☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 46-0539758 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
80 Grasslands Road Elmsford, NY | 10523 | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, Par Value: $0.01/ | PRTY | New York Stock Exchange |
Large accelerated filer | ||||||||||
Accelerated filer | ☐ | |||||||||
☐ | Smaller reporting company | ☐ | ||||||||
Emerging Growth Company | ☐ |
Page | ||||
PART I | ||||
Item 1. Condensed Consolidated Financial Statements (Unaudited) | ||||
3 | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
38 | ||||
38 | ||||
39 | ||||
39 | ||||
39 | ||||
40 |
September 30, 2019 | December 31, 2018 | |||||||
(Note 2) (Unaudited) | (Note 2) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 34,572 | $ | 58,909 | ||||
Accounts receivable, net | 168,124 | 146,983 | ||||||
Inventories, net | 760,179 | 756,038 | ||||||
Prepaid expenses and other current assets | 75,919 | 61,905 | ||||||
Assets held for sale | 172,189 | — | ||||||
Total current assets | 1,210,983 | 1,023,835 | ||||||
Property, plant and equipment, net | 241,413 | 321,044 | ||||||
Operating lease asset | 827,817 | — | ||||||
Goodwill | 1,358,137 | 1,656,950 | ||||||
Trade names | 534,611 | 568,031 | ||||||
Other intangible assets, net | 46,258 | 60,164 | ||||||
Other assets, net | 12,578 | 12,323 | ||||||
Total assets | $ | 4,231,797 | $ | 3,642,347 | ||||
LIABILITIES, REDEEMABLE SECURITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Loans and notes payable | $ | 461,016 | $ | 302,751 | ||||
Accounts payable | 140,112 | 208,149 | ||||||
Accrued expenses | 166,609 | 161,228 | ||||||
Liabilities held for sale | 48,618 | |||||||
Current portion of operating lease liability | 140,781 | — | ||||||
Income taxes payable | — | 25,993 | ||||||
Current portion of long-term obligations | 13,498 | 13,316 | ||||||
Total current liabilities | 970,634 | 711,437 | ||||||
Long-term obligations, excluding current portion | 1,564,098 | 1,621,963 | ||||||
Long-term portion of operating lease liability | 747,079 | — | ||||||
Deferred income tax liabilities, net | 147,904 | 174,427 | ||||||
Other long-term liabilities | 16,305 | 87,548 | ||||||
Total liabilities | 3,446,020 | 2,595,375 | ||||||
Redeemable securities | 3,351 | 3,351 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Common stock (94,448,333 and 93,622,934 shares outstanding and 121,629,237 and 120,788,159 shares issued at September 30, 2019 and December 31, 2018, respectively) | 1,211 | 1,208 | ||||||
Additional paid-in capital | 928,749 | 922,476 | ||||||
Retained earnings | 231,597 | 495,777 | ||||||
Accumulated other comprehensive loss | (52,043 | ) | (49,201 | ) | ||||
Total Party City Holdco Inc. stockholders’ equity before common stock held in treasury | 1,109,514 | 1,370,260 | ||||||
Less: Common stock held in treasury, at cost (27,180,904 and 27,165,225 shares at September 30, 2019 and December 31, 2018) | (327,086 | ) | (326,930 | ) | ||||
Total Party City Holdco Inc. stockholders’ equity | 782,428 | 1,043,330 | ||||||
Noncontrolling interests | (2 | ) | 291 | |||||
Total stockholders’ equity | 782,426 | 1,043,621 | ||||||
Total liabilities, redeemable securities and stockholders’ equity | $ | 4,231,797 | $ | 3,642,347 | ||||
Three Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Revenues: | ||||||||
Net sales | $ | 538,345 | $ | 550,840 | ||||
Royalties and franchise fees | 1,886 | 2,206 | ||||||
Total revenues | 540,231 | 553,046 | ||||||
Cost of sales | 373,413 | 349,641 | ||||||
Wholesale selling expenses | 16,084 | 17,538 | ||||||
Retail operating expenses | 111,595 | 103,833 | ||||||
Franchise expenses | 3,274 | 862 | ||||||
General and administrative expenses | 43,062 | 42,239 | ||||||
Art and development costs | 5,927 | 5,573 | ||||||
Development stage expenses | 2,728 | 1,622 | ||||||
Store impairment and restructuring charges | 2,574 | — | ||||||
Goodwill impairment | 259,100 | — | ||||||
Total expenses | 817,757 | 521,308 | ||||||
(Loss) income from operations | (277,526 | ) | 31,738 | |||||
Interest expense, net | 29,424 | 27,705 | ||||||
Other expense, net | 2,047 | 5,696 | ||||||
Loss before income taxes | (308,997 | ) | (1,663 | ) | ||||
Income tax (benefit) expense | (27,252 | ) | 777 | |||||
Net loss | (281,745 | ) | (2,440 | ) | ||||
Add: Net loss attributable to redeemable securities holder | — | (8 | ) | |||||
Less: Net loss attributable to noncontrolling interests | (212 | ) | (28 | ) | ||||
Net loss attributable to common shareholders of Party City Holdco Inc. | $ | (281,533 | ) | $ | (2,420 | ) | ||
Net loss per share attributable to common shareholders of Party City Holdco Inc.–Basic | $ | (3.02 | ) | $ | (0.03 | ) | ||
Net loss per share attributable to common shareholders of Party City Holdco Inc.–Diluted | $ | (3.02 | ) | $ | (0.03 | ) | ||
Weighted-average number of common shares-Basic | 93,346,448 | 96,494,565 | ||||||
Weighted-average number of common shares-Diluted | 93,346,448 | 96,494,565 | ||||||
Dividends declared per share | $ | 0.00 | $ | 0.00 | ||||
Comprehensive loss | $ | (288,573 | ) | $ | (2,003 | ) | ||
Add: Comprehensive loss attributable to redeemable securities holder | — | (8 | ) | |||||
Less: Comprehensive loss attributable to noncontrolling interests | (213 | ) | (35 | ) | ||||
Comprehensive loss attributable to common shareholders of Party City Holdco Inc. | $ | (288,360 | ) | $ | (1,976 | ) | ||
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Revenues: | ||||||||
Net sales | $ | 1,611,149 | $ | 1,614,049 | ||||
Royalties and franchise fees | 6,089 | 7,832 | ||||||
Total revenues | 1,617,238 | 1,621,881 | ||||||
Cost of sales | 1,065,511 | 996,084 | ||||||
Wholesale selling expenses | 50,929 | 53,581 | ||||||
Retail operating expenses | 302,756 | 285,019 | ||||||
Franchise expenses | 9,813 | 8,624 | ||||||
General and administrative expenses | 126,497 | 136,230 | ||||||
Art and development costs | 17,568 | 17,278 | ||||||
Development stage expenses | 7,966 | 5,620 | ||||||
Gain on sale/leaseback transaction | (58,381 | ) | — | |||||
Store impairment and restructuring charges | 25,817 | — | ||||||
Goodwill impairment | 259,100 | — | ||||||
Total expense | 1,807,576 | 1,502,436 | ||||||
(Loss) i | (190,338 | ) | 119,445 | |||||
Interest expense, net | 88,857 | 76,481 | ||||||
Other expense, net | 6,643 | 9,076 | ||||||
(Loss) income before income taxes | (285,838 | ) | 33,888 | |||||
Income tax (benefit) expense | (21,809 | ) | 9,443 | |||||
Net (loss) income | (264,029 | ) | 24,445 | |||||
Add: Net income attributable to redeemable securities holder | — | 402 | ||||||
Less: Net loss attributable to noncontrolling interests | (352 | ) | (87 | ) | ||||
Net (loss) income attributable to common shareholders of Party City Holdco Inc. | $ | (263,677 | ) | $ | 24,934 | |||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.–Basic | $ | (2.83 | ) | $ | 0.26 | |||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.–Diluted | $ | (2.83 | ) | $ | 0.26 | |||
Weighted-average number of common shares-Basic | 93,271,392 | 96,449,011 | ||||||
Weighted-average number of common shares-Diluted | 93,271,392 | 97,684,290 | ||||||
Dividends declared per share | $ | 0.00 | $ | 0.00 | ||||
Comprehensive (loss) income | $ | (266,883 | ) | $ | 20,889 | |||
Add: Comprehensive income attributable to redeemable securities holder | — | 402 | ||||||
Less: Comprehensive loss attributable to noncontrolling interests | (364 | ) | (108 | ) | ||||
Comprehensive (loss) income attributable to common shareholders of Party City Holdco Inc. | $ | (266,519 | ) | $ | 21,399 | |||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Party City Holdco Inc. Stockholders’ Equity Before Common Stock Held In Treasury | Common Stock Held In Treasury | Total Party City Holdco Inc. Stockholders’ Equity | Non- Controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | 1,210 | $ | 926,838 | $ | 513,130 | $ | (45,216 | ) | $ | 1,395,962 | $ | (327,086 | ) | $ | 1,068,876 | $ | 211 | $ | 1,069,087 | ||||||||||||||||
Net loss | — | — | (281,533 | ) | — | (281,533 | ) | — | (281,533 | ) | (212 | ) | (281,745 | ) | ||||||||||||||||||||||
Stock option expense | — | 409 | — | — | 409 | — | 409 | — | 409 | |||||||||||||||||||||||||||
Restricted stock units – time- based | — | 610 | — | — | 610 | — | 610 | — | 610 | |||||||||||||||||||||||||||
Restricted stock units – performance-based | — | 560 | — | — | 560 | — | 560 | — | 560 | |||||||||||||||||||||||||||
Director – non-cash compensation | — | 148 | — | — | 148 | — | 148 | — | 148 | |||||||||||||||||||||||||||
Warrant expense | — | 128 | — | — | 128 | — | 128 | — | 128 | |||||||||||||||||||||||||||
Exercise of stock options | 1 | 56 | — | — | 57 | — | 57 | — | 57 | |||||||||||||||||||||||||||
Foreign currency | — | — | — | (6,920 | ) | (6,920 | ) | — | (6,920 | ) | (1 | ) | (6,921 | ) | ||||||||||||||||||||||
Impact of foreign exchange contracts, net | — | — | — | 93 | 93 | — | 93 | — | 93 | |||||||||||||||||||||||||||
Balance at September 30, 2019 | $ | 1,211 | $ | 928,749 | $ | 231,597 | $ | (52,043 | ) | $ | 1,109,514 | $ | (327,086 | ) | $ | 782,428 | $ | (2 | ) | $ | 782,426 | |||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Party City Holdco Inc. Stockholders’ Equity Before Common Stock Held In Treasury | Common Stock Held In Treasury | Total Party City Holdco Inc. Stockholders’ Equity | Non- Controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance at June 30, 2018 | $ | 1,199 | $ | 919,845 | $ | 399,872 | $ | (39,797 | ) | $ | 1,281,119 | $ | (286,733 | ) | $ | 994,386 | $ | 282 | $ | 994,668 | ||||||||||||||||
Net loss | — | — | (2,412 | ) | — | (2,412 | ) | — | (2,412 | ) | (28 | ) | (2,440 | ) | ||||||||||||||||||||||
Net loss attributable to redeemable securities holder | — | — | (8 | ) | — | (8 | ) | — | (8 | ) | — | (8 | ) | |||||||||||||||||||||||
Stock option expense | — | 550 | — | — | 550 | — | 550 | — | 550 | |||||||||||||||||||||||||||
Restricted stock units – time-based | 1 | 469 | — | — | 470 | — | 470 | — | 470 | |||||||||||||||||||||||||||
Restricted stock units – performance-based | 5 | 884 | — | — | 889 | — | 889 | — | 889 | |||||||||||||||||||||||||||
Director – non-cash compensation | — | 137 | — | — | 137 | — | 137 | — | 137 | |||||||||||||||||||||||||||
Warrant expense | — | (84 | ) | — | — | (84 | ) | — | (84 | ) | — | (84 | ) | |||||||||||||||||||||||
Exercise of stock options | — | 396 | — | — | 396 | — | 396 | — | 396 | |||||||||||||||||||||||||||
Foreign currency | — | — | — | 419 | 419 | — | 419 | (7 | ) | 412 | ||||||||||||||||||||||||||
Impact of foreign exchange contracts, net | — | — | — | 25 | 25 | — | 25 | — | 25 | |||||||||||||||||||||||||||
Balance at September 30, 2018 | $ | 1,205 | $ | 922,197 | $ | 397,452 | $ | (39,353 | ) | $ | 1,281,501 | $ | (286,733 | ) | $ | 994,768 | $ | 247 | $ | 995,015 | ||||||||||||||||
June 30, 2019 | December 31, 2018 | |||||||
(Note 2) (Unaudited) | (Note 2) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 47,131 | $ | 58,909 | ||||
Accounts receivable, net | 140,070 | 146,983 | ||||||
Inventories, net | 788,097 | 756,038 | ||||||
Prepaid expenses and other current assets | 66,707 | 61,905 | ||||||
Total current assets | 1,042,005 | 1,023,835 | ||||||
Property, plant and equipment, net | 257,395 | 321,044 | ||||||
Operating lease asset | 869,345 | — | ||||||
Goodwill | 1,659,653 | 1,656,950 | ||||||
Trade names | 568,014 | 568,031 | ||||||
Other intangible assets, net | 49,663 | 60,164 | ||||||
Other assets, net | 12,894 | 12,323 | ||||||
Total assets | $ | 4,458,969 | $ | 3,642,347 | ||||
LIABILITIES, REDEEMABLE SECURITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Loans and notes payable | $ | 307,379 | $ | 302,751 | ||||
Accounts payable | 159,515 | 208,149 | ||||||
Accrued expenses | 151,459 | 161,228 | ||||||
Current portion of operating lease liability | 145,472 | — | ||||||
Income taxes payable | 10,279 | 25,993 | ||||||
Current portion of long-term obligations | 76,251 | 13,316 | ||||||
Total current liabilities | 850,355 | 711,437 | ||||||
Long-term obligations, excluding current portion | 1,565,315 | 1,621,963 | ||||||
Long-term portion of operating lease liability | 793,976 | — | ||||||
Deferred income tax liabilities, net | 163,657 | 174,427 | ||||||
Other long-term liabilities | 13,228 | 87,548 | ||||||
Total liabilities | 3,386,531 | 2,595,375 | ||||||
Redeemable securities | 3,351 | 3,351 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Common stock (94,501,055 and 93,622,934 shares outstanding and 121,681,959 and 120,788,159 shares issued at June 30, 2019 and December 31, 2018, respectively) | 1,210 | 1,208 | ||||||
Additional paid-in capital | 926,838 | 922,476 | ||||||
Retained earnings | 513,130 | 495,777 | ||||||
Accumulated other comprehensive loss | (45,216 | ) | (49,201 | ) | ||||
Total Party City Holdco Inc. stockholders’ equity before common stock held in treasury | 1,395,962 | 1,370,260 | ||||||
Less: Common stock held in treasury, at cost (27,180,904 and 27,165,225 shares at June 30, 2019 and December 31, 2018) | (327,086 | ) | (326,930 | ) | ||||
Total Party City Holdco Inc. stockholders’ equity | 1,068,876 | 1,043,330 | ||||||
Noncontrolling interests | 211 | 291 | ||||||
Total stockholders’ equity | 1,069,087 | 1,043,621 | ||||||
Total liabilities, redeemable securities and stockholders’ equity | $ | 4,458,969 | $ | 3,642,347 | ||||
Three Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Revenues: | ||||||||
Net sales | $ | 561,702 | $ | 558,101 | ||||
Royalties and franchise fees | 2,189 | 2,910 | ||||||
Total revenues | 563,891 | 561,011 | ||||||
Cost of sales | 353,056 | 329,477 | ||||||
Wholesale selling expenses | 16,884 | 17,256 | ||||||
Retail operating expenses | 96,143 | 92,094 | ||||||
Franchise expenses | 3,236 | 3,980 | ||||||
General and administrative expenses | 41,510 | 45,326 | ||||||
Art and development costs | 5,712 | 5,732 | ||||||
Development stage expenses | 3,012 | 1,695 | ||||||
Gain on sale/leaseback transaction | (58,381 | ) | — | |||||
Store impairment and restructuring charges | 5,234 | — | ||||||
466,406 | 495,560 | |||||||
Income from operations | 97,485 | 65,451 | ||||||
Interest expense, net | 30,176 | 25,501 | ||||||
Other expense, net | 3,342 | 2,532 | ||||||
Income before income taxes | 63,967 | 37,418 | ||||||
Income tax expense | 15,962 | 9,370 | ||||||
Net income | 48,005 | 28,048 | ||||||
Add: Net income attributable to redeemable securities holder | — | 410 | ||||||
Less: Net loss attributable to noncontrolling interests | (69 | ) | (29 | ) | ||||
Net income attributable to common shareholders of Party City Holdco Inc. | $ | 48,074 | $ | 28,487 | ||||
Net income per share attributable to common shareholders of Party City Holdco Inc.–Basic | $ | 0.52 | $ | 0.30 | ||||
Net income per share attributable to common shareholders of Party City Holdco Inc.–Diluted | $ | 0.51 | $ | 0.29 | ||||
Weighted-average number of common shares-Basic | 93,293,176 | 96,453,884 | ||||||
Weighted-average number of common shares-Diluted | 93,703,546 | 97,688,233 | ||||||
Dividends declared per share | $ | 0.00 | $ | 0.00 | ||||
Comprehensive income | $ | 48,327 | $ | 18,825 | ||||
Add: Comprehensive income attributable to redeemable securities holder | — | 410 | ||||||
Less: Comprehensive loss attributable to noncontrolling interests | (89 | ) | (55 | ) | ||||
Comprehensive income attributable to common shareholders of Party City Holdco Inc. | $ | 48,416 | $ | 19,290 | ||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Party City Holdco Inc. Stockholders’ Equity Before Common Stock Held In Treasury | Common Stock Held In Treasury | Total Party City Holdco Inc. Stockholders’ Equity | Non- Controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | 1,208 | $ | 922,476 | $ | 495,777 | $ | (49,201 | ) | $ | 1,370,260 | $ | (326,930 | ) | $ | 1,043,330 | $ | 291 | $ | 1,043,621 | ||||||||||||||||
Cumulative effect of change in accounting principle, net (see Note 2) | — | 662 | (503 | ) | — | 159 | — | 159 | — | 159 | ||||||||||||||||||||||||||
Balance at December 31, 2018, as adjusted | $ | 1,208 | $ | 923,138 | $ | 495,274 | $ | (49,201 | ) | $ | 1,370,419 | $ | (326,930 | ) | $ | 1,043,489 | $ | 291 | $ | 1,043,780 | ||||||||||||||||
Net loss | — | — | (263,677 | ) | — | (263,677 | ) | — | (263,677 | ) | (352 | ) | (264,029 | ) | ||||||||||||||||||||||
Stock option expense | — | 1,150 | — | — | 1,150 | — | 1,150 | — | 1,150 | |||||||||||||||||||||||||||
Restricted stock units – time - based | — | 1,543 | — | — | 1,543 | — | 1,543 | — | 1,543 | |||||||||||||||||||||||||||
Restricted stock units – performance-based | — | 1,036 | — | — | 1,036 | — | 1,036 | — | 1,036 | |||||||||||||||||||||||||||
Director – non-cas h compensation | — | 313 | — | — | 313 | — | 313 | — | 313 | |||||||||||||||||||||||||||
Warrant expense | — | 386 | — | — | 386 | — | 386 | — | 386 | |||||||||||||||||||||||||||
Exercise of stock options | 3 | 1,142 | — | — | 1,145 | — | 1,145 | — | 1,145 | |||||||||||||||||||||||||||
Acquired non-controlling interest | — | 41 | — | — | 41 | — | 41 | 71 | 112 | |||||||||||||||||||||||||||
Treasury stock purchases | — | — | — | — | — | (156 | ) | (156 | ) | — | (156 | ) | ||||||||||||||||||||||||
Foreign currency adjustments | — | — | — | (2,208 | ) | (2,208 | ) | — | (2,208 | ) | (12 | ) | (2,220 | ) | ||||||||||||||||||||||
Impact of foreign exchange contracts, net | — | — | — | (634 | ) | (634 | ) | — | (634 | ) | — | (634 | ) | |||||||||||||||||||||||
Balance at September 30, 2019 | $ | 1,211 | $ | 928,749 | $ | 231,597 | $ | (52,043 | ) | $ | 1,109,514 | $ | (327,086 | ) | $ | 782,428 | $ | (2 | ) | $ | 782,426 | |||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Party City Holdco Inc. Stockholders’ Equity Before Common Stock Held In Treasury | Common Stock Held In Treasury | Total Party City Holdco Inc. Stockholders’ Equity | Non- Controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance at December 31, 2017 | $ | 1,198 | $ | 917,192 | $ | 372,596 | $ | (35,818 | ) | $ | 1,255,168 | $ | (286,733 | ) | $ | 968,435 | $ | 355 | $ | 968,790 | ||||||||||||||||
Cumulative effect of change in accounting principle, net | — | — | (78 | ) | — | (78 | ) | — | (78 | ) | — | (78 | ) | |||||||||||||||||||||||
Balance at December 31, 2017, as adjusted | $ | 1,198 | $ | 917,192 | $ | 372,518 | $ | (35,818 | ) | $ | 1,255,090 | $ | (286,733 | ) | $ | 968,357 | $ | 355 | $ | 968,712 | ||||||||||||||||
Net income | — | — | 24,532 | — | 24,532 | — | 24,532 | (87 | ) | 24,445 | ||||||||||||||||||||||||||
Net income attributable to redeemable securities holder | — | — | 402 | — | 402 | — | 402 | — | 402 | |||||||||||||||||||||||||||
Stock option expense | — | 1,492 | — | — | 1,492 | — | 1,492 | — | 1,492 | |||||||||||||||||||||||||||
