##### 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: June 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(State or other jurisdiction 
of incorporation or organization)
    
    43-2004527(I.R.S. Employer
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)
 Yes þ No o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 Yes o No þ




---



##### 



PART I  FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Condensed Consolidated Balance Sheets as of June 30, 2010 (unaudited) and December 31, 2009
    
    
    1Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended
June 30, 2010 and 2009
    
    
    2Unaudited Condensed Consolidated Statements of Stockholders Equity and Comprehensive Income
for the Six Months Ended June 30, 2010
    
    
    3Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 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
    
    
    41Item 5. Other Information
    
    
    41Item 6. Exhibits
    
    
    41SIGNATURES
    
    
    42Exhibit 10.2Exhibit 10.3Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 The Dolan Company
 
 Condensed Consolidated Balance Sheets
 (in thousands, except share data)
 June 30,
    
    
    December 31,2010
    
    
    2009(unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    6,942
    
    
    $
    2,894Accounts receivable, including unbilled
services (net of allowances for doubtful
accounts of $1,282 and $1,113 as of June 30,
2010 and December 31, 2009, respectively)
    
    
    63,247
    
    
    
    57,205Unbilled pass-through costs
    
    
    9,079
    
    
    
    13,087Prepaid expenses and other current assets
    
    
    2,923
    
    
    
    2,948Total current assets
    
    
    82,191
    
    
    
    76,134Investments
    
    
    14,491
    
    
    
    15,479Property and equipment, net
    
    
    15,124
    
    
    
    15,457Finite-life intangible assets, net
    
    
    187,247
    
    
    
    193,687Indefinite-lived intangible assets
    
    
    221,129
    
    
    
    222,580Other assets
    
    
    2,892
    
    
    
    4,953Total assets
    
    $
    523,074
    
    
    $
    528,290LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    19,063
    
    
    $
    22,005Accounts payable
    
    
    13,751
    
    
    
    16,030Accrued pass-through liabilities
    
    
    24,124
    
    
    
    25,929Accrued compensation
    
    
    8,457
    
    
    
    4,384Accrued liabilities
    
    
    4,759
    
    
    
    5,371Due to sellers of acquired businesses
    
    
    4,970
    
    
    
    4,685Deferred revenue
    
    
    19,253
    
    
    
    18,797Total current liabilities
    
    
    94,377
    
    
    
    97,201Long-term debt, less current portion
    
    
    125,421
    
    
    
    137,960Deferred income taxes
    
    
    6,097
    
    
    
    8,160Other liabilities
    
    
    10,435
    
    
    
    9,506Total liabilities
    
    
    236,330
    
    
    
    252,827Redeemable noncontrolling interest
    
    
    22,077
    
    
    
    26,600Commitments and contingencies (Note 14)Stockholders equityCommon
stock, $0.001 par value; authorized: 70,000,000 shares;
outstanding: 30,495,904 and 30,326,437 shares as of June 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)
    
    
    (1,253
    )
    
    
    Additional paid-in capital
    
    
    286,478
    
    
    
    287,210Accumulated deficit
    
    
    (20,588
    )
    
    
    (38,377
    )Total stockholders equity
    
    
    264,667
    
    
    
    248,863Total liabilities and stockholders equity
    
    $
    523,074
    
    
    $
    528,290
   1




---



##### Table of Contents



The Dolan Company
 
 Unaudited Condensed Consolidated Statements of Operations
 (in thousands, except share and per share data)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009RevenuesProfessional Services
    
    $
    56,454
    
    
    $
    44,294
    
    
    $
    112,480
    
    
    $
    86,326Business Information
    
    
    22,755
    
    
    
    22,746
    
    
    
    43,707
    
    
    
    44,650Total revenues
    
    
    79,209
    
    
    
    67,040
    
    
    
    156,187
    
    
    
    130,976Operating expensesDirect operating: Professional Services
    
    
    23,861
    
    
    
    15,682
    
    
    
    46,051
    
    
    
    31,140Direct operating: Business Information
    
    
    7,624
    
    
    
    7,425
    
    
    
    14,540
    
    
    
    14,875Selling, general and administrative
    
    
    25,639
    
    
    
    22,427
    
    
    
    50,827
    
    
    
    43,163Amortization
    
    
    3,973
    
    
    
    4,171
    
    
    
    7,966
    
    
    
    9,295Depreciation
    
    
    2,723
    
    
    
    2,351
    
    
    
    5,459
    
    
    
    4,474Total operating expenses
    
    
    63,820
    
    
    
    52,056
    
    
    
    124,843
    
    
    
    102,947Equity in earnings of affiliates
    
    
    1,084
    
    
    
    1,333
    
    
    
    2,512
    
    
    
    2,730Operating income
    
    
    16,473
    
    
    
    16,317
    
    
    
    33,856
    
    
    
    30,759Non-operating income (expense)Interest expense, net of interest income
    
    
    (1,614
    )
    
    
    (1,728
    )
    
    
    (3,350
    )
    
    
    (3,698
    )Non-cash interest income related to
interest rate swaps
    
    
    302
    
    
    
    296
    
    
    
    665
    
    
    
    530Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,446Total non-operating expense
    
    
    (1,312
    )
    
    
    (1,432
    )
    
    
    (2,685
    )
    
    
    (1,722
    )Income before income taxes
    
    
    15,161
    
    
    
    14,885
    
    
    
    31,171
    
    
    
    29,037Income tax expense
    
    
    (5,673
    )
    
    
    (5,361
    )
    
    
    (11,663
    )
    
    
    (9,678
    )Net income
    
    
    9,488
    
    
    
    9,524
    
    
    
    19,508
    
    
    
    19,359Less: Net income attributable to redeemable
noncontrolling interest
    
    
    (856
    )
    
    
    (1,318
    )
    
    
    (1,719
    )
    
    
    (2,506
    )Net income attributable to The Dolan
Company
    
    $
    8,632
    
    
    $
    8,206
    
    
    $
    17,789
    
    
    $
    16,853Earnings per share  basic and diluted:Net income attributable to The Dolan Company
    
