☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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46-0539758
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock $0.01 par value
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PRTY
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New York Stock Exchange
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Large accelerated filer
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☐
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Accelerated filer
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☒
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Non-accelerated
filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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Item 1
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1
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Item 1A
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10
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Item 1B
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26
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Item 2
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27
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Item 3
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29
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Item 4
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29
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Item 5
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30
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Item 6
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32
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Item 7
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41
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Item 7A
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68
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Item 8
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70
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Item 9
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122
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Item 9A
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122
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Item 9B
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123
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Item 10
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125
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Item 11
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125
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Item 12
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125
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Item 13
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125
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Item 14
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125
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Item 15
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126
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Item 16
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130
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Item 1.
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Business
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2019
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2018
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2017
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||||||
Stores open at beginning of year
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866
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803
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750
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|||||||||
Stores opened
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5
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15
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16
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|||||||||
Stores acquired from franchisees/others
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6
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58
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44
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|||||||||
Stores closed and sold
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(100
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) |
(10
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) |
(7
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) | ||||||
Stores open at end of year
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777
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866
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803
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|||||||||
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2019
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2018
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2017
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||||||
Stores open at beginning of year
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96
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148
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184
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|||||||||
Stores opened/acquired by existing franchisees
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2
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1
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3
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|||||||||
Stores sold to the Company
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—
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(50
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) |
(36
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) | |||||||
Stores closed or converted to independent stores
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—
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(3
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) |
(3
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) | |||||||
Stores open at end of year
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98
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96
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148
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Channel
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Sales
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(dollars in millions)
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Owned stores and
e-commerce
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$ |
643
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Party City franchised stores and other domestic retailers
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242
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Domestic balloon distributors/retailers
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78
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International balloon distributors
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23
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Other international
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254
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Total wholesale sales
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$ |
1,240
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Category
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Items
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% of Sales
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Tableware
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Plastic Plates, Paper Plates, Plastic Cups, Paper Cups, Paper Napkins, Plastic Cutlery, Table Covers
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26
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% | |||
Costumes & Accessories
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Costumes, Other Wearables, Wigs
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26
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% | |||
Decorations
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Latex Balloons, Piñatas, Crepes, Flags & Banners, Decorative Tissues, Stickers and Confetti, Scene Setters, Garland, Centerpieces
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22
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% | |||
Metallic Balloons
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Bouquets, Standard 18 Inch
Sing-A-Tune,
SuperShapes, Weights
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15
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% | |||
Favors, Stationery & Other
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Party Favors, Gift Bags, Gift Wrap, Invitations, Bows, Stationery
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11
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% |
Everyday
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Seasonal
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Birthdays: Juvenile, General & Milestone
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New Year’s
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Bridal: Engagement, Shower & Wedding
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Valentine’s Day
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Variety of Religious holidays & Occasions
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St. Patrick’s Day
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Baby Shower & Gender Reveal
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Easter
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General Entertaining, Cocktail & Special Events
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Mardi Gras
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Themes: Casino, Tea Party, Retirement, Hollywood,
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Cinco de Mayo
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Decades, Fiesta, Luau, Masquerade & Sports
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Graduation
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Favors, Wearables & Novelties for all occasions
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Summer & Patriotic
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Fall
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Thanksgiving
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Halloween
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Hanukkah
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Christmas
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Location
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Principal Products
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Approximate Square Feet
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||||
Monterrey, Mexico
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Stickers, gift wrap, bags and invites
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355,500
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Newburgh, New York
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Paper napkins and paper cups
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248,000
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||||||
East Providence, Rhode Island
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Plastic plates, cups and bowls
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229,230(1)
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||||||
Louisville, Kentucky
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Paper plates
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213,958
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Tijuana, Mexico
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Piñatas and other party products
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135,000
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Eden Prairie, Minnesota
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Metallic balloons and accessories
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115,600
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Melaka, Malaysia
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Latex balloons
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100,000
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||||||
Los Lunas, New Mexico
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Injection molded plastics
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85,055
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Antananarivo, Madagascar
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Costumes
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41,000
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(1) | The square footage represents an industrial park, which includes a 48,455 square foot office and warehouse. |
Item 1A.
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Risk Factors
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• |
implement our path to becoming a party platform that is a technology-enabled,
one-stop-shop
that provides
end-to-end
services based on predicting customer needs and wants;
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• |
grow our
e-commerce
business;
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• | implement new retail programs that could include but are not limited to loyalty rewards, new formats for existing stores, fewer skus and less inventory; |
• | identify suitable store locations, including temporary lease space for our Halloween City location, the availability of which is largely outside of our control; |
• | negotiate and secure acceptable lease terms, desired tenant allowances and assurances from operators and developers that they can complete the project, which depend in part on the financial resources of the operators and developers; |
• | obtain or maintain adequate capital resources on acceptable terms; |
• | manufacture and source sufficient levels of inventory at acceptable costs; |
• | hire, train and retain an expanded workforce of store managers and other store-level personnel, many of whom are in entry-level or part-time positions with historically high rates of turnover; |
• |
successfully integrate new
stores/e-commerce
operations into our existing control structure and operations, including information system integration;
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• | maintain adequate manufacturing and distribution facilities, information system and other operational system capabilities; |
• | identify and satisfy the merchandise and other preferences of our customers in new geographic areas and markets; |
• | gain brand recognition and acceptance in new markets; and |
• |
address competitive, merchandising, marketing, distribution and other challenges encountered in connection with expansion into new geographic areas and markets, including geographic restrictions on the opening of new
stores/e-commerce
operations based on certain agreements with our franchisees and other business partners.
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• | recessionary or expansive trends in international markets; |
• | changes in foreign currency exchange rates, principally fluctuations in the British Pound Sterling, the Canadian Dollar, the Euro, the Malaysian Ringgit, the Mexican Peso and the Australian Dollar; |
• | hyperinflation or deflation in the foreign countries in which we operate; |
• | work stoppages or other employee rights issues; |
• | the imposition of restrictions on currency conversion or the transfer of funds; |
• | transportation delays and interruptions; |
• | increases in the taxes we pay and other changes in applicable tax laws; |
• | difficulty enforcing our intellectual property and competition against counterfeit goods; |
• |
public health crises, including the occurrence of a contagious disease or illness such as the
COVID-19
outbreak;
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• | legal and regulatory changes and the burdens and costs of our compliance with a variety of laws, including new or additional trade restrictions, tariffs and changes in environmental regulations; and |
• | political and economic instability. |
• | identify suitable acquisition candidates; |
• | consummate acquisitions on acceptable terms; |
• | successfully integrate any acquired business into our operations or successfully manage the operations of any acquired business; or |
• | retain an acquired company’s significant customer relationships, goodwill and key personnel or otherwise realize the intended benefits of an acquisition. |
• | make it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to comply with the obligations under any of our debt instruments, including restrictive covenants, could result in an event of default under the agreements governing such other indebtedness; |
• | require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing funds available for working capital, capital expenditures, acquisitions, selling and marketing efforts, product development and other purposes; |
• | increase our vulnerability to adverse economic and industry conditions, which could place us at a competitive disadvantage compared to our competitors that have relatively less indebtedness; |
• | limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; |
• | expose us to the risk of increasing rates as certain of our borrowings, including under the Senior Credit Facilities, will be at variable interest rates; |
• |
restrict us from making strategic acquisitions or cause us to make
non-strategic
divestitures; and
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• | limit our ability to borrow additional funds, or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions, product development and other corporate purposes. |
• | incurring additional indebtedness or issuing disqualified stock; |
• | paying dividends or distributions on, redeeming, repurchasing or retiring our capital stock; |
• | making payments on, or redeeming, repurchasing or retiring indebtedness; |
• | making investments, loans, advances or acquisitions; |
• | entering into sale and leaseback transactions; |
• | engaging in transactions with affiliates; |
• | creating liens; |
• | transferring or selling assets; |
• | guaranteeing indebtedness; |
• | creating restrictions on the payment of dividends or other amounts to us from our subsidiaries; and |
• | consolidating, merging or transferring all or substantially all of our assets and the assets of our subsidiaries. |
• | the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; |
• | the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or |
• | it could not pay its debts as they became due. |
• | advance notice requirements for stockholder proposals and director nominations; |
• | the sole ability of the board of directors to fill a vacancy created by the expansion of the board of directors; |
• | the required approval of holders of at least 75% of our outstanding shares of capital stock entitled to vote generally at an election of the directors to remove directors only for cause; |
• |
the required approval of holders of at least 66
2
/
3
% of our outstanding shares of capital stock entitled to vote at an election of directors to adopt, amend or repeal our bylaws, or amend or repeal certain provisions of our amended and restated certificate of incorporation;
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• | limitations on the ability of stockholders to call special meetings and take action by written consent; and |
• |
provisions that reproduce much of the provisions that limit the ability of “interested stockholders” from engaging in specified business combinations with us absent prior approval of the board of directors or holders of 66
2
/
3
% of our voting stock.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Location
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Principal Activity
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Square Feet
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Owned or Leased
(With Expiration Date)
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|||
Elmsford, New York
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Executive and other corporate offices, showrooms, design and art production for party products
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146,346 square feet
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Leased(1)
|
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Rockaway, New Jersey
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Retail corporate offices
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106,000 square feet
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Leased (expiration date:
July 31, 2022)
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|||
Antananarivo, Madagascar
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Manufacture of costumes
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41,000 square feet
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Leased (expiration date:
December 31, 2023)
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|||
Dallas, Texas
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Manufacture/personalization of cups and napkins
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54,413 square feet
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Leased (expiration date:
October 31, 2022)
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|||
East Providence, Rhode Island
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Manufacture and distribution of plastic plates, cups and bowls
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229,230 square feet(2)
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Leased (expiration date:
February 28, 2033)
|
|||
Eden Prairie, Minnesota
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Manufacture of metallic balloons and accessories
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115,600 square feet
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Leased (expiration date:
June 30, 2039)
|
|||
Los Lunas, New Mexico
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Manufacture of injection molded plastics
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85,055 square feet
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Leased (expiration date:
6/30/2039)
|
|||
Louisville, Kentucky
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Manufacture and distribution of paper plates
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213,958 square feet
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Leased (expiration date:
March 31, 2025)
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|||
Melaka, Malaysia
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Manufacture and distribution of latex balloons
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100,000 square feet
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Leased (expiration date:
January 31, 2020)
|
|||
Monterrey, Mexico
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Manufacture and distribution of party products
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355,500 square feet
|
Leased (expiration date:
March 3, 2027)
|
|||
Newburgh, New York
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Manufacture of paper napkins and cups
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248,000 square feet
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Leased (expiration date:
July 31, 2027)
|
|||
Tijuana, Mexico
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Manufacture and distribution of party products
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135,000 square feet
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Leased(3)
|
|||
Chester, New York
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Distribution of party products
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896,000 square feet
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Leased (expiration date:
June 30, 2039)
|
|||
Edina, Minnesota
|
Distribution of metallic balloons and accessories
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122,312 square feet
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Leased (expiration date:
March 31, 2021)
|
|||
Kirchheim unter Teck, Germany
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Distribution of party goods
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215,000 square feet
|
Owned
|
|||
Milton Keynes, Buckinghamshire, England
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Distribution of party products throughout Europe
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130,858 square feet
|
Leased (expiration date:
December 31, 2022)
|
|||
Naperville, Illinois
|
Distribution of party goods for
e-commerce
sales
|
440,343 square feet
|
Leased (expiration date:
December 31, 2033)
|
(1) | Property is comprised of two buildings with various lease expiration dates through December 31, 2027. |
(2) | This figure represents an industrial park, which includes a 48,455 square foot office and warehouse. |
(3) | Property is comprised of two buildings with various lease expiration dates through March 31, 2022. |
State
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Company-owned
|
|
Franchise
|
|
Chain-wide
|
|
||||||
Alabama
|
9
|
—
|
9
|
|||||||||
Arizona
|
16
|
—
|
16
|
|||||||||
Arkansas
|
—
|
3
|
3
|
|||||||||
California
|
97
|
17
|
114
|
|||||||||
Colorado
|
14
|
—
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14
|
|||||||||
Connecticut
|
13
|
—
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13
|
|||||||||
Delaware
|
1
|
1
|
2
|
|||||||||
Florida
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64
|
7
|
71
|
|||||||||
Georgia
|
30
|
1
|
31
|
|||||||||
Illinois
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45
|
—
|
45
|
|||||||||
Indiana
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20
|
—
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20
|
|||||||||
Iowa
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9
|
—
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9
|
|||||||||
Kansas
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7
|
—
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7
|
|||||||||
Kentucky
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9
|
—
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9
|
|||||||||
Louisiana
|
12
|
—
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12
|
|||||||||
Maine
|
3
|
—
|
3
|
|||||||||
Maryland
|
22
|
1
|
23
|
|||||||||
Massachusetts
|
21
|
—
|
21
|
|||||||||
Michigan
|
26
|
—
|
26
|
|||||||||
Minnesota
|
15
|
—
|
15
|
|||||||||
Mississippi
|
1
|
2
|
3
|
|||||||||
Missouri
|
18
|
1
|
19
|
|||||||||
Montana
|
—
|
1
|
1
|
|||||||||
Nebraska
|
3
|
—
|
3
|
|||||||||
Nevada
|
6
|
—
|
6
|
|||||||||
New Hampshire
|
5
|
—
|
5
|
|||||||||
New Jersey
|
26
|
2
|
28
|
|||||||||
New Mexico
|
3
|
—
|
3
|
|||||||||
New York
|
51
|
11
|
62
|
|||||||||
North Carolina
|
14
|
5
|
19
|
|||||||||
North Dakota
|
4
|
—
|
4
|
|||||||||
Ohio
|
29
|
—
|
29
|
|||||||||
Oklahoma
|
11
|
—
|
11
|
|||||||||
Oregon
|
1
|
1
|
2
|
|||||||||
Pennsylvania
|
29
|
1
|
30
|
|||||||||
Puerto Rico
|
—
|
5
|
5
|
|||||||||
Rhode Island
|
2
|
—
|
2
|
State
|
Company-owned
|
|
Franchise
|
|
Chain-wide
|
|
||||||
South Carolina
|
9
|
1
|
10
|
|||||||||
Tennessee
|
9
|
7
|
16
|
|||||||||
Texas
|
74
|
14
|
88
|
|||||||||
Vermont
|
1
|
—
|
1
|
|||||||||
Virginia
|
14
|
8
|
22
|
|||||||||
Washington
|
18
|
1
|
19
|
|||||||||
West Virginia
|
4
|
—
|
4
|
|||||||||
Wisconsin
|
12
|
—
|
12
|
|||||||||
Total
|
777
|
90
|
867
|
|||||||||
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
(a)
|
|
(b)
|
|
(c)
|
|
||||||
Plan Category
|
Number of
securities to be issued upon exercise of outstanding options, warrants, and rights |
|
Weighted-
average exercise price of outstanding options, warrants and rights |
|
Number of
securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|
||||||
Equity compensation plans approved by security holders
|
7,371,967
|
(1) |
7.67
|
(1) |
5,406,685
|
|||||||
Equity compensation plans not approved by security holders
|
596,000
|
15.60
|
254,000
|
|||||||||
Total
|
7,967,967
|
8.27
|
5,660,685
|
(1) | Column (a) includes 6,318,717 outstanding stock options and 1,053,250 restricted stock units. The restricted stock units amount assumes that the maximum number of shares ultimately vest for awards that are performance-based. Additionally, the stock options amount assumes that all performance-based stock options vest. The weighted-average exercise price in column (b) takes into account the restricted stock units, which have no exercise price. The weighted average exercise price solely with respect to stock options outstanding under the approved plans is $8.95. |
Item 6.
