Exhibit 99
THE DOLAN COMPANY REPORTS THIRD QUARTER RESULTS
| • | Third quarter revenues decreased 4.0% year-over-year to $75.3 million |
| • | Net income attributable to The Dolan Company was $3.1 million, or $0.10 per diluted share |
| • | Cash earnings were $7.1 million, or $0.24 per diluted share (See “Non-GAAP Financial
Measures” below) |
| • | Adjusted EBITDA was $16.3 million (See “Non-GAAP Financial Measures” below) |
| • | Company revises guidance for 2011 |
MINNEAPOLIS, MN — November 2, 2011 — The Dolan Company (NYSE: DM), a leading provider of
professional processing services as well as business information to legal, financial and real
estate sectors in the United States, today announced financial results for the three months ended
September 30, 2011.
“The third quarter was mixed as we continue to experience a slowdown in our foreclosure processing
business, but encouraging growth in our e-discovery business. Regulatory scrutiny and adoption of
new procedures have continued to cause mortgage servicers to slow foreclosure referrals,” said
James P. Dolan, chairman, chief executive officer and president. He said the slowdown in default
referrals directly affected The Dolan Company’s Professional Services Division and also affected
its Business Information Division, where default-related public notices have been an important
revenue source.
“Although there are some signs of progress, this process has dragged on longer than expected,”
Dolan said. “There continues to be an enormous backlog of pending and future foreclosures, and we
believe a significant multi-year opportunity still exists.
“Meanwhile, we are very pleased with our recent addition of ACT Litigation Services to our
DiscoverReady e-discovery platform. ACT was immediately accretive and the integration is off to a
good start. ACT allows us to further rebalance our business mix. It also extends our e-discovery
platform into several significant areas of technology and processing development, which allows us
to continue to grow our client list and expand our offerings to current clients,” Dolan said.
“In the third quarter, revenues at our National Default Exchange, or NDeX, declined by 24%
year-over-year. Despite difficult industry trends, we believe we held our market share in most of
our more mature states and that we continued to see market share gains in some of our newer states. We
have worked on reducing our costs, and we will continue to evaluate our cost structure and
efficiencies as we strive to improve our margins,” said Dolan.
“Litigation Support Services revenues grew year-over-year by $9.1 million, or 60%, mostly due to
the addition of ACT Litigation Services in late July. For comparative purposes, assuming we had
owned ACT during the entire third quarters of 2010 and 2011, the Litigation Support Services
segment grew by roughly 33% during the quarter. More than ever, we are excited about the growth
opportunities for this business and we have made good progress in diversifying DiscoverReady’s
customer mix. We are well on our way to our initial goal of building our e-discovery subsidiary
into a $100 million operation,” Dolan said.
“Within our Business Information Division, margins continue to be under pressure from the decline
in higher-margin public notice revenues related to mortgage defaults. We are well down the path of
reorganizing and centralizing some parts of the division to reduce costs and improve margins, and
we are seeing some benefit. We are seeing a growing list of new opportunities for DataStream as
well as the newly launched Legislative Information Services of America,” Dolan said.
“Previously we were cautious about the third quarter given the foreclosure industry backdrop that
exists. Although we have seen some progress, we remain cautious about our foreclosure processing
business heading into the fourth quarter, given regulatory activities and other industry factors,
but we continue to believe this is a matter of revenue timing. We are convinced that a very large
amount of foreclosure work remains to be done, years worth of volume, and that we are extremely
well positioned to handle it,” Dolan said.
Full Year 2011 Guidance
Based on third quarter results, the company is revising its full-year financial guidance as
follows:
| 2011 Financial Guidance | ||
| (dollars in millions, except per share numbers) | ||
Total revenues |
$294 – $297 | |
Adjusted EBITDA |
$60 – $62 | |
GAAP EPS |
$0.39 – $0.41 | |
Cash earnings per diluted share |
$0.89 – $0.92 |
This guidance presumes the following: 1) no significant improvement in the foreclosure market for
the remainder of the year; 2) operating expenses as a percent of total revenues are approximately
91%; 3) non-controlling interest of $0.9 to $1.0 million; 4) interest expense is $6.3 to $6.5
million; 5) cash distributions to holders of non-controlling interest are approximately $0.8
million; 6) the tax rate is estimated at 40%; and 7) fully diluted shares outstanding of 30.2 to
30.4 million.
