F'05 STOCKHOLDERS LETTER


Dear Stockholders,

At the conclusion of our letter in last year's Annual  Report,  we said our plan
for the upcoming fiscal year called for financial and strategic  progress.  Fair
to say, we kept only half of that bargain. Were it not for a European Commission
fine  (previously  disclosed)  of $1.9 million,  stemming from an  investigation
initiated back in 2000,  financial results would have  approximated  prior year,
but not ahead as envisioned.

Specifically,  for the fiscal  year  2005,  consolidated  Net Sales were  $295.9
million versus $297.3 million in fiscal '04, with stronger  European  currencies
versus the prior year providing a $6.6 million  benefit.  Income from operations
was $12.0 million,  versus $14.6 in the prior year.  Excluding the fine,  income
from operations in fiscal 2005 would have been $13.9 million.

Similarly,  since the fine was not tax deductible,  its full amount affected net
income which was $11.0 million or $0.27 per diluted  share,  compared with $12.7
million or $0.31 per  diluted  share last  year.  Were it not for the fine,  net
income  would have been $12.9  million or $0.31 per diluted  share,  essentially
flat with the prior year.

Strategic progress is a better story, marked by planned achievement.  During the
year, we commissioned an outside consulting firm to conduct a thorough review of
our  U.S.  Confectionery  and  Entertainment  business  segments  and to help us
develop  potential growth  opportunities for the future. We also gained a better
understanding  of our strengths and weaknesses,  the markets in which we operate
and our competition.

The balance of this letter is  dedicated to providing  you with  background  and
insights  emanating from the strategic study and, to the extent practical,  some
of the steps  contemplated,  or already being taken, toward  implementation.  We
hope you find the discussion of interest.


U.S. CONFECTIONERY
------------------

Over the last five  years,  Topps  has  gained  market  share,  becoming  a more
important player in the non-chocolate confectionery business.

During that time  period,  we built  distribution  with the help of a fact-based
selling approach, demonstrating that our products...

          --   enjoy widespread consumer appeal,

          --   generate high dollars per point of distribution, and

          --   make more money for our trade partners than do many stock keeping
               units (SKU's) of major competitors.

In fact,  according to recent  Nielsen  reports on Food,  Drug and Mass outlets,
three Topps  brands,  Baby Bottle Pop,  Push Pop and Ring Pop are numbers  four,
seven  and  nine,  respectively,  among  the top ten  best-selling  SKU's in the
non-chocolate category.*

--------------------------------------------------------------------------------
*Source: AC Nielsen Total U.S. FDM (excluding Wal-Mart) 52 weeks ended March 19,
2005, dollar sales for non-chocolate  candy category items less than 3.70 ounces
excluding mints, roll candy, breath fresheners, and gum.

<PAGE>

Nonetheless,  sales over this past year were lower than last, due in part to the
impact of industry trends such as retail  consolidation and consumer nutritional
concerns. Because such factors appear to be abating, and the fact that we have a
variety of sales/marketing measures in the works, our plan calls for a return to
organic top line growth in fiscal '06.

Going forward,  we will  concentrate  on further  improvement in the breadth and
quality of our distribution, particularly as regards convenience stores. We will
restore  advertising  investments  to historic  levels or higher,  redesign  our
product development process and bolster sourcing  activities.  More detail about
each of these key areas may be helpful.

Distribution
------------

Reflecting the success of our  distribution  efforts over the last few years, we
have  achieved  an  impressive   presence  at  large  grocery  chains  and  mass
merchandisers.  The strategic study showed that additional promise exists for us
in the  convenience  channel where  previous  in-store  representation  had been
insufficient.  To that end, we have adopted a new  go-to-market  strategy  that,
among other  positives,  will help us take  advantage of this  opportunity.  Our
broker network has been  consolidated,  thus affording us greater  leverage with
retailers by significantly  increasing coverage at store level. We will now have
the benefit of a retail team  visiting  40,000  targeted  convenience  stores at
least  six  times  a  year.   The   incremental   costs  of  doing  so  are  not
inconsequential but, in the long run, this investment should serve us well.

Advertising
-----------

TV advertising is one of the key drivers of our  confectionery  business.  Early
this past year,  based on the strong brand awareness  levels enjoyed by our core
brands--each is over 90% with kids 6-14--we eased up somewhat on our advertising
levels.  The study  helped us  understand  that if we  restored  advertising  to
historical levels, we could expect to see a demonstrable  pay-off.  Accordingly,
we increased ad spending in last year's 4th quarter and plan to exceed  previous
levels in fiscal `06.

New Product Development
-----------------------

To date,  we have taken an  opportunistic  approach to new product  development.
Guided largely by instinct,  we have created  successful  brands  including Ring
Pop,  Push Pop,  Baby  Bottle Pop and,  most  recently,  Juicy  Drop Pop,  which
continues building up a head of steam, so to speak. All tolled,  we've done very
well  with  new  products  but  believe  we can do even  better  through  a more
disciplined,  data driven,  systematic  development process that compliments our
creative capabilities.

Another  key  priority  on  the  new  product  front  will  be to  leverage  our
investments in the brands we create.  This may take the form of line  extensions
and  flankers,  different  packaging  formats  such as value  bags to reach  new
distribution targets and consumers and seasonal  opportunities such as Halloween
and Easter.

Sourcing
--------

We will  support the  decision  to place  greater  emphasis  on new  products by
significantly improving our sourcing capabilities. After all, with the exception
of Ring Pop for North America, we outsource all of our manufacturing.  Today, we
are  under-resourced  in this area, but will begin devoting time,  attention and
funding to improve performance against this important initiative.

One final note on  Confectionery...when  we referred to organic  growth  earlier
--"organic" implied not-by-acquisition.  This is because we believe that for the
most part  prices  commanded  by candy  businesses  today are  simply out of our
reach.  Still,  Topps will continue  keeping an eye open for affordable  product
lines that can strengthen our portfolio and enhance our position in the market.

<PAGE>

U. S. ENTERTAINMENT
-------------------

There are three key aspects to this segment:  Sports Trading  Cards,  Publishing
and Collectible Gaming products.

Turning first to sports cards,  it's no secret that the industry has experienced
a steady decline since reaching historic highs in the early 1990's. In fact, the
current  level of all sport  card  sales is  approximately  $300MM in  wholesale
dollars,  having  trended  down  over the past five  years at an annual  rate of
approximately 15%. Although a number of factors  influenced these declines,  the
study  forcefully  confirmed that the combination of product  proliferation  and
higher pack prices emerged as the key causes for losing young  consumers and the
casual adult collector. Accordingly, going forward three elements will drive our
strategy:

     o    First, as referenced  above, the sheer number of products in stores is
          intimidating  to all but the  most  serious  card  collector,  driving
          consumers  away and  creating  a  barrier  to  bringing  in new  ones.
          Believing that current  negative trends will persist unless there is a
          significant  reduction in the number of products  introduced  into the
          marketplace,  we will  increase  efforts  to  persuade  our  licensing
          partners to aggressively address product proliferation.

     o    Second,  we will  expand  our  efforts  toward  creating  more  sports
          products  that are  specifically  designed for kids.  This is going to
          take  significant  investments of time and money,  but given that kids
          have all but left sports  trading  cards,  the benefit of  recapturing
          them can be  substantial.  Work in this area has already  begun.  As a
          matter  of fact,  a new  product  called  "Hot  Button"  baseball  was
          recently launched in selected test markets.  If it goes well,  rollout
          will occur next year around Opening Day. "Hot Button"  represents step
          one of our drive to "bring 'em back."

     o    Finally,  we will be even  more  aggressive  in our  marketing  to the
          serious collector,  whose purchases  presently fund the business,  and
          who truly  appreciates  our brands and who  represents the most stable
          community of sports card buyers today. Our efforts in this regard will
          include getting closer to these consumers,  strengthening  our product
          development  activities  and enhancing  Topps'  presence  within hobby
          stores.

As regards  Publishing,  we will  continue to  participate  in this  potentially
lucrative  area.  Over  the  years,  we  have  demonstrated  a track  record  of
identifying,  and  in  some  instances  creating,  breakout  opportunities  that
generate meaningful results. Looking ahead, we will be as highly selective about
choosing  licenses  as before  and will  maintain  a focus on only  those  truly
meriting pursuit.

We recently  introduced a line of products  featuring  the final  episode of the
Star Wars saga:  Revenge of the Sith, another milestone in our relationship with
the Lucas Film organization spanning some 25 years. Furthermore, exploitation of
our own  creations -- Garbage Pail Kids and Wacky  Packages -- continues  apace,
and a TV advertising campaign featuring Wacky Packs is scheduled for this coming
August.

<PAGE>

Finally, we believe that Collectible Gaming continues to represent a significant
opportunity, as originally envisioned when we acquired WizKids.

     o    The Collectible Gaming market is just over $1B and growing.

     o    Collectible Miniatures represent a 20% segment in which WizKids is the
          #2 player.

     o    The other 80% is comprised  primarily of Collectible  Card Games which
          accounts  for  much of the  industry's  growth  and  represents  a new
          opportunity for us.

WizKids will remain an important  factor in the miniatures  market.  At the same
time, we will also leverage its impressive  game design,  grass roots  marketing
and culture of innovation  against new collectible  gaming formats,  "Pirates of
the Spanish Main," the first  constructible  strategy game, is a perfect example
of such an effort.  "Pirates" is enjoying good trade and consumer acceptance and
there are a number of other new products in the development  pipeline.  However,
part of our WizKids strategy is to branch out even more broadly.

Coming out of the study,  our view is that  Collectible  Card Games can generate
significant  financial  returns  on  investment,   through  either  licensed  or
internally developed properties.  Given the nature of this business,  the timing
of "hits" is  difficult  to predict.  Even so,  within a 3 to 5-year time frame,
empirical  evidence  suggests  overall  returns on investment  could exceed 20%,
excluding  huge  home  runs  such as a  "Pokemon."  Accordingly,  we  intend  to
systematically  invest in  self-development  and acquisition of licenses for the
Collectible Card Game market. As part of the Topps family,  WizKids provides the
platform for such investment and opportunity.


INTERNATIONAL
-------------

Most of the  initial  strategic  study did not  encompass  overseas  activities,
primarily  due to cost and time  constraints.  However,  a second  phase of work
undertaken recently is focused on improving our operational  processes,  methods
and  procedures  across  the  entire  business.  This  phase  will also  include
assessing opportunities to drive top-line growth abroad.


CONCLUSION
----------

The tireless devotion of our people in Asia, Europe, North and South America has
become a greater  asset  than  ever,  especially  taking  into  account  various
challenges our business has weathered over the last two years. However, the need
to accelerate efforts toward operational excellence persists.

Accordingly, we are sharply focused on cultivating a new performance-driven work
ethic company-wide to facilitate  increased  accountability and productivity and
to drive future growth.  This  represents a significant  cultural change for the
organization, but one that makes eminent sense all around.

On  behalf  of the  organization,  we'd  like  to  thank  our  consumers,  fans,
collectors, licensors, stockholders and suppliers for their valued support.

<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...............................  15

Notes to Consolidated Financial Statements......................  19

Management's Report on Internal Control over Financial Reporting. 43

Reports of Independent Registered Public Accounting Firm......... 44

Market and Dividend Information ................................. 46

Selected Consolidated Financial Data............................  46

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

<PAGE>

FINANCIAL HIGHLIGHTS


================================================================================
                                        February      February        March
                                        26, 2005      28, 2004       1, 2003
--------------------------------------------------------------------------------
                                    (in thousands of dollars, except share data)

Net sales ........................   $   295,865   $   297,338   $   290,115

Income from operations ...........        11,967        14,595        20,782

Net income .......................        10,999        12,695        16,936

Cash provided by operations ......        22,930        11,954         6,200

Working capital ..................       138,146       133,299       141,484

Stockholders' equity .............       219,189       211,277       196,768

Per share items:

   Net diluted earnings ..........   $      0.27   $      0.31   $      0.40

   Cash dividend paid ............   $      0.16          0.12   $       --

Average diluted shares outstanding    41,327,000    41,515,000     42,065,000
================================================================================

<PAGE>

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS


This section provides an analysis of the Company's operating results, cash flow,
critical  accounting  policies,  and other matters.  It includes or incorporates
"forward-looking  statements"  as  that  term is  defined  by the  U.S.  federal
securities laws. In particular,  statements using words such as "may", "should",
"intend", "estimate", "anticipate",  "believe", "predict", "potential", or words
of similar import generally involve forward-looking  statements.  We based these
forward-looking  statements on our current  expectations  and projections  about
future events,  and,  therefore,  these statements are subject to numerous risks
and uncertainties.  Accordingly, actual results may differ materially from those
expressed or implied by the forward-looking  statements.  We caution readers not
to place undue reliance on these forward-looking statements, which speak only as
of the date of this report.

The  Company  has  two   reportable   business   segments,   Confectionery   and
Entertainment.  The following table sets forth, for the periods  indicated,  net
sales by business segment:

                                                     Year Ended
================================================================================
                                        February      February        March
                                        26, 2005      28, 2004       1, 2003
--------------------------------------------------------------------------------
                                             (in thousands of dollars)

Confectionery ........................  $143,762      $147,188      $146,901

Entertainment ........................   152,103       150,150       143,214
                                        --------      --------      --------
     Total ...........................  $295,865      $297,338      $290,115
================================================================================



|X|FISCAL 2005 VERSUS 2004*
---------------------------

CONSOLIDATED NET SALES

In fiscal 2005, the Company's  consolidated  net sales  decreased 0.5% to $295.9
million from $297.3 million in fiscal 2004.  Stronger foreign  currencies versus
the prior year added $6.6 million to fiscal 2005 sales.  Excluding the impact of
stronger foreign currencies, net sales decreased 2.7%.

