Filed by PSINet Inc.
Pursuant to Rule 425 under the Securities Act of
1933 and deemed filed pursuant to Rule 14a-12(b) and
Rule 14d-2(b) of the Securities Exchange Act of 1934
Commission File No.: 0-25812
Subject Company: Metamor Worldwide, Inc.
Commission File No.: 0-26970
Media Contact: Analyst Contact:
- -------------- ----------------
Robert Leahy Kevin Libby
(703) 726-1063 (703) 726-1245
leahyr@psi.com libbyk@psi.com
- -------------- --------------
PSINET REPORTS RECORD Q1 2000 REVENUE OF $222.9 MILLION, A 113% INCREASE OVER Q1
1999
Acquisition of Calgary-based ISP extends PSINet's cross-Canada offerings.
HIGHLIGHTS:
- -----------
. Annualized revenue increases to $892 million
. Corporate accounts increased to over 98,000, a 66% increase over Q1
1999
. Hosting center revenue increased 35% quarter over quarter
. Continuing aggressive integration of previously acquired companies
. Entered into a definitive agreement to acquire Metamor Worldwide, Inc.
(NASDAQ: MMWW), a leading provider of information technology solutions
Ashburn, Va., May 9, 2000 - PSINet Inc. (NASDAQ: PSIX), the Internet Super
Carrier, today reported first quarter revenues of $222.9 million, a 113%
increase over first quarter 1999 and a 20% increase over fourth quarter 1999.
The Company's net loss available to common shareholders for the quarter was
$204.2 million ($1.35 basic and diluted loss per share), a 9% improvement from
$223.5 million ($1.63 basic and diluted loss per share) reported in the fourth
quarter 1999. EBITDA for the quarter was negative $15.5 million, an improvement
from negative $16.9 million reported in the fourth quarter 1999.
During the past two years PSINet has made significant acquisitions of fiber-
based bandwidth and related equipment to enhance its network infrastructure and
lower its per unit operating costs. The Company has also acquired more than 65
companies throughout its five geographic operating regions, resulting in an
overlapping network infrastructure in several markets. During the first quarter
of 2000, PSINet completed and approved its plan directed at developing a global
brand image, eliminating network redundancies, streamlining operations and
product offerings, and taking advantage of synergies created by its integration
process.
As a result of these actions, the Company recorded a restructuring charge of
$16.9 million ($0.11 per share), and $59.0 million ($0.39 per share) of write-
offs of assets and accelerated depreciation and amortization of certain tangible
and intangible assets. The cash impact of these charges and write-offs is
approximately $16.9 million and will result in annualized cash savings of $19.5
million beginning April 2000.
Additionally, as previously announced, the Company began in February 2000 to
consolidate its worldwide retail consumer operations into a new retail business
unit named Inter.net Ltd. During the first quarter 2000, the Company incurred
approximately $1.1 million ($0.01 per share) of incremental direct costs in
conjunction with these efforts.
The net loss available to common shareholders for the first quarter 2000
excluding the above items and also excluding $32.5 million in gains from the
sale of certain investments was $159.7 million ($1.06 basic and diluted loss per
share) compared to $134.8 million ($0.99 basic and diluted loss per share) in
the fourth quarter 1999 which excluded fourth quarter charges of $88.7 million
for acquired in-process research and development.
-2-
"The three key elements of the first quarter include successful execution of our
investment strategy, a strong cash position, and the building of a high quality
customer base," said William L. Schrader, chairman and chief executive officer.
"First, our investments in fiber, hosting centers, and Internet companies
continued aggressively during this quarter. Second, having about $2 billion
dollars in cash at a time when the global capital markets are questionable, is a
very comforting situation for PSINet as it meets the extraordinary Internet
growth opportunities in 28 countries. Third, reaching nearly 100,000 business
customers on five continents, and simultaneously increasing the annualized
revenue per customer by shifting our customer mix toward web hosting, has the
intended long term positive impact. Together, I think the customers, products,
network, facilities and our team are an unbeatable competitive advantage."
"Over the next 12-18 months, we have two primary objectives," said Harold S.
"Pete" Wills, president and chief operating officer. "First, we will continue
to accelerate selected portions of PSINet's hosting center build-out in key
global markets while actively managing our overall hosting space inventory.
Second, PSINet's network operating leverage should begin to increase
consistently via continued aggressive integration of acquired companies, organic
growth, and additional distribution. During the first quarter, we added over 80
new sales representatives in the U.S. for our web hosting business, including a
large number of experienced eBusiness salespeople. While these new hires had a
negative impact on our first quarter sales and marketing expense, we expect our
enhanced sales force will begin generating significant benefits to our hosting
business in the second half of the year. Over the next 12-18 months, we expect
to complete the deployment of a full field sales force in North America."
