News Releases

News Releases
Savvis Reports Year-over-Year Fourth Quarter 2010 Revenue Growth of 15% and Adjusted EBITDA Growth of 24%

ST. LOUIS, Feb. 8, 2011 /PRNewswire/ -- Savvis, Inc. (Nasdaq: SVVS), a global leader in cloud infrastructure and hosted IT solutions for enterprises, today reported its fourth quarter 2010 financial results, with revenue of $252.7 million, compared to $219.8 million in the fourth quarter of 2009.  Adjusted EBITDA* was $67.8 million, compared to $54.9 million of adjusted EBITDA in the fourth quarter of 2009.  

(Logo:  http://photos.prnewswire.com/prnh/20090803/PH55929LOGO )

Income from continuing operations for the fourth quarter of 2010 was $14.0 million, compared to $10.4 million in the fourth quarter of 2009.  Savvis reported a net loss of ($2.9) million, or ($0.06) per share, in the fourth quarter of 2010, compared to a fourth quarter 2009 net loss of ($5.4) million, or ($0.10) per share.

"Our remarkable fourth quarter results were an appropriate end to 2010, with good growth in Managed Services, Colocation and Network revenue reported on both an annual and a quarterly basis," said Jim Ousley, chairman and chief executive officer for Savvis.  "Our successful execution and the strategic changes we made over the past year are reflected in our solid financials.  We expect to see a general continuation of these trends in 2011, with specific strength in our Managed Services business."

For full year 2010, revenue was $933.0 million, up 7% when compared to full year 2009 revenue of $874.4 million.  Adjusted EBITDA for 2010 was $236.2 million, up 7% over the $220.0 million reported in 2009.  

Savvis reported income from continuing operations of $24.5 million in 2010, compared to full year 2009 income from continuing operations of $40.1 million.  The company reported a net loss of ($54.0) million in 2010, or ($0.98) per share, and this amount includes approximately $11.8 million in costs related to the company's debt refinancing.  For full year 2009, Savvis had a net loss of ($20.8) million, or ($0.39) per share.

Fourth Quarter Financial Results

 

US$ in millions

Three months ended

 
 

12/31/10

9/30/10

12/31/09

 

Hosting

$185.7

$176.7

$154.7

 

Network

$67.0

$65.2

$65.1

 

Total revenue

$252.7

$241.9

$219.8

 
         

Cost of revenue(1)

$129.6

$131.6

$120.4

 

SG&A expenses(1) (2)

$61.7

$56.5

$50.5

 

Non-cash, equity-based compensation(1)

$5.2

$5.4

$6.0

 

Income from continuing operations

$14.0

$3.5

$10.4

 

Net income (loss) from continuing operations

($3.1)

($26.2)

($5.4)

 

Income (loss) from discontinued operations, net of income tax(3)

$0.2

($0.0)

--

 

Net income (loss)

($2.9)

($26.2)

($5.4)

 
         

Adjusted EBITDA

$67.8

$59.7

$54.9

 

Adjusted EBITDA margin

27%

25%

25%

 
   
       

 

(1) Both cost of revenue and SG&A 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 Dec. 31, 2010, Sept. 30, 2010, and Dec. 31, 2009, was $1.3 million, $1.5 million and $1.1 million and to SG&A expenses was $4.0 million, $3.9 million and $4.9 million, respectively.  (2) SG&A expenses include acquisition and integration costs of $1.1 million and $0.5 million for the three months ended Dec. 31, 2010, and Sept. 30, 2010, respectively.  (3) Includes income (loss) from the application services business acquired from Fusepoint, which was classified as an asset held for sale at Sept. 30, 2010, and sold on Dec. 13, 2010.  Total income (loss) attributed to net income for the three months ended Dec. 31, 2010, and Sept. 30, 2010, was $160,000 and ($9,000), respectively.

Fourth Quarter Overview

Total Savvis revenue for the fourth quarter was $252.7 million, up 4% compared to third quarter 2010 revenue of $241.9 million.  Strong Managed Services growth, data center expansions, improved renewals and churn, and a seasonal increase in network traffic all helped contribute to the improvement.

