We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type |
---|---|---|---|
MDC Partners Inc | NASDAQ:MDCA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.42 | 5.36 | 5.45 | 0 | 01:00:00 |
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Canada
|
|
98-0364441
|
(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer Identification No.)
|
|
|
|
745 Fifth Avenue
New York, New York
|
|
10151
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated Filer
x
|
Accelerated filer
¨
|
Non-accelerated Filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
Emerging growth company
¨
|
|
|
|
Page
|
|
PART I. FINANCIAL INFORMATION
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
|
PART II. OTHER INFORMATION
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Revenue:
|
|
|
|
||||
Services
|
$
|
344,700
|
|
|
$
|
309,042
|
|
Operating expenses:
|
|
|
|
||||
Cost of services sold
|
237,563
|
|
|
211,446
|
|
||
Office and general expenses
|
87,840
|
|
|
77,828
|
|
||
Depreciation and amortization
|
10,898
|
|
|
11,220
|
|
||
|
336,301
|
|
|
300,494
|
|
||
Operating profit
|
8,399
|
|
|
8,548
|
|
||
Other income (expense):
|
|
|
|
||||
Other, net
|
2,567
|
|
|
15,512
|
|
||
Interest expense and finance charges
|
(16,768
|
)
|
|
(15,575
|
)
|
||
Loss on redemption of notes
|
—
|
|
|
(33,298
|
)
|
||
Interest income
|
227
|
|
|
178
|
|
||
|
(13,974
|
)
|
|
(33,183
|
)
|
||
Loss before income taxes and equity in earnings of non-consolidated affiliates
|
(5,575
|
)
|
|
(24,635
|
)
|
||
Income tax expense (benefit)
|
3,969
|
|
|
(1,633
|
)
|
||
Loss before equity in earnings of non-consolidated affiliates
|
(9,544
|
)
|
|
(23,002
|
)
|
||
Equity in earnings (losses) of non-consolidated affiliates
|
(139
|
)
|
|
229
|
|
||
Net loss
|
(9,683
|
)
|
|
(22,773
|
)
|
||
Net income attributable to the noncontrolling interests
|
(883
|
)
|
|
(859
|
)
|
||
Net loss attributable to MDC Partners Inc.
|
(10,566
|
)
|
|
(23,632
|
)
|
||
Accretion on convertible preference shares
|
(507
|
)
|
|
—
|
|
||
Net loss attributable to MDC Partners Inc. common shareholders
|
$
|
(11,073
|
)
|
|
$
|
(23,632
|
)
|
|
|
|
|
||||
Loss per common share
|
|
|
|
||||
Basic and diluted
|
|
|
|
|
|||
Net loss attributable to MDC Partners Inc. common shareholders
|
$
|
(0.21
|
)
|
|
$
|
(0.47
|
)
|
|
|
|
|
||||
Weighted average number of common shares outstanding:
|
|
|
|
||||
Basic and diluted
|
52,998,244
|
|
|
50,002,552
|
|
||
|
|
|
|
||||
Stock-based compensation expense is included in the following line items above:
|
|
|
|
||||
Cost of services sold
|
$
|
3,511
|
|
|
$
|
3,136
|
|
Office and general expenses
|
1,439
|
|
|
1,549
|
|
||
Total
|
$
|
4,950
|
|
|
$
|
4,685
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Comprehensive loss
|
|
|
|
|
||||
Net loss
|
|
$
|
(9,683
|
)
|
|
$
|
(22,773
|
)
|
|
|
|
|
|
||||
Other comprehensive income (loss), net of applicable tax:
|
|
|
|
|
||||
Foreign currency translation adjustment
|
|
68
|
|
|
(8,825
|
)
|
||
Other comprehensive income (loss)
|
|
68
|
|
|
(8,825
|
)
|
||
Comprehensive loss for the period
|
|
(9,615
|
)
|
|
(31,598
|
)
|
||
Comprehensive income attributable to the noncontrolling interests
|
|
(1,148
|
)
|
|
(2,515
|
)
|
||
Comprehensive loss attributable to MDC Partners Inc.
|
|
$
|
(10,763
|
)
|
|
$
|
(34,113
|
)
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
23,186
|
|
|
$
|
27,921
|
|
Cash held in trusts
|
5,377
|
|
|
5,341
|
|
||
Accounts receivable, less allowance for doubtful accounts of $1,682 and $1,523
|
428,195
|
|
|
388,340
|
|
||
Expenditures billable to clients
|
37,071
|
|
|
33,118
|
|
||
Other current assets
|
38,606
|
|
|
34,862
|
|
||
Total current assets
|
532,435
|
|
|
489,582
|
|
||
Fixed assets, at cost, less accumulated depreciation of $109,667 and $105,134
|
82,228
|
|
|
78,377
|
|
||
Investments in non-consolidated affiliates
|
4,606
|
|
|
4,745
|
|
||
Goodwill
|
846,124
|
|
|
844,759
|
|
||
Other intangible assets, net
|
80,968
|
|
|
85,071
|
|
||
Deferred tax assets
|
41,539
|
|
|
41,793
|
|
||
Other assets
|
38,753
|
|
|
33,051
|
|
||
Total assets
|
$
|
1,626,653
|
|
|
$
|
1,577,378
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS’ DEFICIT
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
252,146
|
|
|
$
|
251,456
|
|
Trust liability
|
5,377
|
|
|
5,341
|
|
||
Accruals and other liabilities
|
294,341
|
|
|
303,581
|
|
||
Advance billings
|
148,679
|
|
|
133,925
|
|
||
Current portion of long-term debt
|
260
|
|
|
228
|
|
||
Current portion of deferred acquisition consideration
|
111,612
|
|
|
108,290
|
|
||
Total current liabilities
|
812,415
|
|
|
802,821
|
|
||
Long-term debt, less current portion
|
887,270
|
|
|
936,208
|
|
||
Long-term portion of deferred acquisition consideration
|
123,758
|
|
|
121,274
|
|
||
Other liabilities
|
54,611
|
|
|
56,012
|
|
||
Deferred tax liabilities
|
112,318
|
|
|
110,359
|
|
||
Total liabilities
|
1,990,372
|
|
|
2,026,674
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests (Note 2)
|
60,383
|
|
|
60,180
|
|
||
Commitments, contingencies, and guarantees (Note 12)
|
|
|
|
|
|
||
Shareholders’ deficit:
|
|
|
|
|
|
||
Convertible preference shares (liquidation preference $95,507)
|
90,220
|
|
|
—
|
|
||
Common shares
|
323,023
|
|
|
317,784
|
|
||
Shares to be issued, 100,000 shares in 2016
|
—
|
|
|
2,360
|
|
||
Charges in excess of capital
|
(308,808
|
)
|
|
(311,581
|
)
|
||
Accumulated deficit
|
(592,414
|
)
|
|
(581,848
|
)
|
||
Accumulated other comprehensive loss
|
(2,021
|
)
|
|
(1,824
|
)
|
||
MDC Partners Inc. shareholders’ deficit
|
(490,000
|
)
|
|
(575,109
|
)
|
||
Noncontrolling interests
|
65,898
|
|
|
65,633
|
|
||
Total shareholders’ deficit
|
(424,102
|
)
|
|
(509,476
|
)
|
||
Total liabilities, redeemable noncontrolling interests, and shareholders’ deficit
|
$
|
1,626,653
|
|
|
$
|
1,577,378
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net loss
|
$
|
(9,683
|
)
|
|
$
|
(22,773
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
|
|
||
Stock-based compensation
|