Worldwide net sales of the Confectionery  segment, which includes Ring Pop, Push
Pop,  Baby Bottle Pop,  Juicy Drop Pop and Bazooka  brand bubble gum,  decreased
2.3% to $143.8  million in 2005 from $147.2  million in 2004.  Stronger  foreign
currencies  provided a $2.7 million benefit to fiscal 2005 sales.  Confectionery
products accounted for 49% of the Company's net sales in 2005 and 50% in 2004.

--------------------------------------------------------------------------------
* Unless otherwise  indicated,  all date references to 2005, 2004 and 2003 refer
to the fiscal years ended  February 26,  2005,  February 28, 2004,  and March 1,
2003, respectively.

<PAGE>

Fiscal 2005 U.S.  confectionery  sales were impacted in part by industry  trends
such as consumer nutritional concerns and retail consolidation,  particularly in
the first  nine  months of the year.  Incremental  sales of chewy  products  and
strong gains on Juicy Drop Pop  contributed  favorably to results.  For the full
year,  declines in U.S.  confectionery sales of 2.8% were in line with trends in
the non-chocolate industry. Going forward, the Company intends to improve retail
distribution  particularly  in  the  convenience  channel,  step  up  television
advertising  levels,  re-design its product  development  process and strengthen
sourcing activities.

Net sales of international  confectionery  products were also down comparatively
in fiscal  2005 due to strong  2004  performance  of both Push Pop Flip N'Dip in
Japan and Yu-Gi-Oh!  candy products in Europe.  International  sales represented
32% of total confectionery sales in fiscal 2005 versus 31% in 2004.

Net sales of the  Entertainment  segment,  which includes  cards,  sticker album
collections,  Internet  activities and strategy games,  increased 1.3% in fiscal
2005 to $152.1  million.  Stronger  foreign  currencies  provided a $3.9 million
benefit to fiscal  2005 sales.  Entertainment  products  represented  51% of the
Company's net sales in 2005 and 50% in fiscal 2004.

Within the segment,  sales from  WizKids,  a developer  and marketer of strategy
games acquired in July 2003,  increased $6 million to $22 million,  reflecting a
full year of ownership  in fiscal 2005 versus a partial year in fiscal 2004.  In
late 2005, WizKids created a new product category, constructible strategy games,
and launched two new products,  Pirates and Football Flix. In addition, sales of
European sports products  increased in fiscal 2005,  reflecting the inclusion of
products  featuring  the  European  Football  Championship  held once every four
years.

Net sales of U.S.  sports  products were below the prior year, a function of the
absence of an NHL hockey season and continued industry softness, in general. The
Company believes that this downward trend is due largely to the proliferation of
card and memorabilia  products and to significantly higher price points and that
these are principal  factors in driving  children and the casual adult collector
from the market.

Going  forward,  the  Company  intends to make a case to the  leagues and player
associations  to  address  product  proliferation  in  order to  promote  a more
rational  retail  environment  and a more satisfying  consumer  experience.  The
Company will also focus on creating  sports products  specifically  designed for
kids and market even more aggressively to the core collector.

As anticipated, sales of Internet products were below year ago levels in 2005 as
the Company  reduced  advertising  support and explored new  directions for this
venture. Internet operations were virtually breakeven this year versus a loss of
almost $3 million last year.

Finally,  fiscal 2005 sales of non-sports  publishing  products were impacted by
the absence of strong  licenses,  particularly in the fourth  quarter.  However,
during the year, WWE, Barbie,  Pokemon and Yu-Gi-Oh!  were solid contributors in
Europe and Garbage Pail Kids,  now in its fourth  series,  performed well in the
U.S.


RESULTS OF OPERATIONS

Fiscal 2005 consolidated gross profit as a percentage of net sales was 35.6%, up
from  35.0%  in  2004.  Margins  this  year  were  favorably  impacted  by lower
obsolescence  costs  following  abnormally  high  write-offs  at WizKids and the
domestic  confectionery  and  European  publishing  businesses  in fiscal  2004.
Improved  gross profit  margins also  reflected  lower tooling and mold costs on
WizKids  and  European  confectionery   products.   Partially  offsetting  these
improvements  were higher  autograph and relic costs on U.S. sports cards and an
increase in effective royalties associated with England Premier League products.

<PAGE>

Other income was $1,675,000 in 2005 versus $631,000 last year. This increase was
primarily due to more favorable foreign exchange  translation gains on non-local
currency cash  balances in Europe,  the absence of a write-off  associated  with
closing our Brazilian office last year, and increases in royalty income from the
licensing of our WizKids and confectionery trademarks.

Selling, general & administrative expenses ("SG&A") increased as a percentage of
net sales to 32.1% in 2005 from 30.3% a year ago. SG&A dollar spending increased
to $94.9  million in 2005 from $90.0  million.  A $1.9  million fine paid to the
European Commission and the full year of WizKids ownership versus a partial year
in 2004, were the primary reasons for the dollar increase. Additionally,  higher
professional fees, in particular legal,  Sarbanes-Oxley  and  consulting-related
expenses,  impacted  fiscal 2005 SG&A. The Company  estimates fees paid to third
parties related to Sarbanes-Oxley Section 404 were approximately $1.1 million in
2005.

Within SG&A, full year advertising and marketing  expenses of $23.3 million were
$0.5  million  below  2004 due to reduced  spending  on U.S.  confectionery  and
Internet  products,  partially offset by increased  marketing activity overseas.
U.S. confectionery advertising exceeded historical levels in the fourth quarter.

Net interest income increased  slightly to $2.7 million in fiscal 2005 from $2.4
million in fiscal 2004,  reflecting  rising  interest  rates and higher  average
investment balances.

The fiscal 2005 effective tax rate was 25.0% versus 25.4% in fiscal 2004.

Net income in fiscal 2005 was $11.0 million,  or $0.27 per diluted share, versus
$12.7 million,  or $0.31 per diluted share in 2004.  Excluding the impact of the
non-tax  deductible  European  Commission fine, fiscal 2005 net income was $12.9
million, or $0.31 per diluted share.


|X|FISCAL 2004 VERSUS 2003
--------------------------

CONSOLIDATED NET SALES

In fiscal 2004, the Company's  consolidated  net sales  increased 2.5% to $297.3
million from $290.1 million in fiscal 2003. The July 2003 acquisition of WizKids
added $15.9 million to sales in fiscal 2004,  and stronger  European  currencies
increased sales by $9.7 million.  Excluding  these two factors,  fiscal 2004 net
sales were below 2003  levels,  largely  the result of declines in sales of U.S.
sports cards and U.S. confectionery products.

Worldwide  net  sales of the  Confectionery  segment  increased  0.2% to  $147.3
million in 2004 from $146.9 million in 2003.  Confectionery  products  accounted
for 50% of the Company's net sales in 2004 and 51% in 2003.

U.S.  confectionery  sales  decreased  year-over-year,  in part  the  result  of
softness in wholesale  clubs,  the effects of delayed new product  introductions
and a reduction  in  promotional  activity  undertaken  by certain  retailers in
fiscal 2003.

Net sales of international  confectionery products increased in 2004, offsetting
the U.S.  declines.  Increases were largely driven by the roll out of Juicy Drop
Pop,  solid sales of  licensed  confectionery  products  and  stronger  European
currencies.  International sales represented 31% of total confectionery sales in
fiscal 2004.

Net sales of the  Entertainment  segment increased 4.8% in fiscal 2004 to $150.1
million.  Entertainment  products  represented 50% of the Company's net sales in
2004 and 49% in fiscal 2003.

<PAGE>

Within the segment,  sales of international  sports sticker albums increased,  a
function of the expansion and further  success of the mini album format,  higher
sales of traditional  Premier League sticker album collections and the impact of
stronger European currencies.  The acquisition of WizKids added $15.9 million to
segment sales. In addition,  sales of non-sports  publishing  products  exceeded
those in fiscal 2003 due to the strength of products  featuring  the  Yu-Gi-Oh!,
Garbage Pail Kids and Hamtaro properties.

Also within the  Entertainment  segment,  sales of traditional U.S. sports cards
declined in fiscal 2004, a function of continued  industry  softness and reduced
product offerings. The Company reduced the number of sports products it released
in  fiscal  2004 by  almost  20%,  and  restructured  the  sports  organization,
eliminating over $1.5 million in costs on an annualized basis.

Finally,  sales of  product  sold via the  Internet  decreased  in fiscal  2004,
primarily as a result of declines  experienced  at  thePit.com.  The Company has
refocused the etopps website to feature trading  capabilities and  fantasy-style
games played with etopps cards.


RESULTS OF OPERATIONS

Fiscal 2004  consolidated  gross profit as a percentage  of net sales was 35.0%,
virtually  flat  with  2003's  figure  of 35.1%.  Margins  in  fiscal  2004 were
negatively  impacted by higher  obsolescence  costs which  reflected  write-offs
associated with  slow-moving  WizKids  product,  excess  domestic  confectionery
inventories  and  components  related to an Italian  publishing  product.  Lower
royalty  costs as a function of the smaller  U.S.  sports  business  and reduced
costs at our Scranton,  Pennsylvania  manufacturing  facility largely offset the
higher obsolescence costs.

Other  income was $631,000 in fiscal 2004 versus  $184,000 in fiscal 2003.  This
increase was primarily due to favorable  mark-to-market  adjustments  on forward
currency  contracts  which  were  partially  offset  by  translation  losses  on
non-local  currency cash balances in Europe.  The  licensing-out of intellectual
property associated with WizKids and the confectionery business also contributed
favorably in fiscal 2004.

Selling,  general &  administrative  expenses  increased as a percentage  of net
sales to 30.3% in 2004 from 28.0% a year ago. SG&A dollar spending  increased to
$90.0  million  from  $81.1  million,  largely  as a result of the  addition  of
WizKids.  Additionally,  advertising  and marketing  costs were higher in fiscal
2004 due to increased media activity and stronger foreign currencies.

Partially  offsetting  these  increases  in SG&A  was a  reduction  in  overhead
expenses achieved through the restructuring of the U.S. sports card organization
and headcount  eliminations  at the Internet  operations.  Fiscal 2004 SG&A also
benefited from reduced costs associated with employee incentive compensation and
the absence of a payment  related to a legal  settlement that occurred in fiscal
2003.

Net interest income decreased  slightly to $2.4 million in fiscal 2004 from $2.5
million in fiscal 2003,  reflecting  less  favorable  interest rates and a lower
average cash balance following the WizKids acquisition.

The fiscal 2004 effective tax rate was 25.4%. The decrease versus the 2003 rate
of 27.3% was primarily a function of foreign tax benefits received in 2004.

Net income in fiscal 2004 was $12.7 million, or $0.31 per diluted share, versus
$16.9 million, or $0.40 per diluted share in 2003.

<PAGE>

|X|QUARTERLY COMPARISONS
------------------------

Management believes that  quarter-to-quarter  comparisons of sales and operating
results  are  affected  by  a  number  of  factors.   The  Company's   sales  of
Confectionery products are generally seasonally stronger in the first two fiscal
quarters  of the year.  However,  sales  can be  significantly  impacted  by the
introduction  of new products and line  extensions as well as by advertising and
consumer and trade support programs.

In the  Entertainment  segment,  sales of U.S.  sports  card  products  are sold
throughout  the year,  spanning  the three  major  sports  seasons  in which the
Company  currently  participates:  baseball,  football,  and  basketball.  Topps
Europe's  sales of sports  sticker  albums are driven  largely by  shipments  of
Premier League Soccer products, with much of the sales activity occurring in the
fourth fiscal quarter.  Sales of non-sports cards, sticker albums and games tend
to be impacted by the timing of product  introductions and the property on which
they  are  based,  often  peaking  with  the  release  of a movie or the rise in
popularity of a particular licensed property.

The net result of the above factors is that quarterly  results vary. See Note 20
- Quarterly Results of Operations.


|X|INFLATION
------------

In the opinion of  management,  inflation  has not had a material  effect on the
operations or financial results of the Company.


|X|LIQUIDITY AND CAPITAL RESOURCES
----------------------------------

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

The  Company  entered  into a credit  agreement  with  Chase  Manhattan  Bank on
September  14,  2004.  The  agreement  provides  for a $30.0  million  unsecured
facility to cover  revolver  and letter of credit needs and expires on September
13, 2007. With the exception of $2.1 million  currently  reserved for letters of
credit,  the $30.0  million  credit line was  available as of February 26, 2005.
(See Note 9 - Long-Term Debt.)

The Company has  reclassified its portfolio of auction rate securities from cash
to short-term  investments  in the  Consolidated  Balance  Sheets,  in line with
recent  clarification  from  regulatory  bodies.  All periods  contained in this
report reflect this  reclassification.  Year-over-year changes in the amounts of
these  securities  are  now  being  shown  under  investing  activities  on  the
Consolidated  Statement  of Cash  Flows.  While these  securities  are no longer
included in cash and cash  equivalents,  the Company believes them to be similar
to a cash equivalent since they can be redeemed at any time at nominal cost.

As of  February  26,  2005,  the  Company  had  $36.4  million  in cash and cash
equivalents.

During fiscal 2005, the Company's net decrease in cash and cash  equivalents was
$20.5 million versus a decrease of $28.7 million in 2004. The fiscal 2005 use of
cash was primarily the result of the purchase of an additional  $33.1 million in
auction rate securities.  The fiscal 2004 cash use was driven by the acquisition
of WizKids for $28.7 million.

