UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

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

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

Commission file number 000-21827

Amscan Holdings, Inc.

Delaware (State or Other Jurisdiction of Incorporation or Organization)		13-3911462 (I.R.S. Employer Identification No.)
80 Grasslands Road Elmsford, NY (Address of Principal Executive Offices)		10523 (Zip Code)

     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 þ   No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ (Do not check if a smaller reporting company)		Smaller reporting company o

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

     As of November 13, 2009, 1,000.00 shares of Registrant’s common stock were outstanding.

 

 

AMSCAN HOLDINGS, INC.
FORM 10-Q

September 30, 2009

TABLE OF CONTENTS

		Page
PART I
Item 1 Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at September 30, 2009 and December 31, 2008			3
Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2009 and 2008			4
Condensed Consolidated Statements of Operations for the Nine Months Ended September 30, 2009 and 2008			5
Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2009			6
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008			7
Notes to Condensed Consolidated Financial Statements			8
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3 Quantitative and Qualitative Disclosures About Market Risk			31
Item 4 Controls and Procedures			31
PART II
Item 6 Exhibits			32
Signature			33
EX-31.1
EX-31.2
EX-32

     References throughout this document to “Amscan,” “AHI,” and the “Company” include Amscan Holdings, Inc. and its wholly owned subsidiaries. In this document the words “we,” “our,” “ours” and “us” refer only to the Company and its majority owned subsidiaries and not to any other person.

     You may read and copy any materials we file with the Securities and Exchange Commission (“SEC”) at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, including us, at http://www.sec.gov.

AMSCAN HOLDINGS, INC.

		September 30,				December 31,
		2009				2008
		(unaudited)				(Note 3)
ASSETS
Current assets:
Cash and cash equivalents		$	26,366			$	13,058
Accounts receivable, net of allowances			99,266				89,443
Inventories, net of allowances			410,962				366,965
Prepaid expenses and other current assets			44,223				47,812
Total current assets			580,817				517,278
Property, plant and equipment, net			178,845				187,026
Goodwill			548,370				543,731
Trade names			157,283				157,283
Other intangible assets, net			56,036				61,626
Other assets, net			41,223				41,033
Total assets		$	1,562,574			$	1,507,977
LIABILITIES, REDEEMABLE COMMON SECURITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Loans and notes payable		$	160,445			$	136,878
Accounts payable			145,274				126,638
Accrued expenses			103,313				87,985
Income taxes payable			4,701				28,605
Redeemable warrants			15,444				15,444
Current portion of long-term obligations			15,646				34,002
Total current liabilities			444,823				429,552
Long-term obligations, excluding current portion			562,814				550,755
Deferred income tax liabilities			93,402				87,824
Deferred rent and other long-term liabilities			9,948				9,558
Total liabilities			1,110,987				1,077,689
Redeemable common securities (including 592.84 and 585.15 common shares issued and outstanding at September 30, 2009 and December 31, 2008 respectively)			18,389				18,171
Commitments and contingencies
Stockholders’ equity:
Common Stock ($0.01 par value; 40,000.00 shares authorized; 30,226.50 shares issued and outstanding at September 30, 2009 and December 31, 2008)			—				—
Additional paid-in capital			335,604				335,076
Retained earnings			103,439				87,004
Accumulated other comprehensive loss			(7,937	)			(11,852	)
Amscan Holdings, Inc. stockholders’ equity			431,106				410,228
Noncontrolling interests			2,092				1,889
Total equity			433,198				412,117
Total liabilities, redeemable common securities and stockholders’ equity		$	1,562,574			$	1,507,977

See accompanying notes to unaudited condensed consolidated financial statements.

AMSCAN HOLDINGS, INC.

		Three Months Ended September 30,
		2009				2008
Revenues:
Net sales		$	336,944			$	356,231
Royalties and franchise fees			4,164				5,863
Total revenues			341,108				362,094
Expenses:
Cost of sales			215,491				230,920
Selling expenses			9,984				11,064
Retail operating expenses			65,049				64,644
Franchise expenses			3,046				3,077
General and administrative expenses			29,274				30,333
Art and development costs			3,327				3,483
Total expenses			326,171				343,521
Income from operations			14,937				18,573
Interest expense, net			10,345				12,245
Other expense (income), net			421				(389	)
Income before income taxes			4,171				6,717
Income tax expense			1,016				2,518
Net income			3,155				4,199
Less: net income (loss) attributable to noncontrolling interest			76				(364	)
Net income attributable to Amscan Holdings, Inc.		$	3,079			$	4,563

See accompanying notes to unaudited condensed consolidated financial statements.

AMSCAN HOLDINGS, INC.

		Nine Months Ended
		September 30,
		2009				2008
Revenues:
Net sales		$	983,525			$	1,046,437
Royalties and franchise fees			12,394				17,555
Total revenues			995,919				1,063,992
Expenses:
Cost of sales			630,018				671,365
Selling expenses			30,114				32,532
Retail operating expenses			174,714				185,135
Franchise expenses			8,811				10,100
General and administrative expenses			87,698				91,823
Art and development costs			9,606				10,176
Total expenses			940,961				1,001,131
Income from operations			54,958				62,861
Interest expense, net			31,502				38,581
Other expense (income), net			336				(1,112	)
Income before income taxes			23,120				25,392
Income tax expense			6,492				9,595
Net income			16,628				15,797
Less: net income (loss) attributable to noncontrolling interest			193				(898	)
Net income attributable to Amscan Holdings, Inc.		$	16,435			$	16,695

See accompanying notes to unaudited condensed consolidated financial statements.

AMSCAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
Nine Months Ended September 30, 2009
(Unaudited)
(Amounts in thousands, except share amounts)

																						Amscan
										Additional								Accumulated Other				Holdings, Inc.
		Common				Common				Paid-in				Retained				Comprehensive				Shareholdings’				Noncontrolling
		Shares				Stock				Capital				Earnings				Income (Loss)				Equity				Interests				Total
Balance at December 31, 2008			30,226.50			$	—			$	335,076			$	87,004			$	(11,852	)		$	410,228			$	1,889			$	412,117
Net income															16,435								16,435				193				16,628
Net change in cumulative translation adjustment																			4,401				4,401				10				4,411
Change in fair value of interest rate swap contracts, net of income tax benefit																			1,157				1,157								1,157
Change in fair value of foreign exchange contracts, net of income tax benefit																			(1,643	)			(1,643	)							(1,643	)
Comprehensive income																							20,350				203				20,553
Issuance of redeemable common shares											(129	)											(129	)							(129	)
Equity based compensation expense											657												657								657
Balance at September 30, 2009			30,226.50			$	—			$	335,604			$	103,439			$	(7,937	)		$	431,106			$	2,092			$	433,198

See accompanying notes to unaudited condensed consolidated financial statements.

AMSCAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)

		Nine Months Ended September 30,
		2009				2008
Cash flows provided by operating activities:
Net income		$	16,435			$	16,695
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense			32,525				32,482
Amortization of deferred financing costs			1,616				1,664
Provision for doubtful accounts			3,392				1,272
Deferred income tax provision (benefit)			3,410				(5,107	)
Deferred rent			1,059				1,089
Undistributed income in unconsolidated joint venture			(251	)			(561	)
Loss (gain) on disposal of equipment			141				(1,678	)
Equity based compensation			657				4,092
Tax benefit on exercised options			—				(1,823	)
Changes in operating assets and liabilities:
Increase in accounts receivable			(10,494	)			(12,041	)
Increase in inventories			(44,078	)			(122,579	)
Decrease in prepaid expenses and other current assets			167				19,871
Increase in accounts payable, accrued expenses and income taxes payable			15,585				75,998
Net cash provided by operating activities			20,164				9,374
Cash flows used in investing activities:
Cash paid in connection with acquisitions			(3,378	)			(573	)
Capital expenditures			(19,523	)			(39,343	)
Proceeds from disposal of property and equipment			54				2,917
Net cash used in investing activities			(22,847	)			(36,999	)
Cash flows provided by financing activities:
Repayment of loans, notes payable and long-term obligations			(6,343	)			(6,774	)
Proceeds from loans, notes payable and long-term obligations			19,927				44,789
Tax benefit on exercised options			—				1,823
Sale of additional interest to minority shareholder			—				2,500
Capital contributions and proceeds from issuance of common stock and exercise of options, net of retirements			90				—
Net cash provided by financing activities			13,674				42,338
Effect of exchange rate changes on cash and cash equivalents			2,317				(2,263	)
Net increase in cash and cash equivalents			13,308				12,450
Cash and cash equivalents at beginning of period			13,058				17,274
Cash and cash equivalents at end of period		$	26,366			$	29,724

See accompanying notes to unaudited condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share amounts)

Note 1 — Description of Business

     Amscan Holdings, Inc. (“Amscan”, “AHI” or the “Company”) designs, manufactures, contracts for manufacture and distributes party goods, including paper and plastic tableware, metallic balloons, accessories, novelties, gifts and stationery throughout the world, including in North America, South America, Europe, Asia and Australia. In addition, the Company operates specialty retail party supply stores in the United States, and franchises both individual stores and franchise areas throughout the United States and Puerto Rico, under the names Party City, Party America, The Paper Factory and Halloween USA. The Company also operates specialty retail party and social expressions supply stores under the name Factory Card & Party Outlet (“FCPO”).

Note 2 — Acquisitions

     On November 2, 2007 Party City completed the acquisition of 55 stores from franchisees in a series of transactions involving Party City, Party City Franchise Group Holdings, LLC (“Party City Holdings”), a then majority owned subsidiary of Party City, and Party City Franchise Group, LLC (“PCFG”), a wholly-owned subsidiary of Party City Holdings. PCFG operates the acquired 55 stores together with 11 previously owned stores in the Florida and Georgia regions.

     On December 30, 2008, the Company acquired the remaining Party City Holdings equity held by two former franchisees, in exchange for total consideration of $15,944, which included cash of $500 and warrants to purchase 544.75 shares of AAH Holding Company, Inc. (“AAH”) common stock at $0.01 per share. The Company has allocated the purchase price to the fair value of net assets acquired, which resulted in an additional $558 charge to goodwill. As the AAH stock underlying the warrants could be put back to the Company in certain instances per the terms of the Company and PCFG shareholders agreements, the warrants are recorded at fair value and are classified as current liabilities in the Company’s consolidated balance sheets at September 30, 2009 and December 31, 2008.

