iParty Corp. (NYSE Amex: IPT - news), a party goods retailer,
today reported financial results for its first quarter of fiscal
year 2009, which ended on March 28, 2009.
For the first quarter of 2009, consolidated revenues were $14.57
million, a 9.7% decrease compared to $16.14 million for the first
quarter in 2008. The decrease in first quarter revenues from the
year-ago period included a 9.9% decrease in comparable store sales
from stores open more than one year. Consolidated gross profit
margin was 35.6% for the first quarter compared to a gross profit
margin of 38.2% for the same period in 2008. Consolidated net loss
for the first quarter of 2009 was $1.72 million, or $0.08 per
share, compared to consolidated net loss of $1.86 million, or $0.08
per share, for the first quarter in 2008. On a non-GAAP basis, net
loss for the first quarter of 2009 before interest, taxes,
depreciation and amortization (�EBITDA�) was $1.04 million compared
to an EBITDA net loss of $1.15 million for the first quarter in
2008. 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 2009 and 2008 under GAAP to a
non-GAAP, EBITDA basis.
Sal Perisano, Chairman and Chief Executive Officer of iParty
Corp., commented, �Despite tough economic conditions in the first
quarter of 2009, we are reporting improvements in both our P &
L and EBITDA performance compared to the first quarter of
2008.�
�We were able to do this by undertaking in the fourth quarter of
2008 a thorough review of our expense structure at both the store
and corporate level. As a result, we eliminated an estimated $3
million in annualized operating costs throughout the company. Our
reduced cost structure mitigated the absence in the first quarter
of 2009 of two significant retail events that we enjoyed in the
first quarter of 2008, namely the New England Patriots in the Super
Bowl and Easter falling early last year in March, as well as the
effects of the economic recession. So, despite experiencing
negative same store sales of almost 10% for the quarter, our
successful cost reduction efforts allowed us to achieve improved
bottom line numbers as compared to the first quarter of 2008.�
Mr. Perisano further stated that �Our customer traffic and sales
levels so far have been within anticipated ranges. We also believe
that our liquidity position remains comfortable and that we have
demonstrated our ability to successfully manage the business with
the leaner expense levels. With this new expense structure in
place, we believe we are well positioned to manage our way through
this 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 Mar 28, 2009
Mar 29, 2008 Net loss, as reported under GAAP $
(1,715,271 ) $ (1,864,528 ) � plus, Interest expense, net 136,524
212,352 plus, Depreciation and amortization 535,957 501,724 plus,
Income taxes �
- � �
- � � EBITDA,
non-GAAP
$ (1,042,790 )
$ (1,150,452 )
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 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
(unaudited) � �
For the quarter ended
Mar 28, 2009 Mar 29, 2008
Revenues $ 14,568,407 $ 16,144,088 Operating costs: Cost of
products sold 9,382,066 9,983,347 Marketing and sales 4,979,318
5,849,752 General and administrative �
1,785,770 � �
1,963,165 � � Operating loss (1,578,747 ) (1,652,176 )
� Interest expense, net �
(136,524 ) �
(212,352 ) � Net loss
$
(1,715,271 ) $
(1,864,528 ) � Loss per share: Basic and
diluted
$ (0.08 )
$ (0.08 ) � Weighted-average
shares outstanding: Basic and diluted �
22,731,667 � �
22,708,383 �
iPARTY CORP. CONSOLIDATED BALANCE SHEETS � �
Mar 28,
2009(unaudited)
Dec 27, 2008 ASSETS Current assets: Cash
and cash equivalents $ 59,750 $ 60,250 Restricted cash 465,633
775,357 Accounts receivable 892,231 730,392 Inventory, net
13,255,570 13,022,142 Prepaid expenses and other assets �
266,700 � �
279,185 � Total current
assets 14,939,884 14,867,326 Property and equipment, net 3,497,164
3,646,481 Intangible assets, net 2,129,416 2,303,692 Other assets �
163,444 � �
177,774 � Total assets
$ 20,729,908 �
$
20,995,273 � �
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 5,047,244 $
4,048,833 Accrued expenses 2,004,792 2,495,955 Current portion of
capital lease obligations 452 6,444 Current notes payable, net of
discount of $85,229 2,816,792 2,876,182 Borrowings under line of
credit �
2,681,782 � �
1,950,019 � Total
current liabilities 12,551,062 11,377,433 � Long-term liabilities:
Capital lease obligations, net of current portion - - Notes payable
600,000 600,000 Other liabilities �
1,447,632 � �
1,200,174 � Total long-term liabilities 2,047,632
1,800,174 � Commitments and contingencies � Convertible preferred
stock 13,647,720 13,647,720 Common stock 22,732 22,732 Additional
paid-in capital 52,124,530 52,095,711 Accumulated deficit �
(59,663,768 ) �
(57,948,497
) Total stockholders' equity �
6,131,214
� �
7,817,666 � � Total liabilities and stockholders'
equity
$ 20,729,908 �
$
20,995,273 �
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