Adjusted EBITDA was $67.8 million for the fourth quarter of 2010, up 14% compared to $59.7 million of adjusted EBITDA in the third quarter of 2010.  Growth in fourth quarter adjusted EBITDA was the result of steady improvement in the company's renewals, bookings and installations throughout the preceding three quarters.  

Hosting

 

US$ in millions

Percent of Revenue

Three months ended

 
 

12/31/10

9/30/10

12/31/09

 

Managed Services

48%

$89.3

$81.5

$67.8

 

Percentage change

   

10%

32%

 

Colocation

52%

$96.4

$95.2

$86.9

 

Percentage change

   

1%

11%

 

Total Hosting revenue

 

$185.7

$176.7

$154.7

 

Percentage change

   

5%

20%

 
   
         

 

In the fourth quarter, Managed Services revenue reflected continued growth in demand for Savvis' traditional managed services and an increase in traction for its cloud solutions, which represent a growing portion of Managed Services revenue.  Traditional managed services include both utility and virtualized services, while cloud solutions include the Savvis Symphony Open, Dedicated and VPDC products.

Colocation revenue was up both quarterly and annually in the fourth quarter, as the company continued to target and win enterprise clients for its global data centers.  Savvis also continued to reap the benefits of its revamped renewal program, which resulted in a continued reduction in both colocation and overall churn.

Network

 

US$ in millions

Percent of Revenue

Three months ended

 
 

12/31/10

9/30/10

12/31/09

 

Core(1)

57%

$38.4

$36.4

$31.4

 

Percentage change

   

6%

22%

 

Sustaining(2)

43%

$28.6

$28.8

$33.7

 

Percentage change

   

(1%)

(15%)

 

Total Network revenue

 

$67.0

$65.2

$65.1

 

Percentage change

   

3%

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.

The overall Network business showed both quarterly and annual revenue growth in the fourth quarter, due to a seasonal increase in network traffic and a quarterly delay in some expected churn.  As expected, Core Network revenue continued to grow, while the decline in Sustaining Network revenue continued to slow.  

Other Highlights

The Financial Vertical represented 28% of total revenue, or $69.7 million, in the fourth quarter of 2010.  Revenue in the quarter was up 4%, compared to the third quarter of 2010, and was up 21%, compared to the fourth quarter of 2009.  

During the quarter, Savvis added two new exchanges in Chicago and Slough.  The company also continued its expansion into additional global financial markets, as part of its collaboration with Thomson Reuters.  To date, orders for Thomson Reuters Elektron Hosting solution are being taken in 10 locations.

Cash Flow and Balance Sheet

Net cash provided by operating activities was $71.4 million in the fourth quarter of 2010, compared to $57.5 million in the fourth quarter of 2009.  Cash capital expenditures for the fourth quarter of 2010 totaled $43.8 million.  

The company's cash position at Dec. 31, 2010, was $120.3 million, compared to $88.0 million at Sept. 30, 2010.  As of Dec. 31, 2010, the long-term debt and capital leases for Savvis (net of current portion) totaled $747.2 million, flat from $747.7 million as of Sept. 30, 2010.  

Full Year Financial Results

 

US$ in millions

12 months ended

 
 

12/31/10

12/31/09

% change

 

Colocation

$358.4

$341.3

5%

 

Managed services

$315.0

$266.0

18%

 

Hosting

$673.4

$607.3

11%

 

Core

$139.9

$112.6

24%

 

Sustaining

$119.7

$154.5

(23%)

 

Network services

$259.6

$267.1

(3%)

 

Total revenue

$933.0

$874.4

7%

 
         

Cost of revenue(1)

$500.7

$480.3

4%

 

SG&A expenses(1)

$226.8

$203.2

12%

 

Non-cash, equity-based compensation(1)

$25.7

$29.1

(12%)

 

Income from continuing operations

$24.5

$40.1

(39%)

 

Net income (loss) from continuing operations

($54.0)

($20.8)

(159%)

 

Income (loss) from discontinued operations, net of income tax(2)

$0.1

--

--

 

Net income (loss)

($54.0)

($20.8)

(159%)

 
         

Adjusted EBITDA

$236.2

$220.0

7%

 

Adjusted EBITDA margin

25%

25%

~15 bps

 
   
       

 

(1) Both cost of revenue and SG&A 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 12 months ended Dec. 31, 2010, and Dec. 31, 2009, was $5.9 million and $5.5 million and to SG&A expenses was $19.8 million and $23.6 million, respectively.  (2) Includes income from the application services business acquired from Fusepoint, which was classified as an asset held for sale at Sept. 30, 2010, and sold on Dec. 13, 2010.  Total income attributed to net income for the 12 months ended Dec. 31, 2010, was $61,000.

