iParty Corp. (NYSE Amex: IPT - news), a party goods retailer,
today reported financial results for its fourth quarter and fiscal
year 2011, which ended on December 31, 2011.
Fourth Quarter 2011 Highlights
- Net income of $3.0 million for the
fourth quarter of 2011, slightly up from the fourth quarter of
2010, despite disruptions in the Halloween season and the temporary
loss of the West Lebanon, New Hampshire store.
- EBITDA of $3.4 million in the fourth
quarter of 2011, approximately equal to EBITDA of $3.4 million for
the fourth quarter of fiscal year 2010.
- Consolidated 14 week revenues for the
fourth quarter of fiscal 2011 of $29.7 million, a 0.7% increase
compared to the 13 week fourth quarter of fiscal 2010.
- Revenues of $27.8 million on a 13 week
basis, a 5.6% decrease compared to the 13 week fourth quarter of
fiscal 2010.
- Late autumn Nor’easter snowstorm
disrupted Halloween business during final weekend of sales
significantly contributing to a calendar October comparable store
sales decline of 12.8% and comparable store sales decrease of 7.3%
compared to the fourth quarter of 2010.
Fiscal Year 2011 Highlights
- Consolidated 53 week revenues of $80.9
million, a 0.5% decrease compared to the 52 week fiscal year 2010.
- Revenues of $79.0 million on a 52 week
basis, a 2.8% decrease compared to fiscal 2010.
- Comparable store sales decrease of
5.4%.
- Net loss of $1.3 million, compared to
net income of $254 thousand for fiscal year 2010.
- EBITDA of $494 thousand compared to
EBITDA $2.3 million for fiscal year 2010.
- Acquired a Party City store in
Manchester, Connecticut and consolidated that market by closing our
older nearby iParty store.
- Extended revolving credit facility with
Wells Fargo for five years including improved financial terms.
- The continuation and refinement of our
temporary Halloween store strategy.
- The re-launch of our Internet site,
offering a strong assortment of Halloween and related merchandise
for sale on the Web.
Sal Perisano, iParty’s Chairman and Chief Executive Officer,
stated, "2011 was a very disappointing year from many perspectives.
Our sales in the first half of 2011 suffered in comparison to a
relatively strong first half of 2010. Then in late August, we were
hit by Tropical Storm Irene, which caused disruption in many of our
markets as well as the complete flood loss of our store in West
Lebanon, New Hampshire. Finally and most significant, an early
season Nor’easter snow storm struck our most important market the
weekend before Halloween, closing many of our stores temporarily
and significantly reducing our Halloween sales.”
Mr. Perisano further stated, “Despite these events, sales in
December 2011 were strong, and that trend has continued through
January 2012 and continues to date, with January sales additionally
supplemented by the post season successes of the New England
Patriots. We are cautiously optimistic that underlying consumer
demand in 2012 will continue to strengthen. We are pleased with the
early results in our Manchester, Connecticut market, where we
consolidated two stores into one late in 2011, and also with the
performance of our West Lebanon, New Hampshire store, which we
reopened in January. Also, having re-launched our e-commerce site
in 2011 with a full Halloween merchandise assortment, we intend to
expand our online offerings in 2012 to include birthday and other
party categories. Additionally, we believe that our ability to
control key costs in 2011 and the extension to our revolving credit
facility has allowed us to enter 2012 with liquidity sufficient to
grow our business in 2012 and beyond.”
Operating Results
For the fourteen week fourth quarter of 2011, consolidated
revenues were $29.7 million, a 0.7% increase compared to $29.5
million for the thirteen week fourth quarter in 2010. Comparable
store sales in the fourth quarter of 2011 decreased 7.3% compared
to the year-ago period. Consolidated gross profit margin was 43.1%
for the fourth quarter of 2011 compared to a gross profit margin of
42.7% for the fourth quarter in 2010. Consolidated net income for
the fourth quarter of 2011 was $3.0 million, which included a 14th
week, compared to $2.9 million for the 13 week fourth quarter of
2010. Net income per basic and diluted share were $0.08 and $0.08,
respectively, compared to $0.08 and $0.07 per basic and diluted
share, for the fourth quarter in 2010. On a non-GAAP basis, net
income for the 14 week fourth quarter of 2011 before interest,
taxes, depreciation and amortization (“EBITDA”) was $3.4
million, approximately equal to EBITDA of $3.4 million for the 13
week fourth 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 fourth quarters of 2011 and 2010 and for the twelve-month
periods then ended, under GAAP to a non-GAAP, EBITDA basis.
