iParty Corp. (AMEX: IPT), a party goods retailer that operates 50
iParty retail stores, today reported financial results for its
fourth quarter and fiscal year 2005, which ended on December 31,
2005. The Company's accounting cycle resulted in a 14-week fourth
quarter and a 53-week year in fiscal 2005, compared to a 13-week
fourth quarter and a 52-week year in fiscal 2004. For the 14-week
quarter, consolidated revenues were $28.0 million compared to $23.7
million for the 13-week quarter of 2004. On a comparable 13-week
quarter basis for both fiscal 2005 and fiscal 2004, consolidated
revenue increased 11.0% which included a comparable store sales
increase of 0.8%. Consolidated gross profit margin was 47.8% for
the quarter compared to a margin of 47.8% for the same period in
2004. Operating income for the quarter was $4.0 million compared to
$2.9 million for the quarter in 2004. For the quarter, consolidated
net income was $3.9 million, or $0.10 per basic and diluted share,
compared to consolidated net income of $2.7 million, or $0.07 per
basic and diluted share, for the quarter in 2004. For the 53-week
fiscal year, consolidated revenues were $72.5 million compared to
$64.3 million for the 52-week fiscal year of 2004. On a comparable
52-week basis for both fiscal 2005 and fiscal 2004, consolidated
revenue increased 10.2% which included a comparable store sales
increase of 0.6%. Consolidated gross profit margin was 42.9% for
the full fiscal year compared to 44.3% for fiscal 2004. Operating
income for the full fiscal year was $0.3 million compared to $0.9
million for fiscal 2004. For the full fiscal year, consolidated net
loss was $0.3 million, or $0.01 per basic and diluted share,
compared to consolidated net income of $1.0 million, or $0.03 per
basic and $0.02 per diluted share, for fiscal 2004. Sal Perisano,
Chief Executive Officer of iParty Corp., commented, "Overall, we
are pleased with our performance in the fourth quarter which
included a 42.8% increase in net income over the fourth quarter in
2004. This fourth quarter was our most profitable quarter to date.
We began the quarter with a disappointing Halloween season in which
comparable store sales were down by 1.1 %, but we finished the
quarter with strong sales in both November and December which
resulted in a comparable store sales increase of 0.8% for the
comparable 13-week period. During the quarter, our product margins
improved from earlier in the year and we leveraged our marketing
and sales expenses and our general and administrative expenses as a
percentage of sales." "During 2005 we opened six new stores
bringing our total number of stores to 50. Excluding sales from the
53rd week of the fiscal year, sales from our 50 stores, including
new stores which had not been open for one full year, increased by
10.2% for the comparable 52-week period. We are pleased with our
continuing ability to implement our growth strategy and increase
total sales. Unfortunately, a greater-than-anticipated increase in
our product costs for the first three quarters, the higher cost to
sales ratio for our new stores and relatively flat comparable store
sales for the year led to a full year loss of approximately
$270,000." "In 2006, we plan to focus on increasing our comparable
store sales growth, improving our gross margins and leveraging our
overall cost structure as the 12 new stores we opened over the past
two years start to mature. At this time, we do not plan to open any
new stores in 2006. Our focus in the upcoming year will instead be
on infrastructure improvements designed to help support the future
expansion of our business. In the meantime we intend to continue to
investigate and explore potential locations for future store growth
in anticipation of a resumption of our store expansion efforts in
2007. We believe that our increased focus this year on
infrastructure improvements and comparable store performance,
followed by the opening of new stores in 2007, will help build
long-term value for our investors." About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. (AMEX: IPT) is
a party goods retailer that operates 50 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. Safe
harbor statement under the Private Securities Litigation Reform Act
of 1995: This release contains forward-looking statements that are
based on our current expectations, beliefs, assumptions, estimates,
forecasts and projections, including those about future store
openings, future expectations of profitability and the industry and
markets in which iParty operates. The statements contained in this
release are not guarantees of future performance and involve
certain risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual outcomes and results may differ
materially from what is expressed in such forward-looking
statements, and such statements should not be relied upon as
representing iParty's expectations or beliefs as of any date
subsequent to the date of this press release. Important factors
