ST. LOUIS, October 27, 2010 /PRNewswire/ -- Savvis, Inc. , a global leader in cloud infrastructure and hosted IT solutions for enterprises, today reported its third quarter 2010 financial results, with revenue of US$241.9 million, compared to US$213.2 million in the third quarter of 2009. Adjusted EBITDA* was US$59.7 million, compared to US$51.2 million of adjusted EBITDA in the third quarter of 2009.

Savvis continues to deliver on its stated goal of exiting the year at a quarterly sequential double-digit run rate for both revenue and adjusted EBITDA growth, said Jim Ousley, chairman and chief executive officer for Savvis. The company-wide changes and improvements we have made over the past year, specifically in sales and marketing, are now flowing through to our results. Based on the strength we continue to see in bookings, installs and renewals, we expect to continue on this path throughout 2011.

Income from continuing operations for the third quarter of 2010 was US$3.5 million, compared to US$4.5 million in the third quarter of 2009. Savvis reported a net loss of (US$26.2) million, or (US$0.47) per share, in the third quarter of 2010, and this amount includes approximately US$11.8 million in costs related to the company's debt refinancing, which occurred during the quarter. Savvis had a net loss of (US$9.9) million, or (US$0.18) per share, in the third quarter of 2009.

Third Quarter Financial Results US$ in millions Three months ended 9/30/10 6/30/10 9/30/09 Hosting $176.7 $158.2 $148.1 Network $65.2 $63.6 $65.1 ----- ----- ----- Total revenue $241.9 $221.8 $213.2 ------ ------ ------ Cost of revenue(1) $131.6 $120.2 $117.9 SGA expenses(1) (2) $56.5 $56.9 $52.6 Non-cash, equity-based compensation(1) $5.4 $6.5 $8.5 Income from continuing operations $3.5 $2.2 $4.5 Net income (loss) from continuing operations ($26.2) ($13.3) ($9.9) Income (loss) from discontinued operations, net of income tax(3) ($0.0) ($0.1) -- Net income (loss) ($26.2) ($13.4) ($9.9) Adjusted EBITDA $59.7 $54.7 $51.2 Adjusted EBITDA margin 25% 25% 24% (1) Both cost of revenue and SGA expenses exclude depreciation, amortization and accretion and include non-cash, equity-based compensation. Total non-cash, equity-based compensation attributed to cost of revenue for the three months ended Sept. 30, 2010, June 30, 2010, and Sept. 30, 2009, was $1.5 million, $1.5 million and $1.5 million and to SGA expenses was $3.9 million, $5.1 million and $7.0 million, respectively. (2) SGA expenses include acquisition and integration costs of $0.5 million and $3.5 million for the three months ended Sept. 30, 2010, and June 30, 2010, respectively. (3) Includes losses from the application services business acquired from Fusepoint, which is classified as an asset held for sale at Sept. 30, 2010. Total losses attributed to net income for the three months ended Sept. 30, 2010, and June 30, 2010, were ($9,000) and ($88,000), respectively.

Third Quarter Overview

Total Savvis revenue for the third quarter was US$241.9 million, up 9% compared to second quarter 2010 revenue of US$221.8 million. Revenue improved in the third quarter, as the company continued to exceed its internal bookings, installs and renewals targets for 2010.

Adjusted EBITDA was US$59.7 million for the third quarter of 2010, up 9% compared to US$54.7 million of adjusted EBITDA in the second quarter of 2010. Growth in adjusted EBITDA continues to track the company's quarterly sequential improvements in revenue.

Both revenue and adjusted EBITDA included a full-quarter of contribution from the Fusepoint acquisition, which closed on June 16, 2010.

Hosting Percent of US$ in millions Revenue Three months ended 9/30/10 6/30/10 9/30/09 Managed Services 46% $81.5 $73.9 $62.8 Percentage change 10% 30% Colocation 54% $95.2 $84.3 $85.3 Percentage change 13% 12% Total Hosting revenue $176.7 $158.2 $148.1 Percentage change 12% 19%

In the third quarter, Managed Services revenue grew as enterprises in the company's targeted verticals looked to outsourcing as a way to improve the benefit they receive from technology solutions while reducing their overall spend and time to implementation. Managed services revenue includes Savvis Symphony Cloud solutions, such as Open, Dedicated and Virtual Private Data Center.

