Exhibit 99.1
Innotrac Corporation Announces 2008 Third Quarter Results
ATLANTA, GA (November 10, 2008) – Innotrac Corporation (NASDAQ-GM: INOC) announced financial results today for the third quarter and nine months ended September 30, 2008. The Company reported revenues of $32.0 million for the quarter versus $29.1 million reported in the comparable period in 2007, an increase of 10.0%. For the nine months ended September 30, 2008, the Company reported revenues of $94.2 million compared to $84.9 million for the same period in 2007, an increase of 11.0%. The increase in revenue for the three and nine months ended September 30, 2008 was primarily due to the addition of several new direct marketing clients and increased revenue from existing clients in our eCommerce, DSL and direct marketing verticals. These increases were offset by a decrease in revenues from our B2B and telecom verticals.
The Company reported net income of $829,000, or $0.07 per share, fully diluted, for the three months ended September 30, 2008, versus net income of $1.0 million or $0.08 per share in the comparable period of 2007. For the nine months ended September 30, 2008, the Company reported net income of $2.7 million, or $0.22 per share, compared to net income of $287,000, or $0.02 per share in the same period in 2007. Approximately $292,000 of expenses directly related to the merger transaction described below were included in the financial results for the three months ended September 30, 2008.
The GSI Commerce Merger
On October 5, 2008, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with GSI Commerce, Inc., a Delaware corporation (“GSI”), and Bulldog Acquisition Corp., a Georgia corporation and wholly-owned subsidiary of GSI (“Acquisition Sub”). On October 6, 2008, the Company filed a Form 8-K which presented a summary of the Merger Agreement and included the Merger Agreement and related agreements as exhibits. Subject to satisfaction of the terms and conditions of the Merger Agreement, Acquisition Sub will merge with and into the Company, with the Company continuing as the surviving corporation and a wholly-owned subsidiary of GSI. It is expected that the merger will be consummated during the first half of 2009.
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 eight fulfillment centers and two call centers in seven cities spanning all time zones across the continental United States. For more information about Innotrac, visit the Innotrac Website, www.innotrac.com.
Information contained in this press release, other than historical information, may be considered forward-looking in nature. Forward-looking statements in this press release include our expectations for future progress in our business and future generation of cash flows. Forward-looking statements are 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 current clients and attract new clients, realization of expected revenues from new clients, the state of the telecommunications and direct response industries in general, changing technologies, Innotrac’s ability to maintain profit margins in the face of pricing pressures, the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, the inability to complete the merger due to the failure to receive approvals or to satisfy other conditions, the risk that the proposed merger disrupts current plans and operations, the risk that anticipated synergies and opportunities as a result of the transaction will not be realized, difficulty or unanticipated expenses in connection with integrating Innotrac into GSI, the risk that the combined company does not perform as planned, potential difficulties in employee retention following the closing of the merger and numerous other factors discussed in Innotrac's 2007 Annual Report on Form 10-K and other filings on file with the Securities and Exchange Commission. Innotrac disclaims any intention or obligation to update or revise any forward-looking statement whether as a result of new information, future events or otherwise.
