10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number: 001-13718

MDC Partners Inc.

(Exact name of registrant as specified in its charter)

Canada	98-0364441
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
745 Fifth Avenue New York, New York	10151
(Address of principal executive offices)	(Zip Code)

(646) 429-1800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Subordinate Voting Shares, no par value	MDCA	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   ý   No   ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   ý No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated Filer  ¨	Accelerated filer  x
Non-accelerated Filer  ¨	Smaller reporting company  x
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ¨ No   ý

The number of common shares outstanding as of July 19, 2019 was 71,943,994 Class A subordinate voting shares and 3,749 Class B multiple voting shares.

MDC PARTNERS INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2019 and 2018	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three and Six Months Ended June 30, 2019 and 2018	4
	Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018	5
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2019 and 2018	6
	Condensed Consolidated Statements of Shareholders’ Deficit (unaudited) for the Three and Six Months Ended June 30, 2019 and 2018	8
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4.	Controls and Procedures	52
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	55
Item 6.	Exhibits	56
Signatures		56

2

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

MDC PARTNERS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(thousands of United States dollars, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue:
Services	$	362,130		$	379,743		$	690,921		$	706,711
Operating Expenses:
Cost of services sold	240,749			253,390			477,903			496,420
Office and general expenses	87,276			83,878			154,394			167,757
Depreciation and amortization	10,663			11,703			19,501			24,078
Other asset impairment	—			—			—			2,317
	338,688			348,971			651,798			690,572
Operating income	23,442			30,772			39,123			16,139
Other Income (Expenses):
Interest expense and finance charges, net	(16,413		)	(16,859		)	(33,174		)	(32,942		)
Foreign exchange gain (loss)	2,932			(6,549		)	8,374			(13,209		)
Other, net	(746		)	592			(4,128		)	1,033
	(14,227		)	(22,816		)	(28,928		)	(45,118		)
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates	9,215			7,956			10,195			(28,979		)
Income tax expense (benefit)	2,088			1,977			2,835			(6,353		)
Income (loss) before equity in earnings of non-consolidated affiliates	7,127			5,979			7,360			(22,626		)
Equity in earnings (losses) of non-consolidated affiliates	206			(28		)	289			58
Net income (loss)	7,333			5,951			7,649			(22,568		)
Net income attributable to the noncontrolling interest	(3,043		)	(2,545		)	(3,472		)	(3,442		)
Net income (loss) attributable to MDC Partners Inc.	4,290			3,406			4,177			(26,010		)
Accretion on and net income allocated to convertible preference shares	(3,515		)	(2,273		)	(5,625		)	(4,095		)
Net income (loss) attributable to MDC Partners Inc. common shareholders	$	775		$	1,133		$	(1,448	)	$	(30,105	)
Income (loss) Per Common Share:
Basic
Net income (loss) attributable to MDC Partners Inc. common shareholders	$	0.01		$	0.02		$	(0.02	)	$	(0.53	)
Diluted
Net income (loss) attributable to MDC Partners Inc. common shareholders	$	0.01		$	0.02		$	(0.02	)	$	(0.53	)
Weighted Average Number of Common Shares Outstanding:
Basic	71,915,832			57,439,823			66,118,749			56,924,208
Diluted	72,024,689			57,802,872			66,118,749			56,924,208
Stock-based compensation expense is included in the following line items above:
Cost of services sold	$	2,442		$	4,047		$	6,987		$	7,394
Office and general expenses	1,192			1,556			(381		)	3,246
Total	$	3,634		$	5,603		$	6,606		$	10,640

See notes to the Unaudited Condensed Consolidated Financial Statements.

3

MDC PARTNERS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(thousands of United States dollars)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Comprehensive Income (Loss)
Net income (loss)	$	7,333		$	5,951		$	7,649		$	(22,568	)
Other comprehensive income (loss), net of applicable tax:
Foreign currency translation adjustment	(1,385		)	(1,848		)	(6,044		)	429
Other comprehensive income (loss)	(1,385		)	(1,848		)	(6,044		)	429
Comprehensive income (loss) for the period	5,948			4,103			1,605			(22,139		)
Comprehensive income attributable to the noncontrolling interests	(3,081		)	(1,641		)	(3,861		)	(1,436		)
Comprehensive income (loss) attributable to MDC Partners Inc.	$	2,867		$	2,462		$	(2,256	)	$	(23,575	)

See notes to the Unaudited Condensed Consolidated Financial Statements.

4

MDC PARTNERS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(thousands of United States dollars)

	June 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	27,304		$	30,873
Accounts receivable, less allowance for doubtful accounts of $2,792 and $1,879	434,512			395,200
Expenditures billable to clients	40,605			42,369
Assets held for sale	—			78,913
Other current assets	44,815			42,499
Total Current Assets	547,236			589,854
Fixed assets, at cost, less accumulated depreciation of $141,167 and $128,546	83,950			88,189
Right of use assets - operating leases	237,418			—
Investments in non-consolidated affiliates	6,761			6,556
Goodwill	743,582			740,955
Other intangible assets, net, less accumulated amortization of $168,748 and $161,868	60,848			67,765
Deferred tax assets	92,439			92,741
Other assets	26,415			25,513
Total Assets	$	1,798,649		$	1,611,573
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	228,069		$	221,995
Accruals and other liabilities	253,868			313,141
Liabilities held for sale	—			35,967
Advance billings	168,142			138,505
Current portion of lease liabilities - operating leases	46,338			—
Current portion of deferred acquisition consideration	35,439			32,928
Total Current Liabilities	731,856			742,536
Long-term debt	914,092			954,107
Long-term portion of deferred acquisition consideration	22,804			50,767
Long-term lease liabilities - operating leases	233,165			—
Other liabilities	19,503			54,255
Deferred tax liabilities	6,571			5,329
Total Liabilities	1,927,991			1,806,994
Redeemable Noncontrolling Interests	42,635			51,546
Commitments, Contingencies, and Guarantees (Note 13)
Shareholders’ Deficit:
Convertible preference shares, 145,000 authorized, issued and outstanding at June 30, 2019 and 95,000 at December 31, 2018	152,746			90,123
Common stock and other paid-in capital	97,455			58,579
Accumulated deficit	(460,726		)	(464,903		)
Accumulated other comprehensive loss (income)	(1,713		)	4,720
MDC Partners Inc. Shareholders' Deficit	(212,238		)	(311,481		)
Noncontrolling interests	40,261			64,514
Total Shareholders' Deficit	(171,977		)	(246,967		)
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Deficit	$	1,798,649		$	1,611,573

See notes to the Unaudited Condensed Consolidated Financial Statements.

5

MDC PARTNERS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(thousands of United States dollars)

	Six Months Ended June 30,
	2019			2018
Cash flows from operating activities:
Net income (loss)	$	7,649		$	(22,568	)
Adjustments to reconcile net income (loss) to cash used in operating activities:
Stock-based compensation	6,606			10,640
Depreciation	12,621			14,642
Amortization of intangibles	6,880			9,436
Amortization of deferred finance charges and debt discount	1,663			1,605
Other asset impairment	—			2,317
Adjustment to deferred acquisition consideration	(5,570		)	(2,479		)
Deferred income taxes	2,835			(9,494		)
Loss on sale of assets	3,407			(955		)
Earnings of non-consolidated affiliates	(289		)	(58		)
Other and non-current assets and liabilities	(4,139		)	(1,114		)
Foreign exchange	(7,363		)	12,128
Changes in working capital:
Accounts receivable	(21,570		)	19,181
Expenditures billable to clients	1,763			(27,935		)
Prepaid expenses and other current assets	(3,345		)	(12,732		)
Accounts payable, accruals and other current liabilities	(66,343		)	(60,015		)
Acquisition related payments	(4,376		)	(23,894		)
Advance billings	29,334			29,582
Net cash used in operating activities	(40,237		)	(61,713		)
Cash flows from investing activities:
Capital expenditures	(7,923		)	(9,689		)
Proceeds from sale of assets	23,050			—
Acquisitions, net of cash acquired	(5,130		)	(27,299		)
Other investments	(179		)	867
Net cash provided by (used in) investing activities	9,818			(36,121		)
Cash flows from financing activities:
Repayment of revolving credit facility	(834,538		)	(782,600		)
Proceeds from revolving credit facility	793,940			897,844
Proceeds from issuance of common and convertible preference shares, net of issuance costs	98,620			—
Acquisition related payments	(24,219		)	(29,172		)
Distributions to noncontrolling interests	(7,957		)	(8,927		)
Payment of dividends	(56		)	(168		)
Purchase of shares	(78		)	(493		)
Other	—			(141		)
Net cash provided by financing activities	25,712			76,343
Effect of exchange rate changes on cash, cash equivalents, and cash held in trusts	4			311
Net decrease in cash, cash equivalents, and cash held in trusts including cash classified within assets held for sale	(4,703		)	(21,180		)
Change in cash and cash equivalents held in trusts classified within held for sale	(3,307		)	—
Change in cash and cash equivalents classified within assets held for sale	4,441			—
Net decrease in cash and cash equivalents	(3,569		)	(21,180		)
Cash and cash equivalents at beginning of period	30,873			46,179

6

	Six Months Ended June 30,
	2019		2018
Cash and cash equivalents at end of period	$	27,304	$	24,999
Supplemental disclosures:
Cash income taxes paid	$	3,494	$	2,626
Cash interest paid	$	31,643	$	31,414

See notes to the Unaudited Condensed Consolidated Financial Statements.

7

MDC PARTNERS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(thousands of United States dollars, except share amounts)

	Three Months Ended
	June 30, 2019
	Convertible Preference Shares			Common Shares		Common Stock and Other Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income			MDC Partners Inc. Shareholders' Deficit			Noncontrolling Interests		Total Shareholder's Deficit
(in thousands, except share amounts)	Shares	Amount		Shares
Balance at March 31, 2019	145,000	$	152,117	71,890,021		$	98,693		$	(465,016	)	$	(290	)	$	(214,496	)	$	40,223	$	(174,273	)
Net income attributable to MDC Partners Inc.	—	—		—		—			4,290			—			4,290			—		4,290
Other comprehensive loss	—	—		—		—			—			(1,423		)	(1,423		)	38		(1,385		)
Issuance of common and convertible preference shares	—	629		—		362			—			—			991			—		991
Issuance of restricted stock	—	—		76,979		—			—			—			—			—		—
Shares acquired and cancelled	—	—		(19,257	)	(22		)	—			—			(22		)	—		(22		)
Stock-based compensation	—	—		—		1,800			—			—			1,800			—		1,800
Changes in redemption value of redeemable noncontrolling interests	—	—		—		(3,190		)	—			—			(3,190		)			(3,190		)
Business acquisitions and step-up transactions, net of tax	—	—		—		(97		)	—			—			(97		)	—		(97		)
Changes in ownership interest	—	—		—		(91		)	—			—			(91		)	—		(91		)
Balance at June 30, 2019	145,000	$	152,746	71,947,743		$	97,455		$	(460,726	)	$	(1,713	)	$	(212,238	)	$	40,261	$	(171,977	)

	Six Months Ended
	June 30, 2019
	Convertible Preference Shares			Common Shares		Common Stock and Other Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income			MDC Partners Inc. Shareholders' Deficit			Noncontrolling Interests			Total Shareholder's Deficit
(in thousands, except share amounts)	Shares	Amount		Shares
Balance at December 31, 2018	95,000	$	90,123	57,521,323		$	58,579		$	(464,903	)	$	4,720		$	(311,481	)	$	64,514		$	(246,967	)
Net income attributable to MDC Partners Inc.	—	—		—		—			4,177			—			4,177			—			4,177
Other comprehensive loss	—	—		—		—			—			(6,433		)	(6,433		)	389			(6,044		)
Issuance of common and convertible preference shares	50,000	62,623		14,285,714		35,997			—			—			98,620			—			98,620
Issuance of restricted stock	—	—		193,979		—			—			—			—			—			—
Shares acquired and cancelled	—	—		(53,273	)	(78		)	—			—			(78		)	—			(78		)
Stock-based compensation	—	—		—		509			—			—			509			—			509
Changes in redemption value of redeemable noncontrolling interests	—	—		—		2,729			—			—			2,729			—			2,729
Business acquisitions and step-up transactions, net of tax	—	—		—		(97		)	—			—			(97		)	—			(97		)
Changes in ownership interest	—	—		—		(184		)	—			—			(184		)	(24,642		)	(24,826		)
Balance at June 30, 2019	145,000	$	152,746	71,947,743		$	97,455		$	(460,726	)	$	(1,713	)	$	(212,238	)	$	40,261		$	(171,977	)

8

	Three Months Ended
	June 30, 2018
	Convertible Preference Shares			Common Shares		Common Stock and Other Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income			MDC Partners Inc. Shareholders' Deficit			Noncontrolling Interests			Total Shareholder's Deficit
(in thousands, except share amounts)	Shares	Amount		Shares
Balance at March 31, 2018	95,000	$	90,123	56,436,067		$	38,412		$	(370,586	)	$	1,425		$	(240,626	)	$	50,964		$	(189,662	)
Net income attributable to MDC Partners Inc.	—	—		—		—			3,406			—			3,406			—			3,406
Other comprehensive loss	—	—		—		1			—			(944		)	(943		)	(905		)	(1,848		)
Issuance of restricted stock	—	—		12,585		—			—			—			—			—			—
Shares acquired and cancelled	—	—		(6,185	)	(39		)	—			—			(39		)	—			(39		)
Shares issued, acquisitions	—	—		1,011,561		7,030			—			—			7,030			—			7,030
Stock-based compensation	—	—		—		2,107			—			—			2,107			—			2,107
Changes in redemption value of redeemable noncontrolling interests	—	—		—		(1,687		)	—			—			(1,687		)	—			(1,687		)
Business acquisitions and step-up transactions, net of tax	—	—		—		—			—			—			—			27,357			27,357
Balance at June 30, 2018	95,000	$	90,123	57,454,028		$	45,824		$	(367,180	)	$	481		$	(230,752	)	$	77,416		$	(153,336	)

	Six Months Ended
	June 30, 2018
	Convertible Preference Shares				Common Shares		Common Stock and Other Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income			MDC Partners Inc. Shareholders' Deficit			Noncontrolling Interests			Total Shareholder's Deficit
(in thousands, except share amounts)	Shares	Amount			Shares
Balance at December 31, 2017	95,000	$	90,220		56,375,131		$	38,191		$	(340,000	)	$	(1,954	)	$	(213,543	)	$	58,030		$	(155,513	)
Net loss attributable to MDC Partners Inc.	—	—			—		—			(26,010		)	—			(26,010		)	—			(26,010		)
Other comprehensive income (loss)	—	—			—		—			—			2,435			2,435			(2,006		)	429
Expenses for convertible preference shares	—	(97		)	—		—			—			—			(97		)	—			(97		)
Issuance of restricted stock	—	—			122,029		—			—			—			—			—			—
Shares acquired and cancelled	—	—			(54,693	)	(493		)	—			—			(493		)	—			(493		)
Shares issued, acquisitions	—	—			1,011,561		7,030			—			—			7,030			—			7,030
Stock-based compensation	—	—			—		4,324			—			—			4,324			—			4,324
Changes in redemption value of redeemable noncontrolling interests	—	—			—		(2,062		)	—			—			(2,062		)	—			(2,062		)
Business acquisitions and step-up transactions, net of tax	—	—			—		(1,166		)	—			—			(1,166		)	27,357			26,191
Changes in ownership interest	—	—			—		—			—			—			—			(5,965		)	(5,965		)
Cumulative effect of adoption of ASC 606	—	—			—		—			(1,170		)	—			(1,170		)	—			(1,170		)
Balance at June 30, 2018	95,000	$	90,123		57,454,028		$	45,824		$	(367,180	)	$	481		$	(230,752	)	$	77,416		$	(153,336	)

See notes to the Unaudited Condensed Consolidated Financial Statements.

9

MDC PARTNERS INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(thousands of United States dollars, except per share amounts, unless otherwise stated)

1. Basis of Presentation and Recent Developments

The accompanying consolidated financial statements include the accounts of MDC Partners Inc. (the “Company” or “MDC”), its subsidiaries and variable interest entities for which the Company is the primary beneficiary. References herein to “Partner Firms” generally refer to the Company’s subsidiary agencies.

MDC Partners Inc. has prepared the unaudited condensed consolidated interim financial statements included herein in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting interim financial information on Form 10-Q. Accordingly, the financial statements have been condensed and do not include certain information and disclosures pursuant to these rules. The preparation of financial statements in conformity with GAAP requires us to make judgments, assumptions and estimates that affect the amounts reported and disclosed. Actual results could differ from these estimates and assumptions. The consolidated results for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K”).

The accompanying financial statements reflect all adjustments, consisting of normally recurring accruals, which in the opinion of management are necessary for a fair presentation, in all material respects, of the information contained therein. Intercompany balances and transactions have been eliminated in consolidation.

Certain reclassifications have been made to the prior year financial information to conform to the current year presentation.

Due to changes in the composition of certain business and the Company’s internal management and reporting structure during 2019, reportable segment results for the 2018 periods presented have been recast to reflect the reclassification of certain businesses between segments. See Note 12 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for further information.

2. Revenue

The Company’s revenue recognition policies are established in accordance with the Revenue Recognition topics of ASC 606, and accordingly, revenue is recognized when control of the promised goods or services is transferred to our clients, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

The MDC network provides an extensive range of services to our clients offering a variety of marketing and communication capabilities including strategy, creative and production for advertising campaigns across a variety of platforms (print, digital, social media, television broadcast), public relations services including strategy, editorial, crisis support or issues management, media training, influencer engagement and events management. We also provide media buying and planning across a range of platforms (out-of-home, paid search, social media, lead generation, programmatic, television broadcast), experiential marketing and application/website design and development.

The primary source of the Company’s revenue is from agency arrangements in the form of fees for services performed, commissions, and from performance incentives or bonuses, depending on the terms of the client contract. In all circumstances, revenue is only recognized when collection is reasonably assured. Certain of the Company’s contractual arrangements have more than one performance obligation. For such arrangements, revenue is allocated to each performance obligation based on its relative stand-alone selling price. Stand-alone selling prices are determined based on the prices charged to clients or using expected cost plus margin.

The determination of our performance obligations is specific to the services included within each contract. Based on a client’s requirements within the contract, and how these services are provided, multiple services could represent separate performance obligations or be combined and considered one performance obligation. Contracts that contain services that are not significantly integrated nor interdependent, nor that significantly modify or customize each other, are considered separate performance obligations. Typically, we consider media planning, media buying, creative (or strategy), production and experiential marketing services to be separate performance obligations if included in the same contract as each of these services can be provided on a stand-alone basis, and do not significantly modify or customize each other. Public relations services and application/website design and development are typically each considered one performance obligation as there is a significant integration of these services into a combined output.

We typically satisfy our performance obligations over time, as services are performed. Fees for services are typically recognized using input methods (direct labor hours, materials and third-party costs) that correspond with efforts incurred to date in relation to total estimated efforts to complete the contract. Point in time recognition primarily relates to certain commission-based contracts, which are recognized upon the placement of advertisements in various media when the Company has no further performance obligation.                                            

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Revenue is recognized net of sales and other taxes due to be collected and remitted to governmental authorities. The Company’s contracts typically provide for termination by either party within 30 to 90 days. Although payment terms vary by client, they are typically within 30 to 60 days. In addition, the Company generally has the right to payment for all services provided through the end of the contract or termination date.

Within each contract, we identify whether the Company is principal or agent at the performance obligation level. In arrangements where the Company has substantive control over the service before transferring it to the client, and is primarily responsible for integrating the services into the final deliverables, we act as principal. In these arrangements, revenue is recorded at the gross amount billed. Accordingly, for these contracts the Company has included reimbursed expenses in revenue. In other arrangements where a third-party supplier, rather than the Company is primarily responsible for the integration of services into the final deliverables, and thus the Company is solely arranging for the third-party supplier to provide these services to our client, we generally act as agent and record revenue equal to the net amount retained, when the fee or commission is earned. The role of MDC’s agencies under a production services agreement is to facilitate a client’s purchasing of production capabilities from a third-party production company in accordance with the client’s strategy and guidelines. The obligation of MDC’s agencies under media buying services is to negotiate and purchase advertising media from a third-party media vendor on behalf of a client to execute its media plan. We do not obtain control prior to transferring these services to our clients; therefore, we primarily act as agent for production and media buying services.                                    

A small portion of the Company’s contractual arrangements with clients include performance incentive provisions, which allow the Company to earn additional revenues as a result of its performance relative to both quantitative and qualitative goals. Incentive compensation is primarily estimated using the most likely amount method and is included in revenue up to the amount that is not expected to result in a reversal of a significant amount of cumulative revenue recognized. We recognize revenue related to performance incentives as we satisfy the performance obligation to which the performance incentives are related.

Disaggregated Revenue Data

The Company provides a broad range of services to a large base of clients across the full spectrum of industry verticals on a global basis. The primary source of revenue is from agency arrangements in the form of fees for services performed, commissions, and from performance incentives or bonuses. Certain clients may engage with the Company in various geographic locations, across multiple disciplines, and through multiple Partner Firms. Representation of a client rarely means that MDC handles marketing communications for all brands or product lines of the client in every geographical location. The Company’s Partner firms often cooperate with one another through referrals and the sharing of both services and expertise, which enables MDC to service clients’ varied marketing needs by crafting custom integrated solutions. Additionally, the Company maintains separate, independent operating companies to enable it to effectively manage potential conflicts of interest by representing competing clients across the MDC network.

The following table presents revenue disaggregated by client industry vertical for the three and six months ended June 30, 2019 and 2018:

		Three Months Ended June 30,				Six Months Ended June 30,
Industry	Reportable Segment	2019		2018		2019		2018
Food & Beverage	All	$	73,305	$	84,464	$	139,969	$	147,932
Retail	All	39,894		38,396		72,350		76,411
Consumer Products	All	45,296		41,367		78,232		77,973
Communications	All	47,793		43,097		87,490		81,454
Automotive	All	18,541		25,294		36,732		45,788
Technology	All	28,876		23,540		54,279		45,080
Healthcare	All	25,954		35,426		49,161		68,002
Financials	All	27,868		30,207		52,795		52,702
Transportation and Travel/Lodging	All	27,050		18,776		44,085		33,664
Other	All	27,553		39,176		75,828		77,705
		$	362,130	$	379,743	$	690,921	$	706,711

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MDC has historically largely focused where the Company was founded in North America, the largest market for its services in the world. In recent years the Company has expanded its global footprint to support clients looking for help to grow their businesses in new markets. Today, MDC’s Partner Firms are located in the United States, Canada, and an additional twelve countries around the world. In the past, some clients have responded to weakening economic conditions with reductions to their marketing budgets, which included discretionary components that are easier to reduce in the short term than other operating expenses.

The following table presents revenue disaggregated by geography for the three and six months ended June 30, 2019 and 2018:

		Three Months Ended June 30,				Six Months Ended June 30,
Geographic Location	Reportable Segment	2019		2018		2019		2018
United States	All	$	284,659	$	295,268	$	547,676	$	551,792
Canada	All, excluding Media Services	24,564		33,086		46,942		59,465
Other	All, excluding Media Services and Domestic Creative Agencies	52,907		51,389		96,303		95,454
		$	362,130	$	379,743	$	690,921	$	706,711

Contract assets and liabilities

Contract assets consist of fees and reimbursable outside vendor costs incurred on behalf of clients when providing advertising, marketing and corporate communications services that have not yet been invoiced to clients. Unbilled service fees were $92,317 and $64,362 at June 30, 2019 and December 31, 2018, respectively, and are included as a component of accounts receivable on the Unaudited Condensed Consolidated Balance Sheets. Outside vendor costs incurred on behalf of clients which have yet to be invoiced were $40,605 and $42,369 at June 30, 2019 and December 31, 2018, respectively, and are included on the Unaudited Condensed Consolidated Balance Sheets as expenditures billable to clients. Such amounts are invoiced to clients at various times over the course of providing services.

Contract liabilities consist of fees billed to clients in excess of fees recognized as revenue and are classified as advance billings on the Company’s Unaudited Condensed Consolidated Balance Sheets. Advance billings at June 30, 2019 and December 31, 2018 were $168,142 and $138,505, respectively. The increase in the advance billings balance of $29,637 for the six months ended June 30, 2019 is primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by $101,431 of revenues recognized that were included in the advance billings balances as of December 31, 2018 and reductions due to the incurrence of third-party costs.

Changes in the contract asset and liability balances during the six months ended June 30, 2019 and December 31, 2018 were not materially impacted by write-offs, impairment losses or any other factors.

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3. Income (Loss) Per Common Share

The following table sets forth the computation of basic and diluted income (loss) per common share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Numerator:
Net income (loss) attributable to MDC Partners Inc.	$	4,290		$	3,406		$	4,177		$	(26,010	)
Accretion on convertible preference shares	(3,242		)	(2,068		)	(5,625		)	(4,095		)
Net income allocated to convertible preference shares	(273		)	(205		)	—			—
Net income (loss) attributable to MDC Partners Inc. common shareholders	$	775		$	1,133		$	(1,448	)	$	(30,105	)
Adjustment to net income allocated to convertible preference shares	—			1			—			—
Numerator for dilutive income (loss) per common share:
Net income (loss) attributable to MDC Partners Inc. common shareholders	$	775		$	1,134		$	(1,448	)	$	(30,105	)
Denominator:
Basic weighted average number of common shares outstanding	71,915,832			57,439,823			66,118,749			56,924,208
Effect of dilutive securities:
Impact of stock options and non-vested stock under employee stock incentive plans	108,857			363,049			—			—
Diluted weighted average number of common shares outstanding	72,024,689			57,802,872			66,118,749			56,924,208
Basic	$	0.01		$	0.02		$	(0.02	)	$	(0.53	)
Diluted	$	0.01		$	0.02		$	(0.02	)	$	(0.53	)

Anti-dilutive stock awards 2,662,666327,5004,406,2061,594,761

Restricted stock and restricted stock unit awards of 242,338 and 1,308,781 for the three and six months ended June 30, 2019 and 2018, respectively, which are contingent upon the Company meeting a cumulative three year earnings target and contingent upon continued employment, are excluded from the computation of diluted income per common share as the contingencies were not satisfied at June 30, 2019 and 2018, respectively. In addition, there were 145,000 and 95,000 Preference Shares outstanding which were convertible into 25,621,189 and 10,544,708 Class A common shares at June 30, 2019 and 2018, respectively. These Preference Shares were anti-dilutive for each period presented in the table above and are therefore excluded from the diluted income (loss) per common share calculation.

4. Acquisitions and Dispositions

2019 Acquisition

Effective April 1, 2019, the Company acquired the 35% ownership interest of HPR Partners LLC (Hunter) it did not own for an aggregate purchase price of $9,585, comprised of a closing cash payment of $3,890 and additional deferred acquisition payments with an estimated present value at the acquisition date of $5,695. The deferred payments are based on the financial results of the underlying business from 2018 to 2020 with final payment due in 2021. As of the acquisition date, the fair value of the additional interest acquired was $20,178. The fair value was measured using a discounted cash flow model.

As a result of the transaction, the Company reduced redeemable noncontrolling interests by $9,488. The difference between the purchase price and the noncontrolling interest of $97 was recorded in common stock and other paid-in capital in the Unaudited Condensed Consolidated Balance Sheet.

2019 Disposition

On March 8, 2019, the Company consummated the sale of Kingsdale, an operating segment with operations in Toronto and New York City that provides shareholder advisory services. As consideration for the sale, the Company was paid cash plus the assumption of certain liabilities totaling approximately $50 million in the aggregate. The sale resulted in a loss of approximately $3 million, which is included in Other, net within the Unaudited Condensed Consolidated Statement of Operations.

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Assets and Liabilities Held for Sale - Change in Plan to Sell

In the fourth quarter of 2018, the Company initiated a process to sell its ownership interest in a foreign office within the Global Integrated Agencies reportable segment. The assets and liabilities of the entity were classified as Assets and Liabilities held for sale, at their fair value less cost to sell, within the Consolidated Balance Sheet as of December 31, 2018. In the second quarter of 2019, following the appointment of Mark Penn as Chief Executive Officer, management changed its strategy and plan to sell the foreign office. In connection with management’s decision, the amounts classified within assets and liabilities held for sale were reclassified into the respective line items within the Unaudited Condensed Consolidated Balance Sheet as of June 30, 2019.

2018 Acquisitions

On September 7, 2018, a subsidiary of the Company purchased 100% interests of OneChocolate Communications Limited and OneChocolate Communications LLC, PR (“OneChocolate”) a digital marketing consultancy headquartered in London, UK, for an aggregate purchase price of $3,231, working capital of $966 and additional deferred acquisition payments with an estimated present value of $2,146. OneChocolate’s results are reflected in the Allison & Partners operating segment which is included in the Specialist Communications reportable segment which had an immaterial impact on our results.

On July 1, 2018, the Company acquired the remaining 14.87% and 3% of membership interests of Doner Partners, LLC and Source Marketing LLC, respectively, for an aggregate purchase price of $7,618, comprised of a closing cash payment of $3,279 and additional deferred acquisition payments with an estimated present value of $4,305 as of December 31, 2018. As of the acquisition date, the fair value of the additional interests acquired was $16,361 for Doner Partners LLC. The fair values were measured using a discounted cash flow model. As a result of the transaction, the Company reduced noncontrolling interest by $11,946 and redeemable noncontrolling interest by $933.

On April 2, 2018, the Company purchased 51% of the membership interests of Instrument LLC (“Instrument”), a digital creative agency based in Portland, Oregon, for an aggregate purchase price of $35,591. The acquisition is expected to facilitate the Company’s growth and help to build its portfolio of modern, innovative and digital-first agencies. The purchase price consisted of a cash payment of $28,561 and the issuance of 1,011,561 shares of the Company’s Class A subordinate voting stock with an acquisition date fair value of $7,030. The Company issued these shares in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) of the Securities Act.

The purchase price allocation for Instrument resulted in tangible assets of $10,304, identifiable intangibles of $23,130, consisting primarily of customer lists and a trade name, and goodwill of $32,776. In addition, the Company has recorded $27,357 as the fair value of noncontrolling interests, which was derived from the Company’s purchase price less a discount related to the noncontrolling parties’ lack of control. The identified assets have a weighted average useful life of approximately six years and will be amortized in a manner represented by the pattern in which the economic benefits of such assets are expected to be realized. The goodwill is tax deductible. Instruments’ results are included in the All Other category from a segment reporting perspective. The Company has a controlling financial interest in Instrument through its majority voting interest, and as such, has aggregated the acquired Partner Firm’s financial data into the Company’s Unaudited Condensed Consolidated Financial Statements. The operating results of Instrument in the current year is not material.

