Lionel, LLC

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Incorporated: 1900 as Lionel Manufacturing Company
SIC: 3944 Games, Toys & Children's Vehicles

Lionel L.L.C. is the world's leading manufacturer and marketer of model and toy trains. With almost a century of experience by the mid-1990s, Lionel held an established and respected name in the toy industry. Although the company suffered serious problems from the late 1950s through the 1960s, including bankruptcy proceedings, it recovered and regained much of the ground it lost by the 1990s. With 350 products and seemingly stable sales growth, Lionel enjoyed a resurgence of model train enthusiasm in the mid-1990s.

Joshua Lionel Cowen, born in New York City on August 25, 1877, did not set out to create the electric model train or to found one of the most successful 20th century toy manufacturers in the United States. Cowen dropped out of Columbia University and began work as an assembler at an electric lamp factory. However, Cowen's natural skill with electric devices and his desire to innovate led him to conduct electrical experiments after hours at work. About 1898 Cowen's tinkering led to his development of a fuse for igniting magnesium powder for photographers. The U.S. Navy heard about the invention and contacted Cowen to build fuses to be used for exploding mines. Cowen gained $12,000 from his subsequent contract with the Navy, which he used to open a small shop in New York City in 1900. The new enterprise, christened the Lionel Manufacturing Company, produced fuses, low-voltage motors, and electrical novelties. Cowen continued to experiment with electricity, and in 1900 he developed the first dry cell battery.

In 1901 Cowen created a window display for his shop that would change the direction of his company. To showcase one of his small electrical motors, he placed one in a model railroad car and ran it on a track in his shop window. Cowen had hoped the train would grab the attention of passers-by, and they would stay to buy his products. The train did indeed attract the attention of people, but what they wanted to buy was the train! Cowen was soon selling the trains to individual customers and other stores. Within two years, the Lionel Manufacturing Company was issuing catalogs for the trains. The first catalog, in 1903, featured 2 7/8-inch gauge trains and track. The gauge refers to the width between the rails of the track. In addition to locomotives, the catalog offered a steel derrick car and a gondola car. A particular train in this catalog, a steel reproduction of a Baltimore and Ohio R.R. locomotive powered by a wet cell battery, initiated a demand for small scale reproductions of real trains. Designing and manufacturing reproductions for those interested in this new hobby would become a staple for Lionel.

Business grew rapidly. In 1905 Cowen hired Mario Caruso, a young engineer, to help with manufacturing. Soon a strict division of labor developed: Cowen handled the marketing of the trains, and Caruso ran the manufacturing plants. Caruso remained with the company until 1945. Production quickly outgrew the company's New York manufacturing plant, and in 1910 Lionel moved to a new factory in New Haven, Connecticut. In addition to an increase in the sheer number of trains produced, the selection expanded rapidly as well. The 1906 catalog offered a single locomotive, two electric trolley cars, two passenger cars, and seven freight cars, which included an oil tank, a coal car, a cattle car, a box car, a gondola, and a caboose. In contrast, the 1910 catalog offered several different locomotives, an increased number of freight and passenger cars, and eleven trolley cars. The company had also introduced tin lithograph stations and small human figures to aid in the creation of realistic scenes.

A couple of important changes occurred in Lionel train design in the first decade of the century. First, the increasing number of homes wired for electricity meant that the trains no longer had to be powered by dry cell batteries. Cowen developed a transformer that reduced household current to a safe level for use with Lionel trains. Second, Lionel introduced in 1907 a three-rail track that measured 2 1/8 inch between rails. This gauge became so popular in the United States it was soon known as "standard gauge."

Gauge became an important marketing factor when Lionel competitor Ives Trains introduced the "O" gauge train in 1910. Smaller than the standard gauge train, the "O" gauge had only 1 1/4 inches between the rails. The gauge's popularity led Lionel into that market in 1915, when the company introduced 9 sets of "O" gauge trains. At the time, Lionel offered 17 sets of trains in standard gauge.

