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Press Release

MDC Corporation Announces Financial Results For The Third Quarter Ended September 30, 2003

TORONTO, Ontario (October 30, 2003) – MDC Corporation Inc. operating as MDC Partners (“MDC”) of Toronto today announced its financial results for the third quarter and nine months ended September 30, 2003. Consolidated revenues were US$68.1 million for the quarter, representing a 23% decrease from the US$88.5 million reported for the same three-month period of the prior year. Operating income before other charges, at US$7.8 million, declined US$3.5 million or 31% compared to the US$11.3 million achieved during the third quarter of 2002. Net income for the three months ended September 30, 2003 was US$3.3 million compared to US$4.2 million for 2002. Diluted earnings per share for the quarter was US$0.15 compared to US$0.16 last year. Diluted cashflow per share was US$0.26 this quarter versus US$0.29 in the previous year. The inclusion in the 2002 results of the divested operations of Custom Direct, Spectron Security Print and Questa together with the increased focus on Marketing Communications makes the periods’ results less comparable.

“MDC has adopted the U.S. dollar as its reporting currency in order to reflect the global nature of the Company’s business and shareholder base. In addition, MDC has modified its financial statement presentation to improve investors’ ability to compare the Company’s results with those of most other publicly traded businesses in the marketing communications industry,” said Miles S. Nadal, Chairman, President and Chief Executive Officer.

Consistent with the focus on Marketing Communications, MDC will be renamed MDC Partners Inc. on January 1, 2004, operating as MDC Partners until then. “The evolution of MDC has culminated in our rebranding as a result of our fundamental belief that it is time for a change in the Marketing Communications industry. Our commitment is to do great work for great clients that produces measurable results. MDC Partners is well positioned to lead this paradigm, and we believe that the quality of our Brands and the expertise they demonstrate consistently for their clients has, and will enable them to win significant new business in the future,” said Miles S. Nadal.

Marketing Communications reported revenues of US$47.5 million for the third quarter of 2003, an increase of US$5.3 million or 12% compared to the third quarter of 2002. Operating income before other charges increased 56% to US$7.4 million for the quarter from the US$4.8 million achieved in the same quarter in the previous year. Operating margins improved to 15.7% from 11.3%. These improvements were primarily the result of an increase in the demand for database management, direct marketing services, corporate communication and advertising in the United States. As a result of the privatization of Maxxcom and the merger of head offices, additional divisional cost reductions were achieved in the area of divisional corporate overheads.

“Marketing Communications continued to attract new clients throughout the quarter, including Circuit City, Target, Best Buy, Discovery Channel and Borders, resulting in annualized net new business wins with revenues of approximately US$2.8 million,” said Mr. Nadal. “Our operations remain focused on the generation of new business while maintaining a cost-effective structure. The positive momentum experienced in revenues and earnings is anticipated to continue as we benefit from the recovery expected in the marketing communications industry.”

Third quarter revenues of the Secure Transactions Division were US$18.9 million, a decrease of 58% from the US$45.5 million recorded for the same period of 2002. Operating income before other charges was US$1.2 million, down 84% from the US$7.3 million earned in the prior year. Excluding divested operations, revenues improved slightly compared to 2002, however, operating income decreased US$1.6 million primarily as a result of costs related to preparation for increased production under the long-term United States Postal Service contract announced last quarter and increased operating costs at Canadian facilities as a result of the strengthening Canadian dollar.

“We remain committed to the profitable operation of our remaining non-core businesses, and are pleased with progress to date on the implementation of state-of-the-art equipment at Ashton Potter. When fully operational, expected by the end of the fourth quarter, revenues and operating income of the operation are expected to improve significantly,” said Mr. Nadal.

On July 31, 2003 MDC completed the privatization of Maxxcom Inc. with the issuance of 2,473,183 Class A subordinated voting shares at Cdn.$13.25. The share capital issued as a result was US$23 million.

During the quarter, pursuant to its normal course issuer bid, MDC repurchased 626,916 Class A subordinate voting shares at an average price per share of Cdn. $13.80 for total consideration of US$6.3 million.

