Catalina Lighting, Inc. Reports Second Quarter Results

MIAMI, May 7 /PRNewswire-FirstCall/ -- Catalina Lighting, Inc. (OTC Bulletin Board: CALI.OB - news), a leading international designer, manufacturer and distributor of lighting products for residential and office environments, today announced operating results for the second quarter of its 2002 fiscal year.

For the quarter ended March 31, 2002, the Company reported net income of $336,000, or $0.07 per diluted share, on net sales of $54.0 million. The Company's net loss for the comparable prior year period was $3.4 million, or ($2.29) per diluted share, on net sales of $55.8 million. The net income for the quarter ended March 31, 2002 included a $1.1 million charge, related to the valuation of its Mississippi distribution center which was held for sale as of March 31, 2002 and which was sold on May 6, 2002. The after tax effect of the charge was $753,000 or ($0.17) per diluted share. Net income for the quarter ended March 31, 2002, prior to the $753,000 after tax charge, would be $1.1 million or $0.24 per diluted share. Net proceeds from the sale of the Mississippi distribution center of approximately $7.7 million were used by the Company to pay down its debt.

The Company's gross profit as a percentage of net sales was 22.1% for the three months ended March 31, 2002, as compared to 14.3% for the three months ended March 31, 2001. Selling, general and administrative expenses of $8.3 million for the three months ended March 31, 2002 were $1.8 million below the prior year period.

For the six months ended March 31, 2002, the Company reported net sales of $110.1 million and net income of $140,000, or $0.03 per diluted share ($893,000, or $0.20 per diluted share, before the valuation charge related to the sale of the Mississippi distribution center). The Company's net loss for the comparable prior year period was $5.3 million, or ($3.58) per diluted share, on net sales of $120.4 million. The Company's gross profit as a percentage of net sales was 19.9% for the six months ended March 31, 2002, as compared to 15.1% for the six months ended March 31, 2001. Selling, general and administrative expenses of $16.6 million for the six months ended March 31, 2002 were $4.2 million below the prior year period.

Eric Bescoby, Catalina's Chief Executive Officer, stated, "We are very pleased with many aspects of the most recent quarter's performance. We are seeing significant year-to-year improvements in gross profit and operating expenses, reflecting continued success in expense controls implemented in the first half of the fiscal year. The sale of the Company's distribution center in Mississippi may allow additional efficiencies in the months ahead. Catalina plans to relocate its US warehouse operations this summer, seeking to further improve our operating efficiency and our customer service capabilities." "We believe we are now structured for successful operation in current market conditions, and well positioned to take advantage of new market opportunities."

This press release includes statements that constitute "forward-looking" statements, usually containing the words "believes", "anticipates", "estimates", "is optimistic", "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 known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by 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 which may affect consumer spending; reliance on key customers who may delay, cancel or fail to place orders; continued acceptance of the Company's products in the marketplace; new products and technological changes; pressures on product prices and pricing inventories; increases in the costs of labor and raw materials; dependence upon third-party vendors and imports from China, which may limit the Company's margins or affect the timing of revenue and sales recognition; competitive developments, changes in manufacturing and transportation costs, the availability of capital, the ability to satisfy the terms and covenants of credit and loan agreements, and the impact of increases in borrowing costs, each of which affect the Company's short-term and long- term liquidity; foreign currency exchange rates; changes in the Company's effective tax rate, the ability to relocate the Company's US warehouse operations this summer or to improve the Company's Operating efficiencies or customer service capabilities; the continued success of the Company's expense control program and improvements in gross profits; and other risks detailed in the Company's periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or correct these forward- looking statements at any time for any reason after the date of this release.

Catalina Lighting, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)

	Three Months		Six Months
	Ended March 31,		Ended March 31,
	2002	2001	2002	2001
Net sales	$53,958	$55,789	$110,112	$120,397
Cost of goods sold	42,041	47,803	88,208	102,227
Gross profit	11,917	7,986	21,904	18,170
Selling, general, and administrative expenses	8,338	10,175	16,618	20,768
Operating income (loss)	3,579	(2,189)	5,286	(2,598)
Interest expense	(1,915)	(1,816)	(3,852)	(3,406)
Write-down of assets held for sale	(1,098)	--	(1,098)	--
Other income (expenses)	(69)	(133)	(127)	(315)
Income (loss) before income taxes	497	(4,138)	209	(6,319)
Income tax expense (benefit)	161	(770)	69	(1,052)
Net income (loss)	$336	$(3,368)	$140	$(5,267)
Basic earnings (loss) per share	$0.11	$(2.29)	$0.04	$(3.58)
Diluted earnings (loss) per share	$0.07	$(2.29)	$0.03	$(3.58)
Basic weighted average common shares outstanding	3,176	1,472	3,176	1,472
Diluted weighted average common shares outstanding	4,496	1,472	4,418	1,472

Note: Earnings per share reflect the reverse stock split of one-for-five shares on April 8, 2002.

CONTACT: Lynn Skillen, CFO, Catalina Lighting, +1-305-558-4777, ext. 281