##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended: September 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period From  to.
 Commission File Number: 001-33603
 The Dolan Company
 (Exact name of registrant as specified in its charter)
 Delaware
    
    43-2004527(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)
 
 222 South Ninth Street, Suite 2300,
Minneapolis, Minnesota 55402  (Address, including zip code, of registrants principal executive offices)
 
 (612) 317-9420  (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ




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##### 



PART I  FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Condensed Consolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009
    
    
    1Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended
September 30, 2010 and 2009
    
    
    2Unaudited Condensed Consolidated Statements of Stockholders Equity and Comprehensive Income
for the Nine Months Ended September 30, 2010
    
    
    3Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September
30, 2010 and 2009
    
    
    4Notes to Unaudited Condensed Consolidated Interim Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    39Item 4. Controls and Procedures
    
    
    40PART II  OTHER INFORMATION
    
    
    40Item 1. Legal Proceedings
    
    
    40Item 1A. Risk Factors
    
    
    40Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40Item 3. Defaults Upon Senior Securities
    
    
    40Item 4. Reserved
    
    
    40Item 5. Other Information
    
    
    40Item 6. Exhibits
    
    
    41SIGNATURES
    
    
    42Section 302 Certification of James P. DolanSection 302 Certification of Vicki J. DuncombSection 906 Certification of James P. DolanSection 906 Certification of Vicki J. Duncomb




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 The Dolan Company
 
 Condensed Consolidated Balance Sheets
 (in thousands, except share data)
 September 30,
    
    
    December 31,2010
    
    
    2009(unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    9,572
    
    
    $
    2,894Accounts receivable, including unbilled
services (net of allowances for doubtful
accounts of $1,551 and $1,113 as of
September 30, 2010 and December 31, 2009,
respectively)
    
    
    69,616
    
    
    
    57,205Unbilled pass-through costs
    
    
    8,219
    
    
    
    13,087Prepaid expenses and other current assets
    
    
    4,304
    
    
    
    2,948Total current assets
    
    
    91,711
    
    
    
    76,134Investments
    
    
    14,983
    
    
    
    15,479Property and equipment, net
    
    
    15,914
    
    
    
    15,457Finite-life intangible assets, net
    
    
    184,587
    
    
    
    193,687Indefinite-lived intangible assets
    
    
    221,129
    
    
    
    222,580Other assets
    
    
    1,901
    
    
    
    4,953Total assets
    
    $
    530,225
    
    
    $
    528,290LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    19,470
    
    
    $
    22,005Accounts payable
    
    
    12,966
    
    
    
    16,030Accrued pass-through liabilities
    
    
    23,155
    
    
    
    25,929Accrued compensation
    
    
    10,565
    
    
    
    4,384Accrued liabilities
    
    
    4,202
    
    
    
    5,371Due to sellers of acquired businesses
    
    
    5,000
    
    
    
    4,685Deferred revenue
    
    
    21,381
    
    
    
    18,797Total current liabilities
    
    
    96,739
    
    
    
    97,201Long-term debt, less current portion
    
    
    119,986
    
    
    
    137,960Deferred income taxes
    
    
    4,469
    
    
    
    8,160Other liabilities
    
    
    11,221
    
    
    
    9,506Total liabilities
    
    
    232,415
    
    
    
    252,827Redeemable noncontrolling interest
    
    
    25,463
    
    
    
    26,600Commitments and contingencies (Note 14)
    
    
    
    
    
    
    Stockholders equityCommon stock, $0.001 par value;
authorized: 70,000,000 shares;
outstanding: 30,511,179 and 30,326,437
shares as of September 30, 2010 and
December 31, 2009, respectively
    
    
    30
    
    
    
    30Preferred stock, $0.001 par value;
authorized: 5,000,000 shares; designated: 5,000 shares of Series A Junior
Participating Preferred Stock; no shares
outstanding
    
    
    
    
    
    
    Other comprehensive loss (net of tax)
    
    
    (1,732
    )
    
    
    Additional paid-in capital
    
    
    285,597
    
    
    
    287,210Accumulated deficit
    
    
    (11,548
    )
    
    
    (38,377
    )Total stockholders equity
    
    
    272,347
    
    
    
    248,863Total liabilities and stockholders equity
    
    $
    530,225
    
    
    $
    528,290
   1




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##### Table of Contents



The Dolan Company
 
 Unaudited Condensed Consolidated Statements of Operations
 (in thousands, except share and per share data)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009RevenuesProfessional Services
    
    $
    56,337
    
    
    $
    39,996
    
    
    $
    168,817
    
    
    $
    126,322Business Information
    
    
    22,122
    
    
    
    22,348
    
    
    
    65,829
    
    
    
    66,998Total revenues
    
    
    78,459
    
    
    
    62,344
    
    
    
    234,646
    
    
    
    193,320Operating expensesDirect operating: Professional Services
    
    
    22,790
    
    
    
    15,553
    
    
    
    68,841
    
    
    
    46,693Direct operating: Business Information
    
    
    7,229
    
    
    
    6,952
    
    
    
    21,769
    
    
    
    21,827Selling, general and administrative
    
    
    26,758
    
    
    
    22,910
    
    
    
    77,585
    
    
    
    66,073Amortization
    
    
    3,981
    
    
    
    3,924
    
    
    
    11,947
    
    
    
    13,219Depreciation
    
    
    2,413
    
    
    
    2,264
    
    
    
    7,872
    
    
    
    6,738Total operating expenses
    
    
    63,171
    
    
    
    51,603
    
    
    
    188,014
    
    
    
    154,550Equity in earnings of affiliates
    
    
    1,142
    
    
    
    731
    
    
    
    3,654
    
    
    
    3,461Operating income
    
    
    16,430
    
    
    
    11,472
    
    
    
    50,286
    
    
    
    42,231Non-operating income (expense)Interest expense, net of interest income
    
    
    (1,589
    )
    
    
    (1,607
    )
    
    
    (4,939
    )
    
    
    (5,305
    )Non-cash interest income related to
interest rate swaps
    
    
    228
    
    
    
    205
    
    
    
    893
    
    
    
    735Other income
    
    
    197
    
    
    
    23
    
    
    
    197
    
    
    
    1,469Total non-operating expense
    
    
    (1,164
    )
    
    
    (1,379
    )
    
    
    (3,849
    )
    
    
    (3,101
    )Income before income taxes
    
    
    15,266
    
    
    
    10,093
    
    
    
    46,437
    
    
    
    39,130Income tax expense
    
    
    (5,545
    )
    
    
    (3,529
    )
    
    
    (17,208
    )
    
    
    (13,207
    )Net income
    
    
    9,721
    
    
    
    6,564
    
    
    
    29,229
    
    
    
    25,923Less: Net income attributable to redeemable
noncontrolling interest
    
    
    681
    
    
    
    694
    
    
    
    2,400
    
    
    
    3,200Net income attributable to The Dolan
Company
    
    $
    9,040
    
    
    $
    5,870
    
    
    $
    26,829
    
    
    $
    22,723Earnings per share  basic and diluted:Net income attributable to The Dolan Company
    
