F O R M 10 - K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 For the Fiscal Year Ended December 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT  OF  1934  For  the   transition   period   from
                                                          --------------------
    to
       --------------------

Commission file number       000-21827
                       ---------------------

                              AMSCAN HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

               Delaware                                     13-3911462
   (State or other jurisdiction                  (I.R.S. Employer Identification
  of incorporation or organization)                           Number)

          80 Grasslands Road
          Elmsford, New York                                  10523
(Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code:       (914) 345-2020

Securities registered pursuant to Section 12(b) of the Act:    None

Securities registered pursuant to Section 12(g) of the Act:    None



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

       Yes    X            No
           -------            -------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
Registrant (assuming for purposes of this calculation,  without conceding,  that
all executive  officers and directors  are  "affiliates")  at March 24, 2000 was
$1,551,250.

As of March 24, 2000,  1,132.41 shares of Registrants'  Common Stock,  par value
$0.10, were outstanding.

                       Documents Incorporated by Reference
                       -----------------------------------

None.


<PAGE>


                              AMSCAN HOLDINGS, INC.

                                 1999 FORM 10-K

                                Table of Contents

                                     Part I                                 Page

Item 1       Business ....................................................... 3

Item 2       Properties ..................................................... 9

Item 3       Legal Proceedings ..............................................10

Item 4       Submission of Matters to a Vote of Security Holders ............10

                                     Part II

Item 5       Market for Registrant's Common Equity and Related
                Stockholder Matters .........................................10

Item 6       Selected Consolidated Financial Data ...........................10

Item 7       Management's Discussion and Analysis of Financial
                Condition and Results  of Operations ........................14

Item 7A      Quantitative and Qualitative Disclosures About
                Market Risk .................................................22

Item 8       Financial Statements and Supplementary Data ....................23

Item 9       Changes in and Disagreements with Accountants on
                Accounting and Financial Disclosure .........................23

                                    Part III

Item 10      Directors and Executive Officers of the Registrant .............23

Item 11      Executive Compensation .........................................24

Item 12      Security Ownership of Certain Beneficial Owners and
                Management ..................................................31

Item 13      Certain Relationships and Related Transactions .................34

                                     Part IV

Item 14      Exhibits, Financial Statement Schedules and Reports
                on Form 8-K .................................................35

             Signatures .....................................................39





                                       2
<PAGE>




                                     PART I

ITEM 1.  BUSINESS

         Amscan Holdings, Inc. ("Amscan" or the "Company") designs, manufactures
and distributes decorative party goods, offering one of the broadest and deepest
product lines in the industry.  Our products include paper and plastic tableware
(such as plates, napkins, tablecovers,  cups and cutlery),  accessories (such as
invitations,  thank-you  cards,  table and wall  decorations  and  balloons) and
novelties (such as games and party favors).  During 1999,  Amscan introduced new
product  lines  encompassing  home,  baby and wedding  products for general gift
giving or  self-purchase.  Our  products  are sold to party  goods  superstores,
independent card and gift retailers,  mass  merchandisers and other distributors
which sell Amscan  products in more than 20,000 retail  outlets  throughout  the
world, including North America, South America, Europe, Asia and Australia.

         The Company  currently  offers over 350  product  ensembles,  generally
containing 30 to 150 coordinated  items. These ensembles comprise a wide variety
of products to accessorize a party including  matching  invitations,  tableware,
decorations, party favors and thank-you cards. The Company designs, manufactures
and  markets  party goods for a wide  variety of  occasions  including  seasonal
holidays,  special  events  and  themed  celebrations.  The  Company's  seasonal
ensembles enhance holiday celebrations throughout the year including New Year's,
Valentine's Day, St. Patrick's Day, Easter, Passover, Fourth of July, Halloween,
Thanksgiving,  Hanukkah and  Christmas.  The Company's  special event  ensembles
include birthdays,  christenings, first communions, bar mitzvahs, confirmations,
graduations, baby and bridal showers and anniversaries, while its theme-oriented
ensembles include Hawaiian luaus, Mardi Gras and 50's rock-and-roll parties.

         In addition to its  long-standing  relationships  with independent card
and gift retailers,  Amscan is a leading  supplier to the party goods superstore
distribution   channel.   Despite  recent  consolidations  in  the  party  goods
superstore  channel,  superstores  continue to grow,  providing consumers with a
one-stop  source for all of their party needs,  generally at discounted  prices.
The  retail  party  goods  business  has  historically   been  fragmented  among
independent  stores and drug,  discount or  department  store  chains.  However,
according  to industry  analysts,  there has been a  significant  shift of sales
since 1990 to the party goods superstore channel.

         Amscan's sales to party goods superstores represented approximately 40%
of total sales in 1999. While the number of superstores that Amscan supplies has
grown at a compound  annual  growth rate  ("CAGR") of 7% from 1996 to 1999,  the
Company's sales to superstores  have grown by a 14% CAGR during the same period.
With Amscan products  occupying an increasing share of superstore shelf space in
many product categories, Amscan believes it is well positioned to take advantage
of continued growth in the party goods superstore channel.  In addition,  Amscan
has continued to broaden and increase its distribution channels by expanding its
presence in the gift shop,  supermarket,  and other smaller  independent  retail
channels.  This has been accomplished in part by acquisition via the utilization
of the strong  presence  in the gift shop,  supermarket  and other  channels  of
Anagram  International,   Inc.  and  certain  related  companies   (collectively
"Anagram") to bring party goods to these markets as well as a realignment of its
salesforce in 1999 to focus more closely on these  channels.  To further achieve
sales growth and expansion,  Amscan,  during the latter half of 1999, introduced
new product  lines  encompassing  home,  baby and wedding  gifts which are being
distributed through a newly aligned salesforce. Our recent expansion initiatives
have been primarily funded by current revenues.

         The Company's  sales and cash flows have grown  substantially  over the
past five years. From 1994 to 1999, sales and adjusted earnings before interest,
income taxes, depreciation and amortization ("Adjusted EBITDA" - EBITDA adjusted
for  non-recurring  items,  other  income or expenses,  and minority  interests)
(refer to Note 8 in Item 6, "Selected  Consolidated  Financial Data") have grown
at compound annual rates of 18% and 23%,  respectively.  During the same period,
Adjusted  EBITDA  margins  (i.e.,  as a percentage of net sales)  increased from
approximately  15% to 19%  due  in  part  to  the  Company's  achieving  greater
economies of scale in manufacturing and distribution.




                                       3
<PAGE>






SUMMARY FINANCIAL INFORMATION ABOUT THE COMPANY

         Information about the Company's  revenues,  operating profits or losses
and  assets  for the last  five  years is  included  in this  report  in Item 6,
"Selected Consolidated Financial Data." Because more holidays fall in the fourth
quarter  of the year than in the  other  quarters,  the  Company's  business  is
somewhat seasonal. Sales for the third quarter are generally the highest for the
year  because  the  Company  begins to ship such  seasonal  merchandise  in that
quarter.

         The Company does business in the United States and in other  geographic
areas of the world. Information about the Company's revenues,  operating profits
or losses and assets relating to geographic  areas outside the United States for
each of the years in the three year period ended  December 31, 1999, is included
in Note 13 to the Company's 1999  Consolidated  Financial  Statements  which are
included in this report beginning on page F-2

COMPANY STRATEGY

         The Company  seeks to become the primary  source for  consumers'  party
goods requirements. The key elements of the Company's strategy are as follows:

         o        STRENGTHEN  POSITION  AS A  LEADING  PROVIDER  TO PARTY  GOODS
                  SUPERSTORES. The Company offers convenient "one-stop shopping"
                  for  large  superstore   buyers  and  seeks  to  increase  its
                  proportionate  share of sales  volume  and shelf  space in the
                  superstores.

         o        OFFER THE BROADEST AND DEEPEST  PRODUCT LINE IN THE  INDUSTRY.
                  The Company  strives to offer the broadest and deepest product
                  line  in the  industry.  The  Company  helps  retailers  boost
                  average  purchase  volume  per  consumer  through  coordinated
                  ensembles that promote "add on" purchases.

         o        DIVERSIFY   DISTRIBUTION   CHANNELS,   PRODUCT   OFFERING  AND
                  GEOGRAPHIC  PRESENCE.  The  Company  seeks,  through  internal
                  growth   and   acquisitions,   to  expand   its   distribution
                  capabilities   internationally,   increase   its  presence  in
                  additional  retail channels and further broaden and deepen its
                  product line.

         o        PROVIDE  SUPERIOR  CUSTOMER  SERVICE.  The Company  strives to
                  achieve high average fill rates in excess of 95% and to ensure
                  short turnaround times.

         o        MAINTAIN PRODUCT DESIGN LEADERSHIP.  The Company will continue
                  investing  in art and  design to  support  a steady  supply of
                  fresh ideas and create complex,  unique  ensembles that appeal
                  to consumers and are difficult to replicate.

         o        MAINTAIN   STATE-OF-THE-ART   MANUFACTURING  AND  DISTRIBUTION
                  TECHNOLOGY.  The Company  intends to maintain  technologically
                  advanced  production  and  distribution  systems  in  order to
                  enhance  product  quality,   manufacturing  efficiency,   cost
                  control and customer satisfaction.

         o        PURSUE  ATTRACTIVE  ACQUISITIONS.  The Company  believes  that
                  opportunities  exist  to make  acquisitions  of  complementary
                  businesses  to  leverage  the  Company's  existing  marketing,
                  distribution and production capabilities,  expand its presence
                  in the various retail channels, further broaden and deepen its
                  product line and penetrate  international markets. The Company
                  receives  inquiries  from  time to time  with  respect  to the
                  possible  acquisition by the Company of other entities and the
                  Company   intends   to   pursue   acquisition    opportunities
                  aggressively.




                                       4
<PAGE>






PRODUCT DESIGN

         The Company's  90-person in-house design staff produces and manages the
Company's party goods. From the designs and concepts  developed by the Company's
artists,  the  Company  selects  those it  believes  best to replace or to add a
number of its designed  product  ensembles  each year.  During 1999, the Company
introduced approximately 100 new ensembles.

PRODUCT LINE

         The  major   categories  of  products  which  the  Company  offers  are
tableware,  accessories and novelties.  The percentage of sales for each product
category for 1999, 1998 and 1997 are set forth in the following table:

                                          1999            1998            1997
                                          ----            ----            ----
Tableware ......................            45%             57%             59%
Accessories ....................            38              26              26
Novelties ......................            17              17              15
                                           ---             ---             ---
                                           100%            100%            100%
                                           ===             ===             ===

         The following  table sets forth the  principal  products in each of the
three categories:

<TABLE>
<CAPTION>

Tableware                                       Accessories                              Novelties
---------                                       -----------                              ---------
<S>                                             <C>                                      <C>
Decorated                                       Balloons                                 Buttons
---------                                       Banners                                  Cocktail Picks
   Paper Plates                                 Cascades                                 Games
   Paper Napkins                                Caketops                                 Candles
   Paper Tablecovers                            Confetti                                 Mugs
   Paper Cups                                   Banners                                  Noise Makers
                                                Crepe                                    Party Favors
                                                Cutouts                                  Party Hats
                                                Decorative Tissues                       Pinatas
                                                Flags                                    Pom Poms
Solid Color                                     Gifts                                    T-shirts
-----------                                     Gift Bags
   Paper and Plastic Plates                     Gift Wrap
   Paper Napkins                                Guest Towels
   Paper and Plastic Tablecovers                Honeycomb Centerpieces
   Paper and Plastic Cups                       Invitations and Notes
   Plastic Cutlery                              Ribbons and Bows
                                                Signs
</TABLE>




         The Company  supplies party goods and gifts for the following  types of
occasions:

<TABLE>
<CAPTION>

Seasonal                                        Everyday                                Themes
--------                                        --------                                ------

<S>                                             <C>                                     <C>
New Year's                                      Anniversaries                           Fall
Valentine's Day                                 Bar Mitzvahs                            Fiesta
St. Patrick's Day                               Birthdays                               Fifties Rock-and-Roll
Easter                                          Christenings                            Hawaiian Luau
Passover                                        Confirmations                           Mardi Gras
Fourth of July                                  First Communions                        Patriotic
Halloween                                       Graduations                             Religious
Thanksgiving                                    Retirements                             Sports
Hanukkah                                        Showers                                 Summer Fun
Christmas                                       Weddings
</TABLE>




                                       5
<PAGE>





MANUFACTURED PRODUCTS

         Items  manufactured  by the  Company  accounted  for  nearly 65% of the
Company's  sales  in  1999.  State-of-the-art  printing,  forming,  folding  and
packaging  equipment  support the Company's  manufacturing  operations.  Company
facilities in Kentucky,  New York,  Rhode Island,  Minnesota and Mexico  produce
paper and plastic plates,  napkins,  cups, metallic balloons and other party and
novelty items. This vertically integrated  manufacturing capability provides the
Company the  opportunity  to better control costs and monitor  product  quality,
manage inventory investment and provide efficient order fulfillment.

         Given its size and sales  volume,  the  Company  is  generally  able to
operate its manufacturing  equipment on the basis of at least two shifts per day
thus  lowering  its  production  costs.  In addition,  the Company  manufactures
products for third parties allowing the Company to maintain a satisfactory level
of equipment utilization.

PURCHASED PRODUCTS

         The   Company   purchases   the   remainder   of  its   products   from
independently-owned  manufacturers, many of whom are located in the Far East and
with whom the  Company has  long-standing  relationships.  The two largest  such
suppliers   operate  as  exclusive   suppliers  to  the  Company  and  represent
relationships  which  have been in place for more than ten  years.  The  Company
believes  that the  quality  and  price of the  products  manufactured  by these
suppliers provide a significant  competitive advantage.  The Company's business,
however,  is not  dependent  upon any  single  source  of  supply  for  products
manufactured for the Company by third parties.

RAW MATERIALS

         The  principal  raw  material  used by the  Company in its  products is
paper.  The Company has  historically  been able to change its product prices in
response to changes in raw material costs. While the Company currently purchases
such raw material from a relatively small number of sources,  paper is available
from a number of sources.  The Company  believes its current  suppliers could be
replaced  by the Company  without  adversely  affecting  its  operations  in any
material respect.

SALES AND MARKETING

         The  Company's  principal  sales and  marketing  efforts are  conducted
through a domestic direct employee sales force of approximately 90 professionals
servicing over 5,000 retail accounts. These professionals have, on average, been
affiliated  with the Company for nearly five years. In addition to this seasoned
sales   team,   the   Company   utilizes  a  select   group  of   manufacturers'
representatives to handle specific account situations.  International  customers
are generally  serviced by employees of the Company's foreign  subsidiaries.  To
support its sales and marketing efforts,  the Company produces four main product
catalogues annually,  three for seasonal products and one for everyday products.
The Company also produces additional  catalogues to market its metallic balloons
and new gift products.

         The Company's practice of including party goods retailers in all facets
of the Company's product development is a key element of the Company's sales and
marketing  efforts.  The  Company  targets  important  consumer  preferences  by
integrating  its own market  research with the input of party goods retailers in
the creation of its designs and products.  In addition,  the sales  organization
assists  customers in the actual  set-up and layout of displays of the Company's
products,  and,  from time to time,  the Company also  provides  customers  with
promotional displays.

DISTRIBUTION AND SYSTEMS

         The Company  ships its  products  from  distribution  warehouses  which
employ  computer  assisted  systems.   In  order  to  better  control  inventory
investment, seasonal products are shipped out of




                                       6
<PAGE>




warehouses  located in New York. As a result of the acquisition of Anagram,  the
Company  distributes its metallic  balloons  domestically from facilities in New
York and Minnesota.  Products for foreign markets are shipped from the Company's
distribution  warehouses  in  Mexico,  England  and  Australia.   Management  is
currently evaluating the consolidation of its distribution  facilities which may
result in restructuring charges in subsequent periods.

         Many of the Company's sales orders are generated electronically through
hand-held  units with which the sales  force and many  customers  are  equipped.
Specifically,  orders are entered into the hand-held units and then  transmitted
over  telephone  lines  to the  Company's  mainframe  computer,  where  they are
processed  for  shipment.  This  electronic  order  entry  expedites  the  order
processing  which  in turn  improves  the  Company's  ability  to fill  customer
merchandise needs accurately and quickly.

E-COMMERCE

         Amscan  has  successfully  pursued  sales  opportunities  to  have  our
products  listed  on the  sites of  various  Internet  retailers.  We have  also
developed a website to enable our key customers to access real time  information
regarding the status of existing orders,  stock  availability,  and to place new
orders.  In addition,  we have also begun making portions of Amscan's  catalogue
available to retailers over the Internet.

CUSTOMERS

         Amscan's customers are principally party goods superstores, independent
card and party retailers, mass merchandisers and other distributors.  Amscan has
also  expanded its  presence in the gift shop,  supermarket,  and other  smaller
independent retail channels. In the aggregate,  Amscan supplies more than 20,000
retail outlets both domestically and internationally.  We are a leading supplier
to the party goods superstore channel, which has experienced  significant growth
in the past decade.

         The Company has a diverse customer base. Only one customer,  Party City
Corporation  ("Party City"),  accounted for more than 10% of the Company's sales
in 1999.  For the years ended December 31, 1999,  1998 and 1997,  sales to Party
City's corporate  stores  represented 10%, 13% and 7% of consolidated net sales,
respectively.  For the years ended  December 31, 1999,  1998 and 1997,  sales to
Party City's  franchise  stores  represented 9%, 10% and 12% of consolidated net
sales,  respectively.  During the first quarter of 1999,  Party City experienced
financial  difficulties which they appear to have resolved through new financing
arrangements.  Although the Company believes its  relationships  with Party City
and its  franchisees  are good, if they were to reduce their volume of purchases
from the Company significantly, the Company's financial condition and results of
operations could be materially adversely affected.

COMPETITION

         The  Company  competes  on the basis of  diversity  and  quality of its
product  designs,   breadth  of  product  line,  product  availability,   price,
reputation and customer  service.  The Company has many competitors with respect
to one or more of its products but believes that there are few competitors which
manufacture and distribute products with the complexity of design and breadth of
product offerings that the Company does. Furthermore,  the Company believes that
its design and  manufacturing  processes  create an efficiency in  manufacturing
that few of its  competitors  achieve in the production of numerous  coordinated
products in multiple design types.

         Competitors include smaller  independent  specialty  manufacturers,  as
well as divisions or subsidiaries of large companies with greater  financial and
other resources than those of the Company.  Certain of these competitors control
licenses  for  widely  recognized  images,  such as  cartoon  or motion  picture
characters,  which could provide them with a competitive advantage.  The Company
has pursued a strategy of  developing  its own  designs  and  generally  has not
pursued licensing opportunities.




                                       7
<PAGE>




Through its  acquisition  of Anagram,  however,  the  Company  controls  various
licenses which it uses for its production of balloons.

INTELLECTUAL PROPERTY AND LICENSES

         The Company owns  copyrights on the designs  created by the Company and
used on its products.  The Company owns trademarks on the words and designs used
on or in  connection  with its  products.  It is the  practice of the Company to
register its copyrights with the United States Copyright Office to the extent it
deems  reasonable.  The Company does not believe that the loss of  copyrights or
trademarks  with  respect to any  particular  product or  products  would have a
material adverse effect on the business of the Company.  Except for Anagram, the
Company does not depend on licenses to any material  degree in its business and,
therefore,  does not  incur  any  material  licensing  expenses.  Anagram  holds
approximately  145  licenses  allowing  it to  use  various  cartoon  and  other
characters on its balloons.  None of Anagram's licenses is individually material
to its business.

EMPLOYEES

         As of December 31, 1999, the Company had approximately 1,800 employees,
none  of  whom is  represented  by a labor  union.  The  Company  considers  its
relationship with its employees to be good.




                                       8
<PAGE>




ITEM 2.  PROPERTIES

         The Company maintains its corporate  headquarters in Elmsford, New York
and conducts its principal design,  manufacturing and distribution operations at
the following facilities:

<TABLE>
<CAPTION>

                                                                                                     Owned or Leased
      Location                      Principal Activity                     Square Feet            (with Expiration Date)
      --------                      ------------------                     -----------            ----------------------

<S>                            <C>                                      <C>                       <C>
Elmsford, New York             Executive Offices; design and            59,000 square feet        Leased (expiration date:
                               art production of paper party                                      December 31, 2007)
                               products and decorations

Harriman, New York             Manufacture of paper napkins             75,000 square feet        Leased (expiration date:
                               and cups                                                           March 31, 2002)

Providence, Rhode Island       Manufacture and distribution             51,000 square feet        Leased (expiration date:
                               of plastic plates, cups and bowls                                  June 30, 2008)

Louisville, Kentucky           Manufacture and distribution             189,000 square feet       Leased (expiration date:
                               of paper plates                                                    March 31, 2001)

Newburgh, New York             Manufacture and distribution             457,000 square feet       Leased (expiration date:
                               of solid color party products                                      October 31, 2002)

Brooklyn, New York             Manufacture and distribution             12,200 square feet        Leased (expiration date:
                               of wedding cake tops and                                           July 20, 2003)
                               accessories

Eden Prairie, Minnesota        Manufacture and distribution             115,600 square feet       Owned
                               of balloons and accessories

Tijuana, Mexico                Manufacture and distribution             50,000 square feet        Leased (expiration date:
                               of party products                                                  May 14, 2002)

Chester, New York (1)          Distribution of party products           287,000 square feet       Owned
                               and decorations

Goshen, New York               Distribution of seasonal party           130,000 square feet       Leased (expiration date:
                               products and decorations                                           December 31, 2000)

Milton Keynes, England         Distribution of party products           110,000 square feet       Leased (expiration date:
                               and decorations throughout United                                  June 30, 2017)
                               Kingdom and Europe

Melbourne, Australia           Distribution of party products           10,000 square feet        Owned
                               and decorations in Australia
                               and Asia

Saint Denis, France            Distribution of balloons and             6,800 square feet         Leased (expiration date:
                               accessories                                                        March 31, 2005)

Madrid, Spain                  Distribution of balloons and             6,700 square feet         Leased (expiration date:
                               accessories                                                        February 24, 2004)

Silverwater, Australia         Distribution of balloons and             4,700 square feet         Leased (expiration date:
                               accessories                                                        December 31, 2000)

Granada, Mexico                Distribution of balloons and             6,600 square feet         Leased (expiration date:
                               accessories                                                        October 31, 2000)

Quebec, Canada                 Sales  and administrative                14,700 square feet        Leased (expiration date:
                               offices                                                            March 31, 2002)
</TABLE>

 (1)     Property subject to a ten-year mortgage securing a loan in the original
         principal  amount of  $5,925,000  bearing  interest at a rate of 8.51%.
         Such loan matures in September 2004. The principal  amount  outstanding
         as of December 31, 1999 was approximately $2,814,000.




                                       9
<PAGE>




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

ITEM 3.  LEGAL PROCEEDINGS

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

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Following the consummation of a merger in December 1997 (the "Merger"),
the common stock of the Company (the "Common Stock" or "Company  Common Stock"),
par value $0.10 per share,  was delisted from the Nasdaq  National Market System
("Nasdaq")  and the Company filed with the  Securities  and Exchange  Commission
(the  "Commission")  a Form 15 to deregister  the Company Common Stock under the
Securities Exchange Act of 1934. As a result,  there is no public trading market
for the Company Common Stock.

         As of the close of business on March 24, 2000, there were 23 holders of
record of the Company's Common Stock.

         The Company has not paid any dividends on the Common Stock and does not
anticipate  paying  cash  dividends  in  the  foreseeable  future.  The  Company
currently  intends to retain its  earnings  for working  capital,  repayment  of
indebtedness,  capital expenditures and general corporate purposes. In addition,
the Company's  current  credit  facility and the  indenture  governing its notes
contain  restrictive  covenants  which have the effect of limiting the Company's
ability to pay dividends or distributions to its stockholders.

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

         The selected  consolidated  financial  data  presented  below under the
captions  "Statements of Operations Data" and "Balance Sheet Data" as of the end
of and for each of the years in the  five-year  period ended  December 31, 1999,
are derived from the consolidated financial statements of Amscan Holdings, Inc.,
which consolidated  financial statements have been audited by Ernst & Young LLP,
independent  certified public accountants,  as of the end of and for each of the
years ended  December 31, 1999 and 1998 and by KPMG LLP,  independent  certified
public accountants, as of the end of and for




                                       10
<PAGE>




each of the  years  in the  three-year  period  ended  December  31,  1997.  The
consolidated  financial statements as of December 31, 1999 and 1998 and for each
of the years in the  three-year  period ended  December 31, 1999 and the reports
thereon,  are  included  in this  report  under  Item 14,  "Exhibits,  Financial
Statement  Schedules  and  Reports  on  Form  8-K."  The  selected  consolidated
financial data should be read in  conjunction  with the  consolidated  financial
statements  and the related notes thereto and Item 7,  "Management's  Discussion
and Analysis of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>

                                                                                      Years Ended December 31,
                                                                -----------------------------------------------------------------

                                                                   1999          1998          1997          1996          1995
                                                                ---------     ---------     ---------     ---------     ---------
                                                                                       (Dollars in thousands)
Statements of Operations Data (1):

<S>                                                             <C>           <C>           <C>           <C>           <C>
Net sales ...................................................   $ 306,112     $ 235,294     $ 209,931     $ 192,705     $ 167,403
Cost of sales ...............................................     193,586       150,456       136,571       123,913       108,654
                                                                ---------     ---------     ---------     ---------     ---------
Gross profit ................................................     112,526        84,838        73,360        68,792        58,749
Selling expenses ............................................      24,455        17,202        13,726        11,838        12,241
General and administrative expenses .........................      33,249        23,432        20,772        19,266        15,002
Art and development costs ...................................      10,047         7,356         5,282         5,173         4,256
Non-recurring charges (2) ...................................         995
Restructuring charges (3) ...................................                     2,400
Non-recurring charges in connection with the Merger (4) .....                                  22,083
Non-recurring compensation in connection with the IPO (5) ...                                                15,535
Special bonuses (5) .........................................                                                 4,222         2,581
                                                                ---------     ---------     ---------     ---------     ---------
Income from operations ......................................      43,780        34,448        11,497        12,758        24,669
Interest expense, net .......................................      26,365        22,965         3,892         6,691         5,772
Other expense (income), net .................................          35          (121)          (71)          335          (309)
                                                                ---------     ---------     ---------     ---------     ---------
Income before income taxes and minority interests ...........      17,380        11,604         7,676         5,732        19,206
Income tax expense ..........................................       7,100         4,816         7,665         1,952           731
Minority interests ..........................................          73            79           193         1,653         1,041
                                                                ---------     ---------     ---------     ---------     ---------
Net income (loss) ...........................................   $  10,207     $   6,709     $    (182)    $   2,127     $  17,434
                                                                =========     =========     =========     =========     =========

Pro forma data relating to change in tax status:

Income before income taxes ..................................                                             $   4,079     $  18,165
Pro forma income taxes (6) ..................................                                                 1,827         7,403
                                                                                                          ---------     ---------
Pro forma net income (6) ....................................                                             $   2,252     $  10,762
                                                                                                          =========     =========

Other financial data:

Gross margin percentage .....................................        36.8%         36.1%         34.9%         35.7%         35.1%
Capital expenditures, including assets under capital leases..   $  12,283     $   7,714     $  10,296       $11,008        $4,522
Depreciation and amortization ...............................      12,931         8,501         6,245         5,137         4,332
Ratio of earnings to fixed charges (7) ......................        1.6x          1.4x          2.2x          1.7x          3.8x

Cash Flow Statement Data:

Cash flows from operations ..................................   $  19,435     $  22,762     $   4,169     $  12,273     $   4,721
Cash flows from investing ...................................     (11,416)      (83,127)      (10,097)       (7,613)       (4,513)
Cash flows from financing ...................................      (8,767)      (49,762)      116,005        (5,958)          147

Non-GAAP financial data:

Adjusted EBITDA (8) .........................................   $  56,881     $  45,609     $  40,115     $  37,652     $  31,582
Adjusted EBITDA margin ......................................        18.6%         19.4%         19.1%         19.5%         18.9%
Adjusted EBITDA to interest expense, net ....................        2.2x          2.0x         10.3x          5.4x          5.2x
</TABLE>




                                       11
<PAGE>



<TABLE>
<CAPTION>

                                                                                  December 31,
                                                         ------------------------------------------------------------
                                                            1999         1998         1997         1996        1995
                                                         ---------    ---------    ---------    ---------   ---------
                                                                             (Dollars in thousands)
Balance Sheet Data:

<S>                                                      <C>          <C>          <C>          <C>         <C>
Working capital ......................................   $  82,228    $  71,476    $  96,793    $  45,405   $   8,383
                                                         =========    =========    =========    =========   =========
Total assets .........................................   $ 263,487    $ 248,852    $ 269,276    $ 140,274   $ 114,601
                                                         =========    =========    =========    =========   =========
Short-term indebtedness (9) ..........................   $   8,250    $  13,177    $   3,335    $  33,262   $  58,541
Long-term indebtedness ...............................     266,891      270,127      234,422       15,085      12,284
                                                         ---------    ---------    ---------    ---------   ---------
Total indebtedness ...................................   $ 275,141    $ 283,304    $ 237,757    $  48,347   $  70,825
                                                         =========    =========    =========    =========   =========
Redeemable Common Stock (10) .........................   $  23,582    $  19,547
                                                         =========    =========
Stockholders' (deficit) equity .......................   $ (88,529)   $ (95,287)   $ (95,219)   $  67,949   $  27,205
                                                         =========    =========    =========    =========   =========
</TABLE>
------------------


      (1)   In  connection  with the  preparation  of the selected  consolidated
            financial  data,  Amscan has  reclassified  certain amounts in prior
            years to conform to the current year presentation.

