Date: Thu, 18 Dec 1997 22:49:52 GMT Server: Apache/1.2.4 Last-Modified: Wed, 01 Oct 1997 18:43:52 GMT ETag: "42f4-27a2-343299e8" Content-Length: 10146 Accept-Ranges: bytes Connection: close Content-Type: text/html DGS REPORTS 98% REVENUE GAIN FOR 3d QTR 1996


For more information:
Thomas Associates 415-596-2700
Robert Schettino
bobtino@thomaspr.com
Jeff Byrne
jbyrne@dgsystemstems.com
Tom Shanahan
tsha1@dgsystemstems.com
DG Systems 415-276-6600

DG SYSTEMS REPORTS 98% REVENUE GAIN FOR THIRD QUARTER 1996

Company commences commercial delivery of television advertisements

SAN FRANCISCO, CALIFORNIA - October 16, 1996 - Digital Generation Systems, Inc. (NASDAQ: DGIT), a leading provider of electronic distribution services to the broadcast industry, today reported revenue of $2.3 million for its third quarter ended September 30, 1996, a gain of 98% over the third quarter of 1995.

Earnings before interest, taxes, depreciation and amortization (EBITDA) improved from a loss of $1,660,000 in the third quarter of 1995 to a loss of $1,164,000 in the most recent quarter. EBITDA measures the company's cash flow results, excluding the costs of deploying its audio and video distribution equipment at production studios and broadcast stations. The company also reported a net loss per share of $0.21 in the quarter, compared with a net loss of $0.25 per share in the third quarter of 1995.

Additionally, in a separate release, the company announced today the signing of a binding, definitive agreement for the acquisition of PDR Productions, a leading media duplication and distribution company based in New York City. PDR Productions will continue to operate as a wholly owned subsidiary of DG Systems.

"We are pleased with the healthy growth in our audio deliveries," said Henry Donaldson, DG Systems president and CEO. "Our revenue growth reflects a continuing expansion of our digital delivery network, coupled with an increasing demand among our advertiser, agency, and record company clients for digital delivery of their content to broadcasters."

Unit deliveries of audio commercials and first-release music singles totaled 184,000 in the third quarter, more than doubling the 91,000 deliveries achieved in the corresponding quarter a year ago. The company's online network can now deliver digital audio content to over 5,000 radio stations, representing nearly a 50% increase in the past twelve months.

DG Systems also recently announced that over 340 television stations, including more than 50 out of the top 90 major network stations, along with ten major cable interconnects, have agreed to install the company's video receiving equipment and receive video spot advertising over the DG Systems network. The company to date has deployed its ADvantage Digital Video Playback System (DVPS) at 20 television stations, and plans to deploy the DVPS platforms at 150 television stations by the end of 1996.

DG Systems commenced commercial video deliveries to television stations in September 1996, and has completed paid delivery of several hundred video spots to date. However, the company does not anticipate substantial revenues from video services until 1997.

Founded in 1991, Digital Generation Systems is a leading provider of electronic distribution services to the broadcast industry, linking hundreds of advertisers, agencies, music companies, and syndicators with over 5,000 radio stations and 20 television stations in the United States. DG Systems offers a family of services for quick and reliable delivery of CD-quality advertisements, new music singles, and short-form programming to radio stations, along with associated traffic instructions and supporting promotional material. The company also offers a family of services for rapid, reliable delivery of high-quality advertisements and associated traffic instructions to television stations and cable interconnects. DG Systems is headquartered in San Francisco, with field offices in New York, Chicago, Los Angeles, and Washington, D.C. DG Systems can be reached at 415-276-6600 or www.dgsystemstems.com on the World Wide Web.

This release contains forward-looking statements relating to the company, the expansion of its digital audio and video networks, and the demand among certain clients for digital audio and video delivery services. These forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These and other risks relating to DG Systems' business are set forth in the company's Form 10-Q filed with the Securities and Exchange Commission on August 6, 1996.

DG Systems, ADvantage Digital Video Playback System, and ADvantage DVPS are trademarks of Digital Generation Systems, Inc. All other trademarks are the property of their respective holders.

###

DIGITAL GENERATION SYSTEMS, INC.
Corporate Information
September 30, 1996
Description of Business:Digital electronic distribution services to the broadcast industry linking advertisers, agencies, music companies and syndicators to thousands of broadcast stations.
Corporate Address:875 Battery Street
San Francisco, CA 94111
Telephone/Fax:Phone: 415/276-6600
Fax: 415/276-6601
Trading Information:NASDAQ - DGIT
11,623,807 shares outstanding
1996 Price Range: $7 3/4 - $13 1/4
Current Price (10/15) $9 1/2
Officers:President & CEO: Henry W. Donaldson
V.P. Finance & CFO: Thomas P. Shanahan

Three Months Ended September 30
Income Summary
(in thousands, except for per share and other data)
19951996Change
 
Revenues$1,146$2,26598%
Delivery Costs$ 445$ 664
Customer Operations$ 752$ 934
Sales & Marketing$ 880$ 905
Research & Development$ 407$ 519
General & Administrative$ 322$ 407
EBITDA($ 1,660)($ 1,164)30%
Depreciation$ 637$1,181
Interest Income$ 132$ 399
Interest Expense($ 221)($ 451)
Net Loss($ 2,386)($ 2,397)-1%
 
Earnings Per Share($ 0.25)($ 0.21)
 
Weighted Average Shares9,55011,575
 
Financial Position
Cash & Short-term Investments$ 8,710$ 29,386
Total Assets$15,119$ 41,669
 
Other Data
Total Deliveries91,000184,000102%
On-Line Stations3,4005,00047%


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Digital Generation Systems, Inc.
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Telephone 415.276.6600 / 800.335.4DGS
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