EX-99.1 3 dex991.htm NEWS RELEASE NEWS RELEASE
 
EXHIBIT 99.1
 
Contact:
     
Allen & Caron Inc
Jay McKeage (investors)
jay@allencaron.com
(212) 691-8087
or
Kari Paskewicz (media)
kari@allencaron.com
(630) 759-9640
     
Catalina Lighting Inc
Eric Bescoby
Chief Executive Officer
(305) 558-4777
 
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 (November 22, 2002) … Catalina Lighting Inc (Nasdaq: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
Ended September 30,
     
Fiscal Year
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