Note 3 — Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements as of September 30, 2009 and for the three and nine month periods ended September 30, 2009 and 2008, and the audited balance sheet as of December 31, 2008, include the accounts of the Company and its majority-owned and controlled entities. All material intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included in the unaudited condensed consolidated financial statements. Operating results for the three and nine month periods ended September 30, 2009 are not necessarily indicative of the results to be expected for the year ending December 31, 2009. Our business is subject to substantial seasonal variations, as our retail segment has realized a significant portion of its net sales, cash flow and net income in the fourth quarter of each year, principally due to its Halloween season sales in October and, to a lesser extent, other holiday season sales at the end of the calendar year. We expect that this general pattern will continue. Our results of operations may also be affected by industry factors that may be specific to a particular period, such as movement in and the general level of raw material costs. For further information, see the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the Securities and Exchange Commission.

     On January 1, 2009, we adopted the provisions of Accounting Standards Codification or ASC, Subtopic 810 (SFAS No. 160), “Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51.” ASC 810 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling (minority) interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. ASC 810 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. The presentation and disclosure requirements of ASC 810 were applied retrospectively and, as a result, we have reclassified noncontrolling interests in the December 2008 balance sheet and September 30, 2008 statement of operations, to comply with the presentation in 2009.

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands, except share amounts)

Note 4 — Inventories

     Inventories consisted of the following:

		September 30,				December 31,
		2009				2008
Finished goods		$	401,340			$	353,713
Raw Materials			13,390				13,756
Work in Process			5,928				7,814
			420,658				375,283
Less: reserve for slow moving and obsolete inventory			(9,696	)			(8,318	)
		$	410,962			$	366,965

     Inventories are valued at the lower of cost or market. The Company determines the cost of inventory at its retail stores using either the weighted average or retail inventory method, which approximate the first-in, first-out method. All other inventory cost is determined using the first-in, first-out method.

Note 5 — Income Taxes

     The consolidated income tax expense for the three and nine month periods ended September 30, 2009 and 2008 were determined based upon estimates of the Company’s consolidated effective income tax rates of 36.8% for the year ending December 31, 2009 and 37.9% for the year ended December 31, 2008, respectively. The differences between the estimated consolidated effective income tax rate and the U.S. federal statutory rate are primarily attributable to state income taxes and available domestic manufacturing deductions. In addition, the income tax expense for the nine-month period ended September 30, 2009 reflects the expiration of state statutes of limitations resolving previously unrecognized tax benefits and the favorable settlement of the audits of the Company’s 2006 and 2005 federal tax returns during the first quarter.

Note 6 — Restructuring

     On November 16, 2007 the Company completed the merger of its wholly-owned subsidiary, Amscan Acquisition, Inc. with and into Factory Card & Party Outlet Corp. (“FCPO Acquisition”). In connection with the FCPO Acquisition, $9,101 has been accrued related to plans to restructure FCPO’s merchandising assortment and administrative operations and involuntarily terminate a limited number of FCPO personnel. Charges taken against the reserve for the three and nine month period ended September 30, 2009 were $1,094 and $3,263 respectively. Through September 30, 2009, the Company incurred $6,133 in restructuring costs and expects to incur the balance in 2009.

     During October of 2009, the Company communicated its plan to close the FCPO corporate office in Naperville, Illinois and to consolidate its retail corporate office operations with those of Party City, in Rockaway, New Jersey. In connection with the closing, the Company recorded additional planned severances costs of $2,550 during the month of October 2009 and expects to incur additional retention costs of $750 through April 2010. The Company will continue to utilize the Naperville facility as a distribution center for greeting cards and other products.

     Restructuring costs associated with the Party City Franchise Group Transaction of $1,000 were accrued related to plans to restructure PCFG’s merchandising assortment and administrative operations and involuntarily terminate a limited number of PCFG personnel. Charges taken against the reserve for the nine-month period ended September 30, 2009 were $100. Through September 30, 2009, PCFG incurred $1,000 in restructuring costs.

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands, except share amounts)

Note 7 — Comprehensive Income

     Comprehensive income consisted of the following:

		Three months ended								Nine Months Ended
		September 30,								September 30,
		2009				2008				2009				2008
Net income		$	3,079			$	4,563			$	16,435			$	16,695
Net change in cumulative translation adjustment			(164	)			(2,831	)			4,401				(2,731	)
Change in fair value of interest rate swap contracts, net of income tax (benefit) expense of $(41), $(201), $680, and $(241)			(69	)			(343	)			1,157				(411	)
Change in fair value of foreign exchange contracts, net of income tax (benefit) expense of $(258), $724, $(965), $735			(440	)			1,232				(1,643	)			1,251
Comprehensive income		$	2,406			$	2,621			$	20,350			$	14,804

Note 8 — Capital Stock

     At September 30, 2009 and December 31, 2008, the Company’s authorized capital stock consisted of 10,000.00 shares of preferred stock, $0.01 par value, of which no shares were issued or outstanding and 40,000.00 shares of common stock, $0.01 par value, of which 30,226.50 were issued and outstanding.