|
Selected Consolidated Financial Data
|
|
Fiscal Year Ended December 31,
|
|||||||||||||||||||
|
2015(1)
|
|
2016(2)
|
|
2017(3)
|
|
2018(4)
|
|
2019(5)
|
|
||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues:
|
|
|
|
|
|
|||||||||||||||
Net sales(6)
|
$ |
2,275,122
|
$ |
2,266,386
|
$ |
2,357,986
|
$ |
2,416,442
|
$ |
2,339,510
|
||||||||||
Royalties and franchise fees
|
19,411
|
17,005
|
13,583
|
11,073
|
9,279
|
|||||||||||||||
Total revenues(6)
|
2,294,533
|
2,283,391
|
2,371,569
|
2,427,515
|
2,348,789
|
|||||||||||||||
Expenses:
|
|
|
|
|
|
|||||||||||||||
Cost of sales
|
1,370,884
|
1,350,387
|
1,395,279
|
1,435,358
|
1,500,633
|
|||||||||||||||
Wholesale selling expenses
|
64,260
|
59,956
|
65,356
|
71,502
|
67,103
|
|||||||||||||||
Retail operating expenses
|
401,039
|
408,583
|
415,167
|
425,996
|
440,395
|
|||||||||||||||
Franchise expenses
|
14,394
|
15,213
|
14,957
|
13,214
|
13,152
|
|||||||||||||||
General and administrative expenses
|
151,097
|
152,919
|
168,369
|
172,764
|
177,672
|
|||||||||||||||
Art and development costs
|
20,640
|
22,249
|
23,331
|
23,388
|
23,203
|
|||||||||||||||
Development stage expenses(7)
|
—
|
—
|
8,974
|
7,008
|
10,736
|
|||||||||||||||
Gain on sale/leaseback transaction(11)(p)
|
—
|
—
|
—
|
—
|
(58,381
|
) | ||||||||||||||
Store impairment and restructuring charges
|
—
|
—
|
—
|
—
|
29,038
|
|||||||||||||||
Goodwill and intangibles impairment(11)(r)
|
—
|
—
|
—
|
—
|
562,631
|
|||||||||||||||
Income (loss) from operations
|
272,219
|
274,084
|
280,136
|
278,285
|
(417,393
|
) | ||||||||||||||
Interest expense, net
|
123,361
|
89,380
|
87,366
|
105,706
|
114,899
|
|||||||||||||||
Other expense (income), net(8)
|
130,990
|
(2,010
|
) |
4,626
|
10,982
|
1,871
|
||||||||||||||
Income (loss) before income taxes
|
17,868
|
186,714
|
188,144
|
161,597
|
(534,163
|
) | ||||||||||||||
Income tax expense (benefit)(9)
|
7,409
|
69,237
|
(27,196
|
) |
38,778
|
(1,305
|
) | |||||||||||||
Net income (loss)
|
10,459
|
117,477
|
215,340
|
122,819
|
(532,858
|
) | ||||||||||||||
Add: net income attributable to redeemable securities holder
|
—
|
—
|
—
|
409
|
—
|
|||||||||||||||
Less: net loss attributable to noncontrolling interests
|
—
|
—
|
—
|
(31
|
) |
(363
|
) | |||||||||||||
Net income (loss) attributable to common shareholders of Party City Holdco Inc.
|
$ |
10,459
|
$ |
117,477
|
$ |
215,340
|
$ |
123,259
|
$ |
(532,495
|
) | |||||||||
|
Fiscal Year Ended December 31,
|
|||||||||||||||||||
|
2015(1)
|
|
2016(2)
|
|
2017(3)
|
|
2018(4)
|
|
2019(5)
|
|
||||||||||
Statement of Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net cash provided by (used in)
|
|
|
|
|
|
|||||||||||||||
Operating activities(10)
|
$ |
80,385
|
$ |
257,782
|
$ |
267,883
|
$ |
101,856
|
$ |
43,693
|
||||||||||
Investing activities(10)
|
(100,136
|
) |
(113,733
|
) |
(141,645
|
) |
(150,907
|
) |
163,675
|
|||||||||||
Financing activities(10)
|
18,941
|
(119,740
|
) |
(139,962
|
) |
56,170
|
(237,710
|
) | ||||||||||||
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
$ |
0.09
|
$ |
0.98
|
$ |
1.81
|
$ |
1.28
|
$ |
(5.71
|
) | |||||||||
Diluted
|
$ |
0.09
|
$ |
0.98
|
$ |
1.79
|
$ |
1.27
|
$ |
(5.71
|
) | |||||||||
Weighted Average
|
|
|
|
|
|
|||||||||||||||
Outstanding basic
|
111,917,168
|
119,381,842
|
118,589,421
|
96,133,144
|
93,295,692
|
|||||||||||||||
Diluted
|
112,943,807
|
120,369,672
|
119,894,021
|
97,271,050
|
93,295,692
|
|||||||||||||||
Cash dividend per common share
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Adjusted EBITDA(11)
|
$ |
380,293
|
$ |
390,049
|
$ |
409,210
|
$ |
400,116
|
$ |
269,189
|
||||||||||
Adjusted net income(11)
|
$ |
114,206
|
$ |
138,277
|
$ |
148,643
|
$ |
156,842
|
$ |
43,414
|
||||||||||
Adjusted net income per common share—diluted(11)
|
$ |
1.01
|
$ |
1.15
|
$ |
1.24
|
$ |
1.61
|
$ |
0.46
|
||||||||||
Number of company-owned Party City stores
|
712
|
750
|
803
|
866
|
777
|
|||||||||||||||
Capital expenditures
|
$ |
78,825
|
$ |
78,825
|
$ |
66,970
|
$ |
85,661
|
$ |
61,733
|
||||||||||
Party City brand comp sales(12)
|
1.5
|
% |
(0.4
|
)% |
(0.7
|
)% |
(0.7
|
)% |
(3.0
|
)% | ||||||||||
Wholesale Share of shelf(13)
|
75.0
|
% |
76.6
|
% |
79.6
|
% |
78.9
|
% |
79.6
|
% | ||||||||||
Balance Sheet Data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$ |
42,919
|
$ |
64,610
|
$ |
54,291
|
$ |
58,909
|
$ |
34,917
|
||||||||||
Working capital(14)
|
382,788
|
387,565
|
194,632
|
312,398
|
199,203
|
|||||||||||||||
Total assets(14)
|
3,292,403
|
3,393,978
|
3,454,756
|
3,642,347
|
3,595,319
|
|||||||||||||||
Total debt(14)(15)
|
1,786,809
|
1,673,090
|
1,831,440
|
1,938,030
|
1,704,317
|
|||||||||||||||
Redeemable common securities
|
—
|
—
|
3,590
|
3,351
|
3,351
|
|||||||||||||||
Total equity(15)
|
913,017
|
1,016,789
|
968,790
|
1,043,621
|
529,721
|
(1) | The acquisitions of Travis Designs Limited (“Travis”) and Accurate Custom Injection Molding Inc. (“ACIM”) are included in the financial statements from their acquisition dates (first quarter 2015 and third quarter 2015, respectively). |
(2) | The acquisitions of nineteen franchise stores and Festival S.A. are included in the financial statements from their acquisition dates during the first quarter of 2016. |
(3) |
The acquisitions of
thirty-six
franchise stores and Granmark S.A. de C.V. (“Granmark”) are included in the financial statements from their acquisition dates during the first quarter of 2017. The acquisition of Print Appeal, Inc. (“Print Appeal”) is included in the financial statements from its acquisition date during the third quarter of 2017.
|
(4) | The acquisitions of eleven franchise stores are included in the financial statements from their acquisition dates during the first quarter of 2018. Additionally, the acquisitions of thirty-seven franchise stores are included in the financial statements from their acquisition dates during the third quarter of 2018. |
(5) | During the year ended December 31, 2019, the financial statements reflect store impairment and restructuring charges associated with the closure of approximately 55 stores. Refer to (11)(p)(r) for further detail regarding 2019 results. |
(6) |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2014-09,
“Revenue from Contracts with Customers (Topic 606).” The pronouncement contains a
|
five-step model which replaces most existing revenue recognition guidance. The Company adopted the standard on January 1, 2018 via a modified retrospective approach and recognized the cumulative effect of the adoption by reducing January 1, 2018 retained earnings by $0.1 million. See the Notes to Consolidated Financial Statements of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion. |
(7) |
During the first quarter of 2017, the Company and Ampology, a subsidiary of Trivergence, reached an agreement to form a new legal entity (Kazzam, LLC) for the purpose of designing, developing and launching an online exchange platform for party-related services. The website allows consumers to select, schedule and pay for various services (including entertainment, activities and food) all through a single portal. During 2017, 2018 and 2019, Kazzam incurred $9.0 million, $7.0 million and $11.0 million of
start-up
expenses, respectively, which are recorded in development stage expenses in the Company’s consolidated statement of operations and comprehensive (loss) income.
|
(8) |
During April 2015, in conjunction with the Company’s initial public offering, the Company paid a 2% prepayment penalty, or $7.0 million, in order to redeem $350.0 million of senior PIK toggle notes (the “Nextco Notes”) issued by the Company’s wholly-owned subsidiaries, PC Nextco and PC Nextco Finance, Inc., and paid a management agreement termination fee of $30.7 million to affiliates of THL and Advent. The Company recorded the prepayment penalty and termination fee in other expense, net. Additionally, in conjunction with the redemption of the Nextco Notes, the Company wrote off $8.6 million of capitalized debt issuance costs and original issuance discounts. The
write-off
was also recorded in other expense, net.
|
(9)
|
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law. The Act significantly changed U.S. tax law, including lowering the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018, and implementing a
one-time
“deemed repatriation” tax on unremitted earnings accumulated in
non-U.S.
jurisdictions. During 2017 the Company recorded a provisional estimate of the
|
impact of the Act, which included an income tax benefit of $91.0 million related to the remeasurement of its domestic deferred tax liabilities and deferred tax assets due to the lower U.S. corporate tax rate. Additionally, during 2017, the Company recorded an income tax expense of $1.1 million as its provisional estimate of the Transition Tax related to the deemed repatriation of unremitted earnings of foreign subsidiaries. During the fourth quarter of 2018, the Company finalized its assessment of the impact of the Act on the Company’s domestic deferred tax liabilities and deferred tax assets and recorded an additional income tax benefit of $2.0 million. Additionally, during such quarter, the Company finalized its assessment of the Transition Tax and recorded additional income tax expense of $0.2 million. See Note 17, Income Taxes, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion. |
(10)
|
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity,” for a discussion of cash flows. |
(11)
|
The Company presents adjusted EBITDA, adjusted net income and adjusted net income per common share—diluted as supplemental measures of its operating performance. The Company defines EBITDA as net income (loss) before interest expense, net, income taxes, depreciation and amortization and defines adjusted EBITDA as EBITDA, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of our core operating performance. These further adjustments are itemized below. Adjusted net income represents the Company’s net income (loss) adjusted for, among other items, intangible asset amortization,
non-cash
purchase accounting adjustments, amortization of deferred financing costs and original issue discounts, refinancing charges, equity based compensation, and impairment charges. Adjusted net income per common share—diluted represents adjusted net income divided by diluted weighted average common shares outstanding. The Company presents these measures as supplemental measures of its operating performance. You are encouraged to evaluate these adjustments and the reasons the Company considers them appropriate for supplemental analysis. In evaluating the measures, you should be aware that in the future the Company may incur expenses that are the same as, or similar to, some of the adjustments in this presentation. The Company’s presentation of adjusted EBITDA, adjusted net income and adjusted net income per common share—diluted should not be construed as an inference that the Company’s future results will be unaffected by unusual or
non-recurring
items. The Company presents the measures because the Company believes they assist investors in comparing the Company’s performance across reporting periods on a consistent basis by eliminating items that the Company does not believe are indicative of its core operating performance. In addition, the Company uses adjusted EBITDA: (i) as a factor in determining incentive compensation, (ii) to evaluate the effectiveness of its business strategies and (iii) because its credit facilities use adjusted EBITDA to measure compliance with certain covenants. The Company also believes that adjusted net income and adjusted net income per common share—diluted are helpful benchmarks to evaluate its operating performance.
