XML 22 R17.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Segment Information
 6 Months Ended
Jun. 30, 2011
Segment Information
12.
Segment Information

The Company’s segment reporting is consistent with the current manner of how the Chief Operating Decision Maker (“CODM”) and the Board of Directors view the business. The Company is focused on expanding its capabilities in database marketing and data analytics in order to position the Company for future business development efforts and revenue growth.
 
In order to position this strategic focus along the lines of how the CODM and management will base their business decisions, the Company reports two segments. Decisions regarding allocation of resources are made and will be made based not only on the individual operating results of the subsidiaries but also on the overall performance of the reportable segments. These reportable segments are the aggregation of various reporting segments.


The Company reports in two segments plus corporate. The segments are as follows:
 
 
•
The Strategic Marketing Services segment includes Crispin Porter & Bogusky and kirshenbaum bond senecal + partners among others. This segment consists of integrated marketing consulting services firms that offer a full complement of marketing consulting services including advertising and media, marketing communications including direct marketing, public relations, corporate communications, market research, corporate identity and branding, interactive marketing and sales promotion. Each of the entities within the Strategic Marketing Services Group share similar economic characteristics, specifically related to the nature of their respective services, the manner in which the services are provided and the similarity of their respective customers. Due to the similarities in these businesses, they exhibit similar long term financial performance and have been aggregated together.

 
•
The Performance Marketing Services segment includes our firms that provide consumer insights to satisfy the growing need for targetable, measurable solutions or cost effective means of driving return on marketing investment. These services interface directly with the consumer of a client’s product or service. Such services include the design, development, research and implementation of consumer service and direct marketing initiatives. Each of the entities within the Performance Marketing Services Group share similar economic characteristics specifically related to the nature of their respective services, the manner in which the services are provided, and the similarity of their respective customers. Due to the similarities in these businesses, the services provided to the customer and they exhibit similar long term financial performance and have been aggregated together.

The significant accounting polices of these segments are the same as those described in the summary of significant accounting policies included in the notes to the consolidated financial statements. The Company continues to evaluate its Corporate Group and the services provided by the Corporate Group to the operating segments.

 Summary financial information concerning the Company’s operating segments is shown in the following tables:

Three Months Ended June 30, 2011
(thousands of United States dollars)

   
Strategic
Marketing
Services
    
Performance
Marketing
Services
    
Corporate
    
Total
  
                         
Revenue
   $ 154,957     $ 85,519     $ —     $ 240,476  
                                 
Cost of services sold
     99,247       63,161       —       162,408  
                                 
Office and general expenses
     27,657       15,517       10,603       53,777  
                                 
Depreciation and amortization
     5,182       4,437       117       9,736  
                                 
Operating Profit/(Loss)
     22,871       2,404       (10,720 )     14,555  
                                 
Other Income (Expense):
                                
Other income, net
                             444  
Interest expense, net
                             (10,638 )
                                 
Income from continuing operations before income taxes, equity in affiliates
                             4,361  
Income tax expense
                             590  
                                 
Income from continuing operations before equity in affiliates
                             3,771  
Equity in earnings of non-consolidated affiliates
                             79  
                                 
Net income
                             3,850  
                                 
Net income attributable to the noncontrolling interests
     (2,335 )     (192 )     —       (2,527 )
Net income attributable to MDC Partners Inc.
                           $ 1,323  
                                 
Non cash stock based compensation
   $ 176       478     $ 5,121     $ 5,775  
                                 
Supplemental Segment Information:
                                
                                 
Capital expenditures
   $ 2,620     $ 791     $ 32     $ 3,443  
                                 
Goodwill and intangibles
   $ 390,835     $ 215,826     $ —     $ 606,661  
                                 
Total assets
   $ 578,419     $ 332,092     $ 42,408     $ 952,919  
 

 
Three Months Ended June 30, 2010
(thousands of United States dollars)

   
Strategic
Marketing
Services
    
Performance
Marketing
Services
    
Corporate
    
Total
  
                         
Revenue
   $ 106,881     $ 63,009     $ —     $ 169,890  
                                 
Cost of services sold
     71,034       45,330       —       116,364  
                                 
Office and general expenses
     20,920       12,634       5,547       39,101  
                                 
Depreciation and amortization
     4,228       3,707       94       8,029  
                                 
Operating Profit/(Loss)
     10,699       1,338       (5,641 )     6,396  
                                 
Other Income (Expense):
                                
Other expense, net
                             (289 )
Interest expense, net
                             (8,356 )
                                 
Loss from continuing operations before income taxes, equity in affiliates
                             (2,249 )
Income tax expense
                             552  
                                 