During the first quarter 2000, to meet the explosive demand for hosting
services, PSINet accelerated the opening of its hosting facilities in Amsterdam
and Los Angeles. With the addition of these new facilities, PSINet now operates
eight centers, comprising approximately 250,000 total square feet of hosting
space that currently generate over $80 million in annualized hosting revenue.
PSINet also accelerated the construction of its Atlanta and Toronto facilities,
which will add 100,000 square feet of new hosting space by the end of the second
quarter.
Through April 2000, PSINet Ventures, a PSINet subsidiary, has completed over 50
investments in Internet and telecommunications start-up companies. PSINet
Ventures is an important part of the Company's technology research and product
development strategy, customer lead generation, as well as a source for future
revenue that is expected to arise out of commercial relationships with Internet
companies in which the Company invests. During the quarter, PSINet realized
gains in excess of $30 million from the sale of some of its investments.
QUARTERLY HIGHLIGHTS
. In March, announced entry into a definitive agreement to acquire Metamor
Worldwide, Inc. (NASDAQ: MMWW), a leading provider of information
technology solutions. The
-3-
combination will also give PSINet a controlling interest in Metamor's
publicly traded e-Business solutions subsidiary, Xpedior Incorporated
(NASDAQ: XPDR). Completion of the transaction is subject to a number of
conditions, including the receipt of shareholder approval.
. In February, announced the creation of Inter.net Ltd., a global consumer
Internet service provider with approximately 550,000 users in 20 plus
countries, which is anticipated to be spun off, including a possible
initial public offering in approximately one year.
. In January, announced the opening of a new state-of-the-art 50,000 square
foot global Internet hosting center in the City of Los Angeles.
. In January, entered into a broad strategic relationship with Akamai
Technologies (NASDAQ: AKAM) for the deployment of Akamai servers and the
development of new technologies for application delivery.
. In February, along with Hicks, Muse, Tate & Furst Incorporated and Aether
Systems Inc. (NASDAQ: AETH), made a significant investment in and
established a strategic relationship with Metrocall, Inc. (NASDAQ: MCLL).
Metrocall has six million mobile wireless messaging subscribers, including
approximately one million small to medium enterprise customers.
. During the quarter, continued lighting its 14,000 mile U.S. wide dark fiber
network with advanced Nortel (NYSE: NT) equipment.
. Effected a two-for-one stock split on February 11, 2000.
. Completed the sale of 16.5 million shares of the Company's 7% Series D
cumulative convertible preferred stock with net proceeds of $740.2 million,
excluding $57.9 million deposited into a deposit account, pursuant to
Securities and Exchange Commission Rule 144A.
OPERATING RESULTS
. PSINet provided service to over 98,000 corporate customer accounts at March
31, 2000, an increase of 66% over the 59,700 customer accounts at March 31,
1999. Accounts outside the U.S. represented 67% of PSINet's customer base
at March 31, 2000, compared with 60% at March 31, 1999.
. Average annual new contract value for business accounts increased to $7,300
for the first quarter of 2000 from $7,100 for the fourth quarter of 1999
and $6,200 for the first quarter of 1999. This continues to reflect the
increasing demand for value-added services and higher levels of bandwidth.
. Average annual new contract value for managed web hosting accounts in the
U.S. was $123,000 for the first quarter of 2000.
. The business account retention rate remained strong for the quarter at 75%,
compared with 81% for the first quarter of 1999 and a full-year retention
rate in 1999 of 79%.
. As of March 31, 2000, PSINet serviced over 1.3 million end users of its
carrier customers around the world.
HISTORIC PERFORMANCE METRICS
Quarter Ended
-------------
03/31/00 12/31/99 03/31/99
---------- --------- ---------
Business Accounts 98,900 91,000 59,700
Carrier Customers' end users 1,300,000 753,000 634,000
Average New Contract Value - Business Accounts $ 7,300 $ 7,100 $ 6,200
Corporate Account Retention Rate 75% 79% 81%
Capital Expenditures (in millions) $ 412.2 $ 452.0 $ 127.6
Revenues (in millions):
U.S. and Canada $ 136.4 $ 105.0 $ 59.1
% of Total Revenues 61% 57% 56%
(Table continues)
-4-
Latin America $ 14.1 $ 11.5 --
% of Total Revenues 6% 6% --
Europe $ 33.4 $ 31.7 $ 15.9
% of Total Revenues 15% 17% 15%
Asia $ 38.7 $ 37.2 $ 29.9
% of Total Revenues 17% 20% 29%
IMEA $ 0.3 NA NA
% of Total Revenues 1% NA NA
BALANCE SHEET
At March 31, 2000, PSINet had cash, restricted cash and short-term investments
of $2.02 billion, compared with $1.76 billion at December 31, 1999. This
includes an escrow of $38.2 million to fund one semi-annual interest payment on
PSINet's 10% Senior Notes. Property, plant and equipment, net of accumulated
depreciation and amortization, increased to $1.53 billion at March 31, 2000,
from $1.16 billion at December 31, 1999. Property, plant, and equipment at March
31, 2000 included $670.4 million in fiber assets. The company's debt obligations
were $3.28 billion at March 31, 2000, compared with $3.30 billion at December
31, 1999.