The company, which changed its name in 1918 to the Lionel Corporation, continued to experience rapid growth through the 1920s. Increased production again forced the company to move to larger facilities, this time to a plant in Irvinton, New Jersey. Lionel also increased its size and market share by acquiring its biggest competitor, Ives Trains, in 1928. Initially Lionel bought the company in partnership with the model train company American Flyer Trains, and both companies supplied some parts for Ives trains through 1929 and 1930. However, Lionel bought out American Flyer's interest in Ives at the end of 1930. Lionel then closed the Ives plant in Bridgeport, Connecticut, and transferred the operations to its New Jersey facility.

The demand for reproductions of real trains grew through the 1920s. Throughout this time Lionel produced several sets of highly authentic trains as part of its numerous offerings of locomotives and train cars. During this "classic period" for Lionel, the company created model cars and engines with an astonishing attention to detail, including many models with brass and nickel trim. For example, the powerful 408E twin-motored engine featured six running lights, operating pantographs, and all brass detail. Lionel sets from this time, which included highly detailed passenger cars in addition to the locomotives, became valuable collectors' items, sought after by collectors and train enthusiasts through the end of the century.

The Depression forced a slight change in focus at Lionel. Sales dropped for the toy manufacturer early in the Depression, and the company responded by shifting production to lower-cost items, particularly to the smaller "O" gauge trains. Customers reacted favorably, and by 1939 Lionel had completely discontinued production of its standard gauge, three-rail trains. Despite the focus on lower costs, Lionel continued to introduce new models. The company's first steam-type "O" gauge locomotive debuted in 1930; within five years, Lionel made eight different "O" gauge steam engines. Streamlined passenger trains were introduced in the middle of the decade, as was the first steam whistle. Some demand for high-priced reproduction models remained, and Lionel filled it with its exact scale "O" gauge Hudson steam locomotive in 1937, which cost $75 at the time.

However, low-priced items were a staple in the company's sales during the Depression. One new line in particular helped buoy company sales. In collaboration with the Walt Disney Company, Lionel created a Mickey Mouse hand car in 1934. A single car that was wound by hand, the one-dollar toy enjoyed a vast popularity. Its success engendered a whole line of similar toys, including a Santa Claus hand car, introduced in 1935; Donald Duck and Peter Rabbit "chick mobiles," which came out the following year; and the Mickey Mouse Circus Train. Mickey, as the conductor of the tin locomotive, led the train filled with Disney passengers past a cardboard backdrop of a circus.

In 1938 Lionel introduced its first "OO" gauge train, a scale model of the Hudson engine with a tender and four freight cars. An immediate success in the "OO" gauge market, the Hudson model was the first of several that Lionel designed in the late 1930s. However, Lionel stopped production of toy trains in 1942 to join the war effort and never resumed its line of "OO" trains, even after the war ended.

Lionel's adjustments to the Depression market appeared successful. In 1937 the company employed 1,000 people and produced approximately 40,000 model train engines, 1.2 million railcars, and more than a million sets of track. That year Lionel offered stock to the public for the first time. With the entrance of the United States into World War II, Lionel suspended its model train production and began manufacturing navigation and communication equipment for the armed forces.

Toy train production resumed in 1945 under the direction of Lawrence Cowen, the son of Joshua Lionel Cowen. Having assumed the presidency that year, Lawrence remained at the head of the company until its sale in 1959. He oversaw the introduction of the company's all-time top-selling train engine, the Santa Fe Diesel, in 1948. Not only did Lionel begin producing diesel engines in 1948, it used plastic in its trains for the first time. The year of its fiftieth anniversary, 1950, Lionel unveiled Magne-Traction, a system designed to increase the pulling power of the locomotives. By inserting permanent magnets into the locomotive driving axles, a magnetic attraction was induced between the wheels and the steel track, enabling the locomotives to pull more cars and work better on steep grades.

Pent-up demand for consumer goods after the war led to some of Lionel's best years. By 1953 Lionel was the largest toy manufacturer in the world and employed 2,000 people. Mismanagement and a shrinking market, however, reversed the company's fortunes. In the mid-1950s Lawrence Cowen attempted to diversify Lionel's products and holdings, perhaps in response to decreasing interest in model trains from the public. In 1957 the company began marketing "HO" gauge trains, licensed first from Rivarossi and later from Athern, but the line didn't sell and was dropped in 1967. Cohen also introduced a stereo camera and acquired Airex Corporation, a fishing reel manufacturer, but both ventures proved unprofitable. Labor disputes added to the company's misfortunes, disrupting production at the New Jersey plant with strikes. In 1958 Lionel lost $470,000 on sales of $14.5 million, the company's first yearly loss since the Depression.

