Jill Barad Quotations

But there was good news coming out of last year. Retail sales of Mattel products at our top U.S accounts were up 12 percent, and yearend retail inventories were down 30 percent, positioning us well for 1999.

These developments were counter to all historical trends, and could not have been foreseen. This situation is very painful and disappointing for us.

As we disclosed in December, unexpected cutbacks by retailers and our further adjustment to a just-in-time shipping pattern negatively impacted our results.

Unfortunately, the Learning Co. performance masks an underlying vitality of core U.S. business.

Although we had a strong Thanksgiving, up 23 percent at our top five U.S. accounts, retailers have determined that they would rather drastically reduce their inventory levels than capture incremental sales. This has negatively impacted our sales by approximately $350 million this year.

We believe Toys R Us is doing what is right for its long-term business, which should benefit us in 1999 and beyond.