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 results of operations 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 businesses and the Company’s internal management and reporting structure during 2019, reportable segment results for the 2018 and 2017 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.


•	Varick Media, previously within the Yes & Company operating segment, is now included within 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.”

•

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 Agencies reportable 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 results of operations 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 results of operations 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 its 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.

See Note 1 of the Notes to the Consolidated Financial statements for information regarding our assessment of changes to our reportable segments in our fiscal year 2020.



	Years Ended December 31,
	2019			2018			2017
Revenue:
Global Integrated Agencies	$	598,184		$	610,290		$	688,011
Domestic Creative Agencies	230,718			246,642			277,587
Specialist Communications	180,591			163,367			153,506
Media Services	97,825			121,859			150,198
All Other	308,485			334,045			244,477
Total	$	1,415,803		$	1,476,203		$	1,513,779

Segment operating income (loss):
Global Integrated Agencies	$	58,933		$	63,972		$	60,891
Domestic Creative Agencies	28,254			51			38,221
Specialist Communications	23,822			17,316			19,978
Media Services	(5,398		)	(51,169		)	13,900
All Other	20,397			34,683			39,825
Corporate	(45,768		)	(55,157		)	(40,856		)
Total	$	80,240		$	9,696		$	131,959

Other Income (expense):
Interest expense and finance charges, net	$	(64,942	)	$	(67,075	)	$	(64,364	)
Foreign exchange gain (loss)	8,750			(23,258		)	18,137
Other, net	(2,401		)	230			1,346
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates	21,647			(80,407		)	87,078
Income tax expense (benefit)	10,533			31,603			(168,064		)
Income (loss) before equity in earnings of non-consolidated affiliates	11,114			(112,010		)	255,142
Equity in earnings of non-consolidated affiliates	352			62			2,081
Net income (loss)	11,466			(111,948		)	257,223
Net income attributable to the noncontrolling interest	(16,156		)	(11,785		)	(15,375		)
Net income (loss) attributable to MDC Partners Inc.	$	(4,690	)	$	(123,733	)	$	241,848



	Years Ended December 31,
	2019		2018		2017
Depreciation and amortization:
Global Integrated Agencies	$	16,572	$	21,179	$	21,206
Domestic Creative Agencies	4,843		5,052		5,143
Specialist Communications	2,577		4,113		4,567
Media Services	3,261		2,693		3,709
All Other	10,208		12,397		7,751
Corporate	868		762		1,098
Total	$	38,329	$	46,196	$	43,474

Stock-based compensation:
Global Integrated Agencies	$	26,207	$	8,095	$	14,666
Domestic Creative Agencies	1,532		2,623		2,301
Specialist Communications	209		372		2,160
Media Services	20		276		614
All Other	1,192		2,391		2,475
Corporate	1,880		4,659		2,134
Total	$	31,040	$	18,416	$	24,350

Capital expenditures:
Global Integrated Agencies	$	8,223	$	8,731	$	18,897
Domestic Creative Agencies	3,044		2,692		4,695
Specialist Communications	1,166		3,553		1,181
Media Services	194		806		3,035
All Other	5,933		4,415		5,127
Corporate	36		67		23
Total	$	18,596	$	20,264	$	32,958

A summary of the Company’s long-lived assets, comprised of fixed assets, goodwill and intangibles, net, by geographic region at December 31, is set forth in the following table.



	United States		Canada		Other		Total
Long-lived Assets
2019	$	68,497	$	4,475	$	8,082	$	81,054
2018	$	76,781	$	4,779	$	6,629	$	88,189

Goodwill and Intangible Assets
2019	$	668,567	$	64,842	$	62,158	$	795,567
2018	$	679,344	$	61,748	$	67,628	$	808,720

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.

A summary of the Company’s revenue by geographic region at December 31 is set forth in the following table.



	United States		Canada		Other		Total
Revenue:
2019	$	1,116,045	$	105,067	$	194,691	$	1,415,803
2018	$	1,153,191	$	124,001	$	199,011	$	1,476,203
2017	$	1,172,364	$	123,093	$	218,322	$	1,513,779