NEW YORK, March 15, 2019 /PRNewswire/ --
COMPLETION OF CEO SEARCH AND STRATEGIC REVIEW:
- Mark Penn named CEO of MDC
Partners
- The Stagwell Group invests $100
million in common and preferred stock
- MDC Partners separately sells its interest in subsidiary firm
Kingsdale Advisors
- MDC Partners entered into an amendment to the existing senior
secured revolving credit facility with Wells Fargo Bank
FOURTH QUARTER 2018 HIGHLIGHTS:
- Revenue of $393.7 million versus
$402.7 million a year ago; excluding
the impact of ASC 606 (see details below), revenue was $406.1 million, an increase of 0.8% versus a year
ago.
- Organic revenue decrease of 0.3%
- Net loss attributable to MDC Partners common shareholders of
$83.7 million versus income of
$187.4 million a year ago; excluding
the impact of ASC 606, Net loss attributable to MDC Partners common
shareholders was $84.5 million
- Adjusted EBITDA of $52.0 million
versus $66.8 million a year ago;
excluding the impact of ASC 606, Adjusted EBITDA was $50.1 million
- Net New Business wins totaled $26.4
million
FULL YEAR 2018 HIGHLIGHTS:
- Revenue of $1.48 billion versus
$1.51 billion a year ago; excluding
the impact of ASC 606, revenue was $1.53
billion, an increase of 0.9% versus a year ago
- Organic revenue increase of 0.1%
- Net loss attributable to MDC Partners common shareholders was
$132.1 million versus income of
$205.6 million for the prior year;
excluding the impact of ASC 606, net loss attributable to MDC
Partners common shareholders was $139.0
million
- Adjusted EBITDA was $162.6
million versus $203.5 million
for the prior year; excluding the impact of the adoption of ASC
606, Adjusted EBITDA was $151.8
million
- Covenant EBITDA was $183.1
million
- Net New Business wins totaled $76.1
million
(NASDAQ: MDCA) - MDC Partners Inc. ("MDC Partners" or the
"Company") today announced financial results for the three and
twelve months ended December 31,
2018.
David Doft, Chief Financial
Officer of MDC Partners, said, "We are very pleased to welcome
Mark Penn as our new CEO and The
Stagwell Group as a strategic investor. The capital invested by
Stagwell will provide the Company with greater resources to invest
behind its growth strategy while at the same time bolstering its
balance sheet to the benefit of shareholders. Stagwell's investment
at a premium to our current stock price illustrates the underlying
value of our business, their confidence in our agencies and people
as well as a clear view of the growth opportunities ahead."
"We made important strides in strengthening our business in
2018, including the fourth quarter, in which we delivered our
highest level of net new business wins in two years. The
streamlining of costs and refocusing of go-to-market strategies
across several of our agencies also sets the Company up for
improved performance in 2019."
Mark Penn Named CEO; The Stagwell Group Invests $100 million
The Company announced today that it has entered into an
agreement with The Stagwell Group ("Stagwell") pursuant to which
Stagwell, a media investment fund, has invested $100 million in MDC Partners through the purchase
of $50 million in MDC common shares
and $50 million non-voting
convertible preference shares. In connection with the closing of
the transaction, industry veteran Mark
Penn will join MDC Partners as Chief Executive Officer and
as a member of its Board of Directors.
"I have admired MDC for a long time and believe wholeheartedly
in its mission," said Mr. Penn. "MDC is home to some of the world's
best creative and strategic talent; strategists with a deep
understanding of the way technology and media solutions address the
needs of today's modern marketer. Its agencies share a healthy
entrepreneurial culture and the network as a whole is steeped in
untapped potential. I am eager to begin applying not only our
investment and resources, but also a plan based on my expertise,
towards growth and the creation of significant value for our
shareholders."
The Stagwell Group has purchased 14,285,714 Class A shares of
the Company (the "Class A Shares") for $50
million, or $3.50 per share,
which represents an 18% premium to the 30-day average closing price
of $2.96 per share. In addition, the
Stagwell Group has purchased $50
million of convertible preferred shares with a $5.00 conversion price (the "Preference Shares").
Following the transaction, the Stagwell Group owns approximately
19.5% of the outstanding common equity of the Company. Assuming the
full conversion of the Preference Shares into the Company's Class A
shares, the Stagwell Group will own approximately 29.2% of the
outstanding equity of the Company. Assuming conversion of both the
Stagwell Group Preference Shares and the currently outstanding
Goldman Sachs preference shares which were issued in 2017, the
Stagwell Group will own approximately 24.8% of the outstanding
equity of the Company. The Preference Shares have a liquidation
preference that accretes at a rate of 8.0% per annum, compounded
quarterly until conversion on the five-year anniversary of the
issuance date of the Preference Shares.
MDC Partners expects to use the net proceeds from the investment
to pay down existing debt under the Company's credit facility and
for general corporate purposes.
Sale of Kingsdale
The Company also announced today that it has sold its
interest in shareholder advisory and proxy solicitation firm
Kingsdale Advisors to Kingsdale Executive Chairman and
Founder, Wes Hall, in exchange for
cash plus the assumption of certain liabilities totaling
approximately $50 million in
aggregate. MDC Partners will continue its engagement of Kingsdale
as its proxy solicitation advisor.
Bank Amendment
On March 12, 2019, MDC Partners
and Maxxcom Inc. (a subsidiary of the Company) and each of their
subsidiary parties entered into an amendment (the "Amendment") to
the existing senior secured revolving credit facility, dated as of
May 3, 2016 with Wells Fargo Bank.
The Amendment provides financial covenant relief by increasing the
total leverage ratio applicable on each testing date after the
Amendment Effective Date through the period ending December 31, 2020 from 5.5:1.0 to 6.25:1.0. The
total leverage ratio applicable on each testing date after
December 31, 2020 will revert to
5.5:1.0. The Amendment also provides, the modification of certain
restrictive covenants in the Credit Agreement to provide the
Company with increased flexibility regarding the ability to
repurchase outstanding debt and/or notes.
Pursuant to its rights under the credit facility, the Company
has elected to reduce the aggregate maximum amount of revolving
commitments provided by the lenders under the credit facility to
$250 million.
Adoption of ASC 606
Effective January 1, 2018, we
adopted ASC Topic 606, "Revenue from Contracts with Customers" (ASC
606). In accordance with the new revenue accounting standard, we
were required to change certain aspects of our accounting policy as
it relates to performance incentives, non-refundable retainer fees,
and certain third-party pass-through and out-of-pocket costs. ASC
606 was applied using the modified retrospective method, with the
cumulative effect of the initial adoption being recognized as an
adjustment to opening retained earnings at January 1, 2018 for contracts that were not
completed as of that date, and with all subsequent periods reported
under the new policy. Comparative prior periods have not been
restated and continue to be reported under the historical
accounting standards and policies in effect for those periods.
As a result of the adoption of ASC 606, our fourth quarter and
year-to-date 2018 financial performance is not directly comparable
with last year. We have therefore provided additional disclosure to
assist investors in reconciling the two accounting standards,
including updating the definition of the Non-GAAP metric Organic
Revenue to exclude the impact of the change in accounting standard
and providing additional schedules which show the impact of the
adoption of ASC 606 on our GAAP and Non-GAAP performance metrics.
See schedules 2 and 3.
Fourth Quarter and Full Year 2018 Financial Results
Revenue for the fourth quarter of 2018 was $393.7 million, a decline of 2.3%, compared to
$402.7 million for the fourth quarter
of 2017. The decline in revenue was primarily due to the adoption
of ASC 606, which reduced revenue by $12.5
million, or 3.1%. Excluding the impact of ASC 606, revenue
was $406.1 million, an increase of
0.8% versus a year ago. The effect of foreign exchange was negative
1.2%, the impact of non-GAAP acquisitions (dispositions), net was
positive 2.4%, and organic revenue declined 0.3%. There was a
positive 305 basis-point impact on organic revenue growth from
billable pass-through costs incurred on clients' behalf from
certain of our partner firms acting as principal. Net New Business
wins for the fourth quarter of 2018 totaled $26.4 million.
Net loss attributable to MDC Partners common shareholders for
the fourth quarter of 2018 was $83.7
million versus net income of $187.4
million for the fourth quarter of 2017. Excluding the impact
of ASC 606, net loss attributable to MDC Partners common
shareholders was $84.5 million. The
net loss is largely attributable to a goodwill and other asset
impairment charge of $56.7 million
and the recognition of a valuation allowance resulting in income
tax expense on the pretax loss. Diluted loss per share attributable
to MDC Partners common shareholders for the fourth quarter of 2018
was a loss of $1.46 versus diluted
income per share of $3.30 for the
fourth quarter of 2017. The impact of the adoption of ASC 606 was a
reduction in net loss attributable to MDC Partners common
shareholders of $0.8 million, or
$0.02 per share.
Adjusted EBITDA for the fourth quarter of 2018 was $52.0 million versus $66.8
million for the fourth quarter of 2017. The impact of the
adoption of ASC 606 was $1.8 million.
Excluding the impact of the adoption of ASC 606, Adjusted EBITDA
was $50.1 million with margins of
12.3%. (see schedules 4 and 10).
Revenue for the twelve months of 2018 was $1.48 billion, a decline of 2.5%, compared to
$1.51 billion for the twelve months
of 2017. The decline in revenue was primarily due the
adoption of ASC 606, which reduced revenue by $51.6 million, or 3.4%. Excluding the impact of
ASC 606, revenue was $1.53 billion,
an increase of 0.9% versus a year ago. The impact of non-GAAP
acquisitions (dispositions), net was positive 0.9%, and organic
revenue increase was 0.1%. Organic revenue growth was favorably
impacted by 203 basis points from increased billable pass-through
costs incurred on clients' behalf from certain of our partner firms
acting as principal. Net New Business wins for the twelve months of
2018 totaled $76.1 million.
Net loss attributable to MDC Partners common shareholders for
the twelve months of 2018 was $132.1
million versus income of $205.6
million for the twelve months of 2017. Excluding the impact
of ASC 606, net loss attributable to MDC Partners common
shareholders was $139.0 million. The
net loss is largely attributable to the decline in revenue, a
goodwill and other asset impairment charge of $80.1 million, a foreign exchange loss of
$23.3 million and from the
recognition of a valuation allowance resulting in income tax
expense on the pretax loss. Diluted loss per share attributable to
MDC Partners common shareholders for the twelve months of 2018 was
$2.31 versus diluted income per share
of $3.71 for the twelve months of
2017. The impact of the adoption of ASC 606 was a reduction in net
loss attributable to MDC Partners common shareholders of
$6.9 million, or $0.12 per share.
Adjusted EBITDA for the twelve months of 2018 was $162.6 million versus $203.5 million for the twelve months of 2017. The
impact of the adoption of ASC 606 was $10.7
million. Excluding the impact of the adoption of ASC 606,
Adjusted EBITDA was $151.8 million
with margins of 9.9%.
Conference Call
Management will host a conference call on Friday, March 15, 2019, at 8:30 a.m. (ET) to discuss results. The
conference call will be accessible by dialing 1-412-902-4266 or
toll free 1-888-346-6216. An investor presentation has been
posted on our website at www.mdc-partners.com and may be referred
to during the conference call.
A recording of the conference call will be available one hour
after the call until 12:00 a.m. (ET),
March 22, 2019, by dialing
1-412-317-0088 or toll free 1-877-344-7529 (passcode 10129581), or
by visiting our website at www.mdc-partners.com.
About MDC Partners Inc.
MDC Partners is one of the most influential marketing and
communications networks in the world. As "The Place Where Great
Talent Lives," MDC Partners is celebrated for its innovative
advertising, public relations, branding, digital, social and event
marketing agency partners, which are responsible for some of the
most memorable and effective campaigns for the world's most
respected brands. By leveraging technology, data analytics,
insights and strategic consulting solutions, MDC Partners drives
creative excellence, business growth and measurable return on
marketing investment for over 1,700 clients worldwide. For more
information about MDC Partners and its partner firms, visit our
website at www.mdc-partners.com and follow us on Twitter at
http://www.twitter.com/mdcpartners.
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.
Such non-GAAP financial measures include the following:
(1) Organic Revenue: "Organic revenue growth" and "organic
revenue decline" refer to the positive or negative results,
respectively, of subtracting both the foreign exchange and
acquisition (disposition) components from total revenue growth,
excluding the impact of adopting ASC 606. The acquisition
(disposition) component is calculated by aggregating prior period
revenue for any acquired businesses, less the prior period revenue
of any businesses that were disposed of during the current period.
The organic revenue growth (decline) component reflects the
constant currency impact of (a) the change in revenue of the
partner firms which the Company has held throughout each of the
comparable periods presented, and (b) "non-GAAP acquisitions
(dispositions), net". Non-GAAP acquisitions (dispositions), net
consists of (i) for acquisitions during the current year, the
revenue effect from such acquisition as if the acquisition had been
owned during the equivalent period in the prior year and (ii) for
acquisitions during the previous year, the revenue effect from such
acquisitions as if they had been owned during that entire year (or
same period as the current reportable period), taking into account
their respective pre-acquisition revenues for the applicable
periods, and (iii) for dispositions, the revenue effect from such
disposition as if they had been disposed of during the equivalent
period in the prior year.
(2) Net New Business: Estimate of annualized revenue for new
wins less annualized revenue for losses incurred in the period.
(3) Adjusted EBITDA: Adjusted EBITDA is a non-GAAP measure that
represents operating profit plus depreciation and amortization,
stock-based compensation, deferred acquisition consideration
adjustments, distributions from non-consolidated affiliates, and
other items.
(4) Covenant EBITDA: Covenant EBITDA is a measure that includes
pro forma adjustments for acquisitions, one-time charges, and other
items, as defined in the Credit Agreement. We believe that the
presentation of Covenant EBITDA is appropriate as it eliminates the
effect of certain non-cash and other items not necessarily
indicative of a company's underlying operating performance. In
addition, the presentation of Covenant EBITDA provides additional
information to investors about the calculation of, and compliance
with, certain financial covenants in the Credit Agreement.
Included in this earnings release are tables reconciling MDC
Partners' reported results to arrive at certain of these non-GAAP
financial measures.
This press release contains forward-looking statements.
Statements in this press release that are not historical facts,
including without limitation statements about the Company's beliefs
and expectations, earnings guidance, recent business and economic
trends, potential acquisitions, and estimates of amounts for
redeemable noncontrolling interests and deferred acquisition
consideration, constitute forward-looking statements. Words such as
"estimates", "expects", "contemplates", "will", "anticipates",
"projects", "plans", "intends", "believes", "forecasts", "may",
"should", and variations of such words or similar expressions are
intended to identify 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 conditions;
- 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 redeemable noncontrolling interests and
deferred acquisition consideration;
- the successful completion and integration of acquisitions
which complement and expand the Company's business capabilities;
and
- foreign currency fluctuations
Investors should carefully consider these risk factors and
the additional risk factors outlined in more detail in the
Company's 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 per Share Amounts)
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2018
(1)
|
|
2017
|
|
2018
(1)
|
|
2017
|
Revenue:
|
|
|
|
|
|
|
|
Services
|
$
|
393,662
|
|
|
$
|
402,747
|
|
|
$
|
1,476,203
|
|
|
$
|
1,513,779
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Cost of services
sold
|
256,088
|
|
|
268,673
|
|
|
991,198
|
|
|
1,023,476
|
|
Office and general
expenses
|
78,919
|
|
|
59,142
|
|
|
349,056
|
|
|
310,455
|
|
Depreciation and
amortization
|
10,984
|
|
|
10,558
|
|
|
46,196
|
|
|
43,474
|
|
Goodwill and other
asset impairment
|
56,732
|
|
|
4,415
|
|
|
80,057
|
|
|
4,415
|
|
|
402,723
|
|
|
342,788
|
|
|
1,466,507
|
|
|
1,381,820
|
|
Operating income
(loss)
|
(9,061)
|
|
|
59,959
|
|
|
9,696
|
|
|
131,959
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
Interest expense and
finance charges, net
|
(17,070)
|
|
|
(16,055)
|
|
|
(67,075)
|
|
|
(64,364)
|
|
Foreign exchange gain
(loss)
|
(13,324)
|
|
|
(660)
|
|
|
(23,258)
|
|
|
18,137
|
|
Other income (loss),
net
|
(992)
|
|
|
2,331
|
|
|
230
|
|
|
1,346
|
|
|
(31,386)
|
|
|
(14,384)
|
|
|
(90,103)
|
|
|
(44,881)
|
|
Income (loss) before
income taxes and equity in earnings of non-consolidated
affiliates
|
(40,447)
|
|
|
45,575
|
|
|
(80,407)
|
|
|
87,078
|
|
Income tax expense
(benefit)
|
34,970
|
|
|
(185,723)
|
|
|
31,603
|
|
|
(168,064)
|
|
Income (loss) before
equity in earnings of non-consolidated affiliates
|
(75,417)
|
|
|
231,298
|
|
|
(112,010)
|
|
|
255,142
|
|
Equity in earnings
(losses) of non-consolidated affiliates
|
(296)
|
|
|
157
|
|
|
62
|
|
|
2,081
|
|
Net income
(loss)
|
(75,713)
|
|
|
231,455
|
|
|
(111,948)
|
|
|
257,223
|
|
Net income
attributable to the noncontrolling interests
|
(5,885)
|
|
|
(8,787)
|
|
|
(11,785)
|
|
|
(15,375)
|
|
Net income (loss)
attributable to MDC Partners Inc.
|
(81,598)
|
|
|
222,668
|
|
|
(123,733)
|
|
|
241,848
|
|
Accretion on and net
income allocated to convertible preference shares
|
(2,151)
|
|
|
(35,254)
|
|
|
(8,355)
|
|
|
(36,254)
|
|
Net income (loss)
attributable to MDC Partners Inc. common shareholders
|
$
|
(83,749)
|
|
|
$
|
187,414
|
|
|
$
|
(132,088)
|
|
|
$
|
205,594
|
|
Income (loss) Per
Common Share:
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
Net income (loss)
attributable to MDC Partners Inc. common shareholders
|
$
|
(1.46)
|
|
|
$
|
3.33
|
|
|
$
|
(2.31)
|
|
|
$
|
3.72
|
|
Diluted
|
|
|
|
|
|
|
|
Net income (loss)
attributable to MDC Partners Inc. common shareholders
|
$
|
(1.46)
|
|
|
$
|
3.30
|
|
|
$
|
(2.31)
|
|
|
$
|
3.71
|
|
Weighted Average
Number of Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
|
57,519,286
|
|
|
56,356,265
|
|
|
57,218,994
|
|
|
55,255,797
|
|
Diluted
|
57,519,286
|
|
|
56,793,442
|
|
|
57,218,994
|
|
|
55,481,786
|
|
(1) Effective January
1, 2018, we adopted ASC Topic 606, "Revenue from Contracts with
Customers" (ASC 606). ASC 606 was applied using the modified
retrospective method, with the cumulative effect of the initial
adoption being recognized as an adjustment to opening retained
earnings at January 1, 2018. As a result, comparative prior periods
have not been adjusted and continue to be reported under ASC 605
"Revenue Recognition" (ASC 605). See Schedule 2 in this release,
for the impact of the adoption of ASC 606, as required, on the
consolidated statement of operations for the three and twelve
months ended December 31, 2018.
|
SCHEDULE
2
MDC PARTNERS
INC.
UNAUDITED
RECONCILIATION OF COMPONENTS OF NON-GAAP MEASURES
(US$ in 000s,
except percentages)
|
|
|
Three months ended
December 31, 2018
|
|
Twelve months
ended December 31, 2018
|
|
As
Reported
|
Adjustments
|
Adjusted to
Exclude the
Impact of
Adoption of
ASC 606
|
|
As
Reported
|
Adjustments
|
Adjusted to
Exclude the
Impact of
Adoption of
ASC 606
|
Revenue
|
$
|
393,662
|
|
$
|
12,459
|
|
$
|
406,121
|
|
|
$
|
1,476,203
|
|
$
|
51,636
|
|
$
|
1,527,839
|
|
Cost of service
sold
|
256,088
|
|
14,275
|
|
270,363
|
|
|
991,198
|
|
62,358
|
|
1,053,556
|
|
Operating income
(loss)
|
(9,061)
|
|
(1,815)
|
|
(10,876)
|
|
|
9,696
|
|
(10,722)
|
|
(1,026)
|
|
Net loss attributable
to MDC Partners Inc.
common shareholders
|
(83,749)
|
|
(798)
|
|
(84,547)
|
|
|
(132,088)
|
|
(6,883)
|
|
(138,971)
|
|
Loss per common
share- basic and diluted
|
(1.46)
|
|
(0.02)
|
|
(1.48)
|
|
|
(2.31)
|
|
(0.12)
|
|
(2.43)
|
|
|
|
|
|
|
|
|
|
Organic revenue
growth
|
(0.3)
|
%
|
—
|
|
(0.3)
|
%
|
|
0.1
|
%
|
—
|
|
0.1
|
%
|
Adjusted
EBITDA
|
$
|
51,959
|
|
$
|
(1,815)
|
|
$
|
50,144
|
|
|
$
|
162,566
|
|
$
|
(10,722)
|
|
$
|
151,844
|
|
margin
|
13.2
|
%
|
|
12.3
|
%
|
|
11.0
|
%
|
|
9.9
|
%
|
* The table above
summarizes the impact of the adoption of ASC 606 on our US GAAP and
non-GAAP performance metrics.
|
|
Note: Actuals may not
foot due to rounding
|
SCHEDULE
3
MDC PARTNERS
INC.
UNAUDITED REVENUE
RECONCILIATION
(US$ in 000s,
except percentages)
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
Revenue
$
|
%
Change
|
|
Revenue
$
|
%
Change
|
December 31, 2017
as reported under ASC 605
|
$
|
402,747
|
|
|
|
$
|
1,513,779
|
|
|
|
|
|
|
|
|
Organic revenue
growth (decline) (1)
|
(1,282)
|
|
(0.3)
|
%
|
|
879
|
|
0.1
|
%
|
Non-GAAP acquisitions
(dispositions), net
|
9,578
|
|
2.4
|
%
|
|
13,644
|
|
0.9
|
%
|
Foreign exchange
impact
|
(4,922)
|
|
(1.2)
|
%
|
|
(463)
|
|
—
|
%
|
Impact of adoption of
ASC 606 (2)
|
(12,459)
|
|
(3.1)
|
%
|
|
(51,636)
|
|
(3.4)
|
%
|
Total
change
|
(9,085)
|
|
(2.3)
|
%
|
|
(37,576)
|
|
(2.5)
|
%
|
December 31, 2018
as reported under ASC 606
|
$
|
393,662
|
|
|
|
$
|
1,476,203
|
|
|
(1) "Organic revenue growth" and
"organic revenue decline" refer to the positive or negative
results, respectively, of subtracting both the foreign exchange and
acquisition (disposition) components from total revenue growth,
excluding the impact of adopting ASC 606. The acquisition
(disposition) component is calculated by aggregating prior period
revenue for any acquired businesses, less the prior period revenue
of any businesses that were disposed of during the current period.
The organic revenue growth (decline) component reflects the
constant currency impact of (a) the change in revenue of the
partner firms which the Company has held throughout each of the
comparable periods presented, and (b) "non-GAAP acquisitions
(dispositions), net". Non-GAAP acquisitions (dispositions), net
consists of (i) for acquisitions during the current year, the
revenue effect from such acquisition as if the acquisition had been
owned during the equivalent period in the prior year and (ii) for
acquisitions during the previous year, the revenue effect from such
acquisitions as if they had been owned during that entire year (or
same period as the current reportable period), taking into account
their respective pre-acquisition revenues for the applicable
periods, and (iii) for dispositions, the revenue effect from such
disposition as if they had been disposed of during the equivalent
period in the prior year.
|
|
(2) In accordance with the adoption
of ASC 606, we were required to change certain aspects of our
revenue recognition accounting policy as it relates to performance
incentives, retainer fees, and certain third-party pass-through and
out-of-pocket costs. Under the prior guidelines, performance
incentives were recognized in revenue when specific quantitative
goals were achieved, or when the Company's performance against
qualitative goals was determined by the client. Under ASC 606, the
Company now estimates the amount of the incentive that will
be earned at the inception of the contract and recognizes such
incentive over the term of the contract. Additionally, previously,
fees for non-refundable retainers were generally recognized on a
straight-line basis over the term of the specific customer
arrangement. Under ASC 606, an input method is typically used to
measure progress and recognize revenue for these types of
arrangements. Finally, the adoption of ASC 606 resulted in certain
client arrangements previously being accounted for as principal,
now being accounted for as agent. In these instances, certain
third-party pass-through and out-of-pocket costs which were billed
to clients in connection with services being provided, are no
longer included in revenue and therefore the revenue recorded is
equal to the net amount retained.
|
|
Note: Actuals may not
foot due to rounding
|
SCHEDULE
4
MDC PARTNERS
INC.
UNAUDITED
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA
(US$ in 000s,
except percentages)
|
|
For the Three
months ended December 31, 2018, as reported under ASC
606
|
|
|
Advertising
and
Communication
|
Global
Integrated
Agencies
|
Domestic
Creative
Agencies
|
Specialist
Communications
|
Media
Services
|
All
Other
|
Corporate
|
Total
|
Revenue
|
$
|
393,662
|
|
$
|
188,512
|
|
$
|
26,560
|
|
$
|
49,341
|
|
$
|
36,292
|
|
$
|
92,957
|
|
$
|
—
|
|
$
|
393,662
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to MDC Partners Inc. common
shareholders
|
|
|
|
|
|
|
|
(83,749)
|
|
Adjustments to
reconcile to operating profit (loss):
|
|
|
|
|
|
|
|
|
Accretion on and net
income allocated to
convertible preference shares
|
|
|
|
|
|
|
|
2,151
|
|
Net income
attributable to the noncontrolling
interests
|
|
|
|
|
|
|
|
5,885
|
|
Equity in losses of
non-consolidated affiliates
|
|
|
|
|
|
|
|
296
|
|
Income tax
expense
|
|
|
|
|
|
|
|
34,970
|
|
Interest expense and
finance charges, net
|
|
|
|
|
|
|
|
17,070
|
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
13,324
|
|
Other, net
|
|
|
|
|
|
|
|
992
|
|
Operating income
(loss)
|
$
|
860
|
|
$
|
38,771
|
|
$
|
4,101
|
|
$
|
4,158
|
|
$
|
(51,604)
|
|
$
|
5,434
|
|
$
|
(9,921)
|
|
$
|
(9,061)
|
|
margin
|
0.2
|
%
|
20.6
|
%
|
15.4
|
%
|
8.4
|
%
|
(142.2)
|
%
|
5.8
|
%
|
|
(2.3)
|
%
|
|
|
|
|
|
|
|
|
|
Additional
adjustments to reconcile to Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
10,805
|
|
5,072
|
|
398
|
|
1,089
|
|
804
|
|
3,442
|
|
179
|
|
10,984
|
|
Goodwill and other
asset impairment
|
56,732
|
|
—
|
|
—
|
|
—
|
|
52,041
|
|
4,691
|
|
—
|
|
56,732
|
|
Stock-based
compensation
|
964
|
|
29
|
|
155
|
|
172
|
|
36
|
|
572
|
|
570
|
|
1,534
|
|
Deferred acquisition
consideration adjustments
|
(8,979)
|
|
(8,123)
|
|
—
|
|
(228)
|
|
135
|
|
(763)
|
|
—
|
|
(8,979)
|
|
Distributions from
non- consolidated affiliates (2)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
270
|
|
270
|
|
Other items, net
(3)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
479
|
|
479
|
|
Adjusted EBITDA
(1)
|
$
|
60,382
|
|
$
|
35,749
|
|
$
|
4,654
|
|
$
|
5,191
|
|
$
|
1,412
|
|
$
|
13,376
|
|
$
|
(8,423)
|
|
$
|
51,959
|
|
margin
|
15.3
|
%
|
19.0
|
%
|
17.5
|
%
|
10.5
|
%
|
3.9
|
%
|
14.4
|
%
|
|
13.2
|
%
|
(1)
Adjusted EBITDA is a non-GAAP measure, but as shown above it
represents operating profit (loss) plus depreciation and
amortization, goodwill and other asset impairment, stock-based
compensation, deferred acquisition consideration adjustments,
distributions from non-consolidated affiliates, and other
items.
|
|
(2) Distributions from
non-consolidated affiliates includes (i) cash received for profit
distributions from non-consolidated affiliates, and (ii)
consideration from the sale of ownership interests in
non-consolidated affiliates less contributions to date plus
undistributed earnings (losses).
|
|
(3) Other items, net includes
severance expense and other restructuring expenses, legal fees and
related expenses, net of insurance proceeds, relating to the SEC
investigation and related class action litigation claims. See
Schedule 10 for a reconciliation of amounts.
|
SCHEDULE
5
MDC PARTNERS
INC.
UNAUDITED
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA AND COVENANT
EBITDA
(US$ in 000s,
except percentages)
|
|
For the Twelve
months ended December 31, 2018, as reported under ASC
606
|
|
|
Advertising
and
Communication
|
Global
Integrated
Agencies
|
Domestic
Creative
Agencies
|
Specialist
Communications
|
Media
Services
|
All
Other
|
Corporate
|
Total
|
Revenue
|
$
|
1,476,203
|
|
$
|
698,872
|
|
$
|
102,063
|
|
$
|
179,065
|
|
$
|
140,753
|
|
$
|
355,450
|
|
$
|
—
|
|
$
|
1,476,203
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to MDC Partners Inc. common
shareholders
|
|
|
|
|
|
|
|
(132,088)
|
|
Adjustments to
reconcile to operating profit (loss):
|
|
|
|
|
|
|
|
|
Accretion on and net
income allocated to
convertible preference shares
|
|
|
|
|
|
|
|
8,355
|
|
Net income
attributable to the noncontrolling
interests
|
|
|
|
|
|
|
|
11,785
|
|
Equity in earnings of
non-consolidated affiliates
|
|
|
|
|
|
|
|
(62)
|
|
Income tax
expense
|
|
|
|
|
|
|
|
31,603
|
|
Interest expense and
finance charges, net
|
|
|
|
|
|
|
|
67,075
|
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
23,258
|
|
Other, net
|
|
|
|
|
|
|
|
(230)
|
|
Operating income
(loss)
|
$
|
64,853
|
|
$
|
44,868
|
|
$
|
18,552
|
|
$
|
18,629
|
|
$
|
(51,196)
|
|
$
|
34,000
|
|
$
|
(55,157)
|
|
$
|
9,696
|
|
margin
|
4.4
|
%
|
6.4
|
%
|
18.2
|
%
|
10.4
|
%
|
(36.4)
|
%
|
9.6
|
%
|
|
0.7
|
%
|
|
|
|
|
|
|
|
|
|
Additional
adjustments to reconcile to Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
45,434
|
|
23,571
|
|
1,583
|
|
4,252
|
|
3,119
|
|
12,909
|
|
762
|
|
46,196
|
|
Goodwill and other
asset impairment
|
77,740
|
|
21,008
|
|
—
|
|
—
|
|
52,041
|
|
4,691
|
|
2,317
|
|
80,057
|
|
Stock-based
compensation
|
13,757
|
|
8,521
|
|
1,100
|
|
714
|
|
318
|
|
3,104
|
|
4,659
|
|
18,416
|
|
Deferred acquisition
consideration adjustments
|
(457)
|
|
(5,345)
|
|
—
|
|
1,107
|
|
318
|
|
3,463
|
|
—
|
|
(457)
|
|
Distributions from
non- consolidated affiliates (2)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
779
|
|
779
|
|
Other items, net
(3)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
7,879
|
|
7,879
|
|
Adjusted EBITDA
(1)
|
$
|
201,327
|
|
$
|
92,623
|
|
$
|
21,235
|
|
$
|
24,702
|
|
$
|
4,600
|
|
$
|
58,167
|
|
$
|
(38,761)
|
|
$
|
162,566
|
|
margin
|
13.6
|
%
|
13.3
|
%
|
20.8
|
%
|
13.8
|
%
|
3.3
|
%
|
16.4
|
%
|
|
11.0
|
%
|
Covenant EBITDA
(4)
|
|
|
|
|
|
|
|
$
|
183,146
|
|
(1)
Adjusted EBITDA is a non-GAAP measure, but as shown above it
represents operating profit (loss) plus depreciation and
amortization, goodwill and other asset impairment, stock-based
compensation, deferred acquisition consideration adjustments,
distributions from non-consolidated affiliates, and other
items.
|
|
(2) Distributions from
non-consolidated affiliates includes (i) cash received for profit
distributions from non-consolidated affiliates, and (ii)
consideration from the sale of ownership interests in
non-consolidated affiliates less contributions to date plus
undistributed earnings (losses).
|
|
(3) Other items, net includes
severance expense and other restructuring expenses, legal fees and
related expenses, net of insurance proceeds, relating to the SEC
investigation and related class action litigation claims. See
Schedule 10 for a reconciliation of amounts.
|
|
(4)
Covenant EBITDA consist of adjusted EBITDA of $162.6 million, plus
i) severance for eliminated agency positions of $11.9 million, ii)
professional fees of $4.6 million, primarily related to the
adoption of ASC 606, iii) proforma acquisition EBITDA of $2.4
million and iv) real estate consolidation costs of $1.6
million.
|
SCHEDULE
6
MDC PARTNERS
INC.
UNAUDITED
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA
(US$ in 000s,
except percentages)
|
|
For the Three
months ended December 31, 2017, as reported under ASC
605
|
|
|
Advertising
and
Communication
|
Global
Integrated
Agencies
|
Domestic
Creative
Agencies
|
Specialist
Communications
|
Media
Services
|
All
Other
|
Corporate
|
Total
|
Revenue
|
$
|
402,747
|
|
$
|
212,057
|
|
$
|
27,092
|
|
$
|
47,095
|
|
$
|
44,010
|
|
$
|
72,493
|
|
$
|
—
|
|
$
|
402,747
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to MDC Partners Inc.
common shareholders
|
|
|
|
|
|
|
|
187,414
|
|
Adjustments to
reconcile to operating profit (loss):
|
|
|
|
|
|
|
|
|
Accretion on and net
income allocated to
convertible preference shares
|
|
|
|
|
|
|
|
35,254
|
|
Net income
attributable to the noncontrolling interests
|
|
|
|
|
|
|
|
8,787
|
|
Equity in earnings of
non-consolidated affiliates
|
|
|
|
|
|
|
|
(157)
|
|
Income tax
benefit
|
|
|
|
|
|
|
|
(185,723)
|
|
Interest expense and
finance charges, net
|
|
|
|
|
|
|
|
16,055
|
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
660
|
|
Other, net
|
|
|
|
|
|
|
|
(2,331)
|
|
Operating income
(loss)
|
$
|
71,833
|
|
$
|
38,618
|
|
$
|
3,922
|
|
$
|
7,304
|
|
$
|
3,957
|
|
$
|
18,032
|
|
$
|
(11,874)
|
|
$
|
59,959
|
|
margin
|
17.8
|
%
|
18.2
|
%
|
14.5
|
%
|
15.5
|
%
|
9.0
|
%
|
24.9
|
%
|
|
14.9
|
%
|
|
|
|
|
|
|
|
|
|
Additional
adjustments to reconcile to Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
10,324
|
|
5,918
|
|
410
|
|
1,057
|
|
820
|
|
2,119
|
|
234
|
|
10,558
|
|
Goodwill and other
asset impairment
|
3,238
|
|
2,741
|
|
—
|
|
—
|
|
497
|
|
—
|
|
1,177
|
|
4,415
|
|
Stock-based
compensation
|
6,945
|
|
5,313
|
|
353
|
|
690
|
|
161
|
|
428
|
|
535
|
|
7,480
|
|
Deferred acquisition
consideration adjustments
|
(18,173)
|
|
(7,763)
|
|
—
|
|
(1,025)
|
|
(1,248)
|
|
(8,137)
|
|
—
|
|
(18,173)
|
|
Distributions from
non- consolidated affiliates (2)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,716
|
|
2,716
|
|
Other items, net
(3)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(112)
|
|
(112)
|
|
Adjusted EBITDA
(1)
|
$
|
74,167
|
|
$
|
42,086
|
|
$
|
4,685
|
|
$
|
8,026
|
|
$
|
3,690
|
|
$
|
15,680
|
|
$
|
(7,324)
|
|
$
|
66,843
|
|
margin
|
18.4
|
%
|
19.8
|
%
|
17.3
|
%
|
17.0
|
%
|
8.4
|
%
|
21.6
|
%
|
|
16.6
|
%
|
(1)
Adjusted EBITDA is a non-GAAP measure, but as shown above it
represents operating profit (loss) plus depreciation and
amortization, goodwill and other asset impairment, stock-based
compensation, deferred acquisition consideration adjustments,
distributions from non-consolidated affiliates, and other
items.
|
|
(2) Distributions from
non-consolidated affiliates includes (i) cash received for profit
distributions from non-consolidated affiliates, and (ii)
consideration from the sale of ownership interests in
non-consolidated affiliates less contributions to date plus
undistributed earnings (losses).
|
|
(3) Other items, net includes legal
fees and related expenses, net of insurance proceeds, relating to
the SEC investigation and related class action litigation claims.
See Schedule 10 for a reconciliation of amounts.
|
|
Note: Due to changes
in the Company's internal management and reporting structure during
2018, reportable segment results for the 2017 periods presented
have been recasted to reflect the reclassification of certain
businesses between segments. The changes were as follows: 1) 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, 2) Yamamoto,
previously within the All Other category, was included within the
Domestic Creative Agencies reportable segment, and 3) 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.
|
SCHEDULE
7
MDC PARTNERS
INC.
UNAUDITED
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA
(US$ in 000s,
except percentages)
|
|
For the Twelve
months ended December 31, 2017, as reported under ASC
605
|
|
|
Advertising
and
Communication
|
Global
Integrated
Agencies
|
Domestic
Creative
Agencies
|
Specialist
Communications
|
Media
Services
|
All
Other
|
Corporate
|
Total
|
Revenue
|
$
|
1,513,779
|
|
$
|
797,347
|
|
$
|
104,417
|
|
$
|
172,565
|
|
$
|
166,216
|
|
$
|
273,234
|
|
$
|
—
|
|
$
|
1,513,779
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to MDC Partners Inc.
common shareholders
|
|
|
|
|
|
|
|
205,594
|
|
Adjustments to
reconcile to operating profit (loss):
|
|
|
|
|
|
|
|
|
Accretion on and net
income allocated to
convertible preference shares
|
|
|
|
|
|
|
|
36,254
|
|
Net income
attributable to the noncontrolling
interests
|
|
|
|
|
|
|
|
15,375
|
|
Equity in earnings of
non-consolidated affiliates
|
|
|
|
|
|
|
|
(2,081)
|
|
Income tax
benefit
|
|
|
|
|
|
|
|
(168,064)
|
|
Interest expense and
finance charges, net
|
|
|
|
|
|
|
|
64,364
|
|
Foreign exchange
gain
|
|
|
|
|
|
|
|
(18,137)
|
|
Other, net
|
|
|
|
|
|
|
|
(1,346)
|
|
Operating income
(loss)
|
$
|
172,815
|
|
$
|
71,857
|
|
$
|
19,333
|
|
$
|
20,728
|
|
$
|
13,126
|
|
$
|
47,771
|
|
$
|
(40,856)
|
|
$
|
131,959
|
|
margin
|
11.4
|
%
|
9.0
|
%
|
18.5
|
%
|
12.0
|
%
|
7.9
|
%
|
17.5
|
%
|
|
8.7
|
%
|
|
|
|
|
|
|
|
|
|
Additional
adjustments to reconcile to Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
42,376
|
|
23,831
|
|
1,582
|
|
4,714
|
|
4,052
|
|
8,197
|
|
1,098
|
|
43,474
|
|
Goodwill and other
asset impairment
|
3,238
|
|
2,741
|
|
—
|
|
—
|
|
497
|
|
—
|
|
1,177
|
|
4,415
|
|
Stock-based
compensation
|
22,216
|
|
15,225
|
|
887
|
|
2,954
|
|
656
|
|
2,494
|
|
2,134
|
|
24,350
|
|
Deferred acquisition
consideration adjustments
|
(4,898)
|
|
4,604
|
|
359
|
|
(419)
|
|
(819)
|
|
(8,623)
|
|
—
|
|
(4,898)
|
|
Distributions from
non- consolidated affiliates (2)
|
105
|
|
—
|
|
—
|
|
105
|
|
—
|
|
—
|
|
3,834
|
|
3,939
|
|
Other items, net
(3)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
253
|
|
253
|
|
Adjusted EBITDA
(1)
|
$
|
235,852
|
|
$
|
115,517
|
|
$
|
22,161
|
|
$
|
28,082
|
|
$
|
17,015
|
|
$
|
53,077
|
|
$
|
(32,360)
|
|
$
|
203,492
|
|
margin
|
15.6
|
%
|
14.5
|
%
|
21.2
|
%
|
16.3
|
%
|
10.2
|
%
|
19.4
|
%
|
|
13.4
|
%
|
(1)
Adjusted EBITDA is a non-GAAP measure, but as shown above it
represents operating profit (loss) plus depreciation and
amortization, goodwill and other asset impairment, stock-based
compensation, deferred acquisition consideration adjustments,
distributions from non-consolidated affiliates, and other
items.
|
|
(2) Distributions from
non-consolidated affiliates includes (i) cash received for profit
distributions from non-consolidated affiliates, and (ii)
consideration from the sale of ownership interests in
non-consolidated affiliates less contributions to date plus
undistributed earnings (losses).
|
|
(3) Other items, net includes legal
fees and related expenses, net of insurance proceeds, relating to
the SEC investigation and related class action litigation claims.
See Schedule 10 for a reconciliation of amounts.
|
|
Note: Due to changes
in the Company's internal management and reporting structure during
2018, reportable segment results for the 2017 periods presented
have been recasted to reflect the reclassification of certain
businesses between segments. The changes were as follows: 1) 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, 2) Yamamoto,
previously within the All Other category, was included within the
Domestic Creative Agencies reportable segment, and 3) 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.
|
SCHEDULE
8
MDC PARTNERS
INC.
UNAUDITTED
CONSOLIDATED BALANCE SHEETS
(US$ in
000s)
|
|
|
December
31,
|
|
2018
|
|
2017
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
30,873
|
|
|
$
|
46,179
|
|
Cash held in
trusts
|
—
|
|
|
4,632
|
|
Accounts receivable,
less allowance for doubtful accounts of $1,879 and
$2,453
|
395,200
|
|
|
434,072
|
|
Expenditures billable
to clients
|
42,369
|
|
|
31,146
|
|
Assets held for
sale
|
78,913
|
|
|
—
|
|
Other current
assets
|
42,499
|
|
|
26,742
|
|
Total Current
Assets
|
589,854
|
|
|
542,771
|
|
Fixed assets, at
cost, less accumulated depreciation of $128,546 and
$123,599
|
88,189
|
|
|
90,306
|
|
Investment in
non-consolidated affiliates
|
6,556
|
|
|
6,307
|
|
Goodwill
|
740,955
|
|
|
835,935
|
|
Other intangible
assets, net, less accumulated amortization of $161,868 and
$173,546
|
67,765
|
|
|
70,605
|
|
Deferred tax
assets
|
92,741
|
|
|
115,325
|
|
Other
assets
|
25,513
|
|
|
37,643
|
|
Total
Assets
|
$
|
1,611,573
|
|
|
$
|
1,698,892
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS, AND SHAREHOLDERS'
DEFICIT
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
|
221,995
|
|
|
$
|
244,527
|
|
Trust
liability
|
—
|
|
|
4,632
|
|
Accruals and other
liabilities
|
312,785
|
|
|
327,812
|
|
Liabilities held for
sale
|
35,967
|
|
|
—
|
|
Advance
billings
|
138,505
|
|
|
148,133
|
|
Current portion of
long-term debt
|
356
|
|
|
313
|
|
Current portion of
deferred acquisition consideration
|
32,928
|
|
|
50,213
|
|
Total Current
Liabilities
|
742,536
|
|
|
775,630
|
|
Long-term debt, less
current portion
|
954,229
|
|
|
882,806
|
|
Long-term portion of
deferred acquisition consideration
|
50,767
|
|
|
72,213
|
|
Other
liabilities
|
54,133
|
|
|
54,110
|
|
Deferred tax
liabilities
|
5,329
|
|
|
6,760
|
|
Total
Liabilities
|
1,806,994
|
|
|
1,791,519
|
|
Redeemable
Noncontrolling Interests
|
51,546
|
|
|
62,886
|
|
Commitments,
Contingencies and Guarantees
|
|
|
|
Shareholders'
Deficit:
|
|
|
|
Convertible
preference shares, 95,000 authorized, issued and outstanding at
December 31, 2018 and 2017
|
90,123
|
|
|
90,220
|
|
Common stock and
other paid in capital
|
58,579
|
|
|
38,191
|
|
Accumulated
deficit
|
(464,903)
|
|
|
(340,000)
|
|
Accumulated other
comprehensive loss
|
4,720
|
|
|
(1,954)
|
|
MDC Partners Inc.
Shareholders' Deficit
|
(311,481)
|
|
|
(213,543)
|
|
Noncontrolling
Interests
|
64,514
|
|
|
58,030
|
|
Total Shareholders'
Deficit
|
(246,967)
|
|
|
(155,513)
|
|
Total liabilities,
redeemable noncontrolling interests and shareholders'
deficit
|
$
|
1,611,573
|
|
|
$
|
1,698,892
|
|
SCHEDULE
9
MDC PARTNERS
INC.
UNAUDITTED SUMMARY
CASH FLOW DATA
(US$ in
000s)
|
|
|
Twelve Months
Ended December 31,
|
|
2018
|
|
2017
|
Net cash provided by
operating activities
|
$
|
17,280
|
|
|
$
|
71,786
|
|
Net cash used in
investing activities
|
(50,431)
|
|
|
(20,884)
|
|
Net cash provided by
(used in) financing activities
|
21,434
|
|
|
(32,599)
|
|
Effect of exchange
rate changes on cash, cash equivalents and cash held in
trusts
|
77
|
|
—
|
|
(754)
|
|
Net increase
(decrease) in cash, cash equivalents and cash held in trusts
including cash
classified within assets held for sale
|
$
|
(11,640)
|
|
—
|
|
$
|
17,549
|
|
Net decrease in cash,
cash equivalents and cash held in trusts classified within assets
held
for sale
|
(8,298)
|
|
|
—
|
|
Net
increase(decrease) in cash, cash equivalents, and cash held in
trusts
|
$
|
(19,938)
|
|
|
$
|
17,549
|
|
Note: Effective
January 1, 2018, we adopted ASU 2016-15, "Statement of Cash Flows",
which clarifies how cash receipts and cash payments in certain
transactions are presented and classified on the statement of cash
flows. We applied ASU 2016-15 on a retrospective basis, and
accordingly the prior period has been reclassified to conform to
the new standard.
|
SCHEDULE
10
MDC PARTNERS
INC.
UNAUDITTED
RECONCILIATION OF COMPONENTS OF NON- GAAP MEASURES
(US$ in
000s)
|
|
|
2017
|
|
2018
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
NON-GAAP
ACQUISITIONS
(DISPOSITIONS), NET
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenue from
current year acquisitions
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
11,066
|
|
$
|
12,734
|
|
$
|
12,317
|
|
$
|
36,117
|
|
GAAP revenue from
prior year acquisitions (1)
|
18,552
|
|
24,983
|
|
—
|
|
—
|
|
43,535
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Impact of adoption of
ASC 606 exclusion
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
450
|
|
(1,122)
|
|
504
|
|
(168)
|
|
Foreign exchange
impact
|
1,046
|
|
1,341
|
|
—
|
|
—
|
|
2,387
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Contribution to
organic revenue (growth)
decline (2)
|
1,470
|
|
(6,399)
|
|
—
|
|
—
|
|
(4,929)
|
|
|
—
|
|
(3,417)
|
|
(945)
|
|
(3,243)
|
|
(7,605)
|
|
Prior year revenue
from dispositions (3)
|
(691)
|
|
(660)
|
|
(3,153)
|
|
(6,103)
|
|
(10,607)
|
|
|
(5,261)
|
|
(5,592)
|
|
(3,847)
|
|
—
|
|
(14,700)
|
|
Non-GAAP acquisitions
(dispositions), net
|
$
|
20,377
|
|
$
|
19,265
|
|
$
|
(3,153)
|
|
$
|
(6,103)
|
|
$
|
30,386
|
|
|
$
|
(5,261)
|
|
$
|
2,507
|
|
$
|
6,820
|
|
$
|
9,578
|
|
$
|
13,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2018
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
OTHER ITEMS,
NET
|
|
|
|
|
|
|
|
|
|
|
|
SEC investigation and
class action litigation
expenses
|
$
|
339
|
|
$
|
382
|
|
$
|
330
|
|
$
|
287
|
|
$
|
1,338
|
|
|
$
|
122
|
|
$
|
235
|
|
$
|
(88)
|
|
$
|
131
|
|
$
|
400
|
|
D&O insurance
proceeds
|
(204)
|
|
(482)
|
|
—
|
|
(399)
|
|
(1,085)
|
|
|
—
|
|
(303)
|
|
(231)
|
|
(24)
|
|
(558)
|
|
Severance and other
restructuring expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
7,665
|
|
372
|
|
8,037
|
|
Total other items,
net
|
$
|
135
|
|
$
|
(100)
|
|
$
|
330
|
|
$
|
(112)
|
|
$
|
253
|
|
|
$
|
122
|
|
$
|
(68)
|
|
$
|
7,346
|
|
$
|
479
|
|
$
|
7,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2018
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
CASH INTEREST, NET
& OTHER
|
|
|
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
$
|
(999)
|
|
$
|
(30,567)
|
|
$
|
(758)
|
|
$
|
(30,571)
|
|
$
|
(62,895)
|
|
|
$
|
(649)
|
|
$
|
(30,765)
|
|
$
|
(1,597)
|
|
$
|
(31,001)
|
|
$
|
(64,012)
|
|
Bond interest
accruals adjustment
|
(14,625)
|
|
14,625
|
|
(14,625)
|
|
14,625
|
|
—
|
|
|
(14,625)
|
|
14,625
|
|
(14,625)
|
|
14,625
|
|
—
|
|
Adjusted cash
interest paid
|
(15,624)
|
|
(15,942)
|
|
(15,383)
|
|
(15,946)
|
|
(62,895)
|
|
|
(15,274)
|
|
(16,140)
|
|
(16,222)
|
|
(16,376)
|
|
(64,012)
|
|
Interest
income
|
227
|
|
178
|
|
145
|
|
209
|
|
759
|
|
|
148
|
|
159
|
|
91
|
|
227
|
|
625
|
|
Total cash interest,
net & other
|
$
|
(15,397)
|
|
$
|
(15,764)
|
|
$
|
(15,238)
|
|
$
|
(15,737)
|
|
$
|
(62,136)
|
|
|
$
|
(15,126)
|
|
$
|
(15,981)
|
|
$
|
(16,131)
|
|
$
|
(16,149)
|
|
$
|
(63,387)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2018
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
CAPITAL
EXPENDITURES, NET
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$
|
(9,413)
|
|
$
|
(11,743)
|
|
$
|
(7,149)
|
|
$
|
(4,653)
|
|
$
|
(32,958)
|
|
|
$
|
(3,799)
|
|
$
|
(5,890)
|
|
$
|
(5,543)
|
|
$
|
(5,032)
|
|
$
|
(20,264)
|
|
Landlord
reimbursements
|
75
|
|
3,146
|
|
1,357
|
|
1,858
|
|
6,436
|
|
|
219
|
|
851
|
|
291
|
|
442
|
|
1,803
|
|
Total capital
expenditures, net
|
$
|
(9,338)
|
|
$
|
(8,597)
|
|
$
|
(5,792)
|
|
$
|
(2,795)
|
|
$
|
(26,522)
|
|
|
$
|
(3,580)
|
|
$
|
(5,039)
|
|
$
|
(5,252)
|
|
$
|
(4,590)
|
|
$
|
(18,461)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2018
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
MISCELLANEOUS
OTHER DISCLOSURES
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to the noncontrolling
interest
|
$
|
883
|
|
$
|
2,214
|
|
$
|
3,491
|
|
$
|
8,787
|
|
$
|
15,375
|
|
|
$
|
897
|
|
$
|
2,545
|
|
$
|
2,458
|
|
$
|
5,885
|
|
$
|
11,785
|
|
Cash taxes
|
$
|
1,293
|
|
$
|
2,130
|
|
$
|
3,486
|
|
$
|
1,190
|
|
$
|
8,099
|
|
|
$
|
1,333
|
|
$
|
1,293
|
|
$
|
2,196
|
|
$
|
(986)
|
|
$
|
3,836
|
|
(1)
GAAP revenue from prior year acquisitions for 2018 and 2017 relates
to acquisitions which occurred in 2017 and 2016,
respectively.
|
|
(2)
Contributions to organic revenue growth (decline) represents the
change in revenue, measured on a constant currency basis, relative
to the comparable pre-acquisition period for acquired businesses
that is included in the Company's organic revenue growth (decline)
calculation.
|
|
(3) Prior
year revenue from dispositions reflects the incremental impact on
revenue for the comparable period after the Company's disposition
of such disposed business, plus revenue from each business disposed
of by the Company in the previous year through the twelve month
anniversary of the disposition.
|
|
Note: Actuals may not
foot due to rounding.
|
CONTACT:
|
Erica
Bartsch
|
|
Sloane &
Company
|
|
212-446-1875
|
|
IR@mdc-partners.com
|
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SOURCE MDC Partners Inc.