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Segment Information | 12 Months Ended
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Dec. 31, 2018
Segment Reporting [Abstract] |
Segment Information | . 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. Effective January 1, 2019, the Executive Committee assumed the role and responsibilities of the Chief Executive Officer until the appointment of a successor which occurred on March 18, 2019. See Note 1 of the Notes to the Consolidated Financial Statements included herein for additional information. Once operating segments are identified, the Company performs an analysis to determine if aggregation of operating segments is applicable. This determination is based upon a quantitative analysis of the expected and historic average long-term profitability for each operating segment, together with a qualitative assessment to determine if operating segments have similar operating characteristics. Due to changes in the Company’s internal management and reporting structure during 2018, reportable segment results for 2017 and prior periods presented have been recast to reflect the reclassification of certain businesses between segments. The changes were as follows:
• | Source Marketing, previously within the All Other category, was included within the Doner operating segment, which is aggregated into the Global Integrated Agencies reportable segment;
• | Yamamoto, previously within the All Other category, was operationally merged with Civilian and is now included within the Domestic Creative Agencies reportable segment;
• | Bruce Mau Design, Hello Design and Northstar Research Partners, previously within the All Other category, and Varick Media Management, previously within the Media Services reportable segment, were included into a newly-formed operating segment, Yes & Company, which is aggregated within the Media Services reportable segment.
Also in 2018, Forsman & Bodenfors and kbs+, both within the Global Integrated Agencies reportable segment, merged under the Forsman & Bodenfors name. The four reportable segments that result from applying the aggregation criteria are as follows: “Global Integrated Agencies”; “Domestic Creative Agencies”; “Specialist Communications”; and “Media Services.” In addition, the Company combines and discloses those operating segments that do not meet the aggregation criteria as “All Other.” The Company also reports corporate expenses, as further detailed below, as “Corporate.”
• | The Global Integrated Agencies reportable segment is comprised of the Company’s five global, integrated operating segments (72andSunny, Anomaly, Crispin Porter Bogusky, Doner and Forsman & Bodenfors) serving multinational clients around the world. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of global clients and the methods used to provide services; and (iii) the extent to which they may be impacted by global economic and geopolitical risks. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Global Integrated Agencies reportable segment.
The operating segments within the Global Integrated Agencies reportable segment provides a range of different services for its clients, including strategy, creative and production for advertising campaigns across a variety of platforms (print, digital, social media, television broadcast).
• | The Domestic Creative Agencies reportable segment is comprised of five operating segments that are national advertising agencies (Colle + McVoy, Laird + Partners, Mono Advertising, Union and Yamamoto) leveraging creative capabilities at their core. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of domestic client accounts and the methods used to provide services; and (iii) the extent to which they may be impacted by domestic economic and policy factors within North America. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Domestic Creative Agencies reportable segment.
The operating segments within the Domestic Creative Agencies reportable segment provide similar services as the Global Integrated Agencies.
• | The Specialist Communications reportable segment is comprised of five operating segments that are each communications agencies (Allison & Partners, HL Group Partners, Hunter PR, KWT Global (formerly Kwittken), and Veritas) with core service offerings in public relations and related communications services. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of client accounts and the methods used to provide services; (iii) the extent to which they may be impacted by domestic economic and policy factors within North America; and (iv) the regulatory environment regarding public relations and social media. In addition, these operating segments compete with each other for new business and from time to time have business move between them. The Company believes the historic and expected average long-term profitability is similar among the operating segments aggregated in the Specialist Communications reportable segment.
The operating segments within the Specialist Communications reportable segment provide public relations and communications services including strategy, editorial, crisis support or issues management, media training, influencer engagement, and events management.
• | The Media Services reportable segment is comprised of two operating segments (MDC Media Partners and Yes & Company). These operating segments perform media buying and planning as their core competency across a range of platforms (out-of-home, paid search, social media, lead generation, programmatic, television broadcast).
• | All Other consists of the Company’s remaining operating segments that provide a range of diverse marketing communication services, but generally do not have similar services offerings or financial characteristics as those aggregated in the reportable segments. The All Other category includes 6Degrees Communications, Concentric Partners, Gale Partners, Kenna, Kingsdale, Instrument, Redscout, Relevent, Team, Vitro, and Y Media Labs. The nature of the specialist services provided by these operating segments vary among each other and from those operating segments aggregated into the reportable segments. This results in these operating segments having current and long-term performance expectations inconsistent with those operating segments aggregated in the reportable segments. The operating segments within All Other provide a range of diverse marketing communication services, including application and website design and development, data and analytics, experiential marketing, customer research management, creative services, and branding.
• | Corporate consists of corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses 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 operating segments are allocated to the appropriate reportable segment and the All Other category.
| Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Revenue: |  |  |  |  |
Global Integrated Agencies | $ | 698,872 |  |  | $ | 797,347 |  |  | $ | 712,793 |
Domestic Creative Agencies | 102,063 |  |  | 104,417 |  |  | 97,199 |
Specialist Communications | 179,065 |  |  | 172,565 |  |  | 170,285 |
Media Services | 140,753 |  |  | 166,216 |  |  | 157,696 |
All Other | 355,450 |  |  | 273,234 |  |  | 247,812 |
Total | $ | 1,476,203 |  |  | $ | 1,513,779 |  |  | $ | 1,385,785 |
Segment operating income (loss): |  |  |  |  |
Global Integrated Agencies | $ | 44,868 |  |  | $ | 71,857 |  |  | $ | 59,193 |
Domestic Creative Agencies | 18,552 |  |  | 19,333 |  |  | 18,089 |
Specialist Communications | 18,629 |  |  | 20,728 |  |  | 1,940 |
Media Services | (51,196 | ) |  | 13,126 |  |  | 5,554 |
All Other | 34,000 |  |  | 47,771 |  |  | 7,773 |
Corporate | (55,157 | ) |  | (40,856 | ) |  | (44,118 | )
Total | $ | 9,696 |  |  | $ | 131,959 |  |  | $ | 48,431 |
Other Income (Expense): |  |  |  |  |
Interest expense and finance charges, net | (67,075 | ) |  | (64,364 | ) |  | (65,050 | )
Foreign exchange transaction gain (loss) | (23,258 | ) |  | 18,137 |  |  | (213 | )
Loss on redemption of Notes | — |  |  | — |  |  | (33,298 | )
Other, net | 230 |  |  | 1,346 |  |  | 414 |
Income (loss) before income taxes and equity in earnings (losses) of non-consolidated affiliates | (80,407 | ) |  | 87,078 |  |  | (49,716 | )
Income tax expense (benefit) | 31,603 |  |  | (168,064 | ) |  | (9,404 | )
Income (loss) before equity in earnings (losses) of non-consolidated affiliates | (112,010 | ) |  | 255,142 |  |  | (40,312 | )
Equity in earnings (losses) of non-consolidated affiliates | 62 |  |  | 2,081 |  |  | (309 | )
Net income (loss) | (111,948 | ) |  | 257,223 |  |  | (40,621 | )
Net income attributable to the noncontrolling interest | (11,785 | ) |  | (15,375 | ) |  | (5,218 | )
Net income (loss) attributable to MDC Partners Inc. | $ | (123,733 | ) |  | $ | 241,848 |  |  | $ | (45,839 | )
| Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Depreciation and amortization: |  |  |  |  |
Global Integrated Agencies | $ | 23,571 |  |  | $ | 23,831 |  |  | $ | 21,555 |
Domestic Creative Agencies | 1,583 |  |  | 1,582 |  |  | 1,811 |
Specialist Communications | 4,252 |  |  | 4,714 |  |  | 6,637 |
Media Services | 3,119 |  |  | 4,052 |  |  | 6,091 |
All Other | 12,909 |  |  | 8,197 |  |  | 8,768 |
Corporate | 762 |  |  | 1,098 |  |  | 1,584 |
Total | $ | 46,196 |  |  | $ | 43,474 |  |  | $ | 46,446 |
Stock-based compensation: |  |  |  |  |
Global Integrated Agencies | $ | 8,521 |  |  | $ | 15,225 |  |  | $ | 12,177 |
Domestic Creative Agencies | 1,100 |  |  | 887 |  |  | 651 |
Specialist Communications | 714 |  |  | 2,954 |  |  | 3,629 |
Media Services | 318 |  |  | 656 |  |  | 318 |
All Other | 3,104 |  |  | 2,494 |  |  | 1,703 |
Corporate | 4,659 |  |  | 2,134 |  |  | 2,525 |
Total | $ | 18,416 |  |  | $ | 24,350 |  |  | $ | 21,003 |
Capital expenditures: |  |  |  |  |
Global Integrated Agencies | $ | 10,088 |  |  | $ | 20,760 |  |  | $ | 16,486 |
Domestic Creative Agencies | 951 |  |  | 1,168 |  |  | 1,153 |
Specialist Communications | 3,618 |  |  | 1,288 |  |  | 2,741 |
Media Services | 966 |  |  | 3,842 |  |  | 5,266 |
All Other | 4,574 |  |  | 5,877 |  |  | 3,753 |
Corporate | 67 |  |  | 23 |  |  | 33 |
Total | $ | 20,264 |  |  | $ | 32,958 |  |  | $ | 29,432 |
A summary of the Company’s long-lived assets, comprised of fixed assets, goodwill and intangibles, net, by geographic region at December 31, is set forth in the following table.
| United States |  | Canada |  | Other |  | Total
Long-lived Assets |  |  |  |  |  |  |  |  |  |  |
2018 | $ | 76,781 |  |  | $ | 4,779 |  |  | $ | 6,629 |  |  | $ | 88,189 |
2017 | $ | 77,163 |  |  | $ | 5,638 |  |  | $ | 7,505 |  |  | $ | 90,306 |
Goodwill and Intangible Assets |  |  |  |  |  |  |  |  |  |  |
2018 | $ | 679,344 |  |  | $ | 61,748 |  |  | $ | 67,628 |  |  | $ | 808,720 |
2017 | $ | 706,241 |  |  | $ | 127,014 |  |  | $ | 73,285 |  |  | $ | 906,540 |
The Company’s CODM does not use segment assets to allocate resources or to assess performance of the segments and therefore, total segment assets have not been disclosed. A summary of the Company’s revenue by geographic region at December 31 is set forth in the following table.
| United States |  | Canada |  | Other |  | Total
Revenue: |  |  |  |  |  |  |  |  |  |  |
2018 | $ | 1,153,192 |  |  | $ | 124,000 |  |  | $ | 199,011 |  |  | $ | 1,476,203 |
2017 | $ | 1,172,364 |  |  | $ | 123,092 |  |  | $ | 218,323 |  |  | $ | 1,513,779 |
2016 | $ | 1,103,714 |  |  | $ | 124,101 |  |  | $ | 157,970 |  |  | $ | 1,385,785 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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