THE TOPPS COMPANY, INC. REPORTS FISCAL 2006
FIRST QUARTER RESULTS
New York, NY, June 28, 2005 - The Topps Company, Inc. (Nasdaq: TOPP) today
reported financial results for the fiscal 2006 first quarter ended May 28, 2005.
Net sales in the fiscal 2006 first quarter were $78.9 million compared to $88.1
million last year. Stronger foreign currencies versus the prior year contributed
$1.5 million to 2006 first quarter sales. Income from operations was $397,000
compared to $5.6 million last year. Net income in the fiscal 2006 first quarter
was $897,000, or $0.02 per diluted share, versus $4.1 million, or $0.10 per
diluted share, last year. Fiscal 2005 first quarter results included a one-time
charge of $1.9 million, or approximately $0.05 per diluted share, related to a
European Commission fine.
Profitability for the current period was impacted significantly by softness in
U.S. and European sports, as expected. Professional fees associated with the
recently resolved proxy fight, settlement of the Media Technologies litigation,
and strategic business initiatives were also factors.
Confectionery net sales were essentially flat at $44.0 million in the fiscal
2006 first quarter, a 0.4% decline compared to $44.2 million in last year's
first quarter. Net sales in the period benefited from distribution gains of
Juicy Drop Pop in the U.S., supported by new packaging and increased advertising
as well as new product introductions. Gains were offset by the timing of the
Easter holiday this year and the discontinuation of Juicy Bugs and Juicy Chews.
Entertainment net sales declined 20.6% to $34.8 million in the fiscal 2006 first
quarter from $43.9 million in the prior-year period, reflecting the absence of
sales related to the European Cup held once every four years, lower sales of
other European sports products, and continuing softness in U.S. sports cards.
These declines were partially offset by strength in non-sports Entertainment
products including Star Wars in the U.S. and Europe, World Wrestling
Entertainment in Italy, and WizKids constructible strategy games.
Arthur T. Shorin, Chairman and CEO of Topps, commented, "During the first
quarter, we rolled out certain confectionery products to new markets, continued
to work at implementing our new go-to-market strategy for the segment, and began
developing an exciting program to build the Bazooka brand that will be
introduced early next year. Sports products declined, as noted, but efforts in
connection with product proliferation issues were actively pursued. As
anticipated, sales of non-sports publishing products and Pirates constructible
strategy games fared well in the first quarter.
Mr. Shorin continued, "We remain focused upon doing the right things to improve
long-term performance and build shareholder value. These include completing the
final phase of in-depth business reviews with outside consultants and continuing
the exploration of strategic alternatives, previously announced, which we
initiated with Lehman Brothers this past February.
Mr. Shorin concluded, "First quarter results do not diminish our confidence
about achieving the full year plan we outlined at the beginning of fiscal 2006.
I anticipate increasingly better performance from the Confectionery segment
during the second half. Further, Entertainment activities, including WizKids
introductions and a national roll out of TV advertising featuring Wacky
Packages, are quite promising."
During the first quarter, the Company paid its regular quarterly cash dividend
to shareholders of $0.04 per share. At May 28, 2005, the Company had $92.9
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
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(amounts in thousands)
As of As of
May 28, 2005 February 26, 2005
------------ -----------------
Cash and Equivalents $ 22,048 $ 36,442
Investments 70,881 69,955
Working Capital 134,645 138,146
Net Property, Plant and Equipment 12,531 12,553
Total Assets 281,878 290,411
Shareholders' Equity 216,702 219,189
SEGMENT INFORMATION
(Amounts in thousands)
Quarter Ended
May 28, 2005 May 29, 2004
------------ ------------
Net Sales
---------
Confectionery $ 44,039 $ 44,207
Entertainment Products 34,827 43,882
--------- ---------
Total $ 78,866 $ 88,089
========= =========
Contributed Margin
------------------
Confectionery $ 11,840 $ 13,002
Entertainment Products 8,281 13,428
--------- ---------
Total $ 20,121 $ 26,430
========= =========
Reconciliation of Contributed Margin
to Income Before Provision for Taxes:
-------------------------------------
Total Contributed Margin $ 20,121 $ 26,430
Unallocated General and Administrative
Expenses and Manufacturing Overhead (19,245) (19,632)
Depreciation & Amortization ( 1,431) ( 1,592)
Other Income 952 433
--------- ----------
Income from Operations 397 5,639
Interest Income, Net 739 484
--------- ----------
Income before Provision for
Income Taxes $ 1,136 $ 6,123
========= ==========
THE TOPPS COMPANY, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share data)
(Unaudited)
Thirteen weeks ended
May 28, 2005 May 29, 2004
------------ ------------
Net Sales $ 78,866 $ 88,089
Cost of sales 51,192 54,290
--------- ---------
Gross profit on sales 27,674 33,799
Other income 952 433
Selling, general and
administrative expenses 28,229 28,593
--------- ---------
Income from operations 397 5,639
Interest income, net 739 484
--------- ---------
Income before provision
for income taxes 1,136 6,123
Provision for income taxes 239 2,021
--------- ---------
Net income $ 897 $ 4,102
========= =========
Basic net income per share 0.02 0.10
Diluted net income per share 0.02 0.10
Weighted average shares
outstanding - Basic 40,455,000 40,567,000
Weighted average shares
outstanding - Diluted 41,255,000 41,372,000