MDC Partners Inc. reports results for the three and six months ended June 30, 2008



    
    QUARTERLY HIGHLIGHTS:

    -   Revenues increased to $158.3 million vs. $134.5 million in Q2 2007,
        an increase of 17.7%
    -   Organic revenue growth of 14.8% for Q2 2008
    -   Net new business wins of $3.0 million for Q2 2008
    -   MDC EBITDA increased to $15.8 million vs. $9.6 million in Q2 2007, an
        increase of 64.9%
    -   Free Cash Flow increased to $6.6 million vs. $3.6 million in Q2 2007,
        an increase of 82.5%

    YEAR TO DATE HIGHLIGHTS:

    -   Revenues increased to $301.0 million vs. $252.6 million in the first
        half of 2007, an increase of 19.2%
    -   Organic revenue growth of 14.7% for the first half of 2008
    -   Net new business wins of $43.0 million for the first half of 2008
    -   MDC EBITDA increased to $25.6 million vs. $15.1 million in the first
        half of 2007, an increase of 69.9%
    -   Free Cash Flow increased to $9.4 million vs. $1.7 million in Q2 2007,
        an increase of 447.0%
    

    NEW YORK, July 30 /CNW/ - MDC Partners Inc. ("MDC Partners" or the
"Company") today announced financial results for the three and six months
ended June 30, 2008.
    Consolidated revenues for the second quarter of 2008 were $158.3 million,
an increase of 17.7% compared to $134.5 million in the second quarter of 2007.
MDC EBITDA (as defined) for the second quarter of 2008 was $15.8 million, an
increase of 64.9% compared to $9.6 million in the second quarter of 2007. Free
cash flow (as defined) was $6.6 million in the second quarter of 2008 compared
with $3.6 million in the second quarter of 2007.
    Consolidated revenues for the first half of 2008 were $301.0 million, an
increase of 19.2% compared to $252.6 million in the first half of 2007. MDC
EBITDA (as defined) for the first half of 2008 was $25.6 million, an increase
of 69.9% compared to $15.1 million in the first half of 2007. Free cash flow
(as defined) was $9.4 million in the first half of 2008 compared with
$1.7 million in the first half of 2007.
    "We are very pleased with another strong quarter of excellent financial
results and believe that our investment in talent and technology is continuing
to enable us to win market share as we deliver outstanding results for our
clients. We believe that our first half momentum will continue for the second
half of the year and into 2009, despite the challenging economic environment,"
said Miles S. Nadal, Chairman & CEO of MDC Partners.
    The Company affirms it previously issued guidance for 2008 of revenues of
$600 to $610 million, MDC's EBITDA (as defined) of $61 to $64 million and Free
Cash Flow (as defined) of $30 to $35 million.

    Conference Call

    Management will host a conference call on July 30, at 4:30 p.m. (EST) to
discuss our results. The conference call will be accessible by dialing
1-416-644-3427 or toll free 1-800-595-8550. An investor presentation has been
posted on our website www.mdc-partners.com and will be referred to during the
conference call.

    About MDC Partners Inc.

    MDC Partners is a leading provider of marketing communications solutions
and services to clients in North America, Europe and Latin America. Through
its partnership of entrepreneurial firms it provides advertising, specialized
communications and consulting services to leading brands. MDC Partners'
philosophy emphasizes the utilization of strategy and creativity to drive
growth for its clients. "MDC Partners is The Place Where Great Talent Lives".
MDC Partners Class A shares are publicly traded on the 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 MDC's share of EBITDA
(as defined) for the three and six months ended June 30, 2008 and 2007; and
(2) presenting Free Cash Flow (as defined) for the three and six months ended
June 30, 2008 and 2007. Included in this earnings release are tables
reconciling MDC's reported results to arrive at these non-GAAP financial
measures.

    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, 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 effects of national and regional economic
        conditions;
    -   the Company's ability to attract new clients and retain existing
        clients;
    -   the 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
        compliment and expand the Company's business capabilities;
    -   foreign currency fluctuations; and
    -   risks arising from the Company's historical option grant practices.
    