Full Year Highlights

In addition to year-over-year growth in Managed Services, Colocation and Core Network in 2010, the company also saw significant improvement in specific verticals and product lines.  In the financial vertical, 2010 revenue was $252.7 million, up 10% over 2009 revenue of $229.1 million.  For the company's Savvis Symphony line of cloud products, which is a part of its Managed Services offerings, revenue in 2010 was $15.2 million, up 106% over 2009 revenue of $7.4 million.  

Savvis closed out the year with the news that it was positioned in the Leaders Quadrant in the Magic Quadrant for Cloud Infrastructure as a Service and Web Hosting in 2010.  The Gartner Magic Quadrant is widely recognized as one of the most influential market analyses for enterprises seeking to evaluate cloud and hosting vendors.  

As part of the company's strategic plan to expand its geographic presence around the world, Savvis acquired Fusepoint for approximately $121 million in cash in June.  Fusepoint is well-positioned in the Canadian hosting market as a leading provider of managed IT and colocation services, with data centers in Toronto, Vancouver and Montreal.

In August, Savvis restructured its debt profile and closed on its senior secured credit facilities, which include a $550 million term loan and a $75 million revolving credit facility.  The proceeds were used to fund a tender offer for the company's 3% Convertible Senior Notes due May 2012, and Savvis accepted nearly 99% of the outstanding $345 million for payment.  Proceeds were also used to repay outstanding amounts under the company's existing revolving credit facility and other bank and vendor financing.

Financial Outlook

"The strength in execution we saw throughout 2010, and into the fourth quarter, gave us the confidence to announce our full year 2011 guidance at our investor day in early December 2010," said Greg Freiberg, chief financial officer for Savvis.  "Strong fourth quarter financial results and continued execution of our business model are expected to help position us for success in 2011."

Savvis continues to expect the following for full year 2011:

  • Revenue of $1,030 to $1,060 million
  • Adjusted EBITDA of $265 to $290 million
  • Total cash capital expenditures of $220 to $240 million
  • Cash interest expense (net) of approximately $65 million

 

Investor Conference Call

Savvis will webcast an investor conference call at 10:00 a.m. ET today, Feb. 8, 2011.  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 (866) 261-2650 for analysts in North America or (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 (703) 925-2533 internationally and using the access code 1505734 through Tuesday, Feb. 22.

About Savvis

Savvis, Inc. (Nasdaq: SVVS) is a global leader in cloud infrastructure and hosted IT solutions for enterprises. Nearly 2,500 unique clients, including 32 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 www.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, Feb. 8, 2011.  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 2011 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

 

Year Ended

 
         

December 31,

 

December 31,

 
         

2010

 

2009

 

2010

 

2009

 
                         

Revenue

   

$              252,740

 

$              219,819

 

$              932,984

 

$              874,414

 

Operating Expenses:

                   
 

Cost of revenue (including non-cash, equity-based

                   
   

compensation of $1,262, $1,068, $5,919 and $5,498) (1)

   

                129,563

 

                120,428

 

                500,749

 

                480,335

 
 

Sales, general and administrative expenses (including

                   
   

non-cash, equity-based compensation of $3,983, $4,882, $19,759 and $23,604) (1)

   

                  61,746

 

                  50,454

 

                226,842

 

                203,158

 
 

Depreciation, amortization and accretion

   

                  47,390

 

                  38,519

 

                180,903

 

                150,854

 

Total Operating Expenses

   

                238,699

 

                209,401

 

                908,494

 

                834,347

 

Income from Continuing Operations

   

                  14,041

 

                  10,418

 

                  24,490

 

                  40,067

 
 

Loss on debt extinguishment

   

