iParty Corp. (NYSE ALTERNEXT US: IPT - news), a party goods
retailer that operates 50 iParty retail stores, today reported
financial results for its fourth quarter and fiscal year 2008,
which ended on December 27, 2008.
For the fiscal year 2008, consolidated revenues were $81.2
million, a 0.7% decrease compared to $81.8 million for the fiscal
year 2007, and included a 2.4% decrease in comparable store sales.
Consolidated gross profit margin was 42.3% for fiscal 2008 compared
to 43.2% for fiscal 2007. For fiscal 2008, consolidated net loss
was $0.4 million, or $0.02 net loss per share, compared to
consolidated net income of $0.6 million, or $0.02 net income per
share, for fiscal 2007. On a non-GAAP basis, income before
interest, taxes, depreciation and amortization (�EBITDA�)
for fiscal year 2008 was $2.4 million compared to an EBITDA of $3.3
million for fiscal 2007. 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
2008 and 2007 under GAAP to a non-GAAP, EBITDA basis.
For the fourth quarter 2008, consolidated revenues were $27.2
million, a 1.4% decrease compared to $27.6 million for the fourth
quarter in 2007, and included a 3.3% decrease in comparable store
sales. Consolidated gross profit margin was 46.1% for the quarter
compared to a margin of 46.4% in the year-ago quarter. Consolidated
net income for the quarter was $2.6 million, or $0.07 per share,
compared to consolidated net income of $2.7 million, or $0.07 per
share, for the fourth quarter in 2007. On a non-GAAP basis, EBITDA
for the quarter was $3.3 million compared to EBITDA of $3.5 million
for the fourth quarter in 2007. The schedule accompanying this
release provides the reconciliation of net income for the fourth
quarters of 2008 and 2007 under GAAP to a non-GAAP, EBITDA
basis.
Sal Perisano, Chairman and Chief Executive Officer of iParty
Corp., commented, "After two successive years of increasing sales
and profit in 2006 and 2007, we are disappointed to report a
decline of 0.7% in total sales and a net loss of $0.4 million for
fiscal 2008. On a comparable store basis, we achieved a 1.1%
increase in our most important month, October, compared to the
prior year. However, weakness in the rest of the fiscal year,
caused mainly by the dramatic softening in consumer confidence and
spending in the last half of 2008, caused our full year same store
sales to decline by 2.4% as compared to 2007."
Mr. Perisano further commented, "We are, however, pleased with
certain aspects of our company�s performance in 2008. First, we
believe our core party and Halloween businesses held up fairly well
in 2008 despite increasing negative economic news and double digit
sales losses for some segments of the retail industry in the 2nd
half of 2008. Second, we ended our fiscal year with lean and clean
inventories that we anticipate will position us well as we continue
in this difficult economy in 2009. In response to the economic
downturn, we have reviewed and revamped our expense structure at
our headquarters and in our stores, decreasing expenditures and
altering the mix of our advertising spend. Due to these changes, we
expect to achieve up to $3 million in savings over the course of
fiscal 2009. We continue to believe that our core categories will
maintain their performance in 2009, and with our strong branding
and market position, put us in a position to emerge as a stronger,
better company on the other side of this current recession."
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
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 December 27, 2008 � December 29, 2007 December 27,
2008 � December 29, 2007 � Net income (loss) as reported under GAAP
$2,563,497 $2,736,067 $(440,055) $611,691 � plus, Interest expense,
net 141,728 170,068 716,282 839,806 plus, Depreciation and
amortization 514,370 441,646 2,037,108 1,705,947 plus, Income taxes
50,605 146,323 50,605 146,323 � EBITDA, non-GAAP $3,270,200
$3,494,104 $2,363,940 $3,303,767
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 Alternext US (formerly
the 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 29, 2007 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 27, 2008
Dec 29, 2007 Dec 27, 2008
Dec 29, 2007 Revenues $ 27,220,928 $ 27,578,796
$ 81,210,999 $ 81,798,634 Operating costs: Cost of products sold
and occupancy costs 14,660,137 14,778,080 46,885,215 46,465,441
Marketing and sales 8,089,970 7,895,308 26,793,885 26,181,504
General and administrative �
1,714,991 � �
1,852,950 � �
7,205,067 � �
7,553,869 � � Operating income 2,755,830 3,052,458
326,832 1,597,820 � Interest expense, net � (141,728 ) � (170,068 )
� (716,282 ) � (839,806 ) � Income before income taxes 2,614,102
2,882,390 (389,450 ) 758,014 � Income taxes � 50,605 � � 146,323 �
� 50,605 � � 146,323 � � Net income (loss) $ 2,563,497 � $
2,736,067 � $ (440,055 ) $ 611,691 � � Income per share: Basic
$ 0.07 �
$ 0.07
�
$ (0.02 ) $
0.02 � Diluted
$ 0.07 �
$ 0.07 �
$
(0.02 ) $ 0.02
� � Weighted-average shares outstanding: Basic �
38,210,583 � �
38,210,588 � �
22,722,485 � �
38,204,374 � Diluted �
38,212,561 � �
39,411,558 � �
22,722,485 � �
39,913,274 �
iPARTY
CORP. CONSOLIDATED BALANCE SHEETS �
Dec 27,
2008 �
Dec 29, 2007 �
ASSETS
Current assets: Cash and cash equivalents $ 60,250 $ 71,532
Restricted cash 775,357 862,536 Accounts receivable 730,392
1,105,807 Inventory, net 13,022,142 13,639,531 Prepaid expenses and
other assets �
279,185 � �
996,779 �
Total current assets 14,867,326 16,676,185 Property and equipment,
net 3,646,481 4,360,123 Intangible assets, net 2,303,692 1,756,800
Other assets �
177,774 � �
183,978 �
Total assets
$ 20,995,273 �
$ 22,977,086 � �
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
4,048,833 $ 4,723,370 Accrued expenses 2,495,955 2,503,752 Current
portion of capital lease obligations 6,444 30,473 Current notes
payable, net of discount of $136,367 at December 27, 2008 2,876,182
620,706 Borrowings under line of credit �
1,950,019 �
�
2,613,511 � Total current liabilities 11,377,433
10,491,812 � Long-term liabilities: Capital lease obligations, net
of current portion - 9,213 Notes payable, net of discount of
$340,917 at December 29, 2007 600,000 3,271,632 Other liabilities �
1,200,174 � �
1,113,522 � Total long-term
liabilities 1,800,174 4,394,367 � Commitments and contingencies �
Stockholders' equity: Convertible preferred stock 13,647,720
13,682,167 Common stock 22,732 22,701 Additional paid-in capital
52,095,711 51,894,481 Accumulated deficit �
(57,948,497 ) �
(57,508,442
) Total stockholders' equity �
7,817,666
� �
8,090,907 � � Total liabilities and stockholders'
equity
$ 20,995,273 �
$
22,977,086 �
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