<PAGE> 1
FOR FURTHER INFORMATION:
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
EDWARD L. PIERCE, CFO MARILYN WINDSOR DARCY BRETZ
KEVIN P. COHN, CONTROLLER GENERAL INQUIRIES MEDIA INQUIRIES
713-548-3400 312-640-6692 312-640-6756
FOR IMMEDIATE RELEASE
WEDNESDAY, APRIL 26, 2000
METAMOR WORLDWIDE, INC. REPORTS Q1 RESULTS
IMPROVING DEMAND DRIVES SEQUENTIAL REVENUE GROWTH
HIGHLIGHTS:
o REVENUES FOR Q1 2000 WERE $158.4 MILLION, UP 30% OVER Q1 1999 AND 7% OVER
Q4 1999
o Q1 2000 REVENUES FOR XPEDIOR, METAMOR'S EBUSINESS SOLUTIONS SUBSIDIARY,
WERE UP 26% OVER Q4 1999
o ADDED KEY MARKETING AND SALES PERSONNEL TO DRIVE REVENUE GROWTH
o PROCEEDING FORWARD WITH PSINET MERGER
o POSITIVE EFFECTS TO DATE ON EARLY CROSS-SELLING EFFORTS
-------------------------------------------------------------------------
SUMMARY OF RESULTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000 1999
--------- --------
REVENUES ......................................... $ 158,364 $121,701
GROSS PROFIT ..................................... $ 61,509 $ 52,372
OPERATING INCOME (LOSS) .......................... $ (12,974) $ 12,548
INCOME (LOSS) FROM CONTINUING OPERATIONS ......... $ (5,737) $ 4,564
EARNINGS (LOSS) PER SHARE (DILUTED):
INCOME (LOSS) FROM CONTINUING OPERATIONS ....... $ (0.16) $ 0.14
SUPPLEMENTAL INCOME (LOSS) FROM
CONTINUING OPERATIONS (1) .................... $ (0.04) $ 0.20
(1) ADJUSTED FOR AFTER-TAX STOCK COMPENSATION
CHARGE AND GOODWILL AMORTIZATION. THIS DOES
NOT PURPORT TO BE IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
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METAMOR WORLDWIDE, INC.
FIRST QUARTER
ADD-1-
HOUSTON, APRIL 26, 2000 -- METAMOR WORLDWIDE, INC. (NASDAQ: MMWW), one of the
leading providers of information technology (IT) solutions, today announced
results for the quarter ended March 31, 2000. Revenues for the quarter increased
30 percent to $158.4 million, from $121.7 million in the first quarter of 1999.
The improvement reflected strong internal growth in the company's eBusiness
solutions subsidiary, Xpedior Incorporated (Nasdaq: XPDR), as well as the
effects of acquisitions. Excluding Xpedior, Metamor's core units (collectively
the "Core Business") reported revenues of approximately $107.4 million for the
first quarter, which approximated that reported for the fourth quarter of 1999.
For the current quarter, the company reported a loss from continuing operations
of $5.7 million, or $0.16 per share. This loss related to a substantial increase
in sales and marketing expenses, non-cash compensation charges and one-time
legal expenses. The higher level of sales and marketing expenses related to
enhancing infrastructure to drive and support higher revenue growth, to position
Xpedior as a standalone public company, and to create greater brand awareness of
Xpedior and the Core Business.
Commenting on the results, Peter T. Dameris, president and chief executive
officer, said, "Last year, we successfully executed initiatives that have
repositioned the company to take advantage of the current technology cycle.
During that period, we sold our non-core businesses, including our IT staffing
unit, and established Xpedior as a publicly held eBusiness solutions company.
This repositioning, together with the investments we made in sales
infrastructure, branding and marketing, helped drive the strong first quarter
operating performance and positioned the company for higher sustainable growth
in the future."
Dameris continued, "Revenues for the first quarter were up 7 percent over the
fourth quarter of 1999, which represented the first sequential quarterly
increase since the second quarter of 1999. Revenues for our Core Business were
in line with our expectations and were achieved despite a more difficult than
expected operating environment in the first two months of the quarter due to the
spillover effects of Y2K and the effects of foreign currency translation on our
foreign operations. Revenues in the last month of the quarter were much improved
over the first two months, reflecting improved client demand and the benefits of
our repositioning and infrastructure investments.