    $
    0.29
    
    
    $
    0.27
    
    
    $
    0.59
    
    
    $
    0.56(Increase) decrease in redeemable
noncontrolling interest in NDeX
    
    
    0.04
    
    
    
    (0.13
    )
    
    
    0.04
    
    
    
    (0.24
    )Net income attributable to The Dolan
Company common stockholders
    
    $
    0.33
    
    
    $
    0.14
    
    
    $
    0.63
    
    
    $
    0.32Weighted average shares outstanding:Basic
    
    
    30,136,567
    
    
    
    29,815,405
    
    
    
    30,121,831
    
    
    
    29,810,590Diluted
    
    
    30,240,004
    
    
    
    29,917,495
    
    
    
    30,217,885
    
    
    
    29,896,194
   2




---



##### 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
    
    
    
    
    
    
    
    
    
    
    
    2,600Issuance of common stock
pursuant to the exercise
of stock options
    
    
    9,533
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Share-based compensation
expense, including
issuance of restricted
stock (shares are net of
forfeitures)
    
    
    113,886
    
    
    
    
    
    
    
    2,556
    
    
    
    
    
    
    
    
    
    
    
    2,556Other
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    (10
    )Balance (deficit) at
December 31, 2009
    
    
    30,326,437
    
    
    $
    30
    
    
    $
    287,210
    
    
    $
    (38,377
    )
    
    $
    
    
    
    $
    248,863Net income attributable
to The Dolan Company
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,789
    
    
    
    
    
    
    
    17,789(Increase) decrease in
redeemable noncontrolling
interest in NDeX
    
    
    
    
    
    
    
    
    
    
    1,094
    
    
    
    
    
    
    
    
    
    
    
    1,094Net income attributable
to The Dolan Company
common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,883Unrealized loss on
interest rate swap, net
of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,253
    )
    
    
    (1,253
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,630Share-based compensation
expense, including
issuance of restricted
stock (shares are net of
forfeitures)
    
    
    158,039
    
    
    
    
    
    
    
    1,358
    
    
    
    
    
    
    
    
    
    
    
    1,358Issuance of common stock
pursuant to the exercise
of stock options
    
    
    11,428
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    20(Increase) in redeemable
noncontrolling interest
in DiscoverReady
    
    
    
    
    
    
    
    
    
    
    (3,204
    )
    
    
    
    
    
    
    
    
    
    
    (3,204
    )Balance (deficit) at
June 30, 2010
    
    
    30,495,904
    
    
    $
    30
    
    
    $
    286,478
    
    
    $
    (20,588
    )
    
    $
    (1,253
    )
    
    $
    264,667
   3




---



##### Table of Contents



The Dolan Company
 
 Unaudited Condensed Consolidated Statements of Cash Flows
 (in thousands)
 Six Months EndedJune 30,2010
    
    
    2009Cash flows from operating activitiesNet income
    
    $
    19,508
    
    
    $
    19,359Distributions received from The Detroit Legal News Publishing, LLC
    
    
    3,500
    
    
    
    3,500Distributions paid to holders of noncontrolling interest
    
    
    (1,061
    )
    
    
    (2,311
    )Non-cash operating activities:Amortization
    
    
    7,966
    
    
    
    9,295Depreciation
    
    
    5,459
    
    
    
    4,474Equity in earnings of affiliates
    
    
    (2,512
    )
    
    
    (2,730
    )Stock-based compensation expense
    
    
    1,358
    
    
    
    1,145Change in value of interest rate swap
    
    
    (665
    )
    
    
    (525
    )Amortization of debt issuance costs
    
    
    164
    
    
    
    123Non-cash fair value adjustment on earnout recorded in
connection with acquisition
    
    
    588
    
    
    
    Changes in operating assets and liabilities, net of effects
of business combinations in 2009:Accounts receivable and unbilled pass-through costs
    
    
    (2,033
    )
    
    
    (18,571
    )Prepaid expenses and other current assets
    
    
    55
    
    
    
    2,581Other assets
    
    
    18
    
    
    
    18Accounts payable and accrued liabilities
    
    
    (605
    )
    
    
    5,199Deferred revenue and other liabilities
    
    
    (370
    )
    
    
    1,444Net cash provided by operating activities
    
    
    31,370
    
    
    
    23,001Cash flows from investing activitiesAcquisitions and investments
    
    
    (115
    )
    
    
    (1,426
    )Capital expenditures
    
    
    (3,326
    )
    
    
    (1,613
    )Net cash used in investing activities
    
    
    (3,441
    )
    
    
    (3,039
    )Cash flows from financing activitiesNet payments on senior revolving note
    
    
    (8,000
    )
    
    
    Payments on senior long-term debt
    
    
    (6,225
    )
    
    
    (4,625
    )Payments on unsecured notes payable
    
    
    (9,576
    )
    
    
    (1,750
    )Proceeds from stock option exercises
    
    
    20
    
    
    
    7Other
    
    
    (100
    )
    
    
    (2
    )Net cash used in financing activities
    
    
    (23,881
    )
    
    
    (6,370
    )Net increase in cash and cash equivalents
    
    
    4,048
    
    
    
    13,592Cash and cash equivalents at beginning of the period
    
    
    2,894
    
    
    
    2,456Cash and cash equivalents at end of the period
    
    $
    6,942
    
    
    $
    16,048
   4




---



##### 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




---



##### Table of Contents



in thousands, except per share amounts
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income attributable to The Dolan Company
    
    $
    8,632
    
    
    $
    8,206
    
    
    $
    17,789
    
    
    $
    16,853(Increase) decrease in redeemable noncontrolling interest in NDeX, net of tax
    
    
    1,173
    
    
    
    (3,943
    )
    
    
    1,094
    
    
    
    (7,293
    )Net income attributable to The Dolan Company common stockholders
    
    $
    9,805
    
    
    $
    4,263
    
    
    $
    18,833
    
    
    $
    9,560Basic:Weighted average common shares outstanding
    
    
    30,431
    
    
    
    30,036
    
    
    
    30,377
    
    
    
    29,995Weighted average common shares of unvested restricted stock
    
    
    (294
    )
    
    
    (221
    )
    
    
    (255
    )
    
