more of the Company’s holdings may not be offset by hypothetically better performance of other holdings. This concentration of risk may result in a more pronounced effect on net income and shareholders’ equity. - 15 - The irreplaceable manager of our marketable securities portfolio passed away in November 2023.
Accordingly, a significant decline in the market value of one or more of the Company’s holdings may not be offset by hypothetically better performance of other holdings. This concentration of risk may result in a pronounced effect on net income and shareholders’ equity. The irreplaceable manager of our marketable securities portfolio passed away in November 2023. Charles T.
We are allocating certain resources to ensure we have the capacity to recognize and pursue these opportunities, whether through in-house engineering, partnership, or mergers and acquisitions, but whether we will be successful is uncertain. The process and approach to engineering software itself may change in notable ways, and this could impact the business model of Journal Technologies.
The Company is allocating certain resources to ensure it has the capacity to recognize and pursue these opportunities, whether through in-house engineering, partnership, or mergers and acquisitions, but whether it will be successful is uncertain. The process and approach to engineering software itself may change in notable ways, and this could impact the business model of Journal Technologies.
These trends are expected to continue and would adversely affect the Traditional Business. During fiscal 2023, we had a slight increase of $9,000 in circulation revenues primarily resulting from some promotional sale efforts which we will continue. However, overall industry-wide circulation revenues have continued to decline as more and more information has become available online.
These trends are expected to continue and adversely affect the Traditional Business. During fiscal 2024, we had a slight increase of $59,000 (1%) in circulation revenues primarily resulting from promotional sale efforts which we will continue. However, overall industry-wide circulation revenues have continued to decline as more and more information has become available online.
Journal Technologies faces significant competition from other case management software vendors. There is significant competition among a limited number of companies to provide services and software to courts and other justice agencies, and some of these companies are much larger and have greater access to capital and other resources than Journal Technologies.
There is significant competition among a limited number of companies to provide services and software to courts and other justice agencies, and some of these companies are much larger and have greater access to capital and other resources than Journal Technologies.
Charles T. Munger, the legendary investor of Berkshire Hathaway fame, has been a director of the Company for many decades, and has long managed the Company’s holdings of marketable securities. Mr. Munger passed away on November 28, 2023. Although the Board will work to ensure that the portfolio remains well-managed, it’s impossible to ever replace Mr. Munger.
Munger, the legendary investor of Berkshire Hathaway fame, was a director of the Company for many decades, and long managed the Company’s holdings of marketable securities. Mr. Munger passed away on November 28, 2023. Although the Board has been working to ensure that the portfolio remains well-managed, it’s impossible to ever replace Mr. Munger. Given the loss of Mr.
The value of these securities could decline, which would adversely affect net income and shareholders’ equity. Also, as of September 30, 2023, the Company’s holdings of marketable securities were concentrated in just eight companies.
The value of these securities could decline, which would adversely affect net income and shareholders’ equity. - 16 - As of September 30, 2024, the Company’s holdings of marketable securities were concentrated in just six companies.
The Company’s internal control over financial reporting has been designed to provide management and the Board of Directors with reasonable assurance regarding the preparation and fair presentation of the Company’s consolidated financial statements.
The Company has identified material weaknesses in its internal control over financial reporting. The Company’s internal control over financial reporting has been designed to provide management and the Board of Directors with reasonable assurance regarding the preparation and fair presentation of the Company’s consolidated financial statements.
Another bill (AB721) relative to school budget hearing notices, was also passed.
Another bill (AB721) relative to school budget hearing notices was also passed in September 2023.
Likewise, specialized vendors in specific vertical markets may develop or continue to enhance specific solutions for certain customer types that are sufficiently focused and turnkey that Journal Technologies will struggle to compete with them. - 14 - The customers of Journal Technologies are public sector entities, which create special issues and risks.
Likewise, specialized vendors in specific vertical markets may develop or continue to enhance specific solutions for certain customer types that are sufficiently focused and turnkey, or leverage disruptive new approaches, that Journal Technologies will struggle to compete with them. - 15 - The customers of Journal Technologies are public sector entities, thus creating special issues and risks.
For Journal Technologies, AI may fundamentally alter or automate key customer workflows over time, obviating the need for its technology. AI will likely also create new and better ways for customers to achieve their mandates.
Likewise, AI may negatively impact the business in ways that will prove difficult to circumvent. For Journal Technologies, AI may fundamentally alter or automate key customer workflows over time, obviating the need for its technology. AI will likely also create new and better ways for customers to achieve their mandates.
Risks Associated with Journal Technologies The success of Journal Technologies depends in large part on the technological update and upgrade of its software products. Journal Technologies’ success depends on the continued improvement of its products, and the costs to update and upgrade those products consistently represent a large portion of Journal Technologies’ expenses.
Journal Technologies’ success depends on the continued improvement of its products, and the costs to update and upgrade those products consistently represent a large portion of Journal Technologies’ expenses.
Also, our insurance may not cover all of the costs that we may incur as a result of a material security breach. The Company has identified material weaknesses in its internal control over financial reporting. The Company has identified material weaknesses in its internal control over financial reporting.
The Traditional Business also operates certain websites that process and, in certain cases, store customer information. Our insurance may not cover all of the costs that we may incur as a result of a material security breach. The Company has identified material weaknesses in its internal control over financial reporting.
As noted above, beginning in fiscal 2019, changes in unrealized gains (losses) on marketable securities are included in the Company’s net income (loss) and thus may have a significant impact on the Company’s reported results depending on the fluctuations of the prices of the marketable securities owned by the Company. - 16 - We cannot be sure that customer information and systems are fully protected against security breaches.
As noted above, beginning in fiscal 2019, changes in unrealized gains (losses) on marketable securities are included in the Company’s net income (loss) and thus may have a significant impact on the Company’s reported results depending on the fluctuations of the prices of the marketable securities owned by the Company.
When it does, the Company may be at risk for significant fluctuations in the applicable foreign currency exchange rates, which would affect the profitability of such marketable securities. The Company currently owns one such investment that is denominated in Hong Kong Dollars.
When it does, the Company may be at risk for significant fluctuations in the applicable foreign currency exchange rates, which would affect the profitability of such marketable securities.
These investments are being made to both improve win rates and maximize the efficiency (ergo reduce costs, and increase margins) of building and deploying customer systems. The intention is to improve profitability, but if this development is not done effectively, it may not yield the expected competitive advantages or intended efficiencies.
These investments are being made to both improve win rates and maximize the efficiency of building and deploying customer systems. The intention is to improve profitability, but if this development is not done effectively, it may not yield the expected competitive advantages or intended efficiencies. Journal Technologies faces significant competition from other case management software vendors.
These proposals typically focus on the availability of alternative means of providing public notices, such as via the Internet. Some proposals also question the need for public notices at all. To the extent these proposals become law, particularly in California and Arizona, they could materially affect the revenues of the Traditional Business.
Some proposals also question the need for public notices at all. As noted above, some of these proposals have already become law. To the extent more of these proposals are adopted, particularly in California and Arizona, they could materially adversely affect the revenues of the Traditional Business.
From time to time, the legislatures in California and Arizona (and elsewhere) have considered various proposals that would result in the elimination or reduction of the amount of public notice advertising in printed newspapers required by statute, and Arizona approved one such proposal for a particular notice type in fiscal 2017.