     In addition, certain employee stockholders owned 592.84 and 585.15 shares of AAH common stock at September 30, 2009 and December 31, 2008, respectively. Under the terms of the AAH stockholders’ agreement dated April 30, 2004, as amended, the Company has an option to purchase all of the shares of common stock held by former employees and, under certain circumstances, former employee stockholders can require the Company to purchase all of their shares held by the former employee. The purchase price as prescribed in the stockholders’ agreement is to be determined through a market valuation of the minority-held shares or, under certain circumstances, based on cost, as defined therein. The aggregate amount that may be payable by the Company to certain employee stockholders based on the estimated fair market value of fully paid and vested common securities is classified as redeemable common securities on the consolidated balance sheet, with a corresponding adjustment to stockholders’ equity. As there is no active market for the Company’s common stock, the Company estimated the fair value of its common stock based on a valuation calculated using a multiple of earnings.

     At September 30, 2009 and December 31, 2008, the aggregate amount that may be payable by the Company to employee stockholders and option holders, based on the estimated market value, was $18,389 and $18,171 respectively.

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands, except share amounts)

Note 9 — Segment Information

Industry Segments

     The Company has two identifiable business segments. The Wholesale segment includes the design, manufacture, contract for manufacture and wholesale distribution of party goods, including paper and plastic tableware, metallic balloons, accessories, novelties, gifts and stationery. The Retail segment includes the operation of company-owned specialty retail party & social expressions stores in the United States and the sale of franchises on an individual store and franchise area basis throughout the United States and Puerto Rico.

     The Company’s industry segment data for the three months ended September 30, 2009 and 2008 is as follows:

		Wholesale				Retail				Consolidated
Three Months Ended September 30, 2009
Revenues:
Net sales		$	172,948			$	222,367			$	395,315
Royalties and franchise fees			—				4,164				4,164
Total revenues			172,948				226,531				399,479
Eliminations			(58,371	)			—				(58,371	)
Net Revenues		$	114,577			$	226,531			$	341,108
Income (loss) from operations		$	19,536			$	(4,599	)		$	14,937
Interest expense, net											10,345
Other expense, net											421
Income before income taxes and minority interests										$	4,171
Total assets		$	782,868			$	779,706			$	1,562,574

		Wholesale				Retail				Consolidated
Three Months Ended September 30, 2008
Revenues:
Net sales		$	186,750			$	230,082			$	416,832
Royalties and franchise fees			—				5,863				5,863
Total revenues			186,750				235,945				422,695
Eliminations			(60,601	)			—				(60,601	)
Net Revenues		$	126,149			$	235,945			$	362,094
Income from operations		$	18,024			$	549			$	18,573
Interest expense, net											12,245
Other income, net											(389	)
Income before income taxes and minority interests										$	6,717
Total assets		$	788,830			$	846,396			$	1,635,226

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands, except share amounts)

The Company’s industry segment data for the nine months ended September 30, 2009 and 2008 is as follows:

		Wholesale				Retail				Consolidated
Nine Months Ended September 30, 2009
Revenues:
Net sales		$	478,147			$	668,521			$	1,146,668
Royalties and franchise fees			—				12,394				12,394
Total revenues			478,147				680,915				1,159,062
Eliminations			(163,143	)			—				(163,143	)
Net Revenues		$	315,004			$	680,915			$	995,919
Income from operations		$	45,826			$	9,132			$	54,958
Interest expense, net											31,502
Other expense, net											336
Income before income taxes and minority interests										$	23,120
Total assets		$	782,868			$	779,706			$	1,562,574

		Wholesale				Retail				Consolidated
Nine Months Ended September 30, 2008
Revenues:
Net sales		$	505,476			$	702,645			$	1,208,121
Royalties and franchise fees			—				17,555				17,555
Total revenues			505,476				720,200				1,225,676
Eliminations			(161,684	)			—				(161,684	)
Net Revenues		$	343,792			$	720,200			$	1,063,992
Income from operations		$	44,172			$	18,689			$	62,861
Interest expense, net											38,581
Other (income), net											(1,112	)
Income before income taxes and minority interests										$	25,392
Total assets		$	788,830			$	846,396			$	1,635,226

Geographic Segments

     The Company’s export sales, other than inter-company sales between geographic areas, are not material. Inter-company sales between geographic areas primarily consist of sales of finished goods for distribution in foreign markets, and are made at cost plus a share of operating profit. No single foreign operation is significant to the Company’s consolidated operations.

Note 10 — Legal Proceedings

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

Note 11 — Stock Option Plan

     The Company recorded stock-based compensation of $219 and $3,654 during the three months ended September 30, 2009 and 2008 and $657 and $4,092 during the nine months ended September 30, 2009 and 2008, respectively, in general and administrative expenses.

     There were 0.73 and 7.69 options exercised during the three and nine month periods ended September 30, 2009, respectively. There are options to purchase 2,936.63 shares of common stock outstanding at September 30, 2009.

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands, except share amounts)

Note 12 — Long Term Obligations

     On November 2, 2007, PCFG entered into a Credit Agreement (the “PCFG Credit Agreement”), among PCFG, CIT Group/Business Credit, Inc., as Administrative Agent and Collateral Agent, Newstar Financial, Inc., as Syndication Agent, CIT Capital Securities LLC, as Sole Arranger, and the Lenders party thereto. PCFG and Party City Franchise Group Holdings, LLC (“Party City Holdings”), the sole member of PCFG, have been designated by the Board of Directors of the Company as “Unrestricted Subsidiaries” pursuant to the Company’s existing ABL Credit Agreement, and the indenture governing its 8.75% Senior Subordinated Notes and neither PCFG nor Party City Holdings is a guarantor of the Company’s existing credit facilities or indenture. In addition, PCFG’s credit facility is a stand alone facility for PCFG and is not guaranteed by the Company or its other subsidiaries.

