XML 22 R9.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Revenue | 6 Months Ended
--- | ---
Jun. 30, 2018
Revenue from Contract with Customer [Abstract] |
Revenue | Revenue Effective January 1, 2018, the Company adopted FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 was applied using the modified retrospective method, with the cumulative effect of the initial adoption being recognized as an adjustment to opening retained earnings at January 1, 2018. As a result, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 605, Revenue Recognition (“ASC 605”). See Note 13 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for additional details surrounding the Company’s adoption of ASC 606. The Company’s policy surrounding revenue under ASC 605 is described in Note 2 of Item 8 of the Company’s 2017 Form 10-K. The policies described herein refer to those in effect as of January 1, 2018. The Company’s revenue recognition policies are established in accordance with the Revenue Recognition topics of ASC 606, and accordingly, revenue is recognized when control of the promised goods or services is transferred to our clients, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The primary source of the Company’s revenue is from agency arrangements in the form of fees for services performed, commissions, and from performance incentives or bonuses, depending on the terms of the client contract. In all circumstances, revenue is only recognized when collection is reasonably assured. Certain of the Company’s contractual arrangements have more than one performance obligation. For such arrangements, revenue is allocated to each performance obligation based on its relative stand-alone selling price. Stand-alone selling prices are determined based on the prices charged to clients or using expected cost plus margin. Revenue is recognized net of sales and other taxes due to be collected and remitted to governmental authorities. The Company’s contracts typically provide for termination by either party within 30 to 90 days. Although payment terms vary by client, they are typically within 30 to 60 days. In addition, the Company generally has the right to payment for all services provided through the end of the contract or termination date. Although certain of our performance obligations are recognized at a point in time, we typically satisfy our performance obligations over time, as services are performed. Point in time recognition primarily relates to certain commission-based contracts, which are recognized upon the placement of advertisements in various media when the Company has no further performance obligation. Fees for services are typically recognized using input methods that correspond with efforts incurred to date in relation to total estimated efforts to complete the contract. Within each contract, we identify whether the Company is principal or agent at the performance obligation level. In arrangements where the Company has substantive control over the service before transferring it to the client, and is primarily responsible for integrating the services into the final deliverables, we act as principal. In these arrangements, revenue is recorded at the gross amount billed. Accordingly, for these contracts the Company has included reimbursed expenses in revenue. In other arrangements where a third-party supplier, rather than the Company is primarily responsible for the integration of services into the final deliverables for our client, then we generally act as agent and record revenue equal to the net amount retained, when the fee or commission is earned. We have determined that we primarily act as agent for production and media buying services. A small portion of the Company’s contractual arrangements with clients include performance incentive provisions, which allow the Company to earn additional revenues as a result of its performance relative to both quantitative and qualitative goals. Incentive compensation is primarily estimated using the most likely amount method and is included in revenue up to the amount that is not expected to result in a reversal of a significant amount of cumulative revenue recognized. We recognize revenue related to performance incentives as we satisfy the performance obligation to which the performance incentives are related. Disaggregated Revenue Data The Company provides a broad range of services to a large base of clients across the full spectrum of industry verticals on a global basis. The primary source of revenue is from agency arrangements in the form of fees for services performed, commissions, and from performance incentives or bonuses. Certain clients may engage with the Company in various geographic locations, across multiple disciplines, and through multiple Partner Firms. Representation of a client rarely means that MDC handles marketing communications for all brands or product lines of the client in every geographical location. The Company’s Partner firms often cooperate with one another through referrals and the sharing of both services and expertise, which enables MDC to service clients’ varied marketing needs by crafting custom integrated solutions. Additionally, the Company maintains separate, independent operating companies to enable it to effectively manage potential conflicts of interest by representing competing clients across the MDC network. The following table presents revenue disaggregated by client industry vertical for the three and six months ended June 30, 2018 and 2017, and the impact of adoption of ASC 606:
| Three Months Ended June 30,
| 2018 |  | 2017
Industry | Reportable Segment |  | As reported |  | Adjustment to exclude impact of Adoption of ASC 606 |  | Adjusted |  |
Food & Beverage | All |  | $ | 84,464 |  |  | $ | (940 | ) |  | $ | 83,524 |  |  | $ | 79,299 |
