ATLANTA, Nov. 10 /PRNewswire-FirstCall/ -- Innotrac Corporation (NASDAQ: 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, 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, 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. 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 DATASOURCE: Innotrac Corporation CONTACT: George Hare, Chief Financial Officer of Innotrac Corporation, +1-678-584-4020, Web site: http://www.innotrac.com/

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