-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UBb5TCji6dgYW9fHcxp+B2v7ipYYFW4LQvXNSC6d9PMXn8zxSYo/sjjx8IzBVuiC a07m/9hTGAil28R/q4d5kg== 0000913355-97-000055.txt : 19970520 0000913355-97-000055.hdr.sgml : 19970520 ACCESSION NUMBER: 0000913355-97-000055 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMSCAN HOLDINGS INC CENTRAL INDEX KEY: 0001024729 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PAPER AND PAPER PRODUCTS [5110] IRS NUMBER: 133911462 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21827 FILM NUMBER: 97607162 BUSINESS ADDRESS: STREET 1: 80 GRASSLANDS ROAD CITY: ELMSFORD STATE: NY ZIP: 10523 BUSINESS PHONE: 9143452020 MAIL ADDRESS: STREET 1: 80 GRASSLANDS ROAD CITY: ELMSFORD STATE: NY ZIP: 10523 10-Q 1 FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997 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, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission file number 000-21827 ------------- AMSCAN HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 13-3911462 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 80 Grasslands Road Elmsford, New York 10523 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (914) 345-2020 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Number of shares of the registrant's Common Stock, par value $0.10 per share, outstanding as of May 12, 1997: 21,120,476 AMSCAN HOLDINGS, INC. FORM 10-Q MARCH 31, 1997 TABLE OF CONTENTS PART I FINANCIAL INFORMATION PAGE ITEM 1 FINANCIAL STATEMENTS (UNAUDITED) CONSOLIDATED BALANCE SHEETS AT MARCH 31, 1997 AND DECEMBER 31, 1996 3 CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 4 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 1997 5 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10 PART II OTHER INFORMATION ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 14 SIGNATURES................................................................15 AMSCAN HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, DECEMBER 31, 1997 1996 ---------- ------------ (UNAUDITED) (NOTE) ASSETS (IN THOUSANDS) Cash and cash equivalents $ 2,118 $ 1,589 Accounts receivable, net of allowances 50,814 37,378 Inventories 39,951 45,693 Deposits and other current assets 8,393 11,360 ------- ------ Total current assets 101,276 96,020 Property, plant and equipment, net 35,534 34,663 Intangible assets, net 7,380 7,443 Other assets 2,577 2,148 ------- ------- Total assets $146,767 $140,274 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Loans and notes payable $ 25,483 $ 29,328 Subordinated and other indebtedness due to stockholders 1,236 1,393 Accounts payable 5,287 7,128 Accrued expenses 8,352 9,403 Income taxes payable 4,279 822 Current portion of long-term obligations 2,567 2,541 ------- ------- Total current liabilities 47,204 50,615 Long-term obligations, excluding current portion 14,958 15,085 Deferred tax liabilities 5,586 5,662 Other 1,038 963 ------- ------- Total liabilities 68,786 72,325 Stockholders' equity: Preferred Stock ($0.10 par value; 5,000,000 shares authorized; none issued and outstanding) - - Common Stock ($0.10 par value; 50,000,000 shares authorized; 21,120,476 and 20,698,076 shares issued and outstanding, respectively) 2,112 2,070 Additional paid-in capital 66,000 61,503 Retained earnings 10,050 4,748 Foreign currency translation adjustment (181) (372) ------- ------- Total stockholders' equity 77,981 67,949 ------- ------- Total liabilities and stockholders' equity $146,767 $140,274 ======= ======= Note: The balance sheet at December 31, 1996 has been derived from the audited consolidated financial statements at that date. See accompanying notes to consolidated financial statements. 3 AMSCAN HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) THREE MONTHS ENDED MARCH 31, ---------------------------- 1997 1996 -------- -------- (In thousands, except per share amounts) Sales, net $ 53,176 $ 47,258 Cost of sales 34,410 30,403 ------- ------ Gross profit 18,766 16,855 Operating expenses: Selling 3,099 2,973 General and administrative 4,364 3,994 Art and development 1,274 1,202 Special bonuses - 1,100 ------- ------ Total operating expenses 8,737 9,269 ------- ------ Income from operations 10,029 7,586 Interest expense, net 984 1,480 Other income, net (27) (172) ------- ------ Income before income taxes and minority interests 9,072 6,278 Income taxes 3,728 219 Minority interests 42 266 ------- ------ Net income $ 5,302 $ 5,793 ======= ====== Pro forma data (Note 6): Income before income taxes $ 6,012 Pro forma income tax expense 2,484 ------ Pro forma net income $ 3,528 ====== Net income per share $ 0.25 ======= Weighted average common shares outstanding 21,082,929 ========== See accompanying notes to consolidated financial statements. 4 AMSCAN HOLDINGS, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
FOREIGN ADDITIONAL CURRENCY COMMON PAID-IN RETAINED TRANSLATION STOCK CAPITAL EARNINGS ADJUSTMENT TOTAL ------ ---------- -------- ----------- ----- (IN THOUSANDS) Balance as of December 31, 1996 $2,070 $61,503 $ 4,748 $(372) $67,949 Net income - - 5,302 - 5,302 Net proceeds from sale of Common Stock (Note 3) 42 4,497 - - 4,539 Net change in translation adjustment - - - 191 191 ------ ------- ------- ------ ------- Balance as of March 31, 1997 $2,112 $66,000 $10,050 $(181) $77,981 ======= ======= ======= ====== =======
See accompanying notes to consolidated financial statements. 5 AMCAN HOLDINGS, INC. CONSOLIDATED CASH FLOW STATEMENTS (UNAUDITED) THREE MONTHS ENDED MARCH 31, ---------------------------- 1997 1996 ------ ------ (in thousands) Cash flows from operating activities: Net income $ 5,302 $ 5,793 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,484 1,248 Provision for doubtful accounts 327 85 Changes in operating assets and liabilities: Increase in accounts receivable (13,767) (11,527) Decrease (increase) in inventories 5,742 (2,237) Decrease (increase) in deposits and other current assets 2,967 (3,343) Increase in accounts payable, accrued expenses and income taxes payable 565 2,880 Other, net (448) (1,179) --------- --------- Net cash provided by (used in) operating activities 2,172 (8,280) Cash flows from investing activities: Capital expenditures (2,283) (988) --------- --------- Net cash used in investing activities (2,283) (988) Cash flows from financing activities: Net proceeds from sale of Common Stock 4,539 - Proceeds from loans, notes payable and long-term obligations 825 10,052 Repayment of loans, notes payable and long-term obligations (4,830) (669) Proceeds from subordinated and other indebtedness due to stockholders - 25 Repayment of subordinated and other indebtedness due to stockholders (157) (802) Subchapter S and other distributions - (151) --------- --------- Net cash provided by financing activities 377 8,455 Effect of exchange rate changes on cash and cash equivalents 263 84 --------- --------- Net increase (decrease) in cash and cash equivalents 529 (729) Cash and cash equivalents at beginning of period 1,589 2,492 --------- --------- Cash and cash equivalents at end of period $2,118 $1,763 ========= ========= SUPPLEMENTAL DISCLOSURE: Interest paid $1,019 $1,746 Taxes paid $ 532 $ 185 Supplemental information on non-cash activities (dollars in thousands): Capital lease obligations of $59 were incurred during the three months ended March 31, 1997. There were no capital lease obligations incurred for the three months ended March 31, 1996. See accompanying notes to consolidated financial statements. 6 AMSCAN HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS Amscan Holdings, Inc. ("Amscan Holdings") was incorporated on October 3, 1996 for the purpose of becoming the holding company for Amscan Inc. and certain affiliated entities in connection with an initial public offering of Common Stock ("IPO") involving the sale of 4,000,000 shares of its Common Stock at $12.00 per share. The IPO was completed on December 18, 1996 pursuant to which the principal stockholder (the "Principal Stockholder") and certain affiliates of the Principal Stockholder exchanged shares in Amscan Inc. and certain affiliates for 15,024,616 and 138,461 shares, respectively, in Amscan Holdings (the "Organization") and in the case of the Principal Stockholder, $133,000 in cash. Prior to the IPO, certain subsidiaries of Amscan Holdings were operated as Subchapter S corporations for federal and, where available, for state income tax purposes. In connection with the IPO, such subsidiaries declared a dividend representing distributions of accumulated Subchapter S corporation profits and a return of capital. These amounts were reflected as subordinated debt and repaid from the net proceeds of the IPO. Amscan Holdings and its subsidiaries (collectively the "Company") design, manufacture, contract for manufacture and distribute party and novelty goods principally in the United States, Canada and Europe. NOTE 2: BASIS OF PRESENTATION The consolidated financial statements include the accounts of Amscan Holdings and its majority-owned subsidiaries (or with respect to less than majority- owned subsidiaries, on the equity basis). In connection with the IPO, there was a transfer of ownership between the former stockholders of Amscan Inc. and certain of its affiliates and Amscan Holdings whereby Amscan Holdings became the holding company for the business conducted by Amscan Inc. and certain of its affiliates. Such transfer of ownership was accounted for in a manner similar to a pooling of interests and resulted in Amscan Inc., Am-Source, Inc., JCS Realty Corp. and SSY Realty Corp. being taxed as Subchapter C corporations under federal and certain state income tax requirements. For the period prior to December 18, 1996, financial statements are presented on a combined basis. Certain reclassifications have been made to conform to the current year's presentation. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. 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 financial statements and footnotes thereto included in the Amscan Holdings, Inc. annual report on Form 10-K for the year ended December 31, 1996. 7 AMSCAN HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (UNAUDITED) NOTE 3: COMMON STOCK On January 8, 1997, an additional 422,400 shares of the Company's Common Stock were sold at $12.00 per share to cover the over-allotment option as provided for in the underwriting agreement between the Company and the underwriters associated with the IPO. The proceeds, net of underwriters' discount, fees and expenses, of $4,538,984 were used to repay borrowings outstanding to banks. NOTE 4: INVENTORIES Inventories consisted of the following: MARCH 31, DECEMBER 31, 1997 1996 --------- ------------ (IN THOUSANDS) Finished goods $37,646 $42,127 Raw materials 2,378 3,863 Work-in-process 1,448 1,388 ------- ------- 41,472 47,378 Less: reserve for slow moving and obsolete inventory (1,521) (1,685) ------- ------- $39,951 $45,693 ======= ======= Substantially all inventories are valued at the lower of cost, determined on a first in - first out basis, or market. NOTE 5: NET INCOME PER COMMON SHARE Net income per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. NOTE 6: INCOME TAXES The consolidated income tax provision for the three months ended March 31, 1997 was determined based upon an estimate of the Company's consolidated effective income tax rates for the year ending December 31, 1997. The differences between the consolidated effective income tax rate and the U.S. Federal statutory rate are primarily attributable to state income taxes and the effects of foreign operations. The amounts shown as income taxes for the three months ended March 31, 1996 consisted principally of foreign taxes. 8 AMSCAN HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (UNAUDITED) Pro forma net income for the three months ended March 31, 1996 gives effect to pro forma income tax provisions at an estimated effective tax rate (40.5%) assuming Amscan Inc., Am- Source, Inc., JCS Realty Corp., and SSY Realty Corp. had not elected Subchapter S corporation status for those periods. 9 ITEM 2 . MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS PERCENTAGE OF NET SALES THREE MONTHS ENDED MARCH 31, ----------------------------- 1997 1996 ------ ------ Net sales 100.0% 100.0% Cost of sales 64.7 64.3 ------ ------ Gross profit 35.3 35.7 Operating expenses: Selling 5.8 6.3 General and administrative 8.2 8.5 Art and development 2.4 2.5 Special bonuses - 2.3 ------ ------ Total operating expenses 16.4 19.6 ------ ------ Income from operations 18.9 16.1 Interest expense, net 1.9 3.1 Other income, net (0.1) (0.4) ------ ------ Income before income taxes and minority interests 17.1 13.4 Income taxes 7.0 0.5 Minority interests 0.1 0.6 ------ ------ Net income 10.0% 12.3% ====== ====== THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996 NET SALES Net sales for the three months ended March 31, 1997 were $53.2 million, an increase of 12.5% over the three months ended March 31, 1996 for which net sales were $47.3 million. Increased sales to national accounts, principally party superstores, accounted for the majority of the increase. Also, contributing to this sales increase was the impact of the Company's marketing strategy of continually offering new products as well as new designs and themes for existing products. GROSS PROFIT Gross profit increased $1.9 million for the three months ended March 31, 1997 compared to the same period in 1996. However, gross profit decreased as a percentage of sales from 35.7% to 35.3% due to start-up costs associated with the addition of a new distribution facility and increases in manufacturing capacity. SELLING EXPENSES Selling expenses of $3.1 million for the three months ended March 31, 1997 were comparable to those of the corresponding quarter in 1996. Selling expenses decreased as a percentage of net sales from 6.3% to 5.8%, primarily due to the Company's ability to increase sales to its party superstore customers while not significantly increasing its sales costs associated with those accounts. 