STOCKHOLDERS' LETTER


Dear Stockholders:

     We had another  successful year in fiscal 2002. While declining interest in
Pokemon  negatively  impacted  financial   comparisons  with  fiscal  2001,  the
company's  fundamentals  remained  strong.  Total sales for the year were $302.9
million  compared with $439.3  million last year,  despite a decrease in Pokemon
sales of $155.5  million.  Net income was $28.5  million,  or $0.64 per  diluted
share as compared with $88.5 million, or $1.91 per diluted share in fiscal 2001.

     Other noteworthy financial information includes net worth of $194.1 million
as compared with $196.5 million a year ago and a year-end cash balance of $121.1
million  versus  $158.7  million.  Both net worth and cash  balance  levels were
reduced by the expenditure of $29.4 million to purchase  2,813,500 shares of the
company's common stock at an average price of $10.39.

     Looking ahead,  fiscal 2003 is going to be a year of strategic  investment,
devoted in large part to building for future growth and profitability in each of
our three businesses - namely confectionery,  sports and entertainment.  We will
focus on  strengthening  our brands that offer real and  distinctive  value,  on
developing  sports-based  products  relevant to a broader community of consumers
and on operating more efficiently throughout the company.

     Here  is a  sampling  of our  achievements  during  last  year  along  with
references to key  strategies  going forward.

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

     The domestic candy  business  performed well during fiscal '02. While total
confectionery  sales declined due to diminishing  consumer  support for Pokemon,
sales of branded  confectionery  products increased 11.5%.  Growth was driven by
continued  strong  gains of domestic  Ring Pop and Push Pop and higher  sales of
Baby Bottle Pop worldwide,  as well as by the introduction of seasonal  products
focused on Christmas, Valentine's Day and Easter.

     We believe our candy brands now enjoy a stronger  franchise  with  children
than ever before.  Clearly,  more kids are buying our products and doing so more
frequently. In fact, in calendar 2001, Topps gained almost four points of market
share  in  the  domestic  lollipop  category*.   This  bears  testament  to  our
three-pronged  strategy of creating compelling products,  increasing the breadth
and quality of our distribution and employing  effective  national  advertising.

     Last year,  we added to our core  brands by  introducing  Ring Pop  Twisted
Fruit and  Jumpin'  Push Pop and by  beginning  a  national  rollout of Ring Pop
Twisted Cream.  In the U.S. we expanded  distribution  across the four principal
trade  channels in which we compete and heavied up on domestic media spending by
17%. Overseas, the greater emphasis was on licenses and innovation, but we began
taking steps toward generating  planogram  placement and year-round  listings of
our products with major  retailers.  This program is young but very important to
building sustainability.

     At home and abroad,  growing our lollipop brands even further remains a key
priority.  These  brands will be  supported  by new  advertising  campaigns  and
increased media weights wherever  distribution makes it appropriate to do so.

----------------------------------------------------
*According to an independent syndicated data service


                                       1
<PAGE>

     In terms of new  products,  we've  been  working  on a number  of items for
future introduction. Research suggests that one of them in particular, scheduled
for  release in the latter  part of fiscal  '03,  could have  especially  strong
appeal to children domestically and overseas. Additionally, within 18 months, we
plan to leverage our skills in kids'  marketing and  distribution by launching a
non-lollipop brand via either strategic acquisition and/or self-creation.

Sports
------

     As  mentioned  in the past,  the  traditional  sports  card  category  is a
difficult  one. Sales and margins  continue to trend down and industry  dynamics
promise  little  likelihood of near-term  improvement.  There is simply too much
competition  vying for the attention of a declining  consumer  base.  That said,
Topps'  reputation as a sports card marketer,  whose  considerable  achievements
span over 50 years, is enviable,  strong and deserved.  For example,  during the
last  year,  Topps  won the  lion's  share of  industry  awards  - from  product
development  and marketing  initiative to trade programs and customer  service -
reflecting solid performance throughout the organization.  Moreover, we continue
to create and market some of the hottest  products  in the  category.  Our Topps
base  brand  continues  to be the  number  one  selling  sports  card,  and  new
introductions  such as Topps T-206,  Topps  Tribute and Topps  Pristine have met
with  the  highest  level  of  collector  acceptance,  positioning  Topps as the
industry leader in innovation and creativity. Internationally, we saw the fruits
of our labor as the  sticker  album  collection  featuring  stars of The English
Premier Football League posted impressive year on year gains.

     Going  forward,  as you might  imagine,  we are not nearly out of ideas and
possibilities. We plan to transform our sports business into one that has better
long-term  growth potential along the following lines:

     o First, we will continue to solidify our base by competing  vigorously for
the interest of collectors we currently serve.  Even in decline,  we believe the
sports card category  still  represents at least $500 million in retail  dollars
and can  continue  to produce  meaningful  results for the  company.  Topps is a
valuable  brand name,  especially as it relates to sports.  Keeping this part of
our business  strong promises us the opportunity to leverage the Topps franchise
into other areas and activities.


                                       2

<PAGE>

     o Second,  we are committed to making our brands and products  relevant and
attractive  to a wider  audience.  To that end, we will  create an in-house  new
product team  dedicated to developing  sports items - card-based and otherwise -
which appeal to new, as well as  existing,  consumers.  We employed  just such a
creative  strategy in our candy  business in 1996 and, by tapping into  internal
and external resources,  were able to dramatically improve our performance.  The
objective is to replicate that success in our sports business.

     o Third, we will continue to invest in our Internet activities.  We believe
this area plays to our strengths and offers  significant  future  potential.  On
that front,  we  successfully  completed the  technology  development  to launch
etopps on October 1, 2001,  and began to introduce the concept to consumers.  At
the end of fiscal '02,  we had fewer  registered  users than hoped for,  but the
average buyer had spent  considerably more money on etopps than anticipated - an
encouraging  sign.  On April 1 of this  year,  we  began  to roll out an  etopps
marketing  campaign  devoted  to  increasing  awareness  among  sports  fans and
attracting new users.  That campaign  includes  in-pack  promotions,  print ads,
advertising  programs with MLB.com and CBS Sportsline.com,  an aggressive public
relations  effort and  television  advertising in three test markets - New York,
Seattle and San Francisco.

     In August 2002, we acquired  thePit.com,  an on-line trading card exchange,
which represents our first foray into the secondary market for trading cards. We
have been integrating their people and processes into our own, and plan to begin
leveraging  Topps'  capabilities  and experience in the card industry to enhance
thePit.com  products in fiscal '03.

Entertainment
-------------

     With  the  decline  of  Pokemon,  our  card  and  sticker  businesses  were
relatively  quiet. We continued to follow our strategy of being highly selective
in  pursuing  licenses,  focusing  only on those  that  provide  an  appropriate
risk-reward ratio. As our fiscal '02 numbers reflect, the opportunities were few
and far between.

     Among those properties that passed muster was Lord of the Rings, one of the
highest  grossing  movies of all time.  We also  produced  collections  based on
Disney-Pixar's  animated  blockbuster,  Monsters,  Inc.,  and  an  international
sticker collection featuring the WWF. As we look ahead to fiscal '03, our lineup
will  include  Star Wars:  Episode II Attack of the Clones,  Spider-Man  and the
second  installment  of the Lord of the Rings Trilogy,  The Two Towers.  We have
plans to market products based on all of these properties worldwide.  Of course,
as  the  year  unfolds,  we  will  be on  the  lookout  to  identify  additional
opportunities with above-average potential.


                                       3

<PAGE>

International
-------------

     Our international operation reaches 60 countries around the world through a
network  of  offices  in  the  UK,   Ireland,   Italy,   Argentina  and  Brazil.
International  sales focus on essentially the same business segments as domestic
- confectionery, sports and entertainment. However, whereas brands are "tools of
power" in the domestic markets,  at present,  innovation and strong licenses are
the main drivers of our product lines overseas.  Pokemon is a perfect example in
that over the last two years we achieved  almost $200  million in  international
sales from products featuring those extraordinary characters.

     Looking to the new year, building  sustainability is important to long-term
growth and we will move  toward  doing so  overseas.  At the same time,  we will
continue  creating and  marketing  novel  products - licensed and  non-licensed,
candy and  editorial,  as demand  exists for them in the multitude of markets we
serve.

In Conclusion
-------------

     A great deal of effort has gone into  producing  the  results,  numeric and
otherwise,  described  in this report.  We thank the Topps'  family of employees
everywhere for their tireless efforts and, on behalf of the entire organization,
we also thank our  customers,  licensors,  stockholders  and suppliers for their
valued support.


                               /Arthur T. Shorin/
                              -------------------
                                Arthur T. Shorin
                Chairman, Chief Executive Officer and President



<TABLE>
<S>         <C>               <C>               <C>             <C>                     <C>
/Ed Camp/   /Mike Drewniak/   /Ira Friedman/    /C.K. Jessup/   /William G. O'Connor/   /Ron Boyum/
---------   ---------------   --------------    -------------   ---------------------   -----------
 Ed Camp     Mike Drewniak     Ira Friedman      C.K. Jessup     William G. O'Connor     Ron Boyum
</TABLE>
<TABLE>
<S>                    <C>                 <C>              <C>                   <C>
/Michael P. Clancey/   /Leon J. Gutmann/   /John Perillo/   /Scott Silverstein/   /Warren Friss/
--------------------   -----------------   --------------   -------------------   --------------
 Michael P. Clancey     Leon J. Gutmann     John Perillo     Scott Silverstein     Warren Friss

</TABLE>



                                       4

<PAGE>

Table of Contents







                                                                        Page


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


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


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


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


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


Report of Independent Public Accountants
    and Market & Dividend Information...................................31


Selected Consolidated Financial Data....................................32


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












                                       5

<PAGE>
FINANCIAL HIGHLIGHTS

                                              Year Ended
--------------------------------------------------------------------------
                                  March          March          February
                                 2, 2002        3, 2001         26, 2000
--------------------------------------------------------------------------
                              (In thousands of dollars, except share data)

Net sales ....................  $302,932        $439,268        $374,193

Income from operations .......    36,564         121,917          94,852

Net income ...................    28,462          88,489          59,215

Cash provided by operations ..     1,619         104,120          59,447

Working capital ..............   136,389         140,487          71,952

Stockholders' equity .........   194,054         196,542         129,175


Net income per share - basic    $   0.66        $   1.97        $   1.28
                     - diluted  $   0.64        $   1.91        $   1.25

Weighted average shares
    outstanding - basic         43,073,000      45,011,000      46,398,000
                - diluted       44,276,000      46,366,000      47,463,000













                                       6
<PAGE>

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

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

                                               Year Ended
                                ----------------------------------------
                                 March            March         February
                                2, 2002          3, 2001        26, 2000
                                ----------------------------------------
                                        (In thousands of dollars)

Confectionery ...............   $154,879        $172,528        $129,724

Collectible sports products..    118,368         122,918         133,803

Entertainment products ......     29,685         143,822         110,666
                                --------        --------        --------
     Total ..................   $302,932        $439,268        $374,193
                                ========        ========        ========

Fiscal 2002 Versus 2001*
-----------------------

     In fiscal 2002, the Company's  consolidated  net sales  decreased  31.0% to
$302.9 million from $439.3 million in fiscal 2001. This decrease was primarily a
function of a reduction in the popularity of products featuring  Pokemon,  which
generated  $24.1 million in sales in fiscal 2002 versus $179.6 million in fiscal
2001.

     Net sales of confectionery products, which include among other things, Ring
Pop,  Push Pop, Baby Bottle Pop,  Bazooka brand bubble gum and Pokemon  candies,
decreased 10.2% in 2002 to $154.9 million from $172.5 million in 2001.  Sales of
Pokemon  confectionery  products  decreased  to $5.9  million in 2002 from $38.9
million last year.  Topps branded  (non-Pokemon)  confectionery  sales increased
11.5%,  reflecting  strong domestic  growth of Ring Pop and Push Pop,  worldwide
growth of Baby  Bottle Pop and the  introduction  of  seasonal  candy  products.
Confectionery products accounted for 51% of the Company's consolidated net sales
in 2002, compared with 39% in 2001.

     Net sales of collectible sports products, which consist of traditional card
and sticker album products as well as sports Internet activities, decreased 3.7%
in fiscal 2002 to $118.4 million. Sales of traditional sports products decreased
8.4% to $112.6  million,  a function of lower sales of football  and  basketball
products,  partially  offset by higher  sales of baseball  and  European  soccer
products.  Internet  activities,  which include etopps (cards sold online via an
IPO format) and  thePit.com  (an online sports card  exchange),  generated  $5.8
million in sales and $1.4 million in contributed margin losses (before overhead)
in the year versus $0.1 million in sales and $0.5 million in contributed  margin
losses in the prior year.  Collectible  sports products accounted for 39% of the
Company's net sales in 2002, compared with 28% in 2001.

     Net sales of entertainment  products,  which consist of entertainment cards
and the Merlin line of  entertainment  sticker album products  marketed by Topps
Europe,  decreased to $29.7  million from $143.8  million in 2001,  reflecting a
$122.4  million  decrease  in sales of Pokemon  entertainment  products to $18.2
million this year. Excluding Pokemon,  sales of entertainment products increased
to $11.5  million in 2002 from $3.2 million last year,  reflecting  new releases
such as Lord of the  Rings,  Monsters,  Inc.,  Planet  of the Apes and  Enduring
Freedom (a series which  tastefully  chronicles  our nation's war on terrorism).
Entertainment  products represented 10% of the Company's  consolidated net sales
in 2002, compared with 33% in 2001.

     Consolidated  gross profit as a percentage of net sales  decreased to 38.5%
in 2002 from 45.9% in 2001.  Margins this year were impacted by the reduction in
sales of high-margin Pokemon products as well as an increase in sports autograph
and relic costs and lower gross profit margins at thePit.com.

     Other income  (expense)  was an expense of $215,000 this year versus income
of $3.0 million last year  primarily  as a result of non-cash  foreign  exchange
losses this year on dollar-denominated  cash balances held in Europe, as well as
lower levels of prompt payment discounts on European inventory purchases.

     Selling,   general  &  administrative  expenses  ("SG&A")  increased  as  a
percentage  of net sales to 26.3% in 2002  from  18.8% a year ago as a result of
lower sales. SG&A dollar spending  decreased to $79.8 million from $82.8 million
due to a legal  settlement  related to the  Internet  business,  a reduction  in
etopps overhead expenses and lower marketing expenditures overseas.

     Net  interest  income  decreased  to $4.9  million in fiscal 2002 from $5.7
million in fiscal 2001 reflecting  lower interest rates and a lower average cash
balance than in 2001.

     The effective tax rate in 2002 of 31.4%  reflects  provisions  for federal,
state and local income taxes in accordance with statutory  income tax rates. The
increase  versus  the 2001  rate of  30.7% is a  function  of the  lower  mix of

                                       7
<PAGE>
international  earnings and the lower  effective rates on those earnings as well
as the absence of certain one-time tax benefits present last year.

     Net income in fiscal 2002 was $28.5  million,  or $0.64 per diluted  share,
versus $88.5 million, or $1.91 per diluted share in 2001.


*Unless otherwise indicated, all date references to 2002, 2001 and 2000 refer to
the fiscal  years  ended March 2, 2002,  March 3, 2001 and  February  26,  2000,
respectively.

Fiscal 2001 Versus 2000
-----------------------

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

     Net  sales of  confectionery  products  increased  33.0% in 2001 to  $172.5
million.  Excluding sales of Pokemon candy products which totaled $38.9 million,
confectionery  sales grew  8.6%.  This  growth  was the result of the  continued
strength  of Baby Bottle Pop  domestically  and Push Pop in Japan and the United
States.  Confectionery  products accounted for 39% of the Company's consolidated
net sales in 2001, compared with 34% in 2000.

     Net sales of collectible  sports products decreased 8.1% to $122.9 million.
Sales  comparisons  versus the prior year were affected by the NBA lockout which
resulted in an unusual quantity of basketball product being shipped in the first
quarter of fiscal 2000.  Sales of European  soccer  sticker  album  products and
hockey products were also less in 2001 than in 2000. Sales of baseball  products
were up versus the previous year driven by the increased  focus on nostalgia and
success of products  commemorating  the fiftieth  anniversary of Topps marketing
its first baseball card.  Collectible  sports products  accounted for 28% of the
Company's net sales in 2001, compared with 36% in 2000.

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

     Consolidated  gross profit as a percentage of net sales  increased to 45.9%
in 2001 from 44.6% in 2000.  This margin  improvement  was largely the result of
the  increased  mix  of  high-margin  entertainment  products.  Reduced  product
obsolescence  costs  on  both  the  sports  and  confectionery  businesses  also
contributed to favorable margins in 2001.

     Other  income  increased  to $3.0  million  in 2001 from  $755,000  in 2000
primarily  as a result of a foreign  exchange  gain on European  cash as well as
higher levels of prompt payment discounts on European inventory purchases.

     Selling, general & administrative expenses decreased as a percentage of net
sales to 18.8% in 2001 from 19.5% a year ago as a result of higher  sales.  SG&A
dollar  spending  increased  to $82.8  million  from  $72.8  million  due to the
Company's  investment in its Internet  initiative and greater  expenditures  for
advertising and marketing.

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

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

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

Quarterly Comparisons
---------------------

     Management  believes  that  quarter-to-quarter  comparisons  of  sales  and
operating  results are  affected by a number of factors,  including  new product
introductions,  seasonal  products,  the  timing  of  various  expenses  such as
advertising  and  variations  in shipping and factory  scheduling  requirements.
Thus,  quarterly  results vary. See Note 18 of Notes to  Consolidated  Financial
Statements.

Inflation
---------

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

                                       8
<PAGE>

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.

     As of March 2,  2002,  the  Company  had  $121.1  million  in cash and cash
equivalents.

     On June 26, 2000,  the Company  entered into a credit  agreement with Chase
Manhattan Bank and LaSalle Bank National Association. The agreement provides for
a $35.0 million unsecured  facility to cover revolver and letter of credit needs
and expires on June 26, 2004.  Interest rates are variable and a function of the
Company's EBITDA. The credit agreement contains restrictions and prohibitions of
a nature  generally  found in loan  agreements  of this  type and  requires  the
Company, among other things, to comply with certain financial covenants,  limits
the Company's ability to repurchase its shares, sell or acquire assets or borrow
additional  money and prohibits the payment of dividends.  The credit  agreement
may be terminated by the Company at any point over the four year term  (provided
the Company repays all outstanding amounts thereunder) without penalty.

     In October  1999,  the Board of  Directors  of the Company  authorized  the
Company to purchase up to 5 million  shares of the Company's  common  stock.  In
October 2001, purchases against this authorization were completed, and the Board
of Directors  authorized the purchase of up to an additional 5 million shares of
stock. As of March 2, 2002, the Company had purchased 1.0 million shares against
this new authorization.  During fiscal 2002 the Company purchased a total of 2.8
million shares at an average price per share of $10.39.

     During 2002,  the Company's net decrease in cash and cash  equivalents  was
$37.7  million  versus an  increase  of $82.9  million  in 2001.  Cash flow from
operating  activities in 2002 was $1.6 million  versus $104.1 million last year,
primarily as a result of lower net income,  European tax payments on fiscal 2001
income and an increase in receivables, in part the result of the introduction of
seasonal products. Cash flow from investing activities reflects the $5.7 million
acquisition of thePit.com as well as $5.1 million in capital  expenditures  this
year  versus  $3.4  million  in  capital  expenditures  in 2001.  Cash flow from
financing  activities  primarily  reflects  treasury  stock  purchases  of $29.4
million this year versus $21.4 million last year. Stockholders' equity of $194.1
million in fiscal 2002 was $2.5 million below fiscal 2001 due to these  treasury
stock purchases which, combined with pension and translation  adjustments,  more
than offset net income of $28.5 million.

     Future minimum payments under  non-cancelable  leases which extend into the
year  2012  are  $1,555,000  (2003),   $1,447,000  (2004),   $1,349,000  (2005),
$1,292,000 (2006), $1,200,000 (2007) and $3,400,000 thereafter.

     Future minimum  payments  required under the Company's  existing sports and
entertainment  contracts,  with various expiration dates extending into the year
2004 are estimated to be $6,203,000 (2003) and $3,095,000 (2004).


Critical Accounting Policies
----------------------------

     An understanding of the Company's critical accounting policies is important
for a complete analysis of its results,  financial position and liquidity. Below
is a summary of the most significant of these policies.

     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.

     Intangible  Assets:  Intangible  assets  include  trademarks,  the value of
sports, entertainment and proprietary product rights and goodwill (the excess of
the purchase  price over the  estimated  fair value of  identifiable  net assets
acquired).  Amortization is by the straight-line  method over estimated lives of
up to forty years.  Management evaluates the recoverability of intangible assets
under the  provisions  of SFAS No. 121,  based on  undiscounted  projections  of
future cash flows attributable to the individual assets.

     Estimates:  The  preparation  of financial  statements in  conformity  with
generally accepted  accounting  principles requires management to make estimates


                                       9
<PAGE>

and  assumptions  which affect the reporting of assets and liabilities as of the
dates of the financial statements and revenues and expenses during the reporting
period.  These  estimates  primarily  relate to the provision for sales returns,
allowance for doubtful  accounts,  inventory  obsolescence and asset valuations.
Actual results could differ from these estimates.

     See Note 1  Summary  of  Significant  Accounting  Policies  for  additional
information regarding the Company's key accounting policies.


Euro Conversion
---------------

     On January 1, 2002, the euro currency was introduced  into  circulation and
the currencies of all affected  countries were retired.  During the  "transition
period"  from January 1, 1999  through  December  31,  2001,  public and private
entities as well as  individuals  could pay for goods and services using checks,
drafts or wire  transfers  denominated in euros or the  participating  country's
national currency. The conversion of these currencies to the euro did not have a
material  impact on the  financial  condition  and results of  operations of the
Company.

Disclosures About Market Risk
-----------------------------

     The  Company's  exposure  to market  risk  associated  with  activities  in
derivative  financial  instruments (e.g.,  hedging or currency swap agreements),
other financial  instruments and derivative commodity instruments is confined to
the impact of mark-to-market  changes in foreign currency rates on the Company's
forward  contracts  and options.  The Company has no debt and does not engage in
any commodity-related derivative transactions.  As of March 2, 2002, the Company
had $12.5 million in forward  contracts  which were entered into for the purpose
of hedging  foreign  exchange  risk  associated  with  forecasted  receipts  and
disbursements.


Accounting Changes
------------------

     In June 2001, the FASB issued Statement of Financial  Accounting  Standards
No. 141 "Business  Combinations" ("SFAS 141"). SFAS 141 applies prospectively to
all  business  combinations  initiated  after June 30, 2001 and to all  business
combinations  accounted  for using  the  purchase  method  for which the date of
acquisition  is July 1, 2001,  or later.  The  Company  adopted  SFAS 141 during
fiscal 2002. The adoption of this standard did not have a material impact on the
Company's financial condition or results of operations.

     In June 2001, the FASB issued Statement of Financial  Accounting  Standards
No. 142 "Goodwill and Other Intangible  Assets" ("SFAS 142"). SFAS 142 addresses
financial  accounting and reporting for acquired  goodwill and other  intangible
assets.  Under SFAS 142,  goodwill and some intangible  assets will no longer be
amortized,  but rather reviewed for impairment on a periodic basis. In addition,
the standard includes  provisions for the  reclassification  of certain existing
recognized intangibles as goodwill, reassessment of the useful lives of existing
recognized intangibles and the identification of reporting units for purposes of
assessing  potential future impairments of goodwill.  The standard also requires
the Company to complete a transitional  impairment test six months from the date
of adoption.  The Company  adopted the  provisions of this  Statement  effective
March 3, 2002. The Company has not completed an analysis of the potential impact
upon  adoption of the  impairment  test of  goodwill,  however  amortization  of
existing  goodwill,  which was $1.6 million for each of the years ended March 2,
2002, March 3, 2001 and February 26, 2000, respectively, ceased upon adoption.

     In August 2001, the FASB issued Statement of Financial Accounting Standards
No. 143 "Accounting for Asset  Retirement  Obligations"  ("SFAS 143").  SFAS 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible  long-lived  assets and the associated  retirement costs.
The  adoption of SFAS 143 was  effective  March 3, 2002.  The  Company  does not
expect  the  adoption  of SFAS 143 to have a  significant  impact on the  future
results of operations or its financial position.

     In  October  2001,  the  FASB  issued  Statement  of  Financial  Accounting
Standards  No. 144  "Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets"  ("SFAS  144").  SFAS 144  superseded  previous  guidance for  financial
accounting and reporting for the impairment or disposal of long-lived assets and
for  segments  of a business to be disposed  of. The  Company  adopted  SFAS 144
during fiscal 2002. The adoption of this standard did not have a material impact
on the Company's financial condition or results of operations.


                                       10
<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS


The Topps Company, Inc. and Subsidiaries
(In thousands of dollars, except share data)
<TABLE>
<CAPTION>
                                              Year Ended
------------------------------------------------------------------------
                                 March           March          February
                                2, 2002         3, 2001         26, 2000
------------------------------------------------------------------------
<S>                             <C>             <C>             <C>
Net sales ..................... $302,932        $439,268        $374,193

Cost of sales .................  186,339         237,529         207,298
                                --------        --------        --------
    Gross profit on sales .....  116,593         201,739         166,895

Other income (expense) ........     (215)          2,964             755

Selling, general and
  administrative expenses .....   79,814          82,786          72,798
                                --------        --------        --------
     Income from operations ...   36,564         121,917          94,852

Interest income, net ..........    4,894           5,717           1,712
                                --------        --------        --------
     Income before provision
        for income taxes ......   41,458         127,634          96,564

Provision for income taxes ....   12,996          39,145          37,349
                                --------        --------        --------
     Net income ............... $ 28,462        $ 88,489        $ 59,215
                                ========        ========        ========

Net income per share - basic .. $   0.66        $   1.97        $   1.28
                     - diluted. $   0.64        $   1.91        $   1.25

Weighted average shares
 outstanding - basic .......... 43,073,000      45,011,000      46,398,000
             - diluted ........ 44,276,000      46,366,000      47,463,000
--------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.


                                       11

<PAGE>
CONSOLIDATED BALANCE SHEETS

The Topps Company, Inc. and Subsidiaries
(In thousands of dollars, except share data)
<TABLE>
<CAPTION>
                                                 March          March
                                                2, 2002        3, 2001
------------------------------------------------------------------------
                                     ASSETS
------------------------------------------------------------------------
<S>                                             <C>             <C>
Current assets:

     Cash and cash equivalents ...............  $121,057        $158,741

     Accounts receivable, net ................    20,039          10,770

     Inventories .............................    23,096          22,926

     Income tax receivable ...................     3,230          11,570

     Deferred tax assets .....................     4,343           2,444

     Prepaid expenses and other current assets    11,807           4,328
                                                --------        --------
          Total current assets ...............   183,572         210,779

Property, plant and equipment, net ...........    13,856          11,181

Intangible assets ............................    56,242          54,970

Other assets .................................     4,280           3,342
                                                --------        --------
Total assets .................................  $257,950        $280,272
                                                ========        ========
------------------------------------------------------------------------
                      LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------------------------------------

Current liabilities:

     Accounts payable ........................  $ 10,966        $ 13,705

     Accrued expenses and other liabilities ..    30,274          34,561

     Income taxes payable ....................     5,943          22,026
                                                --------        --------
          Total current liabilities ..........    47,183          70,292

Deferred income taxes ........................        --           1,344

Other liabilities ............................    16,713          12,094
                                                --------        --------
          Total liabilities ..................    63,896          83,730
                                                --------        --------
Commitments ..................................      --              --

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
     49,189,000 in 2002 and 48,421,000 in 2001       492             484

   Additional paid-in capital ................    26,824          21,758

   Treasury stock, 7,143,000 shares in 2002
     and 4,329,000 shares in 2001 ............   (67,415)        (38,051)

   Retained earnings .........................   245,941         217,479

   Accumulated other comprehensive loss ......   (11,788)         (5,128)
                                                --------        --------
       Total stockholders' equity ............   194,054         196,542
                                                --------        --------

Total liabilities and stockholders' equity ...  $257,950        $280,272
                                                ========        ========
------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.

