##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q/A
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 OR
 o
    
    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 or Organization)
    
    (I.R.S. Employer Identification No.)80 Grasslands Road Elmsford, NY
    
    10523(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants telephone number, including area code:
(914) 345-2020
 þ o
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### 



AMSCAN HOLDINGS, INC.
FORM 10-Q/A
 March 31, 2011
 Explanatory Note
  TABLE OF CONTENTS
 PagePART IItem 1. Condensed Consolidated Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at March 31, 2011 and December 31, 2010
    
    
    3Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010
    
    
    4Condensed Consolidated Statement of Stockholders Equity for the Three Months Ended March 31, 2011
    
    
    5Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    25PART IIItem 6. Exhibits
    
    
    25Signature
    
    
    26EX-31.1EX-31.2EX-32
   http://www.sec.gov
 2




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
 March 31,
    
    
    December 31,2011
    
    
    2010(unaudited)
    
    
    (Note 3)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    18,221
    
    
    $
    20,454Accounts receivable, net of allowances
    
    
    113,889
    
    
    
    107,331Inventories, net of allowances
    
    
    437,059
    
    
    
    424,317Prepaid expenses and other current assets
    
    
    65,037
    
    
    
    65,672Total current assets
    
    
    634,206
    
    
    
    617,774Property, plant and equipment, net
    
    
    202,757
    
    
    
    190,729Goodwill
    
    
    660,366
    
    
    
    630,492Trade names
    
    
    129,954
    
    
    
    129,954Other intangible assets, net
    
    
    52,795
    
    
    
    55,362Other assets, net
    
    
    29,250
    
    
    
    28,840Total assets
    
    $
    1,709,328
    
    
    $
    1,653,151LIABILITIES, REDEEMABLE COMMON SECURITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Loans and notes payable
    
    $
    227,632
    
    
    $
    150,098Accounts payable
    
    
    91,848
    
    
    
    108,172Accrued expenses
    
    
    107,803
    
    
    
    111,054Income taxes payable
    
    
    29,550
    
    
    
    34,325Redeemable warrants
    
    
    
    
    
    
    15,086Current portion of long-term obligations
    
    
    9,100
    
    
    
    9,046Total current liabilities
    
    
    465,933
    
    
    
    427,781Long-term obligations, excluding current portion
    
    
    839,051
    
    
    
    841,112Deferred income tax liabilities
    
    
    95,091
    
    
    
    94,981Deferred rent and other long-term liabilities
    
    
    17,623
    
    
    
    14,766Total liabilities
    
    
    1,417,698
    
    
    
    1,378,640Redeemable common securities (including 1,142.27 and 597.52 common shares
issued and outstanding at March 31, 2011 and December 31, 2010,
respectively)
    
    
    33,179
    
    
    
    18,089Commitments and contingenciesStockholders equity:Common Stock ($0.01 par value; 40,000.00 shares authorized; 30,970.02 and
30,226.50 shares issued and outstanding at March 31, 2011 and December 31,
2010, respectively )
    
    
    
    
    
    
    Additional paid-in capital
    
    
    287,751
    
    
    
    287,583Retained deficit
    
    
    (30,119
    )
    
    
    (27,558
    )Accumulated other comprehensive loss
    
    
    (1,613
    )
    
    
    (5,915
    )Amscan Holdings Inc. stockholders equity
    
    
    256,019
    
    
    
    254,110Noncontrolling interests
    
    
    2,432
    
    
    
    2,312Total stockholders equity
    
    
    258,451
    
    
    
    256,422Total liabilities, redeemable common securities and stockholders equity
    
    $
    1,709,328
    
    
    $
    1,653,151
  3




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands)
 Three Months Ended March 31,2011
    
    
    2010Revenues:Net sales
    
    $
    352,501
    
    
    $
    304,379Royalties and franchise fees
    
    
    3,681
    
    
    
    3,844Total revenues
    
    
    356,182
    
    
    
    308,223Expenses:Cost of sales
    
    
    225,014
    
    
    
    199,900Wholesale selling expenses
    
    
    13,852
    
    
    
    10,390Retail operating expenses
    
    
    61,848
    
    
    
    52,960Franchise expenses
    
    
    3,365
    
    
    
    3,124General and administrative expenses
    
    
    31,545
    
    
    
    29,925Art and development costs
    
    
    3,950
    
    
    
    3,636Total expenses
    
    
    339,574
    
    
    
    299,935Income from operations
    
    
    16,608
    
    
    
    8,288Interest expense, net
    
    
    20,368
    
    
    
    9,301Other expense (income), net
    
    
    62
    
    
    
    (69
    )Loss before income taxes
    
    
    (3,822
    )
    
    
    (944
    )Income tax benefit
    
    
    (1,330
    )
    
    
    (575
    )Net loss
    
    
    (2,492
    )
    
    
    (369
    )Less: net income attributable to noncontrolling interest
    
    
    71
    
    
    
    43Net loss attributable to Amscan Holdings, Inc.
    
