CINAR Provides Shareholders With Consolidated Financial Information

Business Wire, Oct 18, 2002

b) On May 3, 2002, the Company announced that it had entered into two separate settlement agreements with certain executive officers of its subsidiaries, Carson-Dellosa Publishing Co. and HighReach Learning Inc. The settlement agreement provides that CINAR will pay seven plaintiffs an agreggate amount of US$ 19,850,000 (CDN$ 31,800,000) of which US$ 11,000,000 (CDN$ 18,277,000) was paid on May 2, 2002. The balance is to be paid in installments over the next two years, at interest rates ranging from 6.0% to 6.5%. The plaintiffs surrendered a total of 1,014,570 shares of the share capital of CINAR. The share redemption by the Company has been recorded as a decrease to share capital in the amount of CDN $14,055,000, and an increase in the deficit of CDN $17,745,000.

5. DISCONTINUED OPERATIONS

On May 7, 2002, the Company divested of its interest in CINAR Multimedia for a nominal consideration.

The Company, in its financial statements for the year ended November 30, 2001, had recorded a provision for all costs related to terminating its operations. This provision is no longer required and, as such, an amount of CDN $4,166,000 has been recorded as income from discontinued operations in the financial statements for the nine month period ending August 31, 2002.