St. Louis, MO, February 10, 2004 -- SAVVIS Communications Corporation (NASDAQ: SVVS), a leading global managed IP and hosting services provider, today announced results for the fourth quarter and year ended December 31, 2003.

Consolidated revenues for the quarter increased 24% to a record $69.4 million versus $56.0 million for the fourth quarter of 2002. SAVVIS’ gross margin for the current quarter grew 25% to $25.2 million from $20.2 million for the same quarter of 2002.

SAVVIS’ consolidated net loss for the current quarter was $15.8 million versus net income of $17.3 million for the same quarter last year, due in part to a $39.6 million gain on extinguishment of debt resulting from the settlement of litigation with Winstar in November of 2002

For the full year, consolidated revenues for 2003 increased to $252.9 million, from $236.0 million in 2002. Over the same period, gross margin improved to $89.3 million from $73.9 million, or to 35% of revenues in 2003 from 31% of revenues in 2002.

SAVVIS’ consolidated net loss for the year ending December 31, 2003 was $94.0 million versus net income for 2002 of $13.9 million. The net loss in 2003 versus net income in 2002 was due to an $8.1 million loss on the sale of the company’s St. Louis data center as well as a restructuring charge of $7.9 million recorded in the third quarter of 2003, and $97.9 million in gains from the extinguishment of debt associated with the March 2002 recapitalization of the company and the Winstar settlement recorded in the fourth quarter of 2002.

As previously announced on January 23, 2004, SAVVIS was approved as the purchaser of substantially all of the assets of Cable & Wireless USA, Inc. and Cable & Wireless Internet Services, Inc. (“Cable & Wireless America” or “CWA”) for $155.0 million in cash and an estimated $25.0 million in liabilities assumed prior to closing, which is expected to on or near March 5, 2004. CWA had filed for protection under Chapter 11 of the U.S. Bankruptcy Code in December of 2003.

Commenting on SAVVIS’ financial results and the CWA transaction, Rob McCormick, SAVVIS’ chairman and chief executive officer, said, “I am pleased to welcome the Cable & Wireless employees and customers to the SAVVIS team. We are excited about the opportunity to service this large customer base and look forward to offering our clients an expanded portfolio of value added managed utility services. SAVVIS continues to execute on its strategy of delivering existing and new managed services to a wide range of customers. Diversified revenue1 continues to grow and we look forward to even greater business expansion as the Cable & Wireless assets are integrated into SAVVIS’ operations.”

McCormick continued, “Early this year, we will complete development of what we believe is the industry’s first truly virtualized managed services platform. This approach solves one of the largest problems facing IT departments – massively underutilized servers and storage devices. SAVVIS’ virtualized platform is a unique combination of integrated virtualized servers, storage, appliances, and network from which our tailored, value-added services can be delivered in a utility model. The ability to purchase units of service frees up IT resources to focus on the important tasks they want to do but are stretched too thinly to accomplish – build and deliver new applications that create value and boosts competitive advantage.”

With the addition of the CWA network and hosting assets to SAVVIS’ existing world class IP network and hosting business, SAVVIS becomes one of the world’s largest IP/hosting infrastructure services providers. The acquired assets will add over 3,000 customers and the combined entity is currently projected to have annualized revenues of approximately $700 million by year-end 2004. The purchase of the CWA assets will enable SAVVIS to expand its range of IP network services to include private line services and an expanded range of consulting and hosting infrastructure services. The transaction, which was approved by the US Bankruptcy Court on January 23, 2004, is subject to customary regulatory approvals and closing conditions. It is currently expected to close in the first quarter of 2004.

Consolidated Revenues

Consolidated revenues for the fourth quarter increased 24% year over year and grew 2% sequentially. Reuters and Moneyline Telerate revenues for the quarter decreased 20% when compared to the same quarter of 2002 and 6% sequentially.

Diversified revenue for the quarter expanded to $37.7 million, rising over 129% when compared to the fourth quarter of 2002 and increasing 11% sequentially due to strong growth in Managed Services . Managed IP VPN diversified revenue increased 120% and Managed Hosting diversified revenue rose 462% when compared to the same quarter last year. As compared to the third quarter of 2003, Managed IP VPN diversified revenue increased 16% and Managed Hosting diversified revenue increased 2%. The considerable increases in Managed IP VPN diversified revenue were partially the result of revenues from customers acquired in the previously announced WAM!NET transaction, which closed August 1, 2003, with the remainder due to the addition of new customers and the expansion of business with existing customers. Excluding the impact of WAM!NET, Managed IP VPN diversified revenue increased 67% over the same quarter last year and 8% sequentially. The significant increase in Managed Hosting diversified revenue in the current quarter over the same quarter last year was the result of the transition of Intel Online Services (“IOS”) customers, along with steady growth in sales beyond IOS. Internet access revenue in the current quarter grew 29% over the same quarter of last year and 7% sequentially.

For the full year ending December 31, 2003, consolidated revenues increased 7% over the prior year. Reuters and Moneyline Telerate revenues for 2003 decreased 22% when compared 2002.

For the twelve months ending December 31, 2003, diversified revenue expanded to $115.7 million, rising over 90% when compared to 2002 due to strong growth in Managed Services. Managed IP VPN diversified revenue increased 95% and Managed Hosting diversified revenue rose 312% over the prior year. The strong growth in Managed IP VPN diversified revenue was the result of revenues from customers acquired in the WAM!NET transaction, the addition of new customers, and the expansion of business with existing customers. Excluding the impact of WAM!NET, Managed IP VPN diversified revenue rose 68% in 2003. The significant increase in Managed Hosting diversified revenue for 2003 was the result of the transition of IOS customers along with steady growth in sales beyond IOS. Internet access revenue in 2003 was flat versus the prior year.

