UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended May 27, 2006

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.  For the transition period from  ____________ to ___________

                        Commission File Number: 000-15817

                             THE TOPPS COMPANY, INC.
             (Exact name of registrant as specified in its charter)

                                    Delaware
         (State or other jurisdiction of incorporation or organization)

                                   11-2849283
                      (I.R.S. Employer Identification No.)

                    One Whitehall Street, New York, NY 10004
          (Address of principal executive offices, including zip code)

                                 (212) 376-0300
              (Registrant's telephone number, including area code)

                                       N/A
              (Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.  Yes _X_ No ____.

Indicate by check mark whether the registrant is a large accelerated filer, an
 accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer | |    Accelerated filer |X|   Non-accelerated filer | |


Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes ___ No __X__

The  number  of  outstanding  shares  of  Common  Stock  as of June 28, 2006 was
39,147,060.


                                       1
<PAGE>

                             THE TOPPS COMPANY, INC.
                                AND SUBSIDIARIES


                         PART I - FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS


                        Index                                           Page
                        -----                                           ----

     Condensed Consolidated Balance Sheets as of May 27, 2006
       and February 25, 2006                                              3

     Condensed Consolidated Statements of Operations for the
       thirteen weeks ended  May 27, 2006 and May 28, 2005                4

     Condensed Consolidated Statements of Comprehensive Income (Loss)
       for the thirteen weeks ended May 27, 2006 and May 28, 2005         5

     Condensed Consolidated Statements of Cash Flows for the thirteen
       weeks ended May 27, 2006 and May 28, 2005                          6

     Notes to Condensed Consolidated Financial Statements                 7

     Report of Independent Registered Public Accounting Firm             15


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS                            16

ITEM 3. DISCLOSURES ABOUT MARKET RISK                                    19

ITEM 4. CONTROLS AND PROCEDURES                                          19


--------------------------------------------------------------------------------
                           PART II - OTHER INFORMATION
--------------------------------------------------------------------------------


ITEM 1. LEGAL PROCEEDINGS                                                20

ITEM 1A RISK FACTORS                                                     21

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS      21

ITEM 6. EXHIBITS                                                         22


                                       2
<PAGE>

                    THE TOPPS COMPANY, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
             (amounts in thousands, except per share and share data)

                                                               (Unaudited)
                                                            May        February
                                                          27, 2006     25, 2006
                                                          --------     --------
ASSETS
------
CURRENT ASSETS:
  Cash and cash equivalents ..........................     $27,557      $28,174
  Short-term investments .............................      52,071       53,269
  Accounts receivable, net ...........................      38,384       31,180
  Inventories ........................................      42,153       36,781
  Income tax receivable ..............................       1,330        1,407
  Deferred tax assets ................................       5,672        5,687
  Prepaid expenses and other current assets ..........       9,060       11,134
                                                         ---------    ---------
        TOTAL CURRENT ASSETS .........................     176,227      167,632

PROPERTY, PLANT AND EQUIPMENT ........................      31,073       30,430
  Less:  accumulated depreciation and amortization ...      20,219       19,402
                                                         ---------    ---------
        PROPERTY, PLANT AND EQUIPMENT ................      10,854       11,028
                                                         ---------    ---------

GOODWILL .............................................      63,405       63,405
INTANGIBLE ASSETS, net ...............................       5,998        6,424
DEFERRED TAX ASSETS ..................................       7,269        6,334
OTHER ASSETS .........................................      12,087       13,815
                                                         ---------    ---------
        TOTAL ASSETS .................................   $ 275,840    $ 268,638
                                                         =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
  Accounts payable ...................................   $  12,212    $  11,263
  Accrued expenses and other liabilities .............      31,586       25,345
  Income taxes payable ...............................       4,121        3,311
                                                         ---------    ---------
        TOTAL CURRENT LIABILITIES ....................      47,919       39,919

OTHER LIABILITIES ....................................      24,202       24,083
                                                         ---------    ---------
        TOTAL LIABILITIES ............................      72,121       64,002
                                                         ---------    ----------

STOCKHOLDERS' EQUITY:
  Preferred stock, par value $.01 per share; authorized
    10,000,000 shares, none issued ...................         -           -

  Common stock, par value $.01 per share; authorized
    100,000,000 shares; issued 49,244,000 shares as of
    of May 27, 2006 and February 25, 2006 ............         492          492

  Additional paid-in capital .........................      28,699       28,644

  Treasury stock, 9,915,000 shares and 9,539,000 shares
    as of May 27, 2006 and February 25, 2006 .........     (94,947)     (91,376)

  Retained earnings ..................................     270,014      269,954

  Minimum pension liability adjustment ...............      (5,551)      (5,551)

  Unrealized loss on securities available for sale ...        (311)          --

  Cummulative foreign currency adjustment ............       5,323        2,473
                                                          ---------    ---------
        TOTAL STOCKHOLDERS' EQUITY ...................     203,719      204,636
                                                         ---------    ---------

        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...   $ 275,840    $ 268,638
                                                         =========    =========

See Notes to Condensed Consolidated Financial Statements.


                                      3
<PAGE>



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


                                                       (Unaudited)
                                                  Thirteen weeks ended
                                                  May             May
                                                27, 2006        28, 2005
                                                --------        --------

Net sales                                       $ 80,971        $ 78,584

Cost of sales                                     53,043          50,940
                                                --------        --------
   Gross profit on sales                          27,928          27,644

Selling, general and administrative expenses      26,288          27,137
                                                --------        --------
     Income from operations                        1,640             507

Interest income, net                                 757             740
                                                --------        --------
Income before provision for income taxes           2,397           1,247

Provision for income taxes                           760             285
                                                --------        --------
Net income from continuing operations              1,637             962

Loss from discontinued operations -net of tax         32              65
                                                --------        --------
   Net income                                   $  1,605        $    897
                                                ========        ========


Basic net income per share
  - From continuing operations                  $   0.04        $   0.02
  - From discontinued operations                $     --        $     --
                                                --------        --------
Basic net income per share                      $   0.04        $   0.02
                                                ========        ========

Diluted net income per share:
   - From continuing operations                 $   0.04        $   0.02
   - From discontinued operations               $     --        $     --
                                                --------        --------
Diluted net income per share                    $   0.04        $   0.02
                                                ========        ========


Weighted average shares outstanding
   - basic                                      39,497,000      40,455,000
   - diluted                                    40,354,000      41,255,000




            See Notes to Condensed Consolidated Financial Statements.


                                       4
<PAGE>

                    THE TOPPS COMPANY, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED STATEMENTS OF
                           COMPREHENSIVE INCOME (LOSS)
                             (amounts in thousands)



                                                       (Unaudited)
                                                  Thirteen weeks ended
                                                  May             May
                                                27, 2006        28, 2005
                                                --------        --------

Net income                                      $  1,605        $    897

Unrealized loss on securities
  available for sale                                (311)             --

Currency translation adjustment                    2,850          (1,806)
                                                ---------       ---------
     Comprehensive income (loss)                $  4,144        $   (909)
                                                =========       =========






































            See Notes to Condensed Consolidated Financial Statements.


