UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                 F O R M 10 - Q



[x]      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1998


[ ]      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 of incorporation    (I.R.S. Employer Identification
               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


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 
           -----             -----


As of August 7, 1998,  1,012.41 shares of Registrants'  Common Stock,  par value
$0.10, were outstanding.




<PAGE>



                              AMSCAN HOLDINGS, INC.
                                    FORM 10-Q

                                  June 30, 1998

                                Table of Contents



                                  Part I                                 Page

Item 1    Financial Statements  (Unaudited)

          Consolidated Balance Sheets at June 30, 1998 and
          December 31, 1997.............................................   3

          Consolidated Statements of Income for the Three and
          Six Months Ended June 30, 1998 and 1997.......................   4

          Consolidated Statement of Stockholders' Deficit for
          the Six Months Ended June 30, 1998............................   5

          Consolidated Statements of Cash Flows for the Six
          Months Ended June 30, 1998 and 1997...........................   6

          Notes to Consolidated Financial Statements....................   7

Item 2    Management's Discussion and Analysis of Financial
          Condition and Results of Operations...........................   11

Item 3    Quantitative and Qualitative Disclosures About Market Risk ...   17


                                     Part II


Item 2    Changes in Securities and Use of Proceeds.....................   17

Item 6    Exhibits and Reports on Form 8-K..............................   17

Signature ..............................................................   19




                                       2
<PAGE>



<TABLE>
<CAPTION>
                                                AMSCAN HOLDINGS, INC.
                                             CONSOLIDATED BALANCE SHEETS
                                                (Dollars in thousands)

                                                                        June 30,          December 31,
                                                                          1998                1997
                                                                    ----------------      -----------
                                                                      (Unaudited)            (Note)
                                     ASSETS
         Current assets:
            <S>                                                         <C>                  <C>     
            Cash and cash equivalents.............................      $ 19,833             $111,539
            Accounts receivable, net of allowances ...............        42,655               44,838
            Inventories...........................................        46,483               51,742
            Assets held for disposal..............................         2,776
            Prepaid expenses and other current assets.............         8,281                8,073
                                                                     -----------          -----------
              Total current assets................................       120,028              216,192
         Property, plant and equipment, net.......................        33,668               38,860
         Intangible assets, net...................................         8,561                7,762
         Other assets, net  ......................................         7,759                6,462
                                                                     -----------          -----------

              Total assets........................................      $170,016             $269,276
                                                                        ========             ========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

         Current liabilities:
            Notes payable.........................................   $       167          $       424
            Due to stockholders...................................           158               93,243
            Accounts payable......................................         5,838               12,152
            Accrued expenses......................................        10,234               10,502
            Income taxes payable..................................                                167
            Current portion of long-term obligations..............         4,401                2,911
                                                                     -----------          -----------
              Total current liabilities...........................        20,798              119,399
         Long-term obligations, excluding current portion.........       231,392              234,422
         Deferred tax liabilities.................................         7,342                6,893
         Other....................................................         3,614                3,781
                                                                     -----------          -----------
              Total liabilities...................................       263,146              364,495

         Stockholders' deficit:
            Common Stock..........................................           -                    -
            Additional paid-in capital............................           181                  -
            Unamortized restricted Common Stock award, net........          (705)                (835)
            Notes receivable from officers........................          (728)                (750)
            Accumulated deficit...................................       (90,611)             (92,912)
            Accumulated other comprehensive loss..................        (1,267)                (722)
                                                                       ---------            ---------
              Total stockholders' deficit.........................       (93,130)             (95,219)
                                                                       ---------            ---------

              Total liabilities and stockholders' deficit.........      $170,016             $269,276
                                                                       =========             ========

Note:  The balance  sheet at December 31, 1997 has been derived from the audited
consolidated financial statements at that date.
</TABLE>



          See accompanying notes to consolidated financial statements.



                                       3
<PAGE>


<TABLE>
<CAPTION>

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

                                                    Three Months Ended June 30,         Six Months Ended June 30,
                                                    ----------------------------        -------------------------
                                                       1998             1997               1998            1997
                                                    -----------      -----------        ----------      ---------

   <S>                                                <C>              <C>               <C>            <C>     
   Net sales.....................................     $48,686          $49,225           $104,247       $102,401
   Cost of sales.................................      31,023           31,554             67,012         65,964
                                                     --------         --------          ---------       --------
     Gross profit................................      17,663           17,671             37,235         36,437

