11/12/2002, 11:48 Uhr CESTAd-hoc Release

QSC sharply reduces cash burn for the sixth time in a row. Confirms forecast for 2002

Cologne, November 12, 2002. Based on preliminary results, QSC AG, a professional DSL service provider in Germany, grew its 9-months revenues by 66 percent to EUR 33.6 million, compared to EUR 20.2 million for the comparable period in 2001. During the third quarter 2002, which is traditionally weak due to the slow summer months, the company generated preliminary revenues of EUR 12.1 million (Q3 2001: EUR 7.8 million), thus succeeded in posting a moderate rise over the strong second quarter of 2002 (Q2 2002: EUR 12.0 million). Business with resellers, essentially consisting of Internet service providers to whom QSC supplies DSL lines, declined moderately as a result of the weak economy.
In the third quarter 2002, QSC's preliminary EBITDA loss totalled EUR -14.7 million, as opposed to EUR -18.9 million for the comparable prior-year period. This reduction by more than 20 percent was primarily attributable to the company's rising percentage of higher-margin end-customer revenues and its project business. During the first nine months of 2002 QSC's preliminary EBITDA loss was improved by nearly 30 percent to EUR -45.9 million, compared to EUR -64.6 million in 2001.
There was a significant improvement in net cash outflow in the third quarter of 2002, with the company reducing its cash burn for the sixth time in a row. According to the preliminary results, the net cash outflow reached EUR -15.1 million for the third quarter, as opposed to EUR -17.1 million for the second quarter of 2002 (Q3 2001: EUR -35.5 million). For the coming quarters, too, QSC anticipates that its net cash outflow will decline by an average of around EUR 1.5 million per quarter. Liquid assets on September 30, 2002, totaled approximately EUR 102.6 million after EUR 153.8 million on December 31, 2001.
In spite of the weak economy, QSC is confirming its February 2002 forecast that it would reduce its EBITDA loss from EUR -85.4 million in 2001 to EUR -60 to -70 million in 2002. As of today, QSC anticipates to generate annual revenues around the lower end of its projected revenue range of EUR 46 to 54 million. The company plans to reach breakeven on an EBITDA basis in the course of 2003 and on a cash flow basis in the course of 2004.

Notes :
For more information: IR-Partner of QSC AG, Schumachers AG, Stefan Schwartz
Fon: 089/4892720, Fax : 089/48927212 Mail : qsc@schumachers.net

This Adhoc announcement contains forward-looking statements pursuant to the US "Private Securities Litigation Act" of 1995). These forward-looking statements are based on current expectations and forecasts of future events by the management of QSC AG. Due to risks or mistaken assumptions, actual results may deviate substantially from those made in such forward-looking statements. The assumptions that may involve material deviations due to unforeseeable developments include, but are not limited to, the demand for our products and services, the competitive situation, the development, dissemination and technical performance of DSL technology and its prices, the development and dissemination of alternative broadband technologies and their respective prices, changes in respect of telecommunications regulation, legislation and adjudication, prices and timely availability of essential third-party services and products, the timely development of additional marketable value-added services, the ability to maintain and enlarge upon marketing and distribution agreements and to conclude new marketing and distribution agreements, the ability to obtain additional financing in the event that management's planning targets are not attained, the punctual and full payment of outstanding debts by sales partners and resellers of QSC AG, and the availability of sufficient skilled personnel.