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8-K - FORM 8-K - Dolan Co. | c20722e8vk.htm |
Exhibit 99
THE DOLAN COMPANY REPORTS SECOND QUARTER RESULTS
| Second quarter revenues decreased 12.3% year-over-year to $69.4 million |
|
| Net income attributable to The Dolan Company was $2.6 million, or $0.09 per diluted share |
|
| Cash earnings were $5.9 million, or $0.19 per diluted share (See Non-GAAP Financial
Measures below) |
|
| Adjusted EBITDA was $12.9 million (See Non-GAAP Financial Measures below) |
|
| Company revises guidance for 2011 to reflect current foreclosure environment and the ACT
acquisition |
MINNEAPOLIS, MN August 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
June 30, 2011.
The second quarter remained challenging as we continue to experience a slowdown in our foreclosure
processing business. Regulatory scrutiny and negotiated process change have caused mortgage
servicers to slow down foreclosure referrals while they review their internal procedures, said
James P. Dolan, chairman, chief executive officer and president. He said the slowdown in default
referrals directly affected The Dolan Companys Professional Services Division and also affected
its Business Information Division, where default-related public notices have been an important
revenue source.
Although this process has dragged on longer than we had hoped, we believe it is a temporary
slowdown, Dolan said. There continues to be an enormous backlog of pending and future
foreclosures, and we believe the mortgage servicers are moving steadily towards amended procedures
that will allow an increased pace of referrals into foreclosures.
Meanwhile, our corporate rebalancing efforts are on track with the important addition of ACT
Litigation Services to our DiscoverReady e-discovery platform. ACT is a superb fit and extends our
e-discovery business into several significant areas of technology and process development, giving
us a more powerful combination of processing services to offer our growing client list, Dolan
said.
-1-
In the second quarter, revenues at our National Default Exchange, or NDeX, declined by almost 18%
year-over-year. Despite the slower market, we believe we held our market share in most of
our more mature states and we continued to see market share gains in some of our newer states such
as Florida and Georgia. We have taken steps to reduce our cost structure and become more
efficient, and we will reduce our cost structure further as we strive to recapture our margins,
even on temporarily lower industry-wide volumes, said Dolan.
Although DiscoverReady, our electronic discovery business, showed a modest revenue decline this
quarter, we attribute it in part to a challenging comparison. A year ago DiscoverReady had a
couple of extremely large legal matters that allowed it to have its best quarter ever. However,
DiscoverReadys revenues are up more than 20% sequentially from the first quarter of this year and
we continue to see strong growth from new clients. With the addition of ACT, we are even more
excited about the growth opportunities for this business and we are making good progress in
diversifying DiscoverReadys customer mix. The path to our initial goal of building our
e-discovery subsidiary into a $100 million business has now become much clearer, Dolan said.
Within our Business Information Division, margins were reduced by the decline in higher-margin
public notice revenues related to mortgage defaults. We are in the process of reorganizing and
centralizing some parts of the division to reduce costs and improve margins in the future. Our new
initiatives in the division are on plan and we continue to be optimistic about DataStreams growth
opportunities as well as the newly launched Legislative Information Services of America, Dolan
said.
Previously we were cautious about the second quarter given the foreclosure industry backdrop that
exists. We remain cautious as we think about our foreclosure processing business, given the
regulatory activities and other industry factors, but we continue to believe this is a matter of
revenue timing. A very large amount of foreclosure work remains to come, years worth of work, and
we are positioned to handle very large volumes when our law firm affiliates and their servicer
clients are ready to refer the mortgage default files, Dolan said.
Full Year 2011 Guidance
Based on second quarter results, the addition of ACT, which is accretive to cash earnings
immediately, and the outlook for the remainder of 2011, the company is revising its full-year
financial guidance as follows:
2011 Financial Guidance | ||
(dollars in millions, except per share numbers) | ||
Total revenues |
$297 - $305 | |
Adjusted EBITDA |
$61 - $67 | |
Cash earnings per diluted share |
$0.90 - $1.04 |
-2-
This guidance presumes the following: 1) no significant improvement in foreclosure volumes for
the remainder of the year; 2) operating expenses as a percent of total revenues are 90.5% to 91.8%;
3) non-controlling interest payments are $1.0 to $1.2 million; 4) interest expense is $6.3 to $6.4
million; 5) cash distributions to holders of non-controlling interest are $1.0 to $1.2
million; 6) the tax rate is 38% to 39%; and 7) fully diluted shares outstanding of 30.3 to 30.6
million.
