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8-K - FORM 8-K - Dolan Co. | c13053e8vk.htm |
Exhibit 99 |
THE DOLAN COMPANY REPORTS
FOURTH QUARTER AND YEAR-END 2010 RESULTS
FOURTH QUARTER AND YEAR-END 2010 RESULTS
| Fourth quarter revenues increased 10.2% year-over-year to $76.7 million |
|
| 2010 revenues increased 18.4% to $311.3 million |
|
| Net income attributable to The Dolan Company was $5.5 million, or $0.18 per diluted share
in the fourth quarter, and for the year it was $32.4 million, or $1.07 per diluted share |
|
| Free cash flow was $17.3 million in the fourth quarter and $55.3 million for the year
(See Non-GAAP Financial Measures below) |
|
| Cash earnings per diluted share were $0.28 for the fourth quarter and $1.49 for the year
(See Non-GAAP Financial Measures below) |
|
| Adjusted EBITDA was $19.8 million for the fourth quarter and $92.8 million for the year
(See Non-GAAP Financial Measures below) |
|
| Fourth quarter EPS results were lowered by approximately $0.04 because of non-recurring
items including debt refinance fees and corporate reorganization costs as well as an interim
higher tax rate |
|
| Company provides guidance for 2011 |
MINNEAPOLIS, MINNESOTA February 23, 2010 The Dolan Company (NYSE: DM), a leading provider of
professional services and business information to legal, financial and real estate sectors in the
United States, today announced financial results for the three months and year ended December 31,
2010. These financial results are preliminary pending the filing of an annual report on Form 10-K
with the U.S. Securities and Exchange Commission.
In 2010, we were pleased with the 29% revenue growth of the Professional Services Division, our
largest operating group. DiscoverReady nearly doubled its revenues on a pro-forma basis from 2009.
NDeX grew 8% in 2010, including both organic growth and acquisitions, despite facing strong
regulatory headwinds, said James P. Dolan, chairman, chief executive officer and president.
Overall our rebalancing of the company while maintaining strong growth has gone as we intended,
Dolan said.
-1-
In the fourth quarter, NDeX grew its revenues by almost 13% year-over-year due to market share
gains. Overall margins were modestly reduced as we made investments that set the stage for greater
growth and profitability in the future, said Dolan.
We continued to diversify our Business Information Division during the fourth quarter with the
addition of both DataStream and Legislative Information Services of America, which are
subscription-based businesses. Division margins were negatively affected by a decline in
higher-margin public notice revenue. We believe this decline resulted from regulatory changes and
temporary slowdowns by mortgage servicers that delayed the timing of revenue.
During the quarter, company-wide, we incurred some non-recurring items that reduced our EPS by
approximately $0.04. These items, in combination with the shortfall in high-margin public notice
revenue, are the primary reasons for the difference relative to previous EPS guidance. Although
the timing of certain public notice revenues has been delayed, we believe our overall business
model remains strong, and that revenue timing issues should be relatively short-lived.
Our strong free cash flow in the quarter allowed us to acquire DataStream and diversify our
company with little change to net debt. We are continuing to pursue both organic growth and
acquisitions to sustain our growth rates while providing greater revenue balance, Dolan said.
Full Year 2011 Guidance
Based on the outlook for 2011, the company is providing full-year financial guidance as follows:
2011 Financial Guidance | ||||
(dollars in millions, | ||||
except per share numbers) | ||||
Total revenues |
$ | 328 338 | ||
Adjusted EBITDA |
$ | 95 100 | ||
Net income attributable to The Dolan Company per diluted share |
$ | 1.20 $1.30 | ||
Cash earnings per diluted share |
$ | 1.65 $1.75 |
This guidance presumes the following: 1) operating expenses as a percent of total revenue of
79.5%-80.5%; 2) non-controlling interest of $3.1-$3.3 million; 3) interest expense of $5.0-$5.5
million; 4) cash distributions to holders of non-controlling interest of $1.5-$2.0 million; 5) tax
rate of 38%-39%; and 6) fully diluted shares outstanding of 30.3-30.6 million.
