MDC PARTNERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
PREPARED IN ACCORDANCE WITH U.S. GAAP
(US$ '000's) (Unaudited)
as at
Dec. 31, Mar. 31, Jun. 30, Sept. 31, Dec. 31, Mar. 31
2002 2003 2003 2003 2003 2004
---- ---- ---- ---- ---- ----
ASSETS
Current assets:
Cash and cash equivalents 32,250 27,648 41,682 46,760 66,726 59,158
Accounts receivable, less allowance
for doubtful accounts 53,102 56,837 50,624 63,250 60,115 96,958
Expenditures billable to clients 7,193 7,875 7,650 7,573 7,422 8,294
Inventories 7,005 7,020 5,814 5,464 6,795 7,851
Prepaid expenses and other current assets 6,063 8,345 4,928 5,638 4,924 6,844
---------- ----------- ---------- --------- --------- ---------
Total Current Assets 105,613 107,725 110,698 128,685 145,982 179,105
Fixed assets 47,591 49,523 36,618 39,074 42,025 46,543
Investment in affiliates 18,144 19,340 56,437 35,667 36,084 19,579
Goodwill 154,562 149,648 60,362 82,926 87,479 129,917
Deferred tax benefits 19,778 20,458 13,695 12,926 12,580 10,097
Other assets 7,841 11,227 6,252 5,893 6,030 5,615
---------- ----------- ---------- --------- --------- ---------
Total assets 353,529 357,921 284,062 305,171 330,180 390,856
========== =========== ========== ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable 70,047 68,146 65,346 71,432 74,050 132,162
Advance billings 10,810 15,927 13,511 14,864 13,391 26,869
Current portion of long-term debt 2,395 2,104 2,565 9,803 16,486 31,554
Deferred acquisition consideration 23,966 23,385 9,311 5,350 1,113 1,113
---------- ----------- ---------- --------- --------- ---------
Total current liabilities 107,218 109,562 90,733 101,449 105,040 191,698
Long-term debt 149,044 151,250 79,552 72,724 95,946 52,543
Convertible notes 31,694 34,065 37,106 36,299 37,794 36,605
Other liabilities 245 633 611 583 516 483
Minority interests 9,824 10,209 9,554 2,534 2,533 1,195
---------- ----------- ---------- --------- --------- ---------
Total liabilities 298,025 305,719 217,556 213,589 241,829 282,524
---------- ----------- ---------- --------- --------- ---------
Shareholders' equity
Share capital 91,561 94,607 94,569 116,191 115,996 131,520
Share capital to be issued 0 0 0 0 0 3,909
Contributed surplus 0 0 0 1,900 3,272 5,321
Retained earnings (deficit) (44,744) (43,857) (21,070) (20,374) (25,148) (26,166)
Accumulated other comprehensive income (loss) 8,687 1,452 (6,993) (6,135) (5,769) (6,252)
---------- ----------- ---------- --------- --------- ---------
Total shareholders' equity 55,504 52,202 66,506 91,582 88,351 108,332
---------- ----------- ---------- --------- --------- ---------
Total liabilities and shareholders' equity 353,529 357,921 284,062 305,171 330,180 390,856
========== =========== =========== =========== =========== =========
MDC PARTNERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
PREPARED IN ACCORDANCE WITH U.S. GAAP
(US$ '000's) (Unaudited)
Three
Year Three months ended Year months
ended ---------------------------------------------- ended ended
Dec. 31, Mar. 31 Jun. 30, Sept. 30, Dec. 31, Dec. 31, Mar. 31,
2002 2003 2003 2003 2003 2003 2004
---- ---- ---- ---- ---- ---- ----
Revenue
Services 162,382 39,689 45,849 45,987 52,094 183,619 56,266
Products 215,877 43,525 33,750 18,898 19,433 115,606 18,847
--------- --------- --------- --------- --------- ---------- ---------
378,259 83,214 79,599 64,885 71,527 299,225 75,113
--------- --------- --------- --------- --------- ---------- ---------
Operating expenses
Cost of products sold 98,488 18,729 15,620 12,073 11,156 57,578 11,567
Salary and related costs 107,319 27,139 27,666 25,698 28,191 108,694 36,768
Office and general expenses 120,934 28,362 30,165 21,662 26,180 106,369 29,115
Depreciation and amortization 14,243 3,365 3,310 2,465 2,483 11,623 2,343
