DEDHAM, Mass., April 29 /PRNewswire-FirstCall/ -- iParty Corp.
(AMEX:IPT), a party goods retailer, today reported financial
results for its first quarter of fiscal year 2008, which ended on
March 29, 2008. For the first quarter of 2008, consolidated
revenues were $16.1 million, a 3.2% increase compared to $15.6
million for the first quarter in 2007. The increase in first
quarter revenues from the year-ago period included a 2.2% increase
in comparable store sales from stores open more than one year.
Consolidated gross profit margin was 38.2% for the first quarter
compared to a margin of 39.7% for the same period in 2007.
Consolidated net loss for the first quarter of 2008 was $1.9
million, or $0.08 per share, compared to consolidated net loss of
$1.5 million, or $0.07 per share, for the first quarter in 2007. On
a non-GAAP basis, loss for the first quarter of 2008 before
interest, taxes, depreciation and amortization ("EBITDA") was $1.2
million compared to EBITDA net loss of $0.9 million for the first
quarter in 2007. EBITDA is calculated as net 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 first quarters of 2008 and
2007 under GAAP to a non-GAAP, EBITDA basis. Sal Perisano, Chairman
and Chief Executive Officer of iParty Corp., commented, "We are
pleased by our sales performance in the first quarter of 2008. Like
many other retailers, we felt the effect of the current challenging
economic and consumer climate in our day-to-day customer traffic.
However, our customers responded strongly to an extra pre-New
Year's Eve shopping day and to the NFL playoff and Super Bowl
excitement in the quarter. Taken together, these events were enough
to drive positive same-store sales in a quarter in which many
retailers were reporting big negatives. "Gross profit margin and
net loss for the first quarter of 2008 were negatively impacted by
two events: first, by markdowns taken to clear out merchandise left
over from our storm-depressed December 2007 sales; and second, by
one-time grand opening expenses associated with our two recently
acquired Rhode Island stores. As a result of these activities,
though, we believe that our holiday inventories are now
appropriately lean and we have two new strong entries in the
southern end of our New England market. We believe that we are well
positioned as we move forward into the summer and fall seasons,
focusing on our core customer offering and looking forward to our
important seasons such as Graduation and Halloween." About iParty
Corp. Headquartered in Dedham, Massachusetts, iParty Corp. 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 http://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 http://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
reconciliations of any non-GAAP financial measures we use 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 Mar 29, 2008 Mar 31, 2007
Net loss, as reported under GAAP $(1,864,528) $(1,502,856) plus,
Interest expense, net 212,352 226,310 plus, Depreciation and
amortization 501,724 414,875 plus, Income taxes - - EBITDA,
non-GAAP $(1,150,452) $(861,671) 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 that reflect management's current
views and estimates regarding, among other things, our growth
strategy, industry and market trends, expectations regarding our
two new Rhode Island stores, belief regarding our positioning as we
move into the summer and fall , and our belief as to the
appropriateness of our holiday inventory levels. 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; the successful implementation of our growth and marketing
strategies; our ability 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; our inventory management system; and the
availability of retail store space on reasonable lease terms. 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 29, 2007. 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 For the quarter ended Mar 29, 2008 Mar 31,
2007 Revenues $16,144,088 $15,599,159 Operating costs: Cost of
products sold 9,983,347 9,406,774 Marketing and sales 5,849,752
5,586,074 General and administrative 1,963,165 1,882,857 Operating
loss (1,652,176) (1,276,546) Interest expense, net (212,352)
(226,310) Net loss $(1,864,528) $(1,502,856) Loss per share: Basic
and diluted $(0.08) $(0.07) Weighted-average shares outstanding:
Basic and diluted 22,708,383 22,614,544 iPARTY CORP. CONSOLIDATED
BALANCE SHEETS Mar 29, 2008 Dec 29, 2007 ASSETS Current assets:
Cash and cash equivalents $66,216 $71,532 Restricted cash 541,190
862,536 Accounts receivable 858,784 1,105,807 Inventory, net
14,568,513 13,639,531 Prepaid expenses and other assets 1,270,307
996,779 Total current assets 17,305,010 16,676,185 Property and
equipment, net 4,331,595 4,360,123 Intangible assets, net 2,762,040
1,756,800 Other assets 221,510 183,978 Total assets $24,620,155
$22,977,086 LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $6,700,244 $4,723,370 Accrued
expenses 2,568,076 2,503,752 Current portion of capital lease
obligations 30,924 30,473 Current notes payable 637,852 620,706
Borrowings under line of credit 4,121,547 2,613,511 Total current
liabilities 14,058,643 10,491,812 Long-term liabilities: Capital
lease obligations, net of current portion 451 9,213 Notes payable,
net of discount of $494,330 3,156,314 3,271,632 Other liabilities
1,136,262 1,113,522 Total long-term liabilities 4,293,027 4,394,367
Commitments and contingencies Convertible preferred stock
13,663,567 13,682,167 Common stock 22,717 22,701 Additional paid-in
capital 51,955,171 51,894,481 Accumulated deficit (59,372,970)
(57,508,442) Total stockholders' equity 6,268,485 8,090,907 Total
liabilities and stockholders' equity $24,620,155 $22,977,086
DATASOURCE: iParty Corp. CONTACT: David Robertson, iParty Corp.,
+1-781-355-3770, Web site: http://www.iparty.com/
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