For the fifty-three-week fiscal year ended December 31, 2011,
consolidated revenues were $80.9 million, a 0.5% decrease compared
to $81.3 million for fifty-two week fiscal year 2010. Consolidated
revenues for 2011 included a 5.4% decrease in comparable store
sales from the year-ago period. Consolidated gross profit margin
was 39.2% for 2011 compared to 39.7% in 2010. Consolidated net loss
for the fiscal year 2011 was $1.3 million, or $0.05 per basic and
diluted share, compared to net income of $254 thousand, or $0.01
per basic and diluted share for fiscal year 2010. On a non-GAAP
basis, EBITDA was $494 thousand for fiscal year 2011, compared to
an EBITDA of $2.3 million for 2010.
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. is a party
goods retailer that operates 52 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 offers a
strong assortment of Halloween and related merchandise for sale on
the internet and 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.
For the
three months ended For the twelve months ended RECONCILIATION OF
NON-GAAP MEASURES Dec 31, 2011 Dec 25, 2010 Dec 31, 2011 Dec 25,
2010 Net income (loss) as reported under GAAP $ 2,983,683 $
2,917,972 $ (1,314,638 ) $ 254,449 plus, Interest expense,
net 56,847 41,161 305,530 249,195 plus, Depreciation and
amortization 361,626 443,894 1,484,212 1,766,462
plus, Income tax expense (benefit)
19,343
(2,613 ) 19,343 (2,613 ) EBITDA,
non-GAAP $ 3,421,499 $ 3,400,414 $ 494,447 $
2,267,493
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; disruptions to our most
important selling season, Halloween; 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 twelve months ended
Dec 31, 2011 Dec 25, 2010
Dec 31, 2011 Dec 25, 2010
Revenues $ 29,710,785 $ 29,491,967 $ 80,882,751 $ 81,291,429
Operating costs: Cost of products sold and occupancy costs
16,912,576 16,908,670 49,147,010 49,023,399 Marketing and sales
8,082,924 8,032,949 25,509,559 24,927,511 General and
administrative 1,649,697 1,604,661 6,827,196 6,850,321 Flood loss
5,715 - 398,751 -
Operating income (loss) 3,059,873 2,945,687 (999,765
) 490,198 Change in fair value of warrant liability - 10,833
10,000 10,833 Interest expense, net (56,847 ) (41,161
) (305,530 ) (249,195 ) Income (loss) before
income taxes 3,003,026
2,915,359
(1,295,295 )
251,836 Income taxes (benefit) 19,343
(2,613 ) 19,343 (2,613 ) Net income
(loss) $ 2,983,683
$ 2,917,972
$ (1,314,638 )
$ 254,449
Income (loss) per share:
Basic
$ 0.08 $ 0.08 $ (0.05 ) $ 0.01
Diluted
$ 0.08 $ 0.07 $ (0.05 ) $ 0.01
Weighted-average shares outstanding: Basic 38,930,281
38,358,472 24,386,220
38,251,888 Diluted 39,201,487
39,392,056 24,386,220 39,281,252
iPARTY CORP. CONSOLIDATED BALANCE SHEETS
(UNAUDITED) Dec 31,
2011 Dec 25, 2010 ASSETS
Current assets: Cash $ 63,650 $ 62,650 Restricted cash 819,604
616,742 Accounts receivable 1,377,234 626,181 Inventories
15,965,507 14,950,933 Prepaid expenses and other assets 1,415,780
253,749 Deferred income tax asset - current
46,761 95,163 Total current assets
19,688,536 16,605,418 Property and equipment, net 2,664,086
3,000,798 Intangible assets, net 626,900 934,477 Other assets
333,731 264,179 Deferred income tax asset
540,842 476,354 Total assets
$ 23,854,095 $
21,281,226 LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable and book
overdrafts $ 5,970,014 $ 4,572,147 Accrued expenses 2,295,467
2,254,049 Current portion of capital lease obligations 4,614 9,228
Current note payable and warrant liability - 10,000 Borrowings
under line of credit
5,366,512
3,102,213 Total current liabilities 13,636,607
9,947,637 Long-term liabilities: Capital lease obligations,
net of current portion - 4,613 Deferred rent
1,504,973 1,517,157 Total
long-term liabilities 1,504,973 1,521,770 Commitments and
contingencies Convertible preferred stock 13,012,668
13,024,721 Common stock 24,409 24,294 Additional paid-in capital
52,987,574 52,760,302 Accumulated deficit
(57,312,136 )
(55,997,498 )
Total stockholders' equity
8,712,515 9,811,819
Total liabilities and stockholders' equity
$
23,854,095 $ 21,281,226
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