Restricted stock units – time - based | 1 | 721 | — | — | 722 | — | 722 | — | 722 | |||||||||||||||||||||||||||
Restricted stock units – performance-based | 5 | 1,477 | — | — | 1,482 | — | 1,482 | — | 1,482 | |||||||||||||||||||||||||||
Director – non-cash compensation | — | 196 | — | — | 196 | — | 196 | — | 196 | |||||||||||||||||||||||||||
Warrant expense | — | 242 | — | — | 242 | — | 242 | — | 242 | |||||||||||||||||||||||||||
Exercise of stock options | 1 | 877 | — | — | 878 | — | 878 | — | 878 | |||||||||||||||||||||||||||
Foreign currency adjustments | — | — | — | (4,888 | ) | (4,888 | ) | — | (4,888 | ) | (21 | ) | (4,909 | ) | ||||||||||||||||||||||
Impact of foreign exchange contracts, net | — | — | — | 1,353 | 1,353 | — | 1,353 | — | 1,353 | |||||||||||||||||||||||||||
Balance at September 30, 2018 | $ | 1,205 | $ | 922,197 | $ | 397,452 | $ | (39,353 | ) | $ | 1,281,501 | $ | (286,733 | ) | $ | 994,768 | $ | 247 | $ | 995,015 | ||||||||||||||||
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Revenues: | ||||||||
Net sales | $ | 1,072,804 | $ | 1,063,209 | ||||
Royalties and franchise fees | 4,203 | 5,626 | ||||||
Total revenues | 1,077,007 | 1,068,835 | ||||||
Cost of sales | 692,098 | 646,443 | ||||||
Wholesale selling expenses | 34,845 | 36,043 | ||||||
Retail operating expenses | 191,161 | 181,186 | ||||||
Franchise expenses | 6,539 | 7,762 | ||||||
General and administrative expenses | 83,435 | 93,991 | ||||||
Art and development costs | 11,641 | 11,705 | ||||||
Development stage expenses | 5,238 | 3,998 | ||||||
Gain on sale/leaseback transaction | (58,381 | ) | — | |||||
Store impairment and restructuring charges | 23,243 | — | ||||||
989,819 | 981,128 | |||||||
Income from operations | 87,188 | 87,707 | ||||||
Interest expense, net | 59,433 | 48,776 | ||||||
Other expense, net | 4,596 | 3,380 | ||||||
Income before income taxes | 23,159 | 35,551 | ||||||
Income tax expense | 5,443 | 8,666 | ||||||
Net income | 17,716 | 26,885 | ||||||
Add: Net income attributable to redeemable securities holder | — | 410 | ||||||
Less: Net loss attributable to noncontrolling interests | (140 | ) | (59 | ) | ||||
Net income attributable to common shareholders of Party City Holdco Inc. | $ | 17,856 | $ | 27,354 | ||||
Net income per share attributable to common shareholders of Party City Holdco Inc. –Basic | $ | 0.19 | $ | 0.28 | ||||
Net income per share attributable to common shareholders of Party City Holdco Inc. –Diluted | $ | 0.19 | $ | 0.28 | ||||
Weighted-average number of common shares-Basic | 93,233,865 | 96,426,235 | ||||||
Weighted-average number of common shares-Diluted | 93,791,763 | 97,669,309 | ||||||
Dividends declared per share | $ | 0.00 | $ | 0.00 | ||||
Comprehensive income | $ | 21,690 | $ | 22,892 | ||||
Add: Comprehensive income attributable to redeemable securities holder | — | 410 | ||||||
Less: Comprehensive loss attributable to noncontrolling interests | (151 | ) | (73 | ) | ||||
Comprehensive income attributable to common shareholders of Party City Holdco Inc. | $ | 21,841 | $ | 23,375 | ||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Party City Holdco Inc. Stockholders’ Equity Before Common Stock Held In Treasury | Common Stock Held In Treasury | Total Party City Holdco Inc. Stockholders’ Equity | Non- Controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance at March 31, 2019 | $ | 1,210 | $ | 925,233 | $ | 465,056 | $ | (45,558 | ) | $ | 1,345,941 | $ | (327,086 | ) | $ | 1,018,855 | $ | 300 | $ | 1,019,155 | ||||||||||||||||
Net income (loss) | — | — | 48,074 | — | 48,074 | — | 48,074 | (69 | ) | 48,005 | ||||||||||||||||||||||||||
Stock option expense | — | 371 | — | — | 371 | — | 371 | — | 371 | |||||||||||||||||||||||||||
Restricted stock units – time-based | — | 541 | — | — | 541 | — | 541 | — | 541 | |||||||||||||||||||||||||||
Restricted stock units – performance-based | — | 476 | — | — | 476 | — | 476 | — | 476 | |||||||||||||||||||||||||||
Director – non-cash compensation | — | 88 | — | — | 88 | — | 88 | — | 88 | |||||||||||||||||||||||||||
Warrant expense | — | 129 | — | — | 129 | — | 129 | — | 129 | |||||||||||||||||||||||||||
Foreign currency adjustments | — | — | — | 556 | 556 | — | 556 | (20 | ) | 536 | ||||||||||||||||||||||||||
Impact of foreign exchange contracts, net | — | — | — | (214 | ) | (214 | ) | — | (214 | ) | — | (214 | ) | |||||||||||||||||||||||
Balance at June 30, 2019 | $ | 1,210 | $ | 926,838 | $ | 513,130 | $ | (45,216 | ) | $ | 1,395,962 | $ | (327,086 | ) | $ | 1,068,876 | $ | 211 | $ | 1,069,087 | ||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Party City Holdco Inc. Stockholders’ Equity Before Common Stock Held In Treasury | Common Stock Held In Treasury | Total Party City Holdco Inc. Stockholders’ Equity | Non- Controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance at March 31, 2018 | $ | 1,198 | $ | 918,205 | $ | 371,385 | $ | (30,600 | ) | $ | 1,260,188 | $ | (286,733 | ) | $ | 973,455 | $ | 337 | $ | 973,792 | ||||||||||||||||
Net income (loss) | — | — | 28,077 | — | 28,077 | — | 28,077 | (29 | ) | 28,048 | ||||||||||||||||||||||||||
Net income attributable to redeemable securities holder | — | — | 410 | — | 410 | — | 410 | — | 410 | |||||||||||||||||||||||||||
Stock option expense | — | 482 | — | — | 482 | — | 482 | — | 482 | |||||||||||||||||||||||||||
Restricted stock units – time-based | — | 252 | — | — | 252 | — | 252 | — | 252 | |||||||||||||||||||||||||||
Restricted stock units – performance-based | — | 593 | — | — | 593 | — | 593 | — | 593 | |||||||||||||||||||||||||||
Director – non-cash compensation | — | 59 | — | — | 59 | — | 59 | — | 59 | |||||||||||||||||||||||||||
Warrant expense | — | 65 | — | — | 65 | — | 65 | — | 65 | |||||||||||||||||||||||||||
Exercise of stock options | 1 | 189 | — | — | 190 | — | 190 | — | 190 | |||||||||||||||||||||||||||
Foreign currency adjustments | — | — | — | (10,713 | ) | (10,713 | ) | — | (10,713 | ) | (26 | ) | (10,739 | ) | ||||||||||||||||||||||
Impact of foreign exchange contracts, net | — | — | — | 1,516 | 1,516 | — | 1,516 | — | 1,516 | |||||||||||||||||||||||||||
Balance at June 30, 2018 | $ | 1,199 | $ | 919,845 | $ | 399,872 | $ | (39,797 | ) | $ | 1,281,119 | $ | (286,733 | ) | $ | 994,386 | $ | 282 | $ | 994,668 | ||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Party City Holdco Inc. Stockholders’ Equity Before Common Stock Held In Treasury | Common Stock Held In Treasury | Total Party City Holdco Inc. Stockholders’ Equity | Non- Controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | 1,208 | $ | 922,476 | $ | 495,777 | $ | (49,201 | ) | $ | 1,370,260 | $ | (326,930 | ) | $ | 1,043,330 | $ | 291 | $ | 1,043,621 | ||||||||||||||||
Cumulative effect of change in accounting principle, net (see Note 2) | — | 662 | (503 | ) | — | 159 | — | 159 | — | 159 | ||||||||||||||||||||||||||
Balance at December 31, 2018, as adjusted | $ | 1,208 | $ | 923,138 | $ | 495,274 | $ | (49,201 | ) | $ | 1,370,419 | $ | (326,930 | ) | $ | 1,043,489 | $ | 291 | $ | 1,043,780 | ||||||||||||||||
Net income (loss) | — | ��� | 17,856 | — | 17,856 | — | 17,856 | (140 | ) | 17,716 | ||||||||||||||||||||||||||
Stock option expense | — | 741 | — | — | 741 | — | 741 | — | 741 | |||||||||||||||||||||||||||
Restricted stock units – time-based | — | 933 | — | — | 933 | — | 933 | — | 933 | |||||||||||||||||||||||||||
Restricted stock units – performance-based | — | 476 | — | — | 476 | — | 476 | — | 476 | |||||||||||||||||||||||||||
Director – non-cash compensation | — | 165 | — | — | 165 | — | 165 | — | 165 | |||||||||||||||||||||||||||
Warrant expense | — | 258 | — | — | 258 | — | 258 | — | 258 | |||||||||||||||||||||||||||
Exercise of stock options | 2 | 1,086 | — | — | 1,088 | — | 1,088 | — | 1,088 | |||||||||||||||||||||||||||
Acquired non-controlling interest | — | 41 | — | — | 41 | — | 41 | 71 | 112 | |||||||||||||||||||||||||||
Treasury stock purchases | — | — | — | — | — | (156 | ) | (156 | ) | — | (156 | ) | ||||||||||||||||||||||||
Foreign currency adjustments | — | — | — | 4,712 | 4,712 | — | 4,712 | (11 | ) | 4,701 | ||||||||||||||||||||||||||
Impact of foreign exchange contracts, net | — | — | — | (727 | ) | (727 | ) | — | (727 | ) | — | (727 | ) | |||||||||||||||||||||||
Balance at June 30, 2019 | $ | 1,210 | $ | 926,838 | $ | 513,130 | $ | (45,216 | ) | $ | 1,395,962 | $ | (327,086 | ) | $ | 1,068,876 | $ | 211 | $ | 1,069,087 | ||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Party City Holdco Inc. Stockholders’ Equity Before Common Stock Held In Treasury | Common Stock Held In Treasury | Total Party City Holdco Inc. Stockholders’ Equity | Non- Controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
Balance at December 31, 2017 | $ | 1,198 | $ | 917,192 | $ | 372,596 | $ | (35,818 | ) | $ | 1,255,168 | $ | (286,733 | ) | $ | 968,435 | $ | 355 | $ | 968,790 | ||||||||||||||||
Cumulative effect of change in accounting principle, net | — | — | (78 | ) | — | (78 | ) | — | (78 | ) | — | (78 | ) | |||||||||||||||||||||||
Balance at December 31, 2017, as adjusted | $ | 1,198 | $ | 917,192 | $ | 372,518 | $ | (35,818 | ) | $ | 1,255,090 | $ | (286,733 | ) | $ | 968,357 | $ | 355 | $ | 968,712 | ||||||||||||||||
Net income | — | — | 26,944 | — | 26,944 | — | 26,944 | (59 | ) | 26,885 | ||||||||||||||||||||||||||
Net income attributable to redeemable securities holder | — | — | 410 | — | 410 | — | 410 | — | 410 | |||||||||||||||||||||||||||
