Corporate  Profile

The Topps Company, Inc. is an international marketer of entertainment  products,
principally  collectible  trading  cards,  confections  and  sticker  and  album
collections.  The Company,  founded in 1938, created Bazooka brand bubble gum in
1947 and marketed its first Topps baseball cards in 1951.


Dedication

With thanks and  admiration,  we dedicate  this  Annual  Report to our  esteemed
colleague  Seymour P.  Berger,  former Vice  President  and now  retiring  Board
member. For over half a century Sy, known as "the father of modern-day  baseball
cards,"  has served the  Company  with  distinction  and still  devotes  time to
consult  for us on special  assignments.  A major  leaguer in every sense of the
word,  congratulations  and best wishes to this  remarkable  man from a grateful
Topps.

<PAGE>



Stockholders' Letter

Dear Stockholders,
Fiscal 1999 results reflect  significant  progress as we work to build the value
of your investment in Topps.

For the year ended February 27, 1999,  Topps earned $15.6  million,  or 34 cents
per share,  compared to a loss the previous  year of $4.6  million,  or minus 10
cents per share.  We also reduced our debt from $31.0  million to $15.8  million
and built cash to $41.7  million.  The Company's  net worth  increased by 25% to
$77.2 million, return on equity was 22.4%, and our stock price rose from $2.75 a
share to  $4.375  at  fiscal  year  end,  a 59%  improvement.  Other  highlights
included:

     o Growth and strengthening of core brand franchises in both sports and
       confectionery
     o Highly successful new product introductions
     o Distribution gains for a variety of  products
     o Improved  margins  through  cost  cutting  and new
       efficiencies
     o Significantly better customer service performance
     o Effective use of TV  advertising

     Fair to say,  we made  good  progress  for the year,  and  fully  intend to
produce  more of it. As a matter of fact,  the theme "more" is featured in this
report because  looking ahead our  continuing aim is to provide more:  more fun,
value and innovation for consumers;  more profits for our trade partners  (doing
so endears us to them as a more highly prized supplier); more challenges for the
Topps  organization to tackle  successfully;  and,  underlying all of the above,
more stockholder  value.

     For  your  information,  what  follows  is a  discussion  of the  Company's
businesses in some detail -- its actions and achievements, plus a description of
opportunities that we are able to talk about in this writing.


Collectible Sports Products
     More brands, more sports, more innovation...

     Generally speaking, fiscal 1999 was a constructive period for sports cards,
albeit one in which some of the positives  were masked by the effects of a labor
problem in basketball.  Indeed,  baseball had a splendid year, punctuated by the
exploits  of two players in  particular,  Mark  McGwire  and Sammy  Sosa,  whose
incredible  home run chase was both  historic and  awakening.  Not only did they
represent a perfect  combination of athletic skills and fine personal character,
but the spirit they created on and off the field was contagious.

     Football cards had a good year as well.  Collectors  were excited about the
strong entry class of rookies and sales got a boost from the  temporary  absence
of NBA product. Rounding out the picture, this was our first year back marketing
hockey cards after being out of the "rink" for awhile and, as of this writing, I
can report that the return of  basketball to arenas and our sales of NBA product
at the start of fiscal 2000 are encouraging.  Let's go on to some specifics.

     The Company's  strategy of focusing on brands continues  proving correct as
Topps,  Bowman and Topps  Finest  brands  remain  among the most  desired in the
industry.  Our brands also provided a natural  platform for  extensions  such as

                                      1
<PAGE>

Topps Chrome and Bowman's  Best.  Further,  this strategy  allows brands to
transfer  smoothly to additional  sports,  increasing their strength and equity,
and providing new sales opportunities.

     We had two  successful  new  sports  brand  introductions  this  year.  Our
stunning  Topps Gold Label cards were a big hit in baseball and  football.  Next
year they will be seen in  basketball  and hockey  versions as well.  Topps Tek,
with its new innovative mode of set construction,  encouraged different types of
collecting.  As mentioned,  the Company also  re-entered  the hockey card market
this year on a limited  basis,  after sitting out the past couple of seasons due
to poor economics in the category.  With improved  conditions this year, we were
moderately  successful,  collectors  were  happy to have  Topps back and we will
expand our hockey  offerings  next year.

     This  past  year saw  other  evidence  of  progress  as well.  The  Company
introduced Action Flats -- three  dimensional  detailed  miniature  figurines of
professional  athletes.  Such "new sports initiatives"  present a natural growth
opportunity  for  the  Company.  Accordingly,  we  hope to  expand  our  "Flats"
offerings and test at least one other  non-card  sports  concept  during the new
year.

     Our international  sports business remains a significant  building block as
well. The Merlin Premier League Football (soccer) collection in the U.K. remains
one of our most important products  overseas.  Our second year of involvement in
Italian Football proved beneficial,  as we added a second collection and further
established our presence in the market.  We will continue to seek  opportunities
to license and market  other sports  collections  featuring  athletes  overseas.

Entertainment Products
More focus, more profits...

     The market for entertainment cards and collections remained relatively weak
this year, with only the strongest properties performing acceptably.  This being
the case,  our strategy of exercising  extreme  selectivity  about our offerings
proved  to be all  the  more  important.  In  America  we  marketed  just  three
properties  this  year --  Xena,  X-Files,  and WCW  wrestling.  All  were  well
received,  which led to  higher  margins  and more  profits  from  entertainment
products.  Overseas we cut down significantly on our entertainment offerings and
improved profitability,  although in certain instances we strayed a bit from our
strategy  and paid the price.  We also  suspended  operations  of our comic book
business, as we found no sustainable  opportunities there. On the other hand, we
stand  ready  (and able) to jump back in when  market  conditions  improve.

     The general weakness in the entertainment market  notwithstanding,  our new
year could be an exciting one as we begin  marketing  merchandise  featuring the
new Star Wars movie,  "Episode I: The Phantom  Menace," under  domestic  trading
card  and  international  sticker/album  licenses.  This is  probably  the  most
anticipated  movie  of all  time,  and  should  translate  well  to our  picture
products.

     As announced  recently,  we are also  planning to market  trading cards and
lollipops  featuring  "Pokemon,"  a  hot  children's  property.  Even  with  our
enthusiasm for these properties,  we continue to believe a selective approach is
appropriate,  and  intend to keep a tight  rein on our  roster of  entertainment
products both here and abroad.


                                       2
<PAGE>

Confectionery
More distribution, more new products, more value, more fun...

     The Company's confectionery business had a fine year. In the U.S., our core
lollipop brands,  Ring Pop and Push Pop,  achieved double digit growth rates and
are among the  nation's  best  selling  premium  lollipops.  Our brands  grew in
vitality  among  consumers as we  introduced  new flavors and new  packaging and
invested in advertising support. Both Ring Pop and Push Pop achieved substantial
distribution  gains as well. We completed our  transition  this year to a broker
sales  force and did a better  job  managing  it which,  combined  with  product
improvements, enticed more outlets to carry our products. Internationally,  Push
Pop in  particular  is a powerful  brand that we sold in thirty  countries  last
year,  seven of which were new to the product.

     We made more progress on the new product front also.  Topps Baby Bottle Pop
gave  an  excellent  account  for  itself  at  home  and  abroad.  According  to
independent  retail audit data,  Baby Bottle Pop was the year's most  successful
new lollipop  brand in convenience  stores in America.  We are excited about the
long term  prospects  for this  brand,  and plan to support  its  future  with a
multi-national  advertising  program.  We also introduced Flip Pop,  another new
lollipop  brand,  which was  received  especially  well  overseas.

     Our  Bazooka  business  had some  interesting  developments  as well,  most
notably the introduction of Bazooka Pops, a major brand extension  targeting the
large  bubble gum filled  lollipop  segment.  Who better to shake up this market
than Bazooka Joe?  Bazooka Pops enjoyed  outstanding  pre-market  consumer  test
results, and initial trade acceptance on sell-in is promising. This product is a
good example of the Company's  "more" theme -- giving  consumers  more value and
variety  (two pops per  pack),  more fun  (comics  on every  wrapper),  and more
quality  (Bazooka  gum  inside).

     Next  year,  the  Company  expects to  continue  building  momentum  in its
confectionery  business.  Product enhancements will include the addition of real
fruit  juice  to some of our  lollipop  formulas,  changes  in  flavors  and new
packaging.  We will increase and improve our advertising support,  with exciting
new creative  executions for Push Pop, Ring Pop and Bazooka Pop.  Innovative new
products will be introduced, such as Triple Power Push Pop and Treasure Pop, and
our all-out drive to expand  distribution will continue  unabated.  In sum, this
should be an eventful year in  confections.

Operations
More efficiency, more savings, more service to customers...

     The  operations  group had a banner year,  with success in many areas.  The
Company  realized  savings in  purchased  materials  through  improved  supplier
management,  bundling of products and longer-term commitments.  Obsolescence was
reduced  to  record  low  levels  through  better  sku  management  and  further
refinement of our  make-to-order  system. A revamped,  more streamlined  process
lowered product  development costs as well. Our inventory  management system was
made more efficient, leaving us with lower stock levels on hand, hence more cash
in the bank and fresher  products in stores.  We also made  progress in reducing
warehousing and shipping costs.


                                       3
<PAGE>

     An important part of customer service is on-time accurate shipments. We set
ambitious  goals for ourselves in this area and achieved them by more  carefully
managing every step of the logistics  process.  Our trading card performance was
close to 100% on-time ship. Confectionery  performance was excellent as well, as
we improved our average  shipping time by a full 10 days.  Pardon the boast, but
these and a variety of other actions exemplify the strength and determination of
our entire  organization  as it exists  today.

The Future
More growth, more stockholder value...

     To  build on this  year's  progress,  the  Company  will  focus on some key
strategies.  Leading the charge is continued core brand development.  Our brands
are the heart and soul of this  business,  and building and  supporting  them is
paramount.  At the same time,  we want to  introduce  brand  extensions  and new
products  that excite  consumers.  We will remain in our areas of expertise  but
stretch the boundaries through innovation and application of considerable skills
available to us inside and outside the Company.  It is also  imperative  that we
continue to expand the number of outlets  which carry our  products,  convincing
them to do so through creative marketing and merchandising  programs which don't
just look good,  but that work.