"Revenue momentum in the Core Business continues to build. We are seeing a
significant increase in the number and size of the projects on which we are
proposing and being awarded. This sales momentum, supported by the investments
we made in our sales and marketing infrastructure, should drive high sales
growth over the remainder of the year. We expect to meet our previously
announced organic growth targets for the Core Business and believe that our
ability to exceed these growth targets will be enhanced with the proposed PSINet
merger as we further penetrate PSINet's 90,000 plus middle market customers.
"Xpedior's revenues for the quarter were up 26 percent over the fourth quarter
of 1999. Xpedior reported impressive improvements in virtually all of its
operating metrics, including bill rates, revenues per consultant and gross
margin. This impressive performance and strong outlook for the remainder of the
year demonstrate the quality of Xpedior as one of the premier, full-service
eBusiness solutions companies."
The company's loss for the first quarter included: (i) a $19 million increase
over the first quarter of 1999 in the selling, general and administrative
expenses ("SG&A") of Xpedior, (ii) a non-cash charge of $1.4 million related to
stock options of Xpedior issued prior to its initial public offering in December
1999,
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METAMOR WORLDWIDE, INC.
FIRST QUARTER
ADD-2-
(iii) $2.5 million in legal expenses related to the company's prosecution of
claims against certain officers and principals of an acquired business, and (iv)
over $3.0 million in sales infrastructure and marketing expenditures in the Core
Business. The after-tax effects of these expenses totaled $14.7 million, or
$0.42 per share. The investments include higher marketing and branding
expenditures, as well as investments in sales and recruiting infrastructure
necessary to support a higher level of growth.
INVESTMENTS IN SALES AND MARKETING. Over the past few months, the company has
invested heavily in sales and recruiting infrastructure and marketing programs
of the Core Business to drive and support higher growth levels. The company has
added a number of high-level solutions sales personnel and established a sales
support function to more effectively train the sales force of the Core Business.
The company also made modifications to its sales and recruiting programs in an
effort to align them more closely with its operating objectives. These
initiatives, coupled with the company's branding and marketing efforts, are
beginning to drive higher revenue growth.
ACQUISITIONS AND ALLIANCES. The company continues to support the development and
growth of several new practice areas in the Core Business. As previously
announced, the company expanded its Oracle capabilities with the February
acquisition of NextLinx Services, an Oracle solutions provider headquartered in
the Washington, DC area. The company also continues to organically grow its
Oracle, JD Edwards, Great Plains, i2 and Ariba practices while evaluating other
strategic acquisition opportunities in the eBusiness, supply chain management
and customer relationship management arenas. In support of its business
strategy, the company also entered into or expanded several key alliance
relationships in the first quarter with industry leaders such as Silknet, HAHT,
iManage, CASEwise and Great Plains, further enhancing its capabilities in
leading-edge technologies. The company is also exploring opportunities to
further expand its relationships with best-of-breed enterprise application
integration development companies to support its vertical market strategy.
NEW WINS. The company's Core Business had numerous successes in the first
quarter that should provide strong momentum into the second quarter and
remainder of the year. These included the following:
o A 27-month contract extension with one of the largest transportation
enterprises to provide maintenance, enhancement and system support for 57
mission-critical systems.
o A contract to develop a mobile computing system and handheld eBusiness
application with an Internet component for a state government entity.
o A two-year guarantee to provide Web and legacy services for a national
financial services company.
o A system scalability study that initiates a project to re-engineer the
existing order management systems for a global food company.
o The development of a Web-based child welfare system for a state government
department.
o The completion of the first phase to develop the Intranet for a diversified
services, technology and manufacturing company.
o The installation and implementation of a Web-enabled SAP solution for an
eCommerce distribution business.
o The implementation of an SAP human resources and supply chain management
system for a global food company.
o A contract for the SAP business warehouse implementation at one of the
leading producers of electronic products.
