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SAVVIS 8-K 2007

Documents found in this filing:

  1. 8-K
  2. Ex-2.1
  3. Ex-2.1
Form 8-K

UNITED STATES

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 (Date of earliest event reported): June 29, 2007

 


SAVVIS, INC.

(Exact name of registrant as specified in its charter)

 


 

Delaware   0-29375   43-1809960

(State or Other Jurisdiction

of Incorporation)

  (Commission File Number)  

(IRS Employer

Identification No.)

 

1 SAVVIS Parkway, Town & Country, Missouri   63017
(Address of Principal Executive Office)   (Zip Code)

Registrant’s telephone number, including area code: (314) 628-7000

N/A

(Former Name or Former Address, if Changed Since Last Report)

 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



ITEM 1.01.   ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On June 29, 2007, SAVVIS Communications Corporation (“SAVVIS”), a wholly-owned subsidiary of SAVVIS, Inc. (“Registrant”), sold assets and assigned a lease for two data centers in Santa Clara, California to Microsoft Corporation (“Microsoft”) pursuant to an Asset Purchase Agreement dated as of June 29, 2007 (the “Purchase Agreement”). Under the terms of the Purchase Agreement, Microsoft paid SAVVIS $190 million in cash for the assets and forgave the repayment of approximately $10 million of advanced revenue paid by Microsoft to SAVVIS. In addition, the service contract between Microsoft and SAVVIS related to the data centers was terminated, and SAVVIS was released from all potential contractual claims and obligations under the service contract.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to such document, a copy of which is filed as Exhibit 2.1 to this report on Form 8-K and is incorporated herein by reference.

ITEM 1.02.   TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.

On June 29, 2007, the Registrant prepaid its Series A Subordinated Notes (the “Notes”) in full for approximately $342.5 million. The Notes were originally issued in February 2004 and accrued interest at a rate of 15% per annum, payable semi-annually through the issuance of additional Notes. Pursuant to the terms of the Notes, the Registrant was entitled to prepay the Notes prior to January 30, 2008 for an amount equal to the outstanding principal amount, all accrued and unpaid interest on the Notes to the date of prepayment and a make-whole premium. Holders of the Notes agreed to a reduction in the make-whole premium of approximately $8.6 million in consideration for the prepayment.

ITEM 2.01.   COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

The information set forth in Item 1.01 of this Form 8-K is hereby incorporated into this Item 2.01 by reference.

 


ITEM 9.01   FINANCIAL STATEMENTS AND EXHIBITS.

 

  (b) Pro forma financial information.

 


SAVVIS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed consolidated financial statements present the pro forma financial position and results of operations of SAVVIS, Inc. and Subsidiaries (the “Company”) based upon historical financial information after giving effect to the sale of assets, the assignment of a facility lease, and the assumption and forgiveness of certain liabilities related to two of the Company’s data centers to Microsoft Corporation (“Microsoft”), pursuant to the Purchase Agreement.

The unaudited pro forma condensed consolidated financial statements presented herein have been prepared in accordance with Article 11 of Regulation S-X and are based upon the Company’s audited consolidated financial statements for the year ended December 31, 2006, and the unaudited consolidated financial statements as of and for the three months ended March 31, 2007, and certain assumptions, as set forth in the related notes, that the Company believes are reasonable. The unaudited pro forma condensed consolidated balance sheet is presented as if the sale had been completed on March 31, 2007, and the unaudited pro forma condensed consolidated statements of operations are presented as if the sale had been completed on January 1, 2006. The pro forma adjustments presented herein are based on estimates and certain information that is currently available and may change as additional information becomes available. The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the results of operations or the financial position that would have been achieved had the sale been completed at the beginning of or as of the periods presented, nor are they indicative of the future results of operations or future financial position of the Company.


SAVVIS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

MARCH 31, 2007

(in thousands)

 

     SAVVIS
Historical
    Disposition
and Pro
Forma
Adjustments
         SAVVIS
Pro Forma
 

ASSETS

         

Current Assets:

         

Cash and cash equivalents

   $ 221,574     $  190,000    

(b)

   $ 411,574  

Trade accounts receivable, net

     43,033       (160 )   (a)      44,541  
       1,668     (c)   

Prepaid expenses and other current assets

     24,296       (2,415 )   (a)      21,881  
                           

Total Current Assets

     288,903       189,093          477,996  
                           

Property and equipment, net

     336,744       (29,401 )   (a)      307,343  

Other non-current assets

     14,522       (4,777 )   (a)      9,745  
                           

Total Assets

   $ 640,169     $ 154,915        $ 795,084  
                           

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

         

Current Liabilities:

         

Payables and other trade accruals

   $ 48,516     $ (234 )   (a)    $ 48,282  

Current portion of capital and financing method lease obligations

     2,313       —            2,313  

Other accrued liabilities

     92,589       (8,705 )   (a)      94,666  
       10,782     (c)   
                           

