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The Topps Company, Inc. Reports Fiscal 2004 Fourth Quarter and Full Year Results
The Topps Company, Inc. (Nasdaq:TOPP) today reported financial results for the
fiscal 2004 fourth quarter and year ended February 28, 2004.
Net sales in the fiscal 2004 fourth quarter were $69.8 million compared to $65.7
million last year. Stronger foreign currencies versus the prior year increased
2004 fourth quarter sales by $3.1 million. Income from operations was $2.0
million compared to $3.0 million in the same period last year. Net income was
$2.9 million, or $0.07 per diluted share, versus $2.0 million, or $0.05 per
diluted share, in the prior year period. Results for the fiscal 2004 fourth
quarter benefited by $0.04 per diluted share due to a difference in the tax rate
for this year's fourth quarter versus the same quarter in the prior year.
For the twelve months ended February 28, 2004, net sales were $297.3 million
compared to $290.1 million last year. Stronger foreign currencies versus the
prior year added $9.7 million to full year fiscal 2004 sales results. Income
from operations was $14.6 million compared to $20.8 million last year. Net
income was $12.7 million, or $0.31 per diluted share, versus $16.9 million, or
$0.40 per diluted share, in the prior year.
Confectionery sales declined 13.3% in the fourth quarter resulting in flat sales
for the full fiscal year. Fourth quarter sales in the U.S. were impacted by
several factors including continued softness in wholesale clubs, the effects of
delayed new product introductions, and a reduction in certain promotional
activity undertaken by major retailers last year. Domestic performance was
partially offset by growth of international confectionery sales which benefited
from the successful introduction of Juicy Drop Pop.
Entertainment sales increased 25.1% in the fourth quarter and 4.8% for the full
year. The addition of WizKids and strong sales of European sports sticker and
album products drove the fourth quarter and full year increase. Additionally,
Yu-Gi-Oh! in Europe and Garbage Pail Kids in the U.S. performed well. WizKids
contributed $4.2 million in revenue in the fourth quarter and generated a
pre-tax loss of $1.0 million for the period, which was a smaller loss than
previously anticipated. U.S. sports card sales declined in the quarter as
expected.
Arthur T. Shorin, Chairman and CEO of Topps, commented, "In fiscal 2004, we
undertook a number of strategic initiatives to drive long-term Company
performance. In Confectionery, while financial results came in below
expectations, we made significant inroads into branded, non-lollipop products
marked by the introduction of Juicy Bugs, Juicy Drop Chews, and Big Mouth Candy
Spray which occurred too late in the fiscal year to contribute meaningfully.
Additionally, distribution of Juicy Drop Pops reached sufficient levels to
justify a full television advertising schedule which began in late February. We
also made significant headway in achieving targeted distribution gains in a
number of European markets.
"Within Entertainment, we placed additional focus in Europe on football products
and extended the successful mini-album format to new markets and licenses. In
the U.S., we restructured the sports business, pared down our offerings, and
reduced overhead. While we experienced a year-on-year decline during fiscal
2004, we fared considerably better than our expectations, fueled in part by
stronger basketball sales. We also established a new avenue for growth with the
acquisition of WizKids, which we continue to believe offers us long-term
potential by applying its game design capabilities to the Company's overall line
of products."
Mr. Shorin concluded, "We currently anticipate a return to operating earnings
growth in fiscal 2005."
During the fourth quarter, the Company paid a cash dividend to shareholders of
$0.04 per share. Additionally, the Company repurchased 63,200 shares of stock at
an average price of $9.06 per share. At February 28, 2004, the Company had $93.8
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.
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 and 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.
THE TOPPS COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except share data)
(Unaudited)
Quarter ended Year ended
February 28, March 1, February 28, March 1,
2004 2003 2004 2003
Net sales $ 69,775 $ 65,688 $297,338 $290,115
Cost of sales 47,293 43,533 193,417 188,375
Gross profit on sales 22,482 22,155 103,921 101,740
Other income (expense) 286 322 631 184
Selling, general and
administrative expenses 20,769 19,484 89,957 81,142
Income from operations 1,999 2,993 14,595 20,782
Interest income, net 497 643 2,426 2,516
Income before provision
for income taxes 2,496 3,636 17,021 23,298
Provision for income taxes (424) 1,643 4,326 6,362
Net income $ 2,920 $ 1,993 $ 12,695 $ 16,936
Basic net income per share 0.07 0.05 0.31 0.41
Diluted net income per share 0.07 0.05 0.31 0.40
Weighted average shares
outstanding - Basic 40,594,000 40,727,000 40,604,000 41,353,000
Weighted average shares
outstanding - Diluted 41,557,000 41,380,000 41,515,000 42,065,000
THE TOPPS COMPANY, INC.
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(Amounts in Thousands)
As of As of
February 28, 2004 March 1, 2003
Cash and Equivalents $ 93,837 $ 114,259
Working Capital 133,299 141,484
Net Property, Plant and Equipment 13,786 14,606
Total Assets 275,463 262,756
Shareholders' Equity $ 211,277 $ 196,768
SEGMENT INFORMATION
(Amounts in Thousands)
Quarter Ended Year Ended
February 28, March 1, February 28, March 1,
2004 2003 2004 2003
Net Sales
Confectionery $ 28,027 $ 32,326 $ 147,254 $ 146,901
Entertainment Products 41,748 33,362 150,084 143,214
Total $ 69,775 $ 65,688 $ 297,338 $ 290,115
Contributed Margin
Confectionery $ 7,241 $ 11,124 $ 45,734 $ 52,101
Entertainment Products 14,084 10,616 42,467 39,313
Total $ 21,325 $ 21,740 $ 88,201 $ 91,414
Reconciliation of Contributed
Margin to Income Before
Provision for Taxes:
Total Contributed Margin $ 21,325 $ 21,740 $ 88,201 $ 91,414
Unallocated General and
Administrative Expenses
and Manufacturing
Overhead (17,817) (17,712) (67,644) (65,778)
Depreciation & Amortization (1,795) (1,357) (6,593) (5,038)
Other Income (Expense) 286 322 631 184
Income from Operations 1,999 2,993 14,595 20,782
Interest Income, Net 497 643 2,426 2,516
Income before Provision
for Income Taxes $ 2,496 $ 3,636 $ 17,021 $ 23,298
Source: The Topps Company, Inc.
Date: April 6, 2004
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