STOCKHOLDERS' LETTER

Dear Stockholders:

     We are  pleased to report  record  operating  results for fiscal year 2001.
Sales increased to $439.3 million from $374.2 million last year. Net income rose
to $88.5 million, or $1.91 per diluted share, as compared with $59.2 million, or
$1.25 per diluted share in fiscal 2000. Other financial highlights included:  An
increase in net worth of $67.3  million from a base of $129.2  million to $196.5
million,  a significant boost in our cash position to $158.7 million at year end
as compared with $75.9 million a year ago and the repurchase of 2,286,500 shares
of common stock at an average  price of $ 9.30.  In all,  fiscal 2001 was a very
good year,  one in which  extraordinary  results  emanated from  Pokemon,  other
progress was made and the growth engine of our candy business clearly  evidenced
itself.


Confectionery
-------------

     In North America, our branded (non-Pokemon)  confectionery  business posted
healthy gains during the year, further establishing Topps as a serious player in
the kids' candy market.  Marketing  support was excellent and our cohesive sales
team drove overall  distribution levels to record heights. The elements of Topps
brand building  strategy  continues at work - creating products kids like a lot,
broadening  distribution so those products are visible (in the stores where kids
can buy them),  then  stepping  up the  advertising  weights  and  frequency  of
broadcast  with the  intent  of  increasing  rates of retail  sale.  Doing so is
particularly  meaningful  because today, trade buyers often make their judgments
about  which  items to carry on the basis of best  performers,  such as "Top 10"
sellers. If an item slips to 11, so to speak, it well may get the boot.

     I am happy to report that in mass merchandisers  (such as Wal-Mart,  Kmart,
and Target),  Topps Ring Pop,  Push Pop and  Baby Bottle Pop are in the top FIVE
of  all  non-chocolate  confectionery  products,  as  measured  by  a  respected
independent  retail  auditing  firm.  Early  in the  year,  we began  selling  a
sour-flavored  version of Baby Bottle Pop and rolling out Triple Power Push Pop.
Later on, we introduced new  two-flavored  (Twisted) Ring Pop and  spring-loaded
Jumbo Push Pop, both to be expanded to national distribution during fiscal 2002.
We aired new TV  commercials,  brought  additional  flavors  into the lineup and
debuted  new  packaging  configurations  along  with  special  point-of-purchase
displays.

                                       1

<PAGE>

     Also on the new product front,  we introduced our very first seasonal candy
products and created  several  more to be marketed in the new fiscal year.  Over
25% of all candy  sold in America  today is  seasonal,  and we believe  there is
growing appreciation for same overseas. With concerted focus, Topps is beginning
to reach for a share of this promising category.

     Internationally,  Pokemon  candy  sales  boomed  to  such an  extent  as to
overshadow our "regular" candy business.  Of course, we benefited  overall,  but
consumer  interest  and trade  attention  was drawn away from some of our staple
products and will have to be rekindled in the new year.  An ongoing  bright spot
for  our  branded  confectionery  business  overseas  is the  market  of  Japan,
difficult to  penetrate  but one in which both Push Pop and more  recently  Baby
Bottle Pop, have enjoyed good consumer acceptance.


Collectible Sports Products
---------------------------

     Under the  heading  "time  flies",  2001 marks  Topps 50th  anniversary  of
producing its first baseball card. To celebrate this  milestone,  we fashioned a
broad-based  promotion  leveraging Topps long and storied history in sports. Our
efforts were extremely well-received,  not just by the card collecting community
but by America at large, as evidenced by wide-spread  coverage  received in both
the print and broadcast  media. In fact, we think USA Today got it just right in
their front-page feature story on Topps noting. "While Topps has been challenged
by  competition,  its brand is to  baseball  cards what  Band-Aid is to adhesive
bandages." A reprint of that article is enclosed for your review.

     During this last fiscal  year,  we changed  our  organizational  structure,
realigned  responsibility  by  sport  (instead  of  brand)  and  beefed  up  our
commitment to product  development,  all in an effort to provide  consumers with
compelling  products,  appropriately  priced.  By way  of  example,  Topps  2001
Baseball was the most significant release the industry has seen in years. Bowman
Reserve  Football made a huge impact with  collectors  by packaging  signed mini
football helmets with traditional  trading cards in a single selling unit. Topps
Heritage,  our new retro brand with bubble gum in every pack,  also  ignited the
hobby,  and  played  to one of Topps  proprietary  strengths  -  nostalgia-based
products.

                                       2

<PAGE>

     We will look to capitalize  on some of this momentum as we navigate  fiscal
2002,  but it  won't  be a snap  given  the  general  sports  card  environment.
Competitors  appear willing to sacrifice  margins in an appeal to  high-spending
collectors  and there is only so far we are willing to go down that road. To the
degree we do,  downward  pressure on margins may be  difficult  to offset in its
entirety, despite extracting savings from other areas of the business.

     On the international front, we were successful in securing exclusive rights
to continue  publishing  products  featuring  athletes  of the  English  Premier
Football  League  for an  additional  three  years.  We are  pleased  with  this
achievement,  although the football  sticker business is presently on a downward
cycle in  Europe.  Steps  are being  taken to  stimulate  sales of our  football
products in the U.K. and Italy where we also have licenses.


     Last,  but by no means least,  work  continues on etopps,  the trading card
brand we are developing to sell exclusively over the Internet to a wide range of
consumers.  We ran a test launch this past  December  and learned two  important
things:  that the test group  seemed to like the  concept a great deal (the good
news), but that the technical underpinnings provided by an outside supplier were
woefully  inadequate.  Since then,  we have been working  extremely  hard to get
support in line with requirements. From a timing standpoint, it is reasonable to
hope that we can begin marketing etopps cards within this baseball season.


Entertainment Publishing
------------------------

     Last year,  Publishing both here and abroad was a strong contributor to the
corporate pot and will continue receiving the attention and support it deserves.
Pokemon had the starring role and performed  very well,  particularly  in Europe
and other foreign markets.  To put that in perspective,  in addition to cards we
sold more than three billion Pokemon stickers last year, printed in 17 different
languages, to customers in 21 countries around the world.

     During  fiscal  2002,  in one form or  another,  our line of  entertainment
products  will feature Star Wars,  Marvel  Superheroes,  WWF, and summer  movies
Planet of the Apes and Jurassic Park III. Prior to the winter holiday season, we
plan to market  products  featuring  the Lord of the Rings movie,  and Monsters,
Inc. from Disney-Pixar.

                                       3

<PAGE>

The Future
----------

     Last  year's  success  has  made  this  great  Company  stronger  and  more
financially  secure than ever. We can fund  investments  in the business and its
future.  We can afford the tools and talent  etopps needs to get up and operate.
We can increase television  advertising where appropriate,  spend in sports both
here and abroad to meet competitive challenges, and make capital expenditures to
maintain first-class status in both manufacturing and administrative  functions.
We can  acquire  companies  if we  find a  proper  fit  and we can  continue  to
repurchase  shares of Topps.  All told,  we can use the "nest egg" to help build
more stockholder value.

     In closing,  we thank the Topps family of employees  everywhere  for making
good things  happen and  congratulate  them on a job well done. On behalf of the
entire organization,  we also thank our customers,  licensors,  stockholders and
suppliers for their valued support.





                           Chairman, Chief Executive Officer and President







                           OFFICERS OF THE TOPPS COMPANY, INC.






                                       4


<PAGE>


                             Table of Contents










                                                                      Page


Stockholders' Letter....................................................1


Financial Highlights....................................................6


Management's Discussion and Analysis of Financial Condition
   and Results of Operations............................................7


Consolidated Financial Statements......................................11


Notes to Consolidated Financial Statements.............................15


Report of Independent Public Accountants...............................29


Market & Dividend Information..........................................30


Selected Consolidated Financial Data...................................31


Directors, Officers, Subsidiaries and Corporate
   Information..........................................Inside Back Cover





                                       5

<PAGE>

FINANCIAL HIGHLIGHTS
--------------------


<TABLE>
<CAPTION>
                                                        Year Ended
------------------------------------------------------------------------------------
                                           March          February        February
                                           3, 2001        26, 2000        27, 1999
------------------------------------------------------------------------------------
                                        (In thousands of dollars, except share data)

<S>                                     <C>             <C>             <C>
Net sales .........................     $   439,268     $   374,193     $   229,414

Income from operations ............         121,917          94,852          26,658

Net income ........................          88,489          59,215          15,571

Cash provided by operations .......         104,356          58,879          29,522

Working capital ...................         138,079          71,128          24,919

Total debt ........................            --              --            15,783

Stockholders' equity ..............         196,542         129,175          77,224

Net income per share - basic ......     $      1.97     $      1.28     $      0.34
                     - diluted ....     $      1.91     $      1.25     $      0.33

Weighted average shares outstanding
                     - basic ......      45,011,000      46,398,000      46,415,000
                     - diluted ....      46,366,000      47,463,000      46,678,000
------------------------------------------------------------------------------------

Income from operations includes certain non-recurring items in the year 1999
presented above.  See Note 2.