                                       5
<PAGE>

                    THE TOPPS COMPANY, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)


                                                               (Unaudited)
                                                          Thirteen weeks ended
                                                            May           May
                                                          27, 2006     28, 2005
                                                          --------     --------

Cash flows from operating activities:
  Net income from continuing operations.................  $  1,637     $   962
  Adjustments to reconcile net income to cash flows
    provided by (used in) operating activities:
  Depreciation and amortization ........................     1,243       1,394
  Share based compensation                                      55          --
  Deferred income taxes ................................      (920)       (689)

Net effect of changes in:
  Accounts receivable ..................................    (7,204)        291
  Inventories ..........................................    (5,372)     (4,969)
  Income tax receivable ................................        77          11
  Income tax payable ...................................       810        (864)
  Prepaid expenses and other current assets ............     2,074       1,425
  Payables and other current liabilities ...............     7,190      (5,406)
  All other ............................................       943      (1,517)
                                                            -------     -------
    Cash provided by (used in) operating activities
      -- continuing operations .........................       533      (9,362)
    Cash used in operating activites -- discontinued
      operations .......................................       (32)        (73)
                                                            -------     -------
    Cash provided by (used in) operating activites --total     501      (9,435)

Cash flows from investing activities:
  Purchase of short-term investments ...................    (29,880)   (101,901)
  Sale of short-term investments .......................     30,767     100,975
  Purchases of property, plant and equipment ...........       (643)      (673)
                                                           ---------  ---------
    Cash provided by (used in) investing activities ....        244     (1,599)

Cash flows from financing activities:
  Dividends paid ........................................    (1,545)    (1,618)
  Exercise of stock options .............................     1,389         40
  Purchase of treasury stock ............................    (4,960)        --
                                                           ---------    --------
    Cash used in financing activities - continuing
      operations ........................................    (5,116)    (1,578)

Effect of exchange rates on cash and cash equivalents ...     3,754     (1,782)

Net decrease in cash and cash equivalents ...............     ( 617)   (14,394)

Cash and cash equivalents at beginning of period ........    28,174      36,442
                                                           ---------   ---------
Cash and cash equivalents at end of period ..............  $ 27,557    $ 22,048
                                                           =========   =========

Supplemental disclosure of cash flow information:

  Interest paid .........................................  $     33    $     28
                                                           ========    ========
  Income taxes paid .....................................  $    676    $  1,123
                                                           ========    ========


            See Notes to Condensed Consolidated Financial Statements.


                                       6
<PAGE>


                    THE TOPPS COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF MAY 27, 2006 AND FEBRUARY 25, 2006
         AND FOR THE THIRTEEN WEEKS ENDED MAY 27, 2006 AND MAY 28, 2005


1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying  unaudited condensed interim consolidated  financial statements
have  been  prepared  by The  Topps  Company,  Inc.  and its  subsidiaries  (the
"Company")  pursuant to the rules and regulations of the Securities and Exchange
Commission and reflect all adjustments  which are, in the opinion of management,
considered necessary for a fair presentation. Operating results for the thirteen
week periods ended May 27, 2006 and May 28, 2005 are not necessarily  indicative
of the results that may be expected for the year. For further information, refer
to the  consolidated  financial  statements  and notes  thereto in the Company's
annual report for the year ended February 25, 2006.

Impact of Recent Accounting Pronouncements

Share-Based Compensation Plans

Effective  February 26, 2006,  the Company  adopted the  provisions of Financial
Accounting   Standards   Board  ("FASB")   Statement  No.  123  (revised  2004),
"Share-Based  Payment" ("SFAS 123R") using the modified  prospective  transition
method.  Under this  method,  prior  periods  are not  revised  for  comparative
purposes and the Company  recognizes  compensation cost using a fair-value based
method for all  share-based  payments  granted after February 25, 2006, plus any
awards granted to employees up through February 25, 2006 that remain unvested at
that time. Prior to February 26, 2006, the Company accounted for its share-based
compensation  plans in accordance  with the provisions of Accounting  Principles
Board ("APB") Opinion No. 25.  "Accounting  for Stock Issued to Employees",  and
related  interpretations  including FASB  Interpretation No. 44, "Accounting for
Certain  Transactions  Involving Stock  Compensation--An  Interpretation  of APB
Opinion No. 25". On November 10, 2005,  the FASB issued FASB Staff  Position No.
FAS 123(R)-3,  "Transition  Election  Related to  Accounting  for Tax Effects of
Share-Based  Payment  Awards." The Company has elected to adopt the  alternative
transition  method  provided  in  this  FASB  Staff  Position  for  purposes  of
calculating the pool of excess tax benefits available to absorb tax deficiencies
recognized subsequent to the adoption of SFAS 123R.

The  Company  has  Stock   Option   Plans  that  provide  for  the  granting  of
non-qualified  stock  options,  incentive  stock options and stock  appreciation
rights (SARs) to employees,  non-employee  directors and consultants  within the
meaning of Section 422A of the Internal  Revenue Code.  Options are granted with
an exercise  price equal to the closing  market  price of the stock on the grant
date,  generally  vest  within  three years and expire ten years after the grant
date. The Company re-issues treasury shares when stock options are exercised and
the Company  anticipates  that it will have enough treasury shares  purchased to
cover all outstanding stock options.

The  Company  recorded   compensation  cost  arising  from  share-based  payment
arrangements in selling, general and administrative expenses on the Consolidated
Statement of Operations for the Company's Stock Option Plans of $55,000 and zero
for the thirteen weeks ended May 27, 2006 and May 28, 2005, respectively.

As a result of adopting  SFAS 123R,  the Company's  income before  provision for
income  taxes and net  income  for the  thirteen  weeks  ended May 27,  2006 was
$55,000 and $38,000 lower, respectively.  Basic and diluted income per share for
the  thirteen  weeks  ended May 27,  2006,  did not change  materially  from the
reported  $0.04 and $0.04,  respectively,  upon the  Company's  adoption of SFAS
123R.

Determining Fair Value

Valuation and Amortization Method: The fair value of stock options granted under
the Company's  Stock Option Plans is estimated  using the  Black-Scholes  option
pricing model.  The fair value of stock options  granted after February 25, 2006
will be amortized on a straight-line  basis.  Compensation  expense is amortized
over the  requisite  service  periods of the  awards,  which are  generally  the
vesting periods.


                                       7
<PAGE>

Expected Volatility:  Volatility is a measure of the amount by which a financial
variable,  such as share price,  has  fluctuated  (historical  volatility) or is
expected to fluctuate  (expected  volatility).  The expected volatility of stock
option awards at the date of grant is estimated based on the historical  selling
price of the Company's securities. The decision to use historical volatility was
based upon the lack of  availability of actively traded options on the Company's
common  stock.  Prior to the  adoption  of SFAS  123R,  the  Company  calculated
expected volatility using historical stock price volatility.

Expected  Term:  The expected term of an employee  share option is the period of
time for which the option is expected to be outstanding.  The Company has made a
determination  of expected  term by  analyzing  employees'  historical  exercise
experience and post-vesting  employment termination behavior from its history of
grants and exercises in the Company's option database. The historical pattern of
options  exercised has been analyzed in an effort to determine if there were any
discernable  patterns of activity based on certain  demographic  characteristics
such as employees' length of service, salary and job level.

Risk-Free  Interest Rate: The risk-free  interest rate used in the Black-Scholes
option  pricing model is based on the implied yield  available on U.S.  Treasury
zero-coupon issues with a remaining term equal to the expected term used.

Dividends:  On June 26, 2003, the Board of Directors of the Company  initiated a
regular  quarterly cash dividend of $0.04 per share. An expected  dividend yield
of $0.16 was used in the Black-Scholes valuation model.

Forfeiture:  The Company uses  historical  data to estimate  pre-vesting  option
forfeitures.  Share-based compensation expense is recorded only for those awards
that are expected to vest.

The  following  assumptions  were used to  estimate  the fair  value of  options
granted under the Company's  Stock Option Plans for the thirteen weeks ended May
27, 2006 and May 28, 2005:

                                                        Stock Options
                                                     Thirteen Weeks Ended
                                                        May         May
                                                     27, 2006     28, 2005
--------------------------------------------------------------------------------

Expected term (years)                                   5.7          5.8
Expected volatility                                      29%          32%
Risk-free interest rate                                 4.9%         4.4%
Expected dividend                                     $0.16         $0.16
--------------------------------------------------------------------------------

Stock Option Activity and Share-Based Compensation Expense

Stock option activity for the thirteen weeks ended May 27, 2006 is summarized as
follows:
<TABLE>
<CAPTION>
                                                        Weighted     Weighted
                                                         Average      Average
                                                        Exercise     Remaining       Aggregate
                                         Number of        Price     Contractual   Intrinsic Value
                                          Shares        Per Share   Term (Years)   (in thousands)
<S>                                     <C>             <C>         <C>           <C>
Outstanding at February 25, 2006        3,427,543(1)    $ 7.30
   Granted                                 43,000         7.94
   Exercised                             (199,649)        6.74
   Forfeitures                           (116,460)        8.73
                                       -----------
Outstanding at May 27, 2006             3,154,434         7.29         4.71          $  3,802
Vested or expected to vest              3,065,345         7.25         4.61          $  3,816
Exercisable at May 27, 2006             2,687,182       $ 7.06         4.12          $  3,879
</TABLE>

(1)  The number of shares outstanding has been adjusted from previously reported
     figures due to 13,333 shares  incorrectly  reported as forfeited during the
     year ended February 25, 2006.