                         -  

 

                         -  

 

                    8,735

 

                         -  

 
 

Other income and expense

   

                  17,835

 

                  14,916

 

                  70,770

 

                  58,184

 

Loss from Continuing Operations before

                   

Income Taxes

   

                  (3,794)

 

                  (4,498)

 

                (55,015)

 

                (18,117)

 
 

Income tax (benefit) expense

   

                     (688)

 

                       861

 

                     (995)

 

                    2,729

 

Loss from Continuing Operations, net

                   

of Income Taxes

   

                  (3,106)

 

                  (5,359)

 

                (54,020)

 

                (20,846)

 
 

Income from discontinued operations, net

                   
 

of income taxes

   

                       160

 

                         -  

 

                         61

 

                         -  

 

Net Loss

   

$                (2,946)

 

$                (5,359)

 

$              (53,959)

 

$              (20,846)

 
                         

Loss per Share from Continuing Operations

                   
 

Basic earnings per share

   

$                  (0.06)

 

$                  (0.10)

 

$                  (0.98)

 

$                  (0.39)

 
 

Diluted earnings per share

   

$                  (0.06)

 

$                  (0.10)

 

$                  (0.98)

 

$                  (0.39)

 
                         

Weighted-Average Common Shares Outstanding

                   
 

Basic

   

                  56,285

 

                  54,036

 

                  55,312

 

                  53,786

 
 

Diluted

   

                  56,285

 

                  54,036

 

                  55,312

 

                  53,786

 
                         

(1)

Excludes depreciation, amortization and accretion, which is reported separately.

         
                       

 

SAVVIS, Inc. and Subsidiaries

 

Unaudited Condensed Consolidated Balance Sheets

 

(in thousands)

 
                   
                   
                   
                   
           

December 31,

 

December 31,

 
           

2010

 

2009

 

ASSETS

       

Current Assets:

             

Cash and cash equivalents

     

$                     120,344

 

$                   160,815

 

Trade accounts receivable, net

     

65,058

 

45,754

 

Prepaid expenses and other current assets

   

32,359

 

21,217

 

Total Current Assets

     

217,761

 

227,786

 

Property and equipment, net

     

843,801

 

783,852

 

Goodwill

       

75,883

 

-

 

Intangible assets, net

     

19,540

 

404

 

Other non-current assets

     

26,665

 

12,716

 

Total Assets

       

$                  1,183,650

 

$                1,024,758

 
                   

LIABILITIES AND STOCKHOLDERS' EQUITY

       
                   

Current Liabilities:

             

Payables and other trade accruals

   

$                       73,445

 

$                     52,710

 

Current portion of long-term debt and lease obligations

 

17,881

 

17,479

 

Other accrued liabilities

     

84,101

 

68,314

 

Total Current Liabilities

     

175,427

 

138,503

 

Long-term debt, net of current portion

   

530,649

 

376,089

 

Capital and financing method lease obligations, net of current portion

216,508

 

223,897

 

Other accrued liabilities

     

74,937

 

76,452

 

Total Liabilities

     

997,521

 

814,941

 
                   

Stockholders' Equity:

       

Common stock

       

566

 

545

 

Additional paid-in capital

     

886,593

 

862,834

 

Accumulated deficit

     

(688,388)

 

(634,429)

 

Accumulated other comprehensive loss

   

(12,642)

 

(19,133)

 

Total Stockholders' Equity

     

186,129

 

209,817

 

Total Liabilities and Stockholders' Equity

 

$                  1,183,650

 

$                1,024,758

 
                 

 

SAVVIS, Inc. and Subsidiaries

 

Unaudited Condensed Consolidated Statements of Cash Flows

 

(in thousands)

 
   
       
             

Three Months Ended

 

Year Ended

 
             

December 31,

 

December 31,

 
             

2010

 

2009

 

2010

 

2009

 

Cash Flows from Operating Activities:

                 

Net income (loss)

     

$                 (2,946)

 

$                (5,359)

 

$               (53,959)

 

$              (20,846)

 
 

(Income) loss from discontinued operations, net of income taxes

 

160

 

-

 

61

 

-

 
   

Income (loss) from continuing operations, net of income taxes

 

