EX-99.1 3 e15310ex99_1.txt PRESS RELEASE Exhibit 99.1 Innotrac Corporation Announces 2003 Second Quarter Results ATLANTA, July 28 /PRNewswire-FirstCall/ -- Innotrac Corporation (Nasdaq: INOC), a full-service provider of order processing, order fulfillment and call center services, today announced financial results for the second quarter ended June 30, 2003. The Company reported revenues of $17.6 million and a net loss of $393,000 or a $0.03 loss per diluted share for the quarter. Gross margins were 51.9%. The Company generated $1.4 million in positive cash flow from operations and $1 million in EBITDA. Reconciliations of EBITDA to net (loss) income for the periods presented appear in the schedule following the statement of operations information below. For the six months ended June 30, 2003, revenues totaled $36.0 million and gross margins were 52.3%. The Company reported a net loss for the six months ended June 30, 2003 of $1.3 million or a $0.11 loss per diluted share. However, for the six months ended June 30, 2003 the Company generated EBITDA of $1.3 million. "We are pleased with our ability to generate increasing operating cash flows and EBITDA this quarter. This is what we set out to do, and we accomplished our objectives. We continue to monitor our spending and our capital investment in the first half of the year was minimal. We anticipate no major capital expenditures for the remainder of the year. Our gross margins also maintained their strength and should stay above 50% throughout 2003. We are administering our strategic plan, keeping operating costs down and we remain steadfast in our efforts to drive the Company to sustainable profitability," stated Scott D. Dorfman, President and Chief Executive Officer. Conference Call Innotrac Corporation will hold a conference call to discuss this release this evening, July 28, at 5:00 p.m. Eastern Daylight Time. Investors can listen to the conference call live by dialing 1-800-291-3901 or 706-634-6500 (Conference ID: 1586445) or by logging on to www.innotrac.com and clicking on "Webcasts and Presentations" in the "Company" section. The Webcast will be archived and available at the same Web address. Additionally, a 48-hour audio playback will be available at 1-800-642-1687 or 706-645-9291 (Conference ID Number: 1586445). About Innotrac Innotrac Corporation, founded in 1984 and based in Atlanta, Georgia, is a full-service provider of order processing, order fulfillment and call center services. The Company operates fulfillment and call centers in various cities spanning all time zones across the continental United States. For more information about Innotrac, visit the Innotrac Web site, www.innotrac.com . Information contained in this press release, other than historical information, may be considered forward-looking in nature and is subject to various risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. Among the key factors that may have a direct bearing on Innotrac's operating results, performance or financial condition are competition, the demand for Innotrac's services, Innotrac's ability to retain its clients, the state of the telecommunications industry in general, Innotrac's ability to maintain profit margins in the face of pricing pressures and numerous other factors discussed in Innotrac's 2002 Annual Report on Form 10-K and other filings on file with the Securities and Exchange Commission. INNOTRAC CORPORATION Condensed Consolidated Statements of Operations (in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, (Unaudited) (Unaudited) 2003 2002 2003 2002 Revenues $17,631 $19,351 $35,965 $40,399 Cost of revenues: Cost of revenues 8,488 10,308 17,158 22,015 Special credit --- --- --- (293) Total cost of revenues 8,488 10,308 17,158 21,722 Gross profit 9,143 9,043 18,807 18,677 Selling, general and administrative expenses 8,183 7,543 17,543 15,338 Special credit (30) (359) (30) (1,321) Depreciation and amortization 1,462 1,271 2,931 2,489 Total operating expenses 9,615 8,455 20,444 16,506 Operating (loss) income (472) 588 (1,637) 2,171 Interest expense 155 48 402 132 Other --- --- (7) (89) Other expense, net 155 48 395 43 (Loss) income before income taxes (627) 540 (2,032) 2,128 Income tax benefit (provision) 234 (227) 747 (849) Net (loss) income $(393) $313 $(1,285) $1,279 Earnings per share: Basic $(0.03) $0.03 $(0.11) $0.11 Diluted $(0.03) $0.03 $(0.11) $0.11 Weighted average shares outstanding: Basic 11,487 11,623 11,455 11,570 Diluted 11,487 12,017 11,455 11,902 Reconciliation of EBITDA and Net (Loss) Income EBITDA is derived from net (loss) income as follows: Net (loss) income $(393) $313 $(1,285) $1,279 Income tax (benefit) provision (234) 227 (747) 849 Interest expense 155 48 402 132 Depreciation and amortization 1,462 1,271 2,931 2,489 EBITDA $990 $1,859 $1,301 $4,749 Note: These statements should be read in conjunction with the Company's Form 10-K filed with the Securities and Exchange Commission on March 31, 2003. INNOTRAC CORPORATION Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended Six Months Ended June 30, June 30, (Unaudited) (Unaudited) 2003 2002 2003 2002 CASH FLOW FROM OPERATING ACTIVITIES: Net (loss) income $(393) $313 $(1,285) $1,279 Adjustments to net income: Depreciation and amortization 1,462 1,271 2,931 2,489 Impairment and disposal of fixed assets --- --- --- 501 Deferred income taxes (234) (3,501) (747) (2,177) Amortization of deferred compensation 18 18 36 36 Changes in working capital: Accounts receivable, net (439) 10,161 (2,475) 2,144 Inventories 3,813 2,702 7,042 9,120 Prepaid assets and other 863 3,100 853 2,180 Accounts payable, accrued expenses and other (3,693) (4,131) (10,874) (1,130) Cash provided by (used in) operating activities 1,397 9,933 (4,519) 14,442 CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures (258) (5,219) (655) (8,039) Payment for business acquired (176) --- (176) (13,727) Sale of marketable securities --- --- --- 435 Cash (used in) investing activities (434) (5,219) (831) (21,331) CASH FLOW FROM FINANCING ACTIVITIES: Net (repayments) borrowings under line of credit (1,053) (2,334) 4,635 --- Repayment of capital lease and other obligations (36) (74) (72) (145) Loan fees paid (31) (50) (31) (50) Exercise of employee stock options 425 --- 472 --- Cash (used in) provided by financing activities (695) (2,458) 5,004 (195) Net increase (decrease) in cash 268 2,256 (346) (7,084) Cash, beginning of period 347 73 961 9,413 Cash, end of period $615 $2,329 $615 $2,329 Supplemental cash flow disclosures: Cash paid for interest 191 69 425 154 Cash refunds received for taxes (954) --- (1,486) (18) Noncash transaction: Stock issued for business acquired --- --- --- 1,550 Note: These statements should be read in conjunction with the Company's Form 10-K filed with the Securities and Exchange Commission on March 31, 2003. INNOTRAC CORPORATION Condensed Consolidated Balance Sheets (in thousands) June 30, December 31, 2003 2002 ASSETS (Unaudited) (Audited) Current Assets: Cash $615 $961 Accounts receivable, net 16,678 14,203 Inventories, net 17,056 24,098 Prepaid expenses and other 2,261 2,909 Total current assets 36,610 42,171 Property and equipment, net 16,786 18,915 Goodwill 25,164 24,988 Other assets, net 9,851 9,425 Total Assets $88,411 $95,499 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $4,805 $13,517 Accrued expenses and other 4,208 6,626 Line of credit 19,007 --- Total current liabilities 28,020 20,143 Noncurrent Liabilities: Line of credit --- 14,372 Other non-current liabilities 1,049 1,125 Total noncurrent liabilities 1,049 15,497 Total shareholders' equity 59,342 59,859 Total Liabilities and Shareholders' Equity $88,411 $95,499 Note: These statements should be read in conjunction with the Company's Form 10-K filed with the Securities and Exchange Commission on March 31, 2003. SOURCE Innotrac Corporation -0- 07/28/2003 /CONTACT: Jennifer Sekel Church, Investor Relations of Innotrac Corporation, +1-678-584-4055, or jsekelchurch@innotrac.com/ /Web site: http://www.innotrac.com/ (INOC) CO: Innotrac Corporation ST: Georgia IN: TLS CPR SU: ERN CCA