|
• | they do not reflect the Company’s cash expenditures or future requirements for capital expenditures or contractual commitments; |
• | they do not reflect changes in, or cash requirements for, the Company’s working capital needs; |
• | adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s indebtedness; |
• |
although depreciation and amortization are
non-cash
charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacements;
|
• |
non-cash
compensation is and will remain a key element of the Company’s overall long-term incentive compensation package, although the Company excludes it as an expense when evaluating its core operating performance for a particular period;
|
• | they do not reflect the impact of certain cash charges resulting from matters the Company considers not to be indicative of its ongoing operations; and |
• | other companies in the Company’s industry may calculate adjusted EBITDA, adjusted net income and adjusted net income per common share differently than the Company does, limiting its usefulness as a comparative measure. |
|
Fiscal Year Ended December 31,
|
|||||||||||||||||||
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
||||||||||
Net income (loss)
|
$ |
10,459
|
$ |
117,477
|
$ |
215,340
|
$ |
122,819
|
$ |
(532,858
|
) | |||||||||
Interest expense, net
|
123,361
|
89,380
|
87,366
|
105,706
|
114,899
|
|||||||||||||||
Income taxes
|
7,409
|
69,237
|
(27,196
|
) |
38,778
|
(1,305
|
) | |||||||||||||
Depreciation and amortization
|
80,515
|
83,630
|
85,168
|
78,575
|
81,116
|
|||||||||||||||
EBITDA
|
221,744
|
359,724
|
360,678
|
345,878
|
(338,148
|
) | ||||||||||||||
Non-cash
purchase accounting adjustments
|
4,470
|
4,114
|
7,378
|
6,196
|
3,000
|
|||||||||||||||
Management fee
|
31,627
|
(a) |
—
|
—
|
—
|
—
|
||||||||||||||
Gain on sale/leaseback transaction
|
—
|
—
|
—
|
—
|
(58,381
|
)(p) | ||||||||||||||
Store impairment and restructuring charges
|
852
|
—
|
—
|
—
|
58,778
|
(q) | ||||||||||||||
Goodwill and intangibles impairment
|
—
|
—
|
—
|
—
|
562,631
|
(r) | ||||||||||||||
Other restructuring, retention and severance
|
2,318
|
911
|
9,718
|
(b) |
3,397
|
(b) |
6,460
|
(b) | ||||||||||||
Refinancing charges
|
94,607
|
(c) |
1,458
|
—
|
6,237
|
(c) |
36
|
|||||||||||||
Deferred rent
|
13,407
|
(d) |
18,835
|
(d) |
7,287
|
(d) |
5,351
|
(d) |
(1,796
|
)(d) | ||||||||||
Corporate development expenses
|
1,786
|
(e) |
4,290
|
(e) |
9,401
|
(e) |
11,314
|
(e) |
14,208
|
(e) | ||||||||||
Foreign currency losses (gains)
|
3,691
|
(7,417
|
) |
466
|
24
|
421
|
||||||||||||||
Closed store expense
|
1,901
|
(f) |
3,688
|
(f) |
4,875
|
(f) |
4,211
|
(f) |
4,445
|
(f) | ||||||||||
Stock option expense
|
3,042
|
(g) |
3,853
|
(g) |
5,309
|
(g) |
1,744
|
(g) |
1,319
|
(g) | ||||||||||
Non-employee
equity based compensation
|
—
|
—
|
3,033
|
(h) |
81
|
(h) |
515
|
(h) | ||||||||||||
Restricted stock units expense—time based
|
—
|
—
|
—
|
1,174
|
(i) |
2,033
|
(i) | |||||||||||||
Undistributed loss (income) in equity method investments
|
562
|
314
|
(194
|
) |
(369
|
) |
(472
|
) | ||||||||||||
Non-recurring
consulting charges
|
—
|
—
|
—
|
12,514
|
(j) |
—
|
||||||||||||||
Non-recurring
legal settlements/costs
|
—
|
—
|
—
|
2,380
|
(k) |
8,548
|
(k) | |||||||||||||
(Gain) loss on sale of assets
|
(2,660
|
) |
—
|
—
|
—
|
5,074
|
(t) | |||||||||||||
Hurricane-related costs
|
—
|
—
|
455
|
—
|
—
|
|||||||||||||||
Change-of-control
license premium
|
3,000
|
—
|
—
|
—
|
—
|
|||||||||||||||
Other
|
(54
|
) |
279
|
804
|
(16
|
) |
518
|
|||||||||||||
Adjusted EBITDA
|
$ |
380,293
|
$ |
390,049
|
$ |
409,210
|
$ |
400,116
|
$ |
269,189
|
||||||||||
|
Fiscal Year Ended December 31,
|
|||||||||||||||||||
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
||||||||||
Income (loss) before income taxes
|
$ |
17,868
|
$ |
186,714
|
$ |
188,144
|
$ |
161,597
|
$ |
(534,163
|
) | |||||||||
Intangible asset amortization
|
18,885
|
(l) |
17,247
|
(l) |
16,959
|
(l) |
12,271
|
(l) |
14,100
|
(l) | ||||||||||
Non-cash
purchase accounting adjustments
|
6,445
|
5,300
|
9,549
|
6,812
|
4,202
|
|||||||||||||||
Amortization of deferred financing costs and original issuance discounts
|
40,516
|
(c)(m) |
5,818
|
(m) |
4,937
|
(m) |
10,989
|
(c)(m) |
4,722
|
(m) | ||||||||||
Store impairment and restructuring charges
|
—
|
—
|
—
|
—
|
58,778
|
(q) | ||||||||||||||
Goodwill and intangibles impairment
|
—
|
—
|
—
|
—
|
562,631
|
(r) | ||||||||||||||
Management fee
|
31,627
|
(a) |
—
|
—
|
—
|
—
|
||||||||||||||
Refinancing charges
|
65,338
|
(c) |
725
|
(c) |
—
|
—
|
36
|
|||||||||||||
Stock option expense
|
3,042
|
(g) |
3,853
|
(g) |
5,309
|
(g) |
1,744
|
(g) |
1,319
|
(g) | ||||||||||
Non-employee
equity based compensation
|
—
|
—
|
3,033
|
81
|
(h) |
515
|
(h) | |||||||||||||
Non-recurring
consulting charges
|
—
|
—
|
—
|
12,514
|
(j) |
—
|
||||||||||||||
Restructuring
|
—
|
—
|
3,195
|
(b) |
—
|
—
|
||||||||||||||
Other restructuring charges
|
—
|
—
|
3,918
|
(b) |
809
|
(b) |
3,211
|
(b) | ||||||||||||
Hurricane-related costs
|
—
|
—
|
455
|
—
|
—
|
|||||||||||||||
Non-recurring
legal settlements/costs
|
—
|
—
|
—
|
2,380
|
(k) |
6,500
|
||||||||||||||
Impairment charges
|
852
|
—
|
—
|
—
|
—
|
|||||||||||||||
(Gain) on sale of assets
|
(2,660
|
) |
—
|
—
|
—
|
—
|
||||||||||||||
(Gain) on sale-leaseback
|
—
|
—
|
—
|
—
|
(58,381
|
)(p) | ||||||||||||||
(Gain) on sale of Canada retail assets
|
—
|
—
|
—
|
—
|
(2,873
|
)(s) | ||||||||||||||
Change-of-control
license premium
|
3,000
|
—
|
—
|
—
|
—
|
|||||||||||||||
Adjusted income before income taxes
|
184,913
|
219,657
|
235,499
|
209,197
|
60,597
|
|||||||||||||||
Adjusted income taxes
|
70,707
|
(n) |
81,380
|
(n) |
86,856
|
(n)(o) |
52,355
|
(n)(o) |
17,183
|
(n) | ||||||||||
Adjusted net income
|
$ |
114,206
|
$ |
138,277
|
$ |
148,643
|
$ |
156,842
|
$ |
43,414
|
||||||||||
Adjusted net income per common share—diluted
|
$ |
1.01
|
$ |
1.15
|
$ |
1.24
|
$ |
1.61
|
$ |
0.46
|
||||||||||
(a) | In 2012, the Company entered into a management agreement with two of its investors under which the investors provided advice to the Company on, among other things, financing, operations, acquisitions and dispositions. Under the agreement, the investors were paid an annual management fee for such services. In connection with the Company’s initial public offering in April 2015, the management agreement was terminated and the Company paid the investors a termination fee. Such amount, $30.7 million, was recorded in other expense, net. |
(b) | On March 15, 2017, the Company and its then Chairman of the Board of Directors, Gerald Rittenberg, entered into a Transition and Consulting Agreement under which Mr. Rittenberg’s employment as Executive Chairman of the Company terminated effective March 31, 2017. As a result of the agreement, the Company recorded a $3.9 million severance charge in general and administrative expenses during 2017. Such amount is included in “Other Restructuring, Retention and Severance” in the Adjusted EBITDA table above and in “Executive Severance” in the Adjusted Net Income table above. Additionally, during 2017, the Company recorded a $3.2 million severance charge related to a restructuring of its Retail segment. Such amount is included in “Other Restructuring, Retention and Severance” in the Adjusted EBITDA table above and in “Restructuring” in the Adjusted Net Income table above. Further, during 2018, the Company recorded $0.8 million of senior executive severance. Such amount is included in “Other Restructuring, Retention and Severance” in the Adjusted EBITDA table above and in “Executive Severance” in the Adjusted Net Income table above. Finally, the 2017 and 2018 “Other Restructuring, Retention and |
Severance” amounts in the “Adjusted EBITDA” table above also include costs incurred while moving one of the Company’s domestic manufacturing facilities to a new location. For the year ended December 31, 2019, amounts expensed principally relate to executive severance and the
write-off
of inventory for a section of the Company’s Party City stores that were restructured.
|
(c) |
During August 2018, the Company executed a refinancing of its debt portfolio and issued $500 million of new senior notes at an interest rate of 6.625%. The notes will mature in August 2026. The Company used the proceeds from the notes to: (i) reduce the outstanding balance under its existing ABL Facility by $90 million and (ii) voluntarily prepay $400 million of the outstanding balance under its existing Term Loan Credit Agreement. Additionally, as part of the refinancing, the Company extended the maturity of the ABL Facility to August 2023 (subject to a springing maturity at an earlier date if the maturity date of certain of our other debt has not been extended or refinanced). As the partial prepayment of the Term Loan Credit Agreement was in accordance with the terms of such agreement, at the time of such prepayment the Company
wrote-off
a
pro-rata
portion of the existing capitalized deferred financing costs and original issuance discounts, $1.8 million, for investors who did not participate in the new notes. To the extent that investors in the Term Loan Credit Agreement participated in the new notes, the Company assessed whether the refinancing should be accounted for as an extinguishment on a
creditor-by-creditor
basis and
wrote-off
$1.0 million of existing deferred financing costs and original issuance discounts. Additionally, in conjunction with the issuance of the notes, the Company incurred third-party fees (principally banker fees). To the extent that such fees related to investors for whom their original debt was not extinguished, the Company expensed the portion of such fees, $2.3 million in aggregate, that related to such investors. Such 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.
|
(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. |
(e) |
Principally represents third-party costs related to acquisitions (primarily legal expenses and diligence fees). Such costs are excluded from the definition of “Consolidated Adjusted EBITDA” that is utilized for certain covenants in the Company’s credit agreements. Additionally, 2017, 2018, and 2019 include
start-up
costs for Kazzam (see Note 25, Kazzam LLC., of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion).
|
(f) | Principally charges incurred related to closing underperforming stores. |
(g) |
Represents
non-cash
charges related to stock options.
|
(h) | Principally represents shares of Kazzam awarded to Ampology as compensation for Ampology’s services. See Note 25, Kazzam LLC., of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion. |
(i) |
Non-cash
charges for restricted stock units that vest based on service conditions.
|
(j) |
Primarily
non-recurring
consulting charges related to the Company’s retail operations.
|
(k) |
Non-recurring
legal settlements/costs.
|
(l) |
Represents the
non-cash
amortization of intangible assets.
|
(m) |
Includes the
non-cash
amortization of deferred financing costs, original issuance discounts and capitalized call premiums. Additionally, certain years include charges related to debt refinancings. See note (c) for further discussion.
|
(n) |
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 the
pre-tax
adjustments the effective income tax rates for the specific legal entities in which the adjustments were recorded.
|
(o) |
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law. The Act significantly changed U.S. tax law, including lowering the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018, and implementing a
one-time
“deemed repatriation” tax on unremitted earnings accumulated in
non-U.S.
jurisdictions since 1986. Due to the complexities of accounting for the Act, the SEC issued Staff Accounting Bulletin No. 118 which allows entities to include a provisional estimate of the impact of the Act in its 2017 financial statements. Therefore, based on then currently available information, during 2017 the Company recorded a provisional estimate of the impact of the Act, which included an income tax benefit of $91.0 million related to the remeasurement of its domestic deferred tax liabilities and deferred tax assets due to the lower U.S. corporate tax rate. During the fourth quarter of 2018, the Company finalized its assessment of the impact of the Act on such domestic deferred tax liabilities and deferred tax assets and recorded an additional income tax benefit of $2.0 million. As the Act is a significant and
non-recurring
event which is impacting the comparability of the Company’s financial statements, the Company has excluded the impact of the adjustments from its adjusted net income and adjusted earnings per share.
|
(p) | During June 2019, the Company reported a $58.4 million 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 $128.0 million. Simultaneous with the sale, the Company entered into twenty-year leases for each of the facilities. |
(q) | During the year ended December 31, 2019, the Company performed a comprehensive review of its store locations aimed at improving the overall productivity of such locations (“store optimization program”) and made the decision to accelerate the optimization of its store portfolio with the closure of approximately 55 stores which are primarily located in close proximity to other Party City stores. In conjunction with the store optimization program, the Company recorded the following charges: inventory reserves: $21.3 million, operating lease asset impairment: $14.9 million, property plant and equipment impairment: $4.7 million, labor and other costs related to closing the stores: $8.7 million and severance: $0.7 million. The charge for inventory reserves was recorded in cost of sales in the Company’s statement of operations and comprehensive (loss) income. The other charges were recorded in store impairment and restructuring charges in the Company’s statement of operations and comprehensive (loss) income. See Note 3, Store Impairment and Restructuring Charges, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion. Additionally, during the process of liquidating the inventory in such stores, the Company lost margin of $8.5 million. |
(r) |
As a result of a sustained decline in market capitalization, the Company recognized a
non-cash
pre-tax
goodwill impairment charge during the year ended December 31, 2019 of $562.6 million. This includes a non-cash pre-tax trade name intangibles impairment charge of $6.6 million (see Note 4, Goodwill, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion).
|
(s) | The Company recorded a $2.9 million gain on sale of its Canadian-based Party City stores, which is reported in Other expense, net on the Consolidated Statement of Operations and Comprehensive (Loss) Income. |
(t) |
Represents a loss on sale of ownership interest in Punchbowl (see Note 21, Fair Value Measurements, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion) and certain property, plant and equipment, and a
write-off
of goodwill related to the Company’s sale of its Canadian-based Party City stores.
|
(12) |
Party City brand comp sales include North American
e-commerce
sales.
|
(13) |
Represents the percentage of product costs included in cost of goods sold by our Party City stores and North American retail
e-commerce
operations which relate to products supplied by our wholesale operations.
|
(14) |
Amount for 2014 adjusted to reflect the Company’s retrospective adoption during the fourth quarter of 2015 of FASB ASU
2015-03,
“Simplifying the Presentation of Debt Issuance Costs”. Deferred financing costs in the amount of $44.4 million were reclassified from “other assets” to debt as of December 31, 2014.