About MDC Partners (“MDC”)

MDC Corporation Inc. is one of the world’s leading marketing communications firms. Through its partnership of entrepreneurial firms, MDC provides creative, integrated and specialized communication services to leading brands throughout the United States, Canada and the United Kingdom. MDC also offers security-sensitive transaction products and services through its Secure Transactions Division. MDC Class A shares are publicly traded on the Toronto Stock Exchange under the symbol MDZ.A and on the NASDAQ under the symbol MDCA.

 

                            MDC CORPORATION INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                         THIRD QUARTER 2003 and 2002
                                 (Unaudited)

                                                $U.S. 000's - except
                                                 per share amounts
                                              -----------------------
    For the Three Months Ended September 30,      2003       2002(*)   Change
    -------------------------------------------------------------------------
    Gross billings                               132,140    140,545      (6%)
                                              -----------------------
                                              -----------------------
    Revenues                                      68,088     88,548     (23%)

    Operating costs                               60,252     77,267     (22%)
                                              -----------------------
    Operating income before other income
     (charges)                                     7,836     11,281     (31%)
                                              -----------------------
    Other income (charges)
      Net gain on asset dispositions and
       other charges                                 445      1,456
      Amortization                                (2,723)    (3,566)
      Interest, net                               (1,439)    (3,873)
      Income participation of minority
       partners                                   (1,455)      (900)
                                              -----------------------
                                                  (5,172)    (6,883)
                                              -----------------------
    Income before income taxes and minority
     interest                                      2,664      4,398     (39%)

    Income taxes (recovery)                         (818)       224
                                              -----------------------
    Income before minority
     interest                                      3,482      4,174     (17%)

    Minority interest (recovery)                     141         (5)
                                              -----------------------
    Net income for the period                      3,341      4,179     (20%)
                                              -----------------------
                                              -----------------------
    Cash Flow from operations                      5,867      7,633     (23%)
                                              -----------------------
                                              -----------------------
    Earnings Per Share
      Net income
        - Basic                                     0.17       0.23     (26%)
        - Diluted                                   0.15       0.16      (6%)

    Cash Flow Per Share
        - Basic                                     0.30       0.44     (32%)
        - Diluted                                   0.26       0.29     (10%)

    Weighted average shares
     outstanding during the period
        - Basic                               18,361,746 16,915,341       9%
        - Diluted(xx)                         23,249,320 26,558,351     (12%)

    -------------------------------------------------------------------------
    SEGMENTED INFORMATION - BY OPERATING DIVISION

    For the Three Months Ended September 30,      2003      2002(*)    Change
    -------------------------------------------------------------------------
    Marketing
     Communications
    Revenues                                      47,476     42,207      12%
    Operating income before other
     income (charges)                              7,444      4,764      56%

    Secure Transactions
    Revenues                                      18,898     45,516     (58%)
    Operating income before other
     income (charges)                              1,208      7,336     (84%)

    Corporate and Other
    Revenues                                       1,714        825     108%
    Operating loss before other
     income (charges)                               (816)      (819)      -
    -------------------------------------------------------------------------
    (*)    Comparative figures have been reclassified to conform with current
           presentation.
    (xx)   The Company has the option to satisfy the CDN$49,000 (US$36,299)
           of 7% Convertible Notes ("Notes") with cash or Class A
           Subordinated Voting Shares ("Shares") at 95% of the current share
           price. As a result, the diluted shares outstanding include
           4,013,104 (2002 - 9,633,911) Shares for the conversion of the
           Notes at 95% of the average closing price of the Shares during the
           period.

                            MDC CORPORATION INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                         THIRD QUARTER 2003 and 2002
                                 (Unaudited)

                                                $U.S. 000's - except
                                                 per share amounts
                                              -----------------------
    For the Nine Months Ended September 30,       2003      2002(*)    Change
    -------------------------------------------------------------------------
    Gross billings                               410,304    453,614     (10%)
                                              -----------------------
                                              -----------------------
    Revenues                                     236,928    299,952     (21%)
    Operating costs                              211,159    259,555     (19%)
                                              -----------------------
    Operating income before other income
     (charges)                                    25,769     40,397     (36%)
                                              -----------------------
    Other income (charges)
      Net gain on asset dispositions
       and other charges                          15,415     99,483
      Unrealized foreign exchange gain                 -      4,380
      Amortization                                (9,868)   (12,208)
      Interest, net                               (9,654)   (14,077)
      Income participation of minority
       partners                                   (4,019)    (2,252)
                                              -----------------------
                                                  (8,126)    75,326
                                              -----------------------
    Income before income taxes and
     minority interest                            17,643    115,723     (85%)

