MDC Partners Inc. reports results for the three months ended March 31, 2009



    
    QUARTERLY HIGHLIGHTS:

    -   Revenues decreased to $126.7 million vs. $140.9 million in Q1 2008
    -   Organic revenue decline of 6.7% for Q1 2009
    -   Net new business wins of $1.1 million for Q1 2009
    -   MDC EBITDA increased to $11.2 million vs. $10.8 million in Q1 2008
    -   Net income attributable to MDC Partners Inc. increased to $29,000 vs.
        a loss of ($3.4) million in Q1 2008
    -   Diluted earnings per share attributable to MDC Partners Inc. common
        shareholders improved to nil vs. a loss of ($0.13) in Q1 2008
    -   Free Cash Flow increased to $7.8 million vs. $4.0 million in Q1 2008
    -   Net senior debt decreased to $103.3 million vs. $124.3 million at the
        end of Q1 2008
    

    NEW YORK, April 27 /CNW/ - MDC Partners Inc. ("MDC Partners" or the
"Company") today announced financial results for the three months ended March
31, 2009.
    Consolidated revenues for the first quarter of 2009 were $126.7 million,
a decrease of 10% compared to $140.9 million in the first quarter of 2008. MDC
EBITDA (as defined) for the first quarter of 2009 was $11.2 million, an
increase of 3.9% compared to $10.8 million in the first quarter of 2008. Net
income attributable to MDC Partners Inc. in the first quarter was $29,000
compared to a loss of ($3.4) million in the first quarter of 2008. Diluted
earnings per share attributable to MDC Partners Inc. common shareholders for
the first quarter of 2009 was nil compared with a loss of ($0.13) per share in
the same period of 2008. Free cash flow (as defined) was $7.8 million in the
first quarter of 2009 compared with $4.0 million in the first quarter of 2008.
    "We are extremely proud of our ability to continue to grow MDC's EBITDA
and free cash flow, despite a challenging quarter for revenue growth. Our
first quarter demonstrated that our retainer businesses continue to grow and
our disciplined approach to managing expenses and capital investments were
successful. We believe that revenue growth will accelerate in the second half
of the year and we remain confident in our ability to meet our annual
guidance," said Miles S. Nadal, Chairman & CEO of MDC Partners.

    Conference Call

    Management will host a conference call on April 28, at 10:00 a.m. (EST)
to discuss our results. The conference call will be accessible by dialing
1-416-644-3423 or toll free 1-800-731-5319. 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 Friday, May
15, 2009 by dialing 1-416-640-1917 or toll free 1-877-289-8525 (passcode
21303249 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 months ended March 31, 2009 and 2008; and (2)
presenting Free Cash Flow (as defined) for the three months ended March 31,
2009 and 2008. 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
        complement 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 March 31,
                                                       2009         2008
    -------------------------------------------------------------------------
    Revenue                                           $126,738      $140,902

    Operating Expenses:
      Cost of services sold                             85,879        95,519
      Office and general expenses                       31,152        34,455
      Depreciation and amortization                      7,593         9,776
                                                  ---------------------------
                                                  ---------------------------
                                                       124,624       139,750
                                                  ---------------------------

    Operating profit                                     2,114         1,152

    Other Income (Expenses):
      Other income                                       2,629         3,627
      Interest expense                                  (3,761)       (3,911)
      Interest income                                      203           467
                                                  ---------------------------
                                                  ---------------------------

    Income from continuing operations before
     income taxes and equity in affiliates               1,185         1,335

    Income taxes expense (recovery)                        615          (292)
                                                  ---------------------------

    Income from continuing operations before
     equity in affiliates                                  570         1,627
    Equity in earnings of non-consolidated
     affiliates                                             93           140
                                                  ---------------------------
                                                  ---------------------------

    Income from continuing operations                      663         1,767
    Loss from discontinued operations
     attributable to MDC Partners Inc.                    (252)       (3,036)
                                                  ---------------------------
    Net income (loss)                                      411        (1,269)
      Less: Net income attributable to the
       noncontrolling interests                           (382)       (2,125)
                                                  ---------------------------
    Net income (loss) attributable to
     MDC Partners Inc.                                     $29       ($3,394)
                                                  ---------------------------
                                                  ---------------------------

    Income (Loss) Per Common Share:
      Basic and Diluted:
        Income (loss) from continuing operations
         attributable to MDC Partners Inc. common
         shareholders                                    $0.01        ($0.01)
        Discontinued operations attributable to
         MDC Partners Inc. common shareholders          ($0.01)       ($0.12)
                                                  ---------------------------
                                                  ---------------------------
        Net income (loss) attributable to MDC
         Partners Inc. common shareholders               $0.00        ($0.13)
                                                  ---------------------------
                                                  ---------------------------

    Weighted Average Number of Common Shares:
      Basic                                         27,115,751    26,497,163
      Diluted                                       27,115,751    26,497,163
    -------------------------------------------------------------------------



                                 SCHEDULE 2

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

    For the Three Months Ended March 31, 2009

                                   Customer  Specialized
                       Strategic   Relation-   Communi-
                       Marketing       ship     cation
                        Services Management   Services  Corporate      Total
    -------------------------------------------------------------------------
    Revenue              $78,870    $29,132    $18,736          -   $126,738
                       ------------------------------------------------------
                       ------------------------------------------------------

    Operating Income
     (Loss) as Reported   $6,331      ($162)      ($49)   ($4,006)    $2,114

    Add:
      Depreciation and
       amortization        5,240      1,839        420         94      7,593
      Stock-based
       compensation          433         29        161      1,274      1,897
                       ------------------------------------------------------

    EBITDA(*)             12,004      1,706        532     (2,638)    11,604

    Less: Net income
     attributable to
     noncontrolling
     interests              (365)         -        (17)         -       (382)
                       ------------------------------------------------------

    MDC's Share of
     EBITDA(xx)          $11,639     $1,706       $515    ($2,638)   $11,222
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*)  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 net income
         attributable to noncontrolling interests.



