##### 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, 2009
 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
 Dolan Media 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
 Yes o No þ




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##### 



PART I  FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Condensed Consolidated Balance Sheets as of June 30, 2009 (unaudited) and December 31, 2008
    
    
    1Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended
June 30, 2009 and 2008
    
    
    2Unaudited Condensed Consolidated Statements of Stockholders Equity as of June 30, 2009
    
    
    3Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30,
2009 and 2008
    
    
    4Notes to Unaudited Condensed Consolidated Interim Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    37Item 4. Controls and Procedures
    
    
    38PART II  OTHER INFORMATION
    
    
    38Item 1. Legal Proceedings
    
    
    38Item 1A. Risk Factors
    
    
    38Item 2. Unregistered Sales of Securities and Use of Proceeds
    
    
    39Item 3. Defaults Upon Senior Securities
    
    
    39Item 4. Submission of Matters to a Vote of Security Holders
    
    
    39Item 5. Other Information
    
    
    39Item 6. Exhibits
    
    
    40SIGNATURES
    
    
    41Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 10.8Section 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
 Dolan Media Company
 
 Condensed Consolidated Balance Sheets
 (in thousands, except share data)
 June 30,
    
    
    December 31,2009
    
    
    2008(unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    16,048
    
    
    $
    2,456Accounts receivable, including unbilled
services (net of allowances for doubtful
accounts of $964 and $1,398 as of June 30,
2009 and December 31, 2008, respectively)
    
    
    51,827
    
    
    
    38,776Unbilled pass-through costs
    
    
    12,684
    
    
    
    7,164Prepaid expenses and other current assets
    
    
    2,299
    
    
    
    4,881Deferred income taxes
    
    
    397
    
    
    
    397Total current assets
    
    
    83,255
    
    
    
    53,674Investments
    
    
    16,356
    
    
    
    17,126Property and equipment, net
    
    
    18,861
    
    
    
    21,438Finite-life intangible assets, net
    
    
    246,948
    
    
    
    254,917Goodwill
    
    
    117,961
    
    
    
    118,983Other assets
    
    
    4,510
    
    
    
    5,166Total assets
    
    $
    487,891
    
    
    $
    471,304LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    11,900
    
    
    $
    12,048Accounts payable
    
    
    7,055
    
    
    
    9,116Accrued pass-through liabilities
    
    
    25,073
    
    
    
    21,598Accrued compensation
    
    
    6,848
    
    
    
    7,673Accrued liabilities
    
    
    5,898
    
    
    
    2,738Due to sellers of acquired businesses
    
    
    
    
    
    
    75Deferred revenue
    
    
    14,540
    
    
    
    13,014Total current liabilities
    
    
    71,314
    
    
    
    66,262Long-term debt, less current portion
    
    
    137,225
    
    
    
    143,450Deferred income taxes
    
    
    13,505
    
    
    
    18,266Deferred revenue and other liabilities
    
    
    4,696
    
    
    
    5,136Total liabilities
    
    
    226,740
    
    
    
    233,114Redeemable noncontrolling interest
    
    
    28,009
    
    
    
    15,760Commitments and contingencies (Note 13)Stockholders equityCommon
stock, $0.001 par value; authorized: 70,000,000
shares; outstanding: 30,081,017
and 29,955,018 shares as of June 30, 2009
and December 31, 2008, 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
    
    
    
    
    
    
    Additional paid-in capital
    
    
    285,169
    
    
    
    291,310Accumulated deficit
    
    
    (52,057
    )
    
    
    (68,910
    )Total stockholders equity
    
    
    233,142
    
    
    
    222,430Total liabilities and stockholders equity
    
    $
    487,891
    
    
    $
    471,304
   1




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##### Table of Contents



Dolan Media Company
 
 Unaudited Condensed Consolidated Statements of Operations
 (in thousands, except share and per share data)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenuesProfessional Services
    
    $
    44,294
    
    
    $
    18,129
    
    
    $
    86,326
    
    
    $
    36,869Business Information
    
    
    22,746
    
    
    
    23,424
    
    
    
    44,650
    
    
    
    46,196Total revenues
    
    
    67,040
    
    
    
    41,553
    
    
    
    130,976
    
    
    
    83,065Operating expensesDirect operating: Professional Services
    
    
    15,682
    
    
    
    6,436
    
    
    
    31,140
    
    
    
    12,747Direct operating: Business Information
    
    
    7,425
    
    
    
    8,152
    
    
    
    14,875
    
    
    
    15,724Selling, general and administrative
    
    
    22,427
    
    
    
    16,732
    
    
    
    43,163
    
    
    
    32,836Amortization
    
    
    4,171
    
    
    
    2,318
    
    
    
    9,295
    
    
    
    4,536Depreciation
    
    
    2,351
    
    
    
    1,190
    
    
    
    4,474
    
    
    
    2,291Total operating expenses
    
    
    52,056
    
    
    
    34,828
    
    
    
    102,947
    
    
    
    68,134Equity in earnings of The Detroit Legal News
Publishing, LLC
    
    
    1,333
    
    
    
    1,469
    
    
    
    2,730
    
    
    
    3,026Operating income
    
    
    16,317
    
    
    
    8,194
    
    
    
    30,759
    
    
    
    17,957Non-operating income (expense)Interest expense, net of interest income
    
    
    (1,728
    )
    
    
    (1,464
    )
    
    
    (3,698
    )
    
    
    (2,760
    )Non-cash interest income related to interest
rate swaps
    
    
    296
    
    
    
    1,177
    
    
    
    530
    
    
    
    22Other income
    
    
    
    
    
    
    10
    
    
    
    1,446
    
    
    
    21Total non-operating expense
    
    
    (1,432
    )
    
    
    (277
    )
    
    
    (1,722
    )
    
    
    (2,717
    )Income before income taxes
    
    
    14,885
    
    
    
    7,917
    
    
    
    29,037
    
    
    
    15,240Income tax expense
    
    
    (5,361
    )
    
    
    (3,027
    )
    
    
    (9,678
    )
    
    
    (5,786
    )Net income
    
    
    9,524
    
    
    
    4,890
    
    
    
    19,359
    
    
    
    9,454Less: Net income attributable to the
redeemable noncontrolling interest
    
    
    (1,318
    )
    
    
    (493
    )
    
    
    (2,506
    )
    
    
    (1,050
    )Net income attributable to Dolan Media Company
    
    $
    8,206
    
    
    $
    4,397
    
    
    $
    16,853
    
    
    $
    8,404Earnings per share  basic:Net income attributable to Dolan Media Company
    
