Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2011

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

Note 15 — Condensed Consolidating Financial Information

     Amscan Holdings is the issuer of the senior subordinated notes due April 30, 2014. The senior subordinated notes are guaranteed jointly and severally, fully and unconditionally, by the following wholly-owned domestic subsidiaries (collectively, the “Guarantors”), which subsidiaries are 100% owned, directly or indirectly, by Amscan Holdings:

• Amscan Inc.

• Am-Source, LLC

• Anagram Eden Prairie Property Holdings LLC

• Anagram International, Inc.

• Anagram International Holdings, Inc.

• Anagram International, LLC

• Factory Card & Party Outlet Corp.

• Gags & Games, Inc.

• JCS Packaging Inc.

• M&D Industries, Inc.

• Party City Corporation

• PA Acquisition Corporation

• Party City Franchise Group Holdings, LLC

• SSY Realty Corp.

• Trisar, Inc.

     Non-guarantor subsidiaries (collectively, “Non-guarantors”) include the following:

• Amscan (Asia-Pacific) Pty. Ltd.

• Amscan de Mexico, S.A. de C.V.

• Amscan Distributors (Canada) Ltd.

• Amscan Holdings Limited

• Anagram International (Japan) Co., Ltd.

• Amscan Partyartikel GmbH

• Christy Asia, Ltd.

• Christy’s By Design, Ltd.

• Christy Dress Up, Ltd.

• Christy Garments & Accessories Ltd.

• JCS Hong Kong Ltd.

• Party Packagers

• Riethmüller GmbH

     The following information presents condensed consolidating balance sheets at September 30, 2011 and December 31, 2010, the condensed consolidating statements of operations for the three months ended September 30, 2011 and 2010, and the related condensed consolidating statements of cash flows for the three months ended September 30, 2011 and 2010, for the combined Guarantors and the combined Non-guarantors, together with the elimination entries necessary to consolidate the entities comprising the combined companies.

CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2011

	Amscan
	Holdings,
	Inc. and			Combined
	Combined			Non-
	Guarantors			Guarantors			Eliminations			Consolidated
	(Amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	12,336		$	7,148		$	—		$	19,484
Accounts receivable , net of allowances		93,458			50,513			—			143,971
Inventories, net of allowances		466,228			58,266			(1,359	)		523,135
Prepaid expenses and other current assets		66,807			12,458			(509	)		78,756
Total current assets		638,829			128,385			(1,868	)		765,346
Property, plant and equipment, net		190,569			17,579			—			208,148
Goodwill		609,483			75,965			—			685,448
Trade names		129,740			3,630			—			133,370
Other intangible assets, net		47,931			—			—			47,931
Investment in and advances to unconsolidated subsidiaries		260,633			—			(260,633	)		—
Due from affiliates		82,005			71,027			(153,032	)		—
Other assets, net		25,737			791			—			26,528
Total assets	$	1,984,927		$	297,377		$	(415,533	)	$	1,866,771
LIABILITIES, REDEEMABLE COMMON SECURITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Loans and notes payable		250,590			12,808			—			263,398
Accounts payable		157,454			29,804			—			187,258
Accrued expenses		113,272			18,422			—			131,694
Income taxes payable		33,075			—			(661	)		32,414
Due to affiliates		68,540			84,492			(153,032	)		—
Current portion of long-term obligations		8,806			39			—			8,845
Total current liabilities		631,737			145,565			(153,693	)		623,609
Long-term obligations, excluding current portion		834,854			56			—			834,910
Deferred income tax liabilities		93,347			600			—			93,947
Other		19,382			1,366			—			20,748
Total liabilities		1,579,320			147,587			(153,693	)		1,573,214
Redeemable common securities		35,765			—			—			35,765
Commitments and contingencies
Stockholders’ equity:
Class A and Class B Common Stock		—			336			(336	)		—
Additional paid-in capital		399,492			113,893			(227,128	)		286,257
Retained (deficit) earnings		(20,305	)		42,069			(43,276	)		(21,512	)
Accumulated other comprehensive loss		(9,345	)		(8,900	)		8,900			(9,345	)
Amscan Holdings, Inc. stockholders’ equity		369,842			147,398			(261,840	)		255,400
Noncontrolling interests		—			2,392			—			2,392
Total stockholders’ equity		369,842			149,790			(261,840	)		257,792
Total liabilities, redeemable common securities and stockholders’ equity	$	1,984,927		$	297,377		$	(415,533	)	$	1,866,771

CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2010

	Amscan
	Holdings,
	Inc. and
	Combined			Combined
	Guarantors			Non-Guarantors			Eliminations			Consolidated
				(Amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	14,198		$	6,256		$	—		$	20,454
Accounts receivable , net		76,699			30,632			—			107,331
Inventories, net		405,452			19,883			(1,018	)		424,317
Prepaid expenses and other current assets		61,211			5,816			(1,355	)		65,672
Total current assets		557,560			62,587			(2,373	)		617,774
Property, plant and equipment, net		187,574			3,155			—			190,729
Goodwill		600,014			30,478			—			630,492
Trade names		129,954			—			—			129,954
Other intangible assets, net		55,362			—			—			55,362
Investment in and advances to unconsolidated subsidiaries		64,485			—			(64,485	)		—
Due from affiliates		22,148			12,998			(35,146	)		—
Other assets, net		28,057			783			—			28,840
Total assets	$	1,645,154		$	110,001		$	(102,004	)	$	1,653,151
LIABILITIES, REDEEMABLE COMMON SECURITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Loans and notes payable		150,098			—			—			150,098
Accounts payable		97,510			10,662			—			108,172
Accrued expenses		102,749			8,305			—			111,054
Income taxes payable		35,706			—			(1,381	)		34,325
Due to affiliates		11,593			23,553			(35,146	)		—
Redeemable warrants		15,086			—			—			15,086
Current portion of long-term obligations		9,005			41			—			9,046
Total current liabilities		421,747			42,561			(36,527	)		427,781
Long-term obligations, excluding current portion		841,023			89			—			841,112
Deferred income tax liabilities		94,427			554			—			94,981
Other		14,766			—			—			14,766
Total liabilities		1,371,963			43,204			(36,527	)		1,378,640
Redeemable common securities		18,089			—			—			18,089
Commitments and contingencies
Stockholders’ equity:
Class A and Class B Common Stock		—			336			(336	)		—
Additional paid-in capital		287,583			31,025			(31,025	)		287,583
Retained (deficit) earnings		(26,566	)		37,535			(38,527	)		(27,558	)
Accumulated other comprehensive loss		(5,915	)		(4,411	)		4,411			(5,915	)
Amscan Holdings, Inc. stockholders’ equity		255,102			64,485			(65,477	)		254,110
Noncontrolling interests		—			2,312			—			2,312
Total stockholders’ equity		255,102			66,797			(65,477	)		256,422
Total liabilities, redeemable common securities and stockholders’ equity	$	1,645,154		$	110,001		$	(102,004	)	$	1,653,151

CONDENSED CONSOLIDATING INCOME STATEMENT
Three Months Ended September 30, 2011
(Amounts in thousands)

	Amscan
	Holdings, Inc.
	and Combined			Combined Non-
	Guarantors			Guarantors		Eliminations			Consolidated
Revenues:
Net sales	$	374,233		$	73,419	$	(11,466	)	$	436,186
Royalties and franchise fees		3,962			—		—			3,962
Total revenues		378,195			73,419		(11,466	)		440,148
Expenses:
Cost of sales		243,750			55,730		(11,333	)		288,147
Wholesale selling expenses		8,376			6,275		—			14,651
Retail operating expenses		79,941			2,799		—			82,740
Franchise expenses		3,558			—		—			3,558
General and administrative expenses		30,247			4,887		420			35,554
Art and development costs		4,159			63		—			4,222
Total expenses		370,031			69,754		(10,913	)		428,872
Income from operations		8,164			3,665		(553	)		11,276
Interest expense, net		19,397			175		—			19,572
Other (income) expense , net		(1,728	)		580		1,851			703
(Loss) income before income taxes		(9,505	)		2,910		(2,404	)		(8,999	)
Income tax (benefit) expense		(3,666	)		536		(49	)		(3,179	)
Net (loss) income		(5,839	)		2,374		(2,355	)		(5,820	)
Less net income attributable to noncontrolling interests		—			102		—			102
Net (loss) income attributable to Amscan Holdings, Inc.	$	(5,839	)	$	2,272	$	(2,355	)	$	(5,922	)

CONDENSED CONSOLIDATING INCOME STATEMENT
Nine Months Ended September 30, 2011
(Amounts in thousands)

	Amscan
	Holdings, Inc.
	and Combined			Combined Non-
	Guarantors			Guarantors			Eliminations			Consolidated
Revenues:
Net sales	$	1,057,969		$	171,777		$	(29,558	)	$	1,200,188
Royalties and franchise fees		12,193			—			—			12,193
Total revenues		1,070,162			171,777			(29,558	)		1,212,381
Expenses:
Cost of sales		659,582			130,582			(29,217	)		760,947
Wholesale selling expenses		24,866			18,104			—			42,970
Retail operating expenses		214,156			2,800			—			216,956
Franchise expenses		10,294			—			—			10,294
General and administrative expenses		84,080			13,975			—			98,055
Art and development costs		12,049			205			—			12,254
Total expenses		1,005,027			165,666			(29,217	)		1,141,476
Income from operations		65,135			6,111			(341	)		70,905
Interest expense, net		59,627			625			—			60,252
Other (income) expense, net		(3,168	)		(416	)		4,534			950
Income before income taxes		8,676			5,902			(4,875	)		9,703
Income tax expense		2,416			1,148			(126	)		3,438
Net income		6,260			4,754			(4,749	)		6,265
Less net income attributable to noncontrolling interests		—			219			—			219
Net income attributable to Amscan Holdings, Inc.	$	6,260		$	4,535		$	(4,749	)	$	6,046

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended September 30, 2010
(Amounts in thousands)

	Amscan Holdings,
	Inc. and Combined			Combined Non-
	Guarantors			Guarantors			Eliminations			Consolidated
Revenues:
Net sales	$	332,781		$	31,854		$	(5,863	)	$	358,772
Royalties and franchise fees		4,035			—			—			4,035
Total revenues		336,816			31,854			(5,863	)		362,807
Expenses:
Cost of sales		209,516			22,741			(5,922	)		226,335
Wholesale selling expenses		7,728			2,796			—			10,524
Retail operating expenses		73,785			—			—			73,785
Franchise expenses		2,930			—			—			2,930
General and administrative expenses		25,625			2,200			(330	)		27,495
Art and development costs		3,802			(27	)		—			3,775
Total expenses		323,386			27,710			(6,252	)		344,844
Income from operations		13,430			4,144			389			17,963
Interest expense, net		9,817			17			—			9,834
Other (income) expense, net		(3,753	)		148			4,309			704
Income before income taxes		7,366			3,979			(3,920	)		7,425
Income tax expense		3,189			1,509			(1,946	)		2,752
Net income		4,177			2,470			(1,974	)		4,673
Less net income attributable to noncontrolling interests		—			70			—			70
Net income attributable to Amscan Holdings, Inc.	$	4,177		$	2,400		$	(1,974	)	$	4,603

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2010
(Amounts in thousands)

	Amscan
	Holdings, Inc.
	and Combined			Combined Non-
	Guarantors			Guarantors			Eliminations			Consolidated
Revenues:
Net sales	$	955,977		$	77,309		$	(17,430	)	$	1,015,856
Royalties and franchise fees		12,333			—			—			12,333
Total revenues		968,310			77,309			(17,430	)		1,028,189
Expenses:
Cost of sales		599,003			55,486			(17,389	)		637,100
Wholesale selling expenses		23,900			7,859			—			31,759
Retail operating expenses		191,161			—			—			191,161
Franchise expenses		9,203			—			—			9,203
General and administrative expenses		80,717			6,575			(990	)		86,302
Art and development costs		11,117			(73	)		—			11,044
Total expenses		915,101			69,847			(18,379	)		966,569
Income from operations		53,209			7,462			949			61,620
Interest expense, net		28,213			48			—			28,261
Other (income) expense, net		(7,646	)		487			7,917			758
Income before income taxes		32,642			6,927			(6,968	)		32,601
Income tax expense		11,781			2,323			(2,328	)		11,766
Net income		20,861			4,604			(4,630	)		20,835
Less net income attributable to noncontrolling interests		—			184			—			184
Net income attributable to Amscan Holdings, Inc.	$	20,861		$	4,420		$	(4,630	)	$	20,651

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2011
(Amounts in thousands)

	Amscan
	Holdings, Inc.
	and			Combined
	Combined			Non-
	Guarantors			Guarantors			Eliminations			Consolidated
Cash flows provided by (used in) operating activities:
Net income		6,261			4,753			(4,749	)		6,265
Net income attributable to noncontrolling interest		—			219			—			219
Net income attributable to Amscan Holdings, Inc.	$	6,261		$	4,534		$	(4,749	)	$	6,046
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization expense		40,139			2,945			—			43,084
Amortization of deferred financing costs		3,606			—			—			3,606
Provision for doubtful accounts		301			298			—			599
Deferred income tax benefit		(615	)		—			—			(615	)
Deferred rent		5,839			(28	)		—			5,811
Undistributed income in unconsolidated joint venture		(589	)		—			—			(589	)
Loss on disposal of equipment		133			63			—			196
Equity based compensation		1,065			—			—			1,065
Changes in operating assets and liabilities, net of effects of acquisitions:
Increase in accounts receivable		(17,196	)		(13,250	)		—			(30,446	)
Increase in inventories		(58,143	)		(13,380	)		341			(71,182	)
Increase in prepaid expenses and other current assets		(7,369	)		(6,563	)		—			(13,932	)
Increase in accounts payable, accrued expenses and income taxes payable		62,091			16,447			4,408			82,946
Net cash provided by (used) in operating activities		35,523			(8,934	)		—			26,589
Cash flows used in investing activities:
Cash paid in connection with acquisitions, net of cash acquired		(95,627	)		—			—			(95,627	)
Capital expenditures		(34,578	)		(1,691	)		—			(36,269	)
Proceeds from disposal of property and equipment		36			16			—			52
Net cash used in investing activities		(130,169	)		(1,675	)		—			(131,844	)
Cash flows provided by financing activities:
Repayments of loans, notes payable and long-term obligations		(7,549	)		(32	)		—			(7,581	)
Proceeds from loans, notes payable and long-term obligations		100,491			12,809			—			113,300
Capital contributions and proceeds from issuance of common stock and exercise of options, net of retirements		199			—			—			199
Net cash provided by financing activities		93,141			12,777			—			105,918
Effect of exchange rate changes on cash and cash equivalents		(357	)		(1,276	)		—			(1,633	)
Net (decrease) increase in cash and cash equivalents		(1,862	)		892			—			(970	)
Cash and cash equivalents at beginning of period		14,198			6,256			—			20,454
Cash and cash equivalents at end of period	$	12,336		$	7,148		$	—		$	19,484

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2010
(Amounts in thousands)

	Amscan
	Holdings, Inc.
	and			Combined
	Combined			Non-
	Guarantors			Guarantors			Eliminations			Consolidated
Cash flows (used in) provided by operating activities:
Net income		20,861			4,604			(4,630	)		20,835
Net income attributable to noncontrolling interest		—			184			—			184
Net income attributable to Amscan Holdings, Inc.	$	20,861		$	4,420		$	(4,630	)	$	20,651
Adjustments to reconcile net income attributable to Amscan Holdings, Inc. to net cash (used in) provided by operating activities:
Depreciation and amortization expense		36,006			670			—			36,676
Amortization of deferred financing costs		2,142			—			—			2,142
Provision for doubtful accounts		658			180			—			838
Deferred income tax expense		660			—			—			660
Deferred rent		1,546			—			—			1,546
Undistributed income in unconsolidated joint venture		(382	)		—			—			(382	)
Loss (gain) on disposal of equipment		266			(7	)		—			259
Equity based compensation		513			—			—			513
Changes in operating assets and liabilities, net of effects of acquisitions:
Increase in accounts receivable		(24,966	)		(4,622	)		—			(29,588	)
Increase in inventories		(129,152	)		(1,565	)		92			(130,625	)
Increase in prepaid expenses and other current assets		(11,773	)		(1,199	)		—			(12,972	)
Increase in accounts payable, accrued expenses and income taxes payable		100,936	)		3,308			4,538			108,782
Net cash (used in) provided by operating activities		(2,685	)		1,185			—			(1,500	)
Cash flows used in investing activities:
Cash paid in connection with acquisitions, net of cash acquired		(35,632	)		2			—			(35,630	)
Capital expenditures		(35,343	)		(757	)		—			(36,100	)
Proceeds from disposal of property and equipment		109			38			—			147
Net cash used in investing activities		(70,866	)		(717	)		—			(71,583	)
Cash flows provided by financing activities:
Repayments of loans, notes payable and long-term obligations		(49,136	)		(21	)		—			(49,157	)
Proceeds from loans, notes payable and long-term obligations		128,812			39			—			128,851
Capital contributions and proceeds from issuance of common stock and exercise of options, net of retirements		52			—			—			52
Net cash provided by financing activities		79,728			18			—			79,746
Effect of exchange rate changes on cash and cash equivalents		(131	)		791			—			660
Net increase in cash and cash equivalents		6,046			1,277			—			7,323
Cash and cash equivalents at beginning of period		13,599			1,821			—			15,420
Cash and cash equivalents at end of period	$	19,645		$	3,098		$	—		$	22,743