iParty Corp. (NYSE Amex: IPT), a party goods retailer, today
reported financial results for its second quarter of fiscal year
2009, which ended on June 27, 2009.
Second Quarter 2009 Highlights
- $668,868 in net income for the
second quarter of 2009, compared to $183,606 in the second quarter
of 2008, an increase of $485,262
- An increase of $444,712, or
49.8% in EBITDA for the second quarter of 2009 compared to the
second quarter of 2008 (See accompanying schedule for
reconciliation of non-GAAP EBITDA to net income for these
periods)
- Consolidated revenues of $19.57
million for the second quarter of 2009, a 2.6% decrease compared to
the second quarter of 2008
- Comparable store sales in the
second quarter of 2009 decreased 2.6% compared to the year-ago
period
- 3 year extension of Wells Fargo
Retail Finance, LLC (�Wells Fargo�) credit facility executed
on July 1, 2009
Sal Perisano, iParty�s Chairman and Chief Executive Officer,
stated, �Despite continuing softness in consumer spending in the
first half of 2009, we are reporting significant improvements as
measured by both our net income and EBITDA performance compared to
the first half of 2008. Our cost cutting initiatives, which began
late last year, have resulted in significant expense saving through
the second quarter, mitigating the overall effects of the economic
recession to date. With these cost cutting initiatives in place and
our ongoing promotional activities, our team has delivered
significantly improved operating profits as compared to the first
half of 2008.�
Mr. Perisano further stated that �With our customer traffic and
sales levels within anticipated ranges for the first half of 2009,
and with the significant improvements in net income and EBITDA as
compared to the prior period, we believe we have demonstrated that
we can successfully manage the business with�leaner expense levels.
Additionally, after the close of the second fiscal quarter, we
finalized the renewal of our $12.5 million revolving line of credit
with Wells Fargo extending the credit line for an additional three
years, through June 2012.�
Operating Results
For the second quarter of 2009, consolidated revenues were
$19.57 million, a 2.6% decrease compared to $20.10 million for the
second quarter in 2008. Comparable store sales in the second
quarter of 2009 also decreased 2.6% compared to the year-ago
period. Consolidated gross profit margin was 40.3% for the second
quarter of 2009 compared to a gross profit margin of 42.2% for the
same period in 2008. Consolidated net income for the second quarter
of 2009 was $668,868, or $0.02 per basic and diluted share,
compared to consolidated net income of $183,606, or $0.00 per basic
and diluted share, for the second quarter in 2008. On a non-GAAP
basis, net income for the second quarter of 2009 before interest,
taxes, depreciation and amortization (�EBITDA�) was $1.34
million compared to EBITDA of $892,365 for the second quarter in
2008. EBITDA is calculated as net income (loss), as reported under
United States generally accepted accounting principles
(�GAAP�), plus net interest expense, depreciation and
amortization and income taxes. The schedule accompanying this
release provides the reconciliation of net income for the second
quarters of 2009 and 2008, and net loss for the six-month periods
then ended, under GAAP to a non-GAAP, EBITDA basis.
For the six-month year-to-date period ending June 27, 2009,
consolidated revenues were $34.14 million, a 5.8% decrease compared
to $36.25 million for the first six months of 2008. Consolidated
revenues for the first six months of 2009 included a 5.9% decrease
in comparable store sales from the year ago period. Consolidated
gross profit margin was 38.3% for the six-month period, compared to
40.4% for the same period in 2008. For the six-month period,
consolidated net loss was $1.05 million, or $0.05 per basic and
diluted share, compared to a consolidated net loss of $1.68
million, or $0.07 per basic and diluted share for the first six
months of 2008. On a non-GAAP basis, EBITDA was $294,287 compared
to an EBITDA net loss of $258,087 for the first six months of 2008,
an increase of 214% or $552,374.
Wells Fargo Credit Facility Extension
As previously reported, on July 1, 2009, iParty amended and
restated its secured revolving line of credit with Wells Fargo for
three years to July 2, 2012. The amount of credit, up to a maximum
of $12.5 million that is available from time to time under the
credit facility is determined as a percentage of the value of
eligible inventory and eligible credit card receivables, as reduced
by certain reserve amounts. In addition, the credit facility
includes an option whereby iParty may increase its line of credit
up to a maximum level of $15 million. Borrowings under the new
agreement will generally accrue interest at a margin ranging from
3.00% to 3.50% over, at iParty�s election, either the London
Interbank Offered Rate (�LIBOR�) or a base rate determined
by Wells Fargo from time to time. Subject to conditions set forth
in the amended and restated credit facility, which iParty expects
to meet, the credit facility continues to allow the secured
revolving line of credit to be used to repay the $2.5 million loan
from Highbridge International LLC when it becomes due on September
15, 2009.