    $
    0.27
    
    
    $
    0.18
    
    
    $
    0.56
    
    
    $
    0.34Accretion of redeemable noncontrolling
interest, net of tax, in conjunction with
adoption of SFAS No. 160
    
    
    (0.13
    )
    
    
    
    
    
    
    (0.24
    )
    
    
    Net income attributable to Dolan Media
Company common stockholders
    
    $
    0.14
    
    
    $
    0.18
    
    
    $
    0.32
    
    
    $
    0.34Weighted average shares outstanding  basic
    
    
    29,815,405
    
    
    
    24,936,360
    
    
    
    29,810,590
    
    
    
    24,936,183Earnings per share  diluted:Net income attributable to Dolan Media Company
    
    $
    0.27
    
    
    $
    0.17
    
    
    $
    0.56
    
    
    $
    0.33Accretion of redeemable noncontrolling
interest, net of tax, in conjunction with
adoption of SFAS No. 160
    
    
    (0.13
    )
    
    
    
    
    
    
    (0.24
    )
    
    
    Net income attributable to Dolan Media
Company common stockholders
    
    $
    0.14
    
    
    $
    0.17
    
    
    $
    0.32
    
    
    $
    0.33Weighted average shares outstanding  diluted
    
    
    29,917,495
    
    
    
    25,307,422
    
    
    
    29,896,194
    
    
    
    25,246,279
   2




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##### Table of Contents



Dolan Media Company
 
 Unaudited Condensed
Consolidated Statements of Stockholders Equity
 (in thousands, except share data)
 AdditionalCommon Stock
    
    
    Paid-In
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    TotalBalance (deficit) at December 31, 2007
    
    
    25,088,718
    
    
    $
    25
    
    
    $
    212,364
    
    
    $
    (83,213
    )
    
    $
    129,176Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,303
    
    
    
    14,303Private placement of common stock,
net of offering costs
    
    
    4,000,000
    
    
    
    4
    
    
    
    60,483
    
    
    
    
    
    
    
    60,487Issuance of common stock in a
business acquisition
    
    
    825,528
    
    
    
    1
    
    
    
    16,460
    
    
    
    
    
    
    
    16,461Issuance of common stock pursuant to
the exercise of stock options under
the 2007 incentive compensation plan
    
    
    8,089
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    21Stock-based compensation expense,
including issuance of restricted
stock (shares are net of forfeitures)
    
    
    32,683
    
    
    
    
    
    
    
    1,918
    
    
    
    
    
    
    
    1,918Tax benefit on stock options exercised
    
    
    
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    64Balance (deficit) at December 31, 2008
    
    
    29,955,018
    
    
    $
    30
    
    
    $
    291,310
    
    
    $
    (68,910
    )
    
    $
    222,430Net income attributable to Dolan
Media Company
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,853
    
    
    
    16,853Accretion of redeemable
noncontrolling interest, net of tax
    
    
    
    
    
    
    
    
    
    
    (7,293
    )
    
    
    
    
    
    
    (7,293
    )Net income attributable to Dolan
Media Company common stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,560Issuance of common stock pursuant to
the exercise of stock options under
the 2007 incentive compensation plan
    
    
    5,033
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Stock-based compensation expense,
including issuance of restricted
stock (shares are net of forfeitures)
    
    
    120,966
    
    
    
    
    
    
    
    1,145
    
    
    
    
    
    
    
    1,145Balance (deficit) at June 30, 2009
    
    
    30,081,017
    
    
    $
    30
    
    
    $
    285,169
    
    
    $
    (52,057
    )
    
    $
    233,142
   3




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##### Table of Contents



Dolan Media Company
 
 Unaudited Condensed Consolidated Statements of Cash Flows
 (in thousands)
 Six Months EndedJune 30,2009
    
    
    2008Cash flows from operating activitiesNet income
    
    $
    19,359
    
    
    $
    9,454Distributions received from The Detroit Legal News Publishing, LLC
    
    
    3,500
    
    
    
    3,500Distributions paid to holders of noncontrolling interest
    
    
    (2,311
    )
    
    
    (909
    )Non-cash operating activities:Amortization
    
    
    9,295
    
    
    
    4,536Depreciation
    
    
    4,474
    
    
    
    2,291Equity in earnings of The Detroit Legal News Publishing, LLC
    
    
    (2,730
    )
    
    
    (3,026
    )Stock-based compensation expense
    
    
    1,145
    
    
    
    792Change in value of interest rate swap and accretion of interest on
note payable
    
    
    (525
    )
    
    
    81Amortization of debt issuance costs
    
    
    123
    
    
    
    94Change in accounting estimate related to self-insured medical reserve
    
    
    
    
    
    
    (470
    )Changes in operating assets and liabilities, net of effects of
business acquisitions:Accounts receivable and unbilled pass-through costs
    
    
    (18,571
    )
    
    
    (4,461
    )Prepaid expenses and other current assets
    
    
    2,581
    
    
    
    386Other assets
    
    
    18
    
    
    
    17Accounts payable and accrued liabilities
    
    
    5,199
    
    
    
    (2,910
    )Deferred revenue
    
    
    1,444
    
    
    
    199Net cash provided by operating activities
    
    
    23,001
    
    
    
    9,574Cash flows from investing activitiesAcquisitions and investments
    
    
    (1,426
    )
    
    
    (19,176
    )Pending acquisitions
    
    
    
    
    
    
    (691
    )Capital expenditures
    
    
    (1,613
    )
    
    
    (2,303
    )Net cash used in investing activities
    
    
    (3,039
    )
    
    
    (22,170
    )Cash flows from financing activitiesNet payments on senior revolving note
    
    
    
    
    
    
    (9,000
    )Proceeds from borrowings or conversions on senior term notes
    
    
    
    
    
    
    25,000Payments on senior long-term debt
    
    
    (4,625
    )
    
    
    (1,564
    )Capital contribution from holder of noncontrolling interest
    
    
    
    
    
    
    1,179Payment on unsecured note payable
    
    
    (1,750
    )
    
    
    (1,750
    )Proceeds from stock option exercises
    
    
    7
    
    
    
    Other
    
    
    (2
    )
    
    
    Net cash (used) provided by financing activities
    
    
    (6,370
    )
    
    
    13,865Net increase in cash and cash equivalents
    
    
    13,592
    
    
    
    1,269Cash and cash equivalents at beginning of the period
    
    
    2,456
    
    
    