- 2 -
This guidance excludes the effect of any other businesses that may be acquired in the remainder of
2011. It also assumes that there will be no additional material effect on results of operations
from current or future foreclosure-related government legislation, programs or investigations, or
from lender-based programs or moratoria. These include, but are not limited to, programs,
legislation, investigations and moratoria detailed in “Regulatory Environment” and “Risk Factors”
in the company’s 2011 quarterly reports and its annual report for the year ended December 31, 2010,
filed with the SEC.
Third Quarter 2011
Financial results for the three months ended September 30, 2011, and 2010 are as follows:
| Three Months | Three Months | |||||||||||
| Ended | Ended | Year-over- | ||||||||||
| September 30, | September 30, | Year % | ||||||||||
| Dollars in thousands, except per share data | 2011 | 2010 | Change | |||||||||
| (unaudited) | (unaudited) | |||||||||||
Total revenues |
$ | 75,294 | $ | 78,459 | (4.0 | )% | ||||||
Professional Services Division revenues |
55,402 | 56,337 | (1.7 | )% | ||||||||
Business Information Division revenues |
19,892 | 22,122 | (10.1 | )% | ||||||||
Operating income |
7,715 | 16,430 | (53.0 | )% | ||||||||
Net income attributable to The Dolan Company |
3,089 | 9,040 | (65.8 | )% | ||||||||
Adjusted EBITDA * |
16,304 | 24,154 | (32.5 | )% | ||||||||
Net income attributable to The Dolan Company
per diluted share |
$ | 0.10 | $ | 0.30 | (66.7 | )% | ||||||
Cash earnings * |
7,099 | 12,352 | (42.5 | )% | ||||||||
Cash earnings per diluted share * |
$ | 0.24 | $ | 0.41 | (41.5 | )% | ||||||
| * | Please refer to the “Non-GAAP Financial Measures” below for a reconciliation of these non-GAAP
financial measures to GAAP and why the company believes these are important measures of
performance. |
Professional Services Division Results
The Professional Services Division provides specialized processing services to the legal profession
through its subsidiaries, NDeX, Counsel Press, and DiscoverReady. NDeX is a leading provider of
mortgage default processing services in the United States. Together, Counsel Press and
DiscoverReady comprise the company’s litigation support services segment. Counsel Press is the
largest provider of appellate services in the United States, and DiscoverReady provides outsourced
discovery management, including document review and data management services, to major corporations
and law firms.
- 3 -
Division revenues for the third quarter were $55.4 million, a decline of 1.7% from $56.3 million in
the third quarter of 2010. The decline was the result of much lower NDeX file volume, which was
partially offset by increased revenue for DiscoverReady.
NDeX received 77,200 mortgage default files for processing during the third quarter and generated
$31.2 million in revenues. This compares to 99,700 files received for processing and $41.2 million
in revenues in the third quarter of 2010. The total number of mortgage foreclosure files received
decreased by more than 30% in the quarter compared to the third quarter of 2010.
Litigation Support contributed $24.2 million in revenues during the third quarter of 2011, an
increase of 60.2% from the third quarter of 2010. The increase is primarily the result of the ACT
Litigation Services acquisition by DiscoverReady in July of 2011.
Direct operating expenses within the Professional Services Division increased 11.5% to $25.4
million during the third quarter of 2011, from $22.8 million for the same period in 2010. The
increase is mostly due to the ACT acquisition, offset in part by lower direct operating expenses at
NDeX, which continues to focus on reducing costs and increasing efficiencies to offset volume
declines. Selling, general and administrative expenses increased 12.9% on a year-over-year basis
to $17.2 million. The increases were largely the result of the ACT acquisition as well as negative
operating leverage. Total Professional Services Division operating expenses as a percentage of
division revenues increased to 86.6% for the quarter, from 76.4% in the third quarter of 2010.
Previous investments made in DiscoverReady and negative operating leverage at NDeX were the primary
reasons for the increase. The increase in third quarter operating expenses as a percentage of
revenue was partially offset by higher margins at ACT.
Business Information Division Results
The Business Information Division publishes print and electronic business journals, court and
commercial media and other highly focused information products and services, operates Web sites and
produces events for targeted professional audiences in 21 geographic markets across the United
States.
Business Information Division revenues for the third quarter of 2011 were $19.9 million, a 10.1%
decrease from $22.1 million in the third quarter of 2010. The addition of DataStream in December
2010 and Federal News Service in August 2010 helped somewhat offset significant weakness in public
notice advertising. The company believes that a majority of the weakness in public notice is
related to ongoing delays from large mortgage servicers that are deferring foreclosures as
previously described.
Total operating expenses within the Business Information Division rose 5.4% to $18.3 million from
the third quarter of 2010, due primarily to the additional operating costs associated with the
acquisitions of DataStream and Federal News Service. However, total operating expenses from
pre-existing business decreased $1.4 million on a year-over-year basis. For the third quarter of
2011, direct operating expenses increased 8.3% to $7.8 million while selling, general and
administrative expenses for the division were up 0.3% to $9.0 million.
- 4 -
Balance Sheet and Liquidity
As of September 30, 2011, the company held $2.1 million of cash and cash equivalents, compared to
$4.9 million at the end of 2010. During the third quarter of 2011, the company generated $9.7
million of cash from operating activities and $7.4 million of free cash flow, which
is defined as net cash provided by operating activities minus capital expenditures. Quarterly
capital expenditures were $2.3 million. Days sales outstanding were 97.8 days for the third
quarter of 2011, which was up from 85.0 days in the third quarter of last year. DSO increased
primarily from a slowdown of payments received from NDeX law firm customers as they experience
delays in the foreclosure process and taking files to sale.
Total
debt outstanding at the end of the third quarter was $187.7 million, of which $46.3 million
was under a term loan facility. Net debt was $185.6 million, up $51.3 million from the end of 2010
due primarily to the acquisition of ACT. At September 30, 2011, the combined weighted-average
interest rate on the company’s credit facilities was 2.9%. The leverage ratio at the end of the
quarter was 2.6 times total debt to trailing twelve month pro forma adjusted EBITDA, up from 1.5
times as of December 31, 2010. We are within our senior debt covenants.
Non-GAAP Financial Measures
Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework
of guidelines for financial accounting in the United States. GAAP includes the standards,
conventions, and rules accountants follow in recording and summarizing transactions, and in the
preparation of financial statements. In addition to reporting financial results in accordance with
GAAP, The Dolan Company reports the following non-GAAP measures:
| • | Adjusted EBITDA, defined as GAAP net income attributable to The Dolan Company adjusted for
the impact of the following: net interest expense resulting from the company’s net cash or
borrowing position, which includes non-cash interest income or expense related to the changes
in fair value of interest rate swaps; income tax expense; non-cash expenses, including
depreciation and amortization, charges for stock options and restricted stock the company has
granted, and fair value adjustments on earnouts recorded in connection with acquisitions;
non-recurring items of income or expense, if applicable; non-controlling interest; and
distributions paid to holders of non-controlling interest; |
| • | Cash earnings, defined as GAAP net income attributable to The Dolan Company adjusted for
the impact of the following: non-cash expenses, including non-cash interest income or expense
related to the changes in the fair value of interest rate swaps, charges for stock options and
restricted stock granted, fair value adjustments on earnouts recorded in connection with
acquisitions, and amortization; certain non-recurring items of income or expense; and an
adjustment to income tax expense related to the above reconciling items at the appropriate
then-in-effect tax rate; |
| • | Cash earnings per diluted share, defined as cash earnings divided by the number of weighted
average diluted shares outstanding; and |
| • | Free cash flow, defined as net cash provided by operating activities minus capital
expenditures.
|
- 5 -
The Dolan Company provides these measures because it believes that they are helpful to investors in
comparing year-over-year performance in light of certain non-recurring charges, and to better
understand its operating performance and profitability, competitive position and future
prospects. Non-GAAP measures should be considered in conjunction with the GAAP financial
presentation and should not be considered in isolation or as a substitute for GAAP net income
attributable to The Dolan Company. In addition, it should be noted that the company’s calculations
of adjusted EBITDA, cash earnings, cash earnings per diluted share, and free cash flow may not be
comparable to the calculations of such measures by other companies.