|
(15) | Excludes redeemable common securities. |
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Fiscal Year Ended December 31,
|
|||||||||||||||
|
2019
|
2018
|
||||||||||||||
|
(Dollars in thousands, except per share data)
|
|||||||||||||||
Revenues:
|
|
|
|
|
||||||||||||
Net sales
|
$ |
2,339,510
|
99.6
|
% | $ |
2,416,442
|
99.5
|
% | ||||||||
Royalties and franchise fees
|
9,279
|
0.4
|
11,073
|
0.5
|
||||||||||||
Total revenues
|
2,348,789
|
100.0
|
2,427,515
|
100.0
|
||||||||||||
Expenses:
|
|
|
|
|
||||||||||||
Cost of sales
|
1,500,633
|
63.9
|
1,435,358
|
59.1
|
||||||||||||
Wholesale selling expenses
|
67,103
|
2.9
|
71,502
|
2.9
|
||||||||||||
Retail operating expenses
|
440,395
|
18.7
|
425,996
|
17.5
|
||||||||||||
Franchise expenses
|
13,152
|
0.6
|
13,214
|
0.5
|
||||||||||||
General and administrative expenses
|
177,672
|
7.6
|
172,764
|
7.1
|
||||||||||||
Art and development costs
|
23,203
|
1.0
|
23,388
|
1.0
|
||||||||||||
Development stage expenses
|
10,736
|
0.5
|
7,008
|
0.3
|
||||||||||||
Gain on sale/leaseback transaction
|
(58,381
|
) |
(2.5
|
) |
—
|
0.0
|
||||||||||
Store impairment and restructuring charges
|
29,038
|
1.2
|
—
|
0.0
|
||||||||||||
Goodwill and intangibles impairment
|
562,631
|
24.0
|
—
|
0.0
|
||||||||||||
Total expenses
|
2,766,182
|
117.8
|
2,149,230
|
88.5
|
||||||||||||
(Loss) income from operations
|
(417,393
|
) |
(17.8
|
) |
278,285
|
11.5
|
||||||||||
Interest expense, net
|
114,899
|
4.9
|
105,706
|
4.3
|
||||||||||||
Other expense, net
|
1,871
|
0.1
|
10,982
|
0.4
|
||||||||||||
(Loss) income before income taxes
|
(534,163
|
) |
(22.7
|
) |
161,597
|
6.7
|
||||||||||
Income tax (benefit) expense
|
(1,305
|
) |
(0.1
|
) |
38,778
|
1.6
|
||||||||||
Net (loss) income
|
(532,858
|
) |
(22.7
|
) |
122,819
|
5.1
|
% | |||||||||
Add: Net income attributable to redeemable securities holder
|
—
|
—
|
409
|
—
|
||||||||||||
Less: Net loss attributable to noncontrolling interests
|
(363
|
) |
—
|
(31
|
) |
—
|
||||||||||
Net (loss) income attributable to common shareholders of Party City Holdco Inc.
|
$ |
(532,495
|
) |
(22.7
|
)% | $ |
123,259
|
5.1
|
% | |||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—basic
|
$ |
(5.71
|
) |
|
$ |
1.28
|
|
|||||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—diluted
|
$ |
(5.71
|
) |
|
$ |
1.27
|
|
|
Fiscal Year Ended December 31,
|
|||||||||||||||
|
2019
|
2018
|
||||||||||||||
|
Dollars in
Thousands |
|
Percentage
of Total Revenues |
|
Dollars in
Thousands |
|
Percentage
of Total Revenues |
|
||||||||
Net Sales:
|
|
|
|
|
||||||||||||
Wholesale
|
$ |
1,240,026
|
52.8
|
% | $ |
1,325,490
|
54.6
|
% | ||||||||
Eliminations
|
(642,652
|
) |
(27.4
|
) |
(711,882
|
) |
(29.3
|
) | ||||||||
Net wholesale
|
597,374
|
25.4
|
613,608
|
25.3
|
||||||||||||
Retail
|
1,742,136
|
74.1
|
1,802,834
|
74.2
|
||||||||||||
Total net sales
|
2,339,510
|
99.6
|
2,416,442
|
99.5
|
||||||||||||
Royalties and franchise fees
|
9,279
|
0.4
|
11,073
|
0.5
|
||||||||||||
Total revenues
|
$ |
2,348,789
|
100.0
|
% | $ |
2,427,515
|
100.0
|
% | ||||||||
|
Fiscal Year Ended December 31,
|
|||||||||||||||
|
2019
|
2018
|
||||||||||||||
|
Dollars in
Thousands
|
|
Percentage
of Net Sales
|
|
Dollars in
Thousands
|
|
Percentage
of Net Sales
|
|
||||||||
Retail
|
$ |
696,439
|
40.0
|
% | $ |
801,349
|
44.4
|
% | ||||||||
Wholesale
|
142,438
|
23.8
|
179,735
|
29.3
|
||||||||||||
Total
|
$ |
838,877
|
35.9
|
% | $ |
981,084
|
40.6
|
% | ||||||||
|
Fiscal Year Ended December 31,
|
|||||||||||||||
|
2018
|
2017
|
||||||||||||||
|
(Dollars in thousands, except per share data)
|
|||||||||||||||
Revenues:
|
|
|
|
|
||||||||||||
Net sales
|
$ |
2,416,442
|
99.5
|
% | $ |
2,357,986
|
99.4
|
% | ||||||||
Royalties and franchise fees
|
11,073
|
0.5
|
13,583
|
0.6
|
||||||||||||
Total revenues
|
2,427,515
|
100.0
|
2,371,569
|
100.0
|
||||||||||||
Expenses:
|
|
|
|
|
||||||||||||
Cost of sales
|
1,435,358
|
59.1
|
1,395,279
|
58.8
|
||||||||||||
Wholesale selling expenses
|
71,502
|
2.9
|
65,356
|
2.8
|
||||||||||||
Retail operating expenses
|
425,996
|
17.5
|
415,167
|
17.5
|
||||||||||||
Franchise expenses
|
13,214
|
0.5
|
14,957
|
0.6
|
||||||||||||
General and administrative expenses
|
172,764
|
7.1
|
168,369
|
7.1
|
||||||||||||
Art and development costs
|
23,388
|
1.0
|
23,331
|
1.0
|
||||||||||||
Development stage expenses
|
7,008
|
0.3
|
8,974
|
0.4
|
||||||||||||
Total expenses
|
2,149,230
|
88.5
|
2,091,433
|
88.2
|
||||||||||||
Income from operations
|
278,285
|
11.5
|
280,136
|
11.8
|
||||||||||||
Interest expense, net
|
105,706
|
4.3
|
87,366
|
3.7
|
||||||||||||
Other expense, net
|
10,982
|
0.4
|
4,626
|
0.2
|
||||||||||||
Income before income taxes
|
161,597
|
6.7
|
188,144
|
7.9
|
||||||||||||
Income tax expense (benefit)
|
38,778
|
1.6
|
(27,196
|
) |
(1.2
|
) | ||||||||||
Net income
|
122,819
|
5.1
|
215,340
|
9.1
|
||||||||||||
Add: Net income attributable to redeemable securities holder
|
409
|
—
|
—
|
—
|
||||||||||||
Less: Net loss attributable to noncontrolling interests
|
(31
|
) |
—
|
—
|
—
|
|||||||||||
Net income attributable to common shareholders of Party City Holdco Inc.
|
$ |
123,259
|
5.1
|
% | $ |
215,340
|
9.1
|
% | ||||||||
Net income per share attributable to common shareholders of Party City Holdco Inc.—basic
|
$ |
1.28
|
|
$ |
1.81
|
|
||||||||||
Net income per share attributable to common shareholders of Party City Holdco Inc.—diluted
|
$ |
1.27
|
|
$ |
1.79
|
|
|
Fiscal Year Ended December 31,
|
|||||||||||||||
|
2018
|
2017
|
||||||||||||||
|
Dollars in
Thousands |
|
Percentage
of Total Revenues |
|
Dollars in
Thousands |
|
Percentage
of Total Revenues |
|
||||||||
Net Sales:
|
|
|
|
|
||||||||||||
Wholesale
|
$ |
1,325,490
|
54.6
|
% | $ |
1,260,089
|
53.1
|
% | ||||||||
Eliminations
|
(711,882
|
) |
(29.3
|
) |
(630,692
|
) |
(26.6
|
) | ||||||||
Net wholesale
|
613,608
|
25.3
|
629,397
|
26.5
|
||||||||||||
Retail
|
1,802,834
|
74.2
|
1,728,589
|
72.9
|
||||||||||||
Total net sales
|
2,416,442
|
99.5
|
2,357,986
|
99.4
|
||||||||||||
Royalties and franchise fees
|
11,073
|
0.5
|
13,583
|
0.6
|
||||||||||||
Total revenues
|
$ |
2,427,515
|
100.0
|
% | $ |
2,371,569
|
100.0
|
% | ||||||||
|
Fiscal Year Ended December 31,
|
|||||||||||||||
|
2018
|
2017
|
||||||||||||||
|
Dollars in
Thousands
|
|
Percentage
of Net Sales
|
|
Dollars in
Thousands
|
|
Percentage
of Net Sales
|
|
||||||||
Retail
|
$ |
801,349
|
44.4
|
% | $ |
763,315
|
44.2
|
% | ||||||||
Wholesale
|
179,735
|
29.3
|
199,392
|
31.7
|
||||||||||||
Total
|
$ |
981,084
|
40.6
|
% | $ |
962,707
|
40.8
|
% | ||||||||
• | incur additional indebtedness; |
• | pay dividends on capital stock or redeem, repurchase or retire capital stock; |
• | make certain investments, loans, advances and acquisitions; |
• | engage in transactions with affiliates; |
• | create liens; and |
• | transfer or sell certain assets. |
• | incur additional indebtedness; |
• | pay dividends on capital stock or redeem, repurchase or retire capital stock; |
• | make certain investments, loans, advances and acquisitions; |
• | engage in transactions with affiliates; |
• | create liens; and |
• | transfer or sell certain assets. |
• | incur additional indebtedness or issue certain disqualified stock and preferred stock; |
• | pay dividends or distributions, redeem or repurchase equity; |
• | prepay subordinated debt or make certain investments; |
• | engage in transactions with affiliates; |
• | consolidate, merge or transfer all or substantially all of PCHI’s assets; |
• | create liens; and |
• | transfer or sell certain assets. |
Twelve-month period beginning on August 15,
|
Percentage
|
|
||
2019
|
101.531
|
% | ||
2020 and thereafter
|
100.000
|
% |
• | incur additional indebtedness or issue certain disqualified stock and preferred stock; |
• | pay dividends or distributions, redeem or repurchase equity; |
• | prepay subordinated debt or make certain investments; |
• | engage in transactions with affiliates; |
• | consolidate, merge or transfer all or substantially all of PCHI’s assets; |
• | create liens; and |
• | transfer or sell certain assets. |
Twelve-month period beginning on August 1,
|
Percentage
|
|
||
2021
|
103.313
|
% | ||
2022
|
101.656
|
% | ||
2023 and thereafter
|
100.000
|
% |
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
||||||||||||||
Long-term debt obligations(a)
|
$ |
1,573,965
|
$ |
70,462
|
$ |
12,266
|
$ |
641,237
|
$ |
350,000
|
$ |
—
|
$ |
500,000
|
||||||||||||||
Finance lease obligations(a)
|
14,990
|
1,062
|
1,431
|
1,259
|
390
|
521
|
10,327
|
|||||||||||||||||||||
Operating lease obligations(a)
|
1,149,650
|
197,480
|
181,970
|
162,352
|
134,131
|
106,078
|
367,639
|
|||||||||||||||||||||
Transition Tax on unremitted foreign earnings(b)
|
4,205
|
—
|
—
|
—
|
—
|
1,400
|
2,805
|
|||||||||||||||||||||
Minimum product royalty obligations(a)
|
51,738
|
35,525
|
10,393
|
5,820
|
—
|
—
|
—
|
|||||||||||||||||||||
Total contractual obligations
|
$ |
2,794,548
|
$ |
304,529
|
$ |
206,060
|
$ |
810,668
|
$ |
484,521
|
$ |
107,999
|
$ |
880,771
|
||||||||||||||
(a) | See Item 8, “Financial Statements and Supplementary Data,” for further detail. |
(b) | As a result of the Act, the U.S. is transitioning from a worldwide system of international taxation to a territorial tax system, thereby eliminating the U.S. federal tax on foreign earnings. However, the Act |
requires a
one-time
deemed repatriation tax on such earnings and, accordingly, we have recorded a liability related to such requirement. See Note 17, Income Taxes, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.
|
|
For the Three Months Ended,
|
|||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
||||||||
2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales
|
$ |
511,102
|
$ |
561,702
|
$ |
538,345
|
$ |
728,361
|
||||||||
Royalties and franchise fees
|
2,014
|
2,189
|
1,886
|
3,190
|
||||||||||||
Gross profit
|
172,060
|
208,646
|
164,932
|
293,239
|
||||||||||||
(Loss) income from operations
|
(10,297
|
) |
97,485
|
(277,526
|
) |
(227,055
|
) | |||||||||
Net (loss) income
|
(30,289
|
) |
48,005
|
(281,745
|
) |
(268,829
|
) | |||||||||
Net (loss) income attributable to common
shareholders of Party City Holdco Inc.
|
(30,218
|
) |
48,074
|
(281,533
|
) |
(268,818
|
) | |||||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic
|
$ |
(0.32
|
) | $ |
0.52
|
$ |
(3.02
|
) | $ |
(2.88
|
) | |||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted
|
$ |
(0.32
|
) | $ |
0.51
|
$ |
(3.02
|
) | $ |
(2.88
|
) |
|
For the Three Months Ended,
|
|||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
||||||||
2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales
|
$ |
505,108
|
$ |
558,101
|
$ |
550,840
|
$ |
802,393
|
||||||||
Royalties and franchise fees
|
2,716
|
2,910
|
2,206
|
3,241
|
||||||||||||
Gross profit
|
188,142
|
228,624
|
201,199
|
363,119
|
||||||||||||
Income from operations
|
22,256
|
65,451
|
31,738
|
158,840
|
||||||||||||
Net (loss) income
|
(1,163
|
) |
28,048
|
(2,440
|
) |
98,374
|
||||||||||
Net (loss) income attributable to common
shareholders of Party City Holdco Inc.
|
(1,133
|
) |
28,487
|
(2,420
|
) |
98,325
|
||||||||||
Net (loss) income per share attributable to common
shareholders of Party City Holdco Inc.—Basic
|
$ |
(0.01
|
) | $ |
0.30
|
$ |
(0.03
|
) | $ |
1.03
|
||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted
|
$ |
(0.01
|
) | $ |
0.29
|
$ |
(0.03
|
) | $ |
1.02
|
|
For the Three Months Ended,
|
|||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
||||||||
2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales
|
$ |
473,963
|
$ |
541,653
|
$ |
557,350
|
$ |
785,020
|
||||||||
Royalties and franchise fees
|
3,036
|
3,225
|
2,759
|
4,563
|
||||||||||||
Gross profit
|
175,244
|
219,753
|
199,827
|
367,883
|
||||||||||||
Income from operations
|
14,671
|
60,699
|
37,388
|
167,378
|
||||||||||||
Net (loss) income
|
(4,683
|
) |
24,982
|
10,084
|
184,957
|
|||||||||||
Net (loss) income attributable to common shareholders of Party City Holdco Inc.