    1,346Cash and cash equivalents at end of the period
    
    $
    16,048
    
    
    $
    2,615
   4




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##### Table of Contents



Notes to Unaudited Condensed Consolidated Interim Financial Statements
 Note 1. Nature of Business and Significant Accounting Policies
 Basis of Presentation:
    Use of Derivative Instruments:
 Fair Value of Financial Instruments:
  5




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##### Table of Contents



New Accounting Pronouncements:
 .
   6




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##### Table of Contents



Note 2. Basic and Diluted Income Per Share
  in thousands, except per
share amounts
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income attributable to Dolan Media Company
    
    $
    8,206
    
    
    $
    4,397
    
    
    $
    16,853
    
    
    $
    8,404Accretion of redeemable noncontrolling interest, net of tax
    
    
    (3,943
    )
    
    
    
    
    
    
    (7,293
    )
    
    
    Net income attributable to Dolan Media Company common
stockholders
    
    $
    4,263
    
    
    $
    4,397
    
    
    $
    9,560
    
    
    $
    8,404Basic:Weighted average common shares outstanding
    
    
    30,036
    
    
    
    25,116
    
    
    
    29,995
    
    
    
    25,101Weighted average common shares of unvested restricted stock
    
    
    (221
    )
    
    
    (180
    )
    
    
    (184
    )
    
    
    (165
    )Shares used in the computation of basic net income per share
    
    
    29,815
    
    
    
    24,936
    
    
    
    29,811
    
    
    
    24,936Net income attributable to Dolan Media Company common
stockholders per share  basic
    
    $
    0.14
    
    
    $
    0.18
    
    
    $
    0.32
    
    
    $
    0.34Diluted:Shares used in the computation of basic net income per share
    
    
    29,815
    
    
    
    24,936
    
    
    
    29,811
    
    
    
    24,936Stock options and restricted stock
    
    
    102
    
    
    
    371
    
    
    
    85
    
    
    
    310Shares used in the computation of dilutive net income per
share
    
    
    29,917
    
    
    
    25,307
    
    
    
    29,896
    
    
    
    25,246Net income attributable to Dolan Media Company common
stockholders per share  diluted
    
    $
    0.14
    
    
    $
    0.17
    
    
    $
    0.32
    
    
    $
    0.33
   7




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##### Table of Contents



Note 3. Acquisitions
  Wilford & Geske
 National Default Exchange, L.P. and related entities:
   8




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##### Table of Contents



Pro Forma Information (unaudited): (in thousands, except per share data):
 Pro FormaThree Months
    
    
    Six MonthsEnded
    
    
    Ended June 30,June 30, 2008
    
    
    2008Total revenues
    
    $
    59,774
    
    
    $
    120,466Net income attributable to Dolan Media Company common stockholders
    
    
    4,716
    
    
    
    9,139Net income per share:Basic
    
    $
    0.18
    
    
    $
    0.35Diluted
    
    $
    0.18
    
    
    $
    0.36Actual/Pro forma weighted average shares outstanding:Basic
    
    
    25,762
    
    
    
    25,762Diluted
    
    
    25,513
    
    
    
    25,658
 Note 4. Investments
 (in thousands)
 Accounting
    
    Percent
    
    
    June 30,
    
    
    December 31,Method
    
    Ownership
    
    
    2009
    
    
    2008The Detroit Legal News Publishing, LLC
    
    Equity
    
    
    35
    
    
    $
    15,456
    
    
    $
    16,226GovDelivery, Inc.
    
    Cost
    
    
    15
    
    
    
    900
    
    
    
    900Total
    
    
    
    
    
    
    
    $
    16,356
    
    
    $
    17,126
 The Detroit Legal News Publishing, LLC:
  (in thousands)
 As of June 30,
    
    
    As of December 31,2009
    
    
    2008Carrying value of investment
    
    $
    15,456
    
    
    $
    16,226Underlying finite-lived customer list, net of amortization
    
    
    9,675
    
    
    
    10,429
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Equity in
earnings of DLNP, net of
amortization of
customer list
    
    $
    1,333
    
    
    $
    1,469
    
    
    $
    2,730
    
    
    $
    3,026Distributions received
    
    
    2,100
    
    
    
    2,100
    
    
    
    3,500
    
    
    
    3,500Amortization expense
    
    
    377
    
    
    
    377
    
    
    
    753
    
    
    
    754
  9




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##### Table of Contents



(in thousands)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    11,534
    
    
    $
    12,031
    
    
    $
    23,483
    
    
    $
    24,436Cost of revenues
    
    
    4,669
    
    
    
    4,797
    
    
    
    9,438
    
    
    
    9,539Gross profit
    
    
    6,865
    
    
    
    7,234
    
    
    
    14,045
    
    
    
    14,897Selling, general and administrative expenses*
    
    
    1,600
    
    
    
    1,934
    
    
    
    3,326
    
    
    
    3,232Operating income*
    
    
    5,265
    
    
    
    5,300
    
    
    
    10,719
    
    
    
    10,846Net income
    
    $
    4,886
    
    
    $
    5,273
    
    
    $
    9,953
    
    
    $
    10,800Companys 35% share of net income
    
    $
    1,710
    
    
    $
    1,846
    
    
    $
    3,483
    
    
    $
    3,780Less amortization of intangible assets
    
    
    377
    
    
    
    377
    
    
    
    753
    
    
    
    754Equity in earnings of DLNP, LLC
    
    $
    1,333
    
    
    $
    1,469
    
    
    $
    2,730
    
    
    $
    3,026
 *
    
    For comparison purposes only, the Company has changed the selling, general and administrative
expenses and operating income presented here for the three and six months ended June 30, 2008 from
those previously reported to reflect current year treatment of Michigan business taxes as a
non-operating expense as a result of changes in Michigan tax law. Note 5. Goodwill and Finite-life Intangible Assets
 Goodwill: (in thousands)
 June 30, 2009
    
    
    December 31, 2008Professional Services
    
    $
    58,729
    
    
    $
    59,751Business Information
    
    
    59,232
    
    
    
    59,232Total
    
    $
    117,961
    
    
    $
    118,983
  Finite-Life Intangible Assets:
  10




---



##### Table of Contents



Note 6. Long-Term Debt, Capital Lease Obligation
 (in thousands)
 June 30,
    
    
    December 31,2009
    
    
    2008Senior secured debt (see below):Senior variable-rate term note, payable in quarterly
installments with a balloon payment due August 8,
2014
    
    $
    149,125
    
    
    $
    153,750Senior variable-rate revolving note due August 8, 2012
    
    
    
    
    
    
    Total senior secured debt
    
    
    149,125
    
    
    
    153,750Unsecured note payable
    
    
    
    
    
    
    1,746Capital lease obligations
    
    
    
