FOR IMMEDIATE RELEASE
THE TOPPS COMPANY, INC. REPORTS
FISCAL 2005 THIRD QUARTER RESULTS
New York, NY, January 6, 2005 - The Topps Company, Inc. (Nasdaq: TOPP) today
reported financial results for the fiscal 2005 third quarter ended November 27,
2004.
Net sales in the fiscal 2005 third quarter were $70.7 million compared to $78.5
million last year. Stronger foreign currencies versus the prior year increased
2005 third quarter sales by $1.4 million. Income from operations was $3.2
million compared to $655,000 in last year's third quarter. Net income in the
fiscal 2005 third quarter was $2.8 million, or $0.07 per diluted share, versus
$982,000, or $0.02 per diluted share, last year. Profitability in last year's
third quarter was impacted by a $3 million pre-tax, or $0.05 per share, loss at
WizKids.
For the nine months ended November 27, 2004, net sales were $227.5 million
compared to $227.8 million in the same period last year. Stronger foreign
currencies versus the prior year increased sales for the first nine months of
fiscal 2005 by $5.4 million. Income from operations was $13.7 million compared
to $12.6 million in the prior-year period. Net income in the first nine months
of fiscal 2005 was $10.5 million, or $0.26 per diluted share, versus $9.8
million, or $0.23 per diluted share, last year. Results for the first nine
months of fiscal 2005 include a one-time charge of $1.9 million, or
approximately $0.05 per diluted share incurred in the fiscal 2005 first quarter,
related to a previously disclosed European Commission fine.
Confectionery net sales were $29.0 million in the fiscal 2005 third quarter
compared to $31.8 million in the prior-year period. Confectionery results were
impacted primarily by continued softness in Baby Bottle Pop, a reduction in
sales of Flip N' Dip in Japan, and the ongoing effect of domestic industry
factors including retailer consolidation and childhood nutritional concerns.
During the third quarter, the Company introduced Push Pop in Argentina with
encouraging early results and secured national distribution of Juicy Drop Pop
with major retail accounts in the U.S.
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TOPP - Third Quarter Fiscal 2005 Financial Results
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Arthur T. Shorin, Chairman and CEO of Topps, commented, "We are working hard to
address the challenges in the domestic candy business. As an example, we have
consolidated our broker network across the U.S. as part of a new go-to-market
strategy that will provide us with greater leverage, enhanced retail coverage,
and improved convenience store distribution. We are also developing new
television ads for Baby Bottle Pop, Ring Pop, and Push Pop. On the new product
front, we have made significant distribution gains on Juicy Drop Pop, began
shipments of Bazooka Booster in the U.K. during the third quarter, and are
receiving positive trade acceptance to our early solicitation efforts in Europe
on Crunchy Snakes Candy."
Entertainment sales in the third quarter were $41.7 million versus $46.7 million
in the prior-year period. Third quarter results reflect declines in U.S. sports
card products and the Company's previously announced decision to not release
hockey cards in light of the NHL's labor issues this year. Sports product
performance benefited from sales of a Boston Red Sox World Series gift set as
well as earlier shipments of Italian football products.
Also within Entertainment, WizKids reported lower sales, but was profitable for
the quarter. Non-sports publishing benefited from releases including World
Wrestling Entertainment, Barbie, and Star Wars products partially offset by
lower Yu-Gi-Oh sales year-on-year.
Mr. Shorin continued, "Our Entertainment business is opportunistic by nature,
and we continue to pursue prospects as appropriate. WizKids' Pirates of the
Spanish Main, the world's first constructible strategy game, is now in full
distribution in gaming stores with testing underway in broader channels. The
game enjoyed strong sell-through in the third quarter, and we are currently
planning a new release for next year. We are also exploring trading card games
with future product launches planned including a baseball product this coming
spring."
During the quarter, the Company paid its regular quarterly cash dividend to
shareholders of $0.04 per share. Additionally, the Company repurchased 94,000
shares of stock at an average price of $9.76 per share. At November 27, 2004,
the Company had $116.7 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.
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TOPP - Third Quarter Fiscal 2005 Financial Results
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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 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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except share data)
(Unaudited) (Unaudited)
Thirteen weeks ended Thirty-nine weeks ended
November November November November
27, 2004 29, 2003 27, 2004 29, 2003
-------- -------- -------- -------
Net Sales $ 70,650 $ 78,470 $ 227,520 $ 227,781
Cost of sales 46,990 54,148 143,781 146,576
-------- -------- -------- --------
Gross Profit on sales 23,660 24,322 83,739 81,205
Other income (expense) (54) (402) 790 542
Selling, general and administrative expenses 20,378 22,265 70,850 69,151
-------- -------- -------- --------
Income from operations 3,228 655 13,679 12,596
Interest income, net 883 445 1,924 1,929
-------- -------- -------- --------
Income before provision for income taxes 4,111 1,100 15,603 14,525
Provision for income taxes 1,320 118 5,055 4,750
-------- -------- -------- --------
Net Income $ 2,791 $ 982 $ 10,548 $ 9,775
======== ======== ======== ========
Basic net income per share 0.07 0.02 0.26 0.24
Diluted net income per share 0.07 0.02 0.26 0.23
Weighted average shares outstanding - Basic 40,412,000 40,530,000 40,482,000 40,610,000
Weighted average shares outstanding - Diluted 41,253,000 41,822,000 41,280,000 41,726,000
THE TOPPS COMPANY, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Amounts in Thousands)
As of As of
November 27, 2004 February 28, 2004
----------------- -----------------
Cash and Equivalents $ 116,703 $ 93,837
Working Capital 143,252 133,299
Net Property, Plant and Equipment 12,521 13,786
Total Assets 282,253 275,463
Shareholders' Equity 215,991 211,277
SEGMENT INFORMATION
(Amounts in Thousands)
Thirteen weeks ended Thirty-nine weeks ended
November November November November
27, 2004 29, 2003 27, 2004 29, 2003
-------- -------- -------- --------
Net Sales
---------
Confectionery $ 28,992 $ 31,819 $ 113,181 $ 119,357
Entertainment Products 41,658 46,651 114,339 108,424
-------- -------- -------- --------
Total $ 70,650 $ 78,470 $ 227,520 $ 227,781
======== ======== ======== ========
Contributed Margin
------------------
Confectionery $ 8,885 $ 9,253 $ 37,664 $ 38,493
Entertainment Products 12,923 10,964 35,349 28,383
-------- -------- -------- --------
Total $ 21,808 $ 20,217 $ 73,013 $ 66,876
======== ======== ======== ========
Reconciliation of Contributed Margin
to Income Before Provision for Taxes:
-------------------------------------
Total Contributed Margin $ 21,808 $ 20,217 $ 73,013 $ 66,876
Unallocated General and Administrative
Expenses and Manufacturing Overhead (16,970) (17,206) (55,407) (50,024)
Depreciation & Amortization ( 1,556) ( 1,954) ( 4,717) ( 4,798)
Other Income (Expense) (54) (402) 790 542
-------- -------- -------- --------
Income from Operations 3,228 655 13,679 12,596
Interest Income, Net 883 445 1,924 1,929
-------- -------- -------- --------
Income before Provision for Income Taxes $ 4,111 $ 1,100 $ 15,603 $ 14,525
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