Segment Information

3 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company determines an operating segment if a component (1) engages in business activities from which it earns revenues and incurs expenses, (2) has discrete financial information that is, and (3) regularly reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance. During 2015, the Company had a change in the CODM as well as a change in how the CODM manages the business. As a result, in the fourth quarter of 2015, the Company reassessed its determination of operating segments. Decisions regarding allocations of resources are made and will be made based on the overall performance of the overall Partner Firm network. Therefore, the Company has determined that the Partner Firm network represents its operating segment. The Company also reassessed its previous allocation methodology and has conformed the allocations to align with how the CODM manages the business. The overall Partner Firm network consists of each of the Company's operating agencies. The Company now reports in one reportable Advertising and Communications segment in addition to the Corporate Group described as follows:

• The Advertising and Communications segment consists of Partner Firms that deliver innovative, value-added marketing, activation, communications and strategic consulting services to their clients. MDC and its Partner Firms deliver a wide range of customized services, including (1) multi-channel media management and optimization, (2) interactive and mobile marketing, (3) direct marketing, (4) database and customer relationship management, (5) sales promotion, (6) corporate communications, (7) market research, (8) data analytics and insights, (9) corporate identity, design and branding services, (10) social media communications, (11) product and service innovation and (12) e-commerce management.

• The Corporate Group consists of corporate office expenses incurred in connection with the strategic resources provided to the Advertising and Communications segment, as well as certain other centrally managed expenses that are not fully allocated to the reportable segment. Office and general expenses include (1) salaries and related expenses for corporate office employees including employees dedicated to supporting the Partner Firms, (2) occupancy expense relating to properties occupied by all corporate office employees, (3) other office and general expenses including professional fees for the financial statement audits, and (4) certain other professional fees managed by the corporate office. Additional expenses managed by the corporate office that are directly related to the Partner Firms are allocated to the reportable segment.

Prior year results have been recast to reflect the new reportable segment.

The significant accounting policies are in the summary of significant accounting policies included in the notes to the consolidated financial statements. 

Three Months Ended March 31, 2016

(thousands of United States dollars)

	Advertising and Communications			Corporate			Total
Revenue	$	309,042		$	—		$	309,042
Cost of services sold	211,446			—			211,446
Office and general expenses	65,095			12,733			77,828
Depreciation and amortization	10,823			397			11,220
Operating profit (loss)	21,678			(13,130		)	8,548
Other Income (Expense):
Other income, net							15,512
Interest expense and finance charges, net							(15,397		)
Loss on redemption of notes							(33,298		)
Loss from continuing operations before income taxes and equity in earnings of non-consolidated affiliates							(24,635		)
Income tax benefit							(1,972		)
Loss from continuing operations before equity in earnings of non-consolidated affiliates							(22,663		)
Equity in earnings of non-consolidated affiliates							229
Loss from continuing operations							(22,434		)
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes							—
Net loss							(22,434		)
Net income attributable to the noncontrolling interests	(859		)	—			(859		)
Net loss attributable to MDC Partners Inc.							$	(23,293	)
Stock-based compensation	$	3,881		$	804		$	4,685
Supplemental Segment Information:
Capital expenditures	$	5,511		$	28		$	5,539
Goodwill and intangibles	$	944,660		$	—		$	944,660
Total Assets	$	1,412,988		$	158,567		$	1,571,555

Three Months Ended March 31, 2015

(thousands of United States dollars)

	Advertising and Communications			Corporate			Total
Revenue	$	302,222		$	—		$	302,222
Cost of services sold	210,419			—			210,419
Office and general expenses	53,936			20,372			74,308
Depreciation and amortization	11,854			446			12,300
Operating profit (loss)	26,013			(20,818		)	5,195
Other Income (Expense):
Other expense, net							(18,040		)
Interest expense and finance charges, net							(14,977		)
Loss from continuing operations before income taxes and equity in earnings of non-consolidated affiliates							(27,822		)
Income tax benefit							(4,054		)
Loss from continuing operations before equity in earnings of non-consolidated affiliates							(23,768		)
Equity in earnings of non-consolidated affiliates							351
Loss from continuing operations							(23,417		)
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes							(6,294		)
Net loss							(29,711		)
Net income attributable to the noncontrolling interests	(2,380		)	—			(2,380		)
Net loss attributable to MDC Partners Inc.							$	(32,091	)
Stock-based compensation	$	3,500		$	945		$	4,445
Supplemental Segment Information:
Capital expenditures	$	5,588		$	68		$	5,656
Goodwill and intangibles	$	916,222		$	—		$	916,222
Total Assets	$	1,483,613		$	142,000		$	1,625,613

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,
2016	$	252,199	$	28,406	$	28,437	$	309,042
2015	$	252,018	$	29,825	$	20,379	$	302,222