From time to time, the legislatures in California and Arizona (and elsewhere) have considered various proposals that would result in the elimination or reduction of the amount of public notice advertising in printed newspapers required by statute. These proposals typically focus on the availability of alternative means of providing public notices, such as via the Internet.
After personnel costs, postage and paper costs are typically the Company’s next two largest expenses. An adequate supply of newsprint and other paper is important to the operations of the Traditional Business. The Company currently does not have a contract with any paper supplier, and in the past, shortages of newsprint have sometimes resulted in higher prices.
The Traditional Business is exposed to risks associated with fluctuations in postage and paper costs. After personnel costs, postage and paper costs are typically the Company’s next two largest expenses. An adequate supply of newsprint and other paper is important to the operations of the Traditional Business.
Worthwhile new technologies capitalize on eliminating old inefficiencies. Just as the emergence and maturation of the Internet and smartphone technologies had profound implications across many industries, AI has the potential to significantly change key factors related to the Traditional Business, Journal Technologies, and companies in the Company’s holdings of marketable securities.
Just as the emergence and maturation of the Internet and smartphone technologies had profound implications across many industries, AI has the potential to significantly change key factors related to the Traditional Business, Journal Technologies, and companies in the Company’s holdings of marketable securities. - 12 - For the Traditional Business, there may be opportunities to automate or reduce the cost of content creation, or perhaps allow monetization of existing and/or historic content in new ways.
The Company’s challenge is to find and exploit opportunities to ensure change precipitated by AI provides tailwinds and not headwinds, and to do so in a way that is neither too slow, nor premature.
Monitoring potential impacts of AI on companies in the marketable securities portfolio will also require attention. Mitigating risk and capitalizing on potential opportunity requires active engagement. The Company’s challenge is to find and exploit opportunities to ensure change precipitated by AI provides tailwinds and not headwinds, and to do so in a way that is neither too slow, nor premature.
Recently, there have been consolidations of newsprint suppliers, and paper prices may fluctuate substantially in the future. The Traditional Business uses the U.S. Postal Service for distribution of a majority of its newspapers and products. Postal rates are dependent on the operating efficiency of the U.S. Postal Service and on legislative mandates imposed upon the U.S. Postal Service.
Postal Service for distribution of a majority of its newspapers and products. Postal rates are dependent on the operating efficiency of the U.S. Postal Service and on legislative mandates imposed upon the U.S. Postal Service. During the past several years, postal rates have increased. Postal rates and fees may increase more in the future.
Journal Technologies’ software processes and stores customer information in the conduct of its business, including in some cases by utilizing cloud-based systems supplied by third-party vendors. Despite our efforts to maintain up-to-date security controls, it is possible that our system could be improperly used to access or misappropriate customer systems or information, including personally identifiable or other confidential information.
Despite our efforts to maintain up-to-date security controls, it is possible that our system could be improperly used to access or misappropriate customer systems or information, including personally identifiable or other confidential information.
Also, with new norms established, the majority of Journal Technologies employees continue working from home most days, and the long-term downsides of these new norms on innovation and productivity are still being determined. - 11 - Risks Associated with the Maturation of Artificial Intelligence (AI) Technologies The Company ’ s business may be materially affected — either positively or negatively--by the emergence of disruptive new technologies or approaches enabled by the rapid pace of innovation unfolding in the artificial intelligence space.
Risks Associated with the Maturation of Artificial Intelligence (AI) Technologies The Company ’ s business may be materially affected--either positively or negatively--by the emergence of disruptive new technologies or approaches enabled by the rapid pace of innovation unfolding in the artificial intelligence space. Worthwhile new technologies capitalize on eliminating old inefficiencies.
A change in the accounting guidance with respect to one or more of these areas could materially affect the Company’s reported financial results.
The Company considers fair value measurement and disclosures, revenue recognition, accounting for software costs and income taxes to be critical accounting policies and estimates. A change in the accounting guidance with respect to one or more of these areas could materially affect the Company’s reported financial results.
Further, the Company does not have an internal audit group, and has not engaged an outside firm to complete the documentation of its internal control assessment to the level required by the applicable criteria. We believe that our overall internal control environment is sufficient for a company of our size.
Further, the Company does not have an internal audit group, and has not engaged an outside firm to complete the documentation of its internal control assessment to the level required by the applicable criteria. - 18 - The existence of material weaknesses means that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
Similarly, many law firms and companies from which the Traditional Business derives advertising and subscription revenues also curtailed their operations and spending. The impact on economic activity of a new crisis or a serious mutation of COVID-19 could again threaten the Traditional Business’ advertising and subscription revenues.
Similarly, many law firms and companies from which the Traditional Business derives advertising and subscription revenues also curtailed their operations and spending.
Journal Technologies generally recognizes revenues for software installations only upon completion of the applicable services and customer acceptance of the software system. In most cases, installation fees are not due until the customer has indicated its satisfaction with the installed system, and it has “gone live”.
In many cases, installation fees are not due until the customer has indicated its satisfaction with the installed system, and it has “gone live” or upon completion of certain milestones. Accordingly, we do not recognize revenues for installation services or for most other consulting services until after the services have been performed and accepted.
An inability to realize payment for services performed could materially affect the earnings of Journal Technologies. Additional costs may not be recoverable for historic projects with flexible scopes or scopes that are subject to interpretation, or projects that require adjustments due to technology changes that occur due to the passage of time.
Additional costs may not be recoverable for historic projects with flexible scopes or scopes that are subject to interpretation, or projects that require adjustments due to technology changes that occur due to the passage of time. The end-of-life process for legacy products and customer transitions to new products must be handled effectively.
It is not practical to assume that we will be able to offset the decline in subscriptions with increases in the subscription rate, and we cannot anticipate that our circulation revenues will continue to increase. - 13 - The Traditional Business is exposed to risks associated with fluctuations in postage and paper costs.
Law firm mergers have also reduced the number of firms that purchase multiple subscriptions of our newspapers. It is not practical to assume that we will be able to offset future declines in subscriptions with increases in the subscription rate, and we cannot anticipate that our circulation revenues will continue to increase.
For example, the California legislature recently passed a bill (AB542) to be effective January 1, 2024 that will almost certainly result in a decline in legal advertising revenue by reducing the number of publication days in a newspaper for self-service storage facility lien sales. The existing requirement is to publish the notice once per week for two consecutive weeks.
In September 2023, the California legislature passed a bill (AB542) effective January 1, 2024 that set in motion a decline in legal advertising revenue of approximately $14,000 during fiscal 2024 by reducing the number of required publication days in a newspaper for self-service storage facility lien sales.
General Corporate Risks Changes in accounting guidance could have a significant effect on the Company ’ s reported financial results. Preparing consolidated financial statements requires the Company’s management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses.
Preparing consolidated financial statements requires the Company’s management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by management’s application of accounting policies and the prevailing accounting guidance.
During the past several years, postal rates have increased. Postal rates and fees may increase more in the future. Further, we may not be able to pass on increases in paper and postage costs to our customers. We expect the Traditional Business to continue to suffer from significant secular decline.
Further, we may not be able to pass on increases in paper and postage costs to our customers. We expect the Traditional Business to continue to suffer from significant secular decline. The newspaper industry continues to experience significant secular decline, although the number of subscriptions to The Daily Journals has increased recently primarily due to promotional efforts.