    $
    0.30
    
    
    $
    0.20
    
    
    $
    0.89
    
    
    $
    0.76(Increase) decrease in redeemable
noncontrolling interest in NDeX
    
    
    (0.01
    )
    
    
    (0.02
    )
    
    
    0.03
    
    
    
    (0.26
    )Net income attributable to The Dolan
Company common stockholders
    
    $
    0.29
    
    
    $
    0.18
    
    
    $
    0.92
    
    
    $
    0.50Weighted average shares outstanding:Basic
    
    
    30,174,798
    
    
    
    29,843,444
    
    
    
    30,139,681
    
    
    
    29,821,661Diluted
    
    
    30,316,660
    
    
    
    29,932,275
    
    
    
    30,296,544
    
    
    
    29,908,462
   2




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##### Table of Contents



The Dolan Company
 
 Unaudited Condensed Consolidated Statements of Stockholders Equity and Comprehensive Income
 (in thousands, except share data)
 OtherCommon Stock
    
    
    Additional
    
    
    Accumulated
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Paid-In Capital
    
    
    Deficit
    
    
    Loss
    
    
    TotalBalance (deficit) at December 31, 2008
    
    
    29,955,018
    
    
    $
    30
    
    
    $
    291,310
    
    
    $
    (69,190
    )
    
    $
    
    
    
    $
    222,150Net income attributable to The Dolan Company
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,813
    
    
    
    
    
    
    
    30,813(Increase) decrease in redeemable noncontrolling interest in NDeX
    
    
    
    
    
    
    
    
    
    
    (9,262
    )
    
    
    
    
    
    
    
    
    
    
    (9,262
    )Net income attributable to The Dolan Company common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,551Issuance of common stock in connection with a purchase of
noncontrolling interest in NDeX
    
    
    248,000
    
    
    
    
    
    
    
    2,600
    
    
    
    
    
    
    
    
    
    
    
    2,600Share-based compensation expense, including issuance of
restricted stock (shares are net of forfeitures)
    
    
    113,886
    
    
    
    
    
    
    
    2,556
    
    
    
    
    
    
    
    
    
    
    
    2,556Issuance of common stock pursuant to the exercise of stock options
    
    
    9,533
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Other
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    (10
    )Balance (deficit) at December 31, 2009
    
    
    30,326,437
    
    
    $
    30
    
    
    $
    287,210
    
    
    $
    (38,377
    )
    
    $
    
    
    
    $
    248,863Net income attributable to The Dolan Company
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,829
    
    
    
    
    
    
    
    26,829(Increase) decrease in redeemable noncontrolling interest in NDeX
    
    
    
    
    
    
    
    
    
    
    843
    
    
    
    
    
    
    
    
    
    
    
    843Net income attributable to The Dolan Company common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,672Unrealized loss on interest rate swap, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,732
    )
    
    
    (1,732
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,940Share-based compensation expense, including issuance of
restricted stock (shares are net of forfeitures)
    
    
    173,314
    
    
    
    
    
    
    
    2,330
    
    
    
    
    
    
    
    
    
    
    
    2,330Issuance of common stock pursuant to the exercise of stock options
    
    
    11,428
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    20(Increase) in redeemable noncontrolling interest in DiscoverReady
    
    
    
    
    
    
    
    
    
    
    (4,806
    )
    
    
    
    
    
    
    
    
    
    
    (4,806
    )Balance (deficit) at September 30, 2010
    
    
    30,511,179
    
    
    $
    30
    
    
    $
    285,597
    
    
    $
    (11,548
    )
    
    $
    (1,732
    )
    
    $
    272,347
   3




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##### Table of Contents



The Dolan Company
 
 Unaudited Condensed Consolidated Statements of Cash Flows
 (in thousands)
 Nine Months EndedSeptember 30,2010
    
    
    2009Cash flows from operating activitiesNet income
    
    $
    29,229
    
    
    $
    25,923Distributions received from The Detroit Legal News Publishing, LLC
    
    
    4,900
    
    
    
    4,200Distributions paid to holders of noncontrolling interest
    
    
    (1,374
    )
    
    
    (3,145
    )Gain on sale of investment
    
    
    (197
    )
    
    
    Non-cash operating activities:Amortization
    
    
    11,947
    
    
    
    13,219Depreciation
    
    
    7,872
    
    
    
    6,738Equity in earnings of affiliates
    
    
    (3,654
    )
    
    
    (3,461
    )Deferred income taxes
    
    
    (463
    )
    
    
    166Stock-based compensation expense
    
    
    2,330
    
    
    
    1,861Change in value of interest rate swap
    
    
    (893
    )
    
    
    (731
    )Amortization of debt issuance costs
    
    
    244
    
    
    
    182Non-cash fair value adjustment on earnout recorded in
connection with acquisition
    
    
    882
    
    
    
    Changes in operating assets and liabilities, net of effects of
business combinations:Accounts receivable and unbilled pass-through costs
    
    
    (6,958
    )
    
    
    (22,290
    )Prepaid expenses and other current assets
    
    
    (1,271
    )
    
    
    239Other assets
    
    
    360
    
    
    
    (507
    )Accounts payable and accrued liabilities
    
    
    (816
    )
    
    
    7,110Deferred revenue and other liabilities
    
    
    1,884
    
    
    
    2,600Net cash provided by operating activities
    
    
    44,022
    
    
    
    32,104Cash flows from investing activitiesAcquisitions and investments
    
    
    (2,587
    )
    
    
    (2,441
    )Capital expenditures
    
    
    (6,011
    )
    
    
    (2,584
    )Escrow payment received on sale of investment
    
    
    197
    
    
    
    Other
    
    
    
    
    
    
    100Net cash used in investing activities
    
    
    (8,401
    )
    
    
    (4,925
    )Cash flows from financing activitiesNet payments on senior revolving note
    
    
    (8,000
    )
    
    
    Payments on senior long-term debt
    
    
    (9,775
    )
    
    
    (7,250
    )Payments on unsecured notes payable
    
    
    (10,986
    )
    
    
    (1,750
    )Proceeds from stock option exercises
    
    
    20
    
    
    
    7Other
    
    
    (202
    )
    
    
    (2
    )Net cash used in financing activities
    
    
    (28,943
    )
    
    
    (8,995
    )Net increase in cash and cash equivalents
    
    
    6,678
    
    
    
    18,184Cash and cash equivalents at beginning of the period
    
    
    2,894
    
    
    
    2,456Cash and cash equivalents at end of the period
    
    $
    9,572
    
    
    $
    20,640
   4




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##### Table of Contents



Notes to Unaudited Condensed Consolidated Interim Financial Statements
 Note 1. Basis of Presentation
 Basis of Presentation
     Note 2. Basic and Diluted Income Per Share
   5




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##### Table of Contents



in thousands, except per share amounts
 Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income attributable to The Dolan Company
    
    $
    9,040
    
    
    $
    5,870
    
    
    $
    26,829
    
    
    $
    22,723(Increase) decrease in redeemable
noncontrolling interest in NDeX, net of tax
    
    
    (251
    )
    
    
    (372
    )
    
    
    843
    
    
    
