6.25. 10 | Holland Landing, ONT | Mr. Madan Bhayana, 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 fourth quarter and fiscal year ended April 30, 2010:

Inscape Corporation Summary of Consolidated Financial Results (Unaudited) (in thousands except EPS)

Three Months Ended April 30, 2010 2009 Change

Sales $ 17,256 $ 19,901 -13.3% ------------------------------------------------------------------
Gross margin 5,308 3,841 38.2% Selling, general & administrative expenses 5,455 5,432 0.4% Unrealized loss on foreign exchange 107 25 Unrealized gain on derivatives (200) - Interest income (174) (176) ------------------------------------------------------------------
Income (Loss) before taxes 120 (1,440) Income taxe recovery (121) (406) ------------------------------------------------------------------
Net income loss $ 241 $ (1,034) ------------------------------------------------------------------
Basic and diluted income (loss) per share $ 0.02 $ (0.07)

Weighted average number of shares (in thousands) for basic EPS calculation 15,097 15,097 for diluted EPS calculation 15,119 15,097

Years Ended April 30, 2010 2009 Change

Sales $ 69,345 $ 82,940 -16.4% ------------------------------------------------------------------
Gross margin 19,235 18,631 3.2% Selling, general & administrative expenses 20,586 22,903 -10.1% Unrealized loss (gain) on foreign exchange 730 (1,283) Unrealized gain on derivatives (200) - Interest income (586) (805) ------------------------------------------------------------------
Loss before taxes (1,295) (2,184) Income taxes recovery (206) (844) ------------------------------------------------------------------
Net loss $ (1,089) $ (1,340) ------------------------------------------------------------------
Basic and diluted loss per share $ (0.07) $ (0.09)

Weighted average number of shares (in thousands) for basic and diluted EPS calculation 15,097 15,097

Commentary and Outlook

"Fiscal 2010 was a very difficult year in terms of declining sales. Overall, the contract furniture industry experienced a 25.1% decline in the 12 month period matching the Company's fiscal year. Although, modest satisfaction could be taken from declining less than the industry; the Company did not meet its expectations to significantly outperform the industry.

Despite the substantial top line challenges, the Company experienced excellent performance in a number of important aspects of our business. Exceeding our objectives in these areas led to higher gross margins and improved bottom line results; especially when measured on an equivalent operating basis. Credit goes to our management and employees for successfully improving our performance metrics related to shipment reliability and product quality; as well as, their continued efforts to reduce the cost of operations.

In the later part of the fiscal year; the Company undertook a number of actions to ensure more successful implementation of its market based strategies. We are confident that we are on a path that will lead to a turnaround of the business.

We expect that sales for the first quarter of fiscal 2011 will be similar to the fourth quarter of fiscal 2010." said Madan Bhayana, CEO.

Operating Performance

The fourth quarter of fiscal year 2010 had a net income of $0.2 million or 2 cents per share, compared to a net loss of $1.0 million or 7 cents per share in the same quarter of last year. Current quarter's result included an unrealized gain on derivatives of $0.1 million after tax, offset by an after-tax severance of $0.3 million relating to the restructuring of sales personnel. The improvement in current quarter's result over the same quarter of prior year was primarily the result of a much higher gross margin than a year ago.

Fiscal year 2010 recorded a net loss of $1.1 million, compared to a net loss of $1.3 million in fiscal year 2009. Basic and diluted earnings per share, based on 15.1 million shares outstanding, was a loss of 7 cents in 2010 versus a loss of 9 cents in 2009. Annual sales fell $13.6 million or 16.4% from prior year's level as the office furniture industry continued to experience an industry downturn that began in calendar year 2009. The Company managed to contain the adverse financial impact of falling sales by improving product quality, manufacturing productivity, temporarily rolling back salaries, reducing workforce, fixed overheads and discretionary expenses.

Sales in the fourth quarter of fiscal 2010 were $17.3 million, a decline of 13.3% from the sales of $19.9 million in the same quarter of last year. On a normalized currency basis, current quarter's sales were 16.8% behind the same quarter of last year due to soft market conditions. For the twelve-month period ended April 30, 2010, sales decreased 16.4% from last year's $82.9 million to current year's $69.3 million. On a normalized currency basis, 2010 annual sales were about 19.9% less than 2009 annual sales. The sales decrease was due to lower market demand and heightened price pressure. Sales declines in these segments were moderated by an increase in the movable wall business as the Company was successful in securing major wall projects.

Gross margin as a percentage of sales in the fourth quarter was 30.8%, compared to last year's 19.3%. Despite a decline in sales volume, the current quarter's gross margin benefited from a currency hedge gain while the gross margin of last year's fourth quarter was adversely affected by a currency hedge loss. In comparison with the current quarter, the unusually low margin in the 2009 fourth quarter was due to selling price pressure, sales of higher material content products, special charges relating to severance, inventory write-off and building costs. On an annual basis, gross margin increased 520 basis points from last year's 22.5% to current year's 27.7%. The 2010 growth in gross margin was the result of gains in currency hedges, reductions in fixed overheads and improvements in variable production costs, offset by lower realized selling prices and unfavourable overhead absorption arising from lower sales volumes.

Selling, general and administrative expenses ("SG&A") in the fourth quarter were 31.6% of sales, compared to 27.3% in the same quarter of last year. Current quarter's SG&A included a $0.5 million severance expense in relation to a recent restructuring of the sales personnel. Due to lower sales volume, SG&A as a percentage of sales increased from last year's 27.6% to current year's 29.7%. In terms of dollar amount, total SG&A expense was $2.3 million less than last year's level. The decrease consisted of $1.3 million variable selling expense arising from lower sales, $2.0 million net reduction in fixed and discretionary overheads, offset by $0.5 million severance expense relating to the restructuring of the sales personnel and $0.5 million contractual benefits relating to the resignation of former Chief Executive Officer in November 2009.

The fourth quarter of fiscal 2010 had a relatively high tax recovery as the U.S. subsidiaries' tax losses were calculated at a higher tax rate than the tax payable by the Canadian entities. Fiscal year 2010 had an income tax recovery of $0.2 million, compared to an income tax recovery of $0.8 million the previous year. Effective consolidated income tax rate in fiscal year 2010 was 15.9%, compared to 38.6% for 2009. The annual effective tax rate is based on income or loss before taxes, amounts of non-taxable items such as unrealized exchange gain/loss for the U.S. tax jurisdictions, statutory tax rates in Canada and the U.S., future tax consequences relating to temporary differences between the carrying amount and tax basis of various assets and liabilities, enacted tax rates expected to apply when future tax benefits of tax loss carryforwards are realized.

At the end of the quarter, the Company remained debt free and had cash and cash equivalents, and short term investments totalling $19.7 million.

Conference Call

Inscape will host a conference call at 8:30 a.m. on Friday, June 25, 2010 to discuss the Company's quarterly and annual results and to provide additional outlook on the next quarter. To participate, please call 1-800-954-0642. A replay of the conference call will also be available from Friday, June 25, 2010 after 10:30 a.m. until midnight on July 2, 2010. To access the rebroadcast, please dial 1-800-558-5253 (Reservation Number 21473674).

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.