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. 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.

Effective in the first quarter of 2020, the Company reorganized its management structure resulting in the aggregation of certain Partner Firms into integrated groups (“Networks”). Mark Penn, Chief Executive Officer and Chairman of the Company, appointed key agency executives, that report directly into him, to lead each Network. In connection with the reorganization, we reassessed our reportable segments to align our external reporting with how we operate the Networks under our new organizational structure. Prior periods presented have been recast to reflect the change in reportable segments.

The two reportable segments that result from applying the aggregation criteria are as follows: “Integrated Agencies Network”; and “Media & Data Network.” In addition, the Company combines and discloses operating segments that do not meet the aggregation criteria as “All Other.” The Company also reports corporate expenses, as further detailed below, as “Corporate.” All segments follow the same basis of presentation and accounting policies as those described throughout the Notes to the Unaudited Condensed Consolidated Financial Statements included herein and Note 2 of the Company’s 2019 Form 10-K.

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The Integrated Agencies Network reportable segment is comprised of the Company’s four integrated operating segments (Constellation, Doner Partner Network, Anomaly Alliance, and Colle McVoy). These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of 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 Integrated Agencies Network reportable segment.

The operating segments within the Integrated Agencies Network reportable segment provide a range of different services for its clients, primarily including strategy, creative and production for advertising campaigns across a variety of platforms (print, digital, social media, television broadcast), public relations and communications services, experiential, social media and influencer marketing.


•	The Media & Data Network reportable segment is comprised of a single operating segment that combines media buying and planning across a range of platforms (out-of-home, paid search, social media, lead generation, programmatic, television broadcast) with technology and data capabilities.

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All Other consists of the Company’s remaining operating segments that provide a range of services including advertising, public relations and 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 Allison & Partners, Bruce Mau, Forsman & Bodenfors, Hello, Team and Vitro.

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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.



	Three Months Ended March 31,
	2020			2019
Revenue:
Integrated Agencies Network	$	208,328		$	206,910
Media & Data Network	41,058			43,232
All Other	78,356			78,649
Total	$	327,742		$	328,791

Segment operating income (loss):
Integrated Agencies Network	$	29,193		$	15,512
Media & Data Network	617			(1,649		)
All Other	7,857			6,641
Corporate	(8,338		)	(4,822		)
Total	$	29,329		$	15,682

Other Income (Expenses):
Interest expense and finance charges, net	$	(15,612	)	$	(16,760	)
Foreign exchange gain (loss)	(14,757		)	5,442
Other, net	16,334			(3,383		)
Income before income taxes and equity in earnings of non-consolidated affiliates	15,294			981
Income tax expense	13,500			748
Income before equity in earnings of non-consolidated affiliates	1,794			233
Equity in earnings of non-consolidated affiliates	—			83
Net income	1,794			316
Net income attributable to the noncontrolling interest	(791		)	(429		)
Net income (loss) attributable to MDC Partners Inc.	$	1,003		$	(113	)



	Three Months Ended March 31,
	2020			2019
Depreciation and amortization:
Integrated Agencies Network	$	6,267		$	5,715
Media & Data Network	808			993
All Other	1,899			1,913
Corporate	232			217
Total	$	9,206		$	8,838

Stock-based compensation:
Integrated Agencies Network	$	2,861		$	4,459
Media & Data Network	(13		)	—
All Other	80			86
Corporate	142			(1,573		)
Total	$	3,070		$	2,972

Capital expenditures:
Integrated Agencies Network	$	835		$	3,049
Media & Data Network	86			138
All Other	323			418
Corporate	302			1
Total	$	1,546		$	3,606

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.

See Note 3 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for a summary of the Company’s revenue by geographic region for three months ended March 31, 2020 and 2019.