    (7,665
    )Net income attributable to The Dolan
Company common stockholders
    
    $
    8,789
    
    
    $
    5,498
    
    
    $
    27,672
    
    
    $
    15,058Basic:Weighted average common shares outstanding
    
    
    30,504
    
    
    
    30,080
    
    
    
    30,419
    
    
    
    30,023Weighted average common shares of unvested
restricted stock
    
    
    (329
    )
    
    
    (237
    )
    
    
    (279
    )
    
    
    (201
    )Shares used in the computation of basic net
income per share
    
    
    30,175
    
    
    
    29,843
    
    
    
    30,140
    
    
    
    29,822Net income attributable to The Dolan
Company common stockholders per share 
basic
    
    $
    0.29
    
    
    $
    0.18
    
    
    $
    0.92
    
    
    $
    0.50Diluted:Shares used in the computation of basic net
income per share
    
    
    30,175
    
    
    
    29,843
    
    
    
    30,140
    
    
    
    29,822Stock options and restricted stock
    
    
    142
    
    
    
    89
    
    
    
    157
    
    
    
    86Shares used in the computation of dilutive
net income per share
    
    
    30,317
    
    
    
    29,932
    
    
    
    30,297
    
    
    
    29,908Net income attributable to The Dolan
Company common stockholders per share 
diluted
    
    $
    0.29
    
    
    $
    0.18
    
    
    $
    0.92
    
    
    $
    0.50
  Note 3. Business Combinations
  2010 Acquisitions/Equity Transactions:
 Acquisition of Federal News Service, Inc.
 Acquisition of Noncontrolling Interest in NDeX
  6




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##### Table of Contents



Redemption of Noncontrolling Interest of Feiwell & Hannoy in NDeX
 2009 Acquisitions/Equity Transactions:
 Albertelli:
   DiscoverReady:
   Acquisition of Noncontrolling Interest in NDeX .
  7




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##### Table of Contents



Pro Forma Information: (in thousands, except per share data):
 Pro FormaThree Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Total revenues
    
    $
    78,826
    
    
    $
    71,469
    
    
    $
    237,082
    
    
    $
    219,275Net income
attributable to The
Dolan Company
    
    
    9,033
    
    
    
    7,360
    
    
    
    26,795
    
    
    
    27,128Net income
attributable to The
Dolan Company
per share:Basic
    
    $
    0.30
    
    
    $
    0.24
    
    
    $
    0.89
    
    
    $
    0.90Diluted
    
    $
    0.30
    
    
    $
    0.24
    
    
    $
    0.88
    
    
    $
    0.90Actual/Pro forma
weighted average
shares outstanding:Basic
    
    
    30,174,798
    
    
    
    30,091,444
    
    
    
    30,139,681
    
    
    
    30,069,662Diluted
    
    
    30,316,660
    
    
    
    30,180,275
    
    
    
    30,296,544
    
    
    
    30,156,462
 Note 4. Derivative Instruments
      8




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##### Table of Contents



Note 5. Fair Value of Financial Instruments
  Level 1
    
    Quoted prices in active markets for identical assets or liabilities.Level 2
    
    Quoted prices in active markets for similar assets or liabilities, or quoted
prices for identical or similar assets or liabilities in markets that are not active,
or inputs other than quoted prices that are observable or can be corroborated by
observable market data for the asset or liability.Level 3
    
    Unobservable inputs for the asset or liability that are supported by little
or no market activity. These fair values are determined using pricing models for which
the assumptions utilize managements estimates or market participant assumptions.
 Assets and Liabilities Measured at Fair Value on a Recurring Basis.
  (in thousands)
 Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalInterest rate swaps
    
    $
    
    
    
    $
    3,400
    
    
    $
    
    
    
    $
    3,400Earnout liability recorded
in connection with the NDeX
Florida operations acquired
from the Albertelli sellers
    
    
    
    
    
    
    
    
    
    
    7,881
    
    
    
    7,881Redeemable noncontrolling
interest in DiscoverReady
    
    
    
    
    
    
    
    
    
    
    13,981
    
    
    
    13,981Total
    
    $
    
    
    
    $
    3,400
    
    
    $
    21,862
    
    
    $
    25,262
  9




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##### Table of Contents



(in thousands)
 Fair ValueFair Value
    
    
    
    
    
    
    
    
    
    
    AdjustmentAdjustment
    
    
    
    
    
    
    
    
    
    
    Included inIncluded in
    
    
    
    
    
    
    
    
    
    
    AdditionalNet Income
    
    
    Minority
    
    
    Distributions
    
    
    Paid-inBalance at
    
    
    Attributable
    
    
    Partners
    
    
    to Minority
    
    
    Capital and
    
    
    Balance atJune 30,
    
    
    to The Dolan
    
    
    Share of
    
    
    Partners /
    
    
    Deferred
    
    
    September2010
    
    
    Company
    
    
    Earnings
    
    
    Redemptions
    
    
    Taxes
    
    
    30, 2010Earnout liability recorded in connection with the NDeX Florida operations acquired from the Albertelli sellers
    
    $
    7,587
    
    
    $
    294
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7,881Redeemable noncontrolling interest in DiscoverReady
    
    
    11,319
    
    
    
    
    
    
    
    361
    
    
    
    (309
    )
    
    
    2,610
    
    
    
    13,981Total
    
    $
    18,906
    
    
    $
    294
    
    
    $
    361
    
    
    $
    (309
    )
    
    $
    2,610
    
    
    $
    21,862
 (in thousands)
 Fair ValueFair Value
    
    
    
    
    
    
    
    
    
    
    AdjustmentAdjustment
    
    
    
    
    
    
    
    
    
    
    Included inIncluded in
    
    
    
    
    
    
    
    
    
    
    AdditionalNet Income
    
    
    Minority
    
    
    Distributions
    
    
    Paid-inBalance at
    
    
    Attributable
    
    
    Partners
    
    
    to Minority
    
    
    Capital and
    
    
    Balance atDecember
    
    
    to The Dolan
    
    
    Share of
    
    
    Partners /
    
    
    Deferred
    
    
    September31, 2009
    
    
    Company
    
    
    Earnings
    
    
    Redemptions
    
    
    Taxes
    
    
    30, 2010Earnout liability recorded in connection with the NDeX Florida operations acquired from the Albertelli sellers
    
    $
    6,999
    
    
    $
    882
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7,881Redeemable noncontrolling interest in DiscoverReady
    
    
    5,902
    
    
    
    
    
    
    
    1,255
    
    
    
    (951
    )
    
    
    7,775
    
    
    
    13,981Total
    
    $
    12,901
    
    
    $
    882
    
    
    $
    1,255
    
    
    $
    (951
    )
    
    $
    7,775
    
    
    $
    21,862
 Distributions to
Minority Partners/Redemptions
 Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis.
 Fair Value of Financial Instruments:
  10




---



##### Table of Contents



Note 6. Investments
 (in
thousands)
 Accounting
    
    Percent
    
    
    September 30,
    
    
    December 31,Method
    
    Ownership
    
    
    2010
    
    
    2009The Detroit Legal News Publishing, LLC
    
    Equity
    
    
    35
    
    
    $
    14,245
    
    
    $
    15,479Other
    
    Equity
    
    
    
    
    
    
    738
    
    
    
    Total
    
    
    
    
    
    
    
    $
    14,983
    
    
    $
    15,479
 in thousands
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009The Detroit Legal News Publishing, LLC
    
    $
    1,154
    
    
    $
    924
    
    
    $
    3,666
    
    
    $
    3,654GovDelivery, Inc.
    
