sec document
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant / /
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/ / Preliminary Proxy Statement
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14a-6(e)(2))
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/X/ Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
THE TOPPS COMPANY, INC.
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(Name of Registrant as Specified in Its Charter)
PEMBRIDGE VALUE OPPORTUNITY FUND LP
PEMBRIDGE CAPITAL MANAGEMENT LLC
CRESCENDO PARTNERS II L.P. SERIES Y
CRESCENDO INVESTMENTS II, LLC
CRESCENDO ADVISORS LLC
ERIC ROSENFELD
TIMOTHY E. BROG
ARNAUD AJDLER
JOHN J. JONES
TOPPS FULL VALUE COMMITTEE
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On June 23, 2006, the Topps Full Value Committee (the "Committee"),
together with the other participants (as defined below), made a definitive
filing with the Securities and Exchange Commission ("SEC") of a proxy statement
and accompanying GOLD proxy card to be used to solicit votes for the election of
its slate of director nominees and certain business proposals at the 2006 annual
meeting of stockholders scheduled to be held July 28, 2006 (the "2006 Annual
Meeting") of The Topps Company, Inc., a Delaware corporation (the "Company").
Item 1: On July 11, 2006, the Committee issued the following press release:
FOR IMMEDIATE RELEASE
Tuesday, July 11, 2006
TOPPS FULL VALUE COMMITTEE DELIVERS LETTER TO
TOPPS' STOCKHOLDERS
New York, NY, July 11, 2006 - Citing that The Topps Company, Inc.
(Nasdaq: TOPP) Board has overseen a dramatic deterioration of the operations of
the business, a lagging stock price and significant erosion to stockholder
value, the Topps Full Value Committee delivered the following letter to Topps'
stockholders on Monday, July 10, 2006.
TOPPS FULL VALUE COMMITTEE
708 THIRD AVENUE, 22ND FLOOR
NEW YORK, NEW YORK 10017
(212) 557-6150
July 10, 2006
Fellow Topps Stockholders:
IT IS TIME FOR A CHANGE
Over the last five years, Topps' Board of Directors has overseen a dramatic
deterioration of the operations of the business and a lagging stock price.
During that time period, the Topps Board, in our opinion, failed to take action
to overhaul management and to reduce the Company's cost structure. Instead, the
very Board that was elected to represent our best interests has doled out
excessive salary and bonuses to the Chairman and Chief Executive Officer, Arthur
Shorin.
FAILURE TO MAXIMIZE FULL VALUE OF THE BAZOOKA BRAND
A perfect example of such deterioration under the Board's watch is the
failure to maximize the full value of the iconic Bazooka brand over the past 20
years. Bazooka and other gum products sales were $26.2 million in fiscal year
1985. Twenty-one years later, gum sales were down more than 60% to $10 million
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in fiscal year 2006. But don't just take it from us. Paul Cherrie, a Topps
Managing Director stated publicly that "We've almost missed an entire
generation." Scott Silverstein, the President and Chief Operating Officer of the
Company and the son-in-law of Arthur Shorin, admitted on a January 2006 earnings
conference call that the reason why Topps does not currently sell its Bazooka
gum to warehouse shopping clubs, such as Costco and Sam's Club, is that the
clubs' retail price for bubble gum was LESS than the cost for Topps to
manufacture its gum. ADVERTISINGAGE reported recently that "Bazooka disappeared
from the airwaves and virtually all other forms of communication over the last
decade." It seems to us that the Bazooka brand is not the only thing that
disappeared during this time. Where was the Board and management when Topps'
manufacturing costs made Bazooka so uncompetitive?
ACQUISITION OF WIZKIDS
Another example of poor management and capital allocation is the purchase
of WizKids for approximately $29 million in July 2003. During the recent first
quarter conference call, Topps' CFO stated that "the sales softness at WizKids
was a key factor in the decline in the entertainment segment's margins" and "as
for WizKids, the market remains a difficult one and we are responding
appropriately by focusing in on smaller core product lines and downsizing
accordingly." Mr. Weisman, the co-founder and CEO of WizKids, was terminated in
June 2006.
PROMISES, PROMISES AND MORE PROMISES - WE HAVE HEARD THEM ALL BEFORE
The Company is now asking you to trust its "strategic plan." After years of
dismal operating performance and poor corporate governance, can you afford to
believe what the Topps Board and management are now telling you? Given Topps'
recent track record, we have no confidence that this Board can create or enhance
stockholder value. Here are some quotes from prior annual reports, illustrating
management's unfulfilled promises:
TOPPS ANNUAL REPORT PUBLISHED MAY 2002
"Fiscal 2003 is going to be a year of strategic investment...for future growth
and profitability."
TOPPS ANNUAL REPORT PUBLISHED MAY 2003
"We took the steps necessary to bring staffing, costs and marketing plans more
in line with reality."
TOPPS ANNUAL REPORT PUBLISHED MAY 2004
"In the U.S., we restructured our sports business early in the year, paring down
the product line to focus on the more profitable releases and reducing overhead
costs by over $1.5 million on an annualized basis."
