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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
¨
|
|
|
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,
|
||||||
|
2016
|
|
2015
|
||||
Revenue:
|
|
|
|
||||
Services
|
$
|
309,042
|
|
|
$
|
302,222
|
|
Operating Expenses:
|
|
|
|
||||
Cost of services sold
|
211,446
|
|
|
210,419
|
|
||
Office and general expenses
|
77,828
|
|
|
74,308
|
|
||
Depreciation and amortization
|
11,220
|
|
|
12,300
|
|
||
|
300,494
|
|
|
297,027
|
|
||
Operating profit
|
8,548
|
|
|
5,195
|
|
||
Other Income (Expense):
|
|
|
|
||||
Other, net
|
15,512
|
|
|
(18,040
|
)
|
||
Interest expense and finance charges
|
(15,575
|
)
|
|
(15,096
|
)
|
||
Loss on redemption of notes
|
(33,298
|
)
|
|
—
|
|
||
Interest income
|
178
|
|
|
119
|
|
||
|
(33,183
|
)
|
|
(33,017
|
)
|
||
Loss from continuing operations before income taxes and equity in earnings of non-consolidated affiliates
|
(24,635
|
)
|
|
(27,822
|
)
|
||
Income tax benefit
|
(1,972
|
)
|
|
(4,054
|
)
|
||
Loss from continuing operations before equity in earnings of non-consolidated affiliates
|
(22,663
|
)
|
|
(23,768
|
)
|
||
Equity in earnings of non-consolidated affiliates
|
229
|
|
|
351
|
|
||
Loss from continuing operations
|
(22,434
|
)
|
|
(23,417
|
)
|
||
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes
|
—
|
|
|
(6,294
|
)
|
||
Net loss
|
(22,434
|
)
|
|
(29,711
|
)
|
||
Net income attributable to the noncontrolling interests
|
(859
|
)
|
|
(2,380
|
)
|
||
Net loss attributable to MDC Partners Inc.
|
$
|
(23,293
|
)
|
|
$
|
(32,091
|
)
|
|
|
|
|
||||
Loss Per Common Share
|
|
|
|
||||
Basic and Diluted
|
|
|
|
|
|||
Loss from continuing operations attributable to MDC Partners Inc. common shareholders
|
$
|
(0.47
|
)
|
|
$
|
(0.52
|
)
|
Discontinued operations attributable to MDC Partners Inc. common shareholders
|
—
|
|
|
(0.13
|
)
|
||
Net loss attributable to MDC Partners Inc. common shareholders
|
$
|
(0.47
|
)
|
|
$
|
(0.65
|
)
|
|
|
|
|
||||
Weighted Average Number of Common Shares Outstanding:
|
|
|
|
||||
Basic and diluted
|
50,002,552
|
|
|
49,754,961
|
|
||
|
|
|
|
||||
Stock-based compensation expense is included in the following line items above:
|
|
|
|
||||
Cost of services sold
|
$
|
3,136
|
|
|
$
|
2,738
|
|
Office and general expenses
|
1,549
|
|
|
1,707
|
|
||
Total
|
$
|
4,685
|
|
|
$
|
4,445
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
Comprehensive Loss
|
|
|
|
||||
Net loss
|
$
|
(22,434
|
)
|
|
$
|
(29,711
|
)
|
|
|
|
|
||||
Other comprehensive income (loss), net of applicable tax:
|
|
|
|
||||
Foreign currency translation adjustment
|
(8,825
|
)
|
|
5,181
|
|
||
Other comprehensive income (loss)
|
(8,825
|
)
|
|
5,181
|
|
||
Comprehensive loss for the year
|
(31,259
|
)
|
|
(24,530
|
)
|
||
Comprehensive income (loss) attributable to noncontrolling interests
|
(2,515
|
)
|
|
151
|
|
||
Comprehensive loss attributable to MDC Partners Inc.