(3,106)

 

(5,359)

 

(54,020)

 

(20,846)

 

Reconciliation of net income (loss) from continuing operations to net cash provided by operating activities:

                 

Depreciation, amortization and accretion

 

47,390

 

38,519

 

180,903

 

150,854

 

Non-cash, equity-based compensation

 

5,245

 

5,950

 

25,678

 

29,102

 

Accrued interest, net

     

6,894

 

(1,702)

 

10,511

 

4,578

 

Amortization of debt discount

   

741

 

3,691

 

10,127

 

14,319

 

Loss on debt extinguishment

   

-

 

-

 

7,535

 

-

 

Other, net

     

9

 

16

 

4,244

 

943

 

Net changes in operating assets and liabilities:

                 
 

Trade accounts receivable, net

 

7,578

 

859

 

(15,504)

 

6,331

 
 

Prepaid expenses and other current and non-current assets

 

(1,923)

 

6,458

 

(19,559)

 

5,893

 
 

Payables and other trade accruals

 

5,132

 

7,597

 

17,553

 

2,322

 
 

Other accrued liabilities

   

3,196

 

1,441

 

9,652

 

(7,015)

 

Net cash provided by continuing operations

 

71,156

 

57,470

 

177,120

 

186,481

 

Net cash provided by discontinued operations

 

270

 

-

 

621

 

-

 

Net cash provided by operating activities

 

71,426

 

57,470

 

177,741

 

186,481

 
                             

Cash Flows from Investing Activities:

                 

Payments for capital expenditures

 

(43,811)

 

(57,132)

 

(202,554)

 

(132,936)

 

Acquisition of business, net of cash acquired

 

-

 

-

 

(112,790)

 

-

 

Cash received for disposition of business

 

1,459

 

-

 

1,459

 

-

 

Net cash used in investing activities

 

(42,352)

 

(57,132)

 

(313,885)

 

(132,936)

 
                             

Cash Flows from Financing Activities:

                 

Proceeds from long-term debt

   

-

 

-

 

643,500

 

2,865

 

Principal payments on long-term debt

 

(1,375)

 

(1,650)

 

(525,619)

 

(6,600)

 

Payments for debt extinguishment

 

-

 

-

 

(1,179)

 

-

 

Payments for debt issuance costs

 

(65)

 

-

 

(12,805)

 

-

 

Proceeds from stock option exercises

 

9,829

 

37

 

26,367

 

367

 

Payments for employee taxes on equity-based instruments

 

(229)

 

(130)

 

(3,326)

 

(1,749)

 

Principal payments under capital lease obligations

 

(3,843)

 

(1,055)

 

(23,141)

 

(7,145)

 

Other, net

     

-

 

(749)

 

(4,607)

 

(2,211)

 

Net cash provided by (used in) financing activities

 

4,317

 

(3,547)

 

99,190

 

(14,473)

 

Effect of exchange rate changes on

                 
 

cash and cash equivalents

   

(1,095)

 

526

 

(3,517)

 

459

 
                             

Net Increase (Decrease) in Cash and Cash Equivalents

 

32,296

 

(2,683)

 

(40,471)

 

39,531

 

Cash and Cash Equivalents, Beginning of Period

 

88,048

 

163,498

 

160,815

 

121,284

 

Cash and Cash Equivalents, End of Period

 

$              120,344

 

$              160,815

 

$              120,344

 

$              160,815

 
                             

Supplemental Disclosures of Cash Flow Information:

                 

Cash paid for interest

   

$                10,500

 

$                11,586

 

$                45,584

 

$                37,228

 
                             

 

SAVVIS, Inc. and Subsidiaries

 

  Unaudited Selected Condensed Consolidated Financial Information

 

(in thousands)

 
                             
             
       

Three Months Ended

   

Year Ended

 
       

December 31,

 

September 30,

   

December 31,

 
       

2010

 

2009

 

2010

   

2010

 

2009

 

Segment Revenue:

                         

Hosting

   

$              185,697

 

$             154,664

 

$                 176,724

   

$             673,352

 

$             607,296

 

Network

   

                  67,043

 

                 65,155

 

                     65,177

   