     The  Company  will also  continue  to explore  and  invest in new  business
opportunities,  either  through  internal  development  or  acquisition.  To the
latter,  we are constantly on the lookout for things that fit with our knitting,
but to date have not found an  appropriate  match.

     Finally,  rest  assured,  the existence of the internet has not escaped our
attention.  We are working to identify the best means of productively  combining
its explosive  potential with our unique corporate  profile.  It is our hope and
intention  to  begin  some  purposeful  form of  implementation  of an  internet
initiative  this coming  fiscal year.

     In closing,  we thank the Topps  family of employees  everywhere  for their
dedication and commitment to making good things happen.  On behalf of the entire
organization, we also thank our customers, licensors, stockholders and suppliers
for their valued support.

                                Arthur T. Shorin

                Chairman, Chief Executive Officer and President



Edward P. Camp           Michael J. Drewniak          Ira Friedman
Catherine K. Jessup      William G. O'Connor          Ronald L. Boyum
Michael P. Clancy        Leon J. Gutmann              John Perillo
Scott Silverstein

                      OFFICERS OF THE TOPPS COMPANY, INC.

                                       4
<PAGE>



Table of Contents



                                                                            Page


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


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


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


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


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


Report of Independent Public Accountants......................................30


Market & Dividend Information.................................................31


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


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


                                       5
<PAGE>


Financial Highlights
<TABLE>
<CAPTION>
                                                                                                Year Ended
------------------------------------------------------------------------------------------------------------------------------------
                                                                                February              February                March
                                                                                27, 1999              28, 1998              1, 1997
------------------------------------------------------------------------------------------------------------------------------------
                                                                                (In thousands of dollars, except share data)
<S>                                                                             <C>                   <C>                  <C>

Net sales                                                                      $ 229,414             $ 241,250            $ 268,975
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations                                                     26,658                (2,020)             (14,475)
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                                 15,571                (4,572)             (10,943)
------------------------------------------------------------------------------------------------------------------------------------
Cash provided (used) by operations                                                29,522                   (62)              12,707
------------------------------------------------------------------------------------------------------------------------------------
Working capital                                                                   24,919                20,971               18,716
------------------------------------------------------------------------------------------------------------------------------------
Total debt                                                                        15,783                30,950               34,950
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                                              77,224                61,609               68,052
------------------------------------------------------------------------------------------------------------------------------------
Per share data - basic:
  Net income (loss)                                                                 0.34                 (0.10)               (0.23)
------------------------------------------------------------------------------------------------------------------------------------
  Book value                                                                      $ 1.66                $ 1.33               $ 1.45
------------------------------------------------------------------------------------------------------------------------------------

Weighted average shares outstanding - basic                                     46,414,960          46,421,301           46,928,369
------------------------------------------------------------------------------------------------------------------------------------

Income (loss) from operations includes certain  non-recurring items in each year
presented above. See Note 2.
</TABLE>
                                       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:
<TABLE>


                                                                                                Year Ended
---------------------------------------------------------------------------------------------------------------------------
                                                                                 February         February           March
                                                                                 27, 1999         28, 1998         1, 1997
---------------------------------------------------------------------------------------------------------------------------
                                                                                          (In thousands of dollars)
<S>                                                                              <C>              <C>             <C>
Collectible sports products                                                     $ 124,855        $ 140,588       $ 144,015
---------------------------------------------------------------------------------------------------------------------------
Entertainment products                                                              9,321           16,137          34,917
---------------------------------------------------------------------------------------------------------------------------
Confectionery                                                                      95,238           84,525          90,043
---------------------------------------------------------------------------------------------------------------------------
     Total                                                                      $ 229,414        $ 241,250       $ 268,975
---------------------------------------------------------------------------------------------------------------------------

</TABLE>

Fiscal 1999 Versus 1998*

In 1999,  the Company's net sales  decreased  4.9% to $229.4 million from $241.3
million.  This was the  result of lower  sales of both  collectible  sports  and
entertainment  products which were only partially  offset by increased  sales of
confectionery products.

Net sales of collectible sports products, which consist of both sports cards and
sports  sticker/album  products,  decreased 11.2% from $140.6 million in 1998 to
$124.9  million  in 1999.  This  decrease  was the result of the  prolonged  NBA
lockout  and,  to a lesser  extent,  a  decline  in sales of U.K.  sticker/album
products.  Partially  offsetting  these declines were increases in sales of U.S.
baseball  and football  cards and the  Company's  re-introduction  of NHL hockey
cards this year.  Collectible  sports products accounted for 54% of consolidated
net sales of the Company in 1999, versus 58% in 1998.

Net sales of entertainment products, which consist of entertainment cards, comic
books,  magazines and the Merlin line of entertainment  sticker/album  products,
decreased  42.2% from $16.1  million in 1998 to $9.3  million in 1999.  This was
primarily  the  result of the  Company's  decision  to reduce  its  emphasis  on
entertainment  sticker/album  products and comics.  U.S. sales of  entertainment
cards increased however, as a result of the introduction of WCW wrestling cards.
Sales of  entertainment  products  accounted for 4% of consolidated net sales of
the Company in 1999, compared with 7% in 1998.

Net sales of confectionery  products,  which include among other things, Bazooka
brand bubble gum and Ring Pop, Push Pop and Baby Bottle Pop lollipops, increased
12.7% in 1999 to $95.2 million from $84.5  million in 1998.  This growth was the
result of the roll out of Baby Bottle Pop and Flip Pop,  the  expansion  of Push
Pop in Brazil and stronger sales of our core lollipop  brands--Ring Pop and Push
Pop in the U.S. The Company's  confectionery business accounted for 42% of total
1999 net sales, compared with 35% in 1998.

Consolidated  gross  profit as a percentage  of net sales  increased to 41.3% in
1999 from 33.0% in 1998. This margin improvement  resulted,  in part, from lower
royalty  payments due to an increase in the  percentage of  non-royalty  bearing
confectionery  sales as well as the  absence  of  minimum  guarantee  shortfalls
experienced in 1998 on U.S.  basketball and Brazilian  sticker  products.  Gross
profit margins also benefited from reduced  material,  product  development  and
obsolescence costs in the U.S.

Royalties  and other income  increased to $676,000 in 1999 from $390,000 in 1998
largely as the result of income received from an insurance settlement and a U.K.
tax refund.

Selling, general and administrative expenses ("SG&A") decreased to $72.3 million
or 31.5% of sales in 1999 from $78.4 million or 32.5% in 1998. This decrease was
largely the result of the  headcount and cost  reductions  put into place at the
end of 1998. A reduction in U.S. marketing expenses  previously  required by one
of the  Company's  sport  licenses  as well as lower  advertising  agency  fees,
combined with reduced  marketing  costs in Europe (due to the de-emphasis of the
entertainment business), also resulted in lower SG&A.

----------------------------------
*Unless otherwise indicated, all date references to 1999, 1998 and 1997 refer to
the fiscal years ended  February 27, 1999,  February 28, 1998 and March 1, 1997,
respectively.

                                       7
<PAGE>



Results for 1999 include  non-recurring income of $3.5 million from gains on the
sale  of the  Irish  plant  as  well as on the  sales  of  manufacturing-related
equipment  in Ireland and the U.S.  1998  results  reflect a  non-recurring  net
expense of $3.7  million.  This consists of severance and other costs related to
both the 1998 headcount reductions and the closure of the Irish plant, offset by
income from the reversal of a plant closure reserve set up in 1997.

Net interest expense decreased to $454,000 in 1999 from $1.6 million in 1998 due
to a reduction in the Company's outstanding loan balance and an increase in cash
balances.

The effective tax rate of 40.6% in 1999 reflects  provisions for federal,  state
and local income taxes in accordance with statutory  income tax rates.  The 1998
effective  tax rate of (26.8)%  was a function  of the  Company's  inability  to
recognize tax benefits on certain foreign losses.

Net income was $15.6  million,  or $0.34 per share in 1999  versus a net loss of
$(4.6) million, or $(0.10) per share in 1998.  Excluding  non-recurring items in
both years, net income from operations in 1999 would have been $13.3 million, or
$0.29 per share,  versus a net loss of $(2.3)  million,  or $(0.05) per share in
the prior year.



Fiscal 1998 Versus 1997

In 1998, net sales decreased  10.3% to $241.3 million from $269.0  million.  The
decrease  was the  result  of lower  sales in all  three  of the  Company's  key
business segments.

Net sales of  collectible  sports  products  decreased 2.4% to $140.6 million in
1998 from $144.0 million in 1997.  This decrease was  principally  the result of
lower sales of baseball card  products,  and to a lesser  extent,  the Company's
decision  not to  renew  its  NHL  licenses  on  terms  it  deemed  unfavorable.
Collectible sports products accounted for 58% of the Company's  consolidated net
sales in 1998 versus 54% in 1997.

Net sales of  entertainment  products  decreased  53.8% to $16.1 million in 1998
from $34.9  million  in 1997.  Revenues  versus  the prior year were  negatively
impacted by weakness in the entertainment card and sticker/album  markets in the
U.S. and Europe.  Entertainment  products  accounted for 7% of consolidated  net
sales of the Company in 1998 versus 13% in 1997.

Net sales of confectionery products decreased 6.1% in 1998 to $84.5 million from
$90.0  million in 1997.  This  decrease was the result of lower sales of Bazooka
bubble gum in the U.S. and  lollipops  in Europe.  Baby Bottle Pop and Flip Pop,
which  were  introduced  in the  fourth  quarter  of  fiscal  1998,  contributed
positively  to year  over  year  sales.  The  Company's  confectionery  business
accounted for 35% of total 1998 net sales, compared with 33% in 1997.

Gross profit as a percentage of net sales  decreased to 33.0% in 1998 from 33.5%
in 1997. This decrease in gross profit resulted from higher product costs in the
U.S. and Ireland.  The Company benefited during the year from savings related to
the December 1996 closure of the Duryea, Pennsylvania manufacturing facility.

The decrease in royalties and other income and expense from $2.7 million in 1997
to $390,000 in 1998, was in part the result of the  termination of the Company's
Canadian  licensee  in March  1997 (due to the  Company's  decision  to  conduct
business  directly in Canada),  the  recognition of foreign  exchange  losses in
Europe and Latin  America and the absence of a one-time  benefit from  royalties
received in 1997 relating to the sale of Mars Attacks products.

