Catalina Lighting Inc Reports Fourth Quarter, Fiscal 2002 Year End Results

Strong Year-to-Year Increases in Gross Margins and Net Income and Dramatic Reduction in Debt Mark Year of Significant Accomplishment

MIAMI, Nov. 22  -- Catalina Lighting Inc CALA, a leading international designer, manufacturer, and distributor of lighting products for residential and office environments, today announced improved results for its fourth quarter and year ended September 30, 2002. Gross margin increased to 19.6 percent for the quarter and 19.7 percent for the full year, compared to 10.6 percent and 13.5 percent, respectively, in the prior year periods. The Company achieved net income of $859,000 for fiscal 2002, marking a return to profitability after a loss of $18.4 million in fiscal 2001. Debt was reduced by 38.6 percent, from $60.9 million at September 30, 2001, to $37.4 million at September 30, 2002.

CEO Eric Bescoby stated, "Fiscal 2002 was a watershed year for Catalina. We believe the much improved operating results are primarily the result of the entire Catalina team focusing on turning the Company around." Bescoby continued, "Over the last year we reduced operating costs and improved operations while working with our customers and suppliers to improve product mix and increase gross margins. We believe that the higher gross margins, general and administrative cost reductions and lower interest expense all contributed to our enhanced bottom-line results and also believe that Catalina is now well-positioned in its key markets to benefit increasingly from a leaner operating base and an efficiently-run production facility in China."

For the fourth quarter ended September 30, 2002, Catalina reported revenues of $56.8 million, up from $53.8 million in the year-earlier period, primarily reflecting strong trading results by Ring, the Company's United Kingdom subsidiary. Net income for the fiscal 2002 fourth quarter was $1.1 million or $0.20 per diluted share, which marks a substantial improvement from the net loss of $10.7 million, or $3.85 loss per diluted share, in the year- ago period.

For the full 2002 fiscal year, revenues were $220.3 million with net income of $859,000, or $0.18 per diluted share, compared to revenues of $234.8 million and a loss of $18.4 million, or $10.22 loss per diluted share in fiscal 2001. Bescoby stated, "We believe the year-to-year decline in revenues for fiscal 2002 was due in large part to challenging U.S. market conditions."

The Company also believes that its overall gross margins were enhanced due to improved product sourcing, purchasing and manufacturing processes. Lower debt levels, with the consequent decreases in interest expense, resulted from paying down the debt with proceeds from the sale of a warehouse in Mississippi and stronger internal cash flow, as well as the conversion of subordinated debt to equity by the Company's majority shareholder.

About Catalina Lighting Inc

Catalina Lighting Inc is a leading international designer, manufacturer and marketer of residential and office lighting products. The Company's broad product line includes functional and decorative table lamps; ceiling, wall, recessed, vanity and track lighting fixtures; emergency and outdoor lighting; and chandeliers. Its line is distributed under several brand names, including Catalina, Dana, Ring, Illuminada and Pro Office. The Company also functions as an OEM, selling goods under its customers' private labels.

This press release includes statements that constitute "forward-looking" statements, including, without limitation, that fiscal 2002 was a watershed year for the Company and that the Company is well-positioned to benefit increasingly from a leaner operating base and its facility in China. 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 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 Company's ability to improve its 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. 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.

                   CATALINA LIGHTING, INC. AND SUBSIDIARIES
                    Consolidated Statements of Operations
                    (In thousands, except per share data)

                                    Three Months             Fiscal Year
                                 Ended September 30,      Ended September 30,
                                2002         2001         2002        2001

    Net sales                 $56,803      $53,841     $220,266    $234,786

    Cost of goods sold         45,672       48,109      176,965     203,204
    Gross profit               11,131        5,732       43,301      31,582

    Selling, general, and
     administrative expenses    8,296        9,395       32,692      40,010
    Severance and office
     closing costs                 29          929          624       1,154
    Executive settlements          --        2,586           --       2,586
    Litigation Settlement          --           --          959        (714)
    Operating income (loss)     2,806       (7,178)       9,026     (11,454)
    Interest expense           (1,107)      (2,034)      (6,858)     (7,169)
    Gain (loss) on disposal
     of property, net              94           --         (869)         --
    Other income (expenses)       (96)        (153)          (3)       (107)
    Income (loss) before
     income taxes               1,697       (9,365)       1,296     (18,730)
    Income tax expense (benefit)  569        1,298          437        (383)
    Net income (loss)          $1,128     $(10,663)        $859    $(18,347)

    Basic income (loss)
     per share                   $0.20      $(3.85)       $0.18     $(10.22)

    Diluted income (loss)
     per share                  $0.20       $(3.85)       $0.18     $(10.22)

    Basic weighted average
     common shares outstanding  5,562        2,770        4,755       1,796

    Diluted weighted average
     common shares outstanding  5,734        2,770        4,834       1,796

                     CATALINA LIGHTING, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                        (in thousands, except share data)
                                                           September 30,
    ASSETS                                             2002           2001
    Current assets
     Cash and cash equivalents                        $2,657         $4,613
     Restricted cash equivalents
      and short-term investments                          --          1,066
     Accounts receivable, net                         33,814         27,761
     Inventories                                      34,511         37,425
     Other current assets                              5,660          5,114
       Total current assets                           76,642         75,979

    Property and equipment, net                       18,102         30,227

    Goodwill, net                                     28,282         28,812
    Other assets                                       8,188         11,079
                                                    $131,214       $146,097
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities
     Revolving credit facilities                      $1,477         $7,078
     Term loans                                        3,154            818
     Accounts and letters of credit payable           29,498         27,586
     Current maturities of bonds payable                  --            900
     Current maturities of other long-term debt          340            878
     Income taxes payable                              1,813            455
     Other current liabilities                        11,887         12,011
      Total current liabilities                       48,169         49,726

    Revolving credit facilities                       11,315         16,366
    Term loans                                        17,574         23,479
    Subordinated notes                                 2,804          6,110
    Bonds payable                                         --          4,200
    Other long-term debt                                 721          1,085
    Other liabilities                                  4,959          5,926
      Total liabilities                               85,542        106,892

    Minority interest                                  1,144          1,073
    Commitments and contingencies

    Stockholders' equity
     Preferred stock, $.01 par value authorized
      1,000,000 shares; none issued Common stock,
      $.01 par value authorized 20,000,000 shares;
      issued and outstanding 4,414,260 shares
      and 3,304,036 shares, respectively                  44             33
     Additional paid-in capital                       38,119         34,411
     Retained earnings                                 7,623          6,764
     Accumulated other comprehensive income (loss)     1,203           (615)
     Treasury stock, at cost, 128,387 shares          (2,461)        (2,461)
      Total stockholders' equity                      44,528         38,132
                                                    $131,214       $146,097

CONTACT: Steve Marble, CFO, Catalina Lighting, +1-305-558-4777, ext. 269