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Press Release

MDC Corporation Announces Financial Results for the First Quarter Ended March 31, 2002

TORONTO, Ontario (May 1, 2002) – MDC Corporation Inc. (“MDC”) of Toronto today announced its financial results for the first quarter ended March 31, 2002.


For the quarter ended March 31, 2002, revenue was $271.3 million, a decrease of 5% compared to the $285.1 million generated in the same quarter of 2001. Operating income before other charges was $29.9 million, a decline of 4% from the $31.2 million reported last year.
Including a $9.5 million gain on the disposition of a 4.54% ownership interest in the Canadian cheque operations of Davis + Henderson through the exercise of the over-allotment option by the underwriters, net income for the quarter was $12.1 million, a $20.8 million increase in net income from the restated loss of $8.7 million in the prior-year first quarter.

Comparative results for 2001 were restated to conform with changes to Canadian GAAP effective January 1, 2002, with respect to foreign exchange gains and losses on long-term monetary assets and liabilities. These exchange gains and losses, which were previously deferred and amortized over the term of the related item, are now expensed in the period. As a result, a $14.9 million unrealized foreign exchange loss was recognized in the first quarter of 2001 due to the significant decline in the Canadian to U.S. dollar exchange rates experienced in that quarter, compared to a loss of $0.3 million recorded in the first quarter of the current year.

First quarter 2001 results also included $4.7 million of amortization charges (net of taxes) related to goodwill. In accordance with the adoption of new accounting standards for goodwill and other intangibles, goodwill is no longer amortized but is to be tested for impairment annually. Fully diluted earnings per share for the first quarter of 2002 was $0.45 versus an adjusted fully diluted loss per share of $0.27 for last year calculated on a comparable basis excluding goodwill charges. Cashflow from operations for the first quarter of 2002 was $11.5 million, a decline of 35% from the $17.6 million achieved in the prior year. Fully diluted cashflow per share was $0.42 compared to the $0.83 achieved in 2001.

“We continue to make progress on both cost reduction initiatives and non-core asset divestitures commenced in the third quarter of last year,” commented Miles S. Nadal, Chairman and Chief Executive Officer. “We are also exploring additional discretionary cost reduction opportunities as we focus on the expansion of our revenue base in an improving economic business environment.”

Sales for the Secure Transactions division totalled $131.0 million for the first quarter, down 3% from the $134.5 million achieved in the same quarter of 2001. Revenue growth in the cheque operations was more than offset by the reduced activity experienced in the stamp and ticketing businesses, combined with significantly reduced revenues from e-commerce operations. However, operating income before other charges for the division improved to $24.3 million from $23.8 million last year. Increased operating profits from the cheque operations combined with reduced losses experienced in e-commerce operations more than offset a reduction in operating income experienced in our stamp and card operations.

First quarter revenues for Maxxcom were $140.3 million, a decline of $10.3 million compared to the $150.6 million recorded in the first quarter of 2001. Operating income before other charges was $5.6 million, a decline of 25% from the $7.4 million generated in the same prior-year period. In the quarter, Maxxcom continued to be affected by the general decline in demand for advertising, database management and interactive marketing services. The significant cost-cutting measures taken by Maxxcom did not entirely offset the impact of the reduced business activity.

“Notwithstanding the current financial results, we are very encouraged by the increased activity that our Maxxcom operations are experiencing. There has recently been a noticeable increase in new business opportunities, which we anticipate will translate into increased revenues in the second half of this year, ” said Mr. Nadal.

Maxxcom has stated its intention to proceed with a common share rights offering subject to regulatory approval. MDC anticipates that it will subscribe for its proportionate share of the total offering, an additional investment of approximately $25 million.

“Subsequent to the quarter, MDC completed additional transactions that are expected to significantly enhance liquidity and improve balance sheet leverage,” remarked Mr. James C. Johnson, President and Chief Operating Officer. “The disposition of our remaining interest in Davis + Henderson, Limited Partnership was completed April 2, 2002, for gross proceeds of approximately $200 million. The divestiture of the Canadian cheque business produced a significant return on MDC’s original investment of $50 million in 1996, and provided funds used to reduce leverage, including the repurchase of U.S. $112.5 million of outstanding Senior Subordinated Notes at 89% of the original principal amount completed on April 11, 2002.”

About MDC Corporation Inc. (“MDC”)

MDC is a publicly traded international business services organization with operating units in Canada, the United States, United Kingdom and Australia. MDC provides marketing communication services, through Maxxcom, and offers security sensitive transaction products and services in four primary areas: Personalized Transaction Products such as personal and business cheques; Electronic Transaction Products such as credit, debit, telephone & smart cards; Secure Ticketing Products, such as airline, transit and event tickets, and Stamps, both postal and excise. MDC shares are traded on the Toronto Stock Exchange under the symbol MDZ.A and on NASDAQ National Market under the symbol MDCA.

