##### 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, 2007
 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
  Delaware
    
    43-2004527(State or other jurisdiction 
of incorporation or organization)
    
    (IRS Employer Identification No.)
 706 Second Avenue South, Suite 1200, Minneapolis, Minnesota 55402
 (612) 317-9420
 o þ
  o o þ
 o þ




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##### 



DOLAN MEDIA COMPANY
QUARTER ENDED JUNE 30, 2007
 INDEX
 PAGEPART I  FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial StatementsBalance Sheets as of June 30, 2007 (Unaudited) and December 31, 2006
    
    
    2Statements of Operations for the three and six months ended June 30, 2007
and 2006 (Unaudited)
    
    
    3Statements of Cash Flows for the six months ended June 30, 2007
and 2006 (Unaudited)
    
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    50Item 4 and 4T. Controls and Procedures
    
    
    50PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    51Item 1A. Risk Factors
    
    
    51Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    51Item 3. Defaults Upon Senior Securities
    
    
    54Item 4. Submission of Matters to a Vote of Security Holders
    
    
    55Item 5. Other Information
    
    
    55Item 6. Exhibits
    
    
    55SIGNATURES
    
    
    56INDEX TO EXHIBITS
    
    
    57Amended and Restated Certificate of IncorporationSecond Amended and Restated Bylaws of the CompanyCertification of Chief Executive OfficerCertification of Chief Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 Dolan Media Company
 
 Condensed Consolidated Balance Sheets
 (In thousands, except share data)
 June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    1,623
    
    
    
    786Accounts receivable (net of allowances for doubtful accounts of $999,
and $1,014 as of June 30, 2007 and December 31, 2006, respectively)
    
    
    18,100
    
    
    
    15,679Prepaid expenses and other current assets
    
    
    1,914
    
    
    
    2,187Deferred income taxes
    
    
    152
    
    
    
    152Total current assets
    
    
    21,789
    
    
    
    18,804Investments
    
    
    17,511
    
    
    
    18,065Property and equipment, net
    
    
    11,331
    
    
    
    8,230Finite-life intangible assets, net
    
    
    79,401
    
    
    
    65,881Goodwill
    
    
    79,063
    
    
    
    72,690Other assets
    
    
    4,210
    
    
    
    2,449Total assets
    
    $
    213,305
    
    
    $
    186,119LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilitiesCurrent portion of long-term debt
    
    $
    9,812
    
    
    $
    7,031Accounts payable
    
    
    7,023
    
    
    
    4,438Accrued compensation
    
    
    3,049
    
    
    
    3,526Accrued liabilities
    
    
    2,779
    
    
    
    1,448Due to sellers of acquired businesses
    
    
    
    
    
    
    600Deferred revenue
    
    
    10,988
    
    
    
    10,752Mandatorily redeemable preferred stock
    
    
    164,655
    
    
    
    Total current liabilities
    
    
    198,306
    
    
    
    27,795Long-term debt, less current portion
    
    
    83,350
    
    
    
    72,760Deferred income taxes
    
    
    4,034
    
    
    
    4,034Deferred revenue and other liabilities
    
    
    1,832
    
    
    
    1,829Series C mandatorily redeemable, convertible, participating preferred stock, $0.001 par value; authorized, actual: 40,000 shares; issued and outstanding, actual: 38,132 shares; liquidation preference of $64,250
    
    
    
    
    
    
    73,292Series B mandatorily redeemable, nonconvertible preferred stock, $0.001 par value; authorized, actual: 40,000 shares issued and outstanding, actual: 0 shares; liquidation preference of $0
    
    
    
    
    
    
    Series A mandatorily redeemable, nonconvertible preferred stock, $.001 par value; authorized, actual: 550,000 shares; issued and outstanding, actual: 287,000 shares; liquidation preference of $35,549
    
    
    
    
    
    
    35,037Total liabilities
    
    
    287,522
    
    
    
    214,747Minority interest in consolidated subsidiary
    
    
    4,281
    
    
    
    247Commitments and contingencies (Notes 4, 8 and 13)Stockholders deficitCommon stock, $0.001 par value; authorized: 70,000,000 shares; issued and outstanding: 9,324,000 as of June 30, 2007 and December 31, 2006, respectively (Note 14)*
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    324
    
    
    
    303Accumulated deficit
    
    
    (78,823
    )
    
    
    (29,179
    )Total stockholders deficit
    
    
    (78,498
    )
    
    
    (28,875
    )Total liabilities and stockholders deficit
    
    $
    213,305
    
    
    $
    186,119
 
 *
    
    Adjusted to reflect a 9 for 1 stock split.  2




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##### Table of Contents



Dolan Media Company
 
 Unaudited Condensed Consolidated Statement of Operations
 (In thousands, except share data)
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006RevenuesBusiness Information
    
    $
    21,588
    
    
    $
    18,741
    
    
    $
    41,068
    
    
    $
    36,655Professional Services
    
    
    15,467
    
    
    
    9,163
    
    
    
    31,682
    
    
    
    13,964Total revenues
    
    
    37,055
    
    
    
    27,904
    
    
    
    72,750
    
    
    
    50,619Operating expensesDirect operating: Business Information
    
    
    6,999
    
    
    
    6,612
    
    
    
    13,777
    
    
    
    13,140Direct operating: Professional Services
    
    
    5,005
    
    
    
    3,225
    
    
    
    10,405
    
    
    
    4,582Selling, general and administrative
    
    
    15,989
    
    
    
    11,032
    
    
    
    29,583
    
    
    
    20,929Amortization
    
    
    1,871
    
    
    
    1,315
    
    
    
    3,714
    
    
    
    2,286Depreciation
    
    
    889
    
    
    
    633
    
    
    
    1,645
    
    
    
    1,094Total operating expenses
    
    
    30,753
    
    
    
    22,817
    
    
    
    59,124
    
    
    
    42,031Equity in earnings of Detroit Legal News Publishing, LLC, net of amortization of $358 and $347 for the three months ended June 30, 2007 and 2006, respectively, and $718 and $809 for the six months ended June 30, 2007 and 2006, respectively
    
    
    1,330
    
    
    
    530
    
    
    
    2,245
    
    
    
    991Operating income
    
    
    7,632
    
    
    
    5,617
    
    
    
    15,871
    
    
    
    9,579Non-operating expenseNon-cash interest expense related to redeemable preferred stock
    
    
    (26,318
    )
    
    
    (8,816
    )
    
    
    (56,260
    )
    
    
    (13,451
    )Interest expense
    
    
    (1,393
    )
    
    
    (988
    )
    
    
    (3,428
    )
    
    
    (2,464
    )Other expense
    
    
    (5
    )
    
    
    (10
    )
    
    
    (13
    )
    
    
    (20
    )Total non-operating expense
    
    
    (27,716
    )
    