The next year, 1959, Lawrence Cowen sold Lionel to a group of investors, sparking almost three decades of shifting ownership. Roy Cohn, Joshua Cowen's great nephew and head of the investors, hoped to gain government missile contracts by acquiring electronics firms. Cohn placed John Maderis, a former major general, at the head of Lionel but replaced him in 1962 with Melvin Raney. Not only did government missile contracts fail to appear, but sales remained stagnant as well. Cohn sold Lionel at a significant loss in 1963 to financier Victor Muscat, who resold the company later the same year to a group led by A. M. Sonnabend of the Hotel Corporation of America. Sonnabend died the next year, and Robert Wolfe, a former toy company executive, was named president.

Wolfe took over a company that had suffered at the hands of its numerous leaders in the previous decade. Employees had been let go, and high-quality product lines had been discontinued in order to cut costs. Efforts to diversify the company's product line, including ventures into microscopes, science labs, and tape recorders, had only served to blur the company's focus. Wolfe was determined to return Lionel to its traditional niche as a high-quality toy train manufacturer. However, even with the company's focus back on producing high-quality electric trains, Lionel continued to lose money. Its 1967 purchase of American Flyer Trains, its largest competitor, did nothing to stem the tide.

In 1969 the company was forced to reorganize by a bankruptcy proceeding. General Mills, Inc., bought the rights to the Lionel name and all of the company's manufacturing equipment. What was left of the original Lionel Corporation emerged as a holding company for toy stores and hobby shops. Before resuming production of Lionel trains, General Mills moved the company's manufacturing equipment from New Jersey to Mt. Clemens, Michigan. Fundimensions, a division of General Mills Fun Group, assumed responsibility for the Lionel train production and revitalized the ailing brand.

In 1973 Fundimensions attempted to revive the Lionel "HO" gauge line, manufacturing the trains in Mt. Clemens and the Orient. However, the line once again failed to sell and was discontinued five years later. In 1979 Fundimensions reintroduced the American Flyer S Gauge trains as part of the Lionel line. In general, Lionel trains regained its health in the 1970s, enjoying increasing sales through the decade. However, in 1983 General Mills combined its toy manufacturing, including the production from Fundimensions, Kenner Toys, and Parker Brothers Games, and moved it all to Mexico. The new plant had a difficult time maintaining the quality of Lionel products and frequently missed delivery dates to retailers, injuring the reputation of the brand. When Kenner-Parker Toys, Inc., spun off from General Mills in 1985, Lionel went with it as one of its divisions. That year Lionel moved its train production back to Mt. Clemens.

In 1986 Richard P. Kughn, a Detroit real estate developer, formed a corporation with a group of investors in order to purchase Lionel Trains. After paying an estimated $25 million, the group incorporated the enterprise as Lionel Trains, Inc. Kughn, who took over as the company's chairman, was an avid model train collector and, when he became interested in purchasing Lionel, already owned thousands of trains in a collection whose worth was estimated at nearly $1 million. Within two years of the purchase, Lionel's sales rose 150 percent, to $50 million a year, and market share reached 60 percent. Both the Collector and Traditional lines of trains showed record sales that year.

Kughn, with his background as a model train collector, saw a market for reissues of classic Lionel trains. He initiated a new line in 1988, Lionel Classics, that directly reproduced the metal Lionel trains of the 1920s and 1930s. However, Kughn also encouraged innovation, particularly in the development of state-of-the-art technological features. RailScope, a locomotive with a miniature video camera in the nose, was introduced in 1988 to give railroading enthusiasts a chance to see the ride as an engineer would. The following year RailSounds debuted in the Pennsylvania B6 Scale Switcher engine and the Reading T-1 Northern Locomotives. The micro-electronic sound chip placed inside the engines held an exact sound recording from full-size trains. In 1994 Lionel incorporated a high-tech remote control device into a new series of trains. Through a joint venture with Lionel called Liontech, the rock singer Neil Young developed the TrainMaster in order to share his passion for model railroading with his son Ben, a victim of cerebral palsy. Easier to use than a traditional transformer, the hand-held controller uses on-board electronic processors to move the train via electronic signal and incorporates digital sound to more closely reproduce such sounds as engines churning or cars uncoupling.

