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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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||
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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.
|
||
Item 6.
|
||
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Three Months Ended September 30,
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|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Services
|
$
|
375,830
|
|
|
$
|
375,800
|
|
|
$
|
1,082,541
|
|
|
$
|
1,111,032
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of services sold
|
238,690
|
|
|
249,418
|
|
|
735,110
|
|
|
754,803
|
|
||||
Office and general expenses
|
102,380
|
|
|
77,910
|
|
|
270,137
|
|
|
251,313
|
|
||||
Depreciation and amortization
|
11,134
|
|
|
11,252
|
|
|
35,212
|
|
|
32,916
|
|
||||
Goodwill and other asset impairment
|
21,008
|
|
|
—
|
|
|
23,325
|
|
|
—
|
|
||||
|
373,212
|
|
|
338,580
|
|
|
1,063,784
|
|
|
1,039,032
|
|
||||
Operating profit
|
2,618
|
|
|
37,220
|
|
|
18,757
|
|
|
72,000
|
|
||||
Other Income (Expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense and finance charges, net
|
(17,063
|
)
|
|
(16,258
|
)
|
|
(50,005
|
)
|
|
(48,309
|
)
|
||||
Foreign exchange transaction gain (loss)
|
3,275
|
|
|
9,913
|
|
|
(9,934
|
)
|
|
18,798
|
|
||||
Other, net
|
189
|
|
|
(1,264
|
)
|
|
1,222
|
|
|
(986
|
)
|
||||
|
(13,599
|
)
|
|
(7,609
|
)
|
|
(58,717
|
)
|
|
(30,497
|
)
|
||||
Income (loss) before income taxes and equity in earnings (losses) of non-consolidated affiliates
|
(10,981
|
)
|
|
29,611
|
|
|
(39,960
|
)
|
|
41,503
|
|
||||
Income tax expense (benefit)
|
2,986
|
|
|
9,049
|
|
|
(3,367
|
)
|
|
17,659
|
|
||||
Income (loss) before equity in earnings (losses) of non-consolidated affiliates
|
(13,967
|
)
|
|
20,562
|
|
|
(36,593
|
)
|
|
23,844
|
|
||||
Equity in earnings of non-consolidated affiliates
|
300
|
|
|
1,422
|
|
|
358
|
|
|
1,924
|
|
||||
Net income (loss)
|
(13,667
|
)
|
|
21,984
|
|
|
(36,235
|
)
|
|
25,768
|
|
||||
Net income attributable to noncontrolling interests
|
(2,458
|
)
|
|
(3,491
|
)
|
|
(5,900
|
)
|
|
(6,588
|
)
|
||||
Net income (loss) attributable to MDC Partners Inc.
|
(16,125
|
)
|
|
18,493
|
|
|
(42,135
|
)
|
|
19,180
|
|
||||
Accretion on and net income allocated to convertible preference shares
|
(2,109
|
)
|
|
(4,356
|
)
|
|
(6,204
|
)
|
|
(6,147
|
)
|
||||
Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
(18,234
|
)
|
|
$
|
14,137
|
|
|
$
|
(48,339
|
)
|
|
$
|
13,033
|
|
|
|
|
|
|
|
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|
||||||||
Income (loss) per common share:
|
|
|
|
|
|
|
|
|
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||||||
Basic
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
(0.32
|
)
|
|
$
|
0.25
|
|
|
$
|
(0.85
|
)
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
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||||||||
Diluted
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to MDC Partners Inc. common shareholders
|
$
|
(0.32
|
)
|
|
$
|
0.24
|
|
|
$
|
(0.85
|
)
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Number of Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
57,498,661
|
|
|
57,566,707
|
|
|
57,117,797
|
|
|
53,915,536
|
|
||||
Diluted
|
57,498,661
|
|
|
57,943,080
|
|
|
57,117,797
|
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|
54,228,208
|
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||||
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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
|
$
|
4,390
|
|
|
$
|
5,310
|
|
|
$
|
11,784
|
|
|
$
|
12,558
|
|
Office and general expenses
|
1,852
|
|
|
1,070
|
|
|
5,098
|
|
|
4,312
|
|
||||
Total
|
$
|
6,242
|
|
|
$
|
6,380
|
|
|
$
|
16,882
|
|
|
$
|
16,870
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(13,667
|
)
|
|
$
|
21,984
|
|
|
$
|
(36,235
|
)
|
|
$
|
25,768
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of applicable tax:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(1,327
|
)
|
|
(1,912
|
)
|
|
(898
|
)
|
|
(1,294
|
)
|
||||
Other comprehensive income (loss)
|
(1,327
|
)
|
|
(1,912
|
)
|
|
(898
|
)
|
|
(1,294
|
)
|
||||
Comprehensive income (loss) for the period
|
(14,994
|
)
|
|
20,072
|
|
|
(37,133
|
)
|
|
24,474
|
|
||||
Comprehensive income attributable to the noncontrolling interests
|
(2,931
|
)
|
|
(4,695
|
)
|
|
(4,367
|
)
|
|
(9,063
|
)
|
||||
Comprehensive income (loss) attributable to MDC Partners Inc.
|
$
|
(17,925
|
)
|
|
$
|
15,377
|
|
|
$
|
(41,500
|
)
|
|
$
|
15,411
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
25,056
|
|
|
$
|
46,179
|
|
Cash held in trusts
|
3,965
|
|
|
4,632
|
|
||
Accounts receivable, less allowance for doubtful accounts of $3,001 and $2,453
|
437,024
|
|
|
434,072
|
|
||
Expenditures billable to clients
|
59,317
|
|
|
31,146
|
|
||
Other current assets
|
37,867
|
|
|
26,742
|
|
||
Total Current Assets
|
563,229
|
|
|
542,771
|
|
||
Fixed assets, at cost, less accumulated depreciation of $132,193 and $123,599
|
90,249
|
|
|
90,306
|
|
||
Investments in non-consolidated affiliates
|
6,814
|
|
|
6,307
|
|
||
Goodwill
|
843,180
|
|
|
835,935
|
|
||
Other intangible assets, net
|
75,115
|
|
|
70,605
|
|
||
Deferred tax assets
|
122,505
|
|
|
115,325
|
|
||
Other assets
|
28,632
|
|
|
37,643
|
|
||
Total Assets
|
$
|
1,729,724
|
|
|
$
|
1,698,892
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS’ DEFICIT
|
|
|
|
|
|
||
Current Liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
219,757
|
|
|
$
|
244,527
|
|
Trust liability
|
3,965
|
|
|
4,632
|
|
||
Accruals and other liabilities
|
300,664
|
|
|
327,812
|
|
||
Advance billings
|
182,305
|
|
|
148,133
|
|
||
Current portion of long-term debt
|
360
|
|
|
313
|
|
||
Current portion of deferred acquisition consideration
|
37,902
|
|
|
50,213
|
|
||
Total Current Liabilities
|
744,953
|
|
|
775,630
|
|
||
Long-term debt, less current portion
|
987,880
|
|
|
882,806
|
|
||
Long-term portion of deferred acquisition consideration
|
56,827
|
|
|
72,213
|
|
||
Other liabilities
|
53,912
|
|
|
54,110
|
|
||
Deferred tax liabilities
|
6,899
|
|
|
6,760
|
|
||
Total Liabilities
|
1,850,471
|
|
|
1,791,519
|
|
||
|
|
|
|
||||
Redeemable Noncontrolling Interests
|
57,193
|
|
|
62,886
|
|
||
Commitments, Contingencies, and Guarantees (Note 13)
|
|
|
|
|
|
||
Shareholders’ Deficit:
|
|
|
|
|
|
||
Convertible preference shares (liquidation preference $107,556 and $101,352)
|
90,123
|
|
|
90,220
|
|
||
Common shares
|
362,195
|
|
|
352,432
|
|
||
Charges in excess of capital
|
(311,576
|
)
|
|
(314,241
|
)
|
||
Accumulated deficit
|
(383,305
|
)
|
|
(340,000
|
)
|
||
Accumulated other comprehensive loss
|
(1,319
|
)
|
|
(1,954
|
)
|
||
MDC Partners Inc. Shareholders' Deficit
|
(243,882
|
)
|
|
(213,543
|
)
|
||
Noncontrolling interests
|
65,942
|
|
|
58,030
|
|
||
Total Shareholders' Deficit
|
(177,940
|
)
|
|
(155,513
|
)
|
||
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Deficit
|
$
|
1,729,724
|
|
|
$
|
1,698,892
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income (loss)
|
$
|
(36,235
|
)
|
|
$
|
25,768
|
|
Adjustments to reconcile net income (loss) to cash used in operating activities:
|
|
|
|
|
|
||
Stock-based compensation
|
16,882
|
|
|
16,870
|
|
||
Depreciation
|
20,944
|
|
|
18,000
|
|
||
Amortization of intangibles
|
14,268
|
|
|
14,916
|
|
||
Amortization of deferred finance charges
|
2,402
|
|
|
2,018
|
|
||
Goodwill and other asset impairment
|
23,325
|
|
|
—
|
|
||
Adjustment to deferred acquisition consideration
|
8,522
|
|
|
13,354
|
|
||
Acquisition-related contingent consideration payment
|
(28,263
|
)
|
|
(36,570
|
)
|
||
Deferred income taxes (benefits)
|
(6,690
|
)
|
|
8,125
|
|
||
Gain (loss) on sale of assets
|
(1,408
|
)
|
|
1,245
|
|
||
(Earnings) losses of non-consolidated affiliates
|
(358
|
)
|
|
(1,924
|
)
|
||
Other non-current assets and liabilities
|
(956
|
)
|
|
(4,388
|
)
|
||
Foreign exchange
|
9,125
|
|
|
(15,113
|
)
|
||
Changes in working capital:
|
|
|
|
||||
Accounts receivable
|
8,574
|
|
|
(54,723
|
)
|
||
Expenditures billable to clients
|
(28,171
|
)
|
|
(9,294
|
)
|
||
Prepaid expenses and other current assets
|
(11,516
|
)
|
|
6,400
|
|
||
Accounts payable, accruals and other liabilities
|
(49,587
|
)
|
|
(31,149
|
)
|
||
Advance billings
|
27,413
|
|
|
32,015
|
|
||
Net cash used in operating activities
|
(31,729
|
)
|
|
(14,450
|
)
|
||
Cash flows used in investing activities:
|
|
|
|
|
|
||
Capital expenditures
|
(15,232
|
)
|
|
(28,305
|
)
|
||
Deposits
|
—
|
|
|
(1,461
|
)
|
||
Acquisitions, net of cash acquired
|
(34,303
|
)
|
|
—
|
|
||
Proceeds from sale of assets
|
—
|
|
|
11,120
|
|
||
Distributions from non-consolidated affiliates
|
—
|
|
|
673
|
|
||
Other investments
|
1,180
|
|
|
(1,530
|
)
|
||
Net cash used in investing activities
|
(48,355
|
)
|
|
(19,503
|
)
|
||
Cash flows provided by financing activities:
|
|
|
|
|
|
||
Repayments of revolving credit agreement
|
(1,121,300
|
)
|
|
