MDC Partners Inc. reports results for the three months and year ended December 31, 2008



    
    YEAR END HIGHLIGHTS:
    -   Revenues increased to $584.6 million vs. $533.9 million in 2007, an
        increase of 9.5%
    -   Organic revenue growth of 8.4% for 2008
    -   Net new business wins of $77.3 million for 2008
    -   MDC EBITDA increased to $61.0 million vs. $42.1 million in 2007, an
        increase of 45.2%
    -   Income from Continuing Operations increased to $10.1 million vs. a
        loss of ($18.2) million in 2007
    -   Diluted Earnings per Share from Continuing Operations improved to
        $0.37 vs. a loss of ($0.73) in 2007
    -   Free Cash Flow increased to $32.9 million vs. $8.1 million in 2007

    QUARTERLY HIGHLIGHTS:
    -   Revenues decreased to $144.7 million vs. $152.1 million in Q4 2007, a
        decrease of 4.9%
    -   Organic revenue decline of 1.3% for Q4 2008
    -   Net new business wins of $10.0 million for Q4 2008
    -   MDC EBITDA decreased to $17.1 million vs. $17.9 million in Q4 2007, a
        decrease of 4.3%
    -   Income from Continuing Operations increased to $8.1 million vs. a
        loss of ($6.6) million in Q4 2007
    -   Diluted Earnings per Share from Continuing Operations increased to
        $0.29 vs. a loss of ($0.25) in Q4 2007
    -   Free Cash Flow increased to $9.2 million vs. $8.2 million in Q4 2007
    

    NEW YORK, Feb. 24 /CNW/ - MDC Partners Inc. ("MDC Partners" or the
"Company") today announced financial results for the three and twelve months
ended December 31, 2008.
    "We are very proud of our achievements in 2008 on all financial metrics
and believe that the Company will continue to grow in 2009 despite the
difficult economic environment. Our focus on organic growth and providing the
optimum environment to obtain and retain the best talent is enabling us to
increase our market share and deliver superior results for our clients. This
coupled with our fiscal discipline and ongoing initiatives to optimize our
infrastructure costs have positioned the Company well to continue to grow and
meet its long term financial goals and objectives. Given all of these
initiatives, we believe that no matter what the year brings, MDC will exit
2009 an even stronger company," said Miles S. Nadal, Chairman & CEO of MDC
Partners.
    Consolidated revenues for 2008 were $584.6 million, an increase of 9.5%
compared to $533.9 million in 2007. MDC EBITDA for 2008 was $61.0 million, an
increase of 45.2% compared to $42.1 million in 2007. Income from continuing
operations for 2008 increased to $10.1 million vs. a loss of ($18.2) million
in 2007. Net income in 2008 was $0.1 million compared to a loss of ($26.4)
million in 2007. Diluted earnings per share from continuing operations for
2008 was $0.37 compared with a loss of ($0.73) and diluted earnings per common
share of net income grew to $0.01 vs. a loss of ($1.05) during 2007. Free cash
flow was $32.9 million in 2008 compared with $8.1 million in 2007.
    Consolidated revenues for the fourth quarter of 2008 were $144.7 million,
a decrease of 4.9% compared to $152.1 million in the fourth quarter of 2007.
MDC EBITDA (as defined) for the fourth quarter of 2008 was $17.1 million, a
decrease of 4.3% compared to $17.9 million in the fourth quarter of 2007.
Income from continuing operations for the fourth quarter of 2008 increased to
$8.1 million vs. a loss of ($6.6) million during the fourth quarter of 2007.
Net income in the fourth quarter was $4.7 million compared to a loss of ($8.2)
million in the fourth quarter of 2007. Diluted earnings per share from
continuing operations for the fourth quarter of 2008 was $0.29 compared with a
loss of ($0.25) in the same period of 2007 and diluted earnings per share of
net income grew to $0.18 vs. a loss of ($0.31) during the same period of 2007.
Free cash flow (as defined) was $9.2 million in the fourth quarter of 2008
compared with $8.2 million in the fourth quarter of 2007.
    "We have made significant strides during 2008 to optimize our portfolio,
significantly improve our working capital management and drive free cash flow
and liquidity," said David Doft, Chief Financial Officer of MDC Partners.

