Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 25, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | PRTY | |
Entity Registrant Name | Party City Holdco Inc. | |
Entity Central Index Key | 0001592058 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 93,789,991 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 38,999 | $ 58,909 |
Accounts receivable, net | 138,909 | 146,983 |
Inventories, net | 763,341 | 756,038 |
Prepaid expenses and other current assets | 68,735 | 61,905 |
Total current assets | 1,009,984 | 1,023,835 |
Property, plant and equipment, net | 311,990 | 321,044 |
Operating lease asset | 779,810 | |
Goodwill | 1,659,414 | 1,656,950 |
Trade names | 568,290 | 568,031 |
Other intangible assets, net | 52,959 | 60,164 |
Other assets, net | 14,813 | 12,323 |
Total assets | 4,397,260 | 3,642,347 |
Current liabilities: | ||
Loans and notes payable | 397,882 | 302,751 |
Accounts payable | 156,100 | 208,149 |
Accrued expenses | 138,680 | 161,228 |
Current portion of operating lease liability | 143,028 | |
Income taxes payable | 21,127 | 25,993 |
Current portion of long-term obligations | 13,315 | 13,316 |
Total current liabilities | 870,132 | 711,437 |
Long-term obligations, excluding current portion | 1,618,802 | 1,621,963 |
Long-term portion of operating lease liability | 707,364 | |
Deferred income tax liabilities, net | 165,095 | 174,427 |
Other long-term liabilities | 13,361 | 87,548 |
Total liabilities | 3,374,754 | 2,595,375 |
Redeemable securities | 3,351 | 3,351 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock (93,779,787 and 93,622,934 shares outstanding and 120,960,691 and 120,788,159 shares issued at March 31, 2019 and December 31, 2018, respectively) | 1,210 | 1,208 |
Additional paid-in capital | 925,233 | 922,476 |
Retained earnings | 465,056 | 495,777 |
Accumulated other comprehensive loss | (45,558) | (49,201) |
Total Party City Holdco Inc. stockholders' equity before common stock held in treasury | 1,345,941 | 1,370,260 |
Less: Common stock held in treasury, at cost (27,180,904 and 27,165,225 shares at March 31, 2019 and December 31, 2018) | (327,086) | (326,930) |
Total Party City Holdco Inc. stockholders' equity | 1,018,855 | 1,043,330 |
Noncontrolling interests | 300 | 291 |
Total stockholders' equity | 1,019,155 | 1,043,621 |
Total liabilities, redeemable securities and stockholders' equity | $ 4,397,260 | $ 3,642,347 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - shares | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, shares outstanding | 93,779,787 | 93,622,934 |
Common stock, shares issued | 120,960,691 | 120,788,159 |
Treasury stock, shares | 27,180,904 | 27,165,225 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Total revenues | $ 513,116 | $ 507,824 |
Expenses: | ||
Cost of sales | 339,042 | 316,966 |
Wholesale selling expenses | 17,961 | 18,787 |
Retail operating expenses | 95,018 | 89,092 |
Franchise expenses | 3,303 | 3,782 |
General and administrative expenses | 41,925 | 48,665 |
Art and development costs | 5,929 | 5,973 |
Development stage expenses | 2,226 | 2,303 |
Store impairment and restructuring charges | 18,009 | |
Total expenses | 523,413 | 485,568 |
(Loss) income from operations | (10,297) | 22,256 |
Interest expense, net | 29,257 | 23,275 |
Other expense, net | 1,254 | 848 |
Loss before income taxes | (40,808) | (1,867) |
Income tax benefit | (10,519) | (704) |
Net loss | (30,289) | (1,163) |
Less: Net loss attributable to noncontrolling interests | (71) | (30) |
Net loss attributable to common shareholders of Party City Holdco Inc. | $ (30,218) | $ (1,133) |
Net loss per share attributable to common shareholders of Party City Holdco Inc.–Basic | $ (0.32) | $ (0.01) |
Net loss per share attributable to common shareholders of Party City Holdco Inc.–Diluted | $ (0.32) | $ (0.01) |
Weighted-average number of common shares-Basic | 93,174,553 | 96,398,585 |
Weighted-average number of common shares-Diluted | 93,174,553 | 96,398,585 |
Dividends declared per share | $ 0 | $ 0 |
Comprehensive (loss) income | $ (26,637) | $ 4,067 |
Less: Comprehensive loss attributable to noncontrolling interests | (62) | (18) |
Comprehensive (loss) income attributable to common shareholders of Party City Holdco Inc. | (26,575) | 4,085 |
Net Sales [Member] | ||
Revenues: | ||
Revenues | 511,102 | 505,108 |
Royalties and Franchise Fees [Member] | ||
Revenues: | ||
Revenues | $ 2,014 | $ 2,716 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Total Party City Holdco Inc. Stockholders' Equity Before Common Stock Held In Treasury [Member] | Common Stock Held In Treasury [Member] | Total Party City Holdco Inc. Stockholders' Equity [Member] | Non-Controlling Interests [Member] |
Balance at Dec. 31, 2017 | $ 968,790 | $ 1,198 | $ 917,192 | $ 372,596 | $ (35,818) | $ 1,255,168 | $ (286,733) | $ 968,435 | $ 355 |
Cumulative effect of change in accounting principle, net (see Note 2) | (78) | (78) | (78) | (78) | |||||
Balance, adjusted at Dec. 31, 2017 | 968,712 | 1,198 | 917,192 | 372,518 | (35,818) | 1,255,090 | (286,733) | 968,357 | 355 |
Net loss | (1,163) | (1,133) | (1,133) | (1,133) | (30) | ||||
Stock option expense | 460 | 460 | 460 | 460 | |||||
Warrant expense | 261 | 261 | 261 | 261 | |||||
Exercise of stock options | 292 | 292 | 292 | 292 | |||||
Foreign currency adjustments | 5,418 | 5,406 | 5,406 | 5,406 | 12 | ||||
Impact of foreign exchange contracts, net | (188) | (188) | (188) | (188) | |||||
Balance at Mar. 31, 2018 | 973,792 | 1,198 | 918,205 | 371,385 | (30,600) | 1,260,188 | (286,733) | 973,455 | 337 |
Balance at Dec. 31, 2018 | 1,043,621 | 1,208 | 922,476 | 495,777 | (49,201) | 1,370,260 | (326,930) | 1,043,330 | 291 |
Cumulative effect of change in accounting principle, net (see Note 2) | 159 | 662 | (503) | 159 | 159 | ||||
Balance, adjusted at Dec. 31, 2018 | 1,043,780 | 1,208 | 923,138 | 495,274 | (49,201) | 1,370,419 | (326,930) | 1,043,489 | 291 |
Net loss | (30,289) | (30,218) | (30,218) | (30,218) | (71) | ||||
Stock option expense | 370 | 370 | 370 | 370 | |||||
Restricted stock units - time-based | 392 | 0 | 392 | 392 | 392 | ||||
Directors - non-cash compensation | 77 | 77 | 77 | 77 | |||||
Warrant expense | 129 | 129 | 129 | 129 | |||||
Exercise of stock options | 1,088 | 2 | 1,086 | 1,088 | 1,088 | ||||
Acquired non-controlling interest | 112 | 41 | 41 | 41 | 71 | ||||
Treasury stock purchases | (156) | (156) | (156) | ||||||
Foreign currency adjustments | 4,165 | 4,156 | 4,156 | 4,156 | 9 | ||||
Impact of foreign exchange contracts, net | (513) | (513) | (513) | (513) | |||||
Balance at Mar. 31, 2019 | $ 1,019,155 | $ 1,210 | $ 925,233 | $ 465,056 | $ (45,558) | $ 1,345,941 | $ (327,086) | $ 1,018,855 | $ 300 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows used in operating activities: | ||
Net loss | $ (30,289) | $ (1,163) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 21,341 | 20,557 |
Amortization of deferred financing costs and original issuance discounts | 1,143 | 1,556 |
Provision for doubtful accounts | 371 | 350 |
Deferred income tax (benefit) expense | (9,383) | 178 |
Deferred rent | 368 | |
Change in operating lease liability/asset | (19,693) | |
Undistributed income in equity method investments | (198) | (211) |
Loss on disposal of assets | 94 | 22 |
Store impairment and restructuring charges | 18,009 | |
Non-employee equity based compensation | 129 | 261 |
Stock option expense | 370 | 460 |
Restricted stock units expense – time-based | 392 | |
Directors – non-cash compensation | 77 | |
Changes in operating assets and liabilities, net of effects of acquired businesses: | ||
Decrease in accounts receivable | 8,022 | 11,243 |
Increase in inventories | (6,426) | (11,696) |
Increase in prepaid expenses and other current assets | (7,935) | (923) |
Decrease in accounts payable, accrued expenses and income taxes payable | (76,911) | (46,192) |
Net cash used in operating activities | (100,887) | (25,190) |
Cash flows used in investing activities: | ||
Cash paid in connection with acquisitions, net of cash acquired | (545) | (17,021) |
Capital expenditures | (12,393) | (17,906) |
Proceeds from disposal of property and equipment | 10 | 21 |
Net cash used in investing activities | (12,928) | (34,906) |