      (2)   During  the   fourth   quarter  of  1999,   the   Company   recorded
            non-recurring  charges  of $1.0  million  in  association  with  the
            proposed   construction  of  a  new   distribution   facility.   The
            non-recurring  charges represented building costs written-off due to
            the relocation of the proposed site.

      (3)   The Company  recorded  charges of $2.4 million in 1998 in connection
            with the restructuring of its distribution  operations.  The Company
            closed  two  facilities   located  in  California  and  Canada.  The
            restructuring  charges  include  the  non-cash  write-down  of  $1.3
            million  relating to property,  plant and equipment,  the accrual of
            future lease  obligations  of $0.5 million and  severance  and other
            costs of $0.6 million.

      (4)   In connection with the Merger,  the Company  recorded  non-recurring
            charges   of   approximately    $22.1   million   related   to   the
            recapitalization  comprised of $11.7 million in  transaction  costs,
            $7.5 million  compensation  payment to an officer,  $1.9 million for
            the  redemption  of Company  stock  options and $1.0 million of debt
            retirement costs.

      (5)   In conjunction with Amscan's initial public offering of Common Stock
            ("IPO") in 1996,  the Company  recorded  non-recurring  compensation
            expense of $15.5 million related to stock and cash payments of $12.5
            million to certain  executives in connection with the termination of
            prior employment  agreements and $3.0 million for the  establishment
            of an Employee Stock Ownership Plan for the benefit of the Company's
            domestic  employees  and the payment of stock  bonuses to certain of
            such  employees.  In addition,  in each of the years in the two-year
            period ended December 31, 1996, special bonus  arrangements  existed
            with certain members of management. In connection with the IPO, such
            special profit sharing arrangements were substantially  modified and
            replaced  by  incentives  tied to the  value of the  Company  Common
            Stock.

      (6)   Prior  to the  consummation  of the IPO in  1996,  Amscan  Inc.  and
            certain  of its  affiliates  elected  to be  taxed as  Subchapter  S
            corporations  under the  Internal  Revenue  Code.  The pro forma net
            income  amounts give effect to pro forma income tax amounts for each
            of the periods  shown at  statutory  rates  (40.5%)  assuming  these
            entities had not elected Subchapter S corporation status.

      (7)   For purposes of determining  the ratio of earnings to fixed charges,
            earnings  are defined as earnings  before  income taxes and minority
            interests  plus fixed  charges.  Fixed  charges  consist of interest
            expense on all obligations, amortization of deferred financing costs
            and one-third of the rental expense on operating leases representing
            that  portion  of  rental  expense  deemed  by  the  Company  to  be
            attributable to interest.




                                       12
<PAGE>





      (8)   "EBITDA"   represents   earnings  before  interest,   income  taxes,
            depreciation and amortization.  "Adjusted EBITDA"  represents EBITDA
            adjusted for certain  non-recurring items, other income or expenses,
            amortization  of the  restricted  Common Stock  award,  and minority
            interests  reflected  in the  following  table.  Neither  EBITDA nor
            Adjusted  EBITDA are intended to represent cash flow from operations
            as defined by accounting principles generally accepted in the United
            States and should not be considered as an  alternative to net income
            as an indicator of the Company's  operating  performance  or to cash
            flows as a measure  of  liquidity.  EBITDA and  Adjusted  EBITDA are
            presented because they are widely accepted financial indicators of a
            leveraged company's ability to service and/or incur indebtedness and
            because management  believes EBITDA and Adjusted EBITDA are relevant
            measures of the Company's ability to generate cash without regard to
            the Company's capital structure or working capital needs. EBITDA and
            Adjusted  EBITDA as  presented  may not be  comparable  to similarly
            titled measures used by other companies, depending upon the non-cash
            charges  included.  When  evaluating  EBITDA  and  Adjusted  EBITDA,
            investors should consider that EBITDA and Adjusted EBITDA (i) should
            not be considered in isolation but together with other factors which
            may influence operating and investing activities, such as changes in
            operating  assets and  liabilities  and  purchases  of property  and
            equipment,  (ii)  are not  measures  of  performance  calculated  in
            accordance  with  accounting  principles  generally  accepted in the
            United  States,  (iii) should not be construed as an  alternative or
            substitute for income from operations, net income or cash flows from
            operating   activities   in  analyzing   the   Company's   operating
            performance, financial position or cash flows and (iv) should not be
            used as an indicator of the Company's operating  performance or as a
            measure of its liquidity.

<TABLE>
<CAPTION>

                                                                                  Years Ended December 31,
                                                                    ----------------------------------------------------

                                                                      1999       1998        1997      1996       1995
                                                                    --------   --------    -------   --------   --------
<S>                                                               <C>        <C>         <C>         <C>        <C>
     EBITDA ...................................................   $ 56,603   $ 42,991    $ 17,620    $ 15,907   $ 28,269
     Adjustments - increase (decrease):
       Certain non-recurring items and special
         bonuses ..............................................                 2,400      22,083      19,757      2,581
       Amortization of restricted Common
         Stock award ..........................................        170        260         290
       Other expense (income), net ............................         35       (121)        (71)        335       (309)
       Minority interests .....................................         73         79         193       1,653      1,041
                                                                   --------    --------    --------  --------
     Adjusted EBITDA ..........................................   $ 56,881   $ 45,609    $ 40,115    $ 37,652   $ 31,582
                                                                   ========    ========    ========   ========   ========
</TABLE>


     (9)  Short-term indebtedness consists primarily of the Company's borrowings
          under bank lines of credit and the current  portion of long-term debt.
          Prior to December 31, 1997, short-term indebtedness also included debt
          previously due to John A. Svenningsen.

     (10) Under  the  terms  of  a   stockholders'   agreement   ("Stockholders'
          Agreement"),  the Company can  purchase  all of the shares held by the
          employee  stockholders,  and the  employees can require the Company to
          purchase  all of the shares held by the employee  stockholders,  under
          certain  circumstances.  Prior to December 31, 1998, the obligation to
          purchase employee shares was assignable to GSCP at a cost of up to $15
          million.  The  purchase  price  as  prescribed  in  the  Stockholders'
          Agreement  is to be  determined  through  a  market  valuation  of the
          minority-held shares or, under certain  circumstances,  based on cost.
          The  aggregate  amount  that may be payable by the Company to employee
          stockholders based on fully paid and vested shares has been classified
          as redeemable common stock ("Redeemable Common Stock").





                                       13
<PAGE>




ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

GENERAL

         Over the past several years,  the party goods industry has  experienced
significant changes in both distribution channels and product offerings. Despite
the recent  consolidation  in the party  goods  superstore  channel,  the retail
distribution of party goods continues to shift from smaller  independent  stores
and designated  departments within drug,  discount or department store chains to
superstores  dedicated to retailing  party goods.  In part due to the success of
the superstore channel, party goods manufacturers  broadened their product lines
to support the  celebration  of a greater  number of occasions.  The  industry's
growth has been directly affected by these changes.

         Amscan's  revenues are  generated  from sales of  approximately  30,000
SKU's consisting of paper and plastic  tableware,  accessories and novelties for
all occasions and, in 1999, gifts. Tableware (plates, cups, cutlery, napkins and
tablecovers) is the Company's core product  category,  generating  approximately
45% of revenues in 1999.  Coordinated  accessories (e.g.,  balloons and banners)
and  novelties  (e.g.,  party  favors) are offered to  complement  the Company's
tableware  products.  To  serve  its  customers  better,  the  Company  has made
significant additions to its product line as well as introducing new gift lines.
Our new gift lines encompass home,  baby, and wedding  products for general gift
giving or  self-purchase  and are  being  distributed  through  a newly  aligned
salesforce.  Through increased spending on internal product  development as well
as through  acquisitions,  the Company has had a net  increase of  approximately
22,300  SKU's  since  1991.  Revenue  growth  primarily  has been the  result of
increased  orders  from its party  goods  superstore  customers  (new stores and
increased same-store sales), increased international sales and price increases.

         Amscan's gross profit is principally  influenced by its product mix and
paper costs.  Products  manufactured  by the Company,  primarily  tableware  and
metallic balloons,  represented  nearly 65% of the Company's 1999 sales.  Amscan
has made significant additions to its manufacturing  capacity which have allowed
it to increase manufacturing efficiencies and improve gross margins. The Company
believes that its  manufacturing  capabilities  enable it to lower product cost,
ensure product quality and be more responsive to customer  demands.  The Company
has historically  been able to adjust its prices in response to changes in paper
prices.




                                       14
<PAGE>




RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

 PERCENTAGE OF NET SALES
<TABLE>
<CAPTION>

                                                                             Years Ended December 31,
                                                                             ------------------------
                                                                                1999          1998
                                                                               ------        ------
<S>                                                                             <C>           <C>
Net sales ............................................................          100.0%        100.0%
Cost of sales ........................................................           63.2          63.9
                                                                               ------        ------
     Gross profit ....................................................           36.8          36.1
Operating expenses:
    Selling expenses .................................................            8.0           7.3
    General and administrative expenses ..............................           10.9          10.0
    Art and development costs ........................................            3.3           3.1
    Non-recurring charges ............................................            0.3
    Restructuring charges ............................................                          1.0
                                                                               ------        ------
   Total operating expenses ..........................................           22.5          21.4
                                                                               ------        ------
     Income from operations ..........................................           14.3          14.7
   Interest expense, net .............................................            8.6           9.8
   Other income, net .................................................
                                                                               ------        ------
     Income before income taxes and minority interests ...............            5.7           4.9
Income tax expense ...................................................            2.4           2.0
Minority interests ...................................................
                                                                               ------        ------
    Net income .......................................................            3.3%          2.9%
                                                                               ======        ======
</TABLE>


         Net sales for the year ended December 31, 1999 of $306.1 million,  were
$70.8  million or 30.1% higher than for the year ended  December  31, 1998.  The
increase in net sales includes  approximately $44.2 million of incremental sales
from Anagram,  which was acquired in mid September of 1998, as well as increased
sales to superstores and independent party goods stores.  The increased sales to
superstores and independent party goods stores are principally attributable to a
realignment of the Company's  independent sales force in 1999 in connection with
the  introduction of its new gift lines, a strong solid color tableware  program
and stronger than usual  seasonal  sales as a result of the  celebration  of the
millennium.  During  the  year  ended  December  31,  1999,  the  Company  added
approximately  10,000 SKU's to its product  line, of which  approximately  1,000
related to the newly introduced gift lines.

         Gross profit for the year ended  December 31, 1999 was $112.5  million,
or 36.8% of net sales,  as  compared  to 36.1% for the year ended  December  31,
1998. The improvement in gross profit margin principally resulted from increased
efficiencies gained at the manufacturing level.

         Selling expenses for the year ended December 31, 1999 increased by $7.3
million to $24.5  million and, as a  percentage  of net sales from 7.3% to 8.0%.
The increase in selling expenses  reflected the inclusion of approximately  $5.0
million  of  incremental  selling  expenses  from  Anagram,  which  historically
operates at a higher level of expense as a percentage  of sales.  The  remaining
increase in selling expenses  principally  resulted from the addition of several
new product  catalogues and the  realignment of the  independent  sales force in
1999.

         General and administrative expenses of $33.2 million for the year ended
December  31,  1999  increased  by $9.8  million as  compared  to the year ended
December 31,  1998.  The  increase  reflected  the  additional  amortization  of
goodwill and other intangible  assets arising from the acquisition of Anagram as
well as the  inclusion  of Anagram  results,  which  historically  operates at a
higher level of expense as a percentage  of sales.  The  provision  for doubtful
accounts for the year ended  December 31, 1999 decreased by $0.4 million to $2.9
million  and as a  percentage  of net sales from 1.4% to 1.0%.  During the first
quarter  of 1999,  Party  City  experienced  financial  difficulties  which were
addressed during the fourth quarter of 1999 through new financing arrangements.




                                       15
<PAGE>





         Art and development  costs of $10.0 million for the year ended December
31, 1999 were $2.7 million higher than the prior year. As a percentage of sales,
art and  development  costs  increased  to 3.3% in 1999 from  3.1% in 1998.  The
increase in costs  reflected  the Company's  investment  in  additional  art and
product development staff associated with the development of the new gift lines.

         During the fourth quarter of 1999, the Company  recorded  non-recurring
charges of $1.0 million in association  with the proposed  construction of a new
distribution  facility.  The non-recurring  charges  represented  building costs
written-off due to the relocation of the proposed site.

         In the second quarter of 1998, the Company commenced a restructuring of
its distribution  operations to reduce costs and improve operating efficiencies.
The Company closed two distribution  facilities located in California and Canada
which resulted in the elimination of a total of approximately 100 positions. The
restructuring  was  substantially  completed by December  1998.  The Company has
recorded  restructuring  charges of approximately $2.4 million, or 1.0% of sales
for the year ended December 31, 1998.  The  restructuring  charges  included the
non-cash  write-down of $1.3 million relating to property,  plant and equipment,
the accrual of future lease  obligations of $0.5 million and severance and other
costs  of  $0.6  million.   Management  is  currently   evaluating  the  further
consolidation  of its  domestic  distribution  facilities  which  may  result in
additional restructuring charges in subsequent periods.

         Interest expense, net, of $26.4 million for the year ended December 31,
1999  increased by $3.4 million as compared to 1998 mainly due to higher average
borrowings principally as a result of the acquisition of Anagram (see "Liquidity
and Capital Resources").

         Income  taxes  for the  years  ended  December  31,  1999 and 1998 were
provided  for at  consolidated  effective  income tax rates of 40.85% and 41.5%,
respectively. The effective income tax rates exceed the federal statutory income
tax rate primarily due to state income taxes.




                                       16
<PAGE>




YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

 PERCENTAGE OF NET SALES
<TABLE>
<CAPTION>

                                                                              Years Ended December 31,
                                                                              ------------------------
                                                                                1998           1997
                                                                               ------         ------
<S>                                                                             <C>            <C>
Net sales ............................................................          100.0%         100.0%
Cost of sales ........................................................           63.9           65.1
                                                                               ------         ------
     Gross profit ....................................................           36.1           34.9
Operating expenses:
   Selling expenses ..................................................            7.3            6.5
   General and administrative expenses ...............................           10.0            9.9
   Art and development costs .........................................            3.1            2.5
   Restructuring charges .............................................            1.0
   Non-recurring charges in connection with the Merger ...............                          10.5
                                                                               ------         ------
Total operating expenses .............................................           21.4           29.4
                                                                               ------         ------
   Income from operations ............................................           14.7            5.5
Interest expense, net ................................................            9.8            1.9
Other income, net ....................................................                          (0.1)
                                                                               ------         ------
   Income before income taxes and minority interests .................            4.9            3.7
Income tax expense ...................................................            2.0            3.7
Minority interests ...................................................                           0.1
                                                                               ------         ------
   Net income (loss) .................................................            2.9%          (0.1)%
                                                                               ======         ======
</TABLE>


         Net sales for the year ended December 31, 1998 of $235.3 million,  were
$25.4  million or 12.1% higher than for the year ended  December  31, 1997.  The
increase  in net sales in 1998  over 1997  reflects  additional  sales  from the
acquisition  of Anagram as well as  increased  sales to party goods  superstores
which was partially offset by a decline in sales to smaller  independent stores.
The Company's  marketing  strategy of  continually  offering new  products,  new
designs and themes for existing  products  also  contributed  to the increase in
sales.  During the year ended December 31, 1998, the Company added approximately
6,000 SKU's to its product line, including approximately 4,500 SKU's as a result
of the acquisition of Anagram.

         Gross profit for the year ended December 31, 1998 was $84.8 million, or
36.1% of net sales,  as compared to 34.9% for the year ended  December 31, 1997.
The increase in gross profit margin for 1998  principally  resulted from savings
associated with a restructuring of the Company's  distribution  operations begun
in the second quarter of 1998 partially  offset by higher freight costs incurred
in the latter half of 1998.

         Selling expenses for the year ended December 31, 1998 increased by $3.5
million to $17.2 million and, as a percentage  of net sales,  to 7.3% from 6.5%,
principally  due to the addition of a new seasonal  catalogue,  expansion of the
"everyday"  catalogue,  the  inclusion  of the  results of  Anagram,  and higher
advertising costs.

         General and administrative expenses of $23.4 million for the year ended
December  31,  1998  increased  by $2.7  million as  compared  to the year ended
December 31, 1997. The increase results from additional amortization of goodwill
and other  intangible  assets  arising from the September  1998  acquisition  of
Anagram.

         Art and  development  costs of $7.4 million for the year ended December
31, 1998 were $2.1 million higher than the prior year. As a percentage of sales,
art and  development  costs  increased  to 3.1% in 1998 from  2.5% in 1997.  The
increase in costs  reflects  the  Company's  investment  in  additional  art and
product development staff associated with the development of new product lines.

         In the second quarter of 1998, the Company commenced a restructuring of
its distribution  operations to reduce costs and improve operating efficiencies.
The Company closed two distribution




                                       17
<PAGE>




facilities located in California and Canada which resulted in the elimination of
a total of approximately  100 positions.  The  restructuring  was  substantially
completed by December  1998. The Company has recorded  restructuring  charges of
approximately  $2.4 million,  or 1.0% of sales,  for the year ended December 31,
1998. The restructuring  charges include the non-cash write-down of $1.3 million
relating  to  property,  plant  and  equipment,  the  accrual  of  future  lease
obligations  of $0.6  million and  severance  and other  costs of $0.5  million.
Management is currently  evaluating  the further  consolidation  of its domestic
distribution facilities which may result in additional  restructuring charges in
subsequent periods.

         Interest expense, net, of $23.0 million for the year ended December 31,
1998  increased  by $19.1  million  as  compared  to 1997  due to the  Company's
increased  borrowings  in  connection  with the  Merger and the  acquisition  of
Anagram (see  "Liquidity and Capital  Resources"),  offset,  in part, by reduced
levels of working capital.

         Income  taxes  for the  years  ended  December  31,  1998 and 1997 were
provided  for at  consolidated  effective  income  tax rates of 41.5% and 99.9%,
respectively. The effective income tax rates exceed the federal statutory income
tax rate  primarily  due to state income taxes and, for the year ended  December
31, 1997, non-deductible charges related to the Merger.

         Minority  interests  represent  the portion of income of the  Company's
subsidiaries attributable to equity ownership not held by the Company.

LIQUIDITY AND CAPITAL RESOURCES

         In connection with the Company's recapitalization in December 1997, the
Company received approximately $67.5 million from contributed capital (including
contributions  of Company  Common  Stock by certain  employee  stockholders  and
issuances of restricted Common Stock), $117 million from a senior term loan (the
"Term  Loan")  provided  under  a  bank  credit   agreement  (the  "Bank  Credit
Facilities")  and $110 million  from the issuance of 9 7/8% senior  subordinated
notes (the "Notes") (collectively, the "Merger Financings").

         In addition to the Term Loan, the Bank Credit  Facilities,  as amended,
provide for  revolving  loan  borrowings  of up to $50 million  (the  "Revolving
Credit Facility"). The Revolving Credit Facility, expiring on December 31, 2002,
bears  interest,  at the option of the Company,  at the lenders'  customary base
rate  plus  1.25%  per  annum  or at the  lenders'  customary  reserve  adjusted
Eurodollar rate plus 2.25% per annum. Interest on balances outstanding under the
Revolving  Credit  Facility are subject to adjustment in the future based on the
Company's performance.  At December 31, 1999, the Company had borrowing capacity
of approximately $40.5 million under the Revolving Credit Facility.

         The Company financed the September 1998 acquisition of Anagram with $40
million of senior term debt,  approximately $20 million of additional  revolving
credit  borrowings,  cash on hand,  the issuance of 120 shares of the  Company's
Redeemable  Common  Stock  valued at $12.6  million and  warrants to purchase 10
shares of the Company's Common Stock valued at $0.2 million.  In connection with
and upon  consummation of the acquisition,  the Company amended and restated the
Revolving  Credit  Facility to provide for,  among other things,  the additional
senior term debt.

         At  December  31,  1999,  the  Company  had  three  interest  rate swap
contracts  outstanding  with a financial  institution  and Goldman Sachs Capital
Markets,  L.P.  ("GSCM")  covering  $123.3  million  of its  Term  Loan at fixed
effective interest rates ranging from 7.18% to 8.80%.

         Based upon the current level of operations and anticipated  growth, the
Company  anticipates  that its  operating  cash flow,  together  with  available
borrowings  under the Revolving  Credit  Facility,  will be adequate to meet its
anticipated  future  requirements for working capital and operating expenses and
to service its debt  requirements  as they become due.  However,  the  Company's
ability to make scheduled




                                       18
<PAGE>




payments  of  principal  of,  or  to  pay  interest  on,  or  to  refinance  its
indebtedness  and to satisfy its other  obligations  will depend upon its future
performance,  which, to a certain extent,  will be subject to general  economic,
financial, competitive, business and other factors beyond its control.

         The  Merger  Financings  and the  amendments  to the  Company's  credit
agreements may affect the Company's ability to make future capital  expenditures
and  potential  acquisitions.  However,  management  believes that current asset
levels provide adequate capacity to support its operations for at least the next
12  months.  As of  December  31,  1999,  the  Company  did  not  have  material
commitments for capital expenditures.

CASH FLOW DATA - YEAR ENDED  DECEMBER 31, 1999  COMPARED TO YEAR ENDED  DECEMBER
31, 1998

         For the year ended  December 31, 1999,  net cash  provided by operating
activities totaled $19.4 million,  or $3.3 million lower than for the year ended
December 31, 1998. The lower cash flow from operations  reflected an increase in
the  Company's net accounts  receivable  balance as a result of higher sales and
increased  sales with  extended  terms and higher levels of inventory to support
the  introduction of new gift lines and new sales programs,  partially offset by
higher earnings and an increase in trade accounts payable.

         Net cash used in investing  activities  during the year ended  December
31, 1999 consisted of $11.4 million of capital expenditures including an upgrade
of  the  Company's  data   processing   systems  and  investment  in  additional
manufacturing  equipment.  Net cash used in investing activities during the year
ended December 31, 1998 totaled $83.1 million and was comprised of $78.4 million
of cash paid for the  acquisitions  of Anagram and the remaining 25% interest in
the Company's U.K. based subsidiary,  and $7.5 million for capital  expenditures
partially  offset by proceeds  received from the sale of the Company's  Canadian
distribution  facility and other  assets in  connection  with its  restructuring
plan.

         During the year ended  December  31,  1999,  net cash used in financing
activities  of $8.8  million  principally  consisted  of  scheduled  payments of
long-term  obligations  partially offset by the proceeds from short-term working
capital  borrowings.  During the year ended  December 31, 1998, net cash used in
financing  activities of $49.8 million consisted of payments of $93.2 million to
former  shareholders whose investment in Company Common Stock was converted into
the right to receive cash in connection  with the Merger in December of 1997 and
the  scheduled  repayment of debt offset by net  proceeds of $59.1  million from
additional  borrowings in connection  with the  acquisition of Anagram,  and the
issuance of Common Stock to employees.

CASH FLOW DATA - YEAR ENDED  DECEMBER 31, 1998  COMPARED TO YEAR ENDED  DECEMBER
31, 1997

         Net cash provided by operating activities increased by $18.6 million to
$22.8 million  during the year ended  December 31, 1998 from $4.2 million during
the year ended December 31, 1997,  principally as a result of increased earnings
and lower accounts receivable and inventory levels (excluding the effects of the
acquisition of Anagram)  attributable to management's  efforts to reduce working
capital.  The  impact of lower  accounts  receivable  and  inventory  levels was
partially offset by lower accounts payable balances at December 31, 1997.

         Net cash used in investing  activities  during the year ended  December
31, 1998 increased by $73.0 million to $83.1 million due to the  acquisitions of
Anagram and the remaining 25% interest in the Company's U.K.  based  subsidiary,
which were partially offset by lower levels of capital expenditures and proceeds
received from the sale of the Company's Canadian distribution facility and other
assets in connection with its restructuring plan.

         During the year ended  December  31,  1998,  net cash used in financing
activities  of $49.8  million  consisted of payments of $93.2  million to former
shareholders  whose  investment in Company  Common Stock was converted  into the
right to receive cash in connection with the Merger and the




                                       19
<PAGE>




scheduled  repayment  of debt,  offset by net  proceeds  of $59.1  million  from
additional  borrowings in connection  with the  Acquisition  and the issuance of
Redeemable Common Stock to employees as well as net payments received applicable
to notes receivable from officers.  During the year ended December 31, 1997, net
cash provided by financing activities of $116.0 million included net proceeds of
$4.5  million  from the  issuance of Common  Stock to cover the  over-allotments
provided for in the IPO underwriting agreement, a contribution to capital by the
Estate of $7.5 million and proceeds of $61.9 million from the issuance of Common
Stock in connection with the Merger, proceeds of the Merger Financings of $237.1
million and related  payments to repurchase the Company's Common Stock of $142.7
million.  In addition,  during 1997,  the Company repaid  indebtedness  of $51.8
million.

