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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003,

OR

COMMISSION FILE NUMBER 0-29375

SAVVIS COMMUNICATIONS CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

1 SAVVIS PARKWAY

TOWN & COUNTRY, MISSOURI 63017

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)

(314-628-7000)

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common stock, par value $.01 per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of the voting common equity held by non-affiliates of the registrant as of June 30, 2003 was approximately $70,730,669 based upon the last reported closing sales price of $0.90 as reported on the Nasdaq SmallCap Market Index of such equity on such date.

The number of shares of the registrant’s common stock outstanding as of February 19, 2004 was 101,413,324.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents incorporated by reference and the Part of the Form 10-K into which the document is incorporated:

Portions of the definitive proxy statement for the 2004 annual meeting of stockholders to be held on May 11, 2004, to be filed within 120 days after the end of the registrant’s fiscal year, are incorporated by reference into Part III, Items 10-14 of this Form 10-K.

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PART I

CAUTIONARY STATEMENT

Some of the statements contained in this Form 10-K discuss future expectations, contain projections of results of operations or financial condition or state other forward-looking information. Any statements in this report that are not statements of historical facts, are intended to be, and are, “forward-looking statements” under the safe harbor provided by the Private Securities Litigation Reform Act of 1995. These statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual events to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and was derived using numerous assumptions. In some cases, you can identify these so-called “forward-looking statements” by our use of words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “intend” or “potential” or the negative of those words and other comparable words. You should be aware that those statements only reflect our predictions. Actual events or results may differ substantially. Important factors that could cause actual events or results to be materially different from the forward-looking statements include those discussed under the heading “Business—Risk Factors” and throughout this Form 10-K. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material. Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this annual report on Form 10-K and the information incorporated by reference in this report to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

The terms “SAVVIS,” “we,” “us,” “the Company,” and “our” as used in this report refer to SAVVIS Communications Corporation, a Delaware corporation, and its subsidiaries, except where by the context it is clear that such terms mean only SAVVIS Communications Corporation.

OVERVIEW

SAVVIS provides outsourced network, computing, and application services to businesses worldwide. We strive to deliver fully integrated solutions, built on SAVVIS’ global infrastructure and based on a virtualization technology that offer our customers lower total cost of ownership, increased availability, and improved operations.

The SAVVIS service platform was developed to support the most demanding real-time data collection and distribution applications of the financial services industry. Known as The Network That Powers Wall Street^TM, SAVVIS connects financial institutions to high performance applications such as market data, electronic trading, and straight through processing. Based on this track record and heritage in financial services, SAVVIS has expanded its customer base to include other industries with mission critical applications such as legal, media, retail, professional services, healthcare, and manufacturing.

As businesses in all industries continue to differentiate themselves through powerful applications, SAVVIS has positioned itself to deliver the technology infrastructure services needed to support these applications.

HISTORY

SAVVIS Communications was incorporated in Delaware in 1998. SAVVIS initially offered Internet access to local and regional Internet service providers, pioneering the use of Private Network Access Points (“PrivateNAPs”) to bypass the Internet’s most significant performance bottlenecks. In April 1999, SAVVIS was acquired by Bridge Information Systems, Inc. (“Bridge”), then a global provider of real-time/historical financial information and news. Bridge had constructed a highly redundant, fault tolerant network and computing infrastructure based on IP (“Internet Protocol”) and ATM (“asynchronous transfer mode”) technologies to provide its services to some of the largest financial companies and institutional investors in the world. In September 1999, the two networks were combined and renamed the SAVVIS Intelligent IP Network^SM.

On February 18, 2000, SAVVIS conducted an initial public offering (“IPO”) and began trading on the Nasdaq under the symbol SVVS. SAVVIS used part of the proceeds of the IPO to acquire the network and computing assets of Bridge, and hired the employees of Bridge who operated those assets. In addition, SAVVIS entered into an agreement to provide network services to Bridge and its world-wide client base. In 2001 Bridge went into bankruptcy and Reuters Limited (“Reuters”) and Moneyline Telerate and Moneyline Telerate International (“Moneyline”) agreed to acquire substantially all of Bridge’s assets. In the fall of 2001, SAVVIS entered into network service agreements with Reuters and Moneyline Telerate and Moneyline Telerate International, effectively replacing the agreement with Bridge who was in the process of liquidation.

During 2002, SAVVIS raised over $200 million to reduce our outstanding debt and invest in our sales and marketing opportunities.

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Additionally, in 2002, SAVVIS was chosen by Intel Online Services (“IOS”) to provide managed hosting services to IOS clients in the United States, United Kingdom and Japan under contracts SAVVIS entered into directly with former IOS customers. In 2003, the Company entered into leases and assumed management of IOS data centers located in Santa Clara, California; Chantilly, Virginia; London; and Tokyo to serve these clients.

In July 2003, SAVVIS entered into an agreement with Reuters whereby we sold Reuters our data center located in Hazelwood, Missouri, leased back approximately one-third of the data center for five years with a five year renewal option, and allowed Reuters to buy-down a portion of its minimum revenue commitments under their 2001 network services agreement with us.

In August 2003, SAVVIS entered into an asset purchase agreement with WAM!NET, a leading global provider of content management and delivery services, to acquire certain assets related to its commercial business operations, including their commercial customer contracts and related customer premise and other equipment. The integration of application services from WAM!NET and SAVVIS, along with SAVVIS’ global infrastructure, resulted in the creation of WAM!NET Media Services.

In January 2004, SAVVIS signed a definitive agreement to purchase substantially all of the assets of Cable & Wireless USA, Inc. and Cable & Wireless Internet Services, Inc. together with the assets of certain of their affiliates (“CWA”). CWA, wholly-owned by Cable and Wireless PLC, provides a range of network and hosting services, including internet access to a Tier 1 network, collocation, hosting and other value-added services such as managed security and content distribution. SAVVIS expects to complete the transaction in March 2004.