Completely new product lines also expanded Lionel's offerings during the late 1980s and early 1990s. Ready-to-run sets of trains with an "O27" gauge, slightly smaller than the "O" gauge, were first offered in the late 1980s. A new line of trains that were 1/24th the size of real trains was introduced in 1987. Roughly twice the size of the "O" gauge trains, the Lionel Large Scale was made of weather resistant plastic to allow their use indoors or out. In collaboration with the Smithsonian Institution, Lionel created a collection of museum-quality "O" gauge engines. An exact replica of the 1938 New York Central Dreyfuss-Hudson locomotive, the first engine produced, was offered in a limited edition run of only 500.

Neil Young's interest in Lionel expanded in 1995 when he joined with former Paramount Communications chairman Martin Davis to purchase Lionel from Kughn. The purchase was friendly, with Kughn remaining as chairman emeritus and retaining a minority share in the renamed Lionel L.L.C. Wellspring Associates L.L.C., an investment firm started by Davis, held Davis's majority share. As part of the deal, Lionel became the full owner of Liontech, the joint venture with Young.

The increasing popularity of model trains in the mid-1990s boded well for Lionel. With 350 products and several years of steady growth, Lionel had a sturdy base from which the new owners could work. Davis and Young hoped that incorporating new technology into the company's traditional train sets would draw even more enthusiasts into the Lionel fold. "[Lionel's] technology is now the leading technology in toys," Young was quoted as saying in Fortune in 1995. "The overall goal is to make an advanced toy that brings families together in a way videogames don't."

Further Reading

"Developing a New Train of Thought: Rocker Helps Lionel Make a Better Toy," Crain's Detroit Business, December 5, 1994, p. 1.

McComas, Tom, and James Tuohy, Lionel: A Collector's Guide and History, Wilmette, Ill.: TM Productions, 1978.

"Neil's Wheels," Time, October 9, 1995, p. 91.

"Rocker, Partner Buy Lionel," Crain's Detroit Business, October 2, 1995, p. 33.

Serwer, Andrew E., "An Odd Couple Aims to Put Lionel on the Fast Track," Fortune, October 30, 1995, p. 21.

"Toy Train Fanciers Team Up to Acquire, Modernize Lionel," Wall Street Journal, September 26, 1995, p. 9B.

Treece, James B., "The Little Train Company That Could," Business Week, December 26, 1988, pp. 70-71.

— Susan W. Brown

Lionel, LLC

Type	Private
Industry	Toys and hobbies
Predecessor(s)	Lionel Corp.
Founded	Chesterfield Township, Michigan (1995)
Headquarters	New York, New York, USA
Key people	Jerry Calabrese, CEO
Products	Lionel trains
Revenue	US$62 million in 2006
Website	www.lionel.com

Lionel, LLC is a designer and importer of toy trains and model railroads that is based in Chesterfield Township, Michigan. Its roots lie in the 1969 purchase of the Lionel product line by cereal conglomerate General Mills.

Although Lionel, LLC now owns all of the trademarks and most of the product rights associated with Lionel Corporation, the original producer of Lionel trains founded in 1900, there is no direct connection between the two companies.

According to its reorganization papers filed as part of its bankruptcy plan on May 21, 2007, about 95 percent of the company's sales come from O gauge trains. The plan estimated that about US$70 million worth of O gauge trains are sold each year, and that Lionel accounts for about 60% of that market, making it the largest manufacturer of O gauge trains.

