To my fellow shareholders:

SAVVIS extended its growth record in 2006 with strong financial performance and record new business sales success—a testament to the high quality of our services and successful execution of our strategy for growth. These achievements, and continued improvements in the company’s capital structure, positively affected investor interest in our company. Toward the end of the year, we announced important investment initiatives for 2007 that will further strengthen our foundation for accelerated growth in 2008 and beyond.

THE SAVVIS STRATEGY

Our financial achievements are critical indicators of the progress we’re making. However, market acceptance of our business model—providing IT infrastructure as a service—is the foundation for our confidence in SAVVIS’ future. Business and government enterprises are confronting the limitations of the traditional information technology (IT) model, in which technology is expensive and under-utilized, while providing no competitive advantage. The SAVVIS approach, highly responsive and purpose-built, is changing the way businesses manage information technology.

As IT professionals look for more cost-effective, efficient technology solutions, they are increasingly receptive to the SAVVIS solution. We enable outsourcing of the IT infrastructure—the technology that enables computing, security, storage, and transport of data—so CIOs can focus their resources on developing applications that add value and competitive advantage.

The basis of our strategy for success is in building on our unique expertise in managed hosting, managed network services, and virtualization. We offer the most complete, end-to-end, integrated IT infrastructure solution available to enterprises. This includes the industry-leading utility platform we introduced in 2004. We continue to refine and expand our utility and other managed services to ensure our clients get the best possible solutions from SAVVIS.

The quality of our hosting and network offerings drove another record year in sales bookings. Our 2006 bookings, on an annualized basis, totaled over $280 million, and our sales staff continued to improve productivity levels as we introduced services to new customers and expanded our relationships with our existing customers. The strong market response to SAVVIS’ offerings is exciting and energizing our team.

2006 FINANCIALS

We continued to achieve growth in our revenue, Adjusted EBITDA¹, and cash position in 2006. Strength in core hosting and managed IP VPN services drove 15% growth in total revenue, to $764.0 million. We increased our Adjusted EBITDA to $122.7 million, up 55% from 2005, on improved adjusted EBITDA margins, which were 16% of revenue, compared to 12% a year ago.

We added $37.5 million of cash to our balance sheet in the year, bringing our year-end cash position to $98.7 million. In addition, we reduced our borrowings under our revolving credit facility by $58.0 million as a result of the strong cash flow performance during the year. Our operating cash flow for 2006 was a very healthy $118.7 million, with just $73.4 million of cash capital expenditures.

We also effected the exchange of our preferred stock for shares of common stock in 2006. Holders of the preferred stock agreed to exchange those shares for just 85% of the common stock that would have accrued to them through the March 2010 redemption date. The exchange resulted in SAVVIS having a single class of equity, which increased investor interest in our common stock considerably.

Pictured, from left to right: Richard Warley, Jonathan Crane, Mary Ann Altergott, Phil Koen, Tim Caulfield, Jim Ousley, Bryan Doerr, and Jeff Von Deylen.

PRIORITIES FOR 2007

We have ambitious plans for 2007, including investments to expand and enhance our service offerings. In addition, we’ll continue to focus our efforts on meeting and exceeding customers’ expectations. We’re committed to ensuring the highest quality and reliability of our products and services—this is the cornerstone for continuing the improvement of SAVVIS’ profitability.

As we sharpen our strategy of offering infrastructure as a service, we continuously appraise our asset portfolio to focus resources on our highest performers, to ensure we’re optimizing our asset base. Early in 2007, we completed the sale of assets related to our CDN services for $135 million. We’ll reinvest the proceeds from that sale in faster-growing products and services where we have a clear competitive advantage.

Our core hosting and managed IP VPN services together posted 28% growth in 2006. We’re committed to extending that growth record. To do so, we’re working with Cisco^® to enable deployment of a next-generation Internet Protocol (IP) network that will enhance SAVVIS’ global application infrastructure and expand our ability to deliver IT infrastructure as a service. We’re also on track to open four new data centers, totaling approximately 180,000 square feet, to help meet continued demand from our customers for both basic colocation services and the most sophisticated managed IT infrastructure solutions.

SAVVIS has successfully laid the foundation for a future of growth and achievement. We’re excited about the prospects ahead, and dedicated to creating value for all of our investors. More than 2,200 SAVVIS employees around the world prove that dedication every day through their commitment to the integrity, innovation, and accountability that define the SAVVIS team, and we’re proud to work with them, and appreciative of their efforts. We’re grateful, too, to our investors for their support of SAVVIS’ success. Together, we are moving forward to create a great company.

Philip J. Koen
Chief Executive Officer

Financial Highlights

1 Please see definition and reconciliation of non-GAAP terms on Corporate Information page.