    
    (184
    )Shares used in the computation of basic net income per share
    
    
    30,137
    
    
    
    29,815
    
    
    
    30,122
    
    
    
    29,811Net income attributable to The Dolan Company common stockholders per share  basic
    
    $
    0.33
    
    
    $
    0.14
    
    
    $
    0.63
    
    
    $
    0.32Diluted:Shares used in the computation of basic net income per share
    
    
    30,137
    
    
    
    29,815
    
    
    
    30,122
    
    
    
    29,811Stock options and restricted stock
    
    
    103
    
    
    
    102
    
    
    
    96
    
    
    
    85Shares used in the computation of dilutive net income per share
    
    
    30,240
    
    
    
    29,917
    
    
    
    30,218
    
    
    
    29,896Net income attributable to The Dolan Company common stockholders per share 
diluted
    
    $
    0.33
    
    
    $
    0.14
    
    
    $
    0.63
    
    
    $
    0.32
  Note 3. Business Combinations
  2010 Equity Transactions:
 Acquisition of Noncontrolling Interest in NDeX
 Redemption of Noncontrolling Interest of Feiwell & Hannoy in NDeX
  6




---



##### Table of Contents



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




---



##### Table of Contents



Pro Forma Information: (in thousands, except per
share data):
 Pro FormaThree Months Ended
    
    
    Six Months EndedJune 30, 2009
    
    
    June 30, 2009Total revenues
    
    $
    75,245
    
    
    $
    145,823Net income attributable to The Dolan Company
    
    
    10,009
    
    
    
    19,758Net income attributable to The Dolan Company per share:Basic
    
    $
    0.33
    
    
    $
    0.66Diluted
    
    $
    0.33
    
    
    $
    0.66Actual/Pro forma weighted average shares outstanding:Basic
    
    
    30,063,405
    
    
    
    30,058,592Diluted
    
    
    30,165,495
    
    
    
    30,144,194
 Note 4. Derivative Instruments
      8




---



##### 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
    
    $
    
    
    
    $
    2,848
    
    
    $
    
    
    
    $
    2,848Earnout liability recorded in connection with the
NDeX Florida operations acquired from the
Albertelli sellers
    
    
    
    
    
    
    
    
    
    
    7,587
    
    
    
    7,587Redeemable noncontrolling interest in DiscoverReady
    
    
    
    
    
    
    
    
    
    
    11,319
    
    
    
    11,319Total
    
    $
    
    
    
    $
    2,848
    
    
    $
    18,906
    
    
    $
    21,754
  9




---



##### 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 atMarch 31,
    
    
    to The Dolan
    
    
    Share of
    
    
    Partners /
    
    
    Deferred
    
    
    June 30,2010
    
    
    Company
    
    
    Earnings
    
    
    Redemptions
    
    
    Taxes
    
    
    2010Earnout liability recorded in connection with the
NDeX Florida operations acquired from the
Albertelli sellers
    
    $
    7,293
    
    
    $
    294
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7,587Redeemable noncontrolling interest in DiscoverReady
    
    
    8,985
    
    
    
    
    
    
    
    537
    
    
    
    (349
    )
    
    
    2,146
    
    
    
    11,319Total
    
    $
    16,278
    
    
    $
    294
    
    
    $
    537
    
    
    $
    (349
    )
    
    $
    2,146
    
    
    $
    18,906
 (in thousands)
 Fair ValueFair Value
    
    
    
    
    
    
    
    
    
    
    AdjustmentAdjustment
    
    
    
    
    
    
    
    
    
    
    Included inIncluded in
    
    
    
    
    
    
    
    
    
    
    AdditionalNet Income
    
    
    Minority
    
    
    Distributions
    
    
    Paid-inBalance at
    
    
    Attributable
    
    
    Partners
    
    
    to Minority
    
    
    Capital and
    
    
    Balance atDecember 31,
    
    
    to The Dolan
    
    
    Share of
    
    
    Partners /
    
    
    Deferred
    
    
    June 30,2009
    
    
    Company
    
    
    Earnings
    
    
    Redemptions
    
    
    Taxes
    
    
    2010Earnout liability recorded in connection with the
NDeX Florida operations acquired from the
Albertelli sellers
    
    $
    6,999
    
    
    $
    588
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7,587Redeemable noncontrolling interest in DiscoverReady
    
    
    5,902
    
    
    
    
    
    
    
    894
    
    
    
    (642
    )
    
    
    5,165
    
    
    
    11,319Total
    
    $
    12,901
    
    
    $
    588
    
    
    $
    894
    
    
    $
    (642
    )
    
    $
    5,165
    
    
    $
    18,906
 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
 The Detroit Legal News Publishing, LLC:
  (in thousands)
 As of June 30,
    
    
    As of December 31,2010
    
    
    2009Carrying value of investment
    
    $
    14,491
    
    
    $
    15,479Underlying finite-lived customer list, net of amortization
    
    
    8,167
    
    
    
    8,921
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Equity in earnings of
DLNP, net of
amortization of
customer list
    
    $
    1,084
    
    
    $
    1,333
    
    
    $
    2,512
    
    
    $
    2,730Distributions received
    
    
    1,400
    
    
    
    2,100
    
    
    
    3,500
    
    
    
    3,500Amortization expense
    
    
    377
    
    
    
    377
    
    
    
    754
    
    
    
    753
 Note 7. Intangible Assets
 Indefinite-Lived Intangible Assets:
 (in thousands)
 June 30,
    
    
    December 31,2010
    
    
    2009Mortgage Default Processing Services
    
    $
    131,709
    
    
    $
    131,709Litigation Support Services
    
    
    23,651
    
    
    
    25,102Business Information
    
    
    59,232
    
    
    
    59,232Total
    
    $
    214,592
    
    
    $
    216,043
  Finite-Life Intangible Assets:
  11




---



##### Table of Contents



Note 8. Long-Term Debt, Capital Lease Obligation
 (in thousands)
 June 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
    
    $
    137,225
    
    
    $
    143,450Senior variable-rate revolving note due August 8, 2012
    
    
    
    
    
    
    8,000Total senior secured debt
    
    
    137,225
    
    
    