Selling,  general and  administrative  expenses increased as a percentage of net
sales to 32.5% in 1998 from 28.2% in 1997.  The  increase in 1998 was  primarily
the result of costs  associated with the startup of operations in Latin America,
the impact of inflation on overhead costs and higher promotional spending in the
U.S., particularly with respect to sports card autograph programs.

Fiscal 1998 results  include a net  non-recurring  charge of $3.7 million.  This
charge  consists of $3.4 million  related to headcount  reductions in the United
States and Europe,  $1.5  million  related to the  closure of the Cork,  Ireland
manufacturing  facility and $1 million of other costs.  The 1998 net charge also
includes a $2.2 million  benefit from the reversal of the plant closure  reserve
set up in fiscal 1997. 1997 results  include a charge of $30.0 million  relating
to the  closure of the  Duryea,  Pennsylvania  manufacturing  facility  and $1.4
million for the impairment of long-lived assets at the Cork,  Ireland factory in
compliance with Statement No. 121 of the Financial Accounting Standards Board.

The effective tax rate of (26.8%) in 1998 reflects provisions for federal, state
and local income taxes in accordance  with statutory  income tax rates and was a
function of the Company's inability to recognize tax benefits on certain foreign
losses.


                                       8
<PAGE>

Net loss decreased to $(4.6) million,  or $(0.10) per share in 1998 from $(10.9)
million,   or  $(0.23)  per  share  in  1997.   Excluding  severance  and  other
non-recurring  items and the  plant-related  charges/benefit  in both years, net
income  (loss)  would have been  $(2.3)  million,  or $(0.05)  per share in 1998
versus $9.5 million, or $0.20 per share in 1997.


Quarterly Comparisons

Management believes that  quarter-to-quarter  comparisons of sales and operating
results are affected by a number of fluctuating factors, including the timing of
product   introductions  and  variations  in  shipping  and  factory  scheduling
requirements. Thus, annual sales and earnings amounts are unlikely to consist of
equal  quarterly  portions.  See  Note 16 of  Notes  to  Consolidated  Financial
Statements.



Inflation

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



Liquidity and Capital Resources

In July 1995,  the Company  entered into a $65 million  credit  agreement with a
syndicate of eight banks in order to finance the  acquisition  of Topps  Europe,
Ltd., formerly known as Merlin Publishing,  Ltd. ("Topps Europe") and to provide
for  working  capital  and  letter of credit  needs.  In May 1998,  the  Company
refinanced  this facility with Chase  Manhattan  Bank. The new credit  agreement
included a term loan in the aggregate amount of $25.0 million (which was used to
repay the prior loan) and a $9.5 million  facility to cover letter of credit and
revolver  needs.  The letter of credit and revolver  facility  was  increased to
$12.5 million in February 1999.  Both the term loan and the letter of credit and
revolver  facility expire on July 6, 2000. The credit  agreement is secured by a
pledge  of the  Company's  domestic  trademarks  and 65% of the  stock  of Topps
Europe.  Beginning June 1998,  interest rates on $10 million of the  outstanding
principal  of the loan are fixed for one year as a result  of an  interest  rate
swap and are, therefore, a function of interest rates at the commencement of the
swap  transaction.  Interest  rates on the balance of the  outstanding  loan are
variable and a function of short-term  indices.  The credit  agreement  contains
restrictions  and prohibitions of a nature generally found in loan agreements of
this type and requires the Company,  among other things,  to comply with certain
financial  covenants,  limits the Company's ability to sell or acquire assets or
borrow  additional  money  and  prohibits  the  payment  of  dividends  and  the
acquisition of treasury stock.

As of  February  27,  1999,  the Company  had $41.7  million in cash,  and $15.8
million in debt under the term loan.

During 1999, the Company's net increase  (decrease) in cash and cash equivalents
was $19.6  million  versus  $(2.0)  million  in 1998.  Cash flow from  operating
activities in 1999 was $29.5 million versus $(62,000) last year,  primarily as a
result of the higher net income,  income tax refunds in the U.S.  and Europe and
lower fourth  quarter  receivables in 1999 resulting from the impact on sales of
the NBA lockout and a smaller European  sticker/album  business.  Cash flow from
investing  activities  this year reflects $5.8 million in proceeds from sales of
the plant in Cork, Ireland and equipment from both the Cork, Ireland and Duryea,
Pennsylvania  plants.  In 1998,  the Company  received  proceeds  totaling  $4.3
million  primarily  from  the  sale of the  manufacturing  facility  in  Duryea,
Pennsylvania.  Cash flow from  financing  activities  reflects  debt payments of
$15.2  million this year versus debt  payments net of borrowings of $4.0 million
and share repurchases of $523,000 in 1998.

Management  believes  that the  Company has  adequate  means to meet its working
capital, capital expenditure,  interest and principal repayment requirements for
the foreseeable future.



Year 2000

The Year 2000 issue is the result of computer  programs using only two digits to
identify a year in the date field. If not corrected,  many systems could fail or
create  erroneous  results on January 1, 2000 by reading  the date as January 1,
1900.  Failure  to  fix  this  problem  could  result  in  systems  failures  or
miscalculations leading to disruption in the Company's operations.

The Company began work on Year 2000 issues in 1996. As of February 27, 1999, all
of the Company's  mainframe  programs have been reviewed for  compliance.  Where


                                       9
<PAGE>


necessary, programs are being fixed, tested and put into production. The Company
is also in the  process of  addressing  the needs of all other  systems  such as
personal  computers,  customer and vendor systems,  telephone  systems and other
electronic hardware.

Year 2000 compliance costs have not and are not expected to significantly affect
the financial condition or results of operations of the Company.

The Company  expects that its essential  systems and business  functions will be
Year 2000 compliant in all material respects in a timely manner.  Given that the
Company's fiscal Year 2000 began on February 28, 1999, many essential  operating
systems have already proven to be Year 2000 compliant. The remaining systems are
in the process of being  reviewed  and  tested.  In a worst case  scenario,  the
Company believes that its essential processes could be handled manually.

The  company has  contacted  key  vendors,  customers  and other  third  parties
regarding their Year 2000 readiness.  Although no issues have been identified to
date, the Company will continue to monitor these  relationships and will develop
contingency plans for dealing with risks, if necessary.



Accounting Changes

During 1998, the FASB approved Statement of Position No. 98-5, "Reporting on the
Costs of  Start-Up  Activities"  ("SOP No.  98-5")  which  requires  that  costs
previously  capitalized as start-up costs be expensed as incurred.  SOP No. 98-5
becomes  effective  for fiscal years  beginning  after  December 15, 1998,  with
earlier application  encouraged.  During 1998, the FASB also issued Statement of
Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
Instruments  and  Hedging   Activities"  and  SFAS  No.  134,   "Accounting  for
Mortgage-Backed Securities." Management does not expect the adoption of SOP 98-5
or SFAS No. 134 to have a material effect, if any, on the financial condition or
results of operations of the Company and has not yet determined  the effect,  if
any,  of SFAS No.  133 on the  financial  condition,  results of  operations  or
additional disclosures of the Company.



                                       10
<PAGE>

Consolidated Statements of Operations

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

<TABLE>
<CAPTION>
                                                                                              Year Ended
-----------------------------------------------------------------------------------------------------------------------------
                                                                                February          February             March
                                                                                27, 1999          28, 1998           1, 1997
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>              <C>               <C>
Net sales                                                                      $ 229,414         $ 241,250         $ 268,975
-----------------------------------------------------------------------------------------------------------------------------
Cost of sales                                                                    134,623           161,541           178,854
-----------------------------------------------------------------------------------------------------------------------------
     Gross profit on sales                                                        94,791            79,709            90,121
-----------------------------------------------------------------------------------------------------------------------------
Royalties and other income                                                           676               390             2,728
-----------------------------------------------------------------------------------------------------------------------------
                                                                                  95,467            80,099            92,849
-----------------------------------------------------------------------------------------------------------------------------
Selling, general and administrative expenses                                      72,288            78,437            75,974
-----------------------------------------------------------------------------------------------------------------------------
Non-recurring expenses (income)                                                   (3,479)            3,682            31,350
-----------------------------------------------------------------------------------------------------------------------------
     Income (loss) from operations                                                26,658            (2,020)          (14,475)
-----------------------------------------------------------------------------------------------------------------------------
Interest expense, net                                                                454             1,585             1,942
-----------------------------------------------------------------------------------------------------------------------------
     Income (loss) before provision (benefit)
        for income taxes                                                          26,204            (3,605)          (16,417)
-----------------------------------------------------------------------------------------------------------------------------
Provision (benefit) for income taxes                                              10,633               967            (5,474)
-----------------------------------------------------------------------------------------------------------------------------
     Net income (loss)                                                          $ 15,571          $ (4,572)        $ (10,943)
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share - basic                                               $ 0.34           $ (0.10)          $ (0.23)
                            - diluted                                             $ 0.33           $ (0.10)          $ (0.23)
-----------------------------------------------------------------------------------------------------------------------------
</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>

