As filed with the Securities and Exchange Commission on January 21, 2014.

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Party City Holdco Inc.

(Exact name of registrant as specified in its charter)

Delaware	5900	46-0539758
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

(914) 345-2020

80 Grasslands Road, Elmsford, NY 10523

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

James M. Harrison

Chief Executive Officer and President

80 Grasslands Road

Elmsford, NY 10523

(914) 345-2020

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Julie H. Jones, Esq. Jay J. Kim, Esq. Ropes & Gray LLP Prudential Tower, 800 Boylston Street Boston, MA 02199-3600 Telephone (617) 951-7000 Fax (617) 951-7050 Marc D. Jaffe, Esq. Senet Bischoff, Esq. Latham & Watkins LLP 885 Third Avenue New York, NY 10022-4834 Telephone (212) 906-1200 Fax (212) 751-4864

Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price (1)(2)	Amount of Registration Fee (3)
Common Stock, $0.01 par value per share	$500,000,000	$64,400

(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act.

(2) Includes shares to be sold upon exercise of the underwriters’ option to purchase additional shares. See “Underwriting.”

(3) This fee is being offset by the previously paid fee of $40,635 paid in connection with the registration statement filed on April 22, 2011 by Party City Holdings Inc., the Registrant’s indirect, wholly-owned subsidiary.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated January 21, 2014

Party City Holdco Inc.

            Shares

Common Stock

This is the initial public offering of shares of common stock of Party City Holdco Inc., or “Party City Holdco.”

Party City Holdco is offering            shares to be sold in the offering.

Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $        and $        . Party City Holdco intends to list the common stock on the            under the symbol “PRTY”.

See “Risk Factors” on page 13 to read about factors you should consider before buying shares of the common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

	Per Share	Total
Initial public offering price	$	$
Underwriting discount	$	$
Proceeds before expenses to Party City Holdco (1)	$	$
Proceeds before expenses to the selling stockholders	$	$

(1) See “Underwriting” on page 140 for additional information regarding underwriting compensation.

Certain selling stockholders identified in this prospectus have granted the underwriters the option to purchase up to an additional              shares of our common stock on the same terms and conditions set forth above if the underwriters sell more than              shares of our common stock in this offering. We will not receive any proceeds from the sale of shares offered by the selling stockholders.

The underwriters expect to deliver the shares against payment in New York, New York on                    , 2014.

Goldman, Sachs & Co.	BofA Merrill Lynch
Credit Suisse	Morgan Stanley

Barclays Deutsche Bank Securities J.P. Morgan

Prospectus dated                    , 2014

TABLE OF CONTENTS

Market, Ranking and Other Industry Data	ii
Trademarks	ii
Prospectus Summary	1
Risk Factors	13
Special Note Regarding Forward-Looking Statements	29
The Transactions	31
Use of Proceeds	32
Dividend Policy	33
Capitalization	34
Dilution	36
Selected Consolidated Financial Data	38
Unaudited Pro Forma Condensed Consolidated Financial Statements	43
Management’s Discussion and Analysis of Financial Condition and Results of Operations	50
Business	79
Management	99
Executive Compensation	104
Principal and Selling Stockholders	120
Certain Relationships and Related Party Transactions	122
Description of Capital Stock	124
Description of Certain Debt	128
Shares Eligible For Future Sale	134
Material U.S. Federal Income Tax Considerations For Non-U.S. Holders of Common Stock	136
Underwriting	140
Validity of Common Stock	146
Experts	146
Where You Can Find Additional Information	146
Index to Consolidated Financial Statements of Party City Holdco Inc. and Subsidiaries	F-1

We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

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MARKET, RANKING AND OTHER INDUSTRY DATA

The market, ranking and other industry data included in this prospectus, including the size of certain markets and our position and the position of our competitors within these markets, are based on published industry sources, our own research and estimates based on our management’s knowledge and experience in the markets in which we operate. Our estimates have been based on information obtained from trade and business organizations and other contacts in the markets in which we operate. We note that our estimates, in particular as they relate to general expectations concerning our industry, involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this prospectus.

TRADEMARKS

We own or have rights to trademarks or trade names that we use in conjunction with the operation of our business. In addition, our name, logo and website name and address are our service marks or trademarks. Some of the more important trademarks and service marks that we use include Party City^®, The Discount Party Super Store^®, Amscan^® and Halloween City^®. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this prospectus may be listed without the ^©, ^® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to these trademarks, service marks, trade names and copyrights. This prospectus may also include trademarks, service marks or trade names of other companies. Each trademark, trade name or service mark by any other company appearing in this prospectus belongs to its holder.

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that is important to you in considering an investment in our common stock. You should read this entire prospectus carefully, especially the “Risk Factors” section of this prospectus and our consolidated financial statements and related notes appearing at the end of this prospectus, before making an investment decision.

As part of the transactions described under “The Transactions,” on July 27, 2012 our wholly-owned indirect subsidiary, PC Merger Sub, Inc. (“Merger Sub”), merged with and into Party City Holdings Inc., with Party City Holdings Inc. being the surviving corporation, which we refer to as the “Acquisition.” In this prospectus, the terms “we,” “us,” “our,” “the Company” and other similar terms refer to Party City Holdco Inc. and all its subsidiaries, including Party City Holdings Inc., that are consolidated under United States generally accepted accounting principles (“GAAP”). Unless we indicate otherwise or the context otherwise requires, information identified in this prospectus as “pro forma” gives effect to various transactions as described under “Unaudited Pro Forma Condensed Consolidated Financial Statements.”

Please note that our discussion of certain financial information, specifically net sales, royalties and franchise fees and retail operating expenses, for the year ended December 31, 2012 and the three and nine months ended September 30, 2012 include data from the “Predecessor” period, which covers the period preceding the Acquisition (January 1, 2012 to July 27, 2012) and data from the “Successor” period, which covers the period following the Acquisition (July 28, 2012 to September 30, 2013), on a combined basis. The Company notes that the change in basis resulting from the Acquisition did not impact such financial information and, although this presentation of financial information on a combined basis does not comply with GAAP, we believe it provides a meaningful method of comparison to the other periods presented in this prospectus. The data is being presented for analytical purposes only. Combined operating results (i) have not been prepared on a pro forma basis as if the Acquisition occurred on the first day of the period, (ii) may not reflect the actual results we would have achieved absent the Acquisition and (iii) may not be predictive of future results of operations.

Our Company

We are the leading party goods retailer in North America and, we believe, the largest vertically integrated supplier of decorated party goods globally with multiple levers to drive future growth across channels, products and geographies. With approximately 880 locations, we have the only coast-to-coast network of party superstores in the U.S. and Canada that make it easy and fun to enhance special occasions with a differentiated shopping experience and an unrivaled assortment of innovative and exciting merchandise offered at a compelling value. Through a series of acquisitions between 2005 and 2010, we built a powerful retail operation that captures the full manufacturing-to-retail margin on a significant portion of the products sold in our stores. We believe we are the largest global designer, manufacturer and distributor of decorated party supplies with products found in over 40,000 retail outlets worldwide, including our own stores as well as independent party supply stores, mass merchants, grocery retailers, dollar stores and others. Our category-defining retail concept, multi-channel reach, widely recognized brands, broad and deep product offering, and low-cost global sourcing model are, we believe, significant competitive advantages. We believe these characteristics position us for continued organic and acquisition-led growth and margin expansion.

Founded in 1947, we started as an importer and wholesaler and grew to offer a broad selection of decorated party supplies including paper and plastic tableware, metallic and latex balloons, novelties, costumes and other garments, stationery and gifts for everyday, themed and seasonal events. Our products are available in over 100 countries with the U.K., France, Germany and Australia among the largest end markets for us outside North America. We believe that through our extensive assortment, as well as our industry-leading innovation, customer service levels and compelling value proposition, we will continue to win with our customers.

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The 2005 combination of Amscan Holdings, Inc. (“Amscan”), which focused on the wholesale market, and Party City Corporation (“Party City”), which focused on the retail market, represented an important step in our evolution. Since then, we have established the largest multi-channel party supply business in North America with approximately 880 party superstores (inclusive of approximately 215 franchised stores) in the United States and Canada, principally under the Party City banner, and PartyCity.com, our primary e-commerce site. Underscored by our slogan “Nobody Has More Party for Less,” we believe we offer a superior one-stop shopping experience with a broad selection, consistently high in-stock positions and compelling value proposition, making us the favored destination for all of our customers’ party supply needs. We also operate a network of approximately 350 temporary Halloween locations under the Halloween City banner.

Through a combination of organic growth and strategic acquisitions, we have been able to generate strong topline performance and margin expansion, including:

• Growing revenue from $1,487 million for the year ended December 31, 2009 to $1,981 million for the twelve months ended September 30, 2013 representing a compounded annual growth rate of 7.9%.

• Increasing adjusted EBITDA from $192 million, implying an adjusted EBITDA margin of 12.9%, for the year ended December 31, 2009 to $         million on a pro forma basis for the twelve months ended September 30, 2013, for an implied pro forma adjusted EBITDA margin of         %. Net income decreased from $63 million for the year ended December 31, 2009 to a net loss of $         million on a pro forma basis for the twelve months ended September 30, 2013 due to both higher interest expense, resulting from debt incurred in conjunction with the Transactions, the impact of non-cash purchase accounting adjustments resulting from the Transactions, and the impact of non-recurring charges related to refinancings.

For a discussion of our use of adjusted EBITDA and a reconciliation to net income (loss), on a historical and pro forma basis, please refer to “—Summary Financial Data” and “Selected Consolidated Financial Data.”

Evolution of Our Business

Over the past 60 years, we have grown to become a global, vertically integrated designer, manufacturer, distributor and retailer of decorated party supplies. Key strategic initiatives that were and continue to be important to our evolution include:

• Establishing retail leadership in our industry and our vertically integrated model through the acquisitions of Party City, Party America Corporation (“Party America”), Factory Card & Party Outlet (“FCPO”), Party Packagers in Canada and iParty Corp. (“iParty”). Following each acquisition, we capitalized on our vertically integrated model by increasing the percentage of products for sale at such retail stores that are manufactured and/or distributed by us, allowing us to capture the full manufacturing-to-retail margin on a significant portion of the retail sales.

• Enhancing our wholesale platform through targeted acquisitions while investing in state-of-the-art distribution facilities and developing a strong Asian-based sourcing and sales organization.

• Re-launching our e-commerce platform in 2009 provided us with an additional direct-to-consumer channel.

• Broadening our product offering and channel reach by acquiring valuable character licenses and costume capabilities in addition to improving our access to grocery and mass merchant retailers.

• Growing our international presence by building relationships with local retailers to develop party supply store-in-store concepts as well as targeted acquisitions that extended our wholesale and retail geographic reach.

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As a result of these investments, we have created a differentiated, vertically integrated business model. We believe that our superior selection of party supplies, scale, innovation and service position us for future growth across all of our channels.

Competitive Strengths

We are well-positioned to continue to attract customers who celebrate life’s memorable events as a result of the following competitive strengths:

Category Defining Multi-Channel Retailer. We believe we are the premier party supplies retailer, providing a one-stop shopping experience with a broad and deep selection of products offered at a compelling value seamlessly through our retail stores and our e-commerce platform. We keep our assortment current by frequently introducing new products, and we organize our stores by events and themes to make it easy to shop while consistently presenting customers with additional product ideas that will enhance their events and our sales. With our extensive selection, convenient locations, consistently high in-stock positions and compelling value proposition, we believe customers associate Party City with successful celebrations, and, as a result, our physical and online stores will continue to be seen as the favored destination for party supplies and innovative ideas.

Leading Market Position. We are the largest retailer of decorated party supplies in the U.S. and Canada. With our network of approximately 850 party superstores, we are the only party supply retailer with a national store footprint. In addition to our leading retail presence, we believe our integrated wholesale business is the largest global designer, manufacturer and distributor of decorated party goods with over 40,000 SKUs found in over 40,000 retail outlets worldwide. Through our category-leading brands, Party City and Amscan, we offer what we believe is the broadest selection of continuously updated and innovative merchandise at a compelling value. We believe that our scale, brand recognition and value proposition underscore our credibility as the destination of choice for party supplies in any channel.

Unique Vertically Integrated Operating Model. We manufacture, source and distribute party supplies, acting as a one-stop shop for decorated party goods to both retail and wholesale customers. Our vertically integrated model provides us with a number of advantages including the ability to (i) enhance our profitability as we realize the full manufacturing-to-retail margin on a significant portion of our retail sales, (ii) leverage a global sourcing network to reinforce our position as a low-cost provider of quality party supplies and (iii) effectively respond to changes in consumer trends through our in-house design and innovation team.

Broad and Innovative Product Offering. We offer a broad and deep product assortment with an average of 25,000 SKUs offered at any one time in our Party City superstores, supported by the approximately 35,000 SKUs offered online which can be accessed via our “endless aisle” in-store kiosk system as well as through PartyCity.com. Our extensive selection offers customers a single source for all of their party needs. Our in-house design team introduces approximately 7,000 products annually, driving newness in our licensed and unlicensed product offering and supporting increased sales across our channels.

Highly Efficient Global Sourcing and Distribution Capabilities. Over the past 60 years, we have developed a global network of owned and third-party manufacturers that we believe optimizes speed to market, quality and cost. We also have warehousing and distribution facilities around the world, including three in the U.S. and seven centers located outside the United States. We have also opened sourcing, quality control and testing offices throughout Asia with over 200 employees in our offices located in China, Vietnam and Hong Kong. Our global sourcing and distribution capabilities offer our customers best-in-class service levels, rapid fulfillment and competitive prices, and have capacity for continued growth with our business.

World-Class Management Team with a Proven Track Record. Our senior management team averages over 20 years of industry experience and possesses a unique combination of management skills and experience in the

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party goods sector. Our team has successfully grown our sales and profits during various economic cycles and through several business transformations. Additionally, our team has a strong track record of successful acquisitions and integrations, which continue to be an important part of our overall strategy.

Growth Strategy

We believe we have significant opportunities to enhance our leadership position in the party goods industry and improve profitability through the further implementation of our operating strategy both organically and through strategic acquisitions. Key elements of our growth strategy include:

Expand Our Retail Store Base. Our retail network includes approximately 850 party superstores (inclusive of approximately 215 franchised stores) in the United States and approximately 30 locations in Canada. We believe there is an opportunity to open more than 350 additional Party City stores in North America which is consistent with an independent analysis conducted by a leading, global consulting firm in 2012. We anticipate opening approximately 30 new stores per year. Based on historical performance and the margin generated from our vertically integrated model, we expect our new stores to have a payback period of approximately three years and to generate an average pre-tax cash-on-cash return on invested capital of approximately 50% in year three.

