"In general, we are pleased with Mattel's ongoing commitment to and compliance with its Global Manufacturing Principles," says Dr. S. Prakash Sethi, chairman of MIMCO and University Distinguished Professor, Zicklin School of Business, Baruch College. "Across the board, we observed compliance to key issues and a general willingness from management to institute the changes we recommended."

"These reports reflect Mattel's determination to set an example of responsible conduct, accountability for our actions, and transparency for our compliance efforts through independent external monitoring and uncensored public disclosure of findings," says Tom Debrowski, executive vice-president of worldwide operations for Mattel. "We are pleased with MIMCO's current findings of our manufacturing facilities in Asia. Our ongoing commitment to our multifaceted GMP program is the framework under which we continue to improve our facilities, increase community outreach initiatives and enhance our employees' professional and personal lives. I am proud of what we have collectively accomplished."

FOLLOW-UP INDEPENDENT AUDIT REPORTS

Mattel Jakarta Satu (Indonesia)
The MIMCO follow-up report for Mattel Jakarta Satu (MJS) indicates that management demonstrates a high level of concern for the welfare of employees, including their conditions in the manufacturing facility, dormitories, and even their homes, and that the quality of the dialogue between management and the workforce is excellent. According to the report, by comparison with its peers, MJS has set a commendable example for addressing employees' health care needs in a country where systems of preventive health care, as well as treatment of illness, are manifestly deficient. MJS exceeds the regional wage mandated by local labor law and the audit found no violations of compensation for hours worked, though a small percentage of employees feel pressured to work overtime.

MIMCO noted some shortfalls, notably in the reluctance of a minority of employees to report incidents of harassment or minor injury and employee reluctance to wear personal protective equipment (PPE). Another problem pertained to high noise levels in certain manufacturing areas. The current approach has been to ensure that all employees wear earplugs in the affected areas. MJS has recognized the need for a better solution through additional capital investment in quieter equipment. MIMCO has been assured that this system will be in place by February 2003. Overall, however, MJS has well-managed facilities where management practices an enlightened and proactive approach to employment policies, training and development of workers, a clean and safe physical work environment, and a pleasant living environment.

Mattel Jakarta Dua (Indonesia)
MIMCO's findings at Mattel Jakarta Dua (MJD) are substantially similar to those at MJS. (There is now one single management team for the two facilities, forming Mattel Indonesia PTMI.) In addition to maintaining generally well-run facilities, MIMCO applauds MJD's efforts in providing job-related and non-job-related skill enhancement programs. Furthermore, management has already begun work to improve employee access to these programs by better accommodating shift schedules and exploring extended training opportunities with local technical schools. Both facilities scored 100 percent in employee awareness of Mattel's GMP program.

While management has begun adjusting break times to align them more closely with Islamic prayer schedules, which vary according to lunar phases, MIMCO continues to assert that half an hour is insufficient for both meals and prayers.

Mattel Bangkok Ltd. (Thailand)
MIMCO commends Mattel Bangkok's (MBK) management for its efforts to meet GMP standards, ensure a safe, healthy and fair work environment, and maintain a well-run manufacturing facility. The facility received generally high overall rankings by the employees in all areas of its operations, and the MIMCO audit team also found MBK to meet GMP standards in substantially all areas. Interviewed employees indicated a high level of satisfaction with orientation, safety training and job training programs, and almost unanimously stated their familiarity with GMP. In addition, nearly all employees expressed awareness of non-job-related training programs provided by the company, and nearly as high a level of participation in these programs.

The audit revealed a few minor points, however, that MIMCO hopes to see addressed: Further improvement in the heat stress reduction programs; an investigation of some irregularities in the punching of time-cards, and a more detailed audit of the wages paid during an employee's initial probationary period. MBK management has already provided responses to MIMCO on these findings, including implementing further preventive maintenance measures, staff training, and continuous monitoring to ensure effective heat stress programs. MBK will also provide further training to employees to ensure that they better understand their pay stubs.

Mattel Malaysia Sdn. Bhd. (Malaysia)
MIMCO's follow-up audit revealed that in all substantive areas of GMP, Mattel Malaysia Sdn. Bhd. (MMSB) has satisfactorily met, and in some cases, even exceeded, GMP requirements. Interviewed workers gave highly positive responses regarding their orientation experience, as well as satisfaction with regard to the training they received in safe handling of machinery and hazardous materials, availability of clean bathrooms, drinking water and time for prayers. In informal discussions with MIMCO, employees also expressed tremendous pride in their living accommodations.

MMSB management has agreed to implement two key recommendations by MIMCO: 1) To re-institute clocking-out after overtime work and 2) improve employee knowledge and accessibility to various skill enhancement programs.

Mattel Tools Sdn. Bhd. (Malaysia)
The MIMCO audit of this tooling facility indicated that employees are well-trained, channels of communication between management and employees are effective, and overall, GMP has been implemented well. With regard to pay and working hours, Mattel Tools Sdn. Bhd. (MTSB) was in complete compliance with the Malaysian law and GMP. Employees expressed a large measure of satisfaction with their personal facilities and work environment. All those interviewed by MIMCO unanimously indicated that they had received training and could operate their equipment free of hazard to themselves and the facility. They also confirmed receiving and regularly using their personal protective equipment by 100 percent.

MIMCO has made recommendations to MTSB management. First, persisting employee complaints regarding perceived safety issues on the factory floor must be addressed. And second, although employees indicated by a large majority that promotions were based on merit, there was also some feeling that discrimination affects hiring and promotion practices. In response, MTSB has agreed to undertake, in cooperation with Mattel's internal audit department, a plant-wide survey of employees and, where necessary, take corrective action. This survey would be completed within 90 days and its findings made available to MIMCO. At its discretion, MIMCO may choose to undertake a follow-up visit to the facility to monitor progress. MTSB management has also agreed to conduct leadership training exercises to further sensitize middle management to the issues of harassment and discrimination.

About GMP
Mattel's Global Manufacturing Principles (GMP), launched in November 1997, are the cornerstone of the company's ongoing commitment to responsible manufacturing practices around the world. Adherence to GMP seeks to ensure that wages, working and living conditions and employee access to management are just and fair, as well as to assure protection of the environment.

About MIMCO
MIMCO is an independent body that was voluntarily established by Mattel to monitor the company's GMP compliance. MIMCO uses an independent monitoring system created to provide objective checks and balances to ensure standards are consistently met. MIMCO consists of three independent, highly respected international experts in codes of conduct, corporate responsibility and children's and labor issues worldwide: Dr. S. Prakash Sethi, Dr. Paul F. McCleary and Dr. Murray L. Weidenbaum. Dr. Sethi is Chairperson of the Council. Further inquiries about MIMCO may be addressed by e-mail to Dr. Sethi at [email protected]. To view MIMCO reports, please visit the Corporate Responsibility page located at www.mattel.com.

About Mattel
Mattel, Inc. (NYSE:MAT, www.mattel.com) is the worldwide leader in the design, manufacture and marketing of toys and family products. With worldwide headquarters in El Segundo, California, Mattel employs more than 27,000 people in 36 countries and sells in more than 150 nations throughout the world. The Mattel vision is to be the World's Premier Toy Brands--Today and Tomorrow.