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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
¨
|
Emerging growth company
¨
|
|
|
|
Page
|
|
PART I. FINANCIAL INFORMATION
|
|
Item 1.
|
||
|
||
|
||
|
||
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||
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||
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Item 2.
|
||
Item 3.
|
||
Item 4.
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||
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PART II. OTHER INFORMATION
|
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Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
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||
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Three Months Ended September 30,
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|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Services
|
$
|
375,800
|
|
|
$
|
349,254
|
|
|
$
|
1,111,032
|
|
|
$
|
995,343
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of services sold
|
249,418
|
|
|
235,659
|
|
|
754,803
|
|
|
675,940
|
|
||||
Office and general expenses
|
77,910
|
|
|
83,303
|
|
|
251,313
|
|
|
233,840
|
|
||||
Depreciation and amortization
|
11,252
|
|
|
11,412
|
|
|
32,916
|
|
|
34,068
|
|
||||
Goodwill impairment
|
—
|
|
|
29,631
|
|
|
—
|
|
|
29,631
|
|
||||
|
338,580
|
|
|
360,005
|
|
|
1,039,032
|
|
|
973,479
|
|
||||
Operating profit (loss)
|
37,220
|
|
|
(10,751
|
)
|
|
72,000
|
|
|
21,864
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Other, net
|
8,649
|
|
|
(6,008
|
)
|
|
17,812
|
|
|
9,530
|
|
||||
Interest expense and finance charges
|
(16,403
|
)
|
|
(16,540
|
)
|
|
(48,859
|
)
|
|
(49,289
|
)
|
||||
Loss on redemption of notes
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,298
|
)
|
||||
Interest income
|
145
|
|
|
218
|
|
|
550
|
|
|
599
|
|
||||
|
(7,609
|
)
|
|
(22,330
|
)
|
|
(30,497
|
)
|
|
(72,458
|
)
|
||||
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates
|
29,611
|
|
|
(33,081
|
)
|
|
41,503
|
|
|
(50,594
|
)
|
||||
Income tax expense (benefit)
|
9,049
|
|
|
(1,930
|
)
|
|
17,659
|
|
|
1,180
|
|
||||
Income (loss) before equity in earnings of non-consolidated affiliates
|
20,562
|
|
|
(31,151
|
)
|
|
23,844
|
|
|
(51,774
|
)
|
||||
Equity in earnings of non-consolidated affiliates
|
1,422
|
|
|
70
|
|
|
1,924
|
|
|
9
|
|
||||
Net income (loss)
|
21,984
|
|
|
(31,081
|
)
|
|
25,768
|
|
|
(51,765
|
)
|
||||
Net income attributable to noncontrolling interests
|
(3,491
|
)
|
|
(1,059
|
)
|
|
(6,588
|
)
|
|
(3,172
|
)
|
||||
Net income (loss) attributable to MDC Partners Inc.
|
18,493
|
|
|
(32,140
|
)
|
|
19,180
|
|
|
(54,937
|
)
|
||||
Accretion on convertible preference shares
|
(1,948
|
)
|
|
—
|
|
|
(4,365
|
)
|
|
—
|
|
||||
Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
16,545
|
|
|
$
|
(32,140
|
)
|
|
$
|
14,815
|
|
|
$
|
(54,937
|
)
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) per common share:
|
|
|
|
|
|
|
|
|
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||||||
Basic
|
|
|
|
|
|
|
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|
|
|
|||||
Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
0.25
|
|
|
$
|
(0.62
|
)
|
|
$
|
0.24
|
|
|
$
|
(1.08
|
)
|
|
|
|
|
|
|
|
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||||||||
Diluted
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
0.24
|
|
|
$
|
(0.62
|
)
|
|
$
|
0.24
|
|
|
$
|
(1.08
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
57,566,707
|
|
|
52,244,819
|
|
|
53,915,536
|
|
|
50,861,890
|
|
||||
Diluted
|
57,943,080
|
|
|
52,244,819
|
|
|
54,228,208
|
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|
50,861,890
|
|
||||
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||||||||
Stock-based compensation expense is included in the following line items above:
|
|
|
|
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|
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|
||||||
Cost of services sold
|
$
|
5,310
|
|
|
$
|
3,026
|
|
|
$
|
12,558
|
|
|
$
|
10,393
|
|
Office and general expenses
|
1,070
|
|
|
2,202
|
|
|
4,312
|
|
|
5,050
|
|
||||
Total
|
$
|
6,380
|
|
|
$
|
5,228
|
|
|
$
|
16,870
|
|
|
$
|
15,443
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
21,984
|
|
|
$
|
(31,081
|
)
|
|
$
|
25,768
|
|
|
$
|
(51,765
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive (loss) income, net of applicable tax:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(1,912
|
)
|
|
2,331
|
|
|
(1,294
|
)
|
|
(8,354
|
)
|
||||
Other comprehensive income (loss)
|
(1,912
|
)
|
|
2,331
|
|
|
(1,294
|
)
|
|
(8,354
|
)
|
||||
Comprehensive income (loss) for the period
|
20,072
|
|
|
(28,750
|
)
|
|
24,474
|
|
|
(60,119
|
)
|
||||
Comprehensive income attributable to the noncontrolling interests
|
(4,695
|
)
|
|
(569
|
)
|
|
(9,063
|
)
|
|
(4,481
|
)
|
||||
Comprehensive income (loss) attributable to MDC Partners Inc.
|
$
|
15,377
|
|
|
$
|
(29,319
|
)
|
|
$
|
15,411
|
|
|
$
|
(64,600
|
)
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
18,861
|
|
|
$
|
27,921
|
|
Cash held in trusts
|
5,182
|
|
|
5,341
|
|
||
Accounts receivable, less allowance for doubtful accounts of $2,800 and $1,523
|
438,765
|
|
|
388,340
|
|
||
Expenditures billable to clients
|
42,332
|
|
|
33,118
|
|
||
Other current assets
|
27,647
|
|
|
34,862
|
|
||
Total current assets
|
532,787
|
|
|
489,582
|
|
||
Fixed assets, at cost, less accumulated depreciation of $118,241 and $105,134
|
91,153
|
|
|
78,377
|
|
||
Investments in non-consolidated affiliates
|
5,655
|
|
|
4,745
|
|
||
Goodwill
|
839,361
|
|
|
844,759
|
|
||
Other intangible assets, net
|
74,685
|
|
|
85,071
|
|
||
Deferred tax assets
|
39,598
|
|
|
41,793
|
|
||
Other assets
|
34,592
|
|
|
33,051
|
|
||
Total assets
|
$
|
1,617,831
|
|
|
$
|
1,577,378
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS’ DEFICIT
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
232,704
|
|
|
$
|
251,456
|
|
Trust liability
|
5,182
|
|
|
5,341
|
|
||
Accruals and other liabilities
|
289,471
|
|
|
303,581
|
|
||
Advance billings
|
165,600
|
|
|
133,925
|
|
||
Current portion of long-term debt
|
300
|
|
|
228
|
|
||
Current portion of deferred acquisition consideration
|
59,849
|
|
|
108,290
|
|
||
Total current liabilities
|
753,106
|
|
|
802,821
|
|
||
Long-term debt, less current portion
|
930,889
|
|
|
936,208
|
|
||
Long-term portion of deferred acquisition consideration
|
88,419
|
|
|
121,274
|
|
||
Other liabilities
|
54,657
|
|
|
56,012
|
|
||
Deferred tax liabilities
|
119,602
|
|
|
110,359
|
|
||
Total liabilities
|
1,946,673
|
|
|
2,026,674
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests (Note 2)
|
60,092
|
|
|
60,180
|
|
||
Commitments, contingencies, and guarantees (Note 12)
|
|
|
|
|
|
||
Shareholders’ deficit:
|
|
|
|
|
|
||
Convertible preference shares (liquidation preference $99,365)
|
90,220
|
|
|
—
|
|
||
Common shares
|
351,075
|
|
|
317,784
|
|
||
Shares to be issued, 100,000 shares in 2016
|
—
|
|
|
2,360
|
|
||
Charges in excess of capital
|
(307,454
|
)
|
|
(311,581
|
)
|
||
Accumulated deficit
|
(562,668
|
)
|
|
(581,848
|
)
|
||
Accumulated other comprehensive loss
|
(5,593
|
)
|
|
(1,824
|
)
|
||
MDC Partners Inc. shareholders’ deficit
|
(434,420
|
)
|
|
(575,109
|
)
|
||
Noncontrolling interests
|
45,486
|
|
|
65,633
|
|
||
Total shareholders’ deficit
|
(388,934
|
)
|
|
(509,476
|
)
|
||
Total liabilities, redeemable noncontrolling interests, and shareholders’ deficit
|
$
|
1,617,831
|
|
|
$
|
1,577,378
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income (loss)
|
$
|
25,768
|
|
|
$
|
(51,765
|
)
|
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Stock-based compensation
|
16,870
|
|
|
15,443
|
|
||
Depreciation
|
18,000
|
|
|
16,853
|
|
||
Amortization of intangibles
|
14,916
|
|
|
17,215
|
|
||
Amortization of deferred finance charges
|
2,018
|
|
|
8,736
|
|
||
Goodwill impairment
|
—
|
|
|
29,631
|
|
||
Loss on redemption of notes
|
—
|
|
|
26,873
|
|
||
Adjustment to deferred acquisition consideration
|
13,354
|
|
|
17,363
|
|
||
Deferred income tax
|
8,125
|
|
|
(553
|
)
|
||
Loss on sale of assets
|
1,245
|
|
|
377
|
|
||
Earnings of non-consolidated affiliates
|
(1,924
|
)
|
|
(9
|
)
|
||
Other non-current assets and liabilities