|
(4,683
|
) |
24,982
|
10,084
|
184,957
|
|||||||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic
|
$ |
(0.04
|
) | $ |
0.21
|
$ |
0.08
|
$ |
1.59
|
|||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted
|
$ |
(0.04
|
) | $ |
0.21
|
$ |
0.08
|
$ |
1.58
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
1) |
Certain foreign subsidiaries purchase product or raw materials in U.S. Dollars and sell such product in their local currencies. To the extent that the subsidiaries cannot adjust their local currency selling prices to reflect the strengthening of the U.S. Dollar, the subsidiaries’ gross margins are negatively impacted when the related product is sold. The subsidiaries that are impacted by this risk principally operate in the Canadian dollar, Euro, British Pound Sterling, Australian dollar and Mexican Peso. British Pound Sterling-based subsidiaries purchase approximately $33 million of
USD-denominated
product per year. Euro-based subsidiaries purchase approximately $35 million of
USD-denominated
product per year. Canadian dollar-based subsidiaries purchase approximately $28 million of
USD-denominated
product per year. Australian Dollar-based subsidiaries purchase approximately $12 million of
USD-denominated
product per year. Mexican Peso-based subsidiaries purchase approximately $4 million of
USD-denominated
raw materials/finished goods per year.
|
2) | Certain foreign subsidiaries sell product in U.S. Dollars and manufacture/purchase such product in their local currencies. To the extent that the subsidiaries cannot adjust their selling prices to reflect the weakening of the U.S. Dollar, the subsidiaries’ gross margins are negatively impacted when sales occur. The subsidiaries that are impacted by this risk principally operate in the Malaysian Ringgit. Ringgit-based subsidiaries sell approximately $20 million of product in U.S. Dollars on an annual basis. |
3) | During our financial statement close process, we adjust open receivables and payables that are not in the functional currencies of our subsidiaries to the latest foreign currency exchange rates. These receivables and payables are principally generated through the sales and inventory purchases discussed in points 1. and 2. above. The gains and losses created by such adjustments are primarily recorded in our statement of income. |
4) | Additionally, the financial statements of foreign subsidiaries with functional currencies other than the U.S. Dollar are translated into U.S. Dollars during our financial statement close process. To the extent that the U.S. Dollar fluctuates versus such functional currencies, our consolidated financial statements are impacted. Based on the loss from operations for such subsidiaries for the year ended December 31, 2019, a uniform 10% change in such exchange rates versus the U.S. Dollar would have impacted our consolidated loss from operations for the year by approximately ($0.5) million. |
Item 8.
|
Financial Statements and Supplementary Data
|
71
|
||||
73
|
||||
74
|
||||
75
|
||||
76
|
||||
77
|
||||
|
||||
117
|
||||
121
|
|
Fiscal Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
2,339,510
|
|
|
$
|
2,416,442
|
|
|
$
|
2,357,986
|
|
Royalties and franchise fees
|
|
|
9,279
|
|
|
|
11,073
|
|
|
|
13,583
|
|
Total revenues
|
|
|
2,348,789
|
|
|
|
2,427,515
|
|
|
|
2,371,569
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
1,500,633
|
|
|
|
1,435,358
|
|
|
|
1,395,279
|
|
Wholesale selling expenses
|
|
|
67,103
|
|
|
|
71,502
|
|
|
|
65,356
|
|
Retail operating expenses
|
|
|
440,395
|
|
|
|
425,996
|
|
|
|
415,167
|
|
Franchise expenses
|
|
|
13,152
|
|
|
|
13,214
|
|
|
|
14,957
|
|
General and administrative expenses
|
|
|
177,672
|
|
|
|
172,764
|
|
|
|
168,369
|
|
Art and development costs
|
|
|
23,203
|
|
|
|
23,388
|
|
|
|
23,331
|
|
Development stage expenses
|
|
|
10,736
|
|
|
|
7,008
|
|
|
|
8,974
|
|
Gain on sale/leaseback transaction
|
|
|
(58,381
|
)
|
|
|
—
|
|
|
|
—
|
|
Store impairment and restructuring charges
|
|
|
29,038
|
|
|
|
—
|
|
|
|
—
|
|
Goodwill
and intangibles
impairment
|
|
|
562,631
|
|
|
|
—
|
|
|
|
—
|
|
Total expenses
|
|
|
2,766,182
|
|
|
|
2,149,230
|
|
|
|
2,091,433
|
|
(Loss) income from operations
|
(417,393
|
) |
278,285
|
280,136
|
||||||||
Interest expense, net
|
114,899
|
105,706
|
87,366
|
|||||||||
Other expense, net
|
1,871
|
10,982
|
4,626
|
|||||||||
(Loss) income before income taxes
|
(534,163
|
) |
161,597
|
188,144
|
||||||||
Income tax
expense
(benefit)
|
(1,305
|
) |
38,778
|
(27,196
|
) | |||||||
Net (loss) income
|
(532,858
|
) |
122,819
|
215,340
|
||||||||
Add: Net income attributable to redeemable securities holder
|
—
|
409
|
—
|
|||||||||
Less: Net loss attributable to noncontrolling interests
|
(363
|
) |
(31
|
) |
—
|
|||||||
Net (loss) income attributable to common shareholders of Party City Holdco Inc
|
|
$
|
(532,495
|
)
|
|
$
|
123,259
|
|
|
$
|
215,340
|
|
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic
|
$ |
(5.71
|
) | $ |
1.28
|
$ |
1.81
|
|||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted
|
$ |
(5.71
|
) | $ |
1.27
|
$ |
1.79
|
|||||
Weighted-average number of common shares—Basic
|
|
|
93,295,692
|
|
|
|
96,133,144
|
|
|
|
118,589,421
|
|
Weighted-average number of common shares—Diluted
|
|
|
93,295,692
|
|
|
|
97,271,050
|
|
|
|
119,894,021
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency adjustments
|
|
$
|
12,599
|
|
|
$
|
(14,479
|
)
|
|
$
|
17,561
|
|
Cash flow hedges
|
|
|
845
|
|
|
|
1,063
|
|
|
|
(1,140
|
)
|
Other comprehensive income (loss), net
|
|
|
13,444
|
|
|
|
(13,416
|
)
|
|
|
16,421
|
|
Comprehensive
(
income
loss
)
|
|
|
(519,414
|
)
|
|
|
109,403
|
|
|
|
231,761
|
|
Add: Comprehensive income attributable to redeemable securities holder
|
|
|
—
|
|
|
|
409
|
|
|
|
—
|
|
Less: Comprehensive loss attributable to noncontrolling interests
|
|
|
(386
|
)
|
|
|
(64
|
)
|
|
|
—
|
|
Comprehensive (loss) income attributable to common shareholders of Party City Holdco
Inc. |
|
$
|
(519,028
|
)
|
|
$
|
109,876
|
|
|
$
|
231,761
|
|
|
Common
Stock |
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
(
Deficit)
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total Party
City
Holdco
Inc.
Stockholders’ Equity Before Common Stock
Treasury
|
|
Common
Stock Held In
Treasury
|
|
Total Party
City
Holdco
Inc.
Stockholders
’
Equity
|
|
Non-
Controlling
Interests
|
|
Total
Stockholders
’
Equity
|
|
||||||||||||||||||
Balance at December 31, 2016
|
$ |
1,195
|
$ |
910,167
|
$ |
157,666
|
$ |
(52,239
|
) | $ |
1,016,789
|
$ |
—
|
$ |
1,016,789
|
$ |
—
|
$ |
1,016,789
|
|||||||||||||||||
Net income
|
|
|
215,340
|
|
215,340
|
|
215,340
|
|
215,340
|
|||||||||||||||||||||||||||
Stock option expense
|
|
5,309
|
|
|
5,309
|
|
5,309
|
|
5,309
|
|||||||||||||||||||||||||||
Warrant
|
|
421
|
|
|
421
|
|
421
|
|
421
|
|||||||||||||||||||||||||||
Adjustment to redeemable securities
|
|
|
(410
|
) |
|
(410
|
) |
|
(410
|
) |
|
(410
|
) | |||||||||||||||||||||||
Exercise of stock options
|
3
|
1,295
|
|
|
1,298
|
|
1,298
|
|
1,298
|
|||||||||||||||||||||||||||
Foreign currency adjustments
|
|
|
|
17,561
|
17,561
|
|
17,561
|
|
17,561
|
|||||||||||||||||||||||||||
Treasury stock purchases
|
|
|
|
|
—
|
(286,733
|
) |
(286,733
|
) |
|
(286,733
|
) | ||||||||||||||||||||||||
Acquired noncontrolling interest
|
|
|
|
|
—
|
|
—
|
355
|
355
|
|||||||||||||||||||||||||||
Impact of foreign exchange contracts
|
|
|
|
(1,140
|
) |
(1,140
|
) |
|
(1,140
|
) |
|
(1,140
|
) | |||||||||||||||||||||||
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, adjusted
|
$ |
1,198
|
$ |
917,192
|
$ |
372,518
|
$ |
(35,818
|
) | $ |
1,255,090
|
$ |
(286,733
|
) | $ |
968,357
|
$ |
355
|
$ |
968,712
|
||||||||||||||||
Net income
|
|
|
122,850
|
|
122,850
|
|
122,850
|
(31
|
) |
122,819
|
||||||||||||||||||||||||||
Net income attributable to redeemable securities holder
|
|
|
409
|
|
409
|
|
409
|
|
409
|
|||||||||||||||||||||||||||
Stock option expense
|
|
1,744
|
|
|
1,744
|
|
1,744
|
|
1,744
|
|||||||||||||||||||||||||||
Restricted stock units—time-based
|
6
|
1,168
|
|
|
1,174
|
|
1,174
|
|
1,174
|
|||||||||||||||||||||||||||
Directors—non-cash compensation
|
|
196
|
|
|
196
|
|
196
|
|
196
|
|||||||||||||||||||||||||||
Warrant
|
|
(89
|
) |
|
|
(89
|
) |
|
(89
|
) |
|
(89
|
) | |||||||||||||||||||||||
Exercise of stock options
|
4
|
2,265
|
|
|
2,269
|
|
2,269
|
|
2,269
|
|||||||||||||||||||||||||||
Foreign currency adjustments
|
|
|
|
(14,446
|
) |
(14,446
|
) |
|
(14,446
|
) |
(33
|
) |
(14,479
|
) | ||||||||||||||||||||||
Treasury stock purchases
|
|
|
|
|
—
|
(40,197
|
) |
(40,197
|
) |
|
(40,197
|
) | ||||||||||||||||||||||||
Impact of foreign exchange contracts
|
|
|
|
1,063
|
1,063
|
|
1,063
|
|
1,063
|
|||||||||||||||||||||||||||
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, adjusted
|
|
$
|
1,208
|
|
|
$
|
923,138
|
|
|
$
|
495,274
|
|
|
$
|
(49,201
|
)
|
|
$
|
1,370,419
|
|
|
$
|
(326,930
|
)
|
|
$
|
1,043,489
|
|
|
$
|
291
|
|
|
$
|
1,043,780
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
(532,495
|
)
|
|
|
|
|
|
|
(532,495
|
)
|
|
|
|
|
|
|
(532,495
|
)
|
|
|
(363
|
)
|
|
|
(532,858
|
)
|
Stock option expense
|
|
|
|
|
|
|
1,319
|
|
|
|
|
|
|
|
|
|
|
|
1,319
|
|
|
|
|
|
|
|
1,319
|
|
|
|
|
|
|
|
1,319
|
|
Restricted stock units—time-based
|
|
|
|
|
|
|
2,033
|
|
|
|
|
|
|
|
|
|
|
|
2,033
|
|
|
|
|
|
|
|
2,033
|
|
|
|
|
|
|
|
2,033
|
|
Directors—non-cash
compensation
|
|
|
|
|
|
|
313
|
|
|
|
|
|
|
|
|
|
|
|
313
|
|
|
|
|
|
|
|
313
|
|
|
|
|
|
|
|
313
|
|
Warrant
|
|
|
|
|
|
|
515
|
|
|
|
|
|
|
|
|
|
|
|
515
|
|
|
|
|
|
|
|
515
|
|
|
|
|
|
|
|
515
|
|
Exercise of stock options
|
|
|
3
|
|
|
|
1,145
|
|
|
|
|
|
|
|
|
|
|
|
1,148
|
|
|
|
|
|
|
|
1,148
|
|
|
|
|
|
|
|
1,148
|
|
Acquired
non-controlling
interest
|
|
|
|
|
|
|
110
|
|
|
|
|
|
|
|
|
|
|
|
110
|
|
|
|
|
|
|
|
110
|
|
|
|
71
|
|
|
|
181
|
|
Foreign currency adjustments
(see
Note 23)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,622
|
|
|
|
12,622
|
|
|
|
|
|
|
|
12,622
|
|
|
|
(23
|
)
|
|
|
12,599 |
|
Treasury stock purchases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
(156
|
)
|
|
|
(156
|
)
|
|
|
|
|
|
|
(156
|
)
|
Impact of foreign exchange contracts
|
|
|
|
|
|
|
—
|
|
|
|
2
|
|
|
|
845
|
|
|
|
847
|
|
|
|
|
|
|
|
847
|