4,950
|
|
|
4,685
|
|
||
Depreciation
|
5,600
|
|
|
5,028
|
|
||
Amortization of intangibles
|
5,298
|
|
|
6,192
|
|
||
Amortization of deferred finance charges
|
742
|
|
|
7,021
|
|
||
Loss on redemption of notes
|
—
|
|
|
26,873
|
|
||
Adjustment to deferred acquisition consideration
|
11,460
|
|
|
6,440
|
|
||
Deferred income tax
|
1,906
|
|
|
(1,927
|
)
|
||
Loss on sale of assets
|
21
|
|
|
—
|
|
||
Losses (earnings) of non-consolidated affiliates
|
139
|
|
|
(229
|
)
|
||
Other non-current assets and liabilities
|
(5,658
|
)
|
|
(1,482
|
)
|
||
Foreign exchange
|
(1,370
|
)
|
|
(14,134
|
)
|
||
Changes in working capital:
|
|
|
|
||||
Accounts receivable
|
(39,855
|
)
|
|
(31,586
|
)
|
||
Expenditures billable to clients
|
(3,953
|
)
|
|
21,692
|
|
||
Prepaid expenses and other current assets
|
(4,270
|
)
|
|
(13,030
|
)
|
||
Accounts payable, accruals and other liabilities
|
(10,757
|
)
|
|
(132,202
|
)
|
||
Advance billings
|
14,754
|
|
|
17,016
|
|
||
Net cash used in operating activities
|
(30,676
|
)
|
|
(122,416
|
)
|
||
Cash flows used in investing activities:
|
|
|
|
|
|
||
Capital expenditures
|
(9,413
|
)
|
|
(5,539
|
)
|
||
Deposits
|
(1,627
|
)
|
|
—
|
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(1,774
|
)
|
||
Other investments
|
(50
|
)
|
|
(815
|
)
|
||
Net cash used in investing activities
|
(11,090
|
)
|
|
(8,128
|
)
|
||
Cash flows provided by financing activities:
|
|
|
|
|
|
||
Proceeds from issuance of 6.50% Notes
|
—
|
|
|
900,000
|
|
||
Repayment of 6.75% Notes
|
—
|
|
|
(735,000
|
)
|
||
Repayments of revolving credit agreement
|
(381,500
|
)
|
|
(217,208
|
)
|
||
Proceeds from revolving credit agreement
|
331,961
|
|
|
234,187
|
|
||
Proceeds from issuance of convertible preference shares
|
95,000
|
|
|
—
|
|
||
Convertible preference shares issuance costs
|
(510
|
)
|
|
—
|
|
||
Acquisition related payments
|
(5,183
|
)
|
|
(30,479
|
)
|
||
Repayment of long-term debt
|
(135
|
)
|
|
(156
|
)
|
||
Purchase of shares
|
(51
|
)
|
|
(902
|
)
|
||
Premium paid on redemption of notes
|
—
|
|
|
(26,873
|
)
|
||
Deferred financing costs
|
—
|
|
|
(18,091
|
)
|
||
Distributions to noncontrolling interests
|
(2,471
|
)
|
|
(2,399
|
)
|
||
Payment of dividends
|
(22
|
)
|
|
(10,636
|
)
|
||
Net cash provided by financing activities
|
37,089
|
|
|
92,443
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(58
|
)
|
|
(1,517
|
)
|
||
Decrease in cash and cash equivalents
|
(4,735
|
)
|
|
(39,618
|
)
|
||
Cash and cash equivalents at beginning of period
|
27,921
|
|
|
61,458
|
|
||
Cash and cash equivalents at end of period
|
$
|
23,186
|
|
|
$
|
21,840
|
|
|
|
|
|
||||
Supplemental disclosures:
|
|
|
|
|
|
||
Cash income taxes paid
|
$
|
1,293
|
|
|
$
|
143
|
|
Cash interest paid
|
$
|
999
|
|
|
$
|
25,703
|
|
Change in cash held in trusts
|
$
|
36
|
|
|
$
|
208
|
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
|
|
||
Capital leases
|
$
|
393
|
|
|
$
|
156
|
|
Dividends payable
|
$
|
716
|
|
|
$
|
1,115
|
|
Deferred acquisition consideration settled through issuance of shares
|
$
|
5,028
|
|
|
$
|
—
|
|
Convertible preference shares issuance costs payable
|
$
|
4,270
|
|
|
$
|
—
|
|
|
Convertible Preference Shares
|
|
Common Shares
|
|
Share Capital to Be Issued
|
|
Additional
Paid-in Capital
|
|
Charges in
Excess of
Capital
|
|
Accumulated
Deficit
|
|
Accumulated Other
Comprehensive
Loss
|
|
MDC Partners Inc.
Shareholders’
Deficit
|
|
Noncontrolling
Interests
|
|
Total
Shareholders’ Deficit |
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Balance at December 31, 2016
|
—
|
|
|
$
|
—
|
|
|
52,802,058
|
|
|
$
|
317,784
|
|
|
100,000
|
|
|
$
|
2,360
|
|
|
$
|
—
|
|
|
$
|
(311,581
|
)
|
|
$
|
(581,848
|
)
|
|
$
|
(1,824
|
)
|
|
$
|
(575,109
|
)
|
|
$
|
65,633
|
|
|
$
|
(509,476
|
)
|
Net loss attributable to MDC Partners Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,566
|
)
|
|
—
|
|
|
(10,566
|
)
|
|
—
|
|
|
(10,566
|
)
|
||||||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(197
|
)
|
|
(197
|
)
|
|
265
|
|
|
68
|
|
||||||||||
Issuance of Series 4 convertible preference shares in private placement
|
95,000
|
|
|
90,220
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,220
|
|
|
—
|
|
|
90,220
|
|
||||||||||
Issuance of restricted stock
|
—
|
|
|
—
|
|
|
17,000
|
|
|
262
|
|
|
—
|
|
|
—
|
|
|
(262
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Shares acquired and canceled
|
—
|
|
|
—
|
|
|
(5,548
|
)
|
|
(51
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
(51
|
)
|
||||||||||
Deferred acquisition consideration settled through issuance of shares
|
—
|
|
|
—
|
|
|
568,182
|
|
|
5,028
|
|
|
(100,000
|
)
|
|
(2,360
|
)
|
|
1,485
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,153
|
|
|
—
|
|
|
4,153
|
|
||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,682
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,682
|
|
|
—
|
|
|
1,682
|
|
||||||||||
Changes in redemption value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(195
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(195
|
)
|
|
|
|
(195
|
)
|
|||||||||||
Decrease in noncontrolling interests and redeemable noncontrolling interests from business acquisitions and step-up transactions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
63
|
|
||||||||||
Transfer to charges in excess of capital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,773
|
)
|
|
2,773
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Balance at March 31, 2017
|
95,000
|
|
|
$
|
90,220
|
|
|
53,381,692
|
|
|
$
|
323,023
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(308,808
|
)
|
|
$
|
(592,414
|
)
|
|
$
|
(2,021
|
)
|
|
$
|
(490,000
|
)
|
|
$
|
65,898
|
|
|
$
|
(424,102
|
)
|
•
|
Level 1 - Quoted prices for identical instruments in active markets.
|
•
|
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations where inputs are observable or where significant value drivers are observable.
|
•
|
Level 3 - Instruments where significant value drivers are unobservable to third parties.
