Third Quarter Highlights

• Worldwide net sales decreased 8 percent;
• Domestic gross sales decreased 2 percent and international gross sales decreased 14 percent;
• Worldwide gross sales for core brands: Barbie® down 8 percent; Hot Wheels® up 9 percent; Core Fisher-Price® down 4 percent and American Girl® brands up 4 percent;
• Gross margin increased 510 basis points of net sales; SG&A increased by 300 basis points of net sales;
• Operating income was $336.5 million compared to operating income of $315.3 million in the third quarter of 2008; and
• Earnings per share of $0.63 vs. prior year of $0.65.

"As expected, revenues continue to be challenging this year due to the overall economic environment, retailers tightly managing inventory, foreign exchange rates and the lack of entertainment-inspired toy lines," said Robert A. Eckert, chairman and chief executive officer of Mattel, Inc. "That said, we are continuing to make strong progress on reducing costs, rebuilding margins and generating strong cash flow."

Financial Overview

For the quarter, net sales were $1.79 billion, down 8 percent compared to $1.95 billion last year, including unfavorable changes in currency exchange rates of 3 percentage points. On a regional basis, third quarter gross sales decreased 2 percent in the U.S. and decreased 14 percent in international markets, including unfavorable changes in currency exchange rates of 5 percentage points. Operating income for the quarter was $336.5 million, compared to prior year's operating income for the quarter of $315.3 million.

The company's debt-to-total-capital ratio was 27.6 percent. Consistent with the seasonality of the business, during the first nine months, the company's cash and equivalents declined by approximately $294 million. This compares to a decline of $454 million in the first nine months of 2008.

Sales by Business Unit

Mattel Girls and Boys Brands

For the third quarter, worldwide gross sales for the Mattel Girls & Boys Brands business unit were $1.08 billion, down 10 percent versus a year ago. Worldwide gross sales for the Barbie® brand declined 8 percent compared to last year, with essentially flat domestic sales offset by international declines. Worldwide gross sales for Other Girls Brands were down 19 percent, driven primarily by declines in the High School Musical™ and Polly Pocket® toy lines, partially offset by higher sales of Little Mommy® and Disney Princesses in the U.S. Worldwide gross sales for the Wheels category, which includes the Hot Wheels®, Matchbox® and Tyco R/C® brands, were down 3 percent. Worldwide gross sales for the Entertainment business, which includes Radica® and Games and Puzzles, declined 15 percent for the quarter, mostly attributable to lower sales of Radica® and toys geared to last year's summer entertainment properties, partially offset by worldwide sales of toys supporting Disney/Pixar's Toy Story and Toy Story 2, along with stronger U.S. sales of Disney/Pixar CARS™ related product.

Fisher-Price Brands

Third quarter worldwide gross sales for the Fisher-Price Brands business unit, which includes the Fisher-Price® Core, Fisher-Price® Friends and Power Wheels® brands, were $784.8 million, or down 6 percent versus the prior year, primarily due to declines in Fisher-Price® Core and Fisher-Price® Friends domestically.

American Girl Brands

Third quarter gross sales for the American Girl Brands business unit, which offers American Girl® branded products directly to consumers, were $82.4 million, up 4 percent versus last year, reflecting the benefit of the opening of two new boutique stores in Boston and Minneapolis in November 2008.

About Mattel

Mattel, Inc. (NASDAQ: MAT) (www.mattel.com) is the worldwide leader in the design, manufacture and marketing of toys and family products. The Mattel family is comprised of such best-selling brands as Barbie®, the most popular fashion doll ever introduced, Hot Wheels®, Matchbox®, American Girl®, Radica® and Tyco R/C®, as well as Fisher-Price® brands, including Little People®, Power Wheels® and a wide array of entertainment-inspired toy lines. In 2009, Mattel is recognized among the "100 Best Corporate Citizens," as one of the "World's Most Ethical Companies" and as one of FORTUNE Magazine's "100 Best Companies to Work For." With worldwide headquarters in El Segundo, Calif., Mattel employs approximately 29,000 people in 43 countries and territories and sells products in more than 150 nations. Mattel's vision is to be the world's premier toy brands - today and tomorrow.