-5-
Condensed Consolidated Statements of Operations
(In millions of U.S. dollars, except shares and loss per share)
Three Months Ended
------------------
March 31, 2000 March 31, 1999
-------------- --------------
Amount % of Revenue Amount % of Revenue
------ ------------ ------ ------------
Revenue $ 222.9 100.0% $ 104.9 100.0%
-------- ----- -------- -----
Operating costs and expenses:
Data communications and 163.6 73.4 76.0 72.5
operations
Sales and marketing 38.5 17.3 18.6 17.7
General and administrative 36.3 16.3 17.1 16.3
Depreciation and amortization 134.5 60.3 26.8 25.6
Restructuring charge 16.9 7.6 - -
Costs related to planned distribution
and sale of consumer business 1.1 0.5 - -
---- ----
Total operating costs and
expenses 390.9 175.4 138.5 132.1
----- ----- ----- -----
Loss from operations (168.0) (75.4) (33.6) (32.1)
Interest expense (79.0) (35.4) (29.6) (28.2)
Interest income 24.8 11.1 4.7 4.5
Other income (expense), net 33.6 15.1 (0.2) (0.2)
---- ---- ---- ----
Loss before taxes (188.6) (84.6) (58.7) (56.0)
Income tax expense (benefit) - - - -
---- ---- ---- ----
Net loss (188.6) (84.6) (58.7) (56.0)
Return to preferred shareholders (15.6) (7.0) (0.6) (0.6)
----- ---- ---- ----
Net loss available to common
shareholders $ (204.2) (91.6) $ (59.3) (56.6)
======== ===== ======== =====
Weighted average shares outstanding
(thousands) (1) 150,848 106,716
======= =======
Basic and diluted loss per share $ (1.35) $ (0.56)
======== ========
Basic and diluted loss per share excluding
certain items (2) $ (1.06) $ (0.56)
======== ========
EBITDA (3) $ (15.5) $ (6.8)
======== ========
(1) The weighted-average shares outstanding used in all calculations give
retroactive effect to the company's two-for-one stock split to holders of
record as of the close of business on January 28, 2000.
(2) For the three months ended March 31, 2000, excludes a $16.9 million
restructuring charge and $59.0 million in depreciation and amortization for
the write-off and accelerated depreciation and amortization of certain
tangible and intangible assets relating to implementing a global brand
image, eliminating redundancies in our network, streamlining operations and
product offerings, and taking advantage of synergies created by the
Company's integration process. Additionally, excludes $1.1 million of
incremental direct costs incurred in conjunction with efforts to
consolidate the worldwide retail consumer operations into a new retail
business unit named Inter.net Ltd. and gains of $32.5 million from the sale
of certain investments.
-6-
(3) EBITDA is used in the Internet services industry as one measure of a
company's operating performance and historical ability to service debt.
EBITDA is not determined in accordance with generally accepted accounting
principles, is not indicative of cash used by operating activities and
should not be considered in isolation or as an alternative to, or more
meaningful than, measures of performance determined in accordance with
generally accepted accounting principles. PSINet defines EBITDA as
earnings (losses) before interest expense and interest income, taxes,
depreciation and amortization, other non-operating income and expenses,
charges for acquired in-process research and development, restructuring
charge and costs related to the planned distribution and sale of the
consumer business. PSINet's definition of EBITDA may not be comparable to
similarly titled measures used by other companies.
