Date: Thu, 18 Dec 1997 22:50:11 GMT Server: Apache/1.2.4 Last-Modified: Wed, 01 Oct 1997 18:43:59 GMT ETag: "4319-363e-343299ef" Content-Length: 13886 Accept-Ranges: bytes Connection: close Content-Type: text/html DG SYSTEMS REPORTS 132% REVENUE GAIN FOR FOURTH QUARTER 1996


For more information:
The LeGrand Group
phone- 719-635-0774
Fax: 719-635-0554
Susan MacCall
susan@legrandgroup.com

Jeff Byrne
jbyrne@dgsystems.com
Tom Shanahan
tsha1@dgsystems.com
DG Systems
415-276-6600

For Immediate Release

DG SYSTEMS REPORTS 132% REVENUE GAIN FOR FOURTH QUARTER 1996

DG SYSTEMS REPORTS 132% REVENUE GAIN FOR FOURTH QUARTER 1996 SAN FRANCISCO, CALIFORNIA - January 29, 1997 - Digital Generation Systems, Inc. (NASDAQ: DGIT), the leading provider of electronic distribution services to the broadcast industry, today reported revenue of $4.0 million for its fourth quarter which ended December 31, 1996. The reported revenue includes $3.1 million from DG Systems' ongoing business plus an additional $0.9 million of revenue as the result of its purchase of PDR Productions, Inc., which took place in November, 1996.

Earnings before interest, taxes, depreciation and amortization (EBITDA) improved from a loss of $1,405,000 in the fourth quarter of 1995 to a pre-consolidated loss of $748,000 in the most recent quarter, or a loss of $645,000 after consolidation. 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 $0.19 in the quarter, compared with a net loss of $0.23 per share in the fourth quarter of 1995.

Additionally, in a separate release today, DG Systems announced that more than 200 television stations are now online and able to receive spots digitally over the DG Systems video distribution network. These TV stations are among the more than 350 stations to date which have signed on to install a DG ADvantage Digital Video Playback System and receive spots digitally over the company's network.

"We are pleased with our continuing growth in audio deliveries," said Henry Donaldson, DG Systems president and CEO. "Our revenue growth reflects an increasing demand among our advertiser and agency clients for digital delivery of their content to broadcasters. With DG's recent introduction of video distribution services, we are now able to fully service the broadcast distribution demands of our customers," added Mr. Donaldson.

Unit deliveries totaled 264,000 in the fourth quarter, including 31,000 as the result of the PDR acquisition, compared to 132,000 deliveries achieved in the corresponding quarter a year ago.

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 5,300 radio stations and 200 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.dgsystems.com on the World Wide Web.

This release contains forward-looking statements relating to the company, the expansion of its digital distribution 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 November 13, 1996.

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

DIGITAL GENERATION SYSTEMS, INC.
Corporate Information
December 31, 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 St.
San Francisco, CA 94111
Telephone/Fax: Phone: 415/276-6600
Fax: 415/276-6601
Trading Information: NASDAQ - DGIT
11,653,625 shares outstanding
1996 Price Range: $7 5/8 - $13 1/4
Current Price (1/28) $6 7/8

Officers: President & CEO: Henry W. Donaldson
V.P. Finance & CFO: Thomas P. Shanahan

Three Months Ended December 31

Income Summary
(in thousands, except for
per share and other data)

1995 1996 Change
Revenues $1,726 $4,005 132%
Delivery & Material Costs $ 565 $1,063
Customer Operations $ 845 $1,392
Sales & Marketing $ 940 $1,140
Research & Development $ 408 $ 565
General & Administrative $ 373 $ 490
EBITDA ($ 1,405) ($ 645) $760
Depreciation $ 735 $1,376
Interest Income $ 104 $ 326
Interest Expense ($ 242) ($ 560)
Net Loss ($ 0.23) ($ 2,255) 1%
Earnings Per Share ($ 2,278) ($ 0.19)
Weighted Average Shares 9,731 11,642
Financial Position
Cash & Short-term Investments $ 6,205 $ 20,598
Total Assets $14,459 $ 45,248
Other Data
Total Deliveries 132,000 264,000 100%
On-Line Stations 3,800 5,300 39%

Twelve Months Ended December 31

Income Summary
(in thousands, except for
per share and other data)

1995 1996 Change
Revenues $5,144 $10,523
Delivery & Material Costs $1,765 $3,084
Customer Operations $3,019 $4,164
Sales & Marketing $3,406 $3,998
Research & Development $1,590 $2,092
General & Administrative $1,380 $1,677
EBITDA ($ 6,016) ($4,492) $1,524
Depreciation $2,345 $4,331
Interest Income $ 417 $1,422
Interest Expense ( $ 836) ($1,726)
Net Loss ($ 8,780) ($9,127) - 4%
Earnings Per Share ($ 0.94) ($ 0.79)
Weighted
Average Shares
9,360 11,594
Other Data
Total Deliveries 390,000 784,000 101%


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Digital Generation Systems, Inc.
875 Battery Street, San Francisco, California 94111

Telephone 415.276.6600 / 800.335.4DGS
Facsimile 415.276.6601

Copyright © 1997 Digital Generation Systems and Foggy August All rights reserved.
All products or services in this document are the marks, registered trademarks or registered service marks of their respective owners.