   Operating expenses: ..........................
     Selling expenses............................       3,533            3,127              7,159          6,226
     General and administrative expenses.........       4,680            3,945              9,771          8,309
     Art and development costs...................       1,596            1,293              3,216          2,567
     Restructuring charges.......................       2,400                               2,400
                                                     --------         --------          ---------     ----------
          Total operating expenses...............      12,209            8,365             22,546         17,102
                                                       ------         --------          ---------     ----------
          Income from operations.................       5,454            9,306             14,689         19,335

   Interest expense, net.........................       5,498              882             10,763          1,866
   Other income, net.............................          19)             (12)               (59)           (39)
                                                    ---------        ---------          ---------     ----------
     (Loss) income before income taxes and
              minority interests.................         (25)           8,436              3,985         17,508
   Income tax (benefit) expense..................         (10)           3,417              1,654          7,145
   Minority interests............................         (45)              43                 30             85
                                                   ----------        ---------          ---------     ----------
     Net income..................................  $       30        $   4,976         $    2,301     $   10,278
                                                    =========         ========          =========      =========
</TABLE>












          See accompanying notes to consolidated financial statements.





                                       4
<PAGE>



<TABLE>
<CAPTION>
                                                  AMSCAN HOLDINGS, INC.
                                    CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                                         For the Six Months Ended June 30, 1998
                                                  (Dollars in thousands)
                                                        (Unaudited)

                                                               Unamortized
                                                               Restricted       Notes                      Accumulated
                                               Additional        Common      Receivable                       Other
                                     Common      Paid-in      Stock Award,      from       Accumulated    Comprehensive
                                      Stock      Capital           Net        Officers       Deficit          Loss         Total
                                    --------   -----------   ------------   -----------   -------------   --------------  ------

<S>                                  <C>                        <C>            <C>          <C>             <C>         <C>      
Balance as of December 31, 1997....  $  -            -          $(835)         $(750)       $(92,912)       $ (722)     $(95,219)

Net income.........................     -            -              -              -           2,301             -         2,301

Net change in foreign currency
   translation adjustment..........     -            -              -              -               -          (545)         (545)

Payment received on notes
   receivable from officers........     -            -              -             22               -             -            22

Issuance of 2.41 shares of
   Common Stock ...................     -         $181              -              -               -             -           181

Amortization of restricted
   Common Stock award..............     -            -             130             -               -             -           130
                                    --------   ------------   -----------   ------------   --------------   ----------    ------

Balance as of June 30, 1998........ $   -         $181           $(705)        $(728)         $(90,611)      $(1,267)   $(93,130)
                                    ========      ====           =====         =====          ========       =======     =======
</TABLE>









           See accompanying notes to consolidated financial statements





                                       5
<PAGE>



<TABLE>
<CAPTION>
                                              AMSCAN HOLDINGS, INC.
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            (Dollars in thousands)
                                                  (Unaudited)
                                                                                Six Months Ended June 30,
                                                                                   1998           1997
                                                                                ----------     ---------
Cash flows from operating activities:
<S>                                                                              <C>           <C>   
   Net income.................................................................   $   2,301     $  10,278
     Adjustments to reconcile net income to net cash provided by
       operating activities:
        Depreciation and amortization.........................................       3,445         2,981
        Amortization of deferred financing costs..............................         348             9
        Restructuring charges.................................................       2,400             -
        Amortization of restricted Common Stock award.........................         130             -
        Provision for doubtful accounts.......................................       1,303           577
        Deferred income tax (benefit) provision...............................        (251)        1,725
        Gain on disposal of equipment.........................................          (2)
        Changes in operating assets and liabilities:
          Decrease (increase) in accounts receivable..........................         880        (9,843)
          Decrease in inventories.............................................       5,259         2,628
          Decrease in prepaid expenses and other current assets...............         492           856
          Decrease in accounts payable, accrued expenses and income
               taxes payable..................................................      (8,905)       (3,187)
       Other, net.............................................................      (1,294)         (456)
                                                                                  --------     ---------
              Net cash provided by operating activities.......................       6,106         5,568

Cash flows from investing activities:
   Capital expenditures.......................................................      (2,474)       (3,711)
   Proceeds from disposal of property and equipment...........................          23             -
                                                                                  --------
              Net cash used in investing activities...........................      (2,451)       (3,711)

Cash flows from financing activities:
   Payments to acquire Common Stock in Merger.................................     (93,085)            -
   Net proceeds from the issuance of Common Stock.............................         181         4,539
   Proceeds from loans, notes payable and long-term obligations...............         167        15,632
   Repayment of loans, notes payable and long-term obligations................      (2,058)      (22,165)
   Repayment of subordinated and other indebtedness due to stockholders.......                      (200)
   Payments received on notes receivable from officers........................          22             -
   Payments to acquire treasury stock.........................................           -          (290)
                                                                                  --------       --------
              Net cash used in financing activities...........................     (94,773)      (2,484)