|
$
|
(33,774
|
)
|
|
$
|
(24,379
|
)
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
|
|
||
Current Assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
21,840
|
|
|
$
|
61,458
|
|
Cash held in trusts
|
5,330
|
|
|
5,122
|
|
||
Accounts receivable, less allowance for doubtful accounts of $1,465 and $1,306
|
392,639
|
|
|
361,044
|
|
||
Expenditures billable to clients
|
22,320
|
|
|
44,012
|
|
||
Other current assets
|
49,804
|
|
|
37,109
|
|
||
Total Current Assets
|
491,933
|
|
|
508,745
|
|
||
Fixed assets, at cost, less accumulated depreciation of $101,117 and $96,554
|
64,755
|
|
|
63,557
|
|
||
Investments in non-consolidated affiliates
|
6,632
|
|
|
6,263
|
|
||
Goodwill
|
877,167
|
|
|
870,301
|
|
||
Other intangible assets, net
|
67,493
|
|
|
72,382
|
|
||
Deferred tax asset
|
20,597
|
|
|
15,367
|
|
||
Other assets
|
42,978
|
|
|
41,010
|
|
||
|
|
|
|
||||
Total Assets
|
$
|
1,571,555
|
|
|
$
|
1,577,625
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS’ DEFICIT
|
|
|
|
|
|
||
Current Liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
313,183
|
|
|
$
|
359,568
|
|
Trust liability
|
5,330
|
|
|
5,122
|
|
||
Accruals and other liabilities
|
212,869
|
|
|
297,964
|
|
||
Advance billings
|
136,116
|
|
|
119,100
|
|
||
Current portion of long-term debt
|
415
|
|
|
470
|
|
||
Current portion of deferred acquisition consideration
|
98,061
|
|
|
130,400
|
|
||
Total Current Liabilities
|
765,974
|
|
|
912,624
|
|
||
Long-term debt, less current portion
|
896,694
|
|
|
728,413
|
|
||
Long-term portion of deferred acquisition consideration
|
222,912
|
|
|
216,704
|
|
||
Other liabilities
|
44,779
|
|
|
44,905
|
|
||
Deferred tax liabilities
|
95,405
|
|
|
92,581
|
|
||
|
|
|
|
||||
Total Liabilities
|
2,025,764
|
|
|
1,995,227
|
|
||
|
|
|
|
||||
Redeemable Noncontrolling Interests (Note 2)
|
71,000
|
|
|
69,471
|
|
||
Commitments, Contingencies and Guarantees (Note 11)
|
|
|
|
|
|
||
Shareholders’ Deficit:
|
|
|
|
|
|
||
Preferred shares, unlimited authorized, none issued
|
—
|
|
|
—
|
|
||
Class A Shares, no par value, unlimited authorized, 50,253,153 and 49,986,705 shares issued and outstanding in 2016 and 2015
|
275,263
|
|
|
269,841
|
|
||
Class B Shares, no par value, unlimited authorized, 3,755 shares issued and outstanding in 2016 and 2015, each convertible into one Class A share
|
1
|
|
|
1
|
|
||
Charges in excess of capital
|
(326,701
|
)
|
|
(315,261
|
)
|
||
Accumulated deficit
|
(550,283
|
)
|
|
(526,990
|
)
|
||
Accumulated other comprehensive income (loss)
|
(4,224
|
)
|
|
6,257
|
|
||
MDC Partners Inc. Shareholders' Deficit
|
(605,944
|
)
|
|
(566,152
|
)
|
||
Noncontrolling Interests
|
80,735
|
|
|
79,079
|
|
||
Total Shareholders' Deficit
|
(525,209
|
)
|
|
(487,073
|
)
|
||
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders’ Deficit
|
$
|
1,571,555
|
|
|
$
|
1,577,625
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net loss
|
$
|
(22,434
|
)
|
|
$
|
(29,711
|
)
|
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes
|
—
|
|
|
(6,294
|
)
|
||
Loss from continuing operations
|
(22,434
|
)
|
|
(23,417
|
)
|
||
Adjustments to reconcile net loss from continuing operations to cash used in operating activities:
|
|
|
|
|
|
||
Stock-based compensation
|
4,685
|
|
|
4,445
|
|
||
Depreciation
|
5,028
|
|
