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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
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Date of Report (Date of
earliest event reported): August 5, 1999
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Digex, Incorporated
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(Exact name of registrant as specified in its charter)
Delaware 59-3582217
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
0-26873
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(Commission File Number)
One Digex Plaza
Beltsville, MD 20705
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 847-5000
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Item 5. Other Events
On August 4, 1999, Digex, Incorporated (the "Company") issued
the attached press release.
Item 7. Financial Statements and Exhibits
Exhibit 99 Press Release, dated August 4, 1999.
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SIGNATURE
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 thereunto duly authorized.
Date: August 4, 1999
Digex, Incorporated
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(Registrant)
By: /s/ Bradley E. Sparks
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Name: Bradley E. Sparks
Title: Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Page
No. Description No.
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99 Press Release, dated August 4, 1999
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Exhibit 99
Investor Contact: Curtis Lightburn
Vice President of Investor Relations
Phone: 813-829-2408
E-Mail: [email protected]
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Media Contact: Missie Hamilton Sargeant
Digex, Incorporated
Phone: 301-847-2438
E-Mail: [email protected]
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DIGEX REPORTS SECOND QUARTER 1999 RESULTS
Revenues More Than Double To $12.6 Million
BELTSVILLE, MD, August 4, 1999 -- Digex, Incorporated (Nasdaq: DIGX) today
announced that revenues for the quarter ended June 30, 1999, grew to $12.6
million from $4.8 million for the same period last year. For the first six
months of 1999, revenues increased to $22.0 million from $8.6 million for the
same period last year. Servers managed in Digex's data centers increased to
1,525 in second quarter 1999 from 788 servers in the same period last year.
"Record revenues were driven by the addition of new customers and growth among
our existing customer base, as they add servers to support increased use of the
Internet as a core business platform," said Mark Shull, president and chief
executive officer of Digex. "In the marketplace, we're seeing a growing number
of businesses that are outsourcing the management of their Web sites and Web-
enabled business applications to managed hosting companies like Digex."
Forrester Research projects the Web hosting market will increase from $2 billion
in 1999 to approximately $15 billion in 2003.
"Digex offers a comprehensive outsourcing solution that includes computer
hardware, software, network technology, systems management, and value-added
professional services such as stress testing," Shull said. "Furthermore, our
relationship with Intermedia Communications Inc. (Nasdaq: ICIX), a top Internet
and data communications company, provides complementary broadband access
solutions to enable business customers to move applications to the Internet."
As expected, EBITDA (as defined below) for the quarter ended June 30, 1999, was
negative $12.2 million, compared to a negative $2.9 million in the same period
last year. For the first six months of 1999, EBITDA was negative $16.5 million,
compared to negative $4.7 million in the same period last year.
"Additional operating expenses were the result of increases in technical support
personnel to staff our two new Internet data centers, additional sales and
service personnel, and the added overhead that is required of a newly
independent company," said Bradley Sparks, chief financial officer for Digex.
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Digex also reported a second quarter net loss of $18.1 million, or ($0.36) per
share on a pro forma basis, compared to a net loss of $5.0 million, or ($0.10)
per share on a pro forma basis, in the same period last year. For the first six
months of 1999, the company reported a net loss of $26.7 million, or ($0.53) per
share on a pro forma basis, compared to a net loss of $8.8 million, or ($0.18)
per share on a pro forma basis, in the same period last year.
In the last week, Digex completed its initial public offering (IPO) of
11,500,000 shares of common stock, representing 18.7% of its common stock,
raising gross proceeds of $195.5 million. Parent company Intermedia
Communications Inc. retained 81.3% of the equity interest in Digex.
Among other second quarter highlights, Digex also:
. Significantly grew its core enterprise hosting business, adding key
customers, including Compaq, Lawson Software, and Philips Components, a
subsidiary of Philips Electronics, and expanded its services with Martha
Stewart Living Omnimedia and other existing customers.
. Continued to see strong growth in the emerging application hosting market,
adding 16 new customers during the second quarter.
. Expanded its distribution channel program, adding 40 new partners during
the second quarter.
. Saw increased demand for Digex's value-added services, including Digex
SmartServices(SM) Version 3.0 which includes enhanced features for
security, backup, reporting, monitoring, and administration.
EBITDA consists of earnings before interest and other income, income taxes,
depreciation and amortization. EBITDA does not represent funds available for
management's discretionary use and is not intended to represent cash flow from
operations. EBITDA should not 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 is not a term defined by generally accepted
accounting principles, and, as a result, the measure of EBITDA presented herein
may not be comparable to similarly titled measures used by other companies.
About Digex
Digex is a leading provider of Web and application hosting services for some of
the world's leading companies that rely on the Internet as a critical business
tool. Digex also offers value-added enterprise and professional services,
including performance and security testing, monitoring, reporting, and
networking services. Digex customers, from mainstream corporations to Internet-
based businesses, leverage Digex's services to deploy secure, scalable, high
performance business solutions, including electronic retailing, online banking,
online procurement and customer self-service applications. Digex is a subsidiary
of Intermedia Communications Inc. (Nasdaq: ICIX). Additional information on
Digex is available at http://www.digex.com.
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DIGEX, INCORPORATED
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share information)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
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June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
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<S> <C> <C> <C> <C>
Revenues $ 12,629 $ 4,752 $ 22,021 $ 8,621
Costs and expenses:
Cost of operations 2,694 1,491 4,346 2,378
Cost of services 3,478 1.567 7,430 2,674
Selling, general and administrative 18,658 4,639 26,727 8,276
Depreciation and amortization 5,652 2,027 9,966 4,054
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Total costs and expenses 30,482 9,724 48,469 17,382
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Loss from operations (17,853) (4,972) (26,448) (8,761)
Interest expense (239) - (239)
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Net loss $ (18,092) $ (4,972) $ (26,687) $ (8,761)
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Pro forma net loss per common share -
basic and diluted $ (0.36) $ (0.10) $ (0.53) $ (0.18)
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Shares used in computing pro forma basic
and diluted net loss per share (1) 50,000,000 50,000,000 50,000,000 50,000,000
=========== =========== =========== ===========
EBIDTA (12,201) (2,945) (16,482) (4,707)
</TABLE>
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(1) Pro forma basic and diluted loss per share have been calculated assuming
that the common shares issued in connection with our recapitalization in
April 1999 were outstanding for all periods of Digex presented. These
shares do not include the effect of the initial public offering of shares
that occurred subsequent to June 30, 1999.
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