DEDHAM, Mass., Oct. 22 /PRNewswire-First Call/ -- iParty Corp.
(AMEX: IPT), a party goods retailer, today reported financial
results for its third quarter of fiscal year 2008, which ended on
September 27, 2008. For the quarter, consolidated revenues were
$17.7 million, a 2.7% decrease compared to $18.2 million for the
third quarter in 2007. The decrease in third quarter revenues from
the year-ago period included a 4.2% decrease in comparable store
sales, offset by sales from two stores that were acquired during
the first quarter of 2008. Consolidated gross profit margin was
40.1% for the quarter compared to a gross profit margin of 41.3%
for the same period in 2007. Consolidated net loss for the quarter
was $1.3 million, or $0.06 per share, compared to $1.1 million, or
$0.05 per share, for the third quarter in 2007. On a non-GAAP
basis, net loss for the quarter before interest, taxes,
depreciation and amortization ("EBITDA net loss") was $0.6 million
compared to $0.5 million for the third quarter in 2007. EBITDA net
loss 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 third quarters of 2008 and 2007, and net loss
for the nine-month periods then ended, under GAAP to a non-GAAP,
EBITDA basis. For the nine-month period ended September 27, 2008,
consolidated revenues were $54.0 million, a 0.4% decrease compared
to $54.2 million for the first nine months of 2007. Consolidated
revenues for the first nine months of 2008 included a 1.9% decrease
in comparable store sales from the year ago period. Consolidated
gross profit margin was 40.3% for the nine-month period, compared
to 41.6% for the same period in 2007. For the nine-month period,
consolidated net loss was $3.0 million, or $0.13 per share,
compared to a consolidated net loss of $2.1 million, or $0.09 per
share for the first nine months of 2007. EBITDA net loss was $0.9
million compared to $0.2 million for the first nine months of 2007.
Sal Perisano, Chairman and Chief Executive Officer of iParty Corp.,
commented, "Our third quarter 2008 sales decreased slightly as a
result of softening customer traffic in our stores, due to a weak
economy. This trend was partly offset by continued improvement in
our average transaction amounts at the register. "Gross profit
margin for the third quarter of 2008 was negatively impacted by
increases in product and store occupancy costs compared to the same
period last year. For the nine-month period ended September, those
increased costs, coupled with clearance markdowns taken in the
first quarter of the year and some one-time grand opening expenses
for our two new Rhode Island stores opened in the first quarter of
2008, contributed to an overall increase in net loss compared to
the same period in 2007. "Overall, while we have seen a slight
decrease in customer traffic this year which we attribute to
general economic conditions, we have not seen substantial evidence
that our core consumers have made significant sacrifices in the
celebration of special occasions for their children." 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 - EBITDA Regulation G, "Conditions for
Use of Non-GAAP Financial Measures," prescribes the conditions for
use of non-GAAP financial information in public disclosures.
Pursuant to the requirements of Regulation G, we have provided
reconciliations of any non-GAAP financial measures we use in this
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. 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. 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. We strongly
encourage investors to review our financial information in its
entirety and not to rely on a single financial measure. For the
quarter ended For the nine months ended RECONCILIATION Sep 27, Sep
29, Sep 27, Sep 29, OF NON-GAAP 2008 2007 2008 2007 MEASURES Net
income (loss) as reported under GAAP $(1,322,630) $(1,133,658)
$(3,003,552) $(2,124,376) plus, Interest expense, net 177,821
213,416 574,554 669,738 plus, Depreciation and amortization 496,636
420,804 1,522,738 1,264,302 plus, Income taxes - - - - EBITDA,
non-GAAP $(648,173) $(499,438) $(906,260) $(190,336) 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 and our
customers' preferences. 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 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 For the three For the nine
months ended months ended Sep 27, Sep 29, Sep 27, Sep 29, 2008 2007
2008 2007 Revenues $17,742,315 $18,208,760 $53,990,071 $54,219,838
Operating costs: Cost of products sold and occupancy costs
10,629,144 10,679,713 32,225,078 31,687,361 Marketing and sales
6,677,703 6,620,424 18,703,915 18,286,196 General and
administrative 1,580,277 1,828,865 5,490,076 5,700,919 ---------
--------- --------- --------- Operating income (loss) (1,144,809)
(920,242) (2,428,998) (1,454,638) Interest expense, net (177,821)
(213,416) (574,554) (669,738) Net income (loss) ($1,322,630)
($1,133,658) ($3,003,552) ($2,124,376) Income (loss) per share:
Basic and diluted $(0.06) $(0.05) $(0.13) $(0.09) ======= =======
======= ======= Weighted-average shares outstanding: Basic and
diluted 22,730,295 22,642,280 22,719,425 22,626,550 ==========
========== ========== ========== iPARTY CORP. CONSOLIDATED BALANCE
SHEETS Sep 27, Dec 29, 2008 2007 ------- ------- ASSETS Current
assets: Cash and cash equivalents $62,563 $71,532 Restricted cash
556,961 862,536 Accounts receivable 1,108,727 1,105,807 Inventory,
net 17,391,470 13,639,531 Prepaid expenses and other assets
1,188,989 996,779 --------- ------- Total current assets 20,308,710
16,676,185 Property and equipment, net 3,965,581 4,360,123
Intangible assets, net 2,452,219 1,756,800 Other assets 195,081
183,978 ------- ------- Total assets $26,921,591 $22,977,086
=========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $9,946,813 $4,723,370 Accrued
expenses 2,668,414 2,503,752 Current portion of capital lease
obligations 14,754 30,473 Current notes payable 2,986,545 620,706
Borrowings under line of credit 4,320,714 2,613,511 ---------
--------- Total current liabilities 19,937,240 10,491,812 Long-term
liabilities: Capital lease obligations, net of current portion -
9,213 Notes payable, net of discount of $238,642 600,000 3,271,632
Other liabilities 1,170,612 1,113,522 --------- --------- Total
long-term liabilities 1,770,612 4,394,367 Commitments and
contingencies Convertible preferred stock 13,647,720 13,682,167
Common stock 22,732 22,701 Additional paid-in capital 52,055,281
51,894,481 Accumulated deficit (60,511,994) (57,508,442)
------------ ------------ Total stockholders' equity 5,213,739
8,090,907 --------- --------- Total liabilities and stockholders'
equity $26,921,591 $22,977,086 =========== =========== DATASOURCE:
iParty Corp. CONTACT: David Robertson, Chief Financial Officer of
iParty Corp., +1-781-355-3770, Web Site: http://www.iparty.com/
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