SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: April 8, 2003
The Topps Company, Inc.
(Exact name of registrant as specified in its charter)
Delaware 001-15817 95-1567322
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of corporation) Identification No.)
One Whitehall, New York, NY 10004
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 376-0300
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events
The Topps Company, Inc. hereby incorporates by reference herein its press
release dated April 8, 2003 regarding its fiscal 2003 fourth quarter and full
year results, a copy of which is included as Exhibit 99.0 attached hereto.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired: None
(b) Pro forma financial information: None
(c) Exhibits:
99.0 Press release dated April 8, 2003
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 hereunto duly authorized.
The Topps Company, Inc.
Registrant
By: /s/ Catherine Jessup
Catherine Jessup
Vice President, CFO
Date: April 8, 2003
Exhibit 99.0
Contacts:
Cathy Jessup, CFO
The Topps Company, Inc.
212.376.0466
or
Betsy Brod/Jonathan Schaffer
Brod Group, LLC
212.750.5800
For Immediate Release
---------------------
The Topps Company, Inc.
REPORTS FISCAL 2003 Fourth Quarter AND FULL YEAR Results
--European Soccer Products Post Strong Results--
--Topps to Celebrate 50th Anniversary of "Bazooka Joe"--
--Company to Introduce "Beyblade" Product --
New York, NY, April 8, 2003 - The Topps Company, Inc. (Nasdaq: TOPP) today
reported financial results for the fiscal fourth quarter and year ended March 1,
2003.
Net sales for the fiscal 2003 fourth quarter were $65.7 million compared with
$60.0 million for the same period last year. Stronger European currencies versus
the dollar in the fourth quarter increased sales by $2.2 million. Income from
operations in the fourth quarter was $3.0 million versus $1.4 million last year.
Net income was $2.0 million, or $0.05 per diluted share, compared with $1.4
million, or $0.03 per diluted share, in the fiscal 2002 fourth quarter.
For the twelve months ended March 1, 2003, net sales were $290.1 million
compared with $300.2 million last year. Total Pokemon sales were $6.0 million in
fiscal 2003 versus $24.1 million last year, a decrease of $18.1 million. Income
from operations for the full year was $20.8 million compared to $36.6 million in
fiscal 2002. Net income was $16.9 million, or $0.40 per diluted share, compared
with $28.5 million, or $0.64 per diluted share last year.
Consistent with Topps organizational structure and product line similarities,
the Company will report two business segments beginning with the fourth quarter:
Entertainment, which now combines the former sports and entertainment segments
into one, and Confectionery.
Sales in the Company's Confectionery segment were flat with last year's fourth
quarter and 3.5% lower this fiscal year than in the prior year. Excluding
Pokemon, confectionery sales increased 2.6% in the fourth quarter and were down
0.7% for the fiscal year. In addition to Pokemon, the Company believes fiscal
2003 confectionery sales were impacted by lower consumer traffic at U.S. retail
stores, plus softer sales of Baby Bottle Pop.
--more--
TOPP - Fourth Quarter Fiscal 2003 Financial Results
Page Two
Arthur T. Shorin, Chairman and CEO of Topps, stated, "Within our Confectionery
segment, Ring Pop and Push Pop posted strong gains in the U.S. for both the
quarter and the year. Yu-Gi-Oh Sticker Pops, introduced in the third quarter in
the U.S. and Canada, generated $1.4 million in sales for the year and Pro Flip
Pop performed well in Japan. Seasonal confectionery items scored double-digit
gains, albeit on a relatively small base. Finally, initial quantities of Baby
Bottle Pop with Candy Juice were introduced in the fourth quarter and early
indications of consumer acceptance are encouraging. The product is showing
strong preliminary sell-through at retail, seemingly without compromising sales
of our traditional Bottle Pop product."
Mr. Shorin continued, "We are entering fiscal 2004 with new TV advertising
campaigns for our confectionery business and with plans to market several new
products in addition to Baby Bottle Pop with Candy Juice. For example, Juicy
Drop Pop, which is currently being tested in the U.K., is planned to roll out
later this year in the U.S. and Europe. Additionally, `Bazooka Joe' is
celebrating his 50th anniversary this year. We will celebrate this special
milestone in the fall with new Bazooka graphics, historical comics dating back
to 1953 and a promotional prize program."
In the Entertainment sector, fourth quarter sales were up 20% versus last year.
This increase was driven by the strong performance of European soccer products,
timing and returns reversals of U.S. sports card releases, the introduction of
`Yu-Gi-Oh' and `Hamtaro' stickers, as well as an increase in etopps sales.
Nonetheless, Entertainment sales for the year decreased 3.3%, largely the result
of continued industry-wide sports card declines in the U.S. and difficult
Pokemon comparisons.
Mr. Shorin commented, "With respect to traditional sports products, and in
keeping with our long-term strategy, we took steps late last year to restructure
our organization, reducing headcount and paring down the domestic sports product
line commensurate with anticipated demand. We intend to maintain our position as
a major force in the U.S. sports card industry, but will reduce the overall
number of product introductions in fiscal 2004, perhaps by as much as 25%.
Accordingly, we expect U.S. sports cards to contribute less to sales and profits
in fiscal 2004.
"The Internet portion of the Entertainment segment generated increased sales in
both the quarter and full fiscal year. Our etopps customer base continues to
expand, and the third season of etopps baseball was launched on March 31,
coinciding with the start of Major League play. The etopps baseball launch is
being supported by a new advertising campaign on television and online.
"On the new product front, we have created several opportunities featuring
licensed characters. During the fourth quarter, we began marketing a `Simpsons'
sticker and gum product domestically and hope to introduce a supermarket version
this summer. Among the items that we plan to introduce later this year are
`Yu-Gi-Oh' sticker and album products, collectible punch-out cards featuring
`Beyblade,' the popular Japanese fighting tops and a new product concept, mini
sticker albums with gum. We successfully marketed our first issue of this
concept featuring Italian football players late last year."
--more--
TOPP - Fourth Quarter Fiscal 2003 Financial Results
Page Three
Mr. Shorin concluded, "During fiscal 2004, we will continue to execute our
long-term growth strategies. In Confectionery, we are continuing to enhance our
brands in terms of distribution, advertising and promotion. We are also adding a
number of new products and are actively working towards the launch of a
non-lollipop, non-chocolate product later in the fiscal year. Within the
Entertainment sector, we will work to leverage the Topps franchise, extend our
Internet reach to a broader customer base, and selectively pursue new licensing
opportunities."
In the fourth quarter, Topps purchased 99,000 shares of its stock at an average
price of $9.00. For the full year, the Company repurchased 1.6 million shares of
stock at an average price of $9.01. As of March 1, 2003, the Company had $114
million in cash and no debt.
As previously announced, the Company adopted two accounting standards effective
March 3, 2002, which resulted in new accounting treatment for certain trade
promotion expenses, such as slotting fees, as well as the elimination of
goodwill amortization. As a result, trade promotion expenses for fiscal 2003 of
$1.3 million for the fourth quarter and $3.2 million for the full year have been
reported as a reduction of net sales rather than as marketing expense. Last
year's financials have also been reclassified to reflect similar treatment of
these expenses which totaled $0.9 million for the fourth quarter of fiscal 2002
and $2.7 million for the fiscal 2002 full year. In addition, goodwill
amortization totaling $0.4 million in the fourth quarter and $1.6 million for
fiscal 2003 has been eliminated in fiscal 2003 in accordance with SFAS 142,
resulting in an increase in EPS of $0.01 for the quarter and $0.04 for the full
year.