    $
    (2,563
    )
    
    $
    (412
    )
  4




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
Three Months Ended March 31, 2011
(Unaudited)
(Amounts in thousands)
 Accumulated
    
    AmscanAdditional
    
    
    
    
    
    Other
    
    Holdings, Inc.Common
    
    Common
    
    Paid-in
    
    Retained
    
    Comprehensive
    
    Stockholders
    
    Noncontrolling
    
    TotalShares
    
    Stock
    
    Capital
    
    Deficit
    
    Loss
    
    Equity
    
    Interests
    
    EquityBalance at December 31, 2010
    
    
    30,226.50
    
    
    $
    
    
    
    $
    287,583
    
    
    $
    (27,558
    )
    
    $
    (5,915
    )
    
    $
    254,110
    
    
    $
    2,312
    
    
    $
    256,422Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,563
    )
    
    
    
    
    
    
    (2,563
    )
    
    
    71
    
    
    
    (2,492
    )Net change in cumulative translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,794
    
    
    
    3,794
    
    
    
    49
    
    
    
    3,843Change in fair value of interest
rate swap contracts, net of income
taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    708
    
    
    
    708
    
    
    
    
    
    
    
    708Change in fair value of foreign
exchange contracts, net of income
taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (200
    )
    
    
    (200
    )
    
    
    
    
    
    
    (200
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,739
    
    
    
    120
    
    
    
    1,859Exercise of redeemable warrants
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )Exercise of non-redeemable warrant
    
    
    740.74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    
    
    
    
    
    
    
    
    Exercise of non-redeemable  common stock options
    
    
    2.78
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    28Equity based compensation expense
    
    
    
    
    
    
    
    
    
    
    143
    
    
    
    
    
    
    
    
    
    
    
    143
    
    
    
    
    
    
    
    143Distribution in lieu of dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Balance at March 31, 2011
    
    
    30,970.02
    
    
    $
    
    
    
    $
    287,751
    
    
    $
    (30,119
    )
    
    $
    (1,613
    )
    
    $
    256,019
    
    
    $
    2,432
    
    
    $
    258,451
  5




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
 Three Months Ended March 31,2011
    
    
    2010Cash flows used in operating activities:Net loss
    
    $
    (2,492
    )
    
    $
    (369
    )Less: net income attributable to noncontrolling interest
    
    
    71
    
    
    
    43Net loss attributable to Amscan Holdings, Inc.
    
    
    (2,563
    )
    
    
    (412
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation and amortization expense
    
    
    13,249
    
    
    
    11,574Amortization of deferred financing costs
    
    
    1,197
    
    
    
    221Provision for doubtful accounts
    
    
    361
    
    
    
    304Deferred income tax provision
    
    
    261
    
    
    
    377Deferred rent
    
    
    2,023
    
    
    
    437Undistributed income in unconsolidated joint venture
    
    
    (313
    )
    
    
    (288
    )Loss on disposal of equipment
    
    
    5
    
    
    
    303Equity based compensation
    
    
    143
    
    
    
    93Changes in operating assets and liabilities:Decrease (increase) in accounts receivable
    
    
    1,660
    
    
    
    (4,469
    )Decrease in inventories
    
    
    2,721
    
    
    
    2,752Decrease (increase) in prepaid expenses and other current assets
    
    
    3,392
    
    
    
    (4,140
    )Decrease in accounts payable, accrued expenses and income taxes
payable
    
    
    (35,043
    )
    
    
    (24,293
    )Net cash used in operating activities
    
    
    (12,907
    )
    
    
    (17,541
    )Cash flows used in investing activities:Cash paid in connection with acquisitions
    
    
    (56,420
    )
    
    
    (3,585
    )Capital expenditures
    
    
    (10,977
    )
    
    
    (6,924
    )Proceeds from disposal of property and equipment
    
    
    1
    
    
    
    54Net cash used in investing activities
    
    
    (67,396
    )
    
    
    (10,455
    )Cash flows provided by financing activities:Repayment of loans, notes payable and long-term obligations
    
    
    (2,506
    )
    
    
    (3,383
    )Borrowings under revolving credit facilities
    
    
    77,816
    
    
    
    33,815Distribution in lieu of dividend
    
    
    2
    
    
    
    Proceeds from exercise of stock options
    
    
    28
    
    
    
    Net cash provided by financing activities
    
    
    75,340
    
    
    
    30,432Effect of exchange rate changes on cash and cash equivalents
    
    
    2,730
    
    
    
    (802
    )Net (decrease) increase in cash and cash equivalents
    
    
    (2,233
    )
    
    
    1,634Cash and cash equivalents at beginning of period
    
    
    20,454
    
    
    
    15,420Cash and cash equivalents at end of period
    
    $
    18,221
    
    
    $
    17,054Supplemental disclosure of cash flow information:Cash paid during the periodInterest
    
    $
    14,032
    
    
    $
    4,751Income taxes
    
    $
    3,081
    
    
    $
    3,516
  6




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 (Amounts in thousands, except share amounts)
 Note 1  Description of Business
  Note 2  Acquisitions
       7




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)
(Amounts in thousands, except share amounts)
   Note 3  Basis of Presentation
  Note 4  Inventories
  March 31,
    
    
    December 31,2011
    
    
    2010Finished goods
    
    $
    426,912
    
    
    $
    416,831Raw Materials
    
    
    13,670
    
    
    
    11,879Work in Process
    
    
    7,048
    
    
    
    6,112447,630
    
    
    
    434,822Reserve for slow-moving and obsolete inventory
    
    
    (10,571
    )
    
    
    (10,505
    )$
    437,059
    
    
    $
    424,317
  Note 5  Income Taxes
   8




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)
(Amounts in thousands, except share amounts)
 Note 6  Restructuring
  Note 7  Comprehensive Income (Loss)
  Three Months ended March 31,2011
    
    
    2010Net loss
    
    $
    (2,563
    )
    
    $
    (412
    )Net change in cumulative translation adjustment
    
    
    3,794
    
    
    
    (1,032
    )Change in fair value of interest rate swap
contracts, net of income tax expense of $416 and
$290
    
    
    708
    
    
    
    494Change in fair value of foreign exchange contracts,
net of income tax (benefit) expense of $(117) and
$313
    
    $
    (200
    )
    
    $
    532Comprehensive income (loss)
    
    $
    1,739
    
    
    $
    (418
    )
 Note 8  Capital Stock
    9




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)
(Amounts in thousands, except share amounts)
 Note 9  Segment Information
 Industry Segments
   Wholesale
    
