Segment Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Information

10. Segment Information

The Company’s segment reporting is consistent with the current manner of how the Chief Operating Decision Maker (“CODM”) and the Board of Directors view the business. The Company is focused on expanding its capabilities in database marketing and data analytics in order to position the Company for future business development efforts and revenue growth.

In order to position this strategic focus along the lines of how the CODM and management will base their business decisions, the Company reports two segments. Decisions regarding allocation of resources are made and will be made based not only on the individual operating results of the subsidiaries but also on the overall performance of the reportable segments. These reportable segments are the aggregation of various reporting segments.

The Company reports in two segments plus corporate. The segments are as follows:

• The Strategic Marketing Services segment consists of integrated marketing consulting services firms that offer a full complement of marketing, activation and consulting services including advertising and media, marketing communications including direct marketing, public relations, corporate communications, market research, corporate identity and branding, interactive marketing, and sales promotion. Each of the entities within the Strategic Marketing Services Group share similar economic characteristics, specifically related to the nature of their respective services, the manner in which the services are provided and the similarity of their respective customers. Due to the similarities in these businesses, they exhibit similar long term financial performance and have been aggregated together.

• The Performance Marketing Services segment includes our firms that provide consumer insights and analytics to satisfy the growing need for targetable, measurable solutions or cost effective means of driving return on marketing investment. These services interface directly with the consumer of a client’s product or service. Such services include the design, development, research and implementation of consumer services, media planning and buying, and direct marketing initiatives. Each of the entities within the Performance Marketing Services Group share similar economic characteristics specifically related to the nature of their respective services, the manner in which the services are provided, and the similarity of their respective customers. Due to the similarities in these businesses, the services provided to the customer and they exhibit similar long term financial performance and have been aggregated together.

The significant accounting policies of these segments are the same as those described in the summary of significant accounting policies included in the notes to the consolidated financial statements. The Company continues to evaluate its Corporate Group and the services provided by the Corporate Group to the operating segments.

Summary financial information concerning the Company’s operating segments is shown in the following tables:

Three Months Ended March 31, 2014

(thousands of United States dollars)

	Strategic Marketing Services		Performance Marketing Services		Corporate		Total
Revenue	$	205,948	$	86,621	$	—	$	292,569
Cost of services sold		133,132		58,561		—		191,693
Office and general expenses		44,167		24,032		9,975		78,174
Depreciation and amortization		5,046		5,747		502		11,295
Operating Profit (Loss)		23,603		(1,719)		(10,477)		11,407
Other Income (Expense):
Other income, net								(6,537)
Interest expense, net								(12,645)
Loss from continuing operations before income taxes, equity in affiliates								(7,775)
Income tax benefit								(334)
Loss from continuing operations before equity in affiliates								(7,441)
Equity in earnings of non-consolidated affiliates								63
Loss from continuing operations								(7,378)
Loss from discontinuing operations attributable to MDC Partners Inc., net of taxes								(106)
Net loss								(7,484)
Net income attributable to the noncontrolling interests		(1,342)		(20)		—		(1,362)
Net loss attributable to MDC Partners Inc.							$	(8,846)
Stock based compensation	$	2,139	$	1,277	$	952	$	4,368
Supplemental Segment Information:
Capital expenditures	$	1,621	$	854	$	541	$	3,016
Goodwill and intangibles	$	512,931	$	433,724	$	—	$	946,655
Total Assets	$	839,792	$	594,088	$	136,392	$	1,570,272

Three Months Ended March 31, 2013

(thousands of United States dollars)

	Strategic Marketing Services		Performance Marketing Services		Corporate		Total
Revenue	$	183,430	$	82,206	$	—	$	265,636
Cost of services sold		118,571		59,287		—		177,858
Office and general expenses		36,428		20,787		10,145		67,360
Depreciation and amortization		5,774		3,340		365		9,479
Operating Profit (Loss)		22,657		(1,208)		(10,510)		10,939
Other Income (Expense):
Other expense, net								2,689
Interest expense, net								(67,913)
Loss from continuing operations before income taxes, equity in affiliates								(54,285)
Income tax benefit								(14,250)
Loss from continuing operations before equity in affiliates								(40,035)
Equity in earnings of non-consolidated affiliates								41
Loss from continuing operations								(39,994)
Loss from discontinuing operations attributable to MDC Partners Inc., net of taxes								(2,182)
Net loss								(42,176)
Net income attributable to the noncontrolling interests		(762)		(220)		—		(982)
Net loss attributable to MDC Partners Inc.							$	(43,158)
Stock based compensation	$	1,141	$	829	$	2,531	$	4,501
Supplemental Segment Information:
Capital expenditures	$	1,774	$	1,052	$	89	$	2,915
Goodwill and intangibles	$	528,944	$	248,096	$	—	$	777,040
Total Assets	$	852,901	$	404,072	$	161,536	$	1,418,509

A summary of the Company’s revenue by geographic area, based on the location in which the services originated, is set forth in the following table:

	United States		Canada		Other		Total
Revenue
Three Months Ended March 31,
2014	$	243,305	$	30,913	$	18,351	$	292,569
2013	$	219,509	$	32,055	$	14,072	$	265,636