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METAMOR WORLDWIDE, INC.
FIRST QUARTER
ADD-3-
ACQUISITION BY PSINET. As previously announced, PSINet Inc. (Nasdaq: PSIX), the
Internet Super Carrier, entered into an agreement to acquire the company in a
stock-for-stock exchange. Under terms of the acquisition, PSINet will exchange
0.9 of a share of its common stock for each share of common stock of the
company. The acquisition is subject to stockholder approval of both companies as
well as certain regulatory approvals. PSINet also agreed to invest $50 million
in convertible preferred stock of Xpedior.
Commenting on the acquisition, Dameris said, "We are excited about joining
forces with PSINet to create a truly global infrastructure and IT services
business. Our service offerings, geographic presence and middle-market focus fit
extremely well with PSINet's Internet and hosting infrastructure and operations.
As the gatekeeper of applications, we believe that we can accelerate the growth
of PSINet's hosting centers and help them drive higher revenue per customer and
higher-margin revenues, as well as improve customer stickiness. We believe that
our access to PSINet's vast middle market client base will significantly enhance
our ability to improve our growth rate and better utilize our capacity."
Dameris continued, "As we plan for the combination of the two companies and
begin our cross-selling efforts, we are seeing, in a very tangible way, the
strategic benefits of merging the two enterprises. Currently, we are jointly
pursuing hosting engagements for a number of our larger clients. At the same
time, we are pursuing significant new business opportunities with a number of
PSINet's existing and prospective customers."
Metamor offers clients a broad range of information technology solutions
including eBusiness, packaged software, application maintenance and support,
business process outsourcing, application development and hosting, network
integration, training and technical documentation. With offices across the U.S.
and abroad, Metamor provides flexible delivery of value-added services through a
combination of geographic presence, industry focus, and specialized technology
practices.
METAMOR WORLDWIDE CAN BE REACHED ON THE INTERNET AT www.metamor.com.
---------------
TABLES FOLLOW . . .
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METAMOR
FOURTH QUARTER
ADD-4-
METAMOR WORLDWIDE, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(in thousands, except per share amounts)
2000 1999
--------- ---------
Revenues from services ....................... $ 158,364 $ 121,701
Gross profit ................................. 61,509 52,372
Operating costs and expenses:
Selling, general and administrative ........ 64,238 35,245
Stock compensation ......................... 1,413 --
Depreciation and amortization .............. 8,832 4,579
--------- ---------
74,483 39,824
--------- ---------
Operating income (loss) ...................... (12,974) 12,548
Interest expense ............................. (3,004) (3,082)
Other income (expense) ....................... 6,631 (1,347)
--------- ---------
Income (loss) before income taxes ............ (9,347) 8,119
Provision (benefit) for income taxes ......... (3,610) 3,555
--------- ---------
Income (loss) from continuing
operations ................................ (5,737) 4,564
Income from discontinued operations,
net of income taxes (1),(2) ............... -- 4,650
--------- ---------
Net income (loss) ............................ $ (5,737) $ 9,214
========= =========
Earnings (loss) per share (diluted):
Income (loss) from continuing
operations .............................. $ (0.16) $ 0.14
Income from discontinued operations ........ -- 0.14
--------- ---------
Net income (loss) .......................... $ (0.16) $ 0.28
========= =========
SUPPLEMENTAL DATA (3)
Income (loss) from continuing
operations before income taxes ............. $ (9,347) $ 8,119
Stock compensation ........................... 1,413 --
Goodwill amortization ........................ 4,655 2,459
--------- ---------
Supplemental income (loss) before
income taxes .............................. (3,279) 10,578
Supplemental provision (benefit) for
income taxes .............................. (2,026) 4,077
--------- ---------
Supplemental income (loss) from
continuing operations ..................... $ (1,253) $ 6,501
========= =========
Supplemental earnings (loss) per
share (diluted) .............................. $ (0.04) $ 0.20
========= =========
NOTES:
(1) Comprised of the company's project support and software solutions units,
which were sold in the third quarter of 1999.
(2) Includes an allocation of interest expense of $4.0 million for the three
months ended March 31, 1999.