Focus on Costs Continues

Gross margin was $25.2 million in the current quarter, versus $20.2 million in the fourth quarter of 2002 and $25.5 million in the prior quarter. As a percentage of revenues, gross margin was 36% both in current quarter and the same quarter of 2002, and 38% in the third quarter of 2003.

Selling, general, and administrative expenses (“SG&A”) for the quarter decreased to $22.7 million, from $23.2 million in the prior quarter, and as a percentage of revenues declined to 33% from 34% in the third quarter of 2003. SG&A for the same period last year was $18.0 million, or 32% of revenues.

Jeff Von Deylen, SAVVIS’ chief financial officer, added, “SAVVIS’ financial performance is right on track. Our focus now is on closing the CWA transaction and integrating the two operations. We view the combination of SAVVIS and the CWA assets to have powerful synergies that could generate substantial infrastructure and operating savings through the optimization of the combined network and hosting operations.”

Cash Flow and Balance Sheet

Net cash generated by operating activities in the current quarter was $4.0 million, versus a net use of $7.9 million in the same quarter a year ago and $1.5 million sequentially. For the twelve months ending December 31, 2003 the company’s operating cash flow was nearly breakeven. The balance sheet and cash position continued to be on target, with Days Sales Outstanding (“DSO”) continuing to be below 20 days.

1 Diversified Revenue is revenue from customers other than Reuters and Moneyline Telerate.
2 Managed Services include Managed IP VPN and Managed Hosting services.
3 Revenue for the year ending December 31, 2002 includes $2.5 million in revenues from Bridge.

Operational Highlights

· New customers in the fourth quarter included ValuBond, Sonic Financial Technologies, Babcock Power, EasyScreen, Watson Farley & Williams, and Walter P. Moore and Associates.
· SAVVIS and H-P announced that they were combining their technologies, integration expertise, and managed services to deliver the industry’s first integrated service which addresses the entire workflow process, including digital content creation, management, archiving, distribution, video transport and transcoding (re-purposing video for multiple formats and audiences).
· SAVVIS’ Financial Transaction Service (FTS) was approved as a network platform for routing order flow to NASDAQ SuperMontage using the popular FIX (Financial Information eXchange) messaging protocol.
· SAVVIS managed media services powered the International Emmy Awards.

Financial Highlights

· Fourth quarter revenues of $69.4 million (highest quarterly revenues in company’s history).
· Record full year revenues of $252.9 million.
· Net cash flow breakeven in fourth quarter.
· Fourth quarter operating cash flow generated of $4.0 million, breakeven for the year.

About SAVVIS
SAVVIS Communications (NASDAQ: SVVS) is a leading Managed Services Provider that delivers private IP VPNs (virtual private networks), hosting, IP voice and application services to businesses. SAVVIS solutions are designed for industries with demanding IP requirements, including legal, media, retail, professional services, healthcare, manufacturing, and financial services. With its recent acquisition of the commercial business of WAM!NET, the company now delivers fully managed media services that enable organizations to share, collaborate, store and manage content with their partners and clients, and accelerate their workflows in the process.

SAVVIS was ranked #3 in IP VPN market share by IDC in its 2003 report, trailing only AT&T and MCI/WorldCom. Known as The Network that Powers Wall StreetSM, its network reliability was declared “perfect” in Network World magazine’s groundbreaking study of backbone performance. In 2003, SAVVIS won the American Business Awards “Stevie”TM in the category of Best Customer Service Organization. SAVVIS’ managed hosting services were awarded the Service Provider Excellence Award by Boardwatch magazine for its virtualized approach to managed hosting, and the Market Engineering Award from Frost & Sullivan for product differentiation and innovation.

For more information about SAVVIS’ Intelligent IP NetworkSM and managed hosting solutions, visit: . For information about WAM!NET visit: www.wamnet.com.

Financial tables to follow.   A copy of this release and associated tables will be available on www.savvis.net. The quarterly earnings conference call will take place on February 10, 2004 at 9:00 AM Eastern and will be available on /company/investors/index.html. Investors should then click on the Conference Calls section. The presentation for the call will be under the Presentations section. Please call 888-405-4399 (domestic) or 610-769-3888 (international). The passcode is “SAVVIS NEWS” and the conference leader is Nancy Bridgman Lysinger. A replay of the call will begin one hour after the end of the call on Tuesday, February 10, 2004 and will continue until 10:00 p.m. eastern on Tuesday, February 17, 2004. To access the replay, dial 888-566-0121 (domestic) or 402-998-1141 (international). An audio version of the conference call will be permanently available on /company/investors/index.html in the Audio Archives section.

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 affect actual results are set forth as risk factors in SAVVIS’ SEC reports and filings, including its annual report on Form 10-K for the year ended December 31, 2002, as filed with the Securities and Exchange Commission on February 28, 2003, and all subsequent filings.

 

For More Information, Investors Contact:
Nancy Bridgman Lysinger
VP, Treasurer and Investor Relations
703-234-8000
nancy.lysinger@savvis.net

For More Information, Media Contact:
Carter B. Cromley 
Director of Public Relations
703-234-8000
carter.cromley@savvis.net