    
    (9,814
    )
    
    
    (59,701
    )
    
    
    (15,935
    )Loss from operations before income taxes and minority interest
    
    
    (20,084
    )
    
    
    (4,197
    )
    
    
    (43,830
    )
    
    
    (6,356
    )Income tax expense
    
    
    (967
    )
    
    
    (3,743
    )
    
    
    (4,107
    )
    
    
    (2,508
    )Minority interest in net income of subsidiary
    
    
    (807
    )
    
    
    (463
    )
    
    
    (1,707
    )
    
    
    (589
    )Net loss
    
    $
    (21,858
    )
    
    $
    (8,403
    )
    
    $
    (49,644
    )
    
    $
    (9,453
    )Net loss per share (Note 14):*Basic
    
    $
    (2.34
    )
    
    $
    (0.90
    )
    
    $
    (5.32
    )
    
    $
    (1.03
    )Diluted
    
    $
    (2.34
    )
    
    $
    (0.90
    )
    
    $
    (5.32
    )
    
    $
    (1.03
    )Weighted average shares outstanding (Note 14):*Basic
    
    
    9,324,000
    
    
    
    9,351,297
    
    
    
    9,324,000
    
    
    
    9,176,618Diluted
    
    
    9,324,000
    
    
    
    9,351,297
    
    
    
    9,324,000
    
    
    
    9,176,618
 
 *
    
    Adjusted to reflect a 9 for 1 stock split. 3




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Dolan Media Company
 
 Unaudited Condensed Consolidated Statements of Cash Flows
 (In thousands)
 Six Months EndedJune 30,2007
    
    
    2006Cash flows from operating activitiesNet loss
    
    $
    (49,644
    )
    
    $
    (9,453
    )Distributions received from Detroit Legal News Publishing, LLC
    
    
    2,800
    
    
    
    2,100Minority interest distributions paid
    
    
    (1,102
    )
    
    
    (303
    )Non-cash operating activities:Amortization
    
    
    3,714
    
    
    
    2,286Depreciation
    
    
    1,645
    
    
    
    1,094Stock-based compensation expense
    
    
    21
    
    
    
    Deferred income taxes
    
    
    
    
    
    
    112Change in value of interest rate swap and accretion of interest on
note payable
    
    
    (207
    )
    
    
    (614
    )Equity in earnings of Detroit Legal News Publishing, LLC
    
    
    (2,245
    )
    
    
    (991
    )Minority interest
    
    
    1,707
    
    
    
    589Non-cash interest related to redeemable preferred stock
    
    
    56,327
    
    
    
    13,513Amortization of debt issuance cost
    
    
    79
    
    
    
    574Changes in operating assets and liabilities, net of effects
of business acquisitions:Accounts receivable
    
    
    (2,422
    )
    
    
    603Prepaid expenses and other current assets
    
    
    (324
    )
    
    
    (116
    )Other assets
    
    
    (996
    )
    
    
    (128
    )Accounts payable and accrued liabilities
    
    
    4,075
    
    
    
    684Deferred revenue
    
    
    (739
    )
    
    
    (278
    )Net cash provided by operating activities
    
    
    12,689
    
    
    
    9,672Cash flows from investing activitiesAcquisitions and investments
    
    
    (17,335
    )
    
    
    (42,262
    )Capital expenditures
    
    
    (4,210
    )
    
    
    (809
    )Proceeds on note receivable from sale of discontinued operations
    
    
    
    
    
    
    20Net cash used in investing activities
    
    
    (21,545
    )
    
    
    (43,051
    )Cash flows from financing activitiesNet borrowings (payments) on senior revolving note
    
    
    4,000
    
    
    
    (13,500
    )Proceeds from borrowings on senior term notes
    
    
    10,000
    
    
    
    55,600Payments on senior long-term debt
    
    
    (3,700
    )
    
    
    (2,250
    )Payments of offering costs
    
    
    (537
    )
    
    
    Payments of deferred financing costs
    
    
    (42
    )
    
    
    (719
    )Other
    
    
    (28
    )
    
    
    (35
    )Net cash provided by financing activities
    
    
    9,693
    
    
    
    39,096Net increase in cash and cash equivalents
    
    
    837
    
    
    
    5,717Cash and cash equivalents at beginning of year
    
    
    786
    
    
    
    2,348Cash and cash equivalents at end of six month period
    
    $
    1,623
    
    
    $
    8,065
 4




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##### Table of Contents



Dolan Media Company
 
 Notes to Unaudited Condensed Consolidated Financial Statements
 Note 1. Significant Accounting Policies
 Basis of Presentation
    Use of Estimates in the Preparation of Financial Statements
 Recently Issued Accounting Standards The
Fair Value Option for Financial Assets and Financial Liabilities Accounting for Derivative Instruments and Hedging Activities
 Fair Value Measurements
 5




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Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
  Recently Adopted Accounting Pronouncement Accounting for Uncertainty in Income Taxes  an interpretation of FASB
Statement No. 109
    Note 2. Accounts Receivable
  in thousands
 Provision forBeginning
    
    
    
    
    
    Doubtful
    
    (Written off
    
    EndingBalance
    
    Acquisitions
    
    Accounts
    
    Recoveries)
    
    BalanceFor the six
months ended June 30, 2007
    
    $
    1,014
    
    
    $
    
    
    
    $
    139
    
    
    $
    (154
    )
    
    $
    999For the six
months ended June 30, 2006
    
    $
    1,175
    
    
    $
    
    
    
    $
    (42
    )
    
    $
    58
    
    
    $
    1,191
 Note 3. Basic and Diluted Loss Per Share
  6




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Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
   Note 4. Acquisitions
 Business Combinations
 2007 Acquisitions
 Feiwell & Hannoy P.C.
   7




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Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
  Venture Publications Inc.
 (in thousands)
 Feiwell &
    
    
    VentureHannoy
    
    
    Publications
    
    
    TotalAssets acquired and liabilities assumed at their fair market values:Property and equipment
    
    $
    565
    
    
    $
    
    
    
    $
    565APC long-term service contract
    
    
    15,300
    
    
    
    
    
    
    
    15,300Other finite-life intangible assets
    
    
    
    
    
    
    1,530
    
    
    
    1,530Goodwill
    
    
    5,044
    
    
    
    1,329
    
    
    
    6,373Operating liabilities assumed
    
    
    (934
    )
    
    
    
    
    
    
    (934
    )Cash consideration paid,. including direct expenses
    
    $
    19,975
    
    
    $
    2,859
    
    
    $
    22,834
 Pro Forma Information: In thousands, except per share data
 Pro FormaThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Total revenues
    
    $
    37,055
    
    
    $
    28,716
    
    
    $
    73,721
    
    
    $
    56,923Net Loss
    
    
    (21,858
    )
    
    
    (8,388
    )
    
    
    (49,609
    )
    
    
    (9,477
    )Net loss per share:Basic and diluted
    
    $
    (2.34
    )
    
    $
    (0.90
    )
    
    $
    (5.32
    )
    
    $
    (1.03
    )Pro forma weighted average shares outstanding, basic and diluted
    
    
    9,324
    
    
    
    9,351
    
    
    
    9,324
    
    
    
    9,177
 8




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##### Table of Contents



Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 5. Investments
 (in thousands)
 Accounting
    
    
    Percentage
    
    
    June 30,
    
    
    December 31,Method
    
    
    Ownership
    
    
    2007
    
    
    2006Detroit Legal News Publishing, LLC
    
    Equity
    
    
    35
    
    
    $
    16,611
    
    
    $
    17,165GovDelivery, Inc.
    
