PRESS RELEASE
| FOR: | MDC Partners Inc. | CONTACT: | Matt Chesler, CFA |
| | 745 Fifth Avenue, 19th Floor | | VP, Investor Relations |
| | New York, NY 10151 | | 646-412-6877 |
| | | | mchesler@mdc-partners.com |
MDC PARTNERS INC. REPORTS RECORD RESULTS FOR THE
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2013
2013 ORGANIC REVENUE GROWTH OF 8.3%, EBITDA GROWTH OF 33.1%
AND 260 BASIS POINTS OF MARGIN IMPROVEMENT, AND FREE CASH FLOW
GROWTH OF 82.0%
QUARTERLY DIVIDEND INCREASED 12.5% FROM $0.16 TO $0.18 PER SHARE,
UNDERSCORING CONTINUED STRONG FREE CASH FLOW GENERATION
FULL YEAR HIGHLIGHTS:
| · | Revenue increased to $1.15 billion from $1.06 billion, an increase of 8.1% |
| · | Organic revenue increased 8.3% |
| · | EBITDA increased to $159.4 million from $119.7 million, an increase of 33.1% |
| · | EBITDA margin increased 260 basis points to 13.9% from 11.3% |
| · | Free Cash Flow increased to $91.6 million from $50.3 million, an increase of 82.0% |
| · | Net New Business wins totaled $132.5 million |
| · | Reduced shares outstanding by 7% via the redemption of stock appreciation rights |
FOURTH QUARTER HIGHLIGHTS:
| · | Revenue increased to $307.1 million from $292.6 million, an increase of 4.9% |
| · | Organic revenue increased 5.0% |
| · | EBITDA increased to $44.6 million from $43.6 million, an increase of 2.2% |
| · | EBITDA margin decreased 40 basis points to 14.5% from 14.9% |
| · | Free Cash Flow increased to $25.8 million from $24.1 million, an increase of 7.2% |
| · | Net New Business wins totaled $25.0 million |
NEW YORK, NY (February 20, 2014)– MDC Partners Inc. (NASDAQ: MDCA; TSX: MDZ.A) today announced financial results for the three and twelve months ended December 31, 2013.
Miles S. Nadal, Chairman and Chief Executive Officer of MDC Partners, said, “The fourth quarter capped another year of exceptionally strong performance for MDC Partners. After a year of reporting record metrics in 2012, in 2013 we again delivered industry leading organic revenue growth, strong EBITDA growth and operating leverage, and solid free cash flow growth. We significantly strengthened our balance sheet, reduced our borrowing costs, and improved our flexibility to use our capital to the benefit of our shareholders. We’ve been able to do this even as we increased our quarterly dividend by 93% over the course of the year and as we purchased 7% of shares outstanding during the fourth quarter. Across our portfolio, we continue to deliver successful, award-winning results for clients, which led to another exceptional new business year as net wins reached $133 million.”
“As we look ahead, our growth profile is as strong as it’s ever been. We have assembled the best talent in the industry and have added to our capabilities across multiple disciplines; we are building our international presence; we are seeing great contribution from our media services platform; and we are beginning to look at opportunistic acquisitions that will maximize our growth trajectory. Without accounting for acquisition, our unique business model over the long-term translates into 5-7% annual organic revenue growth, 50-100 basis points of margin expansion, and significant free cash flow generation. We believe that this makes for a very compelling investment.”
Guidance for 2014 is established as follows:
| | | | | | | | | | | | Implied | |
| | | | 2013 | | | | 2014 | | | | Year over Year | |
| | | | Actuals | | | | Guidance | | | | Change | |
| Revenue | | | $1.15 billion | | | | $1.230 - $1.255 billion | | | | +7.1% to +9.2% | |
| EBITDA | | | $159.4 million | | | | $177 - $181 million | | | | +11.0% to +13.5% | |
| Free Cash Flow | | | $91.6 million | | | | $104 - $108 million | | | | +13.6% to +18.0% | |
| | | | | | | | | | | | | |
| EBITDA Margin | | | 13.9% | | | | 14.4% | | | | +50 basis points | |
Consolidated revenue for the fourth quarter of 2013 was $307.1 million, an increase of 4.9% compared to $292.6 million in the fourth quarter of 2012. EBITDA for the fourth quarter of 2013 was $44.6 million, an increase of 2.2% compared to $43.6 million in the fourth quarter of 2012, excluding the previously announced contractual one-time $9.6 million incentive compensation charge. Net loss attributable to MDC Partners in the fourth quarter was ($94.3) million compared to a loss of ($24.5) million in the fourth quarter of 2012 attributable to the previously announced one-time stock-based compensation charge of $55.8 million which was related to the exercise of stock appreciation rights and a $30.5 million expense related to adjustments to deferred acquisition consideration. Diluted loss per share from continuing operations attributable to MDC Partners common shareholders for the fourth quarter of 2013 was ($1.98) compared to a loss of ($0.50) per share in the same period of 2012. Free cash flow was $25.8 million in the fourth quarter of 2013, compared with $24.1 million in the fourth quarter of 2012.
