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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