</TABLE>

                                       6
<PAGE>

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
---------------------------------------------------------

The following table sets forth, for the periods indicated, net sales by key
business segment:
<TABLE>
<CAPTION>
                                                      Year Ended
--------------------------------------------------------------------------------
                                        March           February        February
                                        3, 2001         26, 2000        27, 1999
--------------------------------------------------------------------------------
                                                (In thousands of dollars)
<S>                                     <C>             <C>             <C>
Confectionery .....................     $172,528        $129,724        $ 95,238

Collectible sports products........      122,918         133,803         124,855

Entertainment products ............      143,822         110,666           9,321

     Total ........................     $439,268        $374,193        $229,414
--------------------------------------------------------------------------------
</TABLE>

FISCAL 2001 VERSUS 2000*
-----------------------

In fiscal 2001, the Company's  consolidated  net sales increased 17.4% to $439.3
million.   This  was  the  result  of  increased  sales  of  confectionery   and
entertainment  products which more than offset a decline in  collectible  sports
products.  Sales this year were reduced by approximately $20 million as a result
of foreign currencies weakening against the dollar.

Net sales of confectionery products,  which include, among other things, Bazooka
brand bubble gum and Ring Pop,  Push Pop,  Baby Bottle Pop and Pokemon  candies,
increased  33.0% in 2001 to $172.5  million.  Excluding  sales of Pokemon  candy
products which totaled $38.9 million, confectionery sales grew 8.6%. This growth
was the result of the  continued  strength of Baby Bottle Pop  domestically  and
Push Pop in Japan and the U.S.  Confectionery  products accounted for 39% of the
Company's consolidated net sales in 2001, compared with 34% in 2000.

Net sales of  collectible  sports  products,  which  consist  of both  cards and
sticker album products, decreased 8.1% to $122.9 million. Sales comparisons this
year versus last were affected by the NBA lockout  which  resulted in an unusual
quantity of  basketball  product  being  shipped in the first  quarter of fiscal
2000.

Sales of European  soccer sticker album  products and hockey  products were also
less this year than last.  Sales of baseball  products  were up versus last year
driven by the increased focus on nostalgia and success of products commemorating
the fiftieth anniversary of Topps marketing its first baseball card. Collectible
sports products  accounted for 28% of the Company's net sales in 2001,  compared
with 36% in 2000.

Net sales of entertainment  products,  which consist of entertainment  cards and
the Merlin line of  entertainment  sticker album  products,  increased to $143.8
million from $110.7  million in 2000 as a result of the success of Pokemon cards
and sticker album products in Europe.  Excluding Pokemon, sales of entertainment
products  were down due to the  absence  of Star Wars  products  sold last year.
Entertainment  products represented 33% of the Company's  consolidated net sales
in 2001, compared with 30% in 2000.

Consolidated  gross  profit as a percentage  of net sales  increased to 49.0% in
2001 from 47.8% in 2000.  This margin  improvement was largely the result of the
increased  mix  of   high-margin   entertainment   products.   Reduced   product
obsolescence  costs  on  both  the  sports  and  confectionery  businesses  also
contributed to favorable margins this year.

Other  income  increased  to $3.0  million  this  year from  $755,000  last year
primarily  as a result of a foreign  exchange  gain on European  cash as well as
higher levels of prompt payment discounts on European inventory purchases.

                                       7
<PAGE>

Selling, general & administrative expenses ("SG&A") decreased as a percentage of
net  sales to 21.9% in 2001 from  22.6% a year ago as a result of higher  sales.
SG&A  dollar  spending  increased  to $96.4  million  from $84.7  million due to
greater  expenditures for advertising and marketing and the Company's investment
in its Internet initiative.

Net interest  income  increased to $5.7 million in fiscal 2001 from $1.7 million
in fiscal  2000 due to an increase  in cash on hand and the  elimination  of the
Company's loan balance.

The effective tax rate in 2001 of 30.7% reflects  provisions for federal,  state
and local  income  taxes in  accordance  with  statutory  income tax rates.  The
improvement  versus the 2000 rate of 38.7% is a function of an increased  mix of
international  earnings this year and the lower effective rate on those earnings
as well as certain one-time tax benefits.

Net income in fiscal 2001 was $88.5 million,  or $1.91 per diluted share, versus
$59.2 million, or $1.25 per diluted share in 2000.


FISCAL 2000 VERSUS 1999
-----------------------

In fiscal 2000, the Company's net sales increased 63.1% to $374.2 million.  This
was the result of higher sales in each of the three key business segments.

Net sales of confectionery  products  increased 36.2% in 2000 to $129.7 million.
Excluding  sales of  Pokemon  lollipop  products  which  totaled  $6.4  million,
confectionery  sales grew  29.5%.  This  growth was the result of the  continued
strength of Baby Bottle Pop around the world, strong domestic growth of Ring Pop
and  Push  Pop,  and  the  successful   introduction   of  Push  Pop  in  Japan.
Confectionery sales declined year over year in Brazil as a result of the January
1999  currency  devaluation.  Confectionery  products  accounted  for 34% of the
Company's net sales in 2000, compared with 42% in 1999.

Net sales of collectible sports products increased 7.2% to $133.8 million.  This
increase was the result of several factors  including the shipment of basketball
card  products,  which  normally  would have  occurred in the fourth  quarter of
fiscal 1999,  but were  delayed into fiscal 2000 due to the NBA lockout.  Higher
sales of baseball  card  products  early in the year,  which  resulted  from the
McGwire/Sosa home run race the prior year and a full year's participation in the
NHL hockey  market,  also  contributed to the increase.  Sales of  international
soccer  sticker  album  products  were  significantly  less this year than last.
Collectible sports products accounted for 36% of the Company's  consolidated net
sales in 2000, compared with 54% in 1999.

Net  sales of  entertainment  products  increased  to $110.7  million  from $9.3
million in 1999. Sales of Pokemon products,  primarily trading cards in the U.S.
and Canada,  represented $87.4 million, while sales of Star Wars products around
the world  accounted for the majority of the remainder.  Entertainment  products
represented 30% of the Company's  consolidated net sales in 2000,  compared with
4% in 1999.

Consolidated  gross  profit as a percentage  of net sales  increased to 47.8% in
2000 from 41.3% in 1999.  This margin  improvement was largely the result of the
favorable mix of high-margin  entertainment card products. Higher sales overall,
which resulted in greater  leverage of fixed costs, and both  manufacturing  and
vendor cost  reductions  also  contributed  to the  improvement  in gross profit
margins.

Selling, general & administrative expenses ("SG&A") decreased as a percentage of
net  sales to  22.6% in 2000  from  31.5% a year ago as a result  of the  higher
sales. SG&A dollar spending increased to $84.7 million from $72.3 million due to
greater  expenditures  for advertising  and marketing,  higher freight costs and
broker  commissions  as a result of the  increase  in sales,  and the  Company's
investment in its Internet initiative.

                                       8
<PAGE>

Income from  operations  in 1999 included  non-recurring  income of $3.5 million
from  gains  on the  sale  of the  Irish  plant  as  well  as on  the  sales  of
manufacturing related equipment in Ireland and the U.S.

Net interest  income in 2000 was $1.7  million  versus an expense of $454,000 in
1999 due to an increase in cash on hand and the  reduction  and ultimate pay off
of the Company's term loan balance.

The effective tax rate in 2000 of 38.7% reflects  provisions for federal,  state
and local  income  taxes in  accordance  with  statutory  income tax rates.  The
improvement  versus  the 1999 rate of 40.6% is a function  of a lower  effective
rate on international earnings.

Net income was $59.2 million,  or $1.25 per diluted share in 2000,  versus $15.6
million,  or $0.33 per diluted share in 1999.  Excluding  non-recurring items in
1999, net income would have been $13.3 million, or $0.28 per diluted share.


QUARTERLY COMPARISONS
---------------------

Management believes that  quarter-to-quarter  comparisons of sales and operating
results are affected by a number of fluctuating factors, including the timing of
product   introductions  and  variations  in  shipping  and  factory  scheduling
requirements. Thus, quarterly results vary. See Note 17 of Notes to Consolidated
Financial Statements.


INFLATION
---------
The Company has been subject to price  increases for certain  materials,  labor,
utilities and services,  which have been partially offset by effective buying of
materials  and by  adjustment  in the  contents of finished  products  and their
prices, as competition has permitted.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

On June 26,  2000,  the  Company  entered  into a credit  agreement  with  Chase
Manhattan Bank and LaSalle Bank National Association. The agreement provides for
a $35.0 million unsecured  facility to cover revolver and letter of credit needs
and expires on June 26, 2004.  Interest rates are variable and a function of the
Company's EBITDA. 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 repurchase its shares, sell or acquire assets or borrow
additional  money and prohibits the payment of dividends.  The credit  agreement
may be terminated by the Company at any point over the four year term  (provided
the Company repays all outstanding amounts thereunder) without penalty.

In October 1999, the Board of Directors of the Company authorized the Company to
repurchase up to 5 million shares of its stock. As of March 3, 2001, the Company
had repurchased 3.2 million shares at an average price per share of $8.99.

As of  March  3,  2001,  the  Company  had  $158.7  million  in  cash  and  cash
equivalents.

During 2001, the Company's net increase in cash and cash  equivalents  was $82.9
million  versus $34.1 million in 2000.  Cash flow from  operating  activities in
2001 was $104.4 million versus $58.9 million last year, primarily as a result of
the higher net income and a reduction in  receivables.  Cash flow from investing
activities  reflects $3.4 million in capital  expenditures this year as compared
with  $2.8  million  in 2000.  Cash  flow from  financing  activities  primarily
reflects  treasury  stock  purchases  of $21.4  million  this year  versus  debt
payments of $15.8  million and  treasury  stock  purchases  of $7.8 million last
year.

Management  believes  that the Company has adequate  means to meet its liquidity
and capital resource needs over the foreseeable future.