Given the loss of Mr. Munger, the Company does not expect the future financial performance of its marketable securities portfolio to rival its past performance. The Company is required to recognize losses in a particular security for financial statement purposes even though the Company has not actually sold the security.
The Company does not anticipate initiating new investments in public common stocks unrelated to its core businesses. The Company is required to recognize losses in a particular security for financial statement purposes even though the Company has not actually sold the security.
Accordingly, we do not recognize revenues for installation services or for most other consulting services until after the services have been performed and accepted. There are significant risks associated with our ability to complete our services to the satisfaction of our customers and to fulfill the requirements that entitle us to be paid.
There are significant risks associated with our ability to complete our services to the satisfaction of our customers and to fulfill the requirements that entitle us to be paid. An inability to realize payment for services performed could materially affect the earnings of Journal Technologies.
The Traditional Business also competes with serious competitors for public notice advertising in all of its markets.
The Company’s court rules publications face competition in both Northern and Southern California from document management programs, online court rules services, and the courts themselves. The Traditional Business also competes with serious competitors for public notice advertising in all of its markets.
Risks Associated with Our Holdings of Marketable Securities A large portion of the Company ’ s assets is held in publicly traded securities, and the prices of those securities may decline. As of September 30, 2023, the Company held marketable securities worth approximately $303,128,000, with an unrealized gain for financial statement purposes of $137,716,000.
Disruptions that affect long-standing customer relationships can have negative reputational implications for Journal Technologies and can affect its earnings. Risks Associated with Our Holdings of Marketable Securities A large portion of the Company ’ s assets is held in publicly traded securities, and the prices of those securities may decline.
Removed
Most people again working from home and using on-line services would likely to put additional pressure on the newspaper business by impacting circulation numbers that may not be replaced by on-line revenues.
Added
Also, with new norms established, many Journal Technologies employees continue working from home most days or following a hybrid schedule. The long-term downsides of these new norms on innovation and productivity are still being determined.
Removed
Actions restricting travel, requiring non-essential workers to “stay at home” or causing courts and justice agencies to close or cut back operations can impact the ability of Journal Technologies to complete certain projects that are typically done in-person (and for which payment is usually received upon completion), reduce e-filing revenues, affect procurement processes and result in overall payment delays.
Added
The Company currently does not have a contract with any paper supplier, and in the past, shortages of newsprint sometimes resulted in higher prices. Recently, there have been consolidations of newsprint suppliers, and paper prices may fluctuate substantially in the future. - 14 - The Traditional Business uses the U.S.
Removed
For the Traditional Business, there may be opportunities to automate or reduce the cost of content creation, or perhaps allow monetization of existing and/or historic content in new ways. Likewise, AI may negatively impact the business in ways that will prove difficult to circumvent.
Added
The Company believes the long-term trend will be in the direction of fewer subscriptions to the Daily Journals and court rule publications, and that trend will certainly impact the Company’s future revenues. Risks Associated with Journal Technologies The success of Journal Technologies depends in large part on the technological update and upgrade of its software products.
Removed
Monitoring potential impacts of AI on companies in our holdings of marketable securities will also require attention. Mitigating risk and capitalizing on potential opportunity requires active engagement.
Added
Project success frequently involves dependencies on customers or third-party vendors/partners completing their responsibilities in an organized, workmanlike, and timely fashion. Journal Technologies generally recognizes revenues for software installations only upon completion of the applicable services and customer acceptance of the software system.
Removed
The bill now allows the notice to be published either once per week for two consecutive weeks in a newspaper or once in a newspaper and once on an internet website that customarily conducts or advertises online auctions or sales. In time, this has the potential to reduce annual earnings by approximately $150,000 to $200,000 per year.
Added
As of September 30, 2024, the Company held marketable securities worth approximately $358,691,000, with an unrealized gain for financial statement purposes of $219,597,000.
Removed
The Company’s court rules publications face competition in both Northern and Southern California from document management programs, online court rules services, and the courts themselves. The steady decline in recent years in the number of subscriptions to The Daily Journals and the court rule publications is likely to continue and adversely impact the Traditional Business’ future revenues.
Added
Munger, the Company does not expect the future financial performance of its marketable securities portfolio to rival its past performance. Henceforth, the Company expects to manage and harvest its marketable securities portfolio primarily to support the further development of Journal Technologies and its business.
Removed
Law firm mergers have also reduced the number of firms that purchase multiple subscriptions of our newspapers.
Added
The Company currently owns one such investment that is denominated in Hong Kong Dollars. - 17 - General Corporate Risks Changes in accounting guidance could have a significant effect on the Company ’ s reported financial results.
Removed
The newspaper business has been experiencing significant secular decline for some time, and the Company’s Traditional Business has been no exception. The Company expects its Traditional Business to continue to decline in the years ahead, which could have a material negative impact upon the Company’s revenue, income and future prospects.
Added
We cannot be sure that customer information and systems are fully protected against security breaches. Journal Technologies’ software processes and stores customer information in the conduct of its business, including in some cases by utilizing cloud-based systems supplied by third-party vendors.
Removed
The end-of-life process for legacy products and customer transitions to new products must be handled effectively. Disruptions that affect long-standing customer relationships can have negative reputational implications for Journal Technologies and that can affect its earnings.
Added
During fiscal 2024, at the request of the Board of Directors, the Company engaged a third-party to help assess opportunities to address the foregoing concerns and formulate a strategy to mitigate material weaknesses.
Removed
These estimates and assumptions are affected by management’s application of accounting policies and the prevailing accounting guidance. The Company considers fair value measurement and disclosures, revenue recognition, accounting for software costs and income taxes to be critical accounting policies and estimates.
Added
Based on recommendations in the final report from July 2024, we have begun a process intended to rectify these material weaknesses in the Company’s internal control over financial reporting in fiscal 2025.
Removed
The Traditional Business also operates certain websites that process and, in certain cases, store customer information.
Removed
Minor security breaches were discovered on websites operated by the Traditional Business in early fiscal 2015 and again in November 2023, and although both incidents were remediated without loss of data or revenue, there can be no assurance that there will not be more material breaches in the future.
Removed
However, the existence of material weaknesses means that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties The main Los Angeles property is comprised of a two-story, 34,000 square foot building constructed in 1990, which is fully occupied by the Company. Approximately 75% of the building is devoted to office space and the remainder to printing and production equipment and facilities.
Item 2. Properties The main Los Angeles property is comprised of a two-story, 34,000 square foot building constructed in 1990, which is occupied by the Company. Approximately 75% of the building is devoted to office space and the remainder to printing and production equipment and facilities.
Since a majority of Journal Technologies employees are working remotely from home post-COVID or at clients’ sites, the Company intends to consolidate the two offices into one and will seek to either sell or lease out the adjacent building in 2024. - 17 - In November 2015, the Company purchased a 30,700 square foot office building constructed in 1998 on about 3.6 acres in Logan, Utah that had been previously leased for Journal Technologies.
Since so many Journal Technologies employees are working remotely from home post-COVID or at clients’ sites, the Company intends to consolidate the two offices into one and will continue to seek to either sell or lease out the adjacent building in 2025.
This office is also currently underutilized and, therefore, a lease to a third party or other approach may be considered at some point in the future.