|
(4,388
|
)
|
|
1,853
|
|
||
Foreign exchange
|
(15,113
|
)
|
|
(12,806
|
)
|
||
Changes in working capital:
|
|
|
|
||||
Accounts receivable
|
(54,723
|
)
|
|
(47,767
|
)
|
||
Expenditures billable to clients
|
(9,294
|
)
|
|
5,551
|
|
||
Prepaid expenses and other current assets
|
6,400
|
|
|
(16,851
|
)
|
||
Accounts payable, accruals and other liabilities
|
(31,149
|
)
|
|
(77,355
|
)
|
||
Advance billings
|
32,015
|
|
|
25,824
|
|
||
Net cash provided by (used in) operating activities
|
22,120
|
|
|
(41,387
|
)
|
||
Cash flows used in investing activities:
|
|
|
|
|
|
||
Capital expenditures
|
(28,305
|
)
|
|
(19,723
|
)
|
||
Deposits
|
(1,461
|
)
|
|
—
|
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
2,531
|
|
||
Proceeds from sale of assets
|
11,120
|
|
|
215
|
|
||
Distributions from non-consolidated affiliates
|
673
|
|
|
4,885
|
|
||
Other investments
|
(1,530
|
)
|
|
(2,571
|
)
|
||
Net cash used in investing activities
|
(19,503
|
)
|
|
(14,663
|
)
|
||
Cash flows (used in) 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
|
(1,093,508
|
)
|
|
(1,255,608
|
)
|
||
Proceeds from revolving credit agreement
|
1,087,688
|
|
|
1,326,105
|
|
||
Proceeds from issuance of convertible preference shares
|
95,000
|
|
|
—
|
|
||
Convertible preference shares issuance costs
|
(4,632
|
)
|
|
—
|
|
||
Acquisition related payments
|
(89,126
|
)
|
|
(129,616
|
)
|
||
Repayment of long-term debt
|
(310
|
)
|
|
(381
|
)
|
||
Purchase of shares
|
(1,239
|
)
|
|
(2,798
|
)
|
||
Premium paid on redemption of notes
|
—
|
|
|
(26,873
|
)
|
||
Deferred financing costs
|
—
|
|
|
(21,569
|
)
|
||
Distributions to noncontrolling interests
|
(5,272
|
)
|
|
(6,549
|
)
|
||
Payment of dividends
|
(284
|
)
|
|
(32,580
|
)
|
||
Net cash (used in) provided by financing activities
|
(11,683
|
)
|
|
15,131
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
6
|
|
|
1,196
|
|
||
Decrease in cash and cash equivalents
|
(9,060
|
)
|
|
(39,723
|
)
|
||
Cash and cash equivalents at beginning of period
|
27,921
|
|
|
61,458
|
|
||
Cash and cash equivalents at end of period
|
$
|
18,861
|
|
|
$
|
21,735
|
|
|
|
|
|
||||
Supplemental disclosures:
|
|
|
|
|
|
||
Cash income taxes paid
|
$
|
6,909
|
|
|
$
|
2,798
|
|
Cash interest paid
|
$
|
32,324
|
|
|
$
|
27,979
|
|
Change in cash held in trusts
|
$
|
(159
|
)
|
|
$
|
147
|
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
|
|
||
Capital leases
|
$
|
621
|
|
|
$
|
—
|
|
Dividends payable
|
$
|
453
|
|
|
$
|
1,077
|
|
Deferred acquisition consideration settled through issuance of shares
|
$
|
28,727
|
|
|
$
|
10,458
|
|
Value of shares issued for acquisition
|
$
|
—
|
|
|
$
|
34,219
|
|
Leasehold improvements paid for directly by landlord
|
$
|
—
|
|
|
$
|
7,250
|
|
|
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 income attributable to MDC Partners Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,180
|
|
|
—
|
|
|
19,180
|
|
|
—
|
|
|
19,180
|
|
||||||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,769
|
)
|
|
(3,769
|
)
|
|
2,475
|
|
|
(1,294
|
)
|
||||||||||
Issuance of Series 4 convertible preference shares in private placement
|
95,000
|
|
|
90,220
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,220
|
|
|
—
|
|
|
90,220
|
|
||||||||||
Issuance of restricted stock
|
—
|
|
|
—
|
|
|
273,169
|
|
|
5,803
|
|
|
—
|
|
|
—
|
|
|
(5,803
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Shares acquired and canceled
|
—
|
|
|
—
|
|
|
(114,822
|
)
|
|
(1,239
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,239
|
)
|
|
—
|
|
|
(1,239
|
)
|
||||||||||
Deferred acquisition consideration settled through issuance of shares
|
—
|
|
|
—
|
|
|
3,353,939
|
|
|
28,727
|
|
|
(100,000
|
)
|
|
(2,360
|
)
|
|
1,485
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,852
|
|
|
—
|
|
|
27,852
|
|
||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,082
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,082
|
|
|
—
|
|
|
6,082
|
|
||||||||||
Changes in redemption value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300
|
)
|
|
|
|
(300
|
)
|
|||||||||||
Decrease in noncontrolling interests and redeemable noncontrolling interests from business acquisitions and step-up transactions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,315
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,315
|
|
|
(11,965
|
)
|
|
(9,650
|
)
|
||||||||||
Dispositions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,657
|
)
|
|
(10,657
|
)
|
||||||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
348
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
348
|
|
|
|
|
348
|
|
|||||||||||
Transfer to charges in excess of capital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,127
|
)
|
|
4,127
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Balance at September 30, 2017
|
95,000
|
|
|
$
|
90,220
|
|
|
56,314,344
|
|
|
$
|
351,075
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(307,454
|
)
|
|
$
|
(562,668
|
)
|
|
$
|
(5,593
|
)
|
|
$
|
(434,420
|
)
|
|
$
|
45,486
|
|
|
$
|
(388,934
|
)
|
•
|
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.
|
|
Nine Months Ended September 30, 2017
|
|
Year Ended December 31, 2016
|
||||
Beginning Balance
|
$
|
60,180
|
|
|
$
|
69,471
|
|
Redemptions
|
(816
|
)
|
|
(1,708
|
)
|
||
Additions
(1)
|
—
|
|
|
2,274
|
|
||
Changes in redemption value
|
299
|
|
|
(9,604
|
)
|
||
Currency translation adjustments
|
429
|
|
|
(253
|
)
|
||
Ending Balance
|
$
|
60,092
|
|
|
$
|
60,180
|
|
(1)
|
Additions consist of transfers from noncontrolling interests related to step-up transactions and new acquisitions.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
|||||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
18,493
|
|
|
$
|
(32,140
|
)
|
|
$
|
19,180
|
|
|
$
|
(54,937
|
)
|
Accretion on convertible preference shares
|
(1,948
|
)
|
|
—
|
|
|
(4,365
|
)
|
|
—
|
|
||||
Net income allocated to convertible preference shares
|
(2,408
|
)
|
|
—
|
|
|
(1,782
|
)
|
|
—
|
|
||||
Numerator for basic loss per common share - Net income (loss) attributable to MDC Partners Inc. common shareholders
|
14,137
|
|
|
(32,140
|
)
|
|
13,033
|
|
|
(54,937
|
)
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|||||
Adjustment to net income allocated to convertible preference shares
|
13
|
|
|
—
|
|
|
9
|
|
|
—
|
|
||||
Numerator for diluted income (loss) per common share- Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
14,150
|
|
|
$
|
(32,140
|
)
|
|
$
|
13,042
|
|
|
$
|
(54,937
|
)
|
Denominator
|
|
|
|
|
|
|
|
|
|||||||
Denominator for basic income (loss) per common share - weighted average common shares
|
57,566,707
|
|
|
52,244,819
|
|
|
53,915,536
|
|
|
50,861,890
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|||||
Impact of stock options and non-vested stock under employee stock incentive plans
|
376,373
|
|
|
—
|
|
|
312,672
|
|
|
—
|
|
||||
Denominator for diluted income (loss) per common share - adjusted weighted shares and assumed conversions
|
57,943,080
|
|
|
52,244,819
|
|
|
54,228,208
|
|
|
50,861,890
|
|
||||
Basic income (loss) per common share
|
$
|
0.25
|
|
|
$
|
(0.62
|
)
|
|
$
|
0.24
|
|
|
$
|
(1.08
|
)
|
Diluted income (loss) per common share
|
$
|
0.24
|
|
|
$
|
(0.62
|
)
|
|
$
|
0.24
|
|
|
$
|
(1.08
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
18,493
|
|
|
$
|
(32,140
|
)
|
|
$
|
19,180
|
|
|
$
|
(54,937
|
)
|
Transfers from the noncontrolling interest:
|
|
|
|
|
|
|
|
||||||||
(Decrease) increase in MDC Partners Inc. paid-in capital for purchase of equity interests in excess of Redeemable Noncontrolling Interests and Noncontrolling Interests
|
(337
|
)
|
|
(520
|
)
|
|
2,315
|
|
|
22,498
|
|
||||
Net transfers from noncontrolling interests
|
$
|
(337
|
)
|
|
$
|
(520
|
)
|
|
$
|
2,315
|
|
|
$
|
22,498
|
|
Change from net income (loss) attributable to MDC Partners Inc. and transfers to noncontrolling interests
|
$
|
18,156
|
|
|
$
|
(32,660
|
)
|
|
$
|
21,495
|
|
|
$
|
(32,439
|
)
|
|
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
|
6,588
|
|
|
Distributions made
|
(5,272
|
)
|
|
Other
(1)
|
332
|
|
|
Balance, September 30, 2017
|
$
|
5,802
|
|
(1)
|
Other consists primarily of business acquisitions, sale of a business, step-up transactions, and cumulative translation adjustments.