|
4,537
|
|
||
Amortization of intangibles
|
6,192
|
|
|
7,763
|
|
||
Amortization of deferred finance charges and debt discount
|
7,021
|
|
|
1,494
|
|
||
Loss on redemption of notes
|
26,873
|
|
|
—
|
|
||
Adjustment to deferred acquisition consideration
|
6,440
|
|
|
2,801
|
|
||
Deferred income tax
|
(2,266
|
)
|
|
(3,929
|
)
|
||
Earnings of non-consolidated affiliates
|
(229
|
)
|
|
(351
|
)
|
||
Other non-current assets and liabilities
|
(1,482
|
)
|
|
733
|
|
||
Foreign exchange
|
(14,134
|
)
|
|
15,219
|
|
||
Changes in working capital:
|
|
|
|
|
|
||
Accounts receivable
|
(31,586
|
)
|
|
(97,760
|
)
|
||
Expenditures billable to clients
|
21,692
|
|
|
(5,721
|
)
|
||
Prepaid expenses and other current assets
|
(13,030
|
)
|
|
(12,211
|
)
|
||
Accounts payable, accruals and other liabilities
|
(138,473
|
)
|
|
(36,478
|
)
|
||
Advance billings
|
17,016
|
|
|
30,496
|
|
||
Cash flows used in continuing operating activities
|
(128,687
|
)
|
|
(112,379
|
)
|
||
Discontinued operations
|
—
|
|
|
(1,294
|
)
|
||
Net cash used in operating activities
|
(128,687
|
)
|
|
(113,673
|
)
|
||
Cash flows used in investing activities:
|
|
|
|
|
|
||
Capital expenditures
|
(5,539
|
)
|
|
(5,656
|
)
|
||
Acquisitions, net of cash acquired
|
(1,774
|
)
|
|
(1,310
|
)
|
||
Proceeds from sale of assets
|
—
|
|
|
29
|
|
||
Other investments
|
(822
|
)
|
|
(2,318
|
)
|
||
Distributions from non-consolidated affiliates
|
7
|
|
|
342
|
|
||
Cash flows used in continuing investing activities
|
(8,128
|
)
|
|
(8,913
|
)
|
||
Discontinued operations
|
—
|
|
|
(153
|
)
|
||
Net cash used in investing activities
|
(8,128
|
)
|
|
(9,066
|
)
|
||
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
|
(217,208
|
)
|
|
(91,190
|
)
|
||
Proceeds from revolving credit agreement
|
234,187
|
|
|
110,792
|
|
||
Acquisition related payments
|
(30,479
|
)
|
|
(11,142
|
)
|
||
Repayment of long-term debt
|
(156
|
)
|
|
(126
|
)
|
||
Purchase of shares
|
(902
|
)
|
|
(876
|
)
|
||
Premium paid on redemption of notes
|
(26,873
|
)
|
|
—
|
|
||
Deferred financing costs
|
(18,091
|
)
|
|
—
|
|
||
Distributions to noncontrolling interests
|
(2,399
|
)
|
|
(2,839
|
)
|
||
Cash overdrafts
|
6,271
|
|
|
32,103
|
|
||
Payment of dividends
|
(10,636
|
)
|
|
(10,636
|
)
|
||
Cash flows provided by continuing financing activities
|
98,714
|
|
|
26,086
|
|
||
Discontinued operations
|
—
|
|
|
(40
|
)
|
||
Net cash provided by financing activities
|
98,714
|
|
|
26,046
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(1,517
|
)
|
|
711
|
|
||
Decrease in cash and cash equivalents
|
(39,618
|
)
|
|
(95,982
|
)
|
||
Cash and cash equivalents at beginning of period
|
61,458
|
|
|
113,348
|
|
||
Cash and cash equivalents at end of period
|
$
|
21,840
|
|
|
$
|
17,366
|
|
|
|
|
|
||||
Supplemental disclosures:
|
|
|
|
|
|
||
Cash income taxes paid
|
$
|
143
|
|
|
$
|
540
|
|
Cash interest paid
|
$
|
25,703
|
|
|
$
|
367
|
|
Change in cash held in trusts
|
$
|
208
|
|
|
$
|
(246
|
)
|
|
|
|
|
Non-cash transactions:
|
|
|
|
|
|
||
Capital leases
|
$
|
156
|
|
|
$
|
42
|
|
Dividends payable
|
$
|
1,115
|
|
|
$
|
1,384
|
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Charges in
Excess of
Capital
|
|
Accumulated
Deficit
|
|
Accumulated Other
Comprehensive
Income (Loss)
|
|
MDC Partners Inc.
