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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,
|
||||||
|
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
|
|
|
(1,972
|
)
|
||
Loss before equity in earnings of non-consolidated affiliates
|
(9,544
|
)
|
|
(22,663
|
)
|
||
Equity in earnings (losses) of non-consolidated affiliates
|
(139
|
)
|
|
229
|
|
||
Net loss
|
(9,683
|
)
|
|
(22,434
|
)
|
||
Net income attributable to the noncontrolling interests
|
(883
|
)
|
|
(859
|
)
|
||
Net loss attributable to MDC Partners Inc.
|
(10,566
|
)
|
|
(23,293
|
)
|
||
Accretion on convertible preference shares
|
(507
|
)
|
|
—
|
|
||
Net loss attributable to MDC Partners Inc. common shareholders
|
$
|
(11,073
|
)
|
|
$
|
(23,293
|
)
|
|
|
|
|
||||
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
|
)
|
|
$
|
(22,434
|
)
|
|
|
|
|
|
||||
Other comprehensive loss, net of applicable tax:
|
|
|
|
|
||||
Foreign currency translation adjustment
|
|
68
|
|
|
(8,825
|
)
|
||
Other comprehensive loss
|
|
68
|
|
|
(8,825
|
)
|
||
Comprehensive loss for the period
|
|
(9,615
|
)
|
|
(31,259
|
)
|
||
Comprehensive income attributable to the noncontrolling interests
|
|
(1,148
|
)
|
|
(2,515
|
)
|
||
Comprehensive loss attributable to MDC Partners Inc.
|
|
$
|
(10,763
|
)
|
|
$
|
(33,774
|
)
|
|
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
|
105,402
|
|
|
103,443
|
|
||
Total liabilities
|
1,983,456
|
|
|
2,019,758
|
|
||
|
|
|
|
||||
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
|
(585,498
|
)
|
|
(574,932
|
)
|
||
Accumulated other comprehensive loss
|
(2,021
|
)
|
|
(1,824
|
)
|
||
MDC Partners Inc. shareholders’ deficit
|
(483,084
|
)
|
|
(568,193
|
)
|
||
Noncontrolling interests
|
65,898
|
|
|
65,633
|
|
||
Total shareholders’ deficit
|
(417,186
|
)
|
|
(502,560
|
)
|
||
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
|
)
|
|
$
|
(22,434
|
)
|
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
|
|
|
(2,266
|
)
|
||
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
|
)
|
|
$
|
(574,932
|
)
|
|
$
|
(1,824
|
)
|
|
$
|
(568,193
|
)
|
|
$
|
65,633
|
|
|
$
|
(502,560
|
)
|
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
|
)
|
|
$
|
(585,498
|
)
|
|
$
|
(2,021
|
)
|
|
$
|
(483,084
|
)
|
|
$
|
65,898
|
|
|
$
|
(417,186
|
)
|
•
|
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
|
)
|
|
$
|
(23,293
|
)
|
Accretion on convertible preference shares
|
(507
|
)
|
|
—
|
|
||
Numerator for basic loss per common share - Net loss attributable to MDC Partners Inc. common shareholders
|
(11,073
|
)
|
|
(23,293
|
)
|
||
Effect of dilutive securities:
|
—
|
|
|
—
|
|
||
Numerator for diluted loss per common share- Net loss attributable to MDC Partners Inc. common shareholders
|
$
|
(11,073
|
)
|
|
$
|
(23,293
|
)
|
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 Reportable Segment is comprised of the Company’s integrated advertising, media, and public relations service Partner Firms. These core or principal service offerings are similar and/or complementary in many respects, and the Partner Firms that provide these service offerings both compete and/or collaborate with each other for new business. Each Partner Firm represents an operating segment and the Company aggregates its Partner Firms to report in the Reportable Segment. Partner Firms within this segment include Allison & Partners, Anomaly, Crispin Porter + Bogusky, Doner, Forsman & Bodenfors, Hunter PR, kbs, MDC Media Partners, and 72andSunny, among others. These Partner Firms share similar characteristics related to the nature of their services as well as the type of clients and the methods used to provide their services. In addition, the class of customer is also common among the Partner Firms in the Reportable Segment. This results in the Partner Firms having similar economics of their business, and the Company’s expected average long-term gross margin are similar among the Partner Firms aggregated in the Reportable Segment.
|
•
|
All Other is comprised of the Company’s Partner Firms that provide the specialist marketing offerings such as direct marketing, sales promotion, market research, strategic communications, database and customer relationship management, data analytics and insights, corporate identity, design and branding, and product and service innovation. Partner Firms within All Other include Gale Partners, Kingsdale, Relevent, Team, Redscout, and Y Media Labs, among others. The nature of the specialized services provided by these Partner Firms vary from those Partner Firms aggregated into the Reportable Segment in that such services are generally complimentary and are provided to round out the portfolio of
|
•
|
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 expense 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 Reportable Segment and All Other.
