Saturday, April 25, 2015

Spirit Of 76 Trombones?

1976 was a big year for the United States as its 200th birthday was celebrated in a yearlong expression of patriotism, red white and blue themed events, and bad mid-70's design.  For some reason Topps, which traced its paternal lineage back to the American Leaf Tobacco Company and American Gas Stations, elected to ignore all of this in designing their 1976 Annual Report.  Instead, they went with a theme that reminds me of Meredith Wilson's The Music Man:

As in 1975, the back cover was a copy of the front cover. The 1976 report continued a trend toward less photography and content and more straight up financial analysis. Once again the big news was on the international front as plans were announced for a new 50,000 square foot facility in Ireland, to serve as a center of manufacturing for their UK and European operations:

A nice start but compare this with the 400,000 square foot Duryea, Pennsylvania plant:

Topps also added a 33,000 square foot plant in Scranton, PA for candy manufacturing, a real "back to the future" move for them.

Another bit of financial news is intriguing:

These royalties were steadily increasing but seem like a bargain compared to today.  The report also notes that Bazooka was still their most profitable item.

Sy Berger finally got a little love as top level executives were also added to the annual pictures of the Board of Directors, which was still a Shorin family juggernaut:

Net sales increased yet again, by 11.2% to $55.748 million. Price increases in all product lines were helping tremendously. The quarterly dividend was also increased from 5 to 7 cents, a sure sign of growth.

I'm going to stop here in terms of acquiring their annul reports I think.  There seems to be less and less detail as the years pass from the 1972 IPO.

Saturday, April 18, 2015

International Intrigue

Our look at the mid 1970's Annual Reports of Topps Chewing Gum continues, today it's the 1975 edition, issued as Topps was celebrating 25 years of issuing baseball cards.  The cover is oh-so 70's:

The back cover was identical; not sure if it was to save costs but it seems possible.  

1974 saw Topps pay tribute yet again to an iconic baseball player.  This time it was the new (and still rightful IMHO) all-time home run king Hank Aaron getting the full Sy Berger treatment and a nice presentation of his Topps cards:

The board of directors is still an austere bunch, featuring some progression of the Shorin family. Manuel Yellen, who was on the Board from its 1972 inception, was the retired CEO of Lorillard Tobacco.  He started there in 1933 and would have been a longtime business associate of the Shorin family from the American Leaf Tobacco Company days.  His is not the father of  current Federal Reserve head honcho Janet Yellen though.

The big trend in fiscal year 1975 was more international expansion and conquest for Topps. Manufacturing operations had begun in Halle Germany as August Storck began making Bazooka under license.  Topps was so impressed with them that they used a nice shot of their plant in the annual report

Of further note was the kickoff of Nigerian operations and the killing off of A&BC Chewing Gum in England.  I plan to take an in depth look at the Topps/A&BC relationship at some point but it's interesting that once the A&BC takeover occurred, Topps moved manufacturing to the US on a temporary basis.

In fact, the report mentions that "Throughout fiscal 1975, Topps finished products continued to be sold to distributors in international markets not served by licensees. Most of the merchandise was manufactured at the Topps Duryea plant, and we also purchased some products for these markets from our licensees."

This was only their third annual report but things were already becoming drier and more businesslike within. Net sales were $50.111 million, a 13.3% increase over the prior year. Other fiscal highlights concerned their ability to borrow money at the prime rate -- no doubt due to to the Shorin family's almost 70 year affiliation with Manufacturers Hanover Bank-- and a big increase in debt (that might be a lowlight). Part of their listed liabilities was an estimate for the cost of premium redemptions from various wholesalers & retailers via their longstanding "prize" certificate offers. In the fiscal year ending 1974 this amount was $630,000 while in FY ending 1975 it was $581,000. I've always wondered about the cost of this program and it is roughly 1% of net sales in the mid-70's.

Next post we'll time trip back to the U.S. Bicentennial.

Saturday, April 11, 2015


Last time out I teased about the impact Wacky Packages had on the sales figures for Topps during the initial rollout in 1973. The answers are at hand in the 1974 Topps Annual Report.

This report is probably the most widely known in the hobby due to some picture that have circulated over the years, which show production facilities and PR shots.  I'll spare most of the repetition but here is a great shot, certainly staged, of some confectionery products available in 1974:

Here's a different look at some of the products can you spot a favorite or two?

I see some old line products, specifically Bozo gumballs and Block Busters bubble gum. Bozo was originally a bulk gumball product sold to wholesalers (jobbers).  I am not 100% certain but a reasonably sure it was phased out in the U.S. in the 1950's and moved to Canadian production and distribution, possibly over trademark concerns due to infringements of the Bozo the Clown "brand". It came back packaged in a clear cello sleeve and I certainly remember getting some in my prime trick or treating years in the early 70's. I also remember it being quite tasty!

Block Busters was a Chiclets style gum introduced in the early 1950's, probably since production of the flagship Topps Gum tab had been shifted to an "ammoniated" gum dubbed Clor-Aid, which was similar in form to Clorets (and Chiclets). The results of extensive litigation over Clor-Aid went against Topps and they likely phased out Block Busters as a result, although not before the last remnants of its production were used as the gum for the 1956 Baseball Buttons. It was reintroduced at the end of 1973 but apparently did not catch on.

I mentioned the impact of Wacky Packages on sales in 1973.  Here is a very handy table showing five years worth of financials and the biggest year-to-year change in net sales is from 1973 to 1974:

There might be some clues in there about why Topps went public.  Look at the net income for 1970 and 1971,  1970's net is quite low compared to net sales and even that was a huge increase from 1969. They reduced debt and increased working capital over this span as well, with the latter really jumping after the IPO in 1972.

Here are some other highlights from the report:
  • "In March of 1974 2 cent Bazooka was introduced into 40% of the United States and 1 cent Bazooka was withdrawn. It is anticipated that 2 cent Bazooka will be expanded into the remainder of the country during this year."
  • "During 1973 a major marketing innovation was tested on Baseball Cards. This involved marketing a single series consisting of all 660 players at the beginning of the season instead of the six traditional series of 132 subjects released sequentially over a four month period. The test was extremely successful..."
  • "..."the company successfully tested 15 cent Sports Cards in place of 10 cent cards during the latter part of 1973 and is currently marketing 15 cent baseball in approximately 10% of the United States.  If this effort continues to show positive results, the Company is prepared to move in this direction with its Football cards in the fall of 1974 on a national basis with television support."
  • "Promotional Card sales have been particularly successful this year with the introduction of Wacky Packages in March, 1973."
  • "Topps new product development area is not only innovative, but also highly skilled in market research and market testing conducted prior to introducing a new product into the line."
  • "Through its own sales force, Topps sells its products to approximately 5,000 jobbers, wholesale grocers and direct-buying chains."
  • "Topps estimates that its products are sold in over 200,000 small and large retail candy and food stores (7-11 type), variety stores (dime stores) and drug outlets."

It wasn't all boring financial talk though.  In October of 1973 (actually I believe it was Sept. 25th) Sy Berger presented Willie Mays with a special framed edition of all his regular issue Topps cards during Willie Mays night at Shea Stadium:

Let's not forget the Board of Directors, who should definitely get a hand:

Not everyone was happy though, as this article from the August 2, 1974 issue of Sports Collectors News shows:

Sorry Ron but you may have been a little naive when you bought the stock.....

Saturday, April 4, 2015

On Report

Over the past year I've managed to reel in the first four Annual Reports issued by Topps after their 1972 IPO.  I'm not sure how deeply I'll dig into the numbers but the IPO looked extremely limited and was primarily distributed among the existing executives of the company (mostly Shorin family and their relatives), with only a small fraction being offered to the general investing public. This iteration of Topps as a public company would last about twelve years, when the firm would be sold in a leveraged buyout for a little under $100 million, which is a whole lotta bubblegum!

1972 was a year of change at Topps in many ways.  They stopped putting inserts in their annual baseball set and were making the decision to stop issuing sports cards in series. The last of the baby boomers were turning eight in 1972 so the company was probably a little past its peak in terms of consumers but still riding the wave of unprecedented growth in the post war era. So you can imagine the mood was positively giddy in the report.

The cover was understated but adorned with four eventual hall-of-famers:

That unfortunate stain on the image of the cards came from this buck slip being attached:

There are some nice shots of the Duryea plant in the report; reading the fine print indicates Topps signed a 20 year lease in 1966 and got a sweetheart deal.

The gentleman at left in the lower right corner picture is Bill Shea, of Continental League and Shea Stadium fame. And look at all that bubble gum! It's hard to believe the current owners of Topps have let Bazooka languish as a brand.  Did you know one of the ingredients in Bazooka is peppermint? That's not in the report but it's a little known fact. I normally hate peppermint but must say I am a big fan of Bazooka, so it's a minor flavoring agent.

There was a distinct focus on international sales; I had no idea Topps had spread to 55 countries by this time:

Overall, things look pretty robust-and Wacky Packages had only just started coming out-they would be a major cash cow for a few years.

Here is a peek at the inner sanctum:

A conservative showing of haberdashery, given the times. A classic suit never goes out of style, that's for sure.

And here's a peek at the Duryea plant, which closed around 1996.  I'm not too hip on the later fortunes and foibles of the company but I believe they outsource everything these days. I wonder where that Topps signage ended up? 

I'll be taking a look at some more in the annual reports over my next few posts.