                                       9
<PAGE>

EURO CONVERSION
---------------

On January 1, 1999,  the exchange  rates of Germany,  France,  the  Netherlands,
Austria, Italy, Spain, Finland,  Ireland,  Belgium, Portugal and Luxembourg were
fixed among one another and to a new currency,  the euro. The euro currency will
be  introduced  into  circulation  on  January  1, 2002 and later  that year the
currencies  of these  countries  will be retired.  The  Company  does not expect
future balance sheets and statements of earnings and cash flows to be materially
impacted by conversion to the euro.


ACCOUNTING CHANGES
------------------

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  No.  133  ("SFAS  133"),  "Accounting  for
Derivative  Instruments  and Hedging  Activities".  SFAS 133,  which  provides a
comprehensive  standard for the  recognition  and measurement of derivatives and
hedging  activities,  was to be effective for the Company's fiscal year 2001. In
June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative  Instruments
and Hedging  Activities  - Deferral of Effective  Date of SFAS No.  133",  which
deferred  adoption to the Company's  fiscal 2002. In June 2000,  the FASB issued
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities,  an Amendment  of SFAS No. 133" to address  certain  issues  causing
implementation  difficulties  for a large  number of  entities.  Management  has
determined  that, had these  statements  been adopted in the current year,  they
would not have had a material effect on the current financial condition, results
of operations or cash flows of the Company.




                                       10
<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------

The Topps Company, Inc. and Subsidiaries
(In thousands of dollars, except share data)

<TABLE>
<CAPTION>
                                                               Year Ended
----------------------------------------------------------------------------------------
                                                    March       February       February
                                                   3, 2001      26, 2000       27, 1999
----------------------------------------------------------------------------------------
<S>                                               <C>           <C>           <C>
Net sales ...................................     $ 439,268     $ 374,193     $ 229,414

Cost of sales ...............................       223,924       195,358       134,623

     Gross profit on sales ..................       215,344       178,835        94,791

Other income ................................         2,964           755           676

Selling, general and administrative expenses         96,391        84,738        72,288

Non-recurring income ........................          --            --           3,479

     Income from operations .................       121,917        94,852        26,658

Interest income (expense), net ..............         5,717         1,712          (454)

     Income before provision for income taxes       127,634        96,564        26,204

Provision for income taxes ..................        39,145        37,349        10,633

     Net income .............................     $  88,489     $  59,215     $  15,571
----------------------------------------------------------------------------------------
Net income per share - basic ................     $    1.97     $    1.28     $    0.34
                     - diluted ..............     $    1.91     $    1.25     $    0.33
----------------------------------------------------------------------------------------
Weighted average shares outstanding - basic .     45,011,000    46,398,000    46,415,000
                                    - diluted     46,366,000    47,463,000    46,678,000
----------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
</TABLE>

                                       11
<PAGE>

CONSOLIDATED BALANCE SHEETS
---------------------------

The Topps Company, Inc. and Subsidiaries
(In thousands of dollars, except share data)

<TABLE>
<CAPTION>
                                                      March          February
                                                      03, 2001       26, 2000
--------------------------------------------------------------------------------
                                     ASSETS
--------------------------------------------------------------------------------
<S>                                                   <C>            <C>
Current Asssets:

     Cash and cash equivalents ..................     $ 158,741      $  75,853

     Accounts receivable, net ...................        10,770         25,730

     Inventories ................................        19,526         20,738

     Income tax receivable ......................        11,570            253

     Deferred tax assets ........................         2,444          5,737

     Prepaid expenses and other current assets ..         7,728          5,357

          Total current assets ..................       210,779        133,668

Property, plant and equipment, net ..............        11,181          9,181

Intangible assets ...............................        54,970         57,588

Other assets ....................................         3,342          2,876

Total assets ....................................     $ 280,272      $ 203,313


--------------------------------------------------------------------------------
                      LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

Current liabilities:

     Accounts payable ...........................     $  13,705      $  18,958

     Accrued expenses and other liabilities .....        36,969         36,941

     Income taxes payable .......................        22,026          6,641

          Total current liabilities .............        72,700         62,540

Deferred income taxes ...........................         1,344          2,630

Other liabilities ...............................         9,686          8,968

          Total liabilities .....................        83,730         74,138

Commitments (See Note 18) .......................          --             --

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
        48,421,000 in 2001 and 47,836,000 in 2000           484            478

     Additional paid-in capital .................        21,758         18,498

     Treasury stock, 4,329,000 shares in 2001
        and 2,043,000 shares in 2000 ............       (38,051)       (16,677)

     Retained earnings ..........................       217,479        128,990

     Accumulated other comprehensive loss .......        (5,128)        (2,114)

          Total stockholders' equity ............       196,542        129,175

Total liabilities and stockholders' equity ......     $ 280,272      $ 203,313
--------------------------------------------------------------------------------

See Notes to Consolidated Financial Statements.

</TABLE>

                                       12
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------

The Topps Company, Inc. and Subsidiaries
(In thousands of dollars)
<TABLE>
<CAPTION>
                                                                        Year Ended
-----------------------------------------------------------------------------------------------
                                                             March       February     February
                                                            3, 2001      26, 2000     27, 1999
-----------------------------------------------------------------------------------------------
<S>                                                        <C>          <C>          <C>
Operating Activities
   Net income ..........................................   $  88,489    $  59,215    $  15,571
   Add (subtract) non-cash items included in income:
      Gain on sale of property, plant and equipment ....        --           --         (3,209)
      Depreciation and amortization ....................       4,345        4,019        4,871
      Deferred taxes on income .........................       2,007       (6,907)        (271)
   Net effect of changes in:
      Receivables ......................................      14,960        3,388        7,980
      Inventories ......................................       1,212       (4,517)         392
      Income tax receivable ............................     (11,317)          16        6,560
      Prepaid expenses and other current assets ........      (2,371)        (497)      (1,039)
      Payables and other current liabilities ...........      10,160        4,544       (2,008)
      Other ............................................      (3,129)        (382)         675

         Cash provided by operating activities .........     104,356       58,879       29,522

Investing Activities
   Proceeds from disposition of property, plant
     and equipment .....................................        --           --          5,770
   Net additions to property, plant and equipment ......      (3,360)      (2,835)        (579)

         Cash (used in) provided by investing activities      (3,360)      (2,835)       5,191


Financing Activities
   Reduction of debt ...................................        --        (15,783)     (15,167)
   Exercise of employee stock options ..................       3,260        1,660           29
   Purchase of treasury stock ..........................     (21,368)      (7,796)        --

         Cash used in financing activities .............     (18,108)     (21,919)     (15,138)


Net increase in cash and cash equivalents ..............      82,888       34,125       19,575
Cash and cash equivalents at beginning of year .........      75,853       41,728       22,153
Cash and cash equivalents at end of year ...............   $ 158,741    $  75,853    $  41,728
-----------------------------------------------------------------------------------------------

Supplemental disclosure of cash flow information:
Interest paid ..........................................   $     119    $     842    $   2,237
Income taxes paid ......................................   $  30,414    $  39,407    $   7,423
-----------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements
</TABLE>


                                       13
<PAGE>

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
-----------------------------------------------

The Topps Company, Inc. and Subsidiaries
(In thousands of dollars)

<TABLE>
<CAPTION>
                                                                        Additional                           Other
                                                              Common     Paid-in    Treasury  Retained   Comprehensive
                                                  Total       Stock      Capital     Stock    Earnings   Income (Loss)
<S>                                             <C>         <C>        <C>        <C>         <C>        <C>
----------------------------------------------------------------------------------------------------------------------
Stockholders' equity as of 2/28/1998 .........  $  61,609   $     475  $  16,812  $  (8,881)  $  54,204  $  (1,001)
----------------------------------------------------------------------------------------------------------------------
Net income ...................................     15,571        --         --         --        15,571       --
Translation adjustment .......................         15        --         --         --          --           15
    Total comprehensive income ...............     15,586        --         --         --        15,571         15
Exercise of employee stock options ...........         29        --           29       --          --         --
Stockholders' equity as of 2/27/1999 .........  $  77,224   $     475  $  16,841  $  (8,881)  $  69,775  $    (986)
----------------------------------------------------------------------------------------------------------------------

Net income ...................................     59,215        --         --         --        59,215       --
Translation adjustment .......................       (304)       --         --         --          --         (304)
Minimum pension liability ....................       (824)       --         --         --          --         (824)
    Total comprehensive income ...............     58,087        --         --         --        59,215     (1,128)

Purchase of treasury stock ...................     (7,796)       --         --       (7,796)       --         --
Exercise of employee stock options ...........      1,660           3      1,657       --          --         --
Stockholders' equity as of 2/26/2000 .........  $ 129,175   $     478  $  18,498  $ (16,677)  $ 128,990  $  (2,114)
----------------------------------------------------------------------------------------------------------------------

Net income ...................................     88,489        --         --         --        88,489       --
Translation adjustment .......................     (1,430)       --         --         --          --       (1,430)
Minimum pension liability ....................     (1,584)       --         --         --          --       (1,584)
    Total comprehensive income ...............     85,475        --         --         --        88,489     (3,014)

Purchase of treasury stock ...................    (21,368)          6       --      (21,374)       --         --
Exercise of employee stock options ...........      3,260        --        3,260       --          --         --
Stockholders' Equity as of 3/3/2001 ..........  $ 196,542   $     484  $  21,758  $ (38,051)  $ 217,479  $  (5,128)
----------------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.
</TABLE>


                                       14

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation:  The consolidated  financial statements include the
accounts  of the  Company  and its  subsidiaries.  All  intercompany  items  and
transactions have been eliminated in consolidation.