|
|
Reportable Segment
|
|
All Other
|
|
Corporate
|
|
Total
|
||||||||
Revenue
|
$
|
286,805
|
|
|
$
|
57,895
|
|
|
$
|
—
|
|
|
$
|
344,700
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of services sold
|
198,143
|
|
|
39,420
|
|
|
—
|
|
|
237,563
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Office and general expenses
|
68,692
|
|
|
10,888
|
|
|
8,260
|
|
|
87,840
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
8,393
|
|
|
2,196
|
|
|
309
|
|
|
10,898
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating profit (loss)
|
11,577
|
|
|
5,391
|
|
|
(8,569
|
)
|
|
8,399
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Other income, net
|
|
|
|
|
|
|
2,567
|
|
|||||||
Interest expense and finance charges, net
|
|
|
|
|
|
|
(16,541
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Loss before income taxes and equity in earnings of non-consolidated affiliates
|
|
|
|
|
|
|
(5,575
|
)
|
|||||||
Income tax expense
|
|
|
|
|
|
|
3,969
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Loss before equity in earnings of non-consolidated affiliates
|
|
|
|
|
|
|
(9,544
|
)
|
|||||||
Equity in losses of non-consolidated affiliates
|
|
|
|
|
|
|
(139
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
|
|
|
|
|
(9,683
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to the noncontrolling interests
|
(741
|
)
|
|
(142
|
)
|
|
—
|
|
|
(883
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to MDC Partners Inc.
|
|
|
|
|
|
|
$
|
(10,566
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
$
|
3,913
|
|
|
$
|
433
|
|
|
$
|
604
|
|
|
$
|
4,950
|
|
|
|
|
|
|
|
|
|
||||||||
Supplemental Segment Information:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Capital expenditures
|
$
|
8,513
|
|
|
$
|
899
|
|
|
$
|
1
|
|
|
$
|
9,413
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill and intangibles
|
$
|
719,164
|
|
|
$
|
207,928
|
|
|
$
|
—
|
|
|
$
|
927,092
|
|
|
|
|
|
|
|
|
|
||||||||
Total assets
|
$
|
1,195,498
|
|
|
$
|
303,941
|
|
|
$
|
127,214
|
|
|
$
|
1,626,653
|
|
|
Reportable Segment
|
|
All Other
|
|
Corporate
|
|
Total
|
||||||||
Revenue
|
$
|
254,106
|
|
|
$
|
54,936
|
|
|
$
|
—
|
|
|
$
|
309,042
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of services sold
|
175,339
|
|
|
36,107
|
|
|
—
|
|
|
211,446
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Office and general expenses
|
52,209
|
|
|
12,886
|
|
|
12,733
|
|
|
77,828
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
7,060
|
|
|
3,763
|
|
|
397
|
|
|
11,220
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating profit (loss)
|
19,498
|
|
|
2,180
|
|
|
(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 before income taxes and equity in earnings of non-consolidated affiliates
|
|
|
|
|
|
|
(24,635
|
)
|
|||||||
Income tax benefit
|
|
|
|
|
|
|
(1,972
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Loss before equity in earnings of non-consolidated affiliates
|
|
|
|
|
|
|
(22,663
|
)
|
|||||||
Equity in earnings of non-consolidated affiliates
|
|
|
|
|
|
|
229
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
|
|
|
|
|
(22,434
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to the noncontrolling interests
|
(726
|
)
|
|
(133
|
)
|
|
—
|
|
|
(859
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to MDC Partners Inc.