Effective January 1, 2018, the Company acquired the remaining 24.5% ownership interest of Allison & Partners LLC for an aggregate purchase price of $10,023, comprised of a closing cash payment of $300 and additional deferred acquisition payments with an estimated present value at the acquisition date of $9,723. The deferred payments are based on the future financial results of the underlying business from 2017 to 2020 with final payments due in 2021. As of the acquisition date, the fair value of the additional interest acquired was $20,096. The fair value was measured using a discounted cash flow model. As a result of the transaction, the Company reduced redeemable noncontrolling interests by $8,857. The difference between the purchase price and the noncontrolling interest of $1,166 was recorded in additional paid-in capital.

5. Deferred Acquisition Consideration

Deferred acquisition consideration on the balance sheet consists of deferred obligations related to contingent and fixed purchase price payments, and to a lesser extent, contingent and fixed retention payments tied to continued employment of specific personnel. Contingent deferred acquisition consideration is recorded at the acquisition date fair value and adjusted at each reporting period through operating income, for contingent purchase price payments, or net interest expense, for fixed purchase price payments. The Company accounts for retention payments through operating income as stock-based compensation over the required retention period.

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The following table presents changes in contingent deferred acquisition consideration, which is measured at fair value on a recurring basis using significant unobservable inputs, and a reconciliation to the amounts reported on the balance sheets as of June 30, 2019 and December 31, 2018.

	June 30,			December 31,
	2019			2018
Beginning Balance of contingent payments	$	82,598		$	119,086
Payments	(24,492		)	(54,947		)
Redemption value adjustments (1)	(6,100		)	3,512
Additions - acquisitions and step up transactions	5,695			14,943
Other	—			4
Ending Balance of contingent payments	$	57,701		$	82,598
Fixed payments	542			1,097
	$	58,243		$	83,695

⁽¹⁾ Redemption value adjustments are fair value changes from the Company’s initial estimates of deferred acquisition payments and stock-based compensation charges relating to acquisition payments that are tied to continued employment. Redemption value adjustments are recorded within cost of services sold and office and general expenses on the Unaudited Condensed Consolidated Statements of Operations.

The following table presents the impact to the Company’s statement of operations due to the redemption value adjustments for the contingent deferred acquisition consideration:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Income (loss) attributable to fair value adjustments	$	2,073		$	(5,065	)	$	(5,570	)	$	(2,479	)
Stock-based compensation	(1,339		)	2,321			(530		)	4,682
Redemption value adjustments	$	734		$	(2,744	)	$	(6,100	)	$	2,203

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6. Leases

Effective January 1, 2019, the Company adopted FASB ASC Topic 842, Leases (“ASC 842”). As a result, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 840, Leases. See Note 14 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for additional information regarding the Company’s adoption of ASC 842. The policies described herein refer to those in effect as of January 1, 2019.

The Company leases office space in North America, Europe, Asia, South America, and Australia. This space is primarily used for office and administrative purposes by the Company’s employees in performing professional services. These leases are classified as operating leases and expire between years 2019 through 2032. Finance leases are considered to be immaterial to the Company.

The Company’s leasing policies are established in accordance with ASC 842, and accordingly, the Company recognizes on the balance sheet at the time of lease commencement a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. Right-of-use lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. All right-of-use assets are reviewed for impairment. As the Company’s implicit rate in its leases is not readily determinable, in determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the commencement date. Lease payments included in the measurement of the lease liability are comprised of noncancelable lease payments, payments based upon an index or rate, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early.

Lease costs are recognized in the Consolidated Statement of Operations over the lease term on a straight-line basis. Leasehold improvements are depreciated on a straight-line basis over the lesser of the term of the related lease or the estimated useful life of the asset. 

Some of the Company’s leases contain variable lease payments, including payments based upon an index or rate. Variable lease payments based upon an index or rate are initially measured using the index or rate in effect at the lease commencement date and are included within the lease liabilities. Lease liabilities are not remeasured as a result of changes in the index or rate, rather changes in these types of payments are recognized in the period in which the obligation for those payments is incurred. In addition, some of our leases contain variable payments for utilities, insurance, real estate tax, repairs and maintenance, and other variable operating expenses. Such amounts are not included in the measurement of the lease liability and are recognized in the period when the facts and circumstances on which the variable lease payments are based upon occur.

The Company’s leases include options to extend or renew the lease through 2040. The renewal and extension options are not included in the lease term as the Company is not reasonably certain that it will exercise its option.

From time to time, the Company enters into sublease arrangements both with unrelated third-parties and with our partner agencies. These leases are classified as operating leases and expire between years 2019 through 2023. Sublease income is recognized over the lease term on a straight-line basis. Currently, the Company subleases office space in North America, Europe and Asia.

As of June 30, 2019, the Company has entered into an operating lease for which the commencement date has not yet occurred as this leased space is in the process of being prepared by the landlord for occupancy. Accordingly, this lease represents an obligation of the Company that is not on the Consolidated Balance Sheet as of June 30, 2019. The aggregate future liability related to the lease is approximately $6 million.

The discount rate used for leases accounted for under ASC 842 is the Company’s collateralized credit adjusted borrowing rate.

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The following table presents lease costs and other quantitative information for the three and six months ended June 30, 2019:

	Three Months Ended June 30,			Six Months Ended June 30,
	2019			2019
Lease Cost:
Operating lease cost	$	17,473		$	33,914
Variable lease cost	4,361			9,325
Sublease rental income	(2,590		)	(4,189		)
Total lease cost	$	19,244		$	39,050
Additional information:
Cash paid for amounts included in the measurement of lease liabilities for operating leases
Operating cash flows	$	19,523		$	35,175
Right-of-use assets obtained in exchange for operating lease liabilities	$	2,195		$	259,013
Weighted average remaining lease term (in years) - Operating leases	7.0			7.0
Weighted average discount rate - Operating leases	8.6			8.6

Operating lease expense is included in office and general expenses in the Unaudited Condensed Consolidated Statement of Operations. Lease expense for leases with a term of 12 months or less is immaterial to the Company. Rental expense for the three and six months ended June 30, 2018 was $15,981 and $33,541, respectively, offset by $926 and $1,640, respectively in sublease rental income.

The following table presents minimum future rental payments under the Company’s leases at June 30, 2019 and their reconciliation to the corresponding lease liabilities:

	Maturity Analysis
Remaining 2019	$	33,776
2020	66,425
2021	56,428
2022	45,942
2023	42,113
Thereafter	133,823
Total	378,507
Less: Present value discount	(99,004		)
Lease liability	$	279,503

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7. Debt

As of June 30, 2019 and December 31, 2018, the Company’s indebtedness was comprised as follows:

	June 30, 2019			December 31, 2018
Revolving credit agreement	$	27,545		$	68,143
6.50% Notes due 2024	900,000			900,000
Debt issuance costs	(13,453		)	(14,036		)
	$	914,092		$	954,107

6.50% Notes

On March 23, 2016, MDC entered into an indenture (the “Indenture”) among MDC, its existing and future restricted subsidiaries that guarantee, are co-borrowers under, or grant liens to secure, the Credit Agreement, as guarantors (the “Guarantors”) and The Bank of New York Mellon, as trustee, relating to the issuance by MDC of $900,000 aggregate principal amount of the senior unsecured notes due 2024 (the “6.50% Notes”) . The 6.50% Notes were sold in a private placement in reliance on exceptions from registration under the Securities Act of 1933. The 6.50% Notes bear interest, payable semiannually in arrears on May 1 and November 1, at a rate of 6.50% per annum. The 6.50% Notes mature on May 1, 2024, unless earlier redeemed or repurchased.

MDC may, at its option, redeem the 6.50% Notes in whole at any time or in part from time to time, on and after May 1, 2019, at varying prices based on the timing of the redemption.

The Indenture includes covenants that are subject to a number of important limitations and exceptions. The 6.50% Notes are also subject to customary events of default, including a cross-payment default and cross-acceleration provision. The Company was in compliance with all covenants at June 30, 2019.

Credit Agreement

The Company is party to a $250,000 secured revolving credit facility due May 3, 2021. The amounts outstanding under the revolving credit facility as of June 30, 2019 and December 31, 2018 are presented in the table above and additional details are provided below.

On March 12, 2019 (the “Amendment Effective Date”), the Company, Maxxcom Inc. (a subsidiary of the Company) (“Maxxcom”) and each of their subsidiaries party thereto entered into an Amendment to the existing senior secured revolving credit facility, dated as of May 3, 2016 (as amended, the “Credit Agreement”), among the Company, Maxxcom, each of their subsidiaries party thereto, Wells Fargo Capital Finance, LLC, as agent (“Wells Fargo”) and the lenders from time to time party thereto. Advances under the Credit Agreement are to be used for working capital and general corporate purposes, in each case pursuant to the terms of the Credit Agreement.

The Amendment provides financial covenant relief by increasing the total leverage ratio applicable on each testing date after the Amendment Effective Date through the period ending December 31, 2020 from 5.5:1.0 to 6.25:1.0. The total leverage ratio applicable on each testing date after December 31, 2020 will revert to 5.5:1.0.

In connection with the Amendment, the Company reduced the aggregate maximum amount of revolving commitments provided by the lenders under the Credit Agreement to $250 million from $325 million.

Advances under the Credit Agreement bear interest as follows: (a)(i) LIBOR Rate Loans bear interest at the LIBOR Rate and (ii) Base Rate Loans bear interest at the Base Rate, plus (b) an applicable margin. The initial applicable margin for borrowing is 0.75% in the case of Base Rate Loans and 1.50% in the case of LIBOR Rate Loans. In addition to paying interest on outstanding principal under the Credit Agreement, MDC is required to pay an unused revolver fee to lenders under the Credit Agreement in respect of unused commitments thereunder.

The Credit Agreement, which includes financial and non-financial covenants, is guaranteed by substantially all of MDC’s present and future subsidiaries, other than immaterial subsidiaries and subject to customary exceptions and collateralized by a portion of MDC’s outstanding receivable balance. The Company is currently in compliance with all of the terms and conditions of its Credit Agreement.

At June 30, 2019 and December 31, 2018, the Company had issued undrawn outstanding letters of credit of $4,744 and $4,701, respectively.

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8. Share Capital

The authorized and outstanding share capital of the Company is as follows:

Series 6 Convertible Preference Shares

On March 14, 2019 (the “Series 6 Issue Date”), the Company entered into a securities purchase agreement with Stagwell Agency Holdings LLC (“Stagwell Holdings”), an affiliate of Stagwell Group LLC (“Stagwell”), pursuant to which Stagwell Holdings agreed to purchase, (i) 14,285,714 newly authorized Class A shares (the “Stagwell Class A Shares”) for an aggregate contractual purchase price of $50,000 and (ii) 50,000 newly authorized Series 6 convertible preference shares (“Series 6 Preference Shares”) for an aggregate contractual purchase price of $50 million. The Company received proceeds of approximately $98,620, net of fees and estimated expenses, which were primarily used to pay down existing debt under the Company’s credit facility and for general corporate purposes. The proceeds allocated to the Stagwell Class A Shares were $35,997 and to Series 6 Preference Shares were $62,623 based on their relative fair value calculated by utilizing a Monte Carlo Simulation model. In connection with the closing of the transaction, the Company increased the size of its Board and appointed one nominee designated by the Purchaser. Except as required by law, the Series 6 Preference Shares do not have voting rights and are not redeemable at the option of the Purchaser.

The holders of the Series 6 Preference Shares have the right to convert their Series 6 Preference Shares in whole at any time and from time to time, and in part at any time and from time to time, into a number of Class A Shares equal to the then-applicable liquidation preference divided by the applicable conversion price at such time (the “Conversion Price”). The initial liquidation per share preference of each Series 6 Preference Share is $1,000. The initial Conversion Price is $5.00 per Series 6 Preference Share, subject to customary adjustments for share splits and combinations, dividends, recapitalizations and other matters, including weighted average anti-dilution protection for certain issuances of equity or equity-linked securities.

The Series 6 Preference Shares’ liquidation preference accretes at 8.0% per annum, compounded quarterly until the five-year anniversary of the Series 6 Issue Date. During the six months ended June 30, 2019, the Series 6 Preference Shares accreted at a monthly rate of $6.69, for total accretion of $1,193, bringing the aggregate liquidation preference to $51,193 as of June 30, 2019. The accretion is considered in the calculation of net income (loss) attributable to MDC Partners Inc. common shareholders. See Note 3 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for further information regarding the Series 6 Preference Shares.

Holders of the Series 6 Preference Shares are entitled to dividends in an amount equal to any dividends that would otherwise have been payable on the Class A Shares issued upon conversion of the Series 6 Preference Shares. The Series 6 Preference Shares are convertible at the Company’s option (i) on and after the two-year anniversary of the Series 6 Issue Date, if the closing trading price of the Class A Shares over a specified period prior to conversion is at least 125% of the Conversion Price or (ii) after the fifth anniversary of the Issue Date, if the closing trading price of the Class A Shares over a specified period prior to conversion is at least equal to the Conversion Price.

Following certain change in control transactions of the Company in which holders of Series 6 Preference Shares are not entitled to receive cash or qualifying listed securities with a value at least equal to the liquidation preference plus accrued and unpaid dividends, (i) holders will be entitled to cash dividends on the liquidation preference at an increasing rate (beginning at 7%), and (ii) the Company will have a right to redeem the Series 6 Preference Shares for cash at the greater of their liquidation preference plus accrued and unpaid dividends or their as-converted value.

Effective March 18, 2019, the Company’s Board of Directors (the “Board”) appointed Mark Penn as the Chief Executive Officer and as a director of the Board. Mr. Penn is manager of Stagwell. Effective April 18, 2019, Mr. Penn was also appointed as Chairman of the Board.

Series 4 Convertible Preference Shares

On March 7, 2017 (the “Series 4 Issue Date”), the Company issued 95,000 newly created Preference Shares (“Series 4 Preference Shares”) to affiliates of The Goldman Sachs Group, Inc. (collectively, the “Purchaser”) pursuant to a $95,000 private placement. The Company received proceeds of approximately $90,123, net of fees and estimated expenses, which were primarily used to pay down existing debt under the Company’s credit facility and for general corporate purposes. In connection with the closing of the transaction, the Company increased the size of its Board and appointed one nominee designated by the Purchaser. Except as required by law, the Series 4 Preference Shares do not have voting rights and are not redeemable at the option of the Purchaser.

Subsequent to the ninetieth day following the Series 4 Issue Date, the holders of the Series 4 Preference Shares have the right to convert their Series 4 Preference Shares in whole at any time and from time to time and in part at any time and from time to time into a number of Class A Shares equal to the then-applicable liquidation preference divided by the applicable conversion

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price at such time (the “Conversion Price”). The initial liquidation per share preference of each Series 4 Preference Share is $1,000. The Conversion Price of a Series 4 Preference Share is subject to customary adjustments for share splits and combinations, dividends, recapitalizations and other matters, including weighted average anti-dilution protection for certain issuances of equity or equity-linked securities. In connection with the anti-dilution protection provision triggered by the issuance of equity securities to Stagwell, the Conversion Price per Series 4 Preference Share was reduced to $7.42 from the initial Conversion Price of $10.00.

The Series 4 Preference Shares’ liquidation preference accretes at 8.0% per annum, compounded quarterly until the five-year anniversary of the Series 4 Issue Date. During the six months ended June 30, 2019, the Series 4 Preference Shares accreted at a monthly rate of approximately $7.85 per Series 4 Preference Share, for total accretion of $4,432, bringing the aggregate liquidation preference to $114,139 as of June 30, 2019. The accretion is considered in the calculation of net income (loss) attributable to MDC Partners Inc. common shareholders. See Note 3 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for further information regarding the Series 4 Preference Shares.

Holders of the Series 4 Preference Shares are entitled to dividends in an amount equal to any dividends that would otherwise have been payable on the Class A Shares issued upon conversion of the Series 4 Preference Shares. The Series 4 Preference Shares are convertible at the Company’s option (i) on and after the two-year anniversary of the Issue Date, if the closing trading price of the Class A Shares over a specified period prior to conversion is at least 125% of the Conversion Price or (ii) after the fifth anniversary of the Series 4 Issue Date, if the closing trading price of the Class A Shares over a specified period prior to conversion is at least equal to the Conversion Price.

Following certain change in control transactions of the Company in which holders of Series 4 Preference Shares are not entitled to receive cash or qualifying listed securities with a value at least equal to the liquidation preference plus accrued and unpaid dividends, (i) holders will be entitled to cash dividends on the liquidation preference at an increasing rate (beginning at 7%), and (ii) the Company will have a right to redeem the Series 4 Preference Shares for cash at the greater of their liquidation preference plus accrued and unpaid dividends or their as-converted value.

Class A Common Shares (“Class A Shares”)

An unlimited number of subordinate voting shares, carrying one vote each, entitled to dividends equal to or greater than Class B Shares, convertible at the option of the holder into one Class B Share for each Class A Share after the occurrence of certain events related to an offer to purchase all Class B shares. There were 71,943,994 (including the Class A Shares issued to Stagwell) and 57,517,568 Class A Shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively.

Class B Common Shares (“Class B Shares”)

An unlimited number of voting shares, carrying twenty votes each, convertible at any time at the option of the holder into one Class A share for each Class B share. There were 3,749 and 3,755 Class B Shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively.

9. Noncontrolling and Redeemable Noncontrolling Interests

When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the option to purchase the incremental ownership is within the Company’s control, the amounts are recorded as noncontrolling interests in the equity section of the Company’s Unaudited Condensed Consolidated Balance Sheets. Where the incremental purchase may be required of the Company, the amounts are recorded as redeemable noncontrolling interests in mezzanine equity at their estimated acquisition date redemption value and adjusted at each reporting period for changes to their estimated redemption value through additional paid-in capital (but not less than their initial redemption value), except for foreign currency translation adjustments. On occasion, the Company may initiate a renegotiation to acquire an incremental ownership interest and the amount of consideration paid may differ materially from the amounts recorded in the Company’s Unaudited Condensed Consolidated Balance Sheets.

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Noncontrolling Interests

Changes in amounts due to noncontrolling interest holders included in accruals and other liabilities on the Unaudited Condensed Consolidated Balance Sheets for the year ended December 31, 2018 and six months ended June 30, 2019 were as follows:

	Noncontrolling Interests
Balance, December 31, 2017	$	11,030
Income attributable to noncontrolling interests	11,785
Distributions made	(13,419		)
Other (1)	(118		)
Balance, December 31, 2018	$	9,278
Income attributable to noncontrolling interests	3,472
Distributions made	(7,957		)
Other (1)	25
Balance, June 30, 2019	$	4,818

(1) Other consists of cumulative translation adjustments.

Changes in the Company’s ownership interests in our less than 100% owned subsidiaries during the three and six months ended June 30, 2019 and 2018 were as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
Net income (loss) attributable to MDC Partners Inc.	$	4,290		$	3,406	$	4,177		$	(26,010	)
Transfers from the noncontrolling interest:
Decrease in MDC Partners Inc. paid-in capital for purchase of equity interests in excess of redeemable noncontrolling interests and noncontrolling interests	(97		)	—		(97		)	(1,166		)
Net transfers from noncontrolling interests	$	(97	)	$	—	$	(97	)	$	(1,166	)
Change from net loss attributable to MDC Partners Inc. and transfers to noncontrolling interests	$	4,193		$	3,406	$	4,080		$	(27,176	)

Redeemable Noncontrolling Interests

The following table presents changes in redeemable noncontrolling interests:

	Six Months Ended June 30, 2019			Year Ended December 31, 2018
Beginning Balance	$	51,546		$	62,886
Redemptions	(9,486		)	(11,943		)
Granted	—			—
Changes in redemption value	421			1,067
Currency translation adjustments	154			(464		)
Ending Balance	$	42,635		$	51,546

The noncontrolling shareholders’ ability to exercise any such option right is subject to the satisfaction of certain conditions, including conditions requiring notice in advance of exercise and specific employment termination conditions. In addition, these rights cannot be exercised prior to specified staggered exercise dates. The exercise of these rights at their earliest contractual date would result in obligations of the Company to fund the related amounts during 2019 to 2024. It is not determinable, at this time, if or when the owners of these rights will exercise all or a portion of these rights.

The redeemable noncontrolling interest of $42,635 as of June 30, 2019, consists of $19,158 assuming that the subsidiaries perform over the relevant future periods at their discounted cash flows earnings level and such rights are exercised, $19,926 upon termination of such owner’s employment with the applicable subsidiary or death and $3,551 representing the initial redemption

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value (required floor) recorded for certain acquisitions in excess of the amount the Company would have to pay should the Company acquire the remaining ownership interests for such subsidiaries.

These adjustments will not impact the calculation of earnings (loss) per share if the redemption values are less than the estimated fair values. For the three months ended June 30, 2019 and 2018, there was no related impact on the Company’s loss per share calculation.  

10. Fair Value Measurements

A fair value measurement assumes a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. The hierarchy for observable and unobservable inputs used to measure fair value into three broad levels are described below: 

• Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

• Level 2 - Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

• Level 3 - Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

Financial Liabilities that are not Measured at Fair Value on a Recurring Basis

The following table presents certain information for our financial liability that is not measured at fair value on a recurring basis at June 30, 2019 and December 31, 2018:

	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Liabilities:
6.50% Senior Notes due 2024	$	900,000	$	823,500	$	900,000	$	834,750

Our long-term debt includes fixed rate debt. The fair value of this instrument is based on quoted market prices in markets that are not active. Therefore, this debt is classified as Level 2 within the fair value hierarchy.

Financial Liabilities Measured at Fair Value on a Recurring Basis

Contingent deferred acquisition consideration are recorded at the acquisition date fair value and adjusted at each reporting period. The estimated liability is determined in accordance with various contractual valuation formulas that may be dependent upon future events, such as the growth rate of the earnings of the relevant subsidiary during the contractual period and, in some cases, the currency exchange rate as of the date of payment (Level 3). See Note 5 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for additional information regarding contingent deferred acquisition consideration.

At June 30, 2019 and December 31, 2018, the carrying amount of the Company’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximated fair value because of their short-term maturity.

Non-financial Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

Certain non-financial assets are measured at fair value on a nonrecurring basis, primarily goodwill and intangible assets (a Level 3 fair value assessment). Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic evaluations for potential impairment. The Company did not recognize an impairment of goodwill or intangible assets in the three and six months ended June 30, 2019 or June 30, 2018

11. Supplemental Information

Accounts Payable, Accruals and Other Liabilities

At June 30, 2019 and December 31, 2018, accruals and other liabilities included accrued media of $151,143 and $180,586, respectively; and also included amounts due to noncontrolling interest holders for their share of profits. See Note 9 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for additional information regarding noncontrolling interest holders share of profits.

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Goodwill and Indefinite Lived Intangibles

Goodwill and indefinite life intangible assets (trademarks) acquired as a result of a business combination which are not subject to amortization are tested for impairment annually as of October 1st of each year, or more frequently if indicators of potential impairment exist. For goodwill, impairment is assessed at the reporting unit level. Goodwill balances as of June 30, 2019 and December 31, 2018, were $743,582 and $740,955, respectively.

Income Taxes

Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in interim periods.

Income tax expense for the three months ended June 30, 2019 was $2,088 (on income of $9,215 resulting in an effective tax rate of 22.7%) compared to an expense of $1,977 (on income of $7,956 resulting in an effective tax rate of 24.8%) for the three months ended June 30, 2018. The change in the effective tax rate was primarily driven by the jurisdictional mix of earnings.  

Income tax expense for the six months ended June 30, 2019 was $2,835 (on income of $10,195 resulting in an effective tax rate of 27.8%) compared to a benefit of $6,353 (on a loss of $28,979 resulting in an effective tax rate of 21.9%) for the six months ended June 30, 2018. The change in the effective tax rate was primarily driven by the jurisdictional mix of earnings.

12. Segment Information

The Company determines an operating segment if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has discrete financial information, and is (iii) regularly reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions regarding resource allocation for the segment and assess its performance. Once operating segments are identified, the Company performs an analysis to determine if aggregation of operating segments is applicable. This determination is based upon a quantitative analysis of the expected and historic average long-term profitability for each operating segment, together with a qualitative assessment to determine if operating segments have similar operating characteristics.

Due to changes in the composition of certain business and the Company’s internal management and reporting structure during 2019, reportable segment results for the 2018 periods presented have been recast to reflect the reclassification of certain businesses between segments. The changes were as follows:

• Doner, previously within the Global Integrated Agencies reportable segment is now included within the Domestic Creative Agencies reportable segment.

• HL Group Partners, previously within the Specialist Communications reportable segment, and Redscout, previously within the All Other category, are now included in the Yes & Company operating segment. The Yes & Company operating segment previously within the Media Services reportable segment is now included within the Domestic Creative Agencies reportable segment.

• Attention, previously within the Forsman & Bodenfors operating segment has operationally merged into MDC Media Partners, which is included within the Media Services reportable segment.

The four reportable segments that result from applying the aggregation criteria are as follows: “Global Integrated Agencies”; “Domestic Creative Agencies”; “Specialist Communications”; and “Media Services.” In addition, the Company combines and discloses those operating segments that do not meet the aggregation criteria as “All Other.” The Company also reports corporate expenses, as further detailed below, as “Corporate.” All segments follow the same basis of presentation and accounting policies as those described throughout the Notes to the Unaudited Condensed Consolidated Financial Statements included herein and Note 2 of the Company’s Form 10-K for the year ended December 31, 2018.

• The Global Integrated Agencies reportable segment is comprised of the Company’s four global, integrated operating segments (72andSunny, Anomaly, Crispin Porter + Bogusky, and Forsman & Bodenfors) serving multinational clients around the world. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of global clients and the methods used to provide services; and (iii) the extent to which they may be impacted by global economic and geopolitical risks. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Global Integrated Agencies reportable segment.

The operating segments within the Global Integrated Agenciesreportable segment provides a range of different services for its clients, including strategy, creative and production for advertising campaigns across a variety of platforms (print, digital, social media, television broadcast).

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• The Domestic Creative Agencies reportable segment is comprised of seven operating segments that are primarily national advertising agencies (Colle + McVoy, Doner, Laird + Partners, Mono Advertising, Union, Yamamoto, and Yes & Company) leveraging creative capabilities at their core. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of domestic client accounts and the methods used to provide services; and (iii) the extent to which they may be impacted by domestic economic and policy factors within North America. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long- term profitability is similar among the operating segments aggregated in the Domestic Creative Agencies reportable segment.

The operating segments within the Domestic Creative Agencies reportable segment provide similar services as the Global Integrated Agencies.

• The Specialist Communications reportable segment is comprised of four operating segments that are each communications agencies (Allison & Partners, Hunter, KWT Global, and Veritas) with core service offerings in public relations and related communications services. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of client accounts and the methods used to provide services; (iii) the extent to which they may be impacted by domestic economic and policy factors within North America; and (iv) the regulatory environment regarding public relations and social media. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Specialist Communications reportable segment.

The operating segments within the Specialist Communications reportable segment provide public relations and communications services including strategy, editorial, crisis support or issues management, media training, influencer engagement, and events management.

• The Media Services reportable segment is comprised of a single operating segment known as MDC Media Partners. MDC Media Partners, which operates primarily in North America, performs media buying and planning as their core competency across a range of platforms (out-of-home, paid search, social media, lead generation, programmatic, television broadcast).

• All Other consists of the Company’s remaining operating segments that provide a range of diverse marketing communication services, but generally do not have similar services offerings or financial characteristics as those aggregated in the reportable segments. The All Other category includes 6Degrees Communications, Concentric Partners, Gale Partners, Kenna, Kingsdale (through the date of sale on March 8, 2019), Instrument, Relevent, Team, Vitro, and Y Media Labs. The nature of the specialist services provided by these operating segments vary among each other and from those operating segments aggregated into the reportable segments. This results in these operating segments having current and long-term performance expectations inconsistent with those operating segments aggregated in the reportable segments. The operating segments within All Other provide a range of diverse marketing communication services, including application and website design and development, data and analytics, experiential marketing, customer research management, creative services, and branding.

• Corporate consists of corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, and (iv) certain other professional fees managed by the corporate office. Additional expenses managed by the corporate office that are directly related to the operating segments are allocated to the appropriate reportable segment and the All Other category.

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	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue:
Global Integrated Agencies	$	154,368		$	158,163		$	284,087		$	287,686
Domestic Creative Agencies	65,193			72,971			132,201			139,625
Specialist Communication	47,170			40,304			86,123			79,128
Media Services	21,331			21,398			41,510			46,082
All Other	74,068			86,907			147,000			154,190
Total	$	362,130		$	379,743		$	690,921		$	706,711
Segment operating income (loss):
Global Integrated Agencies	$	20,720		$	18,352		$	24,491		$	4,760
Domestic Creative Agencies	8,730			5,077			14,207			7,955
Specialist Communication	6,683			6,216			13,760			9,944
Media Services	991			(1,719		)	(843		)	(1,738		)
All Other	2,949			15,986			8,962			22,430
Corporate	(16,631		)	(13,140		)	(21,454		)	(27,212		)
Total	$	23,442		$	30,772		$	39,123		$	16,139
Other Income (Expenses):
Interest expense and finance charges, net	$	(16,413	)	$	(16,859	)	$	(33,174	)	$	(32,942	)
Foreign exchange gain (loss)	2,932			(6,549		)	8,374			(13,209		)
Other, net	(746		)	592			(4,128		)	1,033
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates	9,215			7,956			10,195			(28,979		)
Income tax expense (benefit)	2,088			1,977			2,835			(6,353		)
Income (loss) before equity in earnings of non-consolidated affiliates	7,127			5,979			7,360			(22,626		)
Equity in earnings (losses) of non-consolidated affiliates	206			(28		)	289			58
Net income (loss)	7,333			5,951			7,649			(22,568		)
Net income attributable to the noncontrolling interest	(3,043		)	(2,545		)	(3,472		)	(3,442		)
Net income (loss) attributable to MDC Partners Inc.	$	4,290		$	3,406		$	4,177		$	(26,010	)

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	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
Depreciation and amortization:
Global Integrated Agencies	$	4,437		$	4,743	$	8,502		$	12,152
Domestic Creative Agencies	1,547			1,281		2,786			2,574
Specialist Communication	698			992		1,265			1,959
Media Services	794			635		1,485			1,273
All Other	2,966			3,892		5,025			5,736
Corporate	221			160		438			384
Total	$	10,663		$	11,703	$	19,501		$	24,078
Stock-based compensation:
Global Integrated Agencies	$	1,232		$	2,475	$	4,999		$	4,935
Domestic Creative Agencies	522			1,097		986			1,507
Specialist Communication	52			52		78			239
Media Services	(16		)	74		(16		)	149
All Other	652			684		940			1,341
Corporate	1,192			1,221		(381		)	2,469
Total	$	3,634		$	5,603	$	6,606		$	10,640
Capital expenditures:
Global Integrated Agencies	$	1,816		$	2,411	$	3,234		$	4,654
Domestic Creative Agencies	369			569		1,063			1,473
Specialist Communication	231			2,208		482			2,443
Media Services	126			131		167			315
All Other	1,757			547		2,958			772
Corporate	18			24		19			32
Total	$	4,317		$	5,890	$	7,923		$	9,689

The Company’s CODM does not use segment assets to allocate resources or to assess performance of the segments and therefore, total segment assets have not been disclosed.

