• Worldwide net sales up 1 percent;
• Domestic gross sales up 3 percent and international gross sales flat with prior year;
• Worldwide gross sales for core brands: Barbie® down 8 percent; Hot Wheels® down 3 percent; Core Fisher-Price® up 12 percent and American Girl® brands down 9 percent;
• Gross margin decreased 210 basis points of net sales; SG&A increased 270 basis points of net sales;
• Operating loss was $32.0 million compared to operating income of $5.5 million in the first quarter of 2005; and
• Earnings per share of $0.08 (includes tax benefit from settlements of $0.15) vs. prior year of $0.02.

"Although the first quarter is relatively less important in the highly seasonal toy business, we were encouraged by some of the sales trends," said Robert A. Eckert, chairman and chief executive officer of Mattel. "Positive developments in the quarter included strong worldwide Fisher-Price® growth and a slight increase in U.S. Barbie® sales. Our profitability, however, was negatively impacted by continued gross margin pressure, as well as severance charges in the quarter. We expect the year to continue to be challenging and have implemented price increases effective in the second quarter for the U.S. We look forward in the near-term to the opening of American Girl® Place -- Los Angeles this weekend and the rollout of the toy lines based on the CARS and Superman™ movies slated for release this summer."

Financial Overview

For the quarter, net sales were $793.3 million, up 1 percent compared to $783.1 million last year, in spite of unfavorable changes in currency exchange rates of 2 percentage points. On a regional basis, first quarter gross sales increased 3 percent in the U.S., and were flat with prior year in international markets, including unfavorable changes in currency exchange rates of 4 percentage points. Operating loss for the quarter of $32.0 million included $13 million of severance charges related to the January 2006 reduction in workforce, primarily within the Mattel Brands division. Unfavorable product mix and external cost pressures also contributed to the operating loss.

The company's debt-to-total-capital ratio of 23.7 percent is in line with the company's capital and investment framework. Consistent with the seasonality of the business, during the quarter the company's cash and equivalents declined by approximately $394 million, compared with a decline of approximately $378 million in last year's first quarter.

Sales by Business Unit

Mattel Girls and Boys Brands

For the first quarter, worldwide gross sales for the Mattel Girls and Boys Brands business unit were $493.2 million, down 4 percent versus a year ago. Worldwide gross sales for the Barbie® brand were down 8 percent. Worldwide gross sales for Other Girls Brands were up 23 percent, driven by strong sales of the Pixel Chix™ and Winx™ toy lines. Worldwide gross sales for the Wheels category, which includes the Hot Wheels®, Matchbox® and Tyco® R/C brands, were down 4 percent. Worldwide gross sales for the Entertainment business, which includes Games and Puzzles, were down 14 percent for the quarter primarily due to declines in Yu-Gi-Oh!™.

Fisher-Price Brands

First 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 $307.2 million, or up 16 percent versus the prior year. This reflects strong growth in Fisher-Price® Friends and Core Fisher-Price® worldwide, as well as strong growth in the Power Wheels® brand.

American Girl Brands

First quarter gross sales for the American Girl Brands business unit, which offers American Girl® branded products direct to consumers, were $61.9 million, down 9 percent versus last year primarily due to the timing of the Easter holiday and strong performance in 2005 from the debut of the Marisol™ Girl of the Year doll.

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.