DEPARTMENT 56 TO PREPAY ADDITIONAL $40 MILLION OF SUBORDINATED DEBT.

MINNEAPOLIS--(BUSINESS WIRE)--December 22, 1994--Department 56, Inc. (NYSE:DFS), a leading specialty giftware company, announced today that it will use cash from operations to prepay an additional $40 million principal amount of its 7% subordinated debt at year-end, reducing its outstanding subordinated debt to $108 million.

The debentures, which were not due until 2003 and 2004, were part of the $213 million in subordinated debt issued in connection with the 1992 acquisition of Department 56 by Forstmann Little & Co. and members of management.

"Department 56's strong cash flow has enabled it to prepay approximately half of its subordinated debt within two years, giving us even greater operating flexibility as we continue to grow the company," said Ed Bazinet, chairman and chief executive officer.

For the first nine months of 1994, Department 56 reported earnings of $1.48 per share, an increase of 41% over the comparable nine-month period in 1993.

Department 56 is a leading designer, importer and distributor of fine-quality collectibles and other giftware products sold through gift and home accessory retailers. The company is best known for its series of collectible, handcrafted, lit ceramic and porcelain houses, buildings and related accessories in The Original Snow Village Collection and The Heritage Village Collection. In addition, Department 56 offers an extensive line of holiday and home decorative products, including its Snowbabies collectible porcelain and pewter handpainter figurines, Christmas decorative products and other giftware items.

CONTACT: Department 56, Inc., Minneapolis

              Tim Schugel, 612/944-5600
                      or
              Sard Verbinnen & Co
              George Sard/Anna Cordasco, 212/687-8080