FORM 6-K
Securities and Exchange Commission
washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the month of, October ,20 02
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MDC CORPORATION INC.
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(Translation of registrant's name into English)
45 Hazelton Avenue, Toronto, Ontario, Canada, M5R 2E3
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(Address of principal executive offices)
Indicate by check mark whether the registrant files
or will file annual reports under cover Form 20-F or Form 40F.
Form 20-F Form 40-F X
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Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b) : 82-_______________
EXHIBIT INDEX
Exhibit Page No.
1. Press Release dated October 22, 2002 4
2. Press Release dated October 30, 2002 7
Exhibit 1
FOR IMMEDIATE RELEASE
FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES
MDC CORPORATION INC.
CUSTOM DIRECT INCOME FUND
Custom Direct Income Fund Files Preliminary Prospectus for
Initial Public Offering of Units
TORONTO - October 22, 2002 - MDC Corporation Inc. of Toronto
(TSE: MDZ.A; NASDAQ: MDCA) and Custom Direct Income Fund announced today that
the Fund has filed a preliminary prospectus with the securities regulatory
authorities in each of the provinces and territories of Canada in connection
with a proposed initial public offering of units of the Fund.
The net proceeds of the offering together with proceeds from
a new credit facility to be entered into concurrently with the closing will be
used in connection with the acquisition of an approximate 80% interest in
MDC's U.S. based direct-to-customer cheque business, operated by Custom
Direct, Inc. and affiliated companies.
MDC will retain a 20% subordinated interest in the business
after the offering and has agreed not to sell its interest before December 31,
2003.
"MDC has developed Custom Direct from a modest platform and
built it into one of the pre-eminent paper payment businesses in the United
States," said Miles Nadal, MDC's President and Chief Executive Officer. "The
crystalization of value through this high quality income fund represents
another important step in MDC's strategy to increase its financial flexibility
and realize incremental value for our shareholders," said Nadal.
The Fund units will not be registered under the United
States Securities Act of 1933, as amended, and may not be offered or sold in
the United States absent registration or an applicable exemption from the
registration requirements. This press release will not constitute an offer to
sell or the solicitation of an offer to buy nor will there be any sale of the
securities in any state in which the offer, solicitation or sale would be
unlawful.
About Custom Direct
Based in Maryland and Arkansas, Custom Direct has been
selling cheques and cheque related accessories across the United States since
1992 and offers the industry's widest selection of product designs. Custom
Direct is the second largest participant in the direct-to-consumer segment of
the U.S. cheque industry with forecast sales and EBITDA for the year ending
December 31, 2002 of approximately US$103 million and US$20 million
respectively.
About MDC Corporation Inc.
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.
Maxxcom, approximately 78% owned by MDC, 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. Maxxcom shares are traded on the Toronto
Stock Exchange under the symbol MXX.
FOR MORE INFORMATION CONTACT:
MILES S. NADAL PETER M. LEWIS
Chairman and Chief Executive Officer Executive Vice-President
MDC Corporation Inc. and Chief Financial Officer
Tel: (416) 960-9000, ext. 223 MDC Corporation Inc.
Tel: (416) 960-9000, ext. 272
GRAHAM L. ROSENBERG
Executive Vice-President
MDC Corporation Inc.
Tel: (416) 960-9000, ext. 239
-30-
Exhibit 2
PRESS RELEASE FOR IMMEDIATE RELEASE
FOR: MDC Corporation Inc.
45 Hazelton Avenue
Toronto, Ontario M5R 2E3
CONTACTS: Miles S. Nadal Peter M. Lewis
Chairman & CEO Executive Vice President & CFO
(416) 960-9000 Ext.223 (416) 960-9000 Ext.272
Walter Campbell
Senior Vice-President Finance
(416) 960-9000 Ext.336
TSE Stock Symbol: MDZ.A
NASDAQ Stock Symbol: MDCA
Website: www.mdccorp.com
MDC CORPORATION INC. ANNOUNCES FINANCIAL RESULTS FOR THE THIRD QUARTER AND
NINE MONTHS ENDED SEPTEMBER 30, 2002
TORONTO, Ontario (October 30, 2002) - MDC Corporation Inc. ("MDC") of Toronto
today announced its financial results for the third quarter and nine months
ended September 30, 2002.
For the quarter ended September 30, 2002, revenue was $221.0 million, a
decrease of 16% compared to the $262.3 million achieved in the same quarter of
2001. Operating income before other charges declined to $16.4 million from the
$29.3 million generated in 2001. However, when the results of operations that
have been sold, including Davis + Henderson, are excluded from the prior-year
third quarter, revenue increased over the third quarter of 2001 by 7% from
$202.7 million to $217.8 million. Operating income calculated on the same
basis improved by 25% from $13.0 million to $16.2 million, a reflection of the
significant improvement across the Secure Transactions division in revenue
growth and improved efficiencies.
Net income for the quarter was $5.5 million, including a $1.9 million pre-tax
gain on dispositions as compared with the loss of $154.1 million as restated
for the third quarter of 2001, which contained the previously reported
restructuring provision.