For the twelve month period ended December 31, 2013, consolidated revenue was $1.15 billion, an increase of 8.1% compared to $1.06 billion in the twelve months ended December 31, 2012. EBITDA for the twelve months ended December 31, 2013 increased 33.1% to $159.4 million compared to $119.7 million in the same period of 2012, as the company realized 260 basis points of EBITDA margin expansion in 2013. Loss attributable to MDC Partners in the twelve months ended December 31, 2013 was ($148.9) million compared to a loss of ($85.4) million in 2012 as a result of $55.6 million of expenses related to the redemption of Notes in the Company’s refinancing during the first quarter, a one-time stock-based compensation charge of $78.0 million related to the exercise of stock appreciation rights, and a $35.9 million expense related to adjustments to deferred acquisition consideration, offset by the increase in EBITDA. Diluted loss per share from continuing operations attributable to MDC Partners common shareholders for the twelve months ended December 31, 2013 was ($2.92) compared to a loss of ($1.71) per share in the same period of 2012.
David Doft, CFO of MDC Partners, said, “Our financial performance in 2013 has set the stage for what we believe will be another strong growth year in 2014. We expect revenue to increase 7.1% to 9.2%, EBITDA to increase 11.0% to 13.5%, and margin expansion of 50 basis points. With the capital efficiency of our financial model, free cash flow is expected to increase 13.6% to 18.0%. In addition, we expect to continue to improve our balance sheet and are tracking closer to our long-term target of below 2.5 times net debt-to-EBITDA. We are confident that we can meet or exceed these targets, and continue to drive value for shareholders.”
MDC Partners Announces $0.18 per Share Quarterly Cash Dividend
MDC Partners today also announced that its Board of Directors has declared a cash dividend of $0.18 per share on all of its outstanding Class A shares and Class B shares. The quarterly dividend represents a 12.5% increase from the prior dividend and will be payable on or about March 18, 2014, to shareholders of record at the close of business on March 4, 2014.
Conference Call
Management will host a conference call on Thursday, February 20, 2014 at 4:30 p.m. (ET) to discuss results. The conference call will be accessible by dialing 1-412-317-0790 or toll free 1-877-870-4263. An investor presentation has been posted on our website www.mdc-partners.com and will be referred to during the conference call.
A recording of the conference call will be available one hour after the call until 9:00 a.m. March 7, 2014, by dialing 1-412-317-0088 or toll free 1-877-344-7529 (passcode 10040497) or by visiting our website at www.mdc-partners.com.
About MDC Partners Inc.
MDC is one of the world’s largest Business Transformation Organizations that utilizes technology, marketing communications, data analytics, insights and strategic consulting solutions to drive meaningful returns on Marketing and Communications Investments for multinational clients in the United States, Canada, and worldwide.
MDC Partners’ durable competitive advantage is to Empower the Most Talented Entrepreneurial Thought Leaders to Drive Business Success to new levels of Achievement, for both our Clients and our Shareholders, reinforcing MDC's reputation as "The Place Where Great Talent Lives."
MDC Partners' Class A shares are publicly traded on NASDAQ under the symbol "MDCA" and on the Toronto Stock Exchange under the symbol "MDZ.A".