The following is a reconciliation of net income attributable to The Dolan Company to adjusted
EBITDA (in thousands):
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
Net income attributable to The Dolan Company |
$ | 3,089 | $ | 9,040 | ||||
Interest expense, net |
1,744 | 1,361 | ||||||
Income tax expense |
2,558 | 5,545 | ||||||
Amortization of intangibles |
4,939 | 3,981 | ||||||
Depreciation expense |
2,104 | 2,413 | ||||||
Amortization of Detroit Legal News Publishing
intangible |
377 | 377 | ||||||
Non-cash compensation expense |
1,007 | 972 | ||||||
Non-cash fair value adjustment on earnouts
recorded in connection with acquisitions |
253 | 294 | ||||||
Non-recurring income |
107 | (197 | ) | |||||
Non-controlling interest |
217 | 681 | ||||||
Cash
distribution to holders of non-controlling interest |
(91 | ) | (313 | ) | ||||
Adjusted EBITDA |
$ | 16,304 | $ | 24,154 | ||||
- 6 -
The following is a reconciliation of net income attributable to The Dolan Company to cash earnings
and cash earnings per diluted share (in thousands, except share and per share data):
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
Net income attributable to The Dolan Company |
$ | 3,089 | $ | 9,040 | ||||
Non-cash interest income related to the
change in fair value of interest rate swaps |
— | (228 | ) | |||||
Non-cash compensation expense |
1,007 | 972 | ||||||
Non-cash fair value adjustment on earnouts
recorded in connection with acquisitions |
253 | 294 | ||||||
Amortization of intangibles |
4,939 | 3,981 | ||||||
Amortization of Detroit Legal News
Publishing intangible |
377 | 377 | ||||||
Non-recurring income |
107 | (197 | ) | |||||
Adjustment to income tax expense related to
reconciling items at effective tax rate |
(2,673 | ) | (1,887 | ) | ||||
Cash earnings |
$ | 7,099 | $ | 12,352 | ||||
Net income
attributable to The Dolan Company per diluted share (GAAP) |
$ | 0.10 | $ | 0.30 | ||||
Change in redeemable non-controlling interest |
0.09 | (0.01 | ) | |||||
Net income attributable to The Dolan Company
common stockholders per diluted share (GAAP) |
$ | 0.19 | $ | 0.29 | ||||
Cash earnings per diluted share |
$ | 0.24 | $ | 0.41 | ||||
Weighted average diluted shares outstanding |
30,208,472 | 30,316,660 | ||||||
Conference Call
The company has scheduled a conference call for November 2, 2011, at 8:30 a.m. U.S. Eastern
Daylight Time (7:30 a.m. U.S. Central Daylight Time). The dial-in number is (888) 517-2513,
passcode 7919 254#. The call will be hosted by James P. Dolan, chairman, chief executive officer
and president; Scott J. Pollei, executive vice president and chief operating officer; and Vicki J.
Duncomb, vice president and chief financial officer. It will be broadcast live over the Internet
and will be accessible through the investor relations section of the company’s Web site at
www.thedolancompany.com. Interested parties should access the webcast approximately 10 to 15
minutes before the scheduled start time to register and download any necessary software needed to
listen to the call. Prior to the conference call start, a slide presentation highlighting points
discussed in the third quarter conference call will be available through the investor relations
section of the company Web site at www.thedolancompany.com. The webcast and slide presentation
will be archived online and will be available at the investor relations section of the company Web
site for a period of 21 days after the call.