Comparative third quarter and year to date results have been restated to
recognize losses of $12.2 million and $15.8 million respectively with respect
to foreign exchange gains and losses on non-
hedged long-term monetary assets and liabilities in accordance with changes to
Canadian GAAP effective January 1, 2002. These losses, due to fluctuations in
the Canadian to U.S. dollar exchange rates, were previously deferred and
amortized over the term of the related item. Effective July 1, 2002,
management designated the Company's 10.5% U.S. Senior Subordinated Notes as a
hedge against the foreign exchange exposure of the Secure Transactions U.S.
operations. The resulting net foreign exchange effect will in future be
reflected in the cumulative translation account within shareholders' equity.
Basic earnings per share for the third quarter of 2002 was $0.30 versus an
adjusted basic loss per share of $6.29 for 2001 calculated on a comparable
basis excluding goodwill charges. Fully diluted earnings per share for the
quarter was $0.21 compared to an adjusted fully diluted loss per share of
$6.29. Cashflow from operations for the third quarter of 2002 was $11.0
million, a slight decrease from the $11.6 million achieved in the prior year.
Basic and fully diluted cashflow per share was $0.63 and $0.42, respectively,
compared to $0.65 and $0.48 achieved in 2001.
"We remain committed to the completion of the planned divestiture of non-core
assets. During the quarter, we completed the sale of House of Questa, our U.K.
stamp operation and also completed the divestiture of our Australian ticketing
operations. The combined gross proceeds for these transactions amounted to
approximately $9.0 million," said Peter Lewis, Executive Vice-President and
Chief Financial Officer.
The Secure Transactions division reported sales for the third quarter of $72.9
million and operating income before other charges of $10.3 million. Excluding
the results of disposed operations, this represents a 7% increase in revenues
over third quarter 2001, and a significant improvement in operating income of
$4.2 million. On the same basis, operating margins increased from 5% last year
to 14% in Q3 2002. The significant increase in operating income and margins
was a result of improvements across the division, particularly in our U.S.
direct-to-consumer cheque operation, and our North American stamp and Canadian
card operations.
Third quarter revenues for Maxxcom were $148.1 million, an increase of $10.5
million compared to the $137.6 million recorded in the third quarter of 2001.
Operating income before other charges, at $6.1 million, declined 14% from the
$7.0 million generated in the same prior-year period. Operating expenses for
the quarter included $0.9 million in severance costs related to a further
reduction in staff as Maxxcom continued to align costs with revenues.
"We are encouraged by the revenue growth achieved by Maxxcom in the third
quarter. Increased billings from the advertising agencies, as well as an
expansion of research and consulting services, combined with increased demand
for branding and corporate identity services resulted in an 8% improvement
compared to the third quarter of last year," stated Miles S. Nadal, Chairman
and Chief Executive Officer. "Recent successes in attracting new business
combined with management's continued focus on the reduction of infrastructure
costs positions Maxxcom for improved profitability from both the traditionally
higher fourth quarter revenues and an improving marketing communications
industry."
As previously announced on October 22, Custom Direct, Inc., a wholly owned
subsidiary of MDC, through the Custom Direct Income Fund filed a preliminary
prospectus with the securities regulatory authorities in Canada in connection
with a proposed initial public offering of units of the Fund. If successful,
proceeds of the offering, together with proceeds from a new credit facility,
would be used to acquire from the Company an approximate 80% interest in
Custom Direct, Inc., MDC's U.S. direct-to-consumer cheque business. Based upon
yields of similar recent offerings,
gross proceeds to MDC would be expected to be in the range of U.S.$140 million
to U.S.$160 million (Cdn$220 million to Cdn$250 million).
"Overall we are very pleased with our results in the third quarter and are
encouraged by the momentum for the rest of the year," 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.
This press release contains forward-looking statements within the meaning of
section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such forward-looking statements involve risks and
uncertainties which may cause the actual results or objectives to be
materially different from those expressed or implied by such forward-looking
statements. Such factors include, among other things, the Company's financial
performance; changes in the competitive environment; adverse changes in the
economy; ability to maintain long-term relationships with customers; financing
requirements and other factors set forth in the Company's Form 40-F for its
fiscal year ended December 31, 2001 and subsequent SEC filings.