Colocation revenue was up both quarterly and annually in the third quarter, due to the return of enterprise client demand, lower churn and an improved fill rate. The trend of combining colocation with the company's managed services and network to create a complete solution, continued during the quarter.

Network Percent of US$ in millions Revenue Three months ended 9/30/10 6/30/10 9/30/09 Core(1) 56% $36.4 $33.5 $28.7 Percentage change 9% 27% Sustaining(2) 44% $28.8 $30.1 $36.4 Percentage change (4%) (21%) Total Network revenue $65.2 $63.6 $65.1 Percentage change 3% -- (1) Core network includes revenue from Thomson Reuters and from other financial vertical and data center clients, who also purchase bundled network and hosting services. (2) Sustaining network includes revenue from services that are either in slower growth or declining markets or are not directly tied to the future growth of the company's network and hosting businesses.

As expected, the overall Network business showed quarterly sequential revenue growth in the third quarter. Core Network revenue continued to grow, while the decline in Sustaining Network revenue continued to slow. The majority of Savvis' hosting clients continued to take the company's network offering, as 96% use Network as part of an end-to-end solution.

Other Highlights

The Financial Vertical represented 28% of total revenue, or US$67.0 million, in the third quarter of 2010. Revenue in the quarter was up 11%, compared to the second quarter of 2010 and was up 24%, compared to the third quarter of 2009. Financial firms have begun making additional investments in infrastructure, in order to meet new industry-related regulatory requirements. Savvis has benefitted from this interest in outsourcing, by providing both new and existing clients with the services they require in centrally located data centers.

Cash Flow and Balance Sheet

Net cash provided by operating activities was US$35.7 million in the third quarter of 2010, compared to US$45.0 million in the third quarter of 2009. Cash capital expenditures for the third quarter of 2010 totaled US$56.6 million.

The company's cash position at Sept. 30, 2010, was US$88.0 million, compared to US$118.7 million at June 30, 2010. As of Sept. 30, 2010, the long-term debt and capital leases for Savvis (net of current portion) totaled US$747.7 million, up from US$712.8 million as of June 30, 2010.

In August, the company closed its senior secured credit facilities, which include a US$550.0 million term loan, maturing in 2016, and a US$75.0 million revolving credit facility, maturing in 2014. The company also completed a cash tender offer for its 3% Convertible Senior Notes due May 2012, with approximately 99% of the outstanding US$345.0 million Notes tendered.

Financial Outlook

With strong revenue and adjusted EBITDA growth reported in the third quarter, we have been able to raise and tighten our revenue and adjusted EBITDA guidance for 2010, said Greg Freiberg, chief financial officer for Savvis. Due to successful sales and marketing efforts, we have seen strong revenue growth this year. We are now beginning to see commensurate leverage in adjusted EBITDA and expect both of these trends to continue into 2011.

Savvis now expects the following for full year 2010:

-- Revenue of US$925 to US$930 million, increasing from previous guidance of US$917 to US$927 million -- Adjusted EBITDA of US$225 to US$235 million, narrowing from previous guidance of US$220 to US$240 million -- Total cash capital expenditures of US$190 to US$210 million -- Cash interest expense (net) of approximately US$50 million, decreasing from previous guidance of US$55 to US$60 million

Investor Conference Call

Savvis will webcast an investor conference call at 10:00 a.m. ET today, Oct. 27, 2010. Both the webcast and supporting presentation will be available at savvis.net on the Investor Relations page. A live conference call will be available at +1-866-261-2650 for analysts in North America or +1-703-639-1221 for international analysts. A replay will be available on the website for six months. Investors may also access the replay by dialing (888)-266-2081 in North America or +1-703-925-2533 internationally and using the access code 1487309 through Monday, Nov. 8.