Shareholders'
Deficit
|
|
Noncontrolling
Interests
|
|
Total
Shareholders'
Deficit
|
||||||||||||||||||||||||||
|
Class A
|
|
Class B
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Balance at December 31, 2015
|
49,986,705
|
|
|
$
|
269,841
|
|
|
3,755
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
(315,261
|
)
|
|
$
|
(526,990
|
)
|
|
$
|
6,257
|
|
|
$
|
(566,152
|
)
|
|
$
|
79,079
|
|
|
$
|
(487,073
|
)
|
Net loss attributable to MDC Partners
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,293
|
)
|
|
—
|
|
|
(23,293
|
)
|
|
—
|
|
|
(23,293
|
)
|
|||||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,481
|
)
|
|
(10,481
|
)
|
|
1,656
|
|
|
(8,825
|
)
|
|||||||||
Issuance of restricted stock
|
79,278
|
|
|
956
|
|
|
—
|
|
|
—
|
|
|
(956
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Deferred acquisition consideration settled through issuance of shares
|
227,437
|
|
|
5,368
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,368
|
|
|
—
|
|
|
5,368
|
|
|||||||||
Shares acquired and cancelled
|
(40,267
|
)
|
|
(902
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(902
|
)
|
|
—
|
|
|
(902
|
)
|
|||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,779
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,779
|
|
|
—
|
|
|
1,779
|
|
|||||||||
Changes in redemption value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,423
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,423
|
)
|
|
—
|
|
|
(1,423
|
)
|
|||||||||
Dividends paid and to be paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,840
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,840
|
)
|
|
—
|
|
|
(10,840
|
)
|
|||||||||
Transfer to charges in excess of capital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,440
|
|
|
(11,440
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Balance at March 31, 2016
|
50,253,153
|
|
|
$
|
275,263
|
|
|
3,755
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
(326,701
|
)
|
|
$
|
(550,283
|
)
|
|
$
|
(4,224
|
)
|
|
$
|
(605,944
|
)
|
|
$
|
80,735
|
|
|
$
|
(525,209
|
)
|
•
|
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, 2016
|
|
Year Ended December 31, 2015
|
||||
Beginning Balance
|
$
|
69,471
|
|
|
$
|
194,951
|
|
Redemptions
|
—
|
|
|
(155,042
|
)
|
||
Additions
(1)
|
—
|
|
|
7,703
|
|
||
Changes in redemption value
|
1,423
|
|
|
22,809
|
|
||
Currency Translation Adjustments
|
106
|
|
|
(950
|
)
|
||
Ending Balance
|
$
|
71,000
|
|
|
$
|
69,471
|
|
(1)
|
Additions in 2015 consisted of transfers from noncontrolling interests related to step-up transactions and new acquisitions.
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Numerator
|
|
|
|
|
|
||
Numerator for basic loss per common share - loss from continuing operations
|
$
|
(22,434
|
)
|
|
$
|
(23,417
|
)
|
Net income attributable to the noncontrolling interests
|
(859
|
)
|
|
(2,380
|
)
|
||
Net loss from continuing operations attributable to MDC Partners Inc. common shareholders
|
(23,293
|
)
|
|
(25,797
|
)
|
||
Effect of dilutive securities
|
—
|
|
|
—
|
|
||
Numerator for diluted loss per common share - loss attributable to MDC Partners Inc. common shareholders from continuing operations
|
$
|
(23,293
|
)
|
|
$
|
(25,797
|
)
|
Denominator
|
|
|
|
|
|
||
Denominator for basic loss per common share - weighted average common shares
|
50,002,552
|
|
|
49,754,961
|
|
||
Effect of dilutive securities
|
—
|
|
|
—
|
|
||
Denominator for diluted loss per common share - adjusted weighted shares and assumed conversions
|
50,002,552
|
|
|
49,754,961
|
|
||
Basic loss per common share from continuing operations
|
$
|
(0.47
|
)
|
|
$
|
(0.52
|
)
|
Diluted loss per common share from continuing operations
|
$
|
(0.47
|
)
|
|
$
|
(0.52
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
Net loss attributable to MDC Partners Inc.
