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Innotrac Corporation Announces 2005 Third Quarter ResultsATLANTA, Nov. 7 /PRNewswire-FirstCall/ -- Innotrac Corporation announced financial results today for the third quarter and nine months ended September 30, 2005. The Company reported revenues of $17.5 million for the quarter versus $17.6 million reported in the comparable period in 2004, a decrease of 0.5%. For the nine months ended September 30, 2005, the Company reported revenues of $55.7 million compared to $57.4 million for the same period in 2004, a decrease of 3.0%. The decreases for both the three and nine month periods were primarily attributed to reduced volumes from our telecommunications business, which were partially offset by increased volumes from our DSL business. In addition, we added several new clients, resulting in increased revenues from our direct marketing and retail/catalog businesses in excess of the decreased revenues caused by the termination of services for Tactica International, Inc. and Martha Stewart Living Omnimedia, as anticipated. The Company is pleased to announce that it has reached agreements with three new clients to provide services beginning in the second quarter of 2006. The most significant of these agreements is a multiyear agreement with Target Corporation to provide North America's second largest general merchandise retailer with product fulfillment services to support the expansion of their Target.com eCommerce initiative. To handle the expected volumes, Innotrac will open another fulfillment center just outside of Cincinnati, Ohio, in Hebron, Kentucky. Construction for the facility has begun and the new center is expected to be ready to ship Target.com's orders in the summer of 2006. The new fulfillment center will be Innotrac's second facility in the Hebron, Kentucky, area and its ninth facility across six states bringing the total square footage of the Company's facilities to over 2.4 million. "Over the last year our focus has been on finding companies that would benefit from our integrated national footprint. Although it took longer than anticipated to bring these to fruition, I feel that the new business we have signed for 2006 will be significant and will allow Innotrac to show stronger revenue and profit growth for several years to come," 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 7, 2005 at 5:00 PM Eastern Standard Time. Investors can listen to the conference call live by dialing 1-877-569-0972 (Conference ID: 1788968) 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: 1788968). 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. 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 and numerous other factors discussed in Innotrac's 2004 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) 2005 2004 2005 2004 Revenues $17,543 $17,631 $55,724 $57,433 Cost of revenues 8,695 8,756 28,328 26,670 Gross profit 8,848 8,875 27,396 30,763 Operating expenses: Selling, general and administrative expenses 8,535 7,931 25,421 26,574 Depreciation and amortization 1,091 1,283 3,551 3,905 Total operating expenses 9,626 9,214 28,972 30,479 Operating (loss) income (778) (339) (1,576) 284 Interest expense 18 63 127 234 Other - - - - Total other expense 18 63 127 234 (Loss) income before income taxes (796) (402) (1,703) 50 Income tax (benefit) - - - - Net (loss) income $(796) $(402) $(1,703) $50 Earnings per share: Basic $(0.06) $(0.03) $(0.14) $0.00 Diluted $(0.06) $(0.03) $(0.14) $0.00 Weighted average shares outstanding: Basic 12,277 11,905 12,167 11,843 Diluted 12,277 11,905 12,167 12,540 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, 2005. INNOTRAC CORPORATION Condensed Consolidated Balance Sheets (in thousands) September 30, December 31, 2005 2004 ASSETS (Unaudited) (Audited) Current Assets: Cash $3,803 $1,377 Accounts receivable (net of allowance for doubtful accounts of $1,049 at September 30, 2005 and $1,624 at December 31, 2004) 12,846 18,405 Inventory 4,131 2,662 Prepaid expenses and other 1,627 1,986 Total current assets 22,407 24,430 Property and equipment, net 9,906 12,499 Goodwill 25,169 25,169 Other assets, net 1,116 1,275 Total assets $58,598 $63,373 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $4,292 $6,023 Accrued expenses and other 3,127 2,630 Line of credit - 3,063 Total current liabilities 7,419 11,716 Noncurrent Liabilities: Other non-current liabilities 1,039 1,098 Total noncurrent liabilities 1,039 1,098 Total shareholders' equity 50,140 50,559 Total liabilities and shareholders' equity $58,598 $63,373 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, 2005. INNOTRAC CORPORATION Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended Nine Months Ended September 30, September 30, (Unaudited) (Unaudited) 2005 2004 2005 2004 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $(796) $(402) $(1,703) $50 Adjustments to net loss: Depreciation and amortization 1,091 1,283 3,551 3,905 Loss on disposal of fixed assets 12 6 12 106 Amortization of deferred compensation - 18 - 68 Changes in working capital: Accounts receivable, net 5,031 (175) 5,558 (1,373) Inventory (1,377) 385 (1,469) 6,285 Prepaid assets and other 317 (763) 348 (1,690) Accounts payable, accrued expenses and other (1,584) 195 (1,239) 1,062 Cash provided by operating activities 2,694 547 5,058 8,413 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (217) (795) (800) (2,112) Cash used in investing activities (217) (795) (800) (2,112) CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings (repayments) under line of credit - 262 (3,063) (7,455) Payment of capital lease obligation (18) (25) (54) (65) Loan fees paid - - - (15) Exercise of employee stock options 21 105 1,285 748 Stock reacquired to settle employee stock bonus withholding tax obligation - - - (286) Cash (used in) provided by financing activities 3 342 (1,832) (7,073) Net increase (decrease) in cash 2,480 94 2,426 (772) Cash, beginning of period 1,323 1,362 1,377 2,228 Cash, end of period $3,803 $1,456 $3,803 $1,456 Note: These statements should be read in conjunction with the Company's Form 10-K filed with the Securities and Exchange on March 31, 2005. Innotrac Corporation CONTACT: Christine Herren, Senior Director and Controller of InnotracCorporation, +1-678-584-4115, or [email protected] Web site: http://www.innotrac.com/ |