Segment Information

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Segment Information

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 June 30, 2014

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services		Corporate			Total
Revenue	$	221,017		$	96,702	$	—		$	317,719
Cost of services sold	138,082			62,100		—			200,182
Office and general expenses	42,400			24,045		12,113			78,558
Depreciation and amortization	5,038			5,259		433			10,730
Operating Profit (Loss)	35,497			5,298		(12,546		)	28,249
Other Income (Expense):
Other income,net									7,302
Interest expense and finance charges, net									(13,881		)
Income from continuing operations before income taxes and equity in non-consolidated affiliates									21,670
Income tax expense									3,378
Income from continuing operations before equity in non-consolidated affiliates									18,292
Equity in earnings of non-consolidated affiliates									79
Income from continuing operations									18,371
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes									(152		)
Net income									18,219
Net income attributable to the noncontrolling interests	(1,843		)	94		—			(1,749		)
Net income attributable to MDC Partners Inc.									$	16,470
Stock based compensation	$	2,112		$	930	$	1,386		$	4,428
Supplemental Segment Information:
Capital expenditures	$	2,373		$	1,191	$	265		$	3,829

Three Months Ended June 30, 2013

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services			Corporate			Total
Revenue	$	200,670		$	86,829		$	—		$	287,499
Cost of services sold	128,810			60,867			—			189,677
Office and general expenses	38,336			17,812			4,697			60,845
Depreciation and amortization	5,753			3,408			327			9,488
Operating Profit (loss)	27,771			4,742			(5,024		)	27,489
Other Income (Expense):
Other expense, net										(2,880		)
Interest expense and finance charges, net										(10,313		)
Income from continuing operations before income taxes and equity in non-consolidated affiliates										14,296
Income tax expense										1,727
Income from continuing operations before equity in non-consolidated affiliates										12,569
Equity in earnings of non-consolidated affiliates										82
Income from continuing operations										12,651
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes										(1,321		)
Net income										11,330
Net income attributable to the noncontrolling interests	(1,345		)	(169		)	—			(1,514		)
Net income attributable to MDC Partners Inc.										$	9,816
Stock based compensation	$	1,839		$	1,030		$	1,885		$	4,754
Supplemental Segment Information:
Capital expenditures	$	3,828		$	2,329		$	531		$	6,688

Six Months Ended June 30, 2014

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services		Corporate			Total
Revenue	$	426,965		$	183,323	$	—		$	610,288
Cost of services sold	271,214			120,661		—			391,875
Office and general expenses	86,567			48,077		22,088			156,732
Depreciation and amortization	10,084			11,006		935			22,025
Operating Profit (Loss)	59,100			3,579		(23,023		)	39,656
Other Income (Expense):
Other income,net									765
Interest expense and finance charges, net									(26,526		)
Income from continuing operations before income taxes and equity in non-consolidated affiliates									13,895
Income tax expense									3,044
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes									10,851
Equity in earnings of non-consolidated affiliates									142
Income from continuing operations									10,993
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes									(258		)
Net income									10,735
Net income attributable to the noncontrolling interests	(3,185		)	74		—			(3,111		)
Net income attributable to MDC Partners Inc.									$	7,624
Stock based compensation	$	4,251		$	2,207	$	2,338		$	8,796
Supplemental Segment Information:
Capital expenditures	$	3,994		$	2,045	$	806		$	6,845
Goodwill and intangibles	$	516,815		$	434,669	$	—		$	951,484
Total Assets	$	863,990		$	617,576	$	203,452		$	1,685,018

Six Months Ended June 30, 2013

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services			Corporate			Total
Revenue	$	384,100		$	169,035		$	—		$	553,135
Cost of services sold	247,381			120,154			—			367,535
Office and general expenses	74,764			38,599			14,842			128,205
Depreciation and amortization	11,527			6,748			692			18,967
Operating Profit (Loss)	50,428			3,534			(15,534		)	38,428
Other Income (Expense):
Other expense, net										(191		)
Interest expense, finance charges, and loss on redemption of notes, net										(78,226		)
Loss from continuing operations before income taxes, equity in affiliates										(39,989		)
Income tax benefit										(12,523		)
Loss from continuing operations before equity in affiliates										(27,466		)
Equity in earnings of non-consolidated affiliates										123
Loss from continuing operations										(27,343		)
Loss from discontinuing operations attributable to MDC Partners Inc., net of taxes										(3,503		)
Net loss										(30,846		)
Net income attributable to the noncontrolling interests	(2,107		)	(389		)	—			(2,496		)
Net loss attributable to MDC Partners Inc.										$	(33,342	)
Stock based compensation	$	2,980		$	1,859		$	4,416		$	9,255
Supplemental Segment Information:
Capital expenditures	$	5,606		$	3,381		$	620		$	9,607
Goodwill and intangibles	$	526,491		$	244,709		$	—		$	771,200
Total Assets	$	812,078		$	381,921		$	195,444		$	1,389,443

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 June 30,
2014	$	258,597	$	39,028	$	20,094	$	317,719
2013	$	237,901	$	33,950	$	15,648	$	287,499
Six Months Ended June 30,
2014	$	501,902	$	69,941	$	38,445	$	610,288
2013	$	457,410	$	66,005	$	29,720	$	553,135