Non-GAAP Financial Measures
In addition to its reported results, MDC Partners has included in this earnings release certain financial results that the Securities and Exchange Commission defines as "non-GAAP financial measures." Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results. These non-GAAP financial measures relate to: (1) presenting EBITDA and EBITDA margin (as defined) for the three and twelve months ended December 31, 2013 and 2012; and (2) presenting Free Cash Flow for the three and twelve months ended December 31, 2013 and 2012. Included in this earnings release are tables reconciling MDC’s reported results to arrive at these non-GAAP financial measures. In addition, Net Debt is defined in our credit facility as debt due pertaining to the revolving credit facility plus debt pertaining to the Senior Notes less total cash and cash equivalents.
This press release contains forward-looking statements. The Company’s representatives may also make forward-looking statements orally from time to time. Statements in this press release that are not historical facts, including statements about the Company’s beliefs and expectations, earnings guidance, recent business and economic trends, potential acquisitions, estimates of amounts for deferred acquisition consideration and “put” option rights, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:
| · | risks associated with severe effects of international, national and regional economic downturn; |
| · | the Company’s ability to attract new clients and retain existing clients; |
| · | the spending patterns and financial success of the Company’s clients; |
| · | the Company’s ability to retain and attract key employees; |
| · | the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to “put” option right and deferred acquisition consideration; |
| · | the successful completion and integration of acquisitions which complement and expand the Company’s business capabilities; and |
| · | foreign currency fluctuations. |
The Company’s business strategy includes ongoing efforts to engage in material acquisitions of ownership interests in entities in the marketing communications services industry. The Company intends to finance these acquisitions by using available cash from operations, from borrowings under its credit facility and through incurrence of bridge or other debt financing, any of which may increase the Company’s leverage ratios, or by issuing equity, which may have a dilutive impact on existing shareholders proportionate ownership. At any given time the Company may be engaged in a number of discussions that may result in one or more material acquisitions. These opportunities require confidentiality and may involve negotiations that require quick responses by the Company. Although there is uncertainty that any of these discussions will result in definitive agreements or the completion of any transactions, the announcement of any such transaction may lead to increased volatility in the trading price of the Company’s securities.
Investors should carefully consider these risk factors and the additional risk factors outlined in more detail in the Annual Report on Form 10-K under the caption “Risk Factors” and in the Company’s other SEC filings.
| SCHEDULE 1 |
| | | | | | | |
| MDC PARTNERS INC. |
| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS |
| (US$ in 000s, except share and per share amounts) |
| | | Three Months Ended December 31, | | | The Year Ended December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Revenue | | $ | 307,076 | | | $ | 292,640 | | | $ | 1,148,881 | | | $ | 1,063,265 | |
| | | | | | | | | | | | | | | | | |
| Operating Expenses: | | | | | | | | | | | | | | | | |
| Cost of services sold | | | 197,755 | | | | 194,337 | | | | 754,494 | | | | 733,800 | |
| Office and general expenses | | | 169,746 | | | | 95,018 | | | | 386,779 | | | | 299,599 | |
| Depreciation and amortization | | | 11,171 | | | | 10,197 | | | | 39,600 | | | | 45,792 | |
| | | | 378,672 | | | | 299,552 | | | | 1,180,873 | | | | 1,079,191 | |
| | | | | | | | | | | | | | | | | |
| Operating loss | | | (71,596 | ) | | | (6,912 | ) | | | (31,992 | ) | | | (15,926 | ) |