                                       8
<PAGE>

The weighted  average fair value of options  granted  during the thirteen  weeks
ended May 27, 2006 was $2.32 and there were no stock options  granted during the
thirteen  weeks ended May 28, 2005.  The  aggregate  intrinsic  value of options
outstanding at May 27, 2006 is calculated as the difference between the exercise
price of the  underlying  options and the market price of the  Company's  common
stock for the 1,982,167 shares that had exercise prices that were lower than the
$8.80 market  price of the  Company's  common  stock at May 26, 2006.  The total
intrinsic  value of options  exercised  during the thirteen  weeks ended May 27,
2006 and May 28, 2005 was $413,000 and $0,  respectively,  determined  as of the
date of exercise.

For the thirteen weeks ended May 27, 2006, the Company recognized  approximately
$55,000 in share-based  compensation expense for stock options granted under the
Company's  Stock Option Plans.  As of May 27, 2006,  there was $353,000 of total
unrecognized  compensation cost related to non-vested  share-based  compensation
arrangements granted under the Company's Stock Option Plans. This amount assumes
the Company's  expected  forfeiture rate. That cost is expected to be recognized
over a weighted  average  period of 1.88 years.  The Company  utilizes  treasury
shares to satisfy the exercise of stock options.

Comparable Disclosures

The following table illustrates the pro forma effect on the Company's net income
and net income per share as if the  Company  had  adopted  the fair value  based
method of accounting for stock-based  compensation  under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," for the
thirteen weeks ended May 28, 2005. See the assumptions  disclosed  previously in
this note that were used to estimate the fair value of options granted under the
stock option plans for the thirteen weeks ended May 28, 2005.

                                                Thirteen Weeks Ended
                                                     May, 28, 2005
                                                (In thousands, except
                                                   per share amounts)

Net income, as reported                                 $ 897
Add: Stock-based employee compensation expense
  included in net income, tax effected                     --
Deduct: Total share-based employee compensation
  expense determined under fair value method for
  all awards, net of income taxes                        (116)
                                                        ------
Pro forma net income                                    $ 781
                                                        ======

Net income per share

Basic - as reported                                     $ 0.02
Basic - pro forma                                       $ 0.02
Diluted - as reported                                   $ 0.02
Diluted - pro forma                                     $ 0.02


2. Quarterly Comparison

Management believes that  quarter-to-quarter  comparisons of sales and operating
results are affected by a number of factors,  including, but not limited to, the
timing of sports and entertainment releases, new product introductions, seasonal
products,  the timing of various  expenses such as advertising and variations in
shipping and factory scheduling requirements. Thus, quarterly results may vary.


3. Accounts Receivable
                                            May          February
                                         27, 2006        25, 2006
                                        ---------       ---------
                                        (in thousands of dollars)

Gross receivables                       $  65,612       $  55,244
Reserve for estimated returns             (23,806)        (21,181)
Other reserves                            ( 3,422)        ( 2,883)
                                        ----------      ----------
   Net receivables                      $  38,384       $  31,180
                                        =========       ==========

Other  reserves  consist of  allowances  for  discounts,  doubtful  accounts and
customer deductions for marketing promotional programs.


                                       9
<PAGE>

4. Inventories
                                            May          February
                                         27, 2006        25, 2006
                                        ---------       ---------
                                        (in thousands of dollars)
Raw materials                           $  12,553       $  10,123
Work in process                             6,769           4,623
Finished products                          22,831          22,035
                                        ----------      ----------
   Total inventory                      $  42,153       $  36,781
                                        =========       ==========

Obsolete  inventory reserves for each category are included in the amounts shown
above.

5. Segment Information

Following  is the  breakdown  of  industry  segments  as  required  by SFAS 131,
"Disclosures  About  Segments of an  Enterprise  and Related  Information."  The
Company has two reportable business segments: Confectionery and Entertainment.

The Confectionery segment consists of a variety of candy products including Ring
Pop, Push Pop, Baby Bottle Pop, Juicy Drop Pop, the Bazooka bubble gum line and,
from time to time, confectionery products based on licensed characters,  such as
Pokemon and Yu-Gi-Oh!.

The Entertainment segment primarily consists of cards and sticker album products
featuring  sports and non-sports  subjects.  Trading cards feature  players from
Major League  Baseball,  the National  Basketball  Association  and the National
Football League, as well as characters from popular films,  television shows and
other entertainment properties.  Sticker album products feature players from the
English  Premier League and characters  from  entertainment  properties  such as
Pokemon and  Yu-Gi-Oh!  This  segment also  includes  results  from  WizKids,  a
designer and marketer of strategy games acquired in July 2003.

Beginning  with the quarter  ended May 27, 2006,  the Company  began  evaluating
performance  of each  segment  based  upon its  operating  profit  after  direct
overhead which is defined as net sales less cost of goods,  product development,
advertising and promotional  costs,  obsolescence and personnel and other direct
costs, but before  unallocated  general and  administrative  expenses  including
rent, most insurance,  professional  fees and corporate  personnel costs such as
finance, management information systems, legal and human resources, depreciation
and amortization, other income (expense), net interest and income taxes.

The majority of the Company's  assets are shared across both  segments,  and the
Company's chief decision-maker does not evaluate the performance of each segment
utilizing  asset-based  measures.  Therefore,  the  Company  does not  include a
breakdown of assets or depreciation and amortization by segment.

The  information  provided  below for the thirteen weeks ended May 28, 2005, has
been reclassified to conform with the current year's presentation.

                                          Thirteen Weeks Ended
                                      May 27, 2006    May 28, 2005
                                      ------------    ------------
                                         (amounts in thousands)
Net Sales
Candy                                   $  40,470       $  40,407
Gum                                         2,239           3,632
                                        ---------       ---------
Total Confectionery                        42,709          44,039
                                        ---------       ---------

Sports                                     27,638          15,033
Non-Sports                                 10,624          19,512
                                        ---------       ---------
Entertainment Products                     38,262          34,545
                                        ---------       ---------
Total                                   $  80,971       $  78,584
                                        =========       =========
Contributed Margin
Confectionery                           $  13,212       $  11,840
Entertainment Products                      7,555           8,255
                                        ---------       ---------
Total                                   $  20,767       $  20,095
                                        =========       =========


                                       10
<PAGE>

Direct Overhead
Confectionery                           $   5,679       $   6,240
Entertainment Products                      5,905           5,753
                                        ---------       ---------
Total                                   $  11,584       $  11,993
                                        =========       =========

Operating Profit Net of Direct Overhead
Confectionery                           $   7,533       $   5,600
Entertainment Products                      1,650           2,502
                                        ---------       ---------
Total                                   $   9,183       $   8,102
                                        =========       ==========

Reconciliation of Operating Profit to
Income Before Provision for Income Taxes:

Total operating profit,
  net of direct overhead                $   9,183       $   8,102
Indirect overhead                          (6,418)         (7,283)
Other income, net                             240           1,058
Depreciation & amortization                (1,365)         (1,370)
                                        ----------      ----------
Income from operations                      1,640              507
Interest income, net                          757              740
                                        ----------      ----------
Income before provision
  for income taxes                      $   2,397       $    1,247
                                        ==========      ==========


6. Common Stock

In June  2003,  the  Board of  Directors  of the  Company  initiated  a  regular
quarterly  cash  dividend  of $0.04 per share  which has been paid each  quarter
since that date.

In October 1999, the Company's  Board of Directors  authorized the repurchase of
up to 5 million  shares of the  Company's  common stock.  In October  2001,  the
Company  completed  the  authorization  and the Board  approved  the purchase of
another 5 million shares of the Company's common stock.

