Iparty (AMEX:IPT)
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iParty Corp. (AMEX: IPT
- news),
a party goods retailer that operates 50 iParty retail stores, today
reported financial results for its second quarter of fiscal year 2007,
which ended on June 30, 2007.
For the quarter, consolidated revenues were $20.4 million, a 9.7%
increase compared to $18.6 million for the second quarter in 2006. The
increase in second quarter revenues from the year-ago period was due to
a 5.9% increase in comparable store sales from stores open more than one
year and sales from one store that was acquired during the third quarter
2006. Consolidated gross profit margin was 43.2% for the quarter
compared to a gross profit margin of 41.4% for the same period in 2006.
Consolidated net income for the quarter was $512 thousand, or $0.01 per
share, compared to $122 thousand, or $0.00 per share, for the second
quarter in 2006, representing an increase of 320%. On a non-GAAP basis,
earnings for the quarter before interest, taxes, depreciation and
amortization (“EBITDA”)
were $1.2 million compared to EBITDA of $577 thousand for the second
quarter in 2006. 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 for the second quarters of 2007 and 2006,
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, consolidated revenues were $36.0
million, a 12.1% increase compared to $32.1 million for the first six
months of 2006. This year’s six month
year-to-date revenues included an 8.1% increase in comparable store
sales. Consolidated gross profit margin was 41.7% for the six-month
period, compared to 39.6% for the same period in 2006. For the six-month
period, consolidated net loss was $991 thousand, or $0.04 per basic and
diluted share, compared to a consolidated net loss of $2.0 million, or
$0.09 per basic and diluted share for the first six months of 2006. On a
non-GAAP basis, earnings for the six-month year-to-date period before
interest, taxes, depreciation and amortization (“EBITDA”)
were $309 thousand compared to an EBITDA net loss of $1.1 million for
the first six months of 2006.
Sal Perisano, Chairman and Chief Executive Officer of iParty Corp.,
commented: “Obviously, we are very pleased
with $512 thousand in net income for our second quarter, representing a
320% increase over last year. These results were driven by strong sales
from our graduation season. For the fourth consecutive quarter, we
achieved positive sales increases in stores open at least one year. As
previously disclosed, we achieved a 6.2% increase in same store sales in
the last six months of 2006. We have now followed this with a same store
sales increase of 8.1% for the first six months of 2007. Also, for the
fourth consecutive quarter we have reported an improvement in the Company’s
financial performance over the previous year. We are very proud of the
improvements made throughout our business which are helping us to drive
same store sales increases. We will continue to strive to provide our
customers with the best shopping experience in our industry.”
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. (AMEX: IPT
- news)
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
Regulation G, “Conditions for Use of Non-GAAP
Financial Measures,” prescribes the
conditions for use of non-GAAP financial information in public
disclosures. For purposes of Regulation G, a non-GAAP financial measure
is a numerical measure of a company’s
historical or future financial performance, financial position or cash
flows that excludes amounts, or is subject to adjustments that have the
effect of excluding amounts, that are included in the most directly
comparable measure calculated and presented in accordance with GAAP in
the statements of operations, balance sheets, or statement of cash flows
of the company; or includes amounts, or is subject to adjustments that
have the effect of including amounts, that are excluded from the most
directly comparable measure so calculated and presented. Pursuant to the
requirements of Regulation G, we have provided reconciliations of any
non-GAAP financial measures we use 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, net cash
flows from operations 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, provide 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 30,2007
July 1,2006
June 30,2007
July 1,2006
Net income (loss) as reported under GAAP
$
512,138
$
121,932
$
(990,718)
$
(2,036,425)
plus, Interest expense, net
230,012
169,993
456,322
327,521
plus, Depreciation and amortization
428,623
285,309
843,498
577,879
plus, Income taxes
-
-
-
-
EBITDA, non-GAAP
$
1,170,773
$
577,234
$
309,102
$
(1,131,025)
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995: This release contains forward-looking
statements that are based on our current expectations, beliefs,
assumptions, estimates, forecasts and projections, including those about
future profitability, future store openings or acquisitions, future
expectations of comparable store sales growth, improved gross margins,
increases in EBIDTA, and the industry and markets in which iParty
operates. The statements contained in this release are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Therefore, actual outcomes
and results may differ materially from what is expressed in such
forward-looking statements, and such statements should not be relied
upon as representing iParty’s expectations or
beliefs as of any date subsequent to the date of this press release.