(1,093,508
|
)
|
||
Proceeds from revolving credit agreement
|
1,224,290
|
|
|
1,087,688
|
|
||
Proceeds from issuance of convertible preference shares
|
—
|
|
|
95,000
|
|
||
Convertible preference shares issuance costs
|
—
|
|
|
(4,632
|
)
|
||
Acquisition related payments
|
(32,240
|
)
|
|
(52,556
|
)
|
||
Repayment of long-term debt
|
(260
|
)
|
|
(310
|
)
|
||
Purchase of shares
|
(776
|
)
|
|
(1,239
|
)
|
||
Distributions to noncontrolling interests
|
(10,410
|
)
|
|
(5,272
|
)
|
||
Payment of dividends
|
(182
|
)
|
|
(284
|
)
|
||
Net cash provided by financing activities
|
59,122
|
|
|
24,887
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(161
|
)
|
|
6
|
|
||
Decrease in cash and cash equivalents
|
(21,123
|
)
|
|
(9,060
|
)
|
||
Cash and cash equivalents at beginning of period
|
46,179
|
|
|
27,921
|
|
||
Cash and cash equivalents at end of period
|
$
|
25,056
|
|
|
$
|
18,861
|
|
|
|
|
|
||||
Supplemental disclosures:
|
|
|
|
|
|
||
Cash income taxes paid
|
$
|
4,822
|
|
|
$
|
6,909
|
|
Cash interest paid
|
$
|
33,011
|
|
|
$
|
32,324
|
|
Change in cash held in trusts
|
$
|
(667
|
)
|
|
$
|
(159
|
)
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
|
|
||
Capital leases
|
$
|
600
|
|
|
$
|
621
|
|
Dividends payable
|
$
|
271
|
|
|
$
|
453
|
|
Acquisition related consideration settled through issuance of shares
|
$
|
7,030
|
|
|
$
|
28,727
|
|
|
Convertible Preference Shares
|
|
Common Shares
|
|
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
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Balance at December 31, 2017
|
95,000
|
|
|
$
|
90,220
|
|
|
56,375,131
|
|
|
$
|
352,432
|
|
|
$
|
—
|
|
|
$
|
(314,241
|
)
|
|
$
|
(340,000
|
)
|
|
$
|
(1,954
|
)
|
|
$
|
(213,543
|
)
|
|
$
|
58,030
|
|
|
$
|
(155,513
|
)
|
Net loss attributable to MDC Partners, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,135
|
)
|
|
—
|
|
|
(42,135
|
)
|
|
—
|
|
|
(42,135
|
)
|
|||||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
635
|
|
|
635
|
|
|
(1,533
|
)
|
|
(898
|
)
|
|||||||||
Expenses for convertible preference shares (Note 9)
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
|||||||||
Issuance of restricted stock
|
—
|
|
|
—
|
|
|
237,529
|
|
|
3,509
|
|
|
(3,509
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Shares acquired and cancelled
|
—
|
|
|
—
|
|
|
(108,782
|
)
|
|
(776
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(776
|
)
|
|
—
|
|
|
(776
|
)
|
|||||||||
Shares issued, acquisitions
|
—
|
|
|
—
|
|
|
1,011,561
|
|
|
7,030
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,030
|
|
|
—
|
|
|
7,030
|
|
|||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,774
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,774
|
|
|
—
|
|
|
6,774
|
|
|||||||||
Changes in redemption value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,409
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,409
|
)
|
|
|
|
(4,409
|
)
|
||||||||||
Business acquisitions and step-up transactions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,809
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,809
|
|
|
15,410
|
|
|
19,219
|
|
|||||||||
Changes in ownership interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,965
|
)
|
|
(5,965
|
)
|
|||||||||
Cumulative effect of adoption of ASC 606 (Note 14)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,170
|
)
|
|
—
|
|
|
(1,170
|
)
|
|
—
|
|
|
(1,170
|
)
|
|||||||||
Transfer to charges in excess of capital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,665
|
)
|
|
2,665
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Balance at September 30, 2018
|
95,000
|
|
|
$
|
90,123
|
|
|
57,515,439
|
|
|
$
|
362,195
|
|
|
$
|
—
|
|
|
$
|
(311,576
|
)
|
|
$
|
(383,305
|
)
|
|
$
|
(1,319
|
)
|
|
$
|
(243,882
|
)
|
|
$
|
65,942
|
|
|
$
|
(177,940
|
)
|
|
Three Months Ended September 30,
|
||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||
Industry
|
Reportable Segment
|
|
As reported
|
|
Adjustment to exclude impact of Adoption of ASC 606
|
|
Adjusted
|
|
|
||||||||
Food & Beverage
|
All
|
|
$
|
80,919
|
|
|
$
|
(1,212
|
)
|
|
$
|
79,707
|
|
|
$
|
80,247
|
|
Retail
|
All
|
|
40,421
|
|
|
(4,457
|
)
|
|
35,964
|
|
|
43,202
|
|
||||
Consumer Products
|
All
|
|
40,124
|
|
|
1,136
|
|
|
41,260
|
|
|
43,825
|
|
||||
Communications
|
All
|
|
46,779
|
|
|
8,337
|
|
|
55,116
|
|
|
46,649
|
|
||||
Automotive
|
All
|
|
21,282
|
|
|
734
|
|
|
22,016
|
|
|
30,547
|
|
||||
Technology
|
All
|
|
26,005
|
|
|
171
|
|
|
26,176
|
|
|
25,748
|
|
||||
Healthcare
|
All
|
|
33,751
|
|
|
84
|
|
|
33,835
|
|
|
31,181
|
|
||||
Financials
|
All
|
|
30,378
|
|
|
283
|
|
|
30,661
|
|
|
26,631
|
|
||||
Transportation and Travel/Lodging
|
All
|
|
19,357
|
|
|
1,333
|
|
|
20,690
|
|
|
14,412
|
|
||||
Other
|
All
|
|
36,814
|
|
|
1,763
|
|
|
38,577
|
|
|
33,358
|
|
||||
|
|
|
$
|
375,830
|
|
|
$
|
8,172
|
|
|
$
|
384,002
|
|
|
$
|
375,800
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||
Industry
|
Reportable Segment
|
|
As reported
|
|
Adjustment to exclude impact of Adoption of ASC 606
|
|
Adjusted
|
|
|
||||||||
Food & Beverage
|
All
|
|
$
|
234,203
|
|
|
$
|
4,171
|
|
|
$
|
238,374
|
|
|
$
|
225,873
|
|
Retail
|
All
|
|
116,832
|
|
|
(2,685
|
)
|
|
114,147
|
|
|
134,993
|
|
||||
Consumer Products
|
All
|
|
118,097
|
|
|
362
|
|
|
118,459
|
|
|
119,554
|
|
||||
Communications
|
All
|
|
128,232
|
|
|
20,519
|
|
|
148,751
|
|
|
150,703
|
|
||||
Automotive
|
All
|
|
67,070
|
|
|
6,809
|
|
|
73,879
|
|
|
96,832
|
|
||||
Technology
|
All
|
|
71,085
|
|
|
(139
|
)
|
|
70,946
|
|
|
72,620
|
|
||||
Healthcare
|
All
|
|
101,753
|
|
|
603
|
|
|
102,356
|
|
|
92,380
|
|
||||
Financials
|
All
|
|
83,079
|
|
|
1,194
|
|
|
84,273
|
|
|
73,777
|
|
||||
Transportation and Travel/Lodging
|
All
|
|
53,021
|
|
|
2,109
|
|
|
55,130
|
|
|
42,187
|
|
||||
Other
|
All
|
|
109,169
|
|
|
6,233
|
|
|
115,402
|
|
|
102,113
|
|
||||
|
|
|
$
|
1,082,541
|
|
|
$
|
39,176
|
|
|
$
|
1,121,717
|
|
|
$
|
1,111,032
|
|
|
Three Months Ended September 30,
|
||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||
Geographic Location
|
Reportable Segment
|
|
As reported
|
|
Adjustment to exclude impact of Adoption of ASC 606
|
|
Adjusted
|
|
|
||||||||
United States
|
All
|
|
$
|
296,544
|
|
|
$
|
1,899
|
|
|
$
|
298,443
|
|
|
$
|
289,701
|
|
Canada
|
All
|
|
32,132
|
|
|
286
|
|
|
32,418
|
|
|
31,418
|
|
||||
Other
|
All
|
|
47,154
|
|
|
5,987
|
|
|
53,141
|
|
|
54,681
|
|
||||
|
|
|
$
|
375,830
|
|
|
$
|
8,172
|
|
|
$
|
384,002
|
|
|
$
|
375,800
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||
Geographic Location
|
Reportable Segment
|
|
As reported
|
|
Adjustment to exclude impact of Adoption of ASC 606
|
|
Adjusted
|
|
|
||||||||
United States
|
All
|
|
$
|
848,336
|
|
|
$
|
16,940
|
|
|
$
|
865,276
|
|
|
$
|
868,847
|
|
Canada
|
All
|
|
91,597
|
|
|
(2,352
|
)
|
|
89,245
|
|
|
88,471
|
|
||||
Other
|
All
|
|
142,608
|
|
|
24,588
|
|
|
167,196
|
|
|
153,714
|
|
||||
|
|
|
$
|
1,082,541
|
|
|
$
|
39,176
|
|
|
$
|
1,121,717
|
|
|
$
|
1,111,032
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
|||||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
(16,125
|
)
|
|
$
|
18,493
|
|
|
$
|
(42,135
|
)
|
|
$
|
19,180
|
|
Accretion on convertible preference shares
|
(2,109
|
)
|
|
(1,948
|
)
|
|
(6,204
|
)
|
|
(4,365
|
)
|
||||
Net income allocated to convertible preference shares
|
—
|
|
|
(2,408
|
)
|
|
—
|
|
|
(1,782
|
)
|
||||
Numerator for basic income (loss) per common share - Net income (loss) attributable to MDC Partners Inc. common shareholders
|
(18,234
|
)
|
|
14,137
|
|
|
(48,339
|
)
|
|
13,033
|
|
||||
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
|
$
|
(18,234
|
)
|
|
$
|
14,150
|
|
|
$
|
(48,339
|
)
|
|
$
|
13,042
|
|
Denominator
|
|
|
|
|
|
|
|
|
|||||||
Denominator for basic income (loss) per common share - weighted average common shares
|
57,498,661
|
|
|
57,566,707
|
|
|
57,117,797
|
|
|
53,915,536
|
|
||||
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
|
57,498,661
|
|
|
57,943,080
|
|
|
57,117,797
|
|
|
54,228,208
|
|
||||
Basic income (loss) per common share
|
$
|
(0.32
|
)
|
|
$
|
0.25
|
|
|
$
|
(0.85
|
)
|
|
$
|
0.24
|
|
Diluted income (loss) per common share
|
$
|
(0.32
|
)
|
|
$
|
0.24
|
|
|
$
|
(0.85
|
)
|
|
$
|
0.24
|
|
|
September 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Beginning balance of contingent payments
|
$
|
119,086
|
|
|
$
|
224,754
|
|
Payments
(1)
|
(54,947
|
)
|
|
(110,234
|
)
|
||
Additions - acquisitions and step up transactions
|
12,816
|
|
|
—
|
|
||
Redemption value adjustments
(2)
|
16,276
|
|
|
3,273
|
|
||
Foreign translation adjustment
|
(22
|
)
|
|
1,293
|
|
||
Ending balance of contingent payments
|
$
|
93,209
|
|
|
$
|
119,086
|
|
Fixed payments
|
1,520
|
|
|
3,340
|
|
||
|
$
|
94,729
|
|
|
$
|
122,426
|
|
(1)
|
For the year ended
December 31, 2017
, payments include
$28,727
of deferred acquisition consideration settled through the issuance of
3,353,939
MDC Class A subordinate voting shares, respectively, in lieu of cash.
