Segment Information

6 Months Ended

Jun. 30, 2015

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 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 in one reportable segment and two "other" 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 one reportable Strategic Marketing Services segment plus two “other” segments, Performance Marketing Services and 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 segment 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. In addition, services include consumer activation, investor relations and general public insights.

The significant accounting policies of these segments are the same as those described in the summary of significant accounting policies included in these 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, 2015

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services			Corporate			Total
Revenue	$	270,091		$	66,515		$	—		$	336,606
Cost of services sold	181,231			43,811			—			225,042
Office and general expenses	48,934			655			3,486			53,075
Depreciation and amortization	6,492			5,790			1,725			14,007
Operating profit (loss)	33,434			16,259			(5,211		)	44,482
Other income (expense):
Other income, net										4,348
Interest expense and finance charges, net										(13,183		)
Income from continuing operations before income taxes and equity in non-consolidated affiliates										35,647
Income tax expense										4,679
Income from continuing operations before equity in non-consolidated affiliates										30,968
Equity in earnings of non-consolidated affiliates										104
Income from continuing operations										31,072
Income from discontinued operations attributable to MDC Partners Inc., net of taxes										1,329
Net income										32,401
Net income attributable to the noncontrolling interests	(2,754		)	(87		)	—			(2,841		)
Net income attributable to MDC Partners Inc.										$	29,560
Stock based compensation	$	4,087		$	838		$	389		$	5,314
Supplemental Segment Information:
Capital expenditures	$	3,229		$	424		$	195		$	3,848

Three Months Ended June 30, 2014

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services		Corporate			Total
Revenue	$	230,117		$	69,239	$	—		$	299,356
Cost of services sold	145,679			43,196		—			188,875
Office and general expenses	43,352			15,971		12,113			71,436
Depreciation and amortization	5,139			4,345		433			9,917
Operating profit (loss)	35,947			5,727		(12,546		)	29,128
Other income (expense):
Other income, net									7,564
Interest expense, net									(13,840		)
Income from continuing operations before income taxes and equity in non-consolidated affiliates									22,852
Income tax expense									3,376
Income from continuing operations before equity in non-consolidated affiliates									19,476
Equity in earnings of non-consolidated affiliates									79
Income from continuing operations									19,555
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes									(1,336		)
Net income									18,219
Net income attributable to the non-controlling interests	(1,860		)	111		—			(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	$	2,393		$	546	$	265		$	3,204

Six Months Ended June 30, 2015

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services			Corporate			Total
Revenue	$	510,527		$	128,301		$	—		$	638,828
Cost of services sold	347,257			88,204			—			435,461
Office and general expenses	98,090			11,809			17,484			127,383
Depreciation and amortization	12,915			11,220			2,172			26,307
Operating profit (loss)	52,265			17,068			(19,656		)	49,677
Other income (expense):
Other expense, net										(13,692		)
Interest expense, net										(28,160		)
Income from continuing operations before income taxes and equity in non-consolidated affiliates										7,825
Income tax expense										625
Income from continuing operations before equity in non-consolidated affiliates										7,200
Equity in earnings of non-consolidated affiliates										455
Income from continuing operations										7,655
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes										(4,965		)
Net income										2,690
Net income attributable to the non-controlling interests	(5,047		)	(174		)	—			(5,221		)
Net loss attributable to MDC Partners Inc.										$	(2,531	)
Stock based compensation	$	6,611		$	1,959		$	1,189		$	9,759
Supplemental Segment Information:
Capital expenditures	$	8,559		$	682		$	263		$	9,504
Goodwill and intangibles	$	552,222		$	409,638		$	—		$	961,860
Total Assets	$	901,423		$	756,535		$	190,689		$	1,848,647

Six Months Ended June 30, 2014

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services		Corporate			Total
Revenue	$	444,921		$	129,289	$	—		$	574,210
Cost of services sold	286,239			84,104		—			370,343
Office and general expenses	88,398			32,286		22,088			142,772
Depreciation and amortization	10,287			9,177		935			20,399
Operating profit (loss)	59,997			3,722		(23,023		)	40,696
Other income (expense):
Other income, net									993
Interest expense, net									(26,459		)
Income from continuing operations before income taxes, equity in affiliates									15,230
Income tax expense									3,030
Income from continuing operations before equity in affiliates									12,200
Equity in earnings of non-consolidated affiliates									142
Income from continuing operations									12,342
Loss from discontinuing operations attributable to MDC Partners Inc., net of taxes									(1,607		)
Net income									10,735
Net income attributable to the noncontrolling interests	(3,250		)	139		—			(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	$	4,095		$	799	$	806		$	5,700
Goodwill and intangibles	$	516,815		$	434,669	$	—		$	951,484
Total Assets	$	876,251		$	605,315	$	203,452		$	1,685,018

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,
2015	$	271,375	$	35,432	$	29,799	$	336,606
2014	$	243,128	$	39,028	$	17,200	$	299,356
Six Months Ended June 30,
2015	$	523,392	$	65,258	$	50,178	$	638,828
2014	$	471,962	$	69,941	$	32,307	$	574,210