Effect of exchange rate changes on cash and cash equivalents..................        (588)         289
                                                                                  --------      --------
              Net decrease in cash and cash equivalents.......................     (91,706)        (338)
Cash and cash equivalents at beginning of period..............................     111,539        1,589
                                                                                  --------      --------
Cash and cash equivalents at end of period....................................   $  19,833     $  1,251
                                                                                  ========      ========

Supplemental Disclosures:
    Cash paid during the period for:
           Interest ..........................................................      $8,345       $1,799
           Income taxes ......................................................      $2,297       $6,189
</TABLE>

Capital lease  obligations  of $94 and $59 were  incurred  during the six months
ended June 30, 1998 and 1997, respectively.

          See accompanying notes to consolidated financial statements.




                                       6
<PAGE>




                              AMSCAN HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 1:  ORGANIZATION AND DESCRIPTION OF BUSINESS

         Amscan Holdings,  Inc.  ("Amscan" and,  together with its subsidiaries,
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.

         On August 10, 1997, Amscan 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 in which Confetti
would  be  merged  with and into  Amscan  (the  "Merger"),  with  Amscan  as the
surviving corporation.

         On December 19, 1997 (the "Effective Time"), the Merger was consummated
pursuant  to the Merger  Agreement.  At the  Effective  Time,  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 Effective Time (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.  Also pursuant to
the Merger  Agreement,  at the Effective Time 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.  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 Common Stock),  $117 million from a senior term loan and $110 million
from the issuance of senior  subordinated notes. The Merger was accounted for as
a  recapitalization  and,  accordingly,  the  historical  basis of the Company's
assets and liabilities were not affected by the Merger.

         Amscan  and  its  subsidiaries   design,   manufacture,   contract  for
manufacture  and  distribute  party and novelty goods  principally in the United
States, Canada and Europe.


NOTE 2:  BASIS OF PRESENTATION

         The consolidated  financial  statements  include the accounts of Amscan
and its  majority-owned  subsidiaries.  Investments in less than  majority-owned
subsidiaries are accounted for on an equity basis.

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information.  Accordingly,  they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Operating results for the three and six-month periods each ended
June 30, 1998 are not necessarily indicative of the results that may be expected
for the year ending December 31, 1998. The results of operations may be affected
by seasonal  factors such as the timing of holidays or industry factors that may
be specific to a particular period, such as movement in a general level of



                                       7
<PAGE>


                              AMSCAN HOLDINGS, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (Unaudited)



raw material costs.  For further  information,  see the  consolidated  financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997.


NOTE 3:  RESTRUCTURING CHARGES

         In the second quarter of 1998, the Company commenced a restructuring of
its distribution  operations to reduce costs and improve operating efficiencies.
The Company will close two  distribution  facilities  located in California  and
Canada which will result in the elimination of approximately 100 positions.  The
restructuring  will be  substantially  completed by the end of 1998. The Company
has recorded restructuring charges of approximately $2,400,000 which include the
non-cash write-down of $1,328,000 relating to property, plant and equipment (the
majority of which has been classified as assets held for disposal),  the accrual
of  future  lease  obligations  of  $474,000,  severance  and  related  costs of
$335,000, and other costs of $263,000.


NOTE 4: ACQUISITION OF MINORITY INTEREST

         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 will issue a non-interest bearing
note  to the  former  shareholder  in the  amount  of  350,000  pounds  sterling
(approximately  $583,000) 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  $949,000  is  being  amortized  on  a
straight-line basis over thirty years.

         The results of operations  attributable  to the additional 25% interest
in Amscan Holdings Limited are included in the accompanying financial statements
from the date of  acquisition.  The pro forma  results  of  operations  for this
acquisition  for the  periods  presented,  had the  acquisition  occurred at the
beginning of 1998 and 1997,  are not  significant,  and  accordingly,  pro forma
information has not been provided.


NOTE 5:  INVENTORIES

      Inventories consisted of the following:

                                                      June 30,      December 31,
                                                        1998            1997
                                                    ------------    ------------
                                                             (In thousands)

     Finished goods  ................................   $42,996         $47,704
     Raw materials  ................................      2,950           3,570
     Work-in-process  ..............................      2,183           1,630
                                                        -------         -------
                                                         48,129          52,904
     Less: reserve for slow moving
       and obsolete inventory .....................      (1,646)         (1,162)
                                                        -------         -------
                                                        $46,483         $51,742
                                                        =======         =======

Inventories  are valued at the lower of cost,  determined  on a first in - first
out basis, or market.



