Mattel – Oscar

Business Update

Nuremberg

February 2011

Summary – Overall Business Performance 2010

▪ Positives

▪ GDP growth 4 %

▪ High oil price

▪ Birth growth 3%

▪ Development of e-commerce(growth 50 %)

▪ Decrease of Hasbro position despite big A&P investments

▪ Secure Oscar cash flow

▪ Outstanding decrease of stock level vs to 2009

▪ Negatives

▪ Corruption ( Daimler, IKEA)

▪ Outflow of capital from Russia

▪ High inflation rate (9%). Cost of life (food, utilities, transport, gasoline) is growing but incomes are stagnated

▪ Negative business environment (taxes, customs)

▪ Key client financial instability

▪ Huge A&P investments of competitors

Business performance Oscar

123456789

1011

2008 2009 2010

DI

DOM

• How is distributor doing overall in market?• 350 (2011) accounts vs 300 (2009)• 10 years growth\ 1 year decline

• What do we do well currently in the market?• New channel of distribution• Marketing activity•Well trained staff

• What can we do better? •Increase number of POS•Increase visibility in stores•Develop trade marketing

• What growth opportunities would we prioritize ?•Girls business back on track•Focus on HW•Launch new lines (MH, Cars 2)

•What are the biggest challenges to future growth? •Lack of strategic perspective•Mattel prices growth•Economic instability•Complicated retail environment•High media costs (40% growth)•Worst terms and conditions with key retailers

$ 10.187

$ 5.295

$ 7.445

• Comments •Girls category decrease due to the end of Winx license•Cars still has stable demand•Baby Gear decrease dramatically due to the high stock level and low demand especially on swings

2010 Sales By Brand – Mattel Shipments to Oscar

2010 Sales By Brand – IMS Oscar to Customers

• Comments •Barbie sales increase vs several last years•Great results on HW re-launch

2010 Shipments by Customer Top 10 customers

• Comments •As from November 2010 renewal shipments to DMC•Suspension of collaboration with Auchan (June 2010)•As consequence of crisis 1 wholesaler left the business

2010 Shipments by Customer Top 10 customers

Actuals 2010 Share

DMC (retailer) 31 936 906 6%

TNG trade 53 909 784 11%

Metro Cash and Carry 36 183 763 7%

Korablik 27 210 692 5%

Auchan (retailer) 3 461 080 1%

Mir Barbie 18 555 038 4%

Steinberg (wholesaler) 2 882 374 1%

Premier (wholesaler) 17 369 004 3%

Katyusha 11 043 538 2%

Rasskom SPb 388 906 0%

Stokmann 5 052 402 1%

Vinni 6 948 114 1%

Others 293 922 850 58%

TOTAL 508 864 451 100%

Competitive Update - Media

Competitive Update - Media

Competitive Update - Media

Advertiser SOSFtk-toys 0,10 %Ask 0,10 %Little Genius 0,10 %Odisseya 0,20 %MOOSE ENTERPRISE 0,20 %Grand Toys 0,20 %Smobi 0,20 %Panini 0,20 %Drofa 0,30 %CEPIA LLC 0,30 %Monex Trading 0,30 %Adlum Commerce Ltd 0,30 %Mart 0,40 %SKANBOL 0,60 %Oskar 0,90 %Kub-Market 1,10 %Toydiko 1,30 %Yunitoys 2,00 %Gulliver and Co 3,10 %1 TOY 5,50 %Detskiy Mir 7,50 %De Agostini 9,10 %HASBRO 16,20 %Lego 22,60 %Sax 27,30 %

2010 leaders: - «SAX», with brands «Aurora», «BAKUGAN», «Bandai», «Bratz», «LEGEND OF NARA», «Welly», «MOXIE», «Zapf Creation» - «LEGO» - «HASBRO»

“Basic” Full year Business plan 2011

• Comments• Stock reduction 36%• Purchase increase 32%• Including additional A&P investments 500K from Mattel

“Upside” Full year Business plan 2011

• Comments WHAT IS REQUIRED FROM MATTEL!!!! TO MAKE THIS UPSIDE PLAN• 250K add. Inv. For TV• 50 K for POS• Trainings

Retail overview in Russia in 2010

• Market exit of Carrefour , Walmart

• Bankruptcy of Mosmart (hypermarkets 12),

• Shareholders conflict in Lenta. No new contract, no stable delivery

• X5 bought Kopeika (624 supermarkets)

• 7 continent bought a few hypermarkets of Mosmart

• 25% shares of Detsky Mir were bought by governmental bank

2011 Key Strategies Oscar in Russia& CIS Markets

• Growth IMS by 19% through building distribution

• Increase business in key CIS markets such as Kazakhstan, Belorussia etc.

• Launch new brands (MH, Cars 2)

• In store visibility

• More aggressive promotions : TV , POS, demonstrations

2011 Marketing calendar

    jan feb mar apr may jun jul aug sep oct nov dec

GirlsATL    

TV Fshst

a         

TV FrySc

rt 

TV MH

PrepShcl

BTL  instr/TM

instr/TM

instr/TM

promo     TMinstr/TM

instr/TM

instr/TM

instr/TM

Boys

ATL                TV

ClrShft

   TV Wtr

BTL promoinstr/TM

instr/TM

instr/TM

promo/C2

    collectability programme

I&PATL                

TV spnsr

TV spnsr

 TV

spnsr

 TV

spnsr

BTL     mama schools instore promo

Games

ATL                        

BTL   promo promohighschl

trnmnt test    TM highschl trnmnt test promo

Risks and opportunities to the plan for 2011

Risk

▪ Consumer purchase power decline (decrease of income and growth of cost of life)

▪ Decrease of affordability for non primary goods

▪ Inflation

▪ New certification laws. April 4, 2011

▪ Retailers monopolization trend

▪ High level of competition

▪ According to forecast the growth of retail turnover is 5-8%

▪ Political risk. New presidential election

Opportunities

▪ Exploit brand power

▪ CIS development

▪ Open new channels of distribution ▪ Karusel - National hypermarket

chain▪ X5▪ Real▪ Magnit

▪ Maximize Mattel brands presence and visibility:

▪ Employ 15 merchandisers in Moscow and regions

▪ Employ extra sales people ▪ Implement POSM▪ Provide trade marketing

programs

▪ Strong A&P support. 750 K $

Org. chart Oscar RussiaGeneral Director

S.D Region

S.D Mosco

w

Marketing

Director

Assistant

FinancialDirector

ImportManager

Trade and Promotion Marketing Manager

TrainingManager

BrandsManagers

(4)

Warehouse Manager

General Accountant

Accountant (2)

Workers (29)KAM (5)KAM (3)

(Moscow

based)

Sales Reps (9) (Regions

based)

CIS Sales

manager

Assistant

Supervisor (2)

Regions (4)Moscow (15)

Sales Director

Assistant

Customer Service (3)

Thank you!!

Competitive Update

Market

Mattel

Mattel

Mattel

Mattel

Lego

Corner Lego DM 130 m2

Hasbro

Detsky Mir

Hasbro

MGA

Disney Princess

VTECH