|
(2)
|
Redemption value adjustments are fair value changes from the Company’s initial estimates of deferred acquisition payments, including the accretion of present value and stock-based compensation charges relating to acquisition payments that are tied to continued employment.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Expense (Income) attributable to fair value adjustments
|
$
|
11,003
|
|
|
$
|
(2,462
|
)
|
|
$
|
8,522
|
|
|
$
|
12,152
|
|
Stock-based compensation
|
3,076
|
|
|
3,160
|
|
|
7,758
|
|
|
7,080
|
|
|
September 30,
2018 |
|
December 31, 2017
|
||||
Revolving credit agreement
|
$
|
102,990
|
|
|
$
|
—
|
|
6.50% Notes due 2024
|
900,000
|
|
|
900,000
|
|
||
Debt issuance costs
|
(15,350
|
)
|
|
(17,587
|
)
|
||
|
987,640
|
|
|
882,413
|
|
||
Obligations under capital leases
|
600
|
|
|
706
|
|
||
|
988,240
|
|
|
883,119
|
|
||
Less: Current portion of long-term debt
|
360
|
|
|
313
|
|
||
|
$
|
987,880
|
|
|
$
|
882,806
|
|
|
Noncontrolling
Interests |
||
Balance, December 31, 2016
|
$
|
4,154
|
|
Income attributable to noncontrolling interests
|
15,375
|
|
|
Distributions made
|
(8,865
|
)
|
|
Other
(1)
|
366
|
|
|
Balance, December 31, 2017
|
$
|
11,030
|
|
Income attributable to noncontrolling interests
|
5,900
|
|
|
Distributions made
|
(10,410
|
)
|
|
Other
(1)
|
196
|
|
|
Balance, September 30, 2018
|
$
|
6,716
|
|
(1)
|
Other consists primarily of business acquisitions, sale of a business, step-up transactions, and cumulative translation adjustments.
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
(16,125
|
)
|
|
$
|
18,493
|
|
|
$
|
(42,135
|
)
|
|
$
|
19,180
|
|
Transfers from the noncontrolling interest:
|
|
|
|
|
|
|
|
||||||||
Increase (Decrease) in MDC Partners Inc. paid-in capital for purchase of equity interests in excess of Redeemable Noncontrolling Interests and Noncontrolling Interests
|
4,975
|
|
|
(337
|
)
|
|
3,809
|
|
|
2,315
|
|
||||
Net transfers from noncontrolling interests
|
$
|
4,975
|
|
|
$
|
(337
|
)
|
|
$
|
3,809
|
|
|
$
|
2,315
|
|
Change from net income (loss) attributable to MDC Partners Inc. and transfers to noncontrolling interests
|
$
|
(11,150
|
)
|
|
$
|
18,156
|
|
|
$
|
(38,326
|
)
|
|
$
|
21,495
|
|
|
Nine Months Ended September 30, 2018
|
|
Year Ended December 31, 2017
|
||||
Beginning Balance
|
$
|
62,886
|
|
|
$
|
60,180
|
|
Redemptions
|
(9,791
|
)
|
|
(910
|
)
|
||
Granted
|
—
|
|
|
1,666
|
|
||
Changes in redemption value
|
4,409
|
|
|
1,498
|
|
||
Currency translation adjustments
|
(311
|
)
|
|
452
|
|
||
Ending Balance
|
$
|
57,193
|
|
|
$
|
62,886
|
|
•
|
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.
|
•
|
Source Marketing, previously within the All Other category, was included within the Doner operating segment, which is aggregated into the Global Integrated Agencies reportable segment
|
•
|
Yamamoto, previously within the All Other category, was operationally merged with Civilian and is now included within the Domestic Creative Agencies reportable segment
|
•
|
Bruce Mau Design, Hello Design and Northstar Research Partners, previously within the All Other category, and Varick Media Management, previously within the Media Services reportable segment, were included into a newly-formed operating segment, Yes & Company, which is aggregated within the Media Services reportable segment
|
•
|
The
Global Integrated Agencies
reportable segment is comprised of the Company’s five global, integrated operating segments (72andSunny, Anomaly, Crispin Porter + Bogusky, Doner and Forsman & Bodenfors) serving multinational clients around the world. 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 five operating segments that are national advertising agencies (Colle + McVoy, Laird + Partners, Mono Advertising, Union and Yamamoto) leveraging creative capabilities at their core. These operating segments share similar characteristics related to (i) the nature of their 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 five operating segments that are each communications agencies (Allison & Partners, HL Group Partners, Hunter PR, KWT Global (formerly Kwittken), and Veritas) with core service offerings in public relations and related communications services. These operating segments share similar characteristics related to (i) the nature of their services; (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
|
•
|
The
Media Services
reportable segment is comprised of two operating segments (MDC Media Partners and Yes & Company). These operating segments perform media buying and planning as their core competency across a range of platforms (out-of-home, paid search, social media, lead generation, programmatic, television broadcast).
|
•
|
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 Communications, Concentric Partners, Gale Partners, Kenna, Kingsdale, Instrument, Redscout, Relevent, Team, Vitro, 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 in these operating segments having current and long-term performance expectations inconsistent with those operating segments aggregated in the reportable segments.The operating segments within All Other provide a range of diverse marketing communication services, including application and website design and development, data and analytics, experiential marketing, customer research management, creative services, and branding.
|
•
|
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, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
177,398
|
|
|
$
|
196,974
|
|
|
$
|
510,360
|
|
|
$
|
585,290
|
|
Domestic Creative Agencies
|
24,798
|
|
|
28,096
|
|
|
75,503
|
|
|
77,325
|
|
||||
Specialist Communications
|
42,636
|
|
|
40,670
|
|
|
129,724
|
|
|
125,470
|
|
||||
Media Services
|
35,022
|
|
|
38,315
|
|
|
104,460
|
|
|
122,207
|
|
||||
All Other
|
95,976
|
|
|
71,745
|
|
|
262,494
|
|
|
200,740
|
|
||||
Total
|
$
|
375,830
|
|
|
$
|
375,800
|
|
|
$
|
1,082,541
|
|
|
$
|
1,111,032
|
|
|
|
|
|
|
|
|
|
||||||||
Operating profit (loss):
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies*
|
$
|
2,633
|
|
|
$
|
20,069
|
|
|
$
|
6,099
|
|
|
$
|
33,240
|
|
Domestic Creative Agencies
|
5,532
|
|
|
6,627
|
|
|
14,451
|
|
|
15,411
|
|
||||
Specialist Communications
|
4,677
|
|
|
4,775
|
|
|
14,471
|
|
|
13,423
|
|
||||
Media Services
|
1,387
|
|
|
2,555
|
|
|
407
|
|
|
9,169
|
|
||||
All Other
|
6,413
|
|
|
13,920
|
|
|
28,565
|
|
|
29,740
|
|
||||
Corporate
|
(18,024
|
)
|
|
(10,726
|
)
|
|
(45,236
|
)
|
|
(28,983
|
)
|
||||
Total
|
$
|
2,618
|
|
|
$
|
37,220
|
|
|
$
|
18,757
|
|
|
$
|
72,000
|
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense and finance charges, net
|
(17,063
|
)
|
|
(16,258
|
)
|
|
(50,005
|
)
|
|
(48,309
|
)
|
||||
Foreign exchange transaction gain (loss)
|
3,275
|
|
|
9,913
|
|
|
(9,934
|
)
|
|
18,798
|
|
||||
Other, net
|
189
|
|
|
(1,264
|
)
|
|
1,222
|
|
|
(986
|
)
|
||||
Income (loss) before income taxes and equity in earnings (losses) of non-consolidated affiliates
|
(10,981
|
)
|
|
29,611
|
|
|
(39,960
|
)
|
|
41,503
|
|
||||
Income tax expense (benefit)
|
2,986
|
|
|
9,049
|
|
|
(3,367
|
)
|
|
17,659
|
|
||||
Income (loss) before equity in earnings (losses) of non-consolidated affiliates
|
(13,967
|
)
|
|
20,562
|
|
|
(36,593
|
)
|
|
23,844
|
|
||||
Equity in earnings of non-consolidated affiliates
|
300
|
|
|
1,422
|
|
|
358
|
|
|
1,924
|
|
||||
Net income (loss)
|
(13,667
|
)
|
|
21,984
|
|
|
(36,235
|
)
|
|
25,768
|
|
||||
Net income attributable to the noncontrolling interest
|
(2,458
|
)
|
|
(3,491
|
)
|
|
(5,900
|
)
|
|
(6,588
|
)
|
||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
(16,125
|
)
|
|
$
|
18,493
|
|
|
$
|
(42,135
|
)
|
|
$
|
19,180
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
5,154
|
|
|
$
|
6,365
|
|
|
$
|
18,499
|
|
|
$
|
17,913
|
|
Domestic Creative Agencies
|
396
|
|
|
375
|
|
|
1,185
|
|
|
1,172
|
|
||||
Specialist Communications
|
1,134
|
|
|
1,220
|
|
|
3,163
|
|
|
3,657
|
|
||||
Media Services
|
781
|
|
|
1,011
|
|
|
2,315
|
|
|
3,232
|
|
||||
All Other
|
3,470
|
|
|
2,026
|
|
|
9,467
|
|
|
6,078
|
|
||||
Corporate
|
199
|
|
|
255
|
|
|
583
|
|
|
864
|
|
||||
Total
|
$
|
11,134
|
|
|
$
|
11,252
|
|
|
$
|
35,212
|
|
|
$
|
32,916
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
3,360
|
|
|
$
|
3,840
|
|
|
$
|
8,492
|
|
|
$
|
9,912
|
|
Domestic Creative Agencies
|
175
|
|
|
187
|
|
|
945
|
|
|
534
|
|
||||
Specialist Communications
|
43
|
|
|
659
|
|
|
542
|
|
|
2,264
|
|
||||
Media Services
|
112
|
|
|
161
|
|
|
282
|
|
|
495
|
|
||||
All Other
|
932
|
|
|
1,056
|
|
|
2,532
|
|
|
2,066
|
|
||||
Corporate
|
1,620
|
|
|
477
|
|
|
4,089
|
|
|
1,599
|
|
||||
Total
|
$
|
6,242
|
|
|
$
|
6,380
|
|
|
$
|
16,882
|
|
|
$
|
16,870
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
2,418
|
|
|
$
|
1,950
|
|
|
$
|
7,875
|
|
|
$
|
17,645
|
|
Domestic Creative Agencies
|
371
|
|
|
367
|
|
|
860
|
|
|
980
|
|
||||
Specialist Communications
|
743
|
|
|
206
|
|
|
3,207
|
|
|
673
|
|
||||
Media Services
|
428
|
|
|
2,308
|
|
|
845
|
|
|
4,107
|
|
||||
All Other
|
1,551
|
|
|
2,317
|
|
|
2,380
|
|
|
4,896
|
|
||||
Corporate
|
32
|
|
|
1
|
|
|
65
|
|
|
4
|
|
||||
Total
|
$
|
5,543
|
|
|
$
|
7,149
|
|
|
$
|
15,232
|
|
|
$
|
28,305
|
|
i.
