RC2 Reaches Proposed Settlement of Nationwide Class Action Arising From Recall of...

RC2 Reaches Proposed Settlement of Nationwide Class Action Arising From Recall of Certain Thomas & Friends(TM) Wooden Railway Products

OAK BROOK, Ill.--(Business Wire)--RC2 Corporation (NASDAQ:RCRC) today announced that it has settled
a nationwide class action lawsuit against the Company which was filed
in the Circuit Court of Cook County, Illinois in 2007 in connection
with the Company's recall of certain Thomas & Friends Wooden Railway
products. The Court granted preliminary approval of the terms of the
proposed settlement today. If the settlement receives final approval
it would resolve all class claims of persons in the United States who
purchased or own recalled Thomas & Friends Wooden Railway products
which were recalled in June and September of 2007. In connection with
this settlement, the Company expects to record in the 2007 financial
results, a charge in the range of $3.5 million to $4.5 million, net of
tax, to cover estimated additional replacement costs or refunds,
donations, notice charges, claims administration and legal fees
related to this settlement.

Curt Stoelting, CEO of RC2 commented, "This preliminary agreement
acknowledges and builds upon the many steps that we've taken to
replace recalled products and improve product safety, including
instituting our Multi-Check Safety System, to safeguard current and
future toy production. The Multi-Check Safety System, which provides
additional comfort for parents, has now been extended to all of RC2's
product lines. We're pleased that we've been able to reach a proposed
settlement, which if approved, will resolve this nationwide class
action in a manner that helps us to continue to build parents' trust."

About RC2 Corporation

RC2 Corporation (www.rc2.com) is a leading designer, producer and
marketer of innovative, high-quality toys, collectibles, and infant
products that are targeted to consumers of all ages. RC2's infant,
toddler and preschool products are marketed under its Learning
Curve(R) (www.learningcurve.com) family of brands which includes The
First Years(R) by Learning Curve and Lamaze brands as well as popular
and classic licensed properties such as Thomas & Friends(TM), Bob the
Builder(TM), Winnie the Pooh, John Deere, Nickelodeon and Sesame
Street. RC2 markets its youth and adult products under the Johnny
Lightning(R) (www.johnnylightning.com) and Ertl(R) (www.ertl.com)
brands. 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.

Forward Looking Statements

Certain statements contained in this release are considered
"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,'' "would'' or the negative
of those terms or other words of similar meaning. 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 risk that the charges and expenses the Company expects
relating to the recall may increase based on the amount of inventory
of affected products at retailers, the amount of affected products
that may be returned by consumers and the cost of providing
replacement products to consumers and retailers; the outcome of the
class action lawsuits that have been filed against the Company related
to the recall and the possibility of potential new claims or
litigation; the Company may not be able to manufacture, source and
ship new and continuing products on a timely basis; the Company is
dependent 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 customers' warehouses; increases in the
cost of raw materials used to manufacture the Company's products and
increases in freight costs could increase the Company's cost of sales
and reduce the Company's gross margins; currency exchange rate
fluctuations, particularly in the Chinese Renminbi or the Hong Kong
dollar, could increase the Company's expenses; customers and consumers
may not accept the Company's 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 owners of
popular and classic licensed properties such as Thomas & Friends, Bob
the Builder, Winnie the Pooh, John Deere, Nickelodeon and Sesame
Street, vehicle manufacturers, agricultural equipment manufacturers
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 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.

RC2 Corporation
Media Inquiries:
563-875-5995
or
Investor Inquiries:
Jody Taylor
CFO
630-573-7328

Copyright Business Wire 2008