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Segment Information | 3 Months Ended
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Mar. 31, 2017
Segment Reporting [Abstract] |
Segment Information | 11. Segment Information The Company determines an operating segment if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has discrete financial information, and is (iii) regularly reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions regarding resource allocation for the segment and assess its performance. During June of 2016, the Company entered into a Separation and Release Agreement with its former Chief Operating Officer in connection with a limited restructuring of the Company’s corporate department. This change to the Company’s management structure was designed to provide the CODM greater visibility into the operating performance of individual Partner Firms and resulted in a corresponding change in the level at which the CODM reviews the operating results of such Partner Firms. As a result, in the third quarter of 2016, the Company reassessed its determination of operating segments and concluded that each Partner Firm represents an operating segment. The Company assesses the average long-term gross margins expected for each Partner Firm together with the qualitative characteristics set forth in ASC 280-10-50 and aggregates the Partner Firms that meet the aggregation criteria into one reportable (the “Reportable Segment”), and combines and discloses those Partner Firms that do not meet the aggregation criteria as “All Other.” The Company also reports corporate expenses, as further detailed below, as “Corporate.” Effective January 1, 2017, the Company recast the segment reporting to reflect a non-material change to the Company’s operating segments. The Company elected to separate Kenna, a component business, from the kbs Partner Firm in order to provide additional visibility for the CODM. As a stand-alone Partner Firm, Kenna does not meet the aggregation criteria to be included in the Reportable Segment, thus, Kenna is now reported within All Other.
• | The Reportable Segment is comprised of the Company’s integrated advertising, media, and public relations service Partner Firms. These core or principal service offerings are similar and/or complementary in many respects, and the Partner Firms that provide these service offerings both compete and/or collaborate with each other for new business. Each Partner Firm represents an operating segment and the Company aggregates its Partner Firms to report in the Reportable Segment. Partner Firms within this segment include Allison & Partners, Anomaly, Crispin Porter + Bogusky, Doner, Forsman & Bodenfors, Hunter PR, kbs, MDC Media Partners, and 72andSunny, among others. These Partner Firms share similar characteristics related to the nature of their services as well as the type of clients and the methods used to provide their services. In addition, the class of customer is also common among the Partner Firms in the Reportable Segment. This results in the Partner Firms having similar economics of their business, and the Company’s expected average long-term gross margin are similar among the Partner Firms aggregated in the Reportable Segment.
• | All Other is comprised of the Company’s Partner Firms that provide the specialist marketing offerings such as direct marketing, sales promotion, market research, strategic communications, database and customer relationship management, data analytics and insights, corporate identity, design and branding, and product and service innovation. Partner Firms within All Other include Gale Partners, Kingsdale, Relevent, Team, Redscout, and Y Media Labs, among others. The nature of the specialized services provided by these Partner Firms vary from those Partner Firms aggregated into the Reportable Segment in that such services are generally complimentary and are provided to round out the portfolio of services offered by the Company. This results in these Partner Firms having different current and long-term performance expectations from those Partner Firms aggregated in the Reportable Segment.
• | Corporate consists of corporate office expenses incurred in connection with the strategic resources provided to the Partner Firms, as well as certain other centrally managed expenses that are not fully allocated to the Partner Firms. These office and general expenses include (i) salaries and related expenses for corporate office employees including employees dedicated to supporting the Partner Firms, (ii) occupancy expense 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 Partner Firms are allocated to the Reportable Segment and All Other.