|
Under the guidance in effect through December 31, 2017, performance incentives were recognized in revenue when specific quantitative goals were achieved, or when the Company’s performance against qualitative goals was determined by the client. Under ASC 606, the Company now estimates the amount of the incentive that will be earned at the inception of the contract and recognizes such incentive over the term of the contract. This results in an acceleration of revenue recognition for certain contract incentives compared to ASC 605.
|
ii.
|
Under the guidance in effect through December 31, 2017, non-refundable retainer fees were generally recognized on a straight-line basis over the term of the specific customer arrangement. Under ASC 606, an input method is typically used to measure progress and recognize revenue for these types of arrangements. This resulted in both the deferral and acceleration of revenue recognition in certain instances.
|
iii.
|
In certain client arrangements, the Company records revenue as a principal and includes within revenue certain third-party-pass-through and out-of-pocket costs, which are billed to clients in connection with the services provided. In other arrangements, the Company acts as an agent and records revenue equal to the net amount retained. The adoption of ASC 606 resulted in certain arrangements previously being accounted for as principal, now being accounted for as agent.
|
|
|
Three Months Ended September 30, 2018
|
||||||||||
|
|
As Reported
|
|
Adjustments
|
|
Adjusted to Exclude Adoption of ASC 606
|
||||||
Revenue - Services
|
|
$
|
375,830
|
|
|
$
|
8,172
|
|
|
$
|
384,002
|
|
Costs of services sold
|
|
$
|
238,690
|
|
|
$
|
14,122
|
|
|
$
|
252,812
|
|
Operating profit (loss)
|
|
$
|
2,618
|
|
|
$
|
(5,950
|
)
|
|
$
|
(3,332
|
)
|
Net loss attributable to MDC Partners, Inc. common shareholders
|
|
$
|
(18,234
|
)
|
|
$
|
(4,700
|
)
|
|
$
|
(22,934
|
)
|
Loss per common share - basic and diluted
|
|
$
|
(0.32
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.40
|
)
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||
|
|
As Reported
|
|
Adjustments
|
|
Adjusted to Exclude Adoption of ASC 606
|
||||||
Revenue - Services
|
|
$
|
1,082,541
|
|
|
$
|
39,176
|
|
|
$
|
1,121,717
|
|
Costs of services sold
|
|
$
|
735,110
|
|
|
$
|
48,083
|
|
|
$
|
783,193
|
|
Operating profit (loss)
|
|
$
|
18,757
|
|
|
$
|
(8,907
|
)
|
|
$
|
9,850
|
|
Net loss attributable to MDC Partners, Inc. common shareholders
|
|
$
|
(48,339
|
)
|
|
$
|
(6,085
|
)
|
|
$
|
(54,424
|
)
|
Loss per common share - basic and diluted
|
|
$
|
(0.85
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.95
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
177.4
|
|
|
$
|
197.0
|
|
|
$
|
510.4
|
|
|
$
|
585.3
|
|
Domestic Creative Agencies
|
24.8
|
|
|
28.1
|
|
|
75.5
|
|
|
77.3
|
|
||||
Specialist Communications
|
42.6
|
|
|
40.7
|
|
|
129.7
|
|
|
125.5
|
|
||||
Media Services
|
35.0
|
|
|
38.3
|
|
|
104.5
|
|
|
122.2
|
|
||||
All Other
|
96.0
|
|
|
71.7
|
|
|
262.5
|
|
|
200.7
|
|
||||
Total
|
$
|
375.8
|
|
|
$
|
375.8
|
|
|
$
|
1,082.5
|
|
|
$
|
1,111.0
|
|
|
|
|
|
|
|
|
|
||||||||
Operating profit (loss):
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies*
|
$
|
2.6
|
|
|
$
|
20.1
|
|
|
$
|
6.1
|
|
|
$
|
33.2
|
|
Domestic Creative Agencies
|
5.5
|
|
|
6.6
|
|
|
14.5
|
|
|
15.4
|
|
||||
Specialist Communications
|
4.7
|
|
|
4.8
|
|
|
14.5
|
|
|
13.4
|
|
||||
Media Services
|
1.4
|
|
|
2.6
|
|
|
0.4
|
|
|
9.2
|
|
||||
All Other
|
6.4
|
|
|
13.9
|
|
|
28.6
|
|
|
29.7
|
|
||||
Corporate
|
(18.0
|
)
|
|
(10.7
|
)
|
|
(45.2
|
)
|
|
(29.0
|
)
|
||||
Total
|
$
|
2.6
|
|
|
$
|
37.2
|
|
|
$
|
18.8
|
|
|
$
|
72.0
|
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense and finance charges, net
|
(17.1
|
)
|
|
(16.3
|
)
|
|
(50.0
|
)
|
|
(48.3
|
)
|
||||
Foreign exchange transaction gain (loss)
|
3.3
|
|
|
9.9
|
|
|
(9.9
|
)
|
|
18.8
|
|
||||
Other, net
|
0.2
|
|
|
(1.3
|
)
|
|
1.2
|
|
|
(1.0
|
)
|
||||
Income (loss) before income taxes and equity in earnings (losses) of non-consolidated affiliates
|
(11.0
|
)
|
|
29.6
|
|
|
(40.0
|
)
|
|
41.5
|
|
||||
Income tax expense (benefit)
|
3.0
|
|
|
9.0
|
|
|
(3.4
|
)
|
|
17.7
|
|
||||
Income (loss) before equity in earnings (losses) of non-consolidated affiliates
|
(14.0
|
)
|
|
20.6
|
|
|
(36.6
|
)
|
|
23.8
|
|
||||
Equity in earnings of non-consolidated affiliates
|
0.3
|
|
|
1.4
|
|
|
0.4
|
|
|
1.9
|
|
||||
Net income (loss)
|
(13.7
|
)
|
|
22.0
|
|
|
(36.2
|
)
|
|
25.8
|
|
||||
Net income attributable to the noncontrolling interest
|
(2.5
|
)
|
|
(3.5
|
)
|
|
(5.9
|
)
|
|
(6.6
|
)
|
||||
Net income (loss) attributable to MDC Partners Inc.
|
$
|
(16.1
|
)
|
|
18.5
|
|
|
(42.1
|
)
|
|
19.2
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
5.2
|
|
|
$
|
6.4
|
|
|
$
|
18.5
|
|
|
$
|
17.9
|
|
Domestic Creative Agencies
|
0.4
|
|
|
0.4
|
|
|
1.2
|
|
|
1.2
|
|
||||
Specialist Communications
|
1.1
|
|
|
1.2
|
|
|
3.2
|
|
|
3.7
|
|
||||
Media Services
|
0.8
|
|
|
1.0
|
|
|
2.3
|
|
|
3.2
|
|
||||
All Other
|
3.5
|
|
|
2.0
|
|
|
9.5
|
|
|
6.1
|
|
||||
Corporate
|
0.2
|
|
|
0.3
|
|
|
0.6
|
|
|
0.9
|
|
||||
Total
|
$
|
11.1
|
|
|
$
|
11.3
|
|
|
$
|
35.2
|
|
|
$
|
32.9
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
3.4
|
|
|
$
|
3.8
|
|
|
$
|
8.5
|
|
|
$
|
9.9
|
|
Domestic Creative Agencies
|
0.2
|
|
|
0.2
|
|
|
0.9
|
|
|
0.5
|
|
||||
Specialist Communications
|
—
|
|
|
0.7
|
|
|
0.5
|
|
|
2.3
|
|
||||
Media Services
|
0.1
|
|
|
0.2
|
|
|
0.3
|
|
|
0.5
|
|
||||
All Other
|
0.9
|
|
|
1.1
|
|
|
2.5
|
|
|
2.1
|
|
||||
Corporate
|
1.6
|
|
|
0.5
|
|
|
4.1
|
|
|
1.6
|
|
||||
Total
|
$
|
6.2
|
|
|
$
|
6.4
|
|
|
$
|
16.9
|
|
|
$
|
16.9
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures:
|
|
|
|
|
|
|
|
||||||||
Global Integrated Agencies
|
$
|
2.4
|
|
|
$
|
2.0
|
|
|
$
|
7.9
|
|
|
$
|
17.6
|
|
Domestic Creative Agencies
|
0.4
|
|
|
0.4
|
|
|
0.9
|
|
|
1.0
|
|
||||
Specialist Communications
|
0.7
|
|
|
0.2
|
|
|
3.2
|
|
|
0.7
|
|
||||
Media Services
|
0.4
|
|
|
2.3
|
|
|
0.8
|
|
|
4.1
|
|
||||
All Other
|
1.6
|
|
|
2.3
|
|
|
2.4
|
|
|
4.9
|
|
||||
Corporate
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
||||
Total
|
$
|
5.5
|
|
|
$
|
7.1
|
|
|
$
|
15.2
|
|
|
$
|
28.3
|
|
|
Total
|
|
United States
|
|
Canada
|
|
Other
|
||||||||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(Dollars in Millions)
|
||||||||||||||||||||||||||
September 30, 2017