Contents 1 The MPC/General Mills era (1969-1986) 2 Lionel Trains Inc/Richard Kughn era (1986-1995) 3 The Wellspring era (1995-current) 4 Bankruptcy 5 Collector value 6 Notes 7 External links

The MPC/General Mills era (1969-1986)

The bankrupt Lionel Corporation sold the tooling for its then-current product line and licensed the Lionel name to General Mills in 1969, who then operated Lionel as a division of its subsidiary Model Products Corporation. General Mills did not buy the company, however. The Lionel Corporation became a holding company and invested in a number of ventures, including what would eventually become an East Coast chain of toy stores known as "Lionel Leisure World".

Due to General Mills' cost-cutting measures, production of Lionel-branded toy and model trains returned to profitability, but sometimes at the expense of quality. Detail was often sacrificed, and most of the remaining metal parts were replaced with molded plastic. A number of MPC's changes to the product line endure to the present day, the most noticeable being the use of needlepoint axles and trucks made of Delrin, two changes made to reduce friction and allow longer trains. Also starting in 1973, MPC experimented with a line of cars it called "Standard O," which were scaled to 1:48 (most postwar Lionel and MPC production was undersize for O scale). The experiment's failure is generally blamed on MPC's lack of a 1:48 locomotive and caboose to go with the cars; when it was repeated again in the 1980s with locomotives of appropriate size, it proved more successful.

An internal reorganization after 1973 caused Lionel to become part of General Mills' Fundimensions group. Although Lionel's tenure with MPC was relatively short, "MPC" is the most commonly used term for the 1970-1985 era.

In 1979, General Mills resurrected the American Flyer brand and product line, which Lionel Corporation had purchased from its bankrupt competitor (The A. C. Gilbert Company of New Haven, Connecticut) several months prior to its own bankruptcy in 1967. American Flyer products by Gilbert made after World War II are scaled roughly to a 1:64 proportion and are known as S gauge; their most distinctive feature, however, is that they operate on two-rail track as opposed to Lionel's three-rail trackage system.

With so many years of absence from the market, Gilbert American Flyer S gauge trains were no longer considered a direct competitor to Lionel's 1:48 proportion O gauge trains. To this day, Lionel markets American Flyer S gauge in limited quantities as collectibles.

The year 1982 brought General Mills' ill-fated move of train production from the United States to Mexico. Some Lionel fans were angry simply because the trains had been made in the United States for more than 80 years, while others criticized the quality of the Mexican-produced trains. Lionel production returned to the United States by 1984. During this time, corporate offices were retained at the company's Mount Clemens (later, Chesterfield), Michigan, location.

When General Mills spun off its Kenner-Parker division in 1985, Lionel became part of Kenner-Parker. Lionel was sold again in 1986, this time to toy-train collector / real estate developer Richard P. Kughn of Detroit, Michigan and was known as Lionel Trains Inc (LTI).

Lionel Trains Inc/Richard Kughn era (1986-1995)

In 1986, Detroit-based real estate developer (and railroad enthusiast) Richard Kughn bought the brand and established Lionel Trains Inc. In 1989, Lionel rolled out RailSounds, heralding an era of high-tech audio realism, and trumpeting better things yet to come. In 1992 Richard Kughn and musician Neil Young, an avid model railroader, created Liontech, chartered to develop exclusive new model train control and sound systems. Liontech's RailSounds II debuted in 1994. This all-new digital system captured a real-life locomotive's actual sounds, and propelled Lionel to the forefront of model train technology.

Also debuting in 1994 was the brainchild of Neil Young, Lionel's Trainmaster Command Control, a technology similar to Digital Command Control which permits, among other things, the operation of Lionel trains by remote control. Richard Kughn sold Lionel in 1995.

The Wellspring era (1995-current)

Lionel changed hands again in 1995, when Kughn sold controlling interest in the company to an investment group that included Neil Young (a longtime fan of model trains and of this brand) and the holding company Wellspring Capital Management, which was headed by former Paramount Communications (formerly Gulf+Western) chairman Martin Davis (he had left the board of Viacom, which bought Paramount the previous year). The new company became known as Lionel LLC. The company continued marketing reproductions of its vintage equipment, and the trend towards producing new equipment that was ever-more-detailed continued. Neil Young now had a 20% stake in the company.^[1]

In order to proliferate Trainmaster Command Control as a standard, Lionel licensed it to several of its competitors, including K-Line. Lionel, LLC continued to manufacture and market trains and accessories in O scale under the Lionel brand and S gauge under the American Flyer brand. While most of the American Flyer products are re-issues using old Gilbert tooling from the 1950s, the O scale equipment is a combination of new designs and reissues. Lionel also ventured into HO scale at times during its history, with limited success.