    Cost
    
    
    15
    
    
    
    900
    
    
    
    900$
    17,511
    
    
    $
    18,065
  in thousands
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    10,019
    
    
    $
    6,361
    
    
    $
    19,089
    
    
    $
    13,153Expenses
    
    
    5,179
    
    
    
    3,873
    
    
    
    10,611
    
    
    
    8,043Operating income
    
    
    4,840
    
    
    
    2,488
    
    
    
    8,478
    
    
    
    5,110Net income
    
    $
    4,823
    
    
    $
    2,504
    
    
    $
    8,465
    
    
    $
    5,141Companys 35% share of net income
    
    $
    1,688
    
    
    $
    877
    
    
    $
    2,963
    
    
    $
    1,800Less amortization of intangible assets
    
    
    358
    
    
    
    347
    
    
    
    718
    
    
    
    809Equity in earnings of DLNP
    
    $
    1,330
    
    
    $
    530
    
    
    $
    2,245
    
    
    $
    991
 Note 6. Goodwill and Finite-life Intangible Assets
 Goodwill
 9




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Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
 in thousands
 Business
    
    
    ProfessionalInformation
    
    
    Services
    
    
    TotalBalance as of December 31, 2006
    
    $
    57,322
    
    
    $
    15,368
    
    
    $
    72,690Feiwell & Hannoy P.C
    
    
    
    
    
    
    5,044
    
    
    
    5,044Venture Publications Inc.
    
    
    1,329
    
    
    
    
    
    
    
    1,329Balance as of June 30, 2007
    
    $
    58,651
    
    
    $
    20,412
    
    
    $
    79,063
 Finite-Life Intangible Assets in thousands except amortization
periods
 Amortization
    
    
    As of June 30, 2007
    
    
    As of December 31, 2006Period
    
    
    Gross
    
    
    Accumulated
    
    
    
    
    
    
    Gross
    
    
    Accumulated(Years)
    
    
    Amount
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    
    Amortization
    
    
    NetMastheads and trade names
    
    
    30
    
    
    $
    11,298
    
    
    $
    (1,213
    )
    
    $
    10,085
    
    
    $
    10,498
    
    
    $
    (1,031
    )
    
    $
    9,467Advertising customer lists
    
    
    5-11
    
    
    
    13,441
    
    
    
    (4,107
    )
    
    
    9,334
    
    
    
    12,811
    
    
    
    (3,484
    )
    
    
    9,327Subscriber customer lists
    
    
    7-14
    
    
    
    7,311
    
    
    
    (1,675
    )
    
    
    5,636
    
    
    
    7,211
    
    
    
    (1,395
    )
    
    
    5,816Professional services customer lists
    
    
    7
    
    
    
    6,982
    
    
    
    (2,175
    )
    
    
    4,807
    
    
    
    6,982
    
    
    
    (1,676
    )
    
    
    5,306Noncompete agreements
    
    
    5
    
    
    
    750
    
    
    
    (107
    )
    
    
    643
    
    
    
    750
    
    
    
    (32
    )
    
    
    718APC long-term service contracts
    
    
    15
    
    
    
    46,300
    
    
    
    (3,266
    )
    
    
    43,034
    
    
    
    31,000
    
    
    
    (1,722
    )
    
    
    29,278Customer relationship
    
    
    14
    
    
    
    3,283
    
    
    
    (153
    )
    
    
    3,130
    
    
    
    3,283
    
    
    
    (38
    )
    
    
    3,245Sunwel contract
    
    
    7
    
    
    
    2,821
    
    
    
    (291
    )
    
    
    2,530
    
    
    
    2,821
    
    
    
    (97
    )
    
    
    2,724Exhibitor customer list
    
    
    1
    
    
    
    404
    
    
    
    (202
    )
    
    
    202
    
    
    
    
    
    
    
    
    
    
    
    Total intangibles
    
    
    
    
    
    $
    92,590
    
    
    $
    (13,189
    )
    
    $
    79,401
    
    
    $
    75,356
    
    
    $
    (9,475
    )
    
    $
    65,881
  in
thousands
 For the year ending December 31,2007
    
    
    7,4432008
    
    
    7,0762009
    
    
    7,0762010
    
    
    7,0232011
    
    
    6,965Thereafter
    
    
    43,818Total
    
    $
    79,401
 10




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Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 7. Long-Term Debt, Including Subsequent Events
 (in thousands):
 June 30,
    
    
    December 31,2007
    
    
    2006(unaudited)Senior secured debt (see below):Senior variable-rate term note, payable in quarterly installments with a balloon payment due December 2012, replaced by new term debt subsequent to June 30, 2007
    
    $
    86,050
    
    
    $
    79,750Senior variable-rate revolving note
    
    
    4,000
    
    
    
    Total senior secured debt
    
    
    90,050
    
    
    
    79,750Unsecured note payable
    
    
    3,099
    
    
    
    Capital lease obligations
    
    
    13
    
    
    
    4193,162
    
    
    
    79,791Less current portion
    
    
    9,812
    
    
    
    7,031Long-term debt, less current portion
    
    $
    83,350
    
    
    $
    72,760
     11




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Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements












Note 8. Common and Preferred Stock


12




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Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements










13



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##### Table of Contents



Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
  Note 9. Income Taxes
  Accounting for Uncertainty
in Income Taxes  an Interpretation of FASB Statement No. 109
 Note 10. Major Customers and Related Parties
   Note 11. Reportable Segments
   14




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Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements






in
thousands


Three Months Ended June 30, 2007Business
    
    
    ProfessionalInformation
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    21,588
    
    
    $
    15,467
    
    
    $
    
    
    
    $
    37,055Operating expenses
    
    
    15,770
    
    
    
    9,597
    
    
    
    2,626
    
    
    
    27,993Amortization and depreciation
    
    
    1,098
    
    
    
    1,544
    
    
    
    118
    
    
    
    2,760Equity in earnings of DLNP, LLC
    
    
    1,330
    
    
    
    
    
    
    
    
    
    
    
    1,330Operating income (loss)
    
