Salton Announces Fourth Quarter and Year-End Results.

LAKE FOREST, Ill. -- Salton, Inc. (NYSE: SFP) announced today fiscal results for its fourth quarter and year ended July 1, 2006. The Company reported net sales of $129.5 million and a loss of $50.8 million or ($3.57) per share for its fiscal 2006 fourth quarter compared to net sales of $151.2 million and a loss of $28.8 million or ($2.53) per share for the fiscal 2005 fourth quarter. Net sales decreased domestically by $29.7 million. This decrease includes $5.4 million of reductions, as a result of the sale or discontinuance of certain product lines. The remaining $24.3 million decrease resulted primarily from volume and mix shifts as a result of price increases, other planned product line changes and close outs of discontinued product lines. Despite continued weak consumer demand in the United Kingdom, foreign sales increased by $8.0 million. The loss in the 2006 fourth quarter included a pretax charge of $21.9 million for non-cash intangible asset impairments associated with certain trade names and a $3.4 million non-cash valuation allowance against certain foreign deferred tax assets. The loss in the 2005 fiscal fourth quarter included a pretax charge of $3.0 million for non-cash intangible asset impairments.

Salton's sales were $636.0 million for the year ended July 1, 2006 compared to $781.7 million in fiscal 2005, a reduction of $145.7 million. Domestic sales declined by $124.2 million due to the impact of the sale of the tabletop product lines in September 2005, inventory shortages, vendor and customer uncertainty, post-holiday overstocks at retailers and planned product discontinuation. Foreign sales, particularly in the United Kingdom, were impacted by a continuing weak retail market, resulting in a decline of $16.1 million in 2006. In addition, Salton incurred $5.5 million in unfavorable foreign currency fluctuation.

Gross profit declined from $187.5 million (24%) in fiscal 2005 to $144.4 million (22.7%) in fiscal 2006, primarily a result of global raw material cost increases and additional costs associated with inventory reduction programs. These added costs were partially offset by a $10.6 million decline in distribution expenses.

Selling, general and administrative expenses decreased to $172.1 million in 2006 compared to $207.8 million for 2005 in connection with previously announced cost reduction initiatives. It is expected that further restructuring activities will continue in fiscal 2007, resulting in additional distribution and SG&A expense reductions. Net interest expense was $37.0 million for fiscal 2006 compared to $51.7 million for fiscal 2005 as a result of lower levels of indebtedness and the debt exchange completed in August, 2005.

The Company had approximately $293 million in indebtedness, net of approximately $44 million of cash, swap valuation and accrued interest on senior secured notes at the end of the fiscal 2006 year-end, compared to $429.3 million as of July 2, 2005, net of approximately $21.9 million of cash and swap valuation.

"During fiscal 2006, we made significant progress in reducing costs, improving inventory levels and strengthening our balance sheet," said William Rue, President and Chief Operating Officer. "As a result of our continuing focus on cost controls, we have eliminated more than $90 million in annual operating expenses since 2004. We continue to look for other areas to lower costs, improve inventory turns and working capital utilization. While raw material costs remain high, we believe that our initiatives will make Salton more competitive in the future."

Business Outlook:

"We believe as a result of our cost reduction programs, improved balance sheet and new product introductions that Salton is in a much improved position entering the Holiday Season," said Salton CEO Leon Dreimann. "While the small appliance market remains fiercely competitive, including ongoing pressure from high raw material prices, several of our new products have created tremendous excitement among our customers. Salton has been recognized for its innovation for many years, and our new hydrogen grill will enable us to offer a truly unique product combining the best of the George Foreman Grill with this exciting technology which will be launched in mid 2007. We feel that through increased revenue, driven by product innovation, along with tight cost containment that Salton will return to profitability."

The Company will hold a conference call today at 10 a.m. to discuss these results. Leonhard Dreimann, Chief Executive Officer, William Rue, President and Chief Operating Officer and William Lutz, Chief Financial Officer will host the call. Interested participants should call [phone] when calling from the United States or [phone] when calling internationally. Please reference Conference I.D. Number 8985281. There will be a playback available until midnight November 13, 2006. To listen to the playback, please call [phone] when calling within the United States or [phone] when calling internationally. Please use pass code 8985281 for the replay.

This call is also being webcast and can be accessed at Salton's web site at www.saltoninc.com until November 13, 2006. The conference call can be found under the subheadings, "Stock Quotes" and then "Audio Archives."

About Salton, Inc.

Salton, Inc. is a leading designer, marketer and distributor of branded, high-quality small appliances, home decor and personal care products. Its product mix includes a broad range of small kitchen and home appliances, electronics for the home, time products, lighting products, picture frames and personal care and wellness products. The Company sells its products under a portfolio of well recognized brand names such as Salton[R], George Foreman[R], Westinghouse (TM), Toastmaster[R], Melitta[R], Russell Hobbs[R], Farberware[R], Ingraham[R] and Stiffel[R]. It believes its strong market position results from its well-known brand names, high-quality and innovative products, strong relationships with its customer base and its focused outsourcing strategy.

Certain matters discussed in this press release are forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. These factors include: Salton's ability to realize the benefits it expects from its U.S. restructuring plan; Salton's substantial indebtedness and restrictive covenants in Salton's debt instruments; Salton's ability to access the capital markets on attractive terms or at all; Salton's relationship and contractual arrangements with key customers, suppliers and licensors; pending legal proceedings; cancellation or reduction of orders; the timely development, introduction and customer acceptance of Salton's products; dependence on foreign suppliers and supply and manufacturing constraints; competitive products and pricing; economic conditions and the retail environment; international business activities; the risks related to intellectual property rights; the risks relating to regulatory matters and other risks and uncertainties detailed from time to time in Salton's Securities and Exchange Commission Filings.

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