LEGAL PROCEEDINGS

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

RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting Standard No. 133,  "Accounting for Derivative
Instruments and Hedging  Activities"  ("SFAS No. 133").  SFAS No. 133 provides a
comprehensive  and consistent  standard for the  recognition  and measurement of
derivatives and hedging activities. The statement requires all derivatives to be
recognized on the balance sheet at fair value and establishes  standards for the
recognition of changes in such fair value.  SFAS No. 133 is effective for fiscal
years  beginning  after June 15, 2000. The Company expects to adopt SFAS No. 133
effective January 1, 2001.  Because of the Company's limited use of derivatives,
management  does  not  anticipate  the  adoption  of SFAS No.  133  will  have a
significant effect on earnings or the financial position of the Company.

         Other  pronouncements   issued  by  the  FASB  or  other  authoritative
accounting   standards  groups  with  future  effective  dates  are  either  not
applicable or not significant to the financial statements of the Company.

IMPACT OF YEAR 2000

         During 1999, the Company discussed the nature and progress of its plans
to become Year 2000 ready. In the latter half of 1999, the Company completed its
remediation and testing of its computer  systems.  As a result of those planning
and  implementation  efforts,  the Year  2000  issue  did not  pose  significant
operational  problems  for  the  Company's  computer  systems  and  the  Company
experienced no disruptions with its significant suppliers and subcontractors and
believes those systems successfully  responded to the Year 2000 date change. The
Company did not incur  significant  expenses in connection with  remediating its
systems.  The Company is not aware of any material problems  resulting from Year
2000 issues, either with its products, its internal systems, or the products and
services of third  parties.  The Company  will  continue to monitor its critical
computer applications and those of its suppliers and vendors throughout the Year
2000 to ensure that any latent Year 2000  matters  that may arise are  addressed
promptly.

"SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         This report includes "forward-looking statements" within the meaning of
various provisions of the Private Securities  Litigation Reform Act of 1995. All
statements,  other than statements of historical facts,  included in this report
that address  activities,  events or  developments  that the Company  expects or
anticipates  will  or may  occur  in the  future,  future  capital  expenditures
(including the amount and nature




                                       20
<PAGE>




thereof),  business strategy and measures to implement  strategy,  including any
changes to operations, goals, expansion and growth of the Company's business and
operations,  plans,  references  to future  success  and other such  matters are
forward-looking  statements.  These statements are based on certain  assumptions
and analyses made by the Company in light of its  experience  and its perception
of historical  trends,  current  conditions and expected future  developments as
well as other factors it believes are appropriate in the  circumstances.  Actual
results may differ  materially from those discussed.  Whether actual results and
developments  will conform with the Company's  expectations  and  predictions is
subject to a number of risks and  uncertainties,  including,  but not limited to
(1) the  concentration of sales by the Company to party goods  superstores where
the  reduction of purchases  by a small  number of  customers  could  materially
reduce the  Company's  sales and  profitability,  (2) the  concentration  of the
Company's credit risk in party goods superstores, several of which are privately
held and have expanded  rapidly in recent years,  (3) the failure by the Company
to anticipate  changes in tastes and  preferences  of party goods  retailers and
consumers,  (4) the  introduction  by the Company of new product lines,  (5) the
introduction of new products by the Company's competitors,  (6) the inability of
the Company to increase prices to recover fully future increases in raw material
prices, especially increases in paper prices, (7) the loss of key employees, (8)
changes  in  general  business  conditions,  (9) other  factors  which  might be
described from time to time in the Company's  filings with the  Commission,  and
(10) other  factors  which are beyond the control of the Company.  Consequently,
all of the forward-looking statements made in this report are qualified by these
cautionary statements, and the actual results or developments anticipated by the
Company may not be realized or, even if substantially realized, may not have the
expected  consequences  to  or  effects  on  the  Company  or  its  business  or
operations.  Although the Company believes that it has the product offerings and
resources  needed for continued  growth in revenues and margins,  future revenue
and margin trends cannot be reliably predicted. Changes in such trends may cause
the Company to adjust its operations in the future. Because of the foregoing and
other  factors,  recent trends should not be considered  reliable  indicators of
future  financial  results.  In  addition,  the highly  leveraged  nature of the
Company  may impair its  ability to finance  its future  operations  and capital
needs  and  its  flexibility  to  respond  to  changing  business  and  economic
conditions and business opportunities.

QUARTERLY RESULTS

         As a  result  of the  seasonal  nature  of  certain  of  the  Company's
products, the quarterly results of operations may not be indicative of those for
a full year.  Third quarter sales are generally the highest of the year due to a
combination  of increased  sales to consumers of the Company's  products  during
summer months as well as initial  shipments of seasonal  holiday  merchandise as
retailers build inventory.  Conversely, fourth quarter sales are generally lower
as  retailers  sell  through  inventories  purchased  during the third  quarter.
However,  fourth  quarter  sales in 1999 were higher than prior  quarters and is
primarily  attributable  to  stronger  than  usual  sales  as a  result  of  the
celebration of the millennium. The overall growth rate of the Company's sales in
recent  years  has  offset,  in  part,  this  sales   variability.   Promotional
activities,  including  special  dating  terms,  particularly  with  respect  to
Halloween and Christmas products sold in the third quarter,  result in generally
lower  profitability in the fourth quarter,  due to higher accounts  receivables
balances and associated  higher  interest costs to support these  balances.  The
following table sets forth the historical net sales,  gross profit,  income from
operations and net income (loss) of the Company for 1999 and 1998 by quarter.




                                       21
<PAGE>



<TABLE>
<CAPTION>

                                                              For the Three Months Ended
                                              -----------------------------------------------------------
                                              March 31       June 30       September 30       December 31
                                              --------       -------       ------------       -----------
1999
----

<S>                                           <C>             <C>             <C>                <C>
Net sales..............................       $76,440         $73,203         $74,853            $81,616
Gross profit...........................        28,320          26,508          27,367             30,331
Income from operations (a).............         6,344           9,866          11,801             15,769(b)
Net (loss) income (a) .................           (85)          1,929           3,090              5,273(b)

1998
----

Net sales..............................       $55,561         $48,686         $62,252           $ 68,795
Gross profit...........................        19,572          17,663          22,704             24,899
Income from operations.................         9,235           5,454(c)       11,250              8,509
Net income.............................         2,271              30(c)        3,425                983
</TABLE>


      (a)   During the first quarter of 1999,  the Company's  largest  customer,
            Party  City  announced  that  it  would  be in  default  of  certain
            covenants of its credit facility and as a result Amscan maintained a
            related  allowance for doubtful  accounts and sales allowances which
            approximated one half of the account and note receivable  balance of
            $15.8 million due from Party City, including $6.0 million charged to
            the  provision  for doubtful  accounts  during the first  quarter of
            1999.  Reflecting  Party City's improved  financial  condition,  the
            provision was decreased by $1.9 million during the third quarter and
            the remainder of the  provision of $4.1 million was reversed  during
            the fourth quarter of 1999.

      (b)   During  the   fourth   quarter  of  1999,   the   Company   recorded
            non-recurring  charges  of $1.0  million  in  association  with  the
            proposed   construction  of  a  new   distribution   facility.   The
            non-recurring  charges represented building costs written-off due to
            the relocation of the proposed site.

      (c)   Included  in  second  quarter  results  in  1998  are  non-recurring
            restructuring  charges of $2.4 million  which related to the closure
            of two distribution facilities located in California and Canada. The
            restructuring  charges  consist of the non-cash  write-down  of $1.3
            million  relating to property,  plant and equipment,  the accrual of
            future lease  obligations  of $0.5 million,  and severance and other
            costs of $0.6 million.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company's  earnings are affected by changes in interest  rates as a
result of its  issuance  of variable  rate  indebtedness.  However,  the Company
utilizes interest rate swap agreements to manage the market risk associated with
fluctuations  in interest  rates.  If market  interest  rates for the  Company's
variable rate indebtedness averaged 2% more than the interest rate actually paid
for the year ended December 31, 1999 and 1998, the Company's  interest  expense,
after  considering the effects of its interest rate swap agreements,  would have
increased,  and income before income taxes would have decreased, by $1.4 million
and $1.3 million,  respectively.  This amount is determined by  considering  the
impact of the  hypothetical  interest  rates on the  Company's  borrowing  cost,
short-term investment balances, and interest rate swap agreements. This analysis
does not consider the effects of the reduced level of overall economic  activity
that could exist in such an  environment.  Further,  in the event of a change of
such  magnitude,  management  would likely take actions to further  mitigate its
exposure to the change.  However, due to the uncertainty of the specific actions
that would be taken and their possible effects, the sensitivity analysis assumes
no changes in the Company's financial structure.

         The Company's  earnings are also affected by  fluctuations in the value
of the U.S. dollar as compared to foreign currencies,  predominately in European
countries, as a result of the sales of its



                                       22
<PAGE>




products  in  foreign  markets.  Foreign  currency  forward  contracts  are used
periodically  to hedge  against the  earnings  effects of such  fluctuations.  A
uniform 10%  strengthening in the value of the dollar relative to the currencies
in which the Company's  foreign sales are  denominated  would have resulted in a
decrease in gross  profit of $1.6  million and $1.1  million for the years ended
December 31, 1999 and 1998,  respectively.  This  calculation  assumes that each
exchange rate would change in the same direction relative to the U.S. dollar. In
addition to the direct effects of changes in exchange rates,  which could change
the U.S.  dollar value of the resulting  sales,  changes in exchange  rates also
affect the volume of sales or the foreign  currency sales price as  competitors'
products become more or less attractive.  The Company's  sensitivity analysis of
the effects of changes in foreign  currency  exchange rates does not factor in a
potential change in sales levels or local currency prices.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See the consolidated financial statements and supplementary data listed
in the  accompanying  Index to  Financial  Statements  and  Schedule on page F-1
herein.

ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

         Not applicable.


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Set forth below are the names,  ages and positions  with the Company of
the persons who are currently serving as directors and executive officers of the
Company.

         Name                        Age   Position
         ----                        ---   --------

         Terence M. O'Toole          41    Director, Chairman of the Board
         Sanjeev K. Mehra            41    Director
         Joseph P. DiSabato          33    Director
         Gerald C. Rittenberg        47    Chief Executive Officer and Director
         James M. Harrison           48    President, Chief Financial Officer,
                                             Treasurer and Director
         Garry Kieves                51    Senior Vice President




                                       23
<PAGE>





         Terence M.  O'Toole  is a Managing  Director  of  Goldman,  Sachs & Co.
("Goldman  Sachs") in the Principal  Investment Area. He joined Goldman Sachs in
1983. He is a member of Goldman  Sachs'  Principal  Investment  Area  Investment
Committee and its Stone Street Fund Investment Committee.  Mr. O'Toole serves on
the Boards of Directors  of AMF Bowling,  Inc.,  Western  Wireless  Corporation,
VoiceStream  Wireless Corporation and several privately held companies on behalf
of Goldman Sachs. He holds a B.S. degree from Villanova University and an M.B.A.
from the Stanford Graduate School of Business.

         Sanjeev K. Mehra is a Managing Director of Goldman,  Sachs & Co. in the
Principal  Investment  Area. He joined  Goldman Sachs in 1986. He is a member of
Goldman Sachs'  Principal  Investment  Area  Investment  Committee and its Stone
Street Fund Investment Committee. Mr. Mehra serves on the Boards of Directors of
Promedco  Management  Company,  Madison River  Telephone  Company,  L.L.C.,  and
several  privately held  companies on behalf of Goldman  Sachs.  He holds an A.B
from  Harvard  University  and an M.B.A.  from the  Harvard  Graduate  School of
Business Administration.

         Joseph P. DiSabato is a Vice  President of Goldman,  Sachs & Co. in the
Principal  Investment  Area.  He  joined  Goldman  Sachs  in 1988,  worked  as a
Financial Analyst until 1991, and returned in 1994 as an Associate. Mr. DiSabato
serves on the Board of Directors of Madison River Telephone Company, L.L.C., and
several  privately held  companies on behalf of Goldman  Sachs.  He holds a B.S.
from the  Massachusetts  Institute of Technology and an M.B.A. from the Anderson
Graduate School of Management.

         Gerald C. Rittenberg  became Chief Executive  Officer upon consummation
of the Merger. Prior to that time, Mr. Rittenberg served as the President of the
predecessor  to the  Company,  Amscan  Inc.,  since  April  1996,  and served as
President of the Company from the time of its  formation in October  1996.  From
May 1997 until December 1997, Mr.  Rittenberg  served as Acting  Chairman of the
Board.  From 1991 to April 1996,  he was  Executive  Vice  President  -- Product
Development of Amscan Inc.

         James  M.  Harrison  became  President,  Chief  Financial  Officer  and
Treasurer upon  consummation  of the Merger.  Prior to that time,  Mr.  Harrison
served as the Chief Financial Officer of the predecessor to the Company,  Amscan
Inc.,  since August 1996 and served as Chief Financial  Officer and Secretary of
the  Company  since  February  1997.  From 1993 to 1995,  Mr.  Harrison  was the
Executive Vice President,  Chief Operating Officer,  Secretary,  Treasurer and a
member of the Board of Directors of The C.R. Gibson Company,  a manufacturer and
distributor of paper gift products.

         Garry Kieves became  Senior Vice  President of the Company in September
1998 when the Company  acquired  Anagram.  He has served as President of Anagram
International, Inc. for more than five years.

ITEM 11.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         The following table sets forth information  concerning the compensation
earned for the past three  years for the  Company's  former  and  current  Chief
Executive  Officer  and all other  former and current  executive  officer of the
Company  as of  December  31,  1999  whose  aggregate  salary and bonus for 1999
exceeded  $100,000.  The amounts shown include  compensation for services in all
capacities that were provided to the Company or its subsidiaries.  Amounts shown
were  paid by the  Company's  principal  subsidiary,  Amscan  Inc.,  except  for
payments to or on behalf of Garry Kieves,  which were paid by Anagram.  Prior to
the Merger,  the Company granted stock options on shares of Company Common Stock
("Company  Stock  Options")  pursuant  to the  1996  Stock  Option  Plan for Key
Employees (the "Prior Stock Plan").  Following the Merger, Company stock options
("New Options")




                                       24
<PAGE>




were granted pursuant to a new stock incentive plan and related option agreement
(together,  the "Option  Documents")  adopted by the Company. At the time of the
Merger,  certain  employees  converted  Company  Stock  Options  into options to
purchase shares of Common Stock ("Rollover Options").

<TABLE>
<CAPTION>

                                                                                         Long Term
                                                                                       Compensation
                                                                                  No. of Securities Under-      All Other
Name and Principal Position       Year        Salary        Bonus (a)     Other    lying Options Granted     Compensation (b)
---------------------------       ----        ------        ---------     -----    ---------------------     ----------------

<S>                               <C>        <C>            <C>        <C>                <C>                    <C>
John A. Svenningsen               1997       $126,953                                                            $  4,219
  Former Chief Executive
  Officer and Chairman

Gerald C. Rittenberg              1999       $295,000       $450,000                                               $7,255
  Chief Executive Officer         1998        295,000        395,000                                                6,532
                                  1997        220,000                                     16.648(c)                 3,763

James M. Harrison                 1999       $275,000       $400,000                                               $5,399
  President, Chief Financial      1998        275,000        350,000                                                6,286
  Officer and Treasurer           1997        215,000        255,000   $176,041(d)        16.268(e)                 3,763

Garry Kieves                      1999       $240,000                                                              $5,289
  Senior Vice President           1998         72,900(f)                                   6.648(g)                   929

William S. Wilkey                 1999       $172,604                   $55,125(h)                                 $7,118
  Former Senior Vice President    1998        210,000        $50,000                                                6,532
  - Sales and Marketing           1997        200,000        210,000    352,082(i)        16.441(j)                 3,763
</TABLE>

      (a)   Represents  amounts  earned  with  respect  to the years  indicated,
            whether paid or accrued.

      (b)   Represents  contributions  by the Company under the Profit Sharing &
            Savings Plan, as well as insurance premiums paid by the Company with
            respect  to  term  life  insurance  for  the  benefit  of the  named
            executive officer.

      (c)   Represents  the New Options  granted to Mr.  Rittenberg  immediately
            following the Merger.

      (d)   Represents  a cash  bonus  paid to Mr.  Harrison  at the time of the
            Merger in connection  with the conversion by Mr.  Harrison of 50,000
            Company  Stock Options into the Rollover  Options to purchase  2.394
            shares of Company Common Stock.

      (e)   Represents the New Options and the Rollover  Options  granted to Mr.
            Harrison immediately following the Merger.

      (f)   Mr.  Kieves  became an  employee  and Senior Vice  President  of the
            Company on September 17, 1998.

      (g)   Represents the New Options  granted to Mr. Kieves in connection with
            the  acquisition  of Anagram in 1998.  In addition,  10 Common Stock
            warrants  valued at $225,000 were issued to Mr. Kieves in connection
            with the Anagram acquisition.

      (h)   Effective  November 8, 1999,  Mr. Wilkey  terminated  his employment
            agreement  with  Amscan  and began  serving as a  consultant  to the
            Company.  Amounts  represent  payments  received  under a consulting
            agreement.




                                       25
<PAGE>





      (i)   Represents a cash bonus paid to Mr. Wilkey at the time of the Merger
            in connection  with the conversion by Mr. Wilkey of 100,000  Company
            Stock Options into the Rollover  Options to purchase 4.787 shares of
            Company Common Stock.

      (j)   Represents the New Options and the Rollover  Options  granted to Mr.
            Wilkey immediately following the Merger.



OPTION GRANTS TABLE

         No options  under the Options  Documents  were issued to directors  and
executive officers of the Company during 1999.

FISCAL 1999 YEAR END OPTION VALUES

<TABLE>
<CAPTION>

                                      Number of Securities                     Value of Unexercised In the Money
                                 Underlying Unexercised Options                   Options at Fiscal Year End
                                 ------------------------------                   --------------------------

Name                          Exercisable             Unexercisable           Exercisable           Unexercisable
----                          -----------             -------------           -----------           -------------

<S>                                <C>                   <C>                   <C>                     <C>
Gerald C. Rittenberg               6.659                 9.989                 $332,960                $499,440

James M. Harrison                  6.508                 9.760                  344,948                 517,422

Garry Kieves                       1.3296                5.3184                       -                       -

William S. Wilkey                  6.577                 9.864                  367,987                 551,981
</TABLE>


         The  valuation  of  unexercised  in the  money  options  is  based on a
valuation  of Company  Common  Stock of $125,000  per share.  No New or Rollover
Options were exercised in the most recent fiscal year.

         For a further  description  of the New  Options  and  Rollover  Options
granted to the executives named in the Summary  Compensation Table in connection
with the Merger, see "Employment Arrangements" below.

EMPLOYMENT ARRANGEMENTS

         Employment  Agreement with Gerald C.  Rittenberg.  Under the Employment
Agreement  between the Company and Gerald C. Rittenberg,  dated as of August 10,
1997 (the "Rittenberg  Employment  Agreement"),  Mr.  Rittenberg serves as Chief
Executive  Officer of the Company for a three-year period commencing at the time
of the Merger (the "Initial  Term"),  which term will be extended  automatically
for successive  additional one-year periods (each an "Additional Term"),  unless
either the Company gives Mr.  Rittenberg,  or Mr.  Rittenberg gives the Company,
written  notice  of the  intention  not to extend  the term no less than  twelve
months prior to the end of the Initial  Term or  Additional  Term,  whichever is
then in effect.  Mr.  Rittenberg  will receive during the Initial Term an annual
base salary of $295,000  which will be increased by 5% at the  beginning of each
Additional Term. During Mr.  Rittenberg's  Initial Term and any Additional Term,
Mr.  Rittenberg  will be eligible  for an annual  bonus for each  calendar  year
comprised  of (i) a  non-discretionary  bonus  equal to 50% of his  annual  base
salary if certain  operational and financial targets  determined by the Board of
Directors  in  consultation   with  Mr.  Rittenberg  are  attained  and  (ii)  a
discretionary  bonus  awarded in the sole  discretion of the Board of Directors.
The Rittenberg Employment Agreement also provides for other




                                       26
<PAGE>




customary  benefits  including  incentive,  savings and retirement  plans,  paid
vacation, health care and life insurance plans, and expense reimbursement

         Under  the  Rittenberg  Employment   Agreement,   if  Mr.  Rittenberg's
employment  were to be terminated by the Company other than for cause,  death or
disability, the Company would be obligated to pay Mr. Rittenberg a lump sum cash
payment in an amount equal to the sum of (1) accrued unpaid  salary,  earned but
unpaid  bonus for any prior  year,  any  deferred  compensation  and accrued but
unpaid vacation pay (collectively, "Accrued Obligations") plus (2) severance pay
equal to his annual base salary,  provided,  however,  that in connection with a
termination  by the  Company  other  than for cause  following  a Sale Event (as
defined below), such severance pay will be equal to Mr. Rittenberg's annual base
salary  multiplied by the number of years the Company elects as the  Restriction
Period (as defined  below) in connection  with the  non-competition  provisions.
Upon termination of Mr. Rittenberg's employment by the Company for cause, death,
disability or if he terminates his employment,  Mr.  Rittenberg will be entitled
to  his  unpaid  Accrued  Obligations.  Additionally,  upon  termination  of Mr.
Rittenberg's  employment  during the Initial Term or any Additional  Term (1) by
the Company other than for cause or (2) by reason of his death or disability, or
if the Initial  Term or any  Additional  Term is not  renewed at its  expiration
(other than for cause), the Rittenberg Employment Agreement provides for payment
of a prorated portion of the bonus to which Mr.  Rittenberg would otherwise have
been entitled.

         The  Rittenberg  Employment  Agreement  also  provides  that during his
Initial Term, any Additional Term and during the three-year period following any
termination of his employment (the "Restriction  Period"),  Mr. Rittenberg shall
not  participate in or permit his name to be used or become  associated with any
person or entity  that is or intends to be engaged in any  business  which is in
competition  with the business of the  Company,  or any of its  subsidiaries  or
controlled  affiliates,  in any  country  in  which  the  Company  or any of its
subsidiaries or controlled  affiliates  operate,  compete or are engaged in such
business or at such time intend to so operate, compete or become engaged in such
business  (a  "Competitor"),   provided,   however,  that  if  Mr.  Rittenberg's
employment is  terminated  by the Company other than for cause  following a Sale
Event, the Restriction Period will be instead a one, two or three-year period at
the  election  of  the  Company.  For  purposes  of  the  Rittenberg  Employment
Agreement,  "Sale  Event" means either (1) the  acquisition  by any  individual,
entity or group  (within  the  meaning of Section  13(d)(3)  or  14(d)(2) of the
Securities  Exchange  Act of 1934 (the  "Exchange  Act")) that is a  Competitor,
other than GS Capital  Partners II, L.P. and certain  other  private  investment
funds managed by Goldman,  Sach & Co.  (collectively,  "GSCP"), of a majority of
the outstanding voting stock of the Company or (2) the sale or other disposition
(other than by way of merger or  consolidation)  of all or substantially  all of
the assets of the Company and its subsidiaries taken as a whole to any person or
group of persons that is a Competitor,  provided,  however, that an underwritten
initial  public  offering  of shares  of  Company  Common  Stock  pursuant  to a
registration  statement under the Securities Act of 1933 (the "Securities  Act")
will not  constitute a Sale Event.  The  Rittenberg  Employment  Agreement  also
provides  for  certain  other  restrictions  during  the  Restriction  Period in
connection  with (a) the  solicitation  of persons  or  entities  with  business
relationships  with the Company and (b)  inducing any employee of the Company to
terminate their employment or offering  employment to such persons, in each case
subject to certain conditions.

         Pursuant  to  the  Rittenberg  Employment  Agreement,   Mr.  Rittenberg
contributed to Confetti Acquisition,  Inc. ("Confetti") immediately prior to the
Merger,  272,728  shares of Company  Common Stock in exchange for 60.0 shares of
Common Stock of Confetti  ("Confetti  Common Stock"),  having an aggregate value
equal to approximately $4.5 million,  which shares of Confetti Common Stock were
valued at the purchase price for which GSCP purchased  common shares of Confetti
immediately prior to the Merger (the "New Purchase  Price").  At the time of the
Merger,  such shares of Confetti Common Stock were converted into 60.0 shares of
the Company's Redeemable Common Stock as the surviving company in the Merger (as
converted, the "Rollover Stock").

         Also pursuant to the  Rittenberg  Employment  Agreement,  following the
Merger,  Mr.  Rittenberg  was granted New Options to purchase  16.648  shares of
Company Common Stock at $75,000 per share. Such New Options vest in equal annual
installments over a five-year period and are subject to forfeiture




                                       27
<PAGE>




upon  termination  of Mr.  Rittenberg's  employment  if not vested and exercised
within  certain time periods  specified in the Option  Documents.  Unless sooner
exercised or forfeited as provided in the Option Documents, the New Options will
expire on the tenth anniversary of the Merger.

         Mr. Rittenberg is not permitted to sell,  assign,  transfer,  pledge or
otherwise  encumber  any New  Options,  shares  of  Rollover  Stock or shares of
Redeemable  Common Stock  acquired upon  exercise of the New Options,  except as
provided in the Stockholders'  Agreement dated as of December 19, 1997 among the
Company,  GSCP,  the Estate of John A.  Svenningsen  (the  "Estate") and certain
employees  of the Company and the Option  Documents,  and the shares of Rollover
Stock and shares of  Redeemable  Common Stock  acquired upon exercise of the New
Options are subject to the terms of the Stockholders' Agreement.

         At the time of the Merger, the Rittenberg Employment Agreement replaced
and superseded Mr. Rittenberg's former employment agreement with the Company.

         Employment  Agreement  with  James M.  Harrison.  Under the  Employment
Agreement,  dated  August 10,  1997,  by and  between  the  Company and James M.
Harrison (the "Harrison Employment Agreement"), Mr. Harrison serves as President
of the  Company  for a  three-year  Initial  Term at an  annual  base  salary of
$275,000.  The Harrison Employment  Agreement contains provisions for Additional
Terms,  salary  increases  during any  Additional  Term,  non-discretionary  and
discretionary bonus payments,  severance,  other benefits,  definitions of cause
and disability,  and provisions for non-competition and non-solicitation similar
to those in the  Rittenberg  Employment  Agreement,  with the  exception  of the
provision for an election by the Company of a one, two or three-year Restriction
Period  following a Sale Event;  under the Harrison  Employment  Agreement,  the
Restriction  Period is fixed at three  years and  severance  pay is fixed at one
year's  annual base salary.  In  addition,  the  Harrison  Employment  Agreement
provided that Mr.  Harrison's  bonus for the 1997 calendar year was equal to the
bonus that would have been payable to him in accordance  with the relevant terms
of his then current employment  agreement with the Company,  without taking into
account any  incremental  financing or  transaction  costs  attributable  to the
Merger  as  determined  in good  faith by the  Board.  The  Harrison  Employment
Agreement also provided that Mr. Harrison receive a bonus payment of $105,000 on
March 15, 1998, in addition to any other bonus payable.

         Pursuant to the Harrison  Employment  Agreement,  following the Merger,
Mr. Harrison was granted New Options to purchase 13.874 shares of Company Common
Stock at $75,000 per share.  Such New Options were  granted on terms  similar to
those granted pursuant to the Rittenberg Employment Agreement.

         Additionally,  under the Harrison  Employment  Agreement,  Mr. Harrison
converted,  as of the time of the Merger,  his Company Stock Options to purchase
50,000 shares of Company  Common Stock into Rollover  Options to purchase  2.394
shares of Company Common Stock.  The Rollover Options have an exercise price per
share (the  "Rollover  Exercise  Price")  equal to $54,545.  Mr.  Harrison  also
received at the time of the Merger a cash bonus equal to $176,041 in  connection
therewith.  The Rollover  Options were granted  pursuant to the Option Documents
and on the same terms as the New Options other than the exercise price.

