iParty Corp. Reports Fiscal 2012 and Fourth Quarter Financial Results
* Reuters is not responsible for the content in this press release.
http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130306:nBw066222a http://www.businesswire.com/news/home/20130306006222/en DEDHAM, Mass.--(Business Wire)-- iParty Corp. (NYSE MKT: IPT - news), a party goods retailer, today reported financial results for its fourth quarter and fiscal year 2012, which ended on December 29, 2012. Fiscal Year 2012 Highlights * Consolidated 52 week revenues of $79.1 million, a 2.2% decrease compared to the 53 week fiscal year 2011; and a 0.1% increase compared to the 52 week sales in fiscal 2011. * EBITDA of $539 thousand compared to EBITDA of $494 thousand for fiscal year 2011. * Comparable store sales decrease of 0.1%. * Net loss before taxes of $949 thousand, compared to $1.3 million in 2011. * Net loss of $1.5 million, after a $588 thousand non-cash tax related charge, compared to net loss of $1.3 million for fiscal year 2011. Sal Perisano, iParty`s Chairman and Chief Executive Officer, stated, "For the second consecutive year, a weather event affected our fourth quarter and annual performance. The anticipation of Hurricane Sandy affected our sales the week leading up to Halloween and hit our primary market on October 29th, knocking out power and closing a number of our stores in southern New England. This storm was the major cause of the loss we sustained for the year, and our business remains otherwise healthy. Despite the unfortunate timing of this Hurricane, sales in our non-seasonal categories remained solid through the year helping us regain positive momentum going into fiscal 2013. " Operating Results For the thirteen week fourth quarter of 2012, consolidated revenues were $26.89 million, a 9.5% decrease compared to $29.71 million for the fourteen week fourth quarter in 2011, or a 3.4% decrease compared to the 13 week fourth quarter of fiscal 2011. Comparable store sales in the fourth quarter of 2012 decreased 5.7% compared to the year-ago period. Consolidated gross profit margin was 41.6% for the fourth quarter of 2012 compared to a gross profit margin of 43.1% for the fourth quarter in 2011. Consolidated net income for the fourth quarter of 2012 was $1.8 million, compared to $3.0 million for the 14 week fourth quarter of 2011. Net income per basic and diluted share were $0.05 and $0.05, respectively, compared to $0.08 and $0.08 per basic and diluted share, for the fourth quarter in 2011. On a non-GAAP basis, net income for the 13 week fourth quarter of 2012 before interest, taxes, depreciation and amortization ("EBITDA") was $2.7 million, compared to $3.4 million for the 14 week fourth quarter in 2011. 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 (loss) for the fourth quarters of 2012 and 2011 and for the twelve month periods then ended, under GAAP to a non-GAAP, EBITDA basis. For the fifty-two week fiscal year ended December 29, 2012, consolidated revenues were $79.09 million, a 2.2% decrease compared to $80.88 million for fifty-three week fiscal year 2011. Consolidated revenues for 2012 included a 0.1% decrease in comparable store sales from the year-ago period. Consolidated gross profit margin was 38.3% for 2012 compared to 39.2% in 2011. Consolidated net loss for the fiscal year 2012 was $1.5 million, or $0.06 per basic and diluted share, compared to $1.3 million, or $0.05 per basic and diluted share for fiscal year 2011. Consolidated net loss for fiscal 2012 was affected by a non-cash charge related to the write-off of a deferred tax asset of $588 thousand. On a non-GAAP basis, EBITDA was $539 thousand for fiscal year 2012, compared to EBITDA of $494 thousand for 2011. Subsequent Event On March 1, 2013, iParty announced that it had entered into a merger agreement with Party City Holdings Inc. The consummation of the merger is subject to customary conditions to closing, including the approval of iParty`s stockholders, and is expected to close in the second quarter of 2013. About iParty Corp. Headquartered in Dedham, Massachusetts, iParty Corp. is a party goods retailer that operates 54 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 offers a strong assortment of Halloween and related merchandise for sale on the internet and 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 29, 2012 Dec 31, 2011 Dec 29, 2012 Dec 31, 2011 Net income (loss) as reported under GAAP $ 1,781,138 $ 2,983,683 $ (1,536,430 ) $ (1,314,638 ) plus, Interest expense, net 43,996 56,847 184,854 305,530 plus, Depreciation and amortization 304,676 361,626 1,302,500 1,484,212 plus, Income tax expense (benefit) 587,750 19,343 587,750 19,343 EBITDA, non-GAAP $ 2,717,560 $ 3,421,499 $ 538,674 $ 494,447 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; disruptions to our most important selling season, Halloween; 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, compliance with evolving federal securities, accounting, and stock exchange rules and regulations applicable to publicly-traded companies listed on the NYSE MKT; and the impact of a failure to satisfy the conditions of or to consummate the closing of our recently announced merger agreement with Party City. 