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Segment Information
 3 Months Ended
Mar. 31, 2012
Segment Information
10. 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 72andSunny, Anomaly Partners, Crispin Porter & Bogusky, Doner 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, ecommerce 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 March 31, 2012

(thousands of United States dollars)

 

    Strategic
Marketing
Services		     Performance
Marketing
Services		     Corporate     Total  
                         
Revenue   $ 160,418     $ 75,560     $ —     $ 235,978  
                                 
Cost of services sold     119,853       57,407       —       177,260  
                                 
Office and general expenses     34,978       17,461       7,933       60,372  
                                 
Depreciation and amortization     5,099       4,554       348       10,001  
                                 
Operating Profit/(Loss)     488       (3,862 )     (8,281 )     (11,655 )
                                 
Other Income (Expense):                                
Other expense, net                             (1,023 )
Interest expense, net                             (10,955 )
                                 
Loss from continuing operations before income taxes, equity in affiliates                             (23,633 )
Income tax expense                             1,263  
                                 
Loss from continuing operations before equity in affiliates                             (24,896 )
Equity in earnings of non-consolidated affiliates                             272  
                                 
Loss from continuing operations                             (24,624 )
                                 
Loss from discontinuing operations attributable to MDC Partners Inc., net of taxes                             (300 )
                                 
Net loss                             (24,924 )
                                 
Net income attributable to the noncontrolling interests     (1,027 )     (330 )     —       (1,357 )
Net loss attributable to MDC Partners Inc.                           $ (26,281 )
                                 
Non cash stock based compensation   $ 1,866     $ 1,691     $ 2,327     $ 5,884  
                                 
Supplemental Segment Information:                                
                                 
Capital expenditures   $ 2,687     $ 2,324     $ 100     $ 5,111  
                                 
Goodwill and intangibles   $ 551,674     $ 260,672     $ —     $ 812,346  
                                 
Total assets   $ 837,832     $ 414,448     $ 86,330     $ 1,338,610  

 

 

Three Months Ended March 31, 2011

(thousands of United States dollars)

 

    Strategic
Marketing
Services		     Performance
Marketing
Services		     Corporate     Total  
                         
Revenue   $ 141,493     $ 73,598     $ —     $ 215,091  
                                 
Cost of services sold     100,770       56,992       —       157,762  
                                 
Office and general expenses     27,193       10,565       6,706       44,464  
                                 
Depreciation and amortization     5,807       4,392       104       10,303  
                                 
Operating Profit/(Loss)     7,723       1,649       (6,810 )     2,562  
                                 
Other Income (Expense):                                
Other income, net                             313  
Interest expense, net                             (9,526 )
                                 
Loss from continuing operations before income taxes, equity in affiliates                             (6,651 )
Income tax expense                             358  
                                 
Loss from continuing operations before equity in affiliates                             (7,009 )
Equity in earnings of non-consolidated affiliates                             255  
                                 
Loss from continuing operations                             (6,754 )
Loss from discontinued operations attributable to MDC Partners Inc., net of taxes                             (326 )
Net loss                             (7,080 )
                                 
Net income attributable to the noncontrolling interests     (1,643 )     38       —       (1,605 )
Net loss attributable to MDC Partners Inc.                           $ (8,685 )
                                 
Non cash stock based compensation   $ 1,547     $ 505     $ 2,222     $ 4,274  
                                 
Supplemental Segment Information:                                
                                 
Capital expenditures   $ 3,733     $ 932     $ 198     $ 4,863  
                                 
Goodwill and intangibles   $ 393,320     $ 218,055     $ —     $ 611,375  
                                 
Total Assets   $ 598,369     $ 335,186     $ 41,182     $ 974,737  

 

 

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 March 31,                                
2012   $ 188,185     $ 36,439     $ 11,354     $ 235,978  
2011   $ 171,908     $ 35,140     $ 8,043     $ 215,091