Drive Additional Growth and Productivity From Existing Retail Stores. We plan to grow our comparable store sales by continuing to improve our brand image and awareness, executing our merchandising initiatives, converting existing stores to our new more interactive format and integrating the 2013 iParty acquisition. We are pursuing various merchandising initiatives to drive increased units per transaction including aligning dress-up and candy products coordinated by color and party themes and broadening the product formats available within existing license arrangements. We also anticipate remodeling or relocating approximately 50 stores per year and converting them to our latest interactive store-within-a-store concept (specialty areas named “Sports City”, “Candy City”, “Color City” and “Favor City”). Based on our historical experience, we expect remodeled or relocated stores to generate sales growth of four to five percentage points higher than non-remodeled or non-relocated stores in the first year following conversion with longer-term sales growth of one to two percentage points higher than non-remodeled or non-relocated stores.

Growing Market Share and Earnings. We believe we have significant opportunities to continue to grow our wholesale business by capitalizing on our leading scale, vertical operating model and strong innovation capabilities as well as through strategic acquisitions. We will also continue to broaden our product assortment by adding new items that coordinate with our party themed events and licenses and broaden our reach by expanding into adjacent business-to-business and alternate consumer channels where we see a compelling opportunity for our products. As we continue to grow, our increased scale will allow us to leverage our costs and drive margin expansion. Since 2005, we have increased the selection of our own merchandise offered in Party City stores (also known as “share of shelf”) from approximately 25% in 2005 to approximately 67% for the nine months ended September 30, 2013 which allowed us to increase our margins. Our ultimate long-term share of shelf target is 75% to 80%. Our ability to create new and enhance existing celebration opportunities will continue to be a consistent driver of our growth.

Grow Our E-commerce Platform. Since our e-commerce business was relaunched in 2009 under the PartyCity.com banner, it has grown to account for approximately $100 million in revenue during the twelve months ended September 30, 2013 and, we believe, to become one of the largest e-commerce retailers of decorated party goods and costumes. We are targeting future e-commerce growth by enhancing our merchandising approach online, as well as launching country specific e-commerce sites, building off the 2013 acquisition of Party Delights Ltd. (“Party Delights”). In addition, we anticipate broadening the products and services available to our customers through our e-commerce channel and launching a mobile application.

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Increase International Presence. Through acquisitions and organic growth, we have increased sales to international customers to represent approximately 13.7% of our total revenues in 2012. The market for party goods outside the United States is less mature due to lower consumer awareness of party products and less developed retail distribution channels. We believe this represents an opportunity as we customize our products to different cultural norms as well as engage in a “party education process” to grow demand for party goods in international markets.

Pursue Accretive Acquisitions. Over the past 15 years, we have successfully integrated numerous acquisitions, such as Christy’s Group (“Christy’s” or “Christy’s Group”), and Party Delights, strengthening our manufacturing, distribution and retail platforms. We have also acquired, and will continue to acquire, our franchised stores and independent party good retailers as such opportunities emerge. We believe our significant experience in identifying attractive acquisition targets, proven integration process and global infrastructure create a strong platform for future acquisitions.

Industry Overview

We operate in the broadly defined $10 billion retail party goods industry (including decorative paper and plastic tableware, decorations, accessories and balloons), which is supported by a range of suppliers from commodity paper goods producers to party goods specialty retailers. 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 (Halloween, Christmas, New Year’s Eve, graduations, Easter, Super Bowl, Fourth of July). As a result of numerous and diverse occasions, the U.S. party goods market enjoys broad demographic appeal. Additionally, we operate in the $7 billion Halloween market, a portion of which overlaps with the $10 billion retail party goods industry. The Halloween market includes costumes, candy and makeup.

The retail landscape is comprised primarily of party superstores, mass merchants, craft stores, grocery retailers, and dollar stores. The party superstore has emerged as a preferred destination for party goods shoppers, similar to the dominance of specialty retailers in other categories such as home improvement, pet products and sporting goods. 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 merchants tend to focus primarily on juvenile and seasonal goods, greeting cards and gift wrap; craft stores on decorations and seasonal merchandise; and dollar stores on general and seasonal party goods items.

The consumable nature and low per-item prices in the party goods market have historically driven demand among consumers seeking to enhance the quality of their gatherings and celebrations. Party goods are an economical means by which to make events and occasions more festive and, as a result, have continued to sell well during economic downturns. Manufacturers and retailers continue to create and market party goods and gifts that celebrate a greater number of holidays and occasions. Additionally, the number and types of products offered for each occasion continues to expand, encouraging add-on and impulse purchases by consumers.

The Transactions

On July 27, 2012, Merger Sub, a wholly-owned subsidiary of PC Intermediate Holdings, Inc. (“Holdings”), which is our wholly-owned subsidiary, merged into Party City Holdings Inc. (“PCHI”), with PCHI being the surviving entity. Immediately after the Acquisition, 100% of our common stock was owned by funds affiliated with Thomas H. Lee Partners, L.P. (“THL”), who held approximately 70% ownership, funds affiliated with Advent International Corporation (“Advent” and, together with THL, the “Sponsors”), who held approximately 24% ownership, and other minority investors, including management, who held approximately 6% ownership. To consummate the Acquisition, our subsidiary, PCHI, entered into new debt financing consisting of (i) $1,525

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million of senior secured credit facilities (the “Senior Credit Facilities”) consisting of: (a) a $400 million revolving credit facility (the “ABL Facility”), which had $115 million drawn at the closing of the Acquisition and (b) a $1,125 million term loan credit facility (the “Term Loan Facility”), and (ii) $700 million of 8.875% senior notes (the “senior notes”).

We refer to the Acquisition and the related transactions, including the issuance and sale of the senior notes and the borrowings under the Senior Credit Facilities, as the “Transactions.”

Risks That We Face

Our business is subject to a number of risks of which you should be aware before making an investment decision. The risks are discussed more fully in the “Risk Factors” section of this prospectus immediately following this prospectus summary. These risks include, but are not limited to, the following:

• 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 business may be adversely affected by fluctuations in commodity prices;

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

• we may not be able to successfully implement our store growth strategy;

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

• our substantial indebtedness and lease obligations could adversely affect our financial flexibility and our competitive position; and

• investment funds affiliated with the Sponsors will have the ability to control the outcome of matters submitted for stockholder approval and may have interests that differ from those of our other stockholders.

The Sponsors

THL is one of the world’s oldest and most experienced private equity firms. THL invests in growth-oriented companies across three broad sectors: Business & Financial Services, Consumer & Healthcare and Media & Information Services. THL’s investment and operating professionals partner with portfolio company management teams to identify and implement business model improvements that accelerate sustainable revenue and profit growth. The firm focuses on global businesses headquartered primarily in North America. Since the firm’s founding in 1974, THL has raised approximately $20 billion of equity capital and invested in more than 100 portfolio companies with an aggregate value of more than $150 billion. The firm’s two most recent private equity funds comprise more than $14 billion of aggregate committed capital.

Founded in 1984, Advent is one of the largest and most experienced global investors dedicated solely to private equity. Since inception, the firm has invested in 290 buyout transactions in 39 countries, and today has $32.2 billion in assets under management. With offices on four continents, Advent has established a globally integrated team of over 170 investment professionals across North America, Europe, Latin America and Asia. The firm focuses on growth and traditional buyout and strategic repositioning transactions across five core sectors, including business and financial services; healthcare; industrial; retail, consumer and leisure; and technology, media and telecoms.

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Affiliates of THL, together with affiliates of Advent, own approximately 93% of our common stock, with affiliates of THL owning approximately 69% of our common stock. Upon completion of this offering and assuming no exercise of the underwriters’ option to purchase additional shares, the Sponsors will continue to beneficially own approximately     % of our outstanding common stock.

Corporate Information

Party City Holdco Inc. is a Delaware corporation. Our executive offices are located at 80 Grasslands Road, Elmsford, New York 10523 and our telephone number at that location is (914) 345-2020. Our website address is http://www.partycity.com. The information on our website is not a part of this prospectus, and you should not rely on it in connection with your decision whether or not to participate in this offering.

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THE OFFERING

Common stock offered by us             shares

Common stock to be outstanding after this offering             shares

Option to purchase additional shares offered to underwriters The selling stockholders have granted the underwriters an option to purchase up to              additional shares.

Use of proceeds Assuming an initial public offering price of $         , which is the midpoint of the range listed on the cover page of this prospectus, we estimate that the net proceeds to us from this offering will be approximately $         million. We intend to use the net proceeds from this offering to repay indebtedness and for working capital and other general corporate purposes. See “Use of Proceeds.”

We will not receive any proceeds from the shares sold by the selling stockholders if the underwriters’ option to purchase additional shares is exercised.

Risk factors You should read the “Risk Factors” section of this prospectus beginning on page 13 for a discussion of factors to consider carefully before deciding whether to purchase shares of our common stock.

Proposed              symbol PRTY

The number of shares of our common stock to be outstanding after this offering is based on 33,509.93 shares of common stock outstanding as of December 31, 2013 and excludes:

• 2,547 shares of common stock issuable upon the exercise of stock options issued under our 2012 Omnibus Equity Incentive Plan (the “2012 Plan”) with a weighted average exercise price of $14,916 per share;

• 1,159 additional shares of common stock reserved for future issuance under the 2012 Plan; and

•              additional shares of common stock reserved for future issuance under the 2012 Plan, as amended, which amendment shall take effect prior to the consummation of this offering.

Unless otherwise indicated, all information in this prospectus assumes:

• a            -for-one stock split on our common stock effected as a stock dividend on                     , 2014;

• the adoption of our amended and restated certificate of incorporation and our amended and restated bylaws (“bylaws”), to be effective upon the closing of this offering; and

• no exercise by the underwriters of their option to purchase up to              additional shares of our common stock from certain selling stockholders in this offering.

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SUMMARY FINANCIAL DATA

The following table sets forth summary historical consolidated financial data for the periods ended and at the dates indicated below. Our summary historical consolidated financial data as of December 31, 2011 (Predecessor) and December 31, 2012 (Successor) and for the period from July 28, 2012 to December 31, 2012 (Successor), the period from January 1, 2012 to July 27, 2012 (Predecessor) and the years ended December 31, 2011 (Predecessor) and December 31, 2010 (Predecessor) presented in this table has been derived from our historical audited consolidated financial statements included elsewhere in this prospectus. Our summary historical consolidated financial data for the nine months ended September 30, 2013 (Successor) and the period from July 28, 2012 to September 30, 2012 (Successor) has been derived from our historical unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited pro forma condensed consolidated statements of operations and comprehensive loss for the twelve months ended September 30, 2013 has been derived from our unaudited pro forma condensed consolidated financial statements included elsewhere in this prospectus.

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 the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the notes thereto contained elsewhere in this prospectus.

	Fiscal Year Ended December 31,						Period from January 1 to July 27, 2012			Period from July 28 to December 31, 2012			Period from January 1 to July 27, 2012			Period from July 28 to September 30, 2012			Nine Months Ended September 30, 2013 (3)			Pro Forma Twelve Months Ended September 30, 2013 (4)
	2010 (1)			2011 (2)
	(Predecessor)			(Predecessor)			(Predecessor)			(Successor)			(Predecessor)			(Successor)			(Successor)			(Successor)
		(dollars in thousands, except per common share data)
Income Statement Data:
Revenues:
Net sales	$	1,579,677		$	1,852,869		$	930,903		$	964,330		$	930,903		$	324,525		$	1,323,216
Royalties and franchise fees		19,417			19,106			9,281			9,312			9,281			2,797			11,961
Total revenues		1,599,094			1,871,975			940,184			973,642			940,184			327,322			1,335,177
Expenses:
Cost of sales (5)		943,058			1,118,973			574,048			636,410			574,048			247,508			877,258
Wholesale selling expenses		42,725			57,905			31,568			28,096			31,568			11,465			51,091
Retail operating expenses		296,891			325,332			166,047			172,168			166,047			62,454			245,252
Franchise expenses		12,269			13,685			6,579			6,128			6,579			2,585			9,872
General and administrative expenses (6)		134,392			138,074			101,502			65,890			101,502			28,596			107,718
Art and development costs		14,923			16,636			10,824			8,201			10,824			3,390			14,480
Impairment of trade name (7)		27,400			—			—			—			—			—			—
Income (loss) from operations		127,436			201,370			49,616			56,749			49,616			(28,676	)		29,506
Interest expense, net		40,850			77,743			41,970			62,062			41,970			26,572			103,561
Other expense, net (8)		4,208			1,476			22,245			26,157			22,245			25,621			15,991
Income (loss) before income taxes		82,378			122,151			(14,599	)		(31,470	)		(14,599	)		(80,869	)		(90,046	)
Income tax expense (benefit)		32,945			45,741			403			(1,322	)		403			(25,755	)		(38,546	)
Net income (loss)		49,433			76,410			(15,002	)		(30,148	)		(15,002	)		(55,114	)		(51,500	)
Less: net income attributable to noncontrolling interests		114			135			96			60			96			61			224
Net income (loss) attributable to Party City Holdco Inc.	$	49,319		$	76,275		$	(15,098	)	$	(30,208	)	$	(15,098	)	$	(55,175	)	$	(51,724	)
Per Share Data:
Net income (loss) per share
Basic
Diluted
Pro forma basic
Pro forma diluted
Weighted Average
Outstanding basic
Diluted
Pro forma outstanding basic
Pro forma diluted
Statement of Cash Flow Data
Net cash provided by (used in)
Operating activities (9)	$	61,168		$	161,264		$	(18,126	)	$	(41,844	)	$	(18,126	)	$	(199,168	)	$	(73,986	)
Investing activities (9)		(102,766	)		(138,909	)		(31,824	)		(1,578,553	)		(31,824	)		(1,570,454	)		(90,572	)
Financing activities (9)		46,515			(19,784	)		33,318			1,629,331			33,318			1,777,662			162,871
Cash dividend per common share		9,400			—			—			—			—			—			10,087

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	Year Ended December 31,						Period from January 1 to July 27, 2012			Period from July 28 to December 31, 2012			Period from January 1 to July 27, 2012			Period from July 28 to September 30, 2012			Nine Months Ended September 30, 2013 (3)			Pro Forma Twelve Months Ended September 30, 2013(4)
	2010 (1)			2011 (2)
	(Predecessor)			(Predecessor)			(Predecessor)			(Successor)			(Predecessor)			(Successor)			(Successor)			(Successor)
	(dollars in thousands)
Other Financial Data:
Adjusted EBITDA (10)	$	230,618		$	275,466		$	116,982		$	175,329		$	116,982		$	21,806		$	145,906
Adjusted EBITDA margin (10)		14.4	%		14.7	%		12.4	%		18.0	%		12.4	%		6.7	%		10.9	%
Adjusted net income (10)	$	86,430		$	88,260		$	22,883		$	50,920		$	22,883		$	(5,239	)	$	(2,566	)
Number of company-owned Party City stores (11)		439			487			—			600			—			594			665
Capital expenditures	$	49,623		$	44,483		$	28,864		$	16,376		$	28,864		$	7,635		$	42,143
Party City brand comp sales (12)		3.6	%		9.5	%														1.9	%
Share of shelf (13)		58.7	%		60.5	%		64.7	%		63.7	%		64.7	%		63.0	%		67.1	%
Balance Sheet Data (at end of period):
Cash and cash equivalents	$	20,454		$	22,053		$	—		$	14,563		$	—		$	13,652		$	12,904
Working capital (14)		189,993			226,277			—			387,858			—			337,650			337,827
Total assets		1,653,151			1,750,338			—			3,276,983			—			3,219,374			3,462,049
Total debt		1,000,256			982,258			—			1,851,517			—			2,000,006			2,365,768
Total equity		256,422			326,091			—			787,450			—			761,734			406,286

(1) The acquisitions of Designware and the Christy’s Group are included in the financial statements from their acquisition dates (March 1, 2010 and September 30, 2010, respectively).