- 7 -
Statement Regarding Forward Looking Information
This release contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Statements that are not historical or current facts are
forward-looking statements. Such forward-looking statements include statements related to the
company’s “guidance” as well as statements using words such as “anticipate,” “expect,” “believe,”
“convinced,” “continue,” “to come,” “will,” “may,” “estimate,” “assume,” “pursue,” “outlook” and
similar expressions. Forward-looking statements are subject to risks, uncertainties and other
factors that could cause the actual results, performance, prospects or opportunities to differ
materially from those expressed in, or implied by, these forward-looking statements. These risks,
uncertainties and other factors include, but are not limited to, the following: our businesses
operate in highly competitive markets and depend on the economies and demographics of the legal,
financial and real estate markets we serve, and changes in those sectors could have an adverse
effect on our revenues, cash flows, and profitability; if the number of files referred to us by our
mortgage default processing service law firm customers (or loan servicers and mortgage lenders we
serve directly for mortgage default files in California) decreases or fails to increase, or if one
or more of our law firm customers fails to pay us for our mortgage default processing services, our
operating results and ability to execute our growth strategy could be adversely affected; bills
introduced and laws enacted to mitigate foreclosures, voluntary relief programs and voluntary halts
or moratoria by servicers or lenders, as well as governmental investigations, enforcement actions,
litigation and court orders, may have an adverse effect on our mortgage default processing services
and public notice operations; growing our business may place a strain on our management and
internal systems, processes and controls, may result in operating inefficiencies, and may
negatively impact our operating margins; we intend to continue to pursue acquisition opportunities,
which we may not do successfully and which may subject us to considerable business and financial
risk or require us to raise additional capital or incur additional indebtedness; we depend on our
senior management team and other key leaders of our business segments, and the operation and growth
of our business may be negatively impacted if we lose any of their services; revenues of our
subsidiary NDeX and our subsidiary DiscoverReady have been very concentrated among a few customers,
thus the loss of business from these customers and a failure to attract new customers could
adversely affect our operating results; certain key personnel of our subsidiary NDeX, who are also
shareholders and principal attorneys of our law firm customers, may at times have interests that
differ from or conflict with our interests; and the other risk factors described under “Risk
Factors” in Item 1A of our annual report on Form 10-K for the year ended December 31, 2010, filed
with the SEC on March 11, 2011. We undertake no obligation to update any forward-looking
statements in light of new information or future events.
FOR IMMEDIATE RELEASE
Contact Robert J. Evans, Director of Investor Relations
(612) 317-9430
Bob.evans@thedolancompany.com
Contact Robert J. Evans, Director of Investor Relations
(612) 317-9430
Bob.evans@thedolancompany.com
- 8 -
The
Dolan Company
Condensed Consolidated Balance Sheets
(in thousands, except share data)
Condensed Consolidated Balance Sheets
(in thousands, except share data)
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| (unaudited) | ||||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 2,115 | $ | 4,862 | ||||
Accounts receivable, including unbilled services
(net of allowances for doubtful accounts
of $1,190 and $1,578 as of
September 30, 2011, and December 31, 2010, respectively) |