In November 2015, the Company purchased a 30,700 square foot office building constructed in 1998 on about 3.6 acres in Logan, Utah that had been previously leased for Journal Technologies. This office is also currently underutilized and, therefore, a lease to a third party or other approach may be considered at some point in the future.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The Company did not declare or pay any dividends during fiscal 2023 or 2022. A determination by the Company whether or not to pay dividends in the future will depend on numerous factors, including the Company’s earnings, cash flow, financial condition, capital requirements, future prospects, acquisition opportunities, and other relevant factors.
The Company did not declare or pay any dividends during fiscal 2024 or 2023. A determination by the Company whether or not to pay dividends in the future will depend on numerous factors, including the Company’s earnings, cash flow, financial condition, capital requirements, future prospects, acquisition opportunities, and other relevant factors.
From time to time, the Company has repurchased shares of its common stock and may do so in the future. The Company maintains a common stock repurchase program that was implemented in 1987 in combination with the Company’s Management Incentive Plan. See Note 2 of Notes to Consolidated Financial Statements for more information.
The Company maintains a common stock repurchase program that was implemented in 1987 in combination with the Company’s Management Incentive Plan. See Note 2 of Notes to Consolidated Financial Statements for more information. The Company’s stock repurchase program remains in effect, but the Company did not repurchase any shares during fiscal 2024 and 2023. - 22 -
High Low Fiscal 2023 Quarter ended December 31, 2022 $ 311.39 $ 245.54 Quarter ended March 31, 2023 315.23 258.00 Quarter ended June 30, 2023 297.75 270.05 Quarter ended September 30, 2023 315.50 282.50 Fiscal 2022 Quarter ended December 31, 2021 $ 415.66 $ 334.92 Quarter ended March 31, 2022 389.90 242.11 Quarter ended June 30, 2022 292.00 242.00 Quarter ended September 30, 2022 286.04 236.01 As of December 26, 2023, there were approximately 317 holders of record of the Company’s common stock, and the last trade was at $349.97 per share.
High Low Fiscal 2024 Quarter ended December 31, 2023 $ 357.34 $ 286.05 Quarter ended March 31, 2024 402.95 309.22 Quarter ended June 30, 2024 394.50 333.29 Quarter ended September 30, 2024 512.49 387.00 Fiscal 2023 Quarter ended December 31, 2022 $ 311.39 $ 245.54 Quarter ended March 31, 2023 315.23 258.00 Quarter ended June 30, 2023 297.75 270.05 Quarter ended September 30, 2023 315.50 282.50 As of December 16, 2024, there were approximately 298 holders of record of the Company’s common stock, and the last trade was at $577.94 per share.
The Board of Directors does not expect that the Company will pay any dividends or other distributions to shareholders in the foreseeable future. The Company does not have any equity compensation plans, and it did not sell any securities, whether or not registered under the Securities Act of 1933, during the past two fiscal years.
The Company did not have any equity compensation plans in fiscal 2023, and it did not sell any securities, whether or not registered under the Securities Act of 1933, during the past two fiscal years. From time to time, the Company has repurchased shares of its common stock and may do so in the future.
Removed
The Company’s stock repurchase program remains in effect, but the Company did not repurchase any shares during fiscal 2023 and 2022.
Added
The Board of Directors does not expect that the Company will pay any dividends or other distributions to shareholders in the foreseeable future.
Added
During fiscal 2024, the Company started a 2024 Equity Incentive Plan (the “Plan”) and granted the Company’s Chairman and Chief Executive Officer, Steven Myhill-Jones, 400 fully vested shares of the Company’s common stock and 400 restricted stock units in July 2024.
Added
Fifty-percent of the restricted stock units shall become vested on each of the first two anniversaries of the grant date so long as Mr. Myhill-Jones is then continuing to provide service to the Company, with vesting to be accelerated if he is terminated by the Company without Cause (as defined in the Plan).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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The Company’s goal is simply to continue to develop a successful and profitable software business, while continuing to enjoy the benefit of its Traditional Business for as long as possible. - 25 - Critical Accounting Policies and Estimates The Company’s financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles.
The Company’s goal is simply to continue to develop a successful and profitable software business, while continuing to enjoy the benefit of its Traditional Business for as long as possible. Critical Accounting Policies and Estimates The Company’s financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles.
The amount available for borrowing is based on the market value of the Company’s investment portfolio and fluctuates depending on the value of the underlying securities. In addition, the Company could be subject to margin calls should the balance of the investment decrease significantly. The Company is not a smaller version of Berkshire Hathaway Inc.
The amount available for borrowing is based on the market value of the Company’s investment portfolio and fluctuates depending on the value of the underlying securities. In addition, the Company could be subject to margin calls should the balance of the investment decrease significantly. - 28 - The Company is not a smaller version of Berkshire Hathaway Inc.
The estimated Incentive Plan’s future commitment is calculated using Level 3 inputs, based on an average of the prior fiscal year (fiscal 2022) and the current year’s pretax earnings before certain items, discounted to the present value at 6% since each granted Incentive Plan Unit will expire over its remaining life term of up to 10 years.
The estimated Incentive Plan’s future commitment is calculated using Level 3 inputs, based on an average of the prior fiscal year (fiscal 2023) and the current year’s pretax earnings before certain items, discounted to the present value at 6% since each granted Incentive Plan Unit will expire over its remaining life term of up to 10 years.
In accordance with ASC 280-10, the Company has two reportable business segments which are: (i) the Traditional Business and (ii) Journal Technologies and Journal Technologies (Canada). The above discussion and analysis should be read in conjunction with the consolidated financial statements and the notes thereto included in this report. - 27 -
In accordance with ASC 280-10, the Company has two reportable business segments which are: (i) the Traditional Business and (ii) Journal Technologies and Journal Technologies (Canada). The above discussion and analysis should be read in conjunction with the consolidated financial statements and the notes thereto included in this report. - 30 -
The Company made no transfers in and out of Level 1 and Level 2 measurements in fiscal years 2023 and 2022. During that time all of the Company’s investments have been quoted on public markets and, therefore, all fair value calculations have been based on Level 1 measurements.
The Company made no transfers in and out of Level 1 and Level 2 measurements in fiscal years 2024 and 2023. During that time, all of the Company’s investments have been quoted on public markets and, therefore, all fair value calculations have been based on Level 1 measurements.
Revenues for consulting are generally recognized at point of delivery (go-live) upon completion of services. These contracts include assurance warranty provisions for limited periods and do not include financing terms.
Revenues for consulting are generally recognized at point of delivery upon completion of services. These contracts include assurance warranty provisions for limited periods and do not include financing terms.
The Company may or may not have the ability to borrow additional amounts against its marketable securities and, among other possibilities, it may be required to consider selling some of those securities to generate cash if needed to fund ongoing operations.
The Company may or may not have the ability to borrow additional amounts against its marketable securities and, among other possibilities, it may be required to consider selling additional securities to generate cash if needed to fund ongoing operations.
The court rule and judicial profile services generated about 5% of the total circulation revenues, with the other newspapers and services accounting for the balance.
The court rule and judicial profile services generated about 4% of the total circulation revenues, with the other newspapers and services accounting for the balance.