Stock option expense | — | 942 | — | — | 942 | — | 942 | — | 942 | |||||||||||||||||||||||||||
Restricted stock units – time-based | — | 252 | — | — | 252 | — | 252 | — | 252 | |||||||||||||||||||||||||||
Restricted stock units – performance-based | — | 593 | — | — | 593 | — | 593 | — | 593 | |||||||||||||||||||||||||||
Director – non-cash compensation | — | 59 | — | — | 59 | — | 59 | — | 59 | |||||||||||||||||||||||||||
Warrant expense | — | 326 | — | — | 326 | — | 326 | — | 326 | |||||||||||||||||||||||||||
Exercise of stock options | 1 | 481 | — | — | 482 | — | 482 | — | 482 | |||||||||||||||||||||||||||
Foreign currency adjustments | — | — | — | (5,307 | ) | (5,307 | ) | — | (5,307 | ) | (14 | ) | (5,321 | ) | ||||||||||||||||||||||
Impact of foreign exchange contracts, net | — | — | — | 1,328 | 1,328 | — | 1,328 | — | 1,328 | |||||||||||||||||||||||||||
Balance at June 30, 2018 | $ | 1,199 | $ | 919,845 | $ | 399,872 | $ | (39,797 | ) | $ | 1,281,119 | $ | (286,733 | ) | $ | 994,386 | $ | 282 | $ | 994,668 | ||||||||||||||||
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Cash flows used in operating activities: | ||||||||
Net (loss) income | $ | (264,029 | ) | $ | 24,445 | |||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization expense | 62,380 | 57,786 | ||||||
Amortization of deferred financing costs and original issuance discounts | 3,511 | 9,834 | ||||||
Provision for doubtful accounts | 1,110 | 726 | ||||||
Deferred income tax (benefit) expense | (26,458 | ) | 1,075 | |||||
Deferred rent | — | 3,623 | ||||||
Change in operating lease liability/asset | (23,361 | ) | — | |||||
Undistributed income in equity method investments | (195 | ) | (580 | ) | ||||
(Gain) loss on disposal of assets | (59,088 | ) | 23 | |||||
Store impairment and restructuring charges | 19,443 | — | ||||||
Goodwill impairment | 259,100 | — | ||||||
Non-employee equity-based compensation | 386 | 352 | ||||||
Stock option expense | 1,150 | 1,492 | ||||||
Restricted stock unit expense – time-based | 1,543 | 722 | ||||||
Restricted stock unit expense – performance-based | 1,036 | 1,482 | ||||||
Directors – non-cash compensation | 313 | 196 | ||||||
Changes in operating assets and liabilities, net of effects of acquired businesses: | ||||||||
Increase in accounts receivable | (23,712 | ) | (32,802 | ) | ||||
Increase in inventories | (35,628 | ) | (194,419 | ) | ||||
Increase in prepaid expenses and other current assets | (11,009 | ) | (13,890 | ) | ||||
( Decrease) increase in accounts payable, accrued expenses and income taxes payable | (88,771 | ) | 53,744 | |||||
Net cash used in operating activities | (182,279 | ) | (86,191 | ) | ||||
Cash flows provided by (used in) investing activities: | ||||||||
Cash paid in connection with acquisitions, net of cash acquired | (9,485 | ) | (63,840 | ) | ||||
Capital expenditures | (45,769 | ) | (65,491 | ) | ||||
Proceeds from disposal of property and equipment | 113,845 | 22 | ||||||
Net cash provided by (used in) investing activities | 58,591 | (129,309 | ) | |||||
Cash flows provided by financing activities: | ||||||||
Repayment of loans, notes payable and long-term obligations | (106,133 | ) | (417,281 | ) | ||||
Proceeds from loans, notes payable and long-term obligations | 203,381 | 636,884 | ||||||
Stock repurchases | (156 | ) | — | |||||
Exercise of stock options | 1,145 | 878 | ||||||
Debt issuance costs | (411 | ) | (10,343 | ) | ||||
Net cash provided by financing activities | 97,826 | 210,138 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 1,220 | (772 | ) | |||||
Net decrease in cash and cash equivalents and restricted cash | (24,642 | ) | (6,134 | ) | ||||
Cash and cash equivalents and restricted cash at beginning of period | 59,219 | 54,408 | ||||||
Cash and cash equivalents and restricted cash at end of period | $ | 34,577 | $ | 48,274 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for interest | $ | 97,744 | $ | 77,371 | ||||
Cash paid during the period for income taxes, net of refunds | $ | 34,357 | $ | 56,683 |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Cash flows used in operating activities: | ||||||||
Net income | $ | 17,716 | $ | 26,885 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization expense | 43,225 | 40,812 | ||||||
Amortization of deferred financing costs and original issuance discounts | 2,289 | 2,766 | ||||||
Provision for doubtful accounts | 596 | 304 | ||||||
Deferred income tax (benefit) expense | (10,779 | ) | 1,443 | |||||
Deferred rent | — | 1,155 | ||||||
Change in operating lease liability/asset | (21,406 | ) | — | |||||
Undistributed income in equity method investments | (202 | ) | (301 | ) | ||||
(Gain) loss on disposal of assets | (59,087 | ) | 24 | |||||
Store impairment and restructuring charges | 19,490 | — | ||||||
Non-employee equity based compensation | 258 | 365 | ||||||
Stock option expense | 741 | 942 | ||||||
Restricted stock units expense – time-based | 933 | 252 | ||||||
Restricted stock units expense – performance-based | 476 | 593 | ||||||
Directors – non-cash compensation | 165 | 59 | ||||||
Changes in operating assets and liabilities, net of effects of acquired businesses: | ||||||||
Decrease in accounts receivable | 6,588 | 8,791 | ||||||
Increase in inventories | (31,145 | ) | (68,741 | ) | ||||
Increase in prepaid expenses and other current assets | (4,333 | ) | (9,137 | ) | ||||
Decrease in accounts payable, accrued expenses and income taxes payable | (71,438 | ) | (29,220 | ) | ||||
Net cash used in operating activities | (105,913 | ) | (23,008 | ) | ||||
Cash flows provided by (used in) investing activities: | ||||||||
Cash paid in connection with acquisitions, net of cash acquired | (545 | ) | (21,325 | ) | ||||
Capital expenditures | (31,098 | ) | (44,406 | ) | ||||
Proceeds from disposal of property and equipment | 113,799 | 21 | ||||||
Net cash provided by (used in) investing activities | 82,156 | (65,710 | ) | |||||
Cash flows provided by financing activities: | ||||||||
Repayment of loans, notes payable and long-term obligations | (148,526 | ) | (26,062 | ) | ||||
Proceeds from loans, notes payable and long-term obligations | 157,440 | 112,293 | ||||||
Stock repurchases | (156 | ) | — | |||||
Exercise of stock options | 1,088 | 482 | ||||||
Debt issuance costs | (343 | ) | (56 | ) | ||||
Net cash provided by financing activities | 9,503 | 86,657 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 2,166 | (780 | ) | |||||
Net decrease in cash and cash equivalents and restricted cash | (12,088 | ) | (2,841 | ) | ||||
Cash and cash equivalents and restricted cash at beginning of period | 59,219 | 54,408 | ||||||
Cash and cash equivalents and restricted cash at end of period | $ | 47,131 | $ | 51,567 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for interest | $ | 57,503 | $ | 49,489 | ||||
Cash paid during the period for income taxes, net of refunds | $ | 31,924 | $ | 46,617 |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | |||||||
Inventory reserves | $ | 3,656 | $ | 21,285 | ||||
Operating lease asset impairment | 940 | 14,149 | ||||||
Property, plant and equipment impairment | 541 | 4,680 | ||||||
Labor and other costs incurred closing stores | 3,753 | 3,753 | ||||||
Severance | — | 661 | ||||||
Total | $ | 8,890 | $ | 44,528 | ||||
Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | |||||||
Inventory reserves | $ | — | $ | 21,285 | ||||
Operating lease asset impairment | — | 14,149 | ||||||
Property, plant and equipment impairment | — | 4,680 | ||||||
Labor and other costs incurred closing stores | 2,574 | 6,327 | ||||||
Severance | — | 661 | ||||||
Total | $ | 2,574 | $ | 47,102 | ||||
At September 30, 2019 | ||||
Inventories, net | $ | 31,302 | ||
Property, plant and equipment, net | 14,779 | |||
Operating lease asset | 40,470 | |||
Goodwill | 51,370 | |||
Trade names | 33,044 | |||
Other assets, net | 1,224 | |||
Total, net | $ | 172,189 | ||
June 30, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | |||||||||||||
Finished goods | $ | 738,404 | $ | 706,327 | $ | 709,830 | $ | 706,327 | ||||||||
Raw materials | 33,030 | 33,423 | 34,045 | 33,423 | ||||||||||||
Work in process | 16,663 | 16,288 | 16,304 | 16,288 | ||||||||||||
$ | 788,097 | $ | 756,038 | $ | 760,179 | $ | 756,038 | |||||||||
Three Months Ended June 30, 2019 | ||||||||||||
Foreign Currency Adjustments | Impact of Foreign Exchange Contracts, Net of Taxes | Total, Net of Taxes | ||||||||||
Balance at March 31, 2019 | $ | (45,900 | ) | $ | 342 | $ | (45,558 | ) | ||||
Other comprehensive income (loss) before reclassifications, net of tax | 556 | (3 | ) | 553 | ||||||||
Gains reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive income, net of income tax | — | (211 | ) | (211 | ) | |||||||
Net current-period other comprehensive income (loss) | 556 | (214 | ) | 342 | ||||||||
Balance at June 30, 2019 | $ | (45,344 | ) | $ | 128 | $ | (45,216 | ) | ||||
Three Months Ended September 30, 2019 | ||||||||||||
Foreign Currency Adjustments | Impact of Foreign Exchange Contracts, Net of Taxes | Total, Net of Taxes | ||||||||||
Balance at June 30, 2019 | $ | (45,344 | ) | $ | 128 | $ | (45,216 | ) | ||||
Other comprehensive (loss) income before reclassifications, net of tax | (6,920 | ) | 166 | (6,754 | ) | |||||||
Gains reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive loss, net of income tax | — | (73 | ) | (73 | ) | |||||||