About Savvis

Savvis, Inc. is a global leader in cloud infrastructure and hosted IT solutions for enterprises. More than 2,500 unique clients, including 30 of the top 100 companies in the Fortune 500, use Savvis to reduce capital expense, improve service levels and harness the latest advances in cloud computing. For more information, please visit savvis.net.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from Savvis' expectations. Certain factors that could adversely affect actual results are set forth as risk factors described in Savvis' SEC reports and filings, including its annual report on Form 10-K for the year ended Dec. 31, 2009, and subsequent filings. Those risk factors include, but are not limited to, uncertainties in economic conditions, including conditions that could pressure enterprise IT spending; introduction of, demand for and market acceptance of Savvis' products and services; whether or not Savvis is able to sign additional outsourcing deals; variability in pricing for those products and services; merger and acquisition activity by Savvis customers or other customer activity that affects the level of business done with Savvis; rapid evolution of technology; changes in the operating environment; and changes or proposed changes in, or introduction of new, regulatory schemes or environments that impact Savvis and/or its customers' businesses. The forward-looking statements contained in this document speak only as of the date of publication, Oct. 27, 2010. Subsequent events and developments may cause the company's forward-looking statements to change, and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.

* Non-GAAP Measures

Savvis includes information pertaining to certain non-GAAP measures in conjunction with reporting of its quarterly and year-end financial results. Adjusted EBITDA represents income from continuing operations before depreciation, amortization and accretion, and non-cash, equity-based compensation and excludes acquisition and integration costs. We have included information concerning adjusted EBITDA because we believe that in our industry such information is a relevant measurement of a company's operating financial performance and liquidity. Leveraged free cash flow represents adjusted EBITDA less cash paid acquisition and integration costs, less cash capital expenditures and less cash interest, net. We have included information concerning leveraged free cash flow because we believe that in our industry such information is a relevant measurement of a company's operating financial performance and liquidity. We do not provide forward looking guidance for certain financial data, such as income from operations, depreciation, amortization and accretion, non-cash, equity-based compensation, and interest income. As a result, we are unable to provide a reconciliation of non-GAAP measures, such as adjusted EBITDA and leveraged free cash flow, for forward looking data, including 2010 full-year guidance. The calculations of adjusted EBITDA and leveraged free cash flow are not specified by United States generally accepted accounting principles. Our calculations of adjusted EBITDA and leveraged free cash flow may not be comparable to similarly-titled measures of other companies.

SAVVIS, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2010 2009 2010 2009 ---- ---- ---- ---- Revenue $241,901 $213,211 $680,244 $654,595 Operating Expenses: Cost of revenue (including non- cash, equity- based compensation of $1,536, $1,473, $4,657 and $4,430) (1) 131,597 117,945 371,186 359,907 Sales, general and administrative expenses (including non-cash, equity-based compensation of $3,899, $7,003, $15,776 and $18,722) (1) 56,500 52,551 165,096 152,704 Depreciation, amortization and accretion 50,335 38,201 133,513 112,335 ------ ------ ------- ------- Total Operating Expenses 238,432 208,697 669,795 624,946 ------- ------- ------- ------- Income from Continuing Operations 3,469 4,514 10,449 29,649 Loss on debt extinguishment 8,735 - 8,735 - Other income and expense 21,845 13,887 52,935 43,268 ------ ------ ------ ------ Income (Loss) from Continuing Operations before Income Taxes (27,111) (9,373) (51,221) (13,619) Income tax (benefit) expense (886) 557 (307) 1,868 ---- --- ---- ----- Income (Loss) from Continuing Operations, net of Income Taxes (26,225) (9,930) (50,914) (15,487) ------- ------ ------- ------- Income (loss) from discontinued operations, net of income taxes (9) - (98) - --- --- --- --- Net Income (Loss) $(26,234) $(9,930) $(51,012) $(15,487) ======== ======= ======== ======== Income (Loss) per Share from Continuing Operations Basic earnings per share $(0.47) $(0.18) $(0.92) $(0.29) ====== ====== ====== ====== Diluted earnings per share $(0.47) $(0.18) $(0.92) $(0.29) ====== ====== ====== ====== Weighted- Average Common Shares Outstanding Basic 55,282 53,960 55,453 53,724 ====== ====== ====== ====== Diluted 55,282 53,960 55,453 53,724 ====== ====== ====== ====== (1) Excludes depreciation, amortization and accretion, which is reported separately.