               259,632

 

               267,118

 

Total Revenue

   

$              252,740

 

$             219,819

 

$                 241,901

   

$             932,984

 

$             874,414

 
                             

Segment Adjusted EBITDA:

                         

Hosting

   

$                76,127

 

$               59,326

 

$                   66,892

   

$             261,259

 

$             239,290

 

Network

   

                  17,142

 

                 16,070

 

                     15,747

   

                 65,743

 

                 67,610

 

Corporate - Other (1)

   

                (25,482)

 

                (20,509)

 

                    (22,917)

   

                (90,824)

 

                (86,877)

 

Total Adjusted EBITDA (2)

   

$                67,787

 

$               54,887

 

$                   59,722

   

$             236,178

 

$             220,023

 
                             
                             

Adjusted EBITDA Reconciliation:

                       

Income from continuing operations

 

$                14,041

 

$               10,418

 

$                     3,469

   

$               24,490

 

$               40,067

 

Depreciation, amortization and accretion

 

                  47,390

 

                 38,519

 

                     50,335

   

               180,903

 

               150,854

 

Non-cash, equity-based compensation

 

                    5,245

 

                   5,950

 

                       5,435

   

                 25,678

 

                 29,102

 

Acquisition and integration costs

 

                    1,111

 

                         -  

 

                          483

   

                   5,107

 

                         -  

 

Adjusted EBITDA

   

$                67,787

 

$               54,887

 

$                   59,722

   

$             236,178

 

$             220,023

 
                             

Reconciliation of Adjusted EBITDA to Income (Loss) from Continuing Operations before Income Taxes:

                       
                         

Adjusted EBITDA

   

$                67,787

 

$               54,887

 

$                   59,722

   

$             236,178

 

$             220,023

 

Depreciation, amortization and accretion

 

                (47,390)

 

                (38,519)

 

                    (50,335)

   

              (180,903)

 

              (150,854)

 

Non-cash, equity-based compensation

 

                  (5,245)

 

                  (5,950)

 

                      (5,435)

   

                (25,678)

 

                (29,102)

 

Acquisition and integration costs

 

                  (1,111)

 

                         -  

 

                         (483)

   

                  (5,107)

 

                         -  

 

Interest income

   

                         34

 

                        35

 

                            41

   

                      126

 

                      226

 

Interest expense

   

                (18,132)

 

                (14,266)

 

                    (18,391)

   

                (67,571)

 

                (57,976)

 

Other income (expense)

   

                       263

 

                     (685)

 

                    (12,230)

   

                (12,060)

 

                     (434)

 

Income (Loss) from Continuing Operations before Income Taxes

                       
     

$                (3,794)

 

$                (4,498)

 

$                  (27,111)

   

$              (55,015)

 

$              (18,117)

 
                             
                             
                             

Leveraged Free Cash Flow Reconciliation:

                       

Adjusted EBITDA

   

$                67,787

 

$               54,887

 

$                   59,722

   

$             236,178

 

$             220,023

 

Acquisition and integration costs

 

                  (1,111)

 

                         -  

 

                         (483)

   

                  (5,107)

 

                         -  

 

Cash capital expenditures

   

                (43,811)

 

                (57,132)

 

                    (56,576)

   

              (202,554)

 

              (132,936)

 

Cash interest paid

   

                (10,500)

 

                (11,586)

 

                    (14,298)

   

                (45,584)

 

                (37,228)

 

Interest income

   

                         34

 

                        35

 

                            41

   

                      126

 

                      226

 

Leveraged Free Cash Flow (3)

 

$                12,399

 

$              (13,796)

 

$                  (11,594)

   

$              (16,941)

 

$               50,085

 
                             
                             

(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

 

Year

 
       

Ended

 

Ended

 
       

December 31, 2010

 
               

Revenue

 

$               252,740

 

$               932,984

 

Operating Expenses:

         
 

Cost of revenue (including non-cash, equity-based

         
   

compensation of $1,262 and $5,919)

 

                 129,563

 

                 500,749

 
 

Sales, general and administrative expenses (including

         
   

non-cash, equity-based compensation of $3,983 and $19,759)

 

                   61,746

 

                 226,842

 
 

Depreciation, amortization and accretion

 

                   47,390

 

                 180,903

 

Total Operating Expenses

 

                 238,699

 

                 908,494

 

Income from Continuing Operations

 

                   14,041

 

                   24,490

 
 

Loss on debt extinguishment

 

                           -  

 

                     8,735

 
 

Other income and expense

 

                   17,835

 

                   70,770

 

Loss from Continuing Operations before

         

Income Taxes

 

                    (3,794)

 

                  (55,015)

 
 

Income tax expense

 

                       (688)

 

                       (995)

 

Loss from Continuing Operations, net

         

of Income Taxes

 

                    (3,106)

 

                  (54,020)

 
 

Income from discontinued operations, net

         
 

of income taxes

 

                        160

 

                          61

 

Net Loss

 

$                  (2,946)

 

$                (53,959)

 
               

Adjusted EBITDA

 

$                 67,787

 

$               236,178

 

    As a percentage of revenue

 

27%

 

25%

 
               

Acquisition and integration costs

 

                     1,111

 

                     5,107

 
               

Adjusted EBITDA including acquisition and integration costs

$                 66,676

 

$               231,071

 

    As a percentage of revenue

 

26%

 

25%

 
             

 
 

SAVVIS, Inc. and Subsidiaries

 
 

Unaudited Supplemental Revenue Information

 
 

(in thousands, except per square foot amounts)

 
                         
                         
     

Three Months Ended

 
     

December 31,

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 
     

2009

 

2010

 

2010

 

2010

 

2010

 
 

Data Center Revenue

                     
 

Colocation

 

$            86,892

 

$        82,467

 

$     84,281

 

$                 95,211

 

$                96,430

 
 

Managed hosting

 

67,772

 

70,284

 

73,898

 

81,513

 

89,267

 
                         
                         
 

Data Center Metrics (1)

                     
 

Total raised floor

 

1,433

 

1,477

 

1,477

 

1,564

 

1,541

 
 

Revenue space

 

878

 

889

 

885

 

957

 

938

 
 

Billed square feet

 

591

 

601

 

622

 

678

 

680

 
 

Utilization

 

67%

 

68%

 

70%

 

71%

 

73%

 
                         
 

Average Billed Square Feet

                     
 

Colocation

 

592.3

 

572.1

 

586.6

 

623.4

 

651.2

 
 

Managed hosting

 

22.9

 

23.8

 

25.1

 

26.8

 

28.1

 
 

Total Average Billed Square Feet

 

615.2

 

595.9

 

611.7

 

650.3

 

679.2

 
                         
 

Average Monthly Data Center Revenue

                     
 

      Per Billed Square Foot (2)

                     
 

Colocation

 

$                   48.9

 

$                 48.1

 

$              47.5

 

$                    50.9

 

$                    49.4

 
 

Managed hosting

 

985.4

 

984.5

 

974.4

 

1,012.7

 

1,059.5

 
                         

(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

 
     

December 31,

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 
     

2009

 

2010

 

2010

 

2010

 

2010

 
                         
 

Financial vertical

 

$                      57,742

 

$                      55,532

 

$                      60,417

 

$                      67,007

 

$                      69,698

 
 

Other

 

                      162,077

 

                      161,055

 

                      161,339

 

                      174,894

 

                      183,042

 
 

Total Revenue

 

$                    219,819

 

$                    216,587

 

$                    221,756

 

$                    241,901

 

$                    252,740

 
                         
                         
                         
                       

 
 

Network Revenue Supplemental Information: 

 

Three Months Ended

 
     

December 31,

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 
     

2009

 

2010

 

2010

 

2010

 

2010

 
                         
 

Core (1)

 

$                      31,483

 

$                      31,670

 

$                      33,459

 

$                      36,339

 

$                      38,443

 
 

Sustaining (2)

 

                        33,672

 

                        32,166

 

                        30,118

 

                        28,838

 

                        28,600

 
 

Total Network Revenue

 

$                      65,155

 

$                      63,836

 

$                      63,577

 

$                      65,177

 

$                      67,043

 
                         

(1) Core network includes revenue from Thomson Reuters and from other financial vertical and data center customers, 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.