10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

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

For the fiscal year ended December 31, 2019

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.)

80 Grasslands Road

Elmsford, NY 10523

(Address of Principal Executive Offices)

(914) 345-2020

(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $0.01 par value	PRTY	New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ☐    No  ☒

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 a check mark whether the registrant has submitted electronically and posted on its corporate website 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, a smaller reporting company, or an emerging growth company. See the 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  ☒

The aggregate market value of common stock held by non-affiliates as of June 30, 2019 was $428,960,763. As of February 28, 2020, there were 94,491,352 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement relating to its 2020 annual meeting of stockholders, to be held on June 11, 2020, are incorporated by reference in Part III.

FORM 10-K

TABLE OF CONTENTS

		Page
	PART I
Item 1	Business		1
Item 1A	Risk Factors		10
Item 1B	Unresolved Staff Comments		26
Item 2	Properties		27
Item 3	Legal Proceedings		29
Item 4	Mine Safety Disclosures		29
	PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		30
Item 6	Selected Consolidated Financial Data		32
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations		41
Item 7A	Quantitative and Qualitative Disclosures About Market Risk		68
Item 8	Financial Statements and Supplementary Data		70
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		122
Item 9A	Controls and Procedures		122
Item 9B	Other Information		123
	PART III
Item 10	Directors, Executive Officers and Corporate Governance		125
Item 11	Executive Compensation		125
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		125
Item 13	Certain Relationships and Related Party Transactions and Director Independence		125
Item 14	Principal Accountant Fees and Services		125
	PART IV
Item 15	Exhibits and Financial Statement Schedules		126
Item 16	Form 10-K Summary		130

PART I

Forward-Looking Statements

This Annual Report on Form 10-K, including the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7, contains information that may constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth and the development and introduction of new products. In many cases you can identify forward-looking statements by terms such as “believes,” “anticipates,” “expects,” “targets,” “estimates,” “intends,” “will,” “may” or “plans” and similar expressions. These forward-looking statements reflect our current expectations and are based upon data available to us at the time the statements were made.

Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. These risks, as well as other risks and uncertainties, are detailed in the section Item 1A. “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Annual Report on Form 10-K may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. All forward-looking statements are qualified by these cautionary statements and are made only as of the date of this Annual Report on Form 10-K. Any such forward-looking statements should be considered in context with the various disclosures made by us about our business. Unless required by law, we undertake no obligation to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise. You should, however, review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission (the “SEC”) after the date of the filing of this Annual Report on Form 10-K.

In this Annual Report on Form 10-K references to “Party City Holdco,” “Party City,” the “Company,” “we,” “our,” “ours” and “us” refer to Party City Holdco Inc. and its consolidated subsidiaries unless stated or the context otherwise requires.

Item 1. Business

Overview

Party City Holdco is a Delaware corporation formed in 2012. It has no operating assets or operations. Party City Holdco 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”). PCHI or its direct or indirect subsidiaries conduct most of our operations. The Company’s principal executive offices are located at 80 Grasslands Road, Elmsford, New York 10523.

We are the leading party goods company by revenue in North America and, we believe, the largest vertically integrated supplier of decorated party goods globally by revenue. The Company is a popular one-stop shopping destination for party supplies, balloons, and costumes. In addition to being a great retail brand, the Company is a global, world-class organization that combines state-of-the-art manufacturing and sourcing operations, and sophisticated wholesale operations complemented by a multi-channel retailing strategy and e-commerce retail operations. The Company is a leading player in its category and vertically integrated in its breadth and depth. 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 throughout the world. The Company’s retail operations include approximately 875 specialty retail party supply stores

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(including franchise stores) throughout the United States and Mexico operating under the names Party City and Halloween City, and e-commerce websites, including through the domain name PartyCity.com and others.

In addition to our retail operations, we are also one of the largest global designers, manufacturers and distributors of decorated consumer party products, with items found in over 40,000 retail outlets worldwide, including independent party supply stores, mass merchants, grocery retailers, e-commerce merchandisers and dollar stores. Our products are available in over 100 countries with the United Kingdom (“U.K.”), Canada, Germany, Mexico and Australia among the largest end markets for our products outside of the United States.

The 2005 combination of Amscan, which focused on the wholesale market, and Party City, which focused on the retail market, represented an important step in our evolution. Since the acquisition of Party City, we have steadily increased the selection of Amscan merchandise offered in our Party City stores from approximately 25% in 2005 to approximately 80% in 2019, additionally allowing us to capture multiple levels of gross margin on a significant portion of our retail sales. During 2019, 80% of the product that was sold by our retail operations was supplied by our wholesale operations with 24% of the product self-manufactured and 56% procured externally.    

Industry Overview

We operate in the broadly defined retail party goods industry, which includes a $9 billion Halloween market. The party goods industry includes decorative paper and plastic tableware, costumes, decorations, accessories and balloons, all of which are supported by a range of suppliers from commodity paper goods producers to party goods manufacturers.

The retail landscape for decorated party goods is comprised primarily of party superstores, mass merchants, e-commerce merchandisers, craft stores, grocery retailers, and dollar stores. The party superstore is a preferred destination for party goods shoppers, similar to the dominance of specialty retailers in other categories such as home improvement. This is typically due to the superstore chain’s ability to offer a wider variety of merchandise at more compelling prices in a convenient setting as well as the knowledgeable staff often found at superstores. Other retailers that cater to the party goods market typically offer a limited assortment of party supplies and seasonal items. Mass and e-commerce retailers tend to focus primarily on juvenile and seasonal party goods, greeting cards and gift wrap. Mass and e-commerce retailers also maintain a significant share of the market for packaged Halloween costumes. Craft stores tend to focus on decorations and seasonal merchandise; and dollar stores on general and seasonal party goods items.

Sales of party goods are fueled by everyday events such as birthdays, baby showers, weddings and anniversaries, as well as seasonal events such as holidays and other special occasions. As a result of numerous and diverse occasions, the U.S. party goods market enjoys broad demographic appeal.

Segments

We have two reporting segments: Retail and Wholesale. In 2019, we generated 74.6% of our total revenues from our retail segment and 25.4% of our total revenues from our wholesale segment.

Our retail operations generate revenue primarily through the sale of our party supplies, which are sold under the Amscan, Designware, Anagram and Costumes USA brand names, through our Party City stores, Halloween City stores and PartyCity.com.

Our wholesale revenues are generated from the sale of decorated party goods for all occasions, including paper and plastic tableware, accessories and novelties, costumes, metallic and latex balloons and stationery. Our products are sold at wholesale to party goods superstores (including our franchise stores), other party goods retailers, mass merchants, independent card and gift stores, dollar stores and e-commerce merchandisers.

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Financial information about our industry segments and geographic segments is provided in Note 19, Segment Information, to our consolidated financial statements in Part II, Item 8, “Financial Statements and Supplementary Data,” in this Annual Report on Form 10-K.

Retail Operations

Overview

After opening its first company-owned store in 1986, Party City has grown to become what we believe is the largest operator of owned and franchised party superstores by revenue in the United States. At the time of the combination of Party City and Amscan in 2005, Party City’s network consisted of 502 stores, including 254 franchised locations. The Party City network of stores has expanded since 2005 and is now approximately 875 superstore locations in the United States (inclusive of franchised stores). During the year ended December 31, 2019, the Company performed a comprehensive review of its store locations aimed at improving the overall productivity of such locations (“store optimization program”) and, 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 55 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. On October 1, 2019, as part of the store optimization program, the Company sold its Canadian-based Party City stores to a Canadian-based retailer and entered into a 10-year supply agreement under which the acquirer agreed to purchase product from the Company for such Party City stores, as well as the acquirer’s other stores.

The following table shows the change in our company-owned Party City store network over the past three years (with the Canadian-based stores reflected in the 100 closed stores):

	2019			2018			2017
Stores open at beginning of year		866			803			750
Stores opened		5			15			16
Stores acquired from franchisees/others		6			58			44
Stores closed and sold		(100	)		(10	)		(7	)
Stores open at end of year		777			866			803

E-commerce

Our websites, including PartyCity.com, offer a convenient, user-friendly and secure online shopping option for our customers. In addition to the ability to order products, our websites provide a substantial amount of content about our party products, party planning ideas and promotional offers. The websites are also one of our key marketing vehicles, specifically as they relate to social media marketing initiatives.

Additionally, during 2019, the Company expanded its 2018 pilot program under which it sells a selection of its products via a Party City storefront on Amazon Marketplace.

Retail Advertising and Marketing

Our advertising focuses on promoting specific seasonal occasions and general party themes, with a strong emphasis on the breadth and depth of our products and our price-value proposition, with the goal of increasing customer traffic and further building our brand.

Competition at Retail

In our retail segment, our stores and e-commerce operations compete primarily on the basis of product assortment, customer convenience and value and, with regards to our stores, location and layout. Although we

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compete with a variety of smaller and larger retailers, including, but not limited to, independent party goods supply stores, specialty stores, dollar stores, e-commerce merchandisers, warehouse/merchandise clubs, drug stores, and mass merchants, we believe that, based on our revenues and strong brand awareness with our customers, we maintain a leading position in the party goods business by offering a wider breadth of merchandise than most competitors and a greater selection within merchandise classes, at a compelling value. We are one of only a few vertically integrated suppliers of decorated party goods. While some of our competitors in our markets may have greater financial resources, we believe that our significant buying power, which results from the size of our retail store network and the breadth of our assortment, is an important competitive advantage. Many of our retail competitors are also customers of our wholesale business.

Retail Seasonality

Our retail operations are subject to significant seasonal variations. Historically, this segment has realized a significant portion of its revenues, cash flow and net income in the fourth quarter of the year, principally due to our Halloween sales in October and, to a lesser extent, year-end holiday sales. Halloween business represents approximately 20% of our total domestic retail sales. To maximize our seasonal opportunity, we operate a chain of temporary Halloween stores, under the Halloween City banner, during the months of September and October of each year.

Franchise Operations

We have franchised stores throughout the United States, Mexico and Puerto Rico run by franchisees utilizing our format, design specifications, methods, standards, operating procedures, systems and trademarks. Our wholesale sales to franchised stores generally mirror, with respect to relative size, mix and category, those to our company-owned stores. The following table shows the change in our franchise-owned store network over the past three years:

	2019		2018			2017
Stores open at beginning of year		96		148			184
Stores opened/acquired by existing franchisees		2		1			3
Stores sold to the Company		—		(50	)		(36	)
Stores closed or converted to independent stores		—		(3	)		(3	)
Stores open at end of year		98		96			148

We are not currently marketing, nor do we plan to market, new franchise territories in the United States. During 2015, the Company entered into an agreement with a subsidiary of Grupo Oprimax to franchise the Party City concept throughout Mexico. Under the terms of the agreement, Grupo Oprimax has the opportunity to exclusively open and operate Party City stores in Mexico based on satisfaction of certain conditions.

We receive revenue from our franchisees, consisting of an initial one-time fee and ongoing royalty fees generally ranging from 4% to 6% of net sales. In exchange for these franchise fees, franchisees principally receive brand value and company support with respect to planograms. Each franchisee has a mandated advertising budget, which consists of a minimum initial store opening promotion and ongoing local advertising and promotions. Additionally, franchisees must pay 1% to 2.25% of net sales to a group advertising fund to cover common advertising materials. Our franchise agreements provide us with a right of first refusal should any franchisee look to dispose of its operations.

Current franchise agreements provide for an assigned area or territory that typically equals a three or four-mile radius from the franchisee’s store location and the right to use the Party City® logo and trademark. In addition, certain agreements with our franchisees and other business partners contain geographic limitations on opening new stores. For most stores, the franchisee or the majority owner of a corporate franchisee devotes full time to the management, operation and on-premises supervision of the stores or groups of stores.

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Wholesale Operations

Overview

We currently offer over 400 party goods ensembles, which range from approximately five to 50 design-coordinated items spanning tableware, accessories, novelties, balloons and decorations. The breadth of these ensembles enables retailers to promote additional sales of related products for every occasion. To enhance our customers’ celebrations of life’s important events, we market party goods ensembles for a wide variety of occasions, including seasonal and religious holidays, special events and themed celebrations.

Our Amscan, Anagram, Costumes USA and Designware branded products are offered in over 40,000 retail outlets worldwide, ranging from party goods superstores (including our franchise stores), other party goods retailers, mass merchants, independent card and gift stores, dollar stores and e-commerce merchandisers. We have long-term relationships with many of our wholesale customers.

The table below shows the breakdown of our total wholesale sales by channel for the year ended December 31, 2019:

Channel	Sales
	(dollars in millions)
Owned stores and e-commerce	$	643
Party City franchised stores and other domestic retailers		242
Domestic balloon distributors/retailers		78
International balloon distributors		23
Other international		254
Total wholesale sales	$	1,240

Product Lines

The following table sets forth the principal products we distribute by product category, and the corresponding percentage of revenue that each category represents:

Wholesale Sales by Product for the Year Ended

December 31, 2019

Category	Items	% of Sales
Tableware	Plastic Plates, Paper Plates, Plastic Cups, Paper Cups, Paper Napkins, Plastic Cutlery, Table Covers		26	%
Costumes & Accessories	Costumes, Other Wearables, Wigs		26	%
Decorations	Latex Balloons, Piñatas, Crepes, Flags & Banners, Decorative Tissues, Stickers and Confetti, Scene Setters, Garland, Centerpieces		22	%
Metallic Balloons	Bouquets, Standard 18 Inch Sing-A-Tune, SuperShapes, Weights		15	%
Favors, Stationery & Other	Party Favors, Gift Bags, Gift Wrap, Invitations, Bows, Stationery		11	%

Our product line spans a wide variety of ways to celebrate everyday events including from birthdays to theme parties to sporting events. Additionally, we offer seasonal product throughout the year to decorate and dress-up for holidays such as Halloween, New Year’s Eve and Mardi Gras. Our product offering is designed to

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provide everything needed to throw an amazing event and capture life’s special moments including a wide range of decór, tabletop, balloons & wearable product formats for the following occasions and more:

Current Product Offering

Everyday	Seasonal
Birthdays: Juvenile, General & Milestone		New Year’s
Bridal: Engagement, Shower & Wedding		Valentine’s Day
Variety of Religious holidays & Occasions		St. Patrick’s Day
Baby Shower & Gender Reveal		Easter
General Entertaining, Cocktail & Special Events		Mardi Gras
Themes: Casino, Tea Party, Retirement, Hollywood,		Cinco de Mayo
Decades, Fiesta, Luau, Masquerade & Sports		Graduation
Favors, Wearables & Novelties for all occasions		Summer & Patriotic
		Fall
		Thanksgiving
		Halloween
		Hanukkah
		Christmas

Wholesale Manufactured Products

We manufacture items representing approximately 42% of our net sales at wholesale (including sales to our retail operations). Generally, our manufacturing facilities are highly automated and produce paper and plastic plates and cups, paper napkins, metallic and latex balloons, injection molded product, costumes, pinatas and other party and novelty items at globally competitive costs. State-of-the-art printing, forming, folding and packaging equipment support most of these manufacturing operations. Given our size and sales volume, we are generally able to operate our manufacturing equipment on the basis of at least two shifts per day, thus lowering production costs per unit. In select cases, we use available capacity to manufacture products for third parties, which allows us to maintain a satisfactory level of equipment utilization.

The table below summarizes our principal manufacturing facilities:

Location	Principal Products		Approximate Square Feet
Monterrey, Mexico		Stickers, gift wrap, bags and invites		355,500
Newburgh, New York		Paper napkins and paper cups		248,000
East Providence, Rhode Island		Plastic plates, cups and bowls		229,230(1)
Louisville, Kentucky		Paper plates		213,958
Tijuana, Mexico		Piñatas and other party products		135,000
Eden Prairie, Minnesota		Metallic balloons and accessories		115,600
Melaka, Malaysia		Latex balloons		100,000
Los Lunas, New Mexico		Injection molded plastics		85,055
Antananarivo, Madagascar		Costumes		41,000

(1) The square footage represents an industrial park, which includes a 48,455 square foot office and warehouse.

Complementing our manufacturing facilities, we have a diverse global network of third-party suppliers that supports our strategy of consistently offering a broad selection of high quality, innovative and competitively priced product. We have relationships that exceed twenty years with many of our vendors and often represent a significant portion of their overall business. They generally produce items designed by and created for us, are located in Asia, and are managed by our sourcing office in Hong Kong. We actively work with our third-party suppliers to ensure product cost, quality and safety.

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The principal raw materials used in manufacturing our products are paper, petroleum-based resin and cotton. While we currently purchase such raw material from a relatively small number of sources, paper, resin and cotton are available from numerous sources. Therefore, we believe our current suppliers could be replaced without adversely affecting our manufacturing operations in any material respect.

Wholesale Product Safety and Quality Assurance

We are subject to regulatory requirements in the United States and internationally, and we believe that all products that we manufacture and source comply with the requirements in the markets in which they are sold. Third-party manufactured products are tested both at the manufacturing site and upon arrival at our distribution centers. We have a full-time staff of professionals in the United States, Asia and Europe dedicated to product safety and quality assurance.

Wholesale Distribution and Systems

We ship our products directly to retailers and distributors throughout the world from our distribution facilities, as well as directly from our domestic and international factories. Our electronic order entry and information systems allow us to manage our inventory with minimal obsolescence while maintaining strong fill rates and quick order turnaround time.

Our main distribution facility for domestic party customers is located in Chester, New York, with nearly 900,000 square feet under one roof. This state-of-the-art facility serves as the main point of distribution for our Amscan-branded products and utilizes a paperless, pick-by-light system, a Goods-To-Person (OSR) picking system, offering superior inventory management and turnaround times as short as 48 hours.

We also utilize a bypass system which allows us to ship products directly from selected third-party suppliers to our company-owned and franchised stores, thus bypassing our distribution facilities. In addition to lowering our distribution costs, this bypass system enhances our warehouse capacity.

The distribution center for our main retail e-commerce platform is located in Naperville, Illinois. We also have other distribution centers in the U.K., Germany and Mexico in order to support our international customers.

Wholesale Customers

We have a diverse third-party customer base at wholesale. During 2019, no individual third-party customer accounted for more than 10% of our total third-party sales at wholesale.

Competition at Wholesale

In our wholesale segment, we compete primarily on the basis of diversity and quality of our product designs, breadth of product line, product availability, price, reputation and customer service. Although we have many competitors with respect to one or more of our products, we believe that there are no competitors who design, manufacture, source and distribute products with the complexity of design and breadth of product lines that we do. Furthermore, our design and manufacturing processes create efficiencies in manufacturing that few of our competitors can achieve in the production of numerous coordinated products in multiple design types. Competitors include smaller independent manufacturers and distributors, as well as divisions or subsidiaries of large companies. Certain of these competitors control various party goods product licenses for widely recognized images, such as cartoon or motion picture characters, which could provide them with a competitive advantage. However, we control a strong portfolio of character licenses for use in the design and production of our metallic balloons and we have access to a strong portfolio of character and other licenses for party goods.

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Information Systems

We continually evaluate and upgrade our information systems to enhance the quantity, quality and timeliness of information available to management and to improve the efficiency of our manufacturing and distribution facilities, as well as our service at the store level. We have implemented merchandise replenishment software to complement our distribution, planning and allocation processes. The system enhances the store replenishment function by improving in-stock positions, leveraging our distribution infrastructure and allowing us to become more effective in our use of store labor. We have implemented a Point of Sale system and upgraded merchandising systems to standardize technology across all of our domestic retail temporary and permanent superstores.

Employees

As of December 31, 2019, the Company had approximately 10,400 full-time employees and 7,900 part-time employees, none of whom is covered by a collective bargaining agreement. We consider our relationship with our employees to be good.

Intellectual Property

We own the copyrights in the designs we create and use on our products and various trademarks and service marks used on or in connection with our products. It is our practice to register our copyrights with the United States Copyright Office and our trademarks and service marks with the United States Patent and Trademark Office, or with other foreign jurisdictions, to the extent we deem necessary. In addition, we rely on unregistered common law trademark rights and unregistered copyrights under applicable U.S. law to distinguish and/or protect our products, services and branding. We do not believe that the loss of copyrights or trademarks with respect to any particular product or products would have a material adverse effect on our business. We hold numerous intellectual property licenses from third parties, allowing us to use various third-party cartoon and other characters and designs on our products, and the images on our metallic balloons and costumes are principally covered by these licenses. None of these licenses is individually material to our aggregate business. We also own patents relating to display racks and balloon weights, none of which are individually material to our aggregate business.

We permit our franchisees to use a number of our trademarks and service marks, including Party City, The Discount Party Super Store, Party America, Oh, It’s On, Nobody has More Party for Less and Halloween City.

Government Regulation

As a franchisor, we must comply with regulations adopted by the Federal Trade Commission, such as the Trade Regulation Rule on Franchising, which requires us, among other things, to furnish prospective franchisees with a franchise offering circular. We also must comply with a number of state laws that regulate the offer and sale of our franchises and certain substantive aspects of franchisor-franchisee relationships. These laws vary in their application and in their regulatory requirements. State laws that regulate the offer and sale of franchises typically require us to, among other things, register before the offer and sale of a franchise can be made in that state and to provide a franchise offering circular to prospective franchisees.

State laws that regulate the franchisor-franchisee relationship presently exist in a substantial number of states. Those laws regulate the franchise relationship, for example, by restricting a franchisor’s rights with regard to the termination, transfer and renewal of a franchise agreement (for example, by requiring “good cause” to exist as a basis for the termination and the franchisor’s decision to refuse to permit the franchisee to exercise its transfer or renewal rights), by requiring the franchisor to give advance notice to the franchisee of the termination and give the franchisee an opportunity to cure most defaults. To date, those laws have not precluded us from seeking franchisees in any given area and have not had a material adverse effect on our operations.

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Our wholesale and retail segments must also comply with applicable regulations adopted by federal agencies, including product safety regulations, and with licensing and other regulations enforced by state and local health, sanitation, safety, fire and other departments. Difficulties or failures in obtaining the required licenses or approvals can delay and sometimes prevent the opening of a new store or the shutting down of an existing store.

Our manufacturing operations, stores and other facilities must comply with applicable environmental, health and safety regulations, although the cost of complying with these regulations to date has not been material. More stringent and varied requirements of local governmental bodies with respect to zoning, land use, and environmental factors can delay, and sometimes prevent, development of new stores in particular locations. Our stores must comply with the Fair Labor Standards Act and various state laws governing various matters such as minimum wages, overtime and other working conditions. Our stores must also comply with the provisions of the Americans with Disabilities Act, which requires that employers provide reasonable accommodation for employees with disabilities and that stores must be accessible to customers with disabilities.

Available Information

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in accordance therewith, we file reports, proxy and information statements and other information with the SEC. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other information to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available through the investor relations section of our website at www.partycity.com or investor.partycity.com. Reports are available free of charge as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K. The SEC maintains an Internet site that contains our reports, proxy and information statements, and other information that we file electronically with the SEC at www.sec.gov.

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Item 1A. Risk Factors

The following risk factors may be important to understanding any statement in this Annual Report on Form 10-K or elsewhere. Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below. Any one or more of such factors could directly or indirectly cause our actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, results of operations and stock price.

We operate in a competitive industry, and our failure to compete effectively could cause us to lose our market share, revenues and growth prospects.

Our wholesale segment competes with many other manufacturers and distributors, including smaller, independent manufacturers and distributors and divisions or subsidiaries of larger companies with greater financial and other resources than we have. Some of our competitors control licenses for widely recognized images and have broader access to mass market retailers that could provide them with a competitive advantage.

The party goods retail industry is large and highly fragmented. Our retail stores compete with a variety of smaller and larger retailers including, but not limited to, independent party goods supply stores, specialty stores, warehouse/merchandise clubs, drug stores, dollar stores, mass merchants and e-commerce merchants. We face competition from internet-based retailers in addition to store-based retailers. These internet-based retailers may have a significant collective online presence and may be able to offer similar products to those that we sell, which may result in increased price competition. We compete, among other ways, on the basis of product mix and availability, customer convenience, quality, price and, with respect to our retail stores, location and store layout. We may not be able to continue to compete successfully against existing or future competitors in the retail space. Expansion into markets served by our competitors and entry of new competitors or expansion of existing competitors into our markets could materially adversely affect our business, results of operations, cash flows and financial performance.

We must remain competitive in the areas of quality, price, breadth of selection, customer service and convenience. Competing effectively may require us to reduce our prices or increase our costs, which could lower our margins and adversely affect our revenues and growth prospects.

Our business may be adversely impacted by helium shortages.

Although not used in the actual manufacture of our products, helium gas is currently used to inflate the majority of our metallic balloons and a portion of our latex balloons. We rely upon the exploration and refining of natural gas to ensure adequate supplies of helium as helium is a by-product of the natural gas production process. Helium shortages can adversely impact the financial performance of our retail and wholesale operations.

During the middle of 2018, helium supplies tightened due to various factors. As a result, our balloon sales and gross margins were negatively impacted. In 2019 the negative impact of helium shortages was felt across the business on both the top and bottom line including a 210-basis point headwind to third quarter brand comparable sales. Although, we are encouraged that our retail operations approached a 100% in-stock helium position at the end of 2019, helium supplies could be impacted in the future which could result in shortages that could have a material impact on our results.

Because we rely heavily on our own manufacturing operations and those of our suppliers, disruptions at manufacturing facilities could adversely affect our business, results of operations, cash flows and financial performance.

Any significant disruption in manufacturing facilities, in the United States or abroad, for any reason, including regulatory requirements, unstable labor relations, public health crises, including the occurrence of a

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contagious disease or illness, such as the flu or COVID-19, the loss of certifications, power interruptions, fires, hurricanes, war or other forces of nature, could disrupt our supply of products, adversely affecting our business, results of operations, cash flows and financial performance. For example, the recent spread of the COVID-19 and related quarantines and work and travel restrictions in China and other countries has disrupted, and may continue to disrupt, production for certain of our suppliers and our own manufacturing operations, and the extent to which these events will affect our results of operations and financial position remains uncertain. The occurrence of one or more natural disasters, or other disruptive geo-political events, could also result in increases in fuel (or other energy) prices or a fuel shortage, the temporary or permanent closure of one or more of manufacturing or distribution centers, the temporary lack of an adequate work force in a market, the temporary or long-term disruption in the supply of products from some local and overseas suppliers, the temporary disruption in the transport of goods from overseas or delays in the delivery of goods to our distribution centers or stores or to third parties who purchase from us. If one or more of these events occurred, our revenues and profitability would be reduced.

A decrease in our Halloween sales could have a material adverse effect on our operating results for the year.

Our retail business realizes a significant portion of its revenues, net income and cash flows in September and October, principally due to Halloween sales. We believe that this general pattern will continue in the future. An economic downturn, or adverse weather, during this period could adversely affect us to a greater extent than at other times of the year. Any unanticipated decrease in demand for our products during the Halloween season could require us to maintain excess inventory or sell excess inventory at substantial markdowns, which could have a material adverse effect on our business, profitability, ability to repay any indebtedness and our brand image. In addition, our sales during the Halloween season could be affected by online competition, if we open fewer Halloween City stores, are not able to find sufficient and adequate lease space for our temporary Halloween City stores or if we are unable to hire qualified temporary personnel to adequately staff these stores and our distribution facility during the Halloween season, whether due to labor market conditions or a failure in our internal recruiting and staffing processes. Failure to have proper lease space and adequate personnel could hurt our business, financial condition and results of operations.

Our failure to appropriately respond to changing merchandise trends and consumer preferences could significantly harm our customer relationships and financial performance.

As a manufacturer, distributor and retailer of consumer goods, our products must appeal to a broad range of consumers whose preferences are constantly changing. We also sell certain licensed products, with images such as cartoon or motion picture characters, which are in great demand for short time periods, making it difficult to project our inventory needs for these products. In addition, we may not be able to obtain the licenses for certain popular characters and could lose market share to competitors who are able to obtain those licenses. Additionally, if consumers’ demand for single-use, disposable party goods were to diminish in favor of reusable products for environmental or other reasons, our sales could decline.

The success of our business depends upon many factors, such as our ability to accurately predict the market for our products and our customers’ purchasing habits, to identify product and merchandise trends, to innovate and develop new products, to manufacture and deliver our products in sufficient volumes and in a timely manner and to differentiate our product offerings from those of our competitors. We may not be able to continue to offer assortments of products that appeal to our customers or respond appropriately to consumer demands. We could misinterpret or fail to identify trends on a timely basis. Our failure to anticipate, identify or react appropriately to changes in consumer tastes could, among other things, lead to excess inventories and significant markdowns or a shortage of products and lost sales. Our failure to do so could harm our customer relationships and financial performance.

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Our business may be adversely affected by material fluctuations in commodity prices.

The costs of our key raw materials (paper, petroleum-based resin and cotton) fluctuate. In general, we absorb movements in raw material costs that we consider temporary or insignificant. However, cost increases that are considered other than temporary may require us to increase our prices to maintain our margins. Raw material prices may increase in the future and we may not be able to pass on these increases to our customers. A significant increase in the price of raw materials that we cannot pass on to customers could have a material adverse effect on our results of operations and financial performance. In addition, the interruption in supply of certain key raw materials essential to the manufacturing of our products may have an adverse impact on our and our suppliers’ abilities to manufacture the products necessary to maintain our existing customer relationships. As a result, significant changes in commodity prices, foreign currency exchange rates, the imposition of tariffs on imported products or interest rates, and effects from public health crises, including the occurrence of a contagious disease or illness, such as COVID-19, could have a substantial adverse effect on our financial condition or results of operations.

We may not be able to successfully implement our business strategy.

Our ability to increase our sales depends on many factors including, among others, our ability to:

• implement our path to becoming a party platform that is a technology-enabled, one-stop-shop that provides end-to-end services based on predicting customer needs and wants;

• grow our e-commerce business;

• implement new retail programs that could include but are not limited to loyalty rewards, new formats for existing stores, fewer skus and less inventory;

• identify suitable store locations, including temporary lease space for our Halloween City location, the availability of which is largely outside of our control;

• negotiate and secure acceptable lease terms, desired tenant allowances and assurances from operators and developers that they can complete the project, which depend in part on the financial resources of the operators and developers;

• obtain or maintain adequate capital resources on acceptable terms;

• manufacture and source sufficient levels of inventory at acceptable costs;

• hire, train and retain an expanded workforce of store managers and other store-level personnel, many of whom are in entry-level or part-time positions with historically high rates of turnover;

• successfully integrate new stores/e-commerce operations into our existing control structure and operations, including information system integration;

• maintain adequate manufacturing and distribution facilities, information system and other operational system capabilities;

• identify and satisfy the merchandise and other preferences of our customers in new geographic areas and markets;

• gain brand recognition and acceptance in new markets; and

• address competitive, merchandising, marketing, distribution and other challenges encountered in connection with expansion into new geographic areas and markets, including geographic restrictions on the opening of new stores/e-commerce operations based on certain agreements with our franchisees and other business partners.

As we expand our e-commerce operations and, to the extent that any new store openings are in markets in which we have existing operations, we may experience reduced sales at existing stores. In addition, there can be no assurance that any newly opened stores or expanded e-commerce operations will achieve sales or profitability levels comparable to those of our existing operations in the time frame assumed by us. If our new operations fail

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to achieve, or are unable to sustain, acceptable net sales and profitability levels, our business may be materially harmed and we may incur significant costs associated with closing those operations. Our failure to effectively address challenges such as these could adversely affect our ability to successfully open and operate new operations in a timely and cost-effective manner, and could have a material adverse effect on our business, results of operations and financial condition.

Unexpected or unfavorable consumer responses to our promotional or merchandising programs could materially adversely affect our business, results of operations, cash flows and financial performance.

Brand recognition, quality and price have a significant influence on consumers’ choices among competing products and brands. Advertising, promotion, merchandising and the cadence of new product introductions also have a significant impact on consumers’ buying decisions. If we misjudge consumer responses to our existing or future promotional activities, this could have a material adverse impact on our business, results of operations, cash flow and financial performance.

Our marketing programs, e-commerce initiatives and use of consumer information are governed by an evolving set of laws and enforcement trends and unfavorable changes in those laws or trends, or our failure to comply with existing or future laws, could substantially harm our business and results of operations.

We collect, maintain and use data provided to us through our online activities and other customer interactions in our business. Our current and future marketing programs depend on our ability to collect, maintain and use this information, and our ability to do so is subject to certain contractual restrictions in third-party contracts as well as evolving international, federal and state laws and enforcement trends. We strive to comply with all applicable laws and other legal obligations relating to privacy, data protection and consumer protection, including those relating to the use of data for marketing purposes. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another, may conflict with other rules or may conflict with our practices. If so, we may suffer damage to our reputation and be subject to proceedings or actions against us by governmental entities or others. Any such proceeding or action could hurt our reputation, force us to spend significant amounts to defend our practices, distract our management, increase our costs of doing business and result in monetary liability.

In addition, as data privacy and marketing laws change, we may incur additional costs to ensure we remain in compliance with such laws. If applicable data privacy and marketing laws become more restrictive at the federal or state level, our compliance costs may increase, our ability to effectively engage customers via personalized marketing may decrease, our investment in our e-commerce platform may not be fully realized, our opportunities for growth may be curtailed by our compliance capabilities or reputational harm and our potential liability for security breaches may increase.

For example, in 2018 California enacted the California Consumer Privacy Act (“CCPA”), which broadly regulates the sale of the consumer information of California residents and grants California residents certain rights to, among other things, access and delete data about them in certain circumstances. CCPA went into effect on January 1, 2020, and compliance with the CCPA may increase the cost to us of operating in California. Other states are considering similar proposals. Such attempts by the states to regulate have the potential to create a patchwork of differing and/or conflicting state regulations.

Disruption to the transportation system or increases in transportation costs may negatively affect our operating results.

We rely upon various means of transportation, including shipments by air, sea, rail and truck, to deliver products to our distribution centers from vendors and manufacturers and from other distribution centers to our stores, as well as for direct shipments from vendors to stores and sales to third-party customers. Independent third parties with whom we conduct business may employ personnel represented by labor unions. Labor

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stoppages, shortages or capacity constraints in the transportation industry, disruptions to the national and international transportation infrastructure, public health crises, fuel shortages or transportation cost increases could adversely affect our business, results of operations, cash flows and financial performance. In particular, if the current COVID-19 outbreak continues and results in a prolonged period of travel restrictions, we could experience global supply disruptions. If we experience supply disruptions, we may not be able to develop alternate sourcing quickly, which could adversely affect our operations.

Product recalls and/or product liability may adversely impact our business, merchandise offerings, reputation, results of operations, cash flow and financial performance.

We may be subject to product recalls if any of the products that we manufacture or sell are believed to cause injury or illness. In addition, as a retailer of products manufactured by third parties, we may also be liable for various product liability claims for products we do not manufacture. Indemnification provisions that we may enter into are typically limited by their terms and depend on the creditworthiness of the indemnifying party and its insurer and the absence of significant defenses. We may be unable to obtain full recovery from the insurer or any indemnifying third party in respect of any claims against us in connection with products manufactured by such third party. In addition, if our vendors fail to manufacture or import merchandise that adheres to our quality control standards or standards established by applicable law, our reputation and brands could be damaged, potentially leading to an increase in customer litigation against us. Furthermore, to the extent we are unable to replace any recalled products, we may have to reduce our merchandise offerings, resulting in a decrease in sales, especially if a recall occurs near or during a peak seasonal period. If our vendors are unable or unwilling to recall products failing to meet our quality standards, we may be required to recall those products at a substantial cost to us.

Our business is sensitive to consumer spending and general economic conditions, and other factors beyond our control, including adverse weather conditions or the outbreak of disease, and an economic slowdown could adversely affect our financial performance.

In general, our retail sales, and the retail sales of our business partners to whom we sell, represent discretionary spending by our customers and our business partners’ customers. Discretionary spending is affected by many factors, such as general business conditions, interest rates, availability of consumer credit, unemployment levels, taxation, weather, hurricanes, public health crises, including the occurrence of a contagious disease or illness, such as the flu or COVID-19, and consumer confidence in future economic conditions. Our customers’ purchases and our business partners’ customers’ purchases of discretionary items, including our products, often decline during periods when disposable income is lower or during periods of actual or perceived unfavorable economic conditions or as a result of geopolitical events or widespread health emergencies. Geopolitical events, such as the threat of terrorism or cyber-attacks, and widespread health emergencies, such as COVID-19 or other pandemics or epidemics, could cause people to avoid our stores or decide not to host or attend gatherings or other events. If this occurs, our revenues and profitability will decline. In addition, economic downturns may make it difficult for us to accurately forecast future demand trends, which could cause us to purchase excess inventories, resulting in increases in our inventory carrying cost, or insufficient inventories, resulting in our inability to satisfy our customer demand and potential loss of market share.

Our business may be adversely affected by the loss or actions of our third-party vendors.

Our ability to find new qualified vendors who meet our standards and supply products in a timely and efficient manner can be a significant challenge, especially for goods sourced from outside the United States. Many of our vendors currently provide us with incentives such as volume purchasing allowances and trade discounts. If our vendors were to reduce or discontinue these incentives, costs would increase. Should we be unable to pass cost increases to consumers, our profitability would be reduced.

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Our business and results of operations may be harmed if our suppliers or third-party manufacturers fail to follow acceptable labor practices or to comply with other applicable laws and guidelines.

Many of the products sold in our stores and on our websites are manufactured outside of the United States, which may increase the risk that the labor, manufacturing safety and other practices followed by the manufacturers of these products may differ from those generally accepted in the United States as well as those with which we are required to comply under many of our image or character licenses. Although we require each of our vendors to sign a purchase order and vendor agreement that requires adherence to accepted labor practices and compliance with labor, manufacturing safety and other laws and we test merchandise for product safety standards, we do not supervise, control or audit our vendors or the manufacturers that produce the merchandise we sell to our customers. The violation of labor, manufacturing safety or other laws by any of our vendors or manufacturers, or the divergence of the labor practices followed by any of our vendors or manufacturers from those generally accepted in the United States could interrupt or otherwise disrupt the shipment of finished products to us, damage our brand image, subject us to boycotts by our customers or activist groups or cause some of our licensors of popular images to terminate their licenses to us. Our future operations and performance will be subject to these factors, which are beyond our control and could materially hurt our business, financial condition and results of operations or require us to modify our current business practices or incur increased costs.

Changes in regulations or enforcement, or our failure to comply with existing or future regulations, may adversely impact our business.

We are subject to federal, state and local regulations with respect to our operations in the United States. Additionally, we are subject to regulations in the foreign countries in which we operate and such regulations are increasingly distinct from those in the United States. Further, we may be subject to greater international regulation if we expand our business internationally. There are a number of legislative and regulatory initiatives that could adversely impact our business if they are enacted or enforced. Those initiatives include increased or new tariffs on imported products, wage or workforce issues (such as minimum-wage requirements, overtime and other working conditions and citizenship requirements), collective bargaining matters, environmental regulation, price and promotion regulation, trade regulations, data and privacy protection and others.

Proposed changes in tax regulations may also change our effective tax rate as our business is subject to a combination of applicable tax rates in the various countries, states and other jurisdictions in which we operate. New accounting pronouncements and interpretations of existing accounting rules and practices have occurred and may occur in the future. A change in accounting standards or practices can have a significant effect on our reported results of operations. Failure to comply with legal requirements could result in, among other things, increased litigation risk that could affect us adversely by subjecting us to significant monetary damages and other remedies or by increasing our litigation expenses, administrative enforcement actions, fines and civil and criminal liability. If such issues become more expensive to address, or if new issues arise, they could increase our expenses, generate negative publicity, or otherwise adversely affect us.

Certain aspects of recent U.S. federal income tax reform could negatively affect us.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law. The Act resulted in an overall benefit to us because it reduced our marginal U.S. federal income rate to 21%, effective January 1, 2018, and generally allows us to immediately deduct 100% of the cost of tangible, depreciable property that we acquire and place into service on or before January 1, 2023 for federal income tax purposes.

Certain aspects of the Act, however, could negatively affect us. For example, under the Act, we will generally not be able to deduct our business interest expense to the extent that it exceeds 30% of our Adjusted Taxable Income for our 2018 through 2021 tax years or 30% of our EBIT thereafter. However, such non-deductible interest will be available for an indefinite carryforward.

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Additionally, under the Act, we will be subject to a tax on global intangible low-taxed income and are required to pay a one-time transition tax on the previously untaxed deferred foreign earnings that our foreign subsidiaries have accrued since 1986 at a rate of 15.5% for cash and cash-equivalent profits and 8% on other reinvested foreign earnings (the “Transition Tax”). We have elected to pay this Transition Tax over eight annual installments without interest.

Our international operations subject us to additional risks, which risks and related costs may differ in each country in which we do business and may cause our profitability to decline.

We conduct our business in a number of foreign countries, including contracting with manufacturers and suppliers located outside of the United States, many of which are located in Asia. We have expanded our international operations through numerous acquisitions and we plan to continue our expansion through additional acquisitions, investments in joint ventures and organic growth. Our operations and financial condition may be adversely affected if the markets in which we compete or source our products are affected by changes in political, economic or other factors. These factors, over which we have no control, may include:

• recessionary or expansive trends in international markets;

• changes in foreign currency exchange rates, principally fluctuations in the British Pound Sterling, the Canadian Dollar, the Euro, the Malaysian Ringgit, the Mexican Peso and the Australian Dollar;

• hyperinflation or deflation in the foreign countries in which we operate;

• work stoppages or other employee rights issues;

• the imposition of restrictions on currency conversion or the transfer of funds;

• transportation delays and interruptions;

• increases in the taxes we pay and other changes in applicable tax laws;

• difficulty enforcing our intellectual property and competition against counterfeit goods;

• public health crises, including the occurrence of a contagious disease or illness such as the COVID-19 outbreak;

• legal and regulatory changes and the burdens and costs of our compliance with a variety of laws, including new or additional trade restrictions, tariffs and changes in environmental regulations; and

• political and economic instability.

We face risks arising from the results of the public referendum held in United Kingdom and its membership in the European Union.

We have wholesale and ecommerce retail operations located in the United Kingdom (the “UK”). On June 23, 2016, the UK held a referendum in which voters approved an exit from the European Union (“EU”), commonly referred to as “Brexit.” The withdrawal of the UK from the EU took effect on January 31, 2020, and the UK is now in a period of transition until the end of 2020. The transition period maintains all existing trading arrangements.

The ongoing developments following from the UK’s public referendum vote to exit from the EU could cause disruptions to and create uncertainty surrounding our business in the UK. Negotiations have commenced to determine the terms of the UK’s future relationship with the EU, including the terms of trade between the UK and the EU. The effects of Brexit will depend upon any agreements the UK makes to retain access to EU markets. The measures could potentially adversely change tax benefits or liabilities in these or other jurisdictions and could disrupt some of the markets and jurisdictions in which we operate. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the UK determines which EU laws to

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replace or replicate. In addition, the announcement of Brexit has caused significant volatility in global stock markets and currency exchange rate fluctuations and the Brexit negotiations may continue to cause significant volatility. The progress and outcomes of Brexit negotiations also may create global economic uncertainty. Any of these effects of Brexit, among others, could materially adversely affect our business, financial condition, and results of operations.

International trade disputes and the U.S. government’s trade policy could adversely affect our business.

International trade disputes could result in tariffs and other protectionist measures that could adversely affect our business. Tariffs could increase the cost of our products and the components and raw materials that go into making them. These increased costs could adversely impact the gross margin that we earn on our products. Countries may also adopt other protectionist measures that could limit our ability to offer our products and services, including, but not limited to, the Trump Administration’s tariffs on China and China’s retaliatory tariffs on certain products from the U.S. Political uncertainty surrounding international trade disputes and protectionist measures could also have a negative effect on consumer confidence and spending, which could adversely affect our business.

The U.S. government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. It has also initiated tariffs on certain foreign goods and has raised the possibility of imposing significant, additional tariff increases or expanding the tariffs to capture other types of goods.

The Company has adopted a mitigation strategy that includes price increases, product re-engineering, transitioning product out of China, renegotiating pricing with Chinese vendors or encouraging them to move to other countries. As a result of this strategy, as well as the elimination of Lists 4a and 4b from the tariffs on China, recent tariffs have not had a material impact on the Company’s operating results. However, to the extent that significant additional tariffs are imposed, depending on the extent of such tariffs, they could have a material impact on our operating results in the future.

In response to the U.S. government’s actions, certain foreign governments have imposed retaliatory tariffs on goods that their countries import from the United States. Changes in U.S. trade policy could result in one or more foreign governments adopting responsive trade policies that, depending on the scope of the policies, could make it more difficult or costly for us to do business in those countries.

We cannot predict the extent to which the United States or other countries will impose quotas, duties, tariffs, taxes or other similar restrictions upon the import or export of our products in the future, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business. The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the U.S. economy, which in turn could have a material adverse effect on our business, operating results and financial condition.

We may face risks associated with litigation and claims.

From time to time, we may become involved in other legal proceedings relating to the conduct of our business, including but not limited to, employee-related and consumer matters. Additionally, as a retailer and manufacturer of decorated party goods, we have been and may continue to be subject to product liability claims if the use of our products, whether manufactured by us or third party manufacturers, is alleged to have resulted in injury or if our products include inadequate instructions or warnings. Such matters can be time-consuming, divert management’s attention and resources and cause us to incur significant expenses. Due to the uncertainties of litigation, we can give no assurance that we will prevail on all claims made against us in the lawsuits that we currently face or that additional claims will not be made against us in the future. Furthermore, because litigation

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is inherently uncertain, there can be no assurance that the results of any of these actions will not have a material adverse effect on our business, results of operations or financial condition.

We may require additional capital to fund our business, which may not be available to us on satisfactory terms or at all.

We currently rely on cash generated by operations and borrowings available under the credit facilities to meet our working capital needs. However, if we are unable to generate sufficient cash from operations or if borrowings available under the credit facilities are insufficient, we may be required to adopt one or more alternatives to raise cash, such as incurring additional indebtedness, selling our assets, seeking to raise additional equity capital or restructuring, which alternatives may not be available to us on satisfactory terms or at all. Any of the foregoing could have a material adverse effect on our business.

Our success depends, in large part, on our senior management team.

The success of our business depends, to a large extent, on the continued service of our senior management team and the ability to integrate new senior management. We may not be able to adequately mitigate the negative impact on our business and competitive position that a change of senior leadership could have, as we may not be able to find management personnel internally or externally with similar experience and industry knowledge to replace the individual on a timely basis. We do not maintain key life insurance on any of our senior officers.

Our supply of qualified personnel and our labor costs depend in part on factors outside of our control.

As our business expands, we believe that our future success will depend greatly on our continued ability to attract, motivate and retain qualified personnel who are able to successfully meet the needs of our business. Although we generally have been able to meet our staffing requirements in the past, our ability to meet our labor needs while controlling costs is subject to external factors, such as unemployment levels, labor market conditions, minimum wage legislation and changing demographics. Recently, various legislative movements have sought to increase the federal minimum wage in the United States, as well as the minimum wage in a number of individual states. As federal or state minimum wage rates increase, we may need to increase not only the wage rates of our minimum wage employees, but also the wages paid to our other hourly employees as well. Our inability to meet our staffing requirements in the future at costs that are favorable to us, or at all, could impair our ability to increase revenue, and our customers could experience lower levels of customer service.

We are subject to risks associated with leasing substantial amounts of space.

We lease all of our company-owned stores, our corporate headquarters and most of our distribution facilities. Payments under our leases account for a significant portion of our operating expenses and we expect payment obligations under our leases to account for a significant portion of our future operating expenses. The majority of our store leases contain provisions for base rent and a small number of store leases contain provisions for base rent, plus percentage rent based on sales in excess of an agreed upon minimum annual sales level. Our continued growth and success depends in part on our ability to renew leases for successful stores and negotiate leases for new stores, including temporary leases for our Halloween City stores. There is no assurance that we will be able to negotiate leases at similar or favorable terms, and we may decide not to enter a market or be forced to exit a market if a favorable arrangement cannot be made. If an existing or future store is not profitable and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease, including, among other things, paying the base rent for the balance of the lease term. Moreover, even if a lease has an early cancellation clause, we may not satisfy the contractual requirements for early cancellation under the lease.

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Our business could be harmed if our existing franchisees do not conduct their business in accordance with agreed upon standards.

Our success depends, in part, upon the ability of our franchisees to operate their stores and promote and develop our store concept. Although our franchise agreements include certain operating standards, all franchisees operate independently and their employees are not our employees. We provide certain training and support to our franchisees, but the quality of franchise store operations may be diminished by any number of factors beyond our control. Consequently, franchisees may not successfully operate stores in a manner consistent with our standards and requirements, or may not hire and train qualified managers and other store personnel. If they do not, our image, brand and reputation could suffer.

Our information systems, order fulfillment and distribution facilities may prove inadequate or may be disrupted.

We depend on our management information systems for many aspects of our business. We will be materially adversely affected if our management information systems are disrupted or we are unable to improve, upgrade, maintain and expand our systems. In particular, we believe our perpetual inventory, automated replenishment and stock ledger systems are necessary to properly forecast, manage and analyze our inventory levels, margins and merchandise ordering quantities. We may fail to properly optimize the effectiveness of these systems, or to adequately support and maintain the systems. Moreover, we may not be successful in developing or acquiring technology that is competitive and responsive to our customers and might lack sufficient resources to make the necessary investments in technology needs and to compete with our competitors, which could have a material adverse impact on our business, results of operations, cash flows and financial performance.

In addition, we may not be able to prevent a significant interruption in the operation of our electronic order entry and information systems, e-commerce platforms or manufacturing and distribution facilities due to natural disasters, accidents, systems failures or other events. Any significant interruption in the operation of these facilities, including an interruption caused by our failure to successfully expand or upgrade our systems or manage our transition to utilizing the expansions or upgrades, could reduce our ability to receive and process orders and provide products and services to our stores, third-party stores, and other customers, which could result in lost sales, cancelled sales and a loss of loyalty to our brand.

We may fail to adequately maintain the security of our electronic and other confidential information.

We have become increasingly centralized and dependent upon automated information technology processes. In addition, a portion of our business operations is conducted over the internet. We could experience operational problems with our information systems and e-commerce platforms as a result of system failures, viruses, computer “hackers” or other causes. Any material disruption or slowdown of our systems could cause information, including data related to customer orders, to be lost or delayed, which could—especially if the disruption or slowdown occurred during a peak sales season—result in delays in the delivery of merchandise to our stores and customers or lost sales, which could reduce demand for our merchandise and cause our sales to decline.

In addition, in the ordinary course of our business, we collect and store certain personal information from individuals, such as our customers and suppliers, and our employees, and we process customer payment card and check information, including via our e-commerce platforms. Computer hackers may attempt to penetrate our computer system, payment card terminals or other payment systems and, if successful, misappropriate personal information, payment card or check information or confidential Company business information. In particular, the techniques used by criminals to obtain unauthorized access to sensitive data change frequently and often are not recognized until launched against a target; accordingly, we may be unable to anticipate these techniques or implement adequate preventative measures. In addition, a Company employee, contractor or other third party with whom we do business may attempt to circumvent our security measures in order to obtain such information

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and may purposefully or inadvertently cause a breach involving such information. Any failure to maintain the security of our customers’ confidential information, or data belonging to us or our suppliers, could put us at a competitive disadvantage, result in deterioration in our customers’ confidence in us, subject us to potential litigation and liability, and fines and penalties, resulting in a possible material adverse impact on our business, results of operations, cash flows and financial performance. While we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses and would not remedy damage to our reputation. There can be no assurance that we will not suffer a criminal attack in the future, that unauthorized parties will not gain access to personal information, or that any such incident will be discovered in a timely manner.

Historically we have made a number of acquisitions, and we may make more acquisitions in the future as part of our growth strategy. Future acquisitions or investments could disrupt our ongoing business, distract management and employees, increase our expenses and adversely affect our business. In addition, we may not be able to identify suitable acquisitions.

We have made a number of recent acquisitions which have contributed to our growth. Acquisitions require significant capital resources and can divert management’s attention from our existing business. Acquisitions also entail an inherent risk that we could become subject to contingent or other liabilities, including liabilities arising from events or conduct predating the acquisition, that were not known to us at the time of acquisition. We may also incur significantly greater expenditures in integrating an acquired business than we had anticipated at the time of the acquisition, which could impair our ability to achieve anticipated cost savings and synergies. Acquisitions may also have unanticipated tax and accounting ramifications. Furthermore, acquisitions might consume a significant portion of our senior management team’s time and efforts with issues unrelated to advancing our core business strategies and operation issues. Our failure to successfully identify and consummate acquisitions or to manage and integrate the acquisitions we make could have a material adverse effect on our business, financial condition or results of operations.

In addition, we may not be able to:

• identify suitable acquisition candidates;

• consummate acquisitions on acceptable terms;

• successfully integrate any acquired business into our operations or successfully manage the operations of any acquired business; or

• retain an acquired company’s significant customer relationships, goodwill and key personnel or otherwise realize the intended benefits of an acquisition.

In the event that the operations of an acquired business do not meet our performance expectations, we have in the past and may in the future restructure the acquired business or write-off the value of some or all of the assets of the acquired business.

Our intellectual property rights may be inadequate to protect our business.

We hold a variety of United States trademarks, service marks, patents, copyrights, and registrations and applications therefor, as well as a number of foreign counterparts thereto and/or independent foreign intellectual property asset registrations. In some cases, we rely solely on unregistered common law trademark rights and unregistered copyrights under applicable United States law to distinguish and/or protect our products, services and branding from the products, services and branding of our competitors. We cannot assure you that no one will challenge our intellectual property rights in the future. In the event that our intellectual property rights are successfully challenged by a third party, we could be forced to re-brand, re-design or discontinue the sale of certain of our products or services, which could result in loss of brand recognition and/or sales and could require us to devote resources to advertising and marketing new branding or re-designing our products. Further, we

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cannot assure you that competitors will not infringe our intellectual property rights, or that we will have adequate resources to enforce these rights. We also permit our franchisees to use a number of our trademarks and service marks, including Party City, The Discount Party Super Store, Nobody Has More Party for Less, Party America and Halloween City. Our failure to properly control our franchisees’ use of such trademarks could adversely affect our ability to enforce them against third parties. A loss of any of our material intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

We license from many third parties and do not own the intellectual property rights necessary to sell products capturing many popular images, such as cartoon or motion picture characters. While none of these licenses is individually material to our aggregate business, a large portion of our business depends on the continued ability to license the intellectual property rights to these images in the aggregate. Any injury to our reputation or our inability to comply with, in many cases, stringent licensing guidelines in these agreements may adversely affect our ability to maintain these relationships. A termination of any of our significant intellectual property licenses, or any other similarly material limitation on our ability to use certain licensed material may prevent us from manufacturing and distributing certain licensed products and could cause our customers to purchase these products from our competitors. In addition, we may be unable to renew some of our significant intellectual property licenses on terms favorable to us or at all. A large aggregate loss of our right to use intellectual property under our license agreements could have a material adverse effect on our business, financial condition and results of operations.

We also face the risk of claims that we have infringed third parties’ intellectual property rights, which could be expensive and time consuming to defend, cause us to cease using certain intellectual property rights, redesign certain products or packaging or cease selling certain products or services, result in our being required to pay significant damages or require us to enter into costly royalty or licensing agreements in order to obtain the rights to use third parties’ intellectual property rights, which royalty or licensing agreements may not be available at all, any of which could have a negative impact on our operating profits and harm our future prospects.

Our substantial indebtedness and lease obligations could adversely affect our financial flexibility and our competitive position.

As of December 31, 2019, we had total indebtedness of $1,704.9 million, net of deferred financing costs, capitalized call premiums and original issue discounts. Additionally, we had $355.9 million of borrowing capacity available under our asset-based revolving credit facility (“ABL Facility”, collectively with our senior secured term loan facility, the “Senior Credit Facilities”).

As of December 31, 2019, we had outstanding approximately $845.7 million in aggregate principal amount of indebtedness under the Senior Credit Facilities, net of deferred financing costs, capitalized call premiums and original issue discounts. Such indebtedness bears interest at a floating rate.

We also have, and will continue to have, significant lease obligations. As of December 31, 2019, our minimum aggregate rental obligation under operating leases for fiscal 2020 through 2024 totaled $782.0 million. See Note 26 to the consolidated financial statements in Item 8 for further discussion.

Our substantial level of indebtedness increases the possibility that we may be unable to generate cash sufficient to pay, when due, the principal of, interest on or other amounts due in respect of our indebtedness. For example, it could:

• make it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to comply with the obligations under any of our debt instruments, including restrictive covenants, could result in an event of default under the agreements governing such other indebtedness;

• require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing funds available for working capital, capital expenditures, acquisitions, selling and marketing efforts, product development and other purposes;

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• increase our vulnerability to adverse economic and industry conditions, which could place us at a competitive disadvantage compared to our competitors that have relatively less indebtedness;

• limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;

• expose us to the risk of increasing rates as certain of our borrowings, including under the Senior Credit Facilities, will be at variable interest rates;

• restrict us from making strategic acquisitions or cause us to make non-strategic divestitures; and

• limit our ability to borrow additional funds, or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions, product development and other corporate purposes.

The occurrence of any one of these events could have an adverse effect on our business, financial condition, results of operations, prospects and ability to satisfy our obligations under our indebtedness.

Restrictions under our existing and future indebtedness may prevent us from taking actions that we believe would be in the best interest of our business.

The agreements governing our existing indebtedness contain and the agreements governing our future indebtedness will likely contain customary restrictions on us or our subsidiaries, including covenants that, among other things and subject to certain exceptions, restrict us or our subsidiaries, as the case may be, from:

• incurring additional indebtedness or issuing disqualified stock;

• paying dividends or distributions on, redeeming, repurchasing or retiring our capital stock;

• making payments on, or redeeming, repurchasing or retiring indebtedness;

• making investments, loans, advances or acquisitions;

• entering into sale and leaseback transactions;

• engaging in transactions with affiliates;

• creating liens;

• transferring or selling assets;

• guaranteeing indebtedness;

• creating restrictions on the payment of dividends or other amounts to us from our subsidiaries; and

• consolidating, merging or transferring all or substantially all of our assets and the assets of our subsidiaries.

In addition, the ABL Facility requires us to comply, under specific circumstances, including certain types of acquisitions, with a minimum fixed charge coverage ratio covenant of 1.00 to 1.00. Our ability to comply with this covenant can be affected by events beyond our control and we may not be able to satisfy them. A breach of this covenant would be an event of default. If an event of a default occurs under the ABL Facility, the ABL Facility lenders could elect to declare all amounts outstanding under the ABL Facility to be immediately due and payable or terminate their commitments to lend additional money, which would also lead to an event of default under the senior secured term loan facility (“the Term Loan Credit Agreement”) and would lead to an event of default under our senior notes if any of the Senior Credit Facilities were accelerated. If the indebtedness under the Senior Credit Facilities or our other indebtedness were to be accelerated, our assets may not be sufficient to repay such indebtedness in full. We have pledged a significant portion of our assets as collateral under the Senior Credit Facilities.

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We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. The Senior Credit Facilities and the indentures governing the senior notes restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or obtain the proceeds that we could realize from them and the proceeds may not be adequate to meet any debt service obligations then due. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.

Our ability to repay our debt is affected by the cash flow generated by our subsidiaries.

Our subsidiaries own substantially all of our assets and conduct substantially all of our operations. Accordingly, repayment of our indebtedness will be dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. While the indentures governing the senior notes limit the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions.

In addition, under certain circumstances, legal restrictions may limit our ability to obtain cash from our subsidiaries. Under the Delaware General Corporation Law (the “DGCL”), our subsidiaries organized in the State of Delaware may only make dividends (i) out of their “surplus” as defined in the DGCL or (ii) if there is no such surplus, out of their net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Under fraudulent transfer laws, certain of our subsidiaries may not pay dividends if the relevant entity is insolvent or is rendered insolvent thereby. The measures of insolvency for purposes of these fraudulent transfer laws vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, an entity would be considered insolvent if:

• the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets;

• the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or

• it could not pay its debts as they became due.

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While we believe that we and our relevant subsidiaries currently have surplus and are not insolvent, there can otherwise be no assurance that we and these subsidiaries will not become insolvent or will be permitted to make dividends in the future in compliance with these restrictions in amounts needed to service our indebtedness.

Significant interest rate changes could affect our profitability and financial performance.

Our earnings are affected by changes in interest rates as a result of our variable rate indebtedness under the ABL Facility and the Term Loan Credit Agreement. The interest rate swap agreements that we use to manage the risk associated with fluctuations in interest rates (if any) may not be able to fully eliminate our exposure to these changes.

The transition away from LIBOR may adversely affect our cost to obtain financing.

On July 27, 2017, the U.K. Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. As a result, LIBOR may be discontinued. While there is no consensus on what rate or rates may become accepted alternatives to LIBOR, the Alternative Reference Rates Committee, a steering committee comprised of U.S. financial market participants, selected and the Federal Reserve Bank of New York started in May 2018 to publish the Secured Overnight Finance Rate (“SOFR”) as an alternative to LIBOR. SOFR is a broad measure of the cost of borrowing cash in the overnight U.S. treasury repo market. At this time, it is not possible to predict whether the SOFR or another reference rate will become an accepted alternative to LIBOR. The manner and impact of this transition may materially adversely affect the trading market for LIBOR-based loans, including our Term Loan Credit Agreement, as well as the applicable interest rate on and the amount of interest paid on our current or future debt obligations, including our Senior Credit Facilities.

Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

As a public company, we are subject to the reporting and other requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the New York Stock Exchange (the “NYSE”) rules. The requirements of these rules and regulations have increased and will continue to significantly increase our legal and financial compliance costs, including costs associated with the hiring of additional personnel, making some activities more difficult, time-consuming or costly, and may also place undue strain on our personnel, systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition.

The Sarbanes-Oxley Act requires, among other things, that we maintain disclosure controls and procedures and internal control over financial reporting. Ensuring that we have adequate internal financial and accounting controls and procedures in place is a costly and time-consuming effort that needs to be re-evaluated frequently. We test our internal controls in order to comply with the requirements of Section 404 of the Sarbanes-Oxley Act (“Section 404”). Section 404 requires that we evaluate our internal control over financial reporting to enable management to report on, and our independent auditors to audit, the effectiveness of those controls. Both we and our independent registered public accounting firm test our internal controls in connection with the Section 404 requirements and could, as part of that testing, identify material weaknesses, significant deficiencies or other areas for further attention or improvement.

Implementing any appropriate changes to our internal controls may require specific compliance training for our directors, officers and employees, require the hiring of additional finance, accounting and other personnel, entail substantial costs to modify our existing accounting systems, and take a significant period of time to complete. These changes may not, however, be effective in maintaining the adequacy of our internal controls,

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and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. Moreover, adequate internal controls are necessary for us to produce reliable financial reports and are important to help prevent fraud. As a result, our failure to satisfy the requirements of Section 404 on a timely basis could result in the loss of investor confidence in the reliability of our financial statements, which in turn could cause the market value of our common stock to decline.

Various rules and regulations applicable to public companies make it more difficult and more expensive for us to maintain directors’ and officers’ liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to maintain coverage. If we are unable to maintain adequate directors’ and officers’ liability insurance, our ability to recruit and retain qualified officers and directors, especially those directors who may be deemed independent for purposes of the NYSE rules, will be significantly curtailed.

The market price of our common stock could decline due to the large number of outstanding shares of our common stock eligible for future sale.

Sales of substantial amounts of our common stock in the public market in future offerings, or the perception that these sales could occur, could cause the market price of our common stock to decline. These sales could also make it more difficult for us to sell equity or equity-related securities in the future, at a time and price that we deem appropriate. In addition, the additional sale of our common stock by our officers, directors or significant shareholders in the public market, or the perception that these sales may occur, could cause the market price of our common stock to decline.

We may issue shares of our common stock or other securities from time to time as consideration for, or to finance, future acquisitions and investments or for other capital needs. We cannot predict the size of future issuances of our shares or the effect, if any, that future sales and issuances of shares would have on the market price of our common stock. If any such acquisition or investment is significant, the number of shares of common stock or the number or aggregate principal amount, as the case may be, of other securities that we may issue may in turn be substantial and may result in additional dilution to our stockholders. We may also grant registration rights covering shares of our common stock or other securities that we may issue in connection with any such acquisitions and investments.

To the extent that any of us, our executive officers or our directors sell, or indicate an intent to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline significantly.

Anti-takeover provisions in our charter documents and Delaware law might discourage, delay or prevent a change in control of our company.

Our amended and restated certificate of incorporation or bylaws contain provisions that may make the acquisition of our company more difficult without the approval of our board of directors. These provisions include:

• advance notice requirements for stockholder proposals and director nominations;

• the sole ability of the board of directors to fill a vacancy created by the expansion of the board of directors;

• the required approval of holders of at least 75% of our outstanding shares of capital stock entitled to vote generally at an election of the directors to remove directors only for cause;

• the required approval of holders of at least 662/3% of our outstanding shares of capital stock entitled to vote at an election of directors to adopt, amend or repeal our bylaws, or amend or repeal certain provisions of our amended and restated certificate of incorporation;

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• limitations on the ability of stockholders to call special meetings and take action by written consent; and

• provisions that reproduce much of the provisions that limit the ability of “interested stockholders” from engaging in specified business combinations with us absent prior approval of the board of directors or holders of 662/3% of our voting stock.

The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in the acquisition.

Our amended and restated certificate of incorporation designates courts in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation provides that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws or (iv) any other action asserting a claim against us that is governed by the internal affairs doctrine (each, a “Covered Proceeding”). In addition, our amended and restated certificate of incorporation provides that if any action the subject matter of which is a Covered Proceeding is filed in a court other than the specified Delaware courts without the approval of our board of directors (each, a “Foreign Action”), the claiming party will be deemed to have consented to (i) the personal jurisdiction of the specified Delaware courts in connection with any action brought in any such courts to enforce the exclusive forum provision described above and (ii) having service of process made upon such claiming party in any such enforcement action by service upon such claiming party’s counsel in the Foreign Action as agent for such claiming party. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to these provisions. These provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

Because we have no current plans to pay cash dividends on our common stock for the foreseeable future, you may not receive any return on investment unless you sell your common stock for a price greater than you paid.

We plan to retain future earnings, if any, for future operation, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur. As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than you paid.

Item 1B. Unresolved Staff Comments

Not applicable.

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Item 2. Properties

The Company maintains the following facilities for its corporate and retail headquarters and to conduct its principal design, manufacturing and distribution operations:

Location	Principal Activity	Square Feet	Owned or Leased (With Expiration Date)
Elmsford, New York	Executive and other corporate offices, showrooms, design and art production for party products	146,346 square feet	Leased(1)
Rockaway, New Jersey	Retail corporate offices	106,000 square feet	Leased (expiration date: July 31, 2022)
Antananarivo, Madagascar	Manufacture of costumes	41,000 square feet	Leased (expiration date: December 31, 2023)
Dallas, Texas	Manufacture/personalization of cups and napkins	54,413 square feet	Leased (expiration date: October 31, 2022)
East Providence, Rhode Island	Manufacture and distribution of plastic plates, cups and bowls	229,230 square feet(2)	Leased (expiration date: February 28, 2033)
Eden Prairie, Minnesota	Manufacture of metallic balloons and accessories	115,600 square feet	Leased (expiration date: June 30, 2039)
Los Lunas, New Mexico	Manufacture of injection molded plastics	85,055 square feet	Leased (expiration date: 6/30/2039)
Louisville, Kentucky	Manufacture and distribution of paper plates	213,958 square feet	Leased (expiration date: March 31, 2025)
Melaka, Malaysia	Manufacture and distribution of latex balloons	100,000 square feet	Leased (expiration date: January 31, 2020)
Monterrey, Mexico	Manufacture and distribution of party products	355,500 square feet	Leased (expiration date: March 3, 2027)
Newburgh, New York	Manufacture of paper napkins and cups	248,000 square feet	Leased (expiration date: July 31, 2027)
Tijuana, Mexico	Manufacture and distribution of party products	135,000 square feet	Leased(3)
Chester, New York	Distribution of party products	896,000 square feet	Leased (expiration date: June 30, 2039)
Edina, Minnesota	Distribution of metallic balloons and accessories	122,312 square feet	Leased (expiration date: March 31, 2021)
Kirchheim unter Teck, Germany	Distribution of party goods	215,000 square feet	Owned
Milton Keynes, Buckinghamshire, England	Distribution of party products throughout Europe	130,858 square feet	Leased (expiration date: December 31, 2022)
Naperville, Illinois	Distribution of party goods for e-commerce sales	440,343 square feet	Leased (expiration date: December 31, 2033)

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(1) Property is comprised of two buildings with various lease expiration dates through December 31, 2027.

(2) This figure represents an industrial park, which includes a 48,455 square foot office and warehouse.

(3) Property is comprised of two buildings with various lease expiration dates through March 31, 2022.

In addition to the facilities listed above, we maintain a smaller distribution facility in the United Kingdom, smaller manufacturing facilities in Minnesota, small administrative offices in California, Australia, and the United Kingdom, and sourcing offices in China, Hong Kong, India, Indonesia and Vietnam. We also maintain warehouses in Colorado, Florida, Georgia, Michigan, Minnesota, New Jersey and New York and showrooms in Georgia, Nevada, and the United Kingdom.

As of December 31, 2019, Company-owned and franchised permanent stores were located in the following states and Puerto Rico:

State	Company-owned		Franchise		Chain-wide
Alabama		9		—		9
Arizona		16		—		16
Arkansas		—		3		3
California		97		17		114
Colorado		14		—		14
Connecticut		13		—		13
Delaware		1		1		2
Florida		64		7		71
Georgia		30		1		31
Illinois		45		—		45
Indiana		20		—		20
Iowa		9		—		9
Kansas		7		—		7
Kentucky		9		—		9
Louisiana		12		—		12
Maine		3		—		3
Maryland		22		1		23
Massachusetts		21		—		21
Michigan		26		—		26
Minnesota		15		—		15
Mississippi		1		2		3
Missouri		18		1		19
Montana		—		1		1
Nebraska		3		—		3
Nevada		6		—		6
New Hampshire		5		—		5
New Jersey		26		2		28
New Mexico		3		—		3
New York		51		11		62
North Carolina		14		5		19
North Dakota		4		—		4
Ohio		29		—		29
Oklahoma		11		—		11
Oregon		1		1		2
Pennsylvania		29		1		30
Puerto Rico		—		5		5
Rhode Island		2		—		2

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State	Company-owned		Franchise		Chain-wide
South Carolina		9		1		10
Tennessee		9		7		16
Texas		74		14		88
Vermont		1		—		1
Virginia		14		8		22
Washington		18		1		19
West Virginia		4		—		4
Wisconsin		12		—		12
Total		777		90		867

Additionally, at December 31, 2019, there were eight franchise stores in Mexico.

In 2019, we operated 249 temporary stores in the U.S., principally under the Halloween City banner, and approximately 25 temporary stores in the U.K. and Ireland. We operate such stores under short-term leases with terms of approximately four to six months.

We lease the property for all of our company-operated stores, which generally range in size from 10,000 square feet to 15,000 square feet. We do not believe that any individual store property is material to our financial condition or results of operations. Of the leases for the company-owned stores at December 31, 2019, 38 expire in 2020, 79 expire in 2021, 91 expire in 2022, 135 expire in 2023, 101 expire in 2024 and the balance expire in 2025 or thereafter. We have options to extend many of these leases for a minimum of five years.

We believe that our properties have been adequately maintained, are in generally good condition and are suitable for our business as presently conducted. We believe our existing manufacturing facilities provide sufficient production capacity for our present needs and for our anticipated needs in the foreseeable future. To the extent such capacity is not needed for the manufacture of our products, we generally use such capacity for the manufacture of products for others pursuant to terminable agreements. All manufacturing and distribution facilities generally are used on a basis of two shifts per day. We also believe that, upon the expiration of our current leases, we will be able either to secure renewal terms or to enter into leases for alternative locations at market terms.

Item 3. Legal Proceedings

From time to time, we are subject to various legal proceedings and claims that arise in the ordinary course of our business activities. The Company does not believe that any pending proceedings of which it is aware will result, individually or in the aggregate, in a material adverse effect upon its financial condition or future results of operations.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company’s common stock is listed on the NYSE under the symbol “PRTY”.

As of the close of business on February 28, 2020, there were 34 holders of record of the Company’s common stock, which does not reflect those shares held beneficially or those shares held in “street” name. Accordingly, the number of beneficial owners of our common stock exceeds this number.

Dividend Policy

Most of the Company’s indebtedness contains restrictions on the Company’s activities, including paying dividends on its capital stock and restricting dividends or other payments to the Company. See Note 12, Long-Term Obligations, of Item 8, “Financial Statements and Supplementary Data,” in this Annual Report on Form 10-K for further discussion. The Company currently intends to retain all of its future earnings, if any, to finance operations, development and growth of its business and repay indebtedness. Any future determination relating to our dividend policy will be made at the discretion of the Company’s board of directors and will depend on a number of factors, including future earnings, capital requirements, financial conditions, future prospects, contractual restrictions and covenants and other factors that the board of directors may deem relevant.

Securities Authorized for Issuance Under Equity Compensation Plans

	(a)			(b)			(c)
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants, and rights			Weighted- average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders		7,371,967	(1)		7.67	(1)		5,406,685
Equity compensation plans not approved by security holders		596,000			15.60			254,000
Total		7,967,967			8.27			5,660,685

(1) Column (a) includes 6,318,717 outstanding stock options and 1,053,250 restricted stock units. The restricted stock units amount assumes that the maximum number of shares ultimately vest for awards that are performance-based. Additionally, the stock options amount assumes that all performance-based stock options vest. The weighted-average exercise price in column (b) takes into account the restricted stock units, which have no exercise price. The weighted average exercise price solely with respect to stock options outstanding under the approved plans is $8.95.

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Stock Performance Graph

The line graph below compares the cumulative total stockholder return on the Company’s common stock with the S&P 500 Index and the Dow Jones U.S. Specialty Retailers Index for the period from the completion of our initial public offering on April 16, 2015 through December 31, 2019. The graph assumes an investment of $100 made at the closing of trading on April 16, 2015 in (i) the Company’s common stock, (ii) the stocks comprising the S&P 500 Index and (iii) the stocks comprising the Dow Jones U.S. Specialty Retailers Index. All values assume reinvestment of the full amount of all dividends, if any, into additional shares of the same class of equity securities at the frequency with which dividends were paid on such securities during the applicable time period. The stock price performance included in the line graph below is not necessarily indicative of future stock price performance. The stock performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing by us under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate the graph by reference in such filing.

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Item 6. Selected Consolidated Financial Data

The following table sets forth selected historical consolidated financial data for the periods and as of the dates indicated below. Our selected historical consolidated financial data as of December 31, 2018 and December 31, 2019 and for the years ended December 31, 2017, December 31, 2018 and December 31, 2019 presented in this table has been derived from our historical audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Our selected historical consolidated financial data for the years ended December 31, 2015 and December 31, 2016 were derived from our audited consolidated financial statements that are not included in this Annual Report on Form 10-K.

The historical results presented below are not necessarily indicative of the results to be expected for any future period. The following information should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our financial statements and the notes thereto contained in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.

