Halloween Costume Ideas

DEDHAM, Mass.–(BUSINESS WIRE)–

iParty Corp. (NYSE Amex: IPT – news), a leading party goods retailer,
today reported financial results for its first quarter of fiscal year
2012, which ended on March 31, 2012.

First Quarter 2012 Highlights

• Comparable store sales increase for the first quarter of 2012 of 8.6%.
• Consolidated revenues of $15.8 million for the first quarter of 2012,
  a 4.4% increase compared to the first quarter of 2011.
• Reopening of flood damaged store in West Lebanon, New Hampshire.
• Net loss of $1.2 million for the first quarter of 2012, compared to a
  net loss of $1.5 million for the first quarter of 2011.

Sal Perisano, iParty’s Chairman and Chief Executive Officer, stated,
“The first quarter of 2012 was a strong one for iParty with
significantly improved same store sales. Good weather, two regional
teams in the Super Bowl, a Saturday St Patrick’s Day and an early Easter
contributed to a comparable store sales increase of 8.6%, despite not
having the benefit of a sales run up for New Year’s Eve that occurred in
the first quarter of 2011. The net result of our strong sales
performance this quarter, along with effective expense control, was the
improvement of our net loss for the first quarter by approximately $300
thousand compared to last year’s net loss.”

Mr. Perisano further stated, “With regard to our more recent store
additions, our Boston stores on Boylston Street and in South Bay and our
new store in Manchester, Connecticut are seeing very strong comparative
sales. The sales performance of these new stores is exceeding our
expectations and we believe that they will deliver an enhanced profit
contribution for 2012. Also, we expanded our e-commerce offering in the
first quarter beyond Halloween and related merchandise and continue to
see improved e-commerce sales. Consistent with our plan and on the
strength of our first quarter, we are actively exploring new locations
to add to our base this year.”

Operating Results

For the first quarter of 2012, consolidated revenues were $15.75
million, a 4.4% increase compared to $15.09 million for the first
quarter of 2011. Comparable store sales in the first quarter of 2012
increased 8.6% compared to the year-ago period. Consolidated gross
profit margin was unchanged at 36.4% for the first quarter of 2012
compared to the same period in 2011. Consolidated net loss for the first
quarter of 2012 improved approximately $300,000 to $1.24 million, or
$0.05 per basic and diluted share, compared to consolidated net loss of
$1.51 million, or $0.06 per basic and diluted share, for the first
quarter in 2011. On a non-GAAP basis, net loss for the first quarter of
2012 before interest, taxes, depreciation and amortization (“EBITDA”)
was $834 thousand, compared to EBITDA net loss of $1.05 million for the
first 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 loss for the first quarter of 2012 and 2011, under
GAAP to a non-GAAP, EBITDA basis.

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 and an internet site (www.iparty.com)
for costume and party goods and party planning. 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 and available at
our online store, 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. In addition to the extensive
assortment of costume and other merchandise available through iParty’s
internet site, our web site focuses on increasing customer visits to our
retail stores by highlighting the ever changing store product assortment
for all occasions and seasons and featuring monthly coupons, store and
online promotions and ideas and themes, offering 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.

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; 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 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.