Digex Inc/DE – ‘8-K’ for 5/2/01 – EX-99.0

On:  Wednesday, 5/2/01, at 3:33pm ET   ·   For:  5/2/01   ·   Accession #:  950133-1-500855   ·   File #:  0-26873

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         4      9K 
 2: EX-99.0     Press Release                                          6     29K 

EX-99.0   —   Press Release

EX-99.0
1st Page of 6
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
                                                                    EXHIBIT 99.0

NEWS RELEASE                                                                    

MEDIA CONTACTS:                                        INVESTOR RELATIONS:  
Laura Heinrich               Nicole Morodan            Tania Almond         
Digex, Inc.                  MS&L, for Digex           Digex, Inc.          
240.456.3488                 212.213.7140              240.456.3800         
 laurah@digex.com             nmorodan@mslpr.com        tania.almond@digex.com

 DIGEX ANNOUNCES FIRST QUARTER RESULTS

 Revenue Increases 106%; Industry Recognition from Gartner Group Validates
Continued Dominance in Managed Hosting Space

LAUREL, MD, MAY 2, 2001 - Digex, Incorporated (Nasdaq: DIGX), the leading       
high-end managed Web and application hosting service provider for businesses    
worldwide, today announced revenue of $53.1 million for the quarter-ended March 
31, 2001, a 106% increase over the year-ago level. Managed servers totaled 4,107
with average monthly revenue per server of $4,249. EBITDA* losses continued to  
narrow to $13.8 million with net loss per share of $0.69 in the quarter.        

Digex continues to build a strong and sustainable business model for hosting on 
many fronts. Digex launched several new value-added services, solidified a      
substantial channel through formal agreements with WorldCom, and continued its  
expansion plan to penetrate new markets both domestically and abroad. As part of
the announced agreements with WorldCom, the Digex business plan is to be funded 
through 2002, subject to WorldCom board approval, with annually committed       
revenues to be driven through WorldCom sales efforts.                           

"Our consistent singular focus on managed services continues to prove correct   
during a time when more and more enterprise clients are moving key business     
processes to the Internet," said Mark Shull, president and chief executive      
officer. "Businesses continue using the outsourced model for many corporate     
functions, well beyond the simple outwardly facing Web site. This, of course,   
increases complexities in architecture, redundancy and security which are       
precisely how Digex has engineered its centralized managed platforms."          

Digex has begun to localize its sales force, with deployment of regional sales  
offices and personnel across the country. "Not only will this result in more    
effective local sales activities, but will also assist our channel partners,"   
Shull noted.                                                                    

"We continued to expand our enterprise client base in the first quarter, with   
the addition of major companies including Commerce One Global Services,         
Discovery Communications, Geiger Bros, Johnson Controls, Microsoft EMEA and     
Novartis-Stiftung fur Gerontologie (Novartis Foundation for Gerentology). We    
executed significant expansions for clients such as Economist.com, Fannie Mae,  
Ford Motor Company, and Miller Brewing Company," continued Shull. "Additionally 
we introduced 18 new hosting bundles that have been launched with WorldCom."    

EX-99.0
2nd Page of 6
TOC
1st
Previous
Next
↓Bottom
Just 2nd

"WorldCom delivers several important financial advantages to Digex, including   
the ability, through its data centers and network, to expand capacity and enter 
new markets with very low levels of capital investment," said Tim Adams, chief  
financial officer. "In the first quarter, we operationalized a WorldCom data    
center in Virginia for managed hosting, and over the next several months plan to
operationalize WorldCom data centers in France, Germany, the New York           
metropolitan area and Tokyo. All of these new locations will leverage the       
investments in monitoring, automation and product development which Digex has   
made, with WorldCom's investments in network and data center infrastructure."   

"We continue to lead the industry with our next-generation products making our  
client's business directions and needs the driving forces behind our            
innovation," said Rebecca Ward, president product management, engineering and   
marketing. "Some examples of this include the integration of Dynamic Fail-Over  
for SQL 2000 for high-availability sites and the introduction of server-based   
intrusion detection with TruDefense to address the ongoing security requirements
of our clients running business-critical applications."                         