(2) The acquisitions of Riethmüller and Party City Canada are included in the financial statements from their acquisition dates (January 30, 2011 and July 29, 2011, respectively).

(3) The acquisitions of Party Delights and iParty are included in the financial statements from their acquisition dates (March 13, 2013 and May 9, 2013, respectively).

(4) The unaudited pro forma condensed consolidated statements of operations and comprehensive loss and other financial data for the twelve months ended September 30, 2013 gives effect to: (i) this offering and the use of proceeds therefrom, (ii) the February 2013 amendment to the credit agreement governing the Term Loan Facility, (iii) the issuance of the senior PIK toggle notes and the use of proceeds therefrom and (iv) the termination of the management agreement with the Sponsors, assuming in each case such event occurred on October 1, 2012. The unaudited pro forma condensed consolidated balance sheet data at September 30, 2013 gives effect to: (i) this offering and the use of proceeds therefrom and (ii) the termination of the management agreement with the Sponsors, assuming in each case such event occurred on September 30, 2013. The unaudited pro forma condensed consolidated statements of operations and comprehensive loss and other financial data and the unaudited pro forma consolidated balance sheet data do not necessarily represent what our financial position and results of operations would have been if the transactions had actually been completed on the dates indicated, and are not intended to project our financial position or results of operations for any future period. See “Use of Proceeds” and “Unaudited Pro Forma Condensed Consolidated Financial Statements.”

(5) As a result of the Acquisition, the Company applied the acquisition method of accounting and increased the value of its inventory by $89.8 million as of July 28, 2012. Such adjustment increased the Company’s cost of sales during the nine months ended September 30, 2013, the period from July 28, 2012 to December 31, 2012 and the period from July 28, 2012 to September 30, 2012 by $22.0 million, $58.6 million and $27.8 million, respectively, as a portion of the related inventory was sold.

(6) In conjunction with the Transactions, the Company recorded $8.4 million of transaction costs in general and administrative expenses during the period from January 1, 2012 to July 27, 2012. Additionally, the Transactions accelerated the vesting of certain of the Company’s stock options and during the period from January 1, 2012 to July 27, 2012 the Company recorded $2.1 million of expense in general and administrative expenses. Further, due to the vesting of such stock options, the Company made payments in lieu of dividends to the holders of such options and during the period from January 1, 2012 to July 27, 2012, the Company recorded a $16.1 million charge in general and administrative expenses.

(7) During 2010, the Company implemented plans to convert and rebrand its company-owned FCPO stores as Party City stores. As a result, the Company recorded a charge for the impairment of the Factory Card & Party Outlet trade name of $27.4 million in the fourth quarter of 2010.

(8) During February 2013, the Company amended the Term Loan Facility. In conjunction with that amendment, the Company wrote-off $5.9 million of costs that had been capitalized during the initial issuance of the debt. Additionally, the Company wrote-off $2.3 million of the net original issuance discount that existed as of the time of that amendment. Also, in conjunction with that amendment, the Company expensed $2.5 million of a call premium and $1.6 million of investment banking and legal fees. In conjunction with the Transactions, the Company recorded $19.7 million of transaction costs in other expense, net during the period from January 1, 2012 to July 27, 2012 and $24.6 million of transaction costs during the period from July 28, 2012 to December 31, 2012. Additionally, the period from January 1, 2012 to July 27, 2012 included $2.5 million in costs as a result of the termination of an initial public offering. In connection with the refinancing of the Company’s revolving and term debt credit facilities in August and December 2010, the Company wrote off $2.4 million of deferred finance charges during 2010.

(9) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity” for a discussion of 2012 cash flows.

(10) We present adjusted EBITDA and adjusted net income as supplemental measures of our operating performance. 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 ongoing operating performance. These further adjustments are itemized below. Adjusted net income represents our net income (loss), adjusted for intangible asset amortization, non-cash purchase accounting adjustments, amortization of deferred financing costs and original issue discount, the Sponsors management fee, refinancing charges, equity-based compensation, payments in lieu of dividend, impairment charges and costs associated with the Transactions. We present adjusted EBITDA and adjusted net income as supplemental measures of our performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating adjusted EBITDA and adjusted net income, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of adjusted EBITDA and adjusted net income should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

We present adjusted EBITDA and adjusted net income because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we

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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 facility uses adjusted EBITDA to measure compliance with certain covenants. While we have historically not used adjusted net income for internal management reporting and valuation purposes, we believe adjusted net income is a helpful benchmark to evaluate our operating performance.

We also include information concerning adjusted EBITDA margin, which is defined as the ratio of adjusted EBITDA to revenue. We present adjusted EBITDA margin because it is used by management as a performance measurement to judge the level of adjusted EBITDA generated from revenue. We believe its inclusion is appropriate to provide additional information to investors.

Adjusted EBITDA, adjusted net income and adjusted EBITDA margin have limitations as analytical tools. Some of these limitations are:

• adjusted EBITDA, adjusted net income and adjusted EBITDA margin do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

• adjusted EBITDA and adjusted net income do not reflect changes in, or cash requirements for, our working capital needs;

• adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our 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 and adjusted net income do not reflect any cash requirements for such replacements;

• non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;

• adjusted EBITDA and adjusted net income do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and

• other companies in our industry may calculate adjusted EBITDA and adjusted net income differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, adjusted EBITDA, adjusted net income and adjusted EBITDA margin should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA, adjusted net income and adjusted EBITDA margin only on a supplemental basis. The reconciliations from net income (loss) to each of adjusted EBITDA and adjusted net income for the periods presented is as follows:

	Year Ended December 31,						Period from January 1 to July 27, 2012			Period from July 28 to December 31, 2012			Period from January 1 to July 27, 2012			Period from July 28 to September 30, 2012			Nine Months Ended September 30, 2013			Pro Forma Twelve Months Ended September 30, 2013
	2010			2011
	(Predecessor)			(Predecessor)			(Predecessor)			(Successor)			(Predecessor)			(Successor)			(Successor)			(Successor)
	(dollars in thousands)
Net income (loss)	$	49,433		$	76,410		$	(15,002	)	$	(30,148	)	$	(15,002	)	$	(55,114	)	$	(51,500	)
Interest expense, net		40,850			77,743			41,970			62,062			41,970			26,572			103,561
Income taxes		32,945			45,741			403			(1,322	)		403			(25,755	)		(38,546	)
Depreciation and amortization		49,418			59,631			33,915			49,837			33,915			20,327			70,960
EBITDA		172,646			259,525			61,286			80,429			61,286			(33,970	)		84,475
Equity based compensation		6,019			1,397			3,375			—			3,375			—			1,741
Non-cash purchase accounting adjustments		1,244			—			—			58,626	(a)		—			27,805	(a)		21,979	(a)
Management fee		1,248	(b)		1,248	(b)		713	(b)		1,292	(b)		713	(b)		541	(b)		2,250	(b)
Impairment charges		27,997	(c)		87			—			—			—			—			—
Restructuring, retention and severance		1,780			2,513			355			784			355			350			2,840
Payment in lieu of dividend		9,395	(d)		617	(d)		16,533	(d)		—			16,533	(d)		—			—
Refinancing charges		2,448			—			—			—			—			—			12,295	(e)
Deferred rent		4,500			7,467			3,344			6,335			3,344			1,434			11,706
Estimated business interruption proceeds		—			—			—			2,000			—			—			1,000
Transaction costs		—			—			28,582	(f)		24,564	(f)		28,582	(f)		24,564	(f)		—
Corporate development expenses		1,660			2,471			2,395			351			2,395			239			4,606
Other		1,681			141			399			948			399			843			3,014
Adjusted EBITDA	$	230,618		$	275,466		$	116,982		$	175,329		$	116,982		$	21,806		$	145,906

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	Year Ended December 31,						Period from January 1 to July 27, 2012			Period from July 28 to December 31, 2012			Period from January 1 to July 27, 2012			Period from July 28 to September 30, 2012			Nine Months Ended September 30, 2013			Pro Forma Twelve Months Ended September 30, 2013
	2010			2011
	(Predecessor)			(Predecessor)			(Predecessor)			(Successor)			(Predecessor)			(Successor)			(Successor)			(Successor)
	(dollars in thousands)
Income (loss) before income taxes	$	82,378		$	122,151		$	(14,599	)	$	(31,470	)	$	(14,599	)	$	(80,869	)	$	(90,046	)
Intangible asset amortization		10,345	(g)		11,116	(g)		5,542	(g)		14,160	(g)		5,542	(g)		5,661	(g)		20,477	(g)
Non-cash purchase accounting adjustments		1,244			—			—			71,755	(a)		—			33,057	(a)		33,793	(a)
Amortization of deferred financing costs and original issuance discount		2,475	(h)		4,500	(h)		2,592	(h)		4,605	(h)		2,592	(h)		1,907	(h)		16,886	(e)(h)
Management fee		1,248	(b)		1,248	(b)		713	(b)		1,292	(b)		713	(b)		541	(b)		2,250	(b)
Refinancing charges		2,448			—			—			—			—			—			4,068	(e)
Equity based compensation		6,019			1,397			3,375			—			3,375			—			1,741
Payment in lieu of dividend		9,395	(d)		617	(d)		16,533	(d)		—			16,533	(d)		—			—
Impairment charges		27,997	(c)		87			—			—			—			—			—
Transaction costs		—			—			28,582	(f)		24,564	(f)		28,582	(f)		24,564	(f)		—
Adjusted income (loss) before income taxes		143,549			141,116			42,738			84,906			42,738			(15,139)			(10,831)
Adjusted income tax expense (benefit)		57,119	(i)		52,856	(i)		19,855	(i)		33,986	(i)		19,855	(i)		(9,900	)(i)		(8,265	)(i)
Adjusted net income (loss)	$	86,430		$	88,260		$	22,883		$	50,920		$	22,883		$	(5,239	)	$	(2,566	)

(a) As a result of the Acquisition, the Company applied the acquisition method of accounting and increased the value of its inventory by $89.8 million as of July 28, 2012. Such adjustment increased the Company’s cost of sales during the nine months ended September 30, 2013, the period from July 28, 2012 to December 31, 2012 and the period from July 28, 2012 to September 30, 2012 by $22.0 million, $58.6 million and, $27.8 million, respectively, as a portion of the related inventory was sold. Further, during the application of the acquisition method of accounting, the Company increased the value of certain property, plant and equipment. The impact of such adjustments on depreciation expense increased the Company’s expenses during the nine months ended September 30, 2013, the period from July 28, 2012 to December 31, 2012 and the period from July 28, 2012 to September 30, 2012 by $11.8 million, $13.1 million and $5.3 million, respectively. These property, plant and equipment depreciation amounts are included in “Non-cash purchase accounting adjustments” for purposes of calculating “adjusted net income,” but are excluded from “Non-cash purchase accounting adjustments” for purposes of calculating adjusted EBITDA since they are included in depreciation expense.

(b) Represents management fees paid to the Sponsors. The management agreement will terminate upon consummation of this offering. See “Certain Relationships and Related Party Transactions—Management Agreement.”

(c) During 2010, we implemented plans to convert and rebrand our company-owned FCPO stores as Party City stores. As a result, we recorded a $27.4 million charge for impairment of the FCPO trade name in the fourth quarter of 2010.

(d) In December 2010, a one-time cash dividend was declared. In addition, holders of unvested options at the declaration date would receive a distribution when the options vested. At the time of the Transactions on July 27, 2012, certain outstanding stock options became fully vested and distributions were made in the amount of $16.1 million. Further, prior to the Transactions, during 2012 certain outstanding stock options became fully vested and the Company made distributions in the amount of $0.4 million. The Company recorded charges equal to such amounts in general and administrative expenses during the period from January 1, 2012 to July 27, 2012.

(e) During February 2013, the Company amended the Term Loan Facility. In conjunction with that amendment, the Company wrote-off $5.9 million of costs that had been capitalized during the initial issuance of the debt. Additionally, the Company wrote-off $2.3 million of the net original issuance discount that existed as of the time of that amendment. Both amounts are included in “Amortization of deferred financing costs and original issue discount” in this table and in the Company’s consolidated statement of cash flows included elsewhere in this prospectus. Also, in conjunction with that amendment, the Company expensed $2.5 million of a call premium and $1.6 million of investment banking and legal fees.

(f) In conjunction with the Transactions, the Company incurred certain costs. See Note 5 to the audited consolidated financial statements which are included elsewhere in this prospectus.

(g) Represents the amortization of intangible assets, including those assets recorded in conjunction with the application of the acquisition method of accounting due to the Transactions.

(h) Represents the amortization of deferred financing costs and original issuance discounts related to debt offerings. Additionally, the nine months ended September 30, 2013 includes the write-off of deferred financing costs and net original issuance discounts in conjunction with the February 2013 Term Loan Facility amendment. See note (e) for further discussion.

(i) Represents the income tax expense (benefit) using the rate in effect after considering the adjustments.

(11) Data as of September 30, 2013 includes all 54 stores that were acquired from iParty and which were converted to the Party City banner at such date.

(12) Party City brand comp sales include e-commerce, Canadian store sales and all store sales converted from the FCPO and Party Packagers formats to the Party City format and excludes iParty store sales.

(13) Represents the percentage of cost of goods sold by our domestic permanent stores (excluding iParty stores) and domestic e-commerce operations which relates to product supplied by our wholesale operations.

(14) Loans and notes payable (included in current liabilities) decreased by $106.0 million from December 31, 2011 to December 31, 2012. Additionally, as a result of the Transactions, the Company applied the acquisition method of accounting and increased the value of its inventory as of July 28, 2012. At September 30, 2013 and December 31, 2012, $9.1 million and $31.1 million, respectively, of the adjustment was included in inventory.

12

RISK FACTORS

Investing in our common stock involves a certain degree of risk. You should carefully consider the following risk factors, as well as the other information in this prospectus, before deciding to invest in our common stock. The occurrence of any of the following risks could harm our business, financial condition, results of operations or prospects. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. Certain statements in “Risk Factors” are “forward-looking statements.” See “Special Note Regarding Forward-Looking Statements” elsewhere in this prospectus.

Risks Related to Our Business

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

We compete 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 specialty retailers, warehouse/merchandise clubs, drug stores, supermarkets, dollar stores, mass merchants, and catalogue and online merchants. Our stores compete, among other ways, on the basis of location and store layout, product mix and availability, customer convenience and price. 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 affected by 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.

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. 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.