    
    
    
    2149,125
    
    
    
    155,498Less current portion
    
    
    11,900
    
    
    
    12,048Long-term debt, less current portion
    
    $
    137,225
    
    
    $
    143,450
 Senior Secured Debt:
  Unsecured Note Payable :
 Note 7. Common and Preferred Stock
  Note 8. Income Taxes
  Note 9. Other Income
   11




---



##### Table of Contents



Note 10. Major Customers and Related Parties
  Note 11. Reportable Segments
  in thousands
 Professional
    
    
    BusinessServices
    
    
    Information
    
    
    Corporate
    
    
    Total(In thousands)Three Months Ended June 30, 2009Revenues
    
    $
    44,294
    
    
    $
    22,746
    
    
    $
    
    
    
    $
    67,040Direct operating expenses
    
    
    15,682
    
    
    
    7,425
    
    
    
    
    
    
    
    23,107Selling, general and administrative expenses
    
    
    10,799
    
    
    
    8,507
    
    
    
    3,121
    
    
    
    22,427Amortization and depreciation
    
    
    4,981
    
    
    
    1,346
    
    
    
    195
    
    
    
    6,522Equity in Earnings of DLNP, LLC
    
    
    
    
    
    
    1,333
    
    
    
    
    
    
    
    1,333Operating income (loss)
    
    $
    12,832
    
    
    $
    6,801
    
    
    $
    (3,316
    )
    
    $
    16,317Three Months Ended June 30, 2008Revenues
    
    $
    18,129
    
    
    $
    23,424
    
    
    $
    
    
    
    $
    41,553Direct operating expenses
    
    
    6,436
    
    
    
    8,152
    
    
    
    
    
    
    
    14,588Selling, general and administrative expenses
    
    
    4,585
    
    
    
    10,203
    
    
    
    1,944
    
    
    
    16,732Amortization and depreciation
    
    
    2,083
    
    
    
    1,230
    
    
    
    195
    
    
    
    3,508Equity in Earnings of DLNP, LLC
    
    
    
    
    
    
    1,469
    
    
    
    
    
    
    
    1,469Operating income (loss)
    
    $
    5,025
    
    
    $
    5,308
    
    
    $
    (2,139
    )
    
    $
    8,194
 Professional
    
    
    BusinessServices
    
    
    Information
    
    
    Corporate
    
    
    Total(In thousands)Six Months Ended June 30, 2009Revenues
    
    $
    86,326
    
    
    $
    44,650
    
    
    $
    
    
    
    $
    130,976Direct operating expenses
    
    
    31,140
    
    
    
    14,875
    
    
    
    
    
    
    
    46,015Selling, general and administrative expenses
    
    
    20,824
    
    
    
    16,929
    
    
    
    5,410
    
    
    
    43,163Amortization and depreciation
    
    
    10,662
    
    
    
    2,633
    
    
    
    474
    
    
    
    13,769Equity in Earnings of DLNP, LLC
    
    
    
    
    
    
    2,730
    
    
    
    
    
    
    
    2,730Operating income (loss)
    
    $
    23,700
    
    
    $
    12,943
    
    
    $
    (5,884
    )
    
    $
    30,759Six Months Ended June 30, 2008Revenues
    
    $
    36,869
    
    
    $
    46,196
    
    
    $
    
    
    
    $
    83,065Direct operating expenses
    
    
    12,747
    
    
    
    15,724
    
    
    
    
    
    
    
    28,471Selling, general and administrative expenses
    
    
    9,242
    
    
    
    19,825
    
    
    
    3,769
    
    
    
    32,836Amortization and depreciation
    
    
    4,065
    
    
    
    2,388
    
    
    
    374
    
    
    
    6,827Equity in Earnings of DLNP, LLC
    
    
    
    
    
    
    3,026
    
    
    
    
    
    
    
    3,026Operating income (loss)
    
    $
    10,815
    
    
    $
    11,285
    
    
    $
    (4,143
    )
    
    $
    17,957
  12




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##### Table of Contents



Note 12. Share-Based Compensation
   Stock Options:
  Dividend yield
    
    
    0.0
    %Expected volatility
    
    
    48.0
    %Risk free interest rate
    
    
    2.0
    %Expected term of options
    
    4.75 yearsWeighted average grant date fair value
    
    $
    5.35
  Weighted
    
    
    Weighted
    
    
    Weighted AverageNumber of
    
    
    Average Grant
    
    
    Average
    
    
    RemainingShares
    
    
    Date Fair Value
    
    
    Exercise Price
    
    
    Contractual LifeOutstanding options at December 31, 2008
    
    
    1,352,992
    
    
    $
    4.54
    
    
    $
    14.21
    
    
    6.06 Yrs.Granted
    
    
    414,882
    
    
    
    5.35
    
    
    
    12.51
    
    
    
    Exercised
    
    
    (5,375
    )
    
    
    1.35
    
    
    
    2.22
    
    
    
    Canceled or forfeited
    
    
    (18,725
    )
    
    
    4.96
    
    
    
    14.35
    
    
    
    Outstanding options at June 30, 2009
    
    
    1,743,774
    
    
    $
    4.74
    
    
    $
    13.84
    
    
    5.88 Yrs.Options exercisable at June 30, 2009
    
    
    380,216
    
    
    $
    4.10
    
    
    $
    12.54
    
    
    5.75 Yrs.
  Restricted Stock Grants:
 WeightedAverageNumber
    
    
    Grant Dateof Shares
    
    
    Fair ValueNonvested, December 31, 2008
    
    
    149,296
    
    
    $
    15.30Granted
    
    
    129,990
    
    
    
    12.51Vested
    
    
    (11,941
    )
    
    
    16.51Canceled or forfeited
    
    
    (9,024
    )
    
    
    13.85Nonvested, June 30, 2009
    
    
    258,321
    
    
    $
    13.89
  Note 13. Contingencies and Commitments
 Litigation:
 Note 14. Subsequent Events
   13




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##### 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;
 
    
    NDeXs business revenues are very concentrated, as NDeX currently provides
mortgage default processing services to six law firm customers, and if the number of case
files referred to NDeX by these law firm customers decreases or fails to increase, our
operating results and ability to execute our growth strategy could be adversely affected;
 
    
    the key attorneys at each of NDeXs law firm customers are employed by NDeX,
some of whom, including David A. Trott, the chairman and chief executive officer of NDeX,
also hold an indirect equity interest in NDeX. As a result, these key attorneys may, in
certain circumstances, have interests that differ from or conflict with our interests;
 
    
    government regulation of sub-prime, Alt-A and other residential mortgage
products, including bills introduced in states where we do business, the Hope for
Homeowners Act, the Emergency Economic Stabilization Act and Homeowner Affordability and
Stability Plan, the Streamlined Modification Program, 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 affect on and restrict our mortgage default
processing services and public notice operations;
 
