Iparty (AMEX:IPT)
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3 Years : From May 2010 to May 2013
iParty Corp. (NYSE Amex: IPT - news), a party goods retailer, today
reported financial results for its third quarter of fiscal year 2010,
which ended on September 25, 2010.
Third Quarter 2010 Highlights
-
Consolidated revenues of $16.9 million for the third quarter of 2010,
a 3.0% increase compared to the third quarter of 2009.
-
Comparable store sales increase of 1.4% for the third quarter of 2010,
and for the nine month period then ended.
-
Net loss of $1.9 million for the third quarter of 2010, including
incremental pre-Halloween season costs of $400 thousand, compared to
net loss of $1.4 million for the third quarter of 2009.
-
Net loss for the nine month period of $2.7 million, compared to net
loss of $2.4 million for the nine month period in 2009.
-
EBITDA net loss for the third quarter of 2010 of $1.4 million,
compared to EBITDA net loss in the third quarter of 2009 of $775
thousand (See accompanying schedule for reconciliation of non-GAAP
EBITDA to net loss for the period).
-
EBITDA net loss for the nine month period of $1.1 million compared to
an EBITDA net loss of $481 thousand for the nine month period in 2009.
-
The opening of eleven temporary Halloween stores in September,
bringing the number of iParty storefronts this Halloween season to 62
from 54 last year.
Sal Perisano, iParty’s Chairman and Chief Executive Officer, stated,
“The third quarter results reflect a continuation of the modest sales
increases we saw in the first and second quarters of this year. The
bottom line for the third quarter was impacted by incremental costs
related to the expansion of our temporary Halloween stores, from four
stores in 2009 to eleven in 2010. These costs include pre-opening rents
and other expenses as well as related advertising.
Mr. Perisano further stated, “As we close out our third quarter and
report our operating results for those three months, we are now well
positioned for Halloween, the most important part of our year, with an
increased presence in our markets. With eleven temporary stores now open
and ready for business, we have 62 storefronts open this Halloween
season, compared to 54 storefronts at this time last year. Also, one of
those new temporary stores, in Boston’s South Bay Center, will reopen
shortly after Halloween as the 52nd full-line iParty store.
The opening of this new permanent store will further develop the urban
store strategy we initiated in late 2009, when we opened our first urban
store on Boylston Street in the Back Bay section of Boston.”
Operating Results
For the third quarter of 2010, consolidated revenues were $ 16.9
million, a 3.0% increase compared to $16.4 million for the third quarter
in 2009. Comparable store sales in the third quarter of 2010 increased
1.4% compared to the year-ago period. Consolidated gross profit margin
was 36.8% for the third quarter of 2010 compared to a gross profit
margin of 37.3% for the same period in 2009. Consolidated net loss for
the third quarter of 2010 was $1.9 million, or $0.08 per basic and
diluted share, compared to consolidated net loss of $1.4 million, or
$0.06 per basic and diluted share, for the third quarter in 2009. On a
non-GAAP basis, net loss for the third quarter of 2010 before interest,
taxes, depreciation and amortization (“EBITDA net loss”) was $1.4
million compared to EBITDA net loss of $775 thousand for the third
quarter in 2009. 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 third quarters of 2010 and 2009, and
net loss for the nine-month periods then ended, under GAAP to a
non-GAAP, EBITDA basis.
For the nine-month year-to-date period ended September 25, 2010,
consolidated revenues were $ 51.8 million, a 2.5% increase compared to
$50.5 million for the first nine months of 2009. Consolidated revenues
for the first nine months of 2010 included a 1.4% increase in comparable
store sales from the year-ago period. Consolidated gross profit margin
was 38.0% for both the 2010 and 2009 nine-month periods. For the
nine-month period, consolidated net loss was $2.7 million, or $0.12 per
basic and diluted share, compared to a consolidated net loss of $2.4
million, or $0.11 per basic and diluted share for the first nine months
of 2009. On a non-GAAP basis, EBITDA net loss was $1.1 million compared
to an EBITDA net loss of $481 thousand for the first nine months of 2009.
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. is a party goods
retailer that operates 51 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
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.
For the three months ended
For the nine months ended
RECONCILIATION OF NON-GAAP MEASURES
Sep 25, 2010
Sep 26, 2009
Sep 25, 2010
Sep 26, 2009
Net income (loss) as reported under GAAP
$
(1,945,873
)
$
(1,396,982
)
$
(2,663,523
)
$
(2,443,385
)
plus, Interest expense, net
70,326
125,724
208,034
390,759
plus, Depreciation and amortization
446,307
495,986
1,322,568
1,571,641
plus, Income taxes
-
-
-
-
EBITDA, non-GAAP
$
(1,429,240
)
$
(775,272
)
$
(1,132,921
)
$
(480,985
)
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; 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 26, 2009 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 nine months ended
Sep 25, 2010
Sep 26, 2009
Sep 25, 2010
Sep 26, 2009
Revenues
$
16,898,251
$
16,404,046
$
51,799,462
$
50,541,462
Operating costs:
Cost of products sold and occupancy costs
10,676,032
10,282,326
32,114,729
31,356,342
Marketing and sales
6,371,234
5,810,227
16,894,562
16,231,004
General and administrative
1,726,532
1,582,751
5,245,660
5,006,742
Operating income (loss)
(1,875,547
)
(1,271,258
)
(2,455,489
)
(2,052,626
)
Interest expense, net
(70,326
)
(125,724
)
(208,034
)
(390,759
)
Net income (loss)
$
(1,945,873
)
$
(1,396,982
)
$
(2,663,523
)
$
(2,443,385
)
Income (loss) per share:
Basic and diluted
$
(0.08
)
$
(0.06
)
$
(0.12
)
$
(0.11
)
Weighted-average shares outstanding:
Basic and diluted
23,267,507
22,731,667
23,081,165
22,731,667
iPARTY CORP.
CONSOLIDATED BALANCE SHEETS
Sep 25, 2010
Dec 26, 2009
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
72,950
$
61,050
Restricted cash
577,185
1,056,525
Accounts receivable
930,171
688,506
Inventories, net
20,509,587
13,048,104
Prepaid expenses and other assets
381,591
174,752
Deferred income tax asset - current
70,997
70,997
Total current assets
22,542,481
15,099,934
Property and equipment, net
3,060,266
2,892,835
Intangible assets, net
1,102,504
1,606,585
Other assets
294,645
349,378
Deferred income tax asset
343,690
343,690
Total assets
$
27,343,586
$
20,292,422
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
11,480,751
$
3,885,062
Accrued expenses
2,586,045
2,649,468
Current portion of capital lease obligations
9,228
9,228
Current note payable
-
600,000
Borrowings under line of credit
5,129,464
2,526,982
Total current liabilities
19,205,488
9,670,740
Long-term liabilities:
Capital lease obligations, net of current portion
6,920
13,841
Other liabilities
1,511,331
1,529,257
Total long-term liabilities
1,518,251
1,543,098
Commitments and contingencies
Convertible preferred stock
13,043,321
13,589,491
Common stock
23,268
22,799
Additional paid-in capital
53,061,546
52,311,059
Accumulated deficit
(59,508,288
)
(56,844,765
)
Total stockholders' equity
6,619,847
9,078,584
Total liabilities and stockholders' equity
$
27,343,586
$
20,292,422
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