    $
    6,050
    
    
    $
    4,326
    
    
    $
    (2,744
    )
    
    $
    7,632


Three Months Ended June 30, 2006Business
    
    
    ProfessionalInformation
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    18,741
    
    
    $
    9,163
    
    
    $
    
    
    
    $
    27,904Operating expenses
    
    
    13,888
    
    
    
    5,867
    
    
    
    1,114
    
    
    
    20,869Amortization and depreciation
    
    
    897
    
    
    
    989
    
    
    
    62
    
    
    
    1,948Equity in earnings of DLNP, LLC
    
    
    530
    
    
    
    
    
    
    
    
    
    
    
    530Operating income (loss)
    
    $
    4,486
    
    
    $
    2,307
    
    
    $
    (1,176
    )
    
    $
    5,617


Six Months Ended June 30, 2007Business
    
    
    ProfessionalInformation
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    41,068
    
    
    $
    31,682
    
    
    $
    
    
    
    $
    72,750Operating expenses
    
    
    30,631
    
    
    
    19,284
    
    
    
    3,850
    
    
    
    53,765Amortization and depreciation
    
    
    2,140
    
    
    
    2,989
    
    
    
    230
    
    
    
    5,359Equity in earnings of DLNP, LLC
    
    
    2,245
    
    
    
    
    
    
    
    
    
    
    
    2,245Operating income (loss)
    
    $
    10,542
    
    
    $
    9,409
    
    
    $
    (4,080
    )
    
    $
    15,871


15



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Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
 Six Months Ended June 30, 2006Business
    
    
    ProfessionalInformation
    
    
    Services
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    36,655
    
    
    $
    13,964
    
    
    $
    
    
    
    $
    50,619Operating expenses
    
    
    27,512
    
    
    
    8,956
    
    
    
    2,183
    
    
    
    38,651Amortization and depreciation
    
    
    1,785
    
    
    
    1,443
    
    
    
    152
    
    
    
    3,380Equity in earnings of DLNP, LLC
    
    
    991
    
    
    
    
    
    
    
    
    
    
    
    991Operating income (loss)
    
    $
    8,349
    
    
    $
    3,565
    
    
    $
    (2,335
    )
    
    $
    9,579
 Note 12. Share-Based Compensation
     16




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##### Table of Contents



Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
  Dividend yield
    
    
    0.0
    %Expected volatility
    
    
    55
    %Risk free interest rate
    
    
    4.75
    %Expected life of options
    
    7 YearsWeighted-average fair value of options granted
    
    
    $1.35
  Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    Weighted
    
    
    AverageGrant
    
    
    Average
    
    
    RemainingNumber of
    
    
    Fair
    
    
    Exercise
    
    
    ContractualShares
    
    
    Value
    
    
    Price
    
    
    LifeOutstanding options at December 31, 2006
    
    
    126,000
    
    
    $
    1.35
    
    
    $
    2.22
    
    
    9.79 Yrs.Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Canceled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding options at June 30, 2007
    
    
    126,000
    
    
    $
    1.35
    
    
    $
    2.22
    
    
    9.29 Yrs.Options exercisable at June 30, 2007
    
    
    31,500
    
    
    $
    1.35
    
    
    $
    2.22
    
    
    9.29 Yrs.
   Number
    
    
    Grantof
    
    
    FairShares
    
    
    ValueNonvested stock options at December 31, 2006
    
    
    94,500
    
    
    $
    1.35Granted
    
    
    
    
    
    
    Canceled
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Nonvested stock options at June 30, 2007
    
    
    94,500
    
    
    $
    1.35
  Note 13. Contingencies and Commitments
 Litigation
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Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
 Employment Agreements
  Change of Control Plan
  18




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Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
 Note 14. Subsequent Events
 Authorized Shares and Stock Split:
 Reduction in Preferred Stock Dividend Rate:
 Stock-Based Compensation:
 Initial Public Offering, Conversion and Redemption:
 19




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##### Table of Contents



Dolan Media Company
Notes to Unaudited Condensed Consolidated Financial Statements
 in
thousands):
 OfferingHistorical
    
    
    Adjustments
    
    
    Pro FormaTotal current assets
    
    $
    21,789
    
    
    $
    7,609
    
    
    $
    29,398Total assets
    
    
    213,305
    
    
    
    7,609
    
    
    
    220,914Total current liabilities
    
    
    33,651
    
    
    
    
    
    
    
    33,651Long-term debt
    
    
    83,350
    
    
    
    (30,000
    )
    
    
    53,350Other liabilities
    
    
    5,866
    
    
    
    
    
    
    
    5,866Series C mandatorily redeemable, convertible participating preferred stock
    
    
    128,593
    
    
    
    (128,593
    )
    
    
    Series B mandatorily redeemable, nonconvertible preferred stock
    
    
    
    
    
    
    
    
    
    
    Series A mandatorily redeemable, nonconvertible preferred stock
    
    
    36,062
    
    
    
    (36,062
    )
    
    
    Total liabilities
    
    
    287,522
    
    
    
    (194,655
    )
    
    
    92,867Total stockholders equity
    
    
    (78,498
    )
    
    
    202,764
    
    
    
    124,266Total liabilities and stockholders equity
    
    $
    213,305
    
    
    $
    7,609
    
    
    $
    220,914
  Credit Agreement:
 20




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##### Table of Contents



DOLAN MEDIA COMPANY
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
  
    
    our Business Information Division depends on the economies and the demographics of the legal, financial and real estate sectors in the markets we serve;
    
    a decrease in paid subscriptions to our print publications, which occurred between June 2006 and 2007, primarily due to the termination of discounted subscription programs, could adversely affect our circulation revenues to the extent we are not able to continue increasing our subscription rates and our advertising and display revenues to the extent advertisers begin placing fewer advertisements with us due to decreased readership;
    
    APCs business revenues are very concentrated, as APC currently provides mortgage default processing services to only two customers, Trott & Trott and Feiwell & Hannoy;
    
    the key attorneys at each of APCs two law firm customers are employed by, and hold an indirect equity interest in, APC, and therefore may, in certain circumstances, have interests that differ from or conflict with our interests;
    
    we are dependent on our senior management team, especially James P. Dolan, our founder, Chairman, President and Chief Executive Officer; and
    
    growing our business may place a strain on our management and internal systems, processes and controls.
   21




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##### Table of Contents



Overview
  Recent Developments
     22




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##### Table of Contents



Recent Acquisitions
        23




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##### Table of Contents



Revenues
  
    
    58.3% and 56.4%, respectively, from our Business Information Division; and
    
    41.7% and 43.6%, respectively, from our Professional Services Division.
 Business Information.
   Professional Services.
 24




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##### Table of Contents



Operating Expenses
  
    
    Direct operating expenses, which consist primarily of the cost of compensation and employee benefits for our editorial personnel within our Business Information Division and the processing
 25