Net current-period other comprehensive (loss) income | (6,920 | ) | 93 | (6,827 | ) | |||||||
Balance at September 30, 2019 | $ | (52,264 | ) | $ | 221 | $ | (52,043 | ) | ||||
Three Months Ended September 30, 2018 | ||||||||||||
Foreign Currency Adjustments | Impact of Foreign Exchange Contracts, Net of Taxes | Total, Net of Taxes | ||||||||||
Balance at June 30, 2018 | $ | (40,917 | ) | $ | 1,120 | $ | (39,797 | ) | ||||
Other comprehensive income before reclassifications | 419 | 217 | 636 | |||||||||
Gain reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive loss, net of income tax | — | (192 | ) | (192 | ) | |||||||
Net current-period other comprehensive income | 419 | 25 | 444 | |||||||||
Balance at September 30, 2018 | $ | (40,498 | ) | $ | 1,145 | $ | (39,353 | ) | ||||
Three Months Ended June 30, 2018 | ||||||||||||
Foreign Currency Adjustments | Impact of Foreign Exchange Contracts, Net of Taxes | Total, Net of Taxes | ||||||||||
Balance at March 31, 2018 | $ | (30,204 | ) | $ | (396 | ) | $ | (30,600 | ) | |||
Other comprehensive (loss) income before reclassifications | (10,713 | ) | 1,398 | (9,315 | ) | |||||||
Loss reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive income | — | 118 | 118 | |||||||||
Net current-period other comprehensive (loss) income | (10,713 | ) | 1,516 | (9,197 | ) | |||||||
Balance at June 30, 2018 | $ | (40,917 | ) | $ | 1,120 | $ | (39,797 | ) | ||||
Six Months Ended June 30, 2019 | ||||||||||||
Foreign Currency Adjustments | Impact of Foreign Exchange Contracts, Net of Taxes | Total, Net of Taxes | ||||||||||
Balance at December 31, 2018 | $ | (50,056 | ) | $ | 855 | $ | (49,201 | ) | ||||
Other comprehensive income before reclassifications, net of tax | 4,712 | 60 | 4,772 | |||||||||
Gains reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive income, net of income tax | — | (787 | ) | (787 | ) | |||||||
Net current-period other comprehensive income (loss) | 4,712 | (727 | ) | 3,985 | ||||||||
Balance at June 30, 2019 | $ | (45,344 | ) | $ | 128 | $ | (45,216 | ) | ||||
Nine Months Ended September 30, 2019 | ||||||||||||
Foreign Currency Adjustments | Impact of Foreign Exchange Contracts, Net of Taxes | Total, Net of Taxes | ||||||||||
Balance at December 31, 2018 | $ | (50,056 | ) | $ | 855 | $ | (49,201 | ) | ||||
Other comprehensive (loss) income before reclassifications, net of tax | (2,208 | ) | 226 | (1,982 | ) | |||||||
Gain reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive loss, net of income tax | — | (860 | ) | (860 | ) | |||||||
Net current-period other comprehensive loss | (2,208 | ) | (634 | ) | (2,842 | ) | ||||||
Balance at September 30, 2019 | $ | (52,264 | ) | $ | 221 | $ | (52,043 | ) | ||||
Nine Months Ended September 30, 2018 | ||||||||||||
Foreign Currency Adjustments | Impact of Foreign Exchange Contracts, Net of Taxes | Total, Net of Taxes | ||||||||||
Balance at December 31, 2017 | $ | (35,610 | ) | $ | (208 | ) | $ | (35,818 | ) | |||
Other comprehensive (loss) income before reclassifications, net of income tax | (4,888 | ) | 1,188 | (3,700 | ) | |||||||
Loss reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive income, net of income tax | — | 165 | 165 | |||||||||
Net current-period other comprehensive (loss) income | (4,888 | ) | 1,353 | (3,535 | ) | |||||||
Balance at September 30, 2018 | $ | (40,498 | ) | $ | 1,145 | $ | (39,353 | ) | ||||
Six Months Ended June 30, 2018 | ||||||||||||
Foreign Currency Adjustments | Impact of Foreign Exchange Contracts, Net of Taxes | Total, Net of Taxes | ||||||||||
Balance at December 31, 2017 | $ | (35,610 | ) | $ | (208 | ) | $ | (35,818 | ) | |||
Other comprehensive (loss) income before reclassifications, net of income tax | (5,307 | ) | 971 | (4,336 | ) | |||||||
Loss reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive income, net of income tax | — | 357 | 357 | |||||||||
Net current-period other comprehensive (loss) income | (5,307 | ) | 1,328 | (3,979 | ) | |||||||
Balance at June 30, 2018 | $ | (40,917 | ) | $ | 1,120 | $ | (39,797 | ) | ||||
Wholesale | Retail | Consolidated | ||||||||||
Three Months Ended September 30, 2019 | ||||||||||||
Revenues: | ||||||||||||
Net sales | $ | 383,425 | $ | 369,467 | $ | 752,892 | ||||||
Royalties and franchise fees | — | 1,886 | 1,886 | |||||||||
Total revenues | 383,425 | 371,353 | 754,778 | |||||||||
Eliminations | (214,547 | ) | — | (214,547 | ) | |||||||
Net revenues | $ | 168,878 | $ | 371,353 | $ | 540,231 | ||||||
L oss from operations | $ | (32,424 | ) | $ | (245,102 | ) | $ | (277,526 | ) | |||
Interest expense, net | 29,424 | |||||||||||
Other expense, net | 2,047 | |||||||||||
Loss before income tax benefits | $ | (308,997 | ) | |||||||||
Wholesale | Retail | Consolidated | ||||||||||
Three Months Ended September 30, 2018 | ||||||||||||
Revenues: | ||||||||||||
Net sales | $ | 424,569 | $ | 375,680 | $ | 800,249 | ||||||
Royalties and franchise fees | — | 2,206 | 2,206 | |||||||||
Total revenues | 424,569 | 377,886 | 802,455 | |||||||||
Eliminations | (249,409 | ) | — | (249,409 | ) | |||||||
Net revenues | $ | 175,160 | $ | 377,886 | $ | 553,046 | ||||||
Income from operations | $ | 15,501 | $ | 16,237 | $ | 31,738 | ||||||
Interest expense, net | 27,705 | |||||||||||
Other expense, net | 5,696 | |||||||||||
Loss before income taxes | $ | (1,663 | ) | |||||||||
Wholesale | Retail | Consolidated | ||||||||||
Nine Months Ended September 30, 2019 | ||||||||||||
Revenues: | ||||||||||||
Net sales | $ | 962,793 | $ | 1,170,777 | $ | 2,133,570 | ||||||
Royalties and franchise fees | — | 6,089 | 6,089 | |||||||||
Total revenues | 962,793 | 1,176,866 | 2,139,659 | |||||||||
Eliminations | (522,421 | ) | — | (522,421 | ) | |||||||
Net revenues | $ | 440,372 | $ | 1,176,866 | $ | 1,617,238 | ||||||
Income (loss) from operations | $ | 30,096 | $ | (220,434 | ) | $ | (190,338 | ) | ||||
Interest expense, net | 88,857 | |||||||||||
Other expense, net | 6,643 | |||||||||||
Loss before income tax benefits | $ | (285,838 | ) | |||||||||
Wholesale | Retail | Consolidated | ||||||||||
Nine Months Ended September 30, 2018 | ||||||||||||
Revenues: | ||||||||||||
Net sales | $ | 988,129 | $ | 1,150,609 | $ | 2,138,738 | ||||||
Royalties and franchise fees | — | 7,832 | 7,832 | |||||||||
Total revenues | 988,129 | 1,158,441 | 2,146,570 | |||||||||
Eliminations | (524,689 | ) | — | (524,689 | ) | |||||||
Net revenues | $ | 463,440 | $ | 1,158,441 | $ | 1,621,881 | ||||||
Income from operations | $ | 31,997 | $ | 87,448 | $ | 119,445 | ||||||
Interest expense, net | 76,481 | |||||||||||
Other expense, net | 9,076 | |||||||||||
Income before income taxes | $ | 33,888 | ||||||||||
Wholesale | Retail | Consolidated | ||||||||||
Three Months Ended June 30, 2019 | ||||||||||||
Revenues: | ||||||||||||
Net sales | $ | 289,067 | $ | 423,157 | $ | 712,224 | ||||||
Royalties and franchise fees | — | 2,189 | 2,189 | |||||||||
Total revenues | 289,067 | 425,346 | 714,413 | |||||||||
Eliminations | (150,522 | ) | — | (150,522 | ) | |||||||
Net revenues | $ | 138,545 | $ | 425,346 | $ | 563,891 | ||||||
Income from operations | $ | 60,297 | $ | 37,188 | $ | 97,485 | ||||||
Interest expense, net | 30,176 | |||||||||||
Other expense, net | 3,342 | |||||||||||
Income before income taxes | $ | 63,967 | ||||||||||
Wholesale | Retail | Consolidated | ||||||||||
Three Months Ended June 30, 2018 | ||||||||||||
Revenues: | ||||||||||||
Net sales | $ | 285,733 | $ | 411,353 | $ | 697,086 | ||||||
Royalties and franchise fees | — | 2,910 | 2,910 | |||||||||
Total revenues | 285,733 | 414,263 | 699,996 | |||||||||
Eliminations | (138,985 | ) | — | (138,985 | ||||||||
Net revenues | $ | 146,748 | $ | 414,263 | $ | 561,011 | ||||||
Income from operations | $ | 11,148 | $ | 54,303 | $ | 65,451 | ||||||
Interest expense, net | 25,501 | |||||||||||
Other expense, net | 2,532 | |||||||||||
Income before income taxes | $ | 37,418 | ||||||||||
Wholesale | Retail | Consolidated | ||||||||||
Six Months Ended June 30, 2019 | ||||||||||||
Revenues: | ||||||||||||
Net sales | $ | 579,368 | $ | 801,310 | $ | 1,380,678 | ||||||
Royalties and franchise fees | — | 4,203 | 4,203 | |||||||||
Total revenues | 579,368 | 805,513 | 1,384,881 | |||||||||
Eliminations | (307,874 | ) | — | (307,874 | ) | |||||||
Net revenues | $ | 271,494 | $ | 805,513 | $ | 1,077,007 | ||||||
Income from operations | $ | 62,520 | $ | 24,668 | $ | 87,188 | ||||||
Interest expense, net | 59,433 | |||||||||||
Other expense, net | 4,596 | |||||||||||
Income before income taxes | $ | 23,159 | ||||||||||
Wholesale | Retail | Consolidated | ||||||||||
Six Months Ended June 30, 2018 | ||||||||||||
Revenues: | ||||||||||||
Net sales | $ | 563,560 | $ | 774,929 | $ | 1,338,489 | ||||||
Royalties and franchise fees | — | 5,626 | 5,626 | |||||||||
Total revenues | 563,560 | 780,555 | 1,344,115 | |||||||||
Eliminations | (275,280 | ) | — | (275,280 | ) | |||||||
Net revenues | $ | 288,280 | $ | 780,555 | $ | 1,068,835 | ||||||
Income from operations | $ | 16,496 | $ | 71,211 | $ | 87,707 | ||||||
Interest expense, net | 48,776 | |||||||||||
Other expense, net | 3,380 | |||||||||||
Income before income taxes | $ | 35,551 | ||||||||||
Derivative Assets | Derivative Liabilities | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | Balance Sheet Line | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instrument | June 30, 2019 | December 31, 2018 | June 30, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Exchange Contracts | (a | ) PP | $ | 58 | (a | ) PP | $ | 115 | (b | ) AE | $ | 7 | (b | ) AE | $ | — | (a) PP | $ | 151 | (a) PP | $ | 115 | (b) AE | $ | 22 | (b) AE | $ | — | ||||||||||||||||||||||||||||||||||||
