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Segment Information
9 Months Ended
Sep. 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 72 and Sunny, Anomaly Partners, 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 September 30, 2011
(thousands of United States dollars)

   
Strategic
Marketing
Services
    
Performance
Marketing
Services
    
Corporate
    
Total
  
                         
Revenue
   $ 146,130     $ 92,116     $ —       238,246  
                                 
Cost of services sold
     109,334       66,087       —       175,421  
                                 
Office and general expenses
     31,868       15,434       9,289       56,591  
                                 
Depreciation and amortization
     5,353       4,304       225       9,882  
                                 
Operating Profit/(Loss)
     (425 )     6,291       (9,514 )     (3,648 )
                                 
Other Income (Expense):
                                
Other expense, net
                             (3,116 )
Interest expense, net
                             (10,776 )
                                 
Loss from continuing operations before income taxes, equity in affiliates
                             (17,540 )
Income tax recovery
                             42  
                                 
Loss from continuing operations before equity in affiliates
                             (17,498 )
Equity in loss of non-consolidated affiliates
                             (120 )
                                 
Net loss
                             (17,618 )
                                 
Net income attributable to the noncontrolling interests
     (1,084 )     (872 )     —       (1,956 )
Net loss attributable to MDC Partners Inc.
                           $ (19,574 )
                                 
Non cash stock based compensation
   $ 2,173       1,608     $ 3,990     $ 7,771  
                                 
Supplemental Segment Information:
                                
                                 
Capital expenditures
   $ 2,188     $ 990     $ 6,224     $ 9,402  
 

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

   
Strategic
Marketing
Services
    
Performance
Marketing
Services
    
Corporate
    
Total
  
                         
Revenue
   $ 110,582     $ 68,015     $ —     $ 178,597  
                                 
Cost of services sold
     74,761       47,958       —       122,719  
                                 
Office and general expenses
     23,600       13,960       7,520       45,080  
                                 
Depreciation and amortization
     4,275       4,990       86       9,351  
                                 
Operating Profit/(Loss)
     7,946       1,107       (7,606 )     1,447  
                                 
Other Income (Expense):
                                
Other income, net
                             454  
Interest expense, net
                             (8,832 )
                                 
Loss from continuing operations before income taxes, equity in affiliates
                             (6,931 )
Income tax expense
                             409  
                                 
Loss from continuing operations before equity in affiliates
                             (7,340 )
Equity in loss of non-consolidated affiliates
                             (1,496 )
                                 
Loss from continuing operations
                             (8,836 )
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes
                             (636 )
Net loss
                             (9,472 )
                                 
Net income attributable to the noncontrolling interests
     (597 )     (849 )     —       (1,446 )
Net loss attributable to MDC Partners Inc.
                           $ (10,918 )
                                 
Non cash stock based compensation
   $ 2,376     $ 483     $ 4,089     $ 6,948  
                                 
Supplemental Segment Information:
                                
                                 
Capital expenditures
   $ 1,464     $ 949     $ 33     $ 2,446  
 
 
Nine Months Ended September 30, 2011
(thousands of United States dollars)
 
   
Strategic
Marketing
Services
    
Performance
Marketing
Services
    
Corporate
    
Total
  
                         
Revenue
   $ 442,580     $ 253,644     $ —     $ 696,224  
                                 
Cost of services sold
     309,351       187,622       —       496,973  
                                 
Office and general expenses
     86,718       42,783       26,598       156,099  
                                 
Depreciation and amortization
     16,342       13,213       446       30,001  
                                 
Operating Profit/(Loss)
     30,169       10,026       (27,044 )     13,151  
                                 
Other Income (Expense):
                                
Other expense, net
                             (2,361 )
Interest expense, net
                             (30,946 )
                                 
Loss from continuing operations before income taxes, equity in affiliates
                             (20,156 )
Income tax expense
                             904  
                                 
Loss from continuing operations before equity in affiliates
                             (21,060 )
Equity in earnings of non-consolidated affiliates
                             214  
                                 
Net loss
                             (20,846 )
                                 
Net income attributable to the noncontrolling interests
     (5,062 )     (1,026 )     —       (6,088 )
Net loss attributable to MDC Partners Inc.
                           $ (26,934 )
                                 
Non cash stock based compensation
   $ 3,896     $ 2,591     $ 11,333     $ 17,820  
                                 
Supplemental Segment Information:
                                
                                 
Capital expenditures
   $ 8,541     $ 2,872     $ 6,454     $ 17,867  
                                 
Goodwill and intangibles
   $ 426,533     $ 209,550     $ —     $ 636,083  
                                 
Total assets
   $ 626,865     $ 324,895     $ 53,667     $ 1,005,427  
 

Nine Months Ended September 30, 2010
(thousands of United States dollars)
 
   
Strategic
Marketing
Services
    
Performance
Marketing
Services
    
Corporate
    
Total
  
                         
Revenue
   $ 308,722     $ 175,679     $ —     $ 484,401  
                                 
Cost of services sold
     207,009       128,645       —       335,654  
                                 
Office and general expenses
     64,500       36,107       17,851       118,458  
                                 
Depreciation and amortization
     11,788       11,137       271       23,196  
                                 
Operating Profit/(Loss)
     25,425       (210 )     (18,122 )     7,093  
                                 
Other Income (Expense):
                                
Other expense, net
                             (423 )
Interest expense, net
                             (24,185 )
                                 
Loss from continuing operations before income taxes, equity in affiliates
                             (17,515 )
Income tax expense
                             1,208  
                                 
Loss from continuing operations before equity in affiliates
                             (18,723 )
Equity in loss of non-consolidated affiliates
                             (1,639 )
                                 
Loss from continuing operations
                             (20,362 )
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes
                             (2,044 )
                                 
Net loss
                             (22,406 )
                                 
Net income attributable to the noncontrolling interests
     (2,948 )     (1,555 )     —       (4,503 )
Net loss attributable to MDC Partners Inc.
                           $ (26,909 )
                                 
Non cash stock based compensation
   $ 5,207     $ 1,248     $ 6,849     $ 13,304  
                                 
Supplemental Segment Information:
                                
                                 
Capital expenditures
   $ 4,430     $ 3,412     $ 324     $ 8,166  
                                 
Goodwill and intangibles
   $ 322,160     $ 193,145     $ —     $ 515,305  
                                 
Total assets
   $ 502,639     $ 305,975     $ 53,556     $ 862,170  
 

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 September 30,
                        
2011
   $ 193,197     $ 38,207     $ 6,842     $ 238,246  
2010
   $ 150,826     $ 23,789     $ 3,982     $ 178,597  
Nine Months Ended September 30,
                                
2011
   $ 559,186     $ 113,676     $ 23,362     $ 696,224  
2010
   $ 405,908     $ 66,261     $ 12,232     $ 484,401