The Company’s smaller newspapers, those other than the Los Angeles and San Francisco Daily Journals (“The Daily Journals”), accounted for about 88% of the total public notice advertising revenues during fiscal 2023.
The Company’s smaller newspapers, those other than the Los Angeles and San Francisco Daily Journals (“The Daily Journals”), accounted for about 86% of the total public notice advertising revenues during the fiscal 2024.
The income tax provisions consisted of tax provisions of $110,000 on the realized gains on marketable securities, $4,140,000 on the unrealized gain on marketable securities, and $2,803,000 on operating income, partially offset by a tax benefit of $403,000 for the dividends received deduction and other permanent differences.
The income tax provision consisted of tax provisions of $4,250,000 on the realized and unrealized gains on marketable securities, and $2,803,000 on operating income, partially offset by a tax benefit of $403,000 for the dividends received deduction and other permanent differences.
Trustee sale notices are very much dependent on the number of California and Arizona foreclosures for which public notice advertising is required by law. The number of foreclosure notices published by the Company increased by 22% during fiscal 2023 as compared to the prior fiscal year.
Trustee sale notices are very much dependent on the number of California and Arizona foreclosures for which public notice advertising is required by law. The number of foreclosure notices published by the Company decreased slightly by 1% during fiscal 2024 as compared to the prior fiscal year.
These organizations use the Journal Technologies family of products to help manage cases and information electronically, to interface with other critical justice partners and to extend electronic services to the public, including e-filing and a website to pay traffic citations and fees online. These products are licensed or subscribed in approximately 30 states and internationally.
These organizations use the Journal Technologies family of products to help manage cases and information electronically, to interface with other critical justice partners and to extend electronic services to the public, including e-filing and a website to pay traffic citations and fees online.
During fiscal 2023, the Traditional Business had total operating revenues of $16,253,000, as compared with $15,922,000 in the prior fiscal year.
During fiscal 2024, the Traditional Business had total operating revenues of $16,826,000, as compared with $16,253,000 in the prior fiscal year.
Public notice advertising revenues and related advertising and other service fees, including trustee sales legal advertising revenues, constituted about 14% of the Company's total operating revenues for fiscal 2023 and 17% for fiscal 2022. - 23 - The Daily Journals accounted for about 93% of the Traditional Business’ total circulation revenues, which increased by $9,000 to $4,403,000 from $4,394,000.
Public notice advertising revenues and related advertising and other service fees, including trustee sales legal advertising revenues, constituted about 14% of the Company's total operating revenues for both fiscal 2024 and fiscal 2023. - 26 - The Daily Journals accounted for about 94% of the Traditional Business’ total circulation revenues, which increased by $59,000 (1%) to $4,462,000 from $4,403,000.
The Company files consolidated federal income tax returns in the United States and with various state jurisdictions and is no longer subject to examinations for fiscal years before fiscal 2019 with regard to federal income taxes and fiscal 2018 for state income taxes.
The Company files consolidated federal income tax returns, with its domestic subsidiary, in the United States and with various state jurisdictions and is no longer subject to examinations for fiscal years before fiscal 2020 with regard to federal income taxes and fiscal 2019 for state income taxes. The Canadian subsidiary files a federal and provincial tax return in Canada.
Consequently, the overall effective tax rate for fiscal 2022 was 26.3%, after including the taxes on the realized gains and unrealized losses on marketable securities.
Consequently, the overall effective tax rate for fiscal 2023 was 23.7%, after including the taxes on the realized and unrealized gains on marketable securities.
Most of the unrealized gains were in the common stocks of three U.S. financial institutions and one foreign manufacturer. - 22 - Taxes During fiscal 2023, the Company recorded an income tax provision of $6,650,000 on pretax income of $28,102,000.
Most of the unrealized gains were in the common stocks of three U.S. financial institutions and one foreign manufacturer. - 25 - Taxes During fiscal 2024, the Company recorded an income tax provision of $26,165,000 on pretax income of $104,278,000.
Consequently, the overall effective tax rate for fiscal 2023 was 23.7%, after including the taxes on the realized and unrealized gains on marketable securities. During fiscal 2022, the Company recorded an income tax benefit of $26,925,000 on the pretax loss of $102,549,000.
Consequently, the overall effective tax rate for fiscal 2024 was 25.1%, after including the taxes on the realized and unrealized gains on marketable securities. During fiscal 2023, the Company recorded an income tax provision of $6,650,000 on pretax income of $28,102,000.
Consolidated operating expenses increased by $9,037,000 (17%) to $61,057,000 from $52,020,000. Total salaries and employee benefits increased by $6,970,000 (19%) to $43,450,000 from $36,480,000 primarily due to the annual salary adjustments and the hiring of additional staff members to strengthen operational efficiencies, product development, and bolster the teams working on the company’s installation projects.
Total salaries and employee benefits increased by $3,728,000 (9%) to $47,178,000 from $43,450,000 primarily due to the annual salary adjustments and the hiring of additional staff members to strengthen operational efficiencies, conduct product development and address technical debt, and bolster teams working on the Company’s installation projects.
The Company believes its process for developing software is essentially completed concurrent with the establishment of technological feasibility, and accordingly, no software development costs have been capitalized to date. - 26 - ASC 820, Fair Value Measurement and Disclosures , requires the Company to (i) disclose the amounts of transfers in and out of Level 1 and Level 2 fair value measurements and the reasons for the transfers and (ii) present separately information about purchases, sales, issuances and settlements in the reconciliation of Level 3 measurements.
ASC 820, Fair Value Measurement and Disclosures , requires the Company to (i) disclose the amounts of transfers in and out of Level 1 and Level 2 fair value measurements and the reasons for the transfers and (ii) present separately information about purchases, sales, issuances and settlements in the reconciliation of Level 3 measurements.
This increase of $13,700,000 (25%) was primarily from increases in (i) Journal Technologies’ consulting fees of $7,911,000, license and maintenance fees of $4,311,000 and other public service fees of $1,147,000, and (ii) the Traditional Business’ advertising revenues of $364,000, partially offset by a decrease in the Traditional Business’ advertising service fees and other of $42,000.
This increase of $2,222,000 (3%) was primarily from increases in (i) Journal Technologies’ license and maintenance fees of $4,762,000, and other public service fees of $1,577,000, partially offset by decreased consulting fees of $4,690,000, and (ii) the Traditional Business’ advertising revenues of $370,000 and advertising service fees and other of $144,000.
Operating expenses increased by $10,388,000 (28%) to $47,188,000 from $36,800,000 primarily because of (i) increased personnel costs because of salary adjustments due to recent inflation in the compensation market for talent, (ii) additional contractor services and the hiring of additional staff members to strengthen operational efficiencies, product development, and bolster the teams working on the c ompany’s installation projects, (iii) increased third-party hosting fees which were billed to clients and (iv) increased business travel expenses.
Operating expenses increased by $4,129,000 (9%) to $50,614,000 from $46,485,000 primarily because of (i) increased personnel costs because of annual salary adjustments, (ii) additional contractor services and the hiring of additional staff members to strengthen operational efficiencies, conduct product development and address technical debt, and bolster teams working on the Company’s installation projects, and (iii) increased third-party hosting fees which were billed to clients.