Although this guidance includes the anticipated effect of the ACT acquisition, it excludes the
effect of any other businesses that may be acquired for 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
companys annual report on Form 10-K for year ended December 31, 2010.
No guidance for Net income attributable to The Dolan Company per diluted share (a GAAP financial
measure) is included in this release. This is because, with last weeks purchase of the assets of
ACT Litigation Services, Inc., the company is still working to calculate the amortization expense
on the intangible assets acquired from ACT and the fair value adjustment of the contingent
consideration, and therefore it cannot provide an accurate estimate of this measure at this time.
Second Quarter 2011
Financial results for the three months ended June 30, 2011, and 2010 are as follows:
Three Months | Three Months | |||||||||||
Ended | Ended | |||||||||||
June 30, 2011 | June 30, 2010 | Year-over-Year | ||||||||||
Dollars in thousands, except per share data | (unaudited) | (unaudited) | % Change | |||||||||
Total revenues |
$ | 69,439 | $ | 79,209 | (12.3 | )% | ||||||
Professional Services Division revenues |
48,416 | 56,454 | (14.2 | )% | ||||||||
Business Information Division revenues |
21,023 | 22,755 | (7.6 | )% | ||||||||
Operating income |
5,581 | 16,473 | (66.1 | )% | ||||||||
Net income attributable to The Dolan Company |
2,572 | 8,632 | (70.2 | )% | ||||||||
Adjusted EBITDA * |
12,906 | 24,155 | (46.6 | )% | ||||||||
Net income attributable to The Dolan Company
per diluted share |
$ | 0.09 | $ | 0.29 | (69.0 | )% | ||||||
Cash earnings * |
5,884 | 11,816 | (50.2 | )% | ||||||||
Cash earnings per diluted share * |
$ | 0.19 | $ | 0.39 | (51.3 | )% |
* | 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 companys 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 second quarter were $48.4 million, a decline of 14.2% from $56.5 million
in the second quarter of 2010. The decline was primarily the result of lower NDeX file volume.
NDeX received 80,800 mortgage default files for processing during the second quarter and generated
$32.7 million in revenues. This compares to 86,600 files received for processing and $39.7 million
in revenues in the second quarter of 2010. NDeX saw increased file growth in its newer markets,
particularly Florida, but experienced a decline in its more mature markets. Although the total
number of mortgage default files received decreased by only 6.8% in the quarter compared to the
second quarter of 2010, a subset of that, the number foreclosure files, was down more than 20%.
This was offset in part by a greater number of transfer, foreclosure restart, and mediation files.
Since the processing of foreclosure files has a higher fee and margin, the change in file mix had
an adverse impact on NDeXs second quarter margins.
Litigation Support contributed $15.7 million in revenues during the second quarter of 2011, a
decrease of 6.1% from the second quarter of 2010. The decrease is the result of a very strong
quarter a year ago at DiscoverReady. By comparison, this segment is up more than 20% sequentially
over the preceding quarter. Significant growth at new and existing clients helped offset record
revenues from DiscoverReadys two largest traditional clients last year.
Direct operating expenses within the Professional Services Division decreased 3.9% to $22.9 million
during the second quarter of 2011, from $23.9 million for the same period in 2010. Even with lower
file volume at NDeX, processing costs increased at some locations as a result of additional tasks
and procedural changes required by the customers of NDeXs law firm affiliates, requiring
additional processing work. NDeX continues to focus on reducing costs and increasing efficiencies
to offset volume declines. Selling, general and administrative expenses increased 9.4% on a
year-over-year basis to $15.2 million. The increases were largely the result of investments made
in DiscoverReady as well as NDeXs Florida operations. Total Professional Services Division
operating expenses as a percentage of division revenues increased to 87.9% for the quarter, from
76.3% in the second quarter of 2010. The increase is the result of negative operating leverage due
to the revenue declines at NDeX as well as investments made in DiscoverReady.
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.
-4-
Business Information Division revenues for the second quarter of 2011 were $21.0 million, a 7.6%
decrease from $22.8 million in the second quarter of 2010. The addition of DataStream in December
2010 and Federal News Service in August 2010 helped offset significant weakness in
public notice advertising. The company believes that a majority of the weakness in public notice
is related to temporary delays from large mortgage servicers that are deferring foreclosures as
previously described.