Important factors that may affect future operating results include, but
are not limited to, economic and other developments such as unseasonable
weather, that affect consumer confidence or consumer spending patterns,
particularly those impacting the New England region, where 45 of our 50
stores our located, and particularly during the Halloween season, which
is our single most important season; intense 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 failure of any of our systems,
including, without limitation, our point-of-sale system and our existing
merchandise management system, the latter of which was developed by a
vendor who is no longer in business; the success or failure of our
efforts to implement our business growth and marketing strategies; our
inability to obtain additional financing, if required, on terms and
conditions acceptable to us; fluctuating oil and gasoline prices which
impact prices of petroleum-based/plastic products, which are a key raw
material in much of our merchandise, affect our freight costs and those
of our suppliers, and affect consumer confidence and spending patterns;
third-party suppliers’ failure to fulfill
their obligations to us; our ability or inability to meet our material
contractual obligations with third parties; the availability of retail
store space on reasonable lease terms; compliance with evolving federal
securities, accounting, and stock exchange rules and regulations
applicable to publicly-traded companies listed on the American Stock
Exchange. For a discussion of these and other 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 30, 2006.
iPARTY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended
For the six months ended
Jun 30,2007
July 1,2006
Jun 30,2007
July 1,2006
Revenues
$
20,411,919
$
18,587,169
$
36,011,078
$
32,132,968
Operating costs:
Cost of products sold and occupancy costs
11,600,874
10,897,816
21,007,648
19,396,070
Marketing and sales
6,079,698
5,993,016
11,665,772
11,348,114
General and administrative
1,989,197
1,404,412
3,872,054
3,097,688
Operating income (loss)
742,150
291,925
(534,396)
(1,708,904)
Interest expense, net
(230,012)
(169,993)
(456,322)
(327,521)
Income (loss) before income taxes
512,138
121,932
(990,718)
(2,036,425)
Income taxes
-
-
-
-
Net income (loss)
$
512,138
$
121,932
($990,718)
($2,036,425)
Income (loss) per share:
Basic
$
0.01
$
0.00
$
(0.04)
$
(0.09)
Diluted
$
0.01
$
0.00
$
(0.04)
$
(0.09)
Weighted-average shares outstanding:
Basic
38,199,738
37,728,932
22,618,685
22,545,872
Diluted
40,054,445
39,283,126
22,618,685
22,545,872
iPARTY CORP.
CONSOLIDATED BALANCE SHEETS
Jun 30, 2007
Dec 30, 2006
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
65,015
$
760,376
Restricted cash
592,504
706,066
Accounts receivable
801,367
1,116,042
Inventory, net
13,970,586
12,264,737
Prepaid expenses and other assets
1,035,983
752,172
Total current assets
16,465,455
15,599,393
Property and equipment, net
4,508,648
4,817,993
Intangible assets, net
1,939,390
2,153,482
Other assets
102,030
126,505
Total assets
$
23,015,523
$
22,697,373
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
7,467,587
$
5,516,406
Accrued expenses
2,536,384
3,070,003
Current portion of capital lease obligations
30,473
343,761
Current notes payable
587,373
551,515
Borrowings under line of credit
1,476,163
1,162,719
Total current liabilities
12,097,980
10,644,404
Long-term liabilities:
Capital lease obligations, net of current portion
25,834
42,456
Notes payable, net of discount $443,192
3,487,943
3,736,309
Other liabilities
1,017,764
929,199
Total long-term liabilities
4,531,541
4,707,964
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock
13,756,570
13,771,450
Common stock
22,623
22,604
Additional paid-in capital
51,717,660
51,671,084
Accumulated deficit
(59,110,851)
(58,120,133)
Total stockholders' equity
6,386,002
7,345,005
Total liabilities and stockholders' equity
$
23,015,523
$
22,697,373