    
    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 risks;
 
    
    growing our business may place a strain on our management and internal
systems, processes and controls;
 
    
    we incurred additional indebtedness to close the acquisition of Barrett-NDEx
and this additional debt consumed a significant portion of our ability to borrow and may
limit our ability to pursue other acquisitions or growth strategies; and
 
    
    the acquisition of Barrett-NDEx may expose us to particular business and
financial risks that include, but are not limited to: (1) failing to integrate the
operations, personnel and internal controls of Barrett-NDEx
into NDeX or to manage Barrett-NDEx or our growth; and (2) facing operational difficulties
in new markets or with new product and service offerings.
  14




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Overview
    15




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##### Table of Contents



Recent Developments
 Regulatory Environment
   Adoption of Stockholder Rights Plan
    Recent Acquisitions
    16




---



##### Table of Contents



Revenues
  
    
    66.1% and 65.9%, respectively, from our Professional Services Division; and
 
    
    33.9% and 34.1%, respectively, from our Business Information Division.
 Professional Services.
   17




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##### Table of Contents



Business Information.
    18




---



##### Table of Contents



Operating Expenses
  
    
    Direct operating expenses, which consist primarily of the cost of compensation and
employee benefits for the processing staff at NDeX 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 packaging and
data service 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-lived intangibles acquired
through business combinations allocated over the estimated useful lives of these
intangibles, with such useful lives ranging from one to thirty years.
  Equity in Earnings of The Detroit Legal News Publishing
  Noncontrolling Interest
   Three Months ended June 30,
    
    
    Six Months ended June 30,(In thousands)
    
    
    (In thousands)2009
    
    
    2008
    
    
    2009
    
    
    2008APC Investments
    
    $
    662
    
    
    $
    437
    
    
    $
    1,148
    
    
    $
    737Feiwell & Hannoy
    
    
    148
    
    
    
    98
    
    
    
    257
    
    
    
    172Sellers of  Barrett-NDEx (as a
group)*
    
    
    525
    
    
    
    
    
    
    
    906
    
    
    
    Total
    
    $
    1,335
    
    
    $
    535
    
    
    $
    2,311
    
    
    $
    909
 *
    
    Members of NDeX since September 2, 2008  19




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##### Table of Contents



Critical Accounting Policies and Estimates
     20




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##### Table of Contents



Goodwill, Other Intangible Assets and Other Long-Lived Assets
   Share-based Compensation Expense
   2009Dividend yield
    
    
    0.0
    %Expected volatility
    
    
    48.0
    %Risk free interest rate
    
    
    2.0
    %Expected term of options
    
    4.75 yearsWeighted average grant date fair value
    
    $
    5.35
    21




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##### Table of Contents



Income Taxes
  Accounts Receivable Allowances
   New Accounting Pronouncements
   22




---



##### Table of Contents



RESULTS OF OPERATIONS
 in thousands, except per share data
 Three Months Ended June 30,% of
    
    
    
    
    
    
    % of2009
    
    
    Revenues
    
    
    2008
    
    
    RevenuesRevenues:Professional Services
    
    $
    44,294
    
    
    
    66.1
    %
    
    $
    18,129
    
    
    
    43.6
    %Business Information
    
    
    22,746
    
    
    
    33.9
    %
    
    
    23,424
    
    
    
    56.4
    %Total revenues
    
    
    67,040
    
    
    
    100.0
    %
    
    
    41,553
    
    
    
    100.0
    %Operating expenses:Professional Services
    
    
    31,462
    
    
    
    46.9
    %
    
    
    13,104
    
    
    
    31.5
    %Business Information
    
    
    17,278
    
    
    
    25.8
    %
    
    
    19,585
    
    
    
    47.1
    %Unallocated corporate operating expenses
    
    
    3,316
    
    
    
    4.9
    %
    
    
    2,139
    
    
    
    5.1
    %Total operating expenses
    
    
    52,056
    
    
    
    77.6
    %
    
    
    34,828
    
    
    
    83.8
    %Equity in earnings of The Detroit Legal News
Publishing, LLC, net of amortization
    
    
    1,333
    
    
    
    2.0
    %
    
    
    1,469
    
    
    
    3.5
    %Operating income
    
    
    16,317
    
    
    
    24.3
    %
    
    
    8,194
    
    
    
    19.7
    %Interest expense, net
    
    
    (1,728
    )
    
    
    (2.6
    )%
    
    
    (1,464
    )
    
    
    (3.5
    )%Non-cash interest income related to interest rate swaps
    
    
    296
    
    
    
    0.4
    %
    
    
    1,177
    
    
    
    2.8
    %Other income, net
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    0.0
    %Income before income taxes
    
    
    14,885
    
    
    
    22.2
    %
    
    
    7,917
    
    
    
    19.1
    %Income tax expense
    
    
    (5,361
    )
    
    
    (8.0
    )%
    
    
    (3,027
    )
    
    
    (7.3
    )%Net income before noncontrolling interest
    
    
    9,524
    
    
    
    14.2
    %
    
    
    4,890
    
    
    
    11.8
    %Less: Net income attributable to the redeemable
noncontrolling interest
    
    
    (1,318
    )
    
    
    (2.0
    )%
    
    
    (493
    )
    
    
    (1.2
    )%Net income attributable to Dolan Media Company
    
    $
    8,206
    
    
    
    12.2
    %
    
    $
    4,397
    
    
    
    10.6
    %Net income
attributable to Dolan Media Company per diluted share
    
    $
    0.27
    
    
    
    
    
    
    $
    0.17Accretion of redeemable noncontrolling interest, net
of tax in conjunction with adoption of SFAS No. 160
    
    
    (0.13
    )
    
    
    
    
    
    
    Net income
attributable to Dolan Media Company common stockholders per diluted share
    
    $
    0.14
    
    
    
    
    
    
    $
    0.17Weighted average diluted shares outstanding
    
    
    29,917
    
    
    
    
    
    
    
    25,307
  23




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##### Table of Contents



Six Months Ended June 30,% of
    
    
    
    
    
    
    % of2009
    
    
    Revenues
    
    
    2008
    
    
    RevenuesRevenues:Professional Services
    
    $
    86,326
    
    
    
    65.9
    %
    
    $
    36,869
    
    
    