|
|
|
|
|
|
|
847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
|
$
|
1,211
|
|
|
$
|
928,573
|
|
|
$
|
(37,219
|
)
|
|
$
|
(35,734
|
)
|
|
$
|
856,831
|
|
|
$
|
(327,086
|
)
|
|
$
|
529,745
|
|
|
$
|
(24
|
)
|
|
$
|
529,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
|
|
|
(Adjusted,
Note 2)
|
|
(Adjusted,
Note 2)
|
|
||||||
Cash flows provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(
loss)
|
|
$
|
(532,858
|
) |
|
$
|
122,819
|
|
|
$
|
215,340
|
|
Adjustments to reconcile net
(loss)
income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
81,116
|
|
|
|
78,575
|
|
|
|
85,168
|
|
Amortization of deferred financing costs and original issuance discounts
|
|
|
4,722
|
|
|
|
10,989
|
|
|
|
4,937
|
|
Provision for doubtful accounts
|
|
|
2,323
|
|
|
|
1,213
|
|
|
|
560
|
|
Deferred income tax (benefit) expense
|
|
|
(47,366
|
)
|
|
|
4,573
|
|
|
|
(102,651
|
)
|
Deferred rent
|
|
|
—
|
|
|
5,351
|
|
|
|
7,287
|
|
|
Undistributed income in equity method investments
|
|
|
(472
|
)
|
|
|
(369
|
)
|
|
|
(194
|
)
|
Change in operating lease liability/asset
|
|
|
(9,942
|
)
|
|
|
—
|
|
|
|
—
|
|
(Gain) loss on disposal of assets
|
|
|
(59,786
|
)
|
|
|
3
|
|
|
|
475
|
|
Non-cash adjustment
s
for
|
|
|
20,236
|
|
|
|
—
|
|
|
|
—
|
|
Goodwill and intangibles impairment
|
|
|
562,631
|
|
|
|
—
|
|
|
|
—
|
|
Non-employee equity based compensation
|
|
|
515
|
|
|
|
81
|
|
|
|
3,033
|
|
Stock option expense
|
|
|
1,319
|
|
|
|
1,744
|
|
|
|
5,309
|
|
Restricted stock units expense—time-based
|
|
|
2,033
|
|
|
|
1,174
|
|
|
|
—
|
|
Directors—non-cash compensation
|
|
|
313
|
|
|
|
196
|
|
|
|
—
|
|
Changes in operating assets and liabilities, net of effects of acquired businesses:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in accounts receivable
|
|
|
(2,600
|
)
|
|
|
(10,431
|
)
|
|
|
1,153
|
|
Decrease (increase) in inventories
|
|
|
72,385
|
|
|
|
(142,866
|
)
|
|
|
37,175
|
|
Decrease (increase) in prepaid expenses and other current assets
|
|
|
14,741
|
|
|
|
16,666
|
|
|
|
(9,117
|
)
|
(Decrease) increase in accounts payable, accrued expenses and income taxes payable
|
|
|
(65,617
|
)
|
|
|
12,138
|
|
|
|
19,408
|
|
Net cash provided by operating activities
|
|
|
43,693
|
|
|
|
101,856
|
|
|
|
267,883
|
|
Cash flows provided by (used in) investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid in connection with acquisitions, net of cash acquired
|
|
|
(20,878
|
)
|
|
|
(65,301
|
)
|
|
|
(74,710
|
)
|
Capital expenditures
|
|
|
(61,733
|
)
|
|
|
(85,661
|
)
|
|
|
(66,970
|
)
|
Proceeds from disposal of property and equipment
|
|
|
246,286
|
|
|
|
55
|
|
|
|
35
|
|
Net cash provided (used in) investing activities
|
|
|
163,675
|
|
|
|
(150,907
|
)
|
|
|
(141,645
|
)
|
Cash flows (used in) provided by financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of loans, notes payable and long-term obligations
|
|
|
(441,632
|
)
|
|
|
(547,695
|
)
|
|
|
(234,619
|
)
|
Proceeds from loans, notes payable and long-term obligations
|
|
|
203,344
|
|
|
|
652,087
|
|
|
|
380,092
|
|
Exercise of stock options
|
|
|
1,148
|
|
|
|
2,269
|
|
|
|
1,298
|
|
Treasury stock purchases
|
|
|
(156
|
)
|
|
|
(40,197
|
)
|
|
|
(286,733
|
)
|
Debt issuance
and modification
costs
|
|
|
(414
|
)
|
|
|
(10,294
|
)
|
|
|
—
|
|
Net cash
(u
provided by financing activities
s
ed in)
|
|
|
(237,710
|
)
|
|
|
56,170
|
|
|
|
(139,962
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
6,299
|
|
|
|
(2,308
|
)
|
|
|
3,367
|
|
Net (decrease) increase in cash and cash equivalents and restricted cash
|
|
|
(24,043
|
)
|
|
|
4,811
|
|
|
|
(10,357
|
) |
Cash and cash equivalents and restricted cash at beginning of period
|
|
|
59,219
|
|
|
|
54,408
|
|
|
|
64,765
|
|
Cash and cash equivalents and restricted cash at end of period
|
|
$
|
35,176
|
|
|
$
|
59,219
|
|
|
$
|
54,408
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
108,561
|
|
|
$
|
94,472
|
|
|
$
|
76,171
|
|
Income taxes, net of refunds
|
|
$
|
36,093
|
|
|
$
|
59,156
|
|
|
$
|
66,445
|
|
|
Fiscal Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Net (loss) income attributable to common shareholders of
Party City
Holdco
Inc.:
|
$ |
(532,495
|
) | $ |
123,259
|
$ |
215,340
|
|||||
Weighted average shares—Basic:
|
93,295,692
|
96,133,144
|
118,589,421
|
|||||||||
Effect of dilutive restricted stock units:
|
—
|
9,661
|
—
|
|||||||||
Effect of dilutive stock options:
|
—
|
1,128,245
|
1,304,600
|
|||||||||
Weighted average shares—Diluted:
|
93,295,692
|
97,271,050
|
119,894,021
|
|||||||||
Net (loss) income per share attributable to common
shareholders of Party City
Holdco
Inc.—Basic:
|
$ |
(5.71
|
) | $ |
1.28
|
$ |
1.81
|
|||||
Net (loss) income per share attributable to common
shareholders of Party City
Holdco
Inc.—Diluted:
|
$ |
(5.71
|
) | $ |
1.27
|
$ |
1.79
|
|||||
|
December 31,
|
|
||
|
2019
|
|
||
Inventory reserves
|
$ |
21,284
|
||
Operating lease asset impairment
|
14,943
|
|||
Property, plant and equipment impairment
|
4,680
|
|||
Labor and other costs incurred closing stores
|
8,754
|
|||
Severance
|
661
|
|||
Total
|
$ |
50,322
|
||
|
Fiscal Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
||||
Wholesale segment:
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
510,490
|
|
|
$
|
513,946
|
|
Granmark acquisition
|
|
|
—
|
|
|
|
(1,115
|
)
|
Print Appeal acquisition
|
|
|
—
|
|
|
|
277
|
|
Other acquisitions
|
|
|
—
|
|
|
|
132
|
|
Allocation of Goodwill from Retail segment
|
|
|
42,230
|
|
|
|
|
|
Goodwill impairment
|
|
|
(60,427
|
)
|
|
|
—
|
|
Foreign currency
translation
|
|
|
1,139
|
|
|
|
(2,750
|
)
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
|
493,432
|
|
|
|
510,490
|
|
Retail segment:
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
1,146,460
|
|
|
|
1,105,307
|
|
Store acquisitions
|
|
|
2,557
|
|
|
|
42,801
|
|
Acquisitions
|
|
|
15,375
|
|
|
|
—
|
|
Sale of Canadian-based Party City stores
|
|
|
(48,241
|
)
|
|
|
—
|
|
Allocation of Goodwill
to
Wholesale segment
|
|
|
(42,230
|
)
|
|
|
—
|
|
Goodwill impairment
|
|
|
(495,629
|
)
|
|
|
—
|
|
Foreign currency
translation
|
|
|
606
|
|
|
|
(1,648
|
)
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
|
578,898
|
|
|
|
1,146,460
|
|
|
|
|
|
|
|
|
|
|
Total ending balance, both segments
|
|
$
|
1,072,330
|
|
|
$
|
1,656,950
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|||||||
|
2019
|
|
2018
|
|
||||
Finished goods
|
$ |
606,036
|
$ |
706,327
|
||||
Raw materials
|
34,259
|
33,423
|
||||||
Work in process
|
18,124
|
16,288
|
||||||
|
$ |
658,419
|
$ |
756,038
|
||||
|
December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
Useful lives
|
|
||||||
Machinery and equipment
|
$ |
255,908
|
$ |
216,097
|
3-15
years
|
|||||||
Buildings
|
9,838
|
68,810
|
40 years
|
|||||||||
Data processing equipment
|
92,256
|
82,735
|
3-5
years
|
|||||||||
Leasehold improvements
|
117,894
|
137,508
|
1-10
years
|
|||||||||
Furniture and fixtures
|
168,296
|
191,183
|
5-10
years
|
|||||||||
Land
|
7,047
|
11,069
|
|
|||||||||
|
651,240
|
707,402
|
|
|||||||||
Less: accumulated depreciation
|
(407,668
|
) |
(386,358
|
) |
|
|||||||
|
$ |
243,572
|
$ |
321,044
|
|
|||||||
|
December 31, 2019
|
|||||||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
Useful lives
|
|
||||||||
Franchise-related intangible assets
|
$ |
77,377
|
$ |
50,658
|
$ |
26,719
|
4-19
years
|
|||||||||
Customer lists and relationships
|
62,144
|
45,940
|
16,204
|
2-20
years
|
||||||||||||
Copyrights and designs
|
31,453
|
29,416
|
2,037
|
5-7
years
|
||||||||||||
Non-compete
agreements
|
500
|
400
|
100
|
5 years
|
||||||||||||
Total
|
$ |
171,473
|
$ |
126,413
|
$ |
45,060
|
|
|||||||||
|
December 31, 2018
|
|||||||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
Useful lives
|
|
||||||||
Franchise-related intangible assets
|
$ |
77,377
|
$ |
41,877
|
$ |
35,500
|
4-19
years
|
|||||||||
Customer lists and relationships
|
61,405
|
41,167
|
20,238
|
2-20
years
|
||||||||||||
Copyrights and designs
|
26,030
|
25,708
|
322
|
5-7
years
|
||||||||||||
Lease agreements
|
17,830
|
13,926
|
3,904
|
1-17
years
|
||||||||||||
Non-compete
agreements
|
500
|
300
|
200
|
5 years
|
||||||||||||
Total
|
$ |
183,142
|
$ |
122,978
|
$ |
60,164
|
|
|||||||||
|
•
|
incur additional indebtedness;
|
|
•
|
pay dividends on capital stock or redeem, repurchase or retire capital stock;
|
|
•
|
make certain investments, loans, advances and acquisitions;
|
|
•
|
engage in transactions with affiliates;
|
|
•
|
create liens; and
|
|
•
|
transfer or sell certain assets.
|
|
December 31,
|
|||||||
|
2019
|
|
2018
|
|
||||
Senior secured term loan facility (“Term Loan
|
$ |
718,596
|
$ |
791,135
|
||||
6.125% Senior Notes—due 2023
|
347,015
|
346,191
|
||||||
6.625% Senior Notes—due 2026
|
494,910
|
494,138
|
||||||
Finance
lease obligations
|
14,990
|
3,815
|
||||||
Total long-term obligations
|
1,575,511
|
1,635,279
|
||||||
Less: current portion
|
(71,524
|
) |
(13,316
|
) | ||||
Long-term obligations, excluding current portion
|
$ |
1,503,987
|
$ |
1,621,963
|
||||
• | incur additional indebtedness; |
• | pay dividends on capital stock or redeem, repurchase or retire capital stock; |
• | make certain investments, loans, advances and acquisitions; |
• | engage in transactions with affiliates; |
• | create liens; and |
• | transfer or sell certain assets. |
|
•
|
incur additional indebtedness or issue certain disqualified stock and preferred stock;
|
|
•
|
pay dividends or distributions, redeem or repurchase equity;
|
|
•
|
prepay subordinated debt or make certain investments;
|
|
•
|
engage in transactions with affiliates;
|
|
•
|
consolidate, merge or transfer all or substantially all of PCHI’s assets;
|
|
•
|
create liens; and
|
|
•
|
transfer or sell certain assets.
|
Twelve-month period beginning on August 15,
|
Percentage
|
|
||
2019
|
101.531
|
% | ||
2020 and thereafte
r
|
100.000
|
% |
|
•
|
incur additional indebtedness or issue certain disqualified stock and preferred stock;
|
|
•
|
pay dividends or distributions, redeem or repurchase equity;
|
|
•
|
prepay subordinated debt or make certain investments;
|
|
•
|
engage in transactions with affiliates;
|
|
•
|
consolidate, merge or transfer all or substantially all of PCHI’s assets;
|
|
•
|
create liens; and
|
|
•
|
transfer or sell certain assets.
