iParty Corp. (AMEX: IPT - news), a party goods retailer that
operates 50 iParty retail stores, today reported financial results
for its fourth quarter and fiscal year 2007, which ended on
December 29, 2007. For the fiscal year 2007, consolidated revenues
were $81.8 million, a 4.2% increase compared to $78.5 million for
the fiscal year 2006, and included a 2.6% increase in comparable
store sales. Consolidated gross profit margin was 43.2% for fiscal
2007 compared to 42.7% for fiscal 2006. For fiscal 2007,
consolidated net income was $0.6 million, or $0.02 per share,
compared to consolidated net income of $0.4 million, or $0.01 per
share, for fiscal 2006. On a non-GAAP basis, income before
interest, taxes, depreciation and amortization (�EBITDA�) for the
fiscal year was $3.3 million compared to an EBITDA of $2.5 million
for fiscal 2006. EBITDA is calculated as net income, 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 fiscal 2007 and 2006 under
GAAP to a non-GAAP, EBITDA basis. For the fourth quarter 2007,
consolidated revenues were $27.6 million, a 5.2% decrease compared
to $29.1 million for the fourth quarter in 2006, and included a
4.8% decrease in comparable store sales. Consolidated gross profit
margin was 46.4% for the quarter compared to a margin of 47.5% in
the year-ago quarter. Consolidated net income for the quarter was
$2.7 million, or $0.07 per share, compared to consolidated net
income of $3.9 million, or $0.10 per share, for the fourth quarter
in 2006. On a non-GAAP basis, EBITDA for the quarter was $3.5
million compared to EBITDA of $4.5 million for the fourth quarter
in 2006. The schedule accompanying this release provides the
reconciliation of net income for the fourth quarters of 2007 and
2006 under GAAP to a non-GAAP, EBITDA basis. Sal Perisano, Chairman
and Chief Executive Officer of iParty Corp., commented, "For the
past three years we have seen a progressive improvement in our year
over year net income. In 2007 our net income of $612,000 was 63%
better than 2006. In addition, our 2007 EBITDA of $3.3 million
represented an improvement of 32% over 2006 when we posted an
EBITDA of $2.5 million. In the five years since 2002, we�ve
increased our EBITDA from just over $200,000 to over $3,000,000.
Underscoring this performance has been a consistent growth over
time in total and same store sales. Mr. Perisano further commented,
"In 2007 we achieved a same store sales increase of 2.6% for the
fiscal year, although our same store sales in Q4 decreased 4.8%.
The decrease in same store sales in Q4 was due in part to weakness
in the consumer economy augmented in our New England base by heavy
snow in December. For the full year our total sales increased by
4.2%, which we were pleased to see.� Mr. Perisano added, �At the
beginning of 2008, we acquired two stores from a Party City
franchisee in Rhode Island and closed two stores which had leases
about to expire. Both of the closed stores were in close proximity
to newer, better positioned iParty locations. During the remainder
of 2008 we intend to continue to grow our business by focusing on
continued improvement to same store sales, while potentially
acquiring additional existing stores, opening new stores and/or
opening temporary Halloween stores." About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. (AMEX: IPT -
news) 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. Non-GAAP
Financial Measures Regulation G, "Conditions for Use of Non-GAAP
Financial Measures," prescribes the conditions for use of non-GAAP
financial information in public disclosures. For purposes of
Regulation G, a non-GAAP financial measure is a numerical measure
of a company's historical or future financial performance,
financial position or cash flows that excludes amounts, or is
subject to adjustments that have the effect of excluding amounts,
that are included in the most directly comparable measure
calculated and presented in accordance with GAAP in the statements
of operations, balance sheets, or statement of cash flows of the
company; or includes amounts, or is subject to adjustments that
have the effect of including amounts, that are excluded from the
most directly comparable measure so calculated and presented.