This guidance excludes the effect of any businesses that may be acquired in 2011 and assumes that
there will be no material effect on results of operations from current or future
foreclosure-related government legislation, programs or investigations, or from investor- or
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 to be filed for year ended December 31, 2010, the companys
Form 10-K filed for the year ended December 31, 2009, and in the companys Form 10-Q filed for the
second and third quarters of 2010.
-2-
Fourth Quarter 2010
Financial results for the three months ended Dec. 31, 2010, and 2009 are as follows:
Three Months | Three Months | Year-over- | ||||||||||
Ended | Ended | Year % | ||||||||||
Dec. 31, 2010 | Dec. 31, 2009 | Change | ||||||||||
Dollars in thousands, except per share data | (unaudited) | (unaudited) | ||||||||||
Total revenues |
$ | 76,663 | $ | 69,597 | 10.2 | % | ||||||
Professional Services Division revenues |
54,252 | 46,213 | 17.4 | % | ||||||||
Business Information Division revenues |
22,411 | 23,384 | (4.2 | )% | ||||||||
Operating income |
12,595 | 13,161 | (4.3 | )% | ||||||||
Net income attributable to The Dolan Company |
5,526 | 8,090 | (31.7 | )% | ||||||||
Adjusted EBITDA * |
19,762 | 20,725 | (4.6 | )% | ||||||||
Net income attributable to The Dolan Company
per diluted share |
$ | 0.18 | $ | 0.27 | (33.3 | )% | ||||||
Cash earnings * |
8,584 | 9,508 | (9.7 | )% | ||||||||
Cash earnings per diluted share * |
$ | 0.28 | $ | 0.32 | (12.5 | )% |
* | Please refer to the Non-GAAP Financial Measures below for a reconciliation of these non-GAAP
financial measures to GAAP and why we believe these are important measures of our performance. |
Total revenues for the fourth quarter of 2010 were $76.7 million, an increase of 10.2% from $69.6
million in the same period last year. Spurred by the strength of its DiscoverReady and NDeX
businesses, Professional Services Division revenues increased 17.4% to $54.3 million during the
fourth quarter, while Business Information Division revenues were $22.4 million, down 4.2% from the
fourth quarter of 2009.
DiscoverReady, which was acquired in November 2009, contributed $9.5 million in revenues during the
fourth quarter of 2010, representing more than 50% growth from the previous year when we owned it
for two months. Quarterly NDeX revenues grew by 12.8%, all organic, to $40.9 million.
Total operating expenses for the fourth quarter of 2010 were $65.0 million, or 84.8% of total
revenues, an increase of 12.9% from $57.6 million, which was 82.7% of total revenues for the same
prior-year period. The increase was largely attributable to investments made in DiscoverReady and
NDeX.
Operating income for the three months ended Dec. 31, 2010, was $12.6 million, a decrease of 4.3%
from $13.2 million in the fourth quarter of 2009. Adjusted EBITDA declined 4.6% year-over-year to
$19.8 million due primarily to higher SG&A costs and a lower-margin revenue mix due to a delay in
certain public notice revenues.
Professional Services Division Results
The Professional Services Division provides specialized 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 and document review services to major corporations and law firms
across the United States.
-3-
Division revenues for the fourth quarter were $54.3 million, up 17.4% from $46.2 million in the
fourth quarter of 2009. The increase was a result of higher NDeX file volume and increased
DiscoverReady revenues. DiscoverReady generated $9.5 million in fourth quarter revenues, compared
to revenues of $6.1 million for the fourth quarter of 2009.
NDeX received 96,700 mortgage default files for processing during the fourth quarter, an increase
of 18.0%, and generated $40.9 million in revenues. This compares to 81,900 files received for
processing and $36.3 million in revenues in the fourth quarter of 2009. In addition to the growth
due to NDeXs Florida operations, which we acquired in October 2009, NDeX saw increased file volume
from existing customers and, the company believes, from market share gains.
