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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 10-Q/A

 

(Amendment No. 1)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission file number 001-37344

 

 

Party City Holdco Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

46-0539758

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

100 Tice Blvd. Woodcliff Lake, NJ

 

07677

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:

(973) 453-8601

 

 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

 

 

 

 

 

 

 

 

 

 

 

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

Accelerated filer

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

Emerging Growth Company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of October 13, 2022, 113,316,286 shares of the Registrant’s common stock were outstanding. As of March 28, 2024, there were no shares of the registrant’s common stock outstanding that are publicly traded.

 

 


 

EXPLANATORY NOTE

 

This Amendment No. 1 on Form 10-Q/A (the “Amendment”) amends our original Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 8, 2022 (the “Original Form 10-Q”). References in this Amendment to “the Company,” “we,” “us”, or “our” refer to Party City Holdco Inc. and its consolidated subsidiaries. The purpose of this Amendment is to correct errors that arose from the core issues that resulted in a material weakness related to our going concern assessment process.
 

Background

In connection with the Company’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2022 and an investigation under the supervision of the Company’s Audit Committee, the Company identified a material weakness in internal control over financial reporting relating to management’s analysis under ASC Subtopic 205-40 Presentation of Financial Statements Going Concern as of November 8, 2022, the date the Company filed the Original Form 10-Q. Specifically, the material weakness resulted from the failure to utilize the latest financial forecast information known and reasonably knowable and the failure to adequately address the consequences of certain provisions in the Company’s asset-based revolving credit facility to assess the Company’s ability to continue as a going concern. Under ASC 205-40, the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its obligations as they become due within one year after the date that the financial statements are issued. In re-performing this evaluation as of the date of the filing of the Original Form 10-Q, the Company concluded that there was substantial doubt about the Company’s ability to continue as a going concern. As a result of the Company’s failure to disclose in the Original Form 10-Q that there was substantial doubt about the Company’s ability to continue as a going concern, on June 6, 2023, the Audit Committee concluded, after discussion with the Company’s management, that the interim unaudited financial statements included within the Original Form 10-Q should no longer be relied upon. The Audit Committee further determined that the Third Quarter Form 10-Q should be restated to include disclosure that there was substantial doubt about the Company’s ability to continue as a going concern.

In preparing the issuance of this Amendment and in consideration of the core issues contributing to the going concern disclosure error, management also identified that more recent projections were available and should have been used in the goodwill impairment testing conducted for the quarter ended September 30, 2022 and has corrected its goodwill impairment charges for the three and nine months ended September 30, 2022 in this Amendment to reflect the use of these projections, as follows (in thousands of USD):

 

 

Three and Nine Months Ended September 30, 2022

 

 

 

As Reported

 

 

As Amended

 

Retail

 

$

23,000

 

 

$

 

Wholesale

 

 

110,000

 

 

 

288,423

 

Consolidated

 

$

133,000

 

 

$

288,423

 

The Company's condensed consolidated financial statements (and any related disclosures) as of and for the three and nine months ended September 30, 2022 have been restated in this Amendment to reflect the corrections discussed above, as well as the related impacts of these corrections.

Items Amended in this Amendment

Specific Items amended in this report include:

Part 1, Item 1, Condensed Consolidated Financial Statements (Unaudited)
Part I, Item 1 Notes to Condensed Consolidated Financial Statements (Unaudited);
Part I, Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations;
Part I, Item 4 Controls and Procedures; and
Part II, Item 1A Risk Factors.

In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by the Company’s Chief Executive Officer and Chief Financial Officer are being filed herewith as exhibits 31.1, 31.2, 32.1, and 32.2 to this Amended Filing.

Other than the inclusion within this Amendment of the updated going concern assessment as of the issuance date of this Amendment and the new certifications required by management (and related amendment to the exhibit index to reflect the addition of such certifications), this Amendment speaks only as of the date of the condensed consolidated financial statements in the Original Form 10-Q. The condensed consolidated financial statements were prepared assuming the Company would continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities if the Company does not continue as a going concern. This Amendment should be read in conjunction with subsequent filings with the SEC, as well as Current Reports filed with the SEC since November 8, 2022.

 

Summary of Amended Disclosures

Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (Unaudited) - Note 2 - Basis of Presentation and Recently Issued Accounting Pronouncements: Management’s disclosure regarding its ability to continue as going concern has

2


 

been updated to state that, as of the issuance date of the Original Form 10-Q (November 8, 2022), there was substantial doubt about the Company's ability to continue as going concern for the twelve months following the issuance date and that management, at the time, did not have plans that would have alleviated the substantial doubt.

Management has also provided its updated going concern disclosure applicable to the issuance date of this Amendment (March 28, 2024]. As of the issuance date of this Amendment, there is no longer substantial doubt about the Company’s ability to continue as a going concern due to the Company's emergence from Chapter 11 bankruptcy on October 12, 2023, and the effectiveness and ongoing implementation of the reorganization plan confirmed by the Bankruptcy Court, which, among other things, canceled approximately $1 billion of debt and other obligations.
Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (Unaudited) - Note 4 - Goodwill Impairment: For the three and nine months ended September 30, 2022, goodwill impairment charges were corrected as follows: (in millions of USD):
 

 

 

Three and Nine Months Ended September 30, 2022

 

 

 

As Reported

 

 

As Amended

 

Retail

 

$

23,000

 

 

$

 

Wholesale

 

 

110,000

 

 

 

288,423

 

Consolidated

 

$

133,000

 

 

$

288,423

 

 

Part I, Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources: Management has amended the disclosure in this section of the Amendment to be consistent with its corrected going concern disclosure.
Part II, Item 1A - Risk Factors: Management has updated its risk factors to address its updated going concern assertion addressing the twelve months following the issuance date of this Amendment disclosed in Note 2.

 

3


 

 

 

 

PARTY CITY HOLDCO INC.

Form 10-Q

September 30, 2022

TABLE OF CONTENTS

 

 

Page

 

 

 

PART I

 

 

 

 

 

Item 1. Condensed Consolidated Financial Statements (Unaudited)

 

5

 

 

 

Condensed Consolidated Balance Sheets at September 30, 2022, December 31, 2021 and September 30, 2021

 

5

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2022 and September 30, 2021

 

6

 

 

 

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the Three Months Ended September 30, 2022 and September 30, 2021

 

7

 

 

 

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the Nine Months Ended September 30, 2022 and September 30, 2021

 

8

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and September 30, 2021

 

9

 

 

 

Notes to Condensed Consolidated Financial Statements

 

10

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

 

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

39

 

 

 

Item 4. Controls and Procedures

 

39

 

 

 

PART II

 

 

 

 

 

Item 1. Legal Proceedings

 

41

 

 

 

Item 1A. Risk Factors

 

41

 

 

 

Item 6. Exhibits

 

44

 

 

 

Signature

 

45

 

 

PART I, ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4


 

PARTY CITY HOLDCO INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

 

 

September 30,
2022

 

 

December 31,
2021

 

 

September 30,
2021

 

 

 

(Unaudited)

 

 

 

 

 

(Unaudited)

 

 

 

(As Restated)

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

29,810

 

 

$

47,914

 

 

$

60,740

 

Accounts receivable, net

 

 

106,052

 

 

 

93,301

 

 

 

100,946

 

Inventories, net

 

 

745,697

 

 

 

443,295

 

 

 

520,046

 

Prepaid expenses and other current assets

 

 

59,248

 

 

 

57,656

 

 

 

85,004

 

Income tax receivable

 

 

1,109

 

 

 

56,317

 

 

 

56,361

 

Total current assets

 

 

941,916

 

 

 

698,483

 

 

 

823,097

 

Property, plant and equipment, net

 

 

251,318

 

 

 

221,870

 

 

 

213,959

 

Operating lease asset

 

 

713,434

 

 

 

693,875

 

 

 

700,668

 

Goodwill

 

 

375,220

 

 

 

664,296

 

 

 

662,163

 

Trade names

 

 

383,749

 

 

 

383,737

 

 

 

383,733

 

Other intangible assets, net

 

 

19,524

 

 

 

23,687

 

 

 

25,821

 

Other assets, net

 

 

28,664

 

 

 

25,952

 

 

 

27,385

 

Total assets

 

$

2,713,825

 

 

$

2,711,900

 

 

$

2,836,826

 

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Loans and notes payable

 

$

442,855

 

 

$

84,181

 

 

$

187,084

 

Accounts payable

 

 

208,416

 

 

 

161,736

 

 

 

167,445

 

Accrued expenses

 

 

175,275

 

 

 

195,531

 

 

 

178,155

 

Current portion of operating lease liability

 

 

100,274

 

 

 

116,437

 

 

 

131,653

 

Income taxes payable

 

 

1,006

 

 

 

10,801

 

 

 

 

Current portion of long-term obligations

 

 

23,388

 

 

 

1,373

 

 

 

1,297

 

Total current liabilities

 

 

951,214

 

 

 

570,059

 

 

 

665,634

 

Long-term obligations, excluding current portion

 

 

1,318,185

 

 

 

1,351,189

 

 

 

1,350,886

 

Long-term portion of operating lease liability

 

 

699,933

 

 

 

655,875

 

 

 

639,560

 

Deferred income tax liabilities, net

 

 

24,369

 

 

 

29,195

 

 

 

43,537

 

Other long-term liabilities

 

 

22,142

 

 

 

22,868

 

 

 

34,718

 

Total liabilities

 

 

3,015,843

 

 

 

2,629,186

 

 

 

2,734,335

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

Common stock, Par Value $0.01 (113,316,286, 112,170,944 and 112,194,330 shares outstanding and 126,050,880, 124,157,500 and 123,816,514 shares issued at September 30, 2022, December 31, 2021, and September 30, 2021, respectively)

 

 

1,384

 

 

 

1,384

 

 

 

1,384

 

Additional paid-in capital

 

 

988,197

 

 

 

982,307

 

 

 

980,399

 

Accumulated deficit

 

 

(957,999

)

 

 

(571,985

)

 

 

(552,445

)

Accumulated other comprehensive income

 

 

790

 

 

 

3,541

 

 

 

3,128

 

Total Party City Holdco Inc. stockholders’ equity before common stock held in
   treasury

 

 

32,372

 

 

 

415,247

 

 

 

432,466

 

Less: Common stock held in treasury, at cost (12,734,594, 11,986,556 and 11,622,184 shares at September 30, 2022, December 31, 2021, and September 30, 2021, respectively)

 

 

(334,390

)

 

 

(332,533

)

 

 

(329,975

)

Total Party City Holdco Inc. stockholders’ (deficit) equity

 

 

(302,018

)

 

 

82,714

 

 

 

102,491

 

Total stockholders’ (deficit) equity

 

 

(302,018

)

 

 

82,714

 

 

 

102,491

 

Total liabilities and stockholders’ (deficit) equity

 

$

2,713,825

 

 

$

2,711,900

 

 

$

2,836,826

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

5


 

PARTY CITY HOLDCO INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except share and per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022 (As Restated)

 

 

2021

 

 

2022 (As Restated)

 

 

2021

 

Net sales

 

$

502,191

 

 

$

510,199

 

 

$

1,462,616

 

 

$

1,472,752

 

Cost of sales

 

 

343,743

 

 

 

326,501

 

 

 

988,188

 

 

 

919,596

 

Gross profit

 

 

158,448

 

 

 

183,698

 

 

 

474,428

 

 

 

553,156

 

Selling, general and administrative expenses**

 

 

178,976

 

 

 

163,644

 

 

 

504,342

 

 

 

468,001

 

Loss on disposal of assets in international operations

 

 

 

 

 

 

 

 

 

 

 

3,211

 

Goodwill impairment

 

 

288,423

 

 

 

 

 

