<PAGE> 1
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
-----------------
For the Quarterly Period Ended Commission File Number
June 30, 1997 0-27826
-----------------
Party City Corporation
(Exact name of registrant as specified in its charter)
Delaware 22--3033692
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Commons Way 07866
Rockaway, New Jersey (Zip Code)
(Address of Principal Executive Offices)
973-983-0888
(Registrant's telephone number, including area 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 |X| No: |_|
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date:
As of August 11, 1997, there were outstanding 8,176,667 shares of Common
Stock, $.01 par value.
<PAGE> 2
PARTY CITY CORPORATION
INDEX
Page No.
--------
Part I Financial Information
Item 1. Financial Statements:
Balance Sheets - June 30, 1997
and December 31, 1996 3
Statements of Operations - For the
Three Months Ended June 30, 1997 and 1996
and the Six Months Ended June 30, 1997 and 1996 4
Statements of Stockholders' Equity 5
Statements of Cash Flows - For the
Six Months Ended June 30, 1997 and 1996 6
Notes to Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations 9-12
Part II Other Information
Item 2. Changes in Securities 13
Item 6. Exhibits and Reports on Form 8-K 13
Exhibit Index 14
2
<PAGE> 3
PARTY CITY CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
------------------------
June 30, December 31,
1997 1996
------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $13,667,403 $14,949,714
Restricted assets for advertising fund 148,327 101,573
Receivables from franchisees:
Royalty fees (net of allowance for
doubtful accounts of $85,729 at June
30, 1997 and $32,847 at December 31, 1996) 823,707 1,015,161
Other 409,008 178,571
Merchandise Inventory 16,666,358 9,305,027
Due from affiliates -- 35,815
Prepaid income taxes 247,838 --
Deferred income taxes - current 193,188 193,188
Prepaid expenses and other current assets 2,658,854 1,015,760
------------------------
TOTAL CURRENT ASSETS 34,814,683 26,794,809
Propety and equipment - net 12,164,842 7,310,740
Deferred income taxes 218,224 218,224
Goodwill, net of amortization 4,238,177 --
Other assets 1,498,329 279,334
------------------------
TOTAL ASSETS $52,934,255 $34,603,107
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 7,424,854 $ 4,977,430
Accrued expenses 4,347,214 1,980,696
Advertising fund 148,327 101,573
Income taxes payable -- 1,904,562
Deferred revenue 285,607 412,081
------------------------
TOTAL CURRENT LIABILITIES 12,206,002 9,376,342
------------------------
LONG TERM LIABILITIES:
Deferred rent 1,676,322 1,170,624
Deferred revenue 646,103 495,000
------------------------
TOTAL LONG TERM LIABILITIES 2,322,425 1,665,624
------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value: authorized shares
- 25,000,000 at June 30, 1997 and December 31,
1996; shares issued and outstanding - 8,176,167
at June 30, 1997 and 6,960,667 at December 31, 1996 81,762 69,607
Additional paid-in capital 31,971,705 17,748,034
Retained earnings 6,352,361 5,743,500
------------------------
TOTAL STOCKHOLDERS' EQUITY 38,405,828 23,561,141
------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $52,934,255 $34,603,107
========================
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
PARTY CITY CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------- ------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
----------------------- ------------------------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $20,021,947 $6,338,685 $32,650,710 $10,900,956
Royalty fees 2,305,512 1,772,733 4,198,774 3,101,474
Franchise fees 127,500 175,000 217,500 265,000
----------------------- ------------------------
TOTAL REVENUES 22,454,959 8,286,418 37,066,984 14,267,430
EXPENSES:
Cost of goods sold and Occupancy Costs 13,755,624 4,362,640 23,138,117 7,696,960
Company-owned stores operating and selling
expense 4,921,307 1,581,277 8,435,111 2,882,976
Franchise expense 910,347 919,586 1,794,674 1,771,950
General and administrative expense 1,494,318 761,968 2,926,948 1,521,482
----------------------- ------------------------
TOTAL EXPENSES 21,081,596 7,625,471 36,294,850 13,873,368
----------------------- ------------------------
INCOME BEFORE INTEREST AND INCOME TAXES 1,373,363 660,947 772,134 394,062
Interest income, Net 120,280 170,021 241,527 159,700
----------------------- ------------------------