BUSINESS STRATEGY

SAVVIS’ business strategy is to provide a portfolio of flexible, integrated, managed, and global outsourced technology infrastructure services that can be purchased in part or in whole and to support a broad range of business applications. This product portfolio is particularly well suited to businesses with high performance applications, offices in multiple countries, and a desire to focus internal IT resources on developing applications that differentiate their business rather than building and managing network/hosting infrastructure.

SAVVIS’ strategy is based on the following three competencies:

Outsourced Infrastructure Services

SAVVIS’ outsourcing approach focuses on delivering managed infrastructure services that include network, hosting, and applications. Traditional outsourcers offer mainly operational savings over long term contracts with large enterprises. SAVVIS has developed an infrastructure services platform from which it can deliver high-availability services to businesses of all sizes over 1-3 year terms with both operational and technology savings. These solutions leverage a proprietary end-to-end management system and virtualized technologies so that small to mid-size businesses, typically Fortune 2000 companies, can receive improved availability and flexibility from technology infrastructure and allocate their key IT personnel to other value added projects for their business.

End-to-end Management System

Fundamental to SAVVIS’ strategy is proprietary management software that provides monitoring and management. Traditional outsourcers use separate management systems for each client configuration. SAVVIS’ integrated management platform is used to manage all client solutions end-to-end. For example, configuring a new product for a client could impact multiple infrastructure and customer premise systems including edge routers, firewalls, switches, and access devices. This process is automated through SAVVIS proprietary software. The same is true for monitoring, where proprietary software proactively monitors over 30,000 devices connected to the SAVVIS network.

Virtualized Technologies

SAVVIS has made strategic decisions to be at the forefront in implementing virtualized technology across the solution portfolio. Virtualization addresses one of the biggest inefficiencies in a business’s information technology operation – underutilization of resources. On average, servers, storage, and networks are running at 50% capacity. Through virtualization, SAVVIS can create pools of highly reliable server, storage and network resources that can be dynamically allocated to individual clients. Each client receives their own dedicated and secured slice of the resource pool completely independent of other clients. Each slice is fully utilized and easily scalable resulting in significant cost savings and improved availability for the customer.

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PRODUCTS AND SERVICES

Core Utility Services

SAVVIS’ Core Utility Services portfolio includes managed network and hosting solutions.

MANAGED NETWORK

SAVVIS offers three sets of network services: Private IP VPNs, Internet, and Managed Voice. These services can be purchased individually or in combination. The network portfolio emphasizes high performance and availability, end-to-end management and monitoring, any-to-any connectivity, security, and cost effectiveness.

IP VPN

SAVVIS’ Private IP VPN, called Intelligent IP Networking^SM, is a high performance network platform for a client’s managed voice, video, and data applications. The unique architecture of Intelligent IP allows SAVVIS to deliver network solutions that combine the reliability, performance and security of private networks with the scalability and flexibility of the Internet.

At the core of Intelligent IP is SAVVIS’ global ATM network backbone which extends to 45 countries. Most other network solutions require that all applications receive the same network service levels. ATM technology allows SAVVIS to offer private network solutions in which each application running on the network can be assigned one of five guaranteed service levels. Thus applications receive the network performance they need and clients save money by not over-building their network.

Embedded into the SAVVIS backbone is virtualization technology that allows SAVVIS to offer any-to-any connectivity without complex meshing schemes or routers at the customer site. Through virtualization, SAVVIS can define thousands of individual, secure networks using simple software parameters instead of installing, maintaining, and periodically upgrading complicated routers at the customer site.

The combination of ATM and virtualization technologies allow the customer to “plug into” the SAVVIS network cloud and receive the services they need at a price that is significantly lower than if they built the networks themselves or outsourced to a traditional telecommunications company.

Internet Access

SAVVIS provides Internet Access services on a managed or unmanaged basis. The managed offering includes installation and technical support to deliver the service; in-network services such as security are also available. The SAVVIS Internet service is designed for businesses that run mission critical applications over the Internet. SAVVIS offers its customers a wide range of scalable Internet access methods ranging from DSL through OC-3 and Ethernet access. SAVVIS is also able to include Internet service as part of a private IP VPN solution so that a company can use a private network to connect its offices, and the Internet to reach it customers or partners.

SAVVIS pioneered the use of strategically located PrivateNAPs to provide businesses with the most direct route to the Internet. PrivateNAPs avoid the Internet’s public access points, the source of most performance bottlenecks. Today, SAVVIS operates 14 PrivateNAPs including international locations in London, Tokyo and Singapore. SAVVIS has also deployed 133 Points of Presence (PoPs) in 45 countries. PoPs allow clients to plug into the SAVVIS network via a low cost “local loop.” Customer traffic is then routed through a PrivateNAP resulting in a direct connection to the ultimate Internet destination over 95% of the time. In contrast, most competitive ISPs must traverse multiple public access points to reach the desired location.

Managed Voice

In the third quarter of 2003 SAVVIS, along with its partner AccessLine, launched a managed voice services product family, which included services such as conferencing, find me/follow me access, 1-800, and automated voice response as well as integration with our managed VPN voice service currently under development. These fully managed, network-based IP-voice solutions are designed to assist IT organizations improve total cost of ownership, enhance employee productivity and reduce monthly costs by capitalizing on the benefits associated with converged access of voice and data services.

The virtualized design of these services allows customers to tap into all benefits of IP-voice without having to discard existing equipment or outlay capital for new equipment. SAVVIS’ approach is unique and in contrast to large carriers and independent voice providers who, while offering IP-voice and/or hosted voice services, cannot “mix and match” them with existing legacy systems without additional capital investment.

HOSTING

Hosting services from SAVVIS are sold under the Intelligent Hosting^SM brand name. Intelligent Hosting solutions include the full management of customer hardware, operating systems, and servers within a secure, reliable data center environment. By selecting SAVVIS to outsource their applications infrastructure, clients can eliminate most up-front capital expenditures for equipment, reduce the ongoing expense of supporting computing environments, and can focus on building differentiating services and applications. The SAVVIS Command Center provides clients full visibility into their hosted environments, giving them greater control and oversight over their systems than is typically found with an in-house solution.

