iParty Corp. (NYSE Amex: IPT - news), a leading party goods
retailer, today reported financial results for its second quarter
of fiscal year 2011, which ended on June 25, 2011.
Second Quarter 2011 Highlights
- Re-launch of the newly redesigned
iParty e-commerce site with a full assortment of costume and
related party merchandise for purchase and shipping via the
internet.
- Consolidated revenues of $19.6 million
for the second quarter of 2011, a 2.2% decrease compared to the
second quarter of 2010.
- Net income of $43 thousand for the
second quarter of 2011, compared to $767 thousand for the second
quarter of 2010.
- EBITDA for the second quarter of 2011
of $490 thousand compared to EBITDA in the second quarter of 2010
of $1.3 million (See accompanying schedule for reconciliation of
non-GAAP EBITDA to net income for the period).
- Comparable store sales decrease for the
second quarter of 2011 of 5.6%.
Sal Perisano, iParty’s Chairman and Chief Executive Officer,
stated, “We are disappointed with the performance in our second
quarter which was adversely impacted by the lack of sales to
replace the strong sales in novelty wrist bands that we experienced
in the first half of 2010, the continued sluggish and uncertain
economy and our customers’ sensitivity to increased gas prices
experienced in the first half of 2011. These events were partially
offset by the positive performance of some of our seasonal
categories, which compared well to the same period last year.”
Mr. Perisano went on to say “As we move into the third quarter
and the upcoming Halloween season, we look to expand our presence
and improve performance in our markets with the expected opening of
ten temporary Halloween stores in September and the relaunch of our
newly redesigned e-commerce site showcasing our broad selection of
Halloween products available in our brick and mortar stores and
online.”
Operating Results
For the second quarter of 2011, consolidated revenues were
$19.62 million, a 2.2% decrease compared to $20.06 million for the
second quarter in 2010. Comparable store sales in the second
quarter of 2011 decreased 5.6% compared to the year-ago period.
Consolidated gross profit margin was 39.7% for the second quarter
of 2011 compared to a gross profit margin of 40.7% for the same
period in 2010. Consolidated net income for the second quarter of
2011 was $43 thousand, or $0.00 per basic and diluted share,
compared to consolidated net income of $767 thousand, or $0.02 per
basic and diluted share, for the second quarter in 2010. On a
non-GAAP basis, net income for the second quarter of 2011 before
interest, taxes, depreciation and amortization (“EBITDA”)
was $490 thousand, compared to EBITDA of $1.27 million for the
second 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 income for the second
quarters of 2011 and 2010, and net loss for the six-month periods
then ended, under GAAP to a non-GAAP, EBITDA basis.
For the six-month year-to-date period ended June 25, 2011,
consolidated revenues were $ 34.71 million, a 0.5% decrease
compared to $34.90 million for the first six months of 2010.
Consolidated revenues for the first six months of 2011 included a
3.7% decrease in comparable store sales from the year-ago period.
Consolidated gross profit margin was 38.3% for the six-month
period, compared to 38.6% for the same period in 2010. For the
six-month period, consolidated net loss was $1.47 million, or $0.06
per basic and diluted share, compared to a consolidated net loss of
$718 thousand, or $0.03 per basic and diluted share for the first
six months of 2010. On a non-GAAP basis, EBITDA net loss was $563
thousand compared to an EBITDA net income of $296 thousand for the
first six months of 2010.
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 and an Internet site (www.iparty.com) for costume and
related goods and party planning. 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 and
available at our online store, 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. In addition to the extensive assortment of costume and
related merchandise available through iParty’s internet site our
web site focuses on increasing customer visits to our retail stores
by highlighting the ever changing store product assortment for all
occasions and seasons and featuring sales flyers, enter-to-win
contests, monthly coupons and ideas and themes offering 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.
For the quarter ended For the six months ended
RECONCILIATION OF NON-GAAP MEASURES June 25, 2011 June 26,
2010 June 25, 2011 June 26, 2010 Net income (loss) as
reported under GAAP $ 43,253 $ 767,484 $ (1,467,658 ) $ (717,650 )
plus, Interest expense, net 67,440 71,545 149,665 137,707
plus, Depreciation and amortization 379,497 433,614 754,779 876,261
plus, Income taxes - - - -
EBITDA, non-GAAP $ 490,190 $ 1,272,643 $ (563,214 ) $
296,318
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
three months ended For the six months
ended Jun 25, 2011 Jun 26,
2010 Jun 25, 2011 Jun 26,
2010 Revenues $ 19,617,207 $ 20,064,832 $ 34,709,335 $
34,901,211 Operating costs: Cost of products sold and occupancy
costs 11,819,894 11,903,928 21,420,765 21,438,697 Marketing and
sales 5,960,011 5,586,561 11,096,753 10,523,328 General and
administrative
1,726,609
1,735,314 3,509,810
3,519,128 Operating income (loss)
110,693 839,029 (1,317,993 ) (579,942 ) Interest expense,
net (67,440 ) (71,545 ) (149,665 )
(137,708 ) Net income (loss) $ 43,253 $ 767,484
($1,467,658 ) ($717,650 ) Income
(loss) per share: Basic
$ 0.00
$ 0.02 $
(0.06 ) $ (0.03
) Diluted
$ 0.00
$ 0.02 $
(0.06 ) $ (0.03
) Weighted-average shares outstanding: Basic
39,301,774
38,221,631 24,355,975
22,987,994 Diluted
39,905,404 39,528,113
24,355,975
22,987,994 iPARTY CORP. CONSOLIDATED
BALANCE SHEETS (Unaudited) Jun
25, 2011 Dec 25, 2010 ASSETS
Current assets: Cash $ 63,650 $ 62,650 Restricted cash 698,572
616,742 Accounts receivable 869,821 626,181 Inventories 17,661,838
14,950,933 Prepaid expenses and other assets 437,346 253,749
Deferred income tax asset - current
95,163
95,163 Total current assets
19,826,390 16,605,418 Property and equipment, net 3,062,319
3,000,798 Intangible assets, net 776,072 934,477 Other assets
231,581 264,179 Deferred income tax asset
476,354 476,354
Total assets
$ 24,372,716
$ 21,281,226 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
and book overdrafts $ 7,520,188 $ 4,572,147 Accrued expenses
2,271,202 2,254,049 Warrant liability 4,563 10,000 Current portion
of capital lease obligations 9,228 9,228 Borrowings under line of
credit
4,581,877
3,102,213 Total current liabilities 14,387,058
9,947,637 Long-term liabilities: Capital lease obligations,
net of current portion - 4,613 Other liabilities
1,511,203 1,517,157
Total long-term liabilities 1,511,203 1,521,770 Commitments
and contingencies Convertible preferred stock 13,012,668
13,024,721 Common stock 24,408 24,294 Additional paid-in capital
52,902,535 52,760,302 Accumulated deficit
(57,465,156 )
(55,997,498 ) Total stockholders' equity
8,474,455 9,811,819
Total liabilities and stockholders' equity
$ 24,372,716 $
21,281,226
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