    151,450Unsecured notes payable
    
    
    6,875
    
    
    
    8,000Capital lease obligations
    
    
    384
    
    
    
    515144,484
    
    
    
    159,965Less current portion
    
    
    19,063
    
    
    
    22,005Long-term debt, less current portion
    
    $
    125,421
    
    
    $
    137,960
 Senior Secured Debt:
  Unsecured Notes Payable:
   Note 9. Common and Preferred Stock
   12




---



##### Table of Contents



Note 10. Income Taxes
  Note 11. Major Customers and Related Parties
      Note 12. Reportable Segments
   13




---



##### Table of Contents



in thousands
 Professional ServicesMortgageDefault
    
    
    Litigation
    
    
    BusinessProcessing
    
    
    Support
    
    
    Information
    
    
    Corporate
    
    
    TotalThree Months Ended June 30, 2010Revenues
    
    $
    39,706
    
    
    $
    16,748
    
    
    $
    22,755
    
    
    $
    
    
    
    $
    79,209Direct operating expenses
    
    
    16,830
    
    
    
    7,031
    
    
    
    7,624
    
    
    
    
    
    
    
    31,485Selling, general and
administrative expenses
    
    
    9,514
    
    
    
    4,420
    
    
    
    9,398
    
    
    
    2,307
    
    
    
    25,639Amortization and depreciation
    
    
    4,435
    
    
    
    858
    
    
    
    1,231
    
    
    
    172
    
    
    
    6,696Equity in earnings of affiliates
    
    
    
    
    
    
    
    
    
    
    1,084
    
    
    
    
    
    
    
    1,084Operating income (loss)
    
    $
    8,927
    
    
    $
    4,439
    
    
    $
    5,586
    
    
    $
    (2,479
    )
    
    $
    16,473Three Months Ended June 30, 2009Revenues
    
    $
    40,927
    
    
    $
    3,367
    
    
    $
    22,746
    
    
    $
    
    
    
    $
    67,040Direct operating expenses
    
    
    14,876
    
    
    
    806
    
    
    
    7,425
    
    
    
    
    
    
    
    23,107Selling, general and
administrative expenses
    
    
    8,990
    
    
    
    1,809
    
    
    
    8,507
    
    
    
    3,121
    
    
    
    22,427Amortization and depreciation
    
    
    4,659
    
    
    
    322
    
    
    
    1,346
    
    
    
    195
    
    
    
    6,522Equity in earnings of affiliates
    
    
    
    
    
    
    
    
    
    
    1,333
    
    
    
    
    
    
    
    1,333Operating income (loss)
    
    $
    12,402
    
    
    $
    430
    
    
    $
    6,801
    
    
    $
    (3,316
    )
    
    $
    16,317
 Professional ServicesMortgageDefault
    
    
    Litigation
    
    
    BusinessProcessing
    
    
    Support
    
    
    Information
    
    
    Corporate
    
    
    TotalSix Months Ended June 30, 2010Revenues
    
    $
    82,141
    
    
    $
    30,339
    
    
    $
    43,707
    
    
    $
    
    
    
    $
    156,187Direct operating expenses
    
    
    33,805
    
    
    
    12,246
    
    
    
    14,540
    
    
    
    
    
    
    
    60,591Selling, general and
administrative expenses
    
    
    19,803
    
    
    
    8,419
    
    
    
    18,254
    
    
    
    4,351
    
    
    
    50,827Amortization and depreciation
    
    
    8,877
    
    
    
    1,683
    
    
    
    2,519
    
    
    
    346
    
    
    
    13,425Equity in earnings of affiliates
    
    
    
    
    
    
    
    
    
    
    2,512
    
    
    
    
    
    
    
    2,512Operating income (loss)
    
    $
    19,656
    
    
    $
    7,991
    
    
    $
    10,906
    
    
    $
    (4,697
    )
    
    $
    33,856Six Months Ended June 30, 2009Revenues
    
    $
    79,242
    
    
    $
    7,084
    
    
    $
    44,650
    
    
    $
    
    
    
    $
    130,976Direct operating expenses
    
    
    29,485
    
    
    
    1,655
    
    
    
    14,875
    
    
    
    
    
    
    
    46,015Selling, general and
administrative expenses
    
    
    17,187
    
    
    
    3,637
    
    
    
    16,929
    
    
    
    5,410
    
    
    
    43,163Amortization and depreciation
    
    
    10,020
    
    
    
    642
    
    
    
    2,633
    
    
    
    474
    
    
    
    13,769Equity in earnings of affiliates
    
    
    
    
    
    
    
    
    
    
    2,730
    
    
    
    
    
    
    
    2,730Operating income (loss)
    
    $
    22,550
    
    
    $
    1,150
    
    
    $
    12,943
    
    
    $
    (5,884
    )
    
    $
    30,759
  14




---



##### Table of Contents



Note 13. Share-Based Compensation
   Stock Options:
  Dividend yield
    
    
    0.0
    %Expected volatility
    
    
    47.0
    %Risk free interest rate
    
    
    2.06
    %Expected term of options
    
    4.75 yearsWeighted average grant date fair value
    
    $
    5.15
  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
    
    
    $
    13.81
    
    
    
    5.37Granted
    
    
    435,618
    
    
    
    5.14
    
    
    
    12.20
    
    
    
    Exercised
    
    
    (12,000
    )
    
    
    1.35
    
    
    
    2.22
    
    
    
    Canceled or forfeited
    
    
    (79,546
    )
    
    
    5.11
    
    
    
    14.74
    
    
    
    Outstanding options at June 30, 2010
    
    
    1,973,832
    
    
    $
    4.83
    
    
    $
    13.49
    
    
    
    5.30Options exercisable at June 30, 2010
    
    
    726,004
    
    
    $
    4.45
    
    
    $
    13.26
    
    
    
    4.78
   15




---



##### Table of Contents



Restricted Stock Grants:
 WeightedAverageNumber of
    
    
    Grant DateShares
    
    
    Fair ValueNonvested, December 31, 2009
    
    
    219,504
    
    
    $
    13.74Granted
    
    
    184,925
    
    
    