---



##### Table of Contents



staff at APC and Counsel Press, and production and distribution expenses, such as compensation and employee benefits for personnel involved in the production and distribution of our business information products, the cost of newsprint and the cost of delivery of our business information products;
    
    Selling, general and administrative expenses, which consist primarily of the cost of compensation and employee benefits for our sales, human resources, accounting and information technology personnel, publishers and other members of management, rent, other sales- and marketing-related expenses and other office-related payments;
    
    Depreciation expense, which represents the cost of fixed assets and software allocated over the estimated useful lives of these assets, with such useful lives ranging from one to 30 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 30 years.
  Equity in Earnings of Detroit Legal News Publishing
   Minority Interest in Net Income of Subsidiary
  26




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##### Table of Contents



Critical Accounting Policies
    Purchase Accounting
 Business Combinations
 Valuation of Our Company Equity Securities
   27




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##### Table of Contents




    
    a long-term revenue growth of 3.5%
    
    EBITDA would grow by 7% in 2006  2012 and 5% thereafter and expected EBITDA margins would range from 23  26%
    
    capital expenditures of approximately 2% of revenues
    
    a discount rate, based on our estimated capital structure and the cost of our equity and debt, of 13%
    
    a terminal multiple, based on our anticipated growth prospects and private and public market valuations of comparable companies, of 7.1
    
    a non-marketability discount of 15%
    
    cost growth assumptions (we assumed direct operating expenses and selling, general and administrative expenses would grow 3% per year)
  28




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##### Table of Contents



Goodwill, Other Intangible Assets and Other Long-Lived Assets
 Goodwill and Other Intangible Assets, Accounting for the Impairment or Disposal of Long-Lived Assets,
  29




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##### Table of Contents



Share-Based Compensation Expense
 Share-Based Payment
   30




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##### Table of Contents



Dividend yield
    
    
    0.0
    %Expected volatility
    
    
    55
    %Risk free interest rate
    
    
    4.75
    %Expected life of options
    
    
    7 yearsWeighted average fair value of options granted
    
    
    $1.35
   Dividend yield
    
    
    0.0
    %Expected volatility
    
    
    28
    %Risk free interest rate
    
    
    4.90
    %Expected life of options
    
    
    4.75 yearsWeighted-average fair value of options granted
    
    
    $4.82
    31




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##### Table of Contents



Income Taxes
 Accounting for Income Taxes
  Accounts Receivable Allowances
  32




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##### Table of Contents



New Accounting Pronouncements
   Recently Adopted Accounting Pronouncement
 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109
    33




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##### Table of Contents



Non-GAAP Financial Measures
  Adjusted EBITDA
 before
 
    
    non-cash interest expense related to redeemable preferred stock;
    
    net interest expense;
    
    income tax expense;
    
    depreciation and amortization;
    
    non-cash compensation expense; and
    
    minority interest in net income of subsidiary;
 after
 
    
    minority interest distributions paid.
 Managements Use of Adjusted EBITDA
   34




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##### Table of Contents



(in thousands):
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net loss
    
    $
    (21,858
    )
    
    $
    (8,403
    )
    
    $
    (49,644
    )
    
    $
    (9,453
    )Non-cash compensation expense
    
    
    11
    
    
    
    
    
    
    
    21
    
    
    
    Non-cash interest expense related
to redeemable preferred stock
    
    
    26,318
    
    
    
    8,816
    
    
    
    56,260
    
    
    
    13,451Interest expense, net
    
    
    1,393
    
    
    
    988
    
    
    
    3,428
    
    
    
    2,464Income tax expense
    
    
    967
    
    
    
    3,743
    
    
    
    4,107
    
    
    
    2,508Amortization of intangibles
    
    
    1,871
    
    
    
    1,315
    
    
    
    3,714
    
    
    
    2,286Depreciation expense
    
    
    889
    
    
    
    633
    
    
    
    1,645
    
    
    
    1,094Amortization of DLNP intangible
    
    
    358
    
    
    
    347
    
    
    
    718
    
    
    
    809Minority interest in net income
of subsidiary
    
    
    807
    
    
    
    463
    
    
    
    1,707
    
    
    
    589Cash distributions to minority interest
    
    
    (636
    )
    
    
    (303
    )
    
    
    (1,102
    )
    
    
    (303
    )Adjusted EBITDA
    
    $
    10,120
    
    
    $
    7,599
    
    
    $
    20,854
    
    
    $
    13,445
 35




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##### Table of Contents



RESULTS OF OPERATIONS
 (in thousands)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of2007
    
    
    Revenues
    
    
    2006
    
    
    Revenues
    
    
    2007
    
    
    Revenues
    
    
    2006
    
    
    RevenuesRevenues:Business Information
    
    $
    21,588
    
    
    
    58.3
    %
    
    $
    18,741
    
    
    
    67.2
    %
    
    $
    41,068
    
    
    
    56.4
    %
    
    $
    36,655
    
    
    
    72.4
    %Professional Services
    
    
    15,467
    
    
    
    41.7
    %
    
    
    9,163
    
    
    
    32.8
    %
    
    
    31,682
    
    
    
    43.6
    %
    
    
    13,964
    
    
    
    27.6
    %Total revenues
    
    
    37,055
    
    
    
    100.0
    %
    
    
    27,904
    
    
    
    100.0
    %
    
    
    72,750
    
    
    
    100.0
    %
    
    
    50,619
    
    
    
    100.0
    %Operating expenses:Business Information
    
    
    16,868
    
    
    
    45.5
    %
    
    
    14,785
    
    
    
    53.0
    %
    
    
    32,771
    
    
    
    45.1
    %
    
    
    29,297
    
    
    
    57.9
    %Professional Services
    
    
    11,141
    
    
    
    30.1
    %
    
    
    6,856
    
    
    
    24.6
    %
    
    
    22,273
    
    
    
    30.6
    %
    
    
    10,399
    
    
    
    20.5
    %Unallocated corporate operating expenses
    
    
    2,744
    
    
    
    7.4
    %
    
    
    1,176
    
    
    
    4.2
    %
    
    
    4,080
    
    
    
    5.6
    %
    
    
    2,335
    
    
    
    4.6
    %Total operating expenses
    
    
    30,753
    
    
    
    83.0
    %
    
    
    22,817
    
    
    
    81.8
    %
    
    
    59,124
    
    
    
    81.3
    %
    
    
    42,031
    
    
    
    83.0
    %Equity in earnings of Detroit Legal News Publishing, LLC, net of amortization
    
    
    1,330
    
    
    
    3.6
    %
    
    
    530
    
    
    
    1.9
    %
    
    
    2,245
    
    
    
    3.1
    %
    
    
    991
    
    
    
    2.0
    %Operating income
    
    
    7,632
    
    
    