    
    
    
    
    
    (193
    )
    
    
    
    
    
    
    (193
    )Other
    
    
    (12
    )
    
    
    
    
    
    
    (12
    )
    
    
    Total
    
    $
    1,142
    
    
    $
    731
    
    
    $
    3,654
    
    
    $
    3,461
  The Detroit Legal News Publishing, LLC:
  (in thousands)
 As of September 30,
    
    
    As of December 31,2010
    
    
    2009Carrying value of investment
    
    $
    14,245
    
    
    $
    15,479Underlying finite-lived customer list, net of amortization
    
    
    7,790
    
    
    
    8,921
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Equity in earnings of
DLNP, net of
amortization of
customer list
    
    $
    1,154
    
    
    $
    924
    
    
    $
    3,666
    
    
    $
    3,654Distributions received
    
    
    1,400
    
    
    
    700
    
    
    
    4,900
    
    
    
    4,200Amortization expense
    
    
    377
    
    
    
    377
    
    
    
    1,131
    
    
    
    1,131
 GovDelivery, Inc.:
  11




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##### Table of Contents



Note 7. Intangible Assets
 Indefinite-Lived Intangible Assets:
 (in thousands)
 September 30,
    
    
    December 31,2010
    
    
    2009Goodwill:Mortgage Default Processing Services
    
    $
    131,709
    
    
    $
    131,709Litigation Support Services
    
    
    23,651
    
    
    
    25,102Business Information
    
    
    59,232
    
    
    
    59,232Total Goodwill
    
    
    214,592
    
    
    
    216,043Trade Names
    
    
    6,537
    
    
    
    6,537Total Indefinite-lived intangible assets
    
    $
    221,129
    
    
    $
    222,580
  Finite-Life Intangible Assets:
 Note 8. Long-Term Debt; Capital Lease Obligation
 (in thousands)
 September 30,
    
    
    December 31,2010
    
    
    2009Senior secured debt (see below):Senior variable-rate term note, payable in quarterly
installments with a balloon payment due August 8,
2014
    
    $
    133,675
    
    
    $
    143,450Senior variable-rate revolving note due August 8, 2012
    
    
    
    
    
    
    8,000Total senior secured debt
    
    
    133,675
    
    
    
    151,450Unsecured notes payable
    
    
    5,465
    
    
    
    8,000Capital lease obligations
    
    
    316
    
    
    
    515139,456
    
    
    
    159,965Less current portion
    
    
    19,470
    
    
    
    22,005Long-term debt, less current portion
    
    $
    119,986
    
    
    $
    137,960
 Senior Secured Debt:
  12




---



##### Table of Contents



Unsecured Notes Payable:
   Note 9. Common and Preferred Stock
  Note 10. Income Taxes
  Note 11. Major Customers and Related Parties
   13




---



##### Table of Contents



Note 12. Reportable Segments
  in thousands
 Professional ServicesMortgageDefault
    
    
    Litigation
    
    
    BusinessProcessing
    
    
    Support
    
    
    Information
    
    
    Corporate
    
    
    TotalThree Months Ended September
30, 2010Revenues
    
    $
    41,201
    
    
    $
    15,136
    
    
    $
    22,122
    
    
    $
    
    
    
    $
    78,459Direct operating expenses
    
    
    17,383
    
    
    
    5,407
    
    
    
    7,229
    
    
    
    
    
    
    
    30,019Selling, general and
administrative expenses
    
    
    10,117
    
    
    
    5,124
    
    
    
    8,943
    
    
    
    2,574
    
    
    
    26,758Amortization and depreciation
    
    
    4,139
    
    
    
    864
    
    
    
    1,222
    
    
    
    169
    
    
    
    6,394Equity in earnings of affiliates
    
    
    
    
    
    
    
    
    
    
    1,142
    
    
    
    
    
    
    
    1,142Operating income (loss)
    
    $
    9,562
    
    
    $
    3,741
    
    
    $
    5,870
    
    
    $
    (2,743
    )
    
    $
    16,430Three Months Ended September
30, 2009Revenues
    
    $
    35,948
    
    
    $
    4,048
    
    
    $
    22,348
    
    
    $
    
    
    
    $
    62,344Direct operating expenses
    
    
    14,672
    
    
    
    881
    
    
    
    6,952
    
    
    
    
    
    
    
    22,505Selling, general and
administrative expenses
    
    
    8,716
    
    
    
    1,821
    
    
    
    8,770
    
    
    
    3,603
    
    
    
    22,910Amortization and depreciation
    
    
    4,337
    
    
    
    326
    
    
    
    1,322
    
    
    
    203
    
    
    
    6,188Equity in earnings of affiliates
    
    
    
    
    
    
    
    
    
    
    731
    
    
    
    
    
    
    
    731Operating income (loss)
    
    $
    8,223
    
    
    $
    1,020
    
    
    $
    6,035
    
    
    $
    (3,806
    )
    
    $
    11,472
  14




---



##### Table of Contents



Professional ServicesMortgageDefault
    
    
    Litigation
    
    
    BusinessProcessing
    
    
    Support
    
    
    Information
    
    
    Corporate
    
    
    TotalNine Months Ended September 30,
2010Revenues
    
    $
    123,342
    
    
    $
    45,475
    
    
    $
    65,829
    
    
    $
    
    
    
    $
    234,646Direct operating expenses
    
    
    51,188
    
    
    
    17,653
    
    
    
    21,769
    
    
    
    
    
    
    
    90,610Selling, general and
administrative expenses
    
    
    29,920
    
    
    
    13,543
    
    
    
    27,197
    
    
    
    6,925
    
    
    
    77,585Amortization and depreciation
    
    
    13,016
    
    
    
    2,549
    
    
    
    3,739
    
    
    
    515
    
    
    
    19,819Equity in earnings of affiliates
    
    
    
    
    
    
    
    
    
    
    3,654
    
    
    
    
    
    
    
    3,654Operating income (loss)
    
    $
    29,218
    
    
    $
    11,730
    
    
    $
    16,778
    
    
    $
    (7,440
    )
    
    $
    50,286Nine Months Ended September 30,
2009Revenues
    
    $
    115,190
    
    
    $
    11,132
    
    
    $
    66,998
    
    
    $
    
    
    
    $
    193,320Direct operating expenses
    
    
    44,157
    
    
    
    2,536
    
    
    
    21,827
    
    
    
    
    
    
    
    68,520Selling, general and
administrative expenses
    
    
    25,903
    
    
    
    5,458
    
    
    
    25,699
    
    
    
    9,013
    
    
    
    66,073Amortization and depreciation
    
    
    14,357
    
    
    
    968
    
    
    
    3,955
    
    
    
    677
    
    
    