|
|
|
|
|
|
|
$
|
(23,293
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
$
|
3,751
|
|
|
$
|
130
|
|
|
$
|
804
|
|
|
$
|
4,685
|
|
|
|
|
|
|
|
|
|
||||||||
Supplemental Segment Information:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Capital expenditures
|
$
|
4,857
|
|
|
$
|
654
|
|
|
$
|
28
|
|
|
$
|
5,539
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill and intangibles
|
$
|
699,993
|
|
|
$
|
244,667
|
|
|
$
|
—
|
|
|
$
|
944,660
|
|
|
|
|
|
|
|
|
|
||||||||
Total assets
|
$
|
1,088,365
|
|
|
$
|
324,623
|
|
|
$
|
158,567
|
|
|
$
|
1,571,555
|
|
|
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
|
|
|
Reportable Segment
|
|
All Other
|
|
Corporate
|
|
Total
|
||||||||
Revenue
|
$
|
286,805
|
|
|
$
|
57,895
|
|
|
$
|
—
|
|
|
$
|
344,700
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of services sold
|
198,143
|
|
|
39,420
|
|
|
—
|
|
|
237,563
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Office and general expenses
|
68,692
|
|
|
10,888
|
|
|
8,260
|
|
|
87,840
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
8,393
|
|
|
2,196
|
|
|
309
|
|
|
10,898
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating profit (loss)
|
11,577
|
|
|
5,391
|
|
|
(8,569
|
)
|
|
8,399
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Other income, net
|
|
|
|
|
|
|
2,567
|
|
|||||||
Interest expense and finance charges, net
|
|
|
|
|
|
|
(16,541
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Loss before income taxes and equity in earnings of non-consolidated affiliates
|
|
|
|
|
|
|
(5,575
|
)
|
|||||||
Income tax expense
|
|
|
|
|
|
|
3,969
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Loss before equity in earnings of non-consolidated affiliates
|
|
|
|
|
|
|
(9,544
|
)
|
|||||||
Equity in losses of non-consolidated affiliates
|
|
|
|
|
|
|
(139
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
|
|
|
|
|
(9,683
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to the noncontrolling interests
|
(741
|
)
|
|
(142
|
)
|
|
—
|
|
|
(883
|
)
|
||||
Net loss attributable to MDC Partners Inc.
|
|
|
|
|
|
|
$
|
(10,566
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
$
|
3,913
|
|
|
$
|
433
|
|
|
$
|
604
|
|
|
$
|
4,950
|
|
|
Reportable Segment
|
|
All Other
|
|
Corporate
|
|
Total
|
||||||||
Revenue
|
$
|
254,106
|
|
|
$
|
54,936
|
|
|
$
|
—
|
|
|
$
|
309,042
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of services sold
|
175,339
|
|
|
36,107
|
|
|
—
|
|
|
211,446
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Office and general expenses
|
52,209
|
|
|
12,886
|
|
|
12,733
|
|
|
77,828
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
7,060
|
|
|
3,763
|
|
|
397
|
|
|
11,220
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating profit (loss)
|
19,498
|
|
|
2,180
|
|
|
(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 before income taxes and equity in earnings of non-consolidated affiliates
|
|
|
|
|
|
|
(24,635
|
)
|
|||||||
Income tax benefit
|
|
|
|
|
|
|
(1,972
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Loss before equity in earnings of non-consolidated affiliates
|
|
|
|
|
|
|
(22,663
|
)
|
|||||||
Equity in earnings of non-consolidated affiliates
|
|
|
|
|
|
|
229
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
|
|
|
|
|
(22,434
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to the noncontrolling interests
|
(726
|
)
|
|
(133
|
)
|
|
—
|
|
|
(859
|
)
|
||||
Net loss attributable to MDC Partners Inc.
|
|
|
|
|
|
|
$
|
(23,293
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
$
|
3,751
|
|
|
$
|
130
|
|
|
$
|
804
|
|
|
$
|
4,685
|
|
|
|
|
|
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
|
%
|
|
Reportable Segment
|
|
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 2016 acquisitions.
|
(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
|
|
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 and office and general expenses.
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Reportable Segment
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
39.2
|
|
|
13.7
|
%
|
|
$
|
28.0
|
|
|
11.0
|
%
|
|
$
|
11.2
|
|
|
39.8
|
%
|
Staff costs
(2)
|
|
173.6
|
|
|
60.5
|
%
|
|
157.3
|
|
|
61.9
|
%
|
|
16.3
|
|
|
10.3
|
%
|
|||
Administrative
|
|
40.7
|
|
|
14.2
|
%
|
|
34.3
|
|
|
13.5
|
%
|
|
6.4
|
|
|
18.8
|
%
|
|||
Deferred acquisition consideration
|
|
9.4
|
|
|
3.3
|
%
|
|
4.1
|
|
|
1.6
|
%
|
|
5.3
|
|
|
127.5
|
%
|
|||
Stock-based compensation
|
|
3.9
|
|
|
1.4
|
%
|
|
3.8
|
|
|
1.5
|
%
|
|
0.2
|
|
|
4.3
|
%
|
|||
Depreciation and amortization
|
|
8.4
|
|
|
2.9
|
%
|
|
7.1
|
|
|
2.8
|
%
|
|
1.3
|
|
|
18.9
|
%
|
|||
Total operating expenses
|
|
$
|
275.2
|
|
|
96.0
|
%
|
|
$
|
234.6
|
|
|
92.3
|
%
|
|
$
|
40.6
|
|
|
17.3
|
%
|
(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.
