The Topps Company, Inc. Reports First Quarter Fiscal 2008 Results


NEW YORK, July 17, 2007 -- The Topps Company, Inc. (Nasdaq:TOPP) (the "Company") today reported financial results for the fiscal 2008 first quarter.

Net sales in the fiscal 2008 first quarter were $72.3 million compared to $76.3 million last year. Stronger foreign currencies versus the prior year increased fiscal 2008 first quarter sales by $1.1 million. Income from operations was $1.0 million compared to a loss of $301,000 in last year's first quarter. In the 2008 period, the Company incurred special charges of $3.1 million pre-tax, related to the pending sale of the Company. In the prior year's first quarter, the Company incurred special charges of $500,000 pre-tax for certain proxy contest costs.

Net income for the fiscal first quarter was $1.1 million, or $0.03 per diluted share. In last year's first quarter, the Company reported net income of $388,000 or $0.01 per diluted share.

Arthur T. Shorin, Chairman and CEO of Topps, commented, "The Company continued to post improved operating results which reflect the success of our ongoing efforts to revitalize the U.S. sports business. We are also actively implementing changes across the board in our Confectionery business. However, there are still many challenges in this segment which we expect will continue to impact our performance."

Financial Results by Segment

Entertainment net sales totaled $37.1 million in the fiscal 2008 first quarter, a 6.4% increase from $34.9 million in the prior-year period. First quarter Entertainment performance was driven by continued strong sales of U.S. sports cards across all three sports as well as the earlier shipment of Topps Baseball Series II, which occurred primarily in the first quarter of this year. European sports products sales declined in the period as expected, due to the absence of a World Cup event this year. While there were solid sales of WWE entertainment properties in the U.S. and Europe, as well as Doctor Who and Winx in Europe, non-sports publishing sales decreased in the first quarter due to the expiration of the Company's Pokemon license and lack of other major U.S. licensing properties.

The increase in Entertainment operating margins net of direct overhead to 13.0% for the first quarter of fiscal 2008 from 1.3% in the prior year, combined with solid sales growth, resulted in a significant increase in earnings versus the prior year period. The margin improvement was attributable to the leveraging of fixed costs on the improved U.S. sports card business, increase in sales of high-margin U.S. sports card hobby products as well as a reduction in returns provisions in Europe.

Confectionery net sales were $35.2 million in the first quarter, versus $41.4 million in the prior year period. The sales decline was largely attributable to continued softness in the Company's core lollipops and reduced sales of Pokemon candy in Europe. In addition, the Company's one-time sale of inventory to a new Canadian distributor in the fourth quarter of last year has served to reduce first quarter sales versus a year ago. Increased sales of Mega Mouth Spray in Europe, combined with the Vertigo introduction in the U.S. and Europe, partially offset the decline.

Confectionery earnings declined in the first quarter, driven by a 1.9 percentage point decrease in year-over-year operating margins after direct overhead. Margins reflect the impact of lower sales on a fixed cost base as well as the absence of rebates received in the first quarter of last year from the Company's Far East vendor.

Balance Sheet Information

At June 2, 2007, the Company had $81.5 million in cash and short-term investments and no debt. During the first quarter, the Company paid its regular quarterly cash dividend to shareholders of $0.04 per share. No shares were repurchased in the first quarter.

About Topps

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 may contain forward-looking statements within the meaning 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.


                    THE TOPPS COMPANY, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEET HIGHLIGHTS
                             (Amounts in Thousands)
                                   (Unaudited)

                                                  As of             As of
                                               June 2, 2007     March 3, 2007

    Cash and Cash Equivalents                      $34,288           $28,051
    Short-term Investments                          47,231            53,556
    Working Capital                                132,820           123,845
    Net Property, Plant and Equipment               10,983            11,170
    Total Assets                                   272,132           276,344
    Shareholders' Equity                          $205,185          $203,181



                    THE TOPPS COMPANY, INC. AND SUBSIDIARIES
                               SEGMENT INFORMATION
                             (Amounts in Thousands)
                                   (Unaudited)

                                                      Thirteen Weeks Ended
                                                 June 2, 2007    March 3, 2007

    Net Sales
      Candy                                          $33,424          $39,342
      Gum                                              1,759            2,071
      Total Confectionery                            $35,183          $41,413

      Sports                                          26,531           24,089
      Non-Sports                                      10,580           10,795
      Entertainment Products                          37,111           34,884
    Total                                            $72,294          $76,297

    Contributed Margin
      Confectionery                                  $10,944          $12,482
      Entertainment Products                          11,209            6,344
    Total                                            $22,153          $18,826

    Operating Profit, Net of Overhead
      Confectionery                                   $5,128           $6,803
      Entertainment Products                           4,818              439
    Total                                             $9,946           $7,242


    Reconciliation of Operating Profits,
     Net of Direct Overhead to Income
     Before Provision for Income Taxes:

    Total operating profit, net of direct overhead    $9,946           $7,242
    Indirect overhead                                 (7,846)          (6,178)
    Depreciation & amortization                       (1,103)          (1,365)
    Income (loss) from operations                        997             (301)
    Interest income, net                                 921              757
    Income before provision for income taxes          $1,918             $456



                    THE TOPPS COMPANY, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             (amounts in thousands, except share and per share data)
                                   (Unaudited)

                                                     Thirteen weeks ended
                                                  June 2, 2007    May 27, 2006

    Net sales                                         $72,294         $76,297
    Cost of sales                                      45,161          50,310
        Gross profit on sales                          27,133          25,987

    Selling, general and administrative expenses       26,136          26,288
        Income (loss) from operations                     997            (301)

    Interest income, net                                  921             757
    Income before provision for income taxes            1,918             456

    Provision for income taxes                            824              36
    Net income before discontinued operations           1,094             420

    Loss from discontinued operations - net of tax          -              32
        Net (loss) income                              $1,094            $388


    Basic net income per share:
        - From continuing operations                    $0.03           $0.01
        - From discontinued operations                      -               -
    Basic net income per share                          $0.03           $0.01

    Diluted net income per share:
        - From continuing operations                    $0.03           $0.01
        - From discontinued operations                      -               -
    Diluted net income per share:                       $0.03           $0.01

    Weighted average shares outstanding
        - Basic                                    38,743,000      39,497,000
        - Diluted                                  40,336,000      40,354,000


            

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