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 March 31, 2003


[ ]  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              (I.R.S. Employer Identification
   incorporation or organization)                           Number)


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


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


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


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

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

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

As of May 15, 2003,  1,239.92  shares of  Registrant's  common stock,  par value
$0.10 ("Common Stock"), were outstanding.


<PAGE>


                              AMSCAN HOLDINGS, INC.
                                    FORM 10-Q

                                 March 31, 2003

                                Table of Contents



                                   Part I                                  Page
                                   ------                                  ----

 Item 1    Financial Statements  (Unaudited)

           Consolidated Balance Sheets at March 31, 2003 and
               December 31, 2002...........................................   3

           Consolidated Statements of Income for the Three Months Ended
               March 31, 2003 and 2002.....................................   4

           Consolidated Statement of Stockholders' Deficit for the
               Three Months Ended March 31, 2003...........................   5

           Consolidated Statements of Cash Flows for the Three
                Months Ended March 31, 2003 and 2002.......................   6

           Notes to Consolidated Financial Statements......................   8

 Item 2    Management's Discussion and Analysis of Financial Condition
               and Results of Operations...................................  22

 Item 3    Quantitative and Qualitative Disclosures About Market Risk .....  26

 Item 4    Controls and Procedures.........................................  27


                                     Part II
                                     -------

 Item 6    Exhibits and Reports on Form 8-K................................  27

 Signature ................................................................  28

 Certification by Chief Executive Officer..................................  29

 Certification by Chief Financial Officer..................................  30


                                       2
<PAGE>


<TABLE>
                              AMSCAN HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
                (Dollars in thousands, except per share amounts )

<CAPTION>
                                                                             March 31,     December 31,
                                                                               2003            2002
                                                                             ---------     ------------
                                                                            (Unaudited)       (Note)
<S>                                                                         <C>            <C>
                                     ASSETS
Current assets:
    Cash and cash equivalents .........................................     $   1,511      $   2,400
    Accounts receivable, net of allowances ............................        84,998         74,247
    Inventories, net of allowances ....................................        91,640         93,890
    Prepaid expenses and other current assets .........................        17,517         15,233
                                                                            ---------      ---------
         Total current assets .........................................       195,666        185,770
Property, plant and equipment, net ....................................        99,760        100,304
Goodwill, net .........................................................        72,013         74,251
Notes receivable from officers ........................................         1,960          1,942
Other assets, net .....................................................         9,602         10,230
                                                                            ---------      ---------
         Total assets .................................................     $ 379,001      $ 372,497
                                                                            =========      =========

      LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED AND COMMON STOCK
                         AND STOCKHOLDERS' DEFICIT
Current liabilities:
    Short-term obligations ............................................     $   9,500      $    --
    Accounts payable ..................................................        32,124         39,245
    Accrued expenses ..................................................        24,669         21,524
    Income taxes payable ..............................................         3,648          2,525
    Current portion of long-term obligations ..........................         3,191          3,220
                                                                            ---------      ---------
         Total current liabilities ....................................        73,132         66,514
Long-term obligations, excluding current portion ......................       294,611        295,420
Deferred income tax liabilities .......................................        14,817         17,360
Other .................................................................         2,247          2,317
                                                                            ---------      ---------
         Total liabilities ............................................       384,807        381,611

Redeemable convertible preferred stock ($0.10 par value; 100.00 shares
    authorized; 44.94 and 42.40 shares issued and outstanding) ........         6,742          6,646
Redeemable Common Stock ...............................................        30,523         30,523

Commitments and Contingencies

Stockholders' deficit:
    Common Stock ($0.10 par value; 3,000.00 shares authorized;
        1,233.27 shares issued and outstanding) .......................          --             --
    Additional paid-in capital ........................................        14,718         14,814
    Unamortized restricted Common Stock awards, net ...................          (278)          (323)
    Notes receivable from stockholders ................................          (649)          (638)
    Deficit ...........................................................       (54,089)       (57,551)
    Accumulated other comprehensive loss ..............................        (2,773)        (2,585)
                                                                            ---------      ---------
         Total stockholders' deficit ..................................       (43,071)       (46,283)
                                                                            ---------      ---------
         Total liabilities, redeemable convertible preferred and Common
           Stock and stockholders' deficit ............................     $ 379,001      $ 372,497
                                                                            =========      =========
</TABLE>

     Note:  The balance  sheet at December  31, 2002 has been  derived  from the
     audited consolidated financial statements at that date.

          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>


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


<CAPTION>
                                                                      Three Months
                                                                          Ended
                                                                         March 31,
                                                                  ----------------------
                                                                    2003          2002
                                                                  --------      --------
<S>                                                               <C>           <C>
Net sales ...................................................     $ 99,844      $ 95,908
Cost of sales ...............................................       66,969        61,676
                                                                  --------      --------
         Gross profit .......................................       32,875        34,232
Operating expenses:
   Selling expenses .........................................        9,142         8,179
   General and administrative expenses ......................        8,506         8,151
   Art and development costs ................................        2,537         2,276
   Restructuring charges ....................................          316
                                                                  --------      --------
         Total operating expenses ...........................       20,501        18,606
                                                                  --------      --------
         Income from operations .............................       12,374        15,626
Interest expense, net .......................................        6,644         5,490
Other income, net ...........................................          (18)          (70)
                                                                  --------      --------
         Income before income taxes and minority interests ..        5,748        10,206
Income tax expense ..........................................        2,271         4,031
Minority interests ..........................................           15           (56)
                                                                  --------      --------
         Net income .........................................        3,462         6,231
         Dividend on redeemable convertible preferred
               stock ........................................           96            90
                                                                  --------      --------
         Net income applicable to common shares .............     $  3,366      $  6,141
                                                                  ========      ========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       4
<PAGE>


<TABLE>
                              AMSCAN HOLDINGS, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                        Three Months Ended March 31, 2003
                             (Dollars in thousands)
                                   (Unaudited)


<CAPTION>
                                                                     Unamortized
                                                                     Restricted
                                                  Common               Common      Notes                  Accumulated
                                                  Stock    Additional   Stock     Receivable                 Other
                                         Common     Par      Paid-in   Awards,      from                 Comprehensive
                                         Shares    Value     Capital     Net     Stockholders  Deficit       Loss        Total
                                         ------    -----     -------     ---     ------------  -------       ----        -----

<S>                                     <C>         <C>     <C>         <C>         <C>       <C>          <C>         <C>
Balance at December 31, 2002 .....      1,233.27    $--     $14,814     $(323)      $(638)    $(57,551)    $(2,585)    $(46,283)

  Net income .....................                                                               3,462                    3,462
  Net change in cumulative
    translation adjustment .......                                                                            (123)        (123)
  Change in fair value of
     available-for-sale
     investment, net of taxes ....                                                                             (81)         (81)
  Change in fair value of interest
     rate swap and foreign
     exchange contracts, net of
     taxes ........................                                                                             16           16
                                                                                                                       --------
      Comprehensive income .......                                                                                        3,274

  Redeemable convertible
    preferred stock dividend .....                               (96)                                                       (96)
  Amortization of restricted
    Common Stock awards ..........                                         45                                                45

   Accretion of interest income on
    notes receivable from
    stockholders .................                                                    (11)                                  (11)
                                      ----------    -----   --------    -----       -----     --------     -------     --------

Balance at March 31, 2003 ........      1,233.27    $--      $14,718    $(278)      $(649)    $(54,089)    $(2,773)    $(43,071)
                                      ==========    ===      =======     =====       =====     ========     =======     ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>


<TABLE>
                              AMSCAN HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)

<CAPTION>
                                                                                          Three Months Ended
                                                                                               March 31,
                                                                                          2003          2002
                                                                                        --------      --------
<S>                                                                                     <C>           <C>
Cash flows from operating activities:
   Net income .....................................................................     $  3,462      $  6,231
   Adjustments to reconcile net income to net cash used in operating activities:
      Depreciation and amortization ...............................................        3,976         3,148
      Amortization of deferred financing costs ....................................          479           267
      Amortization of restricted Common Stock awards ..............................           45            59
      Provision for doubtful accounts .............................................          604           603
      Deferred income tax (benefit) expense .......................................         (402)        1,393
      Loss on disposal of equipment ...............................................           22
      Changes in operating assets and liabilities, net of acquisition:
         Increase in accounts receivable ..........................................      (11,355)      (14,350)
         Decrease in inventories ..................................................        2,250         1,324
         Increase in prepaid expenses and other current assets ....................       (2,144)       (4,716)
         (Decrease) increase in accounts payable, accrued expenses and income taxes
            payable ...............................................................       (2,932)        3,853
      Other, net ..................................................................           23          (162)
                                                                                        --------      --------
         Net cash used in operating activities ....................................       (5,972)       (2,350)

Cash flows from investing activities:
   Cash paid in connection with acquisition .......................................                    (13,289)
   Capital expenditures ...........................................................       (3,408)       (4,107)
   Proceeds from disposal of property and equipment ...............................            3
                                                                                        --------      --------
         Net cash used in investing activities ....................................       (3,405)      (17,396)

Cash flows from financing activities:
   Proceeds from short-term obligations ...........................................        9,500        21,550
   Repayment of loans, notes payable and long-term obligations ....................         (938)         (831)
                                                                                        --------      --------
         Net cash provided by financing activities ................................        8,562        20,719
Effect of exchange rate changes on cash and cash equivalents ......................          (74)         (102)
                                                                                        --------      --------
         Net (decrease) increase in cash and cash equivalents .....................         (889)          871
Cash and cash equivalents at beginning of period ..................................        2,400         1,016
                                                                                        --------      --------
Cash and cash equivalents at end of period ........................................     $  1,511      $  1,887
                                                                                        ========      ========
Supplemental Disclosures:
         Interest paid ............................................................     $  2,359      $  2,370
         Income taxes paid ........................................................     $  1,479      $    495
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       6
<PAGE>


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


Supplemental information on non-cash activities:

     In January 2002,  3.0 shares of restricted  Common Stock  aggregating  $465
     were  issued to an  officer  of the  Company,  subject  to  future  vesting
     provisions.

     In February 2002, the Company issued 96.774 shares of its Common Stock,  at
     a value of $155 per share, to American Greetings  Corporation in connection
     with  the  acquisition  of M&D  Industries,  Inc.,  formerly  known  as M&D
     Balloons, Inc. ("M&D Industries") (see Note 10).

     There were no capital lease  obligations  recorded  during the three months
     ended March 31, 2003 or 2002.




          See accompanying notes to consolidated financial statements.


                                       7
<PAGE>


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

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

         Amscan  Holdings,  Inc.  ("Amscan  Holdings"  and,  together  with  its
subsidiaries,  "Amscan," "AHI" or the "Company") was  incorporated on October 3,
1996 for the purpose of becoming the holding company for Amscan Inc. and certain
affiliated entities.  AHI designs,  manufactures,  contracts for manufacture and
distributes  party goods,  including  metallic  balloons,  gifts and stationery,
principally in North America, South America, Europe, Asia and Australia.

NOTE 2 - BASIS OF PRESENTATION

         The accompanying  unaudited  consolidated  financial statements include
the accounts of Amscan Holdings and majority-owned and controlled entities.  All
material   intercompany  balances  and  transactions  have  been  eliminated  in
consolidation.   The  unaudited  consolidated  financial  statements  have  been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States  for  interim  financial  information.  Accordingly,  they do not
include all of the information and footnotes  required by accounting  principles
generally  accepted in the United States 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 months ended March 31, 2003 are not necessarily
indicative of the results to be expected for the year ending  December 31, 2003.
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 and the general  level of raw  material  costs.  For further
information,  see  the  consolidated  financial  statements  and  notes  thereto
included  in Amscan  Holdings'  Annual  Report  on Form 10-K for the year  ended
December 31, 2002 as filed with the Securities and Exchange Commission.


NOTE 3 - INVENTORIES

         Inventories consisted of the following (dollars in thousands):

                                                         March 31,  December 31,
                                                           2003         2002
                                                         --------     --------
Finished goods .....................................     $ 78,725     $ 80,783
Raw materials ......................................        8,859        8,763
Work-in-process ....................................        7,497        7,722
                                                         --------     --------
                                                           95,081       97,268
Less: reserve for slow moving and obsolete inventory       (3,441)      (3,378)
                                                         --------     --------
                                                         $ 91,640     $ 93,890
                                                         ========     ========

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


NOTE 4 - INCOME TAXES

         The  consolidated  income tax expense for the three  months ended March
31,  2003  and  2002  was  determined  based  upon  estimates  of the  Company's
consolidated  effective  income tax rates for the year ending  December 31, 2003
and the year ended December 31, 2002. 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.


                                       8
<PAGE>


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

NOTE 5 - COMPREHENSIVE INCOME (LOSS)

          Comprehensive   income   consisted  of  the   following   (dollars  in
thousands):
<TABLE>
<CAPTION>
                                                                                  Three Months Ended
                                                                                        March 31,
                                                                                   2003         2002
                                                                                 -------      -------
<S>                                                                              <C>          <C>
Net income .................................................................     $ 3,462      $ 6,231
Net change in cumulative translation adjustment ............................        (123)        (213)
Change in fair value of available-for-sale investment, net of taxes of $(53)         (81)
Change in fair value of the Company's interest rate swap contract, net of
   taxes of $6, and $(43), respectively ....................................           9          (67)
Change in fair value of the Company's foreign exchange contracts, net of
   taxes of $4 and $87, respectively .......................................           7          134
                                                                                 -------      -------
                                                                                 $ 3,274      $ 6,085
                                                                                 =======      =======
</TABLE>

         Accumulated  other   comprehensive  loss  consisted  of  the  following
(dollars in thousands):
<TABLE>
<CAPTION>
                                                                              March 31,  December 31,
                                                                                2003         2002
                                                                              -------      -------
<S>                                                                           <C>          <C>
Cumulative translation adjustment .......................................     $(1,598)     $(1,475)
 Unrealized loss on available for sale investment, net of taxes of $(53).         (81)
Interest rate swap contract qualifying as a hedge, net of taxes of $(415)
   and $(421), respectively .............................................        (635)        (644)
Foreign exchange contracts qualifying as hedges, net of taxes of $(300)
   and $(305), respectively .............................................        (459)        (466)
                                                                              -------      -------
                                                                              $(2,773)     $(2,585)
                                                                              =======      =======
</TABLE>


NOTE 6 - CAPITAL STOCK

         At March 31, 2003 and December 31, 2002, issued and outstanding  shares
of Common Stock totaled  1,233.27,  of which 196.92 fully paid and vested shares
were held by current and former employees of the Company. Under the terms of the
stockholders' agreement ("Stockholders' Agreement"), the Company can be required
to purchase  all of the shares held by an employee  stockholder  for a period of
one year after the employee's death or three months after their disability, at a
price  determined  by a  market  valuation,  or for a  period  of  three  months
following  termination of employment by the Company, at the lower of the share's
cost, as defined, or the market valuation. All common shares subject to such put
provisions  are recorded as  redeemable  Common Stock,  at the estimated  market
value of the stock, with a corresponding adjustment to stockholders' deficit. On
January 10, 2003, an executive officer of a wholly-owned subsidiary,  owning 120
shares of the Company's Common Stock, terminated his employment with the Company
and,  on April 9, 2003,  the former  officer  exercised  options to  purchase an
additional  6.648 shares of the Company's  Common Stock at $125,000 per share or
for  $831,000.  On April 10,  2003,  the former  officer's  right to put the 120
shares of Common Stock back to the Company expired and, as a result, the Company
recorded a decrease in redeemable  Common Stock and a decrease in  stockholders'
deficit of $18,600,000 (a $12,600,000 increase in additional paid-in capital and
a  $6,000,000  decrease  in  accumulated  deficit)  in April  2003.  The  former
officer's right to put the remaining 6.648 shares back to the Company expires in
July 2003.


                                       9
<PAGE>


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


         At March 31, 2003 and December  31,  2002,  6.38 shares of Common Stock
(the "Restricted  Stock") were held by the Company's President and its Executive
Vice President subject to the vesting provisions of their employment agreements.
The Restricted Stock held by the President and the Executive Vice President will
vest in June 2003 and December 2004, respectively. During the three months ended
March 31, 2003 and 2002,  the Company  recorded the  amortization  of Restricted
Stock of $45,000 and $59,000,  respectively,  as compensation expense,  which is
included in general and  administrative  expenses in the Company's  consolidated
statements of income.

         At March 31,  2003,  the Company  held notes  receivable  from a former
officer and a current officer of $624,000 and $25,000, respectively. At December
31, 2002, the Company held notes  receivable from a former officer and a current
officer totaling $638,000.  These notes arose in connection with the issuance of
shares of Common  Stock to the  officers.  The notes held at March 31, 2003 bear
interest at 6.65% and LIBOR plus 2% and mature in March 2009 and  January  2004,
respectively.  The notes receivable are shown on the consolidated balance sheets
as an increase in stockholders' deficit.

         In February 2002, the Company issued 96.774 shares of its Common Stock,
at a value of $155,000 per share, to American Greetings  Corporation  ("American
Greetings") in connection with the acquisition of M&D Industries (see Note 10).

         In September  1998, the Company issued warrants to purchase 10.0 shares
of Common Stock at $125,000 per share in connection  with the acquisition of all
the capital stock of Anagram.  The  warrants,  which were valued at $225,000 and
were fully  exercisable  upon  issuance,  expire on September  17, 2008 and were
included as a cost of the acquisition of Anagram.

         On March 30,  2001,  the Board of  Directors  authorized  500 shares of
preferred  stock,  $0.10  par  value,  and  designated  100  shares  as Series A
Redeemable   Convertible  Preferred  Stock  ("Series  A  Redeemable  Convertible
Preferred  Stock").  Also on March 30,  2001,  the  Company  issued 40 shares of
Series A Redeemable  Convertible Preferred Stock to GS Capital Partners II, L.P.
and certain  other  private  investment  funds  managed by Goldman,  Sachs & Co.
(collectively,  "GSCP") for proceeds of $6,000,000. Dividends are cumulative and
payable  annually,  at 6% per  annum.  On March 30,  2003 and 2002,  the  annual
dividend was distributed in additional shares of Series A Redeemable Convertible
Preferred Stock. Dividends payable on or prior to March 30, 2004, are payable in
additional shares of Series A Redeemable Convertible Preferred Stock. Subsequent
to March 30, 2004,  dividends are payable, at the option of the Company,  either
in cash or additional shares of Series A Redeemable Convertible Preferred Stock.

         Each  share  of  Series A  Redeemable  Convertible  Preferred  Stock is
convertible at the option of the holder,  at any time,  into one share of Common
Stock of the Company,  $0.10 par value, subject to adjustment for the effects of
subsequent Common Stock splits or stock dividends.

         The Series A Redeemable  Convertible  Preferred Stock is not redeemable
on or prior to March 30,  2004.  To the  extent  the  Company  shall  have funds
legally  available to redeem these shares,  the Company may redeem these shares,
in whole or, with the  consent of the  holders of a majority of the  outstanding
Series A Redeemable

                                       10
<PAGE>


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

Convertible  Preferred  Stock,  in part,  at a redemption  price of $150,000 per
share, in cash,  together with accrued and unpaid  dividends.  To the extent the
Company shall have funds  legally  available to redeem these shares on March 30,
2008,  the  Company is  required  to redeem all  outstanding  shares of Series A
Redeemable  Convertible Preferred Stock at a redemption price per share equal to
$150,000 in cash, together with accrued and unpaid dividends. The holders of the
Series A Redeemable Convertible Preferred Stock have liquidation rights equal to
their original investment plus accrued but unpaid dividends.

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


NOTE 7 - SEGMENT INFORMATION

Industry Segments
-----------------
         The Company  manages  its  operations  as one  industry  segment  which
involves the design,  manufacture,  contract for manufacture and distribution of
party goods, including metallic balloons, gifts, and stationery.

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

         The  Company's   geographic  area  data  are  as  follows  (dollars  in
thousands):

<TABLE>
<CAPTION>
                                                      Domestic       Foreign    Eliminations   Consolidated
                                                      --------       -------    ------------   ------------
<S>                                                   <C>           <C>           <C>           <C>
Three Months Ended March 31, 2003
Sales to unaffiliated customers .................     $  87,030     $  12,814                   $  99,844
Sales between geographic areas ..................         4,523                   $ (4,523)          --
                                                      ---------     ---------     --------      ---------
Net sales .......................................     $  91,553     $  12,814     $ (4,523)     $  99,844
                                                      =========     =========     ========      =========

Income from operations ..........................     $  11,983     $     124     $    267      $  12,374
                                                      =========     =========     ========
Interest expense, net ...........................                                                   6,644
Other income, net ...............................                                                     (18)
                                                                                                ---------
Income before income taxes and minority interests                                               $   5,748
                                                                                                =========

Long-lived assets, net at March 31, 2003 ........     $ 175,413     $   7,922                   $ 183,335
                                                      =========     =========                   =========
</TABLE>

                                       11
<PAGE>


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


<TABLE>
<CAPTION>
                                                      Domestic        Foreign    Eliminations   Consolidated
                                                      --------        -------    ------------   ------------
<S>                                                   <C>           <C>            <C>           <C>
Three Months Ended March 31, 2002
Sales to unaffiliated customers .................     $  83,792     $   12,116                   $  95,908
Sales between geographic areas ..................         5,282                    $ (5,282)          --
                                                      ---------     ----------     --------      ---------
Net sales .......................................     $  89,074     $   12,116     $ (5,282)     $  95,908
                                                      =========     ==========     ========      =========

Income (loss) from operations ...................     $  15,350     $      (34)    $    310      $  15,626
                                                      ==========    ==========     ========
Interest expense, net ...........................                                                    5,490
Other income, net ...............................                                                      (70)
                                                                                                 ---------
Income before income taxes and minority interests                                                $  10,206
                                                                                                 =========

Long-lived assets, net at March 31, 2002 ........     $ 173,750     $    6,421                   $ 180,171
                                                      ==========    ==========                   =========
</TABLE>


NOTE 8 - LEGAL PROCEEDINGS

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


NOTE 9 - RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

         In July 2002,  Statement of  Financial  Accounting  Standards  No. 146,
"Accounting for Costs  Associated With Exit or Disposal  Activities"  ("SFAS No.
146") was issued.  SFAS No. 146  addresses  accounting  and  reporting for costs
associated with exit or disposal  activities and nullifies  Emerging Issues Task
Force  Issue No. 94-3 (" EITF No.  94-3"),  "Liability  Recognition  for Certain
Employee  Termination  Benefits  and Other Costs to Exit an Activity  (including
Certain  Costs  Incurred  in a  Restructuring)."  SFAS No. 146  requires  that a
liability for a cost associated with an exit or disposal  activity be recognized
when the  liability  is incurred.  Under EITF No. 94-3, a liability  for an exit
cost was  recognized  at the  date an  entity  committed  to an exit  plan.  The
provisions of SFAS No. 146 are effective  for exit or disposal  activities  that
are initiated after December 31, 2002. The adoption of SFAS No. 146 did not have
a material effect on the Company's consolidated financial statements.

         In November 2002,  the Financial  Accounting  Standards  Board ("FASB")
Interpretation No. 45, "Guarantor's  Accounting and Disclosure  Requirements for
Guarantees,   Including  Indirect  Guarantees  of  Indebtedness  of  Others,  an
Interpretation of FASB No. 5, 57, and 107 and Rescission of FASB  Interpretation
No. 34," ("FIN No. 45") was issued. FIN No. 45 clarifies  requirements  relating
to the  guarantor's  accounting  for, and disclosure of, the issuance of certain
types of  guarantees.  FIN No. 45 requires  that upon  issuance of a  guarantee,
companies  recognize a liability for the fair value of the obligation it assumes
under that guarantee.  The disclosure  provisions of FIN No. 45 became effective
commencing in the fourth quarter of 2002. The  recognition  requirements  of FIN
No. 45 are to be applied  prospectively  to guarantees  issued or modified after
December 31, 2002. The adoption of this  interpretation  did not have a material
effect on the Company's consolidated financial statements.

         In January 2003, the FASB issued  Interpretation No. 46, "Consolidation
of Variable Interest Entities,  an interpretation of ARB 51" ("FIN No. 46"). The
primary  objectives of FIN No. 46 are to provide guidance on the  identification
of entities  for which  control is  achieved  through  means other than  through
voting rights ("VIE's") and how to determine when and which business  enterprise
should  consolidate  the VIE.  This new model for  consolidation  applies  to an
entity  in  which  either  (1) the  equity  investors  (if  any)  do not  have a
controlling financial

                                       12
<PAGE>


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

interest or (2) the equity  investment at risk is  insufficient  to finance that
entity's activities without receiving additional  subordinated financial support
from other parties. The consolidation provisions of FIN No. 46 apply immediately
to variable interests in VIE's created after January 31, 2003. It applies in the
first fiscal year or interim period  beginning after June 15, 2003 (July 1, 2003
for  calendar  year-end  companies)  to VIE's in which an  enterprise  that is a
public  company holds a variable  interest that it acquired  before  February 1,
2003. The Company does not expect the adoption of this  interpretation to have a
material effect on the consolidated financial statements.

         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.


NOTE 10-ACQUISITION

         On February  19, 2002,  the Company  purchased  all of the  outstanding
common  stock of M&D  Industries,  a  Manteno,  Illinois-based  manufacturer  of
metallic and plastic  balloons,  from American  Greetings for  $27,500,000  plus
certain other related costs of $1,048,000.  The Company financed the acquisition
by  borrowing  $13,289,000  in the  first  quarter  of 2002  (and an  additional
$259,000 in the second quarter of 2002) under its revolving  credit facility and
issuing  96.774  shares of its Common Stock to American  Greetings.  The Company
purchased M&D Industries to supplement its existing balloon operations. American
Greetings  continues to distribute  metallic  balloons under a supply  agreement
with the Company. The acquisition has been accounted for under the provisions of
SFAS No. 141, "Business  Combinations," and, accordingly,  the operating results
of M&D  Industries  have been included in the Company's  consolidated  financial
statements since the date of acquisition.

         The purchase  price has been  allocated  based upon the estimated  fair
value of net assets acquired at the date of acquisition.  Such  allocations were
based on studies and valuations.  The excess of the purchase price over tangible
net assets  acquired  has been  allocated to  intangible  assets  consisting  of
licensing  agreements  in the amount of  $1,070,000,  which are being  amortized
using the  straight-line  method over the lives of the  contracts  (one to three
years  with an  average  life of 2.7  years),  and  goodwill  in the  amount  of
$15,606,000,  which is not being amortized.  The transaction was structured as a
purchase of common stock and, accordingly, the amortization of intangible assets
is not deductible for income tax purposes.

         The  following   unaudited  pro  forma  information   assumes  the  M&D
Industries   acquisition  had  occurred  on  January  1,  2002.  The  pro  forma
information,  as presented  below, is not necessarily  indicative of the results
that would have been obtained had the  transaction  occurred on January 1, 2002,
nor is it necessarily  indicative of the Company's  future  results  (dollars in
thousands):

                                           Three Months Ended
                                             March 31, 2002
                                             --------------
          Net sales.................            $100,015
          Net income................               6,624

         The net income amount reflects  adjustments  for interest  expense from
additional  borrowings  necessary to finance the acquisition and amortization of
other intangible  assets and income tax effects based upon a pro forma effective
tax  rate  of  39.5%.  The  pro  forma  information  gives  effect  only  to the
adjustments  described above and does not reflect  management's  estimate of any
anticipated cost savings or other benefits as a result of the acquisition.


                                       13
<PAGE>


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

         During the three months ended March 31, 2003 and 2002, the Company sold
$615,000 and $959,000,  respectively, of metallic balloons and other party goods
to American  Greetings.  Trade accounts  receivable  from American  Greetings at
March 31, 2003 and December 31, 2002 were $547,000 and $2,632,000, respectively.


NOTE 11 - RESTRUCTURING CHARGES

         During the three  months  ended March 31,  2003,  the Company  incurred
charges  of  $316,000   resulting  from  the   consolidation   of  the  domestic
distribution operations which may result in additional  restructuring charges in
subsequent periods.


NOTE 12 - STOCK OPTION PLAN

         The Company  accounts  for stock based  awards in  accordance  with the
provisions  of Statement of Financial  Accounting  Standards  No. 123 ("SFAS No.
123"), "Accounting for Stock-Based  Compensation." SFAS No. 123 permits entities
to  recognize  as  expense,  over the  vesting  period,  the  fair  value of all
stock-based  awards on the date of grant.  Alternatively,  SFAS No.  123  allows
entities to apply the provisions of Accounting  Principles Board Opinion ("APB")
No.  25,  "Accounting  for  Stock  Issued  to  Employees,"  which  requires  the
recognition  of  compensation  expense at the date of grant only if the  current
market price of the underlying  stock exceeds the exercise price, and to provide
pro forma net income  disclosures  for employee  stock  option  grants as if the
fair-value-based  method  defined in SFAS No. 123 had been applied.  The Company
has elected to continue to apply the  intrinsic  value  method of APB No. 25 for
awards granted under its stock-based compensation plans and has provided the pro
forma disclosures  required by SFAS No. 123.  Accordingly,  no compensation cost
has been  recognized in  connection  with the issuance of options under the 1997
Stock  Incentive Plan as all options were granted with exercise  prices equal to
the estimated fair market value of the Common Stock on the date of grant.

         Had the Company determined  stock-based  compensation based on the fair
value of the  options  granted  at the grant  date,  consistent  with the method
prescribed  under SFAS No. 123, the Company's net income would have been reduced
to amounts indicated below (dollars in thousands):
                                                                 Three Months
                                                                Ended March 31,
                                                                2003       2002
                                                               ------     ------
Net income:
         As reported .....................................     $3,462     $6,231
         Less: Total stock-based employee compensation
             expense determined under the fair value based
             method for all awards, net of tax of $30 and
             $84, respectively ...........................         46        129
                                                               ------     ------
         SFAS No. 123 pro forma net income ...............     $3,416     $6,102
                                                               ======     ======


NOTE 13 - CONDENSED CONSOLIDATING FINANCIAL INFORMATION

         On December 20, 2002,  Amscan amended and restated its credit  facility
with various  lenders (the  "Lenders"),  and with Goldman Sachs Credit  Partners
L.P. as sole lead arranger,  sole  bookrunner and syndication  agent.  Under the
terms of the Second  Amended and  Restated  Credit and Guaranty  Agreement  (the
"Credit  Agreement")  the Lenders agreed to amend and restate the Company's then
existing bank credit agreements (the "Bank Credit Facilities") in their entirety
and  to  provide  a  $200,000,000   senior  secured  facility  consisting  of  a
$170,000,000  term  loan  (the  "Term  Loan")  and up to  $30,000,000  aggregate
principal amount of revolving loans (the "Revolver"). The proceeds of the


                                       14
<PAGE>


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

Term Loan were used to redesignate  and replace the Company's AXEL term loan and
revolver  borrowings  existing  under the Bank Credit  Facilities at the closing
date and to pay certain fees and expenses associated with the refinancing.

         On December 19, 1997,  the Company also issued  $110,000,000  aggregate
principal  amount of 9.875%  senior  subordinated  notes  (the  `Notes")  due in
December 2007.

         The repayment of the Notes and  borrowings  under the Credit  Agreement
are  guaranteed  jointly  and  severally,  fully  and  unconditionally,  by  the
following wholly-owned domestic subsidiaries of the Company (the "Guarantors"):

     o   Amscan Inc.
     o   Trisar, Inc.
     o   Am-Source, LLC
     o   Anagram International, Inc.
     o   Anagram International Holdings, Inc.
     o   Anagram International, LLC
     o   M&D Industries, Inc.
     o   SSY Realty Corp.
     o   JCS Realty Corp.
     o   Anagram Eden Prairie Property Holdings LLC

       Non-guarantor subsidiaries ("Non-guarantors") include the following:

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

         The following  information presents  consolidating balance sheets as of
March 31, 2003 and December 31, 2002, and the related  consolidating  statements
of income and consolidating  statements of cash flows for the three months ended
March  31,  2003  and  2002  for  the  combined   Guarantors  and  the  combined
Non-guarantors  and  elimination  entries  necessary to consolidate the entities
comprising the combined companies.


                                       15
<PAGE>


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

<TABLE>
                           CONSOLIDATING BALANCE SHEET
                                 March 31, 2003
                             (Dollars in thousands)

<CAPTION>
                                                         Amscan
                                                      Holdings and      Combined
                                                        Combined          Non-
                                                       Guarantors      Guarantors    Eliminations   Consolidated
                                                       ----------      ----------    ------------   ------------
<S>                                                     <C>             <C>            <C>            <C>
ASSETS
Current assets:
     Cash and cash equivalents ...................      $     752       $    759                      $   1,511
     Accounts receivable, net of allowances ......         72,422         12,576                         84,998
     Inventories, net of allowances ..............         81,321         11,259       $   (940)         91,640
     Prepaid expenses and other current assets ...         15,112          2,918           (513)         17,517
                                                        ---------       --------       --------       ---------
     Total current assets ........................        169,607         27,512         (1,453)        195,666
Property, plant and equipment, net ...............         98,159          1,601                         99,760
Goodwill, net ....................................         66,455          5,558                         72,013
Notes receivable from officers ...................          1,960                                         1,960
Other assets, net ................................         35,010          1,059        (26,467)          9,602
                                                        ---------       --------       --------       ---------
     Total assets ................................      $ 371,191       $ 35,730       $(27,920)      $ 379,001
                                                        =========       ========       ========       =========

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED AND COMMON STOCK
    AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
     Short-term obligations ......................      $   9,500       $   --                        $   9,500
     Accounts payable ............................         29,910          2,214                         32,124
     Accrued expenses ............................         18,967          5,702                         24,669
     Income taxes payable ........................          4,174                      $   (526)          3,648
     Current portion of long-term obligations ....          3,026            165                          3,191
                                                        ---------       --------       --------       ---------
     Total current liabilities ...................         65,577          8,081           (526)         73,132
Long-term obligations, excluding current portion .        294,510            101                        294,611
Deferred income tax liabilities ..................         14,817                                        14,817
Other ............................................          1,166         17,479        (16,398)          2,247
                                                        ---------       --------       --------       ---------
     Total liabilities ...........................        376,070         25,661        (16,924)        384,807

Redeemable convertible preferred stock ...........          6,742                                         6,742
Redeemable Common Stock ..........................         30,523                                        30,523

Commitments and Contingencies

Stockholders' (deficit) equity:
     Common Stock ................................                           339           (339)           --
     Additional paid-in capital ..................         14,718            658           (658)         14,718
     Unamortized restricted Common Stock
        awards, net ..............................           (278)                                         (278)
     Notes receivable from stockholders ..........           (649)                                         (649)
     (Deficit) retained earnings .................        (53,162)        11,101        (12,028)        (54,089)
     Accumulated other comprehensive loss ........         (2,773)        (2,029)         2,029          (2,773)
                                                        ---------       --------       --------       ---------
         Total stockholders' (deficit) equity ....        (42,144)        10,069        (10,996)        (43,071)
                                                        ---------       --------       --------       ---------
         Total liabilities, redeemable convertible
             preferred and Common Stock and
             stockholders' (deficit) equity ......      $ 371,191       $ 35,730       $(27,920)      $ 379,001
                                                        =========       ========       ========       =========
</TABLE>

                                       16
<PAGE>


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

<TABLE>
                           CONSOLIDATING BALANCE SHEET
                                December 31, 2002
                             (Dollars in thousands)

<CAPTION>
                                                         Amscan
                                                      Holdings and     Combined
                                                        Combined         Non-
                                                       Guarantors      Guarantors    Eliminations   Consolidated
                                                       ----------      ----------    ------------   ------------
<S>                                                     <C>             <C>            <C>            <C>
ASSETS
Current assets:
     Cash and cash equivalents ...................      $   1,483       $    917                      $   2,400
     Accounts receivable, net of allowances ......         62,520         11,727                         74,247
     Inventories, net of allowances ..............         83,659         11,138       $   (907)         93,890
     Prepaid expenses and other current assets ...         13,411          2,280           (458)         15,233
                                                        ---------       --------       --------       ---------
     Total current assets ........................        161,073         26,062         (1,365)        185,770
Property, plant and equipment, net ...............         98,951          1,353                        100,304
Goodwill, net ....................................         68,611          5,640                         74,251
Notes receivable from officers ...................          1,942                                         1,942
Other assets, net ................................         34,788            627        (25,185)         10,230
                                                        ---------       --------       --------       ---------
     Total assets ................................      $ 365,365       $ 33,682       $(26,550)      $ 372,497
                                                        =========       ========       ========       =========

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED AND COMMON STOCK
    AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
     Short-term obligations ......................      $    --         $   --                        $    --
     Accounts payable ............................         37,813          1,432                         39,245
     Accrued expenses ............................         15,937          5,587                         21,524
     Income taxes payable ........................          3,037                      $   (512)          2,525
     Current portion of long-term obligations ....          3,052            168                          3,220
                                                        ---------       --------       --------       ---------
     Total current liabilities ...................         59,839          7,187           (512)         66,514
Long-term obligations, excluding current portion .        295,274            146                        295,420
Deferred income tax liabilities ..................         17,360                                        17,360
Other ............................................          1,153         16,052        (14,888)          2,317
                                                        ---------       --------       --------       ---------
Total liabilities ................................        373,626         23,385        (15,400)        381,611

Redeemable convertible preferred stock ...........          6,646                                         6,646
Redeemable Common Stock ..........................         30,523                                        30,523

Commitments and Contingencies

Stockholders' (deficit) equity:
     Common Stock ................................                           339           (339)           --
     Additional paid-in capital ..................         14,814            658           (658)         14,814
     Unamortized restricted Common Stock
        awards, net ..............................           (323)                                         (323)
     Notes receivable from stockholders ..........           (638)                                         (638)
     (Deficit) retained earnings .................        (56,698)        11,198        (12,051)        (57,551)
     Accumulated other comprehensive loss ........         (2,585)        (1,898)         1,898          (2,585)
                                                        ---------       --------       --------       ---------
         Total stockholders' (deficit) equity ....        (45,430)        10,297        (11,150)        (46,283)
                                                        ---------       --------       --------       ---------
         Total liabilities, redeemable convertible
             preferred and Common Stock and
             stockholders' (deficit) equity ......      $ 365,365       $ 33,682       $(26,550)      $ 372,497
                                                        =========       ========       ========       =========
</TABLE>

                                       17
<PAGE>


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

<TABLE>
                        CONSOLIDATING STATEMENT OF INCOME
                    For the Three Months Ended March 31, 2003
                             (Dollars in thousands)



<CAPTION>
                                                     Amscan
                                                   Holdings and     Combined
                                                     Combined         Non-
                                                    Guarantors     Guarantors    Eliminations  Consolidated
                                                    ----------     ----------    ------------  ------------

<S>                                                  <C>            <C>            <C>           <C>
Net sales .....................................      $ 91,553       $ 12,790       $(4,499)      $ 99,844
Cost of sales .................................        62,187          9,248        (4,466)        66,969
                                                     --------       --------       -------       --------
         Gross profit .........................        29,366          3,542           (33)        32,875
Operating expenses:
    Selling expenses ..........................         7,590          1,552                        9,142
    General and administrative expenses .......         6,940          1,866          (300)         8,506
    Art and development costs .................         2,537                                       2,537
    Restructuring charges .....................           316                                         316
                                                     --------       --------       -------       --------
         Total operating expenses .............        17,383          3,418          (300)        20,501
                                                     --------       --------       -------       --------
         Income from operations ...............        11,983            124           267         12,374
Interest expense, net .........................         6,483            161                        6,644
Other (income) expense, net ...................          (225)             4           203            (18)
                                                     --------       --------       -------       --------
         Income (loss) before income taxes and
           minority interests .................         5,725            (41)           64          5,748
Income tax expense (benefit) ..................         2,243             41           (13)         2,271
Minority interests ............................                           15                           15
                                                     --------       --------       -------       --------
         Net income (loss) ....................         3,482            (97)           77          3,462
         Dividend on redeemable convertible
            preferred stock ...................            96                                          96
                                                     --------       --------       -------       --------
         Net income (loss) applicable to common
            shares ............................      $  3,386       $    (97)      $    77       $  3,366
                                                     ========       ========       =======       ========
</TABLE>

                                       18
<PAGE>


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

<TABLE>
                        CONSOLIDATING STATEMENT OF INCOME
                    For the Three Months Ended March 31, 2002
                             (Dollars in thousands)


<CAPTION>
                                                             Amscan
                                                          Holdings and     Combined
                                                            Combined         Non-
                                                           Guarantors     Guarantors   Eliminations   Consolidated
                                                           ----------     ----------   ------------   ------------

<S>                                                         <C>            <C>            <C>           <C>
Net sales ............................................      $ 92,800       $ 12,116       $(9,008)      $ 95,908
Cost of sales ........................................        62,122          8,632        (9,078)        61,676
                                                            --------       --------       -------       --------
         Gross profit ................................        30,678          3,484            70         34,232
Operating expenses:
    Selling expenses .................................         6,704          1,475                        8,179
    General and administrative expenses ..............         6,348          2,043          (240)         8,151
    Art and development costs ........................         2,276                                       2,276
                                                            --------       --------       -------       --------
         Total operating expenses ....................        15,328          3,518          (240)        18,606
                                                            --------       --------       -------       --------
         Income (loss) from operations ...............        15,350            (34)          310         15,626
Interest expense, net ................................         5,331            159                        5,490
Other (income) expense, net ..........................          (183)            58            55            (70)
                                                            --------       --------       -------       --------
         Income (loss) before income taxes and
            minority interests .......................        10,202           (251)          255         10,206
Income tax expense (benefit) .........................         4,041            (10)                       4,031
Minority interests ...................................                          (56)                         (56)
                                                            --------       --------       -------       --------
         Net income (loss) ...........................         6,161           (185)          255          6,231
         Dividend on redeemable convertible preferred
            stock ....................................            90                                          90
                                                            --------       --------       -------       --------
         Net income (loss) applicable to common shares      $  6,071       $   (185)      $   255       $  6,141
                                                            ========       ========       =======       ========
</TABLE>

                                       19
<PAGE>


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

<TABLE>
                      CONSOLIDATING STATEMENT OF CASH FLOWS
                    For the Three Months Ended March 31, 2003
                             (Dollars in thousands)



<CAPTION>
                                                                           Amscan Holdings   Combined
                                                                            and Combined       Non-
                                                                             Guarantors     Guarantors   Eliminations  Consolidated
                                                                             ----------     ----------   ------------  ------------
<S>                                                                           <C>            <C>           <C>          <C>
Cash flows from operating activities:
    Net income (loss) ..................................................      $  3,482       $   (97)      $    77      $  3,462
    Adjustments to reconcile net income to net
      cash (used in) provided by operating activities:
        Depreciation and amortization ..................................         3,855           121                       3,976
        Amortization of deferred financing costs .......................           479                                       479
        Amortization of restricted Common Stock awards .................            45                                        45
        Provision for doubtful accounts ................................           457           147                         604
        Deferred income tax benefit ....................................          (402)                                     (402)
        Loss on disposal of equipment ..................................            15             7                          22
        Changes in operating assets and liabilities, net of acquisition:
                Increase in accounts receivable ........................       (10,359)         (996)                    (11,355)
                Decrease (increase) in inventories .....................         2,338          (121)           33         2,250
                Increase in prepaid expenses and other current
                   assets ..............................................        (1,561)         (583)                     (2,144)
                (Decrease) increase in accounts payable,
                   accrued expenses and income taxes payable ...........        (3,768)          849           (13)       (2,932)
         Other, net ....................................................          (903)        1,023           (97)           23
                                                                              --------       -------       -------      --------
                Net cash (used in) provided by operating activities ....        (6,322)          350          --          (5,972)

Cash flows from investing activities:
    Capital expenditures ...............................................        (3,028)         (380)                     (3,408)
    Proceeds from disposal of property and equipment ...................                           3                           3
                                                                              --------       -------       -------      --------
                Net cash used in investing activities ..................        (3,028)         (377)         --          (3,405)

Cash flows from financing activities:
    Proceeds from short-term obligations ...............................         9,500                                     9,500
    Repayment of loans, notes payable and long-term
         obligations ...................................................          (895)          (43)                       (938)
                                                                              --------       -------       -------      --------
                Net cash provided by (used in) financing activities ....         8,605           (43)         --           8,562
Effect of exchange rate changes on cash and cash equivalents ...........            14           (88)                        (74)
                                                                              --------       -------       -------      --------
                Net decrease in cash and cash equivalents ..............          (731)         (158)                       (889)
Cash and cash equivalents at beginning of period .......................         1,483           917                       2,400
                                                                              --------       -------       -------      --------
Cash and cash equivalents at end of period .............................      $    752       $   759       $  --        $  1,511
                                                                              ========       =======       =======      ========
</TABLE>

                                       20
<PAGE>


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

<TABLE>
                      CONSOLIDATING STATEMENT OF CASH FLOWS
                    For the Three Months Ended March 31, 2002
                             (Dollars in thousands)


<CAPTION>
                                                                       Amscan Holdings    Combined
                                                                        and Combined        Non-
                                                                         Guarantors      Guarantors   Eliminations   Consolidated
                                                                         ----------      ----------   ------------   ------------
<S>                                                                       <C>            <C>            <C>           <C>
Cash flows from operating activities:
    Net income (loss) ..............................................      $  6,161       $   (185)      $    255      $  6,231
    Adjustments to reconcile net income to net cash
     (used in) provided by operating activities:
        Depreciation and amortization ..............................         3,057             91                        3,148
        Amortization of deferred financing costs ...................           267                                         267
        Amortization of restricted Common Stock awards .............            59                                          59
        Provision for doubtful accounts ............................            70            533                          603
        Deferred income tax expense ................................         1,393                                       1,393
     Changes in operating assets and liabilities:
                Increase in accounts receivable ....................       (13,403)          (947)                     (14,350)
                Decrease (increase) in inventories .................         1,442            (48)           (70)        1,324
                Increase in prepaid expenses and other
                   current assets ..................................        (3,876)          (840)                      (4,716)
                Increase in accounts payable, accrued
                   expenses and income taxes payable ...............         3,383            470                        3,853
         Other, net ................................................        (1,459)         1,482           (185)         (162)
                                                                          --------       --------       --------      --------
               Net cash (used in) provided by operating activities .        (2,906)           556           --          (2,350)

Cash flows from investing activities:
    Cash paid in connection with acquisition .......................       (13,289)                                    (13,289)
    Capital expenditures ...........................................        (4,094)           (13)                      (4,107)
                                                                          --------       --------       --------      --------
                Net cash used in investing activities ..............       (17,383)           (13)          --         (17,396)

Cash flows from financing activities:
    Proceeds from short-term obligations ...........................        21,550                                      21,550
    Repayment of loans, notes payable and long-term
        obligations ................................................          (824)            (7)                        (831)
                                                                          --------       --------       --------      --------
               Net cash provided by (used in) financing activities .        20,726             (7)          --          20,719
                                                                          --------       --------       --------      --------
Effect of exchange rate changes on cash and cash equivalents .......           (73)           (29)                        (102)
                                                                          --------       --------       --------      --------
               Net increase in cash and cash equivalents ...........           364            507                          871
Cash and cash equivalents at beginning of period ...................            42            974                        1,016
                                                                          --------       --------       --------      --------
Cash and cash equivalents at end of period .........................      $    406       $  1,481       $   --        $  1,887
                                                                          ========       ========       ========      ========
</TABLE>

                                       21
<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Three Months Ended March 31, 2003 Compared to Three Months Ended March 31, 2002

Percentage of Net Sales
-----------------------
<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                              ------------------
                                                                   March 31,
                                                                   ---------
                                                                2003       2002
                                                               -----      -----
<S>                                                            <C>        <C>
Net sales ..............................................       100.0%     100.0%
Cost of sales ..........................................        67.1       64.3
                                                               -----      -----
       Gross profit ....................................        32.9       35.7
Operating expenses:
    Selling expenses ...................................         9.2        8.5
    General and administrative expenses ................         8.5        8.5
    Art and development costs ..........................         2.5        2.4
    Restructuring charges ..............................         0.3
                                                               -----      -----
       Total operating expenses ........................        20.5       19.4
                                                               -----      -----
       Income from operations ..........................        12.4       16.3
Interest expense, net ..................................         6.6        5.7
Other income, net ......................................                   (0.1)
                                                               -----      -----
       Income before income taxes and minority interests         5.8       10.7
Income tax expense .....................................         2.3        4.2
Minority interests .....................................
                                                               -----      -----
       Net income ......................................         3.5%       6.5%
                                                               =====      =====
</TABLE>

         Net sales of $99.8  million for the three  months  ended March 31, 2003
were $3.9  million  higher than net sales for the three  months  ended March 31,
2002. Sales performance  during the first quarter of 2003 was adversely affected
by severe  weather and general  economic  conditions  resulting in a weak retail
environment.  Net sales for the three  months  ended March 31, 2003  included an
18.3%  increase  in  net  domestic  sales  of  metallic  balloons  and  flexible
packaging,  reflecting the February 2002  acquisition of M&D  Industries,  Inc.,
formerly  known as M&D Balloons,  Inc.  ("M&D  Industries")  (see  Liquidity and
Capital Resources).  In addition, net international sales reported for the first
quarter of 2003 increased by 5.8%,  principally as a result of foreign  currency
exchange fluctuations.

         Gross profit margin for the three months ended March 31, 2003, of 32.9%
was 2.8% lower than during the three months  ended March 31, 2002.  Gross profit
margin  during the first  quarter of 2003  reflects  the impact of product  mix,
particularly  solid color  tableware,  as well as  additional  production  costs
incurred  in  connection  with the  ongoing  integration  of the M&D  Industries
fabrication   process  into  our  Anagram  balloon   operations  and  additional
distribution  costs  incurred  as a result  of  severe  weather  conditions  and
redundant  costs arising from the Company's  transition  from four to three east
coast distribution  facilities.  The Company expects the ongoing benefits of the
integration and transition to be realized beginning in the latter half of 2003.

         Selling  expenses of $9.1 million for the quarter  ended March 31, 2003
were $1.0 million higher than in the corresponding  period in 2002,  principally
as a result of the continued  expansion of the Company's  specialty  sales force
and the inclusion of the M&D Industries acquisition for the entire quarter.

         General and  administrative  expenses  of $8.5  million for the quarter
ended March 31, 2003 were $0.4 million higher than the  corresponding  period in
2002. As a percentage of sales,  general and  administrative  expenses  remained
consistent at 8.5% for the first  quarter of 2003 and 2002.  The net increase in
general and  administrative  expenses  principally  reflects  higher  insurance,
employee  and  occupancy  costs  and  the  inclusion  of the  operations  of M&D
Industries for the entire quarter,  partially offset by synergies  realized from
the  integration of M&D Industries'  administrative  functions into our existing
operations.


                                       22
<PAGE>


         Art and  development  costs of $2.5 million for the quarter ended March
31, 2003 were $0.3  million  higher as compared to 2002,  principally  due to an
increase in staff and the inclusion of the operating  results of M&D Industries.
As a percentage of sales, art and development  costs were relatively  consistent
at 2.5% for the first quarter of 2003 and 2.4% for the first quarter of 2002.

         During the three  months  ended March 31,  2003,  the Company  incurred
charges  of $0.3  million  resulting  from  the  consolidation  of its  domestic
distribution operations, which may result in additional restructuring charges in
subsequent periods.

         Interest expense, net, of $6.6 million for the three months ended March
31, 2003 was $1.2 million higher than for the three months ended March 31, 2002,
principally due to a higher average effective interest rate (8.4% in 2003 versus
7.0% in 2002).

         Income  taxes for the first  quarter  of 2003 and 2002 were  based upon
estimated  consolidated effective income tax rates of 39.5% for the years ending
December 31, 2003 and 2002.


Liquidity and Capital Resources
-------------------------------

         On December  20, 2002,  we amended and  restated  our  existing  credit
facility  with  various  lenders  (the  "Lenders"),  with  Goldman  Sachs Credit
Partners L.P. as sole lead  arranger,  sole  bookrunner and  syndication  agent.
Under the terms of the Second Amended and Restated Credit and Guaranty Agreement
(the "Credit  Agreement")  the Lenders agreed to amend and restate the Company's
existing bank credit  agreements in their entirety and to provide a $200,000,000
senior secured facility consisting of a $170,000,000 term loan (the "Term Loan")
and up to  $30,000,000  aggregate  principal  amount  of  revolving  loans  (the
"Revolver").  The proceeds of the Term Loan were used to redesignate and replace
the Company's AXEL term loan of $148.5 million and revolver  borrowings of $16.0
million  existing  at the  closing  date and to pay  certain  fees and  expenses
associated with the refinancing.

         The Term Loan was funded at a 1.0% original issue discount and provides
for amortization (in quarterly  installments) of 1.0% per annum through June 15,
2006, and will then amortize in equal quarterly  payments through June 15, 2007.
The Term Loan bears  interest,  at the option of the Company,  at the index rate
plus 3.50% per annum or at LIBOR plus  4.50% per  annum,  with a LIBOR  floor of
2.0%.  At March 31,  2003,  the Term  Loan,  net of  unamortized  discount,  was
$167,988,000  and the  floating  interest  rate on the Term Loan was 6.51%.  The
Company is required to make  prepayments  under the Credit  Agreement based upon
the net proceeds from certain asset sales and insurance or condemnation  awards,
the  issuances of certain debt and equity  securities,  and based on annual cash
flows, as defined.

         The  Revolver  expires on June 15,  2007,  and bears  interest,  at the
option of the Company,  at the index rate plus,  based on performance,  a margin
ranging from 2.00% to 3.50% per annum, or at LIBOR plus, based on performance, a
margin  ranging  from 3.00% to 4.50% per annum,  with a LIBOR floor of 2.0%.  At
March 31,  2003,  the  Company had  $9,500,000  borrowings  under the  Revolver.
Standby letters of credit totaling $6.8 million were outstanding and the Company
had  borrowing  capacity of  approximately  $13.7 million under the terms of the
Revolver at March 31, 2003.

         The Term Loan and borrowings  under the Revolver are secured by a first
priority lien on substantially all of the Company's assets and are guaranteed by
the Company's domestic subsidiaries. The Company is required to maintain certain
financial ratios during the term of the Credit Agreement, including leverage and
interest coverage ratios.

         At March 31, 2003, the Company had $110,000,000 of senior  subordinated
notes (the "Notes") outstanding. The Notes bear interest at a rate of 9.875% per
annum and mature in December 2007. Interest is payable  semi-annually on June 15
and  December  15 of each year.  The Notes are  redeemable  at the option of the
Company, in

                                       23
<PAGE>


whole or in part,  at  redemption  prices  ranging from  104.937% to 100%,  plus
accrued and unpaid interest to the date of redemption.  Upon the occurrence of a
Change of  Control,  as  defined  in the note  indenture,  the  Company  will be
obligated  to make an offer to  purchase  the Notes,  in whole or in part,  at a
price equal to 101% of the aggregate principal amount of the Notes, plus accrued
and unpaid  interest,  if any, to the date of  purchase.  If a Change of Control
were to occur, the Company may not have the financial  resources to repay all of
its  obligations  under the Credit  Agreement,  the note indenture and the other
indebtedness  that would become  payable upon the  occurrence  of such Change of
Control.

         The Credit Agreement and the Notes may affect the Company's  ability to
make future capital expenditures and potential acquisitions. However, management
believes  that current  asset levels  provide  adequate  capacity to support its
operations  for at least the next 12 months.  At March 31, 2003, the Company did
not have material commitments for capital expenditures or other acquisitions.

         In addition to the Revolver,  the Company has a 400,000 Canadian dollar
denominated revolving credit facility which bears interest at the Canadian prime
rate plus 0.6% and  expires  on April 30,  2004,  a 1.0  million  British  Pound
Sterling denominated  revolving credit facility which bears interest at the U.K.
base rate plus 1.75% and  expires on June 1, 2003 and a $1.0  million  revolving
credit  facility which bears interest at LIBOR plus 1.0% and expires on December
31, 2003. We expect to renew these revolving credit  facilities upon expiration.
No borrowings were outstanding  under these revolving credit facilities at March
31, 2003.

         The  Company  financed  the cost to  purchase  property  in 2000 and to
construct a new domestic  distribution facility completed in 2001 (total cost of
$30.2  million),  using  borrowings  under the then  existing  revolving  credit
facility and, in 2001, the proceeds from the issuance of the Series A Redeemable
Convertible  Preferred  Stock  of  $6.0  million  (noted  below)  and  long-term
borrowings  consisting  of a first and second lien mortgage note in the original
principal amount of $10.0 million each with a financial  institution and the New
York State Job Development Authority, respectively. The first lien mortgage note
bears  interest  at LIBOR plus  2.75%.  However,  the  Company  has  utilized an
interest rate swap agreement to  effectively  fix the loan rate at 8.40% for the
term of the loan.  The second lien mortgage  note bears  interest at the rate of
3.77%,  and is subject to review and adjustment  semi-annually  based on the New
York State Job Development  Authority's  confidential  internal protocols.  Both
notes  are for a term of 96  months  and  require  monthly  payments  based on a
180-month  amortization  period with balloon  payments  upon maturity in January
2010.

         On March 30,  2001,  the Board of  Directors  authorized  500 shares of
preferred  stock,  $0.10  par  value,  and  designated  100  shares  as Series A
Redeemable  Convertible  Preferred  Stock.  Also on March 30, 2001,  the Company
issued  40  shares  of Series A  Redeemable  Convertible  Preferred  Stock to GS
Capital Partners II, L.P. and certain other private  investment funds managed by
Goldman,  Sachs & Co.  (collectively,  "GSCP")  for  proceeds  of $6.0  million.
Dividends are cumulative and payable annually at 6% per annum. Dividends payable
on or prior to March 30,  2004,  are  payable in  additional  shares of Series A
Redeemable  Convertible  Preferred Stock based on a value of $150,000 per share.
Subsequent  to March 30,  2004,  dividends  are  payable,  at the  option of the
Company,  either in cash or additional shares of Series A Redeemable Convertible
Preferred  Stock.  On March 30, 2003,  the annual  dividend was  distributed  in
additional shares of Series A Redeemable  Convertible  Preferred Stock. At March
31, 2003, 44.94 shares of Series A Redeemable  Convertible  Preferred Stock were
issued and outstanding.

         On February  19, 2002,  the Company  purchased  all of the  outstanding
Common  Stock of M&D  Industries,  a  Manteno,  Illinois-based  manufacturer  of
metallic and plastic balloons,  from American Greetings  Corporation  ("American
Greetings")  for $27.5  million plus  related  costs.  The Company  financed the
acquisition by borrowing $13.5 million under its then existing  revolving credit
facility and issuing 96.774 shares of its Common Stock to American Greetings, at
a value of  $155,000  per share.  American  Greetings  continues  to  distribute
metallic balloons under a supply agreement with the Company.

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

                                       24
<PAGE>


insurance  costs.  Rent expense for the quarters  ended March 31, 2003 and 2002,
totaled $3.3 million and $2.5 million,  respectively. The minimum lease payments
currently  required under  non-cancelable  operating  leases for the year ending
December 31, 2003, approximate $12.1 million.

         On June 13, 2002, the Company filed a  registration  statement with the
Commission for an IPO of its Common Stock. However, during the fourth quarter of
2002,  the  Company  decided  not to pursue the IPO,  which  resulted  in a $0.8
million write-off of costs associated with the offering.  On March 12, 2003, the
Company  filed  a Form RW  with  the  Commission  withdrawing  its  registration
statement for the IPO.

         Based upon the current level of operations and anticipated  growth,  we
anticipate  that our operating  cash flow,  together with  available  borrowings
under the Revolver will be adequate to meet our anticipated future  requirements
for working  capital  and  operating  expenses  for at least the next 12 months.
However, the Company's ability to make scheduled payments of principal of, or to
pay  interest  on, or to  refinance  its  indebtedness  and to satisfy its other
obligations will depend upon its future performance, which, to a certain extent,
will be subject to general economic, financial,  competitive, business and other
factors beyond its control.


Cash Flow Data - Three Months Ended March 31, 2003  Compared  Three Months Ended
                 March 31, 2002

         Net cash used in  operating  activities  during the three  months ended
March 31, 2003 and 2002,  totaled $6.0 million and $2.4  million,  respectively.
Net cash flow  provided by  operating  activities  before  changes in  operating
assets and  liabilities  for the three months ended March 31, 2003 and 2002, was
$8.2 million and $11.7 million,  respectively.  Changes in operating  assets and
liabilities,  net of  acquisition  for the three months ended March 31, 2003 and
2002,  resulted  in the  use  of  cash  of  $14.2  million  and  $14.1  million,
respectively.

         Net cash used in  investing  activities  during the three  months ended
March  31,  2003  of  $3.4  million  consisted  of  additional   investments  in
distribution and manufacturing  equipment. Net cash used in investing activities
during the three months ended March 31, 2002 of $17.4 million consisted of $13.3
million  relating to the acquisition of M&D Industries and $4.1 million relating
to  capital  expenditures,  principally  for  distribution  and data  processing
equipment.

         During the three  months  ended March 31,  2003,  net cash  provided by
financing  activities  of $8.6  million  consisted of proceeds  from  short-term
borrowings, partially offset by the scheduled payment of the Term Loan and other
long-term  obligations.  During the three months ended March 31, 2002,  net cash
provided  by  financing  activities  of $20.7  million  included  proceeds  from
short-term working capital  borrowings,  including $13.3 million used to finance
the acquisition of M&D Industries, partially offset by the scheduled payments of
the AXEL term loan and other long-term obligations.


Legal Proceedings
-----------------

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


"Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995
------------------------------------------------------------------------------

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


                                       25
<PAGE>


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)  introduction  of new
product  lines by the  Company,  (5) the  introduction  of new  products  by the
Company's  competitors,  (6) the inability of the Company to increase  prices to
recover fully future increases in raw material prices,  especially  increases in
paper prices,  (7) the loss of key  employees,  (8) changes in general  business
conditions,  (9) other factors which might be described from time to time in the
Company's  filings with the  Commission  and (10) other factors which are beyond
the control of the Company.  Consequently, all of the forward-looking statements
made in this report are qualified by these cautionary statements, and the actual
results or developments  anticipated by the Company may not be realized or, even
if substantially  realized, may not have the expected consequences to or effects
on the Company or its business or operations. Although the Company believes that
it has the  product  offerings  and  resources  needed for  continued  growth in
revenues  and  margins,  future  revenue  and margin  trends  cannot be reliably
predicted. Changes in such trends may cause the Company to adjust its operations
in the future. Because of the foregoing and other factors,  recent trends should
not be considered  reliable indicators of future financial results. In addition,
the highly leveraged nature of the Company may impair its ability to finance its
future  operations and capital needs and its  flexibility to respond to changing
business and economic conditions and business opportunities.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Our earnings  are affected by changes in interest  rates as a result of
our  variable  rate  indebtedness.   However,  we  utilize  interest  rate  swap
agreements to manage the market risk  associated  with  fluctuations in interest
rates. If market interest rates for our variable rate  indebtedness  averaged 2%
more than the interest  rate  actually paid for the three months ended March 31,
2003 and 2002,  our  interest  expense,  after  considering  the  effects of our
interest rate swap  agreements,  would have increased,  and income before income
taxes would have  decreased,  by $0.9  million and $0.8  million,  respectively.
These  amounts are  determined  by  considering  the impact of the  hypothetical
interest  rates on our  borrowings  and  interest  rate  swap  agreements.  This
analysis does not consider the effects of the reduced level of overall  economic
activity  that could exist in such an  environment.  Further,  in the event of a
change of such  magnitude,  management  would  likely  take  actions  to further
mitigate  our exposure to the change.  However,  due to the  uncertainty  of the
specific actions that we would take and their possible effects,  the sensitivity
analysis assumes no changes in our financial structure.

         Our earnings are also affected by fluctuations in the value of the U.S.
dollar as compared to foreign  currencies,  predominately in European countries,
as a result  of the  sales of our  products  in  foreign  markets.  Although  we
periodically  enter into foreign currency forward contracts to hedge against the
earnings  effects of such  fluctuations,  we may not be able to hedge such risks
completely  or  permanently.  A uniform  10%  strengthening  in the value of the
dollar  relative to the  currencies in which our foreign  sales are  denominated
would have  resulted  in a decrease  in gross  profit of $0.4  million  and $0.3
million for the three months ended March 31, 2003 and 2002, respectively.  These
calculations  assume that each exchange rate would change in the same  direction
relative to the U.S.  dollar.  In  addition to the direct  effects of changes in
exchange rates, which could change the U.S. dollar value of the resulting sales,
changes in  exchange  rates may also  affect the volume of sales or the  foreign
currency sales price as competitors'  products  become more or less  attractive.
Our sensitivity  analysis of the effects of changes in foreign currency exchange
rates does not factor in a potential  change in sales  levels or local  currency
prices.

                                       26
<PAGE>


ITEM 4.  CONTROLS AND PROCEDURES

         Based  on an  evaluation  of  the  Company's  disclosure  controls  and
procedures  performed by the  Company's  Chief  Executive  Officer and its Chief
Financial  Officer  within 90 days of the filing of this report,  the  Company's
Chief  Executive  Officer and its Chief  Financial  Officer  concluded  that the
Company's disclosure controls and procedures have been effective.

         As used herein, "disclosure controls and procedures" means controls and
other  procedures  of the Company that are  designed to ensure that  information
required to be  disclosed by the Company in the reports that it files or submits
under  the  Securities  Exchange  Act is  recorded,  processed,  summarized  and
reported within the time periods  specified in the rules and forms issued by the
Securities and Exchange Commission.  Disclosure controls and procedures include,
without limitation,  controls and procedures designed to ensure that information
required to be  disclosed by the Company in the reports that it files or submits
under  the  Securities  Exchange  Act is  accumulated  and  communicated  to the
Company's management,  including its principal executive officer or officers and
its  principal  financial  officer or officers,  or persons  performing  similar
functions,   as  appropriate  to  allow  timely  decisions   regarding  required
disclosure.

         Since  the  date  of the  evaluation  described  above,  there  were no
significant  changes in the Company's internal controls or in other factors that
could significantly affect these controls,  and there were no corrective actions
with regard to significant deficiencies and material weaknesses.

                                     Part II

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

        a) Exhibits

     99   Certification of Chief Executive  Officer and Chief Financial  Officer
          Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002.

        b) Reports on Form 8-K

        On January 30,  2003,  the Company  filed a Current  Report on Form 8-K
     dated  December  20, 2002 (File No.  000-21827)  responding  to Item. 5 and
     reporting the refinancing of its term loan and credit facility.


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<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
                                           Chief Financial Officer
                                           (on behalf of the registrant and as
Date: May 15, 2003                         principal financial and accounting
      ------------                         officer)



                                       28
<PAGE>


                                  CERTIFICATION
                           BY CHIEF EXECUTIVE OFFICER
                             PURSUANT TO RULE 13a-14

I, Gerald C. Rittenberg, certify that:

1)   I have reviewed this quarterly report on Form 10-Q of Amscan Holdings, Inc;

2)   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3)   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4)   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a - 14 and 15d - 14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date.

5)   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified  for the  registrant's  auditors any  material  weakness in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6)   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: May 15, 2003                         /s/ Gerald C. Rittenberg
      ------------                         ------------------------
                                           Gerald C. Rittenberg
                                           Chief Executive Officer
                                           (Principal executive officer)


                                       29
<PAGE>


                                  CERTIFICATION
                           BY CHIEF FINANCIAL OFFICER
                             PURSUANT TO RULE 13a-14


I, Michael A. Correale, certify that:

1)   I have reviewed this quarterly report on Form 10-Q of Amscan Holdings, Inc;

2)   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3)   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4)   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a - 14 and 15d - 14) for the registrant and have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date.

5)   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified  for the  registrant's  auditors any  material  weakness in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6)   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: May 15, 2003                         /s/ Michael A. Correale
    --------------                         -----------------------
                                           Michael A. Correale
                                           Chief Financial Officer
                                           Principal financial officer)


                                       30