Quota-carrying salespeople grew to 128 out of a total Digex employee base of    
1,455, as of March 31, 2001.                                                    

Additional quarterly highlights for Digex include:                              

    -     Placement of Digex in the Leader's quadrant in the Gartner Group's
           annual Web Hosting Magic Quadrant report. To be placed in the upper
         right, or "Leaders" Quadrant, a Web hosting service provider must
 demonstrate "industry-leading strength in both Vision and
Execution," according to Gartner.                       

-     Completion of a SAS70, Type II report and a CyberProcess      
           Certification for specified controls related to Digex's Web Hosting
            and Web Management Services at all major worldwide data centers. The
  reports conclude that controls were designed and operating
            effectively to achieve the related control objectives for the period
July 1, 2000 through December 31, 2000.                 

     -     Enhanced customer platform options and improved Web site management
        with the addition of support for Dynamic Fail-Over for SQL 2000,
supporting high-availability for Windows based database 
         architectures. Digex, continuing to support Microsoft application
technologies, also announced support for Commerce 2000. 

    -     Expanded the Digex security product line with TruDefense, a server
     based intrusion detection and prevention service, designed to
discover and stop hacker attacks on a real-time basis.  

 -     Commercialized ClientCentral(TM), the Digex customer management
portal, with nearly all clients now operational.        

   -     Published 6 separate XML schemas for the automated interchange of
          operational data between a service provider and a clients internal
          system. These schemas were developed as part of project Tiger with
      Microsoft and Compaq and have been made publicly available for
commercial use.                                         

                                                                     Page 2 of 6

EX-99.0
3rd Page of 6
TOC
1st
Previous
Next
↓Bottom
Just 3rd
-     Developed a complete, end-to-end Sun solution set, with the   
            introduction of support for Sun's iPlanet application server and Sun
    T3 storage capabilities. The new storage capability is fully
       integrated with the Digex managed Storagetek high-speed robotic
        system for backup and recovery of large transaction-based sites.

    -     Launched Digex SmartServices version 4.0, with improvements in the
          areas of Digex SmartReporting with the ability to consolidate site
       information across servers for improved business and technology
          decisions without impacting Web performance. Additional monitoring
     capabilities were added for Special Event Monitoring, Keynote
Monitoring and Applications Monitoring.                 

Financial highlights for Digex include:                                         
-     Revenue mix for the first quarter was approximately:                      

                                                                [Download Table]
                                      
                  Enterprise       73%
            Internet-centric       25%
Application Service Provider       2% 

-     Annualized revenue per customer, grew to over $335,000, up 96% over 1Q00  
and up from $322,000 in the previous quarter                        
-     Capital investments for the quarter totaled $29.5 million                 

Digex expects second quarter 2001 results as follows:                           

-     Expected revenue in the range of $54-$55 million                          
-     Expected gross margin similar to the 1Q01 level                           
-     Expected EBITDA* losses in the range of $13-$15 million                   
-     Depreciation and amortization in the range of $31-$33 million             
-     Net loss per share of approximately $0.71-$0.75                           

FORWARD LOOKING STATEMENTS                                                      

Statements contained in this news release regarding expected financial results  
and other planned events are forward looking statements, subject to             
uncertainties and risks, including, but not limited to, the demand for Digex's  
services and the ability of Digex to successfully implement its strategies, each
of which may be impacted, among other things, by economic, competitive or       
technological conditions. These and other applicable risks are summarized under 
the caption "Risk Factors" in the Company's annual 10K filing, and are updated  
periodically through the filing of reports and registration statements with the 
Securities and Exchange Commission.                                             

ABOUT DIGEX                                                                     

Digex (Nasdaq: DIGX) is the leading provider of high-end managed Web and        
application hosting services for some of the world's leading companies that rely
on the Internet as a critical business tool. Digex customers, from mainstream   
enterprise corporations, Internet-based businesses and Application Service      
Providers (ASPs), leverage Digex's services to deploy secure, scaleable, high   
performance business solutions, including electronic retailing, online financial
services, online procurement and customer self-service applications. Digex also 
offers value-added enterprise and professional services, including performance  
and security testing, monitoring, reporting and networking services. Additional 
information on Digex is available at www.digex.com.                             

