Carson, Inc. Reports Fourth Quarter Sales and Earnings.

SAVANNAH, Ga.--(BUSINESS WIRE)--Feb. 23, 1998--Carson, Inc. (NYSE: CIC), a leading manufacturer and marketer of ethnic hair care products for people of African descent, today reported operating results for the year and three month period ended December 31, 1997.

For the fourth quarter of 1997, Carson's consolidated net sales were $31.8 million, an increase of 49.9% over consolidated net sales of $21.2 million for the fourth quarter of 1996. Gross profit for the fourth quarter of 1997 was $16.8 million, compared to $11.2 million for the corresponding quarter of 1996, and operating income was $1.2 million, compared to $2.9 million for the corresponding quarter of 1996. The Company reported a loss for the fourth quarter of 1997, before extraordinary item, of $0.7 million, or $0.05 per share, compared to income, before extraordinary item, of $1.6 million, or $0.11 per share, for the corresponding quarter of 1996. In the fourth quarter of 1997, the company recorded an extraordinary loss after taxes of $2.1 million, or $0.14 per share, related to the write-off of debt issuance costs. A similar after tax extraordinary loss of $3.5 million, or $0.25 per share, was taken in the fourth quarter of 1996.

For all of 1997, consolidated net sales were $109.6 million, an increase of 41.0% over the $77.7 million of consolidated net sales reported for 1996. Gross profit for 1997 was $59.1 million compared to $42.8 million for 1996. Operating income was $12.2 million for 1997, compared with $5.7 million for 1996, after non-recurring incentive compensation charges of $7.1 million for 1996 related to the company's IPO in that year. Income, before extraordinary item, for 1997 was $3.8 million, or $0.25 per share, compared with a loss, before extraordinary item, in 1996 of $2.5 million, after the non-recurring compensation charges cited above. Net income for 1997 after the previously mentioned extraordinary charges was $1.7 million, or $0.11 per share, compared to a net loss of $6.0 million, or $0.48 per share, in 1996.

Carson's domestic net sales for the fourth quarter of 1997 increased 31.4% over the corresponding quarter in 1996, to $19.9 million. This domestic growth is entirely attributable to the Cutex and Let's Jam brands which were acquired in April 1997. These acquisitions contributed $6.9 million of net sales in the fourth quarter of 1997, offsetting a 17.3% decline in net sales for the Company's domestic core business. For all of 1997, Carson's domestic core ethnic hair care sales declined by 5.2% to $54.3 million. However, during this period, Carson's overall market share of this category, as published by Information Resources, Inc. (IRI) (based on sales data from store register scanners at a sampling of food and drug store chains and mass merchandisers), increased slightly. These market share results outperformed the ethnic hair care products market where sales at retail declined by approximately 2.6% as published by IRI. The Company believes that the softness in this market is attributable in part to continuing drug chain consolidation as well as consolidation in the distribution channel.

International net sales for the Company on a consolidated basis for the fourth quarter of 1997 increased 96.0% over the corresponding quarter in 1996 to $11.9 million. Sales by the Company's 69.2% owned South African subsidiary (Carson South Africa) increased by 119.1% over the corresponding quarter in 1996 to $8.7 million in the quarter and increased by 110.0% over all of 1996 to $21.7 million for all of 1997. The operations of Carson South Africa continue to represent an increasing portion of the Company's consolidated results. In 1997, Carson South Africa comprised 19.8% of the Company's consolidated net sales and 38.1% of the Company's consolidated operating income. Net sales of international exports from the United States by the Company increased by 52.1% over the corresponding quarter of 1996 to $3.2 million, and increased by 20.0% over all of 1996 to $12.1 million for all of 1997.

The Company's 1997 results included several non-recurring and new product line introduction related expenses that adversely impacted operating profit and net income. Due to the addition of senior management personnel during the year, two existing senior managers terminated their services with the Company at the end of 1997, resulting in severance benefits aggregating $430,000, or $0.02 per share, being expensed. Additionally, $1.6 million, or $0.06 per share, of marketing expenses were incurred during 1997 in connection with the launch of Carson Compositions, the Company's new line of ethnic hair care products targeted to professional salons. The broad based distribution of this line, however, was delayed in order to assure that all formulations met Carson's high quality standards. As a result, actual sales of the salon professional line were minimal in 1997. Most of the related marketing expenses were incurred in the fourth quarter of 1997.

During the fourth quarter of 1997, Carson completed an offering under Rule 144A and Regulation S of the Securities Act of 1933, as amended, of $100 million aggregate principal amount of 10 year 10_% Senior Subordinated Notes (which were subsequently exchanged for similar notes registered with the SEC). The proceeds of these notes were used in part to repay in full outstanding indebtedness of $91 million plus accrued interest under its previous credit agreement. As a result of the repayment of all indebtedness under the previous credit agreement, the Company took an extraordinary charge in the fourth quarter to write-off the debt issuance cost related to that credit agreement, as mentioned above. Simultaneously with the closing of the Senior Subordinated Notes offering, the Company entered into a new credit facility which provides for loans of up to $75 million, $25 million of which is a revolving credit line for working capital purposes and $50 million of which can be drawn as term loans to fund acquisitions.

Carson, Inc. is a leading manufacturer and marketer in the United States of selected personal care products for both the ethnic market and the mass market. The Company currently sells over 70 different products specifically formulated to address the unique physiological characteristics of persons of African descent. The Company sells its products in the U.S. and in over 60 countries around the world under the brand names Dark & Lovely, Excelle, Beautiful Beginnings, Dark & Natural, Magic, and Let's Jam These products include hair relaxers and texturizers, hair color, shaving products and hair care maintenance products. In the U.S., Carson also owns CUTEX Nail Polish and the U.S. market-leading CUTEX Nail Polish Remover.