                                       12
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS

The Topps Company, Inc. and Subsidiaries
(In thousands of dollars)
                                                        Year Ended
--------------------------------------------------------------------------------
                                               March        March      February
                                              2, 2002      3, 2001     26, 2000
--------------------------------------------------------------------------------
Operating Activities

   Net income ..............................  $ 28,462    $ 88,489    $ 59,215
   Add (subtract) non-cash items included
   in income:
      Depreciation and amortization ........     5,525       4,345       4,019
      Deferred taxes on income .............    (3,242)      2,007      (6,907)

   Net effect of changes in:
      Receivables ..........................    (9,176)     14,960       3,388
      Inventories ..........................       789      (2,188)     (4,867)
      Income tax receivable ................     8,339     (11,317)         16
      Prepaid expenses and other current
         assets ............................    (7,446)      1,029        (147)
      Payables and other current liabilities   (26,439)      7,752       4,544
      Other .................................    4,807        (957)        186

         Cash provided by operating activities   1,619     104,120      59,447

Investing Activities
   Purchase of subsidiary ..................    (5,680)        --          --
   Net additions to property, plant
     and equipment .........................    (5,108)     (3,360)     (2,835)

      Cash used in investing activities ....   (10,788)     (3,360)     (2,835)

Financing Activities
   Reduction of debt .......................      --          --       (15,783)
   Exercise of employee stock options ......     5,066       3,260       1,660
   Purchase of treasury stock ..............   (29,356)    (21,368)     (7,796)

      Cash used in financing activities .....  (24,290)    (18,108)    (21,919)

Effect of exchange rate changes on cash
         and cash equivalents ..............    (4,225)        236        (568)
Net increase (decrease) in cash
         and cash equivalents ..............   (37,684)     82,888      34,125

 Cash and cash equivalents at
 beginning of year .........................   158,741      75,853      41,728

 Cash and cash equivalents at
 end of year ...............................  $121,057    $158,741    $ 75,853

Supplemental disclosure of cash flow
information:
Interest paid ..............................  $    170    $     119    $    842
Income taxes paid ..........................  $ 26,632    $  30,854    $ 39,407
--------------------------------------------------------------------------------

See Notes to Consolidated Financial Statements.

                                       13
<PAGE>

CONSOLIDATED STATMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME

The Topps Company, Inc. and Subsidiaries
(In thousands of dollars)
<TABLE>
<CAPTION>
                                                              Additional                         Other
                                                    Common     Paid-in   Treasury   Retained  Comprehensive
                                           Total     Stock     Capital     Stock    Earnings  Income (Loss)
-----------------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>       <C>        <C>        <C>          <C>
Stockholders' equity as of 2/27/1999   $  77,224    $   475   $ 16,841   $ (8,881)  $  69,775    $    (986)
-----------------------------------------------------------------------------------------------------------
Net income .........................      59,215         --         --         --      59,215           --

Translation adjustment .............        (304)        --         --         --         --          (304)

Minimum pension liability ..........        (824)        --         --         --         --          (824)

    Total comprehensive income .....      58,087         --         --         --      59,215       (1,128)

Purchase of treasury stock .........      (7,796)        --         --     (7,796)        --           --

Exercise of employee stock options .       1,660          3      1,657        --          --           --
-----------------------------------------------------------------------------------------------------------
Stockholders' equity as of 2/26/2000   $ 129,175    $   478   $ 18,498   $(16,677)  $ 128,990    $  (2,114)
-----------------------------------------------------------------------------------------------------------
Net income .........................      88,489         --         --          --     88,489          --

Translation adjustment .............      (1,430)        --         --          --        --        (1,430)

Minimum pension liability ..........      (1,584)        --         --          --        --        (1,584)

    Total comprehensive income .....      85,475         --         --          --     88,489       (3,014)

Purchase of treasury stock .........     (21,368)         6         --    (21,374)        --           --

Exercise of employee stock options .       3,260         --      3,260        --          --           --
-----------------------------------------------------------------------------------------------------------
Stockholders' equity as of 3/3/2001    $ 196,542    $   484   $ 21,758   $(38,051)  $ 217,479    $  (5,128)
-----------------------------------------------------------------------------------------------------------
Net income .........................      28,462         --         --         --      28,462          --

Translation adjustment .............      (3,304)        --         --         --         --        (3,304)

Minimum pension liability ..........      (3,356)        --         --         --         --        (3,356)

    Total comprehensive income .....      21,802         --         --         --      28,462       (6,660)

Purchase of treasury stock .........     (29,356)         8         --    (29,364)        --           --

Exercise of employee stock options .       5,066         --      5,066         --         --           --
-----------------------------------------------------------------------------------------------------------
Stockholders' equity as of 3/2/2002    $ 194,054    $   492   $ 26,824   $(67,415)  $ 245,941    $ (11,788)
-----------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.



                                       14
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation:  The consolidated financial statements include
the accounts of The 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 2001 was  comprised of 53 weeks versus 52 weeks in both fiscal
2002 and fiscal 2000.

     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. The resultant translation adjustments are included in
accumulated other comprehensive  income. Income and expense items are translated
at the  average  exchange  rate for the  month.  Gains and losses  from  foreign
currency  transactions  of these  subsidiaries  are included in net income.  For
subsidiaries  operating  in highly  inflationary  economies  or where  costs are
primarily  U.S.  dollar-based,  the financial  statements are measured using the
U.S.  dollar as the  functional  currency.  Gains and losses from balance  sheet
translation adjustments are also included in net income.

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

     Gains or losses  arising  from the  derivative  financial  instruments  are
recorded in earnings.  On March 4, 2001,  the Company  adopted the provisions of
SFAS No. 133,  "Accounting for Derivative  Instruments  and Hedging  Activities"
("SFAS  133"),  and  related  standards,   as  amended.   SFAS  133  provides  a
comprehensive  standard for the  recognition  and measurement of derivatives and
hedging activities. The impact of this standard was a net mark-to-market gain of
$519,000 in fiscal 2002.

     Accounting  Changes:  In June 2001, the FASB issued  Statement of Financial
Accounting  Standards No. 141  "Business  Combinations"  ("SFAS 141").  SFAS 141
applies prospectively to all business combinations initiated after June 30, 2001
and to all business  combinations  accounted  for using the purchase  method for
which the date of  acquisition  is July 1, 2001, or later.  The Company  adopted
SFAS 141 during  fiscal  2002.  The  adoption  of this  standard  did not have a
material impact on the Company's financial condition or results of operations.

     In June 2001, the FASB issued  Statement of Financial  Accounting  Standard
No. 142 "Goodwill and Other Intangible  Assets" ("SFAS 142"). SFAS 142 addresses
financial  accounting and reporting for acquired  goodwill and other  intangible
assets.  Under SFAS 142,  goodwill and some intangible  assets will no longer be
amortized,  but rather reviewed for impairment on a periodic basis. In addition,
the standard includes  provisions for the  reclassification  of certain existing
recognized intangibles as goodwill, reassessment of the useful lives of existing
recognized intangibles and the identification of reporting units for purposes of
assessing  potential future impairments of goodwill.  The standard also requires
the Company to complete a transitional  impairment test six months from the date
of adoption.  The Company  adopted the  provisions of this  Statement  effective
March 3, 2002. The Company has not completed an analysis of the potential impact
upon  adoption of the  impairment  test of goodwill.  However,  amortization  of
existing  goodwill,  which was $1.6 million for each of the years ended March 2,
2002, March 3, 2001 and February 26, 2000, respectively, ceased upon adoption.

     In August 2001, the FASB issued Statement of Financial  Accounting Standard
No. 143 "Accounting for Asset  Retirement  Obligations"  ("SFAS 143").  SFAS 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible  long-lived  assets and the associated  retirement costs.
The  adoption of SFAS 143 was  effective  March 3, 2002.  The  Company  does not
expect the adoption of SFAS 143 to have a  significant  impact on the  Company's
future results of operations or financial position.



                                       15

<PAGE>

     In October 2001, the FASB issued Statement of Financial Accounting Standard
No. 144 "Accounting for the Impairment or Disposal of Long-Lived  Assets" ("SFAS
144").  SFAS 144  superseded  previous  guidance for  financial  accounting  and
reporting for the  impairment or disposal of long-lived  assets and for segments
of a business to be  disposed  of. The Company  adopted  SFAS 144 during  fiscal
2002.  The  adoption  of this  standard  did not have a  material  impact on the
Company's financial condition or results of operations.

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

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

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

     Intangible  Assets:  Intangible  assets  include  trademarks,  the value of
sports, entertainment and proprietary product rights and goodwill (the excess of
the purchase  price over the  estimated  fair value of  identifiable  net assets
acquired).  Amortization is by the straight-line  method over estimated lives of
up to forty years.  Management evaluates the recoverability of intangible assets
under the  provisions  of SFAS No. 121,  based on  undiscounted  projections  of
future cash flows attributable to the individual assets.