                                                                     Page 3 of 6

EX-99.0
4th Page of 6
TOC
1st
Previous
Next
↓Bottom
Just 4th

INTERNET USERS: Digex news releases and other useful information are available  
on the Digex Web site at www.digex.com. To receive news releases by e-mail or to
request that information be mailed to you, please visit the Investor Relations  
section of the site and click on the "Investor Information Request Form" link.  

*EBITDA before certain charges consists of earnings (net loss) before interest  
expense, interest and other income, merger related expenses, foreign exchange   
gain or loss, income taxes, deferred compensation, depreciation, and            
amortization. EBITDA before certain charges does not represent funds available  
for management's discretionary use and is not intended to represent cash flow   
from operations. EBITDA before certain charges should also not be construed as a
substitute for operating income or a better measure of liquidity than cash flow 
from operating activities, which are determined in accordance with generally    
accepted accounting principles. This caption excludes components that are       
significant in understanding and assessing the results of operations and cash   
flows. In addition, EBITDA before certain charges is not a term defined by      
generally accepted accounting principles and as a result EBITDA before certain  
charges may not be comparable to similarly titled measures used by other        
companies. However, the Company believes that EBITDA before certain charges is  
relevant and useful information that is often reported and widely used by       
analysts, investors and other interested parties in the Web site and application
hosting industry. Accordingly, the Company is disclosing this information to    
permit a more comprehensive analysis of the Company's operating performance, as 
an additional meaningful measure of performance and liquidity, and to provide   
additional information with respect to the Company's ability to meet future debt
service, capital expenditures and working capital requirements.                 

All trademarks, tradenames and service marks mentioned and/or used herein belong
to their respective owners.                                                     

                                                                     Page 4 of 6

EX-99.0
5th Page of 6
TOC
1st
Previous
Next
↓Bottom
Just 5th
DIGEX, INCORPORATED 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
Unaudited (In thousands, except share and per share data) 

                                                        [Enlarge/Download Table]

                                                              THREE MONTHS ENDED      
                                                                    MARCH 31,         
                                                         ---------------------------- 
                                                              2001          2000(4)   
                                                         ------------    ------------ 
                                                                                      
Revenues                                                 $     53,052    $     25,796 
Costs and expenses:                                                                   
   Cost of operations                                           5,156           3,940 
   Cost of services                                            24,545          10,488 
   Selling, general and administrative                         37,180          26,575 
   Deferred compensation                                        1,072             994 
   Depreciation and amortization                               28,887          12,571 

                                                         ------------    ------------ 
Total costs and expenses                                       96,840          54,568 
                                                         ------------    ------------ 
Loss from operations                                          (43,788)        (28,772)
Other income (expense)                                                                
   Interest expense                                              (698)           (443)
   Interest and other income                                      267           3,500 

                                                         ------------    ------------ 
Loss before income tax benefit                                (44,219)        (25,715)
Income tax benefit                                                 --              -- 
                                                         ------------    ------------ 
Loss before cumulative effect of change in accounting                                 
  principle                                                   (44,219)        (25,715)
Cumulative effect of change in accounting principle (1)            --            (166)
                                                         ------------    ------------ 
Net loss                                                 $    (44,219)   $    (25,881)
                                                         ============    ============ 
Net loss per common share -                                                           
   (basic and diluted) (2)                               $      (0.69)   $      (0.41)
                                                         ============    ============ 
Shares used in computing basic and                                                    
   diluted net loss per share                              63,951,087      62,620,879 
                                                         ============    ============ 

EBITDA (3)                                                    (13,829)        (15,207)


(1)   Represents the cumulative net income effect of implementing SAB 101 as of 
January 1, 2000.                                                    

(2)   Basic and diluted loss per share have been calculated assuming that the   
     common shares issued in connection with the Company's recapitalization in
April 1999 were outstanding for all periods presented.              

