DURING TIMES OF DISTRESS... TOYS PROVIDE FUN FOR FAMILIES NATIONWIDE

Toy Industry Releases 2001 Results and Projects 6 Percent Increase This Year

NEW YORK, February 7 -- In spite of major obstacles facing the industry and the nation last year, traditional toys increased 1.7 percent in 2001, reported Patrick Feely, chairman of Toy Industry Association (TIA(TM)) and president and CEO of Radica Games Ltd. during the annual news conference kicking off TOY FAIR 2002. He went on to say that retail sales reached $25.0 billion as compared to $24.6 billion in 2000.

"The right combination of creativity and ingenuity led to many successes during the past year and more will be previewed as we officially launch our 99th annual American International TOY FAIR(TM)," said Mr. Feely. These comments were included in his "State of the Industry" address, which set the stage for the official launch of TOY FAIR 2002 -- the premier event in the world of toys and children's entertainment. The show's official opening in New York is Sunday, February 10th continuing through Thursday the 14th at Toy District showrooms and the Jacob K. Javits Convention Center. Buyer preview days will take place by appointment from February 7th to 9th in showrooms only. Approximately 1,700 manufacturers will preview their toys at the Javits Center and permanent showrooms. TOY FAIR is open to the trade only.

Another traditional part of the annual address is the chairman's industry projection for the coming year. "This year I am confident that we as an industry and as a country will bounce back even further during 2002," said Mr. Feely. "My prediction is that the traditional toy market in the U.S. will grow by 6 percent this year."

The following trends, compiled in conjunction NPDFunworld, a division of The NPD Group, Inc., illuminate how toy manufacturers met the needs of children in 2001:

• Action Figures & Accessories represent the largest category increase, catapulting upward by 36.2 percent. The trend started in July with the release of Jurassic Park III, driving children to toy stores for Hasbro's action figures. Following the devastating events of 9/11, children mirrored the nation's interest in rescue workers by playing with such toys as Hasbro's GI Joe and Mattel's Max Steel.
• Behind the strong leading toys in 2001 were equally powerful licensed properties, with four new titles among the top licensors, including Harry Potter, HIT Entertainment's Bob the Builder, Monsters Inc. from Disney and Universal's Jurassic Park.
• In the aftermath of 9/11, many families chose to stay close to home during the latter part of the year and this trend is reflected in a 22 percent increase in Building & Construction toys. The most dominant new arrival in 2001 was LEGO's Bionicle line, which took six of the top 20 spots in this category. However, claiming the number one position in the Building sets category was the very innovative Screaming Serpent Coaster by K'NEX.
• Infant & Preschool toys increased by 12.6 percent in 2001. Major players within this category were Mattel's Fisher-Price Brand's Rescue Heroes Aqua Command Center, and LeapFrog's LeapPad and LeapPad Books.
• Dolls & Accessories were another strong category, coming in at 8 percent over 2000 sales. Mattel was the predominant player with the innovative, new What's Her Face dolls, Barbie and Diva Starz, with BRATZ dolls by MGA Entertainment also contributing to the success of this category.
• Another market segment that gained strength last year was that supplied by specialty toy manufacturers. With a clear focus on educational, creative and developmental toys, companies like Learning Curve, Brio, Playmobil and Rokenbok are establishing a strong and consistent sub-market within the toy industry.
• Found in the "All Other Toys" category, the battling robots trend gained momentum at TOY FAIR last year. Fashioned after television shows like "Battlebots" on Comedy Central, CNN's "Robot Wars" and "Robotica" on The Learning Channel, toys such as Trendmasters' Rumble Robots and JAKKS Pacific's Battlebots crashed the scene.
• In closing, it is important to mention the changing toy retail climate. Dramatic changes took place in the retail environment in 2001, however, Wal-Mart and Toys 'R' Us remained steady in the first and second positions, respectively. Right Start's acquisition of FAO Schwarz and Zany Brainy has created a new power in the specialty toy category.

To round out the discussion on the "State of the Industry," five industry leaders representing very specific areas crucial to the growth and innovation of the toy industry participated in a panel discussion. Setting the stage was Neil Friedman, president of Mattel's Fisher-Price Brand, discussing "Has the Definition of Toys Changed Since 9/11?" He mentioned how toys have always closely reflected current culture and value systems, and as our culture changes, so do our toys.

With the events of our nation impacting the industry, Norman Walker, president and CEO of K'NEX Industries, spoke about "How Do Toy Companies Compete in a Challenging Global Economy?" Because change is the only constant today, his first suggestion to manufacturers was: "Be bold!" His closing remarks focused on the need for manufacturers and retailers to partner more effectively, which will then enable them to operate more efficiently in the future.

This led the way for John Eyler, Chairman and CEO, of Toys "R" Us, to discuss "Toy Retailing vs. Retailing Toys." In today's competitive marketplace, he focused on the need to create a distinction in your brand, whether it's a toy or a retail store. He said it's never been more important for players in today's marketplace to distinguish themselves with unique and compelling products.

Jay Foreman, president of Play Along, Inc., represented a vital part of the toy industry, talking about the "Little Fish in a Big Pond." The small, entrepreneurial player in the toy business has long been considered the industry's lifeblood. Retail buyers and fellow toy company executives alike will walk the halls of TOY FAIR to see what new and innovative playthings are being presented by the small and mid-sized manufacturer.

As the final panelist, Tom Kalinske, president of Knowledge Universe, L.L.C. and a member of the Toy Industry Hall of Fame, wrapped up by discussing how the numbers support a new paradigm for success in the toy industry. He specifically called for more educational and positive developmental attributes to be built into children's entertainment products: "Moms are demanding it, retailers want it, and even kids now expect it!" On that note, Mr. Kalinske concluded his presentation on "Entertaining Children: Radical Steps to Success," and the panel discussion about the world of play.

With Mr. Feely's closing remarks, the 99th annual American International TOY FAIR(TM) was officially in play.

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