Cash flows provided by financing activities: | ||
Repayment of loans, notes payable and long-term obligations | (23,495) | (27,609) |
Proceeds from loans, notes payable and long-term obligations | 114,260 | 87,370 |
Stock repurchases | (156) | |
Exercise of stock options | 1,088 | 292 |
Debt issuance costs | (56) | |
Net cash provided by financing activities | 91,697 | 59,997 |
Effect of exchange rate changes on cash and cash equivalents | 2,216 | 671 |
Net (decrease) increase in cash and cash equivalents and restricted cash | (19,902) | 572 |
Cash and cash equivalents and restricted cash at beginning of period | 59,219 | 54,408 |
Cash and cash equivalents and restricted cash at end of period | 39,317 | 54,980 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | 42,482 | 28,780 |
Cash paid during the period for income taxes, net of refunds | $ 3,708 | $ 5,342 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Note 1 – Description of Business Party City Holdco Inc. (the “Company” or “Party City Holdco”) is a vertically integrated supplier of decorated party goods. The Company designs, manufactures, sources and distributes party goods, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties, gifts and stationery. The Company’s retail operations include over 900 specialty retail party supply stores (including franchise stores) in the United States and Canada, operating under the name Party City, e-commerce websites, principally operating under the domain name PartyCity.com, and a network of approximately 250 - 300 temporary Halloween City stores. In addition to the Company’s retail operations, it is also a global designer, manufacturer and distributor of decorated party supplies, with products found in over 40,000 retail outlets, including independent party supply stores, mass merchants, grocery retailers, e-commerce merchandisers and dollar stores. The Company’s products are available in over 100 countries with the United Kingdom, Canada, Germany, Mexico and Australia among the largest end markets outside of the United States. Party City Holdco is a holding company with no operating assets or operations. The Company owns 100% of PC Nextco Holdings, LLC (“PC Nextco”), which owns 100% of PC Intermediate Holdings, Inc. (“PC Intermediate”). PC Intermediate owns 100% of Party City Holdings Inc. (“PCHI”), which owns most of the Company’s operating subsidiaries. |
Basis of Presentation and Recen
Basis of Presentation and Recently Issued Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Recently Issued Accounting Pronouncements | Note 2 – Basis of Presentation and Recently Issued Accounting Pronouncements The unaudited condensed consolidated financial statements of the Company include the accounts of the Company and its majority-owned and controlled entities. All intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included in the unaudited condensed consolidated financial statements. The majority of our retail operations define a fiscal year (“Fiscal Year”) as the 52-week period or 53-week period ended on the Saturday nearest December 31st of each year and define fiscal quarters (“Fiscal Quarter”) as the four interim 13-week periods following the end of the previous Fiscal Year, except in the case of a 53-week Fiscal Year when the fourth Fiscal Quarter is extended to 14 weeks. The condensed consolidated financial statements of the Company combine the Fiscal Quarters of our retail operations with the calendar quarters of our wholesale operations. The Company has determined the differences between the retail operation’s Fiscal Year and Fiscal Quarters and the calendar year and calendar quarters to be insignificant. Operating results for interim periods are not necessarily indicative of the results to be expected for the year ending December 31, 2019. Our business is subject to substantial seasonal variations as our retail segment has historically realized a significant portion of its net sales, cash flows and net income in the fourth quarter of each year, principally due to its Halloween season sales in October and, to a lesser extent, other year-end holiday sales. We expect that this general pattern will continue. Our results of operations may also be affected by industry factors that may be specific to a particular period such as movement in and the general level of raw material costs. Recently Issued Accounting Pronouncements In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, “Compensation – Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting”. The ASU simplifies the accounting for non-employee share-based payments. The Company adopted the update during the first quarter of 2019. The pronouncement requires companies to record the impact of adoption, if any, as a cumulative-effect adjustment to retained earnings as of the adoption date. Therefore, on January 1, 2019, the Company decreased retained earnings by $503. Additionally, the Company increased additional paid-in capital by $662 and recorded a $159 deferred income tax asset. In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities”. The pronouncement amends the existing hedge accounting model in order to enable entities to better portray the economics of their risk management activities in their financial statements. The Company adopted the update during the first quarter of 2019 and such adoption had no impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases”. The ASU requires that companies recognize assets and liabilities for the rights and obligations created by companies’ leases. The Company’s lease portfolio is primarily comprised of store leases, manufacturing and distribution facility leases, warehouse leases and office leases. Most of the leases are operating leases. The Company’s finance leases are not material to its consolidated financial statements. The Company adopted the new lease standard during the first quarter of 2019 and, to the extent required by the pronouncement, recognized a right of use asset and liability for all of its operating lease arrangements with terms of greater than twelve months. See the Company’s March 31, 2019 consolidated balance sheet for the impact of such adoption. The pronouncement provided companies with a transition option under which they could opt to continue to apply legacy lease guidance in comparative periods. The Company elected such option. The Company’s December 31, 2018 consolidated balance sheet includes a $74,464 deferred rent liability in other long-term liabilities and a $7,170 deferred rent liability in accrued expenses. In the Company’s March 31, 2019 consolidated balance sheet, such amounts reduce the operating lease asset. Additionally, in the Company’s December 31, 2018 consolidated balance sheet, other intangible assets, net, includes a $3,904 intangible asset related to favorable leases. In the Company’s March 31, 2019 consolidated balance sheet, such asset is included in the operating lease asset. Further, in the Company’s December 31, 2018 consolidated balance sheet, prepaid expenses and other current assets includes a $2,552 asset related to capitalized broker costs. In the Company’s March 31, 2019 consolidated balance sheet, such capitalized costs are included in the operating lease asset. The pronouncement had no impact on the Company’s consolidated statement of operations and comprehensive loss and it did not impact the Company’s compliance with its debt covenants. Additionally, the standard requires companies to make certain disclosures. See Note 16. |
Store Impairment and Restructur
