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Finance Manager

MATTEL, INC.

ENVIRONMENTAL ANALYSIS

October 26th, 2005

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Mattel, Inc. designs, manufactures, and markets a broad variety of toy products worldwide through sales to retailers and wholesalers and directly to consumers. Mattel's vision is to provide "the world's premier toy brands - today and tomorrow."(11)

Mattel's reportable segments are separately managed business units and are divided on a geographic basis between domestic and international. The Domestic segment develops toys that it markets and sells through the Mattel brands US, Fisher-Price Brands US and American Girl Brands segments. Products marketed by the International segment, with the exception of American Girl Brands, are generally the same as those developed and marketed by the Domestic segment, although some are developed or adapted for particular international markets. Mattel's products are sold directly to retailers and wholesalers in Canada and most European, Asian and Latin American countries, and through agents and distributors in those countries where Mattel has no direct presence. (11)

Mattel manufactures toy products for all segments in both company-owned facilities and through third-party manufacturers. Products are also purchased from unrelated entities that design, develop and manufacture those products. To provide greater flexibility in the manufacture and delivery of its products, and as part of a continuing effort to reduce manufacturing costs, Mattel has concentrated production of most of its core products in company-owned facilities and generally uses third-party manufacturers for the production of non-core products. (11)

Mattel's business is very competitive and highly seasonal, with consumers making a large percentage of all toy purchases during the traditional holiday season, which occurs in the third and fourth quarters of their fiscal year. Through its product design and development group, Mattel regularly refreshes, redesigns and extends existing toy...