Segment Information

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Segment Information

10. 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 polices 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, 2013

(thousands of United States dollars)

	Strategic Marketing Services		Performance Marketing Services		Corporate		Total
Revenue	$	200,868	$	87,269	$	—	$	288,137
Cost of services sold		129,264		61,431		—		190,695
Office and general expenses		38,723		17,933		4,697		61,353
Depreciation and amortization		5,806		3,482		327		9,615
Operating Profit (Loss)		27,075		4,423		(5,024)		26,474
Other Income (Expense):
Other expense, net								(2,876)
Interest expense, net								(10,342)
Income from continuing operations before income taxes,     equity in affiliates								13,256
Income tax expense								1,727
Income from continuing operations before equity in affiliates								11,529
Equity in earnings of non-consolidated affiliates								82
Income from continuing operations								11,611
Loss from discontinuing operations attributable to MDC     Partners Inc., net of taxes								(279)
Net income								11,332
Net income attributable to the noncontrolling interests		(1,345)		(171)		—		(1,516)
Net income attributable to MDC Partners Inc.							$	9,816
Non cash stock based compensation	$	1,839	$	1,030	$	1,885	$	4,754
Supplemental Segment Information:
Capital expenditures	$	3,828	$	2,329	$	531	$	6,688

Three Months Ended June 30, 2012

(thousands of United States dollars)

	Strategic Marketing Services		Performance Marketing Services		Corporate		Total
Revenue	$	183,750	$	89,756	$	—	$	273,506
Cost of services sold		122,285		65,335		—		187,620
Office and general expenses		39,557		17,453		16,975		73,985
Depreciation and amortization		8,828		4,474		329		13,631
Operating Profit (Loss)		13,080		2,494		(17,304)		(1,730)
Other Income (Expense):
Other income, net								214
Interest expense, net								(11,785)
Loss from continuing operations before income taxes,     equity in affiliates								(13,301)
Income tax expense								2,544
Loss from continuing operations before equity in affiliates								(15,845)
Equity in earnings of non-consolidated affiliates								34
Loss from continuing operations								(15,811)
Loss from discontinuing operations attributable to MDC     Partners Inc., net of taxes								(2,493)
Net loss								(18,304)
Net income attributable to the noncontrolling interests		(1,353)		(457)		—		(1,810)
Net loss attributable to MDC Partners Inc.							$	(20,114)
Non cash stock based compensation	$	1,967	$	1,887	$	11,499	$	15,353
Supplemental Segment Information:
Capital expenditures	$	2,458	$	1,905	$	87	$	4,450

Six Months Ended June 30, 2013

(thousands of United States dollars)

	Strategic Marketing Services		Performance Marketing Services		Corporate		Total
Revenue	$	384,712	$	170,439	$	—	$	555,151
Cost of services sold		248,310		121,392		—		369,702
Office and general expenses		75,412		39,104		14,842		129,358
Depreciation and amortization		11,640		6,905		692		19,237
Operating Profit (Loss)		49,350		3,038		(15,534)		36,854
Other Income (Expense):
Other expense, net								(184)
Interest expense, net								(78,322)
Loss from continuing operations before income     taxes, equity in affiliates								(41,652)
Income tax benefit								(12,523)
Loss from continuing operations before equity in     affiliates								(29,129)
Equity in earnings of non-consolidated affiliates								123
Loss from continuing operations								(29,006)
Loss from discontinuing operations attributable to       MDC Partners Inc., net of taxes								(1,836)
Net loss								(30,842)
Net income attributable to the noncontrolling     interests		(2,107)		(393)		—		(2,500)
Net loss attributable to MDC Partners Inc.							$	(33,342)
Non cash stock based compensation	$	2,980	$	1,859	$	4,416	$	9,255
Supplemental Segment Information:
Capital expenditures	$	5,610	$	3,381	$	620	$	9,611
Goodwill and intangibles	$	526,491	$	244,709	$	—	$	771,200
Total assets	$	812,078	$	381,921	$	195,444	$	1,389,443

   

 

Six Months Ended June 30, 2012

(thousands of United States dollars)

	Strategic Marketing Services		Performance Marketing Services		Corporate		Total
Revenue	$	343,846	$	164,812	$	—	$	508,658
Cost of services sold		241,838		121,828		—		363,666
Office and general expenses		74,197		34,748		24,908		133,853
Depreciation and amortization		13,925		9,017		677		23,619
Operating Profit (Loss)		13,886		(781)		(25,585)		(12,480)
Other Income (Expense):
Other expense, net								(809)
Interest expense, net								(22,713)
Loss from continuing operations before income     taxes, equity in affiliates								(36,002)
Income tax expense								3,807
Loss from continuing operations before equity     in affiliates								(39,809)
Equity in earnings of non-consolidated affiliates								306
Loss from continuing operations								(39,503)
Loss from discontinuing operations attributable to     MDC Partners Inc., net of taxes								(3,585)
Net loss								(43,088)
Net income attributable to the noncontrolling     interests		(2,453)		(854)		—		(3,307)
Net loss attributable to MDC Partners Inc.							$	(46,395)
Non cash stock based compensation	$	3,833	$	3,578	$	13,826	$	21,237
Supplemental Segment Information:
Capital expenditures	$	5,134	$	4,221	$	187	$	9,542
Goodwill and intangibles	$	543,134	$	258,868	$	—	$	802,002
Total assets	$	835,564	$	429,899	$	127,974	$	1,393,437

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,
2013	$	238,291	$	34,199	$	15,647	$	288,137
2012	$	222,918	$	38,284	$	12,304	$	273,506
Six Months Ended June 30,
2013	$	458,948	$	66,483	$	29,720	$	555,151
2012	$	410,279	$	74,722	$	23,657	$	508,658