CATALINA LIGHTING INC REPORTS SECOND-QUARTER FISCAL 2003 RESULTS

 Continuing Focus on Product Mix and Cost Containment Helps Catalina Maintain Positive Margin Trends 

     MIAMI (May 1, 2003) … Catalina Lighting Inc (Nasdaq:CALA), a leading international designer, manufacturer, and distributor of lighting products for residential and office environments, today announced results for its second fiscal quarter ended March 31, 2003. Catalina reported $1.3 million of net income, or $0.23 per diluted share for the quarter, compared to $336,000 or $0.07 per diluted share in the prior-year period.  For the six months ended March 31, 2003, the Company recorded $3.5 million of net income, or $0.60 per diluted share, versus $140,000 or $0.03 per diluted share in the prior-year period.  The inclusion of a one-time $963,000 loss on disposal of property in the second quarter of fiscal 2002 contributed to the sharp improvement indicated by the year-to-year comparisons. 

     Second-quarter fiscal 2003 sales were $49.9 million, down from $54.0 million in the second quarter of fiscal 2002.  For the six-month period, sales were $106.1 million, versus $110.1 million in the prior-year period.  Continuing the trend of recent quarters, the Company’s gross profit margin for the quarter increased from 21.8 percent to 22.2 percent over the prior year period.  For the first six months of fiscal 2003, gross margins increased from 19.7 percent to 21.3 percent. 

     Catalina Chief Executive Officer Bob Varakian commented, “In the current challenging retail environment, our continued margin improvement, particularly at our United Kingdom subsidiary, is a testimony to the success of our focus on product mix and our cost-cutting programs.” 

     As in the first quarter of 2003, the Company’s focus on cost containment resulted in further operating margin improvement in the second quarter.  Second-quarter 2003 operating margin rose from 6.1 percent in the prior period to 6.3 percent.  The operating margin for the first six months of fiscal 2003 was 7.0 percent, up sharply from 4.5 percent in the prior year period.

     CEO Varakian continued, “We at Catalina have always emphasized new product development, in order to bring value to the consumer and high quality products to our retail partners.  Going forward, we believe that this emphasis, in conjunction with our lean cost structure, will permit us not only to perform well during these difficult times, but also to take the best advantage of any upturn in the retail climate.”

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