Color Spot Nurseries Reports Fourth Quarter and Fiscal Year 1998 Results; New Senior Management Team to Build On Company's Strengths.

PLEASANT HILL, Calif.--(BUSINESS WIRE)--Sept. 1, 1998--Color Spot Nurseries today reported that, as previously announced, fiscal 1998 fourth quarter and total fiscal year results were below expectations.

Marion Antonini, Chairman of the Executive Committee of Color Spot Nurseries, Inc., said: "These results are disappointing. The fact is, however, that Color Spot retains a leading position in a growing market. We have taken concrete steps during the last two months to better build on this position, including hiring key new executives whose operational expertise will be invaluable going forward."

For the quarter ended June 30, 1998, the Company recorded net sales of $85.0 million and an EBITDA loss of $6.1 million. For the fiscal year ended June 30, 1998, the Company had net sales of $187.7 million and an EBITDA loss of $8.2 million before non-recurring charges and extraordinary losses. Among Color Spot's three divisions, the loss in earnings is attributable to the Company's Western Division, which lost $15.0 million of EBITDA on $125.0 million of net sales. By contrast, Color Spot's Southwest Division was a strong contributor to fiscal 1998 results, adding $6.8 million of EBITDA on $51.4 million in net sales. The majority of the variance in the Western Division is related to two core areas: the impact of the severe weather associated with El Nino, and inventory overproduction that resulted in the write-off of unsaleable excess product.

Separately, the Company said that it would recognize a special pre-tax non-recurring charge of approximately $5.0 million in the first quarter of fiscal 1999. The components of the charge include expenses related to non-recurring consulting fees, personnel changes and facility costs. In addition, the Company will record a $1.7 million non-cash charge, net of tax benefit, related to the write-off of organizational costs in accordance with a new accounting pronouncement.

Antonini continued: "As we announced in July, this has been a difficult year, and we have been tightly focused since then on addressing the factors contributing to our earnings shortfall. We have made a strong start towards meeting our objectives of hiring experienced new executives to bolster the current team, adjusting our production process to better match supply and demand, and limiting excess inventory while maintaining high quality customer service."

The Company noted it had made two additions to its senior management team that have enhanced its operations expertise. Raju Boligala, formerly a senior manager of Hines Horticulture's Sun Gro division, joined the Company in August as its President and Chief Operating Officer. Mr. Boligala brings 20 years of experience in the nursery industry to Color Spot, including tenures at both Imperial Nursery and the Weyerhaeuser Company. In addition, Carlos Plaza joined Color Spot as Chief Financial Officer in July. Mr. Plaza brings to Color Spot expertise gained at Welbilt Corporation, where he worked with Mr. Antonini as Controller, as well as at General Electric, Xerox Corporation, and the Seagram Company, Ltd.

The Company will conduct a conference call concurrent with the filing of its Form 10-K with the Securities and Exchange Commission.

Color Spot is the largest wholesale nursery in the United States, based on revenue and greenhouse square footage. The Company provides a wide assortment of high-quality plants as well as extensive merchandising services primarily to leading home centers and mass merchants, such as Home Depot, Home Base, Wal-Mart and Kmart. The Company distributes products to over 850 retail and commercial customers, representing over 8,000 locations, primarily in the western and southwestern regions of the United States.

Certain statements in this release constitute forward looking statements. Such forward looking statements involve risks which may cause actual results and performance of the Company to be materially different from those expressed or implied by the forward-looking statements. Such factors include the following: general economic and business conditions; weather patterns; quality of management; and success of business and financing strategy. For more information, see the Company's annual and quarterly reports filed with the Securities and Exchange Commission.

    CONTACT:  John Franklin
               212-484-7693