(a) | PP = Prepaid expenses and other current assets |
(b) | AE = Accrued expenses |
Derivative Instrument | June 30, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | ||||||||||||
Foreign Exchange Contracts | $ | 6,200 | $ | 10,942 | $ | 3,650 | $ | 10,942 | ||||||||
Level 1 | Level 2 | Level 3 | Total as of June 30, 2019 | Level 1 | Level 2 | Level 3 | Total as of September 30, 2019 | |||||||||||||||||||||||||
Derivative assets | $ | — | $ | 58 | $ | — | $ | 58 | $ | — | $ | 151 | $ | — | $ | 151 | ||||||||||||||||
Derivative liabilities | — | 7 | — | 7 | — | 22 | — | 22 |
Level 1 | Level 2 | Level 3 | Total as of December 31, 2018 | |||||||||||||
Derivative assets | $ | — | $ | 115 | $ | — | $ | 115 | ||||||||
Derivative liabilities | — | — | — | — | ||||||||||||
Punchbowl put liability | — | — | 316 | 316 |
June 30, 2019 | September 30, 2019 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Term Loan Credit Agreement | $ | 784,994 | $ | 787,913 | $ | 720,743 | $ | 722,488 | ||||||||
6.125% Senior Notes – due 2023 | 346,603 | 352,625 | 346,809 | 356,125 | ||||||||||||
6.625% Senior Notes – due 2026 | 494,524 | 485,000 | 494,717 | 493,125 |
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | |||||||||||||||||||||||||
Net income attributable to common shareholders of Party City Holdco Inc. | $ | 48,074 | $ | 28,487 | $ | 17,856 | $ | 27,354 | ||||||||||||||||||||||||
Net (loss) income attributable to common shareholders of Party City Holdco Inc. | $ | (281,533 | ) | $ | (2,420 | ) | $ | (263,677 | ) | $ | 24,934 | |||||||||||||||||||||
Weighted average shares - Basic | 93,293,176 | 96,453,884 | 93,233,865 | 96,426,235 | 93,346,448 | 96,494,565 | 93,271,392 | 96,449,011 | ||||||||||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||||||||
Warrants | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Restricted stock units | 19,228 | — | 23,628 | — | — | — | — | 9,004 | ||||||||||||||||||||||||
Stock options | 391,142 | 1,234,350 | 534,270 | 1,243,074 | — | — | — | 1,226,275 | ||||||||||||||||||||||||
Weighted average shares - Diluted | 93,703,546 | 97,688,233 | 93,791,763 | 97,669,309 | 93,346,448 | 96,494,565 | 93,271,392 | 97,684,290 | ||||||||||||||||||||||||
Net income per share attributable to common shareholders of Party City Holdco Inc. - Basic | $ | 0.52 | $ | 0.30 | $ | 0.19 | $ | 0.28 | ||||||||||||||||||||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc. - Basic | $ | (3.02 | ) | $ | (0.03 | ) | $ | (2.83 | ) | $ | 0.26 | |||||||||||||||||||||
Net income per share attributable to common shareholders of Party City Holdco Inc. - Diluted | $ | 0.51 | $ | 0.29 | $ | 0.19 | $ | 0.28 | ||||||||||||||||||||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc. - Diluted | $ | (3.02 | ) | $ | (0.03 | ) | $ | (2.83 | ) | $ | 0.26 | |||||||||||||||||||||
June 30, 2019 | December 31, 2018 | September 30, 2019 | December 31, 2018 | |||||||||||||
Term Loan Credit Agreement | $ | 784,994 | $ | 791,135 | $ | 720,743 | $ | 791,135 | ||||||||
6.125% Senior Notes – due 2023 | 346,603 | 346,191 | 346,809 | 346,191 | ||||||||||||
6.625% Senior Notes – due 2026 | 494,524 | 494,138 | 494,717 | 494,138 | ||||||||||||
Finance lease obligations | 15,327 | 3,815 | ||||||||||||||
Finance lease obligations | 15,445 | 3,815 | ||||||||||||||
Total long-term obligations | 1,641,566 | 1,635,279 | 1,577,596 | 1,635,279 | ||||||||||||
Less: current portion | (76,251 | ) | (13,316 | ) | (13,498 | ) | (13,316 | ) | ||||||||
Long-term obligations, excluding current portion | $ | 1,565,315 | $ | 1,621,963 | $ | 1,564,098 | $ | 1,621,963 | ||||||||
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | |||||||||||||||||||||||||
Retail Net Sales: | ||||||||||||||||||||||||||||||||
North American Party City Stores | $ | 387,308 | $ | 376,222 | $ | 733,448 | $ | 707,067 | $ | 326,810 | $ | 336,355 | $ | 1,060,258 | $ | 1,043,422 | ||||||||||||||||
Global E-commerce | 35,364 | 35,131 | 67,172 | 67,862 | 36,823 | 34,221 | 103,995 | 102,083 | ||||||||||||||||||||||||
Other | 485 | — | 690 | — | 5,834 | 5,104 | 6,524 | 5,104 | ||||||||||||||||||||||||
Total Retail Net Sales | $ | 423,157 | $ | 411,353 | $ | 801,310 | $ | 774,929 | $ | 369,467 | $ | 375,680 | $ | 1,170,777 | $ | 1,150,609 | ||||||||||||||||
Royalties and Franchise Fees | 2,189 | 2,910 | 4,203 | 5,626 | 1,886 | 2,206 | 6,089 | 7,832 | ||||||||||||||||||||||||
Total Retail Revenue | $ | 425,346 | $ | 414,263 | $ | 805,513 | $ | 780,555 | $ | 371,353 | $ | 377,886 | $ | 1,176,866 | $ | 1,158,441 | ||||||||||||||||
Wholesale Net Sales: | ||||||||||||||||||||||||||||||||
Domestic | $ | 74,766 | $ | 79,397 | $ | 148,587 | $ | 158,956 | $ | 82,670 | $ | 88,287 | $ | 231,257 | $ | 247,243 | ||||||||||||||||
International | 63,779 | 67,351 | 122,907 | 129,324 | 86,208 | 86,873 | 209,115 | 216,197 | ||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||
Total Wholesale Net Sales | $ | 138,545 | $ | 146,748 | $ | 271,494 | $ | 288,280 | $ | 168,878 | $ | 175,160 | $ | 440,372 | $ | 463,440 | ||||||||||||||||
Total Consolidated Revenue | $ | 563,891 | $ | 561,011 | $ | 1,077,007 | $ | 1,068,835 | $ | 540,231 | $ | 553,046 | $ | 1,617,238 | $ | 1,621,881 | ||||||||||||||||
Six months ended December 31, 2019 | $ | 89,895 | ||||||
Three months ended December 31, 2019 | $ | 35,386 | ||||||
2020 | 201,578 | 197,177 | ||||||
2021 | 185,305 | 182,950 | ||||||
2022 | 165,815 | 163,685 | ||||||
2023 | 137,724 | 135,792 | ||||||
Thereafter | 477,022 | 480,287 | ||||||
Total Undiscounted Cash Flows | $ | 1,257,339 | $ | 1,195,277 | ||||
Less: Interest | (317,891 | ) | (307,417 | ) | ||||
Total Operating Lease Liability | 939,448 | 887,860 | ||||||
Less: Current Portion of Operating Lease Liability | (145,472 | ) | (140,781 | ) | ||||
Long-Term Portion of Operating Lease Liability | $ | 793,976 | $ | 747,079 | ||||
Three Months Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Net sales | $ | 561,702 | 99.6 | % | $ | 558,101 | 99.5 | % | $ | 538,345 | 99.7 | % | $ | 550,840 | 99.6 | % | ||||||||||||||||
Royalties and franchise fees | 2,189 | 0.4 | 2,910 | 0.5 | 1,886 | 0.3 | 2,206 | 0.4 | ||||||||||||||||||||||||
Total revenues | 563,891 | 100.0 | 561,011 | 100.0 | 540,231 | 100.0 | 553,046 | 100.0 | ||||||||||||||||||||||||
Cost of sales | 353,056 | 62.6 | 329,477 | 58.7 | 373,413 | 69.1 | 349,641 | 63.2 | ||||||||||||||||||||||||
Wholesale selling expenses | 16,884 | 3.0 | 17,256 | 3.1 | 16,084 | 3.0 | 17,538 | 3.2 | ||||||||||||||||||||||||
Retail operating expenses | 96,143 | 17.0 | 92,094 | 16.4 | 111,595 | 20.7 | 103,833 | 18.8 | ||||||||||||||||||||||||
Franchise expenses | 3,236 | 0.6 | 3,980 | 0.7 | 3,274 | 0.6 | 862 | 0.2 | ||||||||||||||||||||||||
General and administrative expenses | 41,510 | 7.4 | 45,326 | 8.1 | 43,062 | 8.0 | 42,239 | 7.6 | ||||||||||||||||||||||||
Art and development costs | 5,712 | 1.0 | 5,732 | 1.0 | 5,927 | 1.1 | 5,573 | 1.0 | ||||||||||||||||||||||||
Development stage expenses | 3,012 | 0.5 | 1,695 | 0.3 | 2,728 | 0.5 | 1,622 | 0.3 | ||||||||||||||||||||||||
Gain on sale/leaseback transaction | (58,381 | ) | (10.4 | ) | — | — | ||||||||||||||||||||||||||
Store impairment and restructuring charges | 5,234 | 0.9 | — | — | 2,574 | 0.5 | — | — | ||||||||||||||||||||||||
Goodwill impairment | 259,100 | 48.0 | — | — | ||||||||||||||||||||||||||||
Total expenses | 817,757 | 151.4 | 521,308 | 94.3 | ||||||||||||||||||||||||||||
466,406 | 82.7 | 495,560 | 88.3 | |||||||||||||||||||||||||||||
Income from operations | 97,485 | 17.3 | 65,451 | 11.7 | ||||||||||||||||||||||||||||
(Loss) income from operations | (277,526 | ) | (51.4 | ) | 31,738 | 5.7 | ||||||||||||||||||||||||||
Interest expense, net | 30,176 | 5.4 | 25,501 | 4.5 | 29,424 | 5.4 | 27,705 | 5.0 | ||||||||||||||||||||||||
Other expense, net | 3,342 | 0.6 | 2,532 | 0.5 | 2,047 | 0.4 | 5,696 | 1.0 | ||||||||||||||||||||||||
Income before income taxes | 63,967 | 11.3 | 37,418 | 6.7 | ||||||||||||||||||||||||||||
Income tax expense | 15,962 | 2.8 | 9,370 | 1.7 | ||||||||||||||||||||||||||||
Loss before income taxes | (308,997 | ) | (57.2 | ) | (1,663 | ) | (0.3 | ) | ||||||||||||||||||||||||
Income tax (benefit) expense | (27,252 | ) | (5.0 | ) | 777 | 0.1 | ||||||||||||||||||||||||||
Net income | 48,005 | 8.5 | 28,048 | 5.0 | ||||||||||||||||||||||||||||
Add: Net income attributable to redeemable securities holder | — | — | 410 | 0.1 | ||||||||||||||||||||||||||||
Net loss | (281,745 | ) | (52.2 | ) | (2,440 | ) | (0.4 | ) | ||||||||||||||||||||||||
Add: Net loss attributable to redeemable securities holder | — | — | (8 | ) | (0.0 | ) | ||||||||||||||||||||||||||
Less: Net loss attributable to noncontrolling interests | (69 | ) | (0.0 | ) | (29 | ) | (0.0 | ) | (212 | ) | (0.0 | ) | (28 | ) | (0.0 | ) | ||||||||||||||||
Net income attributable to common shareholders of Party City Holdco Inc. | $ | 48,074 | 8.5 | % | $ | 28,487 | 5.1 | % | ||||||||||||||||||||||||
Net loss attributable to common shareholders of Party City Holdco Inc. | $ | (281,533 | ) | (52.1 | )% | $ | (2,420 | ) | (0.4 | )% | ||||||||||||||||||||||
Net income per share attributable to common shareholders of Party City Holdco Inc. – Basic | $ | 0.52 | $ | 0.30 | ||||||||||||||||||||||||||||