<PAGE>

Cash provided by operating  activities  in 2005 was $22.9  million  versus $12.0
million in 2004. The  improvement was primarily due to a decrease in receivables
stemming from lower fourth quarter sales in Europe,  the timing of inventory and
royalty payments and the collection of income tax refunds. These and other items
more than offset the $1.7 million decline in net income in 2005.

Cash used in investing  activities this year of $35.7 million  largely  reflects
the purchase of $33.1 million of auction rate securities. The Company also spent
$2.6  million in  capital  expenditures,  which  included  the first  phase of a
multi-year ERP project as well as Ring Pop production-related  equipment. Fiscal
2006 full year capital  spending is projected  to be  approximately  $4 million,
driven by investments in Ring Pop production equipment and computer software and
hardware.  Capital  spending  will be funded  out of cash  flow  from  operating
activities.

Cash used in  financing  activities  this  year of $8.8  million  reflects  $2.3
million of treasury stock  purchases net of options  exercised plus $6.5 million
in dividend payments,  versus $1.0 million net treasury stock purchases and $4.9
million in dividend payments last year.

Finally,  the $1.0 million favorable effect of exchange rate changes on cash and
cash equivalents,  which is due to the impact of stronger  currencies on foreign
subsidiaries' cash balances when translated into U.S. dollars,  was $4.0 million
lower than in 2004.  This  change  reflects a slowdown in the  strengthening  of
European currencies against the U.S. dollar.

In October  2001,  the Board of  Directors  authorized  the  purchase of up to 5
million shares of Company stock.  As of February 2005, the Company had purchased
3.4 million shares against this authorization.  See Note 13 - Capital Stock. The
Company anticipates  purchasing  additional shares in the future to complete the
authorization.


|X|CONTRACTUAL OBLIGATIONS
--------------------------

Future  minimum  payments  under  existing key  contractual  obligations  are as
follows:

                  Future                    Future
                 Payments                  Payments
                Under Non-                  Under
      Fiscal    Cancelable    Purchase     Royalty
       Year       Leases     Obligations  Contracts      Total
       ----       ------     -----------  ---------      -----
                            (in thousands of dollars)
       2006       $ 2,733      $12,198     $12,088      $27,019
       2007         2,361          175      10,944       13,480
       2008         1,956         -          3,726        5,682
       2009         1,770         -           -           1,770
       2010         1,644         -           -           1,644
   Thereafter       1,139         -           -           1,139



The  Company  anticipates  making a payment of  approximately  $3 - 4 million in
fiscal 2006 for the funding of its qualified pension plans.

<PAGE>

|X| CRITICAL ACCOUNTING POLICIES
--------------------------------

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

Note  1  to  the  Company's   consolidated   financial  statements  "Summary  of
Significant  Accounting Policies" summarizes its significant accounting policies
and  discusses  the  impact of new  accounting  pronouncements.  Following  is a
summary of the critical policies and methods used.

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

Returns Provisions:
-------------------
In  determining  the  provision  for returns,  the Company  performs an in-depth
review of wholesale and retail inventory levels,  trends in product sell-through
by sales channel, and other factors. The provision for returns was $22.0 million
in 2005 and $17.4 million in 2004,  which equates to 7.4% and 5.9% of net sales,
respectively.  An increase or  decrease  in the  provision  for returns by 1% of
sales would decrease or increase operating income by approximately $3.0 million.

Intangible Assets:
------------------
Intangible assets include trademarks and the value of sports,  entertainment and
proprietary  product rights.  Amortization is by the  straight-line  method over
estimated lives of up to fifteen years.  Management evaluates the recoverability
of finite-lived intangible assets under the provisions of Statement of Financial
Accounting Standards No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142")
based on the projected  undiscounted  cash flows  attributable to the individual
assets, among other methods.

Accruals for Obsolete Inventory:
--------------------------------
The  Company's  accrual for  obsolete  inventory  reflects  the cost of items in
inventory not anticipated to be sold. This accrual may be deemed  necessary as a
result of discontinued  items and packaging or a reduction in forecasted  sales.
The  provision  for obsolete  inventory was $4.9 million in fiscal 2005 and $7.5
million  in  fiscal  2004,  which  equates  to  1.7%  and  2.5%  of  net  sales,
respectively. An increase or decrease in the provision for obsolescence by 1% of
sales would decrease or increase operating income by approximately $3.0 million.

Income Taxes:
-------------
Deferred  tax assets and  liabilities  represent  the tax  effects of  temporary
book-tax  differences which will become payable or refundable in future periods.
The Company has accrued tax reserves for  probable  exposures  and, as a result,
any  assessments  resulting  from current tax audits  should not have a material
adverse effect on the Company's consolidated net income.

<PAGE>

|X|DISCLOSURES ABOUT MARKET RISK
--------------------------------

There is no material risk to financial results due to market risk. The Company's
exposure  to market  risk is largely  related  to the  impact of  mark-to-market
changes in foreign currency rates on forward contracts. As of February 26, 2005,
the Company had $26.6 million in forward  contracts  which were entered into for
the  purpose  of  reducing  the impact of  changes  in  foreign  currency  rates
associated with firm and forecasted receipts and disbursements.

The  Company's  primary  exchange  rate  exposure  is with the Euro  against the
British pound, the Japanese yen and the U.S. dollar.  At maturity,  the proceeds
or outlays from the foreign exchange contracts offset a corresponding additional
or reduced outlay in the underlying currency.  The recognition of mark-to-market
gains and losses on these contracts  accelerates the gains and losses that would
otherwise be recognized when the contracts  mature and generally does not result
in an incremental impact on earnings or cash flows. The Company has no long-term
debt and does not engage in any commodity-related derivative transactions.

<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS


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


                                                     Year Ended
============================================================================
                                         February     February       March
                                         26, 2005     28, 2004      1, 2003
----------------------------------------------------------------------------

Net sales                               $ 295,865    $ 297,338    $ 290,115
Cost of sales                             190,667      193,417      188,375
                                        ---------    ---------    ----------
     Gross profit on sales                105,198      103,921      101,740

Other income, net                           1,675          631          184
Selling, general and administrative
  expenses                                 94,906       89,957       81,142
                                        ---------    ---------    ----------
     Income from operations                11,967       14,595       20,782

Interest income, net                        2,706        2,426        2,516
                                        ---------    ---------    ----------
     Income before provision for
      income taxes                         14,673       17,021       23,298

Provision for income taxes                  3,674        4,326        6,362
                                        ---------    ---------    ----------
     Net income                         $  10,999    $  12,695    $  16,936
============================================================================

Net income per share - basic            $    0.27    $    0.31    $    0.41
                     - diluted          $    0.27    $    0.31    $    0.40
----------------------------------------------------------------------------
Cash dividends per share                $    0.16    $    0.12    $       -

Weighted average shares
   outstanding - basic                  40,471,000   40,604,000   41,353,000
               - diluted                41,327,000   41,515,000   42,065,000
============================================================================

See Notes to Consolidated Financial Statements.

<PAGE>

CONSOLIDATED BALANCE SHEETS


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

================================================================================
                                                           February     February
                                                           26, 2005     28, 2004
--------------------------------------------------------------------------------
                                     ASSETS
--------------------------------------------------------------------------------
Current assets:

     Cash and cash equivalents .......................    $ 36,442     $ 56,959
     Short-term investments ..........................      69,955       36,878
     Accounts receivable, net ........................      27,851       30,109
     Inventories .....................................      32,936       33,009
     Income tax receivable ...........................         338        2,697
     Deferred tax assets .............................       3,616        1,505
     Prepaid expenses and other current assets .......      14,541       11,691
                                                          --------     --------
         Total current assets ........................     185,679      172,848

Property, plant and equipment, net ...................      12,553       13,786
Goodwill .............................................      67,566       67,586
Intangible assets, net ...............................       8,544       10,474
Other assets .........................................      16,069       10,769
                                                          --------     --------
TOTAL ASSETS .........................................    $290,411     $275,463
                                                          ========     ========

--------------------------------------------------------------------------------
                      LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
Current liabilities:

     Accounts payable ................................    $ 12,658     $ 10,946
     Accrued expenses and other liabilities ..........      27,485       26,249
     Income taxes payable ............................       7,390        2,354
                                                          --------     --------
         Total current liabilities ...................      47,533       39,549

Deferred income taxes ................................         -          1,956
Other liabilities ....................................      23,689       22,681
                                                          --------     --------
             Total liabilities .......................      71,222       64,186
                                                          --------     --------

Stockholders' equity:

     Preferred stock, par value $.01 per share,
        authorized 10,000,000 shares, none issued ....        --           --
     Common stock, par value $.01 per share,
        authorized 100,000,000 shares,
        issued 49,244,000 in 2005 and 2004 ...........         492          492
     Additional paid-in capital ......................      28,293       27,829
     Treasury stock, 8,790,000 shares in 2005
         and 8,632,000 shares in 2004 ................     (85,060)     (82,287)
     Retained earnings ...............................     275,226      270,704
     Accumulated other comprehensive loss, net of tax          238     (  5,461)
                                                          ---------    ---------
              Total stockholders' equity .............     219,189      211,277
                                                          ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...........    $290,411     $275,463
                                                          ========     =========
================================================================================

See Notes to Consolidated Financial Statements.

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS


The Topss Company, Inc. and Subsidiaries
(in thousands of dollars)
<TABLE>
<CAPTION>
                                                                 Year Ended
========================================================================================
                                                     February     February       March
                                                     26, 2005     28, 2004      1, 2003
----------------------------------------------------------------------------------------
<S>                                                 <C>          <C>          <C>
Operating Activities

   Net income ...................................   $  10,999    $  12,695    $  16,936
   Non-cash items included in net income:
      Depreciation and amortization .............       6,261        6,593        5,038
      Deferred taxes on income ..................       1,895        1,905        ( 984)
   Net effect of changes in:
      Receivables ...............................       2,258       (2,538)      (4,638)
      Inventories ...............................          73          562       (7,241)
      Income taxes receivable/payable ...........         580       (2,256)       3,261
      Prepaid expenses and other current assets .      (2,850)      (1,048)       1,505
      Payables and other current liabilities ....       2,948       (7,696)      (3,796)
      All other .................................         766        3,737       (3,881)
                                                     ---------    ---------    ---------
          Cash provided by operating activities .      22,930       11,954        6,200

Investing Activities

   Net purchases of short-term investments ......     (33,077)       (8,303)     (5,525)
   Purchase of subsidiary .......................         --        (28,650)        --
   Additions to property, plant and equipment ...      (2,634)       (2,842)     (3,807)
                                                     ---------    ---------    ---------
          Cash used in investing activities .....     (35,711)      (39,795)     (9,332)


Financing Activities

   Exercise of employee stock options ...........       1,814        1,770        1,449
   Dividends paid to stockholders ...............      (6,477)      (4,868)        --
   Purchase of treasury stock ...................      (4,123)      (2,781)     (14,305)
                                                     ---------    ---------    ---------
         Cash used in financing activities ......      (8,786)      (5,879)     (12,856)

Effect of exchange rate changes on cash
   and cash equivalents .........................       1,050        4,995        3,665
                                                     ---------    ---------    ---------
Net Decrease in Cash and Cash Equivalents .......   $ (20,517)   $ (28,725)   $ (12,323)
----------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year ..   $  56,959    $  85,684    $  98,007
Cash and cash equivalents at end of year ........   $  36,442    $  56,959    $  85,684
----------------------------------------------------------------------------------------

Supplemental disclosure of cash flow information:
     Interest paid ..............................   $     258    $     322    $      91
     Income taxes paid ..........................   $   3,883    $   6,398    $  12,578
========================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.

<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 3/3/2002 ...........   $ 194,054  ' $     492   $  26,824   $ (67,415)   $ 245,941    $ (11,788)
-------------------------------------------------------------'--------------------------------------------------------------
Net income ....................................      16,936  '      --          --          --         16,936         --
Translation adjustment, net of tax ............       3,399  '      --          --          --           --          3,399
Minimum pension liability .....................      (4,765) '      --          --          --           --         (4,765)
    Total comprehensive income ................      15,570  '      --          --          --         16,936       (1,366)
Purchase of treasury stock ....................     (14,305) '      --          --       (14,305)        --           --
Exercise of employee stock options ............       1,449  '      --           520         929         --           --
Stockholders' equity as of 3/1/2003 ...........   $ 196,768  ' $     492   $  27,344   $ (80,791)   $ 262,877    $ (13,154)
-------------------------------------------------------------'--------------------------------------------------------------

Net income ....................................      12,695  '      --          --          --         12,695         --
Translation adjustment, net of tax ............       6,823  '      --          --          --           --          6,823
Minimum pension liability .....................         870  '      --          --          --           --            870
    Total comprehensive income ................      20,388  '      --          --          --         12,695        7,693
Cash Dividends ................................      (4,868) '      --          --          --         (4,868)        --
Purchase of treasury stock ....................      (2,781) '      --          --        (2,781)        --           --
Exercise of employee stock options ............       1,770  '      --           485       1,285         --           --
Stockholders' equity as of 2/28/2004...........   $ 211,277  ' $     492   $  27,829   $ (82,287)   $ 270,704    $  (5,461)
-------------------------------------------------------------'--------------------------------------------------------------

Net income ....................................      10,999  '      --          --          --         10,999         --
Translation adjustment, net of tax ............       1,864  '      --          --          --           --          1,864
Minimum pension liability, net of tax .........       3,835  '      --          --          --           --          3,835
    Total comprehensive income ................      16,698  '      --          --          --         10,999        5,699
Cash dividends ................................      (6,477) '      --          --          --         (6,477)        --
Purchase of treasury stock ....................      (4,123) '      --          --        (4,123)        --           --
Exercise of employee stock options ............       1,814  '      --           464       1,350         --           --
Stockholders' equity as of 2/26/2005 ..........   $ 219,189  ' $     492   $  28,293   $ (85,060)   $ 275,226    $     238
============================================================='==============================================================

See Notes to Consolidated Financial Statements.
</TABLE>

<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 Topps Company,
Inc.  and  its  subsidiaries  (the  "Company").   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  2003,  fiscal 2004 and fiscal 2005 were all  comprised  of 52
weeks.

