F-B-F.org -

Accordingly, EBITDA should be used in addition to and in conjunction withresults presented in accordance with GAAP and should not be considered as analternative to net income, operating income, or any other operating performancemeasure prescribed by GAAP, nor should these measures be relied upon to theexclusion of GAAP financial measures. Depreciation expense for various long-term assets,interest expense, income taxes and other items have been and will be incurredand are not reflected in the presentation of EBITDA. Each of these items shouldalso be considered in the overall evaluation of our results. Additionally,EBITDA does not consider capital expenditures and other investing activities andshould not be considered as a measure of our liquidity. In particular, we haveopened new stores through the expenditure of capital funded with borrowingsunder our bank line of credit.

Our results of operations, therefore, reflectsignificant charges for depreciation, amortization and interest expense. EBITDA,which excludes these expenses, provides helpful information about the operatingperformance of our business, but EBITDA does not purport to represent operatingincome or cash flow from operating activities, as those terms are defined underGAAP, and should not be considered as an alternative to those measurements as anindicator of our performance. Our presentation of EBITDA may bedifferent from the presentation used by other companies and thereforecomparability may be limited. Our management and audit committee believethat this non-GAAP operating performance measure is useful for investors becauseit enhances investors’ ability to analyze trends in our business and compare ourfinancial and operating performance to that of our peers. EBITDA is a non-GAAP financial measure and has beenpresented in this release because our management and the audit committee of ourboard of directors use this financial measure in monitoring and evaluating ourongoing financial results and trends. Limitations on the Use of Non-GAAP MeasuresThe use of EBITDA has certain limitations.

EBITDAEBITDA is a commonly used measure of performance in our industry which webelieve, when considered with measures calculated in accordance with UnitedStates generally accepted accounting principles (“GAAP”), gives investors a morecomplete understanding of operating results before the impact of investing andfinancing transactions and income taxes and facilitates comparisons between usand our competitors. We believe that ourpresentation of EBITDA, which is a non-GAAP financial measure, is an importantsupplemental measure of operating performance to investors. The discussion belowdefines this term, why we believe it is a useful measure of our performance, andexplains certain limitations on the use of non-GAAP financial measures such asour use of EBITDA. iParty aims to offer reliable, time-testedknowledge of party-perfect trends, and superior customer service to ensureconvenient and comprehensive merchandise selections for every occasion.

Pleasevisit our site at Non-GAAP Financial MeasuresPursuant to the requirements of Regulation G, we have provided belowreconciliations of any non-GAAP financial measures we use in this press releaseto the most directly comparable GAAP financial measures. About iParty Corp.Headquartered in Dedham, Massachusetts, iParty Corp. is a party goods retailerthat operates 50 iParty retail stores and licenses the operation of an Internetsite for party goods and party planning at iParty`s aim is tomake throwing a successful event both stress-free and fun. With over 20,000party supplies and costumes and an online party magazine and party-relatedcontent, 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, summerbarbecues, and, of course, Halloween. In addition, the credit facility includes an option wherebyiParty may increase its line of credit up to a maximum level of $15 million.Borrowings under the new agreement will generally accrue interest at a marginranging from 3.00% to 3.50% over, at iParty`s election, either the LondonInterbank Offered Rate (“LIBOR”) or a base rate determined by Wells Fargo fromtime to time. Subject to conditions set forth in the amended and restated creditfacility, which iParty expects to meet, the credit facility continues to allowthe secured revolving line of credit to be used to repay the $2.5 million loanfrom Highbridge International LLC when it becomes due on September 15, 2009.

Wells Fargo Credit Facility ExtensionAs previously reported, on July 1, 2009, iParty amended and restated its securedrevolving line of credit with Wells Fargo for three years to July 2, 2012. Theamount of credit, up to a maximum of $12.5 million that is available from timeto time under the credit facility is determined as a percentage of the value ofeligible inventory and eligible credit card receivables, as reduced by certainreserve amounts. For the six-month period, consolidated netloss was $1.05 million, or $0.05 per basic and diluted share, compared to aconsolidated net loss of $1.68 million, or $0.07 per basic and diluted share forthe first six months of 2008. On a non-GAAP basis, EBITDA was $294,287 comparedto an EBITDA net loss of $258,087 for the first six months of 2008, an increaseof 214% or $552,374. The schedule accompanying this releaseprovides the reconciliation of net income for the second quarters of 2009 and2008, and net loss for the six-month periods then ended, under GAAP to anon-GAAP, EBITDA basis. For the six-month year-to-date period ending June 27, 2009, consolidatedrevenues were $34.14 million, a 5.8% decrease compared to $36.25 million for thefirst six months of 2008.