T O O U R S H A R E H O L D E R S We ended 2002 w i th $125 . 2 m illi on  i n  c a s h and marketab l e  s e c ur i t i e s,  a ref l e c t i on  of our  c ompet i t i ve  c o s t  s tru c ture and  s trong market po s i t i on . A l though prof i ta b ili ty ,  def i ned a s  net  i n c ome  i n a cc ordan c e w i t h GAA P , i s  our u l t i mate goa l , EB I TDA ,  def i ned a s  earn i ng s  before  i ntere s t , taxe s,  depre c i at i o n ,  amort i zat i on and other non- c a s h and one -t i me  i tem s, i s  a metr i c  we u s e to mea s ure o ur progre ss  toward that goa l . We a l s o f i n i s hed the year w i th 270 EdgeSu i te c u s tomer s  under re c urr i ng  c ontra c t .  The s e c ompan i e s i n c l uded  s u c h marquee g l oba l brand s  a s  ad i da s -Sa l omon AG ,  Amer i c a On li ne , I n c .,  Amer i c an Suzuk i  Motor Corporat i on , The Bombay Company , I n c .,  Canon  J apan , Computer S c i en c e s  Corporat i on , F edEx Corporat i on ,  L . L .  Bean , I n c .,  SAMSUNG , Sony Mu s i c  Enterta i nment  J apan ,  Stap l e s, I n c ., Toyota Motor Sa l e s,  U . S . A ., I n c .,  Ver i S i gn , I n c ., VER I TAS Software Corporat i on ,  and Wa s h i ngton  P o s t . New s week  I ntera c t i ve . Mu c h of th i s s u cc e ss i s  the re s u l t of our i mproved fo c u s  on  s pe c i f i c i ndu s try and  c u s tomer opportun i t i e s  and our more  exper i en c ed ,  better-tra i ned enterpr i s e-fo c u s ed s a l e s  for c e .  We a l s o benef i ted from more  i n-depth bu s i ne ss  re l at i on s h i p s  w i th key  bu s i ne ss  partner s, s u c h a s I BM and EDS , and better a li gnment of our te c hno l ogy roadmap s  w i th market requ i rement s. Our def i n i t i on of  E B I TDA  s tart s  w i th GAA P  net l o ss  and ba c k s  ou t depre c i at i on ,  amort i zat i on , equ i ty-re l ated  c o m pen s at i on  c harge s,  and re s tru c tur i ng  c har g e s  for  s everan c e and rea l e s tate .  We take o ut depre c i at i on and  amort i zat i on be c a u s e tho s e are e ss ent i a ll y f i xed  c o s t s  re s u l t i n g from  c a s h outf l ow s i n  pr i or per i od s.  Equ i ty-re l ated  c ompen s at i on  i s removed be c au s e i t  i s  a non- c a s h  c harge . Re s tru c tur i ng  c ha r ge s  are a l s o removed be c au s e we  c on s i der them  to be expen s e s  that are  one-t i me  i n natur e and not ant i c i pated to  be part of our nor ma l  operat i on s. We be li eve a c h i ev i ng po s i t i ve EB I TDA  i s  a good mea s ure of the  c o mpany’ s  forward progre ss toward prof i tab ili t y be c au s e other than  i ntere s t , wh i c h rema i n s  f l a t ,  the  i tem s  that are ex c l uded from GAA P net  l o ss  to arr i ve at EB I TDA , trended down  i n 2002 .  O u r depre c i at i on ,  amort i zat i on and equ i ty-re l ate d c ompen s at i on have de c rea s ed quarter  over quarter ,  and ,  ab s ent unant i c i pated  c ap i ta l  expend i ture s  or  c hange s to our equ i ty  c om pen s at i on p l an s,  we be li eve that they w ill c on t i nue to de c li ne  i n 2003 , c l o s i ng the gap to  prof i tab ili ty .  Wh il e we be li eve th i s  mea s u re  i s  an  i nd i c ator of our progre ss  toward p rof i tab ili ty ,  you  s hou l d not c on s i der  i t a more i mportant or better  i nd i c at i on of our f i nan c i a l  re s u l t s  than other GAA P  f i nan c i a l  m ea s ure s, s u c h a s  our net  l o ss of $52 m illi on for the fourth quarter . A s  a re s u l t ,  we entered  i nto 2003 ready  to manage through a d i ff i c u l t e c onom i c per i od w i th a  s tronger bu s i ne ss  p l an fo c u s ed on attra c t i ng h i gh-qua li ty ,  new  c u s tomer s to EdgeSu i te and up- s e lli ng our ex i s t i ng  c u s tomer s.  