Here is an excerpt from the November/December 1983 Milton Bradley News
(Volume XIII, Number 10) which is a small paper "Published monthly for
the employees of Milton Bradley Company and its subsidiaries."

[Picture of James J. Shea, Jr. omitted]

The President's Message ________________________________________________

  During the past two years, the toy industry, exclusive of video games,
has experienced a decline in sales.  The video game category, which, in
1982 represented 31% of the entire toy industry, reached 2.1 billion in
sales, domestically.  This category is expected to experience a dollar
decline in 1983.  The non-video portion of the toy industry is also
expected to show a further decline as a result of the impact that video
games and personal computers have had in the leisure time field.

  The unprecedented growth enjoyed by video games in the past two years
has been the most important external factor negatively impacting Milton
Bradley Company's performance during that period.  The recent recession,
which started in the fourth quarter of 1981 and continued through the
first quarter of 1983, also had a dramatic effect on consumer buying
habits which resulted in fewer toys and games being purchased per family
in favor of gift giving of a more practical nature, such as clothing.

  The third factor impeding Milton Bradley's profitable growth was the
impact that a strengthening U.S. dollar had on our international
business which, in effect, reduced a composite growth of nearly 20%,
compounded per year in the years 1981 and 1982, to 2% when translated
from foreign currency to the U.S. dollar.

  Management had elected in 1978, after perfecting its own video game
console, not to participate in the video market due to what we felt at
the time would be high-risk with questionable reward, and put its
emphasis on non-video electronic games.  The loss in popularity of
non-video electronics, which started to manifest itself in 1981, caused
management to reassess its previous position of not participating in
video games and, in August 1982, Milton Bradley Company purchased
General Consumer Electronics, a newly formed company that had a unique
game console with a self-contained screen and cartridges whose play
simulated the play experienced in video arcades.  Management viewed this
product as a niche market opportunity, domestically, recognizing that
the higher cost to manufacture this unit would place it in the upper
price range of video game console offerings.  At the same time, a
self-contained video screen was attractive for European countries where
most households had only one television set.

  In order to become further involved in the video game segment while,
at the same time minimizing our financial risk, we entered into
agreements with Atari and Texas Instruments to develop game software on
a royalty basis and to manufacture a peripheral for the game console on
an O.E.M.  basis which would permit the use of voice and voice
recognition.  These strategies, adopted by the company, did not
anticipate the oversupply of video game consoles and low-end personal
computers that was to follow.  I am sure that I need not elaborate on
the present state of the video game and personal computer markets in the
U.S. today.

  These market conditions saw a personal computer being sold in mid 1983
at on-third of its price in the summer of 1982, and video game consoles
selling at less than one-half of what they were offered for at the
beginning of 1982.  As a result, GCE was forced to reduce its price of
/Vectrex/ in an attempt to be competitive, to a price that was less than
the cost realized to manufacture these products.  These industry-wide
price reductions also resulted in our developing a voice recognition and
synthesis peripheral at a price which, in todays' market, is more than
the price of the main console.  The pricing of the peripheral and
console overshadows that attractiveness of this innovative development
and ultimately was the cause of the Atari and Texas Instruments
abandoning their agreement to purchase and distribute this peripheral
with accompanying cartridges.

  Our GCE subsidiary found it extremely difficult to obtain placement of
/Vectrex/ due to a heavy inventory of other manufacturers' consoles and
cartridges at year end 1982 which extended into 1983.  /Vectrex/ is in
limited distribution which lessens the opportunity to advertise and
promote this product in the marketplace.

  Domestically, orders for conventional games are running 10% behind
those of last year.  The reduced sales reflect the loss in popularity of
arcade-type board games introduced in 1982, and the maturing of the
licensed property "Smurfs."

  Consumer offtake of our conventional games during the first six months
of 1983, was running ahead of that of a year ago with some exceptions.
The trade, however, was taking a very cautions position in the stocking
of these games as they anticipated closeout video game cartridge
promotions at prices lower than or equal to conventional games, which
would have a negative impact on this category.  It is therefore unlikely
that our game division will enjoy the same rate of sale that it did in
1982.  There is some indication that the loss of conventional game
popularity is levelling off as the video game market matures.