         Pursuant to the Harrison Employment Agreement, Mr. Harrison was granted
immediately  prior to the  Merger,  15.0 shares of  Confetti  Common  Stock (the
"Restricted Stock"), having an aggregate value of $1,125,000,  based on the then
new purchase  price,  which shares were converted in the Merger into 15.0 shares
of Company Common Stock.  During the Stock Restricted Period (as defined below),
the  Restricted  Stock  will  be  forfeitable  and may  not be  sold,  assigned,
transferred,  pledged or otherwise  encumbered by Mr. Harrison.  For purposes of
the Harrison  Employment  Agreement,  the "Stock  Restricted  Period"  means the
period  beginning on the date of grant of the Restricted Stock and ending on the
earliest  of (i) the  occurrence  of an IPO (as  such  term  is  defined  in the
Stockholders'  Agreement);  (ii)  immediately  prior  to the  consummation  of a
transaction  or  series of  transactions,  approved  by the Board of  Directors,
pursuant  to which a person,  entity or group  (within  the  meaning  of Section
13(d)(3)




                                       28
<PAGE>




or  14(d)(2)  of the  Exchange  Act,  other  than  Goldman  Sachs  or any of its
affiliates,  acquires a majority of the outstanding voting stock of the Company;
and (iii) the  termination  of Mr.  Harrison's  employment  with the Company (1)
because of his death,  (2) by the Company  without  cause,  (3) by Mr.  Harrison
because of the Company's  material breach of its obligations  under the Harrison
Employment  Agreement,  (4) by Mr. Harrison if the Company imposes on him duties
or work conditions  materially burdensome to him which are inconsistent with his
prior duties and work  conditions or (5) because of Mr.  Harrison's  disability;
provided, however, that the Stock Restricted Period ended with respect to 25% of
the  shares of  Restricted  Stock on  January 1, 1998 and as to 8.33% on each of
January 1, 1999 and 2000. With respect to the remaining  Restricted  Stock,  the
Stock Restriction  Period terminates in equal  installments on January 1 of each
of the years 2001 through 2007. Pursuant to the Harrison  Employment  Agreement,
upon the  voluntary or  involuntary  termination  of Mr.  Harrison's  employment
during the Stock Restricted  Period for any reason other than a reason listed in
clause (iii) of the preceding  sentence,  all shares of  Restricted  Stock (with
respect  to which  the  Stock  Restricted  Period  has not then  ended)  will be
forfeited and returned to the Company without payment.

         Mr.  Harrison is not  permitted to sell,  assign,  transfer,  pledge or
otherwise encumber any New Options, Rollover Options, shares of Restricted Stock
or shares of Company  Common Stock  acquired upon exercise of the New Options or
Rollover Options (in either case,  "Option  Shares"),  except as provided in the
Stockholders'  Agreement and the Option Documents,  and the shares of Restricted
Stock and  Option  Shares  will be  subject  to the  terms of the  Stockholders'
Agreement.

         At the time of the Merger, the Harrison  Employment  Agreement replaced
and  superseded Mr.  Harrison's  former  employment  agreement with the Company,
dated as of February 1, 1997 (the "Prior  Harrison  Employment  Agreement").  At
that time, in consideration and in full satisfaction, and in lieu of the payment
of any Bonus  (other  than as set forth  above) or Sale Bonus (as such terms are
defined in the Prior  Harrison  Employment  Agreement),  the Company paid to Mr.
Harrison,   immediately  after  the  Merger,  $270,000  in  cash.  The  Harrison
Employment Agreement also provides that none of the Merger or other transactions
and  arrangements  contemplated  by  the  merger  agreement,  the  Stockholders'
Agreement,  the voting agreement and the Harrison Employment  Agreement would be
or result  in or give  rise to any  change of  control  or  potential  change of
control under or constitute good reason for Mr.  Harrison  terminating the Prior
Harrison Employment Agreement.

         Agreement with William S. Wilkey.  Effective  November 8, 1999, William
S. Wilkey terminated his employment  agreement with the Company dated October 4,
1996 and began serving as a consultant  to the Company under an agreement  dated
November  8, 1999 and  expiring  September  30,  2002.  Mr.  Wilkey will be paid
$220,500 annually for services rendered to the Company under this agreement.

         Pursuant to a Stock and Option Agreement,  dated as of August 10, 1997,
by and between the Company and William S. Wilkey (the "Wilkey  Agreement"),  Mr.
Wilkey contributed to the Company  immediately after the Merger $500,000 in cash
in exchange for 6.67 shares of Company  Common Stock ("New Stock") valued at the
New Cost Per Share.  Mr.  Wilkey  borrowed  the funds for such  payment from the
Company.  Such  borrowing is evidenced by a personal full recourse note maturing
on March 15, 2009, as amended,  accruing interest at 6.65%, compounded annually,
and  payable in two annual  installments  of  principal  and  interest  equaling
one-quarter of the bonuses Mr. Wilkey received from the Company corresponding to
the years 1998 and 1999,  with the  remaining  portion  of the note and  accrued
interest payable at maturity. As of the date hereof, the unpaid principal amount
of this note is  $568,711.  At the time of the Merger,  Mr.  Wilkey also entered
into a related stock pledge agreement with the Company.

         Also pursuant to the Wilkey Agreement, following the Merger, Mr. Wilkey
was granted New Options to purchase  11.654  shares of Company  Common  Stock at
$75,000  per share.  Such New  Options  were  granted on terms  similar to those
granted pursuant to the Rittenberg Employment Agreement.  Such options expire on
December 17, 2007.




                                       29
<PAGE>




         Additionally,  Mr. Wilkey converted,  as of the time of the Merger, his
Company Stock Options to purchase  100,000  shares of Company  Common Stock into
Rollover  Options to purchase 4.787 shares of Company Common Stock. The Rollover
Options  have a Rollover  Exercise  Price  equal to  $54,545.  Mr.  Wilkey  also
received at the time of the Merger a cash bonus equal to $352,082 in  connection
therewith.  The Rollover  Options were granted  pursuant to the Option Documents
and on the same terms as the New Options.  Such  options  expire on December 17,
2007.

         Mr. Wilkey will not be permitted to sell, assign,  transfer,  pledge or
otherwise  encumber any New Options,  Rollover  Options,  shares of New Stock or
Option Shares, except as provided in the Stockholders'  Agreement and the Option
Documents,  and the  shares of New Stock and Option  Shares  are  subject to the
terms of the Stockholders' Agreement.

         Employment  Agreement with Gary Kieves.  Under the Employment Agreement
dated  August 6, 1998,  by and between the Company and Gary Kieves (the  "Kieves
Employment  Agreement"),  Mr. Kieves is employed as Senior Vice President of the
Company and  President  of Anagram for a period of three years at an annual base
salary of up to $250,000.  The Kieves Employment  Agreement contains  provisions
for  Additional   Terms,   salary   increases   during  any  Additional   Terms,
discretionary bonus payments,  severance and other benefits,  and definitions of
disability.  The Kieves Employment Agreement also provides that upon termination
of  employment  he may not,  for a period of three  years,  be  employed  by, or
associated in any manner with,  any business  which is in  competition  with the
Company.  The  Employment  Agreement  may be  terminated by the Company upon the
death or permanent disability of Mr. Kieves, or for "cause" or without "cause."

         Options were granted to Mr.  Kieves on terms  similar to those  granted
pursuant  to  the  Rittenberg  Employment  Agreement.  Mr.  Kieves  will  not be
permitted  to sell,  assign,  transfer,  pledge or  otherwise  encumber  any New
Options,  shares of Common  Stock,  Redeemable  Common  Stock or Option  Shares,
except as provided in the Stockholders' Agreement and the Option Documents,  and
the  shares of Common  Stock and Option  Shares are  subject to the terms of the
Stockholders' Agreement.

AMSCAN HOLDINGS, INC. 1997 STOCK INCENTIVE PLAN

         Following  consummation  of the Merger,  the Company adopted the Amscan
Holdings,  Inc. 1997 Stock  Incentive  Plan (the "Stock  Incentive  Plan") under
which the  Company may grant  incentive  awards in the form of shares of Company
Common Stock ("Restricted Stock Awards"),  options to purchase shares of Company
Common Stock  ("Company Stock  Options") and stock  appreciation  rights ("Stock
Appreciation Rights") to certain directors,  officers, employees and consultants
("Participants")  of the Company and its affiliates.  The total number of shares
of  Company  Common  Stock  reserved  and  available  for grant  under the Stock
Incentive  Plan is 135. A committee of the  Company's  board of  directors  (the
"Committee"),  or the board itself in the absence of a Committee,  is authorized
to make grants and  various  other  decisions  under the Stock  Incentive  Plan.
Unless otherwise  determined by the Committee,  any Participant granted an award
under the Stock Incentive Plan must become a party to, and agree to be bound by,
the Stockholders' Agreement.

         Company Stock Option awards under the Stock  Incentive Plan may include
incentive stock options,  nonqualified  stock options,  or both types of Company
Stock Options, in each case with or without Stock Appreciation  Rights.  Company
Stock Options are nontransferable  (except under certain limited  circumstances)
and,  unless  otherwise  determined by the Committee,  have a term of ten years.
Upon a Participant's death or when the Participant's employment with the Company
or the applicable  affiliate of the Company is terminated  for any reason,  such
Participant's  previously  unvested  Company Stock Options are forfeited and the
Participant  or his or her legal  representative  may,  within  three months (if
termination  of  employment  is for any reason other than death) or one year (in
the case of the  Participant's  death),  exercise any previously  vested Company
Stock Options.  Stock Appreciation Rights may be granted in conjunction with all
or part of any Company  Stock  Option  award,  and are  exercisable,  subject to
certain limitations, only in connection with the exercise of the related Company
Stock  Option.  Upon  termination  or exercise of a Company  Stock  Option,  any
related Stock




                                       30
<PAGE>




Appreciation Rights terminate and are no longer exercisable.  Stock Appreciation
Rights are transferable only with the related Company Stock Options.

         Unless  otherwise  provided  in the  related  award  agreement  or,  if
applicable, the Stockholders' Agreement,  immediately prior to certain change of
control  transactions  described in the Stock  Incentive  Plan, all  outstanding
Company Stock  Options and Stock  Appreciation  Rights will,  subject to certain
limitations,  become  fully  exercisable  and  vested and any  restrictions  and
deferral limitations applicable to any Restricted Stock Awards will lapse.

         The Stock  Incentive  Plan will terminate ten years after its effective
date;  however,  awards  outstanding  as of such  date will not be  affected  or
impaired by such termination. The Company's board of directors and the Committee
has authority to amend the Stock  Incentive Plan and awards granted  thereunder,
subject to the terms of the Stock Incentive Plan.

COMPENSATION OF DIRECTORS

         The Company  currently does not compensate its directors other than for
expense reimbursement.

STOCK PERFORMANCE GRAPH

         The Company  Common Stock has not traded  publicly  since  December 19,
1997. For this reason a graph indicating the relative performance of the Company
Common Stock price to other  standard  measures has not been  included  since it
would provide no meaningful information.

COMPENSATION COMMITTEE POLICIES

         During 1999,  with the exception of consulting  fees paid to William S.
Wilkey,  compensation of executive officers of the Company was paid according to
the terms of existing employment agreements and,  accordingly,  the Compensation
Committee  did not make any decisions in 1999 in  connection  with  compensation
paid to the Chief Executive Officer and other executive  officers of the Company
named in the Summary  Compensation Table. The consulting fees paid to William S.
Wilkey  were  based  on the  terms of a  consulting  agreement  negotiated  upon
termination of his employment agreement with the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         To the knowledge of the Company,  no relationship of the type described
in Item  402(j)(3)  of  Regulation  S-K existed  during 1999 with respect to the
Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Because the Company Common Stock is not  registered  under the Exchange
Act, none of the Company's  directors,  officers or stockholders is obligated to
file reports of beneficial ownership of Company Common Stock pursuant to Section
16 of the Exchange Act.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information concerning ownership
of shares of Company  Common  Stock by: (i) persons who are known by the Company
to own  beneficially  more than 5% of the  outstanding  shares of Company Common
Stock;  (ii) each  director of the  Company;  (iii) each  executive  officer and
former executive officer of the Company named in the Summary Compensation Table;
and (iv) all directors,  executive  officers and former executive officer of the
Company named in the Summary Compensation Table as a group.




                                       31
<PAGE>




<TABLE>
<CAPTION>

                                                    Shares of Company           Percentage
                                                       Common Stock              of Class
Name of Beneficial Owner                            Beneficially Owned        Outstanding(a)
------------------------                            ------------------        --------------

<S>                                                       <C>                      <C>
Gerald C. Rittenberg (b).......................           66.6590                  5.9%
James M. Harrison (c)..........................           21.5080                  1.9
Garry Kieves, Garry Kieves Retained
   Annuity Trust and Garry Kieves
   Irrevocable Trust, in aggregate (d).........          131.3296                  11.5
Terence M. O'Toole (e).........................           --                        --
Sanjeev K. Mehra (f)...........................           --                        --
Joseph P. DiSabato (g).........................           --                        --

William S. Wilkey (h)..........................           13.2460                  1.2

Estate of John A. Svenningsen..................          100.0                     8.8
  c/o Kurzman & Eisenberg LLP
  One North Broadway, Suite 1004
  White Plains, New York 10601

GS Capital Partners II, L.P. (i)...............          825.0                    72.9
  and other GSCP funds
  85 Broad Street
  New York, New York 10004

All directors, executive officers and William
  S. Wilkey as a group (7 persons) (j).........          232.7426                 20.0
</TABLE>


      (a)   The amounts and  percentage  of Company  Common  Stock  beneficially
            owned are  reported on the basis of  regulations  of the  Commission
            governing the  determination of beneficial  ownership of securities.
            Under  the  rules of the  Commission,  a person  is  deemed  to be a
            "beneficial  owner"  of a  security  if that  person  has or  shares
            "voting  power,"  which  includes the power to vote or to direct the
            voting of such security,  or "investment  power," which includes the
            power to dispose of or to direct the disposition of such security. A
            person is also deemed to be a beneficial  owner of any securities of
            which that person has a right to acquire beneficial ownership within
            60 days.  Under  these  rules,  more than one person may be deemed a
            beneficial  owner of the same  securities and a person may be deemed
            to be a  beneficial  owner  of  securities  as to  which  he  has no
            economic interest.

      (b)   Includes  6.6590  shares  which could be acquired by Mr.  Rittenberg
            within 60 days upon exercise of options.

      (c)   Includes  6.5080  shares  which could be  acquired  by Mr.  Harrison
            within 60 days upon exercise of options.

      (d)   Includes  1.3296 shares which could be acquired by Mr. Kieves within
            60 days  upon  exercise  of  options  and 10  shares  that  could be
            acquired upon exercise of warrants.

      (e)   Mr. O'Toole, who is a Managing Director of Goldman Sachs,  disclaims
            beneficial  ownership of the shares of Company Common Stock that are
            owned  by GSCP  and its  affiliates,  except  to the  extent  of his
            pecuniary interest therein, if any.




                                       32
<PAGE>





      (f)   Mr. Mehra,  who is a Managing  Director of Goldman Sachs,  disclaims
            beneficial  ownership of the shares of Company Common Stock that are
            owned  by GSCP  and its  affiliates,  except  to the  extent  of his
            pecuniary interest therein, if any.

      (g)   Mr.  DiSabato,  who is a Vice President of Goldman Sachs,  disclaims
            beneficial  ownership of the shares of Company Common Stock that are
            owned  by GSCP  and its  affiliates,  except  to the  extent  of his
            pecuniary interest therein, if any.

      (h)   Includes  6.5770 shares which could be acquired by Mr. Wilkey within
            60 days upon exercise of options.

      (i)   Of the 825.0 shares of Company  Common Stock  beneficially  owned by
            GSCP and its  affiliates,  approximately  517.6  shares are owned by
            GSCP II, approximately 205.8 shares are owned by GS Capital Partners
            II Offshore,  L.P.,  approximately 19.1 shares are owned by Goldman,
            Sachs & Co.  Verwaltungs  GmbH as nominee for GS Capital Partners II
            (Germany)  C.L.P.,  approximately  55.5  shares  are  owned by Stone
            Street Fund 1997,  L.P. and  approximately  27.0 shares are owned by
            Bridge Street Fund 1997,  L.P. Each of the GSCP funds are investment
            partnerships  that are managed by Goldman  Sachs or its  affiliates,
            which has full  dispositive  power with  respect to the  holdings of
            such  partnerships.  Affiliates of The Goldman Sachs Group, Inc. are
            the general or managing  partners  of the "GSCP Fund  Partners"  and
            have  full  voting  power  with  respect  to the  holdings  of  such
            partnerships.

      (j)   Includes  21.0726  shares  which could be acquired by the  executive
            officers and Mr.  Wilkey within 60 days upon exercise of options and
            10 shares  which could be acquired  by Mr.  Kieves upon  exercise of
            warrants.

STOCKHOLDERS' AGREEMENT

         As of December 19,  1997,  the Company  entered into the  Stockholders'
Agreement  with GSCP and the Estate and certain  employees of the Company listed
as parties  thereto  (including  the  Estate,  the  "Non-GSCP  Investors").  The
following discussion  summarizes the terms of the Stockholders'  Agreement which
the  Company  believes  are  material  to an  investor  in the  debt  or  equity
securities  of the  Company.  This  summary  is  qualified  in its  entirety  by
reference to the full text of the  Stockholders'  Agreement,  a copy of which is
filed with the Commission,  and which is incorporated  herein by reference.  The
Stockholders'  Agreement provides,  among other things, for (i) the right of the
Non-GSCP  Investors  to  participate  in, and the right of GSCP to  require  the
Non-GSCP  Investors to participate  in, certain sales of Company Common Stock by
GSCP,  (ii) prior to an initial public  offering of the stock of the Company (as
defined  in the  Stockholders'  Agreement),  certain  rights of the  Company  to
purchase,  and certain rights of the Non-GSCP  Investors (other than the Estate)
to  require  the  Company to  purchase  (except  in the case of  termination  of
employment by such Non-GSCP Investors) all, but not less than all, of the shares
of Company  Common  Stock owned by a Non-GSCP  Investor  (other than the Estate)
upon the termination of employment or death of such Non-GSCP Investor, at prices
determined  in  accordance  with the  Stockholders'  Agreement and (iii) certain
additional  restrictions  on the rights of the  Non-GSCP  Investors  to transfer
shares of Company  Common  Stock.  The  Stockholders'  Agreement  also  contains
certain  provisions  granting GSCP and the Non-GSCP  Investors certain rights in
connection with  registrations of Company Common Stock in certain  offerings and
provides  for  indemnification  and  certain  other  rights,   restrictions  and
obligations in connection with such registrations.  The Stockholders'  Agreement
will  terminate  (i)  with  respect  to  the  rights  and   obligations  of  and
restrictions  on GSCP and the  Non-GSCP  Investors  in  connection  with certain
restrictions  on the transfer of shares of Company  Common Stock,  when GSCP and
its affiliates no longer hold at least 40% of the outstanding  shares of Company
Common  Stock,  on a  fully  diluted  basis;  provided  that  the  Stockholders'
Agreement will terminate in such respect in any event if the Company enters into
certain transactions resulting in GSCP, its affiliates,  the Non-GSCP Investors,
and each of their respective permitted transferees,  owning less than a majority
of the outstanding  voting power of the entity surviving such  transaction;  and
(ii) with  respect  to the  registration  of  Company  Common  Stock in  certain
offerings,  with  certain  exceptions,  on the  earlier of (1) the date on which
there



                                       33
<PAGE>





are no longer any registrable  securities  outstanding (as determined  under the
Stockholders'  Agreement) and (2) the twentieth anniversary of the Stockholders'
Agreement.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         During 1999,  the Company  leased a warehouse  in Temecula,  California
from the Estate.  Rent payments  related to this warehouse were $248,000 for the
nine months ended  September  30,  1999.  In September  1999,  Amscan  agreed to
terminate  the lease and received an incentive  payment of $0.2 million from the
Estate.

         Amscan  believes  these rent payments were at least as favorable to the
Company as the terms which would have been available for leases  negotiated with
unaffiliated persons at the inception of the lease.

         Amscan is obligated to obtain  interest  rate  protection,  pursuant to
interest  rate swaps,  caps or other  similar  arrangements  satisfactory  to GS
Credit Partners,  with respect to a notional amount of not less than half of the
aggregate amount  outstanding  under the Term Loan, which protection must remain
in effect  for not less than  three  years  from the date of the  borrowing.  At
December 31, 1999, Amscan had two interest rate swap contracts  outstanding with
GSCM. On September 30, 1998, Amscan entered into a three year interest rate swap
contract for a notional  amount of $35,000,000  with GSCM at an interest rate of
4.808% plus a spread  based on certain  defined  ratios  (7.18% at December  31,
1999). On September 17, 1999,  Amscan entered into a two year interest rate swap
contract for a notional amount of $31,000,000 at an interest rate of 6.424% plus
a spread  based on certain  defined  ratios  (8.80% at December 31,  1999).  Net
settlements  received  from GSCM  under the swap  contracts  for the year  ended
December 31, 1999 totaled $129,000.

         On  October  1,  1999,  Amscan  granted a  $1,000,000  line of  credit,
expiring December 31, 2001, to Mr. Gerald C. Rittenberg.  Amounts borrowed under
the  line  are  evidenced  by a note  and are  secured  by a lien on the  equity
interests which Mr. Rittenberg has in Amscan. In addition, amounts borrowed bear
interest at Amscan's  incremental  borrowing rate in effect during the term such
loan is outstanding  with interest payable on a quarterly basis. At December 31,
1999, borrowings under this line totaled $600,000 and bore interest at 9.75%.

         Under the merger agreement providing for the Merger,  Amscan has agreed
to  indemnify  for six years  after the Merger all former  directors,  officers,
employees and agents of the Company, to the fullest extent currently provided in
the  Company's   Certificate  of  Incorporation  and  By-laws   consistent  with
applicable  law,  for acts or  omissions  occurring  prior to the  Merger to the
extent  such acts or  omissions  are  uninsured  and will,  subject  to  certain
limitations, maintain for six years its prior directors' and officers' liability
insurance.

         Goldman Sachs and its affiliates have certain interests in the Company.
Messrs.  O'Toole and Mehra are Managing Directors of Goldman Sachs, Mr. DiSabato
is Vice  President  of  Goldman  Sachs  and  each of them is a  director  of the
Company.  GSCP currently owns  approximately  72.9% of the outstanding shares of
Company Common Stock. Accordingly,  the general and managing partners of each of
the GSCP Fund  Partners,  which are  affiliates of Goldman Sachs and The Goldman
Sachs  Group,  Inc.  may each be  deemed  to be an  "affiliate"  of GSCP and the
Company.  See  "Ownership  of  Capital  Stock."  Pursuant  to the  Stockholder's
Agreement,  Goldman Sachs has the  exclusive  right (if it so elects) to perform
certain  investment  banking and similar  services  for the Company on customary
terms.  Goldman Sachs may from time to time receive  customary fees for services
rendered to the Company.



                                       34
<PAGE>




                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

 (a) Documents filed as part of this report:

              1. and 2.  Financial Statements and Schedule.

                  See Index to Consolidated  Financial  Statements and Financial
                  Statement Schedule which appears on page F-1 herein.

              3.  Exhibits

   Exhibit
   Number                                  Description
   ------                                  -----------

     2(a)         Agreement and Plan Merger, by and among Amscan Holdings,  Inc.
                  and Confetti  Acquisition,  Inc.,  dated as of August 10, 1997
                  (incorporated  by reference to Exhibit 2.1 to the Registrant's
                  Registration   Statement   on  Form  S-4   (Registration   No.
                  333-45457))

     2(b)         Stock Purchase  Agreement,  dated as of August 6, 1998, by and
                  among  Amscan  Holdings,  Inc.  and  certain  stockholders  of
                  Anagram  International,  Inc.  and certain  related  companies
                  (incorporated  by reference to Exhibit 2.1 to the Registrant's
                  Current  Report on Form 8-K dated  August 6, 1998  (Commission
                  File No. 000-21827))

     3(a)         Certificate of Incorporation  of Amscan Holdings,  Inc., dated
                  October 3, 1996,  (incorporated by reference to Exhibit 3.1 to
                  the   Registrant's   Registration   Statement   on  Form   S-4
                  (Registration No. 333-45457))

     3(b)         Amended  By-Laws of Amscan  Holdings,  Inc.  (incorporated  by
                  reference  to  Exhibit  3.2 to the  Registrant's  Registration
                  Statement on Form S-4 (Registration No. 333-45457))

     3(c)         Amended Articles of  Incorporation  of Anagram  International,
                  Inc.   (incorporated  by  reference  to  Exhibit  3.1  to  the
                  Registrant's  Current  Report on Form 8-K dated  September 17,
                  1998 (Commission File No. 000-21827))

     3(d)         By-laws  of  Anagram  International,   Inc.  (incorporated  by
                  reference to Exhibit 3.2 to the Registrant's Current Report on
                  Form  8-K  dated  September  17,  1998  (Commission  File  No.
                  000-21827))

     3(e)         Articles of Incorporation of Anagram  International  Holdings,
                  Inc.   (incorporated  by  reference  to  Exhibit  3.3  to  the
                  Registrant's  Current  Report on Form 8-K dated  September 17,
                  1998 (Commission File No. 000-21827))

     3(f)         By-laws of Anagram International  Holdings, Inc. (incorporated
                  by reference to Exhibit 3.4 to the Registrant's Current Report
                  on Form 8-K dated  September  17,  1998  (Commission  File No.
                  000-21827))

     3(g)         Articles  of  Organization  of  Anagram   International,   LLC
                  (incorporated  by reference to Exhibit 3.5 to the Registrant's
                  Current   Report  on  Form  8-K  dated   September   17,  1998
                  (Commission File No. 000-21827))



                                       35
<PAGE>




     3(h)         Operating    Agreement   of   Anagram    International,    LLC
                  (incorporated  by reference to Exhibit 3.6 to the Registrant's
                  Current   Report  on  Form  8-K  dated   September   17,  1998
                  (Commission File No. 000-21827))

     3(i)         Certificate  of Formation  of Anagram  Eden  Prairie  Property
                  Holdings LLC  (incorporated by reference to Exhibit 3.7 to the
                  Registrant's  Current  Report on Form 8-K dated  September 17,
                  1998 (Commission File No. 000-21827))

     4(a)         Indenture,  dated as of December  19,  1997,  by and among the
                  Company,  the Guarantors named therein and IBJ Schroder Bank &
                  Trust  Company with respect to the Senior  Subordinated  Notes
                  (incorporated  by reference to Exhibit 4.1 to the Registrant's
                  Registration   Statement   on  Form  S-4   (Registration   No.
                  333-45457))

     4(b)         Supplemental Indenture, dated as of September 17, 1998, by and
                  among  Anagram  International,   Inc.,  Anagram  International
                  Holdings,  Inc.,  Anagram  International,  LLC,  Anagram  Eden
                  Prairie  Property  Holdings LLC and IBJ Schroder  Bank & Trust
                  Company, as Trustee  (incorporated by reference to Exhibit 4.1
                  to the Registrant's Current Report on Form 8-K dated September
                  17, 1998 (Commission File No. 000-21827))

     4(c)         Warrant Agreement,  dated as of August 6, 1998, by and between
                  Amscan Holdings,  Inc. and Garry Kieves Retained Annuity Trust
                  (incorporated  by reference to Exhibit 4.1 to the Registrant's
                  Current  Report on Form 8-K dated  August 6, 1998  (Commission
                  File No. 000-21827))