In 2001, Lionel closed its last manufacturing plant in the United States, outsourcing production to Korea and China. While this move proved unpopular with some longtime fans, the backlash was minor in comparison to the failed move of production to Mexico in the 1980s. The company also licensed the Lionel name to numerous third parties, who have marketed various Lionel-branded products since 1995.

The 2004 Christmas movie Polar Express, based on the children's book of the same name, provided Lionel with its first hit in years. Lionel produced a train set based on the movie, and stronger-than-anticipated demand caused highly publicized shortages. Various news stories told of a reporter's quest to locate a set, and some dealers marked the prices up above the suggested retail price of US$229. Sets turned up on eBay with buy-now prices of US$449 as Lionel ordered an additional production run but said it would not be able to deliver the additional sets until March of the following year. The set remains a popular seller in the product line in 2012.

In 2006, the Lionel electric train was inducted into the National Toy Hall of Fame, along with the Easy Bake Oven. It was the first time an electric toy had ever been inducted. That same year, Lionel made a bigger push to sell its train sets outside of hobby shops, selling them in stores such as FAO Schwarz, Macy's, and Target. By November 2006, the company had turned a US$760,000 profit on sales of US$55 million.

This era was marked by legal troubles. In April 2000, competitor and former partner MTH Electric Trains filed a trade secret misappropriation lawsuit against Lionel, LLC, saying that one of Lionel's subcontractors had acquired plans for an MTH locomotive design and used them to design locomotives for Lionel. Additionally, on May 27, 2004, Union Pacific Railroad sued Athearn and Lionel for trademark infringement because both companies put the names and logos of UP, as well as the names and logos of various fallen flag railroads UP had acquired over the years, on their model railroad products without a license. While Athearn quickly settled and acquired a license, Lionel initially resisted, arguing that it and its predecessor companies had been using the logos for more than 50 years and had been encouraged or even paid to do so. On September 13, 2006, Lionel and UP settled the suit for US$640,000 plus a royalty on future sales.

The misappropriation lawsuit by MTH eventually went to trial, and on June 7, 2004, a jury in Detroit, Michigan found Lionel liable and awarded MTH US$40,775,745. On November 1, 2004, a federal judge upheld the jury's decision. Lionel announced it would appeal, and two weeks later filed for bankruptcy, citing the judgment as the main reason. On December 14, 2006, the judgment was overturned on appeal, citing legal mistakes in the jury trial, and a new trial ordered.

In September 2004, the company dismissed its CEO, Bill Bracy, and replaced him with Jerry Calabrese, a former Marvel Comics and NASCAR executive. Along with Bracy, another 17 high-level employees were also dismissed.

In July 2005, Lionel sued competitor K-Line for theft of trade secrets. The two companies settled out of court but the settlement quickly fell apart, leading to K-Line declaring bankruptcy and selling its assets to Sanda Kan, a Chinese subcontractor who did manufacturing for both K-Line and Lionel. In January 2006, Sanda Kan licensed the K-Line name and intellectual property to Lionel.

On March 27, 2008, a bankruptcy judge approved Lionel's reorganization plan, including a settlement with MTH. Although the specifics were to remain sealed, the Associated Press reported that Lionel settled with MTH for US$12 million.^[2]

Customer service and repair operations were moved from Michigan to Ohio in the summer of 2009. Despite briefly affected operations, preventing replacement parts from being shipped until at least the end of August of that year.^[3], the new facility enabled improvements in service efficiency.

Bankruptcy

On November 15, 2004, Lionel, LLC filed for Chapter 11 bankruptcy protection, citing the US$40 million-plus judgment in the MTH lawsuit as the primary factor. In the filing, it listed US$55 million in debt and US$42 million in assets. The largest secured creditor was PNC Financial Services Corp., owed US$31 million. The MTH judgment was not included in the US$55 million figure. On July 26, 2006, Lionel's bankruptcy judge ordered that Lionel submit a plan for emerging from bankruptcy within 75 days of the appeals court's verdict on the MTH lawsuit. On December 14, 2006, a federal appeals court determined that the company was entitled to a new trial, and that their reorganised plan should be filed by March 1, 2007.

