Craig Consumer Electronics announces revised 1996 earnings.

CERRITOS, Calif.--(BUSINESS WIRE)--April 9, 1997--Craig Consumer Electronics announced a change in the manner in which the company accounts for credits from various vendors and announced its revised 1996 earnings.

The accounting change is being made in accordance with APBO No. 20 and will be reflected in the company's audited financial statements, when released. At year-end 1996, the company had approximately $5.6 million of vendor credits available (specifically amounts owing to the company arising in the ordinary course of business among the company and its vendors). These vendor credits were historically booked for accounting purposes as accrued at year-end.

Because of the certain factors including changes in the industry, and the increase in the aggregate amount of vendor credits, the company has changed its method of accounting to record these vendor credits as they are actually realized, instead of as accrued.

Although this conservative approach will result in a reduction to 1996 income for accounting purposes, to the extent the vendor credits are realized in subsequent periods, there will be a direct corresponding increase in income during those periods.

Resolution of this booking issue in this way will result in a loss for the year-ended Dec. 31, 1996, of approximately $5,980,000. The company also increased certain inventory reserves by approximately $500,000, primarily associated with the company's new Chinese Joint Venture.

Although the loss creates compliance issues with respect to the company's line of credit, waivers of any violations of applicable financial covenants have been obtained and the principal line of credit remains in full force and effect until the expiration of its primary term, subject to future compliance and negotiated extensions. The company previously announced estimated net income of $56,000 for 1996, prior to the resolution of this accounting change.

Management has also been apprised of the institution of a class-action lawsuit against the company arising out of the company's restatement of certain reported financial information. The company has, in connection with its 1996 audit, made certain determinations that affect the company's accounting and certain of its previously reported financial results.

However, the company believes that any claim brought on this basis is without merit and in all likelihood was instituted without the typical requisite diligence. The company would vigorously defend any such lawsuit.

The following table summarizes the company's 1996 earnings. -0-

                  Craig Consumer Electronics Inc.
                        Financial Highlights

                                     Dec. 31,          Dec. 31,
                                       1996              1995

Net sales                          $80,632,000       $88,676,000
Net income (loss)                  $(5,980,000)/a    $    29,000
Average shares                       2,935,811         2,373,051
Income (loss) per share            $     (2.04)      $      0.01


(a) Reflects change in accounting for vendor credits and additional
    inventory reserves.

CONTACT: Craig Consumer Electronics, Cerritos

Donna Richardson, 562/926-9944 (ext. 103)