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 31, 2011 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. Additional Information and Where You Can Find It In connection with the proposed merger transaction, iParty will file a proxy statement and other relevant documents concerning the proposed merger transaction with the SEC. Investors and security holders of iParty are urged to read the proxy statement and any other relevant documents filed with the SEC when they become available, because they will contain important information about iParty and the proposed transaction that should be considered before making a decision about the merger. The proxy statement (when it becomes available) and any other documents filed by iParty with the SEC may be obtained free of charge at the SEC`s web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by iParty by contacting David Robertson, iParty`s Chief Financial Officer, at 781-355-3770. iParty and its directors and certain executive officers may, under SEC rules, be deemed to be participants in the solicitation of proxies from iParty`s shareholders in connection with the transaction. Information regarding the directors and executive officers and their respective interests in the Company by security holdings or otherwise is included in the Company`s proxy statements and Annual Reports on Form 10-K, previously filed with the SEC, and information concerning all of iParty`s participants in the solicitation will be included in the proxy statement relating to the proposed transaction when it becomes available. iPARTY CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the three months ended For the twelve months ended Dec 29, 2012 Dec 31, 2011 Dec 29, 2012 Dec 31, 2011 Revenues $ 26,889,345 $ 29,710,785 $ 79,094,317 $ 80,882,751 Operating costs: Cost of products sold and occupancy costs 15,703,830 16,912,576 48,787,267 49,147,010 Marketing and sales 7,162,185 8,082,924 24,450,968 25,509,559 General and administrative 1,610,452 1,649,771 6,619,978 6,834,443 Flood loss - 5,715 - 398,751 Operating income (loss) 2,412,878 3,059,799 (763,896 ) (1,007,012 ) Change in fair value of warrant liability 6 74 70 17,247 Interest expense, net (43,996 ) (56,847 ) (184,854 ) (305,530 ) Income (loss) before income taxes 2,368,888 3,003,026 (948,680 ) (1,295,295 ) Income taxes (benefit) 587,750 19,343 587,750 19,343 Net income (loss) $ 1,781,138 $ 2,983,683 $ (1,536,430 ) $ (1,314,638 ) Income (loss) per share: Basic $ 0.05 $ 0.08 $ (0.06 ) $ (0.05 ) Diluted $ 0.05 $ 0.08 $ (0.06 ) $ (0.05 ) Weighted-average shares outstanding: Basic 38,930,285 38,930,281 24,418,004 24,386,220 Diluted 39,388,444 39,201,487 24,418,004 24,386,220 iPARTY CORP. CONSOLIDATED BALANCE SHEETS (UNAUDITED) Dec 29, 2012 Dec 31, 2011 ASSETS Current assets: Cash $ 64,650 $ 63,650 Restricted cash 480,816 819,604 Accounts receivable 821,903 1,377,234 Inventories 17,004,269 15,965,507 Prepaid expenses and other assets 1,646,950 1,415,780 Deferred income tax asset - current - 46,762 Total current assets 20,018,588 19,688,537 Property and equipment, net 2,693,991 2,664,086 Intangible assets, net 327,329 626,900 Other assets 282,878 333,731 Deferred income tax asset - 540,841 Total assets $ 23,322,786 $ 23,854,095 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and book overdrafts $ 6,829,864 $ 5,970,015 Accrued expenses 1,870,906 2,295,467 Current portion of capital lease obligations - 4,613 Borrowings under line of credit 5,764,312 5,366,512 Total current liabilities 14,465,082 13,636,607 Long-term liabilities: Deferred rent 1,507,732 1,504,973 Total long-term liabilities 1,507,732 1,504,973 Commitments and contingencies Convertible preferred stock 12,986,628 13,012,668 Common stock 24,431 24,409 Additional paid-in capital 53,187,479 52,987,574 Accumulated deficit (58,848,566 ) (57,312,136 ) Total stockholders' equity 7,349,972 8,712,515 Total liabilities and stockholders' equity $ 23,322,786 $ 23,854,095 iParty Corp. David Robertson, 781-355-3770 Chief Financial Officer firstname.lastname@example.org Copyright Business Wire 2013