|
$
|
(23,293
|
)
|
|
$
|
(32,091
|
)
|
Transfers to (from) the noncontrolling interest:
|
|
|
|
||||
Decrease in MDC Partners Inc. paid-in capital for purchase of equity interests in excess of redeemable noncontrolling interests and noncontrolling interests
|
—
|
|
|
(2,917
|
)
|
||
Net transfers to (from) noncontrolling interests
|
$
|
—
|
|
|
$
|
(2,917
|
)
|
Change from net loss attributable to MDC Partners Inc. and transfers to noncontrolling interests
|
$
|
(23,293
|
)
|
|
$
|
(35,008
|
)
|
|
Noncontrolling
Interests |
||
Balance, December 31, 2014
|
$
|
6,014
|
|
Income attributable to noncontrolling interests
|
9,054
|
|
|
Distributions made
|
(9,503
|
)
|
|
Other
(1)
|
(92
|
)
|
|
Balance, December 31, 2015
|
$
|
5,473
|
|
Income attributable to noncontrolling interests
|
859
|
|
|
Distributions made
|
(2,399
|
)
|
|
Other
(1)
|
(12
|
)
|
|
Balance, March 31, 2016
|
$
|
3,921
|
|
(1)
|
Other consists primarily of step-up transactions and cumulative translation adjustments.
|
|
Three Months Ended
March 31, |
|||
|
|
2015
|
||
Revenue
|
|
$
|
15,524
|
|
Operating loss
|
|
(1,552
|
)
|
|
Other expense
|
|
(72
|
)
|
|
Loss on disposal
|
|
(4,670
|
)
|
|
Net loss from discontinued operations attributable to MDC Partners Inc., net of taxes
|
|
$
|
(6,294
|
)
|
|
March 31,
2016 |
|
December 31, 2015
|
||||
Revolving credit agreement
|
$
|
16,979
|
|
|
$
|
—
|
|
6.50% Senior Notes due 2024
|
900,000
|
|
|
—
|
|
||
6.75% Senior Notes due 2020
|
—
|
|
|
735,000
|
|
||
Original issue premium
|
—
|
|
|
5,838
|
|
||
Debt issuance costs
|
(20,389
|
)
|
|
(12,625
|
)
|
||
|
896,590
|
|
|
728,213
|
|
||
Obligations under capital leases
|
519
|
|
|
670
|
|
||
|
897,109
|
|
|
728,883
|
|
||
|
|
|
|
||||
Less current portion:
|
415
|
|
|
470
|
|
||
|
$
|
896,694
|
|
|
$
|
728,413
|
|
•
|
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.
|
|
Level 1
|
|
Level 1
|
||||||||||||
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying
Amount |
|
Fair Value
|
|
Carrying
Amount |
|
Fair Value
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
6.50% Senior Notes due 2024
|
$
|
900,000
|
|
|
$
|
918,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
6.75% Senior Notes due 2020
|
—
|
|
|
—
|
|
|
740,838
|
|
|
765,319
|
|
|
Fair Value Measurements Using Significant Unobservable Inputs
(Level 3) |
||||||
|
March 31,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Beginning Balance of contingent payments
|
$
|
306,734
|
|
|
$
|
172,227
|
|
Payments
(1)
|
(6,188
|
)
|
|
(77,301
|
)
|
||
Additions
(2)
|
517
|
|
|
174,530
|
|
||
Redemption value adjustments
(3)
|
8,321
|
|
|
41,636
|
|
||
Foreign translation adjustment
|
1,549
|
|
|
(4,358
|
)
|
||
Ending Balance of contingent payments
|
$
|
310,933
|
|
|
$
|
306,734
|
|
(1)
|
For the
three months ended March 31, 2016
, payments include
$5,368
of deferred acquisition consideration settled through the issuance of
227,437
MDC Class A 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.