    19,957Equity in earnings of affiliates
    
    
    
    
    
    
    
    
    
    
    3,461
    
    
    
    
    
    
    
    3,461Operating income (loss)
    
    $
    30,773
    
    
    $
    2,170
    
    
    $
    18,978
    
    
    $
    (9,690
    )
    
    $
    42,231
 Note 13. Share-Based Compensation
   Stock Options:
  Dividend yield
    
    
    0.0
    %Expected volatility
    
    
    47.0
    %Risk free interest rate
    
    
    1.5% - 2.1
    %Expected term of options
    
    4.75 yearsWeighted average grant date fair value
    
    $
    3.95 - $5.15
  15




---



##### Table of Contents



WeightedWeighted
    
    
    Weighted
    
    
    AverageAverage Grant
    
    
    Average
    
    
    RemainingNumber of
    
    
    Date Fair
    
    
    Exercise
    
    
    Contractual LifeShares
    
    
    Value
    
    
    Price
    
    
    (in years)Outstanding options at December 31, 2009
    
    
    1,629,760
    
    
    $
    4.73
    
    
    $
    13.81Granted
    
    
    456,860
    
    
    
    5.10
    
    
    
    12.12
    
    
    
    Exercised
    
    
    (12,000
    )
    
    
    1.35
    
    
    
    2.22
    
    
    
    Canceled or forfeited
    
    
    (114,138
    )
    
    
    4.86
    
    
    
    13.86
    
    
    
    Outstanding options at September 30, 2010
    
    
    1,960,482
    
    
    $
    4.83
    
    
    $
    13.49
    
    
    
    5.06Options exercisable at September 30, 2010
    
    
    891,372
    
    
    $
    4.53
    
    
    $
    13.60
    
    
    
    4.39
  Restricted Stock Grants:
 WeightedAverageNumber of
    
    
    Grant DateShares
    
    
    Fair ValueNonvested, December 31, 2009
    
    
    219,504
    
    
    $
    13.74Granted
    
    
    208,028
    
    
    
    12.05Vested
    
    
    (65,509
    )
    
    
    13.94Canceled or forfeited
    
    
    (34,714
    )
    
    $
    13.73Nonvested, September 30, 2010
    
    
    327,309
    
    
    $
    12.63
  Note 14. Contingencies and Commitments
 Litigation:
  16




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  
    
    our business operates in highly competitive markets and depends upon
the economies and the demographics of the legal, financial and real
estate sectors in the markets we serve and changes in those sectors
could have an adverse effect on our revenues, cash flows and
profitability;
    
    David A. Trott, the chairman and chief executive officer of NDeX, and
certain other employees of NDeX, who are also shareholders and
principal attorneys of our law firm customers, may under certain
circumstances have interests that differ from, or conflict with, our
interests;
    
    NDeXs business revenues are very concentrated, as NDeX currently
provides mortgage default processing services to eight law firm
customers, and if the number of case files referred to us by our
mortgage default processing service law firm customers, or loan
servicers and mortgage lenders we serve directly for properties
located in California and Nevada, decreases or fails to increase, our operating
results and ability to execute our growth strategy could be adversely
affected;
    
    regulations, laws, bills introduced, court orders, investigations by state or
federal officials, and voluntary programs or moratoria seeking to review foreclosure
processes or mitigate foreclosures in states where we do business may have an adverse
effect on, restrict, or slow our mortgage default processing services and public notice
operations, including legislation in Michigan, Indiana and Florida, the Hope for
Homeowners Act, the Emergency Economic Stabilization Act, the Streamlined Modification
Program, the Homeowner Affordability and Stability Plan, the Making Home Affordable
Program, the Home Affordable Modification Program ("HAMP"), the Home Affordable
Foreclosure Alternatives Program ("HAFA"), the Protecting Tenants at Foreclosure Act,
investigations by state attorneys general, and voluntary foreclosure relief programs
developed by lenders, loan servicers and the Hope Now Alliance;
    
    we have owned and operated DiscoverReady LLC
(DiscoverReady) for just one year, and we are highly dependent on the skills and
knowledge of the individuals serving as chief executive officer and
president of DiscoverReady, as none of our executive officers have
managed or operated a discovery management and document review
services company prior to this acquisition;
    
    DiscoverReadys business revenues are very concentrated among a few
customers and if these customers choose to manage their discovery with
their own staff or by engaging another provider and if we are unable
to develop new customer relationships, our operating results and the
ability to execute our growth strategy at DiscoverReady may be
adversely affected;
  17




---



##### Table of Contents




    
    we are dependent on our senior management team, especially James P.
Dolan, our founder, chairman, president and chief executive officer;
Scott J. Pollei, our executive vice president and chief operating
officer; Mark W.C. Stodder, our executive vice president, Business
Information; David A. Trott, chairman and chief executive officer,
NDeX; and Vicki J. Duncomb, our vice president and chief financial
officer;
    
    we intend to continue to pursue acquisition opportunities, which we
may not do successfully and which may subject us to considerable
business and financial risk, and we may be required to incur
additional indebtedness or raise additional capital to fund these
acquisitions and this additional financing may not be available to us
on satisfactory terms or at all; and
    
    growing our business may place a strain on our management and internal
systems, processes and controls.
    Overview
   18




---



##### Table of Contents



Recent Developments
 Increase in our ownership in NDeX
     New Line of Business in Professional Services Division New Reportable Segment
    19




---



##### Table of Contents



Regulatory Environment
   Recent Acquisitions
  Federal News Service, Inc.
 DiscoverReady:
  20




---



##### Table of Contents



Albertelli:
  Revenues
  
    
    72% for both periods from our Professional Services Division (53% from mortgage default
processing services and 19% from litigation support services); and
    
    28% for both periods from our Business Information Division.
 Professional Services.
 Mortgage Default Processing Services.
 Managements Discussion and Analysis of Financial
Condition and Results of Operations
  21




---



##### Table of Contents



Litigation Support Services.
    22




---



##### Table of Contents



Business Information.
   Operating Expenses
  
    
    Direct operating expenses, which consist primarily of the cost of compensation and
employee benefits for the processing staff at NDeX, DiscoverReady, and Counsel Press and our
editorial personnel in our Business Information Division, production and distribution
expenses, such as compensation (including stock-based compensation expense) and employee
benefits for personnel involved in the production and distribution of our business
information products, the cost of newsprint and delivery of our business information
products, and file-specific data services and technology fees in connection with our
California and Nevada foreclosure files;
 
    
    Selling, general and administrative expenses, which consist primarily of the cost of
compensation (including stock-based compensation expense) and employee benefits for our
sales, human resources, accounting and information technology personnel, publishers and
other members of management, rent, other sales and marketing related expenses and other
office-related payments;
 
    
    Depreciation expense, which represents the cost of fixed assets and software allocated
over the estimated useful lives of these assets, with such useful lives ranging from one to
thirty years; and
 
    
    Amortization expense, which represents the cost of finite-life intangible assets acquired
through business combinations allocated over the estimated useful lives of these
intangibles, with such useful lives ranging from two to thirty years.
  23