|
$
|
375.8
|
|
|
|
|
$
|
289.7
|
|
|
|
|
$
|
31.4
|
|
|
|
|
$
|
54.7
|
|
|
|
||||
Components of revenue change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange impact
|
(4.2
|
)
|
|
(1.1
|
)%
|
|
—
|
|
|
—
|
%
|
|
(1.3
|
)
|
|
(4.3
|
)%
|
|
(2.8
|
)
|
|
(5.2
|
)%
|
||||
Non-GAAP acquisitions (dispositions), net
|
6.8
|
|
|
1.8
|
%
|
|
$
|
6.6
|
|
|
2.3
|
%
|
|
—
|
|
|
—
|
%
|
|
0.2
|
|
|
0.3
|
%
|
|||
Impact of adoption of ASC 606
|
(8.2
|
)
|
|
(2.2
|
)%
|
|
(1.9
|
)
|
|
(0.7
|
)%
|
|
(0.3
|
)
|
|
(0.9
|
)%
|
|
(6.0
|
)
|
|
(11.0
|
)%
|
||||
Organic revenue growth (decline)
|
5.5
|
|
|
1.5
|
%
|
|
2.1
|
|
|
0.7
|
%
|
|
2.3
|
|
|
7.5
|
%
|
|
1.1
|
|
|
2.0
|
%
|
||||
Total Change
|
$
|
—
|
|
|
—
|
%
|
|
$
|
6.8
|
|
|
2.4
|
%
|
|
$
|
0.7
|
|
|
2.3
|
%
|
|
$
|
(7.5
|
)
|
|
(13.8
|
)%
|
September 30, 2018
|
$
|
375.8
|
|
|
|
|
$
|
296.5
|
|
|
|
|
$
|
32.1
|
|
|
|
|
$
|
47.2
|
|
|
|
|
Specialist
Communications
|
|
Media Services
|
|
All Other
|
|
Total
|
|||||||||||
|
(Dollars in Millions)
|
|||||||||||||||||
GAAP revenue from 2018 acquisitions
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
12.5
|
|
|
$
|
12.7
|
|
|||
Impact of adoption of ASC 606 from 2018 acquisitions
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|
(1.1
|
)
|
|||||||
Contribution to non-GAAP organic revenue (growth) decline
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.9
|
)
|
—
|
|
(0.9
|
)
|
||||
Prior year revenue from dispositions
|
—
|
|
|
(3.4
|
)
|
|
(0.4
|
)
|
|
(3.8
|
)
|
|||||||
Non-GAAP acquisitions (dispositions), net
|
$
|
0.2
|
|
|
$
|
(3.4
|
)
|
|
$
|
10.0
|
|
|
$
|
6.8
|
|
|
2018
|
|
2017
|
||
United States
|
79.0
|
%
|
|
77.0
|
%
|
Canada
|
8.5
|
%
|
|
8.4
|
%
|
Other
|
12.5
|
%
|
|
14.6
|
%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
375.8
|
|
|
|
|
$
|
375.8
|
|
|
|
|
$
|
—
|
|
|
—
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
238.7
|
|
|
63.5
|
%
|
|
249.4
|
|
|
66.4
|
%
|
|
(10.7
|
)
|
|
(4.3
|
)%
|
|||
Office and general expenses
|
|
84.6
|
|
|
22.5
|
%
|
|
67.4
|
|
|
17.9
|
%
|
|
17.1
|
|
|
25.4
|
%
|
|||
Depreciation and amortization
|
|
10.9
|
|
|
2.9
|
%
|
|
11.0
|
|
|
2.9
|
%
|
|
(0.1
|
)
|
|
(0.6
|
)%
|
|||
Goodwill and intangible impairment
|
|
21.0
|
|
|
5.6
|
%
|
|
—
|
|
|
—
|
%
|
|
21.0
|
|
|
NA
|
|
|||
|
|
$
|
355.2
|
|
|
94.5
|
%
|
|
$
|
327.9
|
|
|
87.2
|
%
|
|
$
|
27.3
|
|
|
8.3
|
%
|
Operating profit
|
|
$
|
20.6
|
|
|
5.5
|
%
|
|
$
|
47.9
|
|
|
12.8
|
%
|
|
$
|
(27.3
|
)
|
|
(56.9
|
)%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
51.8
|
|
|
13.8
|
%
|
|
$
|
62.9
|
|
|
16.7
|
%
|
|
$
|
(11.1
|
)
|
|
(17.7
|
)%
|
Staff costs
(2)
|
|
209.4
|
|
|
55.7
|
%
|
|
204.2
|
|
|
54.3
|
%
|
|
5.2
|
|
|
2.5
|
%
|
|||
Administrative
|
|
46.4
|
|
|
12.4
|
%
|
|
46.3
|
|
|
12.3
|
%
|
|
0.1
|
|
|
0.2
|
%
|
|||
Deferred acquisition consideration
|
|
11.0
|
|
|
2.9
|
%
|
|
(2.5
|
)
|
|
(0.7
|
)%
|
|
13.5
|
|
|
(546.9
|
)%
|
|||
Stock-based compensation
|
|
4.6
|
|
|
1.2
|
%
|
|
5.9
|
|
|
1.6
|
%
|
|
(1.3
|
)
|
|
(21.7
|
)%
|
|||
Depreciation and amortization
|
|
10.9
|
|
|
2.9
|
%
|
|
11.0
|
|
|
2.9
|
%
|
|
(0.1
|
)
|
|
(0.6
|
)%
|
|||
Goodwill and intangible impairment
|
|
21.0
|
|
|
5.6
|
%
|
|
—
|
|
|
—
|
%
|
|
21.0
|
|
|
—
|
%
|
|||
Total operating expenses
|
|
$
|
355.2
|
|
|
94.5
|
%
|
|
$
|
327.9
|
|
|
87.2
|
%
|
|
$
|
27.3
|
|
|
8.3
|
%
|
(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.
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
177.4
|
|
|
|
|
$
|
197.0
|
|
|
|
|
$
|
(19.6
|
)
|
|
(9.9
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
107.2
|
|
|
60.4
|
%
|
|
131.2
|
|
|
66.6
|
%
|
|
(24.0
|
)
|
|
(18.3
|
)%
|
|||
Office and general expenses
|
|
41.4
|
|
|
23.4
|
%
|
|
39.4
|
|
|
20.0
|
%
|
|
2.1
|
|
|
5.2
|
%
|
|||
Depreciation and amortization
|
|
5.2
|
|
|
2.9
|
%
|
|
6.4
|
|
|
3.2
|
%
|
|
(1.2
|
)
|
|
(19.0
|
)%
|
|||
Goodwill and intangible impairment
|
|
21.0
|
|
|
11.8
|
%
|
|
—
|
|
|
—
|
%
|
|
21.0
|
|
|
NA
|
|
|||
|
|
$
|
174.8
|
|
|
98.5
|
%
|
|
$
|
176.9
|
|
|
89.8
|
%
|
|
$
|
(2.1
|
)
|
|
(1.2
|
)%
|
Operating profit
|
|
$
|
2.6
|
|
|
1.5
|
%
|
|
$
|
20.1
|
|
|
10.2
|
%
|
|
$
|
(17.4
|
)
|
|
(86.9
|
)%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
8.5
|
|
|
4.8
|
%
|
|
$
|
25.6
|
|
|
13.0
|
%
|
|
$
|
(17.0
|
)
|
|
(66.6
|
)%
|
Staff costs
(2)
|
|
107.4
|
|
|
60.6
|
%
|
|
112.8
|
|
|
57.2
|
%
|
|
(5.3
|
)
|
|
(4.7
|
)%
|
|||
Administrative
|
|
25.3
|
|
|
14.3
|
%
|
|
26.5
|
|
|
13.4
|
%
|
|
(1.1
|
)
|
|
(4.2
|
)%
|
|||
Deferred acquisition consideration
|
|
4.0
|
|
|
2.2
|
%
|
|
1.9
|
|
|
1.0
|
%
|
|
2.1
|
|
|
108.1
|
%
|
|||
Stock-based compensation
|
|
3.4
|
|
|
1.9
|
%
|
|
3.8
|
|
|
2.0
|
%
|
|
(0.5
|
)
|
|
(12.6
|
)%
|
|||
Depreciation and amortization
|
|
5.2
|
|
|
2.9
|
%
|
|
6.4
|
|
|
3.2
|
%
|
|
(1.2
|
)
|
|
(19.0
|
)%
|
|||
Goodwill and intangible impairment
|
|
21.0
|
|
|
11.8
|
%
|
|
—
|
|
|
—
|
%
|
|
21.0
|
|
|
NA
|
|
|||
Total operating expenses
|
|
$
|
174.8
|
|
|
98.5
|
%
|
|
$
|
176.9
|
|
|
89.8
|
%
|
|
$
|
(2.1
|
)
|
|
(1.2
|
)%
|
(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.
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
24.8
|
|
|
|
|
$
|
28.1
|
|
|
|
|
$
|
(3.3
|
)
|
|
(11.7
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
13.9
|
|
|
56.2
|
%
|
|
15.8
|
|
|
56.2
|
%
|
|
(1.9
|
)
|
|
(11.7
|
)%
|
|||
Office and general expenses
|
|
4.9
|
|
|
19.9
|
%
|
|
5.3
|
|
|
18.9
|
%
|
|
(0.4
|
)
|
|
(7.0
|
)%
|
|||
Depreciation and amortization
|
|
0.4
|
|
|
1.6
|
%
|
|
0.4
|
|
|
1.3
|
%
|
|
—
|
|
|
5.6
|
%
|
|||
|
|
$
|
19.3
|
|
|
77.7
|
%
|
|
$
|
21.5
|
|
|
76.4
|
%
|
|
$
|
(2.2
|
)
|
|
(10.3
|
)%
|
Operating profit
|
|
$
|
5.5
|
|
|
22.3
|
%
|
|
$
|
6.6
|
|
|
23.6
|
%
|
|
$
|
(1.1
|
)
|
|
(16.5
|
)%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
0.5
|
|
|
1.9
|
%
|
|
$
|
1.3
|
|
|
4.5
|
%
|
|
$
|
(0.8
|
)
|
|
(62.8
|
)%
|
Staff costs
(2)
|
|
15.7
|
|
|
63.3
|
%
|
|
16.6
|
|
|
59.0
|
%
|
|
(0.9
|
)
|
|
(5.3
|
)%
|
|||
Administrative
|
|
2.5
|
|
|
10.2
|
%
|
|
3.1
|
|
|
10.9
|
%
|
|
(0.5
|
)
|
|
(17.4
|
)%
|
|||
Stock-based compensation
|
|
0.2
|
|
|
0.7
|
%
|
|
0.2
|
|
|
0.7
|
%
|
|
—
|
|
|
(5.9
|
)%
|
|||
Depreciation and amortization
|
|
0.4
|
|
|
1.6
|
%
|
|
0.4
|
|
|
1.3
|
%
|
|
—
|
|
|
5.6
|
%
|
|||
Total operating expenses
|
|
$
|
19.3
|
|
|
77.7
|
%
|
|
$
|
21.5
|
|
|
76.4
|
%
|
|
$
|
(2.2
|
)
|
|
(10.3
|
)%
|
(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.