| | | | | | | | | | | | | | | | | |
| Other Income (Expenses): | | | | | | | | | | | | | | | | |
| Other, net | | | (4,551 | ) | | | 384 | | | | (3,006 | ) | | | (859 | ) |
| Interest expense and finance charges | | | (11,842 | ) | | | (12,151 | ) | | | (45,234 | ) | | | (46,571 | ) |
| Loss on Redemption of Notes | | | - | | | | - | | | | (55,588 | ) | | | - | |
| Interest income | | | 28 | | | | 124 | | | | 230 | | | | 381 | |
| | | | | | | | | | | | | | | | | |
| Loss from continuing operations before income taxes | | | | | | | | | | | | | | | | |
| and equity in affiliates | | | (87,961 | ) | | | (18,555 | ) | | | (135,590 | ) | | | (62,975 | ) |
| | | | | | | | | | | | | | | | | |
| Income tax expense (benefit) | | | 3,898 | | | | 3,539 | | | | (4,291 | ) | | | 9,553 | |
| | | | | | | | | | | | | | | | | |
| Loss from continuing operations before equity in affiliates | | | (91,859 | ) | | | (22,094 | ) | | | (131,299 | ) | | | (72,528 | ) |
| Equity in earnings of non-consolidated affiliates | | | 85 | | | | 234 | | | | 281 | | | | 633 | |
| | | | | | | | | | | | | | | | | |
| Loss from continuing operations | | | (91,774 | ) | | | (21,860 | ) | | | (131,018 | ) | | | (71,895 | ) |
| Loss from discontinued operations attributable to MDC Partners Inc., net of taxes | | | (493 | ) | | | (1,096 | ) | | | (11,384 | ) | | | (6,681 | ) |
| Net loss | | | (92,267 | ) | | | (22,956 | ) | | | (142,402 | ) | | | (78,576 | ) |
| Net income attributable to the noncontrolling interests | | | (2,054 | ) | | | (1,592 | ) | | | (6,461 | ) | | | (6,863 | ) |
| Net loss attributable to MDC Partners Inc. | | $ | (94,321 | ) | | $ | (24,548 | ) | | $ | (148,863 | ) | | $ | (85,439 | ) |
| | | | | | | | | | | | | | | | | |
| Loss Per Common Share: | | | | | | | | | | | | | | | | |
| Basic and Diluted: | | | | | | | | | | | | | | | | |
| Loss from continuing operations attributable to MDC | | | | | | | | | | | | | | | | |
| Partners Inc. common shareholders | | $ | (1.98 | ) | | $ | (0.50 | ) | | $ | (2.92 | ) | | $ | (1.71 | ) |
| Discontinued operations attributable to MDC | | | | | | | | | | | | | | | | |
| Partners Inc. common shareholders | | $ | (0.01 | ) | | $ | (0.02 | ) | | $ | (0.24 | ) | | $ | (0.14 | ) |
| Loss attributable to MDC Partners Inc. | | | | | | | | | | | | | | | | |
| common shareholders | | $ | (1.99 | ) | | $ | (0.52 | ) | | $ | (3.16 | ) | | $ | (1.85 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted Average Number of Common Shares: | | | | | | | | | | | | | | | | |
| Basic and Diluted | | | 47,272,986 | | | | 46,629,050 | | | | 47,108,406 | | | | 46,090,160 | |
| SCHEDULE 2 |
| | | | | | | | | |
| MDC PARTNERS INC. |
| RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA |
| (US$ in 000s, except percentages) |
| | | | | | | | | |
| For the Three Months Ended December 31, 2013 | | | | | | | | |
| | | Strategic | | | Performance | | | | | | | |
| | | Marketing | | | Marketing | | | | | | | |
| | | Services | | | Services | | | Corporate | | | Total | |
| | | | | | | | | | | | | |
| Revenue | | $ | 217,899 | | | $ | 89,177 | | | | - | | | $ | 307,076 | |
| | | | | | | | | | | | | | | | | |
| Operating profit (loss) as reported | | $ | 6,570 | | | $ | 1,037 | | | $ | (79,203 | ) | | $ | (71,596 | ) |
| margin | | | 3.0% | | | | 1.2% | | | | | | | | -23.3% | |
| | | | | | | | | | | | | | | | | |
| Add: | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | | 6,386 | | | | 4,380 | | | | 405 | | | | 11,171 | |
| Stock-based compensation | | | 2,434 | | | | 920 | | | | 60,361 | | | | 63,715 | |
| Acquisition deal costs | | | 123 | | | | 88 | | | | 425 | | | | 636 | |
| Deferred acquisition consideration adjustments to P&L | | | 27,601 | | | | 2,913 | | | | - | | | | 30,514 | |
| One time incentive | | | - | | | | - | | | | 9,649 | | | | 9,649 | |
| Profit distributions from affiliates | | | - | | | | - | | | | 517 | | | | 517 | |
| | | | | | | | | | | | | | | | | |
| EBITDA * | | $ | 43,114 | | | $ | 9,338 | | | $ | (7,846 | ) | | $ | 44,606 | |
| margin | | | 19.8% | | | | 10.5% | | | | | | | | 14.5% | |
* EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments one time incentive and profit distributions from affiliates.