Total Current Liabilities

     143,418       1,843          145,261  
                           

Long-term debt

     283,527       —            283,527  

Capital and financing method lease obligations, net of current portion

     143,112       —            143,112  

Other accrued liabilities

     83,669       (30,542 )   (a)      53,127  
                           

Total Liabilities

     653,726       (28,699 )        625,027  
                           

Stockholders' Equity (Deficit):

         

Common stock

     527       —            527  

Additional paid-in capital

     708,568       —            708,568  

Accumulated deficit

     (719,951 )     183,614     (d)      (536,337 )

Accumulated other comprehensive loss

     (2,701 )     —            (2,701 )
                           

Total Stockholders' Equity (Deficit)

     (13,557 )     183,614          170,057  
                           

Total Liabilities and Stockholders' Equity (Deficit)

   $ 640,169     $ 154,915        $ 795,084  
                           

 


SAVVIS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2007

(in thousands, except share data)

 

     SAVVIS
Historical
    Disposition
and Pro
Forma
Adjustments
        

SAVVIS

Pro Forma

 

Revenue

   $ 205,248     $ (8,125 )   (e)    $ 197,123  

Operating Expenses:

         

Cost of revenue

     116,675       (3,604 )   (e)      113,071  

Sales, general, and administrative expenses

     53,171       (503 )   (e)      52,668  

Depreciation, amortization, and accretion

     21,645       (1,303 )   (e)      20,342  

Gain on sale of CDN assets

     (125,198 )     —            (125,198 )
                           

Total Operating Expenses

     66,293       (5,410 )        60,883  
                           

Income from Operations

     138,955       (2,715 )        136,240  

Net interest expense and other

     18,337       (149 )   (e)      18,188  
                           

Net Income before Income Taxes

     120,618       (2,566 )        118,052  

Income taxes

     6,077       (128 )   (e)      5,949  
                           

Net Income

   $ 114,541     $ (2,438 )      $ 112,103  
                           

Net Income per Common Share

         

Basic

   $ 2.20          $ 2.15  
                     

Diluted

   $ 2.13          $ 2.09  
                     

Weighted-Average Common Shares Outstanding

         

Basic

     52,023,994            52,023,994  
                     

Diluted

     53,749,503            53,749,503  
                     

 


SAVVIS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2006

(in thousands, except share data)

 

     SAVVIS
Historical
    Disposition
and Pro
Forma
Adjustments
        

SAVVIS

Pro Forma

 

Revenue

   $ 763,971     $ (32,924 )   (e)    $ 731,047  

Operating Expenses:

         

Cost of revenue

     464,924       (17,344 )   (e)      447,580  

Sales, general, and administrative expenses

     196,059       (1,782 )   (e)      194,277  

Depreciation, amortization, and accretion

     77,538       (4,713 )   (e)      72,825  
                           

Total Operating Expenses

     738,521       (23,839 )        714,682  
                           

Income from Operations

     25,450       (9,085 )        16,365  

Net interest expense and other

     67,503       (353 )   (e)      67,150  
                           

Net Loss before Income Taxes

     (42,053 )     (8,732 )        (50,785 )

Income taxes

     1,905       —            1,905  
                           

Net Loss

     (43,958 )     (8,732 )        (52,690 )

Accreted and deemed dividends on Series A
Convertible Preferred stock

     262,810       —            262,810  
                           

Net Loss Attributable to Common Stockholders

   $ (306,768 )   $ (8,732 )      $ (315,500 )
                           

Net Loss per Common Share

         

Basic and Diluted

   $ (9.54 )        $ (9.81 )
                     

Weighted-Average Common Shares Outstanding

         

Basic and Diluted

     32,159,178            32,159,178  
                     

 


SAVVIS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

 

1. Pro Forma Adjustments

 

  (a) To eliminate historical assets and liabilities associated with the assets sold.

 

  (b) To reflect the cash proceeds from the sale of $190.0 million.

 

  (c) To account for estimated working capital adjustments and accrued liabilities related to the sale including, among others, transaction costs, taxes, and severance.

 

  (d) To reflect the gain, net of estimated income taxes.

 

  (e) To eliminate the historical revenues and expenses related to the assets sold.


  (d) Exhibits.

 

Exhibit No.

 

Description

2.1

  Asset Purchase Agreement dated as of June 29, 2007, between SAVVIS Communications Corporation and Microsoft Corporation.

 


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.

 

       

SAVVIS, INC.

Date: July 5, 2007     By:  

/s/ Jeffrey H. Von Deylen

    Name:   Jeffrey H. Von Deylen
    Title:   Chief Financial Officer

 


EXHIBIT INDEX

 

Exhibit No.

 

Description

2.1

  Asset Purchase Agreement dated as of June 29, 2007, between SAVVIS Communications Corporation and Microsoft Corporation.
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