INCOME BEFORE INCOME TAXES 1,493,643 830,968 1,013,661 553,762
Provision for Income Taxes 596,500 331,800 404,800 221,100
----------------------- ------------------------
NET INCOME $ 897,143 $ 499,168 $ 608,861 $ 332,662
======================= ========================
NET INCOME PER SHARE $ 0.11 $ 0.07 $ 0.08 0.05
======================= ========================
Weighted average shares outstanding 8,044,792 7,109,160 7,507,896 6,280,210
======================= ========================
</TABLE>
See accompanying notes to financial statements
4
<PAGE> 5
PARTY CITY CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
-------------------- Additional Retained
Shares Amount Paid-In-Capital Earnings
-----------------------------------------------
<S> <C> <C> <C> <C>
Balance-January 1,1996 5,224,000 $52,240 $ 2,541,492 $1,987,975
Sale of common shares 1,700,000 17,000 16,983,000
Expenses incurred on sale
of common shares (1,990,551)
Exercise of stock options 20,000 200 49,800
Net income 332,662
-----------------------------------------------
Balance-June 30,1996 6,944,000 69,440 17,583,741 2,320,637
Expenses incurred on sale
of common shares 890
Exercise of stock options 16,667 167 124,828
Tax effect of non-qualified
options 38,575
Net income 3,422,863
-----------------------------------------------
Balance-December 31,1996 6,960,667 $69,607 $17,748,034 $5,743,500
Sale of common shares 1,200,000 $12,000 $15,588,000
Expenses incurred on sale
of common shares (1,422,510)
Exercise of stock options 15,500 155 58,181
Net income 608,861
-----------------------------------------------
Balance-June 30,1997 8,176,167 $81,762 $31,971,705 $6,352,361
===============================================
</TABLE>
See accompanying notes to financial statements
5
<PAGE> 6
PARTY CITY CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
June 30, June 30,
1997 1996
-----------------------------
<S> <C> <C>
Cash Flow from Operating Activities:
Net income $ 608,861 $ 332,662
Adjustments to reconcile net income to net cash
(used in)/provided by operating activities:
Depreciation and amortization 839,996 277,764
Deferred rent 505,698 (464,653)
Changes in assets and liabilities:
Royalty fees receivable 191,454 (13,398)
Other receivables (230,437) (135,339)
Merchandise inventory (7,361,331) (1,175,446)
Prepaid income taxes (247,838) --
Prepaid expenses and other current assets (1,643,094) (176,011)
Other assets (1,223,414) (14,344)
Accounts payable 2,447,424 205,128
Accrued expenses 2,366,518 1,128,774
Income taxes payable (1,904,562) (502,377)
Due to/from affiliates 35,815 (15,815)
Deferred revenue (126,474) 213,219
Long term liabilities 151,103 785,288
---------------------------
NET CASH (USED IN) / PROVIDED BY OPERATING ACTIVITIES (5,590,281) 445,452
---------------------------
Cash Flow from Investment Activities:
Purchases of property and equipment (5,433,356) (1,061,737)
Aquisition of franchise stores (4,494,500) --
---------------------------
NET CASH USED IN INVESTING ACTIVITIES (9,927,856) (1,061,737)
---------------------------
Cash Flow from Financing Activities:
Net proceeds from sale of stock 14,177,490 15,009,449
Proceeds from exercise of stock options 58,336 50,000
Repayments of long term debt -- (72,290)
---------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 14,235,826 14,987,159
---------------------------
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS (1,282,311) 14,370,874
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 14,949,714 1,112,566
---------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 13,667,403 $ 15,483,440
===========================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income Taxes Paid $ 2,557,257 $ 767,217
Interest Paid $ 24,926 $ 12,414
</TABLE>
See accompanying notes to financial statements
6
<PAGE> 7
PARTY CITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The financial statements have been prepared by the Company and are
unaudited. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and changes in cash flows at June 30, 1997 and
1996 have been made. Certain financial information and footnote disclosures
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The unaudited financial
statements should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the financial
statements and notes thereto included in the Company's Form 10-K for the year
ended December 31, 1996 filed with the Securities and Exchange Commission.