| MDC PARTNERS INC. |
| RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA |
| (US$ in 000s, except percentages) |
| | | | | | | | | |
| For the Three Months Ended December 31, 2012 | | | | | | | | |
| | | Strategic | | | Performance | | | | | | | |
| | | Marketing | | | Marketing | | | | | | | |
| | | Services | | | Services | | | Corporate | | | Total | |
| | | | | | | | | | | | | |
| Revenue | | $ | 200,155 | | | $ | 92,485 | | | | - | | | $ | 292,640 | |
| | | | | | | | | | | | | | | | | |
| Operating profit (loss) as reported | | $ | 909 | | | $ | 165 | | | $ | (7,986 | ) | | $ | (6,912 | ) |
| margin | | | 0.5% | | | | 0.2% | | | | | | | | -2.4% | |
| | | | | | | | | | | | | | | | | |
| Add: | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | | 5,658 | | | | 4,204 | | | | 335 | | | | 10,197 | |
| Stock-based compensation | | | 2,584 | | | | 2,640 | | | | 603 | | | | 5,827 | |
| Acquisition deal costs | | | 88 | | | | 34 | | | | 761 | | | | 883 | |
| Deferred acquisition consideration adjustments to P&L | | | 29,882 | | | | 3,019 | | | | - | | | | 32,901 | |
| Profit distributions from affiliates | | | - | | | | - | | | | 746 | | | | 746 | |
| | | | | | | | | | | | | | | | | |
| EBITDA* | | $ | 39,121 | | | $ | 10,062 | | | $ | (5,541 | ) | | $ | 43,642 | |
| margin | | | 19.5% | | | | 10.9% | | | | | | | | 14.9% | |
* EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, one time incentive and profit distributions from affiliates.
| SCHEDULE 3 |
| | | | | | | | | |
| MDC PARTNERS INC. |
| RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA |
| (US$ in 000s, except percentages) |
| | | | | | | | | |
| For the Year Ended December 31, 2013 | | | | | | | | |
| | | Strategic | | | Performance | | | | | | | |
| | | Marketing | | | Marketing | | | | | | | |
| | | Services | | | Services | | | Corporate | | | Total | |
| | | | | | | | | | | | | |
| Revenue | | $ | 805,439 | | | $ | 343,442 | | | | - | | | $ | 1,148,881 | |
| | | | | | | | | | | | | | | | | |
| Operating profit (loss) as reported | | $ | 85,336 | | | $ | 10,780 | | | $ | (128,108 | ) | | $ | (31,992 | ) |
| margin | | | 10.6% | | | | 3.1% | | | | | | | | -2.8% | |
| | | | | | | | | | | | | | | | | |
| Add: | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | | 23,720 | | | | 14,486 | | | | 1,394 | | | | 39,600 | |
| Stock-based compensation | | | 7,249 | | | | 3,425 | | | | 89,731 | | | | 100,405 | |
| Acquisition deal costs | | | 323 | | | | 332 | | | | 1,419 | | | | 2,074 | |
| Deferred acquisition consideration adjustments to P&L | | | 35,911 | | | | 3 | | | | - | | | | 35,914 | |
| One time incentive | | | - | | | | - | | | | 9,649 | | | | 9,649 | |
| Profit distributions from affiliates | | | - | | | | - | | | | 3,761 | | | | 3,761 | |
| | | | | | | | | | | | | | | | | |
| EBITDA * | | $ | 152,539 | | | $ | 29,026 | | | $ | (22,154 | ) | | $ | 159,411 | |
| margin | | | 18.9% | | | | 8.5% | | | | | | | | 13.9% | |
* EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, one time incentive and profit distributions from affiliates.
