-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J8zQZO/PmR9+KFNCpeglwz7silR7rMxAUP0LXcxNag0THFGPvI0jIX3RnQtq774b TwxovNh6l7jVddCEhtO4FA== 0000950123-06-003876.txt : 20060329 0000950123-06-003876.hdr.sgml : 20060329 20060329173051 ACCESSION NUMBER: 0000950123-06-003876 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20060329 ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20060329 DATE AS OF CHANGE: 20060329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMSCAN HOLDINGS INC CENTRAL INDEX KEY: 0001024729 STANDARD INDUSTRIAL CLASSIFICATION: PAPERBOARD CONTAINERS & BOXES [2650] IRS NUMBER: 133911462 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-14107 FILM NUMBER: 06719912 BUSINESS ADDRESS: STREET 1: 80 GRASSLANDS ROAD CITY: ELMSFORD STATE: NY ZIP: 10523 BUSINESS PHONE: 9143452020 MAIL ADDRESS: STREET 1: 80 GRASSLANDS ROAD CITY: ELMSFORD STATE: NY ZIP: 10523 8-K 1 y19216e8vk.txt 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) MARCH 29, 2006 AMSCAN HOLDINGS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE (STATE OR OTHER JURISDICTION OF INCORPORATION) 000-21827 13-3911462 (COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
80 GRASSLANDS ROAD ELMSFORD, NY 10523 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(914) 345-2020 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 7.01 REGULATION FD DISCLOSURE The following information is made available to comply with the requirements of Regulation FD: Elmsford, New York, March 29, 2006, Amscan Holdings, Inc. expects to file its Form 10-K for the year ended December 31, 2005 with the Securities and Exchange Commission on March 31, 2006. The finalization of these operating results may result in adjustments to the numbers presented below. For the year ended December 31, 2005, the Company had total revenues of $417.7 million consisting of net sales of $417.2 million and royalties and franchise fees of $0.5 million. The results of operations for the year ended December 31, 2005 include the result of Party City Corporation for the eight days following its acquisition by the Company on December 23. 2005 and also reflect the elimination of inter-company sales to Party City Corporation during that period. For the year ended December 31, 2004, the Company had net sales of $399.2 million Gross profit margin for the year ended December 31, 2005 was 32.6% as compared to 33.3% for the year ended December 31, 2004. Adjusted EBITDA was $72.3 million as compared to $72.0 million of Adjusted EBITDA for the year ended December 31, 2004. On December 23, 2005, the Company completed its acquisition of Party City Corporation. Pursuant to the terms of an Agreement and Plan of Merger, each share of common stock of Party City outstanding at the acquisition date was cancelled and converted into the right to receive $17.50 in cash, without interest. Prior to the acquisition, Party City settled all outstanding stock options and warrants at the spread between $17.50 and their exercise price. Financing for the acquisition, including the repayment of borrowings under the Company's prior senior secured credit facility, was provided by: (i) an equity investment of $166.4 million in the Company's parent, AAH Holdings Corporation, a Delaware corporation jointly controlled by funds affiliated with Berkshire Partners LLC and Weston Presidio, (ii) borrowings under a First Lien Credit Agreement consisting of a $325 million term loan (net of an original issue discount of $3.25 million) and a committed revolving credit facility in an aggregate principal amount of $85 million, (iii) borrowings under a Second Lien Credit Agreement consisting of a $60 million term loan (net of an original issue discount of $1.5 million) and (iv) cash on-hand of $20.4 million. The equity investment consisted of the sale of 13,868.75 shares of AAH common stock to the Principal Investors, certain members of management and certain other investors. Pro forma adjusted EBITDA, adjusted as if the acquisition of Party City had occurred on January 1, 2005, was $101.3 million. The Company anticipates that annual EBITDA synergies arising from the acquisition will reach approximately $30.3 million within 24 to 30 months. The adjustments to arrive at Adjusted EBITDA and Pro forma Adjusted EBITDA for each period are detailed in the tables below. Amscan Holdings, Inc. designs, manufactures, contracts for manufacture and distributes party goods, including paper and plastic tableware, metallic balloons, accessories, novelties, gifts and stationery. With the completion of its acquisition of Party City Corporation, the Company became the operator of specialty retail party supply stores in the United States and the franchisor of both individual store and franchise areas throughout the United States and Puerto Rico. DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS This document may include forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Although management believes that the expectations reflected in any such forward-looking statements are based upon reasonable assumptions, the Company can give no assurance that these expectations will be achieved. Any unanticipated changes in our business may impact our ability to achieve the results implied by the forward-looking statements. For a discussion of other factors that may affect the accuracy of any forward-looking statements contained herein, reference is made to the disclosure concerning forward-looking statements in the Company's quarterly reports on Form 10-Q and its annual reports on Form 10-K. New factors may emerge or changes may occur that impact the accuracy of any forward-looking statement made herein. Any such forward-looking statements herein are expressly qualified by all of the foregoing. EBITDA The following sets forth a reconciliation of net income to Adjusted EBITDA and Pro Forma Adjusted EBITDA:
AMSCAN HOLDINGS INC. ----------------------------------------- YEAR ENDED YEAR ENDED DOLLARS IN THOUSANDS DECEMBER 31, 2005 (A) DECEMBER 31, 2004 --------------------- ----------------- Net income ........................................ $13,635 7,673 Interest expense .................................. 31,907 27,631 Income tax expense ................................ 5,838 5,129 Depreciation and amortization expense ............. 16,307 14,823 EBITDA ............................................ $67,687 $55,256 Adjustments to EBITDA (b): Sponsor management fees ........................ 1,250 832 Effect of purchase accounting including non-recurring expenses ...................... 1,990 14,414 Loss on joint venture and minority interest .... 1,008 1,440 Stock compensation expense ..................... 334 52 Total Adjustments to EBITDA ....................... $ 4,582 $16,738 Adjusted EBITDA ................................... $72,269 $71,994
(a) Includes result of Party City for eight day period following acquisition on December 23, 2005 (b) Represent adjustments made in the Company's senior secured credit facilities definition of Adjusted EBITDA
PRO FORMA YEAR ENDED DOLLARS IN THOUSANDS DECEMBER 31, 2005 (C) --------------------- Pro forma net income .............................. 4,644 Interest expense .................................. 50,370 Income tax expense ................................ 2,151 Depreciation and amortization expense ............. 34,020 Pro forma EBITDA .................................. 91,185 Adjustments to Pro Forma EBITDA (b) Gross profit elimination ....................... 4,998 Sponsor management fees ........................ 1,250 Effect of purchase accounting including non-recurring expenses ...................... 1,423 Loss on joint venture and minority interest .... 1,008 Stock compensation expense ..................... 1,403 Total Adjustments to EBITDA ....................... $ 10,082 Pro forma Adjusted EBITDA ......................... $101,267
(c) Pro forma for the December 23, 2005 acquisition of Party City Corporation, as if the acquisition occurred on January 1, 2005. We consider Adjusted EBITDA to be a key indicator of operating performance as it and similar measures are instrumental in the determination of compliance with certain financial covenants in the senior secured credit facility. We also believe that EBITDA is useful to investors in evaluating the value of companies in general, and in evaluating the liquidity of companies with debt service obligations and their ability to service their indebtedness. EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA are not defined terms under GAAP and should not be considered alternatives to operating income or net income as a measure of operating results or cash flows as a measure of liquidity. EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA important limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. For example, EBITDA: (i) does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; (ii) does not reflect changes in, or cash requirements for, our working capital needs; (iii) does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; (iv) excludes tax payments that represent a reduction in cash available to us; and (v) does not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future. Despite these limitations, we believe that EBITDA is useful, however, since it provides investors with additional information not available in a GAAP presentation. To compensate for these limitations, however, we rely primarily on our GAAP results and use EBITDA only supplementally. SELECTED OPERATING DATA The following table presents a summary of the Company's results of operation for the year ended December 31, 2005, excluding the results of Party City Corporation for the eight day period from the date of acquisition, and the results of Party City Corporation for the last twelve months ended December 31, 2005. Dollars in Millions
AMSCAN PARTY CITY Holdings Inc CORPORATION ------------ ----------- Sales $ 407 $ 514 Gross Profit 132 157 % Margin 32.5% 30.6% Franchise Profit 8 Contribution Adjusted EBITDA 70 31 % Margin 17.3% 6.0% ----- ----- Normalized Capex 17 16 ===== =====
The following table summarizes the Company's capital structure at December 31, 2005:
% Dollars in Millions December 31, 2005 Capitalization ----------------- -------------- Revolving Credit $ 0.0 0.0 Facility Term Loans $380.3 42.9% (Net of OID) Other 9.0 1.0% Total Senior Debt $389.3 43.9% Senior Subordinated $175.0 19.8% Notes Total Debt $564.3 63.7% Cash Equity $301.0 34.0% Other Equity $ 20.6 2.3% ------ ----- Total Capitalization $885.9 100.0% ====== =====
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AMSCAN HOLDINGS, INC. Date: March 29, 2006 By: /S/ Michael A. Correale ------------------------------------ Michael A. Correale Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----