During the first half of fiscal  2006,  the Company did not  purchase any shares
due to a strategic  business  review being  performed by investment  banking and
consulting  firms. In September 2005, the Company entered into a written trading
plan that  complies  with Rule 10b5-1 under the  Securities  and Exchange Act of
1934, as amended,  which  provides for the purchase of up to 500,000  shares for
each of the next four  quarters  starting in the third quarter of fiscal 2006 at
the  prevailing  market  price,  per share,  subject to certain  conditions.  In
addition,  the Board of Directors  increased the outstanding share authorization
by 3,390,700  shares to 5 million  shares.  As of May 27, 2006,  the Company had
purchased 1,611,211 shares under this amended  authorization,  leaving 3,388,789
shares available for future purchases.

Each of the  members of the Board of  Directors  who is not an  employee  of the
Company annually receives $20,000 worth of restricted stock, which is issued out
of treasury stock and vests over one year.


7. Credit Agreement

On September  14, 2004,  the Company  entered into a new credit  agreement  with
JPMorgan  Chase Bank.  The  agreement  provides  for a $30.0  million  unsecured
facility to cover  revolver  and letter of credit needs and expires on September
13,  2007.  Interest  rates are  variable and a function of market rates and the
Company's earnings before interest,  taxes,  depreciation and amortization.  The
credit  agreement  contains  restrictions and prohibitions of a nature generally
found in loan  agreements  of this type and requires  the  Company,  among other
things, to comply with certain financial covenants, limits the Company's ability
to sell or  acquire  assets  or  borrow  additional  money  and  places  certain
restrictions on the purchase of Company shares and the payment of dividends. The
credit  agreement  may be  terminated  by the  Company  at any  point  over  the
three-year term (provided the Company repays all outstanding amounts thereunder)
without penalty.

There was no debt  outstanding  under the credit agreement as of May 27, 2006 or
February 25, 2006.


                                       11

<PAGE>

8. Discontinued Operations - thePit.com

In August  2001,  the  Company  acquired  all the  outstanding  common  stock of
thePit.com, Inc., which operated a sports card exchange, for a net cash purchase
price of $5.7  million.  The  acquisition  was  accounted for using the purchase
method of  accounting  and resulted in  recognizing  $0.8 million in  intangible
assets and $4.1 million in goodwill. The Company included this subsidiary in the
Entertainment  segment of its  business.  The  Company was unable to operate the
subsidiary profitably and in January 2006 sold the subsidiary for $360,000, with
scheduled payments to be made over four years.

Per Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for
the  Impairment  of  Long-Lived  Assets,  the net book  value of the  assets  of
thePit.com,  Inc.,  which consisted  primarily of the $4.1 million goodwill from
the  acquisition  as  well as  smaller  amounts  of  inventory  and  unamortized
intangibles,  was written down  $2,432,000 net of tax to $360,000,  which is the
fair value of the assets  based on the  expected  proceeds  from the sale of the
subsidiary.

The Company  incurred an additional  $32,000 in expense,  net of tax, related to
the discontinued operations during the quarter ended May 27, 2006.

The purchaser has paid the Company $30,000 of the $360,000 sales price as of May
27,  2006.  The  remaining  $330,000 is reported in prepaid  expenses  and other
current assets and other assets on the Consolidated  Balance Sheet as of May 27,
2006. The Company has restated its Consolidated Statements of Cash Flows for the
thirteen weeks ended May 28, 2005 to reflect this discontinued operation.


9. Goodwill and Intangible Assets

On March 3, 2002, the Company adopted SFAS 141,  Business  Combinations and SFAS
142,  Goodwill  and  Other  Intangible  Assets  which  require  the  Company  to
prospectively  cease amortization of goodwill and instead conduct periodic tests
of goodwill for  impairment.  Intangible  assets as of May 27, 2006 and February
25, 2006 were as follows:

<TABLE>
<CAPTION>
                                            May 27, 2006                    February 25, 2006
                                  ---------------------------------- ----------------------------------
                                    Gross                           '   Gross
                                  Carrying   Accumulated            ' Carrying    Accumulated
                                    Value   Amortization     Net    '   Value    Amortization     Net
                                  --------  ------------  --------  ' --------   ------------  --------
                                                         (in thousands of dollars)
<S>                               <C>        <C>          <C>         <C>         <C>          <C>
Licenses and contracts ........   $ 21,569   $(18,779)    $  2,790  ' $ 21,569    $(18,611)    $ 2,958
Intellectual property .........     18,784    (15,576)       3,208  '   18,784     (15,318)      3,466
Software and other ............      2,482     (2,482)         --   '    2,482     ( 2,482)        --
                                  --------   ---------    --------  ' --------     ---------   --------
Total intangibles .............   $ 42,835   $(36,837)    $  5,998  ' $ 42,835    $(36,411)    $ 6,424
                                  ========   =========    ========  ' ========     =========   ========
</TABLE>

In  connection  with the  classification  of the fair  value  of the  assets  of
thePit.com  as available for sale,  $0.1 million of  intangible  assets and $4.1
million of goodwill  were  determined to be impaired and were written off in the
third quarter of fiscal 2006.

Useful lives of the Company's  intangible  assets have been established based on
the Company's  intended use of such assets and their estimated  period of future
benefit, which are reviewed periodically. Useful lives are as follows:

                                                          Weighted Average
               Category              Useful Life        Remaining Useful Life
               --------           ----------------      ---------------------
        Licenses and contracts        15 years                4.2 years
        Intellectual property          6 years                3.1 years


                                       12

<PAGE>

The weighted average  remaining useful life for the Company's  intangible assets
in  aggregate  is 3.5 years.  Over the next five years,  the  Company  estimates
annual amortization of the intangible assets detailed above to be as follows (in
thousands):


                                    Fiscal Year                 Amount
                                    -----------                 ------
                                        2007                  $   1,703
                                        2008                  $   1,703
                                        2009                  $   1,703
                                        2010                  $   1,036
                                        2011 and thereafter   $     279


In  addition  to  the  amortization  of  intangibles   listed  above,   reported
amortization  expense,  which was $572,000  and $595,000 for the thirteen  weeks
ended May 27, 2006 and May 28,  2005,  respectively,  included  amortization  of
deferred financing fees and deferred compensation costs.


10. Legal Proceedings

On November 19, 2001, Media  Technologies,  Inc. sued the Company and nine other
manufacturers of trading cards (the  "Defendants") in the Federal District Court
for the Central  District of California  for their sales of all types of "relic"
cards that contain an authentic  piece of  equipment,  i.e., a piece of sporting
equipment  or  jersey.  Plaintiffs  alleged  infringement  of U.S.  Patent  Nos.
5,803,501 and 6,142,532.  On May 23, 2005, the Company entered into a settlement
agreement in which it paid Media Technologies, Inc. a sum of $2,000,000 which is
being amortized over the term of the contract. Media Technologies Inc. agreed to
dismiss all claims  against the Company and to issue a license to the Company to
distribute  relic cards for seven years.  The Company  further agreed that under
certain  conditions  which may arise in the  future,  it would  make  additional
payments to Media Technologies, Inc. as part of the ongoing license.

In another  matter,  in September of 1999,  the Company filed a lawsuit  against
Cadbury Stani S.A.I.C. ("Stani"), a corporation organized and existing under the
laws of Argentina,  in federal court in the Southern  District of New York.  The
case centers on the licensing  relationship  the parties had since 1957 in which
the Company had granted Stani the exclusive  right to manufacture and distribute
gum using the Bazooka brand and related  formulas and technologies in Argentina,
Bolivia,  Chile,  Paraguay  and  Uruguay.  In  particular,  at  issue  is a 1980
Licensing  Agreement (the "Agreement")  between the parties and a 1985 Amendment
to that  Agreement.  In its September  17, 2003 Fourth  Amended  Complaint,  the
Company  alleges  that Stani  continued  to use the  Company's  proprietary  and
specialized  knowledge  and  experience,  and its trade  secrets,  regarding the
production  of gum after  the  Agreement's  expiration  in April  1996,  that it
unlawfully  disclosed this  information to Cadbury  Schweppes PLC  ("Schweppes")
which  purchased  Stani in 1993 and that it  deliberately  concealed its use and
disclosure  from the  Company.  The  Company  has  filed  claims  for  breach of
contract,  misappropriation of trade secrets and fraudulent  inducement to enter
into the 1985  Amendment.  The  Company is seeking  to recover  disgorgement  of
Stani's  profits,  certain lost  royalties  and punitive  damages,  interest and
costs. It is also seeking a permanent  injunction against Stani's future use and
dissemination of the Company's proprietary information and trade secrets. In the
Fourth  Amended  Complaint,  the  Company  demanded  damages  in  excess of $250
million.  The Fourth Amended  Complaint also initially  contained claims against
Schweppes, which the parties agreed to dismiss on February 4, 2003.