See Note 2 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for a summary of the Company’s revenue by geographic region for three months ended June 30, 2019 and 2018.

13. Commitments, Contingencies, and Guarantees

Legal Proceedings. The Company’s operating entities are involved in legal proceedings of various types. While any litigation contains an element of uncertainty, the Company has no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on the financial condition or results of operations of the Company.

Deferred Acquisition Consideration and Options to Purchase. See Notes 5 and 9 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for information regarding potential payments associated with deferred acquisition consideration and the acquisition of noncontrolling shareholders’ ownership interest in subsidiaries.

Natural Disasters. Certain of the Company’s operations are located in regions of the United States which typically are subject to hurricanes. During the three and six months ended June 30, 2019 and 2018 these operations did not incur any material costs related to damages resulting from hurricanes.

Guarantees. Generally, the Company has indemnified the purchasers of certain assets in the event that a third party asserts a claim against the purchaser that relates to a liability retained by the Company. These types of indemnification guarantees typically

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extend for a number of years. Historically, the Company has not made any significant indemnification payments under such agreements and no amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification guarantees. The Company continues to monitor the conditions that are subject to guarantees and indemnifications to identify whether it is probable that a loss has occurred and would recognize any such losses under any guarantees or indemnifications in the period when those losses are probable and estimable.

Commitments.  At June 30, 2019, the Company had $4,744 of undrawn letters of credit.

14. New Accounting Pronouncements

Adopted In The Current Reporting Period

Effective January 1, 2019, the Company adopted ASC 842. As a result, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 840, Leases. With the adoption of ASC 842, the Company has elected to apply the package of practical expedients: (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs. Additionally, the Company elected the practical expedient to not separate non-lease components from lease components for all operating leases.

The adoption of ASC 842 had a material impact on the Company’s Unaudited Condensed Consolidated Balance Sheets, resulting in the recognition, on January 1, 2019, of a lease liability of $299,243 which represents the present value of the remaining lease payments, and a right-of-use asset of $254,245 which represents the lease liability, offset by adjustments as appropriate under ASC 842. The adoption of ASC 842 did not have a material impact on the Company’s other Unaudited Condensed Consolidated Financial Statements.

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless otherwise indicated, references to the “Company” or “MDC” mean MDC Partners Inc. and its subsidiaries, and references to a “fiscal year” means the Company’s year commencing on January 1 of that year and ending December 31 of that year (e.g., fiscal 2019 means the period beginning January 1, 2019, and ending December 31, 2019).

The Company reports its financial results in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”). In addition, the Company has included certain non-U.S. GAAP financial measures and ratios, which it believes provide useful supplemental information to both management and readers of this report in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by U.S. GAAP and should not be construed as an alternative to other titled measures determined in accordance with U.S. GAAP.

Two such non-U.S. GAAP measures are “organic revenue growth” or “organic revenue decline” that refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating the prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of in the current period. The organic revenue growth (decline) component reflects the constant currency impact (a) of the change in revenue of the Partner Firms which the Company has held throughout each of the comparable periods presented and (b) “non-GAAP acquisitions (dispositions), net.” Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year or same period as the current reportable period, taking into account their respective pre-acquisition revenues for the applicable periods and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year. The Company believes that isolating the impact of acquisition activity and foreign currency impacts is an important and informative component to understand the overall change in the Company’s consolidated revenue. The change in the consolidated revenue that remains after these adjustments illustrates the underlying financial performance of the Company’s businesses. Specifically, it represents the impact of the Company’s management oversight, investments and resources dedicated to supporting the businesses’ growth strategy and operations. In addition, it reflects the network benefit of inclusion in the broader portfolio of firms that includes, but is not limited to, cross-selling and sharing of best practices. This approach isolates changes in performance of the business that take place under the Company’s stewardship, whether favorable or unfavorable, and thereby reflects the potential benefits and risks associated with owning and managing a talent-driven services business.

Accordingly, during the first twelve months of ownership by the Company, the organic growth measure may credit the Company with growth from an acquired business that is dependent on work performed prior to the acquisition date, and may include the impact of prior work in progress, existing contracts and backlog of the acquired businesses. It is the presumption of the Company that positive developments that may have taken place at an acquired business during the period preceding the acquisition will continue to result in value creation in the post-acquisition period.

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While the Company believes that the methodology used in the calculation of organic revenue change is entirely consistent with our closest U.S. competitors, the calculations may not be comparable to similarly titled measures presented by other publicly traded companies in other industries. Additional information regarding the Company’s acquisition activity as it relates to potential revenue growth is provided in this Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Certain Factors Affecting our Business.”

The following discussion focuses on the operating performance of the Company for the three and six months ended June 30, 2019 and 2018 and the financial condition of the Company as of June 30, 2019. This analysis should be read in conjunction with the interim Unaudited Condensed Consolidated Financial Statements presented in this interim report and the annual audited consolidated financial statements and Management’s Discussion and Analysis presented in the Annual Report for the year ended December 31, 2018 as reported on the Form 10-K (the “Annual Report on Form 10-K”). All amounts are in dollars unless otherwise stated. Amounts reported in millions herein are computed based on the amounts in thousands. As a result, the sum of the components, and related calculations, reported in millions may not equal the total amounts due to rounding.

Executive Summary

MDC conducts its business through its network of Partner Firms, the “Advertising and Communications Group,” who provide a comprehensive array of marketing and communications services for clients both domestically and globally. The Company’s objective is to create shareholder value by building, growing and acquiring market-leading Partner Firms that deliver innovative, value-added marketing, activation, communications and strategic consulting to their clients. Management believes that shareholder value is maximized with an operating philosophy of “Perpetual Partnership” with proven committed industry leaders in marketing communications.

MDC manages its business by monitoring several financial and non-financial performance indicators. The key indicators that we focus on are revenues, operating expenses and capital expenditures. Revenue growth is analyzed by reviewing a mix of measurements, including (i) growth by major geographic location, (ii) growth by client industry vertical, (iii) growth from existing clients and the addition of new clients, (iv) growth by primary discipline (v) growth from currency changes, and (vi) growth from acquisitions. In addition to monitoring the foregoing financial indicators, the Company assesses and monitors several non-financial performance indicators relating to the business performance of our Partner Firms. These indicators may include a Partner Firm’s recent new client win/loss record; the depth and scope of a pipeline of potential new client account activity; the overall quality of the services provided to clients; and the relative strength of the Partner Firm’s next generation team that is in place as part of a potential succession plan to succeed the current senior executive team.

As discussed in Note 12 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for the Company aggregates operating segments that meet the aggregation criteria detailed in ASC 280 into one of the four reportable segments and combines and discloses those operating segments that do not meet the aggregation criteria in the All Other category. Due to changes in the composition of certain business and the Company’s internal management and reporting structure during 2019, reportable segment results for the 2018 periods presented have been recast to reflect the reclassification of certain businesses between segments. See Note 12 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for a description of each of our reportable segments and All Other category and further information regarding the reclassification of certain businesses between segments.

In addition, MDC reports its corporate office expenses incurred in connection with the strategic resources provided to the Partner Firms, as well as certain other centrally managed expenses that are not fully allocated to the operating segments as Corporate. Corporate provides client and business development support to the Partner Firms as well as certain strategic resources, including accounting, administrative, financial, real estate, human resource and legal functions. Additional expenses managed by the corporate office that are directly related to the Partner Firms are allocated to the appropriate reportable segment and the All Other category.

Certain Factors Affecting Our Business

See the Executive Summary section of Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for information regarding certain factors affecting our business.

28

Results of Operations:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue:	(Dollars in Thousands)
Global Integrated Agencies	$	154,368		$	158,163		$	284,087		$	287,686
Domestic Creative Agencies	65,193			72,971			132,201			139,625
Specialist Communication	47,170			40,304			86,123			79,128
Media Services	21,331			21,398			41,510			46,082
All Other	74,068			86,907			147,000			154,190
Total	$	362,130		$	379,743		$	690,921		$	706,711
Segment operating income (loss):
Global Integrated Agencies	$	20,720		$	18,352		$	24,491		$	4,760
Domestic Creative Agencies	8,730			5,077			14,207			7,955
Specialist Communication	6,683			6,216			13,760			9,944
Media Services	991			(1,719		)	(843		)	(1,738		)
All Other	2,949			15,986			8,962			22,430
Corporate	(16,631		)	(13,140		)	(21,454		)	(27,212		)
Total	$	23,442		$	30,772		$	39,123		$	16,139
Other Income (Expenses):
Interest expense and finance charges, net	$	(16,413	)	$	(16,859	)	$	(33,174	)	$	(32,942	)
Foreign exchange gain (loss)	2,932			(6,549		)	8,374			(13,209		)
Other, net	(746		)	592			(4,128		)	1,033
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates	9,215			7,956			10,195			(28,979		)
Income tax expense (benefit)	2,088			1,977			2,835			(6,353		)
Income (loss) before equity in earnings of non-consolidated affiliates	7,127			5,979			7,360			(22,626		)
Equity in earnings (losses) of non-consolidated affiliates	206			(28		)	289			58
Net income (loss)	7,333			5,951			7,649			(22,568		)
Net income attributable to the noncontrolling interest	(3,043		)	(2,545		)	(3,472		)	(3,442		)
Net income (loss) attributable to MDC Partners Inc.	$	4,290		$	3,406		$	4,177		$	(26,010	)

29

	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
Depreciation and amortization:	(Dollars in Thousands)
Global Integrated Agencies	$	4,437		$	4,743	$	8,502		$	12,152
Domestic Creative Agencies	1,547			1,281		2,786			2,574
Specialist Communication	698			992		1,265			1,959
Media Services	794			635		1,485			1,273
All Other	2,966			3,892		5,025			5,736
Corporate	221			160		438			384
Total	$	10,663		$	11,703	$	19,501		$	24,078
Stock-based compensation:
Global Integrated Agencies	$	1,232		$	2,475	$	4,999		$	4,935
Domestic Creative Agencies	522			1,097		986			1,507
Specialist Communication	52			52		78			239
Media Services	(16		)	74		(16		)	149
All Other	652			684		940			1,341
Corporate	1,192			1,221		(381		)	2,469
Total	$	3,634		$	5,603	$	6,606		$	10,640
Capital expenditures:
Global Integrated Agencies	$	1,816		$	2,411	$	3,234		$	4,654
Domestic Creative Agencies	369			569		1,063			1,473
Specialist Communication	231			2,208		482			2,443
Media Services	126			131		167			315
All Other	1,757			547		2,958			772
Corporate	18			24		19			32
Total	$	4,317		$	5,890	$	7,923		$	9,689

30

THREE MONTHS ENDED JUNE 30, 2019 COMPARED TO THREE MONTHS ENDED JUNE 30, 2018

Consolidated Results of Operations

Revenues

Revenue was $362.1 million for the three months ended June 30, 2019 compared to revenue of $379.7 million for the three months ended June 30, 2018. See the Advertising and Communications Group section below for a discussion regarding consolidated revenues for the three months ended June 30, 2019 compared to the three months ended June 30, 2018.

Operating Income

Operating income for the three months ended June 30, 2019 was $23.4 million, compared to $30.8 million for the three months ended June 30, 2018, representing a decrease of $7.4 million. The decrease was primarily driven by a decline in operating income in the Advertising and Communications Group of $3.8 million. Additionally, Corporate operating expenses were higher by $3.5 million, driven by severance expense in the second quarter of 2019.

Other, Net

Other, net, for the three months ended June 30, 2019 was loss of $0.7 million compared to income of $0.6 million for the three months ended June 30, 2018.

Foreign Exchange Gain (Loss)

Foreign exchange gain for the three months ended June 30, 2019 was $2.9 million compared to loss of $6.5 million for the three months ended June 30, 2018. The improvement in the foreign exchange impact is primarily attributable to the strengthening of the Canadian dollar against the U.S. dollar. The change primarily related to U.S. dollar denominated indebtedness that is an obligation of our Canadian parent company.

Interest Expense and Finance Charges, Net

Interest expense and finance charges, net, for the three months ended June 30, 2019 was $16.4 million compared to $16.9 million for the three months ended June 30, 2018, representing a decrease of $0.5 million.

Income Tax Expense (Benefit)

Income tax expense for the three months ended June 30, 2019 was $2.1 million (on income of $9.2 million resulting in an effective tax rate of 22.7%) compared to an expense of $2.0 million (on income of $8.0 million resulting in an effective tax rate of 24.8%) for the three months ended June 30, 2018.  The change in the effective tax rate was primarily driven by the jurisdictional mix of earnings.

Equity in Earnings of Non-Consolidated Affiliates

Equity in earnings of non-consolidated affiliates represents the income or losses attributable to equity method investments. Income recorded for the three months ended June 30, 2019 was $0.2 million compared to the loss of $0.03 million for the three months ended June 30, 2018.

Noncontrolling Interests

The effect of noncontrolling interests for the three months ended June 30, 2019 was $3.0 million compared to $2.5 million for the three months ended June 30, 2018.

Net Income Attributable to MDC Partners Inc. Common Shareholders

As a result of the foregoing and the impact of accretion on and net income allocated to convertible preference shares, net income attributable to MDC Partners Inc. common shareholders for the three months ended June 30, 2019 was $0.8 million, or $0.01 diluted income per share, compared to net income attributable to MDC Partners Inc. common shareholders of $1.1 million, or $0.02 diluted income per share, for the three months ended June 30, 2018.

Advertising and Communications Group

The following discussion provides additional detailed disclosure for each of the Company’s four (4) reportable segments, and the “All Other” category, within the Advertising and Communications Group.

31

The components of the fluctuations in revenues for the three months ended June 30, 2019 compared to the three months ended June 30, 2018 are as follows:

	Total					United States					Canada					Other
	$			%		$			%		$			%		$			%
	(Dollars in Thousands)
June 30, 2018	$	379,743				$	295,268				$	33,086				$	51,389
Components of revenue change:
Foreign exchange impact	(4,176		)	(1.1	)%	—			—	%	(1,122		)	(3.4	)%	(3,054		)	(5.9	)%
Non-GAAP acquisitions (dispositions), net	(4,218		)	(1.1	)%	496			0.2	%	(5,545		)	(16.8	)%	831			1.6	%
Organic revenue growth (decline)	(9,219		)	(2.4	)%	(11,105		)	(3.8	)%	(1,855		)	(5.6	)%	3,741			7.3	%
Total Change	$	(17,613	)	(4.6	)%	$	(10,609	)	(3.6	)%	$	(8,522	)	(25.8	)%	$	1,518		3.0	%
June 30, 2019	$	362,130				$	284,659				$	24,564				$	52,907

Revenue was $362.1 million for the three months ended June 30, 2019 compared to revenue of $379.7 million for the three months ended June 30, 2018, representing a decline of $17.6 million.

The negative foreign exchange impact of $4.2 million, or 1.1%, was attributed to the fluctuation of the U.S. dollar against the Canadian dollar, Swedish Króna, Euro and British Pound.

The Company also utilizes non-GAAP metrics called organic revenue growth (decline) and non-GAAP acquisitions (dispositions), net, as defined above. For the three months ended June 30, 2019, organic revenue decreased by $9.2 million, or 2.4%, of which $9.7 million, or 2.5% pertained to Partner Firms the Company has owned throughout each of the comparable periods presented. The remaining revenue growth of $0.4 million, or 0.1%, was generated from acquired Partner Firms. The decline in revenue from existing Partner Firms was attributable to client losses and a reduction in spending by certain clients, partially offset by new client wins. Additionally, the change in revenue was driven by a decline in categories including health care, food and beverage and automotive, partially offset by growth in transportation and technology.

The table below provides a reconciliation between the revenue in the Advertising and Communications Group from acquired/disposed businesses in the statement of operations to non-GAAP acquisitions (dispositions), net for the three months ended June 30, 2019:

	Specialist Communications				All Other				Total
	(Dollars in Thousands)
GAAP revenue from 2018 and 2019 acquisitions	$	1,519			$	698			$	2,217
Contribution to non-GAAP organic revenue (growth) decline	(440		)	—	—			—	(440		)
Prior year revenue from dispositions	—				(5,995		)		(5,995		)
Non-GAAP acquisitions (dispositions), net	$	1,079			$	(5,297	)		$	(4,218	)

The geographic mix in revenues for the three months ended June 30, 2019 and 2018 is as follows:

	2019		2018
United States	78.6	%	77.8	%
Canada	6.8	%	8.7	%
Other	14.6	%	13.5	%

Revenue growth was mixed through the geographic regions with a decline in the United States of 3.6%, a decline in Canada of 25.8%, partially offset by growth of 3.0% in the other regions outside of North America partially attributable to the strengthening of the U.S. dollar.

32

The United States and Canada had organic revenue decline of 3.8% and 5.6%, respectively. Organic revenue growth outside of North America was 7.3%. Organic revenue performance in the United States and Canada was attributable to client losses and a reduction in spending by some clients, partially offset by a contribution from new client wins.

The change in expenses and operating profit as a percentage of revenue in the Advertising and Communications Group for the three months ended June 30, 2019 and 2018 was as follows:

	2019				2018				Change
Advertising and Communications Group	$		% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Revenue:	$	362,130			$	379,743			$	(17,613	)	(4.6	)%
Operating expenses
Cost of services sold	240,482		66.4	%	253,390		66.7	%	(12,908		)	(5.1	)%
Office and general expenses	71,132		19.6	%	70,898		18.7	%	234			0.3	%
Depreciation and amortization	10,442		2.9	%	11,543		3.0	%	(1,101		)	(9.5	)%
	$	322,056	88.9	%	$	335,831	88.4	%	$	(13,775	)	(4.1	)%
Operating profit (loss)	$	40,074	11.1	%	$	43,912	11.6	%	$	(3,838	)	(8.7	)%

The change in operating profit was primarily attributable to the decline in revenue, partially offset by lower operating expenses, as outlined below.

The change in the categories of expenses as a percentage of revenue in the Advertising and Communications Group for the three months ended June 30, 2019 and 2018 was as follows:

	2019				2018					Change
Advertising and Communications Group	$		% of Revenue		$			% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	60,040	16.6	%	$	52,590		13.8	%	$	7,450		14.2	%
Staff costs (2)	204,442		56.5	%	224,582			59.1	%	(20,140		)	(9.0	)%
Administrative	42,617		11.8	%	47,801			12.6	%	(5,184		)	(10.8	)%
Deferred acquisition consideration	2,073		0.6	%	(5,067		)	(1.3	)%	7,140			NM
Stock-based compensation	2,442		0.7	%	4,382			1.2	%	(1,940		)	(44.3	)%
Depreciation and amortization	10,442		2.9	%	11,543			3.0	%	(1,101		)	(9.5	)%
Total operating expenses	$	322,056	88.9	%	$	335,831		88.4	%	$	(13,775	)	(4.1	)%

NM - Not meaningful

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

Direct costs increased primarily attributed to higher billable costs for client arrangements accounted for as principal.

The decrease in staff costs was primarily attributed to staffing reductions at Partner Firms and lower costs to support the operations of Partner Firms.

Deferred acquisition consideration change for the three months ended June 30, 2019 was primarily attributed to the aggregate performance of certain Partner Firms in 2019 relative to the previously projected expectations.

33

Global Integrated Agencies

The change in expenses and operating profit as a percentage of revenue in the Global Integrated Agencies reportable segment for the three months ended June 30, 2019 and 2018 was as follows:

	2019				2018				Change
Global Integrated Agencies	$		% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Revenue:	$	154,368			$	158,163			$	(3,795	)	(2.4	)%
Operating expenses
Cost of services sold	97,230		63.0	%	104,959		66.4	%	(7,729		)	(7.4	)%
Office and general expenses	31,981		20.7	%	30,109		19.0	%	1,872			6.2	%
Depreciation and amortization	4,437		2.9	%	4,743		3.0	%	(306		)	(6.4	)%
	$	133,648	86.6	%	$	139,811	88.4	%	$	(6,163	)	(4.4	)%
Operating profit	$	20,720	13.4	%	$	18,352	11.6	%	$	2,368		12.9	%

The decline in revenue is primarily due to a negative impact from foreign exchange of $2.9 million, or 1.8%.

The change in operating profit was primarily attributed to a decline in revenue, more than offset by lower operating expenses, as outlined below.

The change in the categories of expenses as a percentage of revenue in the Global Integrated Agencies reportable segment for the three months ended June 30, 2019 and 2018 was as follows:

	2019				2018					Change
Global Integrated Agencies	$		% of Revenue		$			% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	15,785	10.2	%	$	11,237		7.1	%	$	4,548		40.5	%
Staff costs (2)	91,357		59.2	%	102,066			64.5	%	(10,709		)	(10.5	)%
Administrative	19,026		12.3	%	21,899			13.8	%	(2,873		)	(13.1	)%
Deferred acquisition consideration	1,811		1.2	%	(2,609		)	(1.6	)%	4,420			NM
Stock-based compensation	1,232		0.8	%	2,475			1.6	%	(1,243		)	(50.2	)%
Depreciation and amortization	4,437		2.9	%	4,743			3.0	%	(306		)	(6.4	)%
Total operating expenses	$	133,648	86.6	%	$	139,811		88.4	%	$	(6,163	)	(4.4	)%

NM - Not meaningful

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

Direct costs increased primarily attributed to higher billable costs for client arrangements accounted for as principal.

The decrease in staff costs was attributed to staffing reductions at certain Partner Firms.

Deferred acquisition consideration change for the three months ended June 30, 2019 was primarily attributed to the aggregate performance of certain Partner Firms in 2019 relative to the previously projected expectations.

34

Domestic Creative Agencies

The change in expenses and operating profit as a percentage of revenue in the Domestic Creative Agencies reportable segment for the three months ended June 30, 2019 and 2018 was as follows:

	2019				2018				Change
Domestic Creative Agencies	$		% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Revenue	$	65,193			$	72,971			$	(7,778	)	(10.7	)%
Operating expenses
Cost of services sold	41,782		64.1	%	49,830		68.3	%	(8,048		)	(16.2	)%
Office and general expenses	13,134		20.1	%	16,783		23.0	%	(3,649		)	(21.7	)%
Depreciation and amortization	1,547		2.4	%	1,281		1.8	%	266			20.8	%
	$	56,463	86.6	%	$	67,894	93.0	%	$	(11,431	)	(16.8	)%
Operating profit	$	8,730	13.4	%	$	5,077	7.0	%	$	3,653		72.0	%

The decline in revenue from existing Partner Firms was attributable to client losses and a reduction in spending by certain clients, partially offset by new client wins.

The change in operating profit was attributed to the decline in revenue, more than offset by lower operating expenses, as outlined below.

The change in the categories of expenses as a percentage of revenue in the Domestic Creative Agencies reportable segment for the three months ended June 30, 2019 and 2018 was as follows:

	2019					2018				Change
Domestic Creative Agencies	$			% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	9,863		15.1	%	$	12,267	16.8	%	$	(2,404	)	(19.6	)%
Staff costs (2)	37,009			56.8	%	42,809		58.7	%	(5,800		)	(13.5	)%
Administrative	7,688			11.8	%	9,207		12.6	%	(1,519		)	(16.5	)%
Deferred acquisition consideration	(166		)	(0.3	)%	1,233		1.7	%	(1,399		)	NM
Stock-based compensation	522			0.8	%	1,097		1.5	%	(575		)	(52.4	)%
Depreciation and amortization	1,547			2.4	%	1,281		1.8	%	266			20.8	%
Total operating expenses	$	56,463		86.6	%	$	67,894	93.0	%	$	(11,431	)	(16.8	)%

NM - Not meaningful

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

The decline in direct costs are attributable to the decline in revenues.

The decrease in staff costs were attributed to staffing reductions at certain Partner Firms.

Deferred acquisition consideration change for the three months ended June 30, 2019 was primarily attributed to the aggregate performance of certain Partner Firms in 2019 relative to the previously projected expectations.

35

Specialist Communications

The change in expenses and operating profit as a percentage of revenue in the Specialist Communications reportable segment for the three months ended June 30, 2019 and 2018 was as follows:

	2019				2018				Change
Specialist Communications	$		% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Revenue	$	47,170			$	40,304			$	6,866		17.0	%
Operating expenses
Cost of services sold	32,112		68.1	%	25,613		63.5	%	6,499			25.4	%
Office and general expenses	7,677		16.3	%	7,483		18.6	%	194			2.6	%
Depreciation and amortization	698		1.5	%	992		2.5	%	(294		)	(29.6	)%
	$	40,487	85.8	%	$	34,088	84.6	%	$	6,399		18.8	%
Operating profit	$	6,683	14.2	%	$	6,216	15.4	%	$	467		7.5	%

The increase in revenue is primarily due to client wins at certain Partner firms as well as a contribution of $1.5 million from an acquired Partner Firm.

The change in operating profit was attributed to the increase in revenue, partially offset by higher operating expenses, as outlined below.

The change in the categories of expenses as a percentage of revenue in the Specialist Communications reportable segment for the three months ended June 30, 2019 and 2018 was as follows:

	2019				2018				Change
Specialist Communications	$		% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	13,017	27.6	%	$	8,970	22.3	%	$	4,047		45.1	%
Staff costs (2)	20,977		44.5	%	18,769		46.6	%	2,208			11.8	%
Administrative	4,998		10.6	%	5,048		12.5	%	(50		)	(1.0	)%
Deferred acquisition consideration	745		1.6	%	257		0.6	%	488			NM
Stock-based compensation	52		0.1	%	52		0.1	%	—			—
Depreciation and amortization	698		1.5	%	992		2.5	%	(294		)	(29.6	)%
Total operating expenses	$	40,487	85.8	%	$	34,088	84.6	%	$	6,399		18.8	%

NM - Not meaningful

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

The increase in direct costs are attributable to higher revenues.

The increase in staff costs was primarily attributed to contributions from an acquired Partner Firm and higher costs to support the growth of certain Partner Firms.

Media Services

The change in expenses and operating profit as a percentage of revenue in the Media Services reportable segment for the three months ended June 30, 2019 and 2018 was as follows:

36

	2019				2018					Change
Media Services	$		% of Revenue		$			% of Revenue		$			%
	(Dollars in Thousands)
Revenue	$	21,331			$	21,398				$	(67	)	(0.3	)%
Operating expenses
Cost of services sold	14,835		69.5	%	15,239			71.2	%	(404		)	(2.7	)%
Office and general expenses	4,711		22.1	%	7,243			33.8	%	(2,532		)	(35.0	)%
Depreciation and amortization	794		3.7	%	635			3.0	%	159			25.0	%
	$	20,340	95.4	%	$	23,117		108.0	%	$	(2,777	)	(12.0	)%
Operating income (loss)	$	991	4.6	%	$	(1,719	)	(8.0	)%	$	2,710		NM

NM - Not meaningful

The change in operating profit was primarily attributable lower operating expenses, as outlined below.

The change in the categories of expenses as a percentage of revenue in the Media Services reportable segment for the three months ended June 30, 2019 and 2018 was as follows:

	2019					2018				Change
Media Services	$			% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	3,716		17.4	%	$	1,652	7.7	%	$	2,064		125.0	%
Staff costs (2)	12,710			59.6	%	16,629		77.7	%	(3,919		)	(23.6	)%
Administrative	3,751			17.6	%	4,037		18.9	%	(286		)	(7.1	)%
Deferred acquisition consideration	(615		)	(2.9	)%	90		0.4	%	(705		)	NM
Stock-based compensation	(16		)	(0.1	)%	74		0.3	%	(90		)	NM
Depreciation and amortization	794			3.7	%	635		3.0	%	159			25.0	%
Total operating expenses	$	20,340		95.4	%	$	23,117	108.0	%	$	(2,777	)	(12.0	)%

NM - Not meaningful

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

The increase in direct costs is driven by incremental costs to support certain client arrangements.

The decrease in staff costs was attributed to staffing reductions at certain Partner Firms.

37

All Other

The change in expenses and operating profit as a percentage of revenue in the All Other category for the three months ended June 30, 2019 and 2018 was as follows:

	2019				2018				Change
All Other	$		% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Revenue	$	74,068			$	86,907			$	(12,839	)	(14.8	)%
Operating expenses
Cost of services sold	54,522		73.6	%	57,749		66.4	%	(3,227		)	(5.6	)%
Office and general expenses	13,631		18.4	%	9,280		10.7	%	4,351			46.9	%
Depreciation and amortization	2,966		4.0	%	3,892		4.5	%	(926		)	(23.8	)%
	$	71,119	96.0	%	$	70,921	81.6	%	$	198		0.3	%
Operating profit	$	2,949	4.0	%	$	15,986	18.4	%	$	(13,037	)	(81.6	)%

The decline in revenue was primarily attributable to a disposition of a Partner Firm with an impact of $6.0 million as well as a decline from existing Partner Firms of $7.0 million, primarily attributable to reduced spending from existing clients.