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars)
March 31, 2000 December 31, 1999
-------------- -----------------
Assets
Cash, restricted cash and short-term investments $ 2,023.9 $1,755.3
Accounts receivable, net 112.2 103.6
Other current assets 123.3 83.5
--------- --------
Total current assets 2,259.4 1,942.4
Property and equipment, net 1,528.4 1,162.6
Goodwill and other intangibles, net 1,154.8 1,212.0
Other assets and deferred charges 198.9 175.3
--------- --------
Total assets $ 5,141.5 $4,492.3
========= ========
Liabilities and shareholders' equity
Current portion of long-term debt $ 119.9 $ 115.0
Trade accounts payable 143.7 141.5
Other accounts payable and accrued liabilities 129.6 101.4
Accrued interest payable 73.5 94.7
Deferred revenue 31.9 29.5
--------- --------
Total current liabilities 498.6 482.1
Long-term debt 3,159.7 3,185.2
Deferred income taxes 13.8 17.9
Other liabilities 83.8 84.1
--------- --------
Total liabilities 3,755.9 3,769.3
--------- --------
Shareholders' equity
Preferred stock 938.8 375.2
Common stock and capital in excess of par value 1,435.6 1,196.3
Treasury stock - (2.0)
Accumulated deficit (1,065.8) (861.5)
Accumulated other comprehensive income 139.1 125.4
Bandwidth asset to be delivered under IXC (62.1) (110.4)
agreement --------- --------
Total shareholders' equity 1,385.6 723.0
--------- --------
Total liabilities and shareholders' equity $ 5,141.5 $4,492.3
========= ========
-7-
A joint prospectus/proxy statement was filed by PSINet Inc. ("PSINet") and
Metamor Worldwide, Inc. ("Metamor") with the Commission on April 14, 2000. YOU
ARE URGED TO READ THE PROSPECTUS/PROXY STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS TO BE FILED WITH THE COMMISSION. THE PROSPECTUS/PROXY STATEMENT
CONTAINS IMPORTANT INFORMATION THAT YOU SHOULD CONSIDER BEFORE MAKING ANY
DECISION REGARDING THE MERGER AND RELATED TRANSACTIONS. You may obtain a free
copy of the prospectus/proxy statement and other documents filed by PSINet and
Metamor with the Commission at the Commission's web site at www.sec.gov. The
prospectus/proxy statement and other documents filed with the Commission by
PSINet may also be obtained free of charge from PSINet by directing a request to
PSINet Inc., 510 Huntmar Park Drive, Herndon, Virginia 20170, Attn: Corporate
Secretary. In addition, the prospectus/proxy statement and other documents
filed with the Commission by Metamor may be obtained free of charge from Metamor
by directing a request to Metamor Worldwide, Inc. at 4400 Post Oak Parkway,
Suite 1100, Houston, Texas, 77027.
PSINet and its officers and directors may be deemed to be participants in the
solicitation of proxies from its stockholders with respect to the transactions
contemplated by the merger agreement and may have an interest either directly or
indirectly by virtue of their security holdings or otherwise. Information
regarding such officers and directors is included in PSINet's Definitive Proxy
Statement for its 2000 Annual Meeting of Shareholders filed with the Commission
on April 7, 2000. This document is available free of charge at the Commission's
web site at http://www.sec.gov and from PSINet at the address set forth above.
Metamor and its officers and directors may be deemed to be participants in the
solicitation of proxies from stockholders of Metamor with respect to the
transactions contemplated by the merger agreement and may have an interest
either directly or indirectly by virtue of their security holdings or otherwise.
Information regarding such officers and directors is included in Metamor's Proxy
Statement for its 2000 Annual Meeting of Stockholders filed with the Commission
on April 18, 2000. This document is available free of charge at the
Commission's web site at http://www.sec.gov and from Metamor at the address set
forth above.
The preceding communications contain forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. In particular, statements regarding the PSINet/Metamor
merger are based on management's current expectations or beliefs and are subject
to a number of factors and uncertainties that could cause actual results to
differ materially from those described in the forward-looking statements. The
following factors, among others, could cause actual results to differ materially
from those described in the forward-looking statements: inability to obtain or
meet conditions imposed for governmental approvals for the merger; failure of
the PSINet or Metamor stockholders to approve the merger; the risk that the
PSINet and Metamor businesses will not be integrated successfully; and costs
related to the merger. You should also give careful consideration to cautionary
statements made in PSINet's reports filed with the SEC, especially the section
entitled "Forward-Looking Statements" in the "Business-Risk Factors" section of
PSINet's Form 10-K for the fiscal year ended December 31, 1999.
Headquartered in Ashburn, VA., PSINet is an Internet Super Carrier offering
global eCommerce infrastructure and a full suite of retail and wholesale
Internet services through wholly-owned PSINet subsidiaries. Services are
provided on PSINet-owned and operated fiber, satellite, web hosting and
switching facilities providing direct access in more than 800 metropolitan areas
in 27 countries on five continents. PSINet information can be obtained by
e-mail at info@psi.com, by accessing the web site at www.psinet.com or by
------------ --------------
calling in the U.S. (800) 799-0676.
-8-
PSINet's first quarter earnings conference call will be broadcast over the web
via live video and audio streaming beginning today at 11:00 a.m. Eastern
Standard Time and can be accessed at www.psinet.com. Questions will be accepted
--------------
via e-mail at investor-relations@psi.com.
--------------------------
###