Net income per share attributable to common shareholders of Party City Holdco Inc. – Diluted | $ | 0.51 | $ | 0.29 | ||||||||||||||||||||||||||||
Net loss per share attributable to common shareholders of Party City Holdco Inc. – Basic | $ | (3.02 | ) | $ | (0.03 | ) | ||||||||||||||||||||||||||
Net loss per share attributable to common shareholders of Party City Holdco Inc. – Diluted | $ | (3.02 | ) | $ | (0.03 | ) |
Three Months Ended June 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Dollars in Thousands | Percentage of Total Revenues | Dollars in Thousands | Percentage of Total Revenues | |||||||||||||
Net Sales: | ||||||||||||||||
Wholesale | $ | 289,067 | 51.3 | % | $ | 285,733 | 50.9 | % | ||||||||
Eliminations | (150,522 | ) | (26.7 | )% | (138,985 | ) | (24.8 | )% | ||||||||
Net wholesale | 138,545 | 24.6 | % | 146,748 | 26.2 | % | ||||||||||
Retail | 423,157 | 75.0 | % | 411,353 | 73.3 | % | ||||||||||
Total net sales | 561,702 | 99.6 | % | 558,101 | 99.5 | % | ||||||||||
Royalties and franchise fees | 2,189 | 0.4 | % | 2,910 | 0.5 | % | ||||||||||
Total revenues | $ | 563,891 | 100.0 | % | $ | 561,011 | 100.0 | % | ||||||||
Three Months Ended September 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Dollars in Thousands | Percentage of Total Revenues | Dollars in Thousands | Percentage of Total Revenues | |||||||||||||
Net Sales: | ||||||||||||||||
Wholesale | $ | 383,425 | 71.0 | % | $ | 424,569 | 76.8 | % | ||||||||
Eliminations | (214,547 | ) | (39.7 | )% | (249,409 | ) | (45.1 | )% | ||||||||
Net wholesale | 168,878 | 31.3 | % | 175,160 | 31.7 | % | ||||||||||
Retail | 369,467 | 68.4 | % | 375,680 | 67.9 | % | ||||||||||
Total net sales | 538,345 | 99.7 | % | 550,840 | 99.6 | % | ||||||||||
Royalties and franchise fees | 1,886 | 0.3 | % | 2,206 | 0.4 | % | ||||||||||
Total revenues | $ | 540,231 | 100.0 | % | $ | 553,046 | 100.0 | % | ||||||||
Three Months Ended June 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Dollars in Thousands | Percentage of Net Sales | Dollars in Thousands | Percentage of Net Sales | |||||||||||||
Retail | $ | 172,051 | 40.7 | % | $ | 183,915 | 44.7 | % | ||||||||
Wholesale | 36,595 | 26.4 | 44,709 | 30.5 | ||||||||||||
Total | $ | 208,646 | 37.1 | % | $ | 228,624 | 41.0 | % | ||||||||
Three Months Ended September 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Dollars in Thousands | Percentage of Net Sales | Dollars in Thousands | Percentage of Net Sales | |||||||||||||
Retail | $ | 128,692 | 34.8 | % | $ | 151,860 | 40.4 | % | ||||||||
Wholesale | 36,240 | 21.5 | 49,339 | 28.2 | ||||||||||||
Total | $ | 164,932 | 30.6 | % | $ | 201,199 | 36.5 | % | ||||||||
Six Months Ended June 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Net sales | $ | 1,072,804 | 99.6 | % | $ | 1,063,209 | 99.5 | % | $ | 1,611,149 | 99.6 | % | $ | 1,614,049 | 99.5 | % | ||||||||||||||||
Royalties and franchise fees | 4,203 | 0.4 | 5,626 | 0.5 | 6,089 | 0.4 | 7,832 | 0.5 | ||||||||||||||||||||||||
Total revenues | 1,077,007 | 100.0 | 1,068,835 | 100.0 | 1,617,238 | 100.0 | 1,621,881 | 100.0 | ||||||||||||||||||||||||
Cost of sales | 692,098 | 64.3 | 646,443 | 60.5 | 1,065,511 | 65.9 | 996,084 | 61.4 | ||||||||||||||||||||||||
Wholesale selling expenses | 34,845 | 3.2 | 36,043 | 3.4 | 50,929 | 3.1 | 53,581 | 3.3 | ||||||||||||||||||||||||
Retail operating expenses | 191,161 | 17.7 | 181,186 | 17.0 | 302,756 | 18.7 | 285,019 | 17.6 | ||||||||||||||||||||||||
Franchise expenses | 6,539 | 0.6 | 7,762 | 0.7 | 9,813 | 0.6 | 8,624 | 0.5 | ||||||||||||||||||||||||
General and administrative expenses | 83,435 | 7.7 | 93,991 | 8.8 | 126,497 | 7.8 | 136,230 | 8.4 | ||||||||||||||||||||||||
Art and development costs | 11,641 | 1.1 | 11,705 | 1.1 | 17,568 | 1.1 | 17,278 | 1.1 | ||||||||||||||||||||||||
Development stage expenses | 5,238 | 0.5 | 3,998 | 0.4 | 7,966 | 0.5 | 5,620 | 0.3 | ||||||||||||||||||||||||
Gain on sale/leaseback transaction | (58,381 | ) | (5.4 | ) | — | — | (58,381 | ) | (3.6 | ) | — | — | ||||||||||||||||||||
Store impairment and restructuring charges | 23,243 | 2.2 | — | — | 25,817 | 1.6 | — | — | ||||||||||||||||||||||||
Goodwill impairment | 259,100 | 16.0 | — | — | ||||||||||||||||||||||||||||
Total expenses | 1,807,576 | 111.8 | 1,502,436 | 92.6 | ||||||||||||||||||||||||||||
989,819 | 91.9 | 981,128 | 91.8 | |||||||||||||||||||||||||||||
Income from operations | 87,188 | 8.1 | 87,707 | 8.2 | ||||||||||||||||||||||||||||
(Loss) income from operations | (190,338 | ) | (11.8 | ) | 119,445 | 7.4 | ||||||||||||||||||||||||||
Interest expense, net | 59,433 | 5.5 | 48,776 | 4.6 | 88,857 | 5.5 | 76,481 | 4.7 | ||||||||||||||||||||||||
Other expense, net | 4,596 | 0.4 | 3,380 | 0.3 | 6,643 | 0.4 | 9,076 | 0.6 | ||||||||||||||||||||||||
Income before income taxes | 23,159 | 2.2 | 35,551 | 3.3 | ||||||||||||||||||||||||||||
Income tax expense | 5,443 | 0.5 | 8,666 | 0.8 | ||||||||||||||||||||||||||||
(Loss) income before income taxes | (285,838 | ) | (17.7 | ) | 33,888 | 2.1 | ||||||||||||||||||||||||||
Income tax (benefit) expense | (21,809 | ) | (1.4 | ) | 9,443 | 0.6 | ||||||||||||||||||||||||||
Net income | 17,716 | 1.6 | 26,885 | 2.5 | ||||||||||||||||||||||||||||
Net (loss) income | (264,029 | ) | (16.3 | ) | 24,445 | 1.5 | ||||||||||||||||||||||||||
Add: Net income attributable to redeemable securities holder | — | — | 410 | 0.0 | — | — | 402 | 0.0 | ||||||||||||||||||||||||
Less: Net loss attributable to noncontrolling interests | (140 | ) | (0.0 | ) | (59 | ) | (0.0 | ) | (352 | ) | (0.0 | ) | (87 | ) | 0.0 | |||||||||||||||||
Net income attributable to common shareholders of Party City Holdco Inc. | $ | 17,856 | 1.7 | % | $ | 27,354 | 2.6 | % | ||||||||||||||||||||||||
Net (loss) income attributable to common shareholders of Party City Holdco Inc. | $ | (263,677 | ) | 16.3 | % | $ | 24,934 | 1.5 | % | |||||||||||||||||||||||
Net income per share attributable to common shareholders of Party City Holdco Inc. – Basic | $ | 0.19 | $ | 0.28 | ||||||||||||||||||||||||||||
Net income per share attributable to common shareholders of Party City Holdco Inc. – Diluted | $ | 0.19 | $ | 0.28 | ||||||||||||||||||||||||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc. – Basic | $ | (2.83 | ) | $ | 0.26 | |||||||||||||||||||||||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc. – Diluted | $ | (2.83 | ) | $ | 0.26 |
Six Months Ended June 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||
Dollars in Thousands | Percentage of Total Revenues | Dollars in Thousands | Percentage of Total Revenues | Dollars in Thousands | Percentage of Total Revenues | Dollars in Thousands | Percentage of Total Revenues | |||||||||||||||||||||||||
Net Sales: | ||||||||||||||||||||||||||||||||
Wholesale | $ | 579,368 | 53.8 | % | $ | 563,560 | 52.7 | % | $ | 962,793 | 61.4 | % | $ | 988,129 | 60.9 | % | ||||||||||||||||
Eliminations | (307,874 | ) | (28.6 | )% | (275,280 | ) | (25.8 | )% | (522,421 | ) | (34.2 | )% | (524,689 | ) | (32.3 | )% | ||||||||||||||||
Net wholesale | 271,494 | 25.2 | % | 288,280 | 27.0 | % | 440,372 | 27.2 | % | 463,440 | 28.6 | % | ||||||||||||||||||||
Retail | 801,310 | 74.4 | % | 774,929 | 72.5 | % | 1,170,777 | 72.4 | % | 1,150,609 | 70.9 | % | ||||||||||||||||||||
Total net sales | 1,072,804 | 99.6 | % | 1,063,209 | 99.5 | % | 1,611,149 | 99.6 | % | 1,614,049 | 99.5 | % | ||||||||||||||||||||
Royalties and franchise fees | 4,203 | 0.4 | % | 5,626 | 0.5 | % | 6,089 | 0.4 | % | 7,832 | 0.5 | % | ||||||||||||||||||||
Total revenues | $ | 1,077,007 | 100.0 | % | $ | 1,068,835 | 100.0 | % | $ | 1,617,238 | 100.0 | % | $ | 1,621,881 | 100.0 | % | ||||||||||||||||
Six Months Ended June 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||
Dollars in Thousands | Percentage of Net Sales | Dollars in Thousands | Percentage of Net Sales | Dollars in Thousands | Percentage of Net Sales | Dollars in Thousands | Percentage of Net Sales | |||||||||||||||||||||||||
Retail | $ | 308,069 | 38.4 | % | $ | 330,750 | 42.7 | % | $ | 436,761 | 37.3 | % | $ | 482,609 | 41.9 | % | ||||||||||||||||
Wholesale | 72,637 | 26.8 | 86,016 | 29.8 | 108,877 | 24.7 | 135,356 | 29.2 | ||||||||||||||||||||||||
Total | $ | 380,706 | 35.5 | % | $ | 416,766 | 39.2 | % | $ | 545,638 | 33.9 | % | $ | 617,965 | 38.3 | % | ||||||||||||||||
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net income | $ | 48,005 | $ | 28,048 | $ | 17,716 | $ | 26,885 | ||||||||
Interest expense, net | 30,176 | 25,501 | 59,433 | 48,776 | ||||||||||||
Income taxes | 15,962 | 9,370 | 5,443 | 8,666 | ||||||||||||
Depreciation and amortization | 21,884 | 20,255 | 43,225 | 40,812 | ||||||||||||
EBITDA | 116,027 | 83,174 | 125,817 | 125,139 | ||||||||||||
Non-cash purchase accounting adjustments | 1,756 | 1,098 | 2,757 | 542 | ||||||||||||
Store impairment and restructuring charges (a) | 10,628 | — | 46,266 | — | ||||||||||||
Other restructuring, retention and severance (b) | 3,933 | (457 | ) | 5,321 | 2,154 | |||||||||||
Deferred rent (c) | (338 | ) | 787 | (1,488 | ) | 1,155 | ||||||||||
Closed store expense (d) | 507 | 793 | 1,098 | 2,605 | ||||||||||||
Foreign currency losses/(gains), net | 133 | 505 | (160 | ) | 442 | |||||||||||
Stock option expense (e) | 371 | 482 | 741 | 942 | ||||||||||||
Non-employee equity based compensation (f) | 129 | 104 | 258 | 365 | ||||||||||||
Undistributed income in equity method investments | (4 | ) | (90 | ) | (202 | ) | (301 | ) | ||||||||
