iParty Corp. (NYSE Amex: IPT), a party goods retailer that
operates 51 iParty retail stores, today reported financial results
for its fourth quarter and fiscal year 2009, which ended on
December 26, 2009.
Announcement Highlights
- Achieved net income of $1.1
million for fiscal 2009 compared to net loss of $0.4 million in
fiscal 2008
- Grew EBITDA to $3.4 million for
fiscal 2009 (a $1 million increase from fiscal 2008) despite 3.2%
decline in revenues (See schedule accompanying this release for
reconciliation of net income to Non-GAAP EBITDA)
- Intends to grow company in 2010
while continuing tight expense control
- Recently opened first urban
location in Boston, Massachusetts
Sal Perisano, Chairman and Chief Executive Officer of iParty
Corp., commented, "After a slow start in the first half of 2009 due
to the deep economic recession, sales improved in the last part of
the year. Our fiscal 2009 same store sales performance was off
4.5%, which was within the range experienced by many other
specialty retailers in 2009. We offset our same store sales
performance with the successful operation of four temporary
Halloween stores in 2009, double the number in 2008, and through
our strategic cost reductions, initiated at the beginning of the
year. Our cost reductions achieved savings in almost every area of
company operations, including store payroll, advertising and
marketing, non-payroll operating expenses, and general and
administrative expenses. As a result, we are reporting significant
improvements in both EBITDA and net income for the full fiscal year
2009 compared to 2008.
Mr. Perisano further commented, "Going forward into 2010, in
addition to continuing our careful management of expenses, we
intend to grow the company through opening new retail locations,
continuing the expansion of our temporary Halloween store strategy
and through sales growth in our existing retail stores. In the past
few weeks we opened our first urban store, located in downtown
Boston."
Operating Results
For the fiscal year 2009, consolidated revenues were $78.6
million, a 3.2% decrease compared to $81.2 million for the fiscal
year 2008, and included a 4.5% decrease in comparable store sales.
Consolidated gross profit margin was 40.8% for fiscal 2009 compared
to 42.3% for fiscal 2008. For fiscal 2009, consolidated net income
was $1.1 million, or $0.03 per share, compared to consolidated net
loss of $0.4 million, or $0.02 net loss per share, for fiscal 2008.
On a non-GAAP basis, income before interest, taxes, depreciation
and amortization (“EBITDA”) for fiscal year 2009 was $3.4
million compared to an EBITDA of $2.4 million for fiscal 2008.
EBITDA is calculated as net income, 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 (loss) for fiscal 2009 and 2008 under GAAP to a
non-GAAP, EBITDA basis.
For the fourth quarter 2009, consolidated revenues were $28.1
million, a 3.3% increase compared to $27.2 million for the fourth
quarter in 2008, and included a 0.7% decrease in comparable store
sales. Consolidated gross profit margin was 45.8% for the quarter
compared to a margin of 46.1% in the year-ago quarter. Consolidated
net income for the quarter was $3.5 million, or $0.09 per share,
compared to consolidated net income of $2.6 million, or $0.07 per
share, for the fourth quarter in 2008. On a non-GAAP basis, EBITDA
for the quarter was $3.9 million compared to EBITDA of $3.3 million
for the fourth quarter in 2008. The schedule accompanying this
release provides the reconciliation of net income for the fourth
quarters of 2009 and 2008 under GAAP to a non-GAAP, EBITDA
basis.
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. is a party
goods retailer that operates 51 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
Earnings before interest, taxes, depreciation and amortization
("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.
RECONCILIATION OF NON-GAAP MEASURES For the quarter ended
For the year ended
December26, 2009
December27, 2008
December26, 2009
December27, 2008
Net income (loss) as reported under GAAP $ 3,547,117 $
2,563,497 $ 1,103,732 $ (440,055 ) plus, Interest expense,
net 53,702 141,728 444,461 716,282 plus, Depreciation and
amortization 467,669 514,370 2,039,310 2,037,108 plus, Income taxes
(benefit) (147,930 ) 50,605 (147,930 )
50,605 EBITDA, non-GAAP $ 3,920,558 $
3,270,200 $ 3,439,573 $ 2,363,940
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 or sustained high levels of 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 our existing credit line 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
For the three months
ended For the year ended
Dec 26, 2009 Dec 27,
2008 Dec 26, 2009
Dec 27, 2008 Revenues $ 28,053,626 $ 27,220,928
$ 78,595,088 $ 81,210,999 Operating costs: Cost of products sold
and occupancy costs 15,200,697 14,660,137 46,557,039 46,885,215
Marketing and sales 7,472,304 8,089,970 23,703,308 26,793,885
General and administrative
1,927,736
1,714,991 6,934,478
7,205,067 Operating income
3,452,889 2,755,830 1,400,263 326,832 Interest expense, net
(53,702 ) (141,728 ) (444,461 )
(716,282 ) Income (loss) before income taxes 3,399,187
2,614,102 955,802 (389,450 ) Income taxes (benefit)
(147,930 ) 50,605 (147,930 ) 50,605
Net income (loss) $ 3,547,117 $ 2,563,497
$ 1,103,732 $ (440,055 ) Income (loss) per
share: Basic
$ 0.09 $
0.07 $ 0.03
$ (0.02 ) Diluted
$ 0.09 $
0.07 $ 0.03
$ (0.02 )
Weighted-average shares outstanding: Basic
38,225,145 38,210,583
38,220,804
22,722,485 Diluted
38,816,994 38,212,561
38,440,489
22,722,485 iPARTY CORP. CONSOLIDATED
BALANCE SHEETS Dec 26, 2009
Dec 27, 2008 ASSETS Current
assets: Cash and cash equivalents $ 61,050 $ 60,250 Restricted cash
1,056,525 775,357 Accounts receivable 688,506 730,392 Inventory,
net 13,048,104 13,022,142 Prepaid expenses and other assets 174,752
279,185 Deferred tax asset
70,997
- Total current assets 15,099,934 14,867,326
Property and equipment, net 2,892,835 3,646,481 Intangible assets,
net 1,606,585 2,303,692 Other assets 349,378 177,774 Deferred tax
asset
343,690 -
Total assets
$ 20,292,422
$ 20,995,273 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
$ 3,885,062 $ 4,048,833 Accrued expenses 2,649,468 2,495,955
Current portion of capital lease obligations 9,228 6,444 Current
notes payable, net of discount of $136,367 at December 27, 2008
600,000 2,876,182 Borrowings under line of credit
2,526,982 1,950,019
Total current liabilities 9,670,740 11,377,433 Long-term
liabilities: Capital lease obligations, net of current portion
13,841 - Notes payable - 600,000 Other liabilities
1,529,257 1,200,174
Total long-term liabilities 1,543,098 1,800,174 Commitments
and contingencies Stockholders' equity: Convertible
preferred stock 13,589,491 13,647,720 Common stock 22,799 22,732
Additional paid-in capital 52,311,059 52,095,711 Accumulated
deficit
(56,844,765 )
(57,948,497 ) Total stockholders' equity
9,078,584 7,817,666
Total liabilities and stockholders' equity
$ 20,292,422 $
20,995,273
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