Segment Information

9 Months Ended

Sep. 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 September 30, 2014

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services			Corporate			Total
Revenue	$	228,297		$	98,593		$	—		$	326,890
Cost of services sold	148,157			68,348			—			216,505
Office and general expenses	47,455			19,419			10,937			77,811
Depreciation and amortization	6,790			5,269			421			12,480
Operating Profit (Loss)	25,895			5,557			(11,358		)	20,094
Other Income (Expense):
Other expense, net										(9,659		)
Interest expense and finance charges, net										(13,976		)
Loss from continuing operations before income taxes and equity in non-consolidated affiliates										(3,541		)
Income tax benefit										(263		)
Loss from continuing operations before equity in non-consolidated affiliates										(3,278		)
Equity in earnings of non-consolidated affiliates										81
Loss from continuing operations										(3,197		)
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes										(40		)
Net Loss										(3,237		)
Net income attributable to the noncontrolling interests	(1,669		)	(16		)	—			(1,685		)
Net loss attributable to MDC Partners Inc.										$	(4,922	)
Stock based compensation	$	1,816		$	477		$	1,144		$	3,437
Supplemental Segment Information:
Capital expenditures	$	12,111		$	1,250		$	428		$	13,789

Three Months Ended September 30, 2013

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services			Corporate			Total
Revenue	$	203,440		$	85,230		$	—		$	288,670
Cost of services sold	128,300			60,904			—			189,204
Office and general expenses	40,995			14,759			33,074			88,828
Depreciation and amortization	5,807			3,358			297			9,462
Operating Profit (loss)	28,338			6,209			(33,371		)	1,176
Other Income (Expense):
Other income, net										1,736
Interest expense, net										(10,552		)
Loss from continuing operations before income taxes and equity in non-consolidated affiliates										(7,640		)
Income tax expense										4,334
Loss from continuing operations before equity in non-consolidated affiliates										(11,974		)
Equity in earnings of non-consolidated affiliates										73
Loss from continuing operations										(11,901		)
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes										(7,388		)
Net Loss										(19,289		)
Net income attributable to the non-controlling interests	(1,471		)	(440		)	—			(1,911		)
Net loss attributable to MDC Partners Inc.										$	(21,200	)
Stock based compensation	$	1,835		$	646		$	24,954		$	27,435
Supplemental Segment Information:
Capital expenditures	$	2,617		$	844		$	908		$	4,369

Nine Months Ended September 30, 2014

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services		Corporate			Total
Revenue	$	655,262		$	281,916	$	—		$	937,178
Cost of services sold	419,371			189,009		—			608,380
Office and general expenses	134,022			67,496		33,025			234,543
Depreciation and amortization	16,874			16,275		1,356			34,505
Operating Profit (loss)	84,995			9,136		(34,381		)	59,750
Other Income (Expense):
Other expense, net									(8,894		)
Interest expense, net									(40,502		)
Income from continuing operations before income taxes and equity in non-consolidated affiliates									10,354
Income tax expense									2,781
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes									7,573
Equity in earnings of non-consolidated affiliates									223
Income from continuing operations									7,796
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes									(298		)
Net income									7,498
Net income attributable to the non-controlling interests	(4,854		)	58		—			(4,796		)
Net income attributable to MDC Partners Inc.									$	2,702
Stock based compensation	$	6,067		$	2,684	$	3,482		$	12,233
Supplemental Segment Information:
Capital expenditures	$	16,105		$	3,295	$	1,234		$	20,634
Goodwill and intangibles	$	572,454		$	421,330	$	—		$	993,784
Total Assets	$	960,194		$	567,329	$	179,805		$	1,707,328

Nine Months Ended September 30, 2013

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services			Corporate			Total
Revenue	$	587,540		$	254,265		$	—		$	841,805
Cost of services sold	375,681			181,058			—			556,739
Office and general expenses	115,759			53,358			47,916			217,033
Depreciation and amortization	17,334			10,106			989			28,429
Operating Profit (Loss)	78,766			9,743			(48,905		)	39,604
Other Income (Expense):
Other income, net										1,545
Interest expense, net										(88,778		)
Loss from continuing operations before income taxes, equity in affiliates										(47,629		)
Income tax benefit										(8,189		)
Loss from continuing operations before equity in affiliates										(39,440		)
Equity in earnings of non-consolidated affiliates										196
Loss from continuing operations										(39,244		)
Loss from discontinuing operations attributable to MDC Partners Inc., net of taxes										(10,891		)
Net loss										(50,135		)
Net income attributable to the noncontrolling interests	(3,578		)	(829		)	—			(4,407		)
Net loss attributable to MDC Partners Inc.										$	(54,542	)
Stock based compensation	$	4,815		$	2,505		$	29,370		$	36,690
Supplemental Segment Information:
Capital expenditures	$	8,223		$	4,225		$	1,528		$	13,976
Goodwill and intangibles	$	520,408		$	241,737		$	—		$	762,145
Total Assets	$	845,342		$	376,577		$	143,768		$	1,365,687

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 September 30,
2014	$	263,796	$	38,052	$	25,042	$	326,890
2013	$	237,260	$	33,892	$	17,518	$	288,670
Nine Months Ended September 30,
2014	$	765,699	$	107,993	$	63,486	$	937,178
2013	$	694,670	$	99,897	$	47,238	$	841,805