The change in the categories of expenses as a percentage of revenue in the All Other category for the three months ended June 30, 2019 and 2018 was as follows:

	2019				2018					Change
All Other	$		% of Revenue		$			% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	17,659	23.8	%	$	18,464		21.2	%	$	(805	)	(4.4	)%
Staff costs (2)	42,390		57.2	%	44,309			51.0	%	(1,919		)	(4.3	)%
Administrative	7,154		9.7	%	7,610			8.8	%	(456		)	(6.0	)%
Deferred acquisition consideration	298		0.4	%	(4,038		)	(4.6	)%	4,336			NM
Stock-based compensation	652		0.9	%	684			0.8	%	(32		)	(4.7	)%
Depreciation and amortization	2,966		4.0	%	3,892			4.5	%	(926		)	(23.8	)%
Total operating expenses	$	71,119	96.0	%	$	70,921		81.6	%	$	198		0.3	%

NM - Not meaningful

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

The decrease in staff costs was primarily attributed to staffing reductions at certain Partner Firms and a positive benefit from the disposition of a Partner Firm.

38

Deferred acquisition consideration change for the three months ended June 30, 2019 was primarily attributed to the aggregate performance of certain Partner Firms in 2019 relative to the previously projected expectations.

Corporate

The change in operating expenses for Corporate for the three months ended June 30, 2019 and 2018 was as follows:

	2019		2018		Variance
Corporate	$		$		$			%
	(Dollars in Thousands)
Staff costs (1)	$	11,325	$	6,377	$	4,948		77.6	%
Administrative	3,893		5,382		(1,489		)	(27.7	)%
Stock-based compensation	1,192		1,221		(29		)	(2.4	)%
Depreciation and amortization	221		160		61			38.1	%
Total operating expenses	$	16,631	$	13,140	$	3,491		26.6	%

(1) Excludes stock-based compensation.

Staff costs increased due to a $6.7 million severance charge, partially offset by lower compensation expense associated with a reduction in staff related to certain actions taken in the prior year.

The decrease in administrative costs was primarily related to lower professional fees as the prior year included fees related to the implementation of a new accounting pronouncement.

SIX MONTHS ENDED JUNE 30, 2019 COMPARED TO SIX MONTHS ENDED JUNE 30, 2018

Consolidated Results of Operations

Revenues

Revenue was $690.9 million for the six months ended June 30, 2019 compared to revenue of $706.7 million for the six months ended June 30, 2018. See the Advertising and Communications Group section below for a discussion regarding consolidated revenues for the six months ended June 30, 2019 compared to the six months ended June 30, 2018.

Operating Profit

Operating profit for the six months ended June 30, 2019 was $39.1 million compared to $16.1 million for the six months ended June 30, 2018, representing a change of $23.0 million. The change was primarily driven by an increase in operating income in the Advertising and Communications Group of $17.2 million. Additionally, Corporate operating expenses decreased by $5.8 million, primarily related to lower compensation expense, stock-based compensation and professional fees as well as an impairment charge of $2.3 million recognized in 2018.

Other, Net

Other, net, for the six months ended June 30, 2019 was loss of $4.1 million compared to income of $1.0 million for the six months ended June 30, 2018, primarily driven by a loss on the sale of Kingsdale.

Foreign Exchange Transaction Gain (Loss)

Foreign exchange gain for the six months ended June 30, 2019 was $8.4 million compared to a loss of $13.2 million for the six months ended June 30, 2018. The change in foreign exchange is primarily attributable to the strengthening of the Canadian dollar against the U.S. dollar. The change primarily related to U.S. dollar denominated indebtedness that is an obligation of our Canadian parent company.

Interest Expense and Finance Charges, Net

Interest expense and finance charges, net, for the six months ended June 30, 2019 was $33.2 million compared to $32.9 million for the six months ended June 30, 2018, representing an increase of $0.3 million

Income Tax Expense (Benefit)

39

Income tax expense for the six months ended June 30, 2019 was $2.8 million (on income of $10.2 million resulting in an effective tax rate of 27.8%) compared to a benefit of $6.4 million (on a loss of $29.0 million resulting in an effective tax rate of 21.9%) for the six months ended June 30, 2018. The change in the effective tax rate was primarily driven by the jurisdictional mix of earnings.

Equity in Earnings (Losses) of Non-Consolidated Affiliates

Equity in earnings (losses) of non-consolidated affiliates represents the income or losses attributable to equity-accounted affiliate operations. The Company recorded $0.3 million of income for the six months ended June 30, 2019 compared to income of $0.1 million for the six months ended June 30, 2018.

Noncontrolling Interests

The effect of noncontrolling interests for the six months ended June 30, 2019 was $3.5 million compared to $3.4 million for the six months ended June 30, 2018.

Net Loss Attributable to MDC Partners Inc. Common Shareholders

As a result of the foregoing and the impact of accretion on and net income allocated to convertible preference shares, net loss attributable to MDC Partners Inc. common shareholders for the six months ended June 30, 2019 was $1.4 million, or $0.02 diluted loss per share, compared to net loss attributable to MDC Partners Inc. common shareholders of $30.1 million, or $0.53 diluted income per share, for the six months ended June 30, 2018.

Advertising and Communications Group

The following discussion provides additional detailed disclosure for each of the Company’s four (4) reportable segments, plus the “All Other” category, within the Advertising and Communications Group.

The components of the fluctuations in revenues for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 are as follows:

	Total					United States					Canada					Other
	$			%		$			%		$			%		$			%
	(Dollars in Thousands)
June 30, 2018	$	706,711				$	551,792				$	59,465				$	95,454
Components of revenue change:
Foreign exchange impact	(9,316		)	(1.3	)%	—			—	%	(2,375		)	(4.0	)%	(6,941		)	(7.3	)%
Non-GAAP acquisitions (dispositions), net	5,635			0.8	%	11,234			2.0	%	(7,281		)	(12.2	)%	1,682			1.8	%
Organic revenue growth (decline)	(12,109		)	(1.7	)%	(15,350		)	(2.8	)%	(2,867		)	(4.8	)%	6,108			6.4	%
Total Change	$	(15,790	)	(2.2	)%	$	(4,116	)	(0.7	)%	$	(12,523	)	(21.1	)%	$	849		0.9	%
June 30, 2019	$	690,921				$	547,676				$	46,942				$	96,303

Revenue for the Advertising and Communications Group was $690.9 million for the six months ended June 30, 2019 compared to revenue of $706.7 million for the six months ended June 30, 2018, representing a decrease of $15.8 million, or 2.2%.

The negative foreign exchange impact of $9.3 million, or 1.3%, was attributed to the fluctuation of the U.S. dollar against the Canadian dollar, Swedish Króna, Euro and British Pound.

The Company also utilizes non-GAAP metrics called organic revenue growth (decline) and non-GAAP acquisitions (dispositions), net, as defined above. For the six months ended June 30, 2019, organic revenue decreased by $12.1 million, or 1.7%, of which $16.6 million, or 2.3% pertained to Partner Firms the Company has owned throughout each of the comparable periods presented. The remaining revenue growth of $4.4 million, or 0.6%, was generated from acquired Partner Firms. The decline in revenue from existing Partner Firms was attributable to client losses and a reduction in spending by certain clients, partially offset by new client wins. Additionally, the change in revenue was driven by a decline in categories including health care, food and beverage and automotive, partially offset by growth in transportation and technology.

40

The table below provides a reconciliation between the revenue in the Advertising and Communications Group from acquired/disposed businesses in the statement of operations to non-GAAP acquisitions (dispositions), net for the six months ended June 30, 2019:

	Specialist Communications				All Other				Total
	(Dollars in Thousands)
GAAP revenue from 2018 and 2019 acquisitions	$	2,762			$	15,140			$	17,902
Contribution to non-GAAP organic revenue (growth) decline	(643		)	—	(3,805		)	—	(4,448		)
Prior year revenue from dispositions	—				(7,819		)		(7,819		)
Non-GAAP acquisitions (dispositions), net	$	2,119			$	3,516			$	5,635

The geographic mix in revenues for the six months ended June 30, 2019 and 2018 is as follows:

	2019		2018
United States	79.3	%	78.1	%
Canada	6.8	%	8.4	%
Other	13.9	%	13.5	%

Revenue growth was mixed through the geographic regions with a decline in the United States of 0.7%, a decline in Canada of 21.1% and growth of 0.9% in the other regions outside of North America partially attributable to the strengthening of the U.S. dollar.

The United States and Canada had organic revenue decline of 2.8% and 4.8%, respectively. Organic revenue growth outside of North America was 6.4% as we continue to extend capabilities into new markets throughout Europe, South America, Australia, and Asia.

The change in expenses and operating profit as a percentage of revenue in the Advertising and Communications Group for the six months ended June 30, 2019 and 2018 was as follows:

	2019				2018				Change
Advertising and Communications Group	$		% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Revenue	$	690,921			$	706,711			$	(15,790	)	(2.2	)%
Operating expenses
Cost of services sold	477,903		69.2	%	496,420		70.2	%	(18,517		)	(3.7	)%
Office and general expenses	133,377		19.3	%	143,246		20.3	%	(9,869		)	(6.9	)%
Depreciation and amortization	19,063		2.8	%	23,694		3.4	%	(4,631		)	(19.5	)%
	$	630,343	91.2	%	$	663,360	93.9	%	$	(33,017	)	(5.0	)%
Operating profit	$	60,578	8.8	%	$	43,351	6.1	%	$	17,227		39.7	%

The change in operating profit was attributable to a decline in revenue, more than offset by lower operating expenses, as outlined below.

41

The change in the categories of expenses as a percentage of revenue in the Advertising and Communications Group for the six months ended June 30, 2019 and 2018 was as follows:

	2019					2018					Change
Advertising and Communications Group	$			% of Revenue		$			% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	116,492		16.9	%	$	101,102		14.3	%	$	15,390		15.2	%
Staff costs (2)	406,000			58.8	%	437,655			61.9	%	(31,655		)	(7.2	)%
Administrative	87,371			12.6	%	95,219			13.5	%	(7,848		)	(8.2	)%
Deferred acquisition consideration	(5,570		)	(0.8	)%	(2,481		)	(0.4	)%	(3,089		)	NM
Stock-based compensation	6,987			1.0	%	8,171			1.2	%	(1,184		)	(14.5	)%
Depreciation and amortization	19,063			2.8	%	23,694			3.4	%	(4,631		)	(19.5	)%
Total operating expenses	$	630,343		91.2	%	$	663,360		93.9	%	$	(33,017	)	(5.0	)%

NM - Not meaningful

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

Direct costs increased primarily attributed to higher billable costs for client arrangements accounted for as principal.

The decrease in staff costs was primarily attributed to staffing reductions at Partner Firms and lower costs to support the operations of Partner Firms.

The decrease in administrative costs is driven by lower spending in connection with savings initiatives.

Deferred acquisition consideration change for the six months ended June 30, 2019 was primarily attributed to the aggregate performance of certain Partner Firms in 2019 relative to the previously projected expectations.

Global Integrated Agencies

The change in expenses and operating profit as a percentage of revenue in the Global Integrated Agencies reportable segment for the six months ended June 30, 2019 and 2018 was as follows:

	2019				2018				Change
Global Integrated Agencies	$		% of Revenue		$		% of Revenue		$			%
Revenue	$	284,087			$	287,686			$	(3,599	)	(1.3	)%
Operating expenses
Cost of services sold	194,506		68.5	%	207,996		72.3	%	(13,490		)	(6.5	)%
Office and general expenses	56,588		19.9	%	62,778		21.8	%	(6,190		)	(9.9	)%
Depreciation and amortization	8,502		3.0	%	12,152		4.2	%	(3,650		)	(30.0	)%
	$	259,596	91.4	%	$	282,926	98.3	%	$	(23,330	)	(8.2	)%
Operating profit	$	24,491	8.6	%	$	4,760	1.7	%	$	19,731		414.5	%

Revenue was lower due to a negative foreign exchange impact of $6.5 million, or 2.3%, partially offset by an increase in revenue from existing Partner Firms of $2.9 million, or 1.0%, primarily attributable to client wins at a certain agency.

The change in operating profit was primarily attributed to lower operating expenses, as outlined below.

42

The change in the categories of expenses as a percentage of revenue in the Global Integrated Agencies reportable segment for the six months ended June 30, 2019 and 2018 was as follows:

	2019					2018					Change
Global Integrated Agencies	$			% of Revenue		$			% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	30,281		10.7	%	$	17,738		6.2	%	$	12,543		70.7	%
Staff costs (2)	180,600			63.6	%	204,465			71.1	%	(23,865		)	(11.7	)%
Administrative	38,368			13.5	%	44,810			15.6	%	(6,442		)	(14.4	)%
Deferred acquisition consideration	(3,154		)	(1.1	)%	(1,174		)	(0.4	)%	(1,980		)	NM
Stock-based compensation	4,999			1.8	%	4,935			1.7	%	64			1.3	%
Depreciation and amortization	8,502			3.0	%	12,152			4.2	%	(3,650		)	(30.0	)%
Total operating expenses	$	259,596		91.4	%	$	282,926		98.3	%	$	(23,330	)	(8.2	)%

NM - Not meaningful

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

Direct costs increased primarily attributed to higher billable costs for client arrangements accounted for as principal.

The decrease in staff costs was attributed to staffing reductions at certain Partner Firms.

The decrease in administrative costs is driven by lower spending in connection with savings initiatives.

Deferred acquisition consideration change for the six months ended June 30, 2019 was primarily attributed to the aggregate performance of certain Partner Firms in 2019 relative to the previously projected expectations.

Domestic Creative Agencies

The change in expenses and operating profit as a percentage of revenue in the Domestic Creative Agencies reportable segment for the six months ended June 30, 2019 and 2018 was as follows:

	2019				2018				Change
Domestic Creative Agencies	$		% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Revenue	$	132,201			$	139,625			$	(7,424	)	(5.3	)%
Operating expenses
Cost of services sold	89,506		67.7	%	98,424		70.5	%	(8,918		)	(9.1	)%
Office and general expenses	25,702		19.4	%	30,672		22.0	%	(4,970		)	(16.2	)%
Depreciation and amortization	2,786		2.1	%	2,574		1.8	%	212			8.2	%
	$	117,994	89.3	%	$	131,670	94.3	%	$	(13,676	)	(10.4	)%
Operating profit	$	14,207	10.7	%	$	7,955	5.7	%	$	6,252		78.6	%

The decline in revenue from existing Partner Firms was attributable to client losses and a reduction in spending by certain clients, partially offset by new client wins.

The change in operating profit was primarily attributed to the decline in revenue, offset by lower operating expenses, as outlined below.

The change in the categories of expenses as a percentage of revenue in the Domestic Creative Agencies reportable segment for the six months ended June 30, 2019 and 2018 was as follows:

43

	2019					2018				Change
Domestic Creative Agencies	$			% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	24,550		18.6	%	$	23,139	16.6	%	$	1,411		6.1	%
Staff costs (2)	74,879			56.6	%	85,209		61.0	%	(10,330		)	(12.1	)%
Administrative	15,562			11.8	%	17,778		12.7	%	(2,216		)	(12.5	)%
Deferred acquisition consideration	(769		)	(0.6	)%	1,463		1.0	%	(2,232		)	NM
Stock-based compensation	986			0.7	%	1,507		1.1	%	(521		)	(34.6	)%
Depreciation and amortization	2,786			2.1	%	2,574		1.8	%	212			8.2	%
Total operating expenses	$	117,994		89.3	%	$	131,670	94.3	%	$	(13,676	)	(10.4	)%

NM - Not meaningful

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

The decrease in staff costs was attributed to staffing reductions at certain Partner Firms.

Deferred acquisition consideration change for the six months ended June 30, 2019 was primarily attributed to the aggregate performance of certain Partner Firms in 2019 relative to the previously projected expectations.

Specialist Communications

The change in expenses and operating profit as a percentage of revenue in the Specialist Communications reportable segment for the six months ended June 30, 2019 and 2018 was as follows:

	2019				2018				Change
Specialist Communications	$		% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Revenue	$	86,123			$	79,128			$	6,995		8.8	%
Operating expenses
Cost of services sold	57,986		67.3	%	52,355		66.2	%	5,631			10.8	%
Office and general expenses	13,112		15.2	%	14,870		18.8	%	(1,758		)	(11.8	)%
Depreciation and amortization	1,265		1.5	%	1,959		2.5	%	(694		)	(35.4	)%
	$	72,363	84.0	%	$	69,184	87.4	%	$	3,179		4.6	%
Operating profit	$	13,760	16.0	%	$	9,944	12.6	%	$	3,816		38.4	%

The increase in revenue is primarily due to client wins at certain Partner firms as well as a contribution of $2.8 million from an acquired Partner Firm.

The change in operating profit was primarily attributed to an increase in revenue partially offset by an increase in operating expenses, as outlined below.

44

The change in the categories of expenses as a percentage of revenue in the Specialist Communications reportable segment for the six months ended June 30, 2019 and 2018 was as follows:

	2019					2018				Change
Specialist Communications	$			% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	20,842		24.2	%	$	18,448	23.3	%	$	2,394		13.0	%
Staff costs (2)	41,147			47.8	%	37,732		47.7	%	3,415			9.1	%
Administrative	10,080			11.7	%	10,041		12.7	%	39			0.4	%
Deferred acquisition consideration	(1,049		)	(1.2	)%	765		1.0	%	(1,814		)	NM
Stock-based compensation	78			0.1	%	239		0.3	%	(161		)	(67.3	)%
Depreciation and amortization	1,265			1.5	%	1,959		2.5	%	(694		)	(35.4	)%
Total operating expenses	$	72,363		84.0	%	$	69,184	87.4	%	$	3,179		4.6	%

NM - Not meaningful

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

The increase in direct costs are in line with the growth in revenue.

The increase in staff costs was primarily attributed to contributions from an acquired Partner Firm, and higher costs to support the growth of certain Partner Firms.

Deferred acquisition consideration change for the six months ended June 30, 2019 was primarily attributed to the aggregate performance of certain Partner Firms in 2019 relative to the previously projected expectations.

Media Services

The change in expenses and operating profit as a percentage of revenue in the Media Services reportable segment for the six months ended June 30, 2019 and 2018 was as follows:

	2019					2018					Change
Media Services	$			% of Revenue		$			% of Revenue		$			%
	(Dollars in Thousands)
Revenue	$	41,510				$	46,082				$	(4,572	)	(9.9	)%
Operating expenses
Cost of services sold	29,629			71.4	%	32,013			69.5	%	(2,384		)	(7.4	)%
Office and general expenses	11,239			27.1	%	14,534			31.5	%	(3,295		)	(22.7	)%
Depreciation and amortization	1,485			3.6	%	1,273			2.8	%	212			16.7	%
	$	42,353		102.0	%	$	47,820		103.8	%	$	(5,467	)	(11.4	)%
Operating (loss) profit	$	(843	)	(2.0	)%	$	(1,738	)	(3.8	)%	$	895		51.5	%

The decline in revenue is primarily due to client losses and a reduction in spending by certain clients, partially offset by new client wins.

The change in operating profit was primarily attributable to a decline in revenue, more than offset by lower operating expenses, as outlined below.

The change in the categories of expenses as a percentage of revenue in the Media Services reportable segment for the six months ended June 30, 2019 and 2018 was as follows:

45

	2019					2018				Change
Media Services	$			% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	7,645		18.4	%	$	5,455	11.8	%	$	2,190		40.2	%
Staff costs (2)	25,185			60.7	%	32,380		70.3	%	(7,195		)	(22.2	)%
Administrative	7,981			19.2	%	8,391		18.2	%	(410		)	(4.9	)%
Deferred acquisition consideration	73			0.2	%	172		0.4	%	(99		)	(57.6	)%
Stock-based compensation	(16		)	—	%	149		0.3	%	(165		)	NM
Depreciation and amortization	1,485			3.6	%	1,273		2.8	%	212			16.7	%
Total operating expenses	$	42,353		102.0	%	$	47,820	103.8	%	$	(5,467	)	(11.4	)%

NM - Not meaningful

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

The decrease in staff costs was attributed to staffing reductions at certain Partner Firms.

All Other

The change in expenses and operating profit as a percentage of revenue in the All Other category for the six months ended June 30, 2019 and 2018 was as follows:

	2019				2018				Change
All Other	$		% of Revenue		$		% of Revenue		$			%
	(Dollars in Thousands)
Revenue	$	147,000			$	154,190			$	(7,190	)	(4.7	)%
Operating expenses
Cost of services sold	106,276		72.3	%	105,632		68.5	%	644			0.6	%
Office and general expenses	26,737		18.2	%	20,392		13.2	%	6,345			31.1	%
Depreciation and amortization	5,025		3.4	%	5,736		3.7	%	(711		)	(12.4	)%
	$	138,038	93.9	%	$	131,760	85.5	%	$	6,278		4.8	%
Operating profit	$	8,962	6.1	%	$	22,430	14.5	%	$	(13,468	)	(60.0	)%

The change in revenue was primarily attributable to revenue contributions of $15.1 million, or 10.3% from acquired Partner Firms, partially offset by negative revenue impact of $7.8 million or 5.3% from the disposition of a Partner firm, a decline from existing Partner Firms of $13.0 million, or 8.9%, and negative foreign exchange impact of $1.4 million, or 0.9%.

The change in the categories of expenses as a percentage of revenue in the All Other category for the six months ended June 30, 2019 and 2018 was as follows:

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The change in the categories of expenses as a percentage of revenue in the All Other category for the six months ended June 30, 2019 and 2018 was as follows:

	2019					2018					Change
All Other	$			% of Revenue		$			% of Revenue		$			%
	(Dollars in Thousands)
Direct costs (1)	$	33,174		22.6	%	$	36,322		23.6	%	$	(3,148	)	(8.7	)%
Staff costs (2)	84,188			57.3	%	77,869			50.5	%	6,319			8.1	%
Administrative	15,382			10.5	%	14,199			9.2	%	1,183			8.3	%
Deferred acquisition consideration	(671		)	(0.5	)%	(3,707		)	(2.4	)%	3,036			81.9	%
Stock-based compensation	940			0.6	%	1,341			0.9	%	(401		)	(29.9	)%
Depreciation and amortization	5,025			3.4	%	5,736			3.7	%	(711		)	(12.4	)%
Total operating expenses	$	138,038		93.9	%	$	131,760		85.5	%	$	6,278		4.8	%

(1) Excludes staff costs.

(2) Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.

The increase in staff costs was primarily attributed to contributions from an acquired Partner Firm.

Deferred acquisition consideration increase was primarily attributed to the aggregate performance of certain Partner Firms in 2019 relative to the previously projected expectations.

Corporate

The change in operating expenses for Corporate for the six months ended June 30, 2019 and 2018 was as follows:

	2019			2018		Variance
Corporate	$			$		$			%
	(Dollars in Thousands)
Staff costs (1)	$	13,851		$	11,742	$	2,109		18.0	%
Administrative	7,546			10,301		(2,755		)	(26.7	)%
Stock-based compensation	(381		)	2,469		(2,850		)	NM
Depreciation and amortization	438			384		54			14.1	%
Other asset impairment	—			2,317		(2,317		)	(100.0	)%
Total operating expenses	$	21,454		$	27,213	$	(5,759	)	(21.2	)%

NM - Not meaningful

(1) Excludes stock-based compensation.

Staff costs increased due to a $6.7 million severance charge, partially offset by lower compensation expense associated with a reduction in staff related to certain actions taken in the prior year.

The decrease in administrative costs was primarily related to lower professional fees as the prior year included fees related to the implementation of a new accounting pronouncement.

Stock-based compensation was a credit in the six months ended June 30, 2019 due to the reversal of expense previously recognized in connection with the forfeiture of a performance based equity award.

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Liquidity and Capital Resources:

Liquidity

The following table provides summary information about the Company’s liquidity position:

	As of and for the six months ended June 30, 2019			As of and for the six months ended June 30, 2018			As of and for the year ended December 31, 2018
	(In Thousands, Except for Long-Term Debt to Shareholders’ Equity Ratio)
Cash and cash equivalents	$	27,304		$	24,999		$	30,873
Working capital (deficit)	$	(184,620	)	$	(176,959	)	$	(152,682	)
Cash provided by (used in) operating activities	$	(40,237	)	$	(61,713	)	$	17,280
Cash provided by (used in) investing activities	$	9,818		$	(36,121	)	$	(50,431	)
Cash provided by (used in) financing activities	$	25,712		$	76,343		$	21,434
Ratio of long-term debt to shareholders' deficit	-5.32			-6.52			-3.87

The Company intends to maintain sufficient cash and/or available borrowings to fund operations for the next twelve months. The Company has historically been able to maintain and expand its business using cash generated from operating activities, funds available under its Credit Agreement, and other initiatives, such as obtaining additional debt and equity financing. At June 30, 2019, the Company had $27.5 million of borrowings outstanding and $202.7 million available under the Credit Agreement.

The Company’s obligations extending beyond twelve months primarily consist of deferred acquisition payments, capital expenditures, scheduled lease obligation payments, and interest payments on borrowings under the Company’s 6.50% Senior Notes due 2024. Based on the current outlook, the Company believes future cash flows from operations, together with the Company’s existing cash balance and availability of funds under the Company’s Credit Agreement, will be sufficient to meet the Company’s anticipated cash needs for the foreseeable future. The Company’s ability to make scheduled deferred acquisition payments, principal and interest payments, to refinance indebtedness or to fund planned capital expenditures will depend on future performance, which is subject to general economic conditions, the competitive environment and other factors, including those described in the Company’s 2018 Annual Report on Form 10-K and in the Company’s other SEC filings.

As market conditions warrant, the Company may from time to time seek to purchase its notes, in privately negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations contained in the agreements governing its indebtedness, any purchase made by the Company may be funded by the net proceeds from any asset dispositions or the use of cash on its balance sheet. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material.

Working Capital

At June 30, 2019, the Company had a working capital deficit of $184.6 million compared to a deficit of $152.7 million at December 31, 2018. The Company’s working capital is impacted by seasonality in media buying, amounts spent by clients, and timing of amounts received from clients and subsequently paid to suppliers. Media buying is impacted by the timing of certain events, such as major sporting competitions and national holidays, and there can be a quarter to quarter lag between the time amounts received from clients for the media buying are subsequently paid to suppliers. The Company intends to maintain sufficient cash or availability of funds under the Credit Agreement at any particular time to adequately fund working capital should there be a need to do so from time to time.

Cash Flows

Operating Activities

Cash flows used in operating activities for the six months ended June 30, 2019 was $40.2 million, primarily reflecting unfavorable working capital requirements, driven by media and other supplier payments.

Cash flows used in operating activities for the six months ended June 30, 2018 was $61.7 million, primarily reflecting unfavorable working capital requirements, driven by media and other supplier payments, deferred acquisition consideration payments as well as net income (loss) adjusted to reconcile to net cash used in operating activities.

Investing Activities

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During the six months ended June 30, 2019, cash flows provided by investing activities was $9.8 million, which primarily consisted of proceeds of $23.1 million from the sale of the Company’s equity interest in Kingsdale, partially offset by $7.9 million of capital expenditures related primarily to computer equipment, furniture and fixtures, and leasehold improvements and $5.1 million paid for acquisitions.

During the six months ended June 30, 2018, cash flows used in investing activities was $36.1 million, primarily consisting of cash paid of $27.3 million for the acquisition of Instrument and capital expenditures related primarily to computer equipment, furniture and fixtures, and leasehold improvements of $9.7 million.

Financing Activities

During the six months ended June 30, 2019, cash flows provided by financing activities was $25.7 million, primarily driven by $98.6 million in proceeds, net of fees from the issuance of common and preferred shares, partially offset by $40.6 million in net repayments under the Credit Agreement, and $24.2 million in deferred acquisition consideration payments

During the six months ended June 30, 2018, cash flows provided by financing activities was $76.3 million, primarily driven by $115.2 million in net borrowings under the Credit Agreement and $29.2 million of acquisition related payments.

Total Debt

Debt, net of debt issuance costs, as of June 30, 2019 was $914.1 million as compared to $954.1 million outstanding at December 31, 2018. The decrease of $40 millionin debt was primarily a result of the Company’s net repayments on the Credit Agreement. See Note 7 of the Notes to the Unaudited Condensed Consolidated Financial Statements for information regarding the Company’s $900 million aggregate principal amount of its senior unsecured notes due 2024 and $250 million senior secured revolving credit agreement due May 3, 2021 (the “Credit Agreement”).

The Company is currently in compliance with all of the terms and conditions of the Credit Agreement, and management believes, based on its current financial projections, that the Company will be in compliance with its covenants over the next twelve months.

If the Company loses all or a substantial portion of its lines of credit under the Credit Agreement, or if the Company uses the maximum available amount under the Credit Agreement, it will be required to seek other sources of liquidity. If the Company were unable to find these sources of liquidity, for example through an equity offering or access to the capital markets, the Company’s ability to fund its working capital needs and any contingent obligations with respect to acquisitions and redeemable noncontrolling interests would be adversely affected.

Pursuant to the Credit Agreement, the Company must comply with certain financial covenants including, among other things, covenants for (i) senior leverage ratio, (ii) total leverage ratio, (iii) fixed charges ratio, and (iv) minimum earnings before interest, taxes and depreciation and amortization, in each case as such term is specifically defined in the Credit Agreement. For the period ended June 30, 2019, the Company’s calculation of each of these covenants, and the specific requirements under the Credit Agreement, respectively, were calculated based on the trailing twelve months as follows:

	June 30, 2019
Total Senior Leverage Ratio	0.11
Maximum per covenant	2.00
Total Leverage Ratio	4.91
Maximum per covenant	6.25
Fixed Charges Ratio	2.45
Minimum per covenant	1.00
Earnings before interest, taxes, depreciation and amortization (in millions)	$	187,920
Minimum per covenant (in millions)	$	105,000

These ratios and measures are not based on generally accepted accounting principles and are not presented as alternative measures of operating performance or liquidity. Some of these ratios and measures include, among other things, pro forma adjustments for acquisitions, one-time charges, and other items, as defined in the Credit Agreement. They are presented here to demonstrate compliance with the covenants in the Credit Agreement, as non-compliance with such covenants could have a material adverse effect on the Company.

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Commitments, Contingencies, and Guarantees

The Company’s agencies enter into contractual commitments with media providers and agreements with production companies on behalf of our clients at levels that exceed the revenue from services. Some of our agencies purchase media for clients and act as an agent for a disclosed principal. These commitments are included in accounts payable when the media services are delivered by the media providers. MDC takes precautions against default on payment for these services and has historically had a very low incidence of default. MDC is still exposed to the risk of significant uncollectible receivables from our clients. The risk of a material loss could significantly increase in periods of severe economic downturn.