80,788 | 59,801 | ||||||
Unbilled pass-through costs |
5,197 | 7,140 | ||||||
Prepaid expenses and other current assets |
4,943 | 4,186 | ||||||
Income tax receivable |
— | 4,183 | ||||||
Total current assets |
93,043 | 80,172 | ||||||
Account receivables, long-term |
2,729 | — | ||||||
Investments |
11,881 | 13,808 | ||||||
Property and equipment, net |
19,948 | 17,333 | ||||||
Finite-life intangible assets, net |
220,463 | 195,959 | ||||||
Indefinite-lived intangible assets |
287,696 | 225,373 | ||||||
Other assets |
2,702 | 3,143 | ||||||
Total assets |
$ | 638,462 | $ | 535,788 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities |
||||||||
Current portion of long-term debt |
$ | 7,834 | $ | 7,578 | ||||
Accounts payable |
20,027 | 15,589 | ||||||
Accrued pass-through liabilities |
9,557 | 18,271 | ||||||
Accrued compensation |
7,640 | 5,409 | ||||||
Accrued liabilities |
5,780 | 5,537 | ||||||
Due to sellers of acquired businesses |
29,450 | 3,943 | ||||||
Deferred revenue |
20,882 | 21,689 | ||||||
Total current liabilities |
101,170 | 78,016 | ||||||
Long-term debt, less current portion |
179,890 | 131,568 | ||||||
Deferred income taxes |
10,866 | 7,794 | ||||||
Other liabilities |
6,159 | 5,939 | ||||||
Due to sellers of acquired businesses |
32,383 | 7,033 | ||||||
Total liabilities |
330,468 | 230,350 | ||||||
Redeemable noncontrolling interest |
14,232 | 26,580 | ||||||
Commitments and contingencies |
||||||||
Stockholders’ equity |
||||||||
Common stock, $0.001 par value; authorized: 70,000,000 shares;
outstanding: 30,578,999 and 30,511,408 shares as of September 30, 2011,
and December 31, 2010, respectively |
30 | 30 | ||||||
Preferred stock, $0.001 par value; authorized: 5,000,000 shares;
designated: 5,000 shares of Series A Junior Participating Preferred Stock;
no shares outstanding |
— | — | ||||||
Other comprehensive loss (net of tax) |
(1,427 | ) | (1,298 | ) | ||||
Additional paid-in capital |
292,045 | 286,148 | ||||||
Retained earnings (accumulated deficit) |
3,114 | (6,022 | ) | |||||
Total stockholders’ equity |
293,762 | 278,858 | ||||||
Total liabilities and stockholders’ equity |
$ | 638,462 | $ | 535,788 | ||||
- 9 -
The Dolan Company
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
||||||||||||||||
Professional Services |
$ | 55,402 | $ | 56,337 | $ | 155,775 | $ | 168,817 | ||||||||
Business Information |
19,892 | 22,122 | 61,507 | 65,829 | ||||||||||||
Total revenues |
75,294 | 78,459 | 217,282 | 234,646 | ||||||||||||
Operating expenses |
||||||||||||||||
Direct operating: Professional Services |
25,416 | 22,790 | 71,854 | 68,841 | ||||||||||||
Direct operating: Business Information |
7,832 | 7,229 | 24,543 | 21,769 | ||||||||||||
Selling, general and administrative |
27,671 | 26,758 | 82,273 | 77,585 | ||||||||||||
Amortization |
4,939 | 3,981 | 13,822 | 11,947 | ||||||||||||
Depreciation |
2,104 | 2,413 | 5,841 | 7,872 | ||||||||||||
Total operating expenses |
67,962 | 63,171 | 198,333 | 188,014 | ||||||||||||
Equity in earnings of affiliates |
383 | 1,142 | 1,572 | 3,654 | ||||||||||||
Operating income |
7,715 | 16,430 | 20,521 | 50,286 | ||||||||||||
Non-operating income (expense) |
||||||||||||||||
Interest expense, net of interest income |
(1,744 | ) | (1,589 | ) | (4,717 | ) | (4,939 | ) | ||||||||
Non-cash interest income related to
interest rate swaps |
— | 228 | 286 | 893 | ||||||||||||
Other (expense) income |
(107 | ) | 197 | 287 | 197 | |||||||||||
Total non-operating expense |
(1,851 | ) | (1,164 | ) | (4,144 | ) | (3,849 | ) | ||||||||
Income before income taxes |
5,864 | 15,266 | 16,377 | 46,437 | ||||||||||||
Income tax expense |
(2,558 | ) | (5,545 | ) | (6,637 | ) | (17,208 | ) | ||||||||
Net income |
3,306 | 9,721 | 9,740 | 29,229 | ||||||||||||
Less: Net income attributable to redeemable
noncontrolling interests |
(217 | ) | (681 | ) | (604 | ) | (2,400 | ) | ||||||||
Net income attributable to