Loss from continuing operations before equity in affiliates
                             (2,801 )
Equity in loss of non-consolidated affiliates
                             (39 )
Loss from continuing operations
                             (2,840 )
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes
                             (932 )
Net loss
                             (3,772 )
                                 
Net income attributable to the noncontrolling interests
     (1,368 )     (665 )     —       (2,033 )
Net loss attributable to MDC Partners Inc.
                           $ (5,805 )
                                 
Non cash stock based compensation
   $ 1,078       399     $ 1,411     $ 2,888  
                                 
Supplemental Segment Information:
                                
                                 
Capital expenditures
   $ 1,361     $ 1,429     $ 168     $ 2,958  
                                 
Goodwill and intangibles
   $ 314,326     $ 158,379     $ —     $ 472,705  
                                 
Total assets
   $ 456,637     $ 270,215     $ 65,134     $ 791,986  


Six Months Ended June 30, 2011
(thousands of United States dollars)
 
   
Strategic
Marketing
Services
    
Performance
Marketing
Services
    
Corporate
    
Total
  
                         
Revenue
   $ 296,450     $ 161,528     $ —     $ 457,978  
                                 
Cost of services sold
     200,017       121,535       —       321,552  
                                 
Office and general expenses
     54,850       27,349       17,309       99,508  
                                 
Depreciation and amortization
     10,989       8,909       221       20,119  
                                 
Operating Profit/(Loss)
     30,594       3,735       (17,530 )     16,799  
                                 
Other Income (Expense):
                                
Other income, net
                             755  
Interest expense, net
                             (20,170 )
                                 
Loss from continuing operations before income taxes, equity in affiliates
                             (2,616 )
Income tax expense
                             946  
                                 
Loss from continuing operations before equity in affiliates
                             (3,562 )
Equity in earnings of non-consolidated affiliates
                             334  
                                 
Net loss
                             (3,228 )
                                 
Net income attributable to the noncontrolling interests
     (3,978 )     (154 )     —       (4,132 )
Net loss attributable to MDC Partners Inc.
                           $ (7,360 )
                                 
Non cash stock based compensation
   $ 1,723     $ 983     $ 7,343     $ 10,049  
                                 
Supplemental Segment Information:
                                
                                 
Capital expenditures
   $ 6,353     $ 1,882     $ 230     $ 8,465  
                                 
Goodwill and intangibles
   $ 390,835     $ 215,826     $ —     $ 606,661  
                                 
Total assets
   $ 578,419     $ 332,092     $ 42,408     $ 952,919  

Six Months Ended June 30, 2010
(thousands of United States dollars)
 
   
Strategic
Marketing
Services
    
Performance
Marketing
Services
    
Corporate
    
Total
  
                         
Revenue
   $ 198,139     $ 107,666     $ —     $ 305,805  
                                 
Cost of services sold
     132,249       80,686       —       212,935  
                                 
Office and general expenses
     40,900       22,148       10,330       73,378  
                                 
Depreciation and amortization
     7,512       6,146       187       13,845  
                                 
Operating Profit/(Loss)
     17,478       (1,314 )     (10,517 )     5,647  
                                 
Other Income (Expense):
                                
Other expense, net
                             (877 )
Interest expense, net
                             (15,353 )
                                 
Loss from continuing operations before income taxes, equity in affiliates
                             (10,583 )
Income tax expense
                             801  
                                 
Loss from continuing operations before equity in affiliates
                             (11,384 )
Equity in loss of non-consolidated affiliates
                             (143 )
                                 
Loss from continuing operations
                             (11,527 )
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes
                             (1,408 )
                                 
Net loss
                             (12,935 )
                                 
Net income attributable to the noncontrolling interests
     (2,350 )     (706 )     —       (3,056 )
Net loss attributable to MDC Partners Inc.
                           $ (15,991 )
                                 
Non cash stock based compensation
   $ 2,831     $ 765     $ 2,759     $ 6,355  
                                 
Supplemental Segment Information:
                                
                                 
Capital expenditures
   $ 2,966     $ 2,463     $ 291     $ 5,720  
                                 
Goodwill and intangibles
   $ 314,326     $ 158,379     $ —     $ 472,705  
                                 
Total assets
   $ 456,637     $ 270,215     $ 65,134     $ 791,986  


A summary of the Company’s revenue by geographic area, based on the location in which the services originated, is set forth in the following table:

   
United
States
    
Canada
    
Other
    
Total
  
Revenue
                        
Three Months Ended June 30,
                        
2011
   $ 191,669     $ 40,330     $ 8,477     $ 240,476  
2010
   $ 143,200     $ 22,427     $ 4,263     $ 169,890  
Six Months Ended June 30,
                                
2011
   $ 365,989     $ 75,469     $ 16,520     $ 457,978  
2010
   $ 255,082     $ 42,472     $ 8,251     $ 305,805