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Press Release

MDC Partners Announces Financial Results for the Three Months Ended March 31, 2005

TORONTO, Ontario (May 10, 2005) – MDC Partners Inc. (“MDC Partners”) today announced its financial results for the three months ended March 31, 2005. Consolidated revenues for the quarter were $92.4 million, an increase of 35% compared to $68.4 million in the same period of 2004. Operating loss was $1.4 million versus a loss of $4.3 million reported in the first quarter of 2004. Net loss from continuing operations for the three months ended March 31, 2005 was $3.8 million versus income from continuing operations of $9.9 million for the same period in 2004. The first quarter 2005 net loss from continuing operations included a pre-tax net gain on an asset sale of $0.1 million, compared to a pre-tax net gain on asset sales and settlement of debt of $16.3 million in the first quarter of 2004. Excluding the impact of these gains, the pre-tax loss from operations was $2.4 million in Q1 2005 versus a pre-tax loss of $6.5 million in Q1 2004.

Diluted loss per share from continuing operations for the first quarter of 2005 was ($0.17), compared to diluted earnings per share of $0.47 reported last year. .

“We are enthusiastic about the strong double digit organic revenue growth our businesses delivered in the quarter,” said Miles S. Nadal, Chairman, CEO & President of MDC Partners.

Assuming that 100% of the results of operations of those entities which are required to be equity accounted for under US GAAP have been combined on a line by line basis with the other consolidated businesses, Marketing Communications’ combined revenue was $81.7 million for the first quarter of 2005 compared to $62.8 million in 2004, representing a year-over-year increase of $18.9 million, or 30%. This revenue growth is primarily the result of the acquisition of several businesses by the Company.

Combined operating profit of Marketing Communications for the first quarter of 2005 declined by approximately 37 % to $ 5.6 million from $ 8.9 million.

Revenues recorded by Secure Products International for the first quarter of 2005 were $17.2 million, representing a decrease of $0.9 million, or 5%, compared to 2004. The decrease was primarily due to the decrease in volumes from existing clients at Ashton-Potter, Metaca and Mercury. The Secure Products International Group posted an operating loss of $0.6 million, compared with a profit of $0.3 million in 2004.

“As in the past, the first quarter represents the smallest quarterly contribution to annual revenue and profit. We remain confident in our full year plan for 2005,” said Steven Berns, Vice Chairman and Executive Vice President.

Subsequent to the first quarter, on April 1, 2005, the Company acquired 61.6% of Zyman Group for $64.5 million in stock and cash. The results for Zyman Group are not included in the first quarter results being reported by the Company. These results will be consolidated beginning on April 1.

The Company will provide significant additional details on its business results on its conference call (see details below).

Conference Call

Management will host a conference call today at 8:30 a.m. (EST) to discuss the results and will be accessible by dialing Toll Free 1-800-218-8862. An investor presentation has been posted to our website www.mdc-partners.comand will be referred to during the conference call.

Click here to view Financial Results


About MDC Partners Inc.

MDC Partners is a leading provider of marketing communications services, and secure transaction products and services, to clients in the North America, Europe, Australia and Latin America. Through its partnership of entrepreneurial firms, its Marketing Communications Group provides advertising and specialized communication services to leading brands. The Secure Products Group provides security products and services in three primary areas including electronic transaction products, secure ticketing products and stamps. MDC Partners Class A shares are publicly traded on the Toronto Stock Exchange under the symbol “MDZ.SV.A” and on the NASDAQ under the symbol “MDCAE” (expected to revert back to MDCA upon the filing of the 2004 Form 10-K/A).

Definition of Combined Results

We believe that discussing “Combined” results provides a better understanding of our results of operation because it allows for a more meaningful analysis of the financial results of our underlying business operations. For purposes of this release, except as otherwise indicated, 100% of the results of operations of those material entities which are required to be equity accounted for under US GAAP have been combined on a line by line basis with the other consolidated businesses of the Marketing Communications operating segment, and this alternative presentation of operating results has been described as “Combined”. These “Combined” results do not constitute a financial measure prepared in accordance with US GAAP and, therefore, may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other titled measures determined in accordance with US GAAP. A reconciliation of “Combined” results of operations of the Marketing Communications operating segment to the US GAAP reported results of operations has been provided by the Company in the tables included in this release.

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, particularly regarding the financial and strategic impact of acquiring the Zyman Group, 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.

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 remain in compliance with its credit facility;
  • risks arising from potential material weaknesses in internal control over financial reporting;
  • the Company’s ability to retain and attract key employees;
  • 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.