During the middle of 2012, helium supplies tightened due to the following factors: (i) new natural gas plants took longer than expected to come on-line, (ii) certain natural gas plants experienced longer than anticipated downtime for maintenance, (iii) helium demand increased due to new technologies and (iv) natural gas production declined due to warmer than usual winters. As a result, our full-year 2012 domestic metallic balloon

13

sales were $2.6 million lower than 2011 as balloon distributors and retailers rationalized inventory levels in light of the shortage. Additionally, our net sales of domestic metallic balloons during the first nine months of 2013 were $4.4 million lower than the first nine months of 2012.

We believe that the shortage is temporary as new natural gas plants have come on-line during the second half of 2013, other plants are expected to come online in the near term, and many helium users are implementing conservation programs. However, should the shortage continue, it could have a material impact on our results.

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.

We may not be able to successfully implement our store growth strategy.

If we are unable to increase the number of retail stores we operate and increase the productivity and profitability of existing retail stores, our ability to increase sales, profitability and cash flow could be impaired. To the extent we are unable to open new stores as we planned, our sales growth would come primarily from increases in comparable store sales. We may not be able to increase our comparable store sales, improve our margins or reduce costs as a percentage of sales. Growth in profitability in that case would depend significantly on our ability to increase margins or reduce costs as a percentage of sales. Further, as we implement new initiatives to reduce the cost of operating our stores, sales and profitability may be negatively impacted.

Our ability to successfully open and operate new stores depends on many factors including, among others, our ability to:

• identify suitable store locations, including temporary lease space for our Halloween City locations, 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, including the availability of cash for rent outlays under new leases;

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

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• hire, train and retain an expanded workforce of store managers and other personnel;

• successfully integrate new stores 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 based on certain agreements with our franchisees and other business partners.

In addition, as the number of our stores increases along with our online sales, we may face risks associated with market saturation of our product offerings. To the extent our new store openings are in markets where we have existing stores, we may experience reduced net sales in existing stores in those markets. Finally, there can be no assurance that any newly opened stores will be received as well as, or achieve net sales or profitability levels comparable to those of, our existing stores in the time periods estimated by us, or at all. If our stores fail 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 stores. Our failure to effectively address challenges such as these could adversely affect our ability to successfully open and operate new stores in a timely and cost-effective manner, and could have a material adverse effect on our business, results of operations and financial condition.

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

Our retail business, including our Party City stores, online sales from our e-commerce website and our temporary Halloween City locations, realizes a significant portion of its revenues, net income and cash flow in September and October, principally due to our Halloween sales. For example, in 2012 our Halloween business represented approximately 25% of our total domestic retail sales. We believe 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 a substantial markdown, 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 if we are not able to find sufficient and adequate lease space for our temporary Halloween City locations or if we are unable to hire temporary personnel to adequately staff these stores and our distribution facility during the Halloween season. Failure to have proper lease space and adequate personnel could hurt our business, financial condition and results of operations.

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. Independent third parties with whom we conduct business may employ personnel represented by labor unions. Labor stoppages, shortages or capacity constraints in the transportation industry, disruptions to the national and international transportation infrastructure, fuel shortages or transportation cost increases could adversely affect our business, results of operations, cash flows and financial performance.

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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 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 and consumer confidence in future economic conditions. Our customers’ 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. 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.

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

In 2012, we manufactured items representing approximately 34% of our net sales at wholesale (including sales to our retail operations). Any significant disruption in our manufacturing facilities, in the United States or abroad, for any reason, including regulatory requirements, the loss of certifications, power interruptions, fires, hurricanes, war or other force of nature, could disrupt our supply of products, adversely affecting our business, results of operations, cash flows and financial performance. 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.

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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 website 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.

Our international operations subject us to additional risks, which risks and 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 recently expanded our international operations through the acquisitions of the Christy’s Group, a U.K. based costume company, in September 2010, Riethmüller, a German distributor of party goods, in January 2011, Party City Canada, a Canadian retailer of party goods and outdoor toys, in July 2011 and Party Delights, a U.K. based e-commerce retailer, in March 2013, and we plan to continue to expand our international operations through acquisitions, investments in joint ventures and organic expansion. 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 Euro, British pound sterling, Mexican peso, Canadian dollar, Australian dollar, Malaysian ringgit and Chinese renminbi;

• 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;

• legal and regulatory changes and the burdens and costs of our compliance with a variety of laws, including trade restrictions and tariffs; and

• political and economic instability.

We may face risks associated with litigation and claims.

From time to time, we are involved in class actions and other lawsuits, claims and other proceedings relating to the conduct of our business, including but not limited to employee-related and consumer matters. Additionally,

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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. 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. While it is not feasible to predict the outcome of pending lawsuits and claims, we do not believe that any such matters are material or that the disposition thereof is likely to have a material adverse effect on our business, financial condition and results of operations, although the resolution in any reporting period of any matter could have an adverse effect on our operating results for that period. Also, we can give no assurance that any other lawsuits or claims brought in the future will not have a material adverse effect on our business, financial condition and results of operations.

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 on key personnel whom we may not be able to retain or hire.

The success of our business depends, to a large extent, on the continued service of our senior management team. Gerald C. Rittenberg, our Executive Chairman, and James M. Harrison, our Chief Executive Officer and President, have been with the Company for approximately 23 and 17 years, respectively. The loss of the services and leadership of either of these individuals could have a negative impact on our business, as we may not be able to find management personnel with similar experience and industry knowledge to replace either of them on a timely basis. We do not maintain key life insurance on any of our senior officers.

As our business expands, we believe that our future success will depend greatly on our continued ability to attract, motivate and retain highly skilled and qualified personnel. 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, minimum wage legislation and changing demographics. 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 platform 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 now conducted over the Internet. We could experience operational problems with our information systems and e-commerce platform 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 we process customer payment card and check information, including via our e-commerce platform. Computer hackers may attempt to penetrate our computer system and, if successful, misappropriate personal information, payment card or check information or confidential Company business information. 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 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.

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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. 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 may have to 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 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, 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

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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.

Risks Related to Our Indebtedness

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

As of September 30, 2013, we had total indebtedness of $2,384.2 million (exclusive of original issue discount and call premiums) and an additional $167.3 million of borrowing capacity available under the ABL Facility (excluding $19.0 million of letters of credit outstanding as of September 30, 2013).

We also have, and will continue to have, significant lease obligations. As of December 31, 2012, our minimum aggregate rental obligation under operating leases for fiscal 2013 through 2017 totaled $438.8 million.

Our pro forma net interest expense for the nine months ended September 30, 2013 was $118.8 million, after giving effect to the issuance of the $350 million senior PIK toggle notes (the “senior PIK toggle notes”) issued by our subsidiaries, PC Nextco Holdings, LLC (“Nextco Holdings”) and PC Nextco Finance, LLC (“Nextco Finance”) in August 2013 and after giving effect to the impact of the Term Loan Facility refinancing in February 2013. As of September 30, 2013, we had outstanding approximately $1,328.5 million in aggregate principal amount (exclusive of original issue discount and call premiums) of indebtedness under the Senior Credit Facilities that bears interest at a floating rate.

Our substantial level of indebtedness will increase 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;

• 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.

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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 (as defined therein) covenant of 1.00 to 1.00. At September 30, 2013, such ratio was 1.55 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. In the event of a default 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 a cross-default and cross-acceleration of amounts owing under the Term Loan Facility. 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. See “Description of Certain Debt.”

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

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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 and senior PIK toggle notes will restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them and these 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 and the senior PIK toggle 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.

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 Term Loan Facility. The interest rate swap agreements that we use to manage the risk associated with fluctuations in interest rates may not be able to fully eliminate our exposure to these changes.

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Risks Related to This Offering

An active public market for our common stock may not develop following this offering.

Prior to this offering, there has been no public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market in our common stock or how liquid that market might become. An active market for our common stock may not develop or be sustained after the offering. If an active public market does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at a price that is attractive to you, or at all. In addition, an inactive market may impair our ability to raise capital by selling shares and may impair our ability to acquire other companies by using our shares as consideration, which, in turn, could materially adversely affect our business.

We expect to be a “controlled company” within the meaning of the             rules and, as a result, we will qualify for, and currently intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

After completion of this offering, we expect that our Sponsors will hold more than 50% of our common stock. If that occurs, we expect to qualify as a “controlled company” within the meaning of the corporate governance rules of the             . Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

• the requirement that a majority of the board of directors consist of independent directors;

• the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

• the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

Accordingly, we intend to rely on exemptions from certain corporate governance requirements. As a result, we may not have a majority of independent directors and our compensation committee and nominating and corporate governance committee may not consist entirely of independent directors. Additionally, we are only required to have one independent audit committee member upon the listing of our common stock on the             , a majority of independent audit committee members within 90 days from the date of listing and all independent audit committee members within one year from the date of listing. Consequently, you will not have the same protections afforded to stockholders of companies that are subject to all of the            corporate governance rules and requirements. Our status as a controlled company could make our common stock less attractive to some investors or otherwise harm our stock price.

Investment funds affiliated with the Sponsors will have the ability to control the outcome of matters submitted for stockholder approval and may have interests that differ from those of our other stockholders.

Investment funds affiliated with the Sponsors beneficially own approximately 93% of our capital stock as of September 30, 2013. After the completion of this offering, assuming the underwriters do not exercise their option to purchase additional shares, the Sponsors will beneficially own approximately     % of our common stock. The Sponsors have significant influence over corporate transactions. So long as investment funds associated with or designated by the Sponsors continue to own a significant amount of the outstanding shares of our common stock, even if such amount is less than 50%, the Sponsors will continue to be able to strongly influence or effectively control our decisions, regardless of whether or not other stockholders believe that the transaction is in their own best interests. Such concentration of voting power could also have the effect of delaying, deterring or preventing a change of control or other business combination that might otherwise be beneficial to our stockholders.

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Our stock price may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at a price at or above the initial public offering price.

The initial public offering price for the shares of our common stock sold in this offering will be determined by negotiation between the representatives of the underwriters and us. This price may not reflect the market price of our common stock following this offering. In addition, the market price of our common stock is likely to be highly volatile and may fluctuate substantially in response to a number of factors, most of which we cannot control, including:

• actual or anticipated fluctuations in our results of operations;

• variance in our financial performance from the expectations of equity research analysts;

• changes in consumer preferences or merchandise trends;

• announcements of new products or significant price reductions by our competitors;

• additions or changes to key personnel;

• the timing of releases of new merchandise or promotional events;

• the level of customer service that we provide in our stores;

• our ability to source and distribute products effectively;

• weather conditions (particularly during the holiday season);

• the number of stores we open, close or convert in any period;

• the commencement or outcome of litigation;

• changes in market valuation or earnings of our competitors;

• the trading volume of our common stock;

• future sale of our equity securities; and

• economic, legal and regulatory factors unrelated to our performance.

The initial public offering price of our common stock will be determined by negotiations between us and the underwriters based upon a number of factors and may not be indicative of prices that will prevail following the completion of this offering. Volatility in the market price of our common stock may prevent investors from being able to sell their common stock at or above the initial public offering price. As a result, you may suffer a loss on your investment.

In addition, the stock markets in general have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance or the particular companies affected. These broad market and industry factors may materially harm the market price of our common stock irrespective of our operating performance. As a result of these factors, you might be unable to resell your shares at or above the initial public offering price after this offering. In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against the affected company. This type of litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

We will incur increased costs as a result of becoming a public company.

As a public company, we will incur significant legal, accounting, and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also have incurred and will incur costs associated with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and related rules implemented by the Securities and Exchange Commission (“SEC”). The expenses incurred by

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public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.

We do not expect to pay any cash dividends for the foreseeable future and, consequently, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.

Following this offering, we do not anticipate that we will pay any cash dividend on shares of our common stock for the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon results of operations, financial performance, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant. Additionally, the ABL Facility, the Term Loan Facility and the indentures governing the senior notes and the senior PIK toggle notes contain restrictive covenants which have the effect of limiting our ability to pay cash dividends. Accordingly, if you purchase shares in this offering, realization of a gain on your investment will depend on the appreciation of the price of our common stock, which may never occur. Investors seeking cash dividends in the foreseeable future should not purchase our common stock.

Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.

Sales of substantial amounts of our common stock in the public market after this offering, or the perception that these sales could occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional shares. Upon completion of this offering, assuming no exercise by the underwriters of their option to purchase additional shares, we will have             million shares of common stock outstanding, a majority of which we expect will be held by the Sponsors. This concentration, commonly referred to as a market overhang, could depress the price at which our stock trades.

Upon expiration of lock-up agreements between the underwriters and our officers, directors, and certain other holders of our common stock, a substantial number of shares of our common stock could be sold into the public market shortly after this offering, which could depress our stock price.

Our officers, directors and holders of substantially all of our common stock have entered into lock-up agreements with our underwriters which prohibit, subject to certain limited exceptions, the disposal or pledge of, or the hedging against, any of their common stock or securities convertible into or exchangeable for shares of common stock for a period through the date 180 days after the date of this prospectus, subject to extension in certain circumstances. See “Shares Eligible for Future Sale” for a more detailed description of the restrictions on selling shares of our common stock after this offering. The market price of our common stock could decline as a result of sales by our existing stockholders in the market after this offering and after the expiration of these lock-up periods, or the perception that these sales could occur. Once a trading market develops for our common stock, and after these lock-up periods expire, many of our stockholders will have an opportunity to sell their stock for the first time. These factors could also make it difficult for us to raise additional capital by selling stock.

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If you purchase shares of common stock in this offering, you will incur immediate and substantial dilution.

If you purchase shares of common stock in this offering, you will incur immediate and substantial dilution in the amount of $         per share because the initial public offering price of $         per share is substantially higher than the pro forma net tangible book value per share of our common stock. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they purchased their shares. In addition, you may also experience additional dilution upon future equity issuances or the exercise of stock options to purchase common stock granted to our employees, consultants and directors under our equity incentive plans.

We may undertake acquisitions to expand our business, which may pose risks to our business and dilute the ownership of our existing shareholders.

We continuously seek to expand our business through strategic acquisitions, both domestically and internationally. Our recent acquisitions include the March 2013 acquisition of Party Delights and the May 2013 acquisition of iParty. See “Business—Evolution of Our Business” for a more detailed description of recent acquisitions and the growth of our business.

We will continue to selectively pursue acquisitions of businesses, technologies or services. Based on our previous experiences, integrating any newly acquired business, technology or service is an expensive and time consuming task. To finance any future acquisitions, it may be necessary for us to raise additional funds through public or private financings. Additional funds may not be available on terms that are favorable to us, and, in the case of equity financings, would result in dilution to our shareholders. We may be unable to operate any newly acquired businesses profitably or otherwise implement our strategy successfully. If we are unable to integrate any newly acquired entities, technologies or services effectively, our business and results of operations will suffer.

The time and expense associated with finding suitable and compatible businesses, technologies or services could also disrupt our ongoing business and divert our management’s attention. Future acquisitions by us could also result in large and immediate write-offs or assumptions of debt and contingent liabilities, any of which could substantially harm our business and results of operations.

Our management will have broad discretion over the use of the proceeds we receive in this offering and might not apply the proceeds in ways that increase the value of your investment.