Contact
George Hare
Chief Financial Officer
678-584-4020
ghare@innotrac.com
###
INNOTRAC CORPORATION |
Condensed Statements of Operations |
(in thousands, except per share amounts) |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Service revenue | $ | 25,138 | $ | 23,536 | $ | 74,028 | $ | 68,185 | ||||||||
Freight revenue | 6,863 | 5,551 | 20,213 | 16,731 | ||||||||||||
Total revenue | 32,001 | 29,087 | 94,241 | 84,916 | ||||||||||||
Cost of service revenues | 11,532 | 10,657 | 34,190 | 31,372 | ||||||||||||
Freight expense | 6,757 | 5,558 | 20,022 | 16,588 | ||||||||||||
Selling, general and | ||||||||||||||||
administrative expenses | 11,419 | 10,490 | 33,081 | 32,392 | ||||||||||||
Depreciation and amortization | 1,106 | 1,185 | 3,178 | 3,787 | ||||||||||||
Total operating expenses | 30,814 | 27,890 | 90,471 | 84,139 | ||||||||||||
Operating income | 1,187 | 1,197 | 3,770 | 777 | ||||||||||||
Interest expense | 358 | 161 | 1,084 | 490 | ||||||||||||
Total other expense | 358 | 161 | 1,084 | 490 | ||||||||||||
Income before income taxes | 829 | 1,036 | 2,686 | 287 | ||||||||||||
Income tax | - | - | - | - | ||||||||||||
Net income | $ | 829 | $ | 1,036 | $ | 2,686 | $ | 287 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.07 | $ | 0.08 | $ | 0.22 | $ | 0.02 | ||||||||
Diluted | $ | 0.07 | $ | 0.08 | $ | 0.22 | $ | 0.02 | ||||||||
Weighted average shares | ||||||||||||||||
outstanding: | ||||||||||||||||
Basic | 12,332 | 12,320 | 12,324 | 12,296 | ||||||||||||
Diluted | 12,442 | 12,320 | 12,429 | 12,296 |
INNOTRAC CORPORATION |
Condensed Balance Sheets |
(in thousands) |
September 30, | December 31, | |||||||
2008 | 2007 | |||||||
ASSETS | (Unaudited) | (Audited) | ||||||
Current Assets: | ||||||||
Cash | $ | 620 | $ | 1,079 | ||||
Accounts receivable (net of allowance for doubtful accounts of $286 at September 30, 2008 and $288 at December 31, 2007) | 24,844 | 28,090 | ||||||
Inventory | 1,209 | 599 | ||||||
Prepaid expenses and other | 1,193 | 1,100 | ||||||
Total current assets | 27,866 | 30,868 | ||||||
�� | ||||||||
Property and equipment, net | 16,906 | 17,702 | ||||||
Goodwill | 25,169 | 25,169 | ||||||
Other assets, net | 1,012 | 1,192 | ||||||
Total assets | $ | 70,953 | $ | 74,931 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 7,551 | $ | 14,050 | ||||
Line of credit | 9,114 | 6,168 | ||||||
Term loan | - | 5,000 | ||||||
Accrued expenses and other | 7,576 | 5,708 | ||||||
Total current liabilities | 24,241 | 30,926 | ||||||
Noncurrent Liabilities: | ||||||||
Other non-current liabilities | 857 | 993 | ||||||
Total noncurrent liabilities | 857 | 993 | ||||||
Total shareholders' equity | 45,855 | 43,012 | ||||||
Total liabilities and shareholders' equity | $ | 70,953 | $ | 74,931 | ||||
INNOTRAC CORPORATION |
Condensed Statements of Cash Flows |
(in thousands) |
Nine Months Ended | ||||||||
September 30, | ||||||||
(Unaudited) | ||||||||
2008 | 2007 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 2,686 | $ | 287 | ||||
Adjustments to net income: | ||||||||
Depreciation and amortization | 3,178 | 3,787 | ||||||
Provision for bad debts | - | (16 | ) | |||||
Stock compensation expense-stock options | 59 | 88 | ||||||
Stock compensation expense-restricted stock | 56 | - | ||||||
Stock issued to settle employee stock bonus | - | 111 | ||||||
Changes in working capital: | ||||||||
Accounts receivable, gross | 3,245 | 2,189 | ||||||
Inventory | (609 | ) | 810 | |||||
Prepaid assets and other | 87 | (7 | ) | |||||
Accounts payable, accrued expenses and other | (4,767 | ) | (3,024 | ) | ||||
Net cash provided by operating activities | 3,935 | 4,225 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Capital expenditures | (2,382 | ) | (3,836 | ) | ||||
Installment payment on previous acquisition of business | - | (800 | ) | |||||
Cash used in investing activities | (2,382 | ) | (4,636 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Net borrowings (repayments) under line of credit | 2,946 | (4,581 | ) | |||||
(Repayment) proceeds of term loan | (5,000 | ) | 5,000 | |||||
Issuance of stock, net | 42 | - | ||||||
Loan commitment fees | - | (425 | ) | |||||
Cash used in financing activities | (2,012 | ) | (6 | ) | ||||
Net decrease in cash | (459 | ) | (417 | ) | ||||
Cash, beginning of period | 1,079 | 1,014 | ||||||
Cash, end of period | $ | 620 | $ | 597 |