    Income taxes                                   6,122     21,479
                                              -----------------------
    Income before minority interest               11,521     94,244     (88%)

    Minority interest (recovery)                  (1,044)     2,523
                                              -----------------------
    Net income for the period                     12,565     91,721     (86%)
                                              -----------------------
                                              -----------------------
    Cash Flow from operations                     13,282     17,236     (23%)
                                              -----------------------
                                              -----------------------
    Earnings Per Share
      Net income
        - Basic                                     0.67       5.38     (88%)
        - Diluted                                   0.55       3.61     (85%)

    Cash Flow Per Share
        - Basic                                     0.71       0.98     (28%)
        - Diluted                                   0.58       0.69     (16%)

    Weighted average shares
     outstanding during the period
        - Basic                               17,397,476 16,915,341       3%
        - Diluted(xx)                         23,541,571 25,501,775      (8%)

    -------------------------------------------------------------------------
    SEGMENTED INFORMATION - BY OPERATING DIVISION

    For the Nine Months Ended September 30,       2003      2002(*)    Change
    -------------------------------------------------------------------------
    Marketing Communications
    Revenues                                     136,869    123,210      11%
    Operating income before other income
     (charges)                                    18,831     13,045      44%

    Secure Transactions
    Revenues                                      96,173    168,504     (43%)
    Operating income before other
     income (charges)                              9,849     30,129     (67%)

    Corporate and Other
    Revenues                                       3,886      8,238     (53%)
    Operating loss before other
     income (charges)                             (2,911)    (2,777)     (5%)

    (*)  Comparative figures have been reclassified to conform with the
         current presentation.
    (xx) The Company has the option to satisfy the CDN$49,000 (US$36,299) of
         7% Convertible Notes ("Notes") with cash or Class A Subordinated
         Voting Shares ("Shares") at 95% of the current share price. As a
         result, the diluted shares outstanding include 5,751,174 (2002
         -8,576,329) Shares for the conversion of the Notes at 95% of the
         average closing price of the Shares during the period.

                            MDC CORPORATION INC.
                         CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
                                                            ($U.S. 000's)
                                                        ---------------------
                                                        ---------------------
                                                           As at      As at
                                                         September  December
                                                             30,       31,
                                                            2003     2002(*)
                                                        (Unaudited) (Audited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    ASSETS
    Current
      Cash and cash equivalents                              52,700   37,788
      Accounts receivable                                    78,021   67,457
      Inventory                                               5,464    7,005
      Prepaid expenses and sundry                             5,676    6,266
                                                        ---------------------
                                                            141,861  118,516
    Portfolio investments                                    15,834      103
    Capital and other assets                                 59,660   79,864
    Goodwill                                                100,879  185,637
                                                        ---------------------
                                                            318,234  384,120
                                                        ---------------------
                                                        ---------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
      Accounts payable and accrued liabilities               83,402   82,874
      Deferred acquisition consideration                      5,350   23,966
      Deferred revenue                                       15,011   11,104
      Current portion of long-term indebtedness              11,885    4,088
                                                        ---------------------
                                                            115,648  122,032

    Long-term indebtedness                                   79,288  155,514
                                                        ---------------------
                                                            194,936  277,546
                                                        ---------------------
    Minority interest                                         2,534    9,824
                                                        ---------------------
    Shareholders' equity
      Share capital(xx)                                     115,025   96,407
      Contributed surplus                                     1,900        -
      Other paid-in capital                                  29,146   24,179
      Cumulative translation adjustment                      (5,370)   7,858
      Retained earnings (deficit)                           (19,937) (31,694)
                                                        ---------------------
                                                            120,764   96,750
                                                        ---------------------
                                                            318,234  384,120
                                                        ---------------------
                                                        ---------------------
    -------------------------------------------------------------------------

    (*)  Comparative figures have been reclassified to conform with the
         current presentation.

    (xx) Includes $23,327 of share capital issued on the privatization of
         Maxxcom Inc.