Journal Technologies During fiscal 2023, Journal Technologies’ business segment pretax income increased by $2,981,000 (232%) to $4,268,000 from $1,287,000 in the prior fiscal year primarily resulting from increased revenues of $13,369,000, partially offset by increased operating expenses of $10,388,000. Revenues increased by $13,369,000 (35%) to $51,456,000 from $38,087,000 in the prior fiscal year.
Journal Technologies During fiscal 2024, Journal Technologies’ business segment pretax income decreased by $2,480,000 (50%) to $2,491,000 from $4,971,000 in the prior fiscal year primarily resulting from increased operating expenses of $4,129,000, which were partially offset by increased operating revenues of $1,649,000. Revenues increased by $1,649,000 (3%) to $53,105,000 from $51,456,000 in the prior fiscal year.
Also, although we were able to complete many existing projects remotely, we were delayed in finishing certain implementations and trainings because of our inability to work with clients in-person. Given that we are typically paid for implementation services upon “go-live” of a system, recognition of those revenues has been delayed.
For example, for Journal Technologies, although we were able to complete many existing projects remotely, we were delayed in finishing certain implementations and trainings because of our inability to work with clients in-person.
ASC 985-20, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed , provides that costs related to the research and development of a new software product are to be expensed as incurred until the technological feasibility of the product is established.
Other public service fees are earned and recognized as revenues when the Company processes credit card payments on behalf of the courts via its websites through which the public can e-file cases and pay traffic citations and other fees. - 29 - ASC 985-20, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed , provides that costs related to the research and development of a new software product are to be expensed as incurred until the technological feasibility of the product is established.
Liquidity and Capital Resources During fiscal 2023, the Company’s cash and cash equivalents, restricted cash, and marketable security positions increased by $35,269,000, after the sales of marketable securities of approximately $2,826,000, and the recording of net pretax unrealized gains on marketable securities of $17,024,000.
Liquidity and Capital Resources During fiscal 2024, the Company’s cash and cash equivalents, restricted cash, and marketable security positions increased by $47,796,000 after the recording of net pretax unrealized gains on marketable securities of $81,881,000. In March 2024, the Company sold a portion of its marketable securities for approximately $40,579,000.
Cash, cash equivalents, and the proceeds from the sales of marketable securities were primarily used to purchase additional marketable securities of $10,001,000. The investments in marketable securities, which had an adjusted cost basis of approximately $165,412,000 and a market value of about $303,128,000 at September 30, 2023, generated approximately $8,336,000 in dividends and interest income during fiscal 2023.
Cash and cash equivalents as well as proceeds from this sale were primarily used to pay down the margin loan balance by $47,500,000. The investments in marketable securities, which had an adjusted cost basis of approximately $139,094,000 and a market value of about $358,691,000 at September 30, 2024, generated approximately $7,102,000 in dividends and interest income during fiscal 2024.
Outside services increased by $2,312,000 (52%) to $6,768,000 from $4,456,000 mainly because of additional contractor services and increased third-party hosting fees which were billed to clients. Equipment maintenance and software increased by $286,000 (28%) to $1,315,000 from $1,029,000 mainly resulting from increased maintenance costs and additional miscellaneous office and enterprise software license purchases.
Outside services increased by $383,000 (6%) to $7,151,000 from $6,768,000 mainly because of additional contractor services and increased third-party hosting fees which were billed to clients. Equipment and maintenance and software went up by $259,000 (20%) to $1,574,000 from $1,315,000 primarily because of purchases of additional equipment for new hires.
Other general and administrative expenses increased by $518,000 (15%) to $3,876,000 from $3,358,000 mainly because there were increased business travel expenses as compared to the prior fiscal year period.
Other general and administrative expenses decreased slightly by $25,000 (2%) to $3,851,000 from $3,876,000 mainly because there were decreased business travel expenses as compared to the prior fiscal year, partially offset by the purchase of directors and officers insurance and additional accruals for the directors’ stipends.
Approximately 76% of the Company’s revenues during fiscal 2023 were derived from Journal Technologies, as compared with 71% in the prior fiscal year. In addition, the Company’s revenues have been primarily from the United States, with approximately $3,293,000 (5%) from foreign countries. Almost all of Journal Technologies’ revenues are from governmental agencies.
Approximately 76% of the Company’s revenues during fiscal 2024 and 2023 were derived from Journal Technologies. In addition, the Company’s revenues during fiscal 2024 were primarily from the United States, with approximately $6,153,000 (9%) from foreign countries. Almost all of Journal Technologies’ revenues are from governmental agencies. Consolidated operating expenses increased by $4,804,000 (8%) to $65,861,000 from $61,057,000.
The Company’s non-operating income, net of expenses, increased by $125,988,000 to $21,450,000 from a loss of $104,538,000 in the prior fiscal year primarily because of (i) the recording of net unrealized gains on marketable securities of $17,024,000 as compared with net unrealized losses of $123,401,000 in the prior fiscal year, and (ii) increases in dividends and interest income of $2,885,000 (53%) to $8,356,000 from $5,451,000.
The Company’s non-operating income, net of expenses, increased by $78,758,000 (367%) to $100,208,000 from $21,450,000 in the prior fiscal year primarily because of the recording of net realized and unrealized gains on marketable securities of $96,142,000 as compared with $17,446,000 in the prior fiscal year.
Licensing and maintenance fees increased by $4,311,000 (22%) to $23,503,000 from $19,192,000. Consulting fees increased by $7,911,000 (67%) to $19,776,000 from $11,865,000 mainly resulting from more project go-lives (i.e. signoffs by the clients). Other public service fees increased by $1,147,000 (16%) to $8,177,000 from $7,030,000 primarily because of increased e-filing fee revenues.
Licensing and maintenance fees increased by $4,762,000 (20%) to $28,265,000 from $23,503,000. Consulting fees decreased by $4,690,000 (24%) to $15,086,000 from $19,776,000 mainly due to fewer project go-lives. Other public service fees increased by $1,577,000 (19%) to $9,754,000 from $8,177,000 primarily because of increased e-filing fee revenues.