|
|
Three Months Ended March 31, 2017
|
|
Year Ended December 31, 2016
|
||||
Beginning Balance
|
$
|
60,180
|
|
|
$
|
69,471
|
|
Redemptions
|
(63
|
)
|
|
(1,708
|
)
|
||
Additions
(1)
|
—
|
|
|
2,274
|
|
||
Changes in redemption value
|
195
|
|
|
(9,604
|
)
|
||
Currency translation adjustments
|
71
|
|
|
(253
|
)
|
||
Ending Balance
|
$
|
60,383
|
|
|
$
|
60,180
|
|
(1)
|
Additions consist of transfers from noncontrolling interests related to step-up transactions and new acquisitions.
|
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Numerator
|
|
|
|
||||
Net loss attributable to MDC Partners Inc.
|
$
|
(10,566
|
)
|
|
$
|
(23,632
|
)
|
Accretion on convertible preference shares
|
(507
|
)
|
|
—
|
|
||
Numerator for basic loss per common share - Net loss attributable to MDC Partners Inc. common shareholders
|
(11,073
|
)
|
|
(23,632
|
)
|
||
Effect of dilutive securities:
|
—
|
|
|
—
|
|
||
Numerator for diluted loss per common share- Net loss attributable to MDC Partners Inc. common shareholders
|
$
|
(11,073
|
)
|
|
$
|
(23,632
|
)
|
Denominator
|
|
|
|
||||
Denominator for basic loss per common share - weighted average common shares
|
52,998,244
|
|
|
50,002,552
|
|
||
Effect of dilutive securities:
|
—
|
|
|
—
|
|
||
Denominator for diluted loss per common share - adjusted weighted shares and assumed conversions
|
52,998,244
|
|
|
50,002,552
|
|
||
Basic loss per common share
|
$
|
(0.21
|
)
|
|
$
|
(0.47
|
)
|
Diluted loss per common share
|
$
|
(0.21
|
)
|
|
$
|
(0.47
|
)
|
|
Noncontrolling
Interests |
||
Balance, December 31, 2015
|
$
|
5,473
|
|
Income attributable to noncontrolling interests
|
5,218
|
|
|
Distributions made
|
(7,772
|
)
|
|
Other
(1)
|
1,235
|
|
|
Balance, December 31, 2016
|
$
|
4,154
|
|
Income attributable to noncontrolling interests
|
883
|
|
|
Distributions made
|
(2,471
|
)
|
|
Other
(1)
|
27
|
|
|
Balance, March 31, 2017
|
$
|
2,593
|
|
(1)
|
Other consists primarily of business acquisitions, sale of a business, step-up transactions, and cumulative translation adjustments.
|
|
March 31,
2017 |
|
December 31, 2016
|
||||
Revolving credit agreement
|
$
|
4,886
|
|
|
$
|
54,425
|
|
6.50% Notes due 2024
|
900,000
|
|
|
900,000
|
|
||
Debt issuance costs
|
(18,039
|
)
|
|
(18,420
|
)
|
||
|
886,847
|
|
|
936,005
|
|
||
Obligations under capital leases
|
683
|
|
|
431
|
|
||
|
887,530
|
|
|
936,436
|
|
||
Less: Current portion of long-term debt
|
260
|
|
|
228
|
|
||
|
$
|
887,270
|
|
|
$
|
936,208
|
|
•
|
Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
|
•
|
Level 2 - Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
|
•
|
Level 3 - Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
|
|
Fair Value Measurements Using Significant Unobservable Inputs
(Level 3) |
||||||
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Beginning balance of contingent payments
|
$
|
224,754
|
|
|
$
|
306,734
|
|
Payments
(1)
|
(6,745
|
)
|
|
(105,169
|
)
|
||
Additions
(2)
|
—
|
|
|
16,132
|
|
||
Redemption value adjustments
(3)
|
12,671
|
|
|
13,930
|
|
||
Other
(4)
|
—
|
|
|
(6,412
|
)
|
||
Foreign translation adjustment
|
390
|
|
|
(461
|
)
|
||
Ending balance of contingent payments
|
$
|
231,070
|
|
|
$
|
224,754
|
|
(1)
|
For the
three months ended March 31, 2017
and the year ended
December 31, 2016
, payments include
$5,028
and
$10,458
, respectively, of deferred acquisition consideration settled through the issuance of
568,182
and
691,559
, respectively, MDC Class A subordinate voting shares in lieu of cash.
|
(2)
|
Additions are the initial estimated deferred acquisition payments of new acquisitions and step-up transactions completed within that fiscal period.
|
(3)
|
Redemption value adjustments are fair value changes from the Company’s initial estimates of deferred acquisition payments, including the accretion of present value and stock-based compensation charges relating to acquisition payments that are tied to continued employment.
|
(4)
|
For the year ended
December 31, 2016
, other is comprised of (i)
$2,360
transfered to shares to be issued related to
100,000
MDC Class A subordinate voting shares to be issued contingent on specific thresholds of future earnings that management expects to be attained; and (ii)
$4,052
of contingent payments eliminated through the acquisition of incremental ownership interests, see Note
4
.
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Other income
|
$
|
128
|
|
|
$
|
58
|
|
Foreign currency transaction gain
|
2,439
|
|
|
15,454
|
|
||
|
$
|
2,567
|
|
|
$
|
15,512
|
|
•
|
The
Global Integrated Agencies
reportable segment is comprised of the Company’s six global, integrated Partner Firms with broad marketing communication capabilities, including advertising, branding, digital, social media, design and production services, serving multinational clients around the world. Each Partner Firm within this segment represents an
|
•
|
The
Domestic Creative Agencies
reportable segment is comprised of four Partner Firms that are national advertising agencies leveraging creative capabilities at their core. Each Partner Firm within this segment represents an operating segment which includes Colle + McVoy, Laird+Partners, Mono Advertising and Union. These Partner Firms share similar characteristics related to (i) the nature of their creative advertising services; (ii) the type of domestic client accounts and the methods used to provide services; and (iii) the extent to which they may be impacted by domestic economic and policy factors within North America. In addition, these Partner Firms compete with each other for new business and often have business move between them. The Company believes the expected average long-term profitability is similar among the Partner Firms aggregated in the Domestic Creative Agencies segment.
|
•
|
The
Specialist Communications
reportable segment is comprised of seven Partner Firms that are each communications agencies with core service offerings in public relations and related communications services. Each Partner Firm within this segment represents an operating segment which includes Allison & Partners, Hunter PR, HL Group Partners, Kwittken, Luntz Global, Sloane & Company and Veritas. These Partner Firms share similar characteristics related to (i) the nature of their public relations and communication services, including content creation, social media and influencer marketing; (ii) the type of client accounts and the methods used to provide services; (iii) the extent to which they may be impacted by domestic economic and policy factors within North America; and (iv) the regulatory environment regarding public relations and social media. In addition, these Partner Firms compete with each other for new business and often have business move between them. The Company believes the expected average long-term profitability is similar among the Partner Firms aggregated in the Specialist Communications segment.
|
•
|
The
Media Services
reportable segment is comprised of a unique single operating segment known as MDC Media Partners. MDC Media Partners is comprised of the Company’s network of stand-alone agencies with media buying and planning as their core competency, including the integrated platform Assembly. The agencies within this single operating segment share a Chief Executive Officer and Chief Financial Officer, who have operational oversight of these agencies. These agencies provide other services, including influencer marketing, content, insights & analytics, out-of-home, paid search, social media, lead generation, programmatic, artificial intelligence, and corporate barter. MDC Media Partners operates primarily in North America.
