Segment Information

9 Months Ended

Sep. 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 operating 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 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 segment and the services provided by the Corporate segment to the operating segments.

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

Three Months Ended September 30, 2015

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services			Corporate			Total
Revenue	$	264,552		$	63,863		$	—		$	328,415
Cost of services sold	168,367			44,558			—			212,925
Office and general expenses	52,933			10,777			15,076			78,786
Depreciation and amortization	6,445			5,577			1,064			13,086
Operating profit (loss)	36,807			2,951			(16,140		)	23,618
Other Income (Expense):
Other expense, net										(15,623		)
Interest expense and finance charges, net										(14,524		)
Loss from continuing operations before income taxes and equity in non-consolidated affiliates										(6,529		)
Income tax benefit										(1,191		)
Loss from continuing operations before equity in non-consolidated affiliates										(5,338		)
Equity in earnings of non-consolidated affiliates										172
Loss from continuing operations										(5,166		)
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes										(1,316		)
Net loss										(6,482		)
Net income attributable to the noncontrolling interests	(1,930		)	(192		)	—			(2,122		)
Net loss attributable to MDC Partners Inc.										$	(8,604	)
Stock-based compensation	$	2,594		$	508		$	164		$	3,266
Supplemental Segment Information:
Capital expenditures	$	7,524		$	627		$	10		$	8,161

Three Months Ended September 30, 2014

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services		Corporate			Total
Revenue	$	238,419		$	70,972	$	—		$	309,391
Cost of services sold	156,667			48,882		—			205,549
Office and general expenses	48,524			11,354		10,937			70,815
Depreciation and amortization	6,895			4,368		421			11,684
Operating profit (loss)	26,333			6,368		(11,358		)	21,343
Other Income (Expense):
Other expense, net									(9,641		)
Interest expense and finance charges, net									(13,917		)
Loss from continuing operations before income taxes and equity in non-consolidated affiliates									(2,215		)
Income tax benefit									(266		)
Loss from continuing operations before equity in non-consolidated affiliates									(1,949		)
Equity in earnings of non-consolidated affiliates									81
Loss from continuing operations									(1,868		)
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes									(1,369		)
Net loss									(3,237		)
Net (income) loss attributable to the noncontrolling interests	(1,744		)	59		—			(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	$	12,133		$	417	$	428		$	12,978

Nine Months Ended September 30, 2015

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services			Corporate			Total
Revenue	$	775,079		$	192,164		$	—		$	967,243
Cost of services sold	515,624			132,762			—			648,386
Office and general expenses	151,023			22,586			32,560			206,169
Depreciation and amortization	19,360			16,797			3,236			39,393
Operating profit (loss)	89,072			20,019			(35,796		)	73,295
Other Income (Expense):
Other expense, net										(29,315		)
Interest expense and finance charges, net										(42,684		)
Income from continuing operations before income taxes and equity in non-consolidated affiliates										1,296
Income tax benefit										(566		)
Income from continuing operations before equity in non-consolidated affiliates										1,862
Equity in earnings of non-consolidated affiliates										627
Income from continuing operations										2,489
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes										(6,281		)
Net loss										(3,792		)
Net income attributable to the noncontrolling interests	(6,977		)	(366		)	—			(7,343		)
Net loss attributable to MDC Partners Inc.										$	(11,135	)
Stock-based compensation	$	9,205		$	2,467		$	1,353		$	13,025
Supplemental Segment Information:
Capital expenditures	$	16,083		$	1,309		$	273		$	17,665
Goodwill and intangibles	$	546,148		$	398,554		$	—		$	944,702
Total Assets	$	924,072		$	555,728		$	137,401		$	1,617,201

Nine Months Ended September 30, 2014

(thousands of United States dollars)

	Strategic Marketing Services			Performance Marketing Services		Corporate			Total
Revenue	$	683,340		$	200,261	$	—		$	883,601
Cost of services sold	442,906			132,986		—			575,892
Office and general expenses	136,922			43,640		33,025			213,587
Depreciation and amortization	17,182			13,545		1,356			32,083
Operating profit (loss)	86,330			10,090		(34,381		)	62,039
Other Income (Expense):
Other expense, net									(8,648		)
Interest expense and finance charges, net									(40,376		)
Income from continuing operations before income taxes and equity in non-consolidated affiliates									13,015
Income tax expense									2,764
Income from continuing operations before equity in non-consolidated affiliates									10,251
Equity in earnings of non-consolidated affiliates									223
Income from continuing operations									10,474
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes									(2,976		)
Net income									7,498
Net (income) loss attributable to the noncontrolling interests	(4,994		)	198		—			(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	$	16,228		$	1,216	$	1,234		$	18,678
Goodwill and intangibles	$	572,453		$	421,330	$	—		$	993,783
Total Assets	$	973,884		$	553,637	$	179,805		$	1,707,326

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,
2015	$	270,512	$	29,559	$	28,344	$	328,415
2014	$	249,128	$	38,052	$	22,211	$	309,391
Nine Months Ended September 30,
2015	$	793,904	$	94,817	$	78,522	$	967,243
2014	$	721,089	$	107,993	$	54,519	$	883,601