Lionel Quality Electric Trains
At Long Last…

Today, May 1, 2008, marks the end of one of the most dramatic and difficult periods in Lionel’s 108 year history. After more than seven long years of legal warfare, a brutal financial restructuring, and a lot of corporate soul searching, Lionel has fully emerged from bankruptcy. 

In addition to the settlement with MTH, Lionel’s emergence from bankruptcy has been achieved by paying all of its creditors all of the money they were owed, in addition to interest for all the time during which the company was in bankruptcy. As some of you might know, this is an extremely rare and beneficial outcome for creditors. This great result came at a high cost to Lionel’s pre-bankruptcy owners: Luella Davis, Neil Young, and Dick Kughn. It’s extremely gratifying that all of them will remain involved with the company, along with our new partners at Guggenheim Investment Management LLC, who provided much of the new money necessary for Lionel’s successful exit from bankruptcy. 

More than enough has already been written about the lawsuit, and the events that followed, and it has undoubtedly been among the most closely followed and avidly reported civil legal actions in recent years. For me, though, the real story has been how so many people came together to rally around Lionel in one of its greatest hours of crisis.

All model train fans are, by nature, students of history, which offers no greater lesson than the fact that desperate times create opportunities for heroic deeds. Our experience over these past few years has been no exception. As Charles Dickens said so well, “It was the best of times; it was the worst of times.” The resolve of Lionel’s ownership, the inspired and dedicated legal defense by our attorneys, and most of all, the steadfast loyalty and encouragement of our fans, gave all of us who work for Lionel the determination to weather the storm. 

In fact, the level of support and encouragement was so great that Lionel managed to do substantially more than just weather the storm. In the past three years, the company’s sales have grown dramatically, and we have been able to create new products, gain a strong foothold in mainstream retail stores, and develop and release the much heralded, Legacy Control System. 

I wish I could personally thank each and every one of you for your patience and support throughout this long and arduous process, because the enduring strength of this company is a testament to your understanding and loyalty. Now that Lionel’s legal and bankruptcy issues are finally behind us, we look forward to redoubling our efforts to fulfill our promise to create the best products of which we are capable.

Best Regards,

Jerry Calabrese

Phone 586-949-4100 Fax 586-949-1013 WWW.LIONEL.COM