| MDC PARTNERS INC. |
| RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA |
| (US$ in 000s, except percentages) |
| | | | | | | | | |
| For the Year Ended December 31, 2012 | | | | | | | | |
| | | Strategic | | | Performance | | | | | | | |
| | | Marketing | | | Marketing | | | | | | | |
| | | Services | | | Services | | | Corporate | | | Total | |
| | | | | | | | | | | | | |
| Revenue | | $ | 719,364 | | | $ | 343,901 | | | | - | | | $ | 1,063,265 | |
| | | | | | | | | | | | | | | | | |
| Operating profit (loss) as reported | | $ | 24,090 | | | $ | 173 | | | $ | (40,189 | ) | | $ | (15,926 | ) |
| margin | | | 3.3% | | | | 0.1% | | | | | | | | -1.5% | |
| | | | | | | | | | | | | | | | | |
| Add: | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | | 27,260 | | | | 17,190 | | | | 1,342 | | | | 45,792 | |
| Stock-based compensation | | | 9,186 | | | | 8,227 | | | | 14,784 | | | | 32,197 | |
| Acquisition deal costs | | | 951 | | | | 482 | | | | 1,931 | | | | 3,364 | |
| Deferred acquisition consideration adjustments to P&L | | | 47,702 | | | | 5,325 | | | | - | | | | 53,027 | |
| Profit distributions from affiliates | | | - | | | | - | | | | 1,288 | | | | 1,288 | |
| | | | | | | | | | | | | | | | | |
| EBITDA* | | $ | 109,189 | | | $ | 31,397 | | | $ | (20,844 | ) | | $ | 119,742 | |
| margin | | | 15.2% | | | | 9.1% | | | | | | | | 11.3% | |
* EBITDA is a non-GAAP measure, but as shown above it represents operating income (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, one time incentive and profit distributions from affiliates.
| SCHEDULE 4 |
| | | | | | |
| MDC PARTNERS INC. |
| FREE CASH FLOW |
| (US$ in 000s) |
| | | Three Months Ended December 31, | | | For the Year Ended December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| Cash Flows Provided by Continuing Operating Activities | | $ | (51,073 | ) | | $ | 61,577 | | | $ | 62,092 | | | $ | 80,929 | |
| Cash Settlement of Stock Appreciation Rights | | | 77,967 | | | | - | | | | 77,967 | | | | - | |
| | | | | | | | | | | | | | | | | |
| Adjusted Cash Flows Provided by Continuing Operating Activities | | $ | 26,894 | | | $ | 61,577 | | | $ | 140,059 | | | $ | 80,929 | |
| Distributions | | | 517 | | | | 746 | | | | 3,761 | | | | 1,288 | |
| Interest Expense, Net | | | 11,814 | | | | 12,027 | | | | 45,004 | | | | 46,190 | |
| Changes in Working Capital | | | (8,556 | ) | | | (39,935 | ) | | | (52,292 | ) | | | (18,494 | ) |
| Changes in Non-Current Assets & Liabilities | | | 935 | | | | 9,112 | | | | 9,835 | | | | 7,897 | |
| One Time Incentive | | | 9,649 | | | | - | | | | 9,649 | | | | - | |
| Other | | | 3,353 | | | | 115 | | | | 3,395 | | | | 1,932 | |
| | | | | | | | | | | | | | | | | |
| EBITDA | | $ | 44,606 | | | $ | 43,642 | | | $ | 159,411 | | | $ | 119,742 | |
| Net Income Attributable to Noncontrolling Interests | | | (2,054 | ) | | | (1,592 | ) | | | (6,461 | ) | | | (6,863 | ) |
| Capital Expenditures, net (1) | | | (4,985 | ) | | | (5,546 | ) | | | (18,591 | ) | | | (19,206 | ) |
| Cash Taxes | | | (364 | ) | | | (317 | ) | | | (919 | ) | | | (1,236 | ) |
| Cash Interest, net & Other (2) | | | (11,359 | ) | | | (12,070 | ) | | | (41,889 | ) | | | (42,134 | ) |
| | | | | | | | | | | | | | | | | |
| Free Cash Flow (3) | | $ | 25,844 | | | $ | 24,117 | | | $ | 91,551 | | | $ | 50,303 | |
(1) Capital Expenditures, net represents capital expenditures net of landlord reimbursements.
(2) Cash Interest, net & Other represents the quarterly accrual of cash interest under our Senior Notes.
