• Worldwide net sales up 3 percent;
• Domestic gross sales down 2 percent and international gross sales up 10 percent;
• Worldwide gross sales for core brands: Barbie® down 4 percent; Hot Wheels® up 10 percent; Core Fisher-Price® up 19 percent and American Girl® brands flat;
• Gross margin decreased 60 basis points of net sales; SG&A increased by 50 basis points of net sales;
• Operating income was $310.5 million, and included charges of approximately $40 million related to the company's 2007 product recalls, compared to operating income of $322.2 million in the third quarter of 2006, which included $19 million of non-cash compensation expense related to prior periods; and
• Earnings per share of $0.61 vs. prior year of $0.62.

Third quarter operating income of $310.5 million included charges and incremental costs of approximately $40 million related to the company's product recalls during 2007. Of this total, $13.3 million related to an increase in the reserves recorded in the second quarter for the August recalls, due primarily to higher than anticipated product return rates; $9.1 million related to additional reserves for subsequent product recalls; and approximately $17 million related to incremental recall related legal, advertising and administration costs incurred in the third quarter.

"Despite the challenges the company faced during the third quarter, the business has performed fairly well, even with some supply chain disruptions that impacted our sales during the quarter. International has continued to drive growth in every major region, and while the U.S. was down slightly in the quarter, we did continue to see strong performance from several lines, especially Core Fisher-Price® and our Disney/Pixar CARS™ entertainment property," said Robert A. Eckert, chairman and chief executive officer of Mattel. "U.S. Barbie® performance was soft and remains an area of focus, although a good portion of the decline in the quarter was directly related to the supply chain disruptions."

Financial Overview

For the quarter, net sales were $1.84 billion, up 3 percent compared to $1.79 billion last year, including favorable 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 increased 10 percent in international markets, including favorable changes in currency exchange rates of 6 percentage points. Operating income for the quarter was $310.5 million, compared to prior year's operating income for the quarter of $322.2 million.

The company's debt-to-total-capital ratio was 29 percent. Consistent with the seasonality of the business, during the first nine months, the company's cash and equivalents declined by approximately $929 million, compared with a decline of approximately $445 million in the first nine months of 2006. During the third quarter of 2007, the company repurchased 28.3 million shares of its common stock at a cost of $645 million.

Sales by Business Unit

Mattel Girls and Boys Brands

For the quarter, worldwide gross sales for the Mattel Girls & Boys Brands business unit were $1.14 billion, up 6 percent versus a year ago. Worldwide gross sales for the Barbie® brand were down 4 percent, with increases in international markets partially offsetting declines in the U.S. Worldwide gross sales for Other Girls Brands were down 10 percent, due primarily to U.S. declines in the Polly Pocket!™ brand. Worldwide gross sales for Wheels, which includes the Hot Wheels®, Matchbox® and Tyco® R/C brands, were up 9 percent, led by double-digit growth in the Hot Wheels® and Matchbox® lines. Worldwide gross sales for the Entertainment business, which includes Radica® and Games and Puzzles, increased 29 percent, driven by strong performance of Disney/Pixar CARS™ and the addition of the Radica® product lines.

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 $799.8 million, up 1 percent versus the prior year, reflecting continued strong growth in Core Fisher-Price® worldwide, which was partially offset by declines in Fisher-Price® Friends.

American Girl Brands

Third quarter gross sales for the American Girl Brands business unit, which offers American Girl® branded products directly to consumers, were $71.0 million, or flat with last year.

About Mattel

Mattel, Inc., (NYSE: MAT, http://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. Mattel is recognized as one of the 100 Most Trustworthy U.S. Companies by Forbes Magazine and is ranked among the 100 Best Corporate Citizens by CRO Magazine. Committed to ethical manufacturing and sustainable business practices, Mattel marks a 10-year milestone in 2007 for its Global Manufacturing Principles. With global headquarters in El Segundo, Calif., Mattel employs more than 30,000 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.