    20.6
    %
    
    
    5,617
    
    
    
    20.1
    %
    
    
    15,871
    
    
    
    21.8
    %
    
    
    9,579
    
    
    
    18.9
    %Non-cash interest expense related to redeemable preferred stock (1)
    
    
    (26,318
    )
    
    
    (71.0
    )%
    
    
    (8,816
    )
    
    
    (31.6
    )%
    
    
    (56,260
    )
    
    
    (77.3
    )%
    
    
    (13,451
    )
    
    
    (26.5
    )%Interest expense, net
    
    
    (1,393
    )
    
    
    (3.8
    )%
    
    
    (988
    )
    
    
    (3.5
    )%
    
    
    (3,428
    )
    
    
    (4.7
    )%
    
    
    (2,464
    )
    
    
    (4.9
    )%Other expense, net
    
    
    (5
    )
    
    
    0.0
    %
    
    
    (10
    )
    
    
    0.0
    %
    
    
    (13
    )
    
    
    0.0
    %
    
    
    (20
    )
    
    
    0.0
    %Loss from continuing operations before income taxes
    
    
    (20,084
    )
    
    
    (54.2
    )%
    
    
    (4,197
    )
    
    
    (15.0
    )%
    
    
    (43,830
    )
    
    
    (60.2
    )%
    
    
    (6,356
    )
    
    
    (12.5
    )%Income tax expense
    
    
    (967
    )
    
    
    (2.6
    )%
    
    
    (3,743
    )
    
    
    (13.4
    )%
    
    
    (4,107
    )
    
    
    (5.7
    )%
    
    
    (2,508
    )
    
    
    (5.0
    )%Minority interest
    
    
    (807
    )
    
    
    (2.2
    )%
    
    
    (463
    )
    
    
    (1.7
    )%
    
    
    (1,707
    )
    
    
    (2.3
    )%
    
    
    (589
    )
    
    
    (1.2
    )%Loss from operations
    
    $
    (21,858
    )
    
    
    (59.0
    )%
    
    $
    (8,403
    )
    
    
    (30.1
    )%
    
    $
    (49,644
    )
    
    
    (68.2
    )%
    
    $
    (9,453
    )
    
    
    (18.7
    )%Adjusted EBITDA (2)
    
    $
    10,120
    
    
    
    27.3
    %
    
    $
    7,599
    
    
    
    27.2
    %
    
    $
    20,854
    
    
    
    28.7
    %
    
    $
    13,445
    
    
    
    26.6
    %
 
 (1)
    
    For periods after August 7, 2007, the date the Company closed its initial public
offering, converted all shares of series C preferred stock into shares of series A preferred
stock, series B preferred stock and common stock, and redeemed all outstanding shares of its
preferred stock, the Company will no longer incur non-cash interest expense related to
redeemable preferred stock because no shares of preferred stock are outstanding after such
date.(2)
    
    See Non GAAP Financial Measures for a reconciliation of loss from continuing
operations to adjusted EBITDA and why we think it is important to disclose adjusted EBITDA. Three Months Ended June 30, 2007, Compared to Three Months Ended June 30, 2006
 Revenues.
  
    
    $3.0 million of revenues from our mortgage default processing services operations in Indiana, which we acquired from Feiwell & Hannoy on January 9, 2007;
 36




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##### Table of Contents




    
    $0.5 million of revenues from the Mississippi Business Journalincluded as part of our acquisition of the publishing assets of Venture Publications, Inc., which we acquired on March 30, 2007; and
    
    $5.7 million of increased revenues from our organic growth within existing businesses (i.e., businesses that we operated in the second quarter of both 2006 and 2007) including $3.4 million of increased revenues from our Professional Services Division and $2.3 million of increased revenues in our Business Information Division, primarily resulting from increased public notice revenues.
  Operating Expenses.
 Direct Operating Expenses.
 Selling, General and Administrative Expenses.
 37




---



##### Table of Contents



Depreciation and Amortization Expense.
 Adjusted EBITDA
  Non-Cash Interest Expense Related to Redeemable Preferred Stock
  Interest Expense, Net
  38




---



##### Table of Contents



Income Tax Expense
  Business Information Division Results
 Revenues.
  The Daily Record
 Operating Expenses.
 Professional Services Division Results
 Revenues.
 39




---



##### Table of Contents



Operating Expenses.
  Six Months Ended June 30, 2007, Compared to Six Months Ended June 30, 2006
 Revenues.
  
    
    $7.9 million of increased revenues from our mortgage default processing service in Michigan, which we acquired when we acquired APC on March 14, 2006, and for which we recognized a full six months of revenues in 2007;
    
    $5.7 million of revenues from our mortgage default processing services operations in Indiana, which we acquired from Feiwell & Hannoy on January 9, 2007;
 40




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##### Table of Contents




    
    $0.5 million of revenues from the Mississippi Business Journalincluded as part of our acquisition of the publishing assets of Venture Publications, Inc. which we acquired on March 30, 2007; and
    
    $8.0 million of increased revenues from our organic growth within existing businesses (i.e., businesses that we operated in the first six months of both 2006 and 2007).
  Operating Expenses.
  Direct Operating Expenses.
 Selling, General and Administrative Expenses.
 Depreciation and Amortization Expense.
 41




---



##### Table of Contents



Adjusted EBITDA
  Non-Cash Interest Expense Related to Redeemable Preferred Stock
  Interest Expense, Net
  Income Tax Expense
  Business Information Division Results
 Revenues.
 42




---



##### Table of Contents



The Daily Record
 Operating Expenses.
 Professional Services Division Results
 Revenues.
  Operating Expenses.
 43




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##### Table of Contents



OFF BALANCE SHEET ARRANGEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
  June 30,
    
    December 31,2007
    
    2006Cash and cash equivalents
    
    $
    1,623
    
    
    $
    786Working capital deficit*
    
    
    (11,862
    )
    
    
    (8,991
    )Long-term debt, less current portion
    
    
    83,350
    
    
    
    72,760
 Six Months Ended,June 30,2007
    
    2006Net cash provided by financing activities
    
    $
    9,693
    
    
    $
    39,096Net cash provided by operating activities
    
    
    12,689
    
    
    
    9,672Net cash used in investing activities:
    
    
    (21,545
    )
    
    
    (43,051
    )Acquisitions and investments
    
    
    (17,335
    )
    
    
    (42,262
    )Capital expenditures
    
    
    (4,210
    )
    
    
    (809
    )
  Cash Flows Provided by Operating Activities
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December 31,June 30, 2007
    
    2006Allowance for doubtful accounts as a percentage of gross accounts receivable
    
    
    5.2
    %
    
    
    6.1
    %Day sales outstanding
    
    
    49.8
    
    
    58.3
   Cash Flows Used by Investing Activities
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,
  Cash Flows Provided by Financing Activities
   Credit Agreement.
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47