                                       8
<PAGE>



                              AMSCAN HOLDINGS, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (Unaudited)


NOTE 6:  INCOME TAXES

         The  consolidated  income tax  provisions  for the three and  six-month
periods each ended June 30, 1998 and 1997 were  determined  based upon estimates
of the Company's  consolidated  effective  income tax rates for the years ending
December  31,  1998  and  1997,   respectively.   The  differences  between  the
consolidated  effective income tax rate and the U.S. Federal  statutory rate are
primarily  attributable  to  state  income  taxes  and the  effects  of  foreign
operations.


NOTE 7:  COMPREHENSIVE INCOME

         As of  January  1,  1998,  the  Company  adopted  Financial  Accounting
Standards  ("SFAS")  No.  130,  Reporting  Comprehensive  Income.  SFAS No.  130
established new rules for the reporting and display of comprehensive  income and
its  components;  however,  the adoption of this  statement had no impact on the
Company's  net  income or  stockholders'  deficit.  SFAS No.  130  requires  the
Company's foreign currency translation  adjustment,  which prior to adoption was
reported   separately  in   stockholders'   deficit  to  be  included  in  other
comprehensive (loss) income. Amounts reported in prior year financial statements
have been reclassified to conform to the requirements of SFAS No. 130.

      Comprehensive (loss) income consisted of the following:

<TABLE>
<CAPTION>
                                                           Three Months Ended        Six Months Ended
                                                                June 30,                  June 30,
                                                                --------                  --------
                                                           1998          1997        1998        1997
                                                           -----        -----        -----       ----
                                                                          (in thousands)
           <S>                                            <C>          <C>          <C>         <C>    
           Net income.............................        $  30        $4,976       $2,301      $10,278
           Net change in foreign currency
             translation adjustment...............         (530)           54         (545)         245
                                                         ------       -------      -------     --------
           Comprehensive (loss) income............        $(500)       $5,030       $1,756      $10,523
                                                         ======        ======       ======      =======
</TABLE>


Accumulated  other  comprehensive  loss at June 30, 1998 and  December  31, 1997
consisted solely of the Company's foreign currency translation adjustment.


NOTE 8:  CAPITAL STOCK

         At June 30, 1998 and  December 31, 1997,  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 50,000,000 shares
of Common Stock, $0.10 par value, of which 1,012.41 and 1,010 shares were issued
and outstanding,  respectively. In July 1998, the Company reduced its authorized
shares of Common Stock to 3,000 shares.

         During the second  quarter of 1998,  the Company  issued 2.41 shares of
its Common Stock to certain of its employees at a price of $75,000 per share and
received cash proceeds of approximately $181,000.


                                       9
<PAGE>

                              AMSCAN HOLDINGS, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (Unaudited)


         In addition,  during the second  quarter of 1998,  the Company  granted
stock  options to purchase  5.55  shares of Common  Stock under the terms of the
Amscan Holdings,  Inc. Stock Incentive Plan, at an exercise price of $75,000 per
share which  represented the estimated fair market value of the Company's Common
Stock at the grant date. The options 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.

         At June 30,  1998,  there  were  87.41  shares of Common  Stock held by
employees  of which 10 shares  were not yet fully  paid and  11.25  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.  The Company has the option to assign the  obligation to
purchase employee shares, at a cost of up to $15,000,000,  to GSCP. 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 June 30, 1998,  the aggregate  amount that may be payable to
employee stockholders is significantly less than the cap of $15,000,000.

NOTE 9:  SUBSEQUENT EVENT

         On August 6, 1998, the Company entered into a stock purchase  agreement
(the "Stock Purchase Agreement") with the stockholders of Anagram International,
Inc., a  Minneapolis-based  metallic balloon  manufacturer and distributor,  and
certain related companies  (collectively,  the "Anagram  Companies"),  providing
for, among other things,  the acquisition (the  "Acquisition") by the Company of
all of the  capital  stock of each of the  Anagram  Companies  in a  transaction
valued at  approximately  $87,000,000,  including the issuance of equity and the
payment or assumption of debt.  Consummation  of the Acquisition is subject to a
number of  conditions,  including  the  availability  of financing and customary
consents and approvals.  The Acquisition is expected to be completed  during the
third quarter of 1998.

         The  Acquisition  will be  accounted  for  under the  purchase  method,
whereby  the  purchase  price will be  allocated  to the  underlying  assets and
liabilities based on their estimated fair values.

