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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report February 28, 2000
(Date of earliest event reported: January 31, 2000)
VERIO INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-24219 84-1339720
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)
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8005 South Chester Street, Suite 200, Englewood, Colorado 80112
(Address of Principal Executive Offices) (Zip Code)
(303) 645-1900
(Registrant's telephone number, including area code)
Not applicable.
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On January 31, 2000, the Registrant issued a press release, a copy of
which is attached hereto as Exhibit 99(a) and incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99(a) Press Release issued by the Registrant dated January 31, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VERIO INC.
By: /s/ Carla Hamre Donelson
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Carla Hamre Donelson
Vice President, General Counsel
and Secretary
Dated: February 28, 2000
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Exhibit Index
Exhibit No. Description
- ----------- -----------
99(a) Press Release issued by the Registrant dated January 31, 2000
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EXHIBIT 99(a)
VERIO ANNOUNCES PLANS TO ACCELERATE WEB HOSTING
AND CO-LOCATION SERVICES
CAPITAL BUDGET FOR 2000 TOTALS $350 MILLION, INCLUDING SIGNIFICANT FACILITIES
EXPANSION
OPERATING PRIORITIES FOCUS ON THE GROWTH AND SUPPORT FOR WEB HOSTING,
E-COMMERCE, AND OTHER APPLICATION HOSTING SERVICES
EUROPEAN EXPANSION IS UNDERWAY HERBERT R. HRIBAR, PRESIDENT AND COO,
RESIGNS EFFECTIVE FEBRUARY 4, 2000
ENGLEWOOD, Colo., January 31, 2000 -- Verio Inc. (Nasdaq: VRIO), the world's
largest operator of Web sites for businesses and a leading provider of
comprehensive Internet services, today announced plans to significantly expand
its web hosting and co-location physical infrastructure, systems and personnel.
For the year 2000, a capital budget of $350 million has been established, of
which approximately $300 million relates to the expansion of hosting operations.
Hosting-related expenditures include $200 million for hosting centers, $45
million for servers, and the balance for product development, software licenses,
IT systems, a new Web Operations Control Center, and leasehold improvements.
Approximately $50 million of capital has been budgeted for network equipment,
systems and facilities to support the growth of the high-speed access business.
The expenditures will be fully funded with cash currently on hand.
"Verio is strategically positioned to accelerate its growth of higher value
services as it capitalizes on its global leadership in hosting to capture an
exploding demand for hosted applications among small and medium businesses,"
commented Justin L. Jaschke, CEO. "Verio's leadership position in web hosting
and rapidly-growing base of business customers give us a phenomenal position
from which to offer an expanded array of hosted applications. This announcement
signals our strategy to accelerate the growth of our hosting and application
services businesses as we anticipate the ever-increasing needs of growing
businesses."
Growing demand for all types of hosting services -- from co-location, to
outsourced applications, to shared and dedicated servers -- is driving the
acceleration of Verio's investment plans. Forrester Research, Inc. projects that
U.S. Business Internet Services will grow from $7.7 billion in 1999 to $56.6
billion in 2003, including hosting services which they project will increase
from $2.0 billion in 1999 to $14.6 billion in 2003. Forrester also projects that
the application hosting market will grow from $0.9 billion in 1999 to $11.3
billion in 2003, with small and medium-sized businesses -- Verio's target market
- -- accounting for $10.5 billion or 93% of that market. Verio has experienced
significantly higher growth rates in its web hosting, application hosting, and
co-location products, and their increasing percentage of Verio's total revenues
are expected to drive higher internal growth rates in 2000 and beyond. For 1999,
Enhanced Services and Other revenues, which are primarily web hosting and
co-location services, will be approximately 50% of total revenues, up from 35%
in 1998. Enhanced Services and Other revenues include shared and dedicated
hosting products, co-location services, domain name registrations, e-commerce
and other application hosting services. Sales of e-commerce sites, for example,
doubled in the fourth quarter compared to the third quarter and Verio now hosts
over 10,000 e-commerce sites. Verio has set its operating plans for 2000 in
anticipation of increasing internal growth rates, beginning in the first quarter
of 2000. Acquisitions to expand product mix, distribution, and increase
international presence are expected to add further to the total revenue growth
rate.
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Verio's planned hosting center expansion totals approximately 650,000 square
feet in 21 locations, including 80,000 square feet in Virginia and five other
large facilities averaging 60,000 square feet in Seattle, the San Francisco Bay
Area, Dallas, Chicago, and New York. Ten of these facilities are expected to be
complete by mid-year 2000. The balance are expected to be completed by year-end
2000, at which time Verio expects to have 40 hosting centers located throughout
the US. The larger facilities will be used to provide all types of web and
application hosting as well as co-location services. Co-location services
include software configuration, performance monitoring, change order tracking,
security, data storage, asset management and fault detection systems. Revenue
targets for these new data centers are to exceed $20 million in 2000 and $125
million in 2001, with associated cash operating costs of $50 million and $110
million respectively. Based on internal forecasts and current pricing, the new
facilities will ultimately be capable of supporting over $1 billion in annual
revenues, of which 75% is projected to come from shared and dedicated hosting
products and 25% from co-location services. Dedicated servers are one of Verio's
fastest growing and most profitable businesses. Dedicated servers are configured
to meet the specific needs of each customer, and are augmented with additional
services including security, data backup and retrieval, load balancing, and
support services. With over 2,500 dedicated servers installed to-date, Verio has
established a leading position in the global dedicated server market. Over the
last six months, Verio has more than tripled its sales of dedicated servers.