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
    
    incurring indebtedness (including guarantee obligations) or liens;
    
    entering into mergers, consolidations, liquidations or dissolutions;
    
    selling assets;
    
    entering into certain acquisition transactions;
    
    forming or entering into partnerships and joint ventures;
    
    entering into negative pledge agreements;
    
    paying dividends, redeeming or repurchasing shares or making other payments in respect of capital stock;
    
    entering into transactions with affiliates;
    
    making investments;
    
    entering into sale and leaseback transactions; and
    
    changing our line of business.
  Future Needs
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RELATED PARTY TRANSACTIONS
  
    
    ABRY Mezzanine Partners, L.P. and ABRY Investment Partnership, L.P., or the ABRY funds, designated Peni Garber, an employee and officer of ABRY Partners, LLC, as a member of our board;
    
    BG Media Investors L.P., or BGMI, designated Edward Carroll, a member of the general partner of BGMI, and Earl Macomber, an interest holder in the general partner of BGMI, as members of our board; Mr. Macomber stepped down from our board in March 2007;
    
    Caisse de dépôt et placement du Québec, or CDPQ, designated Jacques Massicotte, George Rossi, and Pierre Bédard as members of our board; Mr. Bédard stepped down from our board in March 2007;
    
    Cherry Tree Ventures IV Limited Partnership, or Cherry Tree, designated Anton J. Christianson, managing partner of CTV Partners IV, the general partner of Cherry Tree, as a member of our board;
    
    The David J. Winton trust, or the Winton trust, designated David Michael Winton, the income beneficiary of the Winton trust, as a member of our board; and
    
    DMIC LLC, or DMIC, designated Dean Bachmeier, a principal with Private Capital Management, Inc., as a member of our board; Mr. Bachmeier stepped down from our board in March 2007.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
  Accounting for Derivative Instruments and Hedging Activities
   
 Items 4 and 4T. Controls and Procedures
 Disclosure Controls and Procedures
  Changes In Internal Control Over Financial Reporting
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Part II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
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
    
    Prior to the offering, ABRY Mezzanine Partners, L.P. and ABRY Investment Partnership, L.P., or the ABRY funds, owned 25,000 shares, or approximately 66%, of our outstanding series C preferred stock and, upon completion of the offering and conversion of these shares of series C preferred stock, received 3,339,171 shares of our common
stock, 128,421 shares of our series A preferred stock and 25,000 shares of our series B preferred stock. Upon consummation of the offering, we redeemed these shares of series A preferred stock and series B preferred stock for an aggregate of $42.5 million. The ABRY funds were selling stockholders in the offering and sold an aggregate
of 2,020,152 shares of common stock in the offering and received net proceeds of approximately $27.2 million. Peni Garber, one of our directors, is an employee and officer of ABRY Partners, LLC, a service provider to, and a sponsor and affiliate of, the ABRY funds, and was designated as a member of our board by the ABRY funds.
    
    Prior to the offering, BG Media Investors, L.P., or BGMI, owned 1,460,745 shares, or approximately 15.7%, of our outstanding common stock and 58,227 shares, or approximately 20%, of our outstanding series A preferred stock. Upon consummation of the offering, we redeemed these shares of series A preferred stock for $7.4 million. BGMI
was a selling stockholder in the offering and sold an aggregate of 883,729 shares of common stock in the offering and received net proceeds of approximately $11.9 million. Edward Carroll, one of our directors, and Earl Macomber, who resigned as a director in March 2007, were designated as members of our board by BGMI. Mr. Carroll is
a member of the general partner of BGMI and Mr. Macomber is an interest holder in the general partner of BGMI.
    
    Prior to the offering, Caisse de dépôt et placement du Québec, or CDPQ, owned 2,285,865 shares or approximately 24.5%, of our outstanding common stock, 91,117 shares, or approximately 32%, of our outstanding series A preferred stock and 6,500 shares, or approximately 17%, of our outstanding series C preferred stock and, upon
completion of the offering and conversion of these shares of series C preferred stock, received 868,184 shares of our common stock, 33,390 shares of our series A preferred stock and 6,500 shares of our series B preferred stock. Upon consummation of the offering, we redeemed these shares of series A preferred stock and series B
preferred stock for an aggregate of $22.6 million. CDPQ was a selling stockholder in the offering and sold an aggregate of 1,908,155 shares of common stock in the offering and received net proceeds of approximately $25.7 million. Jacques Massicotte and George Rossi, both of whom are our directors, and Pierre Bédard, who resigned as
a director in March 2007, were designated as members of our board by CDPQ.
    
    Prior to the offering, Cherry Tree Ventures IV Limited Partnership, or Cherry Tree, owned 883,998 shares, or approximately 9.5%, of our outstanding common stock and 35,237 shares, or approximately 12%, of our outstanding series A preferred stock. Upon consummation of the offering, we redeemed these shares of series A preferred stock
for $4.4 million. Anton Christianson, one of our directors, is a managing partner of CTV Partners IV, the general partner of Cherry Tree, and was designated as a member of our board by Cherry Tree. John Bergstrom, one of our directors, is a former senior associate of Cherry Tree Investments.
    
    Prior to the offering, DMIC LLC, or DMIC, owned 460,125 shares, or approximately 4.9%, of our outstanding common stock, 18,341 shares, or approximately 6%, of our outstanding series A preferred stock and 5,030 shares, or approximately 13%, of our outstanding series C preferred stock and, upon completion of the offering and conversion
of these shares of series C preferred stock, received 671,841 shares of our common stock, 25,838 shares of our series A preferred stock and 5,030 shares of our series B preferred stock. Upon consummation of the offering, we redeemed these shares of series A preferred stock and series B preferred stock for an aggregate of $10.9
million. Dean Bachmeier, who resigned as a director in March 2007, is principal of Private Capital
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Management, Inc., an affiliate of DMIC, and was designated as a member of our board by DMIC.
    
    Prior to the offering, the David J. Winton trust, or the Winton trust, owned 264,123 shares, or approximately 2.8%, of our outstanding common stock, 10,528 shares, or approximately 4%, of our outstanding series A preferred stock and 250 shares, or approximately 1%, of our outstanding series C preferred stock and, upon completion of
the offering and conversion of these shares of our series C preferred stock, received 33,392 shares of our common stock, 1,284 shares of our series A preferred stock and 250 shares of our series B preferred stock. Upon consummation of the offering, we redeemed these shares of series A preferred stock and series B preferred stock for
an aggregate of $1.8 million. David Michael Winton, one of our directors, is the income beneficiary of the Winton trust and was designated as a member of our board by the Winton trust.
    