---



##### Table of Contents



Equity in Earnings of Affiliates
   Redeemable Noncontrolling Interest
  (in thousands)
 Three Months ended
    
    
    Nine Months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010 *
    
    
    2009Trott sellers
    
    $
    
    
    
    $
    414
    
    
    $
    114
    
    
    $
    1,562Feiwell & Hannoy
    
    
    
    
    
    
    93
    
    
    
    48
    
    
    
    350Sellers of
Barrett-NDEx or
their transferees
(as a group)
    
    
    4
    
    
    
    327
    
    
    
    376
    
    
    
    1,233Total
    
    $
    4
    
    
    $
    834
    
    
    $
    538
    
    
    $
    3,145
 *
    
    We pay cash distributions in arrears, so a portion of the amount set forth as paid to the
Trott sellers, as well as a portion of the amounts paid to Feiwell & Hannoy and the sellers of
Barrett-NDEx, for the nine months ended September 30, 2010, reflect distributions related to 2009.    24




---



##### Table of Contents



.
   Critical Accounting Policies and Estimates
 Managements Discussion and Analysis of Financial Condition and Results of Operations
  25




---



##### Table of Contents



RESULTS OF OPERATIONS
 in thousands, except per share data
 Three Months Ended September 30,% of
    
    
    
    
    
    
    % of2010
    
    
    Revenues
    
    
    2009
    
    
    RevenuesRevenues:Professional Services
    
    $
    56,337
    
    
    
    71.8
    %
    
    $
    39,996
    
    
    
    64.2
    %Business Information
    
    
    22,122
    
    
    
    28.2
    %
    
    
    22,348
    
    
    
    35.8
    %Total revenues
    
    
    78,459
    
    
    
    100.0
    %
    
    
    62,344
    
    
    
    100.0
    %Operating expenses:Professional Services
    
    
    43,034
    
    
    
    54.8
    %
    
    
    30,753
    
    
    
    49.3
    %Business Information
    
    
    17,394
    
    
    
    22.2
    %
    
    
    17,044
    
    
    
    27.3
    %Unallocated corporate operating expenses
    
    
    2,743
    
    
    
    3.5
    %
    
    
    3,806
    
    
    
    6.1
    %Total operating expenses
    
    
    63,171
    
    
    
    80.5
    %
    
    
    51,603
    
    
    
    82.8
    %Equity in earnings of affiliates
    
    
    1,142
    
    
    
    1.5
    %
    
    
    731
    
    
    
    1.2
    %Operating income
    
    
    16,430
    
    
    
    20.9
    %
    
    
    11,472
    
    
    
    18.4
    %Interest expense, net
    
    
    (1,589
    )
    
    
    (2.0
    )%
    
    
    (1,607
    )
    
    
    (2.6
    )%Non-cash interest income related to interest rate swaps
    
    
    228
    
    
    
    0.3
    %
    
    
    205
    
    
    
    0.3
    %Other income, net
    
    
    197
    
    
    
    0.3
    %
    
    
    23
    
    
    
    Income before income taxes
    
    
    15,266
    
    
    
    19.5
    %
    
    
    10,093
    
    
    
    16.2
    %Income tax expense
    
    
    (5,545
    )
    
    
    (7.1
    )%
    
    
    (3,529
    )
    
    
    (5.7
    )%Net income
    
    
    9,721
    
    
    
    12.4
    %
    
    
    6,564
    
    
    
    10.5
    %Less: Net income attributable to redeemable
noncontrolling interest
    
    
    681
    
    
    
    0.9
    %
    
    
    694
    
    
    
    1.1
    %Net income attributable to The Dolan Company
    
    $
    9,040
    
    
    
    11.5
    %
    
    $
    5,870
    
    
    
    9.4
    %Net income attributable to The Dolan Company per share
 basic and diluted
    
    $
    0.30
    
    
    
    
    
    
    $
    0.20Increase in redeemable noncontrolling interest in NDeX
    
    
    (0.01
    )
    
    
    
    
    
    
    (0.02
    )Net income attributable to The Dolan Company common
stockholders per diluted share  basic and diluted
    
    $
    0.29
    
    
    
    
    
    
    $
    0.18Weighted average shares outstanding:Basic
    
    
    30,175
    
    
    
    
    
    
    
    29,843Diluted
    
    
    30,317
    
    
    
    
    
    
    
    29,932
 Nine Months Ended September 30,% of
    
    
    
    
    
    
    % of2010
    
    
    Revenues
    
    
    2009
    
    
    RevenuesRevenues:Professional Services
    
    $
    168,817
    
    
    
    71.9
    %
    
    $
    126,322
    
    
    
    65.3
    %Business Information
    
    
    65,829
    
    
    
    28.1
    %
    
    
    66,998
    
    
    
    34.7
    %Total revenues
    
    
    234,646
    
    
    
    100.0
    %
    
    
    193,320
    
    
    
    100.0
    %Operating expenses:Professional Services
    
    
    127,869
    
    
    
    54.5
    %
    
    
    93,379
    
    
    
    48.3
    %Business Information
    
    
    52,705
    
    
    
    22.5
    %
    
    
    51,481
    
    
    
    26.6
    %Unallocated corporate operating expenses
    
    
    7,440
    
    
    
    3.2
    %
    
    
    9,690
    
    
    
    5.0
    %Total operating expenses
    
    
    188,014
    
    
    
    80.1
    %
    
    
    154,550
    
    
    
    79.9
    %Equity in earnings of affiliates
    
    
    3,654
    
    
    
    1.6
    %
    
    
    3,461
    
    
    
    1.8
    %Operating income
    
    
    50,286
    
    
    
    21.4
    %
    
    
    42,231
    
    
    
    21.8
    %Interest expense, net
    
    
    (4,939
    )
    
    
    (2.1
    )%
    
    
    (5,305
    )
    
    
    (2.7
    )%Non-cash interest income related to interest rate swaps
    
    
    893
    
    
    
    0.4
    %
    
    
    735
    
    
    
    0.4
    %Other income, net
    
    
    197
    
    
    
    0.1
    %
    
    
    1,469
    
    
    
    0.8
    %Income before income taxes
    
    
    46,437
    
    
    
    19.8
    %
    
    
    39,130
    
    
    
    20.2
    %Income tax expense
    
    
    (17,208
    )
    
    
    (7.3
    )%
    
    
    (13,207
    )
    
    
    (6.8
    )%Net income
    
    
    29,229
    
    
    
    12.5
    %
    
    
    25,923
    
    
    
    13.4
    %Less: Net income attributable to redeemable
noncontrolling interest
    
    
    2,400
    
    
    
    1.0
    %
    
    
    3,200
    
    
    
    1.7
    %Net income attributable to The Dolan Company
    
    $
    26,829
    
    
    
    11.4
    %
    
    $
    22,723
    
    
    
    11.8
    %Net income attributable to The Dolan Company per share
 basic and diluted
    
    $
    0.89
    
    
    
    
    
    
    $
    0.76(Increase) decrease in redeemable noncontrolling
interest in NDeX
    
    
    0.03
    
    
    
    
    
    
    
    (0.26
    )Net income attributable to The Dolan Company common
stockholders per diluted share  basic and diluted
    