With additional marketing, investments in provisioning, new products, and sales
through Verio's direct and indirect sales force, the high growth rates in this
product line are expected to continue, which in turn drive the need for
additional capital for servers.
In addition, to capitalize on opportunities presented by the rapidly emerging
European business Internet market, Verio has begun to significantly expand its
web hosting operations in Europe. Verio has a leading position in hosting
throughout Europe and its expansion plans are designed to leverage its local
presence and world-leading web hosting products and platforms. Verio's already
strong market position is comprised of more than 1200 resellers, a private label
relationship with Swisscom AG (NYSE: SCM), a "Powered by Verio" co-branded
program with Italian telecommunications company Infostrada, a wholly owned
subsidiary of the Mannesmann Group (OTCC: MNNSY), equity investments in web
hosting companies in the top four European markets, and an exclusive marketing
relationship with AOL, CompuServe and Netscape Online in the U.K. Verio has
recently acquired the remaining 40% interest in its Rapidsite U.K. subsidiary
and now owns 100% of that company. Verio also owns 100% of WWWService AG in
Germany and minority interests in web hosting companies in France and Spain.
Expansion plans in Europe include adding more "Powered by Verio" and other
distribution partners throughout the key European markets, acquiring hosting
facilities, hiring additional local sales and technical support staff,
increasing local brand recognition through marketing and advertising campaigns,
and pursuing additional hosting acquisitions in Europe. Verio's European
expansion plans are expected to add $20 million in operating costs in 2000.
Verio is also expanding internal operations to drive and support higher growth,
particularly in the web hosting and co-location product areas. The telesales
force for web related products is projected to increase from 60 to over 250
associates. Further investments will also be made in additional automated care
solutions, development of web hosting products and platforms, recruitment of
technical personnel to staff the new hosting centers, additional sales and
customer care training, and completing the migration of its current customers
onto systems built in 1999.
With respect to financial results for the fourth quarter and fiscal year 1999,
the company expects to issue its normal year-end release on March 1, 2000. Based
on a new SEC staff accounting bulletin issued in Dec. 1999 (SAB 101) Verio has
elected to defer $2.5mm of revenue received in the fourth quarter. Despite this
deferral, Verio expects to report EBITDA positive results for the quarter.
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Verio also announced that Herbert R. Hribar, President and Chief Operating
Officer since July 1998, has resigned. While at Verio Mr. Hribar led the
integration of the numerous acquisitions that Verio made in the 1996-1998
period, eliminating duplicate costs and driving operational efficiencies. With
the integration effort now substantially complete, Justin L. Jaschke, CEO, will
assume Mr. Hribar's responsibilities. The management team extends its thanks to
Herb Hribar for his tremendous energy and contributions to Verio, and wish him
well in his future endeavors.
Verio is hosting a conference call on Tuesday, February 1, 2000 at 9:00 a.m.
EST. Interested parties may access the call via the Verio web site at
http://home.verio.net/company/invest.cfm.
ABOUT VERIO INC.
Verio Inc. (NASDAQ: VRIO) is a leading provider of comprehensive business
Internet services -- including broadband connectivity, virtual private networks,
Web hosting solutions and e-commerce -- with an emphasis on serving the small
and mid-sized business market. Since its inception in March 1996, Verio has
rapidly established a global presence through the acquisition, integration and
growth of independent Internet providers with a business customer focus. Verio
supports its operations with highly reliable and scalable national
infrastructure and systems including a facilities-based Tier One national
network. Verio delivers locally based sales and engineering support in 41 of the
top 50 U.S. markets under the Verio brand name and provides Web hosting services
to customers in more than 100 countries.
For more information on Verio, visit the company's Web site at www.verio.com or
call 1-888-Get-VERIO. Corporate headquarters are located at:
8005 S. Chester St., Suite 200
Englewood, Colorado 80112
Tel: (303) 645-1900.
Except for the historical information contained herein, certain matters set
forth in this press release concerning Verio are forward-looking statements
within the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to
risks and uncertainties, including but not limited to fluctuations in operating
results, additional capital requirements, competition, integration of
acquisitions, and implementation of network infrastructure. Readers are also
encouraged to refer to Verio's reports from time to time filed with the
Securities and Exchange Commission, including the Company's Current Quarterly
Report on Form 10-Q filed on November 12, 1999, for a further discussion of
Verio's business and risk factors that may affect operating and financial
results.