    In addition to improving organic growth for its existing operations, 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 and through incurrence of
bridge or other debt financing, either 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.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
              (US$ in 000s, except share and per share amounts)

                                 Three Months               Six Months
                                Ended June 30,            Ended June 30,
                          ------------------------- -------------------------
                              2008         2007         2008         2007
    -------------------------------------------------------------------------

    Revenue                  $158,275     $134,497     $300,965     $252,577

    Operating Expenses
      Cost of services sold   104,012       85,885      201,186      162,848
      Office and general
       expenses                37,480       35,179       73,072       68,423
      Depreciation and
       amortization             8,708        5,916       18,782       11,727
                          ------------------------- -------------------------
                              150,200      126,980      293,040      242,998
                          ------------------------- -------------------------

    Operating Income            8,075        7,517        7,925        9,579

    Other Income (Expenses)
      Other income
       (expense)                 (527)      (1,012)       3,077       (1,719)
      Interest expense         (3,645)      (3,589)      (7,532)      (6,239)
      Interest income             173        1,079          379        1,235
                          ------------------------- -------------------------
    Income from
     Continuing Operations
     Before Income Taxes,
     Equity in Affiliates
     and Minority Interests     4,076        3,995        3,849        2,856

    Income Tax (Expense)
     Recovery                  (3,943)         433       (3,118)         948
                          ------------------------- -------------------------

    Income from Continuing
     Operations Before
     Equity in Affiliates
     and Minority Interests       133        4,428          731        3,804
    Equity in Earnings of
     Non-consolidated
     Affiliates                    81           61          221           11
    Minority Interests in
     Income of Consolidated
     Entities                  (2,869)      (5,419)      (4,976)      (9,710)
                          ------------------------- -------------------------

    Loss From Continuing
     Operations                (2,655)        (930)      (4,024)      (5,895)
    Loss from Discontinued
     Operations                (1,817)      (1,671)      (3,840)      (5,502)
                          ------------------------- -------------------------
    Net Loss                  ($4,472)     ($2,601)     ($7,864)    ($11,397)
                          ------------------------- -------------------------
                          ------------------------- -------------------------

    Loss Per Common Share
      Basic and Diluted:
        Continuing
         Operations            ($0.10)      ($0.04)      ($0.15)      ($0.24)
        Discontinued
         Operations             (0.07)       (0.07)       (0.14)       (0.22)
                          ------------------------- -------------------------
        Net Loss               ($0.17)      ($0.11)      ($0.29)      ($0.46)
                          ------------------------- -------------------------
                          ------------------------- -------------------------

    Weighted Average Number
     of Common Shares:
      Basic and Diluted    26,831,952   24,752,472   26,664,557   24,514,954
    -------------------------------------------------------------------------



                                 SCHEDULE 2

                              MDC PARTNERS INC.
             RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA(*)
                                (US$ in 000s)

    For the Three Months Ended June 30, 2008

                  Strategic    Customer    Specialized
                  Marketing  Relationship Communication
                   Services   Management    Services     Corporate   Total
    -------------------------------------------------------------------------

    Revenue          $88,785     $36,843     $32,647           -    $158,275
                   ----------------------------------------------------------
                   ----------------------------------------------------------
    Operating
     Income (Loss)
     as Reported      $8,012      $2,296      $2,681     ($4,914)     $8,075

    Add:
      Depreciation
       and
       amortization    5,943       1,879         817          69       8,708
      Stock-based
       compensation      571          35         221       1,036       1,863
                   ----------------------------------------------------------

    EBITDA(*)         14,526       4,210       3,719      (3,809)     18,646

    Less: Minority
     Interests        (1,815)       (130)       (924)          -      (2,869)
                   ----------------------------------------------------------

    MDC's Share of
     EBITDA(xx)      $12,711      $4,080      $2,795     ($3,809)    $15,777
    -------------------------------------------------------------------------
    (*)  EBITDA is a non-GAAP measure, but as shown above it represents
         operating income (loss) plus depreciation and amortization, and
         stock-based compensation.
    (xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
         represents operating income (loss) plus depreciation and
         amortization and stock-based compensation less minority interests.