    $
    0.92
    
    
    
    
    
    
    $
    0.50Weighted average shares outstanding:Basic
    
    
    30,140
    
    
    
    
    
    
    
    29,822Diluted
    
    
    30,297
    
    
    
    
    
    
    
    29,908
  26




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##### Table of Contents



Three Months Ended September 30, 2010
Compared to Three Months Ended September 30, 2009
 Revenues
 Three Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Total revenues
    
    $
    78.5
    
    
    $
    62.3
    
    
    $
    16.1
    
    
    
    25.8
    %
   Operating Expenses
 Three Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Total operating expenses
    
    $
    63.2
    
    
    $
    51.6
    
    
    $
    11.6
    
    
    
    22.4
    %Direct operating expenses
    
    
    30.0
    
    
    
    22.5
    
    
    
    7.5
    
    
    
    33.4
    %Selling, general and
administrative expenses
    
    
    26.8
    
    
    
    22.9
    
    
    
    3.8
    
    
    
    16.8
    %Depreciation expense
    
    
    2.4
    
    
    
    2.3
    
    
    
    0.1
    
    
    
    6.6
    %Amortization expense
    
    
    4.0
    
    
    
    3.9
    
    
    
    0.1
    
    
    
    1.5
    %
  27




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##### Table of Contents



Direct Operating Expenses.
 Selling, General and Administrative Expenses.
 Depreciation and Amortization Expense.
 Interest Expense, Net
 Three Months Ended September 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total interest expense, net
    
    $
    1.6
    
    
    $
    1.6
    
    
    $
    
    
    
    
    (1.1
    )%Interest on bank credit facility
    
    
    0.9
    
    
    
    1.1
    
    
    
    (0.2
    )
    
    
    (22.0
    )%Cash interest expense on interest rate swaps
    
    
    0.6
    
    
    
    0.4
    
    
    
    0.1
    
    
    
    25.1
    %Amortization of deferred financing fees
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    34.4
    %Other
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    Not meaningful
  Non-Cash Interest Income Related to Interest Rate Swaps
 Three Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Non-cash interest income related to interest rate swaps
    
    $
    0.2
    
    
    $
    0.2
    
    
    $
    
    
    
    
    11.2
    %
   28




---



##### Table of Contents



Other Income
 Three Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Other income, net
    
    $
    0.2
    
    
    $
    
    
    
    $
    0.2
    
    
    
    
  Income Tax Expense
 Three Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Income tax expense
    
    $
    5.5
    
    
    $
    3.5
    
    
    $
    2.0
    
    
    
    57.1
    %
   Professional Services Division Results
 Revenues
 Three Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Total revenues
    
    $
    56.3
    
    
    $
    40.0
    
    
    $
    16.3
    
    
    
    40.9
    %Mortgage default processing services revenues
    
    
    41.2
    
    
    
    35.9
    
    
    
    5.3
    
    
    
    14.6
    %Litigation support services revenues
    
    
    15.1
    
    
    
    4.0
    
    
    
    11.1
    
    
    Not meaningful
    29




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##### Table of Contents



Operating Expenses  Mortgage Default Processing Services
 Three Months Ended September 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total operating expenses
    
    $
    31.6
    
    
    $
    27.7
    
    
    $
    3.9
    
    
    
    14.1
    %Direct operating expenses
    
    
    17.4
    
    
    
    14.7
    
    
    
    2.7
    
    
    
    18.5
    %Selling, general and administrative expenses
    
    
    10.1
    
    
    
    8.7
    
    
    
    1.4
    
    
    
    16.1
    %Depreciation expense
    
    
    1.6
    
    
    
    1.5
    
    
    
    0.1
    
    
    
    8.1
    %Amortization expense
    
    
    2.5
    
    
    
    2.8
    
    
    
    (0.3
    )
    
    
    (11.3
    )%
    Operating Expenses  Litigation Support Services
 Three Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Total operating expenses
    
    $
    11.4
    
    
    $
    3.0
    
    
    $
    8.4Direct operating expenses
    
    
    5.4
    
    
    
    0.9
    
    
    
    4.5Selling, general and administrative expenses
    
    
    5.1
    
    
    
    1.8
    
    
    
    3.3Depreciation expense
    
    
    0.2
    
    
    
    
    
    
    
    0.1Amortization expense
    
    
    0.7
    
    
    
    0.3
    
    
    
    0.4
  30




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##### Table of Contents



Business Information Division Results
 Revenues
 Three Months Ended September 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total Business Information Division Revenues
    
    $
    22.1
    
    
    $
    22.3
    
    
    $
    (0.2
    )
    
    
    (1.0
    )%Display and classified advertising revenues
    
    
    6.0
    
    
    
    6.6
    
    
    
    (0.6
    )
    
    
    (9.1
    )%Public notice revenues
    
    
    12.4
    
    
    
    12.3
    
    
    
    0.1
    
    
    
    0.7
    %Circulation and other revenues
    
    
    3.8
    
    
    
    3.5
    
    
    
    0.3
    
    
    
    8.1
    %
   Operating Expenses
 Three Months Ended September 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total operating expenses
    
    $
    17.4
    
    
    $
    17.0
    
    
    $
    0.4
    
    
    
    2.1
    %Direct operating expenses
    
    
    7.2
    
    
    
    7.0
    
    
    
    0.3
    
    
    
    4.0
    %Selling, general and administrative expenses
    
    
    8.9
    
    
    
    8.8
    
    
    
    0.2
    
    
    
    2.0
    %Depreciation expense
    
    
    0.5
    
    
    
    0.5
    
    
    
    
    
    
    
    (9.5
    )%Amortization expense
    
    
    0.8
    
    
    
    0.8
    
    
    
    (0.1
    )
    
    
    (6.3
    )%
   Nine Months Ended September 30, 2010
Compared to Nine Months Ended September 30, 2009
 Revenues
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Total revenues
    
    $
    234.6
    
    
    $
    193.3
    
    
    $
    41.3
    
    
    
    21.4
    %
  31




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##### Table of Contents



Operating Expenses
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total operating expenses
    
    $
    188.0
    
    
    $
    154.6
    
    
    $
    33.5
    
    
    
    21.7
    %Direct operating expenses
    
    
    90.6
    
    
    
    68.5
    
    
    
    22.1
    
    
    
    32.2
    %Selling, general and
administrative expenses
    
    
    77.6
    
    
    
    66.1
    
    
    
    11.5
    
    
    
    17.4
    %Depreciation expense
    
    
    7.9
    
    
    
    6.7
    
    
    
    1.1
    
    
    
    16.8
    %Amortization expense
    
    
    11.9
    
    
    
    13.2
    
    
    
    (1.3
    )
    
    
    (9.6
    )%
  Direct Operating Expenses.
 Selling, General and Administrative Expenses.
 Depreciation and Amortization Expense.
  32




---



##### Table of Contents



Interest Expense, Net
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total interest expense, net
    
    $
    4.9
    
    
    $
    5.3
    
    
    $
    (0.4
    )
    
    
    (6.9
    )%Interest on bank credit facility
    
    
    2.6
    
    
    
