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.
Subsequent EventOn 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.
EBITDAEBITDA 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|
Additional Information and Where You Can Find ItIn 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.
|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|
|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|
|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||)||$||(1,314,638||)|
|Income (loss) per share:|
|Weighted-average shares outstanding:|
|CONSOLIDATED BALANCE SHEETS (UNAUDITED)|
|Dec 29, 2012||Dec 31, 2011|
|Prepaid expenses and other assets||1,646,950||1,415,780|
|Deferred income tax asset - current||-||46,762|
|Total current assets||20,018,588||19,688,537|
|Property and equipment, net||2,693,991||2,664,086|
|Intangible assets, net||327,329||626,900|
|Deferred income tax asset||-||540,841|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accounts payable and book overdrafts||$||6,829,864||$||5,970,015|
|Current portion of capital lease obligations||-||4,613|
|Borrowings under line of credit||5,764,312||5,366,512|
|Total current liabilities||14,465,082||13,636,607|
|Total long-term liabilities||1,507,732||1,504,973|
|Commitments and contingencies|
|Convertible preferred stock||12,986,628||13,012,668|
|Additional paid-in capital||53,187,479||52,987,574|
|Total stockholders' equity||7,349,972||8,712,515|
|Total liabilities and stockholders' equity||$||23,322,786||$||23,854,095|