Store Impairment and Restructuring Charges | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Store Impairment and Restructuring Charges | Note 3 – Store Impairment and Restructuring Charges During the three months ended March 31, 2019, the Company performed a comprehensive review of its store locations aimed at improving the overall productivity of such locations (“store optimization program”). Each year, the Company typically closes approximately 10 Party City stores as part of its typical network rationalization process and in response to ongoing consumer, market and economic changes that naturally arise in the business. During the three months ended March 31, 2019, after careful consideration and evaluation of the store locations , the Company made the decision to accelerate the optimization of its store portfolio with the closure of approximately 45 stores which are primarily located in close proximity to other Party City stores. These closings should provide the Company with capital flexibility to expand into underserved markets. In conjunction with the store optimization program, during the first quarter of 2019, the Company recorded the following charges: Three Months 2019 Inventory reserves $ 17,629 Operating lease asset impairment 13,209 Property, plant and equipment impairment 4,139 Severance 661 Total $ 35,638 Such amounts represent the Company’s best estimate of the total charges that are expected to be recorded for such items. When the Company closes the stores, it will record charges for common area maintenance, insurance and taxes to be paid subsequent to such closures in accordance with the stores’ lease agreements. However, such amounts are expected to be immaterial. Additionally, the Company will incur costs while cleaning the stores and returning them to their original condition. Such costs are also expected to be immaterial. The fair values of the operating lease assets and property, plant and equipment were determined based on estimated future discounted cash flows for such assets using market participant assumptions , The fair value for the operating lease assets was $7,426 and the fair value for the property, plant and equipment was immaterial. Such fair values represent level 3 measurements. The charge for inventory reserves related to both an estimate of the inventory that will be disposed following the closures of the stores and an estimate of inventory that will be sold below cost prior to such closures. The charge for inventory reserves was recorded in cost of sales in the Company’s statement of operations and comprehensive loss. The other charges were recorded in Store impairment and restructuring charges in the Company’s statement of operations and comprehensive loss. None of the severance had been paid as of March 31, 2019. The Company cannot guarantee that it will be able to achieve the anticipated benefits from the store optimization program. If the Company is unable to achieve such benefits, its results of operations and financial condition could be affected. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 4 – Inventories Inventories consisted of the following: March 31, 2019 December 31, 2018 Finished goods $ 712,781 $ 706,327 Raw materials 32,724 33,423 Work in process 17,836 16,288 $ 763,341 $ 756,038 Inventories are valued at the lower of cost or net realizable value. The Company principally determines the cost of inventory using the weighted average method. The Company estimates retail inventory shrinkage for the period between physical inventory dates on a store-by-store basis. Inventory shrinkage estimates can be affected by changes in merchandise mix and changes in actual shortage trends. The shrinkage rate from the most recent physical inventory, in combination with historical experience, is the basis for estimating shrinkage. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 5 – Income Taxes The effective income tax rate for the three months ended March 31, 2019, 25.8%, is higher than the statutory rate of 21.0% primarily due to the impact of state taxes on the Company’s estimated effective income tax rate for full-year 2019. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Loss | Note 6 – Changes in Accumulated Other Comprehensive Loss The changes in accumulated other comprehensive loss consisted of the following: Three Months Ended March 31, 2019 Foreign Currency Adjustments Impact of Foreign Exchange Contracts, Net of Taxes Total, Net of Taxes Balance at December 31, 2018 $ (50,056 ) $ 855 $ (49,201 ) Other comprehensive income before reclassifications, net of income tax 4,156 62 4,218 Gains reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive loss, net of income tax — (575 ) (575 ) Net current-period other comprehensive income (loss) 4,156 (513 ) 3,643 Balance at March 31, 2019 $ (45,900 ) $ 342 $ (45,558 ) Three Months Ended March 31, 2018 Foreign Currency Adjustments Impact of Foreign Exchange Contracts, Net of Taxes Total, Net of Taxes Balance at December 31, 2017 $ (35,610 ) $ (208 ) $ (35,818 ) Other comprehensive income (loss) before reclassifications, net of income tax 5,406 (428 ) 4,978 Loss reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive income, net of income tax — 240 240 Net current-period other comprehensive income (loss) 5,406 (188 ) 5,218 Balance at March 31, 2018 $ (30,204 ) $ (396 ) $ (30,600 ) |
Capital Stock
Capital Stock | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Capital Stock | Note 7 – Capital Stock At March 31, 2019, the Company’s authorized capital stock consisted of 300,000,000 shares of $0.01 par value common stock and 15,000,000 shares of $0.01 par value preferred stock. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Note 8 – Segment Information Industry Segments The Company has two identifiable business segments. The Wholesale segment designs, manufactures, sources and distributes decorated party goods, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties, gifts and stationery throughout the world. The Retail segment operates specialty retail party supply stores in the United States and Canada, principally under the names Party City and Halloween City, and it operates e-commerce websites, principally through the domain name Partycity.com. The Retail segment also franchises both individual stores and franchise areas throughout the United States, Mexico and Puerto Rico, principally under the name Party City. The Company’s industry segment data for the three months ended March 31, 2019 and March 31, 2018 was as follows: Wholesale Retail Consolidated Three Months Ended March 31, 2019 Revenues: Net sales $ 290,301 $ 378,153 $ 668,454 Royalties and franchise fees — 2,014 2,014 Total revenues 290,301 380,167 670,468 Eliminations (157,352 ) — (157,352 ) Net revenues $ 132,949 $ 380,167 $ 513,116 Income (loss) from operations $ 2,223 $ (12,520 ) $ (10,297 ) Interest expense, net 29,257 Other expense, net 1,254 Loss before income taxes $ (40,808 ) Wholesale Retail Consolidated Three Months Ended March 31, 2018 Revenues: Net sales $ 277,827 $ 363,576 $ 641,403 Royalties and franchise fees — 2,716 2,716 Total revenues 277,827 366,292 644,119 Eliminations (136,295 ) — (136,295 ) Net revenues $ 141,532 $ 366,292 $ 507,824 Income from operations $ 5,348 $ 16,908 $ 22,256 Interest expense, net 23,275 Other expense, net 848 Loss before income taxes $ (1,867 ) During the three months ended March 31 , 2019 , the Company adopted ASU 2016 - 02 , “Leases”. See Notes 2 and 16 for further discussion. As of March 31 , 2019 , the operating lease asset for the Company’s Retail segment was $723,835 and the operating lease asset for the Company’s Wholesale segment was $55,975. During the quarter, there were no other material changes to the total assets of the segments. During the three months ended March 31 , 2019 , the Company initiated a store optimization program under which the Company plans to close approximately 45 Party City stores during the course of 2019 . In conjunction with the program, during the first quarter of 2019 , the Company’s Retail segment recorded $35,638 of charges. See Note 3 for further detail. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9 – Commitments and Contingencies The Company is a party to certain claims and litigation in the ordinary course of business. The Company does not believe these proceedings will result, individually or in the aggregate, in a material adverse effect on its financial condition or future results of operations. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Note 10 – Derivative Financial Instruments The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as market risks. The Company, when deemed appropriate, uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed through the use of derivative financial instruments are interest rate risk and foreign currency exchange rate risk. Interest Rate Risk Management As part of the Company’s risk management strategy, the Company periodically uses interest rate swap agreements to hedge the variability of cash flows on floating rate debt obligations. Accordingly, interest rate swap agreements are reflected in the consolidated balance sheets at fair value and the related gains and losses on these contracts are deferred in equity and recognized in interest expense over the same period in which the related interest payments being hedged are recognized in income. The Company did not utilize interest rate swap agreements during the three months ended March 31, 2019 and the three months ended March 31, 2018. Foreign Exchange Risk Management A portion of the Company’s cash flows are derived from transactions denominated in foreign currencies. In order to reduce the uncertainty of foreign exchange rate movements on transactions denominated in foreign currencies, including the British Pound Sterling, the Canadian Dollar, the Euro, the Malaysian Ringgit, the Australian Dollar, and the Mexican Peso, the Company enters into foreign exchange contracts with major international financial institutions. These forward contracts, which typically mature within one year, are designed to hedge anticipated foreign currency transactions, primarily inventory purchases and sales. For contracts that qualify for hedge accounting, the terms of the foreign exchange contracts are such that cash flows from the contracts should be highly effective in offsetting the expected cash flows from the underlying forecasted transactions. The foreign currency exchange contracts are reflected in the condensed consolidated balance sheets at fair value. At March 31, 2019 and December 31, 2018, the Company had foreign currency exchange contracts that qualified for hedge accounting. No components of these agreements were excluded in the measurement of hedge effectiveness. As these hedges are 100% effective, there is no current impact on earnings due to hedge ineffectiveness. The Company anticipates that substantially all unrealized gains and losses in accumulated other comprehensive loss related to these foreign currency exchange contracts will be reclassified into earnings by June 2020. The following table displays the fair values of the Company’s derivatives at March 31, 2019 and December 31, 2018: Derivative Assets Derivative Liabilities Balance Sheet Line Fair Value Balance Sheet Line Fair Value Balance Sheet Line Fair Value Balance Sheet Line Fair Value Derivative Instrument March 31, 2019 December 31, 2018 March 31, 2019 December 31, 2018 Foreign Exchange Contracts (a) PP $ 170 (a) PP $ 115 (b) AE $ 11 (b) AE $ 0 (a) PP = Prepaid expenses and other current assets (b) AE = Accrued expenses The following table displays the notional amounts of the Company’s derivatives at March 31, 2019 and December 31, 2018: Derivative Instrument March 31, 2019 December 31, 2018 Foreign Exchange Contracts $ 10,467 $ 10,942 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 11 – Fair Value Measurements The provisions of ASC Topic 820, “Fair Value Measurement”, define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: • 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. During 2017, the Company acquired a 28% ownership interest in Punchbowl, Inc. (“Punchbowl”), a provider of digital greeting cards and digital invitations. At such time, the Company provided Punchbowl’s other investors with the ability to “put” their interest in Punchbowl to the Company at a future date. The Company is adjusting such put liability to fair value on a recurring basis. The liability represents a Level 3 fair value measurement as it is based on unobservable inputs. During 2017, the Company and Ampology, a subsidiary of Trivergence, reached an agreement to form a new legal entity, Kazzam, LLC (“Kazzam”), for the purpose of designing, developing and launching an online exchange platform for party-related services. As part of Ampology’s compensation for designing, developing and launching the exchange platform, Ampology received an ownership interest in Kazzam. The interest has been recorded as redeemable securities in the mezzanine of the Company’s consolidated balance sheet as, in the future, Ampology has the right to cause the Company to purchase the interest. On a recurring basis, the liability is adjusted to the greater of the current fair value or the original fair value at the time at which the ownership interest was issued (adjusted for any subsequent changes in the ownership interest percentage). As of both March 31, 2019 and December 31, 2018, the original value was greater and, therefore, the liabilities are not included in the table below. The following table shows assets and liabilities as of March 31, 2019 that are measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total as of March 31, 2019 Derivative assets $ — $ 170 $ — $ 170 Derivative liabilities — 11 — 11 Punchbowl put liability — — 326 326 The following table shows assets and liabilities as of December 31, 2018 that are measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total as of December 31, 2018 Derivative assets $ — $ 115 $ — $ 115 Derivative liabilities — — — — Punchbowl put liability — — 316 316 The The carrying amounts for cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximated fair value at March 31, 2019 because of the short-term maturities of the instruments and/or their variable rates of interest. The carrying amounts and fair values of borrowings under the Term Loan Credit Agreement and the Company’s senior notes as of March 31, 2019 are as follows: March 31, 2019 Carrying Amount Fair Value Term Loan Credit Agreement $ 787,766 $ 789,965 6.125% Senior Notes – due 2023 346,397 356,563 6.625% Senior Notes – due 2026 494,331 499,375 The fair values of the Term Loan Credit Agreement and the senior notes represent Level 2 fair value measurements as the debt instruments trade in inactive markets. The carrying amounts for other long-term debt approximated fair value at March 31, 2019 based on the discounted future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturity. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 12 – Earnings Per Share Basic earnings per share are computed by dividing net income attributable to common shareholders of Party City Holdco Inc. by the weighted average number of common shares outstanding for the period. Diluted earnings per share are calculated based on the weighted average number of outstanding common shares plus the dilutive effect of stock options and warrants, as if they were exercised, and restricted stock units, as if they vested. A reconciliation between basic and diluted income per share is as follows: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 Net loss attributable to common shareholders of Party City Holdco Inc. $ (30,218 ) $ (1,133 ) Weighted average shares – Basic 93,174,553 96,398,585 Effect of dilutive securities: Warrants — — Restricted stock units — — Stock options — — Weighted average shares – Diluted 93,174,553 96,398,585 Net loss per share attributable to common shareholders of Party City Holdco Inc. – Basic $ (0.32 ) $ (0.01 ) Net loss per share attributable to common shareholders of Party City Holdco Inc. – Diluted $ (0.32 ) $ (0.01 ) During the three months ended March 31, 2019 and March 31, 2018, 3,613,408 stock options and 4,275,789 stock options, respectively, were excluded from the calculation of net loss per share attributable to common shareholders of Party City Holdco Inc. – diluted as they were anti-dilutive. Additionally, during the three months ended March 31, 2019 and March 31, 2018, 596,000 warrants and 596,000 warrants, respectively, were excluded from the calculation of net loss per share attributable to common shareholders of Party City Holdco Inc. – diluted as they were anti-dilutive. Further, during the three months ended March 31, 2019 and March 31, 2018, 142,130 restricted stock units and 0 restricted stock units, respectively, were excluded from the calculation of net loss per share attributable to common shareholders of Party City Holdco Inc. – diluted as they were anti-dilutive. |
Long-Term Obligations