(3)   EBITDA before certain charges consists of earnings (loss) before interest 
expense, interest and other income, merger-related expenses, foreign
      exchange gains (losses), income taxes, deferred compensation, depreciation
    and amortization. EBITDA before certain charges does not represent funds
available for management's discretionary use and is not intended to 
     represent cash flow from operations. EBITDA before certain charges should
     not to be considered as an alternative to net loss as an indicator of the
Company's operating performance or to cash flows as a measure of    
liquidity. In addition, EBITDA before certain charges is not a term 
    defined by generally accepted accounting principles, and, as result, the
measure of EBITDA before certain charges presented herein may not be
comparable to similarly titled measures used by other companies.    

(4)   The impact of SAB 101 has been retroactively reflected in the statements  
of operations for the quarter ended March 31, 2000.                 

                                                                     Page 5 of 6

EX-99.0
Last Page of 6
TOC
1st
Previous
Next
↓Bottom
Just 6th

 DIGEX, INCORPORATED
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share information)

                                                                [Download Table]

                                                           MARCH 31,   DECEMBER 31,
                                                             2001         2000     
                                                           ---------   ---------   
                                                          (UNAUDITED)              
                                                                                   
                ASSETS                                                             
Current assets:                                                                    
   Cash and cash equivalents                               $  33,849   $  83,434   
   Restricted investments                                      2,000       2,000   
   Accounts receivable, net of allowance                                           
   of $4,956 and $4,741 in 2001 and  2000, respectively       41,096      42,201   
   Due from Intermedia                                           146          40   
   Deferred costs                                              8,686       8,627   
   Prepaid expenses and other current assets                   6,519       7,452   
                                                           ---------   ---------   
      Total current assets                                    92,296     143,754   
Property and equipment, net                                  351,697     348,975   
Intangible assets, net                                        22,224      23,222   
Other assets                                                   4,247       5,100   
                                                           ---------   ---------   
      Total assets                                         $ 470,464   $ 521,051   
                                                           =========   =========   
LIABILITIES AND STOCKHOLDERS' EQUITY                                               

Current liabilities:                                                               
   Accounts payable and accrued expenses                   $  46,813   $  59,455   
   Current portion of deferred revenue                         8,222       7,734   
   Current portion of note payable                             4,235       2,772   
   Current portion of capital lease obligations                1,969       1,871   
                                                           ---------   ---------   
      Total current liabilities                               61,239      71,832   
Deferred revenue                                               3,157       4,025   
Note payable                                                   3,000       1,435   
Capital lease obligations                                     26,674      27,131   
                                                           ---------   ---------   
      Total liabilities                                       94,070     104,423   
                                                           =========   =========   
Stockholders' equity:                                                              

Preferred stock, $.01 par value; 5,000,000 shares                                  
authorized; 100,000 designated, issued and                                         
outstanding in 2000 as  Series A Convertible                       1           1   

Class A common stock, $.01 par value; 100,000,000 shares                           
authorized; 24,624,090 and 24,546,543 shares                                       
issued and outstanding in 2001 and 2000, respectively            246         245   

Class B common stock, $.01 par value; 50,000,000 shares                            
authorized; 39,350,000   shares issued and                                         
outstanding in 2001 and 2000, respectively                       394         394   

Additional capital                                           624,183     622,036   
Accumulated deficit                                         (240,088)   (195,869)  
Deferred compensation                                         (8,219)    (10,141)  
Accumulated other comprehensive loss                            (123)        (38)  
                                                           ---------   ---------   
      Total stockholders' equity                             376,394     416,628   
                                                           ---------   ---------   
      Total liabilities and stockholders' equity           $ 470,464   $ 521,051   
                                                           ---------   ---------   

                                                                     Page 6 of 6

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
Filed on / For Period End:		5/2/01		1
		3/31/01		1		2			10-Q,  10-Q/A
		12/31/00		2					10-K,  10-K/A
		7/1/00		2					11-K
		3/31/00		5					10-Q
		1/1/00		5
									List all Filings