    12.23Vested
    
    
    (38,587
    )
    
    
    13.55Canceled or forfeited
    
    
    (26,886
    )
    
    $
    13.83Nonvested, June 30, 2010
    
    
    338,956
    
    
    $
    12.93
  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, decreases or fails to increase, our
operating results and ability to execute our growth
strategy could be adversely affected;
 
    
    bills introduced and laws enacted, along with court
orders, to mitigate foreclosures in states where we do
business (including recently enacted 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 (including the Making
Home Affordable Program, the Home Affordable Modification
Program (HAMP), and the Home Affordable Foreclosure
Alternatives Program (HAFA)), the Protecting Tenants at
Foreclosure Act and voluntary foreclosure relief programs
developed by lenders, loan servicers and the Hope Now
Alliance (a consortium that includes loan servicers), may
have an adverse effect on, or restrict, our mortgage
default processing services and public notice operations;
 
    
    we have owned and operated DiscoverReady LLC
(DiscoverReady) since November 2, 2009, 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




    
    the acquisition of DiscoverReady may expose us to
particular business and financial risks that include, but
are not limited to: (1) diverting managements time,
attention and resources from managing the business; (2)
incurring significant additional capital expenditures and
operating expenses to improve, coordinate or integrate
managerial, operational, financial and administrative
systems; (3) failing to integrate the operations,
personnel and internal controls of DiscoverReady in our
company or to manage DiscoverReady or our growth; and (4)
facing operational difficulties in new markets or with new
products and service offerings;
 
    
    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
     20




---



##### Table of Contents



Recent Acquisitions
  DiscoverReady:
 Albertelli:
  Revenues
  
    
    71.3% and 72.0%, respectively, from our Professional Services Division (50.1% and 52.6%,
respectively, from mortgage default processing services and 21.2% and 19.4%, respectively,
from litigation support services); and
 
    
    28.7% and 28.0%, respectively, from our Business Information Division.
 Professional Services.
 Mortgage Default Processing Services.
  21




---



##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
  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 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 two 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 June 30,
    
    
    Six Months ended June 30,2010
    
    
    2009
    
    
    2010 *
    
    
    2009Trott sellers
    
    $
    
    
    
    $
    662
    
    
    $
    114
    
    
    $
    1,148Feiwell & Hannoy
    
    
    
    
    
    
    148
    
    
    
    48
    
    
    
    257Sellers of
Barrett-NDEx or
their transferees
(as a group)
    
    
    202
    
    
    
    525
    
    
    
    371
    
    
    
    906Total
    
    $
    202
    
    
    $
    1,335
    
    
    $
    533
    
    
    $
    2,311
 *
    
    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 six months ended June 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 June 30,% of
    
    
    
    
    
    
    % of2010
    
    
    Revenues
    
    
    2009
    
    
    RevenuesRevenues:Professional Services
    
    $
    56,454
    
    
    
    71.3
    %
    
    $
    44,294
    
    
    
    66.1
    %Business Information
    
    
    22,755
    
    
    
    28.7
    %
    
    
    22,746
    
    
    
    33.9
    %Total revenues
    
    
    79,209
    
    
    
    100
    %
    
    
    67,040
    
    
    
    100.0
    %Operating expenses:Professional Services
    
    
    43,090
    
    
    
    54.4
    %
    
    
    31,462
    
    
    
    46.9
    %Business Information
    
    
    18,251
    
    
    
    23.0
    %
    
    
    17,278
    
    
    
    25.8
    %Unallocated corporate operating expenses
    
    
    2,479
    
    
    
    3.1
    %
    
    
    3,316
    
    
    
    4.9
    %Total operating expenses
    
    
    63,820
    
    
    
    80.6
    %
    
    
    52,056
    
    
    
    77.6
    %Equity in earnings of affiliates
    
    
    1,084
    
    
    
    1.4
    %
    
    
    1,333
    
    
    
    2.0
    %Operating income
    
    
    16,473
    
    
    
    20.8
    %
    
    
    16,317
    
    
    
    24.3
    %Interest expense, net
    
    
    (1,614
    )
    
    
    (2.0
    )%
    
    
    (1,728
    )
    
    
    (2.6
    )%Non-cash interest income related to interest rate swaps
    
    
    302
    
    
    
    0.4
    %
    
    
    296
    
    
    
    0.4
    %Income before income taxes
    
    
    15,161
    
    
    
    19.1
    %
    
    
    14,885
    
    
    
    22.2
    %Income tax expense
    
    
    (5,673
    )
    
    
    (7.2
    )%
    
    
    (5,361
    )
    
    
    (8.0
    )%Net income
    
    
    9,488
    
    
    
    12.0
    %
    
    
    9,524
    
    
    
    14.2
    %Less: Net income attributable to redeemable
noncontrolling interest
    
    
    (856
    )
    
    
    (1.1
    )%
    
    
    (1,318
    )
    
    
    (2.0
    )%Net income attributable to The Dolan Company
    
    $
    8,632
    
    
    
    10.9
    %
    
    $
    8,206
    
    
    
    12.2
    %Net income attributable to The Dolan Company per share
 basic and diluted
    
    $
    0.29
    
    
    
    
    
    
    $
    0.27(Increase) decrease in redeemable noncontrolling
interest in NDeX
    
    
    0.04
    
    
    
    
    
    
    
    (0.13
    )Net income attributable to The Dolan Company common
stockholders per diluted share  basic and diluted
    
    $
    0.33
    
    
    
    
    
    
    $
    0.14Weighted average shares outstanding:Basic
    
    
    30,137
    
    
    
    
    
    
    
    29,815Diluted
    
    
    30,240
    
    
    
    
    
    
    
    29,917
 Six Months Ended June 30,% of
    
    
    
    
    
    
    % of2010
    
    
    Revenues
    
    
    2009
    
    
    RevenuesRevenues:Professional Services
    
    $
    112,480
    
    
    
    72.0
    %
    
    $
    86,326
    
    
    
    65.9
    %Business Information
    
    
    43,707
    
    
    
    28.0
    %
    
    
    44,650
    
    
    
    34.1
    %Total revenues
    
    
    156,187
    
    
    