The Dolan Company |
$ | 3,089 | $ | 9,040 | $ | 9,136 | $ | 26,829 | ||||||||
Earnings per share — basic and diluted: |
||||||||||||||||
Net income attributable to
The Dolan Company |
$ | 0.10 | $ | 0.30 | $ | 0.30 | $ | 0.89 | ||||||||
Decrease (increase) in redeemable
noncontrolling interest in NDeX |
0.09 | (0.01 | ) | 0.17 | 0.03 | |||||||||||
Net income attributable to The Dolan
Company common stockholders |
$ | 0.19 | $ | 0.29 | $ | 0.47 | $ | 0.92 | ||||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
30,141,832 | 30,174,798 | 30,125,979 | 30,139,681 | ||||||||||||
Diluted |
30,208,472 | 30,316,660 | 30,218,680 | 30,296,544 | ||||||||||||
- 10 -
The Dolan Company
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Cash flows from operating activities |
||||||||||||||||
Net income |
$ | 3,306 | $ | 9,721 | $ | 9,740 | $ | 29,229 | ||||||||
Distributions received from The Detroit Legal News
Publishing, LLC |
1,400 | 1,400 | 3,500 | 4,900 | ||||||||||||
Distributions paid to holders of noncontrolling interests |
(91 | ) | (313 | ) | (566 | ) | (1,374 | ) | ||||||||
Gain on sale of investment |
— | (197 | ) | (394 | ) | (197 | ) | |||||||||
Non-cash operating activities: |
||||||||||||||||
Amortization |
4,939 | 3,981 | 13,822 | 11,947 | ||||||||||||
Depreciation |
2,104 | 2,413 | 5,841 | 7,872 | ||||||||||||
Equity in earnings of affiliates |
(383 | ) | (1,142 | ) | (1,572 | ) | (3,654 | ) | ||||||||
Stock-based compensation expense |
1,007 | 972 | 3,041 | 2,330 | ||||||||||||
Deferred income taxes |
258 | (463 | ) | 286 | (463 | ) | ||||||||||
Change in value of interest rate swap |
— | (228 | ) | (286 | ) | (893 | ) | |||||||||
Amortization of debt issuance costs |
94 | 80 | 280 | 244 | ||||||||||||
Non-cash
fair value adjustment on earnouts recorded in connection with acquisitions |
253 | 294 | 610 | 882 | ||||||||||||
Changes in operating assets and liabilities,
net of effects of business combinations: |
||||||||||||||||
Accounts receivable and unbilled
pass-through costs |
(4,643 | ) | (4,925 | ) | (9,494 | ) | (6,958 | ) | ||||||||
Prepaid expenses and other current assets |
796 | (1,326 | ) | 3,995 | (1,271 | ) | ||||||||||
Other assets |
97 | 342 | 97 | 360 | ||||||||||||
Accounts payable and accrued liabilities |
504 | (211 | ) | (4,751 | ) | (816 | ) | |||||||||
Deferred revenue and other liabilities |
32 | 2,254 | (660 | ) | 1,884 | |||||||||||
Net cash provided by operating activities |
9,673 | 12,652 | 23,489 | 44,022 | ||||||||||||
Cash flows from investing activities |
||||||||||||||||
Acquisitions and investments |
(61,994 | ) | (2,472 | ) | (67,065 | ) | (2,587 | ) | ||||||||
Capital expenditures |
(2,255 | ) | (2,685 | ) | (6,168 | ) | (6,011 | ) | ||||||||
Escrow payment received on sale of investment |
0 | 197 | 394 | 197 | ||||||||||||
Other |
75 | — | 77 | — | ||||||||||||
Net cash used in investing activities |
(64,174 | ) | (4,960 | ) | (72,762 | ) | (8,401 | ) | ||||||||
Cash flows from financing activities |
||||||||||||||||
Net borrowings (payments) on senior revolving note |
55,300 | — | 54,000 | (8,000 | ) | |||||||||||
Payments on senior long-term debt |
(1,250 | ) | (3,550 | ) | (3,750 | ) | (9,775 | ) | ||||||||
Payments on unsecured notes payable |
(609 | ) | (1,410 | ) | (1,802 | ) | (10,986 | ) | ||||||||
Payments for repurchase of common stock |
— | — | (1,691 | ) | — | |||||||||||
Proceeds from stock option exercises |
— | — | — | 20 | ||||||||||||
Other |
(130 | ) | (102 | ) | (231 | ) | (202 | ) | ||||||||
Net cash provided by (used in) financing activities |
53,311 | (5,062 | ) | 46,526 | (28,943 | ) | ||||||||||
Net change in cash and cash equivalents |
(1,190 | ) | 2,630 | (2,747 | ) | 6,678 | ||||||||||
Cash and cash equivalents at beginning of the period |
3,305 | 6,942 | 4,862 | 2,894 | ||||||||||||
Cash and cash equivalents at end of the period |
$ | 2,115 | $ | 9,572 | 2,115 | 9,572 | ||||||||||
- 11 -