Long-Term Obligations | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term Obligations | Note 13 – Long-Term Obligations Long-term obligations at March 31, 2019 and December 31, 2018 consisted of the following: March 31, 2019 December 31, 2018 Term Loan Credit Agreement $ 787,766 $ 791,135 6.125% Senior Notes – due 2023 346,397 346,191 6.625% Senior Notes – due 2026 494,331 494,138 Capital lease obligations 3,623 3,815 Total long-term obligations 1,632,117 1,635,279 Less: current portion (13,315 ) (13,316 ) Long-term obligations, excluding current portion $ 1,618,802 $ 1,621,963 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Note 14 – Revenue from Contracts with Customers The following table summarizes revenue from contracts with customers for the three months ended March 31, 2019 and March 31, 2018: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 Retail Net Sales: Party City Stores $ 346,140 $ 330,845 Global E-commerce 31,808 32,731 Other 205 — Total Retail Net Sales $ 378,153 $ 363,576 Royalties and Franchise Fees 2,014 2,716 Total Retail Revenue $ 380,167 $ 366,292 Wholesale Net Sales: Domestic $ 73,821 $ 79,559 International 59,128 61,973 Total Wholesale Net Sales $ 132,949 $ 141,532 Total Consolidated Revenue $ 513,116 $ 507,824 |
Cash, Cash Equivalents and Rest
Cash, Cash Equivalents and Restricted Cash | 3 Months Ended |
Mar. 31, 2019 | |
Text Block [Abstract] | |
Cash, Cash Equivalents and Restricted Cash | Note 15 – Cash, Cash Equivalents and Restricted Cash The Company’s March 31, 2019 consolidated balance sheet included $38,999 of cash and cash equivalents and $318 of restricted cash and the Company’s December 31, 2018 consolidated balance sheet included $58,909 of cash and cash equivalents and $310 of restricted cash. The Company’s March 31, 2018 consolidated balance sheet included $54,831 of cash and cash equivalents and $149 of restricted cash and the Company’s December 31, 2017 consolidated balance sheet included $54,291 of cash and cash equivalents and $117 of restricted cash. Restricted cash is recorded in Prepaid expenses and other current assets. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | Note 16 – Leases In February 2016, the FASB issued ASU 2016-02, “Leases”. The ASU requires that companies recognize assets and liabilities for the rights and obligations created by the companies’ leases. The update was effective for the Company during the first quarter of 2019. The FASB has provided companies with a transition option under which they can opt to continue to apply the legacy guidance, including its disclosure requirements, in the comparative periods presented in the year during which they adopt the new lease standard. Entities that elect the option only make annual disclosures for the comparative periods as legacy guidance does not require interim disclosures. The Company has elected this transition option. Practical Expedients/Policy Elections Under the new standard, companies may elect the following practical expedients, which must be elected as a package and applied consistently to all leases: 1. An entity need not reassess whether any expired or existing contracts are or contain leases. 2. An entity need not reassess the lease classification for any expired or existing leases. 3. An entity need not reassess initial direct costs for any existing leases. The Under the new standard, an entity may also elect a practical expedient to use hindsight in determining the lease term and in assessing impairment of the entity’s right-of-use assets. The Company did not elect this practical expedient. Additionally, under the new standard, lessees can make an accounting policy election (by class of underlying asset to which the right of use relates) to apply accounting similar to legacy accounting to leases that meet the new standard’s definition of a “short-term lease” (a lease that, at the commencement date, has a lease term of twelve months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise). The Company has made this election for all classes of underlying assets. Further, the new standard provides a practical expedient that permits lessees to make an accounting policy election (by class of underlying asset) to account for each separate lease component of a contract and its associated non-lease components as a single lease component. The Company has elected this expedient for all asset classes, with the exception Lease Population The Substantially all of the Company’s leases are operating leases. The Company’s finance leases are immaterial. The right-of-use asset for the Company’s finance leases is included in Property, plant and equipment, net on the Company’s consolidated balance sheet. The liabilities for the Company’s finance leases are included in Current portion of long-term obligations and Long-term obligations, excluding current portion, on the Company’s consolidated balance sheet. The Company’s sub-leases are also immaterial. Variable Lease Payments A Additionally, for most store leases, the Company pays variable taxes and insurance. Renewal Options Many Discount Rates The For Quantitative Disclosures During the three months ended March 31, 2019, the Company’s operating lease cost was $48,295. The Company’s variable lease cost during the three months ended March 31, 2019 was $8,541. During the three months ended March 31, 2019, cash paid for amounts included in the measurement of operating lease liabilities was $ 66,514 During the three months ended March 31, 2019, right-of-use assets obtained in exchange for new operating lease liabilities were $31,222 As of March 31, 2019, the weighted-average remaining lease term for operating leases was 5 years and the weighted-average discount rate for operating leases was 6.8%. As of March 31, 2019, the future cash flows for the Company’s operating leases were: Nine months ended December 31, 2019 $ 135,230 2020 187,911 2021 170,658 2022 152,117 2023 123,938 Thereafter 314,034 Total Undiscounted Cash Flows $ 1,083,888 Less: Interest (233,496 ) Total Operating Lease Liability 850,392 Less: Current Portion of Operating Lease Liability (143,028 ) Long-Term Portion of Operating Lease Liability $ 707,364 |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Note 17 – Subsequent Event As of March 31, 2019, the Company had a $540,000 asset-based revolving credit facility (with a seasonal increase to $640,000 during a certain period of each calendar year) (“ABL Facility”), which matures during August 2023 (subject to a springing maturity at an earlier date if the maturity date of certain of the Company’s other debt has not been extended or refinanced). It provides for (a) revolving loans, subject to a borrowing base, and (b) letters of credit, in an aggregate face amount at any time outstanding not to exceed $50,000. During April 2019, the Company amended the ABL Facility. Such amendment removed the seasonal component and made the facility a $640,000 facility on a year-round basis. During May 2019, the Company signed a letter of agreement for a new source of helium which, subject to final execution of a definitive contract, should provide for additional quantities of helium for the next two and a half years. |
Basis of Presentation and Rec_2