SAVVIS, Inc. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets (in thousands) September 30, December 31, 2010 2009 ---- ---- ASSETS Current Assets: Cash and cash equivalents $88,048 $160,815 Trade accounts receivable, net 74,130 45,754 Prepaid expenses and other current assets 34,407 21,217 Total Current Assets 196,585 227,786 ------- ------- Property and equipment, net 841,083 783,852 Goodwill 77,208 - Intangible assets 20,864 404 Other non-current assets 23,156 12,716 ------ ------ Total Assets $1,158,896 $1,024,758 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Payables and other trade accruals $64,849 $52,710 Current portion of long-term debt and lease obligations 18,901 17,479 Other accrued liabilities 74,399 68,314 Total Current Liabilities 158,149 138,503 ------- ------- Long-term debt, net of current portion 531,283 376,089 Capital and financing method lease obligations, net of current portion 216,429 223,897 Other accrued liabilities 79,340 76,452 Total Liabilities 985,201 814,941 ------- ------- Stockholders' Equity: Common stock 558 545 Additional paid-in capital 871,795 862,834 Accumulated deficit (685,441) (634,429) Accumulated other comprehensive loss (13,217) (19,133) Total Stockholders' Equity 173,695 209,817 ------- ------- Total Liabilities and Stockholders' Equity $1,158,896 $1,024,758 ========== ==========

SAVVIS, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2010 2009 2010 2009 ---- ---- ---- ---- Cash Flows from Operating Activities: Net income (loss) $(26,234) $(9,930) $(51,012) $(15,487) (Income) loss from discontinued operations, net of income taxes (9) - (98) - --- --- --- --- Income (loss) from continuing operations, net of income taxes (26,225) (9,930) (50,914) (15,487) Reconciliation of net income (loss) from continuing operations to net cash provided by operating activities: Depreciation, amortization and accretion 50,335 38,201 133,513 112,335 Non-cash, equity-based compensation 5,435 8,476 20,433 23,152 Accrued interest, net 2,279 4,016 3,617 6,280 Amortization of debt discount 1,774 3,615 9,386 10,628 Loss on debt extinguishment 7,535 - 7,535 - Other, net 3,642 1,469 4,235 927 Net changes in operating assets and liabilities: Trade accounts receivable, net (14,649) 8 (23,082) 5,472 Prepaid expenses and other current and non-current assets 4,239 1,712 (17,636) (565) Payables and other trade accruals 3,196 (2,284) 12,421 (5,275) Other accrued liabilities (2,419) (318) 6,456 (8,456) ------ ---- ----- ------ Net cash provided by continuing operations 35,142 44,965 105,964 129,011 Net cash provided by discontinued operations 514 - 351 - --- --- --- --- Net cash provided by operating activities 35,656 44,965 106,315 129,011 ------ ------ ------- ------- Cash Flows from Investing Activities: Payments for capital expenditures (56,576) (30,328) (158,743) (75,804) Acquisition of business, net of cash acquired (826) - (112,790) - Net cash used in investing activities (57,402) (30,328) (271,533) (75,804) ------- ------- -------- ------- Cash Flows from Financing Activities: Proceeds from long-term debt 533,500 - 643,500 2,865 Principal payments on long-term debt (520,944) (1,650) (524,244) (4,950) Payments for debt extinguishment (1,179) - (1,179) - Payments for debt issuance costs (10,190) - (12,740) - Proceeds from stock option exercises 7,207 288 16,538 330 Payments for employee taxes on equity- based instruments (283) (1,175) (3,097) (1,619) Principal payments under capital lease obligations (14,109) (1,932) (19,298) (6,090) Other, net (3,409) (1,462) (4,607) (1,462) Net cash provided by (used in) financing activities (9,407) (5,931) 94,873 (10,926) ------ ------ ------ ------- Effect of exchange rate changes on cash and cash equivalents 531 (156) (2,422) (67) --- ---- ------ --- Net Increase (Decrease) in Cash and Cash Equivalents (30,622) 8,550 (72,767) 42,214 Cash and Cash Equivalents, Beginning of Period 118,670 154,948 160,815 121,284 ------- ------- ------- ------- Cash and Cash Equivalents, End of Period $88,048 $163,498 $88,048 $163,498 ======= ======== ======= ======== Supplemental Disclosures of Cash Flow Information: Cash paid for interest $14,298 $5,541 $35,084 $25,642

