Catalina Lighting Prepays All Outstanding Convertible Notes

MIAMI, July 6 /PRNewswire/ -- Catalina Lighting, Inc. (NYSE: LTG), a leading international designer, manufacturer and distributor of lighting products for residential and office environments, today announced the early repayment of the remaining $5.1 million outstanding balance of its 8% convertible subordinated notes. The Company anticipates that the elimination of its outstanding subordinated notes will have a positive impact on diluted earnings per share for future periods. The remaining $5.1 million balance was due in two installments of approximately $2.55 million each on March 15, 2001, and March 15, 2002. The Company had previously repaid $2.5 million of these notes in March 2000.

The Company's 8% subordinated notes were convertible at the option of the holder into common shares of the Company's stock at a conversion price of $6.63 per share at any time prior to maturity. Generally accepted accounting principles ("GAAP") require consideration of the shares contingently issuable upon conversion of the notes in the Company's diluted earnings per share calculations. The $5.1 million repayment, when combined with the previous $2.5 million payment, prospectively eliminates approximately 1.1 million shares from the diluted earnings per share calculations in future fiscal reporting periods.

The Company also announced that, to date, it has repurchased 604,900 shares of its common stock pursuant to a previously announced stock repurchase program, which was authorized by Catalina's Board of Directors in November 1998. The Company's earnings per share and net book value per share have benefited from the reduction in the number of common shares outstanding resulting from this repurchase program.

"We believe the prepayment of all convertible notes outstanding is in the best interests of our shareholders," noted Robert Hersh, Chairman and Chief Executive Officer of Catalina Lighting, Inc. "We also view the repurchase of shares in the open market or in private transactions as in the best interests of our shareholders so long as the market price of Catalina's common stock remains below book value. At their recent price of approximately $4.50, Catalina's common shares are trading at a 35% discount to book value and for less than eight times the Company's trailing twelve-month diluted earnings per share (excluding non-recurring items)."

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 "believes," "anticipates," "estimates," "should," "expects" 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 www.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. SOURCE Catalina Lighting, Inc.

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