connect with us 2011 Annual Report ConneCt with us In less than 10 years, InnerWorkings has grown from a small regional print management company to a global powerhouse. And 2011 was a pivotal year for us. We entered more than 30 new countries, hired nearly 300 new employees, grew our business over 30% and brought on board some of the largest new clients in our company’s history. From the Global 2000 to middle market companies, there’s a reason why more than 6,000 businesses entrust their brands to InnerWorkings. We partner with our clients to create top-quality print solutions that produce results and satisfy business goals. By leveraging our immense buying scale, industry-leading sourcing technology, extensive print industry expertise and integrated global platform, we consistently maximize our clients’ budgets. 1 first-ever GLOBAL PRINT MANAGEMENT CONTRACT record-breaking FINANCIAL PERFORMANCE 2011 IN REVIEW expanded GLOBAL FOOTPRINT accelerated PENETRATION OF MIDDLE MARKET awarded LARGEST EVER CUSTOMER CONTRACT 2 3 REVENUE PERFORMANCE InnerWorkings has increased revenue from $5.0 million in 2002 to $633.8 million in 2011, representing a compound annual growth rate of 71.3 percent. GROWTH FY10 to FY11 4 5 At InnerWorkings, it’s our people who set us apart. Collaborating with clients and colleagues, our exceptional employees maintain a reputation for providing outstanding service and support. They work closely with each client to understand the needs of their business and respective industry. The CEO Circle Award Winners featured on these pages, and their collective contributions, helped fuel our record-breaking performance in 2011. 6 years with INWK Tiffany Reynolds Newport News, VA “My client’s sourcing team included InnerWorkings as part of their S.M.A.R.T. (Saving Money Around Restructured Thinking) Initiative and are forecasting a continued savings of over $1,000,000 annually.” Valeri Morales Mexico City, MX “I coordinate regional purchases for multi- national corporate clients and distribute the orders to customer locations across Latin America and the Caribbean. No one else can look across markets and make integrated purchasing decisions like we do.” 4 years with INWK 4 years with INWK Brad Armstrong San Francisco, CA “My client loves having us onsite and involved from conception through delivery so they don’t waste time and money developing an idea or program that they might ultimately have to change.” 10 11 5 years with INWK Troy Jackson Chicago, IL “Clients love our automated online eCommerce platforms which improve brand compliance, quickly and easily extend marketing and operational tools to the branch level, and save them a lot of money.” Jody Hooten Plano, TX “We are open book and fully transparent with the clients I serve. At any time they can see the price we paid on a job, the supplier we used, and our negotiated margin. They can see it all.” 6 years with INWK 12 13 Shaun Quinn Chicago, IL “Our finance team has streamlined billing and implemented a new credit card processing system so clients can get back to business.” 3 years with INWK 4 years with INWK Sue Turner Birmingham, UK “We recently developed automation and streamlining solutions to reduce my client’s timeline for delivering marketing collateral from three months to six weeks.” 14 15 OUR COMPANY compound growth InnerWorkings is a leading provider of global marketing supply chain solutions to corporate clients across a wide range of industries. With proprietary technology, a vast supplier network and extensive domain expertise, we procure, manage and deliver printed materials and promotional products as part of a comprehensive outsourced enterprise solution. Unparalleled Buying Power Our technology and database of information is designed to capitalize on excess manufacturing capacity and other inefficiencies in the traditional print supply chain to obtain favorable pricing and deliver high-quality products and services for our clients. We have expanded from a regional focus to a national and then international focus. Combining Innovation and Technology Our proprietary software applications and database create a fully-integrated solution that stores, analyzes and tracks the production capabilities of our supplier network, as well as quote and price data for print jobs. As a result, we believe PPM4™ contains one of the largest independent repositories of equipment profiles and price data for print suppliers in the United States. We leverage our technology to match our print jobs with suppliers that are optimally suited to meet the client’s needs at a highly competitive price. Global Supplier Network Through our supplier network of approximately 9,000 suppliers, we offer a full range of print, promotional, fulfillment and logistics services that allow us to supply printed products on virtually any substrate. The breadth of our product offerings and services and the depth of our supplier network enable us to fulfill all of the print procurement needs of our clients. By leveraging our technology platform and data, our clients are able to reduce overhead costs, redeploy internal resources and obtain favorable pricing and service terms. In addition, our ability to track individual transactions and deliver customized reports detailing print procurement activity on an enterprise-wide-basis provides our clients with greater visibility and control of their print expenditures. Generating Revenue We generate revenue by procuring and purchasing printed products from our suppliers and selling those products to our clients. We do this for clients across a wide range of industries. Our clients fall into two categories: enterprise and middle market. We enter into contractual multi-year arrangements with our enterprise clients to provide some, or substantially all, of their printed products, typically on a recurring basis. We provide printed products to our middle market clients on an order-by-order basis. Operational Performance We were formed in 2001, commenced operations in 2002 and converted from a limited liability company to a Delaware corporation in January 2006. Our corporate headquarters are located in Chicago, Illinois. For the year ended December 31, 2011, we served more than 6,000 clients. We have increased our revenue from $5.0 million in 2002 to $633.8 million in 2011, representing a compound annual growth rate of 71.3%. As of December 31, 2011, we operated in more than 40 countries. In the fourth quarter of 2011, we reorganized our operations into two segments based on geographic regions: United States and International. This change was the result of the international expansion into Latin America and continental Europe that occurred in 2011. The United States segment includes operations in the United States, and the International segment includes operations in the United Kingdom, continental Europe and Latin America. In 2011, we generated revenues of $540.3 million in the United States segment and $93.5 million in the International segment. 18 19 20 21 InnerWorkings provides a full range of marketing supply chain solutions for our global client base. These include: Print Management We administer the entire print procurement workflow through our outsourced print management solution. By leveraging our technology- enabled procurement tools and extensive supplier network, we are able to reduce clients’ hard costs with print savings of 10-20%. Promotional Products We manage comprehensive brand programs which identify, source and deliver branded merchandise. Direct Mail We execute strategic and complex direct mail programs that encompass end-to-end production, process and format consulting, data processing, and fulfillment. POP Displays From concept to consumer, we create display programs designed to catch a shopper’s eye in places where purchasing decisions are made. Our offerings range from simple corrugate shippers to complex 3-D injection molded designs. eCommerce We provide branded online applications from which branch offices, employees located onsite with clients Creative & Studio Services We provide both in-house and outsourced creative and production graphic services as well as copywriting, rendering and pre-press management services. Web Services & Data Management Our web services offerings enhance client visibility into marketing supply chain reporting, facilitate secure online proofing, and create a platform to house electronic libraries of marketing materials and business documentation. Additionally, we quickly, accurately and flexibly manipulate data to provide services including cleansing, suppression, preparation for mailing, database management and profiling. Brand & Color Management We work with many famous brands and take our role of brand custodian extremely seriously. InnerWorkings manages brand identity