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. is a party
goods retailer that operates 50 iParty retail stores and licenses
the operation of an Internet site for party goods and party
planning at www.iparty.com. iParty�s aim is to make throwing a
successful event both stress-free and fun. With over 20,000 party
supplies and costumes and an online party magazine and
party-related content, iParty offers consumers a sophisticated, yet
fun and easy-to-use, resource with an extensive assortment of
products to customize any party, including birthday bashes, Easter
get-togethers, graduation parties, summer barbecues, and, of
course, Halloween. iParty aims to offer reliable, time-tested
knowledge of party-perfect trends, and superior customer service to
ensure convenient and comprehensive merchandise selections for
every occasion. Please visit our site at www.iparty.com.
Non-GAAP Financial Measures
Pursuant to the requirements of Regulation G, we have provided
below reconciliations of any non-GAAP financial measures we use in
this press release to the most directly comparable GAAP financial
measures. We believe that our presentation of EBITDA, which is a
non-GAAP financial measure, is an important supplemental measure of
operating performance to investors. The discussion below defines
this term, why we believe it is a useful measure of our
performance, and explains certain limitations on the use of
non-GAAP financial measures such as our use of EBITDA.
EBITDA
EBITDA is a commonly used measure of performance in our industry
which we believe, when considered with measures calculated in
accordance with United States generally accepted accounting
principles ("GAAP"), gives investors a more complete
understanding of operating results before the impact of investing
and financing transactions and income taxes and facilitates
comparisons between us and our competitors. EBITDA is a non-GAAP
financial measure and has been presented in this release because
our management and the audit committee of our board of directors
use this financial measure in monitoring and evaluating our ongoing
financial results and trends. Our management and audit committee
believe that this non-GAAP operating performance measure is useful
for investors because it enhances investors' ability to analyze
trends in our business and compare our financial and operating
performance to that of our peers.
Limitations on the Use of Non-GAAP Measures
The use of EBITDA has certain limitations. Our presentation of
EBITDA may be different from the presentation used by other
companies and therefore comparability may be limited. Depreciation
expense for various long-term assets, interest expense, income
taxes and other items have been and will be incurred and are not
reflected in the presentation of EBITDA. Each of these items should
also be considered in the overall evaluation of our results.
Additionally, EBITDA does not consider capital expenditures and
other investing activities and should not be considered as a
measure of our liquidity. In particular, we have opened new stores
through the expenditure of capital funded with borrowings under our
bank line of credit. Our results of operations, therefore, reflect
significant charges for depreciation, amortization and interest
expense. EBITDA, which excludes these expenses, provides helpful
information about the operating performance of our business, but
EBITDA does not purport to represent operating income or cash flow
from operating activities, as those terms are defined under GAAP,
and should not be considered as an alternative to those
measurements as an indicator of our performance.
Accordingly, EBITDA should be used in
addition to and in conjunction with results presented in accordance
with GAAP and should not be considered as an alternative to net
income, operating income, or any other operating performance
measure prescribed by GAAP, nor should these measures be relied
upon to the exclusion of GAAP financial measures. EBITDA reflects
additional ways of viewing our operations that we believe, when
viewed with our GAAP results and the reconciliations to the
corresponding GAAP financial measures, provides a more complete
understanding of factors and trends affecting our business than
could be obtained absent this disclosure. We strongly encourage
investors to review our financial information in its entirety and
not to rely on a single financial measure.