|
•
|
All Other
consists of the Company’s remaining Partner Firms that provide a range of diverse marketing communication services, but generally do not have similar services offerings or financial characteristics as those aggregated in the reportable segments. Each Partner Firm within the All Other category represents an operating segment which includes 6Degrees, Bruce Mau Design, Concentric Partners, Civilian, Gale Partners, Hello Design, Kenna, Kingsdale, Northstar Research Partners, Redscout, Relevent, Source Marketing, Team, Vitro, Yamamoto and Y Media Labs. The nature of the specialist services provided by these Partner Firms varies among each other and from those Partner Firms aggregated into the reportable segments. This results in these Partner Firms having current and long-term performance expectations inconsistent with those Partner Firms aggregated in the reportable segments.
|
•
|
Corporate
consists of corporate office expenses incurred in connection with the strategic resources provided to the Partner Firms, as well as certain other centrally managed expenses that are not fully allocated to the Partner Firms. These office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the Partner Firms, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, and (iv) 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 appropriate reportable segment and the All Other category.
|
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Revenue:
|
|
|
|
||||
Global Integrated Agencies
|
$
|
176,723
|
|
|
$
|
150,512
|
|
Domestic Creative Agencies
|
20,910
|
|
|
21,627
|
|
||
Specialist Communications
|
40,684
|
|
|
39,907
|
|
||
Media Services
|
35,244
|
|
|
30,827
|
|
||
All Other
|
71,139
|
|
|
66,169
|
|
||
Corporate
|
—
|
|
|
—
|
|
||
Total
|
$
|
344,700
|
|
|
$
|
309,042
|
|
|
|
|
|
||||
Segment operating income (loss):
|
|
|
|
||||
Global Integrated Agencies
|
$
|
(30
|
)
|
|
$
|
10,375
|
|
Domestic Creative Agencies
|
3,523
|
|
|
4,562
|
|
||
Specialist Communications
|
4,335
|
|
|
2,333
|
|
||
Media Services
|
2,642
|
|
|
1,290
|
|
||
All Other
|
6,498
|
|
|
3,118
|
|
||
Corporate
|
(8,569
|
)
|
|
(13,130
|
)
|
||
Total
|
$
|
8,399
|
|
|
$
|
8,548
|
|
|
|
|
|
||||
Other income (expense):
|
|
|
|
||||
Other income, net
|
2,567
|
|
|
15,512
|
|
||
Interest expense and finance charges, net
|
(16,541
|
)
|
|
(15,397
|
)
|
||
Loss on redemption of notes
|
—
|
|
|
(33,298
|
)
|
||
Loss before income taxes and equity in earnings of non-consolidated affiliates
|
(5,575
|
)
|
|
(24,635
|
)
|
||
Income tax expense (benefit)
|
3,969
|
|
|
(1,633
|
)
|
||
Loss before equity in earnings of non-consolidated affiliates
|
(9,544
|
)
|
|
(23,002
|
)
|
||
Equity in earnings (losses) of non-consolidated affiliates
|
(139
|
)
|
|
229
|
|
||
Net loss
|
(9,683
|
)
|
|
(22,773
|
)
|
||
Net income attributable to the noncontrolling interests
|
(883
|
)
|
|
(859
|
)
|
||
Net loss attributable to MDC Partners Inc.
|
$
|
(10,566
|
)
|
|
$
|
(23,632
|
)
|
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Depreciation and amortization:
|
|
|
|
||||
Global Integrated Agencies
|
$
|
5,952
|
|
|
$
|
4,404
|
|
Domestic Creative Agencies
|
$
|
360
|
|
|
$
|
442
|
|
Specialist Communications
|
$
|
1,216
|
|
|
$
|
2,457
|
|
Media Services
|
$
|
1,005
|
|
|
$
|
1,042
|
|
All Other
|
$
|
2,056
|
|
|
$
|
2,478
|
|
Corporate
|
$
|
309
|
|
|
$
|
397
|
|
Total
|
$
|
10,898
|
|
|
$
|
11,220
|
|
|
|
|
|
||||
Stock-based compensation:
|
|
|
|
||||
Global Integrated Agencies
|
$
|
2,979
|
|
|
$
|
2,412
|
|
Domestic Creative Agencies
|
$
|
155
|
|
|
$
|
190
|
|
Specialist Communications
|
$
|
518
|
|
|
$
|
384
|
|
Media Services
|
$
|
160
|
|
|
$
|
58
|
|
All Other
|
$
|
534
|
|
|
$
|
837
|
|
Corporate
|
$
|
604
|
|
|
$
|
804
|
|
Total
|
$
|
4,950
|
|
|
$
|
4,685
|
|
|
|
|
|
||||
Capital expenditures:
|
|
|
|
||||
Global Integrated Agencies
|
$
|
6,899
|
|
|
$
|
3,314
|
|
Domestic Creative Agencies
|
$
|
286
|
|
|
$
|
236
|
|
Specialist Communications
|
$
|
291
|
|
|
$
|
747
|
|
Media Services
|
$
|
1,014
|
|
|
$
|
288
|
|
All Other
|
$
|
922
|
|
|
$
|
926
|
|
Corporate
|
$
|
1
|
|
|
$
|
28
|
|
Total
|
$
|
9,413
|
|
|
$
|
5,539
|
|
|
United
States |
|
Canada
|
|
Other
|
|
Total
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
||||
2017
|
$
|
274,682
|
|
|
$
|
26,470
|
|
|
$
|
43,548
|
|
|
$
|
344,700
|
|
2016
|
$
|
252,199
|
|
|
$
|
28,406
|
|
|
$
|
28,437
|
|
|
$
|
309,042
|
|
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Revenue:
|
|
|
|
||||
Global Integrated Agencies
|
$
|
176,723
|
|
|
$
|
150,512
|
|
Domestic Creative Agencies
|
20,910
|
|
|
21,627
|
|
||
Specialist Communications
|
40,684
|
|
|
39,907
|
|
||
Media Services
|
35,244
|
|
|
30,827
|
|
||
All Other
|
71,139
|
|
|
66,169
|
|
||
Corporate
|
—
|
|
|
—
|
|
||
Total
|
$
|
344,700
|
|
|
$
|
309,042
|
|
|
|
|
|
||||
Segment operating income (loss):
|
|
|
|
||||
Global Integrated Agencies
|
$
|
(30
|
)
|
|
$
|
10,375
|
|
Domestic Creative Agencies
|
3,523
|
|
|
4,562
|
|
||
Specialist Communications
|
4,335
|
|
|
2,333
|
|
||
Media Services
|
2,642
|
|
|
1,290
|
|
||
All Other
|
6,498
|
|
|
3,118
|
|
||
Corporate
|
(8,569
|
)
|
|
(13,130
|
)
|
||
Total
|
$
|
8,399
|
|
|
$
|
8,548
|
|
|
|
|
|
||||
Other income (expense):
|
|
|
|
||||
Other income, net
|
$
|
2,567
|
|
|
$
|
15,512
|
|
Interest expense and finance charges, net
|
(16,541
|
)
|
|
(15,397
|
)
|
||
Loss on redemption of notes
|
—
|
|
|
(33,298
|
)
|
||
Loss before income taxes and equity in earnings of non-consolidated affiliates
|
(5,575
|
)
|
|
(24,635
|
)
|
||
Income tax expense (benefit)
|
3,969
|
|
|
(1,633
|
)
|
||
Loss before equity in earnings of non-consolidated affiliates
|
(9,544
|
)
|
|
(23,002
|
)
|
||
Equity in earnings (losses) of non-consolidated affiliates
|
(139
|
)
|
|
229
|
|
||
Net loss
|
(9,683
|
)
|
|
(22,773
|
)
|
||
Net income attributable to the noncontrolling interests
|
(883
|
)
|
|
(859
|
)
|
||
Net loss attributable to MDC Partners Inc.