    44.4
    %Business Information
    
    
    44,650
    
    
    
    34.1
    %
    
    
    46,196
    
    
    
    55.6
    %Total revenues
    
    
    130,976
    
    
    
    100.0
    %
    
    
    83,065
    
    
    
    100.0
    %Operating expenses:Professional Services
    
    
    62,626
    
    
    
    47.8
    %
    
    
    26,054
    
    
    
    31.4
    %Business Information
    
    
    34,437
    
    
    
    26.3
    %
    
    
    37,937
    
    
    
    45.7
    %Unallocated corporate operating expenses
    
    
    5,884
    
    
    
    4.5
    %
    
    
    4,143
    
    
    
    5.0
    %Total operating expenses
    
    
    102,947
    
    
    
    78.6
    %
    
    
    68,134
    
    
    
    82.0
    %Equity in earnings of The Detroit Legal News
Publishing, LLC, net of amortization
    
    
    2,730
    
    
    
    2.1
    %
    
    
    3,026
    
    
    
    3.6
    %Operating income
    
    
    30,759
    
    
    
    23.5
    %
    
    
    17,957
    
    
    
    21.6
    %Interest expense, net
    
    
    (3,698
    )
    
    
    (2.8
    )%
    
    
    (2,760
    )
    
    
    (3.3
    )%Non-cash interest income related to interest rate swaps
    
    
    530
    
    
    
    0.4
    %
    
    
    22
    
    
    
    0.0
    %Other income, net
    
    
    1,446
    
    
    
    1.1
    %
    
    
    21
    
    
    
    0.0
    %Income before income taxes
    
    
    29,037
    
    
    
    22.2
    %
    
    
    15,240
    
    
    
    18.3
    %Income tax expense
    
    
    (9,678
    )
    
    
    (7.4
    )%
    
    
    (5,786
    )
    
    
    (7.0
    )%Net income before noncontrolling interest
    
    
    19,359
    
    
    
    14.8
    %
    
    
    9,454
    
    
    
    11.4
    %Less: Net income attributable to the redeemable
noncontrolling interest
    
    
    (2,506
    )
    
    
    (1.9
    )%
    
    
    (1,050
    )
    
    
    (1.3
    )%Net income attributable to Dolan Media Company
    
    $
    16,853
    
    
    
    12.9
    %
    
    $
    8,404
    
    
    
    10.1
    %Net income attributable to Dolan Media Company perdiluted share
    
    $
    0.56
    
    
    
    
    
    
    $
    0.33Accretion of redeemable noncontrolling interest, net
of tax in conjunction with adoption of SFAS No. 160
    
    
    (0.24
    )
    
    
    
    
    
    
    Net income
attributable to Dolan Media Company common stockholders per diluted share
    
    $
    0.32
    
    
    
    
    
    
    $
    0.33Weighted average diluted shares outstanding
    
    
    29,896
    
    
    
    
    
    
    
    25,246
  24




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##### Table of Contents



Three Months Ended June 30, 2009
Compared to Three Months Ended June 30, 2008
 Revenues
 Three Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Total revenues
    
    $
    67.0
    
    
    $
    41.6
    
    
    $
    25.5
    
    
    
    61.3
    %
    Operating Expenses
 Three Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Total operating expenses
    
    $
    52.1
    
    
    $
    34.8
    
    
    $
    17.2
    
    
    
    49.5
    %Direct operating expense
    
    
    23.1
    
    
    
    14.6
    
    
    
    8.5
    
    
    
    58.4
    %Selling, general and administrative expenses
    
    
    22.4
    
    
    
    16.7
    
    
    
    5.7
    
    
    
    34.0
    %Depreciation expense
    
    
    2.4
    
    
    
    1.2
    
    
    
    1.2
    
    
    
    97.6
    %Amortization expense
    
    
    4.2
    
    
    
    2.3
    
    
    
    1.9
    
    
    
    79.9
    %
  25




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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 June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Total interest expense, net
    
    $
    1.7
    
    
    $
    1.5
    
    
    $
    0.3
    
    
    
    18.0
    %Interest on bank credit facility
    
    
    1.3
    
    
    
    1.2
    
    
    
    0.1
    
    
    
    10.9
    %Cash interest expense on interest rate swaps
    
    
    0.4
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    73.9
    %Amortization of deferred financing fees
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    Not materialOther
    
    
    
    
    
    
    
    
    
    
    
    
    
    Not material
  26




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##### Table of Contents



Non-Cash Interest Income Related to Interest Rate Swaps
 Three Months Ended June 30,2009
    
    
    2008
    
    
    Decrease($s in millions)Non-cash interest income related to interest rate swaps
    
    $
    0.3
    
    
    $
    1.2
    
    
    $
    (0.9
    )
    
    
    (74.9
    )%
  Income Tax Expense
 Three Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Income tax expense
    
    $
    5.4
    
    
    $
    3.0
    
    
    $
    2.3
    
    
    
    77.1
    %
  Net income attributable to Dolan Media Company
 Three Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Net income attributable to Dolan Media Company
    
    $
    8.2
    
    
    $
    4.4
    
    
    $
    3.8
    
    
    
    86.6
    %
  Professional Services Division Results
 Revenues
 Three Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Total Professional Services Division revenues
    
    $
    44.3
    
    
    $
    18.1
    
    
    $
    26.2
    
    
    
    144.3
    %Mortgage default processing service revenues
    
    
    40.9
    
    
    
    14.8
    
    
    
    26.1
    
    
    
    176.1
    %Appellate services revenues
    
    
    3.4
    
    
    
    3.3
    
    
    
    0.1
    
    
    
    1.8
    %
  27




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##### Table of Contents



Operating Expenses
 Three Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Total operating expenses
    
    $
    31.5
    
    
    $
    13.1
    
    
    $
    18.4
    
    
    
    140.1
    %Direct operating expense
    
    
    15.7
    
    
    
    6.4
    
    
    
    9.2
    
    
    
    143.7
    %Selling, general and
administrative expenses
    
    
    10.8
    
    
    
    4.6
    
    
    
    6.2
    
    
    
    135.5
    %Depreciation expense
    
    
    1.6
    
    
    
    0.5
    
    
    
    1.1
    
    
    
    206.3
    %Amortization expense
    
    
    3.4
    
    
    
    1.6
    
    
    
    1.8
    
    
    
    116.3
    %
    Business Information Division Results
 Revenues
 Three Months Ended June 30,2009
    
    
    2008
    
    
    Increase (decrease)($s in millions)Total Business Information Division Revenues
    
    $
    22.7
    
    
    $
    23.4
    
    
    $
    (0.7
    )
    
