New Edge EBITDA Gets Positive

VANCOUVER, Wash. -- New Edge Networks, a national business broadband services provider, today announced it achieved for the first time positive earnings before interest, taxes, depreciation, and amortization, or EBITDA, a key financial target for start-up companies. The company expects to begin producing surplus cash flow in July 2003.

Privately-owned New Edge Networks achieved its first full month of positive EBITDA on $7.3 million in revenue in May 2003, one month ahead of original projection for its principal investors, which include Goldman, Sachs & Co. as well as venture firms Accel Partners, Crosspoint Venture Partners, and Greylock. New Edge Networks was formed in June 1999.

"We stayed focused throughout telecom's nuclear winter, effectively managed our expenses, and successfully positioned ourselves to capitalize on growing demand for better business broadband services," said Dan Moffat, President and CEO of New Edge Networks. "With a growing base of recurring revenue, an operating network that's built and paid for, plus low debt structure, New Edge Networks is well on its way to profitability.

"We are proud of our accomplishment and grateful for the support from our investors through a difficult time," Moffat said.

After achieving its EBITDA goal, New Edge Networks next expects to begin producing surplus cash, or free cash flow, starting in July 2003. Since a significant portion of New Edge Networks' revenue is monthly recurring, the company can easily sustain its ability to continue growing free cash flow.

Free cash flow means a company is self-funded with money left over after it pays its employees and bills, invests capital in new equipment, and fulfills debt obligations. It is a closely watched indicator of a company's financial strength.

New Edge Networks currently has about $38.6 million in bank and vendor debt with interest and principal payments deferred until June 2004 and September 2006, respectively. Total invested capital in New Edge Networks is almost $400 million.

New Edge Networks Inc.