8-K

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): July 19, 2005

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

(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 (See General Instruction A.2. below):

¨ 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 2.02.    RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On July 19, 2005, SAVVIS, Inc. announced its financial results for the quarter ended June 30, 2005. A copy of the press release containing the announcement is furnished as Exhibit 99.1 to this report on Form 8-K. The information contained in this report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01.    FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits.

Exhibit No.	Description
99.1	Press release of SAVVIS, Inc., dated July 19, 2005, furnished in accordance with Item 2.02 of this Current Report on Form 8-K.

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 19, 2005	By:	/s/          Jeffrey H. VonDeylen
		Name:   Jeffrey H. VonDeylen Title:     Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release of SAVVIS, Inc. dated July 19, 2005, reporting results for the quarter ended June 30, 2005.

EX-99.1

FOR IMMEDIATE RELEASE

CONTACTS:
Investors: Elizabeth Corse	Media: Carter Cromley
(703) 667-6984	(703) 667-6110
elizabeth.corse@savvis.net	carter.cromley@savvis.net

SAVVIS ACHIEVES $167.2 MILLION SECOND-QUARTER REVENUE

· Revenue up 3% from first quarter; Adjusted EBITDA up 24%, to $19.4 million

· Adjusted EBITDA up $25.9 million from Q2 2004 on 3% revenue decline

· Refinanced debt with new $85 million revolving credit facility

ST. LOUIS, MO. – July 19, 2005 – SAVVIS, Inc. (NASDAQ: SVVS), a leading global IT utility, announced today that revenue for the second quarter of 2005 totaled $167.2 million, compared to $173.0 million in the second quarter of 2004 and $162.2 million in the first quarter of 2005. SAVVIS’ consolidated net loss for the current quarter was $21.3 million, compared to $60.0 million in the second quarter 2004 and $20.9 million in the first quarter 2005. The second-quarter 2005 net loss included $3.3 million of net restructuring charges and $0.7 million of integration costs specifically related to the integration of CWA operations acquired in March 2004. Integration costs were $17.2 million in the second quarter 2004 and $2.1 million in the first quarter of 2005.

Cost of revenue, which excludes depreciation, amortization, and accretion, was $108.6 million, down 16% from a year ago and down just under 1% from the prior quarter. Gross profit, defined as total revenue less cost of revenue, was $58.6 million, up 33% from a year ago and 10% from the first quarter 2005. Gross margin, defined as gross profit as a percentage of total revenue, was 35% in the current quarter, up from 25% a year earlier and 33% in the prior quarter. Adjusted EBITDA* of $19.4 million increased $25.9 million from negative Adjusted EBITDA of $6.5 million a year earlier, and increased $3.7 million from $15.7 million in the first quarter 2005.

Rob McCormick, SAVVIS’ chairman and chief executive officer, said, “This was a great quarter for SAVVIS, as we continued to deliver solid improvement in our financial results, demonstrating the strength of our IT solutions for enterprises and our industry-leading team of professionals. Strong Adjusted EBITDA reflects our success in the market, as new business drove continued growth in our core Managed IP VPN and Hosting revenue. Our SAVVIS team is committed to creating value for all our shareholders by extending our leadership in the market with innovative IT solutions.”

SAVVIS

Second-quarter Financial Results

July 19, 2005

page 2

Second Quarter Results

Three months ended:	June 30, 2005			March 31, 2005			June 30, 2004
(US$ millions)
Revenue:
Managed IP VPN	$	27.5		$	26.4		$	20.8
Hosting		71.7			68.8			65.1
Other Network Services		30.2			31.6			43.9
Digital Content Services		11.4			9.6			12.4
Total Diversified Revenue		140.8			136.4			142.2
Reuters		26.4			25.8			30.8
Total Revenue	$	167.2		$	162.2		$	173.0
Cost of Revenue1	$	108.6		$	109.1		$	129.1
Sales, Gen. & Admin. Expenses	$	39.2		$	37.4		$	50.4
Operating (Loss)	$	(3.5	)	$	(5.3	)	$	(46.7	)
Adjusted EBITDA	$	19.4		$	15.7		$	(6.5	)
Net (Loss)	$	(21.3	)	$	(20.9	)	$	(60.0	)

¹excludes depreciation, amortization, and accretion

Total revenue for the second quarter decreased 3% from a year ago, primarily reflecting pricing pressure in the wholesale services market as well as the decline in revenue from Reuters, consistent with previous company announcements. Sequentially, revenue increased 3% from the first quarter of 2005, driven by growth in Hosting revenue and in Managed IP VPN revenue, both up 4% sequentially, reflecting new business from existing and new customers.

Cost of revenue was $108.6 million in the current quarter, compared to $129.1 million in the same quarter last year and $109.1 million in the first quarter of 2005. Gross margin improved to 35% in the current quarter, up from 25% in the same quarter last year and from 33% in the first quarter 2005, reflecting cost savings from continued network and hosting cost-optimization programs.

Sales, general, and administrative expenses (“SG&A”) for the current quarter were $39.2 million as compared to $50.4 million for the same period last year and $37.4 million in the first quarter of 2005. As a percentage of revenue, SG&A was 23% in the current quarter, down from 29% of revenue in the same quarter of 2004 and unchanged from the first quarter of 2005, reflecting management’s ongoing focus on operating cost control.

Net restructuring charges of $3.3 million in the quarter included payments to exit two long-term expense obligations: a naming rights agreement for a St. Louis sports and entertainment arena and a lease at a previously-vacated space.

