Racing Champions Ertl Completes Acquisition of Learning Curve
International
Glen Ellyn, Ill. (March 5, 2003)-Racing Champions Ertl
Corporation (NASDAQ: RACN), 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 Learning 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®
plush, Feltkids® 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®, Ertl®, Ertl Collectibles®,
American Muscle™, AMT®, W. Britain®, Press Pass®
and JoyRide Studios™. 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.