                                                                                February                 February
                                                                                27, 1999                 28, 1998
<S>                                                                             <C>                     <C>
------------------------------------------------------------------------------------------------------------------
                                     ASSETS
------------------------------------------------------------------------------------------------------------------
Current assets:
------------------------------------------------------------------------------------------------------------------
     Cash and cash equivalents                                                  $ 41,728                 $ 22,153
------------------------------------------------------------------------------------------------------------------
     Accounts receivable, less allowance for doubtful accounts
        of $1,137 (1999) and $1,161 (1998)                                        29,118                   49,727
------------------------------------------------------------------------------------------------------------------
     Inventories                                                                  16,221                   16,613
------------------------------------------------------------------------------------------------------------------
     Income tax receivable                                                           269                    6,829
------------------------------------------------------------------------------------------------------------------
     Deferred tax assets                                                           1,342                    2,792
------------------------------------------------------------------------------------------------------------------
     Prepaid expenses and other current assets                                     4,860                    3,821
------------------------------------------------------------------------------------------------------------------
          Total current assets                                                    93,538                  101,935
------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net                                                 7,429                   10,148
------------------------------------------------------------------------------------------------------------------
Inangible assets                                                                  60,207                   62,825
------------------------------------------------------------------------------------------------------------------
Other assets                                                                       2,908                    3,498
------------------------------------------------------------------------------------------------------------------
Total assets                                                                   $ 164,082                $ 178,406
------------------------------------------------------------------------------------------------------------------
                      LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------
Current liabilities:
------------------------------------------------------------------------------------------------------------------
     Accounts payable                                                           $ 15,022                 $ 23,144
------------------------------------------------------------------------------------------------------------------
     Accrued expenses and other liabilities                                       38,051                   48,322
------------------------------------------------------------------------------------------------------------------
     Income taxes payable                                                          4,921                    1,165
------------------------------------------------------------------------------------------------------------------
     Current portion of long-term debt                                            10,625                    8,333
------------------------------------------------------------------------------------------------------------------
          Total current liabilities                                               68,619                   80,964
------------------------------------------------------------------------------------------------------------------
Long-term debt, less current portion                                               5,158                   22,617
------------------------------------------------------------------------------------------------------------------
Deferred income taxes                                                              5,143                    6,864
------------------------------------------------------------------------------------------------------------------
Other liabilities                                                                  7,938                    6,352
------------------------------------------------------------------------------------------------------------------
          Total liabilities                                                       86,858                  116,797
------------------------------------------------------------------------------------------------------------------
Commitments (See note 17)
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 47,515,760 in 1999 and 47,502,510 in 1998                    475                      475
------------------------------------------------------------------------------------------------------------------
     Additional paid-in capital                                                   16,841                   16,812
------------------------------------------------------------------------------------------------------------------
     Treasury stock, 1,102,500 shares in 1999 and 1998                            (8,881)                  (8,881)
------------------------------------------------------------------------------------------------------------------
     Retained earnings                                                            69,775                   54,204
------------------------------------------------------------------------------------------------------------------
     Accumulated other comprehensive income                                         (986)                  (1,001)
------------------------------------------------------------------------------------------------------------------
          Total stockholders' equity                                              77,224                   61,609
------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                                     $ 164,082                $ 178,406
------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.

                                       12
<PAGE>

Consolidated Statements of Cash Flows

The Topps Company, Inc. and Subsidiaries
(In thousands of dollars)
<TABLE>
<CAPTION>

                                                                                           Year Ended
-------------------------------------------------------------------------------------------------------------------------
                                                                                February        February        March
                                                                                27, 1999        28, 1998        1, 1997
-------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>               <C>            <C>

  Net income (loss)                                                            $ 15,571          $ (4,572)       (10,943)
-------------------------------------------------------------------------------------------------------------------------
   Add (subtract) non-cash items included in income:
-------------------------------------------------------------------------------------------------------------------------
        Plant closure reserve                                                       -                 -           30,000
-------------------------------------------------------------------------------------------------------------------------
        Impairment loss                                                             -                 -            1,350
-------------------------------------------------------------------------------------------------------------------------
        Gain on sale of property, plant and equipment                            (3,209)           (1,317)           -
-------------------------------------------------------------------------------------------------------------------------
        Depreciation and amortization                                             4,871             4,374          5,245
-------------------------------------------------------------------------------------------------------------------------
        Deferred taxes on income                                                   (271)            7,182        (11,705)
-------------------------------------------------------------------------------------------------------------------------
   Net effect of changes in:
-------------------------------------------------------------------------------------------------------------------------
        Receivables                                                              20,609            10,049        (16,419)
-------------------------------------------------------------------------------------------------------------------------
        Inventories                                                                 392             2,568          8,707
-------------------------------------------------------------------------------------------------------------------------
        Income tax receivable                                                     6,560            (3,928)           107
-------------------------------------------------------------------------------------------------------------------------
        Prepaid expenses and other current assets                                (1,039)            5,188          2,256
-------------------------------------------------------------------------------------------------------------------------
        Payables and other current liabilities                                  (14,637)          (19,710)         3,319
-------------------------------------------------------------------------------------------------------------------------
        Other                                                                       675               104            790
-------------------------------------------------------------------------------------------------------------------------
             Cash provided (used) by operating activities                        29,522               (62)        12,707
-------------------------------------------------------------------------------------------------------------------------
 Cash flows from investing activities:
-------------------------------------------------------------------------------------------------------------------------
   Proceeds from disposition of property, plant and equipment                     5,770             4,315            -
-------------------------------------------------------------------------------------------------------------------------
   Additions to property, plant and equipment                                      (579)           (1,776)        (1,074)
-------------------------------------------------------------------------------------------------------------------------
             Cash provided (used) by investing activities                         5,191             2,539         (1,074)
-------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
-------------------------------------------------------------------------------------------------------------------------
   Proceeds from borrowing                                                          -             6,000              -
------------------------------------------------------------------------------------------------------------------------
   Reduction of debt                                                            (15,167)          (10,000)        (9,350)
-------------------------------------------------------------------------------------------------------------------------
   Exercise of employee stock options                                                29                 -              -
-------------------------------------------------------------------------------------------------------------------------
   Purchase of treasury stock                                                       -              (523)          (2,238)
-------------------------------------------------------------------------------------------------------------------------
             Cash provided (used) by financing activities                       (15,138)           (4,523)       (11,588)
-------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                                                  19,575            (2,046)            45
-------------------------------------------------------------------------------------------------------------------------
Cash at beginning of year                                                        22,153            24,199         24,154
-------------------------------------------------------------------------------------------------------------------------
Cash at end of year                                                            $ 41,728          $ 22,153       $ 24,199
-------------------------------------------------------------------------------------------------------------------------

Interest paid                                                                   $ 2,237           $ 3,260        $ 2,605
-------------------------------------------------------------------------------------------------------------------------
Income taxes paid                                                               $ 7,423           $ 3,354        $ 7,811
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.


                                       13
<PAGE>


Consolidated Statements of Stockholders'
     Equity and Comprehensive Income


The Topps Company, Inc. and Subsidiaries
(In thousands of dollars)
<TABLE>
<CAPTION>



                                                                 Additional                                            Other
                                                     Common      Paid-in        Treasury            Retained           Comprehensive
                                        Total        Stock       Capital        Stock               Earnings           Income
------------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>         <C>            <C>                <C>                  <C>


Balance at March 2, 1996             $  81,8850    $ 475       $ 16,812       $ (6,120)           $ 69,719             $ 964
------------------------------------------------------------------------------------------------------------------------------------

Comprehensive income (loss):
Net income (loss)                       (10,943)                                                   (10,943)
------------------------------------------------------------------------------------------------------------------------------------
Translation adjustment                     (727)      -             -             -                    -                (727)
------------------------------------------------------------------------------------------------------------------------------------
Minimum pension liability
adjustment                                  110       -             -             -                    -                 110
------------------------------------------------------------------------------------------------------------------------------------
  Total comprehensive income (loss)     (11,560)      -             -             -                (10,943)             (617)
------------------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock               (2,238)      -             -           (2,238)                -                  -
------------------------------------------------------------------------------------------------------------------------------------
Balance at March 1, 1997                 68,052      475         16,812         (8,358)             58,776               347
------------------------------------------------------------------------------------------------------------------------------------

Comprehensive income (loss):
Net income (loss)                        (4,572)      -             -              -                (4,572)               -
------------------------------------------------------------------------------------------------------------------------------------
Translation adjustment                   (1,348)      -             -              -                   -              (1,348)
------------------------------------------------------------------------------------------------------------------------------------
  Total comprehensive income (lo         (5,920)      -             -              -                (4,572)           (1,348)
------------------------------------------------------------------------------------------------------------------------------------
Purchase of treasury stock                 (523)      -             -             (523)                -                 -
------------------------------------------------------------------------------------------------------------------------------------
Balance at February 28, 1998             61,609      475         16,812         (8,881)             54,204            (1,001)
------------------------------------------------------------------------------------------------------------------------------------

Comprehensive income:
Net income                               15,571       -             -              -                15,571               -
------------------------------------------------------------------------------------------------------------------------------------
Translation adjustment                       15       -             -              -                   -                  15
------------------------------------------------------------------------------------------------------------------------------------

  Total comprehensive income             15,586       -             -              -                15,571                15
------------------------------------------------------------------------------------------------------------------------------------
Exercise of employee stock
options                                      29       -              29            -                   -                 -
------------------------------------------------------------------------------------------------------------------------------------

Balance at February 27, 1999           $ 77,224    $ 475       $ 16,841       $ (8,881)           $ 69,775            $ (986)
------------------------------------------------------------------------------------------------------------------------------------
</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  Company  and its  subsidiaries.  All  intercompany  items  and
transactions have been eliminated in consolidation.

The Company and its  subsidiaries  have fiscal  years which end on the  Saturday
closest to the end of  February.  Financial  results  for the fiscal  year ended
February  28,  1998,  reflect  a change  in Topps  Europe's  fiscal  year end to
coincide with the parent company's and include thirteen months of Topps Europe's
operations.

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

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

Accounting  Changes:  During 1998,  the FASB approved  Statement of Position No.
98-5,  "Reporting  on the Costs of Start-Up  Activities"  ("SOP No. 98-5") which
requires  that costs  previously  capitalized  as start-up  costs be expensed as
incurred.  SOP No.  98-5  became  effective  for fiscal  years  beginning  after
December 15, 1998, with earlier  application  encouraged.  During 1998, the FASB
also issued SFAS No. 133,  "Accounting  for Derivative  Instruments  and Hedging
Activities"  and SFAS No.  134,  "Accounting  for  Mortgage-Backed  Securities."
Management  does not expect the  adoption  of SOP 98-5 or SFAS No. 134 to have a
material effect, if any, on the financial  condition or results of operations of
the Company and has not yet  determined  the effect,  if any, of SFAS No. 133 on
the financial condition,  results of operations or additional disclosures of the
Company.

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

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

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

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

Net  Sales:  Sales are  recorded  upon  shipment  of  products.  Sales made on a
returnable  basis are recorded net of a provision for estimated  returns.  These
estimates are revised,  as necessary,  to reflect  actual  experience and market
conditions.

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


                                       15
<PAGE>

NOTE 2 - NON-RECURRING ITEMS

Fiscal 1999's income from operations includes $3,479,000 of non-recurring income
from the sale of the Company's  manufacturing  facility in Cork, Ireland and the
sale of equipment related to plants in Cork, Ireland and Duryea, Pennsylvania.

Fiscal 1998  results  include a net  non-recurring  charge of  $3,682,000.  This
charge  consists of  $3,407,000  related to headcount  reductions  in the United
States  and  Europe,  $1,518,000  related to the  closure  of the Cork,  Ireland
manufacturing  facility and $1,004,000 of other costs.  The 1998 net charge also
includes a $2,247,000 benefit from the reversal of the plant closure reserve set
up in fiscal 1997.

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 $30,000,000 before
applicable income tax effects. The charge consisted of approximately $16,100,000
in  non-cash  write-offs  relating  to the  disposition  of factory  and related
equipment  and  approximately   $13,900,000  relating  to  severance  and  other
employee-related  costs,  costs to hold and sell the  factory and other costs of
the closure.

During the third  quarter of fiscal  1997,  the Company  recorded an  impairment
reserve  of  $1,350,000  in  accordance  with SFAS No.  121 with  respect to its
factory in Cork, Ireland.

Excluding these items in all years, net income (loss) from operations would have
been $13,326,000 or $0.29 per share in fiscal 1999,  $(2,288,000) or $(0.05) per
share in fiscal 1998 and $9,493,000 or $.20 per share in fiscal 1997.


NOTE 3 - EARNINGS PER SHARE

In the fourth quarter of fiscal 1998, the Company adopted the provisions of SFAS
No. 128,  "Earnings  Per Share." 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.  Because fiscal years ended 1998 and 1997 reflect losses, both basic and
diluted EPS for these years were  calculated  using the weighted  average shares
outstanding.

The following  table  represents  the  computation  of weighted  average  shares
outstanding - diluted:
<TABLE>
<CAPTION>


                                        Year ended
-----------------------------------------------------------------
                           February     February       March
                           27, 1999     28, 1998       1, 1997
-----------------------------------------------------------------
Weighted average
shares outstanding:
<S>                     <C>            <C>            <C>
Basic                    46,414,960     46,421,301     46,928,369
-----------------------------------------------------------------
Effect of dilutive
stock options               263,142         12,363           -
-----------------------------------------------------------------
Diluted                  46,678,102     46,433,664     46,928,369
-----------------------------------------------------------------
</TABLE>


                                       16
<PAGE>


<TABLE>
<CAPTION>
NOTE 4 - INVENTORIES
                                     February     February
                                     27, 1999     28, 1998
-----------------------------------------------------------
                                   (In thousands of dollars)
<S>                                  <C>           <C>

Raw materials                         $ 2,097      $ 1,794
-----------------------------------------------------------
Work in process                         1,020        1,619
-----------------------------------------------------------
Finished products                      13,104       13,200
-----------------------------------------------------------
     Total                           $ 16,221     $ 16,613
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NOTE 5 - PROPERTY, PLANT
AND EQUIPMENT, NET
                                      February    February
                                      27, 1999    28, 1998
-----------------------------------------------------------
                                  (In thousands of dollars)
<S>                                      <C>        <C>
Land                                      $ 42       $ 200
-----------------------------------------------------------
Buildings and improvements               2,030       3,718
-----------------------------------------------------------
Machinery and equipment                 10,973      10,633
-----------------------------------------------------------
     Total PP&E                         13,045      14,551
-----------------------------------------------------------
Accumulated depreciation                (5,616)     (4,403)
-----------------------------------------------------------
     Net                               $ 7,429    $ 10,148
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NOTE 6 - INTANGIBLE ASSETS
                                     February      February
                                     27, 1999      28, 1998
------------------------------------------------------------
                                   (In thousands of dollars)
<S>                                <C>            <C>
Value of sports,
entertainment and
proprietary products                 $ 36,635      $ 36,635
------------------------------------------------------------
Goodwill                               64,265        64,265
------------------------------------------------------------
Less: accumulated
amortization                          (40,693)      (38,075)
------------------------------------------------------------
     Net                             $ 60,207      $ 62,825
------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
NOTE 7 - ACCRUED EXPENSES
AND OTHER LIABILITIES
                                     February      February
                                     27, 1999      28, 1998
------------------------------------------------------------
                                    (In thousands of dollars)
<S>                                  <C>          <C>
Royalties                             $ 3,852      $ 12,351
------------------------------------------------------------
Employee compensation                   4,613           346
------------------------------------------------------------
Provision for estimated
losses on sales returns                12,629        19,258
------------------------------------------------------------
Plant closure, severance and
other non-recurring items                 762         3,260
------------------------------------------------------------
Payments received
in advance                              5,741         4,608
------------------------------------------------------------
Other                                  10,454         8,499
------------------------------------------------------------
     Total                           $ 38,051      $ 48,322
------------------------------------------------------------
</TABLE>





<TABLE>
<CAPTION>
NOTE 8 - DEPRECIATION AND AMORTIZATION

                                     Year Ended
--------------------------------------------------------------
                            February    February        March
                            27, 1999    28, 1998      1, 1997
--------------------------------------------------------------
                                (In thousands of dollars)
<S>                           <C>       <C>           <C>
Depreciation expense         $ 1,464     $ 1,099      $ 2,402
--------------------------------------------------------------
Amortization of
intangible assets              2,618       2,618        2,649
--------------------------------------------------------------
Amortization - other             789         657          194
--------------------------------------------------------------
     Total                   $ 4,871     $ 4,374      $ 5,245
--------------------------------------------------------------
</TABLE>
                                       17

<PAGE>

<TABLE>
<CAPTION>

NOTE 9 - LONG-TERM DEBT


                                     February      February
                                     27, 1999      28, 1998
------------------------------------------------------------
                                    (In thousands of dollars)
<S>                                 <C>           <C>
Term loan                            $ 15,783      $ 24,950
------------------------------------------------------------
Less: current portion                 (10,625)       (8,333)
------------------------------------------------------------
Revolver outstanding                        -         6,000
------------------------------------------------------------
     Total                            $ 5,158      $ 22,617
------------------------------------------------------------
</TABLE>

The scheduled repayment of the term loan is as follows:

<TABLE>
<CAPTION>

<S>                                               <C>

Fiscal year:                       (In thousands of dollars)
------------------------------------------------------------
2000                                               $ 10,625
------------------------------------------------------------
2001                                                  5,158
------------------------------------------------------------
     Total                                         $ 15,783
------------------------------------------------------------
</TABLE>


In May 1998, the Company  entered into a credit  agreement with Chase  Manhattan
Bank.  The credit  agreement  provided  for a  $24,950,000  term loan payable in
monthly  installments  and a  $9,450,000  facility to cover letter of credit and
working  capital needs.  The letter of credit and working  capital  facility has
since been  increased  to  $12,450,000.  The  facility  expires on July 6, 2000.
Amounts  outstanding  under the credit  agreement are secured by a pledge of the
Company's  domestic  trademarks  and 65% of the stock of Topps Europe.  Interest
rates on the term loan and  outstanding  revolving  credit  balance are based on
LIBOR  plus an  applicable  margin of  2.25%,  or prime.  Beginning  June  1998,
interest rates on $10 million of the outstanding principal of the loan are fixed
for one year as a result of an interest rate swap and are, therefore, a function
of  interest  rates at the  commencement  of the swap  transaction.  The  credit
agreement  contains certain  restrictions and prohibitions of a nature generally
found in loan  agreements  of this type and requires  the  Company,  among other
things, to comply with certain financial covenants, limits the Company's ability
to sell or acquire assets or borrow  additional  money and prohibits the payment
of dividends and the acquisition of treasury stock. As of February 27, 1999, the
Company had  outstanding  $15,783,000 on the term loan and $4,475,000 in letters
of credit.

NOTE 10 - INCOME TAXES

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

<TABLE>
<CAPTION>

                                    Year Ended
-------------------------------------------------------------
                          February      February       March
                          27, 1999      28, 1998     1, 1997
-------------------------------------------------------------
                              (In thousands of dollars)
<S>                        <C>          <C>         <C>

United States              $21,984       $ 4,083    $(21,622)
-------------------------------------------------------------
Europe                       2,424        (5,368)      5,492
-------------------------------------------------------------
Canada                       1,868           737         241
-------------------------------------------------------------
Latin America                  (72)       (3,057)       (528)
-------------------------------------------------------------
Total income (loss)
before provision
(benefit) for
income taxes               $26,204      $ (3,605)   $(16,417)
-------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

Provision (benefit) for income taxes consists of:


                                      Year Ended
------------------------------------------------------------
                            February     February     March
                            27, 1999     28, 1998   1, 1997
------------------------------------------------------------
                                (In thousands of dollars)
<S>                          <C>        <C>         <C>
Current income taxes:
Federal                      $ 6,655     $ (4,657)  $ 1,484
------------------------------------------------------------
Foreign                        2,250         (679)    3,501
------------------------------------------------------------
State and local                2,032         (293)      299
------------------------------------------------------------
   Total current              10,937       (5,629)    5,284
------------------------------------------------------------

Deferred income taxes:
Federal                          (79)       5,890    (9,289)
------------------------------------------------------------
State and local                 (225)         706    (1,469)
------------------------------------------------------------
   Total deferred               (304)       6,596   (10,758)
------------------------------------------------------------
   Total provision
   (benefit) for
   income taxes             $ 10,633        $ 967  $ (5,474)
------------------------------------------------------------
</TABLE>


                                       18
<PAGE>


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

<TABLE>
<CAPTION>

                                     Year Ended
-----------------------------------------------------------
                          February    February       March
                           7, 1999    28, 1998     1, 1997
-----------------------------------------------------------
                              (In thousands of dollars)
<S>                         <C>       <C>         <C>

Computed expected tax
provision (benefit)        $ 9,171    $ (1,262)   $ (5,746)
-----------------------------------------------------------
Increase (decrease) in
taxes resulting from:
     State and local taxes,
     net of federal tax
     benefit                 1,175         586        (668)
-----------------------------------------------------------
     Foreign and U.S. tax
     effects attributable to
     foreign operations       (578)      1,113         212
-----------------------------------------------------------
    Goodwill                   549         549         549
-----------------------------------------------------------
    Other permanent
    differences                316         (19)        179
-----------------------------------------------------------
    Provision (benefit)
    for income taxes      $ 10,633       $ 967    $ (5,474)
-----------------------------------------------------------

</TABLE>


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 February 27, 1999.  Deferred taxes previously
provided  on such  earnings  have  been  reversed  in the  current  year.  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.  The  cumulative  amount of  unremitted  earnings  from the  foreign
subsidiaries  that is expected to be permanently  reinvested  was  approximately
$4.6 million on February 27, 1999.








































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

<TABLE>
<CAPTION>

                                      Year Ended
----------------------------------------------------------
                            February   February     March
                            27, 1999   28, 1998   1, 1997
----------------------------------------------------------
                              (In thousands of dollars)
<S>                         <C>         <C>       <C>
Deferred income
tax assets:
    Provision for
    inventory
    obsolescence             $ 1,232        $ -       $ -
----------------------------------------------------------
    Provision for
    estimated losses
    on sales returns             110      2,792     3,489
----------------------------------------------------------
    Total deferred
    income tax
    assets                   $ 1,342    $ 2,792   $ 3,489
----------------------------------------------------------
Deferred income
tax liabilities:
    Depreciation               $ 224      $ 627     $ 814
----------------------------------------------------------
    Undistributed
    earnings - foreign
    subsidiaries                     -    1,422     1,184
----------------------------------------------------------
    Other                        657       (256)   (2,123)
----------------------------------------------------------
    Amortization               4,233      4,756     4,465
----------------------------------------------------------
    Non-recurring
    items                         29        315    (3,961)
----------------------------------------------------------
    Total deferred
    income tax
    liabilities              $ 5,143    $ 6,864     $ 379
----------------------------------------------------------
</TABLE>
                                       19
<PAGE>





NOTE 11 - EMPLOYEE BENEFIT PLANS


The FASB issued SFAS No. 132,  "Employers'  Disclosures about Pensions and Other
Postretirement  Benefits," in February  1998.  This new standard does not change
the  measurement or  recognition  of costs for pensions or other  postretirement
plans.  It  standardizes  disclosures  and  eliminates  those that are no longer
useful.  The information  provided below for fiscal 1999, 1998 and 1997 has been
presented under the requirements of the new standard.

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  $883,000  (1999),  $914,000  (1998)  and
$1,922,000 (1997).


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

<TABLE>
<CAPTION>
                                                                                                        Postretirement
                                                                      Pension Benefits               Healthcare Benefits
---------------------------------------------------------------------------------------------------------------------------
                                                                 February         February         February        February
                                                                 27, 1999         28, 1998         27, 1999        28, 1998
---------------------------------------------------------------------------------------------------------------------------
                                                                             (In thousands of dollars)
<S>                                                            <C>              <C>               <C>              <C>
Reconciliation of change in benefit obligation

Benefit obligation at beginning of year                        $ 20,839         $ 19,624          $ 6,239          $ 7,351
---------------------------------------------------------------------------------------------------------------------------
Service cost                                                        692              654              216              362
---------------------------------------------------------------------------------------------------------------------------
Interest cost                                                     1,513            1,480              443              579
---------------------------------------------------------------------------------------------------------------------------
Benefits paid                                                    (1,847)          (2,115)            (317)            (232)
---------------------------------------------------------------------------------------------------------------------------
Actuarial (gains) losses                                            515            1,196                -           (1,821)
---------------------------------------------------------------------------------------------------------------------------
Benefit obligation at end of year                              $ 21,712         $ 20,839          $ 6,581          $ 6,239
---------------------------------------------------------------------------------------------------------------------------


Reconciliation of change in the fair value
of plan assets

Fair value of plan assets at beginning of year                 $ 14,738         $ 15,442              $ -              $ -
---------------------------------------------------------------------------------------------------------------------------
Actual return on plan assets                                      2,053            1,295                -                -
---------------------------------------------------------------------------------------------------------------------------
Employer contributions                                               67              115              317              232
---------------------------------------------------------------------------------------------------------------------------
Benefits paid                                                    (1,847)          (2,114)            (317)            (232)
---------------------------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year                       $ 15,011         $ 14,738              $ -              $ -
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       20

<PAGE>

<TABLE>
<CAPTION>
                                                                                                       Postretirement
                                                                  Pension Benefits                  Healthcare Benefits
---------------------------------------------------------------------------------------------------------------------------
                                                               February         February         February         February
                                                               27, 1999         28, 1998         27, 1999         28, 1998
---------------------------------------------------------------------------------------------------------------------------
                                                                             (In thousands of dollars)
<S>                                                            <C>              <C>              <C>               <C>
Funded status

Funded status                                                  $ (6,701)        $ (6,101)        $ (6,581)        $ (6,239)
---------------------------------------------------------------------------------------------------------------------------
Unrecognized actuarial (gains) losses                             3,600            3,840             (771)            (782)
---------------------------------------------------------------------------------------------------------------------------
Unrecognized prior service cost                                    (143)            (158)               -                -
---------------------------------------------------------------------------------------------------------------------------
Unrecognized initial transition obligation                          612              809            3,437            3,658
---------------------------------------------------------------------------------------------------------------------------
Net amount recognized in the
consolidated balance sheets                                    $ (2,632)        $ (1,610)        $ (3,915)        $ (3,363)
---------------------------------------------------------------------------------------------------------------------------


Components of amounts recognized
in the consolidated balance sheets

Prepaid benefit cost                                              $ 908          $ 1,380              $ -              $ -
---------------------------------------------------------------------------------------------------------------------------
Accrued benefit liability                                        (3,557)          (3,063)          (3,915)          (3,363)
---------------------------------------------------------------------------------------------------------------------------
Intangible asset                                                     17               73                -                -
---------------------------------------------------------------------------------------------------------------------------
Net amount recognized in the
consolidated balance sheets                                    $ (2,632)        $ (1,610)        $ (3,915)        $ (3,363)
---------------------------------------------------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Postretirement
                                                  Pension Benefits                           Healthcare Benefits
------------------------------------------------------------------------------------------------------------------------------------
                                        February       February          March       February       February           March
                                        27, 1999       28, 1998        1, 1997       27, 1999       28, 1998         1, 1997
------------------------------------------------------------------------------------------------------------------------------------
                                                                       (In thousands of dollars)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>            <C>            <C>            <C>            <C>             <C>

Components of net periodic benefit cost

Service cost                               $ 692          $ 654          $ 720          $ 216          $ 362           $ 122
------------------------------------------------------------------------------------------------------------------------------------
Expected return on
plan assets                               (1,430)        (1,355)        (1,165)            -              -               -
------------------------------------------------------------------------------------------------------------------------------------
Amortization of
initial transition obligation                196             56             56            221            221             221
------------------------------------------------------------------------------------------------------------------------------------
Prior service cost                           (15)           (15)           (16)            -              -               -
------------------------------------------------------------------------------------------------------------------------------------
Actuarial (gains) losses                     132            (10)           117            (11)            18              38
------------------------------------------------------------------------------------------------------------------------------------
Curtailment (gains) losses                       -              -          (14)            -              -               -
------------------------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost                $ 1,088          $ 810        $ 1,150          $ 869        $ 1,180           $ 920
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       21

<PAGE>

<TABLE>
<CAPTION>

The non-qualified  pension plan has accumulated benefit obligations in excess of
plan assets. Information is as follows:
                                                                                               Pension Benefits
------------------------------------------------------------------------------------------------------------------------------------
                                                                                        February                 February
                                                                                        27, 1999                 28, 1998
------------------------------------------------------------------------------------------------------------------------------------
                                                                                         (In thousands of dollars)
<S>                                                                                      <C>                      <C>
Projected benefit obligation                                                             $ 4,462                  $ 3,639
------------------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation                                                             3,557                    3,063
------------------------------------------------------------------------------------------------------------------------------------
Fair value of plan assets                                                                    $ -                      $ -
------------------------------------------------------------------------------------------------------------------------------------



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


---------------------------------------------------------------------------------------------------------------------------
                                                                                        February                February
                                                                                        27, 1999                28, 1998
---------------------------------------------------------------------------------------------------------------------------
Discount rate                                                                             7.0%                    7.0%
---------------------------------------------------------------------------------------------------------------------------
Expected return on plan assets                                                            9.0%                    9.0%
---------------------------------------------------------------------------------------------------------------------------
Rate of compensation increase                                                             5.0%                    5.0%
---------------------------------------------------------------------------------------------------------------------------



Assumptions for healthcare  cost increases are as follows:  9.0% in fiscal 1998;
8.5% in fiscal 1999; 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                                           $ 110           $ (93)
---------------------------------------------------------------------------------------------------------------------------
On postretirement benefit obligation (APBO)                                            $ 831          $ (738)
---------------------------------------------------------------------------------------------------------------------------

</TABLE>
                                       22

<PAGE>


NOTE 12 - STOCK OPTION PLANS


The  Company  has  Stock   Options  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>

------------------------------------------------------------------------------------------------------------------------------------
                                           February 27, 1999            February 28, 1998              March 1, 1997
------------------------------------------------------------------------------------------------------------------------------------
                                                      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          3,604,000    $6.22          3,352,250     $7.90           3,241,750     $8.16
------------------------------------------------------------------------------------------------------------------------------------
Granted                                     527,500    $3.21          1,427,250     $2.47             188,000     $4.16
------------------------------------------------------------------------------------------------------------------------------------
Exercised                                   (13,250)   $2.22                  -       -                     -       -
------------------------------------------------------------------------------------------------------------------------------------
Forfeited                                  (255,750)   $7.39         (1,175,500)    $6.48             (77,500)    $9.47
------------------------------------------------------------------------------------------------------------------------------------
  Outstanding at end of year              3,862,500    $5.72          3,604,000     $6.22           3,352,250     $7.90
------------------------------------------------------------------------------------------------------------------------------------
Options exercisable at end of year        2,490,365    $7.03          1,811,241     $8.90           2,441,266     $8.40
------------------------------------------------------------------------------------------------------------------------------------
Weighted-average fair value of
 options granted during the year                 $1.62                        $1.43                         $2.28
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


Summarized  information  about stock  options  outstanding  and  exercisable  at
February 27, 1999 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                 2/27/99    Contractual Life        Price          2/27/99          Price
------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>                <C>              <C>            <C>              <C>
 $1.50   -    $3.00                 1,227,750         8.4               $2.28          539,625          $2.22
------------------------------------------------------------------------------------------------------------------------------------
 $3.01   -    $6.00                 1,240,000         7.4               $4.07          655,990          $4.80
------------------------------------------------------------------------------------------------------------------------------------
 $6.01   -   $12.00                 1,063,250         3.7               $8.62          963,250          $8.40
------------------------------------------------------------------------------------------------------------------------------------
$12.01   -   $18.00                   331,500         1.5              $15.28          331,500         $15.28
------------------------------------------------------------------------------------------------------------------------------------
                                    3,862,500         6.2               $5.72        2,490,365          $7.03
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                       23

<PAGE>


Effective  March 3, 1996,  the Company  adopted the  provisions of SFAS No. 123,
"Accounting for Stock-Based  Compensation." As permitted by this statement,  the
Company has chosen to continue to account for stock-based compensation using the
intrinsic value method. Accordingly, no compensation expense has been recognized
in the  Company's  Consolidated  Statements of  Operations  for its  stock-based
compensation  plans.  Had  compensation  costs been determined based on the fair
value of the 1999, 1998 and 1997 stock option grants  consistent with the method
of SFAS No.  123,"Accounting  for Stock-Based  Compensation,"  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>

                                     1999                           1998                          1997
--------------------------------------------------------------------------------------------------------------------------
                                                       (In thousands of dollars, except share data)
                                  As reported      Pro forma     As reported      Pro forma    As reported      Pro forma
--------------------------------------------------------------------------------------------------------------------------

<S>                                  <C>            <C>             <C>            <C>           <C>            <C>
Net income (loss)                    $ 15,571       $ 15,537        $ (4,572)      $ (4,881)     $ (10,943)     $ (11,637)
--------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per share              $ 0.34         $ 0.33         $ (0.10)       $ (0.11)       $ (0.23)       $ (0.25)
--------------------------------------------------------------------------------------------------------------------------
</TABLE>



In determining the preceding pro forma amounts under SFAS 123, the fair value of
each option  grant is  estimated  on the date of grant  using the  Black-Scholes
option pricing model with the following assumptions:  risk free interest rate of
6.7%;  expected  life of six years;  estimated  volatility  of 52%;  no dividend
yield.



NOTE 13 - CAPITAL STOCK


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



NOTE 14 - SEGMENT AND GEOGRAPHIC INFORMATION


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

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

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

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


                                       24

<PAGE>


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

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

<TABLE>
<CAPTION>

                                                                                                 Year Ended
----------------------------------------------------------------------------------------------------------------------------
                                                                                February          February             March
                                                                                27, 1999          28, 1998           1, 1997
----------------------------------------------------------------------------------------------------------------------------
                                                                                            (In thousands of dollars)
<S>                                                                             <C>               <C>              <C>
Net Sales
Collectible Sports Products                                                     $ 124,855         $ 140,588        $ 144,015
----------------------------------------------------------------------------------------------------------------------------
Entertainment Products                                                              9,321            16,137           34,917
----------------------------------------------------------------------------------------------------------------------------
Confectionery                                                                      95,238            84,525           90,043
----------------------------------------------------------------------------------------------------------------------------
  Total                                                                         $ 229,414         $ 241,250        $ 268,975
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
<S>                                                                             <C>               <C>               <C>
Contributed Margin

Collectible Sports Products                                                      $ 48,306          $ 41,842         $ 49,600
----------------------------------------------------------------------------------------------------------------------------
Entertainment Products                                                              1,563            (1,806)           2,200
----------------------------------------------------------------------------------------------------------------------------
Confectionery                                                                      25,729            15,902           28,907
----------------------------------------------------------------------------------------------------------------------------
  Total                                                                          $ 75,598          $ 55,938         $ 80,707
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

<S>                                                                             <C>                 <C>             <C>
Reconciliation of contributed margin to income (loss)
before provision (benefit) for income taxes

Total contributed margin                                                         $ 75,598          $ 55,938         $ 80,707
----------------------------------------------------------------------------------------------------------------------------
General & administrative expenses                                                 (48,224)          (50,292)         (61,315)
----------------------------------------------------------------------------------------------------------------------------
Depreciation & amortization                                                        (4,871)           (4,374)          (5,245)
----------------------------------------------------------------------------------------------------------------------------
Other income/expense                                                                  676               390            2,728
----------------------------------------------------------------------------------------------------------------------------
Non-recurring items                                                                 3,479            (3,682)         (31,350)
----------------------------------------------------------------------------------------------------------------------------
   Income (loss) from operations                                                   26,658            (2,020)         (14,475)
----------------------------------------------------------------------------------------------------------------------------
Interest expense, net                                                                 454             1,585            1,942
----------------------------------------------------------------------------------------------------------------------------
   Income (loss) before provision (benefit) for income taxes                     $ 26,204          $ (3,605)       $ (16,417)
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       25


<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  general and  administrative
expenses, depreciation and amortization,  other income/expense and non-recurring
items. Identifiable assets, as presented below, are those assets located in each
geographic area.

<TABLE>
<CAPTION>
                                                                                                Year Ended
-----------------------------------------------------------------------------------------------------------------------------
                                                                                February          February              March
                                                                                27, 1999          28, 1998            1, 1997
-----------------------------------------------------------------------------------------------------------------------------
                                                                                            (In thousands of dollars)
<S>                                                                             <C>               <C>              <C>
Net Sales
United States                                                                   $ 156,913         $ 157,208         $ 178,883
-----------------------------------------------------------------------------------------------------------------------------
Europe                                                                             45,537            64,599            77,955
-----------------------------------------------------------------------------------------------------------------------------
Other                                                                              26,964            19,443            12,137
-----------------------------------------------------------------------------------------------------------------------------
    Total                                                                       $ 229,414         $ 241,250         $ 268,975
-----------------------------------------------------------------------------------------------------------------------------


Income from Operations
United States                                                                    $ 22,536           $ 5,566         $ (19,204)
-----------------------------------------------------------------------------------------------------------------------------
Europe                                                                              1,623            (6,215)            5,187
-----------------------------------------------------------------------------------------------------------------------------
Other                                                                               2,499            (1,371)             (458)
-----------------------------------------------------------------------------------------------------------------------------
    Total                                                                        $ 26,658          $ (2,020)        $ (14,475)
-----------------------------------------------------------------------------------------------------------------------------


Identifiable Assets
United States                                                                   $ 127,186         $ 126,498         $ 140,643
-----------------------------------------------------------------------------------------------------------------------------
Europe                                                                             29,732            43,972            55,630
-----------------------------------------------------------------------------------------------------------------------------
Other                                                                               7,164             7,936             4,905
-----------------------------------------------------------------------------------------------------------------------------
    Total                                                                       $ 164,082         $ 178,406         $ 201,178
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       26


<PAGE>

NOTE 15 - FAIR VALUE OF FINANCIAL INSTRUMENTS


The following disclosure of the estimated fair value of financial instruments is
made in accordance  with the  requirements of SFAS No. 107,  "Disclosures  About
Fair Value of Financial  Instruments."  These  estimates have been determined by
the  Company  using  available  market  information  and  appropriate  valuation
techniques  based on  information  as of  February  27,  1999.  As  considerable
judgment  is  inherent  in the  development  of  these  estimates,  they are not
necessarily  indicative  of the amounts  that the Company  would  realize in the
current market exchange.


The recorded amounts and fair values are as follows:

<TABLE>
<CAPTION>


                                                                 February 27, 1999                 February 28, 1998
------------------------------------------------------------------------------------------------------------------------
                                                            Recorded             Fair         Recorded             Fair
                                                              Amount            Value           Amount            Value
------------------------------------------------------------------------------------------------------------------------
                                                                              (In thousands of dollars)
<S>                                                            <C>              <C>              <C>           <C>
Assets:
Cash and equivalents                                           $ 41,728         $ 41,728         $ 22,153      $ 22,153
------------------------------------------------------------------------------------------------------------------------
Prepaid expenses                                                  4,860            4,860            3,821         3,821
------------------------------------------------------------------------------------------------------------------------
Liabilities:
Current portion of long-term debt                                10,625           10,625            8,333         8,333
------------------------------------------------------------------------------------------------------------------------
Long-term debt                                                    5,158            5,158           22,617        22,617
------------------------------------------------------------------------------------------------------------------------
Foreign currency forward contracts                               -                  (313)               -         1,959
------------------------------------------------------------------------------------------------------------------------
Interest rate swap contracts                                   $ -                 $ (29)             $ -         $ (16)
------------------------------------------------------------------------------------------------------------------------
</TABLE>


NOTE 16 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------------
                                                       1999                                           1998
--------------------------------------------------------------------------------------------------------------------------------
                                      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                          $ 53,327    $ 57,868   $ 67,647    $ 50,572    $ 60,177     $ 55,118    $ 54,173    $ 71,782
--------------------------------------------------------------------------------------------------------------------------------
Gross profit on sales                21,679      25,305     26,545      21,262      22,463       17,625      11,649      27,972
--------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations         5,094       8,668      7,197       5,699       2,011       (2,934)    (10,005)      8,908
--------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                     2,696       4,813      4,134       3,928         822       (1,763)     (8,538)      4,907
--------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share -
basic                                $ 0.06      $ 0.10     $ 0.09      $ 0.08      $ 0.02      $ (0.04)    $ (0.18)     $ 0.11
--------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share -
basic without non-recurring          $ 0.05      $ 0.06     $ 0.09      $ 0.09      $ 0.02      $ (0.04)    $ (0.16)     $ 0.13
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       27

<PAGE>



NOTE 17 - COMMITMENTS AND OTHER MATTERS


Future minimum payments under  non-cancelable  leases which extend into the year
2010 are $1,570,000  (2000),  $1,605,000 (2001),  $1,555,000 (2002),  $1,464,000
(2003), $1,419,000 (2004) and $7,035,000 thereafter.

Future minimum payments required under the Company's  existing sports contracts,
with various  expiration  dates extending into the year 2002 are estimated to be
$15,595,000 (2000), $14,340,000 (2001) and $3,000,000 (2002).

Total royalty  expense under the Company's  sports and  entertainment  licensing
contracts was $24,373,000 (1999), $33,662,000 (1998) and $37,960,000 (1997).

Advertising  expenses included in selling,  general and administrative  expenses
amounted to $11,584,000 (1999), $13,240,000 (1998) and $13,573,000 (1997).

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

At February 27, 1999, the Company had outstanding foreign currency forward sales
and purchase  contracts with banks in the amounts of $4,809,000 and $16,146,000,
respectively,  as compared to  $8,238,000  and  $13,161,000,  as of February 28,
1998.

These  contracts  have various  maturity  dates ranging up to twelve months from
February 27, 1999,  with over 64% of the contracts  maturing  within six months.
The recognition of net losses, which amounted to $474,000 using spot rates as of
year end, is deferred until the hedged  transaction is recorded into operations.
In  addition,  the  Company  also had  options to  purchase  foreign  currencies
outstanding in the amount of $1,658,000 as of February 27, 1999.

Legal proceedings:

In August  1996,  the  Company was named a  defendant  in a class  action in the
United States District Court for the Eastern District of New York (the "New York
Court")  entitled  Sullivan,  et. al. v. The Topps Company,  Inc. No. CV 96 3779
(E.D.N.Y.) (the "Action").  The Action  alleged,  among other things,  that the
Company violated the federal Racketeer Influenced and Corrupt  Organizations Act
by its practice of selling sports and entertainment cards with randomly-inserted
"insert" cards, in violation of state and federal anti-gambling statutes. During
the last two and a half years, each of the Company's principal competitors,  and
principal  licensors,  were  separately  sued  in  various  federal  courts  for
employing, or participating in, the same or similar practices. The Action sought
treble damages and attorneys' fees on behalf of all purchasers of packs of cards
potentially including "insert" cards over a four-year period. The New York Court
granted the  Company's  motion to dismiss the Action  with  prejudice  in August
1997. The New York Court later denied  motions by plaintiffs to alter,  amend or
vacate the  judgment,  and for leave to file an amended  complaint.  Plaintiffs'
time to appeal  all of these  rulings  has  expired,  and the  judgment  for the
Company dismissing the Action is now final and nonappealable.

In September  1998,  the Company  filed an action in the New York Court  seeking
declaratory  and  injunctive  relief  against  a class of all  original  end-use
purchasers of trading cards  marketed  within the four years prior to the filing
of the complaint in packages that may contain randomly-inserted "insert" cards,
entitled  The Topps  Company,  Inc. v.  Sullivan  et al.,  No.l CV 98 6023 (EHN)
(E.D.N.Y.) (the"Declaratory Judgment Action"). The Declaratory Judgment Action


                                       28

<PAGE>

seeks a declaratory judgment that the defendant class of card purchasers did not
suffer any injury  cognizable  under RICO by this  practice,  and an  injunction
enjoining the  defendant  class from filing or pursuing any further RICO actions
against the  Company  relating to the  purchase  of trading  cards.  Two similar
declaratory  judgment  actions  have  been  filed by  several  of the  Company's
principal  licensors in the New York Court against the same class of defendants.
On December 14, 1998,  defendants  in all of the  declaratory  judgment  actions
moved to dismiss the  complaints,  and the New York Court heard oral argument on
the motion on February 26,  1999.  A decision in these  motions has not yet been
rendered.

In November  1998, the Company was named  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  alleged  that the  Company  violated  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
principal  licensors  in the  California  Court.  The Company  has opposed  this
motion.  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 Declatory  Judgment  Action
pending in the Eastern  District of New York. By orders dated May 14, 1999,  the
California  Court denied Topps' motions to dismiss the complaint or transfer the
Class Action to the Eastern  District of New York but granted  Topps'  motion to
stay the Class Action pending the outcome of the Declatory  Judgment Action. The
California Court also denied  plaintiffs' motion to consolidate the Class Action
with similar purported class actions. An unfavorable outcome in the Class Action
could have a material adverse effect on the Company's future plans and results.

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.


                                       29

<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 February 27, 1999 and February 28, 1998,
and the related consolidated statements of operations,  stockholders' equity and
cash flows for each of the three years in the period  ended  February  27, 1999.
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  generally  accepted
auditing  standards.  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 February 27, 1999 and  February 28, 1998 and the results of their  operations
and cash flows for each of the three years in the period ended February 27, 1999
in conformity with generally accepted accounting principles.


DELOITTE & TOUCHE LLP
New York, New York
April 2, 1999


                                       30

<PAGE>


Market and Dividend Information


The  Company's  Common Stock is traded on the Nasdaq  National  Market under the
symbol TOPP. The following table sets forth, for the periods indicated, the high
and low sales  price for the Common  Stock  during the last two fiscal  years as
reported  on the  Nasdaq  National  Market.  As of April 21,  1999,  there  were
approximately 4,959 holders of record.

<TABLE>
<CAPTION>

                                                          Fiscal year ended                  Fiscal year ended
                                                          February 27, 1999                  February 28, 1998
----------------------------------------------------------------------------------------------------------------------

                                                     High Price         Low Price        High Price         Low Price
----------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>               <C>               <C>               <C>
First quarter                                         $ 3.500           $ 2.375           $ 4.313           $ 3.438
----------------------------------------------------------------------------------------------------------------------
Second quarter                                          3.500             2.125             4.188             3.250
----------------------------------------------------------------------------------------------------------------------
Third quarter                                           5.500             2.125             3.563             2.375
----------------------------------------------------------------------------------------------------------------------
Fourth quarter                                        $ 5.563           $ 4.125           $ 3.000           $ 1.500
----------------------------------------------------------------------------------------------------------------------
</TABLE>


The  Company's  credit  agreement  prohibits  the  payment  of  dividends.   See
"Managementt'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>





Selected Consolidated Financial Data
<TABLE>
<CAPTION>
                                                            1999          1998          1997         1996          1995
------------------------------------------------------------------------------------------------------------------------
                                                                         (In thousands of dollars, except share data)
<S>                                                    <C>           <C>           <C>          <C>           <C>
OPERATING DATA:
Net sales                                              $ 229,414     $ 241,250     $ 268,975    $ 265,495     $ 265,386
------------------------------------------------------------------------------------------------------------------------
Gross profit on sales                                     94,791        79,709        90,121       82,005        83,217
------------------------------------------------------------------------------------------------------------------------
Selling, general and administrative
expenses                                                  72,288        78,437        75,974       68,563        59,250
------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations                             26,658        (2,020)      (14,475)      16,571        26,924
------------------------------------------------------------------------------------------------------------------------
Interest income (expense), net                              (454)       (1,585)       (1,942)      (1,447)          461
------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                         15,571        (4,572)      (10,943)       8,394        15,747
------------------------------------------------------------------------------------------------------------------------
Per share - basic:
  Income (loss) from operations                             0.57         (0.04)        (0.31)        0.35          0.57
------------------------------------------------------------------------------------------------------------------------
  Net income (loss)                                         0.34         (0.10)        (0.23)        0.18          0.33
------------------------------------------------------------------------------------------------------------------------
  Cash dividends                                          $ -           $ -           $ -          $ -           $ 0.21
------------------------------------------------------------------------------------------------------------------------
Wtd. avg. shares outstanding - basic                  46,414,960     46,421,301   46,928,369   47,047,251    47,039,287
------------------------------------------------------------------------------------------------------------------------


BALANCE SHEET DATA:
Cash and equivalents                                    $ 41,728      $ 22,153      $ 24,199     $ 24,154      $ 17,785
------------------------------------------------------------------------------------------------------------------------
Working capital                                           24,919        20,971        18,716       31,278        30,917
------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment                          7,429        10,148        12,900       31,610        31,964
------------------------------------------------------------------------------------------------------------------------
Long-term debt, less current portion                       5,158        22,617        27,450       37,500             -
------------------------------------------------------------------------------------------------------------------------
Total assets                                             164,082       178,406       201,178      217,127       136,324
------------------------------------------------------------------------------------------------------------------------
Stockholders' equity                                    $ 77,224      $ 61,609      $ 68,052     $ 81,850      $ 73,869
------------------------------------------------------------------------------------------------------------------------
</TABLE>



Amounts in 1996 include the impact of Topps Europe from the date of  acquisition
on July 6, 1995.

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

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


                                       32



<PAGE>

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

BOARD OF DIRECTORS

Arthur T. Shorin                   Wm. Brian Little              Seymour P. Berger            David Mauer
Chairman, Chief Executive          Private Investor              Business Consultant          Chief Executive Officer
Officer and President                                                                         Riddell Sports, Inc.

Allan A. Feder                     Jack H. Nusbaum               Stephen D. Greenberg*        Stanley Tulchin*
Independent  Business              Senior  Partner and Chairman  Private  Investor            Chairman
Consultant, President and          Willkie Farr & Gallagher                                   Stanley Tulchin Associates, Inc.
Chief Executive Officer,
Vitarroz Corporation



*Nominated to stand for  re-election to the Company's  Board of Directors at the
1999 Annual Meeting of Stockholders.



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

Ronald L. Boyum                    Michael J. Drewniak            Catherine K. Jessup          Scott Silverstein
Vice President - Marketing         Vice President -               Vice President - Chief       Vice President - Business
and Sales                          Manufacturing                  Financial Officer            Affairs, General Counsel

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


SUBSIDIARIES
Topps Argentina S.A.               Topps Canada, Inc.             Topps Ireland Limited        Topps Mexico LLC
Managing Director -                Managing Director -            Managing Director -
Juan P. Georgalos                  Kevin J. Crux                  Michael P. Clancy

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

</TABLE>

<TABLE>

STOCKHOLDER AND OTHER INFORMATION
<S>                                          <C>                                <C>

Annual Meeting                               Corporate Counsel                  Registrar and Transfer Agent
Tuesday, June 29, 1999, 10:30 A.M.           Willkie Farr & Gallagher           ChaseMellon Shareholder Service, LLC
Chase Manhattan Bank                         787 Seventh Avenue                 85 Challenger Road
270 Park Avenue                              New York, New York 10019           Ridgefield Park, NJ  07660
New York, New York  10017                                                       (800) 851-9677

</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 to  stockholders  of
record upon written request to the Assistant Treasurer.