We estimate that net proceeds of the sale of the common stock that we are offering will be approximately $         million. Our management will have broad discretion to use our net proceeds from this offering, and you will be relying on the judgment of our management regarding the application of these proceeds. Our management might not apply the net proceeds of this offering in ways that increase the value of your investment. Our management might not be able to yield any return on the investment and use of these net proceeds. You will not have the opportunity to influence our decisions on how to use the proceeds.

If securities or industry analysts do not publish research or reports or publish unfavorable research or reports about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities and industry analysts publish about us, our business, our market or our competitors. We may not obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price of our stock could be negatively impacted. In the event we obtain securities or industry analyst coverage, if one or more of the analysts who covers us publishes unfavorable research or reports or downgrades our stock, our stock price would likely decline. If one or more of these analysts ceases to cover us or fails to regularly publish reports on us, interest in our stock could decrease, which could cause our stock price or trading volume to decline.

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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:

• the division of our board of directors into three classes and the election of each class for three-year terms;

• 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 a majority 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 66 ²⁄₃% 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 once the Sponsors cease to collectively own at least 50% of our outstanding common stock;

• limitations on the ability of stockholders to call special meetings and, when the Sponsors cease to collectively own 50% of our outstanding common stock, to take action by written consent; and

• provisions that reproduce much of the provisions that limit the ability of “interested stockholders” (other than the Sponsors and certain of their transferees) from engaging in specified business combinations with us absent prior approval of the board of directors or holders of 66 ²⁄₃% 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.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

From time to time, including in this prospectus and, in particular, the sections captioned “Unaudited Pro Forma Condensed Consolidated Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we make “forward-looking statements” within the meaning of federal and state securities laws. Disclosures that use words such as the company “believes,” “anticipates,” “expects,” “targets,” “estimates,” “intends,” “will,” “may” or “plans” and similar expressions are intended to identify forward-looking statements. These forward-looking statements reflect our current expectations and are based upon data available to us at the time the statements were made. Examples of forward-looking statements include, but are not limited to, statements we make regarding (i) our target percentage for the selection of Amscan merchandise offered in Party City stores, (ii) our belief that our cash generated by operating activities, the remaining funds under the credit facilities and existing cash and cash equivalents will be sufficient to meet our liquidity needs over the next 12 months and (iii) anticipated benefits expected to be realized from recent acquisitions.

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 sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus. 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 prospectus 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 in this prospectus are qualified by these cautionary statements and are made only as of the date of this prospectus. Any such forward-looking statements, whether made in this prospectus or elsewhere, should be considered in context with the various disclosures made by us about our business. The following risks related to our business, among others, could cause actual results to differ materially from those described in the forward-looking statements:

• our ability to compete effectively in a competitive industry;

• fluctuations in commodity prices;

• adequacy of helium supplies;

• our ability to appropriately respond to changing merchandise trends and consumer preferences;

• successful implementation of our store growth strategy;

• decreases in our Halloween sales;

• disruption to the transportation system or increases in transportation costs;

• product recalls or product liability;

• economic slowdown affecting consumer spending and general economic conditions;

• loss or actions of third party vendors and loss of the right to use licensed material;

• disruptions at our manufacturing facilities;

• failure by suppliers or third-party manufacturers to follow acceptable labor practices or to comply with other applicable laws and guidelines;

• our international operations subjecting us to additional risks;

• potential litigation and claims;

• lack of available additional capital;

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• our inability to retain or hire key personnel;

• risks associated with leasing substantial amounts of space;

• failure of existing franchisees to conduct their business in accordance with agreed upon standards;

• adequacy of our information systems, order fulfillment and distribution facilities;

• our ability to adequately maintain the security of our electronic and other confidential information;

• our inability to successfully identify and integrate acquisitions;

• adequacy of our intellectual property rights;

• risks related to our substantial indebtedness; and

• the other factors set forth under “Risk Factors.”

You should not unduly rely on these forward-looking statements, which speak only as of the date of this prospectus. 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 SEC after the date of this prospectus. See “Where You Can Find Additional Information.”

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THE TRANSACTIONS

On June 4, 2012, Party City Holdco Inc., an affiliate of THL, PCHI and Merger Sub entered into an Agreement and Plan of Merger, pursuant to which, on July 27, 2012, Merger Sub merged with and into PCHI, with PCHI being the surviving corporation and a wholly-owned subsidiary of Holdings. The aggregate consideration paid in connection with the Acquisition was approximately $2.7 billion. As a result of the consummation of the Acquisition, each outstanding share of PCHI’s common stock (together with any associated rights), other than those held by PCHI (other than treasury stock), Party City Holdco Inc., or any subsidiary of either PCHI or Party City Holdco Inc., were converted into the right to receive cash consideration. Additionally, all outstanding options to acquire capital stock of PCHI were accelerated and cancelled and, in the case of vested in-the-money options only, were converted into the right to receive a cash payment.

To consummate the Acquisition, our subsidiary, PCHI, entered into new debt financing consisting of (i) the $1,525 million Senior Credit Facilities, consisting of: (a) the $400 million ABL Facility, which had $115 million drawn at the closing of the Acquisition, and (b) the $1,125 million Term Loan Facility, and (ii) $700 million of 8.875% senior notes. Subsequent to the closing of the Acquisition, proceeds from the ABL Facility are available to provide financing for working capital and general corporate purposes. See “Description of Certain Debt” for further details on the Senior Credit Facilities and the senior notes.

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USE OF PROCEEDS

We estimate that the net proceeds of the sale of the common stock that we are offering will be approximately $         million, assuming an initial public offering price of $         per share, which is the midpoint of the range listed on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders if the underwriters exercise their option to purchase additional shares, although we will pay the expenses, other than underwriters discounts and commissions, associated with the sale of those shares.

We expect to use approximately $         million of the net proceeds from this offering received by us to repay or repurchase indebtedness, including amounts outstanding under the Senior Credit Facilities, the senior notes or the senior PIK toggle notes. We do not currently have a firm expectation as to how we will allocate the reduction of our indebtedness among these borrowing arrangements but intend to determine the allocation following the completion of this offering based on a number of factors, including amounts remaining at maturity, applicable interest rates, available pricing of repurchases, repayments or redemptions, outstanding balance and ability to reborrow.

We may also use the remaining portion of the net proceeds for working capital and other general corporate purposes.

A $1.00 increase or decrease in the assumed initial public offering price of $         per share (the mid point of the range listed on the cover page of this prospectus) would increase or decrease the net proceeds to us from this offering by $         assuming the number of shares offered by us remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. An increase or decrease of 1,000,000 shares in the number of shares offered by us would increase or decrease the net proceeds to us to us by $         million, assuming no change in the assumed initial public offering price of $         per share (the mid point of the range listed on the cover page of this prospectus) and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

For additional information on our liquidity and outstanding indebtedness, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

This expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors and any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering. Pending our use of the net proceeds from this offering as described above, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments and U.S. government securities.

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DIVIDEND POLICY

We currently intend to retain all of our future earnings, if any, to finance operations, development and growth of our business, and repay debt. Most of our indebtedness contains restrictions on our activities, including paying dividends on our capital stock and restricting dividends or other payments to us. Any future determination relating to our dividend policy will be made at the discretion of our 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 our board of directors may deem relevant.

In August 2013, our wholly-owned subsidiaries, Nextco Holdings and Nextco Finance, issued $350.0 million of senior PIK toggle notes. Nextco Holdings distributed the proceeds, net of expenses, to us and we used this cash to pay a one-time cash dividend to holders of our common stock. The total amount of the dividend was $338.0 million.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2013:

• on an actual basis; and

• on an as adjusted basis to give effect to the issuance and sale by us of                  shares of our common stock in the offering at an assumed initial public offering price of $         per share, the mid-point of the range set forth on the cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us and the application of the net proceeds from this offering as described in “Use of Proceeds.”

You should read this table in conjunction with “Use of Proceeds,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto included elsewhere in this prospectus.

	September 30, 2013
	Actual			As Adjusted
	(dollars in thousands)
Cash and cash equivalents	$	12,904
Debt:
Revolving credit facilities (1)	$	215,041
Term loan (2)		1,114,769
Mortgage obligation		1,492
Capital lease obligations		2,944
8.875% senior notes		700,000
8.750%/9.500% senior PIK toggle notes (3)		350,000
Total debt		2,384,246
Redeemable common stock, $0.01 par value, 1,039.23 shares issued and outstanding, actual;                 shares issued and outstanding, as adjusted		15,497
Stockholders’ Equity:
Common stock, $0.01 par value, 1,000,000 shares authorized (including redeemable common stock), 32,470.70 shares issued and outstanding, actual;                 shares authorized, and                 shares issued and outstanding, as adjusted		—
Additional paid-in capital		483,689
Accumulated deficit		(81,932	)
Accumulated other comprehensive income		4,529
Party City Holdco Inc. stockholders’ equity		406,286
Noncontrolling interests		—
Total stockholders’ equity		406,286
Total capitalization	$	2,806,029

(1) At September 30, 2013, there were $213.8 million of outstanding borrowings under the ABL Facility, a total of $19.0 million of outstanding letters of credit and excess availability of $167.3 million after giving effect to borrowing base limitations. Additionally, at September 30, 2013, there was $1.3 million outstanding under various foreign credit facilities.

(2) Amounts exclude the impact of a $7.9 million net call premium and a $7.3 million net original issue discount.

(3) Amounts exclude the impact of the net original issue discount in the amount of $3.4 million.

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Each $1.00 increase or decrease in the assumed initial public offering price of $         per share (the mid point of the range listed on the cover page of this prospectus) would increase or decrease, as applicable, our cash and cash equivalents, additional paid-in capital and stockholders’ equity by $         million, assuming that the number of shares offered by us as set forth on the cover page of this prospectus remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses. Each 1,000,000 share increase or decrease in the number of shares offered by us would increase or decrease, as applicable, as our cash and cash equivalents, additional paid-in capital and stockholders’ equity by $         million assuming no change in the assumed initial public offering price of $         per share (the mid point of the range listed on the cover page of this prospectus) and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. To the extent we raise more proceeds in this offering, we may repay additional indebtedness. To the extent we raise less proceeds in this offering, we may reduce the amount of indebtedness that will be repaid.

The table above does not include:

• 2,565 shares of common stock issuable upon the exercise of stock options issued under the 2012 Plan with a weighted average exercise price of $14,916 per share;

• 1,141 additional shares of common stock reserved for future issuance under the 2012 Plan; and

•              additional shares of common stock reserved for future issuance under the 2012 Plan, as amended, which amendment shall take effect upon consummation of this offering.

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DILUTION

If you purchase our common stock in this offering, you will experience an immediate dilution of net tangible book value per share from the initial public offering price. Dilution in net tangible book value per share of our common stock represents the difference between the initial public offering price per share and the net tangible book value per share immediately after this offering. We calculate net tangible book value per share of our common stock by dividing the net tangible book value (total consolidated tangible assets less total consolidated liabilities) by the number of outstanding shares of our common stock.

At September 30, 2013, the net tangible book value of our common stock was approximately $(1,857.8) million, or approximately $(55,440.67) per share of our common stock. After giving effect to the sale of shares of our common stock in this offering at an assumed initial public offering price of $         per share, and after deducting estimated underwriting discounts and commissions and the estimated offering expenses of this offering, the as adjusted net tangible book value at September 30, 2013 attributable to common stockholders would have been approximately $         million, or approximately $         per share of our common stock. This represents a net increase in net tangible book value of approximately $         per existing share and an immediate dilution in net tangible book value of approximately $         per share to new stockholders. The following table illustrates this per share dilution to new stockholders:

Assumed initial public offering price per share				$
Net tangible book value per share as of September 30, 2013	$	(55,440.67	)
Increase in net tangible book value per share attributable to this offering	$
As adjusted net tangible book value per share after this offering				$
Dilution in net tangible book value per share to new stockholders				$

The table below summarizes, as of September 30, 2013, the differences for (1) our existing stockholders, and (2) investors in this offering, with respect to the number of shares of common stock purchased from us, the total consideration paid, and the average price per share paid before deducting fees and expenses.

	Shares Issued				Total Consideration				Average Price per Share
	Number	Percentage			Amount	Percentage
Existing stockholders				%				%	$
New stockholders in this offering
Total			100	%			100	%	$

The sale of              shares of our common stock to be sold by the selling stockholders in this offering, which assumes the exercise in full of the underwriters’ option to purchase additional shares, will reduce the number of shares of our common stock held by existing stockholders to         , or         % of the total shares outstanding, and will increase the number of shares of our common stock held by new investors to         , or         % of the total shares of our common stock outstanding.

The foregoing discussion and tables assume no exercise of stock options to purchase              shares of our common stock subject to outstanding stock options with a weighted average exercise price of $         per share as of September 30, 2013 and excludes              shares of our common stock available for future grant or issuance under our stock plans. To the extent that any options having an exercise price that is less than the offering price of this offering are exercised, new investors will experience further dilution.

A $1.00 increase or decrease in the assumed initial offering price of $         per share (the mid point of the range listed on the cover page of this prospectus) would increase or decrease our net tangible deficit as adjusted

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to give effect to this offering by $         per share, assuming that the number of shares offered by us set forth on the cover page of this prospectus remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. An increase or decrease of 1,000,000 shares in the number of shares offered by us would increase or decrease our net tangible deficit as adjusted to give effect to this offering by $         per share, assuming the assumed initial offering price of $         per share (the mid point of the range listed on the cover page of this prospectus) remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The table above does not include:

• 2,565 shares of common stock issuable upon the exercise of stock options issued under the 2012 Plan with a weighted average exercise price of $14,916 per share;

• 1,141 additional shares of common stock reserved for future issuance under the 2012 Plan; and

•              additional shares of common stock reserved for future issuance under the 2012 Plan, as amended, which amendment shall take effect prior to the consummation of this offering.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected historical consolidated financial data for the periods ended and at the dates indicated below. Our selected historical consolidated financial data as of December 31, 2011 (Predecessor) and December 31, 2012 (Successor) and for the period from July 28, 2012 to December 31, 2012 (Successor), the period from January 1, 2012 to July 27, 2012 (Predecessor) and the years ended December 31, 2010 (Predecessor) and December 31, 2011 (Predecessor) presented in this table has been derived from our historical audited consolidated financial statements included elsewhere in this prospectus. Our selected historical consolidated financial data for the years ended December 31, 2008 (Predecessor) and December 31, 2009 (Predecessor) were derived from our audited consolidated financial statements that are not included in this prospectus. Our selected historical consolidated financial data for the nine months ended September 30, 2013 (Successor) and the period from July 28, 2012 to September 30, 2012 (Successor) has been derived from our historical unaudited consolidated financial statements included elsewhere in this prospectus.

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 the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the notes thereto contained elsewhere in this prospectus.

