08/05/2004

QSC records strong growth and positive free cash flow

• Preliminary results for the second quarter of 2004
• Revenues advance by 26 percent
• Sustained positive EBITDA
• Free cash flow break even achieved
• Liquid assets grow to EUR 39.1 million
• QSC expressly confirms full year forecast

Cologne, August 5, 2004. According to preliminary results, Cologne-based QSC AG grew its revenues by 26 percent to EUR 35.6 million in the second quarter of 2004, as opposed to EUR 28.3 million for the same quarter the year before. For the first of half of 2004, QSC posted total revenue growth of 22 percent to EUR 67.8 million (1st half of 2003: EUR 55.8 million).
During the past quarter, QSC again succeeded in further increasing its earnings before interest, taxes, depreciation and amortization ("EBITDA"). According to preliminary results, the company recorded an EBITDA of EUR 0.3 million in the second quarter of 2004. During the second quarter of 2003, EBITDA had been negative at EUR -7.2 million. EBITDA for the first half of 2004 was EUR 0.4 million, as opposed to EUR -17.2 million for the first six months of 2003.
In the second quarter of 2004, QSC generated for the first time a free cash flow in the amount of EUR 0.3 million, one quarter earlier than had been anticipated at the outset of the year. The company, which is virtually debt-free, increased its net liquid assets to EUR 39.1 million as of June 30, 2004.
Given this highly positive development, QSC is reiterating its full year forecast for 2004 of revenue growth of at least 20 percent to more than EUR 138 million along with a sustained positive EBITDA. In addition, the company also anticipates generating a sustained free cash flow during the coming quarters.

Queries to:
QSC AG
Arne Thull
Investor Relations
Fon: +49(0)221-6698-112
Fax: +49(0)221-6698-109
Email: invest@qsc.de

Notes :
The 6 months-report of QSC AG is available starting the 26th of August at www.qsc.de. This corporate news 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 managements 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.