Direct operating expenses within the Professional Services Division increased to $22.6 million
during the fourth quarter of 2010, from $20.0 million for the same period in 2009. Selling,
general and administrative expenses increased 24.1% on a year-over-year basis to $14.7 million.
The increases were largely the result of investments made in NDeX, as well as increased sales and
marketing investments at DiscoverReady. Total Professional Services Division operating expenses as
a percentage of division revenues decreased 290 basis points to 77.0% for the quarter, from 79.9%
in the fourth quarter of 2009. The decrease is the result of operating leverage due to the revenue
growth at NDeX, offset in part by investments in DiscoverReady.
Business Information Division Results
The Business Information Division publishes 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 fourth quarter of 2010 were $22.4 million, a 4.2%
decrease from $23.4 million in the fourth quarter of 2009. The addition of DataStream in December
2010 and Federal News Service in August 2010 helped offset weakness in public notice advertising.
The company believes that a majority of the weakness in public notice is related to delays from
large mortgage servicers who are focused on reviewing systems and compliance to ensure proper
foreclosure processing as well as a delay in the timing of revenue resulting from legislative
changes made in Maryland.
Total operating expenses within the Business Information Division rose 10.2% to $19.4 million from
the fourth quarter of 2009, due to the acquisition of DataStream and to new product initiatives
begun in the first quarter of 2010. On a year-over-year basis, direct operating expenses increased
11.9% to $8.2 million while selling, general and administrative expenses for the division increased
10.4% year-over-year to $9.8 million.
-4-
Balance Sheet and Liquidity
As of December 31, 2010, the company held $4.9 million of cash and cash equivalents, compared to
$2.9 million at the end of 2009. During the fourth quarter of 2010, the company generated $20.4
million of cash from operating activities and $17.3 million of free cash flow, which is defined as
net cash provided by operating activities minus capital expenditures, which were $3.1 million. For
the year ended December 31, 2010, cash from operations increased 5% to $64.4 million. Days sales
outstanding were 74.8 days for the fourth quarter of 2010, which was down sequentially, but up
versus 71.8 days last year due in part to longer collection cycles at DiscoverReady.
Total debt outstanding at the end of the fourth quarter was $139.1 million, of which $50 million
was under a term loan facility. The combined weighted-average interest rate on the companys
credit facilities was 2.5%. The leverage ratio at the end of the quarter was 1.5 times total debt
to trailing twelve month pro forma adjusted EBITDA, down from 1.8 times as of December 31, 2009.
The leverage ratio remained well below the maximum of 3.0 times allowed in the 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 our 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 |
-5-
| 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 companys calculations of adjusted EBITDA,
cash earnings and cash earnings per diluted share 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 | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income attributable to The Dolan Company |
$ | 5,526 | $ | 8,090 | $ | 32,355 | $ | 30,813 | ||||||||
Interest expense, net |
2,312 | 1,502 | 6,358 | 6,072 | ||||||||||||
Income tax expense |
4,271 | 5,363 | 21,479 | 18,570 | ||||||||||||
Amortization of intangibles |
4,007 | 3,866 | 15,954 | 17,085 | ||||||||||||
Depreciation expense |
1,970 | 2,701 | 9,842 | 9,439 | ||||||||||||
Amortization of Detroit Legal News Publishing intangible |