Basis of Presentation and Recently Issued Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, “Compensation – Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting”. The ASU simplifies the accounting for non-employee share-based payments. The Company adopted the update during the first quarter of 2019. The pronouncement requires companies to record the impact of adoption, if any, as a cumulative-effect adjustment to retained earnings as of the adoption date. Therefore, on January 1, 2019, the Company decreased retained earnings by $503. Additionally, the Company increased additional paid-in capital by $662 and recorded a $159 deferred income tax asset. In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities”. The pronouncement amends the existing hedge accounting model in order to enable entities to better portray the economics of their risk management activities in their financial statements. The Company adopted the update during the first quarter of 2019 and such adoption had no impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases”. The ASU requires that companies recognize assets and liabilities for the rights and obligations created by companies’ leases. The Company’s lease portfolio is primarily comprised of store leases, manufacturing and distribution facility leases, warehouse leases and office leases. Most of the leases are operating leases. The Company’s finance leases are not material to its consolidated financial statements. The Company adopted the new lease standard during the first quarter of 2019 and, to the extent required by the pronouncement, recognized a right of use asset and liability for all of its operating lease arrangements with terms of greater than twelve months. See the Company’s March 31, 2019 consolidated balance sheet for the impact of such adoption. The pronouncement provided companies with a transition option under which they could opt to continue to apply legacy lease guidance in comparative periods. The Company elected such option. The Company’s December 31, 2018 consolidated balance sheet includes a $74,464 deferred rent liability in other long-term liabilities and a $7,170 deferred rent liability in accrued expenses. In the Company’s March 31, 2019 consolidated balance sheet, such amounts reduce the operating lease asset. Additionally, in the Company’s December 31, 2018 consolidated balance sheet, other intangible assets, net, includes a $3,904 intangible asset related to favorable leases. In the Company’s March 31, 2019 consolidated balance sheet, such asset is included in the operating lease asset. Further, in the Company’s December 31, 2018 consolidated balance sheet, prepaid expenses and other current assets includes a $2,552 asset related to capitalized broker costs. In the Company’s March 31, 2019 consolidated balance sheet, such capitalized costs are included in the operating lease asset. The pronouncement had no impact on the Company’s consolidated statement of operations and comprehensive loss and it did not impact the Company’s compliance with its debt covenants. Additionally, the standard requires companies to make certain disclosures. See Note 16. |
Store Impairment and Restruct_2
Store Impairment and Restructuring Charges (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs [Table Text Block] | In conjunction with the store optimization program, during the first quarter of 2019, the Company recorded the following charges: Three Months 2019 Inventory reserves $ 17,629 Operating lease asset impairment 13,209 Property, plant and equipment impairment 4,139 Severance 661 Total $ 35,638 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of the following: March 31, 2019 December 31, 2018 Finished goods $ 712,781 $ 706,327 Raw materials 32,724 33,423 Work in process 17,836 16,288 $ 763,341 $ 756,038 |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Loss | The changes in accumulated other comprehensive loss consisted of the following: Three Months Ended March 31, 2019 Foreign Currency Adjustments Impact of Foreign Exchange Contracts, Net of Taxes Total, Net of Taxes Balance at December 31, 2018 $ (50,056 ) $ 855 $ (49,201 ) Other comprehensive income before reclassifications, net of income tax 4,156 62 4,218 Gains reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive loss, net of income tax — (575 ) (575 ) Net current-period other comprehensive income (loss) 4,156 (513 ) 3,643 Balance at March 31, 2019 $ (45,900 ) $ 342 $ (45,558 ) Three Months Ended March 31, 2018 Foreign Currency Adjustments Impact of Foreign Exchange Contracts, Net of Taxes Total, Net of Taxes Balance at December 31, 2017 $ (35,610 ) $ (208 ) $ (35,818 ) Other comprehensive income (loss) before reclassifications, net of income tax 5,406 (428 ) 4,978 Loss reclassified from accumulated other comprehensive loss to the condensed consolidated statement of operations and comprehensive income, net of income tax — 240 240 Net current-period other comprehensive income (loss) 5,406 (188 ) 5,218 Balance at March 31, 2018 $ (30,204 ) $ (396 ) $ (30,600 ) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Company's Industry Segment Data | The Company’s industry segment data for the three months ended March 31, 2019 and March 31, 2018 was as follows: Wholesale Retail Consolidated Three Months Ended March 31, 2019 Revenues: Net sales $ 290,301 $ 378,153 $ 668,454 Royalties and franchise fees — 2,014 2,014 Total revenues 290,301 380,167 670,468 Eliminations (157,352 ) — (157,352 ) Net revenues $ 132,949 $ 380,167 $ 513,116 Income (loss) from operations $ 2,223 $ (12,520 ) $ (10,297 ) Interest expense, net 29,257 Other expense, net 1,254 Loss before income taxes $ (40,808 ) Wholesale Retail Consolidated Three Months Ended March 31, 2018 Revenues: Net sales $ 277,827 $ 363,576 $ 641,403 Royalties and franchise fees — 2,716 2,716 Total revenues 277,827 366,292 644,119 Eliminations (136,295 ) — (136,295 ) Net revenues $ 141,532 $ 366,292 $ 507,824 Income from operations $ 5,348 $ 16,908 $ 22,256 Interest expense, net 23,275 Other expense, net 848 Loss before income taxes $ (1,867 ) |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Values of Derivatives | The following table displays the fair values of the Company’s derivatives at March 31, 2019 and December 31, 2018: Derivative Assets Derivative Liabilities Balance Sheet Line Fair Value Balance Sheet Line Fair Value Balance Sheet Line Fair Value Balance Sheet Line Fair Value Derivative Instrument March 31, 2019 December 31, 2018 March 31, 2019 December 31, 2018 Foreign Exchange Contracts (a) PP $ 170 (a) PP $ 115 (b) AE $ 11 (b) AE $ 0 (a) PP = Prepaid expenses and other current assets (b) AE = Accrued expenses |
Schedule of Notional Amounts of Derivatives | The following table displays the notional amounts of the Company’s derivatives at March 31, 2019 and December 31, 2018: Derivative Instrument March 31, 2019 December 31, 2018 Foreign Exchange Contracts $ 10,467 $ 10,942 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table shows assets and liabilities as of March 31, 2019 that are measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total as of March 31, 2019 Derivative assets $ — $ 170 $ — $ 170 Derivative liabilities — 11 — 11 Punchbowl put liability — — 326 326 The following table shows assets and liabilities as of December 31, 2018 that are measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total as of December 31, 2018 Derivative assets $ — $ 115 $ — $ 115 Derivative liabilities — — — — Punchbowl put liability — — 316 316 |
Summary of Carrying Amount and Fair Value | The carrying amounts and fair values of borrowings under the Term Loan Credit Agreement and the Company’s senior notes as of March 31, 2019 are as follows: March 31, 2019 Carrying Amount Fair Value Term Loan Credit Agreement $ 787,766 $ 789,965 6.125% Senior Notes – due 2023 346,397 356,563 6.625% Senior Notes – due 2026 494,331 499,375 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation Between Basic and Diluted Income Per Share | A reconciliation between basic and diluted income per share is as follows: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 Net loss attributable to common shareholders of Party City Holdco Inc. $ (30,218 ) $ (1,133 ) Weighted average shares – Basic 93,174,553 96,398,585 Effect of dilutive securities: Warrants — — Restricted stock units — — Stock options — — Weighted average shares – Diluted 93,174,553 96,398,585 Net loss per share attributable to common shareholders of Party City Holdco Inc. – Basic $ (0.32 ) $ (0.01 ) Net loss per share attributable to common shareholders of Party City Holdco Inc. – Diluted $ (0.32 ) $ (0.01 ) |
Long-Term Obligations (Tables)