MDC CORPORATION INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THIRD QUARTER 2002 and 2001
(Unaudited, $CDN 000's - except per share amounts)
For the Three Months Ended September 30, 2002 2001* Change
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Sales 221,037 262,343 (16%)
Cost of sales 114,238 129,840 (12%)
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Gross profit 106,799 132,503 (19%)
Operating expenses 90,420 103,175 (12%)
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Operating income before other income (charges) 16,379 29,328 (44%)
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Other income (charges)
Net gain on asset dispositions and other charges 1,854 (154,040)
Unrealized foreign exchange loss - (12,160)
Amortization (5,533) (8,529)
Interest, net (6,088) (14,591)
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(9,767) (189,320)
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Income (loss) before income taxes, goodwill charges and
minority interest 6,612 (159,992)
Income taxes (recovery) 1,006 (48,959)
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Income (loss) before goodwill charges and minority interest 5,606 (111,033)
Goodwill charges, net of income tax recovery - 48,215
Minority interest (recovery) 108 (5,165)
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Net income (loss) for the period 5,498 (154,083)
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Cash Flow from operations 11,013 11,560
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Earnings Per Share
Net income (loss)
o Basic 0.30 (9.14)
o Fully Diluted 0.21 (9.14)
Cash Flow Per Share
o Basic 0.63 0.65 (3%)
o Fully Diluted 0.42 0.48 (13%)
Weighted average shares outstanding during the period
o Basic 16,915,341 16,909,743 0%
o Fully Diluted** 26,558,351 24,315,213 9%
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SEGMENTED INFORMATION - BY OPERATING DIVISION
For the Three Months Ended September 30, 2002 2001 Change
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Secure Transactions
Sales 72,923 124,737 (42%)
Operating Income 10,298 22,292 (54%)
Maxxcom
Sales 148,114 137,606 8%
Operating Income 6,081 7,036 (14%)
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* 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 Company has the option to satisfy the $50,000 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 fully diluted
shares outstanding include 9,633,911 (2001 - 7,072,136) 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
2002 and 2001
(Unaudited, $CDN 000's - except per share amounts)
For the Nine Months Ended September 30, 2002 2001* Change
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Sales 713,314 827,048 (14%)
Cost of sales 370,196 409,920 (10%)
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Gross profit 343,118 417,128 (18%)
Operating expenses 282,936 329,299 (14%)
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Operating income before other income (charges) 60,182 87,829 (31%)
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Other income (charges)
Net gain on asset dispositions and other charges 158,905 (154,040)
Unrealized foreign exchange gain (loss) 6,702 (15,800)
Amortization (19,219) (27,033)
Interest, net (22,170) (39,718)
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124,218 (236,591)
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Income (loss) before income taxes, goodwill charges and
minority interest 184,400 (148,762)
Income taxes (recovery) 34,445 (47,044)
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Income (loss) before goodwill charges and minority interest 149,955 (101,718)
Goodwill charges, net of income tax recovery - 57,573
Minority interest (recovery) 3,978 (5,344)
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Income (loss) from continuing operations 145,977 (153,947)
Loss from discontinued operations - (40,000)
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Net income (loss) for the period 145,977 (193,947)
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Cash Flow from operations 28,220 43,752
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Earnings Per Share
Income (loss) from continuing operations
o Basic 8.56 (9.22)
o Fully Diluted 5.74 (9.22)
Reported
o Basic 8.56 (11.59)
o Fully Diluted 5.74 (11.59)
Cash Flow Per Share
o Basic 1.60 2.49 (36%)
o Fully Diluted 1.12 1.99 (44%)
Weighted average shares outstanding during the period
o Basic 16,915,341 16,876,055 0%
o Fully Diluted 25,501,775 22,148,656 15%
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SEGMENTED INFORMATION - BY OPERATING DIVISION
For the Nine Months Ended September 30, 2002 2001 Change
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Secure Transactions
Sales 278,537 387,892 (28%)
Operating Income 43,227 66,864 (35%)
Maxxcom
Sales 434,777 439,156 (1%)
Operating Income 16,955 20,965 (19%)
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* 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 Company has the option to satisfy the $50,000 of 7% Convertible Notes ("Notes") with cash or Class A
Subordinated Voting Shares ("Shares") at 95% of the current share price. As a result, the fully diluted
shares outstanding include 8,576,329 (2001 - 4,812,320) Shares for the conversion of the Notes at 95% of
the average closing price of the Shares during the period.
MDC CORPORATION INC.
CONSOLIDATED BALANCE SHEETS
($CDN 000's)
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As at As at
September 30, December 31,
2002 2001*
(Unaudited) (Audited)
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ASSETS
Current
Cash and cash equivalents 48,937 59,301
Accounts receivable 119,745 142,769
Inventory 10,557 23,282
Prepaid expenses and sundry 12,586 11,969
Future income taxes - 28,000
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191,825 265,321
Capital and other assets 130,504 166,439
Goodwill 259,521 462,746
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581,850 894,506
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 145,320 204,994
Deferred revenue 20,193 23,771
Current portion of long-term indebtedness 4,984 12,049
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170,497 240,814
Long-term indebtedness 246,710 527,468
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417,207 768,282
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Minority interest 14,650 15,253
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Shareholders' equity
Share capital 144,542 142,599
Other paid-in capital 37,521 51,943
Cumulative translation adjustment 20,078 13,892
Retained earnings (deficit) (52,148) (97,463)
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149,993 110,971
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581,850 894,506
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* 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.
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
MDC CORPORATION INC.
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(Registrant)
Date: November 6, 2002 By: /s/ Walter Campbell
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(Signature)
Walter Campbell
Senior Vice President Finance
Print the name and title of the signing officer under their signature