     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.

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

     Reclassifications:  Certain items in the prior years' financial  statements
have  been  reclassified  to  conform  with  the  current  year's  presentation.
Beginning in the first  quarter of fiscal 2002,  prepress,  autograph  and relic
costs related to future period  releases,  which previously had been included in
prepaid  expenses and other  current  assets,  were  reclassified  to inventory.
Autograph,  relic and freight costs related to  merchandise  sold in the period,
which previously were included in selling,  general and administrative expenses,
were reclassified to cost of goods sold. This presentation has been reflected on
the Condensed and  Consolidated  Balance Sheets as of March 2, 2002 and March 3,
2001 and on the Consolidated Statements of Operations for the fiscal years ended
March 2, 2002, March 3, 2001 and February 26, 2000.




                                       16

<PAGE>

NOTE 2 - EARNINGS PER SHARE

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

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

                                                    Year ended
----------------------------------------------------------------------------
                                            March      March       February
                                          2, 2002     3, 2001      26, 2000
----------------------------------------------------------------------------
Weighted average shares
outstanding: Basic ...................  43,073,000   45,011,000   46,398,000

Effect of dilutive stock options .....   1,203,000    1,355,000    1,065,000

Diluted ..............................  44,276,000   46,366,000   47,463,000
----------------------------------------------------------------------------



NOTE 3 - ACCOUNTS RECEIVABLE

                                         March         March
                                        2, 2002       3, 2001
---------------------------------------------------------------
                                      (In thousands of dollars)

Gross receivables                       $ 37,148     $ 36,684

Reserve for returns                      (15,875)     (24,296)

Allowance for doubtful accounts           (1,234)      (1,618)

     Net                                $ 20,039     $ 10,770
---------------------------------------------------------------



NOTE 4 - INVENTORIES
                                         March         March
                                        2, 2002       3, 2001
---------------------------------------------------------------
                                     (In thousands of dollars)

Raw materials                           $  6,395     $   2,860

Work in process                            1,274         2,282

Finished products                         15,427        17,784

     Total                              $ 23,096      $ 22,926
---------------------------------------------------------------


NOTE 5 - PROPERTY, PLANT AND EQUIPMENT, NET

                                          March        March
                                         2, 2002      3, 2001
---------------------------------------------------------------
                                      (In thousands of dollars)

Land                                    $     42     $     42

Buildings and improvements                 2,291        2,006

Machinery, equipment and software         21,896       17,088

     Total PP&E                           24,229       19,136

Accumulated depreciation
and amortization                         (10,373)      (7,955)

     Net                                $ 13,856      $11,181
---------------------------------------------------------------


                                       17

<PAGE>

NOTE 6 - INTANGIBLE ASSETS
                                         March         March
                                        2, 2002       3, 2001
---------------------------------------------------------------
                                      (In thousands of dollars)
Value of sports, entertainment
and proprietary products                $ 38,664     $ 36,635

Goodwill                                  66,360       64,265

Accumulated amortization                 (48,782)     (45,930)

     Net                                $ 56,242     $ 54,970
---------------------------------------------------------------



NOTE 7 - ACCRUED EXPENSES AND OTHER LIABILITIES

                                          March       March
                                         2, 2002     3, 2001
---------------------------------------------------------------
                                      (In thousands of dollars)

Royalties                               $  9,009      $  8,540

Employee compensation                      7,136         6,520

Advertising and marketing expenses         2,908         4,570

Payments received in advance               1,391         3,989

Other                                      9,830        10,942

     Total                              $ 30,274      $ 34,561
---------------------------------------------------------------



NOTE 8 - DEPRECIATION AND AMORTIZATION

                                         Year Ended
----------------------------------------------------------------
                              March        March       February
                             2, 2002      3, 2001      26, 2000
----------------------------------------------------------------
                                   (In thousands of dollars)

Depreciation expense .....  $ 2,601       $ 1,685      $ 1,151

Amortization of intangible
assets ...................    2,852         2,618        2,618

Amortization of deferred
financing fees                   72            42          250

     Total ...............  $ 5,525       $ 4,345      $ 4,019
-----------------------------------------------------------------


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. The agreement provides for
a $35.0 million unsecured  facility to cover revolver and letter of credit needs
and expires on June 26, 2004.  Interest rates are variable and a function of the
Company's EBITDA. The credit agreement contains restrictions and prohibitions of
a nature  generally  found in loan  agreements  of this  type and  requires  the
Company, among other things, to comply with certain financial covenants,  limits
the Company's ability to repurchase its shares, sell or acquire assets or borrow
additional  money and prohibits the payment of dividends.  The credit  agreement
may be terminated by the Company at any point over the four year term  (provided
the Company repays all outstanding amounts thereunder) without penalty.



                                       18

<PAGE>

NOTE 10 - INCOME TAXES

     U.S. and foreign  operations  contributed  to income  before  provision for
income taxes as follows:
                                               Year Ended
-------------------------------------------------------------------------
                                   March          March         February
                                  2, 2002        3, 2001        26, 2000
-------------------------------------------------------------------------
                                         (In thousands of dollars)

United States                   $ 25,275        $ 36,359        $ 86,654

Europe                            15,744          89,201           7,240

Canada                               739           1,762           1,395

Latin America                       (300)            312           1,275

Total income before
provision for income taxes      $ 41,458        $127,634        $ 96,564
-------------------------------------------------------------------------


Provision for income taxes consists of:
                                              Year Ended
-------------------------------------------------------------------------
                                    March         March         February
                                   2, 2002       3, 2001        26, 2000
-------------------------------------------------------------------------
                                         (In thousands of dollars)
Current income taxes:

Federal ........................   $  8,609     $  6,467        $ 32,024

Foreign ........................      3,889       27,323           3,368

State and local ................        614        2,459           8,362

      Total current ............   $ 13,112     $ 36,249        $ 43,754

Deferred income taxes (benefit):

Federal ........................       (719)       1,554          (4,889)

Foreign ........................        262        1,020          (1,316)

State and local ................        341          322            (200)

     Total deferred ............       (116)       2,896          (6,405)

Total provision
for income taxes ...............   $ 12,996     $ 39,145        $ 37,349
-------------------------------------------------------------------------

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


                                               Year Ended
-------------------------------------------------------------------------
                                     March        March         February
                                    2, 2002      3, 2001        26, 2000
-------------------------------------------------------------------------
                                            (In thousands of dollars)

Computed expected tax provision    $ 14,510      $ 44,672       $ 33,797

Increase (decrease) in taxes
resulting from:
   State and local taxes,
   net of federal tax benefit           900        2,327           5,220

   Foreign and U.S. tax effects
   attributable to foreign
   operations                        (2,274)      (7,080)         (1,525)

   Goodwill                             549          549             549

   Other permanent differences         (689)      (1,323)           (692)

Provision for income taxes         $ 12,996     $ 39,145        $ 37,349
-------------------------------------------------------------------------

                                       19

<PAGE>

     Deferred U.S. income taxes have not been provided on undistributed earnings
of foreign subsidiaries as the Company considers such earnings to be permanently
reinvested in the businesses as of March 2, 2002.  These  undistributed  foreign
earnings  could  become  subject  to U.S.  income  tax if  remitted,  or  deemed
remitted, as a dividend. Determination of the deferred U.S. income tax liability
on these unremitted earnings is not practical,  since such liability, if any, is
dependent on  circumstances  existing at the time of the remittance.  During the
year, the Company remitted non-recurring dividends from two foreign subsidiaries
in the aggregate amount of $52.2 million.  The taxes provided on these dividends
were fully offset by foreign tax credits.  The  cumulative  amount of unremitted
earnings from foreign subsidiaries that is expected to be permanently reinvested
was approximately $22.2 million on March 2, 2002.

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

                                                  Year Ended
-------------------------------------------------------------------------
                                         March       March      February
                                        2, 2002     3, 2001     26, 2000
-------------------------------------------------------------------------
                                          (In thousands of dollars)

Deferred income tax assets:
    Provision for estimated losses
    on sales returns ................  $   929     $ 1,126     $ 3,241
    Provision for inventory
    obsolescence ....................    1,075       1,318       2,496
    Pre-acquisition net operating
    loss of thePit.com ..............    1,937        --          --
    Total deferred income tax
    assets* .........................  $ 3,941     $ 2,444     $ 5,737

Deferred income tax liabilities:
    Amortization ....................   $ 2,786    $ 3,287     $ 3,659
    Depreciation ....................       383        406         242
    Non-recurring items .............      (268)      (291)       (366)
    Post-retirement benefits ........    (1,593)    (1,818)     (1,612)
    Other ...........................    (1,710)      (240)        707
    Total deferred income tax
    liabilities* ....................   $  (402)   $ 1,344     $ 2,630
-------------------------------------------------------------------------

*In fiscal 2002 a net deferred tax asset of $4,343 is presented on the
 Consolidated Balance Sheet.

NOTE 11 - NON-RECURRING ITEMS

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

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

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

NOTE 12 - EMPLOYEE BENEFIT PLANS

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

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

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

     Pension expense for all plans was $2,184,000 (2002),  $1,494,000 (2001) and
$1,334,000 (2000).


                                       20
<PAGE>

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


                                                               Postretirement
                                     Pension Benefits       Healthcare Benefits
--------------------------------------------------------------------------------
                                     March       March        March      March
                                    2, 2002     3, 2001      2, 2002    3, 2001
--------------------------------------------------------------------------------
                                             (In thousands of dollars)

Reconciliation of change in benefit
obligation

Benefit obligation at beginning
of year .........................   $ 25,286    $ 20,755    $  6,836    $ 6,294

Service cost ....................        900         715         217        175

Interest cost ...................      1,852       1,772         479        474

Benefits paid ...................     (1,030)     (1,851)       (546)      (460)

Actuarial (gains) losses ........      1,265       3,895          (5)       353

Plan amendments .................        877        --           --         --

Benefit obligation at end of year   $ 29,150    $ 25,286    $  6,981    $ 6,836
--------------------------------------------------------------------------------

Reconciliation of change in the
fair value of plan assets

Fair value of plan assets
at beginning of year ............   $ 13,730    $ 13,170    $   --      $   --

Actual return on plan assets ....         31       1,269        --          --

Employer contributions ..........      4,689       1,141         546        460

Benefits paid ...................     (1,030)     (1,850)       (546)      (460)

Fair value of plan assets
at end of year ..................   $ 17,420    $ 13,730    $   --      $   --
--------------------------------------------------------------------------------


                                       21

<PAGE>

                                                              Postretirement
                                    Pension Benefits        Healthcare Benefits
--------------------------------------------------------------------------------
                                     March       March       March       March
                                    2, 2002     3, 2001     2, 2002     3, 2001
--------------------------------------------------------------------------------
                                             (In thousands of dollars)
FUNDED STATUS

Funded status ...................   $(11,729)   $(11,555)   $ (6,981)   $(6,836)

Unrecognized actuarial (gains)
losses ..........................      9,105       7,137        (915)      (932)

Unrecognized prior service cost..        697        (113)       --          --

Unrecognized initial transition
obligation ......................       --           220       2,774      2,995

Net amount recognized in the
consolidated balance sheets .....   $ (1,927)   $ (4,311)   $ (5,122)   $(4,773)
--------------------------------------------------------------------------------

Components of amounts recognized
in the consolidated balance sheets

Prepaid benefit cost ............   $  3,304    $    271    $   --      $   --

Accrued benefit liability .......    (11,686)     (6,990)     (5,122)    (4,773)

Intangible asset ................        691        --          --         --

Accumulated other comprehensive
expense .........................      5,764       2,408        --         --

Net amount recognized in the
consolidated balance sheets .....   $ (1,927)   $ (4,311)   $ (5,122)   $(4,773)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                         Postretirement
                                        Pension Benefits              Healthcare Benefits
------------------------------------------------------------------------------------------------
                                 March      March     February    March      March     February
                                2, 2002    3, 2001    26, 2000   2, 2002    3, 2001    26, 2000
------------------------------------------------------------------------------------------------
                                                   (In thousands of dollars)
Components of net periodic
benefit cost
<S>                             <C>        <C>        <C>        <C>        <C>        <C>
Service cost ................   $   900    $   715    $   693    $   217    $   175    $   228

Interest cost ...............     1,852      1,772      1,537        479        474        465

Expected return on
plan assets .................    (1,224)    (1,224)    (1,320)      --         --         --

Amortization of initial
transition obligation .......       220        196        196        221        221        221

Prior service cost ..........        66        (15)       (15)      --         --         --

Actuarial (gains) losses.....       491        192        193        (22)       (82)        (8)

Net periodic benefit cost ...   $ 2,305    $ 1,636    $ 1,284    $   895    $   788    $   906
------------------------------------------------------------------------------------------------
</TABLE>


                                       22
<PAGE>

     As of March 2, 2002 and March 3, 2001, both the qualified and non-qualified
pension plans have  accumulated  benefit  obligations  in excess of plan assets.
Information is as follows:

                                          Pension Benefits
----------------------------------------------------------------
                                         March           March
                                        2, 2002         3, 2001
----------------------------------------------------------------
                                       (In thousands of dollars)

Projected benefit obligation ........   $ 29,150        $ 25,286

Accumulated benefit obligation ......     25,802          20,210

Fair value of plan assets ...........   $ 17,420        $ 13,730
----------------------------------------------------------------

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

----------------------------------------------------------------
                                         March           March
                                        2, 2002         3, 2001
----------------------------------------------------------------
Discount rate                             7.0%            7.0%

Expected return on plan assets            8.5%            9.0%

Rate of compensation increase             5.0%            5.0%
----------------------------------------------------------------

     Assumptions  for healthcare  cost increases are as follows:  7.0% in fiscal
2002,  trending down to a 5.5% increase in fiscal 2005.  Increases in healthcare
costs could significantly affect the reported  postretirement  benefits cost and
benefit obligations. A one percentage point change in assumed healthcare benefit
cost trends would have the following effect:

--------------------------------------------------------------------------
                                                     1-Percentage Point
                                                   Increase       Decrease
--------------------------------------------------------------------------
On total service and interest cost component        $ 101          $  (83)

On postretirement benefit obligation (APBO)         $ 730          $ (627)
--------------------------------------------------------------------------


                                       23

<PAGE>

NOTE 13 - STOCK OPTION PLANS

     The  Company  has Stock  Option  Plans that  provide  for the  granting  of
non-qualified  stock  options,  incentive  stock options and stock  appreciation
rights (SARs) to employees,  non-employee  directors and consultants  within the
meaning of Section 422A of the Internal Revenue Code.  Options granted generally
vest over two or three years and expire ten years after the grant date.

The following table summarizes information about the Plans.
<TABLE>
<CAPTION>
                                           March 2, 2002        March 3, 2001         February 26, 2000
--------------------------------------------------------------------------------------------------------
                                                  Weighted               Weighted               Weighted
                                                   Average                Average                Average
                                                  Exercise               Exercise               Exercise
Stock Options                           Shares     Price       Shares     Price       Shares     Price
--------------------------------------------------------------------------------------------------------
<S>                                   <C>          <C>       <C>          <C>        <C>         <C>
Outstanding at beginning of year .    4,309,369    $ 6.34    4,684,052    $ 5.81     4,036,000   $ 5.75

Granted ..........................      599,306    $10.55      569,550    $ 9.35     1,032,500   $ 5.39

Exercised ........................     (768,335)   $ 4.93     (587,058)   $ 3.57      (318,448)  $ 3.75

Forfeited ........................     (184,213)   $14.24     (357,175)   $11.25       (66,000)  $ 5.41

  Outstanding at end of year .....    3,956,127    $ 6.88    4,309,369    $ 6.34     4,684,052   $ 5.81

Options exercisable at end of year    3,181,109    $ 6.08    3,491,735    $ 5.97     3,468,129   $ 6.11
</TABLE>
<TABLE>
<S>                                           <C>                     <C>                    <C>
Weighted-average fair value of
options granted during the year ..            $ 6.86                  $ 5.84                 $  2.97
--------------------------------------------------------------------------------------------------------
</TABLE>

Summarized  information about stock options outstanding and exercisable at March
2, 2002 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 Ranges      3/2/02      Contractual Life     Price         3/2/02       Price
----------------------------------------------------------------------------------------------
<S>                       <C>                <C>            <C>          <C>           <C>
$ 1.76 -  $3.53             977,234          5.9            $ 2.62         977,234     $ 2.62

$ 3.54 -  $5.29             636,750          6.3            $ 4.52         636,750     $ 4.52

$ 5.30 -  $7.05             302,500          4.3            $ 6.05         302,500     $ 6.05

$ 7.06 -  $8.81             704,500          3.8            $ 7.88         664,500     $ 7.90

$ 8.82 - $10.57             865,893          7.8            $ 9.85         255,125     $ 9.30

$10.58 - $12.34             343,250          6.6            $11.11         219,000     $10.85

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

$14.11 - $15.86              84,000          0.1            $15.75          84,000     $15.75

$15.87 - $17.63              42,000          0.3            $17.63          42,000     $17.63

                          3,956,127          5.8            $ 6.88       3,181,109     $ 6.08
----------------------------------------------------------------------------------------------
</TABLE>


                                       24

<PAGE>

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

<TABLE>
<CAPTION>
                                2002                        2001                        2000
-----------------------------------------------------------------------------------------------------
                                         (In thousands of dollars, except share data)
<S>                   <C>          <C>           <C>           <C>           <C>           <C>
                      As reported  Pro forma     As reported   Pro forma     As reported   Pro forma

Net income              $28,462    $26,721        $ 88,489     $ 87,279      $ 59,215      $ 58,242

Earnings per share      $  0.64    $  0.60        $   1.91     $   1.88      $   1.25      $   1.23
-----------------------------------------------------------------------------------------------------
</TABLE>

     In  determining  the  preceding  pro forma amounts under SFAS 123, the fair
value of each  option  grant is  estimated  as of the  date of grant  using  the
Black-Scholes  option-pricing  model with the following  assumptions:  risk free
interest rate of 5.7%; estimated volatility of 59%; no dividend yield;  expected
life of 6.7 years for fiscal  2002,  6.6 years for fiscal  2001 and 10 years for
fiscal 2000.


NOTE 14 - CAPITAL STOCK

     In October  1999,  the Board of  Directors  of the Company  authorized  the
Company to purchase up to 5 million shares of stock. In October 2001,  purchases
against this authorization were completed, and the Board of Directors authorized
the purchase of up to an  additional 5 million  shares of stock.  As of March 2,
2002,   the  Company  had  purchased  1.0  million   shares   against  this  new
authorization.  During fiscal 2002 the Company  purchased a total of 2.8 million
shares at an average price per share of $10.39.


NOTE 15 - SEGMENT AND GEOGRAPHIC INFORMATION

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

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

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

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

     The  Company's  management  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  unallocated  general  and  administrative   expenses  and  manufacturing
overhead,  depreciation and amortization,  other income, net interest income and
income taxes.

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


                                       25
<PAGE>

<TABLE>
<CAPTION>
BUSINESS SEGMENTS

                                                        Year Ended
------------------------------------------------------------------------------
                                               March       March      February
                                              2, 2002     3, 2001     26, 2000
------------------------------------------------------------------------------
                                                (In thousands of dollars)
<S>                                           <C>         <C>         <C>
Net Sales

Confectionery .............................   $154,879    $172,528    $129,724

Collectible Sports Products ...............    118,368     122,918     133,803

Entertainment Products ....................     29,685     143,822     110,666

  Total Net Sales .........................   $302,932    $439,268    $374,193
------------------------------------------------------------------------------

Contributed Margin

Confectionery .............................   $ 54,880    $ 64,390    $ 40,136

Collectible Sports Products ...............     30,856      36,365      47,408

Entertainment Products ....................     16,608      83,288      62,886

  Total Contributed Margin ................   $102,344    $184,043    $150,430
------------------------------------------------------------------------------


Reconciliation of contributed margin to income
before provision for income taxes

Total Contributed Margin ..................   $102,344    $184,043    $150,430

Unallocated general and administrative
expenses and manufacturing overhead .......    (60,040)    (60,745)    (52,314)

Depreciation & amortization ...............     (5,525)     (4,345)     (4,019)

Other income ..............................       (215)      2,964         755

   Income from operations .................     36,564     121,917      94,852

Interest income, net ......................      4,894       5,717       1,712

   Income before provision for income taxes   $ 41,458    $127,634    $ 96,564
------------------------------------------------------------------------------
</TABLE>


                                       26

<PAGE>

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


GEOGRAPHIC AREAS
                                              Year Ended
---------------------------------------------------------------------
                                     March       March       February
                                    2, 2002     3, 2001      26, 2000
---------------------------------------------------------------------
                                        (In thousands of dollars)
Net Sales

United States ..................   $222,110     $218,118     $270,792

Europe .........................     48,858      180,909       64,534

Other ..........................     31,964       40,241       38,867

    Total Net Sales ............   $302,932     $439,268     $374,193


Income from Operations

United States ..................   $ 22,579     $ 32,591     $ 84,289

Europe .........................     11,216       80,132        5,784

Other ..........................      2,769        9,194        4,779

    Total Income from Operations   $ 36,564     $121,917     $ 94,852


Identifiable Assets
United States ..................   $216,170     $171,385     $146,400

Europe .........................     35,271      101,819       42,267

Other ..........................      6,509        7,068       14,646

    Total Identifiable Assets ..   $257,950     $280,272     $203,313
---------------------------------------------------------------------



                                       27

<PAGE>

NOTE 16 - ACQUISITION OF THEPIT.COM, INC.

     On August 26,  2001,  the Company  acquired all of the  outstanding  common
stock of thePit.com, Inc., which operates a sports card exchange, for a net $5.7
million in cash. The  acquisition was accounted for using the purchase method of
accounting. The financial statements of thePit.com,  Inc. have been consolidated
into the  financial  statements of the Company.  The  allocation of the purchase
price is complete  and,  accordingly,  $780,000  ($470,000  for  technology  and
$310,000  for  marketing  agreements)  has been  reclassified  from  goodwill to
intangibles  and is  being  amortized  over 5  years.  The  amount  of  goodwill
remaining after the reclassification is $2.0 million. $78,000 in amortization of
these intangibles has been included in the Consolidated  Statement of Operations
for the period ended March 2, 2002.


NOTE 17 - 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 March 2, 2002,  the Company had  outstanding
foreign currency forward  contracts,  which will mature at various dates, in the
amount of $12,504,000,  as compared to $31,845,000 as of March 3, 2001. The fair
value of these forward  contracts is the amount the Company would receive or pay
to terminate the contracts.  The approximate  income to the Company to terminate
these  agreements  as of  March 2,  2002 and  March  3,  2001 was  $519,000  and
$995,000, respectively. The Company believes there is no significant credit risk
of non-performance by counter parties of the foreign currency forward contracts.

<TABLE>
<CAPTION>
NOTE 18 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

                                            2002                                2001
---------------------------------------------------------------------------------------------------------------
                            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 ............   $ 87,451   $ 81,659   $ 72,917   $ 60,905   $144,332   $141,708   $ 92,700   $ 60,528

Gross profit on sales      38,261     36,652     23,124     18,556     68,410     71,727     43,610     17,992

Income from operations     16,993     12,295      5,917      1,359     46,010     50,447     24,816        644

Net income ...........     11,629      8,852      6,532      1,449     29,029     31,964     18,881      8,615

Net income per share
  - basic ............   $   0.27   $   0.20   $   0.15   $   0.03   $   0.64   $   0.71   $   0.42   $   0.19
  - diluted ..........   $   0.26   $   0.20   $   0.15   $   0.03   $   0.62   $   0.68   $   0.41   $   0.19
---------------------------------------------------------------------------------------------------------------
</TABLE>




                                       28

<PAGE>

NOTE 19 - COMMITMENTS AND OTHER MATTERS

     Future minimum payments under  non-cancelable  leases which extend into the
year  2012  are  $1,555,000  (2003),   $1,447,000  (2004),   $1,349,000  (2005),
$1,292,000 (2006), $1,200,000 (2007) and $3,400,000 thereafter.

     Future minimum  payments  required under the Company's  existing sports and
entertainment  contracts,  with various expiration dates extending into the year
2004, are estimated to be $6,203,000 (2003) and $3,095,000 (2004).

     Total  royalty  expense  under  the  Company's  sports  and   entertainment
licensing contracts was $25,669,000  (2002),  $46,727,000 (2001) and $43,403,000
(2000).

     Advertising  and  marketing   expenses  (which  encompass  media  spending,
slotting allowances, and consumer promotions costs) included in selling, general
and administrative  expenses amounted to $22,064,000 (2002),  $24,529,000 (2001)
and $22,885,000 (2000).

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

     At March 2, 2002,  the Company had  outstanding  foreign  currency  forward
contracts with banks in the amount of $12,504,000, as compared to $31,845,000 as
of March 3, 2001.  These  contracts  have various  maturity  dates ranging up to
twelve months from March 2, 2002, with over 85% of the contracts maturing within
six months.

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

     In November 1998, the Company was named as a defendant in a purported class
action  commenced in the United States District Court for the Southern  District
of California (the "California Court") entitled Rodriquez,  et. al. v. The Topps
Company,  Inc., No. CV 2121-B (AJB) (S.D. Cal.) (the "Class Action").  The Class
Action  alleges that the Company  violated the Racketeer  Influenced and Corrupt
Organizations Act ("RICO") and the California Unfair Business  Practices Act, by
its  practice  of  selling   sports  and   entertainment   trading   cards  with
randomly-inserted  "insert"  cards,  allegedly in violation of state and federal
anti-gambling laws. The Class Action seeks treble damages and attorneys' fees on
behalf  of all  individuals  who  purchased  packs  of cards at least in part to
obtain an "insert" card over a four-year period. On January 22, 1999, plaintiffs
moved to consolidate the Class Action with similar class actions pending against
several of the Company's  principal  competitors and licensors in the California
Court.  On January 25, 1999,  the Company  moved to dismiss the  complaint,  or,
alternatively,  to transfer the Class Action to the Eastern District of New York
or stay the Class Action pending the outcome of the Declaratory  Judgment Action
pending in the Eastern  District of New York. By orders dated May 14, 1999,  the
California  Court denied the Company's  motions to dismiss or transfer the Class
Action but granted the  Company's  motion to stay the Class  Action  pending the
outcome of the Declaratory  Judgment  Action.  The California  Court also denied
plaintiffs'  motion to consolidate the Class Action with similar purported class
actions.  On April 18, 2000,  the  California  Court entered an order  requiring
plaintiffs in the Class Action as well as in the other  purported  Class Actions
to show cause why all such actions should not be dismissed.  By order dated June
21,  2000,  the  California  Court  vacated its May 14,  2000 order  denying the
Company's  motion to dismiss  the Class,  dismissed  the RICO claim in the Class
Action with  prejudice and without  leave to replead,  and dismissed the pendent
state law claims without  prejudice.  Plaintiffs filed a notice of appeal of the
California  Court's decision to the United States Court of Appeals for the Ninth
Circuit on July 21,  2000.  Oral  argument  was held on December 5, 2001 but the
Court has not yet issued a  decision.  If the Class  Action were  reinstated  on
appeal,  an adverse  outcome in the Class  Action  could  materially  affect the
Company's future plans and results.



                                       29

<PAGE>

     On August 21,  2000,  the Company  was named as a defendant  in a purported
class action  commenced in the Superior Court of the State of California for the
County of Alameda (the "California  State Court") entitled Chaset, et al. v. The
Upper Deck Company,  et al., No. 830257-9 (the "California  Class Action").  The
California  Class Action  alleges that the Company and other  manufacturers  and
licensors of sports and entertainment  trading cards committed unlawful,  unfair
and fraudulent  business acts under the California Unfair Business Practices Act
(CUBPA) and the California Consumer Legal Remedies Act (CLRA) by the practice of
selling  trading  cards  with  randomly-inserted  "insert"  cards  allegedly  in
violation of state and federal  anti-gambling  laws and state consumer laws. The
California  Class Action asserts three claims for relief and seeks  declaratory,
equitable and  injunctive  relief and  attorneys'  fees on behalf of a purported
nationwide  class  of  trading  card  purchasers.  Plaintiff  filed  an  amended
complaint on October 13, 2000, including an amendment to demand compensatory and
punitive  damages and  restitution.  On December 14, 2000,  plaintiff  moved for
summary  judgement  on one of his  CUBPA  claims.  On  December  15,  2000,  all
defendants  filed a motion to dismiss  two of the claims for  failure to state a
claim upon which relief can be granted; a motion for summary judgment dismissing
the remaining  claim;  and a motion to strike all  allegations  of fraudulent or
deceptive  representations and all references to plaintiff's prayer for monetary
relief.  On March  29,  2001,  the  Court  issued a  tentative  ruling  granting
defendants'  motion for summary  judgment on the  grounds  that the  defendant's
practices do not constitute illegal gambling as a matter of law, but denying the
demurrer to the extent that the  remaining two claims allege false or misleading
advertising  practices  unrelated to the gambling  issue.  On March 30, 2001, in
accordance with the California State practice,  the Court heard oral argument on
whether or not its tentative ruling should stand as a final ruling.  On June 12,
2001, the Court denied both motions. On September 21, 2001,  plaintiff moved for
class  certification.  Briefing and discovery concerning the class certification
issue was completed in January 2002, and oral argument was heard on February 27,
2002.  On March 7, 2002,  Judge  Sabraw of the  California  State Court issued a
ruling  denying  class   certification   under  the  CUBPA  and  granting  class
certification  under the CLRA. On April 2, 2002,  the  Defendants  filed a joint
motion to dismiss  the CLRA cause of action.  Plaintiff  has  indicated  that he
intends to appeal the ruling  denying class  certification  under the CUBPA.  On
April 18, 2002, the Court issued a tentative ruling  dismissing the CLRA action.
A hearing was  scheduled on the matter on April 26, 2002.  The Court has not yet
issued a final ruling in the matter.

     In November  2000,  the  Commission  of the European  Communities  began an
investigation into whether Topps Europe Limited's distribution  arrangements for
its  licensed  products  comply with  European  law. The  Commission  is seeking
information  as to whether Topps Europe Limited has engaged in the prevention of
parallel trade between the member states of the European  Union and/or  European
Economic Area, in  infringement of Article 81 of the EC Treaty and/or Article 54
of the EEA Treaty.  Topps Europe  Limited  filed a response to the  Commission's
enquiry on November 29, 2000, and provided further information to the Commission
on February 2, 2001,  pursuant to its request.  The Commission is continuing its
investigation,  and  an  adverse  outcome  in its  findings  could  result  in a
substantial fine. Do not worry about.

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

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



                                       30

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


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


     We have audited the accompanying  consolidated  balance sheets of The Topps
Company,  Inc. and  Subsidiaries  as of March 2, 2002 and March 3, 2001, and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for each of the three  years in the  period  ended  March 2,  2002.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

     In our opinion,  such financial  statements present fairly, in all material
respects,  the financial position of The Topps Company, Inc. and Subsidiaries as
of March 2, 2002 and March 3, 2001 and the results of their  operations and cash
flows  for  each of the  three  years  in the  period  ended  March  2,  2002 in
conformity with accounting principles generally accepted in the United States of
America.


/DELOITTE & TOUCHE LLP/
DELOITTE & TOUCHE LLP
New York, New York
April 3, 2002



MARKET AND DIVIDEND INFORMATION

The Company's Common Stock is traded on the Nasdaq National Market under the
symbol TOPP. The following table sets forth, for the periods indicated, the high
and low sales price for the Common Stock during the last two fiscal years as
reported on the Nasdaq National Market. As of March 2, 2002, there were
approximately 4,519 holders of record.


                           Fiscal year ended        Fiscal year ended
                             March 2, 2002             March 3, 2001
-----------------------------------------------------------------------
                        High Price   Low Price   High Price   Low Price

First quarter           $ 10.40       $ 8.78      $ 10.00       $ 7.00

Second quarter          $ 12.29       $ 9.60      $ 11.97       $ 8.25

Third quarter           $ 12.16       $ 9.05      $ 10.13       $ 7.63

Fourth quarter          $ 12.49       $ 9.06      $ 10.69       $ 7.88
-----------------------------------------------------------------------

     The Company's  credit  agreement  prohibits  the payment of dividends.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations  -  Liquidity  and  Capital  Resources"  and  "Notes to  Consolidated
Financial Statements - Note 9."



                                       31

<PAGE>

<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA

                                            2002        2001        2000        1999        1998
---------------------------------------------------------------------------------------------------
                                                (In thousands of dollars, except share data)
<S>                                    <C>         <C>         <C>         <C>          <C>
OPERATING DATA:
Net sales ....................          $ 302,932   $ 439,268   $ 374,193   $ 229,414    $ 241,250

Gross profit on sales ........            116,593     201,739     166,895      93,037       78,322

Selling, general and
administrative expenses ......             79,814      82,786      72,798      70,534       77,050

Income (loss) from operations              36,564     121,917      94,852      26,658       (2,020)

Interest income (expense), net              4,894       5,717       1,712        (454)      (1,585)

Net income (loss) ............             28,462      88,489      59,215      15,571       (4,572)

Income (loss) from operations
per share - basic                          $ 0.85      $ 2.71      $ 2.04      $ 0.57      $ (0.04)
          - diluted                        $ 0.83      $ 2.63      $ 2.00      $ 0.57      $ (0.04)

Net income (loss) per share
          - basic                          $ 0.66      $ 1.97      $ 1.28      $ 0.34      $ (0.10)
          - diluted                        $ 0.64      $ 1.91      $ 1.25      $ 0.33      $ (0.10)

Cash dividends                             -             -            -           -            -
Wtd. avg. shares outstanding
          - basic                      43,073,000  45,011,000  46,398,000  46,415,000   46,421,000
          - diluted                    44,276,000  46,366,000  47,463,000  46,678,000   46,434,000
---------------------------------------------------------------------------------------------------

BALANCE SHEET DATA:

Cash and equivalents                    $ 121,057   $ 158,741   $ 75,853    $ 41,728     $ 22,153

Working capital                           136,389     140,487     71,952      24,919       20,971

Net property, plant and equipment          13,856      11,181      9,181       7,429       10,148

Long-term debt, less current portion         -            -          -         5,158       22,617

Total assets                              257,950     280,272    203,313     151,453      159,148

Stockholders' equity                    $ 194,054   $ 196,542   $129,175    $ 77,224     $ 61,609
---------------------------------------------------------------------------------------------------
</TABLE>

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

Income (loss) from operations  includes  various  non-recurring  items in fiscal
1999 and 1998. See Note 11.



                                       32


<PAGE>

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


Allan A. Feder                  David Mauer                    Richard Tarlow*
Independent Business            Independent Business           Chairman
Consultant                      Consultant                     Carlson & Partners


Stephen D. Greenberg*           Edward D. Miller               Stanley Tulchin
Managing Director               Senior Advisor                 Chairman
Allen & Company, Inc.           Former President and CEO       Stanley Tulchin
                                AXA Financial, Inc.            Associates, Inc.
</TABLE>

*Nominated to stand for re-election to the Company's Board of Directors at the
2002 Annual Meeting of Stockholders.

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

Arthur T. Shorin                Edward P. Camp                 Ira Friedman                 Catherine K. Jessup
Chairman, Chief Executive       Vice President and President   Vice President -             Vice President - Chief
Officer and President           Hobby Division                 Publishing and New Product   Financial Officer
                                                               Development

Scott Silverstein               Michael P. Clancy              Warren Friss                 William G. O'Connor
Executive Vice President        Vice President -               Vice President -  Internet   Vice President -
                                International and Managing     Business and General         Administration
                                Director, Topps                Counsel
                                International Limited

Ronald L. Boyum                 Michael J. Drewniak            Leon J. Gutmann              John Perillo
Vice President - Marketing      Vice President -               Assistant Treasurer and      Vice President - Operations
and Sales and General           Manufacturing                  Assistant Secretary
Manager Confectionery
</TABLE>
<TABLE>
<S>                             <C>                            <C>                          <C>
SUBSIDIARIES

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

Topps Brasil, Ltda.             Topps Europe Limited           Topps Italia SRL             thePit.com, Inc.
Managing Director - Jeroen      Managing Director -            Managing Director -          Managing Director -
Servaes                         Christopher Rodman             Furio Cicogna                Mark Lore


Topps Enterprises, Inc.         Topps Finance, Inc.

</TABLE>
<TABLE>
  <S>                                   <C>                                <C>
  CORPORATATE INFORMATION

  Annual Meeting                        Corporate Counsel                  Registrar and Transfer Agent
  Thursday, June 27, 2002               Willkie Farr & Gallagher           Mellon Investor Services, LLC
  10:30 A.M.                            787 Seventh Avenue                 85 Challenger Road
  J.P.  Morgan Chase & Co.              New York, NY 10019                 Ridgefield Park, NJ  07660
  270 Park Avenue                                                          (800) 851 9677
  New York, NY  10017

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

</TABLE>
--------------------------------------------------------------------------------

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