                              MDC PARTNERS INC.
             RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA(*)
                                (US$ in 000s)

    For the Three Months Ended June 30, 2007

                  Strategic    Customer    Specialized
                  Marketing  Relationship Communication
                   Services   Management    Services     Corporate   Total
    -------------------------------------------------------------------------

    Revenue          $78,445     $25,681     $30,371           -    $134,497
                   ----------------------------------------------------------
                   ----------------------------------------------------------

    Operating
     Income (Loss)
     as Reported      $8,844        $454      $3,722     ($5,503)     $7,517

    Add:
      Depreciation
       and
       amortization    3,876       1,530         439          71       5,916
      Stock-based
       compensation      482          22         124         925       1,553
                   ----------------------------------------------------------

    EBITDA(*)         13,202       2,006       4,285      (4,507)     14,986

    Less: Minority
     Interests        (4,250)        (13)     (1,156)          -      (5,419)
                   ----------------------------------------------------------

    MDC's Share of
     EBITDA(xx)       $8,952      $1,993      $3,129     ($4,507)     $9,567
    -------------------------------------------------------------------------
    (*)  EBITDA is a non-GAAP measure, but as shown above it represents
         operating income (loss) plus depreciation and amortization, and
         stock-based compensation.
    (xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
         represents operating income (loss) plus depreciation and
         amortization and stock-based compensation less minority interests.



                                 SCHEDULE 3

                              MDC PARTNERS INC.
             RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA(*)
                                (US$ in 000s)

    For the Six Months Ended June 30, 2008

                  Strategic    Customer    Specialized
                  Marketing  Relationship Communication
                   Services   Management    Services     Corporate   Total
    -------------------------------------------------------------------------

    Revenue         $166,766     $71,506     $62,693           -    $300,965
                   ----------------------------------------------------------
                   ----------------------------------------------------------

    Operating
     Income (Loss)
     as Reported      $8,742      $3,522      $5,024     ($9,363)     $7,925

    Add:
      Depreciation
       and
       amortization   13,235       3,705       1,707         135      18,782
      Stock-based
       compensation    1,017          67         474       2,303       3,861
                   ----------------------------------------------------------

    EBITDA(*)         22,994       7,294       7,205      (6,925)     30,568

    Less: Minority
     Interests        (2,484)       (187)     (2,305)          -      (4,976)
                   ----------------------------------------------------------

    MDC's Share of
     EBITDA(xx)      $20,510      $7,107      $4,900     ($6,925)    $25,592
    -------------------------------------------------------------------------
    (*)  EBITDA is a non-GAAP measure, but as shown above it represents
         operating income (loss) plus depreciation and amortization, and
         stock-based compensation.
    (xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
         represents operating income (loss) plus depreciation and
         amortization, and stock-based compensation less minority interests.



                              MDC PARTNERS INC.
           RECONCILIATION OF OPERATING INCOME (LOSS) TO EBITDA(*)
                                (US$ in 000s)

    For the Six Months Ended June 30, 2007

                  Strategic    Customer    Specialized
                  Marketing  Relationship Communication
                   Services   Management    Services     Corporate   Total
    -------------------------------------------------------------------------

    Revenue         $149,008     $49,249     $54,320           -    $252,577
                   ----------------------------------------------------------
                   ----------------------------------------------------------

    Operating
     Income (Loss)
     as Reported     $14,691        $937      $4,910    ($10,959)     $9,579

    Add:
      Depreciation
       and
       amortization    7,643       3,080         866         138      11,727
      Stock-based
       compensation      971          48         248       2,202       3,469
                   ----------------------------------------------------------