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
Other income
|
$
|
58
|
|
|
$
|
490
|
|
Foreign currency gain (loss)
|
15,454
|
|
|
(18,530
|
)
|
||
|
$
|
15,512
|
|
|
$
|
(18,040
|
)
|
•
|
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
|
•
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
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
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
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
|
|
|
|
|
|
2016 Activity
|
|
|
|
Change
|
||||||||||||||||||||||||
Advertising and Communications
|
|
2015 Revenue
|
|
Foreign
Exchange |
|
Acquisitions
|
|
Organic
Growth |
|
2016 Revenue
|
|
Foreign
Exchange |
|
Acquisitions
|
|
Organic
Growth |
|
Total
Revenue |
||||||||||||||
|
|
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
United States
|
|
$
|
252.0
|
|
|
$
|
—
|
|
|
$
|
3.3
|
|
|
$
|
(3.1
|
)
|
|
$
|
252.2
|
|
|
—
|
%
|
|
1.3
|
%
|
|
(1.2
|
)%
|
|
0.1
|
%
|
Canada
|
|
29.8
|
|
|
(2.8
|
)
|
|
—
|
|
|
1.3
|
|
|
28.4
|
|
|
(9.3
|
)%
|
|
—
|
%
|
|
4.5
|
%
|
|
(4.8
|
)%
|
|||||
Other
|
|
20.4
|
|
|
(0.9
|
)
|
|
0.5
|
|
|
8.4
|
|
|
28.4
|
|
|
(4.3
|
)%
|
|
2.4
|
%
|
|
41.4
|
%
|
|
39.5
|
%
|
|||||
Total
|
|
$
|
302.2
|
|
|
$
|
(3.6
|
)
|
|
$
|
3.8
|
|
|
$
|
6.6
|
|
|
$
|
309.0
|
|
|
(1.2
|
)%
|
|
1.3
|
%
|
|
2.2
|
%
|
|
2.3
|
%
|
|
2016
|
|
2015
|
||
United States
|
82
|
%
|
|
83
|
%
|
Canada
|
9
|
%
|
|
10
|
%
|
Other
|
9
|
%
|
|
7
|
%
|
|
|
2016
|
|
2015
|
|
Change
|
|||||||||||||||
Advertising and Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
309.0
|
|
|
|
|
$
|
302.2
|
|
|
|
|
$
|
6.8
|
|
|
2.3
|
%
|
||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
211.4
|
|
|
68.4
|
%
|
|
210.4
|
|
|
69.6
|
%
|
|
1.0
|
|
|
0.5
|
%
|
|||
Office and general expenses
|
|
65.1
|
|
|
21.1
|
%
|
|
53.9
|
|
|
17.8
|
%
|
|
11.2
|
|
|
20.7
|
%
|
|||
Depreciation and amortization
|
|
10.8
|
|
|
3.5
|
%
|
|
11.9
|
|
|
3.9
|
%
|
|
(1.0
|
)
|
|
(8.7
|
)%
|
|||
|
|
$
|
287.4
|
|
|
93.0
|
%
|
|
$
|
276.2
|
|
|
91.4
|
%
|
|
$
|
11.2
|
|
|
4.0
|
%
|
Operating profit
|
|
$
|
21.7
|
|
|
7.0
|
%
|
|
$
|
26.0
|
|
|
8.6
|
%
|
|
$
|
(4.3
|
)
|
|
(16.7
|
)%
|
|
|
2016
|
|
2015
|
|
Change
|
|||||||||||||||
Advertising and Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
40.3
|
|
|
13.0
|
%
|
|
$
|
44.8
|
|
|
14.8
|
%
|
|
$
|
(4.5
|
)
|
|
(10.0
|
)%
|
Staff costs
(2)
|
|
185.6
|
|
|
60.1
|
%
|
|
176.5
|
|
|
58.4
|
%
|
|
9.2
|
|
|
5.2
|
%
|
|||
Administrative
|
|
40.4
|
|
|
13.1
|
%
|
|
37.3
|
|
|
12.4
|
%
|
|
3.0
|
|
|
8.2
|
%
|
|||
Deferred acquisition consideration
|
|
6.3
|
|
|
2.0
|
%
|
|
2.2
|
|
|
0.7
|
%
|
|
4.1
|
|
|
181.5
|
%
|
|||
Stock-based compensation
|
|
3.9
|
|
|
1.3
|
%
|
|
3.5
|
|
|
1.2
|
%
|
|
0.4
|
|
|
10.9
|
%
|
|||
Depreciation and amortization
|
|
10.8
|
|
|
3.5
|
%
|
|
11.9
|
|
|
3.9
|
%
|
|
(1.0
|
)
|
|
(8.7
|
)%
|
|||
Total operating expenses
|
|
$
|
287.4
|
|
|
93.0
|
%
|
|
$
|
276.2
|
|
|
91.4
|
%
|
|
$
|
11.2
|
|
|
4.0
|
%
|
(1)
|
Excludes staff costs.
