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 September 30, 2000

|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- | ----------------------------------------------------------------------------------------

For the transition period from 
to

Commission file number 000-21827

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

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

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

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

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

Yes X
       No

As of November 10, 2000, 1,132.54 shares of Registrants
Common Stock, par value $0.10, were outstanding.

AMSCAN HOLDINGS, INC.
FORM 10-Q

# September 30, 2000

# Table of Contents

`Part I                                    Page

Item 1     Financial Statements (Unaudited)

           Consolidated Balance Sheets at September 30, 2000
           and December 31, 1999...........................................    3

           Consolidated Statements of Income for the Three and
           Nine Months Ended September 30, 2000 and 1999...................    4

           Consolidated Statement of Stockholders' Deficit for
           the Nine Months Ended September 30, 2000........................    5

           Consolidated Statements of Cash Flows for the Nine
           Months Ended September 30, 2000 and 1999........................    6

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

Item 2     Management's Discussion and Analysis of Financial Condition
           and Results of Operations.......................................   12

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


                                     Part II

Item 6     Exhibits and Reports on Form 8-K................................   18


Signature  ................................................................   19`

2

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

`September 30,     December 31,
                                                                                      2000              1999
                                                                                   -----------      ------------
                                                                                   (Unaudited)         (Note)

                                                        ASSETS
Current assets:
   Cash and cash equivalents ................................................       $     756        $     849
   Accounts receivable, net of allowances ...................................          65,255           56,896
   Inventories, net of allowances ...........................................          67,365           59,193
   Prepaid expenses and other current assets ................................          10,117           11,802
                                                                                    ---------        ---------
         Total current assets ...............................................         143,493          128,740
Property, plant and equipment, net ..........................................          62,392           61,709
Intangible assets, net ......................................................          60,220           63,331
Other assets, net ...........................................................           8,803            9,707
                                                                                    ---------        ---------

         Total assets .......................................................       $ 274,908        $ 263,487
                                                                                    =========        =========


                            LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Short-term obligations ...................................................       $  10,354        $   4,688
   Accounts payable .........................................................          19,546           18,967
   Accrued expenses .........................................................          18,908           16,332
   Income taxes payable .....................................................           3,281            2,963
   Current portion of long-term obligations .................................           3,987            3,562
                                                                                    ---------        ---------
         Total current liabilities ..........................................          56,076           46,512
Long-term obligations, excluding current portion ............................         262,488          266,891
Deferred income tax liabilities .............................................          12,861           12,001
Other .......................................................................           2,476            3,030
                                                                                    ---------        ---------
         Total liabilities ..................................................         333,901          328,434

Redeemable Common Stock .....................................................          28,721           23,582

Stockholders' deficit:
   Common Stock .............................................................            --               --
   Additional paid-in capital ...............................................             233              225
   Unamortized restricted Common Stock award, net ...........................            (367)            (405)
   Notes receivable from stockholders .......................................            (524)            (664)
   Deficit ..................................................................         (84,770)         (86,797)
   Accumulated other comprehensive loss .....................................          (2,286)            (888)
                                                                                    ---------        ---------
         Total stockholders' deficit ........................................         (87,714)         (88,529)
                                                                                    ---------        ---------

         Total liabilities, redeemable Common Stock and stockholders' deficit       $ 274,908        $ 263,487
                                                                                    =========        =========`

| | Note:  The balance sheet at December 31, 1999 has been derived from the
audited consolidated financial statements at that
date.
| | -------------------------------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

3

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

`Three Months Ended           Nine Months Ended
                                                            September 30,               September 30,
                                                      -----------------------      -----------------------
                                                         2000          1999          2000          1999
                                                      ---------     ---------      ---------     ---------

Net sales .......................................     $  83,365     $  74,853      $ 239,500     $ 224,496
Cost of sales ...................................        53,022        47,648        150,698       142,899
                                                      ---------     ---------      ---------     ---------
         Gross profit ...........................        30,343        27,205         88,802        81,597

Operating expenses:
   Selling expenses .............................         7,981         6,321         22,037        18,018
   General and administrative expenses ..........         7,914         7,886         23,670        22,679
   Provision for (reduction of) doubtful accounts           444          (858)         4,817         6,263
   Art and development costs ....................         2,329         2,055          6,429         6,626
                                                      ---------     ---------      ---------     ---------
      Total operating expenses ..................        18,668        15,404         56,953        53,586
                                                      ---------     ---------      ---------     ---------
         Income from operations .................        11,675        11,801         31,849        28,011

Interest expense, net ...........................         6,595         6,637         19,768        19,675
Other expense (income), net .....................            85           (78)           158           (13)
                                                      ---------     ---------      ---------     ---------
         Income before income taxes and
             minority interests .................         4,995         5,242         11,923         8,349

Income tax expense ..............................         1,973         2,142          4,710         3,411
Minority interests ..............................            13            10             47             4
                                                      ---------     ---------      ---------     ---------
         Net income .............................     $   3,009     $   3,090      $   7,166     $   4,934
                                                      =========     =========      =========     =========`

See accompanying notes to consolidated financial statements.

4

AMSCAN HOLDINGS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS
DEFICIT
Nine Months Ended September 30, 2000
(Dollars in thousands)
(Unaudited)

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

Balance at December 31, 1999 .     $   --       $    225     $   (405)     $   (664)     $(86,797)     $   (888)     $(88,529)

   Net income ................         --           --           --            --           7,166          --           7,166
   Net change in cumulative
      translation adjustment .         --           --           --            --            --          (1,398)       (1,398)
                                                                                                                     --------
         Comprehensive income          --           --           --            --            --            --           5,768

   Accretion in Redeemable
      Common Stock and other .         --              8         --            --          (5,139)         --          (5,131)
   Payments received on notes
      receivable .............         --           --           --             140          --            --             140
   Amortization of restricted
      Common Stock award .....         --           --             38          --            --            --              38
                                   --------     --------     --------      --------      --------      --------      --------

Balance at September 30, 2000      $   --       $    233     $   (367)     $   (524)     $(84,770)     $ (2,286)     $(87,714)
                                   ========     ========     ========      ========      ========      ========      ========`

See accompanying notes to consolidated financial statements.

5

AMSCAN HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

`Nine Months Ended September 30,
                                                                               -------------------------------
                                                                                    2000            1999
                                                                               -------------   ---------------
Cash flows from operating activities:
    Net income ............................................................       $  7,166        $  4,934
    Adjustments to reconcile net income to net cash provided by
       operating activities:
       Depreciation and amortization ......................................         10,328           9,888
       Amortization of deferred financing costs ...........................            652             653
       Amortization of restricted Common Stock award ......................             38             128
       Provision for doubtful accounts ....................................          4,817           6,263
       Deferred income tax expense ........................................          1,051           1,845
       (Gain) loss on disposal of property and equipment ..................             (5)             69
       Changes in operating assets and liabilities:
           Increase in accounts receivable ................................        (13,513)        (18,244)
           Increase in inventories ........................................         (8,172)         (7,611)
           Decrease (increase) in prepaid expenses and other current assets          1,305          (1,050)
           Increase in accounts payable, accrued expenses and
             income taxes payable .........................................          3,494          12,120
       Other, net .........................................................             60          (2,972)
                                                                                  --------        --------
          Net cash provided by operating activities .......................          7,221           6,023

Cash flows from investing activities:
    Capital expenditures ..................................................         (8,282)         (9,068)
    Proceeds from sale of property and equipment ..........................             17             172
                                                                                  --------        --------
          Net cash used in investing activities ...........................         (8,265)         (8,896)

Cash flows from financing activities:
    Proceeds from short-term obligations ..................................          5,666           4,695
    Repayment of loans, notes payable and long-term obligations ...........         (3,978)         (2,935)
    Other .................................................................            127              39
                                                                                  --------        --------
          Net cash provided by financing activities .......................          1,815           1,799

Effect of exchange rate changes on cash and cash equivalents ..............           (864)            515
                                                                                  --------        --------
          Net decrease in cash and cash equivalents .......................            (93)           (559)
Cash and cash equivalents at beginning of period ..........................            849           1,117
                                                                                  --------        --------
Cash and cash equivalents at end of period ................................       $    756        $    558
                                                                                  ========        ========

Supplemental Disclosures:
               Interest paid ..............................................       $ 16,580        $ 15,748
               Income taxes paid, net of refunds ..........................       $  3,244        $    502

Supplemental information on noncash activities:`

There were no
capital lease obligations incurred during the nine months ended September 30,
2000. Capital lease obligations of $651 were incurred during the nine months
ended September 30, 1999.

See accompanying notes to consolidated financial statements.

6

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,
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 and
novelty goods and gifts  principally  in North America,  South America,  Europe,
Asia and Australia.

## Note 2 - Basis of Presentation

The  accompanying  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 and nine  months  ended  September  30, 2000 are not  necessarily  indicative  of the
results that may be expected  for the year ending  December 31, 2000.  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 the Amscan
Holdings Annual Report on Form 10-K for the year ended December 31, 1999.

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

## Note 3 - Inventories

Inventories consisted of the following (dollars in thousands):

`September 30,    December 31,
                                                                   2000            1999
                                                               -------------    ------------

 Finished goods ..........................................       $ 57,494        $ 50,278
 Raw materials ...........................................          7,861           6,706
 Work-in-process .........................................          4,334           4,238
                                                                 --------        --------
                                                                   69,689          61,222
 Less: reserve for slow moving and obsolete inventory.....         (2,324)         (2,029)
                                                                 --------        --------
                                                                 $ 67,365        $ 59,193
                                                                 ========        ========`

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

7

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

# Note 4 - Income Taxes

The  consolidated  income tax expense for the three and nine months ended  September  30, 2000 and 1999 was  determined  based
upon  estimates  of the  Companys  consolidated  effective  income  tax  rates  for the  years  ending  December  31,  2000 and  1999,
respectively.  The differences  between the consolidated  effective  income tax rate and the U.S. Federal  statutory rate are primarily
attributable to state income taxes and the effects of foreign operations.

## Note 5 - Comprehensive Income

Comprehensive income consisted of the following (dollars in thousands):

`Three Months Ended       Nine Months Ended
                                          September 30,            September 30,
                                      --------------------     --------------------
                                        2000        1999         2000         1999
                                      -------      -------     -------      -------

         Net income .............     $ 3,009      $ 3,090     $ 7,166      $ 4,934
         Net change in cumulative
           translation adjustment        (265)         428      (1,398)         459
                                      -------      -------     -------      -------
         Comprehensive income ...     $ 2,744      $ 3,518     $ 5,768      $ 5,393
                                      =======      =======     =======      =======`

Accumulated
other  comprehensive  loss at  September  30,  2000 and  December  31, 1999
consisted solely of the Companys cumulative translation adjustment.

## Note 6 - Capital Stock

At  September  30, 2000 and December 31,  1999,  the  Companys  authorized  capital  stock  consisted of 5,000,000  shares of
preferred  stock,  $0.10 par value, of which no shares were issued or outstanding,  and 3,000 shares of common stock,  $0.10 par value,
of which 1,132.54 and 1,132.41 shares, respectively, were issued and outstanding.

## Note 7 - Segment Information

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

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.

8

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

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

`Domestic         Foreign        Eliminations    Contolidated
                                                    --------         -------        ------------    ------------
Three Months Ended September 30, 2000
Sales to unaffiliated customers ............       $  71,701        $  11,664                         $  83,365
Sales between geographic areas .............           5,504                         $  (5,504)            --
                                                   ---------        ---------        ---------        ---------
Net sales ..................................       $  77,205        $  11,664        $  (5,504)       $  83,365
                                                   =========        =========        =========        =========

Income from operations .....................       $  10,308        $   1,367                         $  11,675
                                                   =========        =========
Interest expense, net ......................                                                              6,595
Other expense, net .........................                                                                 85
                                                                                                      ---------
Income before income taxes and minority
        interests ..........................                                                          $   4,995
                                                                                                      =========

Long-lived assets, net at September 30, 2000       $ 124,558        $   6,857                         $ 131,415
                                                   =========        =========                         =========

Three Months Ended September 30, 1999
Sales to unaffiliated customers ............       $  61,548        $  13,305                         $  74,853
Sales between geographic areas .............           6,336                         $  (6,336)
                                                   ---------        ---------        ---------        ---------
Net sales ..................................       $  67,884        $  13,305        $  (6,336)       $  74,853
                                                   =========        =========        =========        =========

Income from operations .....................       $   9,876        $   1,925                         $  11,801
                                                   =========        =========
Interest expense, net ......................                                                              6,637
Other income, net ..........................                                                                (78)
                                                                                                      ---------
Income before income taxes and minority
        interests ..........................                                                          $   5,242
                                                                                                      =========

Long-lived assets, net at September 30, 1999       $ 128,309        $   7,940                         $ 136,249
                                                   =========        =========                         =========

Nine Months Ended September 30, 2000
Sales to unaffiliated customers ............       $ 206,995        $  32,505                         $ 239,500
Sales between geographic areas .............          14,230                         $ (14,230)            --
                                                   ---------        ---------        ---------        ---------
Net sales ..................................       $ 221,225        $  32,505        $ (14,230)       $ 239,500
                                                   =========        =========        =========        =========

Income from operations .....................       $  28,764        $   3,085                         $  31,849
                                                   =========        =========
Interest expense, net ......................                                                             19,768
Other expense, net .........................                                                                158
                                                                                                      ---------
Income before income taxes and minority
        interests ..........................                                                          $  11,923
                                                                                                      =========`

9

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

`Domestic         Foreign      Eliminations     Contolidated
                                                 --------         -------      ------------     ------------
Nine Months Ended September 30, 1999
Sales to unaffiliated customers .........       $ 191,351        $  33,145                        $ 224,496
Sales between geographic areas...........          16,462             --         $ (16,462)            --
                                                ---------        ---------       ---------        ---------
Net sales ...............................       $ 207,813        $  33,145       $ (16,462)       $ 224,496
                                                =========        =========       =========        =========

Income from operations ..................       $  26,011        $   2,000                        $  28,011
                                                =========        =========
Interest expense, net ...................                                                            19,675
Other income, net .......................                                                               (13)
                                                                                                  ---------
Income before income taxes and minority
        interests .......................                                                         $   8,349
                                                                                                  =========`

## Note 8 - Provision for (Reduction of) Doubtful Accounts

During
the second  quarter of 2000,  two of the  Companys  customers  filed  voluntary
petitions for relief under Chapter 11 of the United States Bankruptcy Code. As a
result,  the Company charged $3.4 million to the provision for doubtful accounts
during the second quarter of 2000 which  substantially  represented the combined
accounts  receivable  balances  due to the Company  from these  customers.  On a
combined basis, these two customers accounted for approximately 0.6% and 1.9% of
the  Companys  consolidated  net  sales for the  three  and nine  months  ended
September  30, 2000,  respectively.  The Company does not believe the  potential
loss of these  customers  will have a material  adverse  effect on the Companys
future results of operations or its financial condition.

During
the  first  quarter  of  1999,  the  Companys  largest  customer,   Party  City
Corporation  (Party  City),  announced  that it would be in default of certain
covenants  of its credit  facility  and, as a result,  the Company  charged $6.0
million to the provision for doubtful accounts during the first quarter of 1999.
As a result of the subsequent  improvement in Party Citys financial  condition,
the provision  was  decreased by $1.9 million  during the third quarter of 1999,
partially offset by a $1.0 million  provision for other doubtful  accounts.  The
remainder  of the  provision  of $4.1  million  was  reversed  during the fourth
quarter  of  1999.   Sales  to  Party  Citys  corporate  stores  accounted  for
approximately  16.5% and 13.7% of the Companys  consolidated  net sales for the
three and nine months  ended  September  30,  2000,  respectively.  Although the
Company believes its relationships with Party City and its franchisees are good,
if they were to significantly reduce their volume of purchases from the Company,
the Companys  financial condition and future results of operations could be materially
adversely affected.

## Note 9 - Legal Proceedings

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

10

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

## Note 10 Subsequent Event

In October of 2000, the Company  purchased  property for the  construction  of a new domestic  distribution  facility for $4.9
million.  The purchase was financed by  borrowings  under the  Companys  revolving  credit  facility.  The Company also entered into a
contract for the design and construction of the new distribution  facility with an estimated cost, excluding  capitalized  interest, of
$22.1 million.  The Company  intends to permanently  finance both the purchase of property and the  construction  of the facility using
additional  contributed capital of $6 million, long term borrowings totaling $20 million and working capital of $1.0 million.  The Company has obtained firm commitments
totaling $20 million for the permanent  financings from both the New York Job Development  Authority and a financial  institution.  The
Company has amended and restated its credit  agreements  to provide for,  among other  things,  the  additional  borrowings  and future
capital expenditures for the construction of the new domestic distribution facility.

## Note 11  Recently Issued Accounting Standards

In
June 1998, the Financial Accounting Standards Board (FASB) issued Statement of
Financial  Accounting  Standard  (SFAS) No. 133,  Accounting  for  Derivative
Instruments and Hedging Activities, amended by SFAS 137 and 138, which establish
standards for  derivative  instruments  and hedging  activities.  They provide a
comprehensive  and consistent  standard for the  recognition  and measurement of
derivatives and hedging activities.  These statements require all derivatives to
be recognized on the balance sheet at fair value and establish standards for the
recognition  of changes in such fair value.  These  statements are effective for
fiscal years  beginning  after June 15, 2000. The Company expects to adopt these
statements  effective  January 1, 2001.  Because of the Companys limited use of
derivatives,  management does not anticipate the adoption of these statements will
have  a  significant  effect  on  earnings  or  the  financial  position  of the
Company.

In
December 1999, the Securities and Exchange  Commission  issued Staff  Accounting
Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements (SAB 101).
SAB 101 summarizes certain of the SEC staff views in applying accounting principles
generally accepted in the United States to revenue recognition in financial statements. SAB 101 is
effective  beginning in the fourth  quarter of 2000. The Company does not expect
the adoption of SAB 101 to have a material  impact on its results of  operations
or financial position.

11

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

Three Months Ended September 30, 2000 Compared to Three Months Ended September 30, 1999

## Results of OperationsPercentage of Net Sales

`Three Months Ended September 30,
                                                         2000         1999
                                                         -----        -----
 Net sales .......................................       100.0%       100.0%
 Cost of sales ...................................        63.6         63.7
                                                         -----        -----
      Gross profit ...............................        36.4         36.3
 Operating expenses:
     Selling expenses ............................         9.6          8.4
     General and administrative expenses .........         9.5         10.5
     Provision for (reduction of) doubtful
           accounts ..............................         0.5         (1.1)
     Art and development costs ...................         2.8          2.7
                                                         -----        -----
         Total operating expenses ................        22.4         20.5
                                                         -----        -----
         Income from operations ..................        14.0         15.8
 Interest expense, net ...........................         7.9          8.9
 Other expense (income), net .....................         0.1         (0.1)
                                                         -----        -----
          Income before income taxes
             and minority interests...............         6.0          7.0
 Income tax expense ..............................         2.4          2.9
 Minority interests ..............................          --           --
                                                         -----        -----
          Net income .............................         3.6%         4.1%
                                                         =====        =====`

Net sales of $83.4  million  for the  third  quarter  of 2000 were $8.5  million
higher than net sales for the third  quarter of 1999.  The increase in net sales
reflects  increased  sales of party  goods and gift items to  independent  party
goods and specialty  stores, as well as increased sales of solid color tableware
and  gift  items  to  superstores,   partially  offset  by  decreased  sales  to
international  customers.   Increased  sales  to  independent  party  goods  and
specialty stores are attributable to a realignment of the Companys  independent
sales force begun in the first quarter of 1999.

Gross  profit  for the  third  quarter  of 2000 of 36.4% was  comparable  to the
corresponding  period  in 1999 as  incremental  margin  achieved  as a result of
increased sales was offset by lower margins attributable to product mix.

Selling  expenses of $8.0 million for the three months ended  September 30, 2000
were $1.7  million  higher  than those of the  corresponding  period in 1999 and
increased  to 9.6% of net sales from 8.4% of net sales.  The increase in selling
expenses  reflects  the  continued  development  of a specialty  sales force and
increased marketing initiatives relating to new gift product lines.

General and  administrative  expenses for the three months ended  September  30,
2000 of $7.9  million was  comparable  to that of the third  quarter of 1999 but
declined  as a  percent  of  sales by 1.0% to 9.5%  due to the  increased  sales
volume.

Provision for doubtful  accounts for the third quarter of 2000 was $0.4 million.
During the first quarter of 1999, the Companys  largest  customer,  Party City,
announced  that it  would be in  default  of  certain  covenants  of its  credit
facility and, as a result, the Company charged $6.0 million to the provision for
doubtful  accounts  during  the  first  quarter  of  1999.  As a  result  of the
subsequent  improvement in Party Citys financial  condition,  the provision was
decreased by $1.9 million during the third quarter of 1999,  partially offset by
a $1.0 million  provision  for other  doubtful  accounts.  The  remainder of the
provision of $4.1 million was reversed during the fourth quarter of 1999.

12

Art and  development  costs  of $2.3  million  for the  third  quarter  of 2000,
increased by $0.2 million  compared to the  corresponding  period in 1999 due to
the  Companys  continued  commitment  to  product  quality  and  design.  As  a
percentage  of net  sales,  art and  development  costs  were 2.8% for the third
quarter of 2000 as compared to 2.7% for the corresponding period of 1999.

Interest expense of $6.6 million for the third quarter of 2000 was comparable to
the corresponding period in 1999, and reflects a higher average interest rate on
lower average borrowings as compared to 1999.

Income  taxes for the third  quarter of 2000 and 1999 were based upon  estimated
consolidated effective income tax rates of 39.5% and 40.85% for the years ending
December 31, 2000 and 1999, respectively.

Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30, 1999

## Results of OperationsPercentage of Net Sales

`Nine Months Ended September 30,
                                                             2000         1999
                                                            -----        -----
Net sales ...........................................       100.0%       100.0%
Cost of sales .......................................        62.9         63.7
                                                            -----        -----
     Gross profit ...................................        37.1         36.3
Operating expenses:
   Selling expenses .................................         9.2          8.0
   General and administrative expenses...............         9.9         10.1
   Provision for doubtful accounts ..................         2.0          2.8
   Art and development costs ........................         2.7          2.9
                                                            -----        -----
      Total operating expenses ......................        23.8         23.8
                                                            -----        -----
      Income from operations ........................        13.3         12.5
Interest expense, net ...............................         8.2          8.8
Other expense, net ..................................         0.1           --
                                                            -----        -----
       Income before income taxes
           and minority interests ...................         5.0          3.7
Income tax expense ..................................         2.0          1.5
Minority interests ..................................          --           --
                                                            -----        -----
       Net income ...................................         3.0%         2.2%
                                                            =====        =====`

Net sales of $239.5  million for the nine months ended  September  30, 2000 were
$15.0 million  higher than net sales for the  corresponding  period in 1999. The
increase in net sales reflects  increased sales of party goods and gift items to
independent  party goods and  specialty  stores,  as well as increased  sales of
solid color  tableware and gift items to superstores,  partially  offset by both
reduced sales of party goods to other distributors and international  customers.
Increased sales to independent party goods and specialty stores are attributable
to a  realignment  of the Companys  independent  sales force begun in the first
quarter of 1999.

Gross profit for the nine months ended September 30, 2000 was 37.1% and was 0.8%
higher than the corresponding period in 1999 principally as a result of both the
realization  of the full  benefit  from the  closing of the  Companys  Canadian
warehouse during the first quarter of 1999 and incremental margins achieved as a
result of higher sales partially offset by lower margins attributable to product
mix.

Selling  expenses of $22.0 million for the nine months ended  September 30, 2000
were $4.0  million  higher  than those of the  corresponding  period in 1999 and
increased  to 9.2% of net sales from 8.0% of net sales.  The increase in selling
expenses  reflects  the  continued  development  of a specialty  sales force and
increased marketing initiatives relating to new gift product lines.

13

General and  administrative  expenses of $23.7 million increased by $1.0 million
for the nine months ended  September  30, 2000 as compared to the  corresponding
period in 1999  principally  due to  depreciation  and  amortization on new data
processing  equipment and increased expenses  associated with the development of
e-commerce  business  opportunities.  As a percentage of net sales,  general and
administrative  expenses  declined  by 0.2% to 9.9%  for the nine  months  ended
September 30, 2000 as compared to the corresponding period of 1999 primarily due
to increased sales partially offset by higher expenses.

Provision for doubtful accounts for the nine months ended September 30, 2000 was
$4.8 million.  During the second quarter of 2000, two of the Companys customers
filed  voluntary  petitions  for relief  under  Chapter 11 of the United  States
Bankruptcy Code. As a result of the filings, the Company charged $3.4 million to
the  provision  for doubtful  accounts  during the second  quarter of 2000 which
substantially  represented the combined accounts  receivable balances due to the
Company from these customers. On a combined basis, these two customers accounted
for  approximately  1.9% of the  Companys  consolidated  net sales for the nine
months ended September 30, 2000. The Company does not believe the potential loss
of these customers will have a material  adverse effect on the Companys  future
results of operations or its  financial  condition.  During the first quarter of
1999, the Companys largest customer,  Party City, announced that it would be in
default of  certain  covenants  of its credit  facility  and,  as a result,  the
Company  charged $6.0 million to the provision for doubtful  accounts during the
first quarter of 1999. As a result of the subsequent improvement in Party Citys
financial  condition,  the provision  was  decreased by $1.9 million  during the
third quarter of 1999,  partially  offset by a $1.0 million  provision for other
doubtful  accounts.  The remainder of the provision of $4.1 million was reversed
during the fourth quarter of 1999.

Art and  development  costs of $6.4 million for the nine months ended  September
30,  2000,  decreased by $0.2 million  compared to the  corresponding  period in
1999. The higher art and  development  costs for the nine months ended September
30, 1999 included  certain start-up costs associated with the development of new
product lines. As a percentage of net sales, art and development costs were 2.7%
for the  nine  months  ended  September  30,  2000 as  compared  to 2.9% for the
corresponding period of 1999.

Interest  expense of $19.8 million for the nine months ended  September 30, 2000
increased  by $0.1  million as  compared  to the  corresponding  period in 1999,
principally as a result of a higher average  interest rate,  partially offset by
the impact of lower average borrowings.

Income  taxes for the nine months ended  September  30, 2000 and 1999 were based
upon estimated  consolidated  effective income tax rates of 39.5% and 40.85% for
the years ending December 31, 2000 and 1999, respectively.

## Liquidity and Capital Resources

At
September  30, 2000,  the Company had  outstanding  a senior term loan of $151.6
million  (the Term  Loan)  provided  under a bank credit  agreement  (the Bank
Credit  Facilities),  together with senior subordinated notes of $110.0 million
(the  Notes)  (collectively,  the  Financings).  The Term  Loan  matures  in
December 2004 and provides for amortization  (in quarterly  installments) of one
percent of the  principal  amount  thereof per year for the first five years and
32.3% and 62.7% of the principal  amount thereof in the sixth and seventh years,
respectively. The Term Loan bears interest, at the option of the Company, at the
lenders customary base rate plus 1.625% per annum or at the lenders customary
reserve  adjusted  Eurodollar rate plus 2.625% per annum. At September 30, 2000,
the floating  interest rate on the Term Loan was 9.09%.  The Notes bear interest
at a rate of 9 7/8% per annum and  mature  in  December  2007.  The  Company  is
required  to make  prepayments  on the  Bank  Credit  Facilities  under  certain
circumstances, including upon certain asset sales and issuance of debt or equity
securities and based on cash flows, as defined.  A prepayment of $1.3 million on
the Term  Loan was made by the  Company  during  the  first  quarter  of 2000 as
required based on its cash flows.

14

In addition to the Term Loan, the Bank Credit  Facilities  provide for revolving
loan  borrowings of up to $50 million (the  Revolving  Credit  Facility).  The
Revolving Credit Facility, expiring on December 31, 2002, bears interest, at the
option of the  Company,  at the  lenders  customary  base rate  plus,  based on
certain terms, a range of 1.00% to 1.50% per annum or at the lenders  customary
reserve adjusted Eurodollar rate plus, based on certain terms, a range of 2.00 %
to 2.50% per annum.  Interest on balances outstanding under the Revolving Credit
Facility  are  subject  to  adjustment  in the  future  based  on the  Companys
performance.  At  September  30,  2000,  the Company had  borrowing  capacity of
approximately $34.8 million under the Revolving Credit Facility.

At  September  30,  2000,  the Company had three  interest  rate swap  contracts
outstanding with a financial institution and Goldman Sachs Capital Markets, L.P.
covering  $123.5  million of its Term Loan at effective  interest  rates ranging
from 7.18% to 8.80%.

In
October of 2000, the Company purchased property for the construction of a new
domestic  distribution  facility for $4.9 million.  The purchase was financed by
borrowings  under the  Companys  revolving  credit  facility.  The Company also
entered into a contract for the design and  construction of the new distribution
facility  with an  estimated  cost,  excluding  capitalized  interest,  of $22.1
million.  The  Company  intends to  permanently  finance  both the  purchase  of
property and the  construction  of the  facility  using  additional  contributed
capital of $6 million, long term borrowings totaling $20 million and working capital of $1.0 million. The Company
has obtained firm commitments  totaling $20 million for the permanent financings
from both the New York Job  Development  Authority and a financial  institution.
The Company has amended and restated its credit agreements to provide for, among
other things, the additional  borrowings and future capital expenditures for the
construction of the new domestic distribution facility.

Based upon the current level of operations and anticipated  growth,  the Company
anticipates  that its operating cash flow,  together with  available  borrowings
under the Revolving  Credit  Facility,  will be adequate to meet its anticipated
future  requirements  for working capital and operating  expenses and to service  its debt
requirements  as  they  become  due.  However,  the  Companys  ability  to make
scheduled  payments of principal  of, or to pay interest on, or to refinance its
indebtedness  and to satisfy its other  obligations  will depend upon its future
performance,  which, to a certain extent,  will be subject to general  economic,
financial, competitive, business and other factors beyond its control.

The  Financings  and the Companys  credit  agreements  may affect the Companys
ability to make future capital expenditures and potential acquisitions. However,
management  believes  that current  asset levels  provide  adequate  capacity to
support its  operations  for at least the next 12 months.  As of  September  30,
2000,  the Company did not have material  commitments  for capital  expenditures
other than for the construction of a new domestic  distribution facility and the
purchase of the related property.

## Cash Flow Data  Nine Months Ended September
30, 2000 Compared to Nine Months Ended September 30, 1999

During the nine months ended  September 30, 2000, net cash provided by operating
activities totaled $7.2 million,  an increase of $1.2 million as compared to the
corresponding  period in 1999.  Net cash flow  provided by operating  activities
before changes in other  operating  assets and  liabilities  for the nine months
ended  September  30,  2000 and 1999,  was  $24.0  million  and  $23.8  million,
respectively. Net cash used as a result of changes in other operating assets and
liabilities  for the nine months ended  September  30, 2000 and 1999,  was $16.8
million and $17.8 million, respectively.

Net
cash used in investing  activities  during the nine months ended  September  30,
2000 of $8.3  million  decreased  by $0.6  million  from the same period in 1999
primarily due to the purchase of new data processing equipment during 1999.

During
the nine months ended  September 30, 2000, net cash provided by financing
activities  was $1.8  million and  primarily  consisted  of proceeds from
short-term working capital borrowings, partially offset by the

15

repayment  of a
portion of the Term Loan, including the $1.3 million prepayment noted above, and repayment of other long-term
obligations. During the comparable period in 1999, net cash provided by financing
activities of $1.8 million principally consisted of the proceeds from short-term
working capital borrowings, partially offset by the scheduled maturity of the
Term Loan and the repayment of 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  upon  its
financial condition or future results of operations.

## Recently Issued Accounting Standards

In
June 1998, the Financial Accounting Standards Board (FASB) issued Statement of
Financial  Accounting  Standard  (SFAS) No. 133,  Accounting  for  Derivative
Instruments and Hedging Activities, amended by SFAS 137 and 138, which establish
standards for  derivative  instruments  and hedging  activities.  They provide a
comprehensive  and consistent  standard for the  recognition  and measurement of
derivatives and hedging activities.  These statements require all derivatives to
be recognized on the balance sheet at fair value and establish standards for the
recognition  of changes in such fair value.  These  statements are effective for
fiscal years  beginning  after June 15, 2000. The Company expects to adopt these
statements  effective  January 1, 2001.  Because of the Companys limited use of
derivatives,  management does not anticipate the adoption of these statements will
have  a  significant  effect  on  earnings  or  the  financial  position  of the
Company.

In
December 1999, the Securities and Exchange  Commission  issued Staff  Accounting
Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements (SAB 101).
SAB 101 summarizes certain of the SEC staff views in applying
accounting principles generally accepted in the United States to revenue
recognition in financial statements. SAB 101 is
effective  beginning in the fourth  quarter of 2000. The Company does not expect
the adoption of SAB 101 to have a material  impact on its results of  operations
or financial position.

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.

## 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 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

16

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

The
Companys  earnings are affected by changes in interest rates as a result of its
issuance of variable rate indebtedness.  However,  the Company utilizes interest
rate swap agreements to manage the market risk  associated with  fluctuations in
interest  rates.  If market  interest  rates  for the  Companys  variable  rate
indebtedness averaged 2% more than the interest rate actually paid for the three
months ended September 30, 2000 and 1999, the Companys interest expense,  after
considering  the  effects  of its  interest  rate swap  agreements,  would  have
increased,  and income before income taxes and minority interests would have decreased, by $0.2 million
and $0.4  million,  respectively.  If market  interest  rates for the  Companys
variable rate indebtedness averaged 2% more than the interest rate actually paid
for the nine months ended  September 30, 2000 and 1999,  the Companys  interest
expense,  after  considering  the effects of its interest rate swap  agreements,
would have increased,  and income before income taxes and minority interests would have  decreased,  by
$0.6 million and $1.1 million,  respectively.  These  amounts are  determined by
considering  the  impact of the  hypothetical  interest  rates on the  Companys
borrowing  cost,  short-term   investment  balances,   and  interest  rate  swap
agreements.  This analysis does not consider the effects of the reduced level of
overall economic activity that could exist in such an environment.  Further,  in
the event of a change of such magnitude, management would likely take actions to
further mitigate its exposure to the change.  However, due to the uncertainty of
the  specific  actions  that  would be taken and  their  possible  effects,  the
sensitivity   analysis   assumes   no  changes   in  the   Companys   financial
structure.

The  Companys  earnings are also affected by  fluctuations  in the value of the
U.S.  dollar as  compared  to  foreign  currencies,  predominately  in  European
countries, as a result of the sales of its products in foreign markets.  Foreign
currency forward  contracts are used  periodically to hedge against the earnings
effects of such  fluctuations.  A uniform 10%  strengthening in the value of the
dollar  relative to the  currencies  in which the  Companys  foreign  sales are
denominated  would have  resulted in a decrease in gross  profit of $0.4 million
and $0.6  million  for the  three  months  ended  September  30,  2000 and 1999,
respectively. A uniform 10% strengthening in the value of the dollar relative to
the currencies in which the Companys  foreign sales are denominated  would have
resulted in a decrease in gross  profit of $1.2 million and $1.1 million for the
nine months ended September 30, 2000 and 1999, 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 also  affect the volume of sales or the foreign  currency  sales
price as  competitors  products become more or less  attractive.  The Companys
sensitivity  analysis  of the  effects of changes in foreign  currency  exchange
rates does not factor in a potential  change in sales  levels or local  currency
prices.

17

# Part II

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

| | (a) | Exhibits
| | --- | --------

| |  | ExhibitNumber | Description
| |  | ------------- | -----------

| | 4(a) | Second Amendment and Limited Waiver to Amended and Restated Revolving Loan
Credit Agreement, dated as of September 19, 2000, by and among the Registrant,
the financial institutions parties thereto, Goldman, Sachs Credit Partners L.P.,
as arranger and syndication agent, and Fleet National Bank, as administrative
agent.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4(b) | First Amendment and Limited Waiver to Amended and Restated AXEL Credit
Agreement, dated as of September 19, 2000, by and among the Registrant, the
financial institutions parties thereto, Goldman, Sachs Credit Partners L.P., as
arranger and syndication agent, and Fleet National Bank, as administrative
agent.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10 | Agreement dated as of September 14, 2000 between Amscan, Inc. and CLAYCO Construction Company, Inc.
| | -- | ---------------------------------------------------------------------------------------------------

| | 27 | Financial Data Schedule
| | -- | -----------------------

| | (b) | Reports on Form 8 - K
| | --- | ---------------------

| |  | None.
| |  | -----

18

# 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
| | --- | -----------------------

|Date: November 14, 2000 |  | Michael A. Correale
Controller
(on behalf of the registrant and as principal
accounting officer)
|----------------------- |  | ------------------------------------------------------------------------------------------------

19

EXHIBIT INDEX

|ExhibitNumber |  |  | Description
|------------- |  |  | -----------

|4(a) |  |  | Second Amendment and Limited Waiver to Amended and Restated Revolving Loan
Credit Agreement, dated as of September 19, 2000, by and among the Registrant,
the financial institutions parties thereto, Goldman, Sachs Credit Partners L.P.,
as arranger and syndication agent, and Fleet National Bank, as administrative
agent.
|---- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4(b) |  | First Amendment and Limited Waiver to Amended and Restated AXEL Credit
Agreement, dated as of September 19, 2000, by and among the Registrant, the
financial institutions parties thereto, Goldman, Sachs Credit Partners L.P., as
arranger and syndication agent, and Fleet National Bank, as administrative
agent.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10 |  | Agreement dated as of September 14, 2000 between Amscan, Inc. and CLAYCO Construction Company, Inc.
|-- |  | ---------------------------------------------------------------------------------------------------

|27 |  | Financial Data Schedule
|-- |  | -----------------------