Racing Champions Ertl Completes Acquisition of Learning Curve International

    GLEN ELLYN, Ill.--March 5, 2003--Racing Champions Ertl Corporation , a leading producer and marketer of innovative collectibles and toys, today announced it has completed its previously-announced acquisition of Chicago-based Learning Curve International, Inc., the exclusive producer of Thomas the Tank Engine wooden and die-cast toy trains, and other traditional children's toys. The purchase consideration consisted of $106.7 million of cash, less debt and capital leases, and 666,667 shares of Racing Champions Ertl's common stock. The cash purchase price, pay-off of Learn Curve's outstanding debt and capital leases and transaction costs were funded with a $110.0 million drawn from the Company's new $140.0 million credit facility. Additional consideration of up to $6.5 million may be earned based on achieved sales and margin targets for 2003.
    Learning Curve develops and markets a variety of high-quality, award winning traditional children's toys for every stage of childhood from birth through age eight. Learning Curve products are often created with input from leading child development experts. Its product lines include Thomas & Friends, the top selling brand of expandable wooden toy railway systems in the U.S., and the recently introduced Take Along Thomas die-cast train series and play sets. Other products include Lamaze infant toys, Madeline dolls and accessories, Eden(R) plush, Feltkids(R) activity boards, and Lionel battery powered train systems.
    Curt Stoelting, CEO of Racing Champions Ertl, said, "We are pleased to have closed the Learning Curve transaction ahead of schedule. Learning Curve is a great complement to our existing business as it further broadens Racing Champions Ertl's already diverse product lines, broad distribution channels and extensive licensing profile. Learning Curve will improve Racing Champions Ertl's capabilities in the traditional children's toy business in the U.S. as well as in key international markets. Together, we believe we will have one of the broadest customer bases in the industry. We look forward to working with Learning Curve's capable management team and integrating Learning Curve into Racing Champions Ertl."

    Racing Champions Ertl (www.rcertl.com) is a leading producer and marketer of innovative collectibles and toys targeted at adult collectors and children. The Company's diverse product offerings include scaled die-cast replicas of John Deere agricultural equipment and NASCAR stock cars, other licensed vehicle replicas, pre-teen toys, sports trading cards, racing apparel, souvenirs and collectible figures. These products are sold under the Company's market-focused brand names, including Racing Champions(R), Ertl(R), Ertl Collectibles(R), American Muscle(TM), AMT(R), W. Britain(R), Press Pass(R) and JoyRide Studios(TM). The Company supports its brands and enhances the authenticity of its products by linking them with highly recognized licensed properties including NASCAR, NHRA, John Deere, Harley-Davidson, Case, Polaris, Honda, Caterpillar, Ford, GM, Chrysler, Texaco, Universal Studios, Warner Brothers, Hit Entertainment, Nintendo, Sega and Electronic Arts. The Company's products are marketed through multiple channels of distribution, including mass retailers and specialty and hobby wholesalers and retailers, OEM dealers and to corporate accounts for promotional purposes. The Company sells through more than 20,000 retail outlets located in North America, Europe and Asia Pacific.

    Forward-looking Statements

    Certain statements contained in this release contain "forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as "anticipate," "believe," "could," "expect," "intend," "may,'' "planned," "potential," "should," "will" and "would." Such forward-looking statements are inherently subject to known and unknown risks and uncertainties. The Company's actual results and future developments could differ materially from the results or developments expressed in, or implied by, these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to, the following: the Company may experience difficulties in integrating its acquisition of Learning Curve; the Company may not be able to manufacture, source and ship new and continuing products on a timely basis; the Company is dependant upon timely shipping of product and unloading of product through West Coast ports as well as timely rail/truck delivery to the Company's warehouse and/or customer's warehouse; customers and consumers may not accept those products at prices sufficient for the Company to profitably recover development, manufacturing, marketing, royalty and other costs; the inventory policies of retailers, together with increased reliance by retailers on quick response inventory management techniques, may increase the risk of underproduction of popular items, overproduction of less popular items and failure to achieve tight shipping schedules; competition in the markets for the Company's products may increase significantly; the Company is dependent upon continuing licensing arrangements with vehicle manufacturers, agricultural equipment manufacturers, major race sanctioning bodies, race team owners, drivers, sponsors, agents and other licensors; the Company may experience unanticipated negative results of litigation; the Company relies upon a limited number of independently owned factories located in China to manufacture a significant portion of its vehicle replicas and certain other products; the Company is dependent upon the continuing willingness of leading retailers to purchase and provide shelf space for the Company's products; and general economic conditions in the Company's markets. Such uncertainties and other operational matters are discussed further in the Company's quarterly and annual filings with the Securities and Exchange Commission. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this release or to update them to reflect events or circumstances occurring after the date of this release.