377 | 378 | 1,508 | 1,508 | ||||||||||||
Non-cash compensation expense |
913 | 695 | 3,243 | 2,556 | ||||||||||||
Non-cash fair value adjustment on
earnout recorded in connection with
acquisition |
188 | | 1,070 | | ||||||||||||
Non-recurring income |
| (2,359 | ) | (197 | ) | (3,794 | ) | |||||||||
Non-controlling interest |
486 | 584 | 2,886 | 3,784 | ||||||||||||
Cash distribution to holders of
non-controlling interest |
(288 | ) | (95) | (1,662) | (3,240 | ) | ||||||||||
Adjusted EBITDA |
$ | 19,762 | $ | 20,725 | $ | 92,836 | $ | 82,793 | ||||||||
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):
-6-
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income attributable to The Dolan Company |
$ | 5,526 | $ | 8,090 | $ | 32,355 | $ | 30,813 | ||||||||
Non-cash interest income related to the change in
fair value of interest rate swaps |
(292 | ) | (399 | ) | (1,186 | ) | (1,134 | ) | ||||||||
Non-cash compensation expense |
913 | 695 | 3,243 | 2,556 | ||||||||||||
Non-cash fair value adjustment on earnout liability |
188 | | 1,070 | | ||||||||||||
Amortization of intangibles |
4,007 | 3,866 | 15,954 | 17,085 | ||||||||||||
Amortization of Detroit Legal News Publishing intangible |
377 | 378 | 1,508 | 1,508 | ||||||||||||
Non-recurring income |
| (2,359 | ) | (197 | ) | (3,794 | ) | |||||||||
Adjustment to income tax expense related to
reconciling items at effective tax rate |
(2,135 | ) | (763 | ) | (7,709 | ) | (7,073 | ) | ||||||||
Cash earnings |
$ | 8,584 | $ | 9,508 | $ | 45,038 | $ | 39,961 | ||||||||
Net income attributable to The Dolan Company per
diluted share (GAAP) |
$ | 0.18 | $ | 0.27 | $ | 1.07 | $ | 1.03 | ||||||||
(Increase) decrease in redeemable non-controlling
interest |
(0.01 | ) | (0.05 | ) | 0.01 | (0.31 | ) | |||||||||
Net income attributable to The Dolan Company
common stockholders per diluted share (GAAP) |
$ | 0.17 | $ | 0.22 | $ | 1.08 | $ | 0.72 | ||||||||
Cash earnings per diluted share |
$ | 0.28 | $ | 0.32 | $ | 1.49 | $ | 1.34 | ||||||||
Weighted average diluted shares outstanding |
30,380,635 | 29,952,337 | 30,314,174 | 29,916,351 |
Conference Call
The company has scheduled a conference call for Feb. 23, 2011, at 8:30 a.m. U.S. Eastern Time (7:30
a.m. U.S. Central Time). 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 fourth quarter and year-end 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.
Safe Harbor Statement
This release contains forward-looking statements, including under Full Year 2011 Guidance, that
reflect the companys current expectations and projections about future results, performance,
prospects and opportunities. The words outlook, may, anticipate, expect, believe,
continue, will, estimate, assume, pursue and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are based on information currently
available to the company and are subject to many risks, uncertainties and other factors that may
cause actual results, performance, prospects or opportunities to be materially different from those
expressed in, or implied by, such forward looking statements. These risks, uncertainties and other
factors include,
-7-
but are not limited to, the following: the company operates in highly competitive markets and depends upon the
economies and the demographics of the legal, financial and real estate sectors in the markets
served, and changes in those sectors could have an adverse effect on revenues, cash flows and
profitability; David A. Trott, the chairman and chief executive officer of NDeX, and certain other
employees of NDeX who are also shareholders and principal attorneys of the companys law firm
customers, may under certain circumstances have interests that differ from, or conflict with, the
companys interests; NDeXs business revenues are very concentrated, as NDeX currently provides