Additional detail about each of the reportable segments and the Company's corporate income and expenses is set forth below: Overall Financial Results (000) For the twelve months ended September 30 Reportable Segments Traditional Business Journal Technologies Corporate Total 2023 2022 2023 2022 2023 2022 2023 2022 Revenues Advertising $ 8,955 $ 8,591 $ --- $ --- $ --- $ --- $ 8,955 $ 8,591 Circulation 4,403 4,394 --- --- --- --- 4,403 4,394 Advertising service fees and other 2,895 2,937 --- --- --- --- 2,895 2,937 Licensing and maintenance fees --- --- 23,503 19,192 --- --- 23,503 19,192 Consulting fees --- --- 19,776 11,865 --- --- 19,776 11,865 Other public service fees --- --- 8,177 7,030 --- --- 8,177 7,030 Total operating revenues 16,253 15,922 51,456 38,087 --- --- 67,709 54,009 Operating expenses Salaries and employee benefits 10,416 9,618 33,034 26,862 --- --- 43,450 36,480 (Decrease) increase to the long-term Supplemental compensation accrual (470 ) 1,130 175 115 --- --- (295 ) 1,245 Others 3,923 4,472 13,979 9,823 --- --- 17,902 14,295 Total operating expenses 13,869 15,220 47,188 36,800 --- --- 61,057 52,020 Income from operations 2,384 702 4,268 1,287 --- --- 6,652 1,989 Dividends and interest income --- --- --- --- 8,336 5,451 8,336 5,451 Gains on sale of land --- --- --- --- --- 272 --- 272 Interest expenses on note payable collateralized by real estate and other --- --- --- --- (77 ) (83 ) (77 ) (83 ) Interest expense on margin loans --- --- --- --- (4,255 ) (1,026 ) (4,255 ) (1,026 ) Gains on sales of marketable securities, net --- --- --- --- 422 14,249 422 14,249 Net unrealized gains (losses) on marketable securities --- --- --- --- 17,024 (123,401 ) 17,024 (123,401 ) Pretax income (loss) 2,384 702 4,268 1,287 21,450 (104,538 ) 28,102 (102,549 ) Income tax (expense) benefit (520 ) (185 ) (1,450 ) (205 ) (4,680 ) 27,315 (6,650 ) 26,925 Net income (loss) $ 1,864 $ 517 $ 2,818 $ 1,082 $ 16,770 $ (77,223 ) $ 21,452 $ (75,624 ) Total assets $ 18,744 $ 22,743 $ 33,100 $ 27,868 $ 303,016 $ 268,500 $ 354,860 $ 319,111 Capital expenditures $ 70 $ 3 $ 16 $ 33 --- --- $ 86 $ 36 During fiscal 2023 and 2022, the Traditional Business had total operating revenues of $16,253,000 and $15,922,000 of which $11,850,000 and $11,528,000, respectively, were recognized after services were provided while $4,403,000 and $4,394,000, respectively, were recognized ratably over the subscription terms.
Additional detail about each of the reportable segments and the Company’s corporate income and expenses is set forth below: Overall Financial Results (000) For the twelve months ended September 30 Reportable Segments Traditional Business Journal Technologies Corporate Total 2024 2023 2024 2023 2024 2023 2024 2023 Revenues Advertising $ 9,325 $ 8,955 $ --- $ --- $ --- $ --- $ 9,325 $ 8,955 Circulation 4,462 4,403 --- --- --- --- 4,462 4,403 Advertising service fees and other 3,039 2,895 --- --- --- --- 3,039 2,895 Licensing and maintenance fees --- --- 28,265 23,503 --- --- 28,265 23,503 Consulting fees --- --- 15,086 19,776 --- --- 15,086 19,776 Other public service fees --- --- 9,754 8,177 --- --- 9,754 8,177 Total operating revenues 16,826 16,253 53,105 51,456 --- --- 69,931 67,709 Operating expenses Salaries and employee benefits 10,352 10,416 36,826 33,034 --- --- 47,178 43,450 Stock-based compensation 30 --- 172 --- --- --- 202 --- (Decrease) increase to the long-term Supplemental compensation accrual (495 ) (470 ) --- 175 --- --- (495 ) (295 ) Others 5,360 4,626 13,616 13,276 --- --- 18,976 17,902 Total operating expenses 15,247 14,572 50,614 46,485 --- --- 65,861 61,057 Income from operations 1,579 1,681 2,491 4,971 --- --- 4,070 6,652 Dividends and interest income --- --- --- --- 7,102 8,340 7,102 8,340 Interest expenses on note payable collateralized by real estate and other --- --- --- --- (69 ) (77 ) (69 ) (77 ) Interest expense on margin loans --- --- --- --- (3,018 ) (4,255 ) (3,018 ) (4,255 ) Gains on sales of capital assets --- --- --- --- 4 --- 4 --- Net realized and unrealized gains on marketable securities --- --- --- --- 96,142 17,446 96,142 17,446 Net unrealized gains (losses) on non-qualified deferred compensation plan --- --- --- --- 47 (4 ) 47 (4 ) Pretax income 1,579 1,681 2,491 4,971 100,208 21,450 104,278 28,102 Income tax expense (395 ) (520 ) (735 ) (1,450 ) (25,035 ) (4,680 ) (26,165 ) (6,650 ) Net income $ 1,184 $ 1,161 $ 1,756 $ 3,521 $ 75,173 $ 16,770 $ 78,113 $ 21,452 Total assets $ 14,486 $ 18,744 $ 29,838 $ 33,100 $ 359,439 $ 303,016 $ 403,763 $ 354,860 Capital expenditures $ 23 $ 70 $ 26 $ 16 --- --- $ 49 $ 86 - 24 - Fiscal 2024 compared with fiscal 2023 Consolidated Financial Comparison Consolidated revenues were $69,931,000 and $67,709,000 for fiscal 2024 and 2023, respectively.
The Traditional Business segment operating expenses, excluding the adjustments to the long-term supplemental compensation accrual, increased by $249,000 (2%) to $14,339,000 from $14,090,000, primarily resulting from the annual salary adjustments.
The Traditional Business segment operating expenses, excluding the adjustments to the long-term supplemental compensation accrual, increased by $700,000 (5%) to $15,742,000 from $15,042,000, primarily resulting from increased merchant discount fees, additional promotional expenses, postage, and press repairs and maintenance.
These securities had approximately $137,716,000 of net unrealized gains before estimated taxes of $36,260,000 which will become due only when we sell securities in which there is unrealized appreciation.
These securities had approximately $219,597,000 of net unrealized gains before estimated taxes of $57,100,000 which will become due only when we sell securities in which there is unrealized appreciation. The balance on the Company’s margin loan secured by the securities portfolio was $27,500,000 and $75,000,000 at September 30, 2024, and September 30, 2023, respectively.
At September 30, 2023, the aggregate fair market value of the Company’s marketable securities was $303,128,000. These securities had approximately $137,716,000 of net unrealized gains before taxes of $36,260,000. They generated approximately $8,336,000 in dividends and interest income during fiscal 2023, as compared with $5,451,000 in the prior fiscal year.
There was consolidated net income of $78,113,000 ($56.73 per share) for fiscal 2024, as compared with $21,452,000 ($15.58 per share) in the prior fiscal year. At September 30, 2024, the aggregate fair market value of the Company’s marketable securities was $358,691,000. These securities had approximately $219,597,000 of net unrealized gains before taxes of $57,100,000.
The income tax benefit consisted of a tax benefit of $32,840,000 on the unrealized losses on marketable securities and a benefit of $340,000 for the dividends received deduction and other permanent book and tax differences, offset by tax provisions of $3,790,000 on the realized gains on marketable securities, $1,735,000 on income from operations, and $730,000 for the effect of a change in state apportionment on the beginning of the year’s deferred tax liability.
The income tax provision consisted of tax expenses of $24,534,000 on the realized and unrealized gains on marketable securities, and $2,175,000 on operating income, partially offset by a tax benefit of $544,000 for the dividends received deduction and other permanent differences.
Advertising revenues increased by $364,000 (4%) to $8,955,000 from $8,591,000, primarily resulting from increased trustee sale notice advertising revenues of $207,000 (mainly because of the lifting of COVID-related foreclosure moratoriums on lenders), legal notice advertising revenues of $53,000, government notice advertising revenues of $44,000 and commercial advertising revenues of $60,000.
Advertising revenues increased by $370,000 (4%) to $9,325,000 from $8,955,000, primarily resulting from increased commercial advertising revenues of $286,000, legal notice advertising revenues of $45,000, and trustee sale notice advertising revenues of $86,000, partially offset by decreased government notice advertising revenues of $47,000.