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
42.6
|
|
|
|
|
$
|
40.7
|
|
|
|
|
$
|
2.0
|
|
|
4.8
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
28.4
|
|
|
66.7
|
%
|
|
26.6
|
|
|
65.4
|
%
|
|
1.8
|
|
|
6.9
|
%
|
|||
Office and general expenses
|
|
8.4
|
|
|
19.7
|
%
|
|
8.1
|
|
|
19.9
|
%
|
|
0.3
|
|
|
3.8
|
%
|
|||
Depreciation and amortization
|
|
1.1
|
|
|
2.7
|
%
|
|
1.2
|
|
|
3.0
|
%
|
|
(0.1
|
)
|
|
(7.1
|
)%
|
|||
|
|
$
|
38.0
|
|
|
89.0
|
%
|
|
$
|
35.9
|
|
|
88.3
|
%
|
|
$
|
2.1
|
|
|
5.7
|
%
|
Operating profit
|
|
$
|
4.7
|
|
|
11.0
|
%
|
|
$
|
4.8
|
|
|
11.7
|
%
|
|
$
|
(0.1
|
)
|
|
(2.0
|
)%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
9.8
|
|
|
23.1
|
%
|
|
$
|
8.9
|
|
|
21.9
|
%
|
|
$
|
0.9
|
|
|
10.3
|
%
|
Staff costs
(2)
|
|
20.9
|
|
|
48.9
|
%
|
|
19.7
|
|
|
48.3
|
%
|
|
1.2
|
|
|
6.1
|
%
|
|||
Administrative
|
|
5.5
|
|
|
13.0
|
%
|
|
5.3
|
|
|
13.0
|
%
|
|
0.2
|
|
|
4.7
|
%
|
|||
Deferred acquisition consideration
|
|
0.5
|
|
|
1.2
|
%
|
|
0.1
|
|
|
0.3
|
%
|
|
0.4
|
|
|
289.0
|
%
|
|||
Stock-based compensation
|
|
—
|
|
|
0.1
|
%
|
|
0.7
|
|
|
1.6
|
%
|
|
(0.6
|
)
|
|
(93.5
|
)%
|
|||
Depreciation and amortization
|
|
1.1
|
|
|
2.7
|
%
|
|
1.2
|
|
|
3.0
|
%
|
|
(0.1
|
)
|
|
(7.1
|
)%
|
|||
Total operating expenses
|
|
$
|
38.0
|
|
|
89.0
|
%
|
|
$
|
35.9
|
|
|
88.3
|
%
|
|
$
|
2.1
|
|
|
5.7
|
%
|
(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.
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
35.0
|
|
|
|
|
$
|
38.3
|
|
|
|
|
$
|
(3.3
|
)
|
|
(8.6
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
24.2
|
|
|
69.2
|
%
|
|
25.8
|
|
|
67.3
|
%
|
|
(1.6
|
)
|
|
(6.1
|
)%
|
|||
Office and general expenses
|
|
8.6
|
|
|
24.7
|
%
|
|
9.0
|
|
|
23.4
|
%
|
|
(0.3
|
)
|
|
(3.5
|
)%
|
|||
Depreciation and amortization
|
|
0.8
|
|
|
2.2
|
%
|
|
1.0
|
|
|
2.6
|
%
|
|
(0.2
|
)
|
|
(22.7
|
)%
|
|||
|
|
$
|
33.6
|
|
|
96.0
|
%
|
|
$
|
35.8
|
|
|
93.3
|
%
|
|
$
|
(2.1
|
)
|
|
(5.9
|
)%
|
Operating (loss) profit
|
|
$
|
1.4
|
|
|
4.0
|
%
|
|
$
|
2.6
|
|
|
6.7
|
%
|
|
$
|
(1.2
|
)
|
|
(45.7
|
)%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
9.3
|
|
|
26.6
|
%
|
|
$
|
9.8
|
|
|
25.5
|
%
|
|
$
|
(0.4
|
)
|
|
(4.5
|
)%
|
Staff costs
(2)
|
|
18.4
|
|
|
52.4
|
%
|
|
19.8
|
|
|
51.6
|
%
|
|
(1.4
|
)
|
|
(7.1
|
)%
|
|||
Administrative
|
|
5.1
|
|
|
14.5
|
%
|
|
5.0
|
|
|
12.9
|
%
|
|
0.1
|
|
|
2.8
|
%
|
|||
Deferred acquisition consideration
|
|
—
|
|
|
(0.1
|
)%
|
|
0.1
|
|
|
0.3
|
%
|
|
(0.1
|
)
|
|
(123.5
|
)%
|
|||
Stock-based compensation
|
|
0.1
|
|
|
0.3
|
%
|
|
0.2
|
|
|
0.4
|
%
|
|
—
|
|
|
(29.8
|
)%
|
|||
Depreciation and amortization
|
|
0.8
|
|
|
2.2
|
%
|
|
1.0
|
|
|
2.6
|
%
|
|
(0.2
|
)
|
|
(22.7
|
)%
|
|||
Total operating expenses
|
|
$
|
33.6
|
|
|
96.0
|
%
|
|
$
|
35.8
|
|
|
93.3
|
%
|
|
$
|
(2.1
|
)
|
|
(5.9
|
)%
|
(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.
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
96.0
|
|
|
|
|
$
|
71.7
|
|
|
|
|
$
|
24.2
|
|
|
33.8
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
64.9
|
|
|
67.7
|
%
|
|
50.1
|
|
|
69.8
|
%
|
|
14.9
|
|
|
29.7
|
%
|
|||
Office and general expenses
|
|
21.2
|
|
|
22.0
|
%
|
|
5.7
|
|
|
8.0
|
%
|
|
15.4
|
|
|
270.1
|
%
|
|||
Depreciation and amortization
|
|
3.5
|
|
|
3.6
|
%
|
|
2.0
|
|
|
2.8
|
%
|
|
1.4
|
|
|
71.2
|
%
|
|||
|
|
$
|
89.6
|
|
|
93.3
|
%
|
|
$
|
57.8
|
|
|
80.6
|
%
|
|
$
|
31.7
|
|
|
54.9
|
%
|
Operating profit
|
|
$
|
6.4
|
|
|
6.7
|
%
|
|
$
|
13.9
|
|
|
19.4
|
%
|
|
$
|
(7.5
|
)
|
|
(53.9
|
)%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
23.6
|
|
|
24.6
|
%
|
|
$
|
17.3
|
|
|
24.2
|
%
|
|
$
|
6.2
|
|
|
36.0
|
%
|
Staff costs
(2)
|
|
47.1
|
|
|
49.0
|
%
|
|
35.4
|
|
|
49.4
|
%
|
|
11.6
|
|
|
32.8
|
%
|
|||
Administrative
|
|
7.9
|
|
|
8.3
|
%
|
|
6.6
|
|
|
9.2
|
%
|
|
1.4
|
|
|
21.0
|
%
|
|||
Deferred acquisition consideration
|
|
6.5
|
|
|
6.8
|
%
|
|
(4.6
|
)
|
|
(6.4
|
)%
|
|
11.2
|
|
|
(241.9
|
)%
|
|||
Stock-based compensation
|
|
0.9
|
|
|
1.0
|
%
|
|
1.1
|
|
|
1.5
|
%
|
|
(0.1
|
)
|
|
(11.6
|
)%
|
|||
Depreciation and amortization
|
|
3.5
|
|
|
3.6
|
%
|
|
2.0
|
|
|
2.8
|
%
|
|
1.4
|
|
|
71.2
|
%
|
|||
Total operating expenses
|
|
$
|
89.6
|
|
|
93.3
|
%
|
|
$
|
57.8
|
|
|
80.6
|
%
|
|
$
|
31.7
|
|
|
54.9
|
%
|
(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.
|
|
|
2018
|
|
2017
|
|
Variance
|
|||||||||
Corporate
|
|
$
|
|
$
|
|
$
|
|
%
|
|||||||
|
|
(Dollars in Millions)
|
|||||||||||||
Staff costs
(1)
|
|
$
|
12.9
|
|
|
$
|
5.4
|
|
|
$
|
7.5
|
|
|
137.6
|
%
|
Administrative
|
|
3.3
|
|
|
4.6
|
|
|
(1.3
|
)
|
|
(27.4
|
)%
|
|||
Stock-based compensation
|
|
1.6
|
|
|
0.5
|
|
|
1.1
|
|
|
239.6
|
%
|
|||
Depreciation and amortization
|
|
0.2
|
|
|
0.3
|
|
|
(0.1
|
)
|
|
(22.0
|
)%
|
|||
Total operating expenses
|
|
$
|
18.0
|
|
|
$
|
10.7
|
|
|
$
|
7.3
|
|
|
68.0
|
%
|
(1)
|
Excludes stock-based compensation.
|
|
Global Integrated Agencies
|
|
Specialist
Communications
|
|
Media Services
|
|
All Other
|
|
Total
|
|||||||||||||
|
(Dollars in Millions)
|
|||||||||||||||||||||
GAAP revenue from 2018 acquisitions
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
23.6
|
|
|
$
|
23.8
|
|
|||
Impact from adoption of ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
(0.7
|
)
|
||||||||
Contribution to non-GAAP organic revenue (growth) decline
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4.4
|
)
|
—
|
|
(4.4
|
)
|
|||||
Prior year revenue from dispositions
|
(1.9
|
)
|
|
—
|
|
|
(11.6
|
)
|
|
(1.2
|
)
|
|
(14.7
|
)
|
||||||||
Non-GAAP acquisitions (dispositions), net
|
$
|
(1.9
|
)
|
|
$
|
0.2
|
|
|
$
|
(11.6
|
)
|
|
$
|
17.3
|
|
|
$
|
4.1
|
|
|
2018
|
|
2017
|
||
United States
|
78.4
|
%
|
|
78.2
|
%
|
Canada
|
8.5
|
%
|
|
8.0
|
%
|
Other
|
13.2
|
%
|
|
13.8
|
%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
1,082.5
|
|
|
|
|
$
|
1,111.0
|
|
|
|
|
$
|
(28.5
|
)
|
|
(2.6
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
735.1
|
|
|
67.9
|
%
|
|
754.8
|
|
|
67.9
|
%
|
|
(19.7
|
)
|
|
(2.6
|
)%
|
|||
Office and general expenses
|
|
227.8
|
|
|
21.0
|
%
|
|
223.2
|
|
|
20.1
|
%
|
|
4.6
|
|
|
2.1
|
%
|
|||
Depreciation and amortization
|
|
34.6
|
|
|
3.2
|
%
|
|
32.1
|
|
|
2.9
|
%
|
|
2.6
|
|
|
8.0
|
%
|
|||
Goodwill and intangible impairment
|
|
21.0
|
|
|
1.9
|
%
|
|
—
|
|
|
—
|
%
|
|
21.0
|
|
|
NA
|
|
|||
|
|
$
|
1,018.5
|
|
|
94.1
|
%
|
|
$
|
1,010.0
|
|
|
90.9
|
%
|
|
$
|
8.5
|
|
|
0.8
|
%
|
Operating profit
|
|
$
|
64.0
|
|
|
5.9
|
%
|
|
$
|
101.0
|
|
|
9.1
|
%
|
|
$
|
(37.0
|
)
|
|
(36.6
|
)%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Advertising and Communications Group
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
152.9
|
|
|
14.1
|
%
|
|
$
|
192.8
|
|
|
17.3
|
%
|
|
$
|
(39.9
|
)
|
|
(20.7
|
)%
|
Staff costs
(2)
|
|
647.1
|
|
|
59.8
|
%
|
|
615.8
|
|
|
55.4
|
%
|
|
31.3
|
|
|
5.1
|
%
|
|||
Administrative
|
|
141.7
|
|
|
13.1
|
%
|
|
140.9
|
|
|
12.7
|
%
|
|
0.8
|
|
|
0.5
|
%
|
|||
Deferred acquisition consideration
|
|
8.5
|
|
|
0.8
|
%
|
|
13.3
|
|
|
1.2
|
%
|
|
(4.8
|
)
|
|
(35.8
|
)%
|
|||
Stock-based compensation
|
|
12.8
|
|
|
1.2
|
%
|
|
15.3
|
|
|
1.4
|
%
|
|
(2.5
|
)
|
|
(16.2
|
)%
|
|||
Depreciation and amortization
|
|
34.6
|
|
|
3.2
|
%
|
|
32.1
|
|
|
2.9
|
%
|
|
2.6
|
|
|
8.0
|
%
|
|||
Goodwill and intangible impairment
|
|
21.0
|
|
|
1.9
|
%
|
|
—
|
|
|
—
|
%
|
|
21.0
|
|
|
NA
|
|
|||
Total operating expenses
|
|
$
|
1,018.5
|
|
|
94.1
|
%
|
|
$
|
1,010.0
|
|
|
90.9
|
%
|
|
$
|
8.5
|
|
|
0.8
|
%
|
(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.