     4(d)         Senior Subordinated Guarantee, dated as of September 17, 1998,
                  by  Anagram   International,   Inc.,   Anagram   International
                  Holdings,  Inc., Anagram International,  LLC, and Anagram Eden
                  Prairie  Property  Holdings   (incorporated  by  reference  to
                  Exhibit  4.2 to the  Registrant's  Current  Report on Form 8-K
                  dated September 17, 1998 (Commission File No. 000-21827))

     4(e)         Amended and Restated Revolving Loan Credit Agreement, dated as
                  of  September  17,  1998,  by and  among the  Registrant,  the
                  financial institutions parties thereto,  Goldman, Sachs Credit
                  Partners L.P., as arranger and  syndication  agent,  and Fleet
                  National  Bank,  as  administrative   agent  (incorporated  by
                  reference to Exhibit 10.1 to the  Registrant's  Current Report
                  on Form 8-K dated  September  17,  1998  (Commission  File No.
                  000-21827))

     4(f)         Amended  and  Restated  AXEL  Credit  Agreement,  dated  as of
                  September 17, 1998, by and among the Registrant, the financial
                  institutions parties thereto,  Goldman,  Sachs Credit Partners
                  L.P., as arranger and  syndication  agent,  and Fleet National
                  Bank, as  administrative  agent  (incorporated by reference to
                  Exhibit 10.2 to the  Registrant's  Current  Report on Form 8-K
                  dated September 17, 1998 (Commission File No. 000-21827))

        9         Voting  Agreement,   dated  August  10,  1997  among  Confetti
                  Acquisition,  Inc.,  the  Estate  of John A.  Svenningsen  and
                  Christine  Svenningsen  (incorporated  by reference to Exhibit
                  2.2 to the  Registrant's  Registration  Statement  on Form S-4
                  (Registration No. 333-45457))

     10(a)        Employment Agreement by and between Amscan Inc. or the Company
                  and William Wilkey,  dated as of October 4, 1996 (incorporated
                  by  reference  to  Exhibit  10(e)  to  Amendment  No. 1 to the
                  Registrant's  Registration Statement on Form S-1 (Registration
                  No. 333-14107))



                                       36
<PAGE>





    10(b)         Tax Indemnification  Agreement between Amscan Holdings,  Inc.,
                  and  John  A.  Svenningsen,  dated  as of  December  18,  1996
                  (incorporated   by   reference   to   Exhibit   10(j)  to  the
                  Registrant's  1996 Annual Report on Form 10-K (Commission File
                  No. 000-21827))

    10(c)         Tax Indemnification  Agreement between Amscan Holdings,  Inc.,
                  Christine  Svenningsen and the Estate of John A.  Svenningsen,
                  dated as of August 10,  1997  (incorporated  by  reference  to
                  Exhibit 10.17 to the  Registrant's  Registration  Statement on
                  Form S-4 (Registration No. 333-40235))

    10(d)         The  MetLife   Capital   Corporation   Master  Lease  Purchase
                  Agreement between MetLife Capital Corporation and Amscan Inc.,
                  Deco Paper  Products,  Inc.,  Kookaburra USA Ltd., and Trisar,
                  Inc.,  dated  November 21, 1991, as amended  (incorporated  by
                  reference  to  Exhibit   10(n)  to  Amendment  No.  2  to  the
                  Registrant's  Registration Statement on Form S-1 (Registration
                  No. 333-14107))

    10(e)         Form of Indemnification Agreement between the Company and each
                  of the directors of the Company  (incorporated by reference to
                  Exhibit  10(o)  to  Amendment   No.  2  to  the   Registrant's
                  Registration   Statement   on  Form  S-1   (Registration   No.
                  333-14107))

    10(f)         Exchange and Registration Agreement,  dated as of December 19,
                  1997,  by and  among  the  Company  and  Goldman,  Sachs & Co.
                  (incorporated by reference to Exhibit 10.1 to the Registrant's
                  Registration   Statement   on  Form  S-4   (Registration   No.
                  333-45457))

    10(g)         Stockholders' Agreement, dated as of December 19, 1997, by and
                  among the Company and the Stockholders  thereto  (incorporated
                  by reference to Exhibit 10.4 to the Registrant's  Registration
                  Statement on Form S-4 (Registration No. 333-45457))

    10(h)         Employment  Agreement,  dated as of August  10,  1997,  by and
                  among the Company and Gerald C.  Rittenberg  (incorporated  by
                  reference  to Exhibit  10.5 to the  Registrant's  Registration
                  Statement on Form S-4 (Registration No. 333-45457))

    10(i)         Employment  Agreement,  dated as of August  10,  1997,  by and
                  among the  Company  and  James M.  Harrison  (incorporated  by
                  reference  to Exhibit  10.6 to the  Registrant's  Registration
                  Statement on Form S-4 (Registration No. 333-45457))

    10(j)         Amscan Holdings,  Inc. 1997 Stock Incentive Plan (incorporated
                  by  reference  to  Exhibit  10.7   Registrant's   Registration
                  Statement on Form S-4 (Registration No. 333-45457))

    10(k)         Amendment No. 1 to the  Stockholders'  Agreement,  dated as of
                  August 6, 1998 by and among Amscan Holdings,  Inc. and certain
                  stockholders  of  Amscan  Holdings,   Inc.   (incorporated  by
                  reference to Exhibit 10.1 to the  Registrant's  Current Report
                  on  Form  8-K  dated  August  6,  1998  (Commission  File  No.
                  000-21827))

    10(l)         Employment Agreement, dated as of August 6, 1998, by and among
                  the Company and Garry  Kieves  (incorporated  by  reference to
                  Exhibit 99.1 to the  Regsitrant's  Current  Report on Form 8-K
                  dated August 6, 1998 (Commission File No. 000-21827))




                                       37
<PAGE>





    10(m)         Line of Credit Agreement,  dated October 1, 1999, by and among
                  the Company and Gerald C. Rittenberg

    10(n)         Consulting  Agreement dated November 8, 1999, by and among the
                  Company and William Wilkey

    10(o)         Amended Full Recourse  Secured  Promissory Note dated November
                  8, 1999, by and among the Company and William Wilkey

       12         Statement  re:  computation  of  ratio  of  earnings  to fixed
                  charges

       21         Subsidiaries of the Registrant  (incorporated  by reference to
                  Exhibit  21.1 to the  Registrant's  Registration  Statement on
                  Form S-4 (Registration No. 333-45457))

     23.1         Consent of Ernst & Young LLP

     23.2         Consent of KPMG LLP

       27         Financial Data Schedule

 (b)  Reports on Form 8-K.
         Not applicable.




                                       38
<PAGE>




                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

                                               AMSCAN HOLDINGS, INC.


                                               By: /s/ James M. Harrison
                                                   -------------------------
                                               James M. Harrison

Date:  March 29, 2000

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant in the capacities and on the dates indicated.

        Signature                     Title                          Date
        ---------                     -----                          ----

/s/ Terence M. O'Toole       Chairman of the Board of           March 29, 2000
------------------------     Directors
Terence M. O'Toole

                             Director
------------------------
Sanjeev K. Mehra

                             Director
------------------------
Joseph P. DiSabato

/s/ Gerald C. Rittenberg     Chief Executive Officer and        March 29, 2000
------------------------     Director
Gerald C. Rittenberg

                             President, Chief Financial
/s/ James M. Harrison        Officer,Treasurer and Director     March 29, 2000
------------------------     (principal financial officer)
James M. Harrison


/s/ Michael A. Correale      Controller                         March 29, 2000
------------------------     (principal accounting officer)
Michael A. Correale






<PAGE>







                                    FORM 10-K
                           Item 8, Item 14(a) 1 and 2

                              AMSCAN HOLDINGS, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULE
                          Year Ended December 31, 1999

Consolidated Financial  Statements as of December 31, 1999 and 1998 and for each
    of the years in the three-year period ended December 31, 1999:

<TABLE>
<CAPTION>

                                                                                          Page
                                                                                          ----

<S>                                                                                        <C>
    Reports of Independent Auditors..................................................      F-2

    Consolidated Balance Sheets  ....................................................      F-4

    Consolidated Statements of Operations ...........................................      F-5

    Consolidated Statements of Stockholders' (Deficit) Equity .......................      F-6

    Consolidated Statements of Cash Flows ...........................................      F-7

    Notes to Consolidated Financial Statements ......................................      F-9



Financial Statement Schedule for the three years ended December 31, 1999:

    Schedule II - Valuation and Qualifying Accounts  ................................      F-33
</TABLE>





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




                                      F-1
<PAGE>







                         REPORT OF INDEPENDENT AUDITORS

To The Board of Directors and Stockholders
Amscan Holdings, Inc.

We have audited the accompanying consolidated balance sheets of Amscan Holdings,
Inc. as of December 31, 1999 and 1998, and the related  consolidated  statements
of operations, stockholders' (deficit) equity and cash flows for each of the two
years in the period  ended  December  31,  1999.  Our audits also  included  the
financial  statement  schedule as of and for each of the two years in the period
ended  December 31, 1999, as listed in the  accompanying  index to the financial
statements  (Item  14(a)).  These  financial  statements  and  schedule  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of Amscan
Holdings,  Inc. at December 31, 1999 and 1998, and the  consolidated  results of
its  operations and its cash flows for each of the two years in the period ended
December 31, 1999, in conformity with accounting  principles  generally accepted
in the United  States.  Also, in our opinion,  the related  financial  statement
schedule as of and for each of the two years in the period  ended  December  31,
1999, when considered in relation to the basic financial  statements  taken as a
whole,  presents  fairly in all  material  respects  the  information  set forth
therein.

                                       /s/ ERNST & YOUNG LLP

Stamford, Connecticut
March 15, 2000




                                      F-2
<PAGE>







                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Amscan Holdings, Inc.

We  have  audited  the  accompanying   consolidated   statement  of  operations,
stockholders'  (deficit)  equity and cash flows for the year ended  December 31,
1997. In connection with our audit of the consolidated financial statements, we
also have audited the information in the financial  statement schedule as listed
in the  accompanying  index as of  December  31,  1997  and for the  year  ended
December  31,  1997.  These  consolidated  financial  statements  and  financial
statement  schedule are the  responsibility  of the  Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements and financial statement schedule based on our audit.

We  conducted  our  audit  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the results of operations of Amscan Holdings,
Inc. and subsidiaries and their cash flows for the year ended December 31, 1997,
in  conformity  with  generally  accepted  accounting  principles.  Also  in our
opinion,  the related  financial  statement  schedule,  as of and for the period
described above, when considered in relation to the basic consolidated financial
statements taken as a whole,  presents  fairly,  in all material  respects,  the
information set forth therein.

/s/ KPMG LLP



Stamford, Connecticut
February 13, 1998




                                      F-3
<PAGE>





<TABLE>
<CAPTION>

                              AMSCAN HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)

                                                                                                      December 31,
                                                                                                 ----------------------

                                                                                                 1999             1998
                                                                                                 ----             ----
                                     ASSETS

<S>                                                                                             <C>          <C>
Current assets:
   Cash and cash equivalents..............................................................      $    849     $    1,117
   Accounts receivable, net of allowances of $6,172 and $6,875, respectively..............        56,896         49,339
   Inventories............................................................................        59,193         54,691
   Prepaid expenses and other current assets..............................................        11,802          9,113
                                                                                              ----------    -----------
         Total current assets.............................................................       128,740        114,260
Property, plant and equipment, net........................................................        61,709         59,260
Intangible assets, net....................................................................        63,331         66,500
Other assets, net.........................................................................         9,707          8,832
                                                                                              ----------    -----------
         Total assets.....................................................................      $263,487       $248,852
                                                                                                ========       ========

         LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Loans and notes payable................................................................      $  4,688     $    9,628
   Accounts payable.......................................................................        18,967         11,494
   Accrued expenses.......................................................................        16,332         17,520
   Income taxes payable...................................................................         2,963            593
   Current portion of long-term obligations...............................................         3,562          3,549
                                                                                              ----------     ----------
         Total current liabilities........................................................        46,512         42,784
Long-term obligations, excluding current portion..........................................       266,891        270,127
Deferred income tax liabilities...........................................................        12,001          8,128
Other.....................................................................................         3,030          3,553
                                                                                              ----------     ----------
         Total liabilities................................................................       328,434        324,592

Redeemable Common Stock...................................................................        23,582         19,547

Commitments and Contingencies.............................................................

Stockholders' deficit:
   Common Stock...........................................................................             -          -
   Additional paid-in capital.............................................................           225            225
   Unamortized restricted Common Stock award, net.........................................          (405)          (575)
   Notes receivable from stockholders.....................................................          (664)          (718)
   Deficit ...............................................................................       (86,797)       (92,969)
   Accumulated other comprehensive loss...................................................          (888)        (1,250)
                                                                                             -----------     ----------
         Total stockholders' deficit......................................................       (88,529)       (95,287)
                                                                                               ---------      ---------

         Total liabilities, redeemable Common Stock and stockholders' deficit.............      $263,487       $248,852
                                                                                                ========       ========
</TABLE>





          See accompanying notes to consolidated financial statements.



                                      F-4
<PAGE>



<TABLE>
<CAPTION>

                             AMSCAN HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             (Dollars in thousands)

                                                                                    For the Years Ended December 31,
                                                                                    --------------------------------

                                                                                  1999           1998            1997
                                                                                  ----           ----            ----
<S>                                                                             <C>             <C>            <C>
Net sales..................................................................     $306,112        $235,294       $209,931
Cost of sales..............................................................      193,586         150,456        136,571
                                                                               ---------       ---------      ---------
           Gross profit....................................................      112,526          84,838         73,360

Operating expenses:
   Selling expenses........................................................       24,455          17,202         13,726
   General and administrative expenses.....................................       33,249          23,432         20,772
   Art and development costs...............................................       10,047           7,356          5,282
   Non-recurring charges...................................................          995
   Restructuring charges...................................................                        2,400
   Non-recurring charges in connection with the Merger.....................                                      22,083
                                                                               ---------       ---------     ----------
           Total operating expenses........................................       68,746          50,390         61,863
                                                                               ---------       ---------     ----------
           Income from operations..........................................       43,780          34,448         11,497

Interest expense, net......................................................       26,365          22,965          3,892
Other expense (income), net................................................           35            (121)           (71)
                                                                               ---------       ---------     ----------
Income before income taxes and minority interests..........................       17,380          11,604          7,676

Income tax expense.........................................................        7,100           4,816          7,665
Minority interests.........................................................           73              79            193
                                                                               ---------       ---------     ----------
         Net income (loss).................................................    $  10,207       $   6,709     $     (182)
                                                                               =========       =========     ==========
</TABLE>























          See accompanying notes to consolidated financial statements.




                                      F-5
<PAGE>





                             AMSCAN HOLDINGS, INC.
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
              For the Years Ended December 31, 1999, 1998 and 1997
                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                       Unamortized
                                                        Restricted      Notes                 Accumulated
                                            Additional    Common     Receivable    Retained      Other
                                   Common    Paid-in   Stock Award,     from       Earnings  Comprehensive  Treasury
                                    Stock    Capital       Net      Stockholders   (Deficit)     Loss         Stock      Total
                                    -----    -------       ---      ------------   --------      ----         -----      -----
<S>                                <C>       <C>         <C>             <C>       <C>         <C>           <C>       <C>
   Balance at December 31, 1996 .. $ 2,070   $ 61,503                              $  4,748    $  (372)                $ 67,949
   Net loss ......................                                                     (182)                               (182)
   Net change in cumulative
      translation adjustment .....                                                                (350)                    (350)
                                                                                                                        --------
         Comprehensive loss ......                                                                                         (532)
   Net proceeds from sale of
      Common Stock ...............      42      4,482                                                                     4,524
   Purchase of treasury stock ....                                                                           $  (290)      (290)
   Capital contribution ..........              7,500                                                                     7,500
   Distribution to the Estate ....                                                     (619)                               (619)
   Issuance of Common Stock
      in the Merger, net .........             63,750    $(1,125)        $ (750)                                         61,875
   Repurchase of Common Stock
      in the Merger ..............  (2,112)  (137,235)                              (96,859)                     290   (235,916)
   Amortization of restricted
      Common Stock award .........                           290                                                            290
                                    ------    ------      ------          ------   --------    -------       -------    --------
Balance at December 31, 1997 .....       -          -       (835)          (750)    (92,912)      (722)            -    (95,219)
   Net income ....................                                                    6,709                               6,709
   Net change in cumulative
      translation adjustment .....                                                                (528)                    (528)
                                                                                                                        --------
         Comprehensive income ....                                                                                        6,181
   Reclassification of Common
      Stock to Redeemable
         Common Stock ............                                                   (4,781)                             (4,781)
   Issuance of 10 Common Stock
      warrants ...................                225                                                                       225
   Accretion in Redeemable
      Common Stock ...............                                                   (1,985)                             (1,985)
   Amortization of restricted
      Common Stock award .........                           260                                                            260
   Payments received on notes
      receivable from stockholders                                           32                                              32
                                    ------     ------     ------          ------     ------     ------     --------    --------
Balance at December 31, 1998 .....       -        225       (575)          (718)    (92,969)    (1,250)           -     (95,287)
   Net income ....................                                                   10,207                              10,207
   Net change in cumulative
      translation adjustment .....                                                                 362                      362
                                                                                                                       --------
         Comprehensive income ....                                                                                       10,569
   Accretion in Redeemable
      Common Stock ...............                                                   (4,035)                             (4,035)
   Amortization of restricted
      Common Stock award .........                           170                                                            170
   Payments received on notes                                                54                                              54
     receivable from stockholders  -------    -------    --------        -------    --------    -------    --------    --------
Balance at December 31, 1999 ..... $     -    $   225    $  (405)       $  (664)   $(86,797)   $  (888)           -  $ (88,529)
                                   =======    =======    ========        =======    ========     ======    ========    ========
</TABLE>


          See accompanying notes to consolidated financial statements.



                                      F-6
<PAGE>


<TABLE>
<CAPTION>

                             AMSCAN HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)

                                                                                     For the Years Ended December 31,
                                                                                     --------------------------------
                                                                                   1999            1998           1997
                                                                                   ----            ----           ----
Cash flows from operating activities:

<S>                                                                              <C>              <C>          <C>
   Net income (loss).......................................................      $10,207          $6,709       $   (182)
     Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
     Depreciation and amortization.........................................       12,931           8,501          6,245
     Amortization of deferred financing costs..............................          870             748             13
     Loss (gain) on disposal of property and equipment.....................           86             (22)           (31)
     Provision for doubtful accounts.......................................        2,906           3,336          3,775
     Restructuring and other non-recurring charges.........................          995           2,400
     Amortization of Restricted Common Stock award.........................          170             260            290
     Deferred income tax provision.........................................        3,764           2,441          1,565
     Changes in operating assets and liabilities, net of acquisitions:
       Increase in accounts receivable.....................................      (14,297)         (1,124)       (15,869)
       (Increase) decrease in inventories..................................       (4,612)          6,853         (5,871)
       (Increase) decrease in prepaid expenses and other current assets
            and other, net.................................................         (639)          2,078          6,276
       (Increase) decrease in other assets, net............................       (1,525)           (490)         2,863
       Increase (decrease) in accounts payable, accrued expenses
          and income taxes payable.........................................        8,579          (8,928)         5,095
                                                                                 -------          ------         ------
           Net cash provided by operating activities.......................       19,435          22,762          4,169

Cash flows from investing activities:

   Cash paid for acquisitions..............................................                      (78,382)
   Capital expenditures....................................................      (11,632)         (7,514)       (10,237)
   Proceeds from disposal of property, plant and equipment.................          216           2,769            140
                                                                               ---------       ---------      ---------
Net cash used in investing activities......................................      (11,416)        (83,127)       (10,097)

Cash flows from financing activities:

   Net proceeds from sale of Capital Stock.................................                          181          4,524
   Capital contributions...................................................                                       7,500
   Issuance of Common Stock in connection with the Merger..................                                      61,875
   Payments to acquire Common Stock in the Merger and treasury stock.......          (29)        (93,155)      (142,963)
   Proceeds from loans, notes payable and long-term obligations
      net of debt issuance costs of $964 and $5,500  in 1998 and
      1997, respectively...................................................          450          59,064        237,062
   Repayment of loans, notes payable and long-term obligations.............       (9,242)        (15,917)       (51,811)
   Repayment of indebtedness to Principal Stockholder......................                                        (182)
   Other...................................................................           54              65              .
                                                                               ---------       ---------      ---------
           Net cash (used in) provided by financing activities.............       (8,767)        (49,762)       116,005
   Effect of exchange rate changes on cash.................................          480           ( 295)          (127)
                                                                               ---------       ---------      ---------
           Net (decrease) increase in cash and cash equivalents............         (268)       (110,422)       109,950
Cash and cash equivalents at beginning of year.............................        1,117         111,539          1,589
                                                                               ---------       ---------      ---------
Cash and cash equivalents at end of year...................................    $     849       $   1,117      $ 111,539
                                                                               =========       =========      =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:

           Interest........................................................    $  25,278       $  23,174      $   3,598
           Income taxes....................................................    $     950       $   2,558      $   6,604
</TABLE>

          See accompanying notes to consolidated financial statements.




                                      F-7
<PAGE>




                              AMSCAN HOLDINGS, INC.
               CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
                             (Dollars in thousands)

Supplemental information on noncash activities (dollars in thousands):

Capital lease  obligations of $651, $200 and $59 were incurred in 1999, 1998 and
1997, respectively.

Cash  consideration  due to  stockholders  as a  result  of the  Merger  totaled
$235,916  of which  $59 and $88 was  payable  at  December  31,  1999 and  1998,
respectively.

In connection  with the acquisition of Anagram  International,  Inc. and certain
related  companies in 1998, the Company  issued 120 shares of Redeemable  Common
Stock (see Note 11) valued at $12,600 and issued  warrants to purchase 10 shares
of the  Company's  Common Stock for $125 per share  valued at $225  (expiring on
September 17, 2008) to the former owner of Anagram International, Inc.

In  conjunction  with the Merger in 1997, 15 shares of Common Stock  aggregating
$1,125 were issued to an officer and are subject to future  vesting  provisions.
In addition,  subsequent to the Merger, 10 shares of Common Stock were issued to
certain officers of the Company, at that time, in exchange for notes aggregating
$750.


















           See accompanying notes to consolidatedfinancial statements.




                                      F-8
<PAGE>




                              AMSCAN HOLDINGS, INC.
                   Notes to Consolidated Financial Statements
                                December 31, 1999



NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

INITIAL PUBLIC OFFERING

         Amscan  Holdings,  Inc.  ("Amscan  Holdings"  and,  together  with  its
subsidiaries,  "AHI" or the "Company") was  incorporated  on October 3, 1996 for
the  purpose of  becoming  the  holding  company  for Amscan  Inc.  and  certain
affiliated  entities in  connection  with an initial  public  offering of Common
Stock  ("IPO")  involving  the sale of  4,000,000  shares of its Common Stock at
$12.00 per share.  The IPO was  completed on December 18, 1996 pursuant to which
John A. Svenningsen (the "Principal  Stockholder") and certain affiliates of the
Principal  Stockholder  exchanged  shares in Amscan Inc. and certain  affiliated
entities for 15,024,616 and 138,461  shares,  respectively,  in Amscan  Holdings
(the "Organization") and, in the case of the Principal Stockholder,  $133,000 in
cash. On January 8, 1997, an additional 422,400 shares of Common Stock were sold
at  $12.00  per  share to  cover  the  over-allotments  as  provided  for in the
underwriting agreement between the Company and the underwriters  associated with
the IPO.

RECAPITALIZATION

         On August 10, 1997,  Amscan  Holdings and  Confetti  Acquisition,  Inc.
("Confetti"),  a newly formed  Delaware  corporation  affiliated with GS Capital
Partners II, L.P. and certain other private investment funds managed by Goldman,
Sachs & Co. (collectively, "GSCP"), entered into an Agreement and Plan of Merger
(the "Merger Agreement")  providing for a recapitalization of Amscan Holdings in
which  Confetti  would be merged with and into Amscan  Holdings (the  "Merger"),
with Amscan Holdings as the surviving corporation.

         On December 19, 1997, the Merger was consummated pursuant to the Merger
Agreement.  At the time of the Merger, each share of the Common Stock, par value
$0.10 per  share,  of the  Company  (the  "Company  Common  Stock")  issued  and
outstanding immediately prior to the Merger (other than shares of Company Common
Stock  owned,  directly  or  indirectly,  by the  Company  or by  Confetti)  was
converted, at the election of each of the Company's stockholders, into the right
to receive from the Company  either (a) $16.50 in cash or (b) $9.33 in cash plus
a retained  interest in the Company  equal to one share of Company  Common Stock
for every 150,000 shares held by such  stockholder,  with  fractional  shares of
Company  Common  Stock  paid in cash.  The  Estate of John A.  Svenningsen  (the
"Estate"),  which owned  approximately  71.2% of the outstanding  Company Common
Stock  immediately  prior to the  Merger,  elected  to retain  almost 10% of the
outstanding shares of Company Common Stock. No stockholder other than the Estate
elected to retain shares. Also pursuant to the Merger Agreement,  at the time of
the Merger,  each outstanding  share of Common Stock, par value $0.10 per share,
of Confetti  ("Confetti  Common  Stock") was  converted  into an equal number of
shares of Company  Common  Stock as the  surviving  corporation  in the  Merger.
Pursuant to certain employment  arrangements,  certain employees of the Company,
at that  time,  purchased  an  aggregate  of 10 shares of Company  Common  Stock
following the Merger (see Note 11).  Accordingly,  in the Merger, the 825 shares
of  Confetti  Common  Stock owned by GSCP  immediately  prior to the Merger were
converted  into 825 shares of Company Common Stock,  representing  approximately
81.7% of the 1,010  issued and  outstanding  shares of the  Company  immediately
following the Merger.

         The Merger was financed with an equity  contribution  of  approximately
$67.5  million  (including  contributions  of  Company  Common  Stock by certain
employee stockholders and including issuances of restricted stock), $117 million
from  a  senior  term  loan  and  $110  million  from  the  issuance  of  senior
subordinated   notes  (see  Note  6).  The  Merger  was   accounted   for  as  a
recapitalization and, accordingly,  the historical basis of the Company's assets
and liabilities was not impacted by the Merger.

         Amscan Holdings and its subsidiaries design, manufacture,  contract for
manufacture and distribute party and novelty goods principally in North America,
South America, Europe, Asia and Australia.





                                      F-9
<PAGE>






                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999



BASIS OF PRESENTATION

         The consolidated  financial  statements  include the accounts of Amscan
Holdings  and  its  subsidiaries.   All  material   intercompany   balances  and
transactions have been eliminated in consolidation.

ACQUISITIONS

         On September  17, 1998,  the Company  completed  the  acquisition  (the
"Acquisition")  of all the  capital  stock of  Anagram  International,  Inc.,  a
Minneapolis-based  metallic balloon  manufacturer  and distributor,  and certain
related  companies  (collectively,  "Anagram"),  pursuant  to a  Stock  Purchase
Agreement  (the  "Stock  Purchase   Agreement")  dated  August  6,  1998,  in  a
transaction  valued at  approximately  $87,225,000,  plus certain  other related
costs.

         The Company  financed the Acquisition  with  $40,000,000 of senior term
debt,  $20,000,000 of additional revolving credit borrowings,  cash on hand, the
issuance of 120 shares of the  Company's  Redeemable  Common Stock (see Note 11)
valued at $12,600,000  and the issuance of 10 warrants to purchase shares of the
Company's Common Stock at $125,000 per share valued at $225,000.