    
    Retail
    
    
    ConsolidatedThree Months Ended March 31, 2011Revenues:Net sales
    
    $
    199,576
    
    
    $
    220,106
    
    
    $
    419,682Royalties and franchise fees
    
    
    
    
    
    
    3,681
    
    
    
    3,681Total revenues
    
    
    199,576
    
    
    
    223,787
    
    
    
    423,363Eliminations
    
    
    (67,181
    )
    
    
    
    
    
    
    (67,181
    )Net Revenues
    
    $
    132,395
    
    
    $
    223,787
    
    
    $
    356,182Income (loss) from operations
    
    $
    17,286
    
    
    $
    (678
    )
    
    $
    16,608Interest expense, net
    
    
    
    
    
    
    
    
    
    
    20,368Other expense, net
    
    
    
    
    
    
    
    
    
    
    62Loss before income tax benefit
    
    
    
    
    
    
    
    
    
    $
    (3,822
    )Depreciation & Amortization
    
    $
    5,134
    
    
    $
    8,115
    
    
    $
    13,249Total assets
    
    $
    1,036,646
    
    
    $
    672,682
    
    
    $
    1,709,328Wholesale
    
    
    Retail
    
    
    ConsolidatedThree Months Ended March 31, 2010Revenues:Net sales
    
    $
    160,959
    
    
    $
    198,456
    
    
    $
    359,415Royalties and franchise fees
    
    
    
    
    
    
    3,844
    
    
    
    3,844Total revenues
    
    
    160,959
    
    
    
    202,300
    
    
    
    363,259Eliminations
    
    
    (55,036
    )
    
    
    
    
    
    
    (55,036
    )Net Revenues
    
    $
    105,923
    
    
    $
    202,300
    
    
    $
    308,223Income (loss) from operations
    
    $
    17,410
    
    
    $
    (9,122
    )
    
    $
    8,288Interest expense, net
    
    
    
    
    
    
    
    
    
    
    9,301Other income, net
    
    
    
    
    
    
    
    
    
    
    (69
    )Loss before income tax benefit
    
    
    
    
    
    
    
    
    
    $
    (944
    )Depreciation & Amortization
    
    $
    4,391
    
    
    $
    7,183
    
    
    $
    11,574Total assets
    
    $
    811,933
    
    
    $
    691,219
    
    
    $
    1,503,152
 Geographic Segments
  10




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)
(Amounts in thousands, except share amounts)
 Note 10  Legal Proceedings
  Note 11  Stock Option Plan
    Note 12  Hedging Transactions, Derivative Financial Instruments and Fair Value
  Interest Rate Risk Management
   Foreign Exchange Risk Management
  11




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)
(Amounts in thousands, except share amounts)
  Fair Value Measurement
  
    
    Level 1  Quoted prices in active markets for identical assets or liabilities.
    
    Level 2  Observable inputs other than quoted prices included in Level 1, such
as quoted prices for similar assets and liabilities in active markets; quoted
prices for identical or similar assets and liabilities in markets that are not
active; or other inputs that are observable or can be corroborated by observable
market data.
    
    Level 3  Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets or liabilities.
This includes certain pricing models, discounted cash flow methodologies and
similar techniques that use significant unobservable inputs.
  Quoted Prices in
    
    SignificantActive Markets for
    
    Other
    
    UnobservableIdentical Assets or
    
    Observable
    
    Inputs
    
    Total as ofLiabilities (Level 1)
    
    Inputs (Level 2)
    
    (Level 3)
    
    March 31, 2011Derivative assets
    
    
    
    
    
    $
    33
    
    
    
    
    
    
    $
    33Derivative liabilities
    
    

    
    
    
    
    (1,274
    )
    
    
    
    
    
    
    (1,274
    )
 SignificantQuoted Prices in
    
    OtherActive Markets for
    
    Observable
    
    UnobservableIdentical Assets or
    
    Inputs
    
    Inputs
    
    Total as ofLiabilities (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    December 31, 2010Derivative assets
    
    
    
    
    
    $
    241
    
    
    
    
    
    
    $
    241Derivative liabilities
    
    
    
    
    
    
    (2,288
    )
    
    
    
    
    
    
    (2,288
    )
  12




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)
(Amounts in thousands, except share amounts)
   March 31, 2011
    
    December 31, 2010Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueTerm Loan
    
    $
    665,205
    
    
    $
    671,857
    
    
    $
    666,644
    
    
    $
    674,060$175,000 Senior Subordinated Notes
    
    
    175,000
    
    
    
    176,750
    
    
    
    175,000
    
    
    
    176,750
   Derivative Assets
    
    
    Derivative LiabilitiesNotional Amounts
    
    
    March 31, 2011
    
    
    December 31, 2010
    
    
    March 31, 2011
    
    
    December 31, 2010Balance
    
    
    
    
    
    
    Balance
    
    
    
    
    
    
    Balance
    
    
    
    
    
    
    BalanceMarch 31,
    
    
    December 31,
    
    
    Sheet
    
    
    Fair
    
    
    Sheet
    
    
    Fair
    
    
    Sheet
    
    
    Fair
    
    
    Sheet
    
    
    FairDerivative Instrument
    
    2011
    
    
    2010
    
    
    Line
    
    
    Value
    
    
    Line
    
    
    Value
    
    
    Line
    
    
    Value
    
    
    Line
    
    
    ValueInterest Rate Hedge
    
    $
    135,374
    
    
    $
    135,374
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    (b) AE
    
    $
    (1,120
    )
    
    (b) AE
    
    $
    (2,244
    )Foreign Exchange Contracts
    
    
    14,774
    
    
    
    13,468
    
    
    (a) PP
    
    
    33
    
    
    (a) PP
    
    
    241
    
    
    (b) AE
    
    
    (154
    )
    
    (b) AE
    
    
    (44
    )Total Hedges
    
    $
    150,148
    
    
    $
    148,842
    
    
    
    
    
    
    $
    33
    
    
    
    
    
    
    $
    241
    
    
    
    
    
    
    $
    (1,274
    )
    
    
    
    
    
    $
    (2,288
    )
 
 (a)
    
    PP = Prepaid expenses and other current assets(b)
    
    AE = Accrued expenses Note 13  Recently Issued Accounting Pronouncements
  13




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)
(Amounts in thousands, except share amounts)
 Note 14  Condensed Consolidating Financial Information
  
    
    Amscan Inc.
    
    Am-Source, LLC
    
    Anagram Eden Prairie Property Holdings LLC
    
    Anagram International, Inc.
    
    Anagram International Holdings, Inc.
    
    Anagram International, LLC
    
    Gags & Games, Inc.
    
    JCS Packaging Inc.
    
    M&D Industries, Inc.
    
    Party City Corporation
    
    PA Acquisition Corporation
    
    SSY Realty Corp.
  
    
    Amscan (Asia-Pacific) Pty. Ltd.
    
    Amscan de Mexico, S.A. de C.V.
    
    Amscan Distributors (Canada) Ltd.
    
    Anagram Espana, S.A.
    
    Anagram France S.C.S.
    
    Amscan Holdings Limited
    
    Anagram International (Japan) Co., Ltd.
    
    Amscan Partyartikel GmbH
    
    Christys Asia, Ltd.
    
    Christys By Design, Ltd.
    
    Christys Dress Up, Ltd.
    
    Christys Garments & Accessories Ltd.
    
    JCS Hong Kong Ltd.
    
    Riethmuller GmbH
  14




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
 CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 2011
(Amounts in thousands)
 AHI andCombined
    
    
    Combined Non-Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    9,608
    
    
    $
    8,613
    
    
    $
    
    
    
    $
    18,221Accounts receivable, net of allowances
    
    
    75,137
    
    
    
    38,752
    
    
    
    
    
    
    
    113,889Inventories, net of allowances
    
    
    399,394
    
    
    
    38,744
    
    
    
    (1,079
    )
    
    
    437,059Prepaid expenses and other current assets
    
    
    58,881
    
    
    
    6,156
    
    
    
    
    
    
    
    65,037Total current assets
    
    
    543,020
    
    
    
    92,265
    
    
    
    (1,079
    )
    
    
    634,206Property, plant and equipment, net
    
    
    188,554
    
    
    
    14,203
    
    
    
    
    
    
    
    202,757Goodwill
    
    
    608,302
    
    
    
    52,064
    
    
    
    
    
    
    
    660,366Trade names
    
    
    129,954
    
    
    
    
    
    
    
    

    
    
    
    129,954Other intangible assets, net
    
    
    52,795
    
    
    
    
    
    
    
    
    
    
    
    52,795Investment in and advances to unconsolidated subsidiaries
    
    
    113,253
    
    
    
    
    
    
    
    (113,253
    )
    
    
    Due from affiliates
    
    
    73,843
    
    
    
    59,788
    
    
    
    (133,631
    )
    
    
    Other assets, net
    
    
    28,349
    
    
    
    901
    
    
    
    
    
    
    
    29,250Total assets
    
    $
    1,738,070
    
    
    $
    219,221
    
    
    $
    (247,963
    )
    
    $
    1,709,328LIABILITIES, REDEEMABLE COMMON SECURITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Loans and notes payable
    
    
    227,632
    
    
    
    
    
    
    
    
    
    
    
    227,632Accounts payable
    
    
    80,469
    
    
    
    11,379
    
    
    
    
    
    
    
    91,848Accrued expenses
    
    
    92,208
    
    
    
    15,595
    
    
    
    
    
    
    
    107,803Income taxes payable
    
    
    29,932
    
    
    
    (333
    )
    
    
    (49
    )
    
    
    29,550Due to affiliates
    
    
    58,282
    
    
    
    75,349
    
    
    
    (133,631
    )
    
    
    Current portion of long-term obligations
    
    
    9,059
    
    
    
    41
    
    
    
    
    
    
    
    9,100Total current liabilities
    
    
    497,582
    
    
    
    102,031
    
    
    
    (133,680
    )
    
    
    465,933Long-term obligations, excluding current portion
    
    
    838,972
    
    
    
    79
    
    
    
    
    
    
    
    839,051Deferred income tax liabilities
    
    
    94,370
    
    
    
    721
    
    
    
    
    
    
    
    95,091Other
    
    
    16,918
    
    
    
    705
    
    
    
    
    
    
    
    17,623Total liabilities
    
    
    1,447,842
    
    
    
    103,536
    
    
    
    (133,680
    )
    
    
    1,417,698Redeemable common securities
    
    
    33,179
    
    
    
    
    
    
    
    
    
    
    
    33,179Commitments and contingenciesStockholders equity:Common Stock
    
    
    
    
    
    
    336
    
    
    
    (336
    )
    
    
    Additional paid-in capital
    
    
    287,751
    
    
    
    78,094
    
    
    
    (78,094
    )
    
    
    287,751Retained earnings
    
    
    (29,089
    )
    
    
    36,065
    
    
    
    (37,095
    )
    
    
    (30,119
    )Accumulated other comprehensive income (loss)
    
    
    (1,613
    )
    
    
    (1,242
    )
    
    
    1,242
    
    
    
    (1,613
    )Amscan Holdings Inc. stockholders equity
    
    
    257,049
    
    
    
    113,253
    
    
    
    (114,283
    )
    
    
    256,019Noncontrolling interests
    
    
    
    
    
    
    2,432
    
    
    
    
    
    
    
    2,432Total stockholders equity
    
    
    257,049
    
    
    
    115,685
    
    
    
    (114,283
    )
    
    
    258,451Total liabilities, redeemable common securities and
stockholders equity
    
    $
    1,738,070
    
    
    $
    219,221
    
    
    $
    (247,963
    )
    
    $
    1,709,328
 15




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
 CONSOLIDATING BALANCE SHEET
December 31, 2010
(Amounts in thousands)
 AHI andCombined
    
    
    Combined Non-Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    14,198
    
    
    $
    6,256
    
    
    $
    
    
    
    $
    20,454Accounts receivable , net
    
    
    76,699
    
    
    
    30,632
    
    
    
    
    
    
    
    107,331Inventories, net
    
    
    405,452
    
    
    
    19,883
    
    
    
    (1,018
    )
    
    
    424,317Prepaid expenses and other current assets
    
    
    61,211
    
    
    
    4,461
    
    
    
    
    
    
    
    65,672Total current assets
    
    
    557,560
    
    
    
    61,232
    
    
    
    (1,018
    )
    
    
    617,774Property, plant and equipment, net
    
    
    187,574
    
    
    
    3,155
    
    
    
    
    
    
    
    190,729Goodwill
    
    
    600,014
    
    
    
    30,478
    
    
    
    
    
    
    
    630,492Trade names
    
    
    129,954
    
    
    
    
    
    
    
    
    
    
    
    129,954Other intangible assets, net
    
    
    55,362
    
    
    
    
    
    
    
    
    
    
    
    55,362Investment in and advances to
unconsolidated subsidiaries
    
    
    64,485
    
    
    
    
    
    
    
    (64,485
    )
    
    
    Due from affiliates
    
    
    22,148
    
    
    
    12,998
    
    
    
    (35,146
    )
    
    
    Other assets, net
    
    
    28,057
    
    
    
    783
    
    
    
    
    
    
    
    28,840Total assets
    
    
    1,645,154
    
    
    $
    108,646
    
    
    $
    (100,649
    )
    
    $
    1,653,151LIABILITIES, REDEEMABLE COMMON SECURITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Loans and notes payable
    
    
    150,098
    
    
    
    
    
    
    
    
    
    
    
    150,098Accounts payable
    
    
    97,510
    
    
    
    10,662
    
    
    
    
    
    
    
    108,172Accrued expenses
    
    
    102,749
    
    
    
    8,305
    
    
    
    
    
    
    
    111,054Income taxes payable
    
    
    35,706
    
    
    
    (1,355
    )
    
    
    (26
    )
    
    
    34,325Due to affiliates
    
    
    11,593
    
    
    
    23,553
    
    
    
    (35,146
    )
    
    
    Redeemable warrants
    
    
    15,086
    
    
    
    
    
    
    
    
    
    
    
    15,086Current portion of long-term obligations
    
    
    9,005
    
    
    
    41
    
    
    
    
    
    
    
    9,046Total current liabilities
    
    
    421,747
    
    
    
    41,206
    
    
    
    (35,172
    )
    
    
    427,781Long-term obligations, excluding current portion
    
    
    841,023
    
    
    
    89
    
    
    
    
    
    
    
    841,112Deferred income tax liabilities
    
    
    94,427
    
    
    
    554
    
    
    
    
    
    
    
    94,981Other
    
    
    14,766
    
    
    
    
    
    
    
    
    
    
    
    14,766Total liabilities
    
    
    1,371,963
    
    
    
    41,849
    
    
    
    (35,172
    )
    
    
    1,378,640Redeemable common securities
    
    
    18,089
    
    
    
    
    
    
    
    
    
    
    
    18,089Commitments and contingenciesStockholders equity:Common Stock
    
    
    
    
    
    
    336
    
    
    
    (336
    )
    
    
    Additional paid-in capital
    
    
    287,583
    
    
    
    31,025
    
    
    
    (31,025
    )
    
    
    287,583Retained (deficit)earnings
    
    
    (26,566
    )
    
    
    37,535
    
    
    
    (38,527
    )
    
    
    (27,558
    )Accumulated other comprehensive (loss) income
    
    
    (5,915
    )
    
    
    (4,411
    )
    
    
    4,411
    
    
    
    (5,915
    )Amscan Holdings, Inc. stockholders equity
    
    
    255,102
    
    
    
    64,485
    
    
    
    (65,477
    )
    
    
    254,110Noncontrolling interests
    
    
    
    
    
    
    2,312
    
    
    
    
    
    
    
    2,312Total stockholders equity
    
    
    255,102
    
    
    
    66,797
    
    
    
    (65,477
    )
    
    
    256,422Total liabilities, redeemable common
securities and
stockholders equity
    
    $
    1,645,154
    
    
    $
    108,646
    
    
    $
    (100,649
    )
    
    $
    1,653,151
 16




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended March 31, 2011
(Amounts in thousands)
 AHI andCombined
    
    
    Combined Non-Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Net sales
    
    $
    316,743
    
    
    $
    41,308
    
    
    $
    (5,550
    )
    
    $
    352,501Royalties and franchise fees
    
    
    3,681
    
    
    
    
    
    
    
    
    
    
    
    3,681Total revenues
    
    
    320,424
    
    
    
    41,308
    
    
    
    (5,550
    )
    
    
    356,182Expenses:Cost of sales
    
    
    198,141
    
    
    
    32,362
    
    
    
    (5,489
    )
    
    
    225,014Selling expenses
    
    
    8,313
    
    
    
    5,539
    
    
    
    
    
    
    
    13,852Retail operating expenses
    
    
    61,848
    
    
    
    
    
    
    
    
    
    
    
    61,848Franchise expenses
    
    
    3,365
    
    
    
    
    
    
    
    
    
    
    
    3,365General and administrative expenses
    
    
    27,046
    
    
    
    4,829
    
    
    
    (330
    )
    
    
    31,545Art and development costs
    
    
    3,889
    
    
    
    61
    
    
    
    
    
    
    
    3,950Total expenses
    
    
    302,602
    
    
    
    42,791
    
    
    
    (5,819
    )
    
    
    339,574Income (loss) from operations
    
    
    17,822
    
    
    
    (1,483
    )
    
    
    269
    
    
    
    16,608Interest expense, net
    
    
    20,129
    
    
    
    239
    
    
    
    
    
    
    
    20,368Other income (expense), net
    
    
    1,840
    
    
    
    (638
    )
    
    
    (1,140
    )
    
    
    62Loss before income taxes
    
    
    (4,147
    )
    
    
    (1,084
    )
    
    
    1,409
    
    
    
    (3,822
    )Income tax (benefit) expense
    
    
    (1,622
    )
    
    
    315
    
    
    
    (23
    )
    
    
    (1,330
    )Net loss
    
    
    (2,525
    )
    
    
    (1,399
    )
    
    
    1,432
    
    
    
    (2,492
    )Less net income attributable to noncontrolling interests
    
    
    
    
    
    
    71
    
    
    
    
    
    
    
    71Net loss attributable to Amscan Holdings, Inc.
    
    $
    (2,525
    )
    
    $
    (1,470
    )
    
    $
    1,432
    
    
    $
    (2,563
    )
 17




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended March 31, 2010
(Amounts in thousands)
 AHI andCombined
    
    
    Combined Non-Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Net sales
    
    $
    266,083
    
    
    $
    53,608
    
    
    $
    (15,312
    )
    
    $
    304,379Royalties and franchise fees
    
    
    3,844
    
    
    
    
    
    
    
    
    
    
    
    3,844Total revenues
    
    
    269,927
    
    
    
    53,608
    
    
    
    (15,312
    )
    
    
    308,223Expenses:Cost of sales
    
    
    175,250
    
    
    
    38,027
    
    
    
    (13,377
    )
    
    
    199,900Selling expenses
    
    
    7,757
    
    
    
    2,633
    
    
    
    
    
    
    
    10,390Retail operating expenses
    
    
    45,884
    
    
    
    8,301
    
    
    
    (1,225
    )
    
    
    52,960Franchise expenses
    
    
    3,124
    
    
    
    
    
    
    
    
    
    
    
    3,124General and administrative expenses
    
    
    27,110
    
    
    
    3,145
    
    
    
    (330
    )
    
    
    29,925Art and development costs
    
    
    3,660
    
    
    
    (24
    )
    
    
    
    
    
    
    3,636Total expenses
    
    
    262,785
    
    
    
    52,082
    
    
    
    (14,932
    )
    
    
    299,935(Loss) Income loss from operations
    
    
    7,142
    
    
    
    1,526
    
    
    
    (380
    )
    
    
    8,288Interest expense, net
    
    
    8,653
    
    
    
    648
    
    
    
    
    
    
    
    9,301Other (income) expense, net
    
    
    (1,394
    )
    
    
    322
    
    
    
    1,003
    
    
    
    (69
    )(Loss) income before income taxes
    
    
    (117
    )
    
    
    556
    
    
    
    (1,383
    )
    
    
    (944
    )Income tax benefit
    
    
    (408
    )
    
    
    95
    
    
    
    (262
    )
    
    
    (575
    )Net income (loss)
    
    $
    291
    
    
    $
    461
    
    
    $
    (1,121
    )
    
    $
    (369
    )Less Net income attributed to noncontrolling interest
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    43Net income (loss) attributable to Amscan Holdings,
Inc.
    
    $
    291
    
    
    $
    418
    
    
    $
    (1,121
    )
    
    $
    (412
    )
 18




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2011
(Amounts in thousands)
 AHI andCombined
    
    
    Combined Non-Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows used in operating activities:Net loss
    
    
    (2,525
    )
    
    
    (1,399
    )
    
    
    1,432
    
    
    
    (2,492
    )Less: net income attributable to noncontrolling interest
    
    
    
    
    
    
    71
    
    
    
    
    
    
    
    71Net loss attributable to Amscan Holdings, Inc.
    
    $
    (2,525
    )
    
    $
    (1,470
    )
    
    $
    1,432
    
    
    $
    (2,563
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization expense
    
    
    12,691
    
    
    
    558
    
    
    
    
    
    
    
    13,249Amortization of deferred financing costs
    
    
    1,197
    
    
    
    
    
    
    
    
    
    
    
    1,197Provision for doubtful accounts
    
    
    312
    
    
    
    49
    
    
    
    
    
    
    
    361Deferred income tax expense
    
    
    261
    
    
    
    
    
    
    
    
    
    
    
    261Deferred rent
    
    
    2,023
    
    
    
    
    
    
    
    
    
    
    
    2,023Undistributed income in unconsolidated joint venture
    
    
    (313
    )
    
    
    
    
    
    
    
    
    
    
    (313
    )Loss on disposal of equipment
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Equity based compensation
    
    
    143
    
    
    
    
    
    
    
    
    
    
    
    143Changes in operating assets and liabilities:Decrease in accounts receivable
    
    
    1,249
    
    
    
    411
    
    
    
    
    
    
    
    1,660Decrease (increase) in inventories
    
    
    6,693
    
    
    
    (4,033
    )
    
    
    61
    
    
    
    2,721(Increase) decrease in prepaid expenses and other current assets
    
    
    (198
    )
    
    
    3,590
    
    
    
    
    
    
    
    3,392(Decrease) increase in accounts payable, accrued expenses and income taxes payable
    
    
    (34,500
    )
    
    
    950
    
    
    
    (1,493
    )
    
    
    (35,043
    )Net cash (used in) provided by operating activities
    
    
    (12,962
    )
    
    
    55
    
    
    
    
    
    
    
    (12,907
    )Cash flows used in investing activities:Cash paid in connection with acquisitions
    
    
    (56,420
    )
    
    
    
    
    
    
    
    
    
    
    (56,420
    )Capital expenditures
    
    
    (10,701
    )
    
    
    (276
    )
    
    
    
    
    
    
    (10,977
    )Proceeds from disposal of property and equipment
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Net cash used in investing activities
    
    
    (67,120
    )
    
    
    (276
    )
    
    
    
    
    
    
    (67,396
    )Cash flows provided by financing activities:Repayments of loans, notes payable and long-term obligations
    
    
    (2,497
    )
    
    
    (9
    )
    
    
    
    
    
    
    (2,506
    )Proceeds from loans, notes payable and long-term obligations
    
    
    77,534
    
    
    
    282
    
    
    
    
    
    
    
    77,816Distribution in lieu of dividend
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Proceeds from the exercise of stock options
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    28Net cash provided by financing activities
    
    
    75,067
    
    
    
    273
    
    
    
    
    
    
    
    75,340Effect of exchange rate changes on cash and cash equivalents
    
    
    425
    
    
    
    2,305
    
    
    
    
    
    
    
    2,730Net (decrease) increase in cash and cash equivalents
    
    
    (4,590
    )
    
    
    2,357
    
    
    
    
    
    
    
    (2,233
    )Cash and cash equivalents at beginning of period
    
    
    14,198
    
    
    
    6,256
    
    
    
    
    
    
    
    20,454Cash and cash equivalents at end of period
    
    $
    9,608
    
    
    $
    8,613
    
    
    $
    
    
    
    $
    18,221
 19




---



##### Table of Contents



AMSCAN HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2010
(Amounts in thousands)
 AHI andCombined
    
    
    Combined Non-Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows used in operating activities:Net (loss) income
    
    $
    291
    
    
    $
    461
    
    
    $
    (1,121
    )
    
    $
    (369
    )Less: net income attributable to noncontrolling interest
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    43Net (loss) income attributable to Amscan Holdings, Inc.
    
    
    291
    
    
    
    418
    
    
    
    (1,121
    )
    
    
    (412
    )Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:Depreciation and amortization expense
    
    
    10,547
    
    
    
    1,027
    
    
    
    
    
    
    
    11,574Amortization of deferred financing costs
    
    
    154
    
    
    
    67
    
    
    
    
    
    
    
    221Provision for doubtful accounts
    
    
    248
    
    
    
    56
    
    
    
    
    
    
    
    304Deferred income tax expense
    
    
    377
    
    
    
    
    
    
    
    
    
    
    
    377Deferred rent
    
    
    346
    
    
    
    91
    
    
    
    
    
    
    
    437Undistributed gain in unconsolidated joint venture
    
    
    (288
    )
    
    
    
    
    
    
    
    
    
    
    (288
    )Loss on disposal of equipment
    
    
    106
    
    
    
    197
    
    
    
    
    
    
    
    303Equity based compensation
    
    
    93
    
    
    
    
    
    
    
    
    
    
    
    93Changes in operating assets and liabilities:(Increase) decrease in accounts receivable
    
    
    (4,712
    )
    
    
    243
    
    
    
    
    
    
    
    (4,469
    )Decrease (increase) in inventories
    
    
    2,264
    
    
    
    (223
    )
    
    
    711
    
    
    
    2,752Increase in prepaid expenses and other current assets
    
    
    (2,983
    )
    
    
    (928
    )
    
    
    (229
    )
    
    
    (4,140
    )Decrease in accounts payable, accrued expenses and income taxes payable
    
    
    (24,366
    )
    
    
    (566
    )
    
    
    639
    
    
    
    (24,293
    )Net cash (used in) provided by operating activities
    
    
    (17,923
    )
    
    
    382
    
    
    
    
    
    
    
    (17,541
    )Cash flows used in investing activities:Cash paid in connection with acquisitions
    
    
    (3,585
    )
    
    
    
    
    
    
    
    
    
    
    (3,585
    )Capital expenditures
    
    
    (6,577
    )
    
    
    (347
    )
    
    
    
    
    
    
    (6,924
    )Proceeds from disposal of property and equipment
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    54Net cash used in investing activities
    
    
    (10,108
    )
    
    
    (347
    )
    
    
    
    
    
    
    (10,455
    )Cash flows provided by (used in) financing activities:Repayments of loans, notes payable and long-term obligations
    
    
    (1,745
    )
    
    
    (1,638
    )
    
    
    
    
    
    
    (3,383
    )Proceeds from loans, notes payable and long-term obligations
    
    
    33,815
    
    
    
    
    
    
    
    
    
    
    
    33,815Net cash provided by (used in) financing activities
    
    
    32,070
    
    
    
    (1,638
    )
    
    
    
    
    
    
    30,432Effect of exchange rate changes on cash and cash equivalents
    
    
    14
    
    
    
    (816
    )
    
    
    
    
    
    
    (802
    )Net increase (decrease) in cash and cash equivalents
    
    
    4,053
    
    
    
    (2,419
    )
    
    
    
    
    
    
    1,634Cash and cash equivalents at beginning of period
    
    
    8,240
    
    
    
    7,180
    
    
    
    
    
    
    
    15,420Cash and cash equivalents at end of period
    
    $
    12,293
    
    
    $
    4,761
    
    
    $
    
    
    
    $
    17,054
 20




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 General
 st
 Results of Operations
 Three Months Ended March 31, 2011 Compared To Three Months Ended March 31, 2010
  Three Months Ended March 31,2011
    
    
    2010(Dollars in thousands)Revenues:Net sales
    
    $
    352,501
    
    
    
    99.0
    %
    
    $
    304,379
    
    
    
    98.8
    %Royalties and franchise fees
    
    
    3,681
    
    
    
    1.0
    
    
    
    3,844
    
    
    
    1.2Total revenues
    
    
    356,182
    
    
    
    100.0
    
    
    
    308,223
    
    
    
    100.0Expenses:Cost of sales
    
    
    225,014
    
    
    
    63.2
    
    
    
    199,900
    
    
    
    64.9Wholesale selling expenses
    
    
    13,852
    
    
    
    3.9
    
    
    
    10,390
    
    
    
    3.4Retail operating expenses
    
    
    61,848
    
    
    
    17.4
    
    
    
    52,960
    
    
    
    17.2Franchise expenses
    
    
    3,365
    
    
    
    0.9
    
    
    
    3,124
    
    
    
    1.0General and administrative expenses
    
    
    31,545
    
    
    
    8.9
    
    
    
    29,925
    
    
    
    9.7Art and development costs
    
    
    3,950
    
    
    
    1.1
    
    
    
    3,636
    
    
    
    1.1Total expenses
    
    
    339,574
    
    
    
    95.3
    
    
    
    299,935
    
    
    
    97.3Income from operations
    
    
    16,608
    
    
    
    4.7
    
    
    
    8,288
    
    
    
    2.7Interest expense, net
    
    
    20,368
    
    
    
    5.7
    
    
    
    9,301
    
    
    
    3.0Other expense (income), net
    
    
    62
    
    
    
    0.0
    
    
    
    (69
    )
    
    
    0.0Loss before income taxes
    
    
    (3,822
    )
    
    
    (1.1
    )
    
    
    (944
    )
    
    
    (0.3
    )Income tax benefit
    
    
    (1,330
    )
    
    
    (0.4
    )
    
    
    (575
    )
    
    
    (0.2Net loss
    
    
    (2,492
    )
    
    
    (0.7
    )
    
    
    (369
    )
    
    
    (0.1
    )Less net income attributable to noncontrolling interests
    
    
    71
    
    
    
    0.0
    
    
    
    43
    
    
    
    (0.0
    )Net loss attributable to Amscan Holdings, Inc.
    
    $
    (2,563
    )
    
    
    (0.7
    )%
    
    $
    (412
    )
    
    
    (0.1
    )%
 21




---



##### Table of Contents



Revenues
 Total revenues for the first quarter of 2011 were $356.2 million, or 15.6% higher than
for the first quarter of 2010, reflecting growth in both reporting segments. The following
table sets forth the Companys total revenues for the quarters ended March 31, 2011 and
2010, respectively.
 Three Months Ended March 31,2011
    
    2010Dollars in
    
    Percentage of
    
    Dollars in
    
    Percentage ofThousands
    
    Total Revenue
    
    Thousands
    
    Total RevenueRevenuesSalesWholesale
    
    $
    199,576
    
    
    
    56.1
    %
    
    $
    160,959
    
    
    
    52.2
    %Eliminations
    
    
    (67,181
    )
    
    
    (18.9
    )%
    
    
    (55,036
    )
    
    
    (7.9
    )%Net wholesale
    
    
    132,395
    
    
    
    37.2
    %
    
    
    105,923
    
    
    
    34.4
    %Retail
    
    
    220,106
    
    
    
    61.8
    %
    
    
    198,456
    
    
    
    64.4
    %Total net sales
    
    
    352,501
    
    
    
    99.0
    %
    
    
    304,379
    
    
    
    98.8
    %Franchise related
    
    
    3,681
    
    
    
    1.0
    %
    
    
    3,844
    
    
    
    1.2
    %Total revenues
    
    $
    356,182
    
    
    
    100.0
    %
    
    $
    308,223
    
    
    
    100.0
    %
 Wholesale
   Retail
  22




---



##### Table of Contents



Royalties and franchise fees
  Gross Profit
  Three Months Ended March 31,2011
    
    2010Dollars in
    
    Percentage of
    
    Dollars in
    
    Percentage ofThousands
    
    Total Revenue
    
    Thousands
    
    Total RevenueWholesale
    
    $
    44,171
    
    
    
    33.4
    %
    
    $
    37,875
    
    
    
    35.8
    %Retail
    
    
    83,315
    
    
    
    37.9
    %
    
    
    66,604
    
    
    
    33.6
    %Total
    
    $
    127,486
    
    
    
    36.2
    %
    
    $
    104,479
    
    
    
    34.3
    %
   Operating expenses
    .
 Interest expense, net
  23




---



##### Table of Contents



Other expense (income), net
  Income tax benefit
   Liquidity and Capital Resources
      Legal Proceedings
  Seasonality
 Wholesale Operations
  Retail Operations
  24




---



##### Table of Contents



Cautionary Note Regarding Forward-Looking Statements
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   
 Item 4. Controls and Procedures
   
 PART II
 
 Item 6. Exhibits
 31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
and Rule 15d-14(a) of the Securities Exchange Act, as amended.31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
and Rule 15d-14(a) of the Securities Exchange Act, as amended.32
    
    Certification of Chief Executive and Financial Officer pursuant to 18
U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
 25




---



##### Table of Contents



AMSCAN HOLDINGS, INC.Date: May 24, 2011
    By:
    /s/ Michael A. CorrealeMichael A. CorrealeChief Financial Officer
(on behalf of the registrant and as principal
financial and accounting officer) 26