|
(2)
|
Excludes stock-based compensation and is comprised of amounts reported in both cost of services and office and general expenses.
|
|
|
|
|
|
|
Change
|
|||||||||
Corporate Group
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
|
|
(Dollars in Millions)
|
|||||||||||||
Staff costs
(1)
|
|
$
|
7.1
|
|
|
$
|
8.8
|
|
|
$
|
(1.6
|
)
|
|
(18.5
|
)%
|
Administrative
|
|
4.8
|
|
|
10.7
|
|
|
(5.9
|
)
|
|
(55.1
|
)%
|
|||
Stock-based compensation
|
|
0.8
|
|
|
0.9
|
|
|
(0.1
|
)
|
|
(14.9
|
)%
|
|||
Depreciation and amortization
|
|
0.4
|
|
|
0.4
|
|
|
—
|
|
|
(11.0
|
)%
|
|||
Total operating expenses
|
|
$
|
13.1
|
|
|
$
|
20.8
|
|
|
$
|
(7.7
|
)
|
|
(36.9
|
)%
|
(1)
|
Excludes stock-based compensation.
|
|
As of and for the first three months ended March 31, 2016
|
|
As of and for the first three months ended March 31, 2015
|
|
As of and for the year ended December 31, 2015
|
||||||
|
(000’s)
|
|
(000’s)
|
|
(000’s)
|
||||||
Cash and cash equivalents
|
$
|
21,840
|
|
|
$
|
17,366
|
|
|
$
|
61,458
|
|
Working capital deficit
|
$
|
(274,041
|
)
|
|
$
|
(283,960
|
)
|
|
$
|
(403,879
|
)
|
Cash (used in) provided by operations
|
$
|
(128,687
|
)
|
|
$
|
(113,673
|
)
|
|
$
|
162,805
|
|
Cash used in investing
|
$
|
(8,128
|
)
|
|
$
|
(9,066
|
)
|
|
$
|
(29,893
|
)
|
Cash (used in) provided by financing
|
$
|
98,714
|
|
|
$
|
26,046
|
|
|
$
|
(190,020
|
)
|
Long-term debt to total equity ratio
|
(1.71
|
)
|
|
(1.87
|
)
|
|
(1.50
|
)
|
|||
Fixed charge coverage ratio
|
N/A
|
|
N/A
|
|
|
N/A
|
|
|
March 31, 2016
|
||
Total Senior Leverage Ratio
|
0.1
|
|
|
Maximum per covenant
|
2.0
|
|
|
|
|
|
|
Total Leverage Ratio
|
4.4
|
|
|
Maximum per covenant
|
5.5
|
|
|
|
|
|
|
Fixed Charges Ratio
|
1.8
|
|
|
Minimum per covenant
|
1.0
|
|
|
|
|
|
|
Earnings before interest, taxes, depreciation and amortization
|
$
|
210,221
|
|
Minimum per covenant
|
$
|
105,000
|
|
|
Advertising and Communications
|
||||||
|
March 31, 2016
|
|
December 31, 2015
|
||||
Beginning Balance of contingent payments
|
$
|
306,734
|
|
|
$
|
172,227
|
|
Payments
(1)
|
(6,188
|
)
|
|
(77,301
|
)
|
||
Additions
(2)
|
517
|
|
|
174,530
|
|
||
Redemption value adjustments
(3)
|
8,321
|
|
|
41,636
|
|
||
Foreign translation adjustment
|
1,549
|
|
|
(4,358
|
)
|
||
Ending Balance of contingent payments
|
310,933
|
|
|
306,734
|
|
||
Fixed payments
(4)
|
10,040
|
|
|
40,370
|
|
||
|
$
|
320,973
|
|
|
$
|
347,104
|
|
(1)
|
For the
three months ended March 31, 2016
, payments include
$5,368
of deferred acquisition consideration settled through the issuance of
227,437
MDC Class A Shares in lieu of cash.