         The  Acquisition  was  accounted  for  under  the  purchase  method  of
accounting,  and,  accordingly,  the  operating  results  of  Anagram  have been
included in the Company's  consolidated  financial  statements since the date of
acquisition.  The excess of the  aggregate  purchase  price over the fair market
value of net assets acquired (principally goodwill) approximated $58,858,000 and
is being principally amortized on a straight-line basis over 25 years.

         The  following  summarized  unaudited pro forma  financial  information
assumes the  Acquisition  had  occurred on January 1, 1998 and 1997  (dollars in
thousands):

                                                        Years Ended December 31,
                                                        ------------------------
                                                           1998         1997
                                                           ----         ----

         Net sales ..............................       $278,754      $272,729
         Net income   ...........................         $4,843           $56

         The unaudited pro forma  consolidated  financial  information  does not
purport to be indicative of actual results that would have been achieved had the
Acquisition been consummated on the date or for the periods indicated or results
of operations as of any future date or for any future period.

         In May 1998,  the Company  acquired the  remaining  25% interest in its
U.K. based subsidiary, Amscan Holdings Limited, for approximately $1,703,000. In
conjunction with the acquisition, the Company issued a non-interest bearing note
to  the  former   shareholder   in  the  amount  of  350,000   pounds   sterling
(approximately  $589,000) which is payable over five years.  The acquisition has
been  accounted  for as a purchase and the excess  purchase  price over the fair
value of the net assets  acquired of $957,000 is being  amortized  on a straight
line basis over 30 years.

         During 1997, the Company  transferred an equity  interest in a customer
to the Estate for (i) cash of $1,000,000,  (ii)  satisfaction  of  approximately
$2,000,000 of certain debts and future lease obligations owed to the Estate, and
(iii)  substantially  all of  the  assets  of Ya  Otta  Pinata  ("Ya  Otta"),  a
California corporation 100% owned by the Estate, at a valuation of approximately
$1,015,000. Ya Otta manufactures pinatas which historically had been sold by the
Company's  sales  force  with no  commissions  charged  to Ya Otta.  The  assets
transferred  were  recorded  at a  historical  cost of $396,000  resulting  in a
distribution to the Estate of $619,000.




                                      F-10
<PAGE>


                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999




         The results of operations  for the  acquisitions  of the additional 25%
interest in Amscan Holdings Limited and Ya Otta are included in the accompanying
financial statements from their respective dates of acquisition or transfer. The
pro forma  results of operations  for the  aforementioned  acquisitions  for the
periods  presented,  had  the  acquisitions  occurred  at the  beginning  of the
immediately  preceding  prior year from the respective  dates of acquisition are
not significant, and, accordingly, pro forma information has not been provided.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH EQUIVALENTS

         Highly liquid  investments with a maturity of three months or less when
purchased are considered to be cash equivalents.

INVENTORIES

         Substantially all inventories of the Company are valued at the lower of
cost (principally on the first-in, first-out method) or market.

LONG-LIVED ASSETS

         Property,  plant  and  equipment  are  stated  at cost.  Machinery  and
equipment  under  capital  leases are stated at the present value of the minimum
lease  payments  at the  inception  of the  lease.  Depreciation  is  calculated
principally on the  straight-line  method over the estimated useful lives of the
assets.  Machinery  and  equipment  held  under  capital  leases  and  leasehold
improvements  are  amortized  on a  straight-line  basis over the shorter of the
lease term or estimated useful life of the asset.

         Intangible  assets of $63,331,000  and $66,500,000 at December 31, 1999
and  1998,   respectively,   are  comprised  principally  of  goodwill,  net  of
amortization,  which  represents  the excess of the  purchase  price of acquired
companies over the estimated fair value of the net assets acquired.  Goodwill is
being  amortized on a  straight-line  basis over  periods  ranging from 25 to 30
years.  Accumulated  amortization  was $6,362,000 and $2,637,000 at December 31,
1999  and  1998,   respectively.   The   Company   systematically   reviews  the
recoverability  of  its  long-lived  and  intangible  assets  by  comparing  the
unamortized   carrying   value  of  such  assets  to  the  related   anticipated
undiscounted  future cash flows. Any impairment  related to long-lived assets is
measured by  reference  to the assets'  fair market  value,  and any  impairment
related to goodwill is measured against  discounted cash flows.  Impairments are
charged to expense when such determination is made.

DEFERRED FINANCING COSTS

         Deferred  financing  costs  (included in other assets) are amortized to
interest expense using the interest method over the lives of the related debt.

REVENUE RECOGNITION

         The Company  recognizes  revenue from product  sales when the goods are
shipped to the customers.

ROYALTY AGREEMENTS

         Commitments for minimum payments under royalty agreements, a portion of
which may be paid in  advance,  are  charged  to expense  ratably,  based on the
Company's  estimate of total sales of related  products.  If all or a portion of
the  minimum  guarantee   subsequently  appears  not  to  be  recoverable,   the
unrecoverable portion is charged to expense at that time.

CATALOGUE COSTS

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




                                      F-11
<PAGE>



                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999



ART AND DEVELOPMENT COSTS

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

INTEREST RATE SWAP AGREEMENTS

         The Company  enters into  interest  rate swap  agreements  to limit the
effect of increases in the interest rates on any floating rate debt. Payments or
receipts are accrued as interest rates change and are recorded as adjustments to
interest expense.

INCOME TAXES

         The Company accounts for income taxes in accordance with the provisions
of Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income  Taxes." Under the asset and liability  method of SFAS No. 109,  deferred
tax assets and  liabilities are determined  based on the difference  between the
financial  statement and tax bases of assets and  liabilities and operating loss
and tax credit carryforwards  applying enacted statutory tax rates in effect for
the year in which the differences  are expected to reverse.  Deferred tax assets
are reduced by a valuation allowance when, in the judgment of management,  it is
more likely than not that some  portion or all of the  deferred  tax assets will
not be realized.

STOCK-BASED COMPENSATION

         The Company  accounts  for stock based  awards in  accordance  with the
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation".  SFAS No.
123 permits  entities to recognize  as expense over the vesting  period the fair
value of all stock-based  awards on the date of grant.  Alternatively,  SFAS No.
123 allows  entities to apply the  provisions  of  Accounting  Principles  Board
Opinion  ("APB")  No.  25,  "Accounting  for Stock  Issued to  Employees"  which
requires the  recognition of  compensation  expense at the date of grant only if
the current market price of the underlying stock exceeds the exercise price, and
to provide pro forma net income  disclosures for employee stock option grants as
if the  fair-value-based  method  defined in SFAS No. 123 had been applied.  The
Company has elected to apply the  recognition  provisions  of APB No. 25 and has
provided the pro forma disclosures required by SFAS No. 123 (see Note 9).

ACCUMULATIVE OTHER COMPREHENSIVE LOSS

         Accumulated  other  comprehensive  loss at December 31, 1999,  1998 and
1997 consisted solely of the Company's foreign currency translation adjustment.

FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION

         The functional  currencies of the Company's foreign  operations are the
local currencies in which they operate. Realized foreign currency exchange gains
or losses,  which  result  from the  settlement  of  receivables  or payables in
currencies  other than U.S.  dollars,  are  credited  or charged to  operations.
Unrealized gains or losses on foreign currency exchanges are insignificant.

         The balance sheets of foreign  subsidiaries  are  translated  into U.S.
dollars at the exchange  rates in effect on the balance sheet date.  The results
of operations of foreign  subsidiaries  are translated into U.S.  dollars at the
average exchange rates effective for the periods presented. The differences from
historical exchange rates are in comprehensive income (loss) and are included as
a component of accumulated other comprehensive loss.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

         In June 1998, the Financial  Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting



                                      F-12
<PAGE>


                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999




for  Derivative  Instruments  and Hedging  Activities."  SFAS No. 133 provides a
comprehensive  and consistent  standard for the  recognition  and measurement of
derivatives and hedging activities. The statement requires all derivatives to be
recognized on the balance sheet at fair value and establishes  standards for the
recognition of changes in such fair value.  SFAS No. 133 is effective for fiscal
years  beginning  after June 15, 2000. The Company expects to adopt SFAS No. 133
effective January 1, 2001.  Because of the Company's limited use of derivatives,
management  does  not  anticipate  the  adoption  of SFAS No.  133  will  have a
significant effect on earnings or the financial position of the Company.

CONCENTRATION OF CREDIT RISK

         While the Company's customers are geographically  dispersed  throughout
North  America,  South  America,   Europe,  Asia  and  Australia,   there  is  a
concentration  of sales made to and  accounts  receivable  from the stores which
operate in the party goods superstore  channel of distribution.  At December 31,
1999 and 1998,  Party City  Corporation  ("Party  City") the  Company's  largest
customer with 391 corporate  and  franchise  stores,  accounted for 21% and 22%,
respectively,  of  consolidated  accounts  receivable,  net. For the years ended
December  31,  1999,  1998 and  1997,  sales to Party  City's  corporate  stores
represented  10%, 13% and 7% of consolidated  net sales,  respectively.  For the
years ended December 31, 1999,  1998 and 1997,  sales to Party City's  franchise
stores represented 9%, 10% and 12% of consolidated net sales,  respectively.  No
other group or combination of customers subjected the Company to a concentration
of credit  risk.  During  the first  quarter  of 1999,  Party  City  experienced
financial  difficulties  which were addressed  during the fourth quarter of 1999
through new  financing  arrangements.  Additionally,  Party City entered into an
agreement with its trade vendors, including Amscan, whereby, among other things,
the vendors have received  promissory notes for one-third of their then existing
accounts  receivable  balances.  The Company has  reclassified the amount of the
notes ($2.2  million at December 31, 1999) from  accounts  receivable to prepaid
expenses and other  current  assets upon receipt of this  promissory  note.  The
promissory  notes have been paid in January 2000.  Although the Company believes
its relationships  with Party City and its franchisees are good, if they were to
reduce their volume of purchases from the Company  significantly,  the Company's
financial  condition  and results of operations  could be  materially  adversely
affected.

RECLASSIFICATIONS

         In  connection  with  the  preparation  of the  accompanying  financial
statements,  the Company has  reclassified  certain  amounts in prior  financial
statements to conform to the current year presentation.

USE OF ESTIMATES

         Management has made estimates and assumptions relating to the reporting
of assets and  liabilities to prepare these  financial  statements in conformity
with  accounting  principles  generally  accepted in the United  States.  Actual
results could differ from those estimates.

NOTE 3 - INVENTORIES

         Inventories  at December 31, 1999 and 1998  consisted of the  following
(dollars in thousands):

<TABLE>
<CAPTION>

                                                                                     1999          1998
                                                                                   --------      --------
<S>                                                                                 <C>           <C>
         Finished goods......................................................       $50,278       $48,093
         Raw materials.......................................................         6,706         4,845
         Work-in process.....................................................         4,238         3,345
                                                                                   --------      --------
                                                                                     61,222        56,283
         Less:  reserve for slow moving and obsolete inventory...............        (2,029)       (1,592)
                                                                                   --------      --------
                                                                                    $59,193       $54,691
                                                                                   ========      ========
</TABLE>




                                      F-13
<PAGE>



                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999



NOTE 4 - PROPERTY, PLANT AND EQUIPMENT, NET

         Major classifications of property,  plant and equipment at December 31,
1999 and 1998 consisted of the following (dollars in thousands):



<TABLE>
<CAPTION>
                                                                                                               Estimated
                                                                                  1999            1998        Useful Lives
                                                                                --------        --------      ------------
<S>                                                                              <C>             <C>              <C>
         Machinery and equipment...........................................      $63,356         $56,025          3-15
         Buildings.........................................................       12,010          11,989         31-40
         Data processing equipment.........................................       19,618          15,300           5
         Leasehold improvements............................................        3,786           4,475          2-20
         Furniture and fixtures............................................        3,579           3,510           10
         Land..............................................................        2,237           2,237
                                                                                --------        --------
                                                                                 104,586          93,536
         Less:  accumulated depreciation and amortization..................      (42,877)        (34,276)
                                                                                --------        --------
                                                                                $ 61,709        $ 59,260
                                                                                ========        ========
</TABLE>

         Depreciation  and amortization  expense was $9,271,000,  $7,179,000 and
$5,980,000 for the years ended December 31, 1999, 1998 and 1997, respectively.

NOTE 5 - LOANS AND NOTES PAYABLE

         Loans and notes  payable  outstanding  at  December  31,  1999 and 1998
consisted of the following (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                                   1999           1998
                                                                                                 -------         ------
<S>                                                                                                <C>           <C>
         Revolving credit line with interest at LIBOR plus 2.25%
              (7.91%, at December 31,1998).................................................        $   -         $9,000
         Revolving credit line with interest at the prime rate  plus 1.25%
              (9.75% and 9.0% at  December 31, 1999 and 1998, respectively)................        3,500            500
         Revolving credit line with interest at the prime rate  plus 0.75%
              (9.25% and 8.5% at  December 31, 1999 and 1998, respectively)................          710            100
         Revolving credit line with interest at LIBOR plus 1.0%
              (7.0%  at  December 31, 1999)................................................          375
         Revolving credit line with interest at the U.K. bank rate plus 1.75%
              (7.5% and 9.0% at  December 31, 1999 and 1998, respectively).................          103             28
                                                                                                 -------        -------
                                                                                                  $4,688         $9,628
                                                                                                 =======        =======
</TABLE>

         Upon  consummation  of the Merger on  December  19,  1997,  the Company
entered into Bank Credit  Facilities  (see Note 6) which  include a  $50,000,000
revolving  credit  facility (the  "Revolving  Credit  Facility").  The Revolving
Credit  Facility has a term of five years and bears  interest,  at the option of
the Company,  at the lenders'  customary base rate plus, based on certain terms,
either 0.75% or 1.25% per annum or at the lenders'  customary  reserve  adjusted
Eurodollar rate plus 2.25% per annum. Interest on balances outstanding under the
Revolving  Credit  Facility are subject to adjustment in the future based on the
Company's  performance.  Amounts  drawn on the  Revolving  Credit  Facility  for
working  capital  purposes are also subject to an agreed upon borrowing base and
periodic reduction of outstanding  balances.  All borrowings under the Revolving
Credit Facility are guaranteed by the Company's  domestic  subsidiaries  and are
subject to mandatory prepayments upon the occurrence of certain events (see Note
6). In connection  with and upon  consummation of the  Acquisition,  the Company
amended and  restated the  Revolving  Credit  Facility's  credit  agreements  to
provide for, among other things, the additional senior term debt.

         In  addition  to the  Revolving  Credit  Facility,  the  Company  has a
$400,000  Canadian  dollar  denominated  revolving  credit  facility which bears
interest at the Canadian prime rate and expires on August 24, 2000, a $1,000,000
British  Pound  Sterling  denominated  revolving  credit  facility  which  bears
interest at the U.K. base rate




                                      F-14
<PAGE>


                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999






plus 1.75% and expires on May 26, 2000 and $1,000,000  revolving credit facility
which bears  interest at LIBOR plus 1.0% and  expires on January  31,  2001.  No
borrowings  were  outstanding  under the Canadian dollar  denominated  revolving
credit facility at December 31, 1999 and 1998.

         The  weighted  average  interest  rates  on  loans  and  notes  payable
outstanding at December 31, 1999 and 1998 were 9.40% and 7.98%, respectively.

         Prior to the Merger,  the Company  maintained  three interest rate swap
contracts covering $25,000,000 of outstanding  obligations under its LIBOR based
variable rate revolving credit agreement. The contracts fixed the interest rates
as indicated below and entitled the Company to settle with the counterparty on a
quarterly basis, the product of the notional amount times the amount, if any, by
which the ninety day LIBOR rate differed from the fixed rate. The contracts were
terminated on December 19, 1997, in  conjunction  with the Merger,  at a cost of
$1,030,000,  which was reported as a non-recurring charge in connection with the
Merger (see Note 7). Net payments to the  counterparty  under the swap contracts
for the year ended  December  31, 1997 which have been  recorded  as  additional
interest expense, were as follows (dollars in thousands):

<TABLE>
<CAPTION>

                                    Notional                                      Additional Interest
         Date of contract            Amount           Term         Fixed Rate          Expense
         ----------------            ------           ----         ----------          -------
<S>                                 <C>             <C>               <C>                <C>
         September 28, 1994.......  $  5,000        10 years          7.945%             $109
         May 12, 1995.............  $ 10,000         5 years          6.590%               70
         July 20, 1995............  $ 10,000        10 years          6.750%              102
                                                                                         ----
                                                                                         $281
                                                                                         ====
</TABLE>

NOTE 6 - LONG-TERM INDEBTEDNESS

         Long-term  indebtedness  at December 31, 1999 and 1998 consisted of the
following (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                            1999           1998
                                                                                            ----           ----

<S>                                                                                       <C>            <C>
         Senior Subordinated Notes (a)..............................................      $110,000       $110,000
         Term loan (b)..............................................................       154,057        155,629
         Mortgage obligation (c)....................................................         2,814          3,407
         Note to former shareholder and other (d) ..................................           734            922
         Capital lease obligations (e)..............................................         2,848          3,718
                                                                                         ---------      ---------
                 Total long-term obligations........................................       270,453        273,676
         Less: current portion......................................................        (3,562)        (3,549)
                                                                                         ---------      ---------
         Long-term obligations, excluding current portion...........................      $266,891       $270,127
                                                                                         =========      =========
</TABLE>

         On  December  19,  1997,  the  Company  issued  $110,000,000  aggregate
principal amount of 9 7/8% Senior  Subordinated  Notes due in 2007 (the "Notes")
and  entered  into  a bank  credit  agreement  (the  "Bank  Credit  Facilities")
providing  for  borrowings in the aggregate  principal  amount of  approximately
$117,000,000  under a term loan (the "Term Loan") and revolving loan  borrowings
of up to $50,000,000  under a revolving  credit facility (the "Revolving  Credit
Facility") (see Note 5) (collectively, the "Merger Financings"). The proceeds of
the Merger  Financings  were used to fund the payment of the cash portion of the
Merger consideration,  to refinance certain existing outstanding indebtedness of
the Company,  to pay  transaction  costs incurred in connection with the Merger,
and for general corporate purposes.  The Company is required to make prepayments
on the Bank  Credit  Facilities  under  certain  circumstances,  including  upon
certain  asset  sales and  issuance  of debt or equity  securities,  subject  to
certain  exceptions.  Such mandatory  prepayments  will be applied to prepay the
Term Loan first (on a pro rata  basis) and  thereafter  to prepay the  Revolving
Credit  Facility  and to reduce the  commitments  thereunder.  The  Company  may
prepay,  in whole or in part,  borrowings  under the Term Loan.  Call protection
provisions apply to certain  mandatory  prepayments of borrowings under the Term
Loan.  The Company may prepay  borrowings  under or reduce  commitments  for the
Revolving Credit Facility, in whole or in part, without penalty. The Bank Credit
Facilities are




                                      F-15
<PAGE>



                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999



guaranteed by the Company's  domestic  subsidiaries (the "Guarantors") (see Note
15). Subject to certain exceptions,  all extensions of credit to the Company and
all guarantees are secured by all existing and after-acquired  personal property
of the Company and the Guarantors,  including,  subject to certain exceptions, a
pledge of all of the stock of all  subsidiaries  owned by the  Company or any of
the  Guarantors and first  priority  liens on  after-acquired  real property and
leasehold interests of the Company and the Guarantors.  The guarantees are joint
and several guarantees,  irrevocable and full and unconditional,  limited to the
largest  amount  that  would not render  such  guarantee  obligations  under the
guarantee subject to avoidance under any applicable  federal or state fraudulent
conveyance  or similar  law. In  connection  with and upon  consummation  of the
Acquisition,  the Company  amended and restated its Bank Credit  Facilities,  to
provide for, among other things,  additional borrowings of $40,000,000 under the
Term Loan (see Note 1).

(a)  The Senior  Subordinated  Notes were sold by the  Company on  December  19,
     1997, and were  subsequently  resold to qualified  institutional  buyers in
     reliance upon Rule 144A and  Regulation S under the  Securities Act of 1933
     (the "Note  Offering").  In connection with the Note Offering,  the Company
     entered into a Registration Rights Agreement,  which granted holders of the
     Notes certain  exchange and  registration  rights.  In February  1998,  the
     Company  filed with the  Commission  a  Registration  Statement on Form S-4
     offering to exchange  registered notes (the "Exchange Notes") for the Notes
     issued in connection with the Note Offering. The terms of the Notes and the
     Exchange Notes are substantially identical.

     The Notes bore and Exchange  Notes bear  interest at a rate equal to 9 7/8%
     per annum.  Interest is payable semi-annually on June 15 and December 15 of
     each year.  The Exchange Notes are redeemable at the option of the Company,
     in  whole  or in  part,  at any time on or  after  December  15,  2002,  at
     redemption  prices  ranging from 104.937% to 100%,  plus accrued and unpaid
     interest  to the date of  redemption.  In  addition,  at any time  prior to
     December 15, 2000,  up to an  aggregate of 35% of the  principal  amount of
     Exchange  Notes will be redeemable at the option of the Company,  on one or
     more occasions,  from the net proceeds of public or private sales of common
     stock of, or contributions to the common equity capital  of, the Company at
     a price of 109.875% of the principal amount of the Exchange Notes, together
     with  accrued  and  unpaid  interest,  if any,  to the date of  redemption;
     provided  that at  least  $65,000,000  in  aggregate  principal  amount  of
     Exchange Notes remains outstanding  immediately after each such redemption.
     At any time on or prior to December 15, 2002,  the Exchange  Notes may also
     be redeemed  as a whole but not in part at the option of the  Company  upon
     the occurrence of a Change of Control, as defined in the note indenture, at
     a redemption  price equal to 100% of the principal  amount thereof plus the
     Applicable Premium, as defined in the note indenture, together with accrued
     and unpaid interest, if any, to the date of redemption. If the Company does
     not redeem the Exchange Notes upon a Change of Control, the Company will be
     obligated to make an offer to purchase the Exchange  Notes,  in whole or in
     part,  at a price equal to 101% of the  aggregate  principal  amount of the
     Exchange Notes,  plus accrued and unpaid  interest,  if any, to the date of
     purchase.  If a Change of Control  were to occur,  the Company may not have
     the  financial  resources  to repay all of its  obligations  under the Bank
     Credit Facilities, the note indenture and the other indebtedness that would
     become payable upon the occurrence of such Change of Control.

(b)  The Term Loan provides for amortization (in quarterly  installments) of one
     percent of the principal  amount  thereof per year for the first five years
     and  32.3%  and  62.7% of the  principal  amount  thereof  in the sixth and
     seventh years, respectively. The Term Loan bears interest, at the option of
     the Company,  at the lenders'  customary base rate plus 1.375% per annum or
     at the lenders' customary reserve adjusted  Eurodollar rate plus 2.375% per
     annum.  At December 31, 1999 and 1998,  the floating  interest  rate on the
     Term Loan was 8.52% and 7.68%,  respectively.  The Company is  obligated to
     obtain interest rate protection,  pursuant to interest rate swaps,  caps or
     other similar arrangements satisfactory to GS Credit Partners, with respect
     to a notional  amount of not less than  one-half  of the  aggregate  amount
     outstanding under the Term Loan, which protection must remain in effect for
     not less than  three  years  from the date of  borrowing.  The  Company  is
     currently  involved in three interest rate swap  transactions  with Goldman
     Sachs Capital Markets,  L.P. ("GSCM") and a financial  institution covering
     $123,330,000  of its  outstanding  borrowings  under  the  Term  Loan.  The
     interest rate swap  contracts  require the Company to settle the difference
     in interest  obligations  quarterly.  Net payments (receipts) to (from) the
     counterparty under the swap contracts for the years ended December 31, 1999
     and 1998, respectively, which have been recorded as additional




                                      F-16
<PAGE>


                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999






(reduction of) interest expense, were as follows (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                   Additional (Reduction of)
                                                                                      Interest Expense
                                    Notional                                          ----------------
         Date of contract            Amount         Term        Fixed Rate             1999      1998
         ----------------            ------         ----        ----------             ----      ----
<S>                                  <C>          <C>              <C>                 <C>       <C>
         December 31, 1997........   $57,330      3 years          8.36%               $868      $677
         September 30, 1998.......   $35,000      3 years          7.18%               (203)      (44)
         September 17, 1999.......   $31,000      2 years          8.80%                 74
                                                                                       ----      ----
                                                                                       $739      $633
                                                                                       ====      ====
</TABLE>

(c)  At  December  31,  1999 and 1998,  the  Company  had a mortgage  obligation
     payable to a financial  institution relating to a distribution facility due
     September  13, 2004.  The mortgage was  collateralized  by the related real
     estate asset of the Company and its interest rate was 8.51% at December 31,
     1999 and 1998.

(d)  In conjunction with the acquisition of Amscan Holdings Limited in 1998, the
     Company issued a non-interest  bearing note to the former shareholder which
     is payable  through April 2004 (see Note 1). At December 31, 1999 and 1998,
     the note to the former shareholder was $493,000 and $589,000, respectively.
     The remaining portion relates to a note payable issued to a former employee
     of Anagram prior to the Acquisition  which is payable through March 2002 at
     a fixed interest rate of 10%.

(e)  The   Company has   entered into various  capital leases for  machinery and
     equipment with implicit interest  rates ranging from  4.71% to 9.50%. which
     extend to 2003.

         At December 31, 1999,  principal  maturities  of long-term  obligations
(including interest) consisted of the following (dollars in thousands):

<TABLE>
<CAPTION>

                                                            Mortgage, Notes              Capital
                                                               and Loans            Lease Obligations          Total
                                                               ---------            -----------------          -----

<S>                                                          <C>                        <C>                <C>
         2000..........................................      $    2,603                 $  1,323           $    3,926
         2001..........................................           2,563                    1,571                4,134
         2002..........................................           2,431                      154                2,585
         2003..........................................          51,549                       37               51,586
         2004..........................................          99,047                        -               99,047
         Thereafter....................................         110,000                        -              110,000
                                                              ---------                  -------            ---------
                                                                268,193                    3,085              271,278
         Amount representing interest..................            (588)                    (237)                (825)
                                                              ---------                  -------            ---------
         Long-term obligations.........................        $267,605                   $2,848             $270,453
                                                               ========                   ======             ========
</TABLE>


NOTE 7 - NON-RECURRING ITEMS

         During the fourth quarter of 1999, the Company  recorded  non-recurring
charges of $1.0 million in association  with the proposed  construction of a new
distribution  facility.  The non-recurring  charges  represented  building costs
written-off due to the relocation of the proposed site.

         In the  second  quarter of 1998 the  Company  recorded a charge of $2.4
million for the restructuring of its distribution  operations which included the
closure of distribution  facilities in California and Canada.  The restructuring
was  substantially  completed by December 1998 and included the  elimination  of
approximately  100  positions  and  the  sale  of  the  Canadian  facility.  The
restructuring  charges were comprised of the non-cash write-down of $1.3 million
relating  to  property,  plant  and  equipment,  the  accrual  of  future  lease
obligations of $0.5 million and severance and other costs of $0.6 million.

         In  connection   with  the  Merger  in  1997,   the  Company   recorded
non-recurring  charges of  $22,083,000,  comprised of $11,652,000 in transaction
costs,  $7,500,000 of compensation to an officer,  $1,901,000 for the redemption
of Company Stock Options and $1,030,000 of debt retirement costs.