    Conference Call

    Management will host a conference call on February 24, at 4:30 p.m. (EST)
to discuss our results. The conference call will be accessible by dialing
1-416-644-3417 or toll free 1-800-732-9303. An investor presentation has been
posted on our website www.mdc-partners.com and will be referred to during the
conference call.
    A recording of the conference call will be available until Tuesday, March
10, 2009 by dialing 1-416-640-1917 or toll free 1-877-289-8525 (passcode
21296224 followed by the number sign) or by visiting our website.

    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 twelve months ended December 31, 2008 and 2007;
and (2) presenting Free Cash Flow (as defined) for the three and twelve months
ended December 31, 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 severe effects of national and regional
        economic downturn;
    -   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; and
    -   foreign currency fluctuations.
    

    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 Ended      Twelve Months Ended
                                    December 31,            December 31,
                                -------------------     -------------------
                                  2008        2007        2008        2007
    -------------------------------------------------------------------------
    Revenue                     $144,708    $152,092    $584,648    $533,883

    Operating Expenses
      Cost of services sold       99,735      96,363     392,145     343,297
      Office and general
       expenses                   35,001      37,115     137,755     138,234
      Depreciation and
       amortization                8,615       7,657      34,404      28,975
                               ----------------------  ----------------------
                                 143,351     141,135     564,304     510,506
                               ----------------------  ----------------------

    Operating Income               1,357      10,957      20,344      23,377

    Other Income (Expenses)
      Gain (Loss) on sale of
       assets and other               23         858         (14)      3,165
      Foreign exchange gain (Loss) 7,675        (122)     13,257      (7,192)
      Interest expense            (3,858)     (3,965)    (14,998)    (13,801)
      Interest income                393         532       1,743       2,702
                               ----------------------  ----------------------
    Income (Loss) from Continuing
     Operations Before Income
     Taxes, Equity in Affiliates
     and Minority Interests        5,590       8,260      20,332       8,251

    Income Taxes (Expense)
     Recovery                      4,018      (9,290)     (2,397)     (6,081)
                               ----------------------  ----------------------

    Income (Loss) from Continuing
     Operations Before Equity in
     Affiliates and Minority
     Interests                     9,608      (1,030)     17,935       2,170
    Equity in Earnings of
     Non-consolidated Affiliates      59          30         349         165
    Minority Interests in Income
     of Consolidated Subsidiaries (1,601)     (5,597)     (8,136)    (20,517)
                               ----------------------  ----------------------

    Income (Loss) From Continuing
     Operations                    8,066      (6,597)     10,148     (18,182)
    Loss from Discontinued
     Operations                   (3,317)     (1,589)    (10,015)     (8,173)
                               ----------------------  ----------------------
    Net Income (Loss)             $4,749     ($8,186)       $133    ($26,355)
                               ----------------------  ----------------------
                               ----------------------  ----------------------

    Income (Loss) Per Common Share
      Basic:
        Continuing Operations      $0.30      ($0.25)      $0.38      ($0.73)
        Discontinued Operations   ($0.12)     ($0.06)      (0.37)      (0.32)
                               ----------------------  ----------------------
        Net Income (Loss)          $0.18      ($0.31)      $0.01      ($1.05)
                               ----------------------  ----------------------
                               ----------------------  ----------------------

    Income (Loss) Per Common Share
      Diluted:
        Continuing Operations      $0.29      ($0.25)      $0.37      ($0.73)
        Discontinued Operations   ($0.11)     ($0.06)      (0.36)      (0.32)
                               ----------------------  ----------------------
        Net Income (Loss)          $0.18      ($0.31)      $0.01      ($1.05)
                               ----------------------  ----------------------
                               ----------------------  ----------------------

