Accelerating DSL Business and Continued Migration to Fee-for-service Model Drive Innotrac's Third-quarter Results.Business Editors/Technology Writers ATLANTA--(BUSINESS WIRE)--Oct. 25, 2000 Cash Flow From Operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of $18.5 Million for Third Quarter of 2000 Innotrac Corporation (Nasdaq: INOC INOC Internet Network Operations Center INOC Iranian National Oil Company INoC Interpreter Network of Colorado INOC Inoculate/Inoculation INOC International Network Operation Center INOC Iran National Oil Company INOC Income Net of Claims ), today announced financial results for the third quarter of 2000, highlighted by strong cash flow from operations, a substantially improved balance sheet and the second consecutive quarter of profitable operations. Scott Dorfman Dorfman is a surname and may refer to:
An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of increased substantially over results for the second quarter of 2000, which were substantially better than the first quarter of 2000. In addition, cash flow from operations for the third quarter increased by over $31 million from our results for the third quarter last year." Innotrac's revenues for the third quarter ended September September: see month. 30, 2000, in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the gradual The Gradual (Latin: graduale, sometimes called the Grail) is a chant in the extraordinary form of the Roman Catholic Mass, sung after the reading or singing of the Epistle and before the Alleluia, or, during penitential seasons, before the Tract. shift to fee-for-service fee-for-ser·vice adj. Charging a fee for each service performed. revenue recognition, were $50.3 million, compared with $51.7 million for the third quarter of 1999. The Company generated cash flow from operations of $18.5 million for the latest quarter, compared with negative cash flow from operations of $13.1 million for the same quarter last year. Net income for the latest quarter was $319,000, or $0.03 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, including the loss on its investment in the Company's e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. venture, Return.com, of $0.03 per diluted share. Excluding Return.com losses, Innotrac would have reported diluted earnings per share of $0.06 for the third quarter ended September 30, 2000. Mr. Dorfman continued, "Our third quarter results were powered, as expected, by accelerating digital subscriber line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and ("DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary ") fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. service revenues and by the Company's strategic shift to a fee-for-service business model. DSL business levels increased substantially, resulting in the fulfillment of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 124,000 units for the third quarter compared with approximately 41,000 units for the second quarter of 2000. We are enthusiastic about the growth of DSL, and we believe we have successfully positioned Innotrac to be a major contributor to the implementation of this service for consumers throughout the country." David Gamsey, senior vice president and chief financial officer added, "The Company's shift to a fee-for-service business model also gained momentum during the third quarter, which is clearly evident in the growth of cash flow from operations. As anticipated, this shift drove a reduction in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying during the quarter to $42.9 million at the end of the quarter from $65.4 million at the same time last year and $58.4 million at the end of the second quarter of 2000. Innotrac's inventory also remained lower because of the shift to fee-for-service, ending the quarter at $15.3 million, compared with $39.5 million at the end of 1999. Primarily because of these reductions, Innotrac completed the third quarter with cash of $18.4 million, no debt under its $40 million line of credit and tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. book value of $69.1 million, or $6.17 per share. Additionally, cash flow from operations was a strong $1.00 per diluted share for the third quarter ended September 30, 2000." Mr. Gamsey continued, "We intend to continue to focus on steps to generate increasing cash flow from operations. This focus has already substantially strengthened our financial position and increased our flexibility when evaluating potential acquisitions. We intend to selectively pursue accretive acquisitions Accretive Acquisition An acquisition that will increase the acquiring company's EPS. Notes: As they are expected to increase the acquiring company's future earnings, these acquisitions tend to be favorable for the company's market price. to expand our national footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. in fulfillment and call center services, while at the same time reducing our industry and customer concentration." According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Mr. Dorfman, Innotrac also continues to expand its e-commerce initiatives and customer base. During the third quarter, Innotrac announced that it had been selected to operate the Olympic O·lym·pic adj. Of or relating to the Olympic Games. Olympic Adjective of the Olympic Games Adj. 1. Olympic - of or relating to the Olympic Games; "Olympic winners" 2. Legacy Brick Program for the Salt Lake 2002 Olympic Winter Games
Compare: turn-key solution. for both traditional businesses and e-tailers. Since the end of the third quarter, Innotrac has joined the CommerceOne.net Affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. Program, through which the Company can advertise and market its Web site development, inventory management, fulfillment and customer care services. In addition, earlier today the Company announced a contract with Ocean Pacific Apparel Corporation ("Op"), one of the world's best known apparel brands, to serve as Op's exclusive e-commerce partner and to create and operate its first online store. Mr. Dorfman concluded, "We are proud of Innotrac's continued operational and financial progress and intend to remain focused on leveraging our strengths to produce profitable growth." Innotrac Corporation will hold a conference call to discuss this release tomorrow, October October: see month. 26, at 10:00 a.m. eastern time. Investors will have the opportunity to listen to the conference call over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by going to www.innotrac.com, as well as www.streetevents.com or www.vcall.com. Innotrac Corporation is a full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. provider of customized, technology-based marketing support and fulfillment services. With an effective outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. model that utilizes its core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
adapted for analysis, storage and retrieval on a computer. computerized axial tomography see computed tomography. inventory and database management; and inbound in·bound 1 adj. Bound inward; incoming: inbound commuter traffic. Adj. 1. inbound customer support centers. Information contained in this press release, other than historical information, may be considered forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. in nature and is subject to various risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , or should underlying assumptions prove incorrect Incorrect means to not be correct and may also refer to:
A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other filings with the Securities and Exchange Commission.
