CATALINA LIGHTING, INC REPORTS THIRD QUARTER RESULTS

MIAMI, Florida (August 14, 2002) – Catalina Lighting, Inc. (NASDAQ Small Cap: “CALA”), a leading international designer, manufacturer and distributor of lighting products for residential and office environments, today announced operating results for the third quarter of its 2002 fiscal year.

For the quarter ended June 30, 2002, the Company reported a net loss of $409,000, or ($0.12) per diluted share, on net sales of $53.4 million.  The Company’s net loss for the comparable prior year period was $2.4 million, or ($1.64) per diluted share, on net sales of $60.5 million.  The pre-tax loss for the quarter ended June 30, 2002 included a $1.0 million charge related to settlement of litigation.  The after‑tax effect of the charge was $643,000.  Net income for the quarter ended June 30, 2002, prior to the $643,000 after‑tax charge, would be $234,000.

The Company’s gross profit as a percentage of net sales was 19.6% for the three months ended June 30, 2002, as compared to 13.2% for the three months ended June 30, 2001.  Selling, general and administrative expenses of $8.1 million for the three months ended June 30, 2002 were $2.0 million below the prior year period.

For the nine months ended June 30, 2002, the Company reported net sales of $163.5 million and a net loss of $269,000, or ($0.08) per diluted share.  The Company’s net loss for the comparable prior year period was $7.7 million, or ($5.22) per diluted share, on net sales of $180.9 million.  The pre-tax loss for the nine months ended June 30, 2002 included a $1.0 million litigation settlement charge and a $1.1 million loss related to the sale of the Mississippi distribution center.  The after-tax effect of these charges was $1.4 million.  Net income for the nine months ended June 30, 2002, prior to the $1.4 million after-tax charges, would be $1.1 million.  The Company’s gross profit as a percentage of net sales was 19.7% for the nine months ended June 30, 2002, as compared to 14.3% for the nine months ended June 30, 2001.  Selling, general and administrative expenses of $24.7 million for the nine months ended June 30, 2002 were $6.1 million below the prior year period.

Eric Bescoby, Catalina’s Chief Executive Officer, stated, “We are continuing to see considerable improvements in our gross margin and operating expenses, compared to the prior year.  These improvements and other initiatives have allowed us to significantly reduce our debt.  Total debt was $41.6 million as of June 30, 2002, compared to $63.8 million as of September 30, 2001. The reduced leverage contributed to a recent lowering of interest rates on our bank facility by 2.25 percentage points on approximately $30.0 million of the debt.”

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