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SAVVIS manages a total of more than 7,500 servers for Intelligent Hosting customers in its data center facilities located in St. Louis, San Francisco, Santa Clara, Northern Virginia, London, Tokyo and Singapore. Traffic is distributed over SAVVIS’ highly rated Internet backbone or via a private network solution developed to meet the customer’s Intranet or Extranet requirements. Through the Intelligent Hosting product set, SAVVIS can satisfy complex hosting needs with its tailored ‘a la carte’ service offering or provide pre-packaged “Fast Pack” solutions designed to support web, enterprise and database applications.

Application Services

On top of its infrastructure platform, SAVVIS is delivering a series of application services designed to enhance industry workflows. In 2003, SAVVIS launched application services for the media and financial services industries.

WAM!NET Media Services

In August, 2003 SAVVIS acquired certain assets of WAM!NET, a leading global provider of content management and delivery services. The integration of application services from WAM!NET and SAVVIS, along with SAVVIS’ global infrastructure, resulted in the creation of WAM!NET Media Services. This suite of services, designed for the SAVVIS application services for the media industry provide a shared-managed infrastructure tied to applications that streamline process and workflow around the creation, production and distribution of digital content for media industries. These services help companies to manage, share, store, and distribute their digital content inside of their organization, and throughout supply chains outside of their enterprise through a single access point and a single system.

With an open and scalable infrastructure, SAVVIS media application services enable customers to easily plug into a collaborative workflow and connect to their global communities of interest easily. Media customers can gain considerable productivity, time-to-market, and cost-saving benefits while eliminating time-intensive and costly analog steps in their workflows, IT management and maintenance requirements, and technology obsolescence that are generally associated with simple software utilities or proprietary networks.

Data Delivery Utility

In December, 2003 SAVVIS announced a partnership with HyperFeed, a developer of ticker plant technology, software and managed services for the financial markets, to launch Data Delivery Utility, a global network distribution service for financial applications and content. In addition, the new service offers end-to-end Service Level Agreements (SLAs) that guarantee network performance. SAVVIS has the exclusive rights to distribute the Data Delivery Utility worldwide.

SAVVIS Data Delivery Utility seamlessly integrates HyperFeed’s managed services and software with SAVVIS’ global infrastructure and management and monitoring systems. This combination allows the industry to “plug into” a high-performance, yet turnkey utility service for the normalization, data-basing, integration and transmission of high performance, real-time direct data sources. This service is designed for exchanges, financial institutions, content providers, and applications developers with needs for the consumption and transmission of real-time, directly sourced financial information.

CUSTOMER SERVICE

SAVVIS’ goal is to provide the highest level of customer service in the industry. We believe that high quality customer service is critical to attracting and retaining customers. We commenced business in 1996 and have grown our customer base to approximately 3,600 as of December 31, 2003.

Unlike most other service providers, who typically split customer service into separate discrete departments, SAVVIS built its customer service as a cohesive centralized operation. This means that all service calls are assigned a single point-of-contact in one of our three worldwide Operation Centers located in St. Louis, London, and Singapore. This single point of contact works with team members who are accountable for the performance of each customer’s SAVVIS solution. This unique strategy is the foundation of SAVVIS’ customer care both at service installation and in ongoing support.

SAVVIS Service Installation Process

We significantly reduce the complexity and cost of the service installation process by having a single point of contact, as well as using one automated, company-wide system. With SAVVIS’ automated installation process, the local loop is ordered, the customer premises equipment (“CPE”) is configured, routing policies are established, and circuits are provisioned once a site is entered into the customer management system. This single integrated system reduces costs, chance of human error, and install time. Because the CPE is a simple bridging device, not a complicated router, there is no need for SAVVIS to dispatch highly trained engineers to install connectivity devices at the customer sites, thus lowering costs to the customer while maintaining a high level of service.

SAVVIS Ongoing Support

Once a customer is up and running with SAVVIS, the customer is turned over to our Client Services Group. This group, which assigns a single point of contact to each customer call, is supported by powerful automated systems. SAVVIS proprietary systems monitor 30,000 devices attached to SAVVIS’ network, providing 10 data points every 30 seconds, which exceeds the capability of off-the-shelf software solutions. In addition, SAVVIS has developed proactive automated systems to help prevent outages before they happen. SAVVIS systems continuously analyze data against performance thresholds to ensure optimal service. When a threshold is not met, an alert is

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automatically generated and routed to a technician who’s trained to resolve the issue. As a result of these systems and processes, SAVVIS is able to alert its customers within 15 minutes of an occurrence, regardless of whether the occurrence is service affecting.

Service Level Agreements (“SLA”)

SAVVIS offers end-to-end SLAs that provide guarantees for network availability, throughput, latency, packet loss, and jitter. This SLA covers network performance within SAVVIS’ global infrastructure and to the customer’s site.

GLOBAL OPERATIONS

Facilities

SAVVIS clients “plug into” the SAVVIS infrastructure and receive services through hundreds of PoPs in 45 countries. PoPs are secured facilities that provide highly reliable, direct access to SAVVIS high-speed telecommunications infrastructure. SAVVIS provides network connectivity through an extensive global infrastructure that includes 300+ ATM and Frame Relay switches, 200+ backbone routers, and 17,000+ access devices on customer locations.

The SAVVIS network is designed with highly redundant backbone infrastructure including diversely routed long haul and local access connections from multiple carriers. This backbone network uses a ring architecture so that at least two diverse paths exist between switching facilities resulting in a self-healing, fault-tolerant network.

Operations Centers

Our global network operations center located in St. Louis, Missouri, operates 24 hours a day, 365 days a year, and is staffed by highly skilled technicians. SAVVIS also maintains regional network operations centers in London, Singapore, and Tokyo. These regional centers ensure backup for the St. Louis facility. From the operations centers, SAVVIS remotely monitors the components of the global infrastructure, performs diagnostics, and maintains equipment. SAVVIS also operates data center facilities around the globe, with one of the highest levels of security, redundancy, availability and on-site support. SAVVIS’ data centers are located in: St. Louis, San Francisco, Santa Clara, Northern Virginia, London, Tokyo and Singapore.

