• Worldwide net sales up 7 percent;
• Domestic gross sales up 5 percent and international gross sales up 12 percent;
• Worldwide gross sales for core brands: Barbie® up 1 percent; Hot Wheels® up 3 percent; Core Fisher-Price® up 7 percent and American Girl® brands up 3 percent;
• Gross margin increased 190 basis points of net sales; SG&A increased 240 basis points of net sales;
• Operating income was $322.2 million compared to operating income of $308.8 million in the third quarter of 2005;
• Net income was $239.0 million compared to net income of $225.3 million in the third quarter of 2005;
• Earnings per share of $0.62 vs. prior year's earnings per share of $0.55; and
• The company completed a review of its historical stock option practices. Included in third quarter results is $19 million of pre-tax non-cash compensation expense (equivalent of $0.03 per share after tax) due to unintentional accounting errors related to certain stock option grants made prior to 2003.

"I am pleased with our third quarter results. We had good performance across our portfolio, with especially strong contributions from Fisher-Price®, the CARS entertainment property, and girls brands such as Polly Pocket!™ and Pixel Chix™," said Robert A. Eckert, chairman and chief executive officer of Mattel. "The Barbie® business continued to show encouraging signs of stabilization, with U.S. sales increasing for the third consecutive quarter, and we generated early retail excitement with the introduction of TMX™ Elmo in September."

Financial Overview

For the quarter, net sales were $1.79 billion, up 7 percent compared to $1.67 billion last year, including a favorable change in currency exchange rates of 1 percentage point. On a regional basis, third quarter gross sales increased 5 percent in the U.S., and were up 12 percent in international markets, including a favorable impact of changes in currency exchange rates of 3 percentage points. Operating income for the quarter of $322.2 million increased from $308.8 million in 2005 primarily due to the growth in sales and improvement in gross margin.

The company's debt-to-total-capital ratio was 28.8 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 $445 million during the nine months ended September 30, 2006, compared to a decline of approximately $983 million in the prior year period. During the third quarter, the company repurchased 2.4 million shares of its common stock at a cost of $39.4 million.

On October 3rd, the company completed the acquisition of Radica Games Limited, the maker of electronic entertainment toys, for total consideration of approximately $230 million. Since the transaction was completed in the fourth quarter, the acquisition was not included in Mattel's third quarter results.

Sales by Business Unit

Mattel Girls and Boys Brands

For the third quarter, worldwide gross sales for the Mattel Girls and Boys Brands business unit were $1.08 billion, up 8 percent versus a year ago. Worldwide gross sales for the Barbie® brand were up 1 percent. Worldwide gross sales for Other Girls Brands were up 16 percent, due to continued growth from the Pixel Chix™ and Polly Pocket!™ toy lines. 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 Games and Puzzles, were up 27 percent for the quarter primarily due to the CARS toy line.

Fisher-Price Brands

Third quarter worldwide gross sales for the Fisher-Price Brands business unit, which includes the Fisher-Price®, Little People®, and Power Wheels® brands, were $790.5 million, or up 9 percent versus the prior year. This reflects strong growth in Core Fisher-Price® and Fisher-Price Friends worldwide, including continued growth from Dora the Explorer™ and the launch of TMX™ Elmo.

American Girl Brands

Third quarter gross sales for the American Girl Brands business unit, which offers American Girl® branded products direct to consumers, were $71.2 million, up 3 percent versus last year primarily due to sales from the third American Girl Place® store, which opened in Los Angeles in April 2006.

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®, Radica® 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 30,000 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.