     Pursuant to the PCFG Credit Agreement, PCFG borrowed $30,000 in term loans (“PCFG Term Loan”) and obtained a committed revolving credit facility in an aggregate principal amount of up to $20,000 for working capital and general corporate purposes and the issuance of letters of credit (of up to $5,000 at any time outstanding) (“PCFG Revolver”). At September 30, 2009 the balance of the term loan was $26,000. There were no borrowings under the PCFG Revolver and no outstanding letters of credit at September 30, 2009.

     At December 31, 2008, PCFG had not been in compliance with the financial covenants contained in the PCFG Credit Agreement. Effective September 30, 2009, PCFG and its lenders entered into a Waiver and Amendment Agreement which provided that, among other things, (1) interest would be accrued prospectively at either (i) for ABR borrowings, the Alternate Base Rate plus 6.00%, with a floor of 4.00% for the Alternate Base Rate or (ii) the Adjusted LIBO Rate plus 7.00% with a floor of 3.00% for the Adjusted LIBO Rate, (2) PCFG would pay an additional $1,500 in principal on the Term Loans at the effective date of the waiver and amendment , and thereafter the quarterly amortization payment for the Term Loans would be $1,000 each quarter until Maturity Date, (3) the PCFG Revolver would be limited to a maximum of $10,000, and (4) financial covenants related to leverage ratio, fixed charge coverage ratio, minimum EBITDA, and maximum capital expenditures, were revised.

     Under the terms of our other indebtedness, PCFG is an unrestricted subsidiary and the acceleration of our obligation under the PCFG Term Loan did not constitute an event of default under our other debt instruments.

Note 13 — Hedging Transactions, Derivative Financial Instruments and Fair Value

     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 fair value of an interest rate swap agreement is the estimated amount that the counterparty would receive or pay to terminate the swap agreement at the reporting date, taking into account current interest rates and the current creditworthiness of the swap counterparty.

     At September 30, 2009 and December 31, 2008, the Company had interest rate swap agreements with notional amounts of $163,441 and $175,505 respectively, and a net liability fair value of $6,567 and $8,403 respectively. The current interest rate swap agreement is effective until June 25, 2011. The swap agreements had unrealized net losses of $4,137 and $5,294 at September 30, 2009 and December 31, 2008, respectively, which were included in accumulated other comprehensive income. No components of these agreements are excluded in the measurement of hedge effectiveness. As these hedges are 100% effective, there is no current impact on earnings due to hedge ineffectiveness.

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands, except share amounts)

     Foreign Exchange Risk Management

     A portion of the Company’s cash flows is derived from transactions denominated in foreign currencies. The United States dollar value of transactions denominated in foreign currencies fluctuates as the United States dollar strengthens or weakens relative to these foreign currencies. In order to reduce the uncertainty of foreign exchange rate movements on transactions denominated in foreign currencies, including the British Pound Sterling and the Euro, 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 inter-company inventory purchases and trade receivables. No components of the contracts are excluded in the measurement of hedge effectiveness. The critical terms of the foreign exchange contracts are the same as the underlying forecasted transactions; therefore, changes in the fair value of foreign exchange contracts should be highly effective in offsetting changes in the expected cash flows from the forecasted transactions.

     At September 30, 2009 and December 31, 2008 the Company had foreign currency exchange contracts with notional amounts of $2,215 and $18,560, respectively and a net asset fair value of $87 and $2,695, respectively. The foreign currency exchange contracts are reflected in the consolidated balance sheets at fair value. The fair value of the foreign currency exchange contracts is the estimated amount that the counter-parties would receive or pay to terminate the foreign currency exchange contracts at the reporting date, taking into account current foreign exchange spot rates. The fair value adjustment at September 30, 2009 and December 31, 2008 resulted in an unrealized net gain of $55 and $1,698, respectively, which are included in accumulated other comprehensive income (loss). As these hedges are 100% effective, there is no current impact on earnings due to hedge ineffectiveness. The Company anticipates that substantially all gains and losses in accumulated other comprehensive income related to these foreign exchange contracts will be reclassified into earnings by December 2009.

     The following table summarizes the Company’s outstanding derivative instruments on a gross basis as recorded on its consolidated balance sheets as of September 30, 2009 and December 31, 2008.

										Derivative Assets																Derivative Liabilities
										Balance								Balance								Balance								Balance
		Notional Amounts								Sheet				Fair				Sheet				Fair				Sheet				Fair				Sheet				Fair
		September 30,				December 31,				Line				Value				Line				Value				Line				Value				Line				Value
Derivative Instrument		2009				2008				September 30, 2009								December 31, 2008								September 30, 2009								December 31, 2008
Interest Rate Hedge		$	163,441			$	175,505							$	—							$	—			(b) AE				$	(6,567	)		(b) AE				$	(8,403	)
Foreign Exchange Contracts		$	2,215			$	18,560			(a) PP				$	196			(a) PP				$	3,365			(a) PP				$	(109	)		(a) PP				$	(670	)
Total Hedges		$	165,656			$	194,065							$	196							$	3,365							$	(6,676	)						$	(9,073	)

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands, except share amounts)

     Fair Value Measurement

     The provisions of Accounting Standards Codification or ASC, Subtopic 820 (SFAS No. 157) defines 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 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.

The following table shows assets and liabilities as of September 30, 2009 that are measured at fair value on a recurring basis:

						Significant
		Quoted Prices in				Other
		Active Markets for				Observable				Unobservable				Total as of
		Identical Assets or				Inputs				Inputs				September 30,
		Liabilities (Level 1)				(Level 2)				(Level 3)				2009
Derivative assets			—			$	196				—			$	196
Derivative liabilities			—				(6,676	)			—				(6,676	)

The following table shows assets and liabilities as of December 31, 2008 that are measured at fair value on a recurring basis:

						Significant
		Quoted Prices in				Other
		Active Markets for				Observable				Unobservable				Total as of
		Identical Assets or				Inputs				Inputs				December 31,
		Liabilities (Level 1)				(Level 2)				(Level 3)				2008
Derivative assets			—			$	3,365				—			$	3,365
Derivative liabilities			—				(9,073	)			—				(9,073	)

     In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record other assets and liabilities at fair value on a nonrecurring basis, generally as a result of impairment charges.

     The carrying amounts for cash and cash equivalents, accounts receivables, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate fair value at September 30, 2009 and December 31, 2008 because of the short-term maturity of those instruments or their variable rates of interest.

     The carrying amount and fair value (based on market prices) of the Company’s Term Loan and $175,000 Senior Subordinated Notes are as follows:

		September 30, 2009								December 31, 2008
		Carrying				Fair				Carrying				Fair
		Amount				Value				Amount				Value
Term Loan		$	365,625			$	329,063			$	368,437			$	247,000
$175,000 Senior Subordinated Notes			175,000				164,500				175,000				107,000

     The carrying amounts for other long-term debt approximate fair value at September 30, 2009 and December 31, 2008, based on the discounted future cash flow of each instrument at rates currently offered for similar debt instruments of comparable maturity.

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands, except share amounts)

Note 14 — Recently Issued Accounting Standards

     In December 2007, the Financial Accounting Standards Board issued ASC, Subtopic 805 (SFAS No. 141) (revised 2007), Business Combinations (“SFAS 141(R)”). ASC 805 (“SFAS 141(R)”)Business Combinations establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. ASC 805 also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This statement became effective for the Company beginning January 1, 2009 and applies to all business combinations prospectively from that date. The impact of ASC 805 on our consolidated financial statements will depend upon the nature, terms and size of any acquisition we may consummate in the future.

     In April 2009, the FASB issued ASC, Subtopic 805. ASC 805 (FASB Staff Position No FSP FAS 141(R)-1), “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” ASC 805 (“FSP FAS 141(R)-1”). This FSP amends the accounting in ASC 805 for assets and liabilities arising from contingencies in a business combination. ASC 805 (FSP FAS 141(R)-1) requires that pre-acquisition contingencies be recognized at fair value, if fair value can be reasonably determined. If fair value cannot be reasonably determined, ASC 805 (FSP FAS 141(R)-1) requires measurement based on the best estimate in accordance with SFAS No. 5, “Accounting for Contingencies.” ASC 805 (FSP FAS 141(R)-1) is effective as of January 1, 2009 in connection with the adoption of ASC (FAS 141(R)).

     In September 2006, the FASB issued ASC, Subtopic 820 (SFAS No. 157), Fair Value Measurements. ASC 820 provides a common fair value hierarchy for companies to follow in determining fair value measurements in the preparation of financial statements and expands disclosure requirements relating to how such fair value measurements were developed. ASC 820 clarifies the principle that fair value should be based on the assumptions that the marketplace would use when pricing an asset or liability, rather than company-specific data. The Company adopted ASC 820 (SFAS No. 157) effective January 1, 2008 for its financial assets and liabilities and effective January 1, 2009 for its non-financial assets and liabilities. The adoption of ASC 820 (SFAS No. 157) did not have a material impact to the Company’s consolidated financial statements.

     In April 2009, the FASB issued three FASB Staff Positions (“FSPs”) in order to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities.

•		ASC 820 (FSP FAS 157-4), “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive.
•		ASC 320 (FSP FAS 115-2 and FAS 124-2) “Recognition and Presentation of Other-Than-Temporary Impairments.” This FSP is intended to bring consistency to the timing of impairment recognition, and provide improved disclosures about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. The FSP also requires increased and more timely disclosures regarding expected cash flows, credit losses, and an aging of securities with unrealized losses.
•		ASC 825 and ASC 270 (FSP FAS 107-1 and APB 28-1), “Interim Disclosures about Fair Value of Financial Instruments.” This FSP relates to fair value disclosures for financial instruments that are not currently reflected on the balance sheet at fair value. Prior to issuing this FSP, fair values for these assets and liabilities were only disclosed once a year. The FSP now requires these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value.

     We have elected to early adopt these FSPs effective June 30, 2009. The adoption of these FSPs did not have a material effect on our financial condition or results of operations.

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands, except share amounts)

     In March 2008, the FASB issued ASC, Subtopic 815 (SFAS No. 161), Disclosures about Derivative Instruments and Hedging Activities , an amendment of ASC 815 (FASB Statement No. 133) (“SFAS 161”). ASC 815 (SFAS 161) applies to all derivative instruments and related hedged items accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities ASC 815 (“SFAS 133”). ASC 815 (SFAS 161) requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under ASC 815 (SFAS 133) and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, results of operations, and cash flows. ASC 815 (SFAS 161) became effective January 1, 2009. Since ASC 815 (SFAS 161) only requires additional disclosures, it will not have a financial impact on the Company’s financial statements.

Note 15 — Subsequent Events

     In accordance with the provisions of ASC, Subtopic 855 (FAS No. 165), “Subsequent Events,” the Company evaluates events and/or transactions that occur after the balance sheet date, but before the issuance of financial statements, for potential recognition or disclosure in its consolidated financial statements. The Company has evaluated activity through November 13, 2009, the date that the Company’s interim consolidated financial statements were issued, and concluded that there were no subsequent events requiring recognition or disclosure. Other then as disclosed in Note 6 for subsequent events regarding FCPO.

Note 16 — Condensed Consolidating Financial Information

     Borrowings under the Company’s Term Loan Credit Agreement, ABL Credit Agreement and 8.75% $175,000 senior subordinated notes are guaranteed jointly and severally, fully and unconditionally, by the following wholly-owned domestic subsidiaries of the Company (the “Guarantors”):

•		Amscan Inc.
•		Am-Source, LLC
•		Anagram Eden Prairie Property Holdings LLC
•		Anagram International, Inc.
•		Anagram International Holdings, Inc.
•		Anagram International, LLC
•		Factory Card & Party Outlet Corporation
•		Gags & Games, Inc.
•		JCS Packaging Inc. (formerly JCS Realty Corp.)
•		M&D Industries, Inc.
•		Party City Corporation
•		PA Acquisition Corporation
•		SSY Realty Corp.

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

•		Amscan (Asia-Pacific) Pty. Ltd.
•		Amscan de Mexico, S.A. de C.V.
•		Amscan Distributors (Canada) Ltd.
•		Anagram Espana, S.A.
•		Anagram France S.C.S.
•		Amscan Holdings Limited
•		Anagram International (Japan) Co., Ltd.
•		Amscan Partyartikel GmbH
•		JCS Hong Kong Ltd.
•		Party City Franchise Group Holdings, LLC

     The following information presents condensed consolidating balance sheets at September 30, 2009 and December 31, 2008, and the condensed consolidating statements of operations for the three and nine month periods ended September 30, 2009 and 2008, and the related condensed consolidating statements of cash flows for the nine-months ended September 30, 2009 and 2008, for the combined Guarantors and the combined Non-guarantors, together with the elimination entries necessary to consolidate the entities comprising the combined companies.

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands except share amounts)

CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2009

		AHI and				Combined
		Combined				Non-
		Guarantors				Guarantors				Eliminations				Consolidated
ASSETS
Current assets:
Cash and cash equivalents		$	16,341			$	10,025			$	—			$	26,366
Accounts receivable, net of allowances			77,951				21,315				—				99,266
Inventories, net of allowances			366,107				45,804				(949	)			410,962
Prepaid expenses and other current assets			34,336				9,887				—				44,223
Total current assets			494,735				87,031				(949	)			580,817
Property, plant and equipment, net			167,892				10,953				—				178,845
Goodwill			510,400				37,970				—				548,370
Trade names			157,283												157,283
Other intangible assets, net			31,270				24,766								56,036
Other assets, net			168,475				(2,244	)			(125,008	)			41,223
Total assets		$	1,530,055			$	158,476			$	(125,957	)		$	1,562,574
LIABILITIES, REDEEMABLE COMMON SECURITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Loans and notes payable			160,445				—				—				160,445
Accounts payable			134,422				10,852				—				145,274
Accrued expenses			91,166				12,147				—				103,313
Income taxes payable			7,503				(2,709	)			(93	)			4,701
Redeemable warrants			15,444				—				—				15,444
Current portion of long-term obligations			11,645				4,001				—				15,646
Total current liabilities			420,625				24,291				(93	)			444,823
Long-term obligations, excluding current portion			540,814				22,000				—				562,814
Deferred income tax liabilities			92,832				570				—				93,402
Other			16,168				72,686				(78,906	)			9,948
Total liabilities			1,070,439				119,547				(78,999	)			1,110,987
Redeemable common securities			18,389				—				—				18,389
Commitments and contingencies
Stockholders’ equity:
Common Stock			—				339				(339	)			—
Additional paid-in capital			335,512				46,167				(46,075	)			335,604
Retained earnings			113,652				(9,659	)			(554	)			103,439
Accumulated other comprehensive loss			(7,937	)			(10	)			10				(7,937	)
Amscan Holdings, Inc. stockholders’ equity			441,227				36,837				(46,958	)			431,106
Noncontrolling interests			—				2,092				—				2,092
Total stockholders’ equity			441,227				38,929				(46,958	)			433,198
Total liabilities, redeemable common securities and stockholders’ equity		$	1,530,055			$	158,476			$	(125,957	)		$	1,562,574

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands except share amounts)

CONSOLIDATING BALANCE SHEET
December 31, 2008

		AHI and				Combined
		Combined				Non-
		Guarantors				Guarantors				Eliminations				Consolidated
ASSETS
Current assets:
Cash and cash equivalents		$	8,544			$	4,514			$	—			$	13,058
Accounts receivable, net of allowances			73,932				15,511				—				89,443
Inventories, net of allowances			331,059				36,605				(699	)			366,965
Prepaid expenses and other current assets			42,033				5,779				—				47,812
Total current assets			455,568				62,409				(699	)			517,278
Property, plant and equipment, net			175,532				11,494				—				187,026
Goodwill			497,197				46,534				—				543,731
Trade names			157,283				—				—				157,283
Other intangible assets, net			35,496				26,130				—				61,626
Other assets, net			123,315				12,207				(94,489	)			41,033
Total assets		$	1,444,391			$	158,774			$	(95,188	)		$	1,507,977
LIABILITIES, REDEEMABLE COMMON SECURITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Loans and notes payable		$	136,878			$	—			$	—			$	136,878
Accounts payable			98,636				28,002				—				126,638
Accrued expenses			77,470				10,515				—				87,985
Income taxes payable			27,802				860				(57	)			28,605
Redeemable warrants			15,444				—				—				15,444
Current portion of long-term obligations			6,488				27,514				—				34,002
Total current liabilities			362,718				66,891				(57	)			429,552
Long-term obligations, excluding current portion			550,755				—				—				550,755
Deferred income tax liabilities			76,360				11,464				—				87,824
Other			21,988				36,107				(48,537	)			9,558
Total liabilities			1,011,821				114,462				(48,594	)			1,077,689
Redeemable common securities			18,171				—				—				18,171
Commitments and contingencies
Stockholders’ equity:
Common Stock			—				339				(339	)			—
Additional paid-in capital			334,983				45,629				(45,536	)			335,076
Retained earnings			91,268				(3,776	)			(488	)			87,004
Accumulated other comprehensive (loss) income			(11,852	)			231				(231	)			(11,852	)
Amscan Holdings, Inc. stockholders’ equity			414,399				42,423				(46,594	)			410,228
Noncontrolling interest			—				1,889				—				1,889
Total stockholders’ equity			414,399				44,312				(46,594	)			412,117
Total liabilities, redeemable common securities and stockholders’ equity		$	1,444,391			$	158,774			$	(95,188	)		$	1,507,977

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands except share amounts)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended September 30, 2009

		AHI and
		Combined				Combined Non-
		Guarantors				Guarantors				Eliminations				Consolidated
Revenues:
Net sales		$	301,026			$	42,625			$	(6,707	)		$	336,944
Royalties and franchise fees			4,164				—				—				4,164
Total revenues			305,190				42,625				(6,707	)			341,108
Expenses:
Cost of sales			194,334				27,740				(6,583	)			215,491
Selling expenses			8,007				1,977				—				9,984
Retail operating expenses			56,369				8,680				—				65,049
Franchise expenses			3,046				—				—				3,046
General and administrative expenses			25,683				3,921				(330	)			29,274
Art and development costs			3,327				—				—				3,327
Total expenses			290,766				42,318				(6,913	)			326,171
Income from operations			14,424				307				206				14,937
Interest expense, net			9,394				951				—				10,345
Other (income) expense, net			(2,437	)			702				2,156				421
Income (loss) before income taxes			7,467				(1,346	)			(1,950	)			4,171
Income tax expense (benefit)			1,723				(661	)			(46	)			1,016
Net income (loss)			5,744				(685	)			(1,904	)			3,155
Less net income attributable to noncontrolling interests			—				76				—				76
Net income (loss) attributable to Amscan Holdings, Inc.		$	5,744			$	(761	)		$	(1,904	)		$	3,079

AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(Amounts in thousands except share amounts)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2009

		AHI and
		Combined				Combined Non-
		Guarantors				Guarantors				Eliminations				Consolidated
Revenues:
Net sales		$	878,876			$	123,416			$	(18,767	)		$	983,525
Royalties and franchise fees			12,394				—				—				12,394
Total revenues			891,270				123,416				(18,767	)			995,919
Expenses:
Cost of sales			566,527				82,007				(18,516	)			630,018
Selling expenses			24,170				5,944				—				30,114
Retail operating expenses			150,133				24,581				—				174,714
Franchise expenses			8,811				—				—				8,811
General and administrative expenses			76,443				12,245				(990	)			87,698
Art and development costs			9,606				—				—				9,606
Total expenses			835,690				124,777				(19,506	)			940,961
Income (loss) from operations			55,580				(1,361	)			739				54,958
Interest expense, net			29,442				2,060				—				31,502
Other (income) expense, net			(4,607	)			691				4,252				336
Income (loss) before income taxes			30,745				(4,112	)			(3,513	)			23,120
Income tax expense (benefit)			8,419				(1,835	)			(92	)			6,492
Net income (loss)			22,326				(2,277	)			(3,421	)			16,628
Less net income attributable to noncontrolling interests			—				193				—				193
Net income (loss) attributable to Amscan Holdings, Inc.		$	22,326			$	(2,470	)		$	(3,421	)		$	16,435