The Topps Company, Inc. will host a webcast of its earnings conference call
today at 10:00 a.m., Eastern Time. Investors, analysts, and the media are
invited to listen to the call live at www.topps.com. A replay of the webcast
will be available on the Company's website for the next 60 days. The call will
cover the Company's review of its quarterly and full year results and outlook
for the fiscal year 2004.
The Topps Company, Inc. is an international marketer of confectionery and
entertainment products. Founded in 1938, Topps created Bazooka bubble gum in
1947 and marketed its first baseball cards in 1951. For additional information,
please visit the Company's website at www.topps.com.
This release contains forward-looking statements pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Although the
Company believes the expectations contained in such forward-looking statements
are reasonable, it can give no assurance that such expectations will prove to be
correct. This information may involve risks and uncertainties that could cause
actual results to differ materially from the forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, factors detailed in the Company's Securities and Exchange Commission
filings.
THE TOPPS COMPANY, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Amounts in Thousands)
As of As of
March 1, 2003 March 2, 2002
------------- -------------
Cash and Equivalents ....................... $114,259 $121,057
Working Capital ............................ 141,485 136,389
Net Property, Plant and Equipment .......... 14,606 14,606
Total Assets ............................... 261,628 257,950
Shareholders' Equity ....................... $196,768 $194,054
SEGMENT INFORMATION
(Amounts in Thousands)
Quarter Ended Year Ended
March 1, March 2, March 1, March 2,
2003 2002 2003 2002
Net Sales
---------
Confectionery ...................... $32,323 $32,221 $146,865 $152,127
Entertainment Products ............. 33,362 27,801 143,214 148,053
------- ------- -------- --------
Total .............................. $65,685 $60,022 $290,079 $300,180
======= ======= ======== ========
Contributed Margin
------------------
Confectionery ...................... $11,135 $10,090 $ 52,101 $ 54,880
Entertainment Products ............. 10,616 5,719 39,313 47,464
------- ------- -------- --------
Total .............................. $21,751 $15,809 $ 91,414 $102,344
======= ======= ======== ========
Reconciliation of Contributed
Margin to Income Before Provision
for Taxes:
Total Contributed Margin $21,751 $15,809 $ 91,414 $102,344
Unallocated General and Administrative
Expenses and Manufacturing
Overhead (17,723) (14,028) (65,778) (60,040)
Depreciation & Amortization ( 1,357) ( 1,329) ( 5,038) ( 5,525)
Other Income (Expense) 322 907 184 ( 215)
-------- ------- -------- --------
Income from Operations 2,993 1,359 20,782 36,564
Interest Income, Net 643 1,231 2,516 4,894
------- ------- ------ ------
Income before Provision for
Income Taxes $ 3,636 $2,590 $23,298 $41,458
======= ====== ======= =======
THE TOPPS COMPANY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in Thousands, Except Share Data)
Quarter Ended Year Ended
March 1, March 2, March 1, March 2,
2003 2002 2003 2002
------- ------- ------- -------
Net sales 65,685 60,022 290,079 300,180
Cost of sales 43,531 42,349 188,345 186,339
------ ------ ------- -------
Gross profit 22,154 17,673 101,734 113,841
Other Income (expense) 322 907 184 (215)
Selling, general and admin. expense 19,483 17,221 81,136 77,062
Income from operations 2,993 1,359 20,782 36,564
Interest income, net 643 1,231 2,516 4,894
------ ------ ------- -------
Income before provision
for income taxes 3,636 2,590 23,298 41,458
Provision for income taxes 1,643 1,141 6,362 12,996
------ ------ ------- -------
Net income $1,993 $1,449 $16,936 $28,462
====== ====== ======= =======
Net income per share - basic $ 0.05 $ 0.03 $ 0.41 $ 0.66
- diluted $ 0.05 $ 0.03 $ 0.40 $ 0.64
Weighted avg.shares outstanding:
- basic 40,727,000 42,469,000 41,353,000 43,073,000
- diluted 41,380,000 43,580,000 42,065,000 44,276,000