(3) Free Cash Flow is a non-GAAP measures. As shown above, Free Cash Flow represents EBITDA less net income attributable to noncontrolling interests, less capital expenditures, less cash taxes, less net cash interest (including interest paid and other).
| SCHEDULE 5 |
| | | | | |
| MDC PARTNERS INC. |
| CONSOLIDATED BALANCE SHEETS |
| (US$ in 000s) |
| | | December 31, | |
| | | 2013 | | | 2012 | |
| | | | | | | |
| | | | | | | |
| Assets | | | | | | | | |
| Current Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 102,007 | | | $ | 60,330 | |
| Accounts receivable, net | | | 309,796 | | | | 326,087 | |
| Expenditures billable to clients | | | 63,246 | | | | 58,842 | |
| Other current assets | | | 25,458 | | | | 16,892 | |
| Total Current Assets | | | 500,507 | | | | 462,151 | |
| | | | | | | | | |
| Fixed assets, net | | | 52,071 | | | | 52,914 | |
| Investment in affiliates | | | 275 | | | | - | |
| Goodwill | | | 744,333 | | | | 720,071 | |
| Other intangible assets, net | | | 56,262 | | | | 63,243 | |
| Deferred tax assets | | | 21,131 | | | | 9,332 | |
| Other assets | | | 50,648 | | | | 37,234 | |
| Total Assets | | $ | 1,425,227 | | | $ | 1,344,945 | |
| | | | | | | | | |
| | | | | | | | | |
| Liabilities, Redeemable Noncontrolling Interests and Shareholders' Deficit | | | | |
| Current Liabilities: | | | | | | | | |
| Accounts payable | | $ | 246,694 | | | $ | 356,847 | |
| Accruals and other liabilities | | | 240,580 | | | | 93,895 | |
| Advance billings | | | 149,540 | | | | 131,908 | |
| Current portion of long term debt | | | 467 | | | | 1,858 | |
| Current portion of deferred acquisition consideration | | | 53,041 | | | | 104,325 | |
| Total Current Liabilities | | | 690,322 | | | | 688,833 | |
| | | | | | | | | |
| Long-term debt | | | 664,661 | | | | 429,845 | |
| Long-term portion of deferred acquisition consideration | | | 100,872 | | | | 92,121 | |
| Other liabilities | | | 34,430 | | | | 47,985 | |
| Deferred tax liabilities | | | 63,020 | | | | 53,018 | |
| Total Liabilities | | | 1,553,305 | | | | 1,311,802 | |
| | | | | | | | | |
| Redeemable Noncontrolling Interests | | | 148,534 | | | | 117,953 | |
| | | | | | | | | |
| Shareholders' Deficit | | | | | | | | |
| Common shares | | | 262,656 | | | | 253,870 | |
| Shares to be issued | | | 424 | | | | 424 | |
| Charges in excess of capital | | | (126,352 | ) | | | (72,913 | ) |
| Accumulated deficit | | | (465,576 | ) | | | (316,713 | ) |
| Stock subscription receivable | | | (55 | ) | | | (55 | ) |
| Accumulated other comprehensive loss | | | (797 | ) | | | (7,445 | ) |
| MDC Partners Inc. Shareholders' Deficit | | | (329,700 | ) | | | (142,832 | ) |
| Noncontrolling Interests | | | 53,088 | | | | 58,022 | |
| Total Shareholders' Deficit | | | (276,612 | ) | | | (84,810 | ) |
| | | | | | | | | |
| Total Liabilities, Redeemable Noncontrolling | | | | | | | | |
| Interests and Shareholders' Deficit | | $ | 1,425,227 | | | $ | 1,344,945 | |
| SCHEDULE 6 |
| | | | |
| MDC PARTNERS INC. |
| SUMMARY CASH FLOW DATA |
| (US$ in 000s) |
| | | The Year Ended December 31, | |
| | | 2013 | | | 2012 | |
| | | | | | | |
| Cash flows provided by continuing operating activities | | $ | 62,092 | | | $ | 80,929 | |
| Discontinued operations | | | (2,793 | ) | | | (4,626 | ) |
| Net cash provided by operating activities | | | 59,299 | | | | 76,303 | |
| | | | | | | | | |
| Cash flows provided by (used in) continuing investing activities | | | (30,113 | ) | | | 9,838 | |
| Discontinued operations | | | (11 | ) | | | (2,027 | ) |
| Net cash provided by (used in) investing activities | | | (30,124 | ) | | | 7,811 | |
| | | | | | | | | |
| Net cash used in continuing financing activities | | | 10,492 | | | | (31,858 | ) |
| | | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | 2,010 | | | | (23 | ) |
| | | | | | | | | |
| Net increase in cash and cash equivalents | | $ | 41,677 | | | $ | 52,233 | |