(3) Adjusted for the after-tax effects of non-cash stock compensation charges
and goodwill amortization. This does not purport to be in accordance with
generally accepted accounting principles.
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METAMOR WORLDWIDE, INC.
FIRST QUARTER
ADD-5-
METAMOR WORLDWIDE, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED BALANCE SHEET DATA (UNAUDITED)
MARCH 31, 2000 AND DECEMBER 31, 1999
(in thousands)
2000 1999
-------- --------
Cash and cash equivalents ................... $ 31,495 $ 92,625
Accounts receivable, net .................... 194,031 178,129
Intangible assets, net ...................... 597,667 572,936
Total assets ................................ 968,134 971,809
Long-term debt, net of current maturities ... 218,922 209,193
Stockholders' equity ........................ 455,000 458,155
Shares of common stock outstanding .......... 34,635 34,552
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METAMOR WORLDWIDE, INC.
FIRST QUARTER
ADD-6-
Except for historical information, all of the statements, expectations and
assumptions contained in the foregoing are forward-looking statements that
involve a number of risks and uncertainties. Although the company has used its
best efforts to be accurate in making those forward-looking statements, it is
possible that the assumptions made by management may not materialize. In
addition, the information set forth in the company's Form 10-K for the fiscal
year ended December 31, 1999, describes certain additional risks and
uncertainties that could cause actual results to vary materially from the
results covered in such forward-looking statements.
A proxy statement/prospectus has been filed by Metamor Worldwide, Inc. ("MWI")
and PSINet Inc. ("PSINet") with the Commission. YOU ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE
COMMISSION. THE PROXY STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION
THAT YOU SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING THE MERGER AND
RELATED TRANSACTIONS. You may obtain a free copy of the proxy
statement/prospectus (when available) and other documents filed by PSINet and
MWI with the Commission at the Commission's web site at www.sec.gov. In
addition, the proxy statement/prospectus and other documents filed with the
Commission by MWI may be obtained free of charge from MWI by directing a request
to Metamor Worldwide, Inc. at 4400 Post Oak Parkway, Suite 1100, Houston, Texas,
77027, Attn: Investor Relations. The proxy statement/prospectus and other
documents filed with the Commission by PSINet may also be obtained free of
charge from PSINet by directing a request to PSINet Inc., 510 Huntmar Park
Drive, Herndon, Virginia 20170, Attn: Investor Relations.
MWI and its officers and directors may be deemed to be participants in the
solicitation of proxies from its stockholders with respect to the transactions
contemplated by the merger agreement and may have an interest either directly or
indirectly by virtue of their security holdings or otherwise. Information
regarding such officers and directors is included in MWI's Definitive Proxy
Statement for its 2000 Annual Meeting of Stockholders filed with the Commission
on April 18, 2000. This document is available free of charge at the Commission's
web site at http://www.sec.gov and from the MWI at the address set forth above.
PSINet and its officers and directors may be deemed to be participants in the
solicitation of proxies from stockholders of PSINet with respect to the
transactions contemplated by the merger agreement and may have an interest
either directly or indirectly by virtue of their security holdings or otherwise.
Information regarding such officers and directors is included in PSINet's
Definitive Proxy Statement for its 2000 Annual Meeting of Shareholders filed
with the Commission on April 7, 2000. This document is available free of charge
at the Commission's web site at http://www.sec.gov and from PSINet at the
address set forth above.
The preceding communications contain forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. In particular, statements regarding the PSINet/MWI merger
are based on management's current expectations or beliefs and are subject to a
number of factors and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements. The following
factors, among others, could cause actual results to differ materially from
those described in the forward-looking statements, inability to obtain or meet
conditions imposed for governmental approvals for the merger; failure of the
PSINet or MWI stockholders to approve the merger; the risk that the PSINet and
MWI businesses will not be integrated successfully; and costs related to the
merger. You should also give careful consideration to cautionary statements made
in PSINet's reports filed with the SEC, especially the section entitled
"Forward-Looking Statements" in the "Business-Risk Factors" section of PSINet's
Form 10-K for the fiscal year ended December 31, 1999.