� For the quarter ended � For the six months ended RECONCILIATION
OF NON-GAAP MEASURES June 27, 2009 � June 28, 2008 June 27, 2009 �
June 28, 2008 � Net income (loss) as reported under GAAP $ 668,868
$ 183,606 $ (1,046,403 ) $ (1,680,922 ) � plus, Interest expense,
net 128,511 184,381 265,035 396,733 plus, Depreciation and
amortization 539,698 524,378 1,075,655 1,026,102 plus, Income taxes
� - � - � - � � - � � EBITDA, non-GAAP $ 1,337,077 $ 892,365 $
294,287 � $ (258,087 )
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995
This press release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 as contained in Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. You can identify these statements by the fact
that they use words such as "anticipate," "believe," "estimate,"
"expect," "intend," "project," "plan," "outlook," and other words
and terms of similar meaning. These statements involve a number of
risks and uncertainties that could cause actual results to differ
materially from the potential results discussed in the
forward-looking statements. Among the factors that could cause
actual results and outcomes to differ materially from those
contained in such forward-looking statements are the following:
changes in consumer confidence and consumer spending patterns,
particularly those impacting the New England region and Florida,
which may result from, among other factors, rising unemployment,
access to consumer credit, mortgage foreclosures, credit market
turmoil, declines in the stock market, general feelings and
expectations about the overall economy, and unseasonable weather;
the successful implementation of our growth and marketing
strategies; our ability to access existing credit lines or to
obtain additional financing, if required, on acceptable terms and
conditions; rising commodity prices, especially oil and gas prices;
our relationships with our third party suppliers; the failure of
our inventory management system and our point of sale system;
competition from other party supply stores and stores that
merchandise and market party supplies, including big discount
retailers, dollar store chains, and temporary Halloween
merchandisers; the availability of retail store space on reasonable
lease terms; and compliance with evolving federal securities,
accounting, and stock exchange rules and regulations applicable to
publicly-traded companies listed on the NYSE Amex. For a more
detailed discussion of risks and uncertainties which could cause
actual results to differ from those contained in the
forward-looking statements, see Item 1A, "Risk Factors" of iParty's
most recently filed Annual Report on Form 10-K for the fiscal year
ended December 27, 2008 and our other periodic reports filed with
the SEC. iParty is providing this information as of this date, and
does not undertake to update the information included in this press
release, whether as a result of new information, future events or
otherwise.
iPARTY CORP. CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) � � � �
For the three months
ended For the six months ended
Jun 27, 2009 Jun 28, 2008
Jun 27, 2009 Jun 28, 2008
Revenues $ 19,569,009 $ 20,103,668 $ 34,137,416 $ 36,247,756
Operating costs: Cost of products sold and occupancy costs
11,691,950 11,612,587 21,074,016 21,595,934 Marketing and sales
5,441,459 6,176,460 10,420,777 12,026,212 General and
administrative �
1,638,221 � �
1,946,634
� �
3,423,991 � �
3,909,799 � � Operating
income (loss) 797,379 367,987 (781,368 ) (1,284,189 ) � Interest
expense, net � (128,511 ) � (184,381 ) � (265,035 ) � (396,733 ) �
Net income (loss) $ 668,868 � $ 183,606 �
$
(1,046,403
)
$
(1,680,922
) � Income (loss) per share: Basic
$ 0.02
�
$ 0.00 �
$
(0.05 ) $ (0.07
) Diluted
$ 0.02 �
$ 0.00 �
$
(0.05 ) $ (0.07
) � Weighted-average shares outstanding: Basic �
38,222,344 � �
38,210,583 � �
22,731,667 � �
22,713,989 � Diluted �
38,222,344 � �
38,319,767 � �
22,731,667 � �
22,713,989 �
iPARTY
CORP. CONSOLIDATED BALANCE SHEETS � � � �
Jun 27,
2009 �
(Unaudited) Dec 27,
2008 ASSETS Current assets: Cash and cash
equivalents $ 59,750 $ 60,250 Restricted cash 608,048 775,357
Accounts receivable 877,824 730,392 Inventories, net 13,557,515
13,022,142 Prepaid expenses and other assets �
327,608
� �
279,185 � Total current assets 15,430,745
14,867,326 Property and equipment, net 3,197,971 3,646,481
Intangible assets, net 1,955,139 2,303,692 Other assets �
266,066 � �
177,774 � Total assets
$ 20,849,921 �
$
20,995,273 � �
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 6,421,906 $
4,048,833 Accrued expenses 2,294,169 2,495,955 Current portion of
capital lease obligations 9,228 6,444 Current notes payable, net of
discount of $34,092 2,698,730 2,876,182 Borrowings under line of
credit �
515,916 � �
1,950,019 � Total
current liabilities 11,939,949 11,377,433 � Long-term liabilities:
Capital lease obligations, net of current portion 18,455 - Notes
payable 600,000 600,000 Other liabilities �
1,448,490
� �
1,200,174 � Total long-term liabilities 2,066,945
1,800,174 � Commitments and contingencies � Convertible preferred
stock 13,647,720 13,647,720 Common stock 22,732 22,732 Additional
paid-in capital 52,167,475 52,095,711 Accumulated deficit �
(58,994,900 ) �
(57,948,497
) Total stockholders' equity �
6,843,027
� �
7,817,666 � � Total liabilities and stockholders'
equity
$ 20,849,921 �
$
20,995,273 �
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