FOR IMMEDIATE RELEASE
THE TOPPS COMPANY, INC.
REPORTS FISCAL 2004 THIRD QUARTER AND NINE-MONTH RESULTS
~ Confectionery Sales Post Strong Gain in Quarter ~
~ Pre-Tax Income Lower than Year Ago Due to WizKids Loss ~
New York, NY, January 7, 2004 - The Topps Company, Inc. (Nasdaq: TOPP) today
reported financial results for the fiscal 2004 third quarter and nine months
ended November 29, 2003.
Net sales in the fiscal 2004 third quarter were $78.6 million compared to $66.7
million last year. Income from operations was $655,000 compared to $813,000 in
the same period last year. Net income was $982,000, or $0.02 per diluted share,
versus $2.9 million, or $0.07 per diluted share, in the prior-year period.
Included in this year's third quarter net income and earnings per share results
is a tax benefit of $0.01 per diluted share compared to a tax benefit of $0.05
per diluted share in the same period last year.
Net sales for the nine months ended November 29, 2003 were $227.6 million
compared to $224.4 million last year. Income from operations was $12.6 million
compared to $17.8 million in the same period last year. Net income was $9.8
million, or $0.23 per diluted share, versus $14.9 million, or $0.35 per diluted
share, in the prior-year period.
This year's third quarter profitability was reduced by a $3 million pre-tax, or
$0.05 per share, loss at WizKids, resulting mainly from the unsuccessful new
product launch of Creepy Freaks and, to a lesser extent, costs associated with
sales weakness in general.
Arthur T. Shorin, Chairman and CEO of Topps, stated, "Having purchased WizKids
for its extraordinary game design capabilities and as a means of entering the
growing collectible games arena, we remain excited about WizKids' ability to
contribute favorably to our operations over the long term. Nonetheless, early
financial results are disappointing and an additional loss in the fourth
quarter, albeit more modest, is expected. Accordingly, steps are being taken to
improve performance, reduce costs and more effectively manage risk associated
with new game releases."
TOPP - Third Quarter Fiscal 2004 Financial Results
Page Two
During the third quarter, net sales of the overall Entertainment sector
increased 24.7% to $46.7 million. While much of the growth was attributed to the
acquisition of WizKids, the increase was also due to sales of Yu-Gi-Oh! products
in Europe and domestic shipments of Garbage Pail Kids, a sticker product based
on company-owned content. Sales of domestic sports cards were virtually flat
compared to the prior year despite a reduction in the number of releases, due to
both the timing of certain football products and stronger performance of
basketball products.
Confectionery net sales in the third quarter rose 9.1% to $31.9 million. This
increase was driven by strong international performance, particularly as a
result of the continued roll out of Juicy Drop Pop in Europe and Japan and sales
of licensed candy container products. Seasonal products in the U.S. and Canada
also contributed to the increase.
Mr. Shorin continued, "In addition to Juicy Drop Pop in the U.S. and Europe, we
are excited about the introduction of products which reflect our strategy to
diversify our confectionery portfolio beyond lollipops and gum. We began selling
Big Mouth Candy Spray in the U.S. in the recent quarter, and in the fourth
quarter we will roll out two unique chewy products, Juicy Drop Chews and Juicy
Bugs."
During the quarter, the Company paid a cash dividend of $0.04 per share. As of
November 29, 2003, the Company had $89.6 million in cash and no debt.
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.
Founded in 1938, Topps is a leading creator and marketer of distinctive
confectionery and entertainment products. The Company's confectionery brands
include "Ring Pop," "Push Pop," "Baby Bottle Pop" and "Juicy Drop Pop" lollipops
as well as "Bazooka" bubble gum. Topps entertainment products include trading
cards, sticker and album collections, and collectible games. For additional
information, visit 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.
(Tables Follow)
THE TOPPS COMPANY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in Thousands, Except Share Data)
(Unaudited)
Quarter Ended Nine Months Ended
---------------------------- ----------------------------
November 29, November 30, November 29, November 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net sales $ 78,580 $ 66,667 $ 227,563 $ 224,427
Cost of sales 54,665 45,007 146,124 144,814
-------- --------- --------- ---------
Gross profit 23,915 21,660 81,439 79,613
Other income (expense) 21 (360) 345 (138)
Selling, general and admin. expense 23,281 20,487 69,188 61,686
-------- --------- --------- ---------
Income from operations 655 813 12,596 17,789
Interest income, net 445 673 1,929 1,873
-------- --------- --------- ---------
Income before provision for income taxes 1,100 1,486 14,525 19,662
Provision for income taxes 118 (1,424) 4,750 4,719
-------- --------- --------- ---------
Net income $ 982 $ 2,910 $ 9,775 $ 14,943
======== ========= ========= =========
Net income per share - basic 0.02 0.07 0.24 0.36
- diluted 0.02 0.07 0.23 0.35
Weighted avg.shares outstanding:
- basic 40,530,000 41,064,000 40,610,000 41,562,000
- diluted 41,822,000 41,850,000 41,726,000 42,457,000
THE TOPPS COMPANY, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Amounts in Thousands)
As of As of
November 29, 2003 March 1, 2003
----------------- -------------
Cash and Equivalents $ 89,552 $ 114,259
Working Capital 126,085 141,484
Net Property, Plant and Equipment 14,104 14,606
Total Assets 266,773 261,628
Shareholders' Equity $ 206,150 $ 196,768
SEGMENT INFORMATION
(Amounts in Thousands)
Quarter Ended Nine Months Ended
---------------------------- ----------------------------
November 29, November 30, November 29, November 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net Sales
Confectionery $ 31,886 $ 29,225 $ 119,227 $ 114,575
Entertainment Products 46,694 37,442 108,336 109,852
-------- -------- --------- ---------
Total $ 78,580 $ 66,667 $ 227,563 $ 224,427
======== ======== ========= =========
Contributed Margin
Confectionery $ 9,253 $ 9,819 $ 38,493 $ 40,977
Entertainment Products 10,964 9,602 28,383 28,697
-------- -------- --------- ---------
Total $ 20,217 $ 19,421 $ 66,876 $ 69,674
======== ======== ========= =========
Reconciliation of Contributed Margin
to Income Before Provision for Taxes:
Total Contributed Margin $ 20,217 $ 19,421 $ 66,876 $ 69,674
Unallocated General and Administrative
Expenses and Manufacturing Overhead (17,629) (17,000) (49,827) (48,066)
Depreciation & Amortization (1,954) (1,248) (4,798) (3,681)
Other Income (Expense) 21 (360) 345 (138)
-------- --------- --------- ---------
Income from Operations 655 813 12,596 17,789
Interest Income, Net 445 673 1,929 1,873
--------- --------- --------- ---------
Income before Provision for
Income Taxes $ 1,100 $ 1,486 $ 14,525 $ 19,662
========= ========= ========= =========