CINAR Corporation Reports on First Six Months Fiscal 2001 Activities in a Letter to Shareholders.

Business Editors

MONTREAL--(BUSINESS WIRE)--Aug. 9, 2001

CINAR Corporation has released a letter to shareholders (see attached document) providing its financial information for the six-month period ended May 31, 2001.

The letter also offers an update of the company's continuing operations in its Entertainment and Education Divisions.

CINAR will continue to issue its semi-monthly status report by way of news releases as it has since April 20, 2000.

CINAR Corporation is an integrated entertainment and education company involved in the development, production, post-production and worldwide distribution of non-violent, quality programming and educational products for children and families. CINAR's web site is www.cinar.com.

This release may include information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 (U.S.). Forward-looking statements are identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. Actual results or conditions may differ from those anticipated by these and other forward-looking statements. Such forward-looking statements are subject to a number of known or unknown risks and uncertainties.

August 9, 2001
Dear Shareholder,

      This report provides you with CINAR's financial information for
the six-month period ended May 31, 2001 and, at the same time, brings
you up to date on CINAR's ongoing operations.
      As it was the case for the November 30, 2000 financial information
released this past April, the financial information in this Report is
unaudited because current senior management cannot presently provide
the required assurances with respect to financial periods prior to its
appointment. As previously indicated, senior management may be in a
position to provide these assurances after completion of the 2001
financial year.

HIGHLIGHTS OF THE FINANCIAL INFORMATION *

      Readers are cautioned that the financial information provided by
the Company including that summarized below, may not fairly and
accurately present the financial position of the Company or the
results of its operations and cash flows for the six-month period
ended May 31, 2001, in accordance with Generally Accepted Accounting
Principles (GAAP). The Company believes that the financial information
provided herein has been prepared on the basis of the best information
presently available to the Company. However, neither the Company nor
any of its directors, officers, employees, agents or advisors makes
any representations regarding the accuracy or completeness of such
financial information.
      Consolidated revenues for the six-month period ended May 31, 2001
were $66.1 million, an increase of 5% over the $62.8 million of
revenues earned by the Company for the six-month period ended May 31,
2000. Entertainment revenues decreased from $25.3 million in 2000 to
$21.6 million in 2001, largely due to a drop in the current level of
production. Education revenues increased from $37.5 million to $44.6
million, a 19% increase reflecting the continued growth of the

Education Division.
      Gross margin increased from $27 million to $31.4 million.
      The Entertainment gross margin was 33% compared to 26% for the
corresponding six-month period of 2000. The increase is attributable
to write-offs of distribution costs in 2000. Gross margin in our
Education Division continues to be strong at 55% of Education revenue.
      Selling, general and administrative expenses increased from $22.4
million to $31.8 million largely due to foreign taxes paid in prior
periods, which the Company will not likely be able to recuperate, as
well as an increase in employment expenses in both the Entertainment
and Education divisions. In addition, the increase is attributable to
the acquisition of Twin Sisters in February of 2000.
      Unusual items in the amount of $2 million are made up of
professional fees and the interest related to the recent Telefilm
agreement which together amount to $4 million less $2 million of funds
recovered from Globe-X, which had been provided for in prior periods.
      For the six-month period, the Company realized a loss before
interest, taxes, depreciation and amortization of $2.3 million
compared to a loss of $45.9 million for the corresponding six-month
period of 2000. The net loss for the first six months of 2001 was $4.7
million compared to a net loss of $42.4 million for the same period
last year.
      The Company's share of earnings in TeleTOON, increased from
$900,000 in 2000 to $1.2 million this year.
      The Company used $3.8 million of cash in operations compared to
$61.6 million a year ago.
      The Company repaid $23 million of its term debt, and the debt
repayment and loss from operations were financed by a reduction in
marketable securities.

HIGHLIGHTS OF OPERATING ACTIVITIES

CINAR ENTERTAINMENT

      Production is well under way on new episodes of three of CINAR's
most popular series, CAILLOU(R), ARTHUR(R), and MONA THE VAMPIRE.
      More adventures from 4-year-old CAILLOU(R) ! TeleTOON, Canada's
Animation Station, has ordered 16 new half-hour episodes of the
acclaimed preschool series, which consistently rates among its
top-rated children's shows. The new episodes will begin airing in
early 2002. CAILLOU(R) is also enjoying phenomenal success in the U.S.
where it is one of the most watched shows among children ages 2 to 5.
The series is produced by CINAR, in association with PBS.
      It's an encore for ARTHUR(R), the aardvark. CINAR and WGBH Boston
are producing 10 new episodes of the four-time Emmy Award winning
ARTHUR(R), bringing the total number of episodes to 95. The new
episodes will launch ARTHUR(R)'s 6th season on PBS KIDS and one of the
episodes will even feature Olympic Medal-winning skater Michelle Kwan.
ARTHUR(R) is still a favorite among 2-11 year-olds in the U.S. and
ranks among the top ten shows on the CBC in Canada, where it also airs
on the SRC and TVOntario.
      The series, produced for PBS by CINAR and WGBH Boston, is based on
the award-winning book series by Marc Brown.
      Mona gets into all kinds of hair-raising trouble in the 13 new
half-hour episodes of the popular animated program MONA THE VAMPIRE.
The series, which has been sold to major broadcasters in 93 countries,
including Nickelodeon and the BBC in the UK, and ZDF in Germany, will
now comprise a total of 52 episodes. In Canada, MONA THE VAMPIRE is
one of the leading shows on YTV, a major kids' English-language
network in the country. The series is co-produced with Alphanim of
France and Animation Services of Honk Kong, in association with
Canada's YTV, and France's France 3.
      In the first six months of the year 2001, we produced 52
half-hours of programming, increasing the size of our library to 2,166
half-hours in total, and representing 159 titles.
      In 2001, we plan to complete the production of 24 half-hours which
were started last year, and to date in fiscal 2001 we have begun
production of 52 new half hours for a total production commitment to
date of 76 half-hours.
      In addition to the Peabody Award and the Emmy Awards received for
ARTHUR(R), CINAR has, in the last six months, garnered a total of six
prestigious Parents' Choice Awards, including two Parents' Choice Gold
Awards, for ARTHUR(R), ZOBOOMAFOO(TM) and CAILLOU(R).