 

288,423

 

 

 

 

(Loss) Income from operations

 

 

(308,951

)

 

 

20,054

 

 

 

(318,337

)

 

 

81,944

 

Interest expense, net

 

 

26,926

 

 

 

23,899

 

 

 

74,505

 

 

 

64,229

 

Other (income), net

 

 

(2,333

)

 

 

(1,444

)

 

 

(4,336

)

 

 

(2,317

)

(Loss) income before income taxes

 

 

(333,544

)

 

 

(2,401

)

 

 

(388,506

)

 

 

20,032

 

Income tax expense (benefit)

 

 

187,754

 

 

 

388

 

 

 

(2,492

)

 

 

7,128

 

Net (loss) income

 

 

(521,298

)

 

 

(2,789

)

 

 

(386,014

)

 

 

12,904

 

Less: Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

(54

)

Net (loss) income attributable to common shareholders of Party City Holdco Inc.

 

$

(521,298

)

 

$

(2,789

)

 

$

(386,014

)

 

$

12,958

 

Net (loss) income per share attributable to common shareholders of Party City Holdco Inc. – Basic

 

$

(4.60

)

 

$

(0.02

)

 

$

(3.42

)

 

$

0.12

 

Net (loss) income per share attributable to common shareholders of Party City Holdco Inc. – Diluted

 

$

(4.60

)

 

$

(0.02

)

 

$

(3.42

)

 

$

0.11

 

Weighted-average number of common shares – Basic

 

 

113,214,670

 

 

 

112,037,224

 

 

 

112,751,523

 

 

 

111,431,623

 

Weighted-average number of common shares – Diluted

 

 

113,214,670

 

 

 

112,037,224

 

 

 

112,751,523

 

 

 

115,822,121

 

Dividends declared per share

 

$

 

 

$

 

 

$

 

 

$

 

Comprehensive (loss) income

 

$

(523,649

)

 

$

(5,753

)

 

$

(388,759

)

 

$

45,989

 

Less: Comprehensive (loss) attributable to noncontrolling interests

 

 

 

 

 

(24

)

 

 

 

 

 

(54

)

Comprehensive (loss) income attributable to common shareholders of Party City Holdco Inc.

 

$

(523,649

)

 

$

(5,729

)

 

$

(388,759

)

 

$

46,043

 

** Consists of wholesale selling expenses, retail operating expenses, art and development costs and general and administrative expenses, which were reported separately in the prior year. 2022 amounts include long-lived asset impairment charges.

 

 

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

6


 

PARTY CITY HOLDCO INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(Unaudited)

(In thousands, except share and per share amounts)

 

 

 

Common
Stock

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total Party City
Holdco Inc.
Stockholders’
Equity Before
Common Stock
Held In Treasury

 

 

Common
Stock Held
In Treasury

 

 

Total Party City
Holdco Inc.
Stockholders’ (Deficit)
Equity

 

 

Non-
Controlling
Interests

 

 

Total
Stockholders’ (Deficit)
Equity

 

Balance at June 30, 2022

 

$

1,384

 

 

$

986,307

 

 

$

(436,701

)

 

$

3,124

 

 

$

554,114

 

 

$

(334,138

)

 

$

219,976

 

 

$

 

 

$

219,976

 

Net (loss)

 

 

 

 

 

 

 

 

(521,298

)

 

 

 

 

 

(521,298

)

 

 

 

 

 

(521,298

)

 

 

 

 

 

(521,298

)

Stock-based compensation**

 

 

 

 

 

1,907

 

 

 

 

 

 

 

 

 

1,907

 

 

 

 

 

 

1,907

 

 

 

 

 

 

1,907

 

Treasury Stock purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(252

)

 

 

(252

)

 

 

 

 

 

(252

)

Foreign currency adjustments

 

 

 

 

 

(17

)

 

 

 

 

 

(2,334

)

 

 

(2,351

)

 

 

 

 

 

(2,351

)

 

 

 

 

 

(2,351

)