    100.0
    %
    
    
    130,976
    
    
    
    100.0
    %Operating expenses:Professional Services
    
    
    84,835
    
    
    
    54.3
    %
    
    
    62,626
    
    
    
    47.8
    %Business Information
    
    
    35,311
    
    
    
    22.6
    %
    
    
    34,437
    
    
    
    26.3
    %Unallocated corporate operating expenses
    
    
    4,697
    
    
    
    3.0
    %
    
    
    5,884
    
    
    
    4.5
    %Total operating expenses
    
    
    124,843
    
    
    
    79.9
    %
    
    
    102,947
    
    
    
    78.6
    %Equity in earnings of affiliates
    
    
    2,512
    
    
    
    1.6
    %
    
    
    2,730
    
    
    
    2.1
    %Operating income
    
    
    33,856
    
    
    
    21.7
    %
    
    
    30,759
    
    
    
    23.5
    %Interest expense, net
    
    
    (3,350
    )
    
    
    (2.1
    )%
    
    
    (3,698
    )
    
    
    (2.8
    )%Non-cash interest income related to interest rate swaps
    
    
    665
    
    
    
    0.4
    %
    
    
    530
    
    
    
    0.4
    %Other income, net
    
    
    
    
    
    
    
    
    
    
    1,446
    
    
    
    1.1
    %Income before income taxes
    
    
    31,171
    
    
    
    20.0
    %
    
    
    29,037
    
    
    
    22.2
    %Income tax expense
    
    
    (11,663
    )
    
    
    (7.5
    )%
    
    
    (9,678
    )
    
    
    (7.4
    )%Net income
    
    
    19,508
    
    
    
    12.5
    %
    
    
    19,359
    
    
    
    14.8
    %Less: Net income attributable to redeemable
noncontrolling interest
    
    
    (1,719
    )
    
    
    (1.1
    )%
    
    
    (2,506
    )
    
    
    (1.9
    )%Net income attributable to The Dolan Company
    
    $
    17,789
    
    
    
    11.4
    %
    
    $
    16,853
    
    
    
    12.9
    %Net income attributable to The Dolan Company per share
 basic and diluted
    
    $
    0.59
    
    
    
    
    
    
    $
    0.56(Increase) decrease in redeemable noncontrolling
interest in NDeX
    
    
    0.04
    
    
    
    
    
    
    
    (0.24
    )Net income attributable to The Dolan Company common
stockholders per diluted share  basic and diluted
    
    $
    0.63
    
    
    
    
    
    
    $
    0.32Weighted average shares outstanding:Basic
    
    
    30,122
    
    
    
    
    
    
    
    29,811Diluted
    
    
    30,218
    
    
    
    
    
    
    
    29,896
  26




---



##### Table of Contents



Three Months Ended June 30, 2010
Compared to Three Months Ended June 30, 2009
 Revenues
 Three Months Ended June 30,2010
    
    
    2009
    
    
    Increase(in millions)Total revenues
    
    $
    79.2
    
    
    $
    67.0
    
    
    $
    12.2
    
    
    
    18.2
    %
    27




---



##### Table of Contents



Operating Expenses
 Three Months Ended June 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total operating expenses
    
    $
    63.8
    
    
    $
    52.1
    
    
    $
    11.8
    
    
    
    22.6
    %Direct operating expenses
    
    
    31.5
    
    
    
    23.1
    
    
    
    8.4
    
    
    
    36.3
    %Selling, general and
administrative expenses
    
    
    25.6
    
    
    
    22.4
    
    
    
    3.2
    
    
    
    14.3
    %Depreciation expense
    
    
    2.7
    
    
    
    2.4
    
    
    
    0.4
    
    
    
    15.8
    %Amortization expense
    
    
    4.0
    
    
    
    4.2
    
    
    
    (0.2
    )
    
    
    (4.7
    )%
  Direct Operating Expenses.
 Selling, General and Administrative Expenses.
 Depreciation and Amortization Expense.
 Interest Expense, Net
 Three Months Ended June 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total interest expense, net
    
    $
    1.6
    
    
    $
    1.7
    
    
    $
    (0.1
    )
    
    
    (6.6
    )%Interest on bank credit facility
    
    
    0.9
    
    
    
    1.3
    
    
    
    (0.4
    )
    
    
    (33.6
    )%Cash interest expense on interest rate swaps
    
    
    0.6
    
    
    
    0.4
    
    
    
    0.2
    
    
    
    54.5
    %Amortization of deferred financing fees
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.0
    
    
    
    34.4
    %Other
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    Not meaningful
   28




---



##### Table of Contents



Non-Cash Interest Income Related to Interest Rate Swaps
 Three Months Ended June 30,2010
    
    
    2009
    
    
    Increase(in millions)Non-cash interest income related to interest rate swaps
    
    $
    0.3
    
    
    $
    0.3
    
    
    $
    
    
    
    
    2.0
    %
  Income Tax Expense
 Three Months Ended June 30,2010
    
    
    2009
    
    
    Increase(in millions)Income tax expense
    
    $
    5.7
    
    
    $
    5.4
    
    
    $
    0.3
    
    
    
    5.8
    %
  Professional Services Division Results
 Revenues
 Three Months Ended June 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total revenues
    
    $
    56.5
    
    
    $
    44.3
    
    
    $
    12.2
    
    
    
    27.5
    %Mortgage default processing services revenues
    
    
    39.7
    
    
    
    40.9
    
    
    
    (1.2
    )
    
    
    (3.0
    )%Litigation support services revenues
    
    
    16.7
    
    
    
    3.4
    
    
    
    13.4
    
    
    
    397.4
    %
   29




---



##### Table of Contents



Operating Expenses  Mortgage Default Processing Services
 Three Months Ended June 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total operating expenses
    
    $
    30.8
    
    
    $
    28.5
    
    
    $
    2.3
    
    
    
    7.9
    %Direct operating expenses
    
    
    16.8
    
    
    
    14.9
    
    
    
    2.0
    
    
    
    13.1
    %Selling, general and administrative expenses
    
    
    9.5
    
    
    
    9.0
    
    
    