|
|
September 30,
2017 |
|
December 31, 2016
|
||||
Revolving credit agreement
|
$
|
48,607
|
|
|
$
|
54,425
|
|
6.50% Notes due 2024
|
900,000
|
|
|
900,000
|
|
||
Debt issuance costs
|
(18,161
|
)
|
|
(18,420
|
)
|
||
|
930,446
|
|
|
936,005
|
|
||
Obligations under capital leases
|
743
|
|
|
431
|
|
||
|
931,189
|
|
|
936,436
|
|
||
Less: Current portion of long-term debt
|
300
|
|
|
228
|
|
||
|
$
|
930,889
|
|
|
$
|
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) |
||||||
|
September 30,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
Beginning balance of contingent payments
|
$
|
224,754
|
|
|
$
|
306,734
|
|
Payments
(1)
|
(73,358
|
)
|
|
(105,169
|
)
|
||
Additions
(2)
|
—
|
|
|
16,132
|
|
||
Redemption value adjustments
(3)
|
19,233
|
|
|
13,930
|
|
||
Other
(4)
|
(27,118
|
)
|
|
(6,412
|
)
|
||
Foreign translation adjustment
|
1,336
|
|
|
(461
|
)
|
||
Ending balance of contingent payments
|
$
|
144,847
|
|
|
$
|
224,754
|
|
(1)
|
For the
nine months ended September 30, 2017
and the year ended
December 31, 2016
, payments include
$28,727
and
$10,458
, respectively, of deferred acquisition consideration settled through the issuance of
3,353,939
and
691,559
MDC Class A subordinate voting shares, respectively, 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
transferred to shares to be issued related to
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Other income (expense)
|
$
|
(7
|
)
|
|
$
|
26
|
|
|
$
|
271
|
|
|
$
|
(220
|
)
|
Loss on sale of business
(1)
|
(1,424
|
)
|
|
(800
|
)
|
|
(1,424
|
)
|
|
(800
|
)
|
||||
Gain on sale of investments
(2)
|
168
|
|
|
682
|
|
|
168
|
|
|
682
|
|
||||
Foreign currency transaction gain (loss)
|
9,912
|
|
|
(5,916
|
)
|
|
18,797
|
|
|
9,868
|
|
||||
|
$
|
8,649
|
|
|
$
|
(6,008
|
)
|
|
$
|
17,812
|
|
|
$
|
9,530
|
|
•
|
The
Global Integrated Agencies
reportable segment is comprised of the Company’s six global, integrated operating segments with broad marketing communication capabilities, including advertising, branding, digital, social media, design and production services, serving multinational clients around the world. The Global Integrated Agencies reportable segment includes 72andSunny, Anomaly, Crispin Porter + Bogusky, Doner, Forsman & Bodenfors, and kbs+. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of global clients and the methods used to provide services; and (iii) the extent to which they may be impacted by global economic and geopolitical risks. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Global Integrated Agencies reportable segment.
|
•
|
The
Domestic Creative Agencies
reportable segment is comprised of four operating segments that are national advertising agencies leveraging creative capabilities at their core. The Domestic Creative Agencies reportable segment includes Colle + McVoy, Laird+Partners, Mono Advertising and Union. These operating segments 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 operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Domestic Creative Agencies reportable segment.
|
•
|
The
Specialist Communications
reportable segment is comprised of seven operating segments that are each communications agencies with core service offerings in public relations and related communications services. The Specialist Communications reportable segment includes Allison & Partners, Hunter PR, HL Group Partners, Kwittken, Luntz Global, Sloane & Company and Veritas. These operating segments 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 operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Specialist Communications reportable 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 operating segments 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. The All Other category 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 operating segments vary among each other and from those operating segments aggregated into the reportable segments. This results
|
•
|
Corporate
consists of corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (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 operating segments are allocated to the appropriate reportable segment and the All Other category.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
193,979
|
|
|
$
|
177,262
|
|
|
$
|
576,935
|
|
|
$
|
489,880
|
|
Domestic Creative Agencies
|
24,173
|
|
|
22,181
|
|
|
67,473
|
|
|
66,274
|
|
||||
Specialist Communications
|
40,670
|
|
|
40,309
|
|
|
125,470
|
|
|
123,006
|
|
||||
Media Services
|
33,027
|
|
|
34,481
|
|
|
103,966
|
|
|
96,681
|
|
||||
All Other
|
83,951
|
|
|
75,021
|
|
|
237,188
|
|
|
219,502
|
|
||||
Total
|
$
|
375,800
|
|
|
$
|
349,254
|
|
|
$
|
1,111,032
|
|
|
$
|
995,343
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income (loss):
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
19,819
|
|
|
$
|
2,873
|
|
|
$
|
33,765
|
|
|
$
|
24,316
|
|
Domestic Creative Agencies
|
5,716
|
|
|
4,688
|
|
|
13,563
|
|
|
14,779
|
|
||||
Specialist Communications
|
4,775
|
|
|
11,101
|
|
|
13,410
|
|
|
17,860
|
|
||||
Media Services
|
2,421
|
|
|
466
|
|
|
8,618
|
|
|
3,510
|
|
||||
All Other
|
15,213
|
|
|
(22,828
|
)
|
|
31,626
|
|
|
(5,619
|
)
|
||||
Corporate
|
(10,724
|
)
|
|
(7,051
|
)
|
|
(28,982
|
)
|
|
(32,982
|
)
|
||||
Total
|
$
|
37,220
|
|
|
$
|
(10,751
|
)
|
|
$
|
72,000
|
|
|
$
|
21,864
|
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
||||||||
Other income (expense), net
|
8,649
|
|
|
(6,008
|
)
|
|
17,812
|
|
|
9,530
|
|
||||
Interest expense and finance charges, net
|
(16,258
|
)
|
|
(16,322
|
)
|
|
(48,309
|
)
|
|
(48,690
|
)
|
||||
Loss on redemption of notes
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,298
|
)
|
||||
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates
|
29,611
|
|
|
(33,081
|
)
|
|
41,503
|
|
|
(50,594
|
)
|
||||
Income tax expense (benefit)
|
9,049
|
|
|
(1,930
|
)
|
|
17,659
|
|
|
1,180
|
|
||||
Income (loss) before equity in earnings of non-consolidated affiliates
|
20,562
|
|
|
(31,151
|
)
|
|
23,844
|
|
|
(51,774
|
)
|
||||
Equity in earnings of non-consolidated affiliates
|
1,422
|
|
|
70
|
|
|
1,924
|
|
|
9
|
|
||||
Net income (loss)
|
21,984
|
|
|
(31,081
|
)
|
|
25,768
|
|
|
(51,765
|
)
|
||||
Net income attributable to the noncontrolling interest
|
(3,491
|
)
|
|
(1,059
|
)
|
|
(6,588
|
)
|
|
(3,172
|
)
|
||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
18,493
|
|
|
$
|
(32,140
|
)
|
|
$
|
19,180
|
|
|
$
|
(54,937
|
)
|
|
United
States |
|
Canada
|
|
Other
|
|
Total
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
||||
2017
|
$
|
289,702
|
|
|
$
|
31,418
|
|
|
$
|
54,680
|
|
|
$
|
375,800
|
|
2016
|
$
|
274,506
|
|
|
$
|
30,233
|
|
|
$
|
44,515
|
|
|
$
|
349,254
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
|
|
|
||||
2017
|
$
|
868,847
|
|
|
$
|
88,471
|
|
|
$
|
153,714
|
|
|
$
|
1,111,032
|
|
2016
|
$
|
799,696
|
|
|
$
|
92,253
|
|
|
$
|
103,394
|
|
|
$
|
995,343
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
193,979
|
|
|
$
|
177,262
|
|
|
$
|
576,935
|
|
|
$
|
489,880
|
|
Domestic Creative Agencies
|
24,173
|
|
|
22,181
|
|
|
67,473
|
|
|
66,274
|
|
||||
Specialist Communications
|
40,670
|
|
|
40,309
|
|
|
125,470
|
|
|
123,006
|
|
||||
Media Services
|
33,027
|
|
|
34,481
|
|
|
103,966
|
|
|
96,681
|
|
||||
All Other
|
83,951
|
|
|
75,021
|
|
|
237,188
|
|
|
219,502
|
|
||||
Total
|
$
|
375,800
|
|
|
$
|
349,254
|
|
|
$
|
1,111,032
|
|
|
$
|
995,343
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income (loss):
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
19,819
|
|
|
$
|
2,873
|
|
|
$
|
33,765
|
|
|
$
|
24,316
|
|
Domestic Creative Agencies
|
5,716
|
|
|
4,688
|
|
|
13,563
|
|
|
14,779
|
|
||||
Specialist Communications
|
4,775
|
|
|
11,101
|
|
|
13,410
|
|
|
17,860
|
|
||||
Media Services
|
2,421
|
|
|
466
|
|
|
8,618
|
|
|
3,510
|
|
||||
All Other
|
15,213
|
|
|
(22,828
|
)
|
|
31,626
|
|
|
(5,619
|
)
|
||||
Corporate
|
(10,724
|
)
|
|
(7,051
|
)
|
|
(28,982
|
)
|
|
(32,982
|
)
|
||||
Total
|
$
|
37,220
|
|
|
$
|
(10,751
|
)
|
|
$
|
72,000
|
|
|
$
|
21,864
|
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
||||||||
Other income (expense), net
|
8,649
|
|
|
(6,008
|
)
|
|
17,812
|
|
|
9,530
|
|
||||
Interest expense and finance charges, net
|
(16,258
|
)
|
|
(16,322
|
)
|
|
(48,309
|
)
|
|
(48,690
|
)
|
||||
Loss on redemption of notes
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,298
|
)
|
||||
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates
|
29,611
|
|
|
(33,081
|
)
|
|
41,503
|
|
|
(50,594
|
)
|
||||
Income tax expense (benefit)
|
9,049
|
|
|
(1,930
|
)
|
|
17,659
|
|
|
1,180
|
|
||||
Income (loss) before equity in earnings of non-consolidated affiliates
|
20,562
|
|
|
(31,151
|
)
|
|
23,844
|
|
|
(51,774
|
)
|
||||
Equity in earnings of non-consolidated affiliates
|
1,422
|
|
|
70
|
|
|
1,924
|
|
|
9
|
|
||||
Net income (loss)
|
21,984
|
|
|
(31,081
|
)
|
|
25,768
|
|
|
(51,765
|
)
|
||||
Net income attributable to the noncontrolling interest
|
(3,491
|
)
|
|
(1,059
|
)
|
|
(6,588
|
)
|
|
(3,172
|
)
|
||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
18,493
|
|
|
(32,140
|
)
|
|
19,180
|
|
|
(54,937
|
)
|
|
|
|
|
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
|
|
$
|
274.5
|
|
|
$
|
—
|
|
|
$
|
(1.2
|
)
|
|
$
|
16.4
|
|
|
$
|
289.7
|
|
|
—
|
%
|
|
(0.5
|
)%
|
|
6.0
|
%
|
|
5.5
|
%
|
Canada
|
|
30.2
|
|
|
1.3
|
|
|
(0.1
|
)
|
|
—
|
|
|
31.4
|
|
|
4.2
|
%
|
|
(0.5
|
)%
|
|
0.2
|
%
|
|
3.9
|
%
|
|||||
Other
|
|
44.5
|
|
|
1.3
|
|
|
(1.8
|
)
|
|
10.6
|
|
|
54.7
|
|
|
3.0
|
%
|
|
(3.9
|
)%
|
|
23.8
|
%
|
|
22.8
|
%
|
|||||
Total
|
|
$
|
349.3
|
|
|
$
|
2.6
|
|
|
$
|
(3.2
|
)
|
|
$
|
27.1
|
|
|
$
|
375.8
|
|
|
0.8
|
%
|
|
(0.9
|
)%
|
|
7.8
|
%
|
|
7.6
|
%
|
|
Global Integrated Agencies
|
|
Media Services
|
|
All Other
|
|
Total
|
||||||||
|
(Dollars in Millions)
|
||||||||||||||
GAAP revenue from 2016 acquisitions (1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange impact
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Contribution to non-GAAP organic revenue (growth) decline
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Prior year revenue from dispositions
|
(1.8
|
)
|
|
(1.2
|
)
|
|
(0.1
|
)
|
|
(3.2
|
)
|
||||
Non-GAAP acquisitions (dispositions), net
|
$
|
(1.8
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(3.2
|
)
|
(1)
|
Operating segments not impacted by revenue from acquired Partner Firms in the current and prior period were excluded. In addition, no acquisitions were completed during 2017. Refer to Note 4 of the Notes to Unaudited Condensed Consolidated Financial Statements included herein for further information pertaining to the current year dispositions.
|
(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
|
77.1
|
%
|
|
78.6
|
%
|
Canada
|
8.4
|
%
|
|
8.7
|
%
|
Other
|
14.5
|
%
|
|
12.7
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
62.9
|
|
|
16.7
|
%
|
|
$
|
53.4
|
|
|
15.3
|
%
|
|
$
|
9.5
|
|
|
17.8
|
%
|
Staff costs
(2)
|
|
204.2
|
|
|
54.3
|
%
|
|
198.0
|
|
|
56.7
|
%
|
|
6.2
|
|
|
3.1
|
%
|
|||
Administrative
|
|
46.3
|
|
|
12.3
|
%
|
|
45.1
|
|
|
12.9
|
%
|
|
1.2
|
|
|
2.7
|
%
|
|||
Deferred acquisition consideration
|
|
(2.5
|
)
|
|
(0.7
|
)%
|
|
11.2
|
|
|
3.2
|
%
|
|
(13.6
|
)
|
|
(122.1
|
)%
|
|||
Stock-based compensation
|
|
5.9
|
|
|
1.6
|
%
|
|
4.6
|
|
|
1.3
|
%
|
|
1.3
|
|
|
27.7
|
%
|
|||
Depreciation and amortization
|
|
11.0
|
|
|
2.9
|
%
|
|
11.1
|
|
|
3.2
|
%
|
|
(0.1
|
