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Press Release

MDC Corporation Announces Financial Results for the Second Quarter and Six Months Ended June 30, 2002

TORONTO, Ontario (July 31, 2002) -MDC Corporation Inc. (“MDC”) of Toronto today announced its financial results for the second quarter and six months ended June 30, 2002.

Revenue was $221.0 million for the quarter ended June 30, 2002, a decrease of 21% compared to the $279.7 million achieved in the second quarter of 2001. Operating income before other charges declined to $13.9 million from the $27.3 million generated in 2001. Excluding the results of Davis + Henderson (“D+H”) from 2001, as the sale of 50.01% of D+H was completed at the beginning of the 2002 second quarter, revenues declined 5% and operating income increased 24%.

Income from continuing operations was $128.3 million, including a $147.5 million pre-tax gain on dispositions, comprised primarily of the sale of the remaining ownership interest in the Canadian cheque operations of D+H and the gain on the repurchase of US$112.5 million of 10.5% Senior Subordinated Notes at 89% of face value. Income from continuing operations in the second quarter of 2001 was $8.9 million. Net income for the quarter was $128.3 million, representing a $159.5 million increase over the restated loss of $31.1 million in the second quarter of the prior year.

Comparative results for second quarter and six months of 2001 were restated to conform with changes to Canadian GAAP effective January 1, 2002, with respect to foreign exchange gains and losses on non-hedged long-term monetary assets and liabilities. These unrealized 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, for the second quarter of 2001 an $11.3 million gain and for the year to date 2001 a $3.7 million loss was recognized due to fluctuations in the Canadian to U.S. dollar exchange rates. Unrealized foreign exchange gains of $6.9 million were recognized in the current quarter.

In accordance with the changes to Canadian GAAP effective January 1, 2002 to be applied prospectively, with respect to goodwill and other intangibles and the need to test formally for goodwill impairment on an annual basis, in the second quarter of 2002, the Company completed a program of transitional impairment tests, and as a result, an amount of $99.5 million (net of income tax recovery of $16.0 million) was charged to opening retained earnings.

Fully diluted earnings per share for the second quarter of 2002 was $5.43 versus an adjusted fully diluted loss per share of $1.60 for 2001 calculated on a comparable basis excluding goodwill charges. Cashflow from operations for the second quarter of 2002 was $5.8 million, a decrease from the $14.6 million achieved in the prior year. Fully diluted cashflow per share was $0.25 compared to the $0.69 achieved in 2001.

“Operationally, we remain focused on production efficiencies, continually reassessing the levels of our overhead cost structures, and looking to increase revenues in all of our businesses,” commented Miles S. Nadal, Chairman and Chief Executive Officer.

“As part of our previously announced strategic plan, a program to divest non-core assets was undertaken, and recently, we concluded the divestitures of A.E. McKenzie Co. Inc. and Ashton Potter Packaging for combined proceeds of approximately $10.0 million. We continue to examine opportunities to realize the value inherent in the remainder and expect the process will conclude over the next four quarters,” said Peter Lewis, Executive Vice-President and Chief Financial Officer.

The Secure Transactions division reported second quarter sales of $74.6 million, a 42% decline compared to the same quarter last year, due primarily to the sale of the Canadian cheque operations and reduced activity in e-commerce operations. In the core businesses, revenue growth achieved by the card operations was offset by reduced revenues in the stamp and ticketing businesses. Excluding the results of D+H and discontinued e-commerce operations from the second quarter of 2001, operating income before other charges for the second quarter of 2002 improved by $3.2 million to $8.6 million. Operating income improvements were primarily the result of cost reduction and productivity initiatives, leading to enhanced profitability in our US cheque and Canadian card operations.

“The economic recovery of the marketing and communications industry has not developed as quickly as anticipated, however, we believe that Maxxcom has taken the appropriate measures to restore profitability and achieve sustainable growth when such a recovery occurs. Restructuring and cost-cutting plans have been implemented, and during the quarter, Maxxcom successfully completed the re-negotiation of several partnership agreements,” said Mr. Nadal.

Second quarter revenues for Maxxcom were $146.3 million, a decline of $4.7 million compared to the $151.0 million recorded in the second quarter of 2001. Operating income before other charges was $5.3 million, a decline of 18% from the $6.5 million generated in the same prior-year period. The declines result from the lower level of revenues coupled with the negative impact of a strengthening Canadian dollar on the operating profits of U.S. operations and approximately $0.7 million of legal costs incurred related to the re-negotiation of partnership contracts.

“We are also delivering on our commitment to reduce consolidated debt and balance sheet leverage. At June 30, long-term indebtedness was $252.6 million, a reduction of $287.1 million from the levels of indebtedness at the end of March 2002. We have streamlined our operations and remain committed to growing revenues profitably,” stated Mr. Nadal.

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.
                    CONSOLIDATED STATEMENT OF OPERATIONS
                        SECOND QUARTER 2002 and 2001
             (Unaudited, $CDN 000's - except per share amounts)

    For the Three Months Ended June 30,            2002      2001(*)  Change
    -------------------------------------------------------------------------
    Sales                                       220,972     279,653     (21%)

    Cost of sales                               116,959     137,466     (15%)
                                             -----------------------
    Gross profit                                104,013     142,187     (27%)

    Operating expenses                           90,115     114,887     (22%)
                                             -----------------------
    Operating income before other
     income (charges)                            13,898      27,300     (49%)
                                             -----------------------
    Other income (charges)
      Net gain on asset dispositions
       and other charges                        147,507           -
      Unrealized foreign exchange gain            6,982      11,260
      Amortization                               (5,119)     (9,584)
      Interest, net                              (5,925)    (12,145)
                                             -----------------------
                                                143,445     (10,469)
                                             -----------------------
    Income before income taxes, goodwill
     charges and minority interest              157,343      16,831