|
$
|
(10,566
|
)
|
|
$
|
(23,632
|
)
|
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
Depreciation and amortization:
|
|
|
|
||||
Global Integrated Agencies
|
$
|
5,952
|
|
|
$
|
4,404
|
|
Domestic Creative Agencies
|
360
|
|
|
442
|
|
||
Specialist Communications
|
1,216
|
|
|
2,457
|
|
||
Media Services
|
1,005
|
|
|
1,042
|
|
||
All Other
|
2,056
|
|
|
2,478
|
|
||
Corporate
|
309
|
|
|
397
|
|
||
Total
|
$
|
10,898
|
|
|
$
|
11,220
|
|
|
|
|
|
||||
Stock-based compensation:
|
|
|
|
||||
Global Integrated Agencies
|
$
|
2,979
|
|
|
$
|
2,412
|
|
Domestic Creative Agencies
|
155
|
|
|
190
|
|
||
Specialist Communications
|
518
|
|
|
384
|
|
||
Media Services
|
160
|
|
|
58
|
|
||
All Other
|
534
|
|
|
837
|
|
||
Corporate
|
604
|
|
|
804
|
|
||
Total
|
$
|
4,950
|
|
|
$
|
4,685
|
|
|
|
|
|
||||
Capital expenditures:
|
|
|
|
||||
Global Integrated Agencies
|
$
|
6,899
|
|
|
$
|
3,314
|
|
Domestic Creative Agencies
|
286
|
|
|
236
|
|
||
Specialist Communications
|
291
|
|
|
747
|
|
||
Media Services
|
1,014
|
|
|
288
|
|
||
All Other
|
922
|
|
|
926
|
|
||
Corporate
|
1
|
|
|
28
|
|
||
Total
|
$
|
9,413
|
|
|
$
|
5,539
|
|
|
|
|
|
2017 Non-GAAP Activity
|
|
|
|
Change
|
||||||||||||||||||||||||
Advertising and Communications
Group |
|
2016 Revenue
|
|
Foreign
Exchange |
|
Non-GAAP Acquisitions
(Dispositions), net |
|
Organic
Revenue Growth (Decline) |
|
2017 Revenue
|
|
Foreign
Exchange |
|
Non-GAAP Acquisitions
(Dispositions), net |
|
Organic
Revenue Growth (Decline) |
|
Total
Revenue |
||||||||||||||
|
|
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
United States
|
|
$
|
252.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22.5
|
|
|
$
|
274.7
|
|
|
—
|
%
|
|
—
|
%
|
|
8.9
|
%
|
|
8.9
|
%
|
Canada
|
|
28.4
|
|
|
0.9
|
|
|
(0.7
|
)
|
|
(2.2
|
)
|
|
26.5
|
|
|
3.2
|
%
|
|
(2.4
|
)%
|
|
(7.6
|
)%
|
|
(6.8
|
)%
|
|||||
Other
|
|
28.4
|
|
|
(2.8
|
)
|
|
21.1
|
|
|
(3.2
|
)
|
|
43.5
|
|
|
(9.8
|
)%
|
|
74.1
|
%
|
|
(11.1
|
)%
|
|
53.1
|
%
|
|||||
Total
|
|
$
|
309.0
|
|
|
$
|
(1.9
|
)
|
|
$
|
20.4
|
|
|
$
|
17.2
|
|
|
$
|
344.7
|
|
|
(0.6
|
)%
|
|
6.6
|
%
|
|
5.6
|
%
|
|
11.5
|
%
|
|
Global Integrated Agencies
|
|
All Other
|
|
Total
|
||||||
|
(Dollars in Millions)
|
||||||||||
Revenue from acquisitions (dispositions), net
(1)
|
$
|
18.6
|
|
|
$
|
—
|
|
|
$
|
18.6
|
|
Foreign exchange impact
|
1.0
|
|
|
—
|
|
|
1.0
|
|
|||
Contribution to organic revenue growth (decline)
(2)
|
1.5
|
|
|
—
|
|
|
1.5
|
|
|||
Prior year revenue from dispositions
|
—
|
|
|
(0.7
|
)
|
|
(0.7
|
)
|
|||
Non-GAAP acquisitions (dispositions), net
|
$
|
21.1
|
|
|
$
|
(0.7
|
)
|
|
$
|
20.4
|
|
(1)
|
For the
three months ended March 31, 2017
, revenue from acquisitions was comprised of
$18.6 million
from acquisitions completed in 2016.
|
(2)
|
Contributions to organic revenue growth (decline) represents the change in revenue, measured on a constant currency basis, relative to the comparable pre-acquisition period for acquired businesses that is included in the Company’s organic revenue growth (decline) calculation.
|
|
2017
|
|
2016
|
||
United States
|
79.7
|
%
|
|
81.6
|
%
|
Canada
|
7.7
|
%
|
|
9.2
|
%
|
Other
|
12.6
|
%
|
|
9.2
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
344.7
|
|
|
|
|
$
|
309.0
|
|
|
|
|
$
|
35.7
|
|
|
11.5
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
237.6
|
|
|
68.9
|
%
|
|
211.4
|
|
|
68.4
|
%
|
|
26.1
|
|
|
12.4
|
%
|
|||
Office and general expenses
|
|
79.6
|
|
|
23.1
|
%
|
|
65.1
|
|
|
21.1
|
%
|
|
14.5
|
|
|
22.3
|
%
|
|||
Depreciation and amortization
|
|
10.6
|
|
|
3.1
|
%
|
|
10.8
|
|
|
3.5
|
%
|
|
(0.2
|
)
|
|
(2.2
|
)%
|
|||
|
|
$
|
327.7
|
|
|
95.1
|
%
|
|
$
|
287.4
|
|
|
93.0
|
%
|
|
$
|
40.4
|
|
|
14.0
|
%
|
Operating profit
|
|
$
|
17.0
|
|
|
4.9
|
%
|
|
$
|
21.7
|
|
|
7.0
|
%
|
|
$
|
(4.7
|
)
|
|
(21.7
|
)%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
54.0
|
|
|
15.7
|
%
|
|
$
|
40.3
|
|
|
13.0
|
%
|
|
$
|
13.7
|
|
|
33.9
|
%
|
Staff costs
(2)
|
|
201.6
|
|
|
58.5
|
%
|
|
185.6
|
|
|
60.1
|
%
|
|
15.9
|
|
|
8.6
|
%
|
|||
Administrative costs
|
|
45.8
|
|
|
13.3
|
%
|
|
40.4
|
|
|
13.1
|
%
|
|
5.4
|
|
|
13.4
|
%
|
|||
Deferred acquisition consideration
|
|
11.4
|
|
|
3.3
|
%
|
|
6.3
|
|
|
2.0
|
%
|
|
5.1
|
|
|
80.7
|
%
|
|||
Stock-based compensation
|
|
4.3
|
|
|
1.3
|
%
|
|
3.9
|
|
|
1.3
|
%
|
|
0.5
|
|
|
12.0
|
%
|
|||
Depreciation and amortization
|
|
10.6
|
|
|
3.1
|
%
|
|
10.8
|
|
|
3.5
|
%
|
|
(0.2
|
)
|
|
(2.2
|
)%
|
|||
Total operating expenses
|
|
$
|
327.7
|
|
|
95.1
|
%
|
|
$
|
287.4
|
|
|
93.0
|
%
|
|
$
|
40.4
|
|
|
14.0
|
%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services sold and office and general expenses.