                                      F-17
<PAGE>


                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999




NOTE 8 - EMPLOYEE BENEFIT PLANS

         Certain  subsidiaries of the Company maintain  profit-sharing plans for
eligible employees providing for annual discretionary  contributions to a trust.
Eligible employees are full-time domestic employees who have completed a certain
length of service, as defined, and attained a certain age, as defined. The plans
require  the  subsidiaries  to  match  25% to 100% of up to the  first  6% of an
employee's annual salary  voluntarily  contributed to the plan.  Benefit expense
for the  years  ended  December  31,  1999,  1998  and 1997  totaled  $1,906,000
$1,822,000, and $1,432,000, respectively.

         No shares of Company  Common Stock were issued under the Employee Stock
Ownership  Plan (the  "ESOP")  during  the year  ended  December  31,  1997.  In
connection  with the Merger in 1997,  the ESOP shares were converted to cash and
the ESOP plan and assets were merged into the profit-sharing plan.

NOTE 9 - STOCK OPTION PLAN

         The Company adopted the Amscan Holdings, Inc. Stock Incentive Plan (the
"1997 Stock  Incentive  Plan") in conjunction  with the Merger in 1997. The 1997
Stock Incentive Plan is administered by the Board of Directors.  Under the terms
of the 1997 Stock  Incentive  Plan,  the Board may award  Company  Common Stock,
stock  options and stock  appreciation  rights to certain  directors,  officers,
employees and consultants of the Company and its affiliates. The vesting periods
for awards are determined by the Board at the time of grant.  As of December 31,
1999,  there were 135 shares of Company Common Stock reserved for issuance under
the 1997 Stock  Incentive Plan. The 1997 Stock Incentive Plan will terminate ten
years after its effective date; however, awards outstanding as of such date will
not be affected or impaired by such termination.

         On December  19,  1997,  the Company  converted  89,000  stock  options
granted in 1997 and 425,000  stock options  granted in 1996,  under the terms of
the 1996 Stock Option Plan for Key  Employees  (the "1996 Stock  Option  Plan"),
with exercise prices of $12.00,  $13.00 and $13.125, into cash of $1,901,000 and
16.03 stock  options  ("Rollover  Options")  issued  under the terms of the 1997
Stock Incentive Plan, with exercise prices of $54,545,  $59,091 and $59,659. The
cash paid upon  conversion of the stock  options is reported as a  non-recurring
charge of the Merger in 1997 (see Note 7).

         The options  granted under the 1997 Stock  Incentive Plan vest in equal
installments  on each of the first five  anniversaries  of the grant  date.  The
options are  non-transferable  (except under certain limited  circumstances) and
have a term  of ten  years.  The  following  table  summarizes  the  changes  in
outstanding  options  under the 1997 Stock  Incentive  Plan for the years  ended
December 31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>

                                                                           Average              Average Fair Market
                                                 Options               Exercise Price           Value at Grant Date
                                                 -------               --------------           -------------------

Activity:
<S>                                               <C>                    <C>                        <C>
      Rollover Options Granted..............      16.030                 $  55,916                  $  39,018
      Granted...............................      85.146                    75,000                     26,737
                                                --------
Outstanding at December 31, 1997............     101.176
      Granted...............................       4.450                    75,000                     26,737
      Granted...............................       6.648                   125,000                     24,562
      Canceled..............................      (0.555)                   75,000
                                                --------
Outstanding at December 31, 1998............     111.719
      Granted...............................      20.680                   125,000                     44,562
      Canceled..............................      (2.444)                   93,387
                                                --------
Outstanding at December 31, 1999............     129.955
                                                 =======

Exercisable at December 31, 1997............           -                         -
Exercisable at December 31, 1998............      20.124                    71,961
Exercisable at December 31, 1999............      42.018                    73,713
</TABLE>



                                      F-18
<PAGE>


                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999





         The average  exercise price for options  outstanding as of December 31,
1999 was $82,652 with  exercise  prices  ranging  from $54,545 to $125,000.  The
average remaining contractual life of those options was 8.4 years.

         The Company has adopted the disclosure-only provisions of SFAS No. 123.
Accordingly,  no  compensation  cost has been  recognized in connection with the
issuance of options  under  either stock option plan as all options were granted
with exercise  prices either equal to or greater than the estimated  fair market
value of the  Common  Stock on the date of  grant.  Had the  Company  determined
stock-based  compensation  based on the fair value of the options granted at the
grant  date,  consistent  with the method  prescribed  under SFAS No.  123,  the
Company's  net income  (loss)  would have been  reduced  (increased)  to amounts
indicated below (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                     Years Ended December 31,
                                                                                     ------------------------
                                                                                   1999        1998        1997
                                                                                   ----        ----        ----
   Net income (loss):
<S>                                                                              <C>          <C>         <C>
         As reported.......................................................      $10,207      $6,709      $(182)
         SFAS No. 123 pro forma............................................       $9,793      $6,355      $(249)
</TABLE>

         It has  been  assumed  that the  estimated  fair  value of the  options
granted in 1999,  1998 and 1997 under the 1997 Stock Incentive Plan is amortized
on a straight line basis to compensation expense, net of taxes, over the vesting
period of the grant, which is approximately five years. The estimated fair value
of each  option on the date of grant was  determined  using  the  minimum  value
method with the following assumptions:  dividend yield of 0%; risk-free interest
rate of 6.50%, and expected lives of seven years.

         It has  been  assumed  that the  estimated  fair  value of the  options
granted in 1997 under the 1996 Stock Option Plan is amortized on a straight line
basis to  compensation  expense,  net of taxes,  over the vesting  period of the
grant,  which is  approximately  four years.  The  estimated  fair value of each
option on the date of grant is $5.22,  using  the  Black-Scholes  option-pricing
model with the following assumptions:  dividend yield of 0%; expected volatility
of 25%; risk-free interest rate of 6.43%; and expected lives of seven years.

NOTE 10- INCOME TAXES

         A summary of domestic and foreign  pre-tax income  follows  (dollars in
thousands):

<TABLE>
<CAPTION>

                                                                                        Years Ended December 31,
                                                                                        ------------------------
                                                                                   1999            1998           1997
                                                                                   ----            ----           ----
<S>                                                                              <C>             <C>             <C>
         Domestic  ........................................................      $14,035         $10,945         $6,655
         Foreign  .........................................................        3,345             659          1,021
                                                                                 -------         -------         ------
         Total  ...........................................................      $17,380         $11,604         $7,676
                                                                                 =======         =======         ======
</TABLE>


         The provision for income taxes  consisted of the following  (dollars in
thousands):

<TABLE>
<CAPTION>

                                                                                         Years Ended December 31,
                                                                                         ------------------------
                                                                                   1999            1998           1997
                                                                                   ----            ----           ----
         Current:
<S>                                                                               <C>            <C>             <C>
                Federal ..................................................        $1,734         $ 1,648         $4,222
                State.....................................................           490             455          1,174
                Foreign...................................................         1,112             272            704
                                                                                 -------         -------        -------
                  Total current provision.................................         3,336           2,375          6,100
         Deferred:
                Federal...................................................         2,745           1,911          1,250
                State.....................................................           772             542            375
                Foreign...................................................           247             (12)           (60)
                                                                                 -------         -------        -------
                  Total deferred provision................................         3,764           2,441          1,565
                                                                                 -------         -------        -------
         Income tax expense...............................................        $7,100          $4,816         $7,665
                                                                                  ======          ======         ======
</TABLE>



                                      F-19
<PAGE>



                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999





         Deferred   income  taxes  reflect  the  net  tax  effect  of  temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Deferred income
tax  assets  and  liabilities  from  domestic  jurisdictions  consisted  of  the
following at December 31 (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                                  1999            1998
                                                                                                -------          ------
         Current deferred tax assets:
<S>                                                                                               <C>            <C>
         Allowance for doubtful accounts..................................................        $1,331         $1,434
         Accrued liabilities..............................................................           312            454
         Inventories......................................................................         1,158          1,052
         Charitable contributions carryforward............................................         1,222            640
         Other............................................................................           286            373
                                                                                                  ------         ------
              Current deferred tax assets (included in
                prepaid expenses and other current assets)................................        $4,309         $3,953
                                                                                                  ======         ======

         Non-current deferred tax liabilities, net:

         Property, plant and equipment....................................................       $12,275         $8,762
         Future taxable income resulting from a change in
              accounting method for tax purposes..........................................           219            438
         Royalty reserves.................................................................          (462)          (620)
         Other............................................................................           (31)          (452)
                                                                                                 -------         ------
              Non-current deferred tax liabilities, net...................................       $12,001         $8,128
                                                                                                 =======         ======
</TABLE>

         A  non-current  foreign  deferred tax asset of $533,000 and $780,000 at
December  31,  1999 and  1998,  respectively,  is  attributable  to  non-current
obligations  recognized in connection  with the  Acquisition  and is included in
non-current  other assets,  net. In assessing the  realizability of deferred tax
assets,  management  considers  whether  it is more  likely  than not that  some
portion  or all of the  deferred  tax  assets  will be  realized.  The  ultimate
realization  of deferred tax assets is dependent  upon the  generation of future
taxable income during the periods in which those  temporary  differences  become
deductible.   Management  considers  the  scheduled  reversal  of  deferred  tax
liabilities,  projected  future taxable income,  and tax planning  strategies in
making  this  assessment.   Based  upon  the  level  of  historical  income  and
projections for future taxable income over the periods in which the deferred tax
assets are deductible,  management  believes it is more likely than not that the
Company will realize the benefits of these deductible differences.

         The difference between the Company's  effective income tax rate and the
federal statutory income tax rate of 35.0% is reconciled below:

<TABLE>
<CAPTION>

                                                                                             Years Ended December 31,
                                                                                             ------------------------
                                                                                      1999           1998            1997
                                                                                      ----           ----            ----
<S>                                                                                   <C>             <C>            <C>
         Provision at federal statutory income tax rate.........................      35.0%           35.0%          35.0%
         Effect of non-deductible charges related
             to the Merger  ....................................................                                     51.2
         State income tax, net of federal tax benefit  .........................       4.8             6.1           20.2
         Other .................................................................       1.1             0.4           (6.5)
                                                                                     -----             ---          ------
         Effective income tax rate .............................................      40.9%           41.5%          99.9%
                                                                                      ====            ====           ====
</TABLE>

         At  December  31,  1999,   the  Company's   share  of  the   cumulative
undistributed earnings of foreign subsidiaries was approximately $11,800,000. No
provision  has  been  made  for  U.S.  or  foreign   withholding  taxes  on  the
undistributed  earnings  of  foreign  subsidiaries  because  such  earnings  are
expected to be reinvested  indefinitely in the subsidiaries'  operations.  It is
not practical to estimate the amount of additional  tax that might be payable on
these foreign  earnings in the event of  distribution  or sale;  however,  under
existing  law,  foreign tax credits would be available to  substantially  reduce
incremental U.S. taxes payable on amounts repatriated.


                                      F-20

<PAGE>



                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999



NOTE 11- CAPITAL STOCK

         At December 31, 1999 and December 31, 1998, respectively, the Company's
authorized capital stock consisted of 5,000,000 shares of preferred stock, $0.10
par value,  of which no shares were issued or  outstanding,  and 3,000 shares of
common  stock,  $0.10 par  value,  of which  1,132.41  shares  were  issued  and
outstanding.

         At December 31, 1999 and 1998, the Company held three notes  receivable
with balances  totaling $664,000 and $718,000,  respectively,  from two officers
and a former  officer of the Company.  These notes arose in connection  with the
Merger in 1997 whereby the Company  lent the  officers,  at that time,  money to
acquire an aggregate of 10 shares of Common Stock at the then fair market value.
The notes  from the  current  officers  bear  interest  at 6.07%  and  mature in
December  2000.  The note from the former  officer  bears  interest at 6.65% and
matures in March 2009. The notes receivable are shown on the balance sheets as a
reduction in stockholders' deficit.

         At December 31, 1999,  there were 200.74 shares of Common Stock held by
employees  of which 3.33  shares  were not yet fully paid and 8.75  shares  were
subject  to  future  vesting  provisions.  Under  the  terms of a  stockholders'
agreement  ("Stockholders'  Agreement"),  the  Company can  purchase  all of the
shares held by the  employee  stockholders,  and the  employees  can require the
Company to purchase all of the shares held by the employee  stockholders,  under
certain  circumstances.  Prior to December 31, 1998,  the obligation to purchase
employee  shares  was  assignable  to GSCP at a cost of up to $15  million.  The
purchase price as prescribed in the Stockholders'  Agreement is to be determined
through  a market  valuation  of the  minority-held  shares  or,  under  certain
circumstances,  based on cost.  At December 31, 1999,  and 1998,  the  aggregate
amount  that may be payable by the  Company to  employee  stockholders  based on
fully  paid  and  vested  shares,  is  approximately  $23,582,000  and has  been
classified as redeemable common stock ("Redeemable Common Stock").

NOTE 12- COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS

LEASE AGREEMENTS

         The  Company is  obligated  under  various  capital  leases for certain
machinery  and equipment  which expire on various dates through  October 1, 2003
(see  Note 6). At  December  31,  1999 and 1998,  the  amount of  machinery  and
equipment and related accumulated amortization recorded under capital leases and
included with property,  plant and equipment consisted of the following (dollars
in thousands):

                                                            1999         1998
                                                           ------       ------

       Machinery and equipment  .....................      $7,102       $7,243
       Less:  accumulated amortization  .............      (3,107)      (2,749)
                                                           ------       ------
                                                           $3,995       $4,494
                                                           ======       ======

         Amortization  of assets  held under  capitalized  leases is included in
depreciation expense.

         The Company has several noncancelable  operating leases principally for
office and manufacturing space, showrooms, and warehouse equipment,  that expire
on various dates through 2017.  These leases  generally  contain renewal options
and  require  the  Company  to pay real  estate  taxes,  utilities  and  related
insurance.

         At December 31, 1999, the Company also has a  non-cancelable  operating
lease with a real estate  entity owned by an employee for  warehouse  space that
expires in July 2003.  Future  minimum  lease  payments  under this lease  total
$42,000  for each of the years  ended  December  31,  2000,  2001,  and 2002 and
$23,000 for the year ended December 31, 2003.




                                      F-21
<PAGE>



                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999




         At December 31, 1999, future minimum lease payments under all operating
leases consisted of the following (dollars in thousands):

       2000  .................................................      $ 9,545
       2001  .................................................        8,791
       2002  .................................................        7,163
       2003  .................................................        4,754
       2004  .................................................        3,128
       Thereafter  ...........................................       19,106
                                                                   --------
                                                                    $52,487

         Rent expense for the years ended  December 31, 1999,  1998 and 1997 was
$9,038,000,  $7,601,000,  and  $6,844,000,   respectively,  of  which  $166,000,
$233,000, and $2,089,000,  respectively, related to leases with related parties.
In addition,  during 1999, the Company  terminated its operating lease with real
estate entities owned by the Estate for warehouse space that expired on December
31, 2000.  As an incentive to terminate the lease prior to its  expiration,  the
Company received a fee of $200,000.

ROYALTY AGREEMENTS

         In  conjunction  with the  Acquisition,  the Company  has entered  into
royalty  agreements  with  various  licensers  of  copyrighted  and  trademarked
characters  and designs used on the Company's  balloons  which  require  royalty
payments  based on sales of the  Company's  products,  or in some cases,  annual
minimum royalties.

         At December 31, 1999 future  minimum  royalties  payable was as follows
(dollars in thousands):

                  2000...................................         $1,371
                  2001...................................            841
                  2002...................................            300
                                                                  ------
                                                                  $2,512
                                                                  ======

LEGAL PROCEEDINGS

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

RELATED PARTY TRANSACTIONS

         On October 1, 1999,  the Company  issued a  $1,000,000  line of credit,
expiring  December  31,  2001,  to the chief  executive  officer of the Company.
Amounts  borrowed are secured by a lien on the equity  interests which the chief
executive  officer  has in the  Company.  In  addition,  amounts  borrowed  bear
interest at the Company's  incremental  borrowing rate in effect during the time
such loan is  outstanding  and interest  shall be due and payable on a quarterly
basis.  At  December  31,  1999,  the chief  executive  officer  had  borrowings
outstanding of $600,000 under this line of credit (interest at 9.75% at December
31, 1999) and the  borrowings  have been included in  non-current  other assets,
net.

NOTE 13 - SEGMENT INFORMATION

INDUSTRY SEGMENTS

         The Company  operates  in one  operating  segment  which  involves  the
design,  manufacture,  contract for  manufacture  and  distribution of party and
novelty goods.




                                      F-22
<PAGE>



                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999





GEOGRAPHIC SEGMENTS

         The  Company's  export  sales,  other  than  those  intercompany  sales
reported  below as sales  between  geographic  areas,  are not  material.  Sales
between  geographic  areas  primarily  consist  of sales of  finished  goods for
distribution in the foreign markets.  No single foreign operation is significant
to the Company's consolidated operations.  Intersegment sales between geographic
areas are made at cost plus a share of operating profit.

         The Company's  geographic  area data for each of the three fiscal years
ended December 31, 1999, 1998 and 1997 were as follows (dollars in thousands):

<TABLE>
<CAPTION>

                                                                              Domestic     Foreign     Eliminations  Consolidated
                                                                              --------     -------     ------------  ------------

         1999
         ----
<S>                                                                           <C>          <C>           <C>           <C>
         Sales to unaffiliated customers .................................    $ 258,304    $  47,808                   $ 306,112
         Sales between geographic areas ..................................       20,977           -      $ (20,977)           -
                                                                              ---------    ---------     ---------     ---------
         Net sales .......................................................    $ 279,281    $  47,808     $ (20,977)    $ 306,112
                                                                              =========    =========     =========     =========

         Income from operations ..........................................    $  39,609    $   4,171                   $  43,780
                                                                              =========    =========
         Interest expense, net ...........................................                                                26,365
         Other expense, net ..............................................                                                    35
                                                                                                                       ---------
         Income before income taxes and minority
             interests ...................................................                                             $  17,380
                                                                                                                       =========

         Long-lived assets ...............................................    $ 127,062    $   7,685                   $ 134,747
                                                                              =========    =========                   =========


                                                                              Domestic      Foreign    Eliminations  Consolidated
                                                                              ---------     -------    ------------  ------------

         1998
         ----
         Sales to unaffiliated customers .................................    $ 203,232     $  32,062                  $ 235,294
         Sales between geographic areas ..................................       10,643           146    $ (10,789)          -
                                                                              ---------     ---------    ---------     ---------
         Net sales .......................................................    $ 213,875     $  32,208    $ (10,789)    $ 235,294
                                                                              =========     =========    =========     =========

         Income from operations ..........................................    $  33,332     $   1,116                  $  34,448
                                                                              =========     =========
         Interest expense, net ...........................................                                                22,965
         Other income, net ...............................................                                                  (121)
                                                                                                                       ---------
         Income before income taxes and minority
             interests ...................................................                                             $  11,604
                                                                                                                       =========

         Long-lived assets ...............................................    $ 120,588     $  14,004                  $ 134,592
                                                                              =========     =========                  =========


                                                                               Domestic     Foreign    Eliminations  Consolidated
                                                                              ---------     ---------  ------------  ------------

         1997
         ----
         Sales to unaffiliated customers .................................    $ 183,536     $  26,395                  $ 209,931
         Sales between geographic areas ..................................       11,556           308    $ (11,864)           -
                                                                              ---------     ---------    ---------     ---------
         Net sales .......................................................    $ 195,092     $  26,703    $ (11,864)    $ 209,931
                                                                              =========     =========    =========     =========

         Income from operations ..........................................    $   9,575     $   1,922                  $  11,497
                                                                              =========     =========
         Interest expense, net ...........................................                                                 3,892
         Other income, net ...............................................                                                   (71)
                                                                                                                       ---------
         Income before income taxes and minority
              interests ..................................................                                             $   7,676
                                                                                                                       =========

         Long-lived assets ...............................................    $  47,397     $   5,687                  $  53,084
                                                                              =========     =========                  =========
</TABLE>




                                      F-23
<PAGE>



                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999





NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS

         The  carrying   amounts  for  cash  and  cash   equivalents,   accounts
receivables,  deposits  and other  current  assets,  loans  and  notes  payable,
accounts   payable,   accrued  expenses  (non  derivatives)  and  other  current
liabilities  approximate fair value at December 31, 1999 and 1998 because of the
short-term maturity of those instruments or their variable rates of interest.

         The  carrying  amount  of  the  Company's  Senior   Subordinated  Notes
approximates  fair  value at  December  31,  1999 and 1998,  based on the quoted
market price of similar debt instruments.  The carrying amounts of the Company's
borrowings  under  its  Bank  Credit   Facilities  and  other  revolving  credit
facilities  approximate  fair value  because  such  obligations  generally  bear
interest at floating  rates.  The  carrying  amounts  for other  long-term  debt
approximates  fair value at December 31, 1999 and 1998,  based on the discounted
future cash flow of each instrument at rates currently  offered for similar debt
instruments of comparable maturity.

         The fair value of interest rate swaps is the estimated  amount that the
counterparty  would  receive  or pay to  terminate  the swap  agreements  at the
reporting  date,  taking into  account  current  interest  rates and the current
creditworthiness of the swap counterparties.  Termination of the swap agreements
at December 31, 1999 and 1998, would result in a gain (loss) of $0.9 million and
$(1.6) million, respectively.

NOTE 15 - CONDENSED CONSOLIDATING FINANCIAL INFORMATION (UNAUDITED)

         The  Notes,  Exchange  Notes  and  borrowings  under  the  Bank  Credit
Facilities are guaranteed jointly and severally,  fully and unconditionally,  by
the Guarantors (see Notes 5 and 6).

       Non-guarantor companies include the following:
       o   Amscan Distributors (Canada) Ltd.
       o   Amscan Holdings Limited
       o   Amscan (Asia-Pacific) Pty. Ltd.
       o   Amscan Partyartikel GmbH
       o   Amscan Svenska AB
       o   Amscan de Mexico, S.A. de C.V.
       o   Anagram International (Japan) Co., Ltd.
       o   Anagram Mexico S. de R.L. de C.V.
       o   Anagram Espana, S.A.
       o   Anagram France S.C.S.

         The following consolidating  information presents consolidating balance
sheets  as of  December  31,  1999  and  1998,  and  the  related  consolidating
statements of operations  and cash flows for each of the years in the three-year
period  ended  December 31, 1999 for the  combined  Guarantors  and the combined
non-guarantors  and  elimination  entries  necessary to consolidate the entities
comprising the combined companies.




                                      F-24
<PAGE>



                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


                           CONSOLIDATING BALANCE SHEET
                                December 31, 1999
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                         Amscan
                                                                      Holdings and   Combined
                                                                        Combined       Non-
                                                                       Guarantors   Guarantors   Eliminations Consolidated
                                                                       ----------   ----------   ------------ ------------

ASSETS
Current assets:
<S>                                                                     <C>          <C>          <C>          <C>
     Cash and cash equivalents ......................................   $     141    $     708                 $     849
     Accounts receivable, net .......................................      46,212       10,684                    56,896
     Inventories ....................................................      53,486        6,207    $    (500)      59,193
     Prepaid expenses and other current assets ......................      10,809          993                    11,802
                                                                        ---------    ---------    ---------    ---------
     Total current assets ...........................................     110,648       18,592         (500)     128,740
Property, plant and equipment, net ..................................      60,502        1,207                    61,709
Intangible assets, net ..............................................      57,595        5,736                    63,331
Other assets, net ...................................................      25,354          965      (16,612)       9,707
                                                                        ---------    ---------    ---------    ---------
     Total assets ...................................................   $ 254,099    $  26,500    $ (17,112)   $ 263,487
                                                                        =========    =========    =========    =========


LIABILITIES, REDEEMABLE COMMON STOCK
    AND STOCKHOLDERS' (DEFICIT) EQUITY

Current liabilities:
     Loans and notes payable ........................................   $   4,585    $     103                 $   4,688
     Accounts payable ...............................................      17,611        1,356                    18,967
     Accrued expenses ...............................................      11,685        4,647                    16,332
     Income taxes payable ...........................................       2,279          684                     2,963
     Current portion of long-term
       obligations ..................................................       3,443          119                     3,562
                                                                        ---------    ---------    ---------    ---------
     Total current liabilities ......................................      39,603        6,909                    46,512
Long-term obligations, excluding
  current portion ...................................................     266,517          374                   266,891
Deferred tax liabilities ............................................      11,989           12                    12,001
Other ...............................................................         437        9,641    $  (7,048)       3,030
                                                                        ---------    ---------    ---------    ---------
     Total liabilities ..............................................     318,546       16,936       (7,048)     328,434

Redeemable Common Stock .............................................      23,582                                 23,582

Commitments and Contingencies

Stockholders' (deficit) equity:
     Common Stock ...................................................                      339         (339)        --
     Additional paid-in capital .....................................         225          658         (658)         225
     Unamortized restricted Common Stock
        Award, net ..................................................        (405)                                  (405)
     Notes receivable from stockholders .............................        (664)                                  (664)
     (Deficit) retained earnings ....................................     (86,297)       9,188       (9,688)     (86,797)
     Accumulated other comprehensive loss ...........................        (888)        (621)         621         (888)
                                                                        ---------    ---------    ---------    ---------
         Total stockholders' (deficit) equity .......................     (88,029)       9,564      (10,064)     (88,529)
                                                                        ---------    ---------    ---------    ---------
         Total liabilities, redeemable Common

            Stock and stockholders' (deficit) equity ................   $ 254,099    $  26,500    $ (17,112)   $ 263,487
                                                                        =========    =========    =========    =========
</TABLE>



                                      F-25
<PAGE>





                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


                           CONSOLIDATING BALANCE SHEET
                                December 31, 1998
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                           Amscan
                                                                        Holdings and   Combined
                                                                          Combined       Non-
                                                                         Guarantors   Guarantors   Eliminations Consolidated
                                                                         ----------   ----------   ------------ ------------

ASSETS
Current assets:

<S>                                                                        <C>          <C>          <C>          <C>
     Cash and cash equivalents .........................................   $     523    $     594                 $   1,117
     Accounts receivable, net ..........................................      42,636        6,703                    49,339
     Inventories .......................................................      47,948        6,869    $    (126)      54,691
     Prepaid and other current assets ..................................       8,661          452                     9,113
                                                                           ---------    ---------    ---------    ---------
     Total current assets ..............................................      99,768       14,618         (126)     114,260
Property, plant and equipment, net .....................................      57,729        1,531                    59,260
Intangible assets, net .................................................      54,680       11,820                    66,500
Other assets, net ......................................................      28,781          653      (20,602)       8,832
                                                                           ---------    ---------    ---------    ---------
     Total assets ......................................................   $ 240,958    $  28,622    $ (20,728)   $ 248,852
                                                                           =========    =========    =========    =========


LIABILITIES, REDEEMABLE COMMON STOCK  AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:

     Loans and notes payable ...........................................   $   9,600    $      28                 $   9,628
     Accounts payable ..................................................      10,671          823                    11,494
     Accrued expenses ..................................................      13,034        4,486                    17,520
     Income taxes payable ..............................................         458          135                       593
     Current portion of long-term
       obligations .....................................................       3,506           43                     3,549
                                                                           ---------    ---------    ---------    ---------
     Total current liabilities .........................................      37,269        5,515                    42,784
Long-term obligations, excluding
  current portion ......................................................     270,118            9                   270,127
Deferred tax liabilities ...............................................       8,116           12                     8,128
Other ..................................................................       1,069       16,171    $ (13,687)       3,553
                                                                           ---------    ---------    ---------    ---------
     Total liabilities .................................................     316,572       21,707      (13,687)     324,592

Redeemable Common Stock ................................................      19,547                                 19,547

Commitments and Contingencies ..........................................