    4.0
    
    
    
    (1.4
    )
    
    
    (34.3
    )%Cash interest expense on interest rate swaps
    
    
    1.9
    
    
    
    1.2
    
    
    
    0.7
    
    
    
    58.4
    %Amortization of deferred financing fees
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    34.3
    %Other
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    0.3
    
    
    Not meaningful
  Non-Cash Interest Income Related to Interest Rate Swaps
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Non-cash interest income related to interest rate swaps
    
    $
    0.9
    
    
    $
    0.7
    
    
    $
    0.2
    
    
    
    21.5
    %
  Other Income
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    Decrease(in millions)Other income, net
    
    $
    0.2
    
    
    $
    1.5
    
    
    $
    (1.3
    )
    
    
    (86.6
    )%
  Income Tax Expense
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Income tax expense
    
    $
    17.2
    
    
    $
    13.2
    
    
    $
    4.0
    
    
    
    30.3
    %
   33




---



##### Table of Contents



Professional Services Division Results
 Revenues
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Total revenues
    
    $
    168.8
    
    
    $
    126.3
    
    
    $
    42.5
    
    
    
    33.6
    %Mortgage default processing services revenues
    
    
    123.3
    
    
    
    115.2
    
    
    
    8.2
    
    
    
    7.1
    %Litigation support services revenues
    
    
    45.5
    
    
    
    11.1
    
    
    
    34.3
    
    
    Not meaningful
    Operating Expenses  Mortgage Default Processing Services
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total operating expenses
    
    $
    94.1
    
    
    $
    84.4
    
    
    $
    9.7
    
    
    
    11.5
    %Direct operating expenses
    
    
    51.2
    
    
    
    44.2
    
    
    
    7.0
    
    
    
    15.9
    %Selling, general and administrative expenses
    
    
    29.9
    
    
    
    25.9
    
    
    
    4.0
    
    
    
    15.5
    %Depreciation expense
    
    
    5.5
    
    
    
    4.4
    
    
    
    1.1
    
    
    
    24.2
    %Amortization expense
    
    
    7.5
    
    
    
    9.9
    
    
    
    (2.4
    )
    
    
    (24.2
    )%
  34




---



##### Table of Contents



Operating Expenses  Litigation Support Services
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    Increase(in millions)Total operating expenses
    
    $
    33.7
    
    
    $
    9.0
    
    
    $
    24.8Direct operating expenses
    
    
    17.7
    
    
    
    2.5
    
    
    
    15.1Selling, general and administrative expenses
    
    
    13.5
    
    
    
    5.5
    
    
    
    8.1Depreciation expense
    
    
    0.4
    
    
    
    0.1
    
    
    
    0.3Amortization expense
    
    
    2.1
    
    
    
    0.9
    
    
    
    1.3
  Business Information Division Results
 Revenues
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total Business Information Division Revenues
    
    $
    65.8
    
    
    $
    67.0
    
    
    $
    (1.2
    )
    
    
    (1.7
    )%Display and classified advertising revenues
    
    
    18.5
    
    
    
    20.2
    
    
    
    (1.7
    )
    
    
    (8.3
    )%Public notice revenues
    
    
    36.3
    
    
    
    35.8
    
    
    
    0.5
    
    
    
    1.4
    %Circulation and other revenues
    
    
    11.0
    
    
    
    11.0
    
    
    
    
    
    
    
    0.2
    %
   35




---



##### Table of Contents



Operating Expenses
 Nine Months Ended September 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total operating expenses
    
    $
    52.7
    
    
    $
    51.5
    
    
    $
    1.2
    
    
    
    2.4
    %Direct operating expense
    
    
    21.8
    
    
    
    21.8
    
    
    
    (0.1
    )
    
    
    (0.3
    )%Selling, general and administrative expenses
    
    
    27.2
    
    
    
    25.7
    
    
    
    1.5
    
    
    
    5.8
    %Depreciation expense
    
    
    1.4
    
    
    
    1.5
    
    
    
    (0.1
    )
    
    
    (6.2
    )%Amortization expense
    
    
    2.3
    
    
    
    2.4
    
    
    
    (0.1
    )
    
    
    (5.0
    )%
    Off Balance Sheet Arrangements
  Liquidity and Capital Resources
  September 30,
    
    
    December 31,2010
    
    
    2009Cash and cash equivalents
    
    $
    9,572
    
    
    $
    2,894Working capital (deficit)
    
    
    (5,028
    )
    
    
    (21,067
    )Long-term debt, less current portion
    
    
    119,986
    
    
    
    137,960
  36




---



##### Table of Contents



Nine Months Ended September 30,2010
    
    
    2009Net cash provided by operating activities
    
    $
    44,022
    
    
    $
    32,104Net cash used in investing activities:Acquisitions and investments
    
    
    (2,587
    )
    
    
    (2,441
    )Capital expenditures
    
    
    (6,011
    )
    
    
    (2,584
    )Net cash used in financing activities
    
    
    (28,943
    )
    
    
    (8,995
    )
 Cash Flows Provided by Operating Activities
  .
  September 30,
    
    
    December 31,
    
    
    September 30,2010
    
    
    2009
    
    
    2009Allowance for doubtful accounts (in thousands)
    
    $
    1,551
    
    
    $
    1,113
    
    
    $
    914Allowance for doubtful accounts as a percentage of gross accounts receivable
    
    
    2.2
    %
    
    
    1.9
    %
    
    
    1.7
    %Day sales outstanding
    
    
    84.4
    
    
    
    68.5
    
    
    
    79.4
    Cash Flows Used in Investing Activities
    37




---



##### Table of Contents



Cash Flows Used in Financing Activities
      Credit Agreement.
   Future Needs
   38




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
 .
      39




---



##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Reserved
 
 Item 5. Other Information
   40




---



##### Table of Contents



Item 6. Exhibits
 ExhibitNo
    
    Title
    
    Method of Filing31.1
    
    
    Section 302 Certification of James P.
Dolan
    
    Filed herewith.31.2
    
    
    Section 302 Certification of Vicki J.
Duncomb
    
    Filed herewith.32.1
    
    
    Section 906 Certification of James P.
Dolan
    
    Furnished herewith.32.2
    
    
    Section 906 Certification of Vicki J.
Duncomb
    
    Furnished herewith.
  41




---



##### Table of Contents



SIGNATURES
  THE DOLAN COMPANYDated: November 3, 2010
    By:
    /s/ James P. DolanJames P. DolanChairman, Chief Executive Officer and President
(Principal Executive Officer)Dated: November 3, 2010
    By:
    /s/ Vicki J. DuncombVicki J. DuncombVice President and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)  42




---



##### Table of Contents



Exhibit Index
 ExhibitNo
    
    Title
    
    Method of Filing31.1
    
    
    Section 302 Certification of James P. Dolan
    
    Filed herewith.31.2
    
    
    Section 302 Certification of Vicki J.
Duncomb
    
    Filed herewith.32.1
    
    
    Section 906 Certification of James P. Dolan
    
    Furnished herewith.32.2
    
    
    Section 906 Certification of Vicki J.
Duncomb
    
    Furnished herewith.
  43