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
21.4
|
|
|
12.1
|
%
|
|
$
|
10.3
|
|
|
6.8
|
%
|
|
$
|
11.1
|
|
|
108.1
|
%
|
Staff costs
(2)
|
|
113.3
|
|
|
64.1
|
%
|
|
100.5
|
|
|
66.8
|
%
|
|
12.8
|
|
|
12.8
|
%
|
|||
Administrative costs
|
|
24.6
|
|
|
13.9
|
%
|
|
20.2
|
|
|
13.4
|
%
|
|
4.4
|
|
|
21.8
|
%
|
|||
Deferred acquisition consideration
|
|
8.5
|
|
|
4.8
|
%
|
|
2.3
|
|
|
1.6
|
%
|
|
6.2
|
|
|
264.5
|
%
|
|||
Stock-based compensation
|
|
3.0
|
|
|
1.7
|
%
|
|
2.4
|
|
|
1.6
|
%
|
|
0.6
|
|
|
23.6
|
%
|
|||
Depreciation and amortization
|
|
6.0
|
|
|
3.4
|
%
|
|
4.4
|
|
|
2.9
|
%
|
|
1.6
|
|
|
35.2
|
%
|
|||
Total operating expenses
|
|
$
|
176.8
|
|
|
100.0
|
%
|
|
$
|
140.1
|
|
|
93.1
|
%
|
|
$
|
36.7
|
|
|
26.1
|
%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services sold and office and general expenses.
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
20.9
|
|
|
|
|
$
|
21.6
|
|
|
|
|
$
|
(0.7
|
)
|
|
(3.3
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
11.9
|
|
|
57.0
|
%
|
|
11.9
|
|
|
55.0
|
%
|
|
—
|
|
|
0.3
|
%
|
|||
Office and general expenses
|
|
5.1
|
|
|
24.4
|
%
|
|
4.7
|
|
|
21.9
|
%
|
|
0.4
|
|
|
7.9
|
%
|
|||
Depreciation and amortization
|
|
0.4
|
|
|
1.7
|
%
|
|
0.4
|
|
|
2.0
|
%
|
|
(0.1
|
)
|
|
(18.6
|
)%
|
|||
|
|
$
|
17.4
|
|
|
83.2
|
%
|
|
$
|
17.1
|
|
|
78.9
|
%
|
|
$
|
0.3
|
|
|
1.9
|
%
|
Operating profit
|
|
$
|
3.5
|
|
|
16.8
|
%
|
|
$
|
4.6
|
|
|
21.1
|
%
|
|
$
|
(1.0
|
)
|
|
(22.8
|
)%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
0.5
|
|
|
2.5
|
%
|
|
$
|
0.5
|
|
|
2.1
|
%
|
|
$
|
0.1
|
|
|
13.4
|
%
|
Staff costs
(2)
|
|
13.4
|
|
|
64.1
|
%
|
|
13.3
|
|
|
61.7
|
%
|
|
0.1
|
|
|
0.5
|
%
|
|||
Administrative costs
|
|
2.6
|
|
|
12.4
|
%
|
|
2.5
|
|
|
11.7
|
%
|
|
0.1
|
|
|
2.8
|
%
|
|||
Deferred acquisition consideration
|
|
0.4
|
|
|
1.7
|
%
|
|
0.1
|
|
|
0.5
|
%
|
|
0.2
|
|
|
236.5
|
%
|
|||
Stock-based compensation
|
|
0.2
|
|
|
0.7
|
%
|
|
0.2
|
|
|
0.9
|
%
|
|
—
|
|
|
(18.4
|
)%
|
|||
Depreciation and amortization
|
|
0.4
|
|
|
1.7
|
%
|
|
0.4
|
|
|
2.0
|
%
|
|
(0.1
|
)
|
|
(18.6
|
)%
|
|||
Total operating expenses
|
|
$
|
17.4
|
|
|
83.2
|
%
|
|
$
|
17.1
|
|
|
78.9
|
%
|
|
$
|
0.3
|
|
|
1.9
|
%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services sold and office and general expenses.
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
40.7
|
|
|
|
|
$
|
39.9
|
|
|
|
|
$
|
0.8
|
|
|
1.9
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
27.3
|
|
|
67.0
|
%
|
|
27.3
|
|
|
68.3
|
%
|
|
—
|
|
|
—
|
%
|
|||
Office and general expenses
|
|
7.9
|
|
|
19.4
|
%
|
|
7.9
|
|
|
19.7
|
%
|
|
—
|
|
|
0.2
|
%
|
|||
Depreciation and amortization
|
|
1.2
|
|
|
3.0
|
%
|
|
2.5
|
|
|
6.2
|
%
|
|
(1.2
|
)
|
|
(50.5
|
)%
|
|||
|
|
$
|
36.3
|
|
|
89.3
|
%
|
|
$
|
37.6
|
|
|
94.2
|
%
|
|
$
|
(1.2
|
)
|
|
(3.3
|
)%
|
Operating profit
|
|
$
|
4.3
|
|
|
10.7
|
%
|
|
$
|
2.3
|
|
|
5.8
|
%
|
|
$
|
2.0
|
|
|
85.8
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
8.8
|
|
|
21.6
|
%
|
|
$
|
8.5
|
|
|
21.4
|
%
|
|
$
|
0.3
|
|
|
3.1
|
%
|
Staff costs
(2)
|
|
20.0
|
|
|
49.3
|
%
|
|
20.4
|
|
|
51.1
|
%
|
|
(0.3
|
)
|
|
(1.6
|
)%
|
|||
Administrative costs
|
|
5.4
|
|
|
13.4
|
%
|
|
5.1
|
|
|
12.9
|
%
|
|
0.3
|
|
|
6.0
|
%
|
|||
Deferred acquisition consideration
|
|
0.3
|
|
|
0.8
|
%
|
|
0.7
|
|
|
1.8
|
%
|
|
(0.4
|
)
|
|
(50.8
|
)%
|
|||
Stock-based compensation
|
|
0.5
|
|
|
1.3
|
%
|
|
0.4
|
|
|
1.0
|
%
|
|
0.1
|
|
|
34.9
|
%
|
|||
Depreciation and amortization
|
|
1.2
|
|
|
3.0
|
%
|
|
2.5
|
|
|
6.2
|
%
|
|
(1.2
|
)
|
|
(50.5
|
)%
|
|||
Total operating expenses
|
|
$
|
36.3
|
|
|
89.3
|
%
|
|
$
|
37.6
|
|
|
94.2
|
%
|
|
$
|
(1.2
|
)
|
|
(3.3
|
)%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services sold and office and general expenses.