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	Fiscal Year Ended December 31,												Period from January 1 to July 27, 2012			Period from July 28 to December 31, 2012			Period from January 1 to July 27, 2012			Period from July 28 to September 30, 2012			Nine Months Ended September 30, 2013 (3)
	2008			2009			2010 (1)			2011 (2)
	(Predecessor)			(Predecessor)			(Predecessor)			(Predecessor)			(Predecessor)			(Successor)			(Predecessor)			(Successor)			(Successor)
	(dollars in thousands, except per common share data)
Income Statement Data:
Revenues:
Net sales	$	1,537,641		$	1,467,324		$	1,579,677		$	1,852,869		$	930,903		$	964,330		$	930,903		$	324,525		$	1,323,216
Royalties and franchise fees		22,020			19,494			19,417			19,106			9,281			9,312			9,281			2,797			11,961
Total revenues		1,559,661			1,486,818			1,599,094			1,871,975			940,184			973,642			940,184			327,322			1,335,177
Expenses:
Cost of sales (4)		966,426			899,041			943,058			1,118,973			574,048			636,410			574,048			247,508			877,258
Wholesale selling expenses		41,894			39,786			42,725			57,905			31,568			28,096			31,568			11,465			51,091
Retail operating expenses		273,627			261,691			296,891			325,332			166,047			172,168			166,047			62,454			245,252
Franchise expenses		13,686			11,991			12,269			13,685			6,579			6,128			6,579			2,585			9,872
General and administrative expenses (5)		120,272			119,193			134,392			138,074			101,502			65,890			101,502			28,596			107,718
Art and development costs		12,462			13,243			14,923			16,636			10,824			8,201			10,824			3,390			14,480
Impairment of trade name (6)		17,376			—			27,400			—			—			—			—			—			—
Income (loss) from operations		113,918			141,873			127,436			201,370			49,616			56,749			49,616			(28,676	)		29,506
Interest expense, net		50,915			41,481			40,850			77,743			41,970			62,062			41,970			26,572			103,561
Other (income) expense, net (7)		(818	)		(32	)		4,208			1,476			22,245			26,157			22,245			25,621			15,991
Income (loss) before income taxes		63,821			100,424			82,378			122,151			(14,599	)		(31,470	)		(14,599	)		(80,869	)		(90,046	)
Income tax expense (benefit)		24,188			37,673			32,945			45,741			403			(1,322	)		403			(25,755	)		(38,546	)
Net income (loss)		39,633			62,751			49,433			76,410			(15,002	)		(30,148	)		(15,002	)		(55,114	)		(51,500	)
Less: net income attributable to noncontrolling interests		(877	)		198			114			135			96			60			96			61			224
Net income (loss) attributable to Party City Holdco Inc.	$	40,510		$	62,553		$	49,319		$	76,275		$	(15,098	)	$	(30,208	)	$	(15,098	)	$	(55,175	)	$	(51,724	)
Statement of Cash Flow Data
Net cash provided by (used in)
Operating activities (8)	$	79,928		$	123,942		$	61,168		$	161,264		$	(18,126	)	$	(41,844	)	$	(18,126	)	$	(199,168	)	$	(73,986	)
Investing activities (8)		(51,199	)		(54,358	)		(102,766	)		(138,909	)		(31,824	)		(1,578,553	)		(31,824	)		(1,570,454	)		(90,572	)
Financing activities (8)		(23,033	)		(70,157	)		46,515			(19,784	)		33,318			1,629,331			33,318			1,777,662			162,871
Per Share Data
Basic
Diluted
Pro forma basic
Pro forma diluted
Weighted Average
Outstanding basic
Diluted
Pro forma outstanding basic
Pro forma diluted
Cash dividend per common share		—			—			9,400			—			—			—			—			—			10,087

39

	Year Ended December 31,												Period from January 1 to July 27, 2012			Period from July 28 to December 31, 2012			Period from January 1 to July 27, 2012			Period from July 28 to September 30, 2012			Nine Months Ended September 30, 2013 (3)
	2008			2009			2010 (1)			2011 (2)
	(Predecessor)			(Predecessor)			(Predecessor)			(Predecessor)			(Predecessor)			(Successor)			(Predecessor)			(Successor)			(Successor)
	(dollars in thousands)
Other Financial Data:
Adjusted EBITDA (9)	$	186,500		$	192,113		$	230,618		$	275,466		$	116,982		$	175,329		$	116,982		$	21,806		$	145,906
Adjusted EBITDA margin (9)		12.0	%		12.9	%		14.4	%		14.7	%		12.4	%		18.0	%		12.4	%		6.7	%		10.9	%
Adjusted net income (9)	$	60,985		$	68,561		$	86,430		$	88,260		$	22,883		$	50,920		$	22,883		$	(5,239	)	$	(2,566	)
Number of company-owned Party City stores (10)		385			382			439			487			—			600			—			594			665
Capital expenditures	$	53,001		$	26,195		$	49,623		$	44,483		$	28,864		$	16,376		$	28,864		$	7,635		$	42,143
Party City brand comp sales (11)		0.5	%		(3.3	%)		3.6	%		9.5	%														1.9	%
Share of shelf (12)		47.2	%		49.3	%		58.7	%		60.5	%		64.7	%		63.7	%		64.7	%		63.0	%		67.1	%
Balance Sheet Data (at end of period):
Cash and cash equivalents	$	13,058		$	15,420		$	20,454		$	22,053		$	—		$	14,563		$	—		$	13,652		$	12,904
Working capital (13)		76,904			162,243			189,993			226,277			—			387,858			—			337,650			337,827
Total assets		1,507,977			1,480,501			1,653,151			1,750,338			—			3,276,983			—			3,219,374			3,462,049
Total debt		721,635			651,433			1,000,256			982,258			—			1,851,517			—			2,000,006			2,365,768
Total equity		412,117			479,122			256,422			326,091			—			787,450			—			761,734			406,286

(1) The acquisitions of Designware and the Christy’s Group are included in the financial statements from their acquisition dates (March 1, 2010 and September 30, 2010, respectively).

(2) The acquisitions of Riethmüller and Party City Canada are included in the financial statements from their acquisition dates (January 30, 2011 and July 29, 2011, respectively).

(3) The acquisitions of Party Delights and iParty are included in the financial statements from their acquisition dates (March 13, 2013 and May 9, 2013, respectively).

(4) As a result of the Acquisition, the Company applied the acquisition method of accounting and increased the value of its inventory by $89.8 million as of July 28, 2012. Such adjustment increased the Company’s cost of sales during the nine months ended September 30, 2013, the period from July 28, 2012 to December 31, 2012 and the period from July 28, 2012 to September 30, 2012 by $22.0 million, $58.6 million and $27.8 million, respectively, as a portion of the related inventory was sold.

(5) In conjunction with the Transactions, the Company recorded $8.4 million of transaction costs in general and administrative expenses during the period from January 1, 2012 to July 27, 2012. Additionally, the Transactions accelerated the vesting of certain of the Company’s stock options and during the period from January 1, 2012 to July 27, 2012 the Company recorded $2.1 million of expense in general and administrative expenses. Further, due to the vesting of such stock options, the Company made payments in lieu of dividends to the holders of such options and during the period from January 1, 2012 to July 27, 2012, the Company recorded a $16.1 million charge in general and administrative expenses.

(6) During 2010 and 2008, the Company implemented plans to convert and rebrand its company-owned FCPO stores and its company-owned and franchised Party America stores to Party City stores, respectively. As a result, the Company recorded charges for the impairment of the Factory Card & Party Outlet and Party America trade names of $27.4 million and $17.4 million in the fourth quarters of 2010 and 2008, respectively.

(7) During February 2013, the Company amended the Term Loan Facility. In conjunction with that amendment, the Company wrote-off $5.9 million of costs that had been capitalized during the initial issuance of the debt. Additionally, the Company wrote-off $2.3 million of the net original issuance discount that existed as of the time of that amendment. Also, in conjunction with that amendment, the Company expensed $2.5 million of a call premium and $1.6 million of investment banking and legal fees. In conjunction with the Transactions, the Company recorded $19.7 million of transaction costs in other expense, net during the period from January 1, 2012 to July 27, 2012 and $24.6 million of transaction costs during the period from July 28, 2012 to December 31, 2012. Additionally, the period from January 1, 2012 to July 27, 2012 included $2.5 million in costs as a result of the termination of an initial public offering. In connection with the refinancing of the Company’s revolving and term debt credit facilities in August and December 2010, the Company wrote off $2.4 million of deferred finance charges during 2010.

(8) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity” for a discussion of 2012 cash flows.

(9) We present adjusted EBITDA and adjusted net income as supplemental measures of our operating performance. 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 ongoing operating performance. These further adjustments are itemized below. Adjusted net income represents our net income (loss), adjusted for intangible asset amortization, non-cash purchase accounting adjustments, amortization of deferred financing costs and original issue discount, the Sponsors management fee, refinancing charges, equity based compensation, payments in lieu of dividend, impairment charges and costs related to the Transactions. We present adjusted EBITDA and adjusted net income as supplemental measures of our performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating adjusted EBITDA and adjusted net income, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of adjusted EBITDA and adjusted net income should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

We present adjusted EBITDA and adjusted net income because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding 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 facility uses adjusted EBITDA to measure compliance with certain covenants. While we have historically not used adjusted net income for internal management reporting and valuation purposes, we believe adjusted net income is a helpful benchmark to evaluate our operating performance.

We also include information concerning adjusted EBITDA margin, which is defined as the ratio of adjusted EBITDA to revenue. We present adjusted EBITDA margin because it is used by management as a performance measurement to judge the level of adjusted EBITDA generated from revenue. We believe its inclusion is appropriate to provide additional information to investors.

40

Adjusted EBITDA, adjusted net income and adjusted EBITDA margin have limitations as analytical tools. Some of these limitations are:

• adjusted EBITDA, adjusted net income and adjusted EBITDA margin do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

• adjusted EBITDA and adjusted net income do not reflect changes in, or cash requirements for, our working capital needs;

• adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our 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 and adjusted net income do not reflect any cash requirements for such replacements;

• non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;

• adjusted EBITDA and adjusted net income do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and

• other companies in our industry may calculate adjusted EBITDA and adjusted net income differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, adjusted EBITDA, adjusted net income and adjusted EBITDA margin should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA, adjusted net income and adjusted EBITDA margin only on a supplemental basis. The reconciliations from net income (loss) to each of adjusted EBITDA and adjusted net income for the periods presented is as follows:

	Year Ended December 31,												Period from January 1 to July 27, 2012			Period from July 28 to December 31, 2012			Period from January 1 to July 27, 2012			Period from July 28 to September 30, 2012			Nine Months Ended September 30, 2013
	2008			2009			2010			2011
	(Predecessor)			(Predecessor)			(Predecessor)			(Predecessor)			(Predecessor)			(Successor)			(Predecessor)			(Successor)			(Successor)
	(dollars in thousands)
Net income (loss)	$	39,633		$	62,751		$	49,433		$	76,410		$	(15,002	)	$	(30,148	)	$	(15,002	)	$	(55,114	)	$	(51,500	)
Interest expense, net		50,915			41,481			40,850			77,743			41,970			62,062			41,970			26,572			103,561
Income taxes		24,188			37,673			32,945			45,741			403			(1,322	)		403			(25,755	)		(38,546	)
Depreciation and amortization		47,278			44,382			49,418			59,631			33,915			49,837			33,915			20,327			70,960
EBITDA		162,014			186,287			172,646			259,525			61,286			80,429			61,286			(33,970	)		84,475
Equity based compensation		4,546			882			6,019			1,397			3,375			—			3,375			—			1,741
Non-cash purchase accounting adjustments		590			(1,556	)		1,244			—			—			58,626	(a)		—			27,805	(a)		21,979	(a)
Management fee		1,248	(b)		1,248	(b)		1,248	(b)		1,248	(b)		713	(b)		1,292	(b)		713	(b)		541	(b)		2,250	(b)
Impairment charges		17,376	(c)		—			27,997	(c)		87			—			—			—			—			—
Restructuring, retention and severance		—			2,670			1,780			2,513			355			784			355			350			2,840
Payment in lieu of dividend		—			—			9,395	(d)		617	(d)		16,533	(d)		—			16,533	(d)		—			—
Refinancing charges		—			—			2,448			—			—			—			—			—			12,295	(e)
Deferred rent		1,202			1,763			4,500			7,467			3,344			6,335			3,344			1,434			11,706
Estimated business interruption proceeds		—			—			—			—			—			2,000			—			—			1,000
Transaction costs		—			—			—			—			28,582	(f)		24,564	(f)		28,582	(f)		24,564	(f)		—
Corporate development expenses		—			270			1,660			2,471			2,395			351			2,395			239			4,606
Other		(476	)		549			1,681			141			399			948			399			843			3,014
Adjusted EBITDA	$	186,500		$	192,113		$	230,618		$	275,466		$	116,982		$	175,329		$	116,982		$	21,806		$	145,906

41

	Year Ended December 31,												Period from January 1 to July 27, 2012			Period from July 28 to December 31, 2012			Period from January 1 to July 27, 2012			Period from July 28 to September 30, 2012			Nine Months Ended September 30, 2013
	2008			2009			2010			2011
	(Predecessor)			(Predecessor)			(Predecessor)			(Predecessor)			(Predecessor)			(Successor)			(Predecessor)			(Successor)			(Successor)
	(dollars in thousands)
Income (loss) before income taxes	$	63,821		$	100,424		$	82,378		$	122,151		$	(14,599	)	$	(31,470	)	$	(14,599	)	$	(80,869	)	$	(90,046	)
Intangible asset amortization		8,582	(g)		6,559	(g)		10,345	(g)		11,116	(g)		5,542	(g)		14,160	(g)		5,542	(g)		5,661	(g)		20,477	(g)
Non-cash purchase accounting adjustments		590			(1,556	)		1,244			—			—			71,755	(a)		—			33,057	(a)		33,793	(a)
Amortization of deferred financing costs and original issuance discount		2,221	(h)		2,163	(h)		2,475	(h)		4,500	(h)		2,592	(h)		4,605	(h)		2,592	(h)		1,907	(h)		16,886	(e)(h)
Management fee		1,248	(b)		1,248	(b)		1,248	(b)		1,248	(b)		713	(b)		1,292	(b)		713	(b)		541	(b)		2,250	(b)
Refinancing charges		—			—			2,448			—			—			—			—			—			4,068	(e)
Equity based compensation		4,546			882			6,019			1,397			3,375			—			3,375			—			1,741
Payment in lieu of dividend		—			—			9,395	(d)		617	(d)		16,533	(d)		—			16,533	(d)		—			—
Impairment charges		17,376	(c)		—			27,997	(c)		87			—			—			—			—			—
Transaction costs		—			—			—			—			28,582	(f)		24,564	(f)		28,582	(f)		24,564	(f)		—
Adjusted income (loss) before income taxes		98,384			109,720			143,549			141,116			42,738			84,906			42,738			(15,139	)		(10,831	)
Adjusted income tax expense (benefit)		37,399	(i)		41,159	(i)		57,119	(i)		52,856	(i)		19,855	(i)		33,986	(i)		19,855	(i)		(9,900	)(i)		(8,265	)(i)
Adjusted net income (loss)	$	60,985		$	68,561		$	86,430		$	88,260		$	22,883		$	50,920		$	22,883		$	(5,239	)	$	(2,566	)

(a) As a result of the Acquisition, the Company applied the acquisition method of accounting and increased the value of its inventory by $89.8 million as of July 28, 2012. Such adjustment increased the Company’s cost of sales during the nine months ended September 30, 2013, the period from July 28, 2012 to December 31, 2012 and the period from July 28, 2012 to September 30, 2012 by $22.0 million, $58.6 million and, $27.8 million, respectively, as a portion of the related inventory was sold. Further, during the application of the acquisition method of accounting, the Company increased the value of certain property, plant and equipment. The impact of such adjustments on depreciation expense increased the Company’s expenses during the nine months ended September 30, 2013, the period from July 28, 2012 to December 31, 2012 and the period from July 28, 2012 to September 30, 2012 by $11.8 million, $13.1 million and $5.3 million, respectively. These property, plant and equipment depreciation amounts are included in “Non-cash purchase accounting adjustments” for purposes of calculating “adjusted net income”, but are excluded from “Non-cash purchase accounting adjustments” for purposes of calculating adjusted EBITDA since they are included in depreciation expense.