The  Company and its  subsidiaries  operate  and report  financial  results on a
fiscal year of 52 or 53 weeks which ends on the  Saturday  closest to the end of
February.  Fiscal 2001 was  comprised of 53 weeks versus 52 weeks in both fiscal
2000 and fiscal 1999.

Foreign Currency  Translation:  The financial statements of subsidiaries outside
the United  States,  except those  subsidiaries  located in highly  inflationary
economies,  are generally  measured  using the local  currency as the functional
currency.  Assets and  liabilities of these  subsidiaries  are translated at the
rates of exchange  as of the  balance  sheet  date.  The  resultant  translation
adjustments are included in accumulated other comprehensive  income.  Income and
expense items are translated at the average  exchange rate for the month.  Gains
and losses from foreign currency transactions of these subsidiaries are included
in net income. For subsidiaries operating in highly inflationary economies,  the
financial  statements  are  measured  using the U.S.  dollar  as the  functional
currency.  Gains and losses from balance sheet translation  adjustments are also
included in net income.

Derivative Financial Instruments:  Derivative financial instruments are used for
hedging  purposes  by the  Company in the  management  of its  foreign  currency
exposures.  The Company does not hold or issue derivative financial  instruments
for trading purposes.

Accounting  Changes:  In June 1998,  the Financial  Accounting  Standards  Board
("FASB")  issued  Statement of  Financial  Accounting  Standards  No. 133 ("SFAS
133"), "Accounting for Derivative Instruments and Hedging Activities". SFAS 133,
which provides a  comprehensive  standard for the recognition and measurement of
derivatives and hedging activities, was to be effective for the Company's fiscal
year  2001.  In June  1999,  the FASB  issued  SFAS  No.  137,  "Accounting  for
Derivative  Instruments  and Hedging  Activities - Deferral of Effective Date of
SFAS No. 133",  which  deferred  adoption to the Company's  fiscal 2002. In June
2000,  the  FASB  issued  SFAS  No.  138,  "Accounting  for  Certain  Derivative
Instruments  and Certain  Hedging  Activities,  an Amendment of SFAS No. 133" to
address certain issues causing implementation difficulties for a large number of
entities.  Management has determined  that, had these statements been adopted in
the  current  year,  they  would not have had a material  effect on the  current
financial condition, results of operations or cash flows of the Company.

Cash  Equivalents:  The  Company  considers  investments  in highly  liquid debt
instruments with a maturity of three months or less to be cash equivalents.

Inventories:  Inventories  are  stated  at  lower  of  cost or  market.  Cost is
determined on the first-in, first-out basis.

Property,  Plant and Equipment ("PP&E"): PP&E is stated at cost. Depreciation is
computed  using  the  straight-line  method.  Estimated  useful  lives  used  in
computing  depreciation  are  twenty-five  years for buildings,  three to twelve
years for machinery  and equipment and the remaining  lease period for leasehold
improvements.  In  accordance  with  SFAS  No.  121,  the  Company  periodically
evaluates the carrying  value of its PP&E for  circumstances  which may indicate
impairment.

Intangible Assets:  Intangible assets include  trademarks,  the value of sports,
entertainment  and  proprietary  product  rights and goodwill (the excess of the
purchase  price  over the  estimated  fair  value  of  identifiable  net  assets


                                       15
<PAGE>

acquired).  Amortization is by the straight-line  method over estimated lives of
up to forty years.  Management evaluates the recoverability of intangible assets
under the  provisions  of SFAS No. 121,  based on  undiscounted  projections  of
future cash flows attributable to the individual assets.

Net  Sales:  Sales are  recorded  upon  shipment  of  products.  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.

Estimates:  The preparation of financial statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions which affect the reporting of assets and liabilities as of the dates
of the  financial  statements  and revenues and  expenses  during the  reporting
period.  These  estimates  primarily  relate to the provision for sales returns,
allowance for doubtful  accounts,  inventory  obsolescence and asset valuations.
Actual results could differ from these estimates.

Reclassifications:  Certain items in the prior years' financial  statements have
been reclassified to conform with the current year's presentation.


NOTE 2 - NON-RECURRING ITEMS

During the third  quarter of fiscal 1997,  the Company  announced  that it would
discontinue  operations  at  its  Duryea,  Pennsylvania  factory  following  the
expiration of a labor agreement in December 1996. This resulted in the severance
of both union and non-union  employees  and the  outsourcing  of all  production
activities  previously  performed at that location.  As a result of the closing,
the  Company  recorded  a charge of $30  million  before  applicable  income tax
effects in fiscal 1997.

Due to headcount  reductions  in the United States and Europe and closure of the
Cork,  Ireland  manufacturing  facility,  fiscal  1998  results  include  a  net
non-recurring charge of $3.7 million.

Fiscal 1999's  non-recurring  income of $3.5 million represents the gains on the
sales of the Company's  manufacturing facility in Cork, Ireland and of equipment
in Cork, Ireland and Duryea, Pennsylvania.


NOTE 3 - EARNINGS PER SHARE

Earnings  per share is computed in  accordance  with SFAS No. 128.  Basic EPS is
computed  using  weighted  average  shares  outstanding,  while  diluted  EPS is
computed using  weighted  average shares  outstanding  plus shares  representing
stock  distributable  under  stock-based plans computed using the treasury stock
method.

The following  table  represents  the  computation  of weighted  average  shares
outstanding - diluted:
<TABLE>
<CAPTION>
                                                    Year ended
--------------------------------------------------------------------------------
                                        March         February        February
                                       3, 2001        26, 2000        27, 1999
--------------------------------------------------------------------------------
<S>                                  <C>             <C>             <C>
Weighted average shares outstanding:
Basic                                45,011,000      46,398,000      46,415,000
Effect of dilutive stock options      1,355,000       1,065,000         263,000
Diluted                              46,366,000      47,463,000      46,678,000
--------------------------------------------------------------------------------
</TABLE>

NOTE 4 - ACCOUNTS RECEIVABLE

The reserve for estimated  losses on sales  returns,  which  previously had been
included  in the balance of accrued  expenses  and other  liabilities,  has been
reclassified as a contra account to accounts  receivable.  This presentation has
been reflected on the condensed  balance sheets as of March 3, 2001 and February
26, 2000.
<TABLE>
<CAPTION>
                                                  March         February
                                                 3, 2001        26, 2000
-------------------------------------------------------------------------
                                                (In thousands of dollars)
<S>                                             <C>             <C>
Gross receivables                               $ 35,382        $ 50,766
Reserve for returns                              (22,994)        (23,621)
Allowance for doubtful accounts                   (1,618)         (1,415)
     Net                                        $ 10,770        $ 25,730
-------------------------------------------------------------------------
</TABLE>


                                       16

<PAGE>

NOTE 5 - INVENTORIES
                                                  March         February
                                                 3, 2001        26, 2000
-------------------------------------------------------------------------
                                                (In thousands of dollars)

Raw materials                                   $ 2,860         $ 3,171
Work in process                                   2,282             529
Finished products                                14,384          17,038
     Total                                       19,526        $ 20,738
-------------------------------------------------------------------------


NOTE 6 - PROPERTY, PLANT AND EQUIPMENT, NET
                                                  March         February
                                                 3, 2001        26, 2000
-------------------------------------------------------------------------
                                                (In thousands of dollars)

Land                                            $     42        $     42
Buildings and improvements                         2,006           2,022
Machinery and equipment                           17,088          13,704
     Total PP&E                                   19,136          15,768
Accumulated depreciation and amortization         (7,955)         (6,587)
     Net                                        $ 11,181        $  9,181
-------------------------------------------------------------------------


NOTE 7 - INTANGIBLE ASSETS
                                                  March         February
                                                 3, 2001        26, 2000
-------------------------------------------------------------------------
                                                (In thousands of dollars)
Value of sports, entertainment and
proprietary products                            $ 36,635        $ 36,635
Goodwill                                          64,265          64,265
Accumulated amortization                         (45,930)        (43,312)
     Net                                        $ 54,970        $ 57,588
-------------------------------------------------------------------------


NOTE 8 - ACCRUED EXPENSES AND OTHER LIABILITIES
                                                  March         February
                                                 3, 2001        26, 2000
-------------------------------------------------------------------------
                                                (In thousands of dollars)

Royalties                                       $  8,540        $ 12,760
Employee compensation                              6,520           6,533
Advertising and marketing expenses                 4,570           2,392
Payments received in advance                       3,989           4,665
Pension liability                                  2,408             824
Other                                             10,942           9,767
     Total                                      $ 36,969        $ 36,941
-------------------------------------------------------------------------


NOTE 9 - DEPRECIATION AND AMORTIZATION
                                                Year Ended
-------------------------------------------------------------------------
                                    March        February      February
                                   3, 2001       26, 2000      27, 1999
-------------------------------------------------------------------------
                                         (In thousands of dollars)

Depreciation expense               $ 1,685       $  1,151       $  1,464
Amortization of intangible assets    2,618          2,618          2,618
Amortization - other                    42            250            789
    Total                          $ 4,345       $  4,019       $  4,871
-------------------------------------------------------------------------


NOTE 10 - LONG-TERM DEBT

On June 26,  2000,  the  Company  entered  into a credit  agreement  with  Chase
Manhattan Bank and LaSalle Bank National Association. The agreement provides for
a $35.0 million unsecured  facility to cover revolver and letter of credit needs
and expires on June 26, 2004.  Interest rates are variable and a function of the
Company's EBITDA. 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 repurchase its shares, sell or acquire assets or borrow
additional  money and prohibits the payment of dividends.  The credit  agreement
may be terminated by the Company at any point over the four year term  (provided
the Company repays all outstanding amounts thereunder) without penalty.