         The Company is planning to finance the Acquisition  with  approximately
$40,000,000  of  senior  term  debt,  approximately  $24,000,000  of  additional
revolving  credit  borrowings,  cash on hand, and the issuance of  approximately
$13,000,000 of equity.  The Company's existing credit agreements are required to
be amended in  connection  with the  Acquisition,  including  to provide for the
senior debt. The Company has received a commitment for the senior debt financing
from Goldman Sachs Credit Partners L.P.



                                       10
<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations


Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997

Results of Operations
Percentage of Net Sales

                                                  Three Months Ended June 30,
                                                  ---------------------------
                                                      1998             1997
                                                   ----------       -------
       Net sales..................................    100.0%        100.0%
       Cost of sales..............................     63.7          64.1
                                                     ------        ------
               Gross profit.......................     36.3          35.9
       Operating expenses:
          Selling expenses........................      7.3           6.4
          General and administrative expenses.....      9.6           8.0
          Art and development costs...............      3.3           2.6
          Restructuring charges...................      4.9
                                                    -------        ------
               Total operating expenses...........     25.1          17.0
                                                    -------        ------
               Income from operations.............     11.2          18.9
       Interest expense, net......................     11.3           1.8
                                                    -------        ------
       Other income, net..........................
              (Loss) income before income taxes
                    and minority interests........     (0.1)         17.1
       Income tax (benefit) expense...............     (0.1)          6.9
       Minority interests.........................     (0.1)          0.1
                                                    -------       -------
               Net income.........................      0.1%         10.1%
                                                    =======        ======



         Net sales for the three months ended June 30, 1998 were $48.7  million,
as  compared to $49.2  million for the three  months  ended June 30,  1997.  The
decrease in net sales for the three  months  ended June 30, 1998 of 1.1% results
from the timing of shipments  of seasonal  goods to  customers,  the majority of
which will be shipped in the third  quarter  1998  versus the second  quarter in
1997, and the reduction in sales attributable to the recent  bankruptcies of two
national  accounts  which  more  than  offset  the  growth  in  sales  to  party
superstores.

         Gross  profit  for the  three  months  ended  June 30,  1998 was  $17.7
million,  or 36.3% of net  sales,  as  compared  to 35.9% of net  sales  for the
comparable  period in 1997. The  improvement in second quarter 1998 gross profit
margin is primarily due to operating efficiencies and reduced distribution costs
which are partially  attributable to a restructuring  plan commenced  during the
second quarter of 1998.

         Selling  expenses of $3.5  million for the three  months ended June 30,
1998 were $0.4 million higher than those of the  corresponding  quarter in 1997.
Selling  expenses  increased  as a  percentage  of net  sales  from 6.4% to 7.3%
principally  due to the addition of a new seasonal  catalogue,  expansion of the
Company's "everyday" catalogue, and higher advertising costs.

         General and  administrative  expenses of $4.7 million increased by $0.7
million  for  the  three   months  ended  June  30,  1998  as  compared  to  the
corresponding quarter in 1997. General and administrative  expenses increased as
a percentage  of net sales from 8.0% to 9.6%  principally  due to a $0.3 million
increase in the Company's provision for bad debts.




                                       11
<PAGE>



         Art and  development  costs of $1.6  million for the three months ended
June 30, 1998 increased by $0.3 million as compared to the corresponding quarter
in 1997. As a percentage of net sales, art and development  costs increased from
2.6% to 3.3%. The increase in costs is attributable to 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 will close two  distribution  facilities  located in California  and
Canada which will result in the elimination of approximately 100 positions.  The
restructuring  will be  substantially  completed by the end of 1998. The Company
has recorded  restructuring  charges of approximately  $2.4 million,  or 4.9% of
sales for the three  months  ended  June 30,  1998.  The  restructuring  charges
include the non-cash write-down of $1.3 million relating to property,  plant and
equipment  (the  majority  of  which  has been  classified  as  assets  held for
disposal),  the accrual of future lease  obligations of $0.5 million,  severance
and related costs of $0.3 million,  and other costs of $0.3 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 of $5.5  million for the three  months ended June 30,
1998 increased by $4.6 million as compared to the  corresponding  period in 1997
due to the Company's  increased  borrowings  in connection  with the Merger (see
"Liquidity and Capital Resources"),  offset in part by reduced levels of working
capital.

         Income  taxes for the three  months  ended June 30,  1998 and 1997 were
based upon estimated  consolidated effective income tax rates of 41.5% and 40.5%
for the years  ending  December  31,  1998 and 1997,  respectively.  The  higher
effective  income tax rate for the year ending December 31, 1998 is attributable
to an increase in estimated state income taxes.