Management and Monitoring Systems

SAVVIS uses proprietary systems and software to run the applications infrastructure for its customers. Using this software, SAVVIS provides real-time monitoring for thousands of servers and storage devices, network circuits, and CPE worldwide. SAVVIS also provides easy-to-use Web-based tools, allowing clients to monitor the critical elements of their solutions. We have real-time access to system performance statistics by day, week, or month including views into CPU utilization, disk capacity, processor capacity and network interface traffic. These systems are completely integrated, allowing clients to monitor both hosting and network services.

SALES AND MARKETING

SAVVIS reaches potential new customers through a combination of direct sales and a network of outside agents and resellers. SAVVIS also services and up-sells our current customer base through our internal Client Solutions Team. As of December 31, 2003, 306 full-time persons were employed in the areas of sales, sales support, product management and marketing.

Direct Sales

SAVVIS’ direct sales force utilizes a “solution selling” approach to understand a client’s application infrastructure requirements. Once a prospect is qualified, SAVVIS engages product and engineering experts to design the final solution for the customer. With this approach, SAVVIS is able to develop a strong relationship with the client, enabling us to maximize the value derived from SAVVIS solutions. All direct sales representatives take part in extensive training program designed to develop in-depth consultative selling skills so they can better understand customers’ complex network, hosting, and application requirements and help develop tailored solutions.

Agent and Resellers

SAVVIS partners with leading agents and resellers who either sell SAVVIS products themselves or refer business to one of our direct channels to close. SAVVIS partnership programs include the following options:

Client Solutions

SAVVIS’ Client Solutions Team is responsible for managing and expanding the relationship with existing customers. The team alerts customers when they begin to outgrow their SAVVIS services and works with them to maximize the performance of their solutions. They also introduce new SAVVIS services to clients and build a plan, when appropriate, for integrating these services into their current

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solutions. Finally, they work closely with clients as their contract renewal approaches, advising them on the best way to leverage the portfolio of SAVVIS services.

Marketing

SAVVIS is a business-to-business (B2B) company whose marketing programs are targeted at information technology executives, as well as line of business and finance executives, in the B2B marketplace. SAVVIS uses brand awareness and direct marketing programs to generate leads, accelerate the sales process, retain existing customers, and promote new products to existing and prospective customers. SAVVIS print advertisements are placed in trade journals, newspapers and special-interest publications. SAVVIS also participates in industry conferences and uses direct mail, e-newsletters, surveys, telemarketing, Internet marketing, on-line and on-site seminars, collateral materials, welcome kits and direct response programs to communicate with existing customers and to reach potential new customers. SAVVIS authors and publishes articles about our industry in general and SAVVIS’ approach specifically in leading trade journals. Additionally, SAVVIS works closely with industry analysts and the press so that they understand and can communicate the value of SAVVIS services. SAVVIS closely tracks the impact and effectiveness of its primary marketing programs.

CUSTOMERS

We currently provide services to approximately 3,600 customers. From December 31, 2002, our customer count has grown by approximately 1,700 customers, with Reuters and Moneyline each representing a single customer.

In 2001, SAVVIS entered network service agreements with Reuters and Moneyline, effectively replacing the agreement with Bridge, which was in the process of liquidation. The Moneyline agreement was extended in October 2002 for an additional three years, expiring in September 2009. Reuters, representing 33%, 43%, and 13% of revenue for the years ended 2003, 2002, and 2001, respectively, is SAVVIS’ largest customer. Moneyline represented 22%, 30%, and 6% of revenue in 2003, 2002, and 2001, respectively. Bridge, which was our largest customer through the fall of 2001, represented approximately 1% and 55% of our 2002 and 2001 revenues, respectively. There was no revenue from Bridge in 2003. No other individual customer accounted for more than 5% of our revenues during the year ended December 31, 2003. SAVVIS also provides services to many financial service companies and a diverse group of enterprises in legal, retail, media, healthcare and professional services industries.

Our contracts with our customers are typically for one to three years in length. Many of our customer contracts contain service level agreements that provide for service credits should we fail to maintain specified levels of quality.

COMPETITION

SAVVIS competes against traditional telecommunications companies and large-scale systems integrators for network and hosting services, a wide range of providers in the voice space, and point software and service solutions providers in the application services market. Many of our competitors provide SAVVIS with underlying infrastructure requirements or incorporate SAVVIS services into their own portfolios.

Traditional Telecommunications Companies

This category includes companies such as AT&T, Equant, MCI, Qwest, and Sprint. These traditional carriers are attempting to build off of their legacy voice and data business to expand into IP VPNs and Hosting.

Large Scale Systems Integrators

Leading companies in this category include IBM, EDS, and Accenture. These companies tend to focus on large scale, long-term systems integration projects and outsourcing contracts that include hiring a large portion of the client’s staff.

Voice Providers

Independent Local Exchange Carriers (ILECs) such as SBC and Verizon, Voice Service Providers (VSPs) such as Masergy and GoBeam, IntereXchange Carriers (IXCs) such as MCI, Sprint, and AT&T, and hardware manufacturers such as Cisco and Avaya, are all competing in the growing IP-voice market.

Companies with more traditional voice experience, such as the ILECs and IXCs, are focused on converting their existing customers from traditional voice to IP-enhanced services such as IP-Centrex and IP-PBX solutions. Companies in the VSP space are focused on offering enhanced hosted voice services. Hardware manufacturers are seeking to sell IP-voice devices that enable customers to create their own IP-voice solutions.

Point Software and Service Solutions Providers

The primary competition for WAM!NET media services is companies building their own in-house solutions that include networks, file servers, and software applications for digital file delivery as well as digital content management. Stand-alone competitors, such as VIO or Quickcut, provide subscription based file delivery via the Internet or private networks. Finally, shipping services such as Federal Express and United Parcel Service compete by hand delivering printed and digital media.

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REGULATORY MATTERS

Overview

The following section describes laws and regulatory developments that we believe are currently applicable to our business. It does not cover all present or pending federal, state, local or foreign regulations affecting the communications industry.

