Thursday, August 15, 2002
Daily Journal’s Sustain Technologies Unit Drags Down Earnings
By DON PARRET, Staff Writer
Daily Journal Corp.’s Sustain Technologies unit continues to drag down the legal publishing company’s earnings, according to third-quarter figures posted yesterday with the Securities and Exchange Commission.
The Sustain unit had a pretax net loss of $934,000 in the third quarter, while its publishing operations earned a pretax net profit of $1.6 million.
Sustain, a 93 percent-owned subsidiary of Daily Journal, has developed a group of products that enable courts to facilitate computerized filings.
The Los Angeles-based company as a whole reported that pretax net income for the three months ending June 30 was $646,000, or 43 cents per share. The company had a loss of $1.5 million during the same period last year.
Total revenue for the third quarter was $9 million, down from $9.3 million a year ago.
The company publishes the Los Angeles Daily Journal, a legal publication, and other newspapers and online services in California, Arizona, Nevada, Washington and Colorado.
The company said that “expenditures in support of the Sustain software are highly significant and will grossly impact overall results at least through fiscal 2002, and very likely much longer.”
According to SEC filings, the company is attempting to develop the software in-house after the company found portions of developed software “seriously flawed and seriously behind schedule” and dropped Interlink, an Englewood-Colo.-based software developer that worked on the project.
Daily Journal wrote off $15 million last year due to the Sustain’s “zero commercial value,” according to filings. The company, however, was able to realize a tax break, through reported income, of $2 million last year.
It has since boosted its staffing on the project, the filing said, to salvage the unit.
Daily Journal disclosed in March that Interlink, which is reorganizing in U.S. Bankruptcy Court for the District of Colorado, is considering bringing a collection action against Sustain.
Interlink was denied a motion in May by the U.S. Bankruptcy Court to conduct an examination under Bankruptcy Rule 2004 of the company’s financial records.
Daily Journal said in the filing that “Sustain will vigorously defend any litigation or action brought by Interlink, although no assurances can be made as to the ultimate outcome of the dispute.”
Copyright 2002, Metropolitan News Company