)
|
|
(0.5
|
)%
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
%
|
|
29.6
|
|
|
8.5
|
%
|
|
(29.6
|
)
|
|
(100.0
|
)%
|
|||
Total operating expenses
|
|
$
|
327.9
|
|
|
87.2
|
%
|
|
$
|
353.0
|
|
|
101.1
|
%
|
|
$
|
(25.1
|
)
|
|
(7.1
|
)%
|
(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
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Revenue
|
|
$
|
194.0
|
|
|
|
|
$
|
177.3
|
|
|
|
|
$
|
16.7
|
|
|
9.4
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
128.8
|
|
|
66.4
|
%
|
|
119.0
|
|
|
67.1
|
%
|
|
9.8
|
|
|
8.2
|
%
|
|||
Office and general expenses
|
|
39.0
|
|
|
20.1
|
%
|
|
49.3
|
|
|
27.8
|
%
|
|
(10.3
|
)
|
|
(20.9
|
)%
|
|||
Depreciation and amortization
|
|
6.4
|
|
|
3.3
|
%
|
|
6.1
|
|
|
3.4
|
%
|
|
0.2
|
|
|
4.0
|
%
|
|||
|
|
$
|
174.2
|
|
|
89.8
|
%
|
|
$
|
174.4
|
|
|
98.4
|
%
|
|
$
|
(0.2
|
)
|
|
(0.1
|
)%
|
Operating profit
|
|
$
|
19.8
|
|
|
10.2
|
%
|
|
$
|
2.9
|
|
|
1.6
|
%
|
|
$
|
17.0
|
|
|
591.8
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
24.5
|
|
|
12.7
|
%
|
|
$
|
15.6
|
|
|
8.8
|
%
|
|
$
|
9.0
|
|
|
57.8
|
%
|
Staff costs
(2)
|
|
111.3
|
|
|
57.4
|
%
|
|
111.6
|
|
|
63.0
|
%
|
|
(0.3
|
)
|
|
(0.3
|
)%
|
|||
Administrative
|
|
26.2
|
|
|
13.5
|
%
|
|
22.4
|
|
|
12.6
|
%
|
|
3.8
|
|
|
17.1
|
%
|
|||
Deferred acquisition consideration
|
|
1.9
|
|
|
1.0
|
%
|
|
15.9
|
|
|
8.9
|
%
|
|
(14.0
|
)
|
|
(88.0
|
)%
|
|||
Stock-based compensation
|
|
3.8
|
|
|
2.0
|
%
|
|
2.9
|
|
|
1.6
|
%
|
|
1.0
|
|
|
32.9
|
%
|
|||
Depreciation and amortization
|
|
6.4
|
|
|
3.3
|
%
|
|
6.1
|
|
|
3.4
|
%
|
|
0.2
|
|
|
4.0
|
%
|
|||
Total operating expenses
|
|
$
|
174.2
|
|
|
89.8
|
%
|
|
$
|
174.4
|
|
|
98.4
|
%
|
|
$
|
(0.2
|
)
|
|
(0.1
|
)%
|
(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
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
24.2
|
|
|
|
|
$
|
22.2
|
|
|
|
|
$
|
2.0
|
|
|
9.0
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
13.4
|
|
|
55.4
|
%
|
|
12.5
|
|
|
56.2
|
%
|
|
0.9
|
|
|
7.4
|
%
|
|||
Office and general expenses
|
|
4.7
|
|
|
19.5
|
%
|
|
4.7
|
|
|
21.0
|
%
|
|
0.1
|
|
|
1.2
|
%
|
|||
Depreciation and amortization
|
|
0.3
|
|
|
1.4
|
%
|
|
0.4
|
|
|
1.6
|
%
|
|
—
|
|
|
(4.3
|
)%
|
|||
|
|
$
|
18.5
|
|
|
76.4
|
%
|
|
$
|
17.5
|
|
|
78.9
|
%
|
|
$
|
1.0
|
|
|
5.5
|
%
|
Operating profit
|
|
$
|
5.7
|
|
|
23.6
|
%
|
|
$
|
4.7
|
|
|
21.1
|
%
|
|
$
|
1.0
|
|
|
21.9
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
0.6
|
|
|
2.4
|
%
|
|
$
|
0.5
|
|
|
2.4
|
%
|
|
$
|
—
|
|
|
7.7
|
%
|
Staff costs
(2)
|
|
14.7
|
|
|
60.7
|
%
|
|
13.7
|
|
|
61.9
|
%
|
|
0.9
|
|
|
6.8
|
%
|
|||
Administrative
|
|
2.7
|
|
|
11.1
|
%
|
|
3.0
|
|
|
13.4
|
%
|
|
(0.3
|
)
|
|
(9.5
|
)%
|
|||
Deferred acquisition consideration
|
|
—
|
|
|
—
|
%
|
|
(0.3
|
)
|
|
(1.2
|
)%
|
|
0.3
|
|
|
(100.0
|
)%
|
|||
Stock-based compensation
|
|
0.2
|
|
|
0.7
|
%
|
|
0.2
|
|
|
0.7
|
%
|
|
—
|
|
|
18.0
|
%
|
|||
Depreciation and amortization
|
|
0.3
|
|
|
1.4
|
%
|
|
0.4
|
|
|
1.6
|
%
|
|
—
|
|
|
(4.3
|
)%
|
|||
Total operating expenses
|
|
$
|
18.5
|
|
|
76.4
|
%
|
|
$
|
17.5
|
|
|
78.9
|
%
|
|
$
|
1.0
|
|
|
5.5
|
%
|
(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.
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
40.7
|
|
|
|
|
$
|
40.3
|
|
|
|
|
$
|
0.4
|
|
|
0.9
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
26.6
|
|
|
65.4
|
%
|
|
27.6
|
|
|
68.4
|
%
|
|
(1.0
|
)
|
|
(3.6
|
)%
|
|||
Office and general expenses
|
|
8.1
|
|
|
19.9
|
%
|
|
1.4
|
|
|
3.6
|
%
|
|
6.7
|
|
|
464.7
|
%
|
|||
Depreciation and amortization
|
|
1.2
|
|
|
3.0
|
%
|
|
0.2
|
|
|
0.5
|
%
|
|
1.0
|
|
|
549.5
|
%
|
|||
|
|
$
|
35.9
|
|
|
88.3
|
%
|
|
$
|
29.2
|
|
|
72.5
|
%
|
|
$
|
6.7
|
|
|
22.9
|
%
|
Operating profit
|
|
$
|
4.8
|
|
|
11.7
|
%
|
|
$
|
11.1
|
|
|
27.5
|
%
|
|
$
|
(6.3
|
)
|
|
(57.0
|
)%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
8.9
|
|
|
21.9
|
%
|
|
$
|
9.5
|
|
|
23.6
|
%
|
|
$
|
(0.6
|
)
|
|
(6.1
|
)%
|
Staff costs
(2)
|
|
19.7
|
|
|
48.3
|
%
|
|
19.3
|
|
|
47.9
|
%
|
|
0.4
|
|
|
1.9
|
%
|
|||
Administrative
|
|
5.3
|
|
|
13.0
|
%
|
|
5.5
|
|
|
13.8
|
%
|
|
(0.3
|
)
|
|
(4.6
|
)%
|
|||
Deferred acquisition consideration
|
|
0.1
|
|
|
0.3
|
%
|
|
(5.9
|
)
|
|
(14.6
|
)%
|
|
6.0
|
|
|
(102.3
|
)%
|
|||
Stock-based compensation
|
|
0.7
|
|
|
1.6
|
%
|
|
0.6
|
|
|
1.4
|
%
|
|
0.1
|
|
|
16.6
|
%
|
|||
Depreciation and amortization
|
|
1.2
|
|
|
3.0
|
%
|
|
0.2
|
|
|
0.5
|
%
|
|
1.0
|
|
|
549.5
|
%
|
|||
Total operating expenses
|
|
$
|
35.9
|
|
|
88.3
|
%
|
|
$
|
29.2
|
|
|
72.5
|
%
|
|
$
|
6.7
|
|
|
22.9
|
%
|
(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
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
33.0
|
|
|
|
|
$
|
34.5
|
|
|
|
|
$
|
(1.5
|
)
|
|
(4.2
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
21.7
|
|
|
65.6
|
%
|
|
24.8
|
|
|
72.0
|
%
|
|
(3.2
|
)
|
|
(12.7
|
)%
|
|||
Office and general expenses
|
|
8.0
|
|
|
24.3
|
%
|
|
6.9
|
|
|
19.9
|
%
|
|
1.2
|
|
|
17.0
|
%
|
|||
Depreciation and amortization
|
|
0.9
|
|
|
2.8
|
%
|
|
2.3
|
|
|
6.8
|
%
|
|
(1.4
|
)
|
|
(60.8
|
)%
|
|||
|
|
$
|
30.6
|
|
|
92.7
|
%
|
|
$
|
34.0
|
|
|
98.6
|
%
|
|
$
|
(3.4
|
)
|
|
(10.0
|
)%
|
Operating profit
|
|
$
|
2.4
|
|
|
7.3
|
%
|
|
$
|
0.5
|
|
|
1.4
|
%
|
|
$
|
2.0
|
|
|
418.6
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
8.3
|
|
|
25.1
|
%
|
|
$
|
7.9
|
|
|
22.9
|
%
|
|
$
|
0.4
|
|
|
5.1
|
%
|
Staff costs
(2)
|
|
16.8
|
|
|
50.9
|
%
|
|
17.2
|
|
|
50.0
|
%
|
|
(0.4
|
)
|
|
(2.4
|
)%
|
|||
Administrative
|
|
4.3
|
|
|
13.0
|
%
|
|
6.3
|
|
|
18.3
|
%
|
|
(2.0
|
)
|
|
(31.8
|
)%
|
|||
Deferred acquisition consideration
|
|
0.1
|
|
|
0.3
|
%
|
|
0.2
|
|
|
0.5
|
%
|
|
(0.1
|
)
|
|
(31.5
|
)%
|
|||
Stock-based compensation
|
|
0.2
|
|
|
0.5
|
%
|
|
