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 fourth
quarter and fiscal year 2007, which ended on December 29, 2007.
For the fiscal year 2007, consolidated revenues were $81.8 million, a
4.2% increase compared to $78.5 million for the fiscal year 2006, and
included a 2.6% increase in comparable store sales. Consolidated gross
profit margin was 43.2% for fiscal 2007 compared to 42.7% for fiscal
2006. For fiscal 2007, consolidated net income was $0.6 million, or
$0.02 per share, compared to consolidated net income of $0.4 million, or
$0.01 per share, for fiscal 2006. On a non-GAAP basis, income before
interest, taxes, depreciation and amortization (“EBITDA”)
for the fiscal year was $3.3 million compared to an EBITDA of $2.5
million for fiscal 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 fiscal 2007 and 2006 under GAAP to a
non-GAAP, EBITDA basis.
For the fourth quarter 2007, consolidated revenues were $27.6 million, a
5.2% decrease compared to $29.1 million for the fourth quarter in 2006,
and included a 4.8% decrease in comparable store sales. Consolidated
gross profit margin was 46.4% for the quarter compared to a margin of
47.5% in the year-ago quarter. Consolidated net income for the quarter
was $2.7 million, or $0.07 per share, compared to consolidated net
income of $3.9 million, or $0.10 per share, for the fourth quarter in
2006. On a non-GAAP basis, EBITDA for the quarter was $3.5 million
compared to EBITDA of $4.5 million for the fourth quarter in 2006. The
schedule accompanying this release provides the reconciliation of net
income for the fourth quarters of 2007 and 2006 under GAAP to a
non-GAAP, EBITDA basis.
Sal Perisano, Chairman and Chief Executive Officer of iParty Corp.,
commented, "For the past three years we have seen a progressive
improvement in our year over year net income. In 2007 our net income of
$612,000 was 63% better than 2006. In addition, our 2007 EBITDA of $3.3
million represented an improvement of 32% over 2006 when we posted an
EBITDA of $2.5 million. In the five years since 2002, we’ve
increased our EBITDA from just over $200,000 to over $3,000,000.
Underscoring this performance has been a consistent growth over time in
total and same store sales.
Mr. Perisano further commented, "In 2007 we achieved a same store sales
increase of 2.6% for the fiscal year, although our same store sales in
Q4 decreased 4.8%. The decrease in same store sales in Q4 was due in
part to weakness in the consumer economy augmented in our New England
base by heavy snow in December. For the full year our total sales
increased by 4.2%, which we were pleased to see.”
Mr. Perisano added, “At the beginning of 2008,
we acquired two stores from a Party City franchisee in Rhode Island and
closed two stores which had leases about to expire. Both of the closed
stores were in close proximity to newer, better positioned iParty
locations. During the remainder of 2008 we intend to continue to grow
our business by focusing on continued improvement to same store sales,
while potentially acquiring additional existing stores, opening new
stores and/or opening temporary Halloween stores."
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 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, 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.
RECONCILIATION OF NON-GAAP MEASURES
For the quarter ended
For the year ended
December 29, 2007
December 30, 2006
December 29, 2007
December 30, 2006
Net income as reported under GAAP
$
2,736,067
$
3,883,400
$
611,691
$
374,647
plus, Interest expense, net
170,068
212,311
839,806
762,117
plus, Depreciation and amortization
441,646
405,820
1,705,947
1,343,858
plus, Income taxes
146,323
17,279
146,323
17,279
EBITDA, non-GAAP
$
3,494,104
$
4,518,810
$
3,303,767
$
2,497,901
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 store openings or
acquisitions, future expectations of comparable store sales growth,
improved gross margins, increases in EBIDTA, profitability, 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 gas 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,
and its subsequently filed Quarterly Reports on Form 10-Q. iParty
assumes no obligation 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 29, 2007
Dec 30, 2006
Dec 29, 2007
Dec 30, 2006
Revenues
$
27,578,796
$
29,084,826
$
81,798,634
$
78,458,329
Operating costs:
Cost of products sold and occupancy costs
14,778,080
15,279,667
46,465,441
44,942,542
Marketing and sales
7,895,308
7,693,653
26,181,504
25,625,547
General and administrative
1,852,950
1,998,516
7,553,869
6,736,197
Operating income
3,052,458
4,112,990
1,597,820
1,154,043
Interest expense, net
(170,068
)
(212,311
)
(839,806
)
(762,117
)
Income before income taxes
2,882,390
3,900,679
758,014
391,926
Income taxes
146,323
17,279
146,323
17,279
Net income
$
2,736,067
$
3,883,400
$
611,691
$
374,647
Income per share:
Basic
$
0.07
$
0.10
$
0.02
$
0.01
Diluted
$
0.07
$
0.10
$
0.02
$
0.01
Weighted-average shares outstanding:
Basic
38,210,588
38,191,009
38,204,374
37,862,928
Diluted
39,411,558
40,186,640
39,913,274
39,535,874
iPARTY CORP.
CONSOLIDATED BALANCE SHEETS
Dec 29, 2007
Dec 30, 2006
ASSETS
Current assets:
Cash and cash equivalents
$
71,532
$
760,376
Restricted cash
862,536
706,066
Accounts receivable
1,105,807
1,116,042
Inventory, net
13,639,531
12,264,737
Prepaid expenses and other assets
996,779
752,172
Total current assets
16,676,185
15,599,393
Property and equipment, net
4,360,123
4,817,993
Intangible assets, net
1,842,882
2,153,482
Other assets
97,896
126,505
Total assets
$
22,977,086
$
22,697,373
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
4,723,370
$
5,516,406
Accrued expenses
2,503,752
3,070,003
Current portion of capital lease obligations
30,473
343,761
Current notes payable
620,706
551,515
Borrowings under line of credit
2,613,511
1,162,719
Total current liabilities
10,491,812
10,644,404
Long-term liabilities:
Capital lease obligations, net of current portion
9,213
42,456
Notes payable, net of discount $443,192
3,271,632
3,736,309
Other liabilities
1,113,522
929,199
Total long-term liabilities
4,394,367
4,707,964
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock
13,682,167
13,771,450
Common stock
22,701
22,604
Additional paid-in capital
51,894,481
51,671,084
Accumulated deficit
(57,508,442
)
(58,120,133
)
Total stockholders' equity
8,090,907
7,345,005
Total liabilities and stockholders' equity
$
22,977,086
$
22,697,373