Learning Curve, the exclusive producer of Thomas the Tank Engine wooden and die-cast toy trains, was founded in 1993 by Dick Rothkopf and John Lee, the Company's current Chairman and President, respectively, who will retain their roles within Learning Curve International and serve as Executive Vice Presidents with Racing Champions Ertl. In addition, Dick Rothkopf is expected to join Racing Champions Ertl's Board of Directors.

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. Their 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.

Each product line contains age-graded educational and developmental toys that help children advance physically and cognitively and are dedicated to encouraging creative and imaginative play. Learning Curve is a leading supplier to independent specialty toy, train, gift and educational stores which account for approximately 40% of sales. In addition, about 50% of the Learning Curve's sales are made to chain retailers including toy and mid-tier mass chain stores, as well as juvenile, book, and department store chains. The remaining sales are through catalogers and internet retailers and as promotional incentives. In total, Learning Curve sells to more than 4,000 customers located in the U.S. and in key international markets.

Curt Stoelting, CEO of Racing Champions Ertl, said, "We are delighted to have reached agreement with Learning Curve. They have a great team of motivated business people who are leaders and innovators in the traditional children's toy industry. Learning Curve is a great fit as it further broadens Racing Champions Ertl's already diverse product lines, broad distribution channels and extensive licensing profile. We are extremely pleased that Dick Rothkopf and John Lee will be joining our already strong management team. Both bring tremendous industry experience and an entrepreneurial spirit consistent with that of Racing Champions Ertl."

Peter Henseler, President of Racing Champions Ertl, added, "We believe this acquisition will substantially improve Racing Champions Ertl's capabilities in the traditional children's toy business in the U.S. as well as in key international markets. Learning Curve is well positioned to produce and market a variety of high-quality branded and licensed toys designed, using proven play patterns, to support cognitive development and creative play. Because there is very little overlap in our product lines, this acquisition further strengthens our presence in both chain and independent stores. On a combined basis, we believe we will have one of the broadest customer bases in the industry."

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.

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. 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's actual results and future developments could differ materially from the results or developments expressed in, or implied by, these forward-looking statements. 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.