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




                                       12
<PAGE>




Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997

Results of Operations
Percentage of Net Sales
                                                      Six Months Ended June 30,
                                                     --------------------------
                                                        1998           1997
                                                      --------       -------
         Net sales..................................    100.0%        100.0%
         Cost of sales..............................     64.3          64.4
                                                       ------        ------
                Gross profit........................     35.7          35.6
         Operating expenses:
            Selling expenses........................      6.9           6.1
            General and administrative expenses.....      9.4           8.1
            Art and development costs...............      3.0           2.5
            Restructuring charges...................      2.3            -
                                                       ------        ------
                Total operating expenses............     21.6          16.7
                                                       ------        ------
                Income from operations..............     14.1          18.9
         Interest expense, net......................     10.3           1.8
         Other income, net..........................     (0.1)           -
                                                       ------        ------
                Income before income taxes
                      and minority interests........      3.9          17.1
         Income tax expense.........................      1.6           7.0
         Minority interests.........................      0.1           0.1
                                                       ------        ------
                Net income..........................      2.2%         10.0%
                                                       ======        ======

         Net sales for the six months  ended June 30, 1998 were $104.2  million,
as  compared  to $102.4  million  for the six months  ended June 30,  1997.  The
increase  in net  sales  for the  six  months  ended  June  30,  1998 of 1.8% is
attributable to growth in sales to party superstores and international customers
which  more than  offset  the  reduction  in sales  attributable  to the  recent
bankruptcies  of two  national  accounts and the timing of shipments of seasonal
goods to  customers  which will be shipped in the third  quarter 1998 versus the
second quarter in 1997.

         The  Company   maintained   a  consistent   gross   profit   margin  of
approximately 36% between the comparative  periods ending June 30, 1998 and 1997
reflecting its effective management of product and distribution costs.

         Selling expenses of $7.2 million for the six months ended June 30, 1998
were $0.9 million higher than those of the corresponding period in 1997. Selling
expenses  increased as a percentage  of net sales from 6.1% to 6.9%  principally
due to the addition of a new  seasonal  catalogue,  expansion of the  "everyday"
catalogue, and higher advertising costs.

         General and  administrative  expenses of $9.8 million increased by $1.5
million for the six months ended June 30, 1998 as compared to the  corresponding
period in 1997 and  increased  as a  percentage  of net sales  from 8.1% to 9.4%
principally  due to a $0.7 million  increase in the Company's  provision for bad
debts.

         Art and development costs of $3.2 million for the six months ended June
30, 1998 increased by $0.6 million compared to the corresponding period in 1997.
As a percentage of net sales,  art and development  costs increased from 2.5% to
3.0%.  The increase in costs is  attributable  to 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 will close two  distribution  facilities  located in California  and
Canada which will result in the elimination of approximately 100 positions.  The
restructuring  will be  substantially  completed by the end of 1998. The Company
has recorded  restructuring  charges of approximately  $2.4 million,  or 2.3% of
sales for the six month period ended June 30, 1998.  The  restructuring  charges
include the non-cash write-down of $1.3 million relating to property,  plant and
equipment (the majority of which has been


                                       13
<PAGE>



classified as assets held for disposal), the accrual of future lease obligations
of $0.5 million, severance and related costs of $0.3 million, and other costs of
$0.3 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 of $10.8  million  for the six months  ended June 30,
1998 increased by $8.9 million as compared to the  corresponding  period in 1997
due to the Company's  increased  borrowings  in connection  with the Merger (see
"Liquidity and Capital Resources"),  offset in part by reduced levels of working
capital.

         Income taxes for the six months ended June 30, 1998 and 1997 were based
upon estimated  consolidated  effective  income tax rates of 41.5% and 40.5% for
the years ending December 31, 1998 and 1997, respectively.  The higher effective
income tax rate for the year  ending  December  31, 1998 is  attributable  to an
increase in estimated state income taxes.

         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

         On December 19, 1997 the Company and Confetti  consummated  the Merger,
providing  for a  recapitalization  of the Company in which  Confetti was merged
with and into the Company with the Company as the  surviving  corporation.  Upon
consummation of the Merger,  the Company's then existing loan  arrangements were
repaid and terminated and 90% of its then outstanding Common Stock was converted
into  the  right to  receive  cash.  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 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"). The Merger has been accounted for as a
recapitalization and, accordingly,  the historical basis of the Company's assets
and liabilities has not been affected by the Merger.

         In addition to the Term Loan,  the Bank Credit  Facilities  provide for
revolving  loan  borrowings  of  up  to  $50  million  (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
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  June  30,  1998,  the  Company  had  borrowing   capacity  of
approximately $46.1 million under the Revolving Credit Facility.

