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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): November 3, 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 November 1, 1999, Digex, Incorporated. (the "Company") issued the
attached press release.
Item 7. Financial Statements and Exhibits
Exhibit 99 Press Release, dated November 1, 1999.
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: November 2, 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 November 1, 1999
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Exhibit 99
Investor Contact: Curtis Lightburn
Vice President Investor Relations
Phone: 813-829-2408
E-Mail: [email protected]
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Media Contact: Laura Heinrich
Vice President Marketing
Phone: 301-847-5998
E-Mail: [email protected]
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DIGEX REPORTS THIRD QUARTER 1999 RESULTS
3Q99 Revenues Increase 158% from Same Period Last Year
New Smart Centers Opened on East and West Coasts
BELTSVILLE, MD - November 1, 1999 - Digex, Incorporated (NASDAQ: DIGX) today
reported third quarter revenues of $16.1 million, an increase of 158 percent
over the $6.2 million reported for the third quarter of 1998 and an increase of
28 percent over the $12.6 million reported for the second quarter of 1999.
Servers managed in Digex's data centers more than doubled to 1,993 in the third
quarter 1999 versus 924 servers in the same period last year.
"Customers' rapid adoption of the Internet for e-business and applications
delivery continues to drive the market towards managed hosting services," said
Mark Shull, president and chief executive officer of Digex. "Our revenue growth
remains strong as we see large Enterprise and Internet businesses like Ford
Motor Corporation, Colgate-Palmolive and eCredit expand their Web presence and
outsource their sites to Digex. The need for sophisticated platforms and
support services continues to increase as we see the emerging Applications
Service Provider market develop."
"To meet this increasing market demand for managed hosting services, Digex
opened two new Smart Centers located on the east and west coasts that can
support over $500 million in annualized revenue," said Shull. "Digex has always
focused on offering managed hosting services. We provide pre-engineered server
platforms, comprehensive operations support, sophisticated 24x7 monitoring, high
availability and performance solutions, backups, security services, capacity
planning, stress testing and advanced networked and caching - all designed to
enable the growth of e-business."
"The average annualized revenue per customer grew from $90,372 in the second
quarter of 1999 to $111,588 in the third quarter representing a 23 percent
increase in per customer revenue sequentially and a 130 percent increase year
over year. This was driven by strong growth among our existing customer base and
the addition of managed solutions for new clients," stated Bradley Sparks, chief
financial officer for Digex.
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Digex installed 468 servers and monthly revenue per average server increased to
$3,053 during the quarter. EBITDA loss increased from ($12.2) million in the
second quarter to ($13.5) million as Digex continued to add staffing and
increased marketing expenditures.
Key highlights for Digex include:
. Substantial growth in the core enterprise managed hosting business, adding
key customers, including Colgate-Palmolive, eCredit, Gifts.com, and
Slimfast with significant growth for existing clients: Ford Motor
Corporation, Forbes, and Travel Services International.
. Opened two major Smart Centers built to Department of Defense standards in
Beltsville, MD and San Jose, CA.
. Launched leading Dynamic Fail-Over solution to maximize site availability
and up-time for e-business customers and to offer increased server
performance guarantees.
. Expanded our leadership in the emerging Application Service Provider market
by adding Great Plains' accounting and finance applications to our suite of
hosted business management solutions.
. On August 4th, 1999 Digex completed its initial public offering of common
stock, raising approximately $180 million of net proceeds.
EBITDA consists of earnings (net loss) before interest expense, 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 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 is not a term defined by generally accepted
accounting principles and as a result EBITDA may not be comparable to similarly
titled measures used by other companies. However, the Company believes that
EBITDA is relevant and useful information that is often reported and widely used
by analysts, investors and other interested parties in the Web 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.
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 and the ability of Digex to successfully complete its
Y2K remediation project. These and other applicable risks are summarized under
the caption "Risk Factors" in the Company's Prospectus dated July 29, 1999, and
are updated periodically through the filing of reports and registration
statements with the Securities and Exchange Commission.
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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, Incorporated
is a subsidiary of Intermedia Communications Inc. (Nasdaq:ICIX). Additional
information on Digex is available at http://www.digex.com
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INTERNET USERS: Digex news releases and other useful information are available
on Digex's website at www.digex.com. To receive news releases by e-mail or to
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request that information be mailed to you, please visit the Investor Relations
section of our website, and click on the "Investor Information Request Form"
link.
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DIGEX, INCORPORATED
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share information)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
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September 30, 1999 September 30, 1998 September 30, 1999 September 30, 1998
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Revenues $ 16,111 $ 6,242 $ 38,132 $ 14,863
Costs and expenses:
Cost of operations 2,698 1,741 7,044 4,119
Cost of services 6,331 1,738 13,761 4,412
Selling, general and
administrative 20,628 4,306 47,355 12,582
Depreciation and amortization 8,146 2,027 18,112 6,081
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Total costs and expenses 37,803 9,812 86,272 27,194
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Loss from operations (21,692) (3,570) (48,140) (12,331)
Other income (expense)
Interest expense (373) - (612) -
Interest and other income 1,293 - 1,293 -
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Net loss before income tax benefit (20,772) (3,570) (47,459) (12,331)
Income tax benefit - - 4,839 -
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Net loss $ (20,772) $ (3,570) $ (42,620) $ (12,331)
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Net loss per common share -
basic and diluted (1) $ (0.36) $ (0.07) $ (0.81) $ (0.25)
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Shares used in computing pro forma
basic and diluted net loss
per share 57,250,000 50,000,000 52,443,223 50,000,000
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EBITDA (2) (13,546) (1,543) (30,028) (6,250)
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(1) 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.
(2) EBITDA consists of earnings (net loss) before interest expense, 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 flows 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.