    
    (2.9
    )%Display and classified advertising revenues
    
    
    6.8
    
    
    
    8.8
    
    
    
    (1.9
    )
    
    
    (22.1
    )%Public notice revenues
    
    
    12.2
    
    
    
    10.6
    
    
    
    1.6
    
    
    
    15.1
    %Circulation revenues
    
    
    3.3
    
    
    
    3.6
    
    
    
    (0.3
    )
    
    
    (8.1
    )%Other revenues
    
    
    0.4
    
    
    
    0.4
    
    
    
    (0.1
    )
    
    
    (12.0
    )%
  28




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##### Table of Contents



Operating Expenses
 Three Months Ended June 30,2009
    
    
    2008
    
    
    Increase (decrease)($s in millions)Total operating expenses
    
    $
    17.3
    
    
    $
    19.6
    
    
    $
    (2.3
    )
    
    
    (11.8
    )%Direct operating expense
    
    
    7.4
    
    
    
    8.2
    
    
    
    (0.7
    )
    
    
    (8.9
    )%Selling, general and administrative expenses
    
    
    8.5
    
    
    
    10.2
    
    
    
    (1.7
    )
    
    
    (16.6
    )%Depreciation expense
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.1
    
    
    
    15.4
    %Amortization expense
    
    
    0.8
    
    
    
    0.8
    
    
    
    
    
    
    
    5.8
    %
   29




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##### Table of Contents



Six Months Ended June 30, 2009
Compared to Six Months Ended June 30, 2008
 Revenues
 Six Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Total revenues
    
    $
    131.0
    
    
    $
    83.1
    
    
    $
    47.9
    
    
    
    57.7
    %
 The Mecklenburg Times
   Operating Expenses
 Six Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Total operating expenses
    
    $
    102.9
    
    
    $
    68.1
    
    
    $
    34.8
    
    
    
    51.1
    %Direct operating expense
    
    
    46.0
    
    
    
    28.5
    
    
    
    17.5
    
    
    
    61.6
    %Selling, general and administrative expenses
    
    
    43.2
    
    
    
    32.8
    
    
    
    10.3
    
    
    
    31.5
    %Depreciation expense
    
    
    4.5
    
    
    
    2.3
    
    
    
    2.2
    
    
    
    95.3
    %Amortization expense
    
    
    9.3
    
    
    
    4.5
    
    
    
    4.8
    
    
    
    104.9
    %
   30




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##### Table of Contents



Direct Operating Expenses.
 Selling, General and Administrative Expenses.
 Depreciation and Amortization Expense.
 Other Income, Net
 Six Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Other income, net
    
    $
    1.4
    
    
    $
    
    
    
    $
    1.4
    
    
    Not meaningful
  Interest Expense, Net
 Six Months Ended June 30,2009
    
    
    2008
    
    
    Increase (decrease)($s in millions)Total interest expense, net
    
    $
    3.7
    
    
    $
    2.8
    
    
    $
    0.9
    
    
    
    34.0
    %Interest on bank credit facility
    
    
    2.9
    
    
    
    2.3
    
    
    
    0.6
    
    
    
    26.8
    %Cash interest expense on interest rate swaps
    
    
    0.7
    
    
    
    0.3
    
    
    
    0.5
    
    
    
    174.1
    %Amortization of deferred financing fees
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    Not meaningfulOther
    
    
    
    
    
    
    0.1
    
    
    
    (0.2
    )
    
    Not meaningful
  Non-Cash Interest Income Related to Interest Rate Swaps
 Six Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Non-cash interest income related to interest rate swaps
    
    $
    0.5
    
    
    $
    
    
    
    $
    0.5
    
    
    
    
  31




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##### Table of Contents



Income Tax Expense
 Six Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Income tax expense
    
    $
    9.7
    
    
    $
    5.8
    
    
    $
    3.9
    
    
    
    67.3
    %
  Net income attributable to Dolan Media Company
 Six Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Net income attributable to Dolan Media Company
    
    $
    16.9
    
    
    $
    8.4
    
    
    $
    8.4
    
    
    
    100.5
    %
  Professional Services Division Results
 Revenues
 Six Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Total Professional Services Division revenues
    
    $
    86.3
    
    
    $
    36.9
    
    
    $
    49.5
    
    
    
    134.1
    %Mortgage default processing service revenues
    
    
    79.2
    
    
    
    29.9
    
    
    
    49.4
    
    
    
    165.5
    %Appellate services revenues
    
    
    7.1
    
    
    
    7.0
    
    
    
    0.1
    
    
    
    0.9
    %
   32




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##### Table of Contents



Operating Expenses
 Six Months Ended June 30,2009
    
    
    2008
    
    
    Increase($s in millions)Total operating expenses
    
    $
    62.6
    
    
    $
    26.1
    
    
    $
    36.6
    
    
    
    140.4
    %Direct operating expense
    
    
    31.1
    
    
    
    12.7
    
    
    
    18.4
    
    
    
    144.3
    %Selling, general and
administrative expenses
    
    
    20.8
    
    
    
    9.2
    
    
    
    11.6
    
    
    
    125.3
    %Depreciation expense
    
    
    3.0
    
    
    
    1.0
    
    
    
    1.9
    
    
    
    187.7
    %Amortization expense
    
    
    7.7
    
    
    
    3.0
    
    
    
    4.7
    
    
    
    153.6
    %
   %
 Business Information Division Results
 Revenues
 Six Months Ended June 30,2009
    
    
    2008
    
    
    Increase (decrease)($s in millions)Total Business Information Division Revenues
    
    $
    44.7
    
    
    $
    46.2
    
    
    $
    (1.5
    )
    
    
    (3.3
    )%Display and classified advertising revenues
    
    
    13.6
    
    
    
    16.9
    
    
    
    (3.3
    )
    
    
    (19.3
    )%Public notice revenues
    
    
    23.5
    
    
    
    21.2
    
    
    
    2.3
    
    
    
    10.7
    %Circulation revenues
    
    
    6.7
    
    
    
    7.1
    
    
    
    (0.4
    )
    
    
    (5.7
    )%Other revenues
    
    
    0.8
    
    
    
    1.0
    
    
    
    (0.1
    )
    
    
    (14.8
    )%
    33




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##### Table of Contents



Operating Expenses
 Six Months Ended June 30,2009
    
    
    2008
    
    
    Increase (decrease)($s in millions)Total operating expenses
    
    $
    34.4
    
    
    $
    37.9
    
    
    $
    (3.5
    )
    
    
    (9.2
    )%Direct operating expense
    
    
    14.9
    
    
    