0.1
|
|
|
0.2
|
%
|
|
0.1
|
|
|
111.3
|
%
|
|||
Depreciation and amortization
|
|
0.9
|
|
|
2.8
|
%
|
|
2.3
|
|
|
6.8
|
%
|
|
(1.4
|
)
|
|
(60.8
|
)%
|
|||
Total operating expenses
|
|
$
|
30.6
|
|
|
92.7
|
%
|
|
$
|
34.0
|
|
|
98.6
|
%
|
|
$
|
(3.4
|
)
|
|
(10.0
|
)%
|
(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
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
84.0
|
|
|
|
|
$
|
75.0
|
|
|
|
|
$
|
8.9
|
|
|
11.9
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
59.0
|
|
|
70.2
|
%
|
|
51.8
|
|
|
69.0
|
%
|
|
7.2
|
|
|
13.8
|
%
|
|||
Office and general expenses
|
|
7.6
|
|
|
9.1
|
%
|
|
14.4
|
|
|
19.1
|
%
|
|
(6.8
|
)
|
|
(47.0
|
)%
|
|||
Depreciation and amortization
|
|
2.2
|
|
|
2.6
|
%
|
|
2.1
|
|
|
2.7
|
%
|
|
0.1
|
|
|
5.1
|
%
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
%
|
|
29.6
|
|
|
39.5
|
%
|
|
(29.6
|
)
|
|
(100.0
|
)%
|
|||
|
|
$
|
68.7
|
|
|
81.9
|
%
|
|
$
|
97.8
|
|
|
130.4
|
%
|
|
$
|
(29.1
|
)
|
|
(29.7
|
)%
|
Operating profit (loss)
|
|
$
|
15.2
|
|
|
18.1
|
%
|
|
$
|
(22.8
|
)
|
|
(30.4
|
)%
|
|
$
|
38.0
|
|
|
(166.6
|
)%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
20.5
|
|
|
24.5
|
%
|
|
$
|
19.9
|
|
|
26.5
|
%
|
|
$
|
0.7
|
|
|
3.4
|
%
|
Staff costs
(2)
|
|
41.7
|
|
|
49.7
|
%
|
|
36.1
|
|
|
48.2
|
%
|
|
5.6
|
|
|
15.4
|
%
|
|||
Administrative
|
|
7.9
|
|
|
9.4
|
%
|
|
7.9
|
|
|
10.5
|
%
|
|
(0.1
|
)
|
|
(0.7
|
)%
|
|||
Deferred acquisition consideration
|
|
(4.6
|
)
|
|
(5.5
|
)%
|
|
1.3
|
|
|
1.7
|
%
|
|
(5.9
|
)
|
|
(459.1
|
)%
|
|||
Stock-based compensation
|
|
1.1
|
|
|
1.3
|
%
|
|
1.0
|
|
|
1.3
|
%
|
|
0.1
|
|
|
13.5
|
%
|
|||
Depreciation and amortization
|
|
2.2
|
|
|
2.6
|
%
|
|
2.1
|
|
|
2.7
|
%
|
|
0.1
|
|
|
5.1
|
%
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
%
|
|
29.6
|
|
|
39.5
|
%
|
|
(29.6
|
)
|
|
(100.0
|
)%
|
|||
Total operating expenses
|
|
$
|
68.7
|
|
|
81.9
|
%
|
|
$
|
97.8
|
|
|
130.4
|
%
|
|
$
|
(29.1
|
)
|
|
(29.7
|
)%
|
(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
|
|
Variance
|
|||||||||
Corporate
|
|
$
|
|
$
|
|
$
|
|
%
|
|||||||
|
|
(Dollars in Millions)
|
|||||||||||||
Staff costs
(1)
|
|
$
|
5.4
|
|
|
$
|
6.0
|
|
|
$
|
(0.6
|
)
|
|
(9.2
|
)%
|
Administrative
|
|
4.6
|
|
|
0.1
|
|
|
4.5
|
|
|
4,016.2
|
%
|
|||
Stock-based compensation
|
|
0.5
|
|
|
0.6
|
|
|
(0.1
|
)
|
|
(21.0
|
)%
|
|||
Depreciation and amortization
|
|
0.3
|
|
|
0.4
|
|
|
(0.1
|
)
|
|
(29.0
|
)%
|
|||
Total operating expenses
|
|
$
|
10.7
|
|
|
$
|
7.1
|
|
|
$
|
3.7
|
|
|
52.1
|
%
|
(1)
|
Excludes stock-based compensation.
|
|
|
|
|
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
|
|
$
|
799.7
|
|
|
$
|
—
|
|
|
$
|
(1.2
|
)
|
|
$
|
70.4
|
|
|
$
|
868.8
|
|
|
—
|
%
|
|
(0.2
|
)%
|
|
8.8
|
%
|
|
8.6
|
%
|
Canada
|
|
92.3
|
|
|
0.7
|
|
|
(1.5
|
)
|
|
(2.9
|
)
|
|
88.5
|
|
|
0.7
|
%
|
|
(1.6
|
)%
|
|
(3.2
|
)%
|
|
(4.1
|
)%
|
|||||
Other
|
|
103.4
|
|
|
(5.0
|
)
|
|
39.2
|
|
|
16.1
|
|
|
153.7
|
|
|
(4.9
|
)%
|
|
37.9
|
%
|
|
15.6
|
%
|
|
48.7
|
%
|
|||||
Total
|
|
$
|
995.3
|
|
|
$
|
(4.4
|
)
|
|
$
|
36.5
|
|
|
$
|
83.6
|
|
|
$
|
1,111.0
|
|
|
(0.4
|
)%
|
|
3.7
|
%
|
|
8.4
|
%
|
|
11.6
|
%
|
|
Global Integrated Agencies
|
|
Media Services
|
|
All Other
|
|
Total
|
||||||||
|
(Dollars in Millions)
|
||||||||||||||
GAAP revenue from 2016 acquisitions (1)
|
$
|
43.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
43.5
|
|
Foreign exchange impact
|
2.4
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
||||
Contribution to organic revenue (growth) decline (2)
|
(4.9
|
)
|
|
—
|
|
|
—
|
|
|
(4.9
|
)
|
||||
Prior year revenue from dispositions
|
(1.8
|
)
|
|
(1.2
|
)
|
|
(1.5
|
)
|
|
(4.5
|
)
|
||||
Non-GAAP acquisitions (dispositions), net
|
$
|
39.2
|
|
|
$
|
(1.2
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
36.5
|
|
(1)
|
Operating segments not impacted by revenue from acquired Partner Firms in the current and prior period were excluded. In addition, no acquisitions were completed during 2017. Refer to Note 4 of the Notes to Unaudited Condensed Consolidated Financial Statements included herein for further information pertaining to the current year dispositions.
|
(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
|
78.2
|
%
|
|
80.3
|
%
|
Canada
|
8.0
|
%
|
|
9.3
|
%
|
Other
|
13.8
|
%
|
|
10.4
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue
|
|
$
|
|
% of
Revenue
|
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
1,111.0
|
|
|
|
|
$
|
995.3
|
|
|
|
|
$
|
115.7
|
|
|
11.6
|
%
|
||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
754.8
|
|
|
67.9
|
%
|
|
675.9
|
|
|
67.9
|
%
|
|
78.9
|
|
|
11.7
|
%
|
|||
Office and general expenses
|
|
223.2
|
|
|
20.1
|
%
|
|
202.1
|
|
|
20.3
|
%
|
|
21.1
|
|
|
10.4
|
%
|
|||
Depreciation and amortization
|
|
32.1
|
|
|
2.9
|
%
|
|
32.8
|
|
|
3.3
|
%
|
|
(0.8
|
)
|
|
(2.3
|
)%
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
%
|
|
29.6
|
|
|
3.0
|
%
|
|
(29.6
|
)
|
|
(100.0
|
)%
|
|||
|
|
$
|
1,010.0
|
|
|
90.9
|
%
|
|
$
|
940.5
|
|
|
94.5
|
%
|
|
$
|
69.6
|
|
|
7.4
|
%
|
Operating profit
|
|
$
|
101.0
|
|
|
9.1
|
%
|
|
$
|
54.8
|
|
|
5.5
|
%
|
|
$
|
46.1
|
|
|
84.1
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
192.8
|
|
|
17.3
|
%
|
|
$
|
146.2
|
|
|
14.7
|
%
|
|
$
|
46.5
|
|
|
31.8
|
%
|
Staff costs
(2)
|
|
615.8
|
|
|
55.4
|
%
|
|
572.0
|
|
|
57.5
|
%
|
|
43.8
|
|
|
7.7
|
%
|
|||
Administrative
|
|
140.9
|
|
|
12.7
|
%
|
|
129.3
|
|
|
13.0
|
%
|
|
11.6
|
|
|
9.0
|
%
|
|||
Deferred acquisition consideration
|
|
13.3
|
|
|
1.2
|
%
|
|
17.2
|
|
|
1.7
|
%
|
|
(3.9
|
)
|
|
(22.7
|
)%
|
|||
Stock-based compensation
|
|
15.3
|
|
|
1.4
|
%
|
|
13.4
|
|
|
1.3
|
%
|
|
1.9
|
|
|
14.1
|
%
|
|||
Depreciation and amortization
|
|
32.1
|
|
|
2.9
|
%
|
|
32.8
|
|
|