Retail | All |  | 38,396 |  |  | 1,343 |  |  | 39,739 |  |  | 46,357 |
Consumer Products | All |  | 41,367 |  |  | (1,048 | ) |  | 40,319 |  |  | 40,668 |
Communications | All |  | 43,097 |  |  | 5,699 |  |  | 48,796 |  |  | 55,740 |
Automotive | All |  | 25,294 |  |  | 1,856 |  |  | 27,150 |  |  | 33,806 |
Technology | All |  | 23,540 |  |  | (141 | ) |  | 23,399 |  |  | 26,324 |
Healthcare | All |  | 35,426 |  |  | (612 | ) |  | 34,814 |  |  | 32,271 |
Financials | All |  | 30,207 |  |  | 710 |  |  | 30,917 |  |  | 26,808 |
Transportation and Travel/Lodging | All |  | 18,776 |  |  | 42 |  |  | 18,818 |  |  | 13,665 |
Other | All |  | 39,176 |  |  | 2,819 |  |  | 41,995 |  |  | 35,594 |
|  |  | $ | 379,743 |  |  | $ | 9,728 |  |  | $ | 389,471 |  |  | $ | 390,532 |
| Six Months Ended June 30,
| 2018 |  | 2017
Industry | Reportable Segment |  | As reported |  | Adjustment to exclude impact of Adoption of ASC 606 |  | Adjusted |  |
Food & Beverage | All |  | $ | 147,932 |  |  | $ | 5,866 |  |  | $ | 153,798 |  |  | $ | 140,590 |
Retail | All |  | 76,411 |  |  | 1,772 |  |  | 78,183 |  |  | 91,791 |
Consumer Products | All |  | 77,973 |  |  | (774 | ) |  | 77,199 |  |  | 75,729 |
Communications | All |  | 81,454 |  |  | 12,182 |  |  | 93,636 |  |  | 104,055 |
Automotive | All |  | 45,788 |  |  | 6,074 |  |  | 51,862 |  |  | 66,285 |
Technology | All |  | 45,080 |  |  | (310 | ) |  | 44,770 |  |  | 46,872 |
Healthcare | All |  | 68,002 |  |  | 519 |  |  | 68,521 |  |  | 61,199 |
Financials | All |  | 52,702 |  |  | 911 |  |  | 53,613 |  |  | 47,146 |
Transportation and Travel/Lodging | All |  | 33,664 |  |  | 776 |  |  | 34,440 |  |  | 27,775 |
Other | All |  | 77,705 |  |  | 3,988 |  |  | 81,693 |  |  | 73,790 |
|  |  | $ | 706,711 |  |  | $ | 31,004 |  |  | $ | 737,715 |  |  | $ | 735,232 |
MDC has historically largely focused where the Company was founded in North America, the largest market for its services in the world. In recent years the Company has expanded its global footprint to support clients looking for help to grow their businesses in new markets. Today, MDC’s Partner Firms are located in the United States, Canada, and an additional thirteen countries around the world. In the past, some clients have responded to weakening economic conditions with reductions to their marketing budgets, which included discretionary components that are easier to reduce in the short term than other operating expenses. The following table presents revenue disaggregated by geography:
| Three Months Ended June 30,
| 2018 |  | 2017
Geographic Location | Reportable Segment |  | As reported |  | Adjustment to exclude impact of Adoption of ASC 606 |  | Adjusted |  |
United States | All |  | $ | 295,268 |  |  | $ | 6,023 |  |  | $ | 301,291 |  |  | $ | 304,463 |
Canada | All |  | 33,086 |  |  | (3,591 | ) |  | 29,495 |  |  | 30,583 |
Other | All |  | 51,389 |  |  | 7,296 |  |  | 58,685 |  |  | 55,486 |
|  |  | $ | 379,743 |  |  | $ | 9,728 |  |  | $ | 389,471 |  |  | $ | 390,532 |
| Six Months Ended June 30,
| 2018 |  | 2017
Geographic Location | Reportable Segment |  | As reported |  | Adjustment to exclude impact of Adoption of ASC 606 |  | Adjusted |  |
United States | All |  | $ | 551,792 |  |  | $ | 15,041 |  |  | $ | 566,833 |  |  | $ | 579,145 |
Canada | All |  | 59,465 |  |  | (2,638 | ) |  | 56,827 |  |  | 57,053 |
Other | All |  | 95,454 |  |  | 18,601 |  |  | 114,055 |  |  | 99,034 |
|  |  | $ | 706,711 |  |  | $ | 31,004 |  |  | $ | 737,715 |  |  | $ | 735,232 |
For more detailed information about the Company’s reportable segments, see Note 11. Contract assets and liabilities Contract assets consist of fees and reimbursable outside vendor costs incurred on behalf of clients when providing advertising, marketing and corporate communications services that have not yet been invoiced to clients. Unbilled service fees were $78,293 and $54,177 at June 30, 2018 and December 31, 2017, respectively, and are included as a component of accounts receivable on the unaudited condensed consolidated balance sheets. Outside vendor costs incurred on behalf of clients which have yet to be invoiced were $59,081 and $31,146 at June 30, 2018 and December 31, 2017, respectively, and are included on the unaudited condensed consolidated balance sheets as expenditures billable to clients. Such amounts are invoiced to clients at various times over the course of the production process. Contract liabilities consist of fees billed to clients in excess of fees recognized as revenue and are classified as advance billings on the Company’s unaudited condensed consolidated balance sheets. Advance billings at June 30, 2018 and December 31, 2017 were $184,269 and $148,133, respectively. The increase in the advance billings balance of $36,136 for the six months ended June 30, 2018 is primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by $58,888 of revenues recognized that were included in the advance billings balances as of December 31, 2017. Changes in the contract asset and liability balances during the six months ended June 30, 2018 and December 31, 2017 were not materially impacted by write offs, impairment losses or any other factors. Practical expedients In adopting ASC 606, the Company applied the practical expedient to not disclose information about remaining performance obligations that have original expected durations of one year or less. Amounts related to those performance obligations with expected durations of more than one year are immaterial.

X
- References No definition available. + Details
Name: | us-gaap_RevenueFromContractWithCustomerAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
Name: | us-gaap_RevenueFromContractWithCustomerTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration