UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
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(Mark One) |
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ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF |
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THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended March 31, 2005 |
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or |
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o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF |
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THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
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Commission file number: 001-13178 |
MDC Partners Inc.
(Exact name of registrant as specified in its charter)
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Canada |
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98-0364441 |
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(State or other jurisdiction of |
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(IRS Employer Identification No.) |
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incorporation or organization) |
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45 Hazelton Avenue |
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M5R 2E3 |
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Toronto, Ontario, Canada |
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(Zip Code) |
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(Address of principal executive offices) |
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Registrant’s telephone number, including area code:
(416) 960-9000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12(b)-2 of the Act). Yes ý No o
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Act subsequent to the distributions of securities under a plan confirmed by a court. Yes o No o
The numbers of shares outstanding as of May 6, 2005 were: 23,077,846 Class A subordinate voting shares and 2,502 Class B multiple voting shares.
Website Access to Company Reports
MDC Partners Inc.’s Internet website address is www.mdc-partners.com. The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act will be made available free of charge through the Company’s website as soon as reasonably practical after those reports are electronically filed with, or furnished to, the Securities and Exchange Commission.
MDC PARTNERS INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
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Condensed Consolidated Balance Sheets as of March 31, 2005 (unaudited) and December 31, 2004 |
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Notes to Condensed Consolidated Financial Statements (unaudited) |
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Management’s Discussion and Analysis of Financial Condition And Results of Operations |
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2
MDC PARTNERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(thousands of United States dollars, except per share amounts)
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Three Months Ended March 31, |
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2005 |
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2004 |
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Revenue: |
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Services |
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$ |
75,210 |
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$ |
50,336 |
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Products |
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17,171 |
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18,037 |
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92,381 |
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68,373 |
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Operating Expenses: |
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Cost of services sold (1) |
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47,700 |
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36,592 |
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Cost of products sold |
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10,883 |
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11,175 |
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Office and general expenses (2) |
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30,635 |
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22,572 |
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Depreciation and amortization |
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4,515 |
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2,370 |
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93,733 |
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72,709 |
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Operating Loss |
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(1,352 |
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(4,336 |
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Other Income (Expenses): |
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Gain on sale of assets and settlement of long-term debt |
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57 |
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16,322 |
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Foreign exchange gain (loss) |
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180 |
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170 |
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Interest expense |
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(1,336 |
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(2,759 |
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Interest income |
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62 |
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421 |
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(1,037 |
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14,154 |
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Income (Loss) from Continuing Operations Before Income Taxes, Equity in Affiliates and Minority Interests |
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(2,389 |
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9,818 |
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Income Taxes (Recovery) |
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(971 |
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197 |
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Income (Loss) from Continuing Operations Before Equity in Affiliates and Minority Interests |
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(1,418 |
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9,621 |
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Equity in Earnings of Non Consolidated Affiliates |
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184 |
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1,541 |
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Minority Interests in Income of Consolidated Subsidiaries |
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(2,549 |
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(1,297 |
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Income (Loss) from Continuing Operations |
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(3,783 |
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9,865 |
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Discontinued Operations |
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— |
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(1,400 |
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Net Income (Loss) |
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$ |
(3,783 |
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$ |
8,465 |
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Earnings (Loss) Per Common Share: |
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Basic: |
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Continuing Operations |
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$ |
(0.17 |
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$ |
0.52 |
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Discontinued Operations |
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— |
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(0.07 |
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Net Income (Loss) |
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$ |
(0.17 |
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$ |
0.45 |
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Diluted: |
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Continuing Operations |
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$ |
(0.17 |
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$ |
0.47 |
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Discontinued Operations |
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— |
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(0.06 |
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Net Income (Loss) |
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$ |
(0.17 |
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$ |
0.41 |
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Weighted Average Number of Common Shares: |
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Basic |
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22,207,229 |
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18,918,608 |
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Diluted |
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22,207,229 |
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22,469,320 |
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(1) Includes stock-based compensation of $35 and $57, respectively in 2005 and 2004.
(2) Includes stock-based compensation of $957 and $6,002, respectively in 2005 and 2004.
The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.
3
MDC PARTNERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(thousands of United States dollars)
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March 31, |
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December 31, |
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(Unaudited) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
8,978 |
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$ |
22,673 |
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Accounts receivable, less allowance for doubtful accounts of $1,307 and $1,521 |
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112,969 |
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111,399 |
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Expenditures billable to clients |
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7,872 |
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8,296 |
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Inventories |
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9,633 |
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10,792 |
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Prepaid expenses |
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4,116 |
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3,036 |
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Other current assets |
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1,210 |
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813 |
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