	Fiscal Year Ended December 31,
	2015(1)		2016(2)			2017(3)			2018(4)			2019(5)
Income Statement Data:
Revenues:
Net sales(6)	$	2,275,122	$	2,266,386		$	2,357,986		$	2,416,442		$	2,339,510
Royalties and franchise fees		19,411		17,005			13,583			11,073			9,279
Total revenues(6)		2,294,533		2,283,391			2,371,569			2,427,515			2,348,789
Expenses:
Cost of sales		1,370,884		1,350,387			1,395,279			1,435,358			1,500,633
Wholesale selling expenses		64,260		59,956			65,356			71,502			67,103
Retail operating expenses		401,039		408,583			415,167			425,996			440,395
Franchise expenses		14,394		15,213			14,957			13,214			13,152
General and administrative expenses		151,097		152,919			168,369			172,764			177,672
Art and development costs		20,640		22,249			23,331			23,388			23,203
Development stage expenses(7)		—		—			8,974			7,008			10,736
Gain on sale/leaseback transaction(11)(p)		—		—			—			—			(58,381	)
Store impairment and restructuring charges		—		—			—			—			29,038
Goodwill and intangibles impairment(11)(r)		—		—			—			—			562,631
Income (loss) from operations		272,219		274,084			280,136			278,285			(417,393	)
Interest expense, net		123,361		89,380			87,366			105,706			114,899
Other expense (income), net(8)		130,990		(2,010	)		4,626			10,982			1,871
Income (loss) before income taxes		17,868		186,714			188,144			161,597			(534,163	)
Income tax expense (benefit)(9)		7,409		69,237			(27,196	)		38,778			(1,305	)
Net income (loss)		10,459		117,477			215,340			122,819			(532,858	)
Add: net income attributable to redeemable securities holder		—		—			—			409			—
Less: net loss attributable to noncontrolling interests		—		—			—			(31	)		(363	)
Net income (loss) attributable to common shareholders of Party City Holdco Inc.	$	10,459	$	117,477		$	215,340		$	123,259		$	(532,495	)

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	Fiscal Year Ended December 31,
	2015(1)			2016(2)			2017(3)			2018(4)			2019(5)
Statement of Cash Flow Data:
Net cash provided by (used in)
Operating activities(10)	$	80,385		$	257,782		$	267,883		$	101,856		$	43,693
Investing activities(10)		(100,136	)		(113,733	)		(141,645	)		(150,907	)		163,675
Financing activities(10)		18,941			(119,740	)		(139,962	)		56,170			(237,710	)
Per Share Data:
Basic	$	0.09		$	0.98		$	1.81		$	1.28		$	(5.71	)
Diluted	$	0.09		$	0.98		$	1.79		$	1.27		$	(5.71	)
Weighted Average
Outstanding basic		111,917,168			119,381,842			118,589,421			96,133,144			93,295,692
Diluted		112,943,807			120,369,672			119,894,021			97,271,050			93,295,692
Cash dividend per common share		—			—			—			—			—
Other Financial Data:
Adjusted EBITDA(11)	$	380,293		$	390,049		$	409,210		$	400,116		$	269,189
Adjusted net income(11)	$	114,206		$	138,277		$	148,643		$	156,842		$	43,414
Adjusted net income per common share—diluted(11)	$	1.01		$	1.15		$	1.24		$	1.61		$	0.46
Number of company-owned Party City stores		712			750			803			866			777
Capital expenditures	$	78,825		$	78,825		$	66,970		$	85,661		$	61,733
Party City brand comp sales(12)		1.5	%		(0.4	)%		(0.7	)%		(0.7	)%		(3.0	)%
Wholesale Share of shelf(13)		75.0	%		76.6	%		79.6	%		78.9	%		79.6	%
Balance Sheet Data (at end of period):
Cash and cash equivalents	$	42,919		$	64,610		$	54,291		$	58,909		$	34,917
Working capital(14)		382,788			387,565			194,632			312,398			199,203
Total assets(14)		3,292,403			3,393,978			3,454,756			3,642,347			3,595,319
Total debt(14)(15)		1,786,809			1,673,090			1,831,440			1,938,030			1,704,317
Redeemable common securities		—			—			3,590			3,351			3,351
Total equity(15)		913,017			1,016,789			968,790			1,043,621			529,721

(1) The acquisitions of Travis Designs Limited (“Travis”) and Accurate Custom Injection Molding Inc. (“ACIM”) are included in the financial statements from their acquisition dates (first quarter 2015 and third quarter 2015, respectively).

(2) The acquisitions of nineteen franchise stores and Festival S.A. are included in the financial statements from their acquisition dates during the first quarter of 2016.

(3) The acquisitions of thirty-six franchise stores and Granmark S.A. de C.V. (“Granmark”) are included in the financial statements from their acquisition dates during the first quarter of 2017. The acquisition of Print Appeal, Inc. (“Print Appeal”) is included in the financial statements from its acquisition date during the third quarter of 2017.

(4) The acquisitions of eleven franchise stores are included in the financial statements from their acquisition dates during the first quarter of 2018. Additionally, the acquisitions of thirty-seven franchise stores are included in the financial statements from their acquisition dates during the third quarter of 2018.

(5) During the year ended December 31, 2019, the financial statements reflect store impairment and restructuring charges associated with the closure of approximately 55 stores. Refer to (11)(p)(r) for further detail regarding 2019 results.

(6) In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606).” The pronouncement contains a

33

five-step model which replaces most existing revenue recognition guidance. The Company adopted the standard on January 1, 2018 via a modified retrospective approach and recognized the cumulative effect of the adoption by reducing January 1, 2018 retained earnings by $0.1 million. See the Notes to Consolidated Financial Statements of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.

(7) During the first quarter of 2017, the Company and Ampology, a subsidiary of Trivergence, reached an agreement to form a new legal entity (Kazzam, LLC) for the purpose of designing, developing and launching an online exchange platform for party-related services. The website allows consumers to select, schedule and pay for various services (including entertainment, activities and food) all through a single portal. During 2017, 2018 and 2019, Kazzam incurred $9.0 million, $7.0 million and $11.0 million of start-up expenses, respectively, which are recorded in development stage expenses in the Company’s consolidated statement of operations and comprehensive (loss) income.

(8) During April 2015, in conjunction with the Company’s initial public offering, the Company paid a 2% prepayment penalty, or $7.0 million, in order to redeem $350.0 million of senior PIK toggle notes (the “Nextco Notes”) issued by the Company’s wholly-owned subsidiaries, PC Nextco and PC Nextco Finance, Inc., and paid a management agreement termination fee of $30.7 million to affiliates of THL and Advent. The Company recorded the prepayment penalty and termination fee in other expense, net. Additionally, in conjunction with the redemption of the Nextco Notes, the Company wrote off $8.6 million of capitalized debt issuance costs and original issuance discounts. The write-off was also recorded in other expense, net.

During August 2015, PCHI redeemed all $700 million of its 8.875% senior notes (“Old Senior Notes”) and refinanced its existing $1,125 million senior secured term loan facility (“Old Term Loan Credit Agreement”) and $400 million asset-based revolving credit facility (“Old ABL Facility”) with new indebtedness consisting of: (i) a senior secured term loan facility (“Term Loan Credit Agreement”), (ii) a $540 million asset-based revolving credit facility (with a seasonal increase to $640 million during a certain period of each calendar year) (“ABL Facility”) and (iii) $350 million of 6.125% senior notes (“6.125% Notes”). The redemption price for the Old Senior Notes was 6.656% of the principal amount, or $46.6 million. The Company recorded such amount in other expense, net. Additionally, in conjunction with the refinancing, the Company wrote-off $22.7 million of previously capitalized deferred financing costs, original issuance discounts and call premiums and also recorded such amount in other expense, net. Further, in conjunction with the refinancing of the term loans, the Company incurred banker and legal fees, $9.8 million of which was recorded in other expense, net.

During August 2018, PCHI executed a refinancing of its debt portfolio and issued $500 million of new senior notes at an interest rate of 6.625%. The Company used the proceeds from the notes to: (i) reduce the outstanding balance under its existing ABL Facility by $90 million and (ii) voluntarily prepay $400 million of the outstanding balance under its existing Term Loan Credit Agreement. Additionally, as part of the refinancing, the Company extended the maturity of the ABL Facility to August 2023 (subject to a springing maturity at an earlier date if the maturity date of certain of our other debt has not been extended or refinanced). As the partial prepayment of the Term Loan Credit Agreement was in accordance with the terms of such agreement, at the time of such prepayment the Company wrote-off a pro-rata portion of the existing capitalized deferred financing costs and original issuance discounts, $1.8 million, for investors who did not participate in the new notes. To the extent that investors in the Term Loan Credit Agreement participated in the new notes, the Company assessed whether the refinancing should be accounted for as an extinguishment on a creditor-by-creditor basis and wrote-off $1.0 million of existing deferred financing costs and original issuance discounts. Additionally, in conjunction with the issuance of the notes, the Company incurred third-party fees (principally banker fees). To the extent that such fees related to investors for whom their original debt was not extinguished, the Company expensed the portion of such fees, $2.3 million in aggregate, that related to such investors.

(9) On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law. The Act significantly changed U.S. tax law, including lowering the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018, and implementing a one-time “deemed repatriation” tax on unremitted earnings accumulated in non-U.S. jurisdictions. During 2017 the Company recorded a provisional estimate of the

34

impact of the Act, which included an income tax benefit of $91.0 million related to the remeasurement of its domestic deferred tax liabilities and deferred tax assets due to the lower U.S. corporate tax rate. Additionally, during 2017, the Company recorded an income tax expense of $1.1 million as its provisional estimate of the Transition Tax related to the deemed repatriation of unremitted earnings of foreign subsidiaries. During the fourth quarter of 2018, the Company finalized its assessment of the impact of the Act on the Company’s domestic deferred tax liabilities and deferred tax assets and recorded an additional income tax benefit of $2.0 million. Additionally, during such quarter, the Company finalized its assessment of the Transition Tax and recorded additional income tax expense of $0.2 million. See Note 17, Income Taxes, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.

(10) See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity,” for a discussion of cash flows.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows: Restricted Cash”. The pronouncement requires companies to show changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in their statement of cash flows. The Company adopted the pronouncement, which requires retrospective application, during 2018.

(11) The Company presents adjusted EBITDA, adjusted net income and adjusted net income per common share—diluted as supplemental measures of its operating performance. The Company defines EBITDA as net income (loss) before interest expense, net, income taxes, depreciation and amortization and defines adjusted EBITDA as EBITDA, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of our core operating performance. These further adjustments are itemized below. Adjusted net income represents the Company’s net income (loss) adjusted for, among other items, intangible asset amortization, non-cash purchase accounting adjustments, amortization of deferred financing costs and original issue discounts, refinancing charges, equity based compensation, and impairment charges. Adjusted net income per common share—diluted represents adjusted net income divided by diluted weighted average common shares outstanding. The Company presents these measures as supplemental measures of its operating performance. You are encouraged to evaluate these adjustments and the reasons the Company considers them appropriate for supplemental analysis. In evaluating the measures, you should be aware that in the future the Company may incur expenses that are the same as, or similar to, some of the adjustments in this presentation. The Company’s presentation of adjusted EBITDA, adjusted net income and adjusted net income per common share—diluted should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items. The Company presents the measures because the Company believes they assist investors in comparing the Company’s performance across reporting periods on a consistent basis by eliminating items that the Company does not believe are indicative of its core operating performance. In addition, the Company uses adjusted EBITDA: (i) as a factor in determining incentive compensation, (ii) to evaluate the effectiveness of its business strategies and (iii) because its credit facilities use adjusted EBITDA to measure compliance with certain covenants. The Company also believes that adjusted net income and adjusted net income per common share—diluted are helpful benchmarks to evaluate its operating performance.

Adjusted EBITDA, adjusted net income, and adjusted net income per common share—diluted have limitations as analytical tools. Some of these limitations are:

• they do not reflect the Company’s cash expenditures or future requirements for capital expenditures or contractual commitments;

• they do not reflect changes in, or cash requirements for, the Company’s working capital needs;

• adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s indebtedness;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacements;

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• non-cash compensation is and will remain a key element of the Company’s overall long-term incentive compensation package, although the Company excludes it as an expense when evaluating its core operating performance for a particular period;

• they do not reflect the impact of certain cash charges resulting from matters the Company considers not to be indicative of its ongoing operations; and

• other companies in the Company’s industry may calculate adjusted EBITDA, adjusted net income and adjusted net income per common share differently than the Company does, limiting its usefulness as a comparative measure.

Because of these limitations, adjusted EBITDA, adjusted net income, and adjusted net income per common share—diluted should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. The Company compensates for these limitations by relying primarily on its GAAP results and using the metrics only on a supplemental basis. The reconciliations from net income (loss) to adjusted EBITDA and adjusted net income for the periods presented follow (dollars in thousands, except per share amounts):

	Fiscal Year Ended December 31,
	2015			2016			2017			2018			2019
Net income (loss)	$	10,459		$	117,477		$	215,340		$	122,819		$	(532,858	)
Interest expense, net		123,361			89,380			87,366			105,706			114,899
Income taxes		7,409			69,237			(27,196	)		38,778			(1,305	)
Depreciation and amortization		80,515			83,630			85,168			78,575			81,116
EBITDA		221,744			359,724			360,678			345,878			(338,148	)
Non-cash purchase accounting adjustments		4,470			4,114			7,378			6,196			3,000
Management fee		31,627	(a)		—			—			—			—
Gain on sale/leaseback transaction		—			—			—			—			(58,381	)(p)
Store impairment and restructuring charges		852			—			—			—			58,778	(q)
Goodwill and intangibles impairment		—			—			—			—			562,631	(r)
Other restructuring, retention and severance		2,318			911			9,718	(b)		3,397	(b)		6,460	(b)
Refinancing charges		94,607	(c)		1,458			—			6,237	(c)		36
Deferred rent		13,407	(d)		18,835	(d)		7,287	(d)		5,351	(d)		(1,796	)(d)
Corporate development expenses		1,786	(e)		4,290	(e)		9,401	(e)		11,314	(e)		14,208	(e)
Foreign currency losses (gains)		3,691			(7,417	)		466			24			421
Closed store expense		1,901	(f)		3,688	(f)		4,875	(f)		4,211	(f)		4,445	(f)
Stock option expense		3,042	(g)		3,853	(g)		5,309	(g)		1,744	(g)		1,319	(g)
Non-employee equity based compensation		—			—			3,033	(h)		81	(h)		515	(h)
Restricted stock units expense—time based		—			—			—			1,174	(i)		2,033	(i)
Undistributed loss (income) in equity method investments		562			314			(194	)		(369	)		(472	)
Non-recurring consulting charges		—			—			—			12,514	(j)		—
Non-recurring legal settlements/costs		—			—			—			2,380	(k)		8,548	(k)
(Gain) loss on sale of assets		(2,660	)		—			—			—			5,074	(t)
Hurricane-related costs		—			—			455			—			—
Change-of-control license premium		3,000			—			—			—			—
Other		(54	)		279			804			(16	)		518
Adjusted EBITDA	$	380,293		$	390,049		$	409,210		$	400,116		$	269,189

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	Fiscal Year Ended December 31,
	2015			2016			2017			2018			2019
Income (loss) before income taxes	$	17,868		$	186,714		$	188,144		$	161,597		$	(534,163	)
Intangible asset amortization		18,885	(l)		17,247	(l)		16,959	(l)		12,271	(l)		14,100	(l)
Non-cash purchase accounting adjustments		6,445			5,300			9,549			6,812			4,202
Amortization of deferred financing costs and original issuance discounts		40,516	(c)(m)		5,818	(m)		4,937	(m)		10,989	(c)(m)		4,722	(m)
Store impairment and restructuring charges		—			—			—			—			58,778	(q)
Goodwill and intangibles impairment		—			—			—			—			562,631	(r)
Management fee		31,627	(a)		—			—			—			—
Refinancing charges		65,338	(c)		725	(c)		—			—			36
Stock option expense		3,042	(g)		3,853	(g)		5,309	(g)		1,744	(g)		1,319	(g)
Non-employee equity based compensation		—			—			3,033			81	(h)		515	(h)
Non-recurring consulting charges		—			—			—			12,514	(j)		—
Restructuring		—			—			3,195	(b)		—			—
Other restructuring charges		—			—			3,918	(b)		809	(b)		3,211	(b)
Hurricane-related costs		—			—			455			—			—
Non-recurring legal settlements/costs		—			—			—			2,380	(k)		6,500
Impairment charges		852			—			—			—			—
(Gain) on sale of assets		(2,660	)		—			—			—			—
(Gain) on sale-leaseback		—			—			—			—			(58,381	)(p)
(Gain) on sale of Canada retail assets		—			—			—			—			(2,873	)(s)
Change-of-control license premium		3,000			—			—			—			—
Adjusted income before income taxes		184,913			219,657			235,499			209,197			60,597
Adjusted income taxes		70,707	(n)		81,380	(n)		86,856	(n)(o)		52,355	(n)(o)		17,183	(n)
Adjusted net income	$	114,206		$	138,277		$	148,643		$	156,842		$	43,414
Adjusted net income per common share—diluted	$	1.01		$	1.15		$	1.24		$	1.61		$	0.46

(a) In 2012, the Company entered into a management agreement with two of its investors under which the investors provided advice to the Company on, among other things, financing, operations, acquisitions and dispositions. Under the agreement, the investors were paid an annual management fee for such services. In connection with the Company’s initial public offering in April 2015, the management agreement was terminated and the Company paid the investors a termination fee. Such amount, $30.7 million, was recorded in other expense, net.

(b) On March 15, 2017, the Company and its then Chairman of the Board of Directors, Gerald Rittenberg, entered into a Transition and Consulting Agreement under which Mr. Rittenberg’s employment as Executive Chairman of the Company terminated effective March 31, 2017. As a result of the agreement, the Company recorded a $3.9 million severance charge in general and administrative expenses during 2017. Such amount is included in “Other Restructuring, Retention and Severance” in the Adjusted EBITDA table above and in “Executive Severance” in the Adjusted Net Income table above. Additionally, during 2017, the Company recorded a $3.2 million severance charge related to a restructuring of its Retail segment. Such amount is included in “Other Restructuring, Retention and Severance” in the Adjusted EBITDA table above and in “Restructuring” in the Adjusted Net Income table above. Further, during 2018, the Company recorded $0.8 million of senior executive severance. Such amount is included in “Other Restructuring, Retention and Severance” in the Adjusted EBITDA table above and in “Executive Severance” in the Adjusted Net Income table above. Finally, the 2017 and 2018 “Other Restructuring, Retention and

37

Severance” amounts in the “Adjusted EBITDA” table above also include costs incurred while moving one of the Company’s domestic manufacturing facilities to a new location. For the year ended December 31, 2019, amounts expensed principally relate to executive severance and the write-off of inventory for a section of the Company’s Party City stores that were restructured.

(c) During August 2018, the Company executed a refinancing of its debt portfolio and issued $500 million of new senior notes at an interest rate of 6.625%. The notes will mature in August 2026. The Company used the proceeds from the notes to: (i) reduce the outstanding balance under its existing ABL Facility by $90 million and (ii) voluntarily prepay $400 million of the outstanding balance under its existing Term Loan Credit Agreement. Additionally, as part of the refinancing, the Company extended the maturity of the ABL Facility to August 2023 (subject to a springing maturity at an earlier date if the maturity date of certain of our other debt has not been extended or refinanced). As the partial prepayment of the Term Loan Credit Agreement was in accordance with the terms of such agreement, at the time of such prepayment the Company wrote-off a pro-rata portion of the existing capitalized deferred financing costs and original issuance discounts, $1.8 million, for investors who did not participate in the new notes. To the extent that investors in the Term Loan Credit Agreement participated in the new notes, the Company assessed whether the refinancing should be accounted for as an extinguishment on a creditor-by-creditor basis and wrote-off $1.0 million of existing deferred financing costs and original issuance discounts. Additionally, in conjunction with the issuance of the notes, the Company incurred third-party fees (principally banker fees). To the extent that such fees related to investors for whom their original debt was not extinguished, the Company expensed the portion of such fees, $2.3 million in aggregate, that related to such investors. Such amounts are included in “Refinancing Charges” in the “Adjusted EBITDA” table above and in “Amortization of Deferred Financing Costs and Original Issuance Discounts” in the “Adjusted Net Income” table above.

Additionally, during February 2018, the Company amended the Term Loan Credit Agreement. In conjunction with the amendment, the Company wrote-off $0.3 million of capitalized deferred financing costs, original issue discounts and call premiums. Further, in conjunction with the February 2018 amendment, the Company expensed $0.8 million of investment banking and legal fees. Such amounts are included in “Refinancing Charges” in the “Adjusted EBITDA” table above and in “Amortization of Deferred Financing Costs and Original Issuance Discounts” in the “Adjusted Net Income” table above.

During 2015, the Company redeemed all $700 million of its 8.875% senior notes and refinanced its $1,125 million senior secured term loan facility and $400 million asset-based revolving credit facility with new indebtedness. Additionally, during 2015, the Company used proceeds from the initial public offering to redeem outstanding notes. See the Company’s 2015 Form 10-K for a discussion of the charges that were recorded in conjunction with such refinancings.

(d) The deferred rent adjustment reflects the difference between accounting for rent and landlord incentives in accordance with GAAP and the Company’s actual cash outlay for such items.

(e) Principally represents third-party costs related to acquisitions (primarily legal expenses and diligence fees). Such costs are excluded from the definition of “Consolidated Adjusted EBITDA” that is utilized for certain covenants in the Company’s credit agreements. Additionally, 2017, 2018, and 2019 include start-up costs for Kazzam (see Note 25, Kazzam LLC., of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion).

(f) Principally charges incurred related to closing underperforming stores.

(g) Represents non-cash charges related to stock options.

(h) Principally represents shares of Kazzam awarded to Ampology as compensation for Ampology’s services. See Note 25, Kazzam LLC., of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.

(i) Non-cash charges for restricted stock units that vest based on service conditions.

(j) Primarily non-recurring consulting charges related to the Company’s retail operations.

(k) Non-recurring legal settlements/costs.

(l) Represents the non-cash amortization of intangible assets.

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(m) Includes the non-cash amortization of deferred financing costs, original issuance discounts and capitalized call premiums. Additionally, certain years include charges related to debt refinancings. See note (c) for further discussion.

(n) Represents income tax expense/benefit after excluding the specific tax impacts for each of the pre-tax adjustments. The tax impacts for each of the adjustments were determined by applying to the pre-tax adjustments the effective income tax rates for the specific legal entities in which the adjustments were recorded.

(o) On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law. The Act significantly changed U.S. tax law, including lowering the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018, and implementing a one-time “deemed repatriation” tax on unremitted earnings accumulated in non-U.S. jurisdictions since 1986. Due to the complexities of accounting for the Act, the SEC issued Staff Accounting Bulletin No. 118 which allows entities to include a provisional estimate of the impact of the Act in its 2017 financial statements. Therefore, based on then currently available information, during 2017 the Company recorded a provisional estimate of the impact of the Act, which included an income tax benefit of $91.0 million related to the remeasurement of its domestic deferred tax liabilities and deferred tax assets due to the lower U.S. corporate tax rate. During the fourth quarter of 2018, the Company finalized its assessment of the impact of the Act on such domestic deferred tax liabilities and deferred tax assets and recorded an additional income tax benefit of $2.0 million. As the Act is a significant and non-recurring event which is impacting the comparability of the Company’s financial statements, the Company has excluded the impact of the adjustments from its adjusted net income and adjusted earnings per share.

(p) During June 2019, the Company reported a $58.4 million gain from the sale and leaseback of its main distribution center in Chester, New York and its metallic balloons manufacturing facility in Eden Prairie, Minnesota. The aggregate sale price for the three properties was $128.0 million. Simultaneous with the sale, the Company entered into twenty-year leases for each of the facilities.

(q) During the year ended December 31, 2019, the Company performed a comprehensive review of its store locations aimed at improving the overall productivity of such locations (“store optimization program”) and made the decision to accelerate the optimization of its store portfolio with the closure of approximately 55 stores which are primarily located in close proximity to other Party City stores. In conjunction with the store optimization program, the Company recorded the following charges: inventory reserves: $21.3 million, operating lease asset impairment: $14.9 million, property plant and equipment impairment: $4.7 million, labor and other costs related to closing the stores: $8.7 million and severance: $0.7 million. The charge for inventory reserves was recorded in cost of sales in the Company’s statement of operations and comprehensive (loss) income. The other charges were recorded in store impairment and restructuring charges in the Company’s statement of operations and comprehensive (loss) income. See Note 3, Store Impairment and Restructuring Charges, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion. Additionally, during the process of liquidating the inventory in such stores, the Company lost margin of $8.5 million.

(r) As a result of a sustained decline in market capitalization, the Company recognized a non-cash pre-tax goodwill impairment charge during the year ended December 31, 2019 of $562.6 million. This includes a non-cash pre-tax trade name intangibles impairment charge of $6.6 million (see Note 4, Goodwill, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion).

(s) The Company recorded a $2.9 million gain on sale of its Canadian-based Party City stores, which is reported in Other expense, net on the Consolidated Statement of Operations and Comprehensive (Loss) Income.

(t) Represents a loss on sale of ownership interest in Punchbowl (see Note 21, Fair Value Measurements, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion) and certain property, plant and equipment, and a write-off of goodwill related to the Company’s sale of its Canadian-based Party City stores.

(12) Party City brand comp sales include North American e-commerce sales.

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(13) Represents the percentage of product costs included in cost of goods sold by our Party City stores and North American retail e-commerce operations which relate to products supplied by our wholesale operations.

(14) Amount for 2014 adjusted to reflect the Company’s retrospective adoption during the fourth quarter of 2015 of FASB ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs”. Deferred financing costs in the amount of $44.4 million were reclassified from “other assets” to debt as of December 31, 2014.

(15) Excludes redeemable common securities.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

Our Company

We are the leading party goods company by revenue in North America and, we believe, the largest vertically integrated supplier of decorated party goods globally by revenue. The Company is a popular one-stop shopping destination for party supplies, balloons, and costumes. In addition to being a great retail brand, the Company is a global, world-class organization that combines state-of-the-art manufacturing and sourcing operations, and sophisticated wholesale operations complemented by a multi-channel retailing strategy and e-commerce retail operations. The Company is a leading player in its category and vertically integrated in its breadth and depth. 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 throughout the world. The Company’s retail operations include approximately 875 specialty retail party supply stores (including franchise stores) throughout the United States and Mexico operating under the names Party City and Halloween City, and e-commerce websites, including through the domain name PartyCity.com and others.

In addition to our retail operations, we are also one of the largest global designers, manufacturers and distributors of decorated consumer party products, with items found in over 40,000 retail outlets worldwide, including independent party supply stores, mass merchants, grocery retailers, e-commerce merchandisers and dollar stores. Our products are available in over 100 countries with the United Kingdom (“U.K.”), Canada, Germany, Mexico and Australia among the largest end markets for our products outside of the United States.

How We Assess the Performance of Our Company

In assessing the performance of our company, we consider a variety of performance and financial measures for our two operating segments, Retail and Wholesale. These key measures include revenues and gross profit, comparable retail same-store sales and operating expenses. We also review other metrics such as adjusted net income (loss), adjusted net income (loss) per common share—diluted, and adjusted EBITDA. For a discussion of our use of these measures and a reconciliation of adjusted net income (loss) and adjusted EBITDA to net income (loss), please refer to Item 6, “Selected Consolidated Financial Data.”

Segments

Our retail segment generates revenue primarily through the sale of our party supplies, which are sold under the Amscan, Designware, Anagram and Costumes USA brand names through Party City, Halloween City and PartyCity.com. During 2019, 80% of the product that was sold by our retail segment was supplied by our wholesale segment and 24% of the product that was sold by our retail segment was self-manufactured.

Our wholesale revenues are generated from the sale of decorated party goods for all occasions, including paper and plastic tableware, accessories and novelties, costumes, metallic and latex balloons and stationery. Our products are sold at wholesale to party goods superstores (including our franchise stores), other party goods retailers, mass merchants, independent card and gift stores, dollar stores and e-commerce merchandisers.

Intercompany sales between the Wholesale and the Retail segment are eliminated, and the wholesale profits on intercompany sales are deferred and realized at the time the merchandise is sold to the retail consumer. For segment reporting purposes, certain general and administrative expenses and art and development costs are allocated based on total revenues.

Financial Measures

Revenues. Revenue from retail store operations is recognized at the point of sale as control of the product is transferred to the customer at such time. Retail e-commerce sales are recognized when the consumer receives the product as control transfers upon delivery. We estimate future retail sales returns and record a provision in the

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period in which the related sales are recorded based on historical information. Retail sales are reported net of taxes collected.

Under the terms of our agreements with our franchisees, we provide both: 1) brand value (via significant advertising spend) and 2) support with respect to planograms, in exchange for a royalty fee that ranges from 4% to 6% of the franchisees’ sales. The Company records the royalty fees at the time that the franchisees’ sales are recorded.

For most of our wholesale sales, control transfers upon the shipment of the product as: 1) legal title transfers on such date and 2) we have a present right to payment at such time. Wholesale sales returns are not significant as we generally only accept the return of goods that were shipped to the customer in error or that were damaged when received by the customer. Additionally, due to our extensive history operating as a leading party goods wholesaler, we have sufficient history with which to estimate future sales returns and we use the expected value method to estimate such activity.

Intercompany sales from our wholesale operations to our retail stores are eliminated in our consolidated total revenues.

Comparable Retail Same-Store Sales. The growth in same-store sales represents the percentage change in same-store sales in the period presented compared to the prior year. Same-store sales exclude the net sales of a store for any period if the store was not open during the same period of the prior year. Acquired stores are excluded from same-store sales until they are converted to the Party City format and included in our sales for the comparable period of the prior year. Comparable sales are calculated based upon stores that were open at least thirteen full months as of the end of the applicable reporting period. When a store is reconfigured or relocated within the same general territory, the store continues to be treated as the same store. If, during the period presented, a store was closed, sales from that store up to and including the closing day are included as same-store sales as long as the store was open during the same period of the prior year. Same-store sales for the Party City brand include North American retail e-commerce sales.

Cost of Sales. Cost of sales at wholesale reflects the production costs (i.e., raw materials, labor and overhead) of manufactured goods and the direct cost of purchased goods, inventory shrinkage, inventory adjustments, inbound freight to our manufacturing and distribution facilities, distribution costs and outbound freight to get goods to our wholesale customers. At retail, cost of sales reflects the direct cost of goods purchased from third parties and the production or purchase costs of goods acquired from our wholesale segment. Retail cost of sales also includes inventory shrinkage, inventory adjustments, inbound freight, occupancy costs related to store operations (such as rent and common area maintenance, utilities and depreciation on assets) and all logistics costs associated with our retail e-commerce business.

Our cost of sales increases in higher volume periods as the direct costs of manufactured and purchased goods, inventory shrinkage and freight are generally tied to net sales. However, other costs are largely fixed or vary based on other factors and do not necessarily increase as sales volume increases. Changes in the mix of our products may also impact our overall cost of sales. The direct costs of manufactured and purchased goods are influenced by raw material costs (principally paper, petroleum-based resins and cotton), domestic and international labor costs in the countries where our goods are purchased or manufactured and logistics costs associated with transporting our goods. We monitor our inventory levels on an on-going basis in order to identify slow-moving goods.

Cost of sales related to sales from our wholesale segment to our retail segment are eliminated in our consolidated financial statements.

Wholesale Selling Expenses. Wholesale selling expenses include the costs associated with our wholesale sales and marketing efforts, including merchandising and customer service. Costs include the salaries and benefits of the related work force, including sales-based bonuses and commissions. Other costs include

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catalogues, showroom rent, travel and other operating costs. Certain selling expenses, such as sales-based bonuses and commissions, vary in proportion to sales, while other costs vary based on other factors, such as our marketing efforts, or are largely fixed and do not necessarily increase as sales volumes increase.

Retail Operating Expenses. Retail operating expenses include all of the costs associated with retail store operations, excluding occupancy-related costs included in cost of sales. Costs include store payroll and benefits, advertising, supplies and credit card costs. Retail expenses are largely variable but do not necessarily vary in proportion to net sales.

Franchise Expenses. Franchise expenses include the costs associated with operating our franchise network, including salaries and benefits of the administrative work force and other administrative costs. These expenses generally do not vary proportionally with royalties and franchise fees.

General and Administrative Expenses. General and administrative expenses include all operating costs not included elsewhere in the statement of operations and comprehensive (loss) income. These expenses include payroll and other expenses related to operations at our corporate offices, including occupancy costs, related depreciation and amortization, legal and professional fees and data-processing costs. These expenses generally do not vary proportionally with net sales.

Art and Development Costs. Art and development costs include the costs associated with art production, creative development and product management. Costs include the salaries and benefits of the related work force. These expenses generally do not vary proportionally with net sales.

Development Stage Expenses. Development stage expenses represent start-up activities related to Kazzam, LLC (“Kazzam”). See Note 25, Kazzam LLC., of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.

Adjusted EBITDA. We define EBITDA as net income (loss) before interest expense, net, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our core operating performance. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. We believe that Adjusted EBITDA is an appropriate measure of operating performance in addition to EBITDA because we believe it assists investors in comparing our performance across reporting periods on a consistent basis by eliminating the impact of items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA: (i) as a factor in determining incentive compensation, (ii) to evaluate the effectiveness of our business strategies, and (iii) because the credit facilities use Adjusted EBITDA to measure compliance with certain covenants.

Adjusted Net Income (Loss). Adjusted net income (loss) represents our net income (loss), adjusted for, among other items, intangible asset amortization, non-cash purchase accounting adjustments, amortization of deferred financing costs and original issue discounts, equity based compensation and impairment charges. We present adjusted net income because we believe it assists investors in comparing our performance across reporting periods on a consistent basis by eliminating the impact of items that we do not believe are indicative of our core operating performance.

Adjusted Net Income (Loss) Per Common Share—Diluted. Adjusted net income (loss) per common share—diluted represents adjusted net income (loss) divided by the Company’s diluted weighted average common shares outstanding. We present the metric because we believe it assists investors in comparing our per share performance across reporting periods on a consistent basis by eliminating the impact of items that we do not believe are indicative of our core operating performance.

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Factors Affecting Our Results

Important events that have impacted or will impact the results presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” include:

Store Impairment and Restructuring Charges. During the year ended December 31, 2019, the Company performed a comprehensive review of its store locations aimed at improving the overall productivity of such locations (“store optimization program”) and, 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 55 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.

COVID-19. Near-term global economic growth has been adversely impacted by the emergence of COVID-19 in China, and then in several other countries and regions including the United States, Japan and Europe. As a result of this public health concern, a significant amount of global commerce has been affected due to travel restrictions, quarantines, and similar measures. We are continuing to monitor and assess the effects of COVID-19 outbreak on our operations.

Goodwill Impairment. During the three months ended September 30, 2019, and the three months ended December 31, 2019, the Company identified an impairment indicator associated with its market capitalization and performed impairment tests on the goodwill at its wholesale and retail reporting units and its other indefinite lived intangible assets as of September 30, 2019 and December 31, 2019. The Company recognized non-cash pre-tax goodwill impairment charges at September 30, 2019 of $224.1 million and $35.0 million and at December 31, 2019, of $271.5 million and $25.4 million, against the goodwill associated with its retail and wholesale reporting units, respectively. In conjunction with its annual review, the Company recognized non-cash pre-tax tradename intangibles impairment of $6.6 million.

Sale/Leaseback Transaction. In June 2019, the Company sold its main distribution center in Chester, New York, its metallic balloons manufacturing facility in Eden Prairie, Minnesota and its injection molded plastics manufacturing facility in Los Lunas, New Mexico. Simultaneously, the Company entered into twenty-year leases for each of the facilities. The aggregate sale price was $128.0 million and, during the year ended December 31, 2019, the Company recorded a $58.4 million gain on the sale, net of transaction costs, in the Company’s condensed consolidated statement of operations and comprehensive loss.

Sale of Canadian-based Party City Stores. On October 1, 2019, the Company sold its Canadian-based Party City stores to a Canadian-based retailer for $131.7 million and entered into a 10-year supply agreement under which the acquirer agreed to purchase product from the Company for such Party City stores, as well as the acquirer’s other stores. The Company used the net proceeds to paydown debt.

ABL Facility. During April 2019, the Company amended the ABL Facility. Such amendment removed the seasonal component and made the Facility a $640.0 million Facility on a year-round basis.

Refinancing. During August 2018, the Company executed a refinancing of its debt portfolio and issued $500 million of new senior notes at an interest rate of 6.625%. The notes will mature in August 2026. The Company used the proceeds from the notes to: (i) reduce the outstanding balance under its existing ABL Facility by $90 million and (ii) voluntarily prepay $400 million of the outstanding balance under its existing Term Loan Credit Agreement. Additionally, as part of the refinancing, the Company extended the maturity of the ABL Facility to August 2023 (subject to a springing maturity at an earlier date if the maturity date of certain of our other debt has not been extended or refinanced). As the partial prepayment of the Term Loan Credit Agreement was in accordance with the terms of such agreement, at the time of such prepayment the Company wrote-off a pro-rata portion of the existing capitalized deferred financing costs and original issuance discounts, $1.8 million, for investors who did not participate in the new notes. To the extent that investors in the Term Loan Credit

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Agreement participated in the new notes, the Company assessed whether the refinancing should be accounted for as an extinguishment on a creditor-by-creditor basis and wrote-off $1.0 million of existing deferred financing costs and original issuance discounts. Additionally, in conjunction with the issuance of the notes, the Company incurred third-party fees (principally banker fees). To the extent that such fees related to investors for whom their original debt was not extinguished, the Company expensed the portion of such fees, $2.3 million in aggregate, that related to such investors. All charges were recorded in “other expense, net” in the Company’s consolidated statement of operations and comprehensive (loss) income.

Acquisitions. During 2018, we acquired 58 franchise and independent stores. The acquisitions increased net sales for our retail segment by approximately $67 million versus 2017. Additionally, these acquisitions decreased our third-party wholesale sales by $20 million as post-acquisition wholesale sales to such stores are now eliminated as intercompany sales.

Tax Reform. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law. The Act significantly changed U.S. tax law, including lowering the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018, and implementing a one-time “deemed repatriation” tax on unremitted earnings accumulated in non-U.S. jurisdictions since 1986 (the “Transition Tax”). During 2017 the Company recorded a provisional estimate of the impact of the Act, which included an income tax benefit of $91.0 million related to the remeasurement of its domestic deferred tax liabilities and deferred tax assets due to the lower U.S. corporate tax rate. Additionally, during 2017, the Company recorded income tax expense of $1.1 million as its provisional estimate of the Transition Tax related to the deemed repatriation of unremitted earnings of foreign subsidiaries. During the fourth quarter of 2018, the Company finalized its assessment of the impact of the Act on the Company’s domestic deferred tax liabilities and deferred tax assets and recorded an additional income tax benefit of $2.0 million. Additionally, during such quarter, the Company finalized its assessment of the Transition Tax and recorded additional income tax expense of $0.2 million.

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Results of Operations

The following tables set forth our operating results and operating results as a percentage of total revenues for the years ended December 31, 2019 and 2018.

	Fiscal Year Ended December 31,
	2019					2018
	(Dollars in thousands, except per share data)
Revenues:
Net sales	$	2,339,510		99.6	%	$	2,416,442		99.5	%
Royalties and franchise fees		9,279		0.4			11,073		0.5
Total revenues		2,348,789		100.0			2,427,515		100.0
Expenses:
Cost of sales		1,500,633		63.9			1,435,358		59.1
Wholesale selling expenses		67,103		2.9			71,502		2.9
Retail operating expenses		440,395		18.7			425,996		17.5
Franchise expenses		13,152		0.6			13,214		0.5
General and administrative expenses		177,672		7.6			172,764		7.1
Art and development costs		23,203		1.0			23,388		1.0
Development stage expenses		10,736		0.5			7,008		0.3
Gain on sale/leaseback transaction		(58,381	)	(2.5	)		—		0.0
Store impairment and restructuring charges		29,038		1.2			—		0.0
Goodwill and intangibles impairment		562,631		24.0			—		0.0
Total expenses		2,766,182		117.8			2,149,230		88.5
(Loss) income from operations		(417,393	)	(17.8	)		278,285		11.5
Interest expense, net		114,899		4.9			105,706		4.3
Other expense, net		1,871		0.1			10,982		0.4
(Loss) income before income taxes		(534,163	)	(22.7	)		161,597		6.7
Income tax (benefit) expense		(1,305	)	(0.1	)		38,778		1.6
Net (loss) income		(532,858	)	(22.7	)		122,819		5.1	%
Add: Net income attributable to redeemable securities holder		—		—			409		—
Less: Net loss attributable to noncontrolling interests		(363	)	—			(31	)	—
Net (loss) income attributable to common shareholders of Party City Holdco Inc.	$	(532,495	)	(22.7	)%	$	123,259		5.1	%
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—basic	$	(5.71	)			$	1.28
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—diluted	$	(5.71	)			$	1.27

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Revenues

Total revenues for 2019 were $2,348.8 million and were $78.7 million, or 3.2%, lower than 2018. The following table sets forth the Company’s total revenues for the years ended December 31, 2019 and 2018.

	Fiscal Year Ended December 31,
	2019						2018
	Dollars in Thousands			Percentage of Total Revenues			Dollars in Thousands			Percentage of Total Revenues
Net Sales:
Wholesale	$	1,240,026			52.8	%	$	1,325,490			54.6	%
Eliminations		(642,652	)		(27.4	)		(711,882	)		(29.3	)
Net wholesale		597,374			25.4			613,608			25.3
Retail		1,742,136			74.1			1,802,834			74.2
Total net sales		2,339,510			99.6			2,416,442			99.5
Royalties and franchise fees		9,279			0.4			11,073			0.5
Total revenues	$	2,348,789			100.0	%	$	2,427,515			100.0	%

Retail

Retail net sales during 2019 were $1,742.1 million and decreased $60.7 million, or 3.4%, compared to 2018. Retail net sales at our Party City stores totaled $1,527.5 million and were $55.7 million, or 3.5%, lower than 2018 principally due to the negative impact of helium shortages, the sale of our 65 Canadian retail stores prior to the Halloween season, the impact of reduced sales from 55 stores identified for closure in conjunction with our 2019 store optimization program, and soft Halloween sales at both our Party City and temporary Halloween stores. Global retail e-commerce sales totaled $162.4 million during 2019 and were $8.0 million, or 5.2%, higher than during 2018. Sales at our temporary Halloween stores (principally Halloween City) totaled $47.4 million and were $15.1 million lower than 2018. During 2019, sales at other store formats totaled $4.7 million.

Same-store sales for the Party City brand (including North American retail e-commerce sales) decreased by 3.0% during 2019. Excluding the impact of e-commerce, same-store sales decreased by 3.5%. Same-store sales percentages were not affected by foreign currency as such percentages are calculated in local currency.

Wholesale

Wholesale net sales during 2019 totaled $597.4 million and were $16.2 million, or 2.6%, lower than 2018. Net sales to domestic party goods retailers and distributors (including our franchisee network) totaled $231.7 million and were $8.7 million, or 3.6%, lower than during 2018. The decrease reflects our acquisition of franchise and independent stores throughout 2019; as post-acquisition sales to such stores in 2019 (approximately $13.7 million during the corresponding periods of 2018) were eliminated as intercompany sales. Net sales of metallic balloons to domestic distributors and retailers (including our franchisee network) totaled $78.3 million during 2019 and were $9.2 million, or 10.6%, lower than during 2018 principally due to the ongoing helium shortage. Our international sales (which include U.S. export sales and exclude U.S. import sales from foreign subsidiaries) totaled $287.4 million and were $1.7 million, or 0.6%, higher than in 2018 as sales growth of $12.3 million in constant currency was offset by a negative foreign currency impact of $10.6 million.

Intercompany sales to our retail affiliates totaled $642.7 million during 2019 and were $69.2 million lower than during the prior year. The decrease in 2019 intercompany sales principally reflects a lower store count compared to 2018 and a general reduction in retail purchases, in consideration of higher carryover inventory levels from the previous Halloween selling season. Intercompany sales represented 51.8% of total wholesale sales during 2019, compared to 53.7% during 2018. The intercompany sales of our wholesale segment are eliminated against the intercompany purchases of our retail segment in the consolidated financial statements. 

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Royalties and franchise fees

Royalties and franchise fees during 2019 totaled $9.3 million and were $1.8 million lower than during 2018, reflecting the decreasing franchise store count as a results of our franchise store acquisitions.

Gross Profit

The following table sets forth the Company’s gross profit for the years ended December 31, 2019 and December 31, 2018.

	Fiscal Year Ended December 31,
	2019					2018
	Dollars in Thousands		Percentage of Net Sales			Dollars in Thousands		Percentage of Net Sales
Retail	$	696,439		40.0	%	$	801,349		44.4	%
Wholesale		142,438		23.8			179,735		29.3
Total	$	838,877		35.9	%	$	981,084		40.6	%

The gross profit margin on net sales at retail during 2019 was 40.0% or 440 basis points lower than during 2018. The decrease reflects a combination of markdowns in conjunction with the Company’s “store optimization program” and provisions against inventory recorded in conjunction with such program (see “operating expenses” below for further discussion), the impact of an aggressive coupon program during the second half of 2019, the impact of the helium shortage on costs and sales mix, and a flow through of higher freight and distribution costs during the first three quarters of 2019, related to product acquired from the Company’s wholesale operations during the second half of 2018, as the China tariffs caused non-recurring logistical challenges. The manufacturing share of shelf at retail (i.e., the percentage of our retail product cost of sales manufactured by our wholesale segment) increased from 22.9% during 2018 to 23.5% during 2019, driven by the scaling up of recent acquisitions in our wholesale business. Our wholesale share of shelf at our Party City stores and our North American retail e-commerce operations (i.e., the percentage of our retail product cost of sales supplied by our wholesale segment) was 79.6% during 2019 compared to 78.9% during 2018.

The gross profit on net sales at wholesale during 2019 and 2018 was 23.8% and 29.3%, respectively. The decrease in comparison to 2018 principally reflects a decrease in high-margin sales of metallic balloons and higher margin sales to franchisees (due to the store acquisitions noted above) as well as, the deleveraging of distribution and manufacturing costs and the impact of foreign currency.

Operating expenses

Wholesale selling expenses totaled $67.1 million during 2019 compared to $71.5 million during 2018. The decrease of $4.4 million, or 6.2%, was due partially to the impact of foreign currency translation.

Retail operating expenses during 2019 were $440.4 million and were $14.4 million, or 3.4%, higher than in 2018. The increase was principally due to higher advertising, ecommerce and information technology related expenses compared to 2018. Retail operating expenses were 25.3% and 23.6% of net retail sales during 2019 and 2018, respectively.

Franchise expenses during both 2019 and 2018 were $13.2 million.

General and administrative expenses during 2019 totaled $177.7 million and were $4.9 million, or 2.8%, higher than in 2018. The increase for 2019 was principally due to increase legal and settlement costs. General and administrative expenses as a percentage of total revenues were 7.6% and 7.1% during 2019 and 2018, respectively.

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Art and development costs were consistent at $23.2 million and $23.4 million during 2019 and 2018, respectively.

Development stage expenses represent start-up costs related to Kazzam (see Note 25, Kazzam LLC., of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion).

Interest expense, net

Interest expense, net, totaled $114.9 million during 2019, compared to $105.7 million during 2018. The increase in interest principally reflects the full year impact of the Company’s August 2018 refinancing as well as the impact of average borrowings and average rates under our ABL credit facility and Term Loan (see Note 11, Loans and Notes Payable, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion).

Other expense, net

Other expense, net, totaled $1.9 million during 2019 and $11.0 million during 2018. The net decrease was principally due to non-recurring costs in 2018 associated with the Company’s August 2018 debt refinancing, including the write-off of $2.8 million of existing capitalized deferred finance costs and original issue discounts and the incurrence of $2.3 million in related third party fees.

Income tax expense

The effective income tax rate for the year ended December 31, 2019, 0.2%, is different from the statutory rate, 21%, primarily due to the goodwill impairment charge of $556.1 million, and the tax effects of the sale of the Canada Party City stores. See Note 17, Income Tax, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.

Gain on sale/leaseback transaction

In June 2019, the Company reported a $58.4 million gain from the sale and leaseback of its main distribution center in Chester, New York and its metallic balloons manufacturing facility in Eden Prairie, Minnesota. The aggregate sale price for the three properties was $128.0 million. Simultaneous with the sale, the Company entered into twenty-year leases for each of the facilities.

Store impairment and restructuring charges

During 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. 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 55 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 2019, the Company recorded a $14.9 million impairment charge for its operating lease asset, a $4.7 million impairment charge for property, plant and equipment, $8.7 million of labor and other costs related to closing the stores and $0.7 million of severance. See Note 3, Store Impairment and Restructuring Charges, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.

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Impairment of intangible assets

Goodwill and intangibles impairment charges for 2019 totaled $562.6 million. The non-cash pre-tax goodwill impairment charges were the result of a sustained decline in the Company’s market capitalization. This includes Halloween City tradename impairment charge of $6.6 million, which was a result of Company’s decision to lower the number of temporary stores opened each year. There was no goodwill or tradename impairment for 2018. See Note 4, Goodwill, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.

The following tables set forth our operating results and operating results as a percentage of total revenues for the years ended December 31, 2018 and 2017.

	Fiscal Year Ended December 31,
	2018					2017
	(Dollars in thousands, except per share data)
Revenues:
Net sales	$	2,416,442		99.5	%	$	2,357,986		99.4	%
Royalties and franchise fees		11,073		0.5			13,583		0.6
Total revenues		2,427,515		100.0			2,371,569		100.0
Expenses:
Cost of sales		1,435,358		59.1			1,395,279		58.8
Wholesale selling expenses		71,502		2.9			65,356		2.8
Retail operating expenses		425,996		17.5			415,167		17.5
Franchise expenses		13,214		0.5			14,957		0.6
General and administrative expenses		172,764		7.1			168,369		7.1
Art and development costs		23,388		1.0			23,331		1.0
Development stage expenses		7,008		0.3			8,974		0.4
Total expenses		2,149,230		88.5			2,091,433		88.2
Income from operations		278,285		11.5			280,136		11.8
Interest expense, net		105,706		4.3			87,366		3.7
Other expense, net		10,982		0.4			4,626		0.2
Income before income taxes		161,597		6.7			188,144		7.9
Income tax expense (benefit)		38,778		1.6			(27,196	)	(1.2	)
Net income		122,819		5.1			215,340		9.1
Add: Net income attributable to redeemable securities holder		409		—			—		—
Less: Net loss attributable to noncontrolling interests		(31	)	—			—		—
Net income attributable to common shareholders of Party City Holdco Inc.	$	123,259		5.1	%	$	215,340		9.1	%
Net income per share attributable to common shareholders of Party City Holdco Inc.—basic	$	1.28				$	1.81
Net income per share attributable to common shareholders of Party City Holdco Inc.—diluted	$	1.27				$	1.79

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Revenues

Total revenues for the year ended December 31, 2018 were $2,427.5 million and were $55.9 million or 2.4% higher than 2017. The following table sets forth our total revenues for the years ended December 31, 2018 and 2017.

	Fiscal Year Ended December 31,
	2018						2017
	Dollars in Thousands			Percentage of Total Revenues			Dollars in Thousands			Percentage of Total Revenues
Net Sales:
Wholesale	$	1,325,490			54.6	%	$	1,260,089			53.1	%
Eliminations		(711,882	)		(29.3	)		(630,692	)		(26.6	)
Net wholesale		613,608			25.3			629,397			26.5
Retail		1,802,834			74.2			1,728,589			72.9
Total net sales		2,416,442			99.5			2,357,986			99.4
Royalties and franchise fees		11,073			0.5			13,583			0.6
Total revenues	$	2,427,515			100.0	%	$	2,371,569			100.0	%

Retail

Retail net sales during 2018 were $1,802.8 million and increased $74.2 million, or 4.3%, compared to 2017. Retail net sales at our Party City stores totaled $1,583.1 million and were $61.4 million, or 4.0%, higher than 2017 due largely to the acquisition of franchise and independent stores. During the year ended December 31, 2018, we acquired 58 franchise and independent stores, opened 15 new stores and closed 10 stores. Global retail e-commerce sales totaled $154.5 million during 2018 and were $2.0 million, or 1.3%, higher than during the corresponding period of 2017. The North American e-commerce sales that are included in our Party City brand comp increased by 0.6% during the year. However, they increased by 17.5% when adjusted for the impact of our “buy online, pick-up in store” program (as such sales are included in our store sales). Sales at our temporary stores (principally Halloween City) totaled $65.2 million and were $10.8 million higher than during 2017 driven by Halloween City sales per store increasing 14.1% versus the month of fiscal October 2017.

Same-store sales for the Party City brand (including North American retail e-commerce sales) decreased by 0.7% during 2018. Excluding the impact of e-commerce, same-store sales decreased by 0.8%. Same-store sales percentages were not affected by foreign currency as such percentages are calculated in local currency.

Wholesale

Wholesale net sales during 2018 totaled $613.6 million and were $15.8 million, or 2.5%, lower than 2017. Net sales to domestic party goods retailers and distributors (including our franchisee network) totaled $240.5 million and were $24.5 million, or 9.2%, lower than during 2017. The decrease was principally due to our acquisition of 58 franchise and independent stores during the year ended December 31, 2018; as post-acquisition sales to such stores (approximately $20 million during the corresponding period of 2017) are now eliminated as intercompany sales. Net sales of metallic balloons to domestic distributors and retailers (including our franchisee network) totaled $87.5 million during 2018 and were $1.4 million, or 1.6%, higher than during 2017. Our international sales (which include U.S. export sales and exclude U.S. import sales from foreign subsidiaries) totaled $285.6 million and were $7.3 million, or 2.6%, higher than in 2017. The increase was driven by continued strong performance across European markets and the acquisition of Granmark S.A. de C.V. (“Granmark”) in March 2017 and the impact of foreign currency translation (approximately $2 million).

Intercompany sales to our retail affiliates totaled $711.9 million during 2018 and were $81.2 million higher than during the prior year principally due to the higher corporate store count in 2018 and intercompany sales

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during 2017 being impacted by carryover inventory from the 2016 Halloween selling season. Intercompany sales represented 53.7% of total wholesale sales during 2018, compared to 50.0% during 2017. The intercompany sales of our wholesale segment are eliminated against the intercompany purchases of our retail segment in the consolidated financial statements.

Royalties and franchise fees

Royalties and franchise fees during 2018 totaled $11.1 million and were $2.5 million lower than during 2017 due to the acquisition of franchise stores.

Gross Profit

The following table sets forth the Company’s gross profit for the years ended December 31, 2018 and December 31, 2017.

	Fiscal Year Ended December 31,
	2018					2017
	Dollars in Thousands		Percentage of Net Sales			Dollars in Thousands		Percentage of Net Sales
Retail	$	801,349		44.4	%	$	763,315		44.2	%
Wholesale		179,735		29.3			199,392		31.7
Total	$	981,084		40.6	%	$	962,707		40.8	%

The gross profit margin on net sales at retail during 2018 was 44.4%. Such percentage was 20 basis points higher than during the corresponding period of 2017. The increase was principally due to the continued realization of productivity initiatives positively impacting occupancy costs and increased manufacturing share of shelf (i.e., the percentage of our retail product cost of sales manufactured by our wholesale segment). Our manufacturing share of shelf increased from 22.6% during 2017 to 22.9% during 2018, driven by higher sales of metallic balloons and the scaling up of recent acquisitions in our wholesale business. Our wholesale share of shelf at our Party City stores and our North American retail e-commerce operations (i.e., the percentage of our retail product cost of sales supplied by our wholesale segment) was 78.9% during 2018 and was slightly lower than during 2017.

The gross profit on net sales at wholesale during 2018 and 2017 was 29.3% and 31.7%, respectively. The decrease was principally due to higher logistics and distribution costs and rising commodity costs.

Operating expenses

Wholesale selling expenses were $71.5 million during 2018 and $65.4 million during the corresponding period of 2017. The increase of $6.1 million, or 9.4%, was primarily due to selling costs at Granmark (acquired in March 2017), the impact of foreign currency translation (approximately $1 million) and the impact of wage inflation.

Retail operating expenses during 2018 were $426.0 million and were $10.8 million, or 2.6%, higher than the corresponding period of 2017. The higher store count (discussed above), increased advertising spend and the impact of wage inflation were partially offset by lower labor costs realized as a result of increased productivity and efficiency in our stores. Retail operating expenses were 23.6% and 24.0% of net retail sales during 2018 and 2017, respectively. The decrease was mostly due to the improved labor productivity.

Franchise expenses during 2018 and 2017 were $13.2 million and $15.0 million, respectively. The decrease was principally due to a non-recurring reduction to franchise intangible asset amortization expense as a result of recent franchise store acquisitions.

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General and administrative expenses during 2018 totaled $172.8 million and were $4.4 million, or 2.6%, higher than in 2017. Increased one-time third-party consultant costs and the impact of inflation were partially offset by lower incentive compensation costs and 2017 including severance charges related to a Transition and Consulting Agreement entered into with Gerald Rittenberg. General and administrative expenses as a percentage of total revenues was 7.1% during both 2018 and 2017.

Art and development costs were $23.4 million during 2018 and were principally consistent with 2017.

Development stage expenses represent start-up costs related to Kazzam (see Note 25, Kazzam, LLC, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion).

Interest expense, net

Interest expense, net, totaled $105.7 million during 2018, compared to $87.4 million during 2017. The increase principally relates to the impact of increasing LIBOR rates on our Term Loan Credit Agreement and our ABL Facility, increased borrowings under our ABL Facility due to share repurchases during the fourth quarter of 2017 and, to a lesser extent, the impact of the Company’s August 2018 refinancing (see Note 12, Long-Term Obligations, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion).

Other expense, net

Other expense, net, totaled $11.0 million during 2018 and $4.6 million during 2017. The increase was principally due to non-recurring costs associated with the Company’s August 2018 debt refinancing:

During August 2018, the Company executed a refinancing of its debt portfolio and issued $500 million of new senior notes at an interest rate of 6.625%. The notes will mature in August 2026. The Company used the proceeds from the notes to: (i) reduce the outstanding balance under its existing ABL Facility by $90 million and (ii) voluntarily prepay $400 million of the outstanding balance under its existing Term Loan Credit Agreement. Additionally, as part of the refinancing, the Company extended the maturity of the ABL Facility to August 2023. As the partial prepayment of the Term Loan Credit Agreement was in accordance with the terms of such agreement, at the time of such prepayment the Company wrote-off a pro-rata portion of the existing capitalized deferred financing costs and original issuance discounts, $1.8 million, for investors who did not participate in the new notes. To the extent that investors in the Term Loan Credit Agreement participated in the new notes, the Company assessed whether the refinancing should be accounted for as an extinguishment on a creditor-by-creditor basis and wrote-off $1.0 million of existing deferred financing costs and original issuance discounts. Additionally, in conjunction with the issuance of the notes, the Company incurred third-party fees (principally banker fees). To the extent that such fees related to investors for whom their original debt was not extinguished, the Company expensed the portion of such fees, $2.3 million in aggregate, that related to such investors.

Income tax expense

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law. The Act significantly changed U.S. tax law, including lowering the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018, and implementing a one-time “deemed repatriation” tax on unremitted earnings accumulated in non-U.S. jurisdictions since 1986 (the “Transition Tax”). Due to the complexities of accounting for the Act, the SEC issued Staff Accounting Bulletin No. 118 which allows entities to include a provisional estimate of the impact of the Act in its 2017 financial statements. Therefore, based on then currently available information, during 2017 the Company recorded a provisional estimate of the impact of the Act, which included an income tax benefit of $91.0 million related to the remeasurement of its domestic deferred tax liabilities and deferred tax assets due to the lower U.S. corporate tax rate. Additionally, during 2017, the Company recorded income tax expense of $1.1 million as its provisional estimate of the Transition Tax related to the deemed

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repatriation of unremitted earnings of foreign subsidiaries. During the fourth quarter of 2018, the Company finalized its assessment of the impact of the Act on the Company’s domestic deferred tax liabilities and deferred tax assets and recorded an additional income tax benefit of $2.0 million. Additionally, during such quarter, the Company finalized its assessment of the Transition Tax and recorded additional income tax expense of $0.2 million.

The effective income tax rate for the year ended December 31, 2018, 24.0%, is higher than the statutory rate, 21.0%, primarily due to state taxes. See Note 17, Income Taxes, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.

Liquidity and Capital Resources

During August 2015, PCHI redeemed its $700.0 million Old Senior Notes and refinanced its existing $1,125.0 million Old Term Loan Credit Agreement and $400.0 million Old ABL Facility with new indebtedness consisting of: (i) a senior secured term loan facility (“Term Loan Credit Agreement”), (ii) a $540.0 million asset-based revolving credit facility (with a seasonal increase to $640.0 million during a certain period of each calendar year) (“ABL Facility”) and (iii) $350.0 million of 6.125% senior notes (“6.125% Senior Notes”). During August 2018, the Company executed a refinancing of its debt portfolio and issued $500 million of new senior notes at an interest rate of 6.625% (“6.625% Senior Notes”). The Company used the proceeds from the 6.625% Senior Notes to: (i) reduce the outstanding balance under the ABL Facility by $90 million and (ii) voluntarily prepay $400 million of the outstanding balance under the Term Loan Credit Agreement. Additionally, as part of the refinancing, the Company extended the maturity of the ABL Facility to August 2023 (subject to a springing maturity at an earlier date if the maturity date of certain of our other debt has not been extended or refinanced).

ABL Facility

Prior to April 2019, PCHI had a $540.0 million asset-based revolving credit facility (with a seasonal increase to $640.0 million during a certain period of each calendar year) (“ABL Facility”). During April 2019, PCHI amended the ABL Facility. Such amendment removed the seasonal component and made the facility a $640.0 million facility on a year-round basis. The ABL Facility 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 described below, and (b) letters of credit, in an aggregate face amount at any time outstanding not to exceed $50.0 million.

Under the ABL Facility, the borrowing base at any time equals (a) a percentage of eligible trade receivables, plus (b) a percentage of eligible inventory, plus (c) a percentage of eligible credit card receivables, less (d) certain reserves.

The ABL Facility generally provides for two pricing options: (i) an alternate base interest rate (“ABR”) equal to the greater of (a) the prime rate, (b) the federal funds rate plus 0.5% or (c) the LIBOR rate plus 1%, in each case, on the date of such borrowing or (ii) a LIBOR based interest rate, in each case plus an applicable margin. The applicable margin ranges from 0.25% to 0.50% with respect to ABR borrowings and from 1.25% to 1.50% with respect to LIBOR borrowings.

In addition to paying interest on outstanding principal, PCHI is required to pay a commitment fee of 0.25% per annum in respect of unutilized commitments. PCHI must also pay customary letter of credit fees.

All obligations under the ABL Facility are jointly and severally guaranteed by PC Intermediate, PCHI and each existing and future domestic subsidiary of PCHI. PCHI and each guarantor has secured its obligations, subject to certain exceptions and limitations, including obligations under its guaranty, as applicable, by a first-priority lien on its accounts receivable, inventory, cash and certain related assets and a second-priority lien on substantially all of its other assets.

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The facility contains negative covenants that, among other things and subject to certain exceptions, restrict the ability of PCHI to:

• incur additional indebtedness;

• pay dividends on capital stock or redeem, repurchase or retire capital stock;

• make certain investments, loans, advances and acquisitions;

• engage in transactions with affiliates;

• create liens; and

• transfer or sell certain assets.

In addition, PCHI must comply with a fixed charge coverage ratio if excess availability under the ABL Facility on any day is less than the greater of: (a) 10% of the lesser of the aggregate commitments and the then borrowing base under the ABL Facility and (b) $40.0 million. The fixed charge coverage ratio is the ratio of (i) Adjusted EBITDA (as defined in the facility) minus maintenance-related capital expenditures (as defined in the facility) to (ii) fixed charges (as defined in the facility).

The ABL Facility also contains certain customary affirmative covenants and events of default.

In connection with entering into and amending the ABL Facility, PCHI incurred and capitalized third-party costs. All capitalized costs are being amortized over the life of the ABL Facility and are included in loans and notes payable in the Company’s consolidated balance sheet. The balance of related unamortized financing costs at December 31, 2019 was $2.0 million.

Borrowings under the ABL Facility totaled $129.4 million at December 31, 2019. The weighted average interest rate for such borrowings was 5.19% at December 31, 2019. Outstanding standby letters of credit totaled $25.1 million at December 31, 2019 and, after considering borrowing base restrictions, at December 31, 2019 PCHI had $355.9 million of available borrowing capacity under the terms of the facility.

Term Loan Credit Agreement

The Term Loan Credit Agreement, as amended, provides for two pricing options for outstanding loans: (i) an ABR for any day, a rate per annum equal to the greater of (a) the prime rate in effect on such day, (b) the federal funds effective rate in effect on such day plus 0.5%, (c) the adjusted LIBOR rate plus 1% and (d) 1.75% or (ii) the LIBOR rate, with a LIBOR floor of 0.75%, in each case plus an applicable margin. The applicable margin for ABR and LIBOR borrowings are 1.75% and 2.75%, respectively, and will drop to 1.50% and 2.50%, respectively, if PCHI’s Senior Secured Leverage Ratio, as defined by the agreement, falls below 3.2 to 1.0.

The term loans under the Term Loan Credit Agreement mature on August 19, 2022. The Company is required to repay installments on the loans in quarterly principal amounts of 0.25%, with the remaining amount payable on the maturity date.

Additionally, outstanding term loans are subject to mandatory prepayment, subject to certain exceptions, with (i) 100% of net proceeds above a threshold amount of certain asset sales/insurance proceeds, subject to reinvestment rights and certain other exceptions, (ii) 100% of the net cash proceeds of any incurrence of debt other than debt permitted under the Term Loan Credit Agreement, and (iii) 50% of Excess Cash Flow, as defined in the agreement, if any (reduced to 25% if PCHI’s first lien leverage ratio (as defined in the agreement) is less than 3.50 to 1.00, but greater than 2.50 to 1.00, and 0% if PCHI’s first lien leverage ratio is less than 2.50 to 1.00).

The term loans may be voluntarily prepaid at any time without premium or penalty, other than customary breakage costs with respect to loans based on the LIBOR rate.

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All obligations under the agreement are jointly and severally guaranteed by PC Intermediate, PCHI and each existing and future domestic subsidiary of PCHI. PCHI and each guarantor has secured its obligations, subject to certain exceptions and limitations, by a first-priority lien on substantially all of its assets (other than accounts receivable, inventory, cash and certain related assets), including a pledge of all of the capital stock held by PC Intermediate, PCHI and each guarantor, and a second-priority lien on its accounts receivable, inventory, cash and certain related assets.

The Term Loan Credit Agreement contains certain customary affirmative covenants and events of default. Additionally, it contains negative covenants which, among other things and subject to certain exceptions, restrict the ability of PCHI to:

• incur additional indebtedness;

• pay dividends on capital stock or redeem, repurchase or retire capital stock;

• make certain investments, loans, advances and acquisitions;

• engage in transactions with affiliates;

• create liens; and

• transfer or sell certain assets.

At December 31, 2019, the principal amount of term loans outstanding under the Term Loan Credit Agreement was $725.1 million. Such amount is recorded net of original issue discounts, capitalized call premiums and deferred financing costs on the Company’s consolidated balance sheet. At December 31, 2019, original issue discounts, capitalized call premiums and deferred financing costs totaled $6.5 million. At December 31, 2019, all outstanding borrowings were based on LIBOR and were at a weighted average interest rate of 4.22%.

6.125% Senior Notes—Due 2023 (“6.125% Senior Notes”)

The 6.125% Senior Notes mature on August 15, 2023. Interest on the notes is payable semi-annually in arrears on February 15 and August 15 of each year.

The notes are guaranteed, jointly and severally, on a senior basis by each of PCHI’s existing and future wholly-owned domestic subsidiaries. The notes and the guarantees are general unsecured senior obligations and are effectively subordinated to all other secured debt to the extent of the assets securing such secured debt.

The indenture governing the 6.125% Senior Notes contains certain covenants limiting, among other things and subject to certain exceptions, PCHI’s ability to:

• incur additional indebtedness or issue certain disqualified stock and preferred stock;

• pay dividends or distributions, redeem or repurchase equity;

• prepay subordinated debt or make certain investments;

• engage in transactions with affiliates;

• consolidate, merge or transfer all or substantially all of PCHI’s assets;

• create liens; and

• transfer or sell certain assets.

The indenture governing the notes also contains certain customary affirmative covenants and events of default.

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The Company may redeem the 6.125% Senior Notes, in whole or in part, at the following (expressed as a percentage of the principal amount to be redeemed):

Twelve-month period beginning on August 15,	Percentage
2019		101.531	%
2020 and thereafter		100.000	%

Also, if the Company experiences certain types of change in control, as defined, the Company may be required to offer to repurchase the 6.125% Senior Notes at 101% of their principal amount.

In connection with issuing the 6.125% Senior Notes, the Company incurred and capitalized third-party costs. Capitalized costs are being amortized over the life of the debt and are included in long-term obligations, excluding current portion, in the Company’s consolidated balance sheet. At December 31, 2019, $3.0 million of costs were capitalized.

6.625% Senior Notes—Due 2026 (“6.625% Senior Notes”)

The 6.625% Senior Notes mature on August 1, 2026. Interest on the notes is payable semi-annually in arrears on February 1st and August 1st of each year.

The 6.625% Senior Notes are guaranteed, jointly and severally, on a senior basis by each of PCHI’s existing and future wholly-owned domestic subsidiaries. The notes and the guarantees are general unsecured senior obligations and are effectively subordinated to all other secured debt to the extent of the assets securing such secured debt.

The indenture governing the notes contains certain covenants limiting, among other things and subject to certain exceptions, PCHI’s ability to:

• incur additional indebtedness or issue certain disqualified stock and preferred stock;

• pay dividends or distributions, redeem or repurchase equity;

• prepay subordinated debt or make certain investments;

• engage in transactions with affiliates;

• consolidate, merge or transfer all or substantially all of PCHI’s assets;

• create liens; and

• transfer or sell certain assets.

The indenture governing the notes also contains certain customary affirmative covenants and events of default.

On or after August 1, 2021, the Company may redeem the notes, in whole or in part, at the following (expressed as a percentage of the principal amount to be redeemed):

Twelve-month period beginning on August 1,	Percentage
2021		103.313	%
2022		101.656	%
2023 and thereafter		100.000	%

In addition, the Company may redeem up to 40% of the aggregate principal amount outstanding on or before August 1, 2021 with the cash proceeds from certain equity offerings at a redemption price of 106.625% of

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the principal amount. The Company may also redeem some or all of the notes before August 1, 2021 at a redemption price of 100% of the principal amount plus a premium that is defined in the indenture governing the 6.625% Senior Notes.

Also, if the Company experiences certain types of change in control, as defined, the Company may be required to offer to repurchase the notes at 101% of their principal amount.

Other Credit Agreements

At December 31, 2019 and December 31, 2018, borrowings under the foreign facilities totaled $1.4 million and $1.7 million, respectively.

Other Indebtedness

Additionally, we have entered into various finance leases for machinery and equipment. At December 31, 2019 and December 31, 2018 the balances of such leases in our consolidated balance sheets were $15.0 million and $3.8 million, respectively. We also have numerous non-cancelable operating leases for retail store sites, as well as leases for offices, distribution facilities and manufacturing facilities. These leases generally contain renewal options and require us to pay real estate taxes, utilities and related insurance costs.

Liquidity

We expect that cash generated from operating activities and availability under our credit agreements will be our principal sources of liquidity. Based on our current level of operations, we believe that these sources will be adequate to meet our liquidity needs for at least the next 12 months. We cannot assure you, however, that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under the ABL Facility and the Term Loan Credit Agreement in amounts sufficient to enable us to repay our indebtedness or to fund our other liquidity needs. See “Risk Factors—We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.”

Cash Flow Data—Year Ended December 31, 2019, Compared to Year Ended December 31, 2018

Net cash provided by operating activities totaled $43.7 million during 2019. Net cash provided by operating activities totaled $101.9 million during 2018. Net cash flows provided by operating activities before changes in operating assets and liabilities were $24.8 million during 2019, compared to $226.4 million during 2018. Changes in operating assets and liabilities during 2019 resulted in a source of cash of $18.9 million. Changes in operating assets and liabilities during 2018 resulted in a use of cash of $124.5 million (see Note 2, Summary of Significant Accounting Policies and Note 27, Restricted Cash, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion). The operating assets and liabilities year over year change was principally due to a reduction in inventory offset by a reduction in accounts payable.

Net cash provided by investing activities totaled $163.7 million during 2019, as compared to $150.9 million used in 2018. Investing activities during 2019 included $18.1 million paid in connection with acquisitions of foreign online retailers and franchise stores (see Note 9, Acquisitions, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion). Capital expenditures during 2019 and 2018 were $61.7 million and $85.7 million, respectively. In addition, in 2019 our cash flow includes proceeds from disposal of assets of $246.3 million. Retail capital expenditures totaled $32.2 million during 2019 and principally related to initiatives for improving store performance, web re-platforming, investments in new stores and spending on store conversions. Wholesale capital expenditures during 2019 totaled $29.5 million and primarily related to printing plates and dyes, as well as machinery and equipment at the Company’s manufacturing operations and main distribution center.

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Net cash used in financing activities was $237.7 million during 2019. Net cash provided by financing activities was $56.2 million during 2018. The change in net cash used in financing activities was due to a paydown of debt using the net proceeds received from the Sale/Leaseback Transaction (see Note 5, Sale/Leaseback Transaction, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion) and the sale of Canadian-based Party City stores (see Note 6, Disposition of Assets, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion).

Cash Flow Data—Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Net cash provided by operating activities totaled $101.9 million during 2018. Net cash provided by operating activities totaled $267.9 million during 2017. Net cash flows provided by operating activities before changes in operating assets and liabilities were $226.4 million during 2018, compared to $219.3 million during 2017. Changes in operating assets and liabilities during 2018 resulted in a use of cash of $124.5 million. Changes in operating assets and liabilities during 2017 resulted in a source of cash of $48.6 million. The operating assets and liabilities year over year change was principally due to: 2017 benefitting from Halloween carryover inventory from the 2016 Halloween selling season, the increased store count in 2018 and higher interest payments during 2018.

Net cash used in investing activities totaled $150.9 million during 2018, as compared to $141.6 million during 2017. Investing activities during 2018 included $65.3 million paid in connection with acquisitions, principally related to franchise stores (see Note 9, Acquisitions, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion). Capital expenditures during 2018 and 2017 were $85.7 million and $67.0 million, respectively. Retail capital expenditures totaled $51.8 million during 2018 and principally related to initiatives for improving store performance, web re-platforming, investments in new stores and spending on store conversions. Wholesale capital expenditures during 2018 totaled $33.9 million and primarily related to printing plates and dyes, as well as machinery and equipment at the Company’s manufacturing operations and main distribution center.

Net cash provided by financing activities was $56.2 million during 2018. Net cash used in financing activities was $140.0 million during 2017. The change in net cash provided by/used in financing activities was necessary due to higher cash used in operating activities (see above for further detail).

Tabular Disclosure of Contractual Obligations

Our contractual obligations at December 31, 2019 are summarized by the year in which the payments are due in the following table (amounts in thousands):

	Total		2020		2021		2022		2023		2024		Thereafter
Long-term debt obligations(a)	$	1,573,965	$	70,462	$	12,266	$	641,237	$	350,000	$	—	$	500,000
Finance lease obligations(a)		14,990		1,062		1,431		1,259		390		521		10,327
Operating lease obligations(a)		1,149,650		197,480		181,970		162,352		134,131		106,078		367,639
Transition Tax on unremitted foreign earnings(b)		4,205		—		—		—		—		1,400		2,805
Minimum product royalty obligations(a)		51,738		35,525		10,393		5,820		—		—		—
Total contractual obligations	$	2,794,548	$	304,529	$	206,060	$	810,668	$	484,521	$	107,999	$	880,771

(a) See Item 8, “Financial Statements and Supplementary Data,” for further detail.

(b) As a result of the Act, the U.S. is transitioning from a worldwide system of international taxation to a territorial tax system, thereby eliminating the U.S. federal tax on foreign earnings. However, the Act

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requires a one-time deemed repatriation tax on such earnings and, accordingly, we have recorded a liability related to such requirement. See Note 17, Income Taxes, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.

Not included in the above table are borrowings under the ABL Facility of $129.4 million, with a maturity date of 2023, and borrowings under our foreign credit facilities of $1.4 million.

Not included in the above table are $4.9 million of net potential cash obligations associated with unrecognized tax benefits due to the high degree of uncertainty regarding the timing of future cash outflows associated with such obligations. Refer to the notes to the consolidated financial statements which are included elsewhere in this Annual Report on Form 10-K for further information related to unrecognized tax benefits.

Additionally, not included in the above table are expected interest payments associated with the Term Loan Credit Agreement and the senior notes, of approximately $104.1 million in 2020, $102.0 million in 2021, $99.3 million in 2022, $99.3 million in 2023 and $88.0 million thereafter. Interest payments are estimates based on our debt’s scheduled maturities and stated interest rates or, for variable rate debt, interest rates as of December 31, 2019. Our estimates do not reflect interest payments on the credit facilities or the possibility of additional interest from the refinancing of our debt as such amounts are not determinable.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Effects of Inflation

Although we expect that our operating results will be influenced by general economic conditions, we do not believe that inflation has had a material effect on our results of operations during the periods presented. However, there can be no assurance that our business will not be affected by inflation in the future.

Critical Accounting Policies and Procedures

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the appropriate application of certain accounting policies, many of which require estimates and assumptions about future events and their impact on amounts reported in the financial statements and related notes. Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to the consolidated financial statements included herein.

We believe our application of accounting policies, and the estimates inherently required by these policies, are reasonable. These accounting policies and estimates are constantly re-evaluated and adjustments are made when facts and circumstances dictate a change. Historically, we have found the application of accounting policies to be reasonable, and actual results generally do not differ materially from those determined using necessary estimates.

Revenue Recognition

Revenue Transactions—Retail

Revenue from retail store operations is recognized at the point of sale as control of the product is transferred to the customer at such time. Retail e-commerce sales are recognized when the consumer receives the product as control transfers upon delivery. Due to its extensive history operating as the largest party goods retailer in North America, the Company has sufficient history with which to estimate future retail sales returns and it uses the expected value method to estimate such activity.

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The transaction price for the majority of the Company’s retail sales is based on either: 1) the item’s stated price or 2) the stated price adjusted for the impact of a coupon which can only be applied to such transaction. To the extent that the Company charges customers for freight costs on e-commerce sales, the Company records such amounts in revenue. The Company excludes all sales taxes and value-added taxes from revenue.

Under the terms of its agreements with its franchisees, the Company provides both: 1) brand value (via significant advertising spend) and 2) support with respect to planograms, in exchange for a royalty fee that ranges from 4% to 6% of the franchisees’ sales. The Company records the royalty fees at the time that the franchisees’ sales are recorded. Additionally, although the Company anticipates that future franchise store openings will be limited, when a franchisee opens a new store, the Company receives and records a one-time fee which is earned by the Company for its assistance with site selection and development of the new location. Both the sales-based royalty fee and the one-time fee are recorded in royalties and franchise fees in the Company’s consolidated statement of operations and comprehensive (loss) income.

Revenue Transactions—Wholesale

For most of the Company’s wholesale sales, control transfers upon the Company’s shipment of the product. Wholesale sales returns are not significant as the Company generally only accepts the return of goods that were shipped to the customer in error or that were damaged when received by the customer. Additionally, due to its extensive history operating as a leading party goods wholesaler, the Company has sufficient history with which to estimate future sales returns.

In most cases, the determination of the transaction price is fixed based on the contract and/or purchase order. To the extent that the Company charges customers for freight costs, the Company records such amounts in revenue. The Company excludes all sales taxes and value-added taxes from revenue.

The majority of the sales for the Company’s wholesale business are due within 30 to 120 days from the transfer of control of the product and substantially all of the sales are collected within a year from such transfer. For all transactions for which the Company expects to collect the transaction price within a year from the transfer of control, the Company does not adjust the consideration for the effects of a significant financing component.

Judgments

Although most of the Company’s revenue transactions consist of fixed transaction prices and the transfer of control at either the point of sale (for retail) or when the product is shipped (for wholesale), certain transactions involve a limited number of judgments. For transactions for which control transfers to the customer when the freight carrier delivers the product to the customer, the Company estimates the date of such receipt based on historical shipping times. Additionally, the Company utilizes historical data to estimate sales returns. Due to its extensive history operating as a leading party goods retailer, the Company has sufficient history with which to estimate such amounts.

Product Royalty Agreements

We enter into product royalty agreements that allow us to use licensed designs on certain of our products. These contracts require us to pay royalties, generally based on the sales of such product and may require guaranteed minimum royalties, a portion of which may be paid in advance. We match royalty expense with revenue by recording royalties at the time of sale, at the greater of the contractual rate or an effective rate calculated based on the guaranteed minimum royalty and our estimate of sales during the contract period. Guaranteed minimum royalties paid in advance are recorded in the consolidated balance sheets in either prepaid expenses and other current assets or other assets, depending on the nature of the royalties.

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Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers and franchisees to make required payments. Judgment is required in assessing the ultimate realization of these receivables, including consideration of our history of receivable write-offs, the level of past due accounts and the economic status of our customers. In an effort to identify adverse trends relative to customer economic status, we assess the financial health of the markets we operate in and perform periodic credit evaluations of our customers and ongoing reviews of account balances and aging of receivables. Amounts are considered past due when payment has not been received within the time frame of the credit terms extended. Write-offs are charged directly against the allowance for doubtful accounts and occur only after all collection efforts have been exhausted. Because we cannot predict future changes in economic conditions and in the financial stability of our customers, actual future losses from uncollectible accounts may differ from our estimates and could impact our allowance for doubtful accounts.

Inventories

Inventories are valued at the lower of cost and net realizable value. In assessing the ultimate realization of inventories, we are required to make judgments regarding, among other things, future demand and market conditions, current inventory levels and the impact of the possible discontinuation of product designs.

We principally determine the cost of inventory using the weighted average method.

We estimate retail inventory shrinkage for the period between physical inventory dates on a store-by-store basis. Our inventory shrinkage estimate 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.

Long-Lived and Intangible Assets (including Goodwill)

We review the recoverability of our long-lived assets, including finite-lived intangible assets, whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. For purposes of recognizing and measuring impairment, we evaluate long-lived assets/asset groups, other than goodwill, based upon the lowest level of independent cash flows ascertainable to evaluate impairment. If an impairment indicator exists, we compare the undiscounted future cash flows of the asset/asset group to the carrying value of the asset/asset group. If the sum of the undiscounted future cash flows is less than the carrying value of the asset/asset group, we would calculate discounted future cash flows based on market participant assumptions. If the sum of discounted cash flows is less than the carrying value of the asset/asset group, we would recognize an impairment loss. The impairment related to long-lived assets is measured as the amount by which the carrying amount of the asset(s) exceeds the fair value of the asset(s). When fair values are not readily available, we estimate fair values using discounted expected future cash flows. Such estimates of fair value require significant judgment, and actual fair value could differ due to changes in the expectations of cash flows or other assumptions, including discount rates.

In the evaluation of the fair value and future benefits of finite long-lived assets attached to retail stores, we perform our cash flow analysis generally on a store-by-store basis. Various factors including future sales growth and profit margins are included in this analysis. To the extent these future projections or strategies change, the conclusion regarding impairment may differ from the current estimates.

Goodwill is reviewed for potential impairment on an annual basis or more frequently if circumstances indicate a possible impairment.

For purposes of testing goodwill for impairment, reporting units are determined by identifying individual operating segments within our organization which constitute a business for which discrete financial information is available and is reviewed by management. Components within an operating segment are aggregated to the extent that they have similar economic characteristics. Based on this evaluation, we have determined that our operating segments, wholesale and retail, represent our reporting units for the purposes of our goodwill impairment test.

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If it is concluded that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we estimate the fair value of the reporting unit using a combination of a market approach and an income approach. If such carrying value exceeds the fair value, an impairment loss will be recognized in an amount equal to such excess. The fair value of a reporting unit refers to the amount at which the unit as a whole could be sold in a current transaction between willing parties. The determination of such fair value is subjective, and actual fair value could differ due to changes in the expectations of cash flows or other assumptions including discount rates.

Income Taxes

Temporary differences arising from differing treatment of income and expense items for tax and financial reporting purposes result in deferred tax assets and liabilities that are recorded on the balance sheet. These balances, as well as income tax expense, are determined through management’s estimations, interpretation of tax law for multiple jurisdictions and tax planning. However, inherent in the measurement of deferred balances are certain judgments and interpretations of enacted tax laws and published guidance with respect to applicability to our operations. If our actual results differ from estimated results due to changes in tax laws or tax planning, our effective tax rate and tax balances could be affected. As such, these estimates may require adjustment in the future as additional facts become known or as circumstances change. A valuation allowance is established against deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting Standards Codification Topic 740 prescribes a comprehensive model of how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. In accordance with these requirements, we recognize a tax benefit when a tax position is more-likely-than-not to be sustained upon examination, based solely on its technical merits. We measure the recognized tax benefit as the largest amount of tax benefit that has greater than a 50% likelihood of being realized upon the ultimate settlement with a taxing authority. We reverse previously recognized tax benefits if we determine that the tax position no longer meets the more-likely-than-not threshold of being sustained. We accrue interest and penalties related to unrecognized tax benefits in income tax expense.

Stock-Based Compensation

Accounting for stock-based compensation requires measurement of compensation cost for all stock-based awards at fair value on the date of grant and recognition of compensation expense over the service period for awards which are expected to vest.

The value of our stock-based awards is recognized as expense over the service period, net of estimated forfeitures. The estimation of stock awards that will ultimately vest requires judgment and to the extent that actual results or updated estimates differ from our current estimates such revisions will be recorded as cumulative adjustments in the periods during which the estimates are revised. Actual results and future estimates may differ significantly from our current estimates.

The Company grants restricted stock units which vest if certain cash flow and earnings per share targets are met. We recognize compensation expense for such awards if it is probable that the awards will vest. Determining whether it is probable that such awards will vest requires judgment and to the extent that actual results, or revised estimates, differ from our current estimates, such revisions will be recorded as cumulative adjustments in the periods during which the estimates are changed. Actual results and future estimates may differ significantly from our current estimates.

Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, “Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the

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Disclosure Requirements for Fair Value Measurement”. The new guidance improves and clarifies the fair value measurement disclosure requirements of ASC 820. The new disclosure requirements include the disclosure of the changes in unrealized gains or losses included in other comprehensive (loss) income for recurring Level 3 fair value measurements held at the end of the reporting period and the explicit requirement to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The other provisions of ASU 2018-13 also include eliminated and modified disclosure requirements. The guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted, including in an interim period for which financial statements have not been issued or made available for issuance. The Company has evaluated the impact of the adoption of this ASU and determined that it will have no significant impact on its condensed consolidated financial statements.

In June 2018, the FASB issued 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 $0.5 million. Additionally, the Company increased additional paid-in capital by $0.7 million and recorded a $0.2 million 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 January 2017 the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates the requirement to measure a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the amendments in ASU 2017-04, an entity will perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized will not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity will consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Company adopted ASU No. 2017-04 during the first quarter of 2019.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows: Restricted Cash”. The pronouncement requires companies to show changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The Company adopted the pronouncement, which requires retrospective application, during the first quarter of 2018. The impact of such adoption was immaterial to the Company’s consolidated financial statements. See Note 27, Restricted Cash, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. The pronouncement clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The Company adopted the pronouncement during the first quarter of 2018 and such adoption did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses”. The ASU changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The pronouncement is effective for the Company during the first quarter of 2020. The Company is still evaluating the impact of the ASU on its consolidated financial statements, but does not expect it to have a material impact on the Company’s consolidated financial statements.

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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 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 its operating lease arrangements with terms of greater than twelve months. See Item 8, “Financial Statements and Supplementary Data,” Consolidated Balance Sheets at December 31, 2019 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 $74.5 million deferred rent liability in other long-term liabilities and a $7.2 million deferred rent liability in accrued expenses. In the Company’s December 31, 2019 consolidated balance sheet, such accounts reduce the operating lease asset. Additionally, in the Company’s December 31, 2018 consolidated balance sheet, other intangible assets, net, includes a $3.9 million intangible asset related to favorable leases and prepaid expenses and other current assets includes a $2.6 million asset related to capitalized broker costs. In the Company’s December 31, 2019 consolidated balance sheet, such assets 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 26, Leases, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”. The update impacts the accounting for equity investments and the recognition of changes in fair value of financial liabilities when the fair value option is elected. The Company adopted the pronouncement during the first quarter of 2018 and such adoption had no impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The pronouncement contains a five-step model which replaces most existing revenue recognition guidance. The new standard became effective for the Company on January 1, 2018. The Company adopted the pronouncement using the modified retrospective approach. Therefore, on January 1, 2018, the Company adjusted its accounting for certain discounts which are related to the timing of payments by customers of its wholesale business and the Company recorded a cumulative-effect adjustment which reduced retained earnings by $46. Additionally, as of such date, the Company modified its accounting for certain metallic balloon sales of its wholesale segment and started to defer the recognition of revenue on such sales, and the related costs, until the balloons have been filled with helium. As a result, the Company recorded a cumulative-effect adjustment which increased retained earnings by less than $0.1 million. Finally, as of such date, the Company adjusted its accounting for certain discounts on wholesale sales of seasonal product and the Company recorded a cumulative-effect adjustment which reduced retained earnings by less than $0.1 million. See Note 24, Revenue from Contracts with Customers, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further discussion of the adoption of the pronouncement and the Company’s revenue recognition policy.

Quarterly Results

Despite a concentration of holidays in the fourth quarter of the year, as a result of our expansive product lines and customer base and increased promotional activities, the impact of seasonality on the quarterly results of our wholesale segment has been limited. Our retail segment is subject to significant seasonal variations. Historically, our retail segment has realized a significant portion of its revenues, cash flow and net income in the fourth quarter of the year, principally due to our Halloween sales in October and, to a lesser extent, year-end holiday sales. The table below sets forth our historical revenues, gross profit, income (loss) from operations, net

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income (loss), net income (loss) attributable to common shareholders of Party City Holdco Inc. and net income (loss) per share attributable to common shareholders of Party City Holdco Inc. (Basic and Diluted) for each of the last twelve quarters (dollars in thousands):

	For the Three Months Ended,
	March 31,			June 30,		September 30,			December 31,
2019:
Net sales	$	511,102		$	561,702	$	538,345		$	728,361
Royalties and franchise fees		2,014			2,189		1,886			3,190
Gross profit		172,060			208,646		164,932			293,239
(Loss) income from operations		(10,297	)		97,485		(277,526	)		(227,055	)
Net (loss) income		(30,289	)		48,005		(281,745	)		(268,829	)
Net (loss) income attributable to common shareholders of Party City Holdco Inc.		(30,218	)		48,074		(281,533	)		(268,818	)
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic	$	(0.32	)	$	0.52	$	(3.02	)	$	(2.88	)
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted	$	(0.32	)	$	0.51	$	(3.02	)	$	(2.88	)

	For the Three Months Ended,
	March 31,			June 30,		September 30,			December 31,
2018:
Net sales	$	505,108		$	558,101	$	550,840		$	802,393
Royalties and franchise fees		2,716			2,910		2,206			3,241
Gross profit		188,142			228,624		201,199			363,119
Income from operations		22,256			65,451		31,738			158,840
Net (loss) income		(1,163	)		28,048		(2,440	)		98,374
Net (loss) income attributable to common shareholders of Party City Holdco Inc.		(1,133	)		28,487		(2,420	)		98,325
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic	$	(0.01	)	$	0.30	$	(0.03	)	$	1.03
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted	$	(0.01	)	$	0.29	$	(0.03	)	$	1.02

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	For the Three Months Ended,
	March 31,			June 30,		September 30,		December 31,
2017:
Net sales	$	473,963		$	541,653	$	557,350	$	785,020
Royalties and franchise fees		3,036			3,225		2,759		4,563
Gross profit		175,244			219,753		199,827		367,883
Income from operations		14,671			60,699		37,388		167,378
Net (loss) income		(4,683	)		24,982		10,084		184,957
Net (loss) income attributable to common shareholders of Party City Holdco Inc.		(4,683	)		24,982		10,084		184,957
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic	$	(0.04	)	$	0.21	$	0.08	$	1.59
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted	$	(0.04	)	$	0.21	$	0.08	$	1.58

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Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

As a result of our variable rate ABL Facility and Term Loan Credit Agreement, our earnings are affected by changes in interest rates.

The Term Loan Credit Agreement provides for two pricing options for outstanding loans: (i) an ABR for any day, a rate per annum equal to the greater of (a) the prime rate in effect on such day, (b) the federal funds effective rate in effect on such day plus 0.5%, (c) the adjusted LIBOR rate plus 1% and (d) 1.75% or (ii) the LIBOR rate, with a LIBOR floor of 0.75%, in each case plus an applicable margin.

If market interest rates for our variable rate indebtedness had averaged 2% more than the actual market interest rates during the year ended December 31, 2019, our interest expense for the year would have increased by $22.6 million.

This amount is determined by considering the impact of the hypothetical interest rates on our borrowings. This analysis does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management could potentially take action to mitigate our exposure to the change. However, due to the uncertainty of the specific actions that we would take and their possible effects, the sensitivity analysis assumes no changes in our financial structure.

Foreign Currency Risk

As a result of the sale of our products in foreign markets, our earnings are affected by fluctuations in the value of the U.S. Dollar (“USD”) when compared to the values of foreign currencies. Specifically, foreign currency fluctuations impact us in four ways:

1) Certain foreign subsidiaries purchase product or raw materials in U.S. Dollars and sell such product in their local currencies. To the extent that the subsidiaries cannot adjust their local currency selling prices to reflect the strengthening of the U.S. Dollar, the subsidiaries’ gross margins are negatively impacted when the related product is sold. The subsidiaries that are impacted by this risk principally operate in the Canadian dollar, Euro, British Pound Sterling, Australian dollar and Mexican Peso. British Pound Sterling-based subsidiaries purchase approximately $33 million of USD-denominated product per year. Euro-based subsidiaries purchase approximately $35 million of USD-denominated product per year. Canadian dollar-based subsidiaries purchase approximately $28 million of USD-denominated product per year. Australian Dollar-based subsidiaries purchase approximately $12 million of USD-denominated product per year. Mexican Peso-based subsidiaries purchase approximately $4 million of USD-denominated raw materials/finished goods per year.

2) Certain foreign subsidiaries sell product in U.S. Dollars and manufacture/purchase such product in their local currencies. To the extent that the subsidiaries cannot adjust their selling prices to reflect the weakening of the U.S. Dollar, the subsidiaries’ gross margins are negatively impacted when sales occur. The subsidiaries that are impacted by this risk principally operate in the Malaysian Ringgit. Ringgit-based subsidiaries sell approximately $20 million of product in U.S. Dollars on an annual basis.

We periodically enter into foreign currency forward contracts to hedge against a portion of the earnings impact of the risks discussed in points 1. and 2. See Note 22, Derivative Financial Instruments, of Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further detail of our existing contracts. Although we periodically enter into such contracts, we (1) may not be able to achieve hedge effectiveness in order to qualify for “hedge accounting” treatment and, therefore, would record any gain or loss on the mark-to-market of open contracts in our statement of income and (2) may not be able to hedge such risks completely or permanently.

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3) During our financial statement close process, we adjust open receivables and payables that are not in the functional currencies of our subsidiaries to the latest foreign currency exchange rates. These receivables and payables are principally generated through the sales and inventory purchases discussed in points 1. and 2. above. The gains and losses created by such adjustments are primarily recorded in our statement of income.

4) Additionally, the financial statements of foreign subsidiaries with functional currencies other than the U.S. Dollar are translated into U.S. Dollars during our financial statement close process. To the extent that the U.S. Dollar fluctuates versus such functional currencies, our consolidated financial statements are impacted. Based on the loss from operations for such subsidiaries for the year ended December 31, 2019, a uniform 10% change in such exchange rates versus the U.S. Dollar would have impacted our consolidated loss from operations for the year by approximately ($0.5) million.

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Item 8. Financial Statements and Supplementary Data

PARTY CITY HOLDCO INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm	71
Consolidated Balance Sheets at December 31, 2019 and December 31, 2018	73
Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 2019, December 31, 2018 and December 31, 2017	74
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, December 31, 2018 and December 31, 2017	75
Consolidated Statements of Cash Flows for the years ended December 31, 2019, December 31, 2018 and December 31, 2017	76
Notes to Consolidated Financial Statements	77
Financial Statement Schedules for the years ended December 31, 2019, December 31, 2018 and December 31, 2017:
Schedule I—Condensed Financial Information	117
Schedule II—Valuation and Qualifying Accounts	121

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

70

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Party City Holdco Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Party City Holdco Inc. and subsidiaries (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive (loss) income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedules listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 12, 2020 expressed an unqualified opinion thereon.

Adoption of New Accounting Standards

ASU No. 2016-02

As discussed in Note 2 and Note 26 to the consolidated financial statements, effective January 1, 2019 the Company changed its method of accounting for leases due to the adoption of ASU No. 2016-02, Leases (Topic 842).

ASU No. 2014-09

As discussed in Note 2 and Note 24 to the consolidated financial statements, effective January 1, 2018 the Company changed its method for recognizing revenue due to the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1998.

New York, New York

March 12, 2020

71

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Party City Holdco Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Party City Holdco Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Party City Holdco Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive (loss) income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedules listed in the Index at Item 15 and our report dated March 12, 2020 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

New York, New York

March 12, 2020

72

PARTY CITY HOLDCO INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	December 31, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	34,917		$	58,909
Accounts receivable, net		149,109			146,983
Inventories, net		658,419			756,038
Prepaid expenses and other current assets		51,685			61,905
Total current assets		894,130			1,023,835
Property, plant and equipment, net		243,572			321,044
Operating lease asset		802,634			—
Goodwill		1,072,330			1,656,950
Trade names		530,320			568,031
Other intangible assets, net		45,060			60,164
Other assets, net		7,273			12,323
Total assets	$	3,595,319		$	3,642,347
LIABILITIES, REDEEMABLE SECURITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Loans and notes payable	$	128,806		$	302,751
Accounts payable		152,300			208,149
Accrued expenses		150,921			161,228
Current portion of operating lease liability		155,471			—
Income taxes payable		35,905			25,993
Current portion of long-term obligations		71,524			13,316
Total current liabilities		694,927			711,437
Long-term obligations, excluding current portion		1,503,987			1,621,963
Long-term portion of operating lease liability		720,735			—
Deferred income tax liabilities		126,081			174,427
Other long-term liabilities		16,517			87,548
Total liabilities		3,062,247			2,595,375
Redeemable securities		3,351			3,351
Commitments and contingencies
Stockholders’ equity:
Common stock (94,461,576 and 93,622,934 shares outstanding and 121,662,540 and 120,788,159 shares issued at December 31, 2019 and December 31, 2018, respectively)		1,211			1,208
Additional paid-in capital		928,573			922,476
Retained (deficit) earnings		(37,219	)		495,777
Accumulated other comprehensive loss		(35,734	)		(49,201	)
Total Party City Holdco Inc. stockholders’ equity before common stock held in treasury		856,831			1,370,260
Less: Common stock held in treasury, at cost (27,200,964 shares and 27,165,225 shares at December 31, 2019 and December 31, 2018, respectively)		(327,086	)		(326,930	)
Total Party City Holdco Inc. stockholders’ equity		529,745			1,043,330
Noncontrolling interests		(24	)		291
Total stockholders’ equity		529,721			1,043,621
Total liabilities, redeemable securities and stockholders’ equity	$	3,595,319		$	3,642,347

See accompanying notes to consolidated financial statements.

73

PARTY CITY HOLDCO INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(In thousands, except share and per share data)

	Fiscal Year Ended December 31,
	2019			2018			2017
Revenues:
Net sales	$	2,339,510		$	2,416,442		$	2,357,986
Royalties and franchise fees		9,279			11,073			13,583
Total revenues		2,348,789			2,427,515			2,371,569
Expenses:
Cost of sales		1,500,633			1,435,358			1,395,279
Wholesale selling expenses		67,103			71,502			65,356
Retail operating expenses		440,395			425,996			415,167
Franchise expenses		13,152			13,214			14,957
General and administrative expenses		177,672			172,764			168,369
Art and development costs		23,203			23,388			23,331
Development stage expenses		10,736			7,008			8,974
Gain on sale/leaseback transaction		(58,381	)		—			—
Store impairment and restructuring charges		29,038			—			—
Goodwill and intangibles impairment		562,631			—			—
Total expenses		2,766,182			2,149,230			2,091,433
(Loss) income from operations		(417,393	)		278,285			280,136
Interest expense, net		114,899			105,706			87,366
Other expense, net		1,871			10,982			4,626
(Loss) income before income taxes		(534,163	)		161,597			188,144
Income tax expense (benefit)		(1,305	)		38,778			(27,196	)
Net (loss) income		(532,858	)		122,819			215,340
Add: Net income attributable to redeemable securities holder		—			409			—
Less: Net loss attributable to noncontrolling interests		(363	)		(31	)		—
Net (loss) income attributable to common shareholders of Party City Holdco Inc	$	(532,495	)	$	123,259		$	215,340
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic	$	(5.71	)	$	1.28		$	1.81
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted	$	(5.71	)	$	1.27		$	1.79
Weighted-average number of common shares—Basic		93,295,692			96,133,144			118,589,421
Weighted-average number of common shares—Diluted		93,295,692			97,271,050			119,894,021
Other comprehensive (loss) income, net of tax:
Foreign currency adjustments	$	12,599		$	(14,479	)	$	17,561
Cash flow hedges		845			1,063			(1,140	)
Other comprehensive income (loss), net		13,444			(13,416	)		16,421
Comprehensive (loss) income		(519,414	)		109,403			231,761
Add: Comprehensive income attributable to redeemable securities holder		—			409			—
Less: Comprehensive loss attributable to noncontrolling interests		(386	)		(64	)		—
Comprehensive (loss) income attributable to common shareholders of Party City Holdco Inc.	$	(519,028	)	$	109,876		$	231,761

See accompanying notes to consolidated financial statements.

74

PARTY CITY HOLDCO INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Years Ended December 31, 2017, December 31, 2018 and December 31, 2019

(In thousands)

	Common Stock		Additional Paid-in Capital			Retained Earnings (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, 2016	$	1,195	$	910,167		$	157,666		$	(52,239	)	$	1,016,789		$	—		$	1,016,789		$	—		$	1,016,789
Net income							215,340						215,340						215,340						215,340
Stock option expense				5,309									5,309						5,309						5,309
Warrant				421									421						421						421
Adjustment to redeemable securities							(410	)					(410	)					(410	)					(410	)
Exercise of stock options		3		1,295									1,298						1,298						1,298
Foreign currency adjustments										17,561			17,561						17,561						17,561
Treasury stock purchases													—			(286,733	)		(286,733	)					(286,733	)
Acquired noncontrolling interest													—						—			355			355
Impact of foreign exchange contracts										(1,140	)		(1,140	)					(1,140	)					(1,140	)
Balance at December 31, 2017	$	1,198	$	917,192		$	372,596		$	(35,818	)	$	1,255,168		$	(286,733	)	$	968,435		$	355		$	968,790
Cumulative effect of change in accounting principle, net (see Note 2)							(78	)					(78	)					(78	)					(78	)
Balance at December 31, 2017, adjusted	$	1,198	$	917,192		$	372,518		$	(35,818	)	$	1,255,090		$	(286,733	)	$	968,357		$	355		$	968,712
Net income							122,850						122,850						122,850			(31	)		122,819
Net income attributable to redeemable securities holder							409						409						409						409
Stock option expense				1,744									1,744						1,744						1,744
Restricted stock units—time-based		6		1,168									1,174						1,174						1,174
Directors—non-cash compensation				196									196						196						196
Warrant				(89	)								(89	)					(89	)					(89	)
Exercise of stock options		4		2,265									2,269						2,269						2,269
Foreign currency adjustments										(14,446	)		(14,446	)					(14,446	)		(33	)		(14,479	)
Treasury stock purchases													—			(40,197	)		(40,197	)					(40,197	)
Impact of foreign exchange contracts										1,063			1,063						1,063						1,063
Balance at December 31, 2018	$	1,208	$	922,476		$	495,777		$	(49,201	)	$	1,370,260		$	(326,930	)	$	1,043,330		$	291		$	1,043,621
Cumulative effect of change in accounting principle, net (see Note 2)		—		662			(503	)		—			159			—			159			—			159
Balance at December 31, 2018, adjusted	$	1,208	$	923,138		$	495,274		$	(49,201	)	$	1,370,419		$	(326,930	)	$	1,043,489		$	291		$	1,043,780
Net income (loss)							(532,495	)					(532,495	)					(532,495	)		(363	)		(532,858	)
Stock option expense				1,319									1,319						1,319						1,319
Restricted stock units—time-based				2,033									2,033						2,033						2,033
Directors—non-cash compensation				313									313						313						313
Warrant				515									515						515						515
Exercise of stock options		3		1,145									1,148						1,148						1,148
Acquired non-controlling interest				110									110						110			71			181
Foreign currency adjustments (see Note 23)										12,622			12,622						12,622			(23	)		12,599
Treasury stock purchases													—			(156	)		(156	)					(156	)
Impact of foreign exchange contracts				—			2			845			847						847						847
Balance at December 31, 2019	$	1,211	$	928,573		$	(37,219	)	$	(35,734	)	$	856,831		$	(327,086	)	$	529,745		$	(24	)	$	529,721

75

PARTY CITY HOLDCO INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Fiscal Year Ended December 31,
	2019			2018			2017
				(Adjusted, see Note 2)			(Adjusted, see Note 2)
Cash flows provided by operating activities:
Net (loss) income	$	(532,858	)	$	122,819		$	215,340
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization expense		81,116			78,575			85,168
Amortization of deferred financing costs and original issuance discounts		4,722			10,989			4,937
Provision for doubtful accounts		2,323			1,213			560
Deferred income tax (benefit) expense		(47,366	)		4,573			(102,651	)
Deferred rent		—			5,351			7,287
Undistributed income in equity method investments		(472	)		(369	)		(194	)
Change in operating lease liability/asset		(9,942	)		—			—
(Gain) loss on disposal of assets		(59,786	)		3			475
Non-cash adjustment for store impairment and restructuring		20,236			—			—
Goodwill and intangibles impairment		562,631			—			—
Non-employee equity based compensation		515			81			3,033
Stock option expense		1,319			1,744			5,309
Restricted stock units expense—time-based		2,033			1,174			—
Directors—non-cash compensation		313			196			—
Changes in operating assets and liabilities, net of effects of acquired businesses:
(Increase) decrease in accounts receivable		(2,600	)		(10,431	)		1,153
Decrease (increase) in inventories		72,385			(142,866	)		37,175
Decrease (increase) in prepaid expenses and other current assets		14,741			16,666			(9,117	)
(Decrease) increase in accounts payable, accrued expenses and income taxes payable		(65,617	)		12,138			19,408
Net cash provided by operating activities		43,693			101,856			267,883
Cash flows provided by (used in) investing activities:
Cash paid in connection with acquisitions, net of cash acquired		(20,878	)		(65,301	)		(74,710	)
Capital expenditures		(61,733	)		(85,661	)		(66,970	)
Proceeds from disposal of property and equipment		246,286			55			35
Net cash provided (used in) investing activities		163,675			(150,907	)		(141,645	)
Cash flows (used in) provided by financing activities:
Repayment of loans, notes payable and long-term obligations		(441,632	)		(547,695	)		(234,619	)
Proceeds from loans, notes payable and long-term obligations		203,344			652,087			380,092
Exercise of stock options		1,148			2,269			1,298
Treasury stock purchases		(156	)		(40,197	)		(286,733	)
Debt issuance and modification costs		(414	)		(10,294	)		—
Net cash (used in) provided by financing activities		(237,710	)		56,170			(139,962	)
Effect of exchange rate changes on cash and cash equivalents		6,299			(2,308	)		3,367
Net (decrease) increase in cash and cash equivalents and restricted cash		(24,043	)		4,811			(10,357	)
Cash and cash equivalents and restricted cash at beginning of period		59,219			54,408			64,765
Cash and cash equivalents and restricted cash at end of period	$	35,176		$	59,219		$	54,408
Supplemental disclosure of cash flow information:
Cash paid during the period:
Interest	$	108,561		$	94,472		$	76,171
Income taxes, net of refunds	$	36,093		$	59,156		$	66,445

See accompanying notes to consolidated financial statements.

76

PARTY CITY HOLDCO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share)

Note 1—Organization, Description of Business and Basis of Presentation

Party City Holdco Inc. (the “Company” or “Party City Holdco”) is the leading party goods company by revenue in North America and, we believe, the largest vertically integrated supplier of decorated party goods globally by revenue. The Company is a popular one-stop shopping destination for party supplies, balloons, and costumes. In addition to being a great retail brand, the Company is a global, world-class organization that combines state-of-the-art manufacturing and sourcing operations, and sophisticated wholesale operations complemented by a multi-channel retailing strategy and e-commerce retail operations. The Company is a leading player in its category and vertically integrated in its breadth and depth. 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 throughout the world. The Company’s retail operations include approximately 875 specialty retail party supply stores (including franchise stores) throughout the United States and Mexico operating under the names Party City and Halloween City, and e-commerce websites, including through the domain name PartyCity.com and others.

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.

Note 2—Summary of Significant Accounting Policies

Consolidated Financial Statements

The consolidated financial statements of the Company include the accounts of all majority-owned subsidiaries and controlled entities. All intercompany balances and transactions have been eliminated.

The Company’s 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 their 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 consolidated financial statements of the Company combine the Fiscal Year and Fiscal Quarters of the Company’s retail operations with the calendar year and calendar quarters of the Company’s wholesale operations, as the differences are not significant.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Management periodically evaluates estimates used in the preparation of the consolidated financial statements for continued reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based on such periodic evaluations.

Cash Equivalents

Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. All credit card transactions that process in less than seven days are classified as cash and cash equivalents.

77

Inventories

Inventories are valued at the lower of cost and net realizable value. In assessing the ultimate realization of inventories, the Company makes judgments regarding, among other things, future demand and market conditions, current inventory levels and the impact of the possible discontinuation of product designs.

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.

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. Judgment is required in assessing the ultimate realization of these receivables, including consideration of the Company’s history of receivable write-offs, the level of past due accounts and the economic status of the Company’s customers. In an effort to identify adverse trends relative to customer economic status, the Company assesses the financial health of the markets it operates in and performs periodic credit evaluations of its customers and ongoing reviews of account balances and aging of receivables. Amounts are considered past due when payment has not been received within the time frame of the credit terms extended. Write-offs are charged directly against the allowance for doubtful accounts and occur only after all collection efforts have been exhausted. At December 31, 2019 and 2018, the allowance for doubtful accounts was $4,786 and $2,933, respectively.

Long-Lived and Intangible Assets (including Goodwill)

Property, plant and equipment are stated at cost. 

The Company reviews the recoverability of its finite long-lived assets, including finite-lived intangible assets, whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. For purposes of recognizing and measuring impairment, the Company evaluates long-lived assets/asset groups, other than goodwill, based upon the lowest level of independent cash flows ascertainable to evaluate impairment. If an impairment indicator exists, we compare the undiscounted future cash flows of the asset/asset group to the carrying value of the asset/asset group. If the sum of the undiscounted future cash flows is less than the carrying value of the asset/asset group, we would calculate discounted future cash flows based on market participant assumptions. If the sum of discounted cash flows is less than the carrying value of the asset/asset group, we would recognize an impairment loss. The impairment related to long-lived assets is measured as the amount by which the carrying amount of the asset(s) exceeds the fair value of the asset(s).

In the evaluation of the fair value and future benefits of finite long-lived assets attached to retail stores, the Company performs its cash flow analysis generally on a store-by-store basis. Various factors including future sales growth and profit margins are included in this analysis.

The Company evaluates the goodwill associated with its acquisitions, and other intangibles with indefinite lives, for impairment as of the first day of its fourth quarter based on current and projected performance, or more frequently if circumstances indicate a possible impairment. For purposes of testing goodwill for impairment, reporting units are determined by identifying operating segments within the Company’s organization which constitute a business for which discrete financial information is available and is reviewed by management. Components within an operating segment are aggregated to the extent that they have similar economic characteristics. Based on this evaluation, the Company has determined that its operating segments, wholesale and retail, represent reporting units for the purposes of its goodwill impairment test.

78

If it is concluded that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company estimates the fair value of the reporting unit using a combination of a market approach and an income approach. If such carrying value exceeds the fair value an impairment loss will be recognized in an amount equal to such excess. The fair value of a reporting unit refers to the amount at which the unit as a whole could be sold in a current transaction between willing parties.

Our Trade names are treated as indefinite-lived intangible assets and, therefore are not amortized, but rather are tested for impairment annually in the fourth fiscal quarter, unless there are events requiring an earlier assessment or changes in circumstances during an interim period providing impairment indicators are present. When performing a quantitative impairment assessment of our Trade name indefinite-lived intangible assets, the fair value of the Trade names is estimated using a discounted cash flow analysis based on the “relief from royalty” method, assuming that a third party would be willing to pay a royalty in lieu of ownership for this intangible asset. This approach is dependent on many factors, including estimates of future growth, royalty rates, and discount rates. Actual future results may differ from these estimates. Impairment loss is recognized when the estimated fair value of the indefinite-lived intangible asset is less than its carrying amount.

Deferred Financing Costs

Deferred financing costs are netted against amounts outstanding under the related debt instruments. They are amortized to interest expense over the terms of the instruments using the effective interest method.

Equity Method Investments

The Company has an investment in Convergram Mexico, S. De R.L. De C.V., a joint venture distributing metallic balloons, principally in Mexico and Latin America. The Company accounts for its 49.9% investment in the joint venture using the equity method of accounting.

The Company’s investments are included in other assets on the consolidated balance sheet and the results of the investees’ operations are included in other expense in the consolidated statement of operations and comprehensive (loss) income (see Note 14, Other Expense, net).

Insurance Accruals

The Company maintains certain self-insured workers’ compensation and general liability insurance plans. The Company estimates the required liability for claims under such plans based upon various assumptions, which include, but are not limited to, historical loss experience, projected loss development factors, actual payroll and other data. The required liability is also subject to adjustment in the future based upon changes in claims experience, including changes in the number of incidents (frequency) and changes in the ultimate cost per incident (severity).

Revenue Recognition

Retail

Revenue from retail store operations is recognized at the point of sale as control of the product is transferred to the customer at such time. Retail e-commerce sales are recognized when the consumer receives the product as control transfers upon delivery. Due to its extensive history operating as the largest party goods retailer in North America, the Company has sufficient history with which to estimate future retail sales returns and it uses the expected value method to estimate such activity.

The transaction price for the majority of the Company’s retail sales is based on either: 1) the item’s stated price or 2) the stated price adjusted for the impact of a coupon which can only be applied to such transaction. To the extent that the Company charges customers for freight costs on e-commerce sales, the Company records such amounts in revenue. The Company excludes all sales taxes and value-added taxes from revenue.

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Under the terms of its agreements with its franchisees, the Company provides both: 1) brand value (via significant advertising spend) and 2) support with respect to planograms, in exchange for a royalty fee that ranges from 4% to 6% of the franchisees’ sales. The Company records the royalty fees at the time that the franchisees’ sales are recorded. Additionally, although the Company anticipates that future franchise store openings will be limited, when a franchisee opens a new store, the Company receives and records a one-time fee which is earned by the Company for its assistance with site selection and development of the new location. Both the sales-based royalty fee and the one-time fee are recorded in royalties and franchise fees in the Company’s consolidated statement of operations and comprehensive (loss) income.

Wholesale

For most of the Company’s wholesale sales, control transfers upon the Company’s shipment of the product. Wholesale sales returns are not significant as the Company generally only accepts the return of goods that were shipped to the customer in error or that were damaged when received by the customer. Additionally, due to its extensive history operating as a leading party goods wholesaler, the Company has sufficient history with which to estimate future sales returns.

In most cases, the determination of the transaction price is fixed based on the contract and/or purchase order. To the extent that the Company charges customers for freight costs, the Company records such amounts in revenue. The Company excludes all sales taxes and value-added taxes from revenue.

The majority of the sales for the Company’s wholesale business are due within 30 to 120 days from the transfer of control of the product and substantially all of the sales are collected within a year from such transfer. For all transactions for which the Company expects to collect the transaction price within a year from the transfer of control, the Company does not adjust the consideration for the effects of a significant financing component.

Cost of Sales

Cost of sales at wholesale reflects the production costs (i.e., raw materials, labor and overhead) of manufactured goods and the direct cost of purchased goods, inventory shrinkage, inventory adjustments, inbound freight to the Company’s manufacturing and distribution facilities, distribution costs and outbound freight to transfer goods to the Company’s wholesale customers. At retail, cost of sales reflects the direct costs of goods purchased from third parties and the production costs/purchase costs of goods acquired from the Company’s wholesale operations. Retail cost of sales also includes inventory shrinkage, inventory adjustments, inbound freight, occupancy costs related to store operations (such as rent, utilities and common area maintenance), depreciation on assets and all logistics costs (i.e., handling and distribution costs) associated with the Company’s e-commerce business.

Retail Operating Expenses

Retail operating expenses include costs associated with the operation of the Company’s retail stores (with the exception of occupancy costs, which are included in cost of sales). Retail operating expenses principally consist of employee compensation and benefits, advertising, supplies expense and credit card fees.

Shipping and Handling

Outbound shipping costs billed to customers are included in net sales. The costs of shipping and handling incurred by the Company are included in cost of sales.

Product Royalty Agreements

The Company enters into product royalty agreements that allow the Company to use licensed designs on certain of its products. These contracts require the Company to pay royalties, generally based on the sales of such

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product, and may require guaranteed minimum royalties, a portion of which may be paid in advance. The Company matches royalty expense with revenue by recording royalties at the time of sale, at the greater of the contractual rate or an effective rate calculated based on the guaranteed minimum royalty and the Company’s estimate of sales during the contract period. If a portion of the guaranteed minimum royalty is determined to be unrecoverable, the unrecoverable portion is charged to expense at that time. Guaranteed minimum royalties paid in advance are recorded in the consolidated balance sheets in either prepaid expenses and other current assets or other assets, depending on the nature of the royalties.

Catalog Costs

The Company expenses costs associated with the production of catalogs when incurred.

Advertising

Advertising costs are expensed as incurred. Retail advertising expenses for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 were $72,518, $68,756, and $61,187, respectively.

Variable Interest Entities

When determining whether a legal entity should be consolidated, the Company first determines whether it has a variable interest in the legal entity. If a variable interest exists, the Company determines whether the legal entity is a variable interest entity due to either: 1) a lack of sufficient equity to finance its activities, 2) the equity holders lacking the characteristics of a controlling financial interest, or 3) the legal entity being structured with non-substantive voting rights. If the Company concludes that the legal entity is a variable interest entity, the Company next determines whether it is the primary beneficiary due to it possessing both: 1) the power to direct the activities of a variable interest entity that most significantly impact the variable interest entity’s economic performance, and 2) the obligation to absorb losses of the variable interest entity that potentially could be significant to the variable interest entity or the right to receive benefits from the variable interest entity which could be significant to the variable interest entity. If the Company concludes that it is the primary beneficiary, it consolidates the legal entity.

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. Although the Company currently only owns 26% of Kazzam’s equity, the Company has concluded that: a) Kazzam is a variable interest entity as it has insufficient equity at risk, and b) the Company is its primary beneficiary. Therefore, the Company has consolidated Kazzam into the Company’s financial statements.

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 mezzanine liability is adjusted to the greater of: a) the interest’s carrying amount under Accounting Standards Codification (“ASC”) Topic 810, “Consolidation”, or b) the fair value of the interest.

In January 2020, the Company and Ampology terminated certain services agreements and warrants that Ampology had in the Company stock. The parties concurrently entered into an interim transition agreement.  

Art and Development Costs

Art and development costs are primarily internal costs that are not easily associated with specific designs, some of which may not reach commercial production. Accordingly, the Company expenses these costs as incurred.

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Derivative Financial Instruments

ASC Topic 815, “Accounting for Derivative Instruments and Hedging Activities”, requires that all derivative financial instruments be recognized on the balance sheet at fair value and establishes criteria for both the designation and effectiveness of hedging activities. The Company uses derivatives in the management of interest rate and foreign currency exposure. ASC Topic 815 requires the Company to formally document the assets, liabilities or other transactions the Company designates as hedged items, the risk being hedged and the relationship between the hedged items and the hedging instruments. The Company must measure the effectiveness of the hedging relationship at the inception of the hedge and on an on-going basis.

If derivative financial instruments qualify as fair value hedges, the gain or loss on the instrument and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in net income during the period of the change in fair values. For derivative financial instruments that qualify as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive (loss) income and reclassified into net income in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of a cash flow hedge, if any, is determined based on the dollar-offset method (i.e., the gain or loss on the derivative financial instrument in excess of the cumulative change in the present value of future cash flows of the hedged item) and is recognized in net income during the period of change. As long as hedge effectiveness is maintained, interest rate swap arrangements and foreign currency exchange agreements qualify for hedge accounting as cash flow hedges (see Note 22, Derivative Financial Instruments).

Income Taxes

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities (and operating loss and tax credit carryforwards) applying enacted statutory tax rates in effect for the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the judgment of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Stock-Based Compensation

Accounting for stock-based compensation requires measurement of compensation cost for all stock-based awards at fair value on the date of grant and recognition of compensation expense over the service period for awards expected to vest.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the Company’s foreign currency adjustments and the impact of interest rate swap and foreign exchange contracts that qualify as hedges (see Note 22, Derivative Financial Instruments and Note 23, Changes in Accumulated Other Comprehensive Loss).

Foreign Currency Transactions and Translation

The functional currencies of the Company’s foreign operations are the local currencies in which they operate. Foreign currency exchange gains or losses resulting from receivables or payables in currencies other than the functional currencies generally are recognized in the Company’s statement of operations and comprehensive (loss) income. The balance sheets of foreign subsidiaries are translated into U.S. dollars at the exchange rates in effect on the balance sheet date. The results of operations of foreign subsidiaries are translated into U.S. dollars at the average exchange rates effective for the periods presented. The differences from historical exchange rates are recorded as comprehensive (loss) income and are included as a component of accumulated other comprehensive loss.

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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:

	Fiscal Year Ended December 31,
	2019			2018		2017
Net (loss) income attributable to common shareholders of Party City Holdco Inc.:	$	(532,495	)	$	123,259	$	215,340
Weighted average shares—Basic:		93,295,692			96,133,144		118,589,421
Effect of dilutive restricted stock units:		—			9,661		—
Effect of dilutive stock options:		—			1,128,245		1,304,600
Weighted average shares—Diluted:		93,295,692			97,271,050		119,894,021
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic:	$	(5.71	)	$	1.28	$	1.81
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted:	$	(5.71	)	$	1.27	$	1.79

During the year ended December 31, 2019, restricted stock, restricted stock units, stock options, and warrants were not included in the calculation of diluted net loss per share attributable to common shareholders of Party City Holdco Inc. During the years ended December 31, 2018, and December 31, 2017, 2,394,868 stock options and 2,392,150 stock options, respectively, were excluded from the calculations of net income per share attributable to common shareholders of Party City Holdco Inc.—diluted as they were anti-dilutive. Additionally, during each of the years ended December 31, 2018, and December 31, 2017, 596,000 warrants were excluded from the calculations of net income per share attributable to common shareholders of Party City Holdco Inc.—diluted as they were anti-dilutive. Further, during the years ended December 31, 2018, and December 31, 2017, 141,400 restricted stock units and 0 restricted stock units, respectively, were excluded from the calculations of net income per share attributable to common shareholders of Party City Holdco Inc.—diluted as they were anti-dilutive.

Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, “Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”. The new guidance improves and clarifies the fair value measurement disclosure requirements of ASC 820. The new disclosure requirements include the disclosure of the changes in unrealized gains or losses included in other comprehensive (loss) income for recurring Level 3 fair value measurements held at the end of the reporting period and the explicit requirement to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The other provisions of ASU 2018-13 also include eliminated and modified disclosure requirements. The guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted, including in an interim period for which financial statements have not been issued or made available for issuance. The Company has evaluated the impact of the adoption of this ASU and determined that it will have no significant impact on its condensed consolidated financial statements.

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In June 2018, the FASB issued 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 January 2017 the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates the requirement to measure a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the amendments in ASU 2017-04, an entity will perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized will not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity will consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Company adopted ASU No. 2017-04 during the first quarter of 2019. See Note 4.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows: Restricted Cash”. The pronouncement requires companies to show changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The Company adopted the pronouncement, which requires retrospective application, during the first quarter of 2018. The impact of such adoption was immaterial to the Company’s consolidated financial statements. See Note 27, Restricted Cash, for further discussion.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. The pronouncement clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The Company adopted the pronouncement during the first quarter of 2018 and such adoption did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses”. The ASU changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The pronouncement is effective for the Company during the first quarter of 2020. The Company is still evaluating the impact of the ASU on its consolidated financial statements, but does not expect it to have a material 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 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 its operating lease arrangements with terms of greater than twelve months. See the Company’s December 31, 2019 consolidated balance sheet for the impact of such adoption.

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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 December 31, 2019 consolidated balance sheet, such accounts 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 and prepaid expenses and other current assets includes a $2,552 asset related to capitalized broker costs. In the Company’s December 31, 2019 consolidated balance sheet, such assets 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 26, Leases.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”. The update impacts the accounting for equity investments and the recognition of changes in fair value of financial liabilities when the fair value option is elected. The Company adopted the pronouncement during the first quarter of 2018 and such adoption had no impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The pronouncement contains a five-step model which replaces most existing revenue recognition guidance. The new standard became effective for the Company on January 1, 2018. The Company adopted the pronouncement using the modified retrospective approach. Therefore, on January 1, 2018, the Company adjusted its accounting for certain discounts which are related to the timing of payments by customers of its wholesale business and the Company recorded a cumulative-effect adjustment which reduced retained earnings by $46. Additionally, as of such date, the Company modified its accounting for certain metallic balloon sales of its wholesale segment and started to defer the recognition of revenue on such sales, and the related costs, until the balloons have been filled with helium. As a result, the Company recorded a cumulative-effect adjustment which increased retained earnings by $8. Finally, as of such date, the Company adjusted its accounting for certain discounts on wholesale sales of seasonal product and the Company recorded a cumulative-effect adjustment which reduced retained earnings by $40. See Note 24, Revenue from Contracts with Customers, for further discussion of the adoption of the pronouncement and the Company’s revenue recognition policy.

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Note 3—Store Impairment and Restructuring charges

Each year, the Company typically closes approximately ten 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 year ended December 31, 2019, the Company performed a comprehensive review of its store locations aimed at improving the overall productivity of such locations (“store optimization program”) and, 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 55 stores which are primarily located in close proximity to other Party City stores. These closings are expected to provide the Company with capital flexibility to expand into underserved markets. In conjunction with the store optimization program, during the year ended December 31, 2019, the Company recorded the following charges:

	December 31,
	2019
Inventory reserves	$	21,284
Operating lease asset impairment		14,943
Property, plant and equipment impairment		4,680
Labor and other costs incurred closing stores		8,754
Severance		661
Total	$	50,322

Such amounts represent the Company’s best estimate of the total charges that are expected to be recorded for such items. As the Company closes the stores, it records 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 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, including data on the ability to sub-lease the stores.

The charge for inventory reserves represents inventory that is disposed of following the closures of the stores and inventory that is 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.

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.

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Note 4—Goodwill

	Fiscal Year Ended December 31,
	2019			2018
Wholesale segment:
Beginning balance	$	510,490		$	513,946
Granmark acquisition		—			(1,115	)
Print Appeal acquisition		—			277
Other acquisitions		—			132
Allocation of Goodwill from Retail segment		42,230
Goodwill impairment		(60,427	)		—
Foreign currency translation		1,139			(2,750	)
Ending balance		493,432			510,490
Retail segment:
Beginning balance		1,146,460			1,105,307
Store acquisitions		2,557			42,801
Acquisitions		15,375			—
Sale of Canadian-based Party City stores		(48,241	)		—
Allocation of Goodwill to Wholesale segment		(42,230	)		—
Goodwill impairment		(495,629	)		—
Foreign currency translation		606			(1,648	)
Ending balance		578,898			1,146,460
Total ending balance, both segments	$	1,072,330		$	1,656,950

The Company reviews goodwill and other intangibles that have indefinite lives for impairment annually as of October 1 or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. Impairment testing is based upon the best information available including estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. Significant assumptions and estimates are required, including, but not limited to, projecting future cash flows, determining appropriate discount rates and terminal growth rates, and other assumptions, to estimate the fair value of goodwill and indefinite lived intangible assets. Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact its reported financial results.

During the three months ended September 30, 2019, and the three months ended December 31, 2019, the Company identified an impairment indicator associated with its market capitalization and performed impairment tests on the goodwill at its wholesale and retail reporting units and its other indefinite lived intangible assets as of September 30, 2019 and December 31, 2019. The Company recognized non-cash pre-tax goodwill impairment charges at September 30, 2019 of $224,100 and $35,000 and at December 31, 2019, of $271,500 and $25,400, against the goodwill associated with its retail and wholesale reporting units, respectively.

Note 5—Sale/Leaseback Transaction

In June 2019, the Company sold its main distribution center in Chester, New York, its metallic balloons manufacturing facility in Eden Prairie, Minnesota and its injection molded plastics manufacturing facility in Los Lunas, New Mexico. Simultaneously, the Company entered into twenty-year leases for each of the facilities. The aggregate sale price was $128,000 and, during the year ended December 31, 2019, the Company recorded a $58,381 gain on the sale, net of transaction costs, in the Company’s condensed consolidated statement of operations and comprehensive loss.

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Under the terms of the lease agreements, the Company will pay total rent of $8,320 during the first year and the annual rent will increase by 2% thereafter.

The Chester and Eden Prairie leases are being accounted for as operating leases and the sale of such properties is included in the gain above.

However, for the Los Lunas property, the present value of the lease payments is greater than substantially all of the fair value of the assets. Therefore, the lease is a finance lease and sale accounting treatment is prohibited. As such, the Company accounted for the proceeds as a financing lease. As of December 31, 2019, $11,990 is recorded in long-term obligations in the Company’s consolidated balance sheet. 

In conjunction with the sale/leaseback transaction, the Company amended its Term Loan Credit Agreement. The amendment required the Company to use half of the proceeds from the transaction, net of costs, to paydown part of the outstanding balance under such debt agreement. Additionally, the amendment required the Company to pay an immaterial “consent fee” to the lenders. As the Term Loan Credit Agreement is a loan syndication, the Company assessed, on a creditor-by-creditor basis, whether the amendment should be accounted for as an extinguishment or a modification. The Company concluded that, for each creditor, the amendment should be accounted for as a modification. Therefore, no capitalized deferred financing costs or original issuance discounts were written off in conjunction with the amendment.

During June 2019, the Company used proceeds from the sale (net of costs) of $125,864 to paydown outstanding Term Loan debt of $62,770 with the balance used to paydown the ABL. See Note 12.

Note 6—Disposition of Assets

On October 1, 2019, the Company sold its Canadian-based Party City stores to a Canadian-based retailer for $131,711 and entered into a 10-year supply agreement under which the acquirer agreed to purchase product from the Company for such Party City stores, as well as the acquirer’s other stores. The Company will use the net proceeds to paydown debt. For the years ended December 31, 2019, 2018, and 2017, the Canadian-based Party City stores had pre-tax income of $2,631, $10,737, and $8,947, respectively.  

The Company recorded a $2,873 gain on sale of assets, which is reported in Other expense, net on the Consolidated Statement of Operations and Comprehensive (Loss) Income.

Note 7—Inventories, Net

Inventories consisted of the following:

	December 31,
	2019		2018
Finished goods	$	606,036	$	706,327
Raw materials		34,259		33,423
Work in process		18,124		16,288
	$	658,419	$	756,038

See Note 2, Summary of Significant Accounting Policies, for a discussion of the Company’s accounting policies for inventories.

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Note 8—Property, Plant and Equipment, Net

Property, plant and equipment, net consisted of the following:

	December 31,
	2019			2018			Useful lives
Machinery and equipment	$	255,908		$	216,097			3-15 years
Buildings		9,838			68,810			40 years
Data processing equipment		92,256			82,735			3-5 years
Leasehold improvements		117,894			137,508			1-10 years
Furniture and fixtures		168,296			191,183			5-10 years
Land		7,047			11,069
		651,240			707,402
Less: accumulated depreciation		(407,668	)		(386,358	)
	$	243,572		$	321,044

Depreciation expense related to property, plant and equipment, including assets under finance leases, was $67,016, $66,304, and $68,209, for the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively. Assets under finance leases are principally included in machinery and equipment in the table above. See Note 3 for detail regarding property, plant and equipment impairment.

Note 9—Acquisitions

During March 2018, the Company acquired 11 franchise stores, which are located in Maryland, for total consideration (including non-cash consideration) of approximately $17,000. The following summarizes the fair values of the major classes of assets acquired and liabilities assumed: inventories of $3,500, property, plant and equipment of $200, a reacquired right intangible asset in the amount of $4,000, and an asset in the amount of $100 due to leases that are favorable when compared to market rates. 

Also, during July 2018, the Company acquired an additional 16 franchise stores, which are located in Pennsylvania, for total consideration (including non-cash consideration) of approximately $20,500. The following summarizes the fair values of the major classes of assets acquired and liabilities assumed: inventories of $4,200, property, plant and equipment of $500, a reacquired right intangible asset in the amount of $3,400, and an asset in the amount of $500 due to leases that are favorable when compared to market rates.

Additionally, during September 2018, the Company acquired 21 franchise stores, which are located in Minnesota, North Dakota and Texas, for total consideration (including non-cash consideration) of approximately $26,300. The following summarizes the fair values of the major classes of assets acquired and liabilities assumed: inventories of $7,500, property, plant and equipment of $500, a reacquired right intangible asset in the amount of $7,300, and an asset in the amount of $200 due to leases that are favorable when compared to market rates.

The allocation of the purchase price for the business combinations was based on the Company’s estimate of the fair value of the assets acquired and liabilities assumed. Goodwill, which is tax-deductible, arose due to numerous factors, including the wholesale profit generated via the sale of product from the Company’s wholesale operations through the acquired stores. Goodwill also arose due to: the value to the Company of customers knowing that there are party stores in the locations (when the Company opens a new store, sales are initially lower than those of mature stores and increase over time), the Company’s ability to run the stores more efficiently than the franchisee based on the Company’s experience with its corporate-owned stores and the assembled workforce at the acquired stores.

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Also, during 2018, the Company entered into an agreement to acquire 11 independent stores, which are located in Texas. The Company will take control of the stores one at a time over a period of approximately two years. During 2018, the Company took control of eight of the 11 stores, for total business combination consideration of approximately $4,400. The allocation of the purchase price was based on the Company’s estimate of the fair value of the assets acquired and liabilities assumed. Goodwill, which is tax-deductible, arose due to numerous factors, including the wholesale profit generated via the sale of product from the Company’s wholesale operations through the stores. Due to the fact that the stores were independent stores and, therefore, possessed a relatively small percentage of inventory that came from the Company’s wholesale operations, going forward the Company will significantly increase such percentage. Additionally, goodwill arose due to: the value to the Company of customers knowing that there are party stores in the locations, the Company’s ability to run the stores more efficiently than the current operator based on the Company’s experience with its corporate-owned stores and the assembled workforce at the eight stores. In 2019 the Company acquired the remainder of the 11 stores.

In November 2019 the Company acquired all of the stock of two European-based online retailers, Livario GmbH and Webdots GmbH, for total cash consideration of approximately $9 million.

Pro forma financial information has not been presented because the impact of the acquisitions individually, and in the aggregate, is not material to the Company’s consolidated financial results.

Note 10—Intangible Assets

The Company had the following other identifiable finite-lived intangible assets:

	December 31, 2019
	Cost		Accumulated Amortization		Net Carrying Value		Useful lives
Franchise-related intangible assets	$	77,377	$	50,658	$	26,719		4-19 years
Customer lists and relationships		62,144		45,940		16,204		2-20 years
Copyrights and designs		31,453		29,416		2,037		5-7 years
Non-compete agreements		500		400		100		5 years
Total	$	171,473	$	126,413	$	45,060

	December 31, 2018
	Cost		Accumulated Amortization		Net Carrying Value		Useful lives
Franchise-related intangible assets	$	77,377	$	41,877	$	35,500		4-19 years
Customer lists and relationships		61,405		41,167		20,238		2-20 years
Copyrights and designs		26,030		25,708		322		5-7 years
Lease agreements		17,830		13,926		3,904		1-17 years
Non-compete agreements		500		300		200		5 years
Total	$	183,142	$	122,978	$	60,164

The Company is amortizing the majority of its intangible assets utilizing accelerated patterns based on the discounted cash flows that were used to value such assets. The amortization expense for finite-lived intangible assets for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 was $14,100, $12,271, and $16,959, respectively. Estimated amortization expense for each of the next five years will be approximately $10,720, $8,803, $5,975, $4,658, and $4,036, respectively.

In addition to the Company’s finite-lived intangible assets, the Company has recorded indefinite-lived intangible assets for the Party City trade name, the Amscan trade name, the Halloween City trade name, the

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Christys trade name, the Granmark trade name, the partycity.com domain name and the partydelights.co.uk domain name. During 2019, the Company recorded a Halloween City tradename impairment charge of $6,575.

Note 11—Loans and Notes Payable

ABL Facility

Prior to April 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”). 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. The ABL Facility 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 described below, and (b) letters of credit, in an aggregate face amount at any time outstanding not to exceed $50,000.

Under the ABL Facility, the borrowing base at any time equals (a) a percentage of eligible trade receivables, plus (b) a percentage of eligible inventory, plus (c) a percentage of eligible credit card receivables, less (d) certain reserves.

The ABL Facility generally provides for two pricing options: (i) an alternate base interest rate (“ABR”) equal to the greater of (a) the prime rate, (b) the federal funds rate plus 0.5% or (c) the LIBOR rate plus 1%, in each case, on the date of such borrowing or (ii) a LIBOR based interest rate, in each case plus an applicable margin. The applicable margin ranges from 0.25% to 0.50% with respect to ABR borrowings and from 1.25% to 1.50% with respect to LIBOR borrowings.

In addition to paying interest on outstanding principal, the Company is required to pay a commitment fee of 0.25% per annum in respect of unutilized commitments. The Company must also pay customary letter of credit fees.

All obligations under the ABL Facility are jointly and severally guaranteed by PC Intermediate, PCHI and each existing and future domestic subsidiary of PCHI. PCHI and each guarantor has secured its obligations, subject to certain exceptions and limitations, including obligations under its guaranty, as applicable, by a first-priority lien on its accounts receivable, inventory, cash and certain related assets and a second-priority lien on substantially all of its other assets.

The facility contains negative covenants that, among other things and subject to certain exceptions, restrict the ability of PCHI to:

• incur additional indebtedness;

• pay dividends on capital stock or redeem, repurchase or retire capital stock;

• make certain investments, loans, advances and acquisitions;

• engage in transactions with affiliates;

• create liens; and

• transfer or sell certain assets.

In addition, PCHI must comply with a fixed charge coverage ratio if excess availability under the ABL Facility on any day is less than the greater of: (a) 10% of the lesser of the aggregate commitments and the then borrowing base under the ABL Facility and (b) $40,000. The fixed charge coverage ratio is the ratio of (i) Adjusted EBITDA (as defined in the facility) minus maintenance-related capital expenditures (as defined in the facility) to (ii) fixed charges (as defined in the facility).

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The ABL Facility also contains certain customary affirmative covenants and events of default.

In connection with entering into and amending the ABL Facility, the Company incurred and capitalized third-party costs. All capitalized costs are being amortized over the life of the ABL Facility and are included in loans and notes payable in the Company’s consolidated balance sheet. The balance of related unamortized financing costs at December 31, 2019 was $1,992.

Borrowings under the ABL Facility totaled $129,350 at December 31, 2019. The weighted average interest rate for such borrowings was 5.19% at December 31, 2019. Outstanding standby letters of credit totaled $25,128 at December 31, 2019 and, after considering borrowing base restrictions, at December 31, 2019 PCHI had $350,033 of available borrowing capacity under the terms of the facility.

Other Credit Agreements

The Company’s subsidiaries have also entered into several foreign asset-based and overdraft credit facilities that provide the Company with additional borrowing capacity. At December 31, 2019 and 2018, there were $1,447 and $1,710 borrowings outstanding under the foreign facilities, respectively. The facilities contain customary affirmative and negative covenants.

Note 12—Long-Term Obligations

Long-term obligations consisted of the following:

	December 31,
	2019			2018
Senior secured term loan facility (“Term Loan Credit Agreement”)	$	718,596		$	791,135
6.125% Senior Notes—due 2023		347,015			346,191
6.625% Senior Notes—due 2026		494,910			494,138
Finance lease obligations		14,990			3,815
Total long-term obligations		1,575,511			1,635,279
Less: current portion		(71,524	)		(13,316	)
Long-term obligations, excluding current portion	$	1,503,987		$	1,621,963

Debt Amendments and Refinancing 

The Term Loan Credit Agreement was amended in February 2018, lowering ABR and LIBOR margins to their current levels. As the Term Loan Credit Agreement is a loan syndication, the Company assessed, on a creditor-by-creditor basis, whether the refinancing should be accounted for as an extinguishment or a modification for each creditor and, during 2018, the Company wrote-off $186 of existing deferred financing costs, a $102 capitalized original issue discount and $58 of capitalized call premium. The write-offs were recorded in other expense in the Company’s consolidated statement of operations and comprehensive (loss) income. The remaining deferred financing costs, original issue discount and capitalized call premium will continue to be amortized over the life of the Term Loan Credit Agreement, using the effective interest method. Additionally, in conjunction with the amendment, the Company incurred $856 of banker and legal fees, $800 of which were recorded in other expense during 2018. The rest of the costs are being amortized over the term of the debt.

During August 2018, the Company executed a refinancing of its debt portfolio and issued $500,000 of new 6.625% senior notes, maturing in 2026. The Company used the proceeds from the notes to: (i) reduce the outstanding balance under its existing ABL Facility, which is included in loans and notes payable on the Company’s condensed consolidated balance sheet, by $90,000 and (ii) voluntarily prepay $400,000 of the

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outstanding principal under its existing Term Loan Credit Agreement. Additionally, as part of the refinancing, the Company extended the maturity of the ABL Facility to August 2023 (subject to a springing maturity at an earlier date if the maturity date of certain of the Company’s other debt has not been extended or refinanced).

As the partial prepayment of the Term Loan Credit Agreement was in accordance with the terms of such agreement, at the time of such prepayment the Company wrote-off a pro-rata portion of the existing capitalized deferred financing costs and original issuance discounts, $1,824, for investors who did not participate in the new notes. Such amount was recorded in other expense in the Company’s consolidated statement of operations and comprehensive (loss) income.

To the extent that investors in the Term Loan Credit Agreement participated in the new notes, the Company assessed whether the refinancing should be accounted for as an extinguishment on a creditor-by-creditor basis and wrote-off $968 of existing deferred financing costs and original issuance discounts. Such amount was recorded in other expense in the Company’s consolidated statement of operations and comprehensive (loss) income.

Additionally, in conjunction with the issuance of the notes, the Company incurred third-party fees (principally banker fees). To the extent that such fees related to investors for whom their original debt was not extinguished, the Company expensed the portion of such fees, $2,270 in aggregate, that related to such investors. Such amount was recorded in other expense in the Company’s consolidated statement of operations and comprehensive (loss) income. The remainder of the third-party fees, $6,230, have been capitalized and will be amortized over the remaining life of the debt using the effective interest method.

Further, in conjunction with the extension of the ABL Facility, the Company compared the borrowing capacities of the pre-amendment facility and the post-amendment facility, on a creditor-by-creditor basis, and concluded that $29 of existing deferred financing costs should be written-off. Such amount was recorded in other expense in the Company’s consolidated statement of operations and comprehensive (loss) income. The remaining capitalized costs, and $986 of new third-party costs incurred in conjunction with the extension, are being amortized over the revised term of the ABL Facility.

During June 2019, in conjunction with a sale/leaseback transaction, the Company amended the Term Loan Credit Agreement and financed its Los Lunas, New Mexico facility. See Note 5, Sales/Leaseback Transaction, for further detail. The finance lease obligations above include $11,990 related to the Los Lunas, New Mexico facility.

Term Loan Credit Agreement

The Term Loan Credit Agreement, as amended, provides for two pricing options for outstanding loans: (i) an ABR for any day, a rate per annum equal to the greater of (a) the prime rate in effect on such day, (b) the federal funds effective rate in effect on such day plus 0.5%, (c) the adjusted LIBOR rate plus 1% and (d) 1.75% or (ii) the LIBOR rate, with a LIBOR floor of 0.75%, in each case plus an applicable margin. The applicable margin for ABR and LIBOR borrowings are 1.75% and 2.75%, respectively, and will drop to 1.50% and 2.50%, respectively, if PCHI’s Senior Secured Leverage Ratio, as defined by the agreement, falls below 3.2 to 1.0.

The term loans under the Term Loan Credit Agreement mature on August 19, 2022. The Company is required to repay installments on the loans in quarterly principal amounts of 0.25%, with the remaining amount payable on the maturity date.

Additionally, outstanding term loans are subject to mandatory prepayment, subject to certain exceptions, with (i) 100% of net proceeds above a threshold amount of certain asset sales/insurance proceeds, subject to reinvestment rights and certain other exceptions, (ii) 100% of the net cash proceeds of any incurrence of debt other than debt permitted under the Term Loan Credit Agreement, and (iii) 50% of Excess Cash Flow, as defined

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in the agreement, if any (reduced to 25% if PCHI’s first lien leverage ratio (as defined in the agreement) is less than 3.50 to 1.00, but greater than 2.50 to 1.00, and 0% if PCHI’s first lien leverage ratio is less than 2.50 to 1.00). As indicated in Note 5, the Company paid down Term Loan debt of $62,770. Additionally, in connection with the 2019 sale leaseback transaction and the sale of its Canadian retail operations, the Company is obligated to use net proceeds that remain uninvested on the anniversary date of each transaction to pay its term loan principal. Although there is no assurance that net proceeds will remain uninvested at the 2020 anniversary dates, the Company has classified an additional $58,000 of term loan principal as the current portion of long-term debt.

The term loans may be voluntarily prepaid at any time without premium or penalty, other than customary breakage costs with respect to loans based on the LIBOR rate.

All obligations under the agreement are jointly and severally guaranteed by PC Intermediate, PCHI and each existing and future domestic subsidiary of PCHI. PCHI and each guarantor has secured its obligations, subject to certain exceptions and limitations, by a first-priority lien on substantially all of its assets (other than accounts receivable, inventory, cash and certain related assets), including a pledge of all of the capital stock held by PC Intermediate, PCHI and each guarantor, and a second-priority lien on its accounts receivable, inventory, cash and certain related assets.

The Term Loan Credit Agreement contains certain customary affirmative covenants and events of default. Additionally, it contains negative covenants which, among other things and subject to certain exceptions, restrict the ability of PCHI to:

• incur additional indebtedness;

• pay dividends on capital stock or redeem, repurchase or retire capital stock;

• make certain investments, loans, advances and acquisitions;

• engage in transactions with affiliates;

• create liens; and

• transfer or sell certain assets.

At December 31, 2019, the principal amount of term loans outstanding under the Term Loan Credit Agreement was $725,131. Such amount is recorded net of original issue discounts, capitalized call premiums and deferred financing costs on the Company’s consolidated balance sheet. At December 31, 2019, original issue discounts, capitalized call premiums and deferred financing costs totaled $6,535. At December 31, 2019, all outstanding borrowings were based on LIBOR and were at a weighted average interest rate of 4.22%.

6.125% Senior Notes—Due 2023 (“6.125% Senior Notes”)

The 6.125% Senior Notes mature on August 15, 2023. Interest on the notes is payable semi-annually in arrears on February 15 and August 15 of each year.

The notes are guaranteed, jointly and severally, on a senior basis by each of PCHI’s existing and future wholly-owned domestic subsidiaries. The notes and the guarantees are general unsecured senior obligations and are effectively subordinated to all other secured debt to the extent of the assets securing such secured debt.

The indenture governing the notes contains certain covenants limiting, among other things and subject to certain exceptions, PCHI’s ability to:

• incur additional indebtedness or issue certain disqualified stock and preferred stock;

• pay dividends or distributions, redeem or repurchase equity;

• prepay subordinated debt or make certain investments;

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• engage in transactions with affiliates;

• consolidate, merge or transfer all or substantially all of PCHI’s assets;

• create liens; and

• transfer or sell certain assets.

The indenture governing the notes also contains certain customary affirmative covenants and events of default.

The Company may redeem the notes, in whole or in part, at the following (expressed as a percentage of the principal amount to be redeemed):

Twelve-month period beginning on August 15,	Percentage
2019		101.531	%
2020 and thereafter		100.000	%

Also, if the Company experiences certain types of change in control, as defined, the Company may be required to offer to repurchase the Senior Notes at 101% of their principal amount.

In connection with issuing the notes, the Company incurred and capitalized third-party costs. Capitalized costs are being amortized over the life of the debt and are included in long-term obligations, excluding current portion, in the Company’s consolidated balance sheet. At December 31, 2019, $2,985 of costs were capitalized.

6.625% Senior Notes—Due 2026 (“6.625% Senior Notes”)

The 6.625% Senior Notes mature on August 1, 2026. Interest on the notes is payable semi-annually in arrears on February 1st and August 1st of each year.

The notes are guaranteed, jointly and severally, on a senior basis by each of PCHI’s existing and future wholly-owned domestic subsidiaries. The notes and the guarantees are general unsecured senior obligations and are effectively subordinated to all other secured debt to the extent of the assets securing such secured debt.

The indenture governing the notes contains certain covenants limiting, among other things and subject to certain exceptions, PCHI’s ability to:

• incur additional indebtedness or issue certain disqualified stock and preferred stock;

• pay dividends or distributions, redeem or repurchase equity;

• prepay subordinated debt or make certain investments;

• engage in transactions with affiliates;

• consolidate, merge or transfer all or substantially all of PCHI’s assets;

• create liens; and

• transfer or sell certain assets.

The indenture governing the notes also contains certain customary affirmative covenants and events of default.

On or after August 1, 2021, the Company may redeem the notes, in whole or in part, at the following (expressed as a percentage of the principal amount to be redeemed):

Twelve-month period beginning on August 1,	Percentage
2021		103.313	%
2022		101.656	%
2023 and thereafter		100.000	%

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In addition, the Company may redeem up to 40% of the aggregate principal amount outstanding on or before August 1, 2021 with the cash proceeds from certain equity offerings at a redemption price of 106.625% of the principal amount. The Company may also redeem some or all of the notes before August 1, 2021 at a redemption price of 100% of the principal amount plus a premium that is defined in the indenture.

Also, if the Company experiences certain types of change in control, as defined, the Company may be required to offer to repurchase the notes at 101% of their principal amount.

In connection with issuing the notes, the Company incurred and capitalized third-party costs. Capitalized costs are being amortized over the life of the debt and are included in long-term obligations, excluding current portion, in the Company’s consolidated balance sheet. At December 31, 2019, $5,090 of costs were capitalized.

Finance Lease Obligations

Additionally, the Company has entered into various finance leases for building, machinery and equipment. At December 31, 2019 and December 31, 2018 the balances of such leases were $14,990 and $3,815, respectively.

Other

Subject to certain exceptions, PCHI may not make certain payments, including the payment of dividends to its shareholders (“restricted payments”), unless certain conditions are met under the terms of the indentures governing the senior notes, the ABL Facility and the Term Loan Credit Agreement. As of December 31, 2019, the most restrictive of these conditions existed in the Term Loan Credit Agreement, which limits restricted payments based on PCHI’s consolidated net income and leverage ratios. As of December 31, 2019, PCHI had $141,694 of capacity under the debt instrument to make restricted payments. PCHI’s parent companies, PC Intermediate, PC Nextco and Party City Holdco, have no assets or operations other than their investments in their subsidiaries and income from those subsidiaries.

At December 31, 2019, maturities of long-term obligations consisted of the following:

	Long-Term Debt Obligations		Finance Lease Obligations		Totals
2020	$	70,462	$	1,062	$	71,524
2021		12,266		1,431		13,697
2022		641,237		1,259		642,496
2023		350,000		390		350,390
2024		—		521		521
Thereafter		500,000		10,327		510,327
Long-term obligations	$	1,573,965	$	14,990	$	1,588,955

Note 13—Capital Stock

At December 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.

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The changes in common shares outstanding during the three years ended December 31, 2017, December 31, 2018, and December 31, 2019 were as follows:

Common Shares Outstanding at December 31, 2016	119,515,894
Treasury stock purchases	(23,379,567	)
Exercise of stock options	243,775
Common Shares Outstanding at December 31, 2017	96,380,102
Issuance of restricted shares	589,736
Treasury stock purchases	(3,785,658	)
Issuance of shares to directors	13,249
Exercise of stock options	425,505
Common Shares Outstanding at December 31, 2018	93,622,934
Issuance of restricted stock and restricted stock units	564,729
Treasury stock purchases	(15,679	)
Vesting of restricted stock and restricted stock units	74,292
Exercise of stock options	215,300
Common Shares Outstanding at December 31, 2019	94,461,576

During the year ended December 31, 2019, the Company purchased 15,679 treasury shares for $156 from its employees to cover federal and state and other tax withholdings associated with the vesting of restricted stock and restricted stock units. Additionally, during the year ended December 31, 2018, the Company acquired 3,785,658 treasury shares for $40,197. The shares are included in “common stock held in treasury” in the Company’s consolidated balance sheet. 

Note 14—Other Expense, net

	Fiscal Year Ended December 31,
	2019			2018			2017
Other expense, net consists of the following:
Undistributed (income) in equity method investments	$	(472	)	$	(369	)	$	(194	)
Foreign currency losses		421			24			466
Debt refinancings (see Note 12)		36			6,237			—
Corporate development expenses		2,472			4,387			2,660
(Gain) on sale of Canada retail assets		(2,873	)		—			—
Sale of ownership interest in Punchbowl (see Note 21)		2,169			—			—
Other, net		118			703			1,694
Other expense, net	$	1,871		$	10,982		$	4,626

Note 15—Employee Benefit Plans

Certain subsidiaries of the Company maintain defined contribution plans for eligible employees. The plans require the subsidiaries to match from approximately 11% to 100% of voluntary employee contributions to the plans, not to exceed a maximum amount of the employee’s annual salary, ranging from 5% to 6%. Expense for the plans for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 totaled $7,944, $6,454, and $6,565, respectively.

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Note 16—Equity Incentive Plans

Party City Holdco has adopted the Amended and Restated 2012 Omnibus Equity Incentive Plan (the “2012 Plan”) under which it can grant incentive awards in the form of stock appreciation rights, restricted stock, restricted stock units and common stock options to certain directors, officers, employees and consultants of Party City Holdco and its affiliates. A committee of Party City Holdco’s Board of Directors, or the Board itself in the absence of a committee, is authorized to make grants and various other decisions under the 2012 Plan. The maximum number of shares reserved under the 2012 Plan is 15,316,000 shares.

Time-based options

Party City Holdco grants time-based options to key eligible employees and outside directors. In conjunction with the options, the Company recorded compensation expense of $1,319, $1,744, and $5,309 during the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively.

The fair value of time-based options granted during the year ended December 31, 2019 was estimated on the grant date using a Black-Scholes option valuation model based on the assumptions in the following table:

Expected dividend rate	—%
Risk-free interest rate	1.88% to 2.44%
Volatility	29.06% to 30.78%
Expected option term	6 years—6.5 years

As Party City Holdco’s stock only recently started trading publicly, the Company determined volatility based on the average historical volatility of guideline companies. Additionally, as there is not sufficient historical exercise data to provide a reasonable basis for determining the expected terms of the options, the Company estimated such expected terms based on the assumption that options will be exercised at the mid-point of the vesting of the options and the completion of the contractual lives of such options.

The Company has based its estimated forfeiture rate on historical forfeitures for time-based options as the number of options given to each of the various levels of management is principally consistent with historical grants and forfeitures are expected to be materially consistent with past experience.

The Company’s time-based options principally vest 20% on each anniversary date. The Company records compensation expense for such options on a straight-line basis. As of December 31, 2019, there was $1,893 of unrecognized compensation cost, which will be recognized over a weighted-average period of approximately 30 months.

Performance-based options

During 2013, Party City Holdco granted performance-based stock options to key employees and independent directors. For performance-based options, vesting is contingent upon Thomas H. Lee Partners, L.P. (“THL”) achieving specified investment returns when it sells its ownership stake in Party City Holdco. Since the sale of all THL’s shares cannot be assessed as probable before it occurs, no compensation expense has been recorded for the performance-based options that have been granted. As of December 31, 2019, 2,808,400 performance-based options were outstanding. Based on a Monte Carlo simulation and the following assumptions, the options have an average grant date fair value of $3.09 per option:

Expected dividend rate	—%
Risk-free interest rate	1.86%
Volatility	52.00%
Expected option term	5 years

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As Party City Holdco’s stock was not publicly traded when the performance-based options were granted, the Company determined volatility based on the average historical volatility of guideline companies.

The following table summarizes the changes in outstanding stock options for the years ended December 31, 2017, December 31, 2018, and December 31, 2019.

	Options			Average Exercise Price		Average Fair Value of Time-Based Options at Grant Date		Aggregate Intrinsic Value			Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2016		8,461,826
Granted		101,444		$	14.38		4.46
Exercised		(243,775	)		5.33
Forfeited		(294,734	)		9.47
Outstanding at December 31, 2017		8,024,761			8.89				40,634			6.0
Granted		187,080			14.63		4.98
Exercised		(425,505	)		5.33
Forfeited		(859,162	)		7.84
Outstanding at December 31, 2018		6,927,174			9.39				4,089			5.2
Granted		337,000			6.43		2.16
Exercised		(215,300	)		5.33
Forfeited		(730,157	)		13.00
Outstanding at December 31, 2019		6,318,717			8.95				(41,784	)		4.4
Exercisable at December 31, 2019		2,650,034			11.64				(24,642	)		4.5
Expected to vest at December 31, 2019 (excluding performance-based options)		860,284		$	12.50			$	(8,743	)		7.6

The intrinsic value of options exercised was $1,254, $3,351 and $1,972 for the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively. The fair value of options vested was $2,118, $2,819, and $4,354, during the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively.

Restricted stock and Restricted Stock Units

During 2018, the Company started granting restricted stock and restricted stock units to certain executives, senior leaders and the Company’s independent directors. To the extent that the awards vest, the participants receive shares of the Company’s stock.

Of the awards that were granted, 358,506 awards vest solely based on service conditions. To the extent that such awards vest, one share of stock is issued for each award.

Additionally, the Company granted awards which vest if certain cash flow and earnings per share targets are met. Depending on the achievement of such targets, a maximum of 2,834,390 shares could be issued due to such awards.

The service-based awards vested 1/3 on January 1, 2019 and will vest 1/3 each on January 1, 2020 and January 1, 2021. During the years ended December 31, 2019 and December 31, 2018, the Company recorded $2,033 and $1,174 of compensation expense related to the service-based awards, respectively.

The performance-based awards vest if certain cash flow and earnings per share targets are met for the three-year period from January 1, 2018 to December 31, 2020. The Company recognizes compensation expense for

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such awards if it is probable that the performance conditions will be achieved. Based on the Company’s results for the year ended December 31, 2019 and December 31, 2018 and its projections for the year ending December 31, 2020, as of December 31, 2019 the Company concluded that it was not probable that such performance conditions will be met and, therefore, the Company did not record any compensation expense for the awards during the years ended December 31, 2019 and December 31, 2018.

The Company has based its estimated forfeiture rate for the restricted stock units and restricted stock on historical forfeitures for the Company’s time-based stock options as the number of awards given to each of the various levels of management is principally consistent with historical stock option grants and forfeitures are expected to be materially consistent with past experience.

As of December 31, 2019 and December 31, 2018, there were $2,158 and $1,817 of unrecognized compensation cost for the service-based awards, respectively.

Note 17—Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law. The Act significantly changed U.S. tax law, including lowering the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018, and implementing a one-time “deemed repatriation” tax on unremitted earnings accumulated in non-U.S. jurisdictions since 1986 (the “Transition Tax”). In 2017, the Company recorded a provisional estimate of the impact of the Act, which included an income tax benefit of $90,965 related to the remeasurement of its domestic net deferred tax liabilities and deferred tax assets due to the lower U.S. corporate tax rate, and a net income tax expense of $1,132 as its provisional estimate of the Transition Tax related to the deemed repatriation of unremitted earnings of foreign subsidiaries. During the fourth quarter of 2018, the Company finalized its assessment of the impact of the Act on the Company’s domestic net deferred tax liabilities and deferred tax assets and recorded an income tax benefit of $2,049, as well as additional income tax expense of $151 related to the Transition Tax.

Additionally, the Act subjects a U.S. shareholder to current tax on “global intangible low-taxed income” (“GILTI”) of its controlled foreign corporations. GILTI is based on the excess of the aggregate of a U.S. shareholder’s pro rata share of net income of its controlled foreign corporations over a specified return. The Company has elected to account for GILTI in the year during which the tax is incurred.

A summary of domestic and foreign income before income taxes follows:

	Fiscal Year Ended December 31,
	2019			2018		2017
Domestic	$	(572,287	)	$	132,482	$	153,280
Foreign		38,124			29,115		34,864
Total	$	(534,163	)	$	161,597	$	188,144

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The income tax expense (benefit) consisted of the following:

	Fiscal Year Ended December 31,
	2019			2018			2017
Current:
Federal	$	28,908		$	20,609		$	61,890
State		4,613			5,726			6,267
Foreign		12,540			7,870			7,298
Total current expense		46,061			34,205			75,455
Deferred:
Federal		(37,166	)		6,194			(101,774	)
State		(11,207	)		(880	)		(796	)
Foreign		1,007			(741	)		(81	)
Total deferred (benefit) expense		(47,366	)		4,573			(102,651	)
Income tax (benefit) expense	$	(1,305	)	$	38,778		$	(27,196	)

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Deferred income tax assets and liabilities consisted of the following:

	December 31,
	2019			2018
Deferred income tax assets:
Inventory reserves and capitalization	$	8,659		$	8,664
Allowance for doubtful accounts		1,194			709
Accrued liabilities		8,391			7,087
Equity based compensation		3,998			3,431
Federal tax loss carryforwards		525			743
State tax loss carryforwards		2,703			1,554
Foreign tax loss carryforwards		15,874			14,034
Foreign tax credit carryforwards		5,397			5,397
Deferred rent and lease incentives(1)		—			13,565
Section 163(j) Interest Limitation		9,134			1,625
Lease Liabilities		224,966			—
Other		2,231			1,808
Deferred income tax assets before valuation allowances		283,072			58,617
Less: valuation allowances		(24,623	)		(21,879	)
Deferred income tax assets, net	$	258,449		$	36,738
Deferred income tax liabilities:
Depreciation	$	21,211		$	23,720
Trade Name		135,751			145,767
Amortization of goodwill and other assets		16,111			38,712
Foreign earnings expected to be repatriated		1,177			1,132
Lease Right of Use Assets		208,772			—
Other		1,488			826
Deferred income tax liabilities	$	384,510		$	210,157

(1) In accordance with ASC 842, deferred rent and lease incentives are part of the Lease Right of Use Assets as of 2019.

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The Company nets all of its deferred income tax assets and liabilities on a jurisdictional basis and classifies them as noncurrent on the balance sheet. In the Company’s December 31, 2019 consolidated balance sheet, $20 was included in “other assets, net” and $126,081 was included in deferred income tax liabilities. In the Company’s December 31, 2018 consolidated balance sheet, $1,008 was included in “other assets, net” and $174,427 was included in deferred income tax liabilities. 

Management assesses the available positive and negative evidence to estimate if sufficient taxable income will be generated to realize existing deferred tax assets. On the basis of this evaluation, a valuation allowance was recorded to reduce the total deferred tax assets to an amount that will, more-likely-than-not, be realized in the future. The change in the valuation allowance primarily relates to carryforwards of foreign and state net operating losses, and the ending balance also includes foreign tax credit carryforwards.

As of December 31, 2019, the Company had foreign tax-effected net operating loss carryforwards in Germany of $9,134, the United Kingdom of $4,269, and Australia of $599, all of which have an unlimited carryforward; as well as $1,872 from other foreign countries, which expire at different dates. In addition, the U.S. federal net operating loss carryforwards begin to expire in 2032, the U.S. state net operating loss carryforwards begin to expire in 2022 and the foreign tax credit carryforwards begin to expire in 2020.

The difference between the Company’s effective income tax rate and the U.S. statutory income tax rate is as follows:

	Fiscal Year Ended December 31,
	2019			2018			2017
Tax provision at U.S. statutory income tax rate		21.0	%		21.0	%		35.0	%
State income tax, net of federal income tax		1.0			2.4			1.9
Domestic production activities deduction		—			—			(1.4	)
Valuation allowances		(0.4	)		0.6			2.1
GILTI and Foreign-Derived Intangible Income		(0.6	)		1.1			—
Foreign earnings		(1.5	)		0.2			(1.7	)
U.S.—foreign rate differential		(0.6	)		0.4			(1.9	)
Transition Tax on unremitted foreign earnings, net		—			0.1			0.6
Effect of the Act on Federal deferred income tax assets and liabilities		—			(1.3	)		(48.4	)
Goodwill Impairment		(17.9	)		—			—
Other		(0.8	)		(0.5	)		(0.7	)
Effective income tax rate		0.2	%		24.0	%		(14.5	)%

Transition Tax on Unremitted Foreign Earnings: As a result of the Act, the U.S. transitioned from a worldwide system of international taxation to a territorial tax system, thereby eliminating the U.S. federal tax on foreign earnings. However, the Act required a one-time deemed repatriation tax on such earnings and, accordingly, during the fourth quarter of 2017, the Company provisionally recorded a Transition Tax of $11,500 related to such requirement. Prior to the fourth quarter of 2017, the Company recorded deferred income tax liabilities for certain foreign earnings which were expected to be remitted to the U.S. in future periods. Therefore, the expense that was recorded due to the deemed repatriation tax, $11,500, was mostly offset by the reversal of previously recorded deferred income tax liabilities on unremitted foreign earnings, $10,368. During the fourth quarter of 2018, the Company finalized its assessment of the Transition Tax and recorded additional income tax expense of $151. At December 31, 2019, $4,205 of the Transition Tax remains unpaid and is recorded in “Other long-term liabilities” in the Company’s consolidated balance sheet. The Company has elected to pay the Transition Tax over eight annual installments without interest. A deferred tax liability, in the amount of $1,177, is recorded on the Company’s consolidated balance sheet due to the impact of foreign withholding taxes and state income taxes on the future repatriation of certain foreign earnings. No provision has been made for deferred taxes related to any other remaining historical outside basis differences in the Company’s non-U.S. subsidiaries.

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Effect of the Act on Federal Deferred Income Tax Assets and Liabilities: The deferred federal income tax benefit for the year ended December 31, 2017 includes a $90,965 provisional benefit due to the Act changing the U.S. corporate income tax rate from 35% to 21%. During the fourth quarter of 2018, the Company finalized its assessment of the impact of the Act on the Company’s domestic net deferred tax liabilities and deferred tax assets and recorded an income tax benefit of $2,049. See above for further discussion.

Goodwill Impairment: During the third and fourth quarters of 2019, the Company recognized non-cash goodwill impairment charges totaling $556,056. No tax benefit was recognized on $455,689 of the charge, resulting in a 17.9% unfavorable impact to the income tax rate.

Other differences between the effective income tax rate and the federal statutory income tax rate are composed primarily of reserves for unrecognized tax benefits, non-deductible meals and entertainment expenses, benefits related to the exercise of stock options, and the Work Opportunity Tax Credit.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:

	Fiscal Year Ended December 31,
	2019			2018			2017
Balance at beginning of year	$	1,320		$	855		$	913
Increases related to current period tax positions		652			40			100
Increases (decreases) related to prior period tax positions		3,030			495			(158	)
Decreases related to settlements		—			—			—
Decreases related to lapsing of statutes of limitations		(111	)		(70	)		—
Balance at end of year	$	4,891		$	1,320		$	855

The Company’s total unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were $4,891 and $1,320 at December 31, 2019 and 2018, respectively. As of December 31, 2019, it is reasonably possible that the total amount of unrecognized tax benefits could decrease by approximately $3,000 within the next 12 months.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company has accrued $618 and $129 for the potential payment of interest and penalties at December 31, 2019 and 2018, respectively. Such amounts are not included in the table above.

The IRS is currently conducting an examination of the year ended December 31, 2015. For U.S. state income tax purposes, tax years 2015-2019 generally remain open; whereas for non-U.S. income tax purposes, tax years 2014-2019 generally remain open. 

Note 18—Commitments, Contingencies and Related Party Transactions

Litigation

The Company is a party to certain claims and litigation in the ordinary course of business. The Company does not believe that any of these proceedings will result, individually or in the aggregate, in a material adverse effect upon its financial condition or future results of operations.

Product Royalty Agreements

The Company has entered into product royalty agreements, with various licensors of copyrighted and trademarked characters and designs, which are used on the Company’s products, which require royalty payments based on sales of the Company’s products, and, in some cases, include annual minimum royalties.

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At December 31, 2019, the Company’s commitment to pay future minimum product royalties was as follows:

	Future Minimum Royalty Payments
2020	$	35,525
2021		10,393
2022		5,820
Thereafter		—
	$	51,738

Product royalty expense for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 was $48,170, $51,002, and $46,242, respectively.

Related Party Transactions

In the normal course of business, the Company buys and sells party goods from/to certain equity method investees. Such activity is immaterial to the Company’s consolidated financial statements.

Note 19—Segment Information

Industry Segments

The Company has two identifiable business segments. The Wholesale segment designs, manufactures, contracts for manufacture and distributes party goods, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties and stationery throughout the world. The Retail segment operates specialty retail party supply stores in the United States, principally under the names Party City and Halloween City, and it operates e-commerce websites, principally through the domain name PartyCity.com.

The Company’s industry segment data for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 are as follows:

	Wholesale			Retail			Consolidated
Year Ended December 31, 2019
Revenues:
Net sales	$	1,240,026		$	1,742,136		$	2,982,162
Royalties and franchise fees		—			9,279			9,279
Total revenues		1,240,026			1,751,415			2,991,441
Eliminations		(642,652	)		—			(642,652	)
Net revenues	$	597,374		$	1,751,415		$	2,348,789
Income (loss) from operations	$	4,152		$	(421,545	)	$	(417,393	)
Interest expense, net								114,899
Other expense, net								1,871
Loss before income taxes							$	(534,163	)
Depreciation and amortization	$	27,845		$	53,271		$	81,116
Capital expenditures	$	29,480		$	32,253		$	61,733
Total assets	$	1,912,522		$	1,682,797		$	3,595,319

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	Wholesale			Retail		Consolidated
Year Ended December 31, 2018
Revenues:
Net sales	$	1,325,490		$	1,802,834	$	3,128,324
Royalties and franchise fees		—			11,073		11,073
Total revenues		1,325,490			1,813,907		3,139,397
Eliminations		(711,882	)		—		(711,882	)
Net revenues	$	613,608		$	1,813,907	$	2,427,515
Income from operations	$	45,180		$	233,105	$	278,285
Interest expense, net							105,706
Other expense, net							10,982
Income before income taxes						$	161,597
Depreciation and amortization	$	28,368		$	50,207	$	78,575
Capital expenditures	$	33,890		$	51,771	$	85,661
Total assets	$	1,346,856		$	2,295,491	$	3,642,347

	Wholesale			Retail		Consolidated
Year Ended December 31, 2017
Revenues:
Net sales	$	1,260,089		$	1,728,589	$	2,988,678
Royalties and franchise fees		—			13,583		13,583
Total revenues		1,260,089			1,742,172		3,002,261
Eliminations		(630,692	)		—		(630,692	)
Net revenues	$	629,397		$	1,742,172	$	2,371,569
Income from operations	$	68,130		$	212,006	$	280,136
Interest expense, net							87,366
Other income, net							4,626
Income before income taxes						$	188,144
Depreciation and amortization	$	30,520		$	54,648	$	85,168
Capital expenditures	$	32,490		$	34,480	$	66,970

Geographic Segments

Export sales of metallic balloons of $22,728, $23,567, and $22,812 during the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively, are included in domestic sales to unaffiliated customers below. Intercompany sales between geographic areas primarily consist of sales of finished goods and are generally made at cost plus a share of operating profit.

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The Company’s geographic area data follows:

	Domestic			Foreign			Eliminations			Consolidated
Year Ended December 31, 2019
Revenues:
Net sales to unaffiliated customers	$	1,968,319		$	371,191		$	—		$	2,339,510
Net sales between geographic areas		57,117			86,811			(143,928	)		—
Net sales		2,025,436			458,002			(143,928	)		2,339,510
Royalties and franchise fees		9,279			—			—			9,279
Total revenues	$	2,034,715		$	458,002		$	(143,928	)	$	2,348,789
(Loss) from operations	$	(412,225	)	$	(5,168	)	$	—		$	(417,393	)
Interest expense, net											114,899
Other expense, net											1,871
(Loss) before income taxes										$	(534,163	)
Depreciation and amortization	$	72,701		$	8,415					$	81,116
Total long-lived assets (excluding goodwill, trade names and other intangible assets, net)	$	224,692		$	26,156					$	250,848
Total assets	$	3,317,305		$	278,014		$	—		$	3,595,319

	Domestic		Foreign		Eliminations			Consolidated
Year Ended December 31, 2018
Revenues:
Net sales to unaffiliated customers	$	2,015,899	$	400,543	$	—		$	2,416,442
Net sales between geographic areas		65,416		110,185		(175,601	)		—
Net sales		2,081,315		510,728		(175,601	)		2,416,442
Royalties and franchise fees		11,073		—		—			11,073
Total revenues	$	2,092,388	$	510,728	$	(175,601	)	$	2,427,515
Income from operations	$	264,440	$	13,845	$	—		$	278,285
Interest expense, net									105,706
Other expense, net									10,982
Income before income taxes								$	161,597
Depreciation and amortization	$	70,011	$	8,564				$	78,575
Total long-lived assets (excluding goodwill, trade names and other intangible assets, net)	$	292,632	$	40,735				$	333,367
Total assets	$	3,339,155	$	303,192	$	—		$	3,642,347

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	Domestic		Foreign		Eliminations			Consolidated
Year Ended December 31, 2017
Revenues:
Net sales to unaffiliated customers	$	1,962,697	$	395,289	$	—		$	2,357,986
Net sales between geographic areas		54,268		64,585		(118,853	)		—
Net sales		2,016,965		459,874		(118,853	)		2,357,986
Royalties and franchise fees		13,583		—		—			13,583
Total revenues	$	2,030,548	$	459,874	$	(118,853	)	$	2,371,569
Income from operations	$	252,270	$	27,866	$	—		$	280,136
Interest expense, net									87,366
Other income, net									4,626
Income before income taxes								$	188,144
Depreciation and amortization	$	76,970	$	8,198				$	85,168

Note 20—Quarterly Results (Unaudited)

Despite a concentration of holidays in the fourth quarter of the year, as a result of the Company’s expansive product lines and customer base and increased promotional activities, the impact of seasonality on the quarterly results of the Company’s wholesale operations has been limited. However, due to Halloween and Christmas, the inventory balances of the Company’s wholesale operations are slightly higher during the third quarter than during the remainder of the year. Additionally, the promotional activities of the Company’s wholesale business, including special dating terms, particularly with respect to Halloween products sold to retailers and other distributors, result in slightly higher accounts receivable balances during the third quarter. The Company’s retail operations are subject to significant seasonal variations. Historically, the Company’s retail operations have realized a significant portion of their revenues, cash flow and net income in the fourth quarter of the year, principally due to Halloween sales in October and, to a lesser extent, year-end holiday sales.

The following table sets forth our historical revenues, gross profit, (loss) income from operations, net (loss) income, net (loss) income attributable to common shareholders of Party City Holdco Inc., and net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic and Diluted for each of the following quarters: 

	For the Three Months Ended,
2019:	March 31,			June 30,		September 30,			December 31,
Revenues:
Net sales	$	511,102		$	561,702	$	538,345		$	728,361
Royalties and franchise fees		2,014			2,189		1,886			3,190
Gross profit		172,060			208,646		164,932			293,239
(Loss) income from operations		(10,297	)		97,485		(277,526	)		(227,055	)
Net (loss) income		(30,289	)		48,005		(281,745	)		(268,829	)
Net (loss) income attributable to common shareholders of Party City Holdco Inc.		(30,218	)		48,074		(281,533	)		(268,818	)
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic	$	(0.32	)	$	0.52	$	(3.02	)	$	(2.88	)
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted	$	(0.32	)	$	0.51	$	(3.02	)	$	(2.88	)

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	For the Three Months Ended,
2018:	March 31,			June 30,		September 30,			December 31,
Revenues:
Net sales	$	505,108		$	558,101	$	550,840		$	802,393
Royalties and franchise fees		2,716			2,910		2,206			3,241
Gross profit		188,142			228,624		201,199			363,119
Income from operations		22,256			65,451		31,738			158,840
Net (loss) income		(1,163	)		28,048		(2,440	)		98,374
Net (loss) income attributable to common shareholders of Party City Holdco Inc.		(1,133	)		28,487		(2,420	)		98,325
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic	$	(0.01	)	$	0.30	$	(0.03	)	$	1.03
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted	$	(0.01	)	$	0.29	$	(0.03	)	$	1.02

Note 21—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. Additionally, at such time, the Company received the ability to “call” the interest of the other investors. During the twelve months ended December 31, 2019, the option was terminated, and the Company wrote off its asset related to the call option and reversed its liability related to the put option. Prior to such time, the Company had been adjusting the put liability to fair value on a recurring basis. The liability represented a Level 3 fair value measurement as it was based on unobservable inputs. In November 2019, the Company sold its ownership interest in Punchbowl. The Company recorded a net charge of $2,169 in other expenses, net for the option termination and the sale of its ownership interest.

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  

108

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 December 31, 2019 and December 31, 2018 the original value was greater than the fair value, thus a table is not provided for December 31, 2019. In addition, the Company has no material derivative assets and liabilities as of December 31, 2019.

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
Punchbowl put liability		—		—		316		316

The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories and property, plant and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur (or at least annually for goodwill and indefinite-lived intangible assets), a non-financial instrument is required to be evaluated for impairment. If the Company determines that the non-financial instrument is impaired, the Company would be required to write down the non-financial instrument to its fair value. 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 December 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 senior notes as of December 31, 2019 are as follows:

	Carrying Amount		Fair Value
Term Loan Credit Agreement	$	724,881	$	668,703
6.125% Senior Notes—due 2023		347,015		348,250
6.625% Senior Notes—due 2026		494,910		366,250

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 December 31, 2019 based on the discounted future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturity.

Note 22—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 years ended December 31, 2019, December 31, 2018, and December 31, 2017.

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Foreign Exchange Risk Management

A portion of the Company’s cash flows is 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 consolidated balance sheets at fair value. At December 31, 2019 and 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 March 2020.

The following table displays the fair values of the Company’s derivatives at December 31, 2019 and December 31, 2018:

Derivative Assets

Derivative Liabilities

December 31, 2019

December 31, 2018

December 31, 2019

December 31, 2018

Balance Sheet Line

Fair Value

Balance Sheet Line

Fair Value

Balance Sheet Line

Fair Value

Balance Sheet Line

Fair Value

Foreign Exchange Contracts

(a) PP

$

—

(a) PP

$

115

(b) AE

$

—

(b) AE

$

—

(a) PP = Prepaid expenses and other current assets

(b) AE = Accrued expenses

The following table displays the notional amounts of the Company’s derivatives at December 31, 2019 and December 31, 2018:

Derivative Instrument	December 31, 2019		December 31, 2018
Foreign Exchange Contracts	$	300	$	10,942

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Note 23—Changes in Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss consisted of the following:

	Year Ended December 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		5,725			106		5,831
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax		6,897			739		7,636
Net current-period other comprehensive income		12,622			845		13,467
Balance at December 31, 2019	$	(37,434	)	$	1,700	$	(35,734	)

	Year Ended December 31, 2018
	Foreign Currency Adjustments			Impact of Foreign Exchange Contracts, Net of Taxes			Total, Net of Taxes
Balance at December 31, 2017	$	(35,610	)	$	(208	)	$	(35,818	)
Other comprehensive (loss) income before reclassifications, net of income tax		(14,446	)		1,432			(13,014	)
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax		—			(369	)		(369	)
Net current-period other comprehensive (loss) income		(14,446	)		1,063			(13,383	)
Balance at December 31, 2018	$	(50,056	)	$	855		$	(49,201	)

	Year Ended December 31, 2017
	Foreign Currency Adjustments			Impact of Foreign Exchange Contracts, Net of Taxes			Total, Net of Taxes
Balance at December 31, 2016	$	(53,171	)	$	932		$	(52,239	)
Other comprehensive income (loss) before reclassifications, net of income tax		17,561			(1,044	)		16,517
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax		—			(96	)		(96	)
Net current-period other comprehensive income (loss)		17,561			(1,140	)		16,421
Balance at December 31, 2017	$	(35,610	)	$	(208	)	$	(35,818	)

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Note 24—Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The pronouncement contains a five-step model which replaces most existing revenue recognition guidance. The Company adopted the standard on January 1, 2018 via a modified retrospective approach and recognized the cumulative effect of the adoption as an adjustment to January 1, 2018 retained earnings.

Revenue Transactions—Retail

Revenue from retail store operations is recognized at the point of sale as control of the product is transferred to the customer at such time. Retail e-commerce sales are recognized when the consumer receives the product as control transfers upon delivery. Due to its extensive history operating as the largest party goods retailer in North America, the Company has sufficient history with which to estimate future retail sales returns and it uses the expected value method to estimate such activity.

The transaction price for the majority of the Company’s retail sales is based on either: 1) the item’s stated price or 2) the stated price adjusted for the impact of a coupon which can only be applied to such transaction. To the extent that the Company charges customers for freight costs on e-commerce sales, the Company records such amounts in revenue. The Company has chosen the pronouncement’s policy election which allows it to exclude all sales taxes and value-added taxes from revenue.

Under the terms of its agreements with its franchisees, the Company provides both: 1) brand value (via significant advertising spend) and 2) support with respect to planograms, in exchange for a royalty fee that ranges from 4% to 6% of the franchisees’ sales. The Company records the royalty fees at the time that the franchisees’ sales are recorded. Additionally, although the Company anticipates that future franchise store openings will be limited, when a franchisee opens a new store, the Company receives and records a one-time fee which is earned by the Company for its assistance with site selection and development of the new location. Both the sales-based royalty fee and the one-time fee are recorded in royalties and franchise fees in the Company’s consolidated statement of operations and comprehensive (loss) income.

Revenue Transactions—Wholesale

For most of the Company’s wholesale sales, control transfers upon the Company’s shipment of the product. Wholesale sales returns are not significant as the Company generally only accepts the return of goods that were shipped to the customer in error or that were damaged when received by the customer. Additionally, due to its extensive history operating as a leading party goods wholesaler, the Company has sufficient history with which to estimate future sales returns.

In most cases, the determination of the transaction price is fixed based on the contract and/or purchase order. To the extent that the Company charges customers for freight costs, the Company records such amounts in revenue. The Company has chosen the pronouncement’s policy election which allows it to exclude all sales taxes and value-added taxes from revenue.

The majority of the sales for the Company’s wholesale business are due within 30 to 120 days from the transfer of control of the product and substantially all of the sales are collected within a year from such transfer. For all transactions for which the Company expects to collect the transaction price within a year from the transfer of control, the Company applies one of the pronouncement’s practical expedients and does not adjust the consideration for the effects of a significant financing component.

Judgments

Although most of the Company’s revenue transactions consist of fixed transaction prices and the transfer of control at either the point of sale (for retail) or when the product is shipped (for wholesale), certain transactions

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involve a limited number of judgments. For transactions for which control transfers to the customer when the freight carrier delivers the product to the customer, the Company estimates the date of such receipt based on historical shipping times. Additionally, the Company utilizes historical data to estimate sales returns. Due to its extensive history operating as a leading party goods retailer, the Company has sufficient history with which to estimate such amounts.

Other Revenue Topics

During the years ended December 31, 2019, December 31, 2018, and December 31, 2017, impairment losses recognized on receivables and contract assets arising from the Company’s contracts with customers were immaterial.

As a significant portion of the Company’s revenue is either: 1) part of a contract with an original expected duration of one year or less, or 2) related to sales-based royalties promised in exchange for licenses of intellectual property, the Company has elected to apply the optional exemptions in paragraphs ASC 606-10-50-14 through ASC 606-10-50-14A.

Additionally, the Company has elected to apply the practical expedient which allows companies to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset that the entity otherwise would have recognized would have been one year or less.

Disaggregation of Revenue

The following table summarizes revenue from contracts with customers for the years ended December 31, 2019, December 31, 2018, and December 31, 2017:

	Fiscal Year Ended December 31,
	2019		2018		2017
Retail Net Sales:
Party City Stores	$	1,529,043	$	1,583,134	$	1,521,661
Global E-commerce		162,490		154,481		152,465
Temporary Stores		50,603		65,219		54,463
Total Retail Net Sales	$	1,742,136	$	1,802,834	$	1,728,589
Royalties and Franchise Fees		9,279		11,073		13,583
Total Retail Revenue	$	1,751,415	$	1,813,907	$	1,742,172
Wholesale Net Sales:
Domestic	$	310,042	$	328,056	$	351,109
International		287,332		285,552		278,288
Total Wholesale Net Sales	$	597,374	$	613,608	$	629,397
Total Consolidated Revenue	$	2,348,789	$	2,427,515	$	2,371,569

Financial Statement Impact of Adopting the Pronouncement

All of the Company’s revenue is recognized from contracts with customers and, therefore, is subject to the pronouncement.

The Company adopted the pronouncement using a modified retrospective approach and applied the guidance to all contracts as of January 1, 2018. On such date, the Company reduced its retained earnings by $78, reduced its accounts receivable by $141, increased its inventory by $11, reduced its accrued expenses by $26, increased its deferred tax asset by $28 and increased its income taxes payable by $2. The cumulative adjustment principally related to certain discounts within the Company’s wholesale business.

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Additionally, the adoption of the pronouncement impacted the Company’s financial statements for the year ended December 31, 2018 as it decreased pre-tax income by $22 during the period.

Note 25—Kazzam, LLC

During the first quarter of 2017, the Company and Ampology, a subsidiary of Trivergence, reached an agreement to form a new legal entity, Kazzam, LLC (“Kazzam”), for the purpose of designing, developing and launching an online exchange platform for party-related services. The website allows consumers to select, schedule and pay for various services (including entertainment, activities and food) all through a single portal.

Although the Company currently owns only 26% of Kazzam’s equity, the Company has concluded that: a) Kazzam is a variable interest entity as it has insufficient equity at risk, and b) the Company is its primary beneficiary. Therefore, the Company has consolidated Kazzam into the Company’s financial statements. Further, as the Company is currently funding all of Kazzam’s start-up activities via a loan to Kazzam (which will be repaid when the venture is profitable), the Company is recording 100% of Kazzam’s operating results in “development stage expenses” in the Company’s consolidated statement of operations and comprehensive (loss) income.

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 in 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.

In January 2020, the Company and Ampology terminated certain services agreements and warrants that Ampology had in the Company stock. The parties concurrently entered into an interim transition agreement for which expenses are recorded as development stage expenses.

Note 26—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 Company elected this package of practical expedients.

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.

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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 of its real estate.

Lease Population

The Company’s lease portfolio is primarily comprised of real estate leases for its permanent Party City stores. The Company also leases manufacturing facilities, distribution facilities, warehouse space and office space. Additionally, the Company enters into short leases (generally less than four months) in order to operate its temporary stores. Further, the Company enters into leases of equipment, copiers, printers and automobiles.

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 limited number of the Company’s store leases require rent to be paid based on sales levels. The Company’s cost for such leases is immaterial. Variable lease consideration is not included in lease payments until the contingency is resolved.

Additionally, for most store leases, the Company pays variable taxes and insurance.

Renewal Options

Many of the Company’s store leases, and certain of the Company’s other leases, contain renewal options. However, the renewal periods are generally not included in the right-of-use assets and lease liabilities for such leases as exercise of the options is not reasonably certain.

Discount Rates

The Company is unable to determine the discount rates that are implicit in its operating leases. Therefore, for such leases, the Company is utilizing its incremental borrowing rate.

For leases that existed as of January 1, 2019, the Company determined the applicable incremental borrowing rates for such leases based on the remaining lease terms for the leases as of such date.

Quantitative Disclosures

During the year ended December 31, 2019, the Company’s operating lease cost was $204,466. Such amount excludes impairment charges recorded in conjunction with the Company’s store optimization program (see Note 3, Store Impairment and Restructuring Charges).

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The Company’s variable lease cost during the year ended December 31, 2019 was $30,817.

During the year ended December 31, 2019, cash paid for amounts included in the measurement of operating lease liabilities was $197,574.

During the year ended December 31, 2019, right-of-use assets obtained in exchange for new operating lease liabilities were $195,687.

As of December 31, 2019, the weighted-average remaining lease term for operating leases was eight years and the weighted-average discount rate for operating leases was 6.7%.

As of December 31, 2019, the future cash flows for the Company’s operating leases were:

	Future Minimum Operating Lease Payments
2020	$	197,480
2021		181,970
2022		162,352
2023		134,131
2024		106,078
Thereafter		367,639
Total Undiscounted Cash Flows		1,149,650
Less: Interest		(273,444	)
Total Operating Lease Liability		876,206
Less: Current Operating Lease Liability		(155,471	)
Long-Term Operating Lease Liability	$	720,735

Note 27—Restricted Cash

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows: Restricted Cash”. The pronouncement requires companies to show changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in their statement of cash flows. The Company adopted the pronouncement, which requires retrospective application, during the first quarter of 2018.

As a result, the Company’s statement of cash flows for the year ended December 31, 2017 has been adjusted to include $155 of restricted cash at December 31, 2016 and $117 of restricted cash at December 31, 2017. The restricted cash, which principally relates to funds that are required to be spent on advertising, is included in “prepaid expenses and other current assets” in the Company’s consolidated balance sheet. Therefore, in the Company’s adjusted consolidated statement of cash flows for the year ended December 31, 2017, the change in “prepaid expenses and other current assets” has been adjusted from a cash outflow of $9,079 to a cash outflow of $9,117.

The Company’s December 31, 2019 consolidated balance sheet included $34,917 of cash and cash equivalents and $259 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. Restricted cash is recorded in “prepaid expenses and other current assets”.  

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SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT

PARTY CITY HOLDCO INC.

(Parent company only)

CONDENSED BALANCE SHEETS

(Dollars in thousands)

	December 31, 2019			December 31, 2018
ASSETS
Other assets (principally investment in and amounts due from wholly-owned subsidiaries)	$	533,096		$	1,046,681
Total assets	$	533,096		$	1,046,681
LIABILITIES, REDEEMABLE SECURITIES AND STOCKHOLDERS’ EQUITY
Total liabilities	$	—		$	—
Redeemable securities		3,351			3,351
Stockholders’ equity:
Common stock (94,461,576 and 93,622,934 shares outstanding and 121,662,540 and 120,788,159 shares issued at December 31, 2019 and December 31, 2018, respectively)		1,211			1,208
Additional paid-in capital		928,573			922,476
Retained (deficit) earnings		(37,219	)		495,777
Accumulated other comprehensive loss		(35,734	)		(49,201	)
Total stockholders’ equity before common stock held in treasury		856,831			1,370,260
Less: Common stock held in treasury, at cost (27,200,964 shares and 27,165,225 shares at December 31, 2019 and December 31, 2018, respectively)		(327,086	)		(326,930	)
Total stockholders’ equity		529,745			1,043,330
Total liabilities, redeemable securities and stockholders’ equity	$	533,096		$	1,046,681

See accompanying notes to these condensed financial statements.

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PARTY CITY HOLDCO INC.

(Parent company only)

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(Dollars in thousands)

	Fiscal Year Ended December 31,
	2019			2018			2017
Equity in net income of subsidiaries	$	(532,495	)	$	122,850		$	215,340
Net income	$	(532,495	)	$	122,850		$	215,340
Add: Net income attributable to redeemable securities holder		—			409			—
Net income attributable to common shareholders of Party City Holdco Inc.	$	(532,495	)	$	123,259		$	215,340
Other comprehensive (loss) income, net		13,467			(13,383	)		16,421
Comprehensive income		(519,028	)		109,467			231,761
Comprehensive income attributable to redeemable securities holder		—			409			—
Comprehensive income attributable to common shareholders of Party City Holdco Inc.	$	(519,028	)	$	109,876		$	231,761

See accompanying notes to these condensed financial statements.

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PARTY CITY HOLDCO INC.

(Parent company only)

CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

	Fiscal Year Ended December 31,
	2019			2018			2017
Cash flows provided by (used in) operating activities:
Net income	$	(532,495	)	$	122,850		$	215,340
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in net income of subsidiaries		532,495			(122,850	)		(215,340	)
Change in due to/from affiliates		(989	)		37,928			285,435
Net cash (used in) provided by operating activities		(989	)		37,928			285,435
Cash flows (used in) provided by financing activities:
Treasury stock purchases		(156	)		(40,197	)		(286,733	)
Exercise of stock options		1,145			2,269			1,298
Net cash provided by (used in) financing activities		989			(37,928	)		(285,435	)
Net change in cash and cash equivalents		—			—			—
Cash and cash equivalents at beginning of period		—			—			—
Cash and cash equivalents at end of period	$	—		$	—		$	—

See accompanying notes to these condensed financial statements.

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PARTY CITY HOLDCO INC. (Parent company only)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands)

Note 1—Basis of presentation and description of registrant

Party City Holdco Inc. (“Party City Holdco”) Schedule I, Condensed Financial Information of Registrant, provides all parent company information that is required to be presented in accordance with the SEC rules and regulations for financial statement schedules. The consolidated financial statements of Party City Holdco are included elsewhere. The parent-company financial statements should be read in conjunction with the consolidated financial statements and the notes thereto.

Party City Holdco does not conduct any separate operations and acts only as a holding company. Its share of the net income of its unconsolidated subsidiaries is included in its statements of income using the equity method.

Since all material stock requirements, dividends and guarantees of the registrant have been disclosed in the consolidated financial statements, the information is not required to be repeated in this schedule.

Note 2—Dividends from subsidiaries

No cash dividends were paid to Party City Holdco by its subsidiaries during the years included in these financial statements.

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SCHEDULE II

PARTY CITY HOLDCO INC.

VALUATION AND QUALIFYING ACCOUNTS

The Years Ended December 31, 2017, December 31, 2018, and December 31, 2019

(Dollars in thousands)

	Beginning Balance		Write-Offs		Additions		Ending Balance
Allowance for Doubtful Accounts:
For the year ended December 31, 2017	$	2,683	$	272	$	560	$	2,971
For the year ended December 31, 2018		2,971		1,251		1,213		2,933
For the year ended December 31, 2019		2,933		470		2,323		4,786
Sales Returns and Allowances:
For the year ended December 31, 2017	$	466	$	83,865	$	83,879	$	480
For the year ended December 31, 2018		480		86,727		86,988		741
For the year ended December 31, 2019		741		83,474		83,409		676

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2019. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of December 31, 2019, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d—15(f) promulgated under the Exchange Act, as a process designed by, or under the supervision of a company’s chief executive officer and chief financial officer, or persons performing similar functions, and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the consolidated financial statements.

In designing and evaluating our disclosure controls and procedures, we and our management recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their stated objectives. We review on an ongoing basis and document our disclosure controls and procedures, and our internal control over financial reporting, and we may from time to time make changes in an effort to enhance their effectiveness and ensure that our systems evolve with our business.

Under the supervision of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of our internal control over financial reporting based on the framework in Internal Control—

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Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the evaluation performed, management concluded that its internal control over financial reporting, based on the COSO framework, was effective, at the reasonable assurance level, as of December 31, 2019. Our independent registered public accounting firm, Ernst & Young LLP, issued an attestation report on the effectiveness of our internal control over financial reporting. The Ernst & Young LLP report is included in Item 8 of this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

On March 11, 2020, Brad Weston was appointed as the Chief Executive Officer of Party City Holdco Inc. (the “Company”) and Party City Holdings Inc. (“Holdings”), replacing James Harrison, who will retire as the Chief Executive Officer of the Company and Holdings. The transitions are each effective April 1, 2020. Mr. Harrison will remain employed as the Vice Chairman of the Company and Holdings, providing certain strategic and advisory services and reporting to the board of directors of the Company (the “Board”). Mr. Weston was also elected to the Board, effective April 1, 2020.

Mr. Weston, age 54, has served as President of the Company and Chief Executive Officer of Party City Retail Group since July 2019. Previously, Mr. Weston served as the President and Chief Officer Petco Holdings Inc. (“Petco”) from January 2017 through June 2018. Before that, he served in a number of other roles at Petco, holding the position of President and Chief Merchandising Officer from June 2015 to January 2018 and earlier as Executive Vice President and Chief Merchandising Officer from 2012 through June 2015. Prior to joining Petco, Mr. Weston spent five years in a variety of roles at Dick’s Sporting Goods, most recently as Chief Merchandising Officer. Mr. Weston started his career at May Department Stores, where he held numerous roles of increasing responsibility from 1988 through 2006. Mr. Weston currently serves on the board of directors of Boot Barn Holdings, Inc. and the National Retail Federation. Mr. Weston holds a bachelor of science degree in business administration from the University of California, Berkeley

In connection with his promotion to Chief Executive Officer of the Company and Holdings, Mr. Weston has entered into an amended and restated employment agreement with the Company and Holdings, dated as of March 11, 2020 and effective April 1, 2020. Under his amended and restated employment agreement, Mr. Weston’s base salary was increased to $1,050,000. The other material terms of Mr. Weston’s employment agreement remained the same.

Mr. Harrison also entered into an amended and restated employment agreement with the Company and Holdings, dated as of March 11, 2020 and effective April 1, 2020. Under his amended and restated employment agreement, Mr. Harrison will serve as the Vice Chairman of the Company and Holdings through December 31, 2021, unless earlier terminated as provided for in the agreement (the “Initial Employment Period”). The parties may extend the Initial Employment Period (or any subsequent renewal) by one year upon mutual written agreement. The Initial Employment Period, along with any subsequent renewal period, is referred to as the “Employment Period.”

During the Employment Period, Mr. Harrison will receive an annual base salary of $750,000. Mr. Harrison will be eligible for an annual bonus for 2020, with a target amount of $277,169 and a maximum amount of $554,339, reflecting his annual base salary and target annual bonus for the portion of 2020 during which he served as the Chief Executive Officer of the Company and Holdings. He will receive a grant of 200,000 stock options (the “2020 Option Grant”) with a per share exercise price equal to the greater of $3.00 per share or the

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closing price of a share of the Company’s stock on March 31, 2020, with 50% of the 2020 Option Grant vesting on December 31, 2020 and the remaining 50% of the 2020 Option Grant vesting on December 31, 2021, in each case, generally subject to Mr. Harrison’s continued employment through the applicable vesting date. Any vested stock options held by Mr. Harrison as of April 1, 2020 will remain exercisable until their expiration date (unless Mr. Harrison’s employment is terminated for cause (or the Board determines cause exists at the time his employment terminates) or he breaches his restrictive covenants, in which cases his options would be forfeited). Any restricted stock units (including performance stock units) of the Company held by Mr. Harrison as of April 1, 2020 will remain eligible to vest during the Employment Period and, if he remains employed through December 31, 2021, remain eligible to vest (subject to their otherwise applicable terms) thereafter as if he had remained employed with the Company and Holdings.

If Mr. Harrison’s employment is terminated by the Company and Holdings without cause during the Employment Period, subject to his execution and non-revocation of a release of claims, he will continue to receive his annual base salary through the end of the Employment Period and his 2020 Option Grant, other stock options and restricted stock units (including performance stock units) will remain eligible to vest as if he had remained employed through each applicable vesting date. Mr. Harrison will be subject to non-competition, non-solicitation and non-disparagement restrictions during his employment and for a period of 24 months thereafter and will be subject to a perpetual restriction on the disclosure of confidential information.

The foregoing is only a brief description of the material terms of the amended and restated employment agreements for Mssrs. Harrison and Weston and is qualified in its entirety by reference to the amended and restated employment agreements for Mssrs. Harrison and Weston, filed as Exhibit 10.2 and Exhibit 10.30 hereto, respectively.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

Executive Officers of the Registrant

The information required by this item will be set forth in our proxy statement for our 2020 Annual Meeting of shareholders (to be filed within 120 days after December 31, 2019) (the “Proxy Statement”), and is incorporated herein by reference.

Item 11. Executive Compensation

Information required by this item will be set forth in our Proxy Statement, and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by this item will be set forth in our Proxy Statement, and is incorporated herein by reference.

Item 13. Certain Relationships and Related Party Transactions and Director Independence

Information required by this item will be set forth in our Proxy Statement, and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

Information required by this item will be set forth in our Proxy Statement, and is incorporated herein by reference.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

The following documents are filed as part of this report.

1. Financial Statements. The financial statements are set forth under Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.

2. Financial Statement Schedules. Schedule I, Condensed Financial Information of Registrant, and Schedule II, Valuation and Qualifying Accounts, is filed as part of this Annual Report on Form 10-K and should be read in conjunction with the financial statements and notes thereto contained in Item 8, “Financial Statements and Supplementary Data.”

All other financial statements and financial statement schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instruction, are not material or are not applicable and, therefore, have been omitted.

3. Exhibits.

Exhibit Index

Exhibit Number		Description
	3.1*	Certificate of Correction to Party City Holdco Inc.’s Second Amended and Restated Certificate of Incorporation filed on June 6, 2019, dated December 17, 2019 and corrected Second Amended and Restated Certificate of Incorporation
	3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Party City Holdco Inc.’s Form 8-K dated June 7, 2019)
	4.1	Specimen common stock certificate (incorporated by reference to Exhibit 4.1 to Party City Holdco Inc.’s Registration Statement on Form S-1 dated March 26, 2015)
	4.2	Indenture, dated as of August 19, 2015, among Party City Holdings Inc., as Issuer, and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.1 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2015)
	4.3	First Supplemental Indenture, dated as of August 19, 2015, among the Guarantors named therein and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.2 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2015)
	4.4	Form of 6.125% Senior Notes due 2023 (incorporated by reference to Exhibit 4.1 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2015)
	4.5	Second Amended and Restated Stockholders Agreement among Party City Holdco Inc., THL PC Topco, L.P., and certain other stockholders of Party City Holdco Inc. (incorporated by reference to Exhibit 4.5 of Party City Holdco Inc.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2019)
	4.6	Amended and Restated Registration Rights Agreement among Party City Holdco Inc., THL PC Topco, L.P., Advent-Party City Acquisition Limited Partnership and certain other stockholders of Party City Holdco Inc. (incorporated by reference to Exhibit 4.1 to Party City Holdco Inc.’s Form 8-K dated April 21, 2015)

126

Exhibit Number		Description
	4.7	Indenture, dated as of August 2, 2018, among Party City Holdings Inc., as Issuer, and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.1 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 6, 2018)
	4.8	First Supplemental Indenture, dated as of August 2, 2018, among the Guarantors named therein and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.2 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 6, 2018)
	4.9	Form of 6.625% Senior Notes due 2026 (incorporated by reference to Exhibit 4.1 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 6, 2018)
	4.10*	Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
	10.1	Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to Party City Holdco Inc.’s Registration Statement on Form S-1 dated March 26, 2015)
	10.2†*	Amended and Restated Employment Agreement between Party City Holdings Inc., Party City Holdco Inc. and James M. Harrison, dated March 11, 2020
	10.3†	Term Loan Credit Agreement, dated as of August 19, 2015, among PC Intermediate Holdings, Inc., Party City Holdings Inc., Party City Corporation, the subsidiaries of the borrowers from time to time party thereto, the financial institutions party thereto, as the Lenders, and Deutsche Bank AG New York Branch, as Administrative Agent (incorporated by reference to Exhibit 10.1 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2015)
	10.4	Pledge and Security Agreement, dated as of August 19, 2015, among Party City Holdings Inc., Party City Corporation, PC Intermediate Holdings, Inc., the Subsidiary Parties from time to time party thereto and Deutsche Bank AG New York Branch, in its capacity as administrative agent and collateral agent for the lenders party to the Term Loan Credit Agreement (incorporated by reference to Exhibit 10.2 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2015)
	10.5	First Amendment to Term Loan Credit Agreement, dated as of October 20, 2016, by and among Party City Holdings Inc., Party City Corporation, PC Intermediate Holdings, Inc., Deutsche Bank AG New York Branch as administrative agent and the various lenders parties thereto (incorporated by reference to Exhibit 10.1 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 24, 2016)
	10.6	Second Amendment to Term Loan Credit Agreement, dated as of February 16, 2018, by and among Party City Holdings Inc., Party City Corporation, PC Intermediate Holdings, Inc., Deutsche Bank AG New York Branch as administrative agent and the various lenders parties thereto (incorporated by reference to Exhibit 10.1 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 20, 2018)
	10.7	Third Amendment to Term Loan Credit Agreement, dated as of June 28, 2019 (incorporated by reference to Exhibit 10.3 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2019)

127

Exhibit Number		Description
	10.8	ABL Credit Agreement, dated as of August 19, 2015, among PC Intermediate Holdings, Inc., Party City Holdings Inc., Party City Corporation, the subsidiaries of the borrowers from time to time party thereto, the financial institutions party thereto, as the Lenders, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.3 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2015)
	10.9	Pledge and Security Agreement, dated as of August 19, 2015, among Party City Holdings Inc., Party City Corporation, PC Intermediate Holdings, Inc., the Subsidiary Parties from time to time party thereto and JPMorgan Chase Bank, N.A., in its capacity as administrative agent and collateral agent for the lenders party to the ABL Credit Agreement (incorporated by reference to Exhibit 10.4 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2015)
	10.10	Intercreditor Agreement, dated as of August 19, 2015, among PC Intermediate Holdings, Inc., Party City Holdings Inc., Party City Corporation, the other Grantors from time to time party thereto, JPMorgan Chase Bank, N.A., as ABL Facility Agent, and Deutsche Bank AG New York Branch, as Term Loan Agent (incorporated by reference to Exhibit 10.5 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2015)
	10.11	First Amendment to ABL Credit Agreement, dated as of August 2, 2018, among PC Intermediate Holdings, Inc., Party City Holdings Inc., Party City Corporation, the subsidiaries of the borrowers from time to time party thereto, the financial institutions party thereto, as the Lenders, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 6, 2018)
	10.12	Second Amendment to ABL Credit Agreement, dated as of March 4, 2019, by and among Party City Holdings Inc., Party City Corporation, PC Intermediate Holdings, Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, and each of the Persons party thereto as ABL Revolving Lenders (incorporated by reference to Exhibit 10.1 of Party City Holdco Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 9, 2019)
	10.13	Third Amendment to ABL Credit Agreement, dated as of April 8, 2019, by and among Party City Holdings Inc., Party City Corporation, PC Intermediate Holdings, Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, and each of the Persons party thereto as ABL Revolving Lenders (incorporated by reference to Exhibit 10.1 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 11, 2019)
	10.14	Fourth Amendment to ABL Credit Agreement, dated as of June 28, 2019 (incorporated by reference to Exhibit 10.4 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2019)
	10.15†	Party City Holdco Amended and Restated 2012 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to Party City Holdco Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2019)
	10.16†	Party City Holdco Inc. Executive Annual Incentive Plan (incorporated by reference to Exhibit 10.21 to Party City Holdco Inc.’s Registration Statement on Form S-1 dated March 26, 2015)
	10.17†	Party City Holdco Inc. Non-Employee Director Compensation Program (incorporated by reference to Exhibit 10.2 of Party City Holdco Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 8, 2018)

128

Exhibit Number		Description
	10.18†	Form of Nonqualified Stock Option Award Agreement (Non-Employee Directors) under the Party City Holdco Inc. Amended and Restated 2012 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.23 to Party City Holdco Inc.’s Registration Statement on Form S-1 dated March 26, 2015)
	10.19†	Form of Nonqualified Stock Option Award Agreement (Employees) under the Party City Holdco Inc. Amended and Restated 2012 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.24 to Party City Holdco Inc.’s Registration Statement on Form S-1 dated March 26, 2015)
	10.20†	Form of Unrestricted Stock Award Agreement (Non-Employee Directors) under the Party City Holdco Inc. Amended and Restated 2012 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.18 of Party City Holdco Inc.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2018)
	10.21†	Amended and Restated Employment Agreement between Party City Holdings Inc., Party City Holdco Inc. and Ryan Vero, dated May 8, 2018 (incorporated by reference to Exhibit 10.3 of Party City Holdco Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 9, 2018)
	10.22†	Form of Restricted Stock Award Agreement (Time and Performance-Based Vesting) under the Party City Holdco Inc. Amended and Restated 2012 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.6 of Party City Holdco Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2019)
	10.23†	Form of Restricted Stock Unit Award Agreement (Time and Performance-Based Vesting) under the Party City Holdco Inc. Amended and Restated 2012 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.7 of Party City Holdco Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2019)
	10.24†	Form of Non-Employee Director Restricted Stock Unit Agreement under the Party City Holdco Inc. Amended and Restated 2012 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.8 of Party City Holdco Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2019)
	10.25	Purchase and Sale Agreement, dated June 28, 2019, by and between Spirit Realty, L.P. and Amscan Inc., Anagram Eden Prairie Property Holdings LLC, and Amscan NM Land, LLC (incorporated by reference to Exhibit 10.1 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2019)
	10.26	Master Lease Agreement, dated June 28, 2019, by and between Spirit Realty, L.P. and Party City Holdings Inc. (incorporated by reference to Exhibit 10.2 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2019)
	10.27†	Employment Agreement between Party City Holdings Inc., Party City Holdco Inc. and Michael P. Harrison, dated December 28, 2018 (incorporated by reference to Exhibit 10.23 of Party City Holdco Inc.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2019)
	10.28†	Employment Agreement between Party City Holdings Inc., Party City Holdco Inc. and Michael Correale, dated March 24, 2015 (incorporated by reference to Exhibit 10.5 to Party City Holdco Inc.’s Registration Statement on Form S-1 dated March 26, 2015)
	10.29†	Employment Agreement between Party City Holdings Inc., Party City Holdco Inc. and Todd Vogensen, dated February 3, 2020 (incorporated by reference to Exhibit 10.1 of Party City Holdco Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9, 2020)

129

Exhibit Number		Description
	10.30†*	Amended and Restated Employment Agreement between Party City Holdings, Inc., Party City Holdco Inc. and Brad Weston dated March 11, 2020.
	21.1*	List of Subsidiaries of Party City Holdco Inc.
	23.1*	Consent of Independent Registered Public Accounting Firm
	31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	101*	Interactive Data Files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets at December 31, 2020 and December 31, 2019; (ii) the Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 2019, 2018 and 2017; (iii) the Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017; (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017; and (v) the Notes to the Consolidated Financial Statements.
	104.1*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

† Management contract of compensatory plan or arrangement

* Filed herewith.

Item 16. Form 10-K Summary

None.

130

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PARTY CITY HOLDCO INC.
By:	/s/ Todd Vogensen
	Todd Vogensen
	Chief Financial Officer

Date: March 12, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature	Title	Date
/s/ James M. Harrison James M. Harrison	Chief Executive Officer and Director (Principal Executive Officer)	March 12, 2020
/s/ Todd Vogensen Todd Vogensen	Chief Financial Officer (Principal Financial Officer)	March 12, 2020
/s/ Michael A. Correale Michael A. Correale	Chief Accounting Officer (Principal Accounting Officer)	March 12, 2020
/s/ Norman S. Matthews Norman S. Matthews	Chairman of the Board and Director	March 12, 2020
/s/ Todd M. Abbrecht Todd M. Abbrecht	Director	March 12, 2020
/s/ Steven J. Collins Steven J. Collins	Director	March 12, 2020
/s/ James G. Conroy James G. Conroy	Director	March 12, 2020
/s/ William S. Creekmuir William S. Creekmuir	Director	March 12, 2020
/s/ John A. Frascotti John A. Frascotti	Director	March 12, 2020
/s/ Lisa K. Klinger Lisa K. Klinger	Director	March 12, 2020
/s/ Michelle Millstone-Shroff Michelle Millstone-Shroff	Director	March 12, 2020
/s/ Morry J. Weiss Morry J. Weiss	Director	March 12, 2020

131

EX-3.1

Exhibit 3.1

CERTIFICATE OF CORRECTION

OF

SECOND AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

PARTY CITY HOLDCO INC.

Pursuant to Section 103(f) of the General Corporation Law of the State of Delaware (the “General Corporation Law”), Party City Holdco Inc. a Delaware corporation (the “Corporation”).

DOES HEREBY CERTIFY:

FIRST: A Second Amended and Restated Certificate of Incorporation of Party City Holdco Inc. (the “Second Amended and Restated Certificate of Incorporation”) was filed with the Secretary of State of the State of Delaware on June 6, 2019, and said Second Amended and Restated Certificate of Incorporation requires correction as permitted by subsection (f) of Section 103 of the General Corporation Law.

SECOND: The inaccuracy or defect of such Second Amended and Restated Certificate of Incorporation is that the Second Amended and Restated Certificate of Incorporation inadvertently did not include a provision limiting the liability of the directors of the Corporation pursuant to Section 102(b)(7) of the General Corporation Law, thereby rendering the Second Amended and Restated Certificate of Incorporation an inaccurate record of the corporate action taken.

THIRD: The Second Amended and Restated Certificate of Incorporation is corrected by inserting the following before the existing Article VI, Section (a) and re-lettering the current provisions in Article VI accordingly;

“(a) Limitation of Director Liability. To the fullest extent that the DGCL or any other law of the State of Delaware (as they exist on the date hereof or as they may hereafter be amended) permits the limitation or elimination of the liability of directors, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. No amendment to, or modification or repeal of, this Article VI shall adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any state of facts existing or act or omission occurring, or any cause of action, suit or claim that, but for this Article VI, would accrue or arise, prior to such amendment, modification or repeal. If the DGCL is amended after this Amended and Restated Certificate of Incorporation is filed with the Secretary of State of the State of Delaware to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.”

FOURTH: The Second Amended and Restated Certificate of Incorporation in its corrected form is attached hereto in its entirety as Exhibit A.

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IN WITNESS WHEREOF, this Certificate of Correction of the Second Amended and Restated Certificate of Incorporation has been signed by a duly authorized officer of the Corporation on December 17, 2019.

PARTY CITY HOLDCO INC.
By:	/s/ Joseph J. Zepf
	Name; Joseph J. Zepf
	Title: Executive Vice President, General Counsel & Secretary

2

EXHIBIT A

SECOND AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

PARTY CITY HOLDCO INC.

Party City Holdco Inc. a Delaware corporation (the “Corporation”), hereby certifies that this Amended and Restated Certificate of Incorporation has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”) and that:

A. The name of the Corporation is: Party City Holdco Inc.

B. The original Certificate of Incorporation of the Corporation was filed with the Secretary of the State of Delaware on May 31, 2012 under the name PC Topco Holdings, Inc. amended on November 25, 2013 and amended on April 2, 2015 (as amended, the “Original Certificate of Incorporation”).

C. The Amended and Restated Certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) was filed on April 21, 2015, which amended and restated the Original Certificate of Incorporation.

D. This Second Amended and Restated Certificate of Incorporation (the “Second Amended and Restated Certificate of Incorporation”) amends and restates the Amended and Restated Certificate of Incorporation.

E. The Certificate of Incorporation of the Corporation upon the filing of this Second Amended and Restated Certificate of Incorporation, shall read in its entirety as follows:

ARTICLE I

NAME

The name of the corporation is Party City Holdco Inc.

ARTICLE II

REGISTERED OFFICE AND AGENT

The address of the Corporation’s registered office in the State of Delaware is 251 Little Fails Drive, Wilmington, County of New Castle, Delaware 19808. The name of the Corporation’s registered agent at such address is Corporation Service Company.

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ARTICLE III

PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

ARTICLE IV

CAPITALIZATION

(a) Authorized Shares. The total number of shares of stock which the Corporation shall have authority to issue is 315,000,000, consisting of 300,000,000 shares of Common Stock, par value $0.01 per share (“Common Stock”) and 15,000,000 shares of Preferred Stock, par value $0.01 per share (“Preferred Stock”).

(b) Common Stock. Subject to the powers, preferences and rights of any Preferred Stock, including any series thereof having any preference or priority over, or rights superior to, the Common Stock and except as otherwise provided by law and this Article IV, the holders of the Common Stock shall have and possess all powers and voting and other rights pertaining to the stock of the Corporation.

(i) Voting. Each Holder of Common Stock shall be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote; provided that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Second Amended and Restated Certificate of Incorporation (including, but not limited to, any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Second Amended and Restated Certificate of Incorporation (including, but not limited to, any certificate of designations relating to any series of Preferred Stock ) or pursuant to the DGCL. There shall be no cumulative voting.

(ii) Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the board of directors of the Corporation (the “Board of Directors”) and subject to any preferential dividend rights of any then outstanding Preferred Stock. Except as otherwise provided by the DGCL or this Second Amended and Restated Certificate of Incorporation, the holders of record of Common Stock shall share ratably in all dividends payable in cash, stock, or otherwise and other distributions.

(iii) No Preemptive Rights. The holders of the Common Stock shall have no preemptive rights to subscribe for any shares of any class of stock of the Corporation whether now or hereafter authorized.

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(iv) No Conversion Rights. The Common Stock shall not be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same class of the Corporation’s capital stock.

(v) Liquidation Rights. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential rights of any then outstanding Preferred Stock. A merger or consolidation of the Corporation with or into any other corporation or other entity or a sale or conveyance of all or any part of the assets of the Corporation, in any such case which shall not in fact result in the liquidation of the Corporation and the distribution of assets to its stockholders, shall not be deemed to be a voluntary or involuntary liquidation or dissolution or winding up of the Corporation within the meaning of this Article IV(b)(v).

(c) Preferred Stock. Shares of Preferred Stock may be issued in one or more series, from time to time, with each such series to consist of such number of shares and to have such voting powers relative to other classes or series of Preferred Stock, if any, or Common Stock, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional, or other special rights, and the qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issuance of such series adopted by the Board of Directors, and the Board of Directors is hereby expressly vested with the authority, to the full extent now or hereafter provided by applicable law, to adopt any such resolution or resolutions. Except as otherwise provided in this Second Amended and Restated Certificate of Incorporation, no vote of the holders of the Preferred Stock or Common Stock shall be a prerequisite to the designation or issuance of any shares of any series of the Preferred Stock authorized by and complying with the conditions of this Second Amended and Restated Certificate of Incorporation, the right to have such vote being expressly waived by all present and future holders of the capital stock of the Corporation. Any shares of Preferred Stock that are redeemed, purchased, or acquired by the Corporation may be reissued except as otherwise provided by law or this Second Amended and Restated Certificate of Incorporation. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purposes of voting by classes unless expressly provided in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors.

(d) No Class Vote On Changes in Authorized Number of Shares Of Preferred Stock. Subject to the special rights of the holders of any series of Preferred Stock pursuant to the terms of this Second Amended and Restated Certificate of Incorporation, any certificate of designations or any resolution or resolutions providing for the issuance of such series of stock adopted by the Board of Directors, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting; together as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL.

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ARTICLE V

BOARD OF DIRECTORS

(a) Number of Directors; Vacancies and Newly Created Directorships. The number of directors constituting the Board of Directors shall be not fewer than three (3) and not more than fifteen (15), each of whom shall be a natural person. All elections of directors shall be determined by a plurality of the votes cast by stockholders entitled to vote in such elections. The number of directors initially shall be nine (9). Subject to the special rights of the holders of any series of Preferred Stock to elect directors, the precise number of directors shall be fixed exclusively pursuant to a resolution adopted by the Board of Directors. Vacancies and newly-created directorships shall be filled exclusively pursuant to a vote of a majority of the directors then in office, although less than a quorum, or by the sole remaining director, except that any vacancy created by the removal of a director by the stockholders for cause shall only be filled in addition to any other vote otherwise required by law, by vote of a majority of the outstanding shares of Common Stock. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office, and a director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next election of the directors, subject to the election and qualification of his or her successor and to his or her earlier death, resignation or removal

(b) Term. Subject to the special rights of the holders of any class or series of stock to elect directors, commencing at the annual meeting of stockholders in 2019, each director shall be elected annually for terms expiring at the next annual meeting of stockholders until his or her earlier death, resignation or removal The division of directors into classes shall terminate at the annual meeting of stockholders in 2019, from and after which all directors will stand for election annually.

(c) Removal. Subject to the rights of the holders of any series of Preferred Stock to elect directors, any director of the Corporation may be removed with or without cause by the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, at a meeting of the stockholders called for that purpose. For the purpose of this Article V(c), “beneficial ownership” shall be determined in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.

ARTICLE VI

LIMITATION OF DIRECTOR LIABILITY INDEMNIFICATION AND

ADVANCEMENT OF EXPENSES

(a) Limitation of Director Liability. To the fullest extent that the DGCL or any other law of the State of Delaware (as they exist on the date hereof or as they may hereafter be amended) permits the limitation or elimination of the liability of directors, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for

6

breach of fiduciary duty as a director. No amendment to, or modification or repeal of this Article VI shall adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any state of facts existing or act or omission occurring, or any cause of action, suit or claim that, but for this Article VI, would accrue or arise, prior to such amendment, modification, or repeal. If the DGCL is amended after this Amended and Restated Certificate of Incorporation is filed with the Secretary of State of the State of Delaware to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

(b) Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (an “Indemnitee”) who was or is made, or is threatened to be made, a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or an officer of the Corporation or, while a director or an officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, member, trustee or agent of another corporation or of a partnership, joint venture, trust, nonprofit entity or other enterprise (including, but not limited to, service with respect to employee benefit plans) (any such entity, an “Other Entity”), against all liability and loss suffered (including, but not limited to, expenses (including, but not limited to, attorneys’ fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Indemnitee in connection with such Proceeding). Notwithstanding the preceding sentence, the Corporation shall be required to indemnify an Indemnitee in connection with a Proceeding (or part thereof) commenced by such Indemnitee only if the commencement of such Proceeding (or part thereof) by the indemnitee was authorized by the Board of Directors or the Proceeding (or part thereof) relates to the enforcement of the Corporation’s obligations under this Article VI(b).

(c) Advancement of Expenses. The Corporation may to the extent permitted by applicable law pay the expenses (including, but not limited to attorneys’ fees and expenses) incurred by an Indemnitee in defending any proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Indemnitee to repay all amounts advanced if it should be ultimately determined that the Indemnitee is not entitled to be indemnified under this Article VI or otherwise.

(d) Claims. If a claim for indemnification (following the final disposition of such proceeding) under this Article VI is not paid in full within sixty days after a written claim therefor by the Indemnitee has been received by the Corporation, the indemnitee may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the Indemnitee is not entitled to the requested indemnification under applicable law.

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(e) Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, trustee, employee, member, trustee or agent of the Corporation, or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of an Other Entity, against any liability asserted against the person and incurred by the person in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VI.

(f) Non-Exclusivity of Rights. The rights conferred on any Indemnitee by this Article VI are not exclusive of other rights arising under any bylaw, agreement, vote of directors or stockholders or otherwise, and shall inure to the benefit of the heirs and legal representatives of such Indemnitee.

(g) Amounts Received from an Other Entity. Subject to Article VI(h), the Corporation’s obligation, if any, to indemnify any Indemnitee who was or is serving at the Corporation’s request as a director, officer, employee or agent of an Other Entity shall be reduced, by any amount such. Indemnitee may collect as indemnification or advancement of expenses from such Other Entity.

(h) Indemnification Priority. As between the Corporation and any other person (other than an entity directly or indirectly controlled by the Corporation) who provide indemnification and advancement of expenses to the Indemnitees for their service to or on behalf of the Corporation (collectively, the “Secondary Indemnitors”) (i) the Corporation shall be the full indemnitor of first resort in respect of indemnification or advancement of expenses in connection with any Jointly Indemnifiable Claims (as defined below), pursuant to and in accordance with the terms of this Article VI, irrespective of any right of indemnification, advancement of expenses or other right of recovery any Indemnitee may have from any Secondary Indemnitor (i.e., the Corporation’s obligations to such Indemnitees are primary and any obligation, of any Secondary Indemnitor to advance expenses or to provide indemnification for the same loss or liability incurred by such. Indemnitees is secondary to the Corporation’s obligations), (ii) the Corporation shall be required to advance the full amount of expenses incurred by any such Indemnitee and shall be liable for the full amount of all liability and loss suffered by such Indemnitee (including, but not limited to, expenses (including, but not limited to, attorneys’ fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Indemnitee in connection with such Proceeding), without regard to any rights any such Indemnitee may have against any Secondary Indemnitor, and (iii) the Corporation irrevocably waives, relinquishes and releases each Secondary Indemnitor from any and all claims against such Secondary Indemnitor for contribution, subrogation or any other recovery of any kind in respect thereof. The Corporation shall indemnify each Secondary Indemnitor directly for any amounts that such Secondary Indemnitor pays as indemnification or advancement on behalf of any such Indemnitee and for which such Indemnitee may be entitled to indemnification from the Corporation in connection with Jointly Indemnifiable Claims. No right of indemnification, advancement of expenses or other right of recovery that an Indemnitee may have from any Secondary Indemnitor shall reduce or otherwise alter the rights of the Indemnitee or the obligations of the Corporation hereunder. No advancement or payment by any Secondary Indemnitor on behalf of any such Indemnitee with respect to any claim for which such Indemnitee has sought indemnification from the Corporation shall affect the foregoing and the Secondary Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Indemnitee against the Corporation. Each Indemnitee shall

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execute all papers reasonably required and shall do all things that may be reasonably necessary to secure the rights of such Indemnitee’s Secondary indemnitors under this Article VI(h), including the execution of such documents as may be necessary to enable the Secondary Indemnitors effectively to bring suit to enforce such rights, including in the right of the Corporation. Each of the Secondary Indemnitors shall be third-party beneficiaries with respect to this Article VI(h) entitled to enforce this Article VI(h). As used in this Article VI(h) the term “Jointly Indemnifiable Claims” shall be broadly construed and shall include, without limitation, any action, suit, proceeding or other matter for which an Indemnitee shall be entitled to indemnification or advancement of expenses from both a Secondary Indemnitor and the Corporation, whether pursuant to Delaware law, any agreement or certificate of incorporation, bylaws, partnership agreement, operating agreement, certificate of formation, certificate of limited partnership or comparable organizational documents of the Corporation or the Secondary Indemnitors, as applicable.

(i) Amendment or Repeal. Any right to indemnification of any Indemnitee arising hereunder shall not be eliminated or impaired by an amendment to or repeal of this Article VI after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit, proceeding or other matter for which indemnification or advancement of expenses is sought.

(j) Other Indemnification and Advancement of Expenses. This Article VI shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Indemnitees when and as authorized by appropriate corporate action.

(k) Reliance. Indemnitees who after the date of the adoption of this Article VI become or remain an Indemnitee described in Article VI(b) will be conclusively presumed to have relied on the rights contained in this Article VI in entering into or continuing the service. The rights to indemnification conferred in this Article VI will apply to claims made against any Indemnitee described in Article VI(b) arising out of acts or omissions that occurred or occur either before or after the adoption of this Article VI in respect of service as a director or officer of the corporation or other service described in Article VI(b).

ARTICLE VII

ACTION BY CONSENT; SPECIAL MEETINGS OF STOCKHOLDERS

(a) Action by Written Consent. Except as otherwise provided for or fixed by or pursuant to the provisions of this Second Amended and Restated Certificate of Incorporation or any resolution or resolutions of the Board of Directors providing for the Issuance of Preferred Stock, any action, required or permitted to be taken by the stockholders of the Corporation may be effected only at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.

(b) Special Meetings of Stockholders. Subject to the rights of the holders of any series of Preferred Stock, and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called only by either (a) the Chairman or Vice Chairman of the Board of Directors or (b) the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies.

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(c) Election of Directors by Written Ballot. Election of directors need not be by written ballot.

ARTICLE VIII

AMENDMENTS TO THE SECOND AMENDED AND RESTATED CERTIFICATE OF

INCORPORATION AND BYLAWS

(a) Bylaws. In furtherance and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation subject to the power of the stockholders of the Corporation to alter, amend or repeal the Bylaws, provided, that with respect to the powers of stockholders to make, alter, amend or repeal the Bylaws, in addition to any other vote otherwise required by law, the affirmative vote of the holders of at least; sixty-six and two-thirds percent (66²⁄₃%) of the voting power of the outstanding shares of capital stock of the Corporation, entitled to vote on the subject matter shall be required to make, alter amend or repeal the Bylaws of the Corporation.

(b) Amendments to the Second Amended and Restated Certificate of Incorporation. Notwithstanding any other provision of this Second Amended and Restated Certificate of Incorporation, and notwithstanding that a lesser percentage may be permitted from time to time by applicable law, no provision of this Second Amended and Restated Certificate of Incorporation may be altered, amended or repealed in any respect, nor may any provision or bylaw inconsistent therewith be adopted, unless in addition to any other vote required by this Second Amended and Restated Certificate of Incorporation or otherwise required by law, such alteration, amendment, repeal or adoption is approved by, in addition to any other vote otherwise required by law, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66²⁄₃%) of the voting power of the outstanding shares of capital stock entitled to vote on the subject matter.

ARTICLE IX

BUSINESS COMBINATIONS

(a) Section 203 of the DGCL. The Corporation hereby expressly elects not to be governed by Section 203 of the DGCL.

(b) Interested Stockholder Transactions. Notwithstanding any other provision in this Second Amended and Restated Certificate of Incorporation to the contrary, the Corporation shall not engage in any Business Combination (as defined below) with any Interested Stockholder (as defined hereinafter) for a period of three years following the time that such stockholder became an Interested Stockholder, unless:

1) prior to such time the Board, of Directors approved either the Business Combination or the transaction which resulted in such stockholder becoming an Interested Stockholder;

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2) upon consummation of the transaction which resulted in such stockholder becoming an Interested Stockholder, such stockholder owned at least eighty-five percent (85%) of the Voting Stock (as defined below) of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the Voting Stock outstanding (but not the outstanding Voting Stock owned by such stockholder) those shares owned (i) by Persons (as defined below) who are directors and also officers of the Corporation and (ii) employee stock plans of the Corporation in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

3) at or subsequent to such time the Business Combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least sixty-six and two-thirds percent (66²⁄₃%) of the outstanding Voting Stock which is not owned by such stockholder.

(c) Exceptions to Prohibition on Interested Stockholder Transactions. The restrictions contained in this Article IX shall not apply if;

1) A stockholder becomes an Interested Stockholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the stockholder ceases to be an Interested Stockholder; and (ii) would not, at any time within the three-year period, immediately prior to a Business Combination between the Corporation and such stockholder, have been an Interested Stockholder but for the inadvertent acquisition of ownership; or

2) the Business Combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction, which (i) constitutes one of the transactions described in the second sentence of this Article IX(c)(2); (ii) is with or by a Person who either was not an Interested Stockholder during the previous three years or who became an Interested Stockholder with the approval of the Board of Directors; and (iii) is approved or not opposed by a majority of the directors then in office (but not less than one) who were directors prior to any Person becoming an Interested Stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to (x) a merger or consolidation of the Corporation (except for a merger in respect of which, pursuant to §251(f) of the DGCL, no vote of the stockholders of the Corporation is required);

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(y) a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Corporation, or of any direct or indirect majority-owned subsidiary of the Corporation (other than to any direct or indirect wholly-owned subsidiary or to the Corporation ) having an aggregate market value equal to fifty percent (50%) or more of either that aggregate market value of all of the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock (as defined hereinafter) of the Corporation; or (z) a proposed tender or exchange offer for fifty percent (50%) or more of the outstanding Voting Stock of the Corporation. The Corporation shall give not less than 20 days’ notice to all Interested Stockholders prior to the consummation of any of the transactions described in clause (x) or (y) of the second sentence of this Article IX(c)(2).

(d) Definitions. As used in this Article IX only and unless otherwise provided by the express terms of this Article IX, the following terms shall have the meanings ascribed to them, as set forth in paragraph (d) of this Article IX:

1) “Associate.” when used to indicate a relationship with any Person, means: (i) any corporation, partnership, unincorporated association or other entity of which such Person is a director, officer or partner or is, directly or indirectly; the owner of twenty percent (20%) or more of any class of Voting Stock; (ii) any trust or other estate in which such Person has at least a twenty percent (20%) beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity and (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same residence as such Person:

2) “Business Combination” means:

i. any merger or consolidation of the Corporation, or any direct or indirect majority-owned subsidiary of the Corporation with (A) the interested Stockholder, or (B) with any Person. If the merger or consolidation is caused by the Interested Stockholder and as a result of such merger or consolidation paragraph (b) of this Article IX is not applicable to the surviving entity;

ii. any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the Interested Stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to ten percent (10%) or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock of the Corporation; or

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iii. any transaction or series of transactions which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of ten percent (10%) or more of any class or series of Stock of the Corporation or of such subsidiary to the Interested Stockholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into Stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the Interested Stockholder became such ; (B) pursuant to a merger under § 251(g) or § 253 of the DGCL; (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable or exchangeable for or convertible into Stock of the Corporation or any such subsidiary which security is distributed. pro rata to all holders of a class or series of Stock of the Corporation, subsequent to the time the Interested Stockholder became such; or (D) pursuant to an exchange offer by the Corporation to purchase Stock made on the same terms to all holders of such Stock;

3) “Interested Stockholder” means any Person (other than the Corporation and any direct or indirect majority-owned subsidiary of the Corporation) that is the owner of fifteen percent (15%) or more of the outstanding Voting Stock of the Corporation, or is an Affiliate or Associate of the Corporation and was the owner of fifteen percent (15%) or more of the outstanding Voting Stock of the Corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such Person is an Interested Stockholder, and the Affiliates and Associates of such Person. Notwithstanding anything in this Article IX to the contrary, the term “Interested Stockholder” shall not include; (i) investment funds affiliated with Thomas H. Lee Partners, L.P. or their respective Affiliates or Associates; (ii) any Person who would otherwise be an Interested Stockholder because of a transfer, sale, assignment, conveyance, hypothecation, encumbrance, or other disposition of five percent (5%) or more of the outstanding Voting Stock of the Corporation (in one transaction or a series of transactions) by any party specified in the immediately preceding clause (i) to such Person; provided, however, that such Person was not an Interested Stockholder prior to such transfer, sale, assignment, conveyance, hypothecation, encumbrance, or other disposition; or (iii) any Person whose ownership of shares in excess of the fifteen percent (15%) limitation set forth herein is the result of action taken solely by the Corporation, provided that, for purposes of this clause (iii), such Person shall be an Interested Stockholder if thereafter such Person acquires additional shares of Voting Stock of the Corporation, except as a result of further action by the Corporation not caused, directly or indirectly, by such Person;

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4) “Owner “ including the terms “own” and “owned,” when used with respect to any Stock, means a Person that individually or with, or through any of its affiliates or associates beneficially owns such Stock, directly or indirectly; or has (i) the right to acquire such Stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise; provided, however, that a Person shall not be deemed the owner of Stock tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered Stock is accepted for purchase or exchange; or (ii) the right to vote such Stock pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the owner of any Stock because of such Person’s right to vote such Stock if the agreement, arrangement or understanding to vote such Stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more Persons; or (iii) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in (ii) of this Article IX (d)(4)), or disposing of such Stock with any other Person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such Stock; provided, that, for the purpose of determining whether a Person is an Interested Stockholder, the Voting Stock of the Corporation deemed to be outstanding shall include Stock deemed to be owned by the Person through; application of this definition of “owned” but shall not include any other unissued Stock of the Corporation, which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise;

5) “Person” means any individual, corporation, partnership, unincorporated association or other entity;

6) “Stock” means, with respect to any corporation, capital, stock and, with respect to any other entity, any equity interest; and

7) “Voting Stock” means, with respect to any corporation, Stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. Every reference to a percentage of Voting Stock shall refer to such percentage of the votes of such Voting Stock.

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ARTICLE X

RENOUNCEMENT OF CORPORATE OPPORTUNITY

(a) Scope. The provisions of this Article X are set forth to define, to the extent permitted by applicable law, the duties of Exempted Persons (as defined below) to the Corporation with respect to certain classes or categories of business opportunities, “Exempted Persons” means investment funds affiliated with Thomas H. Lee Partners, L.P. and their respective Affiliates (other than the Corporation and its subsidiaries) and all of their respective partners, principals, directors, officers, members, managers and/or employees, including any of the foregoing who serve as officers or directors of the Corporation.

(b) Competition and Allocation of Corporate Opportunities. The Exempted Persons shall not have any fiduciary duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Corporation or any of its subsidiaries. To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its subsidiaries, renounces any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in business opportunities that are from time to time presented to the Exempted Persons, even if the opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and each such Exempted Person shall have no duty to communicate or offer such business opportunity to the Corporation and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation or any of its subsidiaries for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such Exempted Person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries.

(c) Certain Matters Deemed Not Corporate Opportunities. In addition to and notwithstanding the foregoing provisions of this Article X, a corporate opportunity shall not be deemed to belong to the Corporation if it is a business opportunity that the Corporation is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporation’s business or is of no practical advantage to it or that is one in which the Corporation has no interest or reasonable expectancy.

(d) Amendment of this Article. Notwithstanding anything to the contrary elsewhere contained in this Second Amended and Restated Certificate of Incorporation and in addition to any vote required by the DGCL, the affirmative vote of eighty percent (80%) of the voting power of the outstanding shares of capital stock entitled to vote on the adoption, alteration, amendment or repeal of amendments to this Second Amended and Restated Certificate of Incorporation, voting together as a single class, shall be required to alter, amend or repeal or to adopt any provision inconsistent with, this Article X. No amendment or repeal of this Article X shall apply to or have any effect on the liability or alleged liability of any Exempted Person, for or with respect to any activities or opportunities of which such Exempted Person becomes aware prior to such amendment or repeal.

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ARTICLE XI

EXCLUSIVE JURISDICTIC CERTAIN ACTIONS

The Court of Chancery of the State of Delaware shall, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action, or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation arising pursuant to any provision of the DGCL or the Corporation’s Second Amended and Restated Certificate of Incorporation or bylaws or (iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XI.

ARTICLE XII

SEVERABILITY

If any provision or provisions of this Second Amended and Restated Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Second Amended and Restated Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Second Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Second Amended and Restated Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Second Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.

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EX-4.10

Exhibit 4.10

DESCRIPTION OF PARTY CITY HOLDCO INC’S REGISTERED SECURITIES

PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

The following is a description of the material terms of the common stock, $0.01 par value per share (the “common stock”), of Party City Holdco Inc. (the “Company,” “we,” “our” or “us”), which is the only security of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This description may not contain all of the information that is important to you. To understand them fully, you should read our second amended and restated certificate of incorporation (the “Certificate of Incorporation”) and amended and restated bylaws (the “Bylaws”), copies of which are filed as exhibits to our Annual Report on Form 10-K, as well as the relevant portions of the Delaware General Corporation Law, as amended (“DGCL”).

Description of Common Stock

General. Our Certificate of Incorporate authorizes the issuance of up to 300,000,000 shares of common stock, par value $0.01. None of our common stock has been designated as non-voting.

Voting Rights. Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. An election of directors by our stockholders shall be determined by a plurality of the votes cast by the stockholders entitled to vote on the election. Holders of common stock are entitled to receive proportionately any dividends as may be declared by our board of directors, subject to any preferential dividend rights of any series of preferred stock that is outstanding at the time of the dividend.

Liquidation and Dissolution. In the event of our liquidation or dissolution, the holders of common stock are entitled to receive proportionately our net assets available for distribution to stockholders after payment of all debts and other liabilities, subject to the prior rights of any outstanding preferred stock.

Rights, Preferences and Privileges. The rights, preferences and privileges of holders of common stock are subject to the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

Preemptive Rights. Our common stock is not entitled to preemptive rights and is not subject to conversion, redemption or sinking fund provisions.

Assessment. All outstanding shares of our common stock are fully paid and nonassessable.

Preferred Stock

Under our Certificate of Incorporation, our board of directors has the authority, without further action by our stockholders, except as described below, to issue up to 15,000,000 shares of preferred stock in one or more series and to fix the voting powers, designations, preferences and the relative participating, optional or other special rights and qualifications, limitations and restrictions of each series, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any series. Because the board of directors has the power to establish the preferences and rights of the shares of any additional series of preferred stock, it may afford holders of any preferred stock preferences, powers and rights, including voting and dividend rights, senior to the rights of the holders of the common stock, which could adversely affect the holders of the common stock and could discourage a takeover of us even if a change of control of our company would be beneficial to the interests of our stockholders.

Anti-takeover Effects of the DGCL and our Certificate of Incorporation and Bylaws

Our Certificate of Incorporation and our bylaws contain provisions that may delay, defer or discourage another party from acquiring control of us. We expect that these provisions, which are summarized below, will discourage coercive takeover practices or inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with the board of directors, which we believe may result in an improvement of the terms of any such acquisition in favor of our stockholders. However, they also give the board of directors the power to discourage acquisitions that some stockholders may favor.

Board of Directors

Our Certificate of Incorporation provides that the authorized number of directors may be changed only by resolution of the board of directors. A director may be removed with or without cause by the affirmative vote of the holders of at least 75% of the voting power of our outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class. Any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office.

Action by Written Consent

The DGCL provides that, unless otherwise stated in a corporation’s certificate of incorporation, the stockholders may act by written consent without a meeting. Our Certificate of Incorporation provides that any action required or permitted to be taken by our stockholders at an annual meeting or special meeting of the stockholders may only be taken at an annual or special meeting before which it is properly brought, and not by written consent without a meeting.

Special Meeting of Stockholders and Advance Notice Requirements for Stockholder Proposals

Our Certificate of Incorporation and Bylaws provide that, except as otherwise required by law, special meetings of the stockholders can only be called by (a) our chairman or vice chairman of the board of directors or (b) the board of directors through a special resolution.

In addition, our Bylaws require advance notice procedures for stockholder proposals to be brought before an annual meeting of the stockholders, including the nomination of directors. Stockholders at an annual meeting may only consider the proposals specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or any committee thereof, or by a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has delivered a timely written notice in proper form to our secretary, of the stockholder’s intention to bring such business before the meeting.

These provisions could have the effect of delaying until the next stockholder meeting any stockholder actions, even if they are favored by the holders of a majority of our outstanding voting securities.

Amendment to Amended and Restated Certificate of Incorporation and Bylaws

The DGCL provides generally that the affirmative vote of a majority of the outstanding stock entitled to vote on amendments to a corporation’s certificate of incorporation or bylaws is required to approve such amendment, unless a corporation’s certificate of incorporation or bylaws, as the case may be, requires a greater percentage. Our Bylaws may be amended or repealed by a majority vote of our board of directors or, in addition to any other vote otherwise required by law, by the holders of two thirds of the voting power of our outstanding shares of capital stock entitled to vote. Additionally, the affirmative vote of at least two-thirds of the voting power of the outstanding shares of capital stock entitled to vote on the adoption, alteration, amendment or repeal of our Certificate of Incorporation, voting as a single class, is required to amend or repeal or to adopt any provision of our Certificate of Incorporation.

Renouncement of Corporate Opportunity

Our Certificate of Incorporation provides that we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any business opportunity that may from time to time be presented to Exempted Persons (as defined in the Certificate of Incorporation) and that may be a business opportunity for such Exempted Person, even if the opportunity is one that we might reasonably have pursued or had the ability or desire to pursue if granted the opportunity to do so. No such Exempted Person will be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person, acting in good faith, pursues or acquires any such business opportunity, directs any such business opportunity to another person or fails to present any such business opportunity, or information regarding any such business opportunity, to us. None of the Exempted Persons or their representatives has any duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us or any of our subsidiaries. In addition, the affirmative vote of 80% of the voting power of the outstanding shares of capital stock entitled to vote on the adoption, alteration, amendment or repeal of our Certificate of Incorporation, voting together as a single class, shall be required to alter, amend or repeal, or to adopt any provision inconsistent with provisions related to the “Renouncement of Corporate Opportunity.”

Business Combinations

We have opted out of Section 203 of the DGCL. However, our Certificate of Incorporation contains similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless:

• prior to such time, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

• upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or

• at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least 66 ²/₃% of the outstanding voting stock that is not owned by the interested stockholder.

Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of our voting stock.

Under certain circumstances, this provision will make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with a corporation for a three-year period. This provision may encourage companies interested in acquiring our company to negotiate in advance with our board of directors because the stockholder approval requirement would be avoided if our board of directors approves either the business combination or the transaction which results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests.

Section 102(b)(7) of the DGCL enables a corporation in its certificates of incorporation to eliminate or limit the personal liability of a director for violations of the director’s fiduciary duty, except (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for liability of directors for unlawful payment of dividends or unlawful stock purchase or redemptions pursuant to Section 174 of the DGCL or (iv) for any transaction from which a director derived an improper personal benefit. Our Certificate of Incorporation includes a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director to the fullest extent authorized by the DGCL.

Exclusive Jurisdiction for Certain Actions

Our Certificate of Incorporation requires, to the fullest extent permitted by law, that derivative actions brought in the name of the Company, actions against directors, officers and employees for breach of a fiduciary duty and other similar actions, may be brought only in specified courts in the State of Delaware. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Computershare Trust Company, N.A.

Listing

Our common stock is listed on the NYSE under the symbol “PRTY.”

EX-10.2

Exhibit 10.2

Execution Version

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”), dated as of the 11th day of March, 2020, by and between Party City Holdings Inc., a Delaware corporation (the “Company”), Party City Holdco Inc., a Delaware corporation (“Holdco”), and James M. Harrison (the “Executive”) and effective as of the date hereof.

WHEREAS, the Executive has served each of the Company and Holdco as Chief Executive Officer pursuant to an Employment Agreement, which was amended and restated effective as of January 1, 2015, amended on May 8, 2017 and again on May 8, 2018 (as amended, the “Prior Employment Agreement”); and

WHEREAS, the Company, Holdco and the Executive desire to set forth in this new Agreement the terms and conditions under which the Executive will be employed as the Vice Chairman of each of the Company and Holdco effective as of April 1, 2020 (the “Effective Date”);

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Employment Period. The Company and Holdco shall continue to employ the Executive, and the Executive agrees to, and shall, serve the Company and Holdco, on the terms and conditions set forth in this Agreement, for the period beginning on the Effective Date and ending on December 31, 2021 unless sooner terminated as set forth hereinafter (the “Initial Employment Period”). At the conclusion of the Initial Employment Period or any Renewal Period (as defined below), such period may be extended for an additional one-year period (any such one-year extension, a “Renewal Period”) upon mutual written agreement of the Executive and Holdco. The “Employment Period” shall mean the period that includes the Initial Employment Period and any such mutually agreed upon Renewal Period (if applicable).

2. Position, Duties and Work Location.

(a) During the Employment Period, the Executive shall serve as Vice Chairman of the Company and of Holdco. In such role, the Executive will provide strategic advisory services to Holdco, which services are expected to include identifying and evaluating corporate development opportunities available to Holdco and the Company, conducting reviews of acquisition targets, collaborating with and assisting with the onboarding process of the Chief Financial Officer of Holdco, providing advice regarding the Company’s capital structure, enabling the development or further of relationships with licensors, customers or other industry stakeholder and providing counsel and coaching on various initiatives within the consumer products business. The Executive will report to the Board of Directors of Holdco (the “Board”) and will also perform such duties and responsibilities as are assigned to him by the Board from time to time that are reasonably related to the services described above, with it being understood that such role will not include day-to-day operational responsibilities for managing or leading the business and will not required to attend Executive Leadership Team meetings. During the Employment Period, the Executive will be nominated in 2020 and 2021 to serve as a member of the Board.

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(b) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive shall devote his full attention and time during normal business hours to the business and affairs of the Company and Holdco and shall use his reasonable best efforts to carry out the responsibilities assigned to the Executive faithfully and efficiently. It shall not be considered a violation of the foregoing for the Executive to (i) serve on civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, (iii) serve on the board of directors of other companies, so long as the Board approves such appointments (such approval not to be unreasonably withheld), or (iv) manage personal investments, so long as such activities do not compete with and are not provided to or for any entity that competes with or intends to compete with Holdco or any of its subsidiaries and affiliates and do not interfere with the performance of the Executive’s responsibilities as an employee of the Company or Holdco in accordance with this Agreement.

(c) During the Employment Period, (i) the Executive’s principal place of employment will be the Company’s offices in Elmsford, New York, with it being understood that the Executive will generally be in-office two to three days per week (or such lesser amount as is determined by the Company) and otherwise will generally work from his home and (ii) the Executive will be provided with the support of an administrative assistant and will have access to a Company car and driver, in each case, subject such reasonable terms as are determined by the Company or Holdco and, in the case of the Company car and driver, subject to the reasonable availability of such car and driver in light of other business needs.

3. Compensation.

(a) Base Salary. Effective as of the Effective Date, the Executive shall receive from the Company an annual base salary (“Annual Base Salary”) of $750,000, payable in regular intervals in accordance with the Company’s customary payroll practices in effect during the Employment Period.

(b) 2020 Annual Bonus. In addition to the Annual Base Salary, for the Company’s 2020 fiscal year only, the Executive shall be eligible to receive annual bonus compensation (the “2020 Bonus”) consistent with the Company’s bonus plan for key executives as in effect from time to time (the “Bonus Plan”) and the terms set forth herein. The 2020 Bonus, if any, shall be paid in 2021 at the time annual bonuses are paid to other senior executives of the Company. For the 2020 fiscal year, the target amount of the Annual Bonus shall be $277,169.35 and the maximum amount of the Annual Bonus shall be $554,338.70, with the actual amount of the Annual Bonus, if any, to be determined by the Board or the Compensation Committee of the Board (the “Committee”) in accordance with the Bonus Plan.

(c) Other Benefits. During the Employment Period: (i) the Executive shall be eligible to participate in all savings and retirement plans, practices, policies and programs of the Company, and shall be entitled to paid vacation, to the same extent and on the same terms and conditions as senior executives; (ii) the Company shall pay on the Executive’s behalf, disability insurance premiums up to $2,000.00 per month pursuant to which policy the Executive shall be entitled to designate the beneficiary; and (iii) the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in, and shall receive all benefits under, all other

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welfare benefit plans, practices, policies and programs provided by the Company (including, to the extent provided, without limitation, medical, prescription, dental, disability, employee life insurance, group life insurance, accidental death and travel accident insurance plans and programs) to the same extent and on the same terms and conditions as senior executives, subject, in each case, to the terms of the applicable welfare benefit plan; provided, however, that nothing in this Agreement shall impose on the Company any obligation to offer to the Executive participation in any stock, stock option, restricted stock, bonus or other incentive award, plan, practice, policy or program, except as expressly provided in Section 3(e)(i) below. The term “senior executives” means executives of the Company and Holdco at a level of Senior Vice President and above.

(d) Expenses. During the Employment Period, the Executive shall be entitled to receive reimbursement for all reasonable travel and other expenses incurred by the Executive in carrying out the Executive’s duties under this Agreement; provided that the Executive complies with the policies, practices and procedures of the Company for submission of expense reports, receipts, or similar documentation of such expenses.

(e) Stock Awards.

(i) On the Effective Date, the Executive shall receive a grant of 200,000 stock options with a per share exercise price equal to the greater of (A) $3.00 and (B) the closing price of a share of Holdco common stock on March 31, 2020 (the “2020 Option Grant”) under Holdco’s equity incentive plan, subject to Executive’s continued employment through the grant date. The 2020 Option Grant will be eligible to vest as follows: 50% of the 2020 Option Grant will be eligible to vest on December 31, 2020 and the remaining 50% will be eligible to vest on December 31, 2021, subject, in each case, to the Executive’s continued employment with Holdco and the Company through the applicable vesting date and subject to such other terms as are set forth in an award agreement evidencing such grant. For the avoidance of doubt, the Executive will not be entitled to any other equity or equity-based awards following the Effective Date.

(ii) Notwithstanding anything to the contrary herein or in any other award agreement:

(A) any vested stock options of Holdco that are held by the Executive as of the Effective Date (or that otherwise become vested pursuant to their terms after the Effective Date while the Executive remains employed by the Company and Holdco) shall, subject to their otherwise applicable terms, remain outstanding and exercisable until their expiration date (the “Extended Vesting Period”) (i.e., the date that is ten (10) years following the applicable date of grant) notwithstanding any termination of the Executive’s employment following the Effective Date (or, if later, the date on which such stock options vest after the Effective Date but while the Executive remains employed by the Company and Holdco); provided that such stock options will be forfeited for no consideration if the Executive’s employment is terminated by Holdco or the Company for Cause (or the Board determines in good faith that Cause exists at the time the Executive’s employment terminates) or the Executive violates the restrictive covenants that apply to him pursuant to Section 8 or 9 below at any time while such options remain outstanding; and

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(B) (x) any restricted stock units (including performance stock units) of Holdco that are held by the Executive as of the Effective Date will continue to be eligible to vest during the Employment Period if the Executive remains employed by the Company and Holdco on the applicable vesting date and (y) subject to the Executive’s continued employment with the Company and Holdco through December 31, 2021, any restricted stock units (including performance stock units) of Holdco that are scheduled to vest after December 31, 2021, shall, subject to their otherwise applicable terms, continue to be eligible to vest in accordance with their terms as if the Executive’s employment with the Company and Holdco continued from December 31, 2021 through the applicable vesting date.

(iii) As a condition of the Executive’s continued employment with the Company pursuant to this Agreement, the Executive hereby agrees that all performance-based options granted pursuant to that certain Nonqualified Stock Option Award Agreement by and between Holdco and the Executive, dated on or about April 1, 2013 will be forfeited as of the Effective Date for no consideration.

4. Termination of Employment. Upon a termination of the Executive’s employment with the Company and Holdco for any reason, if the Executive is then serving on the Board or in any other capacity with Holdco or its affiliates, unless otherwise agreed in writing by Holdco, his service on the Board (and in any other applicable capacity) will automatically terminate at the time of such termination of employment. The Executive agrees to take any action requested in good faith by Holdco in connection with the foregoing to reflect such cessation of service on the Board (or in any other applicable capacity). In addition:

(a) Death or Permanent Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. The Company or Holdco shall be entitled to terminate the Executive’s employment because of the Executive’s Permanent Disability during the Employment Period. “Permanent Disability” means that the Executive (i) is unable to perform his duties under this Agreement by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company; or (iii) has been determined to be totally disabled by the Social Security Administration. A termination of the Executive’s employment by the Company or Holdco for Permanent Disability shall be communicated to the Executive by written notice and shall be effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), unless the Executive returns to full-time

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performance of the Executive’s duties in accordance with the provisions of Section 2 before such 30th day. In the event of a dispute as to whether the Executive has suffered a Permanent Disability, the final determination shall be made by a licensed physician selected by the Board and acceptable to the Executive in the Executive’s reasonable judgment.

(b) Other than Death or Disability. The Company or Holdco may terminate the Executive’s employment at any time during the Employment Period with or without Cause upon notice to the Executive.

(c) Good Reason. The Executive may terminate his employment at any time during the Employment Period for Good Reason, upon written notice to the Company setting forth in reasonable detail the nature of such Good Reason, as set forth below. For purposes of this Agreement, “Good Reason” is defined as any one or more of the following: any attempt to relocate the Executive to a work location that is more than 100 miles from the Company’s offices in Elmsford, New York; any material diminution in the nature or scope of the Executive’s responsibilities or duties as defined under this Agreement (provided that a change in reporting relationships resulting from the direct or indirect control of the Company or Holdco (or a successor corporation) by another corporation or other person(s) shall not be deemed to constitute “Good Reason”); any material breach by the Company or any affiliate of the Company of any provision of this Agreement or any other written agreement with the Executive, which breach is not cured within twenty (20) days following written notice by the Executive to the Company; or any material failure of the Company to provide the Executive with at least the Annual Base Salary and/or any other compensation or benefits in accordance with the terms of Section 3 hereof, other than an inadvertent failure which is cured within ten (10) business days following written notice from the Executive specifying in reasonable detail the nature of such failure. Notwithstanding the foregoing, the appointment of an interim Vice Chairman during any period of the Executive’s disability (which may potentially result in a Permanent Disability) will not be considered “Good Reason” (so long as the Executive continues to be compensated pursuant to the terms of this Agreement), until the occurrence of a Permanent Disability as defined in Section 4(a).

(d) Change in Control. If there occurs a “Change in Control” (as hereinafter defined) during the Employment Period, and the Executive is not offered employment on substantially similar terms by Holdco or one of its continuing affiliates immediately thereafter, then, for all purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated by the Company effective as of the date of such Change in Control; provided, however, that neither the Company nor Holdco shall have any obligation to the Executive under this Section 4 if the Executive is hired or offered employment on substantially similar terms by the purchaser of the stock or assets of Holdco or the Company, if the Executive’s employment hereunder is continued by Holdco or one of its continuing affiliates, or if the Executive does not actually terminate employment. As used herein, a “Change in Control” shall be deemed to have occurred upon the occurrence of any of the following events:

(i) a change in the ownership of Holdco within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(v) as in effect on the date hereof;

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(ii) a change in the effective control of Holdco within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(vi)(2) as in effect on the date hereof; or

(iii) a change in the ownership of all or substantially all of Holdco’s assets.

(e) Date of Termination. The “Date of Termination” means the date of the Executive’s death, the Disability Effective Date or the date on which the termination of the Executive’s employment by the Company and Holdco, or by the Executive, is effective, as the case may be, including by reason of the expiration of the Employment Period.

5. Obligations of the Company Upon Termination.

(a) By the Company Upon the Executive’s Death or Permanent Disability. If the Executive dies during the Employment Period or the Company or Holdco terminates the Executive’s employment due to the Executive’s Permanent Disability, the Company shall pay the Executive or his legal representative the Executive’s accrued but unpaid cash compensation (the “Accrued Obligations”), which shall equal the sum of (1) any portion of the Executive’s Annual Base Salary through the Date of Termination that has not yet been paid; (2) any 2020 Bonus that the Executive has earned pursuant to Section 3(b), if not previously paid; and (3) any accrued but unpaid vacation pay.

The Accrued Obligations shall be paid in cash within thirty (30) days of the Date of Termination, except for the 2020 Bonus which, if not previously paid, shall be paid in accordance with Section 3(b).

(b) By the Company for Cause. If the Executive’s employment is terminated by the Company or Holdco for “Cause” (as hereinafter defined), then the Executive shall be entitled to only the payment of the Accrued Obligations, which shall be paid to the Executive in cash in a lump sum within thirty (30) days of the Date of Termination (except for the 2020 Bonus which, if not previously paid, shall be paid in accordance with Section 3(b)) and neither the Company nor Holdco shall have any further obligation under this Agreement. For purposes of this Agreement, “Cause” shall mean (1) conviction of the Executive by a court of competent jurisdiction of a felony (excluding felonies under the Vehicle and Traffic Code of the State of New York or any similar law of another state within the United States of America); (2) any act of intentional fraud in connection with his duties under this Agreement; (3) any act of gross negligence or willful misconduct with respect to the Executive’s duties under this Agreement; and (4) any act of willful disobedience in violation of specific reasonable directions of the Board consistent with the Executive’s duties.

(c) By the Company for any reason other than Cause or by the Executive for Good Reason. If the Executive’s employment is terminated during the Employment Period (i) by the Company or Holdco other than for Cause, death or Permanent Disability or (ii) by the Executive for Good Reason the Company shall pay to the Executive (A) the Accrued Obligations, which shall be paid to the Executive in cash in a lump sum within thirty (30) days of the Date of Termination (except for the 2020 Bonus which, if not previously paid, shall be paid in accordance with Section 3(b)), (B) the Executive will also be entitled to his then current Annual Base Salary for the remainder of the Employment Period (i.e., the Initial Employment

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Period for any such termination occurring prior to December 31, 2021 or through the end of any applicable one-year Renewal Period, if the Agreement has been renewed by mutual written agreement in accordance with Section 1) paid in accordance with Section 3(a), (C) the 2020 Option Grant and any other then unvested stock options held by the Executive will, subject to their otherwise applicable terms, continue to vest as though the Executive remained employed by the Company and Holdco through each applicable vesting date (to the extent not previously vested), and (D) any restricted stock units (including performance stock units) of Holdco that are held by the Executive, subject to their otherwise applicable terms, shall remain outstanding and eligible to vest as though the Executive remained employed by the Company and Holdco through each applicable vesting date. Notwithstanding anything to the contrary set forth herein, the Executive shall not be entitled to any payment pursuant to clause (B), (C) or (D) of this Section 5(c) unless the Executive shall have, at the written request of the Company or Holdco, executed a release of any and all legal claims in the form attached hereto as Exhibit A (the “Release”) no later than forty-five (45) days following the Date of Termination and shall not have revoked the Release in accordance with its terms.

(d) By the Executive other than for Good Reason. If during the Employment Period the Executive terminates his employment with the Company and Holdco other than for Good Reason, (x) the Company shall pay the Accrued Obligations to the Executive in a lump sum in cash within thirty (30) days of the Date of Termination (except for the 2020 Bonus which, if not previously paid, shall be paid in accordance with Section 3(b)) and neither the Company nor Holdco shall have any further obligation under this Agreement, and (y) if such termination occurs prior to December 31, 2021, notwithstanding Section 3(e)(ii)(A) of this Agreement, the Extended Vesting Period shall not apply with respect to any stock options granted to or in respect of the Executive and such stock options will be exercisable only to the extent otherwise permitted by their terms.

(e) Expiration of the Term. Unless otherwise terminated pursuant to any of the foregoing clauses of this Section 5, the Executive’s employment hereunder will automatically terminate at the expiration of the Employment Period and the Company shall pay to the Executive (i) the Accrued Obligations. The Accrued Obligations shall be paid in a lump sum in cash within thirty (30) days of the Date of Termination. Notwithstanding anything to the contrary set forth herein, the Executive shall not be entitled any payment pursuant to clause (ii) of this Section 5(e) unless the Executive shall have, at the written request of the Company, executed the Release no later than forty-five (45) days following the Date of Termination and shall not have revoked the Release in accordance with its terms. Upon expiration of the Employment Period, no Severance Payment will be due and no further Restriction Period shall apply.

(g) Continuing Rights under Benefits Programs. Notwithstanding anything to the contrary set forth herein, upon termination of employment for any reason other than death, termination by the Company for Cause, or termination by the Executive without Good Reason, the Executive shall be entitled to receive at the Executive’s expense, continued coverage under the Company’s health insurance policy comparable to the family coverage received by the Executive at the Date of Termination, so long as the Company’s Plan at the Date of Termination and thereafter permits coverage of former employees.

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6. Section 409A. The parties intend for the compensation provided under this Agreement to comply with, or be exempt from, the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (together with the regulations thereunder, “Section 409A”). Notwithstanding the foregoing, in no event shall the Company, Holdco or any of their respective affiliates have any liability to the Executive or to any other person claiming rights under this Agreement relating to the failure or alleged failure of any payment or benefit under this Agreement to comply with, or be exempt from, the provisions of Section 409A.

(a) Definitions. For purposes of this Agreement, all references to “termination of employment” and similar or correlative phrases shall be construed to require a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury regulations after giving effect to the presumptions contained therein), and the term “specified employee” means an individual determined by Holdco to be a specified employee under Treasury regulation Section 1.409A-1(i).

(b) Certain Delayed Payments. If any payment or benefit hereunder constituting “nonqualified deferred compensation” subject to Section 409A would be subject to subsection (a)(2)(B)(i) of Section 409A (relating to payments made to “specified employees” of publicly-traded companies upon separation from service), any such payment or benefit to which the Executive would otherwise be entitled during the six (6) month period following the Executive’s separation from service will instead be provided or paid without interest on the first business day following the expiration of such six (6) month period, or if earlier, the date of the Executive’s death.

(c) Separate Payments. Each payment made under this Agreement shall be treated as a separate payment.

(d) Reimbursements. Notwithstanding anything to the contrary in this Agreement, any reimbursement that constitutes or could constitute nonqualified deferred compensation subject to Section 409A will be subject to the following additional requirements: (i) the expenses eligible for reimbursement will have been incurred during the term of this Agreement, (ii) the amount of expenses eligible for reimbursement during any calendar year will not affect the expenses eligible for reimbursement in any other taxable year; (iii) reimbursement will be made not later than December 31 of the calendar year following the calendar year in which the expense was incurred; and (iv) the right to reimbursement will not be subject to liquidation or exchange for any other benefit.

7. Full Settlement. The Company’s obligations to make the payments provided for in, and otherwise to perform its obligations under, this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of whether the Executive obtains other employment.

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8. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company and Holdco all secret or confidential information, knowledge or data relating to the Company, Holdco or any company affiliated with the Company or Holdco and their respective businesses that the Executive obtains during the Executive’s employment by the Company and Holdco (whether before, during or after the Employment Period) and that is not public knowledge (other than as a result of the Executive’s violation of this Section 8) (“Confidential Information”). The Executive shall not communicate, divulge or disseminate Confidential Information at any time during or after the Executive’s employment with the Company and Holdco, except with the prior written consent of the Company or as otherwise required by law. For the avoidance of doubt, (a) nothing contained in the Agreement or any other agreement containing confidentiality provisions or other restrictive covenants in favor of any the Company or any of its affiliates or subsidiaries shall be construed to limit, restrict or in any other way affect the Executive’s communicating with any governmental agency or entity, or communicating with any official or staff person of a governmental agency or entity, concerning matters relevant to the governmental agency or entity and (b) the Executive will not be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed under seal in a lawsuit or other proceeding; provided that notwithstanding this immunity from liability, the Executive may be held liable if the Executive unlawfully accesses trade secrets by unauthorized means.

9. Noncompetition; Nonsolicitation.

(a) Non-Competition. During the Restriction Period (as hereinafter defined), the Executive shall not directly or indirectly participate in or permit his name directly or indirectly to be used by or become associated with (including as an advisor, representative, agent, promoter, independent contractor, provider of personal services or otherwise) any person, corporation, partnership, firm, association or other enterprise or entity (a “person”) that is, or intends to be, engaged in any business which is in competition with any business of the Company, Holdco or any of their respective subsidiaries or controlled affiliates in any geographic area in which the Company, Holdco or any of their respective subsidiaries or controlled affiliates operate, compete or are engaged in such business or at such time intend so to operate, compete or become engaged in such business (a “Competitor”); provided, however, that the foregoing will not prohibit the Executive from participating in or becoming associated with a person if (i) less than 10% of the consolidated gross revenues of such person, together with its affiliates, derive from activities or businesses that are in competition with any business of the Company or any of its subsidiaries or controlled affiliates (a “Competitive Business”) and (ii) the Executive does not, directly or indirectly, participate in, become associated with, or otherwise have responsibilities that relate to the conduct or operations of, any Competitive Business that is conducted by such person or a division, group, or subsidiary or affiliate of such person. For purposes of this Agreement, the term “participate” includes any direct or indirect interest, whether as an officer, director, employee, partner, sole proprietor, trustee, beneficiary, agent, representative, independent contractor, consultant, advisor, provider of personal services, creditor, or owner (other than by ownership of less than five percent of the stock of a publicly-held corporation whose stock is traded on a national securities exchange or in an over-the-counter market).

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(b) Non-Solicitation. During the Restriction Period, the Executive shall not, directly or indirectly, encourage or solicit, or assist any other person or firm in encouraging or soliciting, any person that during the three-year period preceding such termination of the Executive’s employment with the Company and Holdco (or, if such action occurs during the Employment Period, on the date such action was taken) is or was engaged in a business relationship with the Company or Holdco, any of their respective subsidiaries or controlled affiliates to terminate its relationship with the Company or Holdco or any of their respective subsidiaries or controlled affiliates or to engage in a business relationship with a Competitor.

(c) No Hire. During the Restriction Period, the Executive will not, except with the prior written consent of the Company, directly or indirectly, induce any employee of the Company, Holdco or any of their respective subsidiaries or controlled affiliates to terminate employment with such entity, and will not, directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, employ, offer employment or cause employment to be offered to any person (including employment as an independent contractor) who is or was employed by the Company, Holdco or any of their respective subsidiaries or controlled affiliates unless such person shall have ceased to be employed by such entity for a period of at least twelve months. For purposes of this Section 9(c), “employment” shall be deemed to include rendering services as an independent contractor and “employees” shall be deemed to include independent contractors.

(d) Non-Disparagement. Subject to the last sentence of Section 8, during the Restriction Period, the Executive shall not disparage the Company, Holdco or any of their respective officers, directors, shareholders or any of their respective affiliates, disparage their business or professional capabilities, plans or management to any person, or do anything else to affect adversely the good will of the Company, Holdco or any of their affiliates.

(e) Restriction Period. The term “Restriction Period” as used herein, shall mean the period beginning on the date hereof and ending on the date that is twenty-four (24) months following the date on which the Executive’s employment with the Company and Holdco terminates for any reason.

(f) Return of Confidential Information. Promptly following the Executive’s termination of employment, including due to expiration of the Employment Period, the Executive shall return to the Company all property of the Company, Holdco and their respective subsidiaries and affiliates, and all copies thereof, in the Executive’s possession or under his control, including, without limitation, all Confidential Information in whatever media such Confidential Information is maintained.

(g) Injunctive Relief. The Executive acknowledges and agrees that the Restriction Period and the covenants and obligations of the Executive in Section 8 and this Section 9 with respect to non-competition, nonsolicitation and confidentiality and with respect to the property of the Company and its subsidiaries and controlled affiliates, and the territories covered thereby, are fair and reasonable and the result of negotiation. The Executive further acknowledges and agrees that the covenants and obligations of the Executive in Section 8 and this Section 9 with respect to noncompetition, nonsolicitation and confidentiality and with respect to the property of the Company, Holdco and their respective subsidiaries and controlled

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affiliates, and the territories covered thereby, relate to special, unique and extraordinary matters and that a violation of any of the terms of such covenants and obligations will cause the Company, Holdco and their respective subsidiaries and affiliates irreparable injury for which adequate remedies are not available at law. Therefore, the Executive agrees that the Company and Holdco shall be entitled to an injunction, restraining order or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain the Executive from committing any violation of such covenants and obligations. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company and Holdco may have at law or in equity. If, at the time of enforcement of Section 8 and/or this Section 9, a court holds that any of the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope, and/or geographical area legally permissible under such circumstances will be substituted for the period, scope and/or area stated herein.

10. Successors.

(a) This Agreement is personal to the Executive and shall not be assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives and heirs and successors.

(b) This Agreement shall inure to the benefit of and be binding upon Holdco, the Company and their respective successors and assigns.

11. Section 280G. In the event that the Company undergoes a change in control after it (or any affiliate of the Company, including Holdco, that would be treated, together with the Company, as a single corporation under Section 280G of the Code and the regulations thereunder) has stock that is readily tradeable on an established securities market (within the meaning of Section 280G of the Code and the regulations thereunder), if all, or any portion, of the payments provided under this Agreement, either alone or together with other payments or benefits which the Executive receives or is entitled to receive from the Company or an affiliate, could constitute an “excess parachute payment” within the meaning of Section 280G of the Code, then the Executive shall be entitled to receive (i) an amount limited so that no portion thereof shall fail to be tax deductible under Section 280G of the Code (the “Limited Amount”), or (ii) if the amount otherwise payable hereunder (without regard to clause (i)) reduced by the excise tax imposed by Section 4999 of the Code and all other applicable federal, state and local taxes (with income taxes all computed at the highest applicable marginal rate) is greater than the Limited Amount reduced by all taxes applicable thereto (with income taxes all computed at the highest marginal rate), the amount otherwise payable hereunder. If it is determined that the Limited Amount will maximize the Executive’s after-tax proceeds, payments and benefits shall be reduced to equal the Limited Amount in the following order: (i) first, by reducing cash severance payments, (ii) second, by reducing other payments and benefits to which Q&A 24(c) of Section 1.280G-1 of the Treasury Regulations does not apply, and (iii) finally, by reducing all remaining payments and benefits, with all such reductions done on a pro rata basis. All determinations made pursuant this Section 11 will be made at the Company’s expense by the independent public accounting firm most recently serving as the Company’s outside auditors or such other accounting or benefits consulting group or firm as the Company may designate.

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12. Miscellaneous.

(a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective heirs, successors and legal representatives.

(b) All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or by overnight courier or by registered or certified mail, return receipt requested, postage prepaid, or by facsimile (with receipt confirmation), addressed as follows:

If to the Executive:	James M. Harrison
	At his most recent address
	shown in the Company’s records
If to the Company:	Party City Holdings Inc.
	80 Grasslands Road
	Elmsford, NY 10523
	Attention: Corporate Secretary
	Fax no.: (914) 345-2056

or to such other address as either party furnishes to the other in writing in accordance with this Section 12(b). Notices and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d) Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations. In addition, the obligations of the Company under this Agreement shall be conditional on compliance with this Section 12(d), and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Executive.

(e) Any party’s failure to insist upon strict compliance with any provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver of such provision or right or of any other provision of or right under this Agreement.

(f) The Executive acknowledges that this Agreement, together with the Exhibit hereto (and the other agreements referred to herein and therein), supersedes, as of the Effective Date, all other agreements and understandings, both written and oral, between the Executive, on one hand, and the Company and Holdco, on the other, with respect to the subject matter hereof, including, without limitation, the Prior Employment Agreement and any amendments or restatements thereto. The Executive consents to the changes to the terms of his employment as described herein and as of immediately prior to the Effective Date, the Prior Employment Agreement shall terminate automatically and be of no further force and effect.

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(g) This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall together constitute one and the same instrument.

(h) Provisions of this Agreement shall survive any termination of employment if so provided herein or if necessary or desirable to accomplish the purposes of other surviving provisions, including, without limitation, the obligations of the Executive under Sections 8 and 9 hereof.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization of their respective boards of directors, the Company and Holdco have each caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written.

PARTY CITY HOLDINGS INC.
By:	/s/ Michael Correale
	Name: Michael Correale
	Title: Principal Accounting Officer
PARTY CITY HOLDCO INC.
By:	/s/ Todd Vogensen
	Name: Todd Vogensen
	Title: Chief Financial Officer
/s/ James M. Harrison
JAMES M. HARRISON

[Signature Page to Employment Agreement]

Exhibit A

FORM OF RELEASE OF CLAIMS

This Release of Claims is provided by me, James M. Harrison (or by my designated beneficiary, in the event of my death during my employment), pursuant to the Employment Agreement between me, Party City Holdings, Inc. (the “Company”) and Party City Holdco Inc. (“Holdco”) dated as of March 11, 2020 (the “Employment Agreement”).

This Release of Claims is given in consideration of the severance benefits to be provided to me (or, in the event of my death during my employment, to my designated beneficiary) in connection with the termination of my employment under Section 5 of the Employment Agreement (the “Separation Payments”), which are conditioned on my signing this Release of Claims and to which I am not otherwise entitled, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged. On my own behalf and that of my heirs, executors, administrators, beneficiaries, representatives and assigns, and all others connected with or claiming through me, I hereby release and forever discharge the Company from any and all causes of action, rights or claims of any type or description, known or unknown, which I have had in the past, now have or might have, through the date of my signing of this Release of Claims. This includes, without limitation, any and all causes of action, rights or claims in any way resulting from, arising out of or connected with my employment by the Company or the termination of that employment or pursuant to any federal, state or local law, regulation or other requirement, including without limitation Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the fair employment practices statutes of the state or states in which I have provided services to the Company or any other federal, state, local or foreign law, all as amended, any contracts of employment, any tort claims, or any agreements, plans or policies. Nothing in this Release of Claims shall be construed to prohibit me from filing a charge with or participating in any investigation or proceeding conducted by the federal Equal Employment Opportunity Commission or a comparable state or local agency, except that I hereby agree to waive my right to recover monetary damages or other individual relief in any charge, complaint or lawsuit filed by me or by anyone else on my behalf.

For purposes of this Release of Claims, the word “Company” always includes the Company, Holdco the subsidiaries and affiliates of the Company or Holdco and all of their respective past, present and future officers, directors, trustees, shareholders, employees, employee benefit plans and any of the trustees or administrators thereof, agents, general and limited partners, members, managers, investors, joint venturers, representatives, predecessors, successors and assigns, and all others connected with any of them, both individually and in their official capacities.

Excluded from the scope of this Release of Claims are any rights to benefits that were vested under the Company’s employee benefit plans on the date on which my employment with the Company terminated, in accordance with the terms of such plans.

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In signing this Release of Claims, I give the Company assurance that I have returned to the Company any and all documents, materials and information related to the business, whether present or otherwise, of the Company and all keys and other property of the Company that were in my possession or control, all as required by and consistent with Section 9(e) of the Employment Agreement. I agree that I will not, for any purpose, attempt to access or use any computer or computer network or system of the Company, including without limitation their electronic mail systems. I further acknowledge that I have disclosed to the Company all passwords necessary or desirable to enable the Company to access all information which I have password-protected on its computer network or system.

In signing this Release of Claims, I agree that I have been paid in full all compensation due to me, whether for services rendered by me to the Company or otherwise, through the date on which my employment with the Company terminated and that, exclusive only of the Separation Payments, no further compensation of any kind shall be due to me by the Company, whether arising under the Employment Agreement or otherwise, in connection with my employment or the termination thereof. I also agree that except for any right I and my eligible dependents may have to continue participation in the Company’s health and dental plans under the federal law commonly known as COBRA, my right to participate in any employee benefit plan of the Company will be determined in accordance with the terms of such plan.

I acknowledge that my eligibility for the Separation Payments is not only contingent on my signing and returning this Release of Claims to the Company in a timely manner and not revoking it thereafter, but also is subject to my compliance with the covenants contained in the Employment Agreement.

In signing this Release of Claims, acknowledge that I have not relied on any promises or representations, express or implied, that are not set forth expressly in this Release of Claims. I further acknowledge that I am waiving and releasing any rights I may have under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), and that this waiver and release is knowing and voluntary and is being done with a full understanding of its terms. I agree that the consideration given for this waiver and release is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing as required by the ADEA that:

1. I have the right to and am advised by the Company to consult with an attorney prior to executing this Release of Claims; and I acknowledge that I have had sufficient time to consider this Release of Claims and to consult with an attorney, if I wished to do so, or to consult with any other person of my choosing before signing;

2. I may not sign this Release of Claims prior to the termination of my employment, but that I may consider the terms of this Release of Claims for up to twenty-one days (or, if the Company so instructs me in writing, for up to forty-five days) from the later of the date my employment with the Company terminates or the date I receive this Release of Claims;

3. I have seven (7) days following execution of this Release of Claims to revoke this Release of Claims; and

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4. This Release of Claims shall not be effective until the revocation period has expired.

Intending to be legally bound, I have signed this Release of Claims under seal as of the date written below.

Signature:                                      Date signed:                         

Party City Holdings Inc.

Name:

Title:

Party City Holdco Inc.

Name:

Title:

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EX-10.30

Exhibit 10.30

Execution Version

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”), dated as of the 11th day of March, 2020, by and between Party City Holdings Inc., a Delaware corporation (the “Company”), Party City Holdco Inc., a Delaware corporation (“Holdco”), and Brad Weston (the “Executive”) and effective as of April 1, 2020 (the “Effective Date”).

WHEREAS, the Executive has served as President of Holdco and the Chief Executive Officer of Party City Retail Group pursuant to an Employment Agreement (the “Prior Employment Agreement”) dated July 25, 2019 (the “Prior Agreement Effective Date”); and

WHEREAS, the Company, Holdco and the Executive desire to set forth in this Agreement the terms and conditions under which the Executive will be employed as the President and Chief Executive Officer of the Company and Holdco, effective as of the Effective Date.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Employment Period. The Company and Holdco shall continue to employ the Executive, and the Executive agrees to, and shall, serve the Company and Holdco, on the terms and conditions set forth in this Agreement, for the period beginning on the Effective Date and ending on December 31, 2022, unless sooner terminated as set forth hereinafter (the “Employment Period”).

2. Position and Duties.

(a) Beginning on the Effective Date, the Executive shall serve as the President and Chief Executive Officer of the Company and of Holdco with such duties and responsibilities as are assigned to him by the Board of Directors of Holdco (the “Board”) consistent with his position as President and Chief Executive Officer of the Company and Holdco, including, as the Board may request, without additional compensation, to serve as an officer or director of certain of the subsidiaries and other affiliates of Holdco and/or the Company. During the Employment Period, the Executive shall report to the Board. On the Effective Date, the Executive shall be appointed to the Board.

(b) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive shall devote his full attention and time during normal business hours to the business and affairs of the Company and Holdco and shall use his reasonable best efforts to carry out the responsibilities assigned to the Executive faithfully and efficiently. It shall not be considered a violation of the foregoing for the Executive to (i) serve on civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, (iii) serve on the board of directors of other companies, so long as the Board approves such appointments (such approval not to be unreasonably withheld), or (iv) manage personal investments, so long as such activities do not compete with and are not provided to or for any entity that competes with or intends to compete with the Company, Holdco or any of their respective subsidiaries and affiliates and do not interfere with the performance of the Executive’s responsibilities as an employee of the Company or Holdco in accordance with this Agreement.

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3. Compensation and Expense Reimbursements.

(a) Base Salary. Beginning on the Effective Date, the Executive shall receive from the Company an annual base salary of $1,050,000 (as such amount may be increased from time to time, in the sole discretion of the Board or the Compensation Committee of the Board (the “Committee”), the “Annual Base Salary”), payable in regular intervals in accordance with the Company’s customary payroll practices in effect during the Employment Period.

(b) Annual Bonus. In addition to the Annual Base Salary, during the Employment Period, the Executive shall be eligible to receive annual bonus compensation (the “Annual Bonus”) consistent with the Company’s bonus plan for key executives as in effect from time to time (the “Bonus Plan”). The Annual Bonus (including any pro rata portion thereof, to the extent payable under this Agreement), if any, shall be paid no later than two and one-half months following the end of the calendar year to which such Annual Bonus corresponds. During the Employment Period, the target amount of the Annual Bonus shall be 100% of the Annual Base Salary (the “Target Bonus Amount”), with the actual amount of the Annual Bonus, if any, to be determined by the Board or the Committee in accordance with the Bonus Plan. For any applicable year (including calendar year 2020) during which the Annual Base Salary is increased, the Target Annual Bonus shall be determined by appropriately adjusting the Target Annual Bonus based on the relative portions of the year that Annual Base Salary was at each respective level (e.g., for calendar year 2020, the Target Annual Bonus shall be based on the Executive having an Annual Base Salary of $900,000 for the period from January 1, 2020 through March 31, 2020 and $1,050,000 for the remainder of calendar year 2020). Except as otherwise provided in this Agreement, for any year during which the Executive is employed by the Company and Holdco for less than the entire calendar year (including a year in which the Executive’s employment is terminated), the Annual Bonus, if any, shall be determined based on actual performance, pro-rated for the period during which the Executive was employed during such calendar year (based on the number of days in such calendar year the Executive was so employed divided by 365), as determined in good faith by the Board or the Committee.

(c) Other Benefits; Car Allowance. During the Employment Period: (i) the Executive shall be eligible to participate in all incentive, savings and retirement plans, practices, policies and programs of the Company and shall be entitled to paid vacation, to the same extent and on the same terms and conditions as peer executives; and (ii) the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in, and shall receive all benefits under, all other welfare benefit plans, practices, policies and programs provided by the Company (including, to the extent provided, without limitation, medical, prescription, dental, disability, employee life insurance, group life insurance, accidental death and travel accident insurance plans and programs) to the same extent and on the same terms and conditions as peer executives. The term “peer executives” means the Chief Financial Officer and Senior Vice Presidents of the Company, if such positions exist, and if such positions do not exist, the definition of the term “peer executives” shall be determined by the Board or the Committee in good faith. During the Employment Period, the Company will pay the Executive a monthly car allowance equal to $650, which will be paid not later than thirty (30) days after the end of the month to which it relates.

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(d) Incentive Equity Grants.

(i) The Executive is eligible to receive incentive equity grants under the Company’s equity compensation program for senior executives, subject to the terms of such program as in effect from time to time and with any grants under such program in the discretion of the Board or the Committee.

(ii) Following the Prior Agreement Effective Date, the Executive was be awarded a one-time grant of options to acquire 300,000 shares of Holdco’s common stock (the “Sign-On Options”), which were granted under and subject to the terms of Holdco’s Amended and Restated 2012 Omnibus Equity Incentive Plan and a stock option agreement with the Executive.

(e) Relocation Expenses.

(i) The Company has reimbursed or shall reimburse the Executive for reasonable and customary relocation expenses actually incurred by the Executive during the Employment Period as a direct result of his relocation to a location within reasonable commuting distance of the Company’s retail division executive offices in Rockaway, NJ or the Company’s offices in Elmsford, NY (“Relocation Expenses”), subject to Company policies and to such reasonable substantiation and documentation as may be specified by the Company, including house-hunting visits for the Executive as reasonably necessary; the cost of packing and moving the Executive’s household goods and the moving of automobiles to the Executive’s home in or around Rockaway, NJ or Elmsford, NY; the cost of temporary housing for the Executive and his immediate family in or around Rockaway, NJ or Elmsford, NY (not to exceed 18 months in duration); the cost of temporary storage of the Executive’s household goods for a reasonable period of time; real estate commissions on the purchase of a new home in or around Rockaway, NJ or Elmsford, NY; reasonable closing costs on a new home that is a reasonable commuting distance from Rockaway, NJ or Elmsford, NY; and airfare to the Rockaway, NJ or Elmsford, NY area for all members of the Executive’s immediate family. For the avoidance of doubt, such reimbursable Relocation Expenses will not include payment of any losses in connection with any capital transaction, such as the sale of a home. In the event that any of the reimbursements for Relocation Expenses are taxable to the Executive, the Company shall promptly make additional “gross up” payments to the Executive sufficient to cover such additional taxes (including taxes on the gross-up). The Company has paid or shall pay the Executive any amounts due to him in respect of Relocation Expenses within thirty (30) days after submission of written documentation substantiating such amounts.

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(ii) In the event that the Executive terminates his employment with the Company other than for Good Reason (as defined below), or if the Executive’s employment is terminated by the Company for Cause (as defined below), the Executive will be required to repay (a) 100% of the gross amount of any Relocation Expenses paid or reimbursed if such termination occurs within one year following the Prior Agreement Effective Date and (b) 50% of the gross amount of Relocation Expenses paid or reimbursed if such termination occurs more than one year from the Prior Agreement Effective Date but within two years following the Prior Agreement Effective Date, which repayment shall be made within thirty (30) days of the date of termination.

(f) Other Expenses. During the Employment Period, the Executive shall be entitled to receive reimbursement for all reasonable travel and other expenses incurred by the Executive in carrying out the Executive’s duties under this Agreement; provided that the Executive complies with the policies, practices and procedures of the Company for submission of expense reports, receipts, or similar documentation of such expenses.

(g) Indemnification. During and after the Employment Period, the Executive shall be entitled to all rights to indemnification available under the by-laws or certificate of incorporation of Holdco and the Company, or to which he may otherwise be entitled, through the Company, Holdco and/or any of their respective subsidiaries and affiliates, in accordance with their respective terms.

4. Termination of Employment. The Executive’s employment may be terminated under any of the circumstances described below. If the Executive’s employment as Chief Executive Officer of Holdco ceases for any reason, the Executive hereby agrees that he will immediately (and automatically be deemed to) tender his resignation as a member of the Board. Unless otherwise agreed in writing by Holdco, upon the termination of the Executive’s employment with Holdco and Holdings, he will immediately (and automatically be deemed to) resign from all director, officer, committee, manager, employee and other roles with the Company, Holdco and each of their affiliates. Except as expressly provided in Section 5, no payments or benefits shall be due to the Executive in connection with his termination of service as a director, officer, committee member, manager or employee or from any other role.

(a) Death or Permanent Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. The Company or Holdco shall be entitled to terminate the Executive’s employment because of the Executive’s Permanent Disability during the Employment Period. “Permanent Disability” means that the Executive (i) is unable to perform his duties under this Agreement by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company; or (iii) has been determined to be totally disabled by the Social Security Administration. A termination of the Executive’s employment by the Company or Holdco for Permanent Disability shall be communicated to the

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Executive by written notice and shall be effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), unless the Executive returns to full-time performance of the Executive’s duties in accordance with the provisions of Section 2 before such 30th day. In the event of a dispute as to whether the Executive has suffered a Permanent Disability, the final determination shall be made by a licensed physician selected by the Board and acceptable to the Executive in the Executive’s reasonable judgment.

(b) Other than Death or Disability. The Company or Holdco may terminate the Executive’s employment at any time during the Employment Period with or without Cause upon notice to the Executive.

(c) Good Reason. The Executive may terminate his employment at any time during the Employment Period for Good Reason, upon prior written notice to the Company setting forth in reasonable detail the nature of such Good Reason, as set forth below. For purposes of this Agreement, “Good Reason” is defined as any one or more of the following: any attempt to relocate the Executive to a work location that is more than 100 miles from the Company’s office from which the Executive primarily works; any material diminution in the nature or scope of the Executive’s responsibilities or duties as defined under this Agreement (provided that a change in reporting relationships resulting from the direct or indirect control of the Company or Holdco (or a successor corporation) by another corporation or other person(s) shall not be deemed to constitute “Good Reason”); any material breach by the Company or any affiliate of the Company of any provision of this Agreement or any other written agreement with the Executive; or any material failure of the Company to provide the Executive with at least the Annual Base Salary and/or any other compensation or benefits in accordance with the terms of Section 3 hereof, other than an inadvertent failure which is cured within ten (10) business days following written notice from the Executive specifying in reasonable detail the nature of such failure. Notwithstanding the foregoing, the appointment of an interim President and Chief Executive Officer of the Company and/or Holdco during and for any period of the Executive’s disability (which may potentially result in a Permanent Disability) will not be considered “Good Reason” (so long as the Executive continues to be compensated pursuant to the terms of this Agreement), until the occurrence of a Permanent Disability as defined in Section 4(a). The Executive’s employment will only be deemed to have been terminated for Good Reason if he gives written notice to the Company setting forth in reasonable detail the nature of such Good Reason, gives the Company an opportunity to cure such Good Reason event (which cure period shall not be less than fifteen (15) days) and terminates employment within sixty (60) days of the date of the later of the first occurrence and the Executive’s knowledge of the circumstances giving rise to Good Reason (to the extent the Company has not previously cured the circumstances giving rise to Good Reason).

(d) Change in Control. If there occurs a “Change in Control” (as hereinafter defined) during the Employment Period, and the Executive is not offered employment on substantially similar terms by Holdco or one of its continuing affiliates immediately thereafter, then, for all purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated by the Company in a manner qualifying as a “Change in Control Termination” effective as of the date of such Change in Control; provided, however, that neither the Company nor Holdco shall have any obligation to the Executive under this Section 4 if the

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Executive is hired or offered employment on substantially similar terms by the purchaser of the stock or assets of Holdco or the Company, if the Executive’s employment hereunder is continued by Holdco or one of its continuing affiliates, or if the Executive does not actually terminate employment. Further, if the Company terminates the Executive’s employment without Cause or the Executive terminates his employment for Good Reason, in either case, within six (6) months prior to, or twenty-four (24) months following, the consummation of such Change in Control (the “Change in Control Protection Period”), the Executive shall be deemed to have had a Change in Control Termination. As used herein, a “Change in Control” shall be deemed to have occurred solely upon the occurrence of any of the following events:

(i) a change in the ownership of Holdco within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(v) as in effect on the date hereof; or

(ii) a change in the ownership of all or substantially all of Holdco’s assets within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(vii) as in effect on the date hereof.

(e) Date of Termination. The “Date of Termination” means the date of the Executive’s death, the Disability Effective Date or the date on which the termination of the Executive’s employment by the Company and Holdco, or by the Executive, is effective, as the case may be, including by reason of the expiration of the Employment Period.

5. Obligations of the Company Upon Termination.

(a) By the Company Upon the Executive’s Death or Permanent Disability. If the Executive dies during the Employment Period or the Company or Holdco terminates the Executive’s employment due to the Executive’s Permanent Disability, the Company shall pay the Executive or his legal representative:

(i) One or more payments (the “Accrued Obligations”) equal (in the aggregate) to the sum of (1) any portion of the Executive’s Annual Base Salary through the Date of Termination that has not yet been paid; (2) any Annual Bonus that the Executive has earned for a prior full calendar year that has ended prior to the Date of Termination but which has not yet been calculated and paid; (3) any accrued but unpaid vacation pay and (4) any unreimbursed expenses incurred prior to the Date of Termination, including any then unreimbursed car allowance for each month or partial month of employment; and

(ii) a pro rata Annual Bonus.

The Accrued Obligations shall be paid in cash within thirty (30) days of the Date of Termination (other than the amount described in clause (2) of the definition of Accrued Obligations, which shall be paid in accordance with Section 3(b)). Notwithstanding anything to the contrary set forth herein, the Executive shall not be entitled to any payment pursuant to clause (ii) of this Section 5(a) unless the Executive (or the Executive’s beneficiary previously designated in writing to the Company or, if no such beneficiary has been so designated, the

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Executive’s estate or representative, as applicable) shall have, at the written request of the Company or Holdco, executed a release of any and all legal claims substantially in the form attached hereto as Exhibit A (which form may be modified by the Company to the extent necessary to reflect execution by a person other than the Executive and to include restrictive covenants that are consistent with those set forth herein) (the “Release”) no later than twenty-one (21) days (or, if so instructed by the Company, forty-five (45) days) following the Date of Termination and shall not have revoked the Release in accordance with its terms. The Company shall provide the final Release promptly in connection with any termination of the Executive’s employment hereunder.

(b) By the Company for Cause. If the Executive’s employment is terminated by the Company or Holdco for “Cause” (as hereinafter defined), then the Executive shall be entitled to only the payment of the Accrued Obligations, which shall be paid to the Executive in cash in a lump sum within thirty (30) days of the Date of Termination (other than the amount described in clause (2) of the definition of Accrued Obligations, which shall be paid in accordance with Section 3(b)) and neither the Company nor Holdco shall have any further obligation under this Agreement, except as expressly provided herein. For the avoidance of doubt, if the Executive’s employment is terminated by the Company or Holdco for Cause, or if the Executive resigns at a time when the Executive’s acts or omissions constituted grounds to terminate the Executive’s employment for Cause without regard to applicable cure rights, any Sign-On Options that are outstanding as of the Date of Termination, whether or not then vested, shall be forfeited automatically without consideration. For purposes of this Agreement, “Cause” shall mean (1) conviction of the Executive by a court of competent jurisdiction of a felony (excluding felonies under any state or local vehicle and traffic code); (2) any act of intentional fraud in connection with his duties under this Agreement; (3) any act of gross negligence or willful misconduct with respect to the Executive’s duties under this Agreement and (4) any act of willful disobedience in violation of specific reasonable directions of the Board or the CEO consistent with the Executive’s duties; provided, in the case of clause (3) or (4), that the Executive has not cured the circumstances giving rise to “Cause” within fifteen (15) days of the date the Company gives notice to the Executive of its intent to terminate his employment on such basis.

(c) By the Company for any reason other than Cause or by the Executive for Good Reason. If the Executive’s employment is terminated during the Employment Period (i) by the Company or Holdco other than for Cause, death or Permanent Disability or (ii) by the Executive for Good Reason, in each case, except if such termination is a Change in Control Termination, (A) the Company shall pay to the Executive the Accrued Obligations, paid in cash within thirty (30) days of the Date of Termination (other than the amount described in clause (2) of the definition of Accrued Obligations, which shall be paid in accordance with Section 3(b)); (B) the Company shall pay to the Executive a pro rata Annual Bonus for the year of termination, calculated and paid in accordance with Section 3(b); (C) the Company shall pay to the Executive a severance payment (the “Severance Payment”), in an amount equal to two (2) times the Executive’s then current Annual Base Salary and (D) any Sign-On Options that are outstanding as of the Date of Termination and would have vested during the twenty-four (24) month period immediately following the Date of Termination shall become vested as of the Date of Termination and any vested Sign-On Options outstanding as of such date shall, subject to the

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terms of Holdco’s Amended and Restated 2012 Omnibus Equity Incentive Plan (including Section 11.2 thereof), remain outstanding and exercisable for their full term, notwithstanding such termination of employment. Any Sign-On Options that do not vest after application of the preceding sentence shall be immediately forfeited without payment due thereon. The Severance Payment shall be payable in cash in the form of salary continuation over the twenty-four (24) months following the Date of Termination, with the first payment(s) being payable in arrears on the date that is sixty (60) days following the Date of Termination. Notwithstanding anything to the contrary set forth herein, the Executive shall not be entitled to any payment or benefit pursuant to clauses (B), (C) or (D) of this Section 5(c) unless the Executive shall have executed the Release not later than twenty-one (21) days (or, if so instructed by the Company, forty-five (45) days) following the Date of Termination and shall not have revoked the Release in accordance with its terms. The Company shall provide the final Release promptly in connection with any termination of the Executive’s employment hereunder.

(d) Change in Control Termination. Notwithstanding anything to the contrary set forth herein, in the event of a Change in Control Termination:

(i) the Company shall pay to the Executive the Accrued Obligations;

(ii) the Company shall pay to the Executive:

(A) an amount equal to two (2) times the sum of (1) Executive’s then current Annual Base Salary and (2) the target Annual Bonus,

(B) an amount equal to a pro rata Annual Bonus for the year of termination, calculated and paid in accordance with Section 3(b), and

(C) provided that the Executive timely elects to continue his coverage in the Company’s group health plan under the federal law known as “COBRA”, a monthly amount equal to that portion of the monthly health premiums for such coverage paid by the Company on behalf of the Executive prior to the date of the Change in Control Termination until the date that is twenty-four (24) months following the date of the Change in Control Termination (the “Health Continuation Benefits”);

(iii) any Sign-On Options that are outstanding as of the Date of Termination shall immediately become fully vested as of the date of the Change in Control Termination and any vested Sign-On Options outstanding as of such date shall, subject to the terms of Holdco’s Amended and Restated 2012 Omnibus Equity Incentive Plan (including Section 11.2 thereof), remain outstanding and exercisable for their full term, notwithstanding such termination of employment; and

(iv) any stock options (other than the Sign-On Options), restricted stock, restricted stock units, performance stock units or similar awards (or any awards or rights issued in exchange for such grants in connection with a Change in Control or otherwise) shall be treated as follows: (A) such awards or rights that vest solely based on the Executive’s continued service over time shall immediately become fully vested as of the date of the Change in Control

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Termination and (B) such awards or rights that vest upon the occurrence of specified performance metrics, shall be treated as earned and vest as follows: (1) if the full performance period has elapsed as of the date of the Change in Control Termination, such awards and rights shall be earned based on actual achievement of the applicable performance goals, as provided in the applicable award agreement and shall immediately become vested without pro-ration and (2) otherwise, such awards and rights shall be earned based on assumed achievement of the applicable performance goals at 100% of the performance target, as provided in the applicable award agreement, and shall immediately vest as to a prorated portion of each such award or right based on the number of days of the Executive’s actual employment or other service with the Company prior to the Change in Control Termination during the applicable full performance period; provided, that, if the Executive does not experience a Change in Control Termination prior to the end of the applicable original performance period, such awards and rights shall be earned based on assumed achievement of the applicable performance goals at 100% of the performance target, as provided in the applicable award agreement, and shall be eligible to vest as of the last day of the applicable original performance period without pro-ration, subject to the terms of the applicable award agreement. Any stock options, restricted stock, restricted stock units, performance stock units or similar awards (or any awards or rights issued in exchange for such grants in connection with a Change in Control or otherwise) that do not vest after application of the preceding sentence or clause (iii) hereof shall be immediately forfeited without payment due thereon.

Notwithstanding the foregoing, in the event that the Health Continuation Benefits would subject the Executive or the Company to any tax or penalty under the ACA or Section 105(h) of the Code (as defined below), or applicable subsequent regulations, guidance or successor statutes, the Executive and the Company agree to work together in good faith to restructure the Health Continuation Benefits in a manner that avoids such adverse consequences. All amounts payable hereunder (except the Annual Bonus which is payable in accordance with Section 3(b), the Accrued Obligations, which shall be calculated and paid in a lump sum in cash within thirty (30) days of the date of the Change in Control Termination and the Health Continuation Benefits, which shall be paid as described above in this Section 5(d)) shall be paid in cash in a lump sum on the date that is the later of sixty (60) days following the date of the Change in Control Termination or sixty (60) days following the consummation of the Change in Control (except that, if the Change in Control Termination occurs due to a qualifying termination within six (6) months prior to a Change in Control, such payment will be made over the twenty-four (24) months following the Date of Termination, with the first payment(s) being payable in arrears on the date that is sixty (60) days following the Date of Termination). Notwithstanding anything to the contrary set forth herein, the Executive shall not be entitled to any payment or benefit pursuant to clauses (ii) or (iii) of this Section 5(d) unless the Executive shall have, at the written request of the Company or Holdco, executed the Release no later than twenty-one (21) days (or, if so instructed by the Company, forty-five (45) days) following the date of the Change in Control Termination and shall not have revoked such release in accordance with its terms.

(e) By the Executive other than for Good Reason. If during the Employment Period the Executive terminates his employment with the Company and Holdco other than for Good Reason, the Company shall pay the Accrued Obligations to the Executive in a lump sum in cash within thirty (30) days of the Date of Termination (other than the amount described in clause (2) of the definition of Accrued Obligations, which shall be paid in accordance with Section 3(b)) and neither the Company nor Holdco shall have any further obligation under this Agreement except as expressly provided herein.

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(f) Expiration of the Term. Unless otherwise terminated pursuant to any of the foregoing clauses of this Section 5, the Executive’s employment hereunder will automatically terminate at the expiration of the Employment Period and the Company shall pay to the Executive the Accrued Obligations; provided, however, that if the Company allows the Executive’s employment to terminate due to an expiration of the Employment Period occurring during the Change in Control Protection Period, the Executive will be deemed to have had a Change in Control Termination and will be entitled to the payments and benefits described in Section 5(d) above and shall not otherwise receive payment under this Section 5(f). The Accrued Obligations shall be paid to the Executive in a lump sum in cash within thirty (30) days of the Date of Termination (other than the amount described in clause (2) of the definition of Accrued Obligations, which, for the avoidance of doubt, shall be the Annual Bonus for the calendar year in which the Employment Period expires and which shall be paid in accordance with Section 3(b)). Upon expiration of the Employment Period, no Severance Payment will be due and no further Restriction Period shall apply.

6. Section 409A. The parties intend for the compensation provided under this Agreement to comply with, or be exempt from, the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (together with the regulations thereunder, “Section 409A”). Notwithstanding the foregoing, in no event shall the Company, Holdco or any of their respective affiliates have any liability to the Executive or to any other person claiming rights under this Agreement relating to the failure or alleged failure of any payment or benefit under this Agreement to comply with, or be exempt from, the provisions of Section 409A.

(a) Definitions. For purposes of this Agreement, all references to “termination of employment” and similar or correlative phrases shall be construed to require a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury regulations after giving effect to the presumptions contained therein), and the term “specified employee” means an individual determined by Holdco to be a specified employee under Treasury regulation Section 1.409A-1(i).

(b) Certain Delayed Payments. If any payment or benefit hereunder constituting “nonqualified deferred compensation” subject to Section 409A would be subject to subsection (a)(2)(B)(i) of Section 409A (relating to payments made to “specified employees” of publicly-traded companies upon separation from service), any such payment or benefit to which the Executive would otherwise be entitled during the six (6) month period following the Executive’s separation from service will instead be provided or paid without interest on the first business day following the expiration of such six (6) month period, or if earlier, the date of the Executive’s death.

(c) Separate Payments. Each payment made under this Agreement shall be treated as a separate payment.

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(d) Reimbursements. Notwithstanding anything to the contrary in this Agreement, any reimbursement that constitutes or could constitute nonqualified deferred compensation subject to Section 409A will be subject to the following additional requirements: (i) the expenses eligible for reimbursement will have been incurred during the term of this Agreement, (ii) the amount of expenses eligible for reimbursement during any calendar year will not affect the expenses eligible for reimbursement in any other taxable year; (iii) reimbursement will be made not later than December 31 of the calendar year following the calendar year in which the expense was incurred; and (iv) the right to reimbursement will not be subject to liquidation or exchange for any other benefit. Any tax gross-up payments payable by the Company under Section 3(e)(i) shall be paid not later than the time period provided in Section 1.409A-3(v).

7. Full Settlement. The Company’s obligations to make the payments provided for in, and otherwise to perform its obligations under, this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of whether the Executive obtains other employment.

8. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company and Holdco all secret or confidential information, knowledge or data relating to the Company, Holdco or any of their affiliates and their respective businesses that the Executive obtains during the Executive’s employment by the Company and Holdco (whether before, during or after the Employment Period) and that is not public knowledge (other than as a result of the Executive’s violation of this Section 8) (“Confidential Information”). The Executive shall not communicate, divulge or disseminate Confidential Information at any time during or after the Executive’s employment with the Company and Holdco, except with the prior written consent of the Company or as otherwise required by law. For the avoidance of doubt, (a) nothing contained in this Agreement or any other agreement containing confidentiality provisions or other restrictive covenants in favor of any of Holdco, the Company or any affiliate of either of them, shall be construed to limit, restrict or in any other way affect the Executive’s communicating with any governmental agency or entity, or communicating with any official or staff person of a governmental agency or entity, concerning matters relevant to the governmental agency or entity and (b) the Executive will not be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed under seal in a lawsuit or other proceeding; provided that notwithstanding this immunity from liability, the Executive may be held liable if the Executive unlawfully accesses trade secrets by unauthorized means.

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9. Noncompetition; Nonsolicitation.

(a) Noncompetition. During the Employment Period, and following termination of the Executive’s employment with the Company, Holdco and any of their affiliates, during the “Restriction Period” (as hereinafter defined), the Executive shall not directly or indirectly participate in or permit his name directly or indirectly to be used by or become associated with (including as an advisor, representative, agent, promoter, independent contractor, provider of personal services or otherwise) any person, corporation, partnership, firm, association or other enterprise or entity (a “person”) that is, or intends to be, engaged in any business which is in competition with any business of the Company, Holdco or any of their respective subsidiaries or affiliates in any geographic area in which the Company, Holdco or any of their respective subsidiaries or affiliates operate, compete or are engaged in such business or at such time intend so to operate, compete or become engaged in such business (a “Competitor”); provided, however, that the foregoing will not prohibit the Executive from participating in or becoming associated with a person if (i) less than 10% of the consolidated gross revenues of such person, together with its affiliates, derive from activities or businesses that are in competition with any business of the Company or any of its subsidiaries or affiliates (a “Competitive Business”) and (ii) the Executive does not, directly or indirectly, participate in, become associated with, or otherwise have responsibilities that relate to the conduct or operations of, any Competitive Business that is conducted by such person or a division, group, or subsidiary or affiliate of such person. For purposes of this Agreement, the term “participate” includes any direct or indirect interest, whether as an officer, director, employee, partner, sole proprietor, trustee, beneficiary, agent, representative, independent contractor, consultant, advisor, provider of personal services, creditor, or owner (other than by ownership of less than five percent of the stock of a publicly-held corporation whose stock is traded on a national securities exchange or in an over-the-counter market).

(b) Nonsolicitation. During the Employment Period, and during the Restriction Period following termination of employment, the Executive shall not, directly or indirectly, encourage or solicit, or assist any other person or firm in encouraging or soliciting, any person or firm that during the three-year period preceding such termination of the Executive’s employment with the Company and Holdco (or, if such action occurs during the Employment Period, on the date such action was taken) is or was engaged in a business relationship with the Company or Holdco, any of their respective subsidiaries or affiliates to terminate its relationship with the Company or Holdco or any of their respective subsidiaries or affiliates or, in the case of any such person, to engage in a business relationship with a Competitor.

(c) No Hire. During the Employment Period, and during the Restriction Period following termination of employment, the Executive will not, except with the prior written consent of the Company, directly or indirectly, induce any employee of the Company, Holdco or any of their respective subsidiaries or affiliates to terminate employment with such entity, and will not, directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, employ, offer employment or cause employment to be offered to any person (including employment as an independent contractor) who is or was employed by the Company, Holdco or any of their respective subsidiaries or affiliates unless such person shall have ceased to be employed by such entity for a period of at least twelve months; provided that the foregoing shall not apply to inducing any employee pursuant to a blanket solicitation not specifically targeted at that employee. For purposes of this Section 9(c), “employment” shall be deemed to include rendering services as an independent contractor and “employees” shall be deemed to include independent contractors.

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(d) Restriction Period. The term “Restriction Period” as used herein, shall mean the 24-month period immediately following the Date of Termination (other than a termination at the expiration of the Employment Period).

(e) Return of Confidential Information. Promptly following the Executive’s termination of employment, including due to expiration of the Employment Period, the Executive shall return to the Company all property of the Company, Holdco and their respective subsidiaries and affiliates, and all copies thereof, in the Executive’s possession or under his control, including, without limitation, all Confidential Information in whatever media such Confidential Information is maintained.

(f) Injunctive Relief. The Executive acknowledges and agrees that the Restriction Period and the covenants and obligations of the Executive in Section 8 and this Section 9 with respect to noncompetition, nonsolicitation and confidentiality and with respect to the property of the Company and its subsidiaries and affiliates, and the territories covered thereby, are fair and reasonable and the result of negotiation. The Executive further acknowledges and agrees that the covenants and obligations of the Executive in Section 8 and this Section 9 with respect to noncompetition, nonsolicitation and confidentiality and with respect to the property of the Company, Holdco and their respective subsidiaries and affiliates, and the territories covered thereby, relate to special, unique and extraordinary matters and that a violation of any of the terms of such covenants and obligations will cause the Company, Holdco and their respective subsidiaries and affiliates irreparable injury for which adequate remedies are not available at law. Therefore, the Executive agrees that the Company and Holdco shall be entitled to an injunction, restraining order or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain the Executive from committing any violation of such covenants and obligations. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company and Holdco may have at law or in equity. If, at the time of enforcement of Section 8 and/or this Section 9, a court holds that any of the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope, and/or geographical area legally permissible under such circumstances will be substituted for the period, scope and/or area stated herein.

10. Successors.

(a) This Agreement is personal to the Executive and shall not be assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives and heirs and successors.

(b) This Agreement shall inure to the benefit of and be binding upon Holdco, the Company and their respective successors and assigns.

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11. Section 280G. In the event that the Company undergoes a change in control at a time when it (or any affiliate of the Company, including Holdco, that would be treated, together with the Company, as a single corporation under Section 280G of the Code and the regulations thereunder) has stock that is readily tradeable on an established securities market (within the meaning of Section 280G of the Code and the regulations thereunder), if all, or any portion, of the payments provided under this Agreement, either alone or together with other payments or benefits which the Executive receives or is entitled to receive from the Company or an affiliate, could constitute an “excess parachute payment” within the meaning of Section 280G of the Code, then the Executive shall be entitled to receive (i) an amount limited so that no portion thereof shall fail to be tax deductible under Section 280G of the Code (the “Limited Amount”), or (ii) if the amount otherwise payable hereunder, together with the other payments or benefits the Executive is so entitled to receive, (without regard to clause (i)) reduced by the excise tax imposed by Section 4999 of the Code and all other applicable federal, state and local taxes (with income taxes all computed at the highest applicable marginal rate) is greater than the Limited Amount reduced by all taxes applicable thereto (with income taxes all computed at the highest marginal rate), the amount otherwise payable hereunder. If it is determined that the Limited Amount will maximize the Executive’s after-tax proceeds, payments and benefits shall be reduced to equal the Limited Amount in the following order: (i) first, by reducing cash severance payments, (ii) second, by reducing other payments and benefits to which Q&A 24(c) of Section 1.280G-1 of the Treasury Regulations does not apply, and (iii) finally, by reducing all remaining payments and benefits, with all such reductions done on a pro rata basis. All determinations made pursuant this Section 11 will be made at the Company’s expense by the independent public accounting firm most recently serving as the Company’s outside auditors or such other accounting or benefits consulting group or firm as the Company may designate.

12. Miscellaneous.

(a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New Jersey, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective heirs, successors and legal representatives.

(b) All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or by overnight courier or by registered or certified mail, return receipt requested, postage prepaid, or by facsimile (with receipt confirmation), addressed as follows:

If to the Executive:	Brad Weston At his most recent address shown in the Company’s records
If to the Company:	Party City Holdings Inc. 80 Grasslands Road Elmsford, NY 10523 Attention: Corporate Secretary Fax no.: (914) 345-2056

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or to such other address as either party furnishes to the other in writing in accordance with this Section 12(b). Notices and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d) Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations. In addition, the obligations of the Company under this Agreement shall be conditional on compliance with this Section 12(d), and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Executive.

(e) Any party’s failure to insist upon strict compliance with any provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver of such provision or right or of any other provision of or right under this Agreement.

(f) The Executive acknowledges that this Agreement, together with the Exhibit hereto and the other agreements referred to herein except as modified herein or therein, supersedes, as of the Effective Date, all other agreements and understandings, both written and oral, between the Executive, on one hand, and the Company and Holdco, on the other, with respect to the subject matter hereof (including, without limitation, the Prior Employment Agreement).

(g) This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall together constitute one and the same instrument.

(h) Provisions of this Agreement shall survive any termination of employment if so provided herein or if necessary or desirable to accomplish the purposes of other surviving provisions, including, without limitation, the obligations of the Executive under Sections 8 and 9 hereof.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization of their respective boards of directors, the Company and Holdco have each caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written.

PARTY CITY HOLDINGS INC.
By:	/s/ Jim M. Harrison
	Name: Jim M. Harrison
	Title: Chief Executive Officer
PARTY CITY HOLDCO INC.
By:	/s/ Jim M. Harrison
	Name: Jim M. Harrison
	Title: Chief Executive Officer
/s/ Brad Weston
BRAD WESTON

[Signature Page to Employment Agreement]

Exhibit A

FORM OF RELEASE OF CLAIMS

This Release of Claims is provided by me, Brad Weston (or by my designated beneficiary or estate, in the event of my death during my employment), pursuant to the Amended and Restated Employment Agreement between me, Party City Holdings, Inc. (the “Company”) and Party City Holdco Inc. (“Holdco”) dated as of March 11, 2020 (the “Employment Agreement”).

This Release of Claims is given in consideration of the severance benefits to be provided to me (or, in the event of my death during my employment, to my designated beneficiary) in connection with the termination of my employment under Section 5 of the Employment Agreement (the “Separation Payments”), which are conditioned on my signing this Release of Claims and to which I am not otherwise entitled, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged. On my own behalf and that of my heirs, executors, administrators, beneficiaries, representatives and assigns, and all others connected with or claiming through me, I hereby release and forever discharge the Company from any and all causes of action, rights or claims of any type or description, known or unknown, which I have had in the past, now have or might have, through the date of my signing of this Release of Claims. This includes, without limitation, any and all causes of action, rights or claims in any way resulting from, arising out of or connected with my employment by the Company or the termination of that employment or pursuant to any federal, state or local law, regulation or other requirement, including without limitation Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the fair employment practices statutes of the state or states in which I have provided services to the Company or any other federal, state, local or foreign law, all as amended, any contracts of employment, any tort claims, or any agreements, plans or policies.

For purposes of this Release of Claims, the word “Company” always includes the Company, Holdco the subsidiaries and affiliates of the Company or Holdco and all of their respective past, present and future officers, directors, trustees, shareholders, employees, employee benefit plans and any of the trustees or administrators thereof, agents, general and limited partners, members, managers, investors, joint venturers, representatives, predecessors, successors and assigns, and all others connected with any of them, both individually and in their official capacities.

Nothing in this Release of Claims shall be construed to prohibit me from filing a charge with or participating in any investigation or proceeding conducted by the federal Equal Employment Opportunity Commission or a comparable state or local agency, except that I hereby agree to waive my right to recover monetary damages or other individual relief in any charge, complaint or lawsuit filed by me or by anyone else on my behalf.

Nothing in this Release of Claims is intended to or does waive or release any rights I may have with respect to (i) coverage under liability insurance or indemnification rights provided or maintained by the Company during, or applicable to, my employment with the Company, or under any other obligation or policy of insurance maintained by the Company in accordance with their respective terms; (ii) any other defense or indemnity right under applicable law; (iii) the enforcement of the right to any payment or benefits due upon the termination of my employment in accordance with the express terms of the Employment Agreement or (iv) any right or claim that cannot, by law, be waived or released through this Release of Claims.

Also excluded from the scope of this Release of Claims is any right to benefits that were vested or eligible for continuation under the Company’s employee benefit plans on the date on which my employment with the Company terminated, in accordance with the terms of such plans.

In signing this Release of Claims, I give the Company assurance that I have returned to the Company any and all documents, materials and information related to the business, whether present or otherwise, of the Company and all keys and other property of the Company that were in my possession or control, all as required by and consistent with Section 9(e) of the Employment Agreement. I agree that I will not, for any purpose, attempt to access or use any computer or computer network or system of the Company, including without limitation their electronic mail systems. I further acknowledge that I have disclosed to the Company all passwords necessary or desirable to enable the Company to access all information which I have password-protected on its computer network or system.

In signing this Release of Claims, I agree that I have been paid in full all compensation due to me, whether for services rendered by me to the Company or otherwise, through the date on which my employment with the Company terminated and that, exclusive only of the Separation Payments and the Accrued Obligations, as defined in the Employment Agreement, no further compensation of any kind shall be due to me by the Company, whether arising under the Employment Agreement or otherwise, in connection with my employment or the termination thereof. I also agree that except for any right I and my eligible dependents may have to continue participation in the Company’s health and dental plans under the federal law commonly known as COBRA, my right to participate in any employee benefit plan of the Company will be determined in accordance with the terms of such plan.

I acknowledge that my eligibility for the Separation Payments is not only contingent on my signing and returning this Release of Claims to the Company in a timely manner and not revoking it thereafter, but also is subject to my compliance with the covenants contained in the Employment Agreement.

In signing this Release of Claims, acknowledge that I have not relied on any promises or representations, express or implied, that are not set forth expressly in this Release of Claims. I further acknowledge that I am waiving and releasing any rights I may have under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), and that this waiver and release is knowing and voluntary and is being done with a full understanding of its terms. I agree that the consideration given for this waiver and release is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing as required by the ADEA that:

1. I have the right to and am advised by the Company to consult with an attorney prior to executing this Release of Claims; and I acknowledge that I have had sufficient time to consider this Release of Claims and to consult with an attorney, if I wished to do so, or to consult with any other person of my choosing before signing;

2. I may not sign this Release of Claims prior to the termination of my employment, but that I may consider the terms of this Release of Claims for up to twenty-one (21) days (or, if the Company so instructs, forty-five (45) days) from the later of the date my employment with the Company terminates or the date I receive this Release of Claims;

3. I have seven (7) days following my execution of this Release of Claims to revoke this Release of Claims; and

4. This Release of Claims shall not be effective until the revocation period has expired.

Intending to be legally bound, I have signed this Release of Claims under seal as of the date written below.

Signature:                                      Date signed:                         

Party City Holdings Inc.

Name:

Title:

Party City Holdco Inc.

Name:

Title:

EX-21.1

Exhibit 21.1

List of Subsidiaries of Party City Holdco Inc.

Name	State/Country of Organization or Incorporation
Amscan Asia Limited	Hong Kong
Amscan Canada Inc.	Ontario
Amscan Custom Injection Molding, LLC	Delaware
Amscan de Mexico S.A. de C.V.	Mexico
Amscan Europe GmbH	Germany
Amscan Holdings Limited	United Kingdom
Amscan Inc.	New York
Amscan International Limited	United Kingdom
Amscan Mauritius Company Limited	Mauritius
Amscan NM Land, LLC	Delaware
Amscan Party Goods Pty. Limited	Australia
Amscan Purple Sage, LLC	Delaware
Am-Source, LLC	Rhode Island
Anagram Eden Prairie Property Holdings LLC	Delaware
Anagram France S.C.S.	France
Anagram International Holdings, Inc.	Minnesota
Anagram International Inc.	Minnesota
Anagram International LLC	Nevada
Baja Pacific Paper, S. de R.L. de C.V.	Mexico
Balloon Agencies Pty Ltd.	Australia
Christy Dressup Limited	United Kingdom
Christy’s By Design Limited	United Kingdom
Christy Garments and Accessories Limited	United Kingdom
Convergram de Mexico S. de R.L. (49.9% owned)	Mexico
Eastlake Manufacturing de Mexico S.A. de C.V.	Mexico
Everts Malaysia SDN BHD	Malaysia
Festival S.A.	Madagascar
Granmark S.A. de C.V. (85% owned)	Mexico
Guangzhou Christy Trading Company Limited	China
Kazzam, LLC (26% owned)	Delaware
Livario GmbH	Germany
Mindvent AG	Switzerland
Party City Corporation	Delaware
Party City Holdings Inc.	Delaware
Party Delights Ltd.	United Kingdom
Party HQ Ltd. (65% owned)	United Kingdom
Party Horizon Inc.	Delaware
PC Nextco Holdings, LLC	Delaware
PC Nextco Finance, Inc.	Delaware
PC Intermediate Holdings, Inc.	Delaware
PD Retail Group Ltd. (82.5% owned)	United Kingdom
Print Appeal, Inc. (70% owned)	Texas
Riethmüller (Polska) Sp.z.o.o.	Poland
Trisar, Inc.	California
Webdots GmbH	Germany

1

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements (Form S-3 No. 333-213492, S-8 No. 333-203725) of Party City Holdco Inc. of our reports dated March 12, 2020, with respect to the consolidated financial statements and schedules of Party City Holdco Inc. and the effectiveness of internal control over financial reporting of Party City Holdco Inc. included in this Annual Report (Form 10-K) of Party City Holdco Inc. for the year ended December 31, 2019.

/s/ Ernst & Young LLP

New York, New York

March 12, 2020

EX-31.1

Exhibit 31.1

Section 302 Certification

I, James M. Harrison, certify that:

1. I have reviewed this annual report on Form 10-K of Party City Holdco Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 12, 2020

/s/ James M. Harrison

James M. Harrison

Chief Executive Officer

(Principal Executive Officer)

1

EX-31.2

Exhibit 31.2

Section 302 Certification

I, Todd Vogensen, certify that:

1. I have reviewed this annual report on Form 10-K of Party City Holdco Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 12, 2020

/s/ Todd Vogensen

Todd Vogensen

Chief Financial Officer

(Principal Financial Officer)

1

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Party City Holdco Inc. (the “Company”) on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, James M. Harrison, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James M. Harrison

James M. Harrison

Chief Executive Officer

(Principal Executive Officer)

Date: March 12, 2020

This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Party City Holdco Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

1

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Party City Holdco Inc. (the “Company”) on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Todd Vogensen, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Todd Vogensen

Todd Vogensen

Chief Financial Officer

(Principal Financial Officer)

Date: March 12, 2020

This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Party City Holdco Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

1

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Long-Term Obligations -Term Loan Credit Agreement - Additional Information (Detail) $ in Thousands	1 Months Ended	12 Months Ended
	Feb. 28, 2018	Dec. 31, 2019 USD ($) OptionPlan	Dec. 31, 2018 USD ($)	Aug. 31, 2018 USD ($)
Debt Instrument [Line Items]
Outstanding principal amount of term loans		$ 1,575,511	$ 1,635,279
Term Loan Credit Agreement [Member]
Debt Instrument [Line Items]
Percentage of net cash proceeds above sale of assets subject to debt mandatory prepayment		100.00%
Percentage of net cash proceeds of incurrence of debt subject to debt mandatory prepayment		100.00%
Percentage excess cash flow debt mandatory prepayment subject to leverage ratio		50.00%
Leverage ratio Above that Fifty percentage of Excess Cash Flow as defined in the New Term Loan Credit Agreement		3.50
Leverage ratio below that zero percentage of Excess Cash Flow as defined in the New Term Loan Credit Agreement		2.50
Outstanding principal amount of term loans		$ 725,131
Original issuance discount, call premium and deferred financing costs		$ 6,535
Interest rates		4.22%
Term Loan Credit Agreement [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Credit facility maturity date		Aug. 19, 2022
Term loans repayment, quarterly installment percentage		0.25%
Original issuance discount, call premium and deferred financing costs				$ 1,824
Term Loan Credit Agreement [Member] | Secured Debt [Member] | Alternate Base Interest Rate Loans [Member]
Debt Instrument [Line Items]
Interest rate description		(i) an ABR for any day, a rate per annum equal to the greater of (a) the prime rate in effect on such day, (b) the federal funds effective rate in effect on such day plus 0.5%, (c) the adjusted LIBOR rate plus 1% and (d) 1.75% or (ii) the LIBOR rate, with a LIBOR floor of 0.75%, in each case plus an applicable margin.
Term Loan Credit Agreement [Member] | Secured Debt [Member] | LIBOR Based Loans [Member]
Debt Instrument [Line Items]
Interest rate description		(ii) the LIBOR rate, with a LIBOR floor of 0.75%, in each case plus an applicable margin.
Minimum [Member]
Debt Instrument [Line Items]
Leverage ratio below that Twenty Five percentage of Excess Cash Flow as defined in the New Term Loan Credit Agreement	1.0
Minimum [Member] | Term Loan Credit Agreement [Member]
Debt Instrument [Line Items]
Reduction in percentage of excess cash flow debt mandatory prepayment subject to leverage ratio		0.00%
Leverage ratio below that Twenty Five percentage of Excess Cash Flow as defined in the New Term Loan Credit Agreement		1.00
Minimum [Member] | Term Loan Credit Agreement [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Number of pricing options | OptionPlan		2
Minimum adjustment rate of LIBOR		1.75%
Decreased LIBOR floor rate		0.75%
Minimum [Member] | Term Loan Credit Agreement [Member] | Secured Debt [Member] | Federal Funds Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate		0.50%
Basis spread on variable rate		0.50%
Minimum [Member] | Term Loan Credit Agreement [Member] | Secured Debt [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread on variable rate		1.00%
Basis spread on variable rate		1.00%
Maximum [Member]
Debt Instrument [Line Items]
Leverage ratio below that Twenty Five percentage of Excess Cash Flow as defined in the New Term Loan Credit Agreement	3.2
Maximum [Member] | Term Loan Credit Agreement [Member]
Debt Instrument [Line Items]
Reduction in percentage of excess cash flow debt mandatory prepayment subject to leverage ratio		25.00%
Leverage ratio below that Twenty Five percentage of Excess Cash Flow as defined in the New Term Loan Credit Agreement		3.50
Maximum [Member] | Term Loan Credit Agreement [Member] | Secured Debt [Member] | Alternate Base Interest Rate Loans [Member]
Debt Instrument [Line Items]
Basis spread on variable rate		1.75%
Basis spread on variable rate		1.75%
Maximum [Member] | Term Loan Credit Agreement [Member] | Secured Debt [Member] | LIBOR Based Loans [Member]
Debt Instrument [Line Items]
Basis spread on variable rate		2.75%
Basis spread on variable rate		2.75%

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Fair Value Measurements - Summary of Carrying Amount and Fair Value (Detail) $ in Thousands	Dec. 31, 2019 USD ($)
Term Loan Credit Agreement [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Debt Instrument Carrying Amount	$ 724,881
Debt Instrument Fair Value	668,703
6.125% Senior Notes - due 2023 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument Carrying Amount	347,015
Debt Instrument Fair Value	348,250
6.625% Senior Notes - due 2026 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument Carrying Amount	494,910
Debt Instrument Fair Value	$ 366,250

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Equity Incentive Plans - Fair Value of Options Granted (Detail)	12 Months Ended
	Dec. 31, 2019
Time Based Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend rate	0.00%
Risk-free interest rate, Minimum	1.88%
Risk-free interest rate, Maximum	2.44%
Volatility	29.06%
Volatility	30.78%
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend rate	0.00%
Risk-free interest rate	1.86%
Volatility	52.00%
Expected option term	5 years
Minimum [Member] | Time Based Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected option term	6 years
Maximum [Member] | Time Based Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected option term	6 years 6 months

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Segment Information - Schedule of Company's Geographic Segments (Detail) - USD ($) $ in Thousands	3 Months Ended								9 Months Ended	12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues:
Net sales to unaffiliated customers										$ 2,339,510	$ 2,416,442	$ 2,357,986
Revenue										2,339,510
Total revenues										2,348,789	2,427,515	2,371,569
Income (loss) from operations	$ (227,055)	$ (277,526)	$ 97,485	$ (10,297)	$ 158,840	$ 31,738	$ 65,451	$ 22,256		(417,393)	278,285	280,136
Interest expense, net										114,899	105,706	87,366
Other expense, net										1,871	10,982	4,626
Loss before income taxes										(534,163)	161,597	188,144
Depreciation and amortization										81,116	78,575	85,168
Total long-lived assets (excluding goodwill, trade names and other intangible assets, net)	250,848				333,367					250,848	333,367
Total assets	3,595,319				3,642,347					3,595,319	3,642,347
Reportable Geographical Components [Member] | Domestic [Member]
Revenues:
Net sales to unaffiliated customers										1,968,319	2,015,899	1,962,697
Net sales between geographic areas										57,117	65,416	54,268
Total revenues										2,034,715	2,092,388	2,030,548
Income (loss) from operations										(412,225)	264,440	252,270
Depreciation and amortization										72,701	70,011	76,970
Total long-lived assets (excluding goodwill, trade names and other intangible assets, net)	224,692				292,632					224,692	292,632
Total assets	3,317,305				3,339,155					3,317,305	3,339,155
Reportable Geographical Components [Member] | Foreign [Member]
Revenues:
Net sales to unaffiliated customers										371,191	400,543	395,289
Net sales between geographic areas										86,811	110,185	64,585
Total revenues										458,002	510,728	459,874
Income (loss) from operations										(5,168)	13,845	27,866
Depreciation and amortization										8,415	8,564	8,198
Total long-lived assets (excluding goodwill, trade names and other intangible assets, net)	26,156				40,735					26,156	40,735
Total assets	278,014				303,192					278,014	303,192
Eliminations [Member]
Revenues:
Net sales between geographic areas										(143,928)	(175,601)	(118,853)
Total revenues									$ (143,928)		(175,601)	(118,853)
Net Sales [Member]
Revenues:
Revenue	728,361	538,345	561,702	511,102	802,393	550,840	558,101	505,108			2,416,442	2,357,986
Net Sales [Member] | Reportable Geographical Components [Member] | Domestic [Member]
Revenues:
Revenue										2,025,436	2,081,315	2,016,965
Net Sales [Member] | Reportable Geographical Components [Member] | Foreign [Member]
Revenues:
Revenue										458,002	510,728	459,874
Net Sales [Member] | Eliminations [Member]
Revenues:
Revenue										(143,928)	(175,601)	(118,853)
Royalties and Franchise Fees [Member]
Revenues:
Revenue	$ 3,190	$ 1,886	$ 2,189	$ 2,014	$ 3,241	$ 2,206	$ 2,910	$ 2,716		9,279	11,073	13,583
Royalties and Franchise Fees [Member] | Reportable Geographical Components [Member] | Domestic [Member]
Revenues:
Revenue										$ 9,279	$ 11,073	$ 13,583

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Capital Stock - Summary Changes in Common Shares Outstanding (Detail) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Class of Stock [Line Items]
Common Shares Outstanding, Beginning Balance	93,622,934
Treasury stock purchases	(15,679)	(3,785,658)
Common Shares Outstanding, Ending Balance	94,461,576	93,622,934
Common Stock [Member]
Class of Stock [Line Items]
Common Shares Outstanding, Beginning Balance	93,622,934	96,380,102	119,515,894
Issuance of restricted stock and restricted stock units	564,729	589,736
Treasury stock purchases	(15,679)	(3,785,658)	(23,379,567)
Issuance of shares to directors		13,249
Vesting of restricted stock and restricted stock units	74,292
Exercise of stock options	215,300	425,505	243,775
Common Shares Outstanding, Ending Balance	94,461,576	93,622,934	96,380,102

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Changes in Accumulated Other Comprehensive Loss - Changes in Accumulated and Other Comprehensive Loss (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ 1,043,330
Ending balance	529,745	$ 1,043,330
Foreign Currency Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(50,056)	(35,610)	$ (53,171)
Other comprehensive income before reclassifications, net of income tax	5,725	(14,446)	17,561
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax	6,897
Net current-period other comprehensive	12,622	(14,446)	17,561
Ending balance	(37,434)	(50,056)	(35,610)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	855	(208)	932
Other comprehensive income before reclassifications, net of income tax	106	1,432	(1,044)
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax	739	(369)	(96)
Net current-period other comprehensive	845	1,063	(1,140)
Ending balance	1,700	855	(208)
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(49,201)	(35,818)	(52,239)
Other comprehensive income before reclassifications, net of income tax	5,831	(13,014)	16,517
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax	7,636	(369)	(96)
Net current-period other comprehensive	13,467	(13,383)	16,421
Ending balance	$ (35,734)	$ (49,201)	$ (35,818)

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Long-Term Obligations - Summary of Long-Term Obligations (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total long-term obligations	$ 1,575,511	$ 1,635,279
Less: current portion	(71,524)	(13,316)
Long-term obligations, excluding current portion	1,503,987	1,621,963
6.125% Senior Notes due 2023 [Member]
Debt Instrument [Line Items]
Total long-term obligations	347,015	346,191
6.625% Senior Notes due 2026 [Member]
Debt Instrument [Line Items]
Total long-term obligations	494,910	494,138
Finance Lease Obligations [Member]
Debt Instrument [Line Items]
Total long-term obligations	14,990	3,815
Term Loan Credit Agreement [Member]
Debt Instrument [Line Items]
Total long-term obligations	725,131
Term Loan Credit Agreement [Member] | Senior Secured Term Loan Facility [Member]
Debt Instrument [Line Items]
Total long-term obligations	$ 718,596	$ 791,135

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Intangible Assets - Schedule of Identifiable Intangible Assets (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Cost	$ 171,473	$ 183,142
Accumulated Amortization	126,413	122,978
Net Carrying Value	45,060	60,164
Retail Franchise Licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	77,377	77,377
Accumulated Amortization	50,658	41,877
Net Carrying Value	26,719	35,500
Customer Lists and Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	62,144	61,405
Accumulated Amortization	45,940	41,167
Net Carrying Value	16,204	20,238
Copyrights and Designs [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	31,453	26,030
Accumulated Amortization	29,416	25,708
Net Carrying Value	2,037	322
Lease Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Cost		17,830
Accumulated Amortization		13,926
Net Carrying Value		3,904
Non-compete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	500	500
Accumulated Amortization	400	300
Net Carrying Value	$ 100	$ 200
Useful lives	5 years	5 years
Minimum [Member] | Retail Franchise Licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Useful lives	4 years	4 years
Minimum [Member] | Customer Lists and Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Useful lives	2 years	2 years
Minimum [Member] | Copyrights and Designs [Member]
Finite-Lived Intangible Assets [Line Items]
Useful lives	5 years	5 years
Minimum [Member] | Lease Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Useful lives		1 year
Maximum [Member] | Retail Franchise Licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Useful lives	19 years	19 years
Maximum [Member] | Customer Lists and Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Useful lives	20 years	20 years
Maximum [Member] | Copyrights and Designs [Member]
Finite-Lived Intangible Assets [Line Items]
Useful lives	7 years	7 years
Maximum [Member] | Lease Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Useful lives		17 years

XML

Long-Term Obligations - Summary of Debt Instrument Redemption (Detail) - Senior Notes [Member]	12 Months Ended
	Dec. 31, 2019
Senior Notes - Due 2026 [Member] | Twelve-Month Period Beginning on August 1, 2021 [Member]
Debt Instrument, Redemption [Line Items]
Percentage of principal amount to be redeemed	103.313%
Senior Notes - Due 2026 [Member] | Twelve-Month Period Beginning on August 1, 2022 [Member]
Debt Instrument, Redemption [Line Items]
Percentage of principal amount to be redeemed	101.656%
Senior Notes - Due 2026 [Member] | Twelve-Month Period Beginning on August 1, 2023 and Thereafter [Member]
Debt Instrument, Redemption [Line Items]
Percentage of principal amount to be redeemed	100.00%
Senior Notes - Due 2023 [Member] | Twelve-month period beginning on August 15 ,2019 [Member]
Debt Instrument, Redemption [Line Items]
Percentage of principal amount to be redeemed	101.531%
Senior Notes - Due 2023 [Member] | Twelve-month period beginning on August 15,2020 and Thereafter[Member]
Debt Instrument, Redemption [Line Items]
Percentage of principal amount to be redeemed	100.00%

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 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 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
Punchbowl put liability		—		—		316		316

Summary of Carrying Amount and Fair Value

	Carrying Amount		Fair Value
Term Loan Credit Agreement	$	724,881	$	668,703
6.125% Senior Notes—due 2023		347,015		348,250
6.625% Senior Notes—due 2026		494,910		366,250

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Leases (Tables)

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

The Future Cash flows for The Company's Operating Leases

As of December 31, 2019, the future cash flows for the Company’s operating leases were:

	Future Minimum Operating Lease Payments
2020	$	197,480
2021		181,970
2022		162,352
2023		134,131
2024		106,078
Thereafter		367,639
Total Undiscounted Cash Flows		1,149,650
Less: Interest		(273,444	)
Total Operating Lease Liability		876,206
Less: Current Operating Lease Liability		(155,471	)
Long-Term Operating Lease Liability	$	720,735

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Dividends from subsidiaries

12 Months Ended

Dec. 31, 2019

Party City Holdco Inc. [Member]

Dividends from subsidiaries

Note 2—Dividends from subsidiaries

No cash dividends were paid to Party City Holdco by its subsidiaries during the years included in these financial statements.

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Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

Note 26—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 Company elected this package of practical expedients.

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 of its real estate.

Lease Population

The Company’s lease portfolio is primarily comprised of real estate leases for its permanent Party City stores. The Company also leases manufacturing facilities, distribution facilities, warehouse space and office space. Additionally, the Company enters into short leases (generally less than four months) in order to operate its temporary stores. Further, the Company enters into leases of equipment, copiers, printers and automobiles.

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 limited number of the Company’s store leases require rent to be paid based on sales levels. The Company’s cost for such leases is immaterial. Variable lease consideration is not included in lease payments until the contingency is resolved.

Additionally, for most store leases, the Company pays variable taxes and insurance.

Renewal Options

Many of the Company’s store leases, and certain of the Company’s other leases, contain renewal options. However, the renewal periods are generally not included in the right-of-use assets and lease liabilities for such leases as exercise of the options is not reasonably certain.

Discount Rates

The Company is unable to determine the discount rates that are implicit in its operating leases. Therefore, for such leases, the Company is utilizing its incremental borrowing rate.

For leases that existed as of January 1, 2019, the Company determined the applicable incremental borrowing rates for such leases based on the remaining lease terms for the leases as of such date.

Quantitative Disclosures

During the year ended December 31, 2019, the Company’s operating lease cost was $204,466. Such amount excludes impairment charges recorded in conjunction with the Company’s store optimization program (see Note 3, Store Impairment and Restructuring Charges).

The Company’s variable lease cost during the year ended December 31, 2019 was $30,817.

During the year ended December 31, 2019, cash paid for amounts included in the measurement of operating lease liabilities was $197,574.

During the year ended December 31, 2019, right-of-use assets obtained in exchange for new operating lease liabilities were $195,687.

As of December 31, 2019, the weighted-average remaining lease term for operating leases was eight years and the weighted-average discount rate for operating leases was 6.7%.

As of December 31, 2019, the future cash flows for the Company’s operating leases were:

	Future Minimum Operating Lease Payments
2020	$	197,480
2021		181,970
2022		162,352
2023		134,131
2024		106,078
Thereafter		367,639
Total Undiscounted Cash Flows		1,149,650
Less: Interest		(273,444	)
Total Operating Lease Liability		876,206
Less: Current Operating Lease Liability		(155,471	)
Long-Term Operating Lease Liability	$	720,735

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Consolidated Balance Sheets (Parenthetical) - shares	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Common stock, shares outstanding	94,461,576	93,622,934
Common stock, shares issued	121,662,540	120,788,159
Treasury stock, shares	27,200,964	27,165,225

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Organization, Description of Business and Basis of Presentation

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Description of Business and Basis of Presentation

Note 1—Organization, Description of Business and Basis of Presentation

Party City Holdco Inc. (the “Company” or “Party City Holdco”) is the leading party goods company by revenue in North America and, we believe, the largest vertically integrated supplier of decorated party goods globally by revenue. The Company is a popular one-stop shopping destination for party supplies, balloons, and costumes. In addition to being a great retail brand, the Company is a global, world-class organization that combines state-of-the-art manufacturing and sourcing operations, and sophisticated wholesale operations complemented by a multi-channel retailing strategy and e-commerce retail operations. The Company is a leading player in its category and vertically integrated in its breadth and depth. 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 throughout the world. The Company’s retail operations include approximately 875 specialty retail party supply stores (including franchise stores) throughout the United States and Mexico operating under the names Party City and Halloween City, and e-commerce websites, including through the domain name PartyCity.com and others.

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.

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Sale/Leaseback Transaction

12 Months Ended

Dec. 31, 2019

Sales Leaseback Transaction Disclosure [Abstract]

Sale/Leaseback Transaction

Note 5—Sale/Leaseback Transaction

In June 2019, the Company sold its main distribution center in Chester, New York, its metallic balloons manufacturing facility in Eden Prairie, Minnesota and its injection molded plastics manufacturing facility in Los Lunas, New Mexico. Simultaneously, the Company entered into twenty-year leases for each of the facilities. The aggregate sale price was $128,000 and, during the year ended December 31, 2019, the Company recorded a $58,381 gain on the sale, net of transaction costs, in the Company’s condensed consolidated statement of operations and comprehensive loss.

Under the terms of the lease agreements, the Company will pay total rent of $8,320 during the first year and the annual rent will increase by 2% thereafter.

The Chester and Eden Prairie leases are being accounted for as operating leases and the sale of such properties is included in the gain above.

However, for the Los Lunas property, the present value of the lease payments is greater than substantially all of the fair value of the assets. Therefore, the lease is a finance lease and sale accounting treatment is prohibited. As such, the Company accounted for the proceeds as a financing lease. As of December 31, 2019, $11,990 is recorded in long-term obligations in the Company’s consolidated balance sheet. 

In conjunction with the sale/leaseback transaction, the Company amended its Term Loan Credit Agreement. The amendment required the Company to use half of the proceeds from the transaction, net of costs, to paydown part of the outstanding balance under such debt agreement. Additionally, the amendment required the Company to pay an immaterial “consent fee” to the lenders. As the Term Loan Credit Agreement is a loan syndication, the Company assessed, on a creditor-by-creditor basis, whether the amendment should be accounted for as an extinguishment or a modification. The Company concluded that, for each creditor, the amendment should be accounted for as a modification. Therefore, no capitalized deferred financing costs or original issuance discounts were written off in conjunction with the amendment.

During June 2019, the Company used proceeds from the sale (net of costs) of $125,864 to paydown outstanding Term Loan debt of $62,770 with the balance used to paydown the ABL. See Note 12.

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Acquisitions

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Acquisitions

Note 9—Acquisitions

During March 2018, the Company acquired 11 franchise stores, which are located in Maryland, for total consideration (including non-cash consideration) of approximately $17,000. The following summarizes the fair values of the major classes of assets acquired and liabilities assumed: inventories of $3,500, property, plant and equipment of $200, a reacquired right intangible asset in the amount of $4,000, and an asset in the amount of $100 due to leases that are favorable when compared to market rates. 

Also, during July 2018, the Company acquired an additional 16 franchise stores, which are located in Pennsylvania, for total consideration (including non-cash consideration) of approximately $20,500. The following summarizes the fair values of the major classes of assets acquired and liabilities assumed: inventories of $4,200, property, plant and equipment of $500, a reacquired right intangible asset in the amount of $3,400, and an asset in the amount of $500 due to leases that are favorable when compared to market rates.

Additionally, during September 2018, the Company acquired 21 franchise stores, which are located in Minnesota, North Dakota and Texas, for total consideration (including non-cash consideration) of approximately $26,300. The following summarizes the fair values of the major classes of assets acquired and liabilities assumed: inventories of $7,500, property, plant and equipment of $500, a reacquired right intangible asset in the amount of $7,300, and an asset in the amount of $200 due to leases that are favorable when compared to market rates.

The allocation of the purchase price for the business combinations was based on the Company’s estimate of the fair value of the assets acquired and liabilities assumed. Goodwill, which is tax-deductible, arose due to numerous factors, including the wholesale profit generated via the sale of product from the Company’s wholesale operations through the acquired stores. Goodwill also arose due to: the value to the Company of customers knowing that there are party stores in the locations (when the Company opens a new store, sales are initially lower than those of mature stores and increase over time), the Company’s ability to run the stores more efficiently than the franchisee based on the Company’s experience with its corporate-owned stores and the assembled workforce at the acquired stores.

Also, during 2018, the Company entered into an agreement to acquire 11 independent stores, which are located in Texas. The Company will take control of the stores one at a time over a period of approximately two years. During 2018, the Company took control of eight of the 11 stores, for total business combination consideration of approximately $4,400. The allocation of the purchase price was based on the Company’s estimate of the fair value of the assets acquired and liabilities assumed. Goodwill, which is tax-deductible, arose due to numerous factors, including the wholesale profit generated via the sale of product from the Company’s wholesale operations through the stores. Due to the fact that the stores were independent stores and, therefore, possessed a relatively small percentage of inventory that came from the Company’s wholesale operations, going forward the Company will significantly increase such percentage. Additionally, goodwill arose due to: the value to the Company of customers knowing that there are party stores in the locations, the Company’s ability to run the stores more efficiently than the current operator based on the Company’s experience with its corporate-owned stores and the assembled workforce at the eight stores. In 2019 the Company acquired the remainder of the 11 stores.

In November 2019 the Company acquired all of the stock of two European-based online retailers, Livario GmbH and Webdots GmbH, for total cash consideration of approximately $9 million.

Pro forma financial information has not been presented because the impact of the acquisitions individually, and in the aggregate, is not material to the Company’s consolidated financial results.

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Capital Stock

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Capital Stock

Note 13—Capital Stock

At December 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.

The changes in common shares outstanding during the three years ended December 31, 2017, December 31, 2018, and December 31, 2019 were as follows:

Common Shares Outstanding at December 31, 2016	119,515,894
Treasury stock purchases	(23,379,567	)
Exercise of stock options	243,775
Common Shares Outstanding at December 31, 2017	96,380,102
Issuance of restricted shares	589,736
Treasury stock purchases	(3,785,658	)
Issuance of shares to directors	13,249
Exercise of stock options	425,505
Common Shares Outstanding at December 31, 2018	93,622,934
Issuance of restricted stock and restricted stock units	564,729
Treasury stock purchases	(15,679	)
Vesting of restricted stock and restricted stock units	74,292
Exercise of stock options	215,300
Common Shares Outstanding at December 31, 2019	94,461,576

During the year ended December 31, 2019, the Company purchased 15,679 treasury shares for $156 from its employees to cover federal and state and other tax withholdings associated with the vesting of restricted stock and restricted stock units. Additionally, during the year ended December 31, 2018, the Company acquired 3,785,658 treasury shares for $40,197. The shares are included in “common stock held in treasury” in the Company’s consolidated balance sheet. 

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Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Note 17—Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law. The Act significantly changed U.S. tax law, including lowering the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018, and implementing a one-time “deemed repatriation” tax on unremitted earnings accumulated in non-U.S. jurisdictions since 1986 (the “Transition Tax”). In 2017, the Company recorded a provisional estimate of the impact of the Act, which included an income tax benefit of $90,965 related to the remeasurement of its domestic net deferred tax liabilities and deferred tax assets due to the lower U.S. corporate tax rate, and a net income tax expense of $1,132 as its provisional estimate of the Transition Tax related to the deemed repatriation of unremitted earnings of foreign subsidiaries. During the fourth quarter of 2018, the Company finalized its assessment of the impact of the Act on the Company’s domestic net deferred tax liabilities and deferred tax assets and recorded an income tax benefit of $2,049, as well as additional income tax expense of $151 related to the Transition Tax.

Additionally, the Act subjects a U.S. shareholder to current tax on “global intangible low-taxed income” (“GILTI”) of its controlled foreign corporations. GILTI is based on the excess of the aggregate of a U.S. shareholder’s pro rata share of net income of its controlled foreign corporations over a specified return. The Company has elected to account for GILTI in the year during which the tax is incurred.

A summary of domestic and foreign income before income taxes follows:

	Fiscal Year Ended December 31,
	2019			2018		2017
Domestic	$	(572,287	)	$	132,482	$	153,280
Foreign		38,124			29,115		34,864
Total	$	(534,163	)	$	161,597	$	188,144

The income tax expense (benefit) consisted of the following:

	Fiscal Year Ended December 31,
	2019			2018			2017
Current:
Federal	$	28,908		$	20,609		$	61,890
State		4,613			5,726			6,267
Foreign		12,540			7,870			7,298
Total current expense		46,061			34,205			75,455
Deferred:
Federal		(37,166	)		6,194			(101,774	)
State		(11,207	)		(880	)		(796	)
Foreign		1,007			(741	)		(81	)
Total deferred (benefit) expense		(47,366	)		4,573			(102,651	)
Income tax (benefit) expense	$	(1,305	)	$	38,778		$	(27,196	)

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Deferred income tax assets and liabilities consisted of the following:

	December 31,
	2019			2018
Deferred income tax assets:
Inventory reserves and capitalization	$	8,659		$	8,664
Allowance for doubtful accounts		1,194			709
Accrued liabilities		8,391			7,087
Equity based compensation		3,998			3,431
Federal tax loss carryforwards		525			743
State tax loss carryforwards		2,703			1,554
Foreign tax loss carryforwards		15,874			14,034
Foreign tax credit carryforwards		5,397			5,397
Deferred rent and lease incentives(1)		—			13,565
Section 163(j) Interest Limitation		9,134			1,625
Lease Liabilities		224,966			—
Other		2,231			1,808
Deferred income tax assets before valuation allowances		283,072			58,617
Less: valuation allowances		(24,623	)		(21,879	)
Deferred income tax assets, net	$	258,449		$	36,738
Deferred income tax liabilities:
Depreciation	$	21,211		$	23,720
Trade Name		135,751			145,767
Amortization of goodwill and other assets		16,111			38,712
Foreign earnings expected to be repatriated		1,177			1,132
Lease Right of Use Assets		208,772			—
Other		1,488			826
Deferred income tax liabilities	$	384,510		$	210,157

(1) In accordance with ASC 842, deferred rent and lease incentives are part of the Lease Right of Use Assets as of 2019.

The Company nets all of its deferred income tax assets and liabilities on a jurisdictional basis and classifies them as noncurrent on the balance sheet. In the Company’s December 31, 2019 consolidated balance sheet, $20 was included in “other assets, net” and $126,081 was included in deferred income tax liabilities. In the Company’s December 31, 2018 consolidated balance sheet, $1,008 was included in “other assets, net” and $174,427 was included in deferred income tax liabilities. 

Management assesses the available positive and negative evidence to estimate if sufficient taxable income will be generated to realize existing deferred tax assets. On the basis of this evaluation, a valuation allowance was recorded to reduce the total deferred tax assets to an amount that will, more-likely-than-not, be realized in the future. The change in the valuation allowance primarily relates to carryforwards of foreign and state net operating losses, and the ending balance also includes foreign tax credit carryforwards.

As of December 31, 2019, the Company had foreign tax-effected net operating loss carryforwards in Germany of $9,134, the United Kingdom of $4,269, and Australia of $599, all of which have an unlimited carryforward; as well as $1,872 from other foreign countries, which expire at different dates. In addition, the U.S. federal net operating loss carryforwards begin to expire in 2032, the U.S. state net operating loss carryforwards begin to expire in 2022 and the foreign tax credit carryforwards begin to expire in 2020.

The difference between the Company’s effective income tax rate and the U.S. statutory income tax rate is as follows:

	Fiscal Year Ended December 31,
	2019			2018			2017
Tax provision at U.S. statutory income tax rate		21.0	%		21.0	%		35.0	%
State income tax, net of federal income tax		1.0			2.4			1.9
Domestic production activities deduction		—			—			(1.4	)
Valuation allowances		(0.4	)		0.6			2.1
GILTI and Foreign-Derived Intangible Income		(0.6	)		1.1			—
Foreign earnings		(1.5	)		0.2			(1.7	)
U.S.—foreign rate differential		(0.6	)		0.4			(1.9	)
Transition Tax on unremitted foreign earnings, net		—			0.1			0.6
Effect of the Act on Federal deferred income tax assets and liabilities		—			(1.3	)		(48.4	)
Goodwill Impairment		(17.9	)		—			—
Other		(0.8	)		(0.5	)		(0.7	)
Effective income tax rate		0.2	%		24.0	%		(14.5	)%

Transition Tax on Unremitted Foreign Earnings: As a result of the Act, the U.S. transitioned from a worldwide system of international taxation to a territorial tax system, thereby eliminating the U.S. federal tax on foreign earnings. However, the Act required a one-time deemed repatriation tax on such earnings and, accordingly, during the fourth quarter of 2017, the Company provisionally recorded a Transition Tax of $11,500 related to such requirement. Prior to the fourth quarter of 2017, the Company recorded deferred income tax liabilities for certain foreign earnings which were expected to be remitted to the U.S. in future periods. Therefore, the expense that was recorded due to the deemed repatriation tax, $11,500, was mostly offset by the reversal of previously recorded deferred income tax liabilities on unremitted foreign earnings, $10,368. During the fourth quarter of 2018, the Company finalized its assessment of the Transition Tax and recorded additional income tax expense of $151. At December 31, 2019, $4,205 of the Transition Tax remains unpaid and is recorded in “Other long-term liabilities” in the Company’s consolidated balance sheet. The Company has elected to pay the Transition Tax over eight annual installments without interest. A deferred tax liability, in the amount of $1,177, is recorded on the Company’s consolidated balance sheet due to the impact of foreign withholding taxes and state income taxes on the future repatriation of certain foreign earnings. No provision has been made for deferred taxes related to any other remaining historical outside basis differences in the Company’s non-U.S. subsidiaries.

Effect of the Act on Federal Deferred Income Tax Assets and Liabilities: The deferred federal income tax benefit for the year ended December 31, 2017 includes a $90,965 provisional benefit due to the Act changing the U.S. corporate income tax rate from 35% to 21%. During the fourth quarter of 2018, the Company finalized its assessment of the impact of the Act on the Company’s domestic net deferred tax liabilities and deferred tax assets and recorded an income tax benefit of $2,049. See above for further discussion.

Goodwill Impairment: During the third and fourth quarters of 2019, the Company recognized non-cash goodwill impairment charges totaling $556,056. No tax benefit was recognized on $455,689 of the charge, resulting in a 17.9% unfavorable impact to the income tax rate.

Other differences between the effective income tax rate and the federal statutory income tax rate are composed primarily of reserves for unrecognized tax benefits, non-deductible meals and entertainment expenses, benefits related to the exercise of stock options, and the Work Opportunity Tax Credit.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:

	Fiscal Year Ended December 31,
	2019			2018			2017
Balance at beginning of year	$	1,320		$	855		$	913
Increases related to current period tax positions		652			40			100
Increases (decreases) related to prior period tax positions		3,030			495			(158	)
Decreases related to settlements		—			—			—
Decreases related to lapsing of statutes of limitations		(111	)		(70	)		—
Balance at end of year	$	4,891		$	1,320		$	855

The Company’s total unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were $4,891 and $1,320 at December 31, 2019 and 2018, respectively. As of December 31, 2019, it is reasonably possible that the total amount of unrecognized tax benefits could decrease by approximately $3,000 within the next 12 months.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company has accrued $618 and $129 for the potential payment of interest and penalties at December 31, 2019 and 2018, respectively. Such amounts are not included in the table above.

The IRS is currently conducting an examination of the year ended December 31, 2015. For U.S. state income tax purposes, tax years 2015-2019 generally remain open; whereas for non-U.S. income tax purposes, tax years 2014-2019 generally remain open. 

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Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 21—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. Additionally, at such time, the Company received the ability to “call” the interest of the other investors. During the twelve months ended December 31, 2019, the option was terminated, and the Company wrote off its asset related to the call option and reversed its liability related to the put option. Prior to such time, the Company had been adjusting the put liability to fair value on a recurring basis. The liability represented a Level 3 fair value measurement as it was based on unobservable inputs. In November 2019, the Company sold its ownership interest in Punchbowl. The Company recorded a net charge of $2,169 in other expenses, net for the option termination and the sale of its ownership interest.

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 December 31, 2019 and December 31, 2018 the original value was greater than the fair value, thus a table is not provided for December 31, 2019. In addition, the Company has no material derivative assets and liabilities as of December 31, 2019.

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
Punchbowl put liability		—		—		316		316

The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories and property, plant and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur (or at least annually for goodwill and indefinite-lived intangible assets), a non-financial instrument is required to be evaluated for impairment. If the Company determines that the non-financial instrument is impaired, the Company would be required to write down the non-financial instrument to its fair value. 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 December 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 senior notes as of December 31, 2019 are as follows:

	Carrying Amount		Fair Value
Term Loan Credit Agreement	$	724,881	$	668,703
6.125% Senior Notes—due 2023		347,015		348,250
6.625% Senior Notes—due 2026		494,910		366,250

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 December 31, 2019 based on the discounted future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturity.

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Income Taxes - Summary of Domestic and Foreign Income Before Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Domestic	$ (572,287)	$ 132,482	$ 153,280
Foreign	38,124	29,115	34,864
Total	$ (534,163)	$ 161,597	$ 188,144

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Store Impairment and Restructuring Charges (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Total	$ 50,322
Cost of Sales [Member]
Inventory reserves	21,284
Restructuring Charges [Member]
Operating lease asset impairment	14,943
Property, plant and equipment impairment	4,680
Labor and other costs incurred closing stores	8,754
Severance	$ 661

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Disposition of Assets - Additional Information (Detail) $ in Thousands, $ in Thousands		12 Months Ended
	Oct. 01, 2019 CAD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Income before income taxes		$ (534,163)	$ 161,597	$ 188,144
Operating lease liability		876,206
CANADA [Member]
Income before income taxes		2,631	$ 10,737	$ 8,947
Operating lease liability		$ 2,873
Canadian Based Retailer [Member]
Sale of stores	$ 131,711

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Dividends from Subsidiaries - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Party City Holdco Inc. [Member]
Dividends [Line Items]
Dividends received	$ 0	$ 0	$ 0

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Income Taxes - Summary of Activity of Company's Gross Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Balance at beginning of year	$ 1,320	$ 855	$ 913
Increases related to current period tax positions	652	40	100
Increases (decreases) related to prior period tax positions	3,030	495	(158)
Decreases related to settlements	0
Decreases related to lapsing of statutes of limitations	(111)	(70)
Balance at end of year	$ 4,891	$ 1,320	$ 855

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Kazzam, LLC - Additional Information (Detail) - Kazzam LLC [Member]	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Schedule of Equity Method Investments [Line Items]
Entity ownership percentage	26.00%	26.00%
Percentage of operating results recorded in consolidated financial statement	100.00%
Entity description of entity	a) Kazzam is a variable interest entity as it has insufficient equity at risk, and b) the Company is its primary beneficiary.

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Segment Information - Schedule of Company's Industry Segment Data (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues:
Total revenues									$ 2,348,789	$ 2,427,515	$ 2,371,569
Income (loss) from operations	$ (227,055)	$ (277,526)	$ 97,485	$ (10,297)	$ 158,840	$ 31,738	$ 65,451	$ 22,256	(417,393)	278,285	280,136
Interest expense, net									114,899	105,706	87,366
Other expense, net									1,871	10,982	4,626
Loss before income taxes									(534,163)	161,597	188,144
Depreciation and amortization									81,116	78,575	85,168
Capital expenditures									61,733	85,661	66,970
Total assets	3,595,319				3,642,347				3,595,319	3,642,347
Net Sales [Member]
Revenues:
Revenues									2,339,510	2,416,442	2,357,986
Royalties and Franchise Fees [Member]
Revenues:
Revenues									9,279	11,073	13,583
Wholesale [Member]
Revenues:
Total revenues									597,374	613,608	629,397
Income (loss) from operations									4,152	45,180	68,130
Retail Segment [Member]
Revenues:
Total revenues									1,751,415	1,813,907	1,742,172
Income (loss) from operations									(421,545)	233,105	212,006
Retail Segment [Member] | Net Sales [Member]
Revenues:
Revenues									1,742,136	1,802,834	1,728,589
Retail Segment [Member] | Royalties and Franchise Fees [Member]
Revenues:
Revenues									9,279	11,073	13,583
Operating Segments [Member]
Revenues:
Total revenues									2,991,441	3,139,397	3,002,261
Depreciation and amortization									81,116	78,575	85,168
Capital expenditures									61,733	85,661	66,970
Total assets	3,595,319				3,642,347				3,595,319	3,642,347
Operating Segments [Member] | Net Sales [Member]
Revenues:
Revenues									2,982,162	3,128,324	2,988,678
Operating Segments [Member] | Royalties and Franchise Fees [Member]
Revenues:
Revenues									9,279	11,073	13,583
Operating Segments [Member] | Wholesale [Member]
Revenues:
Total revenues									1,240,026	1,325,490	1,260,089
Depreciation and amortization									27,845	28,368	30,520
Capital expenditures									29,480	33,890	32,490
Total assets	1,912,522				1,346,856				1,912,522	1,346,856
Operating Segments [Member] | Wholesale [Member] | Net Sales [Member]
Revenues:
Revenues									1,240,026	1,325,490	1,260,089
Operating Segments [Member] | Retail [Member]
Revenues:
Depreciation and amortization									53,271	50,207	54,648
Capital expenditures									32,253	51,771	34,480
Total assets	$ 1,682,797				$ 2,295,491				1,682,797	2,295,491
Operating Segments [Member] | Retail Segment [Member]
Revenues:
Total revenues									1,751,415	1,813,907	1,742,172
Operating Segments [Member] | Retail Segment [Member] | Net Sales [Member]
Revenues:
Revenues									1,742,136	1,802,834	1,728,589
Operating Segments [Member] | Retail Segment [Member] | Royalties and Franchise Fees [Member]
Revenues:
Revenues									9,279	11,073	13,583
Eliminations [Member]
Revenues:
Total revenues									(642,652)	(711,882)	(630,692)
Eliminations [Member] | Wholesale [Member]
Revenues:
Total revenues									$ (642,652)	$ (711,882)	$ (630,692)

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Schedule I - Condensed Financial Information of Registrant - Condensed Balance Sheets (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
ASSETS
Other assets (principally investment in and amounts due from wholly-owned subsidiaries)	$ 7,273	$ 12,323
Total assets	3,595,319	3,642,347
LIABILITIES, REDEEMABLE SECURITIES AND STOCKHOLDERS' EQUITY
Redeemable securities	3,351	3,351
Stockholders' equity:
Common stock (94,461,576 and 93,622,934 shares outstanding and 121,662,540 and 120,788,159 shares issued at December 31, 2019 and December 31, 2018, respectively)	1,211	1,208
Additional paid-in capital	928,573	922,476
Retained (deficit) earnings	(37,219)	495,777
Accumulated other comprehensive loss	(35,734)	(49,201)
Total stockholders' equity before common stock held in treasury	856,831	1,370,260
Less: Common stock held in treasury, at cost (27,200,964 shares and 27,165,225 shares at December 31, 2019 and December 31, 2018, respectively)	(327,086)	(326,930)
Total stockholders' equity	529,745	1,043,330
Total liabilities, redeemable securities and stockholders' equity	3,595,319	3,642,347
Party City Holdco Inc. [Member]
ASSETS
Other assets (principally investment in and amounts due from wholly-owned subsidiaries)	533,096	1,046,681
Total assets	533,096	1,046,681
LIABILITIES, REDEEMABLE SECURITIES AND STOCKHOLDERS' EQUITY
Redeemable securities	3,351	3,351
Stockholders' equity:
Common stock (94,461,576 and 93,622,934 shares outstanding and 121,662,540 and 120,788,159 shares issued at December 31, 2019 and December 31, 2018, respectively)	1,211	1,208
Additional paid-in capital	928,573	922,476
Retained (deficit) earnings	(37,219)	495,777
Accumulated other comprehensive loss	(35,734)	(49,201)
Total stockholders' equity before common stock held in treasury	856,831	1,370,260
Less: Common stock held in treasury, at cost (27,200,964 shares and 27,165,225 shares at December 31, 2019 and December 31, 2018, respectively)	(327,086)	(326,930)
Total stockholders' equity	529,745	1,043,330
Total liabilities, redeemable securities and stockholders' equity	$ 533,096	$ 1,046,681

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Acquisitions - Additional Information (Detail) $ in Thousands		1 Months Ended		3 Months Ended	12 Months Ended
	Nov. 04, 2019 USD ($)	Sep. 30, 2018 USD ($) Franchised_Stores	Jul. 31, 2018 USD ($) Franchised_Stores	Mar. 31, 2018 USD ($) Franchised_Stores	Dec. 31, 2018 USD ($) Store
Business Acquisition [Line Items]
Total consideration amount	$ 9,000
Maryland [Member]
Business Acquisition [Line Items]
Number of franchise stores acquired | Franchised_Stores				11
Total consideration amount				$ 17,000
Fair value inventories acquired				3,500
Fair value property, plant and equipment acquired				200
Fair value intangible asset acquired				4,000
Fair value liability due to unfavorable leases conditions				$ 100
TEXAS [Member]
Business Acquisition [Line Items]
Total consideration amount					$ 4,400
Number of independent stores to be acquired | Store					11
Period which control over acquired stores					2 years
Number of assembled workforce | Store					8
Pennsylvania [Member]
Business Acquisition [Line Items]
Number of franchise stores acquired | Franchised_Stores			16
Total consideration amount			$ 20,500
Fair value inventories acquired			4,200
Fair value property, plant and equipment acquired			500
Fair value intangible asset acquired			3,400
Fair value asset due to favorable leases conditions			$ 500
Minnesota [Member]
Business Acquisition [Line Items]
Number of franchise stores acquired | Franchised_Stores		21
Total consideration amount		$ 26,300
Fair value inventories acquired		7,500
Fair value property, plant and equipment acquired		500
Fair value intangible asset acquired		7,300
Fair value asset due to favorable leases conditions		$ 200

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Capital Stock (Tables)

12 Months Ended

Dec. 31, 2019

Federal Home Loan Banks [Abstract]

Summary Changes in Common Shares Outstanding

Common Shares Outstanding at December 31, 2016	119,515,894
Treasury stock purchases	(23,379,567	)
Exercise of stock options	243,775
Common Shares Outstanding at December 31, 2017	96,380,102
Issuance of restricted shares	589,736
Treasury stock purchases	(3,785,658	)
Issuance of shares to directors	13,249
Exercise of stock options	425,505
Common Shares Outstanding at December 31, 2018	93,622,934
Issuance of restricted stock and restricted stock units	564,729
Treasury stock purchases	(15,679	)
Vesting of restricted stock and restricted stock units	74,292
Exercise of stock options	215,300
Common Shares Outstanding at December 31, 2019	94,461,576

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Inventories, Net (Tables)

12 Months Ended

Dec. 31, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories consisted of the following:

	December 31,
	2019		2018
Finished goods	$	606,036	$	706,327
Raw materials		34,259		33,423
Work in process		18,124		16,288
	$	658,419	$	756,038

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Equity Incentive Plans

12 Months Ended

Dec. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity Incentive Plans

Note 16—Equity Incentive Plans

Party City Holdco has adopted the Amended and Restated 2012 Omnibus Equity Incentive Plan (the “2012 Plan”) under which it can grant incentive awards in the form of stock appreciation rights, restricted stock, restricted stock units and common stock options to certain directors, officers, employees and consultants of Party City Holdco and its affiliates. A committee of Party City Holdco’s Board of Directors, or the Board itself in the absence of a committee, is authorized to make grants and various other decisions under the 2012 Plan. The maximum number of shares reserved under the 2012 Plan is 15,316,000 shares.

Time-based options

Party City Holdco grants time-based options to key eligible employees and outside directors. In conjunction with the options, the Company recorded compensation expense of $1,319, $1,744, and $5,309 during the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively.

The fair value of time-based options granted during the year ended December 31, 2019 was estimated on the grant date using a Black-Scholes option valuation model based on the assumptions in the following table:

Expected dividend rate	—%
Risk-free interest rate	1.88% to 2.44%
Volatility	29.06% to 30.78%
Expected option term	6 years—6.5 years

As Party City Holdco’s stock only recently started trading publicly, the Company determined volatility based on the average historical volatility of guideline companies. Additionally, as there is not sufficient historical exercise data to provide a reasonable basis for determining the expected terms of the options, the Company estimated such expected terms based on the assumption that options will be exercised at the mid-point of the vesting of the options and the completion of the contractual lives of such options.

The Company has based its estimated forfeiture rate on historical forfeitures for time-based options as the number of options given to each of the various levels of management is principally consistent with historical grants and forfeitures are expected to be materially consistent with past experience.

The Company’s time-based options principally vest 20% on each anniversary date. The Company records compensation expense for such options on a straight-line basis. As of December 31, 2019, there was $1,893 of unrecognized compensation cost, which will be recognized over a weighted-average period of approximately 30 months.

Performance-based options

During 2013, Party City Holdco granted performance-based stock options to key employees and independent directors. For performance-based options, vesting is contingent upon Thomas H. Lee Partners, L.P. (“THL”) achieving specified investment returns when it sells its ownership stake in Party City Holdco. Since the sale of all THL’s shares cannot be assessed as probable before it occurs, no compensation expense has been recorded for the performance-based options that have been granted. As of December 31, 2019, 2,808,400 performance-based options were outstanding. Based on a Monte Carlo simulation and the following assumptions, the options have an average grant date fair value of $3.09 per option:

Expected dividend rate	—%
Risk-free interest rate	1.86%
Volatility	52.00%
Expected option term	5 years

As Party City Holdco’s stock was not publicly traded when the performance-based options were granted, the Company determined volatility based on the average historical volatility of guideline companies.

The following table summarizes the changes in outstanding stock options for the years ended December 31, 2017, December 31, 2018, and December 31, 2019.

	Options			Average Exercise Price		Average Fair Value of Time-Based Options at Grant Date		Aggregate Intrinsic Value			Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2016		8,461,826
Granted		101,444		$	14.38		4.46
Exercised		(243,775	)		5.33
Forfeited		(294,734	)		9.47
Outstanding at December 31, 2017		8,024,761			8.89				40,634			6.0
Granted		187,080			14.63		4.98
Exercised		(425,505	)		5.33
Forfeited		(859,162	)		7.84
Outstanding at December 31, 2018		6,927,174			9.39				4,089			5.2
Granted		337,000			6.43		2.16
Exercised		(215,300	)		5.33
Forfeited		(730,157	)		13.00
Outstanding at December 31, 2019		6,318,717			8.95				(41,784	)		4.4
Exercisable at December 31, 2019		2,650,034			11.64				(24,642	)		4.5
Expected to vest at December 31, 2019 (excluding performance-based options)		860,284		$	12.50			$	(8,743	)		7.6

The intrinsic value of options exercised was $1,254, $3,351 and $1,972 for the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively. The fair value of options vested was $2,118, $2,819, and $4,354, during the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively.

Restricted stock and Restricted Stock Units

During 2018, the Company started granting restricted stock and restricted stock units to certain executives, senior leaders and the Company’s independent directors. To the extent that the awards vest, the participants receive shares of the Company’s stock.

Of the awards that were granted, 358,506 awards vest solely based on service conditions. To the extent that such awards vest, one share of stock is issued for each award.

Additionally, the Company granted awards which vest if certain cash flow and earnings per share targets are met. Depending on the achievement of such targets, a maximum of 2,834,390 shares could be issued due to such awards.

The service-based awards vested 1/3 on January 1, 2019 and will vest 1/3 each on January 1, 2020 and January 1, 2021. During the years ended December 31, 2019 and December 31, 2018, the Company recorded $2,033 and $1,174 of compensation expense related to the service-based awards, respectively.

The performance-based awards vest if certain cash flow and earnings per share targets are met for the three-year period from January 1, 2018 to December 31, 2020. The Company recognizes compensation expense for

such awards if it is probable that the performance conditions will be achieved. Based on the Company’s results for the year ended December 31, 2019 and December 31, 2018 and its projections for the year ending December 31, 2020, as of December 31, 2019 the Company concluded that it was not probable that such performance conditions will be met and, therefore, the Company did not record any compensation expense for the awards during the years ended December 31, 2019 and December 31, 2018.

The Company has based its estimated forfeiture rate for the restricted stock units and restricted stock on historical forfeitures for the Company’s time-based stock options as the number of awards given to each of the various levels of management is principally consistent with historical stock option grants and forfeitures are expected to be materially consistent with past experience.

As of December 31, 2019 and December 31, 2018, there were $2,158 and $1,817 of unrecognized compensation cost for the service-based awards, respectively.

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Quarterly Results

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results

Note 20—Quarterly Results (Unaudited)

Despite a concentration of holidays in the fourth quarter of the year, as a result of the Company’s expansive product lines and customer base and increased promotional activities, the impact of seasonality on the quarterly results of the Company’s wholesale operations has been limited. However, due to Halloween and Christmas, the inventory balances of the Company’s wholesale operations are slightly higher during the third quarter than during the remainder of the year. Additionally, the promotional activities of the Company’s wholesale business, including special dating terms, particularly with respect to Halloween products sold to retailers and other distributors, result in slightly higher accounts receivable balances during the third quarter. The Company’s retail operations are subject to significant seasonal variations. Historically, the Company’s retail operations have realized a significant portion of their revenues, cash flow and net income in the fourth quarter of the year, principally due to Halloween sales in October and, to a lesser extent, year-end holiday sales.

The following table sets forth our historical revenues, gross profit, (loss) income from operations, net (loss) income, net (loss) income attributable to common shareholders of Party City Holdco Inc., and net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic and Diluted for each of the following quarters: 

	For the Three Months Ended,
2019:	March 31,			June 30,		September 30,			December 31,
Revenues:
Net sales	$	511,102		$	561,702	$	538,345		$	728,361
Royalties and franchise fees		2,014			2,189		1,886			3,190
Gross profit		172,060			208,646		164,932			293,239
(Loss) income from operations		(10,297	)		97,485		(277,526	)		(227,055	)
Net (loss) income		(30,289	)		48,005		(281,745	)		(268,829	)
Net (loss) income attributable to common shareholders of Party City Holdco Inc.		(30,218	)		48,074		(281,533	)		(268,818	)
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic	$	(0.32	)	$	0.52	$	(3.02	)	$	(2.88	)
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted	$	(0.32	)	$	0.51	$	(3.02	)	$	(2.88	)

	For the Three Months Ended,
2018:	March 31,			June 30,		September 30,			December 31,
Revenues:
Net sales	$	505,108		$	558,101	$	550,840		$	802,393
Royalties and franchise fees		2,716			2,910		2,206			3,241
Gross profit		188,142			228,624		201,199			363,119
Income from operations		22,256			65,451		31,738			158,840
Net (loss) income		(1,163	)		28,048		(2,440	)		98,374
Net (loss) income attributable to common shareholders of Party City Holdco Inc.		(1,133	)		28,487		(2,420	)		98,325
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic	$	(0.01	)	$	0.30	$	(0.03	)	$	1.03
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted	$	(0.01	)	$	0.29	$	(0.03	)	$	1.02

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Revenue from Contracts with Customers - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jan. 01, 2018
Disaggregation of Revenue [Line Items]
Revenue, information used to allocate transaction price	the determination of the transaction price is fixed based on the contract and/or purchase order.
Increase (decrease) in retained earnings	$ (37,219)	$ 495,777
Increase (decrease) in accounts receivables	149,109	146,983
Increase (decrease) in inventory	658,419	756,038
Increase (decrease) in accrued expense	150,921	161,228
Increase (decrease) in deferred tax asset	258,449	36,738
Increase (decrease) in income tax payable	35,905	25,993
Increase (decrease) in pre-tax income	$ (534,163)	$ 161,597	$ 188,144
Short-term Contract with Customer [Member]
Disaggregation of Revenue [Line Items]
Contract with an original expected duration	one year or less
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member]
Disaggregation of Revenue [Line Items]
Increase (decrease) in retained earnings				$ (78)
Increase (decrease) in accounts receivables				(141)
Increase (decrease) in inventory				11
Increase (decrease) in accrued expense				(26)
Increase (decrease) in deferred tax asset				28
Increase (decrease) in income tax payable				$ 2
Increase (decrease) in pre-tax income	$ (22)
Retail Segment [Member] | Minimum [Member]
Disaggregation of Revenue [Line Items]
Royalty fee percentage	4.00%
Retail Segment [Member] | Maximum [Member]
Disaggregation of Revenue [Line Items]
Royalty fee percentage	6.00%
Wholesale Segment [Member]
Disaggregation of Revenue [Line Items]
Revenue, information used to allocate transaction price	the determination of the transaction price is fixed based on the contract and/or purchase order.
Wholesale Segment [Member] | Minimum [Member]
Disaggregation of Revenue [Line Items]
Receivables collection period	30 days
Wholesale Segment [Member] | Maximum [Member]
Disaggregation of Revenue [Line Items]
Receivables collection period	120 days

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Segment Information - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) Segment	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Number of business segments | Segment	2
Export sales | $	$ 22,728	$ 23,567	$ 22,812

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Restricted Cash - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	$ 35,176	$ 59,219	$ 54,408	$ 64,765
Net cash outflow	(14,741)	(16,666)	9,117
Cash and cash equivalents	34,917	58,909
Accounting Standards Update 2016-18 [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Net cash outflow			9,079
Previously Reported [Member] | Accounting Standards Update 2016-18 [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Net cash outflow			9,117
Prepaid Expenses and Other Current Assets [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	$ 259	$ 310
Cash [Member] | Accounting Standards Update 2016-18 [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash			$ 117	$ 155

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Property, Plant and Equipment, Net - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property Plant and Equipment Useful Life and Values [Abstract]
Depreciation expense related to property, plant and equipment, including assets under finance leases	$ 67,016	$ 66,304	$ 68,209

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Income Taxes - Additional Information (Detail)	3 Months Ended		12 Months Ended
	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2019 USD ($) Installments	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Income Taxes [Line Items]
U.S. corporate income tax rate			21.00%	21.00%	35.00%
Provisional income tax benefit related to remeasurement of domestic net deferred tax liabilities and deferred tax assets	$ 2,049,000				$ 90,965,000
Net provisional income tax expense related to deemed repatriation of unremitted earnings of foreign subsidiaries					$ 1,132,000
Income tax benefit related to re-measurement of domestic net deferred tax liabilities and deferred tax assets	2,049,000
Income tax expense related to deemed repatriation of unremitted earnings of foreign subsidiaries	151,000
Other assets, net	1,008,000		$ 20,000	$ 1,008,000
Deferred income tax liabilities	174,427,000		$ 126,081,000	174,427,000
State tax credit carryforwards expiration year			2022
Foreign tax credit carryforwards expiration year			2020
Deferred tax liability	210,157,000		$ 384,510,000	210,157,000
Number of annual installments to pay transition tax | Installments			8,000
Unrecognized Tax Benefit That Would Impact Effective Tax Rate	1,320,000		$ 4,891,000	1,320,000
Accrued interest and penalties	129,000		618,000	129,000
Goodwill Impairment charge			$ 556,056,000
Goodwill impairment loss for which tax benefit has not been recognised				$ 455,689,000
Goodwill Impairment impact on income tax rate			(17.90%)	17.90%
Unrecognized Tax Benefits, Period Increase (Decrease)			$ 3,000,000
Non-U.S. Subsidiaries [Member]
Income Taxes [Line Items]
Deferred tax liability			0
Deferred Rent and Other Longterm Liabilities [Member]
Income Taxes [Line Items]
Transition tax unpaid recorded in deferred rent and other long-term liabilities				$ 4,205,000
Germany [Member]
Income Taxes [Line Items]
Net operating loss carryforwards			9,134,000
United Kingdom [Member]
Income Taxes [Line Items]
Net operating loss carryforwards			4,269,000
Australia [Member]
Income Taxes [Line Items]
Net operating loss carryforwards			599,000
Other Foreign Country [Member]
Income Taxes [Line Items]
Net operating loss carryforwards			$ 1,872,000
Domestic [Member]
Income Taxes [Line Items]
Operating loss carryforwards acquisition expiration date			2032
Foreign Tax Authority [Member]
Income Taxes [Line Items]
Transition tax recorded	$ 151,000	$ 11,500,000
Repatriation tax			$ 11,500,000
Deferred income tax liabilities on unremitted foreign earnings			10,368,000
Deferred tax liability			$ 1,177,000

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Summary of Significant Accounting Policies - Schedule of Reconciliation Between Basic and Diluted Income Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share Basic And Diluted [Line Items]
Net (loss) income attributable to common shareholders of Party City Holdco Inc.	$ (268,818)	$ (281,533)	$ 48,074	$ (30,218)	$ 98,325	$ (2,420)	$ 28,487	$ (1,133)	$ (532,495)	$ 123,259	$ 215,340
Weighted average shares - Basic									93,295,692	96,133,144	118,589,421
Effect of dilutive restricted stock units:									0	1,128,245	1,304,600
Weighted average shares - Diluted									93,295,692	97,271,050	119,894,021
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc. - Basic	$ (2.88)	$ (3.02)	$ 0.52	$ (0.32)	$ 1.03	$ (0.03)	$ 0.30	$ (0.01)	$ (5.71)	$ 1.28	$ 1.81
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc. - Diluted	$ (2.88)	$ (3.02)	$ 0.51	$ (0.32)	$ 1.02	$ (0.03)	$ 0.29	$ (0.01)	$ (5.71)	$ 1.27	$ 1.79
Restricted Stock Units (RSUs) [Member]
Earnings Per Share Basic And Diluted [Line Items]
Effect of dilutive restricted stock units:									0	9,661	0

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Sale/Leaseback Transaction - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2019
Aggregate sale price			$ 128,000
Gain on the sale net			$ 58,381
Lease agreement term			Under the terms of the lease agreements, the Company will pay total rent of $8,320 during the first year and the annual rent will increase by 2% thereafter.
Total rent payment			$ 8,320
Long-Term Debt Obligations [Member]
Repayment of Term debt Loan		$ 62,770
Los Lunas New Mexico facility financing [Member]
Financing from long-term obligations			$ 11,990
Term Loan Credit Agreement [Member]
Proceeds from the sale (net of costs)	$ 125,864
Repayment of Term debt Loan	$ 62,770

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Schedule I - Condensed Financial Information of Registrant - Condensed Statements of Cash Flows (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows provided by (used in) operating activities:
Net income	$ (268,829)	$ (281,745)	$ 48,005	$ (30,289)	$ 98,374	$ (2,440)	$ 28,048	$ (1,163)	$ (532,858)	$ 122,819	$ 215,340
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Change in due to/from affiliates									(65,617)	12,138	19,408
Net cash (used in) provided by operating activities									43,693	101,856	267,883
Cash flows (used in) provided by financing activities:
Treasury stock purchases									(156)	(40,197)	(286,733)
Exercise of stock options									1,148	2,269	1,298
Net cash (used in) provided by financing activities									(237,710)	56,170	(139,962)
Party City Holdco Inc. [Member]
Cash flows provided by (used in) operating activities:
Net income									(532,495)	122,850	215,340
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in net income of subsidiaries									532,495	(122,850)	(215,340)
Change in due to/from affiliates									(989)	37,928	285,435
Net cash (used in) provided by operating activities									(989)	37,928	285,435
Cash flows (used in) provided by financing activities:
Treasury stock purchases									(156)	(40,197)	(286,733)
Exercise of stock options									1,145	2,269	1,298
Net cash (used in) provided by financing activities									989	$ (37,928)	$ (285,435)
Net change in cash and cash equivalents									$ 0

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Income Taxes - Summary of Difference Between the Effective Income Tax Rate and the U.S. Statutory Income Tax Rate (Detail)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Tax provision at U.S. statutory income tax rate	21.00%	21.00%	35.00%
State income tax, net of federal income tax	1.00%	2.40%	1.90%
Domestic production activities deduction			(1.40%)
Valuation allowances	(0.40%)	0.60%	2.10%
GILTI and Foreign-Derived Intangible Income	(0.60%)	1.10%
Foreign earnings	(1.50%)	0.20%	(1.70%)
U.S.-foreign rate differential	(0.60%)	0.40%	(1.90%)
Transition Tax on unremitted foreign earnings, net		0.10%	0.60%
Effect of the Act on Federal deferred income tax assets and liabilities		(1.30%)	(48.40%)
Goodwill Impairment	(17.90%)	17.90%
Other	(0.80%)	(0.50%)	(0.70%)
Effective income tax rate	0.20%	24.00%	(14.50%)

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Other Expense , net (Tables)

12 Months Ended

Dec. 31, 2019

Text Block [Abstract]

Summary of Other Expense, Net

	Fiscal Year Ended December 31,
	2019			2018			2017
Other expense, net consists of the following:
Undistributed (income) in equity method investments	$	(472	)	$	(369	)	$	(194	)
Foreign currency losses		421			24			466
Debt refinancings (see Note 12)		36			6,237			—
Corporate development expenses		2,472			4,387			2,660
(Gain) on sale of Canada retail assets		(2,873	)		—			—
Sale of ownership interest in Punchbowl (see Note 21)		2,169			—			—
Other, net		118			703			1,694
Other expense, net	$	1,871		$	10,982		$	4,626

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Property, Plant and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, Net

Property, plant and equipment, net consisted of the following:

	December 31,
	2019			2018			Useful lives
Machinery and equipment	$	255,908		$	216,097			3-15 years
Buildings		9,838			68,810			40 years
Data processing equipment		92,256			82,735			3-5 years
Leasehold improvements		117,894			137,508			1-10 years
Furniture and fixtures		168,296			191,183			5-10 years
Land		7,047			11,069
		651,240			707,402
Less: accumulated depreciation		(407,668	)		(386,358	)
	$	243,572		$	321,044

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Other Expense, Net - Summary of Other Expense (Income), Net (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Undistributed (income) in equity method investments	$ (472)	$ (369)	$ (194)
Foreign currency losses	421	24	466
Debt refinancings	36	6,237
Corporate development expenses	2,472	4,387	2,660
(Gain) on sale of Canada retail assets	(2,873)
Sale of ownership interest in punchbowl	2,169
Other, net	118	703	1,694
Other expense, net	$ 1,871	$ 10,982	$ 4,626

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Revenue from Contracts with Customers - Summary of Revenue from Contracts with Customers (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Total revenues	$ 2,348,789	$ 2,427,515	$ 2,371,569
Retail Segment [Member]
Disaggregation of Revenue [Line Items]
Total revenues	1,751,415	1,813,907	1,742,172
Wholesale Segment [Member]
Disaggregation of Revenue [Line Items]
Total revenues	597,374	613,608	629,397
Party City Stores [Member] | Retail Segment [Member]
Disaggregation of Revenue [Line Items]
Net sales	1,529,043	1,583,134	1,521,661
Global E-commerce [Member] | Retail Segment [Member]
Disaggregation of Revenue [Line Items]
Net sales	162,490	154,481	152,465
Temporary Stores [Member] | Retail Segment [Member]
Disaggregation of Revenue [Line Items]
Net sales	50,603	65,219	54,463
Domestic [Member] | Wholesale Segment [Member]
Disaggregation of Revenue [Line Items]
Net sales	310,042	328,056	351,109
International [Member] | Wholesale Segment [Member]
Disaggregation of Revenue [Line Items]
Net sales	287,332	285,552	278,288
Net Sales [Member]
Disaggregation of Revenue [Line Items]
Net sales	2,339,510	2,416,442	2,357,986
Net Sales [Member] | Retail Segment [Member]
Disaggregation of Revenue [Line Items]
Net sales	1,742,136	1,802,834	1,728,589
Royalties and Franchise Fees [Member]
Disaggregation of Revenue [Line Items]
Net sales	9,279	11,073	13,583
Royalties and Franchise Fees [Member] | Retail Segment [Member]
Disaggregation of Revenue [Line Items]
Net sales	$ 9,279	$ 11,073	$ 13,583

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Long-Term Obligations - Summary of Long-Term Obligations (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
6.125% Senior Notes due 2023 [Member]
Debt Instrument [Line Items]
Notes issued rate	6.125%	6.125%
Debt instrument maturity date	Dec. 31, 2023	Dec. 31, 2023
6.625% Senior Notes due 2026 [Member]
Debt Instrument [Line Items]
Notes issued rate	6.625%	6.625%
Debt instrument maturity date	Dec. 31, 2026	Dec. 31, 2026

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Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Amortization expense for finite-lived intangible assets		$ 14,100	$ 12,271	$ 16,959
Amortization expense for next twelve months		10,720
Amortization expense for two year		8,803
Amortization expense for three year		5,975
Amortization expense for four year		4,658
Amortization expense for five year		$ 4,036
Halloween City Trade Name [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment charge on intangible asset	$ 6,575

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Long-Term Obligations - Senior Notes - due 2026 - Additional Information (Detail) - USD ($) $ in Thousands		12 Months Ended
	Aug. 09, 2018	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Finance lease obligations		$ 14,990		$ 3,815
Senior Notes and Term Loan Credit Agreement [Member]
Debt Instrument [Line Items]
Restricted payment capacity		$ 141,694
Senior Notes - Due 2026 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument interest rate	6.625%	6.625%
Debt instrument maturity date	Aug. 31, 2026	Aug. 01, 2026
Repurchase of senior notes of principal amount		101.00%
Third-party costs incurred and capitalized		$ 5,090
Senior Notes - Due 2026 [Member] | Senior Notes [Member] | New Mexico facility [Member]
Debt Instrument [Line Items]
Finance lease obligations			$ 11,990
Senior Notes - Due 2026 [Member] | Senior Notes [Member] | Debt Instrument Redemption By Equity Offering Before August 1, 2021 [Member]
Debt Instrument [Line Items]
Equity offering for senior notes description		cash proceeds from certain equity offerings
Percentage price of principal amount redeemed		106.625%
Senior Notes - Due 2026 [Member] | Senior Notes [Member] | Debt Instrument Redemption By Equity Offering Before August 1, 2021 [Member] | Maximum [Member]
Debt Instrument [Line Items]
Percentage of principal amount redeemed		40.00%
Senior Notes - Due 2026 [Member] | Senior Notes [Member] | Debt Instrument Redemption Period With Premium Before August 1, 2021 [Member]
Debt Instrument [Line Items]
Percentage of principal amount redeemed		100.00%

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Long-Term Obligations - Senior Notes - Due 2023 - Additional Information (Detail) - Senior Notes - Due 2023 [Member] - Senior Notes [Member] - USD ($) $ in Thousands		12 Months Ended
	Aug. 09, 2018	Dec. 31, 2019
Debt Instrument [Line Items]
Debt instrument interest rate		6.125%
Debt instrument maturity date	Aug. 31, 2023	Aug. 15, 2023
Repurchase of senior notes of principal amount		101.00%
Third-party costs incurred and capitalized		$ 2,985

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Derivative Financial Instruments - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2019
Derivative [Line Items]
Foreign currency exchange contracts reclassified date	2020-03
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

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Equity Incentive Plans - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Intrinsic value of options exercised	$ 1,254,000	$ 3,351,000	$ 1,972,000
Fair value of options vested	$ 2,118,000	$ 2,819,000	$ 4,354,000
Time Based Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares reserved	1,319,000	1,744,000	5,309,000
Options vested granted percentage	20.00%
Unrecognized compensation cost	$ 1,893,000
Unrecognized compensation cost weighted-average recognition period	30 months
Options vesting description	The Company’s time-based options principally vest 20% on each anniversary date.
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding	2,808,400
Options, Average grant date fair value	$ 3.09
Compensation expense	$ 0
Share based stock awards vesting period		3 years
Performance Shares [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share issuable based on performance		2,834,390
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award expect to vest based on service condition		358,506
Number of share of stock issued for each award		1
Service Based Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	2,033,000	$ 1,174,000
Unrecognized compensation cost	$ 2,158,000	$ 1,817,000
Service Based Awards [Member] | Vesting Period 1 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options vested granted percentage		0.333%
Service Based Awards [Member] | Vesting Period 2 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options vested granted percentage		0.333%
Service Based Awards [Member] | Vesting Period 3 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options vested granted percentage		0.333%
2012 Omnibus Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares reserved	15,316,000

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Quarterly Results (Unaudited) - Summary of Historical Revenues Gross Profit Income (Loss) From Operations (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues:
Net sales									$ 2,339,510
Gross profit	$ 293,239	$ 164,932	$ 208,646	$ 172,060	$ 363,119	$ 201,199	$ 228,624	$ 188,142
(Loss) Income from operations	(227,055)	(277,526)	97,485	(10,297)	158,840	31,738	65,451	22,256	(417,393)	$ 278,285	$ 280,136
Net (loss) income	(268,829)	(281,745)	48,005	(30,289)	98,374	(2,440)	28,048	(1,163)	(532,858)	122,819	215,340
Net (loss) income attributable to common shareholders of Party City Holdco Inc.	$ (268,818)	$ (281,533)	$ 48,074	$ (30,218)	$ 98,325	$ (2,420)	$ 28,487	$ (1,133)	$ (532,495)	$ 123,259	$ 215,340
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.-Basic	$ (2.88)	$ (3.02)	$ 0.52	$ (0.32)	$ 1.03	$ (0.03)	$ 0.30	$ (0.01)	$ (5.71)	$ 1.28	$ 1.81
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.-Diluted	$ (2.88)	$ (3.02)	$ 0.51	$ (0.32)	$ 1.02	$ (0.03)	$ 0.29	$ (0.01)	$ (5.71)	$ 1.27	$ 1.79
Net Sales [Member]
Revenues:
Net sales	$ 728,361	$ 538,345	$ 561,702	$ 511,102	$ 802,393	$ 550,840	$ 558,101	$ 505,108		$ 2,416,442	$ 2,357,986
Royalties and Franchise Fees [Member]
Revenues:
Net sales	$ 3,190	$ 1,886	$ 2,189	$ 2,014	$ 3,241	$ 2,206	$ 2,910	$ 2,716	$ 9,279	$ 11,073	$ 13,583

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Quarterly Results (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Summary of Historical Revenues, Gross Profit, Income (Loss) from Operations

The following table sets forth our historical revenues, gross profit, (loss) income from operations, net (loss) income, net (loss) income attributable to common shareholders of Party City Holdco Inc., and net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic and Diluted for each of the following quarters: 

	For the Three Months Ended,
2019:	March 31,			June 30,		September 30,			December 31,
Revenues:
Net sales	$	511,102		$	561,702	$	538,345		$	728,361
Royalties and franchise fees		2,014			2,189		1,886			3,190
Gross profit		172,060			208,646		164,932			293,239
(Loss) income from operations		(10,297	)		97,485		(277,526	)		(227,055	)
Net (loss) income		(30,289	)		48,005		(281,745	)		(268,829	)
Net (loss) income attributable to common shareholders of Party City Holdco Inc.		(30,218	)		48,074		(281,533	)		(268,818	)
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic	$	(0.32	)	$	0.52	$	(3.02	)	$	(2.88	)
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted	$	(0.32	)	$	0.51	$	(3.02	)	$	(2.88	)

	For the Three Months Ended,
2018:	March 31,			June 30,		September 30,			December 31,
Revenues:
Net sales	$	505,108		$	558,101	$	550,840		$	802,393
Royalties and franchise fees		2,716			2,910		2,206			3,241
Gross profit		188,142			228,624		201,199			363,119
Income from operations		22,256			65,451		31,738			158,840
Net (loss) income		(1,163	)		28,048		(2,440	)		98,374
Net (loss) income attributable to common shareholders of Party City Holdco Inc.		(1,133	)		28,487		(2,420	)		98,325
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic	$	(0.01	)	$	0.30	$	(0.03	)	$	1.03
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted	$	(0.01	)	$	0.29	$	(0.03	)	$	1.02

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Revenue from Contracts with Customers (Tables)

12 Months Ended

Dec. 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 years ended December 31, 2019, December 31, 2018, and December 31, 2017:

	Fiscal Year Ended December 31,
	2019		2018		2017
Retail Net Sales:
Party City Stores	$	1,529,043	$	1,583,134	$	1,521,661
Global E-commerce		162,490		154,481		152,465
Temporary Stores		50,603		65,219		54,463
Total Retail Net Sales	$	1,742,136	$	1,802,834	$	1,728,589
Royalties and Franchise Fees		9,279		11,073		13,583
Total Retail Revenue	$	1,751,415	$	1,813,907	$	1,742,172
Wholesale Net Sales:
Domestic	$	310,042	$	328,056	$	351,109
International		287,332		285,552		278,288
Total Wholesale Net Sales	$	597,374	$	613,608	$	629,397
Total Consolidated Revenue	$	2,348,789	$	2,427,515	$	2,371,569

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 34,917	$ 58,909
Accounts receivable, net	149,109	146,983
Inventories, net	658,419	756,038
Prepaid expenses and other current assets	51,685	61,905
Total current assets	894,130	1,023,835
Property, plant and equipment, net	243,572	321,044
Operating lease asset	802,634
Goodwill	1,072,330	1,656,950
Trade names	530,320	568,031
Other intangible assets, net	45,060	60,164
Other assets, net	7,273	12,323
Total assets	3,595,319	3,642,347
Current liabilities:
Loans and notes payable	128,806	302,751
Accounts payable	152,300	208,149
Accrued expenses	150,921	161,228
Current portion of operating lease liability	155,471
Income taxes payable	35,905	25,993
Current portion of long-term obligations	71,524	13,316
Total current liabilities	694,927	711,437
Long-term obligations, excluding current portion	1,503,987	1,621,963
Long-term portion of operating lease liability	720,735
Deferred income tax liabilities	126,081	174,427
Other long-term liabilities	16,517	87,548
Total liabilities	3,062,247	2,595,375
Redeemable securities	3,351	3,351
Commitments and contingencies
Stockholders' equity:
Common stock (94,461,576 and 93,622,934 shares outstanding and 121,662,540 and 120,788,159 shares issued at December 31, 2019 and December 31, 2018, respectively)	1,211	1,208
Additional paid-in capital	928,573	922,476
Retained (deficit) earnings	(37,219)	495,777
Accumulated other comprehensive loss	(35,734)	(49,201)
Total Party City Holdco Inc. stockholders' equity before common stock held in treasury	856,831	1,370,260
Less: Common stock held in treasury, at cost (27,200,964 shares and 27,165,225 shares at December 31, 2019 and December 31, 2018, respectively	(327,086)	(326,930)
Total Party City Holdco Inc. stockholders' equity	529,745	1,043,330
Noncontrolling interests	(24)	291
Total stockholders' equity	529,721	1,043,621
Total liabilities, redeemable securities and stockholders' equity	$ 3,595,319	$ 3,642,347

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows provided by operating activities:
Net (loss) income	$ (532,858)	$ 122,819	$ 215,340
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization expense	81,116	78,575	85,168
Amortization of deferred financing costs and original issuance discounts	4,722	10,989	4,937
Provision for doubtful accounts	2,323	1,213	560
Deferred income tax (benefit) expense	(47,366)	4,573	(102,651)
Deferred rent	0	5,351	7,287
Change in operating lease liability/asset	(9,942)	0	0
(Gain) loss on disposal of assets	(59,786)	3	475
Undistributed income in equity method investments	(472)	(369)	(194)
Non-cash adjustment for store impairment and restructuring	20,236	0	0
Goodwill and intangibles impairment	562,631	0	0
Non-employee equity based compensation	515	81	3,033
Stock option expense	1,319	1,744	5,309
Restricted stock units expense—time-based	2,033	1,174	0
Directors—non-cash compensation	313	196	0
Changes in operating assets and liabilities, net of effects of acquired businesses:
(Increase) decrease in accounts receivable	(2,600)	(10,431)	1,153
Decrease (increase) in inventories	72,385	(142,866)	37,175
Decrease (increase) in prepaid expenses and other current assets	14,741	16,666	(9,117)
(Decrease) increase in accounts payable, accrued expenses and income taxes payable	(65,617)	12,138	19,408
Net cash provided by operating activities	43,693	101,856	267,883
Cash flows provided by (used in) investing activities:
Cash paid in connection with acquisitions, net of cash acquired	(20,878)	(65,301)	(74,710)
Capital expenditures	(61,733)	(85,661)	(66,970)
Proceeds from disposal of property and equipment	246,286	55	35
Net cash provided (used in) investing activities	163,675	(150,907)	(141,645)
Cash flows (used in) provided by financing activities:
Repayment of loans, notes payable and long-term obligations	(441,632)	(547,695)	(234,619)
Proceeds from loans, notes payable and long-term obligations	203,344	652,087	380,092
Exercise of stock options	1,148	2,269	1,298
Treasury stock purchases	(156)	(40,197)	(286,733)
Debt issuance and modification costs	(414)	(10,294)	0
Net cash (used in) provided by financing activities	(237,710)	56,170	(139,962)
Effect of exchange rate changes on cash and cash equivalents	6,299	(2,308)	3,367
Net (decrease) increase in cash and cash equivalents and restricted cash	(24,043)	4,811	(10,357)
Cash and cash equivalents and restricted cash at beginning of period	59,219	54,408	64,765
Cash and cash equivalents and restricted cash at end of period	35,176	59,219	54,408
Cash paid during the period:
Interest	108,561	94,472	76,171
Income taxes, net of refunds	$ 36,093	$ 59,156	$ 66,445

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Schedule II- Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2019

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

Schedule II- Valuation and Qualifying Accounts

SCHEDULE II

PARTY CITY HOLDCO INC.

VALUATION AND QUALIFYING ACCOUNTS

The Years Ended December 31, 2017, December 31, 2018, and December 31, 2019

(Dollars in thousands)

	Beginning Balance		Write-Offs		Additions		Ending Balance
Allowance for Doubtful Accounts:
For the year ended December 31, 2017	$	2,683	$	272	$	560	$	2,971
For the year ended December 31, 2018		2,971		1,251		1,213		2,933
For the year ended December 31, 2019		2,933		470		2,323		4,786
Sales Returns and Allowances:
For the year ended December 31, 2017	$	466	$	83,865	$	83,879	$	480
For the year ended December 31, 2018		480		86,727		86,988		741
For the year ended December 31, 2019		741		83,474		83,409		676

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Restricted Cash

12 Months Ended

Dec. 31, 2019

Text Block [Abstract]

Restricted Cash

Note 27—Restricted Cash

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows: Restricted Cash”. The pronouncement requires companies to show changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in their statement of cash flows. The Company adopted the pronouncement, which requires retrospective application, during the first quarter of 2018.

As a result, the Company’s statement of cash flows for the year ended December 31, 2017 has been adjusted to include $155 of restricted cash at December 31, 2016 and $117 of restricted cash at December 31, 2017. The restricted cash, which principally relates to funds that are required to be spent on advertising, is included in “prepaid expenses and other current assets” in the Company’s consolidated balance sheet. Therefore, in the Company’s adjusted consolidated statement of cash flows for the year ended December 31, 2017, the change in “prepaid expenses and other current assets” has been adjusted from a cash outflow of $9,079 to a cash outflow of $9,117.

The Company’s December 31, 2019 consolidated balance sheet included $34,917 of cash and cash equivalents and $259 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. Restricted cash is recorded in “prepaid expenses and other current assets”.  

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Long-Term Obligations

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Long-Term Obligations

Note 12—Long-Term Obligations

Long-term obligations consisted of the following:

	December 31,
	2019			2018
Senior secured term loan facility (“Term Loan Credit Agreement”)	$	718,596		$	791,135
6.125% Senior Notes—due 2023		347,015			346,191
6.625% Senior Notes—due 2026		494,910			494,138
Finance lease obligations		14,990			3,815
Total long-term obligations		1,575,511			1,635,279
Less: current portion		(71,524	)		(13,316	)
Long-term obligations, excluding current portion	$	1,503,987		$	1,621,963

Debt Amendments and Refinancing 

The Term Loan Credit Agreement was amended in February 2018, lowering ABR and LIBOR margins to their current levels. As the Term Loan Credit Agreement is a loan syndication, the Company assessed, on a creditor-by-creditor basis, whether the refinancing should be accounted for as an extinguishment or a modification for each creditor and, during 2018, the Company wrote-off $186 of existing deferred financing costs, a $102 capitalized original issue discount and $58 of capitalized call premium. The write-offs were recorded in other expense in the Company’s consolidated statement of operations and comprehensive (loss) income. The remaining deferred financing costs, original issue discount and capitalized call premium will continue to be amortized over the life of the Term Loan Credit Agreement, using the effective interest method. Additionally, in conjunction with the amendment, the Company incurred $856 of banker and legal fees, $800 of which were recorded in other expense during 2018. The rest of the costs are being amortized over the term of the debt.

During August 2018, the Company executed a refinancing of its debt portfolio and issued $500,000 of new 6.625% senior notes, maturing in 2026. The Company used the proceeds from the notes to: (i) reduce the outstanding balance under its existing ABL Facility, which is included in loans and notes payable on the Company’s condensed consolidated balance sheet, by $90,000 and (ii) voluntarily prepay $400,000 of the

outstanding principal under its existing Term Loan Credit Agreement. Additionally, as part of the refinancing, the Company extended the maturity of the ABL Facility to August 2023 (subject to a springing maturity at an earlier date if the maturity date of certain of the Company’s other debt has not been extended or refinanced).

As the partial prepayment of the Term Loan Credit Agreement was in accordance with the terms of such agreement, at the time of such prepayment the Company wrote-off a pro-rata portion of the existing capitalized deferred financing costs and original issuance discounts, $1,824, for investors who did not participate in the new notes. Such amount was recorded in other expense in the Company’s consolidated statement of operations and comprehensive (loss) income.

To the extent that investors in the Term Loan Credit Agreement participated in the new notes, the Company assessed whether the refinancing should be accounted for as an extinguishment on a creditor-by-creditor basis and wrote-off $968 of existing deferred financing costs and original issuance discounts. Such amount was recorded in other expense in the Company’s consolidated statement of operations and comprehensive (loss) income.

Additionally, in conjunction with the issuance of the notes, the Company incurred third-party fees (principally banker fees). To the extent that such fees related to investors for whom their original debt was not extinguished, the Company expensed the portion of such fees, $2,270 in aggregate, that related to such investors. Such amount was recorded in other expense in the Company’s consolidated statement of operations and comprehensive (loss) income. The remainder of the third-party fees, $6,230, have been capitalized and will be amortized over the remaining life of the debt using the effective interest method.

Further, in conjunction with the extension of the ABL Facility, the Company compared the borrowing capacities of the pre-amendment facility and the post-amendment facility, on a creditor-by-creditor basis, and concluded that $29 of existing deferred financing costs should be written-off. Such amount was recorded in other expense in the Company’s consolidated statement of operations and comprehensive (loss) income. The remaining capitalized costs, and $986 of new third-party costs incurred in conjunction with the extension, are being amortized over the revised term of the ABL Facility.

During June 2019, in conjunction with a sale/leaseback transaction, the Company amended the Term Loan Credit Agreement and financed its Los Lunas, New Mexico facility. See Note 5, Sales/Leaseback Transaction, for further detail. The finance lease obligations above include $11,990 related to the Los Lunas, New Mexico facility.

Term Loan Credit Agreement

The Term Loan Credit Agreement, as amended, provides for two pricing options for outstanding loans: (i) an ABR for any day, a rate per annum equal to the greater of (a) the prime rate in effect on such day, (b) the federal funds effective rate in effect on such day plus 0.5%, (c) the adjusted LIBOR rate plus 1% and (d) 1.75% or (ii) the LIBOR rate, with a LIBOR floor of 0.75%, in each case plus an applicable margin. The applicable margin for ABR and LIBOR borrowings are 1.75% and 2.75%, respectively, and will drop to 1.50% and 2.50%, respectively, if PCHI’s Senior Secured Leverage Ratio, as defined by the agreement, falls below 3.2 to 1.0.

The term loans under the Term Loan Credit Agreement mature on August 19, 2022. The Company is required to repay installments on the loans in quarterly principal amounts of 0.25%, with the remaining amount payable on the maturity date.

Additionally, outstanding term loans are subject to mandatory prepayment, subject to certain exceptions, with (i) 100% of net proceeds above a threshold amount of certain asset sales/insurance proceeds, subject to reinvestment rights and certain other exceptions, (ii) 100% of the net cash proceeds of any incurrence of debt other than debt permitted under the Term Loan Credit Agreement, and (iii) 50% of Excess Cash Flow, as defined

in the agreement, if any (reduced to 25% if PCHI’s first lien leverage ratio (as defined in the agreement) is less than 3.50 to 1.00, but greater than 2.50 to 1.00, and 0% if PCHI’s first lien leverage ratio is less than 2.50 to 1.00). As indicated in Note 5, the Company paid down Term Loan debt of $62,770. Additionally, in connection with the 2019 sale leaseback transaction and the sale of its Canadian retail operations, the Company is obligated to use net proceeds that remain uninvested on the anniversary date of each transaction to pay its term loan principal. Although there is no assurance that net proceeds will remain uninvested at the 2020 anniversary dates, the Company has classified an additional $58,000 of term loan principal as the current portion of long-term debt.

The term loans may be voluntarily prepaid at any time without premium or penalty, other than customary breakage costs with respect to loans based on the LIBOR rate.

All obligations under the agreement are jointly and severally guaranteed by PC Intermediate, PCHI and each existing and future domestic subsidiary of PCHI. PCHI and each guarantor has secured its obligations, subject to certain exceptions and limitations, by a first-priority lien on substantially all of its assets (other than accounts receivable, inventory, cash and certain related assets), including a pledge of all of the capital stock held by PC Intermediate, PCHI and each guarantor, and a second-priority lien on its accounts receivable, inventory, cash and certain related assets.

The Term Loan Credit Agreement contains certain customary affirmative covenants and events of default. Additionally, it contains negative covenants which, among other things and subject to certain exceptions, restrict the ability of PCHI to:

• incur additional indebtedness;

• pay dividends on capital stock or redeem, repurchase or retire capital stock;

• make certain investments, loans, advances and acquisitions;

• engage in transactions with affiliates;

• create liens; and

• transfer or sell certain assets.

At December 31, 2019, the principal amount of term loans outstanding under the Term Loan Credit Agreement was $725,131. Such amount is recorded net of original issue discounts, capitalized call premiums and deferred financing costs on the Company’s consolidated balance sheet. At December 31, 2019, original issue discounts, capitalized call premiums and deferred financing costs totaled $6,535. At December 31, 2019, all outstanding borrowings were based on LIBOR and were at a weighted average interest rate of 4.22%.

6.125% Senior Notes—Due 2023 (“6.125% Senior Notes”)

The 6.125% Senior Notes mature on August 15, 2023. Interest on the notes is payable semi-annually in arrears on February 15 and August 15 of each year.

The notes are guaranteed, jointly and severally, on a senior basis by each of PCHI’s existing and future wholly-owned domestic subsidiaries. The notes and the guarantees are general unsecured senior obligations and are effectively subordinated to all other secured debt to the extent of the assets securing such secured debt.

The indenture governing the notes contains certain covenants limiting, among other things and subject to certain exceptions, PCHI’s ability to:

• incur additional indebtedness or issue certain disqualified stock and preferred stock;

• pay dividends or distributions, redeem or repurchase equity;

• prepay subordinated debt or make certain investments;

• engage in transactions with affiliates;

• consolidate, merge or transfer all or substantially all of PCHI’s assets;

• create liens; and

• transfer or sell certain assets.

The indenture governing the notes also contains certain customary affirmative covenants and events of default.

The Company may redeem the notes, in whole or in part, at the following (expressed as a percentage of the principal amount to be redeemed):

Twelve-month period beginning on August 15,	Percentage
2019		101.531	%
2020 and thereafter		100.000	%

Also, if the Company experiences certain types of change in control, as defined, the Company may be required to offer to repurchase the Senior Notes at 101% of their principal amount.

In connection with issuing the notes, the Company incurred and capitalized third-party costs. Capitalized costs are being amortized over the life of the debt and are included in long-term obligations, excluding current portion, in the Company’s consolidated balance sheet. At December 31, 2019, $2,985 of costs were capitalized.

6.625% Senior Notes—Due 2026 (“6.625% Senior Notes”)

The 6.625% Senior Notes mature on August 1, 2026. Interest on the notes is payable semi-annually in arrears on February 1st and August 1st of each year.

The notes are guaranteed, jointly and severally, on a senior basis by each of PCHI’s existing and future wholly-owned domestic subsidiaries. The notes and the guarantees are general unsecured senior obligations and are effectively subordinated to all other secured debt to the extent of the assets securing such secured debt.

The indenture governing the notes contains certain covenants limiting, among other things and subject to certain exceptions, PCHI’s ability to:

• incur additional indebtedness or issue certain disqualified stock and preferred stock;

• pay dividends or distributions, redeem or repurchase equity;

• prepay subordinated debt or make certain investments;

• engage in transactions with affiliates;

• consolidate, merge or transfer all or substantially all of PCHI’s assets;

• create liens; and

• transfer or sell certain assets.

The indenture governing the notes also contains certain customary affirmative covenants and events of default.

On or after August 1, 2021, the Company may redeem the notes, in whole or in part, at the following (expressed as a percentage of the principal amount to be redeemed):

Twelve-month period beginning on August 1,	Percentage
2021		103.313	%
2022		101.656	%
2023 and thereafter		100.000	%

In addition, the Company may redeem up to 40% of the aggregate principal amount outstanding on or before August 1, 2021 with the cash proceeds from certain equity offerings at a redemption price of 106.625% of the principal amount. The Company may also redeem some or all of the notes before August 1, 2021 at a redemption price of 100% of the principal amount plus a premium that is defined in the indenture.

Also, if the Company experiences certain types of change in control, as defined, the Company may be required to offer to repurchase the notes at 101% of their principal amount.

In connection with issuing the notes, the Company incurred and capitalized third-party costs. Capitalized costs are being amortized over the life of the debt and are included in long-term obligations, excluding current portion, in the Company’s consolidated balance sheet. At December 31, 2019, $5,090 of costs were capitalized.

Finance Lease Obligations

Additionally, the Company has entered into various finance leases for building, machinery and equipment. At December 31, 2019 and December 31, 2018 the balances of such leases were $14,990 and $3,815, respectively.

Other

Subject to certain exceptions, PCHI may not make certain payments, including the payment of dividends to its shareholders (“restricted payments”), unless certain conditions are met under the terms of the indentures governing the senior notes, the ABL Facility and the Term Loan Credit Agreement. As of December 31, 2019, the most restrictive of these conditions existed in the Term Loan Credit Agreement, which limits restricted payments based on PCHI’s consolidated net income and leverage ratios. As of December 31, 2019, PCHI had $141,694 of capacity under the debt instrument to make restricted payments. PCHI’s parent companies, PC Intermediate, PC Nextco and Party City Holdco, have no assets or operations other than their investments in their subsidiaries and income from those subsidiaries.

At December 31, 2019, maturities of long-term obligations consisted of the following:

	Long-Term Debt Obligations		Finance Lease Obligations		Totals
2020	$	70,462	$	1,062	$	71,524
2021		12,266		1,431		13,697
2022		641,237		1,259		642,496
2023		350,000		390		350,390
2024		—		521		521
Thereafter		500,000		10,327		510,327
Long-term obligations	$	1,573,965	$	14,990	$	1,588,955

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Goodwill

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Asset Impairment [Abstract]

Goodwill

Note 4—Goodwill

	Fiscal Year Ended December 31,
	2019			2018
Wholesale segment:
Beginning balance	$	510,490		$	513,946
Granmark acquisition		—			(1,115	)
Print Appeal acquisition		—			277
Other acquisitions		—			132
Allocation of Goodwill from Retail segment		42,230
Goodwill impairment		(60,427	)		—
Foreign currency translation		1,139			(2,750	)
Ending balance		493,432			510,490
Retail segment:
Beginning balance		1,146,460			1,105,307
Store acquisitions		2,557			42,801
Acquisitions		15,375			—
Sale of Canadian-based Party City stores		(48,241	)		—
Allocation of Goodwill to Wholesale segment		(42,230	)		—
Goodwill impairment		(495,629	)		—
Foreign currency translation		606			(1,648	)
Ending balance		578,898			1,146,460
Total ending balance, both segments	$	1,072,330		$	1,656,950

The Company reviews goodwill and other intangibles that have indefinite lives for impairment annually as of October 1 or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. Impairment testing is based upon the best information available including estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. Significant assumptions and estimates are required, including, but not limited to, projecting future cash flows, determining appropriate discount rates and terminal growth rates, and other assumptions, to estimate the fair value of goodwill and indefinite lived intangible assets. Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact its reported financial results.

During the three months ended September 30, 2019, and the three months ended December 31, 2019, the Company identified an impairment indicator associated with its market capitalization and performed impairment tests on the goodwill at its wholesale and retail reporting units and its other indefinite lived intangible assets as of September 30, 2019 and December 31, 2019. The Company recognized non-cash pre-tax goodwill impairment charges at September 30, 2019 of $224,100 and $35,000 and at December 31, 2019, of $271,500 and $25,400, against the goodwill associated with its retail and wholesale reporting units, respectively.

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Property, Plant and Equipment, Net

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, Net

Note 8—Property, Plant and Equipment, Net

Property, plant and equipment, net consisted of the following:

	December 31,
	2019			2018			Useful lives
Machinery and equipment	$	255,908		$	216,097			3-15 years
Buildings		9,838			68,810			40 years
Data processing equipment		92,256			82,735			3-5 years
Leasehold improvements		117,894			137,508			1-10 years
Furniture and fixtures		168,296			191,183			5-10 years
Land		7,047			11,069
		651,240			707,402
Less: accumulated depreciation		(407,668	)		(386,358	)
	$	243,572		$	321,044

Depreciation expense related to property, plant and equipment, including assets under finance leases, was $67,016, $66,304, and $68,209, for the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively. Assets under finance leases are principally included in machinery and equipment in the table above. See Note 3 for detail regarding property, plant and equipment impairment.

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Other Expense, net

12 Months Ended

Dec. 31, 2019

Text Block [Abstract]

Other Expense, net

Note 14—Other Expense, net

	Fiscal Year Ended December 31,
	2019			2018			2017
Other expense, net consists of the following:
Undistributed (income) in equity method investments	$	(472	)	$	(369	)	$	(194	)
Foreign currency losses		421			24			466
Debt refinancings (see Note 12)		36			6,237			—
Corporate development expenses		2,472			4,387			2,660
(Gain) on sale of Canada retail assets		(2,873	)		—			—
Sale of ownership interest in Punchbowl (see Note 21)		2,169			—			—
Other, net		118			703			1,694
Other expense, net	$	1,871		$	10,982		$	4,626

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Commitments, Contingencies and Related Party Transactions

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments, Contingencies and Related Party Transactions

Note 18—Commitments, Contingencies and Related Party Transactions

Litigation

The Company is a party to certain claims and litigation in the ordinary course of business. The Company does not believe that any of these proceedings will result, individually or in the aggregate, in a material adverse effect upon its financial condition or future results of operations.

Product Royalty Agreements

The Company has entered into product royalty agreements, with various licensors of copyrighted and trademarked characters and designs, which are used on the Company’s products, which require royalty payments based on sales of the Company’s products, and, in some cases, include annual minimum royalties.

At December 31, 2019, the Company’s commitment to pay future minimum product royalties was as follows:

	Future Minimum Royalty Payments
2020	$	35,525
2021		10,393
2022		5,820
Thereafter		—
	$	51,738

Product royalty expense for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 was $48,170, $51,002, and $46,242, respectively.

Related Party Transactions

In the normal course of business, the Company buys and sells party goods from/to certain equity method investees. Such activity is immaterial to the Company’s consolidated financial statements.

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Derivative Financial Instruments

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Note 22—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 years ended December 31, 2019, December 31, 2018, and December 31, 2017.

Foreign Exchange Risk Management

A portion of the Company’s cash flows is 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 consolidated balance sheets at fair value. At December 31, 2019 and 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 March 2020.

The following table displays the fair values of the Company’s derivatives at December 31, 2019 and December 31, 2018:

Derivative Assets

Derivative Liabilities

December 31, 2019

December 31, 2018

December 31, 2019

December 31, 2018

Balance Sheet Line

Fair Value

Balance Sheet Line

Fair Value

Balance Sheet Line

Fair Value

Balance Sheet Line

Fair Value

Foreign Exchange Contracts

(a) PP

$

—

(a) PP

$

115

(b) AE

$

—

(b) AE

$

—

(a) PP = Prepaid expenses and other current assets

(b) AE = Accrued expenses

The following table displays the notional amounts of the Company’s derivatives at December 31, 2019 and December 31, 2018:

Derivative Instrument	December 31, 2019		December 31, 2018
Foreign Exchange Contracts	$	300	$	10,942

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Summary of Domestic and Foreign Income Before Income Taxes

A summary of domestic and foreign income before income taxes follows:

	Fiscal Year Ended December 31,
	2019			2018		2017
Domestic	$	(572,287	)	$	132,482	$	153,280
Foreign		38,124			29,115		34,864
Total	$	(534,163	)	$	161,597	$	188,144

Summary of Income Tax Expense (Benefit)

The income tax expense (benefit) consisted of the following:

	Fiscal Year Ended December 31,
	2019			2018			2017
Current:
Federal	$	28,908		$	20,609		$	61,890
State		4,613			5,726			6,267
Foreign		12,540			7,870			7,298
Total current expense		46,061			34,205			75,455
Deferred:
Federal		(37,166	)		6,194			(101,774	)
State		(11,207	)		(880	)		(796	)
Foreign		1,007			(741	)		(81	)
Total deferred (benefit) expense		(47,366	)		4,573			(102,651	)
Income tax (benefit) expense	$	(1,305	)	$	38,778		$	(27,196	)

Summary of Deferred Income Tax Assets and Liabilities

Deferred income tax assets and liabilities consisted of the following:

	December 31,
	2019			2018
Deferred income tax assets:
Inventory reserves and capitalization	$	8,659		$	8,664
Allowance for doubtful accounts		1,194			709
Accrued liabilities		8,391			7,087
Equity based compensation		3,998			3,431
Federal tax loss carryforwards		525			743
State tax loss carryforwards		2,703			1,554
Foreign tax loss carryforwards		15,874			14,034
Foreign tax credit carryforwards		5,397			5,397
Deferred rent and lease incentives(1)		—			13,565
Section 163(j) Interest Limitation		9,134			1,625
Lease Liabilities		224,966			—
Other		2,231			1,808
Deferred income tax assets before valuation allowances		283,072			58,617
Less: valuation allowances		(24,623	)		(21,879	)
Deferred income tax assets, net	$	258,449		$	36,738
Deferred income tax liabilities:
Depreciation	$	21,211		$	23,720
Trade Name		135,751			145,767
Amortization of goodwill and other assets		16,111			38,712
Foreign earnings expected to be repatriated		1,177			1,132
Lease Right of Use Assets		208,772			—
Other		1,488			826
Deferred income tax liabilities	$	384,510		$	210,157

Summary of Difference Between the Effective Income Tax Rate and the U.S. Statutory Income Tax Rate

The difference between the Company’s effective income tax rate and the U.S. statutory income tax rate is as follows:

	Fiscal Year Ended December 31,
	2019			2018			2017
Tax provision at U.S. statutory income tax rate		21.0	%		21.0	%		35.0	%
State income tax, net of federal income tax		1.0			2.4			1.9
Domestic production activities deduction		—			—			(1.4	)
Valuation allowances		(0.4	)		0.6			2.1
GILTI and Foreign-Derived Intangible Income		(0.6	)		1.1			—
Foreign earnings		(1.5	)		0.2			(1.7	)
U.S.—foreign rate differential		(0.6	)		0.4			(1.9	)
Transition Tax on unremitted foreign earnings, net		—			0.1			0.6
Effect of the Act on Federal deferred income tax assets and liabilities		—			(1.3	)		(48.4	)
Goodwill Impairment		(17.9	)		—			—
Other		(0.8	)		(0.5	)		(0.7	)
Effective income tax rate		0.2	%		24.0	%		(14.5	)%

Summary of Activity of Company's Gross Unrecognized Tax Benefits

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:

	Fiscal Year Ended December 31,
	2019			2018			2017
Balance at beginning of year	$	1,320		$	855		$	913
Increases related to current period tax positions		652			40			100
Increases (decreases) related to prior period tax positions		3,030			495			(158	)
Decreases related to settlements		—			—			—
Decreases related to lapsing of statutes of limitations		(111	)		(70	)		—
Balance at end of year	$	4,891		$	1,320		$	855

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Long-Term Obligations (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Summary of Long-Term Obligations

Long-term obligations consisted of the following:

	December 31,
	2019			2018
Senior secured term loan facility (“Term Loan Credit Agreement”)	$	718,596		$	791,135
6.125% Senior Notes—due 2023		347,015			346,191
6.625% Senior Notes—due 2026		494,910			494,138
Finance lease obligations		14,990			3,815
Total long-term obligations		1,575,511			1,635,279
Less: current portion		(71,524	)		(13,316	)
Long-term obligations, excluding current portion	$	1,503,987		$	1,621,963

Summary of Debt Instrument Redemption

The Company may redeem the notes, in whole or in part, at the following (expressed as a percentage of the principal amount to be redeemed):

Twelve-month period beginning on August 15,	Percentage
2019		101.531	%
2020 and thereafter		100.000	%

On or after August 1, 2021, the Company may redeem the notes, in whole or in part, at the following (expressed as a percentage of the principal amount to be redeemed):

Twelve-month period beginning on August 1,	Percentage
2021		103.313	%
2022		101.656	%
2023 and thereafter		100.000	%

Maturities of Long-Term Obligations

At December 31, 2019, maturities of long-term obligations consisted of the following:

	Long-Term Debt Obligations		Finance Lease Obligations		Totals
2020	$	70,462	$	1,062	$	71,524
2021		12,266		1,431		13,697
2022		641,237		1,259		642,496
2023		350,000		390		350,390
2024		—		521		521
Thereafter		500,000		10,327		510,327
Long-term obligations	$	1,573,965	$	14,990	$	1,588,955

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Goodwill (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Asset Impairment [Abstract]

Schedule of Changes in Goodwill by Reporting Segment

	Fiscal Year Ended December 31,
	2019			2018
Wholesale segment:
Beginning balance	$	510,490		$	513,946
Granmark acquisition		—			(1,115	)
Print Appeal acquisition		—			277
Other acquisitions		—			132
Allocation of Goodwill from Retail segment		42,230
Goodwill impairment		(60,427	)		—
Foreign currency translation		1,139			(2,750	)
Ending balance		493,432			510,490
Retail segment:
Beginning balance		1,146,460			1,105,307
Store acquisitions		2,557			42,801
Acquisitions		15,375			—
Sale of Canadian-based Party City stores		(48,241	)		—
Allocation of Goodwill to Wholesale segment		(42,230	)		—
Goodwill impairment		(495,629	)		—
Foreign currency translation		606			(1,648	)
Ending balance		578,898			1,146,460
Total ending balance, both segments	$	1,072,330		$	1,656,950

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Leases - Future Cash flows for the Company's operating leases (Detail) $ in Thousands	Dec. 31, 2019 USD ($)
Leases [Abstract]
2020	$ 197,480
2021	181,970
2022	162,352
2023	134,131
2024	106,078
Thereafter	367,639
Total Undiscounted Cash Flows	1,149,650
Less: Interest	(273,444)
Total Operating Lease Liability	876,206
Less: Current Portion of Operating Lease Liability	(155,471)
Long-Term Portion of Operating Lease Liability	$ 720,735

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Schedule I - Condensed Financial Information of Registrant - Condensed Balance Sheets (Parenthetical) (Detail) - shares	Dec. 31, 2019	Dec. 31, 2018
Condensed Financial Statements, Captions [Line Items]
Common stock, shares issued	121,662,540	120,788,159
Common stock, shares outstanding	94,461,576	93,622,934
Common stock held in treasury, shares at cost	27,200,964	27,165,225
Party City Holdco Inc. [Member]
Condensed Financial Statements, Captions [Line Items]
Common stock, shares issued	121,662,540	120,788,159
Common stock, shares outstanding	94,461,576	93,622,934
Common stock held in treasury, shares at cost	27,200,964	27,165,225

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Income Taxes - Summary Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current:
Federal	$ 28,908	$ 20,609	$ 61,890
State	4,613	5,726	6,267
Foreign	12,540	7,870	7,298
Total current expense	46,061	34,205	75,455
Deferred:
Federal	(37,166)	6,194	(101,774)
State	(11,207)	(880)	(796)
Foreign	1,007	(741)	(81)
Total deferred (benefit) expense	(47,366)	4,573	(102,651)
Income tax (benefit) expense	$ (1,305)	$ 38,778	$ (27,196)

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Goodwill - Schedule of Changes in Goodwill by Reporting Segment (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Schedule Of Goodwill By Segment [Line Items]
Beginning balance	$ 1,656,950
Goodwill and intangibles impairment	556,056
Ending balance	1,072,330	$ 1,656,950
Total ending balance, both segments	1,656,950	1,656,950
Wholesale Segment [Member]
Schedule Of Goodwill By Segment [Line Items]
Beginning balance	510,490	513,946
Allocation of Goodwill from/to Retail segment	42,230
Goodwill and intangibles impairment	(60,427)
Foreign currency translation	1,139	(2,750)
Ending balance	493,432	510,490
Total ending balance, both segments	493,432	513,946
Wholesale Segment [Member] | Granmark [Member]
Schedule Of Goodwill By Segment [Line Items]
Business acquisition		(1,115)
Wholesale Segment [Member] | Print Appeal Inc [Member]
Schedule Of Goodwill By Segment [Line Items]
Business acquisition		277
Wholesale Segment [Member] | Other Acquisitions [Member]
Schedule Of Goodwill By Segment [Line Items]
Business acquisition		132
Retail Segment [Member]
Schedule Of Goodwill By Segment [Line Items]
Beginning balance	1,146,460	1,105,307
Allocation of Goodwill from/to Retail segment	(42,230)
Goodwill and intangibles impairment	(495,629)
Foreign currency translation	606	(1,648)
Ending balance	578,898	1,146,460
Total ending balance, both segments	578,898	1,105,307
Retail Segment [Member] | Store Acquisitions [Member]
Schedule Of Goodwill By Segment [Line Items]
Business acquisition	2,557	$ 42,801
Retail Segment [Member] | Acquisitions [Member]
Schedule Of Goodwill By Segment [Line Items]
Business acquisition	15,375
Retail Segment [Member] | Sale of Canadianbased Party City stores [Member]
Schedule Of Goodwill By Segment [Line Items]
Business acquisition	$ (48,241)

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Inventories, Net - Inventories (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Finished goods	$ 606,036	$ 706,327
Raw materials	34,259	33,423
Work in process	18,124	16,288
Inventories, net	$ 658,419	$ 756,038

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Commitments, Contingencies and Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Product royalty expense	$ 48,170	$ 51,002	$ 46,242

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Commitments, Contingencies and Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Summary of Future Minimum Product Royalties

At December 31, 2019, the Company’s commitment to pay future minimum product royalties was as follows:

	Future Minimum Royalty Payments
2020	$	35,525
2021		10,393
2022		5,820
Thereafter		—
	$	51,738

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Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 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 December 31, 2019 and December 31, 2018:

Derivative Assets

Derivative Liabilities

December 31, 2019

December 31, 2018

December 31, 2019

December 31, 2018

Balance Sheet Line

Fair Value

Balance Sheet Line

Fair Value

Balance Sheet Line

Fair Value

Balance Sheet Line

Fair Value

Foreign Exchange Contracts

(a) PP

$

—

(a) PP

$

115

(b) AE

$

—

(b) AE

$

—

(a) PP = Prepaid expenses and other current assets

(b) AE = Accrued expenses

Schedule of Notional Amounts of Derivatives

The following table displays the notional amounts of the Company’s derivatives at December 31, 2019 and December 31, 2018:

Derivative Instrument	December 31, 2019		December 31, 2018
Foreign Exchange Contracts	$	300	$	10,942

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Schedule II - Valuation and Qualifying Accounts (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Allowance for Doubtful Accounts [Member]
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items]
Beginning Balance	$ 2,933,000	$ 2,971,000	$ 2,683,000
Write-Offs	470	1,251,000	272,000
Additions	2,323,000	1,213,000	560,000
Ending Balance	4,786,000	2,933,000	2,971,000
Sales Returns and Allowances [Member]
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items]
Beginning Balance	741,000	480,000	466,000
Write-Offs	83,474,000	86,727,000	83,865,000
Additions	83,409,000	86,988,000	83,879,000
Ending Balance	$ 676,000	$ 741,000	$ 480,000

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Organization, Description of Business and Basis of Presentation - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2019 Store
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	875

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Equity Incentive Plans - Summary of Changes in Outstanding Options (Detail) - Performance Based Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding beginning balance	6,927,174	8,024,761	8,461,826
Options granted	337,000	187,080	101,444
Options exercised	(215,300)	(425,505)	(243,775)
Options forfeited	(730,157)	(859,162)	(294,734)
Options outstanding ending balance	6,318,717	6,927,174	8,024,761
Options exercisable	2,650,034
Average exercise price granted	$ 6.43	$ 14.63	$ 14.38
Expected to vest (excluding performance-based options)	860,284
Average exercise price exercised	$ 5.33	5.33	5.33
Average exercise price forfeited	13.00	7.84	9.47
Average exercise price outstanding ending balance	8.95	9.39	8.89
Average exercise price exercisable	11.64
Average exercise price expected to vest	12.50
Average fair market value of TBOs at grant date granted	$ 2.16	$ 4.98	$ 4.46
Aggregate intrinsic value outstanding ending balance	$ 41,784	$ 4,089	$ 40,634
Aggregate intrinsic value exercisable	(24,642)
Aggregate intrinsic value expected to vest	$ (8,743)
Weighted average remaining contractual term outstanding ending balance	4 years 4 months 24 days	5 years 2 months 12 days	6 years
Weighted average remaining contractual term exercisable	4 years 6 months
Weighted average remaining contractual term expected to vest	7 years 7 months 6 days

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Long-Term Obligations - August 2018 Refinancing - Additional Information (Detail) - USD ($) $ in Thousands		1 Months Ended	12 Months Ended
	Aug. 09, 2018	Aug. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Other Expense [Member]
Debt Instrument [Line Items]
Write off of deferred financing costs				$ 186
Senior Notes - Due 2026 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Face amount	$ 500,000
Debt instrument interest rate	6.625%		6.625%
Debt instrument maturity date	Aug. 31, 2026		Aug. 01, 2026
Debt cost incurred		$ 2,270
Debt costs capitalized		6,230
Senior Notes - Due 2023 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument interest rate			6.125%
Debt instrument maturity date	Aug. 31, 2023		Aug. 15, 2023
Write off of deferred financing costs		29
Debt costs capitalized		986
Senior Notes - Due 2023 [Member] | Senior Notes [Member] | Loans and Notes Payable [Member]
Debt Instrument [Line Items]
Debt repayments	$ 90,000
Term Loan Credit Agreement [Member]
Debt Instrument [Line Items]
Deferred financing costs and original issuance discount			$ 6,535
Term Loan Credit Agreement [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Debt repayments	$ 400,000
Deferred financing costs and original issuance discount		1,824
Term Loan Credit Agreement [Member] | Secured Debt [Member] | Other Expense [Member]
Debt Instrument [Line Items]
Write off of deferred financing costs		$ 968

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Loans and Notes Payable - Other Credit Agreements - Additional Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Line of credit facility, amount outstanding	$ 128,806	$ 302,751
Foreign Facilities [Member]
Debt Instrument [Line Items]
Line of credit facility, amount outstanding	$ 1,447	$ 1,710

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Capital Stock - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Equity [Abstract]
Authorized capital stock	300,000,000
Common stock, par value	$ 0.01
Preferred stock, par value	$ 0.01
Authorized preferred stock	15,000,000
Number of acquired treasury shares	15,679	3,785,658
Value of acquired treasury shares	$ 156	$ 40,197	$ 286,733

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Derivative Financial Instruments - Schedule of Notional Amounts of Derivatives (Detail) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Foreign Exchange Contracts [Member]
Derivatives, Fair Value [Line Items]
Notional amounts	$ 300,000	$ 10,942,000

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Fair Value Measurements - Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] $ in Thousands	Dec. 31, 2018 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	$ 115
Punchbowl Inc [Member] | Put Option [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	316
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	115
Level 3 [Member] | Punchbowl Inc [Member] | Put Option [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	$ 316

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Disposition of Assets

12 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Disposition of Assets

Note 6—Disposition of Assets

On October 1, 2019, the Company sold its Canadian-based Party City stores to a Canadian-based retailer for $131,711 and entered into a 10-year supply agreement under which the acquirer agreed to purchase product from the Company for such Party City stores, as well as the acquirer’s other stores. The Company will use the net proceeds to paydown debt. For the years ended December 31, 2019, 2018, and 2017, the Canadian-based Party City stores had pre-tax income of $2,631, $10,737, and $8,947, respectively.  

The Company recorded a $2,873 gain on sale of assets, which is reported in Other expense, net on the Consolidated Statement of Operations and Comprehensive (Loss) Income.

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Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Note 10—Intangible Assets

The Company had the following other identifiable finite-lived intangible assets:

	December 31, 2019
	Cost		Accumulated Amortization		Net Carrying Value		Useful lives
Franchise-related intangible assets	$	77,377	$	50,658	$	26,719		4-19 years
Customer lists and relationships		62,144		45,940		16,204		2-20 years
Copyrights and designs		31,453		29,416		2,037		5-7 years
Non-compete agreements		500		400		100		5 years
Total	$	171,473	$	126,413	$	45,060

	December 31, 2018
	Cost		Accumulated Amortization		Net Carrying Value		Useful lives
Franchise-related intangible assets	$	77,377	$	41,877	$	35,500		4-19 years
Customer lists and relationships		61,405		41,167		20,238		2-20 years
Copyrights and designs		26,030		25,708		322		5-7 years
Lease agreements		17,830		13,926		3,904		1-17 years
Non-compete agreements		500		300		200		5 years
Total	$	183,142	$	122,978	$	60,164

The Company is amortizing the majority of its intangible assets utilizing accelerated patterns based on the discounted cash flows that were used to value such assets. The amortization expense for finite-lived intangible assets for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 was $14,100, $12,271, and $16,959, respectively. Estimated amortization expense for each of the next five years will be approximately $10,720, $8,803, $5,975, $4,658, and $4,036, respectively.

In addition to the Company’s finite-lived intangible assets, the Company has recorded indefinite-lived intangible assets for the Party City trade name, the Amscan trade name, the Halloween City trade name, the

Christys trade name, the Granmark trade name, the partycity.com domain name and the partydelights.co.uk domain name. During 2019, the Company recorded a Halloween City tradename impairment charge of $6,575.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Schedule of Reconciliation Between Basic and Diluted Income Per Share

A reconciliation between basic and diluted income per share is as follows:

	Fiscal Year Ended December 31,
	2019			2018		2017
Net (loss) income attributable to common shareholders of Party City Holdco Inc.:	$	(532,495	)	$	123,259	$	215,340
Weighted average shares—Basic:		93,295,692			96,133,144		118,589,421
Effect of dilutive restricted stock units:		—			9,661		—
Effect of dilutive stock options:		—			1,128,245		1,304,600
Weighted average shares—Diluted:		93,295,692			97,271,050		119,894,021
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic:	$	(5.71	)	$	1.28	$	1.81
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted:	$	(5.71	)	$	1.27	$	1.79

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Consolidated Statements Of Operations And Comprehensive (Loss) Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues:
Total revenues	$ 2,348,789	$ 2,427,515	$ 2,371,569
Expenses:
Cost of sales	1,500,633	1,435,358	1,395,279
Wholesale selling expenses	67,103	71,502	65,356
Retail operating expenses	440,395	425,996	415,167
Franchise expenses	13,152	13,214	14,957
General and administrative expenses	177,672	172,764	168,369
Art and development costs	23,203	23,388	23,331
Development stage expenses	10,736	7,008	8,974
Gain on sale/leaseback transaction	(58,381)
Store impairment and restructuring charges	29,038
Goodwill and intangibles impairment	562,631	0	0
Total expenses	2,766,182	2,149,230	2,091,433
(Loss) income from operations	(417,393)	278,285	280,136
Interest expense, net	114,899	105,706	87,366
Other expense, net	1,871	10,982	4,626
(Loss) income before income taxes	(534,163)	161,597	188,144
Income tax expense (benefit)	(1,305)	38,778	(27,196)
Net (loss) income	(532,858)	122,819	215,340
Add: Net income attributable to redeemable securities holder		409
Less: Net loss attributable to noncontrolling interests	(363)	(31)
Net (loss) income attributable to common shareholders of Party City Holdco Inc	$ (532,495)	$ 123,259	$ 215,340
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.-Basic	$ (5.71)	$ 1.28	$ 1.81
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.-Diluted	$ (5.71)	$ 1.27	$ 1.79
Weighted-average number of common shares-Basic	93,295,692	96,133,144	118,589,421
Weighted-average number of common shares-Diluted	93,295,692	97,271,050	119,894,021
Other comprehensive (loss) income, net of tax:
Foreign currency adjustments	$ 12,599	$ (14,479)	$ 17,561
Cash flow hedges	845	1,063	(1,140)
Other comprehensive income (loss), net	13,444	(13,416)	16,421
Comprehensive (loss) income	(519,414)	109,403	231,761
Add: Comprehensive income attributable to redeemable securities holder		409
Less: Comprehensive loss attributable to noncontrolling interests	(386)	(64)
Comprehensive (loss) income attributable to common shareholders of Party City Holdco Inc.	(519,028)	109,876	231,761
Net Sales [Member]
Revenues:
Revenues	2,339,510	2,416,442	2,357,986
Royalties and Franchise Fees [Member]
Revenues:
Revenues	$ 9,279	$ 11,073	$ 13,583

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Basis of presentation and description of registrant

12 Months Ended

Dec. 31, 2019

Party City Holdco Inc. [Member]

Basis of presentation and description of registrant

Note 1—Basis of presentation and description of registrant

Party City Holdco Inc. (“Party City Holdco”) Schedule I, Condensed Financial Information of Registrant, provides all parent company information that is required to be presented in accordance with the SEC rules and regulations for financial statement schedules. The consolidated financial statements of Party City Holdco are included elsewhere. The parent-company financial statements should be read in conjunction with the consolidated financial statements and the notes thereto.

Party City Holdco does not conduct any separate operations and acts only as a holding company. Its share of the net income of its unconsolidated subsidiaries is included in its statements of income using the equity method.

Since all material stock requirements, dividends and guarantees of the registrant have been disclosed in the consolidated financial statements, the information is not required to be repeated in this schedule.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2—Summary of Significant Accounting Policies

Consolidated Financial Statements

The consolidated financial statements of the Company include the accounts of all majority-owned subsidiaries and controlled entities. All intercompany balances and transactions have been eliminated.

The Company’s 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 their 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 consolidated financial statements of the Company combine the Fiscal Year and Fiscal Quarters of the Company’s retail operations with the calendar year and calendar quarters of the Company’s wholesale operations, as the differences are not significant.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Management periodically evaluates estimates used in the preparation of the consolidated financial statements for continued reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based on such periodic evaluations.

Cash Equivalents

Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. All credit card transactions that process in less than seven days are classified as cash and cash equivalents.

Inventories

Inventories are valued at the lower of cost and net realizable value. In assessing the ultimate realization of inventories, the Company makes judgments regarding, among other things, future demand and market conditions, current inventory levels and the impact of the possible discontinuation of product designs.

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.

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. Judgment is required in assessing the ultimate realization of these receivables, including consideration of the Company’s history of receivable write-offs, the level of past due accounts and the economic status of the Company’s customers. In an effort to identify adverse trends relative to customer economic status, the Company assesses the financial health of the markets it operates in and performs periodic credit evaluations of its customers and ongoing reviews of account balances and aging of receivables. Amounts are considered past due when payment has not been received within the time frame of the credit terms extended. Write-offs are charged directly against the allowance for doubtful accounts and occur only after all collection efforts have been exhausted. At December 31, 2019 and 2018, the allowance for doubtful accounts was $4,786 and $2,933, respectively.

Long-Lived and Intangible Assets (including Goodwill)

Property, plant and equipment are stated at cost. 

The Company reviews the recoverability of its finite long-lived assets, including finite-lived intangible assets, whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. For purposes of recognizing and measuring impairment, the Company evaluates long-lived assets/asset groups, other than goodwill, based upon the lowest level of independent cash flows ascertainable to evaluate impairment. If an impairment indicator exists, we compare the undiscounted future cash flows of the asset/asset group to the carrying value of the asset/asset group. If the sum of the undiscounted future cash flows is less than the carrying value of the asset/asset group, we would calculate discounted future cash flows based on market participant assumptions. If the sum of discounted cash flows is less than the carrying value of the asset/asset group, we would recognize an impairment loss. The impairment related to long-lived assets is measured as the amount by which the carrying amount of the asset(s) exceeds the fair value of the asset(s).

In the evaluation of the fair value and future benefits of finite long-lived assets attached to retail stores, the Company performs its cash flow analysis generally on a store-by-store basis. Various factors including future sales growth and profit margins are included in this analysis.

The Company evaluates the goodwill associated with its acquisitions, and other intangibles with indefinite lives, for impairment as of the first day of its fourth quarter based on current and projected performance, or more frequently if circumstances indicate a possible impairment. For purposes of testing goodwill for impairment, reporting units are determined by identifying operating segments within the Company’s organization which constitute a business for which discrete financial information is available and is reviewed by management. Components within an operating segment are aggregated to the extent that they have similar economic characteristics. Based on this evaluation, the Company has determined that its operating segments, wholesale and retail, represent reporting units for the purposes of its goodwill impairment test.

If it is concluded that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company estimates the fair value of the reporting unit using a combination of a market approach and an income approach. If such carrying value exceeds the fair value an impairment loss will be recognized in an amount equal to such excess. The fair value of a reporting unit refers to the amount at which the unit as a whole could be sold in a current transaction between willing parties.

Our Trade names are treated as indefinite-lived intangible assets and, therefore are not amortized, but rather are tested for impairment annually in the fourth fiscal quarter, unless there are events requiring an earlier assessment or changes in circumstances during an interim period providing impairment indicators are present. When performing a quantitative impairment assessment of our Trade name indefinite-lived intangible assets, the fair value of the Trade names is estimated using a discounted cash flow analysis based on the “relief from royalty” method, assuming that a third party would be willing to pay a royalty in lieu of ownership for this intangible asset. This approach is dependent on many factors, including estimates of future growth, royalty rates, and discount rates. Actual future results may differ from these estimates. Impairment loss is recognized when the estimated fair value of the indefinite-lived intangible asset is less than its carrying amount.

Deferred Financing Costs

Deferred financing costs are netted against amounts outstanding under the related debt instruments. They are amortized to interest expense over the terms of the instruments using the effective interest method.

Equity Method Investments

The Company has an investment in Convergram Mexico, S. De R.L. De C.V., a joint venture distributing metallic balloons, principally in Mexico and Latin America. The Company accounts for its 49.9% investment in the joint venture using the equity method of accounting.

The Company’s investments are included in other assets on the consolidated balance sheet and the results of the investees’ operations are included in other expense in the consolidated statement of operations and comprehensive (loss) income (see Note 14, Other Expense, net).

Insurance Accruals

The Company maintains certain self-insured workers’ compensation and general liability insurance plans. The Company estimates the required liability for claims under such plans based upon various assumptions, which include, but are not limited to, historical loss experience, projected loss development factors, actual payroll and other data. The required liability is also subject to adjustment in the future based upon changes in claims experience, including changes in the number of incidents (frequency) and changes in the ultimate cost per incident (severity).

Revenue Recognition

Retail

Revenue from retail store operations is recognized at the point of sale as control of the product is transferred to the customer at such time. Retail e-commerce sales are recognized when the consumer receives the product as control transfers upon delivery. Due to its extensive history operating as the largest party goods retailer in North America, the Company has sufficient history with which to estimate future retail sales returns and it uses the expected value method to estimate such activity.

The transaction price for the majority of the Company’s retail sales is based on either: 1) the item’s stated price or 2) the stated price adjusted for the impact of a coupon which can only be applied to such transaction. To the extent that the Company charges customers for freight costs on e-commerce sales, the Company records such amounts in revenue. The Company excludes all sales taxes and value-added taxes from revenue.

Under the terms of its agreements with its franchisees, the Company provides both: 1) brand value (via significant advertising spend) and 2) support with respect to planograms, in exchange for a royalty fee that ranges from 4% to 6% of the franchisees’ sales. The Company records the royalty fees at the time that the franchisees’ sales are recorded. Additionally, although the Company anticipates that future franchise store openings will be limited, when a franchisee opens a new store, the Company receives and records a one-time fee which is earned by the Company for its assistance with site selection and development of the new location. Both the sales-based royalty fee and the one-time fee are recorded in royalties and franchise fees in the Company’s consolidated statement of operations and comprehensive (loss) income.

Wholesale

For most of the Company’s wholesale sales, control transfers upon the Company’s shipment of the product. Wholesale sales returns are not significant as the Company generally only accepts the return of goods that were shipped to the customer in error or that were damaged when received by the customer. Additionally, due to its extensive history operating as a leading party goods wholesaler, the Company has sufficient history with which to estimate future sales returns.

In most cases, the determination of the transaction price is fixed based on the contract and/or purchase order. To the extent that the Company charges customers for freight costs, the Company records such amounts in revenue. The Company excludes all sales taxes and value-added taxes from revenue.

The majority of the sales for the Company’s wholesale business are due within 30 to 120 days from the transfer of control of the product and substantially all of the sales are collected within a year from such transfer. For all transactions for which the Company expects to collect the transaction price within a year from the transfer of control, the Company does not adjust the consideration for the effects of a significant financing component.

Cost of Sales

Cost of sales at wholesale reflects the production costs (i.e., raw materials, labor and overhead) of manufactured goods and the direct cost of purchased goods, inventory shrinkage, inventory adjustments, inbound freight to the Company’s manufacturing and distribution facilities, distribution costs and outbound freight to transfer goods to the Company’s wholesale customers. At retail, cost of sales reflects the direct costs of goods purchased from third parties and the production costs/purchase costs of goods acquired from the Company’s wholesale operations. Retail cost of sales also includes inventory shrinkage, inventory adjustments, inbound freight, occupancy costs related to store operations (such as rent, utilities and common area maintenance), depreciation on assets and all logistics costs (i.e., handling and distribution costs) associated with the Company’s e-commerce business.

Retail Operating Expenses

Retail operating expenses include costs associated with the operation of the Company’s retail stores (with the exception of occupancy costs, which are included in cost of sales). Retail operating expenses principally consist of employee compensation and benefits, advertising, supplies expense and credit card fees.

Shipping and Handling

Outbound shipping costs billed to customers are included in net sales. The costs of shipping and handling incurred by the Company are included in cost of sales.

Product Royalty Agreements

The Company enters into product royalty agreements that allow the Company to use licensed designs on certain of its products. These contracts require the Company to pay royalties, generally based on the sales of such

product, and may require guaranteed minimum royalties, a portion of which may be paid in advance. The Company matches royalty expense with revenue by recording royalties at the time of sale, at the greater of the contractual rate or an effective rate calculated based on the guaranteed minimum royalty and the Company’s estimate of sales during the contract period. If a portion of the guaranteed minimum royalty is determined to be unrecoverable, the unrecoverable portion is charged to expense at that time. Guaranteed minimum royalties paid in advance are recorded in the consolidated balance sheets in either prepaid expenses and other current assets or other assets, depending on the nature of the royalties.

Catalog Costs

The Company expenses costs associated with the production of catalogs when incurred.

Advertising

Advertising costs are expensed as incurred. Retail advertising expenses for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 were $72,518, $68,756, and $61,187, respectively.

Variable Interest Entities

When determining whether a legal entity should be consolidated, the Company first determines whether it has a variable interest in the legal entity. If a variable interest exists, the Company determines whether the legal entity is a variable interest entity due to either: 1) a lack of sufficient equity to finance its activities, 2) the equity holders lacking the characteristics of a controlling financial interest, or 3) the legal entity being structured with non-substantive voting rights. If the Company concludes that the legal entity is a variable interest entity, the Company next determines whether it is the primary beneficiary due to it possessing both: 1) the power to direct the activities of a variable interest entity that most significantly impact the variable interest entity’s economic performance, and 2) the obligation to absorb losses of the variable interest entity that potentially could be significant to the variable interest entity or the right to receive benefits from the variable interest entity which could be significant to the variable interest entity. If the Company concludes that it is the primary beneficiary, it consolidates the legal entity.

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. Although the Company currently only owns 26% of Kazzam’s equity, the Company has concluded that: a) Kazzam is a variable interest entity as it has insufficient equity at risk, and b) the Company is its primary beneficiary. Therefore, the Company has consolidated Kazzam into the Company’s financial statements.

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 mezzanine liability is adjusted to the greater of: a) the interest’s carrying amount under Accounting Standards Codification (“ASC”) Topic 810, “Consolidation”, or b) the fair value of the interest.

In January 2020, the Company and Ampology terminated certain services agreements and warrants that Ampology had in the Company stock. The parties concurrently entered into an interim transition agreement.  

Art and Development Costs

Art and development costs are primarily internal costs that are not easily associated with specific designs, some of which may not reach commercial production. Accordingly, the Company expenses these costs as incurred.

Derivative Financial Instruments

ASC Topic 815, “Accounting for Derivative Instruments and Hedging Activities”, requires that all derivative financial instruments be recognized on the balance sheet at fair value and establishes criteria for both the designation and effectiveness of hedging activities. The Company uses derivatives in the management of interest rate and foreign currency exposure. ASC Topic 815 requires the Company to formally document the assets, liabilities or other transactions the Company designates as hedged items, the risk being hedged and the relationship between the hedged items and the hedging instruments. The Company must measure the effectiveness of the hedging relationship at the inception of the hedge and on an on-going basis.

If derivative financial instruments qualify as fair value hedges, the gain or loss on the instrument and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in net income during the period of the change in fair values. For derivative financial instruments that qualify as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive (loss) income and reclassified into net income in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of a cash flow hedge, if any, is determined based on the dollar-offset method (i.e., the gain or loss on the derivative financial instrument in excess of the cumulative change in the present value of future cash flows of the hedged item) and is recognized in net income during the period of change. As long as hedge effectiveness is maintained, interest rate swap arrangements and foreign currency exchange agreements qualify for hedge accounting as cash flow hedges (see Note 22, Derivative Financial Instruments).

Income Taxes

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities (and operating loss and tax credit carryforwards) applying enacted statutory tax rates in effect for the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the judgment of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Stock-Based Compensation

Accounting for stock-based compensation requires measurement of compensation cost for all stock-based awards at fair value on the date of grant and recognition of compensation expense over the service period for awards expected to vest.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the Company’s foreign currency adjustments and the impact of interest rate swap and foreign exchange contracts that qualify as hedges (see Note 22, Derivative Financial Instruments and Note 23, Changes in Accumulated Other Comprehensive Loss).

Foreign Currency Transactions and Translation

The functional currencies of the Company’s foreign operations are the local currencies in which they operate. Foreign currency exchange gains or losses resulting from receivables or payables in currencies other than the functional currencies generally are recognized in the Company’s statement of operations and comprehensive (loss) income. The balance sheets of foreign subsidiaries are translated into U.S. dollars at the exchange rates in effect on the balance sheet date. The results of operations of foreign subsidiaries are translated into U.S. dollars at the average exchange rates effective for the periods presented. The differences from historical exchange rates are recorded as comprehensive (loss) income and are included as a component of accumulated other comprehensive loss.

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:

	Fiscal Year Ended December 31,
	2019			2018		2017
Net (loss) income attributable to common shareholders of Party City Holdco Inc.:	$	(532,495	)	$	123,259	$	215,340
Weighted average shares—Basic:		93,295,692			96,133,144		118,589,421
Effect of dilutive restricted stock units:		—			9,661		—
Effect of dilutive stock options:		—			1,128,245		1,304,600
Weighted average shares—Diluted:		93,295,692			97,271,050		119,894,021
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic:	$	(5.71	)	$	1.28	$	1.81
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted:	$	(5.71	)	$	1.27	$	1.79

During the year ended December 31, 2019, restricted stock, restricted stock units, stock options, and warrants were not included in the calculation of diluted net loss per share attributable to common shareholders of Party City Holdco Inc. During the years ended December 31, 2018, and December 31, 2017, 2,394,868 stock options and 2,392,150 stock options, respectively, were excluded from the calculations of net income per share attributable to common shareholders of Party City Holdco Inc.—diluted as they were anti-dilutive. Additionally, during each of the years ended December 31, 2018, and December 31, 2017, 596,000 warrants were excluded from the calculations of net income per share attributable to common shareholders of Party City Holdco Inc.—diluted as they were anti-dilutive. Further, during the years ended December 31, 2018, and December 31, 2017, 141,400 restricted stock units and 0 restricted stock units, respectively, were excluded from the calculations of net income per share attributable to common shareholders of Party City Holdco Inc.—diluted as they were anti-dilutive.

Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, “Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”. The new guidance improves and clarifies the fair value measurement disclosure requirements of ASC 820. The new disclosure requirements include the disclosure of the changes in unrealized gains or losses included in other comprehensive (loss) income for recurring Level 3 fair value measurements held at the end of the reporting period and the explicit requirement to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The other provisions of ASU 2018-13 also include eliminated and modified disclosure requirements. The guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted, including in an interim period for which financial statements have not been issued or made available for issuance. The Company has evaluated the impact of the adoption of this ASU and determined that it will have no significant impact on its condensed consolidated financial statements.

In June 2018, the FASB issued 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 January 2017 the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates the requirement to measure a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the amendments in ASU 2017-04, an entity will perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized will not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity will consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Company adopted ASU No. 2017-04 during the first quarter of 2019. See Note 4.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows: Restricted Cash”. The pronouncement requires companies to show changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The Company adopted the pronouncement, which requires retrospective application, during the first quarter of 2018. The impact of such adoption was immaterial to the Company’s consolidated financial statements. See Note 27, Restricted Cash, for further discussion.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. The pronouncement clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The Company adopted the pronouncement during the first quarter of 2018 and such adoption did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses”. The ASU changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The pronouncement is effective for the Company during the first quarter of 2020. The Company is still evaluating the impact of the ASU on its consolidated financial statements, but does not expect it to have a material 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 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 its operating lease arrangements with terms of greater than twelve months. See the Company’s December 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 December 31, 2019 consolidated balance sheet, such accounts 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 and prepaid expenses and other current assets includes a $2,552 asset related to capitalized broker costs. In the Company’s December 31, 2019 consolidated balance sheet, such assets 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 26, Leases.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”. The update impacts the accounting for equity investments and the recognition of changes in fair value of financial liabilities when the fair value option is elected. The Company adopted the pronouncement during the first quarter of 2018 and such adoption had no impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The pronouncement contains a five-step model which replaces most existing revenue recognition guidance. The new standard became effective for the Company on January 1, 2018. The Company adopted the pronouncement using the modified retrospective approach. Therefore, on January 1, 2018, the Company adjusted its accounting for certain discounts which are related to the timing of payments by customers of its wholesale business and the Company recorded a cumulative-effect adjustment which reduced retained earnings by $46. Additionally, as of such date, the Company modified its accounting for certain metallic balloon sales of its wholesale segment and started to defer the recognition of revenue on such sales, and the related costs, until the balloons have been filled with helium. As a result, the Company recorded a cumulative-effect adjustment which increased retained earnings by $8. Finally, as of such date, the Company adjusted its accounting for certain discounts on wholesale sales of seasonal product and the Company recorded a cumulative-effect adjustment which reduced retained earnings by $40. See Note 24, Revenue from Contracts with Customers, for further discussion of the adoption of the pronouncement and the Company’s revenue recognition policy.

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Kazzam, LLC

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Kazzam, LLC

Note 25—Kazzam, LLC

During the first quarter of 2017, the Company and Ampology, a subsidiary of Trivergence, reached an agreement to form a new legal entity, Kazzam, LLC (“Kazzam”), for the purpose of designing, developing and launching an online exchange platform for party-related services. The website allows consumers to select, schedule and pay for various services (including entertainment, activities and food) all through a single portal.

Although the Company currently owns only 26% of Kazzam’s equity, the Company has concluded that: a) Kazzam is a variable interest entity as it has insufficient equity at risk, and b) the Company is its primary beneficiary. Therefore, the Company has consolidated Kazzam into the Company’s financial statements. Further, as the Company is currently funding all of Kazzam’s start-up activities via a loan to Kazzam (which will be repaid when the venture is profitable), the Company is recording 100% of Kazzam’s operating results in “development stage expenses” in the Company’s consolidated statement of operations and comprehensive (loss) income.

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 in 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.

In January 2020, the Company and Ampology terminated certain services agreements and warrants that Ampology had in the Company stock. The parties concurrently entered into an interim transition agreement for which expenses are recorded as development stage expenses.

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Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)			12 Months Ended
	Jan. 02, 2019	Jan. 01, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Significant Accounting Policies [Line Items]
Allowance for doubtful accounts			$ 4,786,000	$ 2,933,000
Revenue, information used to allocate transaction price			the determination of the transaction price is fixed based on the contract and/or purchase order.
Retail advertising expenses			$ 72,518,000	68,756,000	$ 61,187,000
Increase (decrease) in retained earnings	$ 503,000
Amount of the cumulative effect on retained earnings net of related income tax effect.	503,000
Increased Deferred Income Tax Asset	662,000
Increased Additional Paid In Capital	$ 159,000
Lease Agreements [Member]
Significant Accounting Policies [Line Items]
Decrease infinite lived intangible assets net				3,904,000
Accounts Payable and Accrued Liabilities [Member]
Significant Accounting Policies [Line Items]
Decrease in current deferred rent credit				7,170,000
Other Noncurrent Liabilities [Member]
Significant Accounting Policies [Line Items]
Decrease in long term deferred rent credit				74,464,000
Other Current Assets [Member]
Significant Accounting Policies [Line Items]
Prepaid expenses and other current assets				$ 2,552,000
Retail Segment [Member]
Significant Accounting Policies [Line Items]
Revenue, information used to determine transaction price			The transaction price for the majority of the Company’s retail sales is based on either: 1) the item’s stated price or 2) the stated price adjusted for the impact of a coupon which can only be applied to such transaction. To the extent that the Company charges customers for freight costs on e-commerce sales, the Company records such amounts in revenue. The Company excludes all sales taxes and value-added taxes from revenue.
Wholesale Segment [Member]
Significant Accounting Policies [Line Items]
Revenue, information used to allocate transaction price			the determination of the transaction price is fixed based on the contract and/or purchase order.
Kazzam LLC [Member]
Significant Accounting Policies [Line Items]
Equity method investment percentage in joint venture			26.00%	26.00%
Customer Payments [Member] | Accounting Standards Update 2014-09 [Member]
Significant Accounting Policies [Line Items]
Increase (decrease) in retained earnings		$ 46,000
Amount of the cumulative effect on retained earnings net of related income tax effect.		46,000
Metallic Balloon Sales [Member] | Accounting Standards Update 2014-09 [Member]
Significant Accounting Policies [Line Items]
Increase (decrease) in retained earnings		8,000
Amount of the cumulative effect on retained earnings net of related income tax effect.		8,000
Discount Sale [Member] | Accounting Standards Update 2014-09 [Member]
Significant Accounting Policies [Line Items]
Increase (decrease) in retained earnings		40,000
Amount of the cumulative effect on retained earnings net of related income tax effect.		$ 40,000
Employee Stock Option [Member]
Significant Accounting Policies [Line Items]
Antidilutive securities excluded from calculation of earnings per share				2,394,868	2,392,150
Warrant [Member]
Significant Accounting Policies [Line Items]
Antidilutive securities excluded from calculation of earnings per share				596,000	596,000
Restricted Stock Units (RSUs) [Member]
Significant Accounting Policies [Line Items]
Antidilutive securities excluded from calculation of earnings per share				141,400	0
Convergram Mexico, S. De R.L. De C.V. [Member]
Significant Accounting Policies [Line Items]
Equity method investment percentage in joint venture			49.90%
Minimum [Member]
Significant Accounting Policies [Line Items]
Retail operations period of fiscal year			52 days
Retail operations period of fiscal quarter			13 days
Minimum [Member] | Retail Segment [Member]
Significant Accounting Policies [Line Items]
Royalty fee percentage			4.00%
Minimum [Member] | Wholesale Segment [Member]
Significant Accounting Policies [Line Items]
Receivables collection period			30 days
Maximum [Member]
Significant Accounting Policies [Line Items]
Retail operations period of fiscal year			53 days
Retail operations period of fiscal quarter			14 days
Maximum [Member] | Retail Segment [Member]
Significant Accounting Policies [Line Items]
Royalty fee percentage			6.00%
Maximum [Member] | Wholesale Segment [Member]
Significant Accounting Policies [Line Items]
Receivables collection period			120 days

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Schedule of Company's Industry Segment Data

The Company’s industry segment data for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 are as follows:

	Wholesale			Retail			Consolidated
Year Ended December 31, 2019
Revenues:
Net sales	$	1,240,026		$	1,742,136		$	2,982,162
Royalties and franchise fees		—			9,279			9,279
Total revenues		1,240,026			1,751,415			2,991,441
Eliminations		(642,652	)		—			(642,652	)
Net revenues	$	597,374		$	1,751,415		$	2,348,789
Income (loss) from operations	$	4,152		$	(421,545	)	$	(417,393	)
Interest expense, net								114,899
Other expense, net								1,871
Loss before income taxes							$	(534,163	)
Depreciation and amortization	$	27,845		$	53,271		$	81,116
Capital expenditures	$	29,480		$	32,253		$	61,733
Total assets	$	1,912,522		$	1,682,797		$	3,595,319

	Wholesale			Retail		Consolidated
Year Ended December 31, 2018
Revenues:
Net sales	$	1,325,490		$	1,802,834	$	3,128,324
Royalties and franchise fees		—			11,073		11,073
Total revenues		1,325,490			1,813,907		3,139,397
Eliminations		(711,882	)		—		(711,882	)
Net revenues	$	613,608		$	1,813,907	$	2,427,515
Income from operations	$	45,180		$	233,105	$	278,285
Interest expense, net							105,706
Other expense, net							10,982
Income before income taxes						$	161,597
Depreciation and amortization	$	28,368		$	50,207	$	78,575
Capital expenditures	$	33,890		$	51,771	$	85,661
Total assets	$	1,346,856		$	2,295,491	$	3,642,347

	Wholesale			Retail		Consolidated
Year Ended December 31, 2017
Revenues:
Net sales	$	1,260,089		$	1,728,589	$	2,988,678
Royalties and franchise fees		—			13,583		13,583
Total revenues		1,260,089			1,742,172		3,002,261
Eliminations		(630,692	)		—		(630,692	)
Net revenues	$	629,397		$	1,742,172	$	2,371,569
Income from operations	$	68,130		$	212,006	$	280,136
Interest expense, net							87,366
Other income, net							4,626
Income before income taxes						$	188,144
Depreciation and amortization	$	30,520		$	54,648	$	85,168
Capital expenditures	$	32,490		$	34,480	$	66,970

Schedule of Company's Industry Geographic Segments

The Company’s geographic area data follows:

	Domestic			Foreign			Eliminations			Consolidated
Year Ended December 31, 2019
Revenues:
Net sales to unaffiliated customers	$	1,968,319		$	371,191		$	—		$	2,339,510
Net sales between geographic areas		57,117			86,811			(143,928	)		—
Net sales		2,025,436			458,002			(143,928	)		2,339,510
Royalties and franchise fees		9,279			—			—			9,279
Total revenues	$	2,034,715		$	458,002		$	(143,928	)	$	2,348,789
(Loss) from operations	$	(412,225	)	$	(5,168	)	$	—		$	(417,393	)
Interest expense, net											114,899
Other expense, net											1,871
(Loss) before income taxes										$	(534,163	)
Depreciation and amortization	$	72,701		$	8,415					$	81,116
Total long-lived assets (excluding goodwill, trade names and other intangible assets, net)	$	224,692		$	26,156					$	250,848
Total assets	$	3,317,305		$	278,014		$	—		$	3,595,319

	Domestic		Foreign		Eliminations			Consolidated
Year Ended December 31, 2018
Revenues:
Net sales to unaffiliated customers	$	2,015,899	$	400,543	$	—		$	2,416,442
Net sales between geographic areas		65,416		110,185		(175,601	)		—
Net sales		2,081,315		510,728		(175,601	)		2,416,442
Royalties and franchise fees		11,073		—		—			11,073
Total revenues	$	2,092,388	$	510,728	$	(175,601	)	$	2,427,515
Income from operations	$	264,440	$	13,845	$	—		$	278,285
Interest expense, net									105,706
Other expense, net									10,982
Income before income taxes								$	161,597
Depreciation and amortization	$	70,011	$	8,564				$	78,575
Total long-lived assets (excluding goodwill, trade names and other intangible assets, net)	$	292,632	$	40,735				$	333,367
Total assets	$	3,339,155	$	303,192	$	—		$	3,642,347

	Domestic		Foreign		Eliminations			Consolidated
Year Ended December 31, 2017
Revenues:
Net sales to unaffiliated customers	$	1,962,697	$	395,289	$	—		$	2,357,986
Net sales between geographic areas		54,268		64,585		(118,853	)		—
Net sales		2,016,965		459,874		(118,853	)		2,357,986
Royalties and franchise fees		13,583		—		—			13,583
Total revenues	$	2,030,548	$	459,874	$	(118,853	)	$	2,371,569
Income from operations	$	252,270	$	27,866	$	—		$	280,136
Interest expense, net									87,366
Other income, net									4,626
Income before income taxes								$	188,144
Depreciation and amortization	$	76,970	$	8,198				$	85,168

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Changes in Accumulated Other Comprehensive Loss (Tables)

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Changes in Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss consisted of the following:

	Year Ended December 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		5,725			106		5,831
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax		6,897			739		7,636
Net current-period other comprehensive income		12,622			845		13,467
Balance at December 31, 2019	$	(37,434	)	$	1,700	$	(35,734	)

	Year Ended December 31, 2018
	Foreign Currency Adjustments			Impact of Foreign Exchange Contracts, Net of Taxes			Total, Net of Taxes
Balance at December 31, 2017	$	(35,610	)	$	(208	)	$	(35,818	)
Other comprehensive (loss) income before reclassifications, net of income tax		(14,446	)		1,432			(13,014	)
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax		—			(369	)		(369	)
Net current-period other comprehensive (loss) income		(14,446	)		1,063			(13,383	)
Balance at December 31, 2018	$	(50,056	)	$	855		$	(49,201	)

	Year Ended December 31, 2017
	Foreign Currency Adjustments			Impact of Foreign Exchange Contracts, Net of Taxes			Total, Net of Taxes
Balance at December 31, 2016	$	(53,171	)	$	932		$	(52,239	)
Other comprehensive income (loss) before reclassifications, net of income tax		17,561			(1,044	)		16,517
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax		—			(96	)		(96	)
Net current-period other comprehensive income (loss)		17,561			(1,140	)		16,421
Balance at December 31, 2017	$	(35,610	)	$	(208	)	$	(35,818	)

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Derivative Financial Instruments - Schedule of Fair Values of Derivatives (Detail) $ in Thousands	Dec. 31, 2018 USD ($)
Foreign Exchange Contracts [Member] | Prepaid Expenses and Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	$ 115

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Fair Value Measurements - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Derivatives asset and liabilities outstanding	$ 0
Option on Securities [Member]
Debt Instrument [Line Items]
Derivative assets wrote off cost	$ 2,169
Punchbowl Inc [Member]
Debt Instrument [Line Items]
Equity method investment, ownership percentage	28.00%

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Employee Benefit Plans - Additional Information (Detail) - Subsidiary Issuer [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Defined Contribution Plan Disclosure [Line Items]
Defined contribution plan, expenses recognized	$ 7,944	$ 6,454	$ 6,565
Minimum [Member]
Defined Contribution Plan Disclosure [Line Items]
Employer matching contribution of employees contribution	11.00%
Employer matching contribution of employees gross pay	5.00%
Maximum [Member]
Defined Contribution Plan Disclosure [Line Items]
Employer matching contribution of employees contribution	100.00%
Employer matching contribution of employees gross pay	6.00%

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Long-Term Obligations - Term Loan Credit Agreement Amendment - Additional Information (Detail) $ in Thousands	1 Months Ended		12 Months Ended
	Jun. 30, 2019 USD ($)	Feb. 28, 2018	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Debt Instrument [Line Items]
Banker and legal fees				$ 856
Term Loan [Member]
Debt Instrument [Line Items]
Long-term Debt, Current			$ 58,000
Other Expense [Member]
Debt Instrument [Line Items]
Write off of deferred financing costs				186
Write off of capitalized original issue discount				102
Write off of capitalized call premium				58
Banker and legal fees				$ 800
Maximum [Member]
Debt Instrument [Line Items]
Senior secured leverage ratio		3.2
Minimum [Member]
Debt Instrument [Line Items]
Senior secured leverage ratio		1.0
Alternate Base Interest Rate Loans [Member]
Debt Instrument [Line Items]
Debt instrument interest rate increase decrease		1.50%
LIBOR [Member]
Debt Instrument [Line Items]
Debt instrument interest rate increase decrease		2.50%
Term loan credit agreement [member]
Debt Instrument [Line Items]
Repayment of Term debt Loan	$ 62,770
Term loan credit agreement [member] | Maximum [Member]
Debt Instrument [Line Items]
Senior secured leverage ratio			3.50
Term loan credit agreement [member] | Minimum [Member]
Debt Instrument [Line Items]
Senior secured leverage ratio			1.00

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Loans and Notes Payable - ABI Facility - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2019 USD ($) OptionPlan	Dec. 31, 2018 USD ($)
Debt Instrument [Line Items]
Line of credit facility, amount outstanding	$ 128,806,000	$ 302,751,000
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of credit facility, amount outstanding	$ 129,350,000
Interest rates	5.19%
Outstanding letter of credit	$ 25,128,000
Line of credit facility, remaining borrowing capacity	350,033,000
ABL Facility [Member]
Debt Instrument [Line Items]
Unamortized financing costs	1,992,000
ABL Facility [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Credit facility current borrowing capacity	540,000,000
Credit facility borrowing maximum capacity	640,000,000
Letters of credit outstanding maximum under our ABL facility	$ 50,000,000
Debt instrument maturity date	Aug. 31, 2023
Number of pricing options | OptionPlan	2
Commitment fee percentage	0.25%
Percentage applied to aggregate commitments and borrowing base	10.00%
Applicability of fixed charge coverage ratio, description	PCHI must comply with a fixed charge coverage ratio if excess availability under the ABL Facility on any day is less than the greater of: (a) 10% of the lesser of the aggregate commitments and the then borrowing base under the ABL Facility and (b) $40,000.
Line of credit facility, excess availability	$ 40,000,000
ABL Facility [Member] | Revolving Credit Facility [Member] | Alternate Base Interest Rate Loans [Member]
Debt Instrument [Line Items]
Interest rate description	(i) an alternate base interest rate (“ABR”) equal to the greater of (a) the prime rate, (b) the federal funds rate plus 0.5% or (c) the LIBOR rate plus 1%, in each case, on the date of such borrowing
ABL Facility [Member] | Revolving Credit Facility [Member] | Alternate Base Interest Rate Loans [Member] | Minimum [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	0.25%
ABL Facility [Member] | Revolving Credit Facility [Member] | Alternate Base Interest Rate Loans [Member] | Maximum [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	0.50%
ABL Facility [Member] | Revolving Credit Facility [Member] | Federal Fund Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	0.50%
ABL Facility [Member] | Revolving Credit Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
ABL Facility [Member] | Revolving Credit Facility [Member] | LIBOR Based Loans [Member]
Debt Instrument [Line Items]
Interest rate description	(ii) a LIBOR based interest rate, in each case plus an applicable margin.
ABL Facility [Member] | Revolving Credit Facility [Member] | LIBOR Based Loans [Member] | Minimum [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	1.25%
ABL Facility [Member] | Revolving Credit Facility [Member] | LIBOR Based Loans [Member] | Maximum [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	1.50%

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Long-Term Obligations - Maturities of Long- Term Obligations (Detail) $ in Thousands	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
2020	$ 71,524
2021	13,697
2022	642,496
2023	350,390
2024	521
Thereafter	510,327
Long-term obligations	1,588,955
Long-Term Debt Obligations [Member]
Debt Instrument [Line Items]
2020	70,462
2021	12,266
2022	641,237
2023	350,000
Thereafter	500,000
Long-term obligations	1,573,965
Finance Lease Obligations [Member]
Debt Instrument [Line Items]
2020	1,062
2021	1,431
2022	1,259
2023	390
2024	521
Thereafter	10,327
Long-term obligations	$ 14,990

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Inventories, Net

12 Months Ended

Dec. 31, 2019

Inventory Disclosure [Abstract]

Inventories, Net

Note 7—Inventories, Net

Inventories consisted of the following:

	December 31,
	2019		2018
Finished goods	$	606,036	$	706,327
Raw materials		34,259		33,423
Work in process		18,124		16,288
	$	658,419	$	756,038

See Note 2, Summary of Significant Accounting Policies, for a discussion of the Company’s accounting policies for inventories.

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Loans and Notes Payable

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Loans and Notes Payable

Note 11—Loans and Notes Payable

ABL Facility

Prior to April 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”). 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. The ABL Facility 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 described below, and (b) letters of credit, in an aggregate face amount at any time outstanding not to exceed $50,000.

Under the ABL Facility, the borrowing base at any time equals (a) a percentage of eligible trade receivables, plus (b) a percentage of eligible inventory, plus (c) a percentage of eligible credit card receivables, less (d) certain reserves.

The ABL Facility generally provides for two pricing options: (i) an alternate base interest rate (“ABR”) equal to the greater of (a) the prime rate, (b) the federal funds rate plus 0.5% or (c) the LIBOR rate plus 1%, in each case, on the date of such borrowing or (ii) a LIBOR based interest rate, in each case plus an applicable margin. The applicable margin ranges from 0.25% to 0.50% with respect to ABR borrowings and from 1.25% to 1.50% with respect to LIBOR borrowings.

In addition to paying interest on outstanding principal, the Company is required to pay a commitment fee of 0.25% per annum in respect of unutilized commitments. The Company must also pay customary letter of credit fees.

All obligations under the ABL Facility are jointly and severally guaranteed by PC Intermediate, PCHI and each existing and future domestic subsidiary of PCHI. PCHI and each guarantor has secured its obligations, subject to certain exceptions and limitations, including obligations under its guaranty, as applicable, by a first-priority lien on its accounts receivable, inventory, cash and certain related assets and a second-priority lien on substantially all of its other assets.

The facility contains negative covenants that, among other things and subject to certain exceptions, restrict the ability of PCHI to:

• incur additional indebtedness;

• pay dividends on capital stock or redeem, repurchase or retire capital stock;

• make certain investments, loans, advances and acquisitions;

• engage in transactions with affiliates;

• create liens; and

• transfer or sell certain assets.

In addition, PCHI must comply with a fixed charge coverage ratio if excess availability under the ABL Facility on any day is less than the greater of: (a) 10% of the lesser of the aggregate commitments and the then borrowing base under the ABL Facility and (b) $40,000. The fixed charge coverage ratio is the ratio of (i) Adjusted EBITDA (as defined in the facility) minus maintenance-related capital expenditures (as defined in the facility) to (ii) fixed charges (as defined in the facility).

The ABL Facility also contains certain customary affirmative covenants and events of default.

In connection with entering into and amending the ABL Facility, the Company incurred and capitalized third-party costs. All capitalized costs are being amortized over the life of the ABL Facility and are included in loans and notes payable in the Company’s consolidated balance sheet. The balance of related unamortized financing costs at December 31, 2019 was $1,992.

Borrowings under the ABL Facility totaled $129,350 at December 31, 2019. The weighted average interest rate for such borrowings was 5.19% at December 31, 2019. Outstanding standby letters of credit totaled $25,128 at December 31, 2019 and, after considering borrowing base restrictions, at December 31, 2019 PCHI had $350,033 of available borrowing capacity under the terms of the facility.

Other Credit Agreements

The Company’s subsidiaries have also entered into several foreign asset-based and overdraft credit facilities that provide the Company with additional borrowing capacity. At December 31, 2019 and 2018, there were $1,447 and $1,710 borrowings outstanding under the foreign facilities, respectively. The facilities contain customary affirmative and negative covenants.

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Schedule I - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Disclosure [Abstract]

Schedule I - Condensed Financial Information of Registrant

SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT

PARTY CITY HOLDCO INC.

(Parent company only)

CONDENSED BALANCE SHEETS

(Dollars in thousands)

	December 31, 2019			December 31, 2018
ASSETS
Other assets (principally investment in and amounts due from wholly-owned subsidiaries)	$	533,096		$	1,046,681
Total assets	$	533,096		$	1,046,681
LIABILITIES, REDEEMABLE SECURITIES AND STOCKHOLDERS’ EQUITY
Total liabilities	$	—		$	—
Redeemable securities		3,351			3,351
Stockholders’ equity:
Common stock (94,461,576 and 93,622,934 shares outstanding and 121,662,540 and 120,788,159 shares issued at December 31, 2019 and December 31, 2018, respectively)		1,211			1,208
Additional paid-in capital		928,573			922,476
Retained (deficit) earnings		(37,219	)		495,777
Accumulated other comprehensive loss		(35,734	)		(49,201	)
Total stockholders’ equity before common stock held in treasury		856,831			1,370,260
Less: Common stock held in treasury, at cost (27,200,964 shares and 27,165,225 shares at December 31, 2019 and December 31, 2018, respectively)		(327,086	)		(326,930	)
Total stockholders’ equity		529,745			1,043,330
Total liabilities, redeemable securities and stockholders’ equity	$	533,096		$	1,046,681

See accompanying notes to these condensed financial statements.

PARTY CITY HOLDCO INC.

(Parent company only)

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(Dollars in thousands)

	Fiscal Year Ended December 31,
	2019			2018			2017
Equity in net income of subsidiaries	$	(532,495	)	$	122,850		$	215,340
Net income	$	(532,495	)	$	122,850		$	215,340
Add: Net income attributable to redeemable securities holder		—			409			—
Net income attributable to common shareholders of Party City Holdco Inc.	$	(532,495	)	$	123,259		$	215,340
Other comprehensive (loss) income, net		13,467			(13,383	)		16,421
Comprehensive income		(519,028	)		109,467			231,761
Comprehensive income attributable to redeemable securities holder		—			409			—
Comprehensive income attributable to common shareholders of Party City Holdco Inc.	$	(519,028	)	$	109,876		$	231,761

See accompanying notes to these condensed financial statements.

PARTY CITY HOLDCO INC.

(Parent company only)

CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

	Fiscal Year Ended December 31,
	2019			2018			2017
Cash flows provided by (used in) operating activities:
Net income	$	(532,495	)	$	122,850		$	215,340
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in net income of subsidiaries		532,495			(122,850	)		(215,340	)
Change in due to/from affiliates		(989	)		37,928			285,435
Net cash (used in) provided by operating activities		(989	)		37,928			285,435
Cash flows (used in) provided by financing activities:
Treasury stock purchases		(156	)		(40,197	)		(286,733	)
Exercise of stock options		1,145			2,269			1,298
Net cash provided by (used in) financing activities		989			(37,928	)		(285,435	)
Net change in cash and cash equivalents		—			—			—
Cash and cash equivalents at beginning of period		—			—			—
Cash and cash equivalents at end of period	$	—		$	—		$	—

See accompanying notes to these condensed financial statements.

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Store Impairment and Restructuring Charges

12 Months Ended

Dec. 31, 2019

Restructuring and Related Activities [Abstract]

Store Impairment and Restructuring Charges

Note 3—Store Impairment and Restructuring charges

Each year, the Company typically closes approximately ten 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 year ended December 31, 2019, the Company performed a comprehensive review of its store locations aimed at improving the overall productivity of such locations (“store optimization program”) and, 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 55 stores which are primarily located in close proximity to other Party City stores. These closings are expected to provide the Company with capital flexibility to expand into underserved markets. In conjunction with the store optimization program, during the year ended December 31, 2019, the Company recorded the following charges:

	December 31,
	2019
Inventory reserves	$	21,284
Operating lease asset impairment		14,943
Property, plant and equipment impairment		4,680
Labor and other costs incurred closing stores		8,754
Severance		661
Total	$	50,322

Such amounts represent the Company’s best estimate of the total charges that are expected to be recorded for such items. As the Company closes the stores, it records 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 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, including data on the ability to sub-lease the stores.

The charge for inventory reserves represents inventory that is disposed of following the closures of the stores and inventory that is 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.

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.

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Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Note 24—Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The pronouncement contains a five-step model which replaces most existing revenue recognition guidance. The Company adopted the standard on January 1, 2018 via a modified retrospective approach and recognized the cumulative effect of the adoption as an adjustment to January 1, 2018 retained earnings.

Revenue Transactions—Retail

Revenue from retail store operations is recognized at the point of sale as control of the product is transferred to the customer at such time. Retail e-commerce sales are recognized when the consumer receives the product as control transfers upon delivery. Due to its extensive history operating as the largest party goods retailer in North America, the Company has sufficient history with which to estimate future retail sales returns and it uses the expected value method to estimate such activity.

The transaction price for the majority of the Company’s retail sales is based on either: 1) the item’s stated price or 2) the stated price adjusted for the impact of a coupon which can only be applied to such transaction. To the extent that the Company charges customers for freight costs on e-commerce sales, the Company records such amounts in revenue. The Company has chosen the pronouncement’s policy election which allows it to exclude all sales taxes and value-added taxes from revenue.

Under the terms of its agreements with its franchisees, the Company provides both: 1) brand value (via significant advertising spend) and 2) support with respect to planograms, in exchange for a royalty fee that ranges from 4% to 6% of the franchisees’ sales. The Company records the royalty fees at the time that the franchisees’ sales are recorded. Additionally, although the Company anticipates that future franchise store openings will be limited, when a franchisee opens a new store, the Company receives and records a one-time fee which is earned by the Company for its assistance with site selection and development of the new location. Both the sales-based royalty fee and the one-time fee are recorded in royalties and franchise fees in the Company’s consolidated statement of operations and comprehensive (loss) income.

Revenue Transactions—Wholesale

For most of the Company’s wholesale sales, control transfers upon the Company’s shipment of the product. Wholesale sales returns are not significant as the Company generally only accepts the return of goods that were shipped to the customer in error or that were damaged when received by the customer. Additionally, due to its extensive history operating as a leading party goods wholesaler, the Company has sufficient history with which to estimate future sales returns.

In most cases, the determination of the transaction price is fixed based on the contract and/or purchase order. To the extent that the Company charges customers for freight costs, the Company records such amounts in revenue. The Company has chosen the pronouncement’s policy election which allows it to exclude all sales taxes and value-added taxes from revenue.

The majority of the sales for the Company’s wholesale business are due within 30 to 120 days from the transfer of control of the product and substantially all of the sales are collected within a year from such transfer. For all transactions for which the Company expects to collect the transaction price within a year from the transfer of control, the Company applies one of the pronouncement’s practical expedients and does not adjust the consideration for the effects of a significant financing component.

Judgments

Although most of the Company’s revenue transactions consist of fixed transaction prices and the transfer of control at either the point of sale (for retail) or when the product is shipped (for wholesale), certain transactions

involve a limited number of judgments. For transactions for which control transfers to the customer when the freight carrier delivers the product to the customer, the Company estimates the date of such receipt based on historical shipping times. Additionally, the Company utilizes historical data to estimate sales returns. Due to its extensive history operating as a leading party goods retailer, the Company has sufficient history with which to estimate such amounts.

Other Revenue Topics

During the years ended December 31, 2019, December 31, 2018, and December 31, 2017, impairment losses recognized on receivables and contract assets arising from the Company’s contracts with customers were immaterial.

As a significant portion of the Company’s revenue is either: 1) part of a contract with an original expected duration of one year or less, or 2) related to sales-based royalties promised in exchange for licenses of intellectual property, the Company has elected to apply the optional exemptions in paragraphs ASC 606-10-50-14 through ASC 606-10-50-14A.

Additionally, the Company has elected to apply the practical expedient which allows companies to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset that the entity otherwise would have recognized would have been one year or less.

Disaggregation of Revenue

The following table summarizes revenue from contracts with customers for the years ended December 31, 2019, December 31, 2018, and December 31, 2017:

	Fiscal Year Ended December 31,
	2019		2018		2017
Retail Net Sales:
Party City Stores	$	1,529,043	$	1,583,134	$	1,521,661
Global E-commerce		162,490		154,481		152,465
Temporary Stores		50,603		65,219		54,463
Total Retail Net Sales	$	1,742,136	$	1,802,834	$	1,728,589
Royalties and Franchise Fees		9,279		11,073		13,583
Total Retail Revenue	$	1,751,415	$	1,813,907	$	1,742,172
Wholesale Net Sales:
Domestic	$	310,042	$	328,056	$	351,109
International		287,332		285,552		278,288
Total Wholesale Net Sales	$	597,374	$	613,608	$	629,397
Total Consolidated Revenue	$	2,348,789	$	2,427,515	$	2,371,569

Financial Statement Impact of Adopting the Pronouncement

All of the Company’s revenue is recognized from contracts with customers and, therefore, is subject to the pronouncement.

The Company adopted the pronouncement using a modified retrospective approach and applied the guidance to all contracts as of January 1, 2018. On such date, the Company reduced its retained earnings by $78, reduced its accounts receivable by $141, increased its inventory by $11, reduced its accrued expenses by $26, increased its deferred tax asset by $28 and increased its income taxes payable by $2. The cumulative adjustment principally related to certain discounts within the Company’s wholesale business.

Additionally, the adoption of the pronouncement impacted the Company’s financial statements for the year ended December 31, 2018 as it decreased pre-tax income by $22 during the period.

XML

Cover Page - USD ($)	12 Months Ended
	Dec. 31, 2019	Feb. 28, 2020	Jun. 30, 2019
Cover [Abstract]
Document Type	10-K
Amendment Flag	false
Document Annual Report	true
Document Transition Report	false
Document Fiscal Year Focus	2019
Document Period End Date	Dec. 31, 2019
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	FY
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Registrant Name	Party City Holdco Inc.
Entity Central Index Key	0001592058
Trading Symbol	PRTY
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		94,491,352
Entity Small Business	false
Entity Emerging Growth Company	false
Entity File Number	001-37344
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-0539758
Entity Address, Address Line One	80 Grasslands Road
Entity Address, State or Province	NY
City Area Code	914
Local Phone Number	345-2020
Entity Address, Postal Zip Code	10523
Entity Address, City or Town	Elmsford
Entity Shell Company	false
Security Exchange Name	NYSE
Title of 12(b) Security	Common Stock
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Public Float			$ 428,960,763

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Consolidated Financial Statements

Consolidated Financial Statements

The consolidated financial statements of the Company include the accounts of all majority-owned subsidiaries and controlled entities. All intercompany balances and transactions have been eliminated.

The Company’s 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 their 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 consolidated financial statements of the Company combine the Fiscal Year and Fiscal Quarters of the Company’s retail operations with the calendar year and calendar quarters of the Company’s wholesale operations, as the differences are not significant.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Management periodically evaluates estimates used in the preparation of the consolidated financial statements for continued reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based on such periodic evaluations.

Cash Equivalents

Cash Equivalents

Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. All credit card transactions that process in less than seven days are classified as cash and cash equivalents.

Inventories

Inventories

Inventories are valued at the lower of cost and net realizable value. In assessing the ultimate realization of inventories, the Company makes judgments regarding, among other things, future demand and market conditions, current inventory levels and the impact of the possible discontinuation of product designs.

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.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. Judgment is required in assessing the ultimate realization of these receivables, including consideration of the Company’s history of receivable write-offs, the level of past due accounts and the economic status of the Company’s customers. In an effort to identify adverse trends relative to customer economic status, the Company assesses the financial health of the markets it operates in and performs periodic credit evaluations of its customers and ongoing reviews of account balances and aging of receivables. Amounts are considered past due when payment has not been received within the time frame of the credit terms extended. Write-offs are charged directly against the allowance for doubtful accounts and occur only after all collection efforts have been exhausted. At December 31, 2019 and 2018, the allowance for doubtful accounts was $4,786 and $2,933, respectively.

Long-Lived and Intangible Assets (including Goodwill)

Long-Lived and Intangible Assets (including Goodwill)

Property, plant and equipment are stated at cost. 

The Company reviews the recoverability of its finite long-lived assets, including finite-lived intangible assets, whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. For purposes of recognizing and measuring impairment, the Company evaluates long-lived assets/asset groups, other than goodwill, based upon the lowest level of independent cash flows ascertainable to evaluate impairment. If an impairment indicator exists, we compare the undiscounted future cash flows of the asset/asset group to the carrying value of the asset/asset group. If the sum of the undiscounted future cash flows is less than the carrying value of the asset/asset group, we would calculate discounted future cash flows based on market participant assumptions. If the sum of discounted cash flows is less than the carrying value of the asset/asset group, we would recognize an impairment loss. The impairment related to long-lived assets is measured as the amount by which the carrying amount of the asset(s) exceeds the fair value of the asset(s).

In the evaluation of the fair value and future benefits of finite long-lived assets attached to retail stores, the Company performs its cash flow analysis generally on a store-by-store basis. Various factors including future sales growth and profit margins are included in this analysis.

The Company evaluates the goodwill associated with its acquisitions, and other intangibles with indefinite lives, for impairment as of the first day of its fourth quarter based on current and projected performance, or more frequently if circumstances indicate a possible impairment. For purposes of testing goodwill for impairment, reporting units are determined by identifying operating segments within the Company’s organization which constitute a business for which discrete financial information is available and is reviewed by management. Components within an operating segment are aggregated to the extent that they have similar economic characteristics. Based on this evaluation, the Company has determined that its operating segments, wholesale and retail, represent reporting units for the purposes of its goodwill impairment test.

If it is concluded that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company estimates the fair value of the reporting unit using a combination of a market approach and an income approach. If such carrying value exceeds the fair value an impairment loss will be recognized in an amount equal to such excess. The fair value of a reporting unit refers to the amount at which the unit as a whole could be sold in a current transaction between willing parties.

Our Trade names are treated as indefinite-lived intangible assets and, therefore are not amortized, but rather are tested for impairment annually in the fourth fiscal quarter, unless there are events requiring an earlier assessment or changes in circumstances during an interim period providing impairment indicators are present. When performing a quantitative impairment assessment of our Trade name indefinite-lived intangible assets, the fair value of the Trade names is estimated using a discounted cash flow analysis based on the “relief from royalty” method, assuming that a third party would be willing to pay a royalty in lieu of ownership for this intangible asset. This approach is dependent on many factors, including estimates of future growth, royalty rates, and discount rates. Actual future results may differ from these estimates. Impairment loss is recognized when the estimated fair value of the indefinite-lived intangible asset is less than its carrying amount.

Deferred Financing Costs

Deferred Financing Costs

Deferred financing costs are netted against amounts outstanding under the related debt instruments. They are amortized to interest expense over the terms of the instruments using the effective interest method.

Equity Method Investments

Equity Method Investments

The Company has an investment in Convergram Mexico, S. De R.L. De C.V., a joint venture distributing metallic balloons, principally in Mexico and Latin America. The Company accounts for its 49.9% investment in the joint venture using the equity method of accounting.

The Company’s investments are included in other assets on the consolidated balance sheet and the results of the investees’ operations are included in other expense in the consolidated statement of operations and comprehensive (loss) income (see Note 14, Other Expense, net).

Insurance Accruals

Insurance Accruals

The Company maintains certain self-insured workers’ compensation and general liability insurance plans. The Company estimates the required liability for claims under such plans based upon various assumptions, which include, but are not limited to, historical loss experience, projected loss development factors, actual payroll and other data. The required liability is also subject to adjustment in the future based upon changes in claims experience, including changes in the number of incidents (frequency) and changes in the ultimate cost per incident (severity).

Revenue Recognition

Revenue Recognition

Retail

Revenue from retail store operations is recognized at the point of sale as control of the product is transferred to the customer at such time. Retail e-commerce sales are recognized when the consumer receives the product as control transfers upon delivery. Due to its extensive history operating as the largest party goods retailer in North America, the Company has sufficient history with which to estimate future retail sales returns and it uses the expected value method to estimate such activity.

The transaction price for the majority of the Company’s retail sales is based on either: 1) the item’s stated price or 2) the stated price adjusted for the impact of a coupon which can only be applied to such transaction. To the extent that the Company charges customers for freight costs on e-commerce sales, the Company records such amounts in revenue. The Company excludes all sales taxes and value-added taxes from revenue.

Under the terms of its agreements with its franchisees, the Company provides both: 1) brand value (via significant advertising spend) and 2) support with respect to planograms, in exchange for a royalty fee that ranges from 4% to 6% of the franchisees’ sales. The Company records the royalty fees at the time that the franchisees’ sales are recorded. Additionally, although the Company anticipates that future franchise store openings will be limited, when a franchisee opens a new store, the Company receives and records a one-time fee which is earned by the Company for its assistance with site selection and development of the new location. Both the sales-based royalty fee and the one-time fee are recorded in royalties and franchise fees in the Company’s consolidated statement of operations and comprehensive (loss) income.

Wholesale

For most of the Company’s wholesale sales, control transfers upon the Company’s shipment of the product. Wholesale sales returns are not significant as the Company generally only accepts the return of goods that were shipped to the customer in error or that were damaged when received by the customer. Additionally, due to its extensive history operating as a leading party goods wholesaler, the Company has sufficient history with which to estimate future sales returns.

In most cases, the determination of the transaction price is fixed based on the contract and/or purchase order. To the extent that the Company charges customers for freight costs, the Company records such amounts in revenue. The Company excludes all sales taxes and value-added taxes from revenue.

The majority of the sales for the Company’s wholesale business are due within 30 to 120 days from the transfer of control of the product and substantially all of the sales are collected within a year from such transfer. For all transactions for which the Company expects to collect the transaction price within a year from the transfer of control, the Company does not adjust the consideration for the effects of a significant financing component.

Cost of Sales/Shipping and Handling

Cost of Sales

Cost of sales at wholesale reflects the production costs (i.e., raw materials, labor and overhead) of manufactured goods and the direct cost of purchased goods, inventory shrinkage, inventory adjustments, inbound freight to the Company’s manufacturing and distribution facilities, distribution costs and outbound freight to transfer goods to the Company’s wholesale customers. At retail, cost of sales reflects the direct costs of goods purchased from third parties and the production costs/purchase costs of goods acquired from the Company’s wholesale operations. Retail cost of sales also includes inventory shrinkage, inventory adjustments, inbound freight, occupancy costs related to store operations (such as rent, utilities and common area maintenance), depreciation on assets and all logistics costs (i.e., handling and distribution costs) associated with the Company’s e-commerce business.

Retail Operating Expenses

Retail Operating Expenses

Retail operating expenses include costs associated with the operation of the Company’s retail stores (with the exception of occupancy costs, which are included in cost of sales). Retail operating expenses principally consist of employee compensation and benefits, advertising, supplies expense and credit card fees.

Product Royalty Agreements

Product Royalty Agreements

The Company enters into product royalty agreements that allow the Company to use licensed designs on certain of its products. These contracts require the Company to pay royalties, generally based on the sales of such

product, and may require guaranteed minimum royalties, a portion of which may be paid in advance. The Company matches royalty expense with revenue by recording royalties at the time of sale, at the greater of the contractual rate or an effective rate calculated based on the guaranteed minimum royalty and the Company’s estimate of sales during the contract period. If a portion of the guaranteed minimum royalty is determined to be unrecoverable, the unrecoverable portion is charged to expense at that time. Guaranteed minimum royalties paid in advance are recorded in the consolidated balance sheets in either prepaid expenses and other current assets or other assets, depending on the nature of the royalties.

Catalog Costs

Catalog Costs

The Company expenses costs associated with the production of catalogs when incurred.

Advertising

Advertising

Advertising costs are expensed as incurred. Retail advertising expenses for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 were $72,518, $68,756, and $61,187, respectively.

Variable Interest Entities

Variable Interest Entities

When determining whether a legal entity should be consolidated, the Company first determines whether it has a variable interest in the legal entity. If a variable interest exists, the Company determines whether the legal entity is a variable interest entity due to either: 1) a lack of sufficient equity to finance its activities, 2) the equity holders lacking the characteristics of a controlling financial interest, or 3) the legal entity being structured with non-substantive voting rights. If the Company concludes that the legal entity is a variable interest entity, the Company next determines whether it is the primary beneficiary due to it possessing both: 1) the power to direct the activities of a variable interest entity that most significantly impact the variable interest entity’s economic performance, and 2) the obligation to absorb losses of the variable interest entity that potentially could be significant to the variable interest entity or the right to receive benefits from the variable interest entity which could be significant to the variable interest entity. If the Company concludes that it is the primary beneficiary, it consolidates the legal entity.

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. Although the Company currently only owns 26% of Kazzam’s equity, the Company has concluded that: a) Kazzam is a variable interest entity as it has insufficient equity at risk, and b) the Company is its primary beneficiary. Therefore, the Company has consolidated Kazzam into the Company’s financial statements.

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 mezzanine liability is adjusted to the greater of: a) the interest’s carrying amount under Accounting Standards Codification (“ASC”) Topic 810, “Consolidation”, or b) the fair value of the interest.

In January 2020, the Company and Ampology terminated certain services agreements and warrants that Ampology had in the Company stock. The parties concurrently entered into an interim transition agreement.  

Art and Development Costs

Art and Development Costs

Art and development costs are primarily internal costs that are not easily associated with specific designs, some of which may not reach commercial production. Accordingly, the Company expenses these costs as incurred.

Derivative Financial Instruments

Derivative Financial Instruments

ASC Topic 815, “Accounting for Derivative Instruments and Hedging Activities”, requires that all derivative financial instruments be recognized on the balance sheet at fair value and establishes criteria for both the designation and effectiveness of hedging activities. The Company uses derivatives in the management of interest rate and foreign currency exposure. ASC Topic 815 requires the Company to formally document the assets, liabilities or other transactions the Company designates as hedged items, the risk being hedged and the relationship between the hedged items and the hedging instruments. The Company must measure the effectiveness of the hedging relationship at the inception of the hedge and on an on-going basis.

If derivative financial instruments qualify as fair value hedges, the gain or loss on the instrument and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in net income during the period of the change in fair values. For derivative financial instruments that qualify as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive (loss) income and reclassified into net income in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of a cash flow hedge, if any, is determined based on the dollar-offset method (i.e., the gain or loss on the derivative financial instrument in excess of the cumulative change in the present value of future cash flows of the hedged item) and is recognized in net income during the period of change. As long as hedge effectiveness is maintained, interest rate swap arrangements and foreign currency exchange agreements qualify for hedge accounting as cash flow hedges (see Note 22, Derivative Financial Instruments).

Income Taxes

Income Taxes

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities (and operating loss and tax credit carryforwards) applying enacted statutory tax rates in effect for the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the judgment of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Stock-Based Compensation

Stock-Based Compensation

Accounting for stock-based compensation requires measurement of compensation cost for all stock-based awards at fair value on the date of grant and recognition of compensation expense over the service period for awards expected to vest.

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the Company’s foreign currency adjustments and the impact of interest rate swap and foreign exchange contracts that qualify as hedges (see Note 22, Derivative Financial Instruments and Note 23, Changes in Accumulated Other Comprehensive Loss).

Foreign Currency Transactions and Translation

Foreign Currency Transactions and Translation

The functional currencies of the Company’s foreign operations are the local currencies in which they operate. Foreign currency exchange gains or losses resulting from receivables or payables in currencies other than the functional currencies generally are recognized in the Company’s statement of operations and comprehensive (loss) income. The balance sheets of foreign subsidiaries are translated into U.S. dollars at the exchange rates in effect on the balance sheet date. The results of operations of foreign subsidiaries are translated into U.S. dollars at the average exchange rates effective for the periods presented. The differences from historical exchange rates are recorded as comprehensive (loss) income and are included as a component of accumulated other comprehensive loss.

Earnings Per Share

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:

	Fiscal Year Ended December 31,
	2019			2018		2017
Net (loss) income attributable to common shareholders of Party City Holdco Inc.:	$	(532,495	)	$	123,259	$	215,340
Weighted average shares—Basic:		93,295,692			96,133,144		118,589,421
Effect of dilutive restricted stock units:		—			9,661		—
Effect of dilutive stock options:		—			1,128,245		1,304,600
Weighted average shares—Diluted:		93,295,692			97,271,050		119,894,021
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Basic:	$	(5.71	)	$	1.28	$	1.81
Net (loss) income per share attributable to common shareholders of Party City Holdco Inc.—Diluted:	$	(5.71	)	$	1.27	$	1.79

During the year ended December 31, 2019, restricted stock, restricted stock units, stock options, and warrants were not included in the calculation of diluted net loss per share attributable to common shareholders of Party City Holdco Inc. During the years ended December 31, 2018, and December 31, 2017, 2,394,868 stock options and 2,392,150 stock options, respectively, were excluded from the calculations of net income per share attributable to common shareholders of Party City Holdco Inc.—diluted as they were anti-dilutive. Additionally, during each of the years ended December 31, 2018, and December 31, 2017, 596,000 warrants were excluded from the calculations of net income per share attributable to common shareholders of Party City Holdco Inc.—diluted as they were anti-dilutive. Further, during the years ended December 31, 2018, and December 31, 2017, 141,400 restricted stock units and 0 restricted stock units, respectively, were excluded from the calculations of net income per share attributable to common shareholders of Party City Holdco Inc.—diluted as they were anti-dilutive.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, “Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”. The new guidance improves and clarifies the fair value measurement disclosure requirements of ASC 820. The new disclosure requirements include the disclosure of the changes in unrealized gains or losses included in other comprehensive (loss) income for recurring Level 3 fair value measurements held at the end of the reporting period and the explicit requirement to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The other provisions of ASU 2018-13 also include eliminated and modified disclosure requirements. The guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted, including in an interim period for which financial statements have not been issued or made available for issuance. The Company has evaluated the impact of the adoption of this ASU and determined that it will have no significant impact on its condensed consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows: Restricted Cash”. The pronouncement requires companies to show changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The Company adopted the pronouncement, which requires retrospective application, during the first quarter of 2018. The impact of such adoption was immaterial to the Company’s consolidated financial statements. See Note 27, Restricted Cash, for further discussion.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. The pronouncement clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The Company adopted the pronouncement during the first quarter of 2018 and such adoption did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses”. The ASU changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The pronouncement is effective for the Company during the first quarter of 2020. The Company is still evaluating the impact of the ASU on its consolidated financial statements, but does not expect it to have a material 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 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 its operating lease arrangements with terms of greater than twelve months. See the Company’s December 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 December 31, 2019 consolidated balance sheet, such accounts 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 and prepaid expenses and other current assets includes a $2,552 asset related to capitalized broker costs. In the Company’s December 31, 2019 consolidated balance sheet, such assets 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 26, Leases.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”. The update impacts the accounting for equity investments and the recognition of changes in fair value of financial liabilities when the fair value option is elected. The Company adopted the pronouncement during the first quarter of 2018 and such adoption had no impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The pronouncement contains a five-step model which replaces most existing revenue recognition guidance. The new standard became effective for the Company on January 1, 2018. The Company adopted the pronouncement using the modified retrospective approach. Therefore, on January 1, 2018, the Company adjusted its accounting for certain discounts which are related to the timing of payments by customers of its wholesale business and the Company recorded a cumulative-effect adjustment which reduced retained earnings by $46. Additionally, as of such date, the Company modified its accounting for certain metallic balloon sales of its wholesale segment and started to defer the recognition of revenue on such sales, and the related costs, until the balloons have been filled with helium. As a result, the Company recorded a cumulative-effect adjustment which increased retained earnings by $8. Finally, as of such date, the Company adjusted its accounting for certain discounts on wholesale sales of seasonal product and the Company recorded a cumulative-effect adjustment which reduced retained earnings by $40. See Note 24, Revenue from Contracts with Customers, for further discussion of the adoption of the pronouncement and the Company’s revenue recognition policy.

Shipping and Handling [Member]

Cost of Sales/Shipping and Handling

Shipping and Handling

Outbound shipping costs billed to customers are included in net sales. The costs of shipping and handling incurred by the Company are included in cost of sales.

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings (Deficit) [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, 2016	$ 1,016,789	$ 1,195	$ 910,167	$ 157,666	$ (52,239)	$ 1,016,789		$ 1,016,789
Balance, adjusted at Dec. 31, 2016	968,712	1,198	917,192	372,518	(35,818)	1,255,090	$ (286,733)	968,357	$ 355
Net income (loss)	215,340			215,340		215,340		215,340
Stock option expense	5,309		5,309			5,309		5,309
Warrant	421		421			421		421
Adjustment to redeemable securities	(410)			(410)		(410)		(410)
Exercise of stock options	1,298	3	1,295			1,298		1,298
Acquired noncontrolling interest	355							0	355
Foreign currency adjustments	17,561				17,561	17,561		17,561
Treasury stock purchases	(286,733)						(286,733)	(286,733)
Impact of foreign exchange contracts	(1,140)				(1,140)	(1,140)		(1,140)
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	(78)			(78)		(78)		(78)
Balance, adjusted at Dec. 31, 2017	1,043,780	1,208	923,138	495,274	(49,201)	1,370,419	(326,930)	1,043,489	291
Net income (loss)	122,819			122,850		122,850		122,850	(31)
Net income attributable to redeemable securities holder	409			409		409		409
Stock option expense	1,744		1,744			1,744		1,744
Restricted stock units — time-based	1,174	6	1,168			1,174		1,174
Directors — non-cash compensation	196		196			196		196
Warrant	(89)		(89)			(89)		(89)
Exercise of stock options	2,269	4	2,265			2,269		2,269
Foreign currency adjustments	(14,479)				(14,446)	(14,446)		(14,446)	(33)
Treasury stock purchases	(40,197)						(40,197)	(40,197)
Impact of foreign exchange contracts	1,063				1,063	1,063		1,063
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	159		662	(503)		159		159
Net income (loss)	(532,858)			(532,495)		(532,495)		(532,495)	(363)
Stock option expense	1,319		1,319			1,319		1,319
Restricted stock units — time-based	2,033		2,033			2,033		2,033
Directors — non-cash compensation	313		313			313		313
Warrant	515		515			515		515
Exercise of stock options	1,148	3	1,145			1,148		1,148
Acquired noncontrolling interest	181		110			110		110	71
Foreign currency adjustments	12,599				12,622	12,622		12,622	(23)
Treasury stock purchases	(156)						(156)	(156)
Impact of foreign exchange contracts	847			2	845	847		847
Balance at Dec. 31, 2019	$ 529,721	$ 1,211	$ 928,573	$ (37,219)	$ (35,734)	$ 856,831	$ (327,086)	$ 529,745	$ (24)

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Changes in Accumulated Other Comprehensive Loss

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Changes in Accumulated Other Comprehensive Loss

Note 23—Changes in Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss consisted of the following:

	Year Ended December 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		5,725			106		5,831
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax		6,897			739		7,636
Net current-period other comprehensive income		12,622			845		13,467
Balance at December 31, 2019	$	(37,434	)	$	1,700	$	(35,734	)

	Year Ended December 31, 2018
	Foreign Currency Adjustments			Impact of Foreign Exchange Contracts, Net of Taxes			Total, Net of Taxes
Balance at December 31, 2017	$	(35,610	)	$	(208	)	$	(35,818	)
Other comprehensive (loss) income before reclassifications, net of income tax		(14,446	)		1,432			(13,014	)
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax		—			(369	)		(369	)
Net current-period other comprehensive (loss) income		(14,446	)		1,063			(13,383	)
Balance at December 31, 2018	$	(50,056	)	$	855		$	(49,201	)

	Year Ended December 31, 2017
	Foreign Currency Adjustments			Impact of Foreign Exchange Contracts, Net of Taxes			Total, Net of Taxes
Balance at December 31, 2016	$	(53,171	)	$	932		$	(52,239	)
Other comprehensive income (loss) before reclassifications, net of income tax		17,561			(1,044	)		16,517
Amounts reclassified from accumulated other comprehensive loss to the consolidated statement of operations and comprehensive income, net of income tax		—			(96	)		(96	)
Net current-period other comprehensive income (loss)		17,561			(1,140	)		16,421
Balance at December 31, 2017	$	(35,610	)	$	(208	)	$	(35,818	)

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2019

Postemployment Benefits [Abstract]

Employee Benefit Plans

Note 15—Employee Benefit Plans

Certain subsidiaries of the Company maintain defined contribution plans for eligible employees. The plans require the subsidiaries to match from approximately 11% to 100% of voluntary employee contributions to the plans, not to exceed a maximum amount of the employee’s annual salary, ranging from 5% to 6%. Expense for the plans for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 totaled $7,944, $6,454, and $6,565, respectively.

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Segment Information

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Segment Information

Note 19—Segment Information

Industry Segments

The Company has two identifiable business segments. The Wholesale segment designs, manufactures, contracts for manufacture and distributes party goods, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties and stationery throughout the world. The Retail segment operates specialty retail party supply stores in the United States, principally under the names Party City and Halloween City, and it operates e-commerce websites, principally through the domain name PartyCity.com.

The Company’s industry segment data for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 are as follows:

	Wholesale			Retail			Consolidated
Year Ended December 31, 2019
Revenues:
Net sales	$	1,240,026		$	1,742,136		$	2,982,162
Royalties and franchise fees		—			9,279			9,279
Total revenues		1,240,026			1,751,415			2,991,441
Eliminations		(642,652	)		—			(642,652	)
Net revenues	$	597,374		$	1,751,415		$	2,348,789
Income (loss) from operations	$	4,152		$	(421,545	)	$	(417,393	)
Interest expense, net								114,899
Other expense, net								1,871
Loss before income taxes							$	(534,163	)
Depreciation and amortization	$	27,845		$	53,271		$	81,116
Capital expenditures	$	29,480		$	32,253		$	61,733
Total assets	$	1,912,522		$	1,682,797		$	3,595,319

	Wholesale			Retail		Consolidated
Year Ended December 31, 2018
Revenues:
Net sales	$	1,325,490		$	1,802,834	$	3,128,324
Royalties and franchise fees		—			11,073		11,073
Total revenues		1,325,490			1,813,907		3,139,397
Eliminations		(711,882	)		—		(711,882	)
Net revenues	$	613,608		$	1,813,907	$	2,427,515
Income from operations	$	45,180		$	233,105	$	278,285
Interest expense, net							105,706
Other expense, net							10,982
Income before income taxes						$	161,597
Depreciation and amortization	$	28,368		$	50,207	$	78,575
Capital expenditures	$	33,890		$	51,771	$	85,661
Total assets	$	1,346,856		$	2,295,491	$	3,642,347

	Wholesale			Retail		Consolidated
Year Ended December 31, 2017
Revenues:
Net sales	$	1,260,089		$	1,728,589	$	2,988,678
Royalties and franchise fees		—			13,583		13,583
Total revenues		1,260,089			1,742,172		3,002,261
Eliminations		(630,692	)		—		(630,692	)
Net revenues	$	629,397		$	1,742,172	$	2,371,569
Income from operations	$	68,130		$	212,006	$	280,136
Interest expense, net							87,366
Other income, net							4,626
Income before income taxes						$	188,144
Depreciation and amortization	$	30,520		$	54,648	$	85,168
Capital expenditures	$	32,490		$	34,480	$	66,970

Geographic Segments

Export sales of metallic balloons of $22,728, $23,567, and $22,812 during the years ended December 31, 2019, December 31, 2018, and December 31, 2017, respectively, are included in domestic sales to unaffiliated customers below. Intercompany sales between geographic areas primarily consist of sales of finished goods and are generally made at cost plus a share of operating profit.

The Company’s geographic area data follows:

	Domestic			Foreign			Eliminations			Consolidated
Year Ended December 31, 2019
Revenues:
Net sales to unaffiliated customers	$	1,968,319		$	371,191		$	—		$	2,339,510
Net sales between geographic areas		57,117			86,811			(143,928	)		—
Net sales		2,025,436			458,002			(143,928	)		2,339,510
Royalties and franchise fees		9,279			—			—			9,279
Total revenues	$	2,034,715		$	458,002		$	(143,928	)	$	2,348,789
(Loss) from operations	$	(412,225	)	$	(5,168	)	$	—		$	(417,393	)
Interest expense, net											114,899
Other expense, net											1,871
(Loss) before income taxes										$	(534,163	)
Depreciation and amortization	$	72,701		$	8,415					$	81,116
Total long-lived assets (excluding goodwill, trade names and other intangible assets, net)	$	224,692		$	26,156					$	250,848
Total assets	$	3,317,305		$	278,014		$	—		$	3,595,319

	Domestic		Foreign		Eliminations			Consolidated
Year Ended December 31, 2018
Revenues:
Net sales to unaffiliated customers	$	2,015,899	$	400,543	$	—		$	2,416,442
Net sales between geographic areas		65,416		110,185		(175,601	)		—
Net sales		2,081,315		510,728		(175,601	)		2,416,442
Royalties and franchise fees		11,073		—		—			11,073
Total revenues	$	2,092,388	$	510,728	$	(175,601	)	$	2,427,515
Income from operations	$	264,440	$	13,845	$	—		$	278,285
Interest expense, net									105,706
Other expense, net									10,982
Income before income taxes								$	161,597
Depreciation and amortization	$	70,011	$	8,564				$	78,575
Total long-lived assets (excluding goodwill, trade names and other intangible assets, net)	$	292,632	$	40,735				$	333,367
Total assets	$	3,339,155	$	303,192	$	—		$	3,642,347

	Domestic		Foreign		Eliminations			Consolidated
Year Ended December 31, 2017
Revenues:
Net sales to unaffiliated customers	$	1,962,697	$	395,289	$	—		$	2,357,986
Net sales between geographic areas		54,268		64,585		(118,853	)		—
Net sales		2,016,965		459,874		(118,853	)		2,357,986
Royalties and franchise fees		13,583		—		—			13,583
Total revenues	$	2,030,548	$	459,874	$	(118,853	)	$	2,371,569
Income from operations	$	252,270	$	27,866	$	—		$	280,136
Interest expense, net									87,366
Other income, net									4,626
Income before income taxes								$	188,144
Depreciation and amortization	$	76,970	$	8,198				$	85,168

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Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Identifiable Intangible Assets

The Company had the following other identifiable finite-lived intangible assets:

	December 31, 2019
	Cost		Accumulated Amortization		Net Carrying Value		Useful lives
Franchise-related intangible assets	$	77,377	$	50,658	$	26,719		4-19 years
Customer lists and relationships		62,144		45,940		16,204		2-20 years
Copyrights and designs		31,453		29,416		2,037		5-7 years
Non-compete agreements		500		400		100		5 years
Total	$	171,473	$	126,413	$	45,060

	December 31, 2018
	Cost		Accumulated Amortization		Net Carrying Value		Useful lives
Franchise-related intangible assets	$	77,377	$	41,877	$	35,500		4-19 years
Customer lists and relationships		61,405		41,167		20,238		2-20 years
Copyrights and designs		26,030		25,708		322		5-7 years
Lease agreements		17,830		13,926		3,904		1-17 years
Non-compete agreements		500		300		200		5 years
Total	$	183,142	$	122,978	$	60,164

The Company is amortizing the majority of its intangible assets utilizing accelerated patterns based on the discounted cash flows that were used to value such assets. The amortization expense for finite-lived intangible assets for the years ended December 31, 2019, December 31, 2018, and December 31, 2017 was $14,100, $12,271, and $16,959, respectively. Estimated amortization expense for each of the next five years will be approximately $10,720, $8,803, $5,975, $4,658, and $4,036, respectively.

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Store Impairment and Restructuring Charges (Tables)

12 Months Ended

Dec. 31, 2019

Restructuring and Related Activities [Abstract]

Store Impairment and Restructuring charges

In conjunction with the store optimization program, during the year ended December 31, 2019, the Company recorded the following charges:

	December 31,
	2019
Inventory reserves	$	21,284
Operating lease asset impairment		14,943
Property, plant and equipment impairment		4,680
Labor and other costs incurred closing stores		8,754
Severance		661
Total	$	50,322

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Equity Incentive Plans (Tables)

12 Months Ended

Dec. 31, 2019

Summary of Changes in Outstanding Options

The following table summarizes the changes in outstanding stock options for the years ended December 31, 2017, December 31, 2018, and December 31, 2019.

	Options			Average Exercise Price		Average Fair Value of Time-Based Options at Grant Date		Aggregate Intrinsic Value			Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2016		8,461,826
Granted		101,444		$	14.38		4.46
Exercised		(243,775	)		5.33
Forfeited		(294,734	)		9.47
Outstanding at December 31, 2017		8,024,761			8.89				40,634			6.0
Granted		187,080			14.63		4.98
Exercised		(425,505	)		5.33
Forfeited		(859,162	)		7.84
Outstanding at December 31, 2018		6,927,174			9.39				4,089			5.2
Granted		337,000			6.43		2.16
Exercised		(215,300	)		5.33
Forfeited		(730,157	)		13.00
Outstanding at December 31, 2019		6,318,717			8.95				(41,784	)		4.4
Exercisable at December 31, 2019		2,650,034			11.64				(24,642	)		4.5
Expected to vest at December 31, 2019 (excluding performance-based options)		860,284		$	12.50			$	(8,743	)		7.6

Time Based Stock Options [Member]

Fair Value of Options Granted

The fair value of time-based options granted during the year ended December 31, 2019 was estimated on the grant date using a Black-Scholes option valuation model based on the assumptions in the following table:

Expected dividend rate	—%
Risk-free interest rate	1.88% to 2.44%
Volatility	29.06% to 30.78%
Expected option term	6 years—6.5 years

Performance Shares [Member]

Fair Value of Options Granted

Based on a Monte Carlo simulation and the following assumptions, the options have an average grant date fair value of $3.09 per option:

Expected dividend rate	—%
Risk-free interest rate	1.86%
Volatility	52.00%
Expected option term	5 years

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Income Taxes - Summary of Deferred Income Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred Tax Assets, Net [Abstract]
Inventory reserves and capitalization	$ 8,659	$ 8,664
Allowance for doubtful accounts	1,194	709
Accrued liabilities	8,391	7,087
Equity based compensation	3,998	3,431
Federal tax loss carryforwards	525	743
State tax loss carryforwards	2,703	1,554
Foreign tax loss carryforwards	15,874	14,034
Foreign tax credit carryforwards	5,397	5,397
Deferred rent and lease incentives(1)		13,565
Section 163(j) Interest Limitation	9,134	1,625
Lease Liabilities	224,966
Other	2,231	1,808
Deferred income tax assets before valuation allowances	283,072	58,617
Less: valuation allowances	(24,623)	(21,879)
Deferred income tax assets, net	258,449	36,738
Deferred income tax liabilities:
Depreciation	21,211	23,720
Trade Name	135,751	145,767
Amortization of goodwill and other assets	16,111	38,712
Foreign earnings expected to be repatriated	1,177	1,132
Lease Right of Use Assets	208,772
Other	1,488	826
Deferred income tax liabilities	$ 384,510	$ 210,157

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Goodwill - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2019
Goodwill, Impairment Loss			$ 556,056
Retail [Member] | Operating Segments [Member]
Goodwill, Impairment Loss	$ 271,500	$ 224,100
Wholesale [Member] | Operating Segments [Member]
Goodwill, Impairment Loss	$ 25,400	$ 35,000

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Property, Plant and Equipment, Net - Property, Plant and Equipment, Net (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	$ 651,240	$ 707,402
Less: accumulated depreciation	(407,668)	(386,358)
Property plant and equipment, net	243,572	321,044
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	255,908	216,097
Buildings [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	$ 9,838	68,810
Useful lives	40 years
Data Processing Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	$ 92,256	82,735
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	117,894	137,508
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	168,296	191,183
Land [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment gross	$ 7,047	$ 11,069
Minimum [Member] | Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Useful lives	3 years
Minimum [Member] | Data Processing Equipment [Member]
Property, Plant and Equipment [Line Items]
Useful lives	3 years
Minimum [Member] | Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Useful lives	1 year
Minimum [Member] | Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Useful lives	5 years
Maximum [Member] | Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Useful lives	15 years
Maximum [Member] | Data Processing Equipment [Member]
Property, Plant and Equipment [Line Items]
Useful lives	5 years
Maximum [Member] | Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Useful lives	10 years
Maximum [Member] | Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Useful lives	10 years

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Commitments, Contingencies and Related Party Transactions - Summary of Future Minimum Product Royalties (Detail) $ in Thousands	Dec. 31, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020	$ 35,525
2021	10,393
2022	5,820
Thereafter	0
Total Future Minimum Royalty Payments	$ 51,738

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Leases - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Lessee, Lease, Description [Line Items]
Operating lease cost	$ 204,466
Variable lease cost	30,817
Operating lease liabilities	197,574
Right of use assets in exchange for operating lease liabilities	$ 195,687
Weighted average remaining lease term	8 years
Weighted average discount rate	6.70%

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Schedule I - Condensed Financial Information of Registrant - Condensed Statements of Operations and Comprehensive Income (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Condensed Income Statements, Captions [Line Items]
Net income	$ (268,829)	$ (281,745)	$ 48,005	$ (30,289)	$ 98,374	$ (2,440)	$ 28,048	$ (1,163)	$ (532,858)	$ 122,819	$ 215,340
Add: Net income attributable to redeemable securities holder										(409)
Net (loss) income attributable to common shareholders of Party City Holdco Inc	$ (268,818)	$ (281,533)	$ 48,074	$ (30,218)	$ 98,325	$ (2,420)	$ 28,487	$ (1,133)	(532,495)	123,259	215,340
Other comprehensive (loss) income, net									13,444	(13,416)	16,421
Comprehensive (loss) income									(519,414)	109,403	231,761
Comprehensive income attributable to redeemable securities holder										409
Comprehensive (loss) income attributable to common shareholders of Party City Holdco Inc.									(519,028)	109,876	231,761
Party City Holdco Inc. [Member]
Condensed Income Statements, Captions [Line Items]
Equity in net income of subsidiaries									(532,495)	122,850	215,340
Net income									(532,495)	122,850	215,340
Add: Net income attributable to redeemable securities holder										409
Net (loss) income attributable to common shareholders of Party City Holdco Inc									(532,495)	123,259	215,340
Other comprehensive (loss) income, net									13,467	(13,383)	16,421
Comprehensive (loss) income									(519,028)	109,467	231,761
Comprehensive income attributable to redeemable securities holder										409
Comprehensive (loss) income attributable to common shareholders of Party City Holdco Inc.									$ (519,028)	$ 109,876	$ 231,761