EX-99.1 2 e18782ex991.txt PRESS RELEASE Exhibit 99.1 Innotrac Corporation Announces 2004 Second Quarter Results ATLANTA, Aug. 9 /PRNewswire-FirstCall/ -- Innotrac Corporation (Nasdaq: INOC) announced financial results today for the second quarter and six months ended June 30, 2004. For the three months ended June 30, 2004, the Company earned $0.02 per share on revenues of $19.8 million and generated $2.6 million in positive cash flow from operations. Revenues were up 12.3% on a year-over-year basis and the Company improved earnings per share by $0.05 versus the second quarter of 2003. Gross margins were 54.7%, up from 51.9% in the same period in 2003. For the six months ended June 30, 2004, the Company earned $0.04 per share on revenues of $39.8 million and delivered gross margins of 55.0%. This represents 10.7% revenue growth and 2.7% margin expansion from the year ago period. Cash flow from operations for the first six months of 2004 was $7.9 million. "In the second quarter, we continued our pace of year-over-year revenue, earnings and cash flow growth. Additionally, we reduced inventory levels and outstanding borrowings on our line of credit to $5.0 million and $4.1 million, respectively, down from $10.9 million and $11.8 million at December 31, 2003," stated David L. Gamsey, Chief Financial Officer. "Our focus on driving operational excellence and back-office efficiency has returned the Company to profitability. We are very pleased that our clients continue to present us with new business opportunities, and we have built an excellent backlog of new prospects that we believe will enable us to continue growing revenue, earnings and cash flow," stated Scott D. Dorfman, President and Chief Executive Officer. Conference Call Innotrac Corporation will hold a conference call to discuss this release this evening, August 9th, at 5:00 p.m. Eastern Daylight Time. Investors can listen to the conference call live by dialing 1-877-569-0972 (Conference ID: 8513271) or by logging on to http://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: 8513271). 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, http://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 2003 Annual Report on Form 10-K and other filings on file with the Securities and Exchange Commission. INNOTRAC CORPORATION Condensed Consolidated Statements of Operations (unaudited) (in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Revenues $19,807 $17,631 $39,802 $35,965 Cost of revenues 8,977 8,488 17,915 17,158 Gross profit 10,830 9,143 21,887 18,807 Operating expenses: Selling, general and administrative expenses 9,158 8,183 18,642 17,543 Special charges - (30) - (30) Depreciation and amortization 1,370 1,462 2,622 2,931 Total operating expenses 10,528 9,615 21,264 20,444 Operating income (loss) 302 (472) 623 (1,637) Interest expense 77 155 171 402 Other - - - (7) Total other expense 77 155 171 395 Income (loss) before income taxes 225 (627) 452 (2,032) Income tax (benefit) - (234) - (747) Net income (loss) $225 $(393) $452 $(1,285) Earnings per share: Basic $0.02 $(0.03) $0.04 $(0.11) Diluted $0.02 $(0.03) $0.04 $(0.11) Weighted average shares outstanding: Basic 11,731 11,487 11,748 11,455 Diluted 12,316 11,487 12,501 11,455 Note: These statements should be read in conjunction with the Company's Form 10-K filed with the Securities and Exchange Commission on March 30, 2004. INNOTRAC CORPORATION Condensed Consolidated Balance Sheets (in thousands) June 30, December 31, 2004 2003 ASSETS (Unaudited) (Audited) Current Assets: Cash $1,362 $2,228 Accounts receivable (net of allowance for doubtful accounts of $2,537 at June 30, 2004 and $1,696 at December 31, 2003) 16,880 15,682 Inventory 4,996 10,896 Prepaid expenses and other 1,766 915 Total current assets 25,004 29,721 13,521 14,750 Property and equipment, net Goodwill 25,169 25,169 Other assets, net 1,237 1,322 Total assets $64,931 $70,962 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $6,365 $5,738 Accrued expenses and other 2,805 2,577 Line of credit 4,085 11,802 Total current liabilities 13,255 20,117 Noncurrent Liabilities: Other non-current liabilities 1,055 1,083 Total noncurrent liabilities 1,055 1,083 Total shareholders' equity 50,621 49,762 Total liabilities and shareholders' equity $64,931 $70,962 Note: These statements should be read in conjunction with the Company's Form 10-K filed with the Securities and Exchange Commission on March 30, 2004. INNOTRAC CORPORATION Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $225 $(393) $452 $(1,285) Adjustments to net loss: Depreciation and amortization 1,370 1,462 2,622 2,931 Loss on impairment or disposal of fixed assets 100 - 100 - Deferred income taxes - (234) - (746) Amortization of deferred compensation 18 18 51 36 Changes in working capital: Accounts receivable, net (524) (439) (1,198) (2,475) Inventory 1,296 3,813 5,899 7,042 Prepaid assets and other (494) 863 (927) 853 Accounts payable, accrued expenses and other 563 (3,693) 866 (10,875) Cash provided by (used in) operating activities 2,554 1,397 7,865 (4,519) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (729) (258) (1,317) (655) Acquisition of business, net of cash acquired - (176) - (176) Cash (used in) investing activities (729) (434) (1,317) (831) CASH FLOWS FROM FINANCING ACTIVITIES: Net (repayments) borrowings under line of credit (2,031) (1,053) (7,717) 4,635 (Payment) of capital lease obligation (20) (36) (39) (72) Loan commitment fees (15) (31) (15) (31) Exercise of employee stock options 235 - 643 - Stock reacquired to settle employee stock bonus withholding tax obligation - - (286) - Issuance of treasury stock - 425 - 472 Cash (used in) provided by financing activities (1,831) (695) (7,414) 5,004 Net (decrease) increase in cash (6) 268 (866) (346) Cash, beginning of period 1,368 347 2,228 961 Cash, end of period $1,362 $615 $1,362 $615 Note: These statements should be read in conjunction with the Company's Form 10-K filed with the Securities and Exchange Commission on March 30, 2004. SOURCE Innotrac Corporation -0- 08/09/2004 /CONTACT: David L. Gamsey, Chief Financial Officer of Innotrac Corporation, +1-678-584-4020, or dgamsey@innotrac.com / /Web site: http://www.innotrac.com/ (INOC) CO: Innotrac Corporation ST: Georgia IN: TRN CPR SU: ERN CCA MAV