         On August 6, 1998, the Company entered into a stock purchase  agreement
(the "Stock Purchase Agreement") with the stockholders of Anagram International,
Inc., a  Minneapolis-based  metallic balloon  manufacturer and distributor,  and
certain related companies  (collectively,  the "Anagram  Companies"),  providing
for, among other things,  the acquisition (the  "Acquisition") by the Company of
all of the  capital  stock of each of the  Anagram  Companies  in a  transaction
valued at  approximately  $87 million,  including the issuance of equity and the
payment or assumption of debt.  Consummation  of the Acquisition is subject to a
number of  conditions,  including  the  availability  of financing and customary
consents and approvals.  The Acquisition is expected to be completed  during the
third quarter of 1998.

         In a press release, the Company stated that the Company and the Anagram
Companies  expect  that on a stand  alone  basis,  the  revenues  of the Anagram
Companies for calendar year 1998 will be  approximately  $65 to $70 million with
an earnings margin (before  interest,  taxes,  depreciation and amortization) of
approximately 13%. In addition,  the Company stated that it expects to realize a
number of  operational  synergies,  of both a revenue and cost nature,  from its
combination  with the  Anagram  Companies.  The  Company  estimates  that  these
synergies will be in the range of at least $1 million to $2 million for 1999.




                                       14
<PAGE>



         The  Acquisition  will be  accounted  for  under the  purchase  method,
whereby  the  purchase  price will be  allocated  to the  underlying  assets and
liabilities based on their estimated fair values.

         The Company is planning to finance the Acquisition  with  approximately
$40.0  million of senior term debt,  approximately  $24.0  million of additional
borrowings under the Revolving  Credit Facility,  cash on hand, and the issuance
of  approximately  $13.0  million  of  equity.  The  Company's  existing  credit
agreements  are  required  to be amended  in  connection  with the  Acquisition,
including to provide for the senior debt.  The Company has received a commitment
for the senior debt financing from Goldman Sachs Credit Partners L.P.

         Based upon the current  level of  operations  and  anticipated  growth,
including  giving effect to the anticipated  Acquisition,  and the  contemplated
amendments to the Company's credit agreements,  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, to permit potential acquisitions and
to service its debt  requirements  as they become due.  However,  the  Company's
ability to make scheduled payments of principal on, 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, the Acquisition, and the contemplated amendments
to the Company's  credit  agreements,  may affect the Company's  ability to make
future  capital  expenditures.  However,  management  believes that additions to
plant and  equipment  during the past three years provide  adequate  capacity to
support its operations for at least the next 12 months. As of June 30, 1998, the
Company did not have material commitments for capital expenditures.


Cash Flow Data - Six Months  Ended June 30, 1998  Compared  to Six Months  Ended
June 30, 1997

         During  the six  months  ended  June 30,  1998,  net cash  provided  by
operating activities increased by $0.5 million to $6.1 million from $5.6 million
during  the same  period in 1997 as a result of lower  accounts  receivable  and
inventory  balances  attributable  to  management's  efforts  to reduce  working
capital.  The  impact of lower  accounts  receivable  and  inventory  levels was
partially offset by reduced earnings and decreased accounts payable.

         Net cash used in investing  activities during the six months ended June
30, 1998 of $2.5 million  decreased by $1.3 million from 1997  reflecting  lower
levels of capital expenditures.

         During the six months ended June 30,  1998,  net cash used in financing
activities  of  $94.8  million  consisted  principally  of  payments  to  former
shareholders  whose  investment in Company  Common Stock was converted  into the
right to receive cash in connection with the Merger and the scheduled  repayment
of debt offset by the net proceeds  received from short-term  borrowings and the
issuance of Common Stock to employees as well as payments received applicable to
notes receivable from officers.  During the comparable  period in 1997, net cash
used in  financing  activities  of  $2.5  million  reflected  the  repayment  of
borrowings under its then existing  revolving credit line of $22.2 million which
was principally financed by advances under the Company's uncommitted  facilities
and the then existing term loan of $15.6 million,  repayments of indebtedness to
stockholders  of $0.2  million and payment of $0.3  million to acquire  treasury
stock,  offset by the net  proceeds of $4.5  million from the issuance of Common
Stock to cover the  overallotment  provided  for in the  underwriting  agreement
relating to the Company's initial public offering.






                                       15
<PAGE>


Recently Issued Accounting Standards

         In June 1998, the Financial Accounting Standards Board 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, 1999. The Company expects to adopt SFAS No. 133 effective January
1, 2000.  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

         Several of the Company's  older  computer  programs have time sensitive
software  that will not  recognize  the year 2000 and, if not  addressed,  could
cause disruptions to the Company's normal business  operations.  The Company has
completed  an   assessment  of  its  software  and  has  begun  to  upgrade  its
time-sensitive  software to be Year 2000 compliant.  Management expects that the
cost to upgrade its software will not be significant and that  substantially all
of the cost will be recognized  over the life of the new software.  To date, the
Company has not  incurred  significant  expenses  associated  with the Year 2000
issue.

         The Company  expects to complete the upgrade of its principal  software
by  December  31,  1998 and  believes  that the Year  2000  issue  will not pose
significant operational problems for its computer systems. However, there can be
no guarantee  that the estimated  cost and  completion  will be achieved and the
actual results could differ materially from those anticipated.


"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,  including the consummation of the
acquisition of the Anagram  Companies and the integration of the business of the
Anagram Companies with that of the Company,  and the expected  operating results
of the Anagram Companies and any expected  synergies,  and also including future
capital  expenditures  (including  the  amount  and  nature  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 of new products by the Company's  competitors,
(5) the  inability  of the Company to increase  prices to recover  fully  future
increases in raw material prices,  especially increases in paper prices, (6) the
loss of key employees,  (7) changes in general  business  conditions,  (8) other
factors which might be described from time to time in the Company's filings with
the Securities and Exchange  Commission,  and (9) 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


                                       16
<PAGE>


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.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

         The  Company has  interest  rate risk  associated  with  variable  rate
indebtedness.  The Company utilizes  off-balance sheet financial  instruments to
manage the market risk associated with fluctuations in interest rates. It is the
Company's  policy to use derivative  financial  instruments  to protect  against
market risk arising in the normal course of business.  Company policies prohibit
the use of derivative instruments for the purpose of trading for profit on price
fluctuations or contracts which intentionally  increase the Company's underlying
exposure.


Part II


Item 2.  Changes in Securities and Use of Proceeds

         a) On April 1, 1998, the Company sold 2.41 shares of its Common Stock.

         b) Not applicable.

         c) The shares of Common Stock  referred to in  paragraph  (a) were sold
            for $180,666 in cash. No underwriting  discounts or commissions were
            paid in connection with such sale.

         d) The shares of Common Stock referred to in paragraph (a) were part of
            an offering to a limited number  accredited  investors and employees
            of the  Company.  Such sales were exempt  under  Section 4(2) of the
            Securities Act of 1933.


Item 6.  Exhibits and Reports on Form 8-K

         a) Exhibits

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

                                                                                
             2.1          Stock Purchase Agreement,  dated as of August 6, 1998,
                          by  and  among  Amscan   Holding,   Inc.  and  certain
                          stockholders  of  Anagram   International,   Inc.  and
                          certain related  companies  (incorporated by reference
                          to Exhibit  2.1 to Current  Report on Form 8 - K dated
                          August 6, 1998)

             3.1          Certificate of Incorporation, as amended

             4.1          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  Current  Report  on  Form 8 - K dated
                          August 6, 1998)

             10.1         Amendment No. 1 to the Stockholders' Agreement,  dated
                          as of August 6,  1998 by and  among  Amscan  Holdings,
                          Inc. and certain stockholders of Amscan



                                       17
<PAGE>


                          Holdings, Inc.(incorporated  by  reference  to Exhibit
                          10.1  to  Current  Report  on  Form 8 - K
                          dated August 6, 1998)

             10.2         Employment  Agreement,  dated as of August 6, 1998, by
                          and between  Amscan  Holdings,  Inc.  and Garry Kieves
                          (incorporated  by reference to Exhibit 10.2 to Current
                          Report on Form 8 - K dated August 6, 1998)

             99.1         Joint  Press  Release,  dated  as of  August  6,  1998
                          (incorporated  by reference to Exhibit 99.1 to Current
                          Report on Form 8-K dated August 6,1998)

             27           Financial Data Schedule



      (b)  Reports on Form 8 - K

     A Current  Report on Form 8 - K was filed dated  August 6, 1998,  regarding
     the  Company's  signing of a  definitive  agreement  to acquire  all of the
     capital stock of Anagram International, Inc. and certain related companies.

     A Current  Report on Form 8-K dated April 29, 1998 was filed  regarding the
     change in the Company's  independent  auditors responding to Item 4 of Form
     8-K.






                                       18
<PAGE>


                                    SIGNATURE


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                               AMSCAN HOLDINGS, INC.


                                               By: /s/ Michael A. Correale
                                                   --------------------------
                                                      Michael A. Correale
                                                          Controller
                                            (on behalf of the registrant and as
                                               principal accounting officer)
Date: August 12, 1998                           
      ----------------


                                       19
<PAGE>