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K'NEX ANNOUNCES RECORD SALES FOR 2001 AND FUTURE GROWTH STRATEGY

Privately Held K'NEX Also Announces Plans To Acquire New
Product Lines That will Fuel Future Growth

Hatfield, PA - January 20, 2002 -- K'NEX Industries, one of the world's leading construction toy manufacturers, announced that 2001 sales for the United States and Canada were up over 20% in spite a weak overall toy year. Sales for the company's popular K'NEX brand rod and connector building toys achieved record results, while sales of the company's classic Lincoln Logs brand, have grown over 10 fold over the past three years.

K'NEX, a well-capitalized private company, has experienced phenomenal success throughout its first ten years in business despite intense competition and a difficult toy market. According to Norman Walker, President and CEO of K'NEX, "Our phenomenal growth-over 50% in the last two years alone-is attributable to our highly qualified, experienced, and ambitious management team. With excellent credentials in every toy category, their focus and intensity have not only established K'NEX as a major toy brand but also helped to revitalized the Lincoln Logs brand."

The top performer for K'NEX during 2001 was the Screamin` Serpent Roller Coaster, "The World's Smallest Real Roller Coaster". It enjoyed a complete sell-out and generated a whopping $15 million dollars in retail sales. Screamin' Serpent's runaway success was complemented by strong sales of the Cyber K'NEX high-technology toy line, the launch of the licensed Mech Warrior line and the new Lincoln Logs train segment.

The K'NEX Screamin' Serpent and Lincoln Logs Sawmill Express train set were top performers with the nation's toy experts who bestowed an unprecedented six top toy awards each on these innovative products. According to Chris Campbell, V-P Worldwide Marketing for K'NEX, "Of the more than 5,000 toys that toy experts reviewed this year, very few received three or more awards." Top honors were awarded from Child magazine's 'Best Toys of the Year'; Family Fun magazine's 'Top Ten Toys for 2001'; Oppenheim Toy Portfolio; Parents magazine's 'Hot Toys for Holiday 2001'; Working Mother magazine's 'Top Toys-Kid Tested, Working Mother Approved'; Canadian Toy Testing Council; Duracell Kids' Choice Awards; and Today's Parent magazine's '2001Toy Odyssey.'"


K'NEX also received recognition from Bizrate.com, the Los Angeles-based research firm that tracks 2,000 leading e-retailers, which numbered K'NEX among its "Top 10 Most Searched For Toys and Games Online" during the 2001 holiday shopping season.

In 2002, K'NEX celebrates its 10th Anniversary and has announced aggresive plans to support future growth. "As we look to the future," said Mr. Walker, "we plan to grow the K'NEX franchise by acquiring additional existing brands which we will infuse with the capital and marketing resources needed to jump start their growth. We also plan to license popular entertainment properties within our flagship K'NEX construction toy brand." K'NEX executives are extremely interested in meeting with representatives of existing toy brands, including under-marketed or undercapitalized brands to discuss marketing and distribution opportunities in the USA and Canada. International brands seeking aggressive growth in North America will be a key focus.

Founded in 1992, K'NEX Industries was established to manufacture and market what has become one of the world's leading integrated construction systems for children. Winner of more than 150 international awards and recognitions, K'NEX seeks to build young minds with its exciting product line and critically acclaimed K'NEX Education program. For more information, consumers can visit www.knex.com or call 1-800-KID-KNEX

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Contact:
Melissa Fogarty/Beth Mosher
LITZKY PUBLIC RELATIONS
(201) 222-9118
email: mfogarty@litzkypr.com

About K’NEX Brands

Founded in 1992, K’NEX Brands, the world’s most innovative construction toy company, was established to make and sell what has become one of the world’s leading integrated construction systems for children. Winner of over 200 international awards and recognitions, K’NEX is America’s building toy company focused on Building Worlds Kids Love, and encourages youngsters to “imagine, build and play.”  For more information, please visit www.knex.com.