Stockholders' (deficit) equity:
     Common Stock ......................................................                      339         (339)        --
     Additional paid-in capital ........................................         225          658         (658)         225
     Unamortized restricted Common Stock
        Award, net .....................................................        (575)                                  (575)
     Notes receivable from stockholders ................................        (718)                                  (718)
     (Deficit) retained earnings .......................................     (92,843)       7,413       (7,539)     (92,969)
     Accumulated other comprehensive loss ..............................      (1,250)      (1,495)       1,495       (1,250)
                                                                            ---------    ---------    ---------    ---------
         Total stockholders' (deficit) equity ..........................     (95,161)       6,915       (7,041)     (95,287)
                                                                            ---------    ---------    ---------    ---------
         Total liabilities, redeemable Common

            Stock and stockholders' (deficit) equity ...................   $ 240,958    $  28,622    $ (20,728)   $ 248,852
                                                                           =========    =========    =========    =========
</TABLE>






                                      F-26
<PAGE>



                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


                      CONSOLIDATING STATEMENT OF OPERATIONS
                      For the Year Ended December 31, 1999
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                           Amscan
                                                                        Holdings and   Combined
                                                                          Combined       Non-
                                                                         Guarantors   Guarantors   Eliminations Consolidated
                                                                         ----------   ----------   ------------ ------------

<S>                                                                        <C>          <C>         <C>          <C>
Net sales ..............................................................   $ 279,988    $  47,477   $ (21,353)   $ 306,112
Cost of sales ..........................................................     182,985       31,952     (21,351)     193,586
                                                                           ---------    ---------   ---------    ---------
         Gross profit ..................................................      97,003       15,525          (2)     112,526
Operating expenses:
    Selling expenses ...................................................      19,015        5,440                   24,455
    General and administrative
      expenses .........................................................      27,536        5,905        (192)      33,249
    Art and development costs ..........................................      10,047                                10,047
    Non-recurring charges ..............................................         995                                   995
                                                                           ---------    ---------   ---------    ---------
         Income from operations ........................................      39,410        4,180         190       43,780
Interest expense, net ..................................................      25,735          630                   26,365
Other (income) expense, net ............................................      (2,513)         193       2,355           35
                                                                           ---------    ---------   ---------    ---------
         Income before income taxes
            and minority interests .....................................      16,188        3,357      (2,165)      17,380
Income taxes ...........................................................       5,979        1,121                    7,100
Minority interests .....................................................                       73                       73
                                                                           ---------    ---------   ---------    ---------
         Net income ....................................................   $  10,209    $   2,163   $  (2,165)   $  10,207
                                                                           =========    =========   =========    =========
</TABLE>









                                      F-27
<PAGE>




                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


                      CONSOLIDATING STATEMENT OF OPERATIONS
                      For the Year Ended December 31, 1998
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                             Amscan
                                                                          Holdings and   Combined
                                                                            Combined       Non-
                                                                           Guarantors   Guarantors   Eliminations  Consolidated
                                                                           ----------   ----------   ------------  ------------

<S>                                                                        <C>           <C>           <C>           <C>
Net sales ..............................................................   $ 215,650     $  31,808     $ (12,164)    $ 235,294
Cost of sales ..........................................................     141,322        21,871       (12,737)      150,456
                                                                           ---------     ---------     ---------     ---------
         Gross profit ..................................................      74,328         9,937           573        84,838
Operating expenses:
    Selling expenses ...................................................      13,408         3,794                      17,202
    General and administrative
      expenses .........................................................      18,788         4,836          (192)       23,432
    Art and development costs ..........................................       7,356                                     7,356
    Restructuring charges ..............................................       2,033           367                       2,400
                                                                           ---------     ---------     ---------     ---------
         Income from operations ........................................      32,743           940           765        34,448
Interest expense, net ..................................................      22,684           281                      22,965
Other income, net ......................................................        (833)          (58)          770          (121)
                                                                           ---------     ---------     ---------     ---------
         Income before income taxes
           and minority interests ......................................      10,892           717            (5)       11,604
Income taxes ...........................................................       4,350           466                       4,816
Minority interests .....................................................                        79                          79
                                                                           ---------     ---------     ---------     ---------
         Net income ....................................................   $   6,542     $     172     $      (5)    $   6,709
                                                                           =========     =========     =========     =========
</TABLE>






                                      F-28
<PAGE>




                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


                      CONSOLIDATING STATEMENT OF OPERATIONS
                      For the Year Ended December 31, 1997
                             (Dollars in thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                             Amscan
                                                                          Holdings and   Combined
                                                                            Combined       Non-
                                                                           Guarantors   Guarantors   Eliminations  Consolidated
                                                                           ----------   ----------   ------------  ------------

<S>                                                                         <C>           <C>          <C>           <C>
Net sales ..............................................................    $ 195,092     $  26,703    $ (11,864)    $ 209,931
Cost of sales ..........................................................      130,785        18,469      (12,683)      136,571
                                                                            ---------     ---------    ---------     ---------
         Gross profit ..................................................       64,307         8,234          819        73,360
Operating expenses:
    Selling expenses ...................................................       10,549         3,177                     13,726
    General and administrative
      expenses .........................................................       17,298         3,930         (456)       20,772
    Art and development costs ..........................................        5,282                                    5,282
    Non-recurring charges in
      connection with the Merger .......................................       22,083                                   22,083
                                                                            ---------     ---------    ---------     ---------
         Income from operations ........................................        9,095         1,127        1,275        11,497
Interest expense, net ..................................................        3,828            64                      3,892
Other (income) expense, net ............................................       (1,717)           51        1,595           (71)
                                                                            ---------     ---------    ---------     ---------
         Income before income taxes
           and minority interests ......................................        6,984         1,012         (320)        7,676
Income taxes ...........................................................        7,166           499                      7,665
Minority interests .....................................................                        193                        193
                                                                            ---------     ---------    ---------     ---------
         Net (loss) income .............................................    $    (182)    $     320    $    (320)    $    (182)
                                                                            =========     =========    =========     =========
</TABLE>





                                      F-29
<PAGE>




                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


                      CONSOLIDATING STATEMENT OF CASH FLOWS
                      For the Year Ended December 31, 1999
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                             Amscan
                                                                          Holdings and   Combined
                                                                            Combined       Non-
                                                                           Guarantors   Guarantors   Eliminations  Consolidated
                                                                           ----------   ----------   ------------  ------------

Cash flows from operating activities:
<S>                                                                         <C>          <C>          <C>          <C>
   Net income ..........................................................    $ 10,209     $  2,163     $ (2,165)    $ 10,207
   Adjustments to reconcile net income to net
     cash provided by (used in) operating activities:
      Depreciation and amortization ....................................      12,327          604                    12,931
      Amortization of deferred financing costs .........................         870                                    870
      (Gain) loss on disposal of property and equipment ................          (2)          88                        86
      Provision for doubtful accounts ..................................       2,288          618                     2,906
      Non-recurring charges ............................................         995                                    995
      Amortization of Restricted Common Stock award ....................         170                                    170
      Deferred income tax provision ....................................       3,517          247                     3,764
      Changes in operating assets and liabilities:
            Increase in accounts receivable ............................      (9,701)      (4,596)                  (14,297)
            (Increase) decrease in inventories .........................      (5,270)         656            2       (4,612)
            Decrease (increase) in prepaid expenses and other
               current assets and other, net ...........................          38         (677)                     (639)
            (Increase) decrease in other assets ........................      (8,293)       4,605        2,163       (1,525)
            Increase (decrease) in accounts payable, accrued
               expenses and income taxes payable .......................      12,765       (4,186)                    8,579
                                                                            --------     --------     --------     --------
            Net cash provided by (used in) operating activities ........      19,913         (478)        --         19,435

Cash flows from investing activities:

   Capital expenditures ................................................     (11,459)        (173)                  (11,632)
   Proceeds from disposal of property and equipment ....................         201           15                       216
                                                                            --------     --------     --------     --------
            Net cash used in investing activities ......................     (11,258)        (158)                  (11,416)

Cash flows from financing activities:

   Payments to acquire Common Stock in the Merger ......................         (29)                                   (29)
   Proceeds from loans, notes payable and long-term obligations ........         375           75                       450
   Repayment of loans, notes payable and long-term obligations .........      (9,116)        (126)                   (9,242)
   Other ...............................................................         729         (675)                       54
                                                                            --------     --------     --------     --------
            Net cash used in financing activities ......................      (8,041)        (726)        --         (8,767)
   Effect of exchange rate changes on cash .............................        (996)       1,476                       480
                                                                            --------     --------     --------     --------
            Net (decrease) increase in cash and cash
              equivalents ..............................................        (382)         114                      (268)
Cash and cash equivalents at beginning of year .........................         523          594                     1,117
                                                                            --------     --------     --------     --------
Cash and cash equivalents at end of year................................    $    141     $    708     $   --       $    849
                                                                            ========     ========     ========     ========
</TABLE>






                                      F-30
<PAGE>





                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


                      CONSOLIDATING STATEMENT OF CASH FLOWS
                      For the Year Ended December 31, 1998
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                Amscan
                                                                             Holdings and   Combined
                                                                               Combined       Non-
                                                                              Guarantors   Guarantors   Eliminations  Consolidated
                                                                              ----------   ----------   ------------  ------------

Cash flows from operating activities:
<S>                                                                           <C>           <C>           <C>           <C>
   Net income ............................................................    $   6,542     $     172     $      (5)    $   6,709
   Adjustments to reconcile net income to net
     cash provided by operating activities:
      Depreciation and amortization ......................................        7,954           547                       8,501
      Amortization of deferred financing costs ...........................          748                                       748
      Loss (gain) on disposal of property and equipment ..................            2           (24)                        (22)
      Provision for doubtful accounts ....................................        2,767           569                       3,336
      Restructuring charges ..............................................        1,999           401                       2,400
      Amortization of Restricted Common Stock award ......................          260                                       260
      Deferred income tax provision  (benefit) ...........................        2,469           (28)                      2,441
      Changes in operating assets and liabilities, net of
        acquisitions:
            (Increase) decrease in accounts receivable ...................       (1,138)           14                      (1,124)
            Decrease in inventories ......................................        4,701         2,026           126         6,853
            Decrease in prepaid expenses and other current assets,
            and other, net ...............................................        1,302           604           172         2,078
            Increase (decrease) in other assets ..........................        2,307        (3,097)          300          (490)
            Increase in accounts payable, accrued expenses
              and income taxes payable ...................................       (8,372)         (556)                     (8,928)
                                                                              ---------     ---------     ---------     ---------
            Net cash provided by operating activities ....................       21,541           628           593        22,762

Cash flows from investing activities:

   Cash paid for acquisitions ............................................      (78,382)                                  (78,382)
   Capital expenditures ..................................................       (7,334)         (180)                     (7,514)
   Proceeds from disposal of property and equipment ......................        2,694            75                       2,769
                                                                              ---------     ---------     ---------     ---------
            Net cash used in investing activities ........................      (83,022)         (105)                    (83,127)

Cash flows from financing activities:

   Net proceeds from sale of  Capital Stock ..............................          181                                       181
   Payments to acquire Common Stock in the Merger ........................      (93,155)                                  (93,155)
   Proceeds from loans, notes payable and long-term
     obligations net of debt issuance costs of $964 ......................       59,036            28                      59,064
   Repayment of loans, notes payable and long-term obligations ...........      (15,432)         (485)                    (15,917)
   Other .................................................................           65           400          (400)           65
                                                                              ---------     ---------     ---------     ---------
            Net cash used in financing activities ........................      (49,305)          (57)         (400)      (49,762)
   Effect of exchange rate changes on cash ...............................          605          (707)         (193)         (295)
                                                                              ---------     ---------     ---------     ---------
            Net decrease in cash and cash
              equivalents ................................................     (110,181)         (241)         --        (110,422)
Cash and cash equivalents at beginning of year ...........................      110,704           835                     111,539
                                                                              ---------     ---------     ---------     ---------
Cash and cash equivalents at end of year..................................          523     $     594     $    --       $   1,117
                                                                              =========     =========     =========     =========
</TABLE>





                                      F-31
<PAGE>



                              AMSCAN HOLDINGS, INC.
             Notes to Consolidated Financial Statements (continued)
                                December 31, 1999


                      CONSOLIDATING STATEMENT OF CASH FLOWS
                      For the Year Ended December 31, 1997
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                               Amscan
                                                                            Holdings and   Combined
                                                                              Combined       Non-
                                                                             Guarantors   Guarantors   Eliminations  Consolidated
                                                                             ----------   ----------   ------------  ------------

Cash flows from operating activities:
<S>                                                                          <C>           <C>           <C>           <C>
   Net (loss) income .....................................................   $    (182)    $     320     $    (320)    $    (182)
   Adjustments to reconcile net (loss) income to net
     cash provided by operating activities:
      Depreciation and amortization ......................................       5,864           381                       6,245
      Amortization of deferred financing costs ...........................          13                                        13
      Gain on disposal of property and equipment .........................         (31)                                      (31)
      Provision for doubtful accounts ....................................       3,419           356                       3,775
      Amortization of Restricted Common Stock award ......................         290                                       290
      Deferred income tax provision ......................................       1,625           (60)                      1,565
      Changes in operating assets and liabilities, net of
        acquisitions:
            Increase in accounts receivable ..............................     (14,915)         (954)                    (15,869)
            Increase in inventories ......................................      (3,773)       (2,098)                     (5,871)
            Decrease in prepaid and other current assets, and
               other net .................................................       4,042         2,234                       6,276
            Decrease (increase) in other assets, net .....................       2,267          (324)          920         2,863
            Increase in accounts payable, accrued expenses
              and income taxes payable ...................................       4,944           151                       5,095
                                                                             ---------     ---------     ---------     ---------
            Net cash provided by operating activities ....................       3,563             6           600         4,169
Cash flows from investing activities:

   Capital expenditures ..................................................      (9,390)         (847)                    (10,237)
   Proceeds from disposal of property and equipment ......................         140                                       140
                                                                             ---------     ---------     ---------     ---------
            Net cash used in investing activities ........................      (9,250)         (847)                    (10,097)
Cash flows from financing activities:
   Net proceeds from sale of Common Stock ................................       4,524                                     4,524
   Capital contributions .................................................       7,500           600          (600)        7,500
   Issuance of Common Stock in connection with the Merger ................      61,875                                    61,875
   Payments to acquire treasury stock ....................................        (290)                                     (290)
   Payments to acquire Common Stock in the Merger ........................    (142,673)                                 (142,673)
   Proceeds from loans, notes payable and long-term
     obligations net of debt issuance costs of $5,500 ....................     236,981            81                     237,062
   Repayment of loans, notes payable and long-term obligations                 (51,743)          (68)                    (51,811)
   Repayment of indebtedness to Principal Stockholder ....................        (181)           (1)                       (182)
                                                                             ---------     ---------     ---------     ---------
            Net cash provided by financing activities ....................     115,993           612          (600)      116,005
   Effect of exchange rate changes on cash ...............................         126          (253)                       (127)
                                                                             ---------     ---------     ---------     ---------
            Net increase (decrease) in cash and cash
              equivalents ................................................     110,432          (482)         --         109,950
Cash and cash equivalents at beginning of year ...........................         272         1,317                       1,589
                                                                             ---------     ---------     ---------     ---------
Cash and cash equivalents at end of year .................................   $ 110,704     $     835     $    --       $ 111,539
                                                                             =========     =========     =========     =========
</TABLE>





                                      F-32
<PAGE>


                                   SCHEDULE II
                              AMSCAN HOLDINGS, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                  Years Ended December 31, 1999, 1998, and 1997
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                  Beginning                                       Ending
                                                                   Balance      Write-offs       Additions        Balance
                                                                   -------      ----------       ---------        -------

Allowance for Doubtful Accounts:
    For the year ended:
<S>                                                               <C>            <C>              <C>              <C>
       December 31, 1997....................................      $4,138         $ 2,220          $3,775           $5,693
       December 31, 1998....................................       5,693           5,459           6,641 (1)        6,875
       December 31, 1999....................................       6,875           3,609           2,906            6,172


                                                                  Beginning                                       Ending
                                                                   Balance      Write-offs       Additions        Balance
                                                                   -------      ----------       ---------        -------
Inventory Reserves:
    For the year ended:
       December 31, 1997....................................      $1,685          $1,562          $1,039           $1,162
       December 31, 1998....................................       1,162             906           1,336            1,592
       December 31, 1999....................................       1,592           1,824           2,261            2,029
</TABLE>



(1)  Includes  approximately  $3,305 of an allowance  for  doubtful  accounts in
     connection with receivables purchased in the 1998 acquisition of Anagram.







                                      F-33

<PAGE>

                                 EXHIBIT INDEX


   Exhibit
   Number                                  Description
   ------                                  -----------

     2(a)         Agreement and Plan Merger, by and among Amscan Holdings,  Inc.
                  and Confetti  Acquisition,  Inc.,  dated as of August 10, 1997
                  (incorporated  by reference to Exhibit 2.1 to the Registrant's
                  Registration   Statement   on  Form  S-4   (Registration   No.
                  333-45457))

     2(b)         Stock Purchase  Agreement,  dated as of August 6, 1998, by and
                  among  Amscan  Holdings,  Inc.  and  certain  stockholders  of
                  Anagram  International,  Inc.  and certain  related  companies
                  (incorporated  by reference to Exhibit 2.1 to the Registrant's
                  Current  Report on Form 8-K dated  August 6, 1998  (Commission
                  File No. 000-21827))

     3(a)         Certificate of Incorporation  of Amscan Holdings,  Inc., dated
                  October 3, 1996,  (incorporated by reference to Exhibit 3.1 to
                  the   Registrant's   Registration   Statement   on  Form   S-4
                  (Registration No. 333-45457))

     3(b)         Amended  By-Laws of Amscan  Holdings,  Inc.  (incorporated  by
                  reference  to  Exhibit  3.2 to the  Registrant's  Registration
                  Statement on Form S-4 (Registration No. 333-45457))

     3(c)         Amended Articles of  Incorporation  of Anagram  International,
                  Inc.   (incorporated  by  reference  to  Exhibit  3.1  to  the
                  Registrant's  Current  Report on Form 8-K dated  September 17,
                  1998 (Commission File No. 000-21827))

     3(d)         By-laws  of  Anagram  International,   Inc.  (incorporated  by
                  reference to Exhibit 3.2 to the Registrant's Current Report on
                  Form  8-K  dated  September  17,  1998  (Commission  File  No.
                  000-21827))

     3(e)         Articles of Incorporation of Anagram  International  Holdings,
                  Inc.   (incorporated  by  reference  to  Exhibit  3.3  to  the
                  Registrant's  Current  Report on Form 8-K dated  September 17,
                  1998 (Commission File No. 000-21827))

     3(f)         By-laws of Anagram International  Holdings, Inc. (incorporated
                  by reference to Exhibit 3.4 to the Registrant's Current Report
                  on Form 8-K dated  September  17,  1998  (Commission  File No.
                  000-21827))

     3(g)         Articles  of  Organization  of  Anagram   International,   LLC
                  (incorporated  by reference to Exhibit 3.5 to the Registrant's
                  Current   Report  on  Form  8-K  dated   September   17,  1998
                  (Commission File No. 000-21827))

     3(h)         Operating    Agreement   of   Anagram    International,    LLC
                  (incorporated  by reference to Exhibit 3.6 to the Registrant's
                  Current   Report  on  Form  8-K  dated   September   17,  1998
                  (Commission File No. 000-21827))





<PAGE>





     3(i)         Certificate  of Formation  of Anagram  Eden  Prairie  Property
                  Holdings LLC  (incorporated by reference to Exhibit 3.7 to the
                  Registrant's  Current  Report on Form 8-K dated  September 17,
                  1998 (Commission File No. 000-21827))

     4(a)         Indenture,  dated as of December  19,  1997,  by and among the
                  Company,  the Guarantors named therein and IBJ Schroder Bank &
                  Trust  Company with respect to the Senior  Subordinated  Notes
                  (incorporated  by reference to Exhibit 4.1 to the Registrant's
                  Registration   Statement   on  Form  S-4   (Registration   No.
                  333-45457))

     4(b)         Supplemental Indenture, dated as of September 17, 1998, by and
                  among  Anagram  International,   Inc.,  Anagram  International
                  Holdings,  Inc.,  Anagram  International,  LLC,  Anagram  Eden
                  Prairie  Property  Holdings LLC and IBJ Schroder  Bank & Trust
                  Company, as Trustee  (incorporated by reference to Exhibit 4.1
                  to the Registrant's Current Report on Form 8-K dated September
                  17, 1998 (Commission File No. 000-21827))

     4(c)         Warrant Agreement,  dated as of August 6, 1998, by and between
                  Amscan Holdings,  Inc. and Garry Kieves Retained Annuity Trust
                  (incorporated  by reference to Exhibit 4.1 to the Registrant's
                  Current  Report on Form 8-K dated  August 6, 1998  (Commission
                  File No. 000-21827))

     4(d)         Senior Subordinated Guarantee, dated as of September 17, 1998,
                  by  Anagram   International,   Inc.,   Anagram   International
                  Holdings,  Inc., Anagram International,  LLC, and Anagram Eden
                  Prairie  Property  Holdings   (incorporated  by  reference  to
                  Exhibit  4.2 to the  Registrant's  Current  Report on Form 8-K
                  dated September 17, 1998 (Commission File No. 000-21827))

     4(e)         Amended and Restated Revolving Loan Credit Agreement, dated as
                  of  September  17,  1998,  by and  among the  Registrant,  the
                  financial institutions parties thereto,  Goldman, Sachs Credit
                  Partners L.P., as arranger and  syndication  agent,  and Fleet
                  National  Bank,  as  administrative   agent  (incorporated  by
                  reference to Exhibit 10.1 to the  Registrant's  Current Report
                  on Form 8-K dated  September  17,  1998  (Commission  File No.
                  000-21827))

     4(f)         Amended  and  Restated  AXEL  Credit  Agreement,  dated  as of
                  September 17, 1998, by and among the Registrant, the financial
                  institutions parties thereto,  Goldman,  Sachs Credit Partners
                  L.P., as arranger and  syndication  agent,  and Fleet National
                  Bank, as  administrative  agent  (incorporated by reference to
                  Exhibit 10.2 to the  Registrant's  Current  Report on Form 8-K
                  dated September 17, 1998 (Commission File No. 000-21827))

        9         Voting  Agreement,   dated  August  10,  1997  among  Confetti
                  Acquisition,  Inc.,  the  Estate  of John A.  Svenningsen  and
                  Christine  Svenningsen  (incorporated  by reference to Exhibit
                  2.2 to the  Registrant's  Registration  Statement  on Form S-4
                  (Registration No. 333-45457))

     10(a)        Employment Agreement by and between Amscan Inc. or the Company
                  and William Wilkey,  dated as of October 4, 1996 (incorporated
                  by  reference  to  Exhibit  10(e)  to  Amendment  No. 1 to the
                  Registrant's  Registration Statement on Form S-1 (Registration
                  No. 333-14107))

    10(b)         Tax Indemnification  Agreement between Amscan Holdings,  Inc.,
                  and  John  A.  Svenningsen,  dated  as of  December  18,  1996
                  (incorporated   by   reference   to   Exhibit   10(j)  to  the
                  Registrant's  1996 Annual Report on Form 10-K (Commission File
                  No. 000-21827))





<PAGE>





    10(c)         Tax Indemnification  Agreement between Amscan Holdings,  Inc.,
                  Christine  Svenningsen and the Estate of John A.  Svenningsen,
                  dated as of August 10,  1997  (incorporated  by  reference  to
                  Exhibit 10.17 to the  Registrant's  Registration  Statement on
                  Form S-4 (Registration No. 333-40235))

    10(d)         The  MetLife   Capital   Corporation   Master  Lease  Purchase
                  Agreement between MetLife Capital Corporation and Amscan Inc.,
                  Deco Paper  Products,  Inc.,  Kookaburra USA Ltd., and Trisar,
                  Inc.,  dated  November 21, 1991, as amended  (incorporated  by
                  reference  to  Exhibit   10(n)  to  Amendment  No.  2  to  the
                  Registrant's  Registration Statement on Form S-1 (Registration
                  No. 333-14107))

    10(e)         Form of Indemnification Agreement between the Company and each
                  of the directors of the Company  (incorporated by reference to
                  Exhibit  10(o)  to  Amendment   No.  2  to  the   Registrant's
                  Registration   Statement   on  Form  S-1   (Registration   No.
                  333-14107))

    10(f)         Exchange and Registration Agreement,  dated as of December 19,
                  1997,  by and  among  the  Company  and  Goldman,  Sachs & Co.
                  (incorporated by reference to Exhibit 10.1 to the Registrant's
                  Registration   Statement   on  Form  S-4   (Registration   No.
                  333-45457))

    10(g)         Stockholders' Agreement, dated as of December 19, 1997, by and
                  among the Company and the Stockholders  thereto  (incorporated
                  by reference to Exhibit 10.4 to the Registrant's  Registration
                  Statement on Form S-4 (Registration No. 333-45457))

    10(h)         Employment  Agreement,  dated as of August  10,  1997,  by and
                  among the Company and Gerald C.  Rittenberg  (incorporated  by
                  reference  to Exhibit  10.5 to the  Registrant's  Registration
                  Statement on Form S-4 (Registration No. 333-45457))

    10(i)         Employment  Agreement,  dated as of August  10,  1997,  by and
                  among the  Company  and  James M.  Harrison  (incorporated  by
                  reference  to Exhibit  10.6 to the  Registrant's  Registration
                  Statement on Form S-4 (Registration No. 333-45457))

    10(j)         Amscan Holdings,  Inc. 1997 Stock Incentive Plan (incorporated
                  by  reference  to  Exhibit  10.7   Registrant's   Registration
                  Statement on Form S-4 (Registration No. 333-45457))

    10(k)         Amendment No. 1 to the  Stockholders'  Agreement,  dated as of
                  August 6, 1998 by and among Amscan Holdings,  Inc. and certain
                  stockholders  of  Amscan  Holdings,   Inc.   (incorporated  by
                  reference to Exhibit 10.1 to the  Registrant's  Current Report
                  on  Form  8-K  dated  August  6,  1998  (Commission  File  No.
                  000-21827))

    10(l)         Employment Agreement, dated as of August 6, 1998, by and among
                  the Company and Garry  Kieves  (incorporated  by  reference to
                  Exhibit 99.1 to the  Regsitrant's  Current  Report on Form 8-K
                  dated August 6, 1998 (Commission File No. 000-21827))

    10(m)         Line of Credit Agreement,  dated October 1, 1999, by and among
                  the Company and Gerald C. Rittenberg

    10(n)         Consulting  Agreement dated November 8, 1999, by and among the
                  Company and William Wilkey





<PAGE>





    10(o)         Amended Full Recourse  Secured  Promissory Note dated November
                  8, 1999, by and among the Company and William Wilkey

       12         Statement  re:  computation  of  ratio  of  earnings  to fixed
                  charges

       21         Subsidiaries of the Registrant  (incorporated  by reference to
                  Exhibit  21.1 to the  Registrant's  Registration  Statement on
                  Form S-4 (Registration No. 333-45457))

     23.1         Consent of Ernst & Young LLP

     23.2         Consent of KPMG LLP

       27         Financial Data Schedule