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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 28, 1999
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Digital Island, Inc.
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(Exact name of registrant as specified in charter)
Delaware 000-26283 680322824
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
45 Fremont Street, Suite 1200, San Francisco, California 94105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 738-4100
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Not Applicable
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(Former name or former address, if changed since last report.)
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Item 2 ACQUISITION OR DISPOSITION OF ASSETS
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On December 28, 1999, Digital Island, Inc. ("Digital Island")
completed the acquisition of Sandpiper Networks, Inc. ("Sandpiper") pursuant to
the terms of the previously reported Agreement and Plan of Reorganization dated
as of October 24, 1999 (the "Merger Agreement") by and among Digital Island,
Inc., Sandpiper and Beach Acquisition Corp., a wholly owned subsidiary of
Digital Island ("Merger Sub"). Merger Sub merged with and into Sandpiper, with
Sandpiper surviving the merger as a wholly owned subsidiary of Digital Island
(the "Merger").
In the Merger, each outstanding share of Sandpiper Networks capital
stock was converted into the right to receive 1.0727 shares of Digital Island
common stock. Digital Island also assumed outstanding options to acquire
Sandpiper common stock and converted these into options to acquire Digital
Island common stock at the same exchange ratio used in the Merger for
outstanding Sandpiper capital stock. The terms of the Merger were determined
through arms-length negotiations between Digital Island and Sandpiper. The
Merger is intended to qualify as a tax-free reorganization under the Internal
Revenue Code of 1986, as amended. The purpose of the Merger is to enhance the
combined company's reach as a provider of comprehensive network services for
global e-business applications.
Attached and incorporated herein by reference in its entirety as 99.1
is a copy of the press release dated December 29, 1999 announcing the
effectiveness of the Merger.
Item 7 FINANCIAL STATEMENTS AND EXHIBITS
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(a) Financial Statements of Business Acquired.
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The required financial statements with respect to Sandpiper are
incorporated by reference to Digital Island's Form S-4 Registration Statement,
as filed with the Commission on December 9, 1999 (File No. 333-92393).
(b) Pro Forma Financial Information.
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The required pro forma financial statements with respect to Sandpiper
and Digital Island are incorporated by reference to Digital Island's Form S-4
Registration Statement, as filed with the Commission on December 9, 1999 (File
No. 333-92393).
(c) Exhibits. The following documents are filed as an exhibit to this
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report:
2.1 Agreement and Plan of Reorganization, dated as of October
24, 1999, by and among Digital Island, Inc., Beach
Acquisition Corp. and Sandpiper Networks, Inc.
(incorporated by reference to Exhibit 2.1 of Digital
Island's Current Report on Form 8-K filed with the
Commission on October 27, 1999).
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99.1 Press Release, dated December 29, 1999, issued by the
Company announcing the completion of Digital Island's
acquisition of Sandpiper.
99.2 Sandpiper Networks, Inc. Financial Statements
(incorporated by reference to the Sandpiper Networks,
Inc. Financial Statements contained in Digital Island's
Form S-4 Registration Statement (File No. 333-92393).
99.3 Unaudited Pro Forma Combined Financial Statements of
Digital Island and Sandpiper (incorporated by reference
to the Unaudited Pro Forma Combined Financial Statements
of Digital Island and Sandpiper contained in Digital
Island's Form S-4 Registration Statement (File No. 333-
92393).
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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.
Digital Island, Inc
(Registrant)
Date: January 5, 2000 By: /s/ T.L. Thompson
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T.L. Thompson
Chief Financial Officer and Secretary
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EXHIBITS INDEX
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Exhibit Description
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2.1 Agreement and Plan of Reorganization, dated as of October
24, 1999, by and among Digital Island, Inc., Beach
Acquisition Corp. and Sandpiper Networks, Inc.
(incorporated by reference to Exhibit 2.1 of Digital
Island's Current Report on Form 8-K filed with the
Commission on October 27, 1999).
99.1 Press Release, dated December 29, 1999, issued by the
Company announcing the completion of Digital Island's
acquisition of Sandpiper.
99.2 Sandpiper Networks, Inc. Financial Statements
(incorporated by reference to the Sandpiper Networks, Inc.
Financial Statements contained in Digital Island's Form S-
4 Registration Statement (File No. 333-92393).
99.3 Unaudited Pro Forma Combined Financial Statements of
Digital Island and Sandpiper (incorporated by reference to
the Unaudited Pro Forma Combined Financial Statements of
Digital Island and Sandpiper contained in Digital Island's
Form S-4 Registration Statement (File No. 333-92393).