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
510.4
|
|
|
|
|
$
|
585.3
|
|
|
|
|
$
|
(74.9
|
)
|
|
(12.8
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
350.0
|
|
|
68.6
|
%
|
|
410.7
|
|
|
70.2
|
%
|
|
(60.7
|
)
|
|
(14.8
|
)%
|
|||
Office and general expenses
|
|
114.8
|
|
|
22.5
|
%
|
|
123.4
|
|
|
21.1
|
%
|
|
(8.7
|
)
|
|
(7.0
|
)%
|
|||
Depreciation and amortization
|
|
18.5
|
|
|
3.6
|
%
|
|
17.9
|
|
|
3.1
|
%
|
|
0.6
|
|
|
3.3
|
%
|
|||
Goodwill and intangible impairment
|
|
21.0
|
|
|
4.1
|
%
|
|
—
|
|
|
—
|
%
|
|
21.0
|
|
|
NA
|
|
|||
|
|
$
|
504.3
|
|
|
98.8
|
%
|
|
$
|
552.0
|
|
|
94.3
|
%
|
|
$
|
(47.8
|
)
|
|
(8.7
|
)%
|
Operating profit
|
|
$
|
6.1
|
|
|
1.2
|
%
|
|
$
|
33.2
|
|
|
5.7
|
%
|
|
$
|
(27.1
|
)
|
|
(81.7
|
)%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Global Integrated Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
31.2
|
|
|
6.1
|
%
|
|
$
|
86.2
|
|
|
14.7
|
%
|
|
$
|
(55.0
|
)
|
|
(63.8
|
)%
|
Staff costs
(2)
|
|
345.9
|
|
|
67.8
|
%
|
|
346.9
|
|
|
59.3
|
%
|
|
(1.0
|
)
|
|
(0.3
|
)%
|
|||
Administrative
|
|
76.4
|
|
|
15.0
|
%
|
|
78.8
|
|
|
13.5
|
%
|
|
(2.4
|
)
|
|
(3.1
|
)%
|
|||
Deferred acquisition consideration
|
|
2.8
|
|
|
0.5
|
%
|
|
12.4
|
|
|
2.1
|
%
|
|
(9.6
|
)
|
|
(77.5
|
)%
|
|||
Stock-based compensation
|
|
8.5
|
|
|
1.7
|
%
|
|
9.9
|
|
|
1.7
|
%
|
|
(1.4
|
)
|
|
(14.3
|
)%
|
|||
Depreciation and amortization
|
|
18.5
|
|
|
3.6
|
%
|
|
17.9
|
|
|
3.1
|
%
|
|
0.6
|
|
|
3.3
|
%
|
|||
Goodwill and intangible impairment
|
|
21.0
|
|
|
4.1
|
%
|
|
—
|
|
|
—
|
%
|
|
21.0
|
|
|
NA
|
|
|||
Total operating expenses
|
|
$
|
504.3
|
|
|
98.8
|
%
|
|
$
|
552.0
|
|
|
94.3
|
%
|
|
$
|
(47.8
|
)
|
|
(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.
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
75.5
|
|
|
|
|
$
|
77.3
|
|
|
|
|
$
|
(1.8
|
)
|
|
(2.4
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
44.1
|
|
|
58.4
|
%
|
|
44.2
|
|
|
57.2
|
%
|
|
(0.1
|
)
|
|
(0.3
|
)%
|
|||
Office and general expenses
|
|
15.8
|
|
|
20.9
|
%
|
|
16.5
|
|
|
21.4
|
%
|
|
(0.7
|
)
|
|
(4.4
|
)%
|
|||
Depreciation and amortization
|
|
1.2
|
|
|
1.6
|
%
|
|
1.2
|
|
|
1.5
|
%
|
|
—
|
|
|
1.1
|
%
|
|||
|
|
$
|
61.1
|
|
|
80.9
|
%
|
|
$
|
61.9
|
|
|
80.1
|
%
|
|
$
|
(0.9
|
)
|
|
(1.4
|
)%
|
Operating profit
|
|
$
|
14.5
|
|
|
19.1
|
%
|
|
$
|
15.4
|
|
|
19.9
|
%
|
|
$
|
(1.0
|
)
|
|
(6.2
|
)%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Domestic Creative Agencies
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
2.2
|
|
|
2.9
|
%
|
|
$
|
3.2
|
|
|
4.1
|
%
|
|
$
|
(0.9
|
)
|
|
(29.8
|
)%
|
Staff costs
(2)
|
|
47.8
|
|
|
63.3
|
%
|
|
47.5
|
|
|
61.5
|
%
|
|
0.2
|
|
|
0.5
|
%
|
|||
Administrative
|
|
8.9
|
|
|
11.8
|
%
|
|
9.1
|
|
|
11.8
|
%
|
|
(0.2
|
)
|
|
(2.3
|
)%
|
|||
Deferred acquisition consideration
|
|
—
|
|
|
—
|
%
|
|
0.4
|
|
|
0.5
|
%
|
|
(0.4
|
)
|
|
(100.0
|
)%
|
|||
Stock-based compensation
|
|
0.9
|
|
|
1.3
|
%
|
|
0.5
|
|
|
0.7
|
%
|
|
0.4
|
|
|
77.0
|
%
|
|||
Depreciation and amortization
|
|
1.2
|
|
|
1.6
|
%
|
|
1.2
|
|
|
1.5
|
%
|
|
—
|
|
|
1.1
|
%
|
|||
Total operating expenses
|
|
$
|
61.1
|
|
|
80.9
|
%
|
|
$
|
61.9
|
|
|
80.1
|
%
|
|
$
|
(0.9
|
)
|
|
(1.4
|
)%
|
(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.
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
129.7
|
|
|
|
|
$
|
125.5
|
|
|
|
|
$
|
4.3
|
|
|
3.4
|
%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
86.7
|
|
|
66.8
|
%
|
|
85.4
|
|
|
68.0
|
%
|
|
1.3
|
|
|
1.6
|
%
|
|||
Office and general expenses
|
|
25.4
|
|
|
19.6
|
%
|
|
23.0
|
|
|
18.4
|
%
|
|
2.4
|
|
|
10.2
|
%
|
|||
Depreciation and amortization
|
|
3.2
|
|
|
2.4
|
%
|
|
3.7
|
|
|
2.9
|
%
|
|
(0.5
|
)
|
|
(13.5
|
)%
|
|||
|
|
$
|
115.3
|
|
|
88.8
|
%
|
|
$
|
112.0
|
|
|
89.3
|
%
|
|
$
|
3.2
|
|
|
2.9
|
%
|
Operating profit
|
|
$
|
14.5
|
|
|
11.2
|
%
|
|
$
|
13.4
|
|
|
10.7
|
%
|
|
$
|
1.1
|
|
|
7.8
|
%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Specialist Communications
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
30.2
|
|
|
23.3
|
%
|
|
$
|
29.7
|
|
|
23.7
|
%
|
|
$
|
0.5
|
|
|
1.7
|
%
|
Staff costs
(2)
|
|
63.2
|
|
|
48.7
|
%
|
|
59.8
|
|
|
47.7
|
%
|
|
3.4
|
|
|
5.7
|
%
|
|||
Administrative
|
|
16.8
|
|
|
13.0
|
%
|
|
16.0
|
|
|
12.8
|
%
|
|
0.8
|
|
|
5.0
|
%
|
|||
Deferred acquisition consideration
|
|
1.3
|
|
|
1.0
|
%
|
|
0.6
|
|
|
0.5
|
%
|
|
0.7
|
|
|
120.3
|
%
|
|||
Stock-based compensation
|
|
0.5
|
|
|
0.4
|
%
|
|
2.3
|
|
|
1.8
|
%
|
|
(1.7
|
)
|
|
(76.1
|
)%
|
|||
Depreciation and amortization
|
|
3.2
|
|
|
2.4
|
%
|
|
3.7
|
|
|
2.9
|
%
|
|
(0.5
|
)
|
|
(13.5
|
)%
|
|||
Total operating expenses
|
|
$
|
115.3
|
|
|
88.8
|
%
|
|
$
|
112.0
|
|
|
89.3
|
%
|
|
$
|
3.2
|
|
|
2.9
|
%
|
(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.
