DG Systems Reports Record Revenues and EBITDA For Full Year 1999; Revenues Rise 18%; EBITDA Increases by $2 Million.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--March 3, 2000

DG Systems, Inc. (Nasdaq: DGIT), the leading digital distributor of advertising to the broadcast industry, today reported record operating results for the fiscal year and fourth quarter ended December 31, 1999.

Consolidated revenues in fiscal 1999 rose 18% to $48.7 million from $41.3 million in 1998. Earnings before interest, taxes, depreciation, amortization and certain non-recurring charges (EBITDA) for 1999 increased to $1.8 million, compared to negative EBITDA of $204,000 in 1998. The Company reduced its net loss for the twelve-month period by 71% to $8.8 million, or $0.33 per share, compared to a net loss of $30.2 million, or $1.97 per share, in the year-ago period.

Commenting on the results, Matthew E. Devine, Chief Executive Officer of DG Systems, stated, "Last year's revenue and EBITDA gains, restructuring initiatives and $3.75 million private placement strengthened the Company's balance sheet, improved its financial performance and repositioned the Company for growth. With expanded service offerings and prospects for a favorable advertising environment in 2000, DG Systems is well-positioned to realize significant operating improvements, grow its market share and enhance shareholder value in the year ahead."

Consolidated revenues for the quarter reached $12.9 million, compared to $12.3 million for the fourth quarter of 1998. EBITDA increased 44% to $1.1 million from $749,000 in the fourth quarter of 1998 - the fifth consecutive quarter of positive EBITDA for the Company.

Including non-recurring charges of $370,000 related primarily to synergies realized from consolidating the Company's 1998 acquisition of DCI, DG Systems reduced its net loss for the fourth quarter by 38% to $1.0 million, or $0.04 per share, compared to a net loss of $1.6 million, or $0.07 per share, in the fourth quarter of 1998.

Mr. Devine continued, "Our strong fourth quarter performance reflects a continuing focus on growing DG Systems' top-line while installing the financial disciplines expected to eliminate redundant operating costs. We also completed the integration of our Vancouver delivery operations, eliminating over $3 million in costs on an annual basis. We continue to develop our increasingly competitive position in the digital video advertising market."

DG Systems operates a nationwide digital network for distributing audio and video content that links thousands of advertisers and hundreds of advertising agencies with approximately 7,000 radio and 600 television stations across the United States and Canada. DG Systems can be reached at 415-276-6600 or at www.dgsystems.com.

This release contains forward-looking statements relating to the company, including the expansion of its digital distribution network, 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-K filed with the Securities and Exchange Commission on March 31, 1999.

                   Digital Generation Systems, Inc.
                 Consolidated Statements of Operations
                 (In thousands, except per share data)

                           Three Months Ended        Year Ended
                              December 31,          December 31,
                           -----------------      ---------------
                            1999       1998        1999        1998
                            ----       ----        ----        ----

Revenues                   $12,942    $12,278     $48,724    $41,270

Operating expenses,
 excluding
 Depreciation &
 amortization               11,867     11,529      46,942     41,474
                           -------    -------     -------    -------

EBITDA                       1,075        749       1,782       (204)

Depreciation &
 Amortization                1,417      1,629       8,619     10,256

Write down of
 goodwill and
 fixed assets                   --         --          --     17,006

Non-recurring Charges          370         --         370         --
                           -------    -------     -------    -------

Operating Loss               ($712)     ($880)    ($7,207)  ($27,466)

Interest Expense, net          297        710       1,556      2,771
                           -------    -------     -------    -------

Net Loss (1)               ($1,009)   ($1,590)    ($8,763)  ($30,237)
                           =======    =======     =======    =======

Basic and diluted
 loss per common
 share (1)(2)               ($0.04)    ($0.07)     ($0.33)    ($1.97)
                            =======    =======     =======    =======

Weighted average
 common shares
 outstanding                26,886     23,209      26,653     16,272
                           =======    =======     =======    =======


(1) Includes non-recurring, pre-tax charges of $370 related primarily
to synergies realized for consolidating the Company's 1998 acquisition
of DCI.

(2) The calculation of basic and diluted net loss per shares reflects
the reported net loss of $30,237 plus a non-cash deduction of $1,764
in the fiscal year ended December 31, 1998 resulting from a deemed
dividend related to the Company's conversion of preferred stock.