On December 17, 2003,  Stani moved for partial summary judgment and to limit the
Company's  possible  damages.  In its August 2, 2005 decision,  the Court denied
Stani's  summary  judgment  motion,  in part,  and ruled that (i) the  Company's
claims were not barred by the statute of limitations;  and (ii)  disgorgement of
profits  and  punitive   damages  are   available   remedies  on  the  Company's
misappropriation  of trade secrets  claims.  The Court granted  Stani's  summary
judgment  motion,  in part,  and ruled  that (i)  disgorgement  of  profits  and
punitive damages are not available  remedies on the Company's breach of contract
and fraudulent  inducement claims; and (ii) Stani was not estopped from claiming
the 1985 Amendment altered the 1980 Agreement.

On February 9, 2006, the Court  adjourned the trial which had been scheduled for
March 13,  2006 and ruled it would  consider a new  motion by Stani for  partial
summary  judgment  which argues that the  Agreement  permitted  Stani to use the
Company's  information  and trade  secrets after the  Agreement's  expiration in
1996. Oral argument was held on March 15, 2006 and the parties await a decision.
If the Company ultimately prevails in this litigation,  it could have a material
impact on the Company's consolidated financial statements.


                                       13
<PAGE>

In another matter, on December 12, 2003,  WizKids,  Inc.  ("WizKids") and Jordan
Weisman   filed  a  complaint  in  Washington   state  court  for   professional
malpractice,  breach of fiduciary duty and  disgorgement of fees against the law
firm Michael,  Best & Friedrich,  LLP ("MB&F),  and Timothy  Kelley,  one of its
partners,  based on their  submission of a PCT patent  application  for WizKids'
combat dial that alleged to have prejudiced WizKids' United States patent rights
by  failing to  designate  the  United  States as one of the  member  states for
subsequent  conversion  to a national  application.  In a settlement  reached on
October  31,  2005,  defendants  agreed to pay WizKids  $2,950,000.

The  Company is a party in several  other  civil  actions  which are routine and
incidental to its business.  In management's  opinion,  after  consultation with
legal  counsel,  these other actions will not have a material  adverse effect on
the Company's financial condition or results of operations.

11. Employee Benefit Plans

The  components of net periodic  benefit costs for the thirteen  weeks ended May
27, 2006 and May 28, 2005 are as follows (in thousands):
                                                               Postretirement
                                               Pension           Healthcare
--------------------------------------------------------------------------------
                                             May      May       May       May
                                          27, 2006  28, 2005  27, 2006  28, 2005
--------------------------------------------------------------------------------
     Service cost                          $ 181     $ 399      $  67    $  93
     Interest cost                           560       618        151      143
     Expected return on plan assets         (574)     (551)        -        -
        Initial transition obligation       ( 14)     ( 16)        50       50
        Prior service cost                     7        13        (46)      -
        Actuarial losses                     134       238         41       10
                                           -----     -----      -----    -----
     Net periodic benefit cost             $ 294     $ 701      $ 263    $ 296
================================================================================

The fiscal 2007 costs are estimated based on actuarial  assumptions,  and actual
costs will be adjusted at the end of the fiscal year.

12. Off-Balance Sheet Arrangements

The Company does not have any off-balance  sheet  arrangements  and,  therefore,
there is no effect on its  financial  position,  changes in financial  position,
revenue or expenses, results of operations,  liquidity,  capital expenditures or
capital resources from this type of arrangement.

13. Restructuring Charge

On September 29, 2005, a restructuring program was announced which separates the
Confectionery  and   Entertainment   businesses  to  the  extent  practical  and
streamlines  the  organizational  structure  through  headcount  reductions.  In
connection  with the  headcount  reductions,  the  Company  incurred  charges of
approximately $3.7 million;  consisting of $1.3 million for termination costs in
each of the third  and  fourth  quarters  of fiscal  2006 and $1.1  million  for
pension  settlement costs in the fourth quarter.  These charges are reflected in
selling,  general and administrative  expenses in the Consolidated Statements of
Operations for the year ended February 25, 2006. The table below  reconciles the
activity to the liability related to the  restructuring  from February 25, 2006,
through May 27, 2006 (in thousands):

                        February                             May
                        25, 2006   Payments   Additions   27, 2006
                        --------   --------   ---------   --------
Termination costs       $   980    $   (61)   $    --     $   919
Pension settlement        1,050         --         --       1,050
                        -------    --------   ---------   -------
                        $ 2,030    $   (61)   $    --     $ 1,969
                        =======    ========   =========   =======

14. Subsequent Event

In  June  2006,  the  Company  internally  announced  a  restructuring  program,
principally  related to its entertainment  operations in New York,  Pennsylvania
and Seattle  (WizKids'  headquarters.)  This  program  will result in  estimated
annual savings of  approximately  $3.3 million.  The Company  expects to incur a
charge of  approximately  $1.7 million in connection with this  restructuring in
the second quarter of fiscal 2007.


                                       14
<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------


To The Board of Directors and Stockholders of The Topps Company, Inc.

We have reviewed the accompanying  condensed  consolidated  balance sheet of The
Topps Company, Inc. and subsidiaries (the "Company") as of May 27, 2006, and the
related condensed  consolidated  statements of operations,  comprehensive income
(loss) and cash flows for the thirteen  week periods  ended May 27, 2006 and May
28, 2005.  These interim  financial  statements  are the  responsibility  of the
Company's management.

We conducted  our reviews in  accordance  with  standards of the Public  Company
Accounting  Oversight  Board  (United  States).  A review of  interim  financial
information  consists  principally of applying analytical  procedures and making
inquiries of persons  responsible  for financial and accounting  matters.  It is
substantially less in scope than an audit conducted in accordance with standards
of the Public Company Accounting  Oversight Board (United States), the objective
of which is the  expression of an opinion  regarding  the  financial  statements
taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to such condensed  consolidated interim financial statements for them to
be in conformity with  accounting  principles  generally  accepted in the United
States of America.

As discussed in Note 1 to the condensed consolidated  financial statements,  the
Company  adopted  Statement  of  Financial   Accounting  Standards  No.  123(R),
Share-Based Payment, effective February 26, 2006.

We have  previously  audited,  in  accordance  with the  standards of the Public
Company  Accounting  Oversight Board (United States),  the consolidated  balance
sheet of the  Company as of February  25,  2006,  and the  related  consolidated
statements of operations,  stockholders' equity,  comprehensive income, and cash
flows for the year then ended (not  presented  herein);  and in our report dated
May 9, 2006, we expressed an unqualified opinion on those consolidated financial
statements.  In our  opinion,  the  information  set  forth in the  accompanying
condensed  consolidated  balance sheet as of February 25, 2006 is fairly stated,
in all material  respects,  in relation to the  consolidated  balance sheet from
which it has been derived.

 /s/   DELOITTE & TOUCHE LLP
 ---------------------------

New York, New York
July 5, 2006


                                       15

<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

First Quarter Fiscal Year 2007 (thirteen  weeks ended May 27, 2006) versus First
Quarter Fiscal Year 2006 (thirteen weeks ended May 28, 2005)

The  following  table sets forth,  for the periods  indicated,  net sales by key
business segment:

NET SALES
                               Thirteen Weeks Ended
                                May            May
                              27, 2006      28, 2005
                              --------      --------
                              (amounts in thousands)
         Net Sales
         ---------
         Confectionery        $ 42,709      $ 44,039
         Entertainment          38,262        34,545
                                ------        ------
         Total                $ 80,971      $ 78,584
                              ========      ========


Net sales for the first quarter of fiscal 2007 were $81.0  million,  an increase
of $2.4  million,  or 3.1%,  from $78.6  million in the same  period  last year.
Weaker foreign currencies versus the prior year reduced 2007 first quarter sales
by $1.0 million.

