TEN BUSINESS QUESTIONS

Q1. What is your role in the company?

I am Rolf Richter, and technically, my title is "Managing General Partner" of Ernst Paul Lehmann Patentwerk and "President" of LGB of America. I am responsible for all our administrative, financial, sales, marketing and customer support operations. My cousin, Johannes Richter, is our other "Managing General Partner" and "President." He is responsible for all our production operations. (That is a very, very big job when you consider that there are more than 600 items currently in the LGB program.)

But the titles are not so important. We are all simply employees, people working for the consumers who actually buy and use LGB trains. In that sense, our roles are simple also: We all work hard to listen to consumers and then work just as hard to give them the trains and support that they want.

So the answers here are joint responses from all of us in N?rnberg, Freehold and San Diego. I must also mention that my father, Wolfgang, is still a very important part of our global team. He still comes to the office almost every day, and he remains our best ambassador and an invaluable advisor.

Clearly, we are most proud of the simple fact that our small, family company -- then led by my father and my uncle -- created LGB, the world's first production model railroad engineered for outdoor and indoor use. It is hard to imagine that the hobby of garden railroading, as we know it today, would exist without their creativity and courage.

However, we can not rest and have not rested on that achievement. We have led the industry with innovations like digital sound and Multi-Train digital controls. We expanded the model railroading market with "outside the box" products like the "LCE" train and the Disney Train Adventure game. Also, we have expanded the physical World of LGB by taking G-scale into new lands, like Asia. We understand that turnover [sales] may vary in any one year in any one country, but overall, we feel that the future of our hobby, G-scale and LGB is very, very bright.

The coming of the Internet has been a wonderful thing for us because it has dramatically improved our ability to communicate with LGB consumers. At our very busy web site, consumers can read about the latest LGB models, download instructions, listen to sound samples, get answers to frequently asked questions and much more ... 24 hours each day, seven days each week.

More importantly, the Internet has dramatically improved the ability of LGB consumers to communicate with us. Through our online "Mail Box" and "Idea Box," we learn -- very quickly -- what we have done well and what we need to do better. Recently, thousands of consumers filled out our "LGB Survey 2005" online, and through that, we've learned a lot about what people want us to make in the future.

And you can already see the result of all that communication: Our friends in North America told us that they wanted a big steam loco at a not-so-big price, and we delivered one -- the 22892 Sumpter Valley Mallet -- in months, not years. It happened because we now can hear our customers better than ever.

As a great American once said, "a rising tide lifts all the boats." Yes, we compete with Bachmann, Aristocraft and USA Trains, but our real competitors are golf courses, fishing boats and electronic games. If we only fight for the same traditional customers, the tide will eventually go out, and the hobby will stagnate.

But if we look "outside the box" to non-traditional customers and markets, we will grow. That is why [EPL export manager] Mrs. Aumer is traveling so much to new countries. That is why we are working so hard with Disney. That is why our little family firm has survived for 125 years ... and will continue for another 125 years.

The commercial world is shrinking rapidly -- thanks to the Internet, eBay, simplified transactions, inexpensive shipping and so on. Everything is global now, and that is fundamentally changing the relationships between manufacturers, retailers and consumers.

Our family firm has always supported local retailers, with programs like the eXtra System in Europe and the Authorized Train Stop program in North America ... and often at great emotional and financial cost. However, we again recognize that our real employer, our ultimate customer, is the consumer -- no matter where that consumer is in the world -- and we will always listen to consumers as we make decisions about how to distribute our products.

The LGB program has long featured new technologies, like high-impact plastics, digital sound and digital controls. But we must remember that "new" technology is only good if it makes things easier and more fun for the user.

The new LGB Roadbed System is an interesting example of a "good" technology. It's deceptively simple. You put the roadbed down and put the track in the roadbed. That's it. You can build a new layout, outdoors or indoors, in minutes, not weeks. Yet we did a tremendous amount of behind-the-scenes work -- with materials, molds, testing and so on -- to make the LGB Roadbed System so simple.

Other large scale "manufacturers" outsource all their production to a variety of outside manufacturers. However, for us, quality assurance is greatly simplified by the fact that we make the majority of our products in our own factory. At the factory, we have Quality Assurance managers in every department, and those managers are headed by Mr. Gall. Plus, we have our own in-house testing facilities, including outdoor and indoor test layouts. At the same time, we work very closely with our suppliers. Most work exclusively with us and must meet tough international standards, for example, the CE, UL and ISO standards.

Most importantly, every one of our products is backed by a commitment from the Richter family, a commitment to quality that goes far beyond any written warranty. Even today, our service stations in N?rnberg and San Diego still repair LGB trains made more than 30 years ago, usually at a price to the consumer that is far less than the actual cost, sometimes for no price at all. That family commitment is a powerful incentive to always give consumers the quality they expect from LGB.

Again, as we mentioned in Question 4, the greatest challenge is to reach out to non-traditional consumers. For example, the new LGB Roadbed System isn't just for traditional LGB fans. It's also targeted at new customers who have been intimidated by the traditional process of layout building.

We listen to our customers. Through our online "Idea Box," from our surveys, at shows and in many more ways, we get great ideas from consumers. Of course, there will always room at LGB for unique trains, like the Pustefix Bubble Blowing Car and Disney Nemo Car in our LGB TOYTRAIN line. However, now more than ever, we are listening to the consumer and working to make what the consumer wants.

There is no "right" or "wrong" way to play with trains. We make LGB to make your life a little happier. If you want to count rivets, that's great. If you want a pink train with purple stripes, that's great too. In the World of LGB, there's room for everyone who wants to have fun!

