IPT Iparty Corp.

DEDHAM, Mass., April 29 /PRNewswire-FirstCall/ -- iParty Corp. (AMEX:IPT), a party goods retailer, today reported financial results for its first quarter of fiscal year 2008, which ended on March 29, 2008. For the first quarter of 2008, consolidated revenues were $16.1 million, a 3.2% increase compared to $15.6 million for the first quarter in 2007. The increase in first quarter revenues from the year-ago period included a 2.2% increase in comparable store sales from stores open more than one year. Consolidated gross profit margin was 38.2% for the first quarter compared to a margin of 39.7% for the same period in 2007. Consolidated net loss for the first quarter of 2008 was $1.9 million, or $0.08 per share, compared to consolidated net loss of $1.5 million, or $0.07 per share, for the first quarter in 2007. On a non-GAAP basis, loss for the first quarter of 2008 before interest, taxes, depreciation and amortization ("EBITDA") was $1.2 million compared to EBITDA net loss of $0.9 million for the first quarter in 2007. EBITDA is calculated as net 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 loss for the first quarters of 2008 and 2007 under GAAP to a non-GAAP, EBITDA basis. Sal Perisano, Chairman and Chief Executive Officer of iParty Corp., commented, "We are pleased by our sales performance in the first quarter of 2008. Like many other retailers, we felt the effect of the current challenging economic and consumer climate in our day-to-day customer traffic. However, our customers responded strongly to an extra pre-New Year's Eve shopping day and to the NFL playoff and Super Bowl excitement in the quarter. Taken together, these events were enough to drive positive same-store sales in a quarter in which many retailers were reporting big negatives. "Gross profit margin and net loss for the first quarter of 2008 were negatively impacted by two events: first, by markdowns taken to clear out merchandise left over from our storm-depressed December 2007 sales; and second, by one-time grand opening expenses associated with our two recently acquired Rhode Island stores. As a result of these activities, though, we believe that our holiday inventories are now appropriately lean and we have two new strong entries in the southern end of our New England market. We believe that we are well positioned as we move forward into the summer and fall seasons, focusing on our core customer offering and looking forward to our important seasons such as Graduation and Halloween." 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 http://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 http://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, 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 Mar 29, 2008 Mar 31, 2007 Net loss, as reported under GAAP $(1,864,528) $(1,502,856) plus, Interest expense, net 212,352 226,310 plus, Depreciation and amortization 501,724 414,875 plus, Income taxes - - EBITDA, non-GAAP $(1,150,452) $(861,671) 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 that reflect management's current views and estimates regarding, among other things, our growth strategy, industry and market trends, expectations regarding our two new Rhode Island stores, belief regarding our positioning as we move into the summer and fall , and our belief as to the appropriateness of our holiday inventory levels. 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; the successful implementation of our growth and marketing strategies; our ability 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; our inventory management system; and the availability of retail store space on reasonable lease terms. 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 29, 2007. 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 quarter ended Mar 29, 2008 Mar 31, 2007 Revenues $16,144,088 $15,599,159 Operating costs: Cost of products sold 9,983,347 9,406,774 Marketing and sales 5,849,752 5,586,074 General and administrative 1,963,165 1,882,857 Operating loss (1,652,176) (1,276,546) Interest expense, net (212,352) (226,310) Net loss $(1,864,528) $(1,502,856) Loss per share: Basic and diluted $(0.08) $(0.07) Weighted-average shares outstanding: Basic and diluted 22,708,383 22,614,544 iPARTY CORP. CONSOLIDATED BALANCE SHEETS Mar 29, 2008 Dec 29, 2007 ASSETS Current assets: Cash and cash equivalents $66,216 $71,532 Restricted cash 541,190 862,536 Accounts receivable 858,784 1,105,807 Inventory, net 14,568,513 13,639,531 Prepaid expenses and other assets 1,270,307 996,779 Total current assets 17,305,010 16,676,185 Property and equipment, net 4,331,595 4,360,123 Intangible assets, net 2,762,040 1,756,800 Other assets 221,510 183,978 Total assets $24,620,155 $22,977,086 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $6,700,244 $4,723,370 Accrued expenses 2,568,076 2,503,752 Current portion of capital lease obligations 30,924 30,473 Current notes payable 637,852 620,706 Borrowings under line of credit 4,121,547 2,613,511 Total current liabilities 14,058,643 10,491,812 Long-term liabilities: Capital lease obligations, net of current portion 451 9,213 Notes payable, net of discount of $494,330 3,156,314 3,271,632 Other liabilities 1,136,262 1,113,522 Total long-term liabilities 4,293,027 4,394,367 Commitments and contingencies Convertible preferred stock 13,663,567 13,682,167 Common stock 22,717 22,701 Additional paid-in capital 51,955,171 51,894,481 Accumulated deficit (59,372,970) (57,508,442) Total stockholders' equity 6,268,485 8,090,907 Total liabilities and stockholders' equity $24,620,155 $22,977,086 DATASOURCE: iParty Corp. CONTACT: David Robertson, iParty Corp., +1-781-355-3770, Web site: http://www.iparty.com/

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