across all materials, media and message. Our account teams are immersed in their client brands, adding value to the production process by removing inconsistencies. Warehousing & Fulfillment Our storage and distribution network allows us to minimize carried inventory and shipping costs. We support our customers by packing inventory, coordinating freight shipments and customs delivery, and monitoring and delivering orders. powerful ORGANIC GROWTH InnerWorkings’ core business, our enterprise channel, is a powerful organic growth engine and the foundation of the company. And our new business momentum has never been stronger. We exhibited this strength in September, signing our largest ever enterprise agreement. Just six months later, we eclipsed this by winning an even larger enterprise contract. We have created lasting partnerships with customers by providing a comprehensive solution, expanding outward from our cost- reducing print management offering to end-to-end programs across our clients’ marketing supply chains. InnerWorkings has a 98% enterprise customer retention rate because we provide the innovation, savings and quality they require. future OPPORTUNITIES The strength of our core organic business has allowed us to invest in separate but complementary growth opportunities: international expansion, M&A, and the middle market channel, which we believe will enhance and expand our partnership with clients and will collectively fuel our next transformational stage of growth. We went global because our customers increasingly sought our services in multiple regions, and around the world. We began 2011 operating in only a few countries and working with only one client on multiple continents. At the end of the year, we were transacting business across more than 40 countries and working with 10 different companies on multiple continents. We believe that the future of our industry is a global solution, where one steward protects and delivers a client’s brand around the world. And we intend to be the preeminent global provider. Our new business Our new business momentum has never momentum has never been stronger… been stronger… 28 29 We expanded our capabilities in February by acquiring CPRO Services, the leading print management company in Latin America. In October, we partnered with Productions Graphics, extending our reach into Continental Europe. Combining these new geographies with our existing capabilities in North America and Asia, InnerWorkings is now in a position to really take advantage of our new global platform to cross-sell existing clients across the regions we serve, and compete for new global contracts. We signed what we believe is the first truly global print management contract in 2011, and will eventually be servicing this client across six continents. InnerWorkings is now in InnerWorkings is now in a position to really take a position to really take advantage of our new advantage of our new global platform… global platform… Our third big opportunity is the middle market. InnerWorkings’ ability to service medium- and small-sized corporations is made possible by our data, technology and buying scale. With this kind of information at our fingertips in real time, we are able to link a slice of the market that has historically faced pervasive price discrimination to substantial cost savings and world class quality and service. Our Inside Sales division is unlocking the value in the middle market. record FINANCIAL PERFORMANCE I am proud of what our team accomplished in 2011. We delivered record results with revenue growing by 31% to $634 million, net income jumping 46% to $16 million and diluted earnings per share increasing 42% to $0.34. As I said at the beginning, InnerWorkings has grown very quickly in our first 10 years, developing the technology, capabilities and expertise to service our clients in every corner of the map. Over the next 10 years, we intend to complete the transformation that is already underway, exploding from a small regional print management provider to a global powerhouse. We will achieve our goals by proving to our clients each and every day that when they connect with InnerWorkings positive things happen for their business. Thank you to our shareholders, our employees, our clients, and our suppliers for your continued support. My regards, ERIC BELCHER CEO & President 30 31 MARKET INFORMATION Our common stock is listed