SAVVIS, Inc. and Subsidiaries Unaudited Selected Condensed Consolidated Financial Information (in thousands) Three Months Ended ------------------ September 30, June 30, ------------- -------- 2010 2009 2010 ---- ---- ---- Segment Revenue: Hosting $176,724 $148,155 $158,179 Network 65,177 65,056 63,577 Total Revenue $241,901 $213,211 $221,756 ======== ======== ======== Segment Adjusted EBITDA: Hosting $66,892 $55,582 $59,280 Network 15,747 18,484 16,589 Corporate - Other (1) (22,917) (22,875) (21,153) Total Adjusted EBITDA (2) $59,722 $51,191 $54,716 ======= ======= ======= Adjusted EBITDA Reconciliation: Income from continuing operations $3,469 $4,514 $2,217 Depreciation, amortization and accretion 50,335 38,201 42,441 Non-cash, equity-based compensation 5,435 8,476 6,545 Acquisition and integration costs 483 - 3,513 Adjusted EBITDA $59,722 $51,191 $54,716 ======= ======= ======= Reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations before Income Taxes: Adjusted EBITDA $59,722 $51,191 $54,716 Depreciation, amortization and accretion (50,335) (38,201) (42,441) Non-cash, equity-based compensation (5,435) (8,476) (6,545) Acquisition and integration costs (483) - (3,513) Interest income 41 33 20 Interest expense (18,391) (14,533) (15,573) Other income (expense) (12,230) 613 220 ------- --- --- Income (Loss) from Continuing Operations before Income Taxes $(27,111) $(9,373) $(13,116) ======== ======= ======== Leveraged Free Cash Flow Reconciliation: Adjusted EBITDA $59,722 $51,191 $54,716 Acquisition and integration costs (483) - (3,513) Cash capital expenditures (56,576) (30,328) (51,476) Cash interest paid (14,298) (5,541) (12,953) Interest income 41 33 20 Leveraged Free Cash Flow (3) $(11,594) $15,355 $(13,206) ======== ======= ======== (1) Corporate -Other adjusted EBITDA includes all costs not directly associated with hosting services or network services. Costs not directly associated with hosting services or network services include, but are not limited to, general and administrative costs. (2) Adjusted EBITDA represents income from continuing operations before depreciation, amortization, accretion and non-cash, equity-based compensation and excludes acquisition and integration costs. We have included information concerning adjusted EBITDA because we believe that in our industry such information is a relevant measurement of a company's operating financial performance and liquidity. The calculation of adjusted EBITDA is not specified by United States generally accepted accounting principles. Our calculation of adjusted EBITDA may not be comparable to similarly titled measures of other companies. (3) Leveraged Free Cash Flow represents adjusted EBITDA less cash paid acquisition and integration costs, less cash capital expenditures and less cash interest, net. We have included information concerning leveraged free cash flow because we believe that in our industry such information is a relevant measurement of a company's operating financial performance and liquidity.