Prior year results have been recast to reflect the new segment reporting. Three Months Ended March 31, 2017 (thousands of United States dollars)
| Reportable Segment |  | All Other |  | Corporate |  | Total
Revenue | $ | 286,805 |  |  | $ | 57,895 |  |  | $ | — |  |  | $ | 344,700 |
Cost of services sold | 198,143 |  |  | 39,420 |  |  | — |  |  | 237,563 |
Office and general expenses | 68,692 |  |  | 10,888 |  |  | 8,260 |  |  | 87,840 |
Depreciation and amortization | 8,393 |  |  | 2,196 |  |  | 309 |  |  | 10,898 |
Operating profit (loss) | 11,577 |  |  | 5,391 |  |  | (8,569 | ) |  | 8,399 |
Other income (expense): |  |  |  |  |  |  |
Other income, net |  |  |  |  |  |  | 2,567 |
Interest expense and finance charges, net |  |  |  |  |  |  | (16,541 | )
Loss before income taxes and equity in earnings of non-consolidated affiliates |  |  |  |  |  |  | (5,575 | )
Income tax expense |  |  |  |  |  |  | 3,969 |
Loss before equity in earnings of non-consolidated affiliates |  |  |  |  |  |  | (9,544 | )
Equity in losses of non-consolidated affiliates |  |  |  |  |  |  | (139 | )
Net loss |  |  |  |  |  |  | (9,683 | )
Net income attributable to the noncontrolling interests | (741 | ) |  | (142 | ) |  | — |  |  | (883 | )
Net loss attributable to MDC Partners Inc. |  |  |  |  |  |  | $ | (10,566 | )
Stock-based compensation | $ | 3,913 |  |  | $ | 433 |  |  | $ | 604 |  |  | $ | 4,950 |
Supplemental Segment Information: |  |  |  |  |  |  |
Capital expenditures | $ | 8,513 |  |  | $ | 899 |  |  | $ | 1 |  |  | $ | 9,413 |
Goodwill and intangibles | $ | 719,164 |  |  | $ | 207,928 |  |  | $ | — |  |  | $ | 927,092 |
Total assets | $ | 1,195,498 |  |  | $ | 303,941 |  |  | $ | 127,214 |  |  | $ | 1,626,653 |
Three Months Ended March 31, 2016 (thousands of United States dollars)
| Reportable Segment |  | All Other |  | Corporate |  | Total
Revenue | $ | 254,106 |  |  | $ | 54,936 |  |  | $ | — |  |  | $ | 309,042 |
Cost of services sold | 175,339 |  |  | 36,107 |  |  | — |  |  | 211,446 |
Office and general expenses | 52,209 |  |  | 12,886 |  |  | 12,733 |  |  | 77,828 |
Depreciation and amortization | 7,060 |  |  | 3,763 |  |  | 397 |  |  | 11,220 |
Operating profit (loss) | 19,498 |  |  | 2,180 |  |  | (13,130 | ) |  | 8,548 |
Other income (expense): |  |  |  |  |  |  |
Other income, net |  |  |  |  |  |  | 15,512 |
Interest expense and finance charges, net |  |  |  |  |  |  | (15,397 | )
Loss on redemption of notes |  |  |  |  |  |  | (33,298 | )
Loss before income taxes and equity in earnings of non-consolidated affiliates |  |  |  |  |  |  | (24,635 | )
Income tax benefit |  |  |  |  |  |  | (1,972 | )
Loss before equity in earnings of non-consolidated affiliates |  |  |  |  |  |  | (22,663 | )
Equity in earnings of non-consolidated affiliates |  |  |  |  |  |  | 229 |
Net loss |  |  |  |  |  |  | (22,434 | )
Net income attributable to the noncontrolling interests | (726 | ) |  | (133 | ) |  | — |  |  | (859 | )
Net loss attributable to MDC Partners Inc. |  |  |  |  |  |  | $ | (23,293 | )
Stock-based compensation | $ | 3,751 |  |  | $ | 130 |  |  | $ | 804 |  |  | $ | 4,685 |
Supplemental Segment Information: |  |  |  |  |  |  |
Capital expenditures | $ | 4,857 |  |  | $ | 654 |  |  | $ | 28 |  |  | $ | 5,539 |
Goodwill and intangibles | $ | 699,993 |  |  | $ | 244,667 |  |  | $ | — |  |  | $ | 944,660 |
Total assets | $ | 1,088,365 |  |  | $ | 324,623 |  |  | $ | 158,567 |  |  | $ | 1,571,555 |
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, |  |  |  |  |  |  |  |  |  |  |
2017 | $ | 274,682 |  |  | $ | 26,470 |  |  | $ | 43,548 |  |  | $ | 344,700 |
2016 | $ | 252,199 |  |  | $ | 28,406 |  |  | $ | 28,437 |  |  | $ | 309,042 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599 + Details
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