We are opt i m i s t i c  that we w ill c ont i nue to  i mprove on the performan c e we demon s trated  i n the fourth quarter of 2002 . The  s u cc e ss  of  c ompany-w i de effort s  to redu c e c o s t s  enab l ed u s  to make  s i gn i f i c ant progre ss i n 2002 toward our prof i tab ili ty goa l .  We be c ame  s li ght l y EB I TDA po s i t i ve  i n the fourth quarter ,  one quarter ear li er than ant i c i pated . I n 2002 , I  be li eve we met or  s urpa ss ed ea c h  of the s e goa l s. I n 2002 ,  we progre ss ed on the path to our  goa l  of prof i tab ili ty by report i ng two quarter s of net po s i t i ve month l y re c urr i ng revenue  i n the  s e c ond ha l f of the year ,  a c h i ev i ng  po s i t i ve EB I TDA  i n the fourth quarter ,  and demon s trat i ng an energy that we be li eve  i s s ett i ng u s  up for  s u cc e ss.  We are p l ea s ed w i th our operat i ng performan c e  i n 2002 de s p i te  the  c ha ll eng i ng ma c roe c onom i c c ond i t i on s. We were part i c u l ar l y en c ouraged by the  c on s i derab l e  i mprovement  i n the qua li ty of  our  c u s tomer ba s e and revenue s.  At the  s ame t i me ,  we deve l oped  i mportant new  s erv i c e s and feature s i n re s pon s e to demand from  our enterpr i s e and pub li c s e c tor  c u s tomer s. At the beg i nn i ng of 2002 ,  we  s et  s i gn i f i c ant goa l s, i n c l ud i ng: • Redu c i ng our EB I TDA  l o ss  and net  l o ss ea c h  c on s e c ut i ve quarter;  • I n c rea s i ng the adopt i on of EdgeSu i te ,  our  f l ag s h i p offer i ng ,  by  i ndu s try- l ead i ng  c ompan i e s ;  • Grow i ng our pub li c s e c tor bu s i ne ss ; and  • I mprov i ng our  c o s t  s tru c ture to better  mat c h our pro s pe c t s i n today’ s env i ronment . J UNE M AY A PR M A R F EB J AN 02 A K A M A I H I G H L I G H T S Akama i  andM i c ro s oft forgea  s trateg i c  a lli an c e todeve l opanewedge s erv i c ebu il tonthe M i c ro s oft  . NETp l atform . The  j o i nt  s o l ut i onw ill s peedde li veryofWeb s erv i c e s  andapp li c at i on s forenterpr i s e s  that dep l oyapp li c at i on s  on theedgeofthe  I nternet . Akama ii ss e l e c tedbyToyota MotorSa l e s, U . S . A ., I n c .  to enhan c emarket i ng i n i t i at i ve s a c ro ss i t s  Toyota . c omand Lexu s. c om  s i te s. Akama i  EdgeSu i te i s named P rodu c toftheYearby NetworkMagaz i ne — forthe s e c ond  c on s e c ut i veyear . Akama i  and  I BMunve il EdgeSu i tefor  J avaba s ed  on  I BMWebSphere , anew edge  c omput i ng  s o l ut i on . Akama i  EdgeSu i te  i s i mp l ementedbyMTV Network s  to  i n c rea s e  performan c ea c ro ss s omeof  i t s  mo s t  h i gh l ytraff i c kedWeb propert i e s, i n c l ud i ng mtv . c om ,  n i c k . c om , and  s on i c net . c om . Akama i  and  I BM  c omb i netopowera  g l oba l  e-bu s i ne ss i nfra s tru c tureforCog no s. The  j o i nt  s o l ut i onen a b l e s the  s e c urewor l dw i d e de li veryofCogno s s oftwaredown l oad s Akama i  S i teW i s e  s erv i c e  i s c ho s enby  morethan50  c ompan i e s, i n c l ud i ngLog i te c h , NetworkA ss o c i ate s, and  P eapod . TheAkama i P l atform , v i a App l e . c om , de li ver s  the Ma c Wor l dSan F ran c i s c o keynoteaddre ss — s ett i ng new  I nternetre c ord s  for  a  s i ng l e , li ve  c orporate s tream i ngevent . Akama ii s  namedCDN i ndu s try’ s  market  s hare l eaderbyNet s Edge Re s ear c hGroup .