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
35.2
|
|
|
|
|
$
|
30.8
|
|
|
|
|
$
|
4.4
|
|
|
14.3
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
22.4
|
|
|
63.6
|
%
|
|
22.9
|
|
|
74.2
|
%
|
|
(0.5
|
)
|
|
(2.0
|
)%
|
|||
Office and general expenses
|
|
9.2
|
|
|
26.1
|
%
|
|
5.6
|
|
|
18.2
|
%
|
|
3.6
|
|
|
63.5
|
%
|
|||
Depreciation and amortization
|
|
1.0
|
|
|
2.9
|
%
|
|
1.0
|
|
|
3.4
|
%
|
|
—
|
|
|
(3.6
|
)%
|
|||
|
|
$
|
32.6
|
|
|
92.5
|
%
|
|
$
|
29.5
|
|
|
95.8
|
%
|
|
$
|
3.1
|
|
|
10.4
|
%
|
Operating profit
|
|
$
|
2.6
|
|
|
7.5
|
%
|
|
$
|
1.3
|
|
|
4.2
|
%
|
|
$
|
1.4
|
|
|
104.8
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
8.0
|
|
|
22.8
|
%
|
|
$
|
8.1
|
|
|
26.2
|
%
|
|
$
|
(0.1
|
)
|
|
(0.6
|
)%
|
Staff costs
(2)
|
|
17.7
|
|
|
50.1
|
%
|
|
15.1
|
|
|
49.1
|
%
|
|
2.5
|
|
|
16.7
|
%
|
|||
Administrative costs
|
|
5.6
|
|
|
15.8
|
%
|
|
4.7
|
|
|
15.1
|
%
|
|
0.9
|
|
|
19.7
|
%
|
|||
Deferred acquisition consideration
|
|
0.2
|
|
|
0.5
|
%
|
|
0.6
|
|
|
1.8
|
%
|
|
(0.4
|
)
|
|
(70.0
|
)%
|
|||
Stock-based compensation
|
|
0.2
|
|
|
0.5
|
%
|
|
0.1
|
|
|
0.2
|
%
|
|
0.1
|
|
|
175.9
|
%
|
|||
Depreciation and amortization
|
|
1.0
|
|
|
2.9
|
%
|
|
1.0
|
|
|
3.4
|
%
|
|
—
|
|
|
(3.6
|
)%
|
|||
Total operating expenses
|
|
$
|
32.6
|
|
|
92.5
|
%
|
|
$
|
29.5
|
|
|
95.8
|
%
|
|
$
|
3.1
|
|
|
10.4
|
%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services sold and office and general expenses.
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
71.1
|
|
|
|
|
$
|
66.2
|
|
|
|
|
$
|
5.0
|
|
|
7.5
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
48.7
|
|
|
68.4
|
%
|
|
45.1
|
|
|
68.1
|
%
|
|
3.6
|
|
|
7.9
|
%
|
|||
Office and general expenses
|
|
13.9
|
|
|
19.6
|
%
|
|
15.5
|
|
|
23.4
|
%
|
|
(1.6
|
)
|
|
(10.1
|
)%
|
|||
Depreciation and amortization
|
|
2.1
|
|
|
2.9
|
%
|
|
2.5
|
|
|
3.7
|
%
|
|
(0.4
|
)
|
|
(17.0
|
)%
|
|||
|
|
$
|
64.6
|
|
|
90.9
|
%
|
|
$
|
63.1
|
|
|
95.3
|
%
|
|
$
|
1.6
|
|
|
2.5
|
%
|
Operating profit
|
|
$
|
6.5
|
|
|
9.1
|
%
|
|
$
|
3.1
|
|
|
4.7
|
%
|
|
$
|
3.4
|
|
|
108.4
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
15.3
|
|
|
21.5
|
%
|
|
$
|
13.0
|
|
|
19.6
|
%
|
|
$
|
2.3
|
|
|
17.8
|
%
|
Staff costs
(2)
|
|
37.1
|
|
|
52.2
|
%
|
|
36.3
|
|
|
54.8
|
%
|
|
0.9
|
|
|
2.4
|
%
|
|||
Administrative costs
|
|
7.6
|
|
|
10.6
|
%
|
|
7.9
|
|
|
11.9
|
%
|
|
(0.3
|
)
|
|
(3.7
|
)%
|
|||
Deferred acquisition consideration
|
|
2.1
|
|
|
2.9
|
%
|
|
2.6
|
|
|
4.0
|
%
|
|
(0.6
|
)
|
|
(21.6
|
)%
|
|||
Stock-based compensation
|
|
0.5
|
|
|
0.8
|
%
|
|
0.8
|
|
|
1.3
|
%
|
|
(0.3
|
)
|
|
(36.2
|
)%
|
|||
Depreciation and amortization
|
|
2.1
|
|
|
2.9
|
%
|
|
2.5
|
|
|
3.7
|
%
|
|
(0.4
|
)
|
|
(17.0
|
)%
|
|||
Total operating expenses
|
|
$
|
64.6
|
|
|
90.9
|
%
|
|
$
|
63.1
|
|
|
95.3
|
%
|
|
$
|
1.6
|
|
|
2.5
|
%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services sold and office and general expenses.
|
|
|
2017
|
|
2016
|
|
Variance
|
|||||||||
Corporate
|
|
$
|
|
$
|
|
$
|
|
%
|
|||||||
|
|
(Dollars in Millions)
|
|||||||||||||
Staff costs
(1)
|
|
$
|
4.2
|
|
|
$
|
6.7
|
|
|
$
|
(2.5
|
)
|
|
(37.2
|
)%
|
Administrative costs
|
|
3.4
|
|
|
5.2
|
|
|
(1.8
|
)
|
|
(34.0
|
)%
|
|||
Stock-based compensation
|
|
0.6
|
|
|
0.8
|
|
|
(0.2
|
)
|
|
(24.9
|
)%
|
|||
Depreciation and amortization
|
|
0.3
|
|
|
0.4
|
|
|
(0.1
|
)
|
|
(22.2
|
)%
|
|||
Total operating expenses
|
|
$
|
8.6
|
|
|
$
|
13.1
|
|
|
$
|
(4.6
|
)
|
|
(34.7
|
)%
|
(1)
|
Excludes stock-based compensation.
