USWeb/CKS Reports Record Revenues for First Quarter

1999 / Record Quarterly Revenue of $84.1 Million, Sequential Quarterly Revenue Increases 16% / Company Reaches Significant Integration Milestones Santa Clara, Calif. (PROTEXT) - USWeb/CKS, (Nasdaq: USWB) a leader in strategic Internet and marketing communications services today reported its financial results for the first quarter of 1999. Revenues for the first quarter of 1999 were $84.1 million, a 16% increase over revenues of $72.6 million reported in the quarter ended December 31, 1998. Revenues increased $44.8 million or 114% over revenues of $39.3 million in the first quarter of 1998. The Company reported a net loss for the quarter of $51.7 million or $0.73 per share, which included non-cash and merger- related charges, compared with a net loss of $84.1 million, or $1.26 per share in the previous quarter, and a net loss of $15.3 million or $0.29 per share in the first quarter of 1998. Net income before non-cash and merger-related charges was $10.9 million or $0.13 per diluted share, compared with net income before non-cash and merger-related charges of $5.9 million or $0.07 per diluted share in the previous quarter and a loss before non-cash charges and merger-related charges of $0.5 million or $0.01 per share in the first quarter of 1998. Non-cash charges include provision for contract loss, which represents the value of certain warrants granted in a strategic relationship and stock compensation, acquired in-process technology, amortization of intangible assets, depreciation and amortization, and an impairment charge associated with goodwill that was recognized in the fourth quarter of 1998. During the fourth quarter of 1998, the merger between USWeb Corporation and CKS Group was completed. The merger was accounted for as a pooling of interests. During the first quarter of 1999, the Company recognized costs directly associated with the merger of $5.3 million, which, combined with merger costs incurred in the fourth quarter of 1998, brings the total of merger and integration costs to $34.2 million. "The first quarter of 1999 demonstrates the momentum USWeb/CKS has created in the market. We grew the business 16% sequentially while at the same time accomplishing major integration milestones that are the foundation for building an Internet professional services powerhouse," said Robert Shaw, CEO of USWeb/CKS. "And, the work we do for clients represents the magnitude of how companies are using the Internet to transform or create businesses in the digital economy." Q1 Client Highlights USWeb/CKS continues to work with a broad, prominent client base in a variety of industries, including companies with established brands, pure-play Internet businesses and emerging leaders. Notable client activity in the first quarter of 1999 included e-commerce services for Dick's Sporting Goods, Honeywell, Jenny Craig, National Airlines, Sony Music and Tower Records. In the financial services industry, notable clients include, E*OFFERING, Net.B@nk and PIMCO. International-based clients include BBC, Bayer AG and IKK Bundesverband, the largest health insurance company in Germany. Q1 Integration Highlights Significant progress has been made to integrate USWeb and CKS Group into one firm. In less than 120 days the Company has achieved a number of significant integration milestones. - Developed a comprehensive business strategy that leverages our first-to-market leadership position. - Consolidated into six regions allowing the Company to focus on integration, drive a more common approach and improve business efficiencies. The company also consolidated offices in four major metropolitan areas: Chicago, Los Angeles, New York and the San Francisco Bay Area and eliminated low-performing and non- strategic units in the Northeast. - Identified eight practices to focus company expertise and disciplines that can be leveraged to benefit clients. These practices are: Business Systems, e-Commerce, Customer Relationships, Internet Communications, Knowledge Management, Marketing Communications, Network Solutions and Strategy Consulting. - Invested in e-Services to leverage the USWeb/CKS business model and increase delivery speed of complex applications to clients. USWeb/CKS e-Services also help drive a common approach and becomes a second channel to customers. - Continued acquisition strategy to fill gaps in service offerings and practices in geographic regions such as Central, Northeast and Europe. - Creating next generation methodologies and knowledge management systems to enhance predictability, create a common approach, increase innovation through shared expertise and cross- fertilization, as well as deploy knowledge faster into client engagements. - Improving back-office infrastructure to implement centralized systems and a single project and financial reporting system. These new systems help eliminate duplication, improve scale and efficiency and provide better management information. USWeb/CKS is a professional services firm that works with its clients to define strategies and implement innovative ways to build their businesses through a combination of expertise in strategy, Internet technology and marketing communications. USWeb/CKS helps clients differentiate their products and services, strengthen customer relationships, leverage human capital, and improve business efficiency in the new electronic economy. The Company provides a broad selection of services from brand development and advertising to business process automation and e-commerce solutions. The Company headquarters are in Santa Clara, California. Additional information about USWeb/CKS is available at http://www.uswebcks.com. This press release contains "forward-looking statements" (as defined under securities law) regarding potential opportunities for USWeb/CKS to provide its professional services and to implement