Exhibit 99.1
Innotrac Corporation Announces 2004 Third Quarter and Nine Month Results
ATLANTA, Nov. 3 /PRNewswire-FirstCall/ -- Innotrac Corporation
(Nasdaq: INOC) announced financial results today for the third quarter ended
September 30, 2004. For the three months ended September 30, 2004, the
Company generated revenues of $17.6 million versus $18.5 million for the
comparable period in 2003, a decline of 4.9%. This decline was primarily
attributable to higher than expected softness in the direct response business
line and the conclusion of two programs for one of our major clients. During
the past two quarters, Innotrac has signed contracts with several new clients,
which we anticipate will offset this decline. Innotrac went live and began
shipping for the majority of these clients in October. Seasonal slowness and
the start-up costs associated with the new client implementations resulted in
a loss per share of $0.03 for the third quarter ended September 30, 2004
versus a loss per share of $0.02 in the comparable period of 2003.
For the nine months ended September 30, 2004, the Company generated
revenues of $57.4 million versus $54.5 million for the comparable period in
2003, an increase of 5.4%. Innotrac produced $8.4 million in cash flows from
operations for the nine months ended September 30, 2004 compared to a
$2.1 million usage of cash in the first nine months of 2003. Earnings per
share for the nine months ended September 30, 2004 was breakeven versus a loss
of $0.13 in the comparable period of 2003.
On October 21, 2004, Tactica International, Inc. ("Tactica"), one of the
Company's direct response clients, filed for Chapter 11 bankruptcy protection.
As part of this filing, Innotrac and Tactica have entered into a court
approved Stipulation Agreement whereby Tactica has acknowledged the validity
of Innotrac's receivable and Innotrac's associated first security interest in
Tactica's inventory. This agreement will allow Innotrac to continue providing
services to Tactica on a prepaid basis while pursuing recovery of its full
$2.7 million receivable, against which there is an existing $1.5 million
reserve. We hope to recover a substantial portion of the receivable but it is
too early in Tactica's Chapter 11 proceeding to predict the ultimate recovery.
"The third quarter of 2004 was an exciting but challenging period for
Innotrac. Despite higher than expected seasonal slowness and the start-up
costs associated with implementing several new enterprise clients and opening
a new facility in Delaware, we generated solid operational cash flows. Most
of these expenses are now behind us and we are now gearing up for the holiday
shipping season," stated Scott D. Dorfman, President and Chief Executive
Officer.
Conference Call
Innotrac Corporation will hold a conference call to discuss this release
this evening, November 3rd, at 5:00 p.m. Eastern Standard Time. Investors can
listen to the conference call live by dialing 1-877-569-0972 (Conference ID:
1461796) 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 (Conference ID: 1461796).
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 eight fulfillment centers and two
call centers in six 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. Without limitation, statements in this press release
concerning future revenues from new clients, future results of operations,
future general economic conditions and our ability to collect amounts owed to
us by Tactica are forward-looking statements. 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 Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
Revenues $17,631 $18,545 $57,433 $54,510
Cost of revenues 8,756 8,548 26,670 25,706
Gross profit 8,875 9,997 30,763 28,804
Operating expenses:
Selling, general and
administrative expenses 7,931 8,819 26,574 26,332
Depreciation and amortization 1,283 1,358 3,905 4,289
Total operating expenses 9,214 10,177 30,479 30,621
Operating income (loss) (339) (180) 284 (1,817)
Interest expense 63 180 234 581
Other - 1 - (5)
Total other expense 63 181 234 576
Income (loss) before income taxes (402) (361) 50 (2,393)
Income tax (benefit) - (112) - (859)
Net income (loss) $(402) $(249) $50 $(1,534)
Earnings per share:
Basic $(0.03) $(0.02) $0.00 $(0.13)
Diluted $(0.03) $(0.02) $0.00 $(0.13)
Weighted average shares outstanding:
Basic 11,905 11,584 11,843 11,498
Diluted 11,905 11,584 12,540 11,498
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)
September 30, December 31,
2004 2003
ASSETS (Unaudited) (Audited)
Current Assets:
Cash $1,456 $2,228
Accounts receivable (net of allowance
for doubtful accounts of $1,897 at
September 30, 2004 and $1,696 at
December 31, 2003) 17,055 15,682
Inventory 4,611 10,896
Prepaid expenses and other 2,500 915
Total current assets 25,622 29,721
Property and equipment, net 13,087 14,750
Goodwill 25,169 25,169
Other assets, net 1,207 1,322
Total assets $65,085 $70,962
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $5,875 $5,738
Accrued expenses and other 3,491 2,577
Line of credit 4,348 11,802
Total current liabilities 13,714 20,117
Noncurrent Liabilities:
Other non-current liabilities 1,028 1,083
Total noncurrent liabilities 1,028 1,083
Total shareholders' equity 50,343 49,762
Total liabilities and
shareholders' equity $65,085 $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 Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(402) $(249) $50 $(1,534)
Adjustments to net loss:
Depreciation and amortization 1,283 1,358 3,905 4,289
Loss on impairment or disposal of
fixed assets 6 1 106 1
Deferred income taxes - (302) - (1,049)
Amortization of deferred compensation 18 18 68 54
Changes in working capital:
Accounts receivable, net (175) 1,679 (1,373) (796)
Inventory 385 1,418 6,285 8,460
Prepaid assets and other (763) (794) (1,690) 58
Accounts payable, accrued
expenses and other 195 (684) 1,062 (11,557)
Cash provided by (used in)
operating activities 547 2,445 8,413 (2,074)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (795) (363) (2,112) (1,018)
Acquisition of business, net of
cash acquired - (5) - (181)
Cash (used in) investing activities (795) (368) (2,112) (1,199)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under
line of credit 262 (2,016) (7,455) 2,619
(Payment) of capital lease obligation (25) (28) (65) (100)
Loan commitment fees - - (15) (31)
Exercise of employee stock options 105 537 748 1,009
Stock reacquired to settle employee
stock bonus withholding tax obligation - - (286) -
Issuance of treasury stock - - - -
Cash (used in) provided by
financing activities 342 (1,507) (7,073) 3,497
Net (decrease) increase in cash 94 570 (772) 224
Cash, beginning of period 1,362 615 2,228 961
Cash, end of period $1,456 $1,185 $1,456 $1,185
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- 11/03/2004
/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; Tactica International, Inc.
ST: Georgia
IN: CPR MLM
SU: ERN CCA MAV