The Carlyle Group To Acquire philosophy, inc., Prestige Personal Care Products Company; Significant Growth Opportunities for the Company

New York, NY – Global private equity firm The Carlyle Group today announced that it has signed a definitive agreement to acquire philosophy, inc. from a group of owners, including current Chief Executive Officer and Founder, Cristina Carlino. Ms. Carlino will remain a significant equity owner in the company and become Executive Chairman. philosophy develops, manufactures and markets prestige personal care products sold primarily in the U.S. The transaction is expected to close in the first quarter of 2007. Financial terms were not disclosed.

Created in 1996 by Ms. Carlino, philosophy sells products across all categories of beauty, including skin care, bath & body care, fragrances and color cosmetics. Products are sold through multiple complementary channels of distribution, including direct response television and prestige retailers. In 2006, philosophy was the #1 beauty brand on QVC, the #1 skin care and bath & body care brand at Sephora USA and among the fastest-growing beauty brands in select department and specialty stores.

Carlyle Managing Director and Head of the Consumer & Retail team Sandra Horbach said, "The acquisition of philosophy is another step in our firm’s effort to partner with enormously talented and dedicated entrepreneurs like Cristina to build world class brands in high-growth and high-quality businesses."

Carlyle was attracted to philosophy for several reasons, including its exceptionally loyal and enthusiastic customer base; its differentiated positioning, which appeals to a broad set of consumers, many of whom are just discovering the brand; its consistent and impressive track record of growth and profitability; and its vast opportunities for future growth through retail expansion, geographic expansion and product line extensions.

Ms. Carlino said, "My original aim for the company was to create products that satisfy a growing need for both scientifically-based and emotionally-inspired beauty products. Throughout the decade, my mission has remained the same, and it was critical for me to find a partner that understands my mission and shares my values. I am thrilled to join forces with Carlyle, and I am committed to philosophy’s continued growth and success. Together, we will build an exciting future for the company."

QVC Chief Executive Officer Michael George, said, "We have enjoyed a longstanding and highly successful relationship with philosophy. We see a long runway of growth ahead and look forward to partnering with The Carlyle Group to continue the brand’s tremendous momentum."

Some of philosophy’s best-selling products include: hope in a jar moisturizer (selected repeatedly as one of Oprah’s favorites); purity made simple high performance deep cleansing emulsion; the microdelivery peel; amazing grace and falling in love fragrances and bath and body lines; the supernatural color cosmetics; and shear splendor restorative hair care.

This is Carlyle’s third consumer & retail acquisition in the past 11 months: Carlyle purchased Dunkin’ Brands in March 2006 and Oriental Trading Company in July 2006.

Funds for this transaction will come from Carlyle’s flagship U.S. buyout fund Carlyle Partners IV.

philosophy, inc.
philosophy is a lifestyle brand that celebrates feeling well and living joyously and wants to inspire its customers to live a better life by being better to themselves. long before the "doctor" skincare brands of today, there was philosophy. born from biomedic, the acclaimed medical company that pioneered some of today’s most popular in-office treatments such as the micropeel. philosophy skincare has long been recommended by dermatologists and plastic surgeons around the country. philosophy is an international skincare and cosmetic company founded in 1996 and headquartered in phoenix, arizona. for more information please visit our website at www.philosophy.com.