The results of operations for the three and six month periods ended June
30, 1997 are not necessarily indicative of the operating results for the full
year.
Note 2 - Secondary Public Offering
The Company completed its secondary public offering on May 8, 1997. The
total offering was for 2,240,000 shares of common stock, of which 1,200,000
shares were offered by the Company and 1,040,000 were offered by certain selling
stockholders. The offering price was $13.00 per share. Proceeds to the Company,
net of offering expenses were approximately $14,177,490.
Note 3 - Acquisition of Franchise Stores
On February 28, 1997, the Company acquired six franchise stores. Four of
the stores acquired were owned by Steven Mandell, the Company's Chairman and
President. Such stores had aggregate sales of approximately $9,100,000 in 1996
and were acquired for an aggregate purchase price of $4,750,000, subject to
post-closing adjustments of inventory and payables. The remaining two stores
were owned by Perry Kaplan, a former executive officer and Director of the
Company. Such stores had aggregate sales of approximately $3,700,000 and were
acquired for an aggregate purchase price of $1,150,000, subject to similar
post-closing adjustments.
The acquisitions have been accounted for under the purchase accounting
method. The results of operations of the acquired stores are included in the
financial statements since the acquisition date. Goodwill recorded in connection
with the acquisitions are being amortized on a straight-line basis over fifteen
years. Assuming the stores were acquired on January 1, 1996, the pro forma
impact would have increased the six month earnings and earnings per share by
approximately $62,800 and $0.01, and approximately $40,589 and $0.01 for the six
months ended June 30, 1997 and 1996, respectively.
Note 4 - Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share." The statement is effective for financial statements for periods ending
after December 15, 1997, and changes the method in which earnings or net income
per share will be determined. Adoption of this statement by the Company will not
have a material impact on net income per share.
7
<PAGE> 8
Note 5 - Subsequent Events
On August 1, 1997, the Company acquired three franchise stores; two stores
in the Southern California market and one store in Staten Island, New York.
Through these transactions, the Company acquired certain development rights to
the Southern California and Staten Island, New York markets. The aggregate
purchase price of these transactions was approximately $3.5 million, subject to
adjustments for actual inventories and trade payables. The acquisitions will be
accounted for under the purchase accounting method. Total sales of the three
franchise stores in 1996 were $6.2 million.
In addition, the Company has recently signed letters of intent to acquire
11 franchise stores in the Dallas/Fort Worth market. The purchase price of the
transaction is approximately $8.3 million, subject to an adjustment for actual
inventories and trade payables at the time of closing. The letters of intent
provide that Party City will acquire the rights for any future development in
the Dallas/Fort Worth market. Seven of the 11 stores were open for all of 1996
and averaged $1.8 million in sales, with the remaining four stores open less
than a year. The closing of the sale is anticipated to be in August.
8
<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three months June 30, 1997 Compared to Three Months June 30, 1996
Company-owned Stores
Net sales from Company-owned stores were $20,021,947 for the three months
ended June 30, 1997 compared to $6,338,685 for the three months ended June 30,
1996. The 1997 results include 16 additional stores which opened during the last
two quarters of 1996 plus six additional stores which opened during the first
quarter of 1997, six additional stores which were acquired during the first
quarter of 1997 and nine additional stores which opened during the second
quarter of 1997. The 1996 amount represents sales from 20 stores, including four
stores which opened during the second quarter of 1996. Stores open in the second
quarter 1996 had a 10.3% same store sales increase for the second quarter 1997.
Gross profit reflects the cost of goods sold and store occupancy costs including
rent, common area maintenance, real estate taxes, repair and maintenance,
depreciation and utilities. Gross profit for the three months ended June 30,
1997 was $6,266,323 compared to $1,976,045 for the three months ended June 30,
1996. The increase in 1997 was due to increased sales volume. Gross margin was
31.3% and 31.2% for the three months ended June 30, 1997 and 1996, respectively.
Store operating and selling expenses were $4,921,307 for the three months
ended June 30, 1997 compared to $1,581,277 in the comparable 1996 period. The
increase in store operating expenses is attributable to the increased number of
stores operated by the Company during the second quarter of 1997. Store
operating and selling expenses were 24.6% and 24.9% of sales for the three
months ended June 30, 1997 and 1996, respectively. Pre-opening expenses for
company-owned stores for the 1997 second quarter were $340,000 compared to
$147,000 in the second quarter of 1996. The increase is due to the increased
number of stores opened during the second quarter of 1997 compared to the second
quarter of 1996. Company-owned stores recorded a profit contribution of
$1,345,016 for the three months ended June 30, 1997, compared to a profit
contribution of $394,768 for the comparable 1996 period. The increase is due to
the increased number of stores as well as the greater profitability of older
stores.
Franchise Operations
Franchise revenue is composed of the initial franchise fees which are
recorded as revenue when the store opens, and ongoing royalty fees, generally
4.0% of the store's net sales. Franchise fees, recognized on five store openings
were $127,500 for the three months ended June 30, 1997 as compared to $175,000
for the same period in 1996, which represents six store openings. No franchise
fee was recognized on the Dallas market store opened this quarter as this store
is expected to be acquired and become a corporate store during the third quarter
of 1997. Royalty fees increased 30.1% to $2,305,512 in the three months ended
June 30, 1997 from $1,772,733 in the three months ended June 30, 1996. The
increase in royalty fees is attributable to the increase in franchise stores
open during the second quarter of 1997 compared to the same period in 1996 as
well as franchise same store sales increases for the three months ended June 30,
1996 of 9.9%.
Expenses directly related to franchise revenue decreased $9,239 to
$910,347 for the three months ended June 30, 1997 from $919,586 for the three
months ended June 30, 1996. As a percentage of franchise revenue, franchise
expenses were 37.4% and 47.2% for the quarters ended June 30, 1997 and 1996,
respectively. This percentage decrease is primarily attributable to the
Company's ability to leverage such expenses across a substantially larger base
of franchise revenues.
9
<PAGE> 10
Franchise profit contribution increased 48.1% to $1,522,665 for the three
months ended June 30, 1997 from $1,028,147 for the three months ended June 30,
1996. The increase in franchise profit contribution is due to the increase in
royalty fees attributable to the opening of new franchises and increases in
existing franchise store sales and the leveraging of franchise expenses as
discussed above.
General and Administrative
General and administrative expenses increased to $1,494,318 from $761,968,
or 96.1% in the second quarter 1997 from the second quarter 1996. The increase
is primarily attributable to an increase in payroll and related benefits,
professional and legal fees, recruitment of new employees and increased travel
and occupancy costs as a result of establishing the necessary organizational
infrastructure to allow the Company to build the Company-owned store base. As a
percentage of revenue, general and administrative expenses were 6.7% and 9.2%
for the three months ended June 30, 1997 and 1996, respectively. This decrease
as a percentage of revenue resulted from the Company's ability to leverage such
expenses across a substantially larger base of revenues.
Net Income
For the second quarter 1997, the Company reported net income of $897,143
and earnings per share of $0.11 as compared to net income of $499,168 and
earnings per share of $0.07 for the second quarter 1996.
Six Months June 30, 1997 Compared to Six Months June 30, 1996
Company-owned Stores
Net sales from Company-owned stores increased to $32,650,710 in the six
months ended June 30, 1997 from $10,900,956 in the six months ended June 30,
1996. Same store sales for the six months ended June 30, 1997 increased 13.2%
over the same six month period last year. Gross profit for the six months ended
June 30, 1997 was $9,512,593 compared to $3,203,996 for the comparable period in
1996. The increase in 1997 was due to increased sales volume. Gross margin was
29.1% and 29.4% for the six months ended June 30, 1997 and 1996, respectively.
Store operating and selling expenses were $8,435,111 for the six months
ended June 30, 1997 compared to $2,882,976 in the comparable 1996 period. The
increase in store operating expenses is attributable to the increased number of
stores operated by the Company during the first six months of 1997. Store
operating expenses were 25.8% and 26.4% of sales for the six months ended June
30, 1997 and 1996, respectively. Pre-opening expenses for company-owned stores
for the first and second quarters of 1997 were $553,000 compared to $147,000 for
the same period last year. The increase is due to the increased number of stores
opened during the six months ended June 30, 1997 compared to the six months
ended June 30, 1996. Company-owned stores' profit contribution was $1,077,482
for the six months ended June 30, 1997 compared to a profit contribution of
$321,020 for the comparable 1996 period. The increase is due to the increased
number of stores as well as the greater profitability of older stores.
Franchise Operations
Franchise fees, recognized on eight store openings during the six months
ended June 30, 1997 were $217,500 compared to $265,000 during the same period in
1996, which represents nine store openings. Royalty fees increased to $4,198,774
in the six months ended June 30, 1997 from $3,101,474 in the six months ended
June 30, 1996. The increase in royalty fees is attributable to the increase in
franchise stores open during the first six months of 1997 compared to the same
period in 1996 as well as franchise same store sales increases for the six
months ended June 30, 1997 of 12.3%.
10
<PAGE> 11
Expenses directly related to franchise revenue increased to $1,794,624 for
the six months ended June 30, 1997 from $1,771,950 for the six months ended June
30, 1996. Franchise expenses as a percentage of franchise revenue was 40.6% and
52.6% for the six months ended June 30, 1997 and 1996, respectively. The
percentage decrease is primarily attributable to the Company's ability to
leverage such expenses across a substantially larger base of franchise revenues.
Franchise profit contribution was $2,621,600 for the six months ended June
30, 1997 compared to $1,594,524 for the six months ended June 30, 1996. The
64.4% increase in franchise contribution is due to the increase in royalty fees,
a decrease in franchise expenses, offset in part by a decrease in franchise
fees, as discussed above.
General and Administrative
General and administrative expenses increased to $2,926,948 from
$1,521,482 or 92.4% in the first six months 1997 from the same period in 1996.
As a percentage of revenue, general and administrative expenses were 7.9% and
10.7% for the six months ended June 30, 1997 and 1996, respectively. The
increase is primarily attributable to an increase in payroll and related
benefits, professional and legal fees, recruitment and moving of new employees
and increased travel as a result of establishing the necessary organizational
infrastructure to allow the Company to build the Company-owned store base.
Net Income
For the first six months of 1997, the Company reported net income of
$608,861 and earnings per share of $0.08 as compared to net income of $332,662
and earnings per share of $0.05 for the same period of 1996.
Liquidity and Capital Resources
For the six months ended June 30, 1997, cash used in operating activities
was $5,590,210, compared to cash provided by operating activities of $445,452
for the comparable 1996 period. The increase in cash used in operating
activities was primarily attributable to increases in merchandise inventory of
$7,361,331 and prepaid expenses and other current assets of $2,554,906 and a
reduction in income taxes payable of $1,904,562, partially offset by net income
of $608,801, depreciation and amortization of $839,996, increases in accounts
payable of $2,447,424 and accrued expenses of $2,366,518 as well as other net
changes in operating assets and liabilities.
Cash used in investing activities for the six months ended June 30, 1997
was $9,927,856 compared to $1,061,737 in the same period of 1996. The increase
in cash used in investing activities was primarily attributable to property and
equipment additions necessary to support the growth in Company-owned stores in
the amount of $5,433,356 and $4,494,500 for the acquisition of six franchise
stores. Both were substantially funded by the Company's existing available cash.
Cash provided by financing activities was $14,235,826 for the six months
ended June 30, 1997 compared to $14,987,159 in the same period of 1996. Cash
provided by financing activities consisted of the net proceeds of the public
sale of the Company's stock of $14,177,490 and proceeds from the exercise of
employee stock options granted under the Company's Amended and Restated 1994
Stock Option Plan in the amount of $58,336. On June 16, 1997, the Company
refinanced and replaced its existing loan facility with a $20,000,000 revolving
line of credit facility maturing on June 30, 2000. Advances under the line bear
interest, at the Company's option, at 1/2 of 1% below the bank's prime rate
(8.5% as of June 30, 1997) or
11
<PAGE> 12
LIBOR plus 1.25% (which margin for the LIBOR rate option is subject to reduction
to .75% or increase to 1.75% based on the Company's ratio of total liabilities
to tangible net worth). The Company paid a facility fee of $50,000 and a
quarterly commitment fee equal to .125% of the average unused portion of the
line, which is secured by substantially all of the assets of the Company. The
credit facility provides various covenants including, among others, restrictions
on capital expenditures, and maintenance of a defined minimum tangible net
worth, interest coverage ratio, total liabilities to tangible net worth ratio
and current ratio. At June 30, 1997, the Company was in compliance with such
loan agreement covenants. There was no outstanding balance on the facility at
June 30, 1997.
The Company completed its secondary public offering on May 8, 1997. The
total offering was for 2,240,000 shares of common stock, of which 1,200,000
shares were offered by the Company and 1,040,000 were offered by certain selling
stockholders. Proceeds to the Company, net of offering expenses were
approximately $14,177,490. The Company believes the proceeds from the offering,
its cash flows from operations and its borrowing capacity under the proposed
credit facility will be adequate to fund its cash requirements for at least the
next 24 months.
12
<PAGE> 13
PART II OTHER INFORMATION
Item 2. Changes in Securities
Within the past three years, the Company has sold the following
securities which were not registered under the Securities Act of 1933, as
amended (the "Securities Act")
In 1994, the Company issued options to purchase 102,240 shares of the
Company's common stock, $.01 par value per share ("Common Stock") to various
employees, officers and directors of the Company pursuant to the Company's
Amended and Restated 1994 Stock Option Plan (the "Plan"), in consideration for
the recipients' services to the Company. Such options were issued based upon
an exemption from registration under Section 4(2) of the Securities Act.
In 1995, the Company issued options to purchase 79,760 shares of Common
Stock to various employees, officers and directors of the Company pursuant to
the Plan, in consideration for the recipients' services to the Company. Such
options were issued based upon an exemption from registration under Section
4(2) of the Securities Act.
In 1996, the Company issued options to purchase 281,500 shares of
Common Stock to various employees, officers and directors of the Company
pursuant to the Plan, in consideration for the recipients' services to the
Company. Such options were issued based upon an exemption from registration
under Section 4(2) of the Securities Act.
In 1996, the Company sold 36,667 shares of Common Stock pursuant to the
exercise of stock options for an aggregate purchase price of $174,995, based
upon an exemption from registration under Section 4(2) of the Securities Act.
In 1997, the Company issued options to purchase 198,750 shares of
Common Stock to various employees, officers and directors of the Company
pursuant to the Plan, in consideration for the recipients' services to the
Company. Such options were issued based upon an exemption from registration
under Section 4(2) of the Securities Act.
In 1997, the Company sold 16,000 shares of Common Stock pursuant to the
exercise of stock options for an aggregate purchase price of $63,335.50, based
upon an exemption from registration under Section 4(2) of the Securities Act.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits required to be filed as part of this report on Form 10-Q
are listed in the attached Exhibit Index.
(b) No reports on Form 8-K have been filed during the quarter for which
this report has been filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
Undersigned thereunto duly authorized.
PARTY CITY CORPORATION
By /s/ STEVEN MANDELL
--------------------------------------------
(Steven Mandell)
President & Chief Executive Officer
By /s/ DAVID LAUBER
--------------------------------------------
(David Lauber)
Chief Financial &
Principal Accounting Officer
Date: August 11, 1997
13
<PAGE> 14
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
27 Financial Data Schedule
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 13,667,403
<SECURITIES> 0
<RECEIVABLES> 909,436
<ALLOWANCES> 85,729
<INVENTORY> 16,666,358
<CURRENT-ASSETS> 34,814,683
<PP&E> 12,164,842
<DEPRECIATION> 0
<TOTAL-ASSETS> 52,934,255
<CURRENT-LIABILITIES> 12,206,002
<BONDS> 0
0
0
<COMMON> 81,762
<OTHER-SE> 38,324,066
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</TABLE>
