EX-99.1 3 e16153ex99_1.txt PRESS RELEASE Exhibit 99.1 Innotrac Corporation Announces 2003 Third Quarter Results Trends Continue to Improve ATLANTA, November 6 /PRNewswire-FirstCall/ -- Innotrac Corporation (Nasdaq: INOC), a full-service fulfillment and logistics provider, today announced financial results for the third quarter ended September 30, 2003. The Company reported revenues of $18.5 million and gross margins were 53.9%. The Company also reported a net loss of $249,000 or a $0.02 loss per share for the quarter compared to a net loss of $5.3 million or $0.46 loss per share in the third quarter of 2002. The Company generated $2.4 million in positive cash flow from operations for the quarter. "These metrics reflect improving trends versus the second quarter of 2003 and a significant improvement over the comparable quarter in 2002," stated David L. Gamsey, Chief Financial Officer. For the nine months ended September 30, 2003, revenues totaled $54.5 million and gross margins were 52.8%. The Company reported a net loss for the nine months ended September 30, 2003 of $1.5 million or a $0.13 loss per share compared to a net loss for the nine months ended September 30, 2002 of $4.0 million or $0.35 loss per share. "Innotrac delivered a very solid quarter of increased operating cash flows and improved financial performance. These results confirm that we are on track to improve our operating results as we continue to grow revenue, improve productivity, and reduce fixed expenses. Our investments in facilities and technology are generating growth opportunities and allowing us to maintain gross margins that exceed 50%," stated Scott D. Dorfman, President and Chief Executive Officer. "We are focused on executing our strategic plan and monitoring fixed costs. We are poised to capitalize on new business opportunities, and we remain steadfast in our efforts to drive the Company to expanding cash flows and sustainable profitability." Conference Call Innotrac Corporation will hold a conference call to discuss this release this evening, November 6, at 5:00 p.m. Eastern Standard 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, 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 fulfillment and logistics provider serving enterprise clients and world-class brands. The Company employs sophisticated order processing and warehouse management technology and operates seven fulfillment centers and two call centers in five 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 Nine Months Ended September 30, September 30, (Unaudited) (Unaudited) 2003 2002 2003 2002 Revenues $18,545 $20,064 $54,510 $60,464 Cost of revenues: Cost of revenues 8,548 11,629 25,706 33,644 Special credit - - - (293) Total cost of revenues 8,548 11,629 25,706 33,351 Gross margin 9,997 8,435 28,804 27,113 Operating expenses: Selling, general and administrative expenses 8,819 12,422 26,362 27,760 Special charges, net - 3,123 (30) 1,802 Depreciation and amortization 1,358 1,352 4,289 3,841 Total operating expenses 10,177 16,897 30,621 33,403 Operating loss (180) (8,462) (1,817) (6,290) Interest expense 180 99 581 232 Other 1 (33) (5) (122) Total other expense 181 66 576 110 Loss before income taxes (361) (8,528) (2,393) (6,400) Income tax benefit (112) (3,220) (859) (2,371) Net loss $(249) $(5,308) $(1,534) $(4,029) Earnings per share: Basic $(0.02) $(0.46) $(0.13) $(0.35) Diluted $(0.02) $(0.46) $(0.13) $(0.35) Weighted average shares outstanding: Basic 11,584 11,506 11,498 11,548 Diluted 11,584 11,506 11,498 11,548 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 Nine Months Ended Ended September 30, September 30, (Unaudited) (Unaudited) 2003 2002 2003 2002 CASH FLOW FROM OPERATING ACTIVITIES: Net loss $(249) $(5,308) $(1,534) $(4,029) Adjustments to net loss: Depreciation and amortization 1,358 1,352 4,289 3,841 Loss on impairment and disposal of fixed assets 1 3,062 1 3,563 Deferred income taxes (302) (2,933) (1,049) (5,109) Amortization of deferred compensation 18 18 54 54 Changes in working capital: Accounts receivable, net 1,679 (5,159) (796) (3,016) Inventory 1,418 (1,847) 8,460 7,273 Prepaid assets and other (794) (367) 58 1,812 Accounts payable, accrued expenses and other (684) 68 (11,557) (1,061) Cash provided by (used in) operating activities 2,445 (11,114) (2,074) 3,328 CASH FLOW FROM INVESTING ACTIVITIES: Capital expenditures (363) (3,553) (1,018) (11,592) Payment for business acquired (5) (360) (181) (14,087) Sale of marketable securities - - - 435 Cash (used in) investing activities (368) (3,913) (1,199) (25,244) CASH FLOW FROM FINANCING ACTIVITIES: Net (repayments) borrowings under line of credit (2,016) 13,407 2,619 13,407 Repayment of long term debt (28) (63) (100) (208) Loan fees paid - - (31) (50) Sale (purchase) of treasury stock shares 537 (448) 1,009 (448) Cash (used in) provided by financing activities (1,507) 12,896 3,497 12,701 Net increase (decrease) in cash 570 (2,131) 224 (9,215) Cash, beginning of period 615 2,329 961 9,413 Cash, end of period $1,185 $198 $1,185 $198 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) September 30, December 31, 2003 2002 ASSETS (Unaudited) (Audited) Current Assets: Cash $1,185 $961 Accounts receivable, net 14,999 14,203 Inventories, net 15,638 24,098 Deferred income taxes 634 552 Prepaid expenses and other 2,372 2,357 Total current assets 34,828 42,171 Property and equipment, net 15,866 18,915 Goodwill 25,169 24,988 Other assets, net 10,127 9,425 Total Assets $85,990 $95,499 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $4,969 $13,517 Accrued expenses and other 3,309 6,626 Line of credit 16,991 - Total current liabilities 25,269 20,143 Noncurrent Liabilities: Line of credit - 14,372 Other non-current liabilities 1,075 1,125 Total noncurrent liabilities 1,075 15,497 Total shareholders' equity 59,646 59,859 Total Liabilities and Shareholders' Equity $85,990 $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- 11/06/2003 /CONTACT: David L. Gamsey, Chief Financial Officer of Innotrac Corporation, +1-678-584-4020, or email, dgamsey@innotrac.com/ /Web site: http://www.innotrac.com/ (INOC) CO: Innotrac Corporation ST: Georgia IN: TRN SU: ERN CCA MAV