10 GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses of $4.4 million increased $0.4 million for the three months ended March 31, 1997 as compared to the corresponding period in 1996. This increase is principally attributable to an increase in the provision for bad debts of $0.3 million or 0.6% of net sales. Also contributing to this increase are additional personnel costs of $0.1 million or 0.2% of net sales and increased occupancy costs of $0.1 million or 0.2% of net sales related to the Company's new corporate offices, which are partially offset by non-recurring corporate office relocation costs incurred in the first quarter of 1996 of $0.1 million or 0.2% of net sales. As a percentage of net sales, general and administrative expenses decreased from 8.5% to 8.2% principally due to the previously mentioned increase in sales. ART AND DEVELOPMENT COSTS Art and development costs of $1.3 million for the three months ended March 31, 1997 were comparable to those for the three months ended March 31, 1996. As a percentage of net sales, art and development costs decreased slightly from 2.5% to 2.4%. In 1996, the Company significantly expanded its creative and new product development staff and internal development capabilities. The continued investment in art and development expenditures in 1997 reflects the Company's strategy to remain a leader in product quality and development. SPECIAL BONUSES The employment agreements which gave rise to special bonuses during the first quarter of 1996 were substantially modified at the time of the IPO in December 1996 to eliminate future special bonus payments. Such bonuses, which were based entirely upon the pre-tax income of Amscan Inc. and certain affiliates, were $1.1 million for the three months ended March 31, 1996. INTEREST EXPENSE, NET Interest expense, net decreased by $0.5 million to $1.0 million for the three months ended March 31, 1997, as the net proceeds received from the issuance of Common Stock in December 1996 and January 1997 in connection with the IPO were used to reduce indebtedness under the Company's line of credit and to repay subordinated debt. INCOME TAXES Income taxes were $3.7 million for the three months ended March 31, 1997. Prior to the IPO, Amscan Inc., Am-Source, Inc., JCS Realty Corp. and SSY Realty Corp. were taxed as Subchapter S corporations for federal income tax and, where available, for state income tax purposes. Accordingly, these entities were not subject to federal and state income taxes except in states which do not recognize Subchapter S corporation status. In connection with the IPO, the aforementioned companies, became subject to federal and state income taxes. The amounts shown as income taxes for the three months ended March 31, 1996 consisted principally of foreign taxes. MINORITY INTERESTS Minority interests represent the portion of income of the Company's subsidiaries attributable to equity ownership not held by Amscan Holdings, Inc. In addition to the minority interests of certain foreign entities, the amounts for the three months ended March 31, 1996 include a 50% minority interest in Am-Source, Inc. On December 18, 1996, the Company acquired the minority interest in Am-Source, Inc. not previously owned. LIQUIDITY AND CAPITAL RESOURCES Management believes that the Company's working capital requirements will be met for at least the next 12 months by cash flow from operations and borrowings under its line of credit. 11 At March 31, 1997, the Company has a revolving line of credit with several banks which provides the Company with a $55.0 million credit line based upon the eligible assets of the Company. The amount available under this facility will increase to $60.0 million on September 20, 1997. The facility expires on September 20, 2000. The Company and its subsidiaries on a consolidated basis are also subject to financial covenants which require them to maintain a certain threshold tangible net worth, limit capital expenditures and require the Company and its subsidiaries to maintain certain financial ratios. The Company is not currently in default in respect of any of these restrictive covenants or financial ratios. The Company may seek to enter into new arrangements to replace this revolving credit facility which might include both term debt and revolving credit. Net cash provided by operating activities increased by $10.5 million to $2.2 million for the three months ended March 31, 1997 compared to the same period in 1996 as a result of lower levels of inventories and deposits and other, partially offset by decreases in accounts payable and accrued expenses. Net cash used in investing activities of $2.3 million for the three months ended March 31, 1997 consisted solely of capital expenditures and increased by $1.3 million from the same period in 1996. Net cash provided by financing activities decreased by $8.1 million to $0.4 million for the three months ended March 31, 1997 as the net proceeds of $4.5 million received from the sale of the Company's Common Stock to cover the exercise of the underwriters' over- allotment option was substantially offset by the repayment of bank and subordinated indebtedness and a lower level of borrowings. Accounts receivable, net increased $13.4 million to $50.8 million on March 31, 1997 from $37.4 million on December 31, 1996. This increase is due to increased sales and extended terms given to customers in association with new promotions. Inventories decreased $5.7 million to $40.0 million on March 31, 1997 from $45.7 million on December 31, 1996 due to shipments of "everyday" goods to customers. Inventory is built-up towards the end of the year in preparation of the new "everyday" line. Improved management of inventory levels has also contributed to the decrease in inventory levels. Deposits and other current assets decreased $3.0 million to $8.4 million on March 31, 1997 from December 31, 1996, principally the result of a net reduction in deposits related to various operating leases for manufacturing and warehouse equipment as well as office equipment and computer software. Property, plant and equipment, net increased $0.9 million to $35.5 million on March 31, 1997 from $34.7 million on December 31, 1996. This increase is primarily due to manufacturing and warehouse equipment acquired, partially offset by depreciation. Loans and notes payable decreased $3.8 million and Common Stock and additional paid-in capital increased by $4.5 million from December 31, 1996 to March 31, 1997 as net proceeds from the sale of the Company's Common Stock to cover the exercise of the underwriters' over-allotment option were used principally to repay bank indebtedness. Income taxes payable increased $3.5 million to $4.3 million on March 31, 1997 from December 31, 1996. This increase is primarily due to the change in tax status. In connection with the IPO on December 18, 1996, Amscan Inc., Am- Source, Inc., JCS Realty Corp. and SSY Realty Corp. terminated their Subchapter S corporation status and, accordingly, are subject to federal and state income taxes. Third party financings for the three months ended March 31, 1997 consisted primarily of borrowings under credit and long-term loans secured by machinery and equipment. The Company used $4.5 million of the cash in the first quarter of 1997 to fund its working capital needs, which consisted primarily of increases in accounts receivable, partially offset by decreases in inventories and deposits and other. 12 Management believes that there is adequate capacity to support its operations for at least the next 12 months. As of March 31, 1997, the Company did not have material commitments for capital expenditures other than for machinery and equipment which will be leased under the operating lease entered into in 1996. RECENTLY ISSUED ACCOUNTING STANDARDS In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 128 - Earnings per Share, effective for interim and annual periods ending after December 15, 1997. The Company does not believe that the impact of SFAS 128 will have a significant impact on its earnings per share calculation. Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or not significant to the financial statements of the Company. "SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements contained in this report, and in particular in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," statements in other filings with the Securities and Exchange Commission and statements in other public documents of the Company may be forward looking and are subject to a variety of risks and uncertainties. Many factors could cause actual results to differ materially from these statements. These factors include, but are not limited to, (1) the concentration of sales by the Company to party goods superstores where the reduction of purchases by a small number of customers could materially reduce the Company's sales and profitability, (2) the concentration of the Company's credit risk in the party goods superstores which are generally privately held and have expanded rapidly in recent years, (3) the failure by the Company to anticipate tastes and preferences of party goods retailers and consumers, (4) the introduction of new products by the Company's competitors, (5) the inability of the Company to increase prices to recover fully future increases in raw material prices, especially increases in paper prices, (6) the loss of key employees (including John A. Svenningsen, the Company's Chairman and Chief Executive Officer, who has been undergoing treatment for lymphoma) and (7) other factors which might be described from time to time in the Company's filings with the Securities and Exchange Commission. In addition, the Company is subject to the effects of changes in general business conditions. Although the Company believes that it has the product offerings and resources needed for continuing success, future revenue and margin trends cannot be reliably predicted. These trends may cause the Company to adjust its operations in the future. Factors external to the Company can also affect the price of the Company's Common Stock. Because of the foregoing and other factors, recent trends should not be considered reliable indicators of future financial results or stock prices. 13 PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits EXHIBIT NUMBER DESCRIPTION 10 1996 Stock Option Plan for Key Employees, as amended to April 1, 1997 27 Financial Data Schedule (b) Reports on Form 8 - K No reports on Form 8 - K were filed during the quarter for which this report is being filed. 14 SIGNATURES 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/ James M. Harrison --------------------------------- James M. Harrison Chief Financial Officer (on behalf of the registrant and as Date: May 13, 1997 principal financial and accounting officer) EX-10 2 STOCK OPTION PLAN, AS AMENDED [As amended to April 1, 1997] Amscan Holdings, Inc. 1996 Stock Option Plan For Key Employees 1. OBJECTIVE OF THE PLAN. The 1996 Stock Option Plan for Key Employees (the "Plan") is intended to encourage ownership of the Common Stock of Amscan Holdings, Inc. (the "Corporation") by key employees of the Corporation and any subsidiary corporation of the Corporation now existing or hereafter formed or acquired and to provide incentives for them to put forth maximum efforts for its successful operations. By extending to key employees the opportunity to acquire proprietary interests in the Corporation and to participate in its success, the Plan may be expected to benefit the Corporation and its stockholders by making it possible for the Corporation to attract and retain the best available talent and by rewarding key employees for their part in increasing the value of the Corporation's stock. The Options (as hereinafter defined) offered pursuant to the Plan are a matter of separate inducement and are not in lieu of any salary or other compensation for the services of any employee or director. The Corporation, by means of the Plan, seeks to retain the services of persons now holding key positions and to secure the services of persons capable of filling such positions. The Options granted under the Plan are intended to be either Incentive Stock Options (as hereinafter defined) or options that do not meet the requirements for Incentive Stock Options, but the Company makes no warranty as to the qualification of any Option as an Incentive Stock Option. 2. DEFINITIONS. As used herein, the following terms have the meanings hereinafter set forth unless the context clearly indicates to the contrary: 2.1. "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 2.2. "BOARD OF DIRECTORS" shall mean the board of directors of the Corporation. 2 2.3. "CAUSE" shall mean incompetence, gross negligence, insubordination, conviction of a felony, or willful misconduct by an employee of the Corporation as determined in good faith by the Corporation. 2.4. "CHANGE IN CONTROL" shall have the meaning specified in Section 9 hereof. 2.5. "CLOSING DATE" shall mean the closing of the sale of shares of Common Stock contemplated by the Corporation's Registration Statement on Form S-1 (No. 333-14107), as such Registration Statement may be amended (as so amended, the "REGISTRATION STATEMENT"). 2.6. "CODE" shall mean the Internal Revenue Code of 1986, as amended. 2.7. "COMMITTEE" shall mean the committee appointed in accordance with Section 4 to administer this Plan. 2.8. "COMMON STOCK" shall mean the Common Stock, par value $0.10 per share, of the Corporation. 2.9. "CONTINUOUS EMPLOYMENT" shall mean continuous regular employment by the Corporation or by one of its subsidiaries or an uninterrupted chain of continuous regular employments by the Corporation and/or one or more of its subsidiaries. A leave of absence granted in accordance with the Corporation's or its subsidiaries' usual procedures (such as those attributable to illness, military obligations or governmental service) shall not be considered a termination of employment nor an interruption of Continuous Employment hereunder, and an employee who is granted such a leave of absence shall be considered to be continuously employed during the period of such leave. 2.10. "EFFECTIVE DATE" shall have the meaning specified in Section 18 hereof. 2.11. "FAIR MARKET VALUE" of the Common Stock on the Closing Date shall be equal to the initial public offering price per share of Common Stock sold pursuant to the Registration Statement. In all other cases, Fair Market Value shall be determined by the Committee in good faith as of the last business day for which the prices or quotes described in this sentence are available preceding the date such Option is granted and shall mean: (i) the average on that date of the high and low prices of the Common Stock on the principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; (ii) the last reported sale price on that date of the Common Stock reported on The Nasdaq Stock Market, Inc., if the Common Stock is not then traded on a national securities exchange; (iii) the closing bid price (or average of bid prices) last quoted on that date by 3 an established quotation service for over-the-counter securities, if the Common Stock is not reported on a national securities exchange or The Nasdaq Stock Market, Inc. or (iv) if none of clauses (i), (ii) and (iii) apply, the amount determined in good faith by the Committee. For purposes of the Plan, the determination by the Committee of the fair market value of a Share shall be conclusive. 2.12. "INCENTIVE STOCK OPTIONS" shall mean those Options granted hereunder which are incentive stock options as defined in Section 422(b) of the Code and Treasury Regulations issued pursuant thereto. 2.13. "INCUMBENT BOARD" shall have the meaning specified in Section 9 hereof. 2.14. "NON-QUALIFIED STOCK OPTIONS" shall mean those Options granted hereunder which are not Incentive Stock Options. 2.15. "OPTION" shall mean an option to purchase Common Stock granted pursuant to the provisions of this Plan. 2.16. "OPTION AGREEMENT" shall mean the agreement between the Optionee and the Corporation setting forth the terms and conditions of an Option. 2.17. "OPTIONEE" shall mean an individual who receives an Option pursuant to this Plan. 2.18. "TEN PERCENT STOCKHOLDER" shall mean an individual who owns, within the meaning of Section 422(b)(6) of the Code, stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or of any subsidiary corporation or parent corporation of the Corporation. In determining stock ownership of an employee, the rules of Section 424(d) of the Code shall be applied, and the Committee may rely on representations of fact made to it by the employee and believed to be true. As used in this Plan, the terms "subsidiary corporation" and "parent corporation" shall be interpreted in accordance with Sections 424(f) and 424(e) of the Code, respectively. 2.19. "TERMINATION DATE" shall have the meaning specified in Section 18 hereof. 3. STOCK RESERVED FOR THE PLAN. Two Million (2,000,000) shares of the authorized but unissued Common Stock are reserved for issue and may be issued upon exercise of Options granted under the Plan. 4 In lieu of such unissued shares, the Corporation may, in its discretion, transfer to an Optionee, upon the exercise of Options, reacquired shares or shares bought in the market for the purposes of the Plan, provided that (subject to the provisions of Section 15 (Adjustments Upon Changes in Capitalization)) the total number of Options which may be granted and shares which may be sold pursuant to Options granted under the Plan shall not exceed Two Million (2,000,000). If any Options granted under the Plan shall for any reason terminate or expire without having been exercised or vested in full, the Common Stock not issued or delivered under such Options shall be available again for the purposes of the Plan. 4. ADMINISTRATION OF THE PLAN. 4.1. The Board of Directors shall appoint a Committee to administer the Plan; PROVIDED, HOWEVER, that following the Closing Date, the Committee shall be composed of at least two (2) directors who are Non-Employee Directors (as defined in Rule 16b-3 under the 1934 Act, as such rule became effective August 15, 1996). 4.2. The Committee shall have plenary authority in its discretion, but subject to the express provisions of the Plan, to determine: Optionees, the time or times at which Options shall be granted, the number of shares to be covered by each Option, the purchase price of the Common Stock covered by each Option, and whether Options shall be Incentive Stock Options, Non-Qualified Stock Options, or both. 4.3. The Committee shall further have plenary authority at its discretion to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it; to determine the terms (which need not be identical) of Option Agreements executed and delivered under the Plan, including such terms and provisions as shall be requisite in the judgment of the Committee to conform to any change in any law or regulation applicable thereto and to make all other determinations deemed necessary or advisable for the administration of the Plan. The Committee's determination on the foregoing matters shall be conclusive. 4.4. The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or computation received from any such legal counsel, consultant or agent. Expenses incurred by the Board of Directors or the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company. No member or former member of the Board of Directors or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any option granted hereunder. 5 5. ELIGIBILITY; FACTORS TO BE CONSIDERED IN GRANTING OPTIONS. 5.1. Optionees shall be such key employees of the Corporation as the Committee, in its sole discretion, shall determine. An Optionee may be any person who, at the time the Option is granted, is a regular, salaried employee (which term shall include officers and directors) of the Corporation or its subsidiaries. A director of the Corporation who is not also a regular, salaried employee of the Corporation will not be eligible to receive an Option. Pursuant to Section 422 of the Code, no Incentive Stock Options may be granted to an individual who, immediately after such Option is granted, is a Ten Percent Stockholder unless (a) the option price is at least 110% of the Fair Market Value of such stock on the date of grant and (b) the Option may not be exercised more than 5 years after the date of grant. 5.2. In determining the Optionees, the number of shares of Common Stock to be covered by each Option, the vesting period of any Option, the term of any Option, and whether any such Option shall be an Incentive Stock Option, a Non-Qualified Stock Option, or both, the Committee shall take into account the duties of the respective employees, their present and potential contributions to the success of the Corporation, and such other factors as the Committee shall deem relevant in connection with accomplishing the purposes of the Plan. An existing Optionee may be granted and hold an additional Option or Options if the Committee shall so determine. 6. OPTION PRICE. The purchase price of Common Stock covered by each Option shall be determined by the Committee but shall not be less than 100% (or 110% in the case of an Incentive Stock Option granted to a Ten Percent Stockholder pursuant to Section 422(c)(5) of the Code) of the Fair Market Value of the Common Stock at the time the Option is granted. 7. TERM OF OPTIONS. The term of each Option shall be for such period as the Committee shall determine but, notwithstanding the foregoing, the term of no Option shall be more than ten (10) years from the date of granting thereof (or five (5) years from the date of granting of the Option in the case of an Incentive Stock Option granted to a Ten Percent Stockholder pursuant to Section 422(c)(5) of the Code). 8. EXERCISE OF OPTIONS. 8.1. The method of exercise of Options shall be prescribed by the Committee; PROVIDED, HOWEVER, that, if no other schedule is prescribed by the Committee, one-quarter (25%) of the total number of shares of Common Stock covered by an Option granted to an employee of the Corporation or its subsidiaries shall become exercisable upon such employee's completion of one year of Continuous Employment with the 6 Corporation or its subsidiaries after the grant of the Option; thereafter, an additional one-quarter (25%) of the total number of shares of Common Stock covered by the Option shall become exercisable upon such employee's completion of two, three and four years of Continuous Employment with the Company or its subsidiaries, respectively. Once an Option or part thereof becomes exercisable, it shall remain exercisable until expiration of the Option, unless otherwise specified by the Committee. 8.2. Unless otherwise provided in the Option Agreement, a holder of an Option may purchase all, or from time to time any part of, the shares which the Optionee has become entitled to purchase in accordance with the terms of the Option by written notice delivered to the Corporation; PROVIDED, HOWEVER, that an Option shall not be exercised as to fewer than fifty (50) shares, or the remaining shares covered by the Option if fewer than fifty (50), at any one time. 8.3. The purchase price of the shares as to which an Option shall be exercised shall be paid in full at the time of exercise at the election of the holder of an Option: (a) in cash or currency of the United States of America; (b) by tendering to the Corporation shares of the Corporation's Common Stock, then owned by the holder, having a Fair Market Value equal to the cash exercise price applicable to the purchase price of the shares as to which an Option is being exercised; or (c) partly in cash and partly in shares of the Corporation's Common Stock valued at Fair Market Value. Fractional shares of Common Stock will not be issued. Notwithstanding the foregoing, the Committee shall have the right to modify, amend or cancel the provisions of clauses (b) and (c) above at any time upon prior notice to the holders of Options. Except as provided in Sections 10 (Agreement to Serve) and 11 (Nontransferability of Options) hereof, no Option may be exercised at any time except by an Optionee who is then a regular employee of the Corporation. 8.4. Except as otherwise provided under the Code, to the extent that the aggregate Fair Market Value of stock with respect to which Incentive Stock Options are exercisable for the first time by an employee during any calendar year (under all stock option plans of the Corporation) exceeds $100,000, such Options shall be treated as Non- Qualified Stock Options. For purposes of this limitation, (i) the Fair Market Value of stock is determined as of the time the Option is granted and (ii) the limitation will be applied by taking into account Options in the order in which they were granted. 7 9. ACCELERATED EXERCISE. Notwithstanding any other provision of this Plan or any Option granted hereunder, any Option granted hereunder and then outstanding shall become immediately exercisable in full: (i) in the event a tender offer or exchange offer is made by any "person" within the meaning of Section 14(d) of the 1934 Act or (ii) in the event of a Change in Control (as hereinafter defined); PROVIDED, HOWEVER, that if in the opinion of counsel to the Corporation the immediate exercisability of such Option, when taken into consideration with all other "parachute payments" as defined in Section 280G(b) of the Code, would result in an "excess parachute payment" as defined in such section, such Option shall not become immediately exercisable, except as and to the extent the Committee in its discretion shall otherwise determine. For purposes of this Section 9, a "Change in Control" shall have occurred if: (a) any "person" within the meaning of Section 14(d) of the 1934 Act (other than any person who is the beneficial owner of more than 25% of the Common Stock on the Closing Date) becomes the "beneficial owner" as defined in Rule 13d-3 thereunder, directly or indirectly, of more than 25% of the Common Stock; (b) any "person" acquires by proxy or otherwise the right to vote more than 25% of the Common Stock for the election of directors, other than solicitation of proxies by the Incumbent Board, for any merger or consolidation of the Corporation or for any other matter or question; (c) during any two-year period, individuals who constitute the Board of Directors of the Corporation (the "Incumbent Board") as of the beginning of the period cease for any reason to constitute at least a majority thereof, PROVIDED that any person becoming a director during such period whose election or nomination for election by the Corporation's stockholders was approved by a vote of at least three-quarters of the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director without objection to such nomination) shall be, for purposes of this clause (c), considered as though such person were a member of the Incumbent Board; or (d) the Corporation's stockholders have approved the sale of all or substantially all of the assets of the Corporation. The Committee may provide for the acceleration of the vesting of Options under such other circumstances as the Committee shall determine in its discretion. The Committee may adopt such procedures as to notice and exercise as may be necessary to effectuate the acceleration of the exercisability of Options as described above. 8 10. AGREEMENT TO SERVE. Each Optionee shall agree, as one of the terms of the Option Agreement and during the course of employment by the Corporation or its subsidiaries, to devote such Optionee's entire time, energy and skill to the service of the Corporation and the promotion of its interests, subject to vacations, sick leave and other absences in accordance with the regular policies of the Corporation or its subsidiaries. If an Optionee shall at any time not be an employee of the Corporation or one of its subsidiaries, the Option shall at once terminate subject to possible exercise as provided in Section 12 (Termination of Employment). Nothing in this Plan or in any Option granted pursuant to this Plan shall constitute an obligation for the Company or any subsidiary to continue the employment of the Optionee. 11. NONTRANSFERABILITY OF OPTIONS. An Option granted under the Plan shall not be transferable otherwise than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order (as defined in the Code), and an Option may be exercised, during the lifetime of an Optionee, only by the Optionee. 12. TERMINATION OF EMPLOYMENT. 12.1. Options granted under the Plan shall not be affected by any change of duties or position so long as the Optionee continues to be an employee of the Corporation or one of its subsidiaries. In the event that the employment of an Optionee shall be terminated (other than by reason of retirement, disability or death) such Option may, subject to the provisions of Sections 8 (Exercise of Options), 10 (Agreement to Serve) and 13 (Retirement, Disability or Death), be exercised, to the extent that the Optionee was entitled to do so at the date of termination of employment unless the Committee otherwise determines, at any time within thirty (30) days after such termination, but in no event after the expiration of the term of the Option unless the Committee otherwise determines. 12.2. Notwithstanding the foregoing and except as otherwise provided by the Committee, in the event an Optionee is discharged for Cause, the unexercised portion of an Option shall terminate immediately. If the Optionee has exercised all or part of an Option within fifteen (15) days of notice of discharge for Cause and the Corporation has not yet delivered Common Stock pursuant to such exercise, such exercise shall be deemed invalid and any purchase price tendered by the Optionee for Common Stock shall be refused or, if previously paid, shall be returned to the Optionee. 9 13. RETIREMENT, DISABILITY OR DEATH. 13.1. If an Optionee shall retire from the Corporation at normal retirement date pursuant to any pension plan provided by the Corporation or its subsidiaries, or if such retirement is earlier than the Optionee's normal retirement date and such retirement is with the prior consent of the Corporation, then notwithstanding the provisions of Sections 8 (Exercise of Options) and 10 (Agreement to Serve), such Optionee may exercise an Option in full, without regard to the period of Continuous Employment after the Option was granted, at any time within 90 days after such retirement or for such other period as may be specified by the Committee, but in no event after the expiration of the term of the Option. 13.2. If the employment of any Optionee shall terminate by reason of the Optionee's disability (within the meaning of Section 22(e)(3) of the Code) and while such Optionee is entitled to exercise such Option as herein provided, such Optionee shall have the right to exercise such Option, to the extent not theretofore exercised, in respect of any or all such number of shares of Common Stock which such Optionee would have been entitled to purchase under the Option at the date of such termination of such employment, at any time up to and including 90 days after the date of such termination or for such other period as may be specified by the Committee, but in no event after the expiration of the term of the Option. 13.3. If an Optionee shall die while employed by the Corporation or any of its subsidiaries or during either the 90-day period specified in Section 13.1 or the 90-day period specified in Section 13.2 hereof, such Option may be exercised, subject to the provisions of Section 8 (Exercise of Options) hereof, to the extent that the Optionee was entitled to do so at the date of death unless otherwise determined by the Committee, by the representative of the Optionee's estate or other person at the time entitled by law to exercise such Option, at any time within such period (not exceeding one year after the Optionee's death or for such other period as may be specified by the Committee) as shall be prescribed in the Option Agreement, but in no event after the expiration of the term of the Option. 13.4. Notwithstanding the provisions of Sections 12.1, 12.2, 13.1, 13.2 or 13.3 hereof, the Committee shall be entitled to prescribe other exercise periods for an Option, but in no event shall any Option be exercisable after the expiration of the term of the Option. 14. NO LOANS TO HOLDERS OF OPTIONS. Except as otherwise specifically provided in an agreement between the Corporation, any company with which it is affiliated or any of its subsidiaries which has been approved by the Board of Directors of the Corporation or the entity which is a party to such employment agreement and an Optionee, neither the Corporation, any company with which it is affiliated, nor any of its subsidiaries may directly or indirectly lend 10 money to any person for the purpose of assisting such person to acquire or carry shares of Common Stock issued upon the exercise of Options. 15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any change in the outstanding shares of Common Stock through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, split-off, spin-off, combination of shares, exchange of shares, or other like change in the capital structure of the Corporation, an adjustment shall be made to each outstanding Option such that each such Option shall thereafter be exercisable for such securities, cash and/or other property as would have been received in respect of the shares of Common Stock subject to such Option had such Option been exercised in full immediately prior to such change, and such an adjustment shall be made successively each time any such change shall occur. The term "Common Stock" shall after any such change refer to the securities, cash and/or property then receivable upon exercise of an Option. In addition, in the event of any such change, the Committee shall make any further adjustment as may be appropriate to the maximum number of shares of Common Stock which may be acquired under the Plan pursuant to the exercise of Options and the number of shares of Common Stock and price per share subject to outstanding Options as shall be equitable to prevent dilution or enlargement of rights under such Options, and the determination of the Committee as to these matters shall be conclusive. Notwithstanding the foregoing, (i) each such adjustment with respect to an Incentive Stock Option shall comply with the rules of Section 424(a) of the Code and (ii) in no event shall any adjustment be made which would render any Incentive Stock Option granted hereunder not an incentive stock option for purposes of Section 422 of the Code without the consent of the Optionee holding such Incentive Stock Option. 16. SATISFACTION OF WITHHOLDING TAXES. The Corporation may require an Optionee exercising a Non- Qualified Stock Option granted hereunder, or disposing of Shares acquired pursuant to the exercise of an Incentive Stock Option in a disqualifying disposition (within the meaning of Section 421(b) of the Code), to reimburse the corporation that employs such Optionee for any taxes required by any government to be withheld or otherwise deducted and paid by such corporation in respect of the issuance or disposition of such Shares. In lieu thereof, the corporation that employs such Optionee shall have the right to withhold the amount of such taxes from any other sums due or to become due from such corporation to the Optionee upon such terms and conditions as the Committee shall prescribe. The corporation that employs such Optionee may, in its discretion, hold the stock certificate to which such Optionee is entitled upon the exercise of an Option as security for the payment of such withholding tax liability, until cash sufficient to pay that liability has been accumulated. In addition, the Corporation shall be authorized to effect any such withholding upon exercise of a Non-Qualified Stock Option by retention of Shares deliverable upon such exercise having a Fair Market Value at the date of exercise which is equal to the amount to be withheld. 11 17. RIGHT TO CONTINUED EMPLOYMENT. Nothing in the Plan or in any Option Agreement shall confer upon any employee the right to continue in the employ of the Corporation or any of its subsidiaries or interfere with the right of the Corporation or any such subsidiary to terminate the employment of such employee at any time. 18. TIME OF GRANTING OPTIONS. Nothing in the Plan or in any resolution to be adopted by the Board of Directors or the holders of Common Stock of the Corporation shall constitute the granting of an Option, which shall be deemed to have been granted only on the date on which the identity of the Optionee and the terms of the Option are determined by the Committee. Except as provided in Sections 19 and 23, the Corporation may, from time to time during the period beginning on the date (the "Effective Date") the Plan is adopted by the Board of Directors and ending on the date ten (10) years thereafter (the "Termination Date"), grant to certain key employees of the Corporation or any of its subsidiaries now existing or hereafter formed or acquired Options under the terms herein set forth. 19. TERMINATION AND AMENDMENT OF THE PLAN. The Board of Directors may at any time prior to the Termination Date terminate the Plan or make such modification or amendment of the Plan as it shall deem advisable; PROVIDED, HOWEVER, that except as provided in Section 15 (Adjustments Upon Changes in Capitalization), no amendment may be made without approval by the holders of Common Stock if such amendment would: (a) increase the maximum number of shares for which Options may be granted under the Plan, either in the aggregate or to any individual, (b) change the manner of determining the minimum option prices, (c) extend the period during which Options may be granted or extend the period during which an Option may be exercised beyond the maximum term provided in Section 7 (Term of Options) or (d) amend the requirements as to the class of employees eligible to receive Options. No termination, modification or amendment of the Plan may, without the consent of an Optionee, adversely affect the rights of such Optionee. 20. GOVERNMENT REGULATIONS. The Plan, the granting and exercising of Options hereunder and the obligation of the Corporation to issue, sell and deliver shares, as applicable, under such Options, shall be subject to the effectiveness of the Registration Statement and to the approval of any governmental authority required in connection with the authorization, issuance or sale of such shares, including any applicable Blue Sky laws. 12 21. NO RIGHTS IN OPTION STOCK No Optionee shall have any rights as a stockholder with respect to shares of Common Stock of the Corporation as to which the Option shall not have been exercised and payment made as herein provided, and an Optionee shall have no rights with respect to such shares of Common Stock not expressly conferred by the Plan. 22. EFFECTIVE DATE. The Plan shall become effective on the Effective Date; PROVIDED, HOWEVER, that if the Plan is not approved by a vote of the stockholders of the Company at an annual meeting or any special meeting or by unanimous consent within twelve (12) months before or after the Effective Date, the Plan and any Options granted under the Plan shall terminate. 23. GOVERNING LAW. The validity and construction of the Plan and the instruments evidencing Options shall be governed by the laws of Delaware. EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF AMSCAN HOLDINGS, INC. AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 MAR-31-1997 2,118 0 54,884 4,070 39,951 101,276 61,659 (26,125) 146,767 47,204 14,558 0 0 2,112 75,869 146,767 53,176 53,176 34,410 34,410 0 327 984 9,072 3,728 5,302 0 0 0 5,302 0.25 0
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