and traded on the NASDAQ Global Market under the symbol “INWK.” Holders As of February 17, 2012, there were 70 holders of record of our common stock. The holders of our common stock are entitled to one vote per share. The following table sets forth the high and low sales prices for our common stock as reported by the NASDAQ Global Market for each of the periods listed. Dividends 2010 High $7.45 High $7.73 High $7.58 High $7.15 Low $4.95 Low $5.07 Low $5.31 Low $6.88 Q1 Jan-Mar Q2 Apr-Jun Q3 Jul-Sep Q4 Oct-Dec 2011 High $8.76 High $9.17 High $9.05 High $10.06 Low $6.24 Low $7.33 Low $6.52 Low $7.28 Q1 Jan-Mar Q2 Apr-Jun Q3 Jul-Sep Q4 Oct-Dec We currently do not intend to pay dividends on our common stock. We intend to retain all available funds and any future earnings for use in the operation and expansion of our business. Any determination in the future to pay dividends will depend upon our financial condition, capital requirements, operating results and other factors deemed relevant by our board of directors, including any contractual or statutory restrictions on our ability to pay dividends. Recent Sales of Unregistered Securities As partial consideration in connection with our acquisition of Productions Graphics, a leading international print management firm that we acquired on October 24, 2011, on December 19, 2011, we issued 238,572 shares of common stock to the sellers of Productions Graphics. We relied on Section 4(2) of the Securities Act of 1933, as amended for an exemption from registration of these shares. Issuer Purchases of Equity Securities None. Stock Performance $120 $100 $80 $60 $40 $20 $ Jan 1, 2007 Dec 31, 2007 Dec 31, 2008 Dec 31, 2009 Dec 31, 2010 Dec 31, 2011 INWK NASDAQ Market Index Dow Jones Business Support Services Index The graph assumes $100 was invested on January 1, 2007 in the common stock of the Company and each of the foregoing indices and assumes reinvestment of any dividends. The stock price performance on the graph above is not necessarily indicative of future stock price performance. 32 33 REVENUE PERFORMANCE FY11 InnerWorkings has increased its revenue from $5.0 million in 2002 to $633.8 in 2011, representing a compound annual growth rate of 71.3%. FY10 FY08 FY09 FY07 FY06 FY05 FY04 FY02 FY03 $5.0 $16.2 $38.9 $76.9 $160.5 $288.4 $419.0 $400.4 $482.2 $633.8 Revenue in $ million 35 CONSOLIDATED BALANCE SHEETS ASSETS Dec. 31, 2010 Dec. 31, 2011 LIABILITIES AND STOCKHOLDERS’ EQUITY Dec. 31, 2010 Dec. 31, 2011 Current Assets Current Liabilities Cash and cash equivalents $ 5,259,272 $ 13,219,385 Accounts payable-trade $ 55,604,566 $ 102,245,865 4,284,614 1,129,757 Advances from related parties 166,259 44,578 85,110,289 124,678,502 Current portion of contingent consideration 1,462,095 14,232,980 Short-term investments Accounts receivable¹ Unbilled revenue Inventories Prepaid expenses Deferred income taxes Other current assets Total current assets 24,626,558 28,318,751 9,674,961 14,201,606 Due to seller Other liabilities 9,836,486 11,066,451 Accrued expenses Advances to related parties 93,191 268,119 Total current liabilities 307,396 1,729,349 Revolving credit facility 146,475,974 208,487,838 Other long-term liabilities Property and equipment, net 9,887,004 12,086,627 Total liabilities Intangibles and Other Assets Stockholders’ Equity 560,000 7,554,000 4,354,016 6,979,516 6,791,259 17,324,598 68,938,195 148,381,537 47,400,000 60,000,000 7,140 — 119,740,681 276,151,399 7,283,207 13,875,918 Contingent consideration, net of current portion 3,395,346 67,769,862 Goodwill Intangible assets² Deferred income taxes Other assets 93,476,206 205,282,587 Common stock, par value $0.0001 per share³ 461 470 23,058,774 26,565,315 Additional paid-in capital 174,537,524 179,692,823 5,899,620 4,246,592 Treasury stock at cost4 ) (74,307,200 (71,241,947 ) 1,127,202 984,227 Accumulated other comprehensive income 2,934,381 268,331 123,561,802 237,078,721 Retained earnings 57,018,099 72,782,110 Total assets 279,924,780 457,653,186 Total stockholders’ equity 160,184,099 181,501,787 Total liabilities and stockholders’ equity 279,924,780 457,653,186 1. Net of allowance for doubtful accounts of $3,610,977 and $3,293,241, respectively 2. Net of accumulated amortization of $9,789,144 and $13,503,735, respectively 3. 57,269,604 and 57,903,418 shares issued, 46,092,291 and 46,998,011 shares outstanding as of December 31, 2010 and 2011, respectively 4. 