|
Twelve-month period beginning on August 1,
|
Percentage
|
|
||
2021
|
103.313
|
% | ||
2022
|
101.656
|
% | ||
2023 and thereafter
|
100.000
|
% |
|
Long-Term
Debt
|
|
Finance
Lease
Obligations
|
|
Totals
|
|
||||||
2020
|
$
|
70,462
|
$
|
1,062
|
$ |
71,524
|
||||||
2021
|
12,266
|
1,431
|
13,697
|
|||||||||
2022
|
641,237
|
1,259
|
642,496
|
|||||||||
2023
|
350,000
|
390
|
350,390
|
|||||||||
2024
|
—
|
521
|
521
|
|||||||||
Thereafter
|
500,000
|
10,327
|
510,327
|
|||||||||
Long-term obligations
|
$ |
1,573,965
|
$ |
14,990
|
$ |
1,588,955
|
||||||
Common Shares Outstanding at December 31, 2016
|
119,515,894
|
|||
Treasury stock purchases
|
(23,379,567
|
) | ||
Exercise of stock options
|
243,775
|
|||
Common Shares Outstanding at December 31, 2017
|
96,380,102
|
|||
Issuance of restricted shares
|
589,736
|
|||
Treasury stock purchases
|
(3,785,658
|
) | ||
Issuance of shares to directors
|
13,249
|
|||
Exercise of stock options
|
425,505
|
|||
Common Shares Outstanding at December 31, 2018
|
93,622,934
|
|||
Issuance of restricted stock and restricted stock units
|
564,729
|
|||
Treasury stock purchases
|
(15,679
|
) | ||
Vesting of restricted stock and restricted stock units
|
74,292
|
|||
Exercise of stock options
|
215,300
|
|||
Common Shares Outstanding at December 31, 2019
|
94,461,576
|
|||
|
Fiscal Year Ended December 31,
|
|||||||||||
|
2019
|
|
|
2018
|
|
2017
|
|
|||||
Other expense, net consists of the following:
|
|
|
|
|
||||||||
Undistributed (income) in equity method investments
|
$
|
(472
|
)
|
|
$ |
(369
|
) | $ |
(194
|
) | ||
Foreign currency losses
|
421
|
|
24
|
466
|
||||||||
Debt refinancings (see Note
12
)
|
36
|
|
6,237
|
—
|
||||||||
Corporate development expenses
|
2,472
|
|
4,387
|
2,660
|
||||||||
(Gain) on sale of Canada retail assets
|
|
|
(2,873
|
) |
|
|
—
|
|
|
|
—
|
|
Sale of ownership interest in Punchbowl (see Note 21)
|
|
|
2,169
|
|
|
|
—
|
|
|
|
—
|
|
Other, net
|
118
|
|
703
|
1,694
|
||||||||
|
||||||||||||
Other expense
,
net
|
$ |
1,871
|
|
$ |
10,982
|
$ |
4,626
|
|||||
Expected dividend rate
|
—%
|
|||
Risk-free interest rate
|
1.88% to 2.44%
|
|||
Volatility
|
29.06% to 30.78%
|
|||
Expected option term
|
6 years—6.5 years
|
Expected dividend rate
|
—%
|
|||
Risk-free interest rate
|
1.86%
|
|||
Volatility
|
52.00%
|
|||
Expected option term
|
5 years
|
|
Options
|
|
Average
Exercise
Price
|
|
Average Fair
Value of
Time-Based
Options at
Grant Date
|
|
Aggregate
Intrinsic
Value
|
|
Weighted
Average
Remaining
Contractual
Term
(Years)
|
|
||||||||||
Outstanding at December 31, 2016
|
8,461,826
|
|
|
|
|
|||||||||||||||
Granted
|
101,444
|
$ |
14.38
|
4.46
|
|
|
||||||||||||||
Exercised
|
(243,775
|
) |
5.33
|
|
|
|
||||||||||||||
Forfeited
|
(294,734
|
) |
9.47
|
|
|
|
||||||||||||||
Outstanding at December 31, 2017
|
8,024,761
|
8.89
|
|
40,634
|
6.0
|
|||||||||||||||
Granted
|
187,080
|
14.63
|
4.98
|
|
|
|||||||||||||||
Exercised
|
(425,505
|
) |
5.33
|
|
|
|
||||||||||||||
Forfeited
|
(859,162
|
) |
7.84
|
|
|
|
||||||||||||||
Outstanding at December 31, 2018
|
6,927,174
|
9.39
|
|
4,089
|
5.2
|
|||||||||||||||
Granted
|
337,000
|
6.43
|
2.16
|
|
|
|||||||||||||||
Exercised
|
(215,300
|
) |
5.33
|
|
|
|
||||||||||||||
Forfeited
|
(730,157
|
) |
13.00
|
|
|
|
||||||||||||||
Outstanding at December 31, 2019
|
6,318,717
|
8.95
|
|
(41,784
|
) |
4.4
|
||||||||||||||
Exercisable at December 31, 2019
|
2,650,034
|
11.64
|
|
(24,642
|
) |
4.5
|
||||||||||||||
Expected to vest at December 31, 2019 (excluding performance-based options)
|
860,284
|
$ |
12.50
|
|
$ |
(8,743
|
) |
7.6
|
|
Fiscal Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Domestic
|
$ |
(572,287
|
) | $ |
132,482
|
$ |
153,280
|
|||||
Foreign
|
38,124
|
29,115
|
34,864
|
|||||||||
Total
|
$ |
(534,163
|
) | $ |
161,597
|
$ |
188,144
|
|||||
|
Fiscal Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Current:
|
|
|
|
|||||||||
Federal
|
$ |
28,908
|
$ |
20,609
|
$ |
61,890
|
||||||
State
|
4,613
|
5,726
|
6,267
|
|||||||||
Foreign
|
12,540
|
7,870
|
7,298
|
|||||||||
Total current expense
|
46,061
|
34,205
|
75,455
|
|||||||||
Deferred:
|
|
|
|
|||||||||
Federal
|
(37,166
|
) |
6,194
|
(101,774
|
) | |||||||
State
|
(11,207
|
) |
(880
|
) |
(796
|
) | ||||||
Foreign
|
1,007
|
(741
|
) |
(81
|
) | |||||||
Total deferred (benefit)
expense
|
(47,366
|
) |
4,573
|
(102,651
|
) | |||||||
Income tax (benefit)
expense
|
$ |
(1,305
|
) | $ |
38,778
|
$ |
(27,196
|
) | ||||
|
December 31,
|
|||||||
|
2019
|
|
2018
|
|
||||
Deferred income tax assets:
|
|
|
||||||
Inventory reserves and capitalization
|
$ |
8,659
|
$ |
8,664
|
||||
Allowance for doubtful accounts
|
1,194
|
709
|
||||||
Accrued liabilities
|
8,391
|
7,087
|
||||||
Equity based compensation
|
3,998
|
3,431
|
||||||
Federal tax loss carryforwards
|
525
|
743
|
||||||
State tax loss carryforwards
|
2,703
|
1,554
|
||||||
Foreign tax loss carryforwards
|
15,874
|
14,034
|
||||||
Foreign tax credit carryforwards
|
5,397
|
5,397
|
||||||
Deferred rent and lease incentives
(1)
|
—
|
13,565
|
||||||
Section 163(j) Interest Limitation
|
9,134
|
1,625
|
||||||
Lease Liabilities
|
224,966
|
—
|
||||||
Other
|
2,231
|
1,808
|
||||||
Deferred income tax assets before valuation allowances
|
283,072
|
58,617
|
||||||
Less: valuation allowances
|
(24,623
|
) |
(21,879
|
) | ||||
Deferred income tax assets, net
|
$
|
258,449
|
$ |
36,738
|
||||
Deferred income tax liabilities:
|
|
|
||||||
Depreciation
|
$ |
21,211
|
$ |
23,720
|
||||
Trade Name
|
135,751
|
145,767
|
||||||
Amortization of goodwill and other assets
|
16,111
|
38,712
|
||||||
Foreign earnings expected to be repatriated
|
1,177
|
1,132
|
||||||
Lease Right of Use Assets
|
208,772
|
—
|
||||||
Other
|
1,488
|
826
|
||||||
Deferred income tax liabilities
|
$ |
384,510
|
$ |
210,157
|
||||
(1) | In accordance with ASC 842, deferred rent and lease incentives are part of the Lease Right of Use Assets as of 2019. |
|
Fiscal Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Tax provision at U.S. statutory income tax rate
|
21.0
|
% |
21.0
|
% |
35.0
|
% | ||||||
State income tax, net of federal income tax
|
1.0
|
2.4
|
1.9
|
|||||||||
Domestic production activities deduction
|
—
|
—
|
(1.4
|
) | ||||||||
Valuation allowances
|
(0.4
|
) |
0.6
|
2.1
|
||||||||
GILTI and Foreign-Derived Intangible Income
|
(0.6
|
) |
1.1
|
—
|
||||||||
Foreign earnings
|
(1.5
|
) |
0.2
|
(1.7
|
) | |||||||
U.S.—foreign rate differential
|
(0.6
|
) |
0.4
|
(1.9
|
) | |||||||
Transition Tax on unremitted foreign earnings, net
|
—
|
0.1
|
0.6
|
|||||||||
Effect of the Act on Federal deferred income tax assets and liabilities
|
—
|
(1.3
|
) |
(48.4
|
) | |||||||
Goodwill Impairment
|
|
|
(17.9
|
)
|
|
|
—
|
|
|
|
— |
|
Other
|
(0.8
|
) |
(0.5
|
) |
(0.7
|
) | ||||||
Effective income tax rat
e
|
0.2
|
% |
24.0
|
% |
(14.5
|
)% | ||||||
|
Fiscal Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Balance at beginning of year
|
$ |
1,320
|
$ |
855
|
$ |
913
|
||||||
Increases related to current period tax positions
|
652
|
40
|
100
|
|||||||||
Increases (decreases) related to prior period tax positions
|
3,030
|
495
|
(158
|
) | ||||||||
Decreases related to settlements
|
—
|
—
|
—
|
|||||||||
Decreases related to lapsing of statutes of limitations
|
(111
|
) |
(70
|
) |
—
|
|||||||
Balance at end of year
|
$ |
4,891
|
$ |
1,320
|
$ |
855
|
||||||
|
Future
Royalty
Payments
|
|
||
2020
|
$ |
35,525
|
||
2021
|
10,393
|
|||
2022
|
5,820
|
|||
Thereafter
|
—
|
|||
|
$ |
51,738
|
||
|
Wholesale
|
|
Retail
|
|
Consolidated
|
|
||||||
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|||
Revenues:
|
|
|
|
|||||||||
Net sales
|
$ |
1,240,026
|
$ |
1,742,136
|
$ |
2,982,162
|
||||||
Royalties and franchise fees
|
—
|
9,279
|
9,279
|
|||||||||
Total revenues
|
1,240,026
|
1,751,415
|
2,991,441
|
|||||||||
Eliminations
|
(642,652
|
) |
—
|
(642,652
|
) | |||||||
Net revenues
|
$ |
597,374
|
$ |
1,751,415
|
$ |
2,348,789
|
||||||
Income
(
from operations
loss
)
|
$ |
4,152
|
$ |
(421,545
|
) | $ |
(417,393
|
) | ||||
Interest expense, net
|
|
|
114,899
|
|||||||||
Other expense, net
|
|
|
1,871
|
|||||||||
Loss
before income taxes
|
|
|
$ |
(534,163
|
) | |||||||
Depreciation and amortization
|
$ |
27,845
|
$ |
53,271
|
$ |
81,116
|
||||||
Capital expenditures
|
$ |
29,480
|
$ |
32,253
|
$ |
61,733
|
||||||
Total assets
|
$ |
1,912,522
|
$ |
1,682,797
|
$ |
3,595,319
|
||||||
|
Wholesale
|
|
Retail
|
|
Consolidated
|
|
||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|||
Revenues:
|
|
|
|
|||||||||
Net sales
|
$ |
1,325,490
|
$ |
1,802,834
|
$ |
3,128,324
|
||||||
Royalties and franchise fees
|
—
|
11,073
|
11,073
|
|||||||||
Total revenues
|
1,325,490
|
1,813,907
|
3,139,397
|
|||||||||
Eliminations
|
(711,882
|
) |
—
|
(711,882
|
) | |||||||
Net revenues
|
$ |
613,608
|
$ |
1,813,907
|
$ |
2,427,515
|
||||||
Income from operations
|
$ |
45,180
|
$ |
233,105
|
$ |
278,285
|
||||||
Interest expense, net
|
|
|
105,706
|
|||||||||
Other expense, net
|
|
|
10,982
|
|||||||||
Income before income taxes
|
|
|
$ |
161,597
|
||||||||
Depreciation and amortization
|
$ |
28,368
|
$ |
50,207
|
$ |
78,575
|
||||||
Capital expenditures
|
$ |
33,890
|
$ |
51,771
|
$ |
85,661
|
||||||
Total assets
|
$ |
1,346,856
|
$ |
2,295,491
|
$ |
3,642,347
|
||||||
|
Wholesale
|
|
Retail
|
|
Consolidated
|
|
||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|||
Revenues:
|
|
|
|
|||||||||
Net sales
|
$ |
1,260,089
|
$ |
1,728,589
|
$ |
2,988,678
|
||||||
Royalties and franchise fees
|
—
|
13,583
|
13,583
|
|||||||||
Total revenues
|
1,260,089
|
1,742,172
|
3,002,261
|
|||||||||
Eliminations
|
(630,692
|
) |
—
|
(630,692
|
) | |||||||
Net revenues
|
$ |
629,397
|
$ |
1,742,172
|
$ |
2,371,569
|
||||||
Income from operations
|
$ |
68,130
|
$ |
212,006
|
$ |
280,136
|
||||||
Interest expense, net
|
|
|
87,366
|
|||||||||
Other income, net
|
|
|
4,626
|
|||||||||
Income before income taxes
|
|
|
$ |
188,144
|
||||||||
Depreciation and amortization
|
$ |
30,520
|
$ |
54,648
|
$ |
85,168
|
||||||
Capital expenditures
|
$ |
32,490
|
$ |
34,480
|
$ |
66,970
|
||||||
|
Domestic
|
|
Foreign
|
|
Eliminations
|
|
Consolidated
|
|||||||||
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues:
|
|
|
|
|
||||||||||||
Net sales to unaffiliated customers
|
$
|
1,968,319
|
$
|
371,191
|
$ |
—
|
$ |
2,339,510
|
||||||||
Net sales between geographic areas
|
57,117
|
86,811
|
(143,928
|
)
|
—
|
|||||||||||
Net sales
|
2,025,436
|
458,002
|
(143,928
|
)
|
2,339,510
|
|||||||||||
Royalties and franchise fees
|
9,279
|
—
|
—
|
9,279
|
||||||||||||
Total revenues
|
$ |
2,034,715
|
$
|
458,002
|
$
|
(143,928
|
)
|
$
|
2,348,789
|
|||||||
(
from operations
L
oss
|
$
|
(412,225
|
)
|
$
|
(5,168
|
)
|
$ |
—
|
$ |
(417,393
|
)
|
|||||
Interest expense, net
|
|
|
|
114,899
|
||||||||||||
Other expense, net
|
|
|
|
1,871
|
||||||||||||
(
Loss
)
|
|
|
|
$ |
(534,163
|
) | ||||||||||
Depreciation and amortization
|
$
|
72,701
|
$
|
8,415
|
|
$ |
81,116
|
|||||||||
Total long-lived assets (excluding goodwill, trade names and other intangible assets, net)
|
$
|
224,692
|
$
|
26,156
|
|
$ |
250,848
|
|||||||||
Total assets
|
$
|
3,317,305
|
$
|
278,014
|
$ |
—
|
$ |
3,595,319
|
||||||||
|
Domestic
|
|
Foreign
|
|
Eliminations
|
|
Consolidated
|
|
||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues:
|
|
|
|
|
||||||||||||
Net sales to unaffiliated customers
|
$ |
2,015,899
|
$ |
400,543
|
$ |
—
|
$ |
2,416,442
|
||||||||
Net sales between geographic areas
|
65,416
|
110,185
|
(175,601
|
) |
—
|
|||||||||||
Net sales
|
2,081,315
|
510,728
|
(175,601
|
) |
2,416,442
|
|||||||||||
Royalties and franchise fees
|
11,073
|
—
|
—
|
11,073
|
||||||||||||
Total revenues
|
$ |
2,092,388
|
$ |
510,728
|
$ |
(175,601
|
) | $ |
2,427,515
|
|||||||
Income from operations
|
$ |
264,440
|
$ |
13,845
|
$ |
—
|
$ |
278,285
|
||||||||
Interest expense, net
|
|
|
|
105,706
|
||||||||||||
Other expense, net
|
|
|
|
10,982
|
||||||||||||
Income before income taxes
|
|
|
|
$ |
161,597
|
|||||||||||
Depreciation and amortization
|
$ |
70,011
|
$ |
8,564
|
|
$ |
78,575
|
|||||||||
Total long-lived assets (excluding goodwill, trade names and other intangible assets, net)
|
$ |
292,632
|
$ |
40,735
|
|
$ |
333,367
|
|||||||||
Total assets
|
$ |
3,339,155
|
$ |
303,192
|
$ |
—
|
$ |
3,642,347
|
||||||||
|
Domestic
|
|
Foreign
|
|
Eliminations
|
|
Consolidated
|
|
||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues:
|
|
|
|
|
||||||||||||
Net sales to unaffiliated customers
|
$ |
1,962,697
|
$ |
395,289
|
$ |
—
|
$ |
2,357,986
|
||||||||
Net sales between geographic areas
|
54,268
|
64,585
|
(118,853
|
) |
—
|
|||||||||||
Net sales
|
2,016,965
|
459,874
|
(118,853
|
) |
2,357,986
|
|||||||||||
Royalties and franchise fees
|
13,583
|
—
|
—
|
13,583
|
||||||||||||
Total revenues
|
$ |
2,030,548
|
$ |
459,874
|
$ |
(118,853
|
) | $ |
2,371,569
|
|||||||
Income from operations
|
$ |
252,270
|
$ |
27,866
|
$ |
—
|
$ |
280,136
|
||||||||
Interest expense, net
|
|
|
|
87,366
|
||||||||||||
Other income, net
|
|
|
|
4,626
|
||||||||||||
Income before income taxes
|
|
|
|
$ |
188,144
|
|||||||||||
Depreciation and amortization
|
$ |
76,970
|
$ |
8,198
|
|
$ |
85,168
|
|||||||||
For the Three Months Ended,
|
||||||||||||||||
2019:
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
||||||||
Revenues:
|
|
|
|
|
||||||||||||
Net sales
|
$ |
511,102
|
$ |
561,702
|
$ |
538,345
|
$ |
728,361
|
||||||||
Royalties and franchise fees
|
2,014
|
2,189
|
1,886
|
3,190
|
||||||||||||
Gross profit
|
172,060
|
208,646
|
164,932
|
293,239
|
||||||||||||
(Loss) income from operations
|
(10,297
|
) |
97,485
|
(277,526
|
) |
(227,055
|
) | |||||||||
Net
(
l
|
(30,289
|
) |
48,005
|
(281,745
|
) |
(268,829
|
) | |||||||||
Net (loss) income attributable to common shareholders of Party City Holdco Inc.