Regulatory Analysis by Service Type

SAVVIS’ provides a portfolio of flexible, integrated, managed, and global outsourced technology infrastructure services that can be purchased in part or in whole and to support a broad range of business applications. Our portfolio includes a full range of manged communications as well as applications services, which we market under various trade names. Our communications-related services include Managed IP, High Bandwidth Internet Access, Hosting, and Managed Voice Services. We also anticipate providing private line services in the near future in connection with our anticipated acquisition of the Cable & Wireless USA assets.

Managed IP

The core of our managed IP services business is providing managed data networking services to corporate customers. The managed data networking services that we provide are generally characterized by regulators as data transmission services or value added services . We are authorized by law or by individual license or a general authorization obtainable by simple notification or declaration by an automatic “class” license to provide these services in all countries in which we expect to generate significant revenue from managed IP services, including the United States, United Kingdom, and Japan, as well as other major markets in North America, the European Union, and Asia.

High Bandwidth Internet Access

The high bandwidth Internet access services that we offer generally do not require any authorization beyond those required for managed data networking services and value added services. In many countries, Internet services are less heavily regulated than other enhanced data services. In the United States, for instance, no individual authorization is currently required for provision of Internet access.

However, because Internet and IP technology remains a relatively recent development, regulations concerning Internet access remain ill defined or in flux in many countries, including in the United States. There is a risk, for instance, that customers may attempt to use our network to access the Internet in countries that may prohibit or restrict such access or, after accessing the Internet, may create or view content or engage in other activities that certain countries may wish to prohibit or restrict. We may limit this risk by discontinuing such access if measures are taken or threatened by the pertinent authorities to restrict the use of our network for these purposes.

Hosting

The hosting services that SAVVIS currently provides in the United States and other foreign countries are generally not considered telecommunications service per se, however, regulations concerning data protection may be applicable. Our data center facilities are designed to ensure a secure environment in which customers locate mission critical networking hardware, which enables us to provide value-added hosting management and service options including server management, operating system management, colocation, hardware management and space and environmental provisioning. Like in the United States, most countries, hosting is a relatively new product offering and therefore communications regulations do not specifically address it.

Managed Voice

We offer a wide range of range of voice enhancement capabilities to our business customers. Our hosted telephony services are designed to enable the layering of a broad set of IT and telephony services on both PBX and IP/SIP-based voice networks. These services are designed to work with both legacy and IP-based voice networks and additional services can be implemented as needed. Voice over the Internet or voice over IP (collectively referred to as “VOIP”) may be regulated as traditional voice service in certain countries. Moreover, countries that today impose few restrictions on the provision of Internet services, including VOIP, may, in the future, adopt rules regulating VOIP services in a manner similar to the way they regulate basic voice telecommunications services. To date, the United States’ Federal Communications Commission (“FCC”) has declined not to treat VOIP as it does traditional voice services, however, various state public utility commissions have taken steps to eliminate the regulatory distinctions. Various courts are in the process of reviewing the state actions and the FCC has initiated a public inquiry to investigate the migration of voice services to IP-based networks and gather public comment to help it develop an appropriate regulatory environment for these services. We cannot predict the ultimate outcome of these various federal, state and court proceedings, and thus the future regulatory classification of VOIP remains uncertain.

Domestic Private Line and International Private Line Services

In connection with our anticipated acquisition of the Cable & Wireless assets in the United States, we anticipate introducing domestic and international private line services during the first quarter of 2004, upon obtaining the required FCC authorizations. Our Private Line Services will provide a digital transmission channel of defined bandwidth between two points. Direct connectivity between fixed points

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will be available within the United States, between the United States and the United Kingdom and between the United States and other locations in Europe and Asia where the company has nodes to accommodate the service. Because the service is protocol independent and highly resilient, it can be designed to meet a variety of customer requirements that can carry data, digitized voice, fax, video, multimedia or any other form of digital transmission. Customers will be able to purchase capacity on a wholesale or unmanaged basis; leased annually or on an IRU basis. Services are most often used by large multinational companies as part of a private corporate network to carry mixed voice, high speed data or for LAN interconnection and by other carriers and Internet service providers. Private line services are regulated as telecommunications in the United States by the FCC. We have obtained domestic 214 authorization from the FCC and applied for international 214 authorization to provide these services. In addition, we have filed applications with the FCC to approve the transfer of telecommunications assets to us from Cable & Wireless. While we cannot guarantee when or that we will be awarded the requisite authorizations and approvals, we do not foresee any impediments at this time to our ultimately obtaining them.

Application Services

Our broad set of application services are provided over a shared-managed infrastructure and tied together with various applications to streamline process and workflow for the creation, production and distribution of digital content. These services allow companies to manage, share, store, and distribute their digital content within their organization and externally throughout their supply chains using a single access point and system. These application services are not generally subject to communications regulations.

Future Regulatory Developments

With respect to all of our current services, we do not foresee the emergence of any significant regulatory issues that will prevent us from selling any of them in accordance with our business plan. Even if certain of our services, such as VOIP, which do not require licensing today become subject to licensing requirements, we do not anticipate the erection of any significant barriers or imposition of significant costs that would prevent us from obtaining the requisite authorizations in any of our principal markets. However, we cannot guarantee that governments will not institute laws and regulations that may impact the provision of these services and/or increase our costs for providing them.

U.S. REGULATORY MATTERS

With the exception of our anticipated introduction of Private Line Service, our existing Internet access and manged IP, hosting, and voice services are generally not regulated by the Federal Communications Commission (“FCC”) or any other government agency of the United States or public utility commissions of the individual states at the present time, other than regulations that apply to businesses generally.

Federal Regulatory Matters

The United States Telecommunications Act of 1996 distinguishes between telecommunications services and information services. This Act defines “telecommunications services” as “transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sent and received.” The Act establishes that the provisioning of interstate telecommunications services or international communications by wire on a common carrier basis requires FCC authorization, as well as contributions to the federal universal service fund (“USF”). Providers of telecommunications services on a private carrier basis are not required to obtain a specific authorization, but are nonetheless required to make USF contributions based on international and interstate telecommunications revenues.

