EasyLink Reports Fourth Quarter 2004 Net Income

EasyLink Services Corporation, a provider of services that power the exchange of information between enterprises, their trading communities and their customers, today reported financial results for the fourth quarter and year ended December 31, 2004.

The Company reports that it achieved its sixth consecutive quarter of positive operating results exclusive of debt restructuring and settlement gains. Net income was $1.0 million or $.02 per share as compared to net income of $.8 million or $.02 per share from continuing operations for the fourth quarter of 2003.

The Company further reported that it achieved Earnings before interest, taxes, depreciation and amortization ("EBITDA") of $2.9 million in the fourth quarter of 2004 as compared to EBITDA during the fourth quarter of 2003 of $3.3 million. EBITDA is not a financial measure within generally accepted accounting principles (GAAP).

The Company increased its cash and cash equivalents balance during the fourth quarter by $1.2 million to $12.3 million as compared to $11.1 million as of September 30, 2004. In comparison to December 31, 2003, cash and cash equivalents increased by $5.7 million from $6.6 million.

Thomas Murawski, President and Chief Executive Officer of EasyLink, said, " The fourth quarter of 2004 was our sixth consecutive profitable quarter, demonstrating that we have the ability to finance the transformation of our business substantially from within. In 2005 we are going to temporarily shift our financial management strategy away from near-term profitability in favor of aggressive investment to accelerate our transition to a growth company.

Revenues for the year ended December 31, 2004 were $91.8 million as compared to $101.3 million in the year ended December 31, 2003. The Company reported net income for the year ended December 31, 2004 of $7.6 million, or $.17 per share, compared to income from continuing operations of $51.9 million, or $1.47 per share, for the year ended December 31, 2003.

In 2004 the debt settlement gain relates to the early payout of all of the Company's existing secured debt on December 16, 2004 with part of the proceeds of a new financing of $12 million of the $15 million credit facility obtained from Wells Fargo.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the full year 2004 amounted to $17.7 million as compared to $63.6 million for the full year 2003. The EBITDA results for the year ended December 31, 2004 and 2003 include $1.0 million and $54.1 million, respectively, in gains on debt restructuring and settlements.