|
(30,218
|
) |
48,074
|
(281,533
|
) |
(268,818
|
) | |||||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic
|
$ |
(0.32
|
) | $ |
0.52
|
$ |
(3.02
|
) | $ |
(2.88
|
) | |||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted
|
$ |
(0.32
|
) | $ |
0.51
|
$ |
(3.02
|
) | $ |
(2.88
|
) |
|
For the Three Months Ended,
|
|||||||||||||||
2018:
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
||||||||
Revenues:
|
|
|
|
|
||||||||||||
Net sales
|
$ |
505,108
|
$ |
558,101
|
$ |
550,840
|
$ |
802,393
|
||||||||
Royalties and franchise fees
|
2,716
|
2,910
|
2,206
|
3,241
|
||||||||||||
Gross profit
|
188,142
|
228,624
|
201,199
|
363,119
|
||||||||||||
Income from operations
|
22,256
|
65,451
|
31,738
|
158,840
|
||||||||||||
Net (loss) income
|
(1,163
|
) |
28,048
|
(2,440
|
) |
98,374
|
||||||||||
Net (loss) income attributable to common shareholders of Party City Holdco Inc.
|
(1,133
|
) |
28,487
|
(2,420
|
) |
98,325
|
||||||||||
Net (loss) income per share attributable to common
shareholders
of Party City Holdco Inc.—Basic
|
$ |
(0.01
|
) | $ |
0.30
|
$ |
(0.03
|
) | $ |
1.03
|
||||||
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted
|
$ |
(0.01
|
) | $ |
0.29
|
$ |
(0.03
|
) | $ |
1.02
|
•
|
Level 1—Quoted prices in active markets for identical assets or liabilities.
|
|
•
|
Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
|
•
|
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total as of
December 31,
2018
|
|
||||||||
Derivative assets
|
$ |
—
|
$ |
115
|
$ |
—
|
$ |
115
|
||||||||
Punchbowl put liability
|
—
|
—
|
316
|
316
|
|
Carrying Amount
|
|
Fair Value
|
|
||||
Term Loan Credit Agreement
|
$ |
724,881
|
$ |
668,703
|
||||
6.125% Senior Notes—due 2023
|
347,015
|
348,250
|
||||||
6.625% Senior Notes—due 2026
|
494,910
|
366,250
|
|
Derivative Assets
|
Derivative Liabilities
|
||||||||||||||||||||||||||||||
|
December 31,
2019 |
December 31,
2018 |
December 31,
2019 |
December 31,
2018 |
||||||||||||||||||||||||||||
|
Balance
Sheet
Line
|
|
Fair
Value
|
|
Balance
Sheet
Line
|
|
Fair
Value
|
|
Balance
Sheet
Line
|
|
Fair
Value
|
|
Balance
Sheet
Line
|
|
Fair
Value
|
|
||||||||||||||||
Foreign Exchange Contracts
|
(a) PP
|
$ |
—
|
(a) PP
|
$ |
115
|
(b) AE
|
$ |
—
|
(b) AE
|
$ |
—
|
||||||||||||||||||||
(a)
|
PP = Prepaid expenses and other current assets
|
(b)
|
AE = Accrued expenses
|
Derivative Instrument
|
December 31,
2019
|
|
December 31,
2018
|
|
||||
Foreign Exchange Contracts
|
$ |
300
|
$ |
10,942
|
Year Ended December 31, 2019
|
||||||||||||
Foreign
Currency Adjustments |
|
Impact of
Foreign Exchange Contracts, Net of
Taxes
|
|
Total,
of Taxes
|
|
|||||||
Balance at December 31, 2018
|
$ |
(50,056
|
) | $ |
855
|
$ |
(49,201
|
) | ||||
Other comprehensive income before reclassifications, net of income tax
|
5,725
|
106
|
5,831
|
|||||||||
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax
|
6,897
|
739
|
7,636
|
|||||||||
Net current-period other comprehensive
income
|
12,622
|
845
|
13,467
|
|||||||||
Balance at December 31, 2019
|
$ |
(37,434
|
) | $ |
1,700
|
$ |
(35,734
|
) | ||||
Year Ended December 31, 2018
|
||||||||||||
Foreign
Currency
Adjustments
|
|
Impact of
Foreign
Exchange
Contracts,
Net of
Taxes
|
|
Total,
of Taxes
|
|
|||||||
Balance at December 31, 2017
|
$ |
(35,610
|
) | $ |
(208
|
) | $ |
(35,818
|
) | |||
Other comprehensive
(
income before reclassifications, net of income tax
loss
)
|
(14,446
|
) |
1,432
|
(13,014
|
) | |||||||
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax
|
—
|
(369
|
) |
(369
|
) | |||||||
Net current-period other comprehensive
(
income
loss
)
|
(14,446
|
) |
1,063
|
(13,383
|
) | |||||||
Balance at December 31, 2018
|
$ |
(50,056
|
) | $ |
855
|
$ |
(49,201
|
) | ||||
|
Year Ended December 31, 2017
|
|||||||||||
|
Foreign
Currency
Adjustments
|
|
Impact of
Foreign
Exchange
Contracts,
Net of
Taxes
|
|
Total, Net
of Taxes
|
|
||||||
Balance at December 31, 2016
|
$ |
(53,171
|
) | $ |
932
|
$ |
(52,239
|
) | ||||
Other comprehensive
income
(loss) before reclassifications, net of income tax
|
17,561
|
(1,044
|
) |
16,517
|
||||||||
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax
|
—
|
(96
|
) |
(96
|
) | |||||||
Net current-period other comprehensive income
(loss)
|
17,561
|
(1,140
|
) |
16,421
|
||||||||
Balance at December 31, 2017
|
$ |
(35,610
|
) | $ |
(208
|
) | $ |
(35,818
|
) | |||
Fiscal Year Ended December 31,
|
||||||||||||
2019
|
|
2018
|
|
2017
|
|
|||||||
Retail Net Sales:
|
|
|
|
|||||||||
Party City Stores
|
$ |
1,529,043
|
$ |
1,583,134
|
$ |
1,521,661
|
||||||
Global
E-commerce
|
162,490
|
154,481
|
152,465
|
|||||||||
Temporary Stores
|
50,603
|
65,219
|
54,463
|
|||||||||
Total Retail Net Sales
|
$ |
1,742,136
|
$ |
1,802,834
|
$ |
1,728,589
|
||||||
Royalties and Franchise Fees
|
9,279
|
11,073
|
13,583
|
|||||||||
Total Retail Revenue
|
$ |
1,751,415
|
$ |
1,813,907
|
$ |
1,742,172
|
||||||
Wholesale Net Sales:
|
|
|
|
|||||||||
Domestic
|
$ |
310,042
|
$ |
328,056
|
$ |
351,109
|
||||||
International
|
287,332
|
285,552
|
278,288
|
|||||||||
Total Wholesale Net Sales
|
$ |
597,374
|
$ |
613,608
|
$ |
629,397
|
||||||
Total Consolidated Revenue
|
$ |
2,348,789
|
$ |
2,427,515
|
$ |
2,371,569
|
||||||
|
Future Minimum
Operating Lease
Payments
|
|
||
2020
|
$
|
197,480
|
||
2021
|
181,970
|
|||
2022
|
162,352
|
|||
2023
|
134,131
|
|||
2024
|
106,078
|
|||
Thereafter
|
367,639
|
|||
Total Undiscounted Cash Flows
|
1,149,650
|
|||
Less: Interest
|
|
|
(273,444
|
)
|
|
|
|
|
|
Total Operating Lease Liability
|
|
|
876,206
|
|
Less: Current Operating Lease Liability
|
|
|
(155,471
|
)
|
|
|
|
|
|
Long-Term Operating Lease Liability
|
|
$
|
720,735
|
|
|
|
|
|
|
Fiscal Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Equity in net income of subsidiaries
|
$ |
(532,495
|
) | $ |
122,850
|
$ |
215,340
|
|||||
Net income
|
$ |
(532,495
|
) | $ |
122,850
|
$ |
215,340
|
|||||
Add: Net income attributable to redeemable securities holder
|
—
|
409
|
—
|
|||||||||
Net income attributable to common shareholders of Party City Holdco Inc.
|
$ |
(532,495
|
) | $ |
123,259
|
$ |
215,340
|
|||||
Other comprehensive (loss) income, net
|
13,467
|
(13,383
|
) |
16,421
|
||||||||
Comprehensive income
|
(519,028
|
) |
109,467
|
231,761
|
||||||||
Comprehensive income attributable to redeemable securities holder
|
—
|
409
|
—
|
|||||||||
Comprehensive income attributable to common shareholders of Party City Holdco Inc.
|
$ |
(519,028
|
) | $ |
109,876
|
$ |
231,761
|
|||||
|
Fiscal Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Cash flows provided by (used in) operating activities:
|
|
|
|
|||||||||
Net income
|
$ |
(532,495
|
) | $ |
122,850
|
$ |
215,340
|
|||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|||||||||
Equity in net income of subsidiaries
|
532,495
|
(122,850
|
) |
(215,340
|
) | |||||||
Change in due to/from affiliates
|
(989
|
) |
37,928
|
285,435
|
||||||||
Net cash (used in) provided by operating activities
|
(989
|
) |
37,928
|
285,435
|
||||||||
Cash flows (used in) provided by financing activities:
|
|
|
|
|||||||||
Treasury stock purchases
|
(156
|
) |
(40,197
|
) |
(286,733
|
) | ||||||
Exercise of stock options
|
1,145
|
2,269
|
1,298
|
|||||||||
Net cash provided by (used in) financing activities
|
989
|
(37,928
|
) |
(285,435
|
) | |||||||
Net change in cash and cash equivalents
|
—
|
—
|
—
|
|||||||||
Cash and cash equivalents at beginning of period
|
—
|
—
|
—
|
|||||||||
Cash and cash equivalents at end of period
|
$ |
—
|
$ |
—
|
$ |
—
|
||||||
|
Beginning
Balance
|
|
Write-Offs
|
|
Additions
|
|
Ending
Balance
|
|
||||||||
Allowance for Doubtful Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
For the year ended December 31, 2017
|
$ |
2,683
|
$ |
272
|
$ |
560
|
$ |
2,971
|
||||||||
For the year ended December 31, 2018
|
2,971
|
1,251
|
1,213
|
2,933
|
||||||||||||
For the year ended December 31, 2019
|
2,933
|
470
|
2,323
|
4,786
|
||||||||||||
Sales Returns and Allowances:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
For the year ended December 31, 2017
|
$ |
466
|
$ |
83,865
|
$ |
83,879
|
$ |
480
|
||||||||
For the year ended December 31, 2018
|
480
|
86,727
|
86,988
|
741
|
||||||||||||
For the year ended December 31, 2019
|
741
|
83,474
|
83,409
|
676
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
• | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the consolidated financial statements. |
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Party Transactions and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
1. |
Financial Statements
10-K.
|
2. |
Financial Statement Schedules
10-K
and should be read in conjunction with the financial statements and notes thereto contained in Item 8, “Financial Statements and Supplementary Data.”
|
3.
|
Exhibits
|
Exhibit
Number
|
|
Description
|
||
3.1*
|
||||
3.2
|
||||
4.1
|
||||
4.2
|
||||
4.3
|
||||
4.4
|
||||
4.5
|
||||
4.6
|
Exhibit
Number
|
|
Description
|
||
10.18†
|
||||
10.19†
|
||||
10.20†
|
||||
10.21†
|
||||
10.22†
|
||||
10.23†
|
||||
10.24†
|
||||
10.25
|
||||
10.26
|
||||
10.27†
|
||||
10.28†
|
||||
10.29†
|
Exhibit
Number
|
|
Description
|
||
10.30†*
|
||||
21.1*
|
||||
23.1*
|
||||
31.1*
|
||||
31.2*
|
||||
32.1*
|
||||
32.2*
|
||||
101*
|
Interactive Data Files pursuant to Rule 405 of Regulation
S-T:
(i) the Consolidated Balance Sheets at December 31, 2020 and December 31, 2019; (ii) the Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 2019, 2018 and 2017; (iii) the Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017; (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017; and (v) the Notes to the Consolidated Financial Statements.
|
|||
104.1*
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
† | Management contract of compensatory plan or arrangement |
* | Filed herewith. |
Item 16.
|
Form
10-K
Summary
|
PARTY CITY HOLDCO INC.
|
||
By:
|
/s/ Todd Vogensen
|
|
|
Todd Vogensen
|
|
|
Chief Financial Officer
|
Signature
|
Title
|
Date
|
||
/s/ James M. Harrison
James M. Harrison
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
March 12, 2020
|
||
/s/ Todd Vogensen
Todd Vogensen
|
Chief Financial Officer
(Principal Financial Officer)
|
March 12, 2020
|
||
/s/ Michael A. Correale
Michael A. Correale
|
Chief Accounting Officer
(Principal Accounting Officer)
|
March 12, 2020
|
||
/s/ Norman S. Matthews
Norman S. Matthews
|
Chairman of the Board and Director
|
March 12, 2020
|
||
/s/ Todd M. Abbrecht
Todd M. Abbrecht
|
Director
|
March 12, 2020
|
||
/s/ Steven J. Collins
Steven J. Collins
|
Director
|
March 12, 2020
|
||
/s/ James G. Conroy
James G. Conroy
|
Director
|
March 12, 2020
|
||
/s/ William S. Creekmuir
William S. Creekmuir
|
Director
|
March 12, 2020
|
||
/s/ John A. Frascotti
John A. Frascotti
|
Director
|
March 12, 2020
|
||
/s/ Lisa K. Klinger
Lisa K. Klinger
|
Director
|
March 12, 2020
|
||
/s/ Michelle Millstone-Shroff
Michelle Millstone-Shroff
|
Director
|
March 12, 2020
|
||
/s/ Morry J. Weiss
Morry J. Weiss
|
Director
|
March 12, 2020
|