mortgage default processing services to eight law firm customers, and if the number of case files
referred by its mortgage default processing service law firm customers, or loan servicers and
mortgage lenders served directly for properties located in California and Nevada, decreases or
fails to increase, the companys operating results and ability to execute its growth strategy could
be adversely affected; regulations, laws, bills introduced, court orders, investigations by state
or federal officials, and voluntary programs or moratoria seeking to review foreclosure processes
or mitigate foreclosures in states where the company does business may have an adverse effect on,
restrict, or slow the companys mortgage default processing services and public notice operations
(including legislation in Michigan, Indiana and Florida, the Hope for Homeowners Act, the Emergency
Economic Stabilization Act, the Streamlined Modification Program, the Homeowner Affordability and
Stability Plan, the Making Home Affordable Program, the Home Affordable Modification Program, the
Home Affordable Foreclosure Alternatives Program, the Protecting Tenants at Foreclosure Act,
investigations by state attorneys general, and voluntary foreclosure relief programs developed by
lenders, loan servicers and the Hope Now Alliance); The Dolan Company has owned and operated
DiscoverReady LLC just over one year and is highly dependent on the skills and knowledge of the
individuals serving as chief executive officer and president of DiscoverReady; DiscoverReadys
business revenues are very concentrated among a few customers and if these customers choose to
perform their discovery themselves or with another provider and if DiscoverReady is unable to
develop new customer relationships, operating results and the ability to execute growth strategies
for DiscoverReady may be adversely affected; The Dolan Company is dependent on its senior
management team; the company intends to continue to pursue acquisition opportunities, which it may
not do successfully and which may subject the company to considerable business and financial risk,
and the company may be required to incur additional indebtedness or raise additional capital to
fund these acquisitions and this additional financing may not be available on satisfactory terms or
at all; and growing the company may place a strain on management and internal systems, processes
and controls. Please see Risk Factors contained in Item 1A of the companys annual report on Form
10-K for 2009 filed with the SEC on March 8, 2010, available at the SECs Web site or the companys
Web site, and the Risk Factors described in Item 1A of the companys annual report on Form 10-K
for 2010 to be filed in March 2011 for a description of these and other risks, uncertainties and
factors that could cause actual results, performance, prospects or opportunities to differ
materially from those expressed in, or implied by, forward looking statements. Investors or
prospective investors should not place undue reliance upon any forward-looking statements. Except
as required by federal securities law, the company assumes no obligation to update publicly or
revise any forward-looking statements for any reason, nor to update the reasons actual results
could differ materially from those anticipated in these forward-looking statements, even if new
information becomes available, new events occur or circumstances change in the future.
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
December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands, except share data) | ||||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 4,862 | $ | 2,894 | ||||
Accounts receivable, including unbilled
services (net of allowances for doubtful
accounts of $1,578 and $1,113 as of
December 31, 2010, and 2009, respectively) |
