• Worldwide net sales flat with the prior year;
• Domestic gross sales down 4 percent and international gross sales up 5 percent;
• Worldwide gross sales for core brands: Barbie® down 18 percent; Hot Wheels® up 8 percent; Core Fisher-Price® flat and American Girl® brands up 12 percent;
• Gross margin decreased 210 basis points of net sales; SG&A increased 100 basis points of net sales;
• Operating income as a percentage of net sales was 18.5 percent, down 310 basis points; and
• Earnings per share of $0.55 vs. prior year of $0.61.

EL SEGUNDO, Calif., Oct. 17, 2005 -- Mattel, Inc. today reported 2005 third quarter financial results. For the quarter, the company reported net income of $225.3 million, or $0.55 per share, compared to last year's third quarter net income of $255.8 million, or $0.61 per share.

"Third quarter results are disappointing as sales increases in much of our portfolio were offset by declines in the Barbie® brand. Overall, we continue to experience the effect of a difficult retail environment as well as cost increases," said Robert A. Eckert, chairman and chief executive officer of Mattel. "I am confident, however, that our recent organizational changes have laid a positive foundation as we continue to reinvigorate the Barbie® brand and improve our processes across the organization."

Financial Overview

For the quarter, net sales were $1.67 billion, flat compared to last year, and included a benefit from changes in currency exchange rates of 1 percentage point. On a regional basis, third quarter gross sales decreased 4 percent in the U.S., and were up 5 percent in international markets, which included a benefit from changes in currency exchange rates of 3 percentage points. Operating income for the quarter was down 14 percent at $308.8 million, primarily due to lower gross margins.

The company's debt-to-total-capital ratio was 18.8 percent. Consistent with the seasonality of the company's business and its use of working capital, the company's cash and equivalents declined by approximately $983 million during the nine months ended September 30, 2005, compared to a decline of approximately $822 million in the prior year period. The primary reason for the higher cash usage was the repayment of $150 million of 6 1/8th percent senior notes that matured in July 2005. Additionally, during the third quarter of 2005, the company repurchased 0.7 million shares of its common stock at a cost of $13.4 million. During the third quarter of 2004, the company did not repurchase shares of its common stock.

Sales by Business Unit

Mattel Brands

For the third quarter, worldwide gross sales for the Mattel Brands business unit were $1.0 billion, a 5 percent decrease versus the prior year's third quarter. Worldwide gross sales for the Barbie® brand were down 18 percent. Worldwide gross sales of Other Girls Brands, which includes Polly Pocket!™, Little Mommy™, and several new brand introductions, such as Disney Cinderella and Teen Trends™, were up double-digits.

Worldwide gross sales for the Wheels category, which includes the Hot Wheels®, Matchbox® and Tyco® R/C brands, were up 4 percent, primarily driven by higher sales of Hot Wheels®. Worldwide gross sales for the Entertainment business, which includes Games and Puzzles, were down 7 percent for the quarter, primarily driven by sales declines in the Yu-Gi-Oh!™ property and JuiceBox™, while sales of the Batman™ property were higher.

Fisher-Price® Brands

Third quarter worldwide gross sales for the Fisher-Price® Brands business unit, which includes the Fisher-Price®, Little People®, Rescue Heroes® and Power Wheels® brands, were $727.4 million, a 6 percent increase versus the prior year's third quarter. The increase reflects the strong growth in Fisher-Price® Friends worldwide and Core Fisher-Price® in international markets.

American Girl® Brands

Third quarter gross sales for the American Girl® Brands business unit, which offers American Girl® branded products direct to consumers, were $69.1 million, up 12 percent from the prior year, primarily driven by the continued success of the new American Girl Today® doll and strong performance of the American Girl® retail stores.

About Mattel

Mattel, Inc., (NYSE: MAT), (www.mattel.com) is the worldwide leader in the design, manufacture and marketing of toys and family products, including Barbie®, the most popular fashion doll ever introduced. The Mattel family is comprised of such best-selling brands as Hot Wheels®, Matchbox®, American Girl® and Tyco® R/C, as well as Fisher-Price® brands (www.fisher-price.com), including Little People®, Rescue Heroes®, Power Wheels® and a wide array of entertainment-inspired toy lines. With worldwide headquarters in El Segundo, Calif., Mattel employs more than 25,000 people in 42 countries and sells products in more than 150 nations throughout the world. The Mattel vision is to be the world's premier toy brands -- today and tomorrow.