    15.7
    
    
    
    (0.8
    )
    
    
    (5.4
    )%Selling, general and administrative expenses
    
    
    16.9
    
    
    
    19.8
    
    
    
    (2.9
    )
    
    
    (14.6
    )%Depreciation expense
    
    
    1.0
    
    
    
    0.9
    
    
    
    0.1
    
    
    
    15.7
    %Amortization expense
    
    
    1.6
    
    
    
    1.5
    
    
    
    0.1
    
    
    
    7.1
    %
  Off Balance Sheet Arrangements
  Liquidity and Capital Resources
  June 30,
    
    
    December 31,2009
    
    
    2008Cash and cash equivalents
    
    $
    16,048
    
    
    $
    2,456Working capital (deficit)
    
    
    11,941
    
    
    
    (12,588
    )Long-term debt, less current portion
    
    
    137,225
    
    
    
    143,450
  34




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##### Table of Contents



Six MonthsEnded June 30,2009
    
    
    2008Net cash provided by operating activities
    
    $
    23,001
    
    
    $
    9,574Net cash used in investing activities:
    
    
    (3,039
    )
    
    
    (22,170
    )Acquisitions and investments
    
    
    (1,426
    )
    
    
    (19,176
    )Capital expenditures
    
    
    (1,613
    )
    
    
    (2,303
    )Net cash (used) provided by financing activities
    
    
    (6,370
    )
    
    
    13,865
 Cash Flows Provided by Operating Activities
     December 31,June 30, 2009
    
    
    2008Allowance for doubtful accounts (in thousands)
    
    $
    964
    
    
    $
    1,398Allowance for doubtful accounts as a percentage of gross accounts receivable
    
    
    1.8
    %
    
    
    3.5
    %Day sales outstanding
    
    
    75.5
    
    
    
    62.6
     35




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##### Table of Contents



Cash Flows Used by Investing Activities
    Cash Flows (Used) Provided by Financing Activities
    Credit Agreement.
  36




---



##### Table of Contents



Future Needs
    
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 .
   37




---



##### 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
  We depend on key personnel and we may not be able to operate and grow our business effectively if
we lose the services of any of our key personnel or are unable to attract qualified personnel in
the future.
   38




---



##### Table of Contents



Item 2. Unregistered Sales of Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
   For
    
    
    WithheldAnton J. Christianson
    
    
    15,923,289
    
    
    
    7,072,102Jacques Massicotte
    
    
    15,925,370
    
    
    
    7,070,021
  For
    
    Against
    
    
    Abstain
    
    
    Broker Non-Votes22,863,151
    
    
    130,973
    
    
    
    1,267
    
    
    
    
 
 Item 5. Other Information
   39




---



##### Table of Contents



Item 6. Exhibits
 ExhibitNo
    
    Title
    
    Method of Filing10.1
    
    Second Amendment to the
Services Agreement between
American Processing Company,
LLC and Wilford & Geske, P.A.
dated June 4, 2009
    
    Filed herewith. Portions of
this exhibit were omitted and
have been filed separately
with the Secretary of the SEC
pursuant to an application
for confidential treatment
under Rule 406 of the
Securities Act.10.2
    
    Amendment No. 5 to the
American Processing Company,
LLC Operating Agreement
    
    Filed herewith.10.3
    
    Second Amended and Restated
Credit Agreement, dated as of
August 8, 2007, among the
Company, its consolidated
subsidiaries, the banks from
time to time party thereto,
LaSalle Bank National
Association, as one of the
banks and as Syndication
Agent, Associated Bank
National Association and Bank
of the West, each as one of
the banks and as
Co-Documentation Agents, and
U.S. Bank National
Association, as one of the
banks, LC bank and Lead
Arranger and as agent for the
banks.
    
    Filed herewith.10.4
    
    First Amendment to Second
Amended and Restated Credit
Agreement with the Company,
its consolidated subsidiaries
and a syndicate of lenders
dated July 28, 2008
    
    Filed herewith.10.5
    
    Separation Agreement and
General Release between the
Company and Mark E. Baumbach
dated July 28, 2009
    
    Incorporated by reference to
our current report on Form
8-K filed with the SEC on
July 28, 2009.10.6
    
    Amended and Restated
Employment Agreement between
the Company and Scott J.
Pollei dated August 1, 2009
    
    Incorporated by reference to
our current report on Form
8-K filed with the SEC on
August 4, 2009.10.7
    
    Employment Agreement between
the Company and Vicki J.
Duncomb dated August 1, 2009
    
    Incorporated by reference to
our current report on Form
8-K filed with the SEC on
August 4, 2009.10.8
    
    Second Amendment to the
Employment Agreement between
the Company and the Mark W.C.
Stodder dated August 1, 2009
    
    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
  40




---



##### Table of Contents



SIGNATURES
  DOLAN MEDIA COMPANYDated: August 7, 2009By:
    /s/ James P. DolanJames P. DolanChairman, Chief Executive Officer and President

(Principal Executive Officer)Dated: August 7, 2009By:
    /s/ Vicki J. DuncombVicki J. DuncombVice President and Chief Financial Officer

(Principal Financial Officer and Principal
Accounting Officer)  41




---



##### Table of Contents



Exhibit Index
 ExhibitNo
    
    Title
    
    Method of Filing10.1
    
    Second Amendment to the Services Agreement
between American Processing Company, LLC
and Wilford & Geske, P.A. dated June 4,
2009
    
    Filed herewith.
Portions of this
exhibit were
omitted and have
been filed
separately with the
Secretary of the
SEC pursuant to an
application for
confidential
treatment under
Rule 406 of the
Securities Act10.2
    
    Amendment No. 5 to the American Processing
Company, LLC Operating Agreement
    
    Filed herewith.10.3
    
    Second Amended and Restated Credit
Agreement, dated as of August 8, 2007,
among the Company, its consolidated
subsidiaries, the banks from time to time
party thereto, LaSalle Bank National
Association, as one of the banks and as
Syndication Agent, Associated Bank
National Association and Bank of the West,
each as one of the banks and as
Co-Documentation Agents, and U.S. Bank
National Association, as one of the banks,
LC bank and Lead Arranger and as agent for
the banks.
    
    Filed herewith.10.4
    
    First Amendment to Second Amended and
Restated Credit Agreement with the
Company, its consolidated subsidiaries and
a syndicate of lenders dated July 28, 2008
    
    Filed herewith.10.8
    
    Second Amendment to Employment Agreement
between the Company and Mark W.C. Stodder
dated August 1, 2007
    
    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.
  42