LET'S LOOK AT THE FACTS - THE TOPPS BOARD HAS OVERSEEN
SIGNIFICANT EROSION TO STOCKHOLDER VALUE
o Over the last five years, Income from Operations fell significantly
from approximately $36.6 million in fiscal year 2002 to a LOSS of
approximately $2.3 million in fiscal year 2006. However, this did not
stop the Board from authorizing increases in salaries and bonuses for
management during these five years.
o The Company has been so poorly managed that gross margin is at a
ten-year low while SG&A expenses as a percentage of sales are at a
ten-year high.
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OUR NOMINEES CAN MAKE A DIFFERENCE AND THEY DO HAVE A PLAN
The Topps Board is telling you that the Committee does not have a plan to
enhance stockholder value. We believe the real story is the Topps directors
simply do not want three independent directors on their board who will press
them to align compensation with stockholders' interests, to eliminate related
party dealings, to allocate capital more efficiently and to hire an investment
bank to explore strategic alternatives, all with the objective of enhancing
operating performance and enhancing the value of the Company for all of its
stockholders. The Committee believes that its nominees will be able to make a
tremendous difference because their election will send a very strong message to
the existing Board and management that stockholders want change and the status
quo is not acceptable. Our nominees - Timothy Brog, Arnaud Ajdler and John Jones
have complementary skills and business experience to contribute to this Board.
They have relevant M&A, business development and corporate governance experience
that will benefit the current Board. Our plan contains a two-pronged approach,
one of which is Strategic and the other Operational:
EXPLORE ALL STRATEGIC ALTERNATIVES
o Hire an investment bank to explore the sale of all or part of the
Company in a tax efficient manner
o Allocate capital in a more efficient manner
o Significant repurchase of Topps' stock either in the open market or as
part of a self-tender offer
o Distribute a large special dividend
OPERATIONAL IMPROVEMENTS
o Significantly reduce the Company's cost structure
o Reduce executive compensation and tie bonuses to significant
improvements in operations
IT IS TIME FOR A CHANGE
TO PROTECT YOUR INVESTMENT, PLEASE SIGN, DATE,
AND RETURN THE ENCLOSED GOLD PROXY CARD TODAY!
If you have any questions or need assistance voting your shares, please
call D.F. King & Co., Inc. who is assisting us in this solicitation, TOLL FREE,
at (800) 628-8532.
Thank you for your support,
Timothy Brog and Eric Rosenfeld
Topps Full Value Committee
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
THE TOPPS FULL VALUE COMMITTEE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") ON JUNE 23, 2006 A DEFINITIVE PROXY STATEMENT AND ACCOMPANYING GOLD
PROXY CARD, TO BE USED TO SOLICIT VOTES FOR THE ELECTION OF ITS SLATE OF
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DIRECTOR NOMINEES AND CERTAIN BUSINESS PROPOSALS FOR USE AT THE 2006 ANNUAL
MEETING. THE COMMITTEE STRONGLY ADVISES ALL TOPPS STOCKHOLDERS TO READ THE PROXY
STATEMENTS AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY
CONTAIN IMPORTANT INFORMATION.
STOCKHOLDERS WILL BE ABLE TO OBTAIN FREE COPIES OF THE PROXY STATEMENT FILED
WITH THE SEC BY THE TOPPS FULL VALUE COMMITTEE THROUGH THE WEBSITE MAINTAINED BY
THE SEC AT WWW.SEC.GOV. IN ADDITION, INVESTORS WILL BE ABLE TO OBTAIN FREE
COPIES OF THE PROXY STATEMENT FROM THE TOPPS FULL VALUE COMMITTEE BY CONTACTING
TIMOTHY BROG, PEMBRIDGE CAPITAL, 708 THIRD AVENUE, NEW YORK, NY 10017 OR BY
CALLING D.F. KING & CO., INC. AT (800) 628-8532.
THE PARTICIPANTS IN THE PROXY SOLICITATION ARE PEMBRIDGE VALUE OPPORTUNITY FUND
LP, A DELAWARE LIMITED PARTNERSHIP, PEMBRIDGE CAPITAL MANAGEMENT LLC, A DELAWARE
LIMITED LIABILITY COMPANY, TIMOTHY E. BROG, CRESCENDO PARTNERS II, L.P., SERIES
Y, A DELAWARE LIMITED PARTNERSHIP, CRESCENDO INVESTMENTS II, LLC, A DELAWARE
LIMITED LIABILITY COMPANY, CRESCENDO ADVISORS LLC, A DELAWARE LIMITED LIABILITY
COMPANY, ERIC ROSENFELD, ARNAUD AJDLER AND JOHN J. JONES.
INFORMATION CONCERNING THE PARTICIPANTS AND THEIR INTERESTS IN THE SOLICITATION
IS SET FORTH IN THE PROXY STATEMENT FILED WITH THE SEC.
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Contacts:
Timothy Brog Eric Rosenfeld
Pembridge Value Opportunity Fund LP Crescendo Partners II L.P, Series Y
(212) 557-6150 (212) 319-7676
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