SAVVIS, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share data) Three Months Nine Months Ended Ended ----- ----- September 30, 2010 ------------------ Revenue $241,901 $680,244 Operating Expenses: Cost of revenue (including non-cash, equity-based compensation of $1,536 and $4,657) 131,597 371,186 Sales, general and administrative expenses (including non-cash, equity-based compensation of $3,899 and $15,776) 56,500 165,096 Depreciation, amortization and accretion 50,335 133,513 ------ ------- Total Operating Expenses 238,432 669,795 ------- ------- Income from Continuing Operations 3,469 10,449 Loss on debt extinguishment 8,735 8,735 Other income and expense 21,845 52,935 ------ ------ Income (Loss) from Continuing Operations before Income Taxes (27,111) (51,221) Income tax expense (886) (307) ---- ---- Income (Loss) from Continuing Operations, net of Income Taxes (26,225) (50,914) ------- ------- Income (loss) from discontinued operations, net of income taxes (9) (98) --- --- Net Income (Loss) $(26,234) $(51,012) ======== ======== Adjusted EBITDA $59,722 $168,391 As a percentage of revenue 25% 25% Acquisition and integration costs 483 3,996 --- ----- Adjusted EBITDA including acquisition and integration costs $59,239 $164,395 As a percentage of revenue 24% 24% SAVVIS, Inc. and Subsidiaries Unaudited Supplemental Revenue Information (in thousands, except per square foot amounts) Three Months Ended ------------------ September 30, December 31, 2009 2009 ---- ---- Data Center Revenue $85,341 $86,892 Colocation 62,814 67,772 Managed hosting Data Center Metrics (1) 1,433 1,433 Total raised floor 886 878 Revenue space 640 591 Billed square feet 72% 67% Utilization Average Billed Square Feet 608.6 592.3 Colocation 22.2 22.9 Managed hosting ---- ---- 630.8 615.2 Total Average Billed Square Feet ===== ===== Average Monthly Data Center Revenue Per Billed Square Foot (2) $46.7 $48.9 Colocation 945.1 985.4 Managed hosting Three Months Ended ------------------ March 31, June 30, September 30, 2010 2010 2010 ---- ---- ---- Data Center Revenue $82,467 $84,281 $95,211 Colocation 70,284 73,898 81,513 Managed hosting Data Center Metrics (1) 1,477 1,477 1,564 Total raised floor 889 885 957 Revenue space 601 622 678 Billed square feet 68% 70% 71% Utilization Average Billed Square Feet 572.1 586.6 623.4 Colocation 23.8 25.1 26.8 Managed hosting ---- 595.9 611.7 650.3 Total Average Billed Square Feet ===== ===== ===== Average Monthly Data Center Revenue Per Billed Square Foot (2) $48.1 $47.5 $50.9 Colocation 984.5 974.4 1,012.7 Managed hosting (1) Data center metrics are calculated as of period end for each respective quarter. (2) Average monthly data center revenue per billed square foot is calculated as the revenue per quarter divided by the average billed square feet per quarter stated on a monthly basis.

SAVVIS Revenue by Vertical Three Months Ended ------------------ September 30, December 31, 2009 2009 ---- ---- $53,974 $57,742 Financial vertical 159,237 162,077 Other $213,211 $219,819 Total Revenue ======== ======== Three Months Ended ------------------ March 31, June 30, September 30, 2010 2010 2010 ---- ---- ---- $55,532 $60,417 $67,007 Financial vertical 161,055 161,339 174,894 Other $216,587 $221,756 $241,901 Total Revenue ======== ======== ======== Network Revenue Supplemental Information: Three Months Ended ------------------ September 30, December 31, 2009 2009 ---- ---- $28,616 $31,483 Core (1) 36,440 33,672 Sustaining (2) $65,056 $65,155 Total Network Revenue ======= ======= Three Months Ended ------------------ March 31, June 30, September 30, 2010 2010 2010 ---- ---- ---- $31,670 $33,459 $36,339 Core (1) 32,166 30,118 28,838 Sustaining (2) $63,836 $63,577 $65,177 Total Network Revenue ======= ======= ======= (1) Core network includes revenue from Thomson Reuters and from other financial vertical and data center clients, who also purchase bundled network and hosting services. (2) Sustaining network includes revenue from services that are either in slower growth or declining markets or are not directly tied to the future growth of the company's network and hosting businesses.

SOURCE: Savvis, Inc.

CONTACT: investors, Peggy Reilly Tharp, +1-314-628-7491,peggy.tharp@savvis.net, or media, George Csolak, +1-314-628-7266,george.csolak@savvis.net, both of Savvis, Inc.