Friday, May 17, 2002
Daily Journal Posts Profit, Still Struggles With Software Unit
By DON PARRET, Staff Writer
Daily Journal Corp., which continues to grapple with developmental and legal issues with its Sustain software unit, posted a pretax profit of $144,000 in its second quarter ending March 31, according to figures posted with the Securities and Exchange Commission.
The Los Angeles-based publisher reported that net income for the three months ending March 31 was $324,000, or 22 cents per share, compared with a loss of $6.9 million during the year-ago period.
Total revenue was $8.6 million, down from $8.7 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.
It also owns a 93 percent interest in Sustain, a group of products that enable courts to facilitate computerized filings.
According to its latest filing with the Securities Exchange Commission, Daily Journal Corp. incurred a loss of $2 million on revenue of $1 million for its Sustain unit.
Daily Journal Corp. is attempting to develop the software in-house, according to SEC filings, after the company found portions of developed software “seriously flawed and seriously behind schedule” and dropped its software developer.
The company wrote off $15 million last year due to the product’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.
“The company’s 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,” the filing said.
The company has since boosted its staffing on the project, the filing said, to salvage the unit after the company terminated Englewood-Colo.-based Interlink, its software developer, in April 2001.
“The company has expanded the staff to meet its planned internal software development efforts and has also expanded relationships with other service providers,” the filing said. “If these development programs are not successful, they will significantly and adversely impact the company’s ability to maximize its existing investment in the Sustain software, to service its existing customers, and to compete for new opportunities in the case management software business.”
The company also disclosed that Interlink, which is reorganizing in U.S. Bankruptcy Court for the District of Colorado, is considering bringing a collection action against Sustain.
“There continues to be issues between Sustain and Interlink, including the amounts due to each of them by the other,” the filing said.
The company also disclosed in its filing that it has discontinued its House Counsel magazine.
Copyright 2002, Metropolitan News Company