Balance at September 30, 2022 (As Restated)

 

$

1,384

 

 

$

988,197

 

 

$

(957,999

)

 

$

790

 

 

$

32,372

 

 

$

(334,390

)

 

$

(302,018

)

 

$

 

 

$

(302,018

)

 

 

 

Common
Stock

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total Party City
Holdco Inc.
Stockholders’
Equity Before
Common Stock
Held In Treasury

 

 

Common
Stock Held
In Treasury

 

 

Total Party City
Holdco Inc.
Stockholders’
Equity

 

 

Non-
Controlling
Interests

 

 

Total
Stockholders’
Equity

 

Balance at June 30, 2021

 

$

1,383

 

 

$

978,167

 

 

$

(549,693

)

 

$

6,096

 

 

$

435,953

 

 

$

(327,394

)

 

$

108,559

 

 

$

(786

)

 

$

107,773

 

Net (loss)

 

 

 

 

 

 

 

 

(2,789

)

 

 

 

 

 

(2,789

)

 

 

 

 

 

(2,789

)

 

 

 

 

 

(2,789

)

Stock-based compensation**

 

 

 

 

 

1,943

 

 

 

 

 

 

 

 

 

1,943

 

 

 

 

 

 

1,943

 

 

 

 

 

 

1,943

 

Disposed noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

810

 

 

 

810

 

Treasury Stock purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,581

)

 

 

(2,581

)

 

 

 

 

 

(2,581

)

Exercise of stock options

 

 

1

 

 

 

298

 

 

 

 

 

 

 

 

 

299

 

 

 

 

 

 

299

 

 

 

 

 

 

299

 

Foreign currency adjustments

 

 

 

 

 

(9

)

 

 

37

 

 

 

(2,968

)

 

 

(2,940

)

 

 

 

 

 

(2,940

)

 

 

(24

)

 

 

(2,964

)

Balance at September 30, 2021

 

$

1,384

 

 

$

980,399

 

 

$

(552,445

)

 

$

3,128

 

 

$

432,466

 

 

$

(329,975

)

 

$

102,491

 

 

$

 

 

$

102,491

 

** Stock-based compensation consists of stock-option expense – time-based, restricted stock units – time-based, restricted stock units – performance-based and directors – non-cash compensation, which were shown separately in prior years.

 

See accompanying notes to unaudited condensed consolidated financial statements.

7


 

PARTY CITY HOLDCO INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(Unaudited)

(In thousands)

 

 

 

 

Common
Stock

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive Income

 

 

Total Party City
Holdco Inc.
Stockholders’
Equity Before
Common Stock
Held In Treasury

 

 

Common
Stock Held
In Treasury

 

 

Total Party City
Holdco Inc.
Stockholders’
Equity

 

 

Non-
Controlling
Interests

 

 

Total
Stockholders’
Equity

 

Balance at December 31, 2021

 

$

1,384

 

 

$

982,307

 

 

$

(571,985

)

 

$

3,541

 

 

$

415,247

 

 

$

(332,533

)

 

$

82,714

 

 

$

 

 

$

82,714

 

Net (loss)

 

 

 

 

 

 

 

 

(386,014

)

 

 

 

 

 

(386,014

)

 

 

 

 

 

(386,014

)

 

 

 

 

 

(386,014

)

Stock-based compensation**

 

 

 

 

 

5,884

 

 

 

 

 

 

 

 

 

5,884

 

 

 

 

 

 

5,884

 

 

 

 

 

 

5,884

 

Treasury stock purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,857

)

 

 

(1,857

)

 

 

 

 

 

(1,857

)

Foreign currency adjustments

 

 

 

 

 

6

 

 

 

 

 

 

(2,751

)

 

 

(2,745

)

 

 

 

 

 

(2,745

)

 

 

 

 

 

(2,745

)

Balance at September 30, 2022 (As Restated)

 

$

1,384

 

 

$

988,197

 

 

$

(957,999

)

 

$

790

 

 

$

32,372

 

 

$

(334,390

)