Corporate development expenses (g) | 4,349 | 2,778 | 7,194 | 5,352 | ||||||||||||
Non-recurring consulting charges (h) | — | 6,869 | — | 11,619 | ||||||||||||
Refinancing charges (i) | — | — | — | 1,146 | ||||||||||||
Restricted stock units – time-based (j) | 541 | 252 | 933 | 252 | ||||||||||||
Restricted stock units – performance-based (k) | 476 | 593 | 476 | 593 | ||||||||||||
Non-recurring legal settlements/costs | 869 | — | 1,601 | — | ||||||||||||
Gain on sale/leaseback transaction (l) | (58,381 | ) | — | (58,381 | ) | — | ||||||||||
Other | 44 | (282 | ) | 291 | (251 | ) | ||||||||||
Adjusted EBITDA | $ | 81,040 | $ | 96,606 | $ | 132,522 | $ | 151,754 | ||||||||
Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net (loss) income | $ | (281,745 | ) | $ | (2,440 | ) | $ | (264,029 | ) | $ | 24,445 | |||||
Interest expense, net | 29,424 | 27,705 | 88,857 | 76,481 | ||||||||||||
Income taxes | (27,252 | ) | 777 | (21,809 | ) | 9,443 | ||||||||||
Depreciation and amortization | 19,155 | 16,974 | 62,380 | 57,786 | ||||||||||||
EBITDA | (260,418 | ) | 43,016 | (134,601 | ) | 168,155 | ||||||||||
Non-cash purchase accounting adjustments | — | 2,154 | 2,757 | 2,696 | ||||||||||||
Store impairment and restructuring charges (a) | 8,694 | — | 54,960 | — | ||||||||||||
Other restructuring, retention and severance (b) | (73 | ) | 951 | 5,248 | 3,105 | |||||||||||
Goodwill impairment (c) | 259,100 | — | 259,100 | — | ||||||||||||
Deferred rent (d) | 446 | 2,468 | (1,042 | ) | 3,623 | |||||||||||
Closed store expense (e) | 2,326 | 825 | 3,424 | 3,430 | ||||||||||||
Foreign currency losses/(gains), net | 646 | (314 | ) | 486 | 128 | |||||||||||
Stock option expense (f) | 409 | 550 | 1,150 | 1,492 | ||||||||||||
Non-employee equity-based compensation (g) | 128 | (13 | ) | 386 | 352 | |||||||||||
Undistributed (loss) income in equity method investments | 7 | (279 | ) | (195 | ) | (580 | ) | |||||||||
Corporate development expenses (h) | 4,588 | 3,057 | 11,782 | 8,409 | ||||||||||||
Non-recurring consulting charges (i) | — | 624 | — | 12,243 | ||||||||||||
Refinancing charges (j) | — | 5,091 | — | 6,237 | ||||||||||||
Restricted stock units – time-based (k) | 610 | 470 | 1,543 | 722 | ||||||||||||
Restricted stock units – performance-based (l) | 560 | 889 | 1,036 | 1,482 | ||||||||||||
Non-recurring legal settlements/costs | 194 | — | 1,795 | — | ||||||||||||
Gain on sale/leaseback transaction (m) | — | — | (58,381 | ) | — | |||||||||||
Other | (75 | ) | (44 | ) | 217 | (295 | ) | |||||||||
Adjusted EBITDA | $ | 17,142 | $ | 59,445 | $ | 149,666 | $ | 211,199 | ||||||||
Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | |||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||
(Loss) income before income taxes | $ | (308,997 | ) | $ | (1,663 | ) | $ | (285,838 | ) | $ | 33,888 | |||||
Intangible asset amortization | 3,553 | 591 | 10,528 | 7,959 | ||||||||||||
Non-cash purchase accounting adjustments | 424 | 1,659 | 4,200 | 2,622 | ||||||||||||
Amortization of deferred financing costs and original issuance discounts (j) | 1,222 | 6,268 | 3,511 | 9,834 | ||||||||||||
Store impairment and restructuring charges (a) | 8,694 | — | 54,960 | — | ||||||||||||
Other restructuring charges (b) | (263 | ) | 809 | 2,822 | 809 | |||||||||||
Goodwill impairment (c) | 259,100 | — | 259,100 | — | ||||||||||||
Non-employee equity-based compensation (g) | 128 | (13 | ) | 386 | 352 | |||||||||||
Refinancing charges (j) | — | — | 36 | — | ||||||||||||
Non-recurring consulting charges (i) | — | 624 | — | 12,243 | ||||||||||||
Stock option expense (f) | 409 | 550 | 1,150 | 1,492 | ||||||||||||
Gain on sale/leaseback transaction (m) | — | — | (58,381 | ) | — | |||||||||||
Restricted stock units - performance-based (l) | 560 | 889 | 1,036 | 1,482 | ||||||||||||
Adjusted (loss) income before income taxes | (35,170 | ) | 9,714 | (6,490 | ) | 70,681 | ||||||||||
Adjusted income tax (benefit) expense (n) | (9,459 | ) | 2,364 | (2,117 | ) | 17,213 | ||||||||||
Adjusted net (loss) income | $ | (25,711 | ) | $ | 7,350 | $ | (4,373 | ) | $ | 53,468 | ||||||
Adjusted net (loss) income per common share – diluted | $ | (0.28 | ) | $ | 0.08 | $ | (0.05 | ) | $ | 0.55 | ||||||
Weighted-average number of common shares-diluted | 93,346,448 | 97,714,252 | 93,271,392 | 97,684,290 |
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | |||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||
Income before income taxes | $ | 63,967 | $ | 37,418 | $ | 23,159 | $ | 35,551 | ||||||||
Intangible asset amortization | 3,546 | 3,705 | 6,975 | 7,368 | ||||||||||||
Non-cash purchase accounting adjustments | 2,459 | 1,668 | 3,776 | 963 | ||||||||||||
Amortization of deferred financing costs and original issuance discounts (i) | 1,146 | 1,210 | 2,289 | 2,766 | ||||||||||||
Store impairment and restructuring charges (a) | 10,628 | — | 46,266 | — | ||||||||||||
Other restructuring charges (b) | 3,085 | — | 3,085 | — | ||||||||||||
Non-employee equity based compensation (f) | 129 | 104 | 258 | 365 | ||||||||||||
Refinancing charges (i) | 36 | — | 36 | 800 | ||||||||||||
Non-recurring consulting charges (h) | — | 6,869 | — | 11,619 | ||||||||||||
Stock option expense (e) | 371 | 482 | 741 | 942 | ||||||||||||
Gain on sale/leaseback transaction (l) | (58,381 | ) | — | (58,381 | ) | — | ||||||||||
Restricted stock units - performance-based (k) | 476 | 593 | 476 | 593 | ||||||||||||
Adjusted income before income taxes | 27,462 | 52,049 | 28,680 | 60,967 | ||||||||||||
Adjusted income tax expense (m) | 7,227 | 12,813 | 7,342 | 14,849 | ||||||||||||
Adjusted net income | $ | 20,235 | $ | 39,236 | $ | 21,338 | $ | 46,118 | ||||||||
Adjusted net income per common share – diluted | $ | 0.22 | $ | 0.40 | $ | 0.23 | $ | 0.47 | ||||||||
Weighted-average number of common shares-diluted | 93,703,546 | 97,688,233 | 93,791,763 | 97,669,309 |
(a) | During the |
(b) | Amounts expensed during 2019 principally relate to executive severance and the write-off of inventory for a section of the Company’s Party City stores that is being restructured. |
(c) | As a result of a sustained decline in market capitalization, the Company recognized a non-cash pre-tax goodwill impairment charge at September 30, 2019 of $259,100. |
(d) | The “deferred rent” adjustment reflects the difference between accounting for rent and landlord incentives in accordance with GAAP and the Company’s actual cash outlay for such items. During the first quarter of 2019, the Company adopted ASC 842. Under the standard, the difference between accounting for rent and landlord incentives in accordance with GAAP and the Company’s actual cash outlay for such items is now incorporated in the Company’s operating lease asset. |
Charges incurred related to closing and relocating stores in the ordinary course of business. |
Represents non-cash charges related to stock options. |
Principally represents shares of Kazzam awarded to Ampology as compensation for Ampology’s services. See the 2018 Form 10-K for further discussion. |
Primarily represents start-up costs for Kazzam (see the 2018 Form10-K for further discussion) and third-party costs related to acquisitions (principally legal and diligence expenses). |
Non-recurring consulting charges related to the Company’s retail operations. |
During wrote-off capitalized deferred financing costs, original issue discounts and call premiums. The amounts are included in “Refinancing charges” in the adjusted EBITDA table above and in “Amortization of deferred financing costs and original issuance discounts” in the adjusted net income table above. Further, in conjunction with the amendment, the Company expensed investment banking and legal fees. These amounts are included in “Refinancing charges” in the tables above. |
Non-cash charges for restricted stock units that vest based on service conditions. |
Non-cash charges for restricted stock units that vest based on performance conditions. |
During June 2019, the Company reported a $58,381 gain from the sale and leaseback of its main distribution center in Chester, New York and its metallic balloons manufacturing facility in Eden Prairie, Minnesota. The aggregate sale price for the three properties was $128,000. Simultaneous with the sale, the Company entered into |
Represents income tax expense/benefit after excluding the specific tax impacts for each of the pre-tax adjustments. The tax impacts for each of the adjustments were determined by applying to thepre-tax adjustments the effective income tax rates for the specific legal entities in which the adjustments were recorded. |
3.1 | ||||
3.2 | ||||
10.1 | ||||
10.2 | ||||
10.3 | ||||
10.4 | ||||
10.5 †* | ||||
10.6 †* | ||||
10.7 †* | ||||
10.8 †* | ||||
31.1* | ||||
31.2* | ||||
32.1* | ||||
32.2* | ||||
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||||
XBRL Taxonomy Extension Schema Document. | ||||
XBRL Taxonomy Extension Calculation Linkbase Document. | ||||
XBRL Taxonomy Extension Definition Linkbase Document. | ||||
XBRL Taxonomy Extension Label Linkbase Document. | ||||
XBRL Taxonomy Extension Presentation Linkbase Document. |
† | Management contract of compensatory plan or arrangement | |||
* | Filed herewith. |
PARTY CITY HOLDCO INC. | ||||||
By: | /s/ Michael A. Correale | |||||
Michael A. Correale | ||||||
Interim Chief Financial Officer (on behalf of the Registrant and as Principal Financial Officer) |