                                       17


<PAGE>
NOTE 11 - INCOME TAXES

U.S. and foreign  operations  contributed to income before  provision for income
taxes as follows:

                                               Year Ended
-------------------------------------------------------------------------
                                    March        February       February
                                   3, 2001       26, 2000       27, 1999
-------------------------------------------------------------------------
                                          (In thousands of dollars)
United States                      $ 36,359      $ 86,654       $ 21,984
Europe                               89,201         7,240          2,424
Canada                                1,762         1,395          1,868
Latin America                           312         1,275            (72)
Total income before provision
for income taxes                   $127,634      $ 96,564       $ 26,204
-------------------------------------------------------------------------


Provision for income taxes consists of:
                                                Year Ended
-------------------------------------------------------------------------
                                     March       February       February
                                     3, 2001     26, 2000       27, 1999
-------------------------------------------------------------------------
                                           (In thousands of dollars)
Current income taxes:
Federal ........................     $  6,467    $ 32,024       $  6,655
Foreign ........................       27,323       3,368          2,250
State and local ................        2,459       8,362          2,032

      Total current ............     $ 36,249    $ 43,754       $ 10,937

Deferred income taxes (benefit):
Federal ........................        1,554      (4,889)           (79)
Foreign ........................        1,020      (1,316)          --
State and local ................          322        (200)          (225)

     Total deferred ............        2,896      (6,405)          (304)

Total provision for income taxes     $ 39,145    $ 37,349       $ 10,633
-------------------------------------------------------------------------


The reasons for the  difference  between the  provision for income taxes and the
amount  computed by applying  the  statutory  federal  income tax rate to income
before provision for income taxes are as follows:

                                                Year Ended
------------------------------------------------------------------------
                                    March        February       February
                                   3, 2001       26, 2000       27, 1999
------------------------------------------------------------------------
                                           (In thousands of dollars)

Computed expected tax provision..  $ 44,672      $ 33,797       $ 9,171

Increase in taxes resulting from:
  State and local taxes, net of
  federal tax benefit............     2,327         5,220         1,175

  Foreign and U.S. tax effects
  attributable to foreign
  operations.....................   (13,352)       (1,525)         (578)
  Goodwill.......................       549           549           549
  Other permanent differences....     4,949          (692)          316

Provision for income taxes.......  $ 39,145      $ 37,349      $ 10,633
------------------------------------------------------------------------


Deferred U.S. income taxes have not been provided on  undistributed  earnings of
foreign  subsidiaries  as the Company  considers such earnings to be permanently
reinvested in the businesses as of March 3, 2001.  These  undistributed  foreign
earnings  could  become  subject  to U.S.  income  tax if  remitted,  or  deemed
remitted, as a dividend. Determination of the deferred U.S. income tax liability
on these unremitted earnings is not practical,  since such liability, if any, is
dependent on  circumstances  existing at the time of the remittance.  During the
year, the Company remitted a one-time dividend from a foreign  subsidiary in the
amount of $10.1  million.  The taxes provided on this dividend were fully offset
by foreign tax credits.  The cumulative  amount of unremitted  earnings from the
foreign  subsidiaries  that  is  expected  to  be  permanently   reinvested  was
approximately $61.9 million on March 3, 2001.



                                       18


<PAGE>

The components of deferred income tax assets and liabilities are as follows:

                                                Year Ended
------------------------------------------------------------------------
                                    March        February       February
                                   3, 2001       26, 2000       27, 1999
------------------------------------------------------------------------
                                         (In thousands of dollars)
Deferred income tax assets:
    Provision for estimated losses
    on sales returns               $ 1,126       $ 3,241        $   110
    Provision for inventory
    obsolescence                     1,318         2,496          1,232

    Total deferred income tax
    assets                         $ 2,444       $ 5,737        $ 1,342

Deferred income tax liabilities:
    Amortization                   $ 3,287       $ 3,659        $ 4,233
    Depreciation                       406           242            224
    Non-recurring items               (291)         (366)            29
    Other                           (2,058)         (905)           657

    Total deferred income tax
    liabilities                    $ 1,344       $ 2,630        $ 5,143
-----------------------------------------------------------------------


NOTE 12 - EMPLOYEE BENEFIT PLANS

The  Company  maintains  noncontributory  qualified  and  non-qualified  defined
benefit  pensions as well as a  postretirement  healthcare plan for all eligible
non-bargaining unit personnel.

The  Company is also a  participant  in a  multi-employer  defined  contribution
pension plan covering domestic bargaining unit employees.

In addition,  the Company sponsors a defined  contribution plan, which qualifies
under  Sections  401(a) and 401(k) of the  Internal  Revenue  Code (the  "401(k)
Plan").  While all non-bargaining  unit employees are eligible to participate in
the 401(k) Plan,  participation is optional.  The Company does not contribute to
the 401(k) Plan.

Pension  expense for all plans was $1,494,000  (2001) and $1,334,000  (2000) and
$883,000 (1999).

The  following  tables   summarize   benefit  costs,  as  well  as  the  benefit
obligations,  plan assets and funded status  associated  with the Company's U.S.
pension and postretirement healthcare benefit plans.

<TABLE>
<CAPTION>
                                                                                   Postretirement
                                                       Pension Benefits          Healthcare Benefits
------------------------------------------------------------------------------------------------------
                                                    March        February       March        February
                                                   3, 2001       26, 2000      3, 2001       26, 2000
------------------------------------------------------------------------------------------------------
                                                               (In thousands of dollars)
Reconciliation of change in benefit obligation
----------------------------------------------
<S>                                                <C>           <C>           <C>           <C>
Benefit obligation at beginning of year ......     $ 20,755      $ 21,712      $  6,294      $  6,581
Service cost .................................          715           693           175           228
Interest cost ................................        1,772         1,537           474           465
Benefits paid ................................       (1,851)       (1,063)         (460)         (376)
Actuarial (gains) losses .....................        3,895        (2,124)          353          (604)

Benefit obligation at end of year ............     $ 25,286      $ 20,755      $  6,836      $  6,294
------------------------------------------------------------------------------------------------------
</TABLE>


                                       19

<PAGE>
<TABLE>
<CAPTION>
                                                                                   Postretirement
                                                       Pension Benefits          Healthcare Benefits
------------------------------------------------------------------------------------------------------
                                                    March        February       March        February
                                                   3, 2001       26, 2000      3, 2001       26, 2000
------------------------------------------------------------------------------------------------------
                                                               (In thousands of dollars)
<S>                                                <C>           <C>           <C>           <C>
Reconciliation of change in the fair value
of plan assets
------------------------------------------

Fair value of plan assets at beginning of year     $ 13,170      $ 15,011      $   --        $   --
Actual return on plan assets .................        1,269          (845)         --            --
Employer contributions .......................        1,141            67           460           376
Benefits paid ................................       (1,850)       (1,063)         (460)         (376)

Fair value of plan assets at end of year .....     $ 13,730      $ 13,170      $   --        $   --
------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
                                                                               Postretirement
                                                  Pension Benefits           Healthcare Benefits
---------------------------------------------------------------------------------------------------
                                                March        February       March        February
                                               3, 2001       26, 2000      3, 2001       26, 2000
---------------------------------------------------------------------------------------------------
                                                           (In thousands of dollars)
Funded status
<S>                                            <C>           <C>           <C>           <C>
Funded status ............................     $(11,555)     $ (7,583)     $ (6,836)     $ (6,294)
Unrecognized actuarial (gains) losses ....        7,137         3,447          (932)       (1,367)
Unrecognized prior service cost ..........         (113)         (128)         --            --
Unrecognized initial transition obligation          220           416         2,995         3,216
Net amount recognized in the consolidated
balance sheets ...........................     $ (4,311)     $ (3,848)     $ (4,773)     $ (4,445)

Components of amounts recognized in the
consolidated balance sheets

Prepaid benefit cost .....................     $    271      $    269      $   --        $   --
Accrued benefit liability ................       (6,990)       (4,941)       (4,773)       (4,445)
Accumulated other comprehensive expense ..        2,408           824          --            --

Net amount recognized in the consolidated
balance sheets ...........................     $ (4,311)     $ (3,848)     $ (4,773)     $ (4,445)
---------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                                         Postretirement
                                                Pension Benefits                       Healthcare Benefits
----------------------------------------------------------------------------------------------------------------
                                         March      February     February      March       February     February
                                        3, 2001     26, 2000     27, 1999     3, 2001      26, 2000     27, 1999
----------------------------------------------------------------------------------------------------------------
                                                               (In thousands of dollars)
Components of net periodic benefit cost
<S>                                    <C>          <C>          <C>          <C>          <C>          <C>
Service cost .....................     $   715      $   693      $   692      $   175      $   228      $   216
Interest cost ....................       1,772        1,537        1,513          474          465          443
Expected return on plan assets ...      (1,224)      (1,320)      (1,430)        --           --           --
Amortization of initial transition
obligation .......................         196          196          196          221          221          221
Prior service cost ...............         (15)         (15)         (15)        --           --           --
Actuarial (gains) losses .........         192          193          132          (82)          (8)         (11)

Net periodic benefit cost ........     $ 1,636      $ 1,284      $ 1,088      $   788      $   906      $   869
----------------------------------------------------------------------------------------------------------------
</TABLE>


                                       20

<PAGE>

As of March 3, 2001 and February 26, 2000, both the qualified and  non-qualified
pension plans have  accumulated  benefit  obligations  in excess of plan assets.
Information is as follows:

                                                     Pension Benefits
-------------------------------------------------------------------------
                                                   March        February
                                                  3, 2001       26, 2000
-------------------------------------------------------------------------
                                                (In thousands of dollars)

Projected benefit obligation ..................  $ 25,286       $ 20,753
Accumulated benefit obligation ................    20,210         17,308
Fair value of plan assets .....................  $ 13,730       $ 13,170
-------------------------------------------------------------------------


The  weighted-average  actuarial  assumptions used for both pension plans are as
follows:

------------------------------------------------------------------------
                                                  March         February
                                                 3, 2001        26, 2000
------------------------------------------------------------------------
Discount rate                                      7.0%           7.75%
Expected return on plan assets                     9.0%            9.0%
Rate of compensation increase                      5.0%            5.0%
------------------------------------------------------------------------


Assumptions for healthcare  cost increases are as follows:  7.5% in fiscal 2001,
trending down to a 5.5% increase in fiscal 2005.  Increases in healthcare  costs
could significantly affect the reported postretirement benefits cost and benefit
obligations.  A one percentage point change in assumed  healthcare  benefit cost
trends would have the following effect:

------------------------------------------------------------------------
                                                   1-Percentage Point
                                                 Increase       Decrease
------------------------------------------------------------------------
On total service and interest cost component       $  91         $  (75)
On postretirement benefit obligation (APBO)        $ 642         $ (551)
------------------------------------------------------------------------



                                       21

<PAGE>

NOTE 13 - STOCK OPTION PLANS

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 granted generally
vest over two or three years and expire ten years after the grant date.

The following table summarizes information about the Plans.
<TABLE>
<CAPTION>
                                              March 3, 2001            February 26, 2000        February 27, 1999
---------------------------------------------------------------------------------------------------------------------
                                                       Weighted-                  Weighted-                 Weighted-
                                                        Average                    Average                   Average
                                                       Exercise                   Exercise                  Exercise
Stock Options                             Shares         Price       Shares         Price      Shares         Price
---------------------------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>         <C>            <C>        <C>            <C>
Outstanding at beginning of year .      4,684,052      $  5.81     4,036,000      $  5.75    3,777,500      $  6.23
Granted ..........................        569,550      $  9.35     1,032,500      $  5.39      527,500      $  3.03
Exercised ........................       (587,058)     $  3.57      (318,448)     $  3.75      (13,250)     $  2.22
Forfeited ........................       (357,175)     $ 11.25       (66,000)     $  5.41     (255,750)     $  7.39
  Outstanding at end of year .....      4,309,369      $  6.34     4,684,052      $  5.81    4,036,000      $  5.75

Options exercisable at end of year      3,491,735      $  5.97     3,468,129      $  6.11    2,663,865      $  6.99

Weighted-average fair value of
options granted during the year ..         $ 5.84                     $ 2.97                   $ 1.72
--------------------------------------------------------------------------------------------------------------------
</TABLE>

Summarized information about stock options outstanding and exercisable at March
3, 2001 is as follows:

<TABLE>
<CAPTION>
                                              Options Outstanding                      Options Exercisable
----------------------------------------------------------------------------------------------------------------
                                 Outstanding  Weighted-Average  Weighted-Average  Exercisable   Weighted-Average
                                    as of        Remaining          Exercise         as of          Exercise
Exercise Price Ranges               3/3/01    Contractual Life        Price          3/3/01           Price
----------------------------------------------------------------------------------------------------------------
<S>                              <C>               <C>               <C>          <C>               <C>
    $1.76  -   $3.53             1,291,319         6.8                $2.65       1,287,985          $2.65

    $3.54  -   $5.29               804,500         7.0                $4.54         594,750          $4.53

    $5.30  -   $7.05               391,000         4.9                $6.04         383,000          $6.03

    $7.06  -   $8.81               883,500         4.5                $7.91         715,500          $8.02

    $8.82  -  $10.57               433,050         7.3                $9.36         123,500          $9.30

   $10.58  -  $12.34               219,000         6.0               $10.85         100,000         $10.75

   $12.35  -  $14.10                     -         0.0                $0.00              -           $0.00

   $14.11  -  $15.86               224,000         0.5               $14.97         224,000         $14.97

   $15.87  -  $17.63                63,000         1.1               $17.63          63,000         $17.63

                                 4,309,369         5.8                $6.34       3,491,735          $5.97
----------------------------------------------------------------------------------------------------------------
</TABLE>


                                       22

<PAGE>

The Company follows the provisions of SFAS No. 123,  "Accounting for Stock-Based
Compensation".  As  permitted  by this  statement,  the  Company  has  chosen to
continue to account  for  stock-based  compensation  using the  intrinsic  value
method.  Accordingly,  no  compensation  expense  has  been  recognized  in  the
Company's Consolidated Statements of Operations for its stock-based compensation
plans.  Had  compensation  costs been determined  based on the fair value of the
stock option  grants  consistent  with the method of SFAS No. 123, the Company's
net income and net income per common  share  assuming  dilution  would have been
reduced to the pro forma amounts indicated below.
<TABLE>
<CAPTION>
                                       (In thousands of dollars, except share data)
                                  2001                     2000                     1999
--------------------------------------------------------------------------------------------------
<S>                    <C>           <C>         <C>           <C>         <C>           <C>
                       As reported   Pro forma   As reported   Pro forma   As reported   Pro forma

Net income .......       $88,489      $87,279      $59,215      $58,242     $15,571       $15,035
Earnings per share       $  1.91      $  1.88      $  1.25      $  1.23     $  0.33       $  0.32
--------------------------------------------------------------------------------------------------
</TABLE>

In determining the preceding pro forma amounts under SFAS 123, the fair value of
each option grant is  estimated as of the date of grant using the  Black-Scholes
option-pricing model with the following assumptions:  risk free interest rate of
6.5%; estimated volatility of 56%; no dividend yield; expected life of 6.6 years
for fiscal 2001 and 10 years for fiscal 2000 and fiscal 1999.


NOTE 14 - CAPITAL STOCK

The  Company  has a  Shareholder  Rights Plan which  entitles  stockholders,  in
certain circumstances, to purchase one one-hundredth of a share of the Company's
Series A Junior  Participating  Preferred  Stock at an exercise price of $62 for
each share of Common Stock  owned.  The  Shareholder  Rights Plan is intended to
protect the interests of the Company's  stockholders in the event the Company is
confronted with coercive or unfair takeover tactics.

In October 1999, the Board of Directors of the Company authorized the Company to
repurchase up to 5 million shares of its stock. As of March 3, 2001, the Company
had repurchased 3.2 million shares at an average price of $8.99.


NOTE 15 - SEGMENT AND GEOGRAPHIC INFORMATION

Following is the breakdown of industry segments as required by SFAS No. 131. The
Company  has three  reportable  business  segments:  Confectionery,  Collectible
Sports Products and Entertainment Products.

The Confectionery  segment consists of a variety of lollipop products  including
Ring Pop,  Push Pop,  Baby Bottle Pop and Flip Pop, the Bazooka  bubble gum line
and other novelty confectioneries including Pokemon products.

The Collectible  Sports  Products  segment  primarily  consists of trading cards
featuring   players  from  Major  League  Baseball,   the  National   Basketball
Association, the National Football League and the National Hockey League as well
as sticker  album  products  featuring  players  from  certain  European  soccer
leagues.

The  Entertainment  Products  segment  consists of trading cards,  sticker album
products, comics and magazines featuring licenses from popular films, television
shows and other entertainment properties, including Pokemon.


                                       23

<PAGE>

The Company's  management  evaluates the  performance of each segment based upon
its  contributed  margin,   which  is  profit  after  cost  of  goods,   product
development,  advertising and  promotional  costs and  obsolescence,  but before
unallocated  general and  administrative  expenses and  manufacturing  overhead,
depreciation  and  amortization,  other income,  non-recurring  items,  interest
income (expense) and income taxes.

The Company does not allocate  assets among its business  segments and therefore
does not include a  breakdown  of assets or  depreciation  and  amortization  by
segment.


<TABLE>
<CAPTION>
                                                              Year Ended
--------------------------------------------------------------------------------------
                                                 March         February       February
                                                3, 2001        26, 2000       27, 1999
--------------------------------------------------------------------------------------
                                                       (In thousands of dollars)
<S>                                             <C>            <C>            <C>
Net Sales
Confectionery .............................     $ 172,528      $ 129,724      $  95,238
Collectible Sports Products ...............       122,918        133,803        124,855
Entertainment Products ....................       143,822        110,666          9,321
  Total Net Sales .........................     $ 439,268      $ 374,193      $ 229,414
---------------------------------------------------------------------------------------


Contributed Margin

Confectionery .............................     $  64,390      $  40,136      $  24,736
Collectible Sports Products ...............        36,365         47,408         48,414
Entertainment Products ....................        83,288         62,886          1,594
  Total Contributed Margin ................     $ 184,043      $ 150,430      $  74,744
---------------------------------------------------------------------------------------

Reconciliation of contributed margin to
income before provision for income taxes

Total contributed margin ..................     $ 184,043      $ 150,430      $  74,744
Unallocated general and administrative
  expenses and manufacturing overhead .....       (60,745)       (52,314)       (47,370)
Depreciation & amortization ...............        (4,345)        (4,019)        (4,871)
Other income ..............................         2,964            755            676
Non-recurring items .......................          --             --            3,479
   Income from operations .................       121,917         94,852         26,658
Interest income (expense), net ............         5,717          1,712           (454)

   Income before provision for income taxes     $ 127,634      $  96,564      $  26,204
---------------------------------------------------------------------------------------
</TABLE>


                                       24

<PAGE>

Net sales to  unaffiliated  customers and income from  operations,  as presented
below,  are  based  on  the  location  of the  ultimate  customer.  Income  from
operations  is  defined as  contributed  margin  less  unallocated  general  and
administrative   expenses   and   manufacturing   overhead,   depreciation   and
amortization,  other income and  non-recurring  items.  Identifiable  assets, as
presented below, are those assets located in each geographic area.

<TABLE>
<CAPTION>
                                                 Year Ended
-----------------------------------------------------------------------
                                     March        February     February
                                    3, 2001       26, 2000     27, 1999
-----------------------------------------------------------------------
                                         (In thousands of dollars)
<S>                                  <C>          <C>          <C>
Net Sales
United States ..................     $218,118     $270,792     $156,913
Europe .........................      180,909       64,534       45,537
Other ..........................       40,241       38,867       26,964
    Total Net Sales ............     $439,268     $374,193     $229,414
-----------------------------------------------------------------------

Income from Operations
United States ..................     $ 32,591     $ 84,289     $ 22,536
Europe .........................       80,132        5,784        1,623
Other ..........................        9,194        4,779        2,499
    Total Income from Operations     $121,917     $ 94,852     $ 26,658
-----------------------------------------------------------------------

Identifiable Assets
United States ..................     $171,385     $146,400     $114,557
Europe .........................      101,819       42,267       29,732
Other ..........................        7,068       14,646        7,164
    Total Identifiable Assets ..     $280,272     $203,313     $151,453
-----------------------------------------------------------------------
</TABLE>


                                       25

<PAGE>

NOTE 16 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial instruments is
made in accordance with the  requirements  of SFAS No. 107, " Disclosures  About
Fair Value of Financial  Instruments".  These  estimates have been determined by
the  Company  using  available  market  information  and  appropriate  valuation
techniques based on information as of March 3, 2001. As considerable judgment is
inherent  in the  development  of  these  estimates,  they  are not  necessarily
indicative of the amounts that the Company would realize in the current market.

The recorded amounts and fair values are as follows:
<TABLE>
<CAPTION>

                                                         March 3, 2001            February 26, 2000
------------------------------------------------------------------------------------------------------
                                                      Recorded       Fair       Recorded       Fair
                                                       Amount        Value       Amount        Value
------------------------------------------------------------------------------------------------------
                                                                  (In thousands of dollars)
<S>                                                  <C>          <C>           <C>          <C>
Cash and equivalents ............................    $ 158,741    $ 158,741     $  75,853    $  75,853
Prepaid expenses and other current assets .......        7,728        7,728         5,357        5,357
Foreign currency forward contracts ..............         --            (55)         --            685
------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 17 - QUARTERLY RESULTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
                                            2001                                          2000
-----------------------------------------------------------------------------------------------------------------
                            1st        2nd        3rd        4th           1st        2nd        3rd        4th
-----------------------------------------------------------------------------------------------------------------
                                                  In thousands of dollars, except share data)
<S>                      <C>        <C>        <C>        <C>           <C>        <C>        <C>        <C>
Net sales ............   $144,332   $141,708   $ 92,700   $ 60,528      $ 84,941   $ 80,391   $110,777   $ 98,084
Gross profit on sales      72,413     74,492     47,518     20,921        37,747     37,286     58,555     45,247
Income from operations     46,010     50,447     24,816        644        15,578     16,525     36,551     26,198
Net income ...........     29,029     31,964     18,881      8,615         9,267      9,881     21,930     18,137
Net income per share
  - basic ............   $   0.64   $   0.71   $   0.42   $   0.19      $   0.20   $   0.21   $   0.47   $   0.39
  - diluted ..........   $   0.62   $   0.68   $   0.41   $   0.19      $   0.20   $   0.21   $   0.46   $   0.38
-----------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 18 - COMMITMENTS AND OTHER MATTERS

Future minimum payments under  non-cancelable  leases which extend into the year
2011 are $1,560,000  (2002),  $1,557,000 (2003),  $1,405,000 (2004),  $1,257,000
(2005), $1,200,000 (2006) and $4,600,000 thereafter.

Future  minimum  payments  required  under the  Company's  existing  sports  and
entertainment  contracts,  with various expiration dates extending into the year
2004 are estimated to be $2,233,000  (2002),  $1,475,000  (2003) and  $1,450,000
(2004).

Total royalty  expense under the Company's  sports and  entertainment  licensing
contracts was $46,727,000 (2001), $43,403,000 (2000) and $24,373,000 (1999).

Advertising  and marketing  expenses (which  encompass media spending,  slotting
allowances,  consumer  promotions  as well as player  autograph and relic costs)
included in selling, general and administrative expenses amounted to $29,565,000
(2001), $25,219,000 (2000) and $18,974,000 (1999).



                                       26

<PAGE>

The Company  transacts  business in many  countries,  utilizing  many  different
currencies.  It is thus exposed to the effect of exchange rate  fluctuations  on
sales and purchase  transactions.  The Company enters into both foreign currency
forward  contracts  and options on currency  forward  contracts  to manage these
exposures and to minimize the effects of foreign  currency  transactions on cash
flow.  Such  contracts  are  entered  into  primarily  to hedge  against  future
commitments. The Company does not engage in foreign currency speculation.  Gains
and losses on these hedging  instruments  that are  designated  and effective as
hedges of firm  commitments  are deferred and  recognized  in income in the same
period as the hedge transaction.  The Company may be exposed to credit losses in
the event of non-performance by counterparties to these instruments.  Management
believes,  however, the risk of incurring such losses is remote as the contracts
are entered into with major financial institutions.

At March 3, 2001, the Company had outstanding foreign currency forward contracts
with  banks in the  amounts of  $8,996,000  as  compared  to  $26,485,000  as of
February 26, 2000.

These  contracts  have various  maturity  dates ranging up to twelve months from
March 3, 2001, with over 90% of the contracts  maturing  within six months.  The
recognition  of the net loss,  which  amounted to $55,000 using spot rates as of
year end, is deferred until the hedged transaction is recorded into operations.


Legal proceedings:
-----------------

In November  1998,  the Company  was named as a defendant  in a purported  class
action  commenced in the United States District Court for the Southern  District
of California (the "California Court") entitled Rodriquez,  et. al. v. The Topps
Company,  Inc., No. CV 2121-B (AJB) (S.D. Cal.) (the "Class Action").  The Class
Action  alleges that the Company  violated the Racketeer  Influenced and Corrupt
Organizations Act ("RICO") and the California Unfair Business  Practices Act, by
its  practice  of  selling   sports  and   entertainment   trading   cards  with
randomly-inserted  "insert"  cards,  allegedly in violation of state and federal
anti-gambling laws. The Class Action seeks treble damages and attorneys' fees on
behalf  of all  individuals  who  purchased  packs  of cards at least in part to
obtain an "insert" card over a four-year period. On January 22, 1999, plaintiffs
moved to consolidate the Class Action with similar class actions pending against
several of the Company's  principal  competitors and licensors in the California
Court.  On January 25, 1999,  the Company  moved to dismiss the  complaint,  or,
alternatively,  to transfer the Class Action to the Eastern District of New York
or stay the Class Action pending the outcome of the Declaratory  Judgment Action
pending in the Eastern  District of New York. By orders dated May 14, 1999,  the
California  Court denied the Company's  motions to dismiss or transfer the Class
Action but granted the  Company's  motion to stay the Class  Action  pending the
outcome of the Declaratory  Judgment  Action.  The California  Court also denied
plaintiffs'  motion to consolidate the Class Action with similar purported class
actions.  On April 18, 2000,  the  California  Court entered an order  requiring
plaintiffs in the Class Action as well as in the other  purported  Class Actions
to show cause why all such actions should not be dismissed.  By order dated June
21,  2000,  the  California  Court  vacated its May 14,  2000 order  denying the
Company's  motion to dismiss  the Class,  dismissed  the RICO claim in the Class
Action with  prejudice and without  leave to replead,  and dismissed the pendent
state law claims without  prejudice.  Plaintiffs filed a notice of appeal of the
California  Court's decision to the United States Court of Appeals for the Ninth
Circuit on July 21, 2000.  Briefing has been completed but the Court has not yet
set a date to hear oral argument. If the Class Action were reinstated on appeal,
an adverse  outcome in the Class Action could  materially  affect the  Company's
future plans and results.

On August 21, 2000,  the Company was named as a defendant  in a purported  class
action commenced in the Superior Court of the State of California for the County
of Alameda (the "California State Court") entitled Chaset,  et. al. v. The Upper


                                       27
<PAGE>

Deck  Company,  et.  al. No.  830257-9  (the  "California  Class  Action").  The
California  Class Action  alleges that the Company and other  manufacturers  and
licensors of sports and entertainment  trading cards committed unlawful,  unfair
and fraudulent  business acts under the California Unfair Business Practices Act
(CUBPA)  and the  California  Consumer  Legal  Remedies  Act by the  practice of
selling  trading  cards  with  randomly-inserted  "insert"  cards  allegedly  in
violation of state and federal  anti-gambling  laws and state consumer laws. The
California  Class Action asserts three claims for relief and seeks  declaratory,
equitable and  injunctive  relief and  attorneys'  fees on behalf of a purported
nationwide  class  of  trading  card  purchasers.  Plaintiff  filed  an  amended
complaint on October 13, 2000, including an amendment to demand compensatory and
punitive  damages and  restitution.  On December 14, 2000,  plaintiff  moved for
summary  judgment  on one  of his  CUBPA  claims.  On  December  15,  2000,  all
defendants  filed a motion to dismiss  two of the claims for  failure to state a
claim upon which relief can be granted; a motion for summary judgment dismissing
the remaining  claim;  and a motion to strike all  allegations  of fraudulent or
deceptive  representations and all references to plaintiff's prayer for monetary
relief.  On March  29,  2001,  the  Court  issued a  tentative  ruling  granting
defendants'  motion for summary  judgment on the  grounds  that the  defendant's
practices do not constitute illegal gambling as a matter of law, but denying the
demurrer to the extent that the  remaining two claims allege false or misleading
advertising  practices  unrelated to the gambling  issue.  On March 30, 2001, in
accordance with the California State practice,  the Court heard oral argument on
whether or not its tentative ruling should stand as a final ruling.  Thereafter,
the court issued a tentative ruling denying the motion for summary  adjudication
and demurrer and set a hearing for June 1, 2001 to hear  additional  argument on
the motion.  An adverse outcome in the California  Class Action could materially
affect the Company's future plans and results.

In  November  2000,  the  Commission  of  the  European   Communities  began  an
investigation into whether Topps Europe Limited's distribution  arrangements for
its  licensed  products  comply with  European  law. The  Commission  is seeking
information  as to whether Topps Europe Limited has engaged in the prevention of
parallel trade between the member states of the European  Union and/or  European
Economic Area, in  infringement of Article 81 of the EC Treaty and/or Article 54
of the EEA Treaty.  Topps Europe  Limited  filed a response to the  Commission's
enquiry on November 29, 2000, and provided further information to the Commission
on February 2, 2001,  pursuant to its request.  The Commission is continuing its
investigation,  and  an  adverse  outcome  in its  findings  could  result  in a
substantial fine.

In all  the  above  matters,  the  Company's  management  believes  that  it has
meritorious defenses and intends to vigorously defend against these claims.

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



                                       28
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


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

We have  audited  the  accompanying  consolidated  balance  sheets  of The Topps
Company,  Inc. and  Subsidiaries  as of March 3, 2001 and February 26, 2000, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the three  years in the  period  ended  March 3,  2001.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the financial position of The Topps Company, Inc. and Subsidiaries as
of March 3, 2001 and February 26, 2000 and the results of their  operations  and
cash  flows for each of the three  years in the  period  ended  March 3, 2001 in
conformity with accounting principles generally accepted in the United States of
America.



DELOITTE & TOUCHE LLP

New York, New York
April 4, 2001




                                       29

<PAGE>


MARKET AND DIVIDEND INFORMATION


The  Company's  Common Stock is traded on the Nasdaq  National  Market under the
symbol TOPP. The following table sets forth, for the periods indicated, the high
and low sales  price for the Common  Stock  during the last two fiscal  years as
reported  on the  Nasdaq  National  Market.  As of April 23,  2001,  there  were
approximately 4,627 holders of record.

<TABLE>
<CAPTION>
                            Fiscal year ended             Fiscal year ended
                              March 3, 2001               February 26, 2000
--------------------------------------------------------------------------------
                        High Price      Low Price      High Price      Low Price
--------------------------------------------------------------------------------
<S>                     <C>             <C>            <C>             <C>
First quarter           $   10.00       $   7.00       $    7.38       $   4.19

Second quarter          $   11.97       $   8.25       $   12.06       $   5.75

Third quarter           $   10.13       $   7.63       $   12.19       $   6.81

Fourth quarter          $   10.69       $   7.88       $   13.38       $   6.94
--------------------------------------------------------------------------------
</TABLE>


The  Company's  credit  agreement  prohibits  the  payment  of  dividends.   See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations  -  Liquidity  and  Capital  Resources"  and  "Notes to  Consolidated
Financial Statements - Note 10."





                                       30


<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
                                              2001           2000           1999            1998            1997
-------------------------------------------------------------------------------------------------------------------
                                                       (In thousands of dollars, except share data)
<S>                                      <C>            <C>            <C>             <C>             <C>
OPERATING DATA:

Net sales ............................   $    439,268   $    374,193   $    229,414    $    241,250    $    268,975
Gross profit on sales ................        215,344        178,835         94,791          79,709          90,121
Selling, general and administrative
  expenses ...........................         96,391         84,738         72,288          78,437          75,974
Income (loss) from operations ........        121,917         94,852         26,658          (2,020)        (14,475)
Interest income (expense), net .......          5,717          1,712           (454)         (1,585)         (1,942)
Net income (loss) ....................         88,489         59,215         15,571          (4,572)        (10,943)

Income (loss) from operations
per share - basic ....................   $       2.71   $       2.04   $       0.57    $      (0.04)   $      (0.31)
                - diluted ............   $       2.63   $       2.00   $       0.57    $      (0.04)   $      (0.31)
Net income (loss) - basic ............   $       1.97   $       1.28   $       0.34    $      (0.10)   $      (0.23)
                  - diluted ..........   $       1.91   $       1.25   $       0.33    $      (0.10)   $      (0.23)
Cash dividends .......................           --             --             --              --              --

Wtd. avg. shares outstanding - basic .     45,011,000     46,398,000     46,415,000      46,421,000      46,928,000
                             - diluted     46,366,000     47,463,000     46,678,000      46,434,000      46,928,000

-------------------------------------------------------------------------------------------------------------------


BALANCE SHEET DATA:

Cash and equivalents .................   $    158,741   $     75,853   $     41,728    $     22,153    $     24,199
Working capital ......................        138,079         71,128         24,919          20,971          18,716
Property, plant and equipment, net ...         11,181          9,181          7,429          10,148          12,900
Long-term debt, less current portion .           --             --            5,158          22,617          27,450
Total assets .........................        280,272        203,313        151,453         159,148         177,939
Stockholders' equity .................   $    196,542   $    129,175   $     77,224    $     61,609    $     68,052
-------------------------------------------------------------------------------------------------------------------

</TABLE>


Certain items in the prior years' financial statements have been reclassified to
conform with the current year's presentation.

Income (loss) from operations  includes  various  non-recurring  items in fiscal
1999, 1998 and 1997. See Note 2.



                                       31


<PAGE>

BOARD OF DIRECTORS

Arthur T. Shorin               Ann Kirschner                  Richard Tarlow
Chairman, Chief Executive      Chief Executive Officer and    Chairman
Officer and President          President                      Carlson & Partners
                               FATHOM


Allan A. Feder*                David Mauer*                   Stanley Tulchin
Independent Business           President and Chief            Chairman
Consultant                     Executive Officer              Stanley Tulchin
                               Riddell Sports Inc.            Associates, Inc.

Stephen D. Greenberg           Jack H. Nusbaum*
Chairman                       Senior Partner and
Fusient Media Ventures, Inc.   Co-Chairman
                               Willkie Farr & Gallagher


*Nominated to stand for re-election to the Company's Board of Directors at the
2001 Annual Meeting of Stockholders.


<TABLE>
<S>                             <C>                            <C>                          <C>
OFFICERS

Arthur T. Shorin                Michael P. Clancy              Leon J. Gutmann              John Perillo
Chairman, Chief Executive       Vice President -               Assistant Treasurer and      Vice President - Operations
Officer and President           International and Managing     Assistant Secretary
                                Director, Topps
                                International Limited**

Ronald L. Boyum                 Michael J. Drewniak            Catherine K. Jessup          Scott Silverstein
Vice President - Marketing      Vice President -               Vice President - Chief       Executive Vice President
and Sales and General           Manufacturing                  Financial Officer
Manager Confectionery


Edward P. Camp                  Ira Friedman                   William G. O'Connor
Vice President and President    Vice President - Publishing    Vice President -
- Hobby Division                and New Product Development    Administration

</TABLE>


<PAGE>

<TABLE>
<S>                             <C>                            <C>                          <C>
SUBSIDIARIES

Topps Argentina S.A.            Topps Canada, Inc.             Topps International          Topps UK Limited
Managing Director -             Managing Director -            Limited                      Managing Director -
Juan P. Georgalos               Kevin J. Crux                  Managing Director -          Jeremy Charter
                                                               Michael P. Clancy

Topps Brasil, Ltda.             Topps Europe Limited           Topps Italia SRL
Managing Director - Jeroen      Managing Director -            Managing Director -
Servaes                         Christopher Rodman             Furio Cicogna

</TABLE>





<TABLE>
<S>                             <C>                           <C>
CORPORATE  INFORMATION

Annual Meeting                  Corporate Counsel             Registrar and Transfer Agent
Thursday, June 28, 2001         Willkie Farr & Gallagher      Mellon Investor Services, LLC
10:30 A.M.                      787 Seventh Avenue            85 Challenger Road
J.P.  Morgan Chase & Co.        New York, NY 10019            Ridgefield Park, NJ  07660
One Chase Manhattan Plaza                                     (800) 851 9677
New York, NY  10081

Investor Relations              Independent Auditors
Edelman Financial Worldwide     Deloitte & Touche LLP
1500 Broadway                   Two World Financial Center
New York, NY 10036              New York, NY 10281

</TABLE>



**Topps Ireland Limited changed its name to Topps International Limited as
of April 19, 2001.

Form 10-K -- A copy of the  Company's  Annual  Report on Form 10-K as filed with
the  Securities and Exchange  Commission  will be available to  stockholders  of
record upon written request to the Assistant Treasurer.
--------------------------------------------------------------------------------

* Unless otherwise  indicated,  all date references to 2001, 2000 and 1999 refer
to the fiscal  years ended March 3, 2001,  February  26, 2000 and  February  27,
1999, respectively.