iParty Corp. (NYSE Amex: IPT - news), a party goods retailer,
today reported financial results for its fourth quarter and fiscal
year 2010, which ended on December 25, 2010.
Fiscal Year 2010 Highlights
- Consolidated revenues of $81.3 million,
a 3.4% increase compared to fiscal year 2009.
- Comparable store sales increase of
0.7%.
- Net income of $254 thousand, compared
to $1.1 million for fiscal year 2009.
- EBITDA of $2.3 million compared to
EBITDA $3.4 million for fiscal year 2009.
- Opening of our second urban store in
the South Bay Center in Dorchester, MA.
- The expansion of our temporary
Halloween store presence to eleven stores during 2010, compared to
four stores in 2009.
- The payoff of the Company’s last
remaining term note at maturity, further strengthening our
consolidated balance sheet.
Fourth Quarter 2010 Highlights
- Consolidated revenues of $29.5 million,
a 5.1% increase compared to the fourth quarter of fiscal 2009.
- Comparable store sales decrease of
0.6%.
- Net income of $2.9 million compared to
$3.5 million for the fourth quarter of fiscal year 2009.
- EBITDA of $3.4 million compared to
EBITDA of $3.9 million for fourth quarter of fiscal year 2009.
Sal Perisano, iParty’s Chairman and Chief Executive Officer,
stated, "In 2010 we grew our business and we returned to an
overall positive sales increase in stores open more than
a year. Our net income declined as compared to 2009, as our
temporary Halloween store performance was not as strong as the
prior year and our product margins suffered from declining vendor
rebates and from writedowns of slow moving inventory.”
Mr. Perisano further stated, “Looking forward to 2011, we feel
that we have now weathered the worst of this downturn and we
believe we are well positioned to build upon several growth
initiatives begun in 2010. First, we are now fully operational in
our second urban store in Boston’s South Bay Center, which we
expect to be a strong addition to our retail chain. We signed an
agreement to acquire a Party City store in Manchester, Connecticut
which we expect to open in March 2011 and to strengthen our
position in that market. Finally, we intend to re-launch our
ecommerce site this year featuring Halloween merchandise, which
together with improved performance from our temporary stores will
help us grow our presence and market share in the Halloween season.
In addition, we continued to strengthen our balance sheet in 2010
with the payoff of our last remaining term note.”
Operating Results
For the fourth quarter of 2010, consolidated revenues were $29.5
million, a 5.1% increase compared to $28.1 million for the fourth
quarter in 2009. Comparable store sales in the fourth quarter of
2010 decreased 0.6% compared to the year-ago period. Consolidated
gross profit margin was 42.7% for the fourth quarter of 2010
compared to a gross profit margin of 45.8% for the same period in
2009. Consolidated net income for the fourth quarter of 2010 was
$2.9 million. Net income per basic and diluted share were $0.08 and
$0.07, respectively, compared to $3.5 million, or $0.09 per basic
and diluted share, for the fourth quarter in 2009. On a non-GAAP
basis, net income for the fourth quarter of 2010 before interest,
taxes, depreciation and amortization (“EBITDA”) was $3.4
million compared to EBITDA of $3.9 million for the fourth 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 income for the fourth
quarters of 2010 and 2009 and for the twelve-month periods then
ended, under GAAP to a non-GAAP, EBITDA basis.
For the fiscal year ended December 25, 2010, consolidated
revenues were $81.3 million, a 3.4% increase compared to $78.6
million for fiscal year 2009. Consolidated revenues for 2010
included a 0.7% increase in comparable store sales from the
year-ago period. Consolidated gross profit margin was 39.7% for
2010 compared to 40.8% in 2009. Consolidated net income for the
fiscal year 2010 was $254 thousand, or $0.01 per basic and diluted
share, compared to $1.1 million, or $0.03 per basic and diluted
share for fiscal year 2009. On a non-GAAP basis, EBITDA was $2.3
million for fiscal year 2010, compared to an EBITDA of $3.4 million
for 2009.