  Non-video electronic games, as mentioned earlier, continue to lose
popularity and we anticipate that domestic sales of non-video electronic
games will be down $15,000,000 from those of a year ago.  While these
games are basically sound, the consumer prices is higher than video game
cartridges available in the marketplace.

  Our preschool division, Playskool, is enjoying an excellent year.
Orders are substantially ahead of those of a year ago and several new
item introductions are in an oversold position due to high demand and
production capacity restrictions.  Playskool is also benefiting from
improving demographics and a more optimistic consumer attitude due to an
improving economy.

  International operations are enjoying increased sales over those of
the previous year but are substantially under budget.  European
economics have not recovered from the recession and retailers are buying
from hand-to-mouth.  The consumers low level of confidence and
restricted buying reflects the high unemployment, high interest rates
and government austerity programs in most foreign countries.  Video
games have note enjoyed the same degree of popularity in Europe as they
have in the United States.  Even at these lower levels of penetration,
however, video games and their accompanying game cartridges are
competing with basic games.  We expect that, as the installed base for
video games increases, there will be a further negative impact on
conventional game sales in the European market.

  Our European subsidiaries are selling the /Vectrex/ system and the
incremental sales from this product category represent the greater part
of the sales increase enjoyed by our international division.

  Milton Bradley Company will experience a loss for the fourth quarter
and year in 1983.  The drop in earnings is primarily due to the losses
we are experiencing from our GCE subsidiary.  There are other factors,
however, contributing to the poor showing in 1983.

  We also anticipate a loss by MB Electronics in the non-video
electronic game area as a result of lower sales than had been
anticipated in this category in addition to writeoffs of non-video
electronic products.

  The lower sales of conventional games will also contribute to the
decline in earnings in this category.

  Our Playskool subsidiary will enjoy improved earnings over those of
last year as a result of a significant increase in sales and improving
profit margins.

  The spectacular growth in consumer electronics over the past two years
has represented a serious challenge to the toy industry, particularly
those manufacturers whose products are directed to boys between the ages
of eight and 14.  Consumer dollars have been diverted from these
traditional toys and games to the video sector.  The speed with which
this has taken place has given the industry little time to react
positively to this challenge.

  Some game and toy companies have begun the manufacturing and sale of
video game software using promotional properties, where possible, in an
attempt to perpetuate growth and offset decline sales in basic toy
categories.  Short-term, it is questionable whether this strategy will
prove profitable.  The current marketplace is overcrowded with unwanted
game cartridges.  Industry sources placed this excess inventory at
20,000,000 to 30,000,000 units at mid-year.  These cartridges are being
offered at greatly reduced prices that, in some instances, are less than
their manufacturing cost.  Already there are numerous companies that
have left the marketplace due to inferior products and an overabundance
of game software available for the various game and home computer
consoles.

  There is little question that, in the long run, the software market,
particularly in the areas of entertainment and education, will become a
profitable business for some.  For the present, however, it is
questionable whether a company can operate profitably due to the
necessity of offering the trade stock balancing, (the free replacement
of slow moving cartridges), and spending large amounts of money to
promote their video games to compete in a marketplace where there are
some 20,000 titles from which to choose.

  Milton Bradley Company expects that the year 1984 will show
considerable improvement over the year just ending.  Our game division
will assume the responsibility for selling /Vectrex/ in 1984 and GCE's
office in Santa Monica, California will be closed by year end.

  Indications are positive that the consumer is retuning to conventional
games while the popularity of video games is beginning to noticeably
decline.  It is management's belief that conventional games will not
experience the decline that has been characteristic of the past two
years.  Also, Milton Bradley Company's game division will introduce new
toy products in addition to conventional games and puzzles in 1984.

  In international markets, we believe that the recessionary environment
will show gradual improvement during the year 1984 which will result in
a modest increase in our international operations.

  In 1984, Playskool will continue to enjoy accelerated growth due to
improving demographics as well as exciting new item introductions for
1984.

  In the immediate future, Milton Bradley Company will continue its
involvement in the electronics area and will be identifying
opportunities in this area that have a potential for profitable growth.

  Milton Bradley Company's strength in the past has been the dedicated
spirit of its employees.  We will continue to rely on this valuable
resource in the years ahead.

James J. Shea, Jr.
Chairman of the Board,
President and Chief Executive Officer