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
57.9
|
|
|
|
|
$
|
54.9
|
|
|
|
|
$
|
3.0
|
|
|
5.4
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
39.4
|
|
|
68.1
|
%
|
|
36.1
|
|
|
65.7
|
%
|
|
3.3
|
|
|
9.2
|
%
|
|||
Office and general expenses
|
|
10.9
|
|
|
18.8
|
%
|
|
12.9
|
|
|
23.5
|
%
|
|
(2.0
|
)
|
|
(15.5
|
)%
|
|||
Depreciation and amortization
|
|
2.2
|
|
|
3.8
|
%
|
|
3.8
|
|
|
6.8
|
%
|
|
(1.6
|
)
|
|
(41.6
|
)%
|
|||
|
|
$
|
52.5
|
|
|
90.7
|
%
|
|
$
|
52.8
|
|
|
96.0
|
%
|
|
$
|
(0.3
|
)
|
|
(0.5
|
)%
|
Operating profit
|
|
$
|
5.4
|
|
|
9.3
|
%
|
|
$
|
2.2
|
|
|
4.0
|
%
|
|
$
|
3.2
|
|
|
147.2
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
14.8
|
|
|
25.5
|
%
|
|
$
|
12.3
|
|
|
22.3
|
%
|
|
$
|
2.5
|
|
|
20.5
|
%
|
Staff costs
(2)
|
|
27.9
|
|
|
48.3
|
%
|
|
28.3
|
|
|
51.5
|
%
|
|
(0.3
|
)
|
|
(1.2
|
)%
|
|||
Administrative
|
|
5.1
|
|
|
8.8
|
%
|
|
6.1
|
|
|
11.1
|
%
|
|
(1.0
|
)
|
|
(16.7
|
)%
|
|||
Deferred acquisition consideration
|
|
2.1
|
|
|
3.6
|
%
|
|
2.2
|
|
|
4.0
|
%
|
|
(0.2
|
)
|
|
(6.8
|
)%
|
|||
Stock-based compensation
|
|
0.4
|
|
|
0.7
|
%
|
|
0.1
|
|
|
0.2
|
%
|
|
0.3
|
|
|
233.1
|
%
|
|||
Depreciation and amortization
|
|
2.2
|
|
|
3.8
|
%
|
|
3.8
|
|
|
6.8
|
%
|
|
(1.6
|
)
|
|
(41.6
|
)%
|
|||
Total operating expenses
|
|
$
|
52.5
|
|
|
90.7
|
%
|
|
$
|
52.8
|
|
|
96.0
|
%
|
|
$
|
(0.3
|
)
|
|
(0.5
|
)%
|
(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
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
(Dollars in Millions)
|
|||||||||||||
Staff costs
(1)
|
|
$
|
4.2
|
|
|
$
|
7.1
|
|
|
$
|
(2.9
|
)
|
|
(40.7
|
)%
|
Administrative
|
|
3.4
|
|
|
4.8
|
|
|
(1.4
|
)
|
|
(28.5
|
)%
|
|||
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
|
(2.13
|
)
|
|
(1.71
|
)
|
|
(1.86
|
)
|
|||
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
|
|
December 31, 2016
|
||||||||||||||||||||
(amounts in $ millions)
|
Reportable
Segment
|
|
All Other
|
|
Total
|
|
Reportable
Segment
|
|
All Other
|
|
Total
|
||||||||||||
Beginning balance of contingent payments
|
$
|
170.1
|
|
|
$
|
54.6
|
|
|
$
|
224.8
|
|
|
$
|
213.2
|
|
|
$
|
93.5
|
|
|
$
|
306.7
|
|
Payments
(1)
|
(5.3
|
)
|
|
(1.5
|
)
|
|
(6.7
|
)
|
|
(66.8
|
)
|
|
(38.4
|
)
|
|
(105.2
|
)
|
||||||
Additions
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
16.1
|
|
|
—
|
|
|
16.1
|
|
||||||
Redemption value adjustments
(3)
|
10.6
|
|
|
2.0
|
|
|
12.7
|
|
|
11.7
|
|
|
2.2
|
|
|
13.9
|
|
||||||
Other
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.4
|
)
|
|
(4.1
|
)
|
|
(6.4
|
)
|
||||||
Foreign translation adjustment
|
0.3
|
|
|
0.1
|
|
|
0.4
|
|
|
(1.8
|
)
|
|
1.3
|
|
|
(0.5
|
)
|
||||||
Ending balance of contingent payments
|
175.8
|
|
|
55.2
|
|
|
231.1
|
|
|
170.1
|
|
|
54.6
|
|
|
224.8
|
|
||||||
Fixed payments
|
3.2
|
|
|
1.1
|
|
|
4.3
|
|
|
3.6
|
|
|
1.2
|
|
|
4.8
|
|
||||||
|
$
|
179.0
|
|
|
$
|
56.3
|
|
|
$
|
235.4
|
|
|
$
|
173.7
|
|
|
$
|
55.8
|
|
|
$
|
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
|
|
|
|
May 2, 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, 2016).
|
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.*
|
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