Dolan Media Company Reports Fourth Quarter and Year-End 2007 Results

Business Wire, March 27, 2008

- Fourth quarter 2007 total revenues increased 26.9% year-over-year to $40.9 million

- Net income for fourth quarter 2007 was $3.1 million

- Fourth quarter adjusted EBITDA increased 59.3% year-over-year to $10.7 million (see "Non-GAAP Financial Measures" below)

- Company provides financial guidance for first quarter and full-year 2008

MINNEAPOLIS -- Dolan Media Company (NYSE: DM), a leading provider of business information and professional services to the legal, financial and real estate sectors in the United States, today announced financial results for the three months and year ended December 31, 2007. These financial results are preliminary pending the filing of the company's Form 10-K with the U.S. Securities and Exchange Commission.

Total revenues for the fourth quarter of 2007 were $40.9 million, an increase of 26.9% from $32.2 million recorded in the same period the previous year. Net income for the fourth quarter of 2007 was $3.1 million, or net income of $0.12 per diluted share on 25.3 million weighted average shares outstanding, compared to a net loss of $3.3 million, or a net loss of $0.36 per diluted share on 9.3 million weighted average shares outstanding, in the fourth quarter of 2006. Net loss for the fourth quarter of 2006 included non-cash interest expense of $5.0 million related to the company's redeemable preferred stock.

In connection with Dolan Media's initial public offering, on August 7, 2007, the company converted its Series C preferred stock and redeemed all of its outstanding Series A and Series B preferred stock, including accrued dividends and shares issued upon conversion of the Series C preferred stock. As a result, there are no longer any shares of preferred stock outstanding and therefore, since August 7, 2007 the company has not recorded non-cash interest expense related to its Series A and Series C preferred stock.

Adjusted EBITDA for the fourth quarter of 2007 was $10.7 million, or 26.1% of revenues, an increase of 59.2% from $6.7 million, or 20.8% of revenues, in the same prior-year period. See "Non-GAAP Financial Measures" below for a description of how the company calculates adjusted EBITDA and why the company believes it is an important measure of its performance.

"We are very pleased with what the company accomplished in 2007," said James P. Dolan, chairman, chief executive officer and president of Dolan Media Company. "Besides our solid financial performance, the highlight of the year was our very successful IPO, which finished 2007 as the fourth-best performing IPO on the New York Stock Exchange."

"Our 2007 financial performance was impressive especially when measured against other media and business services companies. Revenues for the year increased 36.1% to $152.0 million and adjusted EBITDA rose by 49.8% to $43.1 million. We also achieved strong margin expansion as our adjusted EBITDA and operating income margins increased 260 basis points and 180 basis points, respectively, over our prior year results," Dolan said. "The company continues to be a solid cash generator, reporting cash flows from operating activities of $27.3 million for the year, compared to $18.3 million in 2006."

"We are well positioned to benefit from our balanced revenue mix across the Business Information and Professional Services divisions. A little over half of our total revenues are from sources counter-cyclical to the economy," Dolan continued. "In Professional Services, we realized strong growth in our APC subsidiary with a 107% year-over-year increase in the combined number of mortgage default files processed for our attorney clients in Michigan and Indiana. The Business Information division performed well with a 32.3% year-over-year growth in public notice advertising, primarily driven by the growing mortgage default volume. The Business Information division also grew display and classified advertising revenues, and maintained circulation revenue while the industry saw declines in both revenue lines for the year."

"We expect 2008 to be another exciting year. Early in 2008, we announced two acquisitions, one in each of our business divisions," Dolan added. "We remain focused on pursuing the right growth opportunities through organic means as well as acquisitions. We believe our ability to achieve both will continue to build sustainable success and to create shareholder value."

The company is providing first quarter 2008 and full year 2008 guidance as follows:

For the first quarter of 2008, ending March 31, 2008, the company expects revenues to be in the range of $40.0 million to $41.0 million and expects adjusted EBITDA to be in the range of $11.5 million to $12.0 million.

Based on the businesses the company owns today, it expects 2008 revenues to be in the range of $168.0 million to $178.0 million and adjusted EBITDA to be in the range of $50.0 million to $55.0 million. The company also expects full-year 2008 capital expenditures to be between 3.5% and 4.5% of projected 2008 revenues.

Dolan Media's total revenues for the twelve months ended December 31, 2007, were $152.0 million, an increase of 36.1% from $111.6 million recorded in the same period in 2006. Net loss for the full year 2007 was $54.0 million, or a net loss of $3.41 per diluted share on 15.9 million weighted average shares outstanding, compared to a net loss of $20.3 million, or a net loss of $2.19 per diluted share on 9.3 million weighted average shares outstanding in the comparable period last year. Net loss for the twelve months ended December 31, 2007, included non-cash interest expense related to the company's redeemable preferred stock of $66.1 million versus $28.5 million for the same prior-year period, and a minority interest charge of $3.7 million versus $1.9 million for the same prior-year period. Adjusted EBITDA for 2007 was $43.1 million, or 28.4% of revenues. This represented an increase of 49.8% from $28.8 million, or 25.8% of revenues for full year 2006.