HOLLAND LANDING, ONTARIO--(Marketwire - Dec. 7, 2011) - Mr. Rod Turgeon, President and Chief Executive Officer of Inscape (TSX:INQ), a leading designer, manufacturer and marketer of office systems, storage and architectural wall solutions for commercial office environments, announces the following financial results for the second quarter ended October 31, 2011:

Commentary

"Our second quarter results reflected improvement over the first quarter in revenue, margin and profitability; however the results were below our expectations and behind last year's second quarter which was the strongest revenue quarter of fiscal 2011 and also benefited from better currency translation rates.

Achieving our desired levels of performance requires us to successfully implement our market position strategies. The Company is committed to maximizing the return on our investments in recent product launches, sales staff increases, showrooms build-outs and marketing initiatives.

I am excited by several recent developments at Inscape. Our sales team has had a number of recent project wins including one of the largest single project awards in our history. Our new Inscape System was the product of choice for two high profile US based firms setting up operations in Canada. One of our key objectives is to establish successful distribution. We are encouraged to see that one of our Inscape dealers has achieved unprecedented sales levels after only 4 years in operations.

I am proud to be a new member of the Inscape family and look forward to working with my colleagues and our selling partners to deliver the optimum solutions to our customers." said Rod Turgeon, President and CEO.

Operating Performance

The second quarter of fiscal 2012 ended with a net loss of $0.2 million or 2 cents per share, compared with a net income of $1.7 million or 11 cents per share in the same quarter of last year. On a year-to-date basis, the six-month period ended October 31, 2011 had a net loss of $1.9 million or 13 cents per share, compared to a net income of $2.3 million or 16 cents per share a-year-earlier.

Sales in the second quarter of fiscal 2012 were $21.9 million, a decrease of 14.6% from the sales of $25.6 million in the same quarter of last year. The strong sales in the second quarter of last year were attributable to a substantial increase in project volume. In addition, last year's reported sales included a currency hedge gain of $1.7 million, compared to the current quarter's hedge gain of $0.66 million. On a normalized currency basis, the current quarter's sales were about 8.7% lower than the same quarter of last year.

The year-to-date sales of $41.2 million were 5.7% below the $43.7 million reported in last year, which included a currency hedge gain of $3.3 million versus $0.8 million in the current year. On a constant dollar basis that removes the impact of hedge gains and the U.S. exchange rate changes, the current year-to-date sales were about 4% higher than last year.

Gross margin as a percentage of sales in the second quarter of fiscal year 2012 fell 5 percentage points from last year's 30.9% to the current quarter's 25.9%, primarily due to much lower currency hedge gain and overhead absorption, offset by better net realized prices.

On a year-to-date basis, the gross margin as a percentage of sales dropped 9.6 percentage points from the prior year's 30.8% to the current year's 21.2%. About 6.6 percentage points of the fall in gross margin resulted from the lower U.S. exchange rate and currency hedge gain. The margin was further eroded by a less favourable sales mix.

Selling, general and administrative expenses ("SG&A") in the second quarter of fiscal year 2012 were $6.0 million or 27.2% of sales, compared to $5.6 million or 21.9% of sales in the same quarter of last year. Included in the current quarter's SG&A was a charge of $0.26 million on the settlement of certain pension obligations with the purchase of an annuity.

Year-to-date SG&A of $11.6 million were $28.2% of sales, compared to $10.4 million or 23.8% of sales. This increase of $1.2 million is primarily related to continued investments required to develop a broader and deeper go to market strategy which is essential to driving the revenue growth needed for us to achieve sustainable profitability in a par dollar currency environment.

Financial Statements

To view the financial statements, please visit the following link: [ http://media3.marketwire.com/docs/inq_fnc.pdf ]

Conference Call

Inscape will host a conference call at 8:30 a.m. on Thursday, December 8, 2011 to discuss the Company's quarterly results. To participate, please call 1-800-695-1940. A replay of the conference call will also be available from Thursday, December 8, 2011 after 10:30 a.m. until midnight on December 15, 2011. To access the rebroadcast, please dial 1-800-558-5253 (Reservation Number 21544280).

Forward-Looking Statements

Certain of the above statements are forward-looking statements that involve risks and uncertainties. Actual results could differ materially as a result of many factors including, but not limited to, further changes in market conditions and changes or delays in anticipated product demand. In addition, future results may also differ materially as a result of many factors, including: fluctuations in the Company's operating results due to product demand arising from competitive and general economic and business conditions in North America; length of sales cycles; significant fluctuations in international exchange rates, particularly the U.S. dollar exchange rate; restrictions in access to the U.S. market; changes in the Company's markets, including technology changes and competitive new product introductions; pricing pressures; dependence on key personnel; and other factors set forth in the Company's Ontario Securities Commission reports and filings.

About Inscape

Inscape Corporation is a leading designer, manufacturer and marketer of office systems, storage and architectural wall solutions for commercial office environments. Headquartered in Holland Landing, Ontario, the company has offices and production facilities in Canada and the United States totalling approximately 438,000 square feet and serves customers through a network of authorized dealers. For more information, please visit [ www.inscapesolutions.com ].