FOR IMMEDIATE RELEASE
THE TOPPS COMPANY, INC. REPORTS FISCAL 2005
FOURTH QUARTER AND YEAR-END RESULTS
New York, NY, April 7, 2005 - The Topps Company, Inc. (Nasdaq: TOPP) today
reported financial results for the fiscal 2005 fourth quarter and year ended
February 26, 2005.
Net sales in the fiscal 2005 fourth quarter were $68.3 million compared to $69.6
million last year. Stronger foreign currencies versus the prior year contributed
$1.2 million to 2005 fourth quarter sales. The Company generated a loss from
operations of $1.7 million compared to income of $2.0 million in last year's
fourth quarter. Net income in the fiscal 2005 fourth quarter was $451,000, or
$0.01 per diluted share, versus $2.9 million, or $0.07 per diluted share, last
year. Results for the fiscal 2005 fourth quarter were impacted by weakness in
the Entertainment segment and increases in overhead stemming from higher
professional fees. These factors were partially offset by improved performance
of the Confectionery segment and a favorable tax rate.
For the year ended February 26, 2005, net sales were $295.9 million compared to
$297.3 million last year. Stronger foreign currencies versus the prior year
increased fiscal 2005 sales by $6.6 million. Income from operations was $12.0
million compared to $14.6 million in the prior-year period. Net income for
fiscal 2005 was $11.0 million, or $0.27 per diluted share, versus $12.7 million,
or $0.31 per diluted share, last year. Results for 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 increased 9.9% to $30.6 million in the fiscal 2005
fourth quarter compared to $27.8 million in the prior-year period. For the full
year, Confectionery net sales declined 2.3% to $143.8 million. Fourth quarter
sales increases were attributable to expanded distribution of Juicy Drop Pop, as
well as some pipeline fill in advance of certain promotional activity on the
brand, earlier shipment of Easter products due to the timing of the holiday this
year, gains in Ring Pop sales to wholesale clubs and initial sales of Crunchy
Snakes candy recently launched in Europe.
Entertainment sales declined 9.5% to $37.8 million in the fiscal 2005 fourth
quarter from $41.7 million in the prior-year period. Full year Entertainment
sales increased 1.3% to $152.1 million. Fourth quarter Entertainment sales were
impacted by weakness in European sports products. Additionally, year ago fourth
quarter results benefited from strong sales of Yu-Gi-Oh! products in Europe as
well as from Garbage Pail Kids, a company-created brand, which continues to
contribute to results although at lower levels. World Wrestling Entertainment
products in Europe performed well in the recent period.
Topps sports cards showed sales improvement versus the prior-year period due to
additional football and baseball releases, albeit at lower margins. WizKids
sales grew 24% as a result of a broadened product line highlighted by
encouraging sales of Pirates products.
Arthur T. Shorin, Chairman and CEO of Topps, commented, "We are pleased with
fourth quarter Confectionery results as well as WizKids recent performance.
Overall results in the quarter, however, were disappointing in part due to
European sports and the lack of a strong licensed property in the period as
compared with last year."
TOPPS - FOURTH QUARTER AND FULL YEAR FISCAL 2005 FINANCIAL RESULTS
Page Two
Mr. Shorin continued, "Nonetheless, during the quarter, we continued taking
action consistent with our strategic review. We reinstated advertising dollars
in our Confectionery business which, while impacting near-term profitability, is
important to driving lasting consumer demand for our brands. Additionally, we
consolidated our broker network to improve distribution and increase retail
coverage, particularly in the grocery and convenience store channels, and
maintained a focus on creating new products.
"Looking ahead, we are implementing measures to further strengthen our
operations. In this regard, we are undertaking a second phase of study aimed at
our business processes, methods, and procedures. Additionally, we are testing
new product concepts in our U.S. sports and WizKids businesses with the intent
of enhancing our portfolio, broadening our demographic reach and appealing more
to children. We are also taking steps to revamp and streamline our product
development processes which will benefit from a more systematic approach."
Mr. Shorin concluded, "We currently expect to produce year-over-year top line
growth in fiscal 2006. Investment spending associated with the outlined
initiatives will most likely lead to operating earnings comparable with fiscal
2005."
During the fourth quarter, the Company paid its regular quarterly cash dividend
to shareholders of $0.04 per share. At February 26, 2005, the Company had $106.4
million in cash and marketable securities 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 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)
Thirteen weeks ended Fifty two weeks ended
February February February February
26, 2005 28, 2004 26, 2005 28, 2004
-------- -------- -------- -------
Net Sales $ 68,345 $ 69,557 $ 295,865 $ 297,338
Cost of sales 46,886 46,841 190,667 193,417
-------- -------- -------- --------
Gross profit on sales 21,459 22,716 105,198 103,921
Other income (expense) 885 89 1,675 631
Selling, general and administrative expenses 24,056 20,806 94,906 89,957
-------- -------- -------- --------
Income from operations (1,712) 1,999 11,967 14,595
Interest income, net 781 497 2,706 2,426
-------- -------- -------- --------
Income before provision for income taxes (931) 2,496 14,673 17,021
Provision for income taxes (1,382) (424) 3,674 4,326
-------- -------- -------- --------
Net Income $ 451 $ 2,920 $ 10,999 $ 12,695
======== ======== ======== ========
Basic net income per share 0.01 0.07 0.27 0.31
Diluted net income per share 0.01 0.07 0.27 0.31
Weighted average shares outstanding - Basic 40,440,000 40,594,000 40,471,000 40,604,000
Weighted average shares outstanding - Diluted 41,275,000 41,083,000 41,327,000 41,515,000
THE TOPPS COMPANY, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Amounts in Thousands)
As of As of
February February
26, 2005 28, 2004
-------- --------
Cash and Equivalents $ 36,442 $ 56,959
Investments 69,955 36,878
Working Capital 138,339 133,299
Net Property, Plant and Equipment 12,553 13,786
Total Assets 286,382 275,463
Shareholders' Equity 215,142 211,277
SEGMENT INFORMATION
(Amounts in Thousands)
Thirteen weeks ended Fifty two weeks ended
February February February February
26, 2005 28, 2004 26, 2005 28, 2004
-------- -------- -------- --------
Net Sales
---------
Confectionery $ 30,582 $ 27,831 $ 143,762 $ 147,188
Entertainment Products 37,763 41,726 152,103 150,150
-------- -------- -------- --------
Total $ 68,345 $ 69,557 $ 295,865 $ 297,338
======== ======== ======== ========
Contributed Margin
------------------
Confectionery $ 9,117 $ 7,241 $ 46,781 $ 45,734
Entertainment Products 9,786 14,084 45,135 42,467
-------- -------- -------- --------
Total $ 18,903 $ 21,325 $ 91,916 $ 88,201
======== ======== ======== ========
Reconciliation of Contributed Margin
to Income Before Provision for Taxes:
-------------------------------------
Total Contributed Margin $ 18,903 $ 21,325 $ 91,916 $ 88,201
Unallocated General and Administrative
Expenses and Manufacturing Overhead (19,956) (17,620) (75,363) (67,644)
Depreciation & Amortization ( 1,544) ( 1,795) ( 6,261) ( 6,593)
Other Income (Expense) 885 89 1,675 631
-------- -------- -------- --------
Income from Operations ( 1,712) 1,999 11,967 14,595
Interest Income, Net 781 497 2,706 2,426
-------- -------- -------- --------
Income before Provision for Income Taxes $ ( 931) $ 2,496 $ 14,673 $ 17,021
======== ======== ======== ========