About Maxxcom Inc. (“Maxxcom”)

Maxxcom, a subsidiary of MDC Corporation, is a multi-national business services company with operating units in Canada, the United States and the United Kingdom. Maxxcom is built around entrepreneurial partner firms that provide a comprehensive range of communications services to clients in North America and the United Kingdom. Services include advertising, direct marketing, database management, sales promotion, public relations, public affairs, investor relations, marketing research and consulting, corporate identity and branding, and interactive marketing. Maxxcom shares are traded on the Toronto Stock Exchange under the symbol MXX.

                            MDC CORPORATION INC.
                         FIRST QUARTER 2002 and 2001
             (Unaudited, $CDN 000's - except per share amounts)

    For the Three Months Ended March 31,         2002      2001(*)   Change
    Sales                                     271,305     285,052     (5%)

    Cost of sales                             138,999     142,614     (3%)

    Gross profit                              132,306     142,438     (7%)

    Operating expenses                        102,401     111,237     (8%)
    Operating income before
     other income (charges)                    29,905      31,201     (4%)
    Other income (charges)
      Net gain on asset dispositions and
       other charges                            9,544           -
      Unrealized foreign exchange
       gain (loss)                               (280)    (14,900)
      Amortization                             (8,567)     (8,920)
      Interest, net                           (10,157)    (12,982)
                                               (9,460)    (36,802)
    Income (loss) before income taxes,
     goodwill charges and minority
     interest                                  20,445      (5,601)

    Income taxes (recovery)                     4,631      (1,447)
    Income (loss) before goodwill charges
     and minority interest                     15,814      (4,154)

    Goodwill charges, net of income taxes           -       4,677

    Minority interest (recovery)                3,679        (113)
    Net income (loss) for the period           12,135      (8,718)

    Cash Flow from operations                  11,455      17,592
    Earnings Per Share

      Income (loss) before goodwill
       charges and minority interest
        - Basic                                  0.91       (0.28)    N/A
        - Fully diluted                          0.58       (0.28)    N/A

        - Basic                                  0.69       (0.55)    N/A
        - Fully Diluted                          0.45       (0.55)    N/A

    Cash Flow Per Share
        - Basic                                  0.65        1.01    (36%)
        - Fully Diluted                          0.42        0.83    (49%)

    Weighted average shares outstanding
     during the period
        - Basic                            16,915,341  16,843,731      0%
        - Fully Diluted                    27,606,645  21,222,705     30%



    For the Three Months Ended March 31,         2002        2001   Change

    Secure Transactions
    Sales                                     130,968     134,482     (3%)
    Operating Income                           24,331      23,769      2%

    Sales                                     140,337     150,570     (7%)
    Operating Income                            5,574       7,432    (25%)


    (*)  Restated to reflect the change in accounting policy with respect
         to foreign exchange gains and losses on non-current monetary
         assets and liabilities

                            MDC CORPORATION INC.
                         CONSOLIDATED BALANCE SHEET
                   ($CDN 000's - except per share amounts)

                                                     As at           As at
                                                 March  31,    December 31,
                                                      2002          2001(*)
                                                (Unaudited)       (Audited)

      Cash and cash equivalents                     58,009          59,301
      Accounts receivable                          149,312         142,769
      Inventory                                     23,010          23,282
      Prepaid expenses and sundry                   15,343          11,969
      Future income taxes                           25,600          28,000
                                                   271,274         265,321

    Capital and other assets                       165,192         166,439

    Goodwill                                       459,979         462,746
                                                   896,445         894,506


      Accounts payable and accrued liabilities     201,700         204,994
      Deferred revenue                              30,142          23,771
      Current portion of long-term indebtedness      6,330          12,049
                                                   238,172         240,814

    Long-term indebtedness                         533,332         527,468
                                                   771,504         768,282
    Minority interest                               15,809          15,253
    Shareholders' equity
      Share capital                                144,542         142,599
      Other paid-in capital                         36,273          51,943
      Cumulative translation adjustment             14,028          13,892
      Retained earnings (deficit)                  (85,711)        (97,463)
                                                   109,132         110,971
                                                   896,445         894,506


    (*)  Restated to reflect the change in accounting policy with respect to
         foreign exchange gains and losses on non-current monetary assets and
         liabilities. The effect was a reduction in capital and other assets
         and retained earnings (deficit) of $23,809.


    Note:  The sale of the Company's remaining 50.01% of Davis+Henderson,
           Limited Partnership closed April 2, 2002 with net proceeds of
           approximately $185 million. On April 11, 2002, the Company
           repurchased U.S.$112.5 million of Senior Subordinated Notes at
           89% of original principal amount plus a 1% consent fee. Had these
           transactions been completed by March 31, 2002, long-term
           indebtedness would have been reduced to a balance of approximately
           $270 million as of March 31, 2002 including the allocation to
           long-term indebtedness of $14 million relating to the
           7% convertible debentures due January 8, 2007.