    EBITDA(*)         23,305       4,065       6,024      (8,619)     24,775

    Less: Minority
     Interests        (7,966)        (27)     (1,717)          -      (9,710)
                   ----------------------------------------------------------

    MDC's Share of
     EBITDA(xx)      $15,339      $4,038      $4,307     ($8,619)    $15,065
    -------------------------------------------------------------------------
    (*)  EBITDA is a non-GAAP measure, but as shown above it represents
         operating income (loss) plus depreciation and amortization, and
         stock-based compensation.
    (xx) MDC's Share of EBITDA is a non-GAAP measure, but as shown above it
         represents operating income (loss) plus depreciation and
         amortization and stock-based compensation less minority interests.



                                 SCHEDULE 4

                              MDC PARTNERS INC.
                               FREE CASH FLOW
                                (US$ in 000s)

                                 Three Months               Six Months
                                Ended June 30,            Ended June 30,
                          ------------------------- -------------------------
                              2008         2007         2008         2007
    -------------------------------------------------------------------------
    MDC EBITDA                $15,777       $9,567      $25,592      $15,065
    Capital Expenditures       (4,416)      (3,844)      (8,639)      (7,346)
    Cash Taxes                   (593)        (482)        (873)      (1,046)
    Cash Interest, net         (4,209)      (1,647)      (6,694)      (4,957)
                          ------------------------- -------------------------
    Free Cash Flow             $6,559       $3,594       $9,386       $1,716
                          ------------------------- -------------------------



                                 SCHEDULE 5

                              MDC PARTNERS INC.
                         CONSOLIDATED BALANCE SHEETS
                                (US$ in 000s)

                                                     (unaudited)
                                                       June 30,  December 31,
                                                         2008        2007
    -------------------------------------------------------------------------
    Assets
      Current Assets:
        Cash and cash equivalents                      $18,510       $10,410
        Accounts receivable, net                       148,468       135,260
        Expenditures billable to clients                28,781        19,409
        Prepaid expenses                                 6,159         5,937
        Other current assets                             2,441         2,422
                                                    -------------------------
      Total Current Assets                             204,359       173,438

      Fixed assets                                      48,018        47,440
      Investment in affiliates                           1,748         1,434
      Goodwill                                         227,772       217,726
      Other intangible assets, net                      47,566        55,399
      Deferred tax assets                                8,331         9,175
      Other assets                                      14,877        16,086
                                                    -------------------------
    Total Assets                                      $552,671      $520,698
                                                    -------------------------
                                                    -------------------------

    Liabilities and Shareholders' Equity
      Current Liabilities:
        Accounts payable                               $76,895       $65,839
        Accrued and other liabilities                   77,176        74,668
        Advance billings                                70,227        50,988
        Current portion of long term debt                1,896         1,796
        Deferred acquisition consideration               2,442         2,511
                                                    -------------------------
      Total Current Liabilities                        228,636       195,802

      Revolving credit facility                          6,801         1,901
      Long-term debt                                   115,856       115,662
      Convertible notes                                 44,131        45,395
      Other liabilities                                  8,779         8,267
      Deferred tax liabilities                             552           819
                                                    -------------------------
      Total Liabilities                                404,755       367,846
                                                    -------------------------

      Minority Interests                                25,893        24,919
                                                    -------------------------

      Shareholders' Equity:
        Common stock                                   213,018       207,959
        Share capital to be issued                           -           214
        Additional paid in capital                      26,822        26,743
        Accumulated deficit                           (120,835)     (112,969)
        Stock subscription receivable                     (354)         (357)
        Accumulated other comprehensive income           3,372         6,343
                                                    -------------------------
      Total Shareholders' Equity                       122,023       127,933
                                                    -------------------------

    Total Liabilities and Shareholders' Equity        $552,671      $520,698
                                                    -------------------------
                                                    -------------------------
    





For further information:

For further information: Donna Granato, Director, Finance & Investor
Relations, (646) 429-1809, dgranato@mdc-partners.com


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