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Press Release

MDC Partners Inc. Reports Fourth Quarter and Year-End 2005 Results

HIGHLIGHTS:
Annual Revenue up 40% to $443.5 Million
MDC EBITDA up 81% to $32.6 Million
Cash EPS of $1.03

NEW YORK, NEW YORK (March 9, 2006) – MDC Partners Inc. (“MDC Partners” or “the Company”) today announced its financial results for the fourth quarter and year ended December 31, 2005.

Consolidated revenues for the quarter ended December 31, 2005 were $126.6 million, an increase of 38% compared to $91.6 million in the same period of 2004. Operating income for the fourth quarter of 2005 was $12.0 million versus a loss of ($2.7) million reported in the fourth quarter of 2004. Net loss from continuing operations for the quarter ended December 31, 2005 was ($1.6) million versus ($7.6) million for the same period in 2004. Diluted loss per share from continuing operations for the fourth quarter of 2005 was ($0.07) compared to ($0.34) last year.

MDC’s share of EBITDA increased to $14.2 million in the fourth quarter of 2005 from $0.8 million in the fourth quarter of 2004.

Cash earnings per share from continuing operations for the fourth quarter of 2005 was $0.33.

Consolidated revenues for the year ended December 31, 2005 were $443.5 million, an increase of 40% compared to $316.8 million in the same period of 2004. Operating income for 2005 was $22.6 million versus $5.2 million reported in 2004. Net loss from continuing operations for the year ended December 31, 2005 was ($8.5) million versus income from continuing operations of $5.0 million for the same period in 2004. However, the income from continuing operations during the year ended December 31, 2004 included non-recurring amounts totalling $10.5 million (a gain on asset sales and settlement of debt of $14.8 million, an accrual recovery of $2.7 million and income taxes of $7.0). Non-recurring other income in 2005 was $0.4 million, net of taxes. Excluding the impact of these items, the loss from continuing operations would have been ($8.9) million in 2005 versus ($5.5) million in 2004. Diluted loss per share from continuing operations for 2005 was ($0.37), compared to diluted earnings per share of $0.22 reported last year.

MDC’s share of EBITDA increased 81% to $32.6 million in 2005 from $18.0 million in 2004.

Cash earnings per share from continuing operations for 2005 was $1.03.

“We are pleased with the Company’s growth and net new business wins in 2005 and believe that our momentum as we enter 2006 is very strong on all fronts,” said Miles S. Nadal, Chairman & CEO of MDC Partners.

Group Results

Revenue for the Marketing Communications group was $102.3 million for the fourth quarter of 2005 compared to $77.1 million in 2004, representing a year-over-year increase of 33%. This increase included organic revenue growth of 12.6% for the quarter. O perating profit for the Marketing Communications group for the fourth quarter of 2005 increased by approximately 82 % to $ 15.3 million from $ 8.4 million. Marketing Communications group revenue for 2005 increased 47% to $363.4 million from $247.1 million and operating profit increased 55% to $45.5 million from $29.4 million in 2004.

Revenues recorded by the Secure Products group for the fourth quarter of 2005 were $24.4 million, representing an increase of 69% compared to 2004. The Secure Products group posted fourth quarter operating profit of $3.4 million, compared with an operating loss of ($1.3) million during the fourth quarter of 2004. For the year 2005, Secure Products group reported revenue of $80.1 million versus $69.7 million in 2004. Operating profit for the year 2005 was $2.6 million, compared to operating profit in 2004 of $0.5 million.

“The results delivered by both the Marketing Communications group and the Secure Products group for the fourth quarter and full year 2005 are a testament to the dedication and hard work put forth by the world class management teams that exist at both our Partner firms and the support center of MDC. Although our results were strong in the fourth quarter, we believe that there are significant opportunities for improvement through continued focus on organic growth and on enhancing operating margins,” said Steven Berns, President and Chief Financial Officer.

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

Non-GAAP Financial Measures

In addition to its reported results, MDC 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 growth. These non-GAAP financial measures relate to: (1) presenting MDC’s share of EBITDA for the full year and the fourth quarter of 2005 and 2004; and (2) presenting Cash Earnings per Share for the full year and the fourth quarter of 2005. Included in this earnings release are tables reconciling MDC’s reported results to arrive at these non-GAAP financial measures.

Conference Call

Management will host a conference call today at 8:30 a.m. (EST) to discuss our fourth quarter and full year results. The conference call will be accessible by dialing 1-416-644-3423 or toll free 1-800-814-4853 . An investor presentation has been posted to our website www.mdc-partners.com and 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 United States, Canada, Australia and the United Kingdom. Through its partnership of entrepreneurial firms, its Marketing Communications group provides advertising, specialized communication and consulting services to clients. 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 NASDAQ under the symbol “MDCA” and on the Toronto Stock Exchange under the symbol “MDZ.SV.A”

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 remain in compliance with its debt agreements;
  • risks arising from identified and potential future 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.

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.