CINAR LICENSING

      CINAR Licensing once again participated in the Licensing
International 2001 trade show in New York City this past June. CINAR
introduced U.S. retailers to the CAILLOU(R) product line that will be
available for the first time in stores for the 2001 Back-to-School
Season. CINAR also presented an expanded ZOBOOMAFOO(TM) product line,
with a series of new products including the first-ever ZOBOOMAFOO(TM)
interactive games for PlayStation(R) and Game Boy Color(R) from
Brighter Child Interactive and Encore Software.

CAILLOU(R) to debut at FAO Schwarz

      FAO Schwarz and Irwin Toy are teaming up to bring American
preschoolers a complete array of toys and games based on CINAR's
popular series CAILLOU(R), produced in association with PBS. During an
exclusive August promotion, FAO Schwarz and Irwin Toy will launch the
CAILLOU(R) line in the retail market with in-store events, giveaways
for children, a national Sweepstake, radio promotions and tie-ins with
PBS stations in key markets. In addition, top market FAO Schwarz
stores will feature other special events. CAILLOU(R), is a hit with
children aged 2-5 and recently became the 4th most-watched show among
preschoolers in the United States. The show debuted last September as
part of the Ready-To-Learn Service of PBS KIDS, which broadcasts the
show daily to 96% of U.S. homes.

CINAR EDUCATION

      As noted before, CINAR Education continues to be successful,
posting gains in both revenue and EBITDA for the six-month period
ending May 31, 2001. The group should be on target to meet or exceed
projections for the fiscal year ending November 30, 2001.
      Carson-Dellosa introduced 250 new products in the period, which
has contributed to its most successful back-to-school selling period
in its 26-year history. The company continues to develop new and
innovative product for the classroom, which solidifies its position as
a leading supplier of supplemental education products.
      Twin Sisters introduced three new product lines, including six
preschool learning albums, CD greeting cards, and an interactive home
schooling resource center developed in partnership with
Carson-Dellosa. Sales of these new products will begin to show up in
the fourth quarter. In addition, Twin Sisters was the recipient of the
coveted National Parenting Center Seal of Approval for their
Multiplication Rap/Hip- Hop and Addition albums.
      High Reach Learning continued to show excellent growth and margins
for the period. During the period, they completed a study done by
Sinclair Consulting that assesses the effectiveness of their
curriculum programs in Early Childhood settings. We expect that the
positive results of this study should enhance the demand for their
programs. Results of the study may be found at www.HighReach.com for
those who would like more information.

TELEFILM CANADA

      Another important issue to report on is the agreement with
Telefilm Canada signed on June 22, 2001. The agreement between
Telefilm and CINAR allows the Company to move forward with potential
co-producers on future co-production projects that fall under
international co-production treaties. This agreement is important to
CINAR as a large portion of our productions to-date, have been
official co-productions which require Telefilm Canada certification.

INVESTMENT BANKING

      Merrill Lynch & Co., our financial advisor, is still in the
process of evaluating strategic alternatives for the Company. The
process is moving forward and we will keep you posted as soon as we
have something significant to disclose.

INVESTMENTS

      The funds invested with Globe-X Management continue to flow back
to CINAR, still at a slower pace than contemplated in the agreement
signed in October 2000. Since our letter of April 6, 2001, we have
received U.S.$2.1 million, leaving a balance owing of U.S.$43.1
million (excluding interest and the amount of U.S.$12 million, on
which we had earlier reserved our rights to claim).

      In closing, I once again wish to thank and express my very sincere
appreciation to all CINAR employees for their lasting commitment to
the Company in the past year and a half.
      I also want to express my appreciation to you, our shareholders,
for your patience and understanding. I know how difficult this year
and a half has been for everyone but I can assure you that enormous
efforts have been made to move the situation forward.

Best regards,
Barrie Usher
President and Chief Executive Officer

This letter may include information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 (U.S.). Forward-looking statements are identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. Actual results or conditions may differ from those anticipated by these and other forward-looking statements. Such forward-looking statements are subject to a number of known or unknown risks and uncertainties.