11,177,313 and 10,905,407 shares as of December 31, 2010 and 2011, respectively Audited financial statements and notes, along with management’s discussion and analysis of results of operations and financial condition, are available in our 2011 Annual Report on Form 10-K filed with the Securities and Exchange Commission, accessible on our website, www.inwk.com. Audited financial statements and notes, along with management’s discussion and analysis of results of operations and financial condition, are available in our 2011 Annual Report on Form 10-K filed with the Securities and Exchange Commission, accessible on our website, www.inwk.com. 40 41 other financial and operational data Years ended December 31 2009 2010 2011 Income from operations $ 9,456,719 $ 15,207,293 $ 22,616,494 Depreciation and amortization 8,030,772 9,008,514 10,171,758 Stock-based compensation expense 2,481,159 3,148,619 3,976,187 Preference claim charge — — 950,000 adjusted eBitda 19,968,650 27,364,426 37,714,439 Other Data Employees and independent contractors 667 743 1,034 Audited financial statements and notes, along with management’s discussion and analysis of results of operations and financial condition, are available in our 2011 Annual Report on Form 10-K filed with the Securities and Exchange Commission, accessible on our website, www.inwk.com. 42 about our annual report This Annual Report was efficiently sourced via our proprietary print procurement technology and produced by a Certified Supplier in InnerWorkings’ network of print manufacturers. InnerWorkings employed environmentally and socially responsible supply chain decisions when constructing this Annual Report, including local sourcing and the utilization of recycled materials. 43 CORPORATE INFORMATION Board of Directors Executive Officers JACK M. GREENBERG ERIC P. LEFKOFSKY ERIC D. BELCHER Non-Executive Chairman of the Board of Founder of InnerWorkings, Echo Global President and Chief Executive Officer InnerWorkings; Non-Executive Chairman Logistics (transportation management of the Board of Western Union Company outsourcing), Mediaocean (media buying (money transfer services), Retired Chairman and analytics), and Groupon (social and Chief Executive Officer of McDonald’s commerce site) Corporation (global foodservice retailer) SHARYAR BARADARAN Chief Executive Officer and LINDA S. WOLF Retired Chairman and Chief Executive Officer of Leo Burnett Worldwide Chairman of Baradaran Ventures (global advertising agency) (private investment fund) PETER J. BARRIS Managing General Partner of New Committees Enterprise Associates (venture capital AUDIT COMMITTEE firm focused on technology) Charles K. Bobrinskoy (Chair) ERIC D. BELCHER President and Chief Executive Officer of InnerWorkings Sharyar Baradaran Peter J. Barris David Fisher CHARLES K. BOBRINSKOY J. Patrick Gallagher Jr. (Chair) Vice Chairman and Director of Research, Sharyar Baradaran COMPENSATION COMMITTEE JOSEPH M. BUSKY Chief Financial Officer JOHN D. EISEL Chief Operating Officer Shareholder Information CORPORATE HEADQUARTERS TRANSFER AGENT & REGISTER InnerWorkings, Inc. 600 West Chicago Avenue, Suite 850 Chicago, IL 60654 312.642.3700 AUDITOR Ernst & Young LLP Chicago, IL ANNUAL MEETING Computershare 480 Washington Boulevard Jersey City, NJ 07310-1900 Phone: 800.522.6645 Website:http://www.bnymellon.com/ shareowner/equityaccess SHAREHOLDER SERVICES InnerWorkings, Inc. Attn: Investor Relations 600 West Chicago Avenue, Ariel Investments (investment fund) Peter J. Barris InnerWorkings’ shareholders are invited to Suite 850 DAVID FISHER Former President of optionsXpress (online brokerage) Charles K. Bobrinskoy Jack M. Greenberg Eric P. Lefkofsky Linda S. Wolf attend our annual meeting, which will be Chicago, IL 60654 held June 21, 2012, at 10:00 a.m. (CST) Phone: 888.201.8188 at our Chicago Headquarters: 600 West Email: investor@inwk.com Chicago Avenue, Suite 850, Boardroom. Website: www.inwk.com J. PATRICK GALLAGHER JR. Chairman, President and Chief NOMINATING & CORPORATE GOVERNANCE COMMITTEE Executive Officer of Arthur J. Gallagher Linda S. Wolf (Chair) & Co. (international insurance and risk Sharyar Baradaran management company) Peter J. Barris Jack M. Greenberg Eric P. Lefkofsky COMMON STOCK The common stock of InnerWorkings, Inc. is traded on the NASDAQ Global Market under the symbol “INWK.” L I S T E D O N N A S D A Q ® U N D E R T H E S Y M B O L “ I N W K ”