    Income taxes                                 28,808       3,362
                                             -----------------------
    Income before goodwill charges
     and minority interest                      128,535      13,469

    Goodwill charges, net of income taxes             -       4,681

    Minority interest (recovery)                    191         (66)
                                             -----------------------
    Income from continuing operations           128,344       8,854

    Loss from discontinued operations                 -     (40,000)
                                             -----------------------
    Net income (loss) for the period            128,344     (31,146)
                                             -----------------------
                                             -----------------------
    Cash Flow from operations                     5,752      14,600
                                             -----------------------
                                             -----------------------
    Earnings Per Share

      Income from continuing operations
        - Basic                                    7.56        0.49
        - Fully Diluted                            5.43        0.42

      Reported
        - Basic                                    7.56       (1.88)
        - Fully Diluted                            5.43       (1.88)

    Cash Flow Per Share
        - Basic                                    0.32        0.83     (61%)
        - Fully Diluted                            0.25        0.69     (64%)

    Weighted average shares outstanding
     during the period
        - Basic                              16,915,341  16,874,691       0%
        - Fully Diluted                      23,658,938  21,224,007      11%

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    SEGMENTED INFORMATION - BY OPERATING DIVISION

    For the Three Months Ended June 30,            2002        2001   Change
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Secure Transactions
    Sales                                        74,646     128,673     (42%)
    Operating Income                              8,598      20,803     (59%)

    Maxxcom
    Sales                                       146,326     150,980      (3%)
    Operating Income                              5,300       6,497     (18%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

                            MDC CORPORATION INC.
                    CONSOLIDATED STATEMENT OF OPERATIONS
                          FIRST HALF 2002 and 2001
             (Unaudited, $CDN 000's - except per share amounts)

    For the Six Months Ended June 30,              2002      2001(*)  Change
    -------------------------------------------------------------------------
    Sales                                       492,277     564,705     (13%)

    Cost of sales                               255,958     280,080      (9%)
                                             -----------------------
    Gross profit                                236,319     284,625     (17%)

    Operating expenses                          192,516     226,124     (15%)
                                             -----------------------
    Operating income before
     other income (charges)                      43,803      58,501     (25%)
                                             -----------------------
    Other income (charges)
      Net gain on asset dispositions
       and other charges                        157,051           -
      Unrealized foreign exchange gain (loss)     6,702      (3,640)
      Amortization                              (13,686)    (18,504)
      Interest, net                             (16,082)    (25,127)
                                             -----------------------
                                                133,985     (47,271)
                                             -----------------------
    Income before income taxes, goodwill
     charges and minority interest              177,788      11,230

    Income taxes                                 33,439       1,915
                                             -----------------------
    Income before goodwill charges
     and minority interest                      144,349       9,315

    Goodwill charges, net of income taxes             -       9,358

    Minority interest (recovery)                  3,870        (179)
                                             -----------------------
    Income from continuing operations           140,479         136

    Loss from discontinued operations                 -     (40,000)
                                             -----------------------
    Net income (loss) for the period            140,479     (39,864)
                                             -----------------------
                                             -----------------------
    Cash Flow from operations                    17,207      32,192
                                             -----------------------
                                             -----------------------
    Earnings Per Share

      Income from continuing operations
        - Basic                                    8.26       (0.06)
        - Fully Diluted                            5.62       (0.06)

      Reported
        - Basic                                    8.26       (2.43)
        - Fully Diluted                            5.62       (2.43)

    Cash Flow Per Share
        - Basic                                    0.97        1.84     (47%)
        - Fully Diluted                            0.70        1.53     (54%)

    Weighted average shares outstanding
     during the period
        -  Basic                             16,915,341  16,859,211       0%
        -  Fully Diluted                     25,055,517  21,225,986      18%

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    SEGMENTED INFORMATION - BY OPERATING DIVISION

    For the Six Months Ended June 30,              2002        2001   Change
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Secure Transactions
    Sales                                       205,614     263,155     (22%)
    Operating Income                             32,929      44,572     (26%)

    Maxxcom
    Sales                                       286,663     301,550      (5%)
    Operating Income                             10,874      13,929     (22%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

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

    -------------------------------------------------------------------------
                                                        As at          As at
                                                      June 30,   December 31,
                                                         2002         2001(*)
                                                   (Unaudited)      (Audited)
    -------------------------------------------------------------------------
    ASSETS
    Current
      Cash and cash equivalents                        43,198         59,301
      Accounts receivable                             127,166        142,769
      Inventory                                        12,216         23,282
      Prepaid expenses and sundry                      14,097         11,969
      Future income taxes                                   -         28,000
                                                   --------------------------
                                                      196,677        265,321

    Capital and other assets                          132,510        166,439

    Goodwill                                          242,032        462,746
                                                   --------------------------
                                                      571,219        894,506
                                                   --------------------------
                                                   --------------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
      Accounts payable and accrued liabilities        151,710        204,994
      Deferred revenue                                 19,791         23,771
      Current portion of long-term indebtedness         7,251         12,049
                                                   --------------------------
                                                      178,752        240,814

    Long-term indebtedness                            245,322        527,468
                                                   --------------------------
                                                      424,074        768,282
                                                   --------------------------
    Minority interest                                  14,584         15,253
                                                   --------------------------
    Shareholders' equity
      Share capital                                   144,542        142,599
      Other paid-in capital                            36,897         51,943
      Cumulative translation adjustment                 8,385         13,892
      Retained earnings (deficit)                     (57,263)       (97,463)
                                                   --------------------------
                                                      132,561        110,971
                                                   --------------------------
                                                      571,219        894,506
                                                   --------------------------
                                                   --------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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