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
Earnings before interest, taxes, depreciation and amortization
("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,
provide 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. � RECONCILIATION OF NON-GAAP MEASURES For the quarter
ended � For the year ended December 29, 2007 � December 30, 2006
December 29, 2007 � December 30, 2006 � Net income as reported
under GAAP $ 2,736,067 $ 3,883,400 $ 611,691 $ 374,647 � plus,
Interest expense, net 170,068 212,311 839,806 762,117 plus,
Depreciation and amortization 441,646 405,820 1,705,947 1,343,858
plus, Income taxes � 146,323 � 17,279 � 146,323 � 17,279 � EBITDA,
non-GAAP $ 3,494,104 $ 4,518,810 $ 3,303,767 $ 2,497,901 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 or acquisitions, future expectations of comparable store
sales growth, improved gross margins, increases in EBIDTA,
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 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; 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; fluctuating
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 those of our suppliers, and affect
consumer confidence and spending patterns; third-party suppliers'
failure to fulfill their obligations to us; our ability or
inability to meet our material contractual obligations with third
parties; 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 Item 1A, "Risk Factors" of iParty's most recently
filed Annual Report on Form 10-K for the fiscal year ended December
30, 2006, and its subsequently filed Quarterly Reports on Form
10-Q. iParty assumes no obligation 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 � � � � � For the three months ended � For
the year ended Dec 29, 2007 Dec 30, 2006 � Dec 29, 2007 Dec 30,
2006 � Revenues $ 27,578,796 $ 29,084,826 $ 81,798,634 $ 78,458,329
Operating costs: Cost of products sold and occupancy costs
14,778,080 15,279,667 46,465,441 44,942,542 Marketing and sales
7,895,308 7,693,653 26,181,504 25,625,547 General and
administrative � 1,852,950 � � 1,998,516 � � 7,553,869 � �
6,736,197 � � Operating income 3,052,458 4,112,990 1,597,820
1,154,043 � Interest expense, net � (170,068 ) � (212,311 ) �
(839,806 ) � (762,117 ) � Income before income taxes 2,882,390
3,900,679 758,014 391,926 � Income taxes � 146,323 � � 17,279 � �
146,323 � � 17,279 � � Net income $ 2,736,067 � $ 3,883,400 � $
611,691 � $ 374,647 � � Income per share: Basic $ 0.07 � $ 0.10 � $
0.02 � $ 0.01 � Diluted $ 0.07 � $ 0.10 � $ 0.02 � $ 0.01 � �
Weighted-average shares outstanding: Basic � 38,210,588 � �
38,191,009 � � 38,204,374 � � 37,862,928 � Diluted � 39,411,558 � �
40,186,640 � � 39,913,274 � � 39,535,874 � iPARTY CORP.
CONSOLIDATED BALANCE SHEETS Dec 29, 2007 � Dec 30, 2006 � � ASSETS
Current assets: Cash and cash equivalents $ 71,532 $ 760,376
Restricted cash 862,536 706,066 Accounts receivable 1,105,807
1,116,042 Inventory, net 13,639,531 12,264,737 Prepaid expenses and
other assets � 996,779 � � 752,172 � Total current assets
16,676,185 15,599,393 Property and equipment, net 4,360,123
4,817,993 Intangible assets, net 1,842,882 2,153,482 Other assets �
97,896 � � 126,505 � Total assets $ 22,977,086 � $ 22,697,373 � �
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $ 4,723,370 $ 5,516,406 Accrued expenses 2,503,752
3,070,003 Current portion of capital lease obligations 30,473
343,761 Current notes payable 620,706 551,515 Borrowings under line
of credit � 2,613,511 � � 1,162,719 � Total current liabilities
10,491,812 10,644,404 � Long-term liabilities: Capital lease
obligations, net of current portion 9,213 42,456 Notes payable, net
of discount $443,192 3,271,632 3,736,309 Other liabilities �
1,113,522 � � 929,199 � Total long-term liabilities 4,394,367
4,707,964 � Commitments and contingencies � Stockholders' equity:
Convertible preferred stock 13,682,167 13,771,450 Common stock
22,701 22,604 Additional paid-in capital 51,894,481 51,671,084
Accumulated deficit � (57,508,442 ) � (58,120,133 ) Total
stockholders' equity � 8,090,907 � � 7,345,005 � � Total
liabilities and stockholders' equity $ 22,977,086 � $ 22,697,373 �
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