As of September 30, 2023, the Company had working capital of $303,207,000, including the liabilities for deferred subscriptions, deferred consulting fees and deferred maintenance agreements and others of $25,539,000.
This was partially offset by decreases in the Company’s accounts receivable of $1,224,000 and increases in deferred income tax payable of $16,716,000. As of September 30, 2024, the Company had working capital of $356,052,000, including the liabilities for deferred subscriptions, deferred consulting fees and deferred maintenance agreements and others of $23,713,000.
Although the World Health Organization has declared an end to the COVID-19 emergency, enduring changes in society resulting from efforts to contain the COVID-19 pandemic are likely to have continuing effects on the Company’s business. For example, for Journal Technologies, there have been several delays or cancellations in government procurement processes.
These costs are expensed as incurred and will impact earnings at least through the foreseeable future. - 27 - Impact of the COVID-19 Pandemic Although the World Health Organization has declared an end to the COVID-19 emergency, enduring changes in society and the ability to perform project work resulting from efforts to contain the COVID-19 pandemic may have continuing effects on the Company’s business and margins until projects from this era are completed and invoiced.
The balance on the Company's margin loan secured by the securities portfolio was $75,000,000 at both September 30, 2023 and September 30, 2022. - 24 - Cash flows from operating activities increased by $20,345,000 during fiscal 2023, as compared to the prior fiscal year, primarily due to (i) decreases in the Company’s accounts receivable of $5,651,000 mainly resulting from more collections, its income tax receivable of $2,038,000 and its deferred tax benefit of $36,144,000 and (ii) increases in net accounts payable and accrued liabilities of $230,000 (because of the timing difference in remitting e-filing fees to the courts), deferred revenues of $1,434,000 and income tax payable of $7,313,000.
Cash flows from operating activities decreased by $15,173,000 during fiscal 2024, as compared to the prior fiscal year, primarily due to (i) increases in the Company’s income tax receivable of $1,052,000, (ii) decreases in accounts payable of $2,175,000, income taxable payable of $2,138,000, deferred revenues of $6,767,000, accrued liabilities of $1,840,000, including non-qualified deferred compensation, and net income of $18,855,000, excluding the increases in realized and unrealized gains on marketable securities of $78,696,000, and a decrease in stock dividends of $2,978,000.
Removed
Impact of the COVID-19 Pandemic On March 13, 2020, the United States declared the outbreak of COVID-19 to be a national emergency, and several states and municipalities also declared public health emergencies.
Added
These products are licensed or subscribed to in approximately 32 states and internationally. - 23 - Reportable Segments The Company’s Traditional Business is one reportable segment and the other is Journal Technologies which includes Journal Technologies, Inc. and Journal Technologies (Canada) Inc. All inter-segment transactions were eliminated.
Removed
Unprecedented actions were taken by public health and other governmental authorities to contain and combat the spread of COVID-19, including “stay-at-home” orders and similar mandates that restricted the daily activities of individuals and limited the operation of businesses that were deemed “non-essential”.
Added
Accounting and legal fees increased by $86,000 (9%) to $1,026,000 from $940,000 primarily resulting from increased legal fees.
Removed
In addition, most of Journal Technologies’ customers, which are primarily courts and governmental agencies in the United States, Canada and Australia, were either closed or significantly scaled back their activities. Similarly, many law firms and companies from which the Traditional Business derives advertising and subscription revenues also curtailed their in-person operations and spending.
Added
These increases were partially offset by a decrease in dividends and interest income of $1,238,000 (15%) to $7,102,000 from $8,340,000. During fiscal 2024, the Company’s consolidated pretax income was $104,278,000, as compared to $28,102,000 in the prior fiscal year.
Removed
This can also create a risk of contract cancellations of in-progress projects, which has not been a common issue to date (although there were two in the past year), and Journal Technologies is working to minimize additional cancellations. - 20 - Reportable Segments The Company’s Traditional Business is one reportable segment and the other is Journal Technologies which includes Journal Technologies, Inc. and Journal Technologies (Canada) Inc.
Added
The Traditional Business The Traditional Business’ pretax income decreased by $102,000 (6%) to $1,579,000 from $1,681,000 in the prior fiscal year. This decrease was primarily resulting from increased merchant discount fees, additional promotional expenses, postage, and press repairs and maintenance.
Removed
Total operating revenues for the Company’s software business were $51,456,000 and $38,087,000, of which $28,209,000 and $19,459,000, respectively, were recognized upon completion of services while $23,247,000 and $18,628,000, respectively, were recognized ratably over the subscription periods. - 21 - Fiscal 2023 compared with fiscal 2022 Consolidated Financial Comparison Consolidated revenues were $67,709,000 and $54,009,000 for fiscal 2023 and 2022, respectively.
Added
Journal Technologies continues to update and upgrade its software products, which includes work deemed necessary by management to strengthen and update aspects like user experience, documentation, and ease of ongoing customer upgrades (which should correspondingly reduce costs for Journal Technologies over the longer term).
Removed
These increases were partially offset by (i) the recording of realized net gains on sales of marketable securities of $422,000 during fiscal 2023 as compared with $14,249,000 in the prior fiscal year, (ii) increases in interest expenses of $3,229,000 (315%) to $4,255,000 from $1,026,000 primarily due to the federal interest rate increases, and (iii) gains of $272,000 on a partial land sale associated with the City of Logan’s street widening project during fiscal 2022.
Added
Given that we are typically paid for implementation services upon “go-live” of a system, recognition of those revenues has been delayed and in some cases costs have increased. This can also create a risk of contract cancellations for in-progress projects.
Removed
During fiscal 2023, the Company’s consolidated pretax income was $28,102,000, as compared to pretax loss of $102,549,000 in the prior fiscal year. There was consolidated net income of $21,452,000 ($15.58 per share) for fiscal 2023, as compared with consolidated net loss of $75,624,000 (-$54.81 per share) in the prior fiscal year.
Added
The Company believes its process for developing software is essentially completed concurrent with the establishment of technological feasibility, and accordingly, no software development costs have been capitalized to date.
Removed
The Traditional Business The Traditional Business’ pretax income increased by $1,682,000 (240%) to $2,384,000 from $702,000 in the prior fiscal year, primarily due to a reduced long-term supplemental compensation accrual of $1,600,000 (142%) to a reduction of $470,000 from an addition of $1,130,000 in the prior fiscal year, partially offset by increased personnel costs of $798,000 to $10,416,000 from $9,618,000.
Removed
Journal Technologies continues to update and upgrade its software products. These costs are expensed as incurred and will impact earnings at least through the foreseeable future.
Removed
This was partially offset by decreases in net income of $32,228,000, excluding the increases in unrealized gains on marketable securities of $140,425,000; decreases in realized net gains on sales of marketable securities of $13,827,000; additional stock dividends of $2,978,000; and prior year’s gains of $272,00 on land sale associated with Logan City’s street widening project.
Removed
Indeed, given the passing of Mr. Munger, the Company does not expect its holdings of marketable securities to generate gains in the future consistent with the past.
Removed
Other public service fees are earned and recognized as revenues when the Company processes credit card payments on behalf of the courts via its websites through which the public can e-file cases and pay traffic citations and other fees.

Other DJCO 10-K year-over-year comparisons