Total operating expenses within the Business Information Division rose 6.1% to $19.4 million from
the second 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 second quarter of
2011, direct operating expenses increased 9.8% to $8.4 million while selling, general and
administrative expenses for the division were flat year-over-year at $9.4 million.
Balance Sheet and Liquidity
As of June 30, 2011, the company held $3.3 million of cash and cash equivalents, compared to $4.9
million at the end of 2010. During the second quarter of 2011, the company generated $6.2 million
of cash from operating activities and $4.6 million of free cash flow, which is defined as net cash
provided by operating activities minus capital expenditures. Quarterly capital expenditures were
$1.7 million. Days sales outstanding were 91.3 days for the second quarter of 2011, which was up
from 75.7 days in the second 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 second quarter was $134.0 million, of which $47.5 million
was under a term loan facility. Net debt was $130.7 million, down $6.8 million from the second
quarter of last year. The combined weighted-average interest rate on the companys credit
facilities was 2.8%. The leverage ratio at the end of the quarter was 1.8 times total debt to
trailing twelve month pro forma adjusted EBITDA, up from 1.5 times as of December 31, 2010. The
leverage ratio remained well below the maximum of 3.0 times allowed in the senior debt covenants.
Subsequent to the end of the second quarter, the company borrowed $60.0 million under its revolving
credit facility to fund the closing payments in connection with the acquisition of ACT Litigation
Services. After giving effect to this borrowing, the company had $142.0 million outstanding on its
revolving credit facility and total debt of $193.1 million.
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 companys net cash or
borrowing position, which includes non-cash interest income or expense |
-5-
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. |
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 companys 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 | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
Net income attributable to The Dolan Company |
$ | 2,572 | $ | 8,632 | ||||
Interest expense, net |
1,365 | 1,312 | ||||||
Income tax expense |
1,870 | 5,673 | ||||||
Amortization of intangibles |
4,359 | 3,973 | ||||||
Depreciation expense |
1,803 | 2,723 | ||||||
Amortization of Detroit Legal News
Publishing intangible |
377 | 377 | ||||||
Non-cash compensation expense |
1,195 | 752 | ||||||
Non-cash fair value adjustment on
earnouts recorded in connection with
acquisitions |
29 | 294 | ||||||
Non-recurring income |
(394 | ) | | |||||
Non-controlling interest |
168 | 856 | ||||||
Cash distribution to holders of
non-controlling interest |
(438 | ) | (437 | ) | ||||
Adjusted EBITDA |
$ | 12,906 | $ | 24,155 | ||||
-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 | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
Net income attributable to The Dolan Company |
$ | 2,572 | $ | 8,632 | ||||
Non-cash interest income related to the
change in fair value of interest rate swaps |
| (302 | ) | |||||
Non-cash compensation expense |
1,195 | 752 | ||||||
Non-cash fair value adjustment on earnouts
recorded in connection with acquisitions |
29 | 294 | ||||||
Amortization of intangibles |
4,359 | 3,973 | ||||||
Amortization of Detroit Legal News
Publishing intangible |
377 | 377 | ||||||
Non-recurring income |
(394 | ) | | |||||
Adjustment to income tax expense related
to reconciling items at effective tax rate |
(2,254 | ) | (1,910 | ) | ||||
Cash earnings |
$ | 5,884 | $ | 11,816 | ||||
Net income attributable to The Dolan Company
per diluted share (GAAP) |
$ | 0.09 | $ | 0.29 | ||||
Change in redeemable non-controlling interest |
0.05 | 0.04 | ||||||
Net income attributable to The Dolan Company
common stockholders per diluted share (GAAP) |
$ | 0.14 | $ | 0.33 | ||||
Cash earnings per diluted share |
$ | 0.19 | $ | 0.39 | ||||
Weighted average diluted shares outstanding |
30,210,792 | 30,240,004 |
Conference Call