Susanne = Susanne Christensen, Corporate Administrative Manager, LGB of America

Tony = Tony Castellano, Chief Operating Officer, LGB of America

Jack = Jack Lynch, Marketing Manager, LGB of America

Jonathan = Jonathan Meador, Product Manager, LGB of America

Paul = Paul Miano, Sales Manager, LGB of America

Joe = Joe Miceli, Customer Service Manager, LGB of America

Rolf = Rolf Richter, Managing General Partner, Ernst Paul Lehmann Patentwerk; President, LGB of America

Q1. What is your educational background?

Susanne: Never enough!

Tony: Always learning!

Jack: B.A. in History from George Mason University.

Jonathan: Architecture.

Paul: Degree at Grumman Data Institute of Technology, New York

Joe: My formal educational background includes a Bachelor of Science in Administration and Management. My entrepreneur educational background includes earning a California real estate license. I have also earned certificates in Internet Marketing, Emerging IT Technologies, APICS, Oracle applications and many Sony sponsored educational programs, which included Customer Service and Relations.

Rolf: My education in LGB began when I was a child, when my father let me play with the first prototype LGB trains. During my high school years, I worked at the factory, and I always enjoyed helping at our booth at the N?rnberg Toy Fair. I spent a year in California as an exchange student, and I went to study law at the University of Erlangen.

However, in 1978, my father developed a serious illness, and he asked me to join the company. So I left law school to begin my business education. I worked at various toy retailers in various countries -- Germany, Britain and America -- and then started working in our customer service department in 1981. I worked in various departments, and I managed the production department after the death of my uncle in 1984, until Johannes took charge of that area.

Today, my two daughters and Johannes' son are also helping at the toy fair and in the factory. This has been a family business for 125 years, and it is our greatest hope that it will be a family business for another 125 years.

Susanne: Mogul, Blue Crocodile, Christmas Streetcar and all-time favorite is the Beyer-Garratt - what a beauty!

Tony: Licensed and Christmas trains!

Jack: The AMD 103 "Genesis" and Amfleet passenger cars. Generally speaking any large locomotive with great digital sounds makes me happy.

Jonathan: So many trains, so tough to choose! Okay, the 20872 Santa Fe Mikado.

Paul: Aside from my kids, LGB's Aster pieces: the Pennsylvania GG-1 in Tuscan Red and the gold-plated NYC Hudson loco.

Joe: All MTS Products! The two action cars, MTS Self Unloading Car and the Krupp MTS Hot Metal Car, are two of my favorite LGB products this year. They both provide very creative MTS animated action.

Rolf: The Stainz, naturally.

Susanne: Time Travelers Wife by Audrey Niffenegger

Tony: 1776 by David McCullough

Jack: American Raiders by Wolfgang W.E. Samuel

Jonathan: Well, I do read The Good Book just about every day. As far as novels, King's Ransom by Jan Beazely and Thom Lemmons. Before that, High Places by Greg Taylor.

Paul: Reading The Foot Book by Dr. Seuss to my son. For me, Moving Times, the history of Ernst Paul Lehmann Patentwerk.

Joe: Actually, I just finished two books, both by the same primary author, James A. Belasco: Soaring with the Phoenix and Teaching the Elephant to Dance. Both books were unbelievable wake up calls for today's corporations.

Rolf: Recently, I read Vorsicht Bildschirm! -- that is, Beware of Screens! -- by Manfred Spitzer. The "screens" are electronic devices, like televisions and video games, and the book discusses the negative effects they can have on our children: socially, mentally, physically, in many ways. It was really quite frightening, and we, parents and teachers, can no longer ignore the problem.

The other book I have been reading is Das Grosse Ravensburger Spielbuch -- or the Big Ravensburger Book of Playing -- which is a kind of encyclopedia of all sorts of games, like board games and party games. I am reading it to find new games to play together with my family.

Susanne: Only in my head, but it's beautiful!

Tony: The trains are in the shed waiting for retirement and time to build it.

Jack: I just finished a modular display layout to use at shows.

Jonathan: Although the garden railway is temporarily gone, I saved some track and I have purposely left a few pieces out in the weather. Those pieces have been outside in the Southern California sun for over 15 years. They're still fine - no UV damage or degradation at all! Meanwhile, I do cover a large part of the living room with an MTS layout at Christmas. The most recent one had a crossing and I don't think any trains but LGB could have survived the "cornfield meets" which occurred repeatedly.

Paul: My son (Paul Jr., age 7) and I are always taking apart and putting back together layouts in our basement.

Joe: Yes, our family has an indoor large-scale layout, which is displayed from Thanksgiving through Easter. Each year, during the summer and early fall, the whole family gets involved in creating a new railroad theme. We plan, design, build, and best of all, have lots of fun! Past layouts included a fully animated Jurassic Park; a ski resort village with animated skiers, snowmobiles, sledding and holiday carolers; and a North Pole theme with a fully animated mountain snowstorm.

Rolf: I guess we are old fashioned with our LGB. We do not have a permanent layout, but the kids and I have always built temporary layouts, out in the lawn in the summer, in the living room when the weather gets bad, around the tree at Christmas. My father made LGB so that you could put it up and take it down, and I still enjoy doing that.

Susanne: Commercial real estate, probably in the development area.

Tony: In some stuffy, old accounting office. This is a lot more fun!

Jack: Industrial Light and Magic

Jonathan: Building houses and things for people in the slums of Tijuana, which I do occasionally.

Paul: Centerfield for the New York Yankees? Who knew I would be selling toy trains?

Joe: I would be working in the O-27/O-gauge industry. Our family is four generations strong in model railroading, and so much of our quest for action and animation is owed to Lionel and O-gauge trains. Lionel and LGB are traditions sewed through our family's soul.

Rolf: In German, a "judge" in a court of law is a "Richter," and that is what I would be: a Richter. Every person deserves to be treated equally, with justice, and as a judge, you can help make that happen.

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