--------- --------- --------- --------- --------- ---------- ---------
340,984 77,595 76,761 61,898 68,010 284,264 79,793
--------- --------- ---------- ---------- ----------- ----------- ----------
Operating profit (loss) 37,275 5,619 2,838 2,987 3,517 14,961 (4,680)
--------- --------- ---------- ---------- ----------- ----------- ----------
Other income (expenses)
Gain on sale of assets 108,985 0 48,594 1,842 1,238 51,674 7,165
Write-down of capital and other assets (3,391) 0 (8,126) 0 (3,085) (11,211) 0
Goodwill charges (72,522) 0 (10,012) 0 0 (10,012) 0
Costs incurred on postponed income
trust offering (5,097) 0 0 0 0 0 0
Unrealized foreign exchange gain 4,380 0 0 0 0 0 0
Unrealized derivative gain 4,437 0 0 0 0 0 0
Amortization of finance charges (336) 0 0 0 0 0 0
Interest expense (19,945) (4,326) (4,936) (2,321) (2,543) (14,126) (2,313)
Interest income 531 93 78 495 271 937 420
--------- --------- ---------- ---------- ----------- ----------- ----------
17,042 (4,233) 25,598 16 (4,119) 17,262 5,272
--------- --------- ---------- ---------- ----------- ----------- ----------
Income (loss) before income taxes, equity
in affiliates and minority interests 54,317 1,386 28,436 3,003 (602) 32,223 592
Income taxes (recovery) 15,475 (21) 6,012 (1,221) (127) 4,643 1,753
--------- --------- ---------- ---------- ----------- ----------- ----------
Income (loss) before equity in affiliates
and minority interests 38,842 1,407 22,424 4,224 (475) 27,580 (1,161)
Equity in affiliates 1,700 498 724 530 864 2,616 1,446
Minority interests (6,959) (1,018) (361) (1,596) (2,094) (5,069) (1,303)
--------- --------- ---------- ---------- ----------- ----------- ----------
Net income (loss) 33,583 887 22,787 3,158 (1,705) 25,127 (1,018)
========= ========= ========== ========== =========== =========== ==========
Earnings (loss) per common share
Basic - Net income (loss) 1.99 0.05 1.35 0.17 (0.09) 1.41 (0.05)
========= ========= ========== ========== =========== =========== ==========
Diluted - Net income (loss) 1.38 0.05 0.99 0.15 (0.09) 1.15 (0.05)
========= ========= ========== ========== =========== =========== ==========
MDC PARTNERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PREPARED IN ACCORDANCE WITH U.S. GAAP
(US$ '000's) (Unaudited)
Three
Year Three months ended Year months
ended ---------------------------------------------- ended ended
Dec. 31, Mar. 31 Jun. 30, Sept. 30, Dec. 31, Dec. 31, Mar. 31,
2002 2003 2003 2003 2003 2003 2004
---- ---- ---- ---- ---- ---- ----
Cash flows from operating activities
Net income (loss) 33,583 887 22,787 3,158 (1,705) 25,127 (1,018)
Adjustments for non-cash items:
Earnings of affiliates, net
of distributions 139 (1,094) (1,432) 69 (399) (2,856) 581
Depreciation and amortization 14,579 3,365 3,310 2,465 2,483 11,623 2,343
Gain on sale of assets (108,985) 0 (48,594) (1,842) (1,238) (51,674) (7,165)
Writedown of capital and other assets 3,391 0 8,126 0 3,085 11,211 0
Other charges paid (3,545) 0 0 0 0 0 0
Unrealized foreign exchange gain (4,380) 0 0 0 0 0 0
Goodwill writedown 72,522 0 10,012 0 0 10,012 0
Unrealized derivative gain (4,437) 0 0 0 0 0 0
Stock-based compensation 0 0 769 1,397 3,308 5,474 5,922
Deferred income taxes 15,450 134 5,037 (573) 544 5,142 2,407
Non-cash interest expense 3,368 954 1,110 1,344 1,149 4,557 0
Minority interest and other (129) (151) (692) (364) (20) (1,227) (75)
Changes in non-cash working capital (2,324) (4,128) 4,326 (5,825) 4,489 (1,138) (4,732)
--------------------------------------------- ---------- ---------- ---------
Net cash from (used in)
operating activities 19,232 (33) 4,759 (171) 11,696 16,251 (1,737)
--------------------------------------------- ---------- ---------- ---------
Cash flows from investing activities
Proceeds on dispositions
(acquisitions), net 161,302 (1,115) 84,589 12,386 (8,753) 87,107 3
Capital asset expenditures (7,834) (2,267) (5,276) (5,375) (3,801) (16,719) (3,141)
Other assets, net (1,505) (179) 2,995 1,117 608 4,541 115
--------------------------------------------- ---------- ---------- ---------
Net cash from (used in)
investing activities 151,963 (3,561) 82,308 8,128 (11,946) 74,929 (3,023)
--------------------------------------------- ---------- ---------- ---------
Cash flows from financing activities
Proceeds on issuance of long-term debt 5,955 159 11,280 0 26,033 37,472 0
Repayment of long-term debt (186,939) (1,884) (85,678) (493) (1,037) (89,092) (2,188)
Issuance of share capital 0 0 0 1,652 1,379 3,031 2,043
Purchase of share capital 0 0 0 (6,343) (7,319) (13,662) (1,470)
--------------------------------------------- ---------- ---------- ---------
Net cash used in financing
activities (180,984) (1,725) (74,398) (5,184) 19,056 (62,251) (1,615)
--------------------------------------------- ---------- ---------- ---------
Effect of exchange rate changes on
cash and cash equivalents 6,092 717 1,365 2,305 1,160 5,547 (1,193)
--------------------------------------------- ---------- ---------- ---------
Net increase (decrease) in
cash and cash equivalents (3,697) (4,602) 14,034 5,078 19,966 34,476 (7,568)
Cash and cash equivalents at
beginning of period 35,947 32,250 27,648 41,682 46,760 32,250 66,726
--------------------------------------------- ---------- ---------- ---------
Cash and cash equivalents at
end of period 32,250 27,648 41,682 46,760 66,726 66,726 59,158
============================================= ========== ========== =========
MDC PARTNERS INC. AND SUBSIDIARIES
COMBINED STATEMENT OF OPERATIONS
(US$ '000's) (Unaudited)
Year Three months ended Year Three months
ended ---------------------------------------------- ended ended
Dec. 31, Mar. 31 Jun. 30, Sept. 30, Dec. 31, Dec. 31, Mar. 31,
2002 2003 2003 2003 2003 2003 2004
---- ---- ---- ---- ---- ---- ----
Revenue
Services 182,783 45,290 52,548 52,524 60,177 210,539 66,779
Products 214,877 43,525 33,750 18,898 19,433 115,606 18,847
-------- --------- ---------- --------- --------- ---------- ----------
397,660 88,815 86,298 71,422 79,610 326,145 85,626
-------- --------- ---------- --------- --------- ---------- ----------
Operating expenses
Cost of products sold 98,488 18,729 15,620 12,073 11,156 57,578 11,567
Salary and related costs 116,588 30,015 30,609 28,802 31,844 121,270 40,807
Office and general expenses 124,998 29,409 31,450 23,315 27,967 112,141 30,656
Depreciation and amortization 14,795 3,445 3,433 2,614 2,647 12,139 2,519
-------- --------- ---------- --------- --------- ---------- ----------
354,869 81,598 81,112 66,804 73,614 303,128 85,549
-------- --------- ---------- --------- --------- ---------- ----------
Operating profit (loss) 42,791 7,217 5,186 4,618 5,996 23,017 77
-------- --------- ---------- --------- --------- ---------- ----------
Other income (expenses)
Gain on sale of assets 108,985 0 48,594 1,842 1,238 51,674 7,165
Write-down of capital and other assets (3,391) 0 (8,126) 0 (3,085) (11,211) 0
Goodwill charges (72,522) 0 (10,012) 0 0 (10,012) 0
Costs incurred on postponed
income trust offering (5,097) 0 0 0 0 0 0
Unrealized foreign exchange gain 4,380 0 0 0 0 0 0
Unrealized derivative gain 4,437 0 0 0 0 0 0
Amortization of finance charges (336) 0 0 0 0 0 0
Interest expense (19,948) (4,326) (4,936) (2,321) (2,624) (14,207) (2,355)
Interest income 580 126 97 495 291 1,009 420
-------- --------- ---------- --------- --------- ---------- ----------
17,088 (4,200) 25,617 16 (4,180) 17,253 5,230
-------- --------- ---------- --------- --------- ---------- ----------
Income before income taxes and
minority interests 59,879 3,017 30,803 4,634 1,816 40,270 5,307
Income taxes (recovery) 16,501 280 6,448 (875) 417 6,270 2,622
-------- --------- ---------- --------- --------- ---------- ----------
Income (loss) before minority interests 43,378 2,737 24,355 5,509 1,399 34,000 2,685
Minority interests (9,795) (1,850) (1,568) (2,351) (3,104) (8,873) (3,703)
-------- --------- ---------- --------- --------- ---------- ----------
Net income (loss) 33,583 887 22,787 3,158 (1,705) 25,127 (1,018)
-------- --------- ---------- --------- --------- ---------- ----------
Earnings (loss) per common share
Basic - Net income (loss) 1.99 0.05 1.35 0.17 (0.09) 1.41 (0.05)
-------- --------- ---------- --------- --------- ---------- ----------
Diluted - Net income (loss) 1.38 0.05 0.99 0.15 (0.09) 1.15 (0.05)
-------- --------- ---------- --------- --------- ---------- ----------
Many of the Company's marketing communications businesses have significant other interestholders and in some cases, the
Company operates the business as a joint venture with these other interestholders. The Company's management oversees the
businesses as active managers rather than as a passive investor, reviewing all aspects of their operations with the
management of these businesses, regardless of the Company's ownership interest. Management believes the presentation of the
whole of the business also provides readers with a complete view of the elements of all operations that significantly affect
the Marketing Communications reportable segment's profitability. Crispin Porter + Bogusky LLC, ("CPB"), owned 49% by the
Company and operated in joint venture with the other interestholders, is required to be equity accounted for under U.S. GAAP.
The Combined statements of operations includes the results of the whole of CPB.
MDC PARTNERS INC. AND SUBSIDIARIES
SEGMENTED INFORMATION - MARKETING COMMUNICATIONS
(US$ '000's) (Unaudited)
Three
Year Three months ended Year months
ended --------------------------------------------- ended ended
Dec. 31, Mar. 31 Jun. 30, Sept. 30, Dec. 31, Dec. 31, Mar. 31,
2002 2003 2003 2003 2003 2003 2004
---- ---- ---- ---- ---- ---- ----
Revenue 162,234 39,391 44,895 44,806 50,977 180,069 55,919
--------- ----------- --------- ------------ --------- ----------- ----------
Operating expenses
Salary and related costs 76,046 20,005 20,580 20,250 21,300 82,135 25,976
General and other operating costs 67,450 15,570 18,462 17,919 21,864 73,815 25,213
Depreciation and amortization 7,325 1,853 1,925 1,925 1,971 7,674 1,618
--------- ----------- --------- ------------ --------- ----------- ----------
150,821 37,428 40,967 40,094 45,135 163,624 52,807
--------- ----------- --------- ------------ --------- ----------- ----------
Operating profit (loss) 11,413 1,963 3,928 4,712 5,842 16,445 3,112
========= =========== ========= ============ ========= =========== ==========
Minority interests expense 3,927 1,011 1,553 1,455 2,094 6,113 1,303
========= =========== ========= ============ ========= =========== ==========
MDC PARTNERS INC. AND SUBSIDIARIES
SEGMENTED INFORMATION - COMBINED MARKETING COMMUNICATIONS
(US$ '000's) (Unaudited)
Three
Year Three months ended Year months
ended ---------------------------------------------- ended ended
Dec. 31, Mar. 31 Jun. 30, Sept. 30, Dec. 31, Dec. 31, Mar. 31,
2002 2003 2003 2003 2003 2003 2004
---- ---- ---- ---- ---- ---- ----
Revenue 181,635 44,992 51,594 51,343 59,060 206,989 66,432
-------- ----------- --------- ------------ --------- ----------- --------
Operating expenses
Salary and related costs 85,315 22,881 23,523 23,354 24,953 94,711 30,015
General and other operating costs 71,514 16,617 19,747 19,572 23,651 79,587 26,754
Depreciation and amortization 7,877 1,933 2,048 2,074 2,135 8,190 1,794
-------- ----------- --------- ------------ --------- ----------- ---------
164,706 41,431 45,318 45,000 50,739 182,488 58,563
-------- ----------- --------- ------------ --------- ----------- ---------
Operating profit (loss) 16,929 3,561 6,276 6,343 8,321 24,501 7,869
======== =========== ========= ============ ========= =========== =========
Minority interests expense 6,763 1,843 2,760 2,210 3,104 9,917 3,703
======== =========== ========= ============ ========= =========== =========
Many of the Company's marketing communications businesses have significant other interestholders and in some cases, the
Company operates the business as a joint venture with these other interestholders. The Company's management oversees the
businesses as active managers rather than as a passive investor, reviewing all aspects of their operations with the
management of these businesses, regardless of the Company's ownership interest. Management believes the presentation of the
whole of the business also provides readers with a complete view of the elements of all operations that significantly affect
the Marketing Communications reportable segment's profitability. Crispin Porter + Bogusky LLC, ("CPB"), owned 49% by the
Company and operated in joint venture with the other interestholders, is required to be equity accounted for under U.S. GAAP.
The Combined marketing communications includes the results of the whole of CPB.
MDC PARTNERS INC. AND SUBSIDIARIES
SEGMENTED INFORMATION - SECURE PRODUCTS INTERNATIONAL
(US$ '000's) (Unaudited)
Three
Year Three months ended Year months
ended ---------------------------------------------- ended ended
Dec. 31, Mar. 31 Jun. 30, Sept. 30, Dec. 31, Dec. 31, Mar. 31,
2002 2003 2003 2003 2003 2003 2004
---- ---- ---- ---- ---- ---- ----
Revenue 209,100 43,525 33,750 18,898 19,433 115,606 18,847
--------- ---------- --------- -------- ------------- ------------- --------
Operating expenses
Cost of products sold 95,233 18,729 15,620 12,073 11,156 57,578 11,567
Salary and related costs 28,781 6,083 5,683 3,069 2,802 17,637 3,476
General and other operating costs 48,358 12,050 10,469 2,548 2,302 27,369 2,401
Depreciation and amortization 5,556 1,174 1,081 359 448 3,062 675
--------- ---------- --------- -------- ------------- ------------- --------
177,928 38,036 32,853 18,049 16,708 105,646 18,119
--------- ---------- --------- -------- ------------- ------------- --------
Operating profit (loss) 31,172 5,489 897 849 2,725 9,960 728
========= ========== ========= ======== ============= ============= ========
Minority interests expense 2,379 (11) (1,539) 14 0 (1,536) 0
========= ========== ========= ======== ============= ============= ========
MDC PARTNERS INC. AND SUBSIDIARIES
SEGMENTED INFORMATION - CORPORATE AND OTHER
(US$ '000's) (Unaudited)
Three
Year Three months ended Year months
ended ---------------------------------------------- ended ended
Dec. 31, Mar. 31 Jun. 30, Sept. 30, Dec. 31, Dec. 31, Mar. 31,
2002 2003 2003 2003 2003 2003 2004
---- ---- ---- ---- ---- ---- ----
Revenue 6,925 298 954 1,181 1,117 3,550 347
--------- --------- -------- -------- -------- -------- --------
Operating expenses
Salary and related costs* 2,492 1,051 1,403 2,379 4,089 8,922 7,316
General and other operating costs 5,126 742 1,234 1,195 2,014 5,185 1,501
Depreciation and amortization 1,362 338 304 181 64 887 50
--------- --------- -------- -------- -------- -------- --------
8,980 2,131 2,941 3,755 6,167 14,994 8,867
--------- --------- -------- -------- -------- -------- --------
Operating profit (loss) (2,055) (1,833) (1,987) (2,574) (5,050) (11,444) (8,520)
========= ========= ======== ======== ======== ======== ========
Minority interests expense 653 18 347 127 0 492 0
========= ========= ======== ======== ======== ======== ========
* Includes stock-based compensation of 0 0 769 1,397 3,308 5,474 5,922
========= ========= ======== ======== ======== ======== ========