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Revenue
|
|
$
|
104.5
|
|
|
|
|
$
|
122.2
|
|
|
|
|
$
|
(17.7
|
)
|
|
(14.5
|
)%
|
||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services sold
|
|
76.0
|
|
|
72.7
|
%
|
|
80.6
|
|
|
66.0
|
%
|
|
(4.6
|
)
|
|
(5.7
|
)%
|
|||
Office and general expenses
|
|
25.8
|
|
|
24.7
|
%
|
|
29.2
|
|
|
23.9
|
%
|
|
(3.5
|
)
|
|
(11.8
|
)%
|
|||
Depreciation and amortization
|
|
2.3
|
|
|
2.2
|
%
|
|
3.2
|
|
|
2.6
|
%
|
|
(0.9
|
)
|
|
(28.4
|
)%
|
|||
|
|
$
|
104.1
|
|
|
99.6
|
%
|
|
$
|
113.0
|
|
|
92.5
|
%
|
|
$
|
(9.0
|
)
|
|
(7.9
|
)%
|
Operating (loss) profit
|
|
$
|
0.4
|
|
|
0.4
|
%
|
|
$
|
9.2
|
|
|
7.5
|
%
|
|
$
|
(8.8
|
)
|
|
(95.6
|
)%
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
Media Services
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
27.8
|
|
|
26.6
|
%
|
|
$
|
30.8
|
|
|
25.2
|
%
|
|
$
|
(3.1
|
)
|
|
(9.9
|
)%
|
Staff costs
(2)
|
|
57.9
|
|
|
55.4
|
%
|
|
61.0
|
|
|
49.9
|
%
|
|
(3.2
|
)
|
|
(5.2
|
)%
|
|||
Administrative
|
|
15.6
|
|
|
15.0
|
%
|
|
17.0
|
|
|
13.9
|
%
|
|
(1.4
|
)
|
|
(8.1
|
)%
|
|||
Deferred acquisition consideration
|
|
0.2
|
|
|
0.2
|
%
|
|
0.4
|
|
|
0.4
|
%
|
|
(0.2
|
)
|
|
(57.3
|
)%
|
|||
Stock-based compensation
|
|
0.3
|
|
|
0.3
|
%
|
|
0.5
|
|
|
0.4
|
%
|
|
(0.2
|
)
|
|
(43.0
|
)%
|
|||
Depreciation and amortization
|
|
2.3
|
|
|
2.2
|
%
|
|
3.2
|
|
|
2.6
|
%
|
|
(0.9
|
)
|
|
(28.4
|
)%
|
|||
Total operating expenses
|
|
$
|
104.1
|
|
|
99.6
|
%
|
|
$
|
113.0
|
|
|
92.5
|
%
|
|
$
|
(9.0
|
)
|
|
(7.9
|
)%
|
(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.
|
|
|
2018
|
|
2017
|
|
Change
|
|||||||||||||||
All Other
|
|
$
|
|
% of
Revenue |
|
$
|
|
% of
Revenue |
|
$
|
|
%
|
|||||||||
|
|
(Dollars in Millions)
|
|||||||||||||||||||
Direct costs
(1)
|
|
$
|
61.5
|
|
|
23.4
|
%
|
|
$
|
42.9
|
|
|
21.4
|
%
|
|
$
|
18.6
|
|
|
43.4
|
%
|
Staff costs
(2)
|
|
132.3
|
|
|
50.4
|
%
|
|
100.5
|
|
|
50.1
|
%
|
|
31.8
|
|
|
31.6
|
%
|
|||
Administrative
|
|
23.9
|
|
|
9.1
|
%
|
|
19.9
|
|
|
9.9
|
%
|
|
4.0
|
|
|
19.9
|
%
|
|||
Deferred acquisition consideration
|
|
4.2
|
|
|
1.6
|
%
|
|
(0.5
|
)
|
|
(0.2
|
)%
|
|
4.7
|
|
|
(969.5
|
)%
|
|||
Stock-based compensation
|
|
2.5
|
|
|
1.0
|
%
|
|
2.1
|
|
|
1.0
|
%
|
|
0.5
|
|
|
22.5
|
%
|
|||
Depreciation and amortization
|
|
9.5
|
|
|
3.6
|
%
|
|
6.1
|
|
|
3.0
|
%
|
|
3.4
|
|
|
55.7
|
%
|
|||
Total operating expenses
|
|
$
|
233.9
|
|
|
89.1
|
%
|
|
$
|
171.0
|
|
|
85.2
|
%
|
|
$
|
62.9
|
|
|
36.8
|
%
|
(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.
|
|
|
2018
|
|
2017
|
|
Variance
|
|||||||||
Corporate
|
|
$
|
|
$
|
|
$
|
|
%
|
|||||||
|
|
(Dollars in Millions)
|
|||||||||||||
Staff costs
(1)
|
|
$
|
24.6
|
|
|
$
|
15.0
|
|
|
$
|
9.7
|
|
|
64.6
|
%
|
Administrative
|
|
13.6
|
|
|
11.6
|
|
|
2.1
|
|
|
17.8
|
%
|
|||
Stock-based compensation
|
|
4.1
|
|
|
1.6
|
|
|
2.5
|
|
|
155.7
|
%
|
|||
Depreciation and amortization
|
|
0.6
|
|
|
0.9
|
|
|
(0.3
|
)
|
|
(32.5
|
)%
|
|||
Other asset impairment
|
|
2.3
|
|
|
—
|
|
|
2.3
|
|
|
NM
|
|
|||
Total operating expenses
|
|
$
|
45.2
|
|
|
$
|
29.0
|
|
|
$
|
16.3
|
|
|
56.1
|
%
|
(1)
|
Excludes stock-based compensation.
|
Dollars in millions
|
As of and for the nine months ended September 30, 2018
|
|
As of and for the nine months ended September 30, 2017
|
|
As of and for the year ended December 31, 2017
|
||||||
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
25.1
|
|
|
$
|
18.9
|
|
|
$
|
46.2
|
|
Working capital (deficit)
|
$
|
(181.7
|
)
|
|
$
|
(220.3
|
)
|
|
$
|
(232.9
|
)
|
Cash (used in) provided by operating activities
|
$
|
(31.7
|
)
|
|
$
|
(14.5
|
)
|
|
$
|
115.3
|
|
Cash used in investing activities
|
$
|
(48.4
|
)
|
|
$
|
(19.5
|
)
|
|
$
|
(20.9
|
)
|
Cash provided by (used in) financing activities
|
$
|
59.1
|
|
|
$
|
24.9
|
|
|
$
|
(75.4
|
)
|
Ratio of long-term debt to shareholders' deficit
|
(5.55
|
)
|
|
(2.39
|
)
|
|
(5.68
|
)
|
|
September 30, 2018
|
||
Total Senior Leverage Ratio
|
0.5
|
|
|
Maximum per covenant
|
2.0
|
|
|
|
|
|
|
Total Leverage Ratio
|
5.3
|
|
|
Maximum per covenant
|
5.5
|
|
|
|
|
|
|
Fixed Charges Ratio
|
2.4
|
|
|
Minimum per covenant
|
1.0
|
|
|
|
|
|
|
Earnings before interest, taxes, depreciation and amortization
|
$
|
187,041
|
|
Minimum per covenant
|
$
|
105,000
|
|
|
September 30, 2018
|
||||||||||||||||||||||
(amounts in $ millions)
|
Global Integrated Agencies
|
|
Domestic Creative Agencies
|
|
Specialist Communication Agencies
|
|
Media Services
|
|
All Other
|
|
Total
|
||||||||||||
Beginning Balance of contingent payments
|
$
|
81.4
|
|
|
$
|
—
|
|
|
$
|
5.5
|
|
|
$
|
3.7
|
|
|
$
|
28.5
|
|
|
$
|
119.1
|
|
Payments
|
(32.8
|
)
|
|
—
|
|
|
(5.4
|
)
|
|
(1.3
|
)
|
|
(15.5
|
)
|
|
(54.9
|
)
|
||||||
Additions
(1)
|
3.1
|
|
|
—
|
|
|
9.7
|
|
|
—
|
|
|
—
|
|
|
12.8
|
|
||||||
Redemption value adjustments
(2)
|
8.8
|
|
|
—
|
|
|
1.4
|
|
|
0.1
|
|
|
5.9
|
|
|
16.3
|
|
||||||
Ending Balance of contingent payments
|
60.5
|
|
|
—
|
|
|
11.3
|
|
|
2.6
|
|
|
18.9
|
|
|
93.2
|
|
||||||
Fixed payments, net
|
1.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
1.5
|
|
||||||
|
$
|
61.6
|
|
|
$
|
—
|
|
|
$
|
11.3
|
|
|
$
|
2.6
|
|
|
$
|
19.3
|
|
|
$
|
94.7
|
|
(1)
|
Additions are the initial estimated deferred acquisition payments of new acquisitions and step-up transactions completed within that fiscal period.
|
(2)
|
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.
|
Consideration
(4)
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022 &
Thereafter
|
|
Total
|
|
||||||||||||
|
|
(Dollars in Millions)
|
|
||||||||||||||||||||||
Cash
|
|
$
|
3.7
|
|
|
$
|
2.2
|
|
|
$
|
3.2
|
|
|
$
|
2.0
|
|
|
$
|
3.1
|
|
|
$
|
14.2
|
|
|
Shares
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
||||||
|
|
$
|
3.7
|
|
|
$
|
2.2
|
|
|
$
|
3.3
|
|
|
$
|
2.0
|
|
|
$
|
3.1
|
|
|
$
|
14.3
|
|
(1)
|
Operating income before depreciation and amortization to be received
(2)
|
|
$
|
2.4
|
|
|
$
|
—
|
|
|
$
|
1.6
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
4.5
|
|
|
Cumulative operating income before depreciation and amortization
(3)
|
|
$
|
2.4
|
|
|
$
|
2.4
|
|
|
$
|
4.0
|
|
|
$
|
4.0
|
|
|
$
|
4.5
|
|
|
|
(5)
|
(1)
|
This amount is in addition to (i) the
$38.5 million
of options to purchase only exercisable upon termination not within the control of the Company, or death, and (ii) the
$4.3 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.
|
•
|
uncertainty as to whether any strategic alternative will be pursued or, if pursued, consummated; uncertainty as to the terms, value and timing of any such strategic alternative; and the impact of any actions related to the strategic review process and/or any strategic alternative on the Company’s securities or its business;
|
•
|
risks associated with severe effects of international, national and regional economic conditions;
|
•
|
the Company’s ability to attract new clients and retain existing clients;
|
•
|
the spending patterns and financial success of the Company’s clients;
|
•
|
the Company’s ability to retain and attract key employees;
|
•
|
the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to redeemable noncontrolling interests and deferred acquisition consideration;
|
•
|
the successful completion and integration of acquisitions which complement and expand the Company’s business capabilities, and the potential impact of one or more asset sales;
|
•
|
foreign currency fluctuations; and
|
•
|
risks associated with the ongoing DOJ investigation of the historical production bidding practices at one of the Company’s subsidiaries.
|
Exhibit No.
|
|
Description
|
|
Succession Agreement dated as of September 9, 2018 by and between the Company and Scott L. Kauffman (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 12, 2018).
|
|
|
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.*
|
MDC PARTNERS INC.
|
|
|
|
/s/ David Doft
|
|
David Doft
|
|
Chief Financial Officer and Authorized Signatory
|
|
|
|
November 1, 2018
|
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