its objectives for E-Services, E-Commerce and other Internet-related business applications, services and infrastructure. USWeb/CKS's actual future results, including those in achieving, implementing or realizing the planned benefits of any of its objectives, may differ materially and adversely from those discussed in this press release. Factors that may cause such a difference include, the rate of adoption of Internet Technology by large organizations and the level of investment these organizations make in Internet-related professional services, the Company's ability to differentiate itself from competitors and win new clients, the risks associated with implementation of the Company's products and service offerings, technical challenges, costs associated with formation of Internet data centers, risks relating to the merger with CKS or other entities, including difficulties in integration or loss of customers or employees, and diversion of management and employee time and attention from other aspects of the Company's business. Current revenue growth patterns are not necessarily indicative of future performance. For additional information about factors that could affect the Company's business, see the company's documents filed with the United States Securities and Exchange Commission. USWEB/CKS CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share amounts) Three Months Ended March 31, 1999 (Unaudited) 1998 Historical Data: Revenues $84,112 $39,325 -------- ------- - Cost of revenues: Services 51,372 25,744 Depreciation and amortization 1,554 1,006 Stock compensation 4,408 1,681 Provision for loss on contract 11,215 - - -------- ------- - Total cost of revenues 68,549 28,431 -------- ------- - Gross profit 15,563 10,894 -------- ------- - Operating expenses: Marketing, sales and support 8,751 5,185 General and administrative 13,521 9,102 Depreciation and amortization 616 332 Acquired in-process technology 823 4,323 Stock compensation 9,148 2,568 Amortization of intangible assets 29,473 4,860 Merger and integration costs 5,316 - - -------- ------- - Total operating expenses 67,648 26,370 -------- ------- - Loss from operations (52,085) (15,476) Other income 901 925 -------- ------- - Loss before income taxes (51,184) (14,551) Provision for income taxes 491 704 -------- ------- - Net loss $(51,675) $(15,255) -------- ------- - -------- ------- - Net loss per share (1): Basic and diluted $(0.73) $(0.29) -------- ------- - -------- ------- - Weighted average shares outstanding 70,971 52,408 ------- ------ - ------- ------ - Supplemental Data: Gross profit as reported $15,563 $10,894 Non-cash and merger related charges (2) 17,177 2,687 ------- ------ - Supplemental gross profit $32,740 $13,581 ------- ------ - ------- ------ - Net loss as reported $(51,675) $(15,255) Non-cash and merger related charges (2) 62,553 14,770 ------- ------ - Supplemental net income (loss) $10,878 $(485) ------- ------ - ------- ------ - Supplemental net income (loss) per share (1): Basic supplemental net income (loss) per share $0.15 $(0.01) ------- ------ - ------- ------ - Basic supplemental weighted average shares outstanding 70,971 52,408 ------- ------ - ------- ------ - Diluted supplemental net income (loss) per share $0.13 $(0.01) ------- ------ - ------- ------ - Diluted supplemental weighted average shares outstanding 85,539 52,408 ------- ------ - ------- ------ - (1) Net loss per share is computed in accordance with SFAS No. 128, "Earnings Per Share," and SEC Staff Accounting Bulletin No. 98 for all periods presented. The computation excludes: (i) acquisition-related shares held in escrow, and (ii) Common Stock subject to repurchase rights. The computation of net loss and diluted supplemental net loss per share excludes Common Stock issuable upon exercise of certain employee stock options and upon exercise of certain outstanding warrants, as their effect is antidilutive. (2) Non-cash and merger related charges include provision for loss on contract, which represents the value of certain warrants granted in a strategic relationship, merger and integration costs, stock compensation, acquired in-process technology, amortization of intangible assets and depreciation and amortization. USWEB/CKS CONDENSED CONSOLIDATED BALANCE SHEET (In thousands) March 31, December 31, 1999 1998 (Undaudited) ASSETS Current assets: Cash and cash equivalents $79,548 $64,956 Short-term investments 17,135 36,230 Accounts receivable, net 100,538 89,038 Other current assets 10,665 9,946 Deferred tax assets 637 637 ------- ------- Total current assets 208,523 200,807 Property and equipment, net 20,645 18,880 Intangible assets, net 171,954 168,335 Deferred income taxes and other assets 15,162 15,152 ------- ------- $416,284 $403,174 ------- ------- ------- ------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $30,258 $38,251 Accrued expenses 55,502 52,908 Deferred revenue 3,894 4,210 Income taxes payable 2,912 3,111 Lease obligations, current 2,993 3,445 ------- ------- Total current liabilities 95,559 101,925 Lease obligations, long-term portion 1,035 1,377 ------- ------- 96,594 103,302 ------- ------- Stockholders' equity: Common Stock 70 66 Additional paid-in-capital 618,465 546,976 Accumulated deficit (298,845) (247,170) ------- ------- Total stockholders' equity 319,690 299,872 ------- ------- $416,284 $403,174 ------- ------- ------- ------- ots Original Text Service: USWeb Corporation Internet: http://www.newsaktuell.de Contact: Media, Geoff Kerr, (USA) 408-987-3260, or gkerr@uswebcks.com, or Investors, Kate Wagner, (USA) 408-987-3268, or kwagner@uswebcks.com, both of USWeb/CKS Corporation Company News On-Call: http://www.prnewswire.com/comp/120663.html or Fax, 800-758-5804, ext. 120663 Web site: http://www.usweb.com Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. 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