USWeb/CKS Reports Record Revenues for First Quarter
20.04.1999, 17:52
1999 / Record Quarterly Revenue of $84.1 Million, SequentialQuarterly Revenue Increases 16% / Company Reaches SignificantIntegration Milestones Santa Clara, Calif. (PROTEXT) - USWeb/CKS, (Nasdaq: USWB) aleader in strategic Internet and marketing communicationsservices today reported its financial results for the firstquarter of 1999. Revenues for the first quarter of 1999 were $84.1 million, a16% increase over revenues of $72.6 million reported in thequarter ended December 31, 1998. Revenues increased $44.8 millionor 114% over revenues of $39.3 million in the first quarter of1998. The Company reported a net loss for the quarter of $51.7million 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 $15.3million or $0.29 per share in the first quarter of 1998. Netincome before non-cash and merger-related charges was $10.9million or $0.13 per diluted share, compared with net incomebefore non-cash and merger-related charges of $5.9 million or$0.07 per diluted share in the previous quarter and a loss beforenon-cash charges and merger-related charges of $0.5 million or$0.01 per share in the first quarter of 1998. Non-cash chargesinclude provision for contract loss, which represents the valueof certain warrants granted in a strategic relationship and stockcompensation, acquired in-process technology, amortization ofintangible assets, depreciation and amortization, and animpairment charge associated with goodwill that was recognized inthe fourth quarter of 1998. During the fourth quarter of 1998, the merger between USWebCorporation and CKS Group was completed. The merger was accountedfor as a pooling of interests. During the first quarter of 1999,the Company recognized costs directly associated with the mergerof $5.3 million, which, combined with merger costs incurred inthe fourth quarter of 1998, brings the total of merger andintegration costs to $34.2 million. "The first quarter of 1999 demonstrates the momentum USWeb/CKShas created in the market. We grew the business 16% sequentiallywhile at the same time accomplishing major integration milestonesthat are the foundation for building an Internet professionalservices powerhouse," said Robert Shaw, CEO of USWeb/CKS. "And,the work we do for clients represents the magnitude of howcompanies are using the Internet to transform or createbusinesses in the digital economy." Q1 Client Highlights USWeb/CKS continues to work with a broad, prominent clientbase in a variety of industries, including companies withestablished brands, pure-play Internet businesses and emergingleaders. Notable client activity in the first quarter of 1999included e-commerce services for Dick's Sporting Goods,Honeywell, Jenny Craig, National Airlines, Sony Music and TowerRecords. In the financial services industry, notable clientsinclude, E*OFFERING, Net.B@nk and PIMCO. International-basedclients include BBC, Bayer AG and IKK Bundesverband, the largesthealth insurance company in Germany. Q1 Integration Highlights Significant progress has been made to integrate USWeb and CKSGroup into one firm. In less than 120 days the Company hasachieved a number of significant integration milestones. - Developed a comprehensive business strategy that leveragesour first-to-market leadership position. - Consolidated into six regions allowing the Company to focuson integration, drive a more common approach and improve businessefficiencies. The company also consolidated offices in four majormetropolitan areas: Chicago, Los Angeles, New York and the SanFrancisco Bay Area and eliminated low-performing and non-strategic units in the Northeast. - Identified eight practices to focus company expertise anddisciplines that can be leveraged to benefit clients. Thesepractices are: Business Systems, e-Commerce, CustomerRelationships, Internet Communications, Knowledge Management,Marketing Communications, Network Solutions and StrategyConsulting. - Invested in e-Services to leverage the USWeb/CKS businessmodel and increase delivery speed of complex applications toclients. USWeb/CKS e-Services also help drive a common approachand becomes a second channel to customers. - Continued acquisition strategy to fill gaps in serviceofferings and practices in geographic regions such as Central,Northeast and Europe. - Creating next generation methodologies and knowledgemanagement systems to enhance predictability, create a commonapproach, increase innovation through shared expertise and cross-fertilization, as well as deploy knowledge faster into clientengagements. - Improving back-office infrastructure to implementcentralized systems and a single project and financial reportingsystem. These new systems help eliminate duplication, improvescale and efficiency and provide better management information. USWeb/CKS is a professional services firm that works with itsclients to define strategies and implement innovative ways tobuild their businesses through a combination of expertise instrategy, Internet technology and marketing communications.USWeb/CKS helps clients differentiate their products andservices, strengthen customer relationships, leverage humancapital, and improve business efficiency in the new electroniceconomy. The Company provides a broad selection of services frombrand development and advertising to business process automationand e-commerce solutions. The Company headquarters are in SantaClara, California. Additional information about USWeb/CKS isavailable at http://www.uswebcks.com. This press release contains "forward-looking statements" (asdefined under securities law) regarding potential opportunitiesfor USWeb/CKS to provide its professional services and toimplement its objectives for E-Services, E-Commerce and otherInternet-related business applications, services andinfrastructure. USWeb/CKS's actual future results, includingthose in achieving, implementing or realizing the plannedbenefits of any of its objectives, may differ materially andadversely from those discussed in this press release. Factorsthat may cause such a difference include, the rate of adoption ofInternet Technology by large organizations and the level ofinvestment these organizations make in Internet-relatedprofessional services, the Company's ability to differentiateitself from competitors and win new clients, the risks associatedwith implementation of the Company's products and serviceofferings, technical challenges, costs associated with formationof Internet data centers, risks relating to the merger with CKSor other entities, including difficulties in integration or lossof customers or employees, and diversion of management andemployee time and attention from other aspects of the Company'sbusiness. Current revenue growth patterns are not necessarilyindicative of future performance. For additional informationabout factors that could affect the Company's business, see thecompany's documents filed with the United States Securities andExchange Commission.
USWEB/CKS
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended March31,
1999
(Unaudited) 1998 Historical Data: Revenues
$84,112 $39,325
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-------- 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 SFASNo. 128, "Earnings Per Share," and SEC Staff Accounting BulletinNo. 98 for all periods presented. The computation excludes: (i)acquisition-related shares held in escrow, and (ii) Common Stocksubject to repurchase rights. The computation of net loss anddiluted supplemental net loss per share excludes Common Stockissuable upon exercise of certain employee stock options and uponexercise of certain outstanding warrants, as their effect isantidilutive. (2) Non-cash and merger related charges include provision forloss on contract, which represents the value of certain warrantsgranted in a strategic relationship, merger and integrationcosts, stock compensation, acquired in-process technology,amortization of intangible assets and depreciation andamortization.
USWEB/CKS
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
March 31,
December31,
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
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-------
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------- otsOriginal 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/CKSCorporation Company News On-Call:http://www.prnewswire.com/comp/120663.html or Fax, 800-758-5804,ext. 120663 Web site: http://www.usweb.com
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