Net sales of confectionery  products,  which include,  among other things,  Ring
Pop,  Push Pop,  Baby Bottle Pop,  Juicy Drop Pop,  Bazooka brand bubble gum and
licensed candy products, were $42.7 million in the first quarter of this year, a
decrease of $1.3  million,  or 3.0%,  from $44.0  million in fiscal  2006.  This
decrease was largely a function of the later shipment this year of the GrandSlam
pre-pack (a combined  sports card and candy  product  sold  primarily to smaller
retail accounts) as a function of the new baseball agreement, and lower sales of
Bazooka in the period leading up to the relaunch.  U.S. sales of Baby Bottle Pop
increased in the quarter this year, reflecting the success of the new 2DMax line
extension, as did international  confectionery sales, driven by Mega Mouth Spray
and Juicy  Drop Pop in Europe  and  stronger  lollipop  sales in Latin  America.
Weaker  foreign  currencies  versus the prior year  reduced  2007 first  quarter
confectionery sales by $0.2 million.

Net sales of  entertainment  products,  which include cards,  stickers,  sticker
albums and the WizKids line of strategy  games,  were $38.3 million in the first
quarter of fiscal  2007,  an  increase  of $3.7  million,  or 10.8%,  from $34.5
million in the same  period last year.  This  increase  reflected  significantly
higher sales of US sports cards,  driven by a new arrangement  with the baseball
licensors as well as the Company's strong product line up and marketing campaign
which encompasses  national  television  advertising and in-stadium  promotions.
Sales of European  sports  products  also showed strong gains as a result of the
addition of products  surrounding  the World Cup tournament held once every four
years. Sales of non-sports  publishing  products declined  year-over-year due to
last year's strong Star Wars release.  Additionally,  sales of WizKids  products
were  impacted by a softer gaming  industry and lower sales of Pirates  products
introduced last year.  Weaker foreign  currencies  versus the prior year reduced
2007 first quarter entertainment sales by $0.8 million.


RESULTS of OPERATIONS
                                                  Thirteen Weeks Ended
                                           May 27, 2006         May 28, 2005
                                           ------------         ------------
                                                 (amounts in thousands)

     Net Sales                          $ 80,971    100.0%   $ 78,584    100.0%
     Cost of Sales                        53,043     65.5%     50,940     64.8%
                                        --------    -----    --------    ------
          Gross Profit                    27,928     34.5%     27,644     35.2%

     Selling, General & Administrative    26,288     32.5%     27,137     34.5%
                                        ---------   ------   --------    ------
     Income from Operations                1,640      2.2%       507       0.6%


                                       16
<PAGE>

Gross  profit as a percentage  of net sales in the first  quarter of fiscal 2007
was  34.5%  as  compared   with  35.2%  in  the  first  quarter  of  last  year.
Approximately half of the margin decline was a function of the higher proportion
of entertainment sales, which have a lower gross profit margin. The remainder of
the margin  decline was a result of higher costs,  primarily for  autographs and
relics  for U.S.  sports  products  as well as  related  to  returns on sales of
European entertainment products.

SG&A expense was $26.3 million in the first quarter fiscal 2007, down from $27.1
million in fiscal  2006.  As a  percentage  of net sales,  SG&A was 32.5% in the
first  quarter of fiscal 2007 versus 34.5% in the first  quarter of fiscal 2006.
Lower  costs  this  year  reflect  the  Company's  cost  reduction  initiatives,
specifically the September 2005 workforce  reduction as well as cost savings put
in place at year end related to pension,  post retirement  medical,  consulting,
legal and insurance expenses.  Marketing  expenditures for the quarter this year
were flat with prior year as increases in advertising  and  promotional  support
for U.S.  baseball card products were offset by lower spending at WizKids and in
Canada.

Net interest  income of $757,000 in the first quarter of fiscal 2007 was roughly
flat  with  that in the  first  quarter  of  fiscal  2006 due to more  favorable
interest rates offset by a lower average cash balance.

The Company  reflects  provisions  for federal,  state and local income taxes in
accordance with statutory  income tax rates.  The Company  reported an effective
tax rate of 31.7% in the first  quarter of fiscal 2007 versus an  effective  tax
rate of 22.9% in the first quarter of fiscal 2006.

The  Company  reported  net income in the first  quarter of fiscal  2007 of $1.6
million, or $0.04 per diluted share, versus $897,000, or $0.02 per diluted share
in the first quarter of fiscal 2006.

Other Matters

In  June  2006,  the  Company  internally  announced  a  restructuring  program,
principally  related to its entertainment  operations in New York,  Pennsylvania
and Seattle  (WizKids'  headquarters.)  This  program  will result in  estimated
annual savings of approximately $3.3 million. The Company expects to recognize a
charge of approximately $1.7 million in connection with the restructuring in the
second quarter of fiscal 2007.

Liquidity and Capital Resources

Management believes that the Company has adequate reserves to meet its liquidity
and capital needs over the foreseeable  future as a result of the combination of
cash on hand, anticipated cash from operations and credit line availability.

On May 27, 2006, the Company had $27.6 million in cash and cash  equivalents and
$52.1 million in short-term investments.

On September 14, 2004, the Company entered into a credit agreement with JPMorgan
Chase Bank.  The agreement  provides for a $30.0 million  unsecured  facility to
cover  revolver and letter of credit  needs and expires on  September  13, 2007.
Interest  rates are variable  and a function of market  rates and the  Company's
earnings before interest,  taxes,  depreciation,  and  amortization.  The credit
agreement contains  restrictions and prohibitions of a nature generally found in
loan  agreements of this type and requires the Company,  among other things,  to
comply with certain financial covenants, limits the Company's ability to sell or
acquire assets or borrow additional money and places certain restrictions on the
purchase of Company  shares and the payment of dividends.  The credit  agreement
may be terminated by the Company at any point over the three-year term (provided
the Company repays all outstanding amounts thereunder) without penalty.

During the first half of fiscal  2006,  the Company did not  purchase any shares
due to a strategic  business  review being  performed by investment  banking and
consulting  firms. In September 2005, the Company entered into a written trading
plan that  complies  with Rule 10b5-1 under the  Securities  and Exchange Act of
1934, as amended,  which  provides for the purchase of up to 500,000  shares for
each of the next four  quarters  starting in the third quarter of fiscal 2006 at
the  prevailing  market  price,  per share,  subject to certain  conditions.  In
addition,  the Board of Directors  increased the outstanding share authorization
by 3,390,700  shares to 5 million  shares.  As of May 27, 2006,  the Company had
purchased  1,611,211 shares under this amended  authorization  leaving 3,388,789
shares available for future purchases.


                                       17
<PAGE>

In the thirteen weeks ended May 27, 2006, the Company's net decrease in cash and
cash  equivalents  was $0.6  million  versus a decrease of $14.4  million in the
comparable period of fiscal 2006.

Cash  provided by operating  activities  during the first quarter of fiscal 2007
was $0.5 million  versus cash used of $9.4 million  during the first  quarter of
fiscal  2006.  This was  primarily  due to a $7.2  million  increase in accounts
payable  and other  current  liabilities,  a $2.1  million  increase  in prepaid
expenses,  $1.2 million in depreciation and amortization and $1.6 million in net
income.  Partially  offsetting  these were a $7.2  million  increase in accounts
receivable due to higher sales compared to the fourth quarter of fiscal 2006 and
a $5.4 million  increase in inventories  stemming from the timing of board stock
purchases and the  acquisition  of autographs  for future sports  products.  The
prior  periods  unfavorable  cash  performance  reflected  lower net  income,  a
substantial  increase in inventories and decreases in accounts payable and other
current liabilities.

Cash provided by investing  activities  was $0.2 million in the first quarter of
fiscal 2007 versus a use of cash of $1.6  million last year.  Year-to-date  this
year, short-term  investments were reduced by $0.9 million,  partially offset by
capital  spending  of $0.6  million,  largely  related to the rollout of new ERP
system.  Last year's use of cash of $1.6 million  reflected  the net purchase of
$0.9 million of  short-term  investments  and $0.7 million in capital  spending.
Fiscal 2007 full year  capital  spending is  projected to be $4.0 - $5.0 million
driven by investments in Ring Pop production equipment and computer software and
hardware.  Capital  spending  will be funded  out of cash  flow  from  operating
activities. The proceeds from the sale of thePit.com, Inc. will be received over
the next four years.

Cash used in financing  activities  of $5.1 million  this period  reflects  $1.5
million  in cash  dividends  and  $5.0  million  in  treasury  stock  purchases,
partially offset by $1.4 million in cash from options  exercised.  This compares
with a total outlay for financing  activities of $1.6 million in the same period
last year,  comprised of $1.6 million in cash dividends.  There were no treasury
stock  purchases  or options  exercised  in the first  quarter  of fiscal  2006.
Dividend payments and treasury stock purchases are being funded out of cash flow
from operating activities.

There are no material  changes  outside  the  ordinary  course of business  with
respect to Company's purchase  obligations as presented in the Commitments table
included in its Annual Report on Form 10-K for the year ended February 25, 2006.

The Company does not have any off-balance  sheet  arrangements  and,  therefore,
there is no effect on its financial  condition,  changes in financial  position,
revenue or expenses, results of operations,  liquidity,  capital expenditures or
capital resources from this type of arrangement.

Cautionary Statements

In  connection  with the "safe  harbor"  provisions  of the  Private  Securities
Litigation  Reform Act of 1995 (the "Reform Act"),  the Company is hereby filing
cautionary  statements  identifying  important  factors  that could cause actual
results  to  differ  materially  from  those  projected  in any  forward-looking
statements  of the Company made by or on behalf of the Company,  whether oral or
written.  Among the factors  that could cause the  Company's  actual  results to
differ  materially from those indicated in any such  forward-looking  statements
are:  (i)  the  failure  of  certain  of  the  Company's   principal   products,
particularly  sports  cards,   entertainment   cards,  WizKids  strategy  games,
confectionery products and sticker album collections,  to achieve expected sales
levels;  (ii) the Company's  inability to produce timely, or at all, certain new
planned confectionery  products;  (iii) quarterly  fluctuations in results; (iv)
the Company's loss of important licensing  arrangements;  (v) the Company's loss
of important supply arrangements with third parties; (vi) the loss of any of the
Company's key customers or distributors;  (vii) further material  contraction in
the trading card industry as a whole;  (viii) excessive returns of the Company's
products;  (ix) civil unrest,  currency devaluation,  health-related  issues, or
political  upheaval in certain foreign  countries in which the Company  conducts
business;  and other risks  detailed from time to time in the Company's  reports
and registration statements filed with the Securities and Exchange Commission.


                                       18
<PAGE>

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires Topps management to
make  estimates  and  judgments  that  affect the  reported  amounts of revenue,
expenses,  assets,  liabilities  and the  disclosure  of  contingent  assets and
liabilities. Actual results may differ from these estimates.

Note 1 to the  Company's  consolidated  financial  statements,  included  in its
Annual  Report on Form 10-K for the year ended  February 25,  2006,  "Summary of
Significant   Accounting  Policies,"   summarizes  its  significant   accounting
policies. Following is a summary of the critical policies and methods used.

Revenue  Recognition:  Revenue  related to sales of the  Company's  products  is
generally  recognized when products are shipped,  the title and risk of loss has
passed  to  the  customer,   the  sales  price  is  fixed  or  determinable  and
collectibility  is  reasonably  assured.  Sales made on a  returnable  basis are
recorded net of a provision for estimated returns.  These estimates are revised,
as necessary, to reflect actual experience and market conditions.

Returns  Provisions:  In  determining  the  provision  for returns,  the Company
performs an in-depth  review of wholesale and retail  inventory  levels for each
product  sold,  trends  in  product  sell-through  by sales  channel,  and other
factors.  The provision for returns was $9.4 million in the first thirteen weeks
of fiscal 2007 and $7.6 million in 2006,  which equates to 11.6% and 9.6% of net
sales,  respectively.  The increase in the provision this year was partially the
result of higher returns on certain European  publishing products and on WizKids
products sold to retail  channels.  An increase or decrease in the provision for
returns by 1% of net sales would have decreased or increased operating income by
approximately $0.8 million.

Intangible Assets: Intangible assets include trademarks and the value of sports,
entertainment   and  proprietary   product   rights.   Amortization  is  by  the
straight-line  method over estimated lives which range between three and fifteen
years. Management evaluates the recoverability of finite-lived intangible assets
under the  provisions of SFAS No. 144  Accounting for the Impairment or Disposal
of Long-lived Assets.

Accrual for Obsolete  Inventory:  The Company's  accrual for obsolete  inventory
reflects the cost of items in inventory not anticipated to be sold. This accrual
is  deemed  necessary  as a result of  discontinued  items  and  packaging  or a
reduction in forecasted sales and is adjusted  periodically based on a review of
inventory levels and sales projections. The provision for obsolete inventory was
$0.7  million in the first  thirteen  weeks of fiscal  2007 and $1.3  million in
fiscal  2006,  which  equates  to 0.9% and 1.6% of net sales,  respectively.  An
increase or decrease in the provision for  obsolescence by 1% of net sales would
have decreased or increased operating income by approximately $0.8 million.

ITEM 3. DISCLOSURES ABOUT MARKET RISK

The Company's  exposure to market risk  associated with activities in derivative
financial  instruments  (e.g.,  hedging  or  currency  swap  agreements),  other
financial  instruments and derivative  commodity  instruments is confined to the
impact of  mark-to-market  changes in foreign  currency  rates on the  Company's
forward contracts and options.  The Company has no debt outstanding and does not
engage in any commodity-related derivative transactions. As of May 27, 2006, the
Company had $21.7  million in contracts  which were entered into for the purpose
of hedging forecasted receipts and disbursements in various foreign currencies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Our management,  with the participation of our Chief Executive Officer and Chief
Financial  Officer,  has evaluated the effectiveness of our disclosure  controls
and procedures (as such term is defined in Rules  13a-15(e) and 15d-15(e)  under
the Securities  Exchange Act of 1934, as amended (the "Exchange Act")) as of the
end of the period covered by this quarterly  report.  Based on such  evaluation,
our Chief Executive  Officer and Chief Financial Officer have concluded that, as
of the end of such period, our disclosure  controls and procedures are effective
in  recording,  processing,  summarizing  and  reporting,  on  a  timely  basis,
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act.

Changes in internal controls

There have not been any changes in our internal control over financial reporting
(as such term is defined in Rules  13a-15(f)  and  15d-15(f)  under the Exchange
Act) during the most recent fiscal quarter that have materially affected, or are
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.


                                       19
<PAGE>

PART II

ITEM 1. LEGAL PROCEEDINGS

On November 19, 2001, Media  Technologies,  Inc. sued the Company and nine other
manufacturers of trading cards (the  "Defendants") in the Federal District Court
for the Central  District of California  for their sales of all types of "relic"
cards that contain an authentic  piece of  equipment,  i.e., a piece of sporting
equipment  or  jersey.  Plaintiffs  alleged  infringement  of U.S.  Patent  Nos.
5,803,501 and 6,142,532.  On May 23, 2005, the Company entered into a settlement
agreement in which it paid Media Technologies, Inc. a sum of $2,000,000 which is
being amortized over the term of the contract. Media Technologies Inc. agreed to
dismiss all claims  against the Company and to issue a license to the Company to
distribute  relic cards for seven years.  The Company  further agreed that under
certain  conditions  which may arise in the  future,  it would  make  additional
payments to Media Technologies, Inc. as part of the ongoing license.

In another  matter,  in September of 1999,  the Company filed a lawsuit  against
Cadbury Stani S.A.I.C. ("Stani"), a corporation organized and existing under the
laws of Argentina,  in federal court in the Southern  District of New York.  The
case centers on the licensing  relationship  the parties had since 1957 in which
the Company had granted Stani the exclusive  right to manufacture and distribute
gum using the Bazooka brand and related  formulas and technologies in Argentina,
Bolivia,  Chile,  Paraguay  and  Uruguay.  In  particular,  at  issue  is a 1980
Licensing  Agreement (the "Agreement")  between the parties and a 1985 Amendment
to that  Agreement.  In its September  17, 2003 Fourth  Amended  Complaint,  the
Company  alleges  that Stani  continued  to use the  Company's  proprietary  and
specialized  knowledge  and  experience,  and its trade  secrets,  regarding the
production  of gum after  the  Agreement's  expiration  in April  1996,  that it
unlawfully  disclosed this  information to Cadbury  Schweppes PLC  ("Schweppes")
which  purchased  Stani in 1993 and that it  deliberately  concealed its use and
disclosure  from the  Company.  The  Company  has  filed  claims  for  breach of
contract,  misappropriation of trade secrets and fraudulent  inducement to enter
into the 1985  Amendment.  The  Company is seeking  to recover  disgorgement  of
Stani's  profits,  certain lost  royalties  and punitive  damages,  interest and
costs. It is also seeking a permanent  injunction against Stani's future use and
dissemination of the Company's proprietary information and trade secrets. In the
Fourth  Amended  Complaint,  the  Company  demanded  damages  in  excess of $250
million.  The Fourth Amended  Complaint also initially  contained claims against
Schweppes, which the parties agreed to dismiss on February 4, 2003.

On December 17, 2003,  Stani moved for partial summary judgment and to limit the
Company's  possible  damages.  In its August 2, 2005 decision,  the Court denied
Stani's  summary  judgment  motion,  in part,  and ruled that (i) the  Company's
claims were not barred by the statute of limitations;  and (ii)  disgorgement of
profits  and  punitive   damages  are   available   remedies  on  the  Company's
misappropriation  of trade secrets  claims.  The Court granted  Stani's  summary
judgment  motion,  in part,  and ruled  that (i)  disgorgement  of  profits  and
punitive damages are not available  remedies on the Company's breach of contract
and fraudulent  inducement claims; and (ii) Stani was not estopped from claiming
the 1985 Amendment altered the 1980 Agreement.

On February 9, 2006, the Court  adjourned the trial which had been scheduled for
March 13,  2006 and ruled it would  consider a new  motion by Stani for  partial
summary  judgment  which argues that the  Agreement  permitted  Stani to use the
Company's  information  and trade  secrets after the  Agreement's  expiration in
1996. Oral argument was held on March 15, 2006 and the parties await a decision.
If the Company ultimately prevails in this litigation,  it could have a material
impact on the Company's consolidated financial statements.

In another matter, on December 12, 2003,  WizKids,  Inc.  ("WizKids") and Jordan
Weisman   filed  a  complaint  in  Washington   state  court  for   professional
malpractice,  breach of fiduciary duty and  disgorgement of fees against the law
firm Michael,  Best & Friedrich,  LLP ("MB&F),  and Timothy  Kelley,  one of its
partners,  based on their  submission of a PCT patent  application  for WizKids'
combat dial that alleged to have prejudiced WizKids' United States patent rights
by  failing to  designate  the  United  States as one of the  member  states for
subsequent  conversion  to a national  application.  In a settlement  reached on
October  31,  2005,  defendants  agreed to pay WizKids  $2,950,000.

The  Company is a party in several  other  civil  actions  which are routine and
incidental to its business.  In management's  opinion,  after  consultation with
legal  counsel,  these other actions will not have a material  adverse effect on
the Company's financial condition or results of operations.


                                       20
<PAGE>

ITEM 1A. RISK FACTORS

Dependence on Licenses.  The Company's trading card and sticker album businesses
are highly  dependent upon  licensing  arrangements  with third  parties.  These
licenses,  which have varying  expiration  dates,  are obtained from the various
professional sports leagues, players associations and, in certain instances, the
players  themselves  as well as from  non-sports  entertainment  companies.  The
Company's inability to renew or retain certain of these licenses, or the lack of
vitality of these licenses,  could have a material  adverse affect on its future
plans and results.

Contraction  in Sports Card  Industry.  The sports card  industry as a whole has
contracted significantly over at least the last ten years. Further prolonged and
material contraction in the sports card industry, whether caused by labor strife
or otherwise, could have a material adverse affect on the Company's future plans
and results.

New Products.  The Company may be unable to produce timely,  or at all,  certain
new planned  products.  The inability of the Company to produce planned products
could have a material adverse affect on its future plans and results.

Returns.  Approximately  68% of the  Company's  fiscal 2006 sales were made on a
returnable basis.  Although the Company maintains  returns  provisions,  returns
considerably in excess of the Company's provisions could have a material adverse
affect on its future plans and results.

Suppliers.  The Company has a single  source of supply for most of its  lollipop
products.  The loss of this supplier due to civil unrest or for any other reason
could have a material  adverse affect on the Company's future plans and results.
Additionally, failure of the new Bazooka manufacturer to supply the Company with
quality  products on a timely basis could have a material  adverse affect on the
sales of Bazooka.

Customers.  The Company has several large customers,  some of which are serviced
by single distributors. The loss of any of these customers or distributors could
have a material adverse affect on the Company's future plans and results.

International,  Political  and  Economic  Risk.  There  is an  increase  in risk
generally  associated  with operating  outside of the U.S.  Events such as civil
unrest, currency devaluation, political upheaval and health-related issues could
have a material adverse affect on the Company's future plans and results.

Legal  Proceedings.  See Part II Item 1: Legal  Proceedings  for a discussion of
legal matters that could have a material  adverse affect on the Company's future
plans and results.

Raw materials.  Raw materials  required for production of the Company's products
are generally available. However, the unavailability of certain raw materials or
a  significant  increase in their cost could have a material  adverse  affect on
future plans and results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table lays out the information required by Item 703 of Reg S-K:

<TABLE>
<CAPTION>

                        Total    Average                       Maximum Number of
                        Number    Price    Total Number of     Shares that may
                          of      Paid    Shares Purchased as  yet be Purchased
                        Shares     per      Part of Publicly     Under the Plans
     Period           Purchased   Share     Announced Plans       or Programs
--------------------  ---------  -------  -------------------  -----------------
<S>                   <C>        <C>            <C>            <C>
February 26, 2006
to March 25, 2006      166,660    $ 8.18         166,660            3,805,441
--------------------  ---------  -------- -------------------  -----------------
March 26, 2006 to
April 29, 2006         219,992      8.38         219,992            3,585,449
--------------------  ---------  -------- -------------------  -----------------
April 30, 2006 to
May 27, 2006           196,660      8.84         196,660            3,388,789
--------------------  --------- --------- -------------------  -----------------
Total                  583,312    $ 8.48         583,312            3,388,789
====================  ========= ========= ===================  =================

</TABLE>


                                       21
<PAGE>

ITEM 6. EXHIBITS AND REPORTS

(a) Exhibits as required by Item 601 of Regulation S-K filed herewith:

31.1 Certification of Principal Executive Officer pursuant to Rules 13a-14(a)
and 15d-14(a) under the Securities Exchange Act of 1934, as amended.

31.2 Certification of Principal Financial Officer pursuant to Rules 13a-14(a)
and 15d-14(a) under the Securities Exchange Act of 1934, as amended.

32.1 Certification of Arthur T. Shorin, Chairman and Chief Executive Officer,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

32.2 Certification of Catherine K. Jessup, Vice-President - Chief Financial
Officer and Treasurer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.


                                       22
<PAGE>


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        THE TOPPS COMPANY, INC.
                                        -----------------------
                                               REGISTRANT



                                        /s/ Catherine K. Jessup
                                        ------------------------
                                            Catherine K. Jessup
                                         Duly Authorized Officer


July 6, 2006




                                       23