Long-Term Obligations (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Obligations | Long-term obligations at March 31, 2019 and December 31, 2018 consisted of the following: March 31, 2019 December 31, 2018 Term Loan Credit Agreement $ 787,766 $ 791,135 6.125% Senior Notes – due 2023 346,397 346,191 6.625% Senior Notes – due 2026 494,331 494,138 Capital lease obligations 3,623 3,815 Total long-term obligations 1,632,117 1,635,279 Less: current portion (13,315 ) (13,316 ) Long-term obligations, excluding current portion $ 1,618,802 $ 1,621,963 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Revenue from Contracts with Customers | The following table summarizes revenue from contracts with customers for the three months ended March 31, 2019 and March 31, 2018: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 Retail Net Sales: Party City Stores $ 346,140 $ 330,845 Global E-commerce 31,808 32,731 Other 205 — Total Retail Net Sales $ 378,153 $ 363,576 Royalties and Franchise Fees 2,014 2,716 Total Retail Revenue $ 380,167 $ 366,292 Wholesale Net Sales: Domestic $ 73,821 $ 79,559 International 59,128 61,973 Total Wholesale Net Sales $ 132,949 $ 141,532 Total Consolidated Revenue $ 513,116 $ 507,824 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
The Future Cash flows for The Company's Operating Leases | As of March 31, 2019, the future cash flows for the Company’s operating leases were: Nine months ended December 31, 2019 $ 135,230 2020 187,911 2021 170,658 2022 152,117 2023 123,938 Thereafter 314,034 Total Undiscounted Cash Flows $ 1,083,888 Less: Interest (233,496 ) Total Operating Lease Liability 850,392 Less: Current Portion of Operating Lease Liability (143,028 ) Long-Term Portion of Operating Lease Liability $ 707,364 |
Description of Business- Additi
Description of Business- Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2019StoreoutletCountry | |
Minimum [Member] | |
Basis Of Presentation [Line Items] | |
Number stores | outlet | 40,000 |
Number of countries in which products available | Country | 100 |
PC Nextco [Member] | |
Basis Of Presentation [Line Items] | |
Ownership percentage | 100.00% |
PC Intermediate [Member] | |
Basis Of Presentation [Line Items] | |
Ownership percentage | 100.00% |
Party City Holdings Inc [Member] | |
Basis Of Presentation [Line Items] | |
Ownership percentage | 100.00% |
United States and Canada [Member] | |
Basis Of Presentation [Line Items] | |
Number stores | 900 |
United States and Canada [Member] | Minimum [Member] | Halloween City Stores [Member] | |
Basis Of Presentation [Line Items] | |
Number stores | 250 |
United States and Canada [Member] | Maximum [Member] | Halloween City Stores [Member] | |
Basis Of Presentation [Line Items] | |
Number stores | 300 |
Basis of Presentation and Rec_3
Basis of Presentation and Recently Issued Accounting Pronouncements - Additional Information (Detail) - USD ($) $ in Thousands | Jan. 02, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Significant Accounting Policies [Line Items] | |||
Amount of the cumulative effect on retained earnings net of related income tax effect. | $ 503 | ||
Increased Additional Paid In Capital | 662 | ||
Increased Deferred Income Tax Asset | $ 159 | ||
Finite-Lived Intangible Assets, Net | $ 52,959 | $ 60,164 | |
Lease Agreements [Member] | |||
Significant Accounting Policies [Line Items] | |||
Finite-Lived Intangible Assets, Net | 3,904 | ||
Accounts Payable and Accrued Liabilities [Member] | |||
Significant Accounting Policies [Line Items] | |||
Deferred Rent Credit | 7,170 | ||
Other Noncurrent Liabilities [Member] | |||
Significant Accounting Policies [Line Items] | |||
Deferred Rent Credit | 74,464 | ||
Other Current Assets [Member] | |||
Significant Accounting Policies [Line Items] | |||
Capitalized Broker Costs | $ 2,552 | ||
Maximum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Retail operations period of fiscal year | 371 days | ||
Retail operations period of fiscal quarter | 98 days | ||
Minimum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Retail operations period of fiscal year | 364 days | ||
Retail operations period of fiscal quarter | 91 days |
Store Impairment and Restruct_3
Store Impairment and Restructuring Charges (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Total | $ 35,638 |
Cost of Sales [Member] | |
Inventory reserves | 17,629 |
Restructuring Charges [Member] | |
Operating lease asset impairment | 13,209 |
Property, plant and equipment impairment | 4,139 |
Severance | $ 661 |
Store Impairment and Restruct_4
Store Impairment and Restructuring Charges - Additional Information (Detail) $ in Thousands | Mar. 31, 2019USD ($) |
Fair Value, Inputs, Level 3 [Member] | |
Operating Lease Assets Fair Value Disclosure | $ 7,426 |
Inventories- Inventories (Detai
Inventories- Inventories (Detail) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 712,781 | $ 706,327 |
Raw materials | 32,724 | 33,423 |
Work in process | 17,836 | 16,288 |
Inventories, net | $ 763,341 | $ 756,038 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2019 | |
Income Taxes [Line Items] | |
U.S. corporate income tax rate | 21.00% |
Changes In Effective Tax Rate | 25.80% |
Changes in Accumulated Other _3
Changes in Accumulated Other Comprehensive Loss - Changes in Accumulated and Other Comprehensive Loss (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | $ 1,043,330 | |
Ending balance | 1,018,855 | |
Foreign Currency Adjustments [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | (50,056) | $ (35,610) |
Other comprehensive income (loss) before reclassifications, net of income tax | 4,156 | 5,406 |
Net current-period other comprehensive income (loss) | 4,156 | 5,406 |
Ending balance | (45,900) | (30,204) |
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | 855 | (208) |
Other comprehensive income (loss) before reclassifications, net of income tax | 62 | (428) |
(Gains) Loss reclassified from accumulated other comprehensive income (loss) to the condensed consolidated statement of operations and comprehensive income (loss), net of income (loss) tax | (575) | 240 |
Net current-period other comprehensive income (loss) | (513) | (188) |
Ending balance | 342 | (396) |
Accumulated Other Comprehensive Loss [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | (49,201) | (35,818) |
Other comprehensive income (loss) before reclassifications, net of income tax | 4,218 | 4,978 |
(Gains) Loss reclassified from accumulated other comprehensive income (loss) to the condensed consolidated statement of operations and comprehensive income (loss), net of income (loss) tax | (575) | 240 |
Net current-period other comprehensive income (loss) | 3,643 | 5,218 |
Ending balance | $ (45,558) | $ (30,600) |
Capital Stock - Additional Info
Capital Stock - Additional Information (Detail) | Mar. 31, 2019$ / sharesshares |
Equity [Abstract] | |
Authorized capital stock | shares | 300,000,000 |
Common stock, par value | $ / shares | $ 0.01 |
Preferred stock, par value | $ / shares | $ 0.01 |
Authorized preferred stock | shares | 15,000,000 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($)Store | |
Operating lease asset | $ 779,810 |
Store Optimization Program Charges | $ 35,638 |
Discontinued Operations [Member] | |
Number of Stores | Store | 45 |
Retail Segment [Member] | Accounting Standards Update 2016-02 [Member] | |
Operating lease asset | $ 723,835 |
Wholesale Segment [Member] | Accounting Standards Update 2016-02 [Member] | |
Operating lease asset | $ 55,975 |
Segment Information - Schedule
Segment Information - Schedule of Company's Industry Segment Data (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Total revenues | $ 513,116 | $ 507,824 |
Income (loss) from operations | (10,297) | 22,256 |
Interest expense, net | 29,257 | 23,275 |
Other income (expense), net | 1,254 | 848 |
Income before income taxes | (40,808) | (1,867) |
Net Sales [Member] | ||
Revenues: | ||
Revenues | 511,102 | 505,108 |
Royalties and Franchise Fees [Member] | ||
Revenues: | ||
Revenues | 2,014 | 2,716 |
Wholesale [Member] | ||
Revenues: | ||
Total revenues | 132,949 | 141,532 |
Income (loss) from operations | 2,223 | 5,348 |
Retail [Member] | ||
Revenues: | ||
Total revenues | 380,167 | 366,292 |
Income (loss) from operations | (12,520) | 16,908 |
Operating Segments [Member] | ||
Revenues: | ||
Total revenues | 670,468 | 644,119 |
Operating Segments [Member] | Net Sales [Member] | ||
Revenues: | ||
Revenues | 668,454 | 641,403 |
Operating Segments [Member] | Royalties and Franchise Fees [Member] | ||
Revenues: | ||
Revenues | 2,014 | 2,716 |
Operating Segments [Member] | Wholesale [Member] | ||
Revenues: | ||
Total revenues | 290,301 | 277,827 |
Operating Segments [Member] | Wholesale [Member] | Net Sales [Member] | ||
Revenues: | ||
Revenues | 290,301 | 277,827 |
Operating Segments [Member] | Retail [Member] | ||
Revenues: | ||
Total revenues | 380,167 | 366,292 |
Operating Segments [Member] | Retail [Member] | Net Sales [Member] | ||
Revenues: | ||
Revenues | 378,153 | 363,576 |
Operating Segments [Member] | Retail [Member] | Royalties and Franchise Fees [Member] | ||
Revenues: | ||
Revenues | 2,014 | 2,716 |
Eliminations [Member] | ||
Revenues: | ||
Total revenues | (157,352) | (136,295) |
Eliminations [Member] | Wholesale [Member] | ||
Revenues: | ||
Total revenues | $ (157,352) | $ (136,295) |
Derivative Financial Instrume_3
Derivative Financial Instruments - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative [Line Items] | |
Foreign currency exchange contracts reclassified date | 2020-06 |
Foreign Exchange Risk Management [Member] | |
Derivative [Line Items] | |
Hedging effectiveness | 100.00% |
Foreign Exchange Risk Management [Member] | Maximum [Member] | |
Derivative [Line Items] | |
Foreign exchange forward contracts maturity | 1 year |
Derivative Financial Instrume_4
Derivative Financial Instruments - Schedule of Fair Values of Derivatives (Detail) - Foreign Exchange Contracts [Member] - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Prepaid Expenses and Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 170 | $ 115 |
Accrued Expenses [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | $ 11 | $ 0 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Schedule of Notional Amounts of Derivatives (Detail) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Foreign Exchange Contracts [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Notional amounts | $ 10,467,000 | $ 10,942,000 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) | Dec. 31, 2017 |
Punchbowl Inc [Member] | |
Debt Instrument [Line Items] | |
Equity method investment, ownership percentage | 28.00% |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 170 | $ 115 |
Derivative liabilities | 11 | 0 |
Punchbowl Inc [Member] | Put Option [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | 326 | 316 |
Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 170 | 115 |
Derivative liabilities | 11 | 0 |
Level 3 [Member] | Punchbowl Inc [Member] | Put Option [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | $ 326 | $ 316 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Carrying Amount and Fair Value (Detail) $ in Thousands | Mar. 31, 2019USD ($) |
Term Loan Credit Agreement [Member] | Secured Debt [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument Carrying Amount | $ 787,766 |
Debt Instrument Fair Value | 789,965 |
6.125% Senior Notes - due 2023 [Member] | Senior Notes [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument Carrying Amount | 346,397 |
Debt Instrument Fair Value | 356,563 |
6.625% Senior Notes - due 2026 [Member] | Senior Notes [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument Carrying Amount | 494,331 |
Debt Instrument Fair Value | $ 499,375 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Reconciliation Between Basic and Diluted Income Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disclosure Of Earnings Per Share [Line Items] | ||
Net loss attributable to common shareholders of Party City Holdco Inc. | $ (30,218) | $ (1,133) |
Weighted average shares – Basic | 93,174,553 | 96,398,585 |
Effect of dilutive securities: | ||
Warrants | 0 | 0 |
Restricted stock units | 0 | 0 |
Stock options | 0 | 0 |
Weighted average shares – Diluted | 93,174,553 | 96,398,585 |
Net loss per share attributable to common shareholders of Party City Holdco Inc. – Basic | $ (0.32) | $ (0.01) |
Net loss per share attributable to common shareholders of Party City Holdco Inc. – Diluted | $ (0.32) | $ (0.01) |
Earnings Per share - Additional
Earnings Per share - Additional Information (Detail) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Employee Stock Option [Member] | ||
Disclosure Of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,613,408 | 4,275,789 |
Warrant [Member] | ||
Disclosure Of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 596,000 | 596,000 |
Restricted Stock Units (RSUs) [Member] | ||
Disclosure Of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 142,130 | 0 |
Long-Term Obligations - Summary
Long-Term Obligations - Summary of Long-Term Obligations (Detail) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Total long-term obligations | $ 1,632,117 | $ 1,635,279 |
Less: current portion | (13,315) | (13,316) |
Long-term obligations, excluding current portion | 1,618,802 | 1,621,963 |
6.125% Senior Notes due 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term obligations | 346,397 | 346,191 |
6.625% Senior Notes due 2026 [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term obligations | 494,331 | 494,138 |
Capital Lease Obligations [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term obligations | 3,623 | 3,815 |
Term Loan Credit Agreement [Member] | Senior Secured Term Loan Facility [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term obligations | $ 787,766 | $ 791,135 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Summary of Revenue from Contracts with Customers (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 513,116 | $ 507,824 |
Retail Segment [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 380,167 | 366,292 |
Wholesale Segment [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 132,949 | 141,532 |
Party City Stores [Member] | Retail Segment [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 346,140 | 330,845 |
Global E-commerce [Member] | Retail Segment [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 31,808 | 32,731 |
Other retail Segment Store [Member] | Retail Segment [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 205 | 0 |
Domestic [Member] | Wholesale Segment [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 73,821 | 79,559 |
International [Member] | Wholesale Segment [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 59,128 | 61,973 |
Net Sales [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 511,102 | 505,108 |
Net Sales [Member] | Retail Segment [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 378,153 | 363,576 |
Royalties and Franchise Fees [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 2,014 | 2,716 |
Royalties and Franchise Fees [Member] | Retail Segment [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 2,014 | $ 2,716 |
Cash, Cash Equivalents and Re_2
Cash, Cash Equivalents and Restricted Cash - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Cash and cash equivalents | $ 38,999 | $ 58,909 | $ 54,831 | $ 54,291 |
Prepaid Expenses and Other Current Assets [Member] | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Restricted cash | $ 318 | $ 310 | $ 149 | $ 117 |
Leases - Future Cash flows for
Leases - Future Cash flows for the Company's operating leases (Detail) $ in Thousands | Mar. 31, 2019USD ($) |
Leases [Abstract] | |
Nine months ended December 31, 2019 | $ 135,230 |
2020 | 187,911 |
2021 | 170,658 |
2022 | 152,117 |
2023 | 123,938 |
Thereafter | 314,034 |
Total Undiscounted Cash Flows | 1,083,888 |
Less: Interest | (233,496) |
Total Operating Lease Liability | 850,392 |
Less: Current Portion of Operating Lease Liability | (143,028) |
Long-Term Portion of Operating Lease Liability | $ 707,364 |
Leases - Additional Information
Leases - Additional Information (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating lease cost | $ 48,295 |
Variable lease cost | 8,541 |
Operating lease liabilities | 850,392 |
Operating lease | 19,693 |
Right of use assets in exchange for operating lease liabilities | $ 31,222 |
Weighted average remaining lease term | 5 years |
Weighted average discount rate | 6.80% |
Subsequent Event - Additional i
Subsequent Event - Additional information (Detail) - Asset Based Revolving Credit Facility [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Apr. 25, 2019 | |
Line of Credit Facility, Current Borrowing Capacity | $ 540,000 | |
Debt Instrument, Maturity Date | Aug. 31, 2023 | |
Letters Of Credit Outstanding Maximum | $ 50,000 | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 640,000 | |
Subsequent Event [Member] | ||
Line of Credit Facility, Current Borrowing Capacity | $ 640,000 |