Catalina Lighting, Inc. Reports Second Quarter Operating Results

MIAMI, May 5 /PRNewswire/ -- Catalina Lighting, Inc. (NYSE: LTG), a leading international designer, manufacturer and distributor of lighting products for residential and office environments, today announced operating results for the second quarter and first half of its fiscal year ending September 30, 2000. The Company earned $752,000, or $0.10 per diluted share, for the three months ended March 31, 2000, on net sales of $42.0 million. Net income reported for the same quarter of the prior year totaled $1,159,000, or $0.15 per diluted share, on net sales of $42.1 million. The Company's net income was $1,289,000, or $0.17 per diluted share, for the six months ended March 31, 2000, after a non-recurring cost associated with the retirement of a former executive. Excluding this non-recurring item, net income for the six months increased to $1,825,000, or $0.23 per diluted share, compared with net income of $1,662,000, or $0.22 per diluted share, in the first half of fiscal 1999. Net sales approximated $85.2 million for the six months ended March 31, 2000, compared with $84.9 million in the corresponding period of the previous fiscal year. "Overall operating results, excluding the non-recurring item, improved from last year during the first half of fiscal 2000," stated Chairman and Chief Executive Officer Robert Hersh. "Sales increased slightly, gross profit as a percentage of sales was a healthy 19.8%, and SG&A and interest expenses declined in the aggregate by more than $700,000.

"With respect to this quarter's earnings, matching last year's second quarter -- which from an operating standpoint was the most profitable quarter in the last five years -- proved difficult. Last year's second quarter benefited from the placement of a significant amount of new product, resulting in an all-time record gross profit percentage of 21.8%. This quarter was a solid one for us even though earnings trailed those of last year."

Full-scale construction began during the second quarter on the Company's planned expansion of its Go-Gro manufacturing facilities located in Shenzhen, China. The expansion encompasses 350,000 square feet and centralizes activities presently performed at other locations. "This addition to our factory will increase productivity while lowering overall manufacturing overhead. Similar initiatives are underway in other areas of our business to consolidate activities and reengineer processes to lower costs while improving the overall performance of our business," commented Mr. Hersh.

The Company also announced that Carmen M. Miller has joined Catalina Lighting, Inc. as Vice President of Marketing and Product Development. Ms. Miller has a proven record of success in the consumer products industry, having previously held similar positions with Windmere Durable Holdings and Helen of Troy Limited. "The addition of Carmen Miller to our executive team is consistent with Catalina's continuing initiatives to differentiate itself within the lighting industry and to broaden its portfolio of high-margin, value-oriented proprietary products," commented Mr. Hersh. "Ms. Miller will lead the Company's ongoing efforts to enhance its consumer orientation, capitalize on current trends, streamline the overall product development process and bring a design emphasis to substantially all lighting categories sold by the Company."

The Company's design emphasis was on display at last month's Highpoint Furniture Show, which is held each year in Highpoint, North Carolina. Exclusive new products introduced at this show included new and innovative finishes, novelty and translucent lighting, and new families of functional lighting. Catalina Lighting, Inc. a leading international designer, manufacturer and distributor of lighting products for residential and office environments, employs approximately 3,200 people throughout the United States, Canada and Southeast Asia. The Company is headquartered in Miami, Florida, and its common stock trades on the New York Stock Exchange under the ticker symbol "LTG."

This press release includes statements that may constitute "forward- looking" statements, usually containing the words "believe," "anticipate," "estimate," "should," "except" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, general domestic and international economic conditions, consumer spending trends, reliance on key customers, continued acceptance of the Company's products in the marketplace, competitive factors, new products and technological changes, product prices and raw material costs, dependence upon third-party vendors, dependence on imports from China, competitive developments, changes in manufacturing and transportation costs, the availability of capital, foreign exchange rates, changes in the Company's effective tax rate, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. For further information, please contact David Sasnett, Chief Financial Officer, or Dean Rappaport, Chief Operating Officer, at (305) 558-4777, or R. Jerry Falkner, CFA, Investor Relations Counsel, at (800) 377-9893, or via e- mail at info@rjfalkner.com. Copies of Catalina press releases may be obtained by fax at any time by calling (800) 758-5804 and inputting access number 146925.

                                  2000        1999
Net sales                     $42,033,000  $42,128,000
Gross profit                  $8,001,000$  $9,181,000
Selling, general and
 administrative expenses      $6,696,000   $7,089,000
Operating income              $1,305,000   $2,092,000
Income before income taxes    $1,106,000   $1,607,000
Net income                    $752,000     $1,159,000
Basic earnings per share      $0.11        $0.16
Diluted earnings per share    $0.10        $0.15
Weighted avg. basic shares
 outstanding                  6,931,000    7,080,000
Weighted avg. diluted shares
 outstanding                  8,761,000    8,561,000

                                          2000          1999
Net sales                             $85,241,000   $84,931,000
Gross profit                          $16,896,000   $17,310,000
Selling, general and
 administrative expenses              $14,265,000*  $13,900,000
Operating income                      $2,631,000*   $3,410,000
Income before income taxes            $1,895,000    $2,308,000
Net income                            $1,289,000    $1,662,000
Basic earnings per share              $0.19         $0.23
Diluted earnings per share            $0.17         $0.22
Diluted earnings per share excluding
 non-recurring item                   $0.23         $0.22
Weighted avg. basic shares
 outstanding                          6,962,000     7,127,000
Weighted avg. diluted shares
 outstanding                          8,830,000     8,454,000

*Includes non-recurring charge of $788,000 related to reorganization of the Company's Executive management structure. SOURCE Catalina Lighting, Inc.

CONTACT:
David Sasnett, Chief Financial Officer, or Dean Rappaport, Chief Operating Officer, both of Catalina Lighting, Inc., 305-558-4777; or R. Jerry Falkner, CFA, Investor Relations Counsel, 800-377-9893, or info@rjfalkner.com, for Catalina Lighting, Inc.