SAVVIS

Second-quarter Financial Results

July 19, 2005

page 3

Balance Sheet and Cash Flow

Net cash provided by operating activities was $0.2 million in the second quarter, compared to $10.0 million in the first quarter and use of $25.8 million in the second quarter 2004. Second quarter 2005 operating cash flow included cash payments of $3.3 million for acquisition and integration costs, compared to payments of $21.9 million for those costs in the second quarter 2004 and $3.3 million in the first quarter 2005. Cash payments in the second quarter 2005 also included $5.5 million to exit a naming-rights agreement, which had obligated the company to make payments totaling $62.1 million through 2020, and $2.0 million to exit a long-term lease for unused space at favorable terms. SAVVIS’ cash position at June 30, 2005, was $37.0 million compared to $50.3 million at March 31, 2005, largely reflecting the $10.8 million of one-time cash payments discussed above. Day Sales Outstanding were below 30 days.

In the second quarter, SAVVIS obtained $85 million in new financing through a senior secured revolving credit facility (the “Facility”) with Wells Fargo Foothill, Inc., as arranger and administrative agent. The company used the funding to repay a $53.7 million capital lease obligation, resulting in projected savings in cash interest expense of approximately $1.0 million in 2005 and $2.7 million in 2006. Following the repayment, payment of fees and expenses related to the refinancing, and reserves for letters of credit, borrowing capacity of $17.2 million remained for use for working capital and other general corporate purposes. The interest rate on the Facility is variable, based on LIBOR market rates, with an interest rate at the time of the initial borrowing of 1-month LIBOR plus 3.00%, currently 6.2%. The re-paid capital lease obligation carried an interest rate of 9%, which was scheduled to increase to 12% in September. In addition, the new Facility extended the maturity on borrowings from March 2007 to December 2008.

Financial Outlook

Chief Financial Officer Jeff Von Deylen commented, “We’re very pleased with our second-quarter financial performance. Given the continued strength in revenue and Adjusted EBITDA performance in the second quarter, as well as a record pace of new business installations and continued improvement in customer churn, we are refining our financial outlook for the full year 2005. We anticipate continued strong performance in our core Hosting and Managed IP VPN solutions, with some offset as revenue from Reuters, our largest client, will be a lower percentage of total revenue in the second half than in the first.

“We also improved our financial position in the quarter, using available cash to terminate two long-term expense obligations, and refinancing debt with a new credit facility with significantly improved rates, increased maturity, and increased debt capacity. We remain focused on delivering solid operating cash flow and Adjusted EBITDA, which we view as key drivers of stockholder value.”

SAVVIS

Second-quarter Financial Results

July 19, 2005

page 4

Based on current information, SAVVIS management’s current expectations for full-year 2005 financial results include:

· Total revenue in a range of $650-670 million, increased from previous expectation of $640-660 million, including:

- Double-digit year-over-year growth in Hosting and Managed IP VPN revenue;

- Lower revenue from Reuters, contributing 13-15% of total annual revenue, compared to 16% of total revenue in the first half of the year;

· Adjusted EBITDA in a range of $65-75 million, increased from previous expectation of $55-65 million

· Cash capital expenditures for business growth in a range of $43-48 million, increased from previous expectation of $40-45 million as a result of higher revenue expectations

In addition, the company expects to generate positive cash flow in the second half of 2005.

Operational Highlights

· Installed new business generating approximately $45 million of annualized revenue; backlog of approximately $28 million of annualized revenue.

· Rapid commercial adoption of virtualized utility services platform, deploying close to 1,000 virtual firewalls and load balancers, more than 560 virtual servers, and almost 200 terabytes of virtualized storage to date.

· New customers signed include enterprises such as archibald ingall stretton, MediaPass, MES Solutions, Wine.com, and Zoom Information.

· SAVVIS expanded relationships with existing customers including Easybroker, FTEN, Inc., and Reuters.

*Adjusted EBITDA

“Adjusted EBITDA” represents results from operations before net restructuring charges, integration costs, depreciation, amortization, accretion, and non-cash equity-based compensation. We have included information concerning Adjusted EBITDA because our management believes that, in our industry, such information is a relevant measurement of a company’s financial performance and liquidity. The calculation of Adjusted EBITDA is not specified by U.S. generally accepted accounting principles. Our calculation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Please see the table under Selected Condensed Consolidated Financial Information for a reconciliation of Adjusted EBITDA.

Investor Conference Call

SAVVIS will webcast an investor conference call today, July 19, 2005, at 5:30 pm EDT. Both the webcast and supporting presentation will be available at www.savvis.net on the Investor Relations page. A live conference call will also be available at +1 630-395-0019 and 888-398-1687 (in North America, toll free), with the password “SAVVIS NEWS.” Recorded replays will be available on

SAVVIS

Second-quarter Financial Results

July 19, 2005

page 5

the website, and by telephone at +1 203-369-3107 and 800-846-5780 (in North America, toll free) beginning at 7:00 PM EDT today.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from SAVVIS’ expectations. Certain factors that could adversely affect actual results are set forth as risk factors described in SAVVIS’ SEC reports and filings, including its annual report on Form 10-K for the year ended December 31, 2004, and all subsequent filings. Those risk factors include, but are not limited to, variability in pricing for SAVVIS’ products, highly competitive markets, rapid evolution of technology, and changes in regulatory environments. The forward-looking statements contained in this document speak only as of the date of publication, July 19, 2005, and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.

About SAVVIS

SAVVIS, Inc. (NASDAQ: SVVS) is a global IT utility services provider that focuses exclusively on IT solutions for businesses. With an IT services platform that extends to 47 countries, SAVVIS has over 5,000 enterprise customers and leads the industry in delivering secure, reliable, and scalable hosting, network, and application services. These solutions enable customers to focus on their core business while SAVVIS ensures the quality of their IT systems and operations. SAVVIS’ strategic approach combines virtualization technology, a global network and 24 data centers, and automated management and provisioning systems. For more information about SAVVIS, visit www.savvis.net.

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