This Act defines “information services” as “the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications.” Certain services may have components of both “telecommunications” and “information.” In its 1998 Report to Congress on Universal Service the (“Stevens Report”), the FCC identified such services as “hybrids,” defined as “services in which a provider offers a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing or making available information via telecommunications, and as an inseparable part of that service transmits information supplied or requested by the user.” The FCC has determined that certain hybrid services are exempt from federal regulation and will be treated like information services.

Excluding Private Line Service which we plan to offer in the near future, we believe that the products and services we offer, whether on a facilities or resale basis, generally qualify as information services as defined by the Telecommunications Act or exempt hybrid services as classified by the FCC and thus are not subject to federal regulation. There remains some uncertainty at the FCC regarding the distinction between information and telecommunications services.

For instance, with respect to universal service, in the Stevens Report, the FCC stated that “in those cases where an Internet service provider (“ISP”) owns transmission facilities, and engages in data transport over those facilities in order to provide an information service, we do not currently require it to contribute to universal service mechanisms.” The FCC also explained that while it may be “advisable” to require facilities-based ISPs to contribute, it would refrain from doing so because of “significant operational difficulties associated with determining the amount of an Internet service provider’s revenues to be assessed for universal service purposes and with enforcing such requirements.” These same operational difficulties and enforcement problems could also theoretically apply to other types of facilities-based enhanced data service providers.

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In addition, at least one federal appeals court has found that, when an ISP owns the transmission facilities, it provides “telecommunications” services as defined in the 1996 US Telecommunications Act. In response partially to that decision, the FCC has taken a number of steps to address the regulatory status of access to the Internet over cable and other facilities. Accordingly, the FCC continues to consider whether or not facilities-based providers of Internet access services should be required to unbundle the “information” portion from the “telecommunications” portion of their services. If the FCC adopts such a requirement, all facilities-based ISPs could be required to contribute to the USF based on revenues derived from providing the telecommunications services underlying provision of their information service offerings. To the extent that we elect to become or are deemed to be a facilities-based ISP, we could therefore be required to make these USF contributions.

There are numerous proceedings pending before the FCC regarding the appropriate regulatory classification of broadband Internet access services, and other data transmission services. Although the FCC has tentatively concluded that broadband wireline Internet access services are “information services”, there is no guarantee that the FCC will adopt this tentative conclusion, or that the FCC will not impose regulatory obligations on providers of broadband Internet access services, such as USF contribution requirements. Even if the tentative conclusion is adopted, it is unclear what effect such a ruling would have on the regulatory classification of our data networking services. In February 2003, the FCC adopted rules for network unbundling obligations of incumbent local exchange companies (ILECs). The FCC’s decision has been appealed and court review could lead to changes in the new policy. Until these appeals have been exhausted, it is unclear how the FCC’s report and order will effect the level of competition resulting from changes to the ILEC obligations to provide certain unbundled network elements to competitors at discount rates.

Advancements in technology are increasingly narrowing the distinctions, from a customer’s perspective, between traditional or basic telecommunications services and Internet protocol or Internet-based services with respect to voice and thus may lead regulators to reassess their treatment of such services. Indeed, in the Stevens Report, the FCC concluded that some of the services currently offered over the Internet, such as phone-to-phone IP telephone services, may be functionally indistinguishable from traditional telecommunications service offering, and that their non-regulatory status may have to be reexamined. In 2003, a number of state public utility commissions instructed providers of VOIP services to apply for and obtain state authorizations. A number of these providers filed suit, claiming that the FCC has exclusive jurisdiction in this area. These courts are in the process of reviewing the state actions. Partially in response, the FCC has initiated a public inquiry to investigate the migration of voice services to IP-based networks and gather public comment to help it develop an appropriate regulatory environment for these services. We cannot predict the ultimate outcome of these various federal, state and court proceedings, and thus the future regulatory classification of VOIP remains uncertain. There is some risk, therefore, that our VOIP services could be subject to regulation, including requirements to make USF contributions, and that those services could be treated similarly to voice services provided over conventional circuit-switched network facilities for purposes of making payments to local telephone companies for origination and termination of call and for other purposes.

In response to our planned roll-out of private line services, we filed applications with the FCC in January 2004 to obtain both domestic and international 214 authorizations for the provisioning of interstate telecommunications services and international communications by wire on a common carrier basis. In addition, we have filed applications with the FCC to approve the transfer of telecommunications assets to us from Cable & Wireless. Our domestic 214 authorization is already in effect. With respect to the rest, we anticipate that the FCC will grant us these authorizations and approvals, which will enable us to provide certain regulated communications services on both a facilities and leased basis. Additionally, we would become obligated to make USF contributions base on the revenue from the the interstate and international portions of the private line services. However, we do not believe at this time that we will be subject to the jurisdiction of individual state regulatory authorities as it relates to intrastate traffic for these services.

State Regulatory Matters

Intrastate telecommunications services are subject to regulation by the relevant state public utility commission and may be subject to licensing requirements, tariffs, and/or subsidy mechanisms. States also regulate telecommunications services, including through certification of providers of intrastate services, regulation of intrastate rates and services offering, and other regulations. Under the US Telecommunications Act, states retain jurisdiction to adopt regulations necessary to preserve universal services, protect public safety and welfare, ensure the continued quality of communications services and safeguard the rights of consumers. Accordingly, the degree of state involvement in local telecommunications services may be substantial. Furthermore, states generally give municipal authorities responsibility over the access to rights-of way franchises, zoning, and other matters of local concern, which means that localities may also have involvement in the regulation of the telecommunications industry.

With respect to our managed data, hosting and Interenet access services, because SAVVIS bundles its data transmission services with information services, we do not believe our services are regulated at the state level for similar reasons that our services are not regulated by the FCC. However, very little case law exists on the regulation of information or hybrid services at the state level. As such, it is less clear as to how most states currently regulate these types of services. However, generally, state public utility commissions have followed federal interpretations in this area and few of our competitors in the enhanced data service providers industry have obtained state certifications. We do not believe that our private line services will be subject to state authorizations because more than 10% of the revenue will derive from interstate traffic, which places the entire service under federal regulatory jurisdictionl. However, as noted, states are beginning to review the provision of VOIP and some have determined those services to be telecommunications services subject to regulation. How this matter will be solved by the various states, courts and FCC remains an open question.