INNOTRAC CORPORATION
Condensed Consolidated Results of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
----------------------
2000 1999
--------- ---------
Revenues $ 50,284 $ 51,660
Cost of revenues 38,540 37,326
Special charges -- --
--------- ---------
Gross margin 11,744 14,334
Operating expenses:
Selling, general, and
administrative expenses 10,295 9,421
Special charges -- --
Depreciation and amortization 1,167 838
--------- ---------
Total operating expenses 11,462 10,259
--------- ---------
Operating income (loss) 282 4,075
Other (income) expense, net (195) 270
--------- ---------
Net income (loss) before
income taxes 477 3,805
Income tax (provision) benefit (158) (1,502)
--------- ---------
Net income (loss) $ 319 $ 2,303
========= =========
Basic and diluted earnings per share:
Basic $ 0.03 $ 0.22
========= =========
Diluted $ 0.03 $ 0.22
========= =========
Weighted average shares
outstanding:
Basic 11,200 10,392
Diluted 11,200 10,583
Nine Months Ended
September 30,
----------------------
2000 1999
--------- ---------
Revenues $ 149,031 $ 176,477
Cost of revenues 117,794 131,160
Special charges 7,477 --
--------- --------
Gross margin 23,760 45,317
Operating expenses:
Selling, general, and
administrative expenses 28,982 26,946
Special charges 8,473 --
Depreciation and amortization 2,893 2,644
--------- --------
Total operating expenses 40,348 29,590
--------- --------
Operating income (loss) (16,588) 15,727
Other (income) expense, net 240 1,095
--------- --------
Net income (loss) before
income taxes (16,828) 14,632
Income tax (provision) benefit 6,817 (5,778)
--------- --------
Net income (loss) $ (10,011) $ 8,854
========= ========
Basic and diluted earnings per share:
Basic $ (0.89)(1) $ 0.94
========= ========
Diluted $ (0.89)(1) $ 0.92
========= ========
Weighted average shares
outstanding:
Basic 11,209 9,419
Diluted 11,209 9,577
(1) Includes non-recurring pre-tax charge of $15.9 million, or $0.85
per share after tax, related to inventory, accounts receivable
and other write-offs.
INNOTRAC CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
September 30,
---------------------
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 319 $ 2,303
Adjustments to net income (loss):
Depreciation and amortization 1,167 838
Loss on fixed asset disposition 3 110
Deferred income taxes 295 185
Minority interest in subsidiary (119) --
Changes in working capital:
Accounts receivable, net 8,734 (12,401)
Inventories (2,028) (11,735)
Prepaid and other assets 2,876 998
Accounts payable, accrued expenses
and other 7,293 6,622
-------- --------
Cash provided by (used in) operating
activities 18,540 (13,080)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (1,765) (2,008)
Other (12) --
-------- --------
Cash (used in) investing activities (1,777) (2,008)
-------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net (repayments) borrowings under line
of credit (1,730) (19,821)
Repayment of long-term debt (2) (61)
Proceeds from stock issuance of subsidiary and
stock options (150) 35,184
-------- --------
Cash (used in) provided by financing
activities (1,882) 15,302
-------- --------
Net increase (decrease) in cash 14,881 214
Cash at beginning of period 3,554 361
-------- --------
Cash at end of period $ 18,435 $ 575
======== ========
Nine Months Ended
September 30,
--------------------
2000 1999
-------- --------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $(10,011) $ 8,854
Adjustments to net income (loss):
Depreciation and amortization 2,893 2,644
Loss on fixed asset disposition 454 412
Deferred income taxes 667 1,487
Minority interest in subsidiary (165) --
Changes in working capital:
Accounts receivable, net 2,763 (21,082)
Inventories 24,213 (26,572)
Prepaid and other assets (5,709) 534
Accounts payable, accrued expenses
and other 17,725 2,334
-------- --------
Cash provided by (used in) operating
activities 32,830 (31,389)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (9,077) (3,811)
Other (45) --
-------- --------
Cash (used in) investing activities (9,122) (3,811)
-------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net (repayments) borrowings under line
of credit (7,008) (2,655)
Repayment of long-term debt (9) (63)
Proceeds from stock issuance of subsidiary and
stock options 850 35,114
-------- --------
Cash (used in) provided by financing
activities (6,167) 32,396
-------- --------
Net increase (decrease) in cash 17,541 (2,804)
Cash at beginning of period 894 3,379
-------- --------
Cash at end of period $ 18,435 $ 575
======== ========
INNOTRAC CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2000 1999
------------- -------------
ASSETS (Unaudited)
Current Assets:
Cash $ 18,435 $ 894
Accounts receivable, net 42,899 52,431
Other accounts receivable 6,770 --
Inventory 15,290 39,503
Prepaid expenses and other 8,368 1,982
------------- -------------
Total current assets 91,762 94,810
Property and equipment, net 14,676 8,922
Other assets, net 283 486
------------- -------------
Total Assets $ 106,721 $ 104,218
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Line of credit $ -- $ 7,008
Accounts payable, accrued
expenses and other 35,600 17,922
------------- -------------
Total current liabilities 35,600 24,930
Other non-current liabilities 1,233 75
Minority interest in subsidiary 835 --
Total shareholders' equity 69,053 79,213
------------- -------------
Total Liabilities and
Shareholders' Equity $ 106,721 $ 104,218
============= =============
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