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Exhibit 99.1
DIGITAL ISLAND ANNOUNCES COMPLETION OF MERGER WITH SANDPIPER NETWORKS
Appointment of Officers from Both Companies Accelerates Integration of Digital
Island and Sandpiper Networks
SAN FRANCISCO, December 29, 1999 - Digital Island, Inc., (NASDAQ: ISLD), the
leading global e-Business Delivery Network, announced today the completion of
its merger with Sandpiper Networks, Inc. - creating a company that provides a
fast, reliable and rich infrastructure capable of supporting the demands of
interactive e-Business.
Ruann F. Ernst, formerly chairman, president and CEO of Digital Island, will
serve as chairman and CEO of the combined company. Leo Spiegel, the former
chairman, president and CEO of Sandpiper Networks, has been appointed president
of the combined company. T.L. Thompson, CFO for Digital Island, will continue in
the CFO position. Together, these officers will help ensure the continuity of
the company's expertise, execution and vision.
"Digital Island continues to remain dedicated to its core principles of
providing the best possible experience to the ultimate consumer, as a strategic
weapon in helping our own customers expand global brand awareness," Ernst said.
"The Internet has become a viable means for global interactive commerce, and
that plays to our strength of providing fast content delivery at the edges of
the network complemented by our ability to handle centrally controlled
transactions that generate e-Business revenues."
"Digital Island was the first global e-Business network, and Sandpiper Networks
was the original content delivery network, and we believe this spirit of
innovation and leadership will drive the new combined company forward," Spiegel
said. "The powerful capabilities of both companies leverage our world-class
engineers, networks and intellectual property to empower our customers
worldwide."
Since Digital Island and Sandpiper Networks had announced their merger on
October 25, 1999, the companies have also announced milestones, including:
* America Online as a new customer.
* Alliances with Sun Microsystems and Inktomi to greatly accelerate Web-
site performance through the additional deployment of up to 5,000 Sun
servers equipped with Inktomi's Traffic Server over the next three
years. Sun and Inktomi also agreed to make strategic investments in
Digital Island.
* Alliance with SRI International, in which SRI is scheduled to receive
$10 million in Digital Island stock in exchange for Internet
acceleration technology.
* Strategic alliance with Rhythms NetConnections, Inc. to provide DSL-based,
e-Business Delivery Services.
* Value America, the world's leading online superstore, as a new customer.
* The addition of 21 leading i-Builders to Digital Island's Global Partner
Program.
* An alliance with Microsoft Corp. to offer Multicasting and other Streaming
Services.
* A new network operations center in the U.K., and data centers in Japan and
Silicon Valley.
* The Canon subsidiary, FastNet, as a new customer.
* ft.com as a new TraceWare(TM) customer to deliver locally relevant
advertising worldwide.
* Our highest fourth quarter revenues and year-end results to date.
Digital Island(R) is a leading global e-Business Delivery Network. The company's
suite of application services for interactive e-Business allows customers and
partners to readily integrate content delivery, hosting and intelligent
networking to give the ultimate consumer a superior experience. Strategically
located Data Centers in the United States, Europe and Asia are directly
connected to leading access service providers in 21 countries. In addition,
Digital Island operates more than 1,200 content distributors across the
Internet, which improve the performance and reduce the cost of hosting high-
volume Web
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applications in target markets. This network is expected to grow to 5,000
content distributors in 350 locations worldwide by the year 2003. Digital Island
is headquartered in San Francisco.
Important Notice
Digital Island and Sandpiper Networks are registered trademarks of Digital
Island, Inc and Sandpiper Networks, Inc. All other trademarks are properties of
their respective owners.
This release may contain forward-looking statements that involve risks and
uncertainties. Important factors which could cause actual results to differ
materially from those in the forward-looking statements, include but are not
limited to: the company's short operating history which makes it difficult to
predict its future results of operations; the company's history of operating
losses and expected future losses which could impede its ability to address the
risks and difficulties encountered by companies in new and rapidly evolving
markets; the company's future operating results could fluctuate which may cause
volatility or a decline in the price of the company's stock; the company may not
be able to price its services above the overall cost of bandwidth causing its
financial results to suffer; and other factors detailed in the Company's filings
with the Securities and Exchange Commission including its recent filing on Form
S-1.
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Media contact at Digital Island:
Irwin Greenstein
415/738-4162
Mobile: 415/271-0260
[email protected]
Investor Relations contact at Digital Island:
Tom Thompson
415/738-4162
[email protected]
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