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Future Federal and State Developments.

With the exceptions noted above, we believe that the majority of our services are not subject to state or FCC licensing, reporting or USF obligations. However, various communications services and technologies are currently the subject of judicial proceedings, legislative hearings and administrative actions which could change, in varying degrees, the manner in which the telecommunications industry operates. We cannot predict the outcome of these proceedings, or the impact they may have on the telecommunications or information services industries generally, or on us particularly. In addition, we cannot assure you that future legislative, regulatory or judicial changes in the United States or other countries in which we operate will not have a material adverse impact on our business. To the extent that future regulatory licenses or permissions are necessary or useful for us to provide our services, however, we will seek to obtain those licenses and permissions and do not believe that such applications will be denied or we would face processing delays that will have a material adverse effect on us. Moreover, if new regulations are imposed on our industry, or existing regulations are extended to cover our specific services, these regulations will almost certainly also apply to all similarly situated parties offering comparable services, including our competitors.

INTERNATIONAL REGULATORY MATTERS

SAVVIS’ International Operations and Authorizations.

Our principal markets outside the United States include the European Union and the Asia Pacific Rim. We have network operational centers in London, Tokyo and Singapore, where the majority of our non-United States employees are based. As is true in the United States, the market for our services in each of the major economies within these regions are open to foreign competition. We believe that we are authorized to provide our services under the applicable telecommunications regulations in all countries where we derive substantial business. In certain countries throughout Asia, Latin America, the Middle East and Africa regulatory and market access barriers, including foreign ownership limitations and entrenched monopolies, continue to prevent us from providing services directly to customers. As our business plan does not contemplate our selling a significant amount of services in any of these countries in the near term, we do not believe that our inability to offer services directly to customers in these countries will significantly impact us. Nevertheless, in many of the highly regulated countries in these regions, we are able to provide certain services to our customers indirectly, by partnering with local providers.

European Union

The European Union (EU) adopted measures designed to liberalize the telecommunications networks and services of its member countries in 1998. As required, each of the full EU members have incorporated these principles into their respective domestic legal frameworks while the candidate members, who assume full membership in the EU in May 2004, are each in the process of implementing liberalized telecommunications regimes as well.

The EU has also adopted a series of directives extending telecommunication regulation to electronic communications networks and services, including the Internet. Directive 2000/31/EC provides that network services providers are generally exempt from liability for the content transmitted on their networks and for caching and hosting activities, subject to certain conditions. This directive also states that service providers shall not have a general obligation to monitor content. Directive 2002/58/EC obligates network service providers to implement security measures and to discard customer data as soon as such data is no longer needed for billing. The EU Data Protection Directive imposes significant notice and access obligations on data “controllers,” defined as an entity which determines how personal information will be used and processed. Controllers may engage third parties to assist them in processing the data (e.g., compiling, collecting, storing, and disseminating). Requirements for data processors are less stringent: they may only use or process the data as specified by the controller and they must implement measures to protect the data from loss, alteration or misuse. We believe that with respect to the services we provide our customers, we are a data processor not data controller and comply with the applicable data protection requirements.

While the EU directives were intended to harmonize regulations across Europe with respect to telecommunications, and to a great extent have done so, implementation among member countries has been inconsistent in some areas. For instance, the directives do not apply to national criminal laws, some of which require service providers to retain data and permit government monitoring, while others assess liability for transmitting or storing certain kinds of illegal content. Despite such inconsistencies, and while we cannot predict with certainty how each country within the European Union will implement the EU directives, we note that the general trend toward removing regulatory barriers continues throughout the region, which in turn is condusive to our business in Europe.

United Kingdom

Within the EU, the United Kingdom (UK) is our largest single market. Our network operations center for our Europe, Middle East and Africa (“EMEA”) operations is based in London, as are the majority of our EMEA employees, including the bulk of our European sales force. In addition, we operate a data center outside of London. In 2003, the UK adopted a new Communications Act in 2003, which both replaced the Telecommunications Act 1984 and served to implement the EU liberalization regime. The New Act also created a single regulatory body, the Office of Communications, to oversee the entire electronic communications sector. The UK has

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implemented key EU Directives through various regulations and Acts. In the UK we hold a Telecommunications Services Class License, which enables us to provide our services to our customers there.

Asia-Pacific Rim

Degrees of liberalization vary significantly with respect to telecommunications among the countries in the Asia-Pacific Rim. Our two primary markets in the region are Japan and Singapore, and we are authorized to provide our services in both countries. Additionally, we operate network operations centers in both Japan and Singapore and a data center in Tokyo. The majority of our Asian employees are based in either Tokyo or Singapore.

Japan

Japan’s Ministry of Public Management, Home Affairs, Posts and Telecommunicatons (“MPHPT”) is in the process of amending the Telecommunications Business Law, with new rules set to take effect in April 2004. The new system will abolish the current system of Type I and Type II Telelcommunication businesses. We currently hold a Special Type II Telecommunications Business License and a General Type II Telecommunications License. Under the new regime, providers will obtain authorizations through a simplified registration or notification system. In addition, the current requirements to file service terms and conditions and tariff are expected to be abolished. These additional steps toward deregulation of the telecommunications sector should afford opportunities to new market entrants and increase competition for current players, which we expect will benefit providers relatively new to the market, such as ourselves.

Singapore

Once characterized as a monopoly, the telecommunications market in Singapore is one of the most liberalized and competitive in the region. We hold a Service Based Operator (Individual and Class) License that enables us to provide our services directly to our customers.

Global Developments

In 1993, 54 countries during the Uruguay Round of World Trade Organization (“WTO”) negotiations made commitments to permit market access for Value-Added Services. This Agreement on Basic Telecommunications Services (the “WTO Agreement”) formally entered into force, binding the signatory countries, in 1998. By the end of 2003, approximately 90 countries and the European Union had made commitments with respect to basic services. Another round of WTO negotiations (referred to as the Doha Round) is underway but not expected to be completed until sometime in 2004, at the earliest.