Deferred acquisition consideration on the balance sheet consists of deferred obligations related to contingent and fixed purchase price payments, and to a lesser extent, contingent and fixed retention payments tied to continued employment of specific personnel. See Note 5 of the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information regarding contingent deferred acquisition consideration.

The following table presents the changes in the deferred acquisition consideration by segment for the six months ended June 30, 2019:

	June 30, 2019
	Global Integrated Agencies			Domestic Creative Agencies			Specialist Communication Agencies			Media Services			All Other			Total
	(Dollars in Thousands)
Beginning Balance of contingent payments	$	47,880		$	3,747		$	13,193		$	2,689		$	15,089		$	82,598
Payments	(20,773		)	(526		)	(2,031		)	(250		)	(912		)	(24,492		)
Additions - acquisitions and step up transactions	—			—			5,695			—			—			5,695
Redemption value adjustments (1)	(3,154		)	(769		)	(1,049		)	73			(671		)	(5,570		)
Stock-based compensation	(1,711		)	26			—			—			1,155			(530		)
Other	—			—			—			—			—			—
Ending Balance of contingent payments	22,242			2,478			15,808			2,512			14,661			57,701
Fixed payments	263			279			—			—			—			542
	$	22,505		$	2,757		$	15,808		$	2,512		$	14,661		$	58,243

(1) Redemption value adjustments are fair value changes from the Company’s initial estimates of deferred acquisition payments and stock-based compensation charges relating to acquisition payments that are tied to continued employment.

Deferred acquisition consideration excludes future payments with an estimated fair value of $8.6 million that are contingent upon employment terms as well as financial performance and will be expensed as stock-based compensation over the required retention period. Of this amount, the Company estimates $0.2 million will be paid in the current year and $8.4 million will be paid in one to three years

When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the incremental purchase may be required of the Company, the amounts are recorded as redeemable noncontrolling interests in mezzanine equity. See Note 9 of the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information regarding redeemable noncontrolling interest.

The Company intends to finance the cash portion of these contingent payment obligations using available cash from operations, borrowings under the Credit Agreement (and refinancings thereof), and, if necessary, through the incurrence of additional debt and/or issuance of additional equity. The ultimate amount payable and the incremental operating income in the future relating to these transactions will vary because it is dependent on the future results of operations of the subject businesses and the timing of when these rights are exercised.

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The following table summarizes the potential timing of the consideration and incremental operating income before depreciation and amortization based on assumptions as described above:

Consideration (4)	2019		2020		2021		2022		2023 & Thereafter		Total
	(Dollars in Thousands)
Cash	$	4,671	$	1,673	$	3,798	$	2,720	$	6,149	$	19,011
Shares	16		32		49		33		17		$	147
	$	4,687	$	1,705	$	3,847	$	2,753	$	6,166	$	19,158	(1)
Operating income before depreciation and amortization to be received (2)	$	2,001	$	80	$	1,768	$	—	$	569	$	4,418
Cumulative operating income before depreciation and amortization (3)	$	2,001	$	2,081	$	3,849	$	3,849	$	4,418			(5)

(1) This amount is in addition to (i) the $19.9 million of options to purchase only exercisable upon termination not within the control of the Company, or death, and (ii) the $3.6 million excess of the initial redemption value recorded in redeemable noncontrolling interests over the amount the Company would be required to pay to the holders should the Company acquire the remaining ownership interests.

(2) This financial measure is presented because it is the basis of the calculation used in the underlying agreements relating to the put rights and is based on actual operating results. This amount represents additional amounts to be attributable to MDC Partners Inc., commencing in the year the put is exercised.

(3) Cumulative operating income before depreciation and amortization represents the cumulative amounts to be received by the Company.

(4) The timing of consideration to be paid varies by contract and does not necessarily correspond to the date of the exercise of the put.

(5) Amounts are not presented as they would not be meaningful due to multiple periods included.

Critical Accounting Policies

See the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for information regarding the Company’s critical accounting policies.

New Accounting Pronouncements

Information regarding new accounting pronouncements can be found in Note 14 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein.

Risks and Uncertainties

This document contains forward-looking statements. The Company’s representatives may also make forward-looking statements orally from time to time. Statements in this document that are not historical facts, including, without limitation, statements about the Company’s beliefs and expectations, recent business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Words such as “estimates,” “expects,” “contemplates,” “will,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” “may,” “should” and variations of such words or similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:

• risks associated with severe effects of international, national and regional economic conditions;

• the Company’s ability to attract new clients and retain existing clients;

• the spending patterns and financial success of the Company’s clients;

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• the Company’s ability to retain and attract key employees;

• the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to redeemable noncontrolling interests and deferred acquisition consideration;

• the successful completion and integration of acquisitions which complement and expand the Company’s business capabilities; and

• foreign currency fluctuations.

Investors should carefully consider these risk factors, and the risk factors outlined in more detail in Company’s Annual Report on Form 10-K, for the year ended December 31, 2018, filed with the Securities and Exchange Commission (the “SEC”) on March 18, 2019 and accessible on the SEC’s website at www.sec.gov., under the caption “Risk Factors,” and in the Company’s other SEC filings.

Website Access to Company Reports

MDC Partners Inc.’s Internet website address is www.mdc-partners.com. The Company’s Annual Reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act” ), will be made available free of charge through the Company’s website as soon as reasonably practical after those reports are electronically filed with, or furnished to, the SEC.  The information found on, or otherwise accessible through, the Company’s website is not incorporated into, and does not form a part of, this quarterly report on Form 10-Q. From time to time, the Company may use its website as a channel of distribution of material company information.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk related to interest rates, foreign currencies and impairment risk.

Debt Instruments:  At June 30, 2019, the Company’s debt obligations consisted of amounts outstanding under its Credit Agreement and the Senior Notes. The Senior Notes bear a fixed 6.50% interest rate. The Credit Agreement bears interest at variable rates based upon the Eurodollar rate, U.S. bank prime rate and U.S. base rate, at the Company’s option. The Company’s ability to obtain the required bank syndication commitments depends in part on conditions in the bank market at the time of syndication. Given that there were $27.5 million borrowings under the Credit Agreement, as of June 30, 2019, a 1.0% increase or decrease in the weighted average interest rate, which was 5.01% at June 30, 2019, would have an interest impact of approximately $0.3 million.

Foreign Exchange:  While the Company primarily conducts business in markets that use the U.S. dollar, the Canadian dollar, the Euro and the British Pound, its non-U.S. operations transact business in numerous different currencies. The Company’s results of operations are subject to risk from the translation to the U.S. dollar of the revenue and expenses of its non-U.S. operations. The effects of currency exchange rate fluctuations on the translation of the Company’s results of operations are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. For the most part, revenues and expenses incurred related to the non-U.S. operations are denominated in their functional currency. This minimizes the impact that fluctuations in exchange rates will have on profit margins. Translation of intercompany debt, which is not intended to be repaid, is included in cumulative translation adjustments. Translation of current intercompany balances are included in net earnings. The Company generally does not enter into foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.

The Company is exposed to foreign currency fluctuations relating to its intercompany balances between the U.S. and Canada. For every one cent change in the foreign exchange rate between the U.S. and Canada, the impact to the Company’s financial statements would be approximately $1.0 million.

Impairment Risk: At June 30, 2019, the Company had goodwill of $743.6 million and other intangible assets of $60.8 million. The Company reviews goodwill and other intangible assets with indefinite lives not subject to amortization for impairment annually as of October 1st of each year or more frequently if indicators of potential impairment exist. See the Critical Accounting Policies and Estimates section in the Company’s 2018 Form 10-K for information related to impairment testing and the risk of potential impairment charges in future periods.

Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be included in our SEC reports is recorded, processed, summarized and reported within the applicable time periods specified by the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”),

52

who is our principal executive officer, and Chief Financial Officer (“CFO”), who is our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives. However, our disclosure controls and procedures are designed to provide reasonable assurances of achieving our control objectives.

We conducted an evaluation, under the supervision and with the participation of our management, including our CEO, CFO and management Disclosure Committee, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(e) and 15(d)-15(e) of the Exchange Act. Based on that evaluation, our CEO and CFO concluded that, as of June 30, 2019, our disclosure controls and procedures are effective to ensure that decisions can be made timely with respect to required disclosures, as well as ensuring that the recording, processing, summarization and reporting of information required to be included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 is appropriate.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting during the three months ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

The Company’s operating entities are involved in legal proceedings of various types. While any litigation contains an element of uncertainty, the Company has no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on its financial condition or results of operations.

Item 1A.    Risk Factors

There are no material changes in the risk factors set forth in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

For the three months ended June 30, 2019, the Company made no open market purchases of its Class A shares or its Class B shares. Pursuant to its Credit Agreement and the indenture governing the 6.50% Notes, the Company is currently limited from repurchasing its shares in the open market.

For the three months ended June 30, 2019, the Company’s employees surrendered Class A shares in connection with the required tax withholding resulting from the vesting of restricted stock. The Company paid these withholding taxes on behalf of the related employees. These Class A shares were subsequently retired and no longer remain outstanding as of June 30, 2019. The following table details those shares withheld during the second quarter of 2019:

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Number of Shares That May Yet Be Purchased Under the Program
4/1/2019 - 4/30/2019	$	—	$	—	$	—	$	—
5/1/2019 - 5/31/2019	5,602		2.61		—		—
6/1/2019 - 6/30/2019	13,655		2.91		—		—
Total	$	19,257	$	2.70	$	—	$	—

Item 3.    Defaults Upon Senior Securities

None.

Item 4.    Mine Safety Disclosures

Not applicable.

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Item 5.    Other Information

None.

Item 6.    Exhibits

The exhibits required by this item are listed on the Exhibit Index.

55

EXHIBIT INDEX

Exhibit No.	Description
3.1	Articles of Amalgamation, dated January 1, 2004 (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on May 10, 2004).
3.1.1	Articles of Continuance, dated June 28, 2004 (incorporated by reference to Exhibit 3.3 to the Company’s Form 10-Q filed on August 4, 2004).
3.1.2	Articles of Amalgamation, dated July 1, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on July 30, 2010).
3.1.3	Articles of Amalgamation, dated May 1, 2011 (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on May 2, 2011).
3.1.4	Articles of Amalgamation, dated January 1, 2013 (incorporated by reference to Exhibit 3.1.4 to the Company’s Form 10-K filed on March 10, 2014).
3.1.5	Articles of Amalgamation, dated April 1, 2013 (incorporated by reference to Exhibit 3.1.5 to the Company’s Form 10-K filed on March 10, 2014).
3.1.6	Articles of Amalgamation, dated July 1, 2013 (incorporated by reference to Exhibit 3.1.6 to the Company’s Form 10-K filed on March 10, 2014).
3.1.7	Articles of Amendment, dated March 7, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on March 7, 2017).
3.1.8	Articles of Amendment, dated March 14, 2019 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on March 15, 2019).
3.2	General By-law No. 1, as amended on April 29, 2005 (incorporated by reference to Exhibit 3.2 to the Company’s Form 10-K filed on March 16, 2007).
10.1	Agreement, dated April 19, 2019, by and between the Company and FrontFour Capital Group LLC, on behalf of itself and its affiliates (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on April 22, 2019).
10.2	Employment Agreement, dated as of May 6, 2019, by and between the Company and Frank Lanuto (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 8, 2019).
10.3	Employment Agreement, dated as of May 6, 2019, by and between the Company and Jonathan Mirsky (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on May 8, 2019).
10.4	Employment Agreement, dated as of May 16, 2019, by and between the Company and Seth Gardner (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 23, 2019).
10.5	Separation and Release Agreement, dated as of May 9, 2019, by and between the Company and David Doft (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q filed on May 9, 2019).
10.6	Separation and Release Agreement, dated as of May 6, 2019, by and between the Company and Mitchell Gendel (incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q filed on May 9, 2019).
10.7	Agreement of Settlement and Release, dated as of June 3, 2019, by and between the Company and Stephanie Nerlich (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on June 6, 2019).
10.8	Amendment to Incentive/Retention Agreement, dated June 4, 2019, by and between the Company and David Ross (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on June 6, 2019).
31.1	Certification by Chief Executive Officer pursuant to Rules 13a - 14(a) and 15d - 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification by Chief Financial Officer pursuant to Rules 13a - 14(a) and 15d - 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification by Chief Executive Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification by Chief Financial Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
99.1	Schedule of Advertising and Communications Companies.*
101	Interactive data file.*

* Filed electronically herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

56

MDC PARTNERS INC.

/s/ Frank Lanuto

Frank Lanuto

Chief Financial Officer and Authorized Signatory

August 7, 2019

57

EX-31.1

Exhibit 31.1

Certification Pursuant to Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section

302 of the Sarbanes-Oxley Act of 2002

I, Mark Penn, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2019 of MDC Partners Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2019		/s/ MARK PENN
	By:	Mark Penn
	Title:	Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section

302 of the Sarbanes-Oxley Act of 2002

I, Frank Lanuto, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2019 of MDC Partners Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2019		/s/ FRANK LANUTO
	By:	Frank Lanuto
	Title:	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the quarterly report of MDC Partners Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Penn, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2019
/s/ MARK PENN
By:	Mark Penn
Title:	Chairman and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the quarterly report of MDC Partners Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frank Lanuto, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2019
/s/ FRANK LANUTO
By:	Frank Lanuto
Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1

MDC PARTNERS INC.

SCHEDULE OF ADVERTISING AND COMMUNICATIONS COMPANIES

MDC maintains a majority or 100% ownership position in substantially all of its operating partner companies, with management of the partner companies owning the remaining equity.  MDC generally has rights to increase its ownership of non-wholly owned subsidiaries to 100% over a defined period of time.

	Year of Initial
Company	Investment	Locations
Consolidated:
Global Integrated Agencies:
72andSunny	2010	Los Angeles, New York, Netherlands, UK, Australia, Singapore
Anomaly	2011	New York, Los Angeles, Netherlands, Canada, UK, China, Germany
Crispin Porter + Bogusky	2001	Miami, Boulder, Los Angeles, UK, Brazil, China
Forsman & Bodenfors	2016	Sweden, New York, Canada, China, UK, Los Angeles, Singapore
The Media Kitchen	2010	New York, Canada, UK
Domestic Creative Agencies:
Colle + McVoy	1999	Minneapolis
Doner	2012	Detroit, Cleveland, Los Angeles, UK
Laird + Partners	2011	New York
Mono Advertising	2004	Minneapolis, San Francisco
Union	2013	Canada
Yamamoto	2000	Minneapolis
Civilian	2000	Chicago
Yes & Company	2018	New York
Bruce Mau Design	2004	Canada, New York
Hello Design	2004	Los Angeles
HL Group Partners	2007	New York, Los Angeles, China
Northstar Research Partners	1998	Canada, New York, UK, Indonesia
Redscout	2007	New York, San Francisco, UK
Varick Media Management	2010	New York
Specialist Communications:
Allison & Partners	2010	San Francisco, Los Angeles, New York and other US Locations, China, France, Singapore, UK, Japan, Germany
Luntz Global	2014	Washington, D.C.
Sloane & Company	2010	New York
Hunter	2014	New York, UK
KWT Global	2010	New York, UK, Canada
Veritas	1993	Canada
Media Services:
MDC Media Partners	2010
Assembly	2010	New York, Detroit, Atlanta, Los Angeles
Attention	2009	New York, Los Angeles
EnPlay	2015	New York
Trade X	2011	New York
Unique Influence	2015	Austin
All Other:
6degrees Communications	1993	Canada
Concentric Partners	2011	New York, UK
Gale Partners	2014	Canada, New York, India, Singapore
Instrument	2018	Portland
Kenna	2010	Canada
Relevent	2010	New York
TEAM	2010	Ft. Lauderdale
Vitro	2004	San Diego, Austin
Y Media Labs	2015	Redwood City, New York, India

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Jul. 19, 2019
Document Information [Line Items]
Entity Registrant Name	MDC PARTNERS INC
Entity Central Index Key	0000876883
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Current Reporting Status	Yes
Document Type	10-Q
Entity Small Business	false
Document Fiscal Year Focus	2019
Document Period End Date	Jun. 30, 2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		71,943,944
Common Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		3,749
Convertible Preferred Stock | Series 4 Convertible Preferred Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		145,000

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue:
Services	$ 362,130	$ 379,743	$ 690,921	$ 706,711
Operating expenses:
Cost of services sold	240,749	253,390	477,903	496,420
Office and general expenses	87,276	83,878	154,394	167,757
Depreciation and amortization	10,663	11,703	19,501	24,078
Other asset impairment	0	0	0	2,317
Costs and Expenses, Total	338,688	348,971	651,798	690,572
Operating income (loss)	23,442	30,772	39,123	16,139
Other income (expense):
Interest expense and finance charges, net	(16,413)	(16,859)	(33,174)	(32,942)
Other, net	(746)	592	(4,128)	1,033
Foreign exchange transaction gain (loss)	2,932	(6,549)	8,374	(13,209)
Nonoperating Income (Expense), Total	(14,227)	(22,816)	(28,928)	(45,118)
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates	9,215	7,956	10,195	(28,979)
Income tax expense (benefit)	2,088	1,977	2,835	(6,353)
Income (loss) before equity in earnings of non-consolidated affiliates	7,127	5,979	7,360	(22,626)
Equity in earnings of non-consolidated affiliates	206	(28)	289	58
Net income (loss)	7,333	5,951	7,649	(22,568)
Net income attributable to the noncontrolling interests	(3,043)	(2,545)	(3,472)	(3,442)
Net loss attributable to MDC Partners Inc.	$ 4,290	3,406	$ 4,177	$ (26,010)
Accretion on convertible preference shares		$ 2,273
Basic and diluted
Income (Loss) from Continuing Operations, Per Diluted Share	$ 0.01	$ 0.02	$ (0.02)	$ (0.53)
Weighted Average Number of Common Shares Outstanding:
Weighted Average Number of Shares Outstanding, Basic	71,915,832	57,439,823	66,118,749	56,924,208
Weighted Average Number of Shares Outstanding, Diluted	72,024,689	57,802,872	66,118,749	56,924,208
Stock-based compensation	$ 3,634	$ 5,603	$ 6,606	$ 10,640
Cost of services sold
Weighted Average Number of Common Shares Outstanding:
Stock-based compensation	2,442	4,047	6,987	7,394
Office and general expenses
Weighted Average Number of Common Shares Outstanding:
Stock-based compensation	1,192	$ 1,556	$ (381)	3,246
Series 4 Convertible Preferred Stock [Domain] | Preferred Stock
Other income (expense):
Accretion on convertible preference shares	$ 3,515			$ 4,095

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UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Comprehensive income (loss)
Net loss	$ 7,333	$ 5,951	$ 7,649	$ (22,568)
Other comprehensive income (loss), net of applicable tax:
Foreign currency translation adjustment	(1,385)	(1,848)	(6,044)	429
Other comprehensive income (loss)	(1,385)	(1,848)	(6,044)	429
Comprehensive loss for the period	5,948	4,103	1,605	(22,139)
Comprehensive loss (income) attributable to the noncontrolling interests	3,081	1,641	3,861	1,436
Comprehensive loss attributable to MDC Partners Inc.	$ 2,867	$ 2,462	$ (2,256)	$ (23,575)

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS $ in Thousands	Jun. 30, 2019 USD ($)
Current Assets:
Cash and cash equivalents	$ 27,304
Accounts receivable, less allowance for doubtful accounts of $2,066 and $1,879	434,512
Expenditures billable to clients	40,605
Assets held for sale	0
Other current assets	44,815
Total Current Assets	547,236
Fixed assets, at cost, less accumulated depreciation of $133,879 and $128,546	83,950
Right of use assets - operating leases	237,418
Investment in non-consolidated affiliates	6,761
Goodwill	743,582
Other intangible assets, net, less accumulated amortization of $164,347 and $161,868	60,848
Deferred tax assets	92,439
Other assets	26,415
Total Assets	1,798,649
Current Liabilities:
Accounts payable	228,069
Accruals and other liabilities	253,868
Liabilities held for sale	0
Advance billings	168,142
Current portion of lease liabilities - operating leases	46,338
Current portion of deferred acquisition consideration	35,439
Total Current Liabilities	731,856
Long-term debt	914,092
Long-term portion of deferred acquisition consideration	22,804
Long-term lease liabilities - operating leases	233,165
Other Liabilities	19,503
Deferred tax liabilities	6,571
Total Liabilities	1,927,991
Redeemable Noncontrolling Interests	42,635
Shareholders' Deficit:
Convertible preference shares, 145,000 authorized, issued and outstanding at March 31, 2019 and 95,000 at December 31, 2018	152,746
Common stock and other paid-in capital	97,455
Accumulated deficit	(460,726)
Accumulated other comprehensive (loss) income	(1,713)
MDC Partners Inc. Shareholders' Deficit	(212,238)
Noncontrolling Interests	40,261
Total Shareholders' Deficit	(171,977)
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Deficit	$ 1,798,649

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 2,066	$ 1,879
Fixed assets, accumulated depreciation	134,519	128,546
Other intangible assets, accumulated depreciation	$ 164,347	$ 161,868
Preference shares, authorized (in shares)	145,000	95,000
Preference shares, issued (in shares)	145,000	95,000
Preference shares, outstanding (in shares)	145,000	95,000

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Cash flows from operating activities:
Net loss	$ 7,333	$ 5,951	$ 7,649	$ (22,568)
Adjustments to reconcile income (loss) to cash provided by (used in) operating activities:
Stock-based compensation	3,634	5,603	6,606	10,640
Depreciation			12,621	14,642
Amortization of intangibles			6,880	9,436
Amortization of deferred finance charges and debt discount			1,663	1,605
Other asset impairment	0	0	0	2,317
Adjustment to deferred acquisition consideration			(5,570)	(2,479)
Deferred income taxes			2,835	(9,494)
Loss on sale of assets			3,407	(955)
Earnings of non-consolidated affiliates	(206)	28	(289)	(58)
Other and non-current assets and liabilities			(4,139)	(1,114)
Foreign exchange			(7,363)	12,128
Changes in working capital:
Accounts receivable			(21,570)	19,181
Expenditures billable to clients			1,763	(27,935)
Prepaid expenses and other current assets			(3,345)	(12,732)
Accounts payable, accruals and other current liabilities			(66,343)	(60,015)
Acquisition related payments			(4,376)	(23,894)
Advance billings			29,334	29,582
Net cash used in operating activities			(40,237)	(61,713)
Cash flows provided by (used in) investing activities:
Capital expenditures	(4,317)	(5,890)	(7,923)	(9,689)
Proceeds from sale of assets			23,050	0
Acquisitions, net of cash acquired			(5,130)	(27,299)
Other investments			(179)	867
Net cash provided by (used in) investing activities			9,818	(36,121)
Cash flows provided by financing activities:
Acquisition related payments			(24,219)	(29,172)
Distributions to noncontrolling interests			(7,957)	(8,927)	$ (13,419)
Payment of dividends			(56)	(168)
Purchase of shares			(78)	(493)
Other			0	(141)
Net cash provided by financing activities			25,712	76,343
Effect of exchange rate changes on cash, cash equivalents, and cash held in trusts			4	311
Net decrease in cash, cash equivalents, and cash held in trusts including cash classified within assets held for sale			(4,703)	(21,180)
Change in cash and cash equivalents classified within assets held for sale			4,441	0
Net decrease in cash and cash equivalents			(3,569)	(21,180)
Cash, cash equivalents, and cash held in trusts at beginning of period			30,873	46,179	46,179
Cash, cash equivalents, and cash held in trusts at end of period	$ 27,304	$ 24,999	27,304	24,999	$ 30,873
Supplemental disclosures:
Cash income taxes paid			3,494	2,626
Cash interest paid			31,643	31,414
Wells Fargo Capital Finance, LLC | Revolving Credit Facility
Cash flows provided by financing activities:
Repayments of revolving credit facility			(834,538)	(782,600)
Proceeds from revolving credit facility			793,940	897,844
Change in cash and cash equivalents held in trusts classified within held for sale			(3,307)	0
Series 4 Convertible Preferred Stock
Cash flows provided by financing activities:
Proceeds from issuance of common and convertible preference shares, net of issuance costs			$ 98,620

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT - USD ($) $ in Thousands	Total	Convertible Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit	AOCI Attributable to Parent [Member]	Accumulated Other Comprehensive Income (Loss)	MDC Partners Inc. Shareholders' Deficit	Noncontrolling Interest	Common Class A [Member] Common Stock	Series 4 Convertible Preferred Stock [Member] Convertible Preferred Stock
Balance at Dec. 31, 2017	$ (155,513)			$ 38,191	$ (340,000)	$ (1,954)		$ (213,543)	$ 58,030
Balance (in shares) at Dec. 31, 2017											95,000
Common stock, balance (in shares) at Dec. 31, 2017			56,375,131
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss attributable to MDC Partners Inc.	3,406							3,406
Shares acquired and cancelled	(39)			(39)				(39)
Balance at Mar. 31, 2018	(153,336)	$ 90,123		45,824	(367,180)	481		(230,752)	77,416
Balance (in shares) at Mar. 31, 2018		95,000,000
Common stock, balance (in shares) at Mar. 31, 2018			57,454,028
Adjustments to Additional Paid in Capital, Changes due to Business Combinations				(97)				(97)
Balance at Dec. 31, 2018	(246,967)	$ 90,123		58,579	(464,903)	4,720		(311,481)	64,514
Balance (in shares) at Dec. 31, 2018		95,000,000								57,517,568
Common stock, balance (in shares) at Dec. 31, 2018			57,521,323
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss attributable to MDC Partners Inc.	4,177
Other comprehensive income (loss)	(6,044)						$ (6,433)	(6,433)	389
Issuance of common and preference shares (in shares)		50,000,000	14,285,714
Issuance of common and convertible preference shares	98,620	$ 62,623		35,997				98,620
Issuance of restricted stock	0
Issuance of restricted stock (in shares)			193,979
Shares acquired and cancelled	(78)			(78)				(78)
Shares acquired and cancelled (in shares)			(53,273)
Stock-based compensation	509			509				509
Changes in redemption value of redeemable noncontrolling interests	2,729			2,729				2,729
Changes in ownership interest									(24,642)
Balance at Jun. 30, 2019	$ (171,977)	$ 152,746		$ 97,455	$ (460,726)	$ (1,713)		$ (212,238)	$ 40,261
Balance (in shares) at Jun. 30, 2019		145,000,000								71,943,994	145,000
Common stock, balance (in shares) at Jun. 30, 2019			71,947,743

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

asis of Presentation and Recent Developments

The accompanying consolidated financial statements include the accounts of MDC Partners Inc. (the “Company” or “MDC”), its subsidiaries and variable interest entities for which the Company is the primary beneficiary. References herein to “Partner Firms” generally refer to the Company’s subsidiary agencies.

MDC Partners Inc. has prepared the unaudited condensed consolidated interim financial statements included herein in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting interim financial information on Form 10-Q. Accordingly, the financial statements have been condensed and do not include certain information and disclosures pursuant to these rules. The preparation of financial statements in conformity with GAAP requires us to make judgments, assumptions and estimates that affect the amounts reported and disclosed. Actual results could differ from these estimates and assumptions. The consolidated results for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K”).

The accompanying financial statements reflect all adjustments, consisting of normally recurring accruals, which in the opinion of management are necessary for a fair presentation, in all material respects, of the information contained therein. Intercompany balances and transactions have been eliminated in consolidation.

Certain reclassifications have been made to the prior year financial information to conform to the current year presentation.

Due to changes in the composition of certain business and the Company’s internal management and reporting structure during 2019, reportable segment results for the 2018 periods presented have been recast to reflect the reclassification of certain businesses between segments. See Note 12 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for further information.

XML

Revenue

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

The Company’s revenue recognition policies are established in accordance with the Revenue Recognition topics of ASC 606, and accordingly, revenue is recognized when control of the promised goods or services is transferred to our clients, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

The MDC network provides an extensive range of services to our clients offering a variety of marketing and communication capabilities including strategy, creative and production for advertising campaigns across a variety of platforms (print, digital, social media, television broadcast), public relations services including strategy, editorial, crisis support or issues management, media training, influencer engagement and events management. We also provide media buying and planning across a range of platforms (out-of-home, paid search, social media, lead generation, programmatic, television broadcast), experiential marketing and application/website design and development.

The primary source of the Company’s revenue is from agency arrangements in the form of fees for services performed, commissions, and from performance incentives or bonuses, depending on the terms of the client contract. In all circumstances, revenue is only recognized when collection is reasonably assured. Certain of the Company’s contractual arrangements have more than one performance obligation. For such arrangements, revenue is allocated to each performance obligation based on its relative stand-alone selling price. Stand-alone selling prices are determined based on the prices charged to clients or using expected cost plus margin.

The determination of our performance obligations is specific to the services included within each contract. Based on a client’s requirements within the contract, and how these services are provided, multiple services could represent separate performance obligations or be combined and considered one performance obligation. Contracts that contain services that are not significantly integrated nor interdependent, nor that significantly modify or customize each other, are considered separate performance obligations. Typically, we consider media planning, media buying, creative (or strategy), production and experiential marketing services to be separate performance obligations if included in the same contract as each of these services can be provided on a stand-alone basis, and do not significantly modify or customize each other. Public relations services and application/website design and development are typically each considered one performance obligation as there is a significant integration of these services into a combined output.

We typically satisfy our performance obligations over time, as services are performed. Fees for services are typically recognized using input methods (direct labor hours, materials and third-party costs) that correspond with efforts incurred to date in relation to total estimated efforts to complete the contract. Point in time recognition primarily relates to certain commission-based contracts, which are recognized upon the placement of advertisements in various media when the Company has no further performance obligation.                                            

Revenue is recognized net of sales and other taxes due to be collected and remitted to governmental authorities. The Company’s contracts typically provide for termination by either party within 30 to 90 days. Although payment terms vary by client, they are typically within 30 to 60 days. In addition, the Company generally has the right to payment for all services provided through the end of the contract or termination date.

Within each contract, we identify whether the Company is principal or agent at the performance obligation level. In arrangements where the Company has substantive control over the service before transferring it to the client, and is primarily responsible for integrating the services into the final deliverables, we act as principal. In these arrangements, revenue is recorded at the gross amount billed. Accordingly, for these contracts the Company has included reimbursed expenses in revenue. In other arrangements where a third-party supplier, rather than the Company is primarily responsible for the integration of services into the final deliverables, and thus the Company is solely arranging for the third-party supplier to provide these services to our client, we generally act as agent and record revenue equal to the net amount retained, when the fee or commission is earned. The role of MDC’s agencies under a production services agreement is to facilitate a client’s purchasing of production capabilities from a third-party production company in accordance with the client’s strategy and guidelines. The obligation of MDC’s agencies under media buying services is to negotiate and purchase advertising media from a third-party media vendor on behalf of a client to execute its media plan. We do not obtain control prior to transferring these services to our clients; therefore, we primarily act as agent for production and media buying services.                                    

A small portion of the Company’s contractual arrangements with clients include performance incentive provisions, which allow the Company to earn additional revenues as a result of its performance relative to both quantitative and qualitative goals. Incentive compensation is primarily estimated using the most likely amount method and is included in revenue up to the amount that is not expected to result in a reversal of a significant amount of cumulative revenue recognized. We recognize revenue related to performance incentives as we satisfy the performance obligation to which the performance incentives are related.

Disaggregated Revenue Data

The Company provides a broad range of services to a large base of clients across the full spectrum of industry verticals on a global basis. The primary source of revenue is from agency arrangements in the form of fees for services performed, commissions, and from performance incentives or bonuses. Certain clients may engage with the Company in various geographic locations, across multiple disciplines, and through multiple Partner Firms. Representation of a client rarely means that MDC handles marketing communications for all brands or product lines of the client in every geographical location. The Company’s Partner firms often cooperate with one another through referrals and the sharing of both services and expertise, which enables MDC to service clients’ varied marketing needs by crafting custom integrated solutions. Additionally, the Company maintains separate, independent operating companies to enable it to effectively manage potential conflicts of interest by representing competing clients across the MDC network.

The following table presents revenue disaggregated by client industry vertical for the three and six months ended June 30, 2019 and 2018:

		Three Months Ended June 30,				Six Months Ended June 30,
Industry	Reportable Segment	2019		2018		2019		2018
Food & Beverage	All	$	73,305	$	84,464	$	139,969	$	147,932
Retail	All	39,894		38,396		72,350		76,411
Consumer Products	All	45,296		41,367		78,232		77,973
Communications	All	47,793		43,097		87,490		81,454
Automotive	All	18,541		25,294		36,732		45,788
Technology	All	28,876		23,540		54,279		45,080
Healthcare	All	25,954		35,426		49,161		68,002
Financials	All	27,868		30,207		52,795		52,702
Transportation and Travel/Lodging	All	27,050		18,776		44,085		33,664
Other	All	27,553		39,176		75,828		77,705
		$	362,130	$	379,743	$	690,921	$	706,711

MDC has historically largely focused where the Company was founded in North America, the largest market for its services in the world. In recent years the Company has expanded its global footprint to support clients looking for help to grow their businesses in new markets. Today, MDC’s Partner Firms are located in the United States, Canada, and an additional twelve countries around the world. In the past, some clients have responded to weakening economic conditions with reductions to their marketing budgets, which included discretionary components that are easier to reduce in the short term than other operating expenses.

The following table presents revenue disaggregated by geography for the three and six months ended June 30, 2019 and 2018:

		Three Months Ended June 30,				Six Months Ended June 30,
Geographic Location	Reportable Segment	2019		2018		2019		2018
United States	All	$	284,659	$	295,268	$	547,676	$	551,792
Canada	All, excluding Media Services	24,564		33,086		46,942		59,465
Other	All, excluding Media Services and Domestic Creative Agencies	52,907		51,389		96,303		95,454
		$	362,130	$	379,743	$	690,921	$	706,711

Contract assets and liabilities

Contract assets consist of fees and reimbursable outside vendor costs incurred on behalf of clients when providing advertising, marketing and corporate communications services that have not yet been invoiced to clients. Unbilled service fees were $92,317 and $64,362 at June 30, 2019 and December 31, 2018, respectively, and are included as a component of accounts receivable on the Unaudited Condensed Consolidated Balance Sheets. Outside vendor costs incurred on behalf of clients which have yet to be invoiced were $40,605 and $42,369 at June 30, 2019 and December 31, 2018, respectively, and are included on the Unaudited Condensed Consolidated Balance Sheets as expenditures billable to clients. Such amounts are invoiced to clients at various times over the course of providing services.

Contract liabilities consist of fees billed to clients in excess of fees recognized as revenue and are classified as advance billings on the Company’s Unaudited Condensed Consolidated Balance Sheets. Advance billings at June 30, 2019 and December 31, 2018 were $168,142 and $138,505, respectively. The increase in the advance billings balance of $29,637 for the six months ended June 30, 2019 is primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by $101,431 of revenues recognized that were included in the advance billings balances as of December 31, 2018 and reductions due to the incurrence of third-party costs.

Changes in the contract asset and liability balances during the six months ended June 30, 2019 and December 31, 2018 were not materially impacted by write-offs, impairment losses or any other factors.

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Loss Per Common Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Loss Per Common Share

Loss) Per Common Share

The following table sets forth the computation of basic and diluted income (loss) per common share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Numerator:
Net income (loss) attributable to MDC Partners Inc.	$	4,290		$	3,406		$	4,177		$	(26,010	)
Accretion on convertible preference shares	(3,242		)	(2,068		)	(5,625		)	(4,095		)
Net income allocated to convertible preference shares	(273		)	(205		)	—			—
Net income (loss) attributable to MDC Partners Inc. common shareholders	$	775		$	1,133		$	(1,448	)	$	(30,105	)
Adjustment to net income allocated to convertible preference shares	—			1			—			—
Numerator for dilutive income (loss) per common share:
Net income (loss) attributable to MDC Partners Inc. common shareholders	$	775		$	1,134		$	(1,448	)	$	(30,105	)
Denominator:
Basic weighted average number of common shares outstanding	71,915,832			57,439,823			66,118,749			56,924,208
Effect of dilutive securities:
Impact of stock options and non-vested stock under employee stock incentive plans	108,857			363,049			—			—
Diluted weighted average number of common shares outstanding	72,024,689			57,802,872			66,118,749			56,924,208
Basic	$	0.01		$	0.02		$	(0.02	)	$	(0.53	)
Diluted	$	0.01		$	0.02		$	(0.02	)	$	(0.53	)

Anti-dilutive stock awards 2,662,666327,5004,406,2061,594,761

Restricted stock and restricted stock unit awards of 242,338 and 1,308,781 for the three and six months ended June 30, 2019 and 2018, respectively, which are contingent upon the Company meeting a cumulative three year earnings target and contingent upon continued employment, are excluded from the computation of diluted income per common share as the contingencies were not satisfied at June 30, 2019 and 2018, respectively. In addition, there were 145,000 and 95,000 Preference Shares outstanding which were convertible into 25,621,189 and 10,544,708 Class A common shares at June 30, 2019 and 2018, respectively. These Preference Shares were anti-dilutive for each period presented in the table above and are therefore excluded from the diluted income (loss) per common share calculation.

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Acquisitions and Dispositions

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Acquisitions and Dispositions

Acquisitions and Dispositions

2019 Acquisition

Effective April 1, 2019, the Company acquired the 35% ownership interest of HPR Partners LLC (Hunter) it did not own for an aggregate purchase price of $9,585, comprised of a closing cash payment of $3,890 and additional deferred acquisition payments with an estimated present value at the acquisition date of $5,695. The deferred payments are based on the financial results of the underlying business from 2018 to 2020 with final payment due in 2021. As of the acquisition date, the fair value of the additional interest acquired was $20,178. The fair value was measured using a discounted cash flow model.

As a result of the transaction, the Company reduced redeemable noncontrolling interests by $9,488. The difference between the purchase price and the noncontrolling interest of $97 was recorded in common stock and other paid-in capital in the Unaudited Condensed Consolidated Balance Sheet.

2019 Disposition

On March 8, 2019, the Company consummated the sale of Kingsdale, an operating segment with operations in Toronto and New York City that provides shareholder advisory services. As consideration for the sale, the Company was paid cash plus the assumption of certain liabilities totaling approximately $50 million in the aggregate. The sale resulted in a loss of approximately $3 million, which is included in Other, net within the Unaudited Condensed Consolidated Statement of Operations.

Assets and Liabilities Held for Sale - Change in Plan to Sell

In the fourth quarter of 2018, the Company initiated a process to sell its ownership interest in a foreign office within the Global Integrated Agencies reportable segment. The assets and liabilities of the entity were classified as Assets and Liabilities held for sale, at their fair value less cost to sell, within the Consolidated Balance Sheet as of December 31, 2018. In the second quarter of 2019, following the appointment of Mark Penn as Chief Executive Officer, management changed its strategy and plan to sell the foreign office. In connection with management’s decision, the amounts classified within assets and liabilities held for sale were reclassified into the respective line items within the Unaudited Condensed Consolidated Balance Sheet as of June 30, 2019.

2018 Acquisitions

On September 7, 2018, a subsidiary of the Company purchased 100% interests of OneChocolate Communications Limited and OneChocolate Communications LLC, PR (“OneChocolate”) a digital marketing consultancy headquartered in London, UK, for an aggregate purchase price of $3,231, working capital of $966 and additional deferred acquisition payments with an estimated present value of $2,146. OneChocolate’s results are reflected in the Allison & Partners operating segment which is included in the Specialist Communications reportable segment which had an immaterial impact on our results.

On July 1, 2018, the Company acquired the remaining 14.87% and 3% of membership interests of Doner Partners, LLC and Source Marketing LLC, respectively, for an aggregate purchase price of $7,618, comprised of a closing cash payment of $3,279 and additional deferred acquisition payments with an estimated present value of $4,305 as of December 31, 2018. As of the acquisition date, the fair value of the additional interests acquired was $16,361 for Doner Partners LLC. The fair values were measured using a discounted cash flow model. As a result of the transaction, the Company reduced noncontrolling interest by $11,946 and redeemable noncontrolling interest by $933.

On April 2, 2018, the Company purchased 51% of the membership interests of Instrument LLC (“Instrument”), a digital creative agency based in Portland, Oregon, for an aggregate purchase price of $35,591. The acquisition is expected to facilitate the Company’s growth and help to build its portfolio of modern, innovative and digital-first agencies. The purchase price consisted of a cash payment of $28,561 and the issuance of 1,011,561 shares of the Company’s Class A subordinate voting stock with an acquisition date fair value of $7,030. The Company issued these shares in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) of the Securities Act.

The purchase price allocation for Instrument resulted in tangible assets of $10,304, identifiable intangibles of $23,130, consisting primarily of customer lists and a trade name, and goodwill of $32,776. In addition, the Company has recorded $27,357 as the fair value of noncontrolling interests, which was derived from the Company’s purchase price less a discount related to the noncontrolling parties’ lack of control. The identified assets have a weighted average useful life of approximately six years and will be amortized in a manner represented by the pattern in which the economic benefits of such assets are expected to be realized. The goodwill is tax deductible. Instruments’ results are included in the All Other category from a segment reporting perspective. The Company has a controlling financial interest in Instrument through its majority voting interest, and as such, has aggregated the acquired Partner Firm’s financial data into the Company’s Unaudited Condensed Consolidated Financial Statements. The operating results of Instrument in the current year is not material.

Effective January 1, 2018, the Company acquired the remaining 24.5% ownership interest of Allison & Partners LLC for an aggregate purchase price of $10,023, comprised of a closing cash payment of $300 and additional deferred acquisition payments with an estimated present value at the acquisition date of $9,723. The deferred payments are based on the future financial results of the underlying business from 2017 to 2020 with final payments due in 2021. As of the acquisition date, the fair value of the additional interest acquired was $20,096. The fair value was measured using a discounted cash flow model. As a result of the transaction, the Company reduced redeemable noncontrolling interests by $8,857. The difference between the purchase price and the noncontrolling interest of $1,166 was recorded in additional paid-in capital.

Deferred Acquisition Consideration

Deferred acquisition consideration on the balance sheet consists of deferred obligations related to contingent and fixed purchase price payments, and to a lesser extent, contingent and fixed retention payments tied to continued employment of specific personnel. Contingent deferred acquisition consideration is recorded at the acquisition date fair value and adjusted at each reporting period through operating income, for contingent purchase price payments, or net interest expense, for fixed purchase price payments. The Company accounts for retention payments through operating income as stock-based compensation over the required retention period.

The following table presents changes in contingent deferred acquisition consideration, which is measured at fair value on a recurring basis using significant unobservable inputs, and a reconciliation to the amounts reported on the balance sheets as of June 30, 2019 and December 31, 2018.

	June 30,			December 31,
	2019			2018
Beginning Balance of contingent payments	$	82,598		$	119,086
Payments	(24,492		)	(54,947		)
Redemption value adjustments (1)	(6,100		)	3,512
Additions - acquisitions and step up transactions	5,695			14,943
Other	—			4
Ending Balance of contingent payments	$	57,701		$	82,598
Fixed payments	542			1,097
	$	58,243		$	83,695

⁽¹⁾ Redemption value adjustments are fair value changes from the Company’s initial estimates of deferred acquisition payments and stock-based compensation charges relating to acquisition payments that are tied to continued employment. Redemption value adjustments are recorded within cost of services sold and office and general expenses on the Unaudited Condensed Consolidated Statements of Operations.

The following table presents the impact to the Company’s statement of operations due to the redemption value adjustments for the contingent deferred acquisition consideration:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Income (loss) attributable to fair value adjustments	$	2,073		$	(5,065	)	$	(5,570	)	$	(2,479	)
Stock-based compensation	(1,339		)	2,321			(530		)	4,682
Redemption value adjustments	$	734		$	(2,744	)	$	(6,100	)	$	2,203

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Deferred Acquisition Consideration

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Deferred Acquisition Consideration

Acquisitions and Dispositions

2019 Acquisition

Effective April 1, 2019, the Company acquired the 35% ownership interest of HPR Partners LLC (Hunter) it did not own for an aggregate purchase price of $9,585, comprised of a closing cash payment of $3,890 and additional deferred acquisition payments with an estimated present value at the acquisition date of $5,695. The deferred payments are based on the financial results of the underlying business from 2018 to 2020 with final payment due in 2021. As of the acquisition date, the fair value of the additional interest acquired was $20,178. The fair value was measured using a discounted cash flow model.

As a result of the transaction, the Company reduced redeemable noncontrolling interests by $9,488. The difference between the purchase price and the noncontrolling interest of $97 was recorded in common stock and other paid-in capital in the Unaudited Condensed Consolidated Balance Sheet.

2019 Disposition

On March 8, 2019, the Company consummated the sale of Kingsdale, an operating segment with operations in Toronto and New York City that provides shareholder advisory services. As consideration for the sale, the Company was paid cash plus the assumption of certain liabilities totaling approximately $50 million in the aggregate. The sale resulted in a loss of approximately $3 million, which is included in Other, net within the Unaudited Condensed Consolidated Statement of Operations.

Assets and Liabilities Held for Sale - Change in Plan to Sell

In the fourth quarter of 2018, the Company initiated a process to sell its ownership interest in a foreign office within the Global Integrated Agencies reportable segment. The assets and liabilities of the entity were classified as Assets and Liabilities held for sale, at their fair value less cost to sell, within the Consolidated Balance Sheet as of December 31, 2018. In the second quarter of 2019, following the appointment of Mark Penn as Chief Executive Officer, management changed its strategy and plan to sell the foreign office. In connection with management’s decision, the amounts classified within assets and liabilities held for sale were reclassified into the respective line items within the Unaudited Condensed Consolidated Balance Sheet as of June 30, 2019.

2018 Acquisitions

On September 7, 2018, a subsidiary of the Company purchased 100% interests of OneChocolate Communications Limited and OneChocolate Communications LLC, PR (“OneChocolate”) a digital marketing consultancy headquartered in London, UK, for an aggregate purchase price of $3,231, working capital of $966 and additional deferred acquisition payments with an estimated present value of $2,146. OneChocolate’s results are reflected in the Allison & Partners operating segment which is included in the Specialist Communications reportable segment which had an immaterial impact on our results.

On July 1, 2018, the Company acquired the remaining 14.87% and 3% of membership interests of Doner Partners, LLC and Source Marketing LLC, respectively, for an aggregate purchase price of $7,618, comprised of a closing cash payment of $3,279 and additional deferred acquisition payments with an estimated present value of $4,305 as of December 31, 2018. As of the acquisition date, the fair value of the additional interests acquired was $16,361 for Doner Partners LLC. The fair values were measured using a discounted cash flow model. As a result of the transaction, the Company reduced noncontrolling interest by $11,946 and redeemable noncontrolling interest by $933.

On April 2, 2018, the Company purchased 51% of the membership interests of Instrument LLC (“Instrument”), a digital creative agency based in Portland, Oregon, for an aggregate purchase price of $35,591. The acquisition is expected to facilitate the Company’s growth and help to build its portfolio of modern, innovative and digital-first agencies. The purchase price consisted of a cash payment of $28,561 and the issuance of 1,011,561 shares of the Company’s Class A subordinate voting stock with an acquisition date fair value of $7,030. The Company issued these shares in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) of the Securities Act.

The purchase price allocation for Instrument resulted in tangible assets of $10,304, identifiable intangibles of $23,130, consisting primarily of customer lists and a trade name, and goodwill of $32,776. In addition, the Company has recorded $27,357 as the fair value of noncontrolling interests, which was derived from the Company’s purchase price less a discount related to the noncontrolling parties’ lack of control. The identified assets have a weighted average useful life of approximately six years and will be amortized in a manner represented by the pattern in which the economic benefits of such assets are expected to be realized. The goodwill is tax deductible. Instruments’ results are included in the All Other category from a segment reporting perspective. The Company has a controlling financial interest in Instrument through its majority voting interest, and as such, has aggregated the acquired Partner Firm’s financial data into the Company’s Unaudited Condensed Consolidated Financial Statements. The operating results of Instrument in the current year is not material.

Effective January 1, 2018, the Company acquired the remaining 24.5% ownership interest of Allison & Partners LLC for an aggregate purchase price of $10,023, comprised of a closing cash payment of $300 and additional deferred acquisition payments with an estimated present value at the acquisition date of $9,723. The deferred payments are based on the future financial results of the underlying business from 2017 to 2020 with final payments due in 2021. As of the acquisition date, the fair value of the additional interest acquired was $20,096. The fair value was measured using a discounted cash flow model. As a result of the transaction, the Company reduced redeemable noncontrolling interests by $8,857. The difference between the purchase price and the noncontrolling interest of $1,166 was recorded in additional paid-in capital.

Deferred Acquisition Consideration

Deferred acquisition consideration on the balance sheet consists of deferred obligations related to contingent and fixed purchase price payments, and to a lesser extent, contingent and fixed retention payments tied to continued employment of specific personnel. Contingent deferred acquisition consideration is recorded at the acquisition date fair value and adjusted at each reporting period through operating income, for contingent purchase price payments, or net interest expense, for fixed purchase price payments. The Company accounts for retention payments through operating income as stock-based compensation over the required retention period.

The following table presents changes in contingent deferred acquisition consideration, which is measured at fair value on a recurring basis using significant unobservable inputs, and a reconciliation to the amounts reported on the balance sheets as of June 30, 2019 and December 31, 2018.

	June 30,			December 31,
	2019			2018
Beginning Balance of contingent payments	$	82,598		$	119,086
Payments	(24,492		)	(54,947		)
Redemption value adjustments (1)	(6,100		)	3,512
Additions - acquisitions and step up transactions	5,695			14,943
Other	—			4
Ending Balance of contingent payments	$	57,701		$	82,598
Fixed payments	542			1,097
	$	58,243		$	83,695

⁽¹⁾ Redemption value adjustments are fair value changes from the Company’s initial estimates of deferred acquisition payments and stock-based compensation charges relating to acquisition payments that are tied to continued employment. Redemption value adjustments are recorded within cost of services sold and office and general expenses on the Unaudited Condensed Consolidated Statements of Operations.

The following table presents the impact to the Company’s statement of operations due to the redemption value adjustments for the contingent deferred acquisition consideration:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Income (loss) attributable to fair value adjustments	$	2,073		$	(5,065	)	$	(5,570	)	$	(2,479	)
Stock-based compensation	(1,339		)	2,321			(530		)	4,682
Redemption value adjustments	$	734		$	(2,744	)	$	(6,100	)	$	2,203

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Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Leases

Effective January 1, 2019, the Company adopted FASB ASC Topic 842, Leases (“ASC 842”). As a result, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 840, Leases. See Note 14 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for additional information regarding the Company’s adoption of ASC 842. The policies described herein refer to those in effect as of January 1, 2019.

The Company leases office space in North America, Europe, Asia, South America, and Australia. This space is primarily used for office and administrative purposes by the Company’s employees in performing professional services. These leases are classified as operating leases and expire between years 2019 through 2032. Finance leases are considered to be immaterial to the Company.

The Company’s leasing policies are established in accordance with ASC 842, and accordingly, the Company recognizes on the balance sheet at the time of lease commencement a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. Right-of-use lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. All right-of-use assets are reviewed for impairment. As the Company’s implicit rate in its leases is not readily determinable, in determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the commencement date. Lease payments included in the measurement of the lease liability are comprised of noncancelable lease payments, payments based upon an index or rate, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early.

Lease costs are recognized in the Consolidated Statement of Operations over the lease term on a straight-line basis. Leasehold improvements are depreciated on a straight-line basis over the lesser of the term of the related lease or the estimated useful life of the asset. 

Some of the Company’s leases contain variable lease payments, including payments based upon an index or rate. Variable lease payments based upon an index or rate are initially measured using the index or rate in effect at the lease commencement date and are included within the lease liabilities. Lease liabilities are not remeasured as a result of changes in the index or rate, rather changes in these types of payments are recognized in the period in which the obligation for those payments is incurred. In addition, some of our leases contain variable payments for utilities, insurance, real estate tax, repairs and maintenance, and other variable operating expenses. Such amounts are not included in the measurement of the lease liability and are recognized in the period when the facts and circumstances on which the variable lease payments are based upon occur.

The Company’s leases include options to extend or renew the lease through 2040. The renewal and extension options are not included in the lease term as the Company is not reasonably certain that it will exercise its option.

From time to time, the Company enters into sublease arrangements both with unrelated third-parties and with our partner agencies. These leases are classified as operating leases and expire between years 2019 through 2023. Sublease income is recognized over the lease term on a straight-line basis. Currently, the Company subleases office space in North America, Europe and Asia.

As of June 30, 2019, the Company has entered into an operating lease for which the commencement date has not yet occurred as this leased space is in the process of being prepared by the landlord for occupancy. Accordingly, this lease represents an obligation of the Company that is not on the Consolidated Balance Sheet as of June 30, 2019. The aggregate future liability related to the lease is approximately $6 million.

The discount rate used for leases accounted for under ASC 842 is the Company’s collateralized credit adjusted borrowing rate.

The following table presents lease costs and other quantitative information for the three and six months ended June 30, 2019:

	Three Months Ended June 30,			Six Months Ended June 30,
	2019			2019
Lease Cost:
Operating lease cost	$	17,473		$	33,914
Variable lease cost	4,361			9,325
Sublease rental income	(2,590		)	(4,189		)
Total lease cost	$	19,244		$	39,050
Additional information:
Cash paid for amounts included in the measurement of lease liabilities for operating leases
Operating cash flows	$	19,523		$	35,175
Right-of-use assets obtained in exchange for operating lease liabilities	$	2,195		$	259,013
Weighted average remaining lease term (in years) - Operating leases	7.0			7.0
Weighted average discount rate - Operating leases	8.6			8.6

Operating lease expense is included in office and general expenses in the Unaudited Condensed Consolidated Statement of Operations. Lease expense for leases with a term of 12 months or less is immaterial to the Company. Rental expense for the three and six months ended June 30, 2018 was $15,981 and $33,541, respectively, offset by $926 and $1,640, respectively in sublease rental income.

The following table presents minimum future rental payments under the Company’s leases at June 30, 2019 and their reconciliation to the corresponding lease liabilities:

	Maturity Analysis
Remaining 2019	$	33,776
2020	66,425
2021	56,428
2022	45,942
2023	42,113
Thereafter	133,823
Total	378,507
Less: Present value discount	(99,004		)
Lease liability	$	279,503

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Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Debt

Debt

As of June 30, 2019 and December 31, 2018, the Company’s indebtedness was comprised as follows:

	June 30, 2019			December 31, 2018
Revolving credit agreement	$	27,545		$	68,143
6.50% Notes due 2024	900,000			900,000
Debt issuance costs	(13,453		)	(14,036		)
	$	914,092		$	954,107

6.50% Notes

On March 23, 2016, MDC entered into an indenture (the “Indenture”) among MDC, its existing and future restricted subsidiaries that guarantee, are co-borrowers under, or grant liens to secure, the Credit Agreement, as guarantors (the “Guarantors”) and The Bank of New York Mellon, as trustee, relating to the issuance by MDC of $900,000 aggregate principal amount of the senior unsecured notes due 2024 (the “6.50% Notes”) . The 6.50% Notes were sold in a private placement in reliance on exceptions from registration under the Securities Act of 1933. The 6.50% Notes bear interest, payable semiannually in arrears on May 1 and November 1, at a rate of 6.50% per annum. The 6.50% Notes mature on May 1, 2024, unless earlier redeemed or repurchased.

MDC may, at its option, redeem the 6.50% Notes in whole at any time or in part from time to time, on and after May 1, 2019, at varying prices based on the timing of the redemption.

The Indenture includes covenants that are subject to a number of important limitations and exceptions. The 6.50% Notes are also subject to customary events of default, including a cross-payment default and cross-acceleration provision. The Company was in compliance with all covenants at June 30, 2019.

Credit Agreement

The Company is party to a $250,000 secured revolving credit facility due May 3, 2021. The amounts outstanding under the revolving credit facility as of June 30, 2019 and December 31, 2018 are presented in the table above and additional details are provided below.

On March 12, 2019 (the “Amendment Effective Date”), the Company, Maxxcom Inc. (a subsidiary of the Company) (“Maxxcom”) and each of their subsidiaries party thereto entered into an Amendment to the existing senior secured revolving credit facility, dated as of May 3, 2016 (as amended, the “Credit Agreement”), among the Company, Maxxcom, each of their subsidiaries party thereto, Wells Fargo Capital Finance, LLC, as agent (“Wells Fargo”) and the lenders from time to time party thereto. Advances under the Credit Agreement are to be used for working capital and general corporate purposes, in each case pursuant to the terms of the Credit Agreement.

The Amendment provides financial covenant relief by increasing the total leverage ratio applicable on each testing date after the Amendment Effective Date through the period ending December 31, 2020 from 5.5:1.0 to 6.25:1.0. The total leverage ratio applicable on each testing date after December 31, 2020 will revert to 5.5:1.0.

In connection with the Amendment, the Company reduced the aggregate maximum amount of revolving commitments provided by the lenders under the Credit Agreement to $250 million from $325 million.

Advances under the Credit Agreement bear interest as follows: (a)(i) LIBOR Rate Loans bear interest at the LIBOR Rate and (ii) Base Rate Loans bear interest at the Base Rate, plus (b) an applicable margin. The initial applicable margin for borrowing is 0.75% in the case of Base Rate Loans and 1.50% in the case of LIBOR Rate Loans. In addition to paying interest on outstanding principal under the Credit Agreement, MDC is required to pay an unused revolver fee to lenders under the Credit Agreement in respect of unused commitments thereunder.

The Credit Agreement, which includes financial and non-financial covenants, is guaranteed by substantially all of MDC’s present and future subsidiaries, other than immaterial subsidiaries and subject to customary exceptions and collateralized by a portion of MDC’s outstanding receivable balance. The Company is currently in compliance with all of the terms and conditions of its Credit Agreement.

At June 30, 2019 and December 31, 2018, the Company had issued undrawn outstanding letters of credit of $4,744 and $4,701, respectively.

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Share Capital

6 Months Ended

Jun. 30, 2019

Share Capital [Abstract]

Share Capital

Share Capital

The authorized and outstanding share capital of the Company is as follows:

Series 6 Convertible Preference Shares

On March 14, 2019 (the “Series 6 Issue Date”), the Company entered into a securities purchase agreement with Stagwell Agency Holdings LLC (“Stagwell Holdings”), an affiliate of Stagwell Group LLC (“Stagwell”), pursuant to which Stagwell Holdings agreed to purchase, (i) 14,285,714 newly authorized Class A shares (the “Stagwell Class A Shares”) for an aggregate contractual purchase price of $50,000 and (ii) 50,000 newly authorized Series 6 convertible preference shares (“Series 6 Preference Shares”) for an aggregate contractual purchase price of $50 million. The Company received proceeds of approximately $98,620, net of fees and estimated expenses, which were primarily used to pay down existing debt under the Company’s credit facility and for general corporate purposes. The proceeds allocated to the Stagwell Class A Shares were $35,997 and to Series 6 Preference Shares were $62,623 based on their relative fair value calculated by utilizing a Monte Carlo Simulation model. In connection with the closing of the transaction, the Company increased the size of its Board and appointed one nominee designated by the Purchaser. Except as required by law, the Series 6 Preference Shares do not have voting rights and are not redeemable at the option of the Purchaser.

The holders of the Series 6 Preference Shares have the right to convert their Series 6 Preference Shares in whole at any time and from time to time, and in part at any time and from time to time, into a number of Class A Shares equal to the then-applicable liquidation preference divided by the applicable conversion price at such time (the “Conversion Price”). The initial liquidation per share preference of each Series 6 Preference Share is $1,000. The initial Conversion Price is $5.00 per Series 6 Preference Share, subject to customary adjustments for share splits and combinations, dividends, recapitalizations and other matters, including weighted average anti-dilution protection for certain issuances of equity or equity-linked securities.

The Series 6 Preference Shares’ liquidation preference accretes at 8.0% per annum, compounded quarterly until the five-year anniversary of the Series 6 Issue Date. During the six months ended June 30, 2019, the Series 6 Preference Shares accreted at a monthly rate of $6.69, for total accretion of $1,193, bringing the aggregate liquidation preference to $51,193 as of June 30, 2019. The accretion is considered in the calculation of net income (loss) attributable to MDC Partners Inc. common shareholders. See Note 3 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for further information regarding the Series 6 Preference Shares.