3.3
|
%
|
|
(0.8
|
)
|
|
(2.3
|
)%
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
%
|
|
29.6
|
|
|
3.0
|
%
|
|
(29.6
|
)
|
|
(100.0
|
)%
|
|||
Total operating expenses
|
|
$
|
1,010.0
|
|
|
90.9
|
%
|
|
$
|
940.5
|
|
|
94.5
|
%
|
|
$
|
69.6
|
|
|
7.4
|
%
|
(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
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
576.9
|
|
|
|
|
$
|
489.9
|
|
|
|
|
$
|
87.1
|
|
|
17.8
|
%
|
||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
403.2
|
|
|
69.9
|
%
|
|
335.8
|
|
|
68.5
|
%
|
|
67.4
|
|
|
20.1
|
%
|
|||
Office and general expenses
|
|
122.1
|
|
|
21.2
|
%
|
|
114.8
|
|
|
23.4
|
%
|
|
7.3
|
|
|
6.4
|
%
|
|||
Depreciation and amortization
|
|
17.9
|
|
|
3.1
|
%
|
|
15.0
|
|
|
3.1
|
%
|
|
2.9
|
|
|
19.4
|
%
|
|||
|
|
$
|
543.2
|
|
|
94.1
|
%
|
|
$
|
465.6
|
|
|
95.0
|
%
|
|
$
|
77.6
|
|
|
16.7
|
%
|
Operating profit
|
|
$
|
33.8
|
|
|
5.9
|
%
|
|
$
|
24.3
|
|
|
5.0
|
%
|
|
$
|
9.4
|
|
|
38.9
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
82.9
|
|
|
14.4
|
%
|
|
$
|
39.9
|
|
|
8.1
|
%
|
|
$
|
43.0
|
|
|
107.9
|
%
|
Staff costs
(2)
|
|
342.3
|
|
|
59.3
|
%
|
|
315.6
|
|
|
64.4
|
%
|
|
26.7
|
|
|
8.5
|
%
|
|||
Administrative
|
|
77.8
|
|
|
13.5
|
%
|
|
65.9
|
|
|
13.5
|
%
|
|
11.8
|
|
|
18.0
|
%
|
|||
Deferred acquisition consideration
|
|
12.4
|
|
|
2.1
|
%
|
|
20.1
|
|
|
4.1
|
%
|
|
(7.7
|
)
|
|
(38.5
|
)%
|
|||
Stock-based compensation
|
|
9.9
|
|
|
1.7
|
%
|
|
9.0
|
|
|
1.8
|
%
|
|
0.9
|
|
|
9.6
|
%
|
|||
Depreciation and amortization
|
|
17.9
|
|
|
3.1
|
%
|
|
15.0
|
|
|
3.1
|
%
|
|
2.9
|
|
|
19.4
|
%
|
|||
Total operating expenses
|
|
$
|
543.2
|
|
|
94.1
|
%
|
|
$
|
465.6
|
|
|
95.0
|
%
|
|
$
|
77.6
|
|
|
16.7
|
%
|
(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
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
67.5
|
|
|
|
|
$
|
66.3
|
|
|
|
|
$
|
1.2
|
|
|
1.8
|
%
|
||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
38.0
|
|
|
56.3
|
%
|
|
36.3
|
|
|
54.7
|
%
|
|
1.7
|
|
|
4.7
|
%
|
|||
Office and general expenses
|
|
14.9
|
|
|
22.0
|
%
|
|
14.0
|
|
|
21.1
|
%
|
|
0.9
|
|
|
6.5
|
%
|
|||
Depreciation and amortization
|
|
1.1
|
|
|
1.6
|
%
|
|
1.3
|
|
|
1.9
|
%
|
|
(0.2
|
)
|
|
(15.9
|
)%
|
|||
|
|
$
|
53.9
|
|
|
79.9
|
%
|
|
$
|
51.5
|
|
|
77.7
|
%
|
|
$
|
2.4
|
|
|
4.7
|
%
|
Operating profit
|
|
$
|
13.6
|
|
|
20.1
|
%
|
|
$
|
14.8
|
|
|
22.3
|
%
|
|
$
|
(1.2
|
)
|
|
(8.2
|
)%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs (1)
|
|
$
|
1.6
|
|
|
2.4
|
%
|
|
$
|
1.5
|
|
|
2.3
|
%
|
|
$
|
0.1
|
|
|
7.1
|
%
|
Staff costs (2)
|
|
42.2
|
|
|
62.6
|
%
|
|
40.2
|
|
|
60.7
|
%
|
|
2.0
|
|
|
5.1
|
%
|
|||
Administrative
|
|
8.1
|
|
|
12.0
|
%
|
|
8.2
|
|
|
12.4
|
%
|
|
(0.1
|
)
|
|
(1.4
|
)%
|
|||
Deferred acquisition consideration
|
|
0.4
|
|
|
0.5
|
%
|
|
(0.2
|
)
|
|
(0.3
|
)%
|
|
0.6
|
|
|
(275.1
|
)%
|
|||
Stock-based compensation
|
|
0.5
|
|
|
0.7
|
%
|
|
0.5
|
|
|
0.7
|
%
|
|
—
|
|
|
3.1
|
%
|
|||
Depreciation and amortization
|
|
1.1
|
|
|
1.6
|
%
|
|
1.3
|
|
|
1.9
|
%
|
|
(0.2
|
)
|
|
(15.9
|
)%
|
|||
Total operating expenses
|
|
$
|
53.9
|
|
|
79.9
|
%
|
|
$
|
51.5
|
|
|
77.7
|
%
|
|
$
|
2.4
|
|
|
4.7
|
%
|
(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
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
125.5
|
|
|
|
|
$
|
123.0
|
|
|
|
|
$
|
2.5
|
|
|
2.0
|
%
|
||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
85.4
|
|
|
68.0
|
%
|
|
84.2
|
|
|
68.5
|
%
|
|
1.1
|
|
|
1.3
|
%
|
|||
Office and general expenses
|
|
23.0
|
|
|
18.4
|
%
|
|
15.8
|
|
|
12.8
|
%
|
|
7.3
|
|
|
46.1
|
%
|
|||
Depreciation and amortization
|
|
3.7
|
|
|
2.9
|
%
|
|
5.1
|
|
|
4.2
|
%
|
|
(1.5
|
)
|
|
(28.6
|
)%
|
|||
|
|
$
|
112.1
|
|
|
89.3
|
%
|
|
$
|
105.1
|
|
|
85.5
|
%
|
|
$
|
6.9
|
|
|
6.6
|
%
|
Operating profit
|
|
$
|
13.4
|
|
|
10.7
|
%
|
|
$
|
17.9
|
|
|
14.5
|
%
|
|
$
|
(4.5
|
)
|
|
(24.9
|
)%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
29.7
|
|
|
23.7
|
%
|
|
$
|
28.7
|
|
|
23.4
|
%
|
|
$
|
1.0
|
|
|
3.3
|
%
|
Staff costs
(2)
|
|
59.8
|
|
|
47.7
|
%
|
|
59.6
|
|
|
48.5
|
%
|
|
0.1
|
|
|
0.2
|
%
|
|||
Administrative
|
|
16.0
|
|
|
12.8
|
%
|
|
16.0
|
|
|
13.0
|
%
|
|
—
|
|
|
0.2
|
%
|
|||
Deferred acquisition consideration
|
|
0.6
|
|
|
0.5
|
%
|
|
(5.9
|
)
|
|
(4.8
|
)%
|
|
6.5
|
|
|
(110.2
|
)%
|
|||
Stock-based compensation
|
|
2.3
|
|
|
1.8
|
%
|
|
1.6
|
|
|
1.3
|
%
|
|
0.7
|
|
|
45.5
|
%
|
|||
Depreciation and amortization
|
|
3.7
|
|
|
2.9
|
%
|
|
5.1
|
|
|
4.2
|
%
|
|
(1.5
|
)
|
|
(28.6
|
)%
|
|||
Total operating expenses
|
|
$
|
112.1
|
|
|
89.3
|
%
|
|
$
|
105.1
|
|
|
85.5
|
%
|
|
$
|
6.9
|
|
|
6.6
|
%
|
(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
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
104.0
|
|
|
|
|
$
|
96.7
|
|
|
|
|
$
|
7.3
|
|
|
7.5
|
%
|
||
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
66.0
|
|
|
63.5
|
%
|
|
70.9
|
|
|
73.4
|
%
|
|
(4.9
|
)
|
|
(7.0
|
)%
|
|||
Office and general expenses
|
|
26.4
|
|
|
25.4
|
%
|
|
17.8
|
|
|
18.4
|
%
|
|
8.6
|
|
|
48.3
|
%
|
|||
Depreciation and amortization
|
|
2.9
|
|
|
2.8
|
%
|
|
4.4
|
|
|
4.6
|
%
|
|
(1.5
|
)
|
|
(33.9
|
)%
|
|||
|
|
$
|
95.3
|
|
|
91.7
|
%
|
|
$
|
93.2
|
|
|
96.4
|
%
|
|
$
|
2.2
|
|
|
2.3
|
%
|
Operating profit
|
|
$
|
8.6
|
|
|
8.3
|
%
|
|
$
|
3.5
|
|
|
3.6
|
%
|
|
$
|
5.1
|
|
|
145.5
|
%
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
24.2
|
|
|
23.3
|
%
|
|
$
|
23.7
|
|
|
24.5
|
%
|
|
$
|
0.5
|
|
|
2.2
|
%
|
Staff costs
(2)
|
|
52.3
|
|
|
50.3
|
%
|
|
48.1
|
|
|
49.7
|
%
|
|
4.2
|
|
|
8.8
|
%
|
|||
Administrative
|
|
15.0
|
|
|
14.5
|
%
|
|
15.9
|
|
|
16.4
|
%
|
|
(0.9
|
)
|
|
(5.4
|
)%
|
|||
Deferred acquisition consideration
|
|
0.4
|
|
|
0.4
|
%
|
|
0.9
|
|
|
0.9
|
%
|
|
(0.5
|
)
|
|
(52.3