that may affect future operating results include, but are not
limited to, economic and other developments such as unseasonable
weather, that affect consumer confidence or consumer spending
patterns, particularly those impacting the New England region,
where 45 of our 50 stores our located, and particularly during the
Halloween season, which is our single most important season;
intense 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 failure of any of our systems, including,
without limitation, our newly-installed point-of-sale system and
our existing merchandise management system, the latter of which was
developed by a vendor who is no longer in business and which we are
considering replacing in the upcoming twelve months; the success or
failure of our efforts to implement our business growth and
marketing strategies; our inability to obtain additional financing,
if required, on terms and conditions acceptable to us; rising oil
and gas prices which impact prices of petroleum-based/plastic
products, which are a key raw material in much of our merchandise,
affect our freight costs, and affect consumer confidence and
spending patterns; third-party suppliers' failure to fulfill their
obligations to us; the availability of retail store space on
reasonable lease terms; compliance with evolving federal
securities, accounting, and stock exchange rules and regulations
applicable to publicly-traded companies listed on the American
Stock Exchange. For a discussion of these and other risks and
uncertainties which could cause actual results to differ from those
contained in the forward-looking statements, see "Cautionary
Statements and Risk Factors" in iParty's most recently filed Annual
Report on Form 10-K and "Factors That May Affect Future Results" in
iParty's most recently filed Quarterly Report on Form 10-Q. -0- *T
iPARTY CORP. CONSOLIDATED STATEMENTS OF OPERATIONS For the quarter
ended For the year ended -------------------------
------------------------- Dec 31, 2005 Dec 25, 2004 Dec 31, 2005
Dec 25, 2004 ------------ ------------ ------------ ------------
Revenues $28,021,662 $23,722,225 $72,537,998 $64,276,225 Operating
costs: Cost of products sold 14,642,851 12,372,226 41,395,193
35,826,820 Marketing and sales 7,799,233 6,809,090 24,116,050
21,176,925 General and administrative 1,575,394 1,660,169 6,762,583
6,335,067 ------------ ------------ ------------ ------------
Operating income 4,004,184 2,880,740 264,172 937,413 Other Income -
- - 382,500 ------------ ------------ ------------ ------------
Income before interest and income taxes 4,004,184 2,880,740 264,172
1,319,913 Interest income 43 74 801 1,354 Interest expense
(149,351) (76,174) (532,649) (225,074) ------------ ------------
------------ ------------ Income (loss) before income taxes
3,854,876 2,804,640 (267,676) 1,096,193 Income taxes - 105,000 -
105,000 ------------ ------------ ------------ ------------ Net
income (loss) $3,854,876 $2,699,640 $(267,676) $991,193
============ ============ ============ ============ Income (loss)
per share: Basic $0.10 $0.07 $(0.01) $0.03 ============
============ ============ ============ Diluted $0.10 $0.07 $(0.01)
$0.02 ============ ============ ============ ============
Weighted-average shares outstanding: Basic 37,724,517 37,701,585
22,186,581 37,649,400 ============ ============ ============
============ Diluted 39,337,114 41,119,932 22,186,581 41,517,036
============ ============ ============ ============ iPARTY CORP.
CONSOLIDATED BALANCE SHEETS Dec 31, 2005 Dec 25, 2004 ------------
------------ ASSETS Current assets: Cash and cash equivalents
$699,194 $1,757,157 Restricted cash 651,617 561,407 Accounts
receivable 1,246,545 700,961 Inventory, net 13,251,307 11,400,971
Prepaid expenses and other assets 548,114 476,046 ------------
------------ Total current assets 16,396,777 14,896,542 Property
and equipment, net 5,187,099 4,483,705 Other assets 133,200 99,690
------------ ------------ Total assets $21,717,076 $19,479,937
============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $4,695,094 $3,421,195 Accrued
expenses 2,532,238 2,615,835 Current portion of capital lease
obligations 442,358 365,674 Borrowings under line of credit
6,635,874 5,257,690 ------------ ------------ Total current
liabilities 14,305,564 11,660,394 Long-term liabilities: Capital
lease obligations, net of current portion 426,995 796,693 Other
liabilities 669,003 471,759 ------------ ------------ Total
long-term liabilities 1,095,998 1,268,452 Commitments and
contingencies Convertible preferred stock 13,816,101 14,308,002
Common stock 22,537 22,093 Additional paid-in capital 50,971,656
50,448,100 Accumulated deficit (58,494,780) (58,227,104)
------------ ------------ Total stockholders' equity 6,315,514
6,551,091 ------------ ------------ Total liabilities and
stockholders' equity $21,717,076 $19,479,937 ============
============ *T
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