Foreign Currency Translation:
-----------------------------
The financial statements of subsidiaries outside the United States, except those
subsidiaries  located  in  highly  inflationary  economies  or where  costs  are
primarily U.S. dollar-based,  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,  with the
resultant  translation  adjustments  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. The Company has no foreign subsidiaries
operating in highly  inflationary  economies or where  inventory  costs are U.S.
dollar-based  for which the  financial  statements  are measured  using the U.S.
dollar as the functional currency.

Derivative Financial Instruments:
---------------------------------
From time to time,  the Company  enters into  contracts  that are  intended  and
effective as hedges of foreign  currency risks  associated  with the anticipated
purchase of  confectionery  inventories from foreign  suppliers.  It also enters
into  contracts  in order to  hedge  risks  associated  with the  collection  of
receivables from certain foreign  countries.  The Company does not hold or issue
derivative financial instruments for trading purposes.

Gains or losses arising from  derivative  financial  instruments are recorded in
earnings.  On March 4, 2001,  the  Company  adopted the  provisions  of SFAS 133
"Accounting for Derivative Instruments and Hedging Activities," as amended. SFAS
133 provides a  comprehensive  standard for the  recognition  and measurement of
derivatives and hedging activities.

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

Short-term Investments:
-----------------------
Investments in auction rate instruments as well as bank  certificates of deposit
with  maturities  in excess of three  months and subject to an early  withdrawal
penalty are reported as short-term investments.

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

<PAGE>

Property, Plant and Equipment ("PP&E"):
---------------------------------------
PP&E is stated at cost.  Depreciation is computed using the straight-line method
based on estimated  useful lives of twenty-five  years for  buildings,  three to
twelve years for  machinery,  equipment  and software,  and the remaining  lease
period for  leasehold  improvements.  Expenditures  for new  property,  plant or
equipment that substantially extend the useful life of an asset are capitalized.
Ordinary  repair and maintenance  costs are expensed as incurred.  In accordance
with SFAS 144, "Accounting for the Impairment or Disposal of Long-lived Assets,"
the  Company  periodically   evaluates  the  carrying  value  of  its  PP&E  for
circumstances which may indicate impairment.

Goodwill and Intangible Assets:
-------------------------------
Goodwill  and  Intangible  Assets  represent  amounts  paid for the  purchase of
businesses in excess of the fair value of the acquired assets. Intangible assets
include  trademarks  and the  value of  sports,  entertainment  and  proprietary
product rights. Amortization is by the straight-line method over estimated lives
of up to fifteen years.  Under the  provisions of SFAS 144, the Company  reviews
intangibles  on at least an annual basis to determine if there are indicators of
impairment.  Goodwill is not amortized.  Management evaluates the recoverability
of goodwill and finite-lived intangible assets under the provisions of Statement
of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets"
("SFAS 142") based on the projected  undiscounted cash flows attributable to the
individual  assets,  among other  methods.  See Note 6 - Goodwill and Intangible
Assets.

Revenue Recognition:
--------------------
The Company recognizes revenue when the following criteria are met: the products
are shipped,  the title and risk of loss has passed to the  customer,  the sales
price is fixed or determinable and collectibility is reasonably  assured.  Sales
made on a  returnable  basis  are  recorded  net of a  provision  for  estimated
returns. These estimates are revised, as necessary, to reflect actual experience
and market conditions.  In fiscal 2005, approximately 74% of the Company's sales
were made on a returnable  basis,  and the returns  provision as of February 26,
2005 was $22.0 million.

Estimates:
----------
The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  requires  management to make estimates  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 and
inventory obsolescence.  In each case, prior to booking an accounting entry, the
Company does an in-depth review of available information including wholesale and
retail  inventory  levels  and  product  sell-through  in the  case of  returns,
receivables aging and account  credit-worthiness  for the allowance for doubtful
accounts  and  component  and  finished  goods  inventory   levels  and  product
sell-through for obsolescence. 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.

The Company has classified its portfolio of auction rate securities ("ARS") from
cash  to  short-term  investments,   in  line  with  recent  clarification  from
regulatory  bodies.  The  Company  classified  approximately  $69,955,000  as of
February 26, 2005 and reclassified  $36,878,000,  $28,575,000 and $23,050,000 of
investments  in ARS as of February  28,  2004,  March 1, 2003 and March 2, 2002,
respectively. Year-over-year changes in the accounts of these securities are now
being  reflected under investing  activities on the  Consolidated  Statements of
Cash Flows. The impact of the reclassification on investing activities,  related
to the ARS, was approximately $33,077,000 and $8,303,000 for the two year period
ended February 26, 2005.

Income Taxes:
-------------
The  Company  provides  for  deferred  income  taxes  resulting  from  temporary
differences  between the  valuation of assets and  liabilities  in the financial
statements  and the carrying  amounts for tax  purposes.  Such  differences  are
measured  using  the tax  rates  and laws in  effect  for the years in which the
differences are expected to reverse.

<PAGE>

Employee Stock Options:
-----------------------
The  Company  accounts  for  stock-based  employee  compensation  based  on  the
intrinsic  value of stock options  granted in accordance  with the provisions of
APB 25,  "Accounting for Stock Issued to Employees."  The pro forma effect,  had
the Company accounted for stock-based  employee  compensation  based on the fair
value of stock options  granted in  accordance  with SFAS 123,  "Accounting  for
Stock-Based Compensation," is shown below:


                             (In thousands of dollars,
                                 except share data)

                                    Stock-based
                          As         Employee
                        Reported   Compensation     Pro forma
=============================================================
                                        2005
                        -------------------------------------
Net income               $10,999     $ (1,054)       $  9,945
-------------------------------------------------------------
Earnings per share
  Basic                   $ 0.27                       $ 0.25
                        -------------------------------------
  Diluted                 $ 0.27                       $ 0.24
                        -------------------------------------

                                        2004
                        -------------------------------------
Net income               $12,695     $ (1,247)       $ 11,448
-------------------------------------------------------------
Earnings per share
  Basic                   $ 0.31                       $ 0.28
                        -------------------------------------
  Diluted                 $ 0.31                       $ 0.28
                        -------------------------------------

                                        2003
                        -------------------------------------
Net income               $16,936     $ (1,350)       $ 15,586
-------------------------------------------------------------
Earnings per share
  Basic                   $ 0.41                       $ 0.38
                        -------------------------------------
  Diluted                 $ 0.40                       $ 0.37
                        -------------------------------------
=============================================================


Options typically vest within a three-year  period. 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.
Following are the key  assumptions:  $0.16 per share dividend on fiscal 2005 and
2004 options,  but no dividend on fiscal 2003 options;  risk free interest rate,
estimated  volatility and expected life as follows:  fiscal 2005 options - 4.4%,
32% and 5.8 years, respectively;  fiscal 2004 options - 4.4%, 38% and 6.5 years,
respectively; fiscal 2003 options - 4.5%, 35% and 6.5 years, respectively.

<PAGE>

Advertising and Marketing Expenses:
-----------------------------------
Advertising  and marketing  expenses (which  encompass media spending,  customer
promotions  and  research)  included  in  selling,  general  and  administrative
expenses amounted to $23,336,000 in fiscal 2005,  $23,820,000 in fiscal 2004 and
$20,145,000 in fiscal 2003. Advertising and marketing expenses are recognized as
incurred. Costs relating to future periods are classified as prepaid.


NEW ACCOUNTING PRONOUNCEMENTS

In January 2004, the Financial  Accounting  Standards Board ("FASB") issued FASB
Staff  Position  No. 106-1 ("FSP  106-1"),  which  allowed  companies to elect a
one-time  deferral of the  recognition  of effects of the Medicare  Prescription
Drug Act and disclosures related to the postretirement healthcare plan. The FASB
allowed the  one-time  deferral  due to a lack of  clarification  regarding  its
accounting and uncertainties  regarding the effects of the Medicare Prescription
Drug Act on plan participants. For companies electing the one-time deferral, the
deferral  was to remain in  effect  until  guidance  on the  accounting  for the
federal  subsidy was  issued,  or until  certain  other  events,  such as a plan
amendment,  settlement or curtailment,  had occurred.  The Company has evaluated
the effects of the Medicare Prescription Drug Act on the postretirement  benefit
plan and its participants,  and has elected the one-time deferral.  In May 2004,
the FASB issued FASB Staff  Position No. 106-2 ("FSP 106-2"),  which  superceded
FSP 106-1. FSP 106-2 provides  authoritative  guidance on the accounting for the
Act and specifies the disclosure requirements for employers who have adopted FSP
106-2.  FSP 106-2 is effective for the interim or annual period  beginning after
June 15, 2004. The Company's accumulated  postretirement  benefit obligation and
net  postretirement  benefit  cost for fiscal 2004 and fiscal  2005  reflect the
effects of the Medicare  Prescription  Drug Act. The Medicare  Prescription Drug
Act reduced the Company's  fiscal 2005  postretirement  medical expenses by $0.2
million.

On November  24,  2004,  the FASB issued FASB  Statement  No. 151 to clarify the
accounting  for abnormal  amounts of idle facility  expense,  freight,  handling
costs,  and wasted material  (spoilage).  This statement is effective for annual
periods  beginning  after  June  15,  2005  and  requires  that  those  items be
recognized  as  current  period  charges  regardless  of  whether  they meet the
criterion of "so  abnormal" as defined by Accounting  Research  Bulletin No. 43.
This Statement had no effect on the Company's consolidated results of operations
or financial position.

On  December  16,  2004,  the FASB  issued  Statement  of  Financial  Accounting
Standards No. 123 (revised 2004) "Share-Based  Payments"("SFAS  123(r)"),  which
requires that the cost resulting from all  share-based  payment  transactions be
recognized in the financial  statements  starting with interim statements issued
after June 15, 2005.  The SEC has since  extended  the date to be effective  for
fiscal years  beginning  after June 15, 2005.  This statement  establishes  fair
value  as the  measurement  objective  in  accounting  for  share-based  payment
arrangements and requires all entities to apply a  fair-value-based  measurement
method in accounting for share-based payment transactions with employees, except
for equity  instruments held by employee share ownership plans. SFAS 123(r) also
establishes fair value as the measurement objective for transactions in which an
entity  acquires goods or services from  non-employees  in  share-based  payment
transactions.  With limited exceptions,  the amount of compensation cost will be
measured  based  on the  grant-date  fair  value  of  the  equity  or  liability
instruments  issued.  In  addition,  liability  awards will be  remeasured  each
reporting  period.  Compensation cost will be recognized over the period that an
employee  provides service in exchange for the award.  SFAS 123(r) replaces SFAS
No. 123, "Accounting for Stock-Based  Compensation",  and supercedes  Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees". The
Company is  currently  evaluating  the impact of adopting  this  standard on its
future financial statements.

<PAGE>

On December 21, 2004, the FASB issued FASB Staff Position No. 109-2  "Accounting
and Disclosure Guidance for the Foreign Earnings Repatriation Provision With the
American Job Creation Act of 2004" ("FSP 109-2").  The Act introduces a one-time
dividend received deduction on the repatriation of certain foreign earnings to a
U.S.  taxpayer  provided  certain  criteria  are  met.  An  enterprise  that  is
evaluating the repatriation statute shall apply the requirements of FSP 109-2 as
it decides on a plan for reinvestment or repatriation of its unremitted  foreign
earnings.   The  enterprise  shall  measure  the  income  tax  effects  of  such
repatriation  without the  effects of the  repatriation  provision  until it has
decided on a plan. The range of possible  amounts the Company is considering for
repatriation  under this provision is between zero and $11 million.  The related
potential range of income tax effects is between zero and $0.4 million.

In  March  2004,  the FASB  ratified  EITF  Issue  No.  03-1,  "The  Meaning  of
Other-Than-Temporary  Impairment  and its  Application  to Certain  Investments"
("EITF No. 03-1"). In September 2004, the recognition and measurement provisions
of EITF No. 03-1 were delayed.  For reporting  periods  beginning after June 15,
2004, only the disclosure  requirements  for  available-for-sale  securities and
cost method investment are required. The Company does not expect the adoption of
EITF No. 03-1 to have a material effect on its financial condition or results of
operations.


NOTE 2 - EARNINGS PER SHARE

Earnings per share ("EPS") is computed in accordance with SFAS No. 128 "Earnings
Per Share" and both basic and diluted EPS figures are  provided in this  report.
Basic EPS is computed using weighted average shares outstanding.  Diluted EPS is
computed using weighted average shares outstanding plus additional shares issued
as if in-the-money options were exercised (utilizing the treasury stock method).

The following  table  represents  the  computation of weighted  average  diluted
shares outstanding:


                                              Year Ended
-----------------------------------------------------------------------
                                   February     February        March
                                   26, 2005     28, 2004       1, 2003
-----------------------------------------------------------------------
Weighted average
shares outstanding:
Basic                            40,471,000   40,604,000    41,353,000
-----------------------------------------------------------------------
Dilutive stock options              856,000      911,000       712,000
-----------------------------------------------------------------------
Diluted                          41,327,000   41,515,000    42,065,000
=======================================================================


In the above calculation,  the impact of out-of-the-money  options,  (i.e. where
the  exercise  price  exceeds  current  market  price) was not  included.  These
incremental  shares totaled 823,765 in 2005,  1,070,103 in 2004 and 1,532,000 in
2003.


NOTE 3 - ACCOUNTS RECEIVABLE

                                                      February    February
                                                      26, 2005    28, 2004
---------------------------------------------------------------------------
                                                  (in thousands of dollars)

Gross receivables                                     $ 51,265    $ 52,843
---------------------------------------------------------------------------
Reserve for estimated returns                          (20,824)    (19,516)
---------------------------------------------------------------------------
Other reserves                                          (2,590)     (3,218)
---------------------------------------------------------------------------
     Net receivables                                  $ 27,851    $ 30,109
===========================================================================

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

<PAGE>


NOTE 4 - INVENTORIES

                                         February   February
                                         26, 2005   28, 2004
-------------------------------------------------------------
                                    (in thousands of dollars)

Raw materials                            $  7,468   $  5,571
-------------------------------------------------------------
Work in process                             3,703      2,824
-------------------------------------------------------------
Finished product                           21,765     24,614
-------------------------------------------------------------
     Total inventory                     $ 32,936   $ 33,009
=============================================================


NOTE 5 - PROPERTY, PLANT AND EQUIPMENT, NET

                                     February   February
                                     26, 2005   28, 2004
---------------------------------------------------------
                                (in thousands of dollars)

Land                                 $     42   $     42
---------------------------------------------------------
Buildings and improvements              2,722      2,676
---------------------------------------------------------
Machinery, equipment
and software                           32,219     29,631
---------------------------------------------------------
     Total PP&E                        34,983     32,349
---------------------------------------------------------

Accumulated depreciation              (22,430)   (18,563)
---------------------------------------------------------
     Net PP&E                        $ 12,553   $ 13,786
=========================================================


NOTE 6 - GOODWILL AND INTANGIBLE ASSETS

Goodwill  and  Intangible  Assets  represent  amounts  paid for the  purchase of
businesses in excess of the fair value of the acquired assets. Intangible assets
consist  principally  of licenses  and  contracts,  intellectual  property,  and
software; amortization is by the straight-line method over estimated lives of up
to fifteen years.  Goodwill represents the purchase price less the fair value of
acquired assets and less the appraised value of the intangible assets.  Goodwill
is not  amortized.  Management  evaluates  the  recoverability  of goodwill  and
finite-lived  intangible  assets on the first day of each fiscal fourth  quarter
under the provisions of SFAS 142, based on the projected undiscounted cash flows
attributable  to the individual  assets,  among other  methods.  Prior to fiscal
2004, the measurement date was the first day of each fiscal first quarter.

Licenses and contracts  consist primarily of licensing rights to produce sticker
albums featuring  Premier League soccer players obtained as a part of the Merlin
Publishing  Group  acquisition  in July 1995.  Intellectual  property  refers to
rights including  trademarks and copyrights related to branded products obtained
as part of the July  2003  acquisition  of  Wizkids,  LLC.  Software  and  other
consists of proprietary  software  developed by thePit.com and acquired by Topps
in August 2001.

<PAGE>

Intangible  assets  consisted  of the  following  as of  February  26,  2005 and
February 28, 2004:

                                                   February 26, 2005
================================================================================
                                         Gross        Accumulated
                                     Carrying Value   Amortization         Net
--------------------------------------------------------------------------------
                                                (in thousands of dollars)

Licenses and contracts ...........       $ 21,569       $(17,942)       $  3,627
Intellectual property ............         18,784        (14,284)          4,500
Software and other ...............          2,953         (2,811)            142
FAS 132 pension ..................            275           --               275
                                         --------       ---------       --------
Total intangibles ................       $ 43,581       $(35,037)       $  8,544
================================================================================

                                                    February 28, 2004
================================================================================
                                         Gross        Accumulated
                                     Carrying Value   Amortization         Net
--------------------------------------------------------------------------------
                                                (in thousands of dollars)

Licenses and contracts ...........       $ 21,569       $(17,272)       $  4,297
Intellectual property ............         18,784        (13,251)          5,533
Software and other ...............          2,953         (2,717)            236
FAS 132 pension ..................            408           --               408
                                         --------       ---------       --------
Total intangibles ................       $ 43,714       $(33,240)       $ 10,474
================================================================================


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

                                              Weighted Average
                                                  Remaining
          Category             Useful Life       Useful Life
          --------             -----------       -----------
Licenses and contracts          15 years          5.4 years
Intellectual property            6 years          4.4 years
Software and other               5 years          1.5 years


The weighted average  remaining useful life for the Company's  intangible assets
in  aggregate  is 4.8 years.  Over the next five years the  Company  expects the
annual amortization of intangible assets to be as follows:

Fiscal Year                Amount
-----------                ------
                        (in thousands)
2006                       $ 1,797
2007                       $ 1,750
2008                       $ 1,703
2009                       $ 1,703
2010 and thereafter        $ 1,315

<PAGE>

In  addition  to  the  amortization  of  intangibles   listed  above,   reported
amortization  expense,  which was  $2,458,000 and $2,456,000 for the years ended
February 26, 2005 and February 28, 2004, respectively,  included amortization of
deferred financing fees and deferred compensation costs.

Intangible  assets and goodwill for the reporting units is tested for impairment
on an annual  basis and  between  annual  tests in  certain  circumstances.  The
impairment  test is  conducted  at the  reporting  unit level by  comparing  the
reporting unit's carrying amount,  including intangible assets and goodwill,  to
the fair value of the reporting  unit.  If the carrying  amount of the reporting
unit exceeds its fair value, a second step is performed to measure the amount of
impairment,  if any.  Further,  in the  event  that the  carrying  amount of the
Company  as a whole  is  greater  than  its  market  capitalization,  there is a
potential  that  some or all of its  intangible  assets  and  goodwill  would be
considered  impaired.  The Company completed its annual  impairment  testing for
each of the years presented, and no impairment was found. However, no assurances
can be given that  future  impairment  tests of  goodwill  will not result in an
impairment.


NOTE 7 - DEPRECIATION AND AMORTIZATION

                                              Year Ended
--------------------------------------------------------------------
                                    February    February      March
                                    26, 2005    28, 2004    1, 2003
--------------------------------------------------------------------
                                        (in thousands of dollars)

Depreciation expense                  $3,803     $ 4,137     $3,756
--------------------------------------------------------------------
Amortization of:
   Intangible assets                   1,797       1,881      1,160
   Compensation & other                  570         452         --
   Deferred financing fees                91         123        122
--------------------------------------------------------------------
     Total                            $6,261     $ 6,593     $5,038
====================================================================


NOTE 8 - ACCRUED EXPENSES AND OTHER LIABILITIES

                                  February         February
                                  26, 2005         28, 2004
------------------------------------------------------------
                                  (in thousands of dollars)

Royalties                         $  5,400         $  5,665
------------------------------------------------------------
Advertising and
 marketing expenses                  5,079            3,713
------------------------------------------------------------
Employee compensation                4,031            2,946
------------------------------------------------------------
Payments received in advance         1,555            1,768
------------------------------------------------------------
Inventory in transit                 1,363            1,472
------------------------------------------------------------
Deferred rent expense                1,123            1,215
------------------------------------------------------------
Other                                8,934            9,470
------------------------------------------------------------
   Total                          $ 27,485         $ 26,249
============================================================

<PAGE>

NOTE 9 - LONG-TERM DEBT

On June 26,  2000,  the  Company  entered  into a credit  agreement  with  Chase
Manhattan Bank and LaSalle Bank National  Association  for a term of four years,
which ended on June 25, 2004. On June 25, 2004, the credit agreement was amended
to  extend  the  expiration  date for 90 days in order to  provide  the  Company
sufficient time to complete refinancing arrangements. On September 14, 2004, the
Company  entered  into a new credit  agreement  with  JPMorgan  Chase Bank.  The
agreement  provides for a $30.0 million unsecured facility to cover revolver and
letter of credit needs and expires on September  13,  2007.  Interest  rates are
variable and a function of market  rates and the  Company's  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 sell or
acquire assets or borrow additional money and places certain restrictions on the
purchase of Company shares and the payment of dividends.  The Company cannot pay
dividends and/or purchase Company shares where the total cash outlay exceeds $30
million in three consecutive quarters or $50 million over the term of the credit
agreement.

The credit  agreement  may be  terminated  by the  Company at any point over the
three-year term (provided the Company repays all outstanding amounts thereunder)
without  penalty.  With the  exception  of $2.1 million  currently  reserved for
letters of credit,  the $30.0  million  credit line was available as of February
26, 2005.


NOTE 10 - INCOME TAXES

The  Company  provides  for  deferred  income  taxes  resulting  from  temporary
differences  between the  valuation of assets and  liabilities  in the financial
statements  and the carrying  amounts for tax  purposes.  Such  differences  are
measured  using the  enacted  tax rates and laws that will be in effect when the
differences are expected to reverse.

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


                                       Year Ended
-----------------------------------------------------------------
                        February        February         March
                        26, 2005        28, 2004        1, 2003
-----------------------------------------------------------------
                                (in thousands of dollars)
United States           $ 11,650        $ 7,581         $ 14,157
Europe                     4,049         10,941            7,861
Canada                    (1,282)          (996)             992
Latin America                256           (505)             288
                        -----------------------------------------
       Total            $ 14,673        $17,021         $ 23,298
=================================================================

<PAGE>

Provision for income taxes consists of:

                                       Year Ended
-----------------------------------------------------------------
                        February        February         March
                        26, 2005        28, 2004        1, 2003
-----------------------------------------------------------------
                               (in thousands of dollars)
Current income taxes/(benefit):
-----------------------------------------------------------------
  Federal               $   (321)       $   (460)       $  3,899
-----------------------------------------------------------------
  Foreign                  1,031           2,771           3,301
-----------------------------------------------------------------
  State and local          1,069             110             146
-----------------------------------------------------------------
      Total current     $  1,779        $  2,421        $  7,346
-----------------------------------------------------------------

Deferred income taxes /(benefit):
-----------------------------------------------------------------
  Federal               $  1,678        $  1,341        $   (434)
-----------------------------------------------------------------
  Foreign                     41             373            (330)
-----------------------------------------------------------------
  State and local            176             191            (220)
-----------------------------------------------------------------
      Total deferred    $  1,895        $  1,905          $ (984)
-----------------------------------------------------------------
Total provision
for income taxes        $  3,674        $  4,326        $  6,362
=================================================================


The total  provision  for  income  taxes is less  than the  amount  computed  by
applying the statutory  federal  income tax rate to income before  provision for
income  taxes.  This  difference  is largely due to foreign tax planning and the
impact of lower tax rates in foreign countries as shown below:

                                              Year Ended
------------------------------------------------------------------------
                                February        February         March
                                26, 2005        28, 2004        1, 2003
------------------------------------------------------------------------
                                     (in thousands of dollars)
Computed expected
tax provision                   $ 5,135         $ 5,957         $ 8,154
------------------------------------------------------------------------
Increase in taxes resulting from:
------------------------------------------------------------------------
  Dividend income from
  foreign affiliates              6,292           1,636             -
------------------------------------------------------------------------
  State and local taxes,
  net of federal tax benefit        871             213            572
------------------------------------------------------------------------
 European Commission fine           578               -              -
------------------------------------------------------------------------
  Foreign tax credits            (8,556)         (2,550)         (1,343)
------------------------------------------------------------------------
  Tax-exempt interest income       (285)           (208)           (206)
------------------------------------------------------------------------
  R & D tax credits                (210)           (310)           (503)
------------------------------------------------------------------------
  Other items                      (151)           (412)           (312)
------------------------------------------------------------------------
Provision for income taxes      $ 3,674         $ 4,326         $ 6,362
========================================================================

<PAGE>

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 February 26, 2005, the cumulative amount of unremitted
earnings from foreign subsidiaries that is expected to be permanently reinvested
was approximately $21 million. These undistributed foreign earnings could become
subject to U.S.  income tax if  remitted,  or deemed  remitted,  as a  dividend.
Management has determined that the U.S. income tax liability on these unremitted
earnings  should not be  material,  although it is  dependent  on  circumstances
existing at the time of the  remittance.  During the year, the Company  remitted
non-recurring dividends from two foreign subsidiaries in the aggregate amount of
$9.6 million.  The taxes payable on these dividends were fully offset by foreign
tax credits.

In December  2004,  the FASB issued FSP No. 109-2,  "Accounting  and  Disclosure
Guidance for the Foreign Earnings  Repatriation  Provision with the American Job
Creation  Act of 2004".  FSP No.  109-2  provides  guidance  for  reporting  and
disclosing certain foreign earnings that are repatriated, as defined by the Act,
which was signed  into law on October  22,  2004.  The Act allows the company to
deduct 85% of certain  qualifying foreign earnings available for repatriation to
the  United  States  during  the fiscal  years  ended 2005 and 2006.  The Act is
expected to be  supplemented  by additional  legislation  during the fiscal year
ended 2006, which will clarify the manner in which repatriated  earnings will be
taxed.  The Company has begun to evaluate the potential  impact of  repatriating
earnings pursuant to the Act; however,  until such technical  corrections to the
Act are enacted, the Company is not in a position to finalize its analysis.  The
range of possible amounts the Company is considering for repatriation under this
provision is between zero and $11 million. The related potential range of income
tax effects is between zero and $0.4 million.

The Company is  currently  under audit by the Internal  Revenue  Service and New
York State.  Taxing authorities  periodically  challenge  positions taken by the
Company  on its tax  returns.  On the basis of  present  information,  it is the
opinion of the Company's  management that the Company has appropriately  accrued
tax reserves for probable exposures and, as a result, any assessments  resulting
from  current  tax audits  should not have a  materially  adverse  effect on the
Company's consolidated  financial statements.  To the extent the Company were to
prevail in matters for which  accrued tax reserves have been  established  or be
required to pay amounts in excess of such reserves,  the Company's  consolidated
financial  statements  for a given  period  could be  materially  impacted.  The
Company has $5.5 million of tax reserves  within  income taxes payable in fiscal
2005. In fiscal 2004,  $3.7 million of tax reserves are included within deferred
tax liabilities.

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

                                                    Year Ended
---------------------------------------------------------------------
                                                February    February
                                                26, 2005    28, 2004
---------------------------------------------------------------------
                                             (in thousands of dollars)
Deferred income tax assets:

  Pension                                       $  4,047     $     -
---------------------------------------------------------------------
  Inventory                                        3,034       1,005
---------------------------------------------------------------------
  Postretirement benefits                          1,969       2,232
---------------------------------------------------------------------
  Foreign tax credits                              1,399           -
---------------------------------------------------------------------
  Estimated losses on sales returns                  470         500
---------------------------------------------------------------------
  Rent                                               463           -
---------------------------------------------------------------------
  Other                                              755           -
---------------------------------------------------------------------
    Total deferred income tax assets            $ 12,137     $ 3,737
---------------------------------------------------------------------

Deferred income tax liabilities:

  Depreciation                                    (1,808)     (1,911)
---------------------------------------------------------------------
  Package design                                  (1,204)          -
---------------------------------------------------------------------
  Prepaid expenses                                (1,287)          -
---------------------------------------------------------------------
  Other                                                -      (2,277)
---------------------------------------------------------------------
    Total deferred income tax liabilities         (4,299)     (4,188)
---------------------------------------------------------------------
Net Deferred                                     $ 7,838      $ (451)
---------------------------------------------------------------------


Historically,  the Company has not recorded a deferred income tax asset relating
to its minimum pension  obligation  (which is included within  accumulated other
comprehensive  income). As of February 26, 2005, the Company recorded a deferred
income tax asset of $4.0 million  relating to the minimum pension  obligation at
February  26,  2005.  Amounts  relating  to prior  periods  were not  considered
material.

The deferred  tax assets and  liabilities  reflected  in the previous  table are
included on the Company's  balance sheets as net current  deferred tax assets of
$3.6 million and $1.5 million in fiscal 2005 and fiscal 2004, respectively,  and
as a net long term  deferred  tax asset of $4.2  million,  which is  included in
other assets in fiscal 2005,  and a net long term deferred tax liability of $2.0
million in fiscal 2004.

As of February  26, 2005,  the Company had foreign tax credits of  approximately
$1.4 million available for use that will expire beginning in 2009 through 2015.

<PAGE>


NOTE 11 - EMPLOYEE BENEFIT PLANS

The Company maintains  qualified and  non-qualified  defined benefit pensions in
the U.S. and Ireland as well as a postretirement healthcare plan in the U.S. for
all eligible non-union personnel (the "Plans").  The Company also contributes to
a  multi-employer  defined pension plan for its union  employees.  The Company's
policy is to fund the domestic  plans in accordance  with the limits  defined by
the  Employee  Retirement  Income  Security  Act of 1971  and  U.S.  income  tax
regulations.  The Ireland plan is funded in accordance  with local  regulations.
The Company  contributed a total of $3.7 million in funding to its pension plans
in fiscal 2005 and estimates  fiscal 2006  contributions at approximately $3 - 4
million.

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-union employees are eligible to participate in the 401(k)
Plan,  participation  is optional.  With the exception of one  recently-acquired
subsidiary, the Company does not contribute to the 401(k) Plan.

The Company's strategy is to fund its defined benefit plan obligations. The need
for future  contributions  will be based on changes in the value of plan assets,
movements in interest rates and assumptions  regarding employee demographics and
compensation. The asset allocation for the Company's U.S. qualified pension plan
at the end of 2005 and 2004 and the projection for 2006 are as follows:


                       Percentage of Plan Assets
                        2006      2005    2004
                        ----      ----    ----
Asset Category
--------------
Equity Securities        65%       54%     58%

Debt Securities          35%       40%     38%

Cash                      -         6%      4%


The  expected  rate of return on plan  assets is  estimated  using a variety  of
factors including long-term  historical returns, the targeted allocation of plan
assets and expectations regarding future market returns for both equity and debt
securities. The measurement date for all Topps plans is February 26, 2005.

<PAGE>

The following tables summarize benefit costs, benefit  obligations,  plan assets
and the funded status of the Company's  U.S. and Ireland  pension plans and U.S.
postretirement healthcare benefit plan:
<TABLE>
<CAPTION>
================================================================================================
                                                                             Postretirement
                                                          Pension               Healthcare
------------------------------------------------------------------------------------------------
                                                   February    February    February    February
                                                   26, 2005    28, 2004    26, 2005    28, 2004
------------------------------------------------------------------------------------------------
                                                            (in thousands of dollars)
<S>                                                <C>         <C>         <C>         <C>
Change In Benefits Obligation
-----------------------------
Benefits obligation at beginning of year .......   $ 39,709    $ 37,858    $ 10,755    $  9,518
   Service cost ................................      1,419       1,383         305         283
   Interest cost ...............................      2,414       2,390         568         602
   Benefits paid ...............................     (1,462)     (2,524)       (619)       (576)
   Actuarial (gains)/losses ....................      2,786         (98)       (440)        928
   Participants' contributions .................         19          25        --            --
   Foreign currency impact......................        306         675        --            --
                                                   --------    --------    --------    --------
Benefit obligation at end of year ..............   $ 45,191    $ 39,709    $ 10,569    $ 10,755
================================================================================================

Change in Plan Assets
---------------------
Fair value of plan assets at beginning of year .   $ 25,551    $ 18,191    $   --      $   --
   Actual return on plan assets ................      1,722       4,396        --          --
   Employer contributions ......................      3,666       4,999        619         576
   Benefits ....................................     (1,462)     (2,524)      (619)       (576)
   Participants' contributions .................         19          25        --          --
   Foreign currency impact .....................        255         464        --          --
                                                   --------    --------    --------    --------
Fair value of plan assets at end of year .......   $ 29,751    $ 25,551    $   --      $   --
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
================================================================================================
                                                                             Postretirement
                                                          Pension               Healthcare
------------------------------------------------------------------------------------------------
                                                   February     February    February    February
                                                   26, 2005     28, 2004    26, 2005    28, 2004
------------------------------------------------------------------------------------------------
                                                            (in thousands of dollars)
<S>                                                <C>         <C>         <C>         <C>
Funded status
-------------
Funded status at year end ......................   $(15,440)   $(14,158)   $(10,568)   $(10,754)
Unrecognized actuarial losses ..................     14,599      12,151       1,789       2,229
Unamortized prior service cost .................        276         408        --          --
Unrecognized initial transition
  obligation/(asset) ...........................       (744)       (761)      1,900       2,099
                                                   --------    --------    --------    --------
Accrued benefit cost ...........................   $ (1,309)   $ (2,360)   $ (6,879)   $ (6,426)
================================================================================================
</TABLE>

<PAGE>

Amounts recognized in the consolidated balance sheets are as follows:
<TABLE>
<CAPTION>
================================================================================================
                                                                             Postretirement
                                                          Pension               Healthcare
------------------------------------------------------------------------------------------------
                                                   February     February    February   February
                                                   26, 2005     28, 2004    26, 2005   28, 2004
------------------------------------------------------------------------------------------------
                                                            (in thousands of dollars)
<S>                                                <C>         <C>         <C>         <C>
Prepaid benefit cost ...........................   $  5,353    $  3,827    $   --      $   --
Accrued benefit liability ......................    (16,808)    (16,254)     (6,879)     (6,426)
Intangible asset ...............................        275         408        --          --
Accumulated other comprehensive expense ........      9,871       9,659        --          --
Net amount recognized in the
  consolidated balance sheets ..................   $ (1,309)   $ (2,360)   $ (6,879)   $ (6,426)
================================================================================================
</TABLE>

Prior  service cost  changes are  amortized  on a  straight-line  basis over the
average  remaining  service  period  for  employees  active  on the  date  of an
amendment.  Gains and losses are  amortized  on a  straight-line  basis over the
average remaining service period of employees active on the valuation date.

At the end of fiscal 2005 and 2004 the qualified and non-qualified pension plans
had projected and accumulated  benefit  obligations in excess of plan assets, as
follows:
<TABLE>
<CAPTION>
                                                                   For Pension Plans Where:
======================================================================================================================
                                         Projected Benefit Obligation                Accumulated Benefit Obligation
                                     Exceeds the Fair Value of Plan Assets       Exceeds the Fair Value of Plan Assets
----------------------------------------------------------------------------------------------------------------------
                                        February             February                February            February
                                        26, 2005             28, 2004                26, 2005            28, 2004
----------------------------------------------------------------------------------------------------------------------
                                          (in thousands of dollars)                    (in thousands of dollars)
<S>                                     <C>                  <C>                     <C>                  <C>
Projected benefit obligation            $ 45,191             $ 39,709                $ 40,081             $ 35,055

Accumulated benefit obligation            40,591               37,657                  36,429               33,872

Fair value of plan assets               $ 29,751             $ 25,551                $ 24,851             $ 21,299
======================================================================================================================
</TABLE>

The  accumulated  benefit  obligation is less than the fair value of plan assets
for the Ireland pension plan.

The  postretirement  medical plan has no assets, and the premiums are paid on an
on-going basis. The accumulated  postretirement benefit obligation at the end of
fiscal  2005 and 2004 was  $10,568,000  and  $10,755,000,  respectively,  and is
included in non-current liabilities.

<PAGE>

The weighted-average  assumptions used to calculate net period benefit costs are
as follows:

<TABLE>
<CAPTION>
=====================================================================================================
                                   U.S. Pension Plan          Postretirement Healthcare Plan
-----------------------------------------------------------------------------------------------------
                                   2005   2004   2003        2005           2004            2003
-----------------------------------------------------------------------------------------------------
<S>                                <C>    <C>    <C>    <C>             <C>             <C>
Discount rate                      6.0%   6.3%   7.0%         6.0%           6.3%            7.0%
Expected return on plan assets     8.0%   8.0%   8.5%         N/A            N/A             N/A
Rate of compensation increase      4.0%   4.5%   5.0%         N/A            N/A             N/A
Healthcare  cost trend on
  covered charges                  N/A    N/A    N/A         10.0%,         10.0%,           7.0%,
                                                        decreasing to   decreasing to   decreasing to
                                                        5.0% in 2009    5.0% in 2008    5.5% in 2005
=====================================================================================================
</TABLE>

The discount rate and rate of compensation increase for the Ireland Pension Plan
are 5.3% and 3.3%, respectively, for 2005, 5.5% and 3.8%, respectively, for 2004
and 6.0% and 4.0%, respectively, for 2003.


The components of net periodic benefit cost are as follows:
<TABLE>
<CAPTION>
====================================================================================================
                                               Pension                Postretirement Healthcare
----------------------------------------------------------------------------------------------------
                                   February    February     March     February    February    March
                                   26, 2005    28, 2004    1, 2003    26, 2005    28, 2004   1, 2003
----------------------------------------------------------------------------------------------------
                                                      (in thousands of dollars)
<S>                                <C>         <C>        <C>        <C>         <C>        <C>
Service cost ...................   $ 1,419     $ 1,384    $ 1,184    $  304      $  283     $  225
Interest cost ..................     2,414       2,390      2,316       568         602        514
Expected return on plan assets .    (2,096)     (1,451)    (1,643)      --          --          --
Amortization of:
   Initial transition obligation       (59)        (51)       (51)      199         199        221
   Prior service cost ..........       132         131        133       --          --         --
   Actuarial (gains) losses ....       808       1,117        688       --           47        --
   Curtailments and special
     termination benefits ......       --          --         187        --          --        337
                                   -------     -------    -------    -------     -------    -------
Net periodic benefit cost ......   $ 2,618     $ 3,520    $ 2,814   $ 1,071     $ 1,131    $ 1,297
====================================================================================================
</TABLE>

Expected benefit payments are as follows:

============================================================
                  Pension     Postretirement       Total
------------------------------------------------------------

2006            $ 2,459,361     $   677,996     $ 3,137,357

2007            $ 3,108,988     $   732,126     $ 3,841,114

2008            $ 3,628,888     $   790,188     $ 4,419,076

2009            $ 3,483,036     $   849,470     $ 4,332,506

2010            $ 3,301,677     $   893,135     $ 4,194,812

2011-2015       $17,843,331     $ 4,744,350     $22,587,681
============================================================

The postretirement benefits payments do not include the impact of any Medicare D
subsidies, which are not expected to be material.

<PAGE>

Increases in healthcare costs could significantly affect reported postretirement
benefits cost and benefit obligations.  A one-percentage point change in assumed
healthcare benefit cost trends would have the following effect:

                                                  One Percentage Point
-------------------------------------------------------------------------
                                                Increase        Decrease
-------------------------------------------------------------------------
                                                (in thousands of dollars)
On total service and interest
   cost component .........................     $   137         $   (113)
On postretirement benefit
   obligation .............................     $ 1,225         $ (1,038)
=========================================================================



NOTE 12 - 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 are granted with
an exercise  price equal to the closing  market  price of the stock on the grant
date, vest within three years and expire ten years after the grant date.

The following table summarizes information about the Stock Option Plans.
<TABLE>
<CAPTION>
                                          February 26, 2005       February 28, 2004         March 1, 2003
-------------------------------------------------------------------------------------------------------------
                                                    Wtd. Avg.               Wtd. Avg.               Wtd. Avg.
                                                    Exercise                Exercise                Exercise
Stock Options                             Shares      Price       Shares      Price       Shares      Price
-------------------------------------------------------------------------------------------------------------
<S>                                     <C>         <C>         <C>         <C>         <C>         <C>
Outstanding at beginning of year        3,800,407   $  6.90     3,756,977   $  6.73     3,956,127   $  6.88
Granted                                   262,000   $  9.34       890,000   $  8.52       166,000   $ 10.12
Exercised                                (270,550)  $  4.55      (234,680)  $  4.85      (220,750)  $  6.21
Forfeited                                ( 28,938)  $  9.50      (611,890)  $  9.01      (144,400)  $ 15.68
Outstanding at end of year              3,762,919   $  7.22     3,800,407   $  6.90     3,756,977   $  6.73
Options exercisable at end of year      2,973,416   $  6.80     2,973,323   $  6.44     3,383,854   $  6.32
Weighted average fair value of
 options granted during the year               $ 2.99                  $ 2.70                  $ 4.12
============================================================================================================
</TABLE>

In 2005, the shares  forfeited  represent  those cancelled due to termination of
employment;  none expired during the year. In 2004, of the 611,890 stock options
shown as forfeited,  90,390 were unvested options which were lost when employees
were terminated from the Company. The remaining 521,500 "forfeited" options were
the results of the expiration of options in the normal course.

Summarized  information  about stock  options  outstanding  and  exercisable  at
February 26, 2005 is as follows:
<TABLE>
<CAPTION>
=========================================================================================================
                                            Options Outstanding                    Options Exercisable
---------------------------------------------------------------------------------------------------------
                                                                     Weighted                   Weighted
                                 Outstanding   Weighted Average      Average     Exercisable    Average
                                    as of         Remaining          Exercise       as of       Exercise
Exercise Price Range              2/26/2005    Contractual Life       Price       2/26/2005      Price
---------------------------------------------------------------------------------------------------------
<S>                               <C>               <C>              <C>          <C>            <C>
$ 1.76 - $ 3.53                     753,984         2.9              $ 2.60         753,984      $ 2.60
$ 3.54 - $ 5.29                     511,436         3.7              $ 4.51         511,436      $ 4.51
$ 5.30 - $ 7.05                      98,500         4.3              $ 6.94          98,500      $ 6.94
$ 7.06 - $ 8.81                   1,091,584         7.6              $ 8.27         564,081      $ 8.04
$ 8.82 - $10.57                   1,077,165         6.9              $ 9.83         815,165      $ 9.98
$10.58 - $12.34                     230,250         5.9              $11.24         230,250      $11.24
---------------------------------------------------------------------------------------------------------
                                  3,762,919         5.7              $ 7.22       2,973,416      $ 6.80
=========================================================================================================
</TABLE>

<PAGE>


NOTE 13 - CAPITAL STOCK

In October 1999, the Company's  Board of Directors  authorized the repurchase of
up to 5 million  shares of the  Company's  common stock.  In October  2001,  the
Company completed  purchases against this  authorization and the Company's Board
of Directors  authorized the repurchase of up to another 5 million shares of the
Company's common stock. During fiscal 2005, the Company purchased 444,400 shares
at an average price of $9.25 per share.

There were no shares  purchased as part of publicly  announced plans in the most
recent quarter. The maximum number of shares that may yet be purchased under the
plan is 1,609,300 shares.


NOTE 14 - DIVIDENDS

On June 26,  2003,  the Board of  Directors  of the Company  initiated a regular
quarterly  cash  dividend of $0.04 per share.  In fiscal  2005,  four  quarterly
payments totaling $0.16 per share or $6.5 million,  were made and in 2004, three
quarterly payments totaling $0.12 per share, or $4.9 million, were made.


NOTE 15 - LEGAL PROCEEDINGS

In November 2000, the Commission of the European  Communities (the "Commission")
began  an   investigation   into  whether  Topps   Europe's  past   distribution
arrangements  for the sale of Pokemon  products  complied with European law (the
"EU  investigation").  On June 17,  2003,  the  Commission  filed a Statement of
Objections  against  The Topps  Company,  Inc.  and its  European  subsidiaries,
therein coming to a preliminary conclusion that these entities infringed Article
81 of the EC treaty during 2000 by  preventing  parallel  trade  between  member
states of the  European  Union.  A hearing in front of the  European  Commission
Tribunal  took place on October 23, 2003,  and on May 27, 2004,  the  Commission
found  The  Topps  Company,  Inc.  and its  European  subsidiaries  jointly  and
severally  liable  for  infringement  of  Article  81(1) of the EC  treaty.  The
Commission  imposed a total fine of 1.6 million euros ($1.9  million)  which was
paid during fiscal 2005.

On February 17, 2000, Telepresence, Inc. sued Topps and nine other manufacturers
of trading  cards  (the  "Defendants")  in the  Federal  District  Court for the
Central  District of California for  infringement of U.S.  Patent No.  5,803,501
which  was  issued  on  September  8,  1998  (the  "501  Patent").  In its suit,
Telepresence  contended  that the patent  covers all types of "relic" cards that
contain an authentic piece of equipment,  i.e., a piece of sporting equipment or
jersey. The court awarded summary judgment to the Defendants on the grounds that
the  named  Plaintiff  (Telepresence,  Inc.)  did not have  standing  to sue for
infringement of the 501 patent.  The motion was granted,  and the litigation was
dismissed with prejudice on March 28, 2001.

After the  dismissal,  the 501 Patent was assigned to Media  Technologies,  Inc.
which is under the control of the same person (the  inventor,  Adrian Gluck) who
brought the Telepresence  action. On November 19, 2001, Media  Technologies sued
essentially  the same group of defendants in the same court for  infringement of
the 501 Patent.  The court once again granted summary judgment and dismissed the
case with prejudice.  The Court of Appeals for the Federal Circuit  reversed the
judgment on July 11,  2003,  and the case was  returned to Judge  Stotler in the
Central   District  of  California  for  trial.  On  October  16,  2003,   Media
Technologies  amended its complaint by alleging that  Defendants'  sale of relic
cards additionally  infringed U.S. Patent No. 6,142,532 (the "532 Patent") which
was issued on November 7, 2000 and is similar to the 501 Patent.

<PAGE>

On  March  17,  2004,  Topps  filed a  motion  for  summary  judgment  based  on
non-infringement  while other  defendants  filed a motion for  summary  judgment
based on patent  invalidity  because of prior art.  Both  motions were denied on
July 26, 2004. On September 15, 2004,  defendant Upper Deck Company, LLC ("Upper
Deck")  moved  for a  separate  trial on the  issues of  infringement,  damages,
willfulness  and  counterclaims,  a motion  the  other  defendants  subsequently
joined.  On October 26, 2004,  the court ruled that the patent  validity  issues
would be tried first, before those of infringement.  The court otherwise refused
to bifurcate the trial.

On October 4, 2004,  Defendants  petitioned the United States Patent & Trademark
Office (the "PTO") to reexamine the patentability of both the 501 Patent and the
532  Patent.  On October  25,  2004,  Defendants  also  filed a motion  with the
district court  requesting a stay of the  proceedings  pending the petition with
the PTO.  On  December  2, 2004,  the court  denied the motion for the stay.  In
mid-December,  the PTO granted the petition for reexamination of the 501 and 532
Patents.  Plaintiffs  have petitioned the PTO to vacate the  reexaminations  and
have also filed  papers  requesting  the PTO, in the event it decides to proceed
with the reexamination, to hold its claims patentable.

On December  29,  2004,  Defendants  once again filed a motion with the district
court  requesting  a stay  of the  proceedings  while  the  PTO  reexamines  the
patentability  of the 501 Patent and the 532  Patent.  That motion was denied on
February 28, 2005,  along with another  motion to dismiss the case based on lack
of standing.  The pretrial  conference was held on March 21, 2005.  Both parties
requested  that  the  judge  construe  Plaintiff's  issued  patent  claims,  and
Defendants  once again asked that the damages and  infringement  issues be tried
separately as to each party.

The trial was  initially  scheduled  for February 2005 but was adjourned to June
2005.  An  adverse  outcome  in the  litigation  could  result in a  substantial
liability  for the  Company  and could have a material  impact on the  Company's
financial statements.  Plaintiff argues it is entitled to a royalty on all sales
of all product  releases  containing  relic cards since  issuance of the patent,
treble  damages,  and is also seeking to enjoin us from future  distribution  of
relic cards.  It is not possible to determine  the  likelihood of any damages or
equitable  relief , or to estimate the range of loss,  if any.  Accordingly,  no
provision  has been  recorded  for this  matter  in the  accompanying  condensed
consolidated financial statements.

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 other actions will not have a material  adverse effect on
the Company's consolidated financial statements or results of operations.


NOTE 16 - SEGMENT AND GEOGRAPHIC INFORMATION

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

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

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

The Company's chief  decision-maker  regularly 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  general  and   administrative   expenses  and  manufacturing   overhead,
depreciation and amortization,  other income (expense),  net interest and income
taxes.

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

<PAGE>

BUSINESS SEGMENTS

                                                        Year Ended
================================================================================
                                             February    February       March
                                             26, 2005    28, 2004      1, 2003
--------------------------------------------------------------------------------
                                                (in thousands of dollars)
Net sales
---------
Confectionery .............................  $ 143,762   $ 147,188    $ 146,901
Entertainment .............................    152,103     150,150      143,214
                                             ---------   ---------    ---------
  Total net sales .........................  $ 295,865   $ 297,338    $ 290,115
_______________________________________________________________________________

Contributed margin
------------------
Confectionery .............................  $  46,781   $  45,734    $  52,101
Entertainment .............................     45,135      42,467       39,313
                                             ---------    --------     --------
  Total contributed margin ................  $  91,916   $  88,201    $  91,414
_______________________________________________________________________________

Reconciliation of contributed margin to
income before provision for income taxes
----------------------------------------

Total contributed margin ..................  $ 91,916    $ 88,201    $ 91,414
Unallocated general and administrative
 expenses and manufacturing overhead ......   (75,363)    (67,644)    (65,778)
Depreciation & amortization ...............    (6,261)     (6,593)     (5,038)
Other income ..............................     1,675         631         184
--------------------------------------------------------------------------------
   Income from operations .................    11,967      14,595      20,782
Interest income, net ......................     2,706       2,426       2,516
--------------------------------------------------------------------------------
   Income before provision for income taxes  $ 14,673    $ 17,021    $ 23,298
================================================================================


Net sales to unaffiliated  customers and income from operations 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, and other income. Certain
foreign  markets are in part  supported from the U.S. and Europe;  however,  the
full costs of this support have not been allocated to them.  Identifiable assets
are those assets located in each geographic area.

<PAGE>

GEOGRAPHIC AREAS


                                                   Year Ended
=========================================================================
                                        February     February     March
                                        26, 2005     28, 2004    1, 2003
-------------------------------------------------------------------------
                                            (in thousands of dollars)
Net Sales
---------
United States .....................     $ 199,632   $ 203,602   $ 212,496
Europe ............................        70,252      65,135      48,555
Canada, Latin America and Asia ....        25,981      28,601      29,064
                                        ---------   ---------   ---------
    Total Net Sales ...............     $ 295,865   $ 297,338   $ 290,115
_________________________________________________________________________

Income from Operations
----------------------
United States .....................     $   6,315   $   1,410   $  9,428
Europe ............................           795       9,535      5,406
Canada, Latin America and Asia ....         4,857       3,650      5,948
                                        ---------   ---------   ---------
    Total Income from Operations...     $  11,967   $  14,595   $ 20,782
_________________________________________________________________________

Identifiable Assets
-------------------
United States .....................     $ 236,995   $ 214,615   $ 214,525
Europe ............................        47,623      55,520      41,020
Canada, Latin America and Asia ....         5,793       5,328       7,456
                                        ---------   ---------   ---------
    Total Identifiable Assets .....     $ 290,411   $ 275,463   $ 263,001
=========================================================================


NOTE 17 - ACQUISITION OF WIZKIDS, LLC

On July 9, 2003, the Company acquired Wizkids,  LLC ("WizKids"),  a designer and
marketer  of  collectible   strategy  games,   for  a  cash  purchase  price  of
approximately  $28.4 million.  It is believed that the acquisition will serve to
enhance and  accelerate the expansion of the Company's  entertainment  business.
The acquisition  was accounted for using the purchase method of accounting.  The
financial  statements  of  WizKids  have been  consolidated  into the  financial
statements of the Company  subsequent to the acquisition.  The allocation of the
purchase price is reflected in the financial statements contained herein.

The  total  consideration  paid by the  Company  to  WizKids'  shareholders  was
comprised  of  $29,500,000  in cash,  net of a  working  capital  adjustment  of
$1,123,500.  The purchase price also  reflected a $1,326,130  payment to a third
party for associated licenses and legal, accounting, and investment banking fees
of $679,075.  The purchase  price was determined  based on discounted  cash flow
projections, which reflected expected synergies with the Company.

The purchase price includes a $6.2 million allocation for intellectual  property
rights  associated with the WizKids product line,  which is being amortized over
an estimated useful life of 6 years. There were no contingent  payments with the
purchase price.

<PAGE>

Contemporaneous  with the  acquisition,  the Company  entered into an employment
agreement with Jordan Weisman,  the majority shareholder and founder of WizKids,
for a forty-eight month period following the closing. As part of this employment
agreement,  $2 million of the consideration paid to Mr. Weisman as a shareholder
is being  accounted for as deferred  compensation,  and is being  amortized over
four years. If Mr. Weisman does not remain a WizKids' employee for the full four
years of the agreement,  he will be required to pay the Company the  unamortized
balance of his deferred  compensation.  As an additional  part of his employment
agreement, Mr. Weisman is entitled to contingent payments during the forty-eight
months  subsequent to the closing equal to 2% of WizKids'  annual net revenue in
excess of $35 million,  assuming that certain  operating margin targets are met.
In addition,  Mr. Weisman was granted  165,000  options to acquire the Company's
common  stock,  which were granted at fair market value on the date of grant and
vest over a four-year period.


The following table sets forth the components of the purchase price:

        Total consideration                     $ 29,500,000
        Less: Working capital adjustment          (1,123,500)
              Deferred compensation agreement     (2,000,000)
        Add:  Purchase of license                  1,326,130
              Transaction costs                      679,075
                                                -------------
        Total purchase price                    $ 28,381,705
                                                =============

The  following  table  provides  the  fair  value  of the  acquired  assets  and
liabilities assumed based upon WizKids' July 9, 2003 balance sheet:

        Current assets                          $  8,201,851
        Property and equipment                       564,743
        Other assets                                 115,000
        Liabilities assumed, current              (5,426,072)
                                                -------------
        Fair value of net assets acquired          3,455,522
        Intangible assets                          6,200,000
        Goodwill                                  18,726,183
                                                -------------
        Total estimated fair value of net
          assets acquired and goodwill          $ 28,381,705
                                                =============

The final purchase price differs  slightly from the amount shown for Purchase of
Subsidiary in the Consolidated  Statement of Cash Flows which reflects estimated
transaction costs as of February 28, 2004.

The goodwill of $18.7 million is included in the Entertainment  business segment
and is deductible for tax purposes over a fifteen-year period.

The impact of including WizKids in the consolidated  statements of operations on
a pro forma basis as if the  acquisition  had  occurred on March 3, 2002,  is as
follows:

                                                 Year Ended
   =========================================================================
                                        February             March
                                        28, 2004            1, 2003
   -------------------------------------------------------------------------
                                   (amounts in thousands, except share data)

   Net sales .......................    $ 310,726          $ 324,119
   Income from operations ..........       12,792             25,587
   Net income ......................    $  11,584          $  20,043
                                        ---------          ---------
   Net income per share - basic ....    $    0.29          $    0.48
                        - diluted ..    $    0.28          $    0.48
   =========================================================================

<PAGE>

NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash,  accounts  receivable,  accounts payable and accrued
liabilities approximates fair value due to their short-term nature.

The Company enters into foreign currency forward  contracts to hedge its foreign
currency exposure.  As of February 26, 2005, the Company had outstanding foreign
currency  forward  contracts,  which will mature at various  dates during fiscal
2006, in the amount of  $26,563,000,  as compared to  $22,996,000 as of February
28, 2004. Over 67% of the contracts will mature within six months.

The fair  value of these  forward  contracts  is the amount  the  Company  would
receive or pay to terminate them. The approximate pre-tax benefit or cost to the
Company to terminate  these  agreements as of February 26, 2005 and February 28,
2004 would have been  $49,000 and  $(127,000)  respectively.  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.


NOTE 19 - OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance  sheet  arrangements that have, or are
reasonably  likely  to  have,  a  current  or  future  effect  on our  financial
condition,  changes in  financial  condition,  revenue or  expenses,  results of
operations,  liquidity,  capital  expenditures  or  capital  resources  that  is
expected to be material.


NOTE 20- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
================================================================================'===================================================
                                                      2005                      '                       2004
________________________________________________________________________________'___________________________________________________
                                   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                       $ 88,089     $ 68,781     $ 70,650     $ 68,345 '   $ 75,992     $ 73,319     $ 78,470     $ 69,557
Gross profit on sales             33,799       26,280       23,660       21,459 '     28,124       28,759       24,322       22,716
Income from operations             5,639        4,812        3,228       (1,712)'      4,383        7,558          655        1,999
--------------------------------------------------------------------------------'---------------------------------------------------
Net income                         4,102        3,655        2,791          451 '      3,521        5,272          982        2,920
--------------------------------------------------------------------------------'---------------------------------------------------
Net income per share-basic        $ 0.10       $ 0.09       $ 0.07       $ 0.01 '     $ 0.09       $ 0.13       $ 0.02       $ 0.07
                    -diluted      $ 0.10       $ 0.09       $ 0.07       $ 0.01 '     $ 0.08       $ 0.13       $ 0.02       $ 0.07
================================================================================'===================================================
</TABLE>

<PAGE>

NOTE 21- CONTRACTUAL OBLIGATIONS AND COMMITMENTS

Future minimum payments under existing key contractual obligations are as
follows:

                  Future                    Future
                 Payments                  Payments
                Under Non-                  Under
      Fiscal    Cancelable    Purchase     Royalty
       Year       Leases     Obligations  Contracts      Total
       ----       ------     -----------  ---------      -----
                          (in thousands of dollars)

       2006       $ 2,733      $12,198     $12,088      $27,019
       2007         2,361          175      10,944       13,480
       2008         1,956         -          3,726        5,682
       2009         1,770         -           -           1,770
       2010         1,644         -           -           1,644
   Thereafter       1,139         -           -           1,139



The  Company  anticipates  making a payment of  approximately  $3 - 4 million in
fiscal 2006 for the funding of its qualified pension plans.

Historically, lease expense under the Company's contracts was $3,141,000 (2005),
$2,752,000 (2004) and $2,332,000 (2003).

Historically,   the  total  royalty  expense  under  the  Company's  sports  and
entertainment licensing contracts was $24,916,000 (2005), $23,912,000 (2004) and
$25,344,000 (2003).

<PAGE>

REPORT OF INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM ON THE  CONSOLIDATED
FINANCIAL STATEMENTS



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


We have  audited  the  accompanying  consolidated  balance  sheets  of The Topps
Company,  Inc. and its subsidiaries  (the "Company") as of February 26, 2005 and
February  28,  2004,  and the related  consolidated  statements  of  operations,
stockholders' equity and comprehensive income, and of cash flows for each of the
three years in the period ended  February 26, 2005.  Our audits also include the
consolidated  financial statement schedule listed in the Index at Item 15. These
consolidated  financial statements and consolidated financial statement schedule
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these consolidated  financial  statements and consolidated
financial statement schedule based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). 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 consolidated  financial  statements present fairly, in all
material respects, the financial position of the Company as of February 26, 2005
and  February 28, 2004,  and the results of their  operations  and of their cash
flows for each of the three years in the period  ended  February  26,  2005,  in
conformity with accounting principles generally accepted in the United States of
America.  Also, in our opinion, such consolidated  financial statement schedule,
when considered in relation to the basic consolidated financial statements taken
as a whole,  presents fairly in all material  respects the information set forth
therein.




DELOITTE & TOUCHE LLP
New York, New York
May 10, 2005

<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 stock  price for the common  stock as  reported  on the Nasdaq  National
Market as well as cash  dividends per share paid by the Company.  As of February
26, 2005, there were approximately 4,500 shareholders of record.


================================================================================
                          Fiscal Year Ended              Fiscal Year Ended
                          February 26, 2005              February 28, 2004
________________________________________________________________________________
                       Stock Price      Dividends      Stock Price     Dividends
                     High       Low       Paid        High      Low      Paid
--------------------------------------------------------------------------------

First quarter        $  9.76   $ 8.40    $ 0.04       $  9.52   $ 7.24    $ -
Second quarter       $ 10.09   $ 8.82    $ 0.04       $  9.25   $ 8.00    $ 0.04
Third quarter        $ 10.55   $ 9.23    $ 0.04       $ 10.75   $ 8.92    $ 0.04
Fourth quarter       $ 10.00   $ 9.38    $ 0.04       $ 10.69   $ 8.97    $ 0.04

================================================================================



SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
===========================================================================================================
                                            2005          2004          2003          2002          2001
___________________________________________________________________________________________________________
                                               (in thousands of dollars, except share data, unaudited)
<S>                                     <C>           <C>           <C>           <C>           <C>
OPERATING DATA:

Net sales ...........................   $   295,865   $   297,338   $   290,115   $   300,180   $   437,440
Gross profit on sales ...............       105,198       103,921       101,740       113,841       199,911
Selling, general and
 administrative expenses ............        94,906        89,957        81,142        77,062        80,958
Income from operations ..............        11,967        14,595        20,782        36,564       121,917
Interest income, net ................         2,706         2,426         2,516         4,894         5,717
Net income ..........................        10,999        12,695        16,936        28,462        88,489

Net income per share - basic ........   $      0.27   $      0.31   $      0.41   $      0.66   $      1.97
                     - diluted ......   $      0.27   $      0.31   $      0.40   $      0.64   $      1.91
Dividends per share .................   $      0.16          0.12          --            --            --

Wtd. avg. shares outstanding - basic     40,471,000    40,604,000    41,353,000    43,073,000    45,011,000
                             - diluted   41,327,000    41,515,000    42,065,000    44,276,000    46,366,000
___________________________________________________________________________________________________________

BALANCE SHEET DATA:

Cash and equivalents ................   $    36,442   $    56,959   $    85,684   $    98,007   $   134,391
Short-term investments ..............        69,955        36,878        28,575        23,050        24,350
Working capital .....................       138,146       133,299       141,484       136,389       140,487
Net property, plant and equipment ...        12,553        13,786        14,606        14,606        11,181
Long-term debt ......................          --            --            --            --            --
Total assets ........................       290,411       275,463       263,001       257,950       280,272
Stockholders' equity ................       219,189       211,277       196,768       194,054       196,542
===========================================================================================================
</TABLE>

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

<PAGE>

<TABLE>
<CAPTION>
BOARD OF DIRECTORS
------------------
<S>                             <C>                             <C>
Arthur T. Shorin                Ann Kirschner*                  Jack H. Nusbaum
Chairman and Chief              President                       Partner and Chairman
Executive Officer               Comma International             Willkie Farr & Gallagher, LLP


Allan A. Feder                  David Mauer                     Richard Tarlow*
Independent Business            Chief Executive Officer         Chairman
Consultant                      E&B Giftware, LLC               Roberts & Tarlow


Stephen D. Greenberg*           Edward D. Miller                Stanley Tulchin
Managing Director               Former President and CEO        Chairman
Allen & Company, LLC            AXA Financial, Inc.             STA International

</TABLE>


*Nominated to stand for re-election to the Company's Board of Directors at the
2005 Annual Meeting of Stockholders.


<TABLE>
<CAPTION>

OFFICERS
--------
<S>                             <C>                             <C>                             <C>
Arthur T. Shorin                Michael P. Clancy               Warren Friss                    William G. O'Connor
Chairman and Chief              Vice President -                Vice President -                Vice President -
Executive Officer               International and Managing      General Counsel and             Administration
                                Director, Topps                 General Manager Sports
                                International Limited


Scott Silverstein               Michael J. Drewniak             Catherine K. Jessup             John Perillo
President and Chief             Vice President -                Vice President -                Vice President -
Operating Officer               Manufacturing                   Chief Financial Officer         Operations
                                                                and Treasurer


Ronald L. Boyum                 Ira Friedman                    Michael K. Murray               Christopher Rodman
Vice President - Marketing      Vice President -                Vice President -                Vice President -
and Sales and General           Publishing and New Product      Confectionery Sales             Topps Europe
Manager Confectionery           Development


Edward P. Camp
Vice President and
President - Hobby Division

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

SUBSIDIARIES
------------
<S>                             <C>                             <C>                                <C>
Topps Argentina, SRL            Topps Canada, Inc.              Topps International Limited        Topps UK Limited
Managing Director -             General Manager -               Managing Director -                Managing Director -
Juan P. Georgalos               Michael Pearl                   Michael P. Clancy                  Jeremy Charter

Topps Europe Limited            Topps Italia, SRL               WizKids, Inc.                      Topps Finance, Inc.
Managing Director -             Managing Director -             President -
Christopher Rodman              Furio Cicogna                   Jordan Weisman                     Topps Enterprises, Inc.

</TABLE>

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


Annual Meeting                  Corporate Counsel               Registrar and Transfer Agent

Thursday, June 30, 2005         Willkie Farr & Gallagher, LLP   American Stock Transfer & Trust Company
10:30 A.M.                      787 Seventh Avenue              59 Maiden Lane
J.P.  Morgan Chase & Co.        New York, NY 10019              New York, NY 10038
One Chase Manhattan Plaza                                       877-777-0800 ext 6820
New York, NY  10081



Investor Relations              Independent Auditors

Brod & Schaffer, LLC            Deloitte & Touche LLP
230 Park Avenue, Suite 1831     Two World Financial Center
New York, NY  10169             New York, NY  10281

</TABLE>


Form 10-K -- A copy of the  Company's  Annual  Report on Form 10-K as filed with
the Securities and Exchange  Commission is available without charge at the Topps
website www.topps.com or upon written request to the Chief Financial Officer.
--------------------------------------------------------------------------------