Subsequently, on March 27, 2008 Judge Burton R. Lifland, of the U.S. Bankruptcy Court in New York, approved Lionel LLC's Chapter 11 reorganization plan, clearing the way for the company to exit bankruptcy. According to Lionel Chief Executive Jerry Calabrese, the plan called for the company to pay all its creditors in full with interest, whilst the company itself would also obtain up to US$40 million in loans to fund its exit from Chapter 11, pay off its creditors and fund its working capital needs in the future.

In regard to MTH lawsuit, recent filings revealed Lionel agreed to pay MTH US$12 million in cash to settle the lawsuit and a separate suit involving patented smoke-puffing technology. Calabrese and MTH lawyer Alec Ostrow declined to comment on the settlement.

Lionel's Chapter 11 plan also called for private-equity firm Guggenheim Partners to contribute US$37.1 million to the reorganized Lionel company, which consequently would now own 48.6 percent of the new Lionel. Similarly, the plan also called for the estate of the late Martin Davis (former chairman of Gulf+Western Industries/Paramount Communications Inc.) to provide US$21.9 million to Lionel, and the Davis estate would now have a 28.6 percent share in the reorganized company. Guggenheim Partners's and the Davis estate's funding totalled US$59 million for the reorganization plan; they would also loan Lionel an additional US$10 million in second-lien debt. As a result, Calabrese expected the company to be out of bankruptcy "within a week".^[4]

Following the reorganization plan, Neil Young was no longer a minority shareholder in the Lionel company; however, Calabrese insisted that the company wanted Young to remain involved, claiming that Neil would have an "ongoing role in the company", but that this role would be "up to [Neil]".^[4] The pair had organized a meeting on March 28, 2008. Young remains an active consultant in th company's LEGACY and other high-end products as of 2012.

As of May 1, 2008 Lionel was fully out of bankruptcy.

While the company's website identifies it as Lionel, LLC, its press releases refer to it as Lionel Electric Trains, headquartered in New York, NY.^[5]

Collector value

This article may contain original research. Please improve it by verifying the claims made and adding references. Statements consisting only of original research may be removed. More details may be available on the talk page. (February 2012)

Lionel trains are often sought by collectors, but the value of each piece can vary greatly. In general, older pieces tend to be more sought after due to age, rarity and nostalgia. The collector value of "modern era" Lionel trains has been limited by comparison to the trains produced by Lionel Corporation prior to 1969. As another generation grows nostalgic for this era, values may increase. As with any collectible, condition and rarity are important in assesseng value. In addition, reissues and reproductions by Lionel and others have somewhat decreased the collector value and made it more difficult to authenticate vintage Lionel and American Flyer equipment. There are numerous collectors guides to help buyers make informed decisions on authenticity and value.

Currently, Lionel markets its products to several levels of skills and budget. As in the past, the higher-end, limited run products tend to retain the highest collectible value for the future. These products include the LEGACY equipped steam and diesel locomotives which are accurate and highly detailed scale models. Lionel introduced the Vision Line of locomotives and cars in 2009, with the goal of providing the most innovative and detailed O Gauge models available.^[6] Ready-to-run sets and cars are also offered at lower price points. These sets are in the tradition of, and many are reproductions of, the entry-level sets of the classic Lionel era. In March, 2012, Lionel released the first American Flyer exclusive catalog, featuring many all-new models with advanced electronic features and increased scale compatibility.

Lionel also produces lines for children, including battery powered G Scale trains and "Little Lines" sets for children as young as four.

Notes

1. ^ news.ft.com/
2. ^ forbes.com
3. ^ lionel.com, retrieved August 30, 2009
4. ^ ^{a b} forbes.com
5. ^ prnewswire.co
6. ^ Lionel Signature Catalog 2009, p.1

External links

• http://www.lionel.com

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