|
(amounts in $ millions)
|
As of and for the three months ended March 31, 2017
|
|
As of and for the three months ended March 31, 2016
|
|
As of and for the year ended December 31, 2016
|
||||||
Cash and cash equivalents
|
$
|
23.2
|
|
|
$
|
21.8
|
|
|
$
|
27.9
|
|
Working capital deficit
|
$
|
(280.0
|
)
|
|
$
|
(288.4
|
)
|
|
$
|
(313.2
|
)
|
Cash provided by (used in) operating activities
|
$
|
(30.7
|
)
|
|
$
|
(122.4
|
)
|
|
$
|
5.4
|
|
Cash used in investing activities
|
$
|
(11.1
|
)
|
|
$
|
(8.1
|
)
|
|
$
|
(25.2
|
)
|
Cash provided by (used in) financing activities
|
$
|
37.1
|
|
|
$
|
92.4
|
|
|
$
|
(15.9
|
)
|
Long-term debt to total equity ratio
|
(2.09
|
)
|
|
(1.71
|
)
|
|
(1.84
|
)
|
|||
Fixed charge deficiency
|
$
|
5.6
|
|
|
$
|
24.6
|
|
|
$
|
49.6
|
|
|
March 31, 2017
|
||
Total Senior Leverage Ratio
|
0.0
|
|
|
Maximum per covenant
|
2.0
|
|
|
|
|
|
|
Total Leverage Ratio
|
4.7
|
|
|
Maximum per covenant
|
5.5
|
|
|
|
|
|
|
Fixed Charges Ratio
|
3.2
|
|
|
Minimum per covenant
|
1.0
|
|
|
|
|
|
|
Earnings before interest, taxes, depreciation and amortization
|
$
|
191,870
|
|
Minimum per covenant
|
$
|
105,000
|
|
|
March 31, 2017
|
||||||||||||||||||||||
(amounts in $ millions)
|
Global Integrated Agencies
|
|
Domestic Creative Agencies
|
|
Specialist Communications
|
|
Media Services
|
|
All Other
|
|
Total
|
||||||||||||
Beginning balance of contingent payments
|
$
|
148.8
|
|
|
$
|
0.8
|
|
|
$
|
15.0
|
|
|
$
|
7.1
|
|
|
$
|
53.1
|
|
|
$
|
224.8
|
|
Payments
(1)
|
(5.0
|
)
|
|
—
|
|
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
(6.7
|
)
|
||||||
Redemption value adjustments
(3)
|
9.4
|
|
|
0.4
|
|
|
0.4
|
|
|
0.2
|
|
|
2.3
|
|
|
12.7
|
|
||||||
Foreign translation adjustment
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.4
|
|
||||||
Ending balance of contingent payments
|
153.5
|
|
|
1.1
|
|
|
13.7
|
|
|
7.3
|
|
|
55.5
|
|
|
231.1
|
|
||||||
Fixed payments
|
2.7
|
|
|
—
|
|
|
0.6
|
|
|
0.2
|
|
|
0.9
|
|
|
4.3
|
|
||||||
|
$
|
156.2
|
|
|
$
|
1.1
|
|
|
$
|
14.2
|
|
|
$
|
7.5
|
|
|
$
|
56.4
|
|
|
$
|
235.4
|
|
|
December 31, 2016
|
||||||||||||||||||||||
(amounts in $ millions)
|
Global Integrated Agencies
|
|
Domestic Creative Agencies
|
|
Specialist Communications
|
|
Media Services
|
|
All Other
|
|
Total
|
||||||||||||
Beginning balance of contingent payments
|
$
|
157.4
|
|
|
$
|
4.2
|
|
|
$
|
42.5
|
|
|
$
|
7.9
|
|
|
$
|
94.6
|
|
|
$
|
306.7
|
|
Payments
(1)
|
(36.3
|
)
|
|
(3.2
|
)
|
|
(20.5
|
)
|
|
(1.4
|
)
|
|
(43.8
|
)
|
|
(105.2
|
)
|
||||||
Additions
(2)
|
15.6
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
16.1
|
|
||||||
Redemption value adjustments
(3)
|
16.2
|
|
|
(0.3
|
)
|
|
(3.5
|
)
|
|
0.6
|
|
|
0.9
|
|
|
13.9
|
|
||||||
Other
(4)
|
(2.4
|
)
|
|
—
|
|
|
(4.1
|
)
|
|
—
|
|
|
—
|
|
|
(6.4
|
)
|
||||||
Foreign translation adjustment
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|
(0.5
|
)
|
||||||
Ending balance of contingent payments
|
148.8
|
|
|
0.8
|
|
|
15.0
|
|
|
7.1
|
|
|
53.1
|
|
|
224.8
|
|
||||||
Fixed payments
|
2.9
|
|
|
—
|
|
|
0.6
|
|
|
0.3
|
|
|
1.0
|
|
|
4.8
|
|
||||||
|
$
|
151.7
|
|
|
$
|
0.8
|
|
|
$
|
15.5
|
|
|
$
|
7.5
|
|
|
$
|
54.1
|
|
|
$
|
229.6
|
|
(1)
|
For the
three months ended March 31, 2017
and the year ended
December 31, 2016
, payments include
$5.0 million
and
$10.5 million
, respectively, of deferred acquisition consideration settled through the issuance of
568,182
and
691,559
, respectively, MDC Class A subordinate voting shares in lieu of cash.
|
(2)
|
Additions are the initial estimated deferred acquisition payments of new acquisitions and step-up transactions completed within that fiscal period.
|
(3)
|
Redemption value adjustments are fair value changes from the Company’s initial estimates of deferred acquisition payments, including the accretion of present value and stock-based compensation charges relating to acquisition payments that are tied to continued employment.
|
(4)
|
For the year ended
December 31, 2016
, other is comprised of (i)
$2.4 million
transfered to shares to be issued related to
100,000
MDC Class A subordinate voting shares to be issued contingent on specific thresholds of future earnings that management expects to be attained; and (ii)
$4.1 million
of contingent payments eliminated through the acquisition of incremental ownership interests.
|
Consideration
(4)
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021 &
Thereafter
|
|
Total
|
|
||||||||||||
|
|
(Dollars in Millions)
|
|
||||||||||||||||||||||
Cash
|
|
$
|
3.2
|
|
|
$
|
2.6
|
|
|
$
|
2.3
|
|
|
$
|
2.7
|
|
|
$
|
1.5
|
|
|
$
|
12.3
|
|
|
Shares
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
||||||
|
|
$
|
3.2
|
|
|
$
|
2.6
|
|
|
$
|
2.4
|
|
|
$
|
2.7
|
|
|
$
|
1.5
|
|
|
$
|
12.4
|
|
(1)
|
Operating income before depreciation and amortization to be received
(2)
|
|
$
|
2.8
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
4.8
|
|
|
Cumulative operating income before depreciation and amortization
(3)
|
|
$
|
2.8
|
|
|
$
|
3.7
|
|
|
$
|
3.7
|
|
|
$
|
4.8
|
|
|
$
|
4.8
|
|
|
|
(5)
|
(1)
|
This amount is in addition to
$44.1 million
of (i) options to purchase only exercisable upon termination not within the control of the Company, or death, and (ii) the excess of the initial redemption value recorded in redeemable noncontrolling interests over the amount the Company would be required to pay to the holders should the Company acquire the remaining ownership interests.
|
(2)
|
This financial measure is presented because it is the basis of the calculation used in the underlying agreements relating to the put rights and is based on actual operating results. This amount represents additional amounts to be attributable to MDC Partners Inc., commencing in the year the put is exercised.
|
(3)
|
Cumulative operating income before depreciation and amortization represents the cumulative amounts to be received by the Company.
|
(4)
|
The timing of consideration to be paid varies by contract and does not necessarily correspond to the date of the exercise of the put.
|
(5)
|
Amounts are not presented as they would not be meaningful due to multiple periods included.
|
•
|
risks associated with severe effects of international, national and regional economic conditions;
|
•
|
the Company’s ability to attract new clients and retain existing clients;
|
•
|
the spending patterns and financial success of the Company’s clients;
|
•
|
the Company’s ability to retain and attract key employees;
|
•
|
the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to redeemable noncontrolling interests and deferred acquisition consideration;
|
•
|
the successful completion and integration of acquisitions which complement and expand the Company’s business capabilities;
|
•
|
foreign currency fluctuations; and
|
•
|
risks associated with the one Canadian securities class action litigation claim.
|
MDC PARTNERS INC.
|
|
|
|
/s/ David Doft
|
|
David Doft
|
|
Chief Financial Officer and Authorized Signatory
|
|
|
|
August 31, 2017
|
Exhibit No.
|
|
Description
|
3.1
|
|
Articles of Amendment, dated March 7, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on March 7, 2016).
|
10.1
|
|
Securities Purchase Agreement, by and between MDC Partners Inc. and Broad Street Principal Investments, L.L.C., dated as of February 14, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on February 15, 2016).
|
10.2
|
|
Second Amended and Restated Employment Agreement between the Company and David Ross, dated as of February 27, 2017 (incorporated by reference to Exhibit 10.7 to the Company’s Form 10-K filed on March 1, 2017).
|
|
Statement of computation of ratio of earnings to fixed charges.**
|
|
|
Certification by Chief Executive Officer pursuant to Rules 13a - 14(a) and 15d - 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
Certification by Chief Financial Officer pursuant to Rules 13a - 14(a) and 15d - 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
Certification by Chief Executive Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
Certification by Chief Financial Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
Schedule of Advertising and Communications Companies.**
|
|
101
|
|
Interactive data file.*
|
1 Year MDC Partners Chart |
1 Month MDC Partners Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions