OAK BROOK, Ill. -- Nov. 3, 2006 -- RC2 Corporation today announced the completion of the sale of all of the issued and outstanding capital stock of RC2 South, Inc., its collectible trading card business, and substantially all of the assets related to its die-cast sports collectibles business to FCS Enterprises, Inc. The sale has an effective date of November 1, 2006, and the sold businesses will be presented as discontinued operations in RC2's 2006 Form 10-K.
Curt Stoelting, CEO of RC2, commented, "We feel that divesting of the trading card and sports collectibles business is consistent with our strategic focus to achieve sustainable organic growth and to concentrate our efforts on our higher growth infant products and children's toys categories."
The sold businesses generated approximately $16 million in net sales for the twelve months ended October 31, 2006. The net assets of the businesses sold were approximately $17 million including approximately $16 million of goodwill. The Company expects to record an after-tax loss on this transaction of approximately $10 million in the fourth quarter of 2006. This transaction will also negatively impact diluted earnings per share by approximately $0.02 in the fourth quarter of 2006 and $0.08 for the full 2006 year. As a result of this transaction, the Company expects full year 2006 diluted earnings per share from continuing operations will range from $2.52 to $2.62. The Company plans to use the $7 million of net proceeds from the sale to pay down debt.
RC2 Corporation (http://www.rc2corp.com) is a leading designer, producer and marketer of innovative, high-quality toys, collectibles, hobby and infant care products that are targeted to consumers of all ages. RC2's infant and preschool products are marketed under its Learning Curve® family of brands which includes The First Years® by Learning Curve and Lamaze brands as well as popular and classic licensed properties such as Thomas & Friends, Bob the Builder, Winnie the Pooh, John Deere and Sesame Street. RC2 markets its collectible and hobby products under a portfolio of brands including Johnny Lightning®, Racing Champions®, Ertl®, Ertl Collectibles®, AMT®, JoyRide® and JoyRide Studios®. RC2 reaches its target consumers through multiple channels of distribution supporting more than 25,000 retail outlets throughout North America, Europe, Australia, and Asia Pacific.
FCS Enterprises, Inc., a Delaware corporation, is a newly formed holding company. The intent of the FCS Management Committee is to continue the current RC2 South, Inc. business under its present structure.
