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. 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 composition of certain business and the Company’s internal management and reporting structure during 2019, reportable segment results for the 2018 periods presented have been recast to reflect the reclassification of certain businesses between segments. The changes were as follows: • Doner, previously within the Global Integrated Agencies reportable segment is now included within the Domestic Creative Agencies reportable segment. • HL Group Partners, previously within the Specialist Communications reportable segment, and Redscout, previously within the All Other category, are now included in the Yes & Company operating segment. The Yes & Company operating segment previously within the Media Services reportable segment is now included within the Domestic Creative Agencies reportable segment. • Attention, previously within the Forsman & Bodenfors operating segment has operationally merged into MDC Media Partners, which is included within the Media Services reportable segment. 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.” 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 Form 10-K for the year ended December 31, 2018. • The Global Integrated Agencies reportable segment is comprised of the Company’s four global, integrated operating segments (72andSunny, Anomaly, Crispin Porter + Bogusky, 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 seven operating segments that are primarily national advertising agencies (Colle + McVoy, Doner, Laird + Partners, Mono Advertising, Union, Yamamoto, and Yes & Company) 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 four operating segments that are each communications agencies (Allison & Partners, Hunter, KWT Global, 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 a single operating segment known as MDC Media Partners. MDC Media Partners, which operates primarily in North America, performs 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 (through the date of sale on March 8, 2019), Instrument, 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. Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Revenue: Global Integrated Agencies $ 154,368 $ 158,163 $ 284,087 $ 287,686 Domestic Creative Agencies 65,193 72,971 132,201 139,625 Specialist Communication 47,170 40,304 86,123 79,128 Media Services 21,331 21,398 41,510 46,082 All Other 74,068 86,907 147,000 154,190 Total $ 362,130 $ 379,743 $ 690,921 $ 706,711 Segment operating income (loss): Global Integrated Agencies $ 20,720 $ 18,352 $ 24,491 $ 4,760 Domestic Creative Agencies 8,730 5,077 14,207 7,955 Specialist Communication 6,683 6,216 13,760 9,944 Media Services 991 (1,719 ) (843 ) (1,738 ) All Other 2,949 15,986 8,962 22,430 Corporate (16,631 ) (13,140 ) (21,454 ) (27,212 ) Total $ 23,442 $ 30,772 $ 39,123 $ 16,139 Other Income (Expenses): Interest expense and finance charges, net $ (16,413 ) $ (16,859 ) $ (33,174 ) $ (32,942 ) Foreign exchange gain (loss) 2,932 (6,549 ) 8,374 (13,209 ) Other, net (746 ) 592 (4,128 ) 1,033 Income (loss) before income taxes and equity in earnings of non-consolidated affiliates 9,215 7,956 10,195 (28,979 ) Income tax expense (benefit) 2,088 1,977 2,835 (6,353 ) Income (loss) before equity in earnings of non-consolidated affiliates 7,127 5,979 7,360 (22,626 ) Equity in earnings (losses) of non-consolidated affiliates 206 (28 ) 289 58 Net income (loss) 7,333 5,951 7,649 (22,568 ) Net income attributable to the noncontrolling interest (3,043 ) (2,545 ) (3,472 ) (3,442 ) Net income (loss) attributable to MDC Partners Inc. $ 4,290 $ 3,406 $ 4,177 $ (26,010 ) Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Depreciation and amortization: Global Integrated Agencies $ 4,437 $ 4,743 $ 8,502 $ 12,152 Domestic Creative Agencies 1,547 1,281 2,786 2,574 Specialist Communication 698 992 1,265 1,959 Media Services 794 635 1,485 1,273 All Other 2,966 3,892 5,025 5,736 Corporate 221 160 438 384 Total $ 10,663 $ 11,703 $ 19,501 $ 24,078 Stock-based compensation: Global Integrated Agencies $ 1,232 $ 2,475 $ 4,999 $ 4,935 Domestic Creative Agencies 522 1,097 986 1,507 Specialist Communication 52 52 78 239 Media Services (16 ) 74 (16 ) 149 All Other 652 684 940 1,341 Corporate 1,192 1,221 (381 ) 2,469 Total $ 3,634 $ 5,603 $ 6,606 $ 10,640 Capital expenditures: Global Integrated Agencies $ 1,816 $ 2,411 $ 3,234 $ 4,654 Domestic Creative Agencies 369 569 1,063 1,473 Specialist Communication 231 2,208 482 2,443 Media Services 126 131 167 315 All Other 1,757 547 2,958 772 Corporate 18 24 19 32 Total $ 4,317 $ 5,890 $ 7,923 $ 9,689 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 2 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 June 30, 2019 and 2018 . |