Holders of the Series 6 Preference Shares are entitled to dividends in an amount equal to any dividends that would otherwise have been payable on the Class A Shares issued upon conversion of the Series 6 Preference Shares. The Series 6 Preference Shares are convertible at the Company’s option (i) on and after the two-year anniversary of the Series 6 Issue Date, if the closing trading price of the Class A Shares over a specified period prior to conversion is at least 125% of the Conversion Price or (ii) after the fifth anniversary of the Issue Date, if the closing trading price of the Class A Shares over a specified period prior to conversion is at least equal to the Conversion Price.

Following certain change in control transactions of the Company in which holders of Series 6 Preference Shares are not entitled to receive cash or qualifying listed securities with a value at least equal to the liquidation preference plus accrued and unpaid dividends, (i) holders will be entitled to cash dividends on the liquidation preference at an increasing rate (beginning at 7%), and (ii) the Company will have a right to redeem the Series 6 Preference Shares for cash at the greater of their liquidation preference plus accrued and unpaid dividends or their as-converted value.

Effective March 18, 2019, the Company’s Board of Directors (the “Board”) appointed Mark Penn as the Chief Executive Officer and as a director of the Board. Mr. Penn is manager of Stagwell. Effective April 18, 2019, Mr. Penn was also appointed as Chairman of the Board.

Series 4 Convertible Preference Shares

On March 7, 2017 (the “Series 4 Issue Date”), the Company issued 95,000 newly created Preference Shares (“Series 4 Preference Shares”) to affiliates of The Goldman Sachs Group, Inc. (collectively, the “Purchaser”) pursuant to a $95,000 private placement. The Company received proceeds of approximately $90,123, net of fees and estimated expenses, which were primarily used to pay down existing debt under the Company’s credit facility and for general corporate purposes. In connection with the closing of the transaction, the Company increased the size of its Board and appointed one nominee designated by the Purchaser. Except as required by law, the Series 4 Preference Shares do not have voting rights and are not redeemable at the option of the Purchaser.

Subsequent to the ninetieth day following the Series 4 Issue Date, the holders of the Series 4 Preference Shares have the right to convert their Series 4 Preference Shares in whole at any time and from time to time and in part at any time and from time to time into a number of Class A Shares equal to the then-applicable liquidation preference divided by the applicable conversion price at such time (the “Conversion Price”). The initial liquidation per share preference of each Series 4 Preference Share is $1,000. The Conversion Price of a Series 4 Preference Share is subject to customary adjustments for share splits and combinations, dividends, recapitalizations and other matters, including weighted average anti-dilution protection for certain issuances of equity or equity-linked securities. In connection with the anti-dilution protection provision triggered by the issuance of equity securities to Stagwell, the Conversion Price per Series 4 Preference Share was reduced to $7.42 from the initial Conversion Price of $10.00.

The Series 4 Preference Shares’ liquidation preference accretes at 8.0% per annum, compounded quarterly until the five-year anniversary of the Series 4 Issue Date. During the six months ended June 30, 2019, the Series 4 Preference Shares accreted at a monthly rate of approximately $7.85 per Series 4 Preference Share, for total accretion of $4,432, bringing the aggregate liquidation preference to $114,139 as of June 30, 2019. The accretion is considered in the calculation of net income (loss) attributable to MDC Partners Inc. common shareholders. See Note 3 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for further information regarding the Series 4 Preference Shares.

Holders of the Series 4 Preference Shares are entitled to dividends in an amount equal to any dividends that would otherwise have been payable on the Class A Shares issued upon conversion of the Series 4 Preference Shares. The Series 4 Preference Shares are convertible at the Company’s option (i) on and after the two-year anniversary of the Issue Date, if the closing trading price of the Class A Shares over a specified period prior to conversion is at least 125% of the Conversion Price or (ii) after the fifth anniversary of the Series 4 Issue Date, if the closing trading price of the Class A Shares over a specified period prior to conversion is at least equal to the Conversion Price.

Following certain change in control transactions of the Company in which holders of Series 4 Preference Shares are not entitled to receive cash or qualifying listed securities with a value at least equal to the liquidation preference plus accrued and unpaid dividends, (i) holders will be entitled to cash dividends on the liquidation preference at an increasing rate (beginning at 7%), and (ii) the Company will have a right to redeem the Series 4 Preference Shares for cash at the greater of their liquidation preference plus accrued and unpaid dividends or their as-converted value.

Class A Common Shares (“Class A Shares”)

An unlimited number of subordinate voting shares, carrying one vote each, entitled to dividends equal to or greater than Class B Shares, convertible at the option of the holder into one Class B Share for each Class A Share after the occurrence of certain events related to an offer to purchase all Class B shares. There were 71,943,994 (including the Class A Shares issued to Stagwell) and 57,517,568 Class A Shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively.

Class B Common Shares (“Class B Shares”)

An unlimited number of voting shares, carrying twenty votes each, convertible at any time at the option of the holder into one Class A share for each Class B share. There were 3,749 and 3,755 Class B Shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively.

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Noncontrolling and Redeemable Noncontrolling Interests

6 Months Ended

Jun. 30, 2019

Noncontrolling Interest [Abstract]

Noncontrolling and Redeemable Noncontrolling Interests

When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the option to purchase the incremental ownership is within the Company’s control, the amounts are recorded as noncontrolling interests in the equity section of the Company’s Unaudited Condensed Consolidated Balance Sheets. Where the incremental purchase may be required of the Company, the amounts are recorded as redeemable noncontrolling interests in mezzanine equity at their estimated acquisition date redemption value and adjusted at each reporting period for changes to their estimated redemption value through additional paid-in capital (but not less than their initial redemption value), except for foreign currency translation adjustments. On occasion, the Company may initiate a renegotiation to acquire an incremental ownership interest and the amount of consideration paid may differ materially from the amounts recorded in the Company’s Unaudited Condensed Consolidated Balance Sheets.

Noncontrolling Interests

Changes in amounts due to noncontrolling interest holders included in accruals and other liabilities on the Unaudited Condensed Consolidated Balance Sheets for the year ended December 31, 2018 and six months ended June 30, 2019 were as follows:

	Noncontrolling Interests
Balance, December 31, 2017	$	11,030
Income attributable to noncontrolling interests	11,785
Distributions made	(13,419		)
Other (1)	(118		)
Balance, December 31, 2018	$	9,278
Income attributable to noncontrolling interests	3,472
Distributions made	(7,957		)
Other (1)	25
Balance, June 30, 2019	$	4,818

(1) Other consists of cumulative translation adjustments.

Changes in the Company’s ownership interests in our less than 100% owned subsidiaries during the three and six months ended June 30, 2019 and 2018 were as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
Net income (loss) attributable to MDC Partners Inc.	$	4,290		$	3,406	$	4,177		$	(26,010	)
Transfers from the noncontrolling interest:
Decrease in MDC Partners Inc. paid-in capital for purchase of equity interests in excess of redeemable noncontrolling interests and noncontrolling interests	(97		)	—		(97		)	(1,166		)
Net transfers from noncontrolling interests	$	(97	)	$	—	$	(97	)	$	(1,166	)
Change from net loss attributable to MDC Partners Inc. and transfers to noncontrolling interests	$	4,193		$	3,406	$	4,080		$	(27,176	)

Redeemable Noncontrolling Interests

The following table presents changes in redeemable noncontrolling interests:

	Six Months Ended June 30, 2019			Year Ended December 31, 2018
Beginning Balance	$	51,546		$	62,886
Redemptions	(9,486		)	(11,943		)
Granted	—			—
Changes in redemption value	421			1,067
Currency translation adjustments	154			(464		)
Ending Balance	$	42,635		$	51,546

The noncontrolling shareholders’ ability to exercise any such option right is subject to the satisfaction of certain conditions, including conditions requiring notice in advance of exercise and specific employment termination conditions. In addition, these rights cannot be exercised prior to specified staggered exercise dates. The exercise of these rights at their earliest contractual date would result in obligations of the Company to fund the related amounts during 2019 to 2024. It is not determinable, at this time, if or when the owners of these rights will exercise all or a portion of these rights.

The redeemable noncontrolling interest of $42,635 as of June 30, 2019, consists of $19,158 assuming that the subsidiaries perform over the relevant future periods at their discounted cash flows earnings level and such rights are exercised, $19,926 upon termination of such owner’s employment with the applicable subsidiary or death and $3,551 representing the initial redemption value (required floor) recorded for certain acquisitions in excess of the amount the Company would have to pay should the Company acquire the remaining ownership interests for such subsidiaries.

These adjustments will not impact the calculation of earnings (loss) per share if the redemption values are less than the estimated fair values. For the three months ended June 30, 2019 and 2018, there was no related impact on the Company’s loss per share calculation.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

A fair value measurement assumes a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. The hierarchy for observable and unobservable inputs used to measure fair value into three broad levels are described below: 

• Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

• Level 2 - Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

• Level 3 - Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

Financial Liabilities that are not Measured at Fair Value on a Recurring Basis

The following table presents certain information for our financial liability that is not measured at fair value on a recurring basis at June 30, 2019 and December 31, 2018:

	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Liabilities:
6.50% Senior Notes due 2024	$	900,000	$	823,500	$	900,000	$	834,750

Our long-term debt includes fixed rate debt. The fair value of this instrument is based on quoted market prices in markets that are not active. Therefore, this debt is classified as Level 2 within the fair value hierarchy.

Financial Liabilities Measured at Fair Value on a Recurring Basis

Contingent deferred acquisition consideration are recorded at the acquisition date fair value and adjusted at each reporting period. The estimated liability is determined in accordance with various contractual valuation formulas that may be dependent upon future events, such as the growth rate of the earnings of the relevant subsidiary during the contractual period and, in some cases, the currency exchange rate as of the date of payment (Level 3). See Note 5 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for additional information regarding contingent deferred acquisition consideration.

At June 30, 2019 and December 31, 2018, the carrying amount of the Company’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximated fair value because of their short-term maturity.

Non-financial Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

Certain non-financial assets are measured at fair value on a nonrecurring basis, primarily goodwill and intangible assets (a Level 3 fair value assessment). Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic evaluations for potential impairment. The Company did not recognize an impairment of goodwill or intangible assets in the three and six months ended June 30, 2019 or June 30, 2018

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Supplemental Information

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Information

Supplemental Information

Accounts Payable, Accruals and Other Liabilities

At June 30, 2019 and December 31, 2018, accruals and other liabilities included accrued media of $151,143 and $180,586, respectively; and also included amounts due to noncontrolling interest holders for their share of profits. See Note 9 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for additional information regarding noncontrolling interest holders share of profits.

Goodwill and Indefinite Lived Intangibles

Goodwill and indefinite life intangible assets (trademarks) acquired as a result of a business combination which are not subject to amortization are tested for impairment annually as of October 1st of each year, or more frequently if indicators of potential impairment exist. For goodwill, impairment is assessed at the reporting unit level. Goodwill balances as of June 30, 2019 and December 31, 2018, were $743,582 and $740,955, respectively.

Income Taxes

Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in interim periods.

Income tax expense for the three months ended June 30, 2019 was $2,088 (on income of $9,215 resulting in an effective tax rate of 22.7%) compared to an expense of $1,977 (on income of $7,956 resulting in an effective tax rate of 24.8%) for the three months ended June 30, 2018. The change in the effective tax rate was primarily driven by the jurisdictional mix of earnings.  

Income tax expense for the six months ended June 30, 2019 was $2,835 (on income of $10,195 resulting in an effective tax rate of 27.8%) compared to a benefit of $6,353 (on a loss of $28,979 resulting in an effective tax rate of 21.9%) for the six months ended June 30, 2018. The change in the effective tax rate was primarily driven by the jurisdictional mix of earnings.

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Segment Information

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company determines an operating segment if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has discrete financial information, and is (iii) regularly reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions regarding resource allocation for the segment and assess its performance. Once operating segments are identified, the Company performs an analysis to determine if aggregation of operating segments is applicable. This determination is based upon a quantitative analysis of the expected and historic average long-term profitability for each operating segment, together with a qualitative assessment to determine if operating segments have similar operating characteristics.

Due to changes in the composition of certain business and the Company’s internal management and reporting structure during 2019, reportable segment results for the 2018 periods presented have been recast to reflect the reclassification of certain businesses between segments. The changes were as follows:

• Doner, previously within the Global Integrated Agencies reportable segment is now included within the Domestic Creative Agencies reportable segment.

• HL Group Partners, previously within the Specialist Communications reportable segment, and Redscout, previously within the All Other category, are now included in the Yes & Company operating segment. The Yes & Company operating segment previously within the Media Services reportable segment is now included within the Domestic Creative Agencies reportable segment.

• Attention, previously within the Forsman & Bodenfors operating segment has operationally merged into MDC Media Partners, which is included within the Media Services reportable segment.

The four reportable segments that result from applying the aggregation criteria are as follows: “Global Integrated Agencies”; “Domestic Creative Agencies”; “Specialist Communications”; and “Media Services.” In addition, the Company combines and discloses those operating segments that do not meet the aggregation criteria as “All Other.” The Company also reports corporate expenses, as further detailed below, as “Corporate.” All segments follow the same basis of presentation and accounting policies as those described throughout the Notes to the Unaudited Condensed Consolidated Financial Statements included herein and Note 2 of the Company’s Form 10-K for the year ended December 31, 2018.

• The Global Integrated Agencies reportable segment is comprised of the Company’s four global, integrated operating segments (72andSunny, Anomaly, Crispin Porter + Bogusky, and Forsman & Bodenfors) serving multinational clients around the world. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of global clients and the methods used to provide services; and (iii) the extent to which they may be impacted by global economic and geopolitical risks. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Global Integrated Agencies reportable segment.

The operating segments within the Global Integrated Agenciesreportable segment provides a range of different services for its clients, including strategy, creative and production for advertising campaigns across a variety of platforms (print, digital, social media, television broadcast).

• The Domestic Creative Agencies reportable segment is comprised of seven operating segments that are primarily national advertising agencies (Colle + McVoy, Doner, Laird + Partners, Mono Advertising, Union, Yamamoto, and Yes & Company) leveraging creative capabilities at their core. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of domestic client accounts and the methods used to provide services; and (iii) the extent to which they may be impacted by domestic economic and policy factors within North America. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long- term profitability is similar among the operating segments aggregated in the Domestic Creative Agencies reportable segment.

The operating segments within the Domestic Creative Agencies reportable segment provide similar services as the Global Integrated Agencies.

• The Specialist Communications reportable segment is comprised of four operating segments that are each communications agencies (Allison & Partners, Hunter, KWT Global, and Veritas) with core service offerings in public relations and related communications services. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of client accounts and the methods used to provide services; (iii) the extent to which they may be impacted by domestic economic and policy factors within North America; and (iv) the regulatory environment regarding public relations and social media. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Specialist Communications reportable segment.

The operating segments within the Specialist Communications reportable segment provide public relations and communications services including strategy, editorial, crisis support or issues management, media training, influencer engagement, and events management.

• The Media Services reportable segment is comprised of a single operating segment known as MDC Media Partners. MDC Media Partners, which operates primarily in North America, performs media buying and planning as their core competency across a range of platforms (out-of-home, paid search, social media, lead generation, programmatic, television broadcast).

• All Other consists of the Company’s remaining operating segments that provide a range of diverse marketing communication services, but generally do not have similar services offerings or financial characteristics as those aggregated in the reportable segments. The All Other category includes 6Degrees Communications, Concentric Partners, Gale Partners, Kenna, Kingsdale (through the date of sale on March 8, 2019), Instrument, Relevent, Team, Vitro, and Y Media Labs. The nature of the specialist services provided by these operating segments vary among each other and from those operating segments aggregated into the reportable segments. This results in these operating segments having current and long-term performance expectations inconsistent with those operating segments aggregated in the reportable segments. The operating segments within All Other provide a range of diverse marketing communication services, including application and website design and development, data and analytics, experiential marketing, customer research management, creative services, and branding.

• Corporate consists of corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, and (iv) certain other professional fees managed by the corporate office. Additional expenses managed by the corporate office that are directly related to the operating segments are allocated to the appropriate reportable segment and the All Other category.

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue:
Global Integrated Agencies	$	154,368		$	158,163		$	284,087		$	287,686
Domestic Creative Agencies	65,193			72,971			132,201			139,625
Specialist Communication	47,170			40,304			86,123			79,128
Media Services	21,331			21,398			41,510			46,082
All Other	74,068			86,907			147,000			154,190
Total	$	362,130		$	379,743		$	690,921		$	706,711
Segment operating income (loss):
Global Integrated Agencies	$	20,720		$	18,352		$	24,491		$	4,760
Domestic Creative Agencies	8,730			5,077			14,207			7,955
Specialist Communication	6,683			6,216			13,760			9,944
Media Services	991			(1,719		)	(843		)	(1,738		)
All Other	2,949			15,986			8,962			22,430
Corporate	(16,631		)	(13,140		)	(21,454		)	(27,212		)
Total	$	23,442		$	30,772		$	39,123		$	16,139
Other Income (Expenses):
Interest expense and finance charges, net	$	(16,413	)	$	(16,859	)	$	(33,174	)	$	(32,942	)
Foreign exchange gain (loss)	2,932			(6,549		)	8,374			(13,209		)
Other, net	(746		)	592			(4,128		)	1,033
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates	9,215			7,956			10,195			(28,979		)
Income tax expense (benefit)	2,088			1,977			2,835			(6,353		)
Income (loss) before equity in earnings of non-consolidated affiliates	7,127			5,979			7,360			(22,626		)
Equity in earnings (losses) of non-consolidated affiliates	206			(28		)	289			58
Net income (loss)	7,333			5,951			7,649			(22,568		)
Net income attributable to the noncontrolling interest	(3,043		)	(2,545		)	(3,472		)	(3,442		)
Net income (loss) attributable to MDC Partners Inc.	$	4,290		$	3,406		$	4,177		$	(26,010	)

	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
Depreciation and amortization:
Global Integrated Agencies	$	4,437		$	4,743	$	8,502		$	12,152
Domestic Creative Agencies	1,547			1,281		2,786			2,574
Specialist Communication	698			992		1,265			1,959
Media Services	794			635		1,485			1,273
All Other	2,966			3,892		5,025			5,736
Corporate	221			160		438			384
Total	$	10,663		$	11,703	$	19,501		$	24,078
Stock-based compensation:
Global Integrated Agencies	$	1,232		$	2,475	$	4,999		$	4,935
Domestic Creative Agencies	522			1,097		986			1,507
Specialist Communication	52			52		78			239
Media Services	(16		)	74		(16		)	149
All Other	652			684		940			1,341
Corporate	1,192			1,221		(381		)	2,469
Total	$	3,634		$	5,603	$	6,606		$	10,640
Capital expenditures:
Global Integrated Agencies	$	1,816		$	2,411	$	3,234		$	4,654
Domestic Creative Agencies	369			569		1,063			1,473
Specialist Communication	231			2,208		482			2,443
Media Services	126			131		167			315
All Other	1,757			547		2,958			772
Corporate	18			24		19			32
Total	$	4,317		$	5,890	$	7,923		$	9,689

The Company’s CODM does not use segment assets to allocate resources or to assess performance of the segments and therefore, total segment assets have not been disclosed.

See Note 2 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for a summary of the Company’s revenue by geographic region for three months ended June 30, 2019 and 2018.

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Commitments, Contingencies and Guarantees

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments, Contingencies and Guarantees

Commitments, Contingencies, and Guarantees

Legal Proceedings. The Company’s operating entities are involved in legal proceedings of various types. While any litigation contains an element of uncertainty, the Company has no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on the financial condition or results of operations of the Company.

Deferred Acquisition Consideration and Options to Purchase. See Notes 5 and 9 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for information regarding potential payments associated with deferred acquisition consideration and the acquisition of noncontrolling shareholders’ ownership interest in subsidiaries.

Natural Disasters. Certain of the Company’s operations are located in regions of the United States which typically are subject to hurricanes. During the three and six months ended June 30, 2019 and 2018 these operations did not incur any material costs related to damages resulting from hurricanes.

Guarantees. Generally, the Company has indemnified the purchasers of certain assets in the event that a third party asserts a claim against the purchaser that relates to a liability retained by the Company. These types of indemnification guarantees typically extend for a number of years. Historically, the Company has not made any significant indemnification payments under such agreements and no amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification guarantees. The Company continues to monitor the conditions that are subject to guarantees and indemnifications to identify whether it is probable that a loss has occurred and would recognize any such losses under any guarantees or indemnifications in the period when those losses are probable and estimable.

Commitments.  At June 30, 2019, the Company had $4,744 of undrawn letters of credit.

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New Accounting Pronouncements

6 Months Ended

Jun. 30, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements

New Accounting Pronouncements

Adopted In The Current Reporting Period

Effective January 1, 2019, the Company adopted ASC 842. As a result, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 840, Leases. With the adoption of ASC 842, the Company has elected to apply the package of practical expedients: (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs. Additionally, the Company elected the practical expedient to not separate non-lease components from lease components for all operating leases.

The adoption of ASC 842 had a material impact on the Company’s Unaudited Condensed Consolidated Balance Sheets, resulting in the recognition, on January 1, 2019, of a lease liability of $299,243 which represents the present value of the remaining lease payments, and a right-of-use asset of $254,245 which represents the lease liability, offset by adjustments as appropriate under ASC 842. The adoption of ASC 842 did not have a material impact on the Company’s other Unaudited Condensed Consolidated Financial Statements.

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Revenue (Tables)

6 Months Ended

Jun. 30, 2019

By Location

Disaggregation of Revenue [Line Items]

Disaggregation of Revenue

The following table presents revenue disaggregated by geography for the three and six months ended June 30, 2019 and 2018:

Industry Vertical

Disaggregation of Revenue [Line Items]

Disaggregation of Revenue

The following table presents revenue disaggregated by client industry vertical for the three and six months ended June 30, 2019 and 2018:

		Three Months Ended June 30,				Six Months Ended June 30,
Industry	Reportable Segment	2019		2018		2019		2018
Food & Beverage	All	$	73,305	$	84,464	$	139,969	$	147,932
Retail	All	39,894		38,396		72,350		76,411
Consumer Products	All	45,296		41,367		78,232		77,973
Communications	All	47,793		43,097		87,490		81,454
Automotive	All	18,541		25,294		36,732		45,788
Technology	All	28,876		23,540		54,279		45,080
Healthcare	All	25,954		35,426		49,161		68,002
Financials	All	27,868		30,207		52,795		52,702
Transportation and Travel/Lodging	All	27,050		18,776		44,085		33,664
Other	All	27,553		39,176		75,828		77,705
		$	362,130	$	379,743	$	690,921	$	706,711

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Loss Per Common Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share

The following table sets forth the computation of basic and diluted income (loss) per common share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Numerator:
Net income (loss) attributable to MDC Partners Inc.	$	4,290		$	3,406		$	4,177		$	(26,010	)
Accretion on convertible preference shares	(3,242		)	(2,068		)	(5,625		)	(4,095		)
Net income allocated to convertible preference shares	(273		)	(205		)	—			—
Net income (loss) attributable to MDC Partners Inc. common shareholders	$	775		$	1,133		$	(1,448	)	$	(30,105	)
Adjustment to net income allocated to convertible preference shares	—			1			—			—
Numerator for dilutive income (loss) per common share:
Net income (loss) attributable to MDC Partners Inc. common shareholders	$	775		$	1,134		$	(1,448	)	$	(30,105	)
Denominator:
Basic weighted average number of common shares outstanding	71,915,832			57,439,823			66,118,749			56,924,208
Effect of dilutive securities:
Impact of stock options and non-vested stock under employee stock incentive plans	108,857			363,049			—			—
Diluted weighted average number of common shares outstanding	72,024,689			57,802,872			66,118,749			56,924,208
Basic	$	0.01		$	0.02		$	(0.02	)	$	(0.53	)
Diluted	$	0.01		$	0.02		$	(0.02	)	$	(0.53	)

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Deferred Acquisition Consideration (Tables)

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Schedule of Changes in Contingent Deferred Acquisition Consideration

The following table presents changes in contingent deferred acquisition consideration, which is measured at fair value on a recurring basis using significant unobservable inputs, and a reconciliation to the amounts reported on the balance sheets as of June 30, 2019 and December 31, 2018.

	June 30,			December 31,
	2019			2018
Beginning Balance of contingent payments	$	82,598		$	119,086
Payments	(24,492		)	(54,947		)
Redemption value adjustments (1)	(6,100		)	3,512
Additions - acquisitions and step up transactions	5,695			14,943
Other	—			4
Ending Balance of contingent payments	$	57,701		$	82,598
Fixed payments	542			1,097
	$	58,243		$	83,695

⁽¹⁾ Redemption value adjustments are fair value changes from the Company’s initial estimates of deferred acquisition payments and stock-based compensation charges relating to acquisition payments that are tied to continued employment. Redemption value adjustments are recorded within cost of services sold and office and general expenses on the Unaudited Condensed Consolidated Statements of Operations.

The following table presents the impact to the Company’s statement of operations due to the redemption value adjustments for the contingent deferred acquisition consideration:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Income (loss) attributable to fair value adjustments	$	2,073		$	(5,065	)	$	(5,570	)	$	(2,479	)
Stock-based compensation	(1,339		)	2,321			(530		)	4,682
Redemption value adjustments	$	734		$	(2,744	)	$	(6,100	)	$	2,203

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Lease Costs and Other Quantitative Information

The following table presents lease costs and other quantitative information for the three and six months ended June 30, 2019:

	Three Months Ended June 30,			Six Months Ended June 30,
	2019			2019
Lease Cost:
Operating lease cost	$	17,473		$	33,914
Variable lease cost	4,361			9,325
Sublease rental income	(2,590		)	(4,189		)
Total lease cost	$	19,244		$	39,050
Additional information:
Cash paid for amounts included in the measurement of lease liabilities for operating leases
Operating cash flows	$	19,523		$	35,175
Right-of-use assets obtained in exchange for operating lease liabilities	$	2,195		$	259,013
Weighted average remaining lease term (in years) - Operating leases	7.0			7.0
Weighted average discount rate - Operating leases	8.6			8.6

Minimum Future Rental Payments

The following table presents minimum future rental payments under the Company’s leases at June 30, 2019 and their reconciliation to the corresponding lease liabilities:

	Maturity Analysis
Remaining 2019	$	33,776
2020	66,425
2021	56,428
2022	45,942
2023	42,113
Thereafter	133,823
Total	378,507
Less: Present value discount	(99,004		)
Lease liability	$	279,503

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Debt (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of Debt

	June 30, 2019			December 31, 2018
Revolving credit agreement	$	27,545		$	68,143
6.50% Notes due 2024	900,000			900,000
Debt issuance costs	(13,453		)	(14,036		)
	$	914,092		$	954,107

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Noncontrolling and Redeemable Noncontrolling Interests (Tables)

6 Months Ended

Jun. 30, 2019

Noncontrolling Interest [Abstract]

Change In Noncontrolling Interest [Table Text Block]

Changes in amounts due to noncontrolling interest holders included in accruals and other liabilities on the Unaudited Condensed Consolidated Balance Sheets for the year ended December 31, 2018 and six months ended June 30, 2019 were as follows:

	Noncontrolling Interests
Balance, December 31, 2017	$	11,030
Income attributable to noncontrolling interests	11,785
Distributions made	(13,419		)
Other (1)	(118		)
Balance, December 31, 2018	$	9,278
Income attributable to noncontrolling interests	3,472
Distributions made	(7,957		)
Other (1)	25
Balance, June 30, 2019	$	4,818

Noncontrolling Interest [Table Text Block]

Changes in the Company’s ownership interests in our less than 100% owned subsidiaries during the three and six months ended June 30, 2019 and 2018 were as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
Net income (loss) attributable to MDC Partners Inc.	$	4,290		$	3,406	$	4,177		$	(26,010	)
Transfers from the noncontrolling interest:
Decrease in MDC Partners Inc. paid-in capital for purchase of equity interests in excess of redeemable noncontrolling interests and noncontrolling interests	(97		)	—		(97		)	(1,166		)
Net transfers from noncontrolling interests	$	(97	)	$	—	$	(97	)	$	(1,166	)
Change from net loss attributable to MDC Partners Inc. and transfers to noncontrolling interests	$	4,193		$	3,406	$	4,080		$	(27,176	)

Redeemable Noncontrolling Interest [Table Text Block]

The following table presents changes in redeemable noncontrolling interests:

	Six Months Ended June 30, 2019			Year Ended December 31, 2018
Beginning Balance	$	51,546		$	62,886
Redemptions	(9,486		)	(11,943		)
Granted	—			—
Changes in redemption value	421			1,067
Currency translation adjustments	154			(464		)
Ending Balance	$	42,635		$	51,546

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Liability Measured on a Non-recurring Basis

The following table presents certain information for our financial liability that is not measured at fair value on a recurring basis at June 30, 2019 and December 31, 2018:

	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Liabilities:
6.50% Senior Notes due 2024	$	900,000	$	823,500	$	900,000	$	834,750

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue:
Global Integrated Agencies	$	154,368		$	158,163		$	284,087		$	287,686
Domestic Creative Agencies	65,193			72,971			132,201			139,625
Specialist Communication	47,170			40,304			86,123			79,128
Media Services	21,331			21,398			41,510			46,082
All Other	74,068			86,907			147,000			154,190
Total	$	362,130		$	379,743		$	690,921		$	706,711
Segment operating income (loss):
Global Integrated Agencies	$	20,720		$	18,352		$	24,491		$	4,760
Domestic Creative Agencies	8,730			5,077			14,207			7,955
Specialist Communication	6,683			6,216			13,760			9,944
Media Services	991			(1,719		)	(843		)	(1,738		)
All Other	2,949			15,986			8,962			22,430
Corporate	(16,631		)	(13,140		)	(21,454		)	(27,212		)
Total	$	23,442		$	30,772		$	39,123		$	16,139
Other Income (Expenses):
Interest expense and finance charges, net	$	(16,413	)	$	(16,859	)	$	(33,174	)	$	(32,942	)
Foreign exchange gain (loss)	2,932			(6,549		)	8,374			(13,209		)
Other, net	(746		)	592			(4,128		)	1,033
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates	9,215			7,956			10,195			(28,979		)
Income tax expense (benefit)	2,088			1,977			2,835			(6,353		)
Income (loss) before equity in earnings of non-consolidated affiliates	7,127			5,979			7,360			(22,626		)
Equity in earnings (losses) of non-consolidated affiliates	206			(28		)	289			58
Net income (loss)	7,333			5,951			7,649			(22,568		)
Net income attributable to the noncontrolling interest	(3,043		)	(2,545		)	(3,472		)	(3,442		)
Net income (loss) attributable to MDC Partners Inc.	$	4,290		$	3,406		$	4,177		$	(26,010	)

	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
Depreciation and amortization:
Global Integrated Agencies	$	4,437		$	4,743	$	8,502		$	12,152
Domestic Creative Agencies	1,547			1,281		2,786			2,574
Specialist Communication	698			992		1,265			1,959
Media Services	794			635		1,485			1,273
All Other	2,966			3,892		5,025			5,736
Corporate	221			160		438			384
Total	$	10,663		$	11,703	$	19,501		$	24,078
Stock-based compensation:
Global Integrated Agencies	$	1,232		$	2,475	$	4,999		$	4,935
Domestic Creative Agencies	522			1,097		986			1,507
Specialist Communication	52			52		78			239
Media Services	(16		)	74		(16		)	149
All Other	652			684		940			1,341
Corporate	1,192			1,221		(381		)	2,469
Total	$	3,634		$	5,603	$	6,606		$	10,640
Capital expenditures:
Global Integrated Agencies	$	1,816		$	2,411	$	3,234		$	4,654
Domestic Creative Agencies	369			569		1,063			1,473
Specialist Communication	231			2,208		482			2,443
Media Services	126			131		167			315
All Other	1,757			547		2,958			772
Corporate	18			24		19			32
Total	$	4,317		$	5,890	$	7,923		$	9,689

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Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Services	$ 362,130	$ 379,743	$ 690,921	$ 706,711
United States
Disaggregation of Revenue [Line Items]
Services	284,659	295,268	547,676	551,792
Canada
Disaggregation of Revenue [Line Items]
Services	24,564	33,086	46,942	59,465
Other
Disaggregation of Revenue [Line Items]
Services	52,907	51,389	96,303	95,454
Food & Beverage
Disaggregation of Revenue [Line Items]
Services	73,305	84,464	139,969	147,932
Retail
Disaggregation of Revenue [Line Items]
Services	39,894	38,396	72,350	76,411
Consumer Products
Disaggregation of Revenue [Line Items]
Services	45,296	41,367	78,232	77,973
Communications
Disaggregation of Revenue [Line Items]
Services	47,793	43,097	87,490	81,454
Automotive
Disaggregation of Revenue [Line Items]
Services	18,541	25,294	36,732	45,788
Technology
Disaggregation of Revenue [Line Items]
Services	28,876	23,540	54,279	45,080
Healthcare
Disaggregation of Revenue [Line Items]
Services	25,954	35,426	49,161	68,002
Financials
Disaggregation of Revenue [Line Items]
Services	27,868	30,207	52,795	52,702
Transportation and Travel/Lodging
Disaggregation of Revenue [Line Items]
Services	27,050	18,776	44,085	33,664
Other
Disaggregation of Revenue [Line Items]
Services	$ 27,553	$ 39,176	$ 75,828	$ 77,705

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Revenue - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Unbilled service fees	$ 92,317	$ 64,362
Unbilled outside vendor costs, billable to clients	40,605	42,369
Advance billings	168,142	$ 138,505
Increase in advance billings	29,637
Revenue recognized	$ 101,431

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Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Class of Stock [Line Items]
Net loss attributable to MDC Partners Inc.	$ 4,290		$ 3,406	$ 3,406	$ 4,177	$ (26,010)
Numerator
Accretion on convertible preference shares			2,273
Net loss attributable to MDC Partners Inc. common shareholders	$ 775		$ 1,133		$ (1,448)	$ (30,105)
Denominator
Denominator for basic income (loss) per common share - weighted average common shares	71,915,832		57,439,823		66,118,749	56,924,208
Weighted Average Number Diluted Shares Outstanding Adjustment	108,857		363,049		0	0
Denominator for diluted income (loss) per common share - adjusted weighted shares and assumed conversions	72,024,689		57,802,872		66,118,749	56,924,208
Income (loss) from continuing operations attributable to MDC Partners Inc. common shareholders (usd per share)	$ 0.01		$ 0.02		$ (0.02)	$ (0.53)
Income (loss) from continuing operations attributable to MDC Partners Inc. common shareholders (usd per share)	$ 0.01		$ 0.02		$ (0.02)	$ (0.53)
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,662,666,000	4,406,206		327,500
Adjustment to Net Income, Allocated to Convertible Shares	$ 0		$ 1		$ 0	$ 0
Income (Loss) from Continuing Operations Attributable to Parent, Diluted	775		1,134		(1,448)	(30,105)
MDC Partners Inc. Shareholders' Deficit
Class of Stock [Line Items]
Net loss attributable to MDC Partners Inc.				$ 3,406		(26,010)
Series 4 Convertible Preferred Stock | Convertible Preferred Stock
Numerator
Accretion on convertible preference shares	3,242		2,068		5,625	$ 4,095
Net Income Allocated to Convertible Shares	(273)		$ (205)		$ 0
Denominator
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			327,500,000		4,406,206,000	1,594,761,000
Series 4 Convertible Preferred Stock [Domain] | Convertible Preferred Stock
Numerator
Accretion on convertible preference shares	$ 3,515					$ 4,095
Net Income Allocated to Convertible Shares						$ 0

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Loss Per Common Share (Details Textual) - shares	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (shares)	2,662,666,000	4,406,206		327,500
Contingent Restricted Stock Units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (shares)					242,338	1,308,781
Convertible Preferred Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares outstanding (shares)	145,000,000			95,000,000	145,000,000		95,000,000
Series 4 Convertible Preferred Stock | Convertible Preferred Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (shares)			327,500,000		4,406,206,000	1,594,761,000
Shares outstanding (shares)	145,000				145,000			95,000
Convertible preferred stock, common shares issuable upon conversion (shares)	25,621,189				25,621,189		10,544,708
Series 6 Convertible Preferred Stock | Convertible Preferred Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares outstanding (shares)	50,000				50,000
Convertible preferred stock, common shares issuable upon conversion (shares)	10,238,533				10,238,533

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Acquisitions and Dispositions (Details Textual) - USD ($)							3 Months Ended			6 Months Ended		12 Months Ended
	Apr. 01, 2019	Mar. 08, 2019	Sep. 07, 2018	Jul. 01, 2018	Apr. 02, 2018	Jan. 01, 2018	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Business Acquisition [Line Items]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases										$ 5,695,000
Goodwill							$ 743,582,000			743,582,000		$ 740,955,000
Deferred acquisition consideration							58,243,000			58,243,000
Business acquisitions and step-up transactions, net of tax							$ (97,000)		$ 27,357,000		$ 26,191,000
Granted										$ 0		0
Aggregate 2019 Step-up Transaction [Member]
Business Acquisition [Line Items]
Closing cash payment	$ 4,000
Business Acquisition Deferred Acquisition Consideration	$ 5,695
Aggregate 2018 Step-up Transaction [Member] [Member]
Business Acquisition [Line Items]
Closing cash payment					$ 3,279,000
Business Acquisition Deferred Acquisition Consideration												4,305
Instrument LLC [Member]
Business Acquisition [Line Items]
Remaining ownership interest acquired (percent)					51.00%
Business Combination, Consideration Transferred, Other					$ 10,304,000
Finite-lived Intangible Assets Acquired					23,130,000
Goodwill					32,776
Aggregate purchase price					35,591,000
Closing cash payment					28,561,000
Granted					$ 27,357,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life					6 years
Allison & Partners LLC
Business Acquisition [Line Items]
Remaining ownership interest acquired (percent)						24.50%
Aggregate purchase price						$ 10,023,000
Closing cash payment						300,000
Deferred acquisition consideration						9,723,000
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination						20,096
Business acquisitions and step-up transactions, net of tax						(8,857,000)
Granted						$ 1,166,000
Common Stock [Member]
Business Acquisition [Line Items]
Stock Issued During Period, Shares, Acquisitions									1,011,561		1,011,561
Hunter PR LLC [Member] [Domain]
Business Acquisition [Line Items]
Remaining ownership interest acquired (percent)	35.00%
Aggregate purchase price	$ 10,000
Reduction in noncontrolling interests	$ 9,000
OneChocolate [Domain]
Business Acquisition [Line Items]
Remaining ownership interest acquired (percent)			100.00%
Aggregate purchase price			$ 3,231,000
Business Acquisition Working Capital Payments												966
Doner [Domain]
Business Acquisition [Line Items]
Remaining ownership interest acquired (percent)				14.87%
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination												$ 16,361
Source [Domain]
Business Acquisition [Line Items]
Remaining ownership interest acquired (percent)				3.00%
Doner and Source [Domain]
Business Acquisition [Line Items]
Aggregate purchase price				$ 7,618,000
Business acquisitions and step-up transactions, net of tax				(11,946,000)
Reduction in noncontrolling interests				$ 933,000
Common Class A [Member] | Common Stock [Member]
Business Acquisition [Line Items]
Stock Issued During Period, Value, Acquisitions									$ 7,030,000		$ 7,030,000
Common Class A [Member] | Common Stock [Member] | Instrument LLC [Member]
Business Acquisition [Line Items]
Stock Issued During Period, Shares, Acquisitions					1,011,561
Stock Issued During Period, Value, Acquisitions					$ 7,030,000
Kingsdale Partners LP [Member]
Business Acquisition [Line Items]
Proceeds from Divestiture of Businesses								$ 50,000,000
Loss on disposition of business		$ (3,000,000)

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Deferred Acquisition Consideration (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Payments			$ 24,492
Redemption value adjustments	$ 734	$ (2,744)	(6,100)
Additions			5,695
Foreign translation adjustment			0
Ending balance of contingent payments	57,701		57,701
Deferred acquisition consideration	58,243		58,243
Stock-based compensation	(1,339)	2,321	(530)	$ 4,682
Fixed payments
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Deferred acquisition consideration	542		542
Contingent Payment
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Income (loss) attributable to fair value adjustments	$ 2,073	$ (5,065)	$ (5,570)	$ (2,479)

XML

Leases - Lease Costs and Other Quantitative Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Leases [Abstract]
Operating lease cost	$ 17,473	$ 15,981	$ 33,914	$ 34
Variable lease cost	4,361		9,325
Sublease rental income	(2,590)	$ (926)	(4,189)	$ (2)
Total lease cost	19,244		39,050
Operating cash flows	19,523		35,175
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 2,195		$ 259,013
Weighted average discount rate - Operating leases	863.00%		863.00%

XML

Leases - Minimum Future Rental Payments (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Leases [Abstract]
Remaining 2019	$ 33,776
2020	66,425
2021	56,428
2022	45,942
2023	42,113
Thereafter	133,823
Total	378,507
Less: Present value discount	(99,004)
Lease liability	$ 279,503

XML

Leases - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Leases [Abstract]
Leases not yet commenced, liability	$ 6,000		$ 6,000
Operating lease cost	17,473	$ 15,981	33,914	$ 34
Sublease rental income	$ 2,590	$ 926	$ 4,189	$ 2

XML

Debt (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Debt [Line Items]
Revolving credit agreement	$ 27,545
Debt issuance costs	(13,453)
Debt, Long-term and Short-term, Combined Amount, Total	914,092
6.50% Notes due 2024
Debt [Line Items]
Senior Notes	$ 900,000

XML

Debt (Details Textual)			6 Months Ended
	May 01, 2024	Mar. 23, 2016 USD ($)	Jun. 30, 2018	Dec. 31, 2020	Jun. 30, 2019 USD ($)	Mar. 12, 2019 USD ($)	Sep. 30, 2018	May 03, 2016 USD ($)
Debt [Line Items]
Amount outstanding under the line of credit					$ 27,545,000
Amount of letters of credit outstanding					$ 4,744,000
Wells Fargo Capital Finance, LLC | Base Rate
Debt [Line Items]
Interest rate, stated percentage								1.50%
Wells Fargo Capital Finance, LLC | Non-Prime Rate and Prime Rate on European Advances
Debt [Line Items]
Interest rate, stated percentage								0.75%
Wells Fargo Capital Finance, LLC | Revolving Credit Facility [Member]
Debt [Line Items]
Maximum borrowing capacity								$ 325,000,000.0
Ratio of Indebtedness to Net Capital								5.5
Senior Notes | 6.50% Notes due 2024
Debt [Line Items]
Aggregate principal amount		$ 900,000
Interest rate, stated percentage		6.50%					6.50%
Debt instrument, maturity date		May 01, 2024
Debt instrument, redemption date, one			May 01, 2019
Line of Credit [Member] | Amendment, Credit Agreement [Member]
Debt [Line Items]
Maximum borrowing capacity						$ 250,000,000
Ratio of Indebtedness to Net Capital						6.25
Forecast | Wells Fargo Capital Finance, LLC | 6.50% Notes due 2024
Debt [Line Items]
Debt instrument, maturity date	May 01, 2024
Forecast | Line of Credit [Member] | Amendment, Credit Agreement [Member]
Debt [Line Items]
Ratio of Indebtedness to Net Capital				5.5

XML

Share Capital (Details Textual) $ / shares in Units, $ in Thousands			3 Months Ended	6 Months Ended		9 Months Ended
	Mar. 14, 2019 USD ($) $ / shares shares	Mar. 07, 2017 USD ($) $ / shares shares	Jun. 30, 2019 USD ($) vote shares	Jun. 30, 2019 USD ($) vote $ / shares shares	Jun. 30, 2018 USD ($)	Sep. 30, 2018	Dec. 31, 2018 shares	Mar. 31, 2018 shares	Dec. 31, 2017 shares
Share Capital [Line Items]
Issuance of common and convertible preference shares			$ 991	$ 98,620
Expenses for convertible preference shares					$ (97)
Series 4 Convertible Preferred Stock
Share Capital [Line Items]
Proceeds from issuance of common and convertible preference shares, net of issuance costs				98,620
Preferred Stock
Share Capital [Line Items]
Proceeds from issuance of common and convertible preference shares, net of issuance costs	$ 98,620
Issuance of common and convertible preference shares			$ 629	$ 62,623
Shares outstanding (shares) | shares			145,000,000	145,000,000			95,000,000	95,000,000
Preferred Stock | Series 4 Convertible Preferred Stock
Share Capital [Line Items]
Proceeds from issuance of common and convertible preference shares, net of issuance costs		$ 95,000
Preferred Stock, Liquidation Preference Per Share | $ / shares		$ 1,000
Preferred Stock, Conversion Price Per Preference Share | $ / shares	$ 7.42	$ 10.00
Preferred Stock, Accretion Percentage, Preference		8.00%
Preferred Stock, Accretion Rate, Preference Per Share | $ / shares				$ 7.85
Preferred Stock, Accretion of Redemption Discount				$ 4,432
Preferred Stock, Liquidation Preference, Value			$ 114,139	$ 114,139
Shares outstanding (shares) | shares			145,000	145,000					95,000
Expenses for convertible preference shares					$ (97)
Preferred Stock, Conversion Basis, Common Stock Class A Closing Trade Price						125.00%
Preferred Stock, Liquidation Preference Percentage Rate, Change of Control of the Company						7.00%
Stock issued during period, convertible preferred (shares) | shares		95,000
Preferred Stock | Series 6 Convertible Preferred Stock
Share Capital [Line Items]
Stock Issued During Period, Shares, Issued For Services, Convertible Preferred Shares | shares	50,000,000
Proceeds from issuance of common and convertible preference shares, net of issuance costs	$ 50,000
Preferred Stock, Liquidation Preference Per Share | $ / shares	$ 1,000
Preferred Stock, Conversion Price Per Preference Share | $ / shares	$ 5.00
Preferred Stock, Accretion Percentage, Preference	8.00%
Preferred Stock, Convertible Preference Shares, Accretion Period	5 years
Preferred Stock, Accretion of Redemption Discount				$ 1,193
Preferred Stock, Liquidation Preference, Value			$ 51,193	$ 51,193
Shares outstanding (shares) | shares			50,000	50,000
Preferred Stock, Convertible Preference Shares, Convertible at Company's Option, Term	2 years
Preferred Stock, Conversion Basis, Common Stock Class A Closing Trade Price	125.00%
Preferred Stock, Dividend Rate, Percentage	7.00%
Additional Paid-in Capital
Share Capital [Line Items]
Issuance of common and convertible preference shares	$ 35,997		$ 362	$ 35,997
Common Stock | Common Class A
Share Capital [Line Items]
Stock Issued During Period, Shares, Issued for Services | shares	14,285,714
Proceeds from Issuance of Common Stock	$ 50,000
Shares outstanding (shares) | shares			71,943,994	71,943,994			57,517,568
Common stock, voting rights, number of votes per share | vote			1	1
Common Stock | Common Class B
Share Capital [Line Items]
Shares outstanding (shares) | shares			3,749	3,749			3,755		3,755
Common stock, voting rights, number of votes per share | vote			20	20
Contingent Consideration, Liability Settlements [Domain] | Preferred Stock | Series 4 Convertible Preferred Stock
Share Capital [Line Items]
Issuance of common and convertible preference shares	$ 62,623

XML

Noncontrolling and Redeemable Noncontrolling Interests - Changes in Amounts Due to Noncontrolling Interest (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Noncontrolling Interest [Abstract]
Beginning balance			$ 9,278	$ 11,030	$ 11,030
Income attributable to noncontrolling interests	$ 3,043	$ 2,545	3,472	3,442	11,785
Distributions made			(7,957)	$ (8,927)	(13,419)
Other			25		(118)
Ending balance	$ 4,818		$ 4,818		$ 9,278

XML

Noncontrolling and Redeemable Noncontrolling Interests - Changes in Noncontrolling Interests (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Noncontrolling Interest [Line Items]
Net loss attributable to MDC Partners Inc.	$ 4,290	$ 3,406	$ 3,406	$ 4,177	$ (26,010)
Change from net loss attributable to MDC Partners Inc. and transfers to noncontrolling interests	(4,193)	(3,406)		(4,080)	27,176
MDC Partners Inc. Shareholders' Deficit
Noncontrolling Interest [Line Items]
Net loss attributable to MDC Partners Inc.			$ 3,406		(26,010)
Decrease in MDC Partners Inc. paid-in capital for purchase of equity interests in excess of redeemable noncontrolling interests and noncontrolling interests	$ 97	$ 0		$ 97	$ 1,166

XML

Noncontrolling and Redeemable Noncontrolling Interests - Changes in Redeemable Noncontrolling Interests (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Noncontrolling Interest [Abstract]
Beginning Balance	$ 51,546	$ 62,886
Redemptions	(9,486)	(11,943)
Granted	0	0
Changes in redemption value	421	1,067
Currency translation adjustments	154	(464)
Ending Balance	$ 42,635	$ 51,546

XML

Noncontrolling and Redeemable Noncontrolling Interests (Details Textual) - USD ($)	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Noncontrolling Interest [Line Items]
Noncontrolling interest, ownership percentage by Parent (percent)		100.00%
Redeemable Noncontrolling Interest, Equity, Fair Value	$ 42,635,000		$ 51,546,000	$ 62,886,000
Vesting over period [Member]
Noncontrolling Interest [Line Items]
Redeemable Noncontrolling Interest, Equity, Fair Value	19,158,000
Termination, disability, or death [Member]
Noncontrolling Interest [Line Items]
Redeemable Noncontrolling Interest, Equity, Fair Value	19,926,000
Acquisition Value in excess of Redemption Value [Member]
Noncontrolling Interest [Line Items]
Redeemable Noncontrolling Interest, Equity, Fair Value	$ 3,551,000

XML

Fair Value Measurements (Details) - 6.50% Notes due 2024 - Fair Value, Inputs, Level 1 - Senior Notes - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Liabilities:
Long term debt, Carrying Amount	$ 900,000	$ 900,000
Long term debt, Fair Value	$ 823,500	$ 834,750

XML

Supplemental Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accrued media	$ 151,143		$ 151,143		$ 180,586
Goodwill	743,582		743,582		$ 740,955
Income tax expense (benefit)	2,088	$ 1,977	2,835	$ (6,353)
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates	$ 9,215	$ 7,956	$ 10,195	$ (28,979)
Effective tax rate (percent)			22.70%	24.80%

XML

Segment Information (Details 1) $ in Thousands	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Jun. 30, 2019 USD ($) operating_segment reportable_segment	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | reportable_segment				4
Revenue	$ 362,130	$ 379,743		$ 690,921	$ 706,711
Segment operating income (loss)	23,442	30,772		39,123	16,139
Interest expense and finance charges	(16,413)	(16,859)		(33,174)	(32,942)
Foreign exchange transaction gain (loss)	2,932	(6,549)		8,374	(13,209)
Other, net	(746)	592		(4,128)	1,033
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates	9,215	7,956		10,195	(28,979)
Income tax expense (benefit)	2,088	1,977		2,835	(6,353)
Income (loss) before equity in earnings (losses) of non-consolidated affiliates	7,127	5,979		7,360	(22,626)
Equity in earnings (losses) of non-consolidated affiliates	206	(28)		289	58
Net income (loss)	7,333	5,951		7,649	(22,568)
Net income attributable to the noncontrolling interest	(3,043)	(2,545)		(3,472)	(3,442)	$ (11,785)
Net income (loss) attributable to MDC Partners Inc.	4,290	3,406	$ 3,406	4,177	(26,010)
Depreciation and amortization	10,663	11,703		19,501	24,078
Stock-based compensation	3,634	5,603		6,606	10,640
Capital expenditures	4,317	5,890		$ 7,923	9,689
Global Integrated Agencies
Segment Reporting Information [Line Items]
Number of operating segments | operating_segment				4
Revenue	154,368	158,163		$ 284,087	287,686
Segment operating income (loss)	20,720	18,352		24,491	4,760
Depreciation and amortization	4,437	4,743		8,502	12,152
Stock-based compensation	1,232	2,475		4,999	4,935
Capital expenditures	1,816	2,411		$ 3,234	4,654
Domestic Creative Agencies
Segment Reporting Information [Line Items]
Number of operating segments | operating_segment				7
Revenue	65,193	72,971		$ 132,201	139,625
Segment operating income (loss)	8,730	5,077		14,207	7,955
Depreciation and amortization	1,547	1,281		2,786	2,574
Stock-based compensation	522	1,097		986	1,507
Capital expenditures	369	569		$ 1,063	1,473
Specialized Communications
Segment Reporting Information [Line Items]
Number of operating segments | operating_segment				4
Revenue	47,170	40,304		$ 86,123	79,128
Segment operating income (loss)	6,683	6,216		13,760	9,944
Depreciation and amortization	698	992		1,265	1,959
Stock-based compensation	52	52		78	239
Capital expenditures	231	2,208		482	2,443
Media Services
Segment Reporting Information [Line Items]
Revenue	21,331	21,398		41,510	46,082
Segment operating income (loss)	991	(1,719)		(843)	(1,738)
Depreciation and amortization	794	635		1,485	1,273
Stock-based compensation	(16)	74		(16)	149
Capital expenditures	126	131		167	315
All Other
Segment Reporting Information [Line Items]
Revenue	74,068	86,907		147,000	154,190
Segment operating income (loss)	2,949	15,986		8,962	22,430
Depreciation and amortization	2,966	3,892		5,025	5,736
Stock-based compensation	652	684		940	1,341
Capital expenditures	1,757	547		2,958	772
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Revenue	0	0		0	0
Segment operating income (loss)	(16,631)	(13,140)		(21,454)	(27,212)
Depreciation and amortization	221	160		438	384
Stock-based compensation	1,192	1,221		(381)	2,469
Capital expenditures	$ 18	$ 24		$ 19	$ 32

XML

Commitments, Contingencies and Guarantees (Details Textual) $ in Thousands	Jun. 30, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Amount of letters of credit outstanding	$ 4,744

XML

New Accounting Pronouncements (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Lease liability	$ 279,503
Operating lease right-of-use asset	$ 237,418
Accounting Standards Update 2016-02 - ASC 842
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Lease liability		$ 299,243
Operating lease right-of-use asset		$ 254,245

XML

Label	Element	Value
Increase (Decrease) in Redemption Value of Redeemable Noncontrolling Interests	mdca_IncreaseDecreaseinRedemptionValueofRedeemableNoncontrollingInterests	$ (1,687,000)
Increase (Decrease) in Redemption Value of Redeemable Noncontrolling Interests	mdca_IncreaseDecreaseinRedemptionValueofRedeemableNoncontrollingInterests	(2,062,000)
Increase (Decrease) in Redemption Value of Redeemable Noncontrolling Interests	mdca_IncreaseDecreaseinRedemptionValueofRedeemableNoncontrollingInterests	(3,190,000)
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures	us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures	0
Stock Repurchased and Retired During Period, Value	us-gaap_StockRepurchasedAndRetiredDuringPeriodValue	493,000
Stock Repurchased and Retired During Period, Value	us-gaap_StockRepurchasedAndRetiredDuringPeriodValue	22,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	2,107,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	4,324,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	1,800,000
Parent [Member]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	us-gaap_NewAccountingPronouncementOrChangeInAccountingPrincipleEffectOfAdoptionQuantification	0
Increase (Decrease) in Redemption Value of Redeemable Noncontrolling Interests	mdca_IncreaseDecreaseinRedemptionValueofRedeemableNoncontrollingInterests	(1,687,000)
Increase (Decrease) in Redemption Value of Redeemable Noncontrolling Interests	mdca_IncreaseDecreaseinRedemptionValueofRedeemableNoncontrollingInterests	(2,062,000)
Increase (Decrease) in Redemption Value of Redeemable Noncontrolling Interests	mdca_IncreaseDecreaseinRedemptionValueofRedeemableNoncontrollingInterests	(3,190,000)
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	(943,000)
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	2,435,000
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	(1,423,000)
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests	us-gaap_MinorityInterestDecreaseFromRedemptions	0
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests	us-gaap_MinorityInterestDecreaseFromRedemptions	1,166,000
Stock Issued During Period, Value, New Issues	us-gaap_StockIssuedDuringPeriodValueNewIssues	991,000
Stock Issued During Period, Value, Convertible Preferred Shares	mdca_StockIssuedDuringPeriodValueConvertiblePreferredShares	(97,000)
Stock Repurchased and Retired During Period, Value	us-gaap_StockRepurchasedAndRetiredDuringPeriodValue	493,000
Stock Repurchased and Retired During Period, Value	us-gaap_StockRepurchasedAndRetiredDuringPeriodValue	22,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	2,107,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	4,324,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	1,800,000
Retained Earnings [Member]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	us-gaap_NewAccountingPronouncementOrChangeInAccountingPrincipleEffectOfAdoptionQuantification	$ (1,170,000)
Common Stock [Member]
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures	us-gaap_StockIssuedDuringPeriodSharesRestrictedStockAwardNetOfForfeitures	12,585
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures	us-gaap_StockIssuedDuringPeriodSharesRestrictedStockAwardNetOfForfeitures	122,029
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures	us-gaap_StockIssuedDuringPeriodSharesRestrictedStockAwardNetOfForfeitures	76,979
Stock Repurchased and Retired During Period, Shares	us-gaap_StockRepurchasedAndRetiredDuringPeriodShares	6,185
Stock Repurchased and Retired During Period, Shares	us-gaap_StockRepurchasedAndRetiredDuringPeriodShares	54,693
Stock Repurchased and Retired During Period, Shares	us-gaap_StockRepurchasedAndRetiredDuringPeriodShares	19,257
Stock Issued During Period, Shares, New Issues	us-gaap_StockIssuedDuringPeriodSharesNewIssues	0
Additional Paid-in Capital [Member]
Increase (Decrease) in Redemption Value of Redeemable Noncontrolling Interests	mdca_IncreaseDecreaseinRedemptionValueofRedeemableNoncontrollingInterests	$ (1,687,000)
Increase (Decrease) in Redemption Value of Redeemable Noncontrolling Interests	mdca_IncreaseDecreaseinRedemptionValueofRedeemableNoncontrollingInterests	(2,062,000)
Increase (Decrease) in Redemption Value of Redeemable Noncontrolling Interests	mdca_IncreaseDecreaseinRedemptionValueofRedeemableNoncontrollingInterests	(3,190,000)
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests	us-gaap_MinorityInterestDecreaseFromRedemptions	0
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests	us-gaap_MinorityInterestDecreaseFromRedemptions	1,166,000
Adjustments to Additional Paid in Capital, Changes due to Business Combinations	mdca_AdjustmentstoAdditionalPaidinCapitalChangesduetoBusinessCombinations	97,000
Stock Repurchased and Retired During Period, Value	us-gaap_StockRepurchasedAndRetiredDuringPeriodValue	493,000
Stock Repurchased and Retired During Period, Value	us-gaap_StockRepurchasedAndRetiredDuringPeriodValue	22,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	2,107,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	4,324,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	1,800,000
AOCI Including Portion Attributable to Noncontrolling Interest [Member]
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	(944,000)
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	2,435,000
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	(1,423,000)
Noncontrolling Interest [Member]
Noncontrolling Interest, Change in Redemption Value	us-gaap_MinorityInterestChangeInRedemptionValue	(5,965,000)
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	(905,000)
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	(2,006,000)
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	38,000
Adjustments to Additional Paid in Capital, Changes due to Business Combinations	mdca_AdjustmentstoAdditionalPaidinCapitalChangesduetoBusinessCombinations	27,357,000
Adjustments to Additional Paid in Capital, Changes due to Business Combinations	mdca_AdjustmentstoAdditionalPaidinCapitalChangesduetoBusinessCombinations	27,357,000
Adjustments to Additional Paid in Capital, Changes due to Business Combinations	mdca_AdjustmentstoAdditionalPaidinCapitalChangesduetoBusinessCombinations	$ 0
Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues	us-gaap_StockIssuedDuringPeriodSharesNewIssues	0
Contingent Consideration, Liability Settlements [Domain]
Stock Issued During Period, Value, Acquisitions	us-gaap_StockIssuedDuringPeriodValueAcquisitions	$ 7,030,000
Stock Issued During Period, Value, Acquisitions	us-gaap_StockIssuedDuringPeriodValueAcquisitions	7,030,000
Contingent Consideration, Liability Settlements [Domain] | Parent [Member]
Stock Issued During Period, Value, Acquisitions	us-gaap_StockIssuedDuringPeriodValueAcquisitions	7,030,000
Stock Issued During Period, Value, Acquisitions	us-gaap_StockIssuedDuringPeriodValueAcquisitions	$ 7,030,000