    Weighted Average Number of
     Common Shares:
      Basic                   26,896,938  25,998,879  26,765,839  25,000,582
      Diluted                 30,111,225  25,998,879  27,430,162  25,000,582
    -------------------------------------------------------------------------


                                 SCHEDULE 2

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

    For the Three Months Ended December 31, 2008

                                            Specialized
                       Strategic   Customer   Communi-
                       Marketing Relationship  cation
                        Services  Management  Services  Corporate     Total
    -------------------------------------------------------------------------

    Revenue              $86,986    $29,792    $27,930          -   $144,708
                      -------------------------------------------------------
                      -------------------------------------------------------

    Operating Income
     (Loss) as Reported   $6,577    ($1,938)    $2,406    ($5,688)    $1,357

    Add:
      Depreciation and
       amortization        5,970      1,800        649        196      8,615
      Stock-based
       compensation        4,669      2,318        634      1,126      8,747
                      -------------------------------------------------------

    EBITDA(*)             17,216      2,180      3,689     (4,366)    18,719

    Less: Minority
     Interests              (692)       (20)      (889)         -     (1,601)
                      -------------------------------------------------------

    MDC's Share of
     EBITDA(xx)          $16,524     $2,160     $2,800    ($4,366)   $17,118
                      -------------------------------------------------------

    (*)  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 December 31, 2007

                                            Specialized
                       Strategic   Customer   Communi-
                       Marketing Relationship  cation
                        Services  Management  Services  Corporate     Total
    -------------------------------------------------------------------------

    Revenue              $84,009    $33,824    $34,259          -   $152,092
                      -------------------------------------------------------
                      -------------------------------------------------------

    Operating Income
     (Loss) as Reported   $9,360     $1,339     $5,724    ($5,466)   $10,957

    Add:
      Depreciation and
       amortization        5,310      1,729        528         90      7,657
      Stock-based
       compensation        3,677         22        125      1,049      4,873
                      -------------------------------------------------------

    EBITDA(*)             18,347      3,090      6,377     (4,327)    23,487

    Less: Minority
     Interests            (3,521)       (53)    (2,023)         -     (5,597)
                      -------------------------------------------------------

    MDC's Share of
     EBITDA(xx)          $14,826     $3,037     $4,354    ($4,327)   $17,890
    -------------------------------------------------------------------------
    (*)  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 Twelve Months Ended December 31, 2008

                                            Specialized
                       Strategic   Customer   Communi-
                       Marketing Relationship  cation
                        Services  Management  Services  Corporate     Total
    -------------------------------------------------------------------------

    Revenue             $333,370   $133,970   $117,308          -   $584,648
                      -------------------------------------------------------
                      -------------------------------------------------------

    Operating Income
     (Loss) as Reported  $25,252     $2,744    $10,371   ($18,023)   $20,344

    Add:
      Depreciation and
       amortization       24,055      7,350      2,598        401     34,404
      Stock-based
       compensation        6,162      2,416      1,281      4,578     14,437
                      -------------------------------------------------------

    EBITDA(*)             55,469     12,510     14,250    (13,044)    69,185

    Less: Minority
     Interests            (4,402)      (266)    (3,468)         -     (8,136)
                      -------------------------------------------------------

    MDC's Share of
     EBITDA(xx)          $51,067    $12,244    $10,782   ($13,044)   $61,049
    -------------------------------------------------------------------------
    (*)  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 Twelve Months Ended December 31, 2007


                                            Specialized
                       Strategic   Customer   Communi-
                       Marketing Relationship  cation
                        Services  Management  Services  Corporate     Total
    -------------------------------------------------------------------------

    Revenue             $307,236   $112,958   $113,689          -   $533,883
                      -------------------------------------------------------
                      -------------------------------------------------------

    Operating Income
     (Loss) as Reported  $29,288     $3,338    $13,157   ($22,406)   $23,377

    Add:
      Depreciation and
       amortization       20,275      6,488      1,954        258     28,975
      Stock-based
       compensation        5,194         91        489      4,443     10,217
                      -------------------------------------------------------

    EBITDA(*)             54,757      9,917     15,600    (17,705)    62,569

    Less: Minority
     Interests           (15,653)      (122)    (4,742)         -    (20,517)
                      -------------------------------------------------------

    MDC's Share of
     EBITDA(xx)          $39,104     $9,795    $10,858   ($17,705)   $42,052
    -------------------------------------------------------------------------
    (*)  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 Ended      Twelve Months Ended
                                    December 31,            December 31,
                                -------------------     -------------------
                                  2008        2007        2008        2007
    -------------------------------------------------------------------------
    MDC EBITDA                   $17,118     $17,890     $61,049     $42,052
    Capital Expenditures          (3,963)     (4,980)    (14,395)    (19,453)
    Cash Taxes                      (101)        (11)     (1,037)     (1,216)
    Cash Interest, net            (3,874)     (4,676)    (12,724)    (13,245)
                              ------------------------  ---------------------
    Free Cash Flow                $9,180      $8,223     $32,893      $8,138
                              ------------------------  ---------------------



                                 SCHEDULE 5

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


                                                             December 31,
                                                     ------------------------
                                                           2008        2007
    -------------------------------------------------------------------------


    Assets
      Current Assets:
        Cash and cash equivalents                        $41,331     $10,410
        Accounts receivable, net                         106,954     135,260
        Expenditures billable to clients                  16,949      19,409
        Prepaid expenses                                   5,240       5,937
        Other current assets                               5,270       2,422
                                                     ------------------------
      Total Current Assets                               175,744     173,438

      Fixed assets, net                                   44,021      47,440
      Investment in affiliates                             1,593       1,434
      Goodwill                                           238,214     217,726
      Other intangible assets, net                        46,852      55,399
      Deferred tax assets                                 11,926       9,175
      Other assets                                        10,889      16,086
                                                     ------------------------
    Total Assets                                        $529,239    $520,698
                                                     ------------------------
                                                     ------------------------


    Liabilities and Shareholders' Equity
      Current Liabilities:
        Accounts payable                                 $75,360     $65,839
        Accrued and other liabilities                     53,199      74,668
        Advance billings, net                             50,053      50,988
        Current portion of long term debt                  1,546       1,796
        Deferred acquisition consideration                 7,677       2,511
                                                     ------------------------
      Total Current Liabilities                          187,835     195,802

      Revolving credit facility                            9,701       1,901
      Long-term debt                                     133,305     115,662
      Convertible notes                                   36,946      45,395
      Other liabilities                                    6,949       8,267
      Deferred tax liabilities                             4,700         819
                                                     ------------------------
                                                     ------------------------
      Total Liabilities                                  379,436     367,846
                                                     ------------------------

      Minority Interests                                  22,622      24,919
                                                     ------------------------

      Shareholders' Equity:
        Common stock                                     213,534     207,959
        Share capital to be issued                             -         214
        Additional paid in capital                        33,470      26,743
        Accumulated deficit                             (112,836)   (112,969)
        Stock subscription receivable                       (354)       (357)
        Accumulated other comprehensive income            (6,633)      6,343
                                                     ------------------------
      Total Shareholders' Equity                         127,181     127,933
                                                     ------------------------
                                                     ------------------------

    Total Liabilities and Shareholders' Equity          $529,239    $520,698
                                                     ------------------------
                                                     ------------------------



                                 SCHEDULE 6

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



                                                             December 31,
                                                     ------------------------
                                                           2008        2007
    -------------------------------------------------------------------------
    Cash flows from continuing operating activities      $60,945      $3,124
      Discontinued operations                             (3,499)      1,008
                                                     ------------------------
    Net cash provided by operating activities            $57,446      $4,132

    Net cash used in investing activities               $(50,186)   $(60,914)

    Net cash provided by financing activities            $23,510     $60,929
    





For further information:

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


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