59,801 | 57,205 | ||||||
Unbilled pass-through costs |
7,140 | 13,087 | ||||||
Prepaid expenses and other current assets |
4,186 | 2,948 | ||||||
Income tax receivable |
4,183 | | ||||||
Total current assets |
80,172 | 76,134 | ||||||
Investments |
13,808 | 15,479 | ||||||
Property and equipment, net |
17,333 | 15,457 | ||||||
Finite-life intangible assets, net |
195,959 | 193,687 | ||||||
Indefinite-lived intangible assets |
225,373 | 222,580 | ||||||
Other assets |
3,143 | 4,953 | ||||||
Total assets |
$ | 535,788 | $ | 528,290 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
Current liabilities |
||||||||
Current portion of long-term debt |
$ | 7,578 | $ | 22,005 | ||||
Accounts payable |
15,589 | 16,030 | ||||||
Accrued pass-through liabilities |
18,271 | 25,929 | ||||||
Accrued compensation |
5,409 | 4,384 | ||||||
Accrued liabilities |
5,537 | 5,371 | ||||||
Due to sellers of acquired businesses |
3,943 | 4,685 | ||||||
Deferred revenue |
21,689 | 18,797 | ||||||
Total current liabilities |
78,016 | 97,201 | ||||||
Long-term debt, less current portion |
131,568 | 137,960 | ||||||
Deferred income taxes |
7,794 | 8,160 | ||||||
Deferred revenue and other liabilities |
12,972 | 9,506 | ||||||
Total liabilities |
230,350 | 252,827 | ||||||
Redeemable noncontrolling interest |
26,580 | 26,600 | ||||||
Commitments and contingencies
|
||||||||
Stockholders equity |
| | ||||||
Common stock, $0.001 par value;
authorized: 70,000,000 shares;
outstanding: 30,511,408 shares and
30,326,437 as of December 31, 2010, and
2009, 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) |
(1,298 | ) | | |||||
Additional paid-in capital |
286,148 | 287,210 | ||||||
Accumulated deficit |
(6,022 | ) | (38,377 | ) | ||||
Total stockholders equity |
278,858 | 248,863 | ||||||
Total liabilities and stockholders equity |
$ | 535,788 | $ | 528,290 | ||||
-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 | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues |
||||||||||||||||
Professional Services |
$ | 54,252 | $ | 46,213 | $ | 223,069 | $ | 172,535 | ||||||||
Business Information |
22,411 | 23,384 | 88,240 | 90,382 | ||||||||||||
Total revenues |
76,663 | 69,597 | 311,309 | 262,917 | ||||||||||||
Operating expenses |
||||||||||||||||
Direct operating: Professional Services |
22,640 | 20,004 | 91,481 | 66,697 | ||||||||||||
Direct operating: Business Information |
8,245 | 7,370 | 30,014 | 29,197 | ||||||||||||
Selling, general and administrative |
28,132 | 23,649 | 105,717 | 89,722 | ||||||||||||
Amortization |
4,007 | 3,866 | 15,954 | 17,085 | ||||||||||||
Depreciation |
1,970 | 2,701 | 9,842 | 9,439 | ||||||||||||
Total operating expenses |
64,994 | 57,590 | 253,008 | 212,140 | ||||||||||||
Equity in earnings of affiliates |
926 | 1,154 | 4,580 | 4,615 | ||||||||||||
Operating income |
12,595 | 13,161 | 62,881 | 55,392 | ||||||||||||
Non-operating income (expense) |
||||||||||||||||
Interest expense, net of interest income |
(2,604 | ) | (1,901 | ) | (7,543 | ) | (7,206 | ) | ||||||||
Non-cash interest income related to interest rate swaps |
292 | 399 | 1,185 | 1,134 | ||||||||||||
Other income |
| 2,378 | 197 | 3,847 | ||||||||||||
Total non-operating expense |
(2,312 | ) | 876 | (6,161 | ) | (2,225 | ) | |||||||||
Income before income taxes |
10,283 | 14,037 | 56,720 | 53,167 | ||||||||||||
Income tax expense |
(4,271 | ) | (5,363 | ) | (21,479 | ) | (18,570 | ) | ||||||||
Net income |
6,012 | 8,674 | 35,241 | 34,597 | ||||||||||||
Less: Net income attributable to redeemable
noncontrolling interest |
486 | 584 | 2,886 | 3,784 | ||||||||||||
Net income attributable to The Dolan Company |
$ | 5,526 | $ | 8,090 | $ | 32,355 | $ | 30,813 | ||||||||
Earnings per share basic and diluted: |
||||||||||||||||
Net income attributable to The Dolan Company |