    Prior to the offering, Parsnip River Company, L.P., or Parsnip, owned 486,846 shares, or approximately 5.2%, of our outstanding common stock, 19,406 shares, or approximately 7%, of our outstanding series A preferred stock, 250 shares, or approximately 1%, of our outstanding series C preferred stock and, upon completion of the offering
and conversion of these shares of our series C preferred stock, received 33,392 shares of our common stock, 1,284 shares of our series A preferred stock and 250 shares of our series B preferred stock upon. Upon consummation of the offering, we redeemed these shares of series A preferred stock and series B preferred stock for an
aggregate of $2.9 million. David Michael Winton, one of our directors, is the managing general partner of Parsnip.
    
    Prior to the offering, James P. Dolan, our Chairman, President and Chief Executive Officer, directly owned 1,195,947 shares, or approximately 12.8%, of our outstanding common stock, 7,127 shares, or approximately 2%, of our outstanding series A preferred stock and 350 shares, or approximately 1%, of our outstanding series C preferred
stock and, upon completion of the offering and conversion of these shares of our series C preferred stock, Mr. Dolan directly received 46,748 shares of our common stock, 1,798 shares of our series A preferred stock and 350 shares of our series B preferred stock. Upon consummation of the offering, we redeemed these shares of series A
preferred stock and series B preferred stock for an aggregate of $1.5 million. In addition, prior to the offering, Mr. Dolans sisters owned 27 shares of our outstanding series A preferred stock that we redeemed and Mr. Dolans spouse owned 25 shares of our outstanding series C preferred stock that converted into series A preferred
stock and series B preferred stock, that we redeemed, and common stock.
    
    Prior to the offering, John Bergstrom, one of our directors, owned 46,152 shares, or approximately 0.49%, of our outstanding common stock and 46 shares, or approximately 0.02%, of our outstanding series A preferred stock. Upon consummation of the offering, we redeemed these shares of series A preferred stock for an aggregate of $5,814.
    
    Prior to the offering, Scott J. Pollei, our Chief Financial Officer, through an IRA account, owned 50 shares, or approximately 0.13%, of our outstanding series C preferred stock, and upon completion of the offering and conversion of these shares of our series C preferred stock, Mr. Polleis account received 6,678 shares of our common
stock, 257 shares of our series A preferred stock and 50 shares of our series B preferred stock. Upon consummation of the offering, we redeemed these shares of series A preferred stock and series B preferred stock for an aggregate of $85,002. In addition, Mr. Polleis brother owned 150 shares of our outstanding series C preferred
stock that converted into series A preferred stock and series B preferred stock, that we redeemed, and common stock.
    
    Prior to the offering, Mark W.C. Stodder, our Executive Vice President, Business Information, owned 99,000 shares, or approximately 1.1%, of our outstanding common stock, and 13 shares, or approximately 0.03%, of our outstanding series C preferred stock and, upon completion of the offering and conversion of these shares of our series
C preferred stock, received 1,736 shares of our common stock, 67 shares of our series A preferred stock and 13 shares of our series B preferred
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stock. Upon consummation of the offering, we redeemed these shares of series A preferred stock and series B preferred stock for an aggregate of $22,118.
    
    Prior to the offering, Mark Baumbach, our Vice President of Technology, owned 36,000 shares, or approximately 0.4%, of our outstanding common stock, and 5 shares, or approximately 0.01%, of our outstanding series C preferred stock and, upon completion of the offering and conversion of these shares of our series C preferred stock,
received 668 shares of our common stock, 26 shares of our series A preferred stock and 5 shares of our series B preferred stock. Upon consummation of the offering, we redeemed these shares of series A preferred stock and series B preferred stock for an aggregate of $8,530.
    
    Prior to the offering, Chicosa Partners LLC, or Chicosa, owned 229,779 shares, or approximately 2.5%, of our outstanding common stock and 9,160 shares, or approximately 3%, of our outstanding series A preferred stock. Upon consummation of this offering, we redeemed these shares of series A preferred stock for an aggregate of $1.2
million Mr. Dolan is the managing member of, and owns a 74.32% membership interest in, Chicosa, and Mr. Dolans spouse and Messrs. Pollei, Stodder, Baumbach and Bergstrom are also members of Chicosa that own membership interests of 0.83%, 5.56%, 1.24%, 0.56% and 2.07%, respectively.
    
    Prior to the offering, Media Power Limited Partnership, or Media Power, owned 236,610 shares, or approximately 2.5%, of our outstanding common stock, 9,432 shares, or approximately 3%, of our outstanding series A preferred stock and 400 shares, or approximately 1%, of our outstanding series C preferred stock and, upon completion of
this offering and conversion of these shares of series C preferred stock, received 53,427 shares of our common stock, 2,055 shares of our series A preferred stock and 400 shares of our series B preferred stock. Upon consummation of the offering, we redeemed these shares of series A preferred stock and series B preferred stock for an
aggregate of $1,872,054. Mr. Dolan, Cherry Tree Core Growth Fund, L.L.L.P., an affiliate of Cherry Tree, Adam Smith Growth Partners, L.P. and several employees of Cherry Tree are limited partners of Media Power. Mr. Christianson is the chairman of Adam Smith Companies, LLC, which is a general partner of Media Power, as well as the
general partner of Adam Smith Growth Partners, L.P., a limited partner of Media Power. Messrs. Dolan and Bergstrom and several other employees of Cherry Tree are also special limited partners of Media Power. Messrs. Dolan and Bergstrom, Cherry Tree Core Growth Fund, L.L.L.P., Adam Smith Growth Partners, L.P. and Adam Smith Companies
LLC own membership interests in Media Power of 10%, 1.4%, 25.1%, 2.1% and 3.9%, respectively.
  
 Item 3. Defaults Upon Senior Securities.
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Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits
 Number
    
    Exhibit Title3.1
    
    Amended and Restated Certificate of
Incorporation of Dolan Media Company.3.2
    
    Second Amended and Restated Bylaws of the Company.10.1
    
    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.
Incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K as filed on
August 13, 2007 (Registration No. 001-33603).31.1
    
    Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).31.2
    
    Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).32.1 *
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2 *
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Furnished herewith 55




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SIGNATURES
  DOLAN MEDIA COMPANYDate: September 14, 2007
    By:
    /s/ James P. DolanJames P. DolanChief Executive Officer
(Principal Executive Officer)Date: September 14, 2007
    By:
    /s/ Scott J. PolleiScott J. PolleiChief Financial Officer
(Principal Financial Officer)Date: September 14, 2007
    By:
    /s/ Vicki J. DuncombVicki J. DuncombVice President, Finance
(Principal Accounting Officer) 56




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INDEX TO EXHIBITS
 Number
    
    Description of Exhibit3.1
    
    Amended and Restated Certificate of Incorporation of Dolan Media Company.3.2
    
    Second Amended and Restated Bylaws of the Company.31.1
    
    Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).31.2
    
    Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).32.1 *
    
    Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2 *
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Furnished herewith 57