The company has scheduled a conference call for August 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
9144216#. 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 companys 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 second 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
companys guidance as well as statements using words such as anticipate, expect, believe,
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, 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 are each 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
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PER SHARE DATA)
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(unaudited) | ||||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 3,305 | $ | 4,862 | ||||
Accounts receivable, including unbilled services (net of allowances for doubtful accounts
of $1,282 and $1,578 as of June 30, 2011, and December 31, 2010, respectively) |
66,493 | 59,801 | ||||||
Unbilled pass-through costs |
5,349 | 7,140 | ||||||
Prepaid expenses and other current assets |
3,770 | 4,186 | ||||||
Income tax receivable |
1,455 | 4,183 | ||||||
Total current assets |
80,372 | 80,172 | ||||||
Investments |
12,898 | 13,808 | ||||||
Property and equipment, net |
17,532 | 17,333 | ||||||
Finite-life intangible assets, net |
186,063 | 195,959 | ||||||
Indefinite-lived intangible assets |
226,418 | 225,373 | ||||||
Other assets |
2,816 | 3,143 | ||||||
Total assets |
$ | 526,099 | $ | 535,788 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities |
||||||||
Current portion of long-term debt |
$ | 8,992 | $ | 7,578 | ||||
Accounts payable |
15,232 | 15,589 | ||||||
Accrued pass-through liabilities |
11,325 | 18,271 | ||||||
Accrued compensation |
8,332 | 5,409 | ||||||
Accrued liabilities |
4,610 | 5,537 | ||||||
Due to sellers of acquired businesses |
5,630 | 3,943 | ||||||
Deferred revenue |
20,692 | 21,689 | ||||||
Total current liabilities |
74,813 | 78,016 | ||||||
Long-term debt, less current portion |
125,052 | 131,568 | ||||||
Deferred income taxes |
9,338 | 7,794 | ||||||
Other liabilities |
11,723 | 12,972 | ||||||
Total liabilities |
220,926 | 230,350 | ||||||
Redeemable noncontrolling interest |
17,528 | 26,580 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity |
||||||||
Common stock, $0.001 par value; authorized: 70,000,000 shares;
outstanding: 30,577,445 and 30,511,408 shares as of June 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) |
(1,346 | ) | (1,298 | ) | ||||
Additional paid-in capital |
288,936 | 286,148 | ||||||
Retained earnings (accumulated deficit) |
25 | (6,022 | ) | |||||
Total stockholders equity |
287,645 | 278,858 | ||||||
Total liabilities and stockholders equity |
$ | 526,099 | $ | 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 | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
||||||||||||||||
Professional Services |
$ | 48,416 | $ | 56,454 | $ | 100,372 | $ | 112,480 | ||||||||
Business Information |
21,023 | 22,755 | 41,615 | 43,707 | ||||||||||||
Total revenues |
69,439 | 79,209 | 141,987 | 156,187 | ||||||||||||
Operating expenses |
||||||||||||||||
Direct operating: Professional Services |
22,936 | 23,861 | 46,438 | 46,051 | ||||||||||||
Direct operating: Business Information |
8,373 | 7,624 | 16,711 | 14,540 | ||||||||||||
Selling, general and administrative |
26,828 | 25,639 | 54,602 | 50,827 | ||||||||||||
Amortization |
4,359 | 3,973 | 8,882 | 7,966 | ||||||||||||
Depreciation |
1,803 | 2,723 | 3,737 | 5,459 | ||||||||||||
Total operating expenses |
64,299 | 63,820 | 130,370 | 124,843 | ||||||||||||
Equity in earnings of affiliates |
441 | 1,084 | 1,189 | 2,512 | ||||||||||||
Operating income |
5,581 | 16,473 | 12,806 | 33,856 | ||||||||||||
Non-operating income (expense) |
||||||||||||||||
Interest expense, net of interest income |
(1,365 | ) | (1,614 | ) | (2,973 | ) | (3,350 | ) | ||||||||
Non-cash interest income related to
interest rate swaps |
| 302 | 286 | 665 | ||||||||||||
Other income |
394 | | 394 | | ||||||||||||
Total non-operating expense |
(971 | ) | (1,312 | ) | (2,293 | ) | (2,685 | ) | ||||||||
Income before income taxes |
4,610 | 15,161 | 10,513 | 31,171 | ||||||||||||