|
)%
|
|||
Stock-based compensation
|
|
0.5
|
|
|
0.4
|
%
|
|
0.2
|
|
|
0.2
|
%
|
|
0.3
|
|
|
148.1
|
%
|
|||
Depreciation and amortization
|
|
2.9
|
|
|
2.8
|
%
|
|
4.4
|
|
|
4.6
|
%
|
|
(1.5
|
)
|
|
(33.9
|
)%
|
|||
Total operating expenses
|
|
$
|
95.3
|
|
|
91.7
|
%
|
|
$
|
93.2
|
|
|
96.4
|
%
|
|
$
|
2.2
|
|
|
2.3
|
%
|
(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)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
54.3
|
|
|
22.9
|
%
|
|
$
|
52.4
|
|
|
23.9
|
%
|
|
$
|
1.9
|
|
|
3.6
|
%
|
Staff costs
(2)
|
|
119.2
|
|
|
50.2
|
%
|
|
108.4
|
|
|
49.4
|
%
|
|
10.7
|
|
|
9.9
|
%
|
|||
Administrative
|
|
23.9
|
|
|
10.1
|
%
|
|
23.2
|
|
|
10.6
|
%
|
|
0.7
|
|
|
3.1
|
%
|
|||
Deferred acquisition consideration
|
|
(0.5
|
)
|
|
(0.2
|
)%
|
|
2.3
|
|
|
1.1
|
%
|
|
(2.8
|
)
|
|
(121.1
|
)%
|
|||
Stock-based compensation
|
|
2.1
|
|
|
0.9
|
%
|
|
2.1
|
|
|
1.0
|
%
|
|
—
|
|
|
1.2
|
%
|
|||
Depreciation and amortization
|
|
6.5
|
|
|
2.7
|
%
|
|
7.0
|
|
|
3.2
|
%
|
|
(0.5
|
)
|
|
(6.9
|
)%
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
%
|
|
29.6
|
|
|
13.5
|
%
|
|
(29.6
|
)
|
|
(100.0
|
)%
|
|||
Total operating expenses
|
|
$
|
205.6
|
|
|
86.7
|
%
|
|
$
|
225.1
|
|
|
102.6
|
%
|
|
$
|
(19.6
|
)
|
|
(8.7
|
)%
|
(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
|
|
Variance
|
|||||||||
Corporate
|
|
$
|
|
$
|
|
$
|
|
%
|
|||||||
|
|
(Dollars in Millions)
|
|||||||||||||
Staff costs
(1)
|
|
$
|
15.0
|
|
|
$
|
20.9
|
|
|
$
|
(5.9
|
)
|
|
(28.3
|
)%
|
Administrative
|
|
11.6
|
|
|
8.8
|
|
|
2.8
|
|
|
31.6
|
%
|
|||
Stock-based compensation
|
|
1.6
|
|
|
2.1
|
|
|
(0.5
|
)
|
|
(22.3
|
)%
|
|||
Depreciation and amortization
|
|
0.9
|
|
|
1.3
|
|
|
(0.4
|
)
|
|
(31.8
|
)%
|
|||
Total operating expenses
|
|
$
|
29.0
|
|
|
$
|
33.0
|
|
|
$
|
(4.0
|
)
|
|
(12.1
|
)%
|
(1)
|
Excludes stock-based compensation.
|
(amounts in $ millions)
|
As of and for the nine months ended September 30, 2017
|
|
As of and for the nine months ended September 30, 2016
|
|
As of and for the year ended December 31, 2016
|
||||||
Cash and cash equivalents
|
$
|
18.9
|
|
|
$
|
21.7
|
|
|
$
|
27.9
|
|
Working capital deficit
|
$
|
(220.3
|
)
|
|
$
|
(319.2
|
)
|
|
$
|
(313.2
|
)
|
Cash provided by (used in) operating activities
|
$
|
22.1
|
|
|
$
|
(41.4
|
)
|
|
$
|
5.4
|
|
Cash used in investing activities
|
$
|
(19.5
|
)
|
|
$
|
(14.7
|
)
|
|
$
|
(25.2
|
)
|
Cash provided by (used in) financing activities
|
$
|
(11.7
|
)
|
|
$
|
15.1
|
|
|
$
|
(15.9
|
)
|
Long-term debt to total equity ratio
|
(2.39
|
)
|
|
(1.83
|
)
|
|
(1.84
|
)
|
|||
Ratio of earnings to fixed charges
|
1.65
|
|
|
N/A
|
|
|
N/A
|
|
|||
Fixed charge deficiency
|
N/A
|
|
|
$
|
50.5
|
|
|
$
|
49.6
|
|
|
September 30, 2017
|
||
Total Senior Leverage Ratio
|
0.2
|
|
|
Maximum per covenant
|
2.0
|
|
|
|
|
|
|
Total Leverage Ratio
|
4.8
|
|
|
Maximum per covenant
|
5.5
|
|
|
|
|
|
|
Fixed Charges Ratio
|
2.2
|
|
|
Minimum per covenant
|
1.0
|
|
|
|
|
|
|
Earnings before interest, taxes, depreciation and amortization
|
$
|
197,686
|
|
Minimum per covenant
|
$
|
105,000
|
|
|
September 30, 2017
|
||||||||||||||||||||||
(amounts in $ millions)
|
Global Integrated Agencies
|
|
Domestic Creative Agencies
|
|
Specialist Communication Agencies
|
|
Media Services
|
|
All Other
|
|
Total
|
||||||||||||
Beginning Balance of contingent payments
|
$
|
148.8
|
|
|
$
|
0.8
|
|
|
$
|
15.0
|
|
|
$
|
7.1
|
|
|
$
|
53.1
|
|
|
$
|
224.8
|
|
Payments
(1)
|
(72.3
|
)
|
|
(1.1
|
)
|
|
(9.1
|
)
|
|
(2.6
|
)
|
|
(15.4
|
)
|
|
(100.5
|
)
|
||||||
Additions
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Redemption value adjustments
(3)
|
16.3
|
|
|
0.4
|
|
|
1.3
|
|
|
0.4
|
|
|
0.8
|
|
|
19.2
|
|
||||||
Foreign translation adjustment
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
1.3
|
|
||||||
Ending Balance of contingent payments
|
93.4
|
|
|
—
|
|
|
7.3
|
|
|
5.0
|
|
|
39.2
|
|
|
144.8
|
|
||||||
Fixed payments
|
2.3
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.8
|
|
|
3.4
|
|
||||||
|
$
|
95.7
|
|
|
$
|
—
|
|
|
$
|
7.6
|
|
|
$
|
5.0
|
|
|
$
|
40.0
|
|
|
$
|
148.3
|
|
|
December 31, 2016
|
||||||||||||||||||||||
(amounts in $ millions)
|
Global Integrated Agencies
|
|
Domestic Creative Agencies
|
|
Specialist Communication Agencies
|
|
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
nine months ended September 30, 2017
and the year ended
December 31, 2016
, payments include
$28.7 million
and
$10.5 million
, respectively, of deferred acquisition consideration settled through the issuance of
3,353,939
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
|
|
$
|
3.3
|
|
|
$
|
2.8
|
|
|
$
|
2.6
|
|
|
$
|
3.5
|
|
|
$
|
3.1
|
|
|
$
|
15.3
|
|
|
Shares
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
0.2
|
|
|
||||||
|
|
$
|
3.3
|
|
|
$
|
2.8
|
|
|
$
|
2.7
|
|
|
$
|
3.6
|
|
|
$
|
3.1
|
|
|
$
|
15.5
|
|
(1)
|
Operating income before depreciation and amortization to be received
(2)
|
|
$
|
2.7
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
4.1
|
|
|
Cumulative operating income before depreciation and amortization
(3)
|
|
$
|
2.7
|
|
|
$
|
3.6
|
|
|
$
|
3.6
|
|
|
$
|
4.1
|
|
|
$
|
4.1
|
|
|
|
(5)
|
(1)
|
This amount is in addition to (i) the
$42.3 million
of options to purchase only exercisable upon termination not within the control of the Company, or death, and (ii) the
$2.3 million
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 ongoing Canadian class litigation claim.
|
MDC PARTNERS INC.
|
|
|
|
/s/ David Doft
|
|
David Doft
|
|
Chief Financial Officer and Authorized Signatory
|
|
|
|
November 1, 2017
|
Exhibit No.
|
|
Description
|
|
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.*
|
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