 

$

(302,018

)

 

$

 

 

$

(302,018

)

 

 

 

 

Common
Stock

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total Party City
Holdco Inc.
Stockholders’
Equity Before
Common Stock
Held In Treasury

 

 

Common
Stock Held
In Treasury

 

 

Total Party City
Holdco Inc.
Stockholders’
Equity

 

 

Non-
Controlling
Interests

 

 

Total
Stockholders’
Equity

 

Balance at December 31, 2020

 

$

1,373

 

 

$

971,972

 

 

$

(565,457

)

 

$

(29,916

)

 

$

377,972

 

 

$

(327,182

)

 

$

50,790

 

 

$

(269

)

 

$

50,521

 

Net income (loss)

 

 

 

 

 

 

 

 

12,958

 

 

 

 

 

 

12,958

 

 

 

 

 

 

12,958

 

 

 

(54

)

 

 

12,904

 

Stock-based compensation**

 

 

 

 

 

4,830

 

 

 

 

 

 

 

 

 

4,830

 

 

 

 

 

 

4,830

 

 

 

 

 

 

4,830

 

Warrant exercise (see Note 15 - Kazzam, LLC)

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposed non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

323

 

 

 

323

 

Treasury stock purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,793

)

 

 

(2,793

)

 

 

 

 

 

(2,793

)

Exercise of stock options

 

 

7

 

 

 

3,614

 

 

 

 

 

 

 

 

 

3,621

 

 

 

 

 

 

3,621

 

 

 

 

 

 

3,621

 

Foreign currency adjustments

 

 

 

 

 

(13

)

 

 

54

 

 

 

34,392

 

 

 

34,433

 

 

 

 

 

 

34,433

 

 

 

 

 

 

34,433

 

Impact of foreign exchange contracts, net

 

 

 

 

 

 

 

 

 

 

 

(1,348

)

 

 

(1,348

)

 

 

 

 

 

(1,348

)

 

 

 

 

 

(1,348

)

Balance at September 30, 2021

 

$

1,384

 

 

$

980,399

 

 

$

(552,445

)

 

$

3,128

 

 

$

432,466

 

 

$

(329,975

)

 

$

102,491

 

 

$

 

 

$

102,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

** Stock-based compensation consists of stock-option expense – time-based, restricted stock units – time-based, restricted stock units – performance-based and directors – non-cash compensation, which were shown separately in prior years.

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

 

 

 

8


 

PARTY CITY HOLDCO INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2022 (As Restated)

 

 

2021

 

Cash flows (used in) operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(386,014

)

 

$

12,904

 

Adjustments to reconcile net (loss) income to net cash (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization expense

 

 

46,812

 

 

 

50,293

 

Amortization of deferred financing costs and original issuance discounts

 

 

3,969

 

 

 

3,257

 

Provision for doubtful accounts

 

 

282

 

 

 

1,610

 

Deferred income tax (benefit) expense

 

 

(4,829

)

 

 

9,116

 

Change in operating lease liability/asset

 

 

1,729

 

 

 

(58,875

)

Undistributed income in equity method investments

 

 

(2,354

)

 

 

(820

)

Loss on disposal of assets

 

 

201

 

 

 

2,796

 

Loss on disposal of assets in international operations

 

 

 

 

 

3,211

 

Long-lived assets impairment

 

 

10,408

 

 

 

 

Goodwill impairment

 

 

288,423

 

 

 

 

Stock-based compensation**

 

 

5,884

 

 

 

4,830

 

Gain on debt refinancing

 

 

 

 

 

(1,105

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Increase in accounts receivable

 

 

(13,250

)

 

 

(17,339

)

Increase in inventories

 

 

(304,030

)

 

 

(109,227

)

Decrease (increase) in prepaid expenses and other current assets

 

 

52,878

 

 

 

(49,570

)

Increase in accounts payable, accrued expenses and income taxes payable

 

 

13,490

 

 

 

75,368

 

Net cash (used in) operating activities

 

 

(286,401

)