(b) Represents management fees paid to the Sponsors. The management agreement will terminate upon consummation of this offering. See “—Certain Relationships and Related Party Transactions—Management Agreement.”

(c) During 2010 and 2008, we implemented plans to convert and rebrand our company-owned FCPO stores and our company-owned and franchised Party America stores as Party City stores, respectively. As a result, we recorded charges for impairment of the FCPO and Party America trade names of $27.4 million and $17.4 million in the fourth quarters of 2010 and 2008, respectively.

(d) In December 2010, a one-time cash dividend was declared. In addition, holders of unvested options at the declaration date would receive a distribution when the options vested. At the time of the Transactions, certain outstanding stock options became fully vested and distributions were made in the amount of $16.1 million. Further, prior to the Transactions, during 2012 certain outstanding stock options became fully vested and the Company made distributions in the amount of $0.4 million. The Company recorded charges equal to such amounts in general and administrative expenses during the period from January 1, 2012 to July 27, 2012.

(e) During February 2013, the Company amended the Term Loan Facility. In conjunction with that amendment, the Company wrote-off $5.9 million of costs that had been capitalized during the initial issuance of the debt. Additionally, the Company wrote-off $2.3 million of the net original issuance discount that existed as of the time of that amendment. Both amounts are included in “Amortization of deferred financing costs and original issue discount” in this table and in the Company’s consolidated statement of cash flows included elsewhere in this prospectus. Also, in conjunction with that amendment, the Company expensed $2.5 million of a call premium and $1.6 million of investment banking and legal fees.

(f) In conjunction with the Transactions, the Company incurred certain costs. See Note 5 to the audited consolidated financial statements which are included elsewhere in this prospectus.

(g) Represents the amortization of intangible assets, including those assets recorded in conjunction with the application of the acquisition method of accounting due to the Transactions.

(h) Represents the amortization of deferred financing costs and original issuance discounts related to debt offerings. Additionally, the nine months ended September 30, 2013 includes the write-off of deferred financing costs and net original issuance discounts in conjunction with the February 2013 Term Loan Facility amendment. See note (e) for further discussion.

(i) Represents the income tax expense (benefit) using the rate in effect after considering the adjustments.

(10) Data as of September 30, 2013 includes all 54 stores that were acquired from iParty and which were converted to the Party City banner at such date.

(11) Party City brand comp sales include e-commerce, Canadian store sale and all store sales converted from the FCPO and Party Packagers formats to the Party City format and excludes iParty store sales.

(12) Represents the percentage of cost of goods sold by our domestic permanent stores (excluding iParty stores) and domestic e-commerce operations which relates to product supplied by our wholesale operations.

(13) Loans and notes payable (included in current liabilities) decreased by $106.0 million from December 31, 2011 to December 31, 2012. Additionally, as a result of the Transactions, the Company applied the acquisition method of accounting and increased the value of its inventory as of July 28, 2012. At September 30, 2013 and December 31, 2012, $9.1 million and $31.1 million, respectively, of the adjustment was included in inventory.

42

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed consolidated financial statements set forth our unaudited pro forma and historical condensed consolidated statements of operations and comprehensive loss for the year ended December 31, 2012, for the nine months ended September 30, 2013, and for the twelve months ended September 30, 2013 and our unaudited pro forma and historical balance sheet at September 30, 2013. Such information is based on the historical financial statements of the Company appearing elsewhere in this prospectus. The historical information in the unaudited pro forma condensed consolidated statement of operations and comprehensive loss for the twelve months ended September 30, 2013 has been derived by taking the consolidated statement of operations and comprehensive loss for the year ended December 31, 2012, plus the condensed consolidated statement of operations and comprehensive loss for the nine months ended September 30, 2013, less the condensed consolidated statement of operations and comprehensive loss for the period from January 1, 2012 to July 27, 2012, and the condensed consolidated statement of operations and comprehensive loss for the period from July 28, 2012 to September 30, 2012.

The unaudited pro forma consolidated statement of operations and comprehensive loss for the year ended December 31, 2012 gives effect to the following as if each had occurred on January 1, 2012:

• The Transactions. The July 2012 consummation of the Acquisition and the related financing consisting of the $400 million ABL Facility, the $1,125 million Term Loan Facility and the $700 million senior notes.

• Term Loan Facility amendment. The February 2013 amendment to the credit agreement governing the Term Loan Facility which reduced the interest rate applicable to borrowings under the Term Loan Facility.

• Issuance of senior PIK toggle notes. The August 2013 issuance of the $350 million senior PIK toggle notes by our wholly-owned subsidiaries, Nextco Holdings and Nextco Finance, and the use of proceeds to pay a cash dividend to our shareholders. The issuance of the senior PIK toggle notes and the Term Loan Facility amendment are collectively referred to below in these Unaudited Pro Forma Condensed Consolidated Financial Statements as “the Financing.”

• Initial Public Offering. The issuance of                  shares of common stock by us in this offering at a price equal to $         per share, the midpoint of the price range set forth on the cover of this prospectus, and the impact of using the proceeds to us, net of transaction fees and expenses, to repay or repurchase indebtedness.

• Termination of management agreement. The payment of approximately $         million to terminate the management agreement with the Sponsors in connection with this offering.

The unaudited pro forma condensed consolidated statements of operations and comprehensive loss for the nine and twelve months ended September 30, 2013 give effect to the Term Loan Facility amendment, the issuance of the senor PIK toggle notes, this offering and the application of the net proceeds therefrom and the termination of the management agreement as if each had occurred on January 1, 2013 and October 1, 2012, respectively. The unaudited pro forma condensed consolidated balance sheet at September 30, 2013 gives effect to this offering and the application of the net proceeds therefrom and the termination of the management agreement as if each had occurred on September 30, 2013.

The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma condensed consolidated financial data is presented for informational purposes only. The unaudited pro forma condensed consolidated financial data does not purport to represent what our results of operations would have been had the events described above actually occurred on the date indicated and they do not purport to project our results of operations for any future period. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the information contained in the “Selected Consolidated Financial Data,” “Management’s Discussion and

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Analysis of Financial Condition and Results of Operations” and our historical audited and unaudited consolidated financial statements and related notes thereto appearing elsewhere in this prospectus. All pro forma adjustments and their underlying assumptions are described more fully in the notes to our unaudited pro forma condensed consolidated financial statements.

The Acquisition has been accounted for as a business combination in accordance with ASC 805, Business Combinations.

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Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Loss

For the Year Ended December 31, 2012

(dollars in thousands, except per share amounts)

				Pro Forma Adjustments
	Historical			The Transactions       and Financing			IPO and Termination of Management Fee	Pro Forma
Revenues:
Net sales	$	1,895,233		$			$	$
Royalties and franchise fees		18,593
Total revenues		1,913,826
Expenses:
Cost of sales (1)		1,210,458			24,968
Wholesale selling expenses (2)		59,664			4,811
Retail operating expenses		338,215
Franchise expenses (2)		12,707			567
General and administrative expenses (3)		167,392			(25,125	)
Art and development costs (2)		19,025			101
Total expenses		1,807,461			5,322
Income from operations		106,365			(5,322	)
Interest expense, net (4)		104,032			55,630
Other expense, net (5)		48,402			(46,934	)
Loss before income taxes		(46,069	)		(14,018	)
Income tax benefit (6)		(919	)		(20,278	)
Net loss		(45,150	)		6,260
Less: net income attributable to noncontrolling interests		156
Net loss attributable to Party City Holdco Inc.	$	(45,306	)	$	6,260		$	$
Other comprehensive income, net of tax:
Foreign currency adjustments	$	5,209		$			$	$
Cash flow hedges		(172	)
Other comprehensive income, net		5,037
Comprehensive loss		(40,113	)		6,260
Less: comprehensive income attributable to noncontrolling interest		256
Comprehensive loss attributable to Party City Holdco Inc.	$	(40,369	)	$	6,260		$	$
Net Income per share
Basic
Diluted
Weighted Average
Outstanding basic
Diluted

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Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Loss

For the Nine Months Ended September 30, 2013

(dollars in thousands, except per share amounts)

				Pro Forma Adjustments
	Historical			The Financing			IPO and Termination of Management Fee	Pro Forma
Revenues:
Net sales	$	1,323,216		$			$	$
Royalties and franchise fees		11,961
Total revenues		1,335,177
Expenses:
Cost of sales		877,258
Wholesale selling expenses		51,091
Retail operating expenses		245,252
Franchise expenses		9,872
General and administrative expenses		107,718
Art and development costs		14,480
Total expenses		1,305,671
Income from operations		29,506
Interest expense, net (4)		103,561			16,355
Other expense, net		15,991
Loss before income taxes		(90,046	)		(16,355	)
Income tax benefit (6)		(38,546	)		(6,591	)
Net loss		(51,500	)		(9,764	)
Less: net income attributable to noncontrolling interests		224
Net loss attributable to Party City Holdco Inc.	$	(51,724	)	$	(9,764	)	$	$
Comprehensive loss		(52,555	)		(9,764	)
Less: comprehensive income attributable to noncontrolling interest		201
Comprehensive loss attributable to Party City Holdco Inc.	$	(52,756	)	$	(9,764	)	$	$
Net Income per share
Basic
Diluted
Weighted Average
Outstanding basic
Diluted

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Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Loss

For the Twelve Months Ended September 30, 2013

(dollars in thousands, except per share amounts)

				Pro Forma Adjustments
	Historical			The Financing			IPO and Termination of Management Fee	Pro Forma
Revenues:
Net sales	$	1,963,021		$			$	$
Royalties and franchise fees		18,476
Total revenues		1,981,497
Expenses:
Cost of sales		1,266,160
Wholesale selling expenses		67,722
Retail operating expenses		354,966
Franchise expenses		13,415
General and administrative expenses		145,012
Art and development costs		19,291
Total expenses		1,866,566
Income from operations		114,931
Interest expense, net (4)		139,051			19,935
Other expense, net		16,527
Loss before income taxes		(40,647	)		(19,935	)
Income tax benefit (6)		(14,133	)		(8,034	)
Net loss		(26,534	)		(11,901	)
Less: net income attributable to noncontrolling interests		223
Net loss attributable to Party City Holdco Inc.	$	(26,757	)	$	(11,901	)	$	$
Comprehensive loss		(27,401	)		(11,901	)
Less: comprehensive income attributable to noncontrolling interest		181
Comprehensive loss attributable to Party City Holdco Inc.	$	(27,582	)	$	(11,901	)	$	$
Net Income per share
Basic
Diluted
Weighted Average
Outstanding basic
Diluted

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Unaudited Pro Forma Condensed Consolidated Balance Sheet

At September 30, 2013

(dollars in thousands)

	Historical			Pro Forma Adjustments	Pro Forma
				IPO and Termination of Management Fee
ASSETS
Current assets:
Cash and cash equivalents	$	12,904		$	$
Accounts receivable, net of allowances		165,216
Inventories, net of allowances		610,210
Prepaid expenses and other currents assets		110,045
Total current assets		898,375
Property, plant and equipment, net		233,838
Goodwill		1,550,942
Trade names		566,540
Other intangible assets, net		146,617
Other assets, net		65,737
Total assets	$	3,462,049
LIABILITIES, REDEEMABLE COMMON SECURITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Loans and notes payable	$	215,041		$	$
Accounts payable		177,346
Accrued expenses		154,907
Current portion of long-term obligations		13,254
Total current liabilities		560,548
Long-term obligations, excluding current portion		2,137,473
Deferred income tax liabilities		324,159
Deferred rent and other long-term liabilities		18,086
Total liabilities		3,040,266
Redeemable common securities		15,497
Stockholder’s equity:
Common stock		—
Additional paid-in capital		483,689
Accumulated deficit		(81,932	)
Accumulated other comprehensive income		4,529
Total stockholders’ equity		406,286
Total liabilities, redeemable common securities and stockholders’ equity	$	3,462,049		$	$

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Notes to Unaudited Pro Forma Condensed Consolidated Financial Data

(1) As a result of the Acquisition, the Company applied the acquisition method of accounting and increased the value of its inventory. The adjustment principally reflects the previously deferred wholesale margin on inventory supplied to the Company’s retail operations at the Acquisition date. Such adjustment increased the Company’s cost of sales as the related inventory was sold.

Additionally, as a result of the application of the acquisition method of accounting, the Company recorded certain intangible assets and recorded its property, plant and equipment at fair value. Such adjustments impacted the Company’s depreciation expense and amortization expense.

(2) As a result of the application of the acquisition method of accounting, the Company recorded certain intangible assets and recorded its property, plant and equipment at fair value. Such adjustments impacted the Company’s depreciation expense and amortization expense.

(3) In conjunction with the Transactions, the Company incurred $28.6 million of compensation-related costs. Such costs were recorded in the Company’s consolidated statement of operations and comprehensive loss in the period prior to the Transactions (January 1, 2012 to July 27, 2012). As the unaudited pro forma condensed consolidated statements of operations and comprehensive loss for the year ended December 31, 2012 assumes that the Transactions occurred on January 1, 2012, such costs have been removed from the financial statements.

Additionally, as a result of the application of the acquisition method of accounting, the Company recorded certain intangible assets and recorded its property, plant and equipment at fair value. Such adjustments impacted the Company’s depreciation expense and amortization expense.

(4) The unaudited pro forma condensed consolidated statement of operations and comprehensive loss for the year ended December 31, 2012 assumes that the Transactions occurred on January 1, 2012 and that the related refinancing also took place on such date. In conjunction with the Transactions, amounts outstanding under PCHI’s previous $350.0 million ABL revolving credit facility and $675.0 million term loan agreement were repaid. At such time, PCHI entered into the ABL Facility and the Term Loan Facility. Additionally, in conjunction with the Transactions, on July 27, 2012, PCHI issued the senior notes and redeemed all of its outstanding $175.0 million 8.75% senior subordinated notes.