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. is a party
goods retailer that operates 52 iParty retail stores in New England
and Florida. iParty’s aim is to make throwing a successful event
both stress-free and fun. With an extensive assortment of party
supplies and costumes in our stores, iParty offers consumers a
sophisticated, yet fun and easy-to-use, resource to help them
customize any party, including birthday bashes, Easter
get-togethers, graduation parties, summer barbecues and, of course,
Halloween. iParty also operates an internet site that focuses on
increasing customer visits to our stores by highlighting the ever
changing store product assortment for all occasions and seasons.
The site also features sales flyers, enter-to-win contests, monthly
coupons and ideas and themes to offer consumers an easy and fun
approach to any party. 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, cash flows from operating activities 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 twelve months
ended RECONCILIATION OF NON-GAAP MEASURES Dec 25, 2010 Dec
26, 2009 Dec 25, 2010 Dec 26, 2009 Net income as
reported under GAAP $ 2,917,972 $ 3,547,117 $ 254,449 $ 1,103,732
plus, Interest expense, net 41,161 53,702 249,195 444,461
plus, Depreciation and amortization 443,894 467,669 1,766,462
2,039,310 plus, Income taxes (2,613 ) (147,930 )
(2,613 ) (147,930 ) EBITDA, non-GAAP $
3,400,414 $ 3,920,558 $ 2,267,493 $ 3,439,573
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; effect of Chinese
inflation on our suppliers and product pricing; 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; risks related to
e-commerce; 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 twelve months ended
Dec 25, 2010 Dec 26, 2009
Dec 25, 2010 Dec 26, 2009
Revenues $ 29,491,967 $ 28,053,626 $ 81,291,429 $ 78,595,088
Operating costs: Cost of products sold and occupancy costs
16,908,670 15,200,697 49,023,399 46,557,039 Marketing and sales
8,032,949 7,472,304 24,927,511 23,703,308 General and
administrative 1,604,661 1,927,736
6,850,321 6,934,478 Operating
income 2,945,687 3,452,889 490,198 1,400,263 Change in fair
value of warrant liability 10,833 - 10,833 - Interest expense, net
(41,161 ) (53,702 ) (249,195 ) (444,461
) Income before income taxes 2,915,359 3,399,187 251,836
955,802 Income taxes (benefit) (2,613 )
(147,930 ) (2,613 ) (147,930 ) Net income $
2,917,972 $ 3,547,117 $ 254,449
$ 1,103,732 Income per share: $ 0.08 $
0.09 $ 0.01 $ 0.03 Basic $ 0.07 $ 0.09
$ 0.01 $ 0.03 Diluted Weighted-average
shares outstanding: Basic 38,358,472
38,225,145 38,251,888 38,220,804
Diluted 39,392,056 38,816,993
39,281,252 38,440,489
iPARTY
CORP. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Dec 25, 2010
Dec 26, 2009 ASSETS Current
assets: Cash $ 62,650 $ 61,050 Restricted cash 616,742 1,056,525
Accounts receivable 626,181 688,506 Inventories 14,950,933
13,048,104 Prepaid expenses and other assets 253,749 174,752
Deferred income tax asset - current
95,163
70,997 Total current assets
16,605,418 15,099,934 Property and equipment, net 3,000,798
2,892,835 Intangible assets, net 934,477 1,606,585 Other assets
264,179 349,378 Deferred income tax asset
476,354 343,690
Total assets
$ 21,281,226
$ 20,292,422 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
and book overdrafts $ 4,572,147 $ 3,885,062 Accrued expenses
2,254,049 2,649,468 Current portion of capital lease obligations
9,228 9,228 Current note payable and warrant liability 10,000
600,000 Borrowings under line of credit
3,102,213 2,526,982
Total current liabilities 9,947,637 9,670,740 Long-term
liabilities: Capital lease obligations, net of current portion
4,613 13,841 Other liabilities
1,517,157
1,529,257 Total long-term liabilities
1,521,770 1,543,098 Commitments and contingencies
Convertible preferred stock 13,024,721 13,589,491 Common stock
24,294 22,799 Additional paid-in capital 52,760,302 52,311,059
Accumulated deficit
(55,997,498
)
(56,844,765 ) Total stockholders'
equity
9,811,819
9,078,584 Total liabilities and
stockholders' equity
$ 21,281,226
$ 20,292,422
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