|
(2)
|
Additions are the initial estimated deferred acquisition payments of new acquisitions and step-up transactions.
|
(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)
|
The reduction in the fixed payments for the
three months ended March 31, 2016
was attributable to payments of approximately $31.4 million, partially offset by redemption value and foreign translation adjustments.
|
Consideration
(4)
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020 &
Thereafter
|
|
Total
|
|
||||||||||||
|
|
(Dollars in Millions)
|
|
||||||||||||||||||||||
Cash
|
|
$
|
2.6
|
|
|
$
|
3.7
|
|
|
$
|
2.9
|
|
|
$
|
1.6
|
|
|
$
|
5.8
|
|
|
$
|
16.6
|
|
|
Shares
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
||||||
|
|
$
|
2.6
|
|
|
$
|
3.7
|
|
|
$
|
3.0
|
|
|
$
|
1.6
|
|
|
$
|
5.8
|
|
|
$
|
16.7
|
|
(1)
|
Operating income before depreciation and amortization to be received
(2)
|
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
2.4
|
|
|
$
|
—
|
|
|
$
|
1.9
|
|
|
$
|
5.4
|
|
|
Cumulative operating income before depreciation and amortization
(3)
|
|
$
|
1.1
|
|
|
$
|
1.1
|
|
|
$
|
3.5
|
|
|
$
|
3.5
|
|
|
$
|
5.4
|
|
|
|
(5)
|
(1)
|
This amount is in addition to
$50.8
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 the SEC’s ongoing investigation and the related class action litigation claims;
|
•
|
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; and
|
•
|
foreign currency fluctuations.
|
MDC PARTNERS INC.
|
|
|
|
/s/ David Doft
|
|
David Doft
|
|
Chief Financial Officer and Authorized Signatory
|
|
|
|
May 4, 2016
|
Exhibit No.
|
|
Description
|
|
|
|
4.1
|
|
Indenture relating to the 6.50% Senior Notes, dated as of March 23, 2016, among the Company, the Guarantors and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on March 23, 2016).
|
|
|
|
4.2
|
|
Form of 6.50% Senior Notes due 2024 (incorporated by reference to Exhibit 4.2 to the Company's Form 8-K filed on March 23, 2016).
|
|
|
|
10.1
|
|
Consent and Fifth Amendment, with an effective date of March 23, 2016, to the Amended and Restated Credit Agreement, dated as of March 20, 2013, among the Company, Maxxcom Inc., a Delaware corporation, each of their subsidiaries party thereto, Wells Fargo Capital Finance, LLC, as agent, and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on March 23, 2016).
|
|
|
|
10.2
|
|
Second Amended and Restated Credit Agreement, dated as of May 3, 2016, among the Company, Maxxcom Inc., a Delaware corporation, each of their subsidiaries party thereto, Wells Fargo Capital Finance, LLC, as agent, and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 4, 2016).
|
|
|
|
10.3
|
|
Amended and Restated Employment Agreement between the Company and Robert Kantor, dated as of May 5, 2014.*
|
|
|
|
12
|
|
Statement of computation of ratio of earnings to fixed charges.*
|
|
|
|
31.1
|
|
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.*
|
|
|
|
31.2
|
|
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.*
|
|
|
|
32.1
|
|
Certification by Chief Executive Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
32.2
|
|
Certification by Chief Financial Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
99.1
|
|
Schedule of Advertising and Communications Companies.*
|
|
|
|
101
|
|
Interactive data file.*
|
1 Year MDC Partners Chart |
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