During February 2013, PCHI amended the Term Loan Facility and the interest rate was decreased by 1.50%. The unaudited pro forma condensed consolidated statement of operations and comprehensive loss for the year ended December 31, 2012 assumes that the Term Loan Facility was entered into on January 1, 2012 at the amended rate. The unaudited pro forma condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2013 and for the twelve months ended September 30, 2013 assume that the amendment occurred on January 1, 2013 and October 1, 2012, respectively.

During August 2013, Nextco Holdings and Nextco Finance issued the $350.0 million senior PIK toggle notes. The unaudited pro forma condensed consolidated statement of operations and comprehensive loss for the year ended December 31, 2012 assumes that the senior PIK toggle notes were issued on January 1, 2012. The unaudited pro forma condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2013 and for the twelve months ended September 30, 2013 assume that the notes were issued on January 1, 2013 and October 1, 2012, respectively.

(5) In conjunction with the Transactions, the Company incurred $44.5 million of third-party costs. Such costs were recorded in the Company’s consolidated statement of operations and comprehensive loss in the period prior to the Acquisition (January 1, 2012 to July 27, 2012). As the unaudited pro forma condensed consolidated statement of operations and comprehensive loss for the year ended December 31, 2012 assumes that the Transactions occurred on January 1, 2012, such costs have been removed from the financial statements.

(6) Reflects the estimated tax effects of the pro forma adjustments.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our results of operations and financial statements in conjunction with the consolidated financial statements, the accompanying notes and the other financial information contained elsewhere in this prospectus. This section contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may vary materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth in “Risk Factors”, as well as other matters described in this prospectus. See “Special Note Regarding Forward-Looking Statements.”

Effect of the Transactions

On July 27, 2012, Merger Sub, a wholly-owned subsidiary of Holdings, merged into PCHI, with PCHI being the surviving entity. Immediately after the Acquisition, 100% of our common stock was owned by funds affiliated with THL, who held approximately 70% ownership, funds affiliated with Advent, who held approximately 24% ownership, and other minority investors, including management, who held approximately 6% ownership.

As a result of the Transactions, the financial information for the period after July 27, 2012 represents the financial information of the “Successor” company. Prior to, and including, July 27, 2012, the consolidated financial statements include the accounts of the “Predecessor” company. Due to the change in the basis of accounting resulting from the application of the acquisition method of accounting and push-down accounting (see Note 1 to the audited consolidated financial statements, which are included elsewhere in this prospectus, for further discussion), the Predecessor’s consolidated financial statements and the Successor’s consolidated financial statements are not necessarily comparable. The change in basis resulting from the Transactions did not impact net sales, royalties and franchise fees or retail operating expenses and, for those accounts, comparing full-year 2012 results to full-year 2011 results and comparing results for the nine months ended September 30, 2013 to the nine months ended September 30, 2012 provides meaningful comparison. However, for all other accounts, to the extent that the change in basis had a material impact on our results during the Successor period, we have disclosed such impact in “Results of Operations”. Certain amounts in this prospectus combine the results of the Predecessor and the Successor. Such combination was performed by mathematical addition and does not comply with GAAP, although we believe it provides a meaningful method of comparison for certain accounts. The data is being presented for analytical purposes only. Combined operating results (i) have not been prepared on a pro forma basis as if the Transactions occurred on the first day of the period, (ii) may not reflect the actual results we would have achieved absent the Transactions and (iii) may not be predictive of future results of operations.

Business Overview

Our Company

We are the leading party goods retailer in North America and, we believe, the largest vertically integrated supplier of decorated party goods globally with multiple levers to drive future growth across channels, products and geographies. With approximately 880 locations, we have the only coast-to-coast network of party superstores in the U.S. and Canada that make it easy and fun to enhance special occasions with a differentiated shopping experience and an unrivaled assortment of innovative and exciting merchandise offered at a compelling value. Through a series of acquisitions between 2005 and 2010, we built a powerful retail operation that captures the full manufacturing-to-retail margin on a significant portion of the products sold in our stores. We believe we are the largest global designer, manufacturer and distributor of decorated party supplies with products found in over 40,000 retail outlets worldwide, including our own stores as well as independent party supply stores, mass merchants, grocery retailers, dollar stores and others. Our category-defining retail concept, multi-channel reach, widely recognized brands, broad and deep product offering, and low-cost global sourcing model are, we believe, significant competitive advantages. We believe these characteristics position us for continued organic and acquisition-led growth and margin expansion.

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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 EBITDA, adjusted EBITDA margin and adjusted net income. For a discussion of our use of these measures and a reconciliation of each of adjusted EBITDA and adjusted net income to net income (loss), please refer to “Prospectus Summary—Summary Financial Data” and “Selected Consolidated Financial Data.”

Segments

Our Wholesale segment generates revenues globally through sales of Amscan, Designware, Anagram, Costumes USA and other party supplies to party goods superstores, including our company-owned and franchised stores, other party goods retailers, dollar stores, mass merchants, independent card and gift stores and other retailers and distributors throughout the world. Sales to domestic and international customers accounted for 79% and 21%, respectively, of our total wholesale sales in 2012.

Our Retail segment generates revenues from the sale of merchandise to the end consumer through our chain of company-owned party goods stores, online through our e-commerce websites, including PartyCity.com, and through our chain of temporary Halloween City locations. Franchise revenues include royalties on franchise retail sales and franchise fees charged for the initial franchise award and subsequent renewals. Our retail sales of party goods are fueled by everyday events such as birthdays, various seasonal events and other special occasions occurring throughout the year. In addition, through Halloween City, our temporary Halloween business, we seek to maximize our Halloween seasonal opportunity. As a result, in 2012, our Halloween business represented approximately 25% of our total domestic retail sales, generally occurring in a five-week selling season ending on October 31. We expect to continue to generate a significant portion of our retail sales during the Halloween selling season.

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

Financial Measures

Revenues. Revenues from retail operations are recognized at point of sale. We estimate future retail sales returns and record a provision in the period in which the related sales are recorded based on historical information. Retail revenues include shipping revenue related to e-commerce sales. Retail sales are reported net of taxes collected. Franchise royalties are recognized based on reported franchise retail sales.

Revenues from our wholesale operations represent the sale of our products to third parties, less rebates, discounts and other allowances. The terms of our wholesale sales are generally free-on-board (“FOB”) shipping point, and revenue is recognized when goods are shipped. We estimate reductions to revenues for volume-based rebate programs and subsequent credits at the time sales are recognized. 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. 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

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the prior year. Converted FCPO and Party Packagers stores are included in Party City’s same-store sales immediately following conversion. Same-store sales for the Party City brand include e-commerce sales. iParty stores will be included in Party City’s same-store sales after the completion of thirteen full months following the acquisition.

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 operations. 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 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.

As a result of the Acquisition, we applied the acquisition method of accounting and increased the value of our inventory by $89.8 million as of July 28, 2012. The adjustment principally reflects the previously deferred wholesale margin on inventory supplied to our retail operations at July 27, 2012. Such adjustment increased our cost of sales during the period from July 28, 2012 to December 31, 2012 by $58.6 million, and during the nine months ended September 30, 2013 by $22.0 million, as a portion of the related inventory was sold. Further, during the application of the acquisition method of accounting, we increased the values of our property, plant and equipment and certain intangible assets. The impact of such adjustments on depreciation expense and amortization expense increased our cost of sales during the period from July 28, 2012 to December 31, 2012 by $15.4 million and by $21.2 million during the nine months ended September 30, 2013.

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 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 income (loss). 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.

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In conjunction with the Transactions, we incurred transaction costs that were recorded in general and administrative expenses. Additionally, the Transactions accelerated the vesting of certain stock options and we recorded a charge in general and administrative expenses. Further, due to the vesting of such stock options, we made payments in lieu of dividends to the holders of such options and recorded a charge in general and administrative expenses. See “—Results of Operations” for further discussion of these charges.

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.

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 ongoing 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 and analysts calculate Adjusted EBITDA in the same manner. We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding 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 facility uses Adjusted EBITDA to measure compliance with certain covenants.

Adjusted Net Income. Adjusted net income represents our net income (loss), adjusted for intangible asset amortization, non-cash purchase accounting adjustments, amortization of deferred financing costs and original issue discount, the Sponsors management fee, refinancing charges, equity based compensation, payments in lieu of dividend, impairment charges and costs relating to the Transactions. We present adjusted net income because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. While we have historically not used adjusted net income for internal management reporting and valuation purposes, we believe adjusted net income is a helpful benchmark to evaluate our operating performance.

Executive Overview

Our recent financial results demonstrate continued growth and profitability enhancements in a difficult economic environment. During 2012, we posted revenue growth despite the adverse impact of Super Storm Sandy during the all-important Halloween weekend shopping period. Super Storm Sandy’s adverse impact on 2012 net sales is estimated at approximately $10 million. Additionally, 2012 revenues were adversely impacted by Halloween falling on a Wednesday. Further, 2012 Party City sales were negatively impacted by approximately $8 million as a result of the timing of New Year’s Eve, as the fiscal year for our retail operations ended on December 29, 2012 (as opposed to on December 31^st during 2011).

Other Factors Affecting Our Results

Other 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:

Party City Canada. On July 29, 2011, we acquired Party City Canada for total consideration of approximately $31.8 million. Party City Canada is a Canadian retailer of party goods. The acquisition expands our vertical business model, giving us a significant retail presence in Canada. The results of operations of Party City Canada are included in our consolidated financial statements from the date of acquisition. Due to the additional seven months of operations in 2012, our revenues increased by $21.5 million over 2011.

Acquisition-Related Costs. As a result of the Acquisition, we applied the acquisition method of accounting and increased the value of its inventory by $89.8 million as of July 28, 2012. The adjustment principally reflects

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the previously deferred wholesale margin on inventory supplied to our retail operations at July 27, 2012. The adjustment increased our cost of sales during the period from July 28, 2012 to December 31, 2012 by $58.6 million, and during the nine months ended September 30, 2013 by $22.0 million, as a portion of the related inventory was sold. Such amount was added back to EBITDA when arriving at Adjusted EBITDA. For a discussion of our use of Adjusted EBITDA and a reconciliation to net income (loss), please refer to “Prospectus Summary—Summary Financial Data” and “Selected Consolidated Financial Data.”

Additionally, as a result of the Acquisition, we applied the acquisition method of accounting and recorded our property, plant and equipment and intangible assets at fair value. The impact of such adjustments on depreciation expense and amortization expense increased our cost of sales during the period from July 28, 2012 to December 31, 2012 and during the first nine months of 2013 by $15.4 million and $21.2 million, respectively. The impact of such adjustments on depreciation and amortization expense increased wholesale selling expenses during the period from July 28, 2012 to December 31, 2012 and during the first nine months of 2013 by $3.8 million and $6.5 million, respectively.

In conjunction with the Transactions, during the period from January 1, 2012 to July 27, 2012, we recorded $8.9 million of compensation-related transaction costs in general and administrative expenses and $19.7 million of additional transaction costs in other expense, net. Also, the Acquisition accelerated the vesting of certain of our stock options and during the period from January 1, 2012 to July 27, 2012, we recorded $2.1 million of expense in general and administrative expenses. Further, due to the vesting of such stock options, we made payments in lieu of dividends to the holders of such options and during the period from January 1, 2012 to July 27, 2012, we recorded a $16.1 million charge in general and administrative expenses. Finally, in conjunction with the Transactions, during the period from July 28, 2012 to December 31, 2012, we recorded $24.6 million of transaction costs in other expense, net. These costs were added back to EBITDA when arriving at Adjusted EBITDA. For a discussion of our use of Adjusted EBITDA and a reconciliation to net income (loss), please refer to “Prospectus Summary—Summary Financial Data” and “Selected Consolidated Financial Data.”

Recent Acquisitions. In March 2013, we completed our acquisition of Party Delights, an online retailer of party goods, fancy dress and similar items for birthdays, weddings, christenings and other celebrations, for $14.8 million. The acquisition broadens our product offering and allows it to enter European retail markets through e-commerce. The acquisition of Party Delights contributed $10.4 million to net sales during the first nine months of 2013. In May 2013, we completed our acquisition of iParty, a party goods retailer with approximately 50 stores, principally located in the New England region, for $38.4 million (including the repayment of $9.0 million outstanding under iParty’s credit agreement). The acquisition accelerates our growth throughout New England, a densely populated region where we did not have a market presence. The acquisition of iParty contributed $27.8 million to net sales during the first nine months of 2013.

Refinancings. Amounts outstanding under PCHI’s previous $350.0 million ABL revolving credit facility and previous $675.0 million term loan agreement were repaid in conjunction with the closing of the Transactions. At such time, PCHI entered into the ABL Facility and the Term Loan Facility. Additionally, in conjunction with the Transactions, our subsidiary, PCHI, issued the 8.875% senior notes and completed a cash tender offer for all of its outstanding $175.0 million 8.75% senior subordinated notes.

As a result of the higher debt levels following these refinancings, our interest expense increased during 2012.

During February 2013, the Term Loan Facility was amended and the interest rate was lowered. In conjunction with that amendment, we wrote-off $5.9 million of costs that had been capitalized during the initial issuance of the debt. Additionally, we wrote-off $2.3 million of the net original issuance discount that existed as of the time of that amendment. Also, in conjunction with that amendment, we expensed $2.5 million of a call premium and $1.6 million of investment banking and legal fees. All of the charges were recorded in other expense in our condensed consolidated statement of operations and comprehensive loss. For further discussion see the notes to the consolidated financial statements which are included elsewhere in this prospectus.

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Senior PIK Toggle Notes. On August 1, 2013, our wholly-owned subsidiaries, Nextco Holdings and Nextco Finance, issued $350.0 million of 8.750%/9.500% senior PIK toggle notes. The net proceeds were distributed to us by Nextco Holdings and we used this cash to pay a one-time cash dividend to holders of our common stock totaling $338.0 million.

Public Company Costs. As a result of the initial public offering of our common stock we will incur additional legal, accounting and other expenses that we did not previously incur, including costs associated with public company reporting and corporate governance requirements. These requirements include compliance with the Sarbanes-Oxley Act as well as other rules implemented by the SEC and the             .

Termination of Management Agreement. We have a management agreement with our Sponsors. Pursuant to the management agreement, we pay annual management fees of the greater of $3.0 million and 1% of Adjusted EBITDA, as defined in our debt agreements. We intend to pay a termination fee of approximately $         million to terminate the agreement in connection with this offering.

Results of Operations

Nine Months Ended September 30, 2013 Compared To Period From July 28, 2012 to September 30, 2012 and Period From January 1, 2012 to July 27, 2012

The following tables set forth our operating results and operating results as a percentage of total revenues for the nine months ended September 30, 2013, the period from July 28, 2012 to September 30, 2012 and the period from January 1, 2012 to July 27, 2012.

	Period from January 1 to July 27, 2012				Period from July 28 to September 30, 2012				Nine Months Ended September 30, 2013
	(Predecessor)				(Successor)				(Successor)
					(Dollars in thousands)
Revenues:
Net sales	$	930,903	99.0	%	$	324,525	99.1	%	$	1,323,216	99.1	%
Royalties and franchise fees		9,281	1.0