Statements in this press release concerning the Company's business outlook or future economic performance, anticipated profitability, revenues, expenses or other financial items, together with other statements that are not historical facts, are "forward-looking statements" as that term is defined under Federal Securities Laws. "Forward-looking statements" are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those stated in such statements. Such risks, uncertainties and factors include, but are not limited to, foreign business risks, industry cyclicality, fluctuations in customer demand and order pattern, the seasonal nature of the business, changes in pricing, the identification of suitable acquisition candidates, changes in the implementation of the Company's acquisition plans, the availability of financing, and general economic conditions, as well as other risks detailed in the Company's filings with the Securities and Exchange Commission. -0-

Carson, Inc.
Condensed Consolidated Statements of Operations
For the Three and Twelve Months Ended December 31, 1997 and 1996
(In thousands, except per share data)


                                     Three Months      Twelve Months
                                        Ended              Ended
                                      December 31,      December 31
                                     1997      1996     1997   1996

Net sales                        $  31,840 $ 21,242  $109,631 77,730
Cost of goods sold                  15,079   10,070    50,510 34,923
Gross profit                        16,761   11,172    59,121 42,807

Expenses:
 Marketing and selling               8,556    5,861    28,158 19,144
 General and administrative          7,023    2,385    18,714 10,873
 Incentive compensation                --        --      --    7,123
                                    15,579    8,246    46,872 37,140

Operating income                     1,182    2,926    12,249  5,667

Interest expense                    -2,520     -638    -6,444 -6,161
Other income, net                      120      -16       728    481

Income (loss) before income taxes   -1,218    2,272     6,533    -13

Provision for income taxes            -531      669     2,779  2,477

Income (loss) before
 extraordinary item                   -687    1,603     3,754 -2,490

Extraordinary item                  -2,086   -3,527    -2,086 -3,527

Net income (loss)                 $($2,773)$($1,924)   $1,668$($6,017)

Earnings per common share:
  Before extraordinary item        $-0.05   $ 0.11     $ 0.25 $ -0.20
  Extraordinary item, net of
   tax benefit                      -0.14    -0.25      -0.14   -0.28

Net earnings (loss) per share      $-0.19   $-0.14     $ 0.11 $ -0.48

Weighted average common
  shares outstanding               15,021   14,375     15,003  12,502

-0-

                             Carson Inc.
                 Condensed Consolidated Balance Sheets
                  Dec. 31, 1997 and Dec. 31, 1996
                         (In Thousands)

      ASSETS:                              Dec. 31,    Dec. 31,
                                              1997        1996
CURRENT ASSETS:
  Cash and Cash Equivalents            $    14,043   $   4,191
  Accounts Receivable
   (less allowance for doubtful
    accounts and returns of
    $3,881 and $614 at Dec. 31,
    1997 and Dec. 31, 1996,
    respectively)                           27,822       15,117
  Inventories, net                          24,861       10,572
  Other current assets                       1,922        1,421
       Total current assets                 68,648       31,301

PROPERTY, PLANT AND EQUIPMENT, net
 of accumulated depreciation                22,202       15,089

INVESTMENT IN AM COSMETICS                   3,587        3,187

GOODWILL, net                               90,227       45,801

OTHER ASSETS                                17,303        2,151

   TOTAL ASSETS                        $   201,967   $   97,529


    LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
 Accounts payable                       $  13,983    $    7,065
 Accrued expenses                           7,413         5,784
 Income taxes payable                       2,087            --
 Current maturities of long-term
  debt                                          0         2,600
       Total current liabilities           23,483        15,449

LONG-TERM DEBT                            107,711        24,501

MINORITY INTEREST IN SUBSIDIARY             7,500         1,664

DEFERRED INCOME TAXES AND OTHER
 LIABILITIES                                1,742         1,700

STOCKHOLDERS' EQUITY:
 Preferred stock, $.01 par value,
  10,000,000 shares authorized, none
  outstanding                                  --            --
 Common stock:
  Class A, voting, $.01 par value,
   150,000,000 shares authorized,
   5,033,248 and 4,996,568 shares
   issued and outstanding as of
   Dec. 31, 1997 and Dec. 31, 1996,
   respectively                                50            50
  Class B, nonvoting, $.01 par value,
   2,000,000 shares authorized,
   1,859,677 shares issued and
   outstanding as of Dec. 31, 1997 and
   Dec. 31, 1996, respectively                 19            19
 Class C, voting $.01 par value,
   13,000,000 shares authorized,
   8,127,937 share issued and
   outstanding as of Dec. 31, 1997 and
   Dec. 31, 1996, respectively                 81            81
 Treasury stock, common                       (107)           --
 Paid-in capital                           69,022        62,148
 Accumulated deficit                       (4,011)       (5,679)
 Note receivable from employee shareholders,
  net of discount                          (1,353)       (1,365)
 Foreign currency translation adjustment   (2,170)       (1,309)
      Total stockholders' equity           61,531        54,215

   TOTAL LIABILITIES AND STOCKHOLDERS'
    EQUITY                              $ 201,967    $   97,529

CONTACT: Carson, Inc.

John P. Brown, 912/651-3400

or

Anreder Hirschhorn Silver and Company

Steven Anreder, 212/421-4020