    0.5
    
    
    
    5.8
    %Depreciation expense
    
    
    1.9
    
    
    
    1.6
    
    
    
    0.3
    
    
    
    21.8
    %Amortization expense
    
    
    2.5
    
    
    
    3.1
    
    
    
    (0.6
    )
    
    
    (18.4
    )%
    Operating Expenses  Litigation Support Services
 Three Months Ended June 30,2010
    
    
    2009
    
    
    Increase(in millions)Total operating expenses
    
    $
    12.3
    
    
    $
    2.9
    
    
    $
    9.4Direct operating expenses
    
    
    7.0
    
    
    
    0.8
    
    
    
    6.2Selling, general and administrative expenses
    
    
    4.4
    
    
    
    1.8
    
    
    
    2.6Depreciation expense
    
    
    0.1
    
    
    
    
    
    
    
    0.1Amortization expense
    
    
    0.7
    
    
    
    0.3
    
    
    
    0.4
  30




---



##### Table of Contents



Business Information Division Results
 Revenues
 Three Months Ended June 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total Business Information Division Revenues
    
    $
    22.8
    
    
    $
    22.7
    
    
    $
    
    
    
    
    Display and classified advertising revenues
    
    
    7.1
    
    
    
    6.8
    
    
    
    0.2
    
    
    
    3.2
    %Public notice revenues
    
    
    12.1
    
    
    
    12.2
    
    
    
    (0.1
    )
    
    
    (0.7
    )%Circulation and other revenues
    
    
    3.6
    
    
    
    3.7
    
    
    
    (0.1
    )
    
    
    (3.3
    )%
     Operating Expenses
 Three Months Ended June 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total operating expenses
    
    $
    18.3
    
    
    $
    17.3
    
    
    $
    1.0
    
    
    
    5.6
    %Direct operating expenses
    
    
    7.6
    
    
    
    7.4
    
    
    
    0.2
    
    
    
    2.7
    %Selling, general and administrative expenses
    
    
    9.4
    
    
    
    8.5
    
    
    
    0.9
    
    
    
    10.5
    %Depreciation expense
    
    
    0.5
    
    
    
    0.5
    
    
    
    (0.1
    )
    
    
    (11.3
    %)Amortization expense
    
    
    0.8
    
    
    
    0.8
    
    
    
    (0.1
    )
    
    
    (6.9
    %)
    31




---



##### Table of Contents



Six Months Ended June 30, 2010
Compared to Six Months Ended June 30, 2009
 Revenues
 Six Months Ended June 30,2010
    
    
    2009
    
    
    Increase(in millions)Total revenues
    
    $
    156.2
    
    
    $
    131.0
    
    
    $
    25.2
    
    
    
    19.2
    %
   Operating Expenses
 Six Months Ended June 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total operating expenses
    
    $
    124.8
    
    
    $
    102.9
    
    
    $
    21.9
    
    
    
    21.3
    %Direct operating expenses
    
    
    60.6
    
    
    
    46.0
    
    
    
    14.6
    
    
    
    31.7
    %Selling, general and
administrative expenses
    
    
    50.8
    
    
    
    43.2
    
    
    
    7.7
    
    
    
    17.8
    %Depreciation expense
    
    
    5.5
    
    
    
    4.5
    
    
    
    1.0
    
    
    
    22.0
    %Amortization expense
    
    
    8.0
    
    
    
    9.3
    
    
    
    (1.3
    )
    
    
    (14.3
    )%
  Direct Operating Expenses.
  32




---



##### Table of Contents



Selling, General and Administrative Expenses.
 Depreciation and Amortization Expense.
 Interest Expense, Net
 Six Months Ended June 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total interest expense, net
    
    $
    3.4
    
    
    $
    3.7
    
    
    $
    (0.3
    )
    
    
    (9.4
    )%Interest on bank credit facility
    
    
    1.8
    
    
    
    2.9
    
    
    
    (1.1
    )
    
    
    (39.0
    )%Cash interest expense on interest rate swaps
    
    
    1.3
    
    
    
    0.7
    
    
    
    0.6
    
    
    
    78.9
    %Amortization of deferred financing fees
    
    
    0.2
    
    
    
    0.1
    
    
    
    
    
    
    
    34.3
    %Other
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    Not meaningful
  Non-Cash Interest Income Related to Interest Rate Swaps
 Six Months Ended June 30,2010
    
    
    2009
    
    
    Increase(in millions)Non-cash interest income related to interest rate swaps
    
    $
    0.7
    
    
    $
    0.5
    
    
    $
    0.1
    
    
    
    25.5
    %
  Other Income, Net
 Six Months Ended June 30,2010
    
    
    2009
    
    
    Decrease(in millions)Other income, net
    
    $
    
    
    
    $
    1.4
    
    
    $
    (1.4
    )
    
    
    (100.0
    )%
   33




---



##### Table of Contents



Income Tax Expense
 Six Months Ended June 30,2010
    
    
    2009
    
    
    Increase(in millions)Income tax expense
    
    $
    11.7
    
    
    $
    9.7
    
    
    $
    2.0
    
    
    
    20.5
    %
  Professional Services Division Results
 Revenues
 Six Months Ended June 30,2010
    
    
    2009
    
    
    Increase(in millions)Total revenues
    
    $
    112.5
    
    
    $
    86.3
    
    
    $
    26.2
    
    
    
    30.3
    %Mortgage default processing services revenues
    
    
    82.1
    
    
    
    79.2
    
    
    
    2.9
    
    
    
    3.7
    %Litigation support services revenues
    
    
    30.3
    
    
    
    7.1
    
    
    
    23.3
    
    
    Not meaningful
    34




---



##### Table of Contents



Operating Expenses  Mortgage Default Processing Services
 Six Months Ended June 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total operating expenses
    
    $
    62.5
    
    
    $
    56.7
    
    
    $
    5.8
    
    
    
    10.2
    %Direct operating expenses
    
    
    33.8
    
    
    
    29.5
    
    
    
    4.3
    
    
    
    14.7
    %Selling, general and administrative expenses
    
    
    19.8
    
    
    
    17.2
    
    
    
