iParty Corp. (NYSE Amex: IPT - news), a leading party goods
retailer, today reported financial results for its first quarter of
fiscal year 2011, which ended on March 26, 2011.
First Quarter 2011 Highlights
- Consolidated revenues of $15.1 million
for the first quarter of 2011, a 1.7% increase compared to the
first quarter of 2010.
- Opened an additional store in
Manchester, CT.
- Net loss of $1.51 million for the first
quarter of 2011, compared to a net loss of $1.49 million for the
first quarter of 2010.
- EBITDA net loss for the first quarter
of 2011 of $1.05 million compared to an EBITDA net loss in the
first quarter of 2010 of $976 thousand (See accompanying schedule
for reconciliation of non-GAAP EBITDA to net loss for the
period).
- Comparable store sales decrease for the
first quarter of 2011 of 1.1%.
Sal Perisano, iParty’s Chairman and Chief Executive Officer,
stated, “We succeeded in delivering increased sales and essentially
flat net loss in the first quarter of 2011 compared to the first
quarter of 2010 despite a shift in the Easter holiday this year
from March to April and severe winter weather in New England that
shortened our number of sales days in this quarter.”
Mr. Perisano further stated, “During the first quarter of 2011,
we continued to execute on the growth initiatives launched in 2010.
Our new store in Boston’s South Bay Center, opened as a permanent
store last December, is rapidly gaining momentum, and we continue
to actively seek opportunities to add new stores to expand our
store base. In March 2011, we opened an additional store in
Manchester, Connecticut previously operated by Party City. At the
same time, we extended our existing non-compete agreement with
Party City through December 2013. Finally, we also executed a
fulfillment contract for our e-commerce site in the first quarter
which we expect to have operational for the Halloween season.”
Operating Results
For the first quarter of 2011, consolidated revenues were $15.09
million, a 1.7% increase compared to $14.84 million for the first
quarter in 2010. Comparable store sales in the first quarter of
2011 decreased 1.1% compared to the year-ago period. Consolidated
gross profit margin was 36.4% for the first quarter of 2011
compared to a gross profit margin of 35.7% for the same period in
2010. Consolidated net loss for the first quarter of 2011 was $1.51
million, or $0.06 per basic and diluted share, compared to
consolidated net loss of $1.49 million, or $0.07 per basic and
diluted share, for the first quarter in 2010. On a non-GAAP basis,
net loss for the first quarter of 2011 before interest, taxes,
depreciation and amortization (“EBITDA”) was $1.05 million,
compared to EBITDA net loss of $976 thousand for the first quarter
in 2010. EBITDA is calculated as net income (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
quarter of 2011 and 2010, under GAAP to a non-GAAP, EBITDA
basis.
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. is a party
goods retailer that operates 53 iParty retail stores in New England
and Florida. iParty’s aim is to make throwing a successful event
both stress-free and fun. With an extensive assortment of party
supplies and costumes in our stores, iParty offers consumers a
sophisticated, yet fun and easy-to-use, resource to help them
customize any party, including birthday bashes, Easter
get-togethers, graduation parties, summer barbecues and, of course,
Halloween. iParty also operates an internet site that focuses on
increasing customer visits to our stores by highlighting the ever
changing store product assortment for all occasions and seasons.
The site also features sales flyers, enter-to-win contests, monthly
coupons and ideas and themes to offer consumers an easy and fun
approach to any party. 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
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, cash flows from operating activities 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 26,
2011 Mar 27, 2010 Net loss, as
reported under GAAP $ (1,510,911 ) $ (1,485,134 ) plus,
Interest expense, net 82,225 66,163 plus, Depreciation and
amortization 375,282 442,647 plus, Income taxes
- - EBITDA
net loss, non-GAAP
$ (1,053,404
) $ (976,324 )
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 or sustained high levels of 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 our existing credit line or to obtain additional
financing, if required, on acceptable terms and conditions; rising
commodity prices, especially oil and gas prices; effect of Chinese
inflation on our suppliers and product pricing; 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; risks related to
e-commerce; 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 25, 2010 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 26, 2011 Mar 27,
2010 Revenues $ 15,092,128 $ 14,836,379 Operating costs:
Cost of products sold and occupancy costs 9,600,871 9,534,769
Marketing and sales 5,136,742 4,936,767 General and administrative
1,783,201 1,783,814
Operating loss (1,428,686 ) (1,418,971 )
Change in fair value of warrant liability (9,043 ) - Interest
expense, net
(73,182 )
(66,163 ) Net loss
$
(1,510,911 ) $
(1,485,134 ) Loss per share: Basic
and diluted
$ (0.06 )
$ (0.07 )
Weighted-average shares outstanding: Basic and diluted
24,319,464 22,798,647
iPARTY CORP. CONSOLIDATED BALANCE
SHEETS (Unaudited) Mar 26,
2011 Dec 25, 2010 ASSETS
Current assets: Cash $ 63,650 $ 62,650 Restricted cash 440,213
616,742 Accounts receivable 665,469 626,181 Inventories 15,850,976
14,950,933 Prepaid expenses and other assets 251,162 253,749
Deferred income tax asset - current
95,163
95,163 Total current assets
17,366,633 16,605,418 Property and equipment, net 3,005,371
3,000,798 Intangible assets, net 855,274 934,477 Other assets
243,040 264,179 Deferred income tax asset
476,354 476,354
Total assets
$ 21,946,672
$ 21,281,226 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
and book overdrafts $ 5,601,591 $ 4,572,147 Accrued expenses
1,854,488 2,254,049 Warrant liability 19,043 10,000 Current portion
of capital lease obligations 9,228 9,228 Borrowings under line of
credit
4,584,717
3,102,213 Total current liabilities 12,069,067
9,947,637 Long-term liabilities: Capital lease obligations,
net of current portion 2,306 4,613 Other liabilities
1,508,437 1,517,157
Total long-term liabilities 1,510,743 1,521,770 Commitments
and contingencies Convertible preferred stock 13,024,721
13,024,721 Common stock 24,398 24,294 Additional paid-in capital
52,826,152 52,760,302 Accumulated deficit
(57,508,409 )
(55,997,498 ) Total stockholders' equity
8,366,862 9,811,819
Total liabilities and stockholders' equity
$ 21,946,672 $
21,281,226
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