Despite enactment of the WTO Agreement on telecommunications services, regulatory obstacles continue to exist in a number of signatory countries. Some signatory countries made only limited commitments in terms of the services that they were willing to liberalize and the timeframe in which they were willing to do so. Most of the countries that maintain telecommunications monopolies, however, have generally not participated in the WTO negotiations. Moreover, some less developed signatory countries are not well prepared for competition or for effectively regulating a liberalized market; gaining the requisite experience and expertise is likely to be a long and difficult process. Finally, even in the more liberalized countries, there remains considerable “post-liberalization red tape,” such as complicated licensing rules, foreign ownership limits, high fees and undeveloped competition and interconnection safeguards. Nevertheless, we believe that, overall, the WTO Agreement, and its implementation by the signatory countries, which account for the bulk of global telecomunications revenue, offers us significant opportunities to provide our services on a global basis.

OTHER PERTINENT REGULATORY DEVELOPMENTS

The laws and regulations relating to the liability of network service providers continues to evolve in the United States and abroad, as the use and popularity of the Internet and World Wide Web continues to grow. Accordingly, laws and regulations are being and will likely continue to be adopted at the federal, state, and local levels, as well as in the foreign countries in which we operate, governing such issues as content liability, privacy, consumer protection, child protection, intellectual property, libel, taxation, mass circulation of unsolicited e-mail, gambling, pornography, law enforcement and national security, among others. The implementation of any such legislation could result in direct or indirect regulation of service providers such as ourselves and we may be subject to litigation. In that case, it is likely that we would have to implement additional policies and procedures, and incur additional costs, designed to assure our compliance with the particular legislation and/or to defend against any claims. These costs could have a material adverse effect on our business.

INTELLECTUAL PROPERTY

We rely on a combination of trademark, service mark, trade secret, patent and other intellectual property law and contractual restrictions to establish and protect certain proprietary rights in our services. We have registered trademarks for our business name and several product and service names and marketing slogans. We have also registered various Internet domain names in the United States and various other countries in which we operate in connection with the SAVVIS public website. In addition, we have applied for patents and

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trademark protection for various other products, services and marketing slogans. We do not hold any material licenses, franchises or concessions. We enter into confidentiality and invention assignment agreements with our employees and consultants and control access to and distribution of our proprietary information.

EMPLOYEES

As of December 31, 2003, we employed 993 full-time persons, of which 537 were engaged in engineering, operations and customer service, 306 in sales, sales support, product management and marketing, and 150 in finance and administration. None of our employees are represented by a labor union, and we have not experienced any work stoppages to date. We consider our employee relations to be good.

AVAILABLE INFORMATION

Our internet site is at http://www.savvis.net. We will provide to the public on our website, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act as soon as reasonably practicable after such material is electronically filed with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”).

RISK FACTORS

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, set forth below are cautionary statements identifying important factors that could cause actual events or results to differ materially from any forward-looking statements made by or on behalf of us, whether oral or written. We wish to ensure that any forward-looking statements are accompanied by meaningful cautionary statements in order to maximize to the fullest extent possible the protections of the safe harbor established in the Private Securities Litigation Reform Act of 1995. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause actual events or results to differ materially from our forward-looking statements.

RISKS RELATED TO OUR BUSINESS

A material reduction in revenue from either of our two largest customers, who combined represented approximately 46% of our revenues in the fourth quarter of 2003, would have a material adverse effect on our business.

Reuters and Moneyline combined accounted for approximately 46% of our revenue in the fourth quarter of 2003 versus 71% in the fourth quarter of 2002. This reduction from prior year was primarily due to the increase in our diversified customer base. While these customers are contractually bound to purchase minimum amounts of our services each year, material defaults by us under the agreements or failure by us to maintain the service level commitments could lead to reductions in the amount of services they purchase and/or termination of the respective agreements. In addition, the contracts provide that a business downturn that negatively impacts either Reuters or Moneyline could also lead to a reduction of their respective obligations to purchase our services.

SAVVIS’ revenue from Reuters was $82.7 million, $102.2 million, and $32.3 million in 2003, 2002, and 2001, respectively. This decline in 2003 resulted from the termination of service locations by Reuters resulting from customer losses and reduced pricing for certain services. Likewise, these customer losses and reduced pricing has had a significant impact on Reuters’ revenue from their own customers over the same period of time. Revenue earned from Reuters minimum revenue obligations in 2003 was $82.2 million. Reuters minimum revenue obligations are $67.7 million, $42.9 million, and $18.1 million in 2004, 2005, and 2006, respectively. Furthermore, Reuters owns 51% of a joint venture company which competes directly with SAVVIS and which was formed to be Reuters preferred network partner. Reuters could migrate material business from SAVVIS to its joint-venture company which could materially reduce our revenues.

Moneyline revenue was $54.4 million, $70.3 million, and $15.5 million in 2003, 2002, and 2001, respectively. As in the case of Reuters, this decline resulted from the termination of service locations by Moneyline resulting from customer losses and reduced pricing for certain services.

The loss of either of these customers or a significant group of our other customers, or a considerable reduction in the amount of our services that either customer purchases or a significant group of our customers purchase, could materially reduce our revenues which, to the extent not offset by cost reductions or new customer additions, could materially reduce our cash flows and financial position. This may limit our ability to raise capital or fund our operations, working capital needs and capital expenditures in the future.

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We expect to continue to incur substantial net losses.

We incurred a net loss of $94.0 million in 2003, achieved net income of $13.9 million in 2002 due to one-time gains on the extinguishment of debt in the amount of $97.9 million, and incurred a net loss of $288.9 million in 2001. We had negative cash flows from operating activities of $0.3 million, $45.0 million, and $41.9 million, in 2003, 2002, and 2001, respectively. We expect to incur significant net losses at least through 2004.

Our revenues and operating results are affected by a number of factors including the following: