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, 2004


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

For the transition period from ____________________ to ____________________



                              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
                           -------            -----

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 17, 2004, 1,000.00 shares of Registrant's common stock, par value
$0.10, were outstanding.


                                       1


<PAGE>


                              AMSCAN HOLDINGS, INC.
                                    FORM 10-Q

                                 March 31, 2004

                                Table of Contents



                                   Part I                                   Page

Item 1 Financial Statements (Unaudited)

     Consolidated Balance Sheets at March 31, 2004 and December 31,
          2003................................................................ 3

     Consolidated Statements of Income for the Three Months Ended
          March 31, 2004 and 2003............................................. 4

     Consolidated Statement of Stockholders' Deficit for the Three
          Months Ended March 31, 2004......................................... 5

     Consolidated Statements of Cash Flows for the Three Months
          Ended March 31, 2004 and 2003... ................................... 6

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

Item 2 Management's Discussion and Analysis of Financial Condition
          and Results of Operations.......................................... 20

Item 3 Quantitative and Qualitative Disclosures About Market Risk............ 24

Item 4 Controls and Procedures............................................... 25


                                     Part II

Item 2 Changes in Securities, Use of Proceeds and Issuer Purchases
          of Equity Securities............................................... 25

Item 6 Exhibits and Reports on Form 8-K...................................... 25

Signature ................................................................... 27




                                       2


<PAGE>


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

                                                                                      March 31,      December 31,
                                                                                        2004             2003
                                                                                      --------       ------------
                                                                                    (Unaudited)         (Note)
                                     ASSETS
<S>                                                                                <C>             <C>
   Current assets:
       Cash and cash equivalents................................................   $    8,171      $    31,462
       Accounts receivable, net of allowances...................................       88,420           75,682
       Inventories, net of allowances...........................................       80,695           85,137
       Prepaid expenses and other current assets................................       15,189            9,730
                                                                                     --------         --------
            Total current assets ...............................................      192,475          202,011
   Property, plant and equipment, net...........................................       95,436           96,494
   Goodwill, net................................................................       72,078           71,986
   Other assets, net............................................................        8,959           11,611
                                                                                     --------         --------
            Total assets........................................................     $368,948         $382,102
                                                                                     ========         ========

         LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED AND COMMON STOCK
                            AND STOCKHOLDERS' DEFICIT
   Current liabilities:
       Accounts payable.........................................................    $  31,001        $  34,916
       Accrued expenses.........................................................       24,295           20,121
       Income taxes payable.....................................................        5,264            3,178
       Current portion of long-term obligations.................................        2,918           23,237
                                                                                     --------         --------
            Total current liabilities...........................................       63,478           81,452
   Long-term obligations, excluding current portion.............................      271,638          272,272
   Deferred income tax liabilities..............................................       18,210           18,040
   Other........................................................................        2,465            2,414
                                                                                     --------         --------
            Total liabilities...................................................      355,791          374,178

   Redeemable convertible preferred stock ($0.10 par value; 100.00
       shares authorized; 47.64 and 44.94 shares issued
       and outstanding, respectively)...........................................        7,147            7,045
   Redeemable Common Stock......................................................        9,498            9,498

   Commitments and Contingencies

   Stockholders' deficit:
       Common Stock ($0.10 par value; 3,000.00 shares authorized;
           1,217.92 shares issued and outstanding...............................            -                -
       Additional paid-in capital...............................................       26,580           26,682
       Unamortized restricted Common Stock award................................         (116)            (155)
       Notes receivable from stockholders.......................................         (666)            (680)
       Deficit..................................................................      (29,081)         (34,020)
       Accumulated other comprehensive loss.....................................         (205)            (446)
                                                                                     --------         --------
            Total stockholders' deficit.........................................       (3,488)          (8,619)
                                                                                     --------         --------
            Total liabilities, redeemable convertible preferred and Common
              Stock and stockholders' deficit...................................     $368,948         $382,102
                                                                                     ========         ========
</TABLE>

Note: The balance sheet at December 31, 2003 has been derived from the audited
consolidated financial statements at that date.


          See accompanying notes to consolidated financial statements.


                                       3


<PAGE>


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

<TABLE>
<CAPTION>

                                                                       Three Months Ended March 31,
                                                                        2004                2003
                                                                        ----                ----
<S>                                                                   <C>                  <C>
Net sales........................................................     $100,525             $99,844
Cost of sales....................................................       66,081              66,969
                                                                      --------             -------
         Gross profit............................................       34,444              32,875

Operating expenses:
   Selling expenses..............................................        9,302               9,142
   General and administrative expenses...........................        8,129               8,506
   Art and development costs.....................................        2,433               2,537
   Restructuring charges.........................................                              316
                                                                      ---------           --------
         Total operating expenses................................       19,864              20,501
                                                                      --------            --------
         Income from operations..................................       14,580              12,374

Interest expense, net............................................        6,361               6,644
Other income, net................................................          (15)                (18)
                                                                      --------            --------
         Income before income taxes and minority interests.......        8,234               5,748

Income tax expense...............................................        3,252               2,271
Minority interests...............................................           43                  15
                                                                      --------            --------
         Net income..............................................        4,939               3,462
         Dividend on redeemable convertible preferred stock......          102                  96
                                                                      --------            --------
         Net income applicable to common shares..................      $ 4,837            $  3,366
                                                                      ========            ========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       4


<PAGE>


                              AMSCAN HOLDINGS, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                        Three Months Ended March 31, 2004
                             (Dollars in thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                 Unamortized      Notes                Accumulated
                                                   Additional     Restricted   Receivable                 Other
                              Common     Common      Paid-in     Common Stock     from                Comprehensive
                              Shares      Stock      Capital        Award      Stockholders  Deficit       Loss          Total
                              ------      -----      -------        -----      ------------  -------       ----          -----
<S>                           <C>        <C>         <C>            <C>         <C>        <C>           <C>          <C>
Balance at December 31, 2003. 1,217.92   $   -       $26,682        $(155)      $(680)     $(34,020)     $(446)       $(8,619)
   Net income................                                                                 4,939                     4,939
   Net change in cumulative
    translation adjustment...                                                                              356           356
  Change in fair value of
   available-for-sale
   securities, net of income
   taxes.....................                                                                              (23)          (23)
  Change in fair value of
   interest rate swap and
   foreign exchange contracts,
   net of income taxes.......                                                                              (92)          (92)
                                                                                                                      ------
       Comprehensive income..                                                                                          5,180
  Amortization of restricted
   Common Stock award........                                          39                                                  39
 Redeemable convertible
   preferred stock dividend...                          (102)                                                           (102)
 Repayment of note receivable
    from stockholder...........                                                    25                                     25
 Accretion of interest income..                                                   (11)                                   (11)
                               --------  ------      -------        -----       -----     --------       -----       -------
Balance at March 31, 2004....  1,217.92  $    -      $26,580        $(116)      $(666)    $(29,081)      $(205)      $(3,488)
                               ========  ======      =======        =====       =====     ========       =====       =======

</TABLE>


          See accompanying notes to consolidated financial statements.


                                       5


<PAGE>


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

                                                                                            Three Months Ended
                                                                                                 March 31,
                                                                                           2004               2003
                                                                                           ----               ----
<S>                                                                                     <C>                 <C>
Cash flows provided by (used in)operating activities:
   Net income.......................................................................... $ 4,939             $ 3,462
   Adjustments to reconcile net income to net cash provided by (used in) operating
       activities:
      Depreciation and amortization expense............................................   3,968               3,976
      Amortization of deferred financing costs.........................................     537                 479
      Amortization of restricted Common Stock awards...................................      39                  45
      Provision for doubtful accounts..................................................     541                 604
      Deferred income tax expense (benefit)............................................     337                (402)
      (Gain) loss on disposal of equipment.............................................     (36)                 22
      Changes in operating assets and liabilities:
         Increase in accounts receivable............................................... (13,279)            (11,355)
         Decrease in inventories.......................................................   4,442               2,250
         Increase in prepaid expenses and other current assets.........................  (6,386)             (2,144)
         Increase (decrease) in accounts payable, accrued expenses and income taxes
                 payable...............................................................   2,253              (2,932)
      Other, net.......................................................................   2,910                  23
                                                                                        -------             -------
         Net cash provided by (used in) operating activities...........................     265              (5,972)

Cash flows used in investing activities:
   Capital expenditures................................................................  (2,787)             (3,408)
   Proceeds from disposal of property and equipment....................................      53                   3
                                                                                        --------            --------
         Net cash used in investing activities.........................................  (2,734)             (3,405)

Cash flows (used in) provided by financing activities:
   Repayment of loans, notes payable and long-term obligations......................... (21,094)               (938)
   Proceeds from short-term obligations................................................                       9,500
   Repayment of note receivable from stockholder.......................................      25
                                                                                       --------             --------
         Net cash (used in) provided by financing activities........................... (21,069)              8,562
Effect of exchange rate changes on cash and cash equivalents...........................     247                 (74)
                                                                                        -------             -------
         Net decrease in cash and cash equivalents..................................... (23,291)               (889)
Cash and cash equivalents at beginning of period.......................................  31,462               2,400
                                                                                        -------             -------
Cash and cash equivalents at end of period............................................. $ 8,171             $ 1,511
                                                                                        =======             =======
Supplemental Disclosures:
         Interest paid................................................................. $ 3,350             $ 2,359
         Income taxes paid............................................................. $   893             $ 1,479
</TABLE>







          See accompanying notes to consolidated financial statements.


                                       6


<PAGE>


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

Note 1 - Organization and Description of Business

     Amscan Holdings, Inc. ("Amscan 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 - The Acquisition

     On March 26, 2004, Amscan signed an acquisition agreement providing for a
merger of Amscan with AAH Acquisition Corporation, or AAH Acquisition, a
wholly-owned subsidiary of AAH Holdings Corporation, or AAH Holdings, an entity
jointly controlled by funds affiliated with Berkshire Partners LLC and Weston
Presidio. On April 30, 2004, the merger with AAH Acquisition was consummated,
with Amscan continuing as the surviving entity and as a wholly owned subsidiary
of AAH Holdings. Under the terms of the acquisition agreement, the equity
interests in Amscan of GS Capital Partners II, L.P. and certain other private
investment funds managed by Goldman, Sachs & Co., which are collectively
referred to as GSCP, and all other stockholders, other than certain management
investors, were cancelled in exchange for the right to receive cash. The
acquisition was financed with initial borrowings consisting of a $205,000,000
Term Loan under a new senior secured credit facility and a $50,000,000 revolving
loan facility, the proceeds from the issuance of $175,000,000 of 8.75% senior
subordinated notes due 2014, the equity contribution by our principal investors
(including employee stockholders) of $140,500,000 and approximately $2,900,000
of cash on hand. Certain employees of the Company purchased 86.2278 shares of
AAH Holdings Common Stock. The acquisition will be accounted for under the
purchase method of accounting in the Company's second quarter ending June 30,
2004, and requires that the Company adjust its assets and liabilities to their
relative fair values.

     Concurrent with the acquisition, the following financing transactions were
also consummated: the repayment of $147,724,000 under our then existing senior
secured credit facility and the termination of all commitments under that
facility; the consummation of our tender offer and consent solicitation for
$87,200,000 of the $110,000,000 aggregate principal amount outstanding of our
9.875% senior subordinated notes due 2007 and the redemption of the remaining
senior subordinated notes; and repayment of a $8,500,000 mortgage obligation
with a financial institution (the acquisition together with the foregoing
financing transactions are referred to herein collectively as the
"Transactions").

     Following the purchase of the 9.875% senior subordinated notes due 2007
accepted in the tender offer, approximately $22,800,000 in aggregate principal
amount of the notes remained outstanding as of April 30, 2004. The aggregate
cost to purchase the Notes tendered pursuant to the tender offer was
approximately $93,500,000 or 103.542% of the principal amount of such notes plus
accrued and unpaid interest. On May 31, 2004, the remainder of the outstanding
notes will be redeemed pursuant to the redemption notice at a price of 103.292%
of the principal amount of such notes plus accrued and unpaid interest. The
Company will finance the redemption with borrowings under its new revolving
credit facility

     The following unaudited pro forma information assumes the Transactions had
occurred on January 1, 2004 and 2003, respectively. The pro forma information,
as presented below, is not necessarily indicative of the results that would have
been obtained had the Transactions occurred on January 1, 2004 and 2003, nor is
it necessarily indicative of the Company's future results (dollars in
thousands):

                                                    Three Months Ended,
                                                    2004          2003
                                                    ----          ----
          Net sales............................  $100,525       $99,844
          Income from operations...............    14,107        11,913
          Net income...........................     4,556         3,017


                                       7


<PAGE>



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

     The net income amounts reflect adjustments for interest expense from new
borrowings related to the Transactions, the elimination of historical interest
on debt repaid in the Transactions, management fees to be paid to our principal
investors, additional depreciation expense as a result of the write-up of
property, plant and equipment and amortization of other intangible assets, based
on a preliminary purchase price allocation that may be subject to change upon
completion for independent valuations completed on applicable assets and
liabilities, net of their related income tax effects based upon a pro forma
effective income tax rate of 39.5%. The unaudited pro forma information gives
effect only to adjustments described above and does not reflect management's
estimate of any anticipated cost savings or other benefits as a result of the
acquisition.

Note 3 - Basis of Presentation

     The accompanying unaudited consolidated financial statements include the
accounts of Amscan Holdings and its 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, 2004 are not necessarily
indicative of the results to be expected for the year ending December 31, 2004.
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, 2003 as filed with the Securities and Exchange Commission.


Note 4 - Inventories

     Inventories consisted of the following (dollars in thousands):

                                                    March 31,    December 31,
                                                     2004           2003
                                                    -------        -------
        Finished goods..........................    $69,931        $74,258
        Raw materials...........................      8,501          8,842
        Work-in-process.........................      5,276          4,762
                                                    -------        -------
                                                     83,708         87,862
        Less: reserve for slow moving and
        obsolete inventory......................     (3,013)        (2,725)
                                                    -------        -------
                                                    $80,695        $85,137
                                                    =======        =======

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


Note 5 - Income Taxes

     The consolidated income tax expense for the three months ended March 31,
2004 and 2003 was determined based upon estimates of the Company's consolidated
effective income tax rates for the years ending December 31, 2004 and 2003,
respectively. The differences between the consolidated effective income tax
rates 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 6 - Comprehensive Income (Loss)

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

<TABLE>
<CAPTION>

                                                                                                 Three Months Ended
                                                                                                      March 31,
                                                                                                  2004            2003
                                                                                                  ----            ----
<S>                                                                                              <C>             <C>
Net income..............................................................................         $4,939          $3,462
Net change in cumulative translation adjustment.........................................            356            (123)
Change in fair value of available-for-sale securities, net of income taxes
    of $(15) and $(53), respectively....................................................            (23)            (81)
Change in fair value of the interest rate swap contract, net of  income taxes
    of $(55), and $6, respectively......................................................            (85)              9
Change in fair value of the foreign exchange contracts, net of
   income taxes of $(4) and $4, respectively............................................             (7)              7
                                                                                                 ------          ------
                                                                                                 $5,180          $3,274
                                                                                                 ======          ======
</TABLE>

     Accumulated other comprehensive loss consisted of the following (dollars in
thousands):

<TABLE>
<CAPTION>

                                                                                                March 31,          December 31,
                                                                                                  2004                 2003
                                                                                                  ----                 ----
<S>                                                                                                <C>                 <C>
 Cumulative translation adjustment......................................................           $1,042              $686
 Unrealized gain on available-for-sale securities, net of income taxes of $18 and $33
    respectively........................................................................               27                50
 Interest rate swap contract, net of income taxes of $(375) and $(320),
    respectively........................................................................             (575)             (490)
 Foreign exchange contracts, net of income taxes of $(456) and $(452),
   respectively.........................................................................             (699)             (692)
                                                                                                   ------             -----
                                                                                                    $(205)            $(446)
                                                                                                    =====             =====
</TABLE>


Note 7 - Capital Stock

     Under the terms of the stockholders' agreement in effect through the date
of the consummation of the Transactions (see Note 2) ("Stockholders'
Agreement"), the Company was 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 his disability, at a price determined by a market valuation,
and 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.
At March 31, 2004 and December 31, 2003, there were 63.68 shares of fully paid
and vested Common Stock subject to such put provisions. The shares are recorded
as redeemable Common Stock, at their estimated market value, with a
corresponding adjustment to stockholders' deficit. In connection with the
Transactions on April 30, 2004, the Company redeemed all outstanding shares of
its redeemable Common Stock at $182,000 per share (see Note 2). The
Stockholders' Agreement was terminated in connection with the consummation of
the Transactions.


                                       9


<PAGE>



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


     At March 31, 2004 and December 31, 2003, an officer of the Company held
3.00 shares of Common Stock (the "Restricted Stock"), subject to the vesting
provisions of his employment agreement. The 3.00 shares of Restricted Stock
outstanding at March 31, 2004 were to vest in December 2004. In connection with
the Transactions, the 3.00 shares of Restricted Stock vested immediately on
April 30, 2004 (see Note 2). During the three months ended March 31, 2004 and
2003, the Company recorded the amortization of Restricted Stock of $39,000 and
$45,000 respectively, as compensation expense, which is included in general and
administrative expenses in the Company's consolidated statements of income.

     At March 31, 2004 and December 31, 2003, the Company held a note receivable
from a former officer for $666,000 and $655,000, respectively, which bore
interest at 6.65% and due in March 2009. In addition, at December 31, 2003, the
Company held a note receivable from a former employee for $25,000, which bore
interest at Libor plus 2% and matured and was repaid in January 2004. These
notes arose in connection with the issuance of shares of Common Stock and are
reported on the consolidated balance sheets as an increase in stockholders'
deficit. In connection with the Transactions, the note receivable from the
former officer was repaid on April 30, 2004.

     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. On March 30,
2004, the annual dividend was distributed in additional shares of Series A
Redeemable Convertible Preferred Stock. At March 31, 2004, 47.64 shares of
Series A Redeemable Convertible Preferred Stock were issued and outstanding. In
connection with the Transactions on April 30, 2004, the Company redeemed all
outstanding shares of Series A Redeemable Convertible Preferred Stock at a
redemption price per share equal to $182,000 in cash, together with accrued and
unpaid dividends.

Note 8 - Segment Information

Industry Segment

     The Company manages its operations as one industry segment which involves
the design, manufacture, contract for manufacture and distribution of party
goods, including decorative party goods, metallic balloons, stationery, and gift
items.

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.


                                       10


<PAGE>


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

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

<TABLE>
<CAPTION>
                                                                  Domestic         Foreign        Eliminations       Consolidated
                                                                  --------         -------        ------------       ------------
   Three Months Ended March 31, 2004
<S>                                                                <C>             <C>              <C>               <C>
   Sales to unaffiliated customers...........................      $ 87,282        $13,243                            $100,525
   Sales between geographic areas............................         3,864                          $(3,864)                -
                                                                   --------        -------           -------          --------
   Net sales.................................................      $ 91,146        $13,243           $(3,864)         $100,525
                                                                   ========        =======           =======          ========

   Income from operations....................................      $ 13,480      $     829           $   271         $  14,580
                                                                   ========      =========           =======
   Interest expense, net.....................................                                                            6,361
   Other income, net.........................................                                                              (15)
                                                                                                                     ---------
   Income before income taxes and minority interests.........                                                        $   8,234
                                                                                                                     =========

   Long-lived assets, net at March 31, 2004..................      $192,978       $  9,353          $(25,858)        $ 176,473
                                                                   ========       ========          ========         =========


                                                                  Domestic         Foreign        Eliminations      Consolidated
                                                                  --------         -------        ------------      ------------
   Three Months Ended March 31, 2003
   Sales to unaffiliated customers...........................      $ 87,054        $12,790                           $  99,844
   Sales between geographic areas............................         4,499                          $(4,499)                -
                                                                 ----------        -------           -------        ----------
   Net sales.................................................      $ 91,553        $12,790           $(4,499)        $  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 .................      $201,584       $  8,218          $(26,467)         $183,335
                                                                   ========       ========          ========          ========
</TABLE>


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 these proceedings will result,
individually or in the aggregate, in a material adverse effect on its financial
condition or future results of operations.


Note 10 - Related Party Transactions

     During the three months ended March 31, 2004 and 2003, the Company sold
$600,000 and $615,000, respectively, of metallic balloons and other party goods
to American Greetings Corporation, a minority stockholder from February 2002
through the date of the Transactions. Trade accounts receivable from American
Greetings at March 31, 2004 and December 31, 2003 were $1,430,000 and
$1,937,000, 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 domestic distribution operations
which may result in additional restructuring charges in subsequent periods.


                                       11


<PAGE>



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

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):

<TABLE>
<CAPTION>

                                                                             Three Months Ended March 31,
                                                                                 2004          2003
                                                                                 ----          ----
<S>                                                                             <C>            <C>
       Net income:
                As reported..............................................       $4,939         $3,462
                Less: Total stock-based employee compensation
                    expense determined under the fair value based
                    method for all awards, net of income taxes of
                    $95 and $30, respectively............................          145             46
                                                                                ------         ------
            SFAS No. 123 pro forma net income............................       $4,794         $3,416
                                                                                ======         ======
</TABLE>

     In connection with the Transactions, all options vested immediately on
April 30, 2004 (see Note 2).


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 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.


                                       12


<PAGE>



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



     On April 30, 2004, in connection with the consummation of the Transactions,
all borrowings under the Credit Agreement were repaid and the facility was
terminated, $87,200,000 in aggregate principal amount of the Notes were
accepted in the tender offer and a redemption notice was issued for the
remaining $22,800,000 in aggregate principal amount of the Notes (see Note 2).
The aggregate cost to purchase the Notes tendered pursuant to the tender offer
was approximately $93,500,000, or 103.542% of the principal amount of such
Notes plus accrued and unpaid interest. On May 31, 2004, the remainder of the
outstanding Notes will be redeemed pursuant to the redemption notice at a price
of 103.292% of the principal amount of such Notes plus accrued and unpaid
interest.

     Borrowings under the Credit Agreement and Notes were 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 de Mexico, S.A. de C.V.
        o  Anagram International (Japan) Co., Ltd.
        o  Anagram Espana, S.A.
        o  Anagram France S.C.S.

     The following information presents consolidating balance sheets as of March
31, 2004 and December 31, 2003, and the related consolidating statements of
income for the three months ended March 31, 2004 and 2003 and consolidating
statements of cash flows for the three months ended March 31, 2004 and 2003 for
the combined Guarantors and the combined Non-guarantors and elimination entries
necessary to consolidate the entities comprising the combined companies.


                                       13


<PAGE>


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

                           CONSOLIDATING BALANCE SHEET

                                 March 31, 2004
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                              Amscan
                                                           Holdings and       Combined
                                                             Combined           Non-
                                                            Guarantors       Guarantors      Eliminations    Consolidated
                                                            ----------       ----------      ------------    ------------
<S>                                                         <C>             <C>                 <C>          <C>
ASSETS
Current assets:
   Cash and cash equivalents...........................     $   7,270       $      901                        $   8,171
   Accounts receivable, net of allowances..............        75,235           13,185                           88,420
   Inventories, net of allowances......................        71,718            9,247          $   (270)        80,695
   Prepaid expenses and other current assets...........        13,110            2,199              (120)        15,189
                                                            ---------       ----------          --------      ---------
     Total current assets..............................       167,333           25,532              (390)       192,475
Property, plant and equipment, net.....................        93,466            1,970                           95,436
Goodwill, net..........................................        66,453            5,625                           72,078
Other assets, net......................................        33,059            1,758           (25,858)         8,959
                                                            ---------       ----------          --------      ---------
     Total assets......................................      $360,311       $   34,885          $(26,248)     $ 368,948
                                                            =========       ==========          ========      =========

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED AND COMMON STOCK
    AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
   Accounts payable....................................     $  29,081        $   1,920                        $  31,001
   Accrued expenses ...................................        17,594            6,701                           24,295
   Income taxes payable ...............................         5,407                           $  (143)          5,264
   Current portion of long-term obligations............         2,810              108                            2,918
                                                            ---------        ---------          --------      ---------
     Total current liabilities.........................        54,892            8,729              (143)        63,478
Long-term obligations, excluding current portion.......       271,474              164                          271,638
Deferred income tax liabilities........................        18,210                                            18,210
Other. ................................................         2,331            13,501          (13,367)         2,465
                                                            ---------        ----------         --------      ---------
     Total liabilities.................................       346,907           22,394           (13,510)       355,791

Redeemable convertible preferred stock.................         7,147                                             7,147
Redeemable Common Stock................................         9,498                                             9,498

Commitments and Contingencies

Stockholders' (deficit) equity:
     Common Stock......................................                            339              (339)          -
     Additional paid-in capital........................        26,580              658              (658)        26,580
     Unamortized restricted Common Stock
        award..........................................          (116)                                             (116)
     Note receivable from stockholder..................          (666)                                             (666)
     (Deficit) retained earnings.......................       (28,834)          11,283           (11,530)       (29,081)
     Accumulated other comprehensive loss..............          (205)             211              (211)          (205)
                                                            ---------        ---------          --------      ----------
         Total stockholders' (deficit) equity..........        (3,241)          12,491           (12,738)        (3,488)
                                                            ---------        ---------          --------      ---------
         Total liabilities, redeemable convertible
             preferred and Common Stock and
             stockholders' (deficit) equity............      $360,311          $34,885          $(26,248)     $ 368,948
                                                             ========          =======          ========      =========
</TABLE>


                                       14


<PAGE>


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

                           CONSOLIDATING BALANCE SHEET
                                December 31, 2003
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                               Amscan
                                                             Holdings and     Combined
                                                              Combined          Non-
                                                             Guarantors       Guarantors      Eliminations     Consolidated
                                                             ----------       ----------      ------------     ------------
<S>                                                            <C>            <C>             <C>             <C>
ASSETS
Current assets:
     Cash and cash equivalents.........................        $ 30,740       $   722                         $ 31,462
     Accounts receivable, net of allowances............          63,553        12,129                           75,682
     Inventories, net of allowances....................          75,991         9,357         $   (211)         85,137
     Prepaid expenses and other current assets.........           8,611         1,248             (129)          9,730
                                                               --------      --------          -------        --------
     Total current assets..............................         178,895        23,456            (340)         202,011
Property, plant and equipment, net.....................          94,789         1,705                           96,494
Goodwill, net..........................................          66,453         5,533                           71,986
Other assets, net......................................          33,019         1,491          (22,899)         11,611
                                                               --------      --------          -------        --------
     Total assets......................................        $373,156       $32,185         $(23,239)       $382,102
                                                               ========       =======         ========        ========

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED AND COMMON STOCK
    AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
     Accounts payable..................................       $  33,221       $  1,695                        $ 34,916
     Accrued expenses .................................          14,156          5,965                          20,121
     Income taxes payable .............................           3,307                        $  (129)          3,178
     Current portion of long-term obligations..........          23,110            127                          23,237
                                                              ---------      ---------         -------        --------
     Total current liabilities  .......................          73,794          7,787            (129)         81,452
Long-term obligations, excluding current portion.......         272,104            168                         272,272
Deferred income tax liabilities........................          18,040                                         18,040
Other. ................................................           1,083         13,133         (11,802)          2,414
                                                              ---------      ---------         -------         -------
     Total liabilities.................................         365,021         21,088         (11,931)        374,178

Redeemable convertible preferred stock.................           7,045                                          7,045
Redeemable Common Stock................................           9,498                                          9,498

Commitments and Contingencies

Stockholders' (deficit) equity:
     Common Stock......................................                            339            (339)           -
     Additional paid-in capital..........................        26,682            658            (658)         26,682
     Unamortized restricted Common Stock
        award..........................................            (155)                                          (155)
     Notes receivable from stockholders................            (680)                                          (680)
     (Deficit) retained earnings.......................         (33,809)        10,292         (10,503)        (34,020)
     Accumulated other comprehensive loss..............            (446)          (192)            192            (446)
                                                              ---------      ---------         -------         -------
         Total stockholders' (deficit) equity..........          (8,408)        11,097         (11,308)         (8,619)
                                                              ---------      ---------         -------         -------
         Total liabilities, redeemable convertible
         preferred and Common Stock and
         stockholders' (deficit) equity................        $373,156        $32,185        $(23,239)        $382,102
                                                               ========        =======        ==========       ========
</TABLE>


                                       15


<PAGE>



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

                        CONSOLIDATING STATEMENT OF INCOME
                    For the Three Months Ended March 31, 2004
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                               Amscan
                                                            Holdings and      Combined
                                                              Combined          Non-
                                                             Guarantors      Guarantors     Eliminations     Consolidated
                                                             ----------      ----------     ------------     ------------
<S>                                                             <C>            <C>               <C>           <C>
Net sales..............................................         $91,146        $13,243           $(3,864)      $100,525
Cost of sales..........................................          61,084          8,802            (3,805)        66,081
                                                               --------      ---------          --------       --------
         Gross profit..................................          30,062          4,441               (59)        34,444
Operating expenses:
    Selling expenses...................................           7,528          1,774                            9,302
    General and administrative expenses................           6,621          1,838              (330)         8,129
    Art and development costs..........................           2,433                                           2,433
                                                               --------      ---------          --------       --------
         Total operating expenses......................          16,582          3,612              (330)        19,864

         Income from operations........................          13,480            829               271         14,580
Interest expense, net .................................           6,313             48                            6,361
Other (income) expense, net............................             (841)          (42)              868            (15)
                                                               --------      ---------          --------       --------
         Income before income taxes and
           minority interests..........................           8,008            823              (597)         8,234
Income tax expense.....................................           3,033            242               (23)         3,252
Minority interests.....................................                             43                               43
                                                               --------      ---------          --------       --------
         Net income....................................           4,975            538              (574)         4,939
         Dividend on redeemable convertible
            preferred stock............................             102                                             102
                                                               --------      ---------         ---------       --------
         Net income applicable to common shares........        $  4,873      $      538       $     (574)      $  4,837
                                                               ========      ==========       ==========-      ========
</TABLE>



                                       16


<PAGE>


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

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

<TABLE>
<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 ....................................           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>


                                       17


<PAGE>


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

                      CONSOLIDATING STATEMENT OF CASH FLOWS
                    For the Three Months Ended March 31, 2004
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                           Amscan Holdings    Combined
                                                            and Combined        Non-
                                                             Guarantors      Guarantors     Eliminations     Consolidated
                                                             ----------      ----------     ------------     ------------
<S>                                                            <C>              <C>            <C>              <C>
Cash flows (used in) provided by operating activities:
   Net income...............................................   $  4,975         $  538         $ (574)          $ 4,939
   Adjustments to reconcile net income to net
     cash (used in) provided by operating activities:
      Depreciation and amortization expense.................      3,810            158                            3,968
      Amortization of deferred financing costs..............        537                                             537
      Amortization of restricted Common Stock award.........         39                                              39
      Provision for doubtful accounts.......................        448             93                              541
      Deferred income tax expense...........................        337                                             337
      Gain on disposal of property and equipment............                       (36)                             (36)
      Changes in operating assets and liabilities:
            Increase in accounts receivable.................    (12,130)        (1,149)                         (13,279)
            Decrease in inventories.........................      4,273            110             59             4,442
            Increase in prepaid expenses and other
               current assets...............................     (5,426)          (960)                          (6,386)
            Increase (decrease) in accounts payable, accrued
               expenses and income taxes payable............      1,313            963            (23)            2,253
           Other, net.......................................      1,820            552            538             2,910
                                                                -------         ------         ------           -------
            Net cash (used in) provided by operating activities      (4)           269            -                 265

Cash flows used in investing activities:
   Capital expenditures.....................................     (2,403)          (384)                          (2,787)
   Proceeds from disposal of property and equipment.........                        53                               53
                                                                --------        ------         ------           -------
            Net cash used in investing activities...........     (2,403)          (331)          -               (2,734)

Cash flows used in financing activities:
     Repayment of loans, notes payable and long-term
         obligations........................................    (21,034)           (60)                         (21,094)
   Repayment of note receivable from stockholder....                 25                                                25
                                                                --------        ------         ------           -------
            Net cash used in financing activities...........    (21,009)           (60)          -              (21,069)
Effect of exchange rate changes on cash and cash equivalents        (54)           301                              247
                                                                --------        ------         ------           -------
            Net (decrease) increase in cash and cash
                      equivalents...........................    (23,470)           179                          (23,291)
Cash and cash equivalents at beginning of period............     30,740            722                           31,462
                                                                --------        ------         ------           -------
Cash and cash equivalents at end of period..................   $  7,270        $   901       $    -             $ 8,171
                                                                =======         ======         ======            ======
</TABLE>


                                       18


<PAGE>


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

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

<TABLE>
<CAPTION>

                                                           Amscan Holdings    Combined
                                                            and Combined        Non-
                                                             Guarantors      Guarantors     Eliminations     Consolidated
                                                             ----------      ----------     ------------     ------------
<S>                                                              <C>           <C>               <C>             <C>
Cash flows (used in) provided by 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 expense.................      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:
            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 used in 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 provided by (used in) financing activities:
   Repayment of loans, notes payable and long-term
         obligations................................               (895)           (43)                            (938)
     Proceeds from short-term obligations...................      9,500                                           9,500
                                                                --------        ------         ------           -------
            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>


                                       19


<PAGE>



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

The Transactions

     On March 26, 2004, Amscan signed an acquisition agreement providing for a
merger of Amscan with AAH Acquisition Corporation, or AAH Acquisition, a
wholly-owned subsidiary of AAH Holdings Corporation, or AAH Holdings, an entity
jointly controlled by funds affiliated with Berkshire Partners LLC and Weston
Presidio. On April 30, 2004, the merger with AAH Acquisition was consummated,
with Amscan continuing as the surviving entity and as a wholly owned subsidiary
of AAH Holdings. Under the terms of the acquisition agreement, the equity
interests of GS Capital Partners II, L.P. and certain other private investment
funds managed by Goldman, Sachs & Co., which are collectively referred to as
GSCP, and all other stockholders, other than certain management investors, were
cancelled in exchange for the right to receive cash. The acquisition was
financed with initial borrowings consisting of a $205.0 million Term Loan under
a new senior secured credit facility and a $50.0 million revolving loan
facility, the proceeds from the issuance of $175.0 million of 8.75% senior
subordinated notes due 2014, the equity contribution by our principal investors
(including employee stockholders) of $140.5 million and approximately $2.9
million of cash on hand. Certain employees of the Company purchased 86.2278
shares of AAH Holdings Common Stock. The acquisition will be accounted for under
the purchase method of accounting, which requires that the Company revalue or
adjust its assets and liabilities to their fair values.

     Concurrent with the acquisition, the following financing transactions were
also consummated: the repayment of $147.7 million under our then existing senior
secured credit facility and the termination of all commitments under that
facility, the consummation of our tender offer and consent solicitation for
$87.2 million of the $110.0 million aggregate principal amount outstanding of
our 9.875% senior subordinated notes due 2007 and the redemption of the
remaining senior subordinated notes and the repayment of a $8.5 million mortgage
obligation with a financial institution (the acquisition together with the
foregoing financing transactions are referred to herein collectively as the
"Transactions").

     Following the purchase of the 9.875% senior subordinated notes due 2007
accepted in the tender offer, approximately $22.8 million in aggregate principal
amount of the notes remained outstanding as of April 30, 2004. The aggregate
cost to purchase the Notes tendered pursuant to the tender offer was
approximately $93.5 million, or 103.542% of the principal amount of such notes
plus accrued and unpaid interest. On May 31, 2004, the remainder of the
outstanding notes will be redeemed pursuant to the redemption notice at a price
of 103.292% of the principal amount of such notes plus accrued and unpaid
interest. The Company will finance the redemption with borrowings under its new
revolving credit facility.


                                       20


<PAGE>


Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003

Percentage of Net Sales
                                                         Three Months Ended
                                                              March 31,
                                                        2004         2003
                                                        ----         ----
      Net sales...................................      100.0%      100.0%
      Cost of sales...............................       65.7        67.1
                                                       ------      ------
             Gross profit.........................       34.3        32.9
      Operating expenses:
          Selling expenses........................        9.3         9.2
          General and administrative expenses.....        8.1         8.5
          Art and development costs...............        2.4         2.5
          Restructuring charges...................                    0.3
                                                       ------      ------
             Total operating expenses.............       19.8        20.5
                                                       ------      ------
             Income from operations...............       14.5        12.4
      Interest expense, net.......................        6.3         6.6
                                                       ------      ------
                                                          8.2         5.8
      Income tax expense..........................        3.3         2.3
      Minority interests..........................
                                                       ------      ------
             Net income...........................        4.9%        3.5%
                                                       ======      ======

     Net Sales. Net sales of $100.5 million for the quarter ended March 31, 2004
were $0.7 million or 0.7% higher than net sales for the quarter  ended March 31,
2003  principally due to higher  international  and contract  manufacturing  net
sales,  partially  offset by slightly lower net sales to party  superstores,  as
certain  national chains  rationalized  inventories  during the first quarter of
2004.

     Gross  Profit.  Gross profit margin for the first quarter of 2004 was 34.3%
or 140 basis points higher than for the first quarter of 2003.  The  improvement
in  gross  profit  margin   principally   reflects   additional   manufacturing,
distribution  and other synergies  arising from the completion of integration of
M&D Industries,  Inc.  ("M&D"),  our 2002 balloon  business  acquisition and the
rationalization  of our  metallic  balloon  operations  and the  elimination  of
redundant  distribution costs incurred in the first quarter of 2003 arising from
the transition from four to three east coast distribution facilities.

     Operating Expenses.  Selling expenses of $9.3 million for the quarter ended
March 31, 2004 were $0.2 million higher than for first quarter of 2003, and as a
percent of net sales, selling expenses were 9.3%, or 0.1% higher than in 2003.

     General and administrative expenses of $8.1 million for the quarter ended
March 31, 2004 were $0.4 million lower than for the first quarter of 2003. As a
percentage of net sales, general and administrative expenses were 8.1% for the
first quarter of 2004, or 0.4% lower than in 2003. The net decrease in general
and administrative expenses principally reflects lower consulting fees and
depreciation and amortization as well as the elimination of expenses as a result
of the closure in 2003 of certain international facilities.

     Art and development costs of $2.4 million for the quarter ended March 31,
2004 were $0.1 million lower as compared to 2003. As a percentage of net sales,
art and development costs were 2.4% for the first quarter of 2004 or 0.1% lower
than the first quarter of 2003.

     During the three  months  ended  March 31,  2003,  the  Company  incurred a
restructuring  charge of $0.3 million  resulting from the  consolidation  of its
domestic distribution operations.


                                       21


<PAGE>



     Interest Expense. Interest expense, net, of $6.4 million for the three
months ended March 31, 2004 was $0.3 million lower than for the three months
ended March 31, 2003, principally due to the impact of lower average borrowings.

     Income Taxes. Income taxes for the first quarter of 2004 and 2003 were
based upon estimated consolidated effective income tax rates of 39.5% for the
years ending December 31, 2004 and 2003.


Liquidity and Capital Resources

     Our new senior secured credit facility contains financial covenants and
maintenance tests, including a minimum interest coverage test and a maximum
total leverage test, and restrictive covenants, including restrictions on our
ability to make capital expenditures or pay dividends. Our new senior secured
credit facility is secured by substantially all of our assets and the assets of
some of our subsidiaries, and by a pledge of all of our domestic subsidiaries'
capital stock and a portion of our wholly owned foreign subsidiaries' capital
stock.

     The Company's new term loan provides for amortization (in quarterly
installments) of 1.0% per annum through June 30, 2010, and will then amortize in
equal quarterly payments through June 30, 2012. The new term loan bears
interest, at the option of the Company, at the index rate plus 1.75% per annum
or at LIBOR plus 2.75% per annum. Revolving loans under the new senior credit
facility will bear interest, at the option of the Company, at the index rate
plus, based on performance, a margin ranging from 0.75% to 1.50% per annum, or
at LIBOR plus, based on performance, a margin ranging from 1.75% to 2.50% per
annum.

     The Company's prior senior secured facility consisted of a $170.0 million
term loan (the" Term Loan") and up to $30.0 million aggregate principal amount
of revolving loans (the "Revolver"). The Term Loan bore 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, 2004, the Term
Loan, net of unamortized discount, was $146.6 million and the floating interest
rate on the Term Loan was 6.50%.

     The Revolver would have expired on June 15, 2007, and bore 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, 2004, the Company had no borrowings under the Revolver. Standby
letters of credit totaling $7.1 million were outstanding and the Company had
borrowing capacity of approximately $22.9 million under the terms of the
Revolver at March 31, 2004. At April 30, 2004, the outstanding standby letters
of credit were replaced with new standby letters of credit issued under the new
revolving loan facility.

     At March 31, 2004 we have a 400,000 Canadian dollar denominated revolving
credit facility which bears interest at the Canadian prime rate plus 0.6% and
expires on June 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, 2004, and a $1.0 million revolving credit facility which
bears interest at LIBOR plus 1.0% and expires on December 31, 2004. We expect to
renew these revolving credit facilities upon expiration. No borrowings were
outstanding under these revolving credit facilities at March 31, 2004.

     Long-term borrowings at March 31, 2004 include a first lien mortgage note
with a financial institution and second lien mortgage note with the New York
State Job Development Authority in the original principal amounts of $10.0
million each. The first lien mortgage note bore interest at LIBOR plus 2.75%.
However, we utilized an interest rate swap agreement to effectively fix the loan
rate at 8.40% for the term of the loan. On April 30, 2004, in connection with
the Transactions, the first lien mortgage note was paid in full and, a result,
the related interest rate swap agreement was terminated at a cost of $0.7
million. The second lien mortgage note bears interest at the rate of 3.31%, and
is subject to review and adjustment semi-annually based on the New York State
Job Development Authority's confidential internal protocols. Both mortgage 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.


                                       22


<PAGE>



     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. On March 30,
2004, the annual dividend was distributed in additional shares of Series A
Redeemable Convertible Preferred Stock. At March 31, 2004, 47.64 shares of
Series A Redeemable Convertible Preferred Stock were issued and outstanding. In
connection with the Transactions on April 30, 2004, the Company redeemed all
outstanding shares of Series A Redeemable Convertible Preferred Stock at a
redemption price per share equal to $182,000 in cash, together with accrued and
unpaid dividends.

     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 insurance costs. Rent expense for the three months ended
March 31, 2004 and 2003, totaled $2.9 million and $3.3 million, respectively.
The minimum lease payments currently required under non-cancelable operating
leases for the year ending December 31, 2004 approximate $12.5 million.

     In connection with the Transactions, we executed a management agreement
with Berkshire Partners LLC and Weston Presidio. Pursuant to this management
agreement, Berkshire Partners LLC and Weston Presidio will be paid an annual
management fee of $833,333 and $416,667, respectively. Although the indenture
governing the 8.75% senior subordinated notes will permit the payments under the
management agreement, such payments will be restricted during an event of
default under the notes and will be subordinated in right of payment to all
obligations due with respect to the notes in the event of a bankruptcy or
similar proceeding of Amscan.

     We expect that cash generated from operating activities and availability
under our new senior secured credit facility will be our principal sources of
liquidity. Based on our current level of operations, we believe our cash flow
from operations and available cash and available borrowings under our new senior
secured credit facility will be adequate to meet out liquidity needs for at
least the next twelve months. We cannot assure you, however, that our business
will generate sufficient cash flow from operations or that future borrowings
will be available to us under our new senior secured credit facility in an
amount sufficient to enable us to repay our indebtedness, including the notes,
or to fund our other liquidity needs.

Cash Flow Data - Three Months Ended March 31, 2004 Compared to Three Months
Ended March 31, 2003

     Net cash provided by (used in) operating activities during the three months
ended March 31, 2004 and 2003, totaled $0.3 million and $(6.0) million,
respectively. Net cash flow provided by operating activities before changes in
operating assets and liabilities for the three months ended March 31, 2004 and
2003, was $10.3 million and $8.2 million, respectively. Changes in operating
assets and liabilities for the three months ended March 31, 2004 and 2003,
resulted in the use of cash of $10.0 million and $14.2 million, respectively.
The $4.2 million reduction in the use of cash in 2004 principally reflects the
Company's efforts to reduce its investment in working capital.

     During the three months ended March 31, 2004 and 2003, net cash used in
investing activities of $2.7 million and $3.4 million, respectively, consisted
principally of additional investments in distribution and manufacturing
equipment.

     During the three months ended March 31, 2004, net cash used in financing
activities of $21.1 million consisted of scheduled payments on the Term Loan and
other long-term obligations as well as a required prepayment of the Term Loan of
$20.2 million based on our excess cash flows for the year ended December 31,
2003, partially offset by proceeds from the repayment of a note receivable by an
employee. 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 of $9.5 million, partially offset by the scheduled payment of the
Term Loan and other long-term obligations.


                                       23


<PAGE>



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.

Cautionary Note Regarding Forward-Looking Statements

     This quarterly report on Form 10-Q contains "forward-looking statements."
Forward-looking statements give our current expectations or forecasts of future
events. Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "believe," "project" or "continue" or the negative
thereof and similar words. From time to time, we also may provide oral or
written forward-looking statements in other materials we release to the public.
Any or all of our forward-looking statements in this quarterly report and in any
public statements we make may turn out to be wrong. They can be affected by
inaccurate assumptions we might make or by known or unknown risks or
uncertainties. Consequently, no forward-looking statement can be guaranteed.
Actual results may vary materially. Investors are cautioned not to place undue
reliance on any forward-looking statements. Important factors that could cause
actual results to differ materially from the forward-looking statements,
include, but are not limited to: our inability to satisfy our debt obligations,
the reduction of volume of purchases by one or more of our large customers, our
inability to collect receivables from our customers, the termination of our
licenses, our inability to identify and capitalize on changing design trends and
customer preferences, changes in the competitive environment, increases in the
costs of raw materials and the possible risks and uncertainties that have been
noted in reports filed by us with the Securities and Exchange Commission,
including our annual report on Form 10-K for the year ended December 31, 2003.

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 have utilized 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,
2004 and 2003, our interest expense, after considering the effects of our
interest rate swap agreements, would have increased, and income before income
taxes and minority interest would have decreased, by $0.4 million and $0.6
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 U.S.
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 for the three
months ended March 31, 2004 and 2003. 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.


                                       24


<PAGE>



Item 4. Controls and Procedures

     Based on an evaluation of the effectiveness of the Company's disclosure
controls and procedures performed by the Company's management, with the
participation of the Company's Chief Executive Officer and its Chief Financial
Officer, as of the end of the period covered by this report, the Company's Chief
Executive Officer and its Chief Financial Officer concluded that the Company's
disclosure controls and procedures are 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 Securities and Exchange
Commission's rules and forms. 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 and principal financial
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.

     There were no changes in the Company's internal control over financial
reporting identified in connection with the evaluation described in the
preceding paragraph that occurred during the Company's fiscal quarter ended
March 31, 2004 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.


                                     Part II

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities

     a)   Not applicable.

     b)   Not applicable.

     c)   On April 30, 2004, the Company issued 1,000 shares of its Common
          Stock, par value $.10, upon consummation of the merger included in the
          Transactions. These shares were not publicly offered and were issued
          to AAH Acquisition Corporation for an aggregate purchase price of $551
          million. The Company's offering of these shares was exempt from
          registration under the Securities Act of 1933 pursuant to Rule 506 of
          Regulation D thereunder.

     d)   Not applicable.

     e)   Not applicable.

Item 6. Exhibits and Reports on Form 8-K

     a) Exhibits

    31(1) Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
          and Rule 15d-14(a) of the Securities Exchange Act, as amended.

    31(2) Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
          and Rule 15d-14(a) of the Securities Exchange Act, as amended.

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


                                       25


<PAGE>



     b) Reports on Form 8-K

     On March 29, 2004, the Company filed a Current Report on Form 8-K dated
March 29, 2004 (File No. 000-21827) under Item 5 and reporting that the Company
and AAH Holdings Corporation had entered into a merger agreement.


                                       26


<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 principal financial
Date: May 17, 2004                             and accounting officer)
      ------------




                                       27


<PAGE>

                                 EXHIBIT INDEX


  Number                         Description
  ------                         -----------

  31(1)   Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
          and Rule 15d-14(a) of the Securities Exchange Act, as amended.

  31(2)   Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
          and Rule 15d-14(a) of the Securities Exchange Act, as amended.

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