Income tax expense |
(1,870 | ) | (5,673 | ) | (4,079 | ) | (11,663 | ) | ||||||||
Net income |
2,740 | 9,488 | 6,434 | 19,508 | ||||||||||||
Less: Net income attributable to redeemable
noncontrolling interests |
(168 | ) | (856 | ) | (387 | ) | (1,719 | ) | ||||||||
Net income attributable to
The Dolan Company |
$ | 2,572 | $ | 8,632 | $ | 6,047 | $ | 17,789 | ||||||||
Earnings per share basic and diluted: |
||||||||||||||||
Net income attributable to
The Dolan Company |
$ | 0.09 | $ | 0.29 | $ | 0.20 | $ | 0.59 | ||||||||
Decrease in redeemable
noncontrolling interest in NDeX |
0.05 | 0.04 | 0.08 | 0.04 | ||||||||||||
Net income attributable to The Dolan
Company common stockholders |
$ | 0.14 | $ | 0.33 | $ | 0.28 | $ | 0.63 | ||||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
30,107,025 | 30,136,567 | 30,117,924 | 30,121,831 | ||||||||||||
Diluted |
30,210,792 | 30,240,004 | 30,252,095 | 30,217,885 |
-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 | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Cash flows from operating activities |
||||||||||||||||
Net income |
$ | 2,740 | $ | 9,488 | $ | 6,434 | $ | 19,508 | ||||||||
Distributions received from The Detroit Legal News
Publishing, LLC |
700 | 1,400 | 2,100 | 3,500 | ||||||||||||
Distributions paid to holders of noncontrolling interests |
(438 | ) | (437 | ) | (474 | ) | (1,061 | ) | ||||||||
Gain on sale of investment |
(394 | ) | | (394 | ) | | ||||||||||
Non-cash operating activities: |
||||||||||||||||
Amortization |
4,359 | 3,973 | 8,882 | 7,966 | ||||||||||||
Depreciation |
1,803 | 2,723 | 3,737 | 5,459 | ||||||||||||
Equity in earnings of affiliates |
(441 | ) | (1,084 | ) | (1,189 | ) | (2,512 | ) | ||||||||
Stock-based compensation expense |
1,195 | 752 | 2,033 | 1,358 | ||||||||||||
Deferred income taxes |
28 | | 28 | | ||||||||||||
Change in value of interest rate swap |
| (296 | ) | (286 | ) | (665 | ) | |||||||||
Amortization of debt issuance costs |
98 | 81 | 186 | 164 | ||||||||||||
Non-cash fair value adjustment on earnouts
recorded in connection with acquisitions |
29 | 294 | 358 | 588 | ||||||||||||
Changes in operating assets and liabilities,
net of effects of business combinations: |
||||||||||||||||
Accounts receivable and unbilled pass-through costs |
(917 | ) | (668 | ) | (4,850 | ) | (2,033 | ) | ||||||||
Prepaid expenses and other current assets |
839 | 180 | 3,198 | 55 | ||||||||||||
Other assets |
(34 | ) | (18 | ) | | 18 | ||||||||||
Accounts payable and accrued liabilities |
(2,132 | ) | (3,340 | ) | (5,255 | ) | (605 | ) | ||||||||
Deferred revenue and other liabilities |
(1,197 | ) | (2,832 | ) | (692 | ) | (370 | ) | ||||||||
Net cash provided by operating activities |
6,238 | 10,216 | 13,816 | 31,370 | ||||||||||||
Cash flows from investing activities |
||||||||||||||||
Acquisitions and investments |
(4,986 | ) | (115 | ) | (5,071 | ) | (115 | ) | ||||||||
Capital expenditures |
(1,664 | ) | (1,442 | ) | (3,911 | ) | (3,326 | ) | ||||||||
Escrow payment received on sale of investment |
394 | | 394 | | ||||||||||||
Net cash used in investing activities |
(6,256 | ) | (1,557 | ) | (8,588 | ) | (3,441 | ) | ||||||||
Cash flows from financing activities |
||||||||||||||||
Net borrowings (payments) on senior revolving note |
2,500 | | (1,300 | ) | (8,000 | ) | ||||||||||
Payments on senior long-term debt |
(1,250 | ) | (3,175 | ) | (2,500 | ) | (6,225 | ) | ||||||||
Payments on unsecured notes payable |
(603 | ) | (2,268 | ) | (1,193 | ) | (9,576 | ) | ||||||||
Payments for repurchase of common stock |
| | (1,691 | ) | | |||||||||||
Proceeds from stock option exercises |
| 20 | | 20 | ||||||||||||
Other |
(48 | ) | (50 | ) | (101 | ) | (100 | ) | ||||||||
Net cash provided by (used in) financing activities |
599 | (5,473 | ) | (6,785 | ) | (23,881 | ) | |||||||||
Net change in cash and cash equivalents |
581 | 3,186 | (1,557 | ) | 4,048 | |||||||||||
Cash and cash equivalents at beginning of the period |
2,724 | 3,756 | 4,862 | 2,894 | ||||||||||||
Cash and cash equivalents at end of the period |
$ | 3,305 | $ | 6,942 | 3,305 | 6,942 | ||||||||||
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