$ | 0.18 | $ | 0.27 | $ | 1.07 | $ | 1.03 | ||||||||
(Increase) decrease in redeemable noncontrolling
interest in NDeX |
(0.01 | ) | (0.05 | ) | 0.01 | (0.31 | ) | |||||||||
Net income attributable to The Dolan Company
common stockholders |
$ | 0.17 | $ | 0.22 | $ | 1.08 | $ | 0.72 | ||||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
30,183,941 | 29,861,333 | 30,150,837 | 29,831,660 | ||||||||||||
Diluted |
30,380,635 | 29,952,337 | 30,314,174 | 29,916,351 |
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The Dolan Company
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Cash flows from operating activities |
||||||||||||||||
Net income |
$ | 6,012 | $ | 8,674 | $ | 35,241 | $ | 34,597 | ||||||||
Distributions received from The Detroit Legal News Publishing, LLC |
2,100 | 1,400 | 7,000 | 5,600 | ||||||||||||
Distributions paid to holders of non-controlling interest |
(288 | ) | (95 | ) | (1,662 | ) | (3,240 | ) | ||||||||
Gain on sale of investment |
| (2,359 | ) | (197 | ) | (2,359 | ) | |||||||||
Non-cash operating activities: |
||||||||||||||||
Amortization |
4,007 | 3,866 | 15,954 | 17,085 | ||||||||||||
Depreciation |
1,970 | 2,701 | 9,842 | 9,439 | ||||||||||||
Equity in earnings of affiliates |
(926 | ) | (1,154 | ) | (4,580 | ) | (4,615 | ) | ||||||||
Stock-based compensation expense |
912 | 695 | 3,242 | 2,556 | ||||||||||||
Deferred income taxes |
3,376 | 2,140 | 2,913 | 2,306 | ||||||||||||
Change in value of interest rate swap |
(292 | ) | (105 | ) | (1,185 | ) | (836 | ) | ||||||||
Amortization of debt issuance costs |
624 | 75 | 868 | 257 | ||||||||||||
Non-cash fair value adjustment on earnout recorded in connection with acquisition |
188 | | 1,070 | | ||||||||||||
Changes in operating assets and liabilities, net of effects of business combinations: |
||||||||||||||||
Accounts receivable and unbilled pass-through costs |
11,553 | 6,339 | 4,595 | (15,951 | ) | |||||||||||
Prepaid expenses and other current assets |
(4,016 | ) | 1,850 | (5,287 | ) | 2,089 | ||||||||||
Other assets |
38 | 56 | 398 | (451 | ) | |||||||||||
Accounts payable and accrued liabilities |
(6,440 | ) | 2,085 | (7,256 | ) | 9,195 | ||||||||||
Deferred revenue and other liabilities |
1,583 | 2,977 | 3,467 | 5,577 | ||||||||||||
Net cash provided by operating activities |
20,401 | 29,145 | 64,423 | 61,249 | ||||||||||||
Cash flows from investing activities |
||||||||||||||||
Acquisitions and investments |
(15,221 | ) | (54,437 | ) | (17,808 | ) | (56,878 | ) | ||||||||
Capital expenditures |
(3,145 | ) | (466 | ) | (9,156 | ) | (3,050 | ) | ||||||||
Proceeds on sale of investment |
| 3,558 | | 3,558 | ||||||||||||
Other |
| 8 | 197 | 108 | ||||||||||||
Net cash used in investing activities |
(18,366 | ) | (51,337 | ) | (26,767 | ) | (56,262 | ) | ||||||||
Cash flows from financing activities |
||||||||||||||||
Net borrowings (payments) on senior revolving note |
325 | 8,000 | (7,675 | ) | 8,000 | |||||||||||
Payments on senior long-term debt |
| (3,050 | ) | (9,775 | ) | (10,300 | ) | |||||||||
Deferred acquisition payments and earnouts |
(5,000 | ) | | (5,000 | ) | | ||||||||||
Payment on unsecured notes payable |
(579 | ) | | (11,565 | ) | (1,750 | ) | |||||||||
Payments of deferred financing costs |
(1,491 | ) | (466 | ) | (1,491 | ) | (466 | ) | ||||||||
Other |
| (38 | ) | (182 | ) | (33 | ) | |||||||||
Net cash used in financing activities |
(6,745 | ) | 4,446 | (35,688 | ) | (4,549 | ) | |||||||||
Net increase in cash and cash equivalents |
(4,710 | ) | (17,746 | ) | 1,968 | 438 | ||||||||||
Cash and cash equivalents at beginning of the period |
9,572 | 20,640 | 2,894 | 2,456 | ||||||||||||
Cash and cash equivalents at end of the period |
$ | 4,862 | $ | 2,894 | $ | 4,862 | $ | 2,894 | ||||||||
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