    2.6
    
    
    
    15.2
    %Depreciation expense
    
    
    3.9
    
    
    
    2.9
    
    
    
    0.9
    
    
    
    32.6
    %Amortization expense
    
    
    5.0
    
    
    
    7.1
    
    
    
    (2.1
    )
    
    
    (29.4
    )%
    Operating Expenses  Litigation Support Services
 Six Months Ended June 30,2010
    
    
    2009
    
    
    Increase(in millions)Total operating expenses
    
    $
    22.4
    
    
    $
    5.9
    
    
    $
    16.4Direct operating expenses
    
    
    12.2
    
    
    
    1.7
    
    
    
    10.6Selling, general and administrative expenses
    
    
    8.4
    
    
    
    3.6
    
    
    
    4.8Depreciation expense
    
    
    0.3
    
    
    
    0.1
    
    
    
    0.2Amortization expense
    
    
    1.4
    
    
    
    0.6
    
    
    
    0.8
   35




---



##### Table of Contents



Business Information Division Results
 Revenues
 Six Months Ended June 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total Business Information Division Revenues
    
    $
    43.7
    
    
    $
    44.7
    
    
    $
    (0.9
    )
    
    
    (2.1
    )%Display and classified advertising revenues
    
    
    12.6
    
    
    
    13.6
    
    
    
    (1.1
    )
    
    
    (8.0
    )%Public notice revenues
    
    
    23.9
    
    
    
    23.5
    
    
    
    0.4
    
    
    
    1.7
    %Circulation and other revenues
    
    
    7.3
    
    
    
    7.5
    
    
    
    (0.3
    )
    
    
    (3.4
    )%
     Operating Expenses
 Six Months Ended June 30,2010
    
    
    2009
    
    
    Increase (Decrease)(in millions)Total operating expenses
    
    $
    35.3
    
    
    $
    34.4
    
    
    $
    0.9
    
    
    
    (2.5
    )%Direct operating expense
    
    
    14.5
    
    
    
    14.9
    
    
    
    (0.3
    )
    
    
    (2.3
    )%Selling, general and administrative expenses
    
    
    18.3
    
    
    
    16.9
    
    
    
    1.3
    
    
    
    7.8
    %Depreciation expense
    
    
    1.0
    
    
    
    1.0
    
    
    
    0.0
    
    
    
    0.0
    %Amortization expense
    
    
    1.5
    
    
    
    1.6
    
    
    
    (0.1
    )
    
    
    (4.4
    )%
     36




---



##### Table of Contents



Off Balance Sheet Arrangements
  Liquidity and Capital Resources
  June 30,
    
    
    December 31,2010
    
    
    2009Cash and cash equivalents
    
    $
    6,942
    
    
    $
    2,894Working capital (deficit)
    
    
    (12,186
    )
    
    
    (21,067
    )Long-term debt, less current portion
    
    
    125,421
    
    
    
    137,960
 Six Months Ended June 30,2010
    
    
    2009Net cash provided by operating activities
    
    $
    31,370
    
    
    $
    23,001Net cash used in investing activities:
    
    
    (3,441
    )
    
    
    (3,039
    )Acquisitions and investments
    
    
    (115
    )
    
    
    (1,426
    )Capital expenditures
    
    
    (3,326
    )
    
    
    (1,613
    )Net cash used by financing activities
    
    
    (23,881
    )
    
    
    (6,370
    )
 Cash Flows Provided by Operating Activities
    June 30,
    
    
    December 31,
    
    
    June 30,2010
    
    
    2009
    
    
    2009Allowance for doubtful accounts (in thousands)
    
    $
    1,282
    
    
    $
    1,113
    
    
    $
    964Allowance for doubtful accounts as a percentage of gross accounts receivable
    
    
    2.0
    %
    
    
    1.9
    %
    
    
    1.8
    %Day sales outstanding
    
    
    76.4
    
    
    
    68.5
    
    
    
    75.5
    37




---



##### Table of Contents



Cash Flows Used in Investing Activities
  Cash Flows Used in Financing Activities
      Credit Agreement.
   38




---



##### Table of Contents



Future Needs
    
 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
   40




---



##### Table of Contents



Item 4. Reserved
 
 Item 5. Other Information
  
 Item 6. Exhibits
 ExhibitNo.
    
    Title
    
    Method of Filing3
    
    
    Amended and Restated
Certificate of Incorporation
of The Dolan Company (as
amended)
    
    Incorporated by reference to
Exhibit 3 to our current
report on Form 8-K filed with
the SEC on May 26, 2010.10.1
    
    
    Dolan Media Company 2007
Incentive Compensation Plan,
as amended and restated
    
    Incorporated by reference to
Exhibit 10 to our Form 8-K
filed with the SEC on May 26,
2010.10.2
    
    
    First Amendment to Services
Agreement between American
Processing Company, LLC
(d/b/a NDeX) and James E.
Albertelli, P.A. and James E.
Albertelli, individually
dated July 12, 2010
    
    Filed herewith.10.3
    
    
    First Amendment to Asset
Purchase Agreement among
Dolan Media Company, American
Processing Company, LLC
(d/b/a NDeX), James E.
Albertelli, P.A., The
Albertelli Firm, P.C.,
Albertelli Title, Inc. and 

James E. Albertelli dated
July 12, 2010
    
    Filed herewith.31.1
    
    
    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: August 5, 2010By:
    
    /s/ James P. DolanJames P. DolanChairman, Chief Executive Officer and President(Principal Executive Officer)Dated: August 5, 2010By:
    
    /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 Filing10.2
    
    
    First Amendment to Services Agreement
between American Processing Company, LLC
(d/b/a NDeX) and James E. Albertelli, P.A.
and James E. Albertelli, individually
dated July 12, 2010
    
    Filed herewith.10.3
    
    
    First Amendment to Asset Purchase
Agreement among Dolan Media Company,
American Processing Company, LLC (d/b/a
NDeX), James E. Albertelli, P.A., The
Albertelli Firm, P.C., Albertelli Title,
Inc. and James E. Albertelli dated July
12, 2010
    
    Filed herewith.31.1
    
    
    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