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

    For the Three Months Ended March 31, 2008

                                   Customer  Specialized
                       Strategic   Relation-   Communi-
                       Marketing       ship     cation
                        Services Management   Services  Corporate      Total
    -------------------------------------------------------------------------
    Revenue              $76,978    $34,663    $29,261          -   $140,902
                       ------------------------------------------------------
                       ------------------------------------------------------

    Operating Income
     (Loss) as Reported   $1,252     $1,227     $3,124    ($4,451)    $1,152

    Add:
      Depreciation and
       amortization        7,281      1,825        602         68      9,776
      Stock-based
       compensation          446         32        252      1,268      1,998
                       ------------------------------------------------------

    EBITDA(*)              8,979      3,084      3,978     (3,115)    12,926

    Less: Net income
     attributable to
     noncontrolling
     interests              (687)       (57)    (1,381)         -     (2,125)
                       ------------------------------------------------------

    MDC's Share of
     EBITDA(xx)           $8,292     $3,027     $2,597    ($3,115)   $10,801
    -------------------------------------------------------------------------
    (*)  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 net income
         attributable to noncontrolling interests.



                                 SCHEDULE 3

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

                                                 Three Months Ended March 31,
                                                -----------------------------
                                                       2009         2008
    -------------------------------------------------------------------------
    MDC EBITDA                                         $11,222       $10,801
    Capital Expenditures                                  (830)       (4,177)
    Cash Taxes                                              66          (280)
    Cash Interest, net                                  (2,640)       (2,316)
                                                -----------------------------
                                                -----------------------------
    Free Cash Flow                                      $7,818        $4,028



                                 SCHEDULE 4

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


                                                     March 31,   December 31,
                                                       2009          2008
    -------------------------------------------------------------------------
    Assets
      Current Assets:
        Cash and cash equivalents                      $46,247       $41,331
        Accounts receivable, net                       116,219       106,954
        Expenditures billable to clients                18,380        16,949
        Prepaid expenses                                 5,668         5,240
        Other current assets                             5,145         5,270
                                                  ---------------------------
      Total Current Assets                             191,659       175,744

      Fixed assets, net                                 40,798        44,021
      Investment in affiliates                           1,692         1,593
      Goodwill                                         237,270       238,214
      Other intangible assets, net                      43,257        46,852
      Deferred tax assets                               11,321        11,926
      Other assets                                      10,088        10,889
                                                  ---------------------------
    Total Assets                                      $536,085      $529,239
                                                  ---------------------------
                                                  ---------------------------

    Liabilities and Shareholders' Equity
      Current Liabilities:
        Accounts payable                               $66,353       $75,360
        Accrued and other liabilities                   58,985        55,338
        Advance billings, net                           56,663        50,053
        Current portion of long term debt                1,519         1,546
        Deferred acquisition consideration               3,436         5,538
                                                  ---------------------------
      Total Current Liabilities                        186,956       187,835

      Revolving credit facility                         19,567         9,701
      Long-term debt                                   132,872       133,305
      Convertible notes                                 35,677        36,946
      Other liabilities                                  8,914         6,949
      Deferred tax liabilities                           4,589         4,700
                                                  ---------------------------
                                                  ---------------------------
      Total Liabilities                                388,575       379,436
                                                  ---------------------------

    Redeemable Noncontrolling Interests                 57,037        21,751
                                                  ---------------------------

      Shareholders' Equity:
        Common shares                                  217,544       213,534
        Additional paid in capital                           -        33,470
        Accumulated deficit                           (119,154)     (112,836)
        Stock subscription receivable                     (340)         (354)
        Accumulated other comprehensive income          (8,461)       (6,633)
                                                  ---------------------------
                                                  ---------------------------
        Total MDC Partners Inc. Shareholders'
         Equity                                         89,589       127,181
        Noncontrolling Interests                           884           871
                                                  ---------------------------
                                                  ---------------------------
      Total Equity                                      90,473       128,052
                                                  ---------------------------

    Total Liabilities, Redeemable
     Noncontrolling Interests and Equity              $536,085      $529,239
                                                  ---------------------------
                                                  ---------------------------



                                 SCHEDULE 5

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


                                                           March 31,
                                                  ---------------------------
                                                       2009          2008
    -------------------------------------------------------------------------
    Cash flows provided by (used in) continuing
     operating activities                                 $928      ($10,988)
      Discontinued operations                            ($368)         $538
                                                  ---------------------------
    Net cash provided by (used in) operating
     activities                                           $560      ($10,450)

    Net cash used in investing activities              ($4,121)      ($9,933)

    Net cash provided